REPORT DIGEST

REGIONAL OFFICE OF EDUCATION #1: ADAMS AND PIKE
COUNTIES

FINANCIAL AUDIT
For the Year Ended: June 30, 2013


Release Date:   March 20, 2014

Summary of Findings:
Total this audit: 1
Total last audit:  0
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

SYNOPSIS

• The Regional Office of Education #1 did not
have adequate internal controls over accounting
transactions.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

INTERNAL CONTROL OVER ACCOUNTING TRANSACTIONS

The Regional Superintendent of Schools is
responsible for establishing and maintaining an
internal control system over the Regional
Office’s accounting processes to prevent errors
and fraud in reporting.

During testing, auditors noted the following
internal control weaknesses over the accounting
and closing processes:

A. There were several instances where
administrative costs and the associated
reimbursing transfer of cash were recorded as
revenues and expenditures in both the fund that
incurred the cost and in a general fund which
paid the expenditures, resulting in double-
booking of revenues and expenditures.

B. Capital asset additions in the amount of
$7,585 were not included on the Regional
Office’s asset listing.

C. A transfer of funds from one bank account to
another was recorded as a revenue and an
expenditure in the General Fund instead of being
recorded as a transfer.

D. While the Regional Office maintained and
recorded their accrual balances, there was one
instance where a material receivable was not
recorded and one instance where an expenditure
paid in June 2013 should have been recorded as a
prepaid expense.

E. The Regional Office recorded the State and
local revenue for the Bus Driver fund in a
single local revenue account instead of
recording revenue by source in accordance with
the Regional Office of Education Accounting
Manual.

F. The Child and Family Connections and Regional
Office of Prevention Effectiveness Services
grants were both overexpended in prior years and
carry deficit balances of $36,655 and $4,629,
respectively.  The Regional Office will not
receive any additional funding from the grantors
for these specific program years.

G. Six journal entries were not supported by
documentation showing review and approval by
someone independent of the general ledger
process.

H. The individual who records deposits in the
general ledger can also accept cash receipts and
prepare the deposit slips.  No one individual
should have access to all or a majority of the
steps within the receipts or disbursements
process.

The Regional Office of Education #1 did not have
sufficient internal controls over their
accounting and closing processes to detect
errors in their reporting.  (Finding 2013-001,
pages 11a-11b)

The auditors recommended the following:

A. Administrative costs should be recorded in
the fund that incurred the expenses.  The
associated transfer of cash to reimburse the
fund that paid the costs should be recorded as
an offset to the associated expenditure in the
reimbursed fund.

B. The Regional Office should establish
procedures to ensure its capital asset listing
is maintained in accordance with the Regional
Office’s capital asset policy.

C. Transfers of cash internally between funds
should be recorded as transfers.

D. The Regional Office should establish
procedures to ensure that all material accrual
information is captured for reporting at the end
of the fiscal year.

E. The Regional Office should segregate revenue
by source in its accounting system in accordance
with the Regional Office of Education Accounting
Manual.

F. When the Regional Office has overexpended a
reimbursement grant in a program year and will
not receive any additional funding from the
grantor for the program year, the Regional
Office should transfer in unrestricted resources
to cover the overexpenditures.

G. All journal entries should be accompanied by
supporting documentation showing review and
approval by someone independent of the general
ledger process.

H. The individual that accepts cash or drafts
the deposit slip should be independent of the
general ledger process.

The Regional Office of Education #1 responded
that it accepts this finding.

AUDITORS’ OPINION

Our auditors state the Regional Office of
Education #1’s financial statements as of June
30, 2013 are fairly presented in all material
respects.

WILLIAM G. HOLLAND
Auditor General

WGH:JRB

AUDITORS ASSIGNED:  Kemper CPA Group LLP were
our special assistant auditors.