REPORT DIGEST

REGIONAL OFFICE OF EDUCATION #44: MCHENRY
COUNTY

FINANCIAL AUDIT
FOR THE YEAR ENDED JUNE 30, 2024

Release Date:  January 28, 2026

FINDINGS THIS AUDIT: 4

CATEGORY:  NEW -- REPEAT – TOTAL
Category 1:  2 -- 1 -- 3
Category 2:  0 -- 0 -- 0
Category 3:  0 -- 1 -- 1
TOTAL:  2 -- 2 -- 4

FINDINGS LAST AUDIT: 3

State of Illinois, Office of the Auditor
General
FRANK J. MAUTINO, AUDITOR GENERAL

To obtain a copy of the Report contact:
Office of the Auditor General, 400 West
Monroe, Suite 306, Springfield, IL
62704-9849
(217) 782-6046 or TTY (888) 261-2887

This Report Digest and Full Report are also
available on the worldwide web at
www.auditor.illinois.gov

SYNOPSIS

• (24-1) The Regional Office of Education
#44 did not have sufficient internal
controls over financial statement
preparation.

• (24-2) The Regional Office of Education
#44 had uninsured and uncollateralized
deposits.

• (24-3) The Regional Office of Education
#44 did not comply with grant requirements.

• (24-4) The Regional Office of Education
#44 did not provide completed financial
statements in an auditable form by the
August 31 deadline.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

CONTROLS OVER FINANCIAL STATEMENT
PREPARATION

The Regional Office of Education #44 (ROE)
did not have sufficient internal controls
over the financial reporting process. While
the ROE maintains controls over the
processing of most accounting transactions,
there are not sufficient controls over the
preparation of the financial statements for
management or employees in the normal
course of performing their assigned
functions to prevent, or detect and
correct, financial statement misstatements
and disclosure omissions in a timely
manner.

The School Code 105 ILCS 5/2-3.17a allows a
Regional Office of Education or Educational
Service Center to utilize a cash basis,
modified cash basis, or generally accepted
accounting principles (GAAP) basis of
accounting to prepare financial statements
for audit. The ROE has chosen to utilize
the modified cash basis of accounting for
financial reporting. The ROE is required to
maintain a system of controls over the
preparation of financial statements, in
accordance with its selected basis of
accounting.

During review of the ROE’s financial
information, it was noted the ROE did not
have adequate controls to ensure financial
statement balances were accurate. While the
ROE did maintain records to indicate the
balances of financial statement accounts,
material audit adjustments were proposed in
order to ensure those balances were
accurate in accordance with the modified
cash basis of accounting. In addition,
disclosures in the financial statements
were missing related to capital assets,
operating lease, and retirement systems.

Auditors also noted the budgetary
comparison schedules presented as
supplemental information for the grants
from the Illinois State Board of Education
(ISBE) did not accurately present the
original and final budgets. The ROE
subsequently revised the schedules to
reflect the amounts per ISBE.

Regional Office management indicated they
did not effectively detect all of the
adjustments and disclosures needed in order
to present financial statements in
accordance with the modified cash basis of
accounting.   (Finding 24-001, pages 11–12)

The auditors recommended the ROE should
implement comprehensive preparation and/or
review procedures as part of their internal
control over the preparation of financial
statements to ensure the financial
statements, including disclosures, are
complete and accurate. These procedures
should be performed by a properly trained
individual(s) possessing a thorough
understanding of the basis of accounting
selected for financial statements, GASB
pronouncements, and knowledge of ROE’s
activities and operations.

ROE Response: Effective July 1, 2025, a new
accounting firm has been contracted to
complete future audits and perform
accounting duties for the Regional Office
of Education No. 44.

UNINSURED AND UNCOLLATERALIZED DEPOSITS

The Regional Office of Education #44 (ROE)
had uninsured and uncollateralized
deposits.  The ROE did not adequately
perform formal monitoring procedures of its
bank accounts to ensure that cash balances
maintained at various financial
institutions were fully secured and
collateralized. The ROE has three financial
institutions with bank balances totaling
$2,109,042 as of June 30, 2024, of which
$1,457,048 was uninsured or
uncollateralized.

The ROE is required to follow the Illinois
Public Funds Investment Act (30 ILCS 235/6
(d)) (Act). The Act gives authorization for
deposits in excess of the federally insured
limit to be covered by pledged collateral
held by the financial institution’s trust
departments in the ROE’s name. In addition,
prudent business practice requires that all
cash and investments held by the financial
institutions for the ROE be adequately
covered by depository insurance or
collateral.

Regional Office management indicated
competing priorities prevented them from
monitoring the adequacy of the level of the
collateral. (Finding 24-002, page 13)

The auditors recommended the ROE should
regularly monitor balances held with
financial institutions and secure
sufficient pledged collateral. The ROE
should ensure the value of collateral
remains adequate for the balance of the
ROE’s accounts according to the agreement
in place.

ROE Response: The gap in collateralization
resulted from changing bank accounts
requested by the County.  Collateralization
will be completed in FY 2026.

NONCOMPLIANCE WITH GRANT REQUIREMENTS

The Regional Office of Education #44 (ROE)
did not comply with grant requirements.
The ROE submitted inaccurate expenditure
reports to the grantor. We noted the total
expenditures in the financial statements
did not agree with the total expenditures
reported to ISBE as follows:


Key: Program -- Total Expenditures per
Financial Statements -- Total Expenditures
per Quarterly Reports submitted to ISBE --
Difference (Over) Under Stated

ROE/ISC Operations	 -- $673,513 --
$609,244 -- $64,269

Regional Safe Schools program*:  $531,164
-- $153,624 -- $377,540

Regional Safe Schools**: $223,504 --
$296,000 -- ($74,296)

Elementary and Secondary School Emergency
Relief (PY 2024): $9,326 -- $10,428 --
($1,102)

*This program’s fiscal agent was the
Special Education District of McHenry
County until December 31, 2023.

**This is the same program as the Regional
Safe Schools Program that the ROE took over
the fiscal duties starting January 1, 2024.


In addition, for the ROE/ISC Operations
grant, the ROE reported salaries of $43,012
and purchased services of $2,500 to ISBE
but originally presented those expenditures
as payment to other governments in their
financial statements; and $31,596 was
reported as supplies and materials instead
of capital outlay. The ROE made
reclassifications in the financial
statements to reflect the proper line
items.

In all instances, the ROE did not submit
corrected reports to ISBE.

Regional Office management indicated
additional time was needed by the
contracted bookkeeper to process and record
Fiscal Year 2024 transactions, resulting in
inaccurate amounts reported to ISBE.
(Finding 24-003, pages 14-15)

The auditors recommended that the ROE
should ensure grant expenditure reports are
prepared using current and accurate
financial data based on reports obtained
from the ROE’s accounting system.

ROE Response: Due to inaccuracies, delays,
and lack of correct accounting, the
Regional Office of Education #44 did not
renew the contract with the accounting firm
utilized during FY 2024. As of July 1, 2025
another firm was contracted to perform the
accounting and preparation of the financial
statements.

DELAY OF AUDIT

The Regional Office of Education #44 (ROE)
did not provide complete financial
statements in an auditable form by the
August 31 deadline. The preliminary
financial statements provided on June 2,
2025 required material adjustments and the
updated financial statements were provided
on November 21, 2025.

The ROE is subject to 105 ILCS 5/2-3.17a
which requires the Auditor General’s office
to cause an audit to be made, as of June
30th of each year, of the financial
statements of all accounts, funds and other
moneys in the care, custody or control of
the regional superintendent of schools of
each educational service region in the
State and of each educational service
center established in the School Code. The
audit is to be conducted in accordance with
Generally Accepted Government Auditing
Standards. The ROE may utilize a cash
basis, modified cash basis, or generally
accepted accounting principles (GAAP) basis
of accounting to prepare the financial
statements for audit. The ROE has chosen
the modified cash basis of accounting for
financial reporting.

In accordance with 105 ILCS 5/2-3.17a, the
Auditor General has promulgated
administrative rules and regulations to
govern this process. Those rules, 74 Ill.
Adm. Code 420.320 (c) (2), state that for
audit purposes, each regional office of
education and educational service center
shall make available to the Auditor General
or his designee all books and records
deemed necessary to make and complete the
required audits. The records shall be in
auditable form by August 15 of the
succeeding fiscal year. Financial reports
are to be available no later than August 31
in order for the annual audit to be
completed by an independent auditor
selected by the Auditor General.

In addition, prudent business practices and
transparency require timely preparation and
completion of financial statements.

Regional Office management indicated the
delay was due to additional time needed by
the contracted bookkeeper to process and
record Fiscal Year 2024 transactions.
(Finding 24-004, pages 16-17) This finding
was first reported in 2018.


The auditors recommended the ROE should
implement procedures to ensure compliance
with 105 ILCS 5/2-3.17a and 74 Ill. Adm.
Code 420.320 (c) (2). These financial
statements need to be presented to the
Auditor General’s independent auditors for
audit by the August 31 deadline.


ROE Response: Due to inaccuracies, delays,
and lack of correct accounting, the ROE did
not renew the contract with the accounting
firm utilized during FY2024. As of July 1,
2025 another accounting firm was contracted
and will perform the accounting and
preparation of the financial statements.

AUDITORS’ OPINION

Our auditors state the Regional Office of
Education #44’s financial statements as of
June 30, 2024 are fairly stated in all
material respects.

This financial audit was conducted by the
firm of Adelfia LLC.

TRICIA WAGNER
Division Director


This report is transmitted in accordance
with Section 3-14 of the Illinois State
Auditing Act.

FRANK J. MAUTINO
Auditor General

FJM:JRB