EXETER TOWNSHIP

U.S. Department of Transportation: Exeter Township respectfully submits the following corrective action plan for the year ended December 31, 2021. Name and address of independent public accounting firm: Herbein + Company, Inc., 2763 Century Boulevard, Reading, PA 19610 Audit Period: Year Ended December 31, 2021 Contact Person: Jennifer Savage, Finance Director Anticipated Completion Date: December 31, 2022 The findings from the December 31, 2021 schedule of findings and questioned costs are discussed below. The findings are numbered consistently with the number assigned in the schedule. Financial Statement Findings 2021-001 MATERIAL ADJUSTMENTS POSTED AS A RESULT OF THE AUDIT - MATERIAL WEAKNESS Condition Material audit adjustments were proposed during the audit and recorded to properly reflect accounts within various funds. Specifically, there were two areas where material adjustments were required: (1) accurate reporting of unavailable revenue and (2) accurate reporting of interfund receivables and payables. Recommendation We recommend that the Township create standard operating procedures for the identification of cash to accrual adjustments needed at year-end to comply with U.S. generally accepted accounting standards including the application of the period of availability to all governmental fund receivables. Management Response The Township will create standard operating procedures for year-end accrual adjustments to ensure compliance with U.S. generally accepted accounting standards in all future audits. Both the prior Township auditor and Township staff misinterpreted the standard pertaining to reporting of unavailable revenues associated with the former wastewater treatment billing receivables after the plant was sold in late 2019. The Township will work with the current auditor to ensure full compliance in all future audits. 2021-002 FUND LEVEL CASH RECONCILIATIONS - MATERIAL WEAKNESS Condition The Township currently completes monthly bank reconciliations for all bank accounts. These reconciliations are reviewed by a member of management. However, the reconciliations are performed to account balances in a pooled cash account (in total), not to the individual fund cash account balances. Fund cash account balances are the balances included in financial reporting. Differences between pooled cash and fund cash account balances were not detected by the current internal control process prior to the audit. Recommendation We recommend that the Township revise their bank reconciliation procedures to include a reconciliation of pooled cash accounts to fund-level cash accounts. This should include review by an individual independent of the employee completing the reconciliation. Management Response The Township has revised the bank reconciliation process to include a reconciliation of each pooled cash account to the fund-level cash account. Any differences notated between the pooled cash and fund cash account balances are investigated and remedied. Since the pooled cash was already being reconciled to the bank account statements, any differences in the fund cash accounts are journal entry issues, not issues involving cash. Federal Awards Findings and Questioned Costs 2021-003 UNIFORM GUIDANCE REQUIRED POLICIES - SIGNIFICANT DEFICIENCY Federal Program Highway Planning and Construction Cluster ALN 20.205; passed through the Pennsylvania Department of Transportation. Condition/Cause The Township does not normally receive material federal grants that would have required these policies to be in place. Recommendation We recommend that the Township adopt the required policies to ensure that they are in compliance with Uniform Guidance for any future grant awards. Management Response The Township recognizes the importance of policies for fiscal management and responsibility. The Township has prioritized adopting all necessary policies in 2022. If the Department has any questions regarding this plan, you can contact the Township office at (610) 779-5660 or 4975 Demoss Rd, Reading, PA 19606.