REPORT DIGEST

REGIONAL OFFICE OF EDUCATION #28: BUREAU/
HENRY/STARK COUNTIES

FINANCIAL AUDIT (IN ACCORDANCE WITH THE
UNIFORM GUIDANCE)
FOR THE YEAR ENDED JUNE 30, 2018

Release Date:  May 23, 2019

FINDINGS THIS AUDIT:  2

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

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

• (18-1) The Regional Office of Education
#28 did not have sufficient internal
controls over the financial reporting
process.

• (18-2) The Regional Office of Education
#28 did not provide an actuary report with
all information needed to support its other
postemployment benefits (OPEB) balances and
related disclosures by the August 31
deadline.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

CONTROLS OVER FINANCIAL STATEMENT
PREPARATION

The Regional Office of Education #28 (ROE)
did not have sufficient internal controls
over the financial reporting process. While
the ROE maintained controls over the
processing of most accounting transactions,
there were not sufficient controls over the
preparation of the 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 and correct 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.
Regional Office internal controls over GAAP
financial reporting should include
adequately trained personnel with the
knowledge, skill, and experience to prepare
and/or thoroughly review GAAP based
financial statements to ensure they are
free of material misstatements and include
all disclosures as required by the
Governmental Accounting Standards Board
(GASB).

During review of the Regional Office’s
financial information prepared by the ROE,
auditors noted that the ROE did not have
adequate controls over the maintenance of
records of amounts due from other
governments, accounts payable, amounts due
to other governments, and unavailable
revenue. While the ROE did maintain records
to indicate the balances of these accounts,
material audit adjustments, including those
required under GASB Statements No. 34, No.
68, No. 71 and No. 75, were proposed in
order to ensure those balances were
accurate.

According to Regional Office management,
they did not effectively detect all of the
material adjustments needed in order to
present financial statements in accordance
with GAAP.   (Finding 18-001, pages 13-15)
This finding was first reported in 2007.

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

ROE Response: The ROE understands the
nature of this finding and realizes that
this circumstance is not unusual in an
organization this size. In the future, the
Regional Office will contract services to
assist in the preparation of financial
statements.

Prior Year ROE Response: The ROE
understands the nature of this finding and
realizes that this circumstance is not
unusual in an organization this size. The
Regional Office accepts the degree of risk
associated with this condition because the
added expense of seeking additional
expertise to prepare financial statements
would take away from the funds available to
provide educational services to students
and teachers. The cost of hiring and
training additional staff or contracting
services outweighs the benefit.

DELAY OF AUDIT

The actuary report provided by the Regional
Office of Education #28 (ROE) at the start
of its audit did not contain all of the
information needed to support the ROE’s
other postemployment benefits (OPEB)
balances and related disclosures.
Subsequently, a revised actuary report was
obtained.

The Regional Office 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 Governmental Auditing
Standards (GAGAS).

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. Annual
financial statements are to be prepared on
an accrual basis of accounting in
accordance with generally accepted
accounting principles (GAAP).

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

According to Regional Office management,
the ROE was unaware that the actuary report
originally provide did not contain all of
the information needed to support the ROE’s
OPEB balances and related disclosures.
(Finding 18-002, pages 16-17)

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). Annual financial
statements should be compiled on an accrual
basis of accounting in accordance with
GAAP. These financial statements need to be
presented to the Auditor General’s
independent auditors for audit by the
August 31 deadline.

ROE Response: This was the first year for
implementation of the OPEB liability
standard. The ROE did attempt to provide an
actuary report. The ROE will have a report
no later than August 31 in following years.

AUDITORS’ OPINION

Our auditors state the Regional Office of
Education #28’s financial statements as of
June 30, 2018 are fairly presented in all
material respects.

This financial audit was conducted by the
firm of Winkel, Parker, & Foster, CPA 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