REPORT DIGEST

REGIONAL OFFICE OF EDUCATION #51

SANGAMON 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                  2

Total last audit                  1

Repeated from last audit   1

Release Date
March 31, 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 complete report  is also available on

the worldwide web at

http://www.auditor.illinois.gov

SYNOPSIS

·        The Regional Office of Education #51 did not have sufficient internal controls over the financial reporting process.

·        The Regional Office of Education #51 did not have sufficient internal controls over Institute Fund expenditures.

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

The Regional Office of Education #51 did not have sufficient internal controls over the financial reporting process.

The Regional Office of Education #51 did not have sufficient internal controls over Institute Fund expenditures.

FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

Controls Over Financial Statement Preparation

         The Regional Office of Education #51 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 #51 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’s accounting records, noted the following:

• Numerous adjustments were required to present financial statements in accordance with generally accepted accounting principles.

• The Regional Office did not have adequate controls over the maintenance of complete records of grants receivable or deferred revenues.  While the Regional Office did maintain records of accounts payable and accounts receivable, no entries were provided to reconcile the Regional Office’s grant activity, such as posting grant receivables and deferred revenues.

         According to ROE officials, they did not have adequate funding to hire and/or train their accounting personnel in order to comply with these requirements. (Finding 08-01, 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 #51 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 #51 responded that it maintains accounting records on the cash basis of accounting.  The Regional Office of Education noted that while it maintains controls over the processing of most accounting transactions, there will be more stringent controls over the preparation of the GAAP based financial statements.  Specifically, the Regional Office will furnish comprehensive accounts receivable and accounts payable listings, including all grant receivables and deferred revenues.

CONTROLS OVER INSTITUTE FUND EXPENDITURES

         The Regional Office of Education #51 did not have sufficient internal controls over Institute Fund expenditures.  The Regional Office expended $5,232 of funds generated from certification, renewal, and duplicate fees to purchase five computers, of which only one computer was used specifically for certification activities. 

         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 used by the Regional Superintendent to defray expenses associated with the work of the regional professional development review committees, to defray expenses connected with improving technology necessary for the efficient processing of certificates, and to defray expenses incidental to teachers’ institutes, workshops or meetings of a professional nature that are designed to promote the professional growth of teachers or 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. 

         The Regional Office of Education was unaware that these purchases were not made in accordance with the School Code 105 ILCS 5/3-12. (Finding 08-02, pages 14-15)

         Auditors recommended that the Regional Office of Education #51 should ensure that funds generated from certification, renewal, and duplicate fees are expended in accordance with the Illinois School Code 105 ILCS 5/3-12.

         The Regional Office of Education #51 responded that it expended funds from the Institute Fund for payment of computer updates for only employees who provide certification to Sangamon County teachers.  The ROE noted that its interpretation of Section 5/3-12 of the Illinois School Code, regarding the Institute Fund, which allows the ROE “to defray expenses connected with improving the technology necessary for the efficient processing of certificates,” did not comply with Illinois State Board of Education’s opinion that only the Certification Specialist computer upgrade would qualify for 100% funding through the Institute Fund.  The ROE also noted that in an effort to provide uninterrupted services for its teachers, the certification specialist and four support employees of the ROE can accept registration fee payments, certification applications and fees, and provide information to applicants by accessing the ISBE/TCIS online system.  Institute Funds were used to update only the computers used by the five employees who are trained to provide certification services.  The ROE further noted that future technology upgrades for support employees will be allocated on a percentage of use basis from the Institute Fund. 

AUDITORS’ OPINION

         Our auditors state the Regional Office of Education #51’s financial statements as of June 30, 2008 are fairly presented in all material respects.

_____________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:JB

SPECIAL ASSISTANT AUDITORS

         Our special assistant auditors were Sikich, LLP.