REPORT DIGEST REGIONAL OFFICE OF EDUCATION #30: ALEXANDER, JACKSON, PERRY, PULASKI, AND UNION COUNTIES FINANCIAL AUDIT FOR THE YEAR ENDED JUNE 30, 2021 Release Date: August 16, 2023 FINDINGS THIS AUDIT: 2 CATEGORY: NEW -- REPEAT -- TOTAL Category 1: 1 -- 1 -- 2 Category 2: 0 -- 0 -- 0 Category 3: 0 -- 0 -- 0 TOTAL: 1 -- 1 -- 2 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 • (21-1) The Regional Office of Education #30 did not have sufficient internal controls over the financial reporting process. • (21-2) The Regional Office of Education #30’s salaries and benefits were not supported by proper time and effort documentation. FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS CONTROLS OVER FINANCIAL STATEMENT PREPARATION The Regional Office of Education #30 (ROE) did not have sufficient internal controls over the financial reporting process. The ROE did not adequately detect all of the adjustments necessary in order to properly convert its generally accepted accounting principles (GAAP) basis financial statements to modified cash basis financial statements. The beginning net position and fund balance were not properly adjusted to account for the cumulative effect of changing to the new accounting principle. Illinois School Code, 105 ILCS 5/2-3.17a, allows a Regional Office of Education or Educational Service Center to utilize a cash basis, modified cash basis, or GAAP basis of accounting to prepare financial statements for audit. The ROE has chosen to utilize the modified cash basis of accounting for financial statement reporting. The ROE is required to maintain a system of internal controls over the preparation of financial statements in accordance with its selected basis of accounting. The ROE’s internal controls over financial reporting should include adequately trained personnel with the knowledge, skills and experience to prepare financial statements and include all related disclosures as required by the Governmental Accounting Standards Board (GASB). Regional Office management indicated the errors were a result of the change in accounting basis and is not a recurring issue. (Finding 21-001, page 11a) The auditors recommended that as part of internal control over the preparation of financial statements, the ROE should implement comprehensive preparation and/or review procedures to ensure the financial statements, including disclosures, are complete and accurate. These procedures should be performed by a properly trained individual(s) possessing a thorough understanding of the basis of accounting selected for financial statements, GASB pronouncements, and knowledge of the ROE’s activities and operations. ROE Response: The Regional Office agrees with the finding and corrective actions are being implemented. SALARIES AND BENEFITS NOT SUPPORTED BY PROPER TIME AND EFFORT DOCUMENTATION The Regional Office of Education #30 (ROE) did not have formal written policies related to proper time and effort documentation. As such, proper time and effort documentation was not always maintained or complete. The Illinois State Board of Education (ISBE) State and Federal Grant Administration Policy, Fiscal Requirements and Procedures requires that auditable “time and effort” documentation should be written, after the fact (not estimated or budgeted) documentation of how the time was spent. Time and effort reports totaling 100 percent among all projects should be prepared by any staff with salary charged (1) directly to a federal award, (2) directly to multiple federal or State awards, or (3) directly to any combination of a federal award or other federal, State, or local funds. Additionally, all time and effort sheets and other supporting documentation must be retained at the local level and be available for review or audit any time within three years after termination of the project or until the local entity is notified in writing from ISBE that the records are no longer needed for audit or review. Regional Office management indicated this was an oversight. (Finding 21-002, page 11b) The auditors recommended the ROE should implement written policies and procedures over time and effort reporting to ensure proper documentation is being obtained and/or maintained in all instances to properly distribute salary and benefit costs for employees who work in whole or in part on grant program activity in accordance with the ISBE State and Federal Grant Administration Policy, Fiscal Requirements and Procedures. This would include having the documentation reviewed and formally approved by a supervisor. ROE Response: The Regional Office agrees with the finding and corrective actions are being implemented. AUDITORS’ OPINION Our auditors state the Regional Office of Education #30’s financial statements as of June 30, 2021 are fairly stated in all material respects. This financial audit was conducted by the firm of Kemper CPA Group LLP. JOE BUTCHER Division Director This report is transmitted in accordance with Section 3-14 of the Illinois State Auditing Act. FRANK J. MAUTINO Auditor General FJM:JMM