REPORT DIGEST

REGIONAL OFFICE OF EDUCATION #13:
CLINTON/MARION/WASHINGTON COUNTIES

FINANCIAL AUDIT
For the Year Ended: June 30, 2012


Release Date:   June 6, 2013

Summary of Findings:
Total this audit: 1
Total last audit:  2
Repeated from last audit: 1

State of Illinois, Office of the Auditor General
WILLIAM G. HOLLAND, AUDITOR GENERAL

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SYNOPSIS

• The Regional Office of Education #13 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 #13 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 #13 did not have
sufficient internal controls over the financial
reporting process.  The Regional Office maintains its
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.  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 or deferred revenue.

• 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 12-01, page 11-12)  This finding
was first reported in 2007.

The auditors recommended that, as part of its internal
control over the preparation of financial statements,
including disclosures, the Regional Office of Education
#13 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 #13 responded that it
understands the nature of this finding and realizes that
this circumstance is not unusual in an entity of this
size.  The Regional Office accepts the degree of risk
associated with this condition because the added expense
of seeking additional accounting expertise to prepare
and/or review financial statements would take away from
the funds available to provide education services for
the schools in the region.  (For previous Regional
Office response, see Digest Footnote #1.)

AUDITORS’ OPINION

Our auditors state the Regional Office of Education
#13’s financial statements as of June 30, 2012 are
fairly presented in all material respects.

WILLIAM G. HOLLAND
Auditor General

WGH:JRB

AUDITORS ASSIGNED:  West & Company, LLC were our special
assistant auditors.

DIGEST FOOTNOTE

#1: Controls Over Financial Statement Preparation -
Previous Regional Office Response

In its prior response in 2011, the Regional Office of
Education #13 responded that it understands the nature
of this finding and realizes that this circumstance is
not unusual in an entity of this size.  The Regional
Office accepts the degree of risk associated with this
condition because the added expense of seeking
additional accounting expertise to prepare and/or review
financial statements would take away from the funds
available to provide education services for the schools
in the region. The Regional Office noted that in an
attempt to correct this finding, it sent the ROE
Controller to various trainings to better understand
accrual accounting and reporting under generally
accepted accounting principles (GAAP).