Loading...
Nantucket County FS report 14COUNTY OF NANTUCKET, MASSACHUSETTS Report on Examination of Basic Financial Statements and Additional Information Year Ended June 30, 2014 Report on Internal Control Over Financial Reporting and On Compliance and Other Matters Year Ended June 30, 2014 COUNTY OF NANTUCKET, MASSACHUSETTS TABLE OF CONTENTS YEAR ENDED JUNE 30, 2014 Page INDEPENDENT AUDITORS' REPORT 1-2 MANAGEMENT’S DISCUSSION AND ANALYSIS 3-7 BASIC FINANCIAL STATEMENTS: Government-Wide Financial Statements: Statement of Net Position 8 Statement of Activities 9 Fund Financial Statements: Balance Sheet – Governmental Funds 10 Reconciliation of the Governmental Funds Balance Sheet Total Fund Balances to the Statement of Net Position 11 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds 12 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 13 Notes to Basic Financial Statements 14-26 REQUIRED SUPPLEMENTARY INFORMATION: Schedules of Funding Progress – Pension System and Other Postemployment Benefits 27 Schedule of Contribution Funding – Pension System and Other Postemployment Benefits 27 OTHER REPORTS: Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 28-29 INDEPENDENT AUDITORS' REPORT County Commissioners County of Nantucket, Massachusetts Nantucket, Massachusetts Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the County of Nantucket, Massachusetts, (the County) as of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise the County’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. County of Nantucket, Massachusetts Page 1 of 29 Basic Annual Financial Statements County of Nantucket, Massachusetts Page two Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund and the aggregate remaining fund information of the County as of June 30, 2014, and the respective changes in financial position and where applicable, cash flows thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, the funding and contribution progress for pension benefits and other postemployment benefits be presented to supplement the basic financial statements. Such information, although not part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge 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 with sufficient evidence to express an opinion or provide any assurance. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 22, 2014 on our consideration of the County’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contract, 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 internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the County’s internal control over financial reporting and compliance. Roselli, Clark & Associates Certified Public Accountants Woburn, Massachusetts December 22, 2014 County of Nantucket, Massachusetts Page 2 of 29 Basic Annual Financial Statements Management’s Discussion and Analysis As the management of the County of Nantucket, Massachusetts (the County) we offer readers of these financial statements this narrative overview and analysis of the financial activities for the fiscal year ended June 30, 2014. We encourage readers to consider the information presented here in conjunction with their review of the basic financial statements, notes to the basic financial statements and required supplementary information found in this report. Financial Highlights The County is a component unit of the Town of Nantucket. The Town’s financial statements include the County as a discretely presented component unit. The assets and deferred outflows of the County exceeded its liabilities and deferred inflows at the close of the most recent fiscal year by approximately $6.7 million (total net position). Of this amount, $1.3 million (unrestricted net positon) may be used to meet the government’s on- going obligations to citizens and creditors. At the close of the current fiscal year, the County’s general fund reported unassigned fund balance totaling $1.3 million, which was consistent with the prior year. Overview of the Financial Statements This discussion and analysis are intended to serve as an introduction to the County’s basic financial statements. The basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. The governmental-wide financial statements provide both long-term and short-term information about the County as a whole. The fund financial statements focus on the individual components of the County government, reporting the County’s operations in more detail than the government-wide statements. Both presentations (government-wide and fund) allow user to address relevant questions, broaden the basis of comparison and enhance the County’s accountability. An additional part of the basic financial statements are the notes to the financial statements. This report also contains other required supplementary information in addition to the basic financial statements themselves. Government-wide Financial Statements - The government-wide financial statements are designed to provide readers with a broad overview of finances, in a manner similar to a private-sector business. The statement of net position presents information on all of assets, liabilities, and deferred inflows/outflows of resources, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position is improving or deteriorating. The statement of activities presents information showing how the government’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave.) Both of the government-wide financial statements distinguish functions that are principally supported by taxes and intergovernmental revenue (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges. The governmental activities include county administration, register of deeds, corrections department, Cape Cod license plates, state and federal grants, a gift fund and Town assessment. County of Nantucket, Massachusetts Page 3 of 29 Basic Annual Financial Statements Fund Financial Statements - A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. Fund accounting is used to ensure and demonstrate compliance with finance-related legal requirements. All of the funds can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental funds distinguish fund balance between amounts that are considered nonspendable, such as fund balance associated with inventories, and other amounts that are classified based on the relative strength of the constraints that control the purposes for which specific amounts can be spent. Beginning with the most binding constraints, fund balance amounts are reported in the following classifications: • Restricted—amounts constrained by external parties, constitutional provision, or enabling legislation • Committed—amounts constrained by a government using its highest level of decision- making authority • Assigned—amounts a government intends to use for a particular purpose • Unassigned—amounts that are not constrained at all will be reported in the general fund. Governmental Funds - Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Reconciliations are provided in the basic financial statements to help the reader understand the differences. The County maintains a number of individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the general fund and deeds excise fund, which are considered to be major funds. Data from the other governmental funds are combined into a single, aggregated presentation. Proprietary Funds - Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements only in more detail. The County does not maintain any proprietary funds. Fiduciary funds - Fiduciary funds are used to account for resources held for the benefit of parties outside the government. The County does not maintain any fiduciary funds. Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. County of Nantucket, Massachusetts Page 4 of 29 Basic Annual Financial Statements Government-wide Financial Analysis The condensed statement of net position is as follows: As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. The assets and deferred outflows of the County exceeded its liabilities and deferred inflows at the close of the most recent fiscal year by approximately $6.7 million (total net position). By far the largest portion, approximately $3.3 million (49.3%) of the County’s net position reflects its investment in capital assets (e.g. land, buildings, machinery, and equipment) less any related debt used to acquire those assets that is still outstanding. The County uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. The County does not currently carry any debt therefore this net position category is not required to be netted down. An additional portion of the County’s net position, approximately $2.1 million (31.5%) represents resources that are subject to external restrictions on how they may be used. The remaining balance, approximately $1.3 million (19.2%) represents unrestricted net position, which the County may use to meet current obligations. Net Position Governmental activities June 30, June 30, 2014 2013 Assets Currrent and other assets 3,557,301$ 3,203,300$ Capital assets, net 3,326,425 3,335,262 Total assets 6,883,726 6,538,562 Deferred outflows of resources - - Liabilities Long-term liabilities 106,380 88,699 Other liabilities 34,708 40,463 Total liabilities 141,088 129,162 Deferred inflows of resources - - Net Position Net investment in capital assets 3,326,425 3,335,262 Restricted 2,121,457 1,768,963 Unrestricted 1,294,756 1,305,175 Net Position 6,742,638$ 6,409,400$ County of Nantucket, Massachusetts Page 5 of 29 Basic Annual Financial Statements The condensed statement of changes in net position is as follows: Governmental Activities - The governmental expenses totaled approximately $790,000 of which all of it was directly supported by program revenues consisting of charges for service, and operating grants and contributions. This was consistent with prior year expenses of approximately $828,000. Governmental revenues totaled approximately $1,120,000 which also was consistent with prior year revenue of $1,090,000. The majority of the revenues consisted of program revenue and operating grants and contributions. General revenues totaled $8,400, coming from unrestricted investment income. The governmental net position increased approximately $333,000 during the current fiscal year. This compared to an increase of approximately $260,000 in the prior year. The County continues to see vibrant operations as deed excise taxes have been well above expenses due to the robust high-end real estate market on the island. Change in Net Position Governmental activities June 30, June 30, 2014 2013 Revenues Program revenues: Charges for services 945,151$ 925,233$ Operating grants and contributions 170,201 166,050 General revenues: Unrestricted investment income 8,413 - Total revenues 1,123,765 1,091,283 Expenses County administration 8,740 28,099 Registry of deeds 421,312 409,258 Cape Cod license plate 102,121 140,644 State and federal grants 1,990 - Gift fund 6,364 - Town assessment 250,000 250,000 Total expenses 790,527 828,001 Change in net position 333,238 263,282 Net position, beginning of year 6,409,400 6,146,118 Net position, end of year 6,742,638$ 6,409,400$ County of Nantucket, Massachusetts Page 6 of 29 Basic Annual Financial Statements Financial Analysis of the Government’s Funds As noted earlier, the County uses fund accounting to ensure and demonstrate compliance with finance- related legal requirements. Governmental Funds - The focus of governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. The general fund is the chief operating fund. At the end of the current fiscal year, unassigned fund balance, which represented all of the general fund balance, was approximately $1.3 million. As a measure of the general fund’s liquidity, it may be useful to compare fund balance to total fund expenditures. Unassigned fund balance and total fund balances represents over 200% of total general fund expenditures. The County’s governmental funds balance sheet reported a combined ending fund balance surplus of approximately $3.5 million. This was consistent with the prior year. The deeds excise fund is used to account for receipt and disbursements of proceeds from excise tax from the County. The fund is in a surplus position of $1.7 million due to the robust high-end real estate market on the island. The other special revenue fund is used to account for all other proceeds of specific revenue sources that are restricted by law or administrative action to expenditures for specific purpose. The fund is in a surplus position of $0.5 million. Capital Asset and Debt Administration Capital Assets - The County’s investment in capital assets for its governmental activities as of June 30, 2014, amounts to approximately $3.3 million (net of accumulated depreciation). This investment in capital assets includes land and machinery and equipment. Balances are consistent with the prior year as annual depreciation provisions were offset by minor additions. Additional information on the County capital assets can be found in Note II, Section D. of this report. Long-term Debt - At the end of the current fiscal year, the County had no long-term debt outstanding. Requests for Information This financial report is designed to provide a general overview of the County of Nantucket’s finances. For all those with an interest in the government’s finances, questions concerning any of the information provided in this report or request for additional financial information should be addressed to the Office of the Finance Director, 37 Washington Street, Nantucket, Massachusetts 02554. County of Nantucket, Massachusetts Page 7 of 29 Basic Annual Financial Statements COUNTY OF NANTUCKET, MASSACHUSETTS (A COMPONENT UNIT OF THE TOWN OF NANTUCKET, MASSACHUSETTS) STATEMENT OF NET POSITION JUNE 30, 2014 Governmental Activities Assets Cash and cash equivalents 3,475,767$ Receivables, net of allowance for uncollectibles: Intergovernmental 81,534 Capital assets, not being depreciated 3,283,842 Capital assets, net of depreciation 42,583 Total Assets 6,883,726 Deferred Outflows of Resources - Liabilities Current liabilities: Warrants and accounts payable 6,011 Accrued payroll and withholdings 28,697 Noncurrent liabilities: Due in more than one year 106,380 Total Liabilities 141,088 Deferred Inflows of Resources - Net Position Net investment in capital assets 3,326,425 Restricted for: Other purposes 2,121,457 Unrestricted 1,294,756 Total Net Position 6,742,638$ See accompanying notes to basic financial statements. County of Nantucket, Massachusetts Page 8 of 29 Basic Annual Financial Statements COUNTY OF NANTUCKET, MASSACHUSETTS (A COMPONENT UNIT OF THE TOWN OF NANTUCKET, MASSACHUSETTS) STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2014 Net (Expenses) Revenues and Program Revenues Changes in Net Position Operating Capital Total Charges for Grants and Grants and Governmental Functions/Programs Expenses Services Contributions Contributions Activities Governmental Activities: County Adminstration 8,740$ 258,069$ 54,928$ -$ 304,257$ Registry of Deeds 421,312 363,025 115,273 - 56,986 Corrections Department - 250,000 - - 250,000 Cape Cod License Plates 102,121 74,057 - - (28,064) State and Fed Grants 1,990 - - - (1,990) Gift Fund 6,364 - - - (6,364) Town assessment 250,000 - - - (250,000) Total Governmental Activities 790,527 945,151 170,201 - 324,825 Total Primary Government 790,527$ 945,151$ 170,201$ -$ 324,825 General Revenues: Unrestricted investment income 8,413 Total general revenues and transfers 8,413 Change in Net Position 333,238 Net Position - Beginning 6,409,400 Net Position - Ending 6,742,638$ See accompanying notes to basic financial statements. County of Nantucket, Massachusetts Page 9 of 29 Basic Annual Financial Statements COUNTY OF NANTUCKET, MASSACHUSETTS (A COMPONENT UNIT OF THE TOWN OF NANTUCKET, MASSACHUSETTS) GOVERNMENTAL FUNDS BALANCE SHEET JUNE 30, 2014 Other Total Deeds Excise Special Revenue Governmental General Fund Funds Funds Assets Cash and cash equivalents 1,209,785$ 1,774,248$ 491,734$ 3,475,767$ Receivables, net of allowance Due from other government 81,534 - - 81,534 Due from other funds 16,200 - - 16,200 Total Assets 1,307,519 1,774,248 491,734 3,573,501 Total Deferred Outflows of Resources - - - - Total Assets and Deferred Outflows of Resources 1,307,519$ 1,774,248$ 491,734$ 3,573,501$ Liabilities Warrants and accounts payable -$ 406$ 5,605$6,011$ Accrued payroll 12,763 15,934 - 28,697 Due to other funds - 16,200 - 16,200 Total Liabilities 12,763 32,540 5,605 50,908 Total Deferred Inflows of Resources - - - - Fund Balances Restricted - 1,741,708 486,129 2,227,837 Unassigned 1,294,756 - - 1,294,756 Total Fund Balances 1,294,756 1,741,708 486,129 3,522,593 Total Liabilities, Deferred Inflows of Resources, and Fund Balances 1,307,519$ 1,774,248$ 491,734$ 3,573,501$ See accompanying notes to basic financial statements. County of Nantucket, Massachusetts Page 10 of 29 Basic Annual Financial Statements COUNTY OF NANTUCKET, MASSACHUSETTS (A COMPONENT UNIT OF THE TOWN OF NANTUCKET, MASSACHUSETTS) RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TOTAL FUND BALANCES TO THE STATEMENT OF NET POSITION JUNE 30, 2014 Total Governmental Fund Balances 3,522,593$ Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds.3,326,425 Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the government funds: Other postemployment benefits (106,380) Net Position of Governmental Activities 6,742,638$ See accompanying notes to basic financial statements. County of Nantucket, Massachusetts Page 11 of 29 Basic Annual Financial Statements COUNTY OF NANTUCKET, MASSACHUSETTS (A COMPONENT UNIT OF THE TOWN OF NANTUCKET, MASSACHUSETTS) GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES YEAR ENDED JUNE 30, 2014 Other Total Deeds Excise Special Revenue Governmental General Fund Funds Funds Revenues: Excise tax -$ 680,115$ -$ 680,115$ Intergovernmental 170,201 - - 170,201 Departmental and other revenue 190,979 - 74,057 265,036 Investment income 6,681 1,732 - 8,413 Total Revenues 367,861 681,847 74,057 1,123,765 Expenditures: Current: County Adminstration 8,487 - - 8,487 Registry of Deeds 369,793 28,456 - 398,249 Cape Cod License Plate - - 99,161 99,161 State and Fed Grants - - 1,932 1,932 Gift Fund - - 6,180 6,180 Town Assessment 250,000 - - 250,000 Total Expenditures 628,280 28,456 107,273 764,009 Excess (Deficiency) of Revenues Over (Under) Expenditures (260,419) 653,391 (33,216) 359,756 Other Financing Sources (Uses): Transfers in 250,000 - - 250,000 Transfers out - (250,000) - (250,000) Total Other Financing Sources (Uses)250,000 (250,000) - - Net Change in Fund Balances (10,419) 403,391 (33,216) 359,756 Fund Balances - Beginning 1,305,175 1,338,317 519,345 3,162,837 Fund Balances - Ending 1,294,756$ 1,741,708$ 486,129$ 3,522,593$ See accompanying notes to basic financial statements. County of Nantucket, Massachusetts Page 12 of 29 Basic Annual Financial Statements COUNTY OF NANTUCKET, MASSACHUSETTS (A COMPONENT UNIT OF THE TOWN OF NANTUCKET, MASSACHUSETTS) RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES JUNE 30, 2014 Net Change in Fund Balances - Total Governmental Fund Balances 359,756$ Governmental funds report capital outlays as expenditures. However, in the Statement of Activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This amount represents the net amount of depreciation expense in excess of capital outlay. The amounts are represented here as reconciling items: Capital Outlays 6,505$ Depreciation Expense (15,342) Net effect of reporting capital assets (8,837) Some expenses reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in the governmental funds: Other postemployment benefits (17,681) Net effect of reporting long-term liabilities (17,681) Change in Net Position of Governmental Activities 333,238$ See accompanying notes to basic financial statements. County of Nantucket, Massachusetts Page 13 of 29 Basic Annual Financial Statements COUNTY OF NANTUCKET, MASSACHUSETTS (A COMPONENT UNIT OF THE TOWN OF NANTUCKET, MASSACHUSETTS) NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2014 I. Summary of Significant Accounting Policies The basic financial statements of the County of Nantucket, Massachusetts (the County) have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to state and local governments. GAAP is prescribed by the Governmental Accounting Standards Board (GASB), which is the primary standard-setting body for state and local governmental entities. The following is a summary of the more significant policies and practices used by the County: A. Reporting Entity The County of Nantucket adheres to the County Commissioner/County Manager form of government created under MGL Chapter 34A Section 18 and as voted by the citizens of the Town of Nantucket. The County is legally separate from the Town, but is included in the Town’s Financial Statements because the Town is financially accountable for, and can impose its will on, the County. The County shares the same geographical boundaries as the Town, and the Town’s Selectman serve ex-officio as the County Commissioners. The County operates a Register of Deeds and Correction’s Office. For financial reporting purposes, the County has included all funds, organizations, account groups, agencies, boards, commissions and institutions. The County has also considered all potential component units for which it is financially accountable as well as other organizations for which the nature and significance of their relationship with the County are such that exclusion would cause the basic financial statements to be misleading or incomplete. It has been determined that there are no component units that meet the requirements for inclusion in the County’s financial statements. B. Government-Wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the non-fiduciary activities of the County. These are considered Governmental activities because they are supported by intergovernmental revenues and departmental charges as opposed to business-type activities, which rely to a significant extent on user fees and charges for support for which the County reports none. Separate financial statements are provided for governmental funds, Major individual government funds are reported as separate columns in the fund financial statements. Nonmajor funds are aggregated and presented in a single column. Major Fund Criteria – Major funds must be reported if both of the following criteria are met: 1) Total assets and deferred outflow of resources, liabilities and deferred inflow of resources, revenues, or expenditures/expenses of that individual governmental or enterprise funds are at least 10 percent of the corresponding total for all funds of that category or type, and County of Nantucket, Massachusetts Page 14 of 29 Basic Annual Financial Statements 2) Total assets and deferred outflow of resources, liabilities and deferred inflow of resources, revenues, or expenditures/expenses of the individual governmental fund or enterprise fund are at least 5 percent of the corresponding total for all governmental and enterprise funds combined. Additionally, any other governmental fund that management believes is particularly significant to the basic financial statements may be reported as a major fund. C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Under this method, revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Excise taxes are recognized as revenues in the fiscal year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider are met. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include: 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Other items not properly included among program revenues are reported instead as general revenues. For the most part, the effect of interfund activity has been removed from the government-wide financial statements. The governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized when susceptible to accrual (i.e. measurable and available). Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. Expenditures are recorded when the related fund liability is incurred, except for interest on general long-term debt which is recognized when payment is due, certain compensated absences, claims and judgments which are recognized when the obligations are expected to be liquidated with current expendable available resources. The government reports the following major governmental funds: General Fund – is the government’s primary operating fund. It accounts for all financial resources of the general government except those required to be accounted for in another fund. Deeds Excise Fund – is used to account for receipt and disbursements of proceeds from deed excise tax to the County. Other Special Revenue Funds – is used to account for all other proceeds of specific revenue sources that are restricted by law or administrative action to expenditures for specific purpose County of Nantucket, Massachusetts Page 15 of 29 Basic Annual Financial Statements Proprietary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Under this method, revenues are recognized when earned and expenses are recorded when the liabilities are incurred. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues are user charges and fees, while operating expenses consist of salaries, ordinary maintenance, indirect costs and depreciation. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. The County doesn’t report any proprietary funds. Fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Fiduciary funds are used to account for assets held in a trustee capacity for others that may not be used for governmental programs. The County doesn’t report any fiduciary funds. D. Assets, Liabilities, Deferred Outflows/Inflows of Resources and Net Position or Equity Deposits and Investments – The Town’s cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition. County investments are reported at fair value. Receivables – The recognition of revenue related to accounts receivable reported in the government-wide financial statements are reported under the accrual basis of accounting. The recognition of revenue related to accounts receivable reported in the governmental funds financial statements are reported under the modified accrual basis of accounting. Departmental and other receivables consist of various departmental revenues earned at year-end and received subsequent to year-end, net of allowance for uncollectible accounts. Allowance for uncollectible accounts are estimated based upon historical trends and specific account analysis. Intergovernmental receivables consist of various federal and state grants for operating and capital purposes that are applied for and received annually. For non-expenditure driven grants, receivables are recognized as soon as all eligibility requirements imposed by the provider have been met. For expenditure driven grants, receivables are recorded when the qualifying expenditures are incurred and all other grant applications are met. These receivables are considered 100% collectible and therefore do not report an allowance for uncollectible accounts. Inventories and Prepaid Items – Inventories, which are not material to the basic financial statements, are considered to be expenditures at the time of purchase. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. Capital Assets – Capital assets, which include land, buildings and improvements, machinery and equipment, vehicles and infrastructure (e.g. roads, utility mains, and similar items), are reported in the applicable governmental columns in the government-wide financial statements. County of Nantucket, Massachusetts Page 16 of 29 Basic Annual Financial Statements Capital assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at the estimated fair market value at the date of donation. All purchases and construction costs in excess of the County’s capitalization threshold ($10,000) whose expected lives are greater than one year are capitalized at the date of acquisition or construction. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Capital assets (excluding land and construction-in-process) are depreciated using the straight line method over the following estimated useful lives: Buildings and improvements 33-50 years Machinery and equipment 5-7 years Vehicles 5-10 years Infrastructure 40-70 years Interfund Balances – Activity between funds that are representative of lending arrangements outstanding at the end of the fiscal year are referred to as either due to/from other funds or advances to/from other funds. All other outstanding balances between funds are reported as due to/from other funds. Interfund Transfers – During the course of its operations, resources are permanently reallocated between and within funds. These transactions are reported as transfers in and transfers out in the individual fund statements. Investment Income – Investment income derived from major and nonmajor governmental funds is legally assigned to the general fund unless otherwise directed by state law. Long-term Obligations – Long-term debt is reported as liabilities in the government-wide statement of net position. Bond premiums and discounts are amortized over the life of the bonds using the effective interest method. Bond anticipation notes payable are reported net of the applicable bond premium or discount. In the governmental fund financial statements, the face amount of long-term debt issued is reported as other financing sources. Premiums received on a debt issuance are reported as other financing sources while discounts are reported as other financing uses. Issuance costs are exclusively reported as general government expenditures regardless of whether they are withheld from the actual proceeds. Deferred Outflows/Inflows of Resources – In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The County does not have any items that qualify for reporting as a deferred outflow. In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The County does not have any items that qualify for reporting as deferred inflow. County of Nantucket, Massachusetts Page 17 of 29 Basic Annual Financial Statements Net Position – In the government-wide financial statements, net position reported as “net investment in capital assets” includes capital assets, net of accumulated depreciation, less the principal balance of outstanding debt used to acquire capital assets. Unspent proceeds of capital related debt are not considered to be capital related debt. Net position is reported as restricted when amounts are not available for appropriation or are legally restricted by outside parties for a specific use. Net position has been restricted for the following: Other purposes represent assets that are restricted by donors for specific governmental programs and uses. Fund Equity – In the fund financial statements, fund balance for governmental funds is reported in classifications that comprise a hierarchy based primarily on the extent in which the County is required to honor constraints on the specific purpose for which amounts in the funds can be spent. Fund balance is reported in five components – non-spendable, restricted, committed, assigned, and unassigned as described below: Non-spendable represents amounts that cannot be spent because they are either (a) not in spendable form (i.e. inventory or prepaid) or (b) legally or contractually required to be maintained intact as the corpus of the endowment. Restricted represents amounts that have constraints placed either externally by third-parties (creditors, grantors, contributors, or laws or regulations of other governments) or by law through constitutional provisions or enabling legislation. Enabling legislation authorizes the County to assess, levy, charge or otherwise mandate payment of resources (from external resource providers) and includes a legally enforceable requirement (compelled by external parties) that those resources be used only for the specific purposes stipulated in the legislation. Committed represents amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the County’s highest level of decision making authority, which consists of the County Commissioners. Those committed amounts cannot be used for any other purpose unless the County Commissioners remove or change the specified use by taking the same type of action it employed previously to commit those amounts. Assigned represents amounts that are constrained by the County’s intent to be used for specific purposes, but are neither restricted nor committed. Unassigned represents amounts that have not been restricted, committed or assigned to specific purposes within the general fund. The general fund is the only fund that reports a positive unassigned fund balance amount. Other governmental funds besides the general fund can only report a negative unassigned fund balance amount. When both restricted and unrestricted resources are available for use, it is the County’s policy to use restricted resources first, then unrestricted resources (committed, assigned and unassigned) as they are needed. When unrestricted resources (committed, assigned and unassigned) are available for use it is the County’s policy to use committed resources first, then assigned, and then unassigned as they are needed. County of Nantucket, Massachusetts Page 18 of 29 Basic Annual Financial Statements The County has not established financial policies with respect to maintaining minimum fund balance amounts. The following table reflects the County’s fund equity categorizations: E. Deficits During the fiscal year ended, the County did not report any deficits. F. Use of Estimates The preparation of basic financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure for contingent assets and liabilities at the date of the basic financial statements and the reported amounts of the revenues and expenditures/expenses during the fiscal year. Actual results could vary from estimates that were used. II. Detailed Notes to All Funds A. Deposits and Investments A cash and investment pool is maintained that is available for use by all funds. Each fund type’s portion of this pool is displayed on the balance sheet as “cash and cash equivalents”. The deposits and investments of trust funds are held separately from those of other funds. State laws and regulations require the County to invest funds only in pre-approved investment instruments which include but are not necessarily limited to bank deposits, money markets, certificates of deposit, U.S. obligations, repurchase agreements, and State Treasurer’s investment pool (“the Pool”). In addition, the statutes impose various limitations on the amount and length of investments and deposits. Repurchase agreements cannot be for a period of over ninety days, and the underlying security must be a United States obligation. During the fiscal year, the County did not enter into any repurchase agreements. Other Deeds Excise Special Revenue General Fund Funds Total Fund Balances Restricted: County Adminstration -$ 593,306$ -$ 593,306$ Registry of Deeds - 1,146,995 - 1,146,995 Corrections Department - 1,407 - 1,407 Cape Cod License Plate - - 300,417 300,417 State and Fed Grants - - 182,536 182,536 Gift Fund - - 3,176 3,176 Unassigned 1,294,756 - - 1,294,756 1,294,756$ 1,741,708$ 486,129$ 3,522,593$ County of Nantucket, Massachusetts Page 19 of 29 Basic Annual Financial Statements Custodial Credit Risk: Deposits- The County has adopted a deposit policy which requires that the Treasurer review each bank doing business with the County on a quarterly basis. The policy does not restrict the value of uninsured or uncollateralized investments held at any time. At year-end, the carrying amount of the County's deposits was $3,475,767 and the bank balance of $3,493,508 was covered by federal depository insurance or fully collateralized. Custodial Credit Risk: Investments- The County has adopted an investment policy regarding custodial credit risk that requires all securities not held directly by the Treasurer must be held by a third party custodian approved by the Treasurer in the County’s name and tax identification number At year-end, the County’s investments consisted of Certificates of Deposit totaling $42,917 which were covered by federal depository insurance and were not subject to custodial credit risk. These have been classified as cash equivalents due to their maturities. Interest Rate Risk - The County limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. The policy limits investments of operating funds to one year or less and limits investment maturities of trust funds and other special funds to periods no longer that seven years, maintaining an average maturity no greater than three years for the investment portfolio Credit Risk - The County restricts the investment of operating funds to U.S. Treasury or Agency securities which carry “AAA” ratings. Trust and other special funds which are longer-term investments may invest in fixed-income securities which are held principally for capital preservation and income potential and corporate debt that carries a rating of “A” or better by either Standard and Poor’s or Moody’s rating services. If a security falls below the “A” rating, the security will be monitored by the Treasurer and advisor and will be noted as an exception to the policy if held in the investment portfolio. The Treasurer will sell the securities if a decline in value is expected Concentration of Credit Risk – The County does not place a limit on the amount that may be invested in any one issuer B. Receivables Receivables as of year-end for the County’s individual major governmental funds in the aggregate, including the applicable allowances for uncollectible accounts, are as follows: Gross Allowance for Net Amount Uncollectibles Amount Receivables: Intergovernmental 81,534$ - 81,534$ Total 81,534$ -$ 81,534$ County of Nantucket, Massachusetts Page 20 of 29 Basic Annual Financial Statements C. Interfund Receivables, Payables and Transfers The composition of interfund transfers for the fiscal year ended June 30, 2014, is as follows: General Deeds Excise Fund Funds Total Deeds Excise Fund 16,200$ 16,200$ Total 16,200$ -$ 16,200$ The outstanding balances between funds results mainly from the timing differences between the dates that the transactions occur and the transfers of cash to the individual funds are made. Receivable Fund Payable Fund Interfund transfers for the fiscal year ended June 30, 2014, are summarized as follows: General Nonmajor Fund Funds Total Deeds Excise Fund 250,000$ - 250,000$ (1) Total 250,000$ -$ 250,000$ (1) Represents transfers from Deeds Excise Fund for a Excise Tax Split to the General Fund. Transfers In Transfers Out County of Nantucket, Massachusetts Page 21 of 29 Basic Annual Financial Statements D. Capital Assets Capital asset activity for the year ended June 30, 2014 was as follows: Beginning Ending Balance Increases Decreases Balance Governmental Activities: Capital assets not being depreciated: Land 3,283,842$ -$ -$ 3,283,842$ Total capital assets not being depreciated 3,283,842 - - 3,283,842 Capital assets being depreciated: Machinery and equipment 211,012 6,505 (29,590) 187,927 Total capital assets being depreciated 211,012 6,505 (29,590) 187,927 Less accumulated depreciation for: Machinery and equipment (159,592) (15,342) 29,590 (145,344) Total accumulated depreciation (159,592) (15,342) 29,590 (145,344) Total capital assets being depreciated, net 51,420 (8,837) - 42,583 Governmental activities capital assets, net 3,335,262$ (8,837)$ -$ 3,326,425$ Depreciation expense was charged to functions/programs as follows: Governmental Activities: County Adminstration 253$ Registry of Deeds 11,887 Cape Cod License Plate 2,960 State and Fed Grants 58 Gift Fund 184 15,342$ County of Nantucket, Massachusetts Page 22 of 29 Basic Annual Financial Statements E. Long–Term Obligations The following reflects the current year activity in the long-term liability accounts: The long-term obligations are expected to be liquidated from the general fund. Annually, the County is assessed by the Town of Nantucket for debt the Town has in its’ name relating to “Sheriff Space”. Since the debt is in the Town’s name it is shown as a town assessment in the County’s financial statements. During the year ended June 30, 2014, the assessment was $250,000. III. Other Information A. Retirement System Plan Description - Nantucket County contributes to the Barnstable County Retirement System (BCRS), a multiple-employer defined benefit pension plan established under MGL Chapter 32 and is administered by the Barnstable County Retirement Board (BCRB). The BCRS provides retirement, disability and death benefits to plan members and beneficiaries. Chapter 32 of the MGL assigns authority to establish and amend benefit provisions of the plan. Cost-of-living adjustments granted between 1981 and 1997 and any increase in other benefits imposed by the Commonwealth’s state law during those years are borne by the Commonwealth and are deposited into the pension fund directly. Cost-of-living adjustments granted after 1997 must be approved by the BCRB and are borne by the BCRS. The BCRS issues a publicly available unaudited financial report in accordance with guidelines established by the Commonwealth of Massachusetts’ Public Employee Retirement Administration Commission (PERAC) that includes financial statements and required supplementary information. The report may be obtained by writing to the Barnstable County Retirement System, 750 Attucks Lane, Hyannis, Massachusetts 02601. Funding Policy – Plan members are required to contribute to the BCRS at rates ranging from 5% to 11% of annual covered compensation. The Town and County are required to pay into the BCRS for its share of the system-wide actuarial determined contribution that is apportioned among the employers based on active current payroll. The contributions of plan members, the County are governed by Chapter 32 of the MGL. The County’s contributions to the BCRS for the fiscal years ended June 30, 2014, 2013, and 2012 were $44,672, $40,348, and $41,544 respectively, which equaled its required contribution for each year. The schedules of funding progress, presented as required supplementary information (RSI) following the notes to the financial statements, present multi-year trend information regarding whether the actuarial values of plan assets are increasing or decreasing over time relative to the actuarial accrued liability for benefits. Beginning Ending Due within Balance Additions Deletions Balance one year Governmental Activities: Other postemployment benefits 88,699$ 28,435$ (10,754)$ 106,380$ -$ Total Governmental Activities 88,699$ 28,435$ (10,754)$ 106,380$ -$ County of Nantucket, Massachusetts Page 23 of 29 Basic Annual Financial Statements B. Other Postemployment Benefits (OPEB) Plan Description – Nantucket County’s employees participate in the multiple-employer defined benefit healthcare plan administered by the Town. The Plan provides health and life insurance benefits to current and future retirees, their dependents and beneficiaries in accordance with Massachusetts General Law Chapter 32B. Specific benefit provisions and contribution rates are established by collective bargaining agreements, state law, and Town ordinance. All benefits are provided through the Town’s self-funded insurance program described previously. The Plan does not issue a stand–alone financial report. The number of participants in the Plan consists of 463 active employees and 307 retired employees for a total of 770. Funding Policy – The contribution requirements of Plan members and the County are established and may be amended by the Town, through negotiation with the County employee unions. Retirees contribute 10 – 20 percent of the calculated contribution through pension benefit deductions. The remainder of the cost is funded by the County. The County pays the remainder. The County currently contributes enough money to the Plan to satisfy current obligations on a pay-as-you-go basis. The costs of administering the Plan are paid by the Town. Annual OPEB Cost and Net OPEB Obligation – The County's annual OPEB cost is calculated based on the annual required contribution (ARC) of the employer, and actuarially determined amount that is calculated in accordance with GASB Statement number 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded liabilities over a period not to exceed thirty years. The following table reflects the activity regarding the County's OPEB obligation: The County’s annual OPEB Cost, the percentage of annual OPEB cost contributed to the plan, the contribution made by the County, and the net OPEB obligation for the fiscal year 2014 was as follows: Annual required contribution (ARC)27,521$ Interest on net OPEB obligation 4,840 Adjustment to ARC (3,926) Annual OPEB cost 28,435 Contributions made (10,754) Increase in net OPEB obligation 17,681 Net OPEB obligation at beginning of year 88,699 Net OPEB obligation at end of year 106,380$ Percentage of Fiscal Year Annual Contribution Annual OPEB Net OPEB Ended OPEB Cost Made Cost Contributed Obligation 6/30/2014 28,435 10,754 38%106,380$ 6/30/2013 24,071 9,789 41%88,699 6/30/2012 52,122 26,061 50%74,417 County of Nantucket, Massachusetts Page 24 of 29 Basic Annual Financial Statements The Annual OPEB Cost at June 30, 2014 was charged to the Registry of Deeds functional expense. C. Risk Financing The County is exposed to various risks of loss related to torts: theft of, damage to and destruction of assets; errors and omissions; and natural disasters for which the County carries commercial insurance. D. Commitments and Contingencies Various legal actions and claims are pending. Litigation is subject to many uncertainties, and the outcome of individual litigated matters is not always predictable. Although the amount of the liability, if any, at June 30, 2014, can’t be ascertained, management believes any resulting liability should not materially affect the financial position at June 30, 2014. E. Implementation of New GASB Pronouncements Current Year Implementation In March 2012, the GASB issued GASB Statement No. 65, Items Previously Reported as Assets and Liabilities. This Statement establishes accounting and financial reporting standards that reclassify, as deferred outflows of resources or deferred inflows of resources, certain items that were previously reported as assets and liabilities and recognizes, as outflows of resources or inflows of resources, certain items that were previously reported as assets and liabilities. This Statement also provides other financial reporting guidance related to the impact of the financial statement elements deferred outflows of resources and deferred inflows of resources, such as changes in the determination of the major fund calculations and limiting the use of the term deferred in financial statement presentations. The provisions of GASB 65 became effective for the County in fiscal year 2014 and did not have a material effect on its financial statements. In March 2012, the GASB issued GASB Statement No. 66, an amendment of GASB Statements No. 10 and No. 62. The objective of this Statement is to improve accounting and financial reporting for a governmental financial reporting entity by resolving conflicting guidance that resulted from the issuance of two pronouncements, Statements No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, and No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements. The provisions of GASB 66 became effective for the County in fiscal year 2014 and did not have a material effect on its financial statements. In April 2013, the GASB issued GASB Statement No. 70, Accounting and Financial Reporting for Nonexchange Financial Guarantees. The objective of GASB 70 is to improve accounting and financial reporting by governments that extend and receive nonexchange financial guarantees. The provisions of GASB 70 became effective for the County fiscal year 2014 and did not have a material effect on its financial statements. Future Year Implementation In June 2012, the GASB issued GASB Statement No. 67, Financial Reporting for Pension Plans. This Statement replaces the requirements of Statement No. 25, Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans and Statement 50 as County of Nantucket, Massachusetts Page 25 of 29 Basic Annual Financial Statements they relate to pension plans that are administered through trusts or similar arrangements meeting certain criteria. This Statement builds upon the existing framework for financial reports of defined benefit pension plans, which includes a statement of fiduciary net position (the amount held in a trust for paying retirement benefits) and a statement of changes in fiduciary net position. Statement 67 enhances note disclosures and RSI for both defined benefit and defined contribution pension plans. Statement 67 also requires the presentation of new information about annual money-weighted rates of return in the notes to the financial statements and in 10-year RSI schedules. The provisions of GASB 67 are effective for the BCRS for the year end December 31, 2014, the impact of which will become effective for the County in fiscal year 2015. The County believes the adoption of this statement will have a material impact on the financial statements. In June 2012, the GASB issued GASB Statement No. 68, Accounting and Financial Reporting for Pensions — an amendment of GASB Statement No. 27. Statement 68 replaces the requirements of Statement No. 27, Accounting for Pensions by State and Local Governmental Employers and Statement No. 50, Pension Disclosures, as they relate to governments that provide pensions through pension plans administered as trusts or similar arrangements that meet certain criteria. Statement 68 requires governments providing defined benefit pensions to recognize their long-term obligation for pension benefits as a liability for the first time, and to more comprehensively and comparably measure the annual costs of pension benefits. The Statement also enhances accountability and transparency through revised and new note disclosures and required supplementary information. The provisions of this Statement are effective for financial statements for periods beginning after June 15, 2014 (fiscal year 2015). The County believes the adoption of this statement will have a material impact on the financial statements. In January 2013, the GASB issued GASB Statement No. 69, Government Combinations and Disposals of Government Operations. GASB 69 established accounting and financial reporting standards to government combinations and disposals of government operations. The provisions of this Statement are effective for financial reporting periods beginning after December 15, 2013 (fiscal year 2015). The County is currently evaluating whether adoption will have a material impact on the financial statements. In November 2013, the GASB issued GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date—an amendment of GASB Statement No. 68. The objective of GASB 71 is to address an issue regarding application of the transition provisions of GASB 68. The issue relates to amounts associated with contributions, if any, made by a state or local government employer or nonemployer contributing entity to a defined pension plan after the measurement date of the government’s beginning net pension liability. The provisions of this Statement are effective for financial statements for periods beginning after June 15, 2014 (fiscal year 2015). The County is currently evaluating whether adoption will have a material impact on the financial statements. County of Nantucket, Massachusetts Page 26 of 29 Basic Annual Financial Statements COUNTY OF NANTUCKET, MASSACHUSETTS REQUIRED SUPPLEMENTARY INFORMATION YEAR ENDED JUNE 30, 2014 SCHEDULES OF FUNDING PROGRESS Pension System UAAL as a Actuarial Actuarial Unfunded Percentage Actuarial Value of Accrued AAL Funded Covered of Covered Valuation Assets Liability (AAL)(UAAL)Ratio Payroll Payroll Date (a)(b)(b-a)(a/b)(c)(b-a/c) 01/01/12 651,063,981$ 1,173,483,848$ 522,419,867$ 55.5%239,437,303$ 218.2% 01/01/10 554,876,554 1,030,210,321 475,333,767 53.9%234,374,075 202.8% 01/01/09 520,089,855 966,564,614 446,474,759 53.8%249,971,296 178.6% 1/1/2007 517,396,087 825,863,068 308,466,981 62.6%226,391,633 136.3% 1/1/2006 465,637,984 765,747,723 300,109,739 60.8%215,474,180 139.3% 1/1/2004 378,317,300 647655411 269,338,111 58.4%190,614,004 141.3% Other Postemployment Benefits UAAL as a Actuarial Actuarial Unfunded Percentage Actuarial Value of Accrued AAL Funded Covered of Covered Valuation Assets Liability (AAL)(UAAL)Ratio Payroll Payroll Date (a)(b)(b-a)(a/b)(c)(b-a/c) 6/30/2012 -$ 88,559,116$ 88,559,116$ 0.0%N/A N/A 6/30/2010 - 82,253,000 82,253,000 0.0%N/A N/A 6/30/2008 127,923,000 127,923,000 0.0%N/A N/A 6/30/2006 104,980,000 104,980,000 0.0%N/A N/A SCHEDULES OF CONTRIBUTION FUNDING Pension System Total Retirement System County (B / A) Annual (A)(B)County's Percentage Year Ended Required Actual Percentage Actual of System Wide June 30,Contributions Contributions Contributed Contribution Actual Contributions 2012 46,702,087$ 46,702,087$ 100%40,348$ 0.1% 2011 43,807,158 43,807,158 100%41,544 0.1% 2010 41,327,508 41,327,508 100%39,710 0.1% Other Postemployment Benefits Annual Year Ended Required Actual Percentage June 30,Contributions Contributions Contributed 2014 28,435$ 10,754$ 37.8% 2013 24,071 9,789 40.7% 2012 52,122 26,061 50.0% See accompanying independent auditor's report. BARNSTABLE COUNTY CONTRIBUTORY RETIREMENT SYSTEM BARNSTABLE COUNTY CONTRIBUTORY RETIREMENT SYSTEM County of Nantucket, Massachusetts Page 27 of 29 Basic Annual Financial Statements INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS County Commissioners County of Nantucket, Massachusetts Nantucket, Massachusetts We have audited, 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, the financial statements of the County of Nantucket, Massachusetts (the “County”), as of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise the County’s basic financial statements and have issued our report thereon dated December 22, 2014. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the County’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the County’s internal control. Accordingly, we do not express an opinion on the effectiveness of the County’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. County of Nantucket, Massachusetts Page 28 of 29 Basic Annual Financial Statements County of Nantucket, Massachusetts Page Two Compliance and Other Matters As part of obtaining reasonable assurance about whether the County’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Roselli, Clark & Associates Certified Public Accountants Woburn, Massachusetts December 22, 2014 County of Nantucket, Massachusetts Page 29 of 29 Basic Annual Financial Statements