REPORT DIGEST

 

REGIONAL OFFICE OF EDUCATION #47

 

LEE AND OGLE 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†††††††††††††             4

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

Repeated from last audit†††††††††† 3

 

Release Date:

Sept. 26, 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 is also available on

the worldwide web at

http://www.auditor.illinois.gov

 

 

 

 

 

 

 

SYNOPSIS

 

 

        The Regional Office of Education #47 did not comply with certain statutory administrative requirements.

 

        The Regional Office of Education #47 is not maintaining records of its accounts receivable, accounts payable, and deferred revenue in order to efficiently and effectively convert their financial statements from a cash basis to the accrual basis and the modified accrual basis of accounting.

 

        The Regional Office of Education #47 did not have a review function over the financial reporting throughout the year.

 

        The Regional Office of Education #47 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 #47

†††††††† LEE AND OGLE 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

$2,064,727

$1,994,073

Local Sources

$469,355

$582,519

% of Total Revenues

22.73%

29.21%

State Sources

$821,698

$730,296

% of Total Revenues

39.80%

36.62%

Federal Sources

$773,674

$681,258

% of Total Revenues

37.47%

34.16%

 

TOTAL EXPENDITURES

$2,000,478

$1,950,495

Salaries and Benefits

$798,140

$808,150

% of Total Expenditures

39.90%

41.43%

Purchased Services

$648,897

$539,433

% of Total Expenditures

32.44%

27.66%

All Other Expenditures

$553,441

$602,912

% of Total Expenditures

27.67%

30.91%

 

 

 

TOTAL NET ASSETS

$386,920

$322,671

 

 

 

INVESTMENT IN CAPITAL ASSETS

 

$85,203

 

$61,299

 

Percentages may not add due to rounding.

 

 

REGIONAL SUPERINTENDENT

During Audit Period: Honorable Amy Jo Clemens

Currently:Honorable Amy Jo Clemens


 

 

 

 

 

 

 

 

 

 

 

 

 


The Regional Office of Education #47 did not comply with certain statutory administrative requirements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


The Regional Office of Education #47 is not maintaining records of its accounts receivable, accounts payable, and deferred revenue in order to efficiently and effectively convert their financial statements from a cash basis to the accrual basis and the modified accrual basis of accounting.

 

 

 

 

 

 

 

 

 

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 her educational service region, and if she finds any irregularities in them, to report them at once, as directed by the School Code.

 

The Regional Office of Education #47 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 #47 performs compliance inspections for each public school in its region on a rotational basis every four 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.The Regional Office also noted that coverage is obtained through the many different visits to every school throughout the year by various ROE personnel and the various documents and approvals that must be submitted to the ROE or submitted to ISBE and reviewed by the ROE.(Finding 06-01, pages 11-12)

 

The Regional Office of Education #47 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.

 

PREPARATION OF FINANCIAL STATEMENTS

 

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.

 

The Regional Office of Education #47 prepares its financial reports on the cash basis.The ROE is not maintaining records of its accounts receivable, accounts payable, and deferred revenue in order to efficiently and effectively convert their financial statements from a cash basis to the accrual basis and the modified accrual basis of accounting.(Finding 06-02, page 13)

 

The Regional Office of Education #47 accepted the recommendation and will maintain subsidiary records of accounts receivable, accounts payable, deferred revenue, and fund balances sufficient to allow for the preparation of accrual basis financial statements.

 

 

 


The Regional Office of Education #47 did not have a review function over the financial reporting throughout the year.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


The Regional Office of Education #47 did not have sufficient collateral in place to insure their cash balances against possible loss.

 

 

 

 

 

 

 

 

 

 

 

 

CONTROLS OVER FINANCIAL REPORTING

 

Strong internal controls over financial reporting systems are required to prevent inaccuracies in the financial statements.The Regional Office of Education #47 did not have a review function over the financial reporting throughout the year.As a result, the auditors identified and proposed numerous adjustments to the preliminary financial statements.(Finding 06-03, page 14)

 

Regional Office officials noted that they were in the process of converting recordkeeping activities to one system during fiscal year 2006.The conversion consumed the time of personnel assigned to recordkeeping functions.Financial statements were reviewed at the end of the fiscal year.

†††††††

The Regional Office of Education #47 accepted the recommendation, responding that it has fully converted all of its recordkeeping activities to one system for the fiscal year 2007.Internal reporting documents now show all revenues and expenditures by activity, program, and fund resulting in a monthly summary statement of all accounts.These financial statements are currently reviewed by the bookkeeper, Assistant Regional Superintendent and Regional Superintendent.

 

 

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 #47ís name.In addition, prudent business practice requires that all cash and investments held by the financial institutions for the ROE be adequately covered by depository insurance or collateral.

 

 

The Regional Office of Education #47 did not have sufficient collateral in place to insure their cash balances against possible loss.At year end, $535,404 of Regional Office of Education #47ís bank balance of $642,836 was exposed to custodial credit risk.

 

The Regional Office of Education #47 accepted the recommendation and has made formal arrangements with the bank and all deposit amounts in excess of the FDIC insured amount are collateralized.

 

 

AUDITORSí OPINION

 

Our auditors state the Regional Office of Education #47ís 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 Prado & Renteria, Prof. Corp.