REPORT DIGEST
REGIONAL OFFICE OF EDUCATION #33
KNOX COUNTY
FINANCIAL AUDIT
For the Year Ended: June 30, 2011
Release Date: April 19, 2012
Summary of Findings:
Total this audit: 1
Total last audit: 2
Repeated from last audit: 1
State of Illinois, Office of the Auditor General
WILLIAM G. HOLLAND, AUDITOR GENERAL
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SYNOPSIS
• The Regional Office of Education #33 did not have sufficient internal controls over the financial reporting process.
FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS
CONTROLS OVER FINANCIAL STATEMENT PREPARATION
The Knox County Regional Office of Education #33 is required to maintain a system of controls over the preparation of financial statements, including disclosures, in accordance with generally accepted accounting principles (GAAP). Regional Office internal controls over GAAP financial reporting should include adequately trained personnel with the knowledge and expertise to prepare and/or thoroughly review GAAP based financial statements to ensure that they are free of material misstatements and include all disclosures as required by the Governmental Accounting Standards Board (GASB).
The Regional Office of Education #33 did not have sufficient internal controls over the financial reporting process. The Regional Office maintains their accounting records on the cash basis of accounting. While the Regional Office maintains controls over the processing of most accounting transactions, there are not sufficient controls over the preparation of the GAAP based financial statements for management or employees in the normal course of performing their assigned functions to prevent or detect financial statement misstatements and disclosure omissions in a timely manner. For example, auditors, in their review of the ROE’s accounting records, noted the following:
• The Regional Office did not maintain adequate controls over the financial reporting process and adjustments were required to present financial statements in accordance with generally accepted accounting principles.
• The Regional Office did not maintain complete records of accounts payable or deferred revenue.
According to Regional Office officials, they did not have adequate funding to hire and/or train their accounting personnel in order to maintain a system of internal control over the preparation of financial statements in accordance with GAAP. (Finding 11-1, pages 10-11) This finding was first reported in 2007.
The auditors recommended that, as part of its internal control over the preparation of its financial statements, including disclosures, the Knox County Regional Office of Education #33 should implement a comprehensive preparation and/or review procedure to ensure that the financial statements, including disclosures, are complete and accurate. Such procedures should be performed by a properly trained individual(s) possessing a thorough understanding of applicable generally accepted accounting principles, GASB pronouncements, and knowledge of the Regional Office of Education’s activities and operations.
The Regional Office of Education #33 responded that due to limited funds, it is not able to hire and train accounting personnel in order to maintain a system of internal control over the preparation of financial statements in accordance with generally accepted accounting principles. (For previous Regional Office response, see Digest Footnote #1.)
AUDITORS’ OPINION
Our auditors state the Regional Office of Education #33’s financial statements as of June 30, 2011 are fairly presented in all material respects.
WILLIAM G. HOLLAND
Auditor General
WGH:JRB
AUDITORS ASSIGNED: Sulaski and Webb, CPAs were our special assistant auditors.
DIGEST FOOTNOTES
#1: Controls Over Financial Statement Preparation - Previous Regional Office Response
In its prior response in 2010, the Regional Office of Education #33 responded that it understands the nature of this finding and realizes that this circumstance is not unusual in an organization of this size. The Regional Office noted that it is financially unable to employ accounting personnel capable of maintaining an adequate system of internal control over the preparation of financial statements since this cost would take away from the funds available to provide educational services for the schools in the region. The Regional Office noted that if it has more stable financing in the future, it will try to hire and/or train personnel to maintain an appropriate system of internal control over the preparation of financial statements in accordance with generally accepted accounting principles.