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CONTROLS OVER COMPLIANCE
WITH LAWS AND REGULATIONS
The
Illinois School Code (105 ILCS 5/3-14.11) 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Regional Office officials noted they believe the mandate is outdated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. For example, the Regional
Superintendent has been examining school district financial statements on an
annual basis. This mandate has existed
in its current form since at least 1953.
The Illinois School Code 105 ILCS
5/3-14.5 also requires the Regional Superintendent to visit each public
school in the county at least once a year, noting the methods of instruction,
the branches taught, the textbooks used, and the discipline, government and
general condition of the schools. This
mandate has existed in its current form since at least 1953.
The Regional Superintendent performs
compliance inspections for each school district in his region annually but
not each public school. The Illinois
Public School Accreditation Process Compliance Component document completed
at these visits includes many of the items delineated in 105 ILCS 5/3-14.5,
but does not include a review of the methods of instruction and the textbooks
used in the district. (Finding 06-1, pages 12-14)
The Regional Office responded that with
regards to compliance with 105 ILCS 5/3-14.11 and 105 ILCS 5/3-14.5, the
Illinois Association of Regional Superintendents of Schools and the Illinois
State Board of Education have agreed to seek legislation to remove
duplicative and/or obsolete sections of the Illinois School Code. Both parties believe that 105 ILCS 5/3-7 of
the Illinois School Code and 23 Ill. Adm. Code 1.20, respectively, contain
more current, thorough, and comprehensive requirements concerning a public
school district’s financial transactions and visitation of public schools by
the Regional Superintendent. As a
result, the two parties working together will seek legislation to repeal
these two sections of the Illinois School Code.
CONTROLS OVER DISPOSAL OF PROPERTY AND EQUIPMENT
The Kane County Regional Office of
Education #31 did not have adequate controls over disposal of fixed assets. Proper forms were not used to document the
disposal or retirement of 24 equipment items, capital asset/fixed asset
disposal forms were not signed or approved by the Regional Superintendent,
and current fixed asset inventory records were not updated to reflect the
disposal of two equipment items.
The Regional Office’s
Fixed Assets Inventory Management Policy states that when property or
equipment is removed from inventory for any reason, the Asset Inventory
Disposal form is to be filled out and signed by the person requesting the
disposal, the finance department, and the Regional Superintendent. In addition, sound internal controls
require that disposals or transfers be formally documented and approved by
authorized personnel before the disposition.
Upon disposal/transfer of property and equipment, the fixed asset
inventory records should be updated to reflect movement or deletion. (Finding 06-2, pages 15-16)
The Regional Office of
Education responded that it does have a system and forms in place for
disposal of property and equipment and acknowledged that the forms in
question were not completely processed since the Regional Superintendent had
not yet signed them. With the purchase
of the new software system in place and a redesigned form to be used for the
disposal of fixed assets and checks and balances put in place by the new
Finance Director, this problem should not happen again.
ACCOUNTING OF TRANSACTIONS
The Kane County Regional Office #31 did not
properly record the following transactions:
·
Rather than recording $564,165 in revenue in the Youth
Home Education Fund, as was done in prior years, the ROE recorded the revenue
under the Regional Program Development Fund.
·
The ROE purchased computer related items for school
districts as an added service. Purchases
totaling $23,747 were recorded as expenses upon purchase and payment to the
vendors and as revenues in the Local Technology Fund upon billing and
collection from the school districts, instead of recognizing these purchases
as advances (receivables).
·
Purchases for school districts totaling $62,100
paid from the Local Technology Fund were recorded as purchased service
expenses and their reimbursements for these purchases were recorded as
deduction of software expenses instead of a reduction of purchased services
expenses.
The Regional Superintendent of Schools
in each Regional Office of Education is required to maintain accurate
financial records in accordance with 23 Illinois Administrative Code 110 Program Accounting Manual and Regional
Office of Education (ROE) Accounting Manual, as applicable. The Manual requires that the ROE accounting
system be organized and operated on a fund basis. The transactions and balances of each fund
and each source of funds are to be accounted for separately. Generally accepted accounting principles also
require that disbursements made as an advance be accounted for with no net
asset effect. (Finding 06-3, pages 17-20)
The Regional Office of Education No. 31
agrees with the findings and has addressed safeguards and improvements to
ameliorate these situations.
With regards to the Youth Home
Education Fund, a new finance system was installed on July 1, 2006 that has
added controls and features which will aid in notifying multiple people and
approve financial entries. In the
future, the funds will be put into the Youth Home Program Fund and then at
the end of the year, any excess funds will be transferred to the Regional
Program Development Fund.
The Regional Office stated that the incorrect
recording of expenses and reimbursements associated with purchases for school
districts were caused by a misunderstanding between the manager preparing the
requisition and the Finance Department entering it into the finance
system. The Regional Office stated
that with the installation of the new finance system on July 1, 2006, these types
of coding errors should not occur because it is done electronically rather
than from a paper description, with various levels of approvals.
AUDITORS’ OPINION
Our auditors state the Regional
Office of Education #31’s financial statements as of June 30, 2006 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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