Macon County NC Comprehensive Financial Audit Report - June 30, 2013

8/13/2019 Macon County NC Comprehensive Financial Audit Report - June 30, 2013

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MACON COUNTY

NORTH CAROLINA

COMPREHENSIVE ANNUAL

FINANCIAL REPORT

FORTHE YEARENDED JUNE 30, 2013


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MACON COUNTY

NORTH CAROLINA

COMPREHENSIVE ANNUAL

FINANCIAL REPORT

FOR THE YEAR ENDED JUNE 30, 2013

Prepared by: Finance DepartmentFinance Director: Lori M. Hall


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Page

Letter of Transmittal 1-5

Organizational Chart 6

List of Principal Officials 7

2012 GFOA Certificate of Achievement

for Excellence in Financial Reporting 8

Financial Section:

Independent Auditors Report 9-11

Managements Discussion and Analysis 12-20

Exhibit Basic Financial Statements - Overview

Government-Wide Financial Statements:

A Statement of Net Position 21

B Statement of Activities 22-23

Fund Financial Statements:

C Balance Sheet - Governmental Funds 24

D Statement of Revenues, Expenditures, and Changes

in Fund Balances - Governmental Funds 25

E Reconciliation of the Statement of Revenues, Expenditures,

and Changes in Fund Balances - Governmental Funds to

the Statement of Activities 26

F Statement of Revenues, Expenditures, and Changes in

in Fund Balance - Budget and Actual - General Fund 27

G Statement of Net Position - Proprietary Funds 28

Introductory Section

COMPREHENSIVE ANNUAL FINANCIAL REPORT


MACON COUNTY, NORTH CAROLINA

TABLE OF CONTENTS


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TABLE OF CONTENTS

Exhibit Page

Fund Financial Statements - continued:

H Statement of Revenues, Expenses, and Changes

in Fund Net Position - Proprietary Funds 29

I Statement of Cash Flows - Proprietary Funds 30

J Statement of Fiduciary Net Position - Fiduciary Fund 31

Notes to the Financial Statements 32-65

Required Supplementary Financial Data:

A-1 Law Enforcement Officers Special Separation Allowance 66

A-2 Other Post-Employment Benefits - Retiree Health Plan 67

Supplementary Information:

General Fund:

B-1 Schedule of Revenues, Expenditures, and Changesin Fund Balance - Budget and Actual 68-80

Nonmajor Governmental Funds:

C-1 Combining Balance Sheet 81

C-2 Combining Statement of Revenues, Expenditures,

and Changes in Fund Balances 82

Nonmajor Special Revenue Funds:

D-1 Combining Balance Sheet 83

D-2 Combining Statement of Revenues, Expenditures,

and Changes in Fund Balances 84

D-3 Emergency Telephone System Fund:

Schedule of Revenues, Expenditures, and Changes

in Fund Balance - Budget and Actual 85


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TABLE OF CONTENTS

Schedule Page

Supplementary Information - continued:

Nonmajor Special Revenue Funds - continued:

D-4 Fire Districts Fund:



D-5 Housing Grants Fund:

Schedule of Revenues and Expenditures -Budget and Actual 87

Major Capital Projects Funds:

E-1 Consolidated Capital Projects:

Schedule of Revenues and Expenditures -

Budget and Actual 88

Nonmajor Capital Projects Funds:

E-2 Combining Balance Sheet 89-90

E-3 Combining Statement of Revenues, Expenditures,and Changes in Fund Balance 91-92

E-4 Airport Improvements Fund:



E-5 County Building Projects:




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TABLE OF CONTENTS

Schedule Page


Nonmajor Capital Projects Funds - continued:

E-6 Riverbend Estates Waterline Project:



E-7 Little Tennessee River/Cartoogechaye

Creek Sewer Trunk Project:



E-8 Schools Capital Fund:



E-9 Capital Reserve Fund:



Enterprise Fund:

F-1 Solid Waste Fund:Schedule of Revenues and Expenditures -

Budget and Actual (Non-GAAP) 99-100

Internal Service Fund:

G-1 Nonmajor Self-Insurance Fund -

Statement of Net Position 101


Schedule of Revenues, Expenses, and Changes

in Fund Net Position - Financial Plan and Actual 102


Statement of Cash Flows 103


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TABLE OF CONTENTS

Schedule Page


Agency Funds:

H-1 Combining Balance Sheet 104-105

H-2 Combining Statement of Changes in Assets and Liabilities 106-107

Debt Service Fund:

I-1 Schedule of Revenues, Expenditures, and Changes


Additional Financial Data:

J-1 Schedule of Ad Valorem Taxes Receivable -

General Fund 109

J-2 Analysis of Current Tax Levy -

County-Wide Levy 110

J-3 Schedule of Ad Valorem Taxes Receivable -

Fire Districts 111

J-4 Analysis of Current Tax Levy - Fire Districts 112

Table

Statistical Section:

1 Net Position by Components 113

2 Changes in Net Position 114-115

3 Governmental Activities Tax Revenues By Source 116

4 Fund Balances of Governmental Funds 117

5 Changes in Fund Balances of Governmental Funds 118


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TABLE OF CONTENTS

Table Page

Statistical Section - Continued:

6 Assessed Value and Estimated Actual Value of

Taxable Property 119

7 Property Tax Rates, Direct and Overlapping Governments 120

8 Principal Property Taxpayers 121

9 Property Tax Levies and Collections 122

10 Ratio of Outstanding Debt by Type 123

11 Ratios of General Bonded Debt Outstanding 124

12 Direct and Overlapping Governmental Activities Debt 125

13 Legal Debt Margin Information 126

14 Demographic and Economic Statistics 127

15 Principal Employers 128

16 Full-Time Equivalent County Government Employees

by Function 129

17 Operating Indicators by Function 130

18 Capital Asset Statistics by Function 131


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INTRODUCTORY SECTION


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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 Services

Health Department

Cooperative Extension Service

Board of Elections

Register of Deeds

Sheriffs Department

Soil Conservation

Criminal Justice

Tax Department

Building & Grounds

Housing

Emergency Management

Legal Services

HR/Deputy Clerk

Finance Department

Information Technology

Veterans Services

Garage

Solid Waste

Recreation Department

Transit Services

Permitting, Planning &Development

Staff Support 1 Shared Authority2 Direct Line3


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List of Principal Officials

June 30, 2013

Board of Commissioners

Kevin Corbin, ChairmanRonnie Beale, Vice-Chairman

Ron Haven, CommissionerPaul Hidgon, CommissionerJimmy Tate, Commissioner

Principal Officials

Mike Decker, Interim County Manager/Human Resources Director

Lori M. Hall, Finance DirectorChester Jones, County Attorney

Richard Lightner, Tax SupervisorMargaret D. Perry, Tax Collector

Jack Morgan, Permitting, Planning, and Development DirectorKim M. Bishop, Board of Elections Director

Todd Raby, Register of DeedsAndy Muncey, Information Technology DirectorSteve Ledford, Buildings and Grounds Director

Robert L. Holland, SheriffDavid Key, Emergency Medical Services Director

John Hook, Animal Control Director

M. Chris Stahl, Solid Waste DirectorMike Breedlove, Soil and Water ConservationAlan Durden, Cooperative Extension Chairman

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

James Bruckner, Health DirectorDaylon Plemens, Veterans Service Officer

Seth D. Adams, Recreation DirectorLarry D. Conley, Garage Services

Tommy Jenkins, Economic Development DirectorJohn Fay, Housing Director


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FINANCIAL SECTION


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730 13th Avenue Drive SE Hickory, North Carolina 28602 Phone 828-327-2727 Fax 828-328-232413 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

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, the business-typeactivities, 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, 2013, and the relatednotes to the financial statements, which collectively comprise the Countys basic financial statements aslisted in the table of contents.

Managements Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements inaccordance with accounting principles generally accepted in the United States of America; this includesthe 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 orerror.

Auditors Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We conductedour 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 theComptroller General of the United States. Those standards require that we plan and perform the audit toobtain reasonable assurance about whether the financial statements are free from material misstatement.The financial statements of Macon County Airport Authority were not audited in accordance withGovernment Auditing Standards.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures inthe financial statements. The procedures selected depend on the auditors judgment, including theassessment 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 entitys preparationand fair presentation of the financial statements in order to design audit procedures that are appropriate inthe circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitysinternal control. Accordingly, we express no such opinion. An audit also includes evaluating the

appropriateness of accounting policies used and the reasonableness of significant accounting estimatesmade 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 forour audit opinions.

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Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, therespective 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 Macon

County, North Carolina, as of June 30, 2013, and the respective changes in financial position, and, whereapplicable, cash flows thereof, and the respective budgetary comparison for the General Fund, for the yearthen 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 ManagementsDiscussion and Analysis, the Law Enforcement Officers Special Separation Allowance, and the OtherPost-Employment Benefits Schedules of Funding Progress and Employer Contributions, be presented tosupplement the basic financial statements. Such information, although not a part of the basic financialstatements, 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 appropriateoperational, economic, or historical context. We have applied certain limited procedures to the requiredsupplementary information in accordance with auditing standards generally accepted in the United Statesof America, which consisted of inquiries of management about the methods of preparing the informationand comparing the information for consistency with managements responses to our inquiries, the basicfinancial 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 proceduresdo not provide us with sufficient evidence to express an opinion or provide any assurance.

Supplementary and Other Information

Our audit was conducted for the purpose of forming opinions on the basic financial statements thatcollectively comprise Macon Countys basic financial statements. The introductory section, combining

and individual fund financial statements, budget and actual schedules, supplemental ad valorem taxschedules, and statistical tables are presented for purposes of additional analysis and are not a requiredpart of the basic financial statements.

The combining and individual fund financial statements, budget and actual schedules, and supplementalad valorem tax schedules are the responsibility of management and were derived from, and relate directlyto, the underlying accounting and other records used to prepare the financial statements. Suchinformation has been subjected to the auditing procedures applied in the audit of the basic financialstatements and certain additional procedures, including comparing and reconciling such informationdirectly to the underlying accounting and other records used to prepare the basic financial statements or tothe basic financial statements themselves, and other additional procedures in accordance with auditingstandards generally accepted in the United States of America. In our opinion, the combining andindividual fund financial statements, budget and actual schedules, and supplemental ad valorem tax

schedules are fairly stated, in all material respects, in relation to the basic financial statements taken as awhole.

The introductory section and statistical tables have not been subjected to the auditing procedures appliedin the audit of the basic financial statements; and accordingly, we do not express an opinion or provideassurance on them.


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Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated October 29,2013 on our consideration of Macon Countys internal control over financial reporting and on our tests ofits compliance with certain provisions of laws, regulations, contracts and grant agreements, and other

matters. The purpose of that report is to describe the scope of our testing of internal control over financialreporting and compliance and the results of that testing, and not to provide an opinion on internal controlover financial reporting or on compliance. That report is an integral part of an audit performed inaccordance with Government Auditing Standards in considering Macon Countys internal control overfinancial reporting and compliance.

Martin Starnes & Associates, CPAs, P.A.Hickory, NCOctober 29, 2013


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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, 2013.

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 County exceeded its liabilities and deferred inflows of resources at the close ofthe fiscal year by $9,501,645 (net position).

The Countys total net position decreased by $2,328,309, primarily due to a decrease in the netposition of governmental activities.

As of the close of the current fiscal year, Macon Countys General Fund reported an ending fundbalance of $20,613,771, a decrease of $752,787 in comparison with the prior year. Totalgovernmental funds reported combined ending fund balances of $26,086,461. Approximately39.45% of this total amount, or $10,291,763, is restricted or non-spendable.

At the end of the current fiscal year, unassigned fund balance for the General Fund was $12,842,335,or 30.61% of total General Fund expenditures and transfers out for the fiscal year.

Macon Countys total debt decreased by $1,753,727 (4%) during the fiscal year. The key factors inthis decrease are regular debt payments and debt proceeds in the General Fund and ConsolidatedCapital Projects Fund.

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).The basic 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 reportcontains other supplemental information that will enhance the readers understanding of the financialcondition of Macon County.

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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 onthe 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) the

governmental funds statements, 2) the budgetary comparison statements, 3) the proprietary fundstatements, and 4) the fiduciary and agency fund statements.

The next section of the basic financial statements is the Notes to the Financial Statements. The notesoffer a detailed explanation about various information contained in the statements. After the notes,supplemental information is provided to show details about the Countys nonmajor governmental fundsand internal service funds, all of which are added together in one column on the basic financialstatements. Budgetary information required by the North Carolina General Statutes can also be found inthis part of the statements.

Immediately following the notes is the required supplementary information. This section containsfunding information about the Countys pension plans.

Government-Wide Financial

Statements

FundFinancial

Statements

ManagementsDiscussion and

Analysis

BasicFinancial

Statements

Notes to theFinancial

Statements

Summary Detail

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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 Countys financial status

as a whole.

The two government-wide statements report the Countys net position and how they have changed. Netposition is the difference between the total of the Countys assets and the total liabilities and deferredinflows of resources. Measuring the net position is one way to gauge the Countys 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 theCountys basic services, such as general governmental, public safety, transportation, public education,economic development, and general administration. Property taxes and Federal and State grant fundsfinance most of these activities. The business-type activities are those that the County charges customersto provide. This includes the solid waste (landfill) operation offered by Macon County. The finalcategory is the component unit. Macon County is financially accountable for the Macon County Airport

Authority. Financial information for this component unit is reported separately from the financialinformation presented 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 Countys 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 in

North Carolina, uses fund accounting to ensure and reflect compliance (or non-compliance) with finance-related legal requirements, such as the General Statutes or the Countys budget ordinance. All of thefunds of Macon County can be divided into three categories: governmental funds, proprietary funds, and

agency/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 Position and the Statement of Activities) andgovernmental funds is described in a reconciliation that is a part of the fund financial statements.

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 to

provide 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 Countysucceeded 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, and

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classifications 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 its solidwaste operations. Macon County uses an Internal Service Fund to account for health insurance on a costreimbursement basis. As these services predominantly benefit governmental rather than business-typefunctions, 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 waste andhealth insurance.

Fiduciary Funds. Fiduciary funds are used to account for resources held for the benefit of parties outside

the government. Macon County has eight 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 tothe 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.

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Government-Wide Financial Analysis

Macon Countys Net Position

Figure 2

2012 2013 2012 2013 2012 2013

Current and other assets 36,538,679$ 33,906,312$ 8,673,266$ 9,351,358$ 45,211,945$ 43,257,670$

Capital assets 23,459,314 24,398,520 2,271,354 2,103,456 25,730,668 26,501,976

Total assets 59,997,993 58,304,832 10,944,620 11,454,814 70,942,613 69,759,646

Long-term liabilities

outstanding 45,449,420 45,689,648 5,512,126 5,971,656 50,961,546 51,661,304$

Other liabilities 7,522,903 8,233,686 497,909 239,605 8,020,812 8,473,291

Total liabilities 52,972,323 53,923,334 6,010,035 6,211,261 58,982,358 60,134,595

Deferred inflows of resources 130,301 123,406 - - 130,301 123,406

Net position:

Net investment in capital assets 18,601,883 18,778,181 2,071,354 2,103,456 20,673,237 20,881,637

Restricted 6,934,514 9,980,380 - - 6,934,514 9,980,380

Unrestricted (18,641,028) (24,500,469) 2,863,231 3,140,097 (15,777,797) (21,360,372)

Total net position 6,895,369$ 4,258,092$ 4,934,585$ 5,243,553$ 11,829,954$ 9,501,645$

Governmental Activities Business-Type Activities Total

As noted earlier, net position may serve over time as one useful indicator of a governments financialcondition. The Countys assets exceeded its liabilities and deferred inflows of resources by $9,501,645 asof June 30, 2013. The Countys net position decreased by $2,328,309 for the fiscal year ended June 30,2013.

One of the largest portions of Macon Countys net position, $20,881,637, reflects its net investment incapital assets (e.g., land, buildings, machinery, and equipment). The County uses these capital assets to

provide services to citizens; consequently, these assets are not available for future spending. AlthoughMacon Countys investment in its capital assets is reported net of outstanding related debt, the resourcesneeded to repay this debt must be provided from other sources, since the capital assets themselves cannot

be used to repay these liabilities. An additional portion of the Countys net position, $9,980,380,represents resources that are subject to external restrictions on how they may be used.

At the end of the current fiscal year, the County is reporting a negative balance in unrestricted net positionin the amount of $21,360,372 for the government as a whole. The primary reason for the deficit is due tothe fact that under North Carolina law, the County is responsible for providing capital funding for theschool system. The County has chosen to meet its legal obligation to provide the school system capitalfunding by using a mixture of County funds and debt financings. The assets funded by the County,however, are titled to and utilized by the school system. Since the County, as the issuing government,acquires no assets, the County has incurred a liability without a corresponding increase in assets.

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Macon Countys Changes in Net Position

Figure 3

2012 2013 2012 2013 2012 2013

Revenues:

Program revenues

Charges for services 4,319,383$ 4,152,181$ 3,458,349$ 3,388,477$ 7,777,732$ 7,540,658$

Operating grants and contributions 10,647,327 9,918,241 - - 10,647,327 9,918,241

Capital grants and contributions 133,681 3,329,169 - - 133,681 3,329,169

General revenues:

Property taxes 28,747,033 28,912,689 - - 28,747,033 28,912,689

Other taxes 7,609,640 7,793,227 - - 7,609,640 7,793,227

Other 437,806 420,072 13,013 13,541 450,819 433,613

Total revenues 51,894,870 54,525,579 3,471,362 3,402,018 55,366,232 57,927,597

Expenses:

General government 10,544,326 11,086,204 - - 10,544,326 11,086,204Public safety 13,462,012 13,874,996 - - 13,462,012 13,874,996

Transportation 709,086 781,330 - - 709,086 781,330

Economic and physical development 2,977,859 5,083,894 - - 2,977,859 5,083,894

Human services 9,376,517 10,369,682 - - 9,376,517 10,369,682

Cultural and recreational 2,349,816 2,400,236 - - 2,349,816 2,400,236

Education 16,309,605 11,698,110 - - 16,309,605 11,698,110

Interest on long-term debt 2,118,296 1,868,404 - - 2,118,296 1,868,404

Solid waste - - 2,880,580 3,093,050 2,880,580 3,093,050

Total expenses 57,847,517 57,162,856 2,880,580 3,093,050 60,728,097 60,255,906

Increase (decrease) in net position (5,952,647) (2,637,277) 590,782 308,968 (5,361,865) (2,328,309)

Net Position:

Beginning of year - July 1 12,848,016 6,895,369 4,343,803 4,934,585 17,191,819 11,829,954

End of year - June 30 6,895,369$ 4,258,092$ 4,934,585$ 5,243,553$ 11,829,954$ 9,501,645$


Governmental Activities. Of total net position, governmental activities accounted for $4,258,092(44.8%). Property taxes provided 53.0% of funding at $28,912,689, charges for services funded$4,152,181, local option sales tax funded $7,793,227, and operating grants funded $9,918,241 of MaconCountys governmental activities. Governmental activities decreased Macon Countys net position by$2,637,277. Net position decreased due to the spending down of debt proceeds for school construction

and an increase in liabilities due to additional debt incurred.

Business-Type Activities. Business-type activities increased the Countys net position by $308,968.That increase is primarily attributable to an increase in cash and cash equivalents due to revenuesexceeding expenses offset by an increase in non-current liabilities.

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Financial Analysis of the Countys Funds

As noted earlier, the County uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.

Governmental Funds. The focus of the Countys governmental funds is to provide information on near-term inflows, outflows, and balances of usable resources. Such information is useful in assessing MaconCountys financing requirements. Specifically, fund balance available for appropriation can be a usefulmeasure 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 $26,086,461, a decrease of $1,577,629 in comparison with the prior year. The decreaseis primarily due to the spending down of debt proceeds for school construction and expendituresexceeding revenues in the General Fund.

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 $15,274,085, while total fund balance reached$20,613,771. The County currently has an available fund balance of 33.03% of General Fund

expenditures and transfers out, while total fund balance represents 44.58% of that same amount. Totalfund balance in the general fund decreased $752,787. This decrease is primarily attributable to thepurchase of property for future recreational development. The Consolidated Capital Project Funds fundbalance at year-end was $2,333,190, a decrease of $253,173 over the prior year, due to the spending downof 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 to

prepare 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) increasesin appropriations that become necessary to maintain services. Total amendments to the General Fund

increased the revenue source budget by $4,180,077. The majority of this increase was attributable toadditional restricted intergovernmental revenues received after the beginning of the year andappropriating fund balance to purchase property and renovate the pool and pool house in the RecreationDepartment. The difference between the final budgeted amount and the actual expenditures and uses was$2,331,944. This difference is primarily due to underspending the budget in general government, publicsafety, and human services; the decision not to fill certain positions; and incomplete contracts to becontinued in 2014.

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

Unrestricted net position of solid waste at the end of the year totaled $3,140,097. The increase of$308,968 over the prior year is primarily attributable to a $300,000 decrease in debt principal payments.

Other factors concerning the finances of the fund have already been addressed in the discussion of theCountys business-type activities.

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Capital Asset and Debt Administration

Capital Assets. Macon Countys capital assets for its governmental and business-type activities as ofJune 30, 2013 amount to $26,501,976, (net of accumulated depreciation). These assets include land,

buildings and systems, improvements, machinery, and equipment.

Major capital asset transactions during the year include:

Property acquisition $593,797

Pool renovations $447,898

Pool house renovations $207,500

Defibrillators $374,000

Two ambulances $201,546

Six Dodge Chargers for the Sheriffs Department $137,942

Macon Countys Capital Assets

Figure 4

2012 2013 2012 2013 2012 2013

Land 9,104,281$ 9,698,078$ 460,837$ 460,837$ 9,565,118$ 10,158,915$

Buildings and improvements 26,089,890 26,813,681 9,395,567 9,486,139 35,485,457 36,299,820

Furniture and equipment 2,539,709 2,816,679 2,221,473 2,221,473 4,761,182 5,038,152

Vehicles 5,180,244 5,577,931 704,863 744,471 5,885,107 6,322,402

Construction in progress 354,952 537,422 23,179 - 378,131 537,422

Subtotal 43,269,076 45,443,791 12,805,919 12,912,920 56,074,995 58,356,711

Less accumulated

depreciation (19,809,762) (21,045,271) (10,534,565) (10,809,464) (30,344,327) (31,854,735)

Total 23,459,314$ 24,398,520$ 2,271,354$ 2,103,456$ 25,730,668$ 26,501,976$


Additional information on the Countys capital assets can be found in the Notes to the FinancialStatements beginning on page 47.

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

Macon Countys Outstanding Debt

Figure 5

2012 2013 2012 2013 2012 2013

Installment contracts 42,453,279$ 40,899,552$ 200,000$ -$ 42,653,279$ 40,899,552$


The State of North Carolina limits the amount of net bonded debt a County may have outstanding to 8%of the appraised value subject to taxation. The current debt limitation for Macon County is $705,482,642,which is significantly greater than Macon Countys outstanding debt.


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More detailed information on the Countys long-term debt can be found in the Notes to the FinancialStatements beginning on page 58.

Economic Factors and Next Years Budgets and Rates

The following key economic indicators reflect the growth and prosperity of the County.

The unemployment rate for Macon County is currently 9.8%, which is a slight decrease from a rate of10.1% a year ago. Macon Countys rate is slightly higher than the States unemployment rate of9.3%.

Sales tax distributions increased 2.5% over prior year.

The tax base is diverse, with the ten leading taxpayers making up 3.46% of total assessed value.

All of these factors were considered in preparing Macon Countys budget for the 2013-2014 fiscal year.

Budget Highlights for the Fiscal Year Ending June 30, 2014

Governmental Activities: Taxes are based on $9.365 billion in property valuation with no growth

budgeted. The collection rate increased from 96.38% in 2012 to 96.42% in 2013. Sales tax revenueswere budgeted with 2% growth over FY 11-12 actuals.

Budgeted expenditures in the General Fund for 2014 are $47,145,470, which includes new debt servicefor school renovations and defibrillators. The 2014 budget has approximately $1.05 million capitaloutlay, an increase in education due to allocating additional current expense funds, an increase in transitdue to the addition of a VTCLI Grant, an increase in social services due to various program increases, andan increase in human services due to an increase in the Community Transformation Grant.

Business-Type Activities: The budgeted expenditures for the Solid Waste Fund are $3,654,700, whichrepresents a 3.2% decrease over last year. The decrease is due to making final debt service payments inFY 12-13. Funds are budgeted to continue with the planning for a new cell at the Macon County MSWLandfill.

Requests for information

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


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37/180

BASIC FINANCIAL STATEMENTS OVERVIEW


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39/180

Exhibit A

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


STATEMENT OF NET POSITION

JUNE 30, 2013

ComponentUnit

Macon County

Governmental Business-Type Airport

Activities Activities Total Authority

Assets:

Cash and cash equivalents 23,296,252$ 9,044,702$ 32,340,954$ 51,390$

Taxes receivable, net 1,249,920 - 1,249,920 -

Interest receivable 18,299 523 18,822 -

Accounts receivable, net 3,479,770 303,268 3,783,038 -

Due from other governments 4,164,756 2,865 4,167,621 -

Inventories 98,640 - 98,640 -

Prepaid items 243,541 - 243,541 -Restricted cash and cash equivalents 1,355,134 - 1,355,134 -

Construction in progress 537,422 - 537,422 -

Non-depreciable capital assets 9,698,078 460,837 10,158,915 11,281,621

Depreciable capital assets, net 14,163,020 1,642,619 15,805,639 1,108,152

Total assets 58,304,832 11,454,814 69,759,646 12,441,163

Liabilities:

Accounts payable and accrued liabilities 3,285,745 184,498 3,470,243 2,717

Liabilities to be paid from restricted assets 2,584 - 2,584 -

Due in less than one year 4,945,357 55,107 5,000,464 -

Due in more than one year 45,689,648 5,971,656 51,661,304 -

Total liabilities 53,923,334 6,211,261 60,134,595 2,717

Deferred Inflows of Resources:

Prepaid taxes 123,406 - 123,406 -

Net Position:

Net investment in capital assets 18,778,181 2,103,456 20,881,637 12,389,773

Restricted for:

Stabilization by State statute 8,121,354 - 8,121,354 -

Restricted for public safety 362,515 - 362,515 -

Restricted for education 1,496,511 - 1,496,511 -

Unrestricted (24,500,469) 3,140,097 (21,360,372) 48,673

Total net position 4,258,092$ 5,243,553$ 9,501,645$ 12,438,446$

Primary Government


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STATEMENT OF ACTIVITIES


Operating Capital

Charges for Grants and Grants and

Expenses Services Contributions Contributions

Functions/Programs:

Primary Government:

Governmental Activities:

General government 11,086,204$ 1,271,567$ 1,033,706$ -$

Public safety 13,874,996 1,720,635 641,389 -

Transportation 781,330 - 280,271 -

Economic and physical development 5,083,894 506,736 494,374 3,314,169

Human services 10,369,682 519,738 7,219,987 -Cultural and recreational 2,400,236 - 15,000 -

Education 11,698,110 133,505 233,514 15,000

Interest on long-term debt 1,868,404 - - -

Total governmental activities 57,162,856 4,152,181 9,918,241 3,329,169

Business-Type Activities:

Solid waste 3,093,050 3,388,477 - -

Total primary government 60,255,906$ 7,540,658$ 9,918,241$ 3,329,169$

Component Unit:

Airport Authority 136,537$ 8,634$ 41,388$ 2,473,990$

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 Position

Net Position:

Beginning of year - July 1

End of year - June 30

Program Revenues

22


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Exhibit B

Net (Expense) Revenue and Changes in Net PositionComponent Unit

Macon County

Governmental Business-Type Airport

Activities Activities Total Authority

(8,780,931)$ -$ (8,780,931)$ -$

(11,512,972) - (11,512,972) -

(501,059) - (501,059) -

(768,615) - (768,615) -

(2,629,957) - (2,629,957) -(2,385,236) - (2,385,236) -

(11,316,091) - (11,316,091) -

(1,868,404) - (1,868,404) -

(39,763,265) - (39,763,265) -

- 295,427 295,427 -

(39,763,265) 295,427 (39,467,838) -

2,387,475

28,912,689 - 28,912,689 -

7,793,227 - 7,793,227 -

339,575 - 339,575 -

17,743 - 17,743 -

62,754 13,541 76,295 -

37,125,988 13,541 37,139,529 -

(2,637,277) 308,968 (2,328,309) 2,387,475

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

4,258,092$ 5,243,553$ 9,501,645$ 12,438,446$

Primary Government

23


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Exhibit C



BALANCE SHEET - GOVERNMENTAL FUNDS

JUNE 30, 2013

Consolidated Debt Other Total

General Capital Service Governmental Governmental

Fund Project Fund Funds Funds

Assets:

Cash and cash equivalents 17,306,134$ 703,741$ 1,022,379$ 1,555,783$ 20,588,037$

Taxes receivable, net 1,100,264 - - 149,656 1,249,920

Interest receivable 18,299 - - - 18,299

Accounts receivable, net 825,318 887,603 - 1,760,249 3,473,170

Due from other funds 1,226,660 - - - 1,226,660

Due from other governments 3,719,557 - - 445,199 4,164,756

Inventories 98,640 - - - 98,640

Prepaid items 212,743 - - - 212,743

Cash and cash equivalents, restricted 2,584 1,352,550 - - 1,355,134

Total assets 24,510,199$ 2,943,894$ 1,022,379$ 3,910,887$ 32,387,359$

Liabilities, Deferred Inflows of Resources,

and Fund Balances:

Liabilities:

Accounts payable and accrued liabilities 1,908,643$ 610,704$ -$ 417,450$ 2,936,797$

Due to other funds - - - 1,226,660 1,226,660

Liabilities to be paid from restricted assets 2,584 - - - 2,584

Total liabilities 1,911,227 610,704 - 1,644,110 4,166,041

Deferred Inflows of Resources:

Unavailable revenue - property taxes 1,100,264 - - 149,656 1,249,920

Unavailable revenue - ambulance 554,706 - - - 554,706

Unavailable revenue - public health 206,825 - - - 206,825

Prepaid taxes 123,406 - - - 123,406

Total deferred inflows of resources 1,985,201 - - 149,656 2,134,857

Fund Balances:

Non-spendable, not in spendable form:

Inventories 98,640 - - - 98,640Prepaids 212,743 - - - 212,743

Restricted:

Stabilization by State statute 5,028,303 887,603 - 2,205,448 8,121,354

Restricted, all other 310,530 1,352,550 - 195,946 1,859,026

Committed - 93,037 - 1,337,859 1,430,896

Assigned 2,121,220 - 1,022,379 - 3,143,599

Unassigned 12,842,335 - - (1,622,132) 11,220,203

Total fund balances 20,613,771 2,333,190 1,022,379 2,117,121 26,086,461

Total liabilities, deferred inflows of resources,

and fund balances 24,510,199$ 2,943,894$ 1,022,379$ 3,910,887$

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

therefore, are not reported in the funds. 24,398,520

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 Position. 2,396,665

Long-term liabilities and compensated absences are not due and payable in

the current period and, therefore, are not reported in the funds. (50,635,005)

Deferred inflows of resources for taxes and special assessments receivables 1,249,920

Deferred inflows of resources for other unavailable revenues 761,531

Net position of governmental activities 4,258,092$


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Exhibit D


STATEMENT OF REVENUES, EXPENDITURES, AND

CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS


Consolidated Debt Other TotalGeneral Capital Service Governmental Governmental

Fund Project Fund Funds Funds

Revenues:

Ad valorem taxes 26,149,786$ -$ -$ 2,738,405$ 28,888,191$

Local option sales taxes 6,243,883 - - 1,549,344 7,793,227

Unrestricted intergovernmental revenues 357,318 - - - 357,318

Restricted intergovernmental revenues 8,185,273 15,000 938,985 4,108,152 13,247,410

Permits and fees 1,409,574 - - - 1,409,574

Sales and services 2,436,510 - - - 2,436,510

Interest earned on investments 57,117 1,593 475 1,846 61,031

Miscellaneous 173,366 133,505 47,682 3,940 358,493

Total revenues 45,012,827 150,098 987,142 8,401,687 54,551,754

Expenditures:

Current:

General government 6,773,209 - - 226,949 7,000,158

Public safety 11,610,233 - - 3,063,400 14,673,633

Transportation 748,894 - - - 748,894

Economic and physical development 1,033,663 - - 4,055,331 5,088,994

Human services 10,786,673 - - - 10,786,673

Education 8,294,839 3,403,271 - - 11,698,110

Cultural and recreational 2,710,790 - - - 2,710,790

Debt service:

Principal repayments - - 4,927,727 - 4,927,727

Interest - - 1,868,404 - 1,868,404

Total expenditures 41,958,301 3,403,271 6,796,131 7,345,680 59,503,383

Revenues over (under) expenditures 3,054,526 (3,253,173) (5,808,989) 1,056,007 (4,951,629)

Other Financing Sources (Uses):

Issuance of long-term debt 374,000 3,000,000 - - 3,374,000

Transfers in 99,712 - 5,811,073 76,737 5,987,522

Transfers out (4,281,025) - - (1,706,497) (5,987,522)

Total other financing sources (uses) (3,807,313) 3,000,000 5,811,073 (1,629,760) 3,374,000

Net change in fund balances (752,787) (253,173) 2,084 (573,753) (1,577,629)

Fund Balances:

Beginning of year - July 1 21,366,558 2,586,363 1,020,295 2,690,874 27,664,090

End of year - June 30 20,613,771$ 2,333,190$ 1,022,379$ 2,117,121$ 26,086,461$


25


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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 (1,577,629)$

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. 24,498

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. (250,294)

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. 5,021

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. (2,027,043)

Capital assets (net) disposed of during the year are not recognized on the modified accrual basis. (56,435)

Capital outlays are reported as expenditures in the governmental funds statement. However, in theStatement of Activities, capital outlay is not an expense, rather it is an increase in capital assets. 2,596,731

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

reported as an expenditure in the governmental funds statement. (1,601,090)

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. 4,927,727

Debt issued is reported as revenues in the governmental fund statements. However,

in the Statement of Activities, these transactions are not a revenue, rather they are an (3,374,000)

increase in liabilities.

The net revenue (expense) of the internal service funds are reported with governmental activities. (1,304,763)

Change in net position of governmental activities (Exhibit B) (2,637,277)$


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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 26,071,740$ 26,071,740$ 26,149,786$ 78,046$

Local option sales taxes 5,585,715 5,939,715 6,243,883 304,168

Unrestricted intergovernmental revenues 340,000 186,000 357,318 171,318

Restricted intergovernmental revenues 7,088,689 8,840,191 8,185,273 (654,918)

Permits and fees 1,345,755 1,439,755 1,409,574 (30,181)

Sales and services 2,204,404 2,291,419 2,436,510 145,091

Investment earnings 48,000 48,000 57,117 9,117

Miscellaneous 26,121 143,388 173,366 29,978Total revenues 42,710,424 44,960,208 45,012,827 52,619

Expenditures:

Current:

General government 6,806,573 7,105,516 6,773,209 332,307

Public safety 10,807,730 11,922,522 11,610,233 312,289

Transportation 696,386 820,284 748,894 71,390

Economic and physical development 879,516 1,211,323 1,033,663 177,660

Human services 10,651,862 12,181,908 10,786,673 1,395,235

Cultural and recreational 2,017,487 2,728,398 2,710,790 17,608

Intergovernmental:

Education 8,250,684 8,307,278 8,294,839 12,439

Total expenditures 40,110,238 44,277,229 41,958,301 2,318,928

Revenues over (under) expenditures 2,600,186 682,979 3,054,526 2,371,547

Other Financing Sources (Uses):

Long term debt issued - 374,000 374,000 -

Transfers in - 99,712 99,712 -

Transfers out (4,280,955) (4,294,041) (4,281,025) 13,016

Appropriated fund balance 1,680,769 3,137,350 - (3,137,350)

Total other financing sources (uses) (2,600,186) (682,979) (3,807,313) (3,124,334)

Net change in fund balance -$ -$ (752,787) (752,787)$

Fund Balance:

Beginning of year - July 1 21,366,558

End of year - June 30 20,613,771$


27


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Exhibit G


STATEMENT OF NET POSITION

PROPRIETARY FUNDS

JUNE 30, 2013

Business-Type Governmental

Activities Activities

Solid Internal Service

Waste Fund Fund

Assets:

Current assets:

Cash and cash equivalents 9,044,702$ 2,708,215$

Interest receivable 523 -

Accounts receivable, net 303,268 6,600

Prepaids - 30,798

Due from other government agencies 2,865 -Total current assets 9,351,358 2,745,613

Non-current assets:

Non-depreciable capital assets 460,837 -

Depreciable capital assets, net 1,642,619 -

Total non-current assets 2,103,456 -

Total assets 11,454,814 2,745,613

Liabilities:

Current liabilities:

Accounts payable and accrued liabilities 184,498 348,948

Current portion of accrued landfill closure and post-closure care cost 50,000 -

Compensated absences payable - current 5,107 -

Total current liabilities 239,605 348,948

Non-current liabilities:

Accrued landfill closure and post-closure care cost 5,453,100 -

Compensated absences payable 45,962 -

Long-term liabilities - non-current 472,594 -

Total non-current liabilities 5,971,656 -

Total liabilities 6,211,261 348,948

Net Position:

Net investment in capital assets 2,103,456 -

Unrestricted 3,140,097 2,396,665

Total net position 5,243,553$ 2,396,665$


28


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Exhibit H


STATEMENT OF REVENUES, EXPENSES, AND CHANGES

IN FUND NET POSITION - PROPRIETARY FUNDS





Waste Fund Fund

Operating Revenues:

Landfill fees 1,906,509$ -$

Solid waste disposal fees 24,582 -

Charges for services - 3,206,174

Tipping fees 1,113,081 -

Scrap tire revenues 42,175 -

Other 302,130 -Total operating revenues 3,388,477 3,206,174

Operating Expenses:

Salaries 893,001 -

Employee benefits 429,706 -

Benefit payments - 3,966,331

Insurance premiums - 546,329

Operating expenses 1,040,202 -

Landfill closure and post-closure care cost 422,109 -

Depreciation 303,676 -

Total operating expenses 3,088,694 4,512,660

Operating income (loss) 299,783 (1,306,486)

Non-Operating Revenues (Expenses):

Interest earned on investments 13,541 1,723

Interest and fees (4,356) -

Total non-operating revenues (expenses) 9,185 1,723

Change in net position 308,968 (1,304,763)

Net Position:

Beginning of year- July 14,934,585 3,701,428

End of year- June 30 5,243,553$ 2,396,665$


29


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Exhibit I


STATEMENT OF CASH FLOWS

PROPRIETARY FUNDS





Waste Fund Fund

Cash Flows from Operating Activities:

Cash received from customers 2,998,069$ 3,199,574$

Cash paid for goods and services (1,180,131) (4,477,633)

Cash paid to employees for services (1,203,661) -

Other operating revenues 406,697 -

Net cash provided (used) by operating activities 1,020,974 (1,278,059)

Cash Flows from Capital and Related Financing Activities:Acquisition and construction of capital assets (135,778) -

Principal paid on long-term debt (200,000) -

Interest paid on long-term debt (4,356) -

Net cash provided (used) for capital and related financing activities (340,134) -

Cash Flows from Investing Activities:

Interest on investments 13,541 1,723

Net increase (decrease) in cash and cash equivalents 694,381 (1,276,336)

Cash and Cash Equivalents:

Beginning of year - July 1 8,350,321 3,984,551

End of year - June 30 9,044,702$ 2,708,215$

Reconciliation of Operating Income (Loss) to

Net Cash Provided (Used) by Operating Activities:

Operating income (loss) 299,783$ (1,306,486)$

Adjustments to reconcile operating income (loss) to

net cash provided (used) by operating activities:

Depreciation 303,676 -

Change in estimate of closure and post-closure care cost 391,100 -

Change in other post-employment benefits 113,690 -

Changes in assets and liabilities:

(Increase) decrease in receivables 16,289 (6,600)(Increase) decrease in prepaids - (30,798)

Increase (decrease) in accounts payable and accrued liabilities (108,831) 65,825

Increase (decrease) in accrued vacation pay 5,267 -

Net cash provided (used) by operating activities 1,020,974$ (1,278,059)$


30


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Exhibit J


STATEMENT OF FIDUCIARY NET POSITION

FIDUCIARY FUND

JUNE 30, 2013

Agency

Funds

Assets:

Cash and cash equivalents 106,899$

Accounts receivable 18,036

Total assets 124,935$

Liabilities:

Miscellaneous liabilities 102,594$

Intergovernmental payable 22,341

Total liabilities 124,935$


31


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NOTES TO THE FINANCIAL STATEMENTS


1. Summary of Significant Accounting Policies

The accounting policies of Macon County, North Carolina, (the County) and its discretelypresented component units conform to generally accepted accounting principles as applicable togovernments. The following is a summary of the more significant accounting policies:

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 combined

financial 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 financial

transactions 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 fivemembers, 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 financial

statements may be obtained at the administrative offices of the County at 5 West Main Street,Franklin, North Carolina 28734.


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B. Basis of Presentation, Basis of Accounting

Basis of Presentation, Measurement Focus Basis of Accounting

Government-Wide Statements. The Statement of Net Position and the Statement of Activitiesdisplay information about the primary government net position (the County) and its componentunits. These statements include the financial activities of the overall government, except forfiduciary activities. Eliminations have been made to minimize the double counting of internalactivities. These statements distinguish betweengovernmental and business-type activities ofthe County. Governmental activities generally are financed through taxes, intergovernmentalrevenues, and other non-exchange transactions. Business-type activities are financed in wholeor in part by fees charged to external parties.

The Statement of Activities presents a comparison between direct expenses and program

revenues for the different business-type activities of the County and for each function of theCountys governmental activities. Direct expenses are those that are specifically associatedwith a program or function and, therefore, are clearly identifiable to a particular function.Indirect expense allocations that have been made in the funds have been reversed for theStatement of Activities. Program revenues include (a) fees and charges paid by the recipientsof goods or services offered by the programs and (b) grants and contributions that are restrictedto meeting the operational or capital requirements of a particular program. Revenues that arenot classified as program revenues, including all taxes, are presented as general revenues.

Fund Financial Statements. The fund financial statements provide information about theCountys funds, including its fiduciary funds. Separate statements for each fund category

governmental, proprietary, and fiduciary are presented. The emphasis of fund financialstatements is on major governmental and enterprise funds, each of which is displayed in a

separate column. All remaining governmental and enterprise funds are aggregated and reportedas 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, result from non-exchange transactions. Other non-operating items such asinvestment earnings are ancillary activities.

The County has the following fund categories and fund types:

Governmental Funds. Governmental funds account for the Countys general governmentalactivities. Governmental funds include the following fund types:


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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.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, environmental

protection, economic and physical development, human services, cultural and recreationalprojects, education, and general government services.

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.

Consolidated Capital Project Fund. Capital project funds are used to account for financial

resources to be used for acquisition or construction of major capital facilities (other than thosefinanced by proprietary funds or trust funds). The County maintains one major Capital ProjectFund within the governmental fund types. The Consolidated Capital Project Fund accounts for

projects related to education facilities. It is used to account for various school projects that arebeing constructed or renovated. The fund consists of loan funds and local County dollars foreach project. The fund is structured so that revenues and expenditures by project may be easilyidentified.

The County reports the following nonmajor governmental funds:

Special Revenue Funds. Special revenue funds are used to account for specific revenue sources(other than special assessments, expendable trusts, or major capital projects) that are legallyrestricted to expenditures for specified purposes. The County maintains three special revenue

funds: the Emergency Telephone System Fund, the Fire Districts Fund, and the Housing GrantsFund.

Capital Project Funds. Capital project funds are used to account for financial resources to beused for the acquisition or construction of major capital facilities (other than those financed by

proprietary funds or trust funds). The County has six nonmajor capital project funds within thegovernmental fund types: the Airport Improvements Fund, the County Buildings Project Fund,the Riverbend Estates Waterline Project Fund, the Little Tennessee River/Cartoogechaye CreekSewer Trunk Project Fund, the Schools Capital Fund, and the Capital Reserve Fund.

Proprietary Funds include the following fund types:

Enterprise Funds. Enterprise funds are used to account for operations (a) that are financed and

operated in a manner similar to private business enterprises where the intent of the governingbody is that the costs (expenses, including depreciation) of providing goods or services to thegeneral public on a continuing basis be financed or recovered primarily through user charges or(b) where the governing body has decided that periodic determination of revenues earned,expenses incurred, and/or net income is appropriate for capital maintenance, public policy,management control, accountability, or other purposes.


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Macon County has one Enterprise Fund: the Solid Waste Fund. The Landfill Closure and

Post-Closure Reserve Fund is a reserve established by the County to accumulate the fundsnecessary to cover the closure and post-closure care costs that will be incurred by the landfill inthe future. The Landfill Closure and Post-Closure Reserve Fund is consolidated with the SolidWaste Fund (the operating fund) for financial reporting purposes.

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 and do not involve the measurement ofoperating results. Agency funds are used to account for assets the County holds on behalf ofothers. The County maintains eight agency funds: the Social Services and Inmate Trust Fund,which accounts for monies deposited with the Social Services Department and Jail for the

benefit of certain individuals; the Fines and Forfeitures Fund, which accounts for various legalfines and forfeitures that the County is required to remit to the Macon County Board ofEducation; the Motor Vehicle Tax Fund, which accounts for registered motor vehicle propertytaxes that are billed and collected by the County for various municipalities and special districtswithin the County; the Deed of Trust Fund which accounts for $6.20 of each fee collected bythe Register of Deeds for registering or filing a deed of trust; the Western Carolina IndustrialPartners Fund, which accounts for monies held by the County as agent for advertising and

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 to State

Fund, which accounts for interest on delinquent motor vehicle taxes required to be remitted tothe State of North Carolina Department of Motor Vehicles.

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 are reported using the accrual basis of accounting. Revenues are recorded when earned,and expenses are recorded at the time liabilities are incurred, regardless of when the relatedcash flows take place. Non-exchange transactions, in which the County gives (or receives)value without directly receiving (or giving) equal value in exchange, include property taxes,

grants, entitlements, and donations. On an accrual basis, revenue from property taxes isrecognized in the fiscal year for which the taxes are levied. Revenue from grants, entitlements,and donations is recognized in the fiscal year in which all eligibility requirements have beensatisfied.


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Amounts reported as program revenues include: 1) charges to customers or applicants for

goods, 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.

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. The

principal operating revenues of the Countys enterprise funds are charges to customers for salesand services. Operating expenses for the 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 are recorded when the related fund liability is incurred, except for principal andinterest on long-term debt, claims and judgments, and compensated absences, which arerecognized as expenditures to the extent they have matured. General capital asset acquisitionsare reported as expenditures in governmental funds. Proceeds of general long-term debt andacquisitions under capital leases are reported as other financing sources.

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 and

are 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 2012 through February 2013 apply tothe fiscal year ended June 30, 2013. Uncollected taxes which were billed during this period areshown as a receivable on these financial statements and are offset by deferred inflows ofresources.

Sales taxes and certain intergovernmental revenues, such as the utilities franchise tax, collected

and held by the State at year-end on behalf of the County, are recognized as revenue.Intergovernmental revenues and sales and services are not susceptible to accrual becausegenerally they are not measurable until received in cash. Expenditure-driven grants arerecognized as revenue when the qualifying expenditures have been incurred and all other grantrequirements have been satisfied.


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Under the terms of grant agreements, the County funds certain programs by a combination of

specific cost-reimbursement grants, categorical block grants, and general revenues. Thus, whenprogram expenses are incurred, there is both restricted and unrestricted net position 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.

C. Budgetary Data

The Countys 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 (Special Revenue)Fund, the Consolidated Capital Projects Fund, the Airport Improvements Fund, the Little

Tennessee River/Cartoogechaye Creek Sewer Trunk Project Fund, the County BuildingsProject Fund, and the Riverbend Estates Waterline Project Fund.

All budgets are prepared using the modified accrual basis of accounting. Expenditures may notlegally exceed appropriations at the departmental level for the General Fund, special revenuefunds, Enterprise Fund, and Internal Service Fund, or at the object level for the capital projectsfunds. The County Manager is authorized by the budget ordinance to transfer appropriationswithin a fund; however, any such transfers must be reported to the Board of Commissioners andrecorded in the minutes. During the year, several amendments to the original budget werenecessary, the effects of which were not material. The budget ordinance must be adopted byJuly 1 of the fiscal year, or the governing Board must adopt an interim budget that covers thattime until the annual ordinance can be adopted.

D. Assets, Liabilities, Deferred Inflows and Outflows of Resources, 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 public

authority, obligations of certain non-guaranteed Federal agencies, certain high quality issues ofcommercial paper and bankers acceptances, and the North Carolina Capital Management Trust(NCCMT).


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The Countys investments with a maturity of more than one year at acquisition and non-money

market 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 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, represent amounts reservedfor the Public School Building Capital Fund. The restricted assets in the Consolidated CapitalProject Fund of $1,352,550 represents the balance of proceeds available under installment

purchase 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. Thetaxes 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, 2012.

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 asexpenditures when consumed.

Certain payments to vendors reflect costs applicable to future accounting periods and are

recorded as prepaid items, using the consumption method in both government-wide and fundfinancial s

Macon County NC Comprehensive Financial Audit Report - June 30, 2013

Documents

Transcript of Macon County NC Comprehensive Financial Audit Report - June 30, 2013