The URL can be used to link to this page

Home My WebLink About1994 Town AuditI I I I I I 11 I I I I I I I I I I I I TOWN OF GROTON Groton, New York Financical Report Decembeir 31, 1994 TOWN OF GkOTON TABLE OF CONTENTS Independent Auditors' 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 Notesto Financial Statements ................................................ 6-16 Independent Auditors' Report on Additional Information ....................... 1; Combining Balance Sheet - General Fund ...................................... J-8 Combining Statement of Revenues, Expenditures and Charges in :Fund Balance - General Fund............................................................. Combining Balance Sheet - Special Revenue Funds .............................. 20 Combining Statement of Revenues, Expenditures and Changes in Fland Balances 21 - Special Revenue Funds ..................................................... Independent Auditors' Report on Internal Control Structure Related Matters Noted in a Financial Statement Audit Conducted in Accordance with Government Auditing Standards .......................... _.... . 22-24 Independent Auditors' Report on Compliance with Laws and. Regulations Based on an Audit of the General Purpose_ Financial Statements Perfcrmed Standards 25 in Accordance with Government Auditing ..........................— 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 Conley Jordan, C.P.A. Dennis G. Jones, C.P.A. Supervisor and Town Board Town of Groton Groton, New York Ciaschi • Dietershagen • Little • Mickelson, LLP Certified Public Accountants and Consultants INDEPENDENT AUDITORS' REPORT We have audited the accompanying general purpose financial statements of the Town of Groton, as of December 31, 1994 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 standard; and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards 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, 1994, and the results of its operations for the year then ended, in conformity with generally accepted accounting principles. March 10, 1995 Ithaca, New York CORTLAND ITHACA WATKINS GLEN 18 Tompkins Street Suite 103, 118 Prospect Street 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 M TOWN OF G ROTON COMBINED BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUPS DECEMBER 31, 1994 Fiduciary Governmental Fund Types Fund Types Account Groups Special Capital Trust & General Long—Term ASSETS General Revenue Projects Agency Fixed Assets Debt Unrestricted Cash $ Restricted Cash Investments Due From Other Funds Due From State and Federal Governments Due From Other Governments Prepaid Expenses Other Receivables, Net Inventories Restricted Assets Fixed Assets Deferred Expenditures Provision to be Made in Future Budgets Total Assets $ LIABILITIES, DEFERRED REVENUES & FUND EQUITY Liabilities Accounts Payable $ Accrued Liabilities Notes Payable Tax Anticipation Notes Revenue Anticipation Notes Budget Notes Bond Anticipation Notes Capital Notes Bonds Payable Due to Other Funds Due to Other Governments Due to Employees' Retirement System Installment Purchase Debt Judgments and Claims Payable Compensated Absences Agency Liabilities Retainage Payable Overpayments Deferred Revenues Total Liabilities and Deferred Revenues Carried Forward 5,567 $ 157,315 $ 36,374 $ 1,048 $ $ 221,213 7,666 36,980 391 18,557 126,961 245,728 $ 291,942 $ 73,354 $ 5,739 $ 8,358 $ 1,465 8,366 126,961 7,2C%4 143,685 See Independent Auditors' Retort and Acccmpanying Notes _2— Q 1,872,175 10,599 11048 $ 10872,175 $ 10,599 1,048 1,048 10,599 10.599 mm M=�= r� r� r� M r� = M� Total Liabilities and Deferred Revenues Brought Forward $ EQUITY Equity Investment in General Fixed Assets 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 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 9 TOWN OF GROTON COMBINED BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUPS DECEMBER 31. 1994 Governmental Fund Types Special Capital General Revenue Projects 7,204 $ 143,685 $ 7,947 7,666 36,980 859 18,557 27,363 7,666 36,980 Fiduciary Fund Types Account Groups Trust & General Long—Term Agency Fixed Assets Debt $ 1,048 $ $ 10,599 1,872,175 2.09,630 115,774 1 ,531 24,817 36,374 211,161 140,591 36,374 238,524 148,257 73 -1 r;,1 / V v la Y 238,524 148,257 73,354 1,872,175 245,728 $ 291,942 $ 73,3`;4 $ 1 ,048 $ 1,872,175 $ See Independent Auditors' Report and Ac, companying Notes —3-- 10,599 TOWN OF GROTON COMBINED STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE FOR THE YEAR ENDED DECEMBER 31, 1994 Governmental Fund Types Special Capital Revenues General Revenue Projects Real Property Taxes $ 172,125 $ 377,100 $ Real Property Tax Items 4,467 Nonproperty Tax items 1,060 Departmental Income 3,386 Home and Community Services Intel -governmental Charges 5,619 Use of Money and Property 9,948 91,771 1,571 Licenses and Permits 8,507 Fines and Forfeitures 5,632 23,920 Sale of Propertj and Compensation for Loss 58,924 1:',1159 Miscellaneous Local Sources 2,869 Interfund Revenues State Sources 55,860 59,803 Federal Sources 2,628 Total Revenues 328,397 553,361 25,491 Other Sources Interfund Transfers 10,000 Retirement System Credits 1,494 Proceeds of Obligations_. - Total Revenues and Other Sources 329,891 553,361 35,491 Expenditures General Governmental Support 251,816 Public Safety 11,580 58,000 Public Health 51,050 Transportation 36,507 522,9(3) 1 Economic Assistance and Opportunity 10,346 Culture and Recreation 13,877 Home and Community Services 31,788 Employee Benefits 34,711 43,229 Debt Se+vice (Principal and Interest) Total Expenditures 441,675 624,190 Other Uses Interfund Transfers 10,000 Total Expenditures and Other Uses 451,675 624,190 Excess of (Expenditures) Revenues (121,784) (70,829) 35,491 Fund Balance, Beginning of Year 360,308 219,086 37,863 Fund Balance, End Of Year $ 238,524 $ 1481257 $ 73,354 See Independent Auditors' Report and Accompanying Notes -4- Revenues Real Property Taxes $ Real Property Tax Items Nonproperty Tax Items Departmental Income Intergovernmental Charges Use of Money and Property Licenses and Permits Fines and Forfeitures Sale of Property and Compensation for Loss Miscellaneous Local Sources Interfund Revenuos 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 (Expenditures) Revenues Appropriated Fund Balance Net (Decrease) $ Net change In unbudgeted Special Revenue Funds Fund Balance, Beginning of Year Fund Balance, End of Year TOWN OF GROTON COMPARATIVE OPERATING STATEMENT FOR THE GENERAL AND SPECIAL REVENUE FUNDS FOR THE YEAR ENDED DECEMBER 31, 1994 Governmental Fund Types General Fund Special Revenue Variance Variance Modified Budd Actual Encumbrances Fay.-Unfay. Modified Budget Actual Encumbrances Fay.-Unfay. 172,125 $ 172,125 $ $ -0- $ 377,100 $ 377,100 $ $ -0- 4,136 4,467 331 900 1,060 160 3,700 3,386 (314) 5,550 5,619 69 15,000 9,948 (5,052) 91,000 91,544 544 6,500 8,507 2,007 3,300 5,632 2,332 58,891 58,924 33 10,844 12,059 1,215 50 2,869 2,819 41,413 55,860 14,447 66,400 69,803 3,403 311,565 328,397 16,832 545,344 550,506 5,162 1,494 1,494 311,565 329,891 18,326 545,344 550,506 5,162 325,271 251,816 7,947 65,508 4,537 4,537 14,560 11,580 2,980 58,000 58,000 -0- 51,200 51,050 150 36,892 36,507 385 601,237 522,961 78,276 11,100 10,346 754 20,840 13,877 6,963 43,952 31,788 12,164 55,750 34,711 21,039 62,650 43,229 19,421 559,565 441,675 7,947 109,943 726,424 624,190 102,234 10,000 10,000 -0- 10,000 10,000 569,565 451,675 7,947 '109,943 736,424 624,190 112,234 (258,000) (121,784) (7,947) 128,269 (191,080) (73,684) 117,396 258,000 (258,000) (191 ,080) 191,080 -0- (121,784) Q (7,94 7) $ (129,731) $ -0-- (73,684) $ $ 73,684 2,855 360,308 219,086 $ 238,524 $ 148,257 See Independent Audltors' Report and Acccrnpanying Notes -- 5 -- LI LJ TOWN OF GROTON NOTES TO FINANCIAL, S'iATEMENTS DECEMBER 31, 1994 Note 1 - Summary of Signif icant Acceuntinq Policies The general purpose 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 repor_-ing 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: fire protection, highways and streets, recreation, public improvements, planning and zoning, and general administration. All governmental activities and functions performed JE r the Town of Groton are its direct responsibility. No other governmental organizations have been included or excluded frorn the reporting entLty. The financial reporting entity consists of (a) the prima -y government which is the Town of Groton (b) organizations for which the primary government is financially accountable, and (c) other organizations for which the nature and significance of thei]_ relationship with the primary government are such that exclasicn would cause the reporting entity's general purpose financial statements to be misleading or incomplete as sct fc,rth La GASB Statement 14. The decision to include a potential component unit in the Town's reporting entity is based on several criteria set forth in GASB 14 including legal standing, fiscal dependence, and financial accountability. Based on the application of these criteria, no other organizations have been included or excluded from the reporting ent- ity . 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 atta ; ning 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: - 6 - 11 1 1 fl 1 1 1 TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER ji, 1994 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: 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 yproce�:ds- cf specific revenue sourcE�s that are legally restricted to expenditure for specified purposes. The fcllowing 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 Tor 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 highwa1r 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 acccunt 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. - 7 - TOWN N OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER �1, 1994- 2. .9942. 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. General Long -Term Debt Account Group - used to account Eor 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. Bas -Ls of acccurting 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. - g - Material revenues that are accrued include real propE!rty 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 i nventcry-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-H) 4. Pension costs are recognized as an expenditure when billed by the state. (See Note 3-B-1) Account Groups - General fixed assets are recorded at actual cost or at the estimated cost or, in the: case. of gifts and contributions, 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 prncipal amount. No liability is recorded for interest payable to maturity. - g - TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1994 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 April 1. E. Budgetary Data Budgets are adopted annually on a basis consistent with generally accepted accounting principles for the general fund, highway fund, and the special districts. Appropriations authorized for the current year are increased by the amount of encumbrances carried forward from the prior year. Encumbrances are not considered a disbursement in the financial pian or an expenditure in the GAAP based general purpose financial statements, but reserve a portion of the applicable appropriation, thereby ensuring that the appropriations are not exceeded. 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. 1.. Budget Policies - The budget policies are as follows: a. No 1 ater than October S. a tentative budget is s;ibmj_tted 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. d. Appropriations lapse at year end. 2. Encumbrances Encumbrance accounting, under which purchase orders, c-ontracts and other commitments for the expenditure of monies are recorded for budgetary control purposes tc 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 whi-ch the liability is incurred. 3. Budget Basis of Accounting Budgets are adopted annually on a basis consistent with generally accepted accounting principles for the general fund, highway fund, and the special districts. Appropriations authorized for the current year are increased by the amount of encumbrances carried forward from the prior year. Encumbrances are not considered a disbursement in the financial pian or an expenditure in the GAAP based general purpose financial statements, but reserve a portion of the applicable appropriation, thereby ensuring that the appropriations are not exceeded. 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. 1 1 1 TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1994 Corsequent�'y, the budgets for this fund have been excluded from 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. Total Special .,61 $ 190 $ 148, 257 $ � ,� 624 Revenue Funds $,.. 2..Z.9...C86 5.5.3. �, .... �_..,..,., _�. F. Changes in Accounting Policies During the 1994 fiscal year, the Town adopted the follcnwing changes in accounting policies. 1. The Town Board changed the fixed asset capitalization policy. The Board raised the minimum limit from $100 to $1.50. G. Property, Plant and Equipment - General Fixed assets purchased for general governmental purpo-ses are recorded as expenditures in the governmental fundal and are capitalized at cost in the General Fixed Asset Account Group. Contributed fixed assets are recorded at fair market va=_ue at the date received. Fixed assets consisting of certain infrastructure type improvements other than buildings, including roads, bridges, c1sr�s and gutters, streets and sidewalks, drainage and lighting systems, have riot. 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 satisfLed without recording these assets. No depreciat ion has been provided on general fixed assets, nor has interest on general fied assets construction in progress been capitalized. H. Vacation and Sick Leave arid Compensated Absences Town of Groton employees are granted vacat-on 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. Fund Balance Expendi- Fund Balance Beq. of Year Revenues tures End of Year. Total for Funds Included in Budget Comparison $ 198,951 $ 550,506 $ 624,190 $ 125,257 Funds not Included in Budget Comparison Special Grant 12,706 2,628 -0-- 151334 Risk Retention 7,439 227 -0- 7.666 Total Special .,61 $ 190 $ 148, 257 $ � ,� 624 Revenue Funds $,.. 2..Z.9...C86 5.5.3. �, .... �_..,..,., _�. F. Changes in Accounting Policies During the 1994 fiscal year, the Town adopted the follcnwing changes in accounting policies. 1. The Town Board changed the fixed asset capitalization policy. The Board raised the minimum limit from $100 to $1.50. G. Property, Plant and Equipment - General Fixed assets purchased for general governmental purpo-ses are recorded as expenditures in the governmental fundal and are capitalized at cost in the General Fixed Asset Account Group. Contributed fixed assets are recorded at fair market va=_ue at the date received. Fixed assets consisting of certain infrastructure type improvements other than buildings, including roads, bridges, c1sr�s and gutters, streets and sidewalks, drainage and lighting systems, have riot. 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 satisfLed without recording these assets. No depreciat ion has been provided on general fixed assets, nor has interest on general fied assets construction in progress been capitalized. H. Vacation and Sick Leave arid Compensated Absences Town of Groton employees are granted vacat-on 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. P� TOWN OF GRO)TO ;; NOTES TO FINANCIA.a STA�iE ,�: 3. Other Receivables Other receivables at December 31, 1994 consisted of the following, which are stated at riet realizable value. 'rhe Town has deemed the amounts to be fully collectible. Fund Description Amount Special Grant Rehab, ? iLation Loans $ 126,961- B. 26,961B. Liabilities 1. Pension Pians General Information The Town of Groton part i ripates in the New York State and Local Employees' Retirement System (ERS). This 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 Sta}e Retirement and Social Security Law (NYSRSSL). The State Comptroller is sole trustee and administrative head of the System. On March 31, 1994, there were approximately 2,700 participating government employers. Employees of the Town of Groton constituted less than 1% of the members of the System during the 1993-94 fiscal year. The System offers a wide range of Flans 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 - 7N OF G_?C>`7N NOTES TO F z'� A 3�::T �.? STAT7MEN`i'S (CONTINUED) DECEMBc,R _311, 1994 Deposits and investments are categorized as either (1) insured and for which the securities are held by the Town's agent in the Town's name, (2) uninsured and for which the securities are held by the financial institu'Lon's trust department in the Town's name, (3) uninsured and for which the securities are held by the financial institution or it's trust department but not in the Town's name, or (4) uni,4sured and �.�ncol lateralized . Total financial institution (bank) balances at December 31, 1994, per the bank were $472,369. These deposits are categorized as follows: Carrying 1 2 3 4 Value $ 472,369 Y $ $ $ 466,163 2. Changes in Fixed Assets A surmmary of changes in general fixed assets is as follows.- ollows:Balance BalanceB :s_a11.ce Type JC-Inuary 1, Addit;ons Deletions December 31, Land $ 83,003 $ $ $ 83,00 Buildings 669,089 669,089 Machinery and Equipment 1,074,256 45;827 ,,120,083 Total :-1,826,348 $ 45,827Z, ,ri _87? 175 3. Other Receivables Other receivables at December 31, 1994 consisted of the following, which are stated at riet realizable value. 'rhe Town has deemed the amounts to be fully collectible. Fund Description Amount Special Grant Rehab, ? iLation Loans $ 126,961- B. 26,961B. Liabilities 1. Pension Pians General Information The Town of Groton part i ripates in the New York State and Local Employees' Retirement System (ERS). This 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 Sta}e Retirement and Social Security Law (NYSRSSL). The State Comptroller is sole trustee and administrative head of the System. On March 31, 1994, there were approximately 2,700 participating government employers. Employees of the Town of Groton constituted less than 1% of the members of the System during the 1993-94 fiscal year. The System offers a wide range of Flans 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 - In 1989 and subsequent years, the System's billings have been based on Chapter 6' of the Laws of 1989 of the State of Ne,.,: Fork. This legislation requires participating employers to begin making payments on a current basis, while amortizing existing unpaid amounts relating to the System's fisca? years ended. March 31., 1988 and 1989 (which otherwise were to have been paid on June 30, 1989 and 1990, respectively) cyver a. 17 year period, with an 8. i-E�% i _nterest factor added. Local governments were: given the or.t ion to prepay this liability. The Town of Groton has no l.i.abil.:_ty at December 31, 1994. 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. Effective April 1, 1990, the State Legislature amended the Retirement and Social Security Law and mandated a change to a different actuarial funding method for the New York State and Local Employees Retirement System ( ERS) . The Sy sLem, chanced from the aggregate cost funding method to a modified projected unit credit funding method. This new method utilized a rolling amortization period for differences between actuarial assets and actuarial. accrued liabilities. As a result of the lecrislated - 13 TOWN CF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1994 Retirement benefits are established by the New York State Retirement and Social Security Law and are dependent upon the point in time at which the employees last joined the System. Contributory and noncontr ilbutory requirements also depend upon the point in time at which an employee last joined the System. Most members of ERS who joined the System on or before July 26, 1976 are enrolled in a noncontributory plan. Employees who last joined ERS subsequent to July 26, 1976 are enrolled in a contributory plan which requires a 3% contribution of their salary. Generally, members of Tiers 1, 2 and 3 may retire at age 55 and members of Tier 4 may retire ak. age 62; however, members of Tiers 2 and 3 receive a reduced benefit if they retire before age 62. Membership, benefits, and employer and employee obligations to contribute are described in the State Retirement and Social Security Law and i.n the System's annual i:eports and financial statements. Employee Groups Covered Nearly all Town of Groton employees are eligible for membership in the System. All employees employed in a full-time position who ccaurienced employment after Jur•{e 30J, 1576 are mandatory members. Payments 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 subsequent years, the System's billings have been based on Chapter 6' of the Laws of 1989 of the State of Ne,.,: Fork. This legislation requires participating employers to begin making payments on a current basis, while amortizing existing unpaid amounts relating to the System's fisca? years ended. March 31., 1988 and 1989 (which otherwise were to have been paid on June 30, 1989 and 1990, respectively) cyver a. 17 year period, with an 8. i-E�% i _nterest factor added. Local governments were: given the or.t ion to prepay this liability. The Town of Groton has no l.i.abil.:_ty at December 31, 1994. 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. Effective April 1, 1990, the State Legislature amended the Retirement and Social Security Law and mandated a change to a different actuarial funding method for the New York State and Local Employees Retirement System ( ERS) . The Sy sLem, chanced from the aggregate cost funding method to a modified projected unit credit funding method. This new method utilized a rolling amortization period for differences between actuarial assets and actuarial. accrued liabilities. As a result of the lecrislated - 13 In addition, Chapter 437 of the Laws of 1993 added Article to to the New York State Retirement and Social Law. Article 18 authorizes the granting of retroactive transfer, retroactive membership and credit for previous service in certain situations. It contains three Sections, each providing relief under different circumstances. Under Section 803, members may file application for retroactive membership before October. 24, 1996, which may entitle members to an earlier date of membership. If it is determined that members are eligible for retroactive members=hip, the employer, at the time members were first eligible for membership, must pay the employer's share of the retirement cost. The probability of claims being asserted from members applying for retroactive membership and the resultant liability are not reasonably estimated. The following represents information relating to the Town of Groton's participation in the above pension plans for the year ended December 31, 1994. - 14 - TOWN OF GROTON NOTES TO FINANCIAL STATEME14TS (CONTINUED) DECEMBER 31, 1994 changes, employer contributions were generally lower than would have been under the aggregate cost funding method. The State's change to the modified projected unit credit actuarial method has been found by a. lower court to be unconstitutional. On July 1, 1993, the Appellate Division, Third Department unanimously upheld the lower court decision, and on November 16, 1993, the Court of Appeals ruled that the Governor and the State Legislature violated Article V, Section 7 of the State Constitution when they imposed tie modified projected unit credit method. The State has restored the aggregate cost method of determining employer retirement contrinutions immediately to the ERS. Initial pension payme.—its made under the aggregate method will be made on December 15, 1994 by local governments. However, to minimize the disruption of local government budgets and the State budget, the Plan allov.s for a phase-in of the additional costs of returning to the aggregate cost method. For the first four years, Employer contributions will be capped as a percentage of payroll in ERS. The firs} year cap will be zero percent cf payroll; the cap in year two will be 1.5%; year three 3%; and year four, 4.S%. Contributions in the f if tai and subsequent years will be determined by the aggregate method wit -hoot any cap. Information on the Town of Groton' s liability under this plan was not available at the date of this report. In addition, Chapter 437 of the Laws of 1993 added Article to to the New York State Retirement and Social Law. Article 18 authorizes the granting of retroactive transfer, retroactive membership and credit for previous service in certain situations. It contains three Sections, each providing relief under different circumstances. Under Section 803, members may file application for retroactive membership before October. 24, 1996, which may entitle members to an earlier date of membership. If it is determined that members are eligible for retroactive members=hip, the employer, at the time members were first eligible for membership, must pay the employer's share of the retirement cost. The probability of claims being asserted from members applying for retroactive membership and the resultant liability are not reasonably estimated. The following represents information relating to the Town of Groton's participation in the above pension plans for the year ended December 31, 1994. - 14 - .historical trend i rlfor, mati_on showing the progress in accu-nulatincr suf f ici_ent assets to pay benefits w:.en due is presented in the Annual Financial Report of the System. Additional detailed information concern'ng the System may also be found in the Report. 2. Long -Term Debt a. The Town of Groton had the following r:oncurrent liabilities: Compensated Absences: Represents the value of earned and unused portion of the liability for accumulated sick leave. b. The following is a surii-iiary of long-term liabilities outstanding at December 31, 1994: Liability: Com.,,a,nsated Absences a 10,599 - 15 - NOTES TO F I NAINC IAL STATEM NTS (CONTINUED) DECEMSHR 31, 1994 Tota: Town payroll for all employees was $359,764. ERS Total Payroll Covered by the System a 3021207 Total Employer Contributions 561 Total Employer Contributions (Expressed as % of Covered Payroll) 0.0% Total Employee Contribution: 61932 Total Employee Contributions - (Expressed as % of Covered Payroll) 0.,02: The pension benefit obligation of Credited Projected Benefits is a standardized disclosure measure of the actuarial present value of pcnsion benefits, adjusted for the effects of projected salary increases Estimated to be payable in the future as a result of employees' service tc date. The System does not crtake separate measurements for individual employers. The System's ponsions benefit cbligati.on and net =_ssets available to pay benefits for all members of this ERS are as follows for the year ended March 31., 1994 (amounts _n b_LliOns) . ERS Total Pension Benefit Obligation -'49.88 Total Net Assets Available for Benefits 00.83 Assets in Excess (Unfunded Portion) of Pension Benefit Obligation 0.95 .historical trend i rlfor, mati_on showing the progress in accu-nulatincr suf f ici_ent assets to pay benefits w:.en due is presented in the Annual Financial Report of the System. Additional detailed information concern'ng the System may also be found in the Report. 2. Long -Term Debt a. The Town of Groton had the following r:oncurrent liabilities: Compensated Absences: Represents the value of earned and unused portion of the liability for accumulated sick leave. b. The following is a surii-iiary of long-term liabilities outstanding at December 31, 1994: Liability: Com.,,a,nsated Absences a 10,599 - 15 - TOWN OF GOT0-0f NOTES TO FINANCIAL S l'ATEMENTS (CONTINUED) DECEMBER 31, 1994 c. The following is a summary of changes in long --term liabilities for the period ended December 31, 1994: Compensated Absences Balance 1/1/94 $ 14j392 Deletions 3,793 Balance 12/31/93 $ 101599 Additions and deletions to compensated absences are shown net since it is impractical to determine these amounts separately. Note 4 -- Subsequent Evert During the 3.994 fiscal year, the Town of Groton applied for, and was granted, a $400,000 Community Development Block Grant from the U.S. Department of Housing and Urban Development. The program will. commence during the 19:'5 fiscal year.. The Town also contracted with the County of Tompkins for administration cf the grant. i 1 r�L 1 INDEPENDENT AUDITORS' REPORT ON ADDITIONAL INEORMA-"ION 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 1994 appears on page 1. That audit was made for the purpose of forming an opinion on the general purpose financial statements taken as a whale. 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 10, 1995 Ithaca, New York - 17 -- TOWN OF GROTON COMBINING BALANC,°F SHEET GENERAL FUND D EC;EIVIBER 3,41,109-4 Townwide ASSES Unrestricted Cash $ 201,955 $ Parttown 24,825 245 25,070 $ 209 $ 231 440 24,630 24,630 24,630 25,070 $ Total 226,750 X91 18,57 i r- %eAJ 5,739 1,465 7 ,204 7 a^ 85,9 18,557 27,3631 209,630 1,531 211,161 238,524 245,728 Restricted Cast - Investments Due From Other Funds Due From State and Federal Governments Due From Other Governments 146 Prepaid Expenses 18,557 Other Receivables, Net Inventories Restricted Assets Deferred Expenditures Total Assets $ 220,658 $ LIABILITIES, DEFERRED REVENUES AND FUND EOUITY Liabilities Accounts Payable $ 5,530 $ Accrued Liabilities 1,234 Notes Payable Tax Anticipation Notes Payable Revenue Anticipation Notes Payable --..---.___-- Budge: (votes Payable Bond Anticipation Notes Payable Capital Notes Payable Bonds Payable Due to Other Funds Due to Other Governments Due to Employees' Retirement Systern Other Liabilities Overpayments Deferred Revenues Total Liabilities and Deferred Revenues 6,764 FUND EQUITY Fund Balances — Reserved Reserved for Encumbrances 7,947 Reserved for Inventory and Supplies Reserved for Debt Reserved for Repairs Reserved for Unernpioyment Insurance Reserved for Workers' Comoensation Reserved for Excess Dog Control Revenues 859 Reserved for Retirement System Credits 18,557 Total Reserved Fund Balance 27,36.3 Fund Balances — Unreserved Appropriated — Ensuing Year's Budget 185,000 Unappropriated 1,531 Total Unreserved Fund Balance 186,531 Total Fund Balance 213,894 Total Liabilities, Deferred Revenues and Fund Equity $ 220,658 $ See Independent Auditors' Report on Additional Information —18- 245 25,070 $ 209 $ 231 440 24,630 24,630 24,630 25,070 $ Total 226,750 X91 18,57 i r- %eAJ 5,739 1,465 7 ,204 7 a^ 85,9 18,557 27,3631 209,630 1,531 211,161 238,524 245,728 r M i m m=== Revenues Real Property Taxes 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 arid Other Sources Expenditures General Governmental Support Public Safety Public Health Transportation Economic Assistance & 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 (Expendituras) Appropriated Fund Balance Net (Docrease) Fund Balance, Bog!nning of Yoar Fund Balance, End of Year 2.36,278 322,071 14,560 200 36,892 11,10Q 10,402 1,113 46,2130 446,278 10,000 4.36,278 (220,000) 220,G00 1,494 254,503 251,696 1 i.580 r0 36,507 10,346 4,539 3,554 30,924 349,196 10,000 359,195 k11011,693) 75 '287 2,600 51,000 10;348 39,839 9,500 113,287 113,287 (:13,000) 38,0.30 319,587 $ 213,894 9; See Indepandent Ariditors' Report and Accompanying Notes -- 19 -- 75,388 120 51,000 5,313E 28,234 3,787 92,479 92,479 (t7,001) (17,091) $ 41,721 24,630 311,565 326,271 14,560 51,200 36,892 11,100 20,840 4;3,952 55,750 559,565 10,000 569,565 (258,000) 258,000 --0- 1, 4'94 329,891 2`1,816 11,580 51,050 36,507 10,346 13,877 3 i ,7$8 34,711 441,675 10,000 451,675 (121,784) (121,784) 360,308 238,524 TOWN OF GROTON COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GENERALFUND f ECIE-MSE_R 31, 19t -P4 Tow nwide Parttown Total Modified Modified Modified Budge; Actual Budget Actual Budget Actual $ 101,988 $ 101,988 $ 70,137 $ 70,137 $ 172,125 $ 172,125 4,136 4,467 4,136 4,437 900 1,060 900 1,060 1,200 1,792 2,500 1,594 3,700 3,386 4,800 5,374 750 245 5,550 5,619 14,000 3,641 1,000 1,307 15,000 9,948 6,500 7,462 1,045 6,500 8,507 3,300 5,632 3,300 5,632 58,891 58,924 58,891 58,924 50 - -- - - -- 2,869 50 2,8G9 41,413 55,860 41,413 55,860 236,278 253,009 75,287 75,388 311,565 328,397 2.36,278 322,071 14,560 200 36,892 11,10Q 10,402 1,113 46,2130 446,278 10,000 4.36,278 (220,000) 220,G00 1,494 254,503 251,696 1 i.580 r0 36,507 10,346 4,539 3,554 30,924 349,196 10,000 359,195 k11011,693) 75 '287 2,600 51,000 10;348 39,839 9,500 113,287 113,287 (:13,000) 38,0.30 319,587 $ 213,894 9; See Indepandent Ariditors' Report and Accompanying Notes -- 19 -- 75,388 120 51,000 5,313E 28,234 3,787 92,479 92,479 (t7,001) (17,091) $ 41,721 24,630 311,565 326,271 14,560 51,200 36,892 11,100 20,840 4;3,952 55,750 559,565 10,000 569,565 (258,000) 258,000 --0- 1, 4'94 329,891 2`1,816 11,580 51,050 36,507 10,346 13,877 3 i ,7$8 34,711 441,675 10,000 451,675 (121,784) (121,784) 360,308 238,524 TOWN OF GROTON COMBINING BALANCE 31iEET SPECIAL REVENUE FUNDS DECEMBER 31, 1994 Highway Highway Lighting iiia Frotection ASSETS Townwide Parttown Distrk:t District Specia! Grant Fund Risk Retention Unrestricted Cash $ 121,682 $ 10,424 $ 9,87,`.1 $ $ 15,334 $ $ Restricted Cash 7,666 Due From Other Funds Due From State and Federal Governments Due From Other Governments Other Receivables, Not Inventories Temporary Investments Prepaid Expenditures Def=,rred Expenditures Total Assets $ LIABILITIES, DEFERRED REVENUES & FUND EQUITY Liabilities Accounts Payable $ Accrued Liabilities Notes Payable Revenue Anticipation Notes Payable Bud( Notes Payable Gond Anticipation Notcs Payable Bonds Payable Due to Other Funds Due to OtPler Goveniments Due to Employees' Retirement System Other Liabilities Overpayments Doferred Revenues Total Liabilities and Deferred Revenues FUND EQUITY Fund Balance - Reserved Reserved for Encumbrances Reserved for Inventory and Supplies Reserved for Debt Reserved for Repairs Resenied for 41lorkers' Compensation pe!-,erved for Unemployment Insurance Reserved for Insurance Reserved for Retirement Systern Credits Total Reserved Fund Balance Fund &glance - Unroservod Appropriated - Ensuing Year's Bucket Unappropriated T otal Unreserved Fund Balance Total Fund Balance Total Liabilities, Doferred Revenues & Fund Equity $ 126,961 Total 157,315 7,666 126,961 121,682 $ 10,424 $ 9,875 $ $ 142,295 $ 7,656 $ 291.9.12 7,966 $ $ 392 $ $ $ S 8,358 8,.)66 8,366 126,961 126,961 '16,332 392 126,961 143,635 7.666 7,666 7,566 7,666 105,250 10,121 115,774 - --------- 9,483 -�--------- �- 15,334 24,817 ;ii;i,3c0 10,424 9,483 15,334 140,591 105,350 13,424 9,483 15,334 7,666 148,257 121,682 $ 10,424 $ 9,875 $ $ 142,295 $ 7,666 $ 291,942 See Independent Auditors' Rf:p,rrt cr; 11 :ion ,1 !nformaticm Ravenues Real Property Taxes Real Property Tax Items Depaztrrental Income Home and Community Services Intergovernmental Charges Use of Money and Property Licenses and Parmits Finer and Forfeitures Sale of Property and Compensation for Loss Miscellaneous Local Sources !r'terf�xtd Revenues Stato Aid FadoraI Aid Total Revenues Other Sources: Inter -fund Transfers Proceeds of Obligations Total Revenues and Other Sources Expen d9t ures General Governmentai Support Pubic Safety Transportation Culture and Recreation Horne and Community Services Empioyee Benefits Debt Service (Principal and lnterest) Total Expenditures Other Uses: Interfund Transfers Total Expenditures and Other Uses Exz;ess of (Expenditures) Revenues Other Changes in Fund Equity Appropriated Fund Balance Net (Decrease) Increase Fund Balances, Beginning of Year Fund Balances, End of Year TOWN OF GROTON COMBINING' STATEMIEN T OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES SPECIAL REVENUE FUNDS FOR THE YEAR ENDED DECEMBER 31. 1994 Highway Highway Fire Protection Special Risk Townwide Parttown Lighting District District Subtotal Grant Retention Total Budget Actual Budget Actual Budget Actual _Budget Actual Budget Actual Actual Actual Actual $ 206,000 $ 206,000 $ 107,250 $ 107,250 145 5,850 $ 5,850 $ 58,000 $ 58,000 $ 377.100 $ 377,100 $ $ $ 377,100 18,000 88,792 3,000 2,463 '10,844 12,059 66,400 69,803 304,844 306,851 176,650 179,516 5,850 289 91,000 91,544 10,844 12,059 66,400 69,803 6,139 58,000 58,000 545,344 550,506 227 91,771 12,059 69,803 2,628 2,628 2,628 227 553,361 304,844 306,851 176,650 179,516 5,850 6,139 58,000 58,000 545,344 550,506 2,628 227 553,361 4,537 4,537 58,000 Se"000 58,00U 58,000 58,000 4.05,387 329,588 190,000 188,870 5,850 4,503 601,237 522,961 -- _ 522,961 46,000 32,993 16,650 10,236 62,650 43,229 43,229 455,924 362,581 206,650 19 9, 106 5,850 4,5C33 58,000 58,000 726,424 624,190 624,190 10,000 10,000 465,924 362,581 206,650 199,106 5,850 4,503 58000 58,000 736,424 624,190 624,190 (161,080 (55,730) (30,000) (19,590) -0- 1;636 --0- -0- (191,080) (73,684) 2,628 227 (70,82-9) 161,080 30,000 191,080 $ -0- (55,730) $ -0- (19,590) $ -0- 1,636 $ -0- -0- $ -0- (73,684) 2,629 227 (70,829) 161,080 30,014 7,847 -0- 198,941 12,705 7,439 219,086 $ 105,350 $ 1.^.,42 : w 9 483 ,�► --0- $ 125 2 7 $ 15,334 $ 7,666 $ 148,257 See Indepanderi t Auditors' Report on Additional Information -21 - Frederick J. Ciaschi, C.P.A. John H. Dietershagen, C.P.A. John E. Little, C.P.A. Ciaschi • Dietershagen a Little • Mickelson, LLP Jerry E. Mickelson, C.P.A. Certified Public Accountants and Consultants Thomas K. Van Derzee, C.P.A. Debbie Conley Jordan, C.P.A. Dennis G. Jones, C.P.A. In planning and performing our audit of the general purpose financial statements of the Town of Groton for the year ended December 31, 1994, we considered its internal control structure in order to determine our auditing procedures for the purpose of expressing our opinion on the general purpose f ina.ncial statements and not to provide assurance on the internal control structure. 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 provides management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and 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. Because of inherent limitations in any internal control structure, errors or irregularities 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. _ 22 -- INDEPENDENT .AUDITORS' REPORT ON INTERNAL CONTROL STRUCTURE CORTLAND ITHACA RELATED MATTERS NOTED IN A FINANCIAL STATEMENT AUDIT 18 Tompkins Street Cortland, New York 13045 CONDUCTED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS 221 N. Franklin Street Supervisor and Town Board Ithaca, New York 14850 607-272-4444 Watkins Glen, New York 14891 Town of Groton Groton, New York We have audited the general purpose financial statement_ of the Town of Groton for the year ended December 31, 1994, and have issued our report thereon dated March 10, 1995. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the obtain reasonable assurance about whether the audit to general purpose financial statements are free of material misstatement. In planning and performing our audit of the general purpose financial statements of the Town of Groton for the year ended December 31, 1994, we considered its internal control structure in order to determine our auditing procedures for the purpose of expressing our opinion on the general purpose f ina.ncial statements and not to provide assurance on the internal control structure. 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 provides management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and 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. Because of inherent limitations in any internal control structure, errors or irregularities 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. _ 22 -- CORTLAND ITHACA WATKINS GLEN 18 Tompkins Street Cortland, New York 13045 Suite 103, 118 Prospect Street 221 N. Franklin Street 607-753-7439 Ithaca, New York 14850 607-272-4444 Watkins Glen, New York 14891 607-535-4443 For the purpose of this report, we have cla:ssi¢ied the, significant internal control structure policies and procedures in the following categories: CYCLES OF r"Hc. TOWN'S AL°I'TlJITY Treasury or financing Revenue/receipts Purchases/disbursements External financial report nq PaX'ro I For all of the control categories listed above, we obtained an understanding of the design of relevantpolicies and procedures and w°hethsr they have been placed in operation, and we assessed control risk. We noted certain matters involving the internal cc:;r,:rol stru ,.tune and its operation that .ie considered to be reportable conditions under standards esta li_sh.ed by the American Institute of Certifi.cd Public Accountants. Reportable conditions involve matters corning to our attention relating to significant-- deficiencies in the design or operation of the internal control structure, that, in our judgment, could adversely affect the d'own's ability to record, process, summarize, and report financial data consistent with the assertions of management in the general purpose financial statemer�' Cu rr e.n4C. Year Deficit Unreserved, Unappropriated Fund Balance Find na: We noted in our.r for year audit that the Highway Townwi.de unappropriated fund P �' balance was in a deficit position. We noted in the cLlr. ent year ghat this fund was again in the same position. We also noted t -hat tile Gen�_=!ral Fund -- Town Outside Village and Highway Parttown were in similar positions. The Town had a.ppropriaLed, for the ensuing year's budget, an amount- in excess of funds a %,arlable. Recommenclat ion : We recommend that the board carefully monitor all Finan^.ial activity to properly reflect accurate fund balances within their budgeting process. Fund balances should be projected to year-end during the bud�.iet process andtier. decisions can be made based on this planning. If current t. -ends continue-, the Town Mould have deficit fund balances in total and could create wild f luctuat itin7 iA the tax levy to make up the deficits. It should be noted that _subsequent to the date of this report, the Towns Board amended the 19.95 budget. and reduced the :amount of the appropriated fund balance to eliminate the deficit. A material weakness is a reportable condition in w1-1ich the design or operation of one or more of the specific internal control structure elements does not reduce to a relatively low level the risk that Errors or irrcgu.larities in amounts that would be material in relation: tcc, the general purpose financial statements being audited may occur and not bta detected within a timely period by employees in the normal course of performing their- assigned functions. Our consideration of the internal control :structure would not necessarily disclose all matters in the internal control structure that might be reportable conditions, and accordingly, would not necessarily disclose ail reportable conditions that are also considered to be material weaknesses as defined above. However, we believe that the reportable condition described above is not a material weakness. We also noted other matters involving the internal control structure and its operation that we have reported to the management of the Town of Groton in a separate letter dated March 10, 1995, - 23 - This report i:I intended for the info �-maticln of the Superviso - arld Tcv:n Board, management, and New York State. This rE:7--.r.iLction is not intended to liinit the distribution of this report, which is a rnatt�--!r of public .record. /r� March 1.0, 1995 � thac:a, New York I - 24 - 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 Conley Jordan, C.P.A. Dennis G. Jones, C.P.A. Ciaschi • Dietershagen • Little • Mickelson, LLP Certified Public Accountants and Consultants INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH LAWS AND REGULATIONS BASED ON AN AUDIT OF THE GENERAL PURPOSE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUD:�TING STANDARDS Supervisor and Town Board Town of Groton (3roton, New York We have audited the general purpose financial statements of the Town of Groton for the year ended December 31, 1994, and have issued our report thereon dated March 10, 1995. We conducted our audit in accordance with generally .accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards 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, aria grants applicable to 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, the objective of our audit of the general purpose financial statements was not to provide an opinion on overall compliance with such provisions. Accordingly, we do not express such an opinion. 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 tho-se provisions. This report is intended for the information of the Supervisor and Town Board, management, and New York State. This restriction is not intended to limit the distribution of this report, which is a matter of public record. March 10, 1995 t Ithaca, New York CORTLAND - 25 - ITHACA WATKINS GLEN 18 Tompkins Street Suite 103, 118 Prospect Street 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 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 Conley Jordan, C.P.A. Dennis G. Jones, C.P.A. Mayor and Board of Trustees Town of Groton Groton, New York Ciaschi • Dietershagen • Little • Mickelson, LLP Certified Public Accountants and Consultants In planning and performing our audit of the gener- l purpose financial statements of the Town of Groton for the year ended Decemb�ar 31, 1994, we c;or�si tiered th To-,f;n' s internal control structure to determine our auditing procedures for the purpose of expressing an opinion on the financial statements and not to provi le assurance on the internal control structure. However, during our audit we became aware of matters that are an opportunity -for strengthening internal controls and operating efficiency. This .letter summarizes our corrunents and suggestions regarding these matters. w'i_v+ letter does r affect our report dated March 10, 1995, on the general purpose financier]", statements of the Town of Groton. Investment Policy F inding: During the course of our review of the Town of Groton's policies and procedures, we noted that the investment policy has not been updated since May of 1.992. Recommendation: Section 39 of the General Municipal Law (GML) requires local governments to develop written investment policies which, at a minimum, address the recpuire:nents of this law section. Once the policy is developed, it must be considered by the governing board and formally adopted by resolution. We recommend that the Town's legal counsel review the existing policy, ensure that it meets the requirements of GML Section 39, then have the Town Board adapt the policy by resolution. This policy should be reviewed at least annually and updated for any enacted legislation of other factors. A model investment policy is available, in the Office of the State Comp:roller Financial Management Guide - December 1992 update, that conforms to GML Section 39. CORTLAND ITHACA WATKINS GLEN 18 Tompkins Street Suite 103, 118 Prospect Street 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 C` ? l at=-ra i P arreernent Finding: Durina our review of the Tow'n's policies and procedures we noted that the Town did not have a. third party custodial agreement with their designated del.ository. Recommendation: We recon end that the Town of Groton formulate an agreement that cc?rnplies with General Municipal Law Section 10 as soon as p(DSsible and have their attorney review the agreement to ensure this compliance. This agreement will ensure that deposits in excess of FDIC coverage will be collateralized. It should he noted that at the date of this report, the Town was actively work ngr on the agreement and completion was expected in the near future. Fund Balance Plannznci Find inq : � s we noted in our audit report dated Mauch 10, 1995 in the IndepE�ndent Aud-hors' Report on Internal Control Structure delated Matters Piloted i.: a Filnai:c ial SttaLeaie-nt ?audit Conducted in Accordance with Government Auditing: Standards, the Town had no unappropriated 'Lund balances in the following funds: General - Parttow , Highway - Parttoc--,n and Hiqhway - TowTnwide. We also noted that the lana f.-propriated fund balance in General - Tcwnw.i.de Fund was very close to being in the same deficit position. '.':'lis condition was caused by t1lie near overa;� rc:priation of fund balance in the 1995 budget. L'ffect.ivel..y, tela ovin has used all available fund balance to finance expenditures in 1995. By us;irig all oa the available fund balance, the 'Ictan has put itself in the position: cf not being able to address unexpected issues that. may �rcu,� i;. the corning years. if revenues budgeted for the year are lower than what whe ='own expected and expenditures remain as budgeter_., the Town ries no sur.p Lus c), -.i which to fell back. This may cause significant fluctuations in the tax levy_ in the cor—i ng years. Recommendat 7 on We recommend that. the Town Beard do some careful lona range fund planning. The benefits of this planning will allow he Tcwn Board to mitigate sor-ie of the possible problems before they become an iss;.1e. Fluctuations in the tax levy cc -:n be leveled out before it is too late to effectively deal with the problem. also; the Town will be able to plan ahead and can start to address needs in other areas of the government. WE? will the status of this comment during, our next audit engagement. .pie have already discussed this comment and suggestion with various personnel, and we will be pleased to discuss it in further detail at your convenie.rice, to perform any additional study of these matters, cr to assist you in imp"' ecnenti.rg the recorranerdation . March 10, 1995 Ithaca, New York 1 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 Conley Jordan, C.P.A. Dennis G. Jones, C.P.A. Mavor and Board of Trustees Town of Groton Groton, New York Ciaschi • Dietershagen • Little • Mickelson, LLP Certified Public Accountants and Consultants In planning and performing our audit of thea ga:-:eral purpose financial statements of the Town of Groton, for the year ended December 31, 1994, we considered the Town's internal control structure to determine our auditing procedures for the purpose of expressing an opinion on the financial statements and not to provide assurance on the internal control structure. However, during our audit we became aware of matters that are an opportunity for strengthening internal controls and operating efficiency. This letter summarizes our comments and suggestions regarding these matters. This letter does not affect our report dated March 10, 1995, on the general purpose financial statements of the Town of Groton. Investment Policy Finding: During the course of our review of the Town of Groton' s policies and procedures, we noted that the investment policy has riot been updated since May of 1992. Recommendation: Section 39 of the General Municipal Law (GML) requires local governments to develop written investment policies which, at a minimum, address the requirements of this law section. Once the policy is developed, it must be considered by the governing board and formally adopted by resolution. We recommend that the Town's legal counsel review the existing policy, ensure that it meets the requirements of GML Section 39, then have the Town Board adopt the policy by resolution. This policy should be reviewed at least annually and updated for any enacted legislation of other factors. A model investment policy is available, in the Office of the State Comptroller Financial Management Guide - December 1992 update, that conforms to GML Section 39. CORTLAND ITHACA WATKINS GLEN 18 Tompkins Street Suite 103, 118 Prospect Stree: 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