REPORT DIGEST

REGIONAL OFFICE OF EDUCATION #20: EDWARDS,
GALLATIN, HAMILTON, HARDIN, POPE, SALINE,
WABASH, WAYNE, AND WHITE COUNTIES

FINANCIAL AUDIT
FOR THE YEAR ENDED JUNE 30, 2018

Release Date:  May 16, 2019

FINDINGS THIS AUDIT:  2

CATEGORY:  NEW -- REPEAT -- TOTAL
Category 1:  0 -- 1 -- 1
Category 2:  0 -- 0 -- 0
Category 3:  0 -- 0 -- 0
TOTAL:  1 -- 1 -- 2

FINDINGS LAST AUDIT: 1

Category 1: Findings that are material
weaknesses in internal control and/or a
qualification on compliance with State laws
and regulations (material noncompliance).
Category 2: Findings that are significant
deficiencies in internal control and
noncompliance with State laws and
regulations.
Category 3: Findings that have no internal
control issues but are in noncompliance
with State laws and regulations.

State of Illinois, Office of the Auditor
General
FRANK J. MAUTINO, 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
www.auditor.illinois.gov

SYNOPSIS

• (18-1) The Regional Office of Education
#20 did not have sufficient internal
controls over the financial reporting
process.

• (18-2) The Regional Office of Education
#20 did not provide completed financial
statements or financial records in an
auditable form by the August 31 deadline.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

CONTROLS OVER FINANCIAL STATEMENT
PREPARATION

The Regional Office of Education #20 (ROE)
did not have sufficient internal controls
over the financial reporting process. While
the ROE maintained controls over the
processing of most accounting transactions,
there were not sufficient controls over the
preparation of generally accepted
accounting principles (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.

The ROE is required to maintain a system of
controls over the preparation of financial
statements in accordance with GAAP. The
Regional Office’s internal controls over
GAAP financial reporting should include
adequately trained personnel with the
knowledge, skills, and experience to
prepare GAAP based financial statements and
include all disclosures as required by the
Governmental Accounting Standards Board
(GASB).

During review of the Regional Office’s
financial information prepared by the ROE,
auditors noted the ROE’s financial
information required material adjusting
entries to accounts receivable, accounts
payable, accrued payroll, interfund loans,
and unavailable revenue in order to present
its financial statements in accordance with
GAAP. In addition, ROE management did not
have adequate controls to record and report
net accrued pension and OPEB liabilities,
deferred outflows of resources, deferred
inflows of resources, and pension and OPEB
expenses in accordance with GAAP. Proposed
adjusting entries were approved and
accepted by ROE management.

According to Regional Office management,
they did not timely hire and/or train their
accounting personnel in order to comply
with these requirements for fiscal year
2018. (Finding 2018-001, pages 10a-10b)
This finding was first reported in 2011.

The auditors recommended that as part of
internal control over the preparation of
financial statements, the ROE should
implement comprehensive preparation
procedures to ensure that the financial
statements are complete and accurate. These
procedures should be performed by a
properly trained individual possessing a
thorough understanding of applicable GAAP,
GASB pronouncements, and knowledge of the
ROE’s activities and operations.

ROE Response: The Regional Office agrees.
We have created a new position,
Comptroller, in order to better prepare for
FY 19 financial statement work, and beyond.
The ROE will also be contracting with a
retired CPA to assist in the preparation
procedures to ensure complete and accurate
work for the FY 19 audit. Moving forward,
the ROE will have sufficient controls over
preparation of GAAP based financial
statements. This will help employees
prevent or detect financial statement
misstatements and disclosure omissions in a
timely manner.

Prior Year ROE Response: The Regional
Office accepts the auditor’s
recommendation.

DELAY OF AUDIT

The Regional Office of Education #20 (ROE)
did not provide completed financial
statements or financial records, in the
form of a general ledger trial balance, in
an auditable form by the August 31, 2018
deadline. Financial records provided were
not prepared on an accrual basis in
accordance with generally accepted
accounting principles (GAAP).

The Regional Office is subject to 105 ILCS
5/2-3.17a which requires the Auditor
General’s office to cause an audit to be
made, as of June 30th of each year, of the
financial statements of all accounts,
funds, and other moneys in the care,
custody or control of the regional
superintendent of schools of each
educational service region in the State and
of each educational service center
established in the School Code. The audit
is to be conducted in accordance with
Generally Accepted Governmental Auditing
Standards (GAGAS).

In accordance with 105 ILCS 5/2-3.17a, the
Auditor General has promulgated
administrative rules and regulations to
govern this process. Those rules, 74 Ill.
Adm. Code 420.320 (c) (2), state that for
audit purposes, each regional office of
education and educational service center
shall make available to the Auditor General
or his designee all books and records
deemed necessary to make and complete the
required audits. The records shall be in
auditable form by August 15 of the
succeeding fiscal year. Financial reports
are to be available no later than August 31
in order for the annual audit to be
completed by an independent auditor
selected by the Auditor General. Annual
financial statements are to be prepared on
an accrual basis of accounting in
accordance with GAAP.

In addition, prudent business practices and
transparency require timely preparation and
completion of financial statements.

According to Regional Office management,
they did not timely hire and/or train their
accounting personnel in order to comply
with these requirements for fiscal year
2018. (Finding 2018-002, pages 10c-10d)

The auditors recommended that the ROE
should implement procedures to ensure
compliance with 105 ILCS 5/2-3.17a and 74
Ill. Adm. Code 420.320 (c) (2). Annual
financial statements should be compiled on
an accrual basis of accounting in
accordance with GAAP. These financial
statements need to be presented to the
Auditor General’s independent auditors for
audit by the August 31 deadline.

ROE Response: The ROE agrees with the
finding and will present financial
statements in accordance with GAAP for
FY19. ROE #20 is presently implementing a
new position to meet compliance, as well as
contracting with a retired CPA.

AUDITORS’ OPINION

Our auditors state the Regional Office of
Education #20’s financial statements as of
June 30, 2018 are fairly presented in all
material respects.

This financial audit was conducted by the
firm of Doehring, Winders & Co., LLP.

KELLY MITTELSTAEDT
Audit Manager

This report is transmitted in accordance
with Section 3-14 of the Illinois State
Auditing Act.

FRANK J. MAUTINO
Auditor General

FJM:JRB