REPORT DIGEST REGIONAL OFFICE OF EDUCATION # 54 VERMILION COUNTY FINANCIAL AUDIT FOR THE YEAR ENDED JUNE 30, 2019 Release Date: January 22, 2020 FINDINGS THIS AUDIT: 1 CATEGORY: NEW -- REPEAT -- TOTAL Category 1: 0 -- 1 -- 1 Category 2: 0 -- 0 -- 0 Category 3: 0 -- 0 -- 0 TOTAL: 0 -- 1 -- 1 FINDINGS LAST AUDIT: 1 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 • (19-1) The Regional Office of Education #54 did not have sufficient internal controls over the financial reporting process. FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS CONTROLS OVER FINANCIAL STATEMENT PREPARATION The Regional Office of Education No. 54 (ROE) did not have sufficient internal controls over the financial reporting process. The ROE maintained its accounting records on the cash basis of accounting during the fiscal year and posted year-end accrual entries for financial statement purposes. While the ROE maintained controls over the processing of most accounting transactions, there were not sufficient controls over the preparation of the generally accepted accounting principles (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. The Regional Office is required to maintain a system of controls over the preparation of financial statements in accordance with GAAP. The ROE’s internal controls over GAAP financial reporting should include adequately trained personnel with the knowledge, skills, and experience to prepare GAAP based financial statements and include all disclosures as required by the Governmental Accounting Standards Board (GASB). During review of the ROE’s financial information prepared by the ROE, auditors noted the ROE’s financial information required a material adjusting entry in order to present its financial statements in accordance with GAAP. Regional Office management indicated a simple oversight in a non-routine transaction caused the material error. (Finding 19-001, pages 10 – 11) This finding was first reported in 2010. The auditors recommended that as part of internal control over the preparation of financial statements, the ROE should implement comprehensive preparation procedures to ensure that the financial statements are complete and accurate. These procedures should be performed by a properly trained individual(s) possessing a thorough understanding of applicable GAAP, GASB pronouncements, and knowledge of the ROE’s activities and operations. ROE Response: The Regional Office of Education No. 54 acknowledges the one error in coding a non-routine transaction which caused the material finding. The bookkeeper has been informed of the incorrect coding and recognizes the error. Prior Year ROE Response: ROE No. 54 contracted in the summer of 2018 with an independent CPA firm that currently audits Vermilion County accounts. The expectation was that this accountant would assist bookkeeping staff with the preparations of the financial statements and material adjusting entries. Since these county auditors do not have experience with Regional Offices of Education and our unique needs, the financial statements were not prepared to the extent that was required which resulted in a repeat finding. AUDITORS’ OPINION Our auditors state the Regional Office of Education #54’s financial statements as of June 30, 2019 are fairly presented in all material respects. This financial audit was conducted by the firm of West & Company, LLC. 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:JMM