• Town Of Oxford Ignores Seven Years Of Financial Auditor's Concerns

    November 5, 2023
    No Comments

    Starting in 2016, the firms conducting Oxford's financial audits have expressed concerns about how the town's financial accounts were being maintained by the town office.

    Yearly audits point out as a weakness in Oxford's financial structure that the responsibilities of Town Manager and Treasurer were under the control of one person, the Town Manager.

    From the last audit done on 6/30/22 by UHYLLP, Certified Public Accountants wrote this regarding the financial management structure of the town:

    Finding Number 2022-001
    Criteria: Proper segregation of duties should be in place to strengthen internal controls to
    provide reasonable assurance that a material misstatement to the financial statements is
    prevented.
    Condition: We noted that the system currently in place creates conflicts within duties assigned
    to a single individual and produces a high level of internal control risk. During our audit, we
    noted a lack of segregation of duties.
    Cause: The lack of appropriately designed internal control systems has produced conflicts
    regarding assigned duties.
    Effect: Segregation of duties issues does not allow management or employees, in the normal
    course of performing their assigned functions, to prevent, or detect and correct, the
    misappropriation of assets and/or errors on a timely basis.
    Recommendation: We recommend that, when possible, responsibilities for authorization,
    recording, and maintaining custody of assets be assigned to different employees. In situations
    where this is not possible, we recommend the implementation of certain transaction review
    controls. It is important to note that review controls do not eliminate all risk when segregation of
    duties conflicts exist, and management and those charged with governance need to be aware of
    such risks.
    Identification of Repeat Finding: Due to the nature and size of the Town, this is a repeat finding.

    This is the same finding that had been stated in all audits starting in 2016. Yet, the town has not corrected the possible conflict and inherent risk by splitting financial duties between two employees.

    Here are the findings from 2016:

    Finding Number 2016-001
    Criteria: Proper segregation of duties should be in place to strengthen internal
    controls to provide reasonable assurance that a material misstatement to the financial
    statements is prevented.
    Condition: We noted that the system currently in place creates conflicts within duties
    assigned to a single individual and produces a high level of internal control risk.
    During our audit, we noted a lack of segregation of duties.
    Cause: The lack of appropriately designed internal control systems has produced
    conflicts regarding assigned duties.
    Effect: Segregation of duties issues does not allow management or employees, in the
    normal course of performing their assigned functions, to prevent, or detect and
    correct, the misappropriation of assets and/or errors on a timely basis.
    Recommendation: We recommend that, when possible, responsibilities for
    authorization, recording, and maintaining custody of assets be assigned to different
    employees. In situations where this is not possible, we recommend the
    implementation of certain transaction review controls. It is important to note that
    review controls do not eliminate all risk when segregation of duties conflicts exist,
    and management and those charged with governance need to be aware of such risks.
    Identification of Repeat Finding: Due to the nature and size of the Town, this is a
    repeat finding.

    In these findings "responsible officials," (who are NOT identified), were quoted in both audits and all audits since 2016:

    Views of Responsible Officials: It has been determined that it would not be cost effective for the
    Town to add additional personnel to ensure complete segregation of duties in the finance
    department. However, within the two-person finance department, the Town has effectively
    designed and implemented mitigating internal controls to help reduce such risk.

    Oxford Financial Reports | Town Of Oxford, Maryland (oxfordmd.net)

    The town has not shared what the "mitigating internal controls" are that have been "designed and implemented."

    The actual actions of these "responsible officials" are at odds with what they stated about "cost effectiveness" since in 2021 the town spent approximately $86,000 a year to hire a "town planner" instead of hiring someone who is a CPA who could act as town treasurer. Hiring a treasurer/CPA would have alleviated the internal controls problem.

    The Town Manager's daughter was hired for the Town Planner position.

    Apparently, the town's priority was not in hiring additional finance personnel. The priority was not about splitting the financial responsibilities of the town to mitigate financial risk for the town.

    One wonders what the priorities were and are.

    The problem could be easily fixed now if some of the financial responsibility was split between current employees in the town office. That's how it was done previous to the current Town administration. Of course, it would have to be someone else besides the Town Manager's daughter to avoid a conflict of interest.

    That could be by using the current Town Clerk to split financial duties with the Town Manager. That position shared financial responsibilities in the past with the previous Town Manager.

    Another option would be to re-classify some jobs in the Town Office and assure that there is someone on staff who has a college degree and financial certification, for example a CPA who could share financial responsibilities with the Town Manager.

    It's been seven years of this being pointed out yearly by auditors. If the issue isn't resolved, the potential is always there for inaccuracies, mistakes or malfeasance as the auditors stated.

    SHARE THIS ARTICLE
              

    Author

    Jan Greenhawk

    Jan Greenhawk is a former teacher and school administrator for over thirty years. She has two grown children and lives with her husband in Maryland. She also spent over twenty-five years coaching/judging gymnastics and coaching women’s softball.
    Subscribe
    Notify of
    guest
    0 Comments
    Inline Feedbacks
    View all comments
  • Maryland's Premier Investigative Journalism
    Copyright © 2024 The Easton Gazette
    magnifiermenu