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Regional Office officials noted they believe the mandate is outdated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 district’s 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
#17’s 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
#17’s 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 month’s 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 Service’s regulations. All working papers will be attached for
proofing and review by administration at time of payment.
AUDITORS’ OPINION
Our auditors state the
Regional Office of Education #17’s 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
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Our special assistant auditors were Clifton Gunderson, LLP.
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DIGEST FOOTNOTES
#1: INACCURATE
REPORTING OF EXPENDITURES – 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 – 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 General’s Office.
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