REPORT DIGEST

REGIONAL OFFICE OF EDUCATION #47: LEE,
OGLE, AND WHITESIDE COUNTIES

FINANCIAL AUDIT  (IN ACCORDANCE WITH
THE UNIFORM GUIDANCE)
FOR THE YEAR ENDED JUNE 30, 2018

Release Date:  December 15, 2021

FINDINGS THIS AUDIT:  4

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

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

• (18-1) The Regional Office of
Education #47’s salaries and benefits
were not supported by proper time and
effort documentation.

• (18-2) The Regional Office of
Education #47 did not provide
completed financial statements in an
auditable form by the August 31
deadline.

• (18-3) The Regional Office of
Education #47 lacked written policies
for federal grants.

• (18-4) The Regional Office of
Education #47 did not have adequate
subrecipient monitoring documentation.


FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS

SALARIES AND BENEFITS NOT SUPPORTED BY
PROPER TIME AND EFFORT DOCUMENTATION

The Regional Office of Education #47
(ROE) allocated salary and benefit
costs to various federal and State
grants based on time and effort
documentation; however the time and
effort documentation was not being
approved by a supervisor to ensure
charges are accurate, allowable, and
properly allocated.

Employees of the ROE are required to
document their time and effort working
on federal and State programs. Title 2
U.S. Code of Federal Regulations Part
200, Uniform Administrative
Requirements, Cost Principles, and
Audit Requirements for Federal Awards
(Uniform Guidance) requires charges
for salaries and benefits to be
supported by a system of internal
control which provides reasonable
assurance that charges are accurate,
allowable, and properly allocated. It
also requires that records are used to
support the distribution of employees’
salaries and benefits among specific
activities if the employee only works
part of the time on a federal award
program. It further states that budget
estimates alone do not qualify as
support for salary and benefit charges
to a federal award.

The Illinois State Board of Education
(ISBE) State and Federal Grant
Administration Policy, Fiscal
Requirements and Procedures, requires
that auditable time and effort reports
should be written, after the fact
documentation of how the time was
spent. Budget estimates can be used
for charging purposes, but a
confirmation process or reconciliation
must take place at some point after
the charges are incurred to record the
true effort and not merely use an
estimate. Time and effort reports
should be prepared by any staff with
salary charged (1) directly to a
federal award, (2) directly to
multiple federal awards, or (3)
directly to any combination of a
federal award or other federal, state,
or local funds. Additionally, all time
and effort sheets and other supporting
documentation must be retained at the
local level and be available for
review or audit any time within three
years after termination of the project
or until the local entity is notified
in writing from ISBE that the records
are no longer needed for audit or
review. The ROE is responsible for
establishing and maintaining a system
of internal controls over payroll to
prevent errors and fraud. This
includes review of time and effort
documentation.

Regional Office management indicated
this was an oversight. (Finding
18-001, pages 14a – 14b)

The auditors recommended the ROE
should implement written policies and
procedures over time and effort
reporting to ensure proper
documentation is being obtained and/or
maintained in all instances to
properly distribute salary and benefit
costs for employees who work in whole
or in part on grant program activity
in accordance with the Uniform
Guidance and the ISBE State and
Federal Grant Administration Policy,
Fiscal Requirements and Procedures.
This would include having the
documentation reviewed and formally
approved by a supervisor.

ROE Response: Effective April 2021,
the Regional Office has developed
written policies and procedures
related to time and effort
documentation.

DELAY OF AUDIT

The Regional Office of Education #47
(ROE) did not provide completed
financial statements in an auditable
form by the August 31 deadline.

Regional Office of Education #47 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.

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.
Annual financial statements are to be
prepared on the accrual basis of
accounting in accordance with
generally accepted accounting
principles (GAAP). Additionally,
effective June 25, 2021 Public Act
102-0025 allows that a Regional Office
of Education or Educational Service
Center may utilize a cash basis,
modified cash basis or GAAP basis of
accounting to prepare the financial
statements for audit.  In addition,
prudent business practices and
transparency require timely
preparation and completion of
financial statements.

Fieldwork was originally scheduled for
the week of November 2, 2020.
Fieldwork was not able to begin due to
the ROE not having its records to the
outside accounting firm to assist in
adjusting the financial statements to
an auditable form. Fieldwork was then
rescheduled for the week of May 10,
2021.

Regional Office management indicated
they did not provide their books to
their outside accountant in time to
fully adjust and prepare their
financial statements in an auditable
form. (Finding 18-002, pages 14c –
14d)

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).
Annual financial statements should be
compiled on an accrual basis of
accounting in accordance with GAAP.
Additionally, ROE management should
consider Public Act 102-0025 to
determine if changing to the cash
basis or modified cash basis would be
allowable and beneficial to the ROE
and users of its financial statements.
These financial statements need to be
presented to the Auditor General’s
independent auditors for audit by the
August 31 deadline.

ROE Response: Management agrees with
the finding.

LACK OF WRITTEN POLICIES FOR FEDERAL
GRANTS

The Regional Office of Education #47
(ROE) did not have written procedures
concerning cash management, the
determination of allowability of costs
in accordance with Subpart E – Cost
Principles of the Uniform
Administrative Requirements, Cost
Principles, and Audit Requirements for
Federal Awards (Uniform Guidance) and
the terms and conditions of the
federal award. In lieu of written
procedures, the ROE utilized informal
procedures in which each purchase made
or cost allocated to the Individuals
with Disabilities Education Act (IDEA)
– Improvement Grant – Part D was
reviewed for allowability by an
individual with knowledge of the
budget, allowable costs and
activities, and the cash management
requirements. The allowability
determinations were based on the
amounts included in the budgets for
the IDEA – Improvement Grant – Part D
approved by, and the grant periods set
by, the Illinois State Board of
Education (ISBE).

The Uniform Guidance, contained in 2
CFR Part 200, became effective for all
federal award programs administered by
the ROE that were issued on or after
December 26, 2014. Specifically, the
Uniform Guidance (2 CFR 200.302(b)(7))
requires the ROE to have written
procedures related to cash management
and for determining the allowability
of costs in accordance with Subpart E
– Cost Principles of the Uniform
Guidance and the terms and conditions
of the federal award.

Regional Office management indicated
they were unable to dedicate the time
needed to fully implement the Uniform
Guidance due to competing priorities.
(Finding 18-003, pages 15b – 15c)

The auditors recommended the ROE
prepare written procedures to
implement the requirements related to
cash management for determining the
allowability of costs in accordance
with Subpart E – Cost Principles of
the Uniform Guidance and the terms and
conditions of the federal award.

ROE Response: Effective April 2021,
the Regional Office has developed
written policies and procedures
related to the Uniform Guidance.

SUBRECIPIENT MONITORING DOCUMENTATION

During the audit, the Regional Office
of Education #47 (ROE) was providing
the subrecipient monitoring
certification to the Illinois State
Board of Education, the funding agency
for Individuals with Disabilities
Education Act (IDEA) – Improvement
Grant – Part D, when required.
However, the certifications were not
obtained from the subrecipients of
this program.

Auditors also noted that there were no
formal documented procedures for
monitoring subrecipients, including
formal completion of risk assessments
and the documentation of an assessed
level of risk of noncompliance for
each subrecipient as required by Title
2 U.S. Code of Federal Regulations
Part 200, Uniform Administration
Requirements, Cost Principles, and
Audit Requirements for Federal Awards
(Uniform Guidance).

Additionally, it was noted that one
requisition related to subrecipient
disbursements was not approved by the
Assistant Regional Superintendent or
Regional Superintendent as required by
the ROE’s established internal control
procedures.

The Uniform Guidance requires the ROE
to provide a specific certification to
funding agencies on all annual and
final fiscal reports or vouchers
requesting payment, and conversely,
requires the ROE to obtain such
certification from its subrecipients
(2 CFR 200.415(a)).

The Uniform Guidance (2 CFR
200.331(b)) also requires the ROE to
evaluate each subrecipient’s risk of
noncompliance with federal statutes,
regulations, and the terms and
conditions of the subaward for
purposes of determining the
appropriate subrecipient monitoring
(cite was changed to 2 CFR 200.332(b)
in November 2020).

Regional Office management indicated
they were unable to dedicate the time
needed to fully implement the Uniform
Guidance due to competing priorities.
Additionally, ROE management indicated
this was an oversight. (Finding
18-004, pages 15d – 15e)

The auditors recommended the ROE
develop written policies and
procedures to ensure all annual and
final fiscal reports or vouchers
requesting payment received from
subrecipients of federal awards
include the certification required by
2 CFR 200.415(a). The auditors also
recommended the ROE formalize, in
writing, its subrecipient monitoring
procedures, which would include
formally performing and documenting
risk assessments for each
subrecipient, as required and
described in 2 CFR 200.331(b).
Additionally, the ROE should take
steps to ensure its established
internal control policies are being
followed.

ROE Response: Effective April 2021,
the Regional Office has added the
following certification to expenditure
reports submitted by its
subrecipients:

By signing this report, I certify to
the best of my knowledge and belief
that the report is true, complete, and
accurate, and the expenditures,
disbursements, and cash receipts are
for the purpose and objectives set
forth in the terms and conditions of
the Federal award. I am aware that any
false, fictitious, or fraudulent
information, or the omission of any
material fact may subject me to
criminal, civil, or administrative
penalties for fraud statements, false
claims, or otherwise. (US Code Title
18, Section 1001 and Title 31,
sections 3729-3730 and 3801-3812)

In addition, the ROE is implementing
formal risk assessment monitoring
procedures for its subrecipients. The
ROE will take steps to ensure its
established internal control policies
are being followed.

AUDITORS’ OPINION

Our auditors state the Regional Office
of Education #47’s financial
statements as of June 30, 2018 are
fairly presented in all material
respects.

This financial audit was conducted by
the firm of Kemper CPA Group LLP.

JOE BUTCHER
Division Director

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

FRANK J. MAUTINO
Auditor General

FJM:JMM