REPORT DIGEST

REGIONAL OFFICE OF EDUCATION #44: MCHENRY
COUNTY

FINANCIAL AUDIT
FOR THE YEAR ENDED JUNE 30, 2025

Release Date:  July 22, 2026

FINDINGS THIS AUDIT: 4

CATEGORY:  NEW -- REPEAT – TOTAL
Category 1:  0 -- 2 -- 2
Category 2:  1 -- 0 -- 1
Category 3:  0 -- 1 -- 1
TOTAL:  1 -- 3 -- 4

FINDINGS LAST AUDIT: 4

State of Illinois, Office of the Auditor
General
CHRISTOPHER B. MEISTER, AUDITOR GENERAL

To obtain a copy of the Report contact:
Office of the Auditor General, 400 West
Monroe, Suite 306, Springfield, IL
62704-9849
(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

• (25-1) The Regional Office of Education
#44 did not have sufficient internal
controls over financial statement
preparation.

• (25-2) The Regional Office of Education
#44 had uninsured and uncollateralized
deposits.

• (25-3) The Regional Office of Education
#44 had inadequate internal control
procedures.

• (25-4) The Regional Office of Education
#44 did not provide completed financial
statements in an auditable form by the
August 31 deadline.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

CONTROLS OVER FINANCIAL STATEMENT
PREPARATION

The Regional Office of Education #44 (ROE)
did not have sufficient internal controls
over the financial reporting process.
While the ROE maintains controls over the
processing of most accounting
transactions, there are not sufficient
controls over the preparation of the
financial statements for management or
employees in the normal course of
performing their assigned functions to
prevent, or detect and correct, financial
statement misstatements and disclosure
omissions in a timely manner.

During our review of the ROE’s financial
information, we noted the ROE improperly
reported all Institute Fund related
revenue and expenditure activity under the
General Fund on the financial statements.
As of the testing date, the ROE was unable
to determine the appropriate amounts to be
reclassified from the General Fund to the
Institute Fund.

The School Code 105 ILCS 5/2-3.17a allows
a Regional Office of Education or
Educational Service Center to utilize a
cash basis, modified cash basis, or
generally accepted accounting principles
(GAAP) basis of accounting to prepare
financial statements for audit. The ROE
has chosen to utilize the modified cash
basis of accounting for financial
reporting. The ROE is required to maintain
a system of controls over the preparation
of financial statements, in accordance
with its selected basis of accounting.

The School Code 105 ILCS 5/3-12 states
that all license registration fees and a
portion of renewal and duplicate fees
shall be kept by the regional
superintendent as described in Section
21-16 or 21B-40 of this Code, together
with a record of the names of the persons
paying them. Such fees shall be deposited
into the institute fund and shall be used
by the regional superintendent to defray
expenses associated with the work of the
regional professional development review
committees established pursuant to
paragraph (2) of subsection (g) of Section
21-14 of this Code to advise the regional
superintendent, upon his or her request;
to defray expenses connected with
improving the technology necessary for the
efficient processing of licenses; to
defray all costs associated with the
administration of teaching licenses; to
defray expenses incidental to teachers’
institutes, workshops or meetings of a
professional nature that are designed to
promote the professional growth of
teachers or for the purpose of defraying
the expense of any general or special
meeting of teachers or school personnel of
the region, which has been approved by the
regional superintendent.

Regional Office officials indicated the
exceptions noted above were due to a
misinterpretation of the proper financial
reporting of the related transactions.
(Finding 25-001, pages 11-12)  This
finding was first reported in 2023.

The auditors recommended that the ROE
should implement comprehensive preparation
and/or review procedures as part of their
internal control over the preparation of
financial statements to ensure the
financial statements, including
disclosures, are complete and accurate.
These procedures should be performed by a
properly trained individual(s) possessing
a thorough understanding of the basis of
accounting selected for financial
statements, GASB pronouncements, and
knowledge of the ROE’s activities and
operations.

ROE Response: All Institute Fund-related
revenue and expenditure activity will be
properly reported within the Institute
Fund going forward. Prior period
adjustments, if necessary, will also be
made for incorrect reporting in prior
years.

UNINSURED AND UNCOLLATERALIZED DEPOSITS

The Regional Office of Education #44 (ROE)
did not adequately perform formal
monitoring procedures of its bank accounts
to ensure that cash balances maintained at
various financial institutions were fully
secured and collateralized. The ROE has
three financial institutions with bank
balances totaling $2,340,838 as of June
30, 2025, of which $631,067 was uninsured
or uncollateralized.

The ROE is required to follow the Illinois
Public Funds Investment Act (30 ILCS 235/6
(d)) (Act). The Act gives the
authorization for deposits in excess of
the federally insured limit to be covered
by pledged collateral held by the
financial institution’s trust departments
in the ROE’s name. In addition, prudent
business practice requires that all cash
and investments held by the financial
institutions for the ROE be adequately
covered by depository insurance or
collateral.

Regional Office officials indicated
competing priorities prevented them from
monitoring the adequacy of the level of
the collateral.  (Finding 25-002, page 13)

The auditors recommended the ROE should
regularly monitor balances held with
financial institutions and secure
sufficient pledged collateral. The ROE
should ensure the value of collateral
remains adequate for the balance of the
ROE’s accounts according to the agreement
in place.

ROE Response: The ROE will move funds to a
banking institution that provides the
necessary collateral.

INADEQUATE INTERNAL CONTROL PROCEDURES

The Regional Office of Education #44 (ROE)
had inadequate internal control
procedures.  Auditors noted the following
deficiencies in the ROE’s internal control
system for which there were no mitigating
controls:

• One of two (50%) payroll reports were
missing the date of when the report was
reviewed and approved by the Regional
Superintendent, therefore we were unable
to determine whether the report was
properly reviewed before the payroll was
processed.

• Eleven of 48 (23%) monthly bank
reconciliations were missing the prepared
by and date information, therefore we were
unable to determine whether the bank
reconciliations were prepared timely.

The Regional Superintendent of Schools is
responsible for establishing and
maintaining an internal control system
over accounting transactions to prevent
errors and fraud.

ROE management indicated the exceptions
noted in the internal controls were due to
schedule and timing conflicts.  (Finding
25-003, pages 14-15)


The auditors recommended the ROE should
ensure supporting documentation for
receipt transactions are properly
maintained; receipts have a documented
received date to ensure timely deposits;
and bank reconciliations for all bank
accounts are performed timely with
documentation of date performed.

ROE Response:  The ROE accounting system
has been transferred to a new accounting
software that provides reports noting
completed dates for all bank
reconciliations. All bank reconciliations
are completed by the outside accountant.
All payrolls are approved by the Regional
Superintendent before payroll is
processed. This approval is done via email
each pay run; therefore, dates are
appropriately documented.

DELAY OF AUDIT

The Regional Office of Education #44 (ROE)
did not provide complete financial
statements in an auditable form by August
31, 2025. The preliminary financial
statements provided on February 13, 2026,
required revisions and the updated
financial statements were provided on
March 2, 2026.

The ROE is subject to 105 ILCS 5/2-3.17a
which requires the Auditor General’s
office to cause an audit to be made, as of
June 30th of each year, of the financial
statements of all accounts, funds and
other moneys in the care, custody or
control of the regional superintendent of
schools of each educational service region
in the State and of each educational
service center established in the School
Code. The audit is to be conducted in
accordance with Generally Accepted
Government Auditing Standards. The ROE may
utilize a cash basis, modified cash basis,
or generally accepted accounting
principles (GAAP) basis of accounting to
prepare the financial statements for
audit. The ROE has chosen the modified
cash basis of accounting for financial
reporting.

In accordance with 105 ILCS 5/2-3.17a, the
Auditor General has promulgated
administrative rules and regulations to
govern this process. Those rules, 74 Ill.
Adm. Code 420.320 (c) (2), state that for
audit purposes, each regional office of
education and educational service center
shall make available to the Auditor
General or his designee all books and
records deemed necessary to make and
complete the required audits. The records
shall be in auditable form by August 15 of
the succeeding fiscal year. Financial
reports are to be available no later than
August 31 in order for the annual audit to
be completed by an independent auditor
selected by the Auditor General.

In addition, prudent business practices
and transparency require timely
preparation and completion of financial
statements.

ROE management indicated the delay was due
to the additional time needed to ensure
that any adjustments from Fiscal Year 2024
would have been properly considered in
finalizing the Fiscal Year 2025 financial
statements. (Finding 25-004, pages 16-17)
This finding was first reported in 2018.

The auditors recommended the ROE should
implement procedures to ensure compliance
with 105 ILCS 5/2-3.17a and 74 Ill. Adm.
Code 420.320 (c) (2). These financial
statements need to be presented to the
Auditor General’s independent auditors for
audit by the August 31 deadline.

ROE Response: Financial statements will be
provided in an auditable form by the
required due dates going forward.

AUDITORS’ OPINION

Our auditors state the Regional Office of
Education #44’s financial statements as of
June 30, 2025 are fairly stated in all
material respects.

This financial audit was conducted by the
firm of Adelfia LLC.

TRICIA WAGNER
Division Director

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

CHRISTOPHER B. MEISTER
Auditor General

CBM:JRB