REPORT DIGEST

REGIONAL OFFICE OF EDUCATION #24:
GRUNDY AND KENDALL COUNTIES

FINANCIAL AUDIT
FOR THE YEAR ENDED: JUNE 30, 2015

Release Date:  July 21, 2016

FINDINGS THIS AUDIT:  1

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

FINDINGS LAST AUDIT: 2

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

• (15-1)  The Regional Office of Education
#24 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 #24 is
required to maintain a system of controls
over the preparation of financial
statements in accordance with generally
accepted accounting principles (GAAP).
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).

The Regional Office of Education #24 did
not have sufficient internal controls over
the financial reporting process.  The
Regional Office maintains its accounting
records on the cash basis of accounting
during the fiscal year and posts year-end
accrual entries for financial statement
purposes.  While the Regional Office
maintains controls over the processing of
most accounting transactions, there are
not sufficient controls over the
preparation of 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.

During review of the Regional Office of
Education #24’s financial information
prepared by the Regional Office of
Education #24, auditors noted the Regional
Office’s financial information required
material adjusting entries to accounts
receivable, prepaid expenses, accounts
payable, accrued payroll, and unearned
revenue in order to present its financial
statements in accordance with generally
accepted accounting principles.  Through
inquiries and discussions with the ROE’s
accounting personnel and Regional
Superintendent, auditors noted that the
ROE did not have adequate controls to
record and report the ROE’s net accrued
pension liabilities/assets, deferred
outflows of resources, deferred inflows of
resources, and pension expenses in
accordance with GAAP.  Proposed adjusting
entries were approved and accepted by
Regional Office management.

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.

Additionally, the complex requirements of
GASB Statements No. 68 and No. 71 were new
for fiscal year 2015 and will require
additional time and training before the
ROE can fully implement the requirements
on its own. (Finding 2015-001, pages
11a-11b) This finding was first reported
in 2010.

The auditors recommended that as part of
internal control over the preparation of
financial statements, the Regional Office
of Education #24 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 the applicable GAAP, GASB
pronouncements, and knowledge of the
Regional Office of Education #24’s
activities and operations.

The Regional Office of Education #24
responded that it has taken the following
steps to address this finding:
1.  Implemented a new software system--now
in its third year of use;
2.  Provided professional development
opportunities to personnel.

The Regional Office of Education #24 also
stated that it will continue to address
this finding using the limited resources
it has. (For previous Regional Office
response, see Digest Footnote #1 located
at the end of the digest.)

AUDITORS’ OPINION

Our auditors state the Regional Office of
Education #24’s financial statements as of
June 30, 2015 are fairly presented in all
material respects.

FRANK J. MAUTINO
Auditor General

FJM:KJM

AUDITORS ASSIGNED:  Kemper CPA Group LLP
were our special assistant auditors.

DIGEST FOOTNOTE

#1: Controls Over Financial Statement
Preparation - Previous Regional Office
Response

In its previous response in 2014, the
Regional Office of Education #24 responded
that it has taken the following steps to
address this finding:
1.  Implemented a new software system-now
in its second year of use;
2.  Hired a local accounting firm to
review its financial statements; and
3.  Sent personnel to trainings.

The Regional Office of Education #24 also
stated that it will continue to address
this finding using the limited resources
that they have.