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The Regional Office of Education #51 did
not have sufficient internal controls over the financial reporting process.
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FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
Controls
Over Financial Statement Preparation
The Regional Office of Education #51
is required to maintain a system of controls over the preparation of
financial statements in accordance with generally accepted accounting
principles (GAAP). Regional Office
internal controls over GAAP financial reporting should include adequately
trained personnel with the knowledge and expertise to prepare and/or thoroughly
review GAAP based financial statements to ensure that they are free of
material misstatements and include all disclosures as required by the
Governmental Accounting Standards Board (GASB).
The Regional Office of Education #51
does not have sufficient internal controls over the financial reporting process. The Regional Office maintains their
accounting records on the cash basis of accounting. While the Regional Office
maintains controls over the processing of most accounting transactions, there
are not sufficient controls over the preparation of the GAAP based financial
statements sufficient for management or employees in the normal course of
performing their assigned functions to prevent or detect financial statement
misstatements and disclosure omissions in a timely manner. For example,
auditors, in their review of the Regional Office’s accounting records, noted
the following:
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Numerous
adjustments were required to present financial statements in accordance
with generally accepted accounting principles.
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The Regional Office did not have adequate controls over the
maintenance of complete records of accounts receivable, accounts
payable, or deferred revenues. While
the Regional Office did maintain records of accounts payable and
accounts receivable, detailed testing of accounts payable noted three
items totaling $9,578 had been omitted from the accounts payable records
provided and three items totaling $12,549 had been omitted from the
accounts receivable records provided.
Additionally, no entries were provided to reconcile the Regional
Office’s grant activity, such as posting grant receivables and deferred
revenues. (Finding 07-01, pages 11-12)
The auditors recommended that, as
part of its internal control over the preparation of its financial
statements, including disclosures, the Regional Office of Education #51
should implement a comprehensive preparation and/or review procedure to
ensure that the financial statements, including disclosures, are complete and
accurate. Such procedures should be
performed by a properly trained individual(s) possessing a thorough
understanding of applicable generally accepted accounting principles, GASB
pronouncements, and knowledge of the Regional Office of Education’s
activities and operations.
The Regional Office of Education #51
responded that it maintains accounting records on the cash basis of
accounting. The Regional Office of
Education noted that while it maintains controls over the processing of most
accounting transactions, it will add more stringent controls over the
preparation of the GAAP based financial statements. Specifically, the Regional Office will
furnish comprehensive accounts receivable and accounts payable listings,
including all grant receivables and deferred revenues.
AUDITORS’ OPINION
Our auditors state the Regional Office
of Education #51’s financial statements as of June 30, 2007 are fairly
presented in all material respects.
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WILLIAM
G. HOLLAND, Auditor General
WGH:JB
SPECIAL ASSISTANT AUDITORS
Our special assistant auditors were
Sikich, LLP.
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