TOWN OF NORTH TOPSAIL BEACH, NORTH CAROLINA Report of Audit For the Fiscal Year Ended June 30, 2020 Nature’s Tranquil Beauty TOWN OF NORTH TOPSAIL BEACH, NORTH CAROLINA Table of Contents Page FINANCIAL SECTION Independent Auditor's Report ............................................................................................................... 6 Management’s Discussion and Analysis ................................................................................................ 9 Basic Financial Statements Government‐wide Financial Statements: Statement of Net Position .............................................................................................................. 18 Statement of Activities .................................................................................................................... 20 Fund Financial Statements: Balance Sheet – Governmental Funds ........................................................................................... 22 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position ........................................................................................................................................ 23 Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds ............................................................................................................................................ 24 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities .............................................. 25 Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – General Fund ................................................................................................................. 26 Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – Shoreline Protection Fund ............................................................................................ 27 Notes to the Financial Statements ................................................................................................. 28 Required Supplementary Financial Data Schedule of the Proportionate share of the Net Pension Liability (Asset) – Local Government Employees’ Retirement System ............................................................................ 56 Schedule of Contributions – Local Government Employees’ Retirement System ........................ 57 Schedule of Changes in Total Pension Liability – Law Enforcement Officers’ Special Separation Allowance.................................................................................................................. 58 Schedule of Total Pension Liability as a Percentage of Covered Payroll ....................................... 59 3 TOWN OF NORTH TOPSAIL BEACH, NORTH CAROLINA Table of Contents (Continued) Major Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – General Fund ................................................................................................................. 62 Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – Beach Nourishment Fund ............................................................................................. 66 Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – Shoreline Protection Fund ............................................................................................ 67 Other Schedules Schedule of Ad Valorem Taxes Receivable ........................................................................... 70 Analysis of Current Tax Levy ....................................................................................................... 71 COMPLIANCE SECTION 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 ................................. 74 Independent Auditor’s Report on Compliance for Each Major Federal Program and on Internal Control over Compliance; in Accordance with OMB Uniform Guidance and the State Single Audit Implementation Act ............................................ 76 Independent Auditor’s Report on Compliance for Each Major State Program and on Internal Control over Compliance; in Accordance with OMB Uniform Guidance and the State Single Audit Implementation Act ............................................................ 78 Schedule of Findings and Questioned Costs ............................................................................... 80 Corrective Action Plan ................................................................................................................. 84 Summary Schedule of Prior Audit Findings ................................................................................ 85 Schedule of Expenditures of Federal and State Awards ............................................................ 86 Notes to Schedule of Expenditures of Federal and State Awards ............................................. 87 4 FINANCIAL SECTION 5 PO Box 160 251 Washington Street Whiteville NC 28472 P. 910‐207‐6564 F. 910‐207‐6519 Independent Auditor's Report To the Honorable Mayor And Members of Board of Aldermen North Topsail Beach, North Carolina Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Town of North Topsail Beach, North Carolina, as of and for the year ended June 30, 2020, and the related notes to the financial statements, which collectively comprise the Town’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. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall 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. 6 Opinions In our opinion, based on our audit, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Town of North Topsail Beach, North Carolina as of June 30, 2020, and the respective changes in financial position and the respective budgetary comparison for the General Fund and Shoreline Protection 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, the Local Government Employees’ Retirement System’s Schedules of the Proportionate Share of the Net Pension Liability and Contributions, 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 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, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing