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Board accepts 2016-19 audits


Special to The Press

South Whitehall Township closed a 10-year gap in its financial statements after commissioners voted to accept the township’s 2016-19 audits during a meeting this summer.

The board received a presentation on the audits from Chris Turtell, of Herbein + Company, who noted his firm’s responsibility was to conduct a financial audit and give an opinion on the township’s financial statements.

Turtell discussed the township’s general fund, special revenue funds, propriety funds and pension plans.

He noted the proprietary funds, which encompass water, sewer and refuse funds that are primarily based on user fees, have a strong financial position which has improved over the past four years.

He also said the township’s pension plans were “fairly stable.”

Turtell primarily focused on the township’s fund balance, or reserve, and noted that in 2017 South Whitehall had $4,789,423 in unassigned fund balance, $5,759,952 in 2018 and $5,684,739 in 2019.

Turtell said the township’s fund balance is in good shape and currently runs between 31 percent and 35 percent of the following year’s operating budget.

He added Herbein recommends a minimum unassigned fund balance of 20 percent.

“What we’re suggesting is taking a look at this balance and saying, is it an opportunity for the township to start looking forward, and possibly looking more at a capital reserve fund, looking to fund capital projects that might be coming up within the next couple of years,” Turtell told commissioners. “This way you’re not paying them year after year out of your operating tax dollars.”

Regarding the capital projects fund, Turtell said traditionally this was an “in-and-out” where money is transferred from the general fund and then spent on whatever capital is needed.

He said for the most part South Whitehall’s fund was operating in this manner.

“We don’t have a real reserve here at the township really looking forward to doing any capital replacement or capital items, which is why we think it’s an opportunity to look back at the general fund balance and see if we can assign or earmark some of those funds to be used for those capital purchases.”

Turtell noted that while conducting the audits, Herbein needed to consider and understand the township’s internal control over financial reporting in order to design appropriate procedures.

“There were several deficiencies in internal control that we noted, in particularly around reconciling and reporting key accounts,” he said.

Commissioner Mike Wolk commented after Turtell’s presentation

“Our finances have been audited now for the first time in the last 10 years,” Wolk said. “As you know, this has been a key item of interest for me.”

With regard to Herbein’s uncovering several deficiencies, Wolk said the audit report states the township should continually revise internal controls and regularly conduct an internal risk assessment, but he recommended going a step further.

“Based on your recommendation, I believe the township should complete an internal control audit to ensure we have a complete, definitive list of deficiencies, and they are identified and corrected,” he told the board.

Commissioner Diane Kelly noted Herbein’s report found a potentially significant issue with bank reconciliations which occurred as recently as 2019.

“I know we’ve got a 10-year gap. Certainly you’ve suggested some new protocol moving forward,” Board President Christina “Tori” Morgan said. “I guess I was just surprised there was such a recent, significant issue at that particular time.”

Turtell said bank reconciliations are a key part of maintaining finances, and not having these timely reports was an issue.

He reiterated the importance of having standard operating procedures, stating these can help new staff members come up to speed on the township’s financial situation, and keep them accountable.

He noted South Whitehall has had a lot of staff turnover over the years.

“Your finance directors were living in three different worlds,” Turtell said. “They’re spending their time ‘forward’ trying to help budget, ‘current’ getting the information to you, and ‘prior’ trying to get information to us, so there’s a lot of work involved.”

Wolk said the township’s financial policies were decentralized and any standard procedure would need to be available and accessible to all relevant employees.

Morgan said these audits were “many years in the making,” and the delays were not due to one single incident or issue.

“It’s a culmination of many different things that got us to this point,” Morgan said, adding some of those situations were out of the township’s control.

She said the most important thing was South Whitehall was in good financial standing.

The board unanimously voted to accept the 2016-19 audits.