FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
Controls
Over Financial Statement Preparation
The Regional Office of Education #53
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 #53
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:
- The
Regional Office did not have adequate controls over the maintenance of
complete records of accounts receivable, accounts payable, fixed assets,
or deferred revenues.
- 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 07-01, pages 13-14)
The auditors recommended that, as
part of its internal control over the preparation of its financial
statements, including disclosures, the Regional Office of Education #53
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 #53
responded that it understands the nature of this finding and realizes that
this circumstance is not unusual in an organization of this size. The
Regional Office accepts the degree of risk associated with this condition
because the added expense of seeking additional accounting expertise to
prepare and/or review financial statements would take away from the funds
available to provide educational services for the schools in the region.
AUDITORS’ OPINION
Our
auditors state the Regional Office of Education #53’s financial statements as
of June 30, 2007 are fairly presented in all material respects.
_____________________________________
WILLIAM
G. HOLLAND, Auditor General
WGH:JRB
SPECIAL ASSISTANT AUDITORS
Our special
assistant auditors were Ginoli & Company, LTD.
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