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October 3, 2013

Audit of city finances results in two findings

NEW CASTLE — An audit of the city of New Castle financial statements for 2012 has resulted in two findings.

In one finding, the accounting firm of Zelenkofske Axelrod said, bank reconciliations were not performed in a timely manner.

The other finding deals with the city’s accounting records and states that transactions were not recorded in the proper period.

However, the auditor concluded the findings do not result in any questioned costs.

The report does not provide specifics. An attempt to obtain further information from Zelenkofske Axelrod was unsuccessful.

Bank reconciliations fall within the responsibility of the city treasurer. Joseph Cardella, New Castle’s treasurer, said Wednesday he is taking steps to rectify the situation.

The audit report says the Third Class City Code requires bank reconciliations to be done on a monthly basis and reconciled in the general ledger.

However, bank reconciliations “were not being performed in a timely manner and did not agree to the general ledger.”

The audit goes on to say there was not adequate oversight “to detect this in a timely manner,” and the effect of which “could result in a misstatement of cash.”

The audit report recommends the treasurer should ensure internal controls are sufficient to make reconciliations of the bank balances on a timely basis.

“We’re going to reconcile every month,” Cardella said, adding he would send a copy to the auditor.

He called the finding “serious,” but said rectifying the situation will not be difficult.

“We will do what we have to do to be in compliance,” he said, adding, “Then we’ll have a clean audit.”

The finding dealing with the accounting records falls within the responsibility of the city administration.

The report states the city’s accounts should include “all significant transactions in the period of benefit.”

During the audit, the report says, “certain audit adjustments were required to record additional” expenditures and revenues after the city’s yearend close of its accounting records.

The reason is that transactions were not recorded in the period of benefit, according to the report. Therefore, financial records “did not reflect the correct financial activity of a period which would result in a material misstatement of the financial statements.”

The auditor recommends the city “should ensure that internal control procedures over financial reporting are sufficient to identify and record all material adjustments.”

“I don’t have the specifics of what they found,” Mayor Anthony Mastrangelo said.

The finding hasn’t been discussed because the city recently received the report, which is dated Sept. 12, the mayor said.

 He added he is sure that business administrator Stephanie Dean and the finance department will address the matter.

(Email: jmanna@ncnewsonline.com)

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