REPORT DIGEST

REGIONAL OFFICE OF EDUCATION #47: LEE AND
OGLE COUNTIES

FINANCIAL AUDIT (IN ACCORDANCE WITH THE
SINGLE AUDIT ACT AND OMB CIRCULAR A-133)
FOR THE YEAR ENDED: JUNE 30, 2015

Release Date:  July 21, 2016

FINDINGS THIS AUDIT:  2

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

FINDINGS LAST AUDIT: 3

Category 1:	Findings that are material
weaknesses in internal control and/or a
qualification on compliance with State
laws and regulations (material
noncompliance).
Category 2:	Findings that are
significant deficiencies in internal
control and noncompliance with State laws
and regulations.
Category 3:	Findings that have no
internal control issues but are in
noncompliance with State laws and
regulations.

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, 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
www.auditor.illinois.gov

SYNOPSIS


• (15-1) The Regional Office of Education
#47 did not have sufficient internal
controls over the financial reporting
process.


• (15-2) The Regional Office of Education
#47 did not have sufficient internal
control procedures over disbursements,
receipts, and reporting.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

CONTROLS OVER FINANCIAL STATEMENT
PREPARATION

The Regional Office of Education #47 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 #47 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 and maintains a
list of year-end accrual adjustments for
financial statement purposes.  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 #47’s financial information
prepared by the Regional Office of
Education #47, it was noted that the
Regional Office did not have adequate
controls over the maintenance of complete
records of accounts receivable, accounts
payable, or unearned revenue.  Audit
adjustments were proposed in order to
ensure the financial statement balances
were in accordance with GAAP.  Audit
adjustments were also proposed to properly
allocate fund balance and cash, to
reclassify various revenue or expenditure
transactions to the appropriate financial
statement classification, and to correct
interfund transactions.

Through inquiries and discussions with the
ROE’s accounting personnel and Regional
Superintendent, auditors noted that the
Regional Office did not have adequate
controls to record and report the ROE’s
net accrued pension liabilities/assets,
deferred outflows of resources, deferred
inflows of resources, and pension expenses
in accordance with GAAP.

According to the Regional Office of
Education #47 management, fiscal staff did
not effectively detect all of the
adjustments needed in order to present
financial statements in accordance with
GAAP.
Additionally, the complex requirements of
GASB Statements No. 68 and 71 were new for
fiscal year 2015 and will require
additional time and training before the
ROE can fully implement the requirements
on its own. (Finding 2015-001, pages
13a-13c)  This finding was first reported
in 2009.

The auditors recommended that as part of
internal control over the preparation of
financial statements, the Regional Office
of Education #47 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 possessing a thorough
understanding of applicable GAAP, GASB
pronouncements, and knowledge of the
Regional Office of Education #47’s
activities and operations.

The Regional Office of Education #47
responded that as part of its internal
control over the preparation of its
financial statements, the Regional Office
will continue to provide a comprehensive
preparation and/or review procedure to
ensure that the financial statements,
including disclosures, are complete and
accurate on a monthly basis.  The Regional
Superintendent will continue to review all
financial statements (including accruals)
striving to be as accurate as possible,
hoping to eliminate this finding in the
future.  (For previous Regional Office
response, see Digest Footnote #1 located
at the end of the digest.)

CONTROLS OVER DISBURSEMENTS, RECEIPTS, AND
REPORTING

The Regional Office of Education #47 is
required to maintain a system of internal
controls over disbursements, receipts, and
reporting to prevent errors and fraud.

Internal controls over disbursements,
receipts, and reporting were not
implemented properly.  The Regional Office
of Education #47 maintains a binder
containing the following items:
reconciliation reports, fund balance
summary reports, bi-monthly payroll
register reports, monthly accounts payable
listings of all checks written, and
Illinois Funds activity reports.  It is
the Regional Office of Education #47’s
policy for the Regional Superintendent and
the Assistant Regional Superintendent to
sign cover sheets maintained in front of
each month’s reports within the binder to
evidence their review and approval of
these items.  The binder had not been
reviewed and the cover sheets had not been
signed by the Assistant Regional
Superintendent for the period January –
May 2015.  The Regional Superintendent had
not reviewed the binder or signed the
cover sheets for the period July 2014 –
May 2015.

Internal controls over disbursements,
receipts, and reporting are not properly
implemented.  (Finding 2015-002, page 13d)

The auditors recommended the Regional
Superintendent and Assistant Regional
Superintendent should follow their
established policy and perform a timely
review and provide written approval of all
reports within this binder on a monthly
basis.

The Regional Office of Education #47
responded that this issue has already been
corrected.  The Regional Superintendent of
Schools and Assistant Regional
Superintendent of Schools review all
financial reports on a monthly basis and
sign off as evidence of review.  Also, the
bookkeeper maintains a monthly file.

AUDITORS’ OPINION

Our auditors state the Regional Office of
Education #47’s financial statements as of
June 30, 2015 are fairly presented in all
material respects.

FRANK J. MAUTINO
Auditor General

FJM:JRB

AUDITORS ASSIGNED:  Kemper CPA Group LLP
were our special assistant auditors.

DIGEST FOOTNOTE

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

In its prior response in 2014, the
Regional Office of Education #47 responded
that as part of its internal control over
the preparation of its financial
statements, the Regional Office will
continue to provide a comprehensive
preparation and/or review procedure to
ensure that the financial statements,
including disclosures, are complete and
accurate on a monthly basis.  The Regional
Superintendent will continue to review all
financial statements (including accruals)
striving to be as accurate as possible,
hoping to eliminate this finding in the
future.