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, 2009 Summary of Findings: Total this audit 1 Total last audit 3 Repeated from last audit 1 Release Date: February 4, 2010 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. {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, 2009

	FY 2009	FY 2008
TOTAL REVENUES	$2,399,439	$2,295,617
Local Sources	$651,950	$948,549
% of Total Revenues	27.17%	41.32%
State Sources	$1,145,791	$935,708
% of Total Revenues	47.75%	40.76%
Federal Sources	$601,698	$411,360
% of Total Revenues	25.08%	17.92%
TOTAL EXPENDITURES	$2,416,529	$2,220,687
Salaries and Benefits	$1,455,395	$1,434,324
% of Total Expenditures	60.23%	64.59%
Purchased Services	$652,350	$559,680
% of Total Expenditures	27.00%	25.20%
All Other Expenditures	$308,784	$226,683
% of Total Expenditures	12.78%	10.21%
TOTAL NET ASSETS	$712,890	$729,980
INVESTMENT IN CAPITAL ASSETS	$60,524	$72,955
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.

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, capital assets, or deferred revenues. Numerous adjustments were required to present 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 09-1, pages 13-14) This finding was first reported in 2007. 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 Superintendent responded that he agreed with the finding, but believed that the hiring or training of an individual with a thorough understanding of applicable generally accepted accounting principles and GASB pronouncements would be too costly. However, the Regional Office of Education #3 will continue to seek improvement within their internal controls system. (For previous Regional Office response, see Digest Footnote #1.) AUDITORS’ OPINION Our auditors state the Regional Office of Education #3’s financial statements as of June 30, 2009 are fairly presented in all material respects. _____________________________________ WILLIAM G. HOLLAND, Auditor General WGH:KJM SPECIAL ASSISTANT AUDITORS Our special assistant auditors were West & Company, LLC. DIGEST FOOTNOTES #1: Controls Over Financial Statement Preparation —Previous Regional Office Response In its prior response in 2008, the Regional Office of Education #3 responded that management agreed with the finding.