REPORT DIGEST

INTERMEDIATE SERVICE CENTER #1: NORTH COOK

FINANCIAL AUDIT
FOR THE YEAR ENDED JUNE 30, 2025

Release Date:  May 27, 2026

FINDINGS THIS AUDIT: 2

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

FINDINGS LAST AUDIT: 0

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, 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 Intermediate Service Center #1
did not provide completed financial
statements in an auditable form by the
August 31 deadline.

• (25-2) The Intermediate Service Center #1
did not have adequate internal controls
over financial reporting.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

DELAY OF AUDIT

The Intermediate Service Center #1 (ISC)
did not provide completed financial
statements in an auditable form by the
August 31, 2025 deadline. The FY25
completed financial statements were
provided to auditors on September 22, 2025.

The ISC 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 executive director 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
Regional Office of Education or Educational
Service Center 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 ISC has chosen
the GAAP 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.

ISC management indicated they have spent
considerable time finding and securing the
purchase of a new facility and planning
renovations. In addition, staff illness
delayed the progress in preparing the
needed schedules for the financial
statements.  (Finding 25-001, pages 11-12)

The auditors recommended the ISC 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: With the conversion to cash
basis accounting in FY2026, there will be
less delays in gathering the information
necessary for preparation of the annual
financial statements. Effective 7/1/26
North Cook ISC has hired a full-time Chief
School Business Official and a full-time
Director of Buildings and Operations to
replace the part-time business manager to
handle our growing fiscal and operational
needs. Therefore, meeting the 8/31 deadline
should be achieved.

INADEQUATE CONTROLS OVER FINANCIAL
REPORTING

The Intermediate Service Center #1 (ISC)
did not have adequate internal controls
over financial reporting. The ISC did not
include in the initial draft of the
financial statements, an accrual for
accumulating unused sick time more likely
than not to be used or paid in accordance
with GASB 101. The ISC initially only
reported compensated absences of $53,353
related to unused vacation time. When
brought to their attention by the auditors,
the Intermediate Service Center No. 1
recorded an estimated accrual for unused
sick time of $124,811 resulting in total
compensated absences of $178,164.

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 ISC has chosen to utilize
the GAAP basis of accounting for financial
statement reporting. The ISC is required to
maintain a system of controls over the
preparation of financial statements in
accordance with its selected basis of
accounting. The ISC’s internal controls
over financial reporting should include
adequately trained personnel with the
knowledge, skills and experience to prepare
financial statements and include all
related disclosures as required by the
Governmental Accounting Standards Board
(“GASB”).

GASB Statement No. 101, Compensated
Absences, provides guidance on recognition
and measurement for compensated absences
and amending certain required disclosures.

ISC management indicated that they did not
believe that GASB 101 would have a material
effect on the financial statements since
sick time is not paid out and is only used
in lieu of normal pay for work. (Finding
25-002, pages 13-14)

The auditors recommended the ISC should
implement procedures to strengthen controls
over financial reporting, particularly
their understanding of new pronouncements
that may apply.

ROE Response: The Intermediate Service
Center No. 1 will be converting to cash
basis accounting in FY2026. In addition,
Intermediate Service Center No. 1 will seek
CPA advice interpreting any new GASB
pronouncements applicable to cash basis
accounting.

AUDITORS’ OPINION

Our auditors state the Intermediate Service
Center #1 financial statements as of June
30, 2025 are fairly presented in all
material respects.

This financial audit was conducted by the
firm of GW & Associates, PC.

TRICIA WAGNER
Division Director

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

FRANK J. MAUTINO
Auditor General

FJM:BAO