Report of Audit on the Financial Statements of the Borough of Metuchen in the County of Middlesex New Jersey for the Year Ended December 31, 2017
INDEX PART I PAGES Independent Auditor s Report 1-3 Independent Auditor s 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 4-5 Current Fund: Financial Statements - Regulatory Basis EXHIBITS Balance Sheets - Regulatory Basis Statements of Operations and Changes in Fund Balance - Regulatory Basis Statement of Revenues - Regulatory Basis - Year Ended December 31, 2017 Statement of Expenditures - Regulatory Basis - Year Ended December 31, 2017 A A-1 A-2 A-3 Trust Fund: Balance Sheets - Regulatory Basis Statements of Change in Fund Balance - Regulatory Basis - Assessment Trust Fund for the Years Ended December 31, 2017 and 2016 B B-1 General Capital Fund: Balance Sheets - Regulatory Basis Statement of Change in Fund Balance - Regulatory Basis C C-1 Swimming Pool Utility Fund: Balance Sheets - Regulatory Basis Statement of Changes in Fund Balance - Regulatory for the Years Ended December 31, 2017 and 2016 Statements of Operations and Change in Fund Balance - Regulatory Basis for the Years Ended December 31, 2017 and 2016 Statement of Revenues - Regulatory Basis - Year Ended December 31, 2017 Statement of Expenditures - Regulatory Basis - Year Ended December 31, 2017 D D-1 D-2 D-3 D-4 Public Assistance Trust Fund: Balance Sheets - Regulatory Basis E General Fixed Assets Account Group: Balance Sheets - Regulatory Basis F PAGES Notes to Financial Statements 6-35
INDEX (CONTINUED) EXHIBITS Current Fund: Supplementary Schedules - All Funds Schedule of Cash - Treasurer Schedule of Petty Cash Schedule of Taxes Receivable and Analysis of Property Tax Levy Schedule of Due State of New Jersey - Chapter 73 P.L. 1976 Schedule of Revenue Accounts Receivable Schedule of 2016 Appropriation Reserves Schedule of Prepaid Taxes Schedule of Tax Title Liens Schedule of County Taxes Payable Schedule of Local District School Taxes Payable Schedule of Foreclosed Property Schedule of Reserve for Tax Overpayments Schedule of Reserve for Grants Unappropriated Schedule of Reserve for Grants Appropriated Schedule of Grants Receivable Schedule of Accounts Payable Schedule of Various Reserves Schedule of Deferred Charges Schedule of Interfunds Schedule of Special Improvement District Taxes Payable A-4 A-5 A-6 A-7 A-8 A-9 A-10 A-11 A-12 A-13 A-14 A-15 A-16 A-17 A-18 A-19 A-20 A-21 A-22 A-23 Trust Fund: Schedule of Trust Cash Analysis of Assessment Fund Cash Schedule of Reserve for Accounts Payable Schedule of Reserve for Animal Control Fund Expenditures Schedule of Reserve for Election Schedule of Miscellaneous Reserves and Deposits Schedule of Due State of New Jersey - Animal Control Fund Schedule of Reserve for Unemployment Compensation Insurance Schedule of Community Development Block Grants Receivable Schedule of Reserve for COAH Schedule of Escrow Deposits Schedule of Reserve for Police Outside Overtime Schedule of Reserve for Payroll Deductions Payable Schedule of Reserve for Recreation Schedule of Reserve for Law Enforcement Schedule of Reserve for Forfeiture Schedule of Reserve for Fire Penalties Schedule of Reserve for Equitable Sharing Forfeiture Schedule of Reserve for Due Current Fund Schedule of Reserve for Accounts Payable - Animal Control B-2 B-3 B-4 B-5 B-6 B-7 B-8 B-9 B-10 B-11 B-12 B-13 B-14 B-15 B-16 B-17 B-18 B-19 B-20 B-21
INDEX (CONTINUED) EXHIBITS General Capital Fund: Schedule of Cash - Treasurer Analysis of Cash Schedule of Deferred Charges to Future Taxation - Funded Schedule of Deferred Charges to Future Taxation - Unfunded Schedule of Reserve for Capital Improvements Schedule of Contracts Payable Schedule of Capital Improvement Fund Schedule of Accounts Receivable Schedule of Improvement Authorizations Schedule of General Serial Bonds Schedule of Bonds and Notes Authorized But Not Issued Schedule of Bond Anticipation Notes Payable C-2 C-3 C-4 C-5 C-6 C-7 C-8 C-9 C-10 C-11 C-12 C-13 Swimming Pool Utility Fund: Schedule of Swimming Pool Utility Cash Schedule of Fixed Capital Authorized But Uncompleted Schedule of 2016 Appropriation Reserves Schedule of Improvement Authorizations Schedule of Capital Improvement Fund Schedule of Accounts Payable Schedule of Accrued Interest Payable Schedule of Reserve for Amortization Schedule of Fixed Capital Schedule of General Serial Bonds Payable Schedule of Bonds Authorized But Not Issued Schedule of Deferred Reserve for Amortization Schedule of Bond Anticipation Notes Payable D-5 D-6 D-7 D-8 D-9 D-10 D-11 D-12 D-13 D-14 D-15 D-16 D-17 Public Assistance Trust Fund: Schedule of Public Assistance Cash Schedule of Reserve for Public Assistance E-1 E-2 PART II PAGES Statistical Data 36-39 Officials in Office and Surety Bonds 40 Comments and Recommendations 41-44
PART I INDEPENDENT AUDITOR S REPORT ON AUDIT OF FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES AND DATA REPORTS 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 FINANCIAL STATEMENTS - REGULATORY BASIS - ALL FUNDS NOTES TO FINANCIAL STATEMENTS - REGULATORY BASIS SUPPLEMENTARY SCHEDULES - ALL FUNDS YEAR ENDED DECEMBER 31, 2017 AND 2016
S CC S UPLEE, CLOONEY & COMPANY C ERTIFIED P UBLIC A CCOUNTANTS 308 East Broad Street, Westfield, New Jersey 07090-2122 Telephone 908-789-9300 Fax 908-789-8535 E-mail info@scnco.com INDEPENDENT AUDITOR'S REPORT The Honorable Mayor and Members of the Borough Council Borough of Metuchen County of Middlesex Metuchen, New Jersey 08840 Report on the Financial Statements We have audited the accompanying balance sheets - regulatory basis of the various individual funds and account group of the Borough of Metuchen, as of December 31, 2017 and 2016, 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 the statement of expenditures - regulatory basis of the various individual funds for the year ended December 31, 2017, and the related notes to the financial statements, which collectively comprise the Borough s regulatory 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 regulatory 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 regulatory 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. 1
SUPLEE, CLOONEY & COMPANY An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the regulatory 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 Borough 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 Borough 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 regulatory financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Basis for Adverse Opinion on U.S Generally Accepted Accounting Principles. As described in Note 1 of the regulatory financial statements, the regulatory financial statements are prepared by the Borough of Metuchen 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 the various individual funds and account group of the Borough of Metuchen as of December 31, 2017 and 2016, or the results of its operations and changes in fund balance for the years then ended or the revenues or expenditures for the year ended December 31, 2017. Opinion on Regulatory Basis of Accounting In our opinion, the regulatory financial statements referred to above present fairly, in all material respects, the regulatory basis balances sheets of the various individual funds and account group as of December 31, 2017 and 2016, the regulatory basis statement of operations and changes in fund balance for the years then ended and the regulatory basis statement of revenues and expenditures and changes in fund balance for the year ended December 31, 2017 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. 2
S CC S UPLEE, CLOONEY & COMPANY C ERTIFIED P UBLIC A CCOUNTANTS 308 East Broad Street, Westfield, New Jersey 07090-2122 Telephone 908-789-9300 Fax 908-789-8535 E-mail info@scnco.com INDEPENDENT AUDITOR S 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 The Honorable Mayor and Members of the Borough Council Borough of Metuchen County of Middlesex Metuchen, New Jersey 07080 We have audited, in accordance with the 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 and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the regulatory financial statements of the various individual funds and the account group of the Borough of Metuchen, as of and for the year ended December 31, 2017, and the related notes to the financial statements, which collectively comprise the Borough s regulatory financial statements, and have issued our report thereon dated October 29, 2018. Our report disclosed that, as described in Note 1 to the financial statements, the Borough of Metuchen prepares its financial statements on a basis of accounting prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey, that demonstrates compliance with a modified accrual basis and the budget laws of the State of New Jersey, which is a comprehensive basis of accounting other than U.S. generally accepted accounting principles. Internal Control Over Financial Reporting In planning and performing our audit of the regulatory financial statements, we considered the Borough s control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements but not for the purpose of expressing an opinion on the effectiveness of the Borough s internal control. Accordingly, we do not express an opinion on the effectiveness of Borough s internal control. 4
CURRENT FUND
"A" CURRENT FUND BALANCE SHEETS-REGULATORY BASIS BALANCE BALANCE DECEMBER DECEMBER REF. 31, 2017 31, 2016 A S S E T S Cash A-4 $ 9,678,859.06 $ 8,495,525.50 Petty Cash A-5 1,200.00 1,200.00 Due State of NJ - Senior Citizens and Veterans A-7 35,565.01 35,065.01 Grants Receivable A-18 532,968.18 227,014.05 $ 10,248,592.25 $ 8,758,804.56 Receivables with Full Reserves: Delinquent Property Taxes Receivable A-6 $ 681,262.34 $ 755,298.22 Tax Title Liens A-11 152,899.66 143,619.47 Foreclosed Property A-14 350,300.00 350,300.00 Revenue Accounts Receivable A-8 25,116.16 26,942.53 A $ 1,209,578.16 $ 1,276,160.22 Deferred Charges A-21 $ 39,600.00 $ 49,500.00 $ 39,600.00 $ 49,500.00 $ 11,497,770.41 $ 10,084,464.78 LIABILITIES, RESERVES AND FUND BALANCE Liabilities: Appropriation Reserves A-3:A-9 $ 694,293.44 $ 735,553.79 Tax Overpayments A-15 83,354.67 149,665.34 Grants Appropriated A-17 526,809.80 426,513.31 Prepaid Taxes A-10 4,058,681.12 318,177.02 Grants Unappropriated A-16 15,801.81 3,404.00 Interfunds A-22 31,999.68 Accounts Payable A-19 821,479.40 637,948.92 Various Reserves A-20 76,802.79 30,041.88 School Taxes Payable A-13 3,037,848.85 Special Improvement District Taxes Payable A-23 2,504.24 $ 6,311,726.95 $ 5,339,153.11 Reserve for Receivables A 1,209,578.16 1,276,160.22 Fund Balance A-1 3,976,465.30 3,469,151.45 $ 11,497,770.41 $ 10,084,464.78 The accompanying Notes to the Financial Statements are an integral part of this statement.
"A-1" CURRENT FUND STATEMENTS OF OPERATIONS AND CHANGE IN FUND BALANCE-REGULATORY BASIS REVENUE AND OTHER INCOME YEAR ENDED YEAR ENDED DECEMBER DECEMBER REF. 31, 2017 31, 2016 Fund Balance Utilized A-1:A-2 $ 1,500,000.00 $ 1,355,076.00 Miscellaneous Revenue Anticipated A-2 4,600,588.57 5,318,233.02 Receipts from Delinquent Taxes A-2 750,371.63 859,538.87 Receipts from Current Taxes A-2 59,303,721.65 56,746,894.52 Non-Budget Revenues A-2 480,007.81 287,595.59 Other Credits to Income: Tax Overpayments Canceled A-15 104,441.36 87,949.06 Unexpended Balance of Appropriation Reserves A-9 616,331.33 623,444.38 TOTAL INCOME $ 67,355,462.35 $ 65,278,731.44 EXPENDITURES Budget Appropriations: Operations Within CAPS A-3 $ 11,933,234.55 $ 11,473,130.00 Deferred Charges & Statutory Expenditures Within CAPS A-3 1,338,978.16 1,325,419.00 Operations Excluded from CAPS A-3 2,476,683.25 2,216,932.86 Capital Improvements A-3 25,000.00 104,076.00 Debt Service A-3 2,912,186.68 2,610,676.50 Deferred Charges & Statutory Expenditures Outside CAPS A-3 9,900.00 140,000.00 Local District School Tax A-13 36,974,063.00 35,831,211.00 County Tax A-12 9,415,840.03 8,988,272.25 Special Improvement District Tax A-23 110,641.73 Other Expenditures: Grants Canceled (Net) 466.00 Senior/Veteran Deductions Disallowed By State A-7 4,550.00 Budget Operations A-4 147,071.10 74,942.61 TOTAL EXPENDITURES $ 65,348,148.50 $ 62,765,126.22 Excess in Revenue $ 2,007,313.85 $ 2,513,605.22 Adjustments to Income Before Fund Balance: Expenditures Included Above Which are by Statute Deferred Charges to Budget of Succeeding Year 49,500.00 Statutory Excess to Fund Balance $ 2,007,313.85 $ 2,563,105.22 Fund Balance, January 1 A:A-1 3,469,151.45 2,261,122.23 $ 5,476,465.30 $ 4,824,227.45 Decreased by: Utilized as Anticipated Revenue A-1:A-2 1,500,000.00 1,355,076.00 Fund Balance, December 31 A:A-1 $ 3,976,465.30 $ 3,469,151.45 The accompanying Notes to the Financial Statements are an integral part of this statement.
"A-2" SHEET #1 CURRENT FUND STATEMENT OF REVENUES - REGULATORY BASIS YEAR ENDED DECEMBER 31, 2017 EXCESS ANTICIPATED OR REF. BUDGET NJSA 40A: 4-87 REALIZED (DEFICIT) Fund Balance Anticipated A-1 $ 1,500,000.00 $ 1,500,000.00 Miscellaneous Revenues: ABC Licenses A-8 $ 18,000.00 $ $ 18,613.10 $ 613.10 Other Licenses A-2 3,600.00 13,091.00 9,491.00 Fees and Permits A-2 100,000.00 105,777.50 5,777.50 Municipal Court A-8 320,000.00 330,500.37 10,500.37 Interest and Costs on Taxes A-8 160,000.00 174,669.97 14,669.97 Parking Meters A-8 68,000.00 87,832.19 19,832.19 Interest on Investments and Deposits A-8 12,000.00 52,045.55 40,045.55 Metuchen Senior Housing Service Charge A-8 7,300.00 19,000.00 11,700.00 Cable TV Franchise Fee A-8 61,994.00 61,994.00 Alarm System Fee A-8 11,000.00 11,389.00 389.00 Consolidated Municipal Property Tax Relief Aid A-8 84,411.00 84,411.00 Energy Receipts Taxes A-8 1,364,544.00 1,364,544.00 Uniform Construction Code A-8 600,000.00 589,342.00 (10,658.00) Uniform Fire Safety Act A-8 33,481.55 41,249.65 7,768.10 Metuchen Parking Authority A-8 1,200,000.00 1,200,000.00 Sewer Service Charge A-8 29,000.00 28,686.12 (313.88) NJ Clean Communities A-18 26,243.02 26,243.02 Municipal Alliance Youth Services Board A-18 20,965.00 20,965.00 Municipal Alliance Municipal Match A-18 5,241.25 5,241.25 Middlesex County Cultural Arts Program A-18 6,104.00 6,104.00 Middlesex City Open Space Oakland Park A-18 225,493.00 225,493.00 NJ Adult Literacy/Library Grant A-18 31,825.00 31,825.00 Body Armor Grant A-18 2,749.66 2,749.66 Recycling Tonnage Grant A-18 19,146.29 19,146.29 Cops in Shops A-18 1,800.00 1,800.00 Distracted Driving A-18 5,500.00 5,500.00 Click it or Ticket A-18 5,197.50 5,197.50 Safe Routes to School Design A-18 58,402.36 58,402.36 Drive Sober A-18 3,383.48 3,592.56 6,976.04 Pedestrian Safety A-18 1,800.00 1,800.00 A-1 $ 4,341,817.28 $ 148,956.39 $ 4,600,588.57 $ 109,814.90 Receipts from Delinquent Taxes A-1:A-6 $ 650,000.00 $ $ 750,371.63 $ 100,371.63 Amount to be Raised by Taxes for Support of Municipal Budget: Local Tax for Municipal Purposes A-2:A-6 $ 12,348,167.50 $ $ 13,096,074.10 $ 747,906.60 Municipal Library Tax A-2:A-6 767,951.31 767,951.31 Budget Totals $ 19,607,936.09 $ 148,956.39 $ 20,714,985.61 $ 1,107,049.52 Non-Budget Revenue A-2 480,007.81 480,007.81 $ 19,607,936.09 $ 148,956.39 $ 21,194,993.42 $ 1,587,057.33 REF. A-3 A-3 The accompanying Notes to the Financial Statements are an integral part of this statement.
"A-2" SHEET #2 CURRENT FUND STATEMENT OF REVENUES - REGULATORY BASIS YEAR ENDED DECEMBER 31, 2017 ANALYSIS OF REALIZED REVENUES REF. Allocation of Current Tax Collections: Revenue From Collections A-1:A-6 $ 59,303,721.65 Allocated to: Local District School Tax $ 36,974,063.00 County Taxes 9,415,840.03 Special Improvement District Tax 110,641.73 Municipal Library Tax A-2 767,951.31 47,268,496.07 Balance for Support of Municipal Budget Appropriations $ 12,035,225.58 Add: Appropriation "Reserve for Uncollected Taxes" A-3 1,060,848.52 Amount of Support for Municipal Budget Appropriations A-2 $ 13,096,074.10 OTHER LICENSES Board of Health A-8 $ 9,555.00 Clerk A-8 3,536.00 A-2 $ 13,091.00 FEES AND PERMITS Police A-8 $ 1,116.00 Engineering A-8 417.50 Planning/Zoning A-8 29,355.00 Sidewalk Inspections A-8 4,050.00 Clerk/Other A-8 70,839.00 ANALYSIS OF NON-BUDGET REVENUE A-2 $ 105,777.50 Miscellaneous Revenue Not Anticipated: Police Outside Overtime Admin Fee $ 125,783.50 Other Fees-Developers 113,498.00 PERS Reimbursements 68,132.56 MDA Reimbursement 63,000.00 Cell Tower Rent 28,712.45 DMV Inspection Fines 25,413.00 Other Miscellaneous Revenue 23,855.86 Abandoned Property 21,583.24 Sale of Recycled Materials 8,508.30 Senior Citizen and Veterans' Admin Fee 1,520.90 A-1:A-2:A-4 $ 480,007.81 The accompanying Notes to the Financial Statements are an integral part of this statement.
OPERATIONS WITHIN "CAPS" GENERAL GOVERNMENT Administrative and Executive: Salaries and Wages $ 130,050.00 $ 167,050.00 $ 166,683.60 $ 366.40 $ Other Expenses 410,300.00 322,600.00 285,341.32 37,258.68 Special Emergency - Redevelopment Mayor and Committee Salaries and Wages 9,200.00 9,200.00 7,825.99 1,374.01 Other Expenses 3,150.00 3,150.00 1,977.40 1,172.60 Municipal Clerk: Salaries and Wages 57,030.00 58,030.00 57,940.46 89.54 Other Expenses 1,600.00 1,600.00 1,594.00 6.00 Election: Other Expenses 7,500.00 7,500.00 7,204.70 295.30 DEPARTMENT OF FINANCE Financial Administration: Salaries and Wages 232,000.00 232,000.00 231,260.81 739.19 Other Expenses 74,400.00 74,400.00 57,464.76 16,935.24 Collection of Taxes: Other Expenses 15,900.00 15,900.00 15,889.57 10.43 Assessment of Taxes: Salaries and Wages 63,860.00 63,860.00 63,858.09 1.91 Other Expenses 10,100.00 10,100.00 8,810.60 1,289.40 LEGAL SERVICES AND COSTS Legal Services: Other Expenses 165,000.00 165,000.00 135,194.51 29,805.49 Municipal Prosecutor: Other Expenses 22,500.00 22,500.00 22,500.00 DEPARTMENT OF PUBLIC WORKS Public Works Administration: Salaries and Wages 252,500.00 252,500.00 251,197.26 1,302.74 Other Expenses 6,200.00 6,900.00 6,885.47 14.53 Forestry: Salaries and Wages 215,000.00 215,000.00 197,869.04 17,130.96 Other Expenses 23,400.00 23,400.00 21,464.28 1,935.72 A-3 "SHEET #1" CURRENT FUND STATEMENT OF EXPENDITURES-REGULATORY BASIS YEAR ENDED DECEMBER 31, 2017 APPROPRIATIONS EXPENDED BUDGET AFTER PAID OR BUDGET MODIFICATION CHARGED RESERVED CANCELED The accompanying Notes to the Financial Statements are an integral part of this statement.
A-3 "SHEET #2" APPROPRIATIONS EXPENDED BUDGET AFTER PAID OR BUDGET MODIFICATION CHARGED RESERVED CANCELED DEPARTMENT OF PUBLIC WORKS (CONTINUED) Public Buildings and Grounds: Salaries and Wages $ 79,100.00 $ 79,100.00 $ 70,871.15 $ 8,228.85 $ Other Expenses 109,600.00 129,600.00 119,784.17 9,815.83 Planning Board: Salaries and Wages 35,000.00 30,000.00 24,824.26 5,175.74 Other Expenses 10,600.00 5,600.00 4,409.00 1,191.00 Zoning Board of Adjustment: Salaries and Wages 60,000.00 60,000.00 59,023.70 976.30 Other Expenses 5,800.00 5,800.00 4,056.00 1,744.00 Shade Tree Commission: Other Expenses 5,010.00 5,010.00 4,565.00 445.00 DEPARTMENT OF PUBLIC SAFETY Fire Department: Salaries and Wages 13,000.00 13,000.00 10,431.27 2,568.73 Fire Hydrant Service 310,900.00 310,900.00 310,890.36 9.64 Miscellaneous - Other Expenses 202,388.00 202,388.00 202,101.66 286.34 Police: Salaries and Wages 3,498,000.00 3,457,000.00 3,312,166.38 144,833.62 Other Expenses 208,000.00 209,500.00 208,502.38 997.62 Auxiliary Police Department: Salaries and Wages 3,800.00 3,800.00 3,800.00 Other Expenses 6,700.00 6,700.00 6,700.00 Emergency Management: Salaries and Wages 6,000.00 6,000.00 6,000.00 Other Expenses 10,000.00 8,500.00 8,147.91 352.09 First Aid Contribution 20,000.00 20,000.00 20,000.00 Uniform Fire Safety Act: Salaries and Wages 33,481.55 33,481.55 33,481.55 Municipal Court: Salaries and Wages 140,000.00 140,000.00 138,500.55 1,499.45 Other Expenses 16,250.00 16,250.00 12,512.35 3,737.65 DEPARTMENT OF PUBLIC WORKS Streets and Roads: Salaries and Wages 394,000.00 394,000.00 382,071.89 11,928.11 Other Expenses 241,460.00 236,460.00 194,740.71 41,719.29 Sewer System: Salaries and Wages 167,500.00 167,500.00 147,529.60 19,970.40 Other Expenses 60,100.00 55,100.00 51,660.99 3,439.01 CURRENT FUND STATEMENT OF EXPENDITURES-REGULATORY BASIS YEAR ENDED DECEMBER 31, 2017 The accompanying Notes to the Financial Statements are an integral part of this statement.
A-3 "SHEET #3" APPROPRIATIONS EXPENDED BUDGET AFTER PAID OR BUDGET MODIFICATION CHARGED RESERVED CANCELED DEPARTMENT OF PUBLIC WORKS (CONTINUED) Garbage and Trash Removal: Salaries and Wages $ 465,000.00 $ 465,000.00 $ 439,151.09 $ 25,848.91 $ Other Expenses 31,000.00 31,000.00 30,952.17 47.83 Recycling: Salaries and Wages 700.00 700.00 700.00 Other Expenses 41,400.00 41,400.00 34,909.68 6,490.32 Landfill/Solid Waste Disposal Costs: Other Expenses 300,000.00 300,000.00 279,988.50 20,011.50 HEALTH AND HUMAN SERVICES Board of Health: Salaries and Wages 10,000.00 10,000.00 10,000.00 Other Expenses 2,000.00 2,000.00 789.99 1,210.01 PARKS AND RECREATION Recreation Services and Programs: Salaries and Wages 81,800.00 81,800.00 81,753.81 46.19 Other Expenses 12,150.00 12,150.00 12,068.53 81.47 Parks and Playgrounds: Salaries and Wages 139,000.00 139,000.00 130,833.64 8,166.36 Other Expenses 16,300.00 21,300.00 8,344.86 12,955.14 Senior Citizen Bus Transportation: Salaries and Wages 26,000.00 26,000.00 24,334.38 1,665.62 Senior Citizens Center: Salaries and Wages 45,800.00 45,800.00 43,811.61 1,988.39 Other Expenses 23,320.00 23,320.00 20,047.36 3,272.64 METV Cable: Salaries and Wages 80,000.00 80,400.00 75,344.55 5,055.45 Other Expenses 50,385.00 80,385.00 67,698.50 12,686.50 Insurance: Group Insurance Waiver 25,000.00 25,000.00 25,000.00 Group Insurance for Employees 1,690,000.00 1,690,000.00 1,690,000.00 Other Insurance Premiums 6,000.00 6,000.00 4,313.00 1,687.00 Joint Insurance Fund 418,000.00 418,000.00 418,000.00 Economic Development: Other Expenses 150,000.00 150,000.00 150,000.00 Uniform Construction Code Enforcement Functions: Salaries and Wages 230,000.00 233,000.00 227,215.16 5,784.84 Other Expenses 95,000.00 92,000.00 83,792.66 8,207.34 CURRENT FUND STATEMENT OF EXPENDITURES-REGULATORY BASIS YEAR ENDED DECEMBER 31, 2017 The accompanying Notes to the Financial Statements are an integral part of this statement.
A-3 "SHEET #4" APPROPRIATIONS EXPENDED BUDGET AFTER PAID OR BUDGET MODIFICATION CHARGED RESERVED CANCELED Unclassified: Gasoline and Fuel $ 200,000.00 $ 190,000.00 $ 182,577.27 $ 7,422.73 $ Telephone 65,000.00 55,000.00 43,222.30 11,777.70 Street Lighting 205,000.00 193,800.00 169,237.30 24,562.70 Utilities 285,000.00 273,800.00 230,701.69 43,098.31 TOTAL OPERATIONS WITHIN "CAPS" $ 12,030,234.55 $ 11,933,234.55 $ 11,361,820.79 $ 571,413.76 $ TOTAL OPERATIONS WITHIN "CAPS" Detail: Salaries and Wages $ 6,467,821.55 $ 6,463,221.55 $ 6,197,779.84 $ 265,441.71 $ Other Expenses 5,562,413.00 5,470,013.00 5,164,040.95 305,972.05 DEFERRED CHARGES AND STATUTORY EXPENDITURES-MUNICIPAL WITHIN "CAPS" Statutory Expenditures: Contribution to Public Employee's Retirement System $ 374,614.57 $ 374,614.57 $ 374,614.57 $ $ Social Security System (O.A.S.I.) 285,000.00 288,000.00 287,163.82 836.18 Contribution to Police and Firemen's Retirement System 657,863.59 657,863.59 657,863.59 State Unemployment System 8,000.00 8,000.00 8,000.00 Contribution to Defined Contribution Plan 8,500.00 10,500.00 10,238.35 261.65 TOTAL DEFERRED CHARGES AND STATUTORY EXPENDITURES-MUNICIPAL WITHIN "CAPS" $ 1,333,978.16 $ 1,338,978.16 $ 1,337,880.33 $ 1,097.83 $ TOTAL GENERAL APPROPRIATIONS FOR MUNICIPAL PURPOSES WITHIN "CAPS" $ 13,364,212.71 $ 13,272,212.71 $ 12,699,701.12 $ 572,511.59 $ OPERATIONS EXCLUDED FROM "CAPS" Maintenance of Free Public Library $ 767,951.31 $ 767,951.31 $ 738,997.40 $ 28,953.91 $ Authority - Service Charges - Contractual (MCUA) 1,075,263.28 1,167,263.28 1,075,263.28 92,000.00 Recycling Tax 14,000.00 14,000.00 14,000.00 TOTAL OPERATIONS EXCLUDED FROM "CAPS" $ 1,857,214.59 $ 1,949,214.59 $ 1,828,260.68 $ 120,953.91 $ INTERLOCAL MUNICIPAL SERVICE AGREEMENT Township of Edison - Animal Control $ 26,076.00 $ 26,076.00 $ 25,249.00 $ 827.00 $ County of Middlesex Health Service Contract 51,984.54 51,984.54 51,984.54 County of Middlesex Library Consortium 31,965.00 31,965.00 31,964.06 0.94 TOTAL INTERLOCAL MUNICIPAL SERVICE AGREEMENT $ 110,025.54 $ 110,025.54 $ 109,197.60 $ 827.94 $ CURRENT FUND STATEMENT OF EXPENDITURES-REGULATORY BASIS YEAR ENDED DECEMBER 31, 2017 The accompanying Notes to the Financial Statements are an integral part of this statement.
A-3 "SHEET #5" APPROPRIATIONS EXPENDED BUDGET AFTER PAID OR BUDGET MODIFICATION CHARGED RESERVED CANCELED PUBLIC AND PRIVATE PROGAMS OFFSET BY REVENUES NJ Clean Communities (40A4-47 + $26,243.02) $ $ 26,243.02 $ 26,243.02 $ $ Municipal Alliance Youth Services Board 20,965.00 20,965.00 20,965.00 Municipal Alliance Municipal Match 5,241.25 5,241.25 5,241.25 Middlesex County Cultural Arts Program 6,104.00 6,104.00 6,104.00 Middlesex City Open Space Oakland Park 225,493.00 225,493.00 225,493.00 NJ Adult Literacy/Library Grant (40A4-47 + $31,825.00) 31,825.00 31,825.00 Body Armor Grant (40A4-47 + $2,749.66) 2,749.66 2,749.66 Recycling Tonnage Grant (40A4-47 + $19,146.29) 19,146.29 19,146.29 Cops in Shops (40A4-47 + $1,800.00) 1,800.00 1,800.00 Distracted Drive 5,500.00 5,500.00 5,500.00 Click it or Ticket (40A4-47 + $5,197.50) 5,197.50 5,197.50 Safe Routes to School Design (40A4-47 + $58,402.36) 58,402.36 58,402.36 Drive Sober (40A4-47 + $3,592.56) 3,383.48 6,976.04 6,976.04 Pedestrian Safety 1,800.00 1,800.00 1,800.00 TOTAL PUBLIC AND PRIVATE PROGRAMTS OFFSET BY REVENUES $ 268,486.73 $ 417,443.12 $ 417,443.12 $ $ TOTAL OPERATIONS EXCLUDED FROM "CAPS" $ 2,235,726.86 $ 2,476,683.25 $ 2,354,901.40 $ 121,781.85 $ CAPITAL IMPROVEMENTS EXCLUDED FROM CAPS Capital Improvement Fund $ 25,000.00 $ 25,000.00 $ 25,000.00 $ $ TOTAL CAPITAL IMPROVEMENTS EXCLUDED FROM "CAPS" $ 25,000.00 $ 25,000.00 $ 25,000.00 $ $ MUNICIPAL DEBT SERVICE-EXCLUDED FROM "CAPS" Payment of Bond Principal $ 2,365,000.00 $ 2,365,000.00 $ 2,365,000.00 $ $ Interest on Notes 23,020.00 23,020.00 22,960.18 59.82 Interest on Bonds 524,228.00 524,228.00 524,226.50 1.50 TOTAL MUNICIPAL DEBT SERVICE- EXCLUDED FROM "CAPS" $ 2,912,248.00 $ 2,912,248.00 $ 2,912,186.68 $ $ 61.32 DEFERED CHARGES Emergency Authorizations $ 9,900.00 $ 9,900.00 $ 9,900.00 $ $ TOTAL DEF. CHARGES - MUNI - EXCLUD. FROM "CAPS" $ 9,900.00 $ 9,900.00 $ 9,900.00 $ $ TOTAL GENERAL APPROPRIATIONS FOR MUNICIPAL PURPOSES EXCLUDED FROM "CAPS" $ 5,182,874.86 $ 5,423,831.25 $ 5,301,988.08 $ 121,781.85 $ 61.32 SUBTOTAL GENERAL APPROPRIATIONS $ 18,547,087.57 $ 18,696,043.96 $ 18,001,689.20 $ 694,293.44 $ 61.32 CURRENT FUND STATEMENT OF EXPENDITURES-REGULATORY BASIS YEAR ENDED DECEMBER 31, 2017 The accompanying Notes to the Financial Statements are an integral part of this statement.
A-3 "SHEET #6" APPROPRIATIONS EXPENDED BUDGET AFTER PAID OR BUDGET MODIFICATION CHARGED RESERVED CANCELED RESERVE FOR UNCOLLECTED TAXES $ 1,060,848.52 $ 1,060,848.52 $ 1,060,848.52 $ $ TOTAL GENERAL APPROPRIATIONS $ 19,607,936.09 $ 19,756,892.48 $ 19,062,537.72 $ 694,293.44 $ 61.32 CURRENT FUND STATEMENT OF EXPENDITURES-REGULATORY BASIS YEAR ENDED DECEMBER 31, 2017 REF. A-2:A-3 A-1 A:A-1 Budget A-3 $ 19,607,936.09 Amendment - NJSA 40A: 4-87 A-2 148,956.39 $ 19,756,892.48 Reserve for Uncollected Taxes A-2 $ 1,060,848.52 Accounts Payable A-19 663,495.89 Reserve for Grants Appropriated A-17 417,443.12 Disbursements A-4 16,910,850.19 Deferred Charges A-21 9,900.00 $ 19,062,537.72 The accompanying Notes to the Financial Statements are an integral part of this statement.
TRUST FUND
"B" TRUST FUND BALANCE SHEETS - REGULATORY BASIS BALANCE BALANCE DECEMBER DECEMBER REF. 31, 2017 31, 2016 A S S E T S Assessment Fund: Cash $ $ 953.21 B:B-2 $ $ 953.21 Animal Control Fund: Cash $ 8,229.33 $ 3,966.68 B:B-2 $ 8,229.33 $ 3,966.68 Other Funds: Cash B-2 $ 3,801,390.12 $ 3,643,066.19 Due Current Fund B-20 31,999.68 Community Development Block Grants Receivable B-10 76,758.91 37,823.25 B $ 3,910,148.71 $ 3,680,889.44 TOTAL ASSETS B $ 3,918,378.04 $ 3,685,809.33 Assessment Fund: Fund Balance $ $ 953.21 B:B-1:B-3 $ $ 953.21 Animal Control Fund: Reserve for Animal Control Expenditures B-5 $ 7,622.73 $ 3,958.88 Reserve for Accounts Payable B-21 600.00 Due State of New Jersey B-8 6.60 7.80 B $ 8,229.33 $ 3,966.68 Other Funds: Reserve for: Trust Other B-7 $ 2,011,601.37 $ 1,559,468.02 Payroll Deductions Payable B-14 67,617.33 41,568.71 COAH B-11 382,531.04 346,698.77 Recreation B-15 120,174.29 114,462.76 Unemployment B-9 37,022.68 37,093.87 Police Outside Overtime B-13 99,390.63 12,512.16 Law Enforcement B-16 1,781.59 1,773.40 Developers Escrow B-12 936,616.43 1,396,609.01 Forfeiture B-17 40,526.23 34,769.41 Equitable Sharing Forfeiture B-19 32,409.48 41,584.92 Election B-6 1,768.47 1,559.00 Fire Penalties B-18 1,601.54 2,093.80 Accounts Payable B-4 177,107.63 90,695.61 B $ 3,910,148.71 $ 3,680,889.44 TOTAL LIABILITIES, RESERVES AND FUND BALANCE B $ 3,918,378.04 $ 3,685,809.33 The accompanying Notes to the Financial Statements are an integral part of this statement.
"B-1" TRUST FUND STATEMENTS OF CHANGE IN FUND BALANCE - REGULATORY BASIS - ASSESSMENT FUND FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016 REF. YEAR 2017 YEAR 2016 Balance, January 1 B:B-3 $ 953.21 $ 953.21 Decreased by: Disbursements B-2:B-3 $ 953.21 $ Balance, December 31 B:B-3 $ - 0 - $ 953.21 The accompanying Notes to the Financial Statements are an integral part of this statement.
GENERAL CAPITAL FUND
"C" GENERAL CAPITAL FUND BALANCE SHEETS - REGULATORY BASIS BALANCE BALANCE DECEMBER DECEMBER REF. 31, 2017 31, 2016 A S S E T S Cash C-2:C-3 $ 1,746,880.85 $ 2,634,464.19 Deferred Charges to Future Taxation: Funded C-4 14,247,000.00 16,612,000.00 Unfunded C-5 2,602,650.00 2,305,005.00 Accounts Receivable C-9 1,784,024.55 1,634,024.55 $ 20,380,555.40 $ 23,185,493.74 LIABILITIES, RESERVES AND FUND BALANCE General Serial Bonds Payable C-11 $ 14,247,000.00 $ 16,612,000.00 Bond Anticipation Notes Payable C-13 2,301,850.00 2,301,850.00 Contracts Payable C-7 808,503.08 851,764.45 Capital Improvement Fund C-8 15,095.00 5,550.00 Reserve for Capital Improvements C-6 16,045.50 16,045.50 Improvement Authorizations: Funded C-10 323,520.00 1,085,956.65 Unfunded C-10 2,618,542.46 2,285,709.78 Fund Balance C-1 49,999.36 26,617.36 $ 20,380,555.40 $ 23,185,493.74 The accompanying Notes to Financial Statements are an integral part of this statement.
"C-1" GENERAL CAPITAL FUND STATEMENT OF CHANGE IN FUND BALANCE - REGULATORY BASIS REF. YEAR 2017 YEAR 2016 Balance, January 1 C $ 26,617.36 $ 26,617.36 Increased by: Funded Improvement Authorizations Canceled 200,000.00 Premium on Sale of B.A.N. C-2 23,382.00 $ 49,999.36 $ 226,617.36 Decreased by: Current Fund M.R.A. 200,000.00 Balance, December 31 C $ 49,999.36 $ 26,617.36 The accompanying Notes to Financial Statements are an integral part of this statement.
SWIMMING POOL UTILITY FUND
"D" SWIMMING POOL UTILITY FUND BALANCE SHEETS - REGULATORY BASIS BALANCE BALANCE DECEMBER DECEMBER REF. 31, 2017 31, 2016 A S S E T S Operating Fund: Cash D-5 $ 165,738.49 $ 132,668.28 $ 165,738.49 $ 132,668.28 Capital Fund: Cash D-5 $ 133,981.12 $ 133,981.12 Fixed Capital D-13 1,095,731.00 1,095,731.00 Fixed Capital Authorized and Uncompleted D-6 411,000.00 411,000.00 $ 1,640,712.12 $ 1,640,712.12 LIABILITIES, RESERVES AND FUND BALANCE $ 1,806,450.61 $ 1,773,380.40 Operating Fund: Liabilities: Appropriation Reserves D-4:D-7 $ 61,753.80 $ 24,193.38 Accounts Payable D-10 23,795.76 18,294.22 Accrued Interest Payable D-11 1,249.61 1,318.61 Fund Balance D-2 78,939.32 88,862.07 $ 165,738.49 $ 132,668.28 Capital Fund: Improvement Authorizations: Funded D-8 $ 14,406.66 $ 14,406.66 Unfunded D-8 111,400.00 111,400.00 Bonds Payable D-14 200,000.00 220,000.00 Bond Anticipation Notes Payable D-17 111,000.00 111,000.00 Reserve for Amortization D-12 1,095,531.00 1,095,531.00 Deferred Reserve for Amortization D-16 99,600.00 79,600.00 Capital Improvement Fund D-9 8,338.46 8,338.46 Fund Balance D-1 436.00 436.00 $ 1,640,712.12 $ 1,640,712.12 $ 1,806,450.61 $ 1,773,380.40 The accompanying Notes to the Financial Statements are an integral part of this statement.
"D-1" SWIMMING POOL CAPITAL UTILITY FUND STATEMENT OF CHANGES IN FUND BALANCE - REGULATORY BASIS FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016 REF. YEAR 2017 YEAR 2016 Balance, January 1 D $ 436.00 $ 436.00 Balance, December 31 D $ 436.00 $ 436.00 The accompanying Notes to the Financial Statements are an integral part of this statement.
"D-2" SWIMMING POOL UTILITY FUND STATEMENTS OF OPERATIONS AND CHANGE IN OPERATING FUND BALANCE - REGULATORY BASIS FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016 REVENUE AND OTHER INCOME REALIZED REF. YEAR 2017 YEAR 2016 Fund Balance D-2: D-3 $ 80,000.00 $ 90,000.00 Membership and Guest Fees D-3 343,107.00 340,067.00 Non-budget Revenue D-3 34,225.07 29,937.73 Other Credits to Income: Unexpended Balance of Appropriation Reserves D-7 24,745.18 31,342.98 TOTAL INCOME $ 482,077.25 $ 491,347.71 EXPENDITURES Operating D-4 $ 371,493.00 $ 372,224.00 Debt Service D-4 26,307.00 25,576.00 Deferred Charges and Statutory Expenditures D-4 14,200.00 14,200.00 TOTAL EXPENDITURES $ 412,000.00 $ 412,000.00 Excess in Revenue $ 70,077.25 $ 79,347.71 Fund Balance Balance, January 1 D 88,862.07 99,514.36 $ 158,939.32 $ 178,862.07 Less: Fund Balance Utilized D-2 80,000.00 90,000.00 Balance, December 31 D $ 78,939.32 $ 88,862.07 The accompanying Notes to the Financial Statements are an integral part of this statement.
"D-3" SWIMMING POOL UTILITY OPERATING FUND STATEMENT OF REVENUES - REGULATORY BASIS YEAR ENDED DECEMBER 31, 2017 ANTICIPATED EXCESS/ REF. BUDGET REALIZED (DEFICIT) Fund Balance Utilized D-2 $ 80,000.00 $ 80,000.00 $ Membership and Guest Fees D-2:D-5 332,000.00 343,107.00 11,107.00 $ 412,000.00 $ 423,107.00 $ 11,107.00 REF. D-4 Non-Budget Revenue D-2:D-5 $ 34,225.07 $ 457,332.07 The accompanying Notes to the Financial Statements are an integral part of this statement.
Debt Service: Principal on Bonds $ 20,000.00 $ 20,000.00 $ 20,000.00 $ Interest on Bonds & Notes 6,307.00 6,307.00 6,307.00 Total Debt Service $ 26,307.00 $ 26,307.00 $ 26,307.00 $ Statutory Expenditures: Social Security $ 13,200.00 $ 13,200.00 $ 11,229.63 $ 1,970.37 Unemployment Compensation Insurance 1,000.00 1,000.00 1,000.00 Total Statutory Expenditures $ 14,200.00 $ 14,200.00 $ 12,229.63 $ 1,970.37 "D-4" $ 412,000.00 $ 412,000.00 $ 350,246.20 $ 61,753.80 REF. D-3 D:D-2 D-2 $ 350,246.20 SWIMMING POOL UTILITY OPERATING FUND STATEMENT OF EXPENDITURES - REGULATORY BASIS YEAR ENDED DECEMBER 31, 2017 APPROPRIATIONS EXPENDED BUDGET AFTER PAID OR BUDGET MODIFICATION CHARGED RESERVED Operating: Salaries and Wages $ 185,000.00 $ 185,000.00 $ 146,792.23 $ 38,207.77 Other Expenses 186,493.00 186,493.00 164,917.34 21,575.66 Total Operating $ 371,493.00 $ 371,493.00 $ 311,709.57 $ 59,783.43 Disbursements D-5 $ 331,257.66 Accrued Interest D-11 6,307.00 Accounts Payable D-10 12,681.54 The accompanying Notes to the Financial Statements are an integral part of this statement.
PUBLIC ASSISTANCE TRUST FUND
"E" PUBLIC ASSISTANCE TRUST FUND BALANCE SHEETS - REGULATORY BASIS BALANCE BALANCE DECEMBER DECEMBER REF. 31, 2017 31, 2016 A S S E T S Cash: Public Assistance Trust Fund I E-1 $ 0.00 $ 565.67 $ 0.00 $ 565.67 LIABILITIES Reserve for Public Assistance Trust Fund I E-2 $ 0.00 $ 565.67 $ 0.00 $ 565.67 The accompanying Notes to Financial Statements are an integral part of this statement.
GENERAL FIXED ASSETS ACCOUNT GROUP
"F" STATEMENT OF GENERAL FIXED ASSETS BALANCE SHEETS - REGULATORY BASIS BALANCE BALANCE DECEMBER DECEMBER 31, 2017 31, 2016 Fixed Assets: Land $ 11,895,500.00 $ 11,895,500.00 Buildings and Improvements 6,131,600.00 6,131,600.00 Machinery and Equipment 8,512,061.79 8,850,798.13 TOTAL FIXED ASSETS $ 26,539,161.79 $ 26,877,898.13 Reserve: Investments in General Fixed Assets $ 26,539,161.79 $ 26,877,898.13 The accompanying Notes to Financial Statements are an integral part of this statement.
NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 2017 AND 2016 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity The Borough of Metuchen is an instrumentality of the State of New Jersey, established to function as a municipality. The Borough council consists of elected officials and is responsible for the fiscal control of the Borough. Except as noted below, the financial statements of the Borough of Metuchen include every board, body, officer or commission supported and maintained wholly or in part by funds appropriated by the Borough of Metuchen, as required by N.J.S.A. 40A:5-5. Accordingly, the financial statements of the Borough of Metuchen do not include the operations of the municipal library or regional and local boards of education, inasmuch as their activities are administered by separate boards. B. Description of Funds The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. GASB Codification establishes three fund types and two account groups to be used by general purpose governmental units when reporting financial position and results of operations in accordance with U.S. Generally Accepted Accounting Principles (GAAP). The accounting policies of the Borough of Metuchen 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 respect to public funds. Under this method of accounting, the financial transactions and accounts of the Borough of Metuchen are organized on the basis of funds and an account group which is different from the fund structure required by GAAP. A fund or account group is an accounting entity with a separate set of selfbalancing accounts established to record the financial position and results of operation of a specific government activity. As required by the Division of Local Government Services the Borough accounts for its financial transactions through the following individual funds and account groups: 6
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. Description of Funds (Continued) Current Fund - resources and expenditures for governmental operations of a general nature, including grant funds. Trust Fund - receipts, custodianship and disbursement of funds in accordance with the purpose for which each reserve was created. General Capital Fund - receipts and disbursement of funds for the acquisition of general capital facilities, other than those acquired in the Current Fund. Swimming Pool Operating and Capital Funds - account for the operations and acquisition of capital facilities of the municipally-owned swimming pool. Public Assistance Fund - receipt and disbursement of funds that provide assistance to certain residents of the Borough pursuant to Title 44 of New Jersey statutes. General Fixed Assets Account Group - utilized to account for property, land, buildings and equipment that have been acquired by other 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 government units. The more significant accounting policies and differences in the State of New Jersey are as follows: A modified accrual basis of accounting is followed with minor exceptions. Revenues - are recorded when received in cash except for certain amounts which are due from other governmental units. Federal and State grants are realized as revenue when anticipated in the Borough's budget. Receivables for property taxes are recorded with offsetting reserves on the balance sheet of the Borough's Current Fund; accordingly, such amounts are not recorded as revenue until collected. Other amount that are due the Borough, which are susceptible to accrual, are also recorded as receivables with offsetting reserves and recorded as revenue when received. GAAP requires revenues to be recognized in the accounting period when they become susceptible to accrual, reduced by an allowance for doubtful accounts. 7
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Basis of Accounting (Continued) Expenditures - are recorded on the "budgetary" basis of accounting. General expenditures are recorded when an amount is encumbered for goods or services through the issuances 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 regulatory Appropriation Reserve balance. Appropriation reserves covering unexpended appropriation balances are automatically created at December 31 st 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 and utility bonds and notes are provided on the cash basis; interest on general capital indebtedness is on the cash basis, whereas interest on utility indebtedness is on the accrual basis. Encumbrances - Contractual orders, at December 31, are reported as expenditures through the establishment of encumbrances payable. Under GAAP, encumbrances outstanding at year end are reported as reservations of fund balance because they do not constitute expenditures or liabilities. Foreclosed Property - is recorded in the Current Fund at the assessed valuation when such property was acquired and is fully reserved. GAAP requires such property to be recorded in the General Fixed Assets Account Group at its market value. Sale of Municipal Assets - The proceeds from the sale of municipal assets can be held in a reserve until anticipated as a revenue in a future budget. GAAP requires such proceeds to be recorded as a revenue in the year of sale. 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. GAAP does not require the establishment of an offsetting reserve. General Fixed Assets - N.J.A.C. 5:30-5.6 Accounting for Governmental Fixed Assets, which differs in certain respects from generally accepted accounting principles, requires the inclusion of a statement of general fixed assets of the Borough as part of its basic financial statements. General fixed assets are defined as non-expendable personal property having a physical existence, a useful life of more than one year and an acquisition cost of $500.00 or more per unit. 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 system are not capitalized. 8
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Basis of Accounting (Continued) General Fixed Assets (Continued) - Property and equipment acquired by the Current and General Capital Funds are recorded as expenditures at the time of the purchase and are not capitalized in their own respective funds. The Borough has valued its land and buildings at assessed values. GAAP requires capital assets to be recorded at their historical cost or estimated historical cost. Additionally, GAAP requires depreciation to be calculated on capital assets, with the exception of land. General Fixed Assets that have been acquired and that are utilized in the Current and General Capital Funds are instead accounted for in the General Fixed Asset Account Group. No depreciation has been provided on general fixed assets or reported in the financial statements. Fixed assets acquired through grants in aid or contributed capital have not been accounted for separately. Inventories of Supplies - The costs of inventories of supplies for all funds are recorded as expenditures at the time individual items are purchased. The costs of inventories are not included on the various balance sheets. GAAP requires the cost of inventories to be reported as a current asset and equally offset by a fund balance reserve. Fixed Capital - Swim Pool Utility - Accounting for utility fund fixed capital is done in compliance with N.J.A.C. 5:30-5.6. Property and equipment purchased by the Swim Pool 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. The fixed capital reported is as taken from the municipal records and does not necessarily reflect the true condition of such fixed capital. Contributions in aid of construction are not capitalized. The balance in the Reserve for Amortization account in the utility capital fund represents changes to operations for the cost of acquisitions of property, equipment, and improvements. The utility does not record depreciation on fixed assets. 9
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Basis of Accounting (Continued) Accounting and Financial Reporting for Pensions - In June 2012, the Governmental Accounting Standards Board (GASB) approved Statement No. 68 Accounting and financial reporting for pensions administered by state and local government employers. This Statement improves accounting and financial reporting by state and local governments for pensions. It also improves information provided by state and local government employers about financial support for pensions that is provided by other entities. This Statement results from a comprehensive review of the effectiveness of existing standards of accounting and financial reporting for pensions with regard to providing decision useful information, supporting assessments of accountability and interperiod equity, and creating additional transparency. This Statement replaces the requirement of Statement No. 27, Accounting for Pension by State and Local Governmental Employers, as well as the requirements of Statement No. 50, Pension Disclosures, as they relate to pensions that are provided through pension plans administered as trusts or equivalent arrangements that meet certain criteria. The requirements of Statements 27 and 50 remain applicable for pensions that are not covered by the scope of this Statement. This statement is effective for periods beginning after June 15, 2014. GASB approved Statement 71, Pension Transition for Contributions made Subsequent to the Measurement Date-an amendment to GASB No. 68. The objective of this Statement is to address an issue regarding application of the transition provisions of Statement No. 68, Accounting and Financial Reporting for Pensions. The issue relates to amounts associated with contributions, if any, made by a state or local government employer or non-employer contributing entity to a defined benefit pension plan after the measurement date of the government's beginning net pension liability. Statement 68 requires a state or local government employer (or nonemployer contributing entity in a special funding situation) to recognize a net pension liability measured as of a date (the measurement date) no earlier than the end of its prior fiscal year. If a state or local government employer or non-employer contributing entity makes a contribution to a defined benefit pension plan between the measurement date of the reported net pension liability and the end of the government's reporting period, Statement 68 requires that the government recognize its contribution as a deferred outflow of resources. In addition, Statement 68 requires recognition of deferred outflows of resources and deferred inflows of resources for changes in the net pension liability of a state or local government employer or nonemployer contributing entity that arise from other types of events. 10