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Section 5 - Finance

CAPRA Self-Assessment

Agency Overview Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Section 7 Section 8 Section 9 Section 10

5.1 – Fiscal Policy

Standard:
Fiscal policies setting guidelines for management and control of revenues, expenditures, and investment of funds shall be set forth clearly in writing, and the legal authority must be clearly established.

Narrative:
It is the mission of the Lower Makefield Township Finance Department to provide accurate, timely and reliable information on the Township’s finances to all residents and constituents. The Finance Department is a steward of the Township’s revenues and assets, and responsible to ensure purchases are made in a cost effective and appropriate manner while also safeguarding all funds (LMT Website).

The Finance Department is responsible for:

  • Accounts Payable
  • Accounts Receivable
  • Payroll and Employee Benefits
  • Purchasing
  • Budgeting
  • Special Billing
  • Golf Course Accounting
  • Sewer Fund Accounting
  • Grant Accounting

Lower Makefield Township follows generally accepted accounting principles (GAAP) set forth by the Financial Accounting Standards Board (FASB). The Township is also held accountable by a variety of Governmental agencies per 1933 Act 69 Article IX Auditors and Accountants including the PA Department of the Auditor General, State Department of Community and Economic Development, PA department of Revenue, PA Department of Transportation, Public Employees Retirement Commission.

The legal authority for the Township is outlined in the Second Class Township Code 1933 Act 69. This code also identifies the Treasurer to serve at the pleasure of the Board of Supervisors. The Treasurer is an elected official whose responsibilities are outlined in section 704 ecode book and further justified in the Lower Makefield Township Code Book.

Supporting Documents:

5.1.1 – Comprehensive Revenue Policy

Standard:
There shall be an established revenue policy that is periodically updated regarding fees and charges for services and the strategies and methodologies for determining fees and charges and levels of cost recovery.

Narrative:
A significant portion of the management of a township involves raising and spending money to provide services and infrastructure. The Board of Supervisors is responsible for the fiscal management of the township, which includes raising needed funds by levying taxes, setting service charges and fees, and applying for grants, as well as seeing that township funds are spent in accordance with the adopted budget and following required procedures. Lower Makefield Township sets the fee schedule yearly based on a review of expenses and revenues and projections for the coming year as described in the PA Governor’s Center for Local Government Services Township Supervisor’s Handbook: Township Commissioners Handbook (pa.gov). The Fee Schedule can be found at: https://ecode360.com/11228437.

“When a disbursement is required, check requests are filled out by an employee. This request will include the employee name, the date, department, reason, amount requested, the vendor to be paid, the expense account number to charge and it should be attached to the invoice, PO or other required documentation. The check request must be approved by the department head and then sent to the finance department. All requests for payments will be reviewed and processed in the Finance department. Checks are prepared twice a month (the 1st and 3rd Mondays). With each check run, a warrant report, and all the checks, along with the backup documentation, will then need to be reviewed, and approved by the Township Manager along with the Board of Supervisors. Checks under $100 will only require one signature from the Twp. Manager. If over $100, a second signature is required from the Treasurer on Board of Supervisors.” 2020-Internal Control Memo

Supporting Documents:

Evidence of Compliance:

5.1.2 – Agency Acceptance of Gifts and Donations

Standard:
The agency shall have an established policy for the acceptance of gifts and donations.

Narrative:
Lower Makefield Township follows the Pennsylvania Public Official and Employee Ethics Act, section 1103c as it pertains to the acceptance of gifts and gratuities. All Elected officials and management are required to submit an ethics form annually to ensure they are following the laws set forth in the ethics act. Employees are not allowed to accept any financial value ie. Gift Cards, Tickets etc…

The Parks and Recreation Department also accepts sponsors and donations for different programs or events. This is outlined as park policy.

Supporting Documents:

5.1.3 – Grants Procedures

Standard:
Where feasible and appropriate, the agency shall procure regional, state, federal and/or other applicable agency grants to supplement funding through an established procedure to research, coordinate and implement grant opportunities. Prior to grant procurement, agencies shall evaluate how application, approval, implementation and management processes will be coordinated.

Narrative:
Lower Makefield Township staff, consultants and resident volunteers are consistently reviewing opportunities for grants to offset the use of tax dollars for new projects. The Township has a number of shovel ready projects, completed needs assessment and plans in place so when an opportunity presents itself the Department is ready for the application process. When a grant opportunity presents itself, the concept is presented to the Board of Supervisors for approval to submit the application. Many times the grants that the Township applies for are matching grants with a matching requirement as a budget line item. If that is the case, the township will budget the grant match as part of the annual budget process.

Supporting Documents:

Evidence of Compliance:

5.1.4 – Private, Corporate, and Non-Profit Support Procedures

Standard:
Where feasible and appropriate, the agency shall solicit private, corporate, and non-profit support to supplement agency funding through an established procedure to research, coordinate and implement alternative funding options. Prior to acceptance of support the agency shall evaluate the terms of acceptance and how the implementation and management process will be coordinated.

Narrative:
Lower Makefield Township Parks and Recreation Department has a Donation and Sponsorship Policy in order to clearly delineate what is acceptable when receiving assistance for programs and events.

Supporting Documents:

5.2 – Fiscal Management Procedures

Standard:
There shall be established procedures for the fiscal management of the agency.

Narrative:
The fiscal management of the entire Township is the responsibility of the Township Manager with oversight from the elected officials and auditors. The Township Manager is responsible for providing budget reports to the Board of Supervisors.

Supporting Documents:

5.2.1 – Authority and Responsibility for Fiscal Management

Standard:
The agency’s chief administrator shall be designated as having the authority and responsibility for the fiscal management of the agency. Although an agency’s chief administrator is ultimately responsible for all agency fiscal matters, the size and complexity of the agency may dictate the need to delegate responsibility for fiscal management functions to an identifiable person or component within the agency.

Narrative:
The Lower Makefield Township Manager has been designated by the Board of Supervisors to be responsible for fiscal management of the Township. The Township Treasurer is a Board of Supervisors elected to serve on the board. The Finance Department provides support to all departments with regard to expenditures, revenue, reports and payroll.

The Township Manager shall be the chief administrative officer of the township and shall be responsible to the Board of Supervisors for the proper and efficient administration of the affairs of the township. The powers and duties of the Township Manager shall be non-legislative and shall relate to the general management of the township’s business not expressly by statute or ordinance conferred upon any other township officers or employees. The powers and duties of the Manager shall include but not be limited to the following:

A. Supervision and responsibility for the activities of all municipal departments.

B. Subject to the requirements of the law and the township’s personnel policies, to hire, to suspend, to discharge and to discipline all employees under the Township Managers’ supervision; provided, however, that the Township Manager shall report at the next meeting of the Board of Supervisors any action taken by the Manager in furtherance of the provisions of this subsection.

C. In conformance with the provisions of the Second Class Township Code, prepare and submit to the Board of Supervisors a proposed budget for the succeeding fiscal year together with a budget message.

D. Responsibility for the administration of the budget following its adoption by the Board of Supervisors.

E. Be designated to hold such other municipal offices and to head such municipal departments as may be directed by the Board of Supervisors.

F. Attend all meetings of the Board of Supervisors and to provide notice of said meetings in accordance with law.”

Supporting Documents:

5.2.2 – Purchasing Procedures

Standard:
Agencies shall have established procedures for the requisition and purchase of agency equipment, supplies, and services.

Narrative:
The Township Budget is an example of an allotment system which is the blueprint produced every year and appropriates tax dollars and other receipts to various organizational components. The following reports are prepared monthly: Treasurer’s Report, Trial Balance, Balance sheet and Detail Journal. Additional reports can be found on the Finance Page of the Township website.

Additional information includes the Internal Controls Memo dated 12/31/2020 and the Fraud Risk Questionnaire Management Level dated 12/31/2020.

Supporting Documents:

Evidence of Compliance:

5.2.2.1 – Emergency Purchase Procedures

Standard:
There shall be established procedures for emergency purchases within the agency to secure equipment or services in a swift and efficient manner.

Narrative:
The Pennsylvania State Association of Township Supervisors (PSATS) provides a quick guide to Advertising Requirements for member Townships within the Commonwealth and bid procedures. Lower Makefield Township is an active member of the PSATS. Pennsylvania has requirements for all municipalities, bid requirements are outlined in title 8 of the PA State Assembly, bid base amounts are determined by the State Department of Labor and Industry annually.

Petty cash is managed by the finance department and is reconciled with accounts payable.

Supporting Documents:

Evidence of Compliance:

5.3 – Accounting System

Standard:
The agency shall have a comprehensive accounting system to ensure an orderly, accurate, and complete documentation of the flow of funds. The accounting system shall facilitate rapid retrieval of information on the status of appropriations, expenditures and revenue any time the information is required.

Lower Makefield Township uses several different platforms for finance related tracking and accounting. The Township Tyler Munis Accounting Software, Exact Payroll for Accounting and reporting.

5.3.1 – Financial Status Reports

Standard:
The agency shall periodically, monthly at a minimum, provide financial status reports. Each appropriation and expenditure shall be classified according to function, organizational component, activity, object, and program.

Narrative:
Lower Makefield Township provides monthly treasurer reports to the Board of Supervisors once on the first and third Wednesday of every month. In addition the Township leadership is provided detailed journals for their review so they can ensure they are on target with all accounts associated with the department.

Supporting Documents:

5.3.2 – Position Authorization Procedures

Standard:
The agency shall have established procedures for maintaining control over the number and type of authorized filled and vacant positions to ensure that persons on the payroll are legally employed and that positions are in accordance with budget authorizations.

Narrative:
All new positions are approved during the annual budgeting process. The Township Manager outlines the need for the position, the position description, and reporting structure. Positions are required to be approved by the Board of Supervisors within the guidelines of the Second Class Township Code. All existing positions are budgeted for and can be filled upon vacancy.

The Board of Supervisors approves the budget with current positions under personnel services. If there is a new position that position is proposed to the board as part of this line item for their approval as part of the budgeting process.

Current Roster for 2022:

  • Director
  • Operations Manager
  • Program Manager
  • Pool Manager
  • Membership Coordinator
  • Admin
  • 5 Maintenance Staff
  • Naturalist
  • 4 Summer Maintenance Staff
  • Summer Camp staff as needed to keep ratio (Break even)
  • 4 Pool Assistant Managers
  • Lifeguards as needed at various levels to accommodate opening hours.
  • Pool Maintenance as needed to accommodate opening hours.
  • Pool gate staff as needed to accommodate opening hours.

Supporting Documents:

5.3.3 – Fiscal Control and Monitoring Procedures

Standard:
The agency shall have established procedures used for collecting, safeguarding, and disbursing funds. The procedures shall enhance security and accountability of all monies received by the agency.

The Township Budget is an example of an allotment system which is the blueprint produced every year and appropriates tax dollars and other receipts to various organizational components. The following reports are prepared monthly: Treasurer’s Report, Trial Balance, Balance sheet and Detail Journal. Additional reports can be found on the Finance Page of the Township website.

Additional information includes the Internal Controls Memo dated 12/31/2020 and the Fraud Risk Questionnaire Management Level dated 12/31/2020.

Evidence of Compliance:

5.3.4 – Independent Audit

Standard:
There shall be an independent audit of the agency’s fiscal activities conducted annually or at a time stipulated by applicable statute or regulation. The audit may be performed by the government’s internal audit staff (external to the agency being audited) or by an outside certified public accounting firm.

Narrative:
Audited Financial Statements for Lower Makefield Township are viewable on the Township website. The auditors found that all financial statements and information was presented fairly and in accordance with generally accepted accounting principles, there were no specific recommendations. Audits are performed annually as shown in the audit schedule.

Evidence of Compliance:

5.4 – Annual or Biennial Budget

Standard:
There shall be an annual or biennial operating and capital improvements budgets, including both revenues and expenditures. Operating budgets include both capital and operating expenses, cover a one-year or two-year period and capital improvements may extend five or six years with annual review. The nature of an agency’s budgetary system may be determined by the kind of system in use by its governmental authority.

Narrative:
Lower Makefield Township is a Second Class Township required by Pennsylvania state law to develop an annual budget. All budget reports dating back to 2008 can be found on our finance website. More information about this and how the Township budget must be advertised to the public can be found in the Advertising Requirement Quick Guide published by the Pennsylvania State Association of Township Supervisors.

Supporting Documents:

5.4.1 – Budget Development Guidelines

Standard:
The agency shall establish guidelines to inform the heads of organizational components of the essential tasks and procedures relating to the budget preparation process. The guidelines shall include instructions for preparing budget request documents and for providing adequate justification for major continuing expenditures or changes in continuing expenditures of budget items. Information should be included regarding operating impact.

Narrative:
Lower Makefield Township budgets on an annual basis the fiscal year starts inline with the new year. Each year the Township Manager develops a preliminary budget with input with department heads. The Township Manager also prepares a budget report while keeping the Board of Supervisors in the loop of any big changes within the parameters of the Sunshine Act. The Township Manager will then present the preliminary budget to the Board of Supervisors for their feedback. At that meeting the manager will take feedback from the board and make adjustments that are necessary. At this meeting the Board of Supervisors can vote to accept the preliminary budget. Once the Board of Supervisors vote on the budget, the Budget has to be advertised for a certain number of days. In a public meeting the BOS can make minor changes to the budget before voting on the final budget. The complete outline of requirements is outlined in Second Class Township Code Section 3202.

Supporting Documents:

5.4.2 – Budget Recommendations

Standard:
Major organizational components shall provide recommendations, based on operational and activity analysis, for use in the development of the agency’s budget.

Narrative:
Each department head works closely with the Township Manager and their boards as part of the budgeting process. Each year a cost analysis is completed by department heads based on maintenance needs, personnel, supplies required, projects, and contracted services. Once expenses are better understood a strategy is set in place to cover costs and future plans. Part of this process is the approval of the fee resolution. A great example of this is the LMT Pool, staff recognized a need to raise pool rates to cover the cost of rising personnel costs. With careful review, and developed a strategy to increase revenue by changing the structure of the pool membership. This presentation can be viewed on the November 3, 2021 BOS meeting under the Managers Report at 52:18.

Evidence of Compliance:

5.5 – Budget Control Procedures

Standard:
The agency shall have procedures for budget control with periodic reporting of revenues and expenditures, and continuous management review.

Narrative:
The Township Manager provides budget updates a few times a year at Board of Supervisors meetings, in addition the Parks and Recreation Department provides the Board of Supervisors and the Parks and Recreation board with a full Parks and Recreation Report to cover the state of the department.

Monthly Treasurers Reports are provided to the Board of Supervisors Monthly Parks and Recreation is fund code 5, Pool is fund code 9, it shows YTD totals, budgeted amounts, and available budget. The report is approved once a month at BOS meetings.

Park Board Presentation

5.5.1 – Supplemental /Emergency Appropriations Procedures

Standard:
The agency shall have established procedures for requesting supplemental or emergency appropriations and fund transfers to meet circumstances that cannot be anticipated by prior fiscal planning efforts. Mechanisms of adjustment may include transferring funds from one account to another and/or requesting that additional funds be granted for agency needs.

Narrative:
The Board of Supervisors approves all inter-fund transfers at their second meeting of the month during the Treasurer’s Report. An example of this can be found in the treasurer’s report from the 12/15/2021 meeting. All Inter fund transfers are provided to the board of supervisors in an interfund transfer report.

Supporting Documents:

5.5.2 – Inventory and Fixed Assets Control

Standard:
The agency shall have established procedures for inventory control of property, equipment, and other assets to prevent losses and unauthorized use, and to avoid both inventory excesses and shortages. There shall be a complete and current listing of agency assets.

Narrative:
Fixed assets schedules are updated at the end of the year. After a review of the capital purchases/equipment accounts, all the fixed asset additions are entered on the Finance fixed asset software program. During the annual audit, if any additional assets were missed, these are added to the software. The updated fixed asset schedules as well as depreciation calculations are reviewed and verified by management and external auditors. The Parks and Recreation Director is responsible to review and notify Finance when there are changes, purchases, and disposal of fixed assets within their departments.

The fixed asset software is Thomson Reuters software package, CS Professional Suite.. The previous fixed asset data was entered approximately 10 years ago by Lopez, Teodosio and Larkin, LLC. staff. Since that time the Finance Department monitors invoices and prepares annual fixed asset additions and deletions. This information is then transferred into the software to generate updated lists, depreciation expense, accumulated depreciation, etc., using formulas based on GAAPs.

Fixed assets are sorted by type: Land, Infrastructure, Improvements, Equipment, Vehicles, etc., and the dates of purchase. Depreciation info regarding governmental FA’s is more for information, instead assets are expense in the operating fund when purchased because they are a current use of funds.

Proprietary assets or business type funds, like the pool and the golf course are separated due to the fact depreciation expenses are booked each year to individual business funds. Proprietary funds use the accrual basis of accounting.

Supporting Documents:

Evidence of Compliance: