123-25 Township of West Orange - 12-31-2023 CAP.pdf

TOWNSHIP OF WEST ORANGE 123-25 CORRECTIVE ACTION PLAN FY 2023 ANNUAL AUDIT

Department: Office of the Comptroller Respondent: John Ditinyak, Director of Finance Responsible Employee(s): John Ditinyak, Director of Finance; Melanie Chavez, Assistant Comptroller Finding Number: 2023-1 (Page 160) 1. Condition: An examination of several bank reconciliations as of December 31, 2023 revealed that there are numerous deposits -in-transit that have not been identified and received by the Finance Department. The current Chief Financial Officer is investigating this issue and appropriate action will be taken on his findings. 2. Auditor’s Recommendation: That all bank reconciling items be reviewed and appropriate action be taken based on those findings. 3. Township Response & Corrective Action: The Finance Department has reviewed all of the deposits-in-transit and cleared them. Going forward, deposits-in-transit should clear the bank no later than the 10th of the succeeding month. If the deposits do not clear the bank by the 10th of the succeeding month, the book transaction must be reclassed accordingly. 4. Implementation Date: Implemented effective CY 2025

Department: Office of the Comptroller Respondent: John Ditinyak, Director of Finance Responsible Employee(s): John Ditinyak, Director of Finance; Melanie Chavez, Assistant Comptroller Finding Number: 2023-2 (Page 160) 1. Condition: The reconciled cash per the bank reconciliation for the Current Fund did not agree to the General Ledger Balance. There was a difference of $3,744.36. 2. Auditor’s Recommendation: That all cash reconciliations be in agreement with General Ledger Balances. 3. Township Response and Corrective Action: The Township is utilizing the bank reconciliation functionality built into the current ERP system (ZenGov Cloud Munidex). This system will not allow for reconciliations to be finalized if differences between the reconciled bank balance and the book (General Ledger) balance exist. Furthermore, the Chief Financial Officer will review and sign-off on the bank reconciliations that are completed by the Assistant Comptroller, or other personnel, as assigned by the Chief Financial Officer. 4. Implementation Date: Full implementation by Q3 25 close

Department: Office of the Comptroller Respondent: John Ditinyak, Director of Finance Responsible Employee(s): John Ditinyak, Director of Finance; Melanie Chavez, Assistant Comptroller Finding Number: 2023-3 (Page 160) 1. Condition: Checks outstanding in excess of twelve (12) months are considered stale and may not be honored by the bank. Periodically, stale dated checks should be reviewed and cancelled. Several bank reconciliations have outstanding checks in excess of twelve (12) months. 2. Auditor’s Recommendation: That outstanding checks be reviewed periodically and appropriate action to be taken based on those findings. 3. Township Response and Corrective Action: The Comptroller is currently reviewing all checks with issue dates in excess of twelve (12) months. Any stale dated checks will be cancelled via a resolution put forth to the Governing Body. The resolution will list the check #, issuance date, and the check amount. 4. Implementation Date: Resolution will be placed on the May 20, 2025 meeting.

Department: Office of the Comptroller Respondent: John Ditinyak, Director of Finance Responsible Employee(s): John Ditinyak, Director of Finance; Melanie Chavez, Assistant Comptroller Finding Number: 2023-4 (Page 160) 1. Condition: The Petty Cash Fund was not closed out at year end. A balance of $84.97 was still being carried in the General Ledger. 2. Auditor’s Recommendation: That proper procedures be followed for the annual approval and closeout of Petty Cash Funds per N.J.S.A. 40A:5-21. 3. Township Response and Corrective Action: There are two action items needed by the Township to implement this recommendation. The first is that a new resolution should be presented to the Council authorizing the updated Petty Cash Custodians and amounts. If that resolution passes, it must be sent to the Division of Local Government Services for their approval. The second action item is that Petty Cash should be closed out to operations at the end of the year and then reestablished at the start of the succeeding fiscal year. 4. Implementation Date(s): Resolution updating the custodians and making application to the New Jersey Division of Local Government Services – May 6, 2025; Close out Petty Cash to Operations – December 31, 2025.

Department: Office of the Tax Collector Respondent: Kathy Longo, Tax Collector; John Ditinyak, Director of Finance Responsible Employee(s): Kathy Longo, Tax Collector; John Ditinyak, Director of Finance Finding Number: 2023-5 (Page 161) 1. Condition: A detailed list supporting the Premiums on Tax Sale was not available for audit. 2. Auditor’s Recommendation: That a detailed list supporting the Premiums on Tax Sale be prepared and made available for audit. 3. Township Response and Corrective Action: The Township’s Tax Collector maintains a detailed listing of the Tax Sale Premiums that come to the Township through the annual tax sale process. Differences between the Munidex Property Tax software and the Cloud Munidex General Ledger software are being investigated. 4. Implementation Date: On-going

Department: Office of the Comptroller Respondent: John Ditinyak, Director of Finance Responsible Employee(s): Melanie Chavez, Assistant Comptroller; John Ditinyak, Director of Finance Finding Number: 2023-6 (Page 161) 1. Condition: Not all County taxes levied were remitted to Essex County. As of December 31, 2023, a balance of $212,651.86 was still due to the County for 2023 and prior years. 2. Recommendation: That all County Taxes levied be remitted to Essex County. 3. Township Response and Corrective Action: The Township of West Orange allows the County of Essex to initiate quarterly ACH transactions for all taxes due (County Levy, Open Space, and Added/Omitted). The Comptroller’s Department will work with the County CFO to ascertain if a balance is due, or if this is due to recording the levy and/or the levy payments incorrectly on the Township side. 4. Implementation Date: May 2025

Department: Office of the Comptroller Respondent: John Ditinyak, Director of Finance Responsible Employee(s): Melanie Chavez, Assistant Comptroller; John Ditinyak, Director of Finance Finding Number: 2023-7 (Page 161) 1. Condition: The County Share of PILOT Revenue was not remitted to the County in 2023. As of December 31, 2023, a balance of $212,651.86 was still due to the County for 2023 and prior years. 2. Auditor’s Recommendation: That the County share of PILOT revenue be remitted to the County. 3. Township Response and Corrective Action: The Township will remit the monies owed from 2023 in April of 2025. Going forward and in anticipation of future state legislation, payments will be made on a quarterly basis as PILOT payments are received. 4. Implementation Date: On-going

Department: Office of the Comptroller Respondent: John Ditinyak, Director of Finance Responsible Employee(s): John Ditinyak, Director of Finance; All Department Heads Finding Number: 2023-8 (Page 161) 1. Condition: The revenue collections of the Municipal Court were not in agreement with the records of the Finance Department. Revenue of $318,012.63 was turned over, but only $208,276.35 was recorded in the Current Fund General Ledger. The difference of $109,736.28 could not be identified in the ledger. The DCA Training Fees for new construction and rehabilitation collected by the Construction Department was not in agreement with Finance records. There was a difference of $4,593.00 compared to departmental records. 2. Auditor’s Recommendation: That all revenue received from outside departments be properly identified and recorded. 3. Township Response and Corrective Action: The Township’s method of recording daily cash receipts is through a software solution called Community Pass. On a daily basis, the previous’ days Community Pass cash activity is uploaded to the general ledger software, Cloud Munidex. This process inherently limits differences between the subsidiary ledger (Community Pass) and the general ledger (Cloud Munidex). The Finance Department is going to evaluate all of the mapping codes that are embedded in each Community Pass revenue type. The mapping codes determine what general ledger each Community Pass revenue uploads to in Munidex. Once the coding has been checked and Community Pass maps to the correct General Ledger accounts, we will implement a monthly departmental sign-off process. The Assistant Comptroller will run a monthly cash receipt report in Munidex and have the Department’s compare it to their own Munidex records. Any discrepancies will need to be investigated before completing the monthly reconciliation. 4. Implementation Date: The project will commence in May 2025 and will be completed in phases. The expectation is that all the of the departments will be completed by year-end 2025.

Department: Office of the Comptroller Respondent: John Ditinyak, Director of Finance Responsible Employee(s): John Ditinyak, Director of Finance; Finding Number: 2023-9 (Page 161) 1. Condition: There are interfund balances open at December 31, 2023 on the various balance sheets of the Township. As a general rule, all interfund balances should be closed out before the end of the year. Transactions invariably occur in fund, which results in a corresponding entry to be made in another fund, thus creating interfund balances. 2. Auditor’s Recommendation: That all interfund be liquidated by December 31st. 3. Township Response and Corrective Action: The Finance Department will liquidate all interfund balances prior to year-end 2025. If cash flow needs impede the Township’s ability to liquidate any or all interfund balances, a memorandum will be provided to the auditor prior to the issuance of the audited financial statements. 4. Implementation Date: Year-end 2025