REPORT DIGEST ILLINOIS STATE BOARD OF EDUCATION FINANCIAL AUDIT For the year ended: June 30, 2011 Release Date: June 7, 2012 Summary of Findings: Total this audit: 1 Total last audit: 1 Repeated from last audit: 0 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 Full Report are also available on the worldwide web at www.auditor.illinois.gov INTRODUCTION This report covers our financial audit of the Illinois State Board of Education (Board) for the year ended June 30, 2011. Our next engagement will include a financial audit for the year ended June 30, 2012 and a compliance examination for the two years ended June 30, 2012. SYNOPSIS • The Board did not identify or prevent material misstatements in financial reporting. FINDING, CONCLUSION, AND RECOMMENDATION NEED TO IMPROVE FINANCIAL REPORTING The Illinois State Board of Education (Board) did not identify or prevent material misstatements in the accounting information reported to the Office of the State Comptroller or the Board’s draft financial statements. • The Board misstated fiscal year 2011 liabilities by $58.5 million and the beginning balance of nonmajor funds by $22.5 million due to improper liability recognition for grants. • The assigned fund balance of $2.1 million for one fund was presented as restricted net assets in the financial statements instead of unrestricted net assets due to errors in implementation of a new accounting standard. The Board subsequently made the necessary adjustments in the financial statements to properly record transactions. (Finding 1, Pages 38-39) We recommended the Board review its current process for preparation and review of the annual financial statements as well as its policies and procedures for liability measurement and implementation of new accounting standards to ensure that financial information is complete and accurate. Board management concurred with the finding. Management stated they will review its current process for financial statement preparation as well as develop and employ a new methodology to ensure the proper liability measurement & recognition for financial reporting. AUDITORS’ OPINION Our special assistant auditors stated that the Board’s financial statements of the governmental activities, the major fund, and the aggregate remaining fund information, as of and for the year ended June 30, 2011, are fairly stated in all material respects. WILLIAM G. HOLLAND Auditor General WGH:lkw:rt AUDITORS ASSIGNED Our special assistant auditor for this engagement was E.C. Ortiz & Co., LLP.