NC - Garner: TOWN COUNCIL MEETING

Get alerted when your passions are being discussed in Garner, Wake and more for free

Issues discussed this meeting include:

Get Alerts On New Meetings
Sign Up
When and Where is the Next Meeting?
[ See More ]

TOWN COUNCIL MEETING

TOWN OF GARNER

Town Council Meeting

January 6, 2020 7:00 P.M.

Garner Town Hall 900 7th Avenue

Garner, NC 27529

Town of Garner Town Council Agenda

January 6, 2020

The Council will meet in regular session at 7:00 p.m. in the Garner Town Hall located at 900 7th Avenue.

Tagged Passions:council

A. CALL MEETING TO ORDER/ROLL CALL: Mayor Ken Marshburn

The Council will call for a brief recess at 9:00 p.m.

Tagged Passions:council

B. PLEDGE OF ALLEGIANCE: Council Member Phil Matthews

Tagged Passions:council

C. INVOCATION: Council Member Phil Matthews

Tagged Passions:council

D. PETITIONS AND COMMENTS

This portion of the meeting is to receive comments from the public on items not included in this agenda. Citizens should sign up with the Town Clerk

to speak prior to the start of the meeting. The Board is interested in hearing your concerns but may not take action or deliberate on subject matter brought up during the Petitions and Comments segment. Topics requiring further investigation will be referred to the appropriate town officials or staff and may be scheduled for a future agenda.
Tagged Passions:hearing

E. ADOPTION OF AGENDA

F. PRESENTATIONS

Audit Presentation from Mauldin Jenkins

Tagged Passions:audit

G. CONSENT

1. Budget Amendment - Council Tablets . Page 26 Presenter: David Beck, Finance Director

Tagged Passions:finance, council, and budget

The Town Manager is moving 1,650 out of this department's travel line item over to the Town Council budget to complete the purchase of tablets for

the new council members.
Tagged Passions:council, budget, travel, purchasing, and manager

Action: Consider adopting ordinance (2020) 4036

Tagged Passions:ordinance

2. Council Meeting Minutes Page 28 Presenter: Stella Gibson, Town Clerk

Council meeting minutes from October 7, October 24, October 29, and November 4, 2019 , closed session minutes from October 7, October 24, November 4,

2019, and special meeting minutes from October 3, 2019

Action: Consider adopting minutes

3. PEG Media Partners Interlocal Agreement Page 55 Presenter: Rick Mercier, Communications Manager

Tagged Passions:communications, manager, and Communications

The document is an update and renewal of PEG Media Partners' Interlocal Agreement among the seven area municipalities--including the Town of

Garner--that make up the non-profit video production and broadcast consortium. PEG Media Partners' Board of Directors unanimously approved the updated agreement at its Dec. 5 meeting. Garner's communications manager is the town manager's designee on the board.
Tagged Passions:communications, manager, and Communications

Action: Consider approving the proposed agreement

H. PUBLIC HEARINGS

Tagged Passions:hearing

1. CUP-SP-19-23, KS Bank .. Page 68 Presenter: Stacy Harper, Principal Planner

K J Garner, LLC is requesting conditional use site plan (CUP-SP-19-23) approval for a bank. The 1.287 +/- acre site is located at 409 US HWY 70 E and

can be further identified as Wake County PIN 1721-00-5312.

Action: Consider approving with four conditions

I. NEW/OLD BUSINESS

Tagged Passions:business

J. COMMITTEE REPORTS

K. MANAGER REPORTS

Tagged Passions:manager

1. garner info 2. Building Permit Report 3. Capital Projects Status Report FY2020 3rd Quarter 4. Triangle Commercial Real Estate Conference-January

22nd
Tagged Passions:Homebuilder, capital spending, Capital Spending, and commercial

L. ATTORNEY REPORTS

Tagged Passions:legal

M. COUNCIL REPORTS

Tagged Passions:council

N. ADJOURNMENT

Town of Garner Town Council Meeting

Agenda Form

Meeting Date: Subject: Location on Agenda: Department: Contact: Presenter: Brief Summary:

Recommended Motion and/or Requested Action:

Detailed Notes:

Funding Source:

Tagged Passions:funding

Cost: One Time: Annual: No Cost: Manager s Comments and Recommendations:

Tagged Passions:manager

Attachments Yes: No: Agenda Form Reviewed by:

Initials: Comments:

Department Head:

Finance Director:

Tagged Passions:finance

Town Attorney:

Tagged Passions:legal

Town Manager:

Tagged Passions:manager

Town Clerk:

FY 2018-19 CAFR Presentation

Finance David C. Beck, Finance Director

Tagged Passions:finance

David C. Beck and James Bence

James Bence from the audit firm Mauldin Jenkins will be presenting the audit report for the fiscal year that ended June 30, 2019. The Town received

the desired unmodified audit opinion and there were no audit findings to report. The Town continues to be in a strong financial position. The audit report has been received and approved by the Local Government Commission (LGC). The Comprehensive Annual Financial Report (CAFR) has been submitted to the Government Finance Officer's Association (GFOA) for consideration of their award in financial reporting which the Town has received for 30 consecutive years.
Tagged Passions:finance, boards and commissions, audit, and financial report

No action needed

DCB

DCB

RD

January 6, 2020

Presentations

Page 3

Town of Garner North Carolina

Auditor s Discussion Analysis Financial Compliance Audit Summary

Tagged Passions:finance, compliance, and audit

June 30, 2019

Presented by:

Page 4

PURPOSE OF ANNUAL AUDIT AGENDA

Tagged Passions:audit

Engagement Team and Firm Information.

Overview of:

o Independent Auditor s Report; o Financial Statements, Footnotes and Supplementary

Tagged Passions:finance, audit, and financial report

Information; and

o Compliance Reports.

Tagged Passions:compliance

Required Communications under Government Auditing Standards.

Tagged Passions:communications, audit, and Communications

Accounting Recommendations and Other Matters.

Other Items and Closing Thoughts.

Answer Questions.

Page 5

MAULDIN JENKINS GOVERNMENTAL PRACTICE

General Information: Founded in 1918. Large regional firm serving the Southeastern United States. Offices located in Atlanta, Albany, Savannah,

Macon, GA; Bradenton, FL; Chattanooga, TN;

Columbia, SC; and Birmingham, AL. Approximately 260 personnel are employed at Mauldin Jenkins.

Tagged Passions:personnel

Governmental Sector: Largest specific industry niche served by Firm representing 25 of Firm practice. Serve more governmental entities in the

Southeast than any other certified public

accounting firm requiring over 70,000 hours of service on an annual basis. Approximately 90 professional staff persons with current governmental

experience. In past three (3) years, have served approx. 450 governments in the Southeast, including:

120 municipalities; 55 counties; 55 school systems (8 of the 10 largest in Georgia and 9 of the 30 largest in Georgia

Tagged Passions:education

and Florida combined) and 35 charter schools; 40 state entities; Inclusive of the above, we serve approximately 90 water and sewer enterprise

Tagged Passions:sewer, utility, Utility, water, education, Charter Schools, and charter schools

operations; and Serve 115 governments receiving the GFOA and/or ASBO Certificate of

Achievement for Excellence in Financial Reporting. Experience performing forensic audit services and information technology consultations. Experience

performing municipal bond debt issuance attestation services serving clients
Tagged Passions:finance, bond, services, Technology, technology, audit, information technology, financial report, and Information Technology

with over 11.0 billion in aggregate publicly issued debt instruments. 10th highest level of Single Audits conducted in U.S.A. approximating 8.0

billion annually.
Tagged Passions:audit

Engagement Team Leaders for the Town of Garner Include: James W. Bence - Engagement Lead Partner 16+ years experience, 100 governmental Doug Moses

Quality Control Partner 20+ years experience, 100 governmental

Page 6

MAULDIN JENKINS ADDITIONAL INFORMATION

Other Industries Services by Mauldin Jenkins:

Tagged Passions:services

Each of Mauldin Jenkins offices provides a wide variety of services to a broad range of clientele. We have partners and managers who are responsible

for specialized practice areas of auditing and accounting, taxes and management advisory services. Their purpose, as leaders in the particular practice area, is to establish policies with respect to technical matters in these specific areas and ensure that the quality of the Firm's practice is maintained.
Tagged Passions:taxes, Taxes, services, manager, and audit

Industries Served: Over the years our partners have developed expertise in certain industries representative of a cross section of the Georgia

economy, including:
Tagged Passions:economy

Governmental Entities (state entities, cities, counties, school systems, business type operations, libraries, and other special purpose entities)

Tagged Passions:business, education, and library

SEC Registrants Wholesale Distribution Agri-Businesses Manufacturing Professional Services Employee Benefit Plans

Tagged Passions:business and services

Financial Institutions (community banks, savings loans, thrifts, credit unions, mortgage companies, and finance companies)

Tagged Passions:finance and union

Non-Profit Organizations Retail Businesses Long-term Healthcare Construction Development Individuals, Estates and Trusts Real Estate Management

Tagged Passions:construction, business, development, healthcare, and Development

Services Provided: This diversity of practice enables our personnel to experience a wide variety of business, accounting and tax situations. We

provide the traditional and not-so-traditional services such as:
Tagged Passions:business, taxes, Taxes, personnel, services, and diversity

Financial Audit/Review/Compilation Compliance Audits Single Audits Agreed-Upon Procedures Forensic Audits Bond Issuance Services Performance Audits

State Sales Tax Matters International Tax Matters Business Strategic Planning Profitability Consulting Budgeting Buy-Sell Agreements Business
Tagged Passions:planning, business, finance, strategic, budget, sale, taxes, Taxes, bond, procedure, services, performance, compliance, and audit

Valuation Issues

Income Tax Planning Preparation Multi-State Income Tax Issues Information Systems Consulting Cost Accounting Analysis Healthcare Cost Reimbursement

Outsourced Billing Services Fixed Asset Inventories Succession Exit Strategy Consulting Estate Planning Management Information Systems Employee Benefit Plan Administration Merger/Acquisition Expansion
Tagged Passions:planning, expansion, strategic, taxes, Taxes, services, and healthcare

Financing

Page 7

INDEPENDENT AUDITOR S REPORT

Tagged Passions:audit

The independent auditor s report has specific significance to readers of the financial report.

Tagged Passions:finance, audit, and financial report

Management s Responsibility for the Financial Statements The financial statements are the responsibility of management.

Tagged Passions:finance and financial report

Auditor s Responsibility

Tagged Passions:audit

Our responsibility, as external auditors, is to express opinions on these financial statements based on our audit. We conducted our audit in

accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. We planned and performed our audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
Tagged Passions:finance, audit, and financial report

Opinions

We have issued an unmodified audit report (i.e., clean opinions ). The respective financial statements are considered to present fairly the financial

position and results of operations as of, and for the year ended June 30, 2019.
Tagged Passions:finance, audit, and financial report

Emphasis of Matter The financial statements reflect the implementation of certain new pronouncements, and our opinions are not modified with respect

to them.
Tagged Passions:finance and financial report

Other Matters

Certain required supplementary information and other information is included in the financial report, and as directed by relevant auditing standards,

we have not expressed an opinion or provided any assurance on the respective information.
Tagged Passions:finance, audit, and financial report

Other Reporting

Government Auditing Standards require auditors to issue a report on our consideration of internal control over financial reporting and on our tests

of compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. We have issued such a report and reference to this report is included in the independent auditor s report.
Tagged Passions:grant, regulation, finance, contract, compliance, audit, and financial report

Page 8

OVERVIEW OF FINANCIAL STATEMENTS

Tagged Passions:finance and financial report

The Town s basic financial statements include three components:

Tagged Passions:finance and financial report

1) Government-wide financial statements; 2) Fund financial statements; and 3) Notes to the financial statements.

Tagged Passions:finance and financial report

The government-wide financial statements provide a broad overview of all of the Town s funds. The Statement of Net Position presents information on

all assets and deferred outflows and liabilities and deferred inflows of the Town, with the resulting difference reported as net position. The Statement of Activities presents information showing how the Town s net position changed during the most recent fiscal year. Revenues are categorized as program revenues or general revenues. Expenses are categorized by function.
Tagged Passions:funding, finance, program, and financial report

The fund financial statements more closely resemble the financial statements as presented prior to the adoption of GASB Statement No. 34. All of the

funds of the Town can be divided into two (2) categories: governmental funds (includes the General Fund) and fiduciary funds.
Tagged Passions:funding, finance, and financial report

The Town also includes, as part of the Annual Financial Report, the following information:

Tagged Passions:finance and financial report

1) Schedule of Ad Valorem Taxes Receivable 2) Analysis of Current Tax Levy

Tagged Passions:taxes, Taxes, and ad valorem

Government-Wide (Full-Accrual) Financial Statements

Tagged Passions:finance and financial report

As noted above, the financial report of the Government includes two (2) entity-wide financial statements: a Statement of Net Position; and a

Statement of Activities.
Tagged Passions:finance and financial report

Highlights of the government-wide statements note total assets and deferred outflows of resources of approximately 136,822,000 offset by liabilities

and deferred inflows of resources of approximately 65,984,000. This results in the Town reported net position (or equity) of approximately 70,838,000. Also, a substantial element of the net position is composed of a net investment in capital assets in the approximate amount of 63,714,000. Restricted net position amounts to approximately 3,853,000 leaving unrestricted net position at 3,271,000.
Tagged Passions:investment

Page 9

The Statement of Activities attempts to report expenses in the first column with direct offsetting program revenues to the adjacent columns to arrive

a net cost of the functional areas of operation. General revenues (primarily property taxes and sales taxes) come to the rescue of the net cost functional areas resulting in the Town reporting a decrease in net position of approximately 548,000 for the fiscal year ended June 30, 2019.
Tagged Passions:sale, taxes, Taxes, program, property, and property tax

General Fund

Of primary interest to the Town is the General Fund, which accounts for the majority of revenues received and funds expended in the operations of the

Town, including general government activities, public safety, transportation and development, planning and zoning, libraries, and parks and recreation.
Tagged Passions:planning, funding, development, public safety, zoning, transportation, parks, Development, library, and recreation

Net Change in Fund Balance and the Revenues and Expenditures of the General Fund. The following chart demonstrates General Fund revenues verses

expenditures for a four (4) year period.

Page 10

The primary source of revenue for the Town s General Fund comes from the ad valorem taxes which are levied each year. Below is a trend of the

assessed values of the Town s real estate and person property taxes and the motor vehicle tax, which with the new changes in state law is no longer in place as an ad valorem tax. The Town has maintained a flat millage rate for the past four years, so the changes in the assessments directly affect the revenues.
Tagged Passions:taxes, Taxes, property, ad valorem, and property tax

One final analysis of the General Fund is to review the relationship of year-end fund balance as compared to each year s expenditures. The following

is the relative percentage of fund balance as compared to annual expenditures for each of the past four (4) fiscal years:

Fiscal Year Total Fund

Balance Unassigned

Fund Balance 2019 80.3 52.1 2018 95.3 57.5 2017 83.7 56.3 2016 85.7 59.3

Page 11

The percentages noted above are indicative of the Town s ability to be proactive with its initiatives and general operations, and also its ability to

proceed into the new fiscal year with or without certain seasonal revenue streams. Of course, it is of great importance to further reflect that fund balance does not always equate to cash and investments. Fund balance is simply the difference in all assets (and deferred outflows) and all liabilities (and deferred inflows). Cash and investments are simply a component of this equation.
Tagged Passions:investment

Other Governmental Funds

Tagged Passions:funding

The Town also maintains one (1) capital project fund. This fund accounts for revenues and expenditures related to the renovation and/or construction

of major capital assets.
Tagged Passions:construction, capital spending, and Capital Spending

Footnotes

Note 1 Accounting Policies: This footnote discusses the overall organization of the Town and the nature of its operations. This note also discloses

pertinent information regarding the governing body of the Town.

This footnote continues by sharing with a reader of the financial statements the significant accounting policies and principles utilized in the

preparation of the financial statements.
Tagged Passions:finance and financial report

Note 2 Reconciliation of Government-wide Financial Statements and Fund Financial Statements: This footnote provides additional detailed information

that is not already shown within the financial statements themselves, on the differences between the Town s fund level financial statements and its government-wide financial statements.
Tagged Passions:finance and financial report

Note 3 Stewardship, Compliance and Accountability: This footnote discloses the Town s procedures in establishing its annual budget and discloses

excesses of actual expenditures over appropriations for the year, if any.
Tagged Passions:funding, budget, procedure, compliance, and accountability

Note 4 Deposits and Investments: The Governmental Accounting Standards Board (GASB) issued Statement No. 40, Deposit and Investment Risk Disclosure,

an amendment of GASB Statement No. 3, which significantly changed the disclosure in the financial statements of the Town related to deposits and investments. The disclosure addresses common deposit and investment risks related to credit risk, concentration of credit risk, interest rate risk, and foreign currency risk.
Tagged Passions:finance, risk, investment, and financial report

Note 5 Receivables: This footnote discloses the Town s notes receivable activity.

Note 6 Capital Assets: This footnote discloses the Town s capital asset activity and its related accumulated depreciation for the year.

Page 12

Note 7 Long-Term Debt: This footnote discloses the Town s long-term debt activity for the year, and other information and maturities for the revenue

bonds and installment notes.
Tagged Passions:bond

Note 8 Interfund Receivables, Payables, and Transfers: This footnote discloses detailed information on the Town s interfund balances and transfers

and the purpose of these balances and transactions.

Note 9 Pension Plans: This footnote discloses the details of the Town s LGERS Pension Plan and Law Enforcement Officers Special Separation Allowance

Plan, and the Supplemental Retirement Plans.
Tagged Passions:retirement, public safety, and seniors

Note 10 Other Postemployment Benefit Plan: This footnote discloses information regarding the Town s Retiree Medical Plan.

Tagged Passions:retirement

Note 11 Other Employment Benefits This note discloses the death benefits afforded to employees of the Town.

Tagged Passions:employment

Note 12 Risk Management: This footnote discloses the Town s various risks of loss.

Tagged Passions:risk

Note 13 Commitments and Contingencies: This footnote discloses the outstanding commitments and contingencies of the Town. Certain matters disclosed

in this footnote include: litigation and grant contingencies.
Tagged Passions:grant and legal

Page 13

COMPLIANCE REPORT

Tagged Passions:compliance

Yellow Book Report: The compliance report is a report on our tests of the Town s internal controls and compliance with laws, regulations, etc. The

tests of internal controls were those we determined to be required as a basis for designing our financial statement auditing procedures. Such tests also considered the Town s compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. In accordance with the respective standards, the report is not intended to provide an opinion, but to provide a form of negative assurance as to the Town s internal controls and compliance with applicable rules and regulations.
Tagged Passions:grant, regulation, finance, contract, procedure, compliance, audit, and financial report

Single Audit Report: The second compliance report is a report on our tests of the Town s internal controls and compliance with laws, regulations,

etc. relative to certain State grant programs and the respective expenditures. Our tests were performed on the Town s major programs (as defined by the relevant State and Federal guidelines), and were not applied to each and every State grant expended by the Town. In accordance with the respective standards, we did provide an unmodified (or positive) opinion on the Town s compliance based on our audit. However, we were not required to provide an opinion on the relevant internal controls, but to provide a form of negative assurance on such controls.
Tagged Passions:grant, regulation, program, compliance, and audit

Page 14

REQUIRED COMMUNICATIONS

Tagged Passions:communications and Communications

The Auditor s Responsibility Under Government Auditing Standards and Auditing Standards Generally Accepted in the United States of America

Tagged Passions:audit

Our audit of the financial statements of the Town of Garner, North Carolina (the Town ) for the year ended June 30, 2019 was conducted in accordance

with auditing standards generally accepted in the United States of America and Government Auditing Standards issued by the Comptroller General of the United States. Those standards require we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether caused by error, fraudulent financial reporting or misappropriation of assets. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Accordingly, the audit was designed to obtain reasonable, rather than absolute, assurance about the financial statements. We believe our audit accomplishes that objective.
Tagged Passions:finance, audit, and financial report

In accordance with Government Auditing Standards, we have also performed tests of controls and compliance with laws and regulations that contribute

to the evidence supporting our opinion on the financial statements. However, they do not provide a basis for opining on the Town s internal control or compliance with laws and regulations.
Tagged Passions:regulation, finance, compliance, audit, and financial report

Accounting Policies

Management has the ultimate responsibility for the appropriateness of the accounting policies used by the Town. There are several new accounting

standards which will be required to be implemented in the coming years. These are discussed later in this document.

In considering the qualitative aspects of the Town s accounting policies, we did not identify any significant or unusual transactions or significant

accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus. The Town s policies relative to the timing of recording of transactions are consistent with GAAP and typical government organizations.
Tagged Passions:unusual

Significant Management Judgments and Accounting Estimates

Accounting estimates are an integral part of the preparation of financial statements and are based upon management s current judgment. The process

used by management encompasses their knowledge and experience about past and current events and certain assumptions about future events. Management has informed us they used all the relevant facts available to them at the
Tagged Passions:finance, events, and financial report

Page 15

time to make the best judgments about accounting estimates and we considered this information in the scope of our audit. We considered this

information and the qualitative aspects of management s calculations in evaluating the Town s significant accounting policies. Estimates significant to the financial statements include such items as: the estimated lives of depreciable assets; actuarial assumptions and concepts relative to the benefit plans; and the estimated allowance for uncollectible accounts.
Tagged Passions:finance, audit, and financial report

Financial Statement Disclosures

Tagged Passions:finance and financial report

The footnote disclosures to the financial statements are also an integral part of the financial statements. The process used by management to

accumulate the information included in the disclosures was the same process used in accumulating the financial statements, and the accounting policies described above are included in those disclosures. The overall neutrality, consistency, and clarity of the disclosures was considered as part of our audit and in forming our opinion on the financial statements.
Tagged Passions:finance, audit, and financial report

Significant Difficulties Encountered in Performing the Audit

Tagged Passions:audit

We encountered no difficulties in dealing with management relating to the performance of the audit.

Tagged Passions:performance and audit

Disagreements with Management

We encountered no disagreements with management over the application of significant accounting principles, the basis for management s judgments on

significant matters, the scope of the audit or significant disclosures to be included in the financial statements.
Tagged Passions:finance, audit, and financial report

Representation from Management

We requested written representations from management relating to the accuracy of information included in the financial statements and the

completeness and accuracy of various information requested by us, during the audit. Management provided those written representations without a problem.
Tagged Passions:finance, audit, and financial report

Management s Consultations with Other Accountants

We are not aware of any consultations management had with other accountants about accounting or auditing matters.

Tagged Passions:audit

Page 16

Significant Issues Discussed with Management

There were no significant issues discussed with management related to business conditions, plans, or strategies that may have affected the risk of

material misstatement of the financial statements. We are not aware of any consultations management had with us or other accountants about accounting or auditing matters. No major issues were discussed with management prior to our retention to perform the aforementioned audit.
Tagged Passions:business, finance, risk, audit, and financial report

Audit Adjustments

Tagged Passions:audit

During our audit of the Town s basic financial statements as of and for the year ended June 30, 2019, there were adjustments proposed to the funds of

the Town. The detail of all proposed adjustments have been provided to management and discussed with management. Those entries can be made available, if requested by the Council.
Tagged Passions:funding, finance, council, audit, and financial report

Uncorrected Misstatements

There were no uncorrected or passed misstatements.

Independence

We are independent of the Town, and all related organizations, in accordance with auditing standards promulgated by the American Institute of Public

Accountants and Government Auditing Standards, issued by the Comptroller General of the United States.
Tagged Passions:audit

Other Information in Documents Containing Audited Financial Statements

Tagged Passions:finance, audit, and financial report

We are not aware of any other documents that contain the audited basic financial statements. If such documents were to be published, we would have a

responsibility to determine that such financial information was not materially inconsistent with the audited statements of the Town.
Tagged Passions:finance, audit, and financial report

Page 17

ACCOUNTING RECOMMENDATIONS AND RELATED MATTERS

Recommendations for Improvement and Other Matters

During our audit of the financial statements as of and for the year ended June 30, 2019, we noted some areas within the accounting and internal

control systems that we believe can be improved. We have reported several findings (significant deficiencies and material weaknesses). Additionally, we noted certain items management should consider as part of its decision making process. Further, we noted other matters which we wish to communicate to you in an effort to keep the Town abreast of accounting matters that could present challenges in financial reporting in future periods. Our recommendations and proactive thoughts and communications are presented in the following paragraphs.
Tagged Passions:finance, communications, audit, Communications, and financial report

Management Letter Comments

General Ledger Maintenance

During our review of the payroll accrual, we noted several immaterial accrual accounts which were not properly cleared out throughout the year. We

recommend the Town periodically review all accrued liability accounts to ensure all liabilities are properly supported by a subsidiary ledger, or are timely clearing, and zeroing after the transaction has processed. This will help to catch small accumulations from becoming larger issues in future years.

Cybersecurity Recommendation

The Information Technology environment is characterized by rapid change. Thus, any risk assessment and control activities, as they relate to IT, need

to be monitored and reviewed on a regular basis. During our review we noted that the Town is utilizing an IT framework in evaluating its cybersecurity risk management. However, we recommend that the framework currently being used by management add a monitoring component as new IT risks can emerge, controls and other mitigations can lose effectiveness, and new procedures can be deployed to address changing risk. A regular review or monitoring component to an IT framework is a key part of an effective internal control framework and risk management process.
Tagged Passions:risk, procedure, Conservation, environment, Technology, technology, information technology, and Information Technology

Page 18

Other Matters for Communication to the Board and Management

Tagged Passions:communications and Communications

During our audit of the financial statements as of and for the year ended June 30, 2019, we noted other matters which we wish to communicate to you

in an effort to keep the Town abreast of accounting matters that could present challenges in financial reporting in future periods.
Tagged Passions:finance, audit, and financial report

1) Looking Forward: New Governmental

Accounting Standards Board (GASB) Standards and Pronouncements

As has been the case for the past 10 years, GASB has issued several other new pronouncements which will be effective in future years. The following

is a brief summary of the new standards:

a) Statement No. 84, Fiduciary Activities was issued in January 2017 and is effective for the first reporting period beginning after December 15,

2018. This statement establishes criteria for identifying fiduciary activities with a focus on: 1) whether a government is controlling the assets of the fiduciary activity; and, 2) the beneficiaries with whom a fiduciary relationship exists.

Further, this statement describes four (4) fiduciary funds that should be reported, if applicable: 1) pension and other employee benefit trust funds;

2) investment trust funds; 3) private-purpose trust funds; and, 4) custodial funds. Custodial funds generally should report fiduciary activities that are not held in a trust or equivalent arrangement that meets specific criteria.
Tagged Passions:funding, retirement, and investment

b) Statement No. 87, Leases was issued in June 2017 and is effective for the first reporting period beginning after December 15, 2019. This statement

increases the usefulness of governments financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. It establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Under this statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby enhancing the relevance and consistency of information about governments leasing activities.
Tagged Passions:recognition, finance, leasing, contract, and financial report

Definition of a Lease: A lease is defined as a contract that conveys control of the right to use another entity s nonfinancial asset (the underlying

asset) as specified in the contract for a period of time in an exchange or exchange-like transaction. Examples of nonfinancial assets include buildings, land, vehicles, and equipment. Any contract that meets this
Tagged Passions:Homebuilder, equipment, leasing, and contract

Page 19

definition should be accounted for under the leases guidance, unless specifically excluded in this statement.

Tagged Passions:leasing

Lease Term: The lease term is defined as the period during which a lessee has a non- cancelable right to use an underlying asset, plus the following

periods, if applicable:
Tagged Passions:leasing

Periods covered by a lessee s option to extend the lease if it is reasonably certain, based on all relevant factors, that the lessee will exercise

that option;
Tagged Passions:leasing

Periods covered by a lessee s option to terminate the lease if it is reasonably certain, based on all relevant factors, that the lessee will not

exercise that option;
Tagged Passions:leasing

Periods covered by a lessor s option to extend the lease if it is reasonably certain, based on all relevant factors, that the lessor will exercise

that option;
Tagged Passions:leasing

Periods covered by a lessor s option to terminate the lease if it is reasonably certain, based on all relevant factors, that the lessor will not

exercise that option.
Tagged Passions:leasing

A fiscal funding or cancellation clause should affect the lease term only when it is reasonably certain that the clause will be exercised. Lessees

and lessors should reassess the lease term only if one or more of the following occur:
Tagged Passions:funding and leasing

The lessee or lessor elects to exercise an option even though it was previously determined that it was reasonably certain that the lessee or lessor

would not exercise that option;

The lessee or lessor elects not to exercise an option even though it was previously determined that it was reasonably certain that the lessee or

lessor would exercise that option;

An event specified in the lease contract that requires an extension or termination of the lease takes place.

Tagged Passions:leasing, contract, and events

Short-Term Leases: A short-term lease is defined as a lease that, at the commencement of the lease term, has a maximum possible term under the lease

contract of 12 months (or less), including any options to extend, regardless of their probability of being exercised. Lessees and lessors should recognize short-term lease payments as outflows of resources or inflows of resources, respectively, based on the payment provisions of the lease contract.
Tagged Passions:recognition, leasing, and contract

Lessee Accounting: A lessee should recognize a lease liability and a lease asset at the commencement of the lease term, unless the lease is a

short-term lease or it transfers ownership of the underlying asset. The lease liability should be measured at the present value of payments expected to be made during the lease term (less any lease incentives). The lease asset should be measured at the amount of the initial measurement of the lease
Tagged Passions:recognition, leasing, and incentive

Page 20

liability, plus any payments made to the lessor at or before the commencement of the lease term and certain direct costs.

Tagged Passions:leasing

A lessee should reduce the lease liability as payments are made and recognize an outflow of resources (for example, expense) for interest on the

liability. The lessee should amortize the lease asset in a systematic and rational manner over the shorter of the lease term or the useful life of the underlying asset. The notes to financial statements should include a description of leasing arrangements, the amount of lease assets recognized, and a schedule of future lease payments to be made.
Tagged Passions:recognition, finance, leasing, and financial report

Lessor Accounting: A lessor should recognize a lease receivable and a deferred inflow of resources at the commencement of the lease term, with

certain exceptions for leases of assets held as investments, certain regulated leases, short-term leases, and leases that transfer ownership of the underlying asset. A lessor should not derecognize the asset underlying the lease. The lease receivable should be measured at the present value of lease payments expected to be received during the lease term. The deferred inflow of resources should be measured at the value of the lease receivable plus any payments received at or before the commencement of the lease term that relate to future periods.
Tagged Passions:recognition, leasing, and investment

A lessor should recognize interest revenue on the lease receivable and an inflow of resources (for example, revenue) from the deferred inflows of

resources in a systematic and rational manner over the term of the lease. The notes to financial statements should include a description of leasing arrangements and the total amount of inflows of resources recognized from leases.
Tagged Passions:recognition, finance, leasing, and financial report

Contracts with multiple Components and Contract Combinations: Generally, a government should account for the lease and non-lease components of a

lease as separate contracts. If a lease involves multiple underlying assets, lessees and lessors in certain cases should account for each underlying asset as a separate lease contract. To allocate the contract price to different components, lessees and lessors should use contract prices for individual components as long as they do not appear to be unreasonable based on professional judgment, or use professional judgment to determine their best estimate if there are no stated prices or if stated prices appear to be unreasonable. If determining a best estimate is not practicable, multiple components in a lease contract should be accounted for as a single lease unit. Contracts that are entered into at or near the same time with the same counterparty and that meet certain criteria should be considered part of the same lease contract and should be evaluated in accordance with the guidance for contracts with multiple components.
Tagged Passions:leasing and contract

Lease Modifications and Terminations: An amendment to a lease contract should be considered a lease modification, unless the lessee s right to use

the underlying asset
Tagged Passions:leasing and contract

Page 21

decreases, in which case it would be a partial or full lease termination. A lease termination should be accounted for by reducing the carrying values

of the lease liability and lease asset by a lessee, or the lease receivable and deferred inflows of resources by the lessor, with any difference being recognized as a gain or loss. A lease modification that does not qualify as a separate lease should be accounted for by re-measuring the lease liability and adjusting the related lease asset by a lessee and re-measuring the lease receivable and adjusting the related deferred inflows of resources by a lessor.
Tagged Passions:recognition and leasing

Subleases and Leaseback Transactions: Subleases should be treated as transactions separate from the original lease. The original lessee that becomes

the lessor in a sublease should account for the original lease and the sublease as separate transactions, as a lessee and lessor, respectively.
Tagged Passions:leasing

A transaction qualifies for sale-leaseback accounting only if it includes a sale. Otherwise, it is a borrowing. The sale and lease portions of a

transaction should be accounted for as separate sale and lease transactions, except that any difference between the carrying value of the capital asset that was sold and the net proceeds from the sale should be reported as a deferred inflow of resources or a deferred outflow of resources and recognized over the term of the lease.
Tagged Passions:recognition, leasing, and sale

A lease-leaseback transaction should be accounted for as a net transaction. The gross amounts of each portion of the transaction should be disclosed.

Tagged Passions:leasing

c) Statement 89, Accounting for Interest Cost Incurred Before the End of a Construction Period was issued in June 2018 and is effective for reporting

periods beginning after December 15, 2019. This standard eliminates the requirement/ability to capitalize construction period interest costs as part of the cost of a capital asset in enterprise funds. This standard should be applied prospectively with no restatement. This standard can be early implemented as part of fiscal year 2019.
Tagged Passions:funding and construction

d) Statement 90, Majority Equity Interests An Amendment of GASB s No. 14 and 61 was issued in August 2018, and is effective for reporting periods

beginning after December 15, 2018 (meaning June 30, 2020). Under this standard, an equity interest is: a) a financial interest in a legally separate organization by the ownership shares of the organization s stock; or, b) by otherwise having an explicit, measurable right to the net resources of the organization that is usually based on an investment of financial or capital resources by a government. An equity interest is explicit and measurable if: a) the government has a present or future claim to the net resources of the entity, and b) the method for measuring the government s share of the entity s net resources is determinable.
Tagged Passions:finance and investment

Page 22

If the interest is deemed to be an investment under GASB No. 72, paragraph 64, then the interest should be reported as an investment and measured

using the equity method. If the interest is held by a special-purpose government engaged in fiduciary activities, a fiduciary fund, or an endowment or permanent fund, then amount should be measured at fair value. If interest is 100 of entity, then it is a component unit. We do not expect this new standard to have a significant effect on the Town.
Tagged Passions:investment

e) Other Pending or Current GASB Projects. As noted by the numerous pronouncements issued by GASB over the past decade, the GASB continues to

research various projects of interest to governmental units. Subjects of note include:

Re-Examination of the Financial Reporting Model. GASB has added this project to its technical agenda to make improvements to the existing financial

reporting model (established via GASB 34). Improvements are meant to enhance the effectiveness of the model in providing information for decision-making and assessing a government s accountability. GASB anticipates a final standard expected in early 2022.
Tagged Passions:finance, financial report, and accountability

Conceptual Framework is a constant matter being looked at by GASB. Current measurement focus statements (for governmental funds) to change to

near-term financial resources measurement. May dictate a period (such as 60 days) for revenue and expenditure recognition. May expense things such as supplies and prepaid assets at acquisition. Will look into which balances (at all statement levels) are measured at acquisition and which need to be re-measured at year-end. Project placed on hold for now.
Tagged Passions:funding, recognition, and finance

Revenue and Expense Recognition is another long-term project where the GASB is working to develop a comprehensive application model for recognition

of revenues and expenses from non-exchange, exchange, and exchange-like transactions. The final standard is expected in 2023.
Tagged Passions:recognition

Conduit Debt. The GASB is looking at improving the definition of conduit debt and determining whether a liability should be reported for these

transactions. Additionally, they are reviewing what information should be disclosed by government issuers.

Summations of Thoughts Noted Above


[ See More ]
Council Map

Welcome!

Monitor up to five cities and counties and get alerts when they plan to vote on topics you're passionate about.