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Home My WebLink About2019 Town AuditTOWN OF GROTON Groton, New York FINANCIAL REPORT For the Year Ended December 31, 2019 TOWN OF GROTON TABLE OF CONTENTS Independent Auditors’ Report ............................................................................................................ 1-2 Financial Statements Balance Sheet - Governmental Funds .......................................................................................... 3-3a Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds ....................................................................................... 4-4a Budgetary Comparison Schedule - General Townwide Fund ..................................................... 5 Budgetary Comparison Schedule - General Parttown Fund ......................................................... 6 Budgetary Comparison Schedule - Special Revenue Fund - Highway Townwide Fund .......................................................................................................... 7 Budgetary Comparison Schedule - Special Revenue Fund - Highway Parttown Fund ............................................................................................................. 8 Budgetary Comparison Schedule - Special Revenue Fund - Lighting District Fund ................................................................................................................. 9 Budgetary Comparison Schedule - Special Revenue Fund - Fire Protection District Fund ...................................................................................................... 10 Statement of Fiduciary Net Assets - Fiduciary Funds ................................................................. 11 Schedule of Noncurrent Assets, Deferred Outflows of Resources, Liabilities, and Deferred Inflows of Resources .......................................................................... 12 Notes to Financial Statements .................................................................................................. 13-27 INDEPENDENT AUDITORS’ REPORT To the Town Board of Town of Groton Groton, New York We have audited the accompanying financial statements of each major fund and the aggregate remaining fund information of the Town of Groton, (the Town), as of and for the year ended December 31, 2019, and the related notes to the financial statements, which collectively comprise a portion of the Town’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Town’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Town’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our adverse audit opinion. Insero & Co. CPA s, LLP The Highest Standard | (800) 232-9547 | www.inserocpa.com 2 Basis for Adverse Opinion on the Financial Statements as a Whole Management has not presented government-wide financial statements, a complete set of notes, or required supplementary information to display the financial position and changes in financial position of its governmental activities. Accounting principles generally accepted in the United States of America require the presentation of government-wide financial statements, a complete set of notes, and required supplementary information. The amounts that would be reported in government-wide financial statements, a complete set of notes, and required supplementary information of the Town of Groton’s governmental activities have not been determined. Adverse Opinion In our opinion, because of the significance of the matter discussed in the “Basis for Adverse Opinion on the Financial Statements as a Whole” paragraph, the financial statements referred to above do not present fairly the financial position of the Town of Groton, as of December 31, 2019, or the changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Respectfully submitted, Insero & Co. CPAs, LLP Certified Public Accountants Ithaca, New York October 22, 2020 TOWN OF GROTON BALANCE SHEET GOVERNMENTAL FUNDS DECEMBER 31, 2019 See Notes to Financial Statements 3 General General Townwide Parttown Fund Fund Cash and Cash Equivalents - Unrestricted 210,622$ 108,598$ Cash and Cash Equivalents - Restricted 148,535 Investments - Restricted Due from Other Governments 23,000 Loans Receivable, Net of Allowance Prepaid Expenses Total Assets 359,157$ 131,598$ Liabilities, Deferred Inflows of Resources, and Fund Balances Liabilities Accounts Payable 21,628$ 932$ Accrued Liabilities 2,643 787 Total Liabilities 24,271 1,719 Unavailable Revenues Total Deferred Inflows of Resources - - Fund Balances Nonspendable Restricted 148,535 Assigned 81,658 Unassigned (Deficit)186,351 48,221 Total Fund Balances 334,886 129,879 Total Liabilities, Deferred Inflows of Resources, and Fund Balances 359,157$ 131,598$ Assets Deferred Inflows of Resources 3a Highway Highway Lighting Fire Protection Special Total Townwide Parttown District District Grant Governmental Fund Fund Fund Fund Fund Funds 55,967$ 439,403$ 53,355$ $ $ 867,945$ 81,848 230,383 73,331 73,331 50,275 73,275 87,846 87,846 3,098 12,093 15,191 132,396$ 501,771$ 53,355$ -$ 169,694$ 1,347,971$ 34,682$ 7,677$ 429$ $ $ 65,348$ 15,572 226 19,228 50,254 7,903 429 --84,576 87,846 87,846 - - - - 87,846 87,846 3,098 12,093 15,191 73,331 81,848 303,714 5,713 481,775 52,926 622,072 234,572 82,142 493,868 52,926 -81,848 1,175,549 132,396$ 501,771$ 53,355$ -$ 169,694$ 1,347,971$ Special Revenue Funds TOWN OF GROTON STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED DECEMBER 31, 2019 See Notes to Financial Statements 4 General General Townwide Parttown Fund Fund Revenues Real Property Taxes 610,292$ 184,000$ Real Property Tax Items 4,303 Nonproperty Tax Items 121,716 Departmental Income 2,058 1,777 Intergovernmental Charges 3,000 Use of Money and Property 2,059 486 Licenses and Permits 14,396 12,941 Fines and Forfeitures 23,613 Sale of Property and Compensation for Loss Miscellaneous Local Sources 4,452 700 State Sources 58,136 Total Revenues 719,309 324,620 Expenditures General Governmental Support 449,626 270 Public Safety 31,365 Public Health 156,000 Transportation 72,426 Economic Assistance and Opportunity 9,100 250 Culture and Recreation 4,717 59,801 Home and Community Services 824 58,264 Employee Benefits 108,496 18,814 Total Expenditures 676,554 293,399 Excess of Revenues (Expenditures)42,755 31,221 Net Changes in Fund Balances 42,755 31,221 Fund Balances, Beginning of Year 292,131 98,658 Fund Balances, End of Year 334,886$ 129,879$ 4a Highway Highway Lighting Fire Protection Special Total Townwide Parttown District District Grant Governmental Fund Fund Fund Fund Fund Funds 480,400$ 202,000$ 5,200$ 137,500$ $ 1,619,392$ 4,303 248,734 370,450 3,835 203,188 206,188 1,767 1,443 195 82 6,032 27,337 23,613 22,198 22,198 76,763 81,915 206,117 5,000 269,253 784,316 658,294 10,395 137,500 82 2,634,516 449,896 137,500 168,865 156,000 875,874 517,195 10,504 1,475,999 9,350 64,518 59,088 126,826 85,493 339,629 1,002,700 602,688 10,504 137,500 -2,723,345 (218,384) 55,606 (109) -82 (88,829) (218,384) 55,606 (109) -82 (88,829) 300,526 438,262 53,035 -81,766 1,264,378 82,142$ 493,868$ 52,926$ $ -81,848$ 1,175,549$ Special Revenue Funds TOWN OF GROTON BUDGETARY COMPARISON SCHEDULE GENERAL TOWNWIDE FUND FOR THE YEAR ENDED DECEMBER 31, 2019 See Notes to Financial Statements 5 Original Final Fav. (Unfav.) Budget Budget Actual Variance Revenues Real Property Taxes 610,000$ 610,000$ 610,292$ 292$ Real Property Tax Items 4,650 4,650 4,303 (347) Nonproperty Tax Items 4,000 4,000 (4,000) Departmental Income 1,800 1,800 2,058 258 Use of Money and Property 700 700 2,059 1,359 Licenses and Permits 14,500 14,500 14,396 (104) Fines and Forfeitures 20,500 20,500 23,613 3,113 Miscellaneous Local Sources 4,452 4,452 State Sources 60,000 60,000 58,136 (1,864) Total Revenues 716,150 716,150 719,309 3,159 Expenditures Current General Governmental Support 454,624 528,124 449,626 78,498 Public Safety 35,670 35,670 31,365 4,305 Transportation 74,356 74,856 72,426 2,430 Economic Assistance and Opportunity 9,600 9,600 9,100 500 Culture and Recreation 5,550 5,550 4,717 833 Home and Community Services 1,250 1,250 824 426 Employee Benefits 125,100 125,100 108,496 16,604 Total Expenditures 706,150 780,150 676,554 103,596 Excess of Revenues (Expenditures)10,000 (64,000) 42,755 106,755$ Other Financing Sources (Uses) Interfund Transfers (Out)(10,000) - Total Other Financing Sources (Uses)(10,000) --- Excess of Revenue and Other Financing Sources Over (Expenditures) and Other Financing (Uses) -(64,000) 42,755 106,755$ Appropriated Fund Balances 64,000 Net Change in Fund Balance $ -$ - Fund Balance, Beginning of Year 292,131 Fund Balance, End of Year 334,886$ TOWN OF GROTON BUDGETARY COMPARISON SCHEDULE GENERAL PARTTOWN FUND FOR THE YEAR ENDED DECEMBER 31, 2019 See Notes to Financial Statements 6 Original Final Fav. (Unfav.) Budget Budget Actual Variance Revenues Real Property Taxes 184,000$ 184,000$ 184,000$ $ - Nonproperty Tax Items 74,500 74,500 121,716 47,216 Departmental Income 1,800 1,800 1,777 (23) Intergovernmental Charges 3,000 3,000 Use of Money and Property 200 200 486 286 Licenses and Permits 8,050 8,050 12,941 4,891 Miscellaneous Local Sources 700 700 700 - Total Revenues 269,250 269,250 324,620 55,370 Expenditures General Governmental Support 11,488 5,789 270 5,519 Public Health 156,000 156,000 156,000 - Economic Assistance and Opportunity 250 250 250 - Culture and Recreation 60,000 64,644 59,801 4,843 Home and Community Services 61,512 62,567 58,264 4,303 Employee Benefits 20,000 20,000 18,814 1,186 Total Expenditures 309,250 309,250 293,399 15,851 Excess of Revenues (Expenditures) (40,000) (40,000) 31,221 71,221$ Appropriated Fund Balances 40,000 40,000 Net Change in Fund Balance -$ -$ Fund Balance, Beginning of Year 98,658 Fund Balance, End of Year 129,879$ TOWN OF GROTON BUDGETARY COMPARISON SCHEDULE SPECIAL REVENUE FUND HIGHWAY TOWNWIDE FUND FOR THE YEAR ENDED DECEMBER 31, 2019 See Notes to Financial Statements 7 Original Final Fav. (Unfav.) Budget Budget Actual Variance Revenues Real Property Taxes 480,400$ 480,400$ 480,400$ $ - Intergovernmental Charges 203,188 203,188 203,188 - Use of Money and Property 1,300 1,300 1,767 467 Sale of Property and Compensation for Loss 22,198 22,198 Miscellaneous Local Sources 60,000 76,763 16,763 Total Revenues 684,888 744,888 784,316 39,428 Expenditures Current Transportation 696,688 940,499 875,874 64,625 Employee Benefits 133,200 133,200 126,826 6,374 Total Expenditures 829,888 1,073,699 1,002,700 70,999 Excess of Revenues (Expenditures)(145,000) (328,811) (218,384) 110,427$ Excess of (Expenditures) and Other Financing (Uses) Over Revenue and Other Financing Sources (145,000) (328,811) (218,384) 110,427$ Appropriated Fund Balances 145,000 328,811 Net Change in Fund Balance $ -$ - Fund Balance, Beginning of Year 300,526 Fund Balance, End of Year 82,142$ TOWN OF GROTON BUDGETARY COMPARISON SCH EDULE SPECIAL REVENUE FUND HIGHWAY PARTTOWN FUND FOR THE YEAR ENDED DECEMBER 31, 2019 See Notes to Financial Statements 8 Original Final Fav. (Unfav.) Budget Budget Actual Variance Revenues Real Property Taxes 202,000$ 202,000$ 202,000$ $ - Nonproperty Tax Items 140,000 140,000 248,734 108,734 Use of Money and Property 800 800 1,443 643 State Sources 151,891 205,740 206,117 377 Total Revenues 494,691 548,540 658,294 109,754 Expenditures Current Transportation 539,191 583,040 517,195 65,845 Employee Benefits 75,500 85,500 85,493 7 Total Expenditures 614,691 668,540 602,688 65,852 Excess of Revenues (Expenditures)(120,000) (120,000) 55,606 175,606$ Appropriated Fund Balances 120,000 120,000 Net Change in Fund Balance $ -$ - Fund Balance, Beginning of Year 438,262 Fund Balance, End of Year 493,868$ TOWN OF GROTON BUDGETARY COMPARISON SCH EDULE SPECIAL REVENUE FUND LIGHTING DISTRICT FUND FOR THE YEAR ENDED DECEMBER 31, 2019 See Notes to Financial Statements 9 Original Final Fav. (Unfav.) Budget Budget Actual Variance Revenues Real Property Taxes 5,200$ 5,200$ 5,200$ -$ Use of Money and Property 195 195 State Sources 5,000 5,000 - Total Revenues 5,200 10,200 10,395 195 Expenditures Current Transportation 5,200 10,700 10,504 196 Total Expenditures 5,200 10,700 10,504 196 Excess of Revenues (Expenditures)-(500) (109) 391$ Appropriated Fund Balances 500 Net Change in Fund Balance $ --$ (109) Fund Balance, Beginning of Year 53,035 Fund Balance, End of Year 52,926$ TOWN OF GROTON BUDGETARY COMPARISON SCHEDULE SPECIAL REVENUE FUND FIRE PROTECTION DISTRICT FUND FOR THE YEAR ENDED DECEMBER 31, 2019 See Notes to Financial Statements 10 Original Final Fav. (Unfav.) Budget Budget Actual Variance Revenues Real Property Taxes 265,869$ 265,869$ 137,500$ (128,369)$ Total Revenues 265,869 265,869 137,500 (128,369) Expenditures Current Public Safety 265,869 265,869 137,500 128,369 Total Expenditures 265,869 265,869 137,500 128,369 Excess of Revenues (Expenditures)----$ Net Change in Fund Balance -$ -$ - Fund Balance, Beginning of Year Fund Balance, End of Year -$ TOWN OF GROTON STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS DECEMBER 31, 2019 See Notes to Financial Statements 11 Agency Fund Assets Total Assets -$ Liabilities Total Liabilities -$ TOWN OF GROTON SCHEDULE OF NONCURRENT ASSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES AND DEFERRED INFLOWS OF RESOURCES DECEMBER 31, 2019 See Notes to Financial Stateme nts 12 Noncurrent Government Assets Land 563,000$ Buildings 745,558 Machinery and Equipment 2,542,522 Total Noncurrent Government Assets 3,851,080$ Deferred Outflows of Resources Pensions 107,884$ Total Deferred Outflows of Resources 107,884$ Noncurrent Government Liabilities Compensated Absences 71,813$ Net Pension Liability 136,270 Total Noncurrent Government Liabilities 208,083$ Deferred Inflows of Resources Pensions 50,641$ Total Deferred Inflows of Resources 50,641$ TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2019 13 Note 1 Summary of Significant Accounting Policies The financial statements of the Town of Groton (the Town) have been prepared in conformity with the accounting principles prescribed by the Accounting and Reporting Manual permitted by the Office of Comptroller of the State of New York to meet the requirements of the state of New York, and are not inte nded to be a complete presentation in accordance with accounting principles generally accepted in the United States (U.S. GAAP) established b y the Governmental Accounti ng Standards Board (GASB). The financial statements do not include a Statement of Net Positio n or a Statement of Activities for the Governmental Acti vities, prepared on the accrual basis of accounting, or a Management’s Discussio n and Analysis or other req uired supplementary information. Under the accrual basis of accounting the Town would have re corded capital assets, net of accumulated depreciation, as well as other long-term liabilities in the government-wide financial statemen ts. The amount of these departures has not been determined. The Town’s more significant acco unting policies are described below. Financial Reporting Entit y The Town, which is located in the County of Tompkins (the County) in New York State (the State), was established in 1817. The Town is governed by Town Law, general municipal laws of the state, and various local laws. The Town Board is the legislative body responsible for overall operations. The T own Supervisor serves as Chief Executive Officer and Ch ief Fiscal Officer. The following basic services are provided: fire protection, highway and street maintenance, recreation, public im provements, planning and zoning, and general administration. All governmental activities and functions performed for the Town are its direct responsibility. No other governmental organizations have been included or excluded from the reporting entity. The financial rep orting entity consists of the following, as defined by GASB Statement No. 14, “The Financial Reporting Entity,” as amended. • The primary government, which is the Town; • Organizations for which the primary government is financially accountable, and; • Other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entit y's financial statements to be misleading or in complete. The decision to include a potentia l component unit in the reporting entity is based on the criteria set forth in GASB St atement No. 14, as amended. Based on the application of these criteria, there were no component units to include in the Town reporting entity. TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2019 14 Note 1 Summary of Significant Accounting Policies - Continued Fund Accounting The Town uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance a nd to aid financial management by segregating transactions re lated to certain government functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. A supplemental schedule, on the other hand, is a financial repo rting device designed to provide accountability for certain a ssets and liabilities that are not recorded in the funds because they do not direct ly affect net expendable available financial resources . The Town records its transactions in the fund types described below: Governmental Funds The Governmental Fund t ypes are those through which most governmental fun ctions are financed. The acquisition, use and balances of expendable financial resources, and the related liabilities are accounted for through Governmental Fund types. The measurement focus of the Governmental Fund types is based upon determination of f inancial position and changes in fin ancial position. The following are the Town's Governmental Fund types: • General Funds - (Parttown and Townwide - (Outside Village)) are the principal operating fund s and include all operations not required to be recorde d in other funds. Some functions are required to be financed by tax payers outside the village; therefore, a town with a village must maintain two General Funds. • Special Revenue Funds - Used to account for the proceeds of specific revenue sources legally restricted to expenditure for specified purposes. The following Special Revenue Funds are utilized: o Highway Funds - (Parttown and Townwide - (Outside Village)) were established pursuant to Highway Law, §141, and are used to account for revenues and expenditures for highway purposes. Highway Law, §277, requires expenditures for repairs and improvements outside a village be financed by the area out side the village. Therefore, a town with a village must main tain two Highway Funds. o Special District Funds - (Lighting and Fire Protection District s) Established by the Town to record transactions fo r operations and maintenance of these activities. o Special Grant Fund - Established by the Town to account for Community Development Block Grants. TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2019 15 Note 1 Summary of Significant Accounting Policies - Continued Fiduciary Fund Types Fiduciary Fund Types are used to account for assets held by the local government in a trustee or custodial capacity. The Town reports the following Fiduciary Fund: Agency Fund - The Agency Fund is used to account for money and/or property receiv ed and held in the capacity of trustee, custodian , or agent. Supplemental Schedule - Supplemental schedules are used to establish accounting control and accountability for noncurrent governmental assets, deferred outflows of resources, liabilities, and deferred inflows of resources. The schedule is not “funds.” They are concerned only with th e measurement of financial posit ion and not results of operations. Noncurrent Government Assets – Capital assets purchased for general governmental purposes are recorded as expenditures in the Governm ental Funds and are capitalized at cost in the noncurrent government assets. Contributed fixed assets are recorded at fair market value at the date of contributions. Capital assets consisting of certain infrastructure type improvements other than buildings; including roads, bridges, curbs and gutt ers, streets and sidewalks, drainage and light ing systems; have not been capitalized. Such assets normally are immovable and of value only to the Town. Therefore, the purposes of stewardship for cap ital expenditures can be satisfied without recording the se assets. No depreciation has been provided on general capital assets, nor has interest been capitalized on general capital assets that are construction in progress. Noncurrent Government Liabilities - Accounts established for the unmatured general long-term debt and liabilities of a government which are not recorded as a liability under another fund. 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 i n the financial statements. Basis of accounting relates to the timing of the measurements made, regardless of the measurement focus. Mea surement 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 collect ible within the current period or soon enough thereafter to be used to pay liabilities of the current period, generally 90 days after year end. TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2019 16 Note 1 Summary of Significant Accounting Policies - Continued Basis of Accounting/Measurement Focus - Continued Material revenues accrued include real property taxes, state and f ederal 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. The cost of capital assets is recognized as an expenditure when the asset is received. Exceptio ns to this general rule are: 1) pension costs; 2) expenditures for prepaid expenses and inventory-type items are recognized at the time of purchase; 3) principal and interest on indebtedness are not re cognized as an expenditure until due ; and 4) compensated absences, such as vacation and sick leave, which vest or accumulate are charged as an expenditure when paid. Supplemental Schedule - Noncurrent government assets are recorded at actual or estimated cost or, in the case of gifts or contributions, at f air market value at the time received. No provision for depre ciation is made. Noncurrent government liabilities are recorded at par value of the principal amount. No liability is recorded for inter est payable to maturity. Property Taxes Town real property taxes are levied annually on January 1 and become a lien on that date. Taxes are collected during the period of January 1 to March 31 by the Town. The County subsequently enforces uncollected r eal property taxes. The County pays uncollected real property taxes to the Town no later than May 31. Budget Policies • 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 an d means of financing for all funds. • After public hearings are cond ucted to obtain taxpayer comments, no later t han November 20, the Town Board adopts the budget. • All modifications of the budget must be approved by the Town Board. • Appropriations laps e at year end. TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2019 17 Note 1 Summary of Significant Accounting Policies - Continued Encumbrances Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded for budget ary control purposes to reserve that portion of the applicable appropriations, is employed in the Governmental Funds. Encumbrances are reported as reservations of fund balances , as they do not constitute expenditures or liabilities. Expenditures for such commitments are recorded in the period in which the liabil ity is incurred. Budgetary Basis of Accounting Budgets are adopted annually on a basis consistent with requirements of New York State. Appropriations authorized for the current year are increased by the amount of encumbrances carried forward from the prior year. An annual legal budget is not adopted for the Special Grant Fund, which is one of the Special Revenue Funds. Budgetary controls for the Special Grant Fund are established in accordance with the applicable grant agreements, which cover a period other than the Town’s fiscal year. Cash and Cash Equivalents For financial statement purposes, the Town considers all highly liquid investments w ith original maturities of three months or less as cash equivalents. Vacation, Sick Leave, and Compensated Absences Employees of the Town are granted vacation and sick leave in varying amounts. In the event of termination or retirement, an employee is not entitled to payment for accumulated vacation time. However, sick leave can be accrued up to 960 hours which is payable upon termination or retirement. The value of unused employee sick leave at yearend is recorded in the Schedule of Noncurrent Government Liabilities. Payment of sick leave recorded in the Schedule of Noncurrent Assets, Deferred Outflows of Resources, Liabilities and Deferred Inflows of Resources is dependent upon many factors; therefore, timing of future payments is not readily determinable. Ho wever, management believes sufficient resources wi ll be made available for the payments of sick leave when such payment becomes due. TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2019 18 Note 1 Summary of Significant Accounting Policies - Continued Vacation, Sick Leave, and Compensated Absences - Continued Further, the Town recognizes a liability for v esting sick leave and other compensated absences with similar characteri stics and additional salary related payments as employees earn benefits to the extent it is probable that the Town will compensate the employees for the benefits through cash payments (which may be conditioned on the employees’ termination or retirement), rather than being taken as absences due to illne ss or other contingencies. The liability for compensated absences is calculated at rates in effect as of the Balance Sheet date and is recorded in the Governmental Funds if funded from curren t financial resources and the noncurrent government liability ac count group for amounts to be paid from future financial resources. Deferred Inflows and Deferred Outflows of Resources The Town has deferred inflows of reso urces related to unavailable revenue, which is reported only on the Balance Sheet - Governmental Funds. The Town also has deferred inflows and outflows of resources related to the pension on the Schedule of Noncurrent Assets, Liabilities and Deferred Inflows and Outflows of Reso urces. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that appl ies to a future period(s) and will not be recognized as an inflow of resources (revenue) until that time. At December 31, 2019, the Town’s deferred inflows of resources related to revenues consisted of $87,846 in rehabilitation loan s receivable. Additionally, the deferred inflow s and outflows of resource amounts related to the pensions were determined by actuaries based on their evaluation of the NYSLRS Pension Plan. Fund Balance Classifications The Town follows GASB Statement No. 54, “Fund Balance Reporting and Governmental Fund Type Definitions.” Statement No. 54 changes the terminology and classification of fund balance to reflect spending constraints on resources, rather than availability for appropriation. This approach is intended to provide users more consistent and understandable information about a fund’s net resources. Constraints are broken into five classifications: nonspendable, restricted, committed, assigned, and unassigned. These classifications serve to inform readers of the financial statements of the extent to which the government is bound to honor any constraints on specific purposes for which resources in a fund can be spent. • Nonspendable - Consists of assets inherently nonspendable in the current period either because of their form or because they must be maintained intact; including prepaid items, inventories, long-term portions of loans receivable, financial assets held for resale, and endowments principal. TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2019 19 Note 1 Summary of Significant Accounting Policies - Continued Fund Balance Classifications - Continued • Restricted - Consists of amounts subject to legal purpose restrictions imposed by creditors, grantors, contributors, or laws and regulations of other governments and enforced externally; or through constitutional provisions or enabling legislation. Most of the Town’s legally adopted reserves are reported here. • Committed - Consists of amounts subject to a purpose constraint imposed by formal action of the government’s highest level of decision-making authority, the Town Board, prior to the end of the fiscal year, and requires the same level of formal action to remove said constraint. • Assigned - Consists of amounts subject to a purpose constraint representing an intended use established by the government’s highest level of decision-making authority or their designated body or official. The purpose of the assignment must be narrower than the purpose of the General Fund. In funds other than the General Fund, assigned fund balance represents the residual amount of fund balance. • Unassigned - Represents the residual classification of the government’s General Fund, and could report a surplus or deficit. In funds other than the General Fund, the unassigned classification should only be used to report a deficit balance resulting from overspending amounts restricted, committed, or assigned for specific purposes. The Town has not adopted any resolutions to commit fund balance. Currently, fund balance is assigned by the Town Supervisor for encumbrances and designations. By resolution, the Town Board approves fund balance appropriations for next year’s budget. The Town applies expenditures against non-spendable fund balance, restricted fund balance, committed fund balance, assigned fund balance, and then unassigned fund balance. TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2019 20 Note 1 Summary of Significant Accounting Policies - Continued Legally Adopted Reserves Fund balance reserves are created to satisfy legal restrictions, plan for future expenditures or relate to resources not available for general use or appropriation. The following reserve funds are availab le to the Town within New York State. These reserve funds are established through Board action or voter appro val and a separate identity must be maintained for each reserve. Earnings on the invested resources become part of the respective reserve funds; however, separate bank accounts are not necessary for each reserve fund. These reserves are reported in the fund financial statements as Restricted Fund Balance. Reserves currently in use by t he Town include the following: • Unemployment Insurance Reserve - Used to pay the cost of reimbursement to the State Unemployment Insurance Fund for payments made to claimants where the employer has elected to use the benefit reimbursement method. The reserve may be established by board action and is funded by budgetary appropriations and such other funds as may be legally appropriated. Within 60 days after the end of any fiscal year, excess amounts may either be transferred to another reserve or the excess applied to the appropriations of the next succeeding fiscal year’s budget. If the employer elects to convert tax (contribution) basis, any excess of funds over a sum sufficient to pay pending claims may be transferred to any other Reserve Fund. This reserve is accounted for in the General Fund. • Capital Reserve - Capital Reserve is used to accumulate funds to finance all or a portion of future capital projects for which bonds may be issued. This reserve is accounted for in the General Townwide and Highway Townwide Funds. Note 2 Cash and Investments The Town's investment policies are governed by state statutes. In addition, the Town has its own written investment policy. Town monies must be deposited in Federal Deposit Insurance Corporation (FDIC) insured commercial banks or trust companies located within the state. The Town Supervisor is authorized to use demand accounts and certificates of deposit for operating purposes. Permissible investments include obligations of the U.S. Treasury and U.S. Agencies, repurchase agreements, and obligations of the state or its localities. Collateral is required for demand and time deposits, as well as certificates of deposit not covered by FDIC insurance. Obligations that may be pledged as collateral are obligations of the United States and its agencies, as well as obligations of New York State, its municipalities, and its school districts. The written investment policy requires repurchase agre ements to be purchased from banks located within the state. Underlying securities must be obligati ons of the federal government and must have a market val ue of at least 105% of the cost of the repurchase agreement. TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2019 21 Note 2 Cash and Investments - Continued Custodial credit risk is the risk that in the event of a bank failure, the Town’s deposits may not be returned to it. While the Town does not have a specific policy for custodial credit risk, state statutes govern the Town’s investment policies, as discussed prev iously in these Notes. GASB Statement No. 40 directs that deposits be disclosed as exposed to custodial credit risk if they are not covered by depository insurance, and the deposits are either uncollateralized or collate ralized with securities held by the pledging financial institution’s trust department or agent, but not in the Town’s name. The Town’s aggregate bank balances of $1,185,629, including certificates of deposit, are either insured or collateralized with sec urities held by the pledging financial institution in the Town’s name. The Town chooses to disclose investments by specifically identifying each. The Town’s investment policy for these investments is also governed by New York State statutes, in addition to the Town’s written policy. Investments are stated at fair value and are categorized as either: 1. Insured or registered, with investments held by the Town or by the Town’s agent in the Town’s name; or 2. Uninsured and unregistered, with investments held by the financ ial institution’s trust department in the Town’s name; or 3. Uninsured and unregistered, with investments held by the financial institution or its trust department, but no t in the Town’s name. At December 31, 2019, the Town had the following invest ments: Carrying Amount Type of Cost Fair Value Investment Category Certificate of Highway - Townwide Fund Deposit (12 month)2 $ 73,331 $ 73,331 The Town does not typically purchase investments for a long enough durat ion to cause it to believe it is exposed to any material intere st rate risk. The Town does not typically purchase investments denominated in a foreign currency and is not exposed to foreign currency risk. TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2019 22 Note 3 Loans Receivable and Unavailable Revenues Loans receivable at December 31, 2019 consisted of the following, which are stated at net realizable value: Description Amount Special Grant Fund 2019 Rehabilitation Loans 87,846$ Total 87,846$ The balance of loans receivable of the 2014 rehabilitation loans represents loans with an original principal of $327,850. The loans are forgivable to recipients over a five year period if they meet certain eligibility requirements. During 2019, $65,570 was forgiven , resulting in a loans receivable balance of $87,846 at December 31, 2019. This balance is also reported as deferred inflows of res ources-unavailable revenues. Note 4 Noncurrent Government Assets (Capital Assets) Changes in capital assets for fiscal year ended December 31, 2019 are as follows: Balance Balance Beginning End of of Year Additions Deletions Year 563,000$ $ $ 563,000$ 18,077 641 18,718 - 730,059 15,499 745,558 2,394,043 238,111 89,632 2,542,522 3,705,179$ 254,251$ 108,350$ 3,851,080$ Total Land Buildings Machinery and Equipment Construction in Process Note 5 Current Liabilities Accounts payable consists of amounts owed by the Town for various goods and services. Accrued liabilities represent payroll expense accrued at year end. Note 6 Pension Plans Plan Description The Town participates in the New York State and Local Employees' Retirement System (the System). This is a cost-sharing multiple-employer defined benefit retirement system. The System provides retirement benefits, as well as death and disability benefits. Obligations of employers and employees to contribute and benefits to employees are governed by the New York State Retirement and Social Security Law (NYSRSSL). As set forth in the NYSRSSL, the Comptroller of the State of New York (Comptroller) serves as sole trustee and administrative head of the System. TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2019 23 Note 6 Pension Plans - Continued Plan Description - Continued The Comptroller shall adopt and may amend rules and regulations for the administration and transaction of the business of the System and for the custody and control of its funds. The System issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained by writing to the New York State and Local Retirement Systems, 110 State Street, Albany, NY 12244. Funding Policy Plan members who joined the System before July 27, 1976 are not required to make contributions. Those joining after July 27, 1976 and before January 1, 2010 with less than ten years of membership are required to contribute 3% of their annual salary. Those joining NYSERS on or after January 1, 2010 and before April 1, 2012 are required to contribute 3% of their annual salary for their entire working career. Those joining NYSERS on or after April 1, 2012 are r equired to contribute between 3% and 6%, dependent on salary for their entire working career. Under the authority of the New York State Retirement and Social Security Law, the Comptroller shall certify annually the rates expressed as proportions of payro ll of members which shall be used in computing the contributions required to be made by the employer to the Pension Accumulation Fund. The Town is required to contribute at an actuarially determined rate. The required contributions for the current year and two preceding years were: ERS 2019 $ 93,855 2018 104,464 2017 105,058 The Town’s contributions made to the System were equal to 100% of the c ontributions required for each year. At December 31, 2019, the Town reported the fo llowing liability for its proportionate share of the net pension liability for the System. The net pension liability was measured as of March 31, 201 9. The total pension liability used to calculate the net pension liability was determined b y an actuarial valuati on. The Town’s proportionate share of the net pension liability was based on a projection of the Town ’s long-term share of contributions to the System relative to the projected contributions of all participating members, actuarially determined. This information was derived from a report provided to the Town by the ERS System. TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2019 24 Note 6 Pension Plans - Continued Pension Liabilities, Pension Expense, and Def erred Outflows of Resources an d Deferred Inflows of Resources Related to Pension ERS Actuarial Valuation Date 4/1/2018 Net Pension Liability 7,085,304,242$ Town’s Proportionate Share of the Plan’s Total Net Pension Liability 136,270 Town's Share of the Plan's Total Net Pension Liability 0.0019233% For the year ended December 3 1, 2019, the Town recognized pension expen se of $112,991 for ERS in the financial stateme nts. At December 31, 2019, the Town’s reported deferred outflows of resources and deferred inflows of resources rel ated to the pensions from the following sources: ERS Deferred Outflows of Resources Differences Between Expected and Actual Experience 26,834$ Changes of Assumptions 34,253 Net Differences Between Projected and Actual Earnings on Pension Plan Investments - Changes in Proportion and Differences Between the Town’s Contributions and Proportionate Share of Contributions 46,797 Town’s Contributions Subsequent to the Measurement Date - Total Deferred Outflows of Resources 107,884$ Deferred Inflows of Resources Differences Between Expected and Actual Experience 9,148$ Changes of Assumptions - Net Differences Between Projected and Actual Earnings on Pension Plan Investments 34,974 Changes in Proportion and Differences Between the Town’s Contributions and Proportionate Share of Contributions 6,519 Total Deferred Inflows of Resources 50,641$ TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2019 25 Note 7 Other Postemployment Benefits The Town provides postretirement healthcare benefits to all employees who retire upon or after attaining at least 20 years of full-time service and who are enrolled at the time of retirement. Currently, there are four retirees who meet those eligibility requirements. The Town pays 25% of the total premium of the Town for medical insurance for retirees until age 65. If retirees attain insurance through a plan not established by the Town, the Town will pay up to $204 per month to each retiree to apply toward retirees’ p remium cost. Post-employment benefit expenses are recognized as costs are incurred. During the fiscal year, expenses of $9,792 were recognized for post-retirement health care. Note 8 Compensated Absences The Town has compensated absences outstanding a s of December 31, 2019 in the amount of $71,813. Compensated absences represent the value of the earned and unused portion of accumulated sick leave. Note 9 Fund Balance Detail At December 31, 2019, restricted and assigned fund balance was as follows: Unemployment Appropriated Insurance Capital Fund Total for Next Fund Total Funds Reserve Reserve Balance Restricted Year’s Budget Balance Assigned General Townwide 10,385$ 138,150$ $ 148,535$ $ $ $ General Parttown 44,000 37,658 81,658 Highway Townwide 73,331 73,331 5,713 5,713 Highway Parttown 147,500 334,275 481,775 Lighting District 52,926 52,926 Special Grant 81,848 81,848 Totals 10,385$ 211,481$ 81,848$ 303,714$ 197,213$ 424,859$ 622,072$ Restricted Assigned TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2019 26 Note 9 Fund Balance Detail - Continued Restricted Fund Balances Portions of fund balance are rese rved and are not available for current expenditures as reported in the Balance Sheet. The restricted balances and activity for the year ended December 31, 2019 are as follows: Beginning Interest Released/Ending Balance Additions Earned Appropriated Balance Unemployment Insurance - General Fund 10,350$ $ 35$ $ 10,385$ Capital Reserve - General Fund 201,475 (63,325) 138,150 Capital Reserve - Highway Townwide 256,103 (182,772) 73,331 Loan Funds - Special Grant Fund 81,766 82 81,848 Total 549,694$ -$ 117$ (246,097)$ 303,714$ Restricted Fund Balance Note 10 Commitments and Contingencies Risk Financing and Related Insurance General Information The Town is exposed to various risks of loss related to, but not limited to, torts; theft of, damage to, and destruction of assets; injuries to employees; errors and omission; and natural disasters. These risks are covered by commercial insurance purchased from independent third parties. Settled claims from these risks have not exceeded commercial insurance coverage for the past three years. Note 11 Stewardship Deficit Fund Balance Appropriations in Excess of Available Fund Balance The Town’s Highway Townwide Fund had an appropriated fund balance of $100,000 at December 31, 2019, as a result of the approved 2020 budget. This amount is in excess of available fund balance by $94,287 at December 31, 2019. The Town is currently in the process of developing a plan to address this fund balance deficit. TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2019 27 Note 12 Subsequent Events In March 2020, the COVID-19 coronavirus outbreak was declared a pandemic. Actions taken around the world to help mitigate the spread of the coronavirus include restrictions on travel, quarantines in certain areas, and forced closures for certain types of public places and businesses. The coronavirus and actions taken to mitigate it have had, and are expected to continue to have, an adverse impact on the economies and financial markets of many countries, including the area in which the Town exists. While it is unknown how long these conditions will last and what the complete financial effect will be, the Town expects disruptions to businesses and residents, which could negatively impact operating results in future periods. COMMUNICATION WITH THOSE CHARGED WITH GOVERNANCE AT THE CONCLUSION OF THE AUDIT October 22, 2020 Supervisor and Town Board Town of Groton Groton, New York We have audited the financial statements of the Town of Groton (the Town) as of and for the year ended December 31, 2019, and the related notes to the financial statements. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you dated May 27, 2020. Professional standards also require that we communicate to you the following information related to our audit. Significant Audit Matters Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the Town are described in Note 1 to the financial statements. No new accounting policies were adopted and the application of existing policies was not changed during 2019. We noted no transactions entered into by the Town during the year for which there is a lack of authoritative guidance or consensus. The Town has not adopted Governmental Accounting Standards Board Statement No. 34 as required by generally accepted accounting principles. Accounting estimates are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimate affecting the Town’s financial statements was compensated absences. Management’s estimate of compensated absences is based on key factors and assumptions. We evaluated the key factors and assumptions used to develop the compensated absences estimate in determining that management’s estimate is reasonable in relation to the financial statements taken as a whole. Certain financial statement disclosures are particularly sensitive because of their significance to financial statements users. The most sensitive disclosure affecting the financial statements was related to the Town’s basis of accounting. Insero & Co. CPA s, LLP The Highest Standard | (800) 232-9547 | www.inserocpa.com 2 The disclosure of “Summary of Significant Accounting Policies,” (Note 1 to the financial statements) describes that the financial statements of the Town have been prepared in conformity with the accounting principles prescribed by the Accounting and Reporting Manual permitted by the Office of Comptroller of the State of New York to meet the requirements of New York State, and are not intended to be a complete presentation in accordance with accounting principles generally accepted in the United States (U.S. GAAP) established by the Governmental Accounting Standards Board (GASB). The financial statements do not include a Statement of Net Position or a Statement of Activities for the Governmental Activities, prepared on the accrual basis of accounting, a Management’s Discussion and Analysis, or other required supplementary information. The financial statement disclosures are neutral, consistent, and clear. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. The attached schedule summarizes corrected misstatements of the financial statements. There were no material uncorrected misstatements of financial information detected as a result of audit procedures. Disagreements With Management For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditors’ report. We are pleased to report that no such disagreements arose during the course of our audit. Management Representations We have requested certain representations from management that are included in the management representation letter dated October 22, 2020. Management Consultations With Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the Town’s financial statements or a determination of the type of auditors’ opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. 3 Other Audit Findings or Issues As noted in the Independent Auditors’ Report, the accompanying financial statements are not presented in accordance with accounting principles generally accepted in the United States of America. We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the Town's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. We would like to thank you and your staff for the cooperation and support given to us during the course of the audit. We appreciate the opportunity to be of service to you and look forward to our continued involvement. Restriction on Use This information is intended solely for the use of the Town Board and management of the Town of Groton and is not intended to be, and should not be, used by anyone other than these specified parties. Respectfully submitted, Insero & Co. CPAs, LLP Certified Public Accountants Ithaca, New York October 22, 2020 4 Town of Groton Schedule of Corrected Misstatements For the Year Ended December 31, 2019 The following audit adjustments were reviewed, approved, and posted by management. Net Effect of Adjustment on Condition Prior to Adjustment Cause Fund Balance General Parttown Fund Accounts Receivable Understated Unrecorded Activity 23,000$ Total General Parttown Fund Audit Adjustments 23,000$ Highway Parttown Fund Accounts Receivable Understated Unrecorded Activity 50,275$ Prepaid Expenses Understated Unrecorded Activity 12,093 Total Highway Parttown Fund Audit Adjustments 62,368$ Highway Townwide Fund Prepaid Expenses Understated Unrecorded Activity 3,098$ Total Highway Townwide Fund Audit Adjustments 3,098$ MANAGEMENT COMMENT LETTER Town Board Town of Groton Groton, New York In planning and performing our audit of the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Town of Groton (the Town) as of and for the year ended December 31, 2019, in accordance with the auditing standards generally accepted in the United States of America, we considered the Town’s internal control over financial reporting (internal control) as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Town’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Town’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the Town’s financial statements will not be prevented, or detected and corrected, on a timely basis. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. During our current year audit, we became aware of certain opportunities for strengthening internal controls and operating efficiency. This letter summarizes our current comments regarding these matters. This letter does not affect our report dated October 22, 2020 on the financial statements of the Town. Current Year Finding Deficit Fund Balances Finding: During our current year audit, the approved 2020 budget appropriated fund balance for the Highway Townwide Fund was in excess of available fund balance. The Highway Townwide Fund had a negative unassigned fund balance of $94,287 at December 31, 2019 and $100,000 was appropriated as a revenue source for the 2020 budget. Insero & Co. CPA s, LLP The Highest Standard | (800) 232-9547 | www.inserocpa.com 2 Recommendation: We recommend Town management evaluate future anticipated revenues and expenses and develop a plan to eliminate the current deficit. This communication is intended solely for the information and use of management, Town Board, and others within the Town of Groton, and is not intended to be, and should not be, used by anyone other than these specified parties. Respectfully submitted, Insero & Co. CPAs, LLP Certified Public Accountants Ithaca, New York October 22, 2020