Section 110.110  Audit Requirements

a)         School Districts not subject to Article 34

1)         Section 3-15.1 of the School Code (Ill. Rev. Stat. 1991, ch. 122, par. 3-15.1) [105 ILCS 5/3-15.1] requires that each school district and the administrator of a joint agreement shall cause an annual financial statement to be submitted on forms prescribed by the State Board of Education exhibiting the financial condition of the program established by the school district or pursuant to the joint agreement, for the fiscal year ending on the immediately preceding June 30.  Each educational service center shall also submit an annual financial statement meeting the requirements of Section 3-15.1 of the School Code and exhibiting the financial condition of the center for the fiscal year ending on the immediately preceding August 31.

2)         The original and one copy of the annual financial report from school districts or governing boards that administer joint agreements shall be submitted to the Superintendent of the Educational Service Region on or before October 15, who shall send the original to the State Board of Education on or before November 15 annually. (A joint agreement is an agreement between or among two or more school districts to provide educational services jointly that such districts are authorized to provide individually.)  Educational Service Centers shall send the original and one copy of the annual financial report to the State Board of Education by December 15 annually.

3)         The report shall be prepared by an independent Certified Public Accountant, whose opinion and notes are to be inserted therein.

4)         An auditor shall not be considered to be independent if the auditor or any member of the auditor's immediate family is a township or school treasurer or employee thereof, a member or employee of the board of education, or of the regional superintendent, or of the governing board that is responsible for the administration of the LEA that is being audited. (This includes LEA employees who serve in a nonadministrative capacity such as bookkeepers, treasurers, and custodians of funds.)

5)         The auditor must state that the audit was performed in accordance with generally accepted governmental auditing standards.  Generally accepted governmental auditing standards means the Government Auditing Standards:  Standards for Audit of Governmental Organizations, Programs, Activities and Functions (1988 Revision) published by the Comptroller General of the United States. No later amendments to these standards are incorporated by this rule. If a qualified opinion is rendered, reasons for the qualifications are to be attached and explained in detail.

6)         The Annual Financial Report form provided by the State Board of Education is designed to be used by both cash and modified accrual basis LEA's. Certain accounts provided for in the form are to be used only for modified accrual basis reporting systems. These accounts are clearly identified in order to avoid confusion. It is, however, necessary to indicate on the form the basis of accounting being used.

7)         If a line is not provided on the above report to accommodate special data, do not insert the data or add a line. The data processing system used to process these forms is not programmed to accept such additions. Use "Other" accounts provided and attach supporting schedules which fully explain items reported under "Other." Reports with lines added are unacceptable.

8)         If an LEA fails to file an annual financial report with the Superintendent of the Educational Service Region on or before October 15, or within the time extended, the Superintendent of the Educational Service Region has the responsibility of causing such an audit to be made and billing the LEA for the audit (Section 3-7 of the School Code; Ill. Rev. Stat. 1991, ch. 122, par. 3-7; l05 ILCS 5/3-7).

9)         Failure of the State Board of Education to detect any deficiency in the report, or to call a deficiency to the attention of the LEA shall not in any way relieve the LEA and the independent auditor of their responsibility for such deficiency under Sections 3-7 and 3-15.1 of the School Code and this Part.

10)         Failure to file an annual financial report could result in a loss of state monies to a LEA. The Superintendent of the Educational Service Region is authorized to restrict or deny state funds to LEA's failing to comply with the submission of reports on or before the appointed date (Section 2-3.24 of the School Code; Ill. Rev. Stat. 1991, ch. 122, par. 2-3.24; 105 ILCS 5/2-3.24).

11)         The auditor must sign the opinion letter. The LEA chief administrator, and in Cook County the township treasurer, must sign the annual financial report.

b)         School Districts Subject to Article 34

1)         Each board of education subject to the provisions of Article 34 of the School Code (Ill. Rev. Stat. 1991, ch. 122, par. 34-1 et seq.) [105 ILCS 5/34-1 et seq.] shall file with the State Board of Education the annual financial report and its audit, as required by the rules of the State Board of Education. Such reports shall be filed no later than February 15 following the end of the school year of the Board of Education (Section 34-43.1 of the School Code).

2)         The audit report shall be prepared by an independent Certified Public Accountant, whose opinion and notes are to be inserted therein.

3)         An auditor shall not be considered to be independent if the auditor or any member of the auditor's immediate family, as defined in Section 24-6 of the School Code (Ill. Rev. Stat. 1991, ch. 122, par. 24-6) [105 ILCS 5/24-6], is a township or school treasurer or employee thereof, the city treasurer (ex officio treasurer of the board of education) or an employee thereof, a member or employee of a school finance authority created to exercise financial control over the board, a member or employee of the board or of the regional superintendent.

4)         The auditor shall state that the audit was performed in accordance with generally accepted governmental auditing standards.  Generally accepted governmental auditing standards means the Government Auditing Standards:  Standards for Audit of Governmental Organizations, Programs, Activities and Functions (1988 Revision) published by the Comptroller General of the United States.  No later amendments to these standards are incorporated by this rule.  If a qualified opinion is rendered, reasons for the qualifications are to be attached and explained in detail.

5)         The Annual Financial Report form provided by the State Board of Education is designed to be used by both cash and modified accrual basis LEA's.  Certain accounts provided for in the form are to be used only for modified accrual basis reporting systems.  These accounts are clearly identified in order to avoid confusion.  It is, however, necessary to indicate on the form the basis of accounting being used.

6)         If a line is not provided on the above report to accommodate special data, do not insert the data or add a line.  The data processing system used to process these forms is not programmed to accept such additions. Use "Other" accounts provided and attach supporting schedules which fully explain items reported under "other."  Reports with lines added are unacceptable.

7)         The auditor shall sign the opinion letter.  A school district administrator shall sign the Annual Financial Report.

8)         As part of the required Annual Financial Report, the board of education shall provide a detailed accounting of the central level, district (subdistrict), department, and bureau costs and personnel included within expenditure functions:

A)        2210 Improvement of Instruction Services

B)        2310 Board of Education Services

C)        2330 Special Area Administrative Services

D)        2490 Other Support Services - School Administration

E)         2500 Support Services − Business

F)         2600 Support Services − Central

9)         The reporting of these functions shall be as follows:

A)        Part I – Expenditures by Functions.  This part of the report shall summarize expenditures for these functions from the Educational and the Operations and Maintenance Funds.

B)        Part II – Expenditures by Location.  This part of the report shall summarize expenditures for the functions shown in Part I by location (central level, subdistrict, department, citywide, and attendance centers).

C)        Part III – Personnel.  This part of the report shall include Administrative, Technical/Support, and Clerical Staff by function and by location.  The number of positions and salary amounts shall be reported for each of these categories.

D)        Special forms shall not be required.  Reports, either typewritten or on a computer printout, shall be in the format outlined in subsections (9)(A) through (9)(C).

(Source:  Amended at 18 Ill. Reg. 5178, effective March 22, 1994)