2012 Intermediate Service Center #01%3A North Cook Financial Audit

              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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INTERMEDIATE SERVICE CENTER #1
NORTH COOK
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
0
0
Release Date: April 5, 2012
SYNOPSIS
The Intermediate Service Center #1 did not maintain adequate time and effort statements to allocate indirect costs in accordance with OMB Circular A-87.
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{Revenues and expenditures are summarized on the reverse page.}ii
INTERMEDIATE SERVICE CENTER #1
NORTH COOK
FINANCIAL AUDIT
(In Accordance with Single Audit Act and OMB Circular A-133)
For The Year Ended June 30, 2011
FY 2011 FY 2010
TOTAL REVENUES
$5,163,924
$5,568,419
Local Sources
$2,293,340
$2,064,756
% of Total Revenues
44.41%
37.08%
State Sources
$2,165,058
$2,618,979
% of Total Revenues
41.93%
47.03%
Federal Sources
$705,526
$884,684
% of Total Revenues
13.66%
15.89%
TOTAL EXPENDITURES
$5,214,693
$5,615,197
Salaries and Benefits
$3,053,592
$3,505,946
% of Total Expenditures
58.56%
62.44%
Purchased Services
$1,971,907
$1,784,059
% of Total Expenditures
37.81%
31.77%
All Other Expenditures
$189,194
$325,192
% of Total Expenditures
3.63%
5.79%
TOTAL NET ASSETS
$2,599,054
$2,649,823
INVESTMENT IN CAPITAL ASSETS
$84,616
$140,046
Percentages may not add due to rounding.
EXECUTIVE DIRECTOR
During Audit Period: Mr. Robert Ingraffia
Currently: Mr. Robert Ingraffia
iii
The Intermediate Service Center #1 did not maintain adequate time and effort statements to allocate indirect costs in accordance with OMB Circular A-87.
FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS
INADEQUATE DOCUMENTATION FOR PAYROLL EXPENDITURES
Office of Management and Budget (OMB) Circular A-87, Cost Principles for State, Local and Indian Tribal Governments, establishes principles and standards for determining costs for federal awards carried out through grants, cost reimbursement contracts, and other agreements with State and local governments and federally recognized Indian tribal governments.
OMB Circular A-87 requires that all employees charged to federal grants maintain time and effort reporting. There are two types of required time and effort records: semi-annual certifications and detailed monthly reports. The type of record that must be kept is based on the job responsibilities of the individual charged to the grant.
North Cook Intermediate Service Center #1 did not maintain adequate time and effort statements to allocate indirect costs in accordance with OMB Circular A-87. Salary and benefits for administrative employees were charged to the Title I-School Improvement and Accountability and Title I-Grants to Local Educational Agencies, Recovery Act programs based on amounts calculated for budget purposes rather than costs based on actual time and effort reports.
North Cook Intermediate Service Center #1 allocated a total of $69,097 of indirect compensation costs to the above programs. While these costs were approved in the grant budgets, without acceptable documentation of the basis for, and rationale behind the allocations, the amounts over or under charged to the programs cannot be readily determined. Based on the total amount of allocated costs charged to the programs, any amount deemed to be over charged to the award most likely would be considered immaterial.
According to North Cook Intermediate Service Center #1 officials, they determined the amount of costs to be allocated to the grant programs based on amounts allowable in grant budgets. (Finding 11-1, pages 11-12)
The auditors recommended that the North Cook Intermediate Service Center #1 should develop and implement adequate policies and procedures to ensure compliance with the Allowable Costs/Cost Principles of the OMB Circular A-133 Compliance Supplement and Cost Principles of OMB Circular iv
A-87 for Compensation for Personnel Services. These policies and procedures should include requiring staff involved in multiple programs to submit time sheets by program or a time and effort report by program. North Cook Intermediate Service Center #1 should also establish a payroll cost allocation procedure that allows for computation and comparison of actual time charged with budgeted time or allocation rates on a regular basis. Payroll charges by program should be based on the time devoted and identified specifically to the performance of those programs.
Management of North Cook Intermediate Service Center #1 responded that after discussing the finding with the Illinois State Board of Education, they agreed with this finding and began developing and implementing adequate policies and procedures to ensure compliance with the Allowable Costs/Cost Principles of the OMB Circular A-133 Compliance Supplement and Cost Principles of OMB Circular A-87 for Compensation for Personnel Services. North Cook Intermediate Service Center #1 noted that starting in fiscal year 2012, they will be modifying the budget for its various programs to eliminate administrative function support from the budget.
AUDITORS’ OPINION
Our auditors state the Intermediate Service Center #1’s financial statements as of June 30, 2011 are fairly presented in all material respects.
___________________________________
WILLIAM G. HOLLAND
Auditor General
WGH:KJM
AUDITORS ASSIGNED: Bass, Solomon, & Dowell, LLP were our special assistant auditors.