Expanded Audit: Hamilton’s Strong Financial Controls Prevented Abuse in Municipal Government
An expanded audit conducted by an independent municipal auditor has found no evidence of illegal activities, misappropriations of government funds, or attempts to circumvent the internal financial controls following its in-depth review of three Hamilton Township Departments.
Announced by Hamilton Township Mayor Kelly A. Yaede in January, the expanded scope audit, performed by Hodulik & Morrison; and thanks to availability of remaining consulting hours as part the firm’s existing contract to perform the audit, came at no additional cost to taxpayers.
The expanded scope audit was categorized by Thomas Neff, the Director of the State of New Jersey’s Division of Local Government Services, the Division that oversees all municipal governments across the state as being “appropriate”, “proportional to the events that occurred during the past year” and a “well-advised course of action to ensure the taxpayers of [Hamilton Township] are protected.”
“I believe that the positive results from this expanded audit are yet another indication by an independent, credible and unbiased entity, that the personal actions of a few did not impact the financial operations and internal controls of the Hamilton Township Municipal Government,” says Hamilton Township Mayor Kelly A. Yaede. “And, considering that this action was approved by the State of New Jersey’s Division of Local Government Services, the watchdog of all local governments, I believe it illustrates to the hard-working taxpayers of Hamilton Township that they can rest assured that their Municipal Government has taken the necessary steps to safeguard their tax dollars.”
“As Chief Financial Officer, I believe the results of our expanded audit confirm that the strong internal controls our government has in place are working and have not been violated,” says Hamilton Chief Financial Officer John E. Barrett.
As part of the audit’s expanded scope, the independent auditors used additional forensic tests and employee interviews to see if any past inappropriate practices took place, looked for stark differences over the prior three years of departmental expenditures, questioned township employees to see if they were ever influenced to falsify any financial transaction, and identified and reviewed of all new vendors established during 2011 and 2012.
The auditor’s findings noted:
ü None of the three former employees made any entries in the system while logged on using their personal passwords, as confirmed by the township’s financial accounting system.
ü Interviews with employees in the three affected Departments yielded NO reported instances of the former employees or their staff members attempting to circumvent the existing control policies or to conceal fraud or illegal acts
ü Township procurement procedures contained several, significant internal controls to ensure that purchasing laws and regulations, the legal commitment of funds, and the selection of vendors were followed.
ü Township Departments could not make requisitions for other Departments, preventing the bypass of internal controls on part of the three Departments included in the expanded scope
ü The Township’s Purchasing Agent examines all requisitions to ensure compliance with the New Jersey Public Contracts Law
ü The Townships Director of Finance also examines all requisitions to determine the appropriateness of budget accounts used for purchases, as well as the availability of funds
ü Payments to vendors are not made until the vendor provides evidence of a business registration with the State Department of Treasury and evidence or certification of the receipt of goods or services
ü The audit found that new vendors were ONLY created by the Purchasing Agent, in response to successful bids, holders of state approved contracts, or other valid business purposes
Hamilton Township Mayor Kelly A. Yaede noted her confidence that the results would be positive, specifically noting that:
ü As a member of the Township Council, the body scrutinized all matters brought before the governing body
ü The Municipal Government had strong financial controls in place to prevent such abuses
ü Hamilton’s long-standing Competitive Contracting policy to award contracts to the lowest responsible bidders that extended to contracts that even State Law does not require. The Mayor signed the policy into permanent law earlier this year.
ü For three consecutive years, the Hamilton Township Municipal Government met the highest level of the State of New Jersey’s recommended best practices for local governments.
ü Hamilton also earned consecutive audits without recommendations for corrective measures by a certified, independent municipal auditor and submitted to the State of New Jersey -- stellar results that proved its strong internal controls and procedures were working.
ü Standard and Poor’s independent review of Hamilton Township’s finances led to an increased rating of the Municipal Government’s Financial Management Assessment, expressing S + P’s belief in Hamilton’s good financial management practices.
“I am proud of the overwhelming positive results of this expanded financial audit, which proves the fiscal responsibility and strong managerial controls that Hamilton Township employs to protect our hardworking taxpayers,” explains Mayor Yaede. “This is another example of our internal controls have worked to help produce a 2013 Township Budget that, once again, has no municipal tax increase.”