Borough of CoopersburgLocal Government

FS-2019-001 Preparation of Annual Financial Statements and Footnote Disclosures Condition: The management of the Borough does not have the ability to prepare the financial statements in conformity with the modified cash basis of accounting. The Borough relies on the auditors to prepare the financial statements and necessary disclosures. By definition, this condition is, in almost all cases, a control deficiency that we are required to report to the Borough?s management and governance. This is a common comment for a small governmental authority due to the fact that the Borough cannot afford to have personnel with the expertise (such as a Certified Public Accountant) to prepare full disclosure financial statements. Criteria: Management should possess the expertise to prepare complete internal financial statements including required disclosures. Effect: Lack of complete full disclosure internal financial statements may lead to misstatements or errors going undetected by the Members of Council. Recommendation: Management should consider steps that can be taken to prepare financial statements with disclosures. Management Response: Management understands the importance of internal control procedures. At this time, management does not possess the expertise necessary to alleviate the significant deficiency, nor does it have the resources required to hire an individual to perform this function. Likewise, management does not find it in the Borough?s best interest to engage another firm to prepare financial statements. Therefore, the Borough will continue to rely on the auditors to prepare the financial statements and necessary disclosures.

FS-2019-002 Segregation of Duties Condition: The size of the Borough?s accounting and administrative staff precludes certain internal controls that would be preferred if the staff were large enough to provide optimum segregation of duties. Criteria: A proper internal control structure requires the performance of accounting functions by separate employees or volunteers. Effect: Lack of segregation of duties increases the Borough?s expose to fraud. Recommendation: Management and the Members of Council should remain involved in the financial affairs of the Borough to provide additional oversight controls. Management Response: Management agrees with the recommendation. Management and the Member of Council will continue to be involved in the financial affairs of the Borough. The Borough does not believe it would be feasible or fiscally responsible to hire enough individuals to achieve proper segregation of duties.