Corrective Action Plan Fy2005

TOWNSHIP OF EWING COUNTY OF MERCER, NEW JERSEY CORRECTIVE ACTION PLAN FOR FISCAL YEAR 2005 AUDIT PRIOR YEAR (FISCAL YEAR 2004) FINDINGS, RECOMMENDATIONS AND RESPONSES 1. Finding: The fiscal year 2005 budget did not include an appropriation for the appropriate amounts of obligations to Ewing Lawrence Sewerage Authority. Recommendation: The budget should allocate sufficient funds for the obligation to Ewing Lawrence Sewerage Authority. Response: By August 2006, the Township will establish a reserve account to accumulate funds toward the payment of the 5th ELSA payment, which has been one day late each year. 2. Finding: Grants are not being properly tracked. Recommendation: The Township should designate an individual to be the grant administrator. This individual should track all grants. Response: The Chief Finance Officer has requested an additional staff member to assist with the management of the grants and to perform additional finance responsibilities. During Fiscal Year 2006 the Township is working with Ron Rukenstein and Associates to bring the grants up to date and has been able to close out several grants. All departments have been informed that all grants should begin and end in the finance. 3. Finding: The Township does not comply with Technical Accounting Directive #85-2, “Accounting for Governmental Fixed Assets.” Recommendation: The Township should maintain fixed assets accounting and reporting system for general fixed assets in accordance with the above-mentioned regulation. Response: Administration has asked each department head to begin preparing an inventory list of their department assets. In fiscal year 2007 the Township will budget for the cost of taking a physical inventory using these lists as a starting point.

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TOWNSHIP OF EWING COUNTY OF MERCER, NEW JERSEY CORRECTIVE ACTION PLAN FOR FISCAL YEAR 2005 AUDIT PRIOR YEAR (FISCAL YEAR 2004) FINDINGS, RECOMMENDATIONS AND RESPONSES 4. Finding: Premiums in the Collector’s Trust cash account are not being properly tracked to ensure that all premiums over five years old are being moved to the Current Fund as required. Recommendation: All premiums in the Collector’s Trust account need to be properly tracked to ensure that premiums over five years old are transferred to the Current Fund as required. Response: Beginning in July 2005, the Tax Office changed the Collector’s Trust account to an escrow account which tracks the date the escrow was established, therefore providing a way of determining the age of the premium. No new premiums are being deposited into the old bank account and that account will eventually work its way to zero. Upon review of the old account it was determined that there were no premiums older than 2002, which would not be due to the Current Fund until some time in 2007. 5. Finding: There is a grant receivable in the amount of $422,628 due from Environmental Infrastructure Trust pertaining to capital ordinance 99-10 that has remained the same over the past few years; this receivable needs to be investigated to determine whether or not it is going to be collected. Recommendation: This amount should be investigated to determine whether or not it is going to be collected. Response: With the assistance of Ron Rukenstein and Associates, the Township anticipates the close out of this receivable and the associated Shabakunk Creek Project by the end of June 2006. 6. Finding: Currently, cash disbursements are still reviewed and approved by the court administrator, who also prepares the bank reconciliations. Recommendation: An individual who is independent from both cash receipt and cash disbursement functions should prepare bank reconciliations. Response: This is the procedure mandated by the state judiciary. Currently due to a change in staff, the state is assisting in the preparation of the bank reconciliations and once the duty reverts to the court administrator, the Chief Finance Officer will review the court account reconciliations on monthly basis. 2

TOWNSHIP OF EWING COUNTY OF MERCER, NEW JERSEY CORRECTIVE ACTION PLAN FOR FISCAL YEAR 2005 AUDIT PRIOR YEAR (FISCAL YEAR 2004) FINDINGS, RECOMMENDATIONS AND RESPONSES 7. Finding: Dog licenses are distributed out of sequence. The total licenses issued during the year do not equal the replacement licenses plus the amount of paid licenses. These numbers are not reconciled to the monthly reports. Recommendation: Utilize computer software or keep manual records. Perform reconciliation between yearly and monthly reports. Keep records and written explanation related to any gaps in license sequence. Response: This was predominantly a software issue that should be addressed by June 15, 2006 with the software developer. A new Clerk was appointed in April 2005 and the Clerk has subsequently reviewed the policy with staff regarding the numbering sequence and the policies for no fee tags and will perform periodic checks to ensure compliance. Additionally, the Clerk is reviewing the staff’s reconciliations for accuracy. 8. Finding: The Construction Office is not always stamping permits with an authorized signature. Recommendation: All receipts to permits should be stamped with the required authorized signature. Response: The Construction Official has reviewed the policy with staff regarding the importance of signatures on permits and will perform periodic checks to ensure compliance. 9. Finding: When an individual gets fingerprints, the Police Department does not record money collected in any sort of general ledger and therefore is not reconciling the fingerprint cash collection to the number of fingerprints taken. Recommendation: The Police Department needs to give receipts to customers and maintain a carbon copy for their records. They need to properly record all money received in a ledger to be reconciled at the end of the day. All money collected must be deposited into the bank within 48 hours of receipt as required by law. Response: Effective April 3, 2006 the Police Department has implemented a sequentially numbered receipt log book for logging deposit receipts, which will be given out with all funds received. These funds are turned over daily to Police Records who in turn ensures the funds are forwarded to the Tax Office and depositing within 48 hours.

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TOWNSHIP OF EWING COUNTY OF MERCER, NEW JERSEY CORRECTIVE ACTION PLAN FOR FISCAL YEAR 2005 AUDIT CURRENT YEAR (FISCAL YEAR 2005) FINDINGS, RECOMMENDATIONS AND RESPONSES 10. Finding: The fiscal year 2006 budget does not include an appropriation for the appropriate amounts of obligations to Ewing Lawrence Sewerage Authority. Recommendation: The budget should allocate sufficient funds for the obligation to Ewing Lawrence Sewerage Authority. Response: By August 2006, the Township will establish a reserve account to accumulate funds toward the payment of the 5th ELSA payment, which has been one day late each year. 11. Finding: There are too many different departments applying for grants and then requesting their own drawdowns of reimbursement for expenditures. As a result, grants are not being properly tracked. Recommendation: The Township should designate an individual to be the grant administrator. This individual should track all grants. Response: The Chief Finance Officer has requested an additional staff member to assist with the management of the grants and to perform additional finance responsibilities. During Fiscal Year 2006 the Township is working with Ron Rukenstein and Associates to bring the grants up to date and has been able to close out several grants. All departments have been informed that all grants should begin and end in the finance. 12. Finding: The Township does not comply with Technical Accounting Directive #85-2, “Accounting for Governmental Fixed Assets.” Recommendation: The Township should maintain fixed assets accounting and reporting system for general fixed assets in accordance with the above-mentioned regulation. Response: Administration has asked each department head to begin preparing an inventory list of their department assets. In fiscal year 2007 the Township will budget for the cost of taking a physical inventory using these lists as a starting point.

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TOWNSHIP OF EWING COUNTY OF MERCER, NEW JERSEY CORRECTIVE ACTION PLAN FOR FISCAL YEAR 2005 AUDIT CURRENT YEAR (FISCAL YEAR 2005) FINDINGS, RECOMMENDATIONS AND RESPONSES 13. Finding: Premiums in the Collector’s Trust cash account are not being properly tracked to ensure that all premiums over five years old are being moved to the Current Fund as required. Recommendation: All premiums in the Collector’s Trust account need to be properly tracked to ensure that premiums over five years old are transferred to the Current Fund as required. Response: Beginning in July 2005, the Tax Office changed the Collector’s Trust account to an escrow account which tracks the date the escrow was established, therefore providing a way of determining the age of the premium. No new premiums are being deposited into the old bank account and that account will eventually work its way to zero. Upon review of the old account it was determined that there were no premiums older than 2002, which would not be due to the Current Fund until some time in 2007. 14. Finding: There is a grant receivable in the amount of $422,628 due from Environmental Infrastructure Trust pertaining to capital ordinance 99-10 that has remained the same over the past few years. Recommendation: This amount should be investigated to determine whether or not it is going to be collected. Response: With the assistance of Ron Rukenstein and Associates, the Township anticipates the close out of this receivable and the associated Shabakunk Creek Project by the end of June 2006. 15. Finding: The Municipal Court’s cash disbursements are reviewed and approved by the court administrator, who also prepares bank reconciliations. Recommendation: An individual who is independent from both cash receipt and cash disbursement functions should prepare bank reconciliations. It is also necessary to have an accounting procedures manual prepared, in order to facilitate a better transition in the event an employee leaves. Response: This is the procedure mandated by the state judiciary. Currently due to a change in staff, the state is assisting in the preparation of the bank reconciliations and once the duty reverts to the court administrator, the Chief Finance Officer will review the court account reconciliations on monthly basis. 5

TOWNSHIP OF EWING COUNTY OF MERCER, NEW JERSEY CORRECTIVE ACTION PLAN FOR FISCAL YEAR 2005 AUDIT CURRENT YEAR (FISCAL YEAR 2005) FINDINGS, RECOMMENDATIONS AND RESPONSES 16. Finding: Dog licenses are distributed out of sequence. The total licenses issued during the year do not equal the replacement licenses plus the amount of paid licenses. These numbers are not reconciled to the monthly reports. On one of the monthly reports submitted to the state, the amount owed to the state was calculated incorrectly. Also, there were four licenses issued with no fee that were not for service dogs and are not indicated as replacement tags. Recommendation: Utilize computer software or keep manual records. Perform reconciliation between yearly and monthly reports. Keep records and written explanation related to any gaps in license sequence. Prior to submitting reports to the state, verify that the amount owed is calculated correctly. Also, for no fee licenses issued, properly indicate the type of license in the system. Do not issue licenses with no fee unless they are for service dogs or replacement tags. Response: This was predominantly a software issue that should be addressed by June 15, 2006 with the software developer. A new Clerk was appointed in April 2005 and the Clerk has subsequently reviewed the policy with staff regarding the numbering sequence and the policies for no fee tags and will perform periodic checks to ensure compliance. Additionally, the Clerk is reviewing the staff’s reconciliations for accuracy. 17. Finding: The Construction Office is not always stamping permits with an authorized signature. Also, monies received are not being deposited within 48 hours, as is required. Recommendation: All permits should be stamped with the required authorized signature. Also, bank all monies received should be deposited within 48 hours, as required. Response: The Construction Official has reviewed the policy with staff regarding the importance of signatures on permits and will perform periodic checks to ensure compliance. Additionally, the Chief Finance Officer has provided deposit bags and the staff is to send deposits directly to the Tax Office for deposit within 48 hours.

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TOWNSHIP OF EWING COUNTY OF MERCER, NEW JERSEY CORRECTIVE ACTION PLAN FOR FISCAL YEAR 2005 AUDIT CURRENT YEAR (FISCAL YEAR 2005) FINDINGS, RECOMMENDATIONS AND RESPONSES 18. Finding: When individuals get fingerprints, the Police Department does not record money collected in any sort of general ledger. As a result, the department is not reconciling the fingerprint cash collection to the number of fingerprints taken. Recommendation: The Police Department needs to properly record all money received in a ledger to be reconciled at the end of the day. Response: Effective April 3, 2006 the Police Department has implemented a sequentially numbered receipt log book for logging deposit receipts, which will be given out with all funds received. These funds are turned over daily to Police Records who in turn ensures the funds are forwarded to the Tax Office and depositing within 48 hours. 19. Finding: Overexpenditures Current Fund Overexpenditure of Grant Programs Overexpenditure of Appropriations Capital Fund Overexpenditure of Improvement Authorization

$ $

3,959 135,414

$

63,924

Recommendation: Expenditures should be monitored throughout the year in order to avoid overexpenditures. Response: All departments were informed repeatedly throughout fiscal year 2006 that over expenditures will not be permitted. The Chief Finance Officer is reviewing all accounts on a regular basis to ensure that there will be sufficient funds for all accounts or that transfers will be available to cover all expenditures prior to the tend of the fiscal year. Additionally, the Township has made assurances to the State Division of Local Government Services that there will be no over expenditures in fiscal year 2006.

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TOWNSHIP OF EWING COUNTY OF MERCER, NEW JERSEY CORRECTIVE ACTION PLAN FOR FISCAL YEAR 2005 AUDIT CURRENT YEAR (FISCAL YEAR 2005) FINDINGS, RECOMMENDATIONS AND RESPONSES 20. Finding: There is a lack of segregation of duties in the Finance Department. The CFO makes entries for all wire transfers, and no one reviews her work. Recommendation: Someone below the CFO should make the entries so that the CFO can review them, or the business administrator should review all entries made by the CFO. Response: Effect March 2006, all requisitions require the signature of both the CFO and the Administrator. The Chief Finance Officer has requested additional staff and Administration is reviewing the request. 21. Finding: The Clerk’s Office does not have an organized filing system of all bids. Also, the Township is not maintaining copies of state contracts awarded. Recommendation: The Clerk’s Office should create and maintain an organized filing system for all bids. Copies of the resolution, certification of availability of funds, proof of advertisement, and all other required paperwork relating to the bid should be kept in the same file. The Township should also maintain copies of state contracts awarded. Response: The new Clerk is working with the CFO to establish a filing system. The Clerk is maintaining a binder of all resolutions and certifications of funds. The Chief Finance Officer is maintaining the bid packages until year end when the Clerk and CFO will ensure the completeness of the packages and the CFO will turn the bids over to the Clerk’s Office. 22. Finding: An item in the approved March 22, 2005 minutes that required CFO certification was not given to the CFO for signature, and a majority of the resolutions in the April 26, 2005 minutes and all resolutions from the May 10, 2005 minutes were missing resolution numbers. Recommendation: All approved minutes should be given to the CFO to sign where required, and all resolution numbers should be indicated in the minutes. Response: The CFO certifies a document separate from the minutes which is maintained to signify authorization. The certification in the minutes was an error and will not be included going forward, therefore the CFO’s signature in the body of the minutes will not be required. 8

23. Finding: The Tax Collector’s Office is writing out checks for liens but is not issuing them until they receive the tax lien certificates. These checks are being held and included on the bank reconciliation as outstanding checks when they have not yet been issued. Recommendation: Checks should not be written out for liens until the certificates are actually received by the Township. Response: The Tax Collector was informed and effective April 2006, this practice will be discontinued. Checks will be written out as the certificates are received in the Tax Office and not in advance of the receipt.

24. Finding: Payroll deductions for employees are not being reconciled with the statements received by the Township. Recommendation: All payroll deductions should be reconciled with the reports received and adjusted to actual. Response: The Payroll Supervisor has reviewed the statements and is working with the third parties to ensure compliance. Additionally, the Payroll and Benefits Departments are implementing two new systems to automate processes which should allow for more in depth review rather than up front data entry. Additionally, the Chief Finance Officer has requested additional staff and Administration is reviewing the request.

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