NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

The accounting policies of Harnett County and its component units conform to accounting principles generally accepted in the United States of America as applicable to governments.  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 100 counties established in North Carolina under North Carolina General Statute (“G.S.”) 153A-10.  As required by accounting principles generally accepted in the United States of America, these financial statements present the County and its component units, legally separate entities for which the County is financially accountable.  One component unit of the County has no financial transactions or account balances; therefore, it does not appear in the combined financial statements.  The blended component units, although they are legally separate entities, are in substance, part of the County’s operations.

 

Blended Component Units

 

                        Harnett Water and Sewer Districts

 

Harnett County Water and Sewer Districts (the “Districts”) exist to provide and maintain a water system for the county residents within the districts.  Under State law [G.S. 162A-89], the County’s board of Commissioners also serve as the governing board for the Districts.  Therefore, the Districts are reported as an enterprise fund in the County’s financial statements.  The Districts do not issue separate financial statements.

                       

The County has the following nine water and sewer districts, which are accounted for in enterprise funds:

 

                        Northeast Metro Water and Sewer District         Southwest Water and Sewer District

                        Buies Creek/Coats Sewer District                      Northwest  Water and Sewer District

                        South Central Water and Sewer District             Southeast Water and Sewer District

                        West Central Water and Sewer District              East Central Water and Sewer District

                        Bunnlevel/Riverside Water and Sewer District


The County entered into an agreement during fiscal year 1998, with each existing District and which will encompass additional Districts as they are created, that transferred all assets, liabilities (excluding bond indebtedness, loans, and installment notes, along with accrued interest payable), operational rights, and responsibilities to the County.  In consideration for this agreement, along with related accrued interest payables, the County agreed to pay the Districts an amount equal to debt service costs for the respective Districts for the duration of the respective bonds, loans, and  notes.

 

The County maintains the Districts’ assets, provides water and sewer operations and makes payments on outstanding debts on behalf of the respective Districts.  Therefore, the County’s financial statements reflect the assets and debts in the Harnett County Public Utilities Fund.  The Board of County Commissioners sits as the Board of each District.  No separate financial statements are issued by these Districts as they have no operations, only certain outstanding debt that is paid on their behalf by the County pursuant to the agreement noted above.

 

                        Other Component Unit

 

                        Harnett County Industrial Facility and Pollution Control Financing Authority

 

Harnett 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 of whom are appointed by the County commissioners.  The County can remove any commissioner of the Authority with or without cause.  The Authority has no financial transactions or account balances; therefore, it is not presented in the combined financial statements.  The Authority does not issue separate financial statements.

 

            B.        Basis of Presentation - Fund Accounting

 

The accounts of the County are organized and operated on the basis of funds and account groups.  A fund is an independent fiscal and accounting entity with a self-balancing set of accounts comprised of assets, liabilities, fund equity, revenues, and expenditures or expenses, as appropriate.  Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with finance-related legal and contractual provisions.  The minimum number of funds is maintained consistent with legal and managerial requirements.  The account groups are not funds, but are a reporting device used to account for certain assets and liabilities of the governmental funds that are not recorded directly in those funds.

           

 

 

 

 

 

The County has the following fund categories (further divided by fund type) and account groups.

Governmental Fund Types

 

Governmental Funds are used to account for Harnett County’s general governmental activities.  Governmental funds include the following fund types:

 

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

 

The primary revenue sources are ad valorem taxes, sales taxes, and federal and state grants.  The primary expenditures are for general government services, public safety, human services, and education.  Debt service for general long-term debt is recorded as part of the general fund.

 

Special Revenue Funds - Special Revenue Funds account for the proceeds of specific revenue sources (other than expendable trusts and major capital projects) that are legally restricted to expenditures for specified purposes. The County maintains eight Special Revenue Funds:  the Section 8 Housing Fund, the Special Districts Fund, the Community Development Block Grant Revolving Fund, the Law Enforcement  Fund, the Child Development Grants Fund, the Hurricane Fran Fund, the Emergency Telephone System Fund,  and the Emergency Response Planning Fund.  Three of these funds were closed at June 30, 2001.

 

Capital Project Funds - Capital Project Funds account for financial resources to be used for the acquisition and construction of major capital facilities (other than those financed by proprietary funds).  The County maintains five Capital Project Funds within the governmental fund types:  the Masterplan Courthouse Capital Project Fund, the Airport Capital Projects Fund, the Shawtown Revitalization Capital Project Fund, the Patterson/Bailey COBG Capital Project Fund and the General Fund Capital Project Fund.

 

Proprietary Fund Types

 

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

 

 

 

 

Harnett County has a Solid Waste Management fund, a Public Utilities Fund, and nine water and sewer districts, which are accounted for as individual funds.  The nine water and sewer districts include the Buies Creek/Coats Sewer Fund, South Central Water and Sewer Fund, West Central Water and Sewer Fund, Northwest Water and Sewer Fund, Southwest Water and Sewer Fund, Southeast Water and Sewer Fund, East Central Water and Sewer Fund, and Bunnlevel/Riverside Water and Sewer Fund., and the Northeast Metro Water and Sewer Fund. 

           

The Enterprise Fund also includes four capital project funds. Those funds include the following capital projects:

 

Buies Creek/Coats Capital Project Fund:  Titan Industries Capital Project Fund, Buies Creek Wastewater Expansion Capital Project, and Comprehensive Wastewater Study Capital Project.

 

Southwest Capital Project Fund:  Southwest Regional Distribution Transmission Capital Project, Southwest Wastewater Expansion Capital Project Fund, and Western Harnett and Johnsonville School Sewer Extension Capital Project.

 

Northeast Metro Capital Projects Fund: Water Treatment Pilot Program, Lillington Regional Wastewater Capital Project, Southwest Regional Transmission III (Design Phase) Capital Project, Riverside Capital Project, Wastewater SCADA Improvements Capital Project, Harnett-Wake Transmission Capital Project, Wellons Acquisition and Anderson Creek Sewer Extension Capital Project, South Central Capital Project, Anderson Creek Water Acquisition Capital Project, Harnett Fuquay Wastewater Capital Project, and Northeast Water Plant 18 mgd Expansion Capital Project.

 

Closure Dunn/Erwin Landfill Capital Project Fund:  Closure Dunn/Erwin Landfill.

 

The capital project funds are included with the Harnett County Public Utilities Fund for financial reporting purposes.

 

Fiduciary Fund Type

 

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

 

Agency Funds - Agency funds are custodial in nature and do not involve the measurement of operating results.  Agency funds are used to account for assets held by the County as an agent on behalf of others.  The County maintains three Agency Funds:  the Social Services Trust Fund, Cooperative Extension Special Trust Fund and the Motor Vehicle Tax Fund. The Cooperative Extension Special Trust Fund was closed at June 30, 2001.

 

 

            Account Groups

 

General Fixed Assets Account Group - This account group is established to account for all fixed assets of the County, other than those accounted for in the proprietary fund.

 

General Long-Term Debt Account Group - This account group is established to account for general long-term debt and all long-term obligations of the County except those which are accounted for in the proprietary fund.

 

C.        Measurement Focus and Basis of Accounting

 

The accounting and financial reporting treatment applied to a fund is determined by its measurement focus.  All governmental funds are accounted for using a current financial resources measurement focus.  With this measurement focus, only current assets and current liabilities generally are included on the balance sheet.   Operating statements of these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets.

 

The proprietary funds are accounted for on a flow of economic resources measurement focus. With this measurement focus, all assets and all liabilities associated with the operation of these funds are included on the balance sheet.  Proprietary fund type equity (i.e., net total assets) is segregated into contributed capital and retained earnings components.  Operating statements for these funds present increases (e.g., revenues) and decreases (e.g., expenses) in net total assets.  As required for periods beginning after June 15, 2000 by Statement 33 of the Government Accounting Standards Board, Accounting and Financial Reporting for Nonexchange Transactions, the County has begun recognizing capital contributions as revenue in the current year, rather than as contributed capital.  No adjustment to the balance of the contributed capital account is required.

 

The fiduciary fund type is an agency fund that is purely custodial (assets equal liabilities) and thus does not involve a measurement of results of operations.

 

Basis of accounting determines when revenues and expenditures or expenses and the related assets and liabilities are recognized in the accounts and reported in the financial statements.  Basis of accounting relates to the timing of the measurements made, regardless of the measurement focus applied.


 

In accordance with North Carolina General Statutes, all funds of the County are maintained during the year using the modified accrual basis of accounting.  The governmental fund types and agency funds are presented in the financial statements on this same basis.  Under the modified accrual basis, revenues are recognized in the accounting period when they become susceptible to accrual (i.e., when they are "measurable" and "available") to pay liabilities of the current period.  In addition, expenditures are recorded when the related fund liability is incurred, if measurable, except for unmatured principal and interest on general long-term debt, which are recognized when due, and certain compensated absences and claims and judgments, which are recognized when the obligations are expected to be liquidated with expendable available financial resources.

 

The County recognizes assets of nonexchange transactions in the period when the underlying transaction occurs, when an enforceable legal claim has arisen, or when all eligibility requirements are met. Revenues are recognized, on the modified accrual basis, when they are measurable and available. Nonexchange transactions occur when one government provides (or receives) value to (from) another party without receiving (or giving) equal or nearly equal value in return. State shared revenues, sales tax, property taxes, federal grants funding federal mandates, and most donations are examples of nonexchange transactions.

 

The County considers all revenues available if they are collected within 60 days after year-end, except for property taxes.  Ad valorem property taxes are not accrued as a revenue because the amount 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 collection of property taxes on registered motor vehicles in North Carolina.  Effective with this change in the law, Harnett County is responsible for billing and collecting the property taxes on all registered motor vehicles on behalf of all municipalities and special tax districts in the County.  For those motor vehicles registered under the staggered system and for vehicles newly-registered under the annual system, property taxes are due the first day of the fourth month after the vehicles are registered.  The billed taxes are applicable to the fiscal year in which they become due.  Therefore, taxes for vehicles registered from March 2000 through February 2001 apply to the fiscal year ended June 30, 2001.  Uncollected taxes which were billed during this period are shown as a receivable on these financial statements. For motor vehicles which are renewed and billed under the annual system, taxes are due on May 1 of each year. Uncollected taxes are reported as a receivable on the financial statements offset by deferred revenues because the due date and the date upon which the interest begins to accrue passed prior to June 30.  The taxes for vehicles registered annually that have already been collected as of year-end are also reflected as deferred revenues at June 30, 2001 because they are intended to finance the County's operations during the 2002 fiscal year.

 

Sales taxes 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 because generally they are not measurable until received in cash.  Expenditure-driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other grant requirements have been satisfied.

 

Proprietary funds are presented in the financial statements on the accrual basis of accounting.  Under this basis, revenues are recognized in the accounting period when earned and expenses are recognized in the period they are incurred.  As permitted by accounting principles generally accepted in the United States of America, the County has elected to apply only applicable FASB Statements and Interpretations issued before November 30, 1989 in its accounting and reporting practices for its proprietary operations.

 

                        New Pronouncements

 

In March 1999, the GASB adopted Statement No. 34 (“GASB 34”), (Basic Financial Statements  - and Management’s Discussion and Analysis – for State and Local Governments), making it effective in three phases based on the County’s total annual revenues in the first fiscal year ending after June 15, 1999.  GASB 34 establishes new financial reporting requirements for state and local governments throughout the United States. GASB 34 will be required to be implemented for the fiscal year ended June 30, 2003.

 

            D.        Budgetary Data

 

The County’s budgets are adopted as required by the North Carolina General Statues.  Formal budgetary accounting is employed as a management control for all funds of the County.  Annual budget ordinances are adopted each fiscal year, and amended as required, for the General Fund, all special revenue funds except the Community Development Revolving Loan Fund, the Child Development Grant Fund, the Hurricane Fran Fund, and the Emergency Response Planning Fund, which are authorized by project ordinances, and for the enterprise funds.  All annual appropriations lapse at the fiscal year-end.  Project ordinances are adopted for the capital project funds.  All budgets are prepared using the modified accrual basis of accounting, which is consistent with the accounting system used to record transactions.


 

The legal level of control over expenditures is at the department level for the General Fund, Enterprise funds, and Special Revenue funds.  The balances in the Capital Reserve Funds will be appropriated when transferred to the General Fund or their respective capital project funds.  The County Manager is authorized by the budget ordinance to transfer amounts between line item expenditures within a department without limitation with an official report on such transfers at the next regular meeting of the Board of Commissioners.  These changes should not result in changes in recurring obligations such as salaries.  He may not transfer amounts between departments of the same fund or transfer amounts between funds nor from any contingency appropriation within a fund.  All other transfers, as well as any revisions that alter the total expenditures of any fund, require prior approval by the Board of Commissioners.  During the year, a significant number of amendments to the original budget were necessary.

 

A budget calendar is included in the North Carolina General Statutes which prescribes the last day on which certain steps of the budget procedure are to be performed.  The following schedule lists the tasks to be performed and the date by which each is required to be completed.

 

March 20 -        Each department head submits to the budget officer the budget requests and revenue estimates for their department for the budget year.

 

May 1      -       The budget and the budget message shall be submitted to the governing    board.  The public hearing on the budget should be scheduled at this             time.

 

                        June 19    -        The budget ordinance shall be adopted by the governing board.

 

Encumbrances

 

As required by G. S. 159-26(d), the County maintains encumbrance accounts which are considered to be "budgetary accounts."  Encumbrances outstanding at year-end represent the estimated amounts of the expenditures ultimately to result if unperformed contracts in progress at year-end are completed.  Encumbrances outstanding at year-end do not constitute expenditures or liabilities. 

 

At June 30, 2001, $2,421 of open purchase orders and contracts relating the General Fund was outstanding.  These encumbrances outstanding are reported as “Reserved for encumbrances” in the fund balance section of the Combined Balance Sheet.  An appropriation is made in the subsequent year to complete these transactions.


 

            E.         Assets, Liabilities, and Fund Equity

 

Deposits and Investments

 

All deposits of the County are made in board-designated official depositories and are secured as required by G.S. 159-31.  The County may designate, as an official depository, any bank or savings association whose principal office is located in North Carolina.  Also, the County may establish time deposit accounts such as NOW and SuperNow accounts, money market accounts, and certificates of deposit.

 

State Law G. S. 159-30(c) authorizes the County to invest in obligations of the United States or obligations fully guaranteed both as to principal and interest by the United States; obligations of the 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 of commercial paper and banker’s acceptances; and the North Carolina Capital Management Trust (“NCCMT”).

 

The County’s 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.  The securities of the NCCMT Cash Portfolio, an SEC-registered (2a-7) money market mutual funds, are valued at fair value, which is the NCCMT’s share price.  The NCCMT Term Portfolio’s securities are valued at fair value.  Money market investments including commercial paper that have a remaining maturity at the time of purchase of one year or less and non-participating interest earnings and investment contracts are reported at amortized cost.          

 

Cash and Cash Equivalents

 

The County pools monies from several funds to facilitate disbursement and investment and to maximize investment income.  Therefore, all cash and investments are essentially demand deposits and are considered cash and cash equivalents.  The investment income is allocated based on each fund’s monthly balance in relation to the total pooled cash balance.

 

For purposes of the Statement of Cash Flows, the County’s proprietary funds consider equity in pooled cash and investments to be cash equivalents as they are essentially demand deposit accounts.


 

Restricted Assets

 

The unexpended bond proceeds of the Water and Sewer Fund Serial Bonds issued by the County are considered restricted assets (i.e., cash and investments) for the enterprise fund because their use is completely restricted to the purpose for which the bonds were originally issued.  The unexpended certificate of participation proceeds in the General Fund, Water and Sewer Fund, and the Capital Projects Funds are deposited in a trustee account and are also shown as restricted assets because of contractual requirements.  Such amounts are included in cash and investments.  Customer deposits held by the County before any services are supplied are restricted to the service for which the deposit was collected.

 

Ad Valorem Taxes Receivable and Deferred Revenues

 

In accordance with State law [G.S. 105-347 and G.S. 159-13(a)], the County levies ad valorem taxes on property other than motor vehicles on July 1, the beginning of the fiscal year.  The taxes are due on September 1 (lien date); however, penalties and interest do not accrue until the following January 6.  These taxes are based on the assessed values as of January 1, 2000.   

 

Ad valorem taxes receivable are not accrued as a revenue because the amount is not considered "available."  At June 30, taxes receivable are materially past due and are not considered to be an available resource to finance the operations of the subsequent year.  Accounting principles generally accepted in the United States of America state that property tax revenues which are measurable but not available should be recorded as deferred revenues.  The receivable amount is reduced by an allowance for doubtful accounts, and an amount equal to the net receivable is shown as deferred revenues on the Combined Balance Sheet.  In addition, property taxes collected in advance of the fiscal year to which they apply are recorded as deferred revenues.

 

Allowance for Doubtful Accounts

 

All receivables that historically experience uncollectible accounts are shown net of allowances for doubtful accounts.  These amounts are estimated by analyzing the percentage of receivables which are not expected to be collected.

 

Inventory

 

Inventory is determined by physical count and valued at cost, which approximates market.  The inventory of the General Fund consists of expendable supplies held for consumption that are recorded as expenditures when purchased.  The inventory of the enterprise funds consists of chemicals, meters and meter boxes, fuel oil, tubing and other supplies held for consumption.  In each case, the cost of the inventory carried in the County’s enterprise fund is recorded as an expense when the inventory is consumed.

Fixed Assets

 

Fixed assets used in governmental fund type operations (general fixed assets) are accounted for in the General Fixed Assets Account Group.  Accumulated depreciation is not recorded on general fixed assets.  General fixed assets are recorded at cost.  Donated fixed assets are recorded at their estimated fair market value on the date donated.

 

Public domain or infrastructure general fixed assets are not capitalized because such assets are immovable and of value only to the County. Also, the County has elected not to capitalize those interest costs which are incurred during the construction period of general fixed assets.

 

Property, plant, and equipment in the proprietary funds of the County are recorded at original cost at the time of acquisition.  Property, plant, and equipment donated to these proprietary fund type operations are recorded at the estimated fair market value at the date of donation.  Any interest incurred during the construction phase of proprietary fund type fixed assets is reflected in the capitalized value of the asset constructed.  Assets are depreciated on a straight-line basis.  Gains or losses on dispositions are credited or charged to operations.  Proprietary fund assets of the County are depreciated on a class life basis at the following rates:

 

                        Plant, distribution and collection systems             20 to 40 years

                        Furniture and maintenance equipment                                         4 to 10 years

                        Vehicles                                                                       3 to 7 years

 

Long-Term Debt

 

For governmental fund types, bond issuance costs are recognized during the current period.  Bond proceeds are reported as other financing sources.  Issuance costs, whether or not withheld from the actual net proceeds received, are reported as debt service expenditures.  For the proprietary fund types, material bond issuance costs are deferred and amortized over the life of the bonds using the effective interest method.  The Long-term debt for water system improvements is carried within the enterprise funds rather than in the general long-term debt account group.  The debt service requirements for that debt are being met by water revenues, but the taxing power of the District is pledged to make these payments if water revenues should ever be insufficient.  Long-term debt for other purposes is included in the general long-term debt account group.  The debt service requirements for all of the debt carried in the general long-term debt account group are appropriated annually in the General Fund.

 

Fund Equity

 

Reservations or restrictions of equity represent amounts that are not appropriable or are legally segregated for a specific purpose.  Designations of equity represent tentative management plans that are subject to change. 

 

State law [G.S. 159-13(b) (16)] restricts the appropriation of fund balance or fund equity to an amount not to exceed the sum of cash and investments minus the sum of liabilities, encumbrances and deferred revenues arising from cash receipts as those amounts stand at the close of the fiscal year preceding the budget year. 

 

The governmental fund types classify fund balance as follows:

 

Reserved

 

Reserved for Inventories  - portion of fund balance not available for appropriation because it represents the year-end balance of ending inventories, which are not expendable, available resource.

 

Reserved for Encumbrances - portion of fund balance available to pay for commitments relating to purchase orders and contracts which remain unperformed at year-end.

 

Reserved by State Statute - portion of fund balance, in addition to reserves for encumbrances and reserves for inventories, which is not available for appropriation under State Law [G.S. 159-8 (a)].  This amount is usually comprised of accounts receivable and interfund receivables which are not offset by deferred revenues.

 

Unreserved

 

Designated for Subsequent Year's Expenditures - portion of total fund balance available for appropriation which has been designated for the adopted 2001-2002 budget ordinance.

 

Undesignated - portion of total fund balance available for appropriation which is uncommitted at year-end.

 

Contributed capital is recorded in proprietary funds that have received capital grants or  contributions from developers, customers, or other funds.  The majority of contributed capital consists of water and sewer lines built by developers and donated to the County.

 

F.         Revenues, Expenditures and Expenses

 

Other Resources

 

The General Fund provides the basis of local resources for other governmental funds.  These transactions are recorded as "operating transfers out" in the General Fund and "operating transfers in" in the receiving fund.

 

Compensated Absences

 

The vacation policy of the County provides for the accumulation of up to 10 days earned vacation leave with such leave being fully vested when earned.  For the County, the current portion of the accumulated vacation pay is not considered to be material; therefore, no expenditure or liability has been reported in the County’s governmental funds. The County's liability for accumulated earned vacation and the salary-related payments as of June 30, 2001 is recorded in the General Long-Term Debt Account Group.  For the Enterprise Funds, an expense and a liability for compensated absences and the salary-related payments are recorded within those funds as the leave is earned.

 

The County's sick leave policy provides for an unlimited accumulation of earned sick leave.  Sick leave does not vest but any unused sick leave accumulated at the time of retirement may be used in the determination of length of service for retirement benefit purposes.  Because the County has no obligation for the accumulated sick leave until it is actually taken, no accrual for sick leave has been made.

 

            G.        Totals  (Memorandum Only) Columns

 

The total columns on the accompanying financial statements are captioned as “Total (Memorandum Only)” because they do not represent consolidated financial information and are presented only to facilitate financial analysis.  The columns do not present information that reflects financial position, results of operations, or cash flows in accordance with accounting principles generally accepted in the United States of America for the primary government.  Interfund eliminations have not been made in the aggregation of this data.

           

H.                Comparative Data/Reclassifications

 

Comparative total data for the prior year have been presented in selected sections of the accompanying financial statements in order to provide an understanding of the changes in the County’s financial position and operations.  Comparative totals have not been included on the statements where their inclusion would not provide enhanced understanding of the County’s financial position and operations or would cause the statements to be unduly complex or difficult to understand.  Also, certain amounts presented in the prior year’s data have been reclassified to be consistent with the current year’s presentation.


 

NOTE 2   -  STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY

           
Deficit Fund Balance or Retained Earnings

 

At June 30, 2001, the following individual funds had a deficit in fund equity:

 

            Special Revenue Funds:  

                 Section 8 Housing Fund                                                                                $ (226,482)

                 Special Districts                                                                                                      (864)

 

Non-Compliance with North Carolina General Statutes

 

During the year ended June 30, 2001, expenditures exceeded appropriated amounts at the level of budget ordinance appropriation in the General Fund  and Capital Project Funds as follows:

                                                                                Budget                  Actual                    Variance  

 

General Fund:

   Department

      Medical Examiner                                       $             32,500      $             34,950      $             (2,450)

 

   Intergovernmental

      Education                                                            11,286,282               11,330,282                   (44,000)

 

Capital Project Funds:

   School 2000 COPS

      Education                                                                -                           3,648,474               (3,648,474)

 

 

NOTE 3 - RECONCILIATION OF GAAP AND BUDGET BASIS EXPENDITURES

 

The accompanying schedules reconcile certain transactions which are treated differently on the Combined Statement of Revenues, Expenditures, and Changes in Fund Balances - All Governmental Fund Types and the Combined Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - General Fund and Annually Budgeted Special Revenue Funds.  A reconciliation for the Special Revenue Funds is included below:


 

Increase                                                                   Combined         (Decrease)         Budgetary

Special Revenue Fund:

    Revenues:                                        

            Restricted intergovernmental revenues             $  603,230     $       (28,572)1       $  574,658

            Permits and fees                                                618,408                  3,3851                          621,793

            Investment earnings                                             25,438             (15,845)1              9,593

            Other general revenues                                        80,739             (73,465)1              7,274

 

    Expenditures:                                                                                                                       

            Public safety                                                   3,458,687             (43,024)1        3,415,663

 

    Other financing uses:

            Operating transfer                                              (16,884)            (12,039)1                    (4,845)

 

1 Community Development Block Grant Fund, Child Development Grant Fund, Hurricane Fran Fund, and Emergency Response Planning Fund that are budgeted on a project ordinance basis.

 

NOTE 4 - CASH AND INVESTMENTS

 

A.  Deposits

 

All of the County's deposits are either insured or collateralized by using one of two methods.  Under the Dedicated Method, all deposits exceeding the federal depository insurance coverage are collateralized with securities held by the County's agent in the County’s name.  Under the Pooling Method, which is a collateral pool, all uninsured deposits are collateralized with securities held by the State Treasurer's agent in the name of the State Treasurer.  Since the State Treasurer is acting in a fiduciary capacity for the County, these deposits are considered to be held by the County's agent in the County's name.  The amount of the pledged collateral is based on an approved averaging method for noninterest bearing deposits and the actual current balance for interest-bearing deposits.  Depositories using the Pooling Method report to the State Treasurer the adequacy of their pooled collateral covering uninsured deposits.  The State Treasurer does not confirm this information with the County or the escrow agent.  Because of the inability to measure the exact amount of collateral pledged for the County under the Pooling Method, the potential exists for undercollateralization, and this risk may increase in periods of high cash flows.  However, the State Treasurer of North Carolina enforces strict standards of financial stability for each depository that collateralizes public deposits under the Pooling Method.

 

At June 30, 2001, the County's deposits had a carrying amount of $30,338,796 and a bank balance of $32,186,763.  Of the bank balance, $234,051 is covered by federal depository insurance and $31,952,712 was covered by collateral held under the Pooling Method.   

 

At June 30, 2001, Harnett County had $3,520 cash on hand.

B.  Investments

 

The County's investments are categorized to give an indication of the level of custodial risk assumed by each of these entities at year-end.  In the following tables, Column A includes investments that are insured or registered or for which the securities are held by the County or its agents in the entity’s name.  Column B includes uninsured  and unregistered investments for which the securities are held by the counterparty’s trust department  or agent in the County’s name.  Column C includes uninsured and unregistered investments for which the securities are held by the counterparty, or by its trust department or agent but not in the County’s name.  The County’s investments in the North Carolina Capital Management Trust are exempt from risk categorization because the County does not own any identifiable securities in these mutual funds.

 

At  June 30, 2001, the County’s Investment balances were as follows: 

 

                                             Categories                         Reported            Fair

                                                     A                   B                 C                 Value              Value   

 

Commercial Paper                  $        -           $   4,098,545   $      -            $   4,098,545     $   4,098,545

                                             $        -           $   4,098,545   $      -                4,098,545         4,098,545

 

North Carolina Capital Management Trust                                                 4,920,669          4,920,669

 

Total investments                                                                                       9,019,214          9,019,214

 

Certificates of deposit                                                                                3,644,188          3,644,188

 

Demand Deposits                                                                                     26,698,128         26,698,128

 

Total cash and investments                                                                    $ 39,361,530     $  39,361,530

 

Cash and investments at June 30, 2001, include the following restricted amounts:

 

     General Fund:

Harnett County COPS 1994 School Construction                             $      2,613,491

Harnett County COPS 1994 Governmental Complex                               1,287,242

 

     Capital Project Funds:

Harnett County COPS 2000 School Construction                                    6,969,063

Harnett County COPS 2000 Courthouse Construction                            11,127,882

 

     Enterprise Funds:

            Harnett County Public Utility Fund                                                            476,361

            Northeast Projects Fund                                                                           376,312

            Southwest Projects Fund                                                                          362,480

            Total                                                                                             $    23,212,831

 

 

 

NOTE 5 - RECEIVABLES

 

Taxes and accounts receivable as of year end are shown on the Combining Balance Sheet, net of the allowance for doubtful accounts, as follows:

 

 

 

NOTE  6 - DEFERRED REVENUES