REPORT DIGEST

REGIONAL OFFICE OF EDUCATION #43
MARSHALL/PUTNAM/WOODFORD COUNTIES

FINANCIAL AUDIT
For the Year Ended: June 30, 2012


Release Date:   July 11, 2013

Summary of Findings:
Total this audit: 1
Total last audit:  1
Repeated from last audit: 1

State of Illinois, Office of the Auditor
General
WILLIAM G. HOLLAND, AUDITOR GENERAL

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This Report Digest and Full Report are also
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www.auditor.illinois.gov


SYNOPSIS

• The Regional Office of Education #43 did not
have sufficient internal controls over the
financial reporting process.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

CONTROLS OVER FINANCIAL STATEMENT PREPARATION

The Regional Office of Education #43 is
required to maintain a system of controls over
the preparation of financial statements,
including disclosures, 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 #43 did not
have sufficient internal controls over the
financial reporting process.  The Regional
Office maintains its 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 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.

Auditors, in their review of the ROE’s
accounting records, noted the following:

• The ROE did not maintain adequate controls
over the financial reporting process and
adjustments were required to present financial
statements in accordance with generally
accepted accounting principles.

• The ROE did not maintain complete records of
accounts receivable, accounts payable, or
deferred revenue.

According to Regional Office officials, they
did not have adequate funding to hire and/or
train their accounting personnel in order to
maintain a system of internal control over the
preparation of financial statements in
accordance with GAAP. (Finding 12-1, pages
10-11) 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 Regional Office of Education #43 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 #43 responded
that it understands the nature of this finding.
The Regional Office accepts the degree of risk
associated with this condition as this
circumstance is quite common in organizations
that are similar in size to the ROE.  The
Regional Office noted that it does not have the
funds to employ a person who possesses both a
thorough understanding of the ROE’s activities
and operations and the knowledge and
understanding of generally accepted accounting
principles (GAAP) and GASB pronouncements
needed to produce financial statements with
disclosures. In an attempt to address this
situation, the ROE will make it a point to send
staff  to any state trainings that can help
them better understand accrual basis accounting
and reporting under GAAP. (For previous
Regional Office response, see Digest Footnote
#1.)

AUDITORS’ OPINION

Our auditors state the Regional Office of
Education #43’s financial statements as of June
30, 2012 are fairly presented in all material
respects.

WILLIAM G. HOLLAND
Auditor General

WGH:KJM

AUDITORS ASSIGNED:  Sulaski & Webb, CPAs were
our special assistant auditors.

DIGEST FOOTNOTE

#1: Controls Over Financial Statement
Preparation - Previous Regional Office Response

In its prior response in 2011, the Regional
Office of Education #43 responded that it
understands the nature of this finding and
realizes that this circumstance is not unusual
in an organization of this size.  The Regional
Office accepts the degree of risk associated
with this condition.  The Regional Office noted
that the added expense of seeking a qualified
accountant to prepare and review financial
statements would diminish the limited available
funds for educational services in the region.
The Regional Office noted that management will
monitor the internal controls and need for
additional training and implement training as
funding in the State budget allows. The
Regional Office noted that it is ready to send
staff to any state trainings that are offered
to better understand accrual accounting and
reporting under generally accepted accounting
principles (GAAP).