REPORT DIGEST

REGIONAL OFFICE OF EDUCATION #56: WILL
COUNTY

FINANCIAL AUDIT (In Accordance with the
Uniform Guidance)
FOR THE YEAR ENDED JUNE 30, 2017

Release Date:  November 1, 2018

FINDINGS THIS AUDIT:  1

CATEGORY:  NEW -- REPEAT -- TOTAL
Category 1:  0 -- 1 -- 1
Category 2:  0 -- 0 -- 0
Category 3:  0 -- 0 -- 0
TOTAL:  0 -- 1 -- 1

FINDINGS LAST AUDIT: 2

Category 1: Findings that are material
weaknesses in internal control and/or a
qualification on compliance with State laws
and regulations (material noncompliance).
Category 2: Findings that are significant
deficiencies in internal control and
noncompliance with State laws and
regulations.
Category 3: Findings that have no internal
control issues but are in noncompliance
with State laws and regulations.

State of Illinois, Office of the Auditor
General
FRANK J. MAUTINO, 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 are also
available on the worldwide web at
www.auditor.illinois.gov

SYNOPSIS

• (17-1)  The Regional Office of Education
#56 did not have sufficient internal
controls over the financial reporting
process.

The Regional Office of Education #56 did
not have sufficient internal controls over
the financial reporting process.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

CONTROLS OVER FINANCIAL STATEMENT
PREPARATION

The Will County Regional Office of
Education #56 (ROE) did not have sufficient
internal controls over the financial
reporting process. The ROE maintained its
accounting records on the cash basis of
accounting during the fiscal year and
posted year-end accrual entries for
financial statement purposes. While the ROE
maintained controls over the processing of
most accounting transactions, there were
not sufficient controls over the
preparation of generally accepted
accounting principles (GAAP) based
financial statements 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.

The ROE is required to maintain a system of
controls over the preparation of financial
statements in accordance with GAAP.  The
ROE’s internal controls over GAAP financial
reporting should include adequately trained
personnel with the knowledge, skills, and
experience to prepare GAAP based financial
statements and include all disclosures as
required by the Governmental Accounting
Standards Board (GASB).

During review of the financial information
prepared by the ROE, auditors noted the
Regional Office’s financial information
required material adjusting entries in
order to present its financial statements
in accordance with GAAP. In addition, the
ROE did not have adequate controls to
record and report the Regional Office’s net
accrued pension liabilities/assets,
deferred outflows of resources, deferred
inflows of resources, and pension expenses
in accordance with GAAP. Proposed adjusting
entries were approved and accepted by
Regional Office management.

According to Regional Office officials,
they did not have adequate funding to hire
and/or train their accounting personnel in
order to comply with these requirements.
Also, the complex requirements of GASB
Statements No. 68 and No. 71 require
additional time and training before the ROE
can fully implement the requirements on its
own. (Finding 2017-001, pages 13-14) This
finding was first reported in 2010.

The auditors recommended that as part of
its internal control over the preparation
of financial statements, the ROE should
implement comprehensive preparation
procedures to ensure that the financial
statements are complete and accurate. These
procedures should be performed by a
properly trained individual(s) possessing a
thorough understanding of applicable GAAP,
GASB pronouncements, and knowledge of the
ROE’s activities and operations.

ROE Response: The ROE has contracted with
an independent auditing firm to prepare and
ensure that the GAAP financial statements
are complete and accurate. The auditing
firm possesses a thorough understanding of
applicable GAAP, GASB pronouncements, and
knowledge of the ROE’s activities and
operations.

Prior Year ROE Response: The ROE accepts
the degree of risk associated with this
condition because the added expense of
seeking additional accounting expertise to
prepare and/or review financial statements
would take away from the funds available to
provide educational services for the
schools in the region.

The ROE will continue to work with the
other Regional Offices to determine the
most effective method of ensuring employees
possess the knowledge required to compile
the necessary GAAP based financial
statements.

AUDITORS’ OPINION

Our auditors state the Regional Office of
Education #56’s financial statements as of
June 30, 2017 are fairly stated in all
material respects.

This financial report was conducted by the
firm of McGreal & Company, PC.

KELLY MITTELSTAEDT
Audit Manager

This report is transmitted in accordance
with Section 3-14 of the Illinois State
Auditing Act.

FRANK J. MAUTINO
Auditor General

FJM:JMM