REPORT DIGEST

 

REGIONAL OFFICE OF EDUCATION #41

 

MADISON COUNTY

 

FINANCIAL AUDIT

(In accordance with the

Single Audit Act and OMB Circular A-133)

 

For the Year Ended:

June 30, 2005

 

Summary of Findings:

 

Total this audit†††††††††††††             6

Total last audit†††††††††††††             5

Repeated from last audit†††††††††† 2

 

Release Date:

 Sept. 19, 2006

 

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 TTY (888) 261-2887

 

This Report Digest and Full Report is also available on

the worldwide web at

http://www.state.il.us/auditor

 

 

 

 

SYNOPSIS

 

 

         The Regional Office of Education #41 did not maintain the general ledger with self-balancing accounts by fund.

 

         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 of Education #41ís expenditure reports for various grants did not agree with the actual amounts expended as shown on the general ledger.

  • The Regional Office of Education #41 did not examine at least once each year all books, accounts, and vouchers of every school treasurer in its educational service region.

 

  • The Regional Office of Education #41ís funds deposited at a financial institution exceeded the amount of the federally insured limit with no further collateralization secured for the deposit.

 

  • The Regional Office of Education #41 did not minimize the time elapsing between drawdown and disbursement of federal money, resulting in excess cash on hand.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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


 

 

REGIONAL OFFICE OF EDUCATION #41

MADISON COUNTY

 

FINANCIAL AUDIT

(In Accordance with the Single Audit Act and OMB Circular A-133)

For the Year Ended June 30, 2005

 

 

 

 

FY 2005

FY 2004

TOTAL REVENUES

$6,644,314

$6,933,161

Local Sources

$2,709,464

$2,274,881

% of Total Revenues

40.78%

32.81%

State Sources

$1,562,629

$1,104,365

% of Total Revenues

23.52%

15.93%

Federal Sources

$2,372,221

$3,553,915

% of Total Revenues

35.70%

51.26%

 

TOTAL EXPENDITURES

$6,450,024

$6,803,861

Salaries and Benefits

$4,138,741

$3,511,066

% of Total Expenditures

64.17%

51.60%

Purchased Services

$1,048,947

$1,292,414

% of Total Expenditures

16.26%

19.00%

All Other Expenditures

$1,262,336

$2,000,381

% of Total Expenditures

19.57%

29.40%

 

 

 

TOTAL NET ASSETS

$2,155,546

$1,961,256

 

 

 

INVESTMENT IN CAPITAL ASSETS

 

$147,094

 

$121,175

 

 

 

REGIONAL SUPERINTENDENT

During Audit Period:Honorable Harry Briggs

Currently:Honorable Harry Briggs

 

 


 

 

 

 

 

 

 

 

 


The Regional Office of Education #41 did not maintain the general ledger with self-balancing accounts by fund.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


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 of Education #41ís expenditure reports for various grants did not agree with the actual amounts expended as shown on the general ledger.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


The Regional Office of Education #41 did not examine at least once each year all books, accounts, and vouchers of every school treasurer in its educational service region.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Regional Office of Education #41ís funds deposited at a financial institution exceeded the amount of the federally insured limit with no further collateralization secured for the deposit.

 

 

 

 

 

 

 

 

 

The Regional Office of Education #41 did not minimize the time elapsing between drawdown and disbursement of federal money, resulting in excess cash on hand.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 Educationís 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 #41ís 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 yearsí 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.

 

 

AUDITORSí OPINION

 

††††† Our auditors state the Regional Office of Education #41ís 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 Generalís Office.