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Home My WebLink About1989 Town AuditTOWN OF GROTON Groton, New York Financial Report December 31, 1989 r x.. c d`` -' e - Y u • p T. -41 J T i��, a �"s ... .. �� > `��-'. .',.• ��';!�_ .k �,-. a, H' an v t 4 x ud- x, Ciaschi • Dietershagen • Schaufler • Mickelson $# y Certified Public Accountants Consultants and TOWN OF GROTON TABLE OF CONTENTS Independent Auditors' Report ................................... I Independent Auditors' Report on Compliance with Laws and Regulations Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards issued by the GAO .......................... II-III Schedule of Material Instances of Noncompliance with Laws and Regulations - Current Year ...................... IV Schedule of Material Instances of Noncompliance with Laws and Regulations - Prior Year ........................ V Independent Auditors' Report on Internal Control Structure Related Matters Noted in a Financial Statements Audit Conducted in Accordance with Government Auditing Standards ............................................ VI -VII Combined Balance Sheet ......................................... 1-2 Combined Statement of Revenues, Expenditures and Changes in Fund Balances ...................................... 3-4 Comparative Operating Statement for the General and Special Revenue Funds ..................................... 5-6 Notes to Financial Statements .................................. 7-14 Independent Auditors' Report Additional on Information ......... 15 Combining Balance Sheet - General Fund ......................... 16 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - General Fund ....................... 17 Combining Balance Sheet - Special Revenue ...................... 18-19 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Special Revenue .................... 20-21 Frederick J. Ciaschi, C.P.A. John H. Dietershagen, C.P.A. Craig L. Schaufler, C.P.A. Jerry E. Mickelson, C.P.A. John E. Little, C.P.A. Thomas K. Van Derzee, C.P.A.* Debbie A. Conley, C.P.A. Reginald E. Malley, C.P.A. Cornelia H. Hill Dennis G. Jones, C.P.A. Patrick S. Jordan, C.P.A. Patricia C. Steele, C.P.A. Blixy K. Taetzsch, C.P.A. Francis E. Welch, C.P.A. "Admitted to New York State Bar Town Board Town of Groton Ithaca, New York Ciaschi Dietershagen Schaufler X, Mickelson Certified Public Accountants and Consultants Terrace Hill Ithaca, New York 14850 607-272-4444 INDEPENDENT AUDITORS' REPORT We have audited the accompanying general purpose financial statements of the Town of Groton, as of December 31, 19$9 and for the year then ended. These general purpose financial statements are the responsibility of the Town's management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the general purpose financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the general purpose financial statements referred to above present fairly, in all material respects, the financial position of the Town of Groton, as of December 31, 1989, and the results of its operations for the year then ended in conformity with generally accepted accounting principles. April 25, 1990 Ithaca, New York ICORTLAND I ITHACA WATKINS GLEN 18 Tompkins Street Terrace Hill 211 N. Franklin Street Cortland, New York 13045 Ithaca, New York 14850 Watkins Glen, New York 14891 607-753-7439 607-272-4444 607-535-4443 Frederick J. Ciaschi, C.P.A. John H. Dietershagen, C.P.A. Craig L. Schaufler, C.P.A. Jerry E. Mickelson, C.P.A. John E. Little, C.P.A. Thomas K. Van Derzee, C.P.A.* Debbie A. Conley, C.P.A. Reginald E. Malley, C.P.A. Cornelia H. Hill Dennis G. Jones, C.P.A. Patrick S. Jordan, C.P.A. Patricia C. Steele, C.P.A. Blixy K. Taetzsch, C.P.A. Francis E. Welch, C.P.A. 0 "Admitted to New York State Bar Ciaschi Dietershagen Schaufler AL Mickelson Certified Public Accountants and Consultants Terrace Hill Ithaca, New York 14850 607-272-4444 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH LAWS AND REGULATIONS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS ISSUED BY THE GAO Town Board Town of Groton Ithaca, New York We have audited the general purpose financial statements of the Town of Groton as of and for the year ended December 31, 1989, and have issued our report thereon dated April 25, 1990. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. Compliance with laws, regulations, contracts, and grants applicable to the Town of Groton is the responsibility of the Town's management. As part of obtaining reasonable assurance about whether the general purpose financial statements are free of material misstatement, we performed tests of Town of Groton's compliance with certain provisions of laws, regulations, contracts, and grants. However, it should be noted that our objective was not to provide an opinion on overall compliance with such provisions. Material instances of noncompliance are failures to follow requirements, or violations of prohibitions, contained in statutes, regulations, contracts, or grants, that cause us to conclude that the aggregation of misstatements resulting from those failures or violations are material to the general purpose financial statements. The results of our tests of compliance disclosed material instances of noncompliance as described in the attached schedule, the effects of which have been corrected in the Town of Groton's 1989 general purpose financial statements. In addition, as described in the attached schedule, material instances of noncompliance from 1988 are reviewed for current status. II CORTLAND ITHACA WATKINS GLEN 18 Tompkins Street Terrace Hill 211 N. Franklin Street Cortland, New York 13045 Ithaca, New York 14850 Watkins Glen, New York 14891 607-753-7439 607-272-4444 607-535-4443 11 ll 11 We considered these material instances of noncompliance in forming our opinion on whether Town of Groton's 1989 general purpose financial statements are presented fairly, in all material respects, in conformity with generally accepted accounting principles, and this report does not affect our report dated April 25, 1990 on those general purpose financial statements. Except as described in the attached schedule, the results of our tests of compliance indicate that, with respect to the items tested, the Town of Groton complied, in all material respects, with provisions referred to in the third paragraph of this report and with respect to items not tested, nothing came to our attention that caused us to believe that the Town of Groton had not complied, in all material respects, with those provisions. This report is intended for the information of management, and the Town Board. This restriction is not intended to limit the distribution of this report, which is a matter of public record. - r April 25, 1990 Ithaca, New York III 1� TOWN OF GROTON SCHEDULE OF '-IATERIAL INSTANCES OF NONCOMPLIANCE WITH LAWS AND REGULATIONS CURRENT YEAR - DECEMBER 31, 1989 REPORT FINDINGS The following items were noted during our audit of compliance with laws and regulations of the Town's general purpose financial statements. Investment Policy The Town of Groton has not established or adopted a written investment policy. Every local governmental unit should have a written investment policy approved by the governing board. Such written investment policy should include: The official designated by the governing board to make investment transactions. The approved list of depositories and trading partners with investment units. The type of records and controls that are required to safeguard the investments. The main objectives of a written investment policy are to provide reasonable assurance: That assets are safeguarded. That investments will mature when cash is required to finance operations. That there will be a competitive rate of return on investments. The investment policy should comply with statute and be periodically reviewed and revised as necessary to reflect changes in available investment opportunities and market conditions. Budget Overexpenditures - Special Revenue Fund During the current audit the budget was overexpended in interfund transfers by $40,000. Although the expenditures were approved by the Board, the budget was not amended to reflect the approved expenditures. Cash Management During the audit process we discovered that there was not an adequate amount of securities held as collateral by the Town's bank to fully collateralize cash on deposit at December 31, 1989. The FDIC guarantees bank accounts up to $100,000, thereafter, a request must be made of the bank for additional collateral to secure the Town's cash. Cash balances at December 31, 1989 totals $801,653, however, only $791,167 was secured by securities held as collateral and FDIC insurance leaving $10,486 undercollateralized deposits. We strongly recommend that the Town take measures to ensure that their bank holds an adequate amount of securities to fully collateralize their cash on deposit with the bank at all times. Annual Financial Report Update Document During the current audit we noted that the Capital Project Fund was not reported to the State on the Annual Financial Report Update document. We strongly recommend that the State report be filled out in its entirety and that someone review the document before it is submitted to ensure completeness of the report. IV Budget Overexpenditures During the prior year's audit we noted that the General Fund was overexpended in health and interfund transfers. We also noted that the Special Revenue Fund was overexpended in interfund transfers. During the current year's audit, only the interfund transfers in the Special Revenue Fund were overexpended. Cash Management During the prior year's audit we noted that the Town was undercollateralized at its bank for deposits on hand. During the current year's audit the Town was also undercollateralized. General We recommend that the areas of noncompliance be reviewed and corrective action be implemented to preclude further occurrence of noncompliance with laws and regulations. V TOWN OF GROTON SCHEDULE OF MATERIAL INSTANCES OF NONCOMPLIANCE WITH LAWS AND REGULATIONS PRIOR YEAR — DECEMBER 31, 1988 REPORT FINDINGS The following items of noncompliance were noted during our audit of compliance with laws and regulations of the Town's general purpose financial statements for the year ended December 31, 1988. Investment Policy In our audit report for the year ended December 31, 1988 we noted that the Town had not adopted an investment policy. During our audit noted that the Town still has not adopted an investment policy. for 1989, we Budget Overexpenditures During the prior year's audit we noted that the General Fund was overexpended in health and interfund transfers. We also noted that the Special Revenue Fund was overexpended in interfund transfers. During the current year's audit, only the interfund transfers in the Special Revenue Fund were overexpended. Cash Management During the prior year's audit we noted that the Town was undercollateralized at its bank for deposits on hand. During the current year's audit the Town was also undercollateralized. General We recommend that the areas of noncompliance be reviewed and corrective action be implemented to preclude further occurrence of noncompliance with laws and regulations. V Town Board Town of Groton Groton, New York We have audited the general purpose financial statements of the Town of Groton for the year ended December 31, 1989, and have issued our report thereon dated April 25, 1990. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement. In planning and performing our audit of the general purpose financial statements of the Town of Groton for the year ended December 31, 1989, we considered its internal control structure in order to determine our auditing procedures for the purpose of expressing our opinion on the general purpose financial statements and not to provide assurance on the internal control structure. The management of the Town of Groton is responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility, estimates and judgments by :management are required to assess the expected benefits and related costs of internal control structure policies and procedures. The objectives of an internal control structure are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of general purpose financial statements in accordance with generally accepted accounting principles. Because of inherent limitations in any internal control structure, errors or irregularities may nevertheless occur and not be detected. Also, projection of any evaluation of the system to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate. VI CORTLAND Frederick J. Ciaschi, C.P.A. John H. Dietershagen, C.P.A. / Ciaschi Dietershagen 18 Tompkins Street Cortland, New York 13045 Terrace Hill Ithaca, New York 14850 Schaufler 607-753-7439 Craig L. Schaufler, C.P.A. 607-535-4443 Jerry E. Mickelson, C.P.A. Mickelson John E. Little, C.PA. Thomas K. Van Derzee, C.P.A.* Certified Public Accountants and Consultants Debbie A. Conley, C.PA. Reginald E. Malley, C.P.A. Terrace Hill Ithaca, New York 14850 607-272-4444 Cornelia H. Hill Dennis G. Jones, C.P.A. Patrick S. Jordan, C.P.A. Patricia C. Steele, C.P.A. Blixy K. Taetzsch, C.PA. Francis E. Welch, C.P.A. 'Admitted to New York State Bar INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL STRUCTURE RELATED MATTERS NOTED IN A FINANCIAL STATEIIENT AUDIT CONDUCTED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Town Board Town of Groton Groton, New York We have audited the general purpose financial statements of the Town of Groton for the year ended December 31, 1989, and have issued our report thereon dated April 25, 1990. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement. In planning and performing our audit of the general purpose financial statements of the Town of Groton for the year ended December 31, 1989, we considered its internal control structure in order to determine our auditing procedures for the purpose of expressing our opinion on the general purpose financial statements and not to provide assurance on the internal control structure. The management of the Town of Groton is responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility, estimates and judgments by :management are required to assess the expected benefits and related costs of internal control structure policies and procedures. The objectives of an internal control structure are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of general purpose financial statements in accordance with generally accepted accounting principles. Because of inherent limitations in any internal control structure, errors or irregularities may nevertheless occur and not be detected. Also, projection of any evaluation of the system to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate. VI CORTLAND ITHACA WATKINS GLEN 18 Tompkins Street Cortland, New York 13045 Terrace Hill Ithaca, New York 14850 211 N. Franklin Street Watkins Glen, New York 14891 607-753-7439 607-272-4444 607-535-4443 [l For the purpose of this report, we have classified the significant internal control structure policies and procedures in the following categories: CYCLES OF THE TOWN'S ACTIVITY Treasury or financing Revenue/ receipts Purchases/disbursements External financial reporting For all of the control categories listed above, we obtained an understanding or the design of relevant policies and procedures and whether they have been placed in operation, and we assessed control risk. Our consideration of the internal control structure would not necessarily disclose all matters in the internal control structure that might be material weaknesses under standards established by the American Institute of Certified Public Accountants. A material weakness is a reportable condition in which the design or operation of one or more of the specific internal control structure elements does not reduce to a relatively low level the risk that errors or irregularities in amounts that would be material in relation to the general purpose financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no ;natters involving the internal control structure and its operation that we consider to be material weaknesses as defined above. This report is intended for the information of management, and the Town Board. This restriction is not intended to limit the distribution of this report, which is a matter of public record. 1 April 25, 1990 Ithaca, New York VII TOWN OF GROTON COMBINED BALANCE SHEET DECEMBER 31, 1989 Governmental Special ASSETS General Revenue Cash $ 3589163 $ 3622161 Other Receivables Due from Other Funds 51,860 Fixed Assets (Net) Provisions to be Made in Future Budgets Restricted Cash Materials & Supplies Inventory Prepaids TOTAL ASSETS $ 3641,023 $ 362.161 LIABILITIES, DEFERRED REVENUES AND EQUITY Liabilities Accounts Payable $ 5,096 $ 95159 Accrued Liabilities Notes Payable Other Liabilities Due to Other Funds Bond and Long -Term Liabilities Agency Fund Liabilities Retainage Payable (Note 3) Total Liabilities 51,096 91159 Deferred Revenues Equity Investment in General Fixed Assets Fund Balances - Reserved Trusts Special 3,552 61279 Total Reserved 32552 6,279 Fund Balances - Unreserved Appropriated -Ensuing Year's Budget 801,000 1852000 Unappropriated 2755375 1619723 Total Unreserved 355,375 346,723 Total Equity 358,927 3535002 TOTAL LIABILITIES, DEFERRED REVENUES & EQUITY $ 364,023 $ 362,161 See Independent Auditors' Report on Additional Information - 1 - Fiduciary Fund Types Fund Types General Account Groups Capital Long -Term Projects Trust & Agency Fixed Assets Obligations $ 792901 $ 1,682 $ $ 1,565,694 7,712 $ 79,901 $ 12682 $ 1,565,694 $ 5,860 23 , 920 29,1780 50,121 50,121 50,121 $ 79,901 1,682 1,682 1,565,694 $ 11682 $ 1,565,694 - 2 - 7,712 7,712 7,712 7.712 TOWN OF GROTON COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE FISCAL YEAR ENDED DECEMBER 31, 1989 Governmental Special REVENUES AND OTHER SOURCES General Revenue Revenues Real Property Taxes $ 3175835 $ 281,702 Real Property Tax Items Non -Property Tax Items Departmental Income Intergovernmental Charges Charges for Services Use of Money and Property Licenses and Permits Fines and Forfeitures Sale of Property and Compensation for Loss Miscellaneous Local Sources State Aid Federal Aid Total Revenues Other Sources Operating Transfers TOTAL REVENUES AND OTHER SOURCES EXPENDITURES AND OTHER USES Expenditures General Government Support Public Safety Health Transportation Culture and Recreation Home and Community Services Employee Benefits Debt Service (Interest) Operating Expenses Interest Expense Economic Assist & Opportunity Total Expenditures Other Uses Operating Transfers TOTAL EXPENDITURES AND OTHER USES Revenues and Other Sources Over (Under) Expenditures and Other Uses Fund Balances and Surplus, Beginning of Year Fund Balances and Surplus, End of Year 4,407 3,388 34,695 5,547 3,658 458,600 167,215 6,803 389500 28,541 15,049 26,174 19,037 1,202 12,710 315,231 140,000 455,231 3,369 355,558 $ 358.927 $ See Independent Auditors' Report on Additional Information - 3 - 128,626 76,104 486,432 486,432 45,000 374,250 40,513 459,763 115,000 574,763 (88,331) 441,333 353,002 I Fund Types Capital Projects 255,000 255,000 453,572 453,572 453,572 (198,572) 248,693 50,121 - 4 - TOWN OF GROTON COMPARATIVE OPERATING STATEMENT FOR THE GENERAL AND SPECIAL REVENUE FUNDS FOR THE FISCAL YEAR ENDED DECEMBER 315 1989 General Fund REVENUES AND OTHER SOURCES Modified Budget Actual Revenues Real Property Taxes $ 317,835 $ 317,835 Real Property Tax Items 29500 42407 Non -Property Tax Items Departmental Income 1,750 3,388 Intergovernmental Charges Use of Money and Property 13,000 34,695 Licenses and Permits 59500 51547 Fines and Forfeitures 19350 39658 Sale of Property and Compensation for Loss Miscellaneous Local Sources 886 State Aid 569000 88,184 Federal Aid Total Revenues 397,935 458,600 Other Sources Operating Transfers TOTAL REVENUES AND OTHER SOURCES 397,935 458,600 EXPENDITURES AND OTHER USES Expenditures General Government Support 2789336 1679215 Public Safety 92000 65803 Health 38,700 38,500 Transportation 289960 28,541 Culture and Recreation 195249 15,049 Home and Community Services 459700 262174 Employee Benefits 25,200 19,037 Debt Service (Interest) 31700 19202 Economic Assist & Opportunity 14,090 129710 Total Expenditures 462,935 315,231 Other Uses Operating Transfers 140,000 140,000 TOTAL EXPENDITURES AND OTHER USES 6029935 4555231 Revenues & Other Sources Over (Under) Expenditures and Other Uses $ (205,000) 3,369 Fund Balances - Beginning of Year 355,558 Fund Balances - End of Year $ 358.927 See Independent Auditors' Report on Additional Information - 5 - 60,665 420,650 486,432 65,782 111,121 Special Revenue Fund Types Variance 45,000 45,000 Variance Favorable Favorable (Unfavorable) Modified Budaet Actual (Unfavorable) $ -0- $ 281,702 $ 2819702 $ -0- 11907 1,638 53,534 409513 139021 21,695 685000 128,626 601626 47 2,308 6139184 459,763 153,421 886 759000 115,000 (405000) 32,184 70,948 76904 5,156 60,665 420,650 4863,432 65,782 60,665 420,650 486,432 65,782 111,121 21,197 45,000 45,000 -0- 200 419 5145650 374,250 140,400 4,200 19,526 6,163 53,534 409513 139021 2,498 1,380 147,704 6139184 459,763 153,421 -0- 759000 115,000 (405000) 147,704 688,184 57411763 1135421 $ 208,369 $ (267,534) (88,331) $ 179,203 441,333 $ 353,002 - 6 - TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS DECEMBER 31 , 1989 Note 1 — Summary of Significant Accounting Policies A. Reporting Entity The Town of Groton (which was incorporated in 1865) is governed by the Charter of the Town of Groton, the municipal law and other general laws of the State of New York, and various local laws and ordinances. The Town Board, which is the legislative body responsible for the overall operation of the Tocan, consists of a Supervisor and four Councilmen. The Supervisor serves as Chief Fiscal Officer and the Town Clerk serves as Chief Recording Officer. The Town provides the following principal services: public safety (fire protection and ambulance service), transportation (streets and highways), recreation, planning and zoning, general administration and public improvements. Street lighting is provided by the Town Board in two separate areas of the Town called lighting districts. It is funded by means of a special ad valorem tax on the real property situated within each district. Fire protection for certain areas of the Town outside the village is provided by the Town Board via the Groton Fire Protection District. This district is funded by means of a special ad valorem tax on the real property situated within the district. The furnishing of fire protection for the area of Town around the hamlet of McLean is not a Town function. Instead, it is the responsibility of the -fire commissioners who constitute the governing board of the McLean Fire District whose boundaries are partly within the Town of Groton and partly within the Town of Dryden. Fire commissioners are elected by the qualified voters living within the district. Fire district operations, including the financing thereof through real property taxation, are carried out at the direction of the fire commissioners, and the Town has no oversight or managerial responsibility therefore. The fire district is not considered part of the Town's reporting entity. B. Basis of Presentation The accounts of the Town are organized on the basis of funds or account groups, each of which is considered a separate accounting entity. These funds and account groups are based upon the requirements of Generally Accepted Accounting Principles (GAAP) as well as the New York Uniform System of Accounts of Towns. The operations of each fund are accounted for within a separate set of self—balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures or expenses. Governmental resources are allocated to and accounted for in individual funds based upon the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions and limitations. The various funds are grouped in the financial statements in the following fund types and account groups: - 7 - TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1989 Governmental Funds: Fiduciary Fund 1. Trust and Agency Funds Used to account for those funds held in trust or as agent for subsequent distribution to other governments, persons or funds. Account Groups Account groups are used to establish accounting control and accountability for the Town's general fixed assets and general long-term debt. The two account groups are not "funds". They are concerned only with the measurement of financial position, and not with the results of operations. General Fixed Assets Account Group This group of accounts is established to account for all land, buildings, improvements, and equipment utilized by the Town for Town purposes. _ 8 - I. General Fund To account for revenues (i.e., general tax and other from state, federal and local sources) which are not required by law or other provision to be accounted for in other funds and which finance the basic governmental functions provided by the Town. 2. Special Revenue Funds Utilized to account for revenues derived from specific sources which are required by law or regulation to be accounted for in separate funds. Special Revenue Funds include the following: a. Highway Funds - (Town -wide and outside village) established pursuant to Highway Law, Section 141, to account for revenues and expenditures for highway purposes. Highway Law, Section 277 requires that expenditures for repairs and improvements be financed by the area outside the village. Therefore, a town with a village must maintain two highway funds. b. Special District Funds - (Lighting District and Fire Protection District) are used to record transactions for operation and maintenance. c. Risk Retention Fund - Established for unemployment reserves held by the Town for reimbursement to the State for claims filed by former employees. This is a dollar for dollar reimbursement. 3. Capital projects Fund Used to account for financial resources to be used for the acquisition or construction of major capital facilities. Fiduciary Fund 1. Trust and Agency Funds Used to account for those funds held in trust or as agent for subsequent distribution to other governments, persons or funds. Account Groups Account groups are used to establish accounting control and accountability for the Town's general fixed assets and general long-term debt. The two account groups are not "funds". They are concerned only with the measurement of financial position, and not with the results of operations. General Fixed Assets Account Group This group of accounts is established to account for all land, buildings, improvements, and equipment utilized by the Town for Town purposes. _ 8 - TOWN OF Gi�OTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31 , 1989 General Long -Terra Debt Account Group This group of accounts is established to account for all long-term debt and other obligations of the Town. Long-term indebtedness includes obligations such as bonds, and bond anticipation notes. Other obligations included: unbilled retirement liabilities, any vested or accumulated vacation and/or sick leave, etc. in future budgets. C. Basis of Accounting The Town maintained its records on the double -entry basis of accounting prescribed by the State Comptroller, as set forth in the Uniform System of Accounts for Towns. Town funds are accounted for on the modified accrual basis, 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 for the current period. Material revenues that are accrued include real property taxes, state and federal aid, and certain user charges. Expenditures are recorded when the fund liability is incurred except that: a. Expenditures for prepaid expenses and inventory type items are recognized at the time of the disbursements. b. Principal and interest on indebtedness are not recognized as an expenditure until due. C. Compensated absences, such as vacation and sick leave which vests or accumulates, are charged as an expenditure when paid. See Note 1-H. d. Pension costs are recognized as an expenditure when billed by the State. See Note 2 -B -I . Account Groups General fixed assets are recorded at actual or estimated cost or, in the case of gifts and contributions, at the fair market value at the time received. No provision for depreciation is made. General long-term debt liabilities are recorded at the par value o -F the principal amount. No liability is recorded for interest payable to maturity. Long-term liabilities expected to be financed from governmental funds are accounted for in the General Long -Term Account Group, rather than governmental funds. D. Property Taxes Town real property taxes are levied annually on January 1, and become a lien on April 1. Taxes are collected during the period January 1, to January 31, at face value and from February 1, to May 30, with interest added. On May 31, the list of unpaid taxes is sent to the County Treasurer and the taxes are relevied on the County Tax Roll on January 1, of the following year. - 9 - TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1989 E. Budgetary Data The budget policies are as follows: 1. Budgets are adopted annually on a basis consistent with generally accepted accounting principles. Appropriations authorized for the current year are increased by the amount of encumbrances, if any, carried forward from the prior year. 2. The supervisor, as budget officer, files a tentative budget with the Town Clerk by September 30. It is submitted by the clerk to the Town Board by October 5, for their review and modification and, upon their approval, it becomes the preliminary budget. 3. A public hearing thereon must be held on or before the Thursday immediately following general election day. The preliminary budget as submitted or amended must be adopted by November 20. 4. The Town Board may amend the budget as necessary during the year. Unexpended appropriations lapse at the end of the year. Encumbrance accounting is not used. F. General Fixed Assets General fixed assets purchased are recorded at cost as expenditures in the respective fund at time of purchase. Such assets are accounted for in the General Fixed Asset Group of Accounts. Fixed asset values are shown on the combined balance sheet for the fiscal year ended December 31, 1989 and are reported at cost or estimated cost. G. General Long -Term Indebtedness a. General Long -Term Indebtedness Bonds and bond anticipation notes issued are recognized when issued. b. Retirement The Town participates in the New York State and Local Employees' Retirement System. These are cost sharing multiple public employer retirement systems. Obligations of employers and employees to contribute the benefits to employees are governed by the New York State Retirement and Social Security Law. The systems offer a wide range of plans and benefits which are related to years of service and final average salary, vesting the retirement benefits, death and disability benefits and optional methods of benefit payments. All benefits generally vest after ten years of credited service. The NYSRSSL provides that all participating employers in each system are jointly and severally liable for any actuarial unfunded amounts. Such amounts are collected through annual billing to all participating employers. Generally, all employees, except certain part-time employees, participate in the systems. The systems are noncontributory except for employees who joined the Employees' Retirement System after July 27, 1976 who contribute 3% of their salary. Employee contributions are deducted by employers from employees' paychecks and are sent currently to the Employees' Retirement System. - 10 - TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1989 Nearly all Town of Groton employees are eligible for membership in the systems. All employees employed in a full-time position who commenced employment after June 30, 1976 are mandatory members. Through 1989, the systems billed all participating employers by May 31, each year. Billings were based on salaries paid during the system's fiscal year which ended March 31, of the previous calendar year, and in accordance with funding requirements determined by the system's actuary. Employers were required to remit payment in full by June 30. After June 30, amounts not paid would accumulate interest at 8% per annum. At December 31, 1989 unbilled amounts due to the system are recognized in the General Long -Term Debt Group of Accounts. H. Compensated Absences Full time employees earn from one to three weeks vacation leave per year depending on length of employment. Vacation leave must be taken in the year it is earned or it is forfeited. Sick leave is earned at the rate of one day for every two months of employment. Unused sick leave may be accumulated and is convertible to cash upon termination of employment. The monetary value of accumulated unused sick leave is $7,712 and is reflected in the long-term debt group of accounts. I. Interfund Transfers During the course of operations, the Town has transactions between funds, including expenditures and transfers of revenues to provide services and construct assets. Note 2 - Detail Notes on All Funds and Account Groups A. Assets I. Cash and Investments The Town of Groton investment policies are governed by State statutes. In addition, the Town of Groton has its own written investment policy. Town of Groton monies must be deposited in FDIC insured commercial banks or trust companies located within the State. The Clerk -Treasurer is authorized to use demand accounts and certificates of deposit. Permissible investments include obligations of the U.S. Treasury and U.S. Agencies, repurchase agreements, and obligations of New York State or its localities. Collateral is required for demand deposits and certificates of deposit at 105% of all deposits not covered by Federal Deposit Insurance. Obligations that may be pledged as collateral are obligations of the United States and its agencies and obligations of the State and its municipalities. TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1989 Deposits and investments at year-end were entirely covered by Federal Deposit Insurance or by collateral held by the Town's custodial bank in the Town's name. They consisted of: Fund Interest Bearing Noninterest Bearing General & Special District $ 341,912 $ 172211 Highway 3322393 22,274 Capital Projects 792901 -0- Risk Retention 62280 -0- Trust & Agency -0- 11682 7602486 41,167 FDIC Insured 1009000 419167 Uninsured 6601)486 -0- Collateralized 650,000 -0- Undercollateralized $ 10,486 $ -0- II. Changes in Fixed Assets A summary of changes in general fixed assets is as follows: Balance Balance Type 1/1/89 Additions Deletions 12/31/89 Land $ 832003 $ -0- $ -0- $ 83,003 Buildings 2421,302 3785284 -0- 6209586 Machinery & Equipment 845,948 17,657 15500 862,105 $1,171,253 $395,941 $ 1,500 $1,565,694 B. Liabilities I. Pension Plans The Town of Groton participates in the New York State and Local Employees' Retirement System. The system is a cost sharing multiple public employer retirement system. The system offers a wide range of plans and benefits which are related to years of service and final average salary, vesting of retirement benefits, death and disability. All benefits generally vest after ten years of service. The New York State Retirement and Social Security Law provides that all participants in each system are jointly and severally liable for any actuarial unfunded amounts. Such amounts are collected through annual billings to all participating employers. Generally, all employees, except certain part-time employees, participate in the system. The system is non-contributory except for employees who joined the system after July 27, 1976, who contribute 3% of their salary. I - 12 - TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECE14BER 31 , 1989 The payroll for employees for the Employees' Retirement System for the year ended December 31, 1989 was $243,194. Contributions for 1989 are billed on the basis of salaries paid during the systems fiscal year ending March 31st. Contributions are made in accordance with funding requirements determined by the actuaries of the systems. The amounts billed by the systems during 1988 related to salaries paid from April 1, 1987 through Harch 31, 1988. These contributions represented 3% for employees. It is the policy of the Town to fund pension costs as billed by the systems. In 1989 the System's billing method was changed. The Town was billed for the periods of March 31, 1988, 1989, and 1990. The Town was given the option of paying the bill in full or paying the estimated March 31, 1990 and amortizing remaining over seventeen years at 8.75%. The Town opted to pay the bill in full. This amounted to $33,074. The pension benefit obligation is a standardized disclosure measure of the present value of pension benefits, adjusted for the effects of projected salary increases estimated to be payable in the future as a result of employees service to date. The measure, which is the actuarial present value of credited projected benefits, is intended to help users assess the system's funding status on a going concern basis, assess progress made in accumulating sufficient assets to pay benefits when due and make comparisons among public employees retirement systems and employers. The system does not make separate measurements of assets and pension benefit obligations for individual employers. The pension benefit obligation at March 31, 1987 for the Employees' Retirement System, as a whole, determined through an actuarial valuation performed as of that date, was $28.8 billion. The system's net assets available for benefits on that date were $32.7 billion. The Town of Groton employer's contribution requirements for the systems year ended March 31, 1987 was less than 1% of total contributions required of all participating entities. Historical trend information showing the progress in accumulating sufficient assets to pay benefits when due is presented in the annual report of the system. Additional detailed information concerning the system may also be found in this report. - 13 - TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1989 II. Indebtedness a. Changes The changes in the Town's indebtedness during the year ended December 31, 1989 are summarized as follows: Balance Balance 1/1/89 Additions Deletions 12/31/89 Bond Anticipation Notes $ 209000 $ -0- $ 205000 $ -0- Due to Retirement Systems 335074 331,074 -0- Compensated Absences 51988 1,724 -0- 7,712 $ 59,062 $ 1,724 $ 53,074 $ 7,712 III. Fund Balance a. Unreserved General Fund - The amount of $80,000 has been designated as the amount estimated to be appropriated to reduce taxes in the subsequent year as required by Section 1318 of the Real Property Tax Law. Note 3 - Retainage Payable The Town engaged a general contractor to build the Town Hall and garage. During 1989, while the building was in the process of being completed, this contractor filed for Chapter 11 bankruptcy. The amount in this payable account represents the retainage payable to this contractor. The Town feels that this amount will be used to pay for any additional work required to finish the building and that their potential liability to this contractor will be negligible. Additionally, mechanic's liens totaling $62,636 have been filed against the property containing the Town Hall and the Town Barn. These liens resulted from the general contractor's liability to pay the sub -contractors for the work done on the Town Hall. The bonding company is expected to pay the amount of the liens and, therefore, the liability to the Town is negligible. - 14 - INDEPENDENT AUDITORS' REPORT ON ADDITIONAL INFORMATION Town Board Town of Groton Groton, New York The general purpose financial statements and our reports thereon are set forth on page I to 14 inclusive of this report. Our audit was made primarily for the purpose of rendering an opinion on these general purpose financial statements, taken as a whole. The other data included in this report on pages 16 to 21, inclusive, although not considered necessary for a fair presentation of financial position and results of operations, are presented primarily for supplemental analytical purposes. This additional data for the year ended December 31, 1989, has been subjected to the audit procedures applied in the audit of the general purpose financial statements and, in our opinion, is fairly stated in all material respects in relation to the general purpose financial statements taken as a whole. April 25, 1990 Ithaca, New York - 15 - Cash Due From Other Funds TOTAL ASSETS TOWN OF GROTON COMBINING BALANCE SHEET GENERAL FUND DECEMBER 31, 1989 ASSETS Total $ 358,163 5,860 $ 364,023 Town Wide Part Town $ 280,633 $ 775530 5,860 $ 286,493 $ 77,530 LIABILITIES, DEFERRED REVENUES AND EQUITY Liabilities Accounts Payable Accrued Liabilities Total Liabilities Fund Balances - Reserved Special Total Reserved Fund Balances - Unreserved Appropriated -Ensuing Year's Budget Unappropriated Total Unreserved Total Equity TOTAL LIABILITIES, DEFERRED REVENUES & EQUITY $ 55096 $ 41997 $ 99 55096 41,997 99 39552 35552 31552 31,552 801,000 455000 35,000 2755375 232,944 42,431 355,375 277,944 771,431 358,927 2819496 775431 $ 364,023 $ 286,493 $ 77,530 See Independent Auditors' Report on Additional Information - 16 - TOWN OF GRO"170N COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GENERAL FUND FOR THE FISCAL YEAR ENDED DECEMBER 31, 1989 REVENUES AND OTHER SOURCES Total Town Wide Part Town Revenues 61803 61803 Real Property Taxes $ 317,835 $ 251,035 $ 66,800 Real Property Tax Items 41)407 45407 Departmental Income 31,388 606 21,782 Intergovernmental Charges 151,049 10,049 59000 Use or �vioney and Property 34,695 301020 41075 Licenses and Permits 5,547 5,547 29426 Fines and Forfeitures 39658 31)658 Sale of Property and Compensation for Loss 315,231 2431445 71,786 Miscellaneous Local Sources 886 260 626 State Aid 881,184 82,522 5,602 Total Revenues 4589600 378,055 809545 Other Sources Operating Transfers 33,369 (5,390) 81)759 TOTAL REVENUES AND OTHER SOURCES 458,600 378,055 80,545 EXPENDITURES AND OTHER USES Expenditures General Government Support 1679215 1671215 Public Safety 61803 61803 Health 389500 38,500 Economic Assistance and Opportunity 129710 129710 Transportation 289541 28,541 Culture and Recreation 151,049 10,049 59000 Home and Community Services 269174 314 25,860 Employee Benefits 19,037 16,611 29426 Debt Service (Interest) 1,202 19202 Total Expenditures 315,231 2431445 71,786 Other Uses Operating Transfers 1405000 140,000 TOTAL EXPENDITURES AND OTHER USES 4559231 383,445 719786 Revenues and Other Sources Over (Under) Expenditures and Other Uses 33,369 (5,390) 81)759 Fund Balances, Beginning of Year 3559558 286,886 68,672 Fund Balances, End of Year $ 358,927 $ 281,496 $ 77,431 See Independent Auditors' Report on Additional Information - 17 - ASSETS Cash Other Receivables Due from Other Funds TOTAL ASSETS TOWN OF GROTON COMBINING BALANCE SHEET SPECIAL REVENUE DECEMBER 31, 1989 LIABILITIES, DEFERRED REVENUES AND EQUITY Liabilities Accounts Payable Accrued Liabilities Due to Other Funds Total Liabilities Deferred Revenues Fund Balances - Reserved Special Total Reserved Fund Balances - Unreserved Appropriated -Ensuing Year's Budget Unappropriated Total Unreserved Total Equity TOTAL LIABILITIES, DEFERRED REVENUES & EQUITY Total $ 362,161 Highway Highway Town Wide Part Town $ 2975309 $ 579358 $ 362,161 $ 297,309 $ 57,1358 $ 95159 $ 91,159 $ 91159 92159 6,279 61279 185,000 160,000 25,000 161,723 128,150 32,358 3462723 288,150 579358 353,002 288,150 572358 $ 362IL161 $ 2972309 $ 57,358 See Independent Auditors' Report on Additional Information - 18 - Lighting District $ 1,215 $ Fire Protection District Risk Retention $ 6,279 $ 1, 215 $ $ 6,,279 1,215 1,215 1,215 6,279 6,279 6,279 $ 1,215 $ $ 61279 - 19 - TOWN OF GROTON COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES SPECIAL REVENUE FOR THE FISCAL YEAR ENDED DECEMBER 315 1989 Highway Highway REVENUES AND OTHER SOURCES Total Town Wide Part Town Revenues Real Property Taxes Real Property Tax Items Departmental Income Intergovernmental Charges Use of Money and Property Sale of Property and Compensation for Loss Miscellaneous Local Sources State Aid Federal Aid Total Revenues Other Sources Operating Transfers TOTAL REVENUES AND OTHER SOURCES EXPENDITURES AND OTHER USES Expenditures General Government Support Public Safety Transportation Culture and Recreation Home and Community Services Employee Benefits Debt Service (Interest) Total Expenditures Other Uses Operating Transfers TOTAL EXPENDITURES AND OTHER USES Revenues and Other Sources Over (Under) Expenditures and Other Uses Fund Balances, Beginning of Year Fund Balances, End of Year $ 2815702 $ 147,500 $ 855052 1289626 121,753 69566 76,104 76,104 486,432 2692253 1672722 4861,432 2699253 1675722 45,000 374,250 2211,430 1493,177 401,513 219261 199252 4595763 2429691 1689429 1159000 1152000 574,763 3571,691 168,429 (882331) (88,438) (707) 4419333 3769588 581,065 $ 353.002 $ 88.150 See Independent Auditors' Report on Additional Information - 20 - Fire Lighting Protection Risk District District Retention $ 43,150 $ 451,000 $ 307 41,150 45,000 307 49150 459000 307 45,000 31,643 31,643 455000 3,643 455000 507 708 $ 1,215 $ -0- - 21 - 307 5,972 61279