BASIC FINANCIAL STATEMENTS

Transcription

1 BASIC FINANCIAL STATEMENTS

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3 Exhibit A STATEMENT OF NET ASSETS JUNE 30, 2012 Surry County Primary Government Tourism and Governmental Business-Type Development Activities Activities Total Authority Assets: Current assets: Cash and investments $ 16,590,015 $ 1,586,521 $ 18,176,536 $ 32,907 Taxes receivable, net 1,707,115 95,640 1,802,755 - Accounts receivable, net 4,012, ,326 4,151,134 7,504 Due from other governments 951,503 26, ,133 - Notes receivable 270, ,594 - Internal balances 100,542 (100,542) - - Restricted assets: Cash and investments 5,120,497-5,120,497 - Total current assets 28,753,074 1,746,575 30,499,649 40,411 Capital assets: Land and other non-depreciable assets 22,167,267 1,777,321 23,944,588 - Other capital assets, net of depreciation 72,092,368 15,835,311 87,927,679 - Capital assets, net 94,259,635 17,612, ,872,267 - Total assets 123,012,709 19,359, ,371,916 40,411 Liabilities: Accounts payable and accrued liabilities 4,214,429 65,723 4,280,152 10,464 Unearned revenues 638, ,516 - Non-current liabilities: Due within one year 8,283, ,616 8,780,370 - Due in more than one year 52,312,210 6,707,509 59,019,719 - Total liabilities 65,448,909 7,269,848 72,718,757 10,464 Net Assets: Invested in capital assets, net of related debt 42,472,931 13,072,772 55,545,703 - Restricted for: Stabilization for State statute 5,092,033-5,092,033 7,504 Education 1,627,555-1,627,555 - Debt service 4,587,228-4,587,228 - Public safety 678, ,673 - Register of Deeds 115, ,922 - Unrestricted (deficit) 2,989,458 (983,413) 2,006,045 22,443 Total net assets $ 57,563,800 $ 12,089,359 $ 69,653,159 $ 29,947 The accompanying notes are an integral part of the financial statements. 17

4 STATEMENT OF ACTIVITIES Program Revenues Operating Capital Charges for Grants and Grants and Expenses Services Contributions Contributions Functions/Programs: Primary Government: Governmental Activities: General government $ 10,964,428 $ 2,042,869 $ 2,184,020 $ - Public safety 17,735,735 4,904, ,151 - Economic and physical development 2,756, ,725 1,338,764 - Human services 21,736,284 4,383,072 11,030,549 - Cultural and recreation 992, Education 21,248, , ,583 Interest and fees 2,322, Total governmental activities 77,756,880 11,712,491 15,530, ,583 Business-Type Activities: Interstates Water and Sewer Fund 99,417 33, ,000 - Flat Rock Water and Sewer Fund 363, , Dobson Area Water and Sewer Fund 159,854 64, Elkin Area Water and Sewer Fund 43,359 26, Landfill Fund 2,724,372 2,210, ,410 - Total business-type activities 3,390,499 2,511, ,410 - Total primary government $ 81,147,379 $ 14,224,420 $ 15,774,161 $ 132,583 Component Unit: Surry County Tourism and Development Authority $ 75,711 $ - $ 2,366 $ - General Revenues: Ad valorem taxes Local option sales tax Other taxes Occupancy tax Investment earnings, unrestricted Total general revenues, excluding transfers Transfers Total general revenues and transfers Change in net assets Net Assets: Beginning of year - July 1 End of year - June 30 The accompanying notes are an integral part of the financial statements. 18

5 Exhibit B Net (Expense) Revenue and Changes in Net Assets Primary Government Component Unit Surry County Tourism and Governmental Business-Type Development Activities Activities Total Authority $ (6,737,539) $ - $ (6,737,539) (12,032,759) - (12,032,759) (1,036,146) - (1,036,146) (6,322,663) - (6,322,663) (992,421) - (992,421) (20,937,006) - (20,937,006) (2,322,521) - (2,322,521) (50,381,055) - (50,381,055) - 48,730 48,730 - (186,571) (186,571) - (95,503) (95,503) - (16,666) (16,666) - (385,150) (385,150) - (635,160) (635,160) (50,381,055) (635,160) (51,016,215) $ (73,345) 34,883,475-34,883,475-15,123,965-15,123,965-1,459,490-1,459, , , ,387-51,829, ,829,317 74,504 (501,541) 501, ,327, ,604 51,829,317 74, ,658 (133,556) 813,102 1,159 56,617,142 12,222,915 68,840,057 28,788 $ 57,563,800 $ 12,089,359 $ 69,653,159 $ 29,947 The accompanying notes are an integral part of the financial statements. 19

6 Exhibit C SURRY COUNTY, NORTH CAROLINA BALANCE SHEET - GOVERNMENTAL FUNDS JUNE 30, 2012 Major Nonmajor Schools County Other Total Capital Buildings Capital Governmental Governmental General Project Project Funds Funds Assets: Cash and investments $ 14,841,214 $ 1,002,444 $ - $ 746,357 $ 16,590,015 Taxes receivable, net 1,508, ,633 1,707,115 Accounts receivable, net 4,003, ,946 4,012,808 Notes receivable 270, ,594 Due from other governments 808, ,394-31, ,503 Due from other funds 114, ,410 Restricted assets: Cash and investments 4,838, , ,701-5,120,497 Total assets $ 26,386,373 $ 1,281,688 $ 113,701 $ 985,180 $ 28,766,942 Liabilities: Accounts payable and accrued liabilities $ 3,646,099 $ 49,833 $ - $ 54,370 $ 3,750,302 Due to other funds - - 4,922 8,946 13,868 Due to schools 464, ,127 Deferred revenues 2,133, ,947 2,345,633 Total liabilities 6,243,912 49,833 4, ,263 6,573,930 Fund Balances: Non-spendable: Notes receivable 270, ,594 Restricted for: Stabilization for State statute 4,940, ,394-40,190 5,092,033 Restricted, all other 5,378,094 1,120, , ,673 7,290,929 Committed: General government 178, ,529 Assigned 5,515, ,515,932 Unassigned 3,858,863 - (4,922) (8,946) 3,844,995 Total fund balances 20,142,461 1,231, , ,917 22,193,012 Total liabilities and fund balances $ 26,386,373 $ 1,281,688 $ 113,701 $ 985,180 Amounts reported for governmental activities in the Statement of Net Assets are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. 94,259,635 Long-term liabilities and compensated absences are not due and payable in the current period and, therefore, are not reported in the funds. (60,595,964) Deferred revenues in the governmental funds are used to offset accounts receivable not expected to be available within 90 days of year-end. These receivables are a component of net assets in the Statement of Net Assets. 1,707,117 Net assets of governmental activities $ 57,563,800 The accompanying notes are an integral part of the financial statements. 20

7 Exhibit D SURRY COUNTY, NORTH CAROLINA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS Major Nonmajor Schools County Other Total Capital Buildings Capital Governmental Governmental General Project Project Funds Funds Revenues: Ad valorem taxes $ 30,982,155 $ - $ - $ 3,901,320 $ 34,883,475 Local option sales taxes 15,123, ,123,965 Unrestricted intergovernmental revenues 1,459, ,459,490 Restricted intergovernmental revenues 13,307, , ,310 8,946 13,598,018 Permits and fees 644, ,773 Sales and services 10,692, ,932 11,067,718 Interest earned on investments 355,478 2, , ,324 Miscellaneous 2,065, ,065,316 Total revenues 74,631, , ,029 4,288,730 79,205,079 Expenditures: General government 10,071, ,071,587 Public safety 14,408, ,727,191 17,135,602 Economic and physical development 2,768, ,348 8,946 3,678,853 Human services 21,286, ,286,982 Cultural and recreation 890, ,715 Education 15,835,240 3,461,448-1,670,609 20,967,297 Debt service: Principal repayments 5,682, ,682,631 Interest 2,273,903-48,618-2,322,521 Total expenditures 73,218,028 3,461, ,966 4,406,746 82,036,188 Revenues over (under) expenditures 1,413,114 (3,326,270) (799,937) (118,016) (2,831,109) Other Financing Sources (Uses): Transfers in , ,507 Transfers out (511,559) (511,559) Total other financing sources (uses) (511,559) - 410,507 - (101,052) Net change in fund balances 901,555 (3,326,270) (389,430) (118,016) (2,932,161) Fund Balances: Beginning of year - July 1 19,240,906 4,558, , ,933 25,125,173 End of year - June 30 $ 20,142,461 $ 1,231,855 $ 108,779 $ 709,917 $ 22,193,012 The accompanying notes are an integral part of the financial statements. 21

8 Exhibit E RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES - GOVERNMENTAL FUNDS Amounts reported for governmental activities in the Statement of Activities (Exhibit B) are different due to the following items: Net change in fund balances - total governmental funds (Exhibit D) $ (2,932,161) Exhibit D reports revenues using a current financial resources basis, which generally means revenue is recognized when collected or is expected to be collected within 90 days of year-end. Exhibit B reports revenues when the earning process is complete, regardless of when it is collected. This measurement difference causes timing of revenue recognition differences for the following revenue types: Property tax revenues in the Statement of Activities earned in prior periods are reported as revenues in the governmental funds statement. 279,433 Expenses related to compensated absences that do not require current financial resources are not reported as expenditures in the governmental funds statement. (772,413) Transfer of capital assets from Enterprise Fund to the General Fund (400,489) Capital outlays are reported as expenditures in the governmental funds statement. However, in the Statement of Activities, capital outlay is not an expense, rather it is an increase in capital assets. 1,773,344 Depreciation expense allocates the costs of capital assets over their useful lives. It is reported as an expenditure in the governmental funds statement. (2,561,847) Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds. 244,151 Capital assets disposed of, but not recognized, on the modified accrual basis of accounting (365,991) Principal repayments are reported as expenditures in the governmental funds statement. However, in the Statement of Activities, these transactions are not an expense, rather they are a decrease in liabilities. 5,682,631 Change in net assets of governmental activities (Exhibit B) $ 946,658 The accompanying notes are an integral part of the financial statements. 22

9 Exhibit F GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Variance with Budgeted Amounts Final Budget Original Final Actual Over/Under Revenues: Ad valorem taxes $ 30,072,515 $ 30,072,515 $ 30,982,155 $ 909,640 Local option sales taxes 11,119,000 11,134,200 12,367,760 1,233,560 Unrestricted intergovernmental revenues 1,271,137 1,271,137 1,459, ,353 Restricted intergovernmental revenues 11,950,808 14,004,443 13,307,179 (697,264) Permits and fees 709, , ,773 (64,227) Sales and services 14,790,441 15,083,214 10,692,786 (4,390,428) Investment earnings 207, , ,932 62,988 Miscellaneous 928,625 1,841,260 2,065, ,056 Total revenues 71,049,470 74,323,713 71,790,391 (2,533,322) Expenditures: General government 12,820,238 14,038,569 9,825,649 4,212,920 Public safety 14,154,899 14,764,232 14,408, ,821 Human services 22,642,889 23,666,162 21,286,982 2,379,180 Economic and physical development 2,974,734 3,706,855 2,768, ,296 Cultural and recreation 936, , ,715 62,793 Education 14,441,860 14,441,860 14,402,180 39,680 Debt service: Principal retirement 6,245,670 6,245,670 5,682, ,039 Interest and fees 2,273,906 2,273,906 2,273,903 3 Total expenditures 76,490,260 80,090,762 71,539,030 8,551,732 Revenues over (under) expenditures (5,440,790) (5,767,049) 251,361 6,018,410 Other Financing Sources (Uses): Transfers in 1,608,747 1,608,747 1,608,744 (3) Transfers out (330,223) (755,223) (732,298) 25,442 Appropriated fund balance 4,162,266 4,913,525 - (4,913,525) Total other financing sources (uses) 5,440,790 5,767, ,446 (4,890,603) Net change in fund balance $ - $ - 1,127,807 $ 1,127,807 Fund Balance: Beginning of year - July 1 18,161,179 End of year - June 30 $ 19,288,986 The accompanying notes are an integral part of the financial statements. 23

10 STATEMENT OF NET ASSETS PROPRIETARY FUNDS JUNE 30, 2012 Landfill Fund Major Flat Rock/ Bannertown Water and Sewer District Assets: Current assets: Cash and cash equivalents $ 1,119,771 $ 85,550 Taxes receivable 95,640 - Accounts receivable, net 103,408 28,511 Due from other governments - 6,412 Total current assets 1,318, ,473 Capital assets: Land and other non-depreciable assets 1,500,951 20,000 Other capital assets, net of depreciation 5,611,213 5,915,393 Capital assets, net 7,112,164 5,935,393 Total assets 8,430,983 6,055,866 Liabilities and Net Assets: Liabilities: Current liabilities: Accounts payable and accrued liabilities 55,770 - Due to other funds - 89,489 Current portion of accrued landfill closure and post-closure care cost 46,991 - Current portion of long-term obligations 417,625 32,000 Total current liabilities 520, ,489 Non-current liabilities: Accrued landfill closure and post-closure care cost 2,519,614 - Long-term obligations 1,760,895 2,427,000 Total non-current liabilities 4,280,509 2,427,000 Total liabilities 4,800,895 2,548,489 Net Assets: Invested in capital assets, net of related debt 5,031,304 3,476,393 Unrestricted (1,401,216) 30,984 Total net assets $ 3,630,088 $ 3,507,377 The accompanying notes are an integral part of the financial statements. 24

11 Exhibit G Major Nonmajor Interstates Dobson Area Elkin Area Water and Water and Water and Sewer District Sewer Fund Sewer Fund Total $ 381,200 $ - $ - $ 1,586, ,640 1,111 1,935 3, ,326 6,672 11,334 2,212 26, ,983 13,269 5,573 1,847, , ,777,321 1,834,721 2,473,984-15,835,311 2,091,091 2,473,984-17,612,632 2,480,074 2,487,253 5,573 19,459,749 3,015 6,938-65,723-6,331 4, , , ,625 3,015 13,269 4, , ,519, ,187, ,707,509 3,015 13,269 4,722 7,370,390 2,091,091 2,473,984-13,072, , (983,413) $ 2,477,059 $ 2,473,984 $ 851 $ 12,089,359 The accompanying notes are an integral part of the financial statements. 25

12 STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS - PROPRIETARY FUNDS Landfill Fund Major Flat Rock/ Bannertown Water and Sewer District Operating Revenues: Charges for services $ 969,640 $ 176,926 Local contribution - - Landfill fees 1,150,006 - White goods and scrap tire 128,410 - Other operating revenues 91,166 - Total operating revenues 2,339, ,926 Operating Expenses: Landfill recycling 836,638 - Sanitation 1,322,784 - Water and sewer - 93,355 Depreciation and amortization 553, ,317 Landfill closure and post-closure costs (66,628) - Total operating expenses 2,646, ,672 Operating income (loss) (306,896) (80,746) Non-Operating Revenues (Expenses): Investment earnings - 63 Interest and fees paid (78,254) (105,825) Total non-operating revenues (expenses) (78,254) (105,762) Income (loss) before contributions and transfers (385,150) (186,508) Transfer from General Fund 25,000 - Capital contributions - - Change in net assets (360,150) (186,508) Net Assets: Beginning of year - July 1 3,990,238 3,693,885 End of year - June 30 $ 3,630,088 $ 3,507,377 The accompanying notes are an integral part of the financial statements. 26

13 Exhibit H Major Nonmajor Interstates Dobson Area Elkin Area Water and Water and Water and Sewer District Sewer Fund Sewer Fund Total $ 33,147 $ 64,351 $ 26,693 $ 1,270, , , ,150, , , ,147 64,351 26,693 2,755, , ,322,784 51, ,168 43, ,747 47,552 55, , (66,628) 99, ,854 43,359 3,206,420 48,730 (95,503) (16,666) (451,081) (184,079) (184,016) 48,730 (95,503) (16,666) (635,097) 18,718 39,817 17, , , ,489 67, , (133,556) 2,409,611 2,129,181-12,222,915 $ 2,477,059 $ 2,473,984 $ 851 $ 12,089,359 The accompanying notes are an integral part of the financial statements. 27

14 STATEMENT OF CASH FLOWS PROPRIETARY FUNDS Landfill Fund Flat Rock/ Bannertown Water and Sewer District Cash Flows from Operating Activities: Cash received from customers $ 2,276,167 $ 166,486 Cash paid for goods and services (2,164,245) (93,355) Cash paid to employees for services 14,093 - Net cash provided (used) by operating activities 126,015 73,131 Cash Flows from Non-Capital Financing Activities: Interfund transfer in (out) 25,000 - Net cash provided (used) by non-capital financing activities 25,000 - Cash Flows from Capital and Related Financing Activities: Acquisition and construction of capital assets (230,238) - Principal paid on bonds and notes payable (376,732) (31,000) Interest and fees paid on bonds (78,254) (105,825) Net cash provided (used) by capital and related financing activities (685,224) (136,825) Cash Flows from Investing Activities: Interest on investments - 63 Net increase (decrease) in cash and cash equivalents (534,209) (63,631) Cash and Cash Equivalents: Beginning of year - July 1 1,653, ,181 End of year - June 30 $ 1,119,771 $ 85,550 Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities: Operating income (loss) $ (306,896) $ (80,746) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation and amortization 553, ,317 Change in assets and liabilities: (Increase) decrease in accounts receivable (63,055) (2,415) Increase (decrease) in accounts payable 3,549 (8,025) Increase (decrease) in compensated absences payable (4,104) - Increase (decrease) in other post-employment benefits payable 18,197 - Increase (decrease) in landfill post-closure liability (75,000) - Net cash provided (used) by operating activities $ 126,015 $ 73,131 Non-Cash Transactions: Transfer of capital assets between funds $ - $ - Major The accompanying notes are an integral part of the financial statements. 28

15 Exhibit I Major Nonmajor Interstates Dobson Area Elkin Area Water and Water and Water and Sewer District Sewer Fund Sewer Fund Total $ 144,383 $ 67,492 $ 27,445 $ 2,681,973 (51,258) (107,309) (44,962) (2,461,129) ,093 93,125 (39,817) (17,517) 234,937 18,718 39,817 17, ,052 18,718 39,817 17, ,052 (12,000) - - (242,238) (407,732) (184,079) (12,000) - - (834,049) , (497,997) 281, ,084,518 $ 381,200 $ - $ - $ 1,586,521 $ 48,730 $ (95,503) $ (16,666) $ (451,081) 47,552 55, ,879 (3,764) - (1,460) (70,694) (3,260) (4,104) , (75,000) $ 93,125 $ (39,817) $ (17,517) $ 234,937 $ - $ 400,489 $ - The accompanying notes are an integral part of the financial statements. 29

16 Exhibit J STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS JUNE 30, 2012 Agency Funds Assets: Cash and investments $ 202,809 Accounts receivable 26,280 Total assets $ 229,089 Liabilities: Accounts payable $ 137,758 Intergovernmental payable 91,331 Total liabilities $ 229,089 The accompanying notes are an integral part of the financial statements. 30

17 1. Summary of Significant Accounting Policies The accounting policies of Surry County (the "County") conform to generally accepted accounting principles as applicable to governments. The following is a summary of the more significant accounting policies. A. Reporting Entity The County, which is governed by a five-member Board of Commissioners, is one of the 100 counties established in North Carolina under North Carolina General Statute 153A-10. Generally accepted accounting principles require the entity to include component units in its financial statements if certain criteria are met. The County has one component unit which has no financial transactions or account balances. Therefore, it does not appear in the combined financial statements. The County has two component units which are reported as enterprise funds in the County s financial statements. The County has one component unit that is presented as a discretely presented component unit. This component unit is reported jointly in a separate column in the County s financial statements in order to emphasize that they are legally separate from the County. Surry County Industrial Facility and Pollution Control Financing Authority The Surry County Industrial Facility and Pollution Control Financing Authority (the Authority ) exists to issue and service revenue bond debt of private businesses for economic development purposes. The Authority is governed by a seven-member board of commissioners, all of whom are appointed by the County Commissioners. The County can remove any commissioner of the Authority with or without cause. The Authority has no financial transactions or account balances; therefore, it is not presented in the combined financial statements. The Authority does not issue separate financial statements. The Interstates Water and Sewer District and the Flat Rock/Bannertown Water and Sewer District The Interstates Water and Sewer District and the Flat Rock/Bannertown Water and Sewer District (the Districts ) exist to provide and maintain water and sewer systems for the County residents within each district. Under State law [G.S. 162A-89], the County s Board of Commissioners also serves as the governing board for the Districts. The Flat Rock/Bannertown Water and Sewer District and the Interstates Water and Sewer District are reported as enterprise funds in the County s financial statements. The Interstates Water and Sewer District does not issue separate financial statements. Complete financial statements for the Flat Rock/Bannertown Water and Sewer District may be obtained at the finance office of the County: 118 Hamby Road, Suite 333, Dobson, North Carolina

18 The Surry County Tourism and Development Authority The Surry County Tourism and Development Authority is a special taxing district made up of the unincorporated areas of the County. A six percent room occupancy tax was implemented effective September 1, 2009 to promote travel and tourism related activities within the district. The Surry Tourism and Development Authority issues separate financial statements. Complete financial statements for the Surry County Tourism and Development Authority may be obtained at the finance office of the County: 118 Hamby Road, Suite 333, Dobson, North Carolina B. Basis of Presentation Government-Wide and Fund Financial Statements The Statement of Net Assets and the Statement of Activities report information on all of the nonfiduciary activities of the primary government. The effect of interfund activity has been removed from these statements in all material areas. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include (1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and (2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds. The fiduciary funds are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. All remaining governmental and enterprise funds are aggregated and reported as nonmajor funds. Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Non-operating revenues, such as subsidies and investment earnings, result from non-exchange transactions or ancillary activities. 32

19 The County reports the following major governmental funds: General Fund. The General Fund is the general operating fund of the County. It is used to account for all financial resources except those required to be accounted for in another fund. The County maintains separate Economic Development, Debt Service, Employee Benefits, Home Program, Cooperative Extension, Sheriff s Special Accounts, Workers Compensation, Sheriff- Narcotics, Public Assistance, and Register of Deeds Automation Funds for accounting purposes. These funds have been consolidated into the General Fund for financial reporting purposes. The Revaluation Fund is a legally budgeted fund under North Carolina General Statutes; however, for statement presentation in accordance with GASB Statement No. 54 it is presented in the General Fund. The County also maintains a separate Capital Reserve Fund (Schools Capital Outlay Fund) to account for 30% and 60%, respectively, of the proceeds of the Chapter 40 and Chapter 42 half-cent local option sales taxes; however, for statement presentation in accordance with GASB Statement No. 54 it is presented in the General Fund. Capital Project Funds. Capital project funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by proprietary funds or trust funds). The County maintains two major capital project funds within the governmental fund types: Schools Capital Project Fund accounts for local funds and financing proceeds used to fund school construction projects. County Buildings Capital Project Fund accounts for funds used for the construction of County buildings. The County reports the following nonmajor governmental funds: Special Revenue Funds. Special revenue funds are used to account for specific revenue sources (other than special assessments, expendable trusts, or major capital projects) that are legally restricted to expenditures for specified purposes. The County maintains four special revenue funds: the Fire Districts Fund, the School Districts Fund, the Emergency Telephone 911 Fund, and the Grants Project Fund. The County reports the following major enterprise funds: Enterprise Funds. Enterprise funds are used to account for operations (a) that are financed and operated in a manner similar to private business enterprises, where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis are financed or recovered primarily through user charges; or (b) where the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes. Surry County has four major enterprise funds: the Landfill Fund, the Flat Rock/Bannertown Water and Sewer District, the Interstates Water and Sewer District, and the Dobson Area Water and Sewer Fund. The Landfill Reserve Fund is a fund established by the County to accumulate the funds necessary for any expenses related to land acquisition, construction, equipping, and closing a landfill. 33

20 The Interstates Water and Sewer District Fund accounts for water and sewer activities. A capital project fund has been established for the Interstates Water and Sewer District to account for the construction of the first water lines in the District. This fund is consolidated with the Interstates Water and Sewer District (the operating fund) for financial reporting purposes. The County reports the following nonmajor enterprise fund: The Elkin Area Water and Sewer Fund accounts for water and sewer activities in the Gentry Road area of Elkin. The County reports the following fund types: Fiduciary Funds account for the assets held by the County in a trustee capacity or as an agent for individuals, private organizations, other governmental units, and/or other funds. Fiduciary funds include the following fund type: Agency Funds. Agency funds are custodial in nature and do not involve measurement of results of operations. Agency funds are used to account for assets the County holds on behalf of others. The County maintains six agency funds: the Social Services Trust Fund that accounts for funds held by the County for the subsistence needs of specific social services clients; the Jail Trust Fund that accounts for monies held by the County for inmates; the Motor Vehicle Tax Fund that accounts for registered motor vehicle property taxes that are billed and collected by the County for various municipalities and special districts within the County; the State Solid Waste Disposal Tax Fund that accounts for the $2.00 per ton tax on landfill waste; the Regional Tourism Fund which accounts for a partnership with surrounding counties in North Carolina and Virginia to promote tourism; and a Miscellaneous Agency Funds group. The following agency funds are accounted for in the Miscellaneous Agency Funds group; the Fines and Forfeitures Fund that accounts for the collection and payment of fines and forfeitures to three Boards of Education in the County; the CBA Money and Elderly or Handicap Transportation Assistance Funds that account for the collection and payment of State financial grant assistance to various subrecipients; the Floodplain Mapping accounts for collection and remittance for fees for Floodplain mapping to N.C. Department of Crime Control and Public Safety; the Mental Health ABC Fund which accounts for funds paid by Municipal ABC Boards in Surry County on the number of bottles of spirituous liquor sold during the month by all stores; the NC DOR-HB-1779 Fund accounts for the additional interest on delinquent motor vehicle property tax payments to be transferred to NC State Treasurer; the P.A.R.T Transportation Taxes Fund accounts for vehicle rental taxes collected for Piedmont Authority of Regional Transportation; the Dobson Zoning Fund that accounts for collection and remittance of zoning permits for the Town of Dobson; the State Treasurer General Fund which accounts for fees collected by the Register of Deeds for filing a Deed of Trust; the Department of Cultural Resources Fund which accounts for fees collected by the Register of Deeds which are used to offset the cost of the Archives and Records Management Program; the Excise Tax of Deeds Fund which accounts for the tax rate of one dollar on each five hundred dollars of real property conveyed to another person remitted to the Department of Revenue and distributed per G.S ; the Domestic Violence Center Fund which accounts for thirty dollars of each marriage license issued forwarded to the Department of 34

21 Administration and credited to the Domestic Violence Center Fund established under G.S. 50B-9; the Contractor Permits Inspections fund which accounts for a ten dollar fee collected on building permits paid to the NC Licensing Board for the Homeowners Recovery Fund per G.S b; the State Fees concealed Handgun Permits Fee Fund which accounts for the State s portion of permit fees paid for concealed weapon permits under G.S ; and the Cell Tower Lease Town of Pilot Mountain Fund which accounts for the Town of Pilot Mountain's portion of monthly rent paid for cell tower space. C. Measurement Focus and Basis of Accounting In accordance with North Carolina General Statutes, all funds of the County are maintained during the year using the modified accrual basis of accounting. Government-Wide, Proprietary, and Fiduciary Fund Financial Statements. The government-wide, proprietary, and fiduciary fund financial statements are reported using the economic resources measurement focus, except for the agency funds which have no measurement focus. The government-wide, proprietary, and fiduciary fund financial statements are reported using the accrual basis of accounting. Revenues are recorded when earned, and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Non-exchange transactions, in which the County gives (or receives) value without directly giving (or receiving) equal value in exchange, include property taxes, grants, entitlements, and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided; 2) operating grants and contributions; and 3) capital grants and contributions, including special assessments. Internally-dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund s principal ongoing operations. The principal operating revenues of the County enterprise funds are charges to customers for sales and services. The County also recognizes as operating revenue the portion of tap fees intended to recover the cost of connecting new customers to the system. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. Governmental Fund Financial Statements. Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. Long-term debt issued and acquisitions under capital leases are reported as other financing sources. General capital asset acquisitions are reported as expenditures in governmental funds. 35

22 The County considers all revenues available if they are collected within 90 days after year-end, except for property taxes. Ad valorem property taxes are not accrued as revenue because the amount is not susceptible to accrual. At June 30, taxes receivable are materially past due and are not considered to be an available resource to finance the operations of the current year. Also, as of January 1, 1993, State law altered the procedures for the assessment and collection of property taxes on registered motor vehicles in North Carolina. Effective with this change in the law, Surry County is responsible for billing and collecting the property taxes on all registered motor vehicles on behalf of all municipalities and special tax districts in the County. For registered motor vehicles, property taxes are due the first day of the fourth month after the vehicles are registered. The billed taxes are applicable to the fiscal year in which they become due. Therefore, taxes for vehicles registered from March 2011 through February 2012 apply to the fiscal year ended June 30, Uncollected taxes which were billed during this period are shown as a receivable on these financial statements. Sales taxes collected and held by the State at year-end on behalf of the County are recognized as revenue. Intergovernmental revenues and sales and services are not susceptible to accrual because generally they are not measurable until received in cash. Expenditure-driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other grant requirements have been satisfied. Under the terms of grant agreements, the County funds certain programs by a combination of specific cost-reimbursement grants, categorical block grants, and general revenues. Thus, when program expenses are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the County s policy to first apply cost-reimbursement grant resources to such programs, followed by categorical block grants, then by general revenues. When both restricted and unrestricted resources are available for use, it is the County s policy to use restricted resources first, then unrestricted resources as they are needed. All governmental and business-type activities and enterprise funds of the County follow FASB Statements and Interpretations issued on or before November 30, 1989, Accounting Principles Board Opinions, and Accounting Research Bulletins, unless those pronouncements conflict with GASB pronouncements. D. Budgetary Data The County s budgets are adopted as required by the North Carolina General Statutes. An annual budget ordinance is adopted for the General Fund, special revenue funds, and enterprise funds. All annual appropriations lapse at fiscal year-end. Project ordinances are adopted for the capital project funds. All budgets are prepared using the modified accrual basis of accounting, which is consistent with the accounting system used to record transactions. 36

23 Expenditures may not legally exceed appropriations at the departmental level for the General, Special Revenue, and Enterprise Funds and at the object level for the Capital Project Funds. The County Manager is authorized to adjust approved budget appropriations within the same fund, and such action is reported to the Board at a subsequent meeting. During the year, several amendments to the original budget became necessary. The budget ordinance must be adopted by July 1 of the fiscal year or the governing board must adopt an interim budget that covers that time until the annual ordinance can be adopted. E. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Significant areas where estimates are made are allowance for doubtful accounts and depreciation lives. F. Assets, Liabilities, and Fund Equity Deposits and Investments All of the County s deposits are made in board-designated official depositories and are secured as required by G.S The County may designate, as an official depository, any bank or savings association whose principal office is located in North Carolina. Also, the County may establish time deposit accounts such as NOW and SuperNOW accounts, money market accounts, and certificates of deposit. State law [G.S (c)] authorizes the County to invest in obligations of the United States or obligations fully guaranteed both as to principal and interest by the United States; obligations of the State of North Carolina; bonds and notes of any North Carolina local government or public authority; obligations of certain non-guaranteed federal agencies; certain high quality issues of commercial paper and bankers' acceptances; and the North Carolina Capital Management Trust (NCCMT), an SEC registered (2a-7) money market mutual fund. The County s investments with a maturity of more than one year at acquisition and non-money market investments are carried at fair value as determined by quoted market prices. The securities of the NCCMT Cash Portfolio are valued at fair value, which is the NCCMT s share price. The NCCMT Term Portfolio s securities are valued at fair value. Money market investments that have a remaining maturity at the time of purchase of one year or less and non-participating interest earnings and investment contracts are reported at amortized cost. Cash and Cash Equivalents The County pools money from several funds to facilitate disbursement and investment and to maximize investment income. Therefore, all cash and investments are essentially demand deposits and are considered cash and cash equivalents. 37

24 Restricted Assets The restricted assets of $167,850 in the Schools Capital Project Fund represent the balance of proceeds available under installment purchase contracts to finance construction and renovations to schools and a community college. The restricted assets of $113,701 in the County Capital Project Fund represent the balance of proceeds available under an installment purchase contract to finance County Building upgrades. The total restricted assets of $4,838,946 in the General Fund represents the balance in a sinking fund required by a financing contract to construct schools of $4,660,417 and money in the Revaluation Fund of $178,529 is restricted per North Carolina General Statute 153A-150. Ad Valorem Taxes Receivable In accordance with State laws [G.S and G.S (a)], the County levies ad valorem taxes on property other than motor vehicles on July 1, the beginning of the fiscal year. The taxes are due on September 1 (lien date); however, penalties and interest do not accrue until the following January 6. These taxes are based on the assessed values as of January 1, As allowed by State law, the County has established discounts that apply to taxes which are paid prior to the due date. In the County s General Fund, ad valorem tax revenues are reported net of such discounts. Allowances for Doubtful Accounts All receivables that are historically uncollectible accounts are shown net of an allowance for doubtful accounts. This amount is estimated by analyzing the percentage of receivables that were written off in prior years. Capital Assets Capital assets are recorded at original cost or estimated historical cost. Donated assets are recorded at their estimated fair value at the date of donation. Minimum capitalization cost is $5,000. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. The County holds title to certain properties of the Boards of Education of Surry County, Elkin and Mount Airy, which have been included in capital assets. The properties have been deeded to the County to permit installment purchase financing of acquisition and construction costs. Agreements between the County and the Boards of Education give the Boards of Education full use of the facilities, full responsibility for maintenance of the facilities, and provide that the County will convey title to the property back to the Boards of Education once all restrictions of the financing agreements and all sales tax reimbursement requirements have been met. The properties are not reflected as capital assets in the financial statements of the Boards of Education. 38

25 Capital assets in the enterprise funds of the County are recorded at original cost at the time of acquisition. Capital assets donated to the enterprise fund operations are recorded at the estimated fair market value at the date of donation. Depreciation is provided over the estimated useful lives of the assets using the straight-line method. Capital assets are depreciated on a straight-line basis over the following useful lives to the cost of the assets: Long-Term Obligations Years Equipment 5 Vehicles 5 Other improvements 10 Plant and distribution 40 Buildings In the government-wide financial statements and in the proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or the proprietary fund Statement of Net Assets. In the fund financial statements for governmental fund types, the face amount of debt issued is reported as an other financing source. Net Assets/Fund Balances Net Assets Net assets in government-wide and proprietary fund financial statements are classified as invested in capital assets, net of related debt, restricted and unrestricted. Restricted net assets represent constraints on resources that are either externally imposed by creditors, grantors, contributors, laws or regulations of other governments, or imposed by law through State statutes. Fund Balances In the governmental fund financial statements, fund balance is composed of five classifications designed to disclose the hierarchy of constraints placed on how fund balance can be spent. 39

26 The governmental fund types classify fund balances as follows: Non-Spendable Fund Balance This classification includes amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained in tact. Notes Receivable portion of fund balance that is not an available resource because it represents the year-end balance of notes receivable that are not expendable available resources. Restricted Fund Balance This classification includes amounts that are restricted to specific purposes externally imposed by creditors or imposed by law. Stabilization for State Statute portion of fund balance that is not an available resource for appropriation in accordance with State law [G.S (a)]. Restricted for Register of Deeds portion of fund balance restricted by State statute for automation enhancement (software) improvements. Restricted for General Government portion of fund balance restricted by revenue source to be used to support general government activities. Restricted for Education portion of fund balance restricted by revenue source to be used to support future public education expenditures. Restricted for Debt Service portion of fund balance restricted by revenue source to be used to support future debt service expenditures. Restricted for Public Safety portion of fund balance restricted by revenue source for public safety related activities. School County Capital Building Other General Project Capital Governmental Purpose Fund Fund Project Fund Funds Total Restricted, all other: Register of Deeds $ 115,922 $ - $ - $ - $ 115,922 General Government , ,701 Education 674,944 1,120, ,795,405 Debt Service 4,587, ,587,228 Public Safety , ,673 Total $ 5,378,094 $ 1,120,461 $ 113,701 $ 678,673 $ 7,290,929 40

27 Committed Fund Balance This classification includes amounts that can be used only for the specific purposes determined by a formal action of the government's highest level of decision-making authority. The Board of Commissioners is the highest level of decision-making authority for the government that can, by adoption of an ordinance prior to the end of the fiscal year, commit fund balance. Once adopted, the limitation imposed by the ordinance remains in place until a similar action is taken (the adoption of another ordinance) to remove or revise the limitation. Committed for General Government portion of fund balance that can only be used for tax revaluation. Purpose General Fund Committed: General government $ 178,529 Assigned Fund Balance Assigned fund balance is the portion of fund balance that Surry County intends to use for specific purposes. The County's governing body has the authority to assign fund balance. The Manager and Finance Officer, as granted in the officially adopted budget ordinance, have been granted limited authority to assign fund balance. Subsequent Year's Expenditures portion of fund balance that is appropriated in the next year's budget that is not already classified in restricted of committed. The governing body approves the appropriation; however, the budget ordinance authorizes the Manager and Finance Officer to make certain modifications without requiring Board approval. Assigned fund balance at June 30, 2012 is as follows: General Purpose Fund Subsequent year's expenditures $ 5,515,932 Unassigned Fund Balance Unassigned fund balance represents the portion of fund balance that has not been assigned to another fund or is not restricted, committed, or assigned to specific purposes within the General Fund. 41

28 Surry County has a revenue spending policy that provides guidance for programs with multiple revenue sources. The Finance Officer will use resources in the following order: bond/debt proceeds, federal funds, state funds, local non-county funds, and County funds. For purposes of fund balance classification, expenditures are to be spent from restricted fund balance first, followed in-order by committed fund balance, assigned fund balance, and lastly, unassigned fund balance. The Finance Officer has the authority to deviate from this policy if it is in the best interest of the County or when required by grant or other contractual agreements. The County has not officially adopted a fund balance policy. The following schedule provides management and citizens with information on the portion of General Fund balance that is available for appropriation. Total fund balance - General Fund $ 20,142,461 Less: Notes receivable (270,594) Stabilization for State statute (4,940,449) Total available balance $ 14,931,418 Reconciliation of the Statement of Revenues, Expenditures, and Changes In Fund Balance - Budget and Actual - General Fund to the Statement of Revenues, Expenditures, and Changes in Fund Balance - Governmental Funds A legally budgeted tax Revaluation Fund and School Capital Outlay Fund are consolidated into the General Fund for reporting purposes on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds (Exhibit D). Fund balance for the General Fund is reconciled as follows: Fund balance, ending (Exhibit F) $ 19,288,986 Schools Capital Outlay Fund: Revenues: Local option sales taxes 2,756,205 Interest earned on investments 84,546 Expenditures: Education (1,433,060) Transfers out - General Fund (1,608,744) Fund balance, beginning 875,999 Revaluation Fund: Expenditures: General Government (245,938) Transfers in - General Fund 220,739 Fund balance, beginning 203,728 Fund balance, ending (Exhibit D) $ 20,142,461 42