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Home My WebLink About2017 Town AuditTOWN OF GROTON Groton, New York FINANCIAL REPORT December 31, 2017 RECEIVED & FILED Office of the Town Clerk 101 Conger Boulevard, Groton, NY Date 20.jr Time �•�dC� AM J(F� Ahni, pril L. Sche'ffler, RMC, Grdton Town Clerk ins ro&co Certified Public: Accountams I Business Adyzsots TOWN OF GROTON TABLE OF CONTENTS FOR THE YEAR ENDED DECEMBER 31, 2017 IndependentAuditor's 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 Fund Parttown........................................................ 6 Budgetary Comparison Schedule - Special Revenue Fund - HighwayTownwide Fund.......................................................................................................... 7 Budgetary Comparison Schedule - Special Revenue Fund - HighwayFund Parttown............................................................................................................. 8 Budgetary Comparison Schedule - Special Revenue Fund - LightingDistrict 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 and Liabilities............................................................................ 12 Notes to Financial Statements.................................................................................................. 13-25 ins ro&co ( vi -I -tiled I'lIblic Ac( oull Lall Ls I I->)Iisiness AchTS01'.1; INDEPENDENT AUDITOR'S REPORT To the Town Board 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, 2017, 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. Auditor's 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 auditor's 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 & C.O. C;PAS, LIT 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, 2017, 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, --Toa�v , . Insero & Co. CPAs, LLP Certified Public Accountants Ithaca, New York October 2, 2018 2 TOWN OF GROTON BALANCESHEET GOVERNMENTAL FUNDS DECEMBER 31, 2017 Total Deferred Inflows of Resources Fund Balances Restricted 171,077 Assigned 20,000 54,518 Unassigned (21,351) 129999 Total Fund Balances 169,726 67,517 Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 1919093 S 689274 See Independent Auditor's Report and Notes to Financial Statements 3 General General Townwide Parttown Fund Fund ASSETS Cash and cash equivalents - Unrestricted $ 20,016 $ 49,774 Cash and cash equivalents - Restricted 10,325 Investments - Restricted 160,752 Due from other governments 18,500 Loans receivable, net of allowance Total Assets $ 1919093 S 689274 LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES Liabilities Accounts payable $ 18,987 $ 34 Accrued liabilities 2,380 723 Total Liabilities 21,367 757 Deferred Inflows of Resources Unavailable revenues Total Deferred Inflows of Resources Fund Balances Restricted 171,077 Assigned 20,000 54,518 Unassigned (21,351) 129999 Total Fund Balances 169,726 67,517 Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 1919093 S 689274 See Independent Auditor's Report and Notes to Financial Statements 3 $ 23,370 $ 14,282 $ 431 $ $ $ 57,104 18,282 1,960 23,345 41,652 161242 431 - - 80,449 218,986 218,986 218,986 218,986 2551316 815684 508,077 2241900 450,336 521967 802,721 (34,193) (42,545) 446,023 450,336 52,967 - 81,684 11268,253 $ 487,675 $ 4669578 $ 53,398 $ - $ 819684 $ 195679688 3a Special Revenue Funds Highway Highway Lighting Fire Protection Special Total Townwide Parttown District District Grant Governmental Fund Fund Fund Fund Fund Funds $ 232,359 $ 428,307 $ 531398 $ $ $ 783,854 291993 81,684 122,002 2251323 3861075 38,271 56,771 218,986 218,986 $ 4879675 $ 4669578 $ 539398 $ - $ 3009670 $ 195679688 $ 23,370 $ 14,282 $ 431 $ $ $ 57,104 18,282 1,960 23,345 41,652 161242 431 - - 80,449 218,986 218,986 218,986 218,986 2551316 815684 508,077 2241900 450,336 521967 802,721 (34,193) (42,545) 446,023 450,336 52,967 - 81,684 11268,253 $ 487,675 $ 4669578 $ 53,398 $ - $ 819684 $ 195679688 3a TOWN OF GROTON STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED DECEMBER 31, 2017 EXPENDITURES Current General governmental support General General Public safety Townwide Parttown Public health Fund Fund REVENUES 69,676 Real property taxes $ 470,000 $ 149,000 Real property tax items 4,621 52,721 Nonproperty tax items 4,000 879739 Departmental income 1,944 29052 Intergovernmental charges 623,776 2621074 Use of money and property 892 183 Licenses and permits 15,849 17,459 Fines and forfeitures 259995 72,658 Sale of property and compensation for loss $ 1699726 $ 67,517 Miscellaneous local sources 4,685 500 State sources 79,941 Total Revenues 6079927 256,933 EXPENDITURES Current General governmental support 375,555 250 Public safety 341362 Public health 141,000 Transportation 69,676 Economic assistance and opportunity 9,100 250 Culture and recreation 12,119 52,721 Home and community services 381 511048 Employee benefits 122,583 16,805 Total Expenditures 623,776 2621074 Excess of (Expenditures) Revenues (15,849) (5,141) Net Changes in Fund Balances (15,849) (5,141) Fund Balances, Beginning of Year 185,575 72,658 Fund Balances, End of Year $ 1699726 $ 67,517 See Independent Auditor's Report and Notes to Financial Statements 4 Special Revenue Funds Highway Highway Lighting Fire Protection Special Townwide Parttown District District Grant Fund Fund Fund Fund Fund $ 555,000 $ 258,000 $ 5,200 $ 122,500 $ 172,072 118,982 1,433 836 29,985 206,017 7051400 636,925 8129221 5059576 131,772 57,500 943,993 563,076 (238,593) 73,849 (238,593) 73,849 684,616 376,487 $ 4469023 $ 4509336 $ 100 5,300 5,010 5,010 290 290 52,677 52,967 $ 4a 122,500 122,500 122,500 1,350 81 1,431 Total Governmental Funds $ 1,559,700 4,621 263,811 5,346 118,982 3,525 33,308 25,995 29,985 5,185 285,958 2,336,416 1,431 1,431 80,253 81,684 $ 375,805 156,862 141,000 1,392,483 9,350 64,840 51,429 328,660 2,520,429 (184,013) (184,013) 1,452,266 1,268,253 TOWN OF GROTON BUDGETARY COMPARISON SCHEDULE GENERAL TOWNWIDE FUND FOR THE YEAR ENDED DECEMBER 31, 2017 See Independent Auditor's Report and Notes to Financial Statements 5 Original Final Fay. (Unfay.) Budget Budget Actual Variance REVENUES Real property taxes $ 470,000 $ 470,000 $ 470,000 $ - Real property tax items 6,000 6,000 4,621 (1,379) Nonproperty tax items 4,000 4,000 4,000 - Departmental income 1,600 1,600 1,944 344 Use of money and property 1,050 1,050 892 (158) Licenses and permits 14,000 14,000 15,849 1,849 Fines and forfeitures 18,500 18,500 25,995 7,495 Miscellaneous local sources 2,000 4,685 2,685 State sources 48,000 50,659 79,941 29,282 Total Revenues 563,150 567,809 607,927 40,118 EXPENDITURES Current General governmental support 429,775 432,284 375,555 56,729 Public safety 37,465 37,615 34,362 3,253 Transportation 72,585 72,585 69,676 2,909 Economic assistance and opportunity 9,850 9,850 9,100 750 Culture and recreation 9,975 13,240 12,119 1,121 Home and community services 2,200 2,200 381 1,819 Employee benefits 131,300 131,300 122,583 8,717 Total Expenditures 693,150 699,074 623,776 75,298 Excess of (Expenditures) (130,000) (131,265) (15,849) $ 115,416 OTHER FINANCING (USES) SOURCES Interfund transfers (out) (30,000) - - Total Other Financing (Uses) Sources (30,000) - - - Excess of (Expenditures) and Other Financing (Uses) Over Revenue and Other Financing Sources (160,000) (131,265) (15,849) $ 115,416 Appropriated Fund Balance 160,000 131,265 Net Change in Fund Balance Fund Balance, Beginning of Year 185,575 Fund Balance, End of Year $ 169,726 See Independent Auditor's Report and Notes to Financial Statements 5 TOWN OF GROTON BUDGETARY COMPARISON SCHEDULE GENERAL FUND PARTTOWN FOR THE YEAR ENDED DECEMBER 31, 2017 See Independent Auditor's Report and Notes to Financial Statements 6 Original Final Fay. (Unfay.) Budget Budget Actual Variance REVENUES Real property taxes $ 149,000 $ 1491000 $ 14900 $ - Nonproperty tax items 68,000 68,000 87,739 19,739 Departmental income 15900 15900 2,052 152 Use of money and property 200 200 183 (17) Licenses and permits 6,350 6,350 17,459 119109 Miscellaneous local sources 700 700 500 (200) Total Revenues 226,150 226,150 256,933 30,783 EXPENDITURES Current General governmental support 5,227 2,926 250 2,676 Public health 1415000 141,000 141,000 - Economic assistance and opportunity 250 250 250 - Culture and recreation 54,600 56,601 52,721 300 Home and community services 57,823 58,123 511048 71075 Employee benefits 17,050 17,050 16,805 245 Total Expenditures 2751950 275,950 262,074 13,876 Excess of (Expenditures) (49,800) (49,800) (5,141) S 449659 Appropriated Fund Balances 49,800 4900 Appropriated Reserves Net Change in Fund Balance $ - $ - Fund Balance, Beginning of Year 72,658 Fund Balance, End of Year S 679517 See Independent Auditor's Report and Notes to Financial Statements 6 TOWN OF GROTON BUDGETARY COMPARSION SCHEDULE SPECIAL REVENUE FUND HIGHWAY TOWNWIDE FUND FOR THE YEAR ENDED DECEMBER 31, 2017 Original Final Budget Budget REVENUES Real property taxes $ 5559000 $ 555,000 $ Intergovernmental charges 1189000 118,000 Use of money and property 1,800 1,800 Sale of property and compensation for loss Total Revenues EXPENDITURES Current General governmental support Transportation Employee benefits Total Expenditures Excess of (Expenditures) OTHER FINANCING SOURCES (USES) Interfund transfers in Interfund transfers (out) Total Other Financing (Uses) Sources Excess of (Expenditures) and Other Financing (Uses) Over Revenue and Other Financing Sources Appropriated Fund Balances Net Change in Fund Balance Fund Balance, Beginning of Year Fund Balance, End of Year 674,800 674,800 4,919 Fay. (Unfay.) Actual Variance 555,000 $ - 118,982 982 1,433 (367) 29,985 29,985 705,400 30,600 4,919 1,319 11319 7199481 908,257 8121221 96,036 1451400 1451400 131,772 13,628 869,800 1,054,976 943,993 110,983 (195,000) (380,176) (238,593) 141,583 185,176 (185,176) (55,000) - (55,000) 185,176 - (185,176) (250,000) (195,000) (238,593) $ (439593) 2509000 195,000 684,616 $ 446,023 See Independent Auditor's Report and Notes to Financial Statements 7 TOWN OF GROTON BUDGETARY COMPARISON SCHEDULE SPECIAL REVENUE FUND HIGHWAY FUND PARTTOWN FOR THE YEAR ENDED DECEMBER 31, 2017 See Independent Auditor's Report and Notes to Financial Statements 8 Original Final Fay. (Unfay.) Budget Budget Actual Variance REVENUES Real property taxes $ 258,000 $ 258,000 $ 258,000 $ - Nonproperty tax items 125,000 12500 1721072 47,072 Use of money and property 500 500 836 336 State sources 158,391 2129139 2061017 (6,122) Total Revenues 541,891 595,639 6361,925 41,286 EXPENDITURES Current Transportation 530,391 584,139 505,576 78,563 Employee benefits 585900 58,900 57,500 1,400 Total Expenditures 589,291 643,039 563,076 79,963 Excess of (Expenditures) Revenue (47,400) (47,400) 731,849 $ 1219249 Appropriated Fund Balances 47,400 475400 Appropriated Reserves Net Change in Fund Balance Fund Balance, Beginning of Year 3761487 Fund Balance, End of Year $ 4509336 See Independent Auditor's Report and Notes to Financial Statements 8 TOWN OF GROTON BUDGETARY COMPARISON SCHEDULE SPECIAL REVENUE FUND LIGHTING DISTRICT FUND FOR THE YEAR ENDED DECEMBER 31, 2017 Original Final Budget Budget Actual REVENUES Real property taxes $ 5,200 $ 5,200 $ 5,200 $ Use of money and property Total Revenues EXPENDITURES Current Transportation Total Expenditures Excess of Revenue Net Change in Fund Balance Fund Balance, Beginning of Year Fund Balance, End of Year 5,200 5,200 5,200 5,200 5,200 5,200 See Independent Auditor's Report and Notes to Financial Statements 9 100 5,300 5,010 5,010 290 290 52,677 $ 52,967 Fay. (Unfay.) Variance 100 100 190 190 290 TOWN OF GROTON BUDGETARY COMPARISON SCHEDULE SPECIAL REVENUE FUND FIRE PROTECTION DISTRICT FUND FOR THE YEAR ENDED DECEMBER 31, 2017 Original Final Budget Budget Actual REVENUES Total Revenues EXPENDITURES Current Public Safety Total Expenditures Excess of Revenue Net Change in Fund Balance Fund Balance, Beginning of Year Fund Balance, End of Year $ 248,236 $ 122,500 $ 122,500 $ Fay. (Unfay.) Variance 248,236 122,500 122,500 - 248,236 122,500 122,500 - See Independent Auditor's Report and Notes to Financial Statements 10 TOWN OF GROTON STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS DECEMBER 31, 2017 Agency Funds ASSETS Total Assets $ 84 LIABILITIES Total Liabilities 84 See Independent Auditor's Report and Notes to Financial Statements 11 TOWN OF GROTON SCHEDULE OF NONCURRENT ASSETS AND LIABLITIES DECEMBER 31, 2017 NONCURRENT GOVERNMENT ASSETS Land Buildings Machinery and equipment Total Noncurrent Government Assets DEFERRED OUTFLOWS OF RESOURCES Pensions Total Deferred Outflows of Resources NONCURRENT GOVERNMENT LIABILITIES Compensated absences Net pension liability Total Noncurrent Government Liabilities $ 563,000 730,059 2,505,653 $ 397989712 $ 156,582 $ 156,582 $ 95,653 190,307 $ 285,960 DEFERRED INFLOWS OF RESOURCES Pensions $ 34,901 Total Deferred Inflows of Resources $ 34,901 See Independent Auditor's Report and Notes to Financial Statements 12 TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2017 Note I 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 intended to be a complete presentation in accordance with accounting principles generally accepted in the United States (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, or a Management's Discussion and Analysis or other required supplementary information. Under the accrual basis of accounting the Town would have recorded capital assets, net of accumulated depreciation, as well as long-term debt and other long-term liabilities in the government - wide financial statements. The amount of these departures has not been determined. The Town's more significant accounting policies are described below. Financial Reporting Entity The Town, which is located in the County of Tompkins (the County) in the State of New York (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 Town Supervisor serves as Chief Executive Officer and Chief Fiscal Officer. The following basic services are provided: fire protection, highway and street maintenance, recreation, public improvements, 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 reporting entity consists of the following, as defined by GASB Statement No. 149 "The Financial Reporting Entity," as amended by GASB Statement No. 39, "Determining Whether Certain Organizations are Component Units" and GASB Statement No. 61, "The Financial Reporting Entity: Omnibus." • 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 entity's financial statements to be misleading or incomplete. 13 TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2017 Note 1 Summary of Significant Accounting Policies - Continued Financial Reporting Entity - Continued The decision to include a potential component unit in the reporting entity is based on the criteria set forth in GASB Statement No. 14, as amended by GASB Statements No. 39 and No. 61, including legal standing, fiscal dependency, and financial accountability. Based on the application of these criteria, there were no component units to include in the Town reporting entity. 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 and to aid financial management by segregating transactions related 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 reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect net expendable available financial resources The Town records its transactions in the fund types described below: Governmental Funds The Governmental Fund types 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 Fund types. The measurement focus of the Governmental Fund types is based upon determination of financial position and changes in financial position. The following are the Town's Governmental Fund types: • General Funds - (Parttown and Townwide - (Outside Village)) are the principal operating funds and include all operations not required to be recorded in other funds. Some functions are required to be financed by taxpayers 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 the village be financed by the area outside the village. Therefore, a town with a village must maintain two Highway Funds. 14 TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2017 Note I Summary of Significant Accounting Policies - Continued Governmental Funds - Continued o Special District Funds - (Lighting and Fire Protection Districts) Established by the Town to record transactions for operations and maintenance of these activities. o Special Grant Fund - Established by the Town to account for Community Development Block Grants. 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 received and held in the capacity of trustee, custodian or agent. Supplemental Schedules Supplemental schedules are used to establish accounting control and accountability for noncurrent governmental assets and noncurrent governmental liabilities. The two schedules are not "funds." They are concerned only with the measurement of financial position and not results of operations. Noncurrent Government Assets - Fixed assets purchased for general governmental purposes are recorded as expenditures in the Governmental Funds and are capitalized at cost in the noncurrent government assets account group. Contributed fixed assets are recorded at fair market value at the date of contributions. Fixed assets consisting of certain infrastructure type improvements other than buildings; including roads, bridges, curbs and gutters, streets and sidewalks, drainage and lighting systems, have not been capitalized. Such assets normally are immovable and of value only to the Town. Therefore, the purposes of stewardship for capital expenditures can be satisfied without recording these assets. No depreciation has been provided on general fixed assets, nor has interest been capitalized on general fixed assets that are construction in progress. Accounts and noncurrent deferred outflows of resources established for capital assets of a government not accounted for through specific proprietary or fiduciary funds. Noncurrent Government Liabilities - Accounts established to account for the unmatured general long-term debt and liabilities and noncurrent deferred inflows of resources of a government which is not recorded as a liability under another fund. 15 TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2017 Note I Summary of Significant Accounting Policies - Continued Basis of Accounting/Measurement Focus Basis of accounting refers to when revenues and expenditures and the related assets and liabilities are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurements made, regardless of the measurement focus. Measurement focus is the determination of what is measured, i.e. expenditures or expenses. Modified Accrual Basis - All Governmental Funds are accounted for using the modified accrual basis of accounting. Under this basis of accounting, revenues are recorded when measurable and available. Available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Material revenues accrued include real property taxes, state and federal aid, sales tax and certain user charges. If expenditures are the prime factor for determining eligibility, revenues from federal and state grants are accrued when the expenditure is made. Expenditures are recorded when incurred. The cost of capital assets is recognized as an expenditure when the asset is received. Exceptions 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 recognized as an expenditure until due, and 4) compensated absences, such as vacation and sick leave, which vests or accumulates are charged as an expenditure when paid. Supplemental Schedules - Noncurrent government assets are recorded at actual or estimated cost or, in the case of gifts or contributions, at fair market value at the time received. No provision for depreciation is made. Noncurrent government liabilities are recorded at par value of the principal amount. No liability is recorded for interest 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 real 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 and means of financing for all funds. • After public hearings are conducted to obtain taxpayer comments, no later than November 201, the Town Board adopts the budget. 16 TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2017 Note I Summary of Significant Accounting Policies - Continued Budget Policies - Continued • All modifications of the budget must be approved by the Town Board. • Appropriations lapse at year end. Encumbrances Encumbrance accounting, under which purchase orders, contracts and other commitments for the expenditure of monies are recorded for budgetary control purposes to reserve that portion of the applicable appropriations, is employed in the Governmental Funds. Encumbrances are reported as reservations of fund balances, as they do not constitute expenditures or liabilities. Expenditures for such commitments are recorded in the period in which the liability is incurred. Budgetary Basis of Accounting Budgets are adopted annually on a basis consistent with requirements of the 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 with original maturities of three months or less as cash equivalents. Vacation, Sick Leave, and Compensatory 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 year-end is recorded in the Schedule of Noncurrent Government Liabilities. Payment of sick leave recorded in the Schedule of Noncurrent Government Liabilities is dependent upon many factors; therefore, timing of future payments is not readily determinable. However, management believes sufficient resources will be made available for the payments of sick leave when such payment becomes due. 17 TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2017 Note I Summary of Significant Accounting Policies - Continued Vacation, Sick Leave, and Compensatory Absences - Continued Further, the Town recognizes a liability for vesting sick leave and other compensated absences with similar characteristics 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 illness 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 current financial resources and the noncurrent government liability account group for amounts to be paid from future financial resources. Deferred Inflows of Resources The Town has deferred inflows of resources related to unavailable revenue, which is reported only on the Balance Sheet — Governmental Funds. This separate financial; statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and will not be recognized as an inflow of resources (revenue) until that time. At December 31, 2017, the Town's deferred inflows of resources related to revenues consisted of $218,986 in rehabilitation loans receivable. Post -Employment Benefits The Town provides post-retirement health care benefits to all employees who retire with at least 20 years of full time service and who are enrolled in the Plan at the time of retirement. During the year, $4,995 was paid on behalf of three retirees. 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. 18 TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2017 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. 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 available to the Town within the State of New York. These reserve funds are established through Board action or voter approval 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 the Town include the following: 19 TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2017 Note I Summary of Significant Accounting Policies - Continued Legally Adopted Reserves - Continued • 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 Highway Townwide Fund. 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, and 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 the state, its municipalities and school districts. The written investment policy requires repurchase agreements to be purchased from banks located within the State. Underlying securities must be obligations of the federal government and must have a market value of at least 105% of the cost of the repurchase agreement. 20 TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2017 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 previously in these notes. Governmental Accounting Standards Board 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 collateralized 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 $1,310,718, including certificates of deposit, are either insured or collateralized with securities 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 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, or 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 financial 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 not in the Town's name. At December 31, 2017 the Town had the following investments: Carrying Amount Type of Cost Fair Value Investment Category Certificate of General - Townwide Fund $ 160,752 $ 160,752 Deposit (12 month) 2 Certificate of Highway - Townwide Fund 225,323 225,323 Deposit (6 month) 2 The Town does not typically purchase investments for a long enough duration to cause it to believe it is exposed to any material interest rate risk. The Town does not typically purchase investments denominated in a foreign currency and is not exposed to foreign currency risk. 21 TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2017 Note 3 Loans Receivable and Unavailable Revenues Loans receivable at December 31, 2017 consisted of the following, which are stated at net realizable value: Description Amount Special Grant Fund 2014 Rehabilitation $ 218,986 Total $ 218,986 The balance of loans receivable of the 2014 rehabilitation loans represents loans with an original principal of $327,850. Principal payments were received during 2017, resulting in a loans receivable balance of $218,986 at December 31, 2017. This balance is also reported as deferred inflows of resources -unavailable revenues. The 2007 rehabilitation loan with an original amount of $8,147 was fully repaid in 2017. Note 4 Noncurrent Government Assets (Fixed Assets) Changes in fixed assets for fiscal year ended December 31, 2017 are as follows: Balance Balance Beginning End of of Year Additions Deletions Year Land $ 5631000 $ $ $ 563,000 Buildings 730,059 730,059 Machinery and equipment 2,477,539 218,735 190,621 2150513653 Total S 3,770,598S 218,735$ 190,621 $ 3,798,712 Note S Liabilities Accounts payable consists of amounts owed by the Town for various goods and services. Accrued liabilities represent payroll expense accrued at year-end. 22 TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2017 Note 6 Pension Plans Plan Description The Town participates in the New York State and Local Employees' Retirement System (ERS). 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. 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 required 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 payroll 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 2017 $ 105,058 2016 119,997 2015 1449036 The Town's contributions made to the System were equal to 100% of the contributions required for each year. 23 TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2017 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 in the Plan at the time of retirement. Currently, there are three 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 $185 per month to each retiree to apply toward retirees' premium cost. Post -employment benefit expenses are recognized as costs are incurred. During the fiscal year, expenses of $4,995 were recognized for post retirement health care. Note 8 Compensated Absences The Town has compensated absences outstanding as of December 31, 2017 in the amount of $95,653. Compensated absences represents the value of the earned and unused portion of accumulated sick leave. Note 9 Fund Balance Detail At December 31, 2017, restricted and assigned fund balance was as follows: 24 Restricted Assigned Unemployment Appropriated Insurance Capital Fund Total for Next Fund Total Funds Reserve Reserve Balance Restricted Year's Budget Balance Assigned General Townwide $ 10,325 $ 160,752 $ $ 171,077 $ 20,000 $ $ 20,000 General Parttown 40,000 14,518 54,518 Highway Townwide 255,316 255,316 224,900 224,900 Highway Parttown 105,000 345,336 450,336 Lighting District 52,967 52,967 Special Grant 81,684 81,684 Totals $ 10,325 $ 416,068$ 81,684$ 508,077 $ 389,900$ 412,821 $ 802,721 24 Note 9 TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2017 Fund Balance Detail - Continued Restricted Fund Balances Portions of fund balance are reserved and are not available for current expenditures as reported in the Balance Sheet. The restricted balances and activity for the year ended December 31, 2017 are as follows: Beginning Interest Reserved Fund Balance Balance Additions Earned Unemployment insurance- General Fund $ 10,307$ $ 18 $ Capital reserve- General Fund 1301293 30,459 Capital reserve- Highway Townwide Fund 2791897 159,985 610 Loan funds- Special Grant Fund 80,253 1,431 Total $ 500,750$ 185,964$ $ Note 10 Note 11 Commitments and Contingencies Risk Financing and Related Insurance Released/ Ending Appropriated Balance $ 10,325 160,752 (185,176) 255,316 81,684 (185,176) $ 508,077 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 omissions; 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. Stewardship - Deficit Fund Balance Appropriations in Excess of Available Fund Balance The Town's General Townwide Fund had an appropriated fund balance of $20,000 at December 31, 2017, as a result of the approved 2018 budget. This amount is in excess of available fund balance of ($1,331) by $21,351 at December 31, 2017. This resulted from continued decreasing sales tax allocations from the County along with budgeted expenditures exceeding budgeted revenues. The Town's Highway Townwide Fund had an appropriated fund balance of $224,900 at December 31, 2017, as a result of the approved 2018 budget. This amount is in excess of available fund balance of $190,707 by ($34,193) at December 31, 2017. This resulted from budgeted expenditures exceeding budgeted revenues. The Town is currently in the process of developing a plan to address these fund balance deficits. 25 What Does It Mean to Have a Higher Standard? We believe the greatest successes are not born from a single event. They are the result of hard work, planning, tenacity, passion and focus. They grow without compromising - heralding honor, respect and admiration through the business world and throughout the community. They set a higher standard for all. It is this standard that we bring to every client and every aspect of their business. Through our partnership and leadership we aim to help these clients continue to achieve great successes that can be measured in more than just dollars. insero&co Certified Public Accounw-its ( Business Advisors iI I i cifll ti_ (t_ 31Ii,l!Id I �o ,: t ;l:il I I 8HI)i — I { "eti-11led Public ACC 1111t,11IL4 I I)l1,inc,, COMMUNICATION WITH THOSE CHARGED WITH GOVERNANCE AT THE CONCLUSION OF THE AUDIT 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 311, 2017, 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 June 5, 2018. 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 2017. We noted no transactions entered into by the Town during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. 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 significant 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 estimate of compensated absences 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. CR,S, 1117 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 the State of New York, and are not intended to be a complete presentation in accordance with accounting principles generally accepted in the United States (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 schedule attached 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 auditor's 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 2, 2018. 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 auditor's 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. 2 Other Audit Findings or Issues As noted in the Independent Auditor's 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, , C. - (f p J Insero & Co. CPAs, LLP Certified Public Accountants Ithaca, New York October 2, 2018 3 Town of Groton Schedule of Corrected Misstatements For the year ended December 31, 2017 The following audit adjustments were reviewed, approved, and posted by management. Condition Prior to Adjustment General Part -Town Fund Accounts receivable understated Total General Part -Town Fund Audit Adjustments Highway Town -Wide Fund Accounts payable understated Total Highway Town -Wide Fund Audit Adjustments Net Effect of Adjustment on Cause Fund Equity Unrecorded activity $ Unrecorded activity $ Highway Part -Town Fund Accounts receivable understated Unrecorded activity Accounts payable understated Unrecorded activity Total Highway Part -Town Fund Audit Adjustments 4 13,000 13,000 (13,513) (13,513) 28,160 (2,500) 25,660