REPORT DIGEST

REGIONAL OFFICE OF EDUCATION #43: MARSHALL,
PUTNAM, and WOODFORD COUNTIES

FINANCIAL AUDIT
For the Year Ended:  June 30, 2013

Release Date:  July 10, 2014

Summary of Findings:
Total this audit: 1
Total last audit: 1
Repeated from last audit: 1

State of Illinois, Office of the Auditor
General
WILLIAM G. HOLLAND, AUDITOR GENERAL

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62703
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www.auditor.illinois.gov

SYNOPSIS

• The Regional Office of Education #43 did not
have sufficient internal controls over the
financial reporting process.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

CONTROLS OVER FINANCIAL STATEMENT PREPARATION

The Regional Office of Education #43 is
required to maintain a system of controls over
the preparation of financial statements in
accordance with generally accepted accounting
principles (GAAP).  Regional Office internal
controls over GAAP financial reporting should
include adequately trained personnel with the
knowledge, skills, and experience to prepare
GAAP based financial statements and include
all disclosures as required by the
Governmental Accounting Standards Board
(GASB).

The Regional Office of Education #43 did not
have sufficient internal controls over the
financial reporting process.  The Regional
Office maintains its accounting records on the
cash basis of accounting during the fiscal
year. While the Regional Office maintains
controls over the processing of most
accounting transactions, there are not
sufficient controls over the preparation of
GAAP based financial statements for management
or employees in the normal course of
performing their assigned functions to prevent
or detect financial statement misstatements
and disclosure omissions in a timely manner.

During review of the Regional Office of
Education #43’s financial information prepared
by the Regional Office, auditors noted the
following:

• The ROE did not have adequate controls over
the maintenance of complete records of
accounts receivable, accounts payable, or
unearned revenue.  While the Regional Office
did maintain records to indicate the balances
of accounts receivable, accounts payable, and
unearned revenue, not all entries were
provided to reconcile the Regional Office’s
grant activity, such as posting grant
receivables and unearned revenue.

According to Regional Office management, they
did not have adequate funding to hire and/or
train their accounting personnel in order to
maintain a system of internal control over the
preparation of financial statements in
accordance with GAAP. (Finding 2013-001, pages
11-12) This finding was first reported in
2007.

The auditors recommended that, as part of
internal control over the preparation of
financial statements, the Regional Office of
Education #43 should implement comprehensive
preparation procedures to ensure that the
financial statements are complete and
accurate.  These procedures should be
performed by a properly trained individual(s)
possessing a thorough understanding of the
applicable GAAP, GASB pronouncements, and
knowledge of the Regional Office of Education
#43’s activities and operations.

The Regional Office of Education #43 responded
that it understands the nature of this
finding. The Regional Office noted that it
does not have adequate funds to hire a person
who possesses both a thorough understanding of
the ROE’s operations and activities as well as
the knowledge and understanding of generally
accepted accounting principles (GAAP) and GASB
pronouncements that are needed to produce
financial statements with disclosures. The ROE
also stated that as it stands the Regional
Office accepts the degree of risk associated
with this condition as this circumstance is
very common in organizations that are similar
in size.  In an attempt to improve this
situation, the ROE will make a point to send
staff to any State trainings that could help
their employees better understand accrual
basis accounting and reporting under GAAP.
(For previous Regional Office response, see
Digest Footnote #1.)

AUDITORS’ OPINION

Our auditors state the Regional Office of
Education #43’s financial statements as of
June 30, 2013 are fairly presented in all
material respects.

WILLIAM G. HOLLAND
Auditor General

WGH:KJM

AUDITORS ASSIGNED:  Sulaski & Webb, CPAs were
our special assistant auditors.

DIGEST FOOTNOTE

#1: Controls Over Financial Statement
Preparation - Previous Regional Office
Response

In its prior response in 2012, the Regional
Office of Education #43 responded that it
understands the nature of this finding. The
Regional Office accepts the degree of risk
associated with this condition as this
circumstance is quite common in organizations
that are similar in size to the ROE.  The
Regional Office noted that it does not have
the funds to employ a person who possesses
both a thorough understanding of the ROE’s
activities and operations and the knowledge
and understanding of generally accepted
accounting principles (GAAP) and GASB
pronouncements needed to produce financial
statements with disclosures. In an attempt to
address this situation, the ROE will make it a
point to send staff  to any state trainings
that can help them better understand accrual
basis accounting and reporting under GAAP.