REPORT DIGEST

 

REGIONAL OFFICE OF EDUCATION #35

 

LASALLE 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                       6

Total last audit                       0

Repeated from last audit        0

 

Release Date:

March 18, 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 #35 did not have adequate controls over fixed assets.
  • The Regional Office of Education #35 did not have proper segregation of duties in its disbursement functions.
  • The Regional Office of Education #35 does not maintain a logbook of checks received.
  • Two bank accounts were not reconciled, as of June 30, 2003.

 

 

 

 

 

 

 

 

 

 

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

 

                REGIONAL OFFICE OF EDUCATION #35

                                  LASALLE 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

$1,780,332

$1,648,599

Local Sources

$66,420

$77,329

% of Total Revenues

3.73%

4.69%

State Sources

$1,546,865

$1,468,406

% of Total Revenues

86.89%

89.07%

Federal Sources

$167,047

$102,864

% of Total Revenues

9.38%

6.24%

 

TOTAL EXPENDITURES

$1,761,658

$1,571,470

Salaries and Benefits

$1,206,959

$1,147,451

% of Total Expenditures

68.51%

73.02%

Purchased Services

$314,804

$251,941

% of Total Expenditures

17.87%

16.03%

All Other Expenditures

$239,895

$172,078

% of Total Expenditures

13.62%

10.95%

 

 

 

COST OF PROPERTY AND EQUIPMENT

$413,537

$352,745

 

* Percentages may not add due to rounding.

REGIONAL SUPERINTENDENT

During Audit Period: Honorable William Novotney

Currently: Honorable William Novotney

 

 

 

 

 

 

The Regional Office of Education #35 did not have adequate controls over fixed assets.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Regional Office of Education #35 did not have proper segregation of duties in its disbursement functions.

 

 

 

 

 

 

 

 

 

The Regional Office of Education #35 does not maintain a logbook of checks received.

 

 

 

 

 

 

 

 

 

 

Two bank accounts were not reconciled, as of June 30, 2003.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

INADEQUATE CONTROLS OVER PROPERTY

The Regional Office of Education #35 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. An annual physical inventory of fixed assets was not performed. Proper forms were not used to document disposal or retirement of computer-related equipment. Transfers of equipment from one location to another were not formally documented. The balances in the General Fixed Asset Account Group were not recorded in the general ledger. Finally, the detailed fixed asset listings were not reconciled with the balances reported in the General Fixed Asset Account Group.

The 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, pages 12-14).

The Regional Office of Education #35 accepted the recommendation, stating that while they did not have formal written procedures, they had initiated informal property control procedures. The Regional Office will develop a formal fixed asset policies and procedures manual to monitor property acquisitions, transfers and disposals and provide for accurate reporting of fixed asset balances. The ROE stated they will conduct an annual physical inventory of fixed assets, reconcile the detailed inventory listing to the balances in the General Fixed Asset Account Group, and dispose of all reconciling items in a timely manner. The Regional Office will also maintain spreadsheets to support fixed asset balances in the financial statements.

INADEQUATE SEGREGATION OF DUTIES

The Regional Office of Education #35ís bookkeeper performs the disbursement functions of invoice processing, check preparation, custodian of blank checks, recording and bank reconciliations. The bookkeeper also records cash receipts. Four program employees perform the functions of receiving cash and making deposits.

Sound internal controls require adequate segregation of duties to ensure that effective checks and balances are in place to minimize the risk of loss. (Finding 03-3, page 16)

The Regional Office of Education #35 accepted the auditorís recommendation and will assign critical functions to different individuals as best as they can. If necessary, the Regional Office will strengthen supervisory controls over cash receipts.

 

CASH RECEIPTS

The Regional Office of Education #35 does not maintain a logbook of checks received. Each program employee, as well as the bookkeepers, receive cash and make deposits. In 22 out of the 60 (37%) receipts tested, which totaled $15,346.75, the receipts were deposited from 29 to 68 days after the date of the check.

Failure to deposit receipts as they are received increases the risk of loss. Absence of a control log for receipts or indication of the date of receipt on the supporting documents does not provide a basis for reviewing the timeliness of deposits, considering the receipt functions are performed by numerous individuals. (Finding 03-5, page 18)

The Regional Office of Education #35 accepted the recommendation to develop a process to ensure that all checks received are recorded in a control log upon receipt and deposited in a timely manner.

INACCURATE BANK RECONCILIATIONS

Two bank accounts were not reconciled, as of June 30, 2003. Discrepancies included the June 2002 and October 2002 payroll not being posted to the books, as well as payroll being double booked. Also, outstanding fund transfers were not properly recorded.

Sound internal controls require bank reconciliations to be performed accurately and promptly, with reconciling items being investigated immediately and adjustments made to the general ledger. Inaccurate bank reconciliations render this internal control procedure ineffective to detect irregularities and inaccuracies in the financial records. (Finding 03-4, page 17)

The Regional Office of Education #35 concurred with the recommendation, responding that it will ensure bank reconciliations are prepared accurately and differences investigated promptly.

OTHER FINDINGS

The remaining findings are less significant. We will review progress toward the implementation of our recommendations during the next audit.

 

AUDITORSí OPINION

Our auditors state the Regional Office of Education #35ís financial statements as of June 30, 2003 are fairly presented in all material respects.

 

____________________________________
WILLIAM G. HOLLAND, Auditor General

WGH:JRB

SPECIAL ASSISTANT AUDITORS

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