FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
GENERAL LEDGER WITH SELF BALANCING ACCOUNTS BY
FUND WAS NOT MAINTAINED
The Regional Office of
Education #41 did not maintain the general ledger with self-balancing
accounts by fund. The ROE converted to
new accounting software in January 2005 and, in the process, the number of
funds was condensed. Fund balances
were not maintained on an individual fund basis. In addition, entries in this new system
were made across the combining funds creating unbalanced funds.
Accounting standards
require the Regional Office to maintain a general ledger consisting of
self-balancing accounts within each individual fund. (Finding 05-1, page 12)
The Regional Office of
Education #41 agreed with the recommendation, noting that the Assistant
Regional Superintendent will coordinate efforts between the ROE staff and the
new system support team to make changes to the current software to enable
self-balancing accounts within each fund.
Adjusting entries will be made to correct the individual fund balances
and all future general ledger entries will be required to be balanced entries
within each fund.
UNRECORDED PAYABLES AND RECEIVABLES
The Regional Office of
Education #41 did not properly record the entries necessary to reflect
payables and receivables for the current and prior year. The Regional Office did not maintain
subsidiary records of accounts receivable, accounts payable, and deferred
revenue. Accordingly, the Regional
Office of Education’s general ledger did not agree to the audited financial
statements. Adjusting entries were
required as part of the 2005 year end audit to account for the receivables
and payables at June 30, 2004 and 2005.
Accounting principles
generally accepted in the United
States of America require government-wide
financial statements to be prepared on the accrual basis of accounting and the
fund financial statements to be prepared on the modified accrual basis of
accounting. (Finding 05-2, page
13) This finding was first
reported in 2003.
The Regional Office of
Education #41 agreed with the recommendation, noting it has a new accounting
system that will allow it to properly maintain its general ledger on a
modified accrual basis. In addition,
training will be initiated for the personnel responsible for the general
ledger. (For previous Regional Office response, see Digest Footnote #1.)
INACCURATE EXPENDITURE REPORTS FILED
The expenditure reports, for various
grants, for the grant period ending June 30, 2005, did not agree with the
actual amounts expended as shown on the general ledger. The net difference for 3 programs amounted
to $28,513 more expenditures on the general ledger than on the grant
expenditure reports.
Grant expenditure reports filed with
the State should agree to general ledger totals. (Finding 05-3, page 14) This finding was first reported in 2003.
The Regional Office accepted the
recommendation stating it will file a corrected expenditure report for the
grant year ended June 30, 2005 and will instruct all program directors that
the expenditure reports filed with the granting agencies must be reconciled
with the general ledger prior to the final report being submitted. (For
previous Regional Office response, see Digest Footnote #2.)
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 each 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 05-4, page 15)
The Regional Office accepted the
recommendation, noting it will seek a legislative solution to this and other
obsolete passages.
INADEQUATE PLEDGED COLLATERAL
The Regional Office of Education #41
had $150,000 on deposit at a financial institution. This amount exceeded the federally insured
limit of $100,000 with no further collateralization secured for the deposit.
The Public Funds Deposit Act (30 ILCS
225/1) authorizes deposits in excess of the federally insured limit to be
covered by pledged collateral in the Regional Office of Education #41’s name.
(Finding 05-5, page 16)
The Regional Superintendent agreed with the finding.
EXCESS CASH BALANCE WAS
MAINTAINED
The Regional Office of Education #41
did not minimize the amount of time elapsing between drawdown and
disbursement of funds for the Technology Enhancing Education Grant. At June 30, 2005, the Regional Office had a
cash balance of $589,185, which was more than three months of cash needed
based on prior years’ expenditures. In
addition, the excess cash balance throughout the year generated $5,641 of
interest income that was not returned to the grantor.
OMB Circular A-133 requires recipients
of federal monies to follow procedures to minimize the time elapsing between
the transfer of funds from U.S. Treasury and disbursement. In addition, the Cash Management
Improvement Act of 1990 (31 CFR Part 205) requires that interest earned on
federal fund balances in excess of $100 be remitted back to the federal
granting agency. (Finding 05-6, page 17)
The
Regional Office accepted the finding, noting that all grants with draw-down
requirements will be monitored for cash need and all subsequent draw-downs
will be based on a forecasted need for the next thirty days and no account
will have more than two months cash reserves.
Further, any interest earned on advance payments will be monitored for
possible repayment to the granting agency.
AUDITORS’ OPINION
Our auditors state the Regional Office
of Education #41’s financial statements as of June 30, 2005 are fairly
presented in all material respects.
_____________________________________
WILLIAM
G. HOLLAND, Auditor General
WGH:JRB
SPECIAL ASSISTANT AUDITORS
Our special assistant
auditors were J.W. Boyle & Co., Ltd.
DIGEST
FOOTNOTES
#1: UNRECORDED PAYABLES AND RECEIVABLES MATERIAL TO FINANCIAL
STATEMENTS -- Previous Regional Office Response
In
its prior response in 2004, the Regional Office agreed with the
recommendation, stating that accurate records will be maintained that reflect
receivables and payables at the end of each year.
#2: INNACCURATE EXPENDITURE REPORTS
FILED --
Previous Regional Office Response
In its prior response in 2004, the Regional Office accepted the recommendation
stating it will correct the expenditure reports and reconcile the program
administrative records to the general ledger.
Complete Regional Office responses to prior findings are available
upon request from the Auditor General’s Office.
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