REPORT DIGEST

 

REGIONAL OFFICE OF EDUCATION #1

 

ADAMS AND PIKE COUNTIES

 

FINANCIAL AUDIT

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

For the Year Ended:

June 30, 2005

 

Summary of Findings:

 

Total this audit††††††††††            ††† 5

Total last audit†††††††††††††             5

Repeated from last audit†††††††††† 2

 

Release Date:

February 14, 2006 

 

 

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 is also available on

the worldwide web at

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

 

 

 

 

 

 

 

SYNOPSIS

 

 

        During the past fiscal 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.The West Central Regional System #240 is a separate entity with its own governing board and should be accounted for separately.

 

        The Regional Office of Education #1 had multiple programs with excess cash balances at June 30, 2005 that had not been obligated, and the balances were not refunded to the granting agencies by August 15, 2005.

 

        For June 2005 (fiscal year end), the Regional Office of Education #1ís bank reconciliation for the general checking account contained uncorrected discrepancies.

 

        The Regional Office of Education #1 did not comply with certain statutory administrative requirements.

 

        A comparison of an expenditure report to the Regional Office of Education #1ís general ledger revealed an instance where the totals on the final 2005 expenditure report did not agree with the Regional Office of Education #1ís books by $4,137, resulting in an inaccurate expenditure report.

 

 

 

 

 

 

 

 

 

 

 

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

 


†††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††

REGIONAL OFFICE OF EDUCATION #1

ADAMS AND PIKE COUNTIES

 

FINANCIAL AUDIT

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

For The Year Ended June 30, 2005

 

 

FY 2005

FY 2004

TOTAL REVENUES

$1,593,652

$1,537,856

Local Sources

$216,193

$138,121

% of Total Revenues

13.57%

8.98%

State Sources

$853,296

$928,557

% of Total Revenues

53.54%

60.38%

Federal Sources

$524,163

$471,178

% of Total Revenues

32.89%

30.64%

 

TOTAL EXPENDITURES

$1,527,415

$1,481,693

Salaries and Benefits

$809,937

$785,149

% of Total Expenditures

53.03%

52.99%

Purchased Services

$227,932

$216,078

% of Total Expenditures

14.92%

14.58%

All Other Expenditures

$489,546

$480,466

% of Total Expenditures

32.05%

32.43%

 

 

 

TOTAL NET ASSETS

$667,688

$583,432

 

 

 

INVESTMENT IN CAPITAL ASSETS

 

$57,707

 

$39,688

 

 

Percentages may not add due to rounding

 

 

REGIONAL SUPERINTENDENT

During Audit Period: Honorable Raymond Scheiter

Currently:Honorable Raymond Scheiter


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

During the past fiscal 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 Regional Office of Education #1 had multiple programs with excess cash balances at June 30, 2005 that had not been obligated, and the balances were not refunded to the granting agencies by August 15, 2005.

 

 

 

 

 

 

 

 

 

 

For June 2005 (fiscal year end), the Regional Office of Education #1ís bank reconciliation for the general checking account included $24,897 of net uncorrected discrepancies.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


The Regional Office of Education #1 did not comply with certain statutory administrative requirements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


A comparison of an expenditure report to the Regional Office of Education #1ís general ledger revealed an instance where the totals on the final 2005 expenditure report did not agree with the Regional Office of Education #1ís books by $4,137, resulting in an inaccurate expenditure report.

 

 

 

FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

 

 

TRANSACTIONS OF TWO ENTITIES ARE IN ONE ACCOUNTING SYSTEM

†††††† During the past fiscal 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 Regional Office of Education #1 acts as a fiscal agent for the WCR.

 

†††††† The effect of including the WCRís financial transactions is to overstate the Regional Office of Education #1ís 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 05-1, page 11).This finding was first reported in 2003.

 

†††††† The Regional Office of Education #1 accepted the recommendation to create a separate set of records for the WCRís accounting activity.The Regional Office plans to implement a new general ledger system for fiscal year 2006 in order to separately record transactions of the West Central Regional System #240. (For previous Regional Office response, see Digest Footnote #1.)

 

 

DISBURSEMENT OF EXCESS GRANT FUNDS

 

†††††† The Regional Office of Education #1 had multiple programs with excess cash balances at June 30, 2005 that had not been obligated, and the balances were not refunded to the granting agencies by August 15, 2005.The grant-funded programs with period-end cash balances in excess of $500 ranged from $547 for the Illinois Tobacco Prevention program to $24,866 for the Standards Aligned Classrooms 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 05-2, page 12)This finding was first reported in 2003.

††††††† ††††††††

†††††† 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.(For previous Regional Office response, see Digest Footnote #2.)

 

 

BANK ACCOUNTS WERE NOT PROPERLY RECONCILED FOR JUNE 2005

 

††††††† For June 2005 (fiscal year end), the Regional Office of Education #1ís bank reconciliation for the general checking account included $24,897 of net uncorrected discrepancies.The Regional Office of Education #1 had errantly deposited $11,361 of its cash into the West Central Regional System #240 (WCR) bank account and had deposited $37,789 of WCRís cash into the Regional Office of Educationís bank account.The remaining $1,531 of discrepancies consisted of various unrecorded transactions.

 

†††††† The Regional Office of Education #1 did not properly identify and correct cash discrepancies on a monthly basis as part of the bank statement reconciliation process.(Finding 05-3, page 13)

 

††††††† The Regional Office accepted the recommendation to perform a monthly reconciliation of all bank accounts and correct any discovered discrepancies in a timely manner.

 

 

 

 
 
CONTROLS OVER COMPLIANCE WITH LAWS AND REGULATIONS

 

†††††††† The Illinois School Code (105 ILCS 5/3-14.11) requires the Regional Superintendent to examine at least once each year all books, accounts, and vouchers of every school treasurer in his educational service region, and if he finds any irregularities in them, to report them at once, as directed by the School Code.

 

†††††††† The Regional Office did not examine at least once each year all books, accounts, and vouchers of every school treasurer in the educational service region.Regional Office officials noted they believe the mandate is outdated and that they are satisfying the intent of the statute by other reviews they undertake.This mandate has existed in its current form since at least 1953.

 

††††††††† The School Code (105 ILCS 5/3-14.17) also requires the Regional Superintendent to notify the presidents of boards of trustees and the clerks and secretaries of school districts, on or before September 30, annually, of the amount of money distributed by him to the treasurer, with the dates of distribution.The Regional Office did not make the required notification. According to Regional Office management, they have a policy of only preparing and submitting distribution reports to the districts upon request of the districtsí external auditors. (Finding 05-4, pages 14-15)

 

††††††††† The Regional Office accepted the recommendation to comply with the statutory requirement (105 ILCS 5/3-14.11), and if it believes the mandate is obsolete, to seek legislative action to revise the statute accordingly.The Regional Office responded it will seek a legislative solution to this and other obsolete passages.The Regional Office also responded that it intends to start sending the required distribution report to every district each year by September 30 in order to comply with 105 ILCS 5/3-14.17.

 

 

 

 

EXPENDITURE REPORT FOR EDUCATION FUND DID NOT AGREE TO GENERAL LEDGER

 

††††††† A comparison of an expenditure report to the Regional Office of Education #1ís general ledger revealed an instance where the totals on the final 2005 expenditure report did not agree with the Regional Office of Education #1ís books by $4,137, resulting in an inaccurate expenditure report.

 

††††††† The expenditure report submitted to the Illinois State Board of Education for the Title I-Reading First Part B SEA Funds program incorrectly reported expenditures of $18,503, while the general ledger contained the correct expenditure total of $22,640.(Finding 05-5, page 16)

 

††††††† The Regional Office of Education #1 agreed with the recommendation to have personnel responsible for the report compare the expenditures to the general ledger accounts and make necessary corrections before filing the reports.

 

 

AUDITORSí OPINION

 

Our auditors state the Regional Office of Education #1ís financial statements as of June 30, 2005 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, CPAís.

 

 

 

 

 

DIGEST FOOTNOTES

 

#1: TRANSACTIONS OF TWO ENTITIES ARE IN ONE ACCOUNTING SYSTEMĖ Previous Regional Office Response

 

In its prior response in 2004, the Regional Office stated it 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.

 

 

#2: DISBURSEMENT OF EXCESS GRANT FUNDS Ė Previous Regional Office Response

 

In its prior response in 2004, the Regional Office stated it planned to obtain from bookkeeping, accurate reconciled reports, at least annually, which consider:beginning fiscal year cash balances, current fiscal year grant income, current fiscal year program expenses, current fiscal year interest allocated to programs, and year end cash balances by program.Also, granting agencies will be notified of any excess grant funds at period end.