REPORT DIGEST

 

REGIONAL OFFICE OF EDUCATION #3

 

BOND, FAYETTE AND EFFINGHAM COUNTIES

 

FINANCIAL AUDIT

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

 

For the Year Ended:

June 30, 2008

 

Summary of Findings:

 

Total this audit                      3

Total last audit                      4

Repeated from last audit       3

 

Release Date:

April 21, 2009

 

 

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 is also available on

the worldwide web at

http://www.auditor.illinois.gov

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SYNOPSIS

 

 

·         The Regional Office of Education #3 did not have sufficient internal controls over the financial reporting process.

 

·         The Regional Office of Education #3 did not have adequate internal controls over certain disbursements and receipts.

 

  • The Regional Office of Education #3 expensed as purchased services or supplies several items totaling $5,087 that should have been capitalized.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

REGIONAL OFFICE OF EDUCATION #3

BOND, FAYETTE AND EFFINGHAM COUNTIES

 

 

FINANCIAL AUDIT

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

For The Year Ended June 30, 2008

 

 

 

FY 2008

FY 2007

TOTAL REVENUES

$2,295,617

$2,123,663

Local Sources

$948,549

$612,114

% of Total Revenues

41.32%

28.82%

State Sources

$935,708

$1,033,845

% of Total Revenues

40.76%

48.68%

Federal Sources

$411,360

$477,704

% of Total Revenues

17.92%

22.49%

 

TOTAL EXPENDITURES

$2,220,687

$2,063,178

Salaries and Benefits

$1,434,324

$1,259,461

% of Total Expenditures

64.59%

61.04%

Purchased Services

$559,680

$549,940

% of Total Expenditures

25.20%

26.65%

All Other Expenditures

$226,683

$253,777

% of Total Expenditures

10.21%

12.30%

 

TOTAL NET ASSETS

$729,980

$655,050

 

INVESTMENT IN CAPITAL ASSETS

$72,955

$66,462

 

Percentages may not add due to rounding.

 

 

REGIONAL SUPERINTENDENT 

During Audit Period:  Honorable Mark A. Drone

Currently:  Honorable Mark A. Drone

 

 

 

 

 

 

 

 

 

 

 

 

 


The Regional Office of Education #3 did not have sufficient internal controls over the financial reporting process.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


The Regional Office of Education #3 did not have adequate internal controls over certain disbursements and receipts.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


The Regional Office of Education #3 expensed as purchased services or supplies several items totaling $5,087 that should have been capitalized.

 

 

 

 

 

 

 

FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

 

 

Controls Over Financial Statement Preparation

 

         The Regional Office of Education #3 is required to maintain a system of controls over the preparation of financial statements in accordance with generally accepted accounting principles (GAAP).  Regional Office internal controls over GAAP financial reporting should include adequately trained personnel with the knowledge and expertise to prepare and/or thoroughly review GAAP based financial statements to ensure that they are free of material misstatements and include all disclosures as required by the Governmental Accounting Standards Board (GASB).

 

         The Regional Office of Education #3 did not have sufficient internal controls over the financial reporting process.  The Regional Office maintains their accounting records on the cash basis of accounting.  While the Regional Office maintains controls over the processing of most accounting transactions, there are not sufficient controls over the preparation of the GAAP based financial statements for management or employees in the normal course of performing their assigned functions to prevent or detect financial statement misstatements and disclosure omissions in a timely manner.

 

         In their review of the Regional Office’s accounting records, auditors noted that the Regional Office did not have adequate controls over the maintenance of complete records of accounts receivable, accounts payable, or deferred revenues.  While the Regional Office did maintain records to indicate the balances of accounts payable, accounts receivable, and deferred revenues, there were no entries made by the ROE to reconcile their grant activity, such as posting grant receivables and deferred revenues.  The Regional Office’s financial information required numerous adjusting entries to present the financial statements in accordance with generally accepted accounting principles.

 

         According to Regional Office officials, they did not have adequate funding to hire and/or train their accounting personnel in order to comply with these requirements. (Finding 08-1, pages 12a-12b)

 

         The auditors recommended that, as part of its internal control over the preparation of its financial statements, including disclosures, the Regional Office of Education #3 should implement a comprehensive preparation and/or review procedure to ensure that the financial statements, including disclosures, are complete and accurate.  Such procedures should be performed by a properly trained individual(s) possessing a thorough understanding of applicable generally accepted accounting principles, GASB pronouncements, and knowledge of the Regional Office of Education’s activities and operations.

 

         The Regional Office of Education #3 management responded that they agreed with the finding. 

 

 

INTERNAL CONTROL OVER DISBURSEMENTS AND RECEIPTS

 

         The Regional Office #3 did not have adequate internal controls over certain disbursements and receipts.  The Regional Superintendent of Schools is responsible for establishing and maintaining an internal control system over disbursements and receipts to prevent errors and fraud. 

 

         During testing of 40 general disbursements, auditors noted the following exceptions in the Regional Office’s internal controls:

 

·        One instance where costs were not appropriately allocated among programs for a purchase in the amount of $507.78.

·        Four instances of misclassification of costs to incorrect expense accounts in amounts totaling $652.07.

·        One instance where grant funds were used to purchase an unallowable cost in the amount of $20.

 

         During their review of internal controls over receipts, auditors noted a lack of segregation of duties.  The same individual was able to receive checks and cash, post the receipts to the general ledger, draft the deposit slip, take the deposit to the bank, and prepare the bank reconciliation.

 

         Lack of proper review of the various accounting processes, lack of documentation to support each disbursement, and lack of appropriate segregation of duties could result in unintentional or intentional errors or misappropriation of assets.  These errors or fraud could be material to the financial statements and may not be detected in a timely manner by employees in the normal course of performing their assigned duties. 

 

         The Regional Office of Education #3 was not following their established internal control procedures over disbursements.  The Regional Office had not developed proper internal control procedures over their receipts process. (Finding 08-2, pages 12c-12d)

 

         The auditors recommended that the Regional Office #3 should ensure that their established internal control procedures are being followed for each disbursement.  The auditors also recommended that the Regional Office should establish proper segregation of duties to ensure that no one individual has access to all steps of an accounting process.

 

         The Regional Office of Education #3 management responded that they agreed with the finding. 

 

 

CAPITALIZATION POLICY

 

         The Regional Office of Education #3 expensed as purchased services or supplies several items totaling $5,087 that should have been capitalized.

 

         The Regional Office’s capitalization policy is to capitalize all capital asset purchases that exceed $500.  Several items were expensed and were not added to the capital asset listing.  As a result, the capital asset listing of the Regional Office #3 was incomplete. (Finding 08-3, page 12e)

 

         The auditors recommended that the Regional Office of Education #3 should review account coding of the capital asset purchases with the original supporting documentation to ensure that the Regional Office’s capitalization policy is being followed.

 

         The Regional Office of Education #3 management responded that they agreed with the finding. 

 

 

AUDITORS’ OPINION

 

         Our auditors state the Regional Office of Education       #3’s financial statements as of June 30, 2008 are fairly presented in all material respects.

 

 

 

_____________________________________

WILLIAM G. HOLLAND, Auditor General

 

WGH:KJM

 

 

 

SPECIAL ASSISTANT AUDITORS

 

        Our special assistant auditors were Kemper CPA Group, LLP.