REPORT DIGEST

REGIONAL OFFICE OF EDUCATION #28

BUREAU/HENRY/STARK COUNTIES

FINANCIAL AUDIT

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

For the Year Ended:

June 30, 2007

Summary of Findings:

Total this audit                  2

Total last audit                  1

Repeated from last audit   0

Release Date:

June 24, 2008

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 #28 did not have sufficient internal controls over the financial reporting process.

·        The Regional Office of Education #28 did not capitalize computer equipment with purchase prices totaling $29,234 as is required by its policy.

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

The Regional Office of Education #28 did not have sufficient internal controls over the financial reporting process.

The Regional Office of Education #28 did not capitalize computer equipment with purchase prices totaling $29,234 as is required by its policy.

FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

Controls Over Financial Statement Preparation

         The Regional Office of Education #28 is required to maintain a system of controls over the preparation of financial statements in accordance with generally accepted accounting principles (GAAP).  Regional Office internal controls over GAAP financial reporting should include adequately trained personnel with the knowledge and expertise to prepare and/or thoroughly review GAAP based financial statements to ensure that they are free of material misstatements and include all disclosures as required by the Governmental Accounting Standards Board (GASB).

         The Regional Office of Education #28 did not have sufficient internal controls over the financial reporting process.  The Regional Office maintains their accounting records on the accrual basis of accounting for disbursements and the cash basis of accounting for receipts.  While the Regional Office maintains controls over the processing of most accounting transactions, there are not sufficient controls over the preparation of the 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.

         In their review of the Regional Office’s accounting records, auditors noted the following:

• The Regional Office did not have adequate controls over the maintenance of complete records of accounts receivable or deferred revenue.  

• The Regional Office did not have adequate controls over the maintenance of accurate capital asset additions and deletions, and depreciation.

• The Regional Office did not maintain adequate internal controls over the processing of all financial transactions and numerous adjustments were required to present financial statements in accordance with generally accepted accounting principles. 

         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.  (Finding 07-1, page 15)

         The auditors recommended that, as part of its internal control over the preparation of its financial statements, including disclosures, the Regional Office of Education #28 should implement a comprehensive preparation and/or review procedure to ensure that the financial statements, including disclosures, are complete and accurate.  Such procedures should be performed by a properly trained individual(s) possessing a thorough understanding of applicable generally accepted accounting principles, GASB pronouncements, and knowledge of the Regional Office of Education’s activities and operations.

         The Regional Office of Education #28 responded that at the present time, the additional cost of hiring and training additional staff or contracting the service outweighs the benefits.  The Regional Superintendent and Assistant Regional Superintendent will review financial transactions and financial reports on a periodic basis.  They note that the Regional Office will review, approve, and accept responsibility for the financial statements and related items.  If additional resources are made available through the State, the Regional Office will consider seeking the services of an accountant to review the financial statements and related disclosures for completeness and accuracy. 

CAPITALIZATION POLICY

         The Regional Office of Education #28 did not capitalize computer equipment with purchase prices totaling $29,234 as is required by its policy.  As a result, capital assets were understated and the capital asset listing was incomplete. 

         The Regional Office policy is to capitalize all capital asset purchases that exceed $500.  The Regional Office of Education #28’s accounting personnel misunderstood what type of assets should be included on the capital asset listing.  (Finding 07-2, page 16)

         Auditors recommended that the Regional Office of Education #28 review the capital asset purchases with the original supporting documentation to ensure that its capitalization policy is being followed.

         The Regional Superintendent responded that he agrees with the finding.  The Regional Office will review the capital asset purchases with the original supporting documentation to ensure that the capitalization policy is being followed.

AUDITORS’ OPINION

         Our auditors state the Regional Office of Education #28’s financial statements as of June 30, 2007 are fairly presented in all material respects.

_____________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:KJM

SPECIAL ASSISTANT AUDITORS

         Our special assistant auditors were Ginoli & Company LTD.