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, 2020

Release Date:  August 30, 2023

FINDINGS THIS AUDIT: 4

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

FINDINGS LAST AUDIT: 5

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

• (20-1) The Regional Office of
Education #47’s salaries and benefits
were not supported by proper time and
effort documentation.

• (20-2) The Regional Office of
Education #47 did not provide completed
financial statements in an auditable
form by the August 31 deadline.

• (20-3) The Regional Office of
Education #47 lacked written policies
for federal grants.

• (20-4) 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 instances were
noted in which 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
of the 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 20-001,
pages 14a – 14b) This finding was first
reported in 2017.

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. This process
will be reviewed by the Grant
Coordinator and the Regional
Superintendent.

DELAY OF AUDIT

The Regional Office of Education #47
(ROE) did not provide completed
financial statements in an auditable
form by the August 31, 2020 deadline.
Completed financial statements were
received on December 8, 2021.

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
Regional Office of Education or
Educational Service Center may utilize
a cash basis, modified cash basis, or
generally accepted accounting
principles (GAAP) basis of accounting
to prepare the financial statements for
audit.

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
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 20-002, 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).
Regional Office management should
establish policies and procedures which
set forth closing schedules, deadline,
and accountability for the timely
generation of 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 Title 2 of the U.S.
Code of Federal Regulations Part 200,
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 20-003, pages 15b – 15c) This
finding was first reported in 2017.

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. This process will be
reviewed by the Grant Coordinator and
the Regional Superintendent.

SUBRECIPIENT MONITORING

The Regional Office of Education #47
(ROE) did not have effective internal
controls over subrecipient monitoring.
Furthermore, the ROE was not properly
monitoring subrecipients in accordance
with Title 2 of the U.S. Code of
Federal Regulations Part 200, Uniform
Administrative Requirements, Cost
Principles, and Audit Requirements for
Federal Awards (Uniform Guidance)
standards. During audit testing
procedures it was determined that the
ROE:

a. Did not identify the subaward and
applicable requirements in the
agreements.
    Number of Subrecipients: 1 of 3
b. Did not evaluate the risk of
noncompliance with Federal statutes,
regulations, and the terms and
conditions of the subaward.
    Number of Subrecipients: 1 of 3
c. Did not conduct subrecipient
monitoring procedures.
    Number of Subrecipients: 3 of 3
d. Did not determine whether the
subrecipient met the 2 CFR Subpart F
Audit requirements criteria for a
single audit.
    Number of Subrecipients: 3 of 3

The Uniform Guidance requires the
Regional Office to ensure any
subrecipient monitoring using federal
funds be consistent with the standards
set forth in the Uniform Guidance at 2
CFR 200.332. Additionally, the Uniform
Guidance section 200.303 Internal
Controls states the following : “The
non-Federal entity must:

a. Establish and maintain effective
internal control over the Federal award
that provides reasonable assurance that
the non-Federal entity is managing the
Federal award in compliance with
Federal statutes, regulations, and the
terms and conditions of the Federal
award.”

Regional Office management indicated
the ROE experienced staff turnover and
did not formally document policies and
procedures that provide controls and
structures to ensure all of its
subrecipient monitoring
accountabilities are conducted and
complied with. (Finding 20-004, pages
15d – 15e) THIS FINDING WAS FIRST
REPORTED IN 2017.

The auditors recommended the ROE
establish and maintain effective
internal control over federal awards to
ensure subrecipients are properly
monitored as required by 2 CFR 200.332.
This includes:

a. Identifying the subaward and
applicable requirements in the
agreements;
b. Evaluating the risk of noncompliance
with Federal statutes, regulations, and
the terms and conditions of the
subaward;
c. Conducting subrecipient monitoring
procedures; and
d. Determining whether the subrecipient
met the requirement criteria of 2 CFR
200 Subpart F Audit requirements for a
single audit.

ROE Response: Management agrees with
this finding.

AUDITORS’ OPINION

Our auditors state the Regional Office
of Education #47’s financial statements
as of June 30, 2020 are fairly
presented in all material respects.

This financial audit was conducted by
the firm of Prado & Renteria Certified
Public Accountants.

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