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Home My WebLink AboutAUDIT 06-30-1985TOWN OF NORTH ANDOVER, MASSACHUSETTS FINANCIAL STATEMENTS AND AUDITOR'S REPORT 3UNE 30, 1985 TOWN OF NORTH ANDOVER, MASSACHUSETTS TABLE OF CONTENTS June 30, 1985 AUDITOR' S REPORT FINANCIAL STATEMENTS Combined Balance Sheet - All Fund Types and Account Group Combined Statement of Revenues, Expenditures and Changes in Fund Balance - All Governmental Fund Types and Expendable Trust Funds Statement of Revenues and Expenditures - Budget - Non GAAP Budgetary Basis and Actual Exhibit Page Statement of Revenues, Expenses and Changes in Fund Balance - Non-expendable Trust Funds Statement of Changes in Financial Position - Non-expendable Trust Funds NOTES TO FINANCIAL STATkqMENTS SUPPLEMENTAL INFORMATION SCHEDULE OF RECONCILIATION OF TREASURER'S CASH SCHEDULE OF TAXES, LIENS, EXCISES, DEPARTMENTAL ACCOUNTS RECEIVABLE - ALL FUNDS STUDY AND EVALUATION OF INTERNAL CONTROL SYSTEM 4 8 5 9 10 Schedules I II 21 23 27 IRA A. JACKSON COMMISSIONER EDWARD J. COLLINS, Jr. DEPUTY COMMISSIONER Board of Select. men ?own of North Andover North Andover, Massachusetts 01845 Honorable Selectmen: We have examined the general purpose financial statements of the Town of North Andover, Massachusetts as of and for the year ended June 30, 1985 as listed in the table of contents. Our examination was made in accordance with generally accepted government auditing standards for financial and compliance audits and included such tests of the accounting records and such other auditing procedures including tests of compliance with applicable laws and regulations, as we considered necessary in the circumstances. The town does not maintain records of its general fixed assets and, accordingly, a General Fixed Assets Account Group, required by generally accepted accounting principles is not included. Pension costs are provided on a pay.as-you-go basis, as discussed in Note 8 to the accompanying financial statements instead of an actuarial basis as required by generally accepted accounting principles. The amount of such costs under generally accepted accounting principles is not determined at this time. In our opinion, except for the effect of not providing for pension costs on an actuarial basis, and except that the omission of the financial statements of the town's general fixed assets results in an incomplete presentation as explained previously, the combined financial statements referred to above present fairly the financial position of the Town of North Andover, Massachusetts at June 30, 1985 and the results of its operations and the changes in financial position of its nonexpendable trust funds for the year then ended in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year. Our examination was made for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying financial information listed as a schedule in the table of contents is presented for purposes of additional analysis and is not a required part of the financial statements of the Town of North Andover, Massachusetts. The information has been subjected to the auditing procedures applied in' the examination of the financial statements and, in our opinion, is stated fairly in all material respects in relation to the financial statements taken as a whole. In connection with our examination, we also (1) performed tests of compliance with the Revenue Sharing Act and regulations as detailed in the "Commentary On The Audit Requirements of the Local Government Fiscal Assistance Amendments of 1983" issued by the Office of Revenue Sharing, U.S. Department of the Treasury, and (2) compared the data on the 198~ General Revenue Sharing Form RS-8 with the unaudited records of the Town of North Andover. In our opinion, for the items tested, the Town of North Andover complied with the aforementioned provisions of the Revenue Sharing Act and regulations. Further, based on our examination and the procedures referred to above, nothing came to our attention to indicate that the Toms of North Andover had not complied vith the aforementioned provisions of the Revenue Sharing Act and regulations. Very truly yours, Act~g Director, Bu~eau~f Accounts Department of Revenue t/ May 30, 1986 Assets cash Receivables: User charges Departmental Special assessments Due from other funds Amounts to be provided for: Payment of bonds Tots] assets Liabilities Warrants payable Witholdinss payable Due LO othe~ funds other liabilities ProperLy taxes Other receivables Notes payable Bonds payable Total liabilities TOWN OF NORTH ANDOVER, MASSACHUSETTS COMBINED BALANCE SHEET - ALL FUND TYPES AND ACCOUNT GROUP June 30, 1985 Fiduciary Governmental Fund Types Fund Types Account Group Special capital Trust & Long-Term Totals General Revenue Projects Agency Debt (Memorandum Only) ~2,16~,100 ~(62,871~ ~ ~ 82,00~ 3,630,717 350,000 168,802 533,969 275,895 117,12l 633 2,677 139,009 30,900 522,753 802,365 98,895 1,303,500 2,730,000 {8,217,529 ~819,882 ~802,365 ~350,578 {2,730,080 z====~.=~= ======== =======~ =======~ ~2,193,118 4,149,519 533,969 275,895 137,121 633 2,677 119,009 30,900 1,424,013 1,303,500 2,730,000 {12,920,354 =======~=== 422,656 ~ ~ ~ ~ ~ 422,656 (6,041) (6,041) 1,424,013 1,424,013 32,665 84,689 117,354 417,498 417,498 586,235 586,235 747,416 747,416 1,303,500 1,303,500 2,730,000 2,730,000 4,927,942 84,689 2.730,000 7,742,631 Exhibit I Fund Equit~ Reserved for encumbrances Reserved for extraordinary or usforseen expenditures Unreserved fund balance~ Designated undesignated Total fund equity Total liabilities and fund equity Exhibit l, continued TOWN OF NORTH ANDOVER, MASSACHUSETTS COMBINED BALANCE SHEET - ALL FUND TYPES AND ACCOUNT GROUP June 30, 1985 Fiduciary Governmental Fund Types Fund Types Account Group Special capital Trust & Long-Term Totals General Revenue Projects Agency Debt (Memorandum Only) 775,458 775,458 12,065 12,065 649,849 802,365 1,452,2]4 1,852,215 819,882 265,889 2,937,986 3,289,587 819,882 802,365 265,889 5,177,723 ~8,2i7,529 ~819,882 ~802,365 ~350,578 ~2,730,0n0 ~12,920,354 See accompanying notes to financial statements TOWN OF NORTH ANDOVER, MASSACHUSETTS COMBINED STATEMENT OF REVENUES, EXPENDITURES ~ND CHANGES IN FUND BALANCE ALL GOVERNMENTAL FUND TYPES AND EXPENDABLE TRUST FUNDS For the year ended June 10, 1985 Exhibit 2 Revenues: Property taxes Excises Water charges for aervlcee Sewer chsrges for services Departmental Licenses and permite Intergovernmental - federa! Intergovernmental - state Special assessments Fines and forfeits Earnings on investments Total revenues Expenditures: Public safety Education Public works culture and recreation Debt service Intergovernmental charges Employee benefits Retirement contribution capital outlay CoUrt judgements Miscellaneous Total expenditures Excessideficiency) of revenues over expenditures Fiduciary Governmental Fund Types Fund Types Special Capital Expendable Total9 General Revenue Pro~ects Trusts (Memorandum Only) ~10,678,021 ~ ~ ~ ~1o,6~8,021 889,101 889,101 812,605 812,605 373,674 373,674 497,461 685,263 1,182,724 148,010 148,010 349,639 349,639 3,531,821 2,302,32] 5,834,142 19,200 19,200 139,038 139,038 80,153 25,729 6,508 112,390 17,169,084 3,362,952 6,508 20,538,544 726 148 2,499 014 8,339 851 1,206 127 684 243 394 776 197 047 786 645 584 134 427 563 626 890 202 121 164,140 16,838,699 3,010 566,633 620,392 173,601 7,884 1,642,856 621,135 3,709 3,014,376 621,135 3,709 729,158 3,065,647 8,960,243 1,379,728 684,243 402,660 197,047 786,645 2,226,990 427,563 626,890 202,121 62],135 164,140 3,709 20,477,919 3]0,385 348,576 (621,135) 2,799 60,625 Exhibit 2,continued. TOWN OF NORTH ANDOVER, MASSACHUSETTS COMBINED STATEMENT OF REVENUES, EXPENDITUBES AND CHANGES IN FUND BALANCE ALL GOVERNMENTAL FUND TYPES AND EXPENDABLE TRUST FUNDS FOr the year ended June 30, 1985 Fiduciary Governmental Fund Types Fund Types Special Capital Expendable Totals General Revenue projects Trusts {Memorandum Only) Other financing sources (uses): Proceeds of notes operating transfers in 10,065 Opecating transfers out Total other financing sources 10,065 (uses) ...... Excess(deficiency) of ¢evenues and other financing sources over expenditures and other uses 340,450 Fund balance July 1, 1984 2,949,137 Fund balance June 30, 1985 ~3,289,587 1,423,500 1,423,500 10,065 (10,065) i]0,065) (10,065) 1,423,500 1,423,500 338,5]] 802,365 2,799 1,484,125 481,371 40,673 1,471,181 ~819,882 ~802,365 ~43,472 {4,955,306 ======== ======== ======= See accompanying notes to financial statements TOWN OF NORTN ANDOVER, MASSACHUSETTS STATEMENT OF REVENUES AND EXPENDITURES - BUDGET (NON-GAAP BASIS) AND ACTUAL - FOr the year ended June ]0, 1985 Revenues and other sources: Property taxes Excises Water charges for se~vlces Sewer charges for services Departmental Licenses and permits Intergovernmental - fedeEa! Intergovernmental - state speciai assessments Fines and forfeits gamings on investments Other available funds Tota! revenues and other sources Expenditures and other uses: General government Public safety Education Public works culture and recreation Debt service Employee benefits Retirement contribution Court judgements Other financing uses Total expenditures and other uses Original Final Favorable Budget Budget Actual (Unfavorable) ~11,095,240 ~11,095,240 {11,095,519 ~ 279 700,893 700,893 889,101 188,208 704,260 704,260 812,605 108,345 330,000 330,000 373,674 43,674 227,674 227,674 497,461 269,787 33,597 33,597 148,010 114,413 330,000 330,000 349,639 19,639 3,451,493 3,451,493 3,531,821 80,328 33,017 33,017 19,200 (13,817) 60,402 60,482 139,038 78,556 100,000 lO0,OOO 105,882 5,882 7,593 172,255 172,255 0 17,074,249 17,238,911 18,134,205 895,294 962,833 761,719 752,954 8,765 2,591,464 2,835,282 2,820,673 14,609 8,325,130 8,326,645 8,325,060 1,585 1,178,491 1,244,190 1,185,467 58,723 616,444 669,561 669,046 515 402,478 402,503 394,776 7,727 198,160 199,762 197,047 2,715 858,O40 850,040 850,039 ] 596,486 596,486 584,134 12,352 418,000 418,000 418,000 0 626,890 626,890 626,890 0 206,850 206,850 202,I2i 4,729 92,503 92,503 92,501 0 8,480 8,480 8,480 0 17,074,249 17,238,911 17,127,190 111,721 0 ~0 $1,007,01s ,1,007,015 See accompanying notes to financial statements Exhibit 3 Exhibit TOWN OF NORTH ANDOVER, MASSACHUSETTS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND BALANCE NON-EXPENDABLE TRUST FUNDS For the year ended June 30~ 1985 Fiduciary Fund Types Non-expendable Trust Fund Revenues: Earnings on investments Total Revenues Expenses: Administrative expenses United States Flag Total Expenses Net income $ 2t432 $ 2~432 1,000 49 1t049 1~383 Fund balance July 1, 1984 Fund balance June 30, 1985 See accompanying notes to financial statements 221~034 TOWN OF NORTH ANDOVER, MASSACHUSETTS STATEMENT OF CHANGES IN FINANCIAL POSITION NON-EXPENDABLE TRUST FUNDS For the year ended June 30, 1985 Exhibit 5 Fiduciary ,Fund Type Non-expendable Trust Fund Sources of Working Capital: Net income Net increase in working capital $ 1~383 $ _ 1~383 Elements of net increase in working capital: Cash $ 1,383 Net increua in working capital $ 1,383 See accompanying notes to financial statements TOWN OF NORTH ANDOVER, MASSACHUSETTS NOTES TO FINANCIAL STATEMENTS JUNE 30, 1985 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity The accompanying financial statements present the financial posit&on of the various funds and account groups of the Town of North Andover as of June 30, 1985, Also included are the funds of the Conmunity and Economic Development Agency over which the town exercises oversight responsibility. Criteria used for defining oversight responsibility and determing whether a component unit is included in the financial statements are: selection of governing authority, designation of management, ability to significant- ly influence operations, accountability for fiscal matters and scope of public service. The inclusion of component units in the town's financial statements does not affect their separate legal standing. B. Basis of Presentation - Fund Accounting The accounts of the town are presented on the basis of funds and account groups, each of which is considered a separate accounting entity. The operations of each fund are accounted for in a set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues, expenditures or expenses and other financing sources and uses. The various funds and account groups ere grouped by fund categories and fund types as follows: Governmental Funds Governmental funds are those through which most governmental functions are typically financed. The acquisition, use, and balances of the government's expendable financial resources and the related current liabilities - except activities accounted for in proprietary funds - are accounted for through governmental funds. The governmental funds maintained by the town are as follows: General Fund - is the general operating fund of the town. It is used to account for all financial resources except those required to be accounted for in another fund. Special Revenue Funds - are used to account for the proceeds of specific revenue sources (other than expendable trusts or major capital projects) that are legally restricted to expenditure f~r specified purposes. General funds of component units are also included with special revenue funds. Capital Projects Funds - are used to account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by special assessment, proprietary or trust funds.) TOWN OF NORTH ANDOVER, MASSACHUSETTS NOTES TO FINANCIAL STATEMENTS June 30, 1986 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued Fiduciar~ Funds. Fiduciary funds are used to account for assets, held by the town in a trustee capacity or as an agent for individuals, private organizations, other governmental units, and or other funds. Fiduciary funds maintained by the town are as follows: Expendable Trust Funds - are used to account for trust fund principal and income that may be expended in accordance with conditions of the trust. Expendable trust funds are accounted for in essentially the same manner as governmental funds. Nonexpendable Trust Funds - are used to account for trusts where the principal must remain intact. Generally income earned on non-expendable trust principal may be expended in accordance with the conditions of the trust. Non-expendable trust funds are accounted for in essentially the same manner as proprietary funds. Account Group - The Account Group is used to establish accounting control and acccountability for the town's unmatured principal of it's general long term-debt. C. Basis of Accounting Basis of accounting refers to when revenues, expenditures, expenses and transfers are recognized in the accounts and reported in the financial statements. The modified accrual basis of accounting is followed in governmental funds and expendable trust funds. Revenues are recognized in the accounting period in which they become measurable and available to finance expenditures of the current period. "Available" is defined as collectible within the current period or soon enough thereafter to be used to pay current liabilities. Expenditures are recognized when the related liability is incurred, except for unmatured interest on general long term debt ~hich is recognized when due. Liabilities are not considered current until they are normally expected to be liquidated ~rlth expendable available financial resources. Liabilities incurred in the current period not expected to be liquidated with expendable available financial resources are recorded in the General Long-Term Debt Account Group. The accrual basis of accounting is followed in non-expendable trust funds. Revenues are reco~nized when earned and expenses are recorded when incurred. D. Budgetary Data An annual budget is adopted for the town's general operations. Although legislative approval is required for acceptance of certain grants, capital project and borrowing authorization, no other annual budgets are prepared for any other fund and therefore, comparison of budget to actual is only presented for the general operations. 12 TOWN OF NORTH ANDOVER, MASSACHUSETTS NOTES TO FINANCIAL STATEHENTS June 30, 1986 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued The town's annual budget is adopted on a statutory basis that differs in some respects from Generally Accepted Accounting Principles (GAAP). The major differences are that Real and Personal Property Taxes are recognized as revenue when levied and that encumbrances are treated as budgetary expenditures in the year the commitment is made. Also, certain appropriations, known as special articles, do not lapse and for financial statement presentation are treated as budgetary expenditures in the year they are authorized. Budgets are prepared by the Board of Selectmen and approved by Town Meeting. The town must establish its property tax rate each year so that the property tax rate levy will comply with the limits established by Proposition 2 1/2, as amended, and also equal the sum of (a) the aggregate of all annual approp- riations for expenditures, plus (b) provision for prior year deficits, if any, less (c) the aggregate of all non-property tax revenues estimated to be received and authorized available funds. Supplemental appropriations may be made fran available funds after the setting of the tax rate. Appropriations may be transferred between departments with town meeting approval. E. Assets, Liabilities and Fund Equity Cash and Cash Equivalents. -Cash balances are invested to the extent available and interest income is recognized in the General Fund. Certain special revenue funds and fiduciary funds cash are segregated and investment income becomes a part of those funds. Accounts Receivable.oAccounts receivable are recorded when billed. Abatements and exemptions are estimated based on historical records in the Assessor's department. Interfund Receivables and Pa~ables.-Due from /Due to Other Funds arise during the course of operations from the pooling of cash and as funds provide services to each other. Due From Other Governments.-Due from other governments include amounts due from grantor agencies for specific programs and capital projects. Intergovern- mental receivables are recorded when approved contracts or agreements are received. Inventories.-Inventories of governmental funds are recorded as expenditures at time of purchase. Accrued Sick and Vacation.oEmployees are granted sick and vacation leave in varying amounts based on tenure and in accordance with individual union contracts. Upon termination, retirement, or death, certain employees are compensated for uaused vacation and sick leave (subject to certain limitations.) at their current rates of pay. The cost of sick and vacation pay i8 recorded when expended and future benefits payable are not determined. 13 TOWN OF NORTH ANDOVER, MASSACHUSETTS NOTES TO FINANCIAL STATEMENTS June 30, 1986 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued Deferred Revenue. In Governmental Funds amounts that are not considered available are deferred until collected. Under the modified accrual basis of accounting, such amounts are measurable but not available. Real and Personal Propert~ Taxes. Real and Personal Property Taxes are based on assessed values as of the previous January 1 and are normally due on November 1 and May 1. By law, all taxable property must be assessed at 100% of fair cash value. Taxes due and unpaid after the dates are subject to interest and penalties. The town has an ultimate right to foreclose on property for unpaid taxes. Property taxes are recorded as revenue in the accuunting period that they become measurable and available. Available for property taxes means expected to be collected within 60 days after the end of the fiscal year, except under unusual circumstances. Total Columns on Combined Statements. Total columms on the combined statements are captioned "Memorandum Only" to indicate that they are presented only for informational purposes. Adjustments to eliminate interfund transactions have not been made and data in these columns do not present financial position or represent consolidated information. BUDGETARY DATA Budgetary data is based upon accounting principles that differ from generally accepted accounting principles. Therefore, in addition to the GAAP basis financial statements, the results of the general fund are presented in accordamce with budgetary accounting principles to provide a meaningful comparison with the budget. The following reconciliation sun~arizes the differences between G~P amd budgetary basis accounting principles for the General Fund for the year ended June 30, 1985: 14 Aa reported on a GAAP basis (Exhibit 2) Adjustment of real and personal property taxes from a modified accrual to an accrual basts Reclassification of activities from special revenue Reclassification of other available funds previously reflected on a GAAP basis Adjustment for continuing appropriations, net Adjustment for expenditures accruals and encumbrances, net Prior years deficits previously reflected on a CAAP basis Aa reported on a budgetary basis (Exhibit 3) TOWN OF NORTH ANDOVER, MASSACHUSETTS NOTES TO FINANCIAL STATEMENTS June 30, 1985 Revenues Expenditures Other Financing Sources (Uses) 17,169,084 $ 16,838,699 10,065 417,498 Fund Equity (Deficit) 340,450 417,498 375,368 319,935 (10,065) 45,368 (648,559) 172,255 608,635 8,480 $ 18,134,205 $ !7,127,190 172,255 648,559 (608,635) (8,480) 15 TOWN OF NORTH ANDOVER, MASSACHUSETTS NOTES TO FINANCIAL STATEMENTS June 30, 1985 3. T~MPORARY BORROWINGS Under state law, and with the appropriate local authorization, the town is authorized to borrow funds on a temporary basis as follows: · To fund warrant operations prior to the collection of revenues, by issuing revenue anticipation notes (RANS)o · To fund grants prior to reimbursements, by issuing grant anticipation notes (GANS). · To fund capital project costs incurred prior to selling permanent debt by issuing bond anticipation notes (BANS). Temporary notes are general obligations of the town and maturity dates are governed by statue. Interest expenditures for temporary borrowing were $ 9,868 and are accounted for in the General Fund. Interest Rates RANS BANS Outstanding July 1, 1984 $ -0- $ -0- Issued September 26, 1984 5.74~ 500,000 5.72~ 500,000 Issued June 24, 1985 5.00% 200,000 4.54~ 103,500 4.482 250,000 4.45~ 250,000 4.44% 250,000 4.24% 250,000 Maturity November 27, 1984 (1~000~000) Outstanding June 30, 1985 $ -0- $1.303,500 16 TOWN OF NORTH ANDOVER, MASSACHUSETTS NOTES TO FINANCIAL STATEMENTS June 30, 1985 LONG TERM DEBT A stmanary of the changes in general long-term debt during the year is as follows: chrouth ~a~e Jul~ 1:]984 ~titlone R~tiren,~,ts Public bulldinga Fire it.tion I0166 6.1~ $ 10,000 $ -0- $ 10,000 School P~o]ec~ School Lo~n 6/91 5.5~ 1~0,000 Franklin School 12187 4.5~ 105,000 ]5,000 New Htsh ~hoo! lOfgl 5.25~ Project $:hoo! Loan 5/88 Public Woz~e 145,000 $e~er 31~ 9.2~ 430,000 5,000 Se~er ll~Bb 4.0~ 15,000 W~ter 6f8~ 6.45~ 105,000 ., ~o,.1 $ ~,.~!0_~ooo $ ~ ~ ~0_~0.0,~._~o June 30, 19~5 I~0,000 70,000 2,1~9,000 ~5,000 285.000 ]0,0u0 s L_~ 3_~?o~_o 17 TOWN OF NORTH ANDOVER, MASSACHUSETTS NOTES TO FINANCIAL STATEMENTS June 30, 1985 4. Long-Term Debt (continued) The annual requirements to amortize outstanding bonds, including interest as of June 30, 1985 are as follows: Pr~pclpal Interest Total Year ended June 30, 1986 $ 630,000 $ 144,619 $ 774,619 1987 625,000 105,824 730,824 1988 410,000 68,136 478,136 1989 355,000 46,594 401,594 1990 355,000 27,956 382,956 1991 355,000 9t.3.19 364~319 $2,730,000 $ 402,448 $ 3,132,448 The town is subject to debt limits by law. Such limits are equal to 5% and 10% of the equalized valuation of taxable property and are known as debt issued inside and outside the debt limit respectively. Authorization for debt outside the debt limit must be approved by the State Emergency Finance Board. 18 TOWN OF NORTH ANDOVER, MASSACHUSETTS NOTES TO FINANCIAL STATEHENTS June 30, 1985 4. Long-Term Debt (continued) As of June 30, 1985 the town may issue $30,705,000 and $61,~10,000 in additional debt inside and outside the debt limit. The town has authorized and unissued debt of $ 1,435,996 inside the debt limit and $11,805,000 outside the debt limit as of June 30, 1985. The town pays assessments under formulas which include debt service payments to other govermental agencies providing services to the town. (commonly r~ferred to aa overlapping debt). The following summary sets forth the long term debt of such governmental agencies and the estimated share being financed by the town as of June 30, 1985. Agency Greater Lawrence Sanitary District Greater Lawrence Regional Vocational Technical High School District Essex County Total Long- Town's Town's Term Debt Estimated Indirect Outstanding Share Debt $ 2,771,275 10.6% $ 293,755 600,000 5% 30,000 3,140,000 4.3M 134,54p $ 6,511,275 $ 458,295 19 TOWN OF NORTH ANDOVER, MASSACHUSETTS NOTES TO FINANCIAL STATEMENTS June 30, 1985 Pension Plan Substantially all employees of the to~n, except school teachers and certain other school department employees are members of the Essex County Contributory Retirement System. The pension plan provides retirement benefits for members who have obtained a certain age and for periods of service. Members contribute certain percentages of their salaries or wages to the plan. In addition, the Public Employees Retirement Administration determines an amount, each year, that the to~n must contribute to the system in order to meet that year's projected benefit payments. The town's contribution to the system for the year 1985 amounted to $626,890. This so called "pay-as-you-go" method does not provide for the funding of any unfunded liabilities that might exist as a result of an actuarial deter- mination of the fiscal condition of the plan. The amount of the unfunded liability of the Essex County Contributory Retirement System is actuarially determined periodically and reported to the County by the Massachusetts Retirement Law Commission. However, the amount of such liability directly related to the members from the Town of North Andover has not heretofore been separately determined and remains unknown. The school teachers and other non-member school department employees participate in a plan administered by the Hassachusetts Teachers' Retirement Board. The town does not directly contribute to this plan. 20 Schedule I TOWN OF NORTH AN~OVER, MASSACHUSETTS SCHEDULE OF RECONCILIATION OF TREASURER'S CASH General Fund Federal Revenue Sharing Fund Special Revenue Fund Trust Funds June 30, 1985 Balance July 1~ 1984 Receipts Disbursements Balance June 30~ 1985 $ 3,744,668 $ 25,504,341 $ 23,455,184 $ 5,793,825 305,901 375,368 330,000 351,269 (49,216) 916.641 921,565 (54.140) 248~085 41647 lt049 251,~B3 $ 24,707,798 $ 4,249,438 $ 26,800,997 $ ~,342,637 Co~?osition at June 30~ 1985 Checking Accounts: First Bank of Boston Arlington Trust Company State Street Bank and Trust Company Bay Bank - Merrlmac Valley Patriot Harbor National Boston Safe Deposit Bank of New England - Boston United States Trust Essex Bank Century Bank Savings Accounts: Century Bank Community Savings Lawrence Savings Essex Savings Andover Savings Broadway Savings Bay Bank - Merrimac Valley Certificates of Deposit: Century Bank Patriot Bank United States Trust Merrimac Valley Arlington Trust Bay State State Street Bank of New England Essex Bank Boston Safe Deposit Massachusetts Municipal Depository 'Trust 1,959 592,568 171,208 12,019 58,890 2,994 603,698 238,452 4,279 75,989 326,692 17,184 2,500 3,103 30,283 2,500 48,800 600,000 400,000 700,000 550,000 350,000 450,000 200,000 200,000 200,000 200,000 130,717 21 Schedule I (cont.) TOWN OF NORTH ANDOVER, MASSACHUSE~'I'S SCHEDULE OF RECONCILIATION OF TREASURER'S CASH June 30, 1985 Investments: Merrill Lynch Cash Management Investment Account Total cash, cash equivalents, and investments $ 168,802 $ ~..,342,637 General Fund Special Revenue Fund Trust Funds Total Balance Sheet Presentation June 30~ 1985 Cash 2,163,108 (52,871) 82 ~881 2.193.118 Investments $ 3,630,717 350,000 168~802 $ 4.149~519 Total $ 5,793,825 297,129 251,683 $ 6.342,637 22 General Fund: Property Taxes: Real Estate: Levy of 1985 Levy of 198& Levy of 1983 Levy of 1982 Levy of 1981 Levy of 1980 Levy of 1979 Levy of 1978 Personal Property: Levy of 1985 Levy of 1984 Levy of 1983 Levy of 1982 Levy of 1981 Levy of 1980 Levy of 1979 Levy of 1978 Levy of 1977 Levy of 1975 Forest Land Taxes: Levy of 1984 Levy of 1983 Levy of 1982 Levy o! 1981 Tax Liens: Tax Poeeeeeions Tax Titles TOt~N OF NOaTN ANDOVER~ NASSACHUSETTS SCHEDULE OF TAXES, LIENS, EXCISES AND DEPARTHENTAL ACCOUNTS RECEIVABLE For the year ended June 30, 1985 AbeLemeute Uncollected Trane/ere and Adjusted Jul~ lj 1984 Co~mitmeote Adjustments Collectible &00,875 193,981 58,564 581 801 (171) 6 1,858 496 452 679 862 1,336 1,113 33 313 213 3 104 8,&94 4*71144 ~5.63_8 11,151,733 248,796 129,672 $ 11,022,061 36,962 363,913 26,639 167,362 2,691 56,053 561 206 595 (171) 6 259 138 268,537 1,720 696 652 679 862 1,336 1,113 644 33 11,866,25_~2 313 213 3 104 63~ 8,696 73j896 Collections Net of Refunds $ 10,663,906 241,768 128,554 68,783 1,796 246,940 777 (262) 21 $ ~1.332.263 51,490 Schedule Il Uncollected June 30t 1985 $ 358,155 122,145 38,788 7,270 (1,215) 595 (121) 6 1,597 963 758 631 679 862 1,336 1,113 664 33 313 213 3 106 8,496 221606 Uncollected Per Detall List June 301 1985 365,512 132,766 55,136 7,796 1,621 1,034 1,120 503 679 896 1,010 1,096 656 33 106 lo~ 8,525 22 ~,~21 23 General Fund: Notor Vehicle Excise: Levy of 1985 Levy of 198& Levy of 1983 Levy of 1982 Levy of 1981 Levy of 1980 Levy of 1979 Levy of 1978 and Prior Yearn Farm Animal Excise: Levy of 1985 Levy of 1984 Levy of 1980 Levy of 1979 Levy of 1977 Departmental: VeteranS! Benefits TO~N OF NORTH ANDOVER, HASSACIIU$~TTS SCIIEDULK OF TA~E$, LIENS, EXCISES AND DEPARTHENTAL ACCOUNTS RECEIVABLE For the year ended June 30, 198~ Abatements Uncollected Transfers end ~Justed July !~ ]984 C~itmento ~]u~tmente Collectible $ 763,131 $ 39,990 $ 723,161 169,838 282,092 63,112 368,818 37,967 &,9Il 13,622 29,256 12,062 6,169 5,893 5,675 1,3`$2 6,323 17,398 2,7`$6 16,666 6,761 315 6,626 16,819 1,275 13,566 817 817 96 96 7O 7O 60 60 $ 26_ $ 1~_28~58~9 $ I 165.o68 Collectlona Net of aefunde 536,641 337,805 10,905 1,433 662 652 670 1,903 .$9 663 Schedule I! (Cont.) Uncollected June 30, 1985 Uncollected Per Detail Lilt June 301 1985 $ 188,500 31,013 18,351 7,769 3,881 10,702 3,756 11,642 (59) 156 96 7O 6O $_275,~95 211,297 25,292 7,388 11,459 5,460 19,276 6,215 8,509 96 70 TOliN OF NORTII ANDOVER, NASSACIIUSETTS SCHEDULE OF TAXES, LIENS, EXCISES AND DEPARTHENTAL ACCOUNTS RECEIVABLE For the year ended June 30, 1985 Abatements Uncollected Trmnm[ero and Adjusted July 1, 1984 Commltmentm AdJumtments Collectible Special Assessments: Sever Assessments Paid tn Advance $ (2,120) $ (2,120) A~portloned Sever Amseeement not due 5&,081 54,081 Onepportioned Sever 17,539 17,539 Suspended Mater Hain Assessment 25,020 25,020 Apportioned Water Assessment not due 6,523 6,523 Unapportioned Water Nein &2,990 42,990 U&ter Asseeemento Paid in advance User CharRes end Liens: Water Liens Added to Taxes: 1985 198& 1983 1982 1981 1980 1979 Uater Rates Accounts Receivable Voter Hatnten&nce end Construction Accounts Receivable Sewer Liens Added to Taxes 1985 1986 1983 1982 . 1981 1980 1979 $ $ (19,228) 2,799 255 3,358 2,092 68 (132) (88) 56,971 794,568 21,921 (89) 23,567 6,663 (16,816) 1,723 269 3,069 6,169 (225) (76) 136 19.228 2.544 3.358 2.092 68 (132) (88) 829.618 18.995 16.816 1.654 3.069 6,169 (225) (76) 136 Collections Net of Refunds 335 3.150 1,539 5.02~_ % 16,418 1,198 1,030 2,D57 763,376 18,193 13,282 7OO 613 6,149 Schedule Il (cont.) Uncollected June 30:1985 Uncollected Per Detail List June 30, 1985 (2.455) 56,081 17,539 25.020 6,523 39.840 (1,539) 139,009 17,074 25,020 2,810 1,366 2,328 35 68 (132) (88) 66,242 8O2 1,534 754 2,&36 (225) (76) 136 2.618 1.216 2,122 92 68,523 1,655 723 2,166 63 25 Sewer ~etes Rc¢ounts ~ece~veble Sewer Hilnten&nce and Construction Accountl Receivable Veter Niln Aeeellments A~ded to Taxes 1985 198h TOI4N OF NORTII AflDOVER, tlASSACIIIJSE'rTS SCIIEDULE OF TAXES, LIENS, EXCISES AND UEPARTtlENTAL ACCOUltTS RECEiVAULE For the yeec e~ded June 30, 19U5 Uncollected Trenefera and ~lluated Ju~l~L_~t_198q Cunueitmente ~/j.ata~c~te Collectible 64.113 365,298 15,632 392,979 2,806 7,905 265 10,666 (4,405) 4,405 180 180 Collections Net of #efunde 339,272 6,602 3,982 Schedule II (Cont.) Uhcollected June 30a 1985 53,707 3,844 423 180 Uncollected Per Der&ii List June 301 1985 55,318 288 180 Sewer Aoeelements Added to Tixee 1985 198q 1983 1982 Committed Interest on Aeaeanmenta Adddd to Taxes: 1985 198& 1983 1982 1981 (8,692) 8,492 ~41 241 80 80 54 54 (~,172) 6,172 189 180 9 690 690 2 2 79 79 8,432 3,932 17 6O 8O 5~, 260 9 473 2 79 150 2~1 15O 243 189 136 15! STUDY AND EVALUATION OF INTEI:~AL CONTROL SYSTEM REPORT ON ADEQUACY OF INTERNAL CONTROL SYSTEM We have examined the financial statements of the Town of North Andover, Massachusetts for the fiscal year ending June 30, 1985 and have issued our report thereon dated May 30, 1986. As part of our examination, we made a study and evaluation of the system of internal accounting control of the Town of North Andover to the extent we considered necessary to evaluate the system as required by generally accepted government auditing standards. For the purpose of this report, we have classified the significant internal accounting controls in the following categories: a) Assessors' Office Tax roll maintenance and billing Abatements b) Collectors' Office Receipts Turnovers Tax titles c) Treasurer's Office Receipts Disbursements Tax Possession Trust Funds d) Accountant's Office General ledger Subsidiary ledger Receipts Disbursements Our study and evaluation included all of the control categories listed above. The purpose of our study and evaluation was to determine the nature, timing and extent of the auditing procedures necessary for expressin8 an opinion on the entity's financial statements. Our study and evaluation was more limited than would be necessary to express an opinion on the system of internal accounting control taken as a whole or on any of the categories of controls identified above. 27 The management of the Tow~ of North Andover, is responsible for establishing and maintaining a system of internal accounting control. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of control procedures. The objectives of a system are to provide management with reasonable, but not absolute, assurance that (1) assets are safeguarded against loss from unauthorized use or disposition, and (2) that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of financial statements in accordance with generally accepted accounting principles (or the co~nonwealth's accounting system). Because of inherent limitations in any system of internal accounting control, errors or irregularities may nevertheless occur and not be detected. Also, projection of any evaluation of the system to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the degree of compliance with the procedures may deteriorate. Our study and evaluation conducted for the limited purpose described in the first paragraph would not necessarily disclose all material weaknesses in the system. Accordingly, we do not express an opinion on the system of internal accounting control of the Town of North Andover taken as a whole or on any of the categories of control identified in the first paragraph. However, our stud7 and e~aluation disclosed the following conditions that we believe result in more than a relatively low risk that errors or irregularities in amounts that would be material in relation to the financial state- ments of the ?o~n of North Andover may occur and not be detected within a timely period~ Inadequate recording of general ledger entries Inadequate reconciliation of cash balances between Treasurer and Accountant for all funds Inadequate recording of abatements Inadequate maintenance of encumbrance letters Inadequate control over Federal Grant funds Inadequate segregation of duties in payroll processing