REPORT DIGEST
REGIONAL OFFICE OF EDUCATION #9
CHAMPAIGN AND FORD 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: 2
Total last audit : 2
Repeated from last audit: 1
Release Date: March 11, 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 #9 did not have sufficient
internal controls over the financial reporting process.
•The Regional Office of Education #9 did not consistently
review or document their review of journal entries.
FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
CONTROLS OVER FINANCIAL STATEMENT PREPARATION
The Regional Office of Education #9 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 #9 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 were 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. For example, auditors, in their review of the
Regional Office’s accounting records noted the following:
•The Regional Office did not have adequate controls over the
maintenance of complete records of accounts receivable, accounts payable, and
deferred revenue. While the Regional
Office did maintain records to indicate the balances of accounts payable,
accounts receivable, and deferred revenues, not all entries were 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. This included multiple adjusting entries from the prior year audit.
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 12a-12b) 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 #9 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 #9 responded that it
accepts the degree of risk associated with the condition because the additional
expense to seek outside accounting expertise to prepare and/or review financial
statements would take away from the funds available to provide educational
services for the schools in the region.
The Regional Office noted that it will continue to review, approve, and
accept responsibility for the audit adjustments, financial statements and
related notes provided by the auditors.
(For previous Regional Office response, see Digest Footnote #1.)
LACK OF SUFFICIENT CONTROLS OVER JOURNAL ENTRIES
The Regional Office of Education #9 did not consistently
review or document their review of journal entries. The Regional Office is responsible for
establishing and maintaining an internal control system over journal entries to
prevent errors and fraud.
The Regional Office’s accounting system generated a one sided journal entry during their fiscal year 2008 closing process that caused the fiscal year 2009 beginning general ledger balances to be off by $5,364. The discrepancy was not detected by the Regional Office.
The auditors recommended that Regional Office of Education
#9 should ensure that all journal entries are reviewed and approved by an
individual independent of the journal entry process. Auditors also recommended that the Regional
Office should review all closing and opening entries that are posted
automatically by their accounting software.
The Regional Superintendent agreed with the finding.
AUDITORS’ OPINION
Our auditors state the Regional Office of Education #9’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 Kemper CPA Group, LLP.
DIGEST FOOTNOTE
#1: Controls Over Financial Statement Preparation —Previous
Regional Office Response
In its prior response in 2008, the Regional Office of
Education #9 responded that because of this finding in FY2007, the ROE sought
training for staff. The two members of
the bookkeeping staff attended training at Regional Office of Education #17 on
July 14, 2008. For the first time, ROE
#9 bookkeepers prepared the adjusting entries and trial balances prior to the
beginning of the FY2008 audit.
The Regional Office of Education #9 noted that it accepts
the degree of risk associated with the condition because the additional expense
to seek outside accounting expertise to prepare and/or review financial
statements would take away from the funds available to provide educational
services for the schools in the region.
The Regional Office noted that it will continue to review, approve, and
accept responsibility for the audit adjustments, financial statements and
related notes provided by the auditors.