Audit 372015

CRITERIA/SPECIFIC REQUIREMENT: The Code of Federal Regulations (Code) (2 CFR § 200.332 (e)) requires the Regional Office of Education No. 39 to monitor the activities of the subrecipient to ensure the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. The Code (2 CFR §200.303 (a)) requires the Regional Office of Education No. 39 to establish and maintain effective internal control over the federal award to provide reasonable assurance the Regional Office of Education No. 39 is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Effective internal controls should include procedures over subrecipient monitoring. CONDITION: The Regional Office of Education No. 39 did not have adequate controls over subrecipient monitoring in compliance with the Code. CONTEXT: During our testing of four subrecipients, we noted the Regional Office of Education No. 39 did not adequately monitor its subrecipients’ grant reporting requirements: • 43 of 48 (90%) monthly expenditure reports were not received. • 4 of 48 (8%) monthly expenditure reports were received five to 183 days late. • 4 of 4 (100%) annual performance reports were received 51 to 114 days late. EFFECT: Lack of controls over subrecipient monitoring may result in subrecipients not properly administering the federal programs in accordance with federal regulations. CAUSE: Management indicated this was due to oversight and staffing limitation. RECOMMENDATION: We recommend the Regional Office of Education No. 39 establish and implement procedures over subrecipient monitoring. MANAGEMENT’S RESPONSE: The Regional Office of Education No. 39 agrees with the audit findings and although some subrecipient monitoring was conducted, not all of the required reports were received, or they were not received in a timely manner. The Regional Office of Education No. 39 is implementing policies and procedures to ensure subrecipient monitoring is not only received but received in a timely manner as well.

CRITERIA/SPECIFIC REQUIREMENT: The grant award agreements between the Regional Office of Education No. 39 and Illinois State Board of Education require the Regional Office of Education No. 39 to complete and submit expenditure reports quarterly. The quarterly expenditure reports are due 20 calendar days after the end of the reporting quarter. The Code of Federal Regulations (Code) (2 CFR. §200.303 (a)) requires the Regional Office of Education No. 39 to establish and maintain effective internal control over the federal award to provide reasonable assurance the Regional Office of Education No. 39 is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Effective internal controls should include procedures to ensure compliance with grant reporting requirements and expenditure reports are properly supported. CONDITION: The Regional Office of Education No. 39 did not submit or timely submit the required reports to the Illinois State Board of Education in compliance with the grant award agreement. CONTEXT: During testing of the Regional Office of Education No. 39’s compliance with the grant reporting requirements, we noted the following:  One of 44 (2%) quarterly expenditure reports were submitted 31 days late.  Five of 44 (11%) quarterly expenditure reports lacked sufficient documentation to support expenditures reported; therefore, we were unable to determine if the quarterly expenditure reports were accurately reported. EFFECT: Failure to meet grant reporting requirements is a noncompliance with the related grant agreement and could result in loss of grant funding in future years. CAUSE: Management indicated that the required reports were not timely submitted, and supporting documentation was unavailable due to oversight and access limitations under the previous finance staff. RECOMMENDATION: We recommend the Regional Office of Education No. 39 implement procedures to ensure adherence to the grant reporting requirements and to ensure quarterly expenditure reports are properly supported. MANAGEMENT’S RESPONSE: The Regional Office of Education No. 39 agrees with the audit findings and will provide close oversight for the timely submission of grant expenditures and performance reports. Checklist, due dates, and reminders are shared from the Regional Superintendent to the Business Office Manager and Program Directors. Management will review the grant report submissions in Illinois Web Application Security (IWAS) for accuracy and completion before approving and submitting to Illinois State Board of Education.

CRITERIA/SPECIFIC REQUIREMENT: The Regional Office of Education No. 39 did not have adequate record keeping over its equipment acquired from federal funds. The Code of Federal Regulations (2 CFR §200.313(d)(1)) requires that procedures for managing equipment acquired with federal funds must maintain property records that include the following information: (i) a description of the property, (ii) manufacturer’s serial number or other identification number, (iii) source of the funding for the property (including the Federal Award Identification Number (FAIN)), (iv) who holds title, (v) acquisition date (vi) cost of the property, (vii) percentage of federal contribution in the project cost for the Federal award under which the property was acquired, (viii) location (ix) use and condition of the property, and (x) and any ultimate disposition data, including date of disposal and sale price of the property. Moreover, the Code (2 CFR §200.303 (a)) requires the Regional Office of Education No. 39 to establish and maintain effective internal control over the federal award to provide reasonable assurance the Regional Office of Education No. 39 is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Effective internal controls should include record keeping and monitoring of equipment acquired from federal funds. CONDITION: The Regional Office of Education No. 39 manually maintains and stores its inventory of property and equipment. Asset details in the property records include only the description of the property, manufacturer’s serial number or other identification number, source of funds, who holds title, acquisition date, and cost of the property. The other minimum requirements specified by the Code including FAIN, location, use and condition of the property are not included in the property records. EFFECT: Inadequate record keeping over equipment acquired from federal funds may result in noncompliance with the Code. CAUSE: Management indicated that the issue was due to oversight and lack of training on requirements. RECOMMENDATION: The Regional Office of Education No. 39 should maintain detailed property records as required by federal regulations to ensure full compliance. MANAGEMENT’S RESPONSE: The Regional Office of Education No. 39 agrees with the audit findings and is implementing documents and procedures to meet requirements in the future

CRITERIA/SPECIFIC REQUIREMENT: The Code of Federal Regulations (Code) (2 CFR §200.510 (b)), establishes criteria and requirements related to the preparation of the schedule of expenditures of federal awards. The Code (2 CFR §200.303 (a)) requires Regional Office of Education No. 39 to establish and maintain effective internal control over the federal award to provide reasonable assurance the Regional Office is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Effective internal controls should include procedures over preparation of the schedule of expenditures of federal awards. CONDITION: The Regional Office of Education No. 39 did not have sufficient internal controls over the preparation of the Schedule of Expenditures of Federal Awards (SEFA) to ensure all federal expenditures during the fiscal year were reported and information in the SEFA was accurately reported. CONTEXT: During our review of the SEFA, we noted the following:  Program title descriptions were incorrect.  Assistance listing number was incorrectly listed. EFFECT: Failure to report an accurate SEFA affects the required audit coverage to meet federal requirements and can delay an audit beyond the reporting deadline. CAUSE: Management indicated the errors on the SEFA was due to oversight. RECOMMENDATION: The Regional Office of Education No. 39 should establish and implement internal controls over preparation of the SEFA to ensure accurate reporting. MANAGEMENT’S RESPONSE: The Regional Office of Education No. 39 agrees with the audit findings and will work with contracted accounting firm to ensure that the schedule of expenditures of federal awards is accurately reported as required.