REPORT DIGEST

 

REGIONAL OFFICE OF EDUCATION # 1

 

ADAMS AND PIKE COUNTIES

 

FINANCIAL AND COMPLIANCE AUDIT

(In Accordance with the Single Audit Act and OMB Circular A-133)

For the Year Ended:

June 30, 2003

 

Summary of Findings:

 

Total this audit                    6

Total last audit                    3

Repeated from last audit     3

 

Release Date:

February 18, 2004

 

 

 

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 TDD (217) 524-4646

 

This Report Digest is also available on

the worldwide web at

http://www.state.il.us/auditor

 

 

 

SYNOPSIS

  • While the Regional Office of Education #1 maintains a list of fixed assets, prior to the fiscal year end, there was no system in place to record those assets on the books.
  • The Regional Office of Education # 1 does not account for the monthly excess balances in the payroll imprest bank account.
  • As of June 30, 2003, the Regional Office of Education #1s bank reconciliations had not been prepared beyond February 2003.
  • The Regional Office of Education #1 had multiple programs with excess cash balances at June 30, 2003 that had not been obligated, and the balances were not refunded to the granting agencies by August 15, 2003.
  • During the past year, the Regional Office of Education #1 recorded all revenue and expense transactions of the West Central Regional System #240 in its general ledger system.

 

 

 

 

 

 

 

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

 

                       REGIONAL OFFICE OF EDUCATION # 1

                               ADAMS AND PIKE COUNTIES

 

                       FINANCIAL AND COMPLIANCE AUDIT

       In Accordance with the Single Audit Act and OMB Circular A-133

                             For The Year Ended June 30, 2003

 

FY 2003

FY 2002

TOTAL REVENUES

$1,739,751

$1,818,410

Local sources

$108,393

$145,486

% of Total Revenues

6.23%

8.00%

State Sources

$1,231,529

$1,584,124

% of Total Revenues

70.79%

87.12%

Federal Sources

$399,829

$88,800

% of Total Revenues

22.98%

4.88%

 

TOTAL EXPENDITURES

$1,744,532

$1,737,938

Salaries and Benefits

$978,817

$856,322

% of Total Expenditures

56.11%

49.27%

Purchased Services

$255,788

$304,210

% of Total Expenditures

14.66%

17.50%

All Other Expenditures

$509,927

$577,406

% of Total Expenditures

29.23%

33.22%

 

 

 

COST OF PROPERTY AND EQUIPMENT

$186,062

1

 

1 A schedule of general fixed assets was not maintained in Fiscal Year 2002.

* Percentages may not add due to rounding.

REGIONAL SUPERINTENDENT

During Audit Period: Honorable Raymond Scheiter

Currently: Honorable Raymond Scheiter

 

 

 

 

While the Regional Office of Education #1 maintains a list of fixed assets, prior to the fiscal year end, there was no system in place to record those assets on the books.

 

 

 

 

 

 

 

 

 

The Regional Office of Education #1 does not account for the monthly excess balances in the payroll imprest bank account.

 

 

 

 

 

 

 

 

 

 

 

As of June 30, 2003, the Regional Office of Education #1s bank reconciliations had not been prepared beyond February 2003.

 

 

 

 

 

 

 

 

The Regional Office of Education #1 had multiple programs with excess cash balances at June 30, 2003 that had not been obligated, and the balances were not refunded to the granting agencies by August 15, 2003.

 

 

 

 

 

 

 

 

 

 

 

During the past year, the Regional Office of Education #1 recorded all revenue and expense transactions of the West Central Regional System #240 (WCR) in its general ledger system.

FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

ASSETS HAD NOT BEEN RECORDED

While the Regional Office of Education #1 maintains a list of fixed assets, prior to the fiscal year end, there was no system in place to record those assets on the books. Generally Accepted Accounting Principles require that entities maintain a General Fixed Asset Account Group in order to record furniture and equipment purchases as fixed assets (Finding 03-1, page 10). This finding is repeated from our 2002 audit.

The Regional Office of Education #1 accepted the recommendation to record general fixed assets. The Regional Office plans to implement a system by which all asset items greater than $500 get recorded as fixed assets on a monthly basis. (For previous Regional Office response, see Digest Footnote #1.)

 

EXCESS PAYROLL TRANSFERS HAD NOT BEEN DISBURSED

The Regional Office of Education #1 does not account for the monthly excess balances in the payroll imprest bank account. The various grants and the county are charged their proportionate share of the payroll and the funds are deposited into the payroll imprest account. At the end of the fiscal year, the balance in the payroll imprest account was $20,693, rather than the $500 that it should have been.

The payroll bank account should be accurately maintained, and any excess balances investigated and disbursed (Finding 03-2, page 11). This finding is repeated from our 2002 audit.

The Regional Office of Education #1 accepted the recommendation, stating that management will review the monthly reconciliation of the payroll imprest account, investigate fluctuations in month end balances, and disburse errantly collected monies. (For previous Regional Office response, see Digest Footnote #2.)

 

NOT ALL BANK RECONCILIATIONS COMPLETED

As of June 30, 2003, the Regional Office of Education #1s bank reconciliations had not been prepared beyond February 2003. Also, during the fiscal year, there were transfers made and not recorded, as well as transfers recorded and not made. The effect of not properly performing bank reconciliations in a timely manner resulted in overstated available cash balances.

Sound internal controls require bank reconciliations to be performed to insure that all transactions have been recorded. Bank reconciliations should also be performed in a timely manner (Finding 03-3, page 12). This finding is repeated from our 2002 audit.

The Regional Office of Education #1 accepted the recommendation to reconcile all bank statements every month and correct any discovered discrepancies in a timely manner. The Regional Office will investigate any adjustments on the reconciliation and post the necessary corrections. (For previous Regional Office response, see Digest Footnote #3.)

 

SOME PROGRAMS DID NOT DISBURSE EXCESS GRANT FUNDS

The Regional Office of Education #1 had multiple programs with excess cash balances at June 30, 2003 that had not been obligated, and the balances were not refunded to the granting agencies by August 15, 2003. The grant-funded programs with period-end cash balances in excess of $200 ranged from $305 for the Safe to Learn program to $28,567 for the Project Success program.

The Illinois Grant Funds Recovery Act requires that all grant funds that have not been expended or obligated by the end of the grant period be returned to the granting agency within 45 days after the end of the period (Finding 03-6, page 15).

The Regional Office of Education #1 accepted the recommendation to prepare accurate reconciled reports at year-end for its grant programs and contact the granting agency to determine a proper means of disposition of any excess grant funds.

 

TRANSACTIONS OF TWO ENTITIES ARE IN ONE ACCOUNTING SYSTEM

During the past year, the Regional Office of Education #1 recorded all revenue and expense transactions of the West Central Regional System #240 (WCR) in its general ledger system. The WCR has a separately elected board. It is a legally separate entity and is fiscally independent. The WCR administers vocational education services for the region, and the Regional Office of Education #1 acts as a fiscal agent for the WCR.

The effect of including the WCRs financial transactions is to overstate the Regional Office of Education #1s revenues, expenditures, and cash balances. According to governmental accounting standards, transactions of two separate primary government units should not be co-mingled in one general ledger system (Finding 03-4, page 13).

The Regional Office of Education #1 accepted the recommendation to create a separate set of records for the WCRs accounting activity. The Regional Office plans to implement a new general ledger system at the start of the next fiscal year in order to separately record transactions of the West Central Regional System #240.

 

OTHER FINDING

The remaining finding was less significant and is reportedly being given attention by the Regional Office of Education #1. We will review progress toward the implementation of our recommendations during the next audit.

 

AUDITORS OPINION

Our auditors state the Regional Office of Education #1s financial statements as of June 30, 2003 are fairly presented in all material respects.

 

____________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:JRB

 

SPECIAL ASSISTANT AUDITORS

Our special assistant auditors were Fick, Eggemeyer & Williamson, CPAs.

DIGEST FOOTNOTES

#1: ASSETS HAD NOT BEEN RECORDED Previous Regional Office Response

In its prior response in 2002, the Regional Office accepted the finding and agreed to develop a list of all general fixed assets and work on including every asset in the schedule.

 

#2: EXCESS PAYROLL TRANSFERS HAD NOT BEEN DISBURSED Previous Regional Office Response

In its prior response in 2002, the Regional Office accepted the finding and agreed to perform a review of the monthly bank reconciliation of the imprest payroll account and investigate all fluctuations in the ending balance.

 

#3: BANK RECONCILIATIONS NOT PREPARED IN A TIMELY MANNER -- Previous Regional Office Response

In its prior response in 2002, the Regional Office accepted the finding and agreed to perform a monthly reconciliation of bank accounts and any adjustments on the reconciliation will be investigated.

Complete Regional Office responses to prior findings are available upon request from the Auditor Generals Office.