Bellmawr Borough’s Year End December 31, 2018 Audit Yields Three Findings

The year end December 31, 2018 audit for the Borough of Bellmawr has been completed. The auditor noted three findings with recommendations.

Below are excerpts from the Schedule of Findings and Recommendations:

Finding No. 2018-001
Criteria or Specific Requirement
Internal controls with respect to payroll should be designed for effectiveness and efficiency. The payroll process should follow statutory guidelines and Borough ordinances established.

Condition
The Borough did not process payroll in accordance with established guidelines as promulgated by Borough ordinance and health benefit deductions were not calculated in accordance with state statutes. In addition, amounts reported to the Division of Pensions for Public Employees’ Retirement System (PERS) and Police and Firemen’s Retirement System (PFRS) did not agree to amounts per payroll reports.

Recommendation
That the Borough review procedures with respect to the payroll process, and adhere to healthcare and pension deduction guidelines, including information contained in Local Finance Notices issued by the State of New Jersey Division of Local Government Services.

Finding No. 2018-002
Criteria or Specific Requirement
Transactions between funds (Interfund) should be liquidated within a reasonable period of time and transactions should be posted to the respective general ledger of each fund. Separate bank accounts should be maintained for each fund.

Condition
The Borough had several interfund balances as of December 31. The interfund balances between funds in the respective general ledgers were not in agreement prior to audit adjustments.

Context
During the year numerous transactions between Borough funds occurred that were not properly posted to the general ledger of each fund.

Recommendation
That all transactions between Borough funds (interfunds) be reviewed prior to the end of the year, that all activity be posted to the respective general ledgers of the Borough and that the Borough maintain a separate bank account for the Water Utility Capital fund.

Finding No. 2018-003
Criteria or Specific Requirement
N.J.S.A. 40A:4-57 requires that budgetary transfers be approved by a resolution of the governing body prior to being over-expended.

Condition
Appropriations were over-expended prior to transfers and approved budget transfers of current appropriations and appropriation reserves were not properly recorded. There was one appropriation reserve that was overexpended.

Context
One appropriation in the 2017 appropriation reserves was over-expended and another appropriation was overexpended prior to budget transfers. Additionally, approved transfers were either not posted or were not posted properly. Several budget transfers that were recorded were not approved by resolution of the governing body.

Effect
The Borough is not in compliance with the above referenced statute and controls over current budgetary accounts are not effective to reduce the likelihood that errors of a material nature could occur and not be detected.

Recommendation
That no appropriation from the adopted budget be expended without sufficient available funds or until a transfer is permitted by state statutes, and that all transfers are approved by the governing body and be properly recorded.

Regarding Prior Year (2017) Findings):

Finding No. 2017-001
Condition
The Borough did not process payroll in accordance with established guidelines as promulgated by Borough ordinance and health benefit deductions were not calculated in accordance with state statutes. In addition, amounts reported to the Division of Pensions did not agree to amounts per payroll reports.

Current Status
This condition has been partially resolved. See Finding 2018-001.

Planned Corrective Action
The Borough will implement procedures as part of their corrective action plan.

Finding No. 2017-002
Condition
The Borough had several interfunds as of December 31. The interfund balances in the general ledger did not agree prior to audit adjustments.

Current Status
This condition still exists. See Finding 2018-002.

Planned Corrective Action
The Chief Financial Officer will review all interfund balances prior to the end of the year and establish a separate bank account for the Water Utility Capital Fund.

To view the auditor’s Schedule of Findings and Recommendations in more detail, click the image below:

Approved Correction Action Plan
On October 24, 2019, Bellmawr Council approved the Corrective Action Plan Report below.

To view the entire audit for year end December 31, 2018, click below: