KNOX WARREN SPECIAL EDUCATION DISTRICTLocal Government

Knox-Warren Special Education District 33-048-8010-60 SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year Ending June 30, 2019 SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS 1. FINDING NUMBER: 2019- 004 2. THIS FINDING IS: New x Repeat from Prior year? Year originally reported? 2018 3. Federal Program Name and Year: Pre-School Flow-through and IDEA Flow-through (Special Education Cluster) 4. Project No.: 2019-4600, 2019-4620 5. CFDA No.: 84.173 and 84.027 6. Passed Through: Illinois State Board of Education 7. Federal Agency: US Department of Education 8. Criteria or specific requirement (including statutory, regulatory, or other citation) The overall internal controls over the District's accounting system are not adequate to ensure that misstatements caused by error or fraud, in amounts that would be material to the financial statements, may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. 9. Condition Knox-Warren's former administrative agent withdrew from the Cooperative effective 6/30/2017. The former administrative agent performed all accounting, human resources, reconciliation and reporting functions for the District. Due to the withdrawal of the administrative agent, the remaining districts were forced to establish a new cooperative effective 7/1/17 with a new accounting software system being implemented, new accounting personnel and new internal controls being established in fiscal year 2017-18. The system of internal controls established were ineffective or insufficient to ensure that misstatements caused by error or fraud were detected on a timely basis. 10. Questioned Costs None 11. Context Reconciliation of many of the general ledger accounts to the underlying supporting documentation was not performed for the first five months of the year (accounts receivable, payroll withholding liabilities and liability accounts). In addition, the bank reconciliation was not performed for the first five months of the year until November 2018. 12. Effect Errors and/or omissions were not discovered by District employees and corrections were not made to the general ledger until November 2018 when the bank reconciliations were performed. This resulted in inaccurate/incomplete financial information being recorded in the general ledger for the first five months of the year. 13. Cause There was a lack of a processes/controls to ensure general ledger accounts were reconciled regularly. Additionally, adequate and timely detailed reviews were not performed to ensure that reconciliations were being performed on a timely basis. There was also a lack of a proper training for the office staff. 14. Recommendation We recommend that general ledger accounts be reconciled on a regular basis with all reconciling items being investigated, resolved, and appropriate adjustments be made to the general ledger. In addition, someone other than the individual who is responsible for the preparation of the reconciliations should review the reconciliations for propriety. The District should also re-evaluate controls to determine they are functioning effectively to detect errors or fraud on a timely basis. We also recommend that additional training be obtained to enhance the overall accounting and reconciliation processes. 15. Management's response The Director and Executive Board will meet to determine and implement additional control procedures to ensure that misstatements or errors are found in a timely manner and corrected. Additional control procedures have been implemented subsequent to June 30, 2019.

Knox-Warren Special Education District 33-048-8010-60 SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year Ending June 30, 2019 SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS 1. FINDING NUMBER: 2019- 005 2. THIS FINDING IS: x New Repeat from Prior year? Year originally reported? 3. Federal Program Name and Year: IDEA Flow-Through, 2019 4. Project No.: 2019-4620 5. CFDA No.: 84.027 6. Passed Through: Illinois State Board of Education 7. Federal Agency: US Department of Education 8. Criteria or specific requirement (including statutory, regulatory, or other citation) Expenditures charged to the grant should be supported by receipts and/or other supporting documentation in order to determine that the expenditure is an allowable cost under the grant. 9. Condition Supporting documentation for a conference registration expenditure charged to the grant could not be located. 10. Questioned Costs $707.47 11. Context Out of a sample of 40 items, supporting documentation for one expenditure could not be located. 12. Effect Without the proper supporting documentation, it could not be determined whether the expenditure was an allowable cost under the grant. 13. Cause The registration was performed on-line and the registration fee was charged to a credit card. The supporting documentation was not maintained. 14. Recommendation We recommend that supporting documentation be maintained for all expenditures. There should also be a review process to ensure all the required documentation is obtained and maintained prior to payments being made. 15. Management's response This appears to be an isolated incidence due to registering for the conference on-line. It was an oversight that the supporting documentation was not maintained. In the future, a review process will be implemented to ensure all required documentation is obtained prior to the payment being made.

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