REPORT DIGEST

 

REGIONAL OFFICE OF EDUCATION #44

 

McHENRY COUNTY

 

FINANCIAL AUDIT

 

For the Year Ended:

June 30, 2007

 

Summary of Findings:

 

Total this audit                   2

Total last audit                   1

Repeated from last audit    0

 

Release Date:

May 20, 2008

 

 

 

State of Illinois

Office of the Auditor General

WILLIAM G. HOLLAND

AUDITOR GENERAL

 

 

To obtain a copy of the Report contact:

Office of the Auditor General

Iles Park Plaza

740 E. Ash Street

Springfield, IL 62703

(217) 782-6046 or TTY (888) 261-2887

 

This Report Digest and Full Report

 are also available on

the worldwide web at

http://www.auditor.illinois.gov

 

 

 

 

 

SYNOPSIS

 

 

 

·        The Regional Office of Education #44 does not have sufficient internal controls over the financial reporting process. 

 

·        The Regional Office of Education #44 can strengthen controls over credit card transactions. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

        {Expenditures and Revenues are summarized on the reverse page.}

 

 

 

 

 

REGIONAL OFFICE OF EDUCATION #44

McHENRY COUNTY

 

FINANCIAL AUDIT

For The Year Ended June 30, 2007

 

 

 

FY 2007

FY 2006

TOTAL REVENUES

$1,287,105

$1,285,021

Local Sources

$509,078

$517,854

% of Total Revenues

39.55%

40.30%

State Sources

$778,027

$767,167

% of Total Revenues

60.45%

59.70%

Federal Sources

$0

$0

% of Total Revenues

0%

0%

 

TOTAL EXPENDITURES

$1,225,127

$1,224,149

Salaries and Benefits

$437,280

$443,811

% of Total Expenditures

35.69%

36.25%

Purchased Services

$194,461

$193,362

% of Total Expenditures

15.87%

15.80%

All Other Expenditures

$593,386

$586,976

% of Total Expenditures

48.43%

47.95%

 

 

 

TOTAL NET ASSETS

$282,842

$220,864

 

 

 

INVESTMENT IN CAPITAL ASSETS

 

$0

 

$0

 

              Percentages may not add due to rounding.

 

REGIONAL SUPERINTENDENT

During Audit Period:  Honorable Eugene T. Goeglein

Currently:  Honorable Eugene T. Goeglein
 

 

 

 

 

 

 

 

 


The Regional Office of Education #44 does not have sufficient internal controls over the financial reporting process.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Regional Office of Education #44 can strengthen controls over credit card transactions.

 

FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

 

 

Controls Over Financial Statement Preparation

 

         The Regional Office of Education #44 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 and expertise to prepare and/or thoroughly review GAAP based financial statements to ensure that they are free of material misstatements and include all disclosures as required by the Governmental Accounting Standards Board (GASB).

 

         The Regional Office of Education #44 does not have sufficient internal controls over the financial reporting process.  The Regional Office maintains their accounting records on the cash basis of accounting. While the Regional Office maintains controls over the processing of most accounting transactions, there are not sufficient controls over the preparation of the 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. For example, auditors, in their review of the Regional Office’s accounting records, noted the following:

 

  • Numerous adjustments were required to present financial statements in accordance with generally accepted accounting principles. 

  • The Regional Office did not have adequate controls over the maintenance of complete records of accounts receivable, accounts payable, or deferred revenue. (Finding 07-01, pages 9-10)

 

         The auditors recommended that, as part of its internal control over the preparation of its financial statements, including disclosures, the Regional Office of Education #44 should implement a comprehensive preparation and/or review procedure to ensure that the financial statements, including disclosures, are complete and accurate.  Such procedures should be performed by a properly trained individual(s) possessing a thorough understanding of applicable generally accepted accounting principles, GASB pronouncements, and knowledge of the Regional Office of Education’s activities and operations.

 

         The Regional Office of Education #44 responded that it understands the nature of this finding and realizes that this circumstance is not unusual in an organization of this size.  The McHenry County Regional Office of Education accepts the degree of risk associated with this condition because the added expense of seeking additional expertise to prepare and/or review financial statements would take away from the funds available to provide educational services for the schools in the region.  They note that the cost of hiring and training of additional staff or contracting the service outweighs the benefit.

 

 

CONTROLS OVER CREDIT CARD TRANSACTIONS

 

         In the auditors’ review of 25 credit card transactions in the amount of $2,214, 1 transaction, in the amount of $100, included personal expenses of $52.  This amount was subsequently reimbursed to the Regional Office and deposited within one month of the transaction.

 

         Prudent business practices dictate that the expenditures charged to the Regional Office’s credit card meet all the criteria of an ROE business expense.  The Regional Office of Education #44 had an informal policy in which personal expenses (mainly part of meals) were allowed to be charged on the Regional Office Credit card, as long as they are immediately reimbursed by the employee to the Regional Office.  (Finding 07-02, pages 11-12)

 

         The auditors recommended that the Regional Office of Education formalize and revise credit card policies to prohibit personal expenses from being charged to the Regional Office’s credit card.

 

         The Regional Office of Education #44 responded that it accepts the recommendation that only business-related transactions be charged to the Regional Office’s credit card.  They noted that only the Regional Superintendent and the Assistant Regional Superintendent have access to the Regional Office credit card and even though it had been the practice to reimburse the Regional Office for any and all personal expenses, this practice has ceased effective as of the date of this finding.

 

 

AUDITORS’ OPINION

 

         Our auditors state the Regional Office of Education #44’s financial statements as of June 30, 2007 are fairly presented in all material respects.

 

 

 

_____________________________________

WILLIAM G. HOLLAND, Auditor General

 

WGH:JRB

 

 

SPECIAL ASSISTANT AUDITORS

 

         Our special assistant auditors were Prado & Renteria CPAs.