New Jersey Administrative Code
Title 5 - COMMUNITY AFFAIRS
Chapter 30 - LOCAL FINANCE BOARD
Subchapter 6 - ANNUAL AUDIT
Section 5:30-6.8 - Discovery of fraud or illegal acts

Universal Citation: NJ Admin Code 5:30-6.8

Current through Register Vol. 56, No. 6, March 18, 2024

(a) The Division of Local Government Services has the prerogative to take full charge of the auditing of any local unit where any shortage, embezzlement, or fraud is discovered. Where there is detection of an illegal act, shortage, or irregularity, the Division shall be notified at once by means of a special confidential report. The independent auditor's responsibility for the detection of illegal acts and irregularities in an audit of financial statements shall be according to Generally Accepted Accounting Standards (GAAS).

(b) Confidential report blanks shall be submitted in triplicate; one copy for filing in the Division, one copy for filing with the local unit, and the third copy for the auditor's files. Blanks can be procured upon request and may be secured either in advance or immediately upon the discovery of any condition requiring a special report. The special confidential report (see N.J.A.C. 5:30 Appendix, incorporated herein by reference) shall be prepared, as follows:

1. Section One is a preliminary report and must be filed with the Division within 48 hours after the discovery of any irregularity or shortage regardless of whether or not the facts have been definitely established;

2. Section Two shall be filed immediately after the auditor has completed the work or after the auditor has completed the preliminary work to a point where the auditor can make a fair determination as to the amount involved. The auditor shall file supplements or preliminary reports from time to time pending the filing of Section Two in completed form; and

3. Section Three shall be filed upon final disposition of the case.

(c) In connection with every shortage discovered by the auditor, there shall be an immediate report to the Division of Local Government Services, Bureau of Financial Regulation, and the governing body. The governing body shall make immediate report to the bonding company upon presentation of the preliminary report of the auditor. It is the duty of the governing body to report the discovery of any shortage or irregularity involving public moneys to the county prosecutor serving the county in which the entity is located. The Director shall render a report to the responsible deputy attorney general. The independent auditor shall follow up on these matters in each and every instance and keep the Division informed as to progress and procedure.

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