Macon County NC Comprehensive Financial Audit Report - June 30, 2012

7/30/2019 Macon County NC Comprehensive Financial Audit Report - June 30, 2012

1/178

MACONCOUNTYNORTHCAROLINA

COMPREHENSIVE ANNUAL

FINANCIAL REPORT

FORTHEYEARENDED JUNE 30,2012


2/178

This page left blank intentionally.


3/178

MACONCOUNTYNORTHCAROLINA

COMPREHENSIVE ANNUAL

FINANCIAL REPORT

FORTHEYEARENDED JUNE 30,2012

Prepared by: Finance Department

Finance Director: Lori M. Hall


4/178



5/178

Page

Letter of Transmittal i-v

Organizational Chart vi

List of Principal Officials vii

2011 GFOA Certificate of Achievement

for Excellence in Financial Reporting viii

Financial Section:

Independent Auditors' Report 1-2

Management's Discussion and Analysis 3-11

Exhibit Basic Financial Statements - Overview

Government-Wide Financial Statements:

A Statement of Net Assets 12

B Statement of Activities 13-14

Fund Financial Statements:

C Balance Sheet - Governmental Funds 15

D Statement of Revenues, Expenditures, and Changes

in Fund Balances - Governmental Funds 16

E Reconciliation of the Statement of Revenues, Expenditures,

and Changes in Fund Balances - Governmental Funds to

the Statement of Activities 17

F Statement of Revenues, Expenditures, and Changes in

in Fund Balance - Budget and Actual - General Fund 18

G Statement of Net Assets - Proprietary Funds 19

Introductory Section

COMPREHENSIVE ANNUAL FINANCIAL REPORT

FOR THE YEAR ENDED JUNE 30, 2012

MACON COUNTY, NORTH CAROLINA

TABLE OF CONTENTS


6/178




TABLE OF CONTENTS

Exhibit Page

Fund Financial Statements - continued:

H Statement of Revenues, Expenses, and Changes

in Fund Net Assets - Proprietary Funds 20

I Statement of Cash Flows - Proprietary Funds 21

J Statement of Fiduciary Net Assets - Fiduciary Funds 22

Notes to the Financial Statements 23-57

Required Supplementary Financial Data:

A-1 Law Enforcement Officers' Special Separation Allowance 58

A-2 Other Post-Employment Benefits - Retiree Health Plan 59

Supplementary Information:

General Fund:

B-1 Schedule of Revenues, Expenditures, and Changes

in Fund Balance - Budget and Actual 60-72

Nonmajor Governmental Funds:

C-1 Combining Balance Sheet 73

C-2 Combining Statement of Revenues, Expenditures,

and Changes in Fund Balances 74

Nonmajor Special Revenue Funds:

D-1 Combining Balance Sheet 75

D-2 Combining Statement of Revenues, Expenditures,and Changes in Fund Balances 76

D-3 Emergency Telephone System Fund:

Schedule of Revenues, Expenditures, and Changes

in Fund Balance - Budget and Actual 77


7/178




TABLE OF CONTENTS

Schedule Page

Supplementary Information - continued:

Nonmajor Special Revenue Funds - continued:

D-4 Fire Districts Fund:



D-5 Clean Water Management Trust Fund:

Schedule of Revenues and Expenditures -

Budget and Actual 79

D-6 Housing Grants Fund:



Major Capital Projects Funds:

E-1 Consolidated Capital Projects:



Nonmajor Capital Projects Funds:

E-2 Combining Balance Sheet 82-83

E-3 Combining Statement of Revenues, Expenditures,

and Changes in Fund Balance 84-85

E-4 Airport Improvements Fund:



E-5 County Building Projects:

Schedule of Revenues and Expenditures -Budget and Actual 87

E-6 SCC Campus/Library Project:




8/178




TABLE OF CONTENTS

Schedule Page


Nonmajor Capital Projects Funds - continued:

E-7 Riverbend Estates Waterline Project:



E-8 Little Tennessee River/Cartoogechaye

Creek Sewer Trunk Project - Major:



E-9 Schools Capital Fund:



E-10 Capital Reserve Fund:



Enterprise Fund:

F-1 Solid Waste Fund:


Budget and Actual (Non-GAAP) 93-94

Internal Service Fund:

G-1 Nonmajor Self-Insurance Fund -

Balance Sheet 95


Schedule of Revenues, Expenses, and Changes

in Fund Net Assets-Financial Plan and Actual 96


Statement of Cash Flows 97


9/178




TABLE OF CONTENTS

Schedule Page


Agency Funds:

H-1 Combining Balance Sheet 98-99

H-2 Combining Statement of Changes in Assets and Liabilities 100-101

Debt Service Fund:

I-1 Schedule of Revenues, Expenditures, and Changes


Additional Financial Data:

J-1 Schedule of Ad Valorem Taxes Receivable -

General Fund 103

J-2 Analysis of Current Tax Levy -

County-Wide Levy 104

J-3 Schedule of Ad Valorem Taxes Receivable -

Fire Districts 105

J-4 Analysis of Current Tax Levy - Fire Districts 106

Table

Statistical Section:

1 Net Assets by Components 107

2 Changes in Net Assets 108-109

3 Governmental Activities Tax Revenues By Source 110

4 Fund Balances of Governmental Funds 111

5 Changes in Fund Balances of Governmental Funds 112


10/178




TABLE OF CONTENTS

Table Page

Statistical Section - Continued:

6 Assessed Value and Estimated Actual Value of

Taxable Property 113

7 Property Tax Rates, Direct and Overlapping Governments 114

8 Principal Property Taxpayers 115

9 Property Tax Levies and Collections 116

10 Ratio of Outstanding Debt by Type 117

11 Ratios of General Bonded Debt Outstanding 118

12 Direct and Overlapping Governmental Activities Debt 119

13 Legal Debt Margin Information 120

14 Demographic and Economic Statistics 121

15 Principal Employers 122

16 Full-Time Equivalent County Government Employees

by Function 123

17 Operating Indicators by Function 124

18 Capital Asset Statistics by Function 125


11/178

INTRODUCTORY SECTION


12/178



13/178i


14/178ii


15/178iii


16/178iv


17/178v


18/178

1. County departments whose main function is overall county government support. 2. County departments that have shared resources, supervision and/or local boards.3. All other county departments are headed by elected officials.

Macon County Government

Macon County Board of Commissioners

County Managers Office

Social ServicesHealth Department

Cooperative Extension ServiceBoard of ElectionsRegister of Deeds

Sheriffs DepartmentSoil ConservationCriminal Justice

Tax DepartmentBuilding & Grounds

HousingEmergency Management

Legal Services

HR/Deputy ClerkFinance Department

Information TechnologyVeterans Services

GarageSolid Waste

Recreation DepartmentTransit Services

Permitting, Planning,and Development

Staff Support 1 Shared Authorit 2 Direct Line3

vi


19/178


List of Principal Officials

June 30, 2012

Board of Commissioners

Kevin Corbin, Chairman

Bobby Kuppers, Vice-ChairmanRonnie Beale, Commissioner

Jimmy Tate, Commissioner

Ron Haven, Commissioner

Principal Officials

Jack Horton, County Manager

Lori M. Hall, Finance Director

Chester Jones, County AttorneyMike Decker, Deputy Clerk to the Board/Human Resources Director

Richard Lightner, Tax Supervisor

Margaret D. Perry, Tax CollectorJack Morgan, Permitting, Planning, and Development Director

Kim M. Bishop, Board of Elections Director

Todd Raby, Register of Deeds

Andy Muncey, Information Technology DirectorSteve Ledford, Buildings and Grounds Director

Robert L. Holland, Sheriff

David Key, Emergency Medical Services DirectorJohn Hook, Animal Control Director

M. Chris Stahl, Solid Waste Director

Mike Breedlove, Soil and Water ConservationAlan Durden, Cooperative Extension Chairman

Jane C. Kimsey, Social Services DirectorKim Angel, Transit Director

James Bruckner, Health Director

Daylon Plemens, Veterans Service OfficerSeth D. Adams, Recreation Director

Larry D. Conley, Garage Services

Tommy Jenkins, Economic Development Director

John Fay, Housing Director

vii


20/178viii


21/178

FINANCIAL SECTION


22/178



23/178

730 13th Avenue Drive SE Hickory, North Carolina 28602 Phone 828-327-2727 Fax 828-328-2324

13 South Center Street Taylorsville, North Carolina 28681 Phone 828-632-9025 Fax 828-632-9085

Toll Free Both Locations 1-800-948-0585 Website: www.martinstarnes.com

INDEPENDENT AUDITORS' REPORT

To the Board of CommissionersMacon County, North Carolina

We have audited the accompanying financial statements of the governmental activities, the business-type

activities, the discretely presented component unit, each major fund, and the aggregate remaining fundinformation of Macon County, North Carolina, as of and for the year ended June 30, 2012, which

collectively comprise the Countys basic financial statements as listed in the table of contents. Thesefinancial statements are the responsibility of the Macon County's management. Our responsibility is to

express an opinion 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 performthe audit to obtain reasonable assurance about whether the basic financial statements are free of materialmisstatement. The financial statements of the Macon County Airport Authority were not audited inaccordance with Government Auditing Standards. An audit includes examining, on a test basis, evidence

supporting the amounts and disclosures in the financial statements. An audit also includes assessing theaccounting 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 ouropinions.

In our opinion, based on our audit, the financial statements referred to above present fairly, in all materialrespects, the financial position of the governmental activities, the business-type activities, the discretely

presented component unit, each major fund, and the aggregate remaining fund information of MaconCounty, North Carolina, as of June 30, 2012, the respective changes in financial position and cash flows,where appropriate, thereof, and the respective budgetary comparison for the General Fund for the year

then ended in conformity with accounting principles generally accepted in the United States of America.

In accordance with Government Auditing Standards, we have also issued our report dated October 19,2012, on our consideration of Macon County's internal control over financial reporting and our tests of itscompliance with certain provisions of laws, regulations, contracts, grant agreements, and other matters.

The purpose of that report is to describe the scope of our testing of internal control over financial

reporting and compliance and the results of that testing, and not to provide an opinion on the internalcontrol over financial reporting or on compliance. That report is an integral part of an audit performed inaccordance with Government Auditing Standards and should be considered in assessing the results of ouraudit.


24/178

Accounting principles generally accepted in the United States of America require that the ManagementsDiscussion and Analysis, budgetary comparison information, the Law Enforcement Officers Special

Separation Allowance, and the Other Post-Employment Benefits' Schedules of Funding Progress andEmployer Contributions be presented to supplement the basic financial statements. Such information,although not a part of the basic financial statements, is required by the Governmental AccountingStandards 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 appliedcertain limited procedures to the required supplementary information in accordance with auditingstandards generally accepted in the United States of America, which consisted of inquiries ofmanagement about the methods of preparing the information and comparing the information forconsistency with managements responses to our inquiries, the basic financial statements, and otherknowledge we obtained during our audit of the basic financial statements. We do not express an opinion

or provide any assurance on the information, because the limited procedures do not provide us withsufficient evidence to express an opinion or provide assurance.

Our audit was performed for the purpose of forming an opinion on the financial statements that

collectively comprise the basic financial statements of Macon County, North Carolina, as a whole. Theintroductory section, combining and individual fund financial statements, budget and actual schedules,

supplemental ad valorem tax schedules, and statistical tables are presented for purposes of additionalanalysis and are not a required part of the basic financial statements. The combining and individual fundfinancial statements, budget and actual schedules, and supplemental ad valorem tax schedules are the

responsibility of management and were derived from, and relate directly to, the underlying accountingand other records used to prepare the financial statements. The information has been subjected to theauditing procedures applied in the audit of the financial statements and certain other procedures, including

comparing and reconciling such information directly to the underlying accounting and other records usedto prepare the financial statements, or to the financial statements themselves, and other additional

procedures in accordance with auditing standards generally accepted in the United States of America. Inour opinion, the information is fairly stated, in all material respects, in relation to the basic financialstatements taken as a whole. The introductory section and statistical tables have not been subjected to the

auditing procedures applied in the audit of the basic financial statements and; accordingly, we express no

opinion on them.

Martin Starnes & Associates, CPAs, P.A.

October 19, 2012

2


25/178

Managements Discussion and Analysis

As management of Macon County, we offer readers of Macon Countys financial statements this narrativeoverview and analysis of the financial activities of Macon County for the fiscal year ended June 30, 2012.We encourage readers to consider the information presented here in conjunction with additionalinformation furnished in the Countys financial statements, which follow this narrative.

Financial Highlights

The assets of Macon Countys governmental activities exceeded its liabilities at the close of the fiscalyear by $6,895,369.

The Countys net assets of governmental activities decreased by $5,952,647, primarily due to adecrease in restricted cash and cash equivalents and a decrease in liabilities.

As of the close of the current fiscal year, Macon Countys General Fund reported an ending fundbalance of $21,366,558, an increase of $2,162,543 in comparison with the prior year. Approximately17.0 percent of this total amount, or $3,692,987, is restricted or non-spendable.

At the end of the current fiscal year, unassigned fund balance for the General Fund was $15,992,802,or 38 percent of total General Fund expenditures and transfers out for the fiscal year.

Macon County's total debt decreased by $4,409,338 (9%) during the fiscal year. The key factors inthis decrease are regular debt payments and a drawdown on the NC Clean Water Loan.

The County holds the following bond ratings: Moodys Aa3 and Standard & Poors A+.

Overview of the Financial Statements

This discussion and analysis are intended to serve as an introduction to Macon Countys basic financialstatements. Macon Countys basic financial statements consist of three components: 1) government-widefinancial statements, 2) fund financial statements, and 3) notes to the financial statements (Figure 1). Thebasic financial statements present two different views of the County through the use of government-wide

statements and fund financial statements. In addition to the basic financial statements, this report containsother supplemental information that will enhance the readers understanding of the fi nancial condition ofMacon County.

3


26/178

Required Components of Annual Financial Report

Figure 1

Basic Financial Statements

The first two statements (Exhibits A and B) in the basic financial statements are the Government-WideFinancial Statements. They provide both short and long-term information about the Countys financialstatus.

The next statements (Exhibits C through J) are Fund Financial Statements. These statements focus on

the activities of the individual parts of the Countys government . These statements provide more detailthan the government-wide statements. There are four parts to the Fund Financial Statements: 1) thegovernmental funds statements, 2) the budgetary comparison statements, 3) the proprietary fundstatements, and 4) the fiduciary and agency fund statements.

The final section of the basic financial statements is the Notes to the Financial Statements. The notes tothe financial statements offer a detailed explanation about various information contained in thestatements. After the notes, supplemental information is provided to show details about the Countysnonmajor governmental funds and internal service funds, all of which are added together in one columnon the basic financial statements. Budgetary information required by the North Carolina General Statutescan also be found in this part of the statements.

Immediately following the notes is the required supplementary information. This section containsfunding information about the County's pension plans.

Management'sDiscussion and

AnalysisBasic

Financial

Statements

Government-Wide Financial

StatementsFund

Financial

StatementsNotes to the

Financial

StatementsSummary Detail

4


27/178

Government-Wide Financial Statements

The government-wide financial statements are designed to provide the reader with a broad overview ofthe Countys finances, similar in format to a financial statement of a private-sector business. Thegovernment-wide statements provide short and long-term information about the County's financial statusas a whole.

The two government-wide statements report the County's net assets and how they have changed. Netassets are the difference between the County's total assets and total liabilities. Measuring the net assets isone way to gauge the County's financial condition.

The government-wide financial statements are divided into three categories: 1) governmental activities; 2)business-type activities; and 3) component unit. The governmental activities include most of the County'sbasic services, such as general governmental, public safety, transportation, public education, economicdevelopment, and general administration. Property taxes and federal and State grant funds finance mostof these activities. The business-type activities are those that the County charges customers to provide.This includes the solid waste (landfill) operation offered by Macon County. The final category is thecomponent unit. Macon County is financially accountable for the Macon County Airport Authority.

Financial information for this component unit is reported separately from the financial informationpresented for the primary government itself.

The government-wide financial statements can be found on Exhibits A and B of this report.

Fund Financial Statements

The fund financial statements provide a more detailed look at the County's most significant activities. Afund is a grouping of related accounts that is used to maintain control over resources that have beensegregated for specific activities or objectives. Macon County, like all other governmental entities inNorth Carolina, uses fund accounting to ensure and reflect compliance (or non-compliance) with finance-related legal requirements, such as the General Statutes or the County's budget ordinance. All of the

funds of Macon County can be divided into three categories: governmental funds, proprietary funds, andagency/fiduciary funds.

Governmental Funds. Governmental funds are used to account for those functions reported asgovernmental activities in the government-wide financial statements. Most of the Countys basic servicesare accounted for in governmental funds. These funds focus on how assets can readily be converted intocash flow in and out, and what monies are left at year-end that will be available for spending in the nextyear. Governmental funds are reported using an accounting method called modified accrual accounting.This method also has a current financial resources focus. As a result, the governmental fund financialstatements give the reader a detailed short-term view that helps him or her determine if there are more orless financial resources available to finance the Countys programs. The relationship betweengovernmental activities (reported in the Statement of Net Assets and the Statement of Activities) and

governmental funds is described in a reconciliation that is a part of the fund financial statements.

5


28/178

Macon County adopts an annual budget for its General Fund, as required by the General Statutes. Thebudget is a legally adopted document that incorporates input from the citizens of the County, themanagement of the County, and the decisions of the Board of Commissioners about which services toprovide and how to pay for them. It also authorizes the County to obtain funds from identified sources tofinance these current period activities. The budgetary statement provided for the General Funddemonstrates how well the County complied with the budget ordinance and whether or not the County

succeeded in providing the services as planned when the budget was adopted. The budgetary comparisonstatement uses the budgetary basis of accounting and is presented using the same format, language, andclassifications as the legal budget document. The statement shows four columns: 1) the original budgetas adopted by the Board; 2) the final budget as amended by the Board; 3) the actual resources, charges toappropriations, and ending balances in the General Fund; and 4) the difference or variance between thefinal budget and the actual resources and charges.

Proprietary Funds. Macon County maintains two types of proprietary funds: Enterprise Fund andInternal Service Fund. Enterprise funds report the same functions presented as business-type activities inthe government-wide financial statements. Macon County uses an Enterprise Fund to account for itsSolid Waste operations. Macon County uses an Internal Service Fund to account for health insurance ona cost reimbursement basis. As these services predominantly benefit governmental rather than business-

type functions, they have been included within governmental activities in the government-wide financialstatements.

Proprietary funds provide the same type of information as the government-wide financial statements, onlyin more detail. The proprietary fund financial statements provide separate information for Solid Wasteand Health Insurance.

Fiduciary Funds. Fiduciary funds are used to account for resources held for the benefit of parties outsidethe government. Macon County has seven agency funds.

Notes to the Financial Statements. The notes provide additional information that is essential to a fullunderstanding of the data provided in the government-wide and fund financial statements. The notes to

the financial statements follow Exhibit J of this report.

Other Information. In addition to the basic financial statements and accompanying notes, this reportalso presents certain required supplementary information concerning Macon Countys progress in fundingits obligation to provide pension benefits to its employees. Required supplementary informationimmediately follows the notes to the financial statements.

6


29/178

Government-Wide Financial Analysis

Macon Countys Net Assets

Figure 2

2011 2012 2011 2012 2011 2012

Current and other assets 44,229,066$ 36,538,679$ 8,068,254$ 8,673,266$ 52,297,320$ 45,211,945$

Capital assets 24,156,626 23,459,314 2,536,224 2,271,354 26,692,850 25,730,668

Total assets 68,385,692 59,997,993 10,604,478 10,944,620 78,990,170 70,942,613

Long-term liabilities

outstanding 47,338,503 45,449,420 5,643,286 5,512,126 52,981,789 50,961,546$

Other liabilities 8,199,173 7,653,204 617,389 497,909 8,816,562 8,151,113

Total liabilities 55,537,676 53,102,624 6,260,675 6,010,035 61,798,351 59,112,659

Net assets:Invested in capital assets,

net of related debt 20,496,868 18,601,883 1,836,224 2,071,354 22,333,092 20,673,237

Restricted 6,089,293 6,934,514 - - 6,089,293 6,934,514

Unrestricted (13,738,145) (18,641,028) 2,507,579 2,863,231 (11,230,566) (15,777,797)

Total net assets 12,848,016$ 6,895,369$ 4,343,803$ 4,934,585$ 17,191,819$ 11,829,954$

TotalGovernmental Activities Business-Type Activities

As noted earlier, net assets, over time, may serve as one useful indicator of a governments financialcondition. For Macon County, assets exceeded liabilities by $11,829,954 at the close of the most recentfiscal year. The County's net assets decreased by $5,361,865 for the fiscal year ended June 30, 2012.

By far, the largest portion of Macon Countys net assets, $20,673,237 reflects its investment in capitalassets (e.g., land, buildings, machinery, and equipment), less any related debt used to acquire those assetsthat are still outstanding. Macon County uses these capital assets to provide services to citizens;consequently, these assets are not available for future spending. Although Macon Countys investment inits capital assets is reported net of related debt, it should be noted that the resources needed to repay thisdebt must be provided from other sources, since the capital assets themselves cannot be used to repaythese liabilities.

At the end of the current fiscal year, Macon County is reporting a negative balance in unrestricted netassets in the amount of $15,777,797 for the government as a whole. The primary reason for the deficit isdue to the fact that under North Carolina law, the County is responsible for providing capital funding forthe school system. The County has chosen to meet its legal obligation to provide the school systemcapital funding by using a mixture of County funds and debt financings. The assets, funded by theCounty, however, are titled to and utilized by the school system. Since the County, as the issuinggovernment, acquires no assets, the County has incurred a liability without a corresponding increase inassets.

7


30/178

Macon County's Changes in Net Assets

Figure 3

2011 2012 2011 2012 2011 2012

Revenues:

Program revenues

Charges for services 4,521,633$ 4,319,383$ 3,654,347$ 3,458,349$ 8,175,980$ 7,777,732$

Operating grants and contributions 7,645,348 10,647,327 - - 7,645,348 10,647,327

Capital grants and contributions 5,814,683 133,681 - - 5,814,683 133,681

General revenues:

Property taxes 28,883,855 28,747,033 - - 28,883,855 28,747,033

Other taxes 6,695,601 7,609,640 - - 6,695,601 7,609,640

Other 446,598 437,806 18,830 13,013 465,428 450,819

Total revenues 54,007,718 51,894,870 3,673,177 3,471,362 57,680,895 55,366,232

Expenses:

General government 10,770,642 10,544,326 - - 10,770,642 10,544,326

Public safety 12,147,316 13,462,012 - - 12,147,316 13,462,012Transportation 638,415 709,086 - - 638,415 709,086

Economic and physical development 8,671,741 2,977,859 - - 8,671,741 2,977,859

Human Services 7,734,446 9,376,517 - - 7,734,446 9,376,517

Cultural and recreational 2,430,596 2,349,816 - - 2,430,596 2,349,816

Education 14,553,807 16,309,605 - - 14,553,807 16,309,605

Interest on long-term debt 1,887,654 2,118,296 - - 1,887,654 2,118,296

Solid waste - - 3,351,735 2,880,580 3,351,735 2,880,580

Total expenses 58,834,617 57,847,517 3,351,735 2,880,580 62,186,352 60,728,097

Increase (decrease) in net assets

before special items (4,826,899) (5,952,647) 321,442 590,782 (4,505,457) (5,361,865)

Special item - gain on sale of property 432,900 - - - 432,900 -

Increase (decrease) in net assets (4,393,999) (5,952,647) 321,442 590,782 (4,072,557) (5,361,865)

Net Assets:

Beginning of year - July 1 17,242,015 12,848,016 4,022,361 4,343,803 21,264,376 17,191,819

End of year - June 30 12,848,016$ 6,895,369$ 4,343,803$ 4,934,585$ 17,191,819$ 11,829,954$


8


31/178

Governmental Activities. Of total net assets, governmental activities accounted for $6,895,369 (58.3percent). Property taxes provided 55.4 percent of funding at $28,747,033, charges for services funded$4,319,383, local option sales tax funded $7,609,940, and operating grants funded $10,647,327 of MaconCountys governmental activities. Governmental activities decreased Macon Countys net assets by$5,952,647. Net assets decreased due to the spending down of debt proceeds for school construction,which reduced the restricted cash on hand. Also, the non-current liabilities decreased due to regular debt

payments.

Business-Type Activities. Business-type activities increased Macon Countys net assets by $590,782.That increase is primarily attributable to a decrease in depreciation expense, closure costs, and post-closure costs.

Financial Analysis of the Countys Funds

As noted earlier, Macon County uses fund accounting to ensure and demonstrate compliance withfinance-related legal requirements.

Governmental Funds. The focus of Macon Countys governmental funds is to provide information on

near-term inflows, outflows, and balances of usable resources. Such information is useful in assessingMacon Countys financing requirements. Specifically, fund balance available for appropriation can be auseful measure of a governments net resources available for spending at the end of the fiscal year.

As of the end of the current fiscal year, Macon Countys governmental funds reported combined endingfund balances of $27,664,090, a decrease of $6,333,236 in comparison with the prior year. The decreaseis primarily due to the spending down of debt proceeds for the Iotla Valley Elementary Schoolconstruction.

The General Fund is the chief operating fund of Macon County. At the end of the current fiscal year,fund balance available in the General Fund was $17,951,009, while total fund balance reached$21,366,558. The County currently has an available fund balance of 42% of General Fund expenditures

and transfers out, while total fund balance represents 50% of that same amount. Total fund balance in thegeneral fund increased $2,162,543. This increase is primarily attributable to under spending the budget ingeneral government, public safety, and human services. The Consolidated Capital Project Fund's fundbalance at year-end was $2,586,363, a decrease of $8,052,927 over the prior year, due to the spendingdown of debt proceeds.

General Fund Budgetary Highlights

During the fiscal year, the County revised the budget on several occasions. Generally, budgetamendments fall into three categories: 1) amendments made to adjust the estimates that are used toprepare the original budget ordinance once exact information is available, 2) amendments made torecognize new funding amounts from external sources, such as federal and State grants, and 3) increases

in appropriations that become necessary to maintain services. Total amendments to the General Fundincreased the revenue budget by $2,999,707. The majority of this increase was attributable to additionalrestricted intergovernmental revenues received after the beginning of the year. The difference betweenthe final budgeted amount and the actual expenditures was $3,320,668. This difference is primarily dueto under spending the budget in general government, public safety, and human services, the decision notto fill certain positions, and incomplete contracts to be continued in 2013.

9


32/178

Proprietary Funds. Macon Countys proprietary funds provide the same type of information found inthe government-wide financial statements, but in more detail.

Unrestricted net assets of Solid Waste at the end of the year totaled $2,863,231. The increase of $355,652over the prior year is primarily attributable to an increase in tipping fee revenues and the under spendingof the budget on post closure costs.

Capital Asset and Debt Administration

Capital Assets. Macon Countys investment in capital assets for its governmental and business-typeactivities as of June 30, 2012 amounts to $25,730,668, (net of accumulated depreciation). Thisinvestment in capital assets includes land, buildings and systems, improvements, machinery andequipment. There was a decrease of 3.6 percent in Macon Countys investment in capital assets for thecurrent fiscal year after accumulated depreciation (a 2.9 percent decrease for governmental activities anda 10.4 percent decrease for business-type activities).

Macon County's Capital Assets

Figure 4

2011 2012 2011 2012 2011 2012

Land 9,104,281$ 9,104,281$ 460,837$ 460,837$ 9,565,118$ 9,565,118$

Buildings and improvements 25,499,397 26,089,890 9,395,567 9,395,567 34,894,964 35,485,457

Furniture and equipment 2,624,463 2,539,709 2,116,215 2,221,473 4,740,678 4,761,182

Vehicles 4,851,302 5,180,244 692,115 704,863 5,543,417 5,885,107

Construction in progress 375,697 354,952 - 23,179 375,697 378,131

Subtotal 42,455,140 43,269,076 12,664,734 12,805,919 55,119,874 56,074,995

Less accumulated

depreciation (18,298,514) (19,809,762) (10,128,510) (10,534,565) (28,427,024) (30,344,327)Total 24,156,626$ 23,459,314$ 2,536,224$ 2,271,354$ 26,692,850$ 25,730,668$


Additional information on Macon Countys capital assets can be found in the notes to the financialstatements beginning on page 38.

Long-Term Debt. At the end of the current fiscal year, Macon County had no bonded debt outstanding.

The Municipal Finance Law of North Carolina limits the amount of net bonded debt a County may haveoutstanding to 8 percent of the appraised value subject to taxation. The current debt limitation for MaconCounty is $700,772,885, which is significantly greater than Macon Countys outstanding general

obligation debt.

More detailed information on Macon Countys long-term debt can be found in the notes to the financialstatements beginning on page 50.

10


33/178

Economic Factors and Next Years Budget and Rates

The unemployment rate for Macon County is currently 10.1 percent, which is a slight decrease from arate of 10.3 percent a year ago. Macon Countys rate is slightly higher than the Statesunemployment rate of 9.9 percent.

Sales tax distributions increased 8% over prior year.

The tax base is diverse, with the ten leading taxpayers making up 3.36% of total assessed value.

All of these factors were considered in preparing Macon Countys budget for the 2012-2013 fiscal year.

Budget Highlights for the Fiscal Year Ending June 30, 2013

Governmental Activities: Approximately one percent growth in the tax base is anticipated over lastyear, to a total $9.39 billion in property valuation. The collection rate dropped from 97.09% in 2011 to96.38% in 2012. Sales tax revenues were budgeted with an anticipated 2% growth over FY 11-12projections.

Budgeted expenditures in the General Fund for 2013 are $44,391,193, which includes new debt servicefor school technology. The 2013 budget has approximately $1.1 million capital outlay, an increase inSocial Services due to the daycare subsidy payments passing through the County, and an increase inHuman Services due to the addition of the Community Transformation Grant.

Business-Type Activities: The budgeted expenditures for the Solid Waste Fund are $3,775,200, whichrepresents an 8% percent increase over last year. The increase is due to capital outlay appropriations andpreliminary planning costs for a new cell at the Macon County MSW landfill.

Requests for information

This financial report is designed to provide a general overview of Macon Countys finances for all thosewith an interest in the governments finances. Questions concerning any of the information provided inthis report, or requests for additional financial information, should be addressed to the Office of theFinance Director, 5 West Main Street, Franklin, North Carolina 28734.

11


34/178



35/178

BASIC FINANCIAL STATEMENTSOVERVIEW


36/178



37/178

Exhibit A


STATEMENT OF NET ASSETS

JUNE 30, 2012

Component

Unit

Macon County

Governmental Business-Type Airport

Activities Activities Total Authority

Assets:

Cash and cash equivalents 28,138,552$ 8,350,321$ 36,488,873$ 48,311$

Taxes receivable, net 1,225,422 - 1,225,422 -

Interest receivable 15,388 6,184 21,572 -

Accounts receivable, net 2,211,920 312,311 2,524,231 -

Due from other governments 3,230,564 4,450 3,235,014 -

Inventories 90,114 - 90,114 -

Prepaid items 119,618 - 119,618 -

Restricted cash and cash equivalents 1,507,101 - 1,507,101 -

Construction in progress 354,952 23,179 378,131 -Non-depreciable capital assets 9,104,281 460,837 9,565,118 8,807,631

Depreciable capital assets, net 14,000,081 1,787,338 15,787,419 1,198,442

Total assets 59,997,993 10,944,620 70,942,613 10,054,384

Liabilities:

Accounts payable and accrued liabilities 2,810,634 293,329 3,103,963 3,413

Unearned revenue 130,301 - 130,301 -

Non-current liabilities:

Due in less than one year 4,712,269 204,580 4,916,849 -

Due in more than one year 45,449,420 5,512,126 50,961,546 -

Total liabilities 53,102,624 6,010,035 59,112,659 3,413

Net Assets:

Invested in capital assets,

net of related debt 18,601,883 2,071,354 20,673,237 10,006,073

Restricted for:

Stabilization by State statute 4,692,105 - 4,692,105 -

Restricted for public safety 341,369 - 341,369 -

Restricted for economic and physical development 252,562 - 252,562 -

Restricted for education 1,648,478 - 1,648,478 -

Unrestricted (18,641,028) 2,863,231 (15,777,797) 44,898

Total net assets 6,895,369$ 4,934,585$ 11,829,954$ 10,050,971$

Primary Government

The accompanying notes are an integral part of the financial statements.

12


38/178


STATEMENT OF ACTIVITIES


Operating Capital

Charges for Grants and Grants and

Functions/Programs: Expenses Services Contributions Contributions

Primary Government:

Governmental Activities:

General government 10,544,326$ 1,047,612$ 1,309,983$ -$

Public safety 13,462,012 2,110,943 642,766 -

Transportation 709,086 - 258,237 -

Economic and physical development 2,977,859 476,355 1,249,048 133,681

Human services 9,376,517 684,473 6,813,452 -

Cultural and recreational 2,349,816 - - -

Education 16,309,605 - 373,841 -

Interest on long-term debt 2,118,296 - - -

Total governmental activities 57,847,517 4,319,383 10,647,327 133,681

Business-Type Activities:

Solid waste 2,880,580 3,458,349 - -

Total primary government 60,728,097$ 7,777,732$ 10,647,327$ 133,681$

Component Unit:

Airport Authority 135,753$ 7,240$ 40,000$ 676,674$

General Revenues:

Ad valorem taxes

Local option sales tax

Unrestricted intergovernmental revenues:

Other taxes

Gross receipts tax

Interest earned on investments

Total general revenues

Change In Net Assets

Net Assets:

Beginning of year - July 1

End of year - June 30

Program Revenues


13


39/178

Exhibit B

Net (Expense) Revenue and Changes in Net Assets

Component Unit

Macon County

Governmental Business-Type Airport

Activities Activities Total Authority

(8,186,731)$ -$ (8,186,731)$ -$

(10,708,303) - (10,708,303) -

(450,849) - (450,849) -

(1,118,775) - (1,118,775) -

(1,878,592) - (1,878,592) -

(2,349,816) - (2,349,816) -

(15,935,764) - (15,935,764) -

(2,118,296) - (2,118,296) -

(42,747,126) - (42,747,126) -

- 577,769 577,769 -

(42,747,126) 577,769 (42,169,357) -

588,161

28,747,033 - 28,747,033 -

7,609,640 - 7,609,640 -

342,854 - 342,854 -

16,488 - 16,488 -

78,464 13,013 91,477 -

36,794,479 13,013 36,807,492 -

(5,952,647) 590,782 (5,361,865) 588,161

12,848,016 4,343,803 17,191,819 9,462,810

6,895,369$ 4,934,585$ 11,829,954$ 10,050,971$

Primary Government


14


40/178

Exhibit C


BALANCE SHEET - GOVERNMENTAL FUNDS

JUNE 30, 2012

Consolidated Debt Other Total

General Capital Service Governmental Governmental

Fund Project Fund Funds FundsAssets:

Cash and cash equivalents 19,650,804$ 1,066,505$ 976,150$ 2,460,542$ 24,154,001$

Taxes receivable, net 1,081,406 - - 144,016 1,225,422

Interest receivable 15,388 - - - 15,388

Accounts receivable, net 1,062,390 548,538 44,145 556,847 2,211,920

Due from other funds 241,041 - - - 241,041

Due from other governments 2,893,806 - - 336,758 3,230,564

Inventories 90,114 - - - 90,114

Prepaid items 119,618 - - - 119,618

Cash and cash equivalents, restricted 2,584 1,504,517 - - 1,507,101

Total assets 25,157,151$ 3,119,560$ 1,020,295$ 3,498,163$ 32,795,169$

Liabilities and Fund Balances:

Liabilities:

Accounts payable and accrued liabilities 1,572,078$ 533,197$ -$ 422,236$ 2,527,511$

Due to other funds - - - 241,041 241,041

Deferred revenues 2,218,515 - - 144,012 2,362,527

Total liabilities 3,790,593 533,197 - 807,289 5,131,079

Fund Balances:

Non-spendable, not in spendable form:

Inventories 90,114 - - - 90,114

Prepaids 119,618 - - - 119,618

Stabilization by State statute 3,205,817 548,538 44,145 893,605 4,692,105

Restricted, all others 277,438 1,504,517 - 460,454 2,242,409

Committed - 533,308 - 1,663,942 2,197,250

Assigned 1,680,769 - 976,150 - 2,656,919

Unassigned 15,992,802 - - (327,127) 15,665,675

Total fund balances 21,366,558 2,586,363 1,020,295 2,690,874 27,664,090

Total liabilities and fund balances 25,157,151$ 3,119,560$ 1,020,295$ 3,498,163$

Capital assets used in governmental activities are not financial resources and,

therefore, are not reported in the funds. 23,459,314

Internal service funds are used by management to charge the cost of health

insurance. The assets and liabilities of the Internal Service Fund are included

in governmental activities in the Statement of Net Assets. 3,701,428Long-term liabilities and compensated absences are not due and payable in

the current period and, therefore, are not reported in the funds. (50,161,689)

Deferred revenues in the governmental funds are used to offset accounts

receivable not expected to be available within 90 days of year-end. These

receivables are a component of net assets in the Statement of Net Assets. 2,232,226

Net assets of governmental activities 6,895,369$


15


41/178

Exhibit D


STATEMENT OF REVENUES, EXPENDITURES, AND

CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS


Consolidated Debt Other Total

General Capital Service Governmental Governmental

Fund Project Fund Funds Funds

Revenues:

Ad valorem taxes 25,924,926$ -$ -$ 2,709,230$ 28,634,156$

Local option sales taxes 6,095,609 - - 1,514,031 7,609,640

Unrestricted intergovernmental revenues 359,342 - - - 359,342

Restricted intergovernmental revenues 7,645,173 - 1,131,384 1,595,279 10,371,836

Permits and fees 1,432,807 - - - 1,432,807

Sales and services 2,697,408 - - - 2,697,408

Interest earned on investments 65,589 8,129 566 1,535 75,819

Miscellaneous 43,027 164,092 53,521 148,532 409,172

Total revenues 44,263,881 172,221 1,185,471 5,968,607 51,590,180

Expenditures:

Current:

General government 6,295,610 - - 153,503 6,449,113

Public safety 10,069,670 - - 3,637,436 13,707,106

Transportation 754,920 - - - 754,920

Economic and physical development 844,813 - - 2,159,415 3,004,228

Human services 9,649,735 - - - 9,649,735

Education 8,084,457 8,225,148 - - 16,309,605

Cultural and recreational 2,021,075 - - - 2,021,075

Debt service:

Principal repayments - - 4,637,634 - 4,637,634

Interest - - 2,118,296 - 2,118,296

Total expenditures 37,720,280 8,225,148 6,755,930 5,950,354 58,651,712

Revenues over (under) expenditures 6,543,601 (8,052,927) (5,570,459) 18,253 (7,061,532)

Other Financing Sources (Uses):

Issuance of long-term debt - - - 728,296 728,296

Transfers in 351,125 - 5,576,028 853,324 6,780,477

Transfers out (4,732,183) - - (2,048,294) (6,780,477)

Total other financing sources (uses) (4,381,058) - 5,576,028 (466,674) 728,296

Net change in fund balances 2,162,543 (8,052,927) 5,569 (448,421) (6,333,236)

Fund Balances:

Beginning of year - July 1 19,204,015 10,639,290 1,014,726 3,139,295 33,997,326

End of year - June 30 21,366,558$ 2,586,363$ 1,020,295$ 2,690,874$ 27,664,090$


16


42/178

Exhibit E


RECONCILIATION OF THE STATEMENT OF REVENUES,

EXPENDITURES, AND CHANGES IN FUND BALANCES -

GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES


Amounts reported for governmental activities in the Statement of Activities (Exhibit B) are different

due to the following items:

Net change in fund balances - total governmental funds (6,333,236)$

Property tax revenues in the Statement of Activities that do not provide current financial resources

are not reported as revenues in the governmental funds statement. 112,877

Exhibit D reports revenues using a current financial resources basis, which generally means revenue

is recognized when collected, or is expected to be collected, within 90 days of year-end. Exhibit B

reports revenues when the earning process is complete, regardless of when it is collected. This

measurement difference causes timing of revenue recognition differences for the following

revenues types:

Ambulance revenues in the Statement of Activities that do not provide current financial resources

are not reported as revenues in the governmental funds statement. (77,918)

Public Health fees in the Statement of Activities that do not provide current financial resources

are not reported as revenues in the governmental funds statement. 44,362

Expenses related to compensated absences and Law Enforcement Officers' Separation Allowance

that do not require current financial resources are not reported as expenditures in the governmental

funds statement. (2,117,029)

Capital assets disposed of during the year are not recognized on the modified accrual basis. (4,750)

Capital outlays are reported as expenditures in the governmental funds statement. However, in the

Statement of Activities, capital outlay is not an expense, rather it is an increase in capital assets. 912,731

The issuance of long-term debt provides current financial resources to governmental funds.

However, in the Statement of Activities, these transactions are not revenue, rather they are

an increase in liabilities. (728,296)

Depreciation expense allocates the costs of capital assets over their useful lives. It is not

reported as an expenditure in the governmental funds statement. (1,605,293)

Principal repayments are reported as expenditures in the governmental funds statement.

However, in the Statement of Activities, these transactions are not an expense, rather they

are a decrease in liabilities. 4,637,634

The net revenue (expense) of the internal service funds are reported with governmental activities. (793,729)

Change in net assets of governmental activities (Exhibit B) (5,952,647)$


17


43/178

Exhibit F


STATEMENT OF REVENUES, EXPENDITURES, AND

CHANGES IN FUND BALANCE - BUDGET AND ACTUAL

GENERAL FUND


Variance from

Budgeted Amounts Final Budget

Original Final Actual Over/Under

Revenues:

Ad valorem taxes 26,102,970$ 26,102,970$ 25,924,926$ (178,044)$

Local option sales taxes 5,790,000 5,790,000 6,095,609 305,609

Unrestricted intergovernmental revenues 365,000 365,000 359,342 (5,658)

Restricted intergovernmental revenues 5,869,931 8,435,574 7,645,173 (790,401)

Permits and fees 1,146,300 1,321,300 1,432,807 111,507

Sales and services 2,193,200 2,448,101 2,697,408 249,307

Investment earnings 48,000 48,000 65,589 17,589

Miscellaneous 16,862 21,025 43,027 22,002Total revenues 41,532,263 44,531,970 44,263,881 (268,089)

Expenditures:

Current:

General government 6,848,178 6,946,811 6,295,610 651,201

Public safety 10,237,790 10,694,243 10,069,670 624,573

Transportation 851,751 874,083 754,920 119,163

Economic and physical development 773,220 880,737 844,813 35,924

Human services 9,257,320 11,487,700 9,649,735 1,837,965

Cultural and recreational 2,001,062 2,049,941 2,021,075 28,866

Intergovernmental:

Education 8,121,121 8,107,433 8,084,457 22,976

Total expenditures 38,090,442 41,040,948 37,720,280 3,320,668

Revenues over (under) expenditures 3,441,821 3,491,022 6,543,601 3,052,579

Other Financing Sources (Uses):

Transfers in 270,637 270,637 351,125 80,488

Transfers out (4,684,821) (4,748,849) (4,732,183) 16,666

Appropriated fund balance 972,363 987,190 - (987,190)

Total other financing sources (uses) (3,441,821) (3,491,022) (4,381,058) (890,036)

Net change in fund balance -$ -$ 2,162,543 2,162,543$

Fund Balance:

Beginning of year - July 1 19,204,015

End of year - June 30 21,366,558$


18


44/178

Exhibit G


STATEMENT OF NET ASSETS

PROPRIETARY FUNDS

JUNE 30, 2012

Business-Type Governmental

Activities Activities

Solid Internal Service

Waste Funds

Assets:

Current assets:

Cash and cash equivalents 8,350,321$ 3,984,551$

Interest receivable 6,184 -

Accounts receivable, net 312,311 -

Due from other government agencies 4,450 -

Total current assets 8,673,266 3,984,551

Non-current assets:

Construction in progress 23,179 -

Non-depreciable capital assets 460,837 -

Depreciable capital assets, net 1,787,338 -

Total non-current assets 2,271,354 -

Total assets 10,944,620 3,984,551

Liabilities:

Current liabilities:

Accounts payable and accrued liabilities 293,329 283,123Current portion of long-term liabilities 200,000 -

Compensated absences payable - current 4,580 -

Total current liabilities 497,909 283,123

Non-current liabilities:

Accrued landfill closure and post-closure care cost 5,112,000 -

Compensated absences payable 41,222 -

Long-term liabilities - non-current 358,904 -

Total non-current liabilities 5,512,126 -

Total liabilities 6,010,035 283,123

Net Assets:

Invested in capital assets, net of related debt 2,071,354 -

Unrestricted 2,863,231 3,701,428

Total net assets 4,934,585$ 3,701,428$


19


45/178

Exhibit H


STATEMENT OF REVENUES, EXPENSES, AND CHANGES

IN FUND NET ASSETS - PROPRIETARY FUNDS


Business-Type Governmental

Activities Activities


Waste Funds

Operating Revenues:

Landfill fees 1,826,775$ -$

Solid waste disposal fees 35,447 -

Charges for services - 3,224,310

Tipping fees 1,141,800 -

Scrap tire revenues 41,703 -

Other 412,624 -

Total operating revenues 3,458,349 3,224,310

Operating Expenses:

Salaries 939,943 -

Employee benefits 393,892 -

Benefit payments - 3,575,512

Insurance premiums - 445,172

Operating expenses 1,031,875 -

Landfill closure and post-closure care cost 87,068 -

Depreciation 406,055 -

Total operating expenses 2,858,833 4,020,684

Operating income (loss) 599,516 (796,374)

Non-Operating Revenues (Expenses):

Interest earned on investments 13,013 2,645

Interest and fees (21,747) -

Total non-operating revenues (expenses) (8,734) 2,645

Change in net assets 590,782 (793,729)

Net Assets:

Beginning of year- July 1 4,343,803 4,495,157

End of year- June 30 4,934,585$ 3,701,428$


20


46/178

Exhibit I


STATEMENT OF CASH FLOWS

PROPRIETARY FUNDS


Business-Type GovernmentalActivities Activities


Waste Funds

Cash Flows from Operating Activities:

Cash received from customers 3,058,520$ 3,224,310$

Cash paid for goods and services (992,720) (4,123,501)

Cash paid to employees for services (1,210,698) -

Other operating revenues 524,147 -

Net cash provided (used) by operating activities 1,379,249 (899,191)

Cash Flows from Capital and Related Financing Activities:

Acquisition and construction of capital assets (141,185) -

Principal paid on long-term debt (500,000) -

Interest paid on long-term debt (21,747) -

Net cash provided (used) for capital and related financing activities (662,932) -

Cash Flows from Investing Activities:

Interest on investments 13,013 2,645

Net increase (decrease) in cash and cash equivalents 729,330 (896,546)

Cash and Cash Equivalents:

Beginning of year - July 1 7,620,991 4,881,097

End of year - June 30 8,350,321$ 3,984,551$

Reconciliation of Operating Income (Loss) to

Net Cash Provided (Used) by Operating Activities:

Operating income (loss) 599,516$ (796,374)$

Adjustments to reconcile operating income (loss) to

net cash provided (used) by operating activities:

Depreciation 406,055 -

Change in estimate of closure and post-closure care cost 51,000 -

Other post-employment benefits 117,405 -

Changes in assets and liabilities:(Increase) decrease in accounts receivable 124,318 -

Increase (decrease) in accounts payable and accrued liabilities 80,472 (102,817)

Increase (decrease) in accrued vacation pay 483 -

Net cash provided (used) by operating activities 1,379,249$ (899,191)$


21


47/178

Exhibit J


STATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUND

JUNE 30, 2012

Agency

Funds

Assets:

Cash and cash equivalents 117,783$

Accounts receivable 15,817

Total assets 133,600$

Liabilities:

Miscellaneous liabilities 107,443$

Intergovernmental payable 26,157

Total liabilities 133,600$


22


48/178


NOTES TO THE FINANCIAL STATEMENTS


1. Summary of Significant Accounting PoliciesThe accounting policies of Macon County (the "County") and its discretely presented componentunits conform to accounting principles generally accepted in the United States of America as theyare applicable to governments. The following is a summary of the more significant accountingpolicies:

A. Reporting Entity

The County, which is governed by a five-member Board of Commissioners, is one of the 100counties established in North Carolina under North Carolina General Statute 153A-10. Asrequired by accounting principles generally accepted in the United States of America, thesefinancial statements present the County and its component units legally separate entities forwhich the County is financially accountable. One component unit of the County has nofinancial transactions or account balances; therefore, it does not appear in the combinedfinancial statements. One of the discretely presented component units presented below isreported in a separate column in the Countys combined financial statements in order toemphasize that it is legally separate from the County.

Discretely Presented Component Units

Macon County Industrial Facility and Pollution Control Financing Authority

Macon County Industrial Facility and Pollution Control Financing Authority (the Authority)exists to issue and service revenue bond debt of private businesses for economic development

purposes. The Authority is governed by a seven-member Board of Commissioners, all ofwhom are appointed by the County Commissioners. The County can remove anyCommissioner of the Authority with or without cause. The Authority has no financialtransactions or account balances; therefore, it is not presented in the combined financialstatements. The Authority does not issue separate financial statements.

Macon County Airport Authority

Macon County Airport Authority exists to purchase, construct, or acquire equipment toimprove, maintain, or operate airports and landing fields within the limits of the County. TheAuthority is fiscally dependent on the County due to the County providing the costs andservices of the administrative and finance function. The Authority is governed by five

members, all of whom are appointed by the Macon County Commissioners. Therefore, theCounty has significant influence over the operations of the Authority.

Complete financial statements for the individual component units which issued financialstatements may be obtained at the administrative offices of the County at 5 West Main Street,Franklin, North Carolina 28734.

23


49/178




B. Basis of Presentation

Government-Wide Statements. The Statement of Net Assets and the Statement of Activitiesreport information on all of the non-fiduciary activities of the primary government and itscomponent units. The effect of interfund activity has been removed from these statements in allmaterial areas. The interfund services provided and used are not eliminated in the process ofthe consolidation. Governmental activities, which normally are supported by taxes andintergovernmental revenues, are reported separately from business-type activities, which rely,to a significant extent, on fees and charges for support. Likewise, the primary government isreported separately from certain legally separate component units for which the primarygovernment is financially accountable.

The Statement of Activities demonstrates the degree to which the direct expenses of a givenfunction or segment is offset by program revenues. Direct expenses are those that are clearlyidentifiable with a specific function or segment. Program revenues include (1) charges tocustomers or applicants who purchase, use, or directly benefit from goods, services, orprivileges provided by a given function or segment, and (2) grants and contributions that arerestricted to meeting the operational or capital requirements of a particular function or segment.Taxes and other items not properly included among program revenues are reported instead asgeneral revenues.

Fund Financial Statements. Separate financial statements are provided for governmental funds,proprietary funds, and fiduciary funds. The fiduciary funds are excluded from the government-wide financial statements. Major individual governmental funds and major individualenterprise funds are reported as separate columns in the fund financial statements. All

remaining governmental and enterprise funds are aggregated and reported as nonmajor funds.

Proprietary Fund operating revenues, such as charges for services, result from exchangetransactions associated with the principal activity of the fund. Exchange transactions are thosein which each party receives and gives up essentially equal values. Non-operating revenues,such as subsidies and investment earnings, result from non-exchange transactions or ancillaryactivities.

The County reports the following major governmental funds:

General Fund. The General Fund is the general operating fund of the County. It is used toaccount for all financial resources except those required to be accounted for in another fund.

Debt Service Fund. The Debt Service Fund is used to account for all expenditures for principaland interest for all long-term debt payments. The other governmental fund types provide theresources to the Debt Service Fund to make the payments through transfers.

Capital Project Funds. Capital project funds are used to account for financial resources to beused for acquisition or construction of major capital facilities (other than those financed byproprietary funds or trust funds). The County maintains one major Capital Project Fund withinthe governmental fund types:

24


50/178




Consolidated Capital Projectsaccounts for projects related to education facilities.

The County has the following fund categories:

Governmental Funds. Governmental funds account for the County's general governmentalactivities. Governmental funds include the following fund types:

General Fund. TheGeneral Fund is the general operating fund of the County. It is used toaccount for all financial resources except those required to be accounted for in another fund.The primary revenue sources are ad valorem taxes, sales taxes, federal and State grants, andvarious other taxes and licenses. The primary expenditures are for public safety, environmentalprotection, economic and physical development, human services, cultural and recreationalprojects, education, and general government services.

Special Revenue Funds. Special revenue funds are used to account for specific revenuesources (other than special assessments, expendable trusts, or major capital projects) that arelegally restricted to expenditures for specified purposes. The County maintains four specialrevenue funds: the Emergency Telephone System Fund, the Fire Districts Fund, the CleanWater Management Trust Fund, and the Housing Grants Fund.

Capital Project Funds. Capitalproject funds are used to account for financial resources to beused for the acquisition or construction of major capital facilities (other than those financed byproprietary funds or trust funds). The County has seven nonmajor capital project funds withinthe governmental fund types: the Airport Improvements Fund, the County Buildings ProjectFund, the SCC Campus/Library Project Fund, the Riverbend Estates Waterline Project, the

Little Tennessee River/Cartoogechaye Creek Sewer Trunk Project Fund, the Schools CapitalFund, and the Capital Reserve Fund. The County has one major Capital Project Fund. TheConsolidated Capital Project Fund is used to account for various school projects that are beingconstructed or renovated. The fund consists of loan funds and local County dollars for eachproject. The fund is structured so that revenues and expenditures by project may be easilyidentified.

Proprietary Fundsinclude the following fund types:

Enterprise Funds. Enterprise funds are used to account for operations (a) that are financedand operated in a manner similar to private business enterprises - where the intent of thegoverning body is that the costs (expenses, including depreciation) of providing goods or

services to the general public on a continuing basis be financed or recovered primarily throughuser charges; or (b) where the governing body has decided that periodic determination ofrevenues earned, expenses incurred, and/or net income is appropriate for capital maintenance,public policy, management control, accountability, or other purposes. Macon County has oneEnterprise Fund: the Solid Waste Fund. The Landfill Closure and Post-Closure Reserve Fundis a reserve established by the County to accumulate the funds necessary to cover the closureand post-closure care costs that will be incurred by the landfill in the future. The LandfillClosure and Post-Closure Reserve Fund is consolidated with the Solid Waste Fund (theoperating fund) for financial reporting purposes.

25


51/178




Internal Service Funds. Internal service funds are used to account for the financing of goodsor services provided by one department to other departments of the County on a cost-reimbursement basis. Macon County has one Internal Service Fund: the Self-Insurance Fund.

Fiduciary Funds. Fiduciary funds account for the assets held by the County in a trusteecapacity or as an agent for individuals, private organizations, other governmental units, and/orother funds. Fiduciary funds include the following funds:

Agency Funds. Agency funds are custodial in nature (assets equal liabilities) and do notinvolve the measurement of operating results. Agency funds are used to account for assets theCounty holds on behalf of others. The County maintains eight agency funds: the SocialServices and Inmate Trust Fund, which accounts for monies deposited with the Social ServicesDepartment and Jail for the benefit of certain individuals; the Fines and Forfeitures Fund,which accounts for various legal fines and forfeitures that the County is required to remit to theMacon County Board of Education; the Motor Vehicle Tax Fund, which accounts for registeredmotor vehicle property taxes that are billed and collected by the County for variousmunicipalities within the County; the Deed of Trust Fund which accounts for $6.20 of each feecollected by the Register of Deeds for registering or filing a deed of trust; the Western Carolina,Industrial Partners Fund, which accounts for monies held by the County as agent for advertisingand promotions for Western North Carolina industries; the Hurricane Ivan Relief Fund, whichaccounts for monies held for hurricane relief and recovery; and the 3% Interest Payable toState, which accounts for interest on delinquent motor vehicle taxes required to be remitted tothe State of North Carolina Department of Motor Vehicles.

C. Measurement Focus and Basis of Accounting

In accordance with North Carolina General Statutes, all funds of the County are maintainedduring the year using the modified accrual basis of accounting.

Government-Wide, Proprietary, and Fiduciary Fund Financial Statements. The government-wide, proprietary, and fiduciary fund financial statements are reported using the economicresources measurement focus, except for the agency funds which have no measurement focusand the accrual basis of accounting. Revenues are recorded when earned, and expenses arerecorded at the time liabilities are incurred, regardless of when the related cash flows takeplace. Non-exchange transactions, in which the County gives (or receives) value withoutdirectly receiving (or giving) equal value in exchange, include property taxes, grants,entitlements, and donations. On an accrual basis, revenue from property taxes is recognized in

the fiscal year for which the taxes are levied. Revenue from grants, entitlements, and donationsis recognized in the fiscal year in which all eligibility requirements have been satisfied.

Amounts reported as program revenues include: 1) charges to customers or applicants forgoods, services, or privileges provided, 2) operating grants and contributions, and 3) capitalgrants and contributions, including special assessments. Internally dedicated resources arereported as general revenues rather than as program revenues. Likewise, general revenuesinclude all taxes.

26


52/178




Proprietary funds distinguish operating revenues and expenses from non-operating items.Operating revenues and expenses generally result from providing services and producing anddelivering goods in connection with a proprietary funds principal ongoing operations. Theprincipal operating revenues of the County enterprise funds are charges to customers for salesand services. Operating expenses for enterprise funds include the cost of sales and services,administrative expenses, and depreciation on capital assets. All revenues and expenses notmeeting this definition are reported as non-operating revenues and expenses.

Governmental Fund Financial Statements. Governmental funds are reported using the currentfinancial resources measurement focus and the modified accrual basis of accounting. Underthis method, revenues are recognized when measurable and available. Expenditures arerecorded when the related fund liability is incurred, except for principal and interest on long-term debt, claims and judgments, and compensated absences, which are recognized asexpenditures to the extent they have matured. Long-term debt issued and acquisitions undercapital leases are reported as other financing sources. General capital asset acquisitions arereported as expenditures in governmental funds.

The County considers all revenues available if they are collected within 90 days after year-end,except for property taxes. Ad valorem property taxes are not accrued as revenue because theamount is not susceptible to accrual. At June 30, taxes receivable are materially past due andare not considered to be an available resource to finance the operations of the current year.Also, as of January 1, 1993, State law altered the procedures for the assessment and collectionof property taxes on registered motor vehicles in North Carolina. Effective with this change inthe law, Macon County is responsible for billing and collecting the property taxes on allregistered motor vehicles on behalf of all municipalities and special tax districts in the County.

For registered motor vehicles, property taxes are due the first day of the fourth month after thevehicles are registered. The billed taxes are applicable to the fiscal year in which they becomedue. Therefore, taxes for vehicles registered from March 2011 through February 2012 apply tothe fiscal year ended June 30, 2012. Uncollected taxes which were billed during this period areshown as a receivable on these financial statements.

Sales taxes collected and held by the State at year-end on behalf of the County are recognizedas revenue. Intergovernmental revenues and sales and services are not susceptible to accrualbecause, generally, they are not measurable until received in cash. Expenditure-driven grantsare recognized as revenue when the qualifying expenditures have been incurred and all othergrant requirements have been satisfied.

Under the terms of grant agreements, the County funds certain programs by a combination ofspecific cost-reimbursement grants, categorical block grants, and general revenues. Thus, whenprogram expenses are incurred, there are both restricted and unrestricted net assets available tofinance the program. It is the Countys policy to first apply cost-reimbursement grant resourcesto such programs, followed by categorical block grants, and then by general revenues.

27


53/178




All governmental and business-type activities and enterprise funds of the County follow FASBStatements and Interpretations issued on or before November 30, 1989, Accounting PrinciplesBoard Opinions, and Accounting Research Bulletins, unless those pronouncements conflictwith GASB pronouncements.

D. Budgetary Data

The County's budgets are adopted as required by North Carolina General Statutes. An annualbudget ordinance is adopted for the General Fund, the Debt Service Fund, the EmergencyTelephone System Fund, the Capital Reserve Fund, Fire Districts Fund, the Schools CapitalFund, the Enterprise Fund, and the Internal Service Fund. All annual appropriations lapse atfiscal year-end. Project ordinances are adopted for the Housing Grants and Clean WaterManagement Trust (Special Revenue) Funds, the Consolidated Capital Projects Fund, theAirport Improvements Fund, the Little Tennessee River/Cartoogechaye Creek Sewer TrunkProject Fund, the County Buildings Project Fund, the SCC Campus/Library Project Fund, andthe Riverbend Estates Waterline Project Fund. All budgets are prepared using the modifiedaccrual basis of accounting.

Expenditures may not legally exceed appropriations at the departmental level for the GeneralFund, special revenue funds, Enterprise Fund, and Internal Service Fund, or at the object levelfor the capital projects funds. The County Manager is authorized by the budget ordinance totransfer appropriations within a fund; however, any such transfers must be reported to theBoard of Commissioners and recorded in the minutes. During the year, several amendments tothe original budget were necessary, the effects of which were not material. The budgetordinance must be adopted by July 1 of the fiscal year, or the governing board must adopt an

interim budget that covers that time until the annual ordinance can be adopted.

E. Assets, Liabilities, and Fund Equity

Deposits and Investments

All deposits of the County are made in Board-designated official depositories and are securedas required by G.S. 159-31. The County may designate, as an official depository, any bank orsavings association whose principal office is located in North Carolina. Also, the County mayestablish time deposit accounts such as NOW and SuperNOW accounts, money marketaccounts, and certificates of deposit.

State law [G.S. 159-30(c)] authorizes the County to invest in obligations of the United States orobligations fully guaranteed both as to principal and interest by the United States; obligations ofthe State of North Carolina; bonds and notes of any North Carolina local government or publicauthority; obligations of certain non-guaranteed federal agencies; certain high quality issues ofcommercial paper and bankers' acceptances; and the North Carolina Capital Management Trust(NCCMT).

28


54/178




The Countys investments with a maturity of more than one year at acquisition and non-moneymarket investments are carried at fair value as determined by quoted market prices. Thesecurities of the NCCMT Cash Portfolio, an SEC-registered (2a-7) money market fund, arevalued at fair value, which is the NCCMTs share price. The NCCMT Term Portfoliossecurities are valued at fair value. Money market investments that have a remaining maturity atthe time of purchase of one year or less and non-participating interest earnings and investmentcontracts are reported at amortized cost.

Cash and Cash Equivalents

The County pools money from several funds to facilitate disbursement and investment and tomaximize investment income. Therefore, all cash and investments are essentially demanddeposits and are considered cash and cash equivalents.

Restricted Assets

The restricted assets in the General Fund, in the amount of $2,584, represents amounts reservedfor the Public School Building Capital Fund. The restricted assets in the Consolidated CapitalProject Fund of $1,504,517 represent the balance of proceeds available under installmentpurchase contracts to finance construction and renovations to schools.

Ad Valorem Taxes Receivable

In accordance with State law [G.S. 105-347 and G.S. 159-13(a)], the County levies ad valoremtaxes on property other than motor vehicles on July 1, the beginning of the fiscal year. The

taxes are due on September 1 (lien date); however, penalties and interest do not accrue until thefollowing January 6. These taxes are based on the assessed values as of January 1, 2011.

Allowances for Doubtful Accounts

All receivables that historically experience uncollectible accounts are shown net of anallowance for doubtful accounts. This amount is estimated by analyzing the percentage ofreceivables that were written off in prior years.

Inventories and Prepaid Items

Inventories are valued at cost (first-in, first-out method), which approximates market values.

The inventory of the General Fund consists of expendable supplies and is recorded asexpenditure when consumed.

Certain payments to vendors reflect costs applicable to future accounting periods and arerecorded as prepaid items, using the consumption method in both government-wide and fundfinancial statements.

29


55/178




Capital Assets

Capital assets are recorded at original cost. Donated assets are listed at the market value at thedate of donation. The County has elected not to capitalize those interest costs which areincurred during the construction period of capital assets. The Countys capitalization thresholdis $5,000.

The County holds title to certain Macon County Board of Education properties which have notbeen included in capital assets. The properties have been deeded to the County to permitinstallment purchase financing of acquisition and construction costs and to permit the County toreceive refunds of sales tax paid for construction costs. Agreements between the County andthe Board of Education give the Board of Education full use of the facilities, full responsibilityfor maintenance of the facilities, and provide that the County will convey title to the propertyback to the Board of Education, once all restrictions of the financing agreements and all salestax reimbursement requirements have been met. The properties are reflected as capital assets inthe financial statements of the Macon County Board of Education.

Capital assets in the enterprise funds of the County are recorded at original cost at the time ofacquisition. Capital assets donated to the Enterprise Fund operations are recorded at theestimated fair market value at the date of donation.

Capital assets are depreciated on a straight-line basis over the following estimated useful lives:

Estimated

Asset Useful LivesBuildings 15-20 years

Equipment 7 years

Vehicles 5 years

Long-Term Obligations

In the government-wide financial statements and in the proprietary fund types in the fundfinancial statements, long-term debt and other long-term obligations are reported as liabilities inthe applicable governmental activities, business-type activities, or proprietary fund typeStatement of Net Assets.

In the fund financial statements for governmental fund types, the face amount of debt issued isreported as other financing sources. Bond premiums and discounts, as well as bond issuancecosts, are recognized during the current period. Premiums received on debt issuances arereported as ot

Date post:	14-Apr-2018
Category:	Documents
Upload:	jesse-franklin-sr
View:	216 times
Download:	0 times

Macon County NC Comprehensive Financial Audit Report - June 30, 2012

Documents