REPORT DIGEST

 

REGIONAL OFFICE OF EDUCATION #46

 

BROWN/CASS/MORGAN/ SCOTT COUNTIES

 

FINANCIAL AUDIT

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

For the Year Ended:

June 30, 2006

 

Summary of Findings:

 

Total this audit†††††††††††            †† 5

Total last audit††††††††††††† ††††††††††† 3

Repeated from last audit†††††††††† 3

 

Release Date:

July 31, 2007

 

 

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

http://www.auditor.illinois.gov

 

 

 

 

 

 

SYNOPSIS

 

 

 

  • The Regional Office of Education #46 did not comply with certain statutory administrative requirements.

 

  • The Regional Office of Education #46 included $2,151 of expenses related to the 2005 Truants Alternative and Optional Education grant on the 2006 grant expenditure report.

 

  • The Regional Office of Education #46 recorded all expenditures of the Identix Fingerprinting Fund as a debit to revenue accounts instead of being recorded as expenditures.

 

  • The Regional Office of Education #46 maintains a pooled cash account for many of its funds.The total of the transactions within the funds was not equal to the reconciled cash account by $10,141.

 

        The Regional Office of Education #46 did not have sufficient collateral in place to insure their cash balances against possible loss.

 

 

 

 

 

 

 

 

 

 

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

 

 

 


REGIONAL OFFICE OF EDUCATION #46

BROWN/CASS/MORGAN/SCOTT COUNTIES

 

FINANCIAL AUDIT

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

For The Year Ended June 30, 2006

 

 

 

FY 2006

FY 2005

TOTAL REVENUES

$1,657,556

$2,014,390

Local Sources

$300,374

$235,968

% of Total Revenues

18.12%

11.71%

State Sources

$1,071,245

$1,026,894

% of Total Revenues

64.63%

50.98%

Federal Sources

$285,937

$751,528

% of Total Revenues

17.25%

37.31%

 

TOTAL EXPENDITURES

$1,578,626

$1,922,635

Salaries and Benefits

$1,131,268

$1,543,483

% of Total Expenditures

71.66%

80.28%

Purchased Services

$227,753

$249,375

% of Total Expenditures

14.43%

12.97%

All Other Expenditures

$219,605

$129,777

% of Total Expenditures

13.91%

6.75%

 

 

 

TOTAL NET ASSETS

$1,058,257

$979,327

 

 

 

INVESTMENT IN CAPITAL ASSETS

 

$14,788

 

$11,480

 

Percentages may not add due to rounding.

 

REGIONAL SUPERINTENDENT

During Audit Period:Honorable Stephen Breese

Currently:Honorable Stephen Breese

 

 

 


 

 

 

 

 

 

 

 


The Regional Office of Education #46 did not comply with certain statutory administrative requirements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


The Regional Office of Education #46 included $2,151 of expenses related to the 2005 Truants Alternative and Optional Education grant on the 2006 grant expenditure report.

 

 

 

 

 

 

 

 

 


The Regional Office of Education #46 recorded all expenditures of the Identix Fingerprinting Fund as a debit to revenue accounts instead of being recorded as expenditures.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


The Regional Office of Education #46 maintains a pooled cash account for many of their funds.The total of the transactions within the funds was not equal to the reconciled cash account by $10,141.

 

 

 

 

 

 

 

 

 

 

 

 

 


The Regional Office of Education #46 did not have sufficient collateral in place to insure their cash balances against possible loss.

 

 

 

 

FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

 

 

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 of Education #46 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.†††††††††

 

The Illinois School Code (105 ILCS 5/3-14.5) also requires the Regional Superintendent to visit each public school in the county at least once a year, noting the methods of instruction, the branches taught, the textbooks used, and the discipline, government and general condition of the schools.This mandate has existed in its current form since at least 1953.

 

The Regional Office of Education #46 performs compliance inspections for each public school in his region on a rotational basis every three years instead of annually. The Illinois Public School Accreditation Process Compliance Component document completed at these visits includes many of the items delineated in 105 ILCS 5/3-14.5, but does not include a review of the methods of instruction and the textbooks used in the district.

 

Finally, the Illinois School Code (105 ILCS 5/3-5) requires the Regional Superintendent to present under oath or affirmation to the county board at its meeting in September and as nearly quarterly thereafter as it may have regular or special meetings, a report of all his acts as county superintendent, including a list of all the schools visited with the dates of visitation.This mandate has existed in its current form since at least 1953.

 

The Regional Office of Education #46 did not present at the September county board meeting, and as nearly quarterly thereafter, a report of all his acts including a list of all the schools visited and dates of visitation.The Regional Superintendent presents at the county board meeting annually, not quarterly.(Finding 06-1, pages 12-14)

 

The Regional Office of Education #46 accepted the recommendation to comply with the statutory requirements.The Regional Office responded that with regards to compliance with 105 ILCS 5/3-14.11 and 105 ILCS 5/3-14.5, the Illinois Association of Regional Superintendents of Schools and the Illinois State Board of Education have agreed to seek legislation to remove duplicative and/or obsolete sections of the Illinois School Code.Both parties believe that 105 ILCS 5/3-7 of the Illinois School Code and 23 Ill. Adm. Code 1.20, respectively, contain more current, thorough, and comprehensive requirements concerning a public school districtís financial transactions and visitation of public schools by the Regional Superintendent.As a result, the two parties working together will seek legislation to repeal these two sections of the Illinois School Code.††

 

With regards to 105 ILCS 5/3-5, the Regional Superintendent will present the affirmed report on a quarterly basis.

 

 

INACCURATE EXPENDITURE REPORT

 

The Regional Office of Education #46 included $2,151 of expenses related to the 2005 Truants Alternative and Optional Education grant on the 2006 grant expenditure report.Consequently, the expenditure report submitted did not accurately reflect the activity of the period.(Finding 06-2, page 15)This finding was first reported in 2003.

 

††††† The Regional Office of Education #46 accepted the recommendation, stating it will review expenditure reports and their supporting documentation prior to their filing.(For previous Regional Office response, see Digest Footnote #1.)

 

 

IMPROPER EXPENDITURE CLASSIFICATION

††††††

The Program Accounting Manual and Regional Office of Education Accounting Manual requires expenditures to be identified by function account code and object account code.Generally Accepted Accounting Principles require the recognition and reporting of revenues and expenditures separately.

 

The Regional Office of Education #46 recorded all expenditures of the Identix Fingerprinting Fund as a debit to revenue accounts instead of being recorded as expenditures.As a result, revenues and expenditures for the affected fund were understated by $4,550; however, the net effect is zero. (Finding 06-3, page 16)

 

†††††††† The Regional Office of Education #46 accepted the recommendation stating it will implement the system of accounts promulgated by the Illinois State Board of Education as required by the Illinois Administrative Code and by the ROE Accounting Manual.

 

 

INACCURATE RECONCILIATION OF POOLED CASH ACCOUNT

 

The Regional Office of Education #46 maintains a pooled cash account for many of their funds.The total of the transactions within the funds was not equal to the reconciled cash account by $10,141.When a pooled cash account is maintained, the total of the cash in each fund combined should be in agreement with the total of all the transactions.The Regional Office of Education was not reconciling the total cash among all pooled cash accounts funds monthly.(Finding 06-4, page 17)

 

†††††† ††††The Regional Office of Education #46 accepted the recommendation stating the pooled cash account funds will be reconciled on a monthly basis which will correct the situation in the future.The accounting software will also be replaced beginning July 1, 2007.

 

 

UNDERCOLLATERALIZATION OF BANK ACCOUNTS

 

The Public Funds Deposit Act (30 ILCS 225/1) gives the authorization for deposits in excess of the federally insured limit to be covered by pledged collateral held by the financial institutionsí trust departments in the Regional Office of Education #46ís name.In addition, prudent business practice requires that all cash and investments held by financial institutions for the ROE be adequately covered by depository insurance or collateral.

 

The Regional Office of Education #46 did not have sufficient collateral in place to insure their cash balances against possible loss.At year end, $18,675 of the Regional Office of Education #46ís bank balance of $1,125,021 was exposed to custodial credit risk.(Finding 06-5, page 18)

 

The Regional Office of Education #46 accepted the recommendation, stating it will monitor its bank balances on a monthly basis to make sure there is adequate collateralization to protect its cash and investments from potential loss.

 

 

AUDITORSí OPINION

 

Our auditors state the Regional Office of Education #46ís financial statements as of June 30, 2006 are fairly presented in all material respects.

 

 

 

_____________________________________

WILLIAM G. HOLLAND, Auditor General

 

WGH:JRB

 

 

 

 

 

SPECIAL ASSISTANT AUDITORS

 

Our special assistant auditors were Clifton Gunderson LLP.

 

 

 

DIGEST FOOTNOTES

 

#1: INACCURATE EXPENDITURE REPORT--Previous Regional Office Response

 

In its prior response in 2005, the Regional Office accepted the finding and stated they will amend the expenditure report to accurately reflect the grant activity.

 

Complete Regional Office responses to prior findings are available upon request from the Auditor Generalís Office.