REPORT DIGEST

 

REGIONAL OFFICE OF EDUCATION #31

 

KANE COUNTY

 

FINANCIAL AUDIT

(In Accordance with the

Single Audit Act and OMB Circular A-133)

 

For the Year Ended:

June 30, 2005

 

Summary of Findings:

 

Total this audit†††††††††††††             3

Total last audit†††††††††††††             1

Repeated from last audit†††††††††† 1

 

Release Date:

June 1, 2006

 

 

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.state.il.us/auditor

 

 

 

 

 

 

 

SYNOPSIS

 

        The Regional Office of Education #31 did not comply with certain statutory administrative requirements.

 

        The Regional Office of Education #31 understated total County on-behalf payments and failed to properly match revenues and expenses for County on-behalf payments in the same fund.

 

        The Regional Office of Education #31 did not timely submit required quarterly expenditure reports for its grant programs passed through the Illinois State Board of Education.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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


                                                                                   

REGIONAL OFFICE OF EDUCATION #31

KANE COUNTY

 

FINANCIAL AUDIT

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

For The Year Ended June 30, 2005

 

 

 

FY 2005

FY 2004

TOTAL REVENUES

$4,877,245

$4,134,447

Local Sources

$737,968

$1,037,827

% of Total Revenues

15.13%

25.10%

State Sources

$1,883,706

$750,758

% of Total Revenues

38.62%

18.16%

Federal Sources

$2,255,571

$2,345,862

% of Total Revenues

46.25%

56.74%

 

TOTAL EXPENDITURES

$4,875,093

$3,820,596

Salaries and Benefits

$1,761,056

$1,635,892

% of Total Expenditures

36.12%

42.82%

Purchased Services

$2,390,440

$1,412,413

% of Total Expenditures

49.03%

36.97%

All Other Expenditures

$723,597

$772,291

% of Total Expenditures

14.84%

20.21%

 

 

 

TOTAL NET ASSETS

$3,488,935

$3,486,783

 

 

 

INVESTMENT IN CAPITAL ASSETS

$258,122

$264,250

 

†††††††††††† 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 comply with certain statutory administrative requirements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Regional Office of Education #31 understated total County on-behalf payments and failed to properly match revenues and expenses for County on-behalf payments in the same fund.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Regional Office of Education #31 did not timely submit the required quarterly expenditure reports for its grant programs passed through the Illinois State Board of Education.

 

 

 

 

CONTROLS OVER COMPLIANCE WITH LAWS AND REGULATIONS

†††††

†††††† The Illinois Administrative Code (23 Ill. Adm. Code 110.115) requires that fees for conferences, workshops, materials and other costs charged for discretionary activities not required by law or rule are to be determined on a cost-recovery basis.Excess funds resulting from registrations or requests for materials/services beyond the anticipated cost-recovery basis shall be deposited in an enterprise fund to be used solely to reduce the cost of similar items or to cover costs incurred due to less-than-anticipated registrations or requests for materials or services.

 

†††††† The Regional Office of Education #31 enterprise fund accounts had net assets of $614,592 as of June 30, 2005.Total revenues and expenditures for fiscal year 2005 amounted to $297,198 and $292,184, respectively.The ROE does not have formal cost-recovery pricing procedures to ensure that fees charged approximate costs incurred.

 

††††††† Regional Office management stated that fees were allowed to accumulate and the excess funds were not used to reduce the future costs of programs due to an uncertainty about funding for these activities on a year-to-year basis.The ROE had not completed its cost analysis in fiscal year 2005 to develop a formal cost-recovery pricing methodology and identify programs or items on which to apply the excess funds.††

††

†††††† The Illinois School Code (105 ILCS 5/3-14.11) also requires the Regional Superintendent to examine at least once each year all books, accounts, and vouchers of every school treasurer in his educational service region, and if he finds any irregularities in them, to report them at once, as directed by the School Code.

 

†††††† The Regional Office did not examine at least once per year all books, accounts, and vouchers of every school treasurer in the educational service region.Regional Office officials noted they believe the mandate is outdated and that they are satisfying the intent of the statute by other reviews they undertake.This mandate has existed in its current form since at least 1953.(Finding 05-1, pages 12-15)

 

†††††† The Regional Office accepted the recommendation to comply with the statutory requirements.For the Administrative Code (23 Ill. Adm. Code 110.115), the Regional Office responded that cost recovery guidelines were developed during the 2004/2005 fiscal year and a draft form was discussed by management.The ROE Contract Form was updated for 2004/2005 but the cost recovery form and procedures were not fully implemented.As of December 2005, the Regional Office stated it has a fully developed cost recovery form and procedures in place. For 105 ILCS 5/3-14.11, the Regional Office responded that it would seek a legislative solution to this and other obsolete passages.

 

 

ACCOUNTING OF ON-BEHALF PAYMENTS

†††††

†††††† The salaries of all Kane County Regional Office of Education#31 employees, except for the Regional Superintendent and Associate Regional Superintendent, are paid by Kane County.The Regional Office then reimburses Kane County for salaries paid as well as employer contributions made to the Illinois Municipal Retirement Fund (IMRF) of direct program personnel and a portion of administrative and support staff salaries.

 

†††††† Total gross salaries per County payroll reports for ROE administrative and support personnel for fiscal year 2005 amounted to $401,979.The ROE reimbursed the County $180,808 of these salaries. The difference of $221,171 represents on-behalf payments made by the County.Of this amount, only $111,938 was recorded as on-behalf payments by the ROE.This resulted in an understatement of on-behalf revenues and expenditures of $109,233.In addition, on-behalf revenues and expenditures were recorded in separate fund accounts instead of the same (matching) fund accounts.

 

†††††† Governmental Accounting Standards Board (GASB) Statement No. 24 requires employer governments to recognize revenue and expenditures or expenses for on-behalf payments.The ROE Accounting Manual requires on-behalf revenues and expenditures to be reported in the financial statements in equal amounts.In addition, generally accepted accounting principles require proper matching of costs and revenues. (Finding 05-2, pages 16-18)

 

†††††† The Regional Office of Education #31 accepted the recommendation stating it has moved four employees to the ROE payroll to more closely equal the payroll to the Kane County budget.Only actual salaries and benefits will be charged to programs and all payroll payments will be made directly to the Kane County Treasurer.The payroll accounts will be monitored periodically to assure accuracy and compliance.The Regional Office will also investigate the possibility of a software package that could automate and improve the payroll process.

 

 

QUARTERLY EXPENDITURE REPORTS NOT SUBMITTED TIMELY

†††††

††††††† The Kane County Regional Office #31 did not timely submit the required quarterly expenditure reports for its grant programs passed through the Illinois State Board of Education.Expenditure reports for these programs were submitted 1 to 37 days late.

 

†††††† The financial and reporting requirements section of the grant agreement states that quarterly expenditure reports are due by the end of the following month of each State fiscal year quarter. (Finding 05-3, pages 19-21)

 

†††††† The Regional Office of Education #31 accepted the recommendation stating that instead of the manager responsible for a specific grant providing the information to the finance department for submission, the finance department will now provide the information to the manager who will ensure that the quarterly reports are submitted in a timely manner.In addition to sending reminders to grant managers, the Regional Superintendent or Associate Superintendent will review each report at least one week prior to the due date to ensure timely submission.

 

 

AUDITORSí OPINION

 

††††† Our auditors state the Regional Office of Education #31ís financial statements as of June 30, 2005 are fairly stated in all material respects.

 

 

 

_____________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:KJM:ro

 

 

 

SPECIAL ASSISTANT AUDITORS

 

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