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Home My WebLink About1992 Town AuditL TOWN OF GROTON Groton, New York Financial Report December 31, 1992 F Y ' Ste.' - _ $. Ciaschi • Dietershagen • Little • Mickelson Certified Public Accountants and Consultants tTOWN OF GROTON TABLE OF CONTENTS, Independent Auditors' Report ................................................. 1 Combined Balance Sheet - All Fund Types and Account Groups ................... 2-3 Combined Statement of Revenues, Expenditures, and Changes in Fund Balance .... for the General and 4 Comparative Operating Statement SpecialRevenue Funds ....................................................... 5 Notes to Financial Statements ................................................ 6-15 Independent Auditors' Report on Additional Information ....................... 16 Combining Balance Sheet - General Fund ...................................... 17 Combining Statement of Revenues, Expenditures and Changes in Fund Balance - General Fund............................................................. 18 19 Combining Balance Sheet - Special Revenue Funds .............................. Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Special Revenue Funds ..................................................... 20 Independent Auditors' Report on Internal Control Structure Related Matters Noted in a Financial Statement Audit Conducted in Accordance with Government Auditing Standards ............................... 21-22 Independent Auditors' Report on Compliance with Laws and Regulations Based on an Audit of the General Purpose Financial Statements Performed in Accordance with Government Auditing Standards ............................ 23 Schedule of Immaterial Noncompliance with Laws and Regulations - Current Year.............................................................. Laws and Regulations 24 Schedule of Immaterial Noncompliance with - Prior Year................................................................ 25 L! Frederick J. Ciaschi, C.P.A. John H. Dietershagen, C.P.A. John E. Little, C.P.A. Jerry E. Mickelson, C.P.A. Thomas K. Van Derzee, C.P.A. Debbie A. Conley, C.P.A. Reginald E. Malley, C.P.A. Supervisor and Town Board Town of Groton Groton, New York Ciaschi • Dietershagen • Little 9 Mickelson Certified Public Accountants and Consultants INDEPENDENT AUDITORS' REPORT We have audited the accompanying general purpose financial statements of the Town of Groton, as of December 31, 1992 and for the year then ended. These general purpose financial statements are the responsibility of the Town of Groton's management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards, Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the general purpose financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the general purpose financial statements referred to above present fairly, in all material respects, the financial position of the Town of Groton, at December 31, 1992, and the results of its operations for the year then ended, in conformity with generally accepted accounting principles. March 23, 1993 Ithaca, New York CORTLAND ITHACA WATKINS GLEN 18 Tompkins Street Terrace Hill 221 N. Franklin Street Cortland, New York 13045 Ithaca, New York 14850 Watkins Glen, New York 14891 607-753-7439 607-272-4444 607-535-4443 TOWN OF GROTON COMBINED BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUPS DECEMBER 31, 1992 Fiduciary Governmental Fund Types Fund Types Account Groups Special Capital Trust & General Long -Term ASSETS General Revenue Projects Agency Fixed Assets Debt Unrestricted Cash $ 453,244 $ 355,134 $ 34,692 $ 1,020 $ Restricted Cash $ I 10,018 "vestments Due From Other Funds Due From State and Federal Governments 2,160 Due From Other Governments Prepaid Expenses 13,407 5,000 Other Receivables, Net 126,961 Inventories Restricted Assets Fixed Assets Deferred Expenditures Provision to be Made in Future Budgets Total Assets $ 468,811 $ - - 487,095 $ 44,710 $ 1,020 $ — LIABILITIES, DEFERRED REVENUES AND FUND EQUITY Liabilities Accounts Payable $ 7,321 $ 7,185 $ $ $ Accrued Liabilities 11331 6,861 Notes Payable Tax Anticipation Notes Revenue Anticipation Notes Budget Notes Bond Anticipation Notes Capital Notes Bonds Payable Due to Other Funds Due to Other Governments Due to Employees' Retirement System Installment Purchase Debt Judgments and Claims Payable Compensated Absences Agency Liabilities Retainage Payable 1,020 Overpayments 23,920 Deferred Revenues 126,961 Total Liabilities and Deferred Revenues Carried Forward 8,652 141,007 23,920 1,020 See Independent Auditors' Report and Accompanying Notes —2— 1,775,564 11,035 1,775,564 $ 11,035 11,035 11,035 TOWN OF GROTON COMBINED BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUPS DECEMBER 31, 1992 Fiduciary Governmental Fund Types Fund Types Account Groups Special Capital Trust & General Long—Term General Revenue Projects Agency Fixed Assets Debt Total Liabilities and Deferred Revenues Brought Forward 8,652 141,007 23,920 1,020 11,035 EQUITY Fund Balances — Reserved Reserved for Encumbrances Reserved for Inventory and Supplies Reserved for Taxes Raised Outside of Tax Limit Reserved for Liability Insurance Reserve Reserved for Debt Reserved for Repairs Capital Reserve Reserved for Highway Capital Projects Reserved for Unemployment Insurance Reserved for Workers' Compensation Reserved for Excess Dog Control Revenues Reserved for Retirement System Credits Total Reserved Equity Investment in General Fixed Assets Fund Balances — Unreserved Appropriated — Ensuing Year's Budget Unappropriated Total Unreserved Total Fund Balance Total Fund Balance and Equity Total Liabilities, Deferred Revenues and Fund Equity 1,125 59,691 10,018 7,219 1,219 13,407 15,751 66,910 10,018 1,775,564 215,000 141,000 229,408 138,178 100772 444,408 279,178 10,772 4600159 346,088 20,790 4601159 346,088 20,790 1,775,564 468,811 $ 487,095 $ 44,710 $ 1,020 $ 1,775,564 $ See Independent Auditors' Report and Accompanying Notes — 3- 11,035 TOWN OF GROTON COMBINED STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE FOR THE YEAR ENDED DECEMBER 31, 1992 Revenues Real Property Taxes Real Property Tax Items Nonproperty Tax Items Departmental Income Home and Community Services Intergovernmental Charges Use of Money and Property Licenses and Permits Fines and Forfeitures Sale of Property and Compensation for Loss Miscellaneous Local Sources Interfund Revenues State Sources Federal Sources Total Revenues Other Sources Interfund Transfers Retirement System Credits Proceeds of Obligations Total Revenues and Other Sources Expenditures General Governmental Support Public Safety Public Health Transportation Economic Assistance and Opportunity Culture and Recreation Home and Community Services Employee Benefits Debt Service (Principal and Interest) Total Expenditures Other Uses Interfund Transfers Total Expenditures and Other Uses Excess of (Expenditures) Revenues Net (Decrease) Increase Fund Balance, Beginning of Year Fund Balance, End Of Year Governmental Fund Types Special Capital General Revenue Projects $ 2809486 $ 3709850 $ 4,464 912 5,165 15,813 27,866 102,994 1,022 7,480 51907 1, 055 62,564 59,421 13,041 411,712 546,306 1,022 15,860 3,362 4153074 546,306 16,882 230,459 760 11,196 52,500 461540 33,756 3949316 9,533 29,582 387882 1,525 257227 22,581 425,175 470,922 760 15,860 4411035 4707922 760 (25,961) 75,384 16,122 (25,961) 75,384 16,122 486,120 270,704 4,668 $ 460,159 $ 3463088 $ 20,790 See Independent Auditors' Report and Accompanying Notes -4- Other Sources Interfund Transfers 518,350 Retirement System Credits Proceeds of Obligations 52,500 Total Revenues and Other Sources TOWN OF GROTON Expenditures 567,024 General Governmental Support 307,882 COMPARATIVE OPERATING STATEMENT FOR THE GENERAL AND SPECIAL REVENUE FUNDS 15,000 Public Health 46,700 Transportation FOR THE YEAR ENDED DECEMBER 31, 1992 Economic Assistance and Opportunity 10,500 Culture and Recreation 31,817 Home and Community Services Governmental Fund Types Employee Benefits 32,983 Debt Service (Principal and Interest) 143,000 General Fund Special Revenue Interfund Transfers 15,860 Total Expenditures and Other Uses Variance Excess of (Expenditures) Revenues Variance Revenues Modified Budget Actual Encumbrances Fay. - Unfay. Modified Budget Actual Encumbrances Fay. - Unfay. Real Property Taxes $ 280,486 $ 280,486 $ $ -0- $ 370,850 $ 370,850 $ $ -0- Real Property Tax Items 4,636 4,464 (172) Nonproperty Tax Items 912 912 Departmental Income 1,700 5,165 3,465 Intergovernmental Charges 15,813 15,813 Use of Money and Property 23,000 27,866 4,866 89,000 102,316 13,316 Licenses and Permits 5,500 7,480 1,980 Fines and Forfeitures 3,100 5,907 2,807 Sale of Property and Compensation for Loss Miscellaneous Local Sources 1,055 1,055 Interfund Revenues State Sources 43,200 62,564 19,364 58,500 59,421 921 Federal Sources Total Revenues 361,622 411,712 50,090 518,350 532,587 14,237 Other Sources Interfund Transfers 518,350 Retirement System Credits Proceeds of Obligations 52,500 Total Revenues and Other Sources 361,622 Expenditures 567,024 General Governmental Support 307,882 Public Safety 15,000 Public Health 46,700 Transportation 34,780 Economic Assistance and Opportunity 10,500 Culture and Recreation 31,817 Home and Community Services 49,100 Employee Benefits 32,983 Debt Service (Principal and Interest) 143,000 Total Expenditures 528,762 Other Uses Interfund Transfers 15,860 Total Expenditures and Other Uses 544,622 Excess of (Expenditures) Revenues (183,000) Other Changes in Fund Equity (Note 1- E- 3) Appropriated Fund Balance 183,000 Net (Decrease) Increase $ -0- Fund Balance, Beginning of Year Fund Balance, End of Year $ 3,362 415,074 230,459 1,125 11,196 46,540 33,756 9,533 29,582 38,882 25,227 425,175 1,125 15,860 441,035 1,125 (25,961) (1,125) 3,362 53,452 518,350 76,298 3,804 52,500 160 1,024 567,024 967 2,235 10,218 7,756 41,826 102,462 661,350 -0- 102,462 661,350 155,914 (143,000) (183,000) 143,000 (25,961) $ (1,125) $ (27,086) $ -0- 486,120 460,159 $ See Independent Auditors' Report and Accompanying Notes -5- 532,587 52,500 394,316 58,391 22,581 469,397 58,391 469,397 63,190 20,420 83,610 $ 262,478 346,088 14,237 19,245 133,562 58,391 133,562 (58,391) 147,799 (143,000) (58,391) $ 25,219 TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1992 Note 1 - Summary of Significant Accounting Policies The financial statements of the Town of Groton have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant of the Town's accounting policies are described below. A. Financial Reporting Entity The Town of Groton, which was erected in 1865, is governed by the Town Law and other general municipal laws of the State of New York and various local laws. The Town Board is the legislative body responsible for overall operations, the Town Supervisor serves as chief executive officer and as chief fiscal officer. The following basic services are provided: fire protection, highways and streets, recreation, public improvements, planning and zoning, and general administration. All governmental activities and functions performed for the Town of Groton are its direct responsibility. No other governmental organizations have been included or excluded from the reporting entity. The financial reporting entity includes organizations, functions, and activities over which elected officials exercise oversight responsibility. Oversight responsibility is determined on the basis of financial interdependency, selection of governing authority, designation of management, ability to influence operations and accountability for fiscal matters. B. Basis of Presentation - Fund Accounting The accounts of the local government are organized on the basis of funds or account groups, each of which is considered a separate accounting entity. The operations of each fund are accounted for within a separate set of self -balancing accounts that comprise its assets, liabilities, fund balance, revenues and expenditures which are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions or limitations. The various funds are summarized by type in the general purpose financial statements. Certain funds of the Town are utilized to account for resources derived from, and/or expenditures applicable to an area less than the entire town. The following fund types and account groups are used: 1. Fund Categories a. Governmental Funds - Governmental funds are those through which most governmental functions are financed. The acquisition, use and balances of expendable financial resources and the related liabilities are accounted for through governmental funds. The measurement focus of the governmental funds is based upon determination of financial position and changes in financial position. The following are the Town of Groton's governmental fund types: - 6 - TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1992 General Fund - the general fund is the principal operating fund and includes all operations not required to be recorded in other funds. General Fund, Town Outside Village - used to record transactions which are required to be a charge on the area of the Town outside the village. Special Revenue Funds - used to account for the proceeds of specific revenue sources that are legally restricted to expenditure for specified purposes. The following Special Revenue Funds are utilized: Highway Funds - (Townwide and Parttown) established pursuant to Highway Law, Section 141, and used to account for revenues and expenditures for highway purposes. Highway Law, Section 277, requires that expenditures for repairs and improvements be financed by the area outside the village. Therefore, a town with a village must maintain two highway funds. Special District Funds - (Lighting District and Fire Protection District) are used to record transactions for operations and maintenance for these activities. Risk Retention - established for unemployment reserves held by the Town for reimbursement to the state for claims filed by former employees. Special Grant Fund - used to account for Community Development Block Grants. Capital Projects Fund - The capital projects fund is used to account for and report financial resources to be used for the acquisition, construction or renovation of major capital facilities, or equipment. b. Fiduciary Funds - used to account for assets held by the local government in a trustee or custodial capacity: Agency Funds - are used to account for money and/or property received and held in the capacity of trustee, custodian or agent. 2. Account Groups Account groups are used to establish accounting control and accountability for general fixed assets and general long-term debt. The two account groups are not "funds". They are concerned only with the measurement of financial position, and not results of operations. General Fixed Assets Account Group - used to account for land, buildings, improvements other than buildings, and equipment utilized for general government purposes. TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1992 General Long -Term Debt Account Group - used to account for all long-term debt. C. Basis of Accounting/Measurement Focus Basis of accounting refers to when revenues and expenditures and the related assets and liabilities are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurements made, regardless of the measurement focus. Measurement focus is the determination of what is measured, i.e. expenditures or expenses. Modified Accrual Basis - all Governmental Funds are accounted for using the modified accrual basis of accounting. Under this basis of accounting, revenues are recorded when measurable and available. Available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Material revenues that are accrued include real property taxes, state and federal aid, sales tax and certain user charges. If expenditures are the prime factor for determining eligibility, revenues from federal and state grants are accrued when the expenditure is made. Expenditures are recorded when incurred except: 1. Expenditures for prepaid expenses and inventory -type items are recognized at the time of the purchase. 2. Principal and interest on indebtedness are not recognized as an expenditure until due. 3. Compensated absences, such as vacation and sick leave which vests or accumulates, are charged as an expenditure when paid. (See Note 1-G) 4. Pension costs are recognized as an expenditure when billed by the state. See Note 2-B-1. Account Groups - General f ixed assets are recorded at actual cost or estimated cost or, in the case of gifts and contributions, at the fair market value at the time received. No provision for depreciation is made. General long-term debt liabilities are recorded at the par value of the principal amount. No liability is recorded for interest payable to maturity. D. Property Taxes Real property taxes are levied annually by the Town of Groton no later than January 1, and become a lien on January 1. Taxes are collected during the period January 1, to May 31. Uncollected real property taxes are subsequently enforced by the County of Tompkins in which the Town is located. An amount representing uncollected real property taxes transmitted to the M:M TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1992 county for enforcement is paid by the county to the Town no later than the forthcoming May 31. E. Budgetary Data 1. Budget Policies - The budget policies are as follows: a. No later than October 5, a tentative budget is submitted by the budget officer for the fiscal year commencing the following January 1. The tentative budget includes proposed expenditures and the proposed means of financing for all funds. b. After public hearings are conducted to obtain taxpayer comments, no later than November 20, the governing board adopts the budget. c. All modifications of the budget must be approved by the governing board. 2. Encumbrances Encumbrance accounting, under which purchase orders, contracts and other commitments for the expenditure of monies are recorded for budgetary control purposes to reserve that portion of the applicable appropriations, is employed in the Governmental Funds. Encumbrances are reported as reservations of fund balances since they do not constitute expenditures or liabilities. Expenditures for such commitments are recorded in the period in which the liability is incurred. 3. Budget Basis of Accounting Budgets are adopted annually on a basis consistent with generally accepted accounting principles. Appropriations authorized for the current year are increased by the amount of encumbrances carried forward from the prior year. Budgetary controls for the special grant fund are established in accordance with the applicable grant agreement which covers a period other than the Town of Groton's fiscal year. Consequently, the budgets for this fund have been excluded from the Combined Statement of Revenues, Expenditures, Encumbrances and Changes in Fund Balance - Budget and Actual. In addition, the Risk Retention Fund has been excluded from the Combined Statement of Revenues, Expenditures, Encumbrances, and Changes in Fund Balance - Budget and Actual, because there is no legally adopted annual budget. The following schedule reconciles the difference between Statements 2 and 3. o'M 1 1 1 i 1 1 1 1 Total for Funds Included in Budget Comparison Funds not Included in Budget Comparison Special Grant Risk Retention Total Special Revenue Funds TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1992 Fund Balance Expendi- Fund Balance Bea. of Year Revenues tures End of Year $ 262,478 $ 532,587 $ 469,397 $ 325,668 1,286 13,440 1,525 13,201 6,940 279 7,219 $ 270,704 $ 546,306 $ 470,922 $ 346,088 F. Property, Plant and Equipment - General Fixed assets purchased for general governmental purposes are recorded as expenditures in the governmental funds and are capitalized at cost in the General Fixed Asset Account Group. Contributed fixed assets are recorded at fair market value at the date received. Fixed assets consisting of certain infrastructure type improvements other than buildings, including roads, bridges, curbs and gutters, streets and sidewalks, drainage and lighting systems, have not been capitalized. Such assets normally are immovable and of value only to the Town of Groton. Therefore, the purposes of stewardship for capital expenditures can be satisfied without recording these assets. No depreciation has been provided on general f ixed assets, nor has interest on general fixed assets construction in progress been capitalized. G. Vacation and Sick Leave and Compensated Absences Town of Groton employees are granted vacation and sick leave in varying amounts. In the event of termination or upon retirement, an employee is not entitled to payment for accumulated vacation time. However, sick leave can be accrued up to 720 hours which is payable upon termination or retirement. The value of unused employee sick leave at year-end has been recorded in the General Long -Term Debt Account Group. Payment of sick leave recorded in the General Long -Term Debt Account Group is dependent upon many factors, therefore, timing of future payments is not readily determinable. However, management believes that sufficient resources will be made available for the payments of sick leave when such payment becomes due. - 10 - TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1992 Note 2 - Detail Notes on All Funds and Account Groups A. Assets 1. Cash and Investments The Town of Groton's investment policies are governed by state statutes. In addition, the Town of Groton has its own written investment policy. Town of Groton's monies must be deposited in FDIC -insured commercial banks or trust companies located within the state. The Supervisor is authorized to use demand accounts and certificates of deposit. Permissible investments include obligations of the U.S. Treasury and U.S. Agencies, repurchase agreements, and obligations of New York State or its localities. Collateral is required for demand and time deposits and certificates of deposit at 105 percent 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 and school districts. The written investment policy requires repurchase agreements to be purchased from banks located within the state and that underlying securities must be obligations of the federal government. Underlying securities must have a market value of at least 105 percent of the cost of the repurchase agreement. Deposits and investments at year-end were entirely covered by Federal Deposit Insurance or by collateral held by the Town of Groton's custodial bank in the Town of Groton's name. All deposits including certificates of deposit are carried at cost plus accrued interest. Deposits and investments are categorized as either (1) insured and for which the securities are held by the Town's agent in the Town's name, (2) uninsured and for which the securities are held by the financial institution's trust department in the Town's name, (3) uninsured and for which the securities are held by the financial institution or it's trust department but not in the Town's name, or (4) uninsured and uncollateralized. Total financial institution (bank) balances at December 31, 1992, per the bank were $859,157. These deposits are categorized as follows: Carrying 1 2 3 4 Value $ 859,157 $ $ $ $ 859,157 TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1992 2. Changes in Fixed Assets A summary of changes in general fixed assets is as follows: Balance Balance Type January 1, Additions Deletions December 31, Land $ 83,003 $ $ $ 83,003 Buildings 669,089 669,089 Machinery and Equipment 989,522 34,750 800 1,023,472 Total $ 1,741,614 $ 34,750 $ 800 $ 1, 775,, 564 B. Liabilities 1. Pension Plans General Information The Town of Groton participates in the New York State and Local Employees' Retirement System. This System is a cost sharing multiple public employer retirement system. Obligations of employers and employees to contribute and benefits to employees are governed by the New York State Retirement and Social Security Law (NYSRSSL). The System offers a wide range of plans and benefits which are related to years of service and final average salary, vesting of retirement benefits, death and disability benefits and optional methods of benefit payments. All benefits generally vest after ten years of credited service. The NYSRSSL provides that all participants in the System are jointly and severally liable for any actuarial unfunded amounts. Such amounts are collected through annual billings to all participating employers. Generally, all employees, except certain part-time employees, participate in the System. The System is non-contributory except for employees who joined the Employees' Retirement System after July 27, 1976, who contribute 3% of their salary. Employee contributions are deducted by the employer from employees' paychecks and are sent currently to the Employees' Retirement System. Emplovee Groups Covered Nearly all Town of Groton employees are eligible for membership in the System. All employees employed in a full-time position who commenced employment after June 30, 1976 are mandatory members. The total payroll for all employees of the Town of Groton for fiscal year 1992 was $318,792 of which $285,761 was attributable to employees covered by the Employees' Retirement System. Pavments and Fundina Status Through 1988, the System billed all participating employers by May 31, each year. Billings were based on salaries paid during the System's fiscal year which ended on March 31, of the previous calendar year, and in accordance with funding requirements determined by the System's actuary. Employers were required to remit payment in full by June 30. I - 12 - i 1 1 TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1992 In 1989 and future years, the System's billings are based on Chapter 62 of the Laws of 1989 of the State of New York. This legislation requires participating employers to begin making payments on a current basis, while amortizing existing unpaid amounts relating to the System's fiscal years ended March 31, 1988 and 1989 (which otherwise were to have been paid on June 30, 1989 and 1990, respectively) over a 17 -year period, with an 8.75% interest factor added. Local governments were given the option to prepay this liability. The Town has paid its pension obligation in full in prior years resulting in a credit with the Employees' Retirement System of $13,407. The actuarial cost method used by the System to determine the annual contributions from employees through March 31, 1990 was the aggregate cost method. Under this method the excess of the actuarial liabilities over the actuarial assets was funded by employees as a level percentage of salary over the current members' future working lifetimes. Effective April 1, 1990, the State Legislature amended the Retirement and Social Security Law by enacting Chapter 210 Laws of 1990 which mandated a change to a different actuarial funding method for the System. The System changed from the aggregate cost funding method to a modified projected unit credit funding method. This new method utilizes a rolling amortization period for differences between actuarial assets and actuarial accrued liabilities, of which approximately 17% of such differences are recognized each year in determining the funding amount. As a result of the legislated changes for the year ended March 31, 1992, ERS employer contributions were generally lower than would have been the case under the aggregate cost funding method. The anticipated future effect is that the employer contributions will be, for a time, less than they would have been under the aggregate cost funding method. However, over the long term, employer contributions are expected to be higher under the modified projected unit credit funding method than under the aggregate cost method. Further, the legislation allows the reduction of non -state and state annual payments for prior year employer contributions being amortized over 17 years, by any yearly surplus ( estimated funding credits) resulting from the rolling amortization. At March 31, 1992, the system established a reserve for funding credits of $250 million, reducing employer contributions receivable, based upon an actuarially determined estimate of 1992 employer contributions that are not expected to be received under the modified projected unit credit funding method. The prior year contributions consist of non -state employer contributions receivable for the fiscal years ended March 31, 1989 and 1988 and the state's contribution receivable for the fiscal years ended March 31, 1986 and 1985. The total pension liability for services rendered by covered employees of the Town of Groton during the current fiscal year includes $516 employers share and $5,270 paid by employees as a - 13 - TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1992 current contribution, representing 0% and .02%, respectively, of the covered salaries paid. The Pension Benefit Obligation (PBO) of credited projected benefits is a standardized disclosure measure of the actuarial present value of pension benefits, adjusted for the effects of projected salary increases estimated to be payable in the future as a result of employees' service to date. The retirement systems do not make separate measurements for individual employers. The Pension Benefit Obligation of credited projected benefits at March 31, 1992 for the Employees' Retirement System, determined through an actuarial valuation performed as of that date, was $44.03 billion. The net assets available to pay benefits at that date is $45.50 billion. The Town of Groton's employer contribution requirement was less than 1% of total contributions required of all employers participating in this System. Historical trend information showing the progress in accumulating sufficient assets to pay benefits when due is presented in the Annual Financial Report of the System. Additional detailed information concerning the System may also be found in the Report. 2. Long -Term Debt a. The Town of Groton had the following noncurrent liabilities: Compensated Absences: Represents the value of earned and unused portion of the liability for accumulated sick leave. b. The following is a summary of long-term liabilities outstanding at December 31, 1992: Liability: Compensated Absences $ 11,`035 c. The following is a summary of changes in long-term liabilities for the period ended December 31, 1992: Compensated Absences Balance 1/1/92 $ 9,430 Additions 1,605 Balance 12/31/92 $ 11,035 Additions and deletions to compensated absences are shown net since it is impractical to determine these amounts separately. - 14 - TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1992 C. Fund Equity Balance Fund/Purpose End of Year General Fund/Encumbrances $ 1,125 General/Dog Control 11219 General/Retirement System Credits 13,407 Capital/Capital Reserve 10,018 Risk Retention/Unemployment Insurance 71219 Highway/Encumbrances 58,391 Special Grant/Encumbrances 1,300 Total $ 92,679 Note 3 - Contingent Liabilities The Town engaged a general contractor to build the Town Hall and garage. During 1989, while the building was in the process of being completed, this contractor filed for Chapter 11 bankruptcy. The bonding company for the contractor paid sub -contractors who were owed payments from the general contractor. The amount in the retainage payable account represents amounts withheld from the general contractor by the Town. It is being held in retainage payable pending resolution of all claims related to the contract default of the general contractor. The Town is contesting a bill from Tompkins County for election expenses in the amount of $14,720. It is management's belief that the Town is not liable for the bill and will not have to pay this amount. INDEPENDENT AUDITORS' REPORT ON ADDITIONAL INFORMATION Supervisor and Town Board Town of Groton Groton, New York Our report on our audit of the general purpose financial statements of the Town of Groton for 1992 appears on page 1. That audit was made for the purpose of forming an opinion on the general purpose financial statements taken as a whole. Additional information included on pages 17 through 20 in this report is presented for purposes of additional analysis and is not a required part of the general purpose financial statements. Such information has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, in our opinion, is fairly stated in all material respects in relation to the general purpose financial statements taken as a whole. nl . March 23, 1993 Ithaca, New York - 16 - TOWN OF GROTON COMBINING BALANCE SHEET GENERAL FUND DECEMBER 31, 1992 Townwid e ASSETS Unrestricted Cash $ 3901868 Restricted Cash Investments Due From Other Funds Due From State and Federal Governments Due From Other Governments Prepaid Expenses Other Receivables, Net Inventories Restricted Assets Deferred Expenditures Total Assets IABILITIES, DEFERRED REVENUES AND FUND EQUITY Liabilities Accounts Payable Accrued Liabilities Notes Payable Tax Anticipation Notes Payable Revenue Anticipation Notes Payable Budget Notes Payable Bond Anticipation Notes Payable Capital Notes Payable Bonds Payable Due to Other Funds Due to Other Governments Due to Employees' Retirement System Other Liabilities Overpayments Deferred Revenues Total Liabilities and Deferred Revenues FUND EQUITY Fund Balances - Reserved Reserved for Encumbrances Reserved for Inventory and Supplies Reserved for Debt Reserved for Repairs Reserved for Unemployment Insurance Reserved for Workers' Compensation 1,008 13,407 Parttown $ 62,376 1,152 Total $ 453,244 2,160 13,407 $ 4051283 $ 631528 $ 468,811 $ 5,381 $ 1,940 $ 7,321 1,098 233 1,331 6,479 1,125 2,173 Reserved for Excess Dog Control Revenues 1,219 Reserved for Retirement System Credits 13,407 Total Reserved Fund Balance 15,751 Fund Balances - Unreserved Appropriated - Ensuing Year's Budget 1751000 40,000 Unappropriated 2081053 21,355 Total Unreserved Fund Balance 383,053 61,355 Total Fund Balance 398,804 611355 Total Liabilities, Deferred Revenues and Fund Equity $ 405,283 $ 631528 See Independent Auditors' Report on Additional Information -17- 8,652 1,125 1,219 13,407 15,751 215,000 229,408 444,408 460,159 $ 468,811 TOWN OF GROTON COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GENERAL FUND DECEMBER 31, 1992 Townwide Parttown Total Modified Modified Modified Revenues Budget Actual Budget Actual Budget Actual Real Property Taxes $ 215,661 $ 215,661 $ 64,825 $ 64,825 $ 280,486 $ 280,486 Real Property Tax Items 4,636 4,464 4,636 4,464 Nonproperty Tax Items 912 912 Departmental Income 1,000 1,867 700 3,298 1,700 5,165 Home and Community Services Intergovernmental Charges 14,266 1,547 15,813 Use of Money and Property 17,500 17,619 5,500 10,247 23,000 27,866 Licenses and Permits 5,500 7,480 5,500 7,480 Fines and Forfeitures 3,100 5,907 3,100 5,907 Sale of Property and Compensation for Loss Miscellaneous Local Sources 1,055 1,055 Interfund Revenues State Sources 38,200 61,313 5,000 1,251 43,200 62,564 Federal Sources Total Revenues 285,597 329,632 76,025 82,080 361,622 411,712 Other Sources: Interfund Transfers Retirement System Credits 3,362 3,362 Proceeds of Obligations Total Revenues and Other Sources 285,597 332,994 76,025 82,080 361,622 415,074 Expenditures General Governmental Support 304,682 230,459 3,200 307,882 230,459 Public Safety 12,500 10,240 2,500 956 15,000 11,196 Public Health 200 40 46,500 46,500 46,700 46,540 Transportation 34,780 33,756 34,780 33,756 Economic Assistance & Opportunity 10,500 9,533 10,500 9,533 Culture and Recreation 18,992 18,492 12,825 11,090 31,817 29,582 Home and Community Services 600 506 48,500 380376 49,100 38,882 Employee Benefits 28,483 23,198 4,500 2,029 32,983 25,227 Debt Service (Principal and Interest) Total Expenditures 410,737 326,224 118,025 98,951 528,762 425,175 Other Uses: Interfund Transfers 15,860 15,860 15,860 15,860 Total Expenditures and Other Uses 426,597 342,084 118,025 98,951 544,622 441,035 Excess of (Expenditures) (141,000) (9,090) (42,000) (16,871) (183,000) (25,961) Appropriated Fund Balance 141,000 42,000 183,000 Net (Decrease) $ -0- (9,090) $ -0- (16,871) $ -0- (25,961) Fund Balance, Beginning of Year 407,894 78,226 486,120 Fund Balance, End of Year $ 398,804 $ 61,355 $ 460,159 See Independent Auditors' Report and Accompanying Notes -18- TOWN OF GROTON COMBINING BALANCE SHEET SPECIAL REVENUE FUNDS DECEMBER 31. 1992 Highway Highway Lighting Fire Protection ASSETS Townwide Parttown District District Special Grant Fund Risk Retention Total Unrestricted Cash $ 275,162 $ 53,310 $ 6,242 $ $ 13,201 $ 7,219 $ 355,134 Restricted Cash Due From Other Funds Due From State and Federal Governments Due From Other Governments Other Receivables, Net Inventories Temporary Investments Prepaid Expenditures Deferred Expenditures Total Assets $ LIABILITIES, DEFERRED REVENUES AND FUND EQUITY Liabilities Accounts Payable $ Accrued Liabilities Notes Payable Revenue Anticipation Notes Payable Budget Notes Payable Bond Anticipation Notes Payable Bonds Payable Due to Other Funds Due to Other Governments Due to Employees' Retirement System Other Liabilities Overpayments Deferred Revenues Total Liabilities and Deferred Revenues FUND EQUITY Fund Balance - Reserved Reserved for Encumbrances Reserved for Inventory and Supplies Reserved for Debt Reserved for Repairs Reserved for Workers' Compensation Reserved for Unemployment Insurance Reserved for Insurance Reserved for Retirement System Credits Total Reserved Fund Balance Fund Balance - Unreserved Appropriated - Ensuing Year's Budget Unappropriated Total Unreserved Fund Balance Total Fund Balance Total Liabilities, Deferred Revenues and Fund Equity $ 5,000 126,961 280,162 $ 53,310 $ 6,242 $ $ 140,162 $ 6,845 $ $ 340 $ $ $ 6,751 110 13,596 58,391 58,391 103,500 104,675 208,175 266,566 280,162 $ 110 340 37,500 15,700 5,902 53,200 5,902 53,200 5,902 53,310 $ 6,242 $ See Independent Auditors' Report on Additional Information -19- 126, 961 126,961 1,300 1,300 11,901 11,901 13,201 $ 140,162 $ 7,219 $ 7,219 7,219 7,219 7,219 $ 5,000 126,961 487,095 7,185 6,861 126,961 141,007 59,691 7,219 66,910 141,000 138,178 279,178 346,088 487,095 TOWN OF GROTON COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES SPECIAL REVENUE FUNDS FOR THE YEAR ENDED DECEMBER 31, 1992 Highway Highway Fire Protection Special Risk Townwide Parttown Lighting District District Subtotal Grant Retention Total Revenues Budget Actual Budget _ Actual Budget Actual _Budget Actual Budget Actual Actual Actual Actual Real Property Taxes $ 205,000 $ 205,000 $ 107,500 $ 107,500 $ 5,850 $ 5,850 $ 52,500 $ 52,500 $ 370,850 $ 370,850 $ $ $ 370,850 Real Property Tax Items Departmental Income Home and Community Services Intergovernmental Charges Use of Money and Property 85,000 99,294 4,000 2,853 169 89,000 102,316 399 Licenses and Permits Fines and Forfeitures Sale of Property and Compensation for Loss Miscellaneous Local Sources Interfund Revenues State Aid 58,500 59,421 58,500 59,421 Federal Aid 13,041 Total Revenues 290,000 304,294 170,000 169,774 5,850 6,019 52,500 52,500 518,350 532,587 13,440 Other Sources: Interfund Transfers Proceeds of Obligations Total Revenues and Other Sources 290,000 304,294 170,000 169,774 5,850 6,019 52,500 52,500 518,350 532,587 13,440 Expenditures General Governmental Support Public Safety 52,500 52,500 52,500 52,500 Transportation 384,174 236,123 177,000 154,172 5,850 4,021 567,024 394,316 Culture and Recreation Home and Community Services 1,525 Employee Benefits 30,826 16,794 11,000 5,787 41,826 22,581 Debt Service (Principal and Interest) Total Expenditures 415,000 252,917 188,000 159,959 5,850 4,021 52,500 52,500 661,350 469,397 1,525 Other Uses: Interfund Transfers Total Expenditures and Other Uses 415,000 252,917 188,000 159,959 5,850 4,021 52,500 52,500 661,350 469,397 1,525 Excess of (Expenditures) Revenues (125,000) 51,377 (18,000) 9,815 -0- 1,998 -0- -0- (143,000) 63,190 11,915 Other Changes In Fund Equity 279 102,994 59,421 13,041 279 546,306 279 546,306 52,500 394,316 1,525 22,581 470,922 470,922 279 75,384 Appropriated Fund Balance 125,000 18,000 143,000 Net Increase $ -0- 51,377 $ -0- 9,815 $ -0- 1,998 $ -0- -0- $ -0- 63,190 11,915 279 75,384 Fund Balances, Beginning of Year 215,189 43,385 3,904 -0- 262,478 1,286 6,940 270,704 Fund Balances, End of Year $ 266,566 $ 53,200 $ 5,902 $ -0- $ 325,668 $ 13,201 $ 7,219 $ 346,088 See Independent Auditors' Report on Additional Information -20- Frederick J. Ciaschi, C.P.A. John H. Dietershagen, C.P.A. John E. Little, C.P.A. Jerry E. Mickelson, C.P.A. Thomas K. Van Derzee, C.P.A. Debbie A. Conley, C.P.A. Reginald E. Malley, C.P.A. Ciaschi • Dietershagen • Little • Mickelson Certified Public Accountants and Consultants INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL STRUCTURE RELATED MATTERS NOTED IN A FINANCIAL STATEMENT AUDIT CONDUCTED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Supervisor and Town Board Town of Groton Groton, New York We have audited the general purpose financial statements of the Town of Groton for the year ended December 31, 1992, and have issued our report thereon dated March 23, 1993. We conducted our audit in accordance with generally accepted auditing standards, 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, 1992, 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 structure to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate. ' -zi- CORTLAND ITHACA WATKINS GLEN 18 Tompkins Street Terrace Hill 221 N. Franklin Street Cortland, New York 13045 Ithaca, New York 14850 Watkins Glen, New York 14891 607-753-7439 607-272-4444 607-535-4443 For the purpose of this report, we have classified the significant internal control structure policies and procedures in the following categories: CYCLES OF THE TOWN'S ACTIVITY Treasury or financing Revenue/receipts Purchases/disbursements External financial reporting Payroll For all of the control categories listed above, we obtained an understanding of 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 matters 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 the Supervisor and Town Board, management, and New York State. This restriction is not intended to limit the distribution of this report, which is a matter of public record. r March 23, 1993 Ithaca, New York - 22 - Frederick J. Ciaschi, C.P.A. John H. Dietershagen, C.P.A. John E. Little, C.P.A. Jerry E. Mickelson, C.P.A. Thomas K. Van Derzee, C.P.A. Debbie A. Conley, C.P.A. Reginald E. Malley, C.P.A. Ciaschi * Dietershagen • Little • Mickelson Certified Public Accountants and Consultants INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH LAWS AND REGULATIONS BASED ON AN AUDIT OF THE GENERAL PURPOSE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Supervisor and Town Board Town of Groton Groton, New York We have audited the general purpose financial statements of the Town of Groton for the year ended December 31, 1992, and have issued our report thereon dated March 23, 1993. We conducted our audit in accordance with generally accepted auditing standards, Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement. Compliance with laws, regulations, contracts, and grants applicable to the Town of Groton is the responsibility of the management. As part of obtaining reasonable assurance about whether the general purpose financial statements are free of material misstatement, we performed tests of the Town of Groton's compliance with certain provisions of laws, regulations, contracts, and grants. However, our objective was not to provide an opinion on overall compliance with such provisions. The results of our tests indicate that, with respect to the items tested, the Town of Groton complied, in all material respects, with provisions referred to in the preceding paragraph. With respect to items not tested, nothing came to our attention that caused us to believe that the Town of Groton had not complied, in all material respects, with those provisions. However, we noted certain immaterial instances of noncompliance as described in the attached schedule. This report is intended for the information of the Supervisor and Town Board, management, and New York State. This restriction is not intended to limit the distribution of this report, which is a matter of public record. March 23, 1993 Ithaca, New York CORTLAND - 23 - ITHACA WATKINS GLEN 18 Tompkins Street Terrace Hill 221 N. Franklin Street Cortland, New York 13045 Ithaca, New York 14850 Watkins Glen, New York 14891 607-753-7439 607-272-4444 607-535-4443 TOWN OF GROTON SCHEDULE OF IMMATERIAL NONCOMPLIANCE WITH LAWS AND REGULATIONS CURRENT YEAR - December 31, 1992 REPORT FINDINGS During our audit for the year ended December 31, 1992 we noted the following immaterial instances of noncompliance: Ambulance Contract Condition: The Town contracted with the Village of Groton and the Village of Groton Fire Department to provide emergency ambulance service for all of the residents of the Town who reside outside of the Village limits. Although the Town outside the Village is comprised of the McLean Fire District and the Groton Fire Protection District, the Town budgeted and raised taxes to pay for this emergency ambulance service on a part -town basis. Pursuant to Section 184 of the Town Law, the Town may contract for emergency ambulance service within a fire protection district and may assess and levy taxes upon the taxable property within the district. There is no authority for the Town to contract for such service within the boundaries of a fire district. Such a contract should be made by the Commissioners of the McLean Fire District with the Village of Groton Fire Department. Recommendation: We recommend that the Town advise the McLean Fire District Commissioners of the need for the fire commissioners to enter into an agreement to provide emergency ambulance service within the district rather than the Town. - 24 - u TOWN OF GROTON SCHEDULE OF IMMATERIAL NONCOMPLIANCE WITH LAWS AND REGULATIONS PRIOR YEAR - DECEMBER 31, 1991 REPORT FINDINGS During our audit for the year ended December 31, 1991 we noted the following immaterial instances of noncompliance: Competitive Biddina Condition: During the course of our prior year audit we noted that the Town had purchased a used piece of equipment, from a dealer, without competitively bidding the purchase. All purchase contracts for goods having a purchase price greater than $5,000 must have been competitively bid during calendar year 1991. The Town has adopted a purchasing policy in accordance with GML 104b. Ambulance Contract Condition: The Town contracted with the Village of Groton and the Village of Groton Fire Department to provide emergency ambulance service for all of the residents of the Town who reside outside of the Village limits. Although the Town outside the Village is comprised of the McLean Fire District and the Groton Fire Protection District, the Town budgeted and raised taxes to pay for this emergency ambulance service on a part -town basis. The Board is negotiating with McLean Fire District to enter into an agreement to provide such service with the district rather than the Town. The same condition existed for the 1992 audit. Single Audit General Requirements Community Development Block Grant - #B -90 -DH -36-0248 Condition: During our prior year audit, we found no evidence that the Town of Groton had adopted a Civil Rights policy as required by Circular A-128 general compliance requirements. As a result of non-compliance, the Town was not able to ascertain if the federal funds it had received had been expended in a non-discriminatory manner. The Town has adopted a Civil Rights policy as required by the General Compliance Requirements under the Single Audit Act of 1984. Condition: For the 1991 audit, we noted that the Town had not adopted a policy nor implemented the provisions of the Drug -Free Workplace Act as required by Circular A-128 general compliance requirements. As a result of non-compliance, the Town was unaware of any potential employee non-compliance with federal workplace guidelines for non -usage of drugs. The Town has adopted a Drug -Free Workplace Policy as required by the General Compliance Requirements under the Single Audit Act of 1984. I —zs—