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HomeMy WebLinkAboutAUDIT 06-30-1992 Peat Marwick Certified Public Accountants TOWN OF NORTH ANDOVER, MASSACHUSETTS Schedule of Federal Financial Assistance and Independent Auditors' Reports Requffed under the Single Audit Act of 1984 Year Ended June 30, t992 TOWN OF NORTH ANDOVER, MASSACHUSETTS Schedule of Federal Financial Assistance and Independent Auditors' Reports Required under the Single Audit Act of 1984 Year Ended June 30, 1992 Table of Contents Independent Auditors' Report on Schedule of Federal Financial Assistance Exhibit I Schedule of Federal Financial Assistance Exhibit II Independent Auditors' Report on the Internal Control Structure in Accordance with Government Auditing Standards Exhibit IH Independent Auditors' Compliance Report Based on an Audit of General Purpose Financial Statements Performed in Accordance with Government Auditing Standards Exhibit IV Independent Auditors' Report on Compliance with the General Requirements Exhibit V Independent Auditors' Report on Compliance with Specific Requirements Applicable to Nonmajor Federal Financial Assistance Program Transactions Exhibit VI Independent Auditors' Report on the Internal Control Structure Used in Administering Federal Financial Assistance Programs as Required by the Single Audit Act Exhibit VII Status of Prior Year Findings Exhibit vm Peat Marwick Certified Public Accountants One Boston Place Boston, MA 02108 Telephone 617 723 7700 TeJex 617 443 0082 PMMBOST Exhibit I Telecopler 617 723 6864 INDEPENDENT AUDITORS' REPORT ON SUPPLEMENTARY INFORMATION - SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE The Board of Selectmen Town of North Andover, Massachusetts: We have audited the general purpose financial statements of the Town of North Andover, Massachusetts, for the year ended June 30, 1992, and have issued our report thereon dated October 16, 1992. These general purpose financial statements are the responsibility of the Town's management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and 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 general purpose financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the general purpose 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. We believe that. our audit provides a reasonable basis for our opinion. Our audit was made for the purpose of forming an opinion on the general purpose financial statements of the Town of North Andover, Massachusetts, taken as a whole. The accompanying Schedule of Federal Financial Assistance is presented for purposes of additional analysis and is not a required part of the general purpose financial statements. The information in that schedule has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, in our opinion, is fairly stated in all material respects in relation to the general purpose financial statements taken as a whole. October 16, 1992 Member Firm of Klynveld Peat Marwick Goerdeler I-1 TOWN OF NORTH ANDOVER, MASSACHUSETTS Exhibit !I Schedule of Federal Financial Assistance June 30,1992 Federal Grantor/Pass-Through Grantor/ Program Title CFDA Fund Balance Revenue Reco_maized luly 1. 1991 Federal State Other U.$, Department of Agriculture: Passed-through State Department of Education: National School Lunch Program (includes state and local expenditures of $354,791) 10.555 $ 6,749 72,123 20,653 326,796 Food Distribution 10.550 31,560 U.S, D~_ artment of Housing and Urban Devel~_ ment: Passed-through Civil Defense Agency: Emergency Boat Ramp 14.218 17,928 1,170 U.,S. Federal Emergency Management: Passed-through State Emergency Management Agency: Federal Emergency Management Assistance - (Hurricane Bob) (includes state expenditures of $8,796) 83.516 45,577 8,796 I,I,S. Deparmaent of Education: Passed-through State Deparmaent of Education: Education of Handicapped Children 84.009 3325 13,500 7,070 107,574 Educationally Deprived Children - Chapter 1 84.010 Assistance for Education of Handicapped Children: PL 94-142 Entitlement Early Childhood - (Project Entry) Project Malns~.am Building - Based Support Project Inform A New Approach Project Inclusion 84.027 144,670 470 15,625 10,094 1,440 246 3,000 1,000 1,000 5,000 15.060 11.810 185.795 Improving School Programs - Chapter 2 84.151 11,670 State Grants for Strengthening the Skills of Teachers 84.164 926 7,770 Drug Free ARiance Program 84.186 6,586 15,997 Direct Program: School Assistance in Federally Affected Areas 84.041 53.437 479 Total 107,931 492,045 29,449 .327,966 See accompanying notes to schedule of federal financial assistance. Expenditures 426,914 31,560 3,585 54,373 16,925 106,943 128,697 10,946 11,534 3,246 1,000 3,706 14.974 174.103 11,670 4,686 22,300 853,059 F~dBalance June30.1~2 (593) 15,513 7,701 15,973 5,149 1,000 1,294 86 23.502 4,010 283 104,332 H~I Exhibit 11 (Continued) TOWN OF NORTH ANDOVER, MASSACHUSETTS Notes to Schedule of Federal Financial Assistance Year ended June 30, 1992 (1) Definition of Reporting Entity The accompanying schedule of federal financial assistance presents the activity of all federal financial assistance programs of the Town of North Andover, Massachusetts. All federal financial assistance received directly from federal agencies as well as federal financial assistance passed through other government agencies is included on the schedule. (2) Summary of Significant Accounting Policies The accounting and reporting policies of the Town of North Andover, Massachusetts, are set forth below: (a) Basis of Presentation The accompanying schedule of federal financial assistance is presented using the modified accrual basis of accounting. (b) School Lunch Program The Town accounts for local, state and federal expenditures of the National School Lunch program in one combined fund. Federal reimbursements for meals provided during 1992 was $72,123. (c) Food Distribution Program Non-cash contributions of commodities under the Food Distribution program are received under a State distribution formula and are valued at federally published wholesale prices for purposes of this schedule. Such commodities are not recorded in the financial records, although memorandum records are maintained. Peat Marwick Certified Public Accountants One Boston Place Boston, MA 02108 Telephone 617 723 7700 Telex 617 443 0082 PMMBOST Exhibit llI Telecopier 617 723 6864 INDEPENDENT AUDITORS' REPORT ON THE,, INTERNAL CONTROl, STRUCTURE IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS The Board of Selectmen Town of North Andover, Massachusetts: We have audited the general purpose financial statements of the Town of North Andover, Massachusetts, as of and for the year ended June 30, 1992, and have issued our report thereon dated October 16, 1992. We conducted our audit in accordance with generally accepted auditing standards and 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 general purpose fmancial statements are free of material misstatement. In planning and performing our audit of the general purpose financial statements of the Town of North Andover, Massachusetts, for the year ended June 30, 1992, we considered its internal control structure in order to determine our auditing procedures for the purpose of expressing our opinion on the general purpose f'mancial statements and not to provide assurance on the internal control structure. The management of the Town of North Andover, Massachusetts, is responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of internal control structure policies and procedures. The objectives of an internal control structure are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of general purpose financial statements in accordance with generally accepted accounting principles. Because of inherent limitations in any internal control structure, errors or irregularities may nevertheless occur and not be detected. Also, projection of any evaluation of the structure to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate. For the purpose of this report, we have classified the significant internal control structure policies and procedures in the following categories: Accounting Control · Revenue/receipts ° Purchases/disbursements · Payroll · External fmancial reporting Member Firm of Klynveld Peat Marwick Goerdeler III- 1 ~Pealt Marwick Exhibit II1 (Continued) The Board of Selectmen Town of North Andover, Massachusetts For all of the internal control structure categories listed above, we obtained an understanding of the design of relevant policies and procedures and determined whether they have been placed in operation and we assessed control risk. Our consideration of the internal control structure would not necessarily disclose all matters in the internal control structure that might be material weaknesses under standards established by the American Institute of Certified Public Accountants. A material weakness is a condition in which the design or operation of one or more of the internal control structure elements does not reduce to a relatively low level the risk that errors or irregularities in amounts that would 'be material in relation to the general purpose financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control structure and its operation that we consider to be material weaknesses as defined above. However, we noted certain matters involving the internal control structure and its operation that we have reported to the management of the Town of North Andover, Massachusetts, in a separate letter dated October 16, 1992. This report is intended for the information of Town officials and federal and state agencies that have provided federal financial assistance to the Town. This restriction is not intended to limit the distribution of this report, which is a matter of public record. October 16, 1992 III - 2 Peat Marwick Certified Public Accountants One Boston Place Boston, MA 02108 Telephone 617 723 7700 Telex 617 443 0082 PMMBOST Exhibit IV Telecopier 617 723 6864 INDEPENDENT AUDITORS' COMPLIANCE REPORT BASED ON AN AUDIT OF GENERAL PURPOSE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS The Board of Selectmen Town of North Andover, Massachusetts: We have audited the general purpose financial statements of the Town of North Andover, Massachusetts, as of and for the year ended June 30, 1992, and have issued our report thereon dated October 16, 1992. We conducted our audit in accordance with generally accepted auditing standards and 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 general purpose f'mancial statements are free of material misstatement. Compliance with laws, regulations, contracts and grants applicable to the Town of North Andover, Massachusetts, is the responsibility of the management of the Town. As part of obtaining reasonable assurance about whether the general purpose financial statements are free of material misstatement, we performed tests of the Town's compliance with certain provisions of laws, regulations, contracts and grants. However, the objective of our audit of the general purpose financial statements was not to provide an opinion on overall compliance with such provisions. Accordingly, we do not express such an opinion. The results of our tests indicate that, with respect to the items tested, the Town of North Andover, Massachusetts, complied, in all material respects, with the provisions referred to in the preceding paragraph. With respect to items not tested, nothing came to our attention that caused us to believe that the Town had not complied, in all material respects, with those provisions. This report is intended for the information of Town officials and federal and state agencies that have provided federal financial assistance to the Town. This restriction is not intended to limit the distribution of this report, which is a matter of public record. October 16, 1992 Member Firm of Klynveld Peat Marwick Goerdeler IV-1 Peat Marwick Certified Public Accountants One Boston Place Boston, MA 02108 Telephone 617 723 7700 Telex 617 443 0082 PMMBOST Exhibit V Telecopier 617 723 6864 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH THE GENERAL REQUIREMENTS The Board of Selectmen Town of North Andover, Massachusetts: We have audited the general purpose financial statements of the Town of North Andover, Massachusetts, as of and for the year ended June 30, 1992, and have issued our report thereon dated October 16, 1992. We have applied procedures to test the Town of North Andover, Massachusetts' compliance with the following requirements applicable to its federal financial assistance programs, which are identified in the Schedule of Federal Financial Assistance, for the year ended June 30, 1992: · Political activity · Davis-Bacon Act · Civil rights ° Cash management · Relocation assistance and real property management · Federal financial reports · Drug-Free Workplace Act · Allowable costs/cost principles · Administrative requirements Our procedures were limited to the applicable procedures described in the Office of Management and Budget's Compliance Supplement for Single Audits of State and Local Governments. Our procedures were substantially less in scope than an audit, the objective of which is the expression of an opinion on the Town of North Andover, Massachusetts' compliance with the requirements listed in the preceding paragraph. Accordingly, we do not express such an opinion. With respect to the items tested, the results of those procedures disclosed no material instances of noncompliance with the requirements listed in the second paragraph of this report. With respect to items not tested, nothing came to our attention that caused us to believe that the Town of North Andover, Massachusetts, had not complied, in all material respects, with those requirements. This report is intended for the information of Town officials and federal and state agencies that have provided federal financial assistance to the Town. This restriction is not intended to limit the distribution of this report, which is a matter of public record. October 16, 1992 Member Firm of Klynveld Peat Marwick Goerdeler V-1 Peat Marwick Certified Public Accountants One Boston Place Boston, MA 02108 Telephone 617 723 7700 Telex 617 443 0082 PMMBOST Exhibit VI Telecopier 617 723 6864 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH SPECIFIC REOUIREMENTS APPLICABLE TO. NONMAJOR FEDERAL FINANCIAL ASSISTANCE PROGRAM TRANSACTIONS The Board of Selectmen Town of North Andover, Massachusetts: We have audited the general purpose financial statements of the Town of North Andover, Massachusetts, as of and for the year ended June 30, 1992, and have issued our report thereon dated October 16, 1992. In connection with our audit of the general purpose financial statements of the Town of North Andover, Massachusetts, and with our consideration of the Town's internal control structure used to administer federal financial assistance programs, as required by Office of Management and Budget Circular A-128, "Audits of State and Local Governments," we selected certain transactions applicable to certain nonmajor federal financial assistance programs for the year ended June 30, 1992. As required by OMB Circular A-128, we have performed auditing procedures to test compliance with the requirements governing types of services allowed or unallowed; eligibility; and all other special tests and provisions that are applicable to those transactions. Our procedures were substantially less in scope than an audit, the objective of which is the expression of an opinion on the Town's compliance with these requirements. Accordingly, we do not express such an opinion. With respect to the items tested, the resuRs of those procedures disclosed no material instances of noncompliance with the requirements listed in the preceding paragraph. With respect to items not tested, nothing came to our attention that caused us to believe that the Town of North Andover, Massachusetts, had not complied, in all material respects, with those requirements. This report is intended for the information of Town officials and federal and state agencies that have provided federal financial assistance to the Town. This restriction is not intended to limit the distribution of this report, which is a matter of public record. October 16, 1992 Member Firm of Klynveld Peat Marwick Goerdeler VI- 1 Peat Marwick Certified Public Accountants One Boston Place Boston, MA 02108 Telephone 617 723 7700 Telex 617 443 0082 PMMBOST Exhibit VII Telecopier 617 723 6864 INDEPENDENT AUDITORS' REPORT ON THE INTERNAL CONTROL STRUCTURE USED IN ADMINISTERING FEDERAL FINANCIAL ASSISTANCE PROGRAMS AS REQUIRED BY THE SINGLE AUDIT ACT The Board of Selectmen Town of North Andover, Massachusetts: We have audited the general purpose financial statements of the Town of North Andover, Massachusetts, as of and for the year ended June 30, 1992, and have issued our report thereon dated October 16, 1992. We conducted our audit in accordance with generally accepted auditing standards; Government Auditing Standarck issued by the Comptroller General of the United States; and Office of Management and Budget Circular A-128, "Audits of State and Local Governments." Those standards and OMB Circular A-128 require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement and about whether the Town of North Andover, Massachusetts, complied with laws and regulations, noncompliance with which would be material to a federal financial assistance program. In planning and performing our audit for the year ended June 30, 1992, we considered the Town's internal control structure in order to determine our auditing procedures for the purpose of expressing our opinion on the Town's general purpose financial statements and to report on the internal control structure in accordance with OMB Circular A-128. This report addresses our consideration of internal control structure policies and procedures relevant to compliance with requirements applicable to federal financial assistance programs. We have addressed internal control structure policies and procedures relevant to our audit of the general purpose financial statements in a separate report dated October 16, 1992. The management of the Town of North Andover, Massachusetts, is responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of internal control structure policies and procedures. The objectives of an internal control structure are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of general purpose financial statements in accordance with generally accepted accounting principles, and that federal financial assistance programs are managed in compliance with applicable laws and regulations. Because of inherent limitations in any internal control structure, errors, irregularities, or instances of noncompliance may nevertheless occur and not be detected. Also projection of any evaluation of the structure to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate. Member Firm of Klynveld Peal Marwick GoerOeler VII- 1 ~Peat Marwick Exhibit VI] (Continued) The Board of Selectmen Town of North Andover, Massachusetts For the purpose of this report, we have classified the significant internal control structure policies and procedures used in administering, federal financial assistance programs into the following categories: Accounting Controls ° Revenue/receipts ° Purchasing/disbursements · Payroll · External fmancial reporting General Requirements · Political activity ° Davis-Bacon Act · Civil rights ° Cash management · Relocation assistance and real property management · Federal financial reports ° Drag-Free Workplace Act · Allowable costs/cost principles · Administrative requirements Specific Requirements · Types of services · Eligibility · Matching/level of effort · Reporting · Cost allocation · Special requirements, if any · Monitoring subrecipients Claims for Advances and Reimbursements Amounts Claimed or Used for Matching For all of the internal control structure categories listed above, we obtained an understanding of the design of relevant policies and procedures and determined whether they have been placed in operation, and we assessed control risk. During the year ended June 30, 1992, the Town of North Andover, Massachusetts had no major federal financial assistance programs and expended 56 percent of its total federal financial assistance under the following nonmajor federal financial assistance programs: "Educationally Deprived Children - Chapter 1 (84.010) and Assistance for Education of Handicapped Children (84.027)". We performed tests of controls, as required by OMB Circular A-128, to evaluate the effectiveness of the design and operation of internal control structure policies and procedures that we considered relevant to preventing or detecting material noncompliance with specific requirements, general requirements, and requirements governing claims for advances and reimbursements, and amounts claimed or used for matching that are applicable to the aforementioned nonmajor programs. Our procedures were less in scope than would be necessary to render an opinion on these internal control structure policies and procedures. Accordingly, we do not express such an opinion. VII - 2 · ~lpeat Marwick Exhibit VI] (Continued) The Board of Selectmen Town of North Andover, Massachusetts Our consideration of the internal control structure policies and procedures used in administering federal financial assistance would not necessarily disclose all matters in the internal control structure that might be material weaknesses under standards established by the American Institute of Certified Public Accountants. A material weakness is a condition in which the design or operation of one or more of the internal control structure elements does not reduce to a relatively low level the risk that noncompliance with laws and regulations that would be material to a federal financial assistance program may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control structure and its operation that we consider to be material weaknesses as defined above. However, we noted certain matters involving the internal control structure and its operation that we have reported to the management of the Town of North Andover, Massachusetts, in a separate letter dated October 16, 1992. This report is intended for the information of Town officials and federal and state agencies that have provided assistance to the Town. This restriction is not intended to limit the distribution of this report, which is a matter of public record. October 16, 1992 KPMG Peat Marwick Certified Public Accountants TOWN OF NORTH ANDOVER, MASSACHUSETTS Schedule of Federal Financial Assistance and Independent Auditors' Reports Required under the Sh~gle Audit Act of 1954 Year Ended June 30, t992 Peat Marwick Certified Public Accountants TOWN OF NORTH ANDOVER, MASSACHUSETTS Schedule of Federal Financial Assistm~ce and Independent Auditors' Reports Required under the SMgle Audit Act of 1984 Year Ended June 30, t992 TOWN OF NORTH ANDOVER, MASSACHUSETTS Schedule of Federal Financial Assistance and Independent Auditors' Reports Required under the Single Audit Act of 1984 Year Ended June 30, 1992 Table of Contents Independent Auditors' Report on Schedule of Federal Financial Assistance Exhibit I Schedule of Federal Financial Assistance Exhibit II Independent Auditors' Report on the Internal Control Structure in Accordance with Government Auditing Standards Exhibit 1II Independent Auditors' Compliance Report Based on an Audit of General Purpose Financial Statements Performed in Accordance with Government Auditing Standards Exhibit IV Independent Auditors' Report on Compliance with the General Requirements Exhibit V Independent Auditors' Report on Compliance with Specific Requirements Applicable to Nonmajor Federal Financial Assistance Program Transactions Exhibit VI Independent Auditors' Report on the Internal Control Structure Used in Administering Federal Financial Assistance Programs as Required by the Single Audit Act Exhibit VII Status of Prior Year Findings Exhibit vm Peat Marwick Certified Public Accountants One Boston Place Boston, MA 02108 Telephone 617 723 7700 Telex 617 443 0082 PMMBOST Exhibit I TelecopJer 617 723 6864 INDEPENDENT AUDITORS' REPORT ON SUPPLEMENTARY INFORMATION - SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE The Board of Selectmen Town of North Andover, Massachusetts: We have audited the general purpose financial statements of the Town of North Andover, Massachusetts, for the year ended June 30, 1992, and have issued our report thereon dated October 16, 1992. These general purpose financial statements are the responsibility of the Town's management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and 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 general purpose financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the general purpose 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. We believe that our audit provides a reasonable basis for our opinion. Our audit was made for the purpose of forming an opinion on the general purpose financial statements of the Town of North Andover, Massachusetts, taken as a whole. The accompanying Schedule of Federal Financial Assistance is presented for purposes of additional analysis and is not a required part of the general purpose financial statements. The information in that schedule has been subjected to the auditing procedures applied in the audit of the general purpose fmancial statements and, in our opinion, is fairly stated in all material respects in relation to the general purpose financial statements taken as a whole. October 16, 1992 Member Firm of Klynveld Peat Marwick Goerdeler I-1 TOWN OF NORTH ANDOVER, MASSACHUSETTS Exhibit II Schedule of Federal Financial Assistance June 30,1992 Federal Grantor/Pass-Through Grantor/ Program Title CFDA Number Fund Balance Revenue Recognized July 1. 1991 Federal State Other U.S. Department of Agriculture: Passed-through State Department of Education: National School Lunch Program (includes state and local expenditures of $354,791) 10.555 $ 6,749 72,123 20,653 326,796 Food Distribution 10.550 31,560 U-S. Department of Housing and Urban Development: Passed-through Civil Defense Agency: Emergency Boat Ramp 14.218 17,928 1,170 U.S. Fe~leral Emergency Management: Passed-through State Emergency Management Agency: Federal Emergency Management Assistance - (Hurricane Bob) (includes state expenditures of $8,796) 83.516 45,577 8,796 U,$, Deparlment of Education: Passed-through State Department of Education: Education of Handicapped Children 84.009 3,425 13,500 Educationally Deprived Children - Chapter 1 84.010 7,070 107,574 Ass/st~ce for Education of Handicapped Children: PL 94-142 Entitlement Early Childhood - (Project Enuy) Project Mainstream Building - Based Support Project Inform A New Approach Project Inelnsion 84.027 144,670 470 15,625 16,094 1,440 246 3,000 1,000 1,000 5,000 15.060 11.810 185.795 Improving School Programs - Chapter 2 84.151 11,670 State Grants for Strengthening the Skills of Teachers 84.164 926 7,770 6,586 15,997 Drag Free Alliance Program 84.186 Direct Program: School Assistance in Federally Affected Areas 84.041 53.437 479 Total 107,931 492,045 29,449 327,966 See accompanying notes to schedule of federal financial assistance. Expenditures 426,914 31,560 3,585 54,373 16,925 106,943 128,697 10,946 11,534 3,246 1,000 3,706 14.974 174.103 11,670 4,686 22,300 853,059 Fund Balance (593) 15,513 7,701 15,973 5,149 1,000 1,294 86 23.502 4,010 283 53.916 104,332 H-I TOWN OF NORTH ANDOVER, MASSACHUSETTS Notes to Schedule of Federal Financial Assistance Year ended June 30, 1992 Exhibit II (Continued) (1) Definition of Reporting Entity The accompanying schedule of federal financial assistance presents the activity of all federal financial assistance programs of the Town of North Andover, Massachusetts. All federal financial assistance received directly from federal agencies as well as federal financial assistance passed through other government agencies is included on the schedule. (2) Summary of Significant Accounting Policies The accounting and reporting policies of the Town of North Andover, Massachusetts, are set forth below: (a) Basis of Presentation The accompanying schedule of federal financial assistance is presented using the modified accrual basis of accounting. (b) School Lunch Program The Town accounts for local, state and federal expenditures of the National School Lunch program in one combined fund. Federal reimbursements for meals provided during 1992 was $72,123. (c) Food Distribution Program Non-cash contributions of commodities under the Food Distribution program are received under a State distribution formula and are valued at federally published wholesale prices for purposes of this schedule. Such commodities are not recorded in the financial records, although memorandum records are maintained. 1I-2 Peat Marwick Certified Public Accountants One Boston Place Boston, MA 02108 Telephone 617 723 7700 Telex 617 443 0082 PMMBOST Exhibit 1II Telecopier 617 723 6864 INDEPENDENT AUDITORS' REPORT ON THE INTERNAL CONTROl, STRUCTURE IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS The Board of Selectmen Town of North Andover, Massachusetts: We have audited the general purpose financial statements of the Town of North Andover, Massachusetts, as of and for the year ended June 30, 1992, and have issued our report thereon dated October 16, 1992. We conducted our audit in accordance with generally accepted auditing standards and 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 general purpose financial statements are free of material misstatement. In planning and performing our audit of the general purpose financial statements of the Town of North Andover, Massachusetts, for the year ended June 30, 1992, we considered its internal control structure in order to determine our auditing procedures for the purpose of expressing our opinion on the general purpose financial statements and not to provide assurance on the internal control structure. The management of the Town of North Andover, Massachusetts, is responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of internal control structure policies and procedures. The objectives of an internal control structure are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of general purpose financial statements in accordance with generally accepted accounting principles. Because of inherent limitations in any internal control structure, errors or irregularities may nevertheless occur and not be detected. Also, projection of any evaluation of the structure to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate. For the purpose of this report, we have classified the significant internal control structure policies and procedures in the following categories: Accountine Control · Revenue/receipts · Purchases/disbursements · Payroll · External fmancial reporting lllll Mombor Firm of Klynveld Peat Marwick Goerdeler IH- 1 ~Peat Marwick Exhibit llI (Continued) The Board of Selectmen Town of North Andover, Massachusetts For all of the internal control structure categories listed above, we obtained an understanding of the design of relevant policies and procedures and determined whether they have been placed in operation and we assessed contrOl risk. Our consideration of the internal control structure would not necessarily disclose all matters in the internal control structure that might be material weaknesses under standards established by the American Institute of Certified Public Accountants. A material weakness is a condition in which the design or operation of one or more of the internal control structure elements does not reduce to a relatively low level the risk that errors or irregularities in amounts that would 'be material in relation to the general purpose financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control structure and its operation that we consider to be material weaknesses as defined above. However, we noted certain matters involving the internal control structure and its operation that we have reported to the management of the Town of North Andover, Massachusetts, in a separate letter dated October 16, 1992. This report is intended for the information of Town officials and federal and state agencies that have provided federal financial assistance to the Town. This restriction is not intended to limit the distribution of this report, which is a matter of public record. October 16, 1992 III - 2 Peat Marwick Certified Public Accountants One Boston Place Boston, MA 02108 Telephone 617 723 7700 Telex 617 443 0082 PMMBOST Exhibit IV Telecopier 617 723 6864 INDEPENDENT AUDITORS' COMPLIANCE REPORT BASED ON AN AUDIT OF GENERAL PURPOSE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS The Board of Selectmen Town of North Andover, Massachusetts: We have audited the general purpose financial statements of the Town of North Andover, Massachusetts, as of and for the year ended June 30, 1992, and have issued our report thereon dated October 16, 1992. We conducted our audit in accordance with generally accepted auditing standards and 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 general purpose financial statements are free of material misstatement. Compliance with laws, regulations, contracts and grants applicable to the Town of North Andover, Massachusetts, is the responsibility of the management of the Town. As part of obtaining reasonable assurance about whether the general purpose financial statements are free of material misstatement, we performed tests of the Town's compliance with certain provisions of laws, regulations, contracts and grants. However, the objective of our audit of the general purpose financial statements was not to provide an opinion on overall compliance with such provisions. Accordingly, we do not express such an opinion. The results of our tests indicate that, with respect to the items tested, the Town of North Andover, Massachusetts, complied, in all material respects, with the provisions referred to in the preceding paragraph. With respect to items not tested, nothing came to our attention that caused us to believe that the Town had not complied, in allm aterial respects, with those provisions. This report is intended for the information of Town officials and federal and state agencies that have provided federal financial assistance to the Town. This restriction is not intended to limit the distribution of this report, which is a matter of public record. October 16, 1992 Member Firm of Klynveld Peat Marwick Goerdeler IV-1 Peat Marwick Certified Public Accountants One Boston Place Boston, MA 02108 Telephone 617 723 7700 Telex 617 443 0082 PMMBOST Exhibit V Telecopier 617 723 6864 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH THE GENERAL REQUIREMENTS The Board of Selectmen Town of North Andover, Massachusetts: We have audited the general purpose financial statements of the Town of North Andover, Massachusetts, as of and for the year ended June 30, 1992, and have issued our report thereon dated October 16, 1992. We have applied procedures to test the Town of North Andover, Massachusetts' compliance with the following requirements applicable to its federal financial assistance programs, which are identified in the Schedule of Federal Financial Assistance, for the year ended June 30, 1992: · Political activity · Davis-Bacon Act · Civil rights · Cash management · Relocation assistance and real property management ° Federal financial reports ° Drug-Free Workplace Act · Allowable costs/cost principles · Administrative requirements Our procedures were limited to the applicable procedures described in the Office of Management and Budget's Compliance Supplement for'Single Audits of State and Local Governmenr~. Our procedures were substantially less in scope than an audit, the objective of which is the expression of an opinion on the Town of North Andover, Massachusetts' compliance with the requirements listed in the preceding paragraph. Accordingly, we do not express such an opinion. With respect to the items tested, the results of those procedures disclosed no material instances of noncompliance with the requirements listed in the second paragraph of this report. With respect to items not tested, nothing came to our attention that caused us to believe that the Town of North Andover, Massachusetts, had not complied, in all material respects, with those requirements. This report is intended for the information of Town officials and federal and state agencies that have provided federal financial assistance to the Town. This restriction is not intended to limit the distribution of this report, which is a matter of public record. October 16, 1992 Klynveld Peat Marwick Goerdeler V-1 Peat Marwick Certified Public Accountants One Boston Place Boston, MA 02108 Telephone 617 723 7700 Telex 617 443 0082 PMMBOST Exhibit VI Telecopier 617 723 6864 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH SPECIFIC REOUIREMENTS APPLICABLE TO NONMAJOR FEDERAl, FINANCIAL ASSISTANCE PROGRAM TRANSACTIONS The Board of Selectmen Town of North Andover, Massachusetts: We have audited the general purpose financial statements of the Town of North Andover, Massachusetts, as of and for the year ended June 30, 1992, and have issued our report thereon dated October 16, 1992. In connection with our audit of the general purpose financial statements of the Town of North Andover, Massachusetts, and with our consideration of the Town's internal control structure used to administer federal financial assistance programs, as required by Office of Management and Budget Circular A-128, "Audits of State and Local Governments," we selected certain transactions applicable to certain nonmajor federal financial assistance programs for the year ended June 30, 1992. As required by OMB Circular A-128, we have performed auditing procedures to test compliance with the requirements governing types of services allowed or unallowed; eligibility; and all other special tests and provisions that are applicable to those transactions. Our procedures were substantially less in scope than an audit, the objective of which is the expression of an opinion on the Town's compliance with these requirements. Accordingly, we do not express such an opinion. With respect to the items tested, the results of those procedures disclosed no material instances of noncompliance with the requirements listed in the preceding paragraph. With respect to items not tested, nothing came to our attention that caused us to believe that the Town of North Andover, Massachusetts, had not complied, in all material respects, with those requirements. This report is intended for the information of Town officials and federal and state agencies that have provided federal financial assistance to the Town. This restriction is not intended to limit the distribution of this report, which is a matter of public record. October 16, 1992 lull Member Firm of Klynveld Peat Marwick Goerdeler VI - 1 Peat Marwick Certified Public Accountants One Boston Place Boston, MA 02108 Telephone 617 723 7700 Telex 617 443 0082 PMMBOST Exhibit VI] Telecopier 617 723 6864 INDEPENDENT AUDITORS' REPORT ON THE INTERNAL CONTROL STRUCTURE USED IN ADMINISTERING FEDERAL FINANCIAL ASSISTANCE PROGRAMS AS REQUIRED BY THE SINGLE AUDIT ACT The Board of Selectmen Town of North Andover, Massachusetts: We have audited the general purpose financial statements of the Town of North Andover, Massachusetts, as of and for the year ended June 30, 1992, and have issued our report thereon dated October 16, 1992. We conducted our audit in accordance with generally accepted auditing standards; Government Auditing Standards issued by the Comptroller General of the United States; and Office of Management and Budget Circular A-128, "Audits of State and Local Governments." Those standards and OMB Circular A-128 require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement and about whether the Town of North Andover, Massachusetts, complied with laws and regulations, noncompliance with which would be material to a federal financial assistance program. In planning and performing our audit for the year ended June 30, 1992, we considered the Town's internal control structure in order to determine our auditing procedures for the purpose of expressing our opinion on the Town's general purpose financial statements and to report on the internal control structure in accordance with OMB Circular A-128. This report addresses our consideration of internal control structure policies and procedures relevant to compliance with requirements applicable to federal financial assistance programs. We have addressed internal control structure policies and procedures relevant to our audit of the general purpose financial statements in a separate report dated October 16, 1992. The management of the Town of North Andover, Massachusetts, is responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of internal control structure policies and procedures. The objectives of an internal control structure are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, that transactions are executed in accordance with management's authorization and recorded properly to permit the Preparation of general purpose fmancial statements in accordance with generally accepted accounting principles, and that federal financial assistance programs are managed in compliance with applicable laws and regulations. Because of inherent limitations in any internal control structure, errors, irregularities, or instances of noncompliance may nevertheless occur and not be detected. Also projection of any evaluation of the structure to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate. Firm o' Klynveld Peat Marwick Goerdeler VII- 1 ~Peat Marwick Exhibit VII (Continued) The Board of Selectmen Town of North Andover, Massachusetts For the purpose of this report, we have classified the significant internal control structure policies and procedures used in administering, federal £mancial assistance programs into the following categories: Accounting Controls · Revenue/receipts · Purchasing/disbursements · Payroll ° External fmancial reporting General Requirements · Political activity ° Davis-Bacon Act · Civil rights · Cash management · Relocation assistance and real property management · Federal financial reports · Drag-Free Workplace Act · Allowable costs/cost principles ° Administrative requirements Specific Requirements · Types of services · Eligibility · Matching/level of effort · Reporting · Cost allocation · Special requirements, if any · Monitoring subrecipients Claims for Advances and Reimbursements Amounts Claimed or Used for Matching For all of the internal control structure categories listed above, we obtained an understanding of the design of relevant policies and procedures and determined whether they have been placed in operation, and we assessed control risk. During the year ended June 30, 1992, the Town of North Andover, Massachusetts had no major federal financial assistance programs and expended 56 percent of its total federal financial assistance under the following nonmajor federal financial assistance programs: "Educationally Deprived Children - Chapter 1 (84.010) and Assistance for Education of Handicapped Children (84.027)". We performed tests of controls, as required by OMB Circular A-128, to evaluate the effectiveness of the design and operation of internal control structure policies and procedures that we considered relevant to preventing or detecting material noncompliance with specific requirements, general requirements, and requirements governing claims for advances and reimbursements, and amounts claimed or used for matching that are applicable to the aforementioned nonmajor programs. Our procedures were less in scope than would be necessary to render an opinion on these internal control structure policies and procedures. Accordingly, we do not express such an opinion. VII - 2 ~Peat Marwick Exhibit VQ (Continued) The Board of Selectmen Town of North Andover, Massachusetts Our consideration of the internal control structure policies and procedures used in administering federal financial assistance would not necessarily disclose all matters in the internal control structure that might be material weaknesses under standards established by the American Institute of Certified Public Accountants. A material weakness is a condition in which the design or operation of one or more of the internal control structure elements does not reduce to a relatively low level the risk that noncompliance with laws and regulations that would be material to a federal financial assistance program may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control structure and its operation that we consider to be material weaknesses as def'med above. However, we noted certain matters involving the internal control structure and its operation that we have reported to the management of the Town of North Andover, Massachusetts, in a separate letter dated October 16, 1992. This report is intended for the information of Town officials and federal and state agencies that have provided assistance to the Town. This restriction is not intended to limit the distribution of this report, which is a matter of public record. October 16, 1992 VII - 3 Exhibit V~I STATUS OF PRIOR YEAR FINDINGS There are no material known but uncorrected findings from prior years' single audit reports.