BOROUGH OF ELMER SALEM COUNTY NEW JERSEY AUDIT REPORT FOR THE YEAR ENDED DECEMBER 31, 2013

Transcription

1 BOROUGH OF ELMER SALEM COUNTY NEW JERSEY AUDIT REPORT FOR THE YEAR ENDED DECEMBER 31, 2013

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3 BOROUGH OF ELMER TABLE OF CONTENTS Exhibit Page PART 1 Independent Auditor's Report 1-3 CURRENT FUND Comparative Balance Sheet - Regulatory Basis A 4-5 Comparative Statement of Operations and Change in Fund Balance - Regulatory Basis A Statement of Revenues - Regulatory Basis A Statement of Expenditures - Regulatory Basis A TRUST FUND Comparative Balance Sheet - Regulatory Basis B 17 CAPITAL FUND Comparative Balance Sheet - Regulatory Basis C 18 Schedule of Fund Balance - Regulatory Basis C-1 19 WATER UTILITY FUND Comparative Balance Sheet - Regulatory Basis D Comparative Statement of Operations and Change in Fund Balance - Regulatory Basis D-1 22 Statement of Capital Fund Balance - Regulatory Basis D-2 23 Statement of Revenues - Regulatory Basis D-3 24 Statement of Expenditures - Regulatory Basis D-4 25 GENERAL FIXED ASSET GROUP OF ACCOUNTS Statement of General Fixed Assets - Regulatory Basis G 26 NOTES TO FINANCIAL STATEMENTS 27-38

4 BOROUGH OF ELMER TABLE OF CONTENTS Exhibit Page SUPPLEMENTARY DATA Independent Auditor's Report - Government Auditing Standards Schedule of Expenditures of Federal Awards 41 Schedule of Expenditures of State Financial Assistance 42 Notes to Schedule of Federal Awards and State Financial Assistance 43 CURRENT FUND Schedule of Cash - Treasurer A-4 44 Schedule of Cash - Collector A-5 45 Schedule of Taxes Receivable and Analysis of Property Tax Levy A-6 46 Schedule of Tax Title Liens A-7 47 Schedule of Revenue Accounts Receivable A-8 48 Schedule of Appropriation Reserves A Schedule of Local District School Tax A Schedule of State Grants Receivable A Schedule of Appropriated Reserves for Federal and State Grants A Schedule of State Grant - Unappropriated Reserves A TRUST FUNDS Schedule of Cash - Treasurer B-1 56 Schedule of Reserve for Animal Control Fund Expenditures B-2 57 Schedule of Amount Due To/From State of New Jersey - Department of Health B-3 58 Schedule of Miscellaneous Reserves B-4 59

5 BOROUGH OF ELMER TABLE OF CONTENTS Exhibit Page CAPITAL FUNDS Schedule of Cash - Treasurer C-2 60 Analysis of Cash C-3 61 Statement of Deferred Charges to Future Taxation - Unfunded C-4 62 Schedule of Capital Improvement Fund C-5 63 Schedule of Improvement Authorizations C-6 64 Schedule of Bond Anticipation Notes C-7 65 WATER UTILITY FUND Schedule of Cash - Treasurer D-5 66 Schedule of Cash - Collector D-6 67 Schedule of Consumer Accounts Receivable D-7 67 Schedule of Fixed Capital - Water D-8 68 Schedule of Appropriation Reserves D-9 69 Schedule of Capital Improvement Fund D Schedule of Reserve for Amortization - Water D PART II General Comments Audit Findings and Responses 74 Status of Prior Recommendations 75 Recommendations 76

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7 BOROUGH OF ELMER PART I REPORT ON AUDIT OF FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA YEAR ENDED DECEMBER 31, 2013

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9 Independent Auditor s Report The Honorable Mayor and Members of Borough Council Borough of Elmer, New Jersey Report on the Financial Statements We have audited the accompanying balance sheets - regulatory basis of the various funds and account group of the Borough of Elmer, as of December 31, 2013 and 2012, the related statement of operations and changes in fund balance - regulatory basis for the years then ended, and the related statement of revenues - regulatory basis and statement of expenditures - regulatory basis of the various funds for the year ended December 31, 2013, and the related notes to the financial statements, which collectively comprise the Borough 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 the basis of accounting prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey. Management is also responsible for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatements, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion 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, the audit requirements prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey (the Division ), and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. 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 statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 1

10 Basis for Adverse Opinion on U.S Generally Accepted Accounting Principles. As described in Note 1 of the financial statements, the financial statements are prepared by the Borough of Elmer on the basis of the financial reporting provisions prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey, which is a basis of accounting other than accounting principles generally accepted in the United States of America, to meet the requirements of New Jersey. The effects on the financial statements of the variances between the regulatory basis of accounting described in Note 1 and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material. Adverse Opinion on U.S. Generally Accepted Accounting Principles In our opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion on U.S Generally Accepted Accounting Principles paragraph, the financial statements referred to above do not present fairly, in accordance with accounting principles generally accepted in the United States of America, the financial position of each fund of the Borough of Elmer as of December 31, 2013 and 2012, or changes in financial position for the years then ended. Opinion on Regulatory Basis of Accounting In our opinion, the financial statements referred to above present fairly, in all material respects, the regulatory basis balance sheets and account group as of December 31, 2013 and 2012, the regulatory basis statements of operations for the years then ended and the regulatory basis statements of revenues and expenditures for the year ended December 31, 2013 in accordance with the basis of financial reporting prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey as described in Note 1. Other Matters Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Borough of Elmer s basic financial statements. The supplementary information listed in the table of contents and the letter of comments and recommendations section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The supplemental information listed in the table of contents is the responsibility of management and was derived from and relates 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 supplemental information listed in the table of contents, are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The letter of comments and recommendations section has not been subject to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it. 2

11 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated March 31, 2014 on our consideration of the Borough of Elmer s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and 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 internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Borough of Elmer s internal control over financial reporting and compliance. Very truly yours, Ford, Scott & Associates, L.L.C. FORD, SCOTT & ASSOCIATES, L.L.C. CERTIFIED PUBLIC ACCOUNTANTS Michael S. Garcia Michael S. Garcia Certified Public Accountant Registered Municipal Accountant No. 472 March 31,

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13 EXHIBIT A - CURRENT FUND

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15 CURRENT FUND COMPARATIVE BALANCE SHEET - REGULATORY BASIS AS OF DECEMBER 31, Exhibit A Sheet 1 ASSETS Regular Fund: Cash: Treasurer $ 701, ,323 Collector 70,266 22,749 Change Total Cash 771, ,272 Receivables and Other Assets with Full Reserves: Delinquent Property Taxes Receivable 96, ,304 Tax Title and Other Liens 6,672 13,375 Property Acquired for Taxes - at Assessed Valuation 18,100 - Revenue Accounts Receivable 6,643 6,215 Interfund Receivable: General Capital Fund Trust Deferred Charges: None Total Receivables and Other Assets 128, ,894 Total Deferred Charges - - Total Regular Fund 900, ,166 Federal and State Grant Fund: Federal and State Grants Receivable 168,246 19,606 Due from Regular Fund 119, ,952 Total Federal and State Grant Fund 287, ,558 Total Current Fund $ 1,188, ,724 The Accompanying Notes To The Financial Statements Are An Integral Part of This Statement 4

16 CURRENT FUND COMPARATIVE BALANCE SHEET - REGULATORY BASIS AS OF DECEMBER 31, Exhibit A Sheet 2 LIABILITIES, RESERVES AND FUND BALANCE Regular Fund: Liabilities: Appropriation Reserves $ 84,547 93,928 Reserve for Encumbrances/Accounts Payable 31,219 30,652 Prepaid Taxes 39,494 38,429 Overpaid Taxes - 12 Local School Tax Payable 184, ,693 County Tax Payable 27 - County Added Tax Payable ,773 Due to State: Marriage Licenses 25 - Senior Citizens and Veterans 1,549 1,049 Interfund Payable: Grant Fund 119, ,952 Other Reserve to Pay Debt 85,000 - Reserve for Sale of Municipal Assets 64,610 63,610 Reserve for Codification of Ordinances 6,733 6, , ,831 Reserve for Receivables and Other Assets 128, ,894 Fund Balance 153, ,441 Total Regular Fund 900, ,166 Federal and State Grant Fund: Unappropriated Reserves 3,505 3,240 Appropriated Reserves 193,950 50,070 Encumbrances Payable 2,803 1,850 Due to General Capital 87,398 87,398 Total Federal and State Grant Fund 287, ,558 Total Current Fund $ 1,188, ,724 The Accompanying Notes To The Financial Statements Are An Integral Part of This Statement 5

17 CURRENT FUND COMPARATIVE STATEMENT OF OPERATIONS AND CHANGES IN FUND BALANCE - REGULATORY BASIS FOR THE YEARS ENDED DECEMBER 31, Exhibit A - 1 Sheet Revenue and Other Income Realized Fund Balance $ 126, ,500 Miscellaneous Revenue Anticipated 410, ,506 Receipts from Delinquent Taxes 104,709 91,769 Receipts from Current Taxes 2,732,381 2,766,695 Non Budget Revenue 36,335 61,133 Other Credits to Income: Unexpended Balance of Appropriation Res. 60,039 52,008 Total Income 3,470,107 3,382,611 Expenditures Budget and Emergency Appropriations: Appropriations Within "CAPS" Operations: Salaries and Wages 254, ,139 Other Expenses 449, ,990 Deferred Charges & Statutory Expenditures 46,702 49,108 Appropriations Excluded from "CAPS" Operations: Other Expenses 212,571 75,530 Capital Improvements 10,000 17,500 Debt Service 93,512 94,165 Transferred to Board of Education 8,239 8,307 Local District School Tax 1,284,978 1,257,718 County Tax 978,249 1,041,014 County Share of Added Tax ,773 Interfund Created 1,015 - Refund of Prior Year's Revenue 23,324 3,573 Total Expenditures 3,363,143 3,262,817 Excess in Revenue 106, ,794 The Accompanying Notes To The Financial Statements Are An Integral Part of This Statement 6

18 CURRENT FUND COMPARATIVE STATEMENT OF OPERATIONS AND CHANGES IN FUND BALANCE - REGULATORY BASIS FOR THE YEAR ENDED DECEMBER 31, Exhibit A - 1 Sheet Adjustments to Income before Fund Balance: Expenditures included above which are by Statute Deferred Charges to Budgets of Succeeding Year - - Statutory Excess to Fund Balance 106, ,794 Fund Balance January 1 173, , , ,941 Decreased by: Utilization as Anticipated Revenue 126, ,500 Fund Balance December 31 $ 153, ,441 The Accompanying Notes To The Financial Statements Are An Integral Part of This Statement 7

19 CURRENT FUND STATEMENT OF REVENUES - REGULATORY BASIS FOR THE YEAR ENDED DECEMBER 31, 2013 Exhibit A-2 Sheet 1 Anticipated Excess or Budget N.J.S. 40A:4-87 Realized (Deficit) Fund Balance Anticipated $ 126, ,500 Total Fund Balance Anticipated 126, ,500 - Miscellaneous Revenues: Section A: Local Revenues Fines and Costs: - Municipal Court 90,000 85,379 (4,621) Interest and Costs on Taxes 22,000 25,046 3,046 Interest Earned on Investments 4,000 3,210 (790) Total Section A: Local Revenues 116, ,635 (2,365) Section B: State Aid Without Offsetting Appropriations Consolidated Municipal Property Tax Relief 21,884 21,884 Energy Receipts Tax 104, ,669 Total Section B: State Aid Without Offsetting Appropriations 126, ,553 - Section F: Special Items - Public and Private Programs Off-Set with Appropriations Recycling Tonnage Grant 2,215 2,215 Municipal Alliance on Alcoholism and Drug Abuse 4,178 4,178 Body Armor Fund 1,025 1,025 Clean Communities Grant 4,000 4,000 NJ Dot Municipal Aid Program-Sidewalks 150, ,000 Street Lighting Donations 3,145 3,145 Total Section F: Special Items - Public and Private Programs Off-Set with Appropriations 7, , ,563 - The Accompanying Notes To The Financial Statements Are An Integral Part of This Statement 8

20 CURRENT FUND STATEMENT OF REVENUES - REGULATORY BASIS FOR THE YEAR ENDED DECEMBER 31, 2013 Exhibit A-2 Sheet 2 Anticipated Excess or Budget N.J.S. 40A:4-87 Realized (Deficit) Section G: Other Special Items Uniform Fire Safety Act 4,381 5,392 1,011 Total Section G: Other Special Items 4,381-5,392 1,011 Total Miscellaneous Revenues: 254, , ,143 (1,354) Receipts from Delinquent Taxes 90, ,709 14,709 Amount to be Raised by Taxes for Support of Municipal Budget Local Tax for Municipal Purposes 566, ,186 19,574 Total Amount to be Raised by Taxes for Support of Municipal Budget 566, ,186 19,574 Budget Totals 1,037, ,145 1,227,538 32,929 Non- Budget Revenues: Other Non- Budget Revenues: 36,335 36,335 $ 1,037, ,145 1,263,873 69,264 The Accompanying Notes To The Financial Statements Are An Integral Part of This Statement 9

21 CURRENT FUND STATEMENT OF REVENUES - REGULATORY BASIS FOR THE YEAR ENDED DECEMBER 31, 2013 Exhibit A - 2 Sheet 3 Analysis of Realized Revenues Allocation of Current Tax Collections: Revenue from Collections $ 2,732,381 Allocated to: School, County and Other Taxes 2,263,841 Balance for Support of Municipal Budget Appropriations 468,540 Increased by: Appropriation "Reserved for Uncollected Taxes" 117,646 Amount for Support of Municipal Budget Appropriations 586,186 Receipts from Delinquent Taxes: Delinquent Tax Collection 99,345 Tax Title Lien Collections 5,364 Total Receipts from Delinquent Taxes 104,709 Analysis of Non-Budget Revenue: Miscellaneous Revenue Not Anticipated: Revenue Accounts Receivable: Tax Searches 50 Treasurer: Fire Safety Fines & Permits 840 Housing & Zoning Permits 2,120 Federal Emergency Management Assistance Reimbursement of Hurricane Sandy Costs 1,414 Senior Citizen & Veteran's Administrative Fee 405 Property Lists 170 Registrar Fees 22,452 Close Out Trust Funds 4,095 Cable Franchise Fees 4,585 Other Miscellaneous ,285 Total Miscellaneous Revenue Not Anticipated: $ 36,335 The Accompanying Notes To The Financial Statements Are An Integral Part of This Statement 10

22 CURRENT FUND STATEMENT OF EXPENDITURES - REGULATORY BASIS FOR THE YEAR ENDED DECEMBER 31, 2013 Exhibit A - 3 (Over expended) Appropriations Expended Unexpended Budget After Paid or Balance Budget Modifications Charged Encumbered Reserved Cancelled OPERATIONS WITHIN "CAPS" GENERAL GOVERNMENT Mayor and Council Salaries and Wages $ 18,583 18,583 18,583 Other Expenses 6,200 6,200 4, ,242 Municipal Clerk Salaries and Wages 18,171 18,171 16,317 1,854 Other Expenses 4,750 4,750 4, Elections Other Expenses Financial Administration Salaries and Wages 16,589 16,589 16,589 Other Expenses 12,200 12,225 12,225 Audit Services 9,300 9,300 9,300 Assessment of Taxes Salaries and Wages 11,514 11,514 11,514 Other Expenses 2,000 2,000 1, Tax Collector Salaries and Wages 12,534 12,534 11,514 1,020 Other Expenses 4,000 4,000 2,439 1,561 Legal Services and Costs Other Expenses 21,000 21,000 9,207 1,005 10,788 Engineering Services and Costs - Other Expenses 4,000 3,475 1,316 2,159 Public Buildings and Grounds Salaries and Wages 10,816 10,816 6,281 4,535 Other Expenses 14,140 14,140 10,291 2,738 1,111 Insurance Liability 19,378 19,878 19,878 Worker's Compensation Insurance 20,673 20,673 20,673 Health Insurance Opt-Out 6,968 8,609 8,608 1 The Accompanying Notes To The Financial Statements Are An Integral Part of This Statement 11

23 CURRENT FUND STATEMENT OF EXPENDITURES - REGULATORY BASIS FOR THE YEAR ENDED DECEMBER 31, 2013 Exhibit A - 3 (Over expended) Appropriations Expended Unexpended Budget After Paid or Balance Budget Modifications Charged Encumbered Reserved Cancelled Municipal Land Use Law (N.J.S.A. 40:55D-1) Land Use Board Salaries and Wages 6,421 6,421 6,421 Other Expenses 5,566 5,501 2,475 3,026 Technology Other Expenses 12,000 12,065 12, PUBLIC SAFETY Fire Other Expenses Miscellaneous Other Expenses 36,000 36,000 26,123 6,114 3,763 Police Salaries and Wages 138, , ,616 7,731 Other Expenses 26,000 26,000 19,936 6, Emergency Management Services Salaries and Wages 2,349 2,349 2,348 1 Other Expenses 1,000 1, First Aid Organization - Contribution 6,500 6,500 6,500 Housing Inspections Salaries and Wages 3,089 3,089 3,089 Other Expenses Fire Code Inspector Salaries and Wages 7,453 7,453 5,922 1,531 Other Expenses 3,145 3,145 1,658 1,487 STREETS AND ROADS Road Repairs and Maintenance Other Expenses 17,677 17,677 10,730 2,135 4,812 SANITATION Garbage and Trash Removal Other Expenses - Contractual 94,034 94,034 80,598 6,762 6,674 Recycling Other Expenses 34,000 34,000 29,283 2,930 1,787 The Accompanying Notes To The Financial Statements Are An Integral Part of This Statement 12

24 CURRENT FUND STATEMENT OF EXPENDITURES - REGULATORY BASIS FOR THE YEAR ENDED DECEMBER 31, 2013 Exhibit A - 3 (Over expended) Appropriations Expended Unexpended Budget After Paid or Balance Budget Modifications Charged Encumbered Reserved Cancelled HEALTH AND WELFARE Board of Health Salaries and Wages 7,600 7,600 6,395 1,205 Other Expenses 2,100 2, ,032 Animal Control Services Salaries and Wages Other Expenses 4,000 4,000 2, ,040 RECREATION AND EDUCATION Parks and Playgrounds Other Expenses 9,500 9,500 6, ,000 Celebration of Public Event, Anniversary or Holiday Other Expenses 3,300 3,300 3, Grantsman Other Expenses Municipal Alliance - Upper Pittsgove Other Expenses 2,000 2, ,200 Unclassified Electric 17,500 17,500 17, Telephone 9,000 9,000 8, Gasoline 11,600 11,600 8, ,198 Heating 13,540 11,839 5,718 1,402 4,719 Street Lighting 18,000 18,000 17, TOTAL OPERATIONS WITHIN "CAPS" 705, , ,429 31,219 69,291 2,000 Contingent - TOTAL OPERATIONS INCLUDING CONTINGENT WITHIN "CAPS" 705, , ,429 31,219 69,291 2,000 The Accompanying Notes To The Financial Statements Are An Integral Part of This Statement 13

25 CURRENT FUND STATEMENT OF EXPENDITURES - REGULATORY BASIS FOR THE YEAR ENDED DECEMBER 31, 2013 Exhibit A - 3 (Over expended) Appropriations Expended Unexpended Budget After Paid or Balance Budget Modifications Charged Encumbered Reserved Cancelled Detail: Salaries and Wages 254, , ,292-17,881 - Other Expenses 451, , ,137 31,219 51,410 2,000 DEFERRED CHARGES AND STATUTORY EXPENDITURES: Deferred Charges: None Statutory Expenditures: Contributions to: Public Employees' Retirement System 24,742 24,742 24,742 Social Security System (O.A.S.I.) 20,000 20,000 18,658 1,342 Unemployment Compensation Insurance 1,500 1,560 1,559 1 Defined Contribution Retirement Program TOTAL DEFERRED CHARGES AND STATUTORY EXPENDITURES: 46,642 46,702 45,198-1,504 - TOTAL GENERAL APPROPRIATIONS FOR MUNICIPAL PURPOSES WITHIN "CAPS" 752, , ,627 31,219 70,795 2,000 OPERATIONS - EXCLUDED FROM "CAPS" (A) Operations - Excluded from "CAPS" Recycling Tax Appropriation 1,667 1,667 1,667 Aid to Library 2,000 2,000 2,000 - Total Other Operations - Excluded from "CAPS" 3,667 3,667 2,000-1,667 - The Accompanying Notes To The Financial Statements Are An Integral Part of This Statement 14

26 CURRENT FUND STATEMENT OF EXPENDITURES - REGULATORY BASIS FOR THE YEAR ENDED DECEMBER 31, 2013 Exhibit A - 3 (Over expended) Appropriations Expended Unexpended Budget After Paid or Balance Budget Modifications Charged Encumbered Reserved Cancelled Shared Services Agreements Interlocal Service Agreements: Joint Municipal Court 42,874 42,874 30,789 12,085 Total Shared Services Agreements 42,874 42,874 30,789-12,085 - (A) Public and Private Programs Off-Set by Revenues New Jersey Transportation Trust Fund Construction of Pedestrian Sidewalks 150, ,000 Recycling Tonnage Grant 2,215 2,215 2,215 Clean Communities 4,000 4,000 Body Armor Fund 1,025 1,025 1,025 Donations from Residents Purchase of Decorative Street Lights 3,145 3,145 Municipal Drug Alliance Grant - State Share 4,178 4,178 4,178 Local Match 1,467 1,467 1,467 Total Public and Private Programs Off-Set by Revenues 8, , , Total Operations - Excluded from "CAPS" 55, , ,819-13,752 - Detail: Salaries and Wages Other Expenses 55, , ,819-13,752 (C) Capital Improvements Capital Improvement Fund 10,000 10,000 10,000 Total Capital Improvements 10,000 10,000 10, The Accompanying Notes To The Financial Statements Are An Integral Part of This Statement 15

27 CURRENT FUND STATEMENT OF EXPENDITURES - REGULATORY BASIS FOR THE YEAR ENDED DECEMBER 31, 2013 Exhibit A - 3 (Over expended) Appropriations Expended Unexpended Budget After Paid or Balance Budget Modifications Charged Encumbered Reserved Cancelled (D) Debt Service Payment of Bond Anticipation Notes 84,500 84,500 84,500 Interest on Notes 9,012 9,012 9,012 Total Debt Service 93,512 93,512 93, (N) TRANSFERRED TO BOARD OF EDUCATION FOR USE OF LOCAL SCHOOLS (NJSA 40: & 17.3) 8,239 8,239 8,239 - TOTAL GENERAL APPROPRIATIONS FOR MUNICIPAL PURPOSES EXCLUDED FROM "CAPS" 167, , ,570-13,752 - SUBTOTAL GENERAL APPROPRIATIONS 919,818 1,076, ,197 31,219 84,547 2,000 (M) Reserve for Uncollected Taxes 117, , ,646 TOTAL GENERAL APPRORIATIONS $ 1,037,464 1,194,609 1,076,843 31,219 84,547 2,000 Budget 1,037,464 Cancelled 2,000 Appropriations by 40A: ,145 Overexpended - Emergency Appropriations - 1,194,609 2,000 Reserve for Uncollected Taxes 117,646 Federal and State Grants 166,030 Disbursements 793,167 1,076,843 The Accompanying Notes To The Financial Statements Are An Integral Part of This Statement 16

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29 EXHIBIT B - TRUST FUND

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31 TRUST FUND COMPARATIVE BALANCE SHEET - REGULATORY BASIS AS OF DECEMBER 31, Exhibit B ASSETS Animal Control Fund: Cash - Treasurer $ 1, , Other Funds Cash - Treasurer 40,372 27,109 LIABILITIES, RESERVES AND FUND BALANCE 40,372 27,109 41,701 28,091 Animal Control Fund Reserve for Dog Expenditures Prepaid Licenses: Dogs Cats , Other Funds Due to Current Fund Due to State of New Jersey - Payroll Taxes 1,213 2,622 Reserve for Escrows 8,401 6,609 Reserve for Tax Title Lien Redemptions 1,000 1,041 Reserve for Tax Sale Premiums 13,500 8,783 Reserve for Performance Guarantee 6,401 6,379 Reserve for Fire Safety Fees 1,575 1,575 Reserve for Private Contractor's Escrow Reserve for Snow Removal Trust 8,023-40,372 27,109 $ 41,701 28,091 The Accompanying Notes To The Financial Statements Are An Integral Part of This Statement 17

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33 EXHIBIT C - CAPITAL FUND

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35 Exhibit C GENERAL CAPITAL FUND COMPARATIVE BALANCE SHEET - REGULATORY BASIS AS OF DECEMBER 31, ASSETS Cash $ 288, ,285 Deferred Charges to Future Taxation - Unfunded 450, ,900 Interfunds and Receivables Due from Grant Fund 87,398 87, , ,583 LIABILITIES, RESERVES AND FUND BALANCE Bond Anticipation Notes Payable 450, ,900 Interfunds and Receivables Due to Current Fund Reserve for Preliminary Expense Elmer Train Station Relocation Project Improvement Authorizations: Funded 50,000 50,000 Unfunded 236, ,158 Capital Improvement Fund 54,940 44,940 Fund Balance 32,735 32,735 $ 826, ,583 The Accompanying Notes To The Financial Statements Are An Integral Part of This Statement 18

36 Exhibit C - 1 GENERAL CAPITAL FUND COMPARATIVE STATEMENT OF FUND BALANCE - REGULATORY BASIS FOR THE YEARS ENDED DECEMBER 31, Beginning Balance January 1 $ 32,735 82,735 Decreased by: Appropriated to Finance Improvement Authorizations - 50,000 Ending Balance December 31 $ 32,735 32,735 The Accompanying Notes To The Financial Statements Are An Integral Part of This Statement 19

37 EXHIBIT D - WATER UTILITY FUND

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39 WATER UTILITY FUND COMPARATIVE BALANCE SHEET-REGULATORY BASIS AS OF DECEMBER 31, D Sheet ASSETS Operating Fund: Cash: Treasurer $ 80,774 89,899 Collector 1,031 1,000 Change Fund Due from Water Capital ,501 90,924 Receivables and Other Assets with Full Reserves: Consumer Accounts Receivable 8,801 9,590 8,801 9,590 Total of Operating Fund 91, ,514 Capital Fund: Cash 231, ,930 Fixed Capital - Water 2,055,902 2,055,902 Total of Capital Fund 2,287,503 2,276,832 Total of Utility Fund $ 2,378,805 2,377,346 The Accompanying Notes To The Financial Statements Are An Integral Part of This Statement 20

40 WATER UTILITY FUND COMPARATIVE BALANCE SHEET-REGULATORY BASIS AS OF DECEMBER 31, D Sheet LIABILITIES, RESERVES AND FUND BALANCE Operating Fund: Liabilities: Appropriation Reserves $ 16,937 24,718 Reserve for Encumbrances 6,677 9,654 23,614 34,372 Reserve for Receivables 8,801 9,590 Fund Balance 58,887 56,552 Total of Operating Fund 91, ,514 Capital Fund: Capital Improvement Fund 170, ,959 Due to Water Operating Fund Reserves for: Amortization - Water 2,055,902 2,055,902 Fund Balance 59,971 59,971 Total of Capital Fund 2,287,503 2,276,832 Total Liabilities, Reserves and Fund Balance $ 2,378,805 2,377,346 The Accompanying Notes To The Financial Statements Are An Integral Part of This Statement 21

41 D-1 WATER UTILITY FUND COMPARATIVE STATEMENT OF OPERATIONS AND CHANGES IN FUND BALANCE - REGULATORY BASIS FOR THE YEAR ENDED DECEMBER 31, Revenue and Other Income Realized Fund Balance Anticipated $ 55,604 45,000 Rents 223, ,140 Miscellaneous Revenue Anticipated 1,862 1,515 Other Credits to Income: Unexpended Balance of Appropriation Reserves 22,466 27,693 Total Income 302, ,348 Expenditures Operating 205, ,608 Capital Improvements 30,000 45,000 Deferred Charges and Statutory Expenditures 8,545 9,746 Cancellation of Prior Year Revenue ,608 Total Expenditures 245, ,962 Excess in Revenue 57,939 22,386 Adjustments to Income before Fund Balance: Expenditures included above which are by Statute deferred Charges to Budget of Succeeding Year - - Statutory Excess to Fund Balance 57,939 22,386 Fund Balance January 1 56,552 79,166 Decreased by: 114, ,552 Utilization as Anticipated Revenue 55,604 45,000 Balance December 31 $ 58,887 56,552 The Accompanying Notes To The Financial Statements Are An Integral Part of This Statement 22

42 WATER CAPITAL FUND STATEMENT OF CAPITAL FUND BALANCE REGULATORY BASIS D Beginning Balance January 1 $ 59,971 59,971 No Activity Ending Balance December 31 $ 59,971 59,971 The Accompanying Notes To The Financial Statements Are An Integral Part of This Statement 23

43 D-3 WATER OPERATING FUND STATEMENT OF REVENUES - REGULATORY BASIS Anticipated Excess or Budget N.J.S. 40A:4-87 Realized (Deficit) Operating Surplus Anticipated $ 55,604 55,604 Total Operating Surplus Anticipated 55,604 55,604 - Water Rents 203, ,059 20,059 Miscellaneous 500 1,862 1,362 $ 259, ,525 21,421 ANALYSIS OF REALIZED REVENUES Rents Consumer Accounts Receivable: Collected 223, ,059 Miscellaneous Interest Earned by Treasurer, Collector and Other Miscellaneous Fees and Costs 1,862 The Accompanying Notes To The Financial Statements Are An Integral Part of This Statement 24

44 WATER UTILITY OPERATING FUND STATEMENT OF EXPENDITURES - REGULATORY BASIS FOR THE YEAR ENDED DECEMBER 31, 2013 D-4 APPROPRIATIONS EXPENDED UNEXPENDED BUDGET AFTER PAID OR BALANCE OVER- BUDGET MODIFICATION CHARGED ENCUMBERED RESERVED CANCELLED EXPENDED OPERATING Salaries and Wages $ 50,784 50,784 49, Other Expenses 149, , ,886 6,677 8,948 Liability Insurance 3,872 3,872 2,038 1,834 Health Insurance Opt-Out 1,392 1,392 1, , , ,272 6,677 11, CAPITAL IMPROVEMENTS Capital Improvement Fund 10,000 10,000 10,000 Capital Outlay 35,000 35,000 15,098 4,902 15,000 45,000 45,000 25,098-4,902 15,000 - DEFERRED CHARGES AND STATUTORY EXPENDITURES Statutory Expenditure: Contribution to: Public Employees' Retirement System 3,945 3,945 3,945 Social Security System 4,100 4,100 3, Unemployment Compensation Insurance ,545 8,545 8, $ 259, , ,490 6,677 16,937 15,000 - Budget 259,104 Emergency Authorizations - 259,104 Disbursements 220,490 The Accompanying Notes To Thie Financial Statements Are An Integral Part of This Statement 25

45 EXHIBIT G - GENERAL FIXED ASSETS ACCOUNT GROUP

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47 Exhibit G STATEMENT OF GENERAL FIXED ASSETS DECEMBER 31, REGULATORY BASIS General Fixed Assets: Land $ 83,845 83,845 Buildings and Improvements 713, ,296 Vehicles 633, ,858 Furniture, Fixtures and Equipment 939, ,637 2,370,072 2,389,636 Investment in General Fixed Assets $ 2,370,072 2,389,636 The Accompanying Notes To The Financial Statements Are An Integral Part of This Statement 26

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49 NOTES TO FINANCIAL STATEMENTS

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51 NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2013 AND 2012 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity The financial statements of the Borough of Elmer include every board, body, office or commission supported and maintained wholly or in part by funds appropriated by the Borough of Elmer, as required by N.J.S. 40A:5-5. Component units are legally separate organizations for which the Borough is financially accountable. The Borough is financially accountable for an organization if the Borough appoints a voting majority of the organization s governing board and (1) the Borough is able to significantly influence the programs or services performed or provided by the organization; or (2) the Borough is legally entitled to or can otherwise access the organization s resources; the Borough is legally obligated or has otherwise assumed the responsibility to finance the deficits of or provide financial support to the organization; or the Borough is obligated for the debt of the organization. Component units may also include organizations that are fiscally dependent on the Borough in that the Borough approves the budget, the issuance of debt or the levying of taxes. The Borough has no component units. B. Description of Funds The accounting policies of the Borough of Elmer conform to the accounting principles applicable to municipalities which have been prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey. Such principles and practices are designed primarily for determining compliance with legal provisions and budgetary restrictions and as a means of reporting on the stewardship of public officials with the respect to public funds. Under this method of accounting, the Borough of Elmer accounts for its financial transactions through the following separate funds: Current Fund -- resources and expenditures for governmental operations of a general nature, including Federal and State grant funds. Trust Funds -- receipts, custodianship and disbursement of funds in accordance with the purpose for which each reserve was created. General Capital Fund -- receipt and disbursement of funds for the acquisition of general facilities, other than those acquired in the Current Fund. Water Operating and Capital Funds -- account for the operations and acquisitions of capital facilities, other than those acquired in the current fund. General Fixed Assets Account Group -- All fixed assets used in governmental fund type operations (general fixed assets) are accounted for in the general fixed assets account group, rather than in governmental funds. C. Basis of Accounting The accounting principles and practices prescribed for municipalities by the State of New Jersey differ in certain respects from generally accepted accounting principles applicable to local governmental units. The more significant policies in New Jersey follow. A modified accrual basis of accounting is followed with minor exceptions. Revenues -- are recorded as received in cash except for certain amounts which are due from other governmental units. Receipts from Federal and State grants are realized as revenue when anticipated in the Borough budget. Receivables for property taxes are recorded with offsetting reserves on the balance sheet of the Borough's Current Fund, in addition the receivables for utility billings are recorded with offsetting reserves in the Utility Fund; accordingly, such amounts are not recorded as revenue until collected. Other 27

52 NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2013 AND 2012 amounts that are due to the Borough which are susceptible to accrual are also recorded as receivables with offsetting reserves and recorded as revenue when received. Expenditures -- are recorded on the "budgetary" basis of accounting. Generally, expenditures are recorded when an amount is encumbered for goods or services through the issuance of a purchase order in conjunction with the Encumbrance Accounting System. Outstanding encumbrances at December 31 are reported as a cash liability in the financial statements and constitute part of the Borough s statutory Appropriation Reserve balance. Appropriation reserves covering unexpended appropriation balances are automatically created at December 31st of each year and recorded as liabilities, except for amounts which may be canceled by the Governing Body. Appropriation reserves are available, until lapsed at the close of the succeeding year, to meet specific claims, commitments or contracts incurred during the preceding fiscal year. Lapsed appropriation reserves are recorded as income. Appropriations for principal payments on outstanding general capital bonds and notes are provided on the cash basis; interest on general capital indebtedness is on the cash basis. Compensated absences are treated on a pay as you go basis with no amount charged to operations in the year accrued. Foreclosed Property -- Foreclosed property is recorded in the Current Fund at the assessed valuation when such property was acquired and is fully reserved. Interfunds -- Interfund receivables in the Current Fund are recorded with offsetting reserves which are created by charges to operations. Income is recognized in the year the receivables are liquidated. Interfund receivables in the other funds are not offset by reserves. Inventories of Supplies - The cost of inventories of supplies for all funds are recorded as expenditures at the time individual items are purchased. The cost of inventories are not included on the various balance sheets. General Fixed Assets -- The Borough has developed a fixed asset accounting and reporting system, as promulgated by the Division of Local Government Services, which differs in certain respects from generally accepted accounting principles. As required by New Jersey Statutes, foreclosed property is reported in the current operating fund of the municipality. Fixed assets used in governmental operations (general fixed assets) are accounted for in the General Fixed Assets Account Group. Public domain ("infrastructure") general fixed assets consisting of certain improvements other than buildings, such as roads, bridges, curbs and gutters, streets and sidewalks and drainage systems are not capitalized. All fixed assets are valued at historical cost or estimated historical cost if actual historical cost is not available except for land which is valued at estimated market value on the date of acquisition. No depreciation has been provided for in the financial statements. Expenditures for construction in progress are recorded in the Capital funds until such time as the construction is completed and put into operation. Fixed assets acquired through grants in aid or contributed capital has not been accounted for separately. Property and equipment purchased by the Water Utility Fund are recorded in the capital account at cost and are adjusted for disposition and abandonment. The amounts shown do not purport to represent reproduction costs or current value. Contributions in aid of construction are not capitalized. The balance in the Reserve for Amortization and Deferred Reserve for Amortization accounts in the utility capital fund represents charges to operations for the costs of acquisitions of property, equipment and improvements. The utility does not record depreciation on fixed assets. 28

53 NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2013 AND 2012 Levy of Taxes -- The County Board of Taxation certifies the tax levy of the municipality each year. The tax levy is based on the assessed valuation of taxable property within the municipality. Taxes are payable on the first day of February, May, August, and November. Any taxes that have not been paid by the 11th day of the 11th month in the fiscal year levied are subject to being included in the tax sale and the lien enforced by selling the property in accordance with NJSA 54:5 et. seq. The municipality is responsible for remitting 100% of the school and county taxes to the respective agency. The loss for delinquent or uncollectible accounts is borne by the municipality and not the school district or county. Interest on Delinquent Taxes It is the policy of the Borough to collect interest for the nonpayment of taxes or assessments on or before the date when they would become delinquent. The Tax Collector is authorized to charge eight percent (8%) per annum on the first $1,500 of taxes becoming delinquent after due date and eighteen percent (18%) per annum on any amount of taxes in excess of $1,500 becoming delinquent after due date and if a delinquency is in excess of $10,000 and remains in arrears beyond December 31 st, an additional penalty of six percent (6%) shall be charged against the delinquency. There is a ten (10) day grace period. Levy of Utility Charges The Borough operates a water utility fund. Rates are determined by ordinance and changed as necessary. Water charges are based on flat fees, dependent on meter size, as well as usage. Charges are billed annually and due in quarterly installments on December 1, March 1, June 1, and September 1. Interest on Delinquent Utility Charges It is the policy of the Borough to collect interest for the nonpayment of utility charges on or before the date when they would become delinquent. The Utility Collector is authorized to charge five percent (5%) per annum on any charge becoming delinquent after due date. Capitalization of Interest -- It is the policy of the Borough of Elmer to treat interest on projects as a current expense and the interest is included in both the current and utility operating budgets. Use of Estimates -- The preparation of financial statements in conformity with generally accepted accounting principles or the statutory basis of accounting requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. D. Required Financial Statements The State of New Jersey requires the following financial statements to be presented for each fund on the regulatory basis of accounting: Balance Sheet, Statement of Operations and Changes in Fund Balance, Statement of Revenue and Statement of Expenditures. These statements differ from those presented under Generally Accepted Accounting Principles, which requires a Statement of Net Position and Statement of Activities in addition to the fund financial statements. E. Comparative Data Comparative total data for the prior year has been presented in the accompanying Balance Sheets and Statement of Operations in order to provide an understanding of changes in the Borough's financial position. However, comparative (i.e., presentation of prior year totals by fund type) data have not been presented in each of the Statement of Revenues Regulatory Basis and Statement of Expenditures Regulatory Basis since their inclusion would make the statements unduly complex and difficult to read. 29

54 NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2013 AND 2012 F. Recent Accounting Pronouncements Not Yet Effective In June 2012, the Governmental Accounting Standards Board (GASB) issued Statement No. 67 Financial Reporting for Pension Plans an amendment of GASB Statement No. 25. This statement, which is effective for fiscal periods beginning after June 15, 2013, will not have any effect on the Borough s financial reporting. In June 2012, the Governmental Accounting Standards Board (GASB) issued Statement No. 68 Accounting and Financial Reporting for Pensions an amendment of GASB Statement No. 27. This statement, which is effective for fiscal periods beginning after June 15, 2014, will not have any effect on the Borough s financial reporting. However, the provisions of this statement will require significant modifications to the disclosure requirements related to the entity s proportionate share of the cost-sharing defined benefit plans reported at the State of New Jersey level. In January 2013, the Governmental Accounting Standards Board (GASB) issued Statement No. 69 Government Combinations and Disposals of Government Operations. This statement, which is effective for fiscal periods beginning after December 15, 2013, will not have any effect on the Borough s financial reporting. In April 2013, the Governmental Accounting Standards Board (GASB) issued Statement No 70 Accounting and Financial Reporting for Nonexchange Financial Guarantees. This statement, which is effective for fiscal years beginning after June 15, 2013, will not have any impact on the Borough s financial statements. In November 2013, Governmental Accounting Standards Board (GASB) issued Statement No. 71 Pension Transition for Contributions Made Subsequent to the Measurement Date-an amendment of GASB Statement No. 68. The provisions of this statement are required to be applied simultaneously with the provisions of Statement 68 which is effective for periods beginning after June 15, The provisions of this statement will require significant modifications to the disclosure requirements related to the Borough s proportionate share of the cost-sharing defined benefit plans reported at the State of New Jersey level. Note 2: BUDGETARY INFORMATION Under New Jersey State Statutes, the annual budget is required to be a balanced cash basis document. To accomplish this, the municipality is required to establish a reserve for uncollected taxes. The 2013 and 2012 statutory budgets included a reserve for uncollected taxes in the amount of $117,646 and $98,498, respectively. To balance the budget, the municipality is required to show a budgeted fund balance. The amount of fund balance budgeted to balance the 2013 and 2012 statutory budget s was $126,500 and $126,500, respectively. The Chief Financial Officer has the discretion of approving intra department budgetary transfers throughout the year. Inter department transfers are not permitted prior to November 1. After November 1, these transfers can be made in the form of a resolution and approved by Borough Council. There were no significant transfers approved during the 2013 or 2012 calendar year. NJSA 40A:4-87 permits special items of revenue and appropriations to be inserted into the annual budget when the item has been made available by any public or private funding source and the item was not determined at the time of budget adoption. During the 2013 and 2012 calendar years, Borough Council approved the following budget insertions: 30

55 NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2013 AND NJ Department of Transportation $ Sidewalk Project 150,000 NJDEP Clean Communities 4,000 4,000 Street Lighting Donations 3,145 FEMA Reimbursement - Hurricane Irene 20,134 The municipality may make emergency appropriations, after the adoption of the budget, for a purpose that was not foreseen at the time the budget was adopted or for which adequate provision was not made therein. This type of appropriation shall be made to meet a pressing need for public expenditure to protect or promote the public health, safety, morals or welfare or to provide temporary housing or public assistance prior to the next succeeding fiscal year. Emergency appropriations, except those classified as a special emergency, must be raised in the budget of the succeeding year. Special emergency appropriations are permitted to be raised in the budgets of the succeeding three or five years. No emergency or special emergency resolutions were adopted by Borough Council during the 2013 or 2012 calendar years and no balances remained from prior special emergency appropriations. Note 3: INVESTMENTS As of December 31, 2013, the Borough had no investments. Interest Rate Risk. The Borough does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. However, New Jersey Statutes 40A:5-15.1(a) limits the length of time for most investments to 397 days. Credit Risk. New Jersey Statutes 40A:5-15.1(a) limits Borough investments to those specified in the Statutes. The type of allowable investments are Bonds of the United States of America or of the Borough or the school districts of which the Borough is a part; obligations of federal agencies not exceeding 397 days; government money market mutual funds; the State of New Jersey Cash Management Plan; local government investment pools; or repurchase of fully collateralized securities. Concentration of Credit Risk. The Borough places no limit on the amount the Borough may invest in any one issuer. Note 4: CASH AND CASH EQUIVALENTS Custodial Credit Risk Deposits. Custodial credit risk is the risk that in the event of a bank failure, the government s deposits may not be returned to it. The municipality s policy is based on New Jersey Statutes requiring cash be deposited only in New Jersey based banking institutions that participate in the New Jersey Governmental Depository Protection Act (GUDPA) or in qualified investments established in New Jersey Statutes 40A:5-15.1(a) that are treated as cash equivalents. Under the act, all demand deposits are covered by the Federal Deposit Insurance Corporation (FDIC). Public funds owned by the municipality in excess of FDIC insured amounts are protected by GUDPA. However, GUDPA does not protect intermingled trust funds such as salary withholdings or fund that may pass to the municipality relative to the happening of a future condition. As of December 31, 2013 and 2012, $0 of the government s bank balance of $1,445,040 and $1,345,566 was exposed to custodial credit risk. 31