HAZLET – Municipal officials will carry out a corrective action plan that seeks to rectify seven inconsistencies that were found during Hazlet’s 2017 audit.
On Aug. 7, Township Committee members passed a resolution outlining the corrective action plan.
The 2017 audit, which was conducted by Holman Frenia Allison P.C., uncovered several issues with Hazlet’s finances. The inconsistencies must be remedied by the chief financial officer (CFO) in order to satisfy the action plan and avoid future problems with the township’s financial report, according to the resolution.
Hazlet’s Assistant CFO Anthony Mannino said the “problems” that were identified in the audit are being addressed. He said the number of inconsistencies found by auditors “is not a cause for concern” and said a plan has been set in place to correct the issues, which he said are not uncommon.
“Any items we can address during the audit we do so,” Mannino said. “Other items that can’t be addressed during the audit need to be written in the audit report as comments and recommendations. Though the number of findings may seem alarming, each individual item is something that can easily be rectified by (the 2018) audit.”
He said certain have been addressed and said there is a plan in place to address outstanding issues.
“In addition to the findings in an audit report, an opinion is rendered to the township. In this regard, the township received an unmodified opinion (clean) on the regulatory basis of accounting, which is the basis all municipalities in New Jersey use. This is the best opinion an auditing firm can render,” Mannino said.
Hazlet’s corrective action plan outlines the following inconsistencies and its corresponding corrective action as follows:
• The Township did not complete the disclosures for post-employment benefits. Corrective Action: Effective March 2018, municipal officials enrolled the municipality in the state health benefits plan.
• During a review of cash accounts, bank reconciliations were not prepared in a timely manner. Corrective Action: The CFO position was vacant for a portion of 2017. Municipal officials have caught up on delinquent bank reconciliations and will continue to prepare these on a monthly basis.
• The township did not maintain a fixed asset accounting system. Corrective Action: Municipal officials will evaluate the cost that is associated with having an outside appraisal company prepare a fixed asset report. Officials will then use the fixed asset module within its accounting software to track fixed assets going forward.
• Township officials did not sufficiently maintain the general or subsidiary ledgers in all funds timely or accurately. Corrective Action: The township had a change in the CFO position in the beginning of 2018. A full-time assistant CFO has been hired.
• Township officials did not properly maintain a detailed accounting of accrued compensated absences. Corrective Action: Municipal officials will prepare an analysis of compensated absences.
• Township officials did not properly certify that funds are available prior to release of funds to vendors. Corrective Action: Municipal officials will make sure no vote occurs without first certifying funds are available.
• Municipal officials did not properly follow the cash management plan as it was approved by the Township Council. Corrective Action: Municipal officials will make sure three people are signing checks.
Mannino said Hazlet officials will carry out the corrective action plan in order to avoid penalties that could compromise the amount the municipality receives in state aid. He said the sanction of employees and the implementation of a state monitor could also be enforced if the corrective plan is not addressed in a timely manner.
“These severe circumstances only occur in instances when the Division of Local Government Services believes the township is operating in bad faith. Hazlet is not in this circumstance,” he said.
Mannino said the CFO position has been vacant on and off since 2016.
“Some of the findings in the (2017) audit report are repeat comments that go back several years. … At the end of 2016, the CFO resigned. From November 2016 to February 2017, there was no CFO on record. In the beginning of 2018, the CFO had resigned. For January 2018, there again was no CFO.
“The first month of every year is generally the time the CFO would reconcile the books of the township and complete any analysis that is required for the annual audit. Since that position was vacant during that crucial time of the year, the township had the findings presented in the audit report.
“Currently, the township has a CFO and the township has also since hired an assistant CFO. These two positions … have been working on addressing the issues that have developed due to the changes in the Finance Department over the last few years,” Mannino said, adding he believes the 2018 audit will not uncover significant issues.
Hazlet Mayor Scott Aagre did not respond to requests for comment on the matter.
