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The Regional Office of Education #3 tracked funding
sources by grant income rather than as local, State or federal revenue.
The Regional Office of Education #3 recorded local
support totaling $55,223 as reductions of expenditures rather than as
revenues.
The Regional
Superintendent does not review general journal entries prepared by the
Program Director to allocate expenses between various programs.
The Regional Office
of Education #3 charged programs for budgeted costs rather than actual costs
incurred for rent, utilities, postage, and copying costs, resulting in
$26,925 of questioned costs and a qualified auditor’s opinion for compliance
with major federal programs.
The Regional Office
of Education #3 did not comply with certain statutory administrative
requirements.
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FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
REVENUE CLASSIFICATION
The Regional Office of Education #3 segregates its
sources of revenue by grant income in their general ledger rather than as
local, State, or federal revenue. The
Regional Office of Education #3 is required to maintain their accounting
systems consistent with the Illinois State Board of Education Regional Office
of Education Accounting Manual which requires the Regional Office of
Education #3 to track funding sources as local, State, or federal revenue.
(Finding 04-1, page 12). This finding
is repeated from our 2003 audit.
The
Regional Office of Education #3 accepted the recommendation to identify its
revenues as local, State or federal revenue.
(For previous Regional Office response, see Digest Footnote #1.)
NETTING
REVENUES AGAINST EXPENSES
The
Regional Office of Education #3 recorded local support totaling $55,223 as
reductions of expenditures rather than as revenues. Generally accepted accounting principles require governmental
units to report all sources and uses of revenue. (Finding 04-2, page 13).
The
Regional Office of Education #3 accepted the recommendation to record all
revenues as revenue and not net them against related expenditures.
INADEQUATE REVIEW
The
Program Director for Education Services prepares “Transfer Forms” directing
the bookkeeping staff to make general journal entries allocating expenses
between various programs. The
Regional Superintendent does not review these general journal entries. Reasonable controls over compliance with
laws and regulations and grant contract provisions require supervisory review
of expenditures charged to grant programs. (Finding 04-3, page 14.)
The
Regional Office of Education #3 accepted the recommendation that the
Superintendent should review and approve all “Transfer Forms” along with
supporting information documenting the allocation before the entries are
posted to the accounting records.
CHARGING BUDGETED COST RATHER THAN ACTUAL COST
The
Regional Office of Education #3 charged programs for budgeted costs rather
than actual costs incurred for rent, utilities, postage, and copying costs. Rent and utilities charged to programs were
not based on a reasonable allocation, such as square footage utilized
compared with the total square footage available. Postage and copying charged to programs was based on what was
budgeted and not actual usage. This resulted in $26,925 of questioned costs
and a qualified auditor’s opinion on compliance for major federal programs.
OMB
Circular A-21, Cost Principles for Education Institutions, states that
allowable costs must be based on actual, not budgeted or projected costs.
(Finding 04-5, page 17).
The
Regional Office of Education #3 accepted the recommendation to develop a
reasonable allocation plan for rent and utilities based on square footage
utilized by each program compared with total square footage available. In addition, the Regional Office of
Education will charge postage and copying expenses to programs based on
actual usage.
COMPLIANCE
WITH STATUTORY REQUIREMENTS
The Regional Office of Education #3
did not comply with certain statutory administrative requirements. For example, the Illinois School Code (105
ILCS 5/3-12) requires that on or before January 1 of each year, the Regional
Superintendent shall publish in a newspaper of general circulation published
in the region or post in each school building under his/her jurisdiction,
certain information regarding the Office’s Institute Fund. According to the Regional Office, while
the publication/posting requirement was complied with in prior years, it was
not done in 2003 due to an oversight.
The School Code (105 ILCS 5/3A-7) also requires that the Regional
Office annually prepare and submit a budget to the counties for approval by
October 1. The Regional Office of
Education #3 submitted its budget to the counties on November 17, 2003, more
than 6 weeks after the statutory deadline.
(Finding 04-4, pages 15, 16).
The Regional Office of Education #3 accepted the recommendation
to comply with statutory requirements.
AUDITORS’ OPINION
Our auditors state the Regional Office
of Education #3’s financial
statements as of June 30, 2004 are fairly presented in all material respects.
_____________________________________
WILLIAM G. HOLLAND, Auditor General
WGH:KJM:ro
SPECIAL
ASSISTANT AUDITORS
Our special
assistant auditors were Kemper CPA Group, LLP.
DIGEST
FOOTNOTES
#1: REVENUE CLASSIFICATION– Previous Regional Office
Response
In
its prior response in 2003, the Regional Office accepted the finding and
agreed to implement corrective action.
Complete
Regional Office responses to prior findings are available upon request from
the Auditor General’s Office.
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