Auditor: ‘Everything cleaned up’ in Lansdale’s 2023 financials

Months after talks began on a cloudy financial picture, the 2023 books for Lansdale Borough are coming into focus.

Town officials heard a presentation last week on the long-delayed audit for that year, and a list of steps the town should take to avoid fuzzy finances in the future.

“Initially, when we came into the (2023) audit in 2024, spring or summer of ’24, there was a variety of issues with the books,” said auditor Chris Herr of Maillie LLP.

Last fall borough officials gave an update on delays to the two most recent financial audits for the town, the reasons they remain incomplete, and a timeline for resolving both while budget talks are ongoing this fall for 2026. Those delays were caused by several factors, staff said last October, including the departures of key finance department personnel, combined with a change in software used by that department, and changes to where certain bank accounts were held, with updates given throughout last fall as the borough debated and adopted a 2026 budget.

During the council meeting on March 18, Herr gave another update, saying a draft of the 2023 audit had been completed and submitted to staff and council for their review, along with a letter from the auditor explaining their findings.

“The statements are free of any material misstatement. They comply with the generally accepted accounting principles that all entities have to follow,” Herr said.             

He outlined the steps the outside auditor takes every year to perform their line-by-line analysis of the borough’s books, used to produce the roughly 90-page audit report, and the full cooperation from finance department staff in doing so.

“We come in with a very lengthy list of documents that we want to see: everything from bank statements to W2s, invoices, everything in between. And we did receive everything that we needed,” he said.

Issues identified in early 2024 with the 2023 financials included bank reconciliations and accruals “not being done,” and those concerns were outlined to borough staff and their new financial team at the start of that year.

“A new finance team ultimately came in, got everything cleaned up. And we were able to issue that clean opinion on 2023. But there was about a year that they were working on getting everything sorted out,” he said.               

“Those findings that we have, are really referring to what we saw when we initially came in, not what we saw at the end. The new finance team did a really great job getting everything cleaned up, in order,” Herr said.

A final 2023 audit report was issued last October, the town’s 2024 audit started just before Thanksgiving, the draft 2024 report has already been turned over to the borough, and the final version could be completed “in the next few weeks,” the auditor told council.

“From what I’ve seen so far with ’24, things have definitely been corrected, and things are looking good from my view going forward,” Herr said.

In response to a question about the 2024 audit, Herr said, “It’s drafted, the audit work is 99 percent complete. The borough has a draft of the ’24 financial statement: we’ve got a couple of letters we need, basically confirmation-type things. ’24 is done, ’24 was great,” Herr said. “The work is done, the numbers look good.”

Councilman BJ Breish added that he had a call of “about an hour” with the auditor and finance staff to address his concerns and dive into specifics, and all of his questions were answered: “Sounded like the borough’s doing a great job, and working diligently on fixing, or have fixed, the deficiencies.”

Herr answered that some municipalities reconcile financial statements using a pooled cash method, which he said would list all of a town’s various funds on one bank statement with separate allocations for different departments, and all of those departments should equal the bottom-line total.

“What happened when I initially came in is, they didn’t equal. There was a difference. And what that means is, in pooled cash, you’ve got to figure out, where’s the problem?” Herr said.

“Is it up in fund one, or seven or eight? Or is it down in fund 99? Essentially, the new team that came in, had to really reconcile the entire year, go through almost every cash transaction that happened, to figure to figure out where the reconciliation is. That’s it, in a nutshell,” he said

Herbert replied that he recalled spotting suspicious numbers when reading the audit that caught his attention, and took time to explain.

“When you read things like, in some cases the balance of the general ledger at the end of ’23 was the same as ’22, indicating that ’23 activity was not properly recorded — it just is concerning,” he said.

Lansdale’s borough council next meets at 8:30 p.m. on April 1 and the administration and finance committee next meets at 6:30 p.m. that night, both at the borough municipal building, 1 Vine Street. For more information visit www.Lansdale.org. 

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