REPORT DIGEST

REGIONAL OFFICE OF EDUCATION #16 - DEKALB COUNTY

FINANCIAL AUDIT
For the Year Ended: June 30, 2012


Release Date:   August 21, 2013

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

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

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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
www.auditor.illinois.gov


SYNOPSIS

• The Regional Office of Education #16 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 #16 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 #16 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.  For example,
auditors, in their review of the Regional
Office’s accounting records, noted the
following:

• The Regional Office did not have the ability
to prepare accrual-basis financial reports and
numerous adjustments were required to present
financial statements in accordance with
generally accepted accounting principles.

• The Regional Office did not have adequate
controls over the maintenance of complete
records of accounts receivable or accounts
payable.

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 12-1, pages
9-10) This finding was first reported in 2007.

The auditors recommended that, as part of
internal control over the preparation of
financial statements, including disclosures, the
Regional Office of Education #16 should
implement a comprehensive preparation and/or
review procedure to ensure 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 #16 responded
that it has begun utilizing the DeKalb County
Finance Office as a resource for additional
support.  The Regional Office has purchased an
update of the accounting software program
currently in use.  The ROE noted that an
independent accountant is also being used to set
up the upgraded accounting software that will
allow for internal preparation and review of
financial statements. The Regional Office also
stated that these procedures must be performed
internally because the added expense of hiring
properly trained individuals is cost prohibitive
for a small entity such as the ROE.  Funding for
ROE services is extremely tight, and paying for
a service such as was noted would take away from
the funds available to provide educational
services for the schools in the Region.  The
Regional Office responded that it will continue
to do the best it can with the limited resources
available.  (For previous Regional Office
response, see Digest Footnote #1.)

AUDITORS’ OPINION

Our auditors state the Regional Office of
Education #16’s financial statements as of June
30, 2012 are fairly presented in all material
respects.

WILLIAM G. HOLLAND
Auditor General

WGH:KJM

AUDITORS ASSIGNED:  Wipfli LLP 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 #16 responded that it has
engaged an accounting firm to prepare a program
that allows for internal preparation and review
of financial statements.  These procedures must
be performed internally because the added
expense of hiring properly trained individuals
is cost prohibitive for a small entity such as
the ROE.  The Regional Office noted that funding
for ROE services is extremely tight, and paying
for a service such as was noted would take away
from the funds available to provide educational
services for schools in the Region.  The
Regional Office noted that it will continue to
do the best it can with the limited resources
available.