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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noted they believe the mandate is outdated and that they are satisfying the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.
AUDITORS’ OPINION
Our
auditors state the Regional Office of Education #31’s 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.
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