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Home My WebLink About1991 Town Auditr L TOWN OF GROTON Groton, New York Financial Report December 31, 1991 FILED I o • . a j".t'F Y -' ,s" +�. .r.. _ •':�r► • rcr`s ire �... .?Q 'vj •y,;E:s.. •� ,T rpt y , t Ciaschi • Dietershagen • Little • Mickelson Certified Public Accountants and Consultants H, Certified Public Accountants and Consultants i k Y; ' Frederick J. Ciaschi, C.P.A. John H. Dietershagen, C.P.A. John E. Little, C.P.A. Jerry E. Mickelson, C.P.A. Thomas K. Van Derzee, C.P.A. LA� Debbie A. Conley, C.P.A. Reginald E. Malley, C.P.A. Ciaschi • Dietershagen • Little * Mickelson Certified Public Accountants and Consultants % D 1L i ! � { i r _ ,,... - • to Town Board Town of Groton Groton, NY�,........_.._.- We have audited the books and records of the Town of Groton Justice Court for the period beginning January 1, 1991 and ended December 31, 1991. Our audit was made in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States (1983 edition) which set the audit standards for performance audits and, accordingly, we included such procedures as we considered necessary in the circumstances. Town Law Section 31 states that the Town Justice is responsible for recording and reporting the Court's activities. The Uniform Justice Court Act Section 2019-A states that the books and records of the Court are the Town's property and that the Town is responsible for causing them to be audited. Our audit was made for the purpose of determining whether the Town of Groton Justice Court was properly collecting and recording bail, fines, and other charges, as well as reporting and remitting funds to the State in an accurate and timely manner. We made a preliminary review of the internal control policies and procedures in place to ensure funds are properly collected, recorded and reported. For the purpose of this report, we have classified the significant internal controls in the following categories: CYCLES OF THE TOWN JUSTICE'S ACTIVITY Cash receipts Cash disbursements External reporting For all of the control categories listed above, we obtained an understanding of the design of relevant policies and procedures and performed tests of transactions for each to determine whether they have been placed in operation. The results of our tests indicate that for the transactions tested, the Town of Groton Justice Court substantially complied, in all material respect, with the terms and conditions of the requirements described above. With respect to items not tested, nothing came to our attention that caused up to believe that the Town of Groton Justice Court had not complied, in all material respects, with those terms and conditions. This report is intended for the use of management and New York State and should not be used for any other purpose. This restriction is not intended to limit the distribution of this report, which upon acceptance by the Town of Groton, is a matter of public record. January 9, 1992 Ithaca, New York CORTLAND ITHACA WATKINS GLEN 18 Tompkins Street Terrace Hill 221 N. Franklin Street Cortland, New York 13045 Ithaca, New York 14850 Watkins Glen, New York 14891 607-753-7439 607-272-4444 607-535-4443 TOWN OF GROTON TABLE OF CONTENTS IndependentAuditors' Report ................................................. 1 Combined Balance Sheet - All Fund Types and Account Groups ................... 2-3 Combined Statement of Revenues, Expenditures, and Changes in Fund Balance .... 4 Comparative Operating Statement for the General and SpecialRevenue Funds ....................................................... 5 Notes to Financial Statements ................................................ 6-16 Independent Auditors' Report on Additional Information ....................... 17 Combining Balance Sheet - General Fund ...................................... 18 Combining Statement of Revenues, Expenditures and Changes in Fund Balance - General Fund............................................................. 19 Combining Balance Sheet - Special Revenue Funds .............................. 20 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Special Revenue Funds ..................................................... 21 Independent Auditors' Report on Schedule of Federal Financial Assistance ..... 22 Schedule of Federal Financial Awards ......................................... 23 Independent Auditors' Report on Compliance with Laws and Regulations Based on an Audit of the General Purpose Financial Statements Performed in Accordance with Government Auditing Standards ............................ 24 Schedule of Immaterial Noncompliance with Laws and Regulations - Current Year.............................................................. 25 Independent Auditors' Report on Internal Control Structure Used in Administering Federal Financial Assistance Programs ................. 26-28 Independent Auditors' Report on Compliance with the General Requirements Applicable to Federal Financial Assistance Programs ............ 29 Schedule of Findings and Questioned Costs - General Requirements ............. 30-31 Independent Auditors' Report on Compliance with Requirements Applicable to Nonmajor Federal Financial Assistance Program Transactions ............... 32 Frederick J. Ciaschi, C.P.A. John H. Dietershagen, C.P.A. John E. Little, C.P.A. Jerry E. Mickelson, C.P.A. Thomas K. Van Derzee, C.P.A. Debbie A. Conley, C.P.A. Reginald E. Malley, C.P.A. Ciaschi • Dietershagen • Little • Mickelson Certified Public Accountants and Consultants INDEPENDENT AUDITORS' REPORT Supervisor and Town Board Town of Groton Groton, New York We have audited the accompanying general purpose financial statements of the Town of Groton, as of December 31, 1991 and for the year then ended. These general purpose financial statements are the responsibility of the Town of Groton's management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards, Government Auditing Standards, issued by the Comptroller General of the United States, and the provisions of Office of Management and Budget Circular A-128, "Audits of State and Local Governments". Those standards and OMB Circular A-128 require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the general purpose financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the general purpose financial statements referred to above present fairly, in all material respects, the financial position of the Town of Groton, at December 31, 1991, and the results of its operations for the year then ended, in conformity with generally accepted accounting principles. March 19, 1992 Ithaca, New York ' CORTLAND ITHACA WATKINS GLEN 18 Tompkins Street Terrace Hill 221 N. Franklin Street Cortland, New York 13045 Ithaca, New York 14850 Watkins Glen, New York 14891 607-753-7439 607-272-4444 607-535-4443 � � � � r r � � r r� r r � sr� � r �■ � � TOWN OF GROTON COMBINED BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUPS DECEMBER 31, 1991 Fiduciary Governmental Fund Types Fund Types Account Groups Special Capital Trust & General Long—Term General Revenue Projects Agency Fixed Assets Debt Total Liabilities and Deferred Revenues Brought Forward $ 18,854 $ 214,650 $ 23,920 $ 2,109 $ $ 9,430 EQUITY Fund Balances — Reserved Reserved for Encumbrances Reserved for Inventory and Supplies Reserved for Taxes Raised Outside of Tax Limit Reserved for Liability Insurance Reserve Reserved for Debt Reserved for Repairs Capital Reserve Reserved for Highway Capital Projects Reserved for Unemployment Insurance Reserved for Workers' Compensation Reserved for Excess Dog Control Revenues Reserved for Retirement System Credits Total Reserved Equity Investment in General Fixed Assets Fund Balances — Unreserved Appropriated — Ensuing Year's Budget Unappropriated Total Unreserved Total Fund Balance Total Fund Balance and Equity Total Liabilities, Deferred Revenues and Fund Equity 1,485 10,045 14,530 163,000 308,590 471,590 486,120 486,120 6,940 7,940 143,000 119,764 262,764 270,704 270,704 4,668 4,668 4,668 4,668 1,741,614 1,741,614 $ 504,974 $ 485,354 $ 28,588 $ 2,109 $ 1,741,614 $ See Independent Auditors' Report and Accompanying Notes —3- 9,430 3- 9,430 TOWN OF GROTON COMBINED STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE FOR THE YEAR ENDED DECEMBER 31, 1991 Governmental Fund Types Special Capital Revenues General Revenue Projects Real Property Taxes $ 258,209 $ 3971552 $ Real Property Tax Items Nonproperty Tax Items Departmental Income Home and Community Services Intergovernmental Charges Use of Money and Property Licenses and Permits Fines and Forfeitures Sale of Property and Compensation for Loss Miscellaneous Local Sources Interfund Revenues State Sources Federal Sources Total Revenues Other Sources Interfund Transfers Retirement System Credits Proceeds of Obligations Total Revenues and Other Sources Expenditures General Governmental Support Public Safety Public Health Transportation Economic Assistance and Opportunity Culture and Recreation Home and Community Services Employee Benefits Debt Service (Principal and Interest) Total Expenditures Other Uses Interfund Transfers Total Expenditures and Other Uses Excess of Revenues (Expenditures) Other Changes in Fund Equity Net Increase (Decrease) Fund Balance, Beginning of Year Fund Balance, End Of Year 41744 798 4,546 29,514 7,256 3,905 (1,380) 60,653 368,245 10,045 378,290 199,339 11,069 46,500 32$706 10,186 25,266 27,966 15,976 130,403 1,301 64,901 144,088 738,245 738,245 52,500 473,002 144,088 20,083 6899673 369,008 689,673 9,282 48,572 (936) 8,346 48,572 4771774 222,132 $ 486,120 $ 270, 704 $ See Independent Auditors' Report and Accompanying Notes -4- 1,649 1,649 1, 649 2,110 2,110 (461) 5,129 47668 TOWN OF GROTON COMPARATIVE OPERATING STATEMENT FOR THE GENERAL AND SPECIAL REVENUE FUNDS FOR THE YEAR ENDED DECEMBER 31. 1991 Governmental Fund Types General Fund Special Revenue Variance Actual Variance Modified Budget Actual Encumbrances Fay.-Unfay. Modified BudWt Current Year Encumbrances Fay.-Unfay. Revenues Real Property Taxes $ 258,209 $ 258,209 $ $ -0- $ 397,552 $ 397,552 $ $ -0- Real Property Tax Items 2,500 4,744 2,244 Nonproperty Tax Items 798 798 Departmental Income 1,050 4,546 3,496 Intergovernmental Charges Use of Money and Property 20,000 29,514 9,514 85,000 128,778 43,778 Licenses and Permits 5,500 7,256 1,756 Fines and Forfeitures 3,350 3,905 555 Sale of Property and Compensation for Loss 1,301 1,301 Miscellaneous Local Sources (1,380) (1,380) Interfund Revenues State Sources 62,400 60,653 (1,747) 70,948 64,901 (6,047) Federal Sources Total Revenues 353,009 368,245 15,236 553,500 592,532 39,032 Other Sources Interfund Transfers Retirement System Credits 10,045 10,045 Proceeds of Obligations Total Revenues and,Other Sources 353,009 378,290 25,281 553,500 592,532 39,032 Expenditures General Governmental Support 309,914 199,339 3,000 107,575 Public Safety 13,500 11,069 2,431 52,500 52,500 -0- Public Health 46,700 46,500 200 Transportation 33,500 32,706 794 576,444 473,002 103,442 Econornic Assistance and Opportunity 10,186 10,186 -0- Culture and Recreation 27,857 25,266 2,591 Home and Community Services 51,700 27,966 23,734 Employee Benefits 21,152 15,976 5,176 67,556 20,083 47,473 Debt Service (Principal and Interest) Total Expenditures 514,509 369,008 3,000 142,501 696,500 545,585 150,915 Other Uses Interfund Transfers Total Expenditures and Other Uses 514,509 369,008 3,000 142,501 696,500 545,585 150,915 Excess of Revenues (Expenditures) (161,500) 9,282 (3,000) 167,782 (143,000) 46,947 189,947 Other Changes in Fund Equity (936) (936) Appropriated Fund Balance 161,500 (161,500) 143,000 (143,000) Net Increase $ -07 8,346 $ (3,000) $ 5,346 $ -0- 46,947 $ $ 46,947 Fund Balance, Beginning of Year 477,774 215,531 Fund Balance, End of Year $ 486,120 $ 262,478 See Independent Auditors' Report and Accompanying Notes -5 TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1991 Note 1 - Summary of Significant Accounting Policies The financial statements of the Town of Groton have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant of the Town's accounting policies are described below. A. Financial Reporting Entity The Town of Groton, which was erected in 1865, is governed by the Town Law and other general municipal laws of the State of New York and various local laws. The Town Board is the legislative body responsible for overall operations, the Town Supervisor serves as chief executive officer and as chief fiscal officer. The following basic services are provided: f ire protection, highways and streets, recreation, public improvements, planning and zoning, and general administration. All governmental activities and functions performed for the Town of Groton are its direct responsibility. No other governmental organizations have been included or excluded from the reporting entity. The financial reporting entity includes organizations, functions, and activities over which elected officials exercise oversight responsibility. Oversight responsibility is determined on the basis of financial interdependency, selection of governing authority, designation of management, ability to influence operations and accountability for fiscal matters. B. Basis of Presentation - Fund Accounting The accounts of the local government are organized on the basis of funds or account groups, each of which is considered a separate accounting entity. The operations of each fund are accounted for within a separate set of self -balancing accounts that comprise its assets, liabilities, fund balance, revenues and expenditures which are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions or limitations. The various funds are summarized by type in the general purpose financial statements. Certain funds of the Town are utilized to account for resources derived from, and/or expenditures applicable to an area less than the entire town. The following fund types and account groups are used: 1. Fund Categories a. Governmental Funds - Governmental funds are those through which most governmental functions are financed. The acquisition, use and balances of expendable financial resources and the related liabilities are accounted for through governmental funds. The measurement focus of the governmental funds is based upon determination of financial position and changes in financial position. The following are the Town of Groton's governmental fund types: - 6 - ' TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1991 General Fund - the general fund is the principal operating fund and includes all operations not required to be recorded in other funds. General Fund, Town outside Village - used to record transactions which are required to be a charge on the area of the Town outside the village. Special Revenue Funds - used to account for the proceeds of specific revenue sources that are legally restricted to expenditure for specified purposes. The following Special Revenue Funds are utilized: Highway Funds - (Townwide and Parttown) established pursuant to Highway Law, Section 141, and used to account for revenues and expenditures for highway purposes. Highway Law, Section 277, requires that expenditures for repairs and improvements be financed by the area outside the village. Therefore, a town with a village must maintain two highway funds. Special District Funds - (Lighting District and Fire Protection District) are used to record transactions for operations and maintenance for these activities. Risk Retention - established for unemployment reserves held by the Town for reimbursement to the state for claims filed by former employees. Special Grant Fund - used to account for Community Development Block Grants. Capital Projects Fund - The capital projects fund is used to account for and report financial resources to be used for the acquisition, construction or renovation of major capital facilities, or equipment. b. Fiduciary Funds - used to account for assets held by the local government in a trustee or custodial capacity: Agency Funds - are used to account for money and/or property received and held in the capacity of trustee, custodian or agent. 2. Account Groups Account groups are used to establish accounting control and accountability for general fixed assets and general long-term debt. The two account groups are not "funds". They are concerned only with the measurement of financial position, and not results of operations. General Fixed Assets Account Group - used to account for land, buildings, improvements other than buildings, and equipment utilized for general government purposes. ' TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS ' (CONTINUED) DECEMBER 31, 1991 General Long -Term Debt Account Group - used to account for all long-term debt. C. Basis of Accounting/Measurement Focus Basis of accounting refers to when revenues and expenditures and the related assets and liabilities are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurements made, regardless of the measurement focus. Measurement focus is the determination of what is measured, i.e. expenditures or expenses. Modified Accrual Basis - all Governmental Funds are accounted for using the modified accrual basis of accounting. Under this basis of accounting, revenues are recorded when measurable and available. Available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Material revenues that are accrued include real property taxes, state and federal aid, sales tax and certain user charges. If expenditures are the prime factor for determining eligibility, revenues from federal and state grants are accrued when the expenditure is made. Expenditures are recorded when incurred except: 1. Expenditures for prepaid expenses and inventory -type items are recognized at the time of the purchase. 2. Principal and interest on indebtedness are not recognized as an expenditure until due. 3. Compensated absences, such as vacation and sick leave which vests or accumulates, are charged as an expenditure when paid. (See Note 1-G) Account Groups - General fixed assets are recorded at actual cost or estimated cost or, in the case of gifts and contributions, at the fair market value at the time received. No provision for depreciation is made. General long-term debt liabilities are recorded at the par value of the principal amount. No liability is recorded for interest payable to maturity. D. Property Taxes Real property taxes are levied annually by the Town of Groton no later than January 1, and become a lien on January 1. Taxes are collected during the period January 1, to May 31. Uncollected real property taxes are subsequently enforced by the County of Tompkins in which the Town is located. An amount representing uncollected real property taxes transmitted to the county for enforcement is paid by the county to the Town no later than the forthcoming May 31. - 8 - TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1991 E. Budgetary Data 1. Budget Policies - The budget policies are as follows: a. No later than October 5, a tentative budget is submitted by the budget officer for the fiscal year commencing the following January 1. The tentative budget includes proposed expenditures and the proposed means of financing for all funds. b. After public hearings are conducted to obtain taxpayer comments, no later than November 20, the governing board adopts the budget. c. All modifications of the budget must be approved by the governing board. 2. Encumbrances Encumbrance accounting, under which purchase orders, contracts and other commitments for the expenditure of monies are recorded for budgetary control purposes to reserve that portion of the applicable appropriations, is employed in the Governmental funds. Encumbrances are reported as reservations of fund balances since they do not constitute expenditures or liabilities. Expenditures for such commitments are recorded in the period in which the liability is incurred. 3. Budget Basis of Accounting Budgets are adopted annually on a basis consistent with generally accepted accounting principles. Appropriations authorized for the current year are increased by the amount of encumbrances carried forward from the prior year. Budgetary controls for the special grant fund are established in accordance with the applicable grant agreement which covers a period other than the Town of Groton's fiscal year. Consequently, the budgets for this fund have been excluded from TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1991 the Combined Statement of Revenues, Expenditures, Encumbrances and Changes in Fund Balance - Budget and Actual. In addition, the Risk Retention Fund has been excluded from the Combined Statement of Revenues, Expenditures, Encumbrances, and Changes in Fund Balance - Budget and Actual, because there is no legally adopted annual budget. The following schedule reconciles the difference between Statements 2 and 3. Fund Balance Fund Balance Deficit Expendi- Deficit Bea. of Year Revenues tures End of Year Total for Funds Included in Budget Comparison Funds not Included in Budget Comparison Total Special Revenue Funds $ 215,531 $ 592,532 $ 545,585 $ 262,478 6,601 145,713 144,088 8,226 $ 222,132 $ 738,245 $ 689,673 $ 270,704 F. Property, Plant and Equipment - General Fixed assets purchased for general governmental purposes are recorded as expenditures in the governmental funds and are capitalized at cost in the General Fixed Asset Account Group. Contributed fixed assets are recorded at fair market value at the date received. Fixed assets consisting of certain infrastructure type improvements other than buildings, including roads, bridges, curbs and gutters, streets and sidewalks, drainage and lighting systems, have not been capitalized. Such assets normally are immovable and of value only to the Town of Groton. Therefore, the purposes of stewardship for capital expenditures can be satisfied without recording these assets. No depreciation has been provided on general fixed assets, nor has interest on general fixed assets construction in progress been capitalized. G. Vacation and Sick Leave and Compensated Absences Town of Groton employees are granted vacation and sick leave in varying amounts. In the event of termination or upon retirement, an employee is not entitled to payment for accumulated vacation time. However, sick leave can be accrued up to 720 hours which is payable upon termination or retirement. The value of unused employee sick leave at year-end has been recorded in the General Long -Term Debt Account Group. - 10 - ' TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS ' (CONTINUED) DECEMBER 31, 1991 Payment of sick leave recorded in the General Long -Term Debt Account Group is dependent upon many factors, therefore, timing of future payments is not readily determinable. However, management believes that sufficient resources will be made available for the payments of sick leave when such payment becomes due. Note 2 - Detail Notes on All Funds and Account Groups A. Assets ■ 1. Cash and Investments The Town of Groton's investment policies are governed by state statutes. In addition, the Town of Groton has its own written investment policy. Town of Groton's monies must be deposited in FDIC -insured commercial banks or trust companies located within the state. The Supervisor is authorized to use demand accounts and certificates of deposit. Permissible investments include obligations of the U.S. Treasury and U.S. Agencies, repurchase agreements, and obligations of New York State or its localities. Collateral is required for demand and time deposits and certificates of deposit not covered by Federal Deposit Insurance. obligations that may be pledged as collateral are obligations of the United States and its agencies and obligations of the state and its municipalities and school districts. The written investment policy requires repurchase agreements to be purchased from banks located within the state and that underlying securities must be obligations of the federal government. Deposits and investments at year-end were entirely covered by Federal Deposit Insurance or by collateral held by the Town of Groton's custodial bank in the Town of Groton's name. All deposits including certificates of deposit are carried at cost plus accrued interest. They consisted of: ' TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS ' (CONTINUED) DECEMBER 31, 1991 B. Liabilities 1. Pension Plans General Information The Town of Groton participates in the New York State and Local Employees' Retirement System. This System is a cost sharing multiple public employer retirement system. Obligations of employers and employees to contribute and benefits to employees are governed by the New York State Retirement and Social Security Law (NYSRSSL). The System offers a wide range of plans and benefits which are related to years of service and final average salary, vesting of retirement benefits, death and disability benefits and optional methods of benefit payments. All benefits generally vest after ten years of credited service. 12 - Deposits ---Balances Per Bank---- Balance Per Interest Noninterest Reconciling Financial Bearing Bearing Items Statements Depository General - A $ 304,830 $ 112,492 $ (1,689) $ 415,633 FNB of Groton General - B 49,705 29,021 78,726 FNB of Groton Highway - DA 257,808 2,828 260,636 FNB of Groton Highway - DB 33,658 5,876 39,534 FNB of Groton Risk Retention 6,940 6,940 FNB of Groton Special Grant 1,286 2,912 4,198 FNB of Groton Capital Projects 28,588 28,588 FNB of Groton Lighting 2,203 1,701 3,904 FNB of Groton Trust & Agency -0- 3,864 (2,381) 1,483 FNB of Groton Cash on Hand -0- -0- 250 250 Total Cash Balances 685,018 158,694 $ (3,820) $ 839,892 FDIC Insured 100,000 100,000 Uninsured 585,018 58,694 Collateralized 585,018 58,694 Uncollateralized $ -0- -0- 2, Changes in Fixed Assets A summary of changes in general fixed assets is as follows: Balance Balance Tvpe January 1, Additions Deletions December 31, Land $ 83,003 $ $ $ 83,003 Buildings 669,089 669,089 Machinery and Equipment 968,819 128,209 107,506 989,522 Total $ 1,720,911 $ 128,209 $ 107,506 $ 1,741,614 B. Liabilities 1. Pension Plans General Information The Town of Groton participates in the New York State and Local Employees' Retirement System. This System is a cost sharing multiple public employer retirement system. Obligations of employers and employees to contribute and benefits to employees are governed by the New York State Retirement and Social Security Law (NYSRSSL). The System offers a wide range of plans and benefits which are related to years of service and final average salary, vesting of retirement benefits, death and disability benefits and optional methods of benefit payments. All benefits generally vest after ten years of credited service. 12 - TOWN OF GROTON NOTES TO FINAlNCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1991 The NYSRSSL provides that all participants in the System are jointly and severally liable for any actuarial unfunded amounts. Such amounts are collected through annual billings to all participating employers. Generally, all employees, except certain part-time employees, participate in the System. The System is non-contributory except for employees who joined the Employees' Retirement System after July 27, 1976, who contribute 3% of their salary. Employee contributions are deducted by the employer from employees' paychecks and are sent currently to the Employees' Retirement System. Emplovee Groups Covered Nearly all Town of Groton employees are eligible for membership in the System. All employees employed in a full-time position who commenced employment after June 30, 1976 are mandatory members. The total payroll for all employees of the Town of Groton for fiscal year 1991 was $295,171 of which $272,675 was attributable to employees covered by the Employees' Retirement System. Pavments and Funding Status Through 1988, the System billed all participating employers by May 31, each year. Billings were based on salaries paid during the System's fiscal year which ended on March 31, of the previous calendar year, and in accordance with funding requirements determined by the System's actuary. Employers were required to remit payment in full by June 30. In 1989 and future years, the System's billings are based on Chapter 62 of the Laws of 1989 of the State of New York. This legislation requires participating employers to begin making payments on a current basis, while amortizing existing unpaid amounts relating to the System's fiscal years ended March 31, 1988 and 1989 (which otherwise were to have been paid on June 30, 1989 and 1990, respectively) over a 17 -year period, with an 8.75% interest factor added. The payment covering the System's fiscal year ended March 31, 1990 and the first amortization installment was paid December 15, 1989. December 15th will be the payment date for amounts due on each succeeding year's liability and portion of the amortized amount. Any under or overpayment of the estimate paid for the System's fiscal year ended March 31, 1990 will be included in the succeeding December 15, payment. The actuarial cost method used by the System to determine the annual contributions from employees through March 31, 1990 was the aggregate cost method. Under this method the excess of the actuarial liabilities over the actuarial assets was funded by employees as a level percentage of salary over the current members' future working lifetimes. Subsequent to the System's March 31, 1990 fiscal year-end, the Legislature amended the Retirement and Social Security Law (Chapter 210) mandating a change to a modified projected unit cost method (PUC) for the fiscal year ended March 31, 1991. The new method utilizes a rolling amortization period for any difference between actuarial assets and actuarial accrued - 13 - TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1991 2. Long -Term Debt a. The Town of Groton had the following noncurrent liabilities: Compensated Absences: Represents the value of earned and unused portion of the liability for accumulated sick leave. b. The following is a summary of long-term liabilities outstanding at December 31, 1991: Liability: Compensated Absences $ 9,430 c. The following is a summary of changes in long-term liabilities for the period ended December 31, 1991: Compensated Absences Balance 1/1/91 $ 8,369 Additions 1,061 Balance 12/31/91 $ 9,430 Additions and deletions to compensated absences are shown net since it is impractical to determine these amounts separately. C. Interfund Receivables and Payables Interfund receivables and payables at December 31, 1991 were as follows: Interfund Interfund Fund Receivables Payables General $ 320 $ 296 Highway 330 Agency Fund 626 320 Total $ 946 $ 946 D. Fund Equity Balance Fund/Purpose End of Year General Fund/Encumbrances $ 31000 General/Dog Control 1,485 General/Retirement System Credits 101,045 Risk Retention/Unemployment Insurance 6,940 Special Grant/Encumbrances 11000 Total $ 22,470 TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1991 liabilities. Approximately 17% of such differences is recognized each year. The legislation also allows the reduction of the annual amortization payment by any yearly surplus due to the rolling amortization. In addition, the legislation required a retroactive change in the actuarial smoothing method for the years ended March 31, 1989 and March 31, 1990 from a four year smoothing to a five year smoothing. The anticipated effect of these changes for the year ended March 31, 1991 is that Employees' Retirement System contributions will generally be zero. The anticipated long term affect is that employer contributions will be, for a time, less than they would have been under the aggregate method, but it is anticipated that future contributions will exceed those under the aggregate cash method. The Town has paid its pension obligation in full in prior years resulting in a credit with the Employees' Retirement System of $10,045. The Pension Benefit Obligation (PBO) of credited projected benefits is a standardized disclosure measure of the actuarial present value of pension benefits, adjusted for the effects of projected salary increases estimated to be payable in the future as a result of employees' service to date. The retirement systems do not make separate measurements for individual employers. The Pension Benefit Obligation of credited projected benefits at March 31, 1990 for the Employees' Retirement System determined through an actuarial valuation performed as of that date, was $36.97 billion. The net assets available to pay benefits at that date is $40.7 billion. The Town of Groton's employer contribution requirement was less than 1% of total contributions required of all employers participating in this System. Historical trend information showing the progress in accumulating sufficient assets to pay benefits when due is presented in the Annual Financial Report of the System. Additional detailed information concerning the System may also be found in the Report. - 14 - TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS ' (CONTINUED) DECEMBER 31, 1991 Note 3 - Continaent Liabilities The Town engaged a general contractor to build the Town Hall and garage. During 1989, while the building was in the process of being completed, this contractor filed for Chapter 11 bankruptcy. The bonding company for the contractor paid sub -contractors who were owed payments from the general contractor. The amount in the retainage payable account represents amounts withheld from the general contractor by the Town. It is being held in retainage payable pending resolution of all claims related to the contract default of the general contractor. The Town has been named as a co-respondent in a lawsuit brought by several residents of the Town alleging groundwater contamination emanating from a highway garage owned by Tompkins County. The Town is alleged to have failed to stop the contamination. The amount of damages being claimed are $6,660,000. Attorneys for the Town express the opinion that it is impossible at this point in time to give an accurate estimation of the likelihood of an unfavorable outcome or a range of potential loss. Note 4 - Fund Balance Adjustment The fund balance adjustment in the General fund reflects an increase in accounts payable at the beginning of the year recorded by the Town during a conversion to a computerized bookkeeping system. The $936 was additional expenses for calendar year 1990 which were paid in 1991. - 16 - INDEPENDENT AUDITORS' REPORT ON ADDITIONAL INFORMATION Supervisor and Town Board Town of Groton Groton, New York Our report on our audit of the general purpose financial statements of the Town of Groton for 1991 appears on page 1. That audit was made for the purpose of forming an opinion on the general purpose financial statements taken as a whole. Additional information included on pages 18 through 21 in this report is presented for purposes of additional analysis and is not a required part of the general purpose financial statements. Such information has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, in our opinion, is fairly stated in all material respects in relation to the general purpose financial statements taken as a whole. March 19, 1992 Ithaca, New York - 17 - ' TOWN OF GROTON COMBINING BALANCE SHEET GENERAL FUND � DECEMBER 31, 1991 Parttown $ 78,726 Total $ 494,609 320 10,045 $ 78,726 $ $ 310 $ 190 and Fund Equity $ 426,248 $ See Independent Auditor's Report on Additional Informatior -18- 6•• 42,000 36,226 78,226 78,226 78,726 $ 504,974 17,871 687 296 18,854 3,000 1,485 10,045 14,530 163,000 308,590 471,590 486,120 504,974 Townwide ASSETS Unrestricted Cash $ 415,883 Restricted Cash Investments Due from Other Funds 320 Due from State and Federal Governments Due from Other Governments Prepaid Expenses 10,045 Other Receivables, Net Inventories Restricted Assets Deferred Expenditures Total Assets $ 426,248 LIABILITIES, DEFERRED REVENUES AND FUND EQUITY Liabilities Accounts Payable $ 17,561 Accrued Liabilities 497 Notes Payable Tax Anticipation Notes Payable Revenue Anticipation Notes Payable Budget Notes Payable Bond Anticipation Notes Payable Capital Notes Payable Bonds Payable Due to Other Funds 296 Due to Other Governments Due to Employees' Retirement System Other Liabilities Overpayments Deferred Revenues Total Liabilities and Deferred Revenues 18,354 FUND EQUITY Fund Balances - Reserved Reserved for Encumbrances 3,000 Reserved for Inventory and Supplies Reserved for Debt Reserved for Repairs Reserved for Unemployment Insurance Reserved for Workers' Compensation Reserved for Excess Dog Control Revenues 1,485 Reserved for Retirement System Credits 10,045 Total Reserved Fund Balance 14,530 Fund Balances - Unreserved Appropriated - Ensuing Year's Budget 121,000 Unappropriated 272,364 Total Unreserved Fund Balance 393,364 Total Fund Balance 407,894 Total Liabilities, Deferred Revenues Parttown $ 78,726 Total $ 494,609 320 10,045 $ 78,726 $ $ 310 $ 190 and Fund Equity $ 426,248 $ See Independent Auditor's Report on Additional Informatior -18- 6•• 42,000 36,226 78,226 78,226 78,726 $ 504,974 17,871 687 296 18,854 3,000 1,485 10,045 14,530 163,000 308,590 471,590 486,120 504,974 TOWN OF GROTON COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GENERAL FUND DECEMBER 31, 1991 Townwide Parttown Total Modified Modified Modified Revenues Budget Actual Budget Actual Budget Actual Real Property Taxes $ 191,409 $ 191,409 $ 66,800 $ 66,800 $ 258,209 $ 258,209 Real Property Tax Items 2,500 4,744 2,500 4,744 Nonproperty Tax Items 798 798 Departmental Income 750 1,684 300 2,862 1,050 4,546 Horne and Community Services Intergovernmental Charges Use of Money and Property 15,000 23,686 5,000 5,828 20,000 29,514 Licenses and Permits 5,500 7,256 5,500 7,256 Fines and Forfeitures 3,350 3,905 3,350 3,905 Sale of Property and Compensation for Loss Miscellaneous Local Sources (1,380) (1,380) Interfund Revenues State Sources 60,400 50,591 2,000 10,062 62,400 60,653 Federal Sources Total Revenues 278,909 281,895 74,100 86,350 353,009 368,245 Other Sources: Interfund Transfers Retirement System Credits 10,045 10,045 Proceeds of Obligations Total Revenues and Other Sources 278,909 291,940 74,100 86,350 353,009 378,290 Expenditures General Governmental Support 306,714 199,339 3,200 309,914 199,339 Public Safety 11,500 10,111 2,000 958 13,500 11,069 Public Health 200 46,500 46,500 46,700 46,500 Transportation 33,500 32,706 33,500 32,706 Economic Assistance & Opportunity 10,186 10,186 10,186 10,186 Culture and Recreation 14,557 14,057 13,300 11,209 27,857 25,266 Home and Community Services 600 597 51,100 27,369 51,700 27,966 Employee Benefits 16,652 14,136 4,500 1,840 21,152 15,976 Debt Service (Principal and Interest) Total Expenditures 393,909 281,132 120,600 87,876 514,509 369,008 Other Uses: Interfund Transfers Total Expenditures and Other Uses 393,909 281,132 120,600 87,876 514,509 369,008 Excess of Revenues (Expenditures) (115,000) 10,808 (46,500) (1,526) (161,500) 9,282 Other Changes in Fund Balance (936) (936) Appropriated Fund Balance 115,000 46,500 161,500 Net Increase (Decrease) $ -0- 9,872 $ -0- (1,526) $ -0- 8,346 Fund Balance, Beginning of Year 398,022 79,752 477,774 Fund Balance, End of Year $ 407,894 $ 78,226 $ 486,120 See Independent Auditors' Report and Accompanying Notes - 19 - TOWN OF GROTON COMBINING BALANCE SHEET SPECIAL REVENUE FUNDS DECEMBER 31. 1991 Highway Highway Lighting Fire Protection Townwide Parttown District District Special Grant Fund Risk Retention Total ASSETS Unrestricted Cash $ 260,636 $ 39,534 $ 3,904 $ $ 4,198 $ 6,940 $ 315,212 Restricted Cash 137,912 Due from Other Funds 214,650 Due from State and Federal Governments 1,000 Due from Other Governments 30,154 Other Receivables, Net 286 Inventories 119,764 Temporary Investments Prepaid Expenditures 1,286 Deferred Expenditures 270,704 Total Assets $ 290,790 $ LIABILITIES, DEFERRED REVENUES AND FUND EQUITY Liabilities Accounts Payable $ 70,798 $ Accrued Liabilities 4,473 Notes Payable Revenue Anticipation Notes Payable Budget Notes Payable Bond Anticipation Notes Payable Bonds Payable Due to Other Funds 330 Due to Other Governments Due to Employees Retirement System Other Liabilities Overpayments Deferred Revenues Total Liabilities and Deferred Revenues 75,601 Flt ND EQU ITY Fund Balances - Reserved Reserved for Encumbrances Reserved for Inventory and Supplies Reserved for Debt Reserved for Repairs Reserved for Workers' Compensation Reserved for Unemployment Insurance Reserved for Insurance Reserved for Retirement System Credits Total Reserved Fund Balance Fund Balances - Unreserved Appropriated - Ensuing Year's Budget 125,000 Unappropriated 90,189 Total Unreserved Fund Balance 215,189 Total Fund Balance 215,189 Total Liabilities, Deferred Revenues and Fund Equity $ 290,790 $ 4,988 35,142 135,000 135,000 44,522 $ 3,904 $ $ 139,198 $ 6,940 $ 485,354 1,022 $ $ $ $ $ 71,820 115 4,588 1,137 18,000 25,385 3,904 43,385 3,904 43,385 3,904 44,522 $ 3,904 $ See Independent Auditors' Report on Additional Information -20- 330 137,912 137,912 137,912 214,650 1,000 1,000 6,940 6,940 1,000 6,940 7,940 143,000 286 119,764 286 262,764 1,286 6,940 270,704 $ 139,198 $ 6,940 $ 485,354 TOWN OF GROTON COMBINING STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES SPECIAL REVENUE FUND FOR THE YEAR ENDED DECEMBER 31, 1991 Highway Highway Fire Protection Special Risk Townwide Parttown Lighting District District Subtotal Grant Retention Total Revenues Budget Actual Budget- Actual Budget Actual Budget Actual Budget Actual Actual Actual Actual Real Property Taxes $ 230,500 $ 230,500 $ 109,052 $ 109,052 $ 5,500 $ 5,500 $ 52,500 $ 52,500 $ 397,552 $ 397,552 $ $ $ 397,552 Real Property Tax Items Departmental Income Home and Community Services Intergovernmental Charges Use of Money and Property Licenses and Permits Fines and Forfeitures Sale of Property and Compensation for Loss Miscellaneous Local Sources Interfund Revenues State Aid Federal Aid Total Revenues Other Sources: Interfund Transfers Proceeds of Obligations Total Revenues and Other Sources Expenditures General Governmental Support Public Safety Transportation Culture and Recreation Home and Community Services Employee Benefits Debt Service (Principal and Interest) Total Expenditures Other Uses: Interfund Transfers Total Expenditures and Other Uses Excess of Revenues (Expenditures) Other Changes In Fund Equity Appropriated Fund Balance Net Increase Fund Balances, Beginning of Year Fund Balances, End of Year 80,000 123,245 5,000 5,533 1,301 70,948 64,901 310,500 355,046 185,000 179,486 5,500 85,000 128,778 1,286 1,301 70,948 64,901 144,088 5,500 52,500 52,500 553,500 592,532 145,374 339 130,403 1,301 64,901 144,088 339 738,245 310,500 355,046 185,000 179,486 5,500 5,500 52,500 52,500 553,500 592,532 145,374 339 738,245 52,500 52,500 52,500 52,500 52;500 390,944 297,854 180,000 171,244 5,500 3,904 576,444 473,002 473,002 144,088 144,088 44,556 14,607 23,000 5,476 67,556 20,083 20,083 435,500 312,461 203,000 176,720 5,500 3,904 52,500 52,500 696,500 545,585 144,088 689,673 435,500 312,461 203,000 176,720 5,500 3,904 52,500 52,500 696,500 545,585 144,088 689,673 (125,000) 42,585 (18,000) 2,766 -0- 1,596 -0- -0- (143,000) 46,947 1,286 339 48,572 125,000 18,000 143,000 -0- 42,585 -0- 2,766 -0- 1,596 -0- - 0- -0- 46,947 1,286 339 48,572 172,604 172,604 40,619 40,619 2,308 2,308 -0- -0- 215,531 215,531 -0- 6,601 222,132 $ 172,604 $ 215,189 $ 40,619 $ 43,385 $ 2,308 $ 3,904 $ -0- $ -0- $ 215,531 $ 262,478 $ 1,286 $ 6,940 $ 270,704 See Independent Auditors' Report on Additional Information -21- Frederick J. Ciaschi, C.P.A. John H. Dietershagen, C.P.A. John E. Little, C.P.A. Jerry E. Mickelson, C.P.A. Thomas K. Van Derzee, C.P.A. Debbie A. Conley, C.P.A. Reginald E. Malley, C.P.A. Ciaschi • Dietershagen • Little • Mickelson Certified Public Accountants and Consultants INDEPENDENT AUDITORS' REPORT ON SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE Supervisor and Town Board Town of Groton Groton, New York We have audited the general purpose financial statements of the Town of Groton for the year ended December 31, 1991, and have issued our report thereon dated March 19, 1992. These general purpose financial statements are the responsibility of the Town of Groton's management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards, Government Auditing Standards, issued by the Comptroller General of the United States, and the provisions of office of Management and Budget Circular A-128, "Audits of State and Local Governments". Those standards and OMB Circular A-128 require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement. An audit in accordance with these standards includes examining, on a test basis, evidence supporting the amounts and disclosures in the general purpose financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. Our audit was made for the purpose of forming an opinion on the general purpose financial statements of the Town of Groton taken as a whole. The accompanying schedule of federal financial assistance programs is presented for purposes of additional analysis and is not a required part of the general purpose financial statements. The information in that schedule has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, in our opinion, is fairly stated in all material respects in relation to the general purpose financial statements taken as a whole. March 19, 1992 Ithaca, New York CORTLAND ITHACA WATKINS GLEN 18 Tompkins Street Terrace Hill 221 N. Franklin Street Cortland, New York 13045 Ithaca, New York 14850 Watkins Glen, New York 14891 607-753-7439 607-272-4444 607-535-4443 TOWN OF GROTON SCHEDULE OF FEDERAL AWARDS FOR THE YEAR ENDED DECEMBER 31, 1991 Federal Grantor/ Pass Throuqh Grantor/ Program Title Non—Major Proqram U.S. Department of Housing and Urban Development Total Non—Major Programs Total Federal Expenditures Pass(P) Federal through CFDA # Direct(DI Money Passed Throuqh 14.219 D Program Income See Independent Auditors' Report on Schedule of Federal Financial Assistance —23— Amount of Expenditures $ 144,088 —0- 144,088 0-144,088 $ 144,088 Frederick J. Ciaschi, C.P.A. 1 John H. Dietershagen, C.P.A. John E. Little, C.P.A. Ciaschi • Dietershagen • Little • Mickelson Jerry E. Mickelson, C.P.A. Thomas K. Van Derzee, C.P.A. Certified Public Accountants and Consultants Debbie A. Conley, C.P.A. Reginald E. Malley, C.P.A. INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH LAWS AND REGULATIONS BASED ON AN AUDIT OF THE GENERAL PURPOSE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS S oervisor and Town Board Town of Groton Groton, New York We have audited the general purpose financial statements of the Town of Groton for the year ended December 31, 1991, and have issued our report thereon dated March 19, 1992. We conducted our audit in accordance with generally accepted auditing standards, Government Auditing Standards, issued by the Comptroller General of the United States, and the provisions of Office of Management and Budget Circular A-128, "Audits of State and Local Governments". Those standards and OMB Circular A-128 require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement. Compliance with laws, regulations, contracts, and grants applicable -o the Town of Groton is the responsibility of the management. As part of obtaining reasonable assurance about whether the general purpose financial statements are free of material misstatement, we performed tests of the Town of Groton's compliance with certain provisions of laws, regulations, contracts; and grants. However, our objective was not to provide an opinion on overall compliance with such provisions. The results of our tests indicate that, with respect to the items tested, the Town of Groton complied, in all material respects, with provisions referred to in the preceding paragraph. With respect to items not tested, nothing came to our attention that caused us to believe that the Town of Groton had not complied, in all material respects, with those provisions. However, we noted certain immaterial instances of noncompliance as described in the attached schedule. This report is intended for the information of the Supervisor and Town Board, management, and the Department of Housing and Urban Development. This restriction is not intended to limit the distribution of this report, which is a matter of public record. March 19, 1992 V Ithaca, New York t ICORTLAND - 24 - ITHACA WATKINS GLEN 18 Tompkins Street Terrace Hill 221 N. Franklin Street Cortland, New York 13045 Ithaca, New York 14850 Watkins Glen, New York 14891 607-753-7439 607-272-4444 607-535-4443 TOWN OF GROTON SCHEDULE OF IMMATERIAL NONCOMPLIANCE WITH LAWS AND REGULATIONS CURRENT YEAR - DECEMBER 31, 1991 REPORT FINDINGS During our audit for the year ended December 31, 1991 we noted the following immaterial instances of noncompliance: Competitive Biddinq Condition: During the course of our audit we noted that the Town had purchased a used piece of equipment, from a dealer, without competitively bidding the purchase. All purchase contracts for goods having a purchase price greater than $5,000 must have been competitively bid during calendar year 1991. Recommendation: We recommend that the Town adopt a purchasing policy clearly delineating dollar limits at which competitive bidding and other purchasing procedures must be followed. Ambulance Contract Condition: The Town contracted with the Village of Groton and the Village of Groton Fire Department to provide emergency ambulance service for all of the residents of the Town who reside outside of the Village limits. Although the Town outside the Village is comprised of the McLean Fire District and the Groton Fire Protection District, the Town budgeted and raised taxes to pay for this emergency ambulance service on a part -town basis. Pursuant to Section 184 of the Town Law, the Town may contract for emergency ambulance service within a fire protection district and may assess and levy taxes upon the taxable property within the district. There is no authority for the Town to contract for such service within the boundaries of a fire district. Such a contract should be made by the Commissioners of the McLean Fire District with the Village of Groton Fire Department. Recommendation: We recommend that the Town advise the McLean Fire District Commissioners of the need for the fire commissioners to enter into an agreement to provide emergency ambulance service within the district rather than the Town. - 25 - Frederick J. Ciaschi, C.P.A. John H. Dietershagen, C.P.A. John E. Little, C.P.A. Ciaschi • Dietershagen • Little • Mickelson Jerry E. Mickelson, C.P.A. Thomas K. Van Derzee, C.P.A. Certified Public Accountants and Consultants Debbie A. Conley, C.P.A. Reginald E. Malley, C.P.A. INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL STRUCTURE USED IN ADMINISTERING FEDERAL FINANCIAL ASSISTANCE PROGRAMS, Supervisor and Town Board Town of Groton Groton, New York We have audited the general purpose financial statements of the Town of Groton for the year ended December 31, 1991, and have issued our report thereon dated March 19, 1992. We conducted our audit in accordance with generally accepted auditing standards, Government Auditing Standards, issued by the Comptroller General of the United States, and the provisions of Office of Management and Budget Circular A-128, "Audits of State and Local Governments". Those standards and OMB Circular A-128 require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement. In planning and performing our audit for the year ended December 31, 1991, we considered the Town of Groton's internal control structure in order to determine our auditing procedures for the purpose of expressing our opinions on the Town of Groton's general purpose financial statements and not to provide assurance on the internal control structure. This report addresses our consideration of internal control structure policies and procedures relevant to compliance with requirements applicable to federal financial assistance programs. We have addressed policies and procedures relevant to our audit of the general purpose financial statements in a separate report dated March 19, 1992. The management of the Town of Groton is responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of internal control structure policies and procedures. The objectives of an internal control structure are to provide management with reasonable, but not absolute, assurance that assets are safeguarded from loss, from unauthorized use or disposition, that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of general purpose financial statements in accordance with generally accepted accounting principles, and that the federal financial assistance programs are managed in compliance with applicable laws and regulations. Because of inherent limitations in any internal control structure, errors, irregularities, or instances of noncompliance may nevertheless occur and not be detected. Also, projection of any evaluation of the structure to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate. I - 26 - CORTLAND ITHACA WATKINS GLEN 18 Tompkins Street Terrace Hill 221 N. Franklin Street Cortland, New York 13045 Ithaca, New York 14850 Watkins Glen, New York 14891 607-753-7439 607-272-4444 607-535-4443 For the purpose of this report, we have classified the significant internal control structure policies and procedures used in administering its federal financial assistance program in the following categories: CYCLES OF THE TOWN'S ACTIVITY Treasury or financing Revenue/receipts Purchases/disbursements External financial reporting Payroll ADMINISTRATIVE AND ACCOUNTING CONTROLS General Requirements: 1. Political Activity 2. Davis -Bacon Act 3. Civil Rights 4. Cash Management 5. Relocation Assistance and Real Property Acquisition 6. Federal Financial Reports 7. Allowable Costs/Cost Principles 8. Drug Free Workplace Act 9. Administrative Requirements Specific Requirements: 1. Types of Services Allowed or Unallowed 2. Eligibility 3. Matching, Level of Effort, or Earmarking 4. Special Tests and Provisions For all of the internal control structure categories listed above, we obtained an understanding of the design of relevant policies and procedures and determined whether they have been placed in operation, and we assessed control risk. During the year ended December 31, 1991, the Town of Groton had no major programs and expended 100% of its total federal financial assistance under the following nonmajor federal financial assistance program: Grant # Name B -90 -DH -36-0248 Community Development Block Grant We performed tests of controls, as required by OMB Circular A-128, to evaluate the effectiveness of the design and operation of internal control structure policies and procedures that we considered relevant to preventing or detecting material noncompliance with specific requirements, general requirements, and requirements governing claims for advances and reimbursements and amounts claimed or used for matching that are applicable to the aforementioned nonmajor program. Our procedures were less in scope than would be necessary to render an opinion on these internal control structure policies and procedures. Accordingly, we do not express such an opinion. Our consideration of the internal control structure would not necessarily disclose all matters in the internal control structure that might be material weaknesses under standards established by the American Institute of Certified Public Accountants. A material weakness is a reportable condition in which the design or operation of one or more of the internal control structure elements does not reduce to a relatively low level the risk that noncompliance with laws and regulations that would be material to a federal financial assistance program may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control structure and its operation that we consider to be a material weakness as defined above. - 27 - This report is intended for the use of management, the Supervisor and Town Board, and the Department of Housing and Urban Development. This restriction is not intended to limit the distribution of this report, which upon acceptance by the Town of Groton, is a matter of public record. t r f March 19, 1992 Ithaca, New York 28 - Frederick J. Ciaschi, C.P.A. John H. Dietershagen, C.P.A. John E. Little, C.P.A. Jerry E. Mickelson, C.P.A. Thomas K. Van Derzee, C.P.A. Debbie A. Conley, C.P.A. Reginald E. Malley, C.P.A. Ciaschi • Dietershagen • Little • Mickelson Certified Public Accountants and Consultants INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH THE GENERAL REQUIREMENTS APPLICABLE TO FEDERAL FINANCIAL ASSISTANCE PROGRAMS, Supervisor and Town Board Town of Groton Groton, New York We have applied procedures to test the Town of Groton' s compliance with the following requirements applicable to its federal financial assistance program, which are identified in the schedule of federal financial assistance, for the year ended December 31, 1991: 1. Political Activity 2. Davis -Bacon Act 3. Civil Rights 4. Cash Management 5. Relocation Assistance and Real Property Acquisition 6. Federal Financial Reports 7. Allowable Costs/Cost Principles 8. Drug Free Workplace Act 9. Administrative Requirements Our procedures were limited to those set forth in the Office of Management and Budget's "Compliance Supplement for Single Audits of State and Local Governments". Our procedures were substantially less in scope than an audit, the objective of which is the expression of an opinion on the Town of Groton's compliance with the requirements listed in the preceding paragraph. Accordingly, we do not express such an opinion. With respect to the items tested, the results of those procedures disclosed no material instances of noncompliance with the requirements listed in the first paragraph of this report. With respect to items not tested, nothing came to our attention that caused us to believe that the Town of Groton had not complied, in all material respects, with those requirements. However, the results of our procedures disclosed immaterial instances of noncompliance with those requirements, which are described in the accompanying schedule of findings and questioned costs. This report is intended for the information of the Town Board, management, and the Department of Housing and Urban Development. This restriction is not intended to limit the distribution of this report, which is a matter of public record. March 19, 1992 Ithaca, New York ICORTLAND % r klm�&66-pi " 40 ak414'- k I I a, . -, 29 _ ITHACA WATKINS GLEN 18 Tompkins Street Terrace Hill 221 N. Franklin Street Cortland, New York 13045 Ithaca, New York 14850 Watkins Glen, New York 14891 607-753-7439 607-272-4444 607-535-4443 TOWN OF GROTON SCHEDULE OF FINDINGS AND QUESTIONED COSTS GENERAL REQUIREMENTS DECEMBER 31, 1991 Community Development Block Grant -#B -90 -DH -36-0248 Condition: The Town had not adopted a policy nor implemented the provisions of the Drug -Free Workplace Act. Criteria: The Town of Groton must comply with Circular A-128 general compliance requirements. The Drug Free Workplace requirement requires adoption of a formal policy by the Town to implement the provisions of the Drug Free Workplace Act. Effect: As a result of non-compliance, the Town is unaware of any potential employee non- compliance with federal workplace guidelines for non -usage of drugs. - 30 - Questioned Grantor Aaencv/Program Findings of Noncompliance Costs Community Development Block Grant -#B -90 -DH -36-0248 Condition: We found no evidence that the Town of Groton had adopted a Civil Rights policy. Criteria: The Town of Groton must comply with Circular A-128 general compliance requirements. The Civil Rights compliance requirement requires adoption of a formal policy of non- discrimination by the Town. Effect: As a result of non-compliance, the Town is not able to ascertain if the federal funds it has received have been expended in a non- discriminatory manner. Cause: The condition exists because the Town was not specifically informed as to the requirement and was therefore unaware of the need to formally adopt such a policy. Recommendation: We recommend that the Town adopt a formal policy on non-discrimination in conformity with the general compliance requirement of Circular A-128. Undeterminable Community Development Block Grant -#B -90 -DH -36-0248 Condition: The Town had not adopted a policy nor implemented the provisions of the Drug -Free Workplace Act. Criteria: The Town of Groton must comply with Circular A-128 general compliance requirements. The Drug Free Workplace requirement requires adoption of a formal policy by the Town to implement the provisions of the Drug Free Workplace Act. Effect: As a result of non-compliance, the Town is unaware of any potential employee non- compliance with federal workplace guidelines for non -usage of drugs. - 30 - TOWN OF GROTON SCHEDULE OF FINDINGS AND QUESTIONED COSTS GENERAL REQUIREMENTS (CONTINUED) DECEMBER 31, 1991 Grantor Agencv/Program Findings of Noncompliance Cause: The condition exists because the Town was not specifically informed as to the requirement and was therefore unaware of the need to formally adopt and implement such a policy. Recommendation: We recommend that the Town adopt and implement the provisions of the Drug Free Workplace Act in conformity with the general compliance requirement of Circular A-128. - 31 - Questioned Costs Undeterminable Frederick J. Ciaschi, C.P.A. I John H. Dietershagen, C.P.A. John E. Little, C.P.A. Ciaschi • Dietershagen • Little • Mickelson Jerry E. Mickelson, C.P.A. Thomas K. Van Derzee, C.P.A. Certified Public Accountants and Consultants Debbie A. Conley, C.P.A. Reginald E. Malley, C.P.A. INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO NONMAJOR FEDERAL FINANCIAL ASSISTANCE PROGRAM TRANSACTIONS, Supervisor and Town Board Town of Groton Groton, New York In connection with our audit of the 1991 general purpose financial statements of the Town of Groton, and with our study and evaluation of the Town of Groton's internal control systems used to administer its federal financial assistance program, as required by Office of Management and Budget Circular A-128, "Audits of State and Local Governments," we selected certain transactions applicable to its nonmajor federal financial assistance programs for the year ended December 31, 1991. As required by OMB Circular A-128, we have performed auditing procedures to test compliance with the requirements governing types of services allowed or unallowed; special reporting requirements; and special tests and provisions that are applicable to those transactions. Our procedures were substantially less in scope than an audit, the objective of which is the expression of an opinion on the Town of Groton's compliance with these requirements. Accordingly, we do not express such an opinion. With respect to the items tested, the results of those procedures disclosed no material instances of noncompliance with the requirements listed in the preceding paragraph. With respect to items not tested, nothing came to our attention that caused us to believe that the Town of Groton had not complied, in all material respects, with those requirements. This report is intended for the information of the Supervisor and Town Board, management, and the Department of Housing and Urban Development. This restriction is not intended to limit the distribution of this report, which is a matter of public record. n n�' March 1.9, 1992 � Ithaca, New York CORTLAND - 32 - ITHACA WATKINS GLEN 18 Tompkins Street Terrace Hill 221 N. Franklin Street Cortland, New York 13045 Ithaca, New York 14850 Watkins Glen, New York 14891 607-753-7439 607-272-4444 607-535-4443