Finding 1236271 (2025-001)

Material Weakness Repeat Finding
Requirement
M
Questioned Costs
-
Year
2025
Accepted
2026-09-23

AI Summary

  • Core Issue: The Regional Office of Education #47 lacks adequate internal controls over grant accounting and financial reporting, leading to discrepancies between reports and financial statements.
  • Impacted Requirements: Compliance with federal regulations and grant agreements, including accurate financial disclosures and reconciliations, is not being met.
  • Recommended Follow-Up: Implement procedures for timely reconciliation of reports, including accountability measures and documentation sign-offs by responsible officials.

Finding Text

Federal Program ARP - McKinney Education for Homeless Children, ARP - Community Partnerships, McKinney Education for Homeless Children Identification Number 24-4998-HM, 25-4998-C3, 25-4920 Assistance Listing Number 84.425W, 84.425U, 84.196A Passed Through Illinois State Board of Education Federal Agency U.S. Department of Education Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls requires agency to establish and maintain effective internal control over the federal award to provide reasonable assurance that Federal awards are managed in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Additionally, the Regional Office of Education #47 must comply with grant accounting and reporting requirements established by grant agreements with the Illinois State Board of Education (ISBE) and other grantors in addition to the requirements established by ISBE’s fiscal policies and procedures for grantees. Among these requirements are accurate, current, and complete disclosure of grant financial activity to the grantor. In addition, strong internal controls are necessary and include reconciling grant financial reports with supporting accounting records and ensuring that all reports are reviewed and approved by a responsible official prior to submission. Condition: The Regional Office of Education #47 did not maintain adequate internal controls over the grant accounting and financial reporting process. While the Regional Office of Education #47 maintains controls over the processing of expenditures, there are not sufficient controls over the general ledger and financial statement reporting process for management or employees in the normal course of performing their assigned functions to prevent, or detect and correct, discrepancies between grant expenditures reports, the general ledger, financial statements, and supplementary information. During our review of the Regional Office of Education #47’s grant expenditures, it was noted that the Regional Office of Education #47 did not have adequate controls to ensure accuracy and consistency between grant expenditures reports, general ledger, financial statements, and supplementary information. Audit procedures revealed differences between the grant expenditures reports and the Regional Office of Education #47’s financial statements and General Ledger (GL) as shown below: Total Expenditures Per Grant Grant Reports and the Schedule Total Expenditures Federal Grants of Expenditures of Federal Per Financial Difference Over Assistance Listing Number Awards (SEFA) Statements and GL (Under) Stated ARP - McKinney Education for Homeless Children 84.425W $112,133 $124,432 $(12,299) ARP - Community Partnerships 84.425U 2,475 3,300 (825) McKinney Education for Homeless Children 84.196A 123,965 121,671 2,294 Federal Grants Net Difference $(10,830) State Grant Total Expenditures Per Total Expenditures per Code Grant Reports Financial Statements and GL Difference Over (Under) Computer Science 2025 -3999 $43,567 $27,723 $15,844 Less Expenditures disbursed in FY26 (10,627) State Grant Net Difference $5,217 Management was unable to provide documentation to support and reconcile the federal and State grant differences of $(10,830) and $5,217, respectively. Questioned Costs: None Context: The Regional Office of Education #47 provided a combined total of 15 federal and State grant expenditure reports totaling $684,461 and $1,594,506, respectively, which were submitted for the fiscal year 2025. Auditors reviewed all 15 reports and found that 4 were not reconciled to the general ledger before submission. Effect: The Regional Office of Education #47’s management or its employees, in the normal course of performing their assigned functions, did not prevent or detect general ledger, financial statements, and supplementary information discrepancies in a timely manner. Cause: Regional Office of Education #47’s management did not perform a timely review and reconciliation of federal and State grant expenditure reports to the general ledger, financial statements, and supplementary information for accuracy and consistency. Recommendation: We recommend that the Regional Office of Education #47 implement comprehensive procedures to ensure the accuracy of grant accounting and reporting including: a. Establish accountability for timely reconciliation of grant reimbursement reports to the general ledger, financial statements, and supplementary information. b. Integrate into the year-end closing procedures documentation of the reconciliation including the sign-offs of preparer and review by a responsible official prior to submission. Management’s Response: Management agrees with the recommendation and will implement additional procedures to formally document the reconciliation of grant expenditure reports to the general ledger and financial statements prior to submission and as part of the year-end closing process. The Regional Office believes grant expenditures were properly accounted for; however, management recognizes the need for enhanced documentation of the reconciliation process and will implement preparer and reviewer sign-offs to ensure consistency and strengthen internal controls over grant financial reporting.

Corrective Action Plan

Corrective Action Plan FINDING 2025-001 – Noncompliance with Grant Requirements CONDITION: The Regional Office of Education #47 did not maintain adequate internal controls over the grant accounting and financial reporting process. While the Regional Office of Education #47 maintains controls over the processing of expenditures, there are not sufficient controls over the general ledger and financial statement reporting process for management or employees in the normal course of performing their assigned functions to prevent, or detect and correct, discrepancies between grant expenditures reports, the general ledger, financial statements, and supplementary information. During our review of the Regional Office of Education #47’s grant expenditures, it was noted that the Regional Office of Education #47 did not have adequate controls to ensure accuracy and consistency between grant expenditures reports, general ledger, financial statements, and supplementary information. Audit procedures revealed differences between the grant expenditures reports and the Regional Office of Education #47’s financial statements and General Ledger (GL) as shown below: Total Expenditures Per Grant Reports and the Schedule of Difference Federal Grants Expenditures of Total Expenditures Over Assistance Listing Federal Awards Per Financial (Under) Number (SEFA) Statements and GL Stated ARP - McKinney Education for Homeless Children 84.425W $112,133 $124,432 $(12,299) ARP - Community Partnerships 84.425U 2,475 3,300 (825) McKinney Education for Homeless Children 84.196A 123,965 121,671 2,294 Federal Grants Net Difference $(10,830) Total Total Expenditure Expenditures Per Financial Difference State Grant Per Grant Statements Over Code Reports and GL (Under) Computer Science 2025 -3999 $43,567 $27,723 $15,844 Less Expenditures disbursed in FY26 (10,627) State Grant Net Difference $ 5,217 Management was unable to provide documentation to support and reconcile the federal and State grant differences of $(10,830) and $5,217, respectively. PLAN: The Regional Office of Education #47 will strengthen its grant reconciliation procedures by implementing a formal reconciliation process for all federal and state grant reports prior to submission and as part of the year-end closing process. Grant expenditure reports will be reconciled to the general ledger and financial statements, and the reconciliation will be documented and reviewed by a responsible official with preparer and reviewer sign-offs maintained in the grant file. While all grant funds were properly accounted for and no questioned costs were identified, these additional procedures will provide enhanced documentation and ensure consistency between grant reports, the general ledger, and the financial statements. ANTICIPATED DATE OF COMPLETION: Fiscal Year 2027 CONTACT PERSON: Mr. Chris Tennyson, Regional Superintendent for Lee, Ogle, and Whiteside Counties.

Categories

Reporting Allowable Costs / Cost Principles Cash Management

Programs in Audit

ALN Program Name Expenditures
84.196A EDUCATION FOR HOMELESS CHILDREN AND YOUTH $359,560
17.259 WIOA YOUTH ACTIVITIES $175,378
84.323A SPECIAL EDUCATION - STATE PERSONNEL DEVELOPMENT $133,599
84.425W EDUCATION STABILIZATION FUND $112,133
10.555 NATIONAL SCHOOL LUNCH PROGRAM $15,790
10.553 SCHOOL BREAKFAST PROGRAM $6,932
84.425U EDUCATION STABILIZATION FUND $2,475