A draft financial report presented at a Sept. 18 Dewey Beach audit committee cited four significant findings: Three findings mirror last year’s audit, and all four recommend the town hire a financial director.
The audit also showed the town has a $497,000 surplus.
CohnReznick representatives Dan Kenney and Ryan Ebner detailed draft documents and recommended the town develop formal policies to enhance timeliness and accuracy of reporting.
The audit stated several vendor payments were late, employee vacation/sick leave approvals and public safety payroll are not reviewed, and employees participate in town fundraising activities without compensation.
Further, the report recommended the town review its recently passed whistleblower policy and consider using an outside vendor to manage complaints and concerns. The report also advised a written information technology risk assessment.
Audit committee chair Julie Johnson said the audit is still a draft, so members could not vote to accept it. She said she will schedule a meeting to vote after town management has responded to the findings and the audit is finalized.
During public comment, Commissioner Dale Cooke asked for the negative or positive balance for the year. “The change in position is $497,000 to the positive,” Kenney said.
“So we’re up by numerous hundreds of thousands,” Cooke said, nodding, as he walked to his seat.
Mayor TJ Redefer said the preliminary draft audit does not yet contain responses from management, and said Commissioner David Moskowitz has gone out of his way to undermine the audit committee’s work. “Those answers will help explain why the concerns were raised,” he said. “Moskowitz sent email blasts to the community and raised unreasonable concerns in the public, and that raises the issues and tension I feel in this room tonight.”
Moskowtiz called the audit disastrous. “To say anything else is just wrong,” he said. “Last year, there was the same story, and nothing got done.”
Commissioner Paul Bauer said he doesn’t believe being in the black by $497,000 is a disastrous audit.
CohnReznick audited the town’s 2019 fiscal year financials and identified four deficiencies in internal control. All findings included a recommendation that the town hire a financial director.
The report found:
- Insufficient segregation of duties (repeat finding, two years in a row).
- Lack of timely and accurate financial reporting (repeat finding).
- Accounting records needed numerous adjustments to conform to generally accepted accounting principles (repeat finding).
- Town journal entries are prepared and entered without management review.
Before draft financials were posted on the town website Sept. 13, commissioners and a watchdog group blamed each other when the audit was not presented at its charter-imposed Aug. 15 deadline.
Moskowitz, Jeffrey Smith of Dewey Citizens for Accountability and commissioner candidate Phil Rowe stated numerous times before the meeting that the report was being delayed until after the Saturday, Sept. 21 election.
Johnson said, “There’s been a lot of controversy over the timing of the audit. There’s misinformation out there, and I want to say for the permanent record the timeline of how this has gone down.”
Johnson said former auditor TGM Group resigned in a Feb. 19 letter that Johnson opened Feb. 28. Johnson said she asked TGM to complete the 2019 audit, but TGM finalized its resignation March 12.
The town signed a contract with new auditor CohnReznick June 25, Johnson said. On June 26, she requested TGM forward the town’s previous financial documents to CohnReznick.
Johnson said CohnReznick stated they would not have all necessary documents until July 31, so on-site audit work would not be completed until late August, delaying a draft audit until about Sept. 12.
Before the meeting, Town Counsel Fred Townsend said a late report is not a legal violation. “They’re [auditor] an individual group, and we can’t tell them when to deliver the report. We can only tell them we need it as soon as possible after Aug. 15. There’s no one to prosecute, so to speak,” he said.