The focal point of an annual municipal audit is to identify and eliminate problems in the internal accounting procedures of the city. It is intended to be management tool, not a club to use against departments or employees, let alone the opposing political party. Up until now in Brigantine that has been the case. However, the 2014 audit presentation was clearly used as an attempt to defame.
The “once and future” auditor, who had an unbroken eighteen year history with the city prior to 2013, attempted to paint a picture of utter catastrophe. He cited an incomplete general ledger due to posting errors. He cited inadequate use of the electronic book keeping system. He constantly used the term “a serious finding” without defining the term. He never mentioned the fact that before, when he was auditing the city, the electronic book keeping system had never been updated, let alone used consistently.
The General Ledger merely consisted of a spread sheet updated manually. Apparently he has gained insight during those two years he was not regularly billing the city because these things were simply not problems before.
New Jersey “Best Practice” standards for municipalities instructs that the Municipal Auditor be changed every five years. No mention of that. Remember that this is the man whose firm is barred from doing County work because they broke the pay to play law.
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what are you trying to say? that its the auditors fault the accounting system (I use accounting system loosely) is a catastrophe? its the auditors job to update and implement an electronic accounting system? its the auditors job to make sure city employees do their job? who hired the auditor?
BTW… the focus of an municipal audit is not to identify and eliminate problems nor is it intended as a management tool, although both are by-products they aren’t focal points.
Read some of the findings below and ask yourself if the books and records could possibly be any worse? only thing worse would be completely non existent.
Findings:
The city may have to upgrade some of its accounting systems after an audit showed some of its 2014 reporting to be “a disgrace” while other items were termed unrecorded, unresolved, inaccurate and invalid.
“the general ledger was not reconciled with sub-ledgers.”
“This basically was a disgrace”
“not all transactions were properly recorded nor were transfers made within the period in which the disbursements occurred meaning the city is not compliant with New Jersey Administrative Code.
According to the report, the city had an over-expenditure of appropriations in the current fund appropriation reserves, which is not permitted by local budget law and local finance board regulations.
The city approved a debt service payment of “bond anticipation notes and capital notes in the current fund before verifying that there were sufficient funds available in the budget lines,” the report said.
Bank accounts were not reconciled in a timely manner and records were not available until the beginning of March 2015, he said. As a result, the annual municipal financial statement could not be filed on time as required by state statute.
The city’s master bank account reconciliation was inaccurately prepared and the city’s engineering escrow bank account was not reconciled at all in 2014, Costello said. Several expenses were unrecorded at year end as well as unresolved bank charges, inaccurate debt service payments and invalid encumbrances recorded.
The report said the city’s Finance Department was responsible for debt service budget accounts that were inaccurate and for several expenses that were allocated from the current fund to the water-sewer operating fund for employee salaries and other expenses.
“Debt service, payroll and inter-fund expenditures were encumbered and should not have been,” the report said. “Purchase orders were set up in blanket form and have a balance in which no recent activity has been posted.”
The report noted that some purchase orders were entered in duplicate, others did not have any support attached, and several could not be located.
Another finding said the fixed asset ledger was not maintained in 2014.
State administrative code requires the city to maintain a fixed asset ledger consisting of detailed property records for controlling additions, retirements and transfers of fixed assets.
The report said Brigantine failed a state requirement to have an actuarial calculation of benefit costs, “post-employment benefits” costs and liabilities.
The city was apparently unaware that the Police and Fire department post retirement dental benefits-liability had to be recorded.