Kennett Township’s books receive high praise from auditor03/07/2023 02:01PM ● By Richard Gaw
By Richard L. Gaw, Staff Writer
When the accounting firm of Maillie LLP was first appointed as the auditor for Kennett Township in 2019, the township was embroiled in the big muddy of a scandal that threatened to permanently tear down the governing walls of an entire municipality.
Nearly from the time she was promoted to township manager in 2010, Lisa Moore had oversight and access to virtually all of the township’s financial operations. For nearly eight years, Moore engaged in several clandestine, multi-pronged schemes to steal money from the township.
Moore’s accounting methods were hard to track, and because she was the keeper of the keys to the township’s entire accounting system, there were no checks and balances to monitor the personal shell game she was playing with the township’s money.
Following a months-long investigation by the Chester County District Attorney’s Office and a thorough scrubbing of the township’s accounting methods by a forensic auditor, Moore was arrested on Dec. 10, 2019, and on October 4, 2021 in a West Chester courtroom, she was taken into custody on five counts stemming from her embezzlement of more than $3.2 million from the township beginning in 2013 and ending in 2019.
As she was being led out of the courtroom in handcuffs, Moore left the remaining members of Kennett Township to clear up the financial mess she had orchestrated and left behind.
At the township’s Board of Supervisors’ meeting on March 1 – held at the refurbished meeting room at the Township Building, which had been closed since last August because of a mold infestation – Finance and Human Resources Director Amy Heinrich took a three-year snapshot of how the township has improved its accounting system, from innovative software to the checks and balances of accountability.
When Maillie partner Christopher N. Herr conducted the township’s 2019 audit, he said that he found eight weaknesses that included several discrepancies with interfund balances, fund balances, cash disbursements, expenses, journal entries and cash receipts, as well as a segregation of duties.
He called it “a rough audit.”
“We just couldn’t find stuff,” said Herr, who presented a summary of the township’s 2021 audit at the meeting. “Journal entries were nonsensical. The segregation of duties were being [coordinated] by one person, who was way too involved in the entire process, rather than having different people to split the load and check things. We had interfund balances that didn’t agree with each other, and balances rolling from one year to the other that didn’t work.
“The first thing I tried to do when I first came here was find where the internal controls were. What are the processes? What is happening here? There was a lot of improvement from 2019 to 2020. There might have been one or two lingering things, but going from 2019 to 2020 was like going from night to day.
"We’re still looking at a lot of stuff, but we’re not finding anywhere near what we found back in 2019.”
In his report, Herr said that township revenues increased more than $3 million in 2021, from $8.78 million in 2020 to $12.1 million in 2021. On the expenditure side of the ledger, the township’s expenses jumped $2 million, from $7.1 million in 2020 to $9.1 million in 2021. This increase was due to one-time revenues and expenses such as recovery and related expenses, grant revenue and related project expenses, and other capital expenditures.
Herr said that the only “material weakness” he found in the township’s 2021 audit report was in the area of escrow accounting, but gave the township high marks.
“Going forward, now that things are starting to settle a little bit, I see us starting to back off a little bit on some of the samples – still keeping it well within the industry standards, but I don’t see the risk being as high in 2022 as it was when we came in 2019,” he said.
‘Controls and transparency’
In her presentation, Heinrich pointed to the township’s hiring of a qualified finance team and incorporating the Sage Intacct accounting system in 2021 as major factors that have tightened up the township’s financial processes and procedures, and implemented “best-in-class controls.”
“The most important thing [implemented by the township] in the last few years has been controls and transparency,” Heinrich said of the progress made to the township’s way of conducting financial business. “We’re here to tell you everything. We’re not hiding anything. We are making everything public to give the highest level of confidence and transparency.
“This is what we have been aiming for all along – to really be sure that we are doing everything we can to control the risk and build confidence in local government.”
Township Manager Eden Ratliff praised Heinrich and her team.
“This has been a heavy lift,” Ratliff said. “A lot of familiar faces have been on this journey with us since we started in September and October of 2019. It’s almost kind of sad to try to boil it all down to one power point presentation, because it doesn’t reflect the amount of work that the team has done.
“The journey is not over, so we’re not celebrating just yet, but it’s good to take a moment to pause and reflect on the amount of progress that we have made and how much confidence we believe that the community can have in the financial oversight and controls for the township.”
To contact Staff Writer Richard L. Gaw, email [email protected].