TOWNSHIP OF FRANKLIN REDEVELOPMENT AGENCY SOMERSET COUNTY, NEW JERSEY

Transcription

1 TOWNSHIP OF FRANKLIN REDEVELOPMENT AGENCY SOMERSET COUNTY, NEW JERSEY FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2014 HODULIK & MORRISON, P.A. CERTIFIED PUBLIC ACCOUNT ANTS REGISTERED MUNICIPAL ACCOUNT ANTS HIGHLAND PARK, N.J.

2 FRANKLIN TOWNSHIP REDEVELOPMENT AGENCY TOWNSHIP OF FRANKLIN SOMERSET COUNTY, NEW JERSEY TABLE OF CONTENTS PAGE(S) Independent Auditor's Report Report on Compliance and Internal Control Over Financial Reporting Based on an Audit of Financial Statements Performed In Accordance With Government Auditing Standards PART I - REQUIRED SUPPLEMENTARY INFORMATION Management's Discussion and Analysis FINANCIAL STATEMENTS 10 GOVERNMENT-WIDE AND GOVERNMENTAL FUNDS Exh. A Governmental Funds Balance Sheet / Statement of Net Assets and - December 31,2014 Exh. B Statement of Governmental Funds Revenues, Expenditures and Changes in Fund Balance / Statement of Activities - December 31, FIDUCIARY FUNDS 14 Exh.C Exh.D Statement of Fiduciary Net Assets - December 31, 2014 Statement of Fiduciary Net Assets - December 31, Notes to Financial Statements PART II - REQUIRED SUPPLEMENTARY INFORMATION Sch.1 Supplemental Schedule of Revenues and Expenses Compared To Budget (Budgetary Basis) and Actual Revenues for Prior Year PART III - OTHER SUPPLEMENTAL AND SCHEDULES INFORMATION 26 Sch. 2 Supplemental Schedule of Changes In Cash and Investments - General Fund Sch. 3 Roster of Officials General Comments Recommendations

3 HODULIK & MORRISON, P.A. CERTIFIED PUBLIC ACCOUNTANTS REGISTERED MUNICIPAL ACCOUNTANTS PUBLIC SCHOOL ACCOUNT ANTS 1102 RARITAN AVENUE, P.O. BOX 1450 HIGHLAND PARK, NJ (732) (732) (FAX) ANDREW G. HODULlK, CPA, RMA, PSA ROBERT S. MORRISON, CPA, RMA, PSA JO ANN BOOS, CPA, PSA MEMBERS OF: AMERICAN INSTITUTE OF CPA'S NEW JERSEY SOCIETY OF CPA'S REGISTERED MUNICIPAL ACCOUNTANTS OF N.J. INDEPENDENT AUDITOR'S REPORT Honorable Chairman and Members of the Franklin Township Redevelopment Agency Somerset County, New Jersey We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Franklin Township Redevelopment Agency, Somerset County, New Jersey as of and for the year ended December 31, 2014, and related notes to the financial statements, which collectively comprise the Franklin Township Redevelopment Agency's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States and the audit requirements as prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statement. -1-

4 We believe that our audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Franklin Township Redevelopment Agency, Somerset County, New Jersey, as of December 31,2014 and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended, in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principals generally accepted in the United States of America require that the management's discussion and analysis and budget comparison information as listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the Required Supplementary Information - Part I in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Franklin Township Redevelopment Agency, Somerset County, New Jersey. The information included in the Part II - Required Supplementary Information and Part III - Other Supplemental Information and Schedules as listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements of the Franklin Township Redevelopment Agency. The information included in Part II - Required Supplementary Information are the responsibility of the management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements, or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. HODULIK & MORRISON, P.A. -2-

5 The schedules and information contained in Part III - Other Supplemental Information and Schedules have not been subjected to auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion, or provide any assurance on them. Other Reporting Required by Government Auditing Standards In Accordance with Government Auditing Standards, we have also issued our report dated June 26, 2015, on our consideration of the Franklin Township Redevelopment Agency's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants agreements an other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over the financial reporting or on compliance. That report is an integral part of an audit performed in accordance Government Auditing Standards in considering Franklin Township Redevelopment Agency's internal control over financial reporting and compliance. iurjddt f Jf~,IlIl. HODULIK & MORRISON, P.A. Certified Public Accountants Registered Municipal Accountants ~~=======--- Andrew G. Hodulik ---- Registered Municipal Account No. 406 Highland Park, New Jersey June 26, 2015 HODULIK & MORRISON, P.A. -3-

6 HODULIK CERTIFIED & MORRISON,P.A. PUBLIC ACCOUNTANTS REGISTERED MUNICIPAL ACCOUNTANTS PUBLIC SCHOOL ACCOUNTANTS 1102 RARITAN AVENUE, P.O. BOX 1450 HIGHLAND PARK, NJ (732) (732) (FAX) ANDREW G. HODULIK, CPA. RMA.PSA ROBERT S. MORRISON. CPA, RMA, PSA JOANN BOOS,CPA,PSA MEMBERS OF: AMERICAN INSTITUTE OF CPA'S NEW JERSEY SOCIEfY OF CPA'S REGISTERED MUNICIPAL ACCOUNTANTS OF N.J. REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Honorable Chairman and Members of the Franklin Township Redevelopment Agency Somerset County, New Jersey INDEPENDENT AUDITOR'S REPORT We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States and the audit requirements as prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Franklin Township Redevelopment Agency (the "Agency"), Somerset County, New Jersey, as of and for the year ended December 31, 2014, and the related notes to the financial statements, which collectively comprise Franklin Township Redevelopment Agency's basic financial statements and have issued our report thereon dated June 26, Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Agency's internal control over financial reporting to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Agency's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Agency's internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance -4-

7 Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in the internal control over financial reporting that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Agency's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of the laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit preformed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. This report is intended solely for the information and use of the members and management of the Franklin Township Redevelopment Agency and the Division of Local Government Services and state awarding agencies and is not intended to be and should not be used by anyone other than these specified parties. A4r1dtL~J/J!JH)vf IA. HODULIK & MORRISON, PA. Certified Public Accountants Registered Municipal Accountants ~~CZ;~~~~==~ ~ - Andrew G. Hodulik Registered Municipal Account No. 406 Highland Park, New Jersey June 26, 2015 HODULIK & MORRISON, P.A. -5-

8 PART I - REQUIRED SUPPLEMENTARY INFORMATION -6-

9 FRANKLIN TOWNSHIP REDEVELOPMENT AGENCY TOWNSHIP OF FRANKLIN SOMERSET COUNTY, NEW JERSEY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR YEAR ENDED DECEMBER 31, 2014 (Unaudited) The Franklin Township Redevelopment Agency (the "Agency") is a corporate and politic body organized under the laws of the State of New Jersey and is a component-unit of the Township of Franklin, Somerset County, New Jersey (the "Township"). The following Management's Discussion and Analysis of the activities and financial performance of the Agency provide an introduction to the financial statements of the Agency for the year ended December 31, Please read it in conjunction with the Agency's financial statements and accompanying notes. The Management's Discussion and Analysis is an element of the reporting model adopted by the Governmental Accounting Standards Board (GASB) in their Statement No.34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments, issued June Beginning with the Calendar year 2014 the Redevelopment Agency will have their financial reporting based on the calendar year. Previous financial reporting was on a fiscal year from July 1 to June 30. The previous reporting period is for the eighteen-month transition period from July 1,2012 through December 31, FINANCIAL HIGHLIGHTS Cash and investments increased by $25,6,96 (58.03%) to $69,797 in CY2014 from $44,283 in the eighteen-month transition period from July 1,2012 through December 31, Accounts Receivable and other Assets decreased from $250 in the eighteen-month transition period from July 1, 2012 through December 31, 2013 to no receivable in CY2014. Other liabilities remained unchanged in CY2014 from the eighteen-month transition period from July 1,2012 through December 31,2013. Non-operating revenues decreased by ($3,311) (-7.35%) to 41,738 in CY 2014 from $45,049 in the eighteen-month transition period from July 1, 20] 2 through December 31,2013. Operating expenses decreased by ($16,731) (-50.67%) to $16,291 in CY 2014 from $33,022 in the eighteen-month transition period from July 1, 2012 through December 31,2013. Net income (Loss) increased by $13,419 (111.57%) to Net income $25,446 in CY2014 from Net income $12,027 in the eighteen-month transition period from July 1, 2012 through December 31,

10 OVERVIEW OF THE FINANCIAL STATEMENTS This report consists of two parts: management's discussion and analysis (this section) and the basic financial statements. The Agency is a special-purpose government that engages in a single governmental activity program, and has elected to combine the government-wide and fund financial statements. The basic financial statements include the two kinds of combined statements that present different views of the Agency: Government-wide financial statements provide both short-term and long-term information about the Agency's overall financial status. The government-wide financial statements are designed to provide readers with a broad overview of the agency's finances, in a manner similar to a private sector business. Fund financial statements that focus on individual parts of the Agency, reporting the Agency's operations in more detail than the district-wide statements. A fund is a group of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. All of the funds of the Agency can be categorized into one category - governmental funds. Governmental Funds - Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike governmental-wide financial statements, governmental fund financial statements focus on current financial resources measurement uses of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. The Statement of Net Position and Governmental Funds Balance Sheet presents the Agency's fund financial statements adjusted to the government-wide financial statements. The Statement of Activities and Governmental Fund Revenues, Expenditures, and Changes in Fund Balance presents the Agency's fund financial statements adjusted to the government-wide financial statements. Notes to Financial Statements - The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements can be found as listed in the table of contents, - 8-

11 FINANCIAL ANALYSIS OF THE AGENCY Financial Position - The following table summarizes the changes in financial position between Calendar Year 2014 and the Eighteen-Month Transition Period of July 1,2012 to December 31, 2013: Balance Balance 18-Month Calendar Year Transition Year Change December 31, December 31, Increase/ Percentage Account (Decrease} of Change Cash & Investment $69,979 $44,283 $25, % Accounts Receivable & Other Assets (250) % Bonds, Notes & Other Liabilities 1,257 1,257 (-0-) -0.00% Governmental Fund Balance / Net Position 68,711 43,276 25, Results of Operations - The following table summarizes the changes in results of operations between Calendar Year 2014 and the Eighteen-Month Transition Period of July 1, 2012 to December 31, 2013: Results Results 18-Month Calendar Year Transition Year December 31, December 31, Change Increase / Percentage Account (Decrease} of Change Operating Expenses $16,291 $33,022 ($16,731) % Non-Operating Revenues 41,738 45,049 (3,311) -7.35% Net income/(loss) 25,446 12,027 13, % Non-operating revenues consist of local subsidy, developer agreement contributions, and interest and dividend income. CAPITAL ASSETS AND DEBT ADMINISTRATION The Agency has not acquired any capital assets and carries no debt nor has any debt been authorized as of December 31,2014. CONTACTING THE AGENCY'S MANAGEMENT This financial report is designed to provide Franklin Township residents and taxpayers, and the Agency's customers, investors and creditors, with a general overview of the Agency's finances and to demonstrate the Agency's accountability for the money it receives. If you have questions about this report or need additional information, please contact Mark Healey, Executive Director, Franklin Township Redevelopment Agency, 475 Demott Lane, Somerset, New Jersey,

12 FINANCIAL STATEMENTS -10 -

13 GOVERNMENT-WIDE AND GOVERNMENTAL FUNDS -11-

14 FRANKLIN TOWNSIDP REDEVELOPMENT AGENCY TOWNSIDP OF FRANKLIN SOMERSET COUNTY, NEW JERSEY Exhibit -A GOVERNMENTALFUNDSBALANCESHEETI STATEMENT OF NET POSITION DECEMBER 31, 2014 ASSETS Unrestricted Assets: Cash and Cash Equiv. Interfund Receivable Adjustments Statement 2014 (See Notes) or Net Position $ 69,979 $ - $ 69,979 Total Unrestricted Assets 69, $ 69,979 $ - $ =====6::.:!9,=97=9= LIABILITIES Current Liabilities Accounts Payable and Accrued Expenses $ 1,257 $ - $..:..i1 ~25::;..:7_ Total Current Liabilities 1,257 1,257 FUND BALANCESINET POSITION Fund Balance Unassigned 68,722 (68,722) Total Fund Balances 68,722 (68,722) Total Liabilities and Fund Balances $ 69,979 $ (68,722) $ 1..;...,2_57_ Net Position: Unrestricted 68,722 68,722 Total Net Position $ - $ =====6::::l8,=72=2i:::: Note: See Notes to Financial Statements

15 FRANKLIN TOWNSHIP REDEVELOPMENT AGENCY TOWNSHIP OF FRANKLIN SOMERSET COUNTY, NEW JERSEY STATEMENT OF GOVERNMENTAL FUND REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE/ STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31,2014 Exhibit - B General Adjustments Statement Fund (See Notes) of Activities Expenditures/expenses: Redevelopment - operations $ 16,291 $ - $ 16,291 Total expenditures/expenses (16,291) (16,291) General revenues: Local subsidy 41,668 41,668 Interest and dividend income Total general revenues 41,738 41,738 Excess (deficiency) of revenues over expenditures 25,446 (25,446) Change in Net Position 25,446 25,446 Fund balance/net position: Beginning of the year 43,276 43,276 End of the year $ $ - $ Note: See Notes to Financial Statements

16 FIDUCIARY FUNDS -14 -

17 Exhibit -C TOWNSHIP OF FRANKLIN REDEVELOPMENT AGENCY TOWNSHIP OF FRANKLIN SOMERSET COUNTY, NEW JERSEY STATEMENT OF FIDUCIARY NET POSTION FIDUCIARY FUNDS DECEMBER 31,2014 ASSETS Cash and investments Total Assets LEEWOOD RPM Redev Group TOTAL Development Development Development Development Account Account Account Account $ 1453 $ $ $ 36,993 $ 1453 $ $ $ NET POSITION Held in Trust for redevelopment costs and other related purposes $ TOTAL NET POSITION 1=4~5~3_$-----;2~5~37~7-$----~10~16~3-$----~3~6~99~3~ $ ======1~4=5=3=$======2~5=37=7=$======10==16=3=$======3~6~99=3= Note: See Notes to Financial Statements

18 Exhibit -D TOWNSHIP OF FRANKLIN REDEVELOPMENT AGENCY TOWNSHIP OF FRANKLIN SOMERSET COUNTY, NEW JERSEY STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS FOR THE YEAR ENDED DECEMBER 31, 2014 Leewood Development Account RPM Development Account Redev Group Development Account Total Development Account ADDITIONS: Operating Grants & Entitlements Interest and dividend income Service Charges (includes prior years charges) Total additions DEDUCTIONS: Redevelopment Expenditures $ 15 $ 23 $ 12 $ ,817 28, $ 42,370 $ 26,531 $ $ 68,902 Change in net position Net position Beginning of the Year Net Assets End of the year (14,259) 5, (9,035) 46,027 ~15~71~2~$----~2~0~16~5-$ ~1~0,~15~1~ $ ====1 =45:=3=$===2::i5,!::::37=7=$===I::i::0i::::1=:63=$====36=,=99=3= Note: See Notes to Financial Statements

19 FRANKLIN TOWNSHIP REDEVELOPMENT AGENCY TOWNSHIP OF FRANKLIN SOMERSET COUNTY, NEW JERSEY NOTES TO FINANCIAL STATEMENTS FOR YEAR ENDED DECEMBER 31, 2014 Note 1: REPORTING ENTITY I AUTHORIZING LEGISLATION Authorizing Legislation - The Franklin Township Redevelopment Agency (the Agency) is a public body corporate and politic body organized under the laws of the State of New Jersey and was created by an ordinance adopted by the governing body, effective on October 4, 1999, of the Township of Franklin ("the creating municipality"), a municipal corporation of the State of New Jersey located in the County of Somerset. The Agency was created for the purpose of fostering the economic development of the community, by development or redevelopment of parcels of land within the boundaries of the Township of Franklin. The ordinance creating the Agency provides that the Agency shall consist of seven commissioners, each of who shall be appointed by the Township Council. New Jersey Statutes provide for the creation, dissolution and operations of separate bodies corporate and politic for the purpose of fostering the economic development of the community (Redevelopment Agency). These statutes were enacted pursuant to Chapter 79 of the Laws of New Jersey 1992, under N.J.S.A. 40A: 12A-l through 40A: 12A-9. Additional statutory requirements relating to the financial operations of independent local authorities were established as the "Local Authorities Fiscal Control Law", which is codified as NJSA 40A: 5A-l et seq. The provisions of the Local Authorities Fiscal Control Law established the Local Finance Board and the Division of Local Government Services, in the Department of Community Affairs (DCA), State of New Jersey, as oversight agencies for the creation, project financing, budgeting and overall financial condition of local authorities. The Local Finance Board adopted the approving resolution on September 14, 1999 approving the Township'S request for establishment of a redevelopment agency. The Township adopted the enacting ordinance on September 24, The Franklin Township Redevelopment Agency began operation during the fiscal year The Agency has no stockholders or equity holders. As a public body under existing statute, the Agency is exempt from both Federal and State taxes. Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the Agency have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the standard-setting body for governmental accountin.g and reporting. GASB pronouncements constitute GAAP for governmental units

20 NOTES TO FINANCIAL STATEMENTS Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D.) B. Reporting Entity The DCA has recognized the statements and interpretations of the Governmental Accounting Standards Board (GASB) as authoritative on application of generally accepted accounting principles (GAAP) for local authorities. The primary criterion for including activities within the Agency's reporting entity, as set forth in Section 2100 of the GASB Codification of Governmental Accounting and Financial Reporting Standards, is whether: ~ the organization is legally separate (can sue or be sued in their own name) ~ the Agency holds the corporate powers of the organization ~ the Agency appoints a voting majority of the organization's board ~ the Agency is able to impose its will on the organization ~ the organization has the potential to impose a financial benefitlburden on the Agency ~ there is a fiscal dependency by the organization on the Agency The Agency is considered to be a "Component Unit" of the Township of Franklin under GAAP. This determination is based on the oversight responsibility of the Township, which manifests itself primarily in the selection of Members of the Agency, and on a financial benefitlburden relationship that exists between the Agency and the Township. The Township of Franklin does not follow GAAP for accounting and financial reporting purposes. Rather, it follows a regulatory basis, utilizing accounting principles, which differ, in some cases significantly, from GAAP. Of particular note is the exclusion from the Township's financial statements of potential component units, based on separate legal status of these units. Accordingly, the financial statements of the Township do not include the agency as a component unit. Based on the aforementioned criteria, the Agency has no component units. C. Basis of Presentation The government-wide financial statements (i.e, the Statement of Net Position and the Statement of Activities) display information about the reporting government as a whole. These statements include all the financial activities of the Agency. The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 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

21 NOTES TO FINANCIAL STATEMENTS Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D) C. Basis of Presentation (Cont'd) General Fund Fund Financial Statements: The Agency segregates transactions related to certain functions or activities in separate funds in order to aid financial management and to demonstrate legal compliance. Governmental funds are those funds through which most governmental functions typically financed. The measurement focus of governmental funds is on the sources, uses and balance of current financial resources. The Agency reports the following governmental fund: The General Fund is the general operating fund of the Agency. It is used to account for all financial resources except those required to be accounted for in another fund. All revenues and receipts that are not restricted by law or contractual agreement are accounted for in this fund. General operating expenditures that are not paid through other funds are paid from the General Fund. Pursuant to single-program government reporting, the Agency has elected to combine the following: 1. statement of Net Position and balance sheet for governmental funds; 2. statement of activities and revenues, expenditures, and changes in fund balance for governmental funds. D. Measurement FocuslBasis of Accounting The accounting and financial reporting treatment applied is determined by its measurement focus and basis of accounting. The government-wide financial statements are reported using the economic resources measurement focus and the. accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this basis of accounting transactions are recorded in the following manner: Revenue Recognition - Revenue is recognized when it becomes measurable and available. "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Other revenue is considered available if collected within one year. Recording of Expenditures - Expenditures are generally recorded when a liability is incurred. E. Cash and Cash Equivalents Cash and cash equivalents include money market funds and short-term investments, which may include Certificates of Deposit, with maturity of three months or less carried at cost, which approximates market

22 NOTES TO FINANCIAL STATEMENTS Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D) F. Investments Investments consist of certificates of deposit and direct obligations of the u.s. Government, u.s. Government Agencies, repurchase agreements and investments in money market funds and are valued at cost or amortized cost, which approximates market. G. Reconciliation of Adiustments The following adjustments/reclassifications were required for the combing of the governmentwide and fund financial statements in accordance with GASB: Statement of Net Position and Governmental Fund Balance Sheet: From Adjustment To Fund Balance Unreserved $68,722 ($68,722) $0 Net Position Unrestricted $0 $68,722 $68,722 Statement of Activities and Governmental Revenues, Expenditures, and Changes in Fund Balance: From Adjustment To Excess (Deficit) of Revenues over Expenditures $25,446 ($25,446) $0 Change in Net Position $0 $25,446 $25,446 H. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Recent Accounting Standards GASB issued Statement No. 69, "Government Combinations and Disposals of Government Operations in January This Statement establishes account and financial reporting standards related to government combinations and disposals of government operations. GASB issued Statement No. 70, "Accounting and Financial Reporting for Nonexchange Financial Guarantees" in April This statement requires a government that extends a nonexchange financial guarantee to recognize a liability when qualitative factors and historical date, if any, indicate that it is more likely than not that the government will be required to make a payment on the guarantee

23 NOTES TO FINANCIAL STATEMENTS Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D) Recent Accounting Standards (Cont'd) GASB issued Statement No. 71, "Pension Transition for Contributions Made Subsequent to the Measurement Date - an Amendment of GASB Statement No. 68" in November The issue relates to amounts associated with contributions, if any, made by a state or local government employer or nonemployer contributing entity to a defined pension plan after the measurement date of the government's beginning net pension liability. GASB issued Statement No. 72, "Fair Value Measurement and Application" in February This statement provides guidance for determining the fair value measurement for financial reporting purposes. This statement also provides guidance for applying fair value to certain investments and disclosures related to all fair value instruments. The Agency prepares its financial statements in accordance with accounting principles generally accepted in the United States of America. The Agency is required to adopt these new standards in connection with the organization's financial statements. Note 3: DEPOSITS, CASH AND CASH EQUIVALENTS AND INVESTMENTS Deposits New Jersey statutes permit the deposit of public funds in institutions located in New Jersey, which are insured by the Federal Deposit Insurance Corporation (FDIC), or by any other agencies of the United States that insure deposits or the State of New Jersey Cash Management Fund. New Jersey statutes require public depositories to maintain collateral for deposits of public funds that exceed insurance limits to protect deposits from loss under the provisions of the Governmental Unit Deposit Protection Act ("NJGUDPA"). NJGUDPA was enacted in 1970 to protect governmental units from a loss of funds on deposit with a failed banking institution in New Jersey. NJGUDPA provides for collateral requirements as follows: The market value of the collateral must equal 5 percent of the average daily balance of public funds; or if the public funds deposited exceed 75 percent of the capital funds of the depository, the depository must provide collateral having a market value equal to 100 percent of the amount exceeding 75 percent. All collateral must be deposited with the Federal Reserve Bank, the Federal Home Loan Bank Board or a banking institution that is a member of the Federal Reserve System and has capital funds of not less than $25,000,000. The carrying amount of the Agency's cash and cash equivalents at December 31, 2014 was $106,972. A summary of the cash and cash equivalents at December 31,2014 is as follows: General Fund Fiduciary Fund $ 69,979 36,993 Total $ 106,

24 NOTES TO FINANCIAL STATEMENTS Note 3: DEPOSITS, CASH AND CASH EQUIVALENTS AND INVESTMENTS (CONT.D) Deposits (Cont'd.) At December 31, 2014, the Agency has implemented the disclosure requirements of Governmental Accounting Standards Board Statement No. 40 "Deposits and Investment Risk Disclosures" (GASB 40) and accordingly the Agency has assessed the Custodial Risk, the Concentration of Credit Risk and Interest Rate Risk of its cash and investments. (a) Custodial Credit Risk - The Agency's deposits are exposed to custodial credit risk if they are not covered by depository insurance and the deposits are: uncollateralized, collateralized with securities held by the pledging financial institution, or collateralized with securities held by the pledging financial institution's trust department or agent but no in the depositor-governments name. The deposit risk is that, in the event of the failure of a depository financial institution, the Agency will not be able to recover deposits or will not be able to recover collateral securities that are in possession of an outside party. The Agency's investment securities are exposed to custodial credit risk if the securities are uninsured, are not registered in the name of the Agency and are held by either: the counterparty or the counterparty's trust department or agent but not in the Agency's name. The investment risk is that, in the event of the failure of the counterparty to a transaction, the Agency will not be able to recover the value of the investment or collateral securities that in possession of an outside party. (b) Concentration of Credit Risk - This is the risk associated with the amount of investments that Agency has with anyone issuer that exceeds 5 percent or more of its total investments. Investment issued or explicitly guaranteed by the U.S. government and investments in mutual funds, external investment pools, and other pooled investments are excluded from this requirement. (c) Credit Risk - GASB 40 requires that disclosure be made as to the credit rating of all debt security investments except for obligations of the U.S. government or obligations explicitly guaranteed by the U.S. government. This is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. In general, the Agency does not have an investment policy regarding Credit Risk except to the extent outlined under the Agency's investment policy. The New Jersey Cash Management Fund is not rated. (d) Interest Rate Risk - This is the risk that changes in interest rates will adversely affect the fair value of an investment. The Agency does not have a formal policy that limits investment maturities as a means of managing its exposure to fair value losses arising from interest rate fluctuations. As of December 31, 2014, based upon the insured balances provided by the FDIC coverage, no amount of the Agency's bank balance was considered exposed to custodial credit risk. Note 4: PROPERTY, PLANT AND EQUIPMENT The Agency did not acquire property, plant, and/or equipment during the year ended December 31,

25 Note 5: OPERATING LEASES NOTES TO FINANCIAL STATEMENTS The Agency did not enter into any lease agreements during the year ended December 31, 2014, and accordingly no future minimum lease payments disclosed. Note 6: LONG TERM/ SHORT TERM OBLIGATIONS The Agency did not authorize or issue any long-term or short-term obligations during the year ended December 31,2014. Note 7: CONTINGENT LIABILITIES AND PENDING LITIGATION As at December 31, 2014 and the date of this report, there was no litigation pending which, in the event of an adverse or unfavorable outcome, would materially impair the financial position of the Franklin Township Redevelopment Agency. Note 8: SUBSEQUENT EVENTS Reviews for events subsequent to the date of the financial statements and through June 26, 2015 indicated no matters for which additional disclosures are require

26 PART II REQUIRED SUPPLEMENTARY INFORMATION - 24-

27 Schedule 1 FRANKLIN TOWNSHIP REDEVELOPMENT AGENCY TOWNSIDP OF FRANKLIN SOMERSET COUNTY. NEW JERSEY SUPPLEMENTAL SCHEDULE OF REVENUES AND EXPENSES COMPARED TO BUDGET AND ACTUAL REVENUES (BUDGETARY BASIS) FOR THE YEAR ENDED DECEMBER CY2014 BUDGET CY2014 ACTUAL 18- MONTH PERIOD 2013 ACTUAL Revenues Local Subsidy Township of Franklin $ Interest Income 40,000 $ 41,668 $ 70 45, TOTALREVENUES-BUDGETARY $ $ Expenses: Operating: Other Expenses $ 40,000 $ TOTALEXPENSES-BUDGETARY $ 40,000 $ Excess (Deficiency) of Revenues Over (Under) Expenditures $ ===== $ 41,738 $==4=5~,0=49= 16,291 $ _...:3:.,:2.:,;:;,,9.;;;_97:.._ 16,291 $==3=2~,9=97= 25,446 $ ==1=2~,0=52= Fund Balance - July 1 50,225 Fund Balance - December 31 50,225 43,276 68,722 31,249 43,301 Reconciliation of Budgetary Basis to Net Income: Adjustments to Budgetary Basis: Unreserved Retained Earnings Utilized $ Net Income (Less) $==== - 25-

28 PART III OTHER SUPPLEMENTAL INFORMATION AND SCHEDULES - 26-

29 Schedule 2 FRANKLIN TOWNSIDP REDEVELOPMENT AGENCY TOWNSIDP OF FRANKLIN SOMERSET COUNTY, NEW JERSEY SUPPLEMENTAL SCHEDULE OF CHANGES IN CASH AND INVESTMENTS FOR THE YEAR ENDED DECEMBER 31, 2014 TOTAL GENERAL FIDUCIARY ALL FUND FUND FUNDS Cash and Investment Balances - 31-Dec-13 $ 44,283 46,277 $ 90,561 Cash Receipts: Local Subsidies Collected 41,918 41,918 Developer Agreement Contributions 59,817 59,817 Interest & Dividends Received Total Cash Receipts ,855 Total Cash Receipts and Balance , ,416 Cash Disbursements: Operating Expenses 16,292 69,152 85,444 Total Cash Disbursements 16,292 69,152 85,444 Cash and Cash Equivalent Balance - 31-Dec-14 $ 69,979 $ 36,993 $ 106,972 Analysis of Cash and Cash Equivalent Balance - December 31,2014: By Account Type: Demand Account $ 69,979 $ 36,993 $ 106,972 $ 69,979 $ 36,993 $ 106,

30 Schedule 3 FRANKLIN TOWNSHIP REDEVELOPMENT AGENCY TOWNSHIP OF FRANKLIN SOMERSET COUNTY, NEW JERSEY ROSTER OF OFFICIALS AS AT DECEMBER 31,2014 Roster of Officials -December 31,2014: AGENCY MEMBERS Michael Gianotto Dennis Sanders Robert Mettler Ike Agudosi Wayne Sellers POSITION Chairperson Commissioner Commissioner Commissioner Commissioner COUNCIL REPRESENTATIVES Carl Wright Kimberly Francois Vice Chair Person AGENCY OFFICIAL Mark Healey Vincent Dominach Executive Director/Secretary Recording Secretary ATTORNEY Leslie G. London, Esq. McManimon & Scotland, LLC

31 FRANKLIN TOWNSHIP REDEVELOPMENT AGENCY TOWNSHIP OF FRANKIN COUNTY OF SOMERSET, NEW JERSEY GENERAL COMMENTS AND RECOMMENDATIONS FOR THE YEAR ENDED DECEMBER 31,2014 GENERAL COMMENTS An audit of the financial accounts and transactions of the Franklin Township Redevelopment Agency, County of Somerset, New Jersey, for the year ended December 31, 2014, has been completed. The General Comments are herewith set forth: Scope of Audit The audit covered the financial transactions of the Finance Department of the Franklin Township Redevelopment Agency, County of Somerset, New Jersey. The audit did not and could not determine the character of services rendered for which payment had been made or for which reserves had been set up, nor could it determine the character, proper price or quantity of materials supplied for which claims had been passed. These details were necessarily covered by the internal review and control before approval of such claims by the Governing Body. Cash on hand was counted and cash and investment balances were reconciled with independent certifications obtained directly from the depositories. Revenues and receipts were established and verified as to source and amount insofar as the records permitted. INTERNAL CONTROL MATTERS In planning and performing our audit of the financial statements of the Franklin Township Redevelopment Agency, County of Somerset, New Jersey as of and for the year ended December 31, 2014, in accordance with auditing standards generally accepted in the United States of America, we considered the Agency's internal control over financial reporting (internal control) as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Agency's internal control. Accordingly, we do not express an opinion on the effectiveness of the Agency's internal control. Our consideration of internal control was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance

32 GENERAL COMMENTS INTERNAL CONTROL MATTERS (CONT'D.) With respect to the reporting of internal control matters, standards require that only a significant deficiency and/or a material weakness need be reported in writing to management and those charged with governance and none had been identified. Our comments and recommendations, which have been discussed with appropriate members of management, are intended to improve the internal control or result in other operating efficiencies. OTHER MATTERS Contracts and Agreements Required to Be Advertised for N.J.S.A. 40A: 11-4 N.J.S.A. 40A: 11-4 states "every contract awarded by the contracting agent for the provision or performance of any goods or services, the cost of which in the aggregate exceeds the bid threshold, shall be awarded only by resolution of the governing body of the contracting unit to the lowest responsible bidder after public advertising for bids and bidder therefore, except as is provided otherwise in this act or specifically by any other law. The governing body of a contracting unit may, by resolution approved by a majority of the governing body and subject to subsections b. and c. of this section, disqualify a bidder who would otherwise be determined to be the lowest responsible bidder, if the governing body finds that it has had prior negative experience with the bidder. No work, materials or supplies shall be undertaken, acquired or furnished for a sum exceeding in the aggregate $17, except by contract or agreement." The governing body of the Municipality has the responsibility of determining whether the expenditures in any category will exceed $36, within the fiscal year. Where question arises as to whether any contract or agreement might result in violation of the statute, the Township Counsel's opinion should be sought before a commitment is made. On June 17, 2010, the Local Public Contracts Law was revised pursuant to a statutorily permitted notice issued by the Governor of the State of New Jersey, effective on July 1,2010. The revisions address the bid threshold (Section 7, NJ.S.A. 40A: 11-3), thereby increasing the amount from $17, to $26, under which a contract may be awarded without public advertising. Furthermore, if the Township's Purchasing Agent is "Qualified" the Township may increase the bid threshold from the existing $29, threshold to $36, On May 5, 2011 the Local Public Contracts Law was revised again pursuant to a statutorily permitted notice issued by the Governor of the State of New Jersey, effective to January 1, The law eliminated the previous "lower" non - QPA threshold of $26, and lowered it to $17, The official minutes of the Agency indicated that were no bids requested by public advertising during the year ended December 31,2014. Generally, as the entity's system of records does not provide for an accumulation of payments for categories for the performance of any work or the furnishing or hiring of any materials or supplies, the results of such an accumulation can not reasonably be ascertained. Disbursements are reviewed, however, to determine whether any clear cut violations may have existed

33 GENERAL COMMENTS OTHER MATTERS Contracts and Agreements Required to Be Advertised for N.J.S.A. 40A: 11-4 (Cont'd.) Examination of expenditures revealed no individual payments in excess of $17, "for the performance of any work or the furnishing or hiring of any materials or supplies", other than those where bids had been previously sought by public advertisement. Upon inquiry of various officials responsible for the purchases of materials, supplies, equipment, etc., for the Agency in relation to the Local Public Contracts Laws regarding the solicitation of quotations when the cost is 15% of bid threshold or more, monitoring of change orders, quantities and unit prices of contracts, except as noted in the preceding paragraph, procedures presently in place were found to be good. The minutes also indicated that resolutions were adopted and advertised authorizing the awarding of contracts or agreements for "Professional Services" per N.J.S.A. 40A: Payment of Claims Claims submitted for payment were presented to the Governing Body for approval, with certification of receipt of goods or services rendered, including certification of the party claiming payment. Surety Bond Coverage's Pursuant to Local Authorities Fiscal Control Law, Local Authorities, Chapter 31, Subchapter 6, Surety Bonding section 5:31-5.1, the governing body of an authority shall by resolution designate authority employees and officials required to furnish surety bonds and determine minimum bonds for each official. The authorizing Ordinance of the Township of Franklin states that the Executive Director shall be the Township Manager of the Township of Franklin, or his designee. On January 9, 2013 the Manager appointed Mark Healey as his designee. The Township carries a position bond on the manager in the amount of $1,000,000. Financial Accounting and Reporting System The Franklin Township Redevelopment Agency was created by "An Ordinance Creating A Franklin Township Redevelopment Agency", adopted September 14, 1999, subsequent to Local Finance Board approval on October 4, 1999, in accordance with NJ.S.A. 40A: 5A-4. As the Agency continues to develop and initiate programs and projects, we suggest that the Governing Body of the Agency continually review the control environment to ensure that the entities objectives are met. Local Finance Board regulations require the maintenance of an accounting system that includes a double entry accounting system for all transactions resulting in the recording of a general ledger. Also, interim and year-end financial reports comprised of statements that reflect financial position at the end of a specified accounting period and comparison of actual financial results with budgetary estimates and limitations are mandated by Local Authority regulation. Pursuant to - 31-