REPORT DIGEST

REGIONAL OFFICE OF EDUCATION #31

 

KANE COUNTY

 

FINANCIAL AND COMPLIANCE AUDIT

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

For the Year Ended:

June 30, 2003

 

Summary of Findings:

 

Total this audit                   2

Total last audit                   0

Repeated from last audit    0

 

Release Date:

March 2, 2004

 

 

 

 

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 TDD (217) 524-4646

 

This Report Digest is also available on

the worldwide web at

http://www.state.il.us/auditor

 

 

 

 

 

SYNOPSIS

  • The Regional Office of Education #31 did not have adequate controls over fixed assets.
  • The Regional Office of Education #31 did not allocate interest earned to the sources of funds from which it was earned.

 

 

 

 

 

 

 

 

 

 

 

 

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

 

               REGIONAL OFFICE OF EDUCATION #31

                                   KANE COUNTY

 

                FINANCIAL AND COMPLIANCE AUDIT

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

                     For The Year Ended June 30, 2003

 

FY 2003

FY 2002

TOTAL REVENUES

$3,995,014

$4,051,986

Local Sources

$1,031,149

$1,623,812

% of Total Revenues

25.81%

40.07%

State Sources

$2,161,724

$2,330,805

% of Total Revenues

54.11%

57.52%

Federal Sources

$802,141

$97,369

% of Total Revenues

20.08%

2.40%

 

TOTAL EXPENDITURES

$3,570,883

$3,987,747

Salaries and Benefits

$1,692,953

$1,500,617

% of Total Expenditures

47.41%

37.63%

Purchased Services

$939,366

$1,439,580

% of Total Expenditures

26.31%

36.10%

All Other Expenditures

$938,564

$1,047,550

% of Total Expenditures

26.28%

26.27%

 

 

 

COST OF PROPERTY AND EQUIPMENT

$558,161

$887,305

 

* Percentages may not add due to rounding.

REGIONAL SUPERINTENDENT

During Audit Period: Honorable Clem Mejia

Currently: Honorable Clem Mejia

 

 

 

 

 

 

 

 

 

 

 

The Regional Office of Education #31 did not have proper controls over fixed assets.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Regional Office of Education #31 did not allocate interest to the sources of funds from which it was earned.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

 

INADEQUATE CONTROLS OVER PROPERTY

The Regional Office of Education #31 did not have adequate controls over fixed assets. For example, there were no formal policies or procedures to monitor and control equipment and other fixed assets. Inventory lists did not contain all the information required by the ROE Accounting Manual, such as tag number or acquisition source document (such as check number). In the auditorsí physical inventory testing, not all items were tagged. Transfers of equipment from one location to another were not formally documented.

The Regional Office reported deletions of fixed assets totaling $536,060 for the year to adjust the equipment balances in the General Fixed Asset Account Group (GFAAG) to the balances in the fixed asset detailed inventory. Regional Office officials stated that items deleted were those that were county-owned equipment that should not be part of the GFAAG, items previously disposed of which had not been removed from fixed asset records, and items less than $500 that were included in prior GFAAG balances.

The Regional Office of Education (ROE) Accounting Manual requires each ROE to maintain detailed fixed asset records for both accounting purposes as well as insurance purposes, for fixed assets costing $500 or more. In addition, sound internal controls require that policies and procedures on fixed assets cover the acquisition and tagging, recording and reporting, depreciation (if applicable), transfers and dispositions, and physical inventory, and that they be formally documented and consistently applied (Finding 03-1, page 12 - 14).

The Regional Office of Education #31 accepted the recommendation, stating they have now developed formal fixed asset policies and procedures to effectively and efficiently monitor and maintain records of acquisition, transfer and disposal of fixed assets in order to provide an accurate reporting of fixed asset balances in the General Ledger.

 

INTEREST NOT ALLOCATED TO THE RESPECTIVE SOURCE OF FUNDS

Interest earned on the bank account for the year totaling $31,860.88 was all credited to the Regional Program Development Fund and was not allocated to the other sources of funds from which it was earned.

The Regional Office of Education (ROE) Accounting Manual Section XI states that if funds from two or more sources are combined in one bank account and/or fund, a portion of the interest earned on the bank account or funds should be allocated to each of those sources of funds. The Manual requires interest to be allocated at least monthly. The Grant Funds Recovery Act (30 ILCS 705/1 et seq.) states that interest earned on grant funds becomes part of the principal and is treated accordingly for all purposes unless the grant agreement and/or grant regulations provide otherwise. Federal requirements state that annual interest earned in excess of $100 on advances of funds must be submitted promptly to the granting agency (Finding 03-2, page 16 and 17).

The Regional Office of Education #31 accepted the recommendation to develop an interest allocation plan. The Regional Office stated that it implemented a cost allocation plan in December 2003 that computes interest monthly according to fund balances. Interest revenue for the fiscal year ended June 30, 2003 has already been allocated by month and source of fund and will be returned under the direction of the granting agencies.

 

 

AUDITORSí OPINION

Our auditors state the Regional Office of Education #31ís financial statements as of June 30, 2003 are fairly stated in all material respects.

 

 

_____________________________________

WILLIAM G. HOLLAND, Auditor General

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SPECIAL ASSISTANT AUDITORS

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