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The Regional Office
of Education #51 did not comply with certain statutory administrative
requirements.
The Regional Office
of Education #51 does not maintain a cost allocation plan or an approved
indirect cost rate to allocate indirect costs in accordance with OMB Circular
A-87.
The Regional Office
of Education #51’s accounting system allows for one-sided entries and does
not properly post certain entries, which resulted in 11 fund trial balances
being out-of-balance.
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FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
COMPLIANCE WITH STATUTORY REQUIREMENTS
The Regional
Office of Education #51 did not comply with certain statutory administrative
requirements. For example, the
Illinois School Code (105 ILCS 5/3-6) requires the Regional Superintendent to
report, in writing, to the county board on or before January 1 of each year,
stating: (1) the balance on hand at
the time of the last report, and all receipts since that date, with the
sources from which they were derived; (2) the amount distributed to each of
the school treasurers in his or her county; and (3) any balance on hand. Regional Office officials submitted their
annual report prior to January 1, 2004.
However, the report provides only a listing of services provided by
the Regional Office. The Regional
Office relies on their audit report, which was not completed by January 1, to
provide the detailed balance information. Regional Office management believed
that their annual report, along with the filing of the audit report when
completed, would be adequate.
The School Code (105 ILCS 5/3-12) also requires
that on or before January 1 of each year, the Regional Superintendent shall
publish in a newspaper of general circulation published in the region or post
in each school building under his/her jurisdiction, certain information regarding
the Office’s Institute Fund. According to Regional Office management, they were
unaware of this requirement and had not submitted the required report.
Finally,
the Illinois Administrative Code (23 Ill. Adm. Code 110.115) requires that
fees for conferences, workshops, materials and other costs charged for
discretionary activities not required by law or rule are to be determined on
a cost-recovery basis. Excess funds
resulting from registrations or requests for materials/ services beyond the
anticipated cost-recovery basis shall be deposited in an Enterprise Fund to
be used solely to reduce the cost of similar items or to cover costs incurred
due to less-than-anticipated registrations or requests for
materials/services. According to
Regional Office management, they were unaware of the requirement to deposit
excess fees into an Enterprise Fund (Finding
04-1, pages 11-13).
The Regional Office of Education #51 accepted the recommendation
to comply with the requirements of the Illinois Statutes and Illinois
Administrative Code.
IMPROPER
ALLOCATION OF COSTS
The Regional Office of Education #51
does not maintain a cost allocation plan or an approved indirect cost rate to
allocate indirect costs in accordance with OMB Circular A-87. The Regional Office charges a program it
administers for support salaries.
Such salaries are allowable expenditures under OMB Circular A-87. However, where employees work on multiple
activities or cost objectives, a distribution of their salaries or wages is
required to be documented in accordance with the provisions of OMB Circular
A-87 or be included in the ROE’s cost allocation plan.
When an accumulation of indirect
costs will ultimately result in charges to a Federal Award, a cost allocation
plan or approved indirect cost rate is required. (Finding 04-2, pages 14-15)
The Regional Office of Education
accepted the recommendation, responding that it will maintain a cost
allocation plan in accordance with OMB Circular A-87.
COMPUTERIZED
ACCOUNTING SYSTEM DEFICIENCIES
The Regional Office of Education
#51’s accounting system allows for one-sided entries, and according to ROE
management, did not post certain entries properly, which resulted in 11 fund
trial balances being out-of-balance.
Eight of the 11 funds offset each other and were resolved. The three remaining out-of-balance funds
resulted in a total un-located difference of $2,000. Additionally, the accounting system
omitted two checks dated June 30, 2004 from the June 30, 2004 bank
reconciliation report for unknown reasons.
According to the Regional Office
of Education (ROE) Accounting Manual, an ROE’s management is responsible
for establishing and maintaining a system of internal controls that provides
reasonable assurance about the reliability of its financial statements,
operational compliance with legal and contractual provisions, safeguarding
ROE assets, and the effectiveness and efficiency of ROE operations. At the core of the system of internal
controls is the accounting system.
(Finding 04-3, pages 16-18)
The Regional Office of Education
accepted the recommendation and noted that the Office’s accounting system has
been upgraded which should eliminate the database problems experienced in
Fiscal Year 2004.
AUDITORS’ OPINION
Our auditors state the Regional Office
of Education #51’s financial statements as of June 30, 2004 are fairly
presented in all material respects.
_____________________________________
WILLIAM
G. HOLLAND, Auditor General
WGH:KJM:ro
SPECIAL ASSISTANT AUDITORS
Our special assistant
auditors were Sikich Gardner & Co., LLP, CPAs.
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