Finding Text
CRITERIA: Per the Code of Federal Regulations all recipient and subrecipient financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking of expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the federal award. Internal controls should be in place to provide reasonable assurance that "historical expenditure reports" filed with the Illinois State Board of Education agree and reconcile to actual expenditures incurred and paid by the District. CONDITION: The District has inadequate controls over reviewing and approving quarterly "historical expenditure reports" filed with the Illinois State Board of Education. QUESTIONED COSTS: None. CONTEXT: Quarterly "historical expenditure reports" filed with the Illinois State Board of Education erroneously overstated the June 30, 2025 "historical expenditure report" filed on July 15, 2025 in the amount of $18,209. This overstatement was the result of an entry made in the general ledger to calculate July and August 2025 Teachers Retirement System (TRS) liabilities due July 10, 2025. Historically, the District would make an adjustment to reverse the accrual entry once TRS balances are determined. However, for the year ended June 30, 2025, the District failed to post this adjustment due to a software election not being made. The District was aware of the overstatement in the general ledger and had consulted with a 3rd party professional to correct the entry, but failed to do so prior to drafting and submitting the June 30, 2025 "historical expenditure report" with the Illinois State Board of Education. As a result, corresponding expenditures for July and August 2025 Title I gross wages and employee benefits in the amount of $18,209 were erroneously included in the June 30, 2025 request for reimbursement. This balance has been excluded from the Schedule of Expenditures of Federal Awards for the year ended June 30, 2025 and is not considered a Questioned Cost. The District received the reimbursement in July 2025 and will report the July & August 2025 expenditures on the June 30, 2026 Schedule of Expenditures of Federal Awards. In addition, no other federal program expenditures reported on the June 30, 2025 Schedule of Expenditures of Federal Awards were affected by the TRS entry made for July and August 2025 liabilities. EFFECT: Program expenditures may be overstated on the "historical expenditure reports" submitted to the Illinois State Board of Education and result in excess funding reimbursements before actual expenditures are incurred. CAUSE: The “Historical Expenditure Summary Report” is prepared by one employee and is not thoroughly reviewed for accuracy prior to its electronic submission. RECOMMENDATION: The Superintendent should thoroughly review and approve quarterly 'historical expenditure reports" and supporting documentation on a regular basis prior to electronic submissions. Reviews should encompass a search for adjustments and duplicate classifications, and a determination of reasonable vendors, expense descriptions, budget to actual comparisons, and dates. Corresponding documents should be manually signed and dated to indicate approval. MANAGEMENT'S RESPONSE: The District intends to implement the recommended controls in the Fall of 2025.