Numbered findings
11
Control and compliance issues in the report
Independent municipal audit · CY2013
11 control and compliance findings.
Here is what they mean.
Regulatory financial and major-program compliance opinions were clean despite one material weakness. The principal issues were unreconciled accounts, aged unfunded costs, and unreliable asset records.
At a glance
Material weaknesses
1
The highest financial-reporting control category
Repeat findings
5
Issues reported in at least one earlier audit
Opinion scope
See report opinion
Opinion scope varies by report year and accounting basis
The opinion is not a pass/fail grade
Most regulatory statements received clean opinions—with an important exception.
Unmodified regulatory-basis and major-program compliance opinions; adverse GAAP-basis opinion.
Read the three opinion scopes
- New Jersey regulatory basis: Unmodified.
- U.S. GAAP: Adverse because the mandated regulatory basis differs from GAAP.
- Fixed assets: None
Every numbered finding
What needs to change
“Material weakness” is an audit-control classification, not an allegation of fraud. Open a finding for the condition, why it matters, the auditor's recommendation, repeat history, and the City's separately labeled response.
2013-001 · noncompliance material to basic financial statements
· Repeat since 2012
Aged unfunded capital costs
Unfinanced costs totaling $35,872,028 for capital projects over five years old remained on the City's books, including $25,970,341 for general and school projects and $9,901,687 for water projects.
2013-001 · noncompliance material to basic financial statements
· Repeat since 2012
Aged unfunded capital costs
Unfinanced costs totaling $35,872,028 for capital projects over five years old remained on the City's books, including $25,970,341 for general and school projects and $9,901,687 for water projects.
Why it matters
The aged balances created cash-flow concerns and did not comply with State requirements for funding completed capital projects.
Auditor recommendation
Fund all Unfunded Deferred Charges to Future Taxation and Water Rents over five years old for which unfinanced costs have been paid.
Official report p. 304 · Includes a compliance issue
2013-002 · material weakness
· Repeat since 2012
Grant, UEZ, and capital-account reconciliations
CDBG, HOME, HOPWA, and ESG balances were not reconciled to HUD's IDIS system; UEZ balances were not reconciled to JCEDC records; and capital improvement authorizations did not agree with the subsidiary ledger.
2013-002 · material weakness
· Repeat since 2012
Grant, UEZ, and capital-account reconciliations
CDBG, HOME, HOPWA, and ESG balances were not reconciled to HUD's IDIS system; UEZ balances were not reconciled to JCEDC records; and capital improvement authorizations did not agree with the subsidiary ledger.
Why it matters
Grant and UEZ balances could not be validated, and unreconciled capital authorizations could be overexpended or misstated.
Auditor recommendation
Adopt closing procedures requiring appropriate personnel to reconcile CDBG, HOME, HOPWA, ESG, UEZ, capital improvement authorizations, and other applicable accounts to underlying records and oversight-agency reports.
Questioned costs: None.
City response · unaudited
The City stated that Community Development would retain year-end IDIS reports, review and close temporary CDBG, HOME, and HOPWA accounts, and reconcile UEZ accounts with JCEDC records.
Official report pp. 305–306, 309–310
2013-003 · significant deficiency
Fixed-asset inventory and tracking
Fifteen of 48 sampled assets could not be located, disposal records appeared incomplete, identifying information was missing, and departmental tagging, transfer, and disposal policies were not followed.
2013-003 · significant deficiency
Fixed-asset inventory and tracking
Fifteen of 48 sampled assets could not be located, disposal records appeared incomplete, identifying information was missing, and departmental tagging, transfer, and disposal policies were not followed.
Why it matters
The fixed-asset system did not comply with N.J.A.C. 5:30-5.6 and could become materially misstated and unreliable for tracking City property.
Auditor recommendation
Make every asset traceable to the inventory through tags or other identifiers and enforce existing disposal and transfer procedures.
Official report pp. 307–308 · Includes a compliance issue
Comment 1 · control deficiency
· Repeat since 2012
Grant receipts posted to incorrect lines
Testing found grant receipts posted to incorrect grant lines, requiring a reallocation line in the grant-receivable detail.
Comment 1 · control deficiency
· Repeat since 2012
Grant receipts posted to incorrect lines
Testing found grant receipts posted to incorrect grant lines, requiring a reallocation line in the grant-receivable detail.
Why it matters
The report does not state a separate effect.
Auditor recommendation
Post receipts to the correct grants and grant years.
Official report p. 316
Comment 2 · control deficiency
· Repeat since 2012
Dormant grant receivables and reserves
The grants fund carried $53,734,763 of receivables and $45,820,738 of appropriated reserves, including aged balances likely to be uncollectible or inactive, plus dormant capital-fund grants and $368,981 of Local Law Enforcement Block Grant money.
Comment 2 · control deficiency
· Repeat since 2012
Dormant grant receivables and reserves
The grants fund carried $53,734,763 of receivables and $45,820,738 of appropriated reserves, including aged balances likely to be uncollectible or inactive, plus dormant capital-fund grants and $368,981 of Local Law Enforcement Block Grant money.
Why it matters
The report does not state a separate effect.
Auditor recommendation
Investigate dormant receivable and reserve balances for collectability, posting to correct grant years, proper disposition, expenditure eligibility, or return to grantors.
Official report pp. 316–317
Comment 3 · control deficiency
· Repeat since 2012
Unavailable payroll-deduction support
Testing of employee deductions and W-4 authorizations could not be completed because supporting documents were archived, stored, or otherwise unavailable.
Comment 3 · control deficiency
· Repeat since 2012
Unavailable payroll-deduction support
Testing of employee deductions and W-4 authorizations could not be completed because supporting documents were archived, stored, or otherwise unavailable.
Why it matters
The report does not state a separate effect.
Auditor recommendation
Permanently retain W-4 forms and employee-deduction support in personnel files.
Official report p. 317
Comment 4 · control deficiency
Missing vendor W-9 forms
Eighteen of 60 sampled vendors lacked retained W-9 forms, preventing completion of testing over whether required 1099 forms had been filed.
Comment 4 · control deficiency
Missing vendor W-9 forms
Eighteen of 60 sampled vendors lacked retained W-9 forms, preventing completion of testing over whether required 1099 forms had been filed.
Why it matters
The report does not state a separate effect.
Auditor recommendation
Obtain and retain W-9 forms from all vendors and review them for compliance with federal 1099-reporting rules.
Official report pp. 317–318
Comment 5 · compliance finding
Untimely deposits by City departments
The Health Department did not always deposit receipts within 48 hours, and Parks Maintenance forwarded several months of tree-planting receipts in December, contrary to N.J.S.A. 40A:5-15.
Comment 5 · compliance finding
Untimely deposits by City departments
The Health Department did not always deposit receipts within 48 hours, and Parks Maintenance forwarded several months of tree-planting receipts in December, contrary to N.J.S.A. 40A:5-15.
Why it matters
The report does not state a separate effect.
Auditor recommendation
Require the Health Department and Parks Maintenance to deposit receipts within 48 hours.
Official report p. 318 · Includes a compliance issue
Comment 6 · control deficiency
Retiree-benefit eligibility reviews
The City had no formal policy for self-auditing whether retirees, spouses, and dependents receiving medical benefits remained eligible.
Comment 6 · control deficiency
Retiree-benefit eligibility reviews
The City had no formal policy for self-auditing whether retirees, spouses, and dependents receiving medical benefits remained eligible.
Why it matters
The report does not state a separate effect.
Auditor recommendation
Periodically verify continuing medical-benefit eligibility and institute formal verification controls.
Official report p. 319
Comment 7 · control deficiency
Certificates of Occupancy omitted from tax roll
Six of 60 sampled Certificates of Occupancy had not been added to the City tax roll by the testing date.
Comment 7 · control deficiency
Certificates of Occupancy omitted from tax roll
Six of 60 sampled Certificates of Occupancy had not been added to the City tax roll by the testing date.
Why it matters
The report does not state a separate effect.
Auditor recommendation
Review all Certificates of Occupancy and add improvements as assessments promptly.
Official report p. 319
Comment 8 · control deficiency
Uncollected elevator-inspection fees
More than $180,000 of elevator-inspection bills issued in July 2013 remained uncollected at year end.
Comment 8 · control deficiency
Uncollected elevator-inspection fees
More than $180,000 of elevator-inspection bills issued in July 2013 remained uncollected at year end.
Why it matters
The report does not state a separate effect.
Auditor recommendation
Follow up on elevator-inspection billings to collect City revenue more promptly.
Official report p. 319
Source-validation warning
The report's management crosswalk is internally inconsistent about the repeat status of the fixed-assets finding.
Historical audits
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2010
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