FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
ACCOUNTING
RECORDS MAINTAINED ON A
CASH BASIS
OF ACCOUNTING
The Regional Office of Education #48 prepares its
financial reports on the cash basis of accounting. The Regional Office 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 of
accounting to the accrual and modified accrual basis of accounting.
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 04-1, page 11).
This finding is repeated from our 2003
audit.
The
Regional Office of Education #48 accepted the recommendation, responding that
the Regional Office will begin maintaining subsidiary records of accounts
receivable, accounts payable, and deferred revenue balances. As of July 1, 2005 all funds received by
the Regional Office that are marked for the prior fiscal year will be entered
in the computerized bookkeeping system as accounts receivable for that fiscal
year. Using the same practice, all
items ordered before July 1 and not received prior to that date will be kept
on a separate list and entered into the computer system as accounts
payable. Revenue received during the
prior fiscal year and not totally expended will be transferred from a revenue
account to a liability account, and a listing will be kept of these accounts.
(For previous Regional Office response, see Digest Footnote #1.)
COMMINGLING OF FUNDS
The Regional Office of
Education #48 used the ROE/ISC Operations fund and the Local Workshops fund
to record the payment of salaries and other expenses without properly
allocating those expenses between these funds. The Regional Office also used the ROE/ISC Operations fund to
record the payment of expenses for other funds within the same pooled cash
account during Fiscal Year 2003. The
Regional Office subsequently recorded the expenses to the appropriate
accounts; however, the expenses in the Operations fund were not adjusted to
reflect the transfer. In addition,
neither the transfer of cash nor an amount due to/from other funds was
recorded.
Good business practices require the
Regional Office of Education #48 to transfer cash or record an amount due to
and from other funds when cash from one fund is used to pay for expenses of
another fund (Finding 04-2, page 12
and 13).
The
Regional Office of Education #48 accepted the recommendation, responding that
the Regional Office has created a chart that calculates the percentage of
expenses that will be allocated between the Local Workshops fund and the
ROE/ISC Operations fund from this fiscal year forward. Through communication, training, and
continuous scheduled meetings, the Regional Office has implemented a
procedure, which is reviewed regularly during various meeting times, to help
them better understand and control accounting procedures over pooled cash
funds and transfers between funds.
INADEQUATE
MONITORING OF SUBRECIPIENTS-REGIONAL SAFE SCHOOLS PROGRAM
The
Regional Office of Education #48 contracted with, and distributed $337,325 in
federal pass-through funds to, School District #150 to operate the Regional
Safe School Program for Peoria County.
School District #150 submits various reports to the State to satisfy
financial and compliance requirements; however, the Regional Office does not
review or approve these reports prior to their submission. The Regional Office also did not perform
any other monitoring of the program expenditures. The lack of adequate monitoring resulted in a qualified opinion
on compliance for major federal programs.
The
Regional Office of Education #48 is responsible for monitoring the
alternative school program in Peoria County.
In addition, OMB Circular A-110, “Uniform Administrative Requirements
for Grants and Agreements with Institutions of Higher Education, Hospitals,
and other Non-Profit Organizations”, states recipients are responsible for
managing and monitoring sub-awards to ensure sub- recipients are meeting
audit requirements (Finding 04-3, pages 14 and 15).
The
Regional Office of Education #48 agreed with the recommendation, and
responded that as part of its responsibility for providing a Regional Safe
Schools Program, the Regional Office now reviews and approves all reports on
the Regional Safe Schools Program that are submitted to the State by its
contractor for this program, Peoria School District #150. The Regional Office also monitors and
keeps a formal record of all expenditures for this program as submitted to it
by District #150.
AUDITORS’ OPINION
Our
auditors state the Regional Office of Education #48’s financial statements as
of June 30, 2004 are fairly stated in all material respects.
_____________________________________
WILLIAM
G. HOLLAND, Auditor General
WGH:KJM:ro
SPECIAL ASSISTANT AUDITORS
Our special assistant
auditors were Sulaski & Webb, CPAs.
DIGEST FOOTNOTES
#1: ACCOUNTING
RECORDS MAINTAINED ON CASH BASIS – Previous Regional Office Response
In its prior response in 2003, the Regional Office
accepted the finding, responding that
they have historically prepared financial reports on a cash basis. The Regional Office stated they are
transitioning into a modified accrual system through the use of
vouchers. Each purchase for end of
current fiscal year expenses will be done by voucher, making sure that any
taxes, shipping or additional charges are included. The actual expense will be recorded in the current fiscal year,
even if the actual check is issued the following year.
Complete Regional Office responses to prior findings are available
upon request from the Auditor General’s Office.
|
