Hamlet, North Carolina
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CITY OF HAMLET, NORTH CAROLINA FINANCIAL STATEMENTS For the fiscal year ended June 30, 2019 CITY OF HAMLET, NORTH CAROLINA CITY OFFICIALS JUNE 30, 2019 MAYOR WILLIAM E. BAYLESS MAYOR PRO-TEM JONATHAN BUIE CITY COUNCIL DAVID LINDSEY JESSE MCQUEEN WENDY MASSAGEE EDDIE R. MARTIN OTHER OFFICIALS JONATHAN BLANTON CITY MANAGER GAIL STRICKLAND CITY CLERK JILL DICKENS FINANCE DIRECTOR T.C. MORPHIS CITY ATTORNEY CITY OF HAMLET, NORTH CAROLINA TABLE OF CONTENTS June 30, 2019 Exhibit Page No. FINANCIAL SECTION Independent Auditor’s Report ................................................................................................................ 1 Management’s Discussion and Analysis ............................................................................................... 3 Basic Financial Statements: Government-wide Financial Statements: 1 Statement of Net Position .......................................................................................................... 11 2 Statement of Activities ............................................................................................................... 13 Fund Financial Statements: 3 Balance Sheet – Governmental Funds ..................................................................................... 14 4 Statement of Revenues, Expenditures, and Changes in Fund Balance - Governmental Funds ............................................................................................................. 15 5 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities ................................ 16 6 Statement of Revenues, Expenditures, and Changes in Fund Balance - Annual Budget and Actual - General Fund ........................................................................... 17 7 Statement of Fund Net Position – Proprietary Fund ................................................................ 18 8 Statement of Revenues, Expenses and Changes in Fund Net Position - Proprietary Fund ................................................................................................................... 19 9 Statement of Cash Flows – Proprietary Fund ........................................................................... 20 Notes to the Financial Statements .................................................................................................... 22 REQUIRED SUPPLEMENTAL FINANCIAL DATA: Schedule of the Proportionate Share of Net Pension Asset Local Government Employees’ Retirement System ............................................................. 51 Schedule of Contributions – Local Government Employees’ Retirement System ................... 52 Schedule of the Proportionate Share of Net Pension Liability Firefighter & Rescue Pension ............................................................................................... 53 Schedule of Changes in Total Pension Liability - Law Enforcement Officers’ Special Separation Allowance ................................................................................ 54 Schedule of Total Pension Liability as a Percentage of Covered Payroll ................................ 55 Schedule of Changes in the Total OPEB Liability and Related Ratios ..................................... 56 COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES: Major Governmental Funds General Fund: A-1 Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual ............................................................................................................ 57 CITY OF HAMLET, NORTH CAROLINA TABLE OF CONTENTS June 30, 2019 Exhibit Page No. Enterprise Funds: B-1 Water and Sewer Fund Schedule of Revenues and Expenditures - Budget and Actual (non-gaap) ........................................................................................................................ 61 OTHER SCHEDULES C-1 Schedule of Ad Valorem Taxes Receivable .............................................................................. 64 C-2 Analysis of Current Tax Levy ..................................................................................................... 65 COMPLIANCE SECTION 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 ................................................................................... 66 FINANCIAL SECTION A S W A N D E R S O N S M I T H & W I K E PLLC Certified Public Accountants 220 East Washington Street Other Office Locations: Post Office Box 697 Seven Lakes, North Carolina Rockingham, North Carolina 28380 Gastonia, North Carolina (910) 557-1176 Statesville, North Carolina INDEPENDENT AUDITOR’S REPORT To the Honorable Mayor and Members of the City Council Hamlet, North Carolina Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Hamlet, North Carolina, as of and for the year ended June 30, 2019, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The financial statements of the City of Hamlet ABC Board were not audited in accordance with Government Auditing Standards. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall financial statement presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinion In our opinion, based on our audit and the report of the other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business- type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund Page 1 Member • American Institute of Certified Public Accountants • North Carolina Association of Certified Public Accountants www.asw-cpa.com information of the City of Hamlet, North Carolina as of June 30, 2019, and the respective changes in financial position, and, where applicable, cash flows, thereof and the budgetary comparison for the General Fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis, on pages 3 through 10, the Local Government Employees’ Retirement System’s Schedules of the Proportionate Share of the Net Pension Asset and Contributions, on pages 50 and 51, respectively, and the Firefighters’ and Rescue Squad Workers’ Pension Fund’s Schedule of the Proportionate Share of Net Pension Liability on page 52 and the Law Enforcement Officers’ Special Separation Allowance schedules of the Changes in Total Pension Liability and Total Pension Liability as a Percentage of Covered Payroll on pages 53 and 54, respectively, and Schedule of Changes in the Total OPEB Liability and Related Ratios on page 55, be presented to supplement the basic financial statements. Such information, although not a required part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic,