REPORT DIGEST REGIONAL OFFICE OF EDUCATION #41: MADISON COUNTY FINANCIAL AUDIT For the Year Ended: June 30, 2014 Release Date: May 7, 2015 FINDINGS THIS AUDIT: 1 CATEGORY: NEW -- REPEAT -- TOTAL Category 1: 0 -- 0 -- 0 Category 2: 1 -- 0 -- 1 Category 3: 0 -- 0 -- 0 TOTAL: 1 -- 0 -- 1 FINDINGS LAST AUDIT: 1 Category 1: Findings that are material weaknesses in internal control and/or a qualification on compliance with State laws and regulations (material noncompliance). Category 2: Findings that are significant deficiencies in internal control and noncompliance with State laws and regulations. Category 3: Findings that have no internal control issues but are in noncompliance with State laws and regulations. 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 are also available on the worldwide web at www.auditor.illinois.gov SYNOPSIS • (14-1) The Regional Office of Education #41 did not properly record cash held in the Illinois Funds account related to teacher certification licensure processing. FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS IMPROPER RECORDING OF CASH Generally accepted accounting principles and the accounting policies of Regional Office of Education #41 consider cash and all highly liquid investments with an original maturity of three months or less from the date of acquisition to be cash equivalents. Sound internal controls require that accounting records accurately and completely record all transactions of the entity. Balances in the general ledger accounts should be reconciled with statements of accounts on a regular basis and adjustments recorded timely and correctly in the general ledger. Also, the “due from governmental agencies” account should only include balances that were uncollected at fiscal year-end. The Regional Office of Education #41’s Institute Fund account receives money electronically from the Illinois State Board of Education (ISBE) related to the teacher certification licensure processing. As of June 30, 2014, the cash balance of the Regional Office totaling $1,510,543 did not include the $44,543 bank balance in the Institute Illinois Funds account. This amount was instead recorded in the ROE’s general ledger under “due from other governmental agencies” account. In addition, no formal monthly bank reconciliations were prepared for the Illinois Funds account during the fiscal year. After auditor’s notification, the Regional Office made an adjusting entry to properly account for these transactions. According to the Regional Office of Education #41 management, the Illinois Funds account cash balance was not recorded as part of the Regional Office’s total cash balance because the monies were not yet received into one of the Regional Office’s local financial institution bank accounts. It has been the ROE’s practice to record the cash upon transfer to their local bank account. The Regional Office also reconciled the monthly interim balance of the account to activity reports from the State of Illinois which was deemed sufficient. (Finding 2014-001, pages 11-12) The auditors recommended that the Regional Office of Education #41 should ensure that all transactions are properly accounted and recorded for accurate financial reporting. Bank reconciliations should be performed on all bank accounts on a regular basis. The Regional Office of Education #41 responded that management agrees with the finding. The Regional Office stated that it made the adjusting journal entry to provide for accurate financial reporting of the Illinois Funds account. A bank reconciliation will be performed on this account using the same policies and procedures performed on the Regional Office’s other bank accounts. AUDITORS’ OPINION Our auditors state the Regional Office of Education #41’s financial statements as of June 30, 2014 are fairly presented in all material respects. WILLIAM G. HOLLAND Auditor General WGH:JRB AUDITORS ASSIGNED: E.C. Ortiz & Co., LLP were our special assistant auditors.