REPORT DIGEST

 

REGIONAL OFFICE OF EDUCATION #16

 

DEKALB COUNTY

 

FINANCIAL AUDIT

 

For the Year Ended:

June 30, 2006

 

Summary of Findings:

 

Total this audit†††††††††††            †† 3

Total last audit†††††††††††††             1

Repeated from last audit†††††††††† 1

 

Release Date:

July 31, 2007

 

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 are also available on

the worldwide web at

http://www.auditor.illinois.gov

 

 

 

 

 

 

 

 

SYNOPSIS

 

        The Regional Office of Education #16 did not comply with certain statutory administrative requirements.

 

        The Regional Office of Education #16 had cash receipts from local source funds totaling $21,425 that were neither posted to the general ledger nor deposited in the bank in a timely manner.These receipts were kept in the Regional Office, unsecured, and in many cases, without the source documentation.Undeposited checks were as many as 15 months old.

 

        The Regional Office of Education #16 did not have proper segregation of duties in the accounting function and is not adequately safeguarding all assets.

 

 

 

 

 

 

 

 

 

 

 

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


†††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††

REGIONAL OFFICE OF EDUCATION #16

DEKALB COUNTY

 

FINANCIAL AUDIT

For The Year Ended June 30, 2006

 

 

 

FY 2006

FY 2005

TOTAL REVENUES

$849,288

$800,829

Local Sources

$79,191

$86,660

% of Total Revenues

9.32%

10.82%

State Sources

$760,092

$663,886

% of Total Revenues

89.50%

82.90%

Federal Sources

$10,005

$50,283

% of Total Revenues

1.18%

6.28%

 

TOTAL EXPENDITURES

$847,610

$800,873

Salaries and Benefits

$221,051

$237,056

% of Total Expenditures

26.08%

29.60%

Purchased Services

$467,153

$414,081

% of Total Expenditures

55.11%

51.70%

All Other Expenditures

$159,406

$149,736

% of Total Expenditures

18.81%

18.70%

 

 

 

TOTAL NET ASSETS

$90,181

$88,503

 

 

 

INVESTMENT IN CAPITAL ASSETS

 

$01

 

$01

 

1Capital assets of the Regional Office were purchased using the governmental resources of the County.

 

 

REGIONAL SUPERINTENDENT

During Audit Period:Honorable Gilbert E. Morrison, Jr.

Currently: Honorable Gilbert E. Morrison, Jr.

 

 


 

 

 

 

 

 

 

 

The Regional Office of Education #16 did not comply with certain statutory administrative requirements.



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Regional Office of Education #16 had cash receipts from local source funds totaling $21,425 that were neither posted to the general ledger nor deposited in the bank in a timely manner.These receipts were kept in the Regional Office, unsecured, and in many cases, with out the source documentation.Undeposited checks were as many as 15 months old.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Regional Office of Education #16 did not have proper segregation of duties in the accounting function and is not adequately safeguarding all assets.

 

 

 

 

 

 

FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

 

 

CONTROLS OVER COMPLIANCE WITH LAWS AND REGULATIONS

 

†††††††† The Illinois School Code (105 ILCS 5/3-14.11) requires the Regional Superintendent to examine at least once each year all books, accounts, and vouchers of every school treasurer in his educational service region, and if he finds any irregularities in them, to report them at once, as directed by the School Code.

 

†††††††† The Regional Office did not examine at least once each year all books, accounts, and vouchers of every school treasurer in the educational service region.Regional Office officials noted they believe the mandate is outdated and that they are satisfying the intent of the statute by other reviews they undertake.For example, the Regional Superintendent has been examining school district financial statements and audit reports on an annual basis.This mandate has existed in its current form since at least 1953.

 

†††††††† The Illinois School Code (105 ILCS 5/3-5) also requires the Regional Superintendent to present under oath or affirmation to the county board at its meeting in September and as nearly quarterly thereafter as it may have regular or special meetings, a report of all his acts as county superintendent, including a list of all the schools visited with the dates of visitation.This mandate has existed in its current form since at least 1953.

 

†††††††† The Regional Office did present at the September county board meeting but did not report, as nearly quarterly thereafter, a report of all his acts including a list of all the schools visited and the dates of visitation.† †††

 

†††††††† Finally, the Illinois School Code (105 ILCS 5/3-14.5) requires the Regional Superintendent to visit each public school in the county at least once a year, noting the methods of instruction, the branches taught, the textbooks used, and the discipline, government and general

 

condition of the schools.This mandate has existed in its current form since at least 1953.

 

†††††††† The Regional Superintendent performs compliance inspections for each public school in his region on a rotational basis every three years instead of annually.The Illinois Public School Accreditation Process Compliance Component document completed at these visits includes many of the items delineated in 105 ILCS 5/3-14.5, but does not include a review of the methods of instruction and the textbooks used in the district. (Finding 06-1, pages 9-11)

 

†††††††† The Regional Office accepted the recommendation to comply with the statutory requirements.The Regional Office responded that with regards to compliance with 105 ILCS 5/3-14.11 and 105 ILCS 5/3-14.5, the Illinois Association of Regional Superintendents of Schools and the Illinois State Board of Education have agreed to seek legislation to remove duplicative and/or obsolete sections of the Illinois School Code.Both parties believe that 105 ILCS 5/3-7 of the Illinois School Code and 23 Ill. Adm. Code 1.20, respectively, contain more current, thorough, and comprehensive requirements concerning a public school districtís financial transactions and visitation of public schools by the Regional Superintendent.As a result, the two parties working together will seek legislation to repeal these two sections of the Illinois School Code.††

 

†††††††† In addition, the Regional Office stated in regards to 105 ILCS 5/3-14.5 that it does conduct a Health/Life Safety inspection for each school building in the region annually.††

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†††††††† With regards to 105 ILCS 5/3-5, the Regional Superintendent stated he currently submits an annual report to the county board.In order to comply with the statute, the Regional Superintendent stated he would present the affirmed report on a quarterly basis.

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INADEQUATE CONTROLS OVER CASH

 

†††††††† The Regional Office of Education #16 recorded receipts for local-source funds, namely the Institute Fund, the Bus Permit Fund and the General Educational Development Fund, received by the ROE in a daily cash receipts log.However, receipts totaling $21,425 were neither posted to the general ledger nor deposited in the bank in a timely manner.Instead, cash receipts were kept in the office, unsecured, and in many cases, without the source documentation.The undeposited checks were as many as 15 months old.

 

†††††††† The untimely deposit of these receipts greatly increases the risk of loss and also delays the use of available funds.Also, because the source documents were many times separated from the cash, it is very likely that receipts would not be posted to the proper general ledger fund.According to ROE officials, this situation occurred due to the small number of staff within the office and increased workload.

†††††††† Sound internal controls over cash receipts require that receipts be adequately supported to identify the date, nature, and source of the receipt in order to monitor timeliness and accuracy of deposits as well as the accuracy of revenue recording.Receipts should be deposited intact and on a timely basis.(Finding 06-2, pages 12-13)

†††††††† The Regional Office of Education accepted the recommendation and stated that it will purchase a new accounting software package that will enable the bookkeeper, the Regional Superintendent, and the Assistant Regional Superintendent to monitor and keep track of all transactions.Also, the Regional Office will hire two additional part-time staff to assist with the duties and relieve the workload on the existing bookkeeper.The Regional Superintendent and Assistant Regional Superintendent will: monitor and review all receipts in the cash receipts log; verify that all receipts are posted to the general ledger correctly and in a timely manner; and deposit all receipts with the bank on a weekly basis.

 

 

INADEQUATE SEGREGATION OF DUTIES

 

†††††††† The Regional Office of Education #16 does not have proper segregation of duties in the accounting function and is not adequately safeguarding all assets.In the accounting function, the same person is responsible for opening the mail, recording receipts, accepting cash receipts, preparing deposit slips, reconciling deposit slips to the receipts log, preparing and recording cash disbursements, and reconciling bank statements.In addition, the bank reconciliation is not reviewed by an individual independent of the accounting function.The Regional Office is also not adequately safeguarding its assets by:

 

        allowing large amounts of cash and checks to be in the office in unsecured locations;

        not depositing cash receipts in a timely manner; and

        not having proper supporting documentation for all cash disbursements.††††††††

 

†††††††† The Regional Office of Education (ROE) Accounting Manual requires each ROE to be responsible for establishing and maintaining a system of internal controls that provides reasonable assurance about the reliability of its GAAP financial statements, operational compliance with legal and contractual provisions, safeguarding of ROE assets, and the effectiveness and efficiency of ROE operations. (Finding 06-3, pages 14-15)

 

†††††††† The Regional Office agreed with the finding and responded that it will do the following:

 

        Mail will be opened by an employee not responsible for accounting, such as the Regional Superintendent or his assistant, or other available staff.The accounting staff person will receive cash and complete the cash receipts log as well as prepare deposits. The Regional Superintendent or his assistant will double check these deposits against the cash receipts log to verify, and will initial and date all paperwork.The deposit will be taken to the bank by the Regional Superintendent or his assistant on a timely basis. ††

        Bank statements and cancelled checks will be received by the Regional Superintendent or his assistant.Such items will be periodically reviewed by the Regional Superintendent or Assistant Regional Superintendent prior to them being reconciled, and he will initial and date them.Unusual items noted during the review will be investigated promptly.

        Signed checks will be mailed by an employee not responsible for accounts payable.

        Journal entries will be approved by the Regional Superintendent or his assistant.

        Supporting documentation will be submitted with checks for appropriate approval and signature by the Regional Superintendent or Assistant Regional Superintendent.

 

 

AUDITORSí OPINION

 

†††††††† Our auditors state the Regional Office of Education #16ís financial statements as of June 30, 2006 are fairly presented in all material respects.

 

 

 

_____________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:KJM:ro

 

SPECIAL ASSISTANT AUDITORS

 

†† ††††††Our special assistant auditors were Clifton Gunderson, LLP.