Finding 946174 (2022-001)

SA 2022-01 Internal Control Policies and Procedures Federal Agencies: U.S. Department of Housing and Urban Development and U.S. Department of Treasury Community Development Block Grant – Assistance Listing #14.218 Coronavirus State and Local Fiscal Recovery Funds – Assistance Listing #21.027Condition: During the audit, we noted that the Township does not have a formal internal control document that details key processes and controls over each area, that is consistent with actual processes and procedures followed by the Township. Criteria: A proper system of internal control is essential in order to prevent, detect and correct misstatements, and to ensure that such information is useful in decision-making and evaluating managerial and departmental performance, as well as demonstrating accountability and stewardship. Controls must be properly designed, in place and operating effectively to ensure that the Township's accounting and financial information is fairly stated in accordance with generally accepted accounting principles. Effect: There are not effective internal controls in place over key areas and processes. In addition, transactions of the same type may not be processed consistently. Cause: The Township does not have formal internal controls policies and procedures to standardize the treatment and processing of transactions, or to ensure proper management review of transactions for completeness, accuracy or consistency.Recommendation: We recommend that management implement a formal internal control policy and procedures document, that standardizes processes and controls amongst all Township departments, to ensure consistency in reporting and to establish effective internal controls, including segregation of duties and review and approval controls over all key areas. We recommend that the Township consider initiating a thorough review of current internal control policies and procedures and evaluate the need for changes or improvement to enhance the effectiveness and efficiency of current operations.