State questions Irvington’s accounting

The Office of the State Comptroller has accused the Township of Irvington of keeping sloppy accounting records, ignoring auditor’s recommendations and tolerating obvious conflicts of interest.

Township Business Administrator Musa A. Malik said the state report is based on information they found in 2009 and 2011, which was three years before he was appointed to his position, and the state didn’t follow up for more than a decade.

“It wasn’t until 2021 that I became aware that the state had come in here in 2009 and 2011, which was years before this administration took office,” Malik said. “There had been no follow up on this from the state.”

In a letter released last week, addressed to Gov. Phil Murphy and the legislature, Acting State Comptroller Kevin Walsh noted that the state comptroller’s 2009 and 2011 reports identified serious deficiencies in financial controls and made recommendations for remediation.

More than a decade later, OSC said that it found that the township hadn’t implemented many of its key recommendations, government finances were in disarray and taxpayer funds were at risk as a result.

“Township leaders and staff didn’t even get the basics right,” Walsh said. “For years, they ignored recommendations from OSC, and from their own auditors. It’s clear that they need the day-to-day oversight of a monitor to get their house in order.”

Malik said he became aware of the report when the state sent a letter in August of 2021 but no one from the state followed up on that until 2023.

“In April of 2023, we had our first meeting about these findings they came up with in 2009 and 2011,” Malik said. They asked us what had changed since that time period and we provided a lot of information. We had changed a lot of our financial policies, how we maintain our cash books, how we handled payments.”

Malik said there had been complete turnover in the township’s tax and finance departments since 2011.

“It didn’t come from the state report because we didn’t know about the report,” Malik said. “I knew we had inherited some deficiencies.”

For example, a former tax collector had been making adjustments in the wrong place but an internal auditor caught them and adjustments were made, Malik said.

“There’s always room for improvement,” Malik said. “There are more things we can do that we are in the process of doing.”

OSC’s first audit of Irvington, in 2009, found the general ledger was out of balance by $59.7 million. OSC made 21 recommendations and two years later, found 13 had not been fully implemented. OSC’s latest review examined documentation from 2017 through 2023 and found minimal progress.

Among OSC’s findings in that latest review:

The Township Council spent at least $200,000 over five years, leasing office space from a company that is partly owned by the township’s chief financial officer.

This company also was the sole bidder, and the CFO submitted and signed the bid on behalf of the company. Local Government Ethics Law and the Township Municipal Code bar officers or employees from having these kinds of conflicts of interest. OSC is referring the matter to the New Jersey Department of Community Affairs’ Division of Local Government Services for investigation.

At the meeting in 2023, the state did cite some new concerns, including the lease for office space, Malik said.

“We needed office space,” Malik said. “We went out for public bid. We wanted it in Irvington. It was an open competitive process. Anyone in the township could have bid on it. We received only one bid and it was below what office space in Irvington goes for so we accepted that and it went before the council for approval and ultimately they approved it.”

Malik said the state comptroller noted a potential conflict of interest with that and requested a note from the township attorney identifying the statute permitting it. The township attorney responded and explained how it happened and that it met all requirements, he added.

In addition to recommending that the state appoint a fiscal monitor, OSC made seven recommendations to Irvington Township.

By statute, OSC is required to follow up within three years of an audit to determine if recommendations have been followed. This review of Irvington marked the first time OSC conducted a second follow-up, but Walsh said that OSC may conduct additional follow-ups of audits, as needed.

Additionally, OSC plans to start publishing finalized corrective action plans to give further transparency and inform residents of what actions the government agreed to take.

“Good governance requires commitment and vigilance,” said Walsh. “What we found in Irvington was the opposite – leaders and staff who disregarded recommendations, laws, ethics and their obligation to safeguard public funds.”

Malik said the township has been systematically addressing the deficiencies raised in that report.

“We will respond to the letter accordingly,” Malik said. “The concern is the way it is being couched. We sent them so many documents. The records were voluminous regarding the changes we have made. We have corrected a number of deficiencies we found here, both by getting new staff and changing our procedures.”

None of the material sent to the state since the 2023 meeting seems to have been considered by the OSC, which said it would like the governor and legislature to install an independent fiscal monitor to oversee the Township’s finances.

“We absolutely want to make sure that everything meets with the regulations and the law,” Malik said. “My concern here is that none of the actions that we’ve taken to address our internal controls and audits and everything, have been taken into account. Our responses to their report were not taken into account either.”

  finances, Irvington