Hillside put on notice by Dept. of Community Affairs

HILLSIDE, NJ — The New Jersey Department of Community Affairs has put Hillside on notice regarding an audit report listing a laundry list of fiscal issues stemming from 2015 which, according to the DCA, must be addressed immediately.

In December, a letter was sent by the DCA to former Hillside Business Administrator, Dwayne Warren, regarding a review that was conducted on Hillside’s 2015 statutory audit report.

According to the DCA’s letter, Hillside’s audit report was not submitted in a timely manner, and the 2014 Corrective Action Plan was not filed with the department.

Of 44 audit recommendations listed by the DCA, 27 were repeats from the prior year, while 26 “have been repeated for more than several years,” according to the letter. “The township has not taken the appropriate steps to resolve prior year findings.”

The township, according to the letter, must take immediate action to correct several of the issues.

Books of Original Entry for all funds should be maintained completely and on a timely basis and the Unidentified 2015 Items investigated and properly classified, states the letter. Books of Original Entry should be proven to the Subsidiary Ledgers on a monthly basis, and sufficient “appropriation balances” should be available prior to the commitment or payment of funds, says the DCA’s letter.

According to the DCA, the township’s use of “payroll processing and disbursement services” must be brought into compliance with the requirements, and outside service organizations’ disbursement of payroll taxes be monitored by the township and payments of payroll taxes be confirmed with the taxing agency. Finally, the DCA states that expenditures in excess of the bid threshold be awarded by township resolution.

The township has until Feb. 28, 2017, to implement several recommendations, including maintaining a complete encumbrance accounting system.
An encumbrance is the name given to funds that have been reserved when a purchase request is finalized. When a request is processed, funds are placed aside for that transaction. Those funds are no longer available for use in other transactions, but also have not been included in the “actual funds” balance because a payment has not yet been generated and the funds have not physically left the municipality. The purpose of encumbrance accounting is to avoid budget overspending.

Other issues that must be resolved include “other post-employment benefit” obligations, which are benefits, other than pensions, that U.S. state and local governments provide to their retired employees, including health care and general fixed assets, which are a municipality’s tangible assets bought or obtained through past transactions or events. These can include buildings, equipment, improvements other than buildings, and land.

Corrective action on most of the issues must be completed no later than May 31, 2017, according to the letter.

“Due to the significant number of unresolved prior-year findings, the township must complete and submit by March 15, 2017 a status report on Resolution of 2015 Audit Findings,” states the letter.

A final status report is due on July 15, 2017.
The DCA did not respond to LocalSource’s request for comment as of press time.
According to Hillside Business Administrator Ray Hamlin, the issues are being addressed.

“It is my understanding that those issues are being addressed and were in the process of being addressed during the 2016 fiscal year,” Hamlin said in an email.
Hillside Council President Andrea Hyatt told LocalSource that financial issues are not new to the township.

“The finances have been an issue for the township for several years,” Hyatt said in a phone call. “The audit finding has been consistent for at least several years. The majority of the issues, to my knowledge, have been rectified.”

According to Hyatt, the township’s chief financial officer, Faheem Raoof, has done a good job in managing the township’s finances.

“The CFO has done an excellent job to rectify the 2016 bills,” Hyatt said.