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REPORT DIGEST REGIONAL
OFFICE OF EDUCATION #48 FINANCIAL
AUDIT (In Accordance with the Single Audit Act and
OMB Circular A-133) For the Year Ended: June 30, 2008 Summary
of Findings: Total this audit 8 Total last audit 6 Repeated from
last audit 4 Release Date: July 23, 2009
State of Office of the Auditor General WILLIAM
G. HOLLAND AUDITOR GENERAL To
obtain a copy of the Report contact: Office
of the Auditor General (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 |
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SYNOPSIS ·
The Regional Office of Education #48 did not have
sufficient internal controls over the financial reporting process. ·
The Regional Office of Education #48 lacked adequate policies and procedures
over certain administrative functions. ·
The Regional Office of Education #48 did not have
sufficient internal controls over the financial statement preparation process. ·
The
Regional Office of Education #48 paid for expenses from the Institute Fund
which were not allowable by statute. ·
The Regional Office of Education #48 did not have
adequate controls over fixed assets. ·
The Regional Office of Education #48 recorded and printed
payroll checks in the month of June which were to cover salaries throughout
the summer. However, they did not
accrue a payroll liability. ·
The
Regional Office of Education #48 did not appropriately expend interest income
during the fiscal year. ·
The
Regional Office of Education #48 had unallowable expenditures to certain
federal programs. {Expenditures and Revenues are summarized on the
reverse page.} |
REGIONAL OFFICE OF
EDUCATION #48
FINANCIAL AUDIT
For The Year Ended
June 30, 2008
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FY
2008
|
FY
2007
|
TOTAL REVENUES
|
$6,751,520 |
$5,784,765 |
|
Local Sources |
$990,172 |
$785,421 |
|
% of Total Revenues |
14.67% |
13.58% |
|
State Sources |
$2,613,656 |
$2,249,842 |
|
% of Total Revenues |
38.71% |
38.89% |
|
Federal Sources |
$3,147,692 |
$2,749,502 |
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% of Total Revenues |
46.62% |
47.53% |
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TOTAL EXPENDITURES |
$6,810,961 |
$5,801,015 |
|
Salaries and Benefits |
$2,685,089 |
$1,993,971 |
|
% of Total Expenditures |
39.42% |
34.37% |
|
Purchased Services |
$1,848,301 |
$1,145,482 |
|
% of Total Expenditures |
27.14% |
19.75% |
|
All Other Expenditures |
$2,277,571 |
$2,661,562 |
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% of Total Expenditures |
33.44% |
45.88% |
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|
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TOTAL NET
ASSETS |
$1,358,098 |
$1,333,397 |
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INVESTMENT IN CAPITAL ASSETS |
$290,652 |
$292,547 |
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Percentages may not add due to rounding. |
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REGIONAL SUPERINTENDENT |
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During Audit
Period: Honorable Gerald Brookhart Currently: Honorable Gerald Brookhart |
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The Regional
Office of Education #48 did not have sufficient internal controls over the
financial reporting process. The Regional Office
of Education #48 lacked adequate policies and procedures over
certain administrative functions.
The Regional
Office of Education #48 did not have sufficient internal controls over the
financial statement preparation process. The Regional Office of Education #48 paid
for expenses from the Institute Fund which were not allowable by statute.
The Regional
Office of Education #48 did not have adequate controls over fixed assets. The Regional
Office of Education #48 recorded and printed payroll checks in the month of
June which were to cover salaries throughout the summer. However, they did not accrue a payroll
liability. The Regional Office of
Education #48 did not appropriately expend interest income during the fiscal
year.
The Regional Office of
Education #48 had unallowable expenditures to certain federal programs. |
FINDINGS, CONCLUSIONS AND
RECOMMENDATIONS
INADEQUATE INTERNAL CONTROLS OVER
FINANCIAL REPORTING The Regional Office of Education #48
did not have sufficient internal controls over the financial reporting
process. The Regional Office is
required to maintain a system of controls over the financial reporting
process to be able to initiate, authorize, record, process and report
financial data reliably in accordance with generally accepted accounting
principles (GAAP). In testing, auditors noted the
following deficiencies in internal control: 1.
In 1 of 40 general disbursements tested, the
check written was not supported by the proper documentation. 2.
In obtaining our understanding of internal
controls, we identified a payroll check where there was not a valid contract
signed by the Regional Superintendent to support the payroll expenditure. 3.
In 1 of 40 disbursements tested, the
expenditure was misclassified and the error was not caught by the independent
reviewer. 4.
There was a lack of segregation of duties related
to the cash receipts function. The same
individual opened the mail, posted cash receipts to the general ledger,
initiated the bank transfers, and reconciled the bank accounts. ROE personnel also did not prepare a
listing of cash receipts for an independent reviewer to reconcile to the
deposit slip. 5.
There were numerous accounting processes
including bank reconciliations, direct deposits received from the State,
summary payroll reports, and payroll tax returns where there was no
documentation of review. 6.
We found a lack of segregation of duties in
the payroll function. The payroll
clerk was not given positive confirmation of the salaries to pay out each pay
period. The payroll clerk also
prepared and distributed all payroll checks. 7.
There were segregation of duties and
internal control weaknesses in the cash disbursement function. Copies of purchase orders were not
maintained in order to agree what was actually received to what was
ordered. Also, the same person
prepared and mailed checks once they had been signed. In addition, there was no review of
invoices for accuracy and appropriate account coding by a person independent
of check preparation. Management or employees in the
normal course of performing their assigned functions may not prevent or
detect financial misstatements or possible fraudulent activity in a timely
manner. The ROE also may not be in
compliance with laws, regulations, and contract provisions. The Regional Office of Education #48
did not consistently implement established internal controls. Regional Office personnel were also not
aware of what duties should be segregated in order to have a more effective
process. (Finding 08-1, pages 12 a-c) The Regional Office had attempted to
segregate some of the accounting responsibilities, but there were areas that
should be improved. In order to
correct the deficiencies noted above, auditors recommended that the Regional
Office personnel should do the following: 1.
Review the control processes that are
currently in place with personnel so that they are well informed of their
responsibilities to adequately document expenditures. 2.
Ensure that payroll contracts exist for
all employees of the Regional Office and ensure they are current and in
accordance with laws, regulations, and contract provisions. 3.
Review the control processes that are
currently in place with personnel so they are well informed of their
responsibilities for proper classification of expenditures. 4.
Review job descriptions to determine how
to best segregate the duties within the cash receipts function. 5.
Develop procedures to have an independent
review of bank reconciliations, direct deposits received from the State,
summary payroll reports, and payroll tax returns. 6.
Review job descriptions to determine how
to best segregate the duties within the payroll function. 7.
Review job descriptions to determine how
to best segregate all duties within the cash disbursements function. Auditors also recommended that the
Regional Office should ensure that either their in-house staff obtain the
necessary skills with regards to defining and implementing internal controls
or consider hiring a professional consultant or an individual with an
appropriate level of accounting expertise and experience working with
governmental and fund accounting to oversee the accounting and internal
control system of the Regional Office of Education #48. The Regional Office responded that,
as recommended by the auditor, the Peoria Regional Office of Education #48
will consider hiring an individual with an appropriate level of accounting
expertise and experience working with governmental and fund accounting to
oversee the accounting and internal control system of the Regional
Office. The Regional Office noted that
they have, in fact, already contacted two individuals with such expertise who
might be interested in acting in this capacity; however, the affordability of
implementing this action may become a serious issue. They have also contacted the Peoria County
Auditor, on the other hand, who has agreed to share CPA personnel trained in
these areas to help the Regional Office’s in-house staff define and implement
internal controls. Regional Office officials stated
they have already begun a monthly process of reviewing and accomplishing each
of the seven points listed above with all in-house staff and
administrators. The Regional Office
noted that each of these points will be satisfactorily completed within the
2009 fiscal year. LACK OF ADEQUATE POLICIES AND PROCEDURES
OVER CERTAIN ADMINISTRATIVE FUNCTIONS The Regional Office of Education #48
lacked adequate policies and procedures over certain administrative
functions. As a recipient of federal,
State, and local funds from various grantor agencies, the Regional Office
must incorporate certain administrative policies and procedures into their
operations in order to comply with the grant agreements with these
entities. In addition, as an employer,
the Regional Office must incorporate policies and procedures in its
operations in order to meet the requirements of the Illinois Department of
Revenue, the Illinois Department of Employment Security, and the Internal
Revenue Service. Finally, the Regional
Office must have written policies and procedures for employees to follow in
order to be in compliance with State statutes. In testing, auditors noted the
following deficiencies in administrative functions: 1.
An employee file did not have the
following required forms: I-9, W-4,
employment application, evidence of a background check, and authorization for
deductions. These files were obtained
at the initial date of hire, but they have not been carried forward with the
employee’s current file. In addition,
the employee personnel files were not kept in a locked area. 2.
The Regional Office did not have an
employee manual or code of conduct for all employees. In addition, the current operating manual
was prepared in 1991 and has not been updated. The Regional Office has undergone
significant changes in both organization and compliance requirements since
that time. 3.
There were also some employment contracts
that were out-dated and were between the Education Service Region (ESR) and
related employee. ESRs no longer exist
by statute. ESRs and ESCs were merged
into the Regional Offices of Education over 10 years ago. In addition, the contracts state the
employee is not an employee of the ESR when in fact the employee is an
employee of the newer Regional Offices. 4.
The Regional Office was not reconciling
expenditure reports submitted to the Illinois State Board of Education to the
general ledger to determine that they were accurate. This is a vital process that ensures the
Regional Office is in compliance with respective grant agreement expenditure
restrictions. 5.
The Regional Office is required to account
for each individual program’s activity as individual funds for accounting
purposes. The Regional Office created
an additional fund to keep track of its portion of funds from the Title 1-
School Improvement and Accountability program and the Coordination and
Services Grant program and transferred $288,993 and $43,407, respectively, to
this account. Expenditure reports to
ISBE were inaccurate because the ROE classified the transfer of these funds
as “payments to subrecipients” rather than classifying the transactions in
the specific expenditure categories where the funds were used. The Regional Office #48 receives
federal funding from the State to support school improvement services for
schools in academic difficulty. A
large portion of this money is given to other Regional Offices to support
their activities within the program, and the rest is the Regional Office
#48’s portion. During the year, the
Regional Office created an internal fund to account for their portion of this
federal money. This caused the
Regional Office #48 to incorrectly report expenditures to the State because
the Regional Office did not account for the money that was transferred to the
internal fund correctly. The money
transferred was classified as “payments to subrecipients” when it should have
been classified in the specific expenditure categories where the funds were
used. Auditors questioned costs of
$288,993 for Title I School Improvement and Accountability. The Regional Office did not have
adequate administrative policies and procedures in place to demonstrate
compliance with grant agreements and State statutes. (Finding 08-2, pages 12 d-f) The auditors recommended that the
Regional Office of Education #48 personnel responsible for employee relations
should review all guidelines issued by each agency they are required to
comply with. In order to address the
reported noncompliance, the Regional Office personnel should: 1.
Review the Circular E published by the
Internal Revenue Service to determine the appropriate documentation needed
for every employee’s personnel file. 2.
Develop both an employee manual and
operating manual that are current and address all of the compliance
requirements applicable to the ROEs. 3.
Review all standard employee contracts for
all programs and update them for the current ROE organizational structure. 4.
Implement a control procedure where all
expenditure reports are compared to the general ledger to ensure accuracy
before submitting them to the granting agency. 5.
Ensure that in future years that there are
not any funds created that are not directly associated with a program. Expenditure reports should accurately
reflect the activity within a program. The Peoria County Regional Office of
Education #48 responded that it will comply with all the reporting
requirements of the various State and federal regulatory agencies. They will review the guidelines issued by
these agencies with respect to employee relations, particularly regarding
employee files, policy manuals and contracts. As noted in points 1-3 above, Regional
Office officials stated that have
begun to update all operating manuals, contracts and employee files to comply
with legal requirements and that this will be completed by the end of fiscal
year 2009. The Regional Office noted
that a control procedure has been implemented where all expenditure reports
are compared to the general ledger to ensure accuracy before submitting them
to the State, as noted in point 4 above.
Also, beginning this fiscal year the ROE stated they will ensure that
there are not any funds created that are not directly associated with a
program, as noted in point 5 above. Controls Over Financial Statement Preparation
The Regional Office of Education #48
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 #48
did not have sufficient internal controls over the financial statement
preparation process. While the
Regional Office maintains controls over the processing of some 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:
·
The Regional Office did not have adequate
controls over the maintenance of complete records of accounts receivable,
accounts payable, or deferred revenues.
While the Regional Office did maintain records to indicate the
balances of accounts payable, accounts receivable, and deferred revenues, not
all entries were made by the ROE to reconcile their grant activity, such as
posting grant receivables and deferred revenues.
·
Numerous adjusting entries were required to
present the financial statements in accordance with generally accepted
accounting principles. According to Regional Office
officials, they did not have adequate funding to hire and/or train their
accounting personnel in order to comply with these requirements. (Finding 08-3, pages 12 g-h) The auditors recommended that, as part of its internal control over the
preparation of its financial statements, including disclosures, the Peoria County Regional Office of
Education #48 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 Peoria Regional Office of
Education #48 responded that it will implement a comprehensive preparation
and review procedure to ensure that the financial statements, including
disclosures are complete and accurate.
Regional Office officials stated they are currently exploring the
hiring of an individual with the necessary expertise to help accomplish this
task, assuming finances are available for this purpose. Further, they intend to use the
aforementioned CPA personnel from the Peoria County Auditor’s office to help them
in this area as well. CONTROL OVER COMPLIANCE WITH LAWS AND REGULATIONS The Regional Office of Education #48
paid for expenses from the Institute Fund which were not allowable by statute.
The Illinois School Code (105 ILCS 5/3-12) states that all certificate
registration fees and a portion of renewal and duplicate fees shall be
deposited into the Institute Fund and shall be used by the Regional
Superintendent to: a) defray expenses
associated with the work of the regional professional development review
committees; b) to advise the Regional
Superintendent, upon his or her request, and to hear appeals relating to the
renewal of teaching certificates; c)
to defray expenses connected with improving the technology necessary for the
efficient processing of certificates;
d) to defray expenses incidental to teachers’ institutes, workshops or
meetings of a professional nature that are designed to promote the
professional growth of teacher; or e)
for the purpose of defraying the expense of any general or special meeting of
teachers or school personnel of the region, which has been approved by the
Regional Superintendent. Auditors found that in 6
of 25 disbursements (24%) tested the expenditure was for items outside those
allowable by statute. Auditors also
found one disbursement out of 40 from our general disbursements testing that
was inappropriately paid from the Institute Fund. The expenditures not in compliance with
statute included: $3,500 in consultant
fees, $339 in travel costs, $485 in supplies, and $40 in unrelated meeting
expenses. According to the Regional Office,
they were not aware of the specific requirements of this statute. (Finding 08-4, page 12 i) Auditors recommended that the
Regional Superintendent and his staff should ensure that future expenditures
from the Institute Fund are in compliance with 105 ILCS 5/3-12. The Peoria County Regional Office of
Education #48 responded the Regional Superintendent and his staff will ensure
that eligibility of future expenditures from the Institute Fund are in
compliance with 105 ILCS 5/3-12 and upon advice of legal counsel. INADEQUATE CONTROLS OVER PROPERTY AND EQUIPMENT The Regional Office of Education #48
did not have adequate controls over fixed assets. Regional Office of Education (ROE) policy
is to maintain detailed fixed asset records for both accounting purposes as
well as insurance purposes for fixed assets costing $500 or more and that have
a useful life of greater than one year.
Generally accepted accounting principles require that an inventory of
all fixed assets and depreciation schedules for assets meeting the
capitalization threshold for reporting be maintained. In addition, the ROE is required to keep
track of each asset by program in order to be in compliance with grantors. Numerous issues with fixed asset
reporting were found by auditors during testing of the fixed assets within
the Regional Office, including: 1.
The Regional Office disposed of 11 fixed
assets totaling $11,828 that were not removed from the inventory listing. 2.
The Regional Office had not assigned
useful lives to 428 assets. Due to
this omission, the Regional Office miscalculated depreciation on these fixed
assets. 3.
Thirteen assets purchased in prior years
did not have costs assigned. 4.
The fixed asset listing did not clearly
label each of the assets as to the source of the program funds that were
used. An incomplete fixed asset listing
does not provide an adequate basis for physical control and losses may occur
without being detected. Inaccurate
recording of the book value of fixed assets and depreciation expense can
cause the financial statements to be materially misstated. Also, any assets that are required to be
returned to the grantor after the end of the program can not accurately be
identified. Regional Office personnel had not
been adequately trained to understand the standards associated with fixed
asset reporting. (Finding 08-5, pages 12 j-k) This finding was first reported in 2006. Auditors recommended that the
Regional Office of Education #48 maintain a separate listing of assets that
are disposed of, and periodically update the fixed asset listing to eliminate
the disposed assets. The Regional
Office should also ensure that each fixed asset addition is appropriately
recorded in the listing and that each required attribute, such as useful life
and cost, is included in the listing in accordance with the established
policy. If a purchase cost is not
applicable to the asset, then the estimated fair market value at the date of
acquisition should be recorded. The
Regional Office should also prepare listings of fixed assets by program. Auditors also recommended that the Regional
Office personnel involved with fixed asset reporting review the ROE
Accounting Manual to learn and understand the standards involved with fixed
asset reporting. The Peoria County Regional Office of
Education #48 responded that it will, with assistance from CPA personnel from
the Peoria County Auditor’s office, accomplish each of the recommended tasks
listed above. They are also
researching appropriate fixed asset accounting system software, which they
intend to purchase in order to reorganize the current records and properly
record and maintain an inventory of all fixed assets and depreciation
schedules in the future. (For previous Regional Office response, see Digest
Footnote #1.) ACCRUAL OF PAYROLL LIABILITIES The Regional Office of Education #48
recorded and printed payroll checks in the month of June which were to cover
salaries throughout the summer. However,
they did not accrue a payroll liability.
According to generally accepted accounting principles, all employees’
wages, bonuses, and salaries for services rendered in the current fiscal year
for which paychecks will be issued in the following fiscal year, must be
accrued at the end of the current fiscal year. The Regional Office recorded and
printed payroll checks totaling $25,181 in the month of June. The checks were to cover salaries due for
the months that school was not in session.
The Regional Office held these checks and distributed them throughout
the summer months every two weeks. A
payroll liability should have been recorded in the financial statements
rather than printing the checks early.
The Regional Office understated its cash balance and payroll
liabilities by $25,181 at the end of the fiscal year. (Finding 08-6, page 12
l) Auditors recommended that the
Regional Office of Education #48 should accrue a payroll liability at the end
of the fiscal year to record the salaries owed for the summer months. The Regional Office should also employ a
controller with substantial training in and experience with governmental
generally accepted accounting principles, to oversee the bookkeepers and
prepare required journal entries. The Peoria County Regional Office of
Education #48 responded that it will accrue a payroll liability at the end of
the fiscal year to record the salaries owed for the summer months. They intend to use CPA personnel from the
Peoria County Auditor’s office to oversee their bookkeepers and help prepare
required journal entries. FAILURE TO
ALLOCATE INTEREST EARNED The Regional Office of Education #48
did not appropriately expend interest income during the fiscal year. Once interest earned on grant funds is
allocated to the appropriate source of funds, certain rules apply to the
expenditure of that interest. Unless
the grant agreement specifically addresses the interest issue and provides
otherwise, the following rules would apply:
·
The Grant Funds Recovery Act (30 ILCS 705/1 et seq.) states that the interest
earned on grant funds becomes part of the grant principal and is treated
accordingly for all purposes unless the grant agreement and/or the grant
regulations provides otherwise. The
Act further states that any grant funds not expended (or legally obligated)
by the end of the grant period must be returned to the grantor. This applies to State and federal grants.
·
Generally, federal rules supersede those of the
state (for federal grants only). If a
federal rule allows different treatment of interest, then the federal rule
would be followed.
·
US Department of Education regulations appear in
34 Code of Federal Regulations (CFR).
Part 80 of 34 CFR is titled “Uniform Administrative Requirements for
Grants and Cooperative Agreements to State and Local Governments.” It is also known as the “Common Rule”
because most federal agencies have adopted it in their regulations. The “Common Rule” states that annual
interest in excess of $100 on advances of funds must be submitted promptly to
the granting agency. The $100 may be
spent on administrative costs. Those
administrative costs must be for that grant and within the grant period. Some grants may be exempt from the “Common
Rule.”
·
Interest earned on sources of funds that are not
grants but are set up by statute must be allocated to the source of funds and
expended for the same purpose.
However, unlike grants, this interest does not have to be expended
within any given period of time unless statute, regulations, or contracts
state otherwise. The Regional Office
records interest earned in a separate General Fund account, and then
distributes it out to the program fund that earned the interest. This process began in February 2008. Prior to that, no interest was
allocated. The expenditure detail, for
transactions prior to February 2008, was reviewed for this General Fund
account, and expenditures were made for administrative items such as bank
fees and attorney costs that are not specifically related to the program that
earned the interest. In addition, the
Regional Office did not appropriately monitor the interest allocated to its
programs after the February 2008 change in procedure. Numerous funds earned interest over $100,
and no liability was recorded for interest due back to the State or the
respective grantor. The portion of costs
which should be questioned cannot be readily determined in whole due to the
Regional Office of Education not preparing monthly interest allocations for
the months of July 2007 through January 2008.
The Regional Office’s bookkeeping staff
lacks the training and understanding of compliance rules in order to
appropriately monitor any interest earnings from programs, expenditures paid
with those earnings, and any refunds that are due back to the grantor. (Finding 08-7, pages 12 m-o) Auditors recommended that the
Regional Office of Education #48 develop a plan to appropriately expend
interest earned on programs in accordance with the contract regulations. The Regional Office should also track
interest earned over $100 for individual programs so that it can be returned
to the appropriate granting agency.
The Regional Office should ensure that its controller has adequate and
necessary training and experience with the various State and federal
compliance requirements and will monitor interest income earned to ensure
that it is being accounted for appropriately. The Peoria County Regional Office of
Education #48 responded that it will develop a plan to appropriately expend
interest earned on programs in accordance with the contract regulations and
will track interest income earned over $100 for individual programs so that
it can be returned to the appropriate granting agency. The Regional Office noted that assuming
they are successful in hiring an individual with appropriate experience in
governmental and fund accounting, that person will monitor interest income
earned to ensure that it is being accounted for appropriately. Otherwise, the Regional Office will ask for
assistance from CPA personnel from the Peoria County Auditor’s office for
this purpose. UNALLOWABLE
COSTS CHARGED TO FEDERAL PROGRAMS The
Regional Office of Education #48 had unallowable expenditures to certain
federal programs. To be allowable
under federal awards, costs must meet the following general criteria under
Circular A-87: 1.
Be necessary and reasonable for the
performance and administration of federal awards. 2.
Be allowable to federal awards under the
provisions of A-87. 3.
Be authorized or not prohibited under
State or local laws or regulations. 4.
Conform to any limitations or exclusions
set forth in A-87, federal laws, terms and conditions of the federal award,
or other governing regulations as to types or amounts of cost items. 5.
Be consistent with policies, regulations,
and procedures that apply uniformly to both federal awards and other
activities of the governmental unit. 6.
Be adequately documented. Auditors tested two
specific federal programs as major programs for fiscal year 2008. As part of the compliance audit testing, auditors
selected 40 disbursements for each program (for a total of 80 tested) and
reviewed the invoices for compliance with the programs. The Regional Office received a total of
$1,281,012 for Title I – School Improvement and Accountability and a total of
$250,301 for Title I – Reading First Part B SEA funds. Auditors
found:
·
One disbursement that was not authorized according
to Circular A-87;
·
Four disbursements did not have adequate
documentation; and
·
Seven disbursements were incurred during the
fiscal year of 2008, but were not recorded as accounts payable in accordance
with generally accepted accounting principles. Auditors questioned
costs for the following reasons, amounts and programs:
·
Unauthorized under A-87 in the amount of $43 for
Title I – School Improvement and Accountability;
·
Inadequately documented in the amount of $3,919
for Title I – School Improvement and Accountability;
·
Inadequately documented in the amount of $2,336
for Title I – Reading First Part B SEA funds; and
·
Improper period in the amount of $12,185 for Title
I – School Improvement and Accountability. The Regional Office of
Education #48 personnel did not have adequate training and knowledge to
establish sufficient internal control procedures that would detect
noncompliance with their programs. (Finding 08-8, pages 13 a-b) Auditors recommended that the
Regional Office of Education #48 develop and implement procedures that will
ensure compliance with their federal programs. We recommended that Circular A-87 be
reviewed by all personnel involved with charging costs to federal
programs. The ROE should ensure its
controller has adequate and necessary training and accounting background to
review invoice support for proper classification, proper support, compliance
with federal award requirements and compliance with generally accepted
accounting principles. The Peoria County Regional Office of
Education #48 responded that it will implement and develop procedures that
will ensure compliance with their federal programs. The administrators and bookkeepers involved
with charging costs to federal programs will review Circular A-87. Regional Office of Education officials
noted that they are currently exploring the hiring of an individual with the
necessary expertise to help accomplish this task, assuming finances are
available for this purpose. Further, they
intend to use the aforementioned CPA personnel from the Peoria County
Auditor’s office to help them in this area as well. AUDITORS’ OPINION Our auditors state the Regional
Office of Education #48’s financial statements as of June 30, 2008 are fairly
stated in all material respects. _____________________________________ WILLIAM
G. HOLLAND, Auditor General WGH:KJM SPECIAL
ASSISTANT AUDITORS Our
special assistant auditors were Kemper CPA Group LLP. DIGEST FOOTNOTE #1: INADEQUATE CONTROLS OVER PROPERTY AND
EQUIPMENT – Previous Regional Office Response In
its prior response in 2007, the
Regional Office of Education #48 responded that it currently has a fixed
asset listing that includes all the details required by the Regional Office of Education Accounting
Manual. The listing will be
updated and checked for accuracy and existence through an annual physical
inventory. A reconciliation will be
performed between the fixed asset listing and the recorded capital outlay expenditures
for each year. In addition, the
Regional Office will implement procedures to track the location of property
items maintained at other locations and items that are temporarily used off
of ROE property. The Regional Office
notes that personnel will attempt to compute depreciation using the straight
line method for each asset in order to record depreciation expense for each
year. |