No material weaknesses found in Dewey audit

Dewey Beach commissioners voted unanimously Aug. 18 to accept a draft financial audit that did not identify any deficiencies in internal control that were considered material weaknesses.

Certain matters involving internal control and other operations were identified for consideration, said Dan Kenney of independent auditor Mitchell Titus, offering recommendations to improve internal control or result in other operating efficiencies.

To effectively implement new processes and procedures, Kenney said the town should seek employee buy-in, and consider financial statements and accounting processes when evaluating a new consolidated Enterprise Resource Planning system.

Town leaders working on information technology changes recommended during the security risk assessment should consider the entire environment, Kenney said, which includes financial statement processes, as they develop an IT management handbook.

Town expenditures have exceeded final budgeted amounts in certain categories, but the overall net change in fund balance reported a favorable outcome, audit materials state. Kenney suggested the budget should be adjusted when town leaders see a substantial change that could result in going over projections.

As the town continues its review of the fund balance policy, Kenney said, it should continue to consider updates that incorporate all components of Governmental Accounting Standards Board Statement 54.

GASB Statement 54 states that a special revenue fund may only be established around one or more revenue sources that are restricted or committed to purposes other than capital projects or debt service.

The final policy should include how to apply resources when an expenditure can be funded by both restricted and unrestricted resources, and the policy if an expenditure can be funded using sources in different unrestricted categories, audit materials state.

Auditors received two trial balances during the initial stages of work, Kenney said, which are the combined trial balance and the beach replenishment fund. The combined trial balance included the general fund and the beach replenishment fund, audit materials state. 

The town needs to provide three separate trial balances – government-wide, general fund, beach replenishment fund – to prepare government-wide and fund financial statements, audit materials state.

There are immaterial unrecorded entries relating to depreciation of $16,342, and interest received of $13,377, Kenney said.

Additionally, Mayor Bill Stevens said the town has $4 million listed in current liabilities. Of that, he said, $3.5 million is unearned revenue that represents $3 million for the new town hall facility and $300,000 for the relocation of Verizon’s 5G poles. The current liabilities will be converted to equities, he said.

Dewey’s fiscal year runs from April 1 through March 31.