REPORT DIGEST

REGIONAL OFFICE OF EDUCATION #50: ST.
CLAIR COUNTY

FINANCIAL AUDIT (IN ACCORDANCE WITH THE
UNIFORM GUIDANCE)
FOR THE TWO YEARS ENDED JUNE 30, 2022

Release Date:  July 25, 2023

FINDINGS THIS AUDIT: 1

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

FINDINGS LAST AUDIT: 0

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

• (22-1) The Regional Office of
Education #50 had inadequate controls
over financial statement preparation.

FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS

CONTROLS OVER FINANCIAL STATEMENT
PREPARATION

The Regional Office of Education #50
(ROE) had inadequate controls over
financial statement preparation. Leases
were properly identified by the ROE and
the accounting firm that was hired to
assist in the implementation of
Governmental Accounting Standards Board
(GASB) Statement No. 87, Leases.
However, calculations of the lease
liability and related asset were not
discounted by an interest rate and
included an on-behalf subsidy amount
that was paid by St. Clair County,
overstating the liability and lease
asset. Additionally, lease payments at
the fund level were not reclassed from
purchased services accounts to
principal and interest accounts in each
subfund.

Beginning with the fiscal year ended
June 30, 2022, the ROE was to implement
GASB Statement No. 87. The
pronouncement required the ROE to
report a lease liability and a related
intangible right-to-use asset. The
lease liability is to be discounted at
the interest rate that is stated in the
lease agreement or, in the absence of
such an interest rate, the incremental
borrowing rate of the ROE at its
banking institution. Previously,
activity related to these agreements
were considered to be operating leases
and financial statement activity only
consisted of annual expenditures with
no balance sheet impact.

Regional Office officials indicated the
ROE had hired an accounting firm to
assist with the implementation of GASB
Statement No. 87. However, the
accounting firm did not take into
account a discount rate or County
subsidy in valuing the beginning lease
liability and asset balances. ROE
management did not detect the error
made by the accounting firm. (Finding
22-001, pages 14 – 15)

The auditors recommended the ROE
research GASB pronouncements as they
are issued to ensure that
implementation assistance provided by a
third party is calculated appropriately
prior to inclusion into the financial
statements. Regional Office management
should determine if changing to the
cash basis or modified cash basis would
be allowable or beneficial to the ROE’s
users of its financial statements.

ROE Response: The ROE understands the
finding. The ROE will continue to work
with the third party accountant to
ensure the accuracy of calculations.
The ROE will also work with a third
party accountant to ensure lease
payments are classified into the
correct accounts.


AUDITORS’ OPINION

Our auditors state the Regional Office
of Education #40’s financial statements
as of June 30, 2022 are fairly
presented in all material respects.

This financial audit was conducted by
the firm of GW & Associates PC.

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:JRB