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HomeMy WebLinkAbout1993 Town Auditk ri TOWN OF GROTON Groton, New York Financia! Report December 31, 1993 TOWN OF GROTON TABLE OF CONTENTS C. 11 Independent Auditors' Report ................................................. 1 Combined Balance Sheet - All Fund Types and Account Groups ................... 2-3 Combined Statement of Revenues, Expenditures, and Changes in Fund Balance .... 4 Comparative Operating Statement for the General and Special Revenue 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 Combining Balance Sheet - Special Revenue Funds .............................. 19 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 - Prior Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 C. 11 FrederickJ. 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. Dennis G. Jones, C.P.A. Supervisor and Town Board Town of Groton Groton, New York Ciaschi • Dietershagen • Little • 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, 1993 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, 1993, and the results of its operations for the year then ended, in conformity with generally accepted accounting principles. March 17, 1994 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, 1993 Fiduciary Governmental Fund Types Fund Types Account Groups Special Capital Trust & General Long—Term ASSETS Unrestricted Cash $ Restricted Cash Investments Due From Other Funds Due From State and Federal Governments Due From Other Governments Prepaid Expenses Other Receivables, Net Inventories Restricted Assets Fixed Assets Deferred Expenditures Provision to be Made in Future Budgets Total Assets $ LIABILITIES. DEFERRED REVENUES & FUND EQUITY Liabilities Accounts Payable $ Accrued Liabilities Notes Payable Tax Anticipation Notes Revenue Anticipation Notes Budget Notes Bond Anticipation Notes Capital Notes Bonds Payable Due to Other Funds Due to Other Governments Due to Employees' Retirement System Installment Purchase Debt Judgments and Claims Payable Compensated Absences Agency Liabilities Retainage Payable Overpayments Deferred Revenues Total Liabilities and Deferred Revenues Carried Forward General Revenue Projects Agency Fixed Assets Debt 351,051 $ 236,086 $ 35,474 $ 1,286 $ $ 26,309 2,160 336 8,211 17,063 126,961 1,826,348 370,610 $ 371,258 $ 61,783 $ 1,286 $ 1,826,348 $ 8,994 $ 13,301 $ $ $ $ 1,308 11,910 1,286 23,920 126,951 10,302 152,172 23,920 1,286 See Independent Auditors' Report and Accompanying Notes —2- 14,392 14,392 14,392 14,392 TOWN OF GROTON COMBINED BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUPS DECEMBER 31, 1993 Fiduciary Govemmental 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 $ 10,302 $ 152,172 $ 23,920 $ 1,286 $ $ 14,392 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 26,309 7,439 1,063 17,063 18,126 22,439 26,309 1,826,348 258,000 191,080 84,182 5,567 11,554 342,182 196,647 11,554 360,308 219,086 37,863 360,308 219,086 37,863 1,826,348 $ 370,610 $ 371,258 $ 611783 $ 11286 $ 1,826,348 $ 141392 See Independent Auditors' Report and Accompanying Notes —3— 1 1 1 1 1 1 1 1 TOWN OF GROTON COMBINED STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE FOR THE YEAR ENDED DECEMBER 31, 1993 See Independent Auditors' Report and Accompanying Notes -4- Governmental Fund Types Special Capita! Revenues General Revenue Projects Real Property Taxes $ 197,804 $ 380,100 $ Real Property Tax Items 41326 Nonproperty Tax Items 11008 Departmental Income 5,556 Home and Community Services Intergovemmental Charges 16,213 Use of Money and Property 13,690 90,596 1,256 Licenses and Permits 7,820 Fines and Forfeitures 3,788 Sale of Property and Compensation for Loss Miscellaneous Local Sources 943 Interfund Revenues State Sources 59,378 67,048 Federal Sources 8,877 Total Revenues 310,526 5461621 1,256 Other Sources Interfund Transfers 161000 Retirement System Credits 31656 Proceeds of Obligations Total Revenues and Other Sources 314,182 5469621 171256 Expenditures General Governmental Support 198,706 183 Public Safety 11,536 549500 Public Health 481500 Transportation 35,240 579,218 Economic Assistance and Opportunity 101953 Culture and Recreation 29,170 Home and Community Services 33,069 1,321 Employee Benefits 31,859 379584 Debt Service (Principal and Interest) Total Expenditures 399,033 6721623 183 Other Uses Interfund Transfers 151000 1,000 Total Expenditures and Other Uses 414,033 673,623 183 Excess of (Expenditures) Revenues (99,851) (127,002) 17,073 Fund Balance, Beginning of Year 460,159 3461088 201790 Fund Balance, End Of Year $ 360,308 $ 219,086 $ 371863 See Independent Auditors' Report and Accompanying Notes -4- Other Sources 545,575 Interfund Transfers == = m m r m= r= M Proceeds of Obligations 62,198 Total Revenues and Other Sources TOWN OF GROTON Expenditures 20,145 General Governmental Support 255,384 COMPARATIVE OPERATING STATEMENT FOR THE GENERAL AND SPECIAL REVENUE FUNDS Public Health 48,700 Transportation 35,611 FOR THE YEAR ENDED DECEMBER 31. 1993 11,000 Culture and Recreation 32,000 Home and Community Services 48,030 Governmental Fund Types 51,740 Debt Service (Principal and Interest) Total Expenditures General Fund Special Revenue I nterfund Transfers 15,000 Total Expenditures and Other Uses Variance Excoss of (Expenditures) Revenues Variance Revenues Modified Budget Actual Encumbrances Fay.-Unfay. Modified Budget Actual Encumbrances Fay.-Unfay. Real Property Taxes $ 197,804 $ 197,804 $ $ -0- $ 380,100 $ 380,100 $ $ -0- Real Property Tax Items 4,136 4,326 190 Nonproperty Tax Items 900 1,008 108 Departmental Income 3,750 5,556 1,806 Intergovernmental Charges 14,842 16,213 1,371 Use of Money and Property 17,500 13,690 (3,810) 83,000 89,550 6,550 Licenses and Permits 6,000 7,820 1,820 Fines and Forfeitures 3,300 3,788 488 Sale of Property and Compensation for Loss Miscellaneous Local Sources 943 943 Interfund Revenues State Sources 47,608 59,378 11,770 56,400 67,048 10,648 Federal Sources 8,877 8,877 Total Revenues 295,840 310,526 14,686 519,500 545,575 26,075 Other Sources 545,575 Interfund Transfers 54,500 Retirement System Credits 579,218 15,000 Proceeds of Obligations 62,198 Total Revenues and Other Sources 295,840 Expenditures 20,145 General Governmental Support 255,384 Public Safety 14,500 Public Health 48,700 Transportation 35,611 Economic Assistance and Opportunity 11,000 Culture and Recreation 32,000 Home and Community Services 48,030 Employee Benefits 51,740 Debt Service (Principal and Interest) Total Expenditures 496,965 Other Uses I nterfund Transfers 15,000 Total Expenditures and Other Uses 511,965 Excoss of (Expenditures) Revenues (216,125) Other Changes In Fund Equity Appropriated Fund Balanco 216,125 Not (Decrease) $ -0- Fund Balance, Beginning of Year Fund Balance, End of Year $ 3,656 314,182 198,706 11,536 48,500 35,240 10,953 29,170 33,069 31,859 399,033 15,000 414,033 (99,851) 3,656 18,342 56,678 2,964 200 371 47 2,830 14,961 19,881 97,932 -0- 97,932 116,274 (216,125) 519,500 545,575 54,500 54,500 637,995 579,218 15,000 56,005 748,500 1,000 749,500 (230,000) 230,000 (99,851) $ $ (99,851) $ -0- 460,159 360,308 $ See Independent Auditors' Report and Accompanying Notes -5- 37, 584 671,302 1,000 672,302 (126,727) 20,145 (106,582) $ 325,668 219,086 26,075 -0- 43,777 18,421 15,000 62,198 -0- 15,000 62,198 (15, 000) 88,273 20,145 (230,000) (15,000) $ (121,5132) TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1993 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: J ' TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS ' (CONTINUED) DECEMBER 31, 1993 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. 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, 1993 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 fixed 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 -em ' TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1993 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. 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. 1 TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS ' (CONTINUED) DECEMBER 31, 1993 Fund Balance Expendi- Fund Balance Bea. of Year Revenues tures End of Year Total for Funds Included in Budget Comparison $ 325,668 $ 545,575 $ 672,302 $ 198,941 Funds not Included in Budget Comparison Special Grant 13,201 826 1,321 12,706 Risk Retention 7,219 220 7,439 Total Special Revenue Funds $ 346,088 $ 546,621 $ 673,623 $ 219,086 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 fixed 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, 1993 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, 1993, per the bank were $652,669. These deposits are categorized as follows: Carrying 1 2 3 4 Value $ 652,669 $ $ $ $ 650,206 TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1993 B. Liabilities 1. Pension Plans The Town participates in the New York State and Local Retirement Systems (System), which includes the New York State and Local Employees Retirement System (ERS). The State Comptroller is sole trustee and administrative head of the System. The System is a cost-sharing multiple -employer public employee retirement system. On March 31, 1993, there were approximately 20,700 participating government employers. Employees of the Town of Groton constituted less than 1% of the members of the System during the 1992-93 fiscal year. The System provides retirement benefits as well as death and disability benefits. All benefits vest after 10 years of credited service. Nearly all Town of Groton's employees are eligible for membership in the System. Retirement benefits are established by the New York State Retirement and Social Security Law and are dependent upon the point in time at which the employees last joined the System. Contributory and noncontributory requirements also depend upon the point in time at which an employee last joined the System. Most members of ERS who joined the System on or before July 26, 1976 are enrolled in a noncontributory plan. Employees who last joined ERS subsequent to July 26, 1976 are enrolled in a contributory plan which requires a 3% contribution of their salary. Generally, members of Tiers 1, 2 and 3 may retire at age 55 and members of Tier 4 may retire at age 62; however, members of Tiers 2 and 3 receive a reduced benefit if they retire before age 62. Membership, benefits, and employer and employee obligations to contribute are described in the State Retirement and Social Security Law and in the Systems' annual reports and financial statements. Effective April 1, 1990, the State Legislature amended the Retirement and Social Security Law and mandated a change to a different actuarial funding method for the System. The System changes 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. As a result of the legislated changes, ERS employer contributions were generally lower than would have been under the aggregate cost funding method. - 12 - 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 1,023,472 106,524 55,740 1,074,256 Total $1,775,564 $ 106,524 $ 55,740 $1,826„348 B. Liabilities 1. Pension Plans The Town participates in the New York State and Local Retirement Systems (System), which includes the New York State and Local Employees Retirement System (ERS). The State Comptroller is sole trustee and administrative head of the System. The System is a cost-sharing multiple -employer public employee retirement system. On March 31, 1993, there were approximately 20,700 participating government employers. Employees of the Town of Groton constituted less than 1% of the members of the System during the 1992-93 fiscal year. The System provides retirement benefits as well as death and disability benefits. All benefits vest after 10 years of credited service. Nearly all Town of Groton's employees are eligible for membership in the System. Retirement benefits are established by the New York State Retirement and Social Security Law and are dependent upon the point in time at which the employees last joined the System. Contributory and noncontributory requirements also depend upon the point in time at which an employee last joined the System. Most members of ERS who joined the System on or before July 26, 1976 are enrolled in a noncontributory plan. Employees who last joined ERS subsequent to July 26, 1976 are enrolled in a contributory plan which requires a 3% contribution of their salary. Generally, members of Tiers 1, 2 and 3 may retire at age 55 and members of Tier 4 may retire at age 62; however, members of Tiers 2 and 3 receive a reduced benefit if they retire before age 62. Membership, benefits, and employer and employee obligations to contribute are described in the State Retirement and Social Security Law and in the Systems' annual reports and financial statements. Effective April 1, 1990, the State Legislature amended the Retirement and Social Security Law and mandated a change to a different actuarial funding method for the System. The System changes 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. As a result of the legislated changes, ERS employer contributions were generally lower than would have been under the aggregate cost funding method. - 12 - TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1993 The State's change to the modified projected unit credit actuarial method had been found by a lower court to be unconstitutional. On July 1, 1993, the Appellate Division, Third Department unanimously upheld the lower court decision, and on November 16, 1993, the Court of Appeals ruled that the Governor and the State Legislature violated Article V, Section 7 of the State Constitution when they imposed the modified projected unit credit method. The State plans to restore the aggregate cost method of determining employer retirement contributions immediately to both the ERS and the PFRS. Initial pension payments made under the aggregate method will be made on December 15, 1994 by local governments. However, to minimize the disruption of local government budgets and the state budget, the plan allows for a phase-in in ERS of the additional costs of returning to aggregate. For the first four years, employer contributions will be capped as a percentage of payroll in ERS. The first year cap will be zero percent of payroll; the cap in year two will be 1.5%; year three 3%; and year four, 4.5%. Contributions in the fifth and subsequent years will be determined by the aggregate method without any cap. The following represents information relating to the Town of Groton's participation in the above pension plans for the year ended December 31, 1993. Total Town payroll for all employees was $346,390. ERS Total payroll covered by the System $298,827 Total Employer Contributions 668 Total Employer Contributions (Expressed as % of Covered Payroll) 0.0% Total Employee Contributions 5,877 Total Employee Contributions (Expressed as % of Covered Payroll) 0.02% The pension benefit obligation of Credited Projected Benefits is a standardized disclosure measure of the actuarial present value of 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 Systems do not make separate measurements for individual employers. - 13 - TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1993 The Systems' pensions benefit obligation and net assets available to pay benefits for all members of the ERS and PFRS are as follows for the year ended March 31, 1993 (amounts in millions). ERS Total Pension Benefit Obligation $ 46,480 Total Net Assets Available for Benefits 49,080 Assets in Excess (Unfunded Portion) of Pension Benefit Obligation 2,600 Historical trend information showing the progress in accumulating sufficient assets to pay benefits when due is presented in the Annual Financial Reports of the Systems. Additional detailed information concerning the Systems may also be found therein. 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, 1993: Liability: Compensated Absences $ 14,392 c. The following is a summary of changes in long-term liabilities for the period ended December 31, 1993: Compensated Absences Balance 1/1/93 $ 11,035 Additions 3,357 Balance 12/31/93 $ 14,392 Additions and deletions to compensated absences are shown net since it is impractical to determine these amounts separately. I - 14 - TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1993 Note 3 - Contingent Liabilities The Town is contesting a bill from Tompkins County for election expenses in the amount of $18,025 which represents $14,720 and $3,305 for 1992 and 1993, respectively. It is management's belief that the Town is not liable for the bill and will not have to pay this amount. - 15 - 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 1993 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. -�J l March 17, 1994 Ithaca, New York - 16 - TOWN OF GROTON COMBINING BALANCE SHEET GENERAL FUND DECEMBER 31, 1993 Townwid e ASSETS Unrestricted Cash $ 309,379 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 LIABILITIES, 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 1,008 226 17,063 Parttown $ 41,672 1,152 110 Total $ 351,051 2,160 336 17,063 $ 327,676 $ 42,934 $ 370,610 $ 71900 $ 1,094 $ 8,994 1,189 119 1,308 1,213 Reserved for Excess Dog Control Revenues 1,063 Reserved for Retirement System Credits 17,063 Total Reserved Fund Balance 18,126 Fund Balances - Unreserved Appropriated - Ensuing Year's Budget 220,000 38,000 Unappropriated 80,461 3,721 Total Unreserved Fund Balance 300,461 41,721 Total Fund Balance 318,587 41,721 Total Liabilities, Deferred Revenues and Fund Equity $ _ 327676 $ „ 421934 See Independent Auditors' Report on Additional Information -17- 10,302 1,063 17,063 18,126 258,000 84,182 342,182 360,308 $ 370,610 Sale of Property and Compensation for Loss Miscellaneous Local Sources TOWN OF GROTON 943 Interfund Revenues COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GENERAL FUND State Sources 42,408 58,187 5,200 1,191 47,608 DECEMBER 31. 1993 Federal Sources Townwide Parttown Total Revenues Total 233,662 80,910 Modified 295,840 Modified Other Sources: Modified Revenues Budget Actual Budget Actual Budget Actual Real Property Taxes $ 128,744 $ 128,744 $ 69,060 $ 69,060 $ 197,804 $ 197,804 Real Property Tax Items 4,136 4,326 3,656 Proceeds of Obligations 4,136 4,326 Nonproperty Tax Items 900 1,008 900 1,008 Departmental Income 1,250 1,725 2,500 3,831 3,750 5,556 Home and Community Services General Governmental Support 250,284 198,656 Intergovernmental Charges 14,092 16,103 750 110 14,842 16,213 Use of Money and Property 15,000 12,026 2,500 1,664 17,500 13,690 Licenses and Permits 6,000 7,820 48,500 Transportation 6,000 7,820 Fines and Forfeitures 31300 3,788 35,240 Economic Assistance & Opportunity 3,300 3,788 Sale of Property and Compensation for Loss Miscellaneous Local Sources 943 943 Interfund Revenues State Sources 42,408 58,187 5,200 1,191 47,608 59,378 Federal Sources Total Revenues 214,930 233,662 80,910 76,864 295,840 310,526 Other Sources: Interfund Transfers Retirement System Credits 3,656 3,656 Proceeds of Obligations Total Revenues and Other Sources 214,930 237,318 80,910 76,864 295,840 314,182 Expenditures General Governmental Support 250,284 198,656 5,100 50 255,384 198,706 Public Safety 14,500 11,536 14,500 11,536 Public Health 200 48,500 48,500 48,700 48,500 Transportation 35,611 35,240 35,611 35,240 Economic Assistance & Opportunity 11,000 10,953 11,000 10,953 Culture and Recreation 19,500 18,413 12,500 10,757 32,000 29,170 Home and Community Services 3,220 2,717 44,810 30,352 48,030 33,069 Employee Benefits 41,740 25,020 10,000 6,839 51,740 31,859 Debt Service (Principal and Interest) Total Expenditures 376,055 302,535 120,910 96,498 496,965 399,033 Other Uses: Interfund Transfers 15,000 15,000 15,000 15,000 Total Expenditures and Other Uses 391,055 317,535 120,910 96,498 511,965 4140033 Excess of (Expenditures) (176,125) (80,217) (40,000) (19,634) (216,125) (99,851) Appropriated Fund Balance 176,125 40,000 2161125 Not (Decrease) $ -0- (80,217) $ -0- (19,634) $ -0- (99,851) Fund Balance, Beginning of Year 398,804 61,355 460,159 Fund Balance, End of Year $ 318,587 $ 41,721 $ 360,308 See Independent Auditors' Report and Accompanying Notes --- i n TOWN OF GROTON COMBINING BALANCE SHEET SPECIAL REVENUE FUNDS DECEMBER 31, 1993 Highway Highway Lighting Fire Protection ASSETS Townwide Parttown District District Special Grant Fund Risk Retention Total Unrestricted Cash $ 177,713 $ 30,014 $ 8,214 $ $ 12,706 $ 7,439 $ 236,086 Restricted Cash Dua From Other Funds Due From State and Federal Govemments Due From Other Governments 8,211 8,211 Other Receivables, Net 126,961 126,961 Inventories Temporary Investments Prepaid Expenditures Deferred Expenditures Total Assets $ LIABILITIES, DEFERRED REVENUES & 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 Govemments 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 Baiance Total Fund Balance Total Liabllklos, Deferred Revenues & Fund Equity $ 185,924 $ 30,014 $ 8,214 $ $ 139,667 $ 7,439 $ 371,258 12,934 $ $ 367 $ $ $ $ 13,301 11,910 11,910 126,961 126,961 24,841 367 126,961 152,172 15,000 15,000 7,439 7,439 15,000 7,439 22,439 161,080 30,000 191,080 (15,000) 14 7,847 12,706 5,567 146,080 30,014 7,847 12,706 196,647 161,080 30,014 7,847 12,706 7,439 219.086 185,924 $ 30,014 $ 8,214 $ $ 139,667 $ 7,439 $ 371,258 See Independent Auditors' Report on Add;tlonal Information - 19-- Real Property Tax Items Departmental Income Home and Community Services Intergovernmental Charges Use of Money and Property 80,000 87,283 3,000 2,043 Licenses and Permits TOWN OF GROTON 54,500 Fines and Forfeitures 54,500 COMBINING STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES Sale of Property and Compensation for Loss 447,457 SPECIAL REVENUE FUNDS 184,688 Miscellaneous Local Sources 5,850 4,129 FOR THE YEAR ENDED DECEMBER 31. 1993 lnterfund Revenues 637,995 579,218 Highway Highway Fire Protection Special Risk Federal Aid Townwlde 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 $ 217,000 $ 217,000 $ 102,750 $ 102,750 $ 5,850 $ 5,850 $ 54,500 $ 54,500 $ 380,100 $ 380,100 $ $ $ 380,100 Real Property Tax Items Departmental Income Home and Community Services Intergovernmental Charges Use of Money and Property 80,000 87,283 3,000 2,043 Licenses and Permits 54,500 Fines and Forfeitures 54,500 54,500 Sale of Property and Compensation for Loss 447,457 390,611 184,688 Miscellaneous Local Sources 5,850 4,129 lnterfund Revenues 637,995 579,218 State Aid 56,400 67,048 Federal Aid 8,877 Total Revenues 297,000 313,160 162,150 171,841 Other Sources: lnterfund Transfers Proceeds of Obligations 1,321 Total Revenues and Other Sources 297,000 313,160 162,150 171,841 Expenditures General Governmental Support 56,005 37,584 224 83,000 89,550 826 220 90,596 56,400 67,048 67,048 8,877 8,877 5,850 6,074 54,500 54,500 519,500 545,575 826 220 546,621 5,850 6,074 54,500 54,500 519,500 545,575 826 220 546,621 Public Safety 54,500 54,500 54,500 54,500 Transportation 447,457 390,611 184,688 184,478 5,850 4,129 637,995 579,218 Culture and Recreation Home and Community Services 1,321 Employee Benefits 41,043 27,035 14,962 10,549 56,005 37,584 Debt Service (Principal and Interest) Total Expenditures 488,500 417,646 199,650 195,027 5,850 4,129 54,500 54,500 748,500 671,302 1,321 Other Uses: lnterfund Transfers 1,000 1,000 1,000 1,000 Total Expenditures and Other Uses 489,500 418,646 199,650 195,027 5,850 4,129 54,500 54,500 749,500 672,302 1,321 Excess of (Expenditures) revenues (192,500) (105,486) (37,500) (23,186) -0-• 1,945 -0- -0- (230,000) (126,727) (495) Other Changes In Fund Equity Appropriated Fund Balance 192,500 37,500 Not (Decrease) Increase $ -0- (105,486) $ -0- (23,186) $ -0- Fund Balances, Beginning of Year 266,566 53,200 Fund Balances, End of Year $ 161,080 $ 30,014 54,500 579,218 1,321 37,584 672,623 1,000 673,623 220 (127,002) 230,000 1,945 $ -0- -0- $ -0- (126,727) (495) 220 (127,002 5,902 -0- 325,668 13,201 7,219 346,088 $ 7,847 $ -0- $ 198,941 $ 12,706 $ 7,439 $ 219,086 See Independent Auditors' Roport on Additional Information -20- FrederickJ. Ciaschi, C.P.A. John H. Dietershagen, C.P.A. John E. Little, C.P.A. Ciaschi • Dietershagen • Little • Mickelson Jerry E. Mickelson, C.P.A. Certified Public Accountants and Consultants Thomas K. Van Derzee, C.P.A. Debbie A. Conley, C.P.A. Dennis G. Jones, C.P.A. 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, 1993, and have issued our report thereon dated March 17, 1994. 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, 1993, 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. 21 CORTLAND ITHACA WATKINS GLEN 18 Tompkins Street Cortland, New York 13045 Terrace Hill Ithaca, New York 14850 221 N. Franklin Street 607-753-7439 607-272-4444 Watkins Glen, New York 14891 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. We noted certain matters involving the internal control structure and its operation that we considered to be reportable conditions under standards established by the American Institute of Certified Public Accountants. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control structure, that, in our judgment, could adversely affect the entity's ability to record, process, summarize, and report financial data consistent with the assertions of management in the general purpose financial statements. CURRENT YEAR: Finding: During our current year audit, it was noted that the Highway Townwide unappropriated fund balance was in a deficit position. The Town had appropriated, for the ensuing year's budget, an amount in excess of funds available. Recommendation: We recommend that the board carefully monitor all financial activity to properly reflect accurate fund balances within their budgeting process. It is noted that the board is aware of this issue and will take steps to amend the budget and reduce the deficit in their April board meeting. 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. Our consideration of the internal control structure would not necessarily disclose all matters in the internal control structure that might be reportable conditions, and accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses as defined above. However, we believe the reportable condition described above is not a material weakness. 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. t March 17, 1994 Ithaca, New York -z2- FrederickJ. 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. Dennis G. Jones, 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, 1993, and have issued our report thereon dated March 17, 1994. 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, the objective of our audit of the general purpose financial statements was not to provide an opinion on overall compliance with such provisions. Accordingly, we do not express such an opinion. The results of our tests indicate that, with respect to the items tested, the Town of Groton complied, in all material respects, with provisions referred to in the preceding paragraph. With respect to items not tested, nothing came to our attention that caused us to believe that the Town of Groton had not complied, in all material respects, with those provisions. In addition, we noted an instance of noncompliance in our 1992 report that has been resolved 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 noir intended to limit the distribution of this report, which is a matter of public record. u � � March 17, 1994 Ithaca, New York 23 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 SCHEDULE OF IMMATERIAL NONCOMPLIANCE WITH LAWS AND REGULATIONS PRIOR YEAR - DECEMBER 31, 1992 REPORT FINDINGS During our audit for the year ended December 31, 1992 we noted the following immaterial instance of noncompliance: Ambulance Contract Condition: The Town had 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. 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. Resolution: It was noted during our current year audit that the Town has discussed this finding with the state agency in order to resolve this issue. - 24 -