REPORT DIGEST

 

REGIONAL OFFICE OF EDUCATION #49

 

ROCK ISLAND COUNTY

 

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                       6

Total last audit                       5

Repeated from last audit        3

 

Release Date:

October 15, 2009

 

 

State of Illinois

Office of the Auditor General

WILLIAM G. HOLLAND

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  is also available on

the worldwide web at

http://www.auditor.illinois.gov

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SYNOPSIS

 

 

·         The Regional Office of Education #49 did not have sufficient internal controls over the financial reporting process.

 

·         The Regional Office of Education #49 paid $1,151 in finance charges and $467 in late fees on its credit cards in fiscal year 2008. 

 

·         Regional Office of Education #49 did not report expenditures properly for the Mathematics and Science Partnership grant program and the Early Childhood Prevention Initiative grant program. 

 

·         Regional Office of Education #49 did not have adequate internal control over disbursements. 

 

·         The Regional Office of Education #49 was not in compliance with the requirements for the Title IV – 21st Century Community Learning Centers grant regarding consultation with private schools.

 

·         The Regional Office of Education #49 did not follow applicable cash management compliance requirements for the Title IV – 21st Century Community Learning Centers grant and expended funds that were due back to the granting agency.

 

 

 

 

 

 

 

{Expenditures and Revenues are summarized on the reverse page.}

 

 

 

 

 

 

REGIONAL OFFICE OF EDUCATION #49

ROCK ISLAND COUNTY

 

 

FINANCIAL AUDIT

(In Accordance with the Single Audit Act and OMB Circular A-133)

For The Year Ended June 30, 2008

 

 

 

FY 2008

FY 2007

TOTAL REVENUES

$5,584,908

$4,728,306

Local Sources

$1,348,656

$979,508

% of Total Revenues

24.15%

20.72%

State Sources

$3,491,616

$2,818,200

% of Total Revenues

62.52%

59.60%

Federal Sources

$744,636

$930,598

% of Total Revenues

13.33%

19.68%

 

TOTAL EXPENDITURES

$5,596,041

$4,682,757

Salaries and Benefits

$1,929,834

$1,701,724

% of Total Expenditures

34.49%

36.34%

Purchased Services

$3,248,341

$2,551,737

% of Total Expenditures

58.05%

54.49%

All Other Expenditures

$417,866

$429,296

% of Total Expenditures

7.47%

9.17%

 

TOTAL NET ASSETS

$917,512

$928,645

 

INVESTMENT IN CAPITAL ASSETS

$80,340

$87,614

 

Percentages may not add due to rounding.

 

REGIONAL SUPERINTENDENT

During Audit Period:  Honorable Joseph Vermeire

Currently:  Honorable James Widdop, Jr.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


The Regional Office of Education #49 did not have sufficient internal controls over the financial reporting process.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


The Regional Office of Education #49 paid $1,151 in finance charges and $467 in late fees on its credit cards in fiscal year 2008.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Regional Office of Education #49 did not report expenditures properly for the Mathematics and Science Partnership grant program and the Early Childhood Prevention Initiative grant program. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Regional Office of Education #49 did not have adequate internal control over disbursements. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Regional Office of Education #49 was not in compliance with the requirements for the Title IV – 21st Century Community Learning Centers grant regarding consultation with private schools.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


The Regional Office of Education #49 did not follow applicable cash management compliance requirements for the Title IV – 21st Century Community Learning Centers grant and expended funds that were due back to the granting agency. 

 

 

 

 

 

 

 

 

 

FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

 

 

Controls Over Financial Statement Preparation

 

         The Regional Office of Education #49 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 #49 did not have sufficient internal controls over the financial reporting process.  The Regional Office maintains their accounting records on the cash basis of accounting.  While the Regional Office maintains controls over the processing of most 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 accounting records noted that numerous adjustments were required to present 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 08-1, pages 12-13)

 

         The auditors recommended that, as part of its internal control over the preparation of its financial statements, including disclosures, the Regional Office of Education #49 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 Regional Office of Education #49 responded that it has five positions that have some direct review, contact and oversight of its financial statements.  These individuals will attend training opportunities to enhance their knowledge of the applicable accounting principles and other areas needed to have a sufficient set of internal controls of financial statement preparation.

 

 

PAYMENT OF FINANCE CHARGES AND SALES TAXES

 

         The Regional Office of Education #49 paid $1,151 in finance charges and $467 in late fees on its credit cards in fiscal year 2008.  Of the twelve monthly statements reviewed, all months had finance charges and six months had late fees. 

 

         Internal controls should exist to ensure that bills are paid in a timely fashion.  Payment of finance charges and late fees result in an ineffective use of Regional Office financial resources.  Regional Office staff indicated that credit card bills were not paid timely because staff was late submitting receipts to support the charges on the credit cards. (Finding 08-2, page 14)

 

         Auditors recommended that the Regional Office of Education #49 should strengthen its internal controls to ensure that credit card bills are paid in a timely manner. 

 

         The Regional Office of Education #49 responded that it will work to ensure that all credit card bills are paid in a timely manner by giving authority to the bookkeepers to work with Regional Office credit card holders in a demonstrative manner to obtain the necessary credit card documentation.  The Regional Office noted that this will allow statements to be paid quicker and accurately.

 

 

INACCURATE EXPENDITURE REPORTS

 

         Regional Office of Education #49 did not report expenditures properly for the Mathematics and Science Partnership grant program and the Early Childhood Prevention Initiative grant program.  Amounts submitted on grant expenditure reports to the Illinois State Board of Education should be in agreement with the general ledger. 

 

         The amount reported for purchased services was understated on the Mathematics and Science Partnership grant program expenditure report by $17,661.  The amount reported for supplies was understated on the Early Childhood Prevention Initiative grant program expenditure report by $3,999. 

 

         The Regional Office used general ledger account detail that was not complete to prepare the expenditure report.  The expenditure reports that were submitted did not accurately reflect the activity of the period. (Finding 08-3, pages 15-16)

 

         Auditors recommended that the Regional Office of Education #49 management should review expenditure reports and their supporting documentation to ensure they are including all expenditures through the date of the report. 

 

         The Regional Office of Education #49 responded that it will establish procedures to ensure that all expenditure reports are completed properly and in a timely manner.  Bookkeepers and supervisors shall monitor those reports to ensure compliance. 

 

 

INADEQUATE INTERNAL CONTROL OVER DISBURSEMENTS

 

         Regional Office of Education #49 did not have adequate internal control over disbursements.  The Regional Office of Education is responsible for establishing and maintaining an internal control system over disbursements to prevent errors and fraud.  Internal controls should exist to ensure that all disbursements are supported with invoices, packing slips, or other appropriate documents. 

 

         In 2 out of 15 credit card disbursements tested, there were no supporting documents for paid disbursements.  In 4 out of 25 Title IV items tested, the Regional Office did not have a signature of approval for expenditures that were paid from the grant program.  Three of these four items included purchases for expenditures that would normally be paid from general or other non-federal funds, including charges for cleaning services, telephone, and cellular phone charges.  In addition to these items for Title IV, there was a movie charge on a hotel invoice that was not reimbursed by the staff.

 

         Without obtaining and reviewing supporting documentation for expenditures, unallowable, duplicate payments, or incorrect amounts may be paid. (Finding 08-4, pages 17-18)

 

        Auditors recommended that the Regional Office of Education #49 should ensure that all disbursements are supported with invoices, packing slips, or other appropriate documents before payments are made to prevent unallowable, duplicate payments, or incorrect amounts from being paid.

 

         The Regional Office of Education #49 responded that it will establish a purchase order procedure for purchases.  Documentation for each purchase order will be filed in an orderly manner to ensure a proper and authentic system of properly authorized payments for each purchase.  The Regional Office noted that invoices, packing slips, and/or other appropriate documents will be reviewed and approved to prevent unallowable expenditures, duplicate payments, or incorrect amounts from being paid.  Bookkeepers and supervisors will ensure that the system is followed correctly.

 

 

INADEQUATE CONSULTATION WITH PRIVATE SCHOOLS

 

         The Regional Office of Education #49 was not in compliance with the requirements for the Title IV – 21st Century Community Learning Centers grant regarding consultation with private schools.

 

         The Title IV – 21st Century Community Learning Centers program provides students with academic enrichment opportunities along with activities designed to complement the student’s regular academic programs.  As required by section 34 CFR sections 299.6 through 299.9, before an agency makes any decision that affects the opportunity of eligible private school children, teachers, and other educational personnel to participate in the program, the agency must engage in timely and meaningful consultation with private school officials.

 

         Since the Regional Office was not aware of the requirement for the Title IV – 21st Century Community Learning Centers RIHS UTHS and Edison grants, it did not consult timely with private schools and some eligible private school children, teachers, and other educational personnel were not made aware of the opportunity to participate in the program. (Finding 08-5, pages 20-21)

 

         The auditors recommended that the Regional Office of Education #49 should conduct timely and meaningful consultations with private schools regarding decisions that affect the opportunity of private school children, teachers, and other educational personnel to participate in activities associated with the Title IV – 21st Century Community Learning Centers grant program.

 

         The Regional Office of Education #49 responded that it shall conduct timely and meaningful consultations with private schools regarding decisions that affect the opportunity of private school children, teachers, and other educational personnel to participate.  The Regional Office noted that this is particularly true with the ROE’s Title IV – 21st Century Community Learning Center grants.

 

 

INADEQUATE CONTROLS OVER CASH MANAGEMENT

 

         The Regional Office of Education #49 did not follow applicable cash management compliance requirements for the Title IV – 21st Century Community Learning Centers grant and expended funds that were due back to the granting agency.

 

         The Regional Office of Education (ROE) Accounting Manual states that if dollars from two or more sources of funds are combined in one bank account and/or fund, the ROE must allocate, on a reasonable basis, a portion of the interest earned on that bank account or fund to each of those sources of funds.  The allocation should be done no less than monthly when bank statements are received.  Once the interest is allocated to the appropriate source of funds, certain rules apply to the expenditure of that interest.  The ROE Accounting Manual states that the rules for allocating and expending interest vary depending on the source of funds that generated the interest. 

 

         Unless the grant agreement specifically addresses the interest issue and provides otherwise, the following rules would apply:

 

·         Federal cash management requirements state that grantees and subgrantees shall minimize the time elapsed between the receipt of funds and the expenditure of those funds.  The accumulation of interest would indicate excess cash on hand.

·         U.S. 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 earned 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.”

 

         The Regional Office of Education earned approximately $620 in interest on Title IV – 21st Century Community Learning Centers advancements and did not remit amounts in excess of $100 to the federal agency on at least a quarterly basis.  (Finding 08-6, pages 22-23)

 

         The auditors recommended that the Regional Office of Education #49 should monitor interest earned on federal advances.  Any interest amounts in excess of $100 should be remitted on at least a quarterly basis to the appropriate granting agency as required by rules, regulations, or statutes.

 

         The Regional Office of Education #49 responded that it shall monitor interest earned on federal advances.  The Regional Office noted that any interest amounts in excess of $100 shall be remitted to the appropriate granting agency as required by rules, regulations, or statutes.  Bookkeepers and supervisors shall be made aware of such response.

 

 

 

 

AUDITORS’ OPINION

 

         Our auditors state the Regional Office of Education #49’s financial statements as of June 30, 2008 are fairly presented in all material respects.

 

 

 

_____________________________________

WILLIAM G. HOLLAND, Auditor General

 

WGH:JRB

 

 

SPECIAL ASSISTANT AUDITORS

 

         Our special assistant auditors were Clifton Gunderson, LLP.