Kennett audit improved

Kennett Township’s 2020 audit looks a lot different than the previous years.

The audit, performed by Maillie LLP and presented at the March 16 supervisors’ meeting, identified two material weaknesses and two recommendations. The 2019 audit, according to township Finance Director Amy Heinrich, “identified eight material weaknesses and three other recommendations,” many of which were related to the embezzlement of township funds by former Kennett Township Manager Lisa Moore.

In the 2020 audit, both material weaknesses, or deficiencies, again dealt with the embezzlement. One was the investigation into Moore, and the other was the status of escrow funds.

In a memo Heinrich sent to the supervisors and included as part of the meeting documents, she said the audit shows “substantial improvement” and added, “Since there is a lag on audit findings, we still expected findings on the 2020 audit. The immediate issues were stopped as soon as the fraud was discovered but true remediation required a full and experienced finance team, process revamp, and a new general ledger system.

“This began when I joined in October of 2019 but is very extensive and continues to this day.”

Maillie’s Chris Herr explained the different parts of the audit, such as the management letter, and added there was a lot of improvement between 2019's and 2020’s audits.

“It is a smaller letter than last year,” he said. “There was a lot of improvement.

“What stayed for 2020 in our letter … we still have a note about the investigation,” he said. “We thought it was important to keep in there for one more year. There still are costs related to that matter in the 2020 financial statement.”

The material weakness with the escrow funds focused on the township trying to sort out individual escrow funds, something that wasn’t accurately accounted for under Moore’s tenure.

“One of the delays in getting 2020 done was trying to figure out the escrow funds,” Herr said. “We did get there by the end of the audit.”

In her report at the meeting, Heinrich said there are “very little still outstanding.”

“What’s in the financials now we feel is a fair representation of escrow funds, but it was a lot of work” to get there, she added.

The township will now be moving on to the 2021 audit process.

“We haven’t quite handed off the full set of (2021) financials, given that we were finishing up 2020 and quality checking 2021,” Heinrich said. “There’s nothing of concern I’m dealing with now … just making sure it’s all tied with a bow.”

Copies of the 2019 and 2020 audit reports by Maillie LLP, as well as Heinrich’s presentation, are available on the township’s website at Kennett.pa.us.

About Monica Fragale

Monica Thompson Fragale is a freelance reporter who spent her life dreaming of being in the newspaper business. That dream came true after college when she started working at The Kennett Paper and, years later The Reporter newspaper in Lansdale and other dailies. She turned to non-profit work after her first daughter was born and spent the next 13 years in that field. But while you can take the girl out of journalism, you can’t take journalism out of the girl. Offers to freelance sparked the writing bug again started her fingers happily tapping away on the keyboard. Monica lives with her husband and two children in Kennett Square.

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