REPORT DIGEST

REGIONAL OFFICE OF EDUCATION #49

ROCK ISLAND COUNTY

FINANCIAL AUDIT

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

For the Year Ended:

June 30, 2004

Summary of Findings:

Total this audit                          3

Total last audit                          1

Repeated from last audit           1

Release Date:

June 23, 2005 

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 is also available on

the worldwide web at

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

SYNOPSIS

·        The Regional Office of Education #49 maintains a pooled cash account for several funds.  The balance of the pooled cash account per the bank reconciliation was $14,091 higher than the balance in the general ledger.

·        The Regional Office of Education #49 paid expenses for grants using funds from a different grant.  Instead of the expending grant reimbursing the paying grant for these expenses, the Enterprise Fund was reimbursed. This caused inaccurate expenditure reporting.

·        The Regional Office of Education #49 included as an expense accrued payroll for teachers that would not be paid until July or August.  The amount was an allowable expense but should have been obligated rather than expensed.

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

FY 2004

FY 2003

TOTAL REVENUES

$5,062,484

$4,108,204

Local Sources

$651,803

$497,543

% of Total Revenues

12.88%

12.11%

State Sources

$1,072,399

$1,474,308

% of Total Revenues

21.18%

35.89%

Federal Sources

$3,338,282

$2,136,353

% of Total Revenues

65.94%

52.00%

TOTAL EXPENDITURES

$4,893,712

$4,029,666

Salaries and Benefits

$1,292,046

$1,330,914

% of Total Expenditures

26.40%

33.03%

Purchased Services

$899,557

$409,659

% of Total Expenditures

18.38%

10.17%

All Other Expenditures

$2,702,109

$2,289,093

% of Total Expenditures

55.22%

56.81%

TOTAL NET ASSETS¹

$929,554

$1,003,355

INVESTMENT IN CAPITAL ASSETS¹

$155,553

$103,815

1         In fiscal year 2004, Regional Offices of Education implemented Government Accounting Standards Board (GASB) Statement No. 34 which established a new financial reporting model for state and local governments.  Government-wide financial statements are prepared using full accrual accounting that reports Total Net Assets.  The fiscal year 2003 ending general fixed assets have been restated to reflect the changes required as part of the implementation of GASB Statement No. 34.  

              Percentages may not add due to rounding.

REGIONAL SUPERINTENDENT

During Audit Period:  Honorable Joseph Vermeire

Currently:  Honorable Joseph Vermeire

The Regional Office of Education #49 maintains a pooled cash account for several funds.  The balance of the pooled cash account per the bank reconciliation was $14,091 higher than the balance in the general ledger.

The Regional Office of Education #49 paid expenses for grants using funds from a different grant.  Instead of the expending grant reimbursing the paying grant for these expenses, the Enterprise Fund was reimbursed. This caused inaccurate expenditure reporting.

The Regional Office of Education #49 included as an expense accrued payroll for teachers that would not be paid until July or August.  The amount was an allowable expense but should have been obligated rather than expensed.

FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

RECONCILIATION OF POOLED CASH ACCOUNT

The Regional Office of Education #49 maintains a pooled cash account for several funds.  The total of the transactions within the funds was not equal to the reconciled cash account. When a pooled cash account is maintained, the total of the cash in each program combined should be in agreement with the total of all the transactions.  The balance of the pooled cash account per the bank reconciliation was $14,091 higher than the balance in the general ledger.

Not reconciling the pooled cash accounts with general ledger transactions could cause inaccurate expenditure report information and grant reporting.  (Finding 04-1, pages 11-12) This finding is repeated from our 2003 audit.

The Regional Office of Education #49 accepted the auditor’s recommendation to reconcile all pooled cash account funds on a monthly basis to the total of all transactions in the pooled cash account. (For previous Regional Office response, see Digest Footnote #1.)

REIMBURSEMENT OF GRANT EXPENSES TO ENTERPRISE FUND

             The Regional Office of Education #49 paid expenses for grants using funds from a different grant.  Instead of the expending grant reimbursing the paying grant for these expenses, the Enterprise Fund was reimbursed.  In effect, these expenses were shown on expenditure reports for each of the grants, which overstated their expenses and were shown as revenue in the Enterprise Fund. 

             The expenditures reported on grant expenditure reports should reflect expenses directly related to the grant.  Reimbursing the Enterprise Fund for these expenses causes grant expenditures for the grants originally charged with the expense to be overstated and also accumulates inappropriate revenue in the Enterprise Fund. (Finding 04-2, page 13)

             The Regional Office of Education #49 accepted the auditor’s recommendation to expend all grant expenditures through the grant funds to which the expense relates.

INACCURATE EXPENDITURE REPORT

             The Regional Office of Education #49 included as an expense accrued payroll for teachers that would not be paid until July or August.  The amount was an allowable expense.  However, the amount should have been obligated instead of expensed.  The actual amount should have been included as an outstanding obligation on the expenditure report and recorded as a liability of the grant on the general ledger.

             Expensing the accrued payroll, rather than obligating it, caused the expenditure report that was submitted to not accurately reflect the outstanding obligation of the grant.  (Finding 04-3, pages 14-15)

             The Regional Office of Education #49 accepted the auditor’s recommendation stating they would  amend the expenditure report to accurately reflect the grant activity at June 30, 2004 and would refrain from crediting expense accounts to record liabilities. 

AUDITORS’ OPINION

Our auditors state the Regional Office of Education #49’s financial statements as of June 30, 2004 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:  RECONCILIATION OF POOLED CASH ACCOUNT– Previous Regional Office Response

In its prior response in 2003, the Regional Office accepted the finding and agreed to reconcile the pooled cash account funds on a monthly basis.