REPORT DIGEST

REGIONAL OFFICE OF EDUCATION #44: MCHENRY
COUNTY

FINANCIAL AUDIT
FOR THE YEAR ENDED JUNE 30, 2023

Release Date:  March 13, 2024

FINDINGS THIS AUDIT: 3

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

FINDINGS LAST AUDIT:  4

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

INTRODUCTION

• (22-1) The Regional Office of Education
#44 did not comply with grant requirements.

• (22-2) The Regional Office of Education
#44 did not have adequate internal control
procedures.

• (22-3) 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

NONCOMPLIANCE WITH GRANT REQUIREMENTS

The Regional Office of Education #44 (ROE)
did not comply with grant requirements. The
ROE submitted 3 of 12 (25%) expenditure
reports untimely, ranging from 31 to 40 days
late.

Item 5 of Section A of the Illinois State
Board of Education’s (ISBE) State and
Federal Grant Administration Policy, Fiscal
Requirements, and Procedures requires
grantees with an approved state and/or
federal grant program to submit quarterly
expenditure reports, at a minimum, on or
before 20 calendar days after the end of the
reporting quarter.

Regional Office management indicated the
weaknesses noted in the internal controls
were due to not having a bookkeeper on a
full-time basis. (Finding 2022-001, page 11)
This finding was first reported in 2016.

The auditors recommended the ROE should
develop internal controls to ensure
expenditure reports are submitted by the
grantors due date.

ROE Response: The Regional Office of
Education has put dates on a calendar and
asked ISBE to establish email reminders for
each grant needing an expenditure report
filed.

INADEQUATE INTERNAL CONTROL PROCEDURES

The Regional Office of Education #44 (ROE)
did not have adequate internal control
procedures. Auditors noted the following
weaknesses in the ROE’s internal control
system for which there were no mitigating
controls:

• Missing supporting documentation for
receipt transactions, for 3 of 35 (9%)
receipts selected for testing.
• Receipts were not deposited timely in 4 of
35 (11%) sampled receipts, ranging from 15
days to 49 days late.
• Untimely performance of 38 of 48 (79%)
monthly bank reconciliations for all bank
accounts, ranging from 48 to 494 days late.
In addition, 48 of 48 (100%) bank
reconciliations had no documentation of
review.
• Disbursement transactions did not have
indication of review or approval in 7 of 22
(32%) sampled disbursements.
• Missing supporting documentation for
disbursement transactions, for 10 of 22
(45%) disbursements selected for testing.

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

Regional Office management indicated the
weaknesses noted in the internal controls
were due to not having a bookkeeper on a
full-time basis. (Finding 2022-002, pages 12
– 13) This finding was first reported in
2016.

The auditors recommended that the ROE should
ensure supporting documentation for receipt
and disbursement transactions are maintained
and approved; receipts are deposited timely;
perform monthly bank reconciliations for all
bank accounts accurately and timely; and
document evidence of independent review.

ROE Response: The Regional Office of
Education #44’s policy for FY23 is to
deposit checks within one week of receipt
date. The ROE will contract an outside
accounting firm and supporting documentation
will be sent to the accountant on
expenditures after the approval of the
Regional Superintendent. The outside
accounting firm will complete the bank
reconciliations for the review and approval
of the Regional Superintendent.

DELAY OF AUDIT

The Regional Office of Education #44 (ROE)
did not provide completed financial
statements in an auditable form by August
31, 2022. The completed financial statements
were provided on July 7, 2023.

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 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.

Regional Office management indicated the
delay was due to not having a bookkeeper on
a full-time basis. (Finding 2022-003, pages
14 – 15) This finding was first reported in
2018.

The auditors recommended that the ROE should
implement procedures to ensure compliance
with 105 ILCS 5/2-3.17a and 74 Ill. Adm.
Code 420.320 (c) (2). Additionally, ROE
management should determine if changing to
the cash or modified cash basis would be
allowable and beneficial to the ROE and
users of its financial statements. These
financial statements need to be presented to
the Auditor General’s independent auditors
for audit by the August 31 deadline.

ROE Response: The Regional Office will
contract an outside accounting firm to
prepare and maintain documentation needed
for an audit going forward from FY23.

AUDITORS’ OPINION

Our auditors state the Regional Office of
Education #44’s financial statements as of
June 30, 2022 are fairly stated in all
material respects.

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

JOE BUTCHER
Division Director

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

FRANK J. MAUTINO
Auditor General

FJM:JRB