18469_Authority_June

26 The Authority | June 2025 By Russell F. McIntosh and Ryan A. Killen, Herbert, Rowland & Grubic, Inc. Municipal authorities play a crucial role in managing public resources and services. However, the Municipality Authorities Act (the “Act”) provides limited guidance on fiscal matters compared to the detailed prescriptions found in municipal codes for townships, boroughs, and cities. Financial policies and accounting procedures often develop informally over time, shaped by experience and availability of staff rather than formal board direction. While this approach may be practical, it can lead to inconsistencies or gaps in oversight. In addition, many authorities have small administrative staffs and therefore struggle with weak internal accounting controls. One common issue is insufficient separation of duties: when one individual prepares and sends bills, receives and deposits customer payments, writes checks to pay bills, and reconciles bank accounts. Even when tasks are divided, workflow consolidation often leads to a single person handling most aspects of financial operations, including income and expense reports, delinquencies, payroll, and disbursements. These limitations can increase the risk of financial errors or irregularities. To address these challenges, it is essential for municipal authorities to adopt a formal set of financial policies and procedures. Formal financial policies provide a clear framework for managing an authority's financial affairs and ensure decisions are consistent and transparent. They also promote accountability and public trust. These policies and procedures are typically adopted by resolution and include the following: • General Background Information – outlines the authority’s incorporation details, governance structure, and principal activities. • Policy Statement – identifies principles for budgeting, financial audits, insurance, rate setting and capital reserves. • Rate Setting – defines the authority’s primary revenue sources, rate-setting process and billing procedures. • Monies of the Authority – details the investment plan, acceptable investments and responsibilities of the treasurer. • Banking – lists authorized depositories and procedures for reconciling accounts. • Expenditures – specifies the authorization process for payments. • Billing and Collections – outlines the billing cycle, reporting requirements and procedures for handling delinquent accounts. • Debt Management – provides guidelines for issuing and managing debt, ensuring compliance with relevant laws and regulations. Illustrated below is sample language for each of these sections: General Background Information The ( Authority Name) (the “Authority”) was incorporated by ( Incorporating Municipality/Municipalities ) ( Township/ Borough/City ) in ( County Name ) County under the Municipality Authorities Act of 1945, as amended (the “Act”). It operates within the charter approved by the incorporating municipality/municipalities and the Commonwealth of Pennsylvania. The Authority is governed by ( Number of members )-member board of directors, with individual