REPORT DIGEST

REGIONAL OFFICE OF EDUCATION #40: CALHOUN,
GREENE, JERSEY AND MACOUPIN COUNTIES

FINANCIAL AUDIT (IN ACCORDANCE WITH THE
UNIFORM GUIDANCE)
FOR THE YEAR ENDED JUNE 30, 2024

Release Date:  March 30, 2026

FINDINGS THIS AUDIT: 5

CATEGORY:  NEW -- REPEAT – TOTAL
Category 1:  0 -- 2 -- 2
Category 2:  0 -- 1 -- 1
Category 3:  0 -- 2 -- 2
TOTAL:  0 -- 5 – 5

FINDINGS LAST AUDIT: 5

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, 400 West
Monroe, Suite 306, Springfield, IL
62704-9849
(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

• (24-1) The Regional Office of Education
#40 did not provide completed financial
statements in an auditable form by the
August 31 deadline.

• (24-2) The Regional Office of Education
#40 had inadequate controls over bank
reconciliations.

• (24-3) The Regional Office of Education
#40 did not comply with grant reporting
requirements.

• (24-4) The Regional Office of Education
#40 had inadequate controls over payroll.

• (24-5) The Regional Office of Education
#40 had inadequate control over financial
statement preparation.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

DELAY OF AUDIT

The Regional Office of Education #40 (ROE)
did provide completed financial statements
in an auditable form by the August 31
deadline. However, the audit was delayed
significantly due to issues that the
Regional Office of Education was trying to
resolve with the June 30, 2023 financial
statements.

The ROE is subject to 105 ILCS 5/2-3.17a
which requires the Auditor General’s office
to cause an audit to be made, as of June
30th of each year, of the financial
statements of all accounts, funds and other
moneys in the care, custody or control of
the regional superintendent of schools of
each educational service region in the
State and of each educational service
center established in the School Code. The
audit is to be conducted in accordance with
Generally Accepted Government Auditing
Standards. The Regional Office of Education
or Educational Service Center may utilize a
cash basis, modified cash basis, or
generally accepted accounting principles
(GAAP) basis of accounting to prepare the
financial statements for audit. The ROE
utilizes the cash basis of accounting for
financial statement reporting.

In accordance with 105 ILCS 5/2-3.17a, the
Auditor General has promulgated
administrative rules and regulations to
govern this process. Those rules, 74 Ill.
Adm. Code 420.320 (c) (2), state that for
audit purposes, each regional office of
education and educational service center
shall make available to the Auditor General
or his designee all books and records
deemed necessary to make and complete the
required audits. The records shall be in
auditable form by August 15 of the
succeeding fiscal year. Financial reports
are to be available no later than August 31
in order for the annual audit to be
completed by an independent auditor
selected by the Auditor General.

In addition, prudent business practices and
transparency require timely preparation and
completion of financial statements.

Regional Office management indicated due to
the FY23 audit being delayed, the FY24
audit was not completed in a timely manner.
(Finding 2024-001, pages 15A-15B)  This
finding was first reported in 2021.

The auditors recommended the ROE should
implement procedures to ensure compliance
with 105 ILCS 5/2-3.17a and 74 Ill. Adm.
Code 420.320 (c) (2). Annual financial
statements should be compiled on an accrual
basis of accounting in accordance with
GAAP, on the cash basis of accounting, or
on the modified cash basis of accounting.
These financial statements need to be
presented to the Auditor General’s
independent auditors for audit by the
August 31 deadline and the Regional Office
of Education should reply timely to all
audit requests.

ROE Response: The ROE will implement
procedures to ensure compliance with 105
ILCS 5/2-3.17a and 74 Ill. Adm. Code
420.320 (c) (2). Future financial
statements will be presented to the Auditor
General’s independent auditors for audit by
the August 31 deadline. The ROE will reply
to the auditor’s requests in a timely
manner.

CONTROLS OVER CASH

The Regional Office of Education #40 (ROE)
had inadequate controls over bank
reconciliations. Monthly bank
reconciliations had significant unexplained
variances and were not completed timely.
The bank reconciliations for fiscal year
2024 were not completed accurately until
the hired CPA firm helped prepare the
6/30/24 reconciliation while closing the
books. The 6/30/24 bank reconciliation was
not prepared until August 29, 2024

Sound internal control requires bank
reconciliations to be performed monthly to
ensure all transactions have been recorded.
The bank reconciliation process should
include identifying and correcting all
discrepancies between the bank records and
the books in a timely manner. Sound
internal control over cash also requires
bank reconciliations to be completed and
reviewed by the appropriate level of
management on a monthly basis.

Regional Office management indicated new
administrative staff didn’t have the
necessary training to prepare accurate bank
reconciliations on a timely basis. (Finding
2024-002, page 15C) This finding was first
reported in 2021.

The auditors recommended as part of its
internal controls over cash, the ROE should
reconcile all bank statements every month
and correct any discrepancies in a timely
manner. In addition, ROE 40’s management
should review bank reconciliations and
document their review each month after the
reconciliation has been completed.

ROE Response:  The ROE will reconcile all
bank statements monthly and correct
discrepancies in a timely manner. The ROE’s
management will review and document bank
reconciliations monthly.

GRANT REPORTING NONCOMPLIANCE

The Regional Office of Education #40 (ROE)
did not comply with grant reporting
requirements.

During the course of the audit, auditors
noted that 3 of the 18 (17%) quarterly
expenditure reports required by the
Illinois State Board of Education (ISBE)
were not submitted timely. These three
quarterly expenditure reports were
submitted 1-30 days late.

Auditors also noted that the 6/30/24
expenditure reports for the ROE/ISC
Operations and Regional Safe Schools grants
claimed $5,064 and $1,950 of expenditures,
respectively, prior to the expenditures
actually being paid by the ROE. ISBE
requires that expenditure reports be
prepared on the cash basis of accounting.
Therefore, an expenditure should not be
submitted for reimbursement prior to the
ROE paying for the expenditure.

As a recipient of federal, State, and local
funds from various grantor agencies, the
ROE must incorporate certain procedures
into its operations in order to comply with
the grant agreements with these entities.

The ROE is responsible for establishing and
maintaining an internal control system over
the completion of timely quarterly
expenditure reports and budget requirements
for grants administered by ISBE. ISBE
requires expenditure reports to be filed
within 20 days of the applicable end of
each quarter.

ISBE requires expenditure reports to be
prepared on the cash basis of accounting.
The expenditure reports submitted should
reconcile directly to the ROE’s general
ledger and should only include expenditures
that have already been paid.

Regional Office management indicated that
the ROE inadvertently submitted quarterly
expenditure reports late. The ROE did not
reconcile the adjusted general ledger
amounts to the expenditure reports
previously prepared. During the closing
process, the ROE’s hired CPA firm proposed
adjustments, as necessary, to funds that
are required to file expenditure reports.
Those adjustments resulted in variances
between the amounts reported on the
expenditure report and the amounts reported
in the general ledger. (Finding 2024-003,
pages 15D – 15E) This finding was first
reported in 2021.

The auditors recommended the ROE should
implement adequate internal controls to
ensure that expenditure reports are
submitted timely and to ensure that
expenditures reported on the expenditure
reports agree to the actual expenditures
recorded in the general ledger. The ROE
should implement adequate internal controls
to ensure that expenditures included on the
expenditure reports have been paid by the
ROE before the ROE requests reimbursement
for the expenditures.

ROE Response: The ROE will implement
adequate internal controls to ensure that
expenditure reports are submitted timely
and to ensure that expenditures reported on
expenditure reports agree with the actual
expenditures recorded in the general
ledger. The ROE will implement adequate
internal controls to ensure that
expenditures included on expenditure
reports have been paid by the ROE before
the ROE requests reimbursement for the
expenditures.

CONTROLS OVER PAYROLL

The Regional Office of Education #40 (ROE)
had inadequate controls over payroll.
During the course of audit fieldwork,
auditors noted the following:

• The ROE did not use time and effort
documentation to distribute salary and
benefit costs for employees paid from
multiple funding sources. The ROE budgeted
amounts at the beginning of the year to
allocate payroll expense to each fund;
however, the ROE never reconciled the
amounts expensed in the general ledger to
the employees’ submitted timesheets.
Therefore, the ROE was unable to determine
the reasonableness of the allocation of
salaries and benefits amongst federal and
State programs.

• For six out of the twenty-four (25%)
payroll disbursements tested, the
withholding information used to calculate
the employees’ pay did not agree to the
Federal or Illinois Forms W-4 on file. For
the federal program, auditors noted for 1
out of the 4 (25%) payroll disbursements
tested, the withholding information used to
calculate the employee’s pay did not agree
to the Federal or Illinois Forms W-4 on
file.

The ROE is responsible for establishing and
maintaining an internal control system over
payroll to prevent errors or fraud. In
addition, the Grant Accountability and
Transparency Act (GATA) 30 ILCS 708/1
establishes that State grant programs are
subject to the requirements set forth in
Title 2 U.S. Code of Federal Regulations
Part 200, Uniform Administrative
Requirements, Cost Principles, and Audit
Requirements for Federal Awards (Uniform
Guidance). The Uniform Guidance (2 CFR
200.430) requires charges for salaries and
benefits to be supported by a system of
internal controls which provide reasonable
assurance that the charges are accurate and
properly allocated. It also requires
records to be used to support the
distribution of employee salaries and
benefits among specific activities if the
employee works on multiple programs. It
further states that budget estimates alone
do not qualify as support for salary and
benefit expenditures charged to federal and
State grants.

The ROE is responsible for calculating
payroll taxes and the related withholdings
in compliance with requirements of the
Internal Revenue Service and the Illinois
Department of Revenue.

Regional Office management indicated the
ROE’s time sheets were not adequate to
ensure that wages were properly allocated
amongst the various grants. The lack of
having the accurate Federal or Illinois
Forms W-4 on file was an oversight by the
ROE administrative staff. (Finding 2024-004
pages 15F-15G)

The auditors recommended the ROE use time
and effort documentation to distribute
salary and benefit costs for all employees.
We also recommend the ROE implement the
necessary controls over payroll to ensure
that payroll is being properly prepared and
calculated.

ROE Response: The ROE will use time and
effort documentation to distribute salary
and benefit costs for all employees. The
ROE will implement the necessary controls
over payroll to ensure that payroll is
being properly prepared and calculated.

CONTROLS OVER FINANCIAL STATEMENT
PREPARATION

The Regional Office of Education #40 (ROE)
does not have sufficient internal controls
over the financial reporting process. While
the ROE maintains controls over the
processing of most accounting transactions,
there are not sufficient controls over the
preparation of the cash basis financial
statements for management or employees in
the normal course of performing their
assigned functions to prevent or detect
financial statement misstatements and
disclosure errors and omissions in a timely
manner.

During review of the ROE’s accounting
records, auditors noted that the ROE’s
preliminary financial statements required
material adjustments to the cash balance
and salary disbursements for the General
Fund in order to present the financial
statements in accordance with the cash
basis of accounting.

The School Code 105 ILCS 5/2-3.17a allows a
Regional Office of Education or Educational
Service Center to utilize a cash basis,
modified cash basis, or generally accepted
accounting principles (GAAP) basis of
accounting to prepare financial statements
for audit. The Regional Office of Education
No. 40 (ROE) has chosen to utilize the cash
basis of accounting for financial statement
reporting. The ROE is required to maintain
a system of controls over the preparation
of financial statements in accordance with
its selected basis of accounting.

Regional Office management indicated the
ROE does not have a CPA on staff. The ROE
staff will work with the hired CPA firm
going forward to make sure that the
financial statements are complete and
accurate. (Finding 2024-05, pages 15H-15I)

The auditors recommended the ROE should
implement comprehensive preparation and/or
review procedures as part of their internal
control over the preparation of financial
statements to ensure the financial
statements, including disclosures, are
complete and accurate. These procedures
should be performed by a properly trained
individual(s) possessing a thorough
understanding of the basis of accounting
selected for financial statements, GASB
pronouncements, and knowledge of the ROE’s
activities and operations.

ROE Response:  The ROE has implemented
comprehensive preparation procedures to
ensure the financial statements are
complete and accurate. These procedures
will be performed by a properly trained
individual possessing a thorough
understanding of the applicable accounting
principles, GASB pronouncements, and
knowledge of the ROE’s activities and
operations.

AUDITORS’ OPINION

Our auditors state the Regional Office of
Education #40’s financial statements as of
June 30, 2024 are fairly presented in all
material respects.

This financial audit was conducted by the
firm of West & Company, LLC.

TRICIA WAGNER
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