Regional Office of Education #51%3A Sangamon County. Financial Audit for the Year Ended June 30, 2011

              Office of the Auditor General, Iles Park Plaza, 740 E. Ash St., Springfield, IL 62703 • Tel: 217-782-6046 or TTY 888-261-2887
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REGIONAL OFFICE OF EDUCATION #51
SANGAMON COUNTY
FINANCIAL AUDIT (In accordance with the Single Audit Act and OMB Circular A-133)
For the Year Ended: June 30, 2011
Summary of Findings:
Total this audit:
Total last audit:
Repeated from last audit:
1
3
1
Release Date: February 28, 2012
SYNOPSIS
• The Regional Office of Education #51 did not have sufficient internal controls over the financial reporting process.
{Revenues and expenditures are summarized on the reverse page.}ii
REGIONAL OFFICE OF EDUCATION #51
SANGAMON COUNTY
FINANCIAL AUDIT
(In Accordance with the Single Audit Act and OMB Circular A-133)
For The Year Ended June 30, 2011
FY 2011
FY 2010
TOTAL REVENUES
$3,381,147
$3,809,203
Local Sources
$1,336,710
$1,223,922
% of Total Revenues
39.53%
32.13%
State Sources
$1,200,366
$1,719,881
% of Total Revenues
35.50%
45.15%
Federal Sources
$844,071
$865,400
% of Total Revenues
24.96%
22.72%
TOTAL EXPENDITURES
$3,316,022
$3,849,108
Salaries and Benefits
$2,099,843
$1,935,422
% of Total Expenditures
63.32%
50.28%
Purchased Services
$1,038,372
$1,713,947
% of Total Expenditures
31.31%
44.53%
All Other Expenditures
$177,807
$199,739
% of Total Expenditures
5.36%
5.19%
TOTAL NET ASSETS
$1,321,606
$1,256,481
INVESTMENT IN CAPITAL ASSETS
$16,402
$23,437
Percentages may not add due to rounding.
REGIONAL SUPERINTENDENT
During Audit Period: Honorable Jeff Vose
Currently: Honorable Jeff Voseiii
The Regional Office of Education #51 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 #51 is required to maintain a system of controls over the preparation of financial statements 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 #51 did not have sufficient internal controls over the financial reporting process. The Regional Office maintains their 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. For example, auditors, in their review of the Regional Office’s accounting records, noted the following:
• The Regional Office’s financial information required numerous adjusting entries to present the financial statements in accordance with generally accepted accounting principles.
• The Regional Office did not have adequate controls over the maintenance of complete records of accounts receivable, accounts payable, or deferred revenue. While the Regional Office did maintain records to indicate the balances of accounts payable, accounts receivable, and deferred revenue, no entries were provided to reconcile the Regional Office of Education #51’s grant activity, such as posting grant receivables and deferred revenue.
According to ROE officials, they did not have adequate funding to hire and/or train their accounting personnel in order to comply with these requirements. (Finding 11-01, pages 12a-12b) This finding was first reported in 2007.iv
The auditors recommended that, as part of its internal control over the preparation of its financial statements, including disclosures, the Regional Office of Education #51 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 #51 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 of Education staff has a reasonable understanding of the financial statements and can determine that the information in the financial statements is accurate, however, they lack the ability to prepare the notes to the financial statements. The recommendation that “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,” has been noted by the Regional Office. The ROE noted that they will continue to work with the other Regional Offices of Education to determine the most effective method of ensuring that its employees possess the knowledge required to compile the necessary GAAP based financial statements. (For previous Regional Office response, see Digest Footnote #1.)
AUDITORS’ OPINION
Our auditors state the Regional Office of Education #51’s financial statements as of June 30, 2011 are fairly stated in all material respects.
___________________________________
WILLIAM G. HOLLAND
Auditor General
WGH:JRB
AUDITORS ASSIGNED: Kemper CPA Group LLP were our special assistant auditors. v
DIGEST FOOTNOTES
#1: Controls Over Financial Statement Preparation —Previous Regional Office Response
In its prior response in 2010, the Regional Office of Education #51 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 of Education staff has a reasonable understanding of the financial statements and can determine that the information in the financial statements is accurate, however, lacks the ability to prepare the notes to the financial statements. The recommendation that “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,” has been noted by the Regional Office. The ROE noted that they will continue to work with the other Regional Offices of Education to determine the most effective method of ensuring that its employees possess the knowledge required to compile the necessary GAAP based financial statements.