REPORT DIGEST

 

REGIONAL OFFICE OF EDUCATION #17

 

DEWITT, LIVINGSTON, AND MCLEAN COUNTIES

 

FINANCIAL AUDIT

(In Accordance with the
Single Audit Act and OMB Circular A-133)

 

For the Year Ended:

June 30, 2006

 

Summary of Findings:

 

Total this audit ††††††††††           5

Total last audit†††† ††††††       ††† 4

Repeated from last audit†††††† 3

 

Release Date:

June 21, 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 #17 did not comply with certain statutory administrative requirements.

 

     The Regional Office of Education #17ís expenditure report at June 30, 2006 did not agree to the related general ledger accounts for the Even Start Family Literacy grant.

 

     The Regional Office of Education #17ís ending adjusted general ledger balance in the operating account was $35,407 more than the balance per the June 30, 2006 bank reconciliation. This unreconciled difference includes the unreconciled difference reported in the FY 05 audit of $20,712, with the remaining variance ($14,695) being attributable to current year errors that had not been resolved by the Regional Office.

 

  • The Regional Office of Education #17 did not properly classify revenue in accordance with requirements of the ROE Accounting Manual.† ††

 

     The Regional Office of Education #17 made two late payroll tax payments that resulted in $773 in Internal Revenue Service penalties.

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 


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

†††††††††††††††††††††††††††††††††††††††††††††† REGIONAL OFFICE OF EDUCATION #17

††††††††††† DEWITT, LIVINGSTON, AND MCLEAN COUNTIES

 

††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† FINANCIAL AUDIT

††† (In Accordance with the Single Audit Act and OMB Circular A-133)

†††††††††††††††††††††††††††††††††††††††††††††††††††††† For The Year Ended June 30, 2006

 

 

 

FY 2006

FY 2005

TOTAL REVENUES

$5,690,750

$5,872,651

Local Sources

$3,414,465

$2,930,940

% of Total Revenues

60.00%

49.91%

State Sources

$1,520,833

$2,230,632

% of Total Revenues

26.72%

37.98%

Federal Sources

$755,452

$711,079

% of Total Revenues

13.28%

12.11%

 

TOTAL EXPENDITURES

$5,469,109

$5,701,632

Salaries and Benefits

$2,816,068

$3,662,947

% of Total Expenditures

51.49%

64.24%

Purchased Services

$2,315,380

$1,000,178

% of Total Expenditures

42.34%

17.54%

All Other Expenditures

$337,661

$1,038,507

% of Total Expenditures

6.17%

18.21%

 

 

 

TOTAL NET ASSETS

$1,883,790

$1,662,149

 

 

 

INVESTMENT IN CAPITAL ASSETS

 

$485,921

 

$449,819

 

††††††† Percentages may not add due to rounding.

 

 

REGIONAL SUPERINTENDENT

During Audit Period:Honorable G. Lawrence Daghe

Currently:Honorable G. Lawrence Daghe


 

 

 

 

 

 

 

 

 

 

 


The Regional Office of Education #17 did not comply with certain statutory administrative requirements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


The Regional Office of Education #17ís expenditure report at June 30, 2006 did not agree to the related general ledger accounts for the Even Start Family Literacy grant.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


The Regional Office of Education #17ís ending adjusted general ledger balance in the operating account was $35,407 more than the balance per the June 30, 2006 bank reconciliation.This unreconciled difference includes the unreconciled difference reported in the FY 05 audit of $20,712, with the remaining variance ($14,695) being attributable to current year errors that had not been resolved by the Regional Office.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


The Regional Office of Education #17 did not properly classify revenue in accordance with requirements of the ROE Accounting Manual.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


The Regional Office of Education #17 made two late payroll tax payments that resulted in $773 in Internal Revenue Service penalties.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 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 not present at the September county board meeting, and as nearly quarterly thereafter, a report of all his acts including a list of all the schools visited and dates of visitation.The Regional Superintendent presented reports annually at the meetings, but they did not include a detailed list of the schools visited with 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 four 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 12-14)

 

†††††††† 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.††

 

†††††††††† With regards to 105 ILCS 5/3-5, the Regional Superintendent will present at the September county board meeting and as nearly quarterly thereafter, a report of all his acts including a list of all the schools visited and dates of visitation.

 

 

INACCURATE REPORTING OF EXPENDITURES

 

†††††††† The Regional Office of Education #17ís June 30, 2006 expenditure report did not agree to the related general ledger accounts for the Even Start Family Literacy grant.Because of insufficient review and internal controls, there were transactions posted to the general ledger for the program after the expenditure report was prepared, resulting in expenditures not being reflected on the expenditure report.

 

†††††††† The Illinois State Board of Education and the U.S. Department of Education require that expenditure reports reconcile to the related general ledger accounts.(Finding 06-2, pages 15-16). This finding was first reported in 2004.

 

†††††††† The Regional Office of Education #17 accepted the recommendation stating that the grant program directors and management will review general ledger and expenditure reports to ensure accuracy in reporting.(For previous Regional Office response, see Digest Footnote #1)

 

 

INADEQUATE INTERNAL CONTROLS OVER CASH

 

†††††††† The Regional Office of Education #17ís ending adjusted general ledger balance in the operating account was $35,407 more than the balance per the June 30, 2006 bank reconciliation.This unreconciled difference includes the unreconciled difference reported in the FY 05 audit of $20,712, with the remaining variance ($14,695) being attributable to current year errors that had not been resolved by the Regional Office.

 

†††††††† Generally accepted accounting principles require that all cash in the custody of the Regional Office of Education be recorded in the general ledger and that each monthís bank statement be reconciled to the related general ledger account balance.

 

 

†††††††† The Regional Office of Education #17 has inadequate internal controls in place to ensure that bank statements are reconciled to the related general ledger cash accounts.The Regional Office had been reconciling checks and deposits for the account but had not been reconciling electronic transfer activity in the account, leading to the large variance. (Finding 06-3, page 17)This finding was first reported in 2004.

 

†††††††† The Regional Office of Education #17 accepted the recommendation and stated it will work to ensure that all bank statements are reconciled to the related general ledger cash accounts.The Regional Office also stated that procedures for monthly bank reconciliations are in place and that all reconciling items will be reviewed with the appropriate follow-up.The Regional Office will provide internal control to ensure that bank statements are reconciled accurately to the general ledger on a monthly basis.The unreconciled difference will be adjusted through a journal entry.(For previous Regional Office response, see Digest Footnote #2)

 

 

IMPROPER REVENUE CLASSIFICATION

 

†††††† ††The Regional Office of Education #17 originally recorded reimbursements received for general supplies and other miscellaneous costs in the Indirect Cost and Interest account, a sub-account of the General Fund, as a reduction of the expenditure instead of recording the receipts as local source revenue.

 

†††††† ††Transactions are not being recorded in accordance with the Illinois Program Accounting Manual and ROE Accounting Manual.Financial reports prepared by the ROE require additional analysis in order to be comparable and consistent with reporting requirements and GAAP.Revenues and expenditures for the affected fund were understated by $27,766; however, the net effect was zero.(Finding 06-4, page 18)

 

†††††††† The Regional Office of Education #17 accepted the recommendation and stated it will record reimbursements as the appropriate type of revenue in the future in accordance with the ROE Accounting Manual requirements.

 

 

UNTIMELY FILED PAYROLL REPORTS

 

†††††††† The Regional Office of Education #17 made two payroll tax payments late during the year, resulting in

$773 in penalties assessed by the Internal Revenue Service.

††††††††

† †††††††The Internal Revenue Service requires employers to timely file payroll tax reports. (Finding 06-5, page 19)

 

†††††††† The Regional Office of Education #17 accepted the recommendation stating that it will review payroll filings and their supporting reports to ensure that they are filed timely in accordance with the Internal Revenue Serviceís regulations.All working papers will be attached for proofing and review by administration at time of payment.

 

 

AUDITORSí OPINION

 

†††††††† Our auditors state the Regional Office of Education #17ís 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.

 

 

 

DIGEST FOOTNOTES

 

 

#1: INACCURATE REPORTING OF EXPENDITURES Ė Previous Regional Office Response

 

In its prior response in 2005, the Regional Office accepted the recommendation stating that all grant program directors and ROE management would review general ledger and expenditure reports to ensure accuracy in reporting. ††

 

 

#2: INADEQUATE INTERNAL CONTROLS OVER CASH Ė Previous Regional Office Response

 

In its prior response in 2005, the Regional Office accepted the recommendation stating that it would work to ensure that all bank statements are reconciled to the related general ledger cash accounts.Procedures for monthly bank reconciliations are in place and software irregularities were addressed by an outside consultant to bring all database problems back into balance.The ROE also stated that all reconciling items would be reviewed with the appropriate follow-up.In addition, the ROE stated it would provide internal control to ensure that bank statements and Illinois Funds accounts are reconciled accurately to the general ledger on a monthly basis.

 

Complete Regional Office responses to prior findings are available upon request from the Auditor Generalís Office.