REPORT DIGEST

 

REGIONAL OFFICE OF EDUCATION #19

 

DUPAGE COUNTY

 

FINANCIAL AUDIT

(In Accordance with the

Single Audit Act and OMB Circular A-133)

For the Year Ended:

June 30, 2005

 

Summary of Findings:

 

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

Total last audit†††††††††††††             3

Repeated from last audit†††††††††† 1

 

Release Date:

June 20, 2006 

 

 

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.state.il.us/auditor

 

 

 

 

 

 

 

SYNOPSIS

 

        The Regional Office of Education #19 did not examine at least once each year all books, accounts and vouchers of every school treasurer in the educational service region.

 

        The Regional Office of Education #19 did not prepare bank reconciliations on a timely basis and a $44,004 certificate of deposit was not recorded in the general ledger, as of June 30, 2005.

 

        The Regional Office of Education #19 incorrectly accounted for revenues and expenses associated with indirect costs in the Partnership in Character Education program.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 


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

REGIONAL OFFICE OF EDUCATION #19

DUPAGE COUNTY

 

FINANCIAL AUDIT

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

For The Year Ended June 30, 2005

 

 

 

FY 2005

FY 2004

TOTAL REVENUES

$5,114,203

$3,950,485

Local Sources

$1,102,019

$1,012,465

% of Total Revenues

21.55%

25.63%

State Sources

$2,817,788

$1,026,383

% of Total Revenues

55.10%

25.98%

Federal Sources

$1,194,396

$1,911,637

% of Total Revenues

23.35%

48.39%

 

TOTAL EXPENDITURES

$5,153,096

$4,002,371

Salaries and Benefits

$2,463,771

$2,010,254

% of Total Expenditures

47.81%

50.23%

Purchased Services

$1,885,025

$1,530,619

% of Total Expenditures

36.58%

38.24%

All Other Expenditures

$804,300

$461,498

% of Total Expenditures

15.61%

11.53%

 

 

 

TOTAL NET ASSETS

$2,543,429

$2,582,322

 

 

 

INVESTMENT IN CAPITAL ASSETS

 

$386,915

 

$254,268

 

 

REGIONAL SUPERINTENDENT

During Audit Period: Honorable Darlene Ruscitti

Currently:Honorable Darlene Ruscitti


 

 

 

 

 

 

 

 

 

 

 


The Regional Office of Education #19 did not examine at least once each year all books, accounts and vouchers of every school treasurer in the educational service region.

 

 

 

 

 

 

 

 

 

 

 

 

 


The Regional Office of Education #19 did not prepare bank reconciliations on a timely basis and a $44,004 certificate of deposit was not recorded in the general ledger as of June 30, 2005.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


The Regional Office of Education #19 incorrectly accounted for program revenues and expenses associated with the Partnership in Character Education program.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 her educational service region, and if she 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.This mandate has existed in its current form since at least 1953.(Finding 05-1, pages 12-13)

 

††††† The Regional Office accepted the recommendation, noting it will seek a legislative solution to this and other obsolete passages.

 

 

BANK RECONCILIATIONS NOT COMPLETED PROPERLY AND TIMELY

 

†††† The Regional Office of Education #19 has not been preparing bank reconciliations on a timely basis for 13 bank accounts totaling $2,411,382 for fiscal year 2005.The June 2005 bank reconciliations were completed on November 4, 2005.Additionally, a $44,004 certificate of deposit was not recorded in the general ledger as of June 30, 2005.

 

††††† The Regional Office noted that a lack of staff and loss of the Business Manager in January 2004, whose position was not filled until October 2004, resulted in a backlog in many functions, including bank reconciliations and the information on the certificate of deposit.Also, the computerized general ledger system used for general fund bank accounts crashed and could not be restored until the second quarter of fiscal year 2005.

 

†††††† Sound internal controls require bank reconciliations to be performed accurately and promptly.Reconciling items should be investigated immediately and adjustments made to the general ledger.Bank reconciliations should also be reviewed and approved by a person independent of the preparer.(Finding 05-2, pages 14-15)This finding was first reported in 2003.

 

††††† The Regional Office of Education #19 agreed with auditorís recommendation noting that it will aggressively approach the problem to ensure that monthly bank reconciliations are prepared accurately and on time.A plan will be implemented to ensure that this finding does not repeat itself.In addition to training other personnel to perform the bank reconciliations, provisions have been made to use outside sources to perform this task on a monthly basis if needed.

 

††††† The Finance Department suffered a computer crash during the fiscal years 2003-2004 and not all data could be restored.The documentation of the $44,000 certificate of deposit was missing as a result of the computer crash.The certificate of deposit was reflected in the general ledger accordingly upon notification of the renewal of the investment from the bank.(For previous Regional Office response, see Digest Footnote #1.)

 

 

INCORRECT ACCOUNTING OF PROGRAM REVENUES AND EXPENSES

 

††††† The Regional Office of Education #19 incorrectly accounted for program revenues and expenses by netting indirect program costs with grant revenues instead of recording them as expenses for the Partnership in Character Education grant.This resulted in program costs and revenues being understated by the allocable indirect costs totaling $4,533.Instead, the cost reimbursement revenues were recorded directly as revenues of the Institute Fund.Accordingly, amounts reported in federal drawdown requests do not agree with the accounting records.†† (Finding 05-3, pages 16-17)

 

††††† The federal Office of Management and Budget (OMB) Circular A-87, Cost Principles for State, Local and Indian Tribal Governments defines allocable costs as goods and services that are chargeable or assignable to a particular cost objective in accordance with the relative benefits received.OMB Circular A-87 states that the total cost of Federal awards is comprised of the allowable direct cost of the program, plus its allocable portion of allowable indirect costs, less applicable credits.††††

 

†††† The Regional Office of Education #19 agreed with the recommendation noting it will in the future comply with OMB Circular A-87.The Finance Department has completed a full review of this finding and all members of the Department are now aware of the correct steps that need to be taken regarding the drawdown of allowable indirect cost amounts.

 

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AUDITORSí OPINION

 

††††††† Our auditors state the Regional Office of Education #19ís financial statements as of June 30, 2005 are fairly presented in all material respects.

 

 

 

___________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:KJM:ro

 

 

 

SPECIAL ASSISTANT AUDITORS

 

††††††† Our special assistant auditors were E. C. Ortiz & Co., LLP.

 

DIGEST FOOTNOTE

 

#1: BANK RECONCILIATIONS NOT COMPLETED TIMELY Ė Previous Regional Office Response

 

In its prior response in 2004, the Regional Office agreed with finding and stated that the finance office had upgraded their computer hardware, begun using the latest version of its financial software package, put into place a new tape backup system, as well as, cross-trained finance staff.

 

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