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Home My WebLink About2013 City of Carmel Audit Report STATE BOARD OF ACCOUNTS 302 West Washington Street Room E418 INDIANAPOLIS, INDIANA 46204-2769 FINANCIAL STATEMENT AND FEDERAL SINGLE AUDIT REPORT OF CITY OF CARMEL • HAMILTON COUNTY, INDIANA January 1, 2013 to December 31, 2013 ,_- ;::,.e.--- -.4-4-N,:-.. „,;.-/.--,e;.-, ..--......-i... 0\,-., -16,...,-,7:-.,-, ,,,!.A..;,-,....;*\:,.„,. vet ..-„,,!„..,„,„„: 1:1r4.6.1.„.,4.,.... _dv,,,,, v,,,,,...:.. iii ;fir ,,!, 0 1 1 _?..,14, 1♦ �, ., i r ",..; ,( i #...s4 0. j J., •4 ' �s�„ 1 ma°_ __. TABLE OF CONTENTS Description Page Schedule of Officials 2 Independent Auditor's Report 3-5 Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statement Performed in Accordance With Government Auditing Standards 6-7 Financial Statement and Accompanying Notes: Statement of Receipts, Disbursements, and Cash and Investment Balances-Regulatory Basis 10 Notes to Financial Statement 11-16 Supplementary Information - Unaudited: Combining Schedule of Receipts, Disbursements, and Cash and Investment Balances -Regulatory Basis 18-27 Schedule of Payables and Receivables 28 Schedule of Leases and Debt 29 Schedule of Capital Assets 30 Supplemental Audit of Federal Awards: Independent Auditor's Report on Compliance for Each Major Federal Program and on Internal Control Over Compliance 32-33 Schedule of Expenditures of Federal Awards and Accompanying Note: Schedule of Expenditures of Federal Awards 36 Note to Schedule of Expenditures of Federal Awards 37 Schedule of Findings and Questioned Costs 38-40 Auditee Prepared Document: Corrective Action Plan 42 Other Report 43 -1- SCHEDULE OF OFFICIALS Office Official Term Clerk-Treasurer Diana L. Cordray 01-01-12 to 12-31-15 Mayor James Brainard 01-01-12 to 12-31-15 President Pro Tempore of the Common Council Rick Sharp 01-01-13 to 12-31-13 W. Eric Seidensticker 01-01-14 to 12-31-14 Utilities Director John Duffy 01-01-13 to 12-31-14 -2- 6 5 4�F r�; ..,_ti<::., STATE OF INDIANA 2r\r_j_t'� ,'i) AN EQUAL OPPORTUNITY EMI'LOVER STATE BOARD OF ACCOUNTS R'x- P , 302 WEST WASHINGTON STREET eie ROOM E418 INDIANAPOLIS,INDIANA 46204-2769 Telephone:(317)232-2513 Fax:(317)232-4711 Web Site: www.in.gov/sboa INDEPENDENT AUDITOR'S REPORT TO: THE OFFICIALS OF THE CITY OF CARMEL, HAMILTON COUNTY, INDIANA Report on the Financial Statement We have audited the accompanying financial statement of the City of Carmel(City),which comprises the financial position and results of operations for the year ended December 31, 2013, and the related notes to the financial statement. Management's Responsibility for the Financial Statement Management is responsible for the preparation and fair presentation of this financial statement in ac- cordance with the financial reporting provisions of the Indiana State Board of Accounts as allowed by state statute (IC 5-11-1-6). Management is responsible for and has determined that the regulatory basis of ac- counting, as established by the Indiana State Board of Accounts, is an acceptable basis of presentation. Management is also responsible for the design, implementation,and maintenance of internal control relevant to the preparation and fair presentation of a financial statement that is free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on this financial statement based on our audit. We con- ducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to ob- tain reasonable assurance about whether the financial statement is free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statement. The procedures selected depend on the auditor's judgment, including the assess- ment of the risks of material misstatement of the financial statement,whether due to fraud or error. In making those risk assessments,the auditor considers internal control relevant to the City's preparation and fair pres- entation of the financial statement in order to design audit procedures that are appropriate in the circum- stances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly,we express no such opinion. An audit also includes evaluating the appropriateness of account- ing policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statement. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. -3- INDEPENDENT AUDITOR'S REPORT (Continued) Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles As discussed in Note 1 of the financial statement, the City prepares its financial statement on the prescribed basis of accounting that demonstrates compliance with the reporting requirements established by the Indiana State Board of Accounts as allowed by state statute(IC 5-11-1-6),which is a basis of accounting other than accounting principles generally accepted in the United States of America. The effects on the financial statement of the variances between the regulatory basis of accounting described in Note 1 and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material. Adverse Opinion on U.S. Generally Accepted Accounting Principles In our opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles paragraph,the financial statement referred to above does not present fairly, in accordance with accounting principles generally accepted in the United States of America, the financial position and results of operations of the City for the year ended December 31, 2013. Opinion on Regulatory Basis of Accounting In our opinion, the financial statement referred to above presents fairly, in all material respects, the financial position and results of operations of the City for the year ended December 31,2013, in accordance with the financial reporting provisions of the Indiana State Board of Accounts described in Note 1. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards,we have also issued a report dated December 8, 2014,on our consideration of the City's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements,and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance. Accompanying Information Supplementary Information Our audit was conducted for the purpose of forming an opinion on the City's financial statement. The accompanying Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by the U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations,and is not a required part of the financial statement. Such infor- mation is the responsibility of management and was derived from and relates directly to the underlying ac- counting and other records used to prepare the financial statement. The information has been subjected to the auditing procedures applied in the audit of the financial statement and certain additional procedures, in- cluding comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statement or to the financial statement itself,and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Schedule of Expenditures of Federal Awards is fairly stated, in all material respects, in relation to the financial statement taken as a whole. -4- INDEPENDENT AUDITOR'S REPORT (Continued) Our audit was conducted for the purpose of forming an opinion on the City's financial statement. The Combining Schedule of Receipts, Disbursements, and Cash and Investment Balances- Regulatory Basis, Schedule of Payables and Receivables, Schedule of Leases and Debt, and Schedule of Capital Assets, as listed in the Table of Contents,are presented for additional analysis and are not required parts of the financial statement. They have not been subjected to the auditing procedures applied by us in the audit of the financial statement and, accordingly, we express no opinion on them. Paul D. Joyce, CPA State Examiner December 8, 2014 -5- 45'7"1 \ STATE OF INDIANA laa -} e AN EQUAL OPPOR'T'UNITY EMPLOYER STATE BOARD OF ACCOUNTS 83 302 WEST WASHINGTON STREET rti1 ROOM E418 INDIANAPOLIS,INDIANA 46204-2769 Telephone:(317)232-2513 Fax: (317)232-4711 Web Site: www.in.gov/sboa INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF THE FINANCIAL STATEMENT PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS TO: THE OFFICIALS OF THE CITY OF CARMEL, HAMILTON COUNTY, INDIANA We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statement of the City of Carmel (City), which comprises the financial position and results of operations for the year ended December 31, 2013, and the related notes to the financial statement,and have issued our report thereon dated December 8,2014,where- in we noted the City followed accounting practices the Indiana State Board of Accounts prescribes rather than accounting principles generally accepted in the United States of America. Internal Control Over Financial Reporting In planning and performing our audit of the financial statement,we considered the City's internal con- trol over financial reporting(internal control)to determine the audit procedures that are appropriate in the cir- cumstances for the purpose of expressing our opinion on the financial statement, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly,we do not express an opinion on the effectiveness of the City's internal control. Our consideration of the internal control was for the limited purpose described in the preceding para- graph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as described in the accompanying Schedule of Findings and Questioned Costs,we identified certain deficiencies in internal control over financial reporting that we consider to be material weak- nesses. A deficiency in internal control exists when the design or operation of a control does not allow man- agement or employees, in the normal course of performing their assigned functions,to prevent,or detect and correct,misstatements on a timely basis. A material weakness is a deficiency,or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's finan- cial statement will not be prevented, or detected and corrected, on a timely basis. We consider the deficien- cies described in the accompanying Schedule of Findings and Questioned Costs as item 2013-001 to be material weaknesses. -6- INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF THE FINANCIAL STATEMENT PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS (Continued) Compliance and Other Matters As part of obtaining reasonable assurance about whether the City's financial statement is free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and,accordingly,we do not express such an opinion. The results of our tests disclosed instances of noncompliance or other matters that are required to be reported under Government Auditing Standards and which are described in the accompanying Schedule of Findings and Questioned Costs as item 2013-001. City of Carmel's Response to Findings The City's response to the findings identified in our audit is described in the accompanying Corrective Action Plan. The City's response was not subjected to the auditing procedures applied in the audit of the financial statement and, accordingly, we express no opinion on it. Purpose of This Report The purpose of this report is solely to describe the scope of our testing of internal control and compli- ance and the results of that testing, and not to provide an opinion on the effectiveness of the City's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control and compliance. Accordingly,this communication is not suitable for any other purpose. • .Q. . Paul D. Joyce, CPA State Examiner December 8, 2014 -7- (This page intentionally left blank.) -8- FINANCIAL STATEMENT AND ACCOMPANYING NOTES The financial statement and accompanying notes were approved by management of the City. The financial statement and notes are presented as intended by the City. -9- CITY OF CARMEL STATEMENT OF RECEIPTS,DISBURSEMENTS,AND CASH AND INVESTMENT BALANCES- REGULATORY BASIS For the Year Ended December 31,2013 Cash and Cash and Investments investments Fund 01-01-13 Receipts Disbursements 12-31-13 General $ 2,454,932 $ 73,229,769 $ 71,979,961 $ 3,704,740 Motor Vehicle Highway 2,705,140 10,149,086 9,920,584 2,933,642 Local Road And Street 2,057,350 1,132,695 2,527,735 662,310 Throughfare Fund 483,776 417,005 639,463 261,318 Economic Fund 38,352 10,059 - 48,411 Housing Authority 58,590 88 - 58,678 User Fee Fund 125,905 117,622 110,842 132,685 Clerk's Record Perpetuation 95,213 19,510 9,570 105,153 Deferral Fund 559,720 76,689 60,223 576,186 Rainy Day 8,963,321 13,561 - 8,976,882 Hazardous Material Response Fund 7,536 762 - 8,298 Cumulative Captial Development 3,015,644 1,725,407 3,765,895 975,156 Parks Capital 689,266 731 230,148 459,849 Cumulative Capital Improvement 727,093 213,280 553,972 386,401 Police Pension Fund 2,384,605 514,967 2,089,493 810,079 Fire Pension Fund 2,728,576 574,794 2,734,728 568,642 Judical Salary Fees 90,395 44,065 14,279 120,181 Illinois St Construction Fund 700,178 3,183,696 61,401 3,822,473 Drug Task Force 588,416 143,524 169,644 562,296 Fire Gift Fund 5,726 19,098 16,681 8,143 Parks Gift Fund 49,716 3,258 4,931 48,043 Ambulance Fund 700,564 1,122,657 1,034,206 789,015 Grant Fund 574,496 50,522 153,015 472,003 Police Gift 38,800 12,171 20,491 30,480 Dnr/Tree City 50,223 306 26 50,503 Court Interpreter Fund 3,429 1 3,400 30 Community Relations Gift Fund 19,347 84,062 41,128 62,281 Public Defenders Fund 1,028 453 - 1,481 Redevelopment Commission 14,354 26,948,106 19,002,871 7,959,589 Crc Regions Account 3,607,850 1,416 3,609,266 - Carmel City Court 637,261 1,922,391 2,393,492 166,160 Parks Program Fund 1,173,986 3,607,772 3,028,294 1,753,464 Parks Monon Fund 1,509,331 4,873,086 4,537,949 1,844,468 Lease Rental Fund 3,834 6 - 3,840 Cumulative Capital Sewer 912,349 720 385,311 527,758 Park Impact Fee Fund 1,905,206 816,716 843,897 1,878,025 Barrett Law Fund 6 - - 6 Civic Square Construction Fund 596 - 596 - Old Town/126Th Street 457 1 - 458 Keystone Ave Fund 2,903,739 3,295 2,665,093 241,941 Historic Preservation - 18,900 16,110 2,790 Health Insurance Fund 3,377,675 11,985,566 12,091,018 3,272,223 Workers Comp Fund 36,170 270,969 307,139 - Support For The Arts 119,856 740,036 842,756 17,136 Payroll Fund 277,146 44,637,421 44,709,101 205,466 Barrett Law Surplus 165,445 250 - 165,695 Sewage Works Revenue Bonds 8,103,357 51,082 4,339,129 3,815,310 Sewer Operating 65,159 9,242,084 9,286,855 20,388 Sewer Depreciating 1 229,455 229,456 - Sewer Connection Fund 5,735 410,849 234,393 182,191 Sewer Availability Fund 5,365 118,682 3,156 120,891 Wastewater Bond&Interest At Bony 2,450,635 1,763,977 1,414,238 2,800,374 Water Operating 222,297 25,138,841 25,341,880 19,258 Water Bond&Interest 1,146,140 80,574 - 1,226,714 Water Depreciation 2 225,994 225,996 - Hydrant Meter Deposit Fund 36,965 2,725 500 39,190 Water Connection 16,609 2,111,162 2,127,681 90 Water Availability 1 3,027,194 3,027,182 13 Water Sinking Fund 922,465 4,265,710 4,860,419 327,756 Totals $ 59,537,329 $ 235,354,818 $ 241,665,594 $ 53,226,553 The notes to the financial statement are an integral part of this statement. CITY OF CARMEL NOTES TO FINANCIAL STATEMENT Note 1. Summary of Significant Accounting Policies A. Reporting Entity The City was established under the laws of the State of Indiana. The City operates under a Council-Mayor form of government and provides some or all of the following services: public safety(police and fire), highways and streets, health and social services, culture and recrea- tion,public improvements,planning and zoning,general administrative services,water,waste- water, electric, gas, storm water, trash, aviation, and urban redevelopment and housing. The accompanying financial statement presents the financial information for the City. B. Basis of Accounting The financial statement is reported on a regulatory basis of accounting prescribed by the Indiana State Board of Accounts in accordance with state statute(IC 5-11-1-6),which is a com- prehensive basis of accounting other than accounting principles generally accepted in the United States of America. The basis of accounting involves the reporting of only cash and in- vestments and the changes therein resulting from cash inflows (receipts) and cash outflows (disbursements) reported in the period in which they occurred. The regulatory basis of accounting differs from accounting principles generally accepted in the United States of America in that receipts are recognized when received in cash, rather than when earned, and disbursements are recognized when paid, rather than when a liability is in- curred. C. Cash and Investments Investments are stated at cost. Any changes in fair value of the investments are reported as receipts in the year of the sale of the investment. D. Receipts Receipts are presented in the aggregate on the face of the financial statement. The aggregate receipts may include the following sources: Taxes which can include one or more of the following: property taxes, certified shares (local option tax), property tax replacement credit(local option tax), county option income tax,wheel tax, innkeepers tax,food and beverage tax, county economic development in- come tax, boat and trailer excise tax, county adjusted gross income tax, and other taxes that are set by the City. Licenses and permits which include amounts received from businesses, occupations, or nonbusinesses that must be licensed before doing business within the government's jurisdiction or permits levied according to the benefits presumably conferred by the permit. Examples of licenses and permits include: peddler licenses,dog tax licenses,auctioneer license, building and planning permits,demolition permits,electrical permits,sign permits, and gun permits. -11- CITY OF CARMEL NOTES TO FINANCIAL STATEMENT (Continued) Intergovernmental receipts which include receipts from other governments in the form of operating grants, entitlements, or payments in lieu of taxes. Examples of this type of receipts include, but are not limited to: federal grants, state grants, cigarette tax distribu- tions received from the state, motor vehicle highway distribution received from the state, local road and street distribution received from the state, financial institution tax received from the state, auto excise surtax received from the state, commercial vehicle excise tax received from the state, major moves distributions received from the state, and riverboat receipts received from the county. Charges for services which can include, but are not limited to the following: planning com- mission charges, building department charges, copies of public records, copy machine charges,accident report copies,gun permit applications,911 telephone services,recycling fees, dog pound fees, emergency medical service fees, park rental fees, swimming pool receipts, cable tv receipts, ordinance violations, fines and fees, bond forfeitures, court costs, and court receipts. Fines and forfeits which include receipts derived from fines and penalties imposed for the commission of statutory offenses, violation of lawful administrative rules and regulations (fines), and for the neglect of official duty and monies derived from confiscating deposits held as performance guarantees (forfeitures). Utility fees which are comprised mostly of charges for current services. Other receipts which include amounts received from various sources which can include, but are not limited to the following: net proceeds from borrowings; interfund loan activity; transfers authorized by statute, ordinance, resolution, or court order; internal service receipts; and fiduciary receipts. E. Disbursements Disbursements are presented in the aggregate on the face of the financial statement. The ag- gregate disbursements may include the following uses: Personal services include outflows for salaries,wages,and related employee benefits pro- vided for all persons employed. In those units where sick leave, vacation leave,overtime compensation,and other such benefits are appropriated separately, such payments would also be included. Supplies which include articles and commodities that are entirely consumed and materially altered when used and/or show rapid depreciation after use for a short period of time. Examples of supplies include office supplies, operating supplies, and repair and mainte- nance supplies. Other services and charges which include, but are not limited to: professional services, communication and transportation, printing and advertising, insurance, utility services, repairs and maintenance, and rental charges. Debt service principal and interest which include fixed obligations resulting from financial transactions previously entered into by the City. It includes all expenditures for the reduc- tion of the principal and interest of the City's general obligation indebtedness. -12- CITY OF CARMEL NOTES TO FINANCIAL STATEMENT (Continued) Capital outlay which include all outflows for land, infrastructure, buildings, improvements, and machinery and equipment having an appreciable and calculable period of usefulness. Utility operating expenses which include all outflows for operating the utilities. Other disbursements which include,but are not limited to the following: interfund loan pay- ments, loans made to other funds, internal service disbursements, and transfers out that are authorized by statute, ordinance, resolution, or court order. F. Interfund Transfers The City may, from time to time, transfer money from one fund to another. These transfers, if any, are included as a part of the receipts and disbursements of the affected funds and as a part of total receipts and disbursements. The transfers are used for cash flow purposes as pro- vided by various statutory provisions. G. Fund Accounting Separate funds are established, maintained, and reported by the City. Each fund is used to account for money received from and used for specific sources and uses as determined by various regulations. Restrictions on some funds are set by statute while other funds are inter- nally restricted by the City. The money accounted for in a specific fund may only be available for use for certain, legally restricted purposes. Additionally, some funds are used to account for assets held by the City in a trustee capacity as an agent of individuals, private organiza- tions,other funds,or other governmental units and therefore the funds cannot be used for any expenditures of the unit itself. Note 2. Budgets The operating budget is initially prepared and approved at the focal level. The fiscal officer of the City submits a proposed operating budget to the governing board for the following calendar year. The budget is advertised as required by law. Prior to adopting the budget, the governing board conducts public hearings and obtains taxpayer comments. Prior to November 1, the governing board approves the budget for the next year The budget for funds for which property taxes are levied or highway use taxes are received is subject to final approval by the Indiana Department of Local Government Finance. Note 3. Property Taxes Property taxes levied are collected by the County Treasurer and are scheduled to be distributed to the City in June and December; however, situations can arise which would delay the distributions. State statute (IC 6-1.1-17-16) requires the Indiana Department of Local Government Finance to establish property tax rates and levies by February 15. These rates were based upon the pre- ceding year's March 1 (lien date) assessed valuations adjusted for various tax credits. Taxable property is assessed at 100 percent of the true tax value(determined in accordance with rules and regulations adopted by the Indiana Department of Local Government Finance). Taxes may be paid in two equal installments which normally become delinquent if not paid by May 10 and November 10, respectively. -13- CITY OF CARMEL NOTES TO FINANCIAL STATEMENT (Continued) Note 4. Deposits and Investments Deposits, made in accordance with state statute(IC 5-13),with financial institutions in the State of Indiana at year end should be entirely insured by the Federal Depository Insurance Corporation or by the Indiana Public Deposit Insurance Fund. This includes any deposit accounts issued or offered by a qualifying financial institution. State statutes authorize the City to invest in securities including, but not limited to,federal govern- ment securities, repurchase agreements, and certain money market mutual funds. Certain other statutory restrictions apply to all investments made by local governmental units. Note 5. Risk Management The City may be exposed to various risks of loss related to torts; theft of, damage to, and destruc- tion of assets;errors and omissions;job related illnesses or injuries to employees;medical benefits to employees, retirees, and dependents; and natural disasters. These risks can be mitigated through the purchase of insurance,establishment of a self-insurance . fund, and/or participation in a risk pool. The purchase of insurance transfers the risk to an inde- pendent third party. The establishment of a self-insurance fund allows the City to set aside money for claim settlements. The self-insurance fund would be included in the financial statement. The purpose of participation in a risk pool is to provide a medium for the funding and administration of the risks. Note 6. Pension Plans A. Public Employees'Retirement Fund Plan Description The Indiana Public Employees' Retirement Fund (PERF) is a defined benefit pension plan. PERF is an agent multiple-employer public employee retirement system,which provides retire- ment benefits to plan members and beneficiaries. All full-time employees are eligible to par- ticipate in this defined benefit plan. State statutes(IC 5-10.2 and 5-10.3)govern,through the Indiana Public Retirement System(INPRS)Board, most requirements of the system,and give the City authority to contribute to the plan. The PERF retirement benefit consists of the pen- sion provided by employer contributions plus an annuity provided by the member's annuity savings account. The annuity savings account consists of members'contributions,set by state statute at 3 percent of compensation, plus the interest credited to the member's account. The employer may elect to make the contributions on behalf of the member. INPRS administers the plan and issues a publicly available financial report that includes finan- cial statements and required supplementary information for the plan as a whole and for its par- ticipants. That report may be obtained by contacting: Indiana Public Retirement System 1 North Capitol Street, Suite 001 Indianapolis, IN 46204 Ph. (888) 526-1687 -14- CITY OF CARMEL NOTES TO FINANCIAL STATEMENT (Continued) Funding Policy and Annual Pension Cost The contribution requirements of the plan members for PERF are established by the Board of Trustees of INPRS. B. 1925 Police Officers'Pension Plan Plan Description The 1925 Police Officers'Pension Plan is a single-employer defined benefit pension plan. The plan is administered by the local pension board as authorized by state statute(IC 36-8-6). The plan provides retirement,disability,and death benefits to plan members and beneficiaries. The plan was established by the plan administrator, as provided by state statute. The plan admin- istrator does not issue a publicly available financial report that includes financial statements and required supplementary information of the plan. Funding Policy The contribution requirements of plan members for the 1925 Police Officers'Pension Plan are established by state statute. On Behalf Payments The 1925 Police Officers' Pension Plan is funded by the State of Indiana through the Indiana Public Retirement System as provided under Indiana Code 5-10.3-11. C. 1937 Firefighters'Pension Plan Plan Description The 1937 Firefighters' Pension Plan is a single-employer defined benefit pension plan. The plan is administered by the local pension board as authorized by state statute(IC 36-8-7). The plan provides retirement,disability,and death benefits to plan members and beneficiaries. The plan was established by the plan administrator,as provided by state statute. The plan admin- istrator does not issue a publicly available financial report that includes financial statements and required supplementary information of the plan. Funding Policy The contribution requirements of plan members for the 1937 Firefighters' Pension Plan are established by state statute. On Behalf Payments The 1937 Firefighters' Pension Plan is funded by the State of Indiana through the Indiana Public Retirement System as provided under Indiana Code 5-10.3-11. -15- CITY OF CARMEL NOTES TO FINANCIAL STATEMENT • (Continued) D. 1977 Police Officers'and Firefighters'Pension and Disability Fund Plan Description The 1977 Police Officers' and Firefighters' Pension and Disability Fund is a cost-sharing • multiple-employer defined benefit pension plan administered by the Indiana Public Retirement System (INPRS)for all police officers and firefighters hired after April 30, 1977. State statute (IC 36-8-8) regulates the operations of the system, including benefits, vesting, and requirements for contributions by employers and by employees. Covered employees may retire at age 52 with 20 years of service. An employee with 20 years of service may leave service, but will not receive benefits until reaching age 52. The plan also provides for death and disability benefits. INPRS issues a publicly available financial report that includes financial statements and required supplementary information for the plan as a whole and for its participants. That report may be obtained by contacting: Indiana Public Retirement System 1 North Capitol Street, Suite 001 Indianapolis, IN 46204 Ph. (888) 526-1687 Funding Policy The contribution requirements of plan members and the City are established by the Board of Trustees of INPRS. Note 7. Holding Corporation The City has entered into capital leases with Carmel Redevelopment Authority (the lessor). The lessor was organized as a not-for-profit corporation pursuant to state statute for the purpose of financing and constructing or reconstructing assets for lease to the City. The lessor has been determined to be a related party of the City. Lease payments during the year 2013 totaled $21,404,908. -16- • SUPPLEMENTARY INFORMATION - UNAUDITED For additional financial information, the City's Annual Report information can be found on the Gateway website: https://gateway.ifionline.org/. Differences may be noted between the financial information presented in the financial statement con- tained in this report and the financial information presented in the Annual Report of the City which is referenced above. These differences, if any,are due to adjustments made to the financial information during the course of the audit. This is a common occurrence in any financial statement audit. The financial informa- tion presented in this report is audited information, and the accuracy of such information can be determined by reading the opinion given in the Independent Auditor's Report. The supplementary information presented was approved by management of the City. It is presented as intended by the City. -17- • CITY OF CARMEL COMBINING SCHEDULE OF RECEIPTS,DISBURSEMENTS,AND CASH AND INVESTMENT BALANCES-REGULATORY BASIS For the Year Ended December 31,2013 Local Motor Road Vehicle And Throughfare Economic Housing General Highway Street Fund Fund Authority Cash and investments-beginning. $ 2,454,932 $ 2,705,140 $ 2,057,350 $ 483,776 $ 38,352 $ 58,590 Receipts: Taxes 31,434,657 6,890,871 - - - - Licenses and permits 2,388,212 - - 416,141 - - Intergovernmental 28,530,562 3,204,312 1,131,085 - - - Charges for services 3,699,293 - - - - - Fines and forfeits 550,668 - - - - - Utility fees - - - .. - - Other receipts 6,626,377 53,903 1,610 864 10,059 88 Total receipts 73,229,769 10,149,086 1,132,695 417,005 10,059 88 Disbursements: Personal services 42,954,169 5,731,484 - - - - Supplies 1,265,979 1,438,364 - - - - Other services and charges 10,853,829 2,591,985 1,690,039 27,463 - - Debt service-principal and interest 13,266,433 - - - - - Capital outlay 359,754 158,745 837,696 - - - Utility operating expenses - - - - - - Other disbursements 3,279,797 6 - 612,000 - - Total disbursements 71,979,961 9,920,584 2,527,735 639,463 - - Excess(deficiency)of receipts over disbursements 1,249,808 228,502 (1,395,040) (222,458) 10,059 88 Cash and investments-ending $ 3,704,740 $ 2,933,642 $ 662,310 $ 261,318 $ 48,411 S 58,678 • CITY OF CARMEL COMBINING SCHEDULE OF RECEIPTS,DISBURSEMENTS,AND CASH AND INVESTMENT BALANCES-REGULATORY BASIS For the Year Ended December 31,2013 (Continued) Hazardous User Clerk's Material Cumulative • Fee Record Deferral Rainy Response Captial Fund Perpetuation Fund Day Fund Development Cash and investments-beginning $ 125,905 $ 95,213 $ 559,720 S 8,963,321 $ 7,536 $ 3,015,644 Receipts' Taxes - - - - - 1,521,643 Licenses and permits 54,630 - - - - - Intergovernmental - - - - - 171,697 Charges for services 23,527 19,355 - - 750 - Fines and forfeits 37,622 - 75,821 - - - Utility fees - - - - - - Other receipts 1,843 155 868 13,561 12 32,067 Total receipts 117,622 19,510 76,689 13,561 762 1,725,407 Disbursements: Personal services - - 26,636 - - - Supplies - - 5,203 - - 19,444 Other services and charges 101,352 1,674 16,655 - - 848,047 Debt service-principal and interest - - - - - - Capital outlay - 7,896 11,729 - - 2,898,404 Utility operating expenses - - - -Other disbursements 9,490 - - - - - Total disbursements 110,842 9,570 60,223 - - 3,765,895 Excess(deficiency)of receipts over disbursements 6,780 9,940 16,466 13,561 762 (2,040,488) Cash and investments-ending $ 132,685 $ 105,153 $ 576,186 $ 8,976,882 $ 8,298 5 975,156 • CITY OF CARMEL COMBINING SCHEDULE OF RECEIPTS,DISBURSEMENTS,AND CASH AND INVESTMENT BALANCES-REGULATORY BASIS For the Year Ended December 31,2013 (Continued) Illinois Cumulative Police Fire Judical St Parks Capital Pension Pension Salary Construction Capital Improvement Fund Fund Fees Fund Cash and investments-beginning S 689,266 $ 727,093 $ 2,384,605 $ 2,728,576 S 90,395 $ 700,178 Receipts: Taxes - - - - - - Licenses and permits .. - - - - - Intergovernmental - 212,588 509,142 574,628 - - Charges for services - - - - - - Fines and forfeits - - - - 43,899 - Utility fees - - - - -Other receipts 731 692 5,825 166 166 3,183,696 Total receipts 731 213,280 514,967 574,794 44,065 3,183,696 Disbursements: Personal services - - 2,082,476 2,725,409 - - Supplies - - - - -Other services and charges 34,948 280,710 100 100 - 739 Debt service-principal and interest - - - - - - Capital outlay 195,200 273,262 - - 14,279 60,662 Utility operating expenses - - - - -Other disbursements - - 6,917 9,219 - .. Total disbursements 230,148 553,972 2,089,493 2,734,728 14,279 61,401 Excess(deficiency)of receipts over disbursements (229,417) (340,692) (1,574,526) (2,159,934) 29,786 3,122,295 Cash and investments.-ending $ 459,849 S 386,401 $ 810,079 $ 568,642 5 120,181 S 3,822,473 CITY OF CARMEL COMBINING SCHEDULE OF RECEIPTS,DISBURSEMENTS,AND CASH AND INVESTMENT BALANCES-REGULATORY BASIS For the Year Ended December 31,2013 (Continued) Drug Fire Parks Task Gift Gift Ambulance Grant Police Force Fund Fund Fund Fund Gift Cash and investments-beginning $ 588,416 $ 5,726 $ 49,716 $ 700,564 $ 574,496 $ 38,800 Receipts: Taxes - - - - - - Licenses and permits - - - - - - Intergovernmental 25,000 - - 6,429 42,293 - Charges for services - - - 1,114,774 - - Fines and forfeits - - - - - - Utility fees - .. - - - - Other receipts 118,524 19,098 3,258 1,454 8,229 12.171 Total receipts 143.524 19,098 3.258 1,122,657 50,522 12,171 Disbursements: Personal services - - - - - - Supplies 4,945 - - 56,016 - - Other services and charges 160,312 - - 36,466 153,015 - Debt service-principal and interest - - - - - - Capital outlay 4,384 - - 938,377 - - Utility operating expenses - - - - - - Other disbursements 3 16,681 4,931 3,347 - 20,491 Total disbursements 169,644 16,681 4,931 1,034,206 153,015 20,491 Excess(deficiency)of receipts over disbursements (26,120) 2,417 (1,673) 88,451 (102,493) (8.320) Cash and investments-ending $ 562,296 S 8,143 $ 48,043 $ 789,015 $ 472.003 S 30,480 CITY OF CARMEL COMBINING SCHEDULE OF RECEIPTS,DISBURSEMENTS,AND CASH AND INVESTMENT BALANCES-REGULATORY BASIS For the Year Ended December 31,2013 (Continued) Community Court Relations Public Crc Dnr/Tree Interpreter Gift Defenders Redevelopment Regions . City Fund Fund Fund Commission Account Cash and investments-beginning $ 50,223 $ 3,429 $ 19,347 $ 1,028 $ 14,354 $ 3,607,850 Receipts: Taxes - - - - 24,292,947 - Licenses and permits .. - - - - - Intergovernmental - - - - _ - Charges for services - - - - 2,618,858 - Fines and forfeits - - - 450 - - Utility fees - - - _ - - Other receipts 306 1 84,062 3 36,301 1,416 Total receipts 306 1 84,062 453 26,948,106 1,416 Disbursements: Personal services - - - - - 3,053 Supplies - - - - 46,515 - Other services and charges - 3,400 41,128 - 286,750 - Debt service-principal and interest - - - - 11,023,719 - Capital outlay - - - - 2,862,310 - Utility operating expenses - - - - _ - Other disbursements 26 - - - 4,783,577 3,606,213 Total disbursements 26 3,400 41,128 - 19,002,871 3,609,266 Excess(deficiency)of receipts over disbursements 280 (3,399) 42,934 453 7,945,235 (3,607,850) Cash and investments-ending $ 50,503 $ 30 $ 62,281 $ 1,481 S 7,959,589 $ - CITY OF CARMEL COMBINING SCHEDULE OF RECEIPTS,DISBURSEMENTS,AND CASH AND INVESTMENT BALANCES-REGULATORY BASIS For the Year Ended December 31,2013 (Continued) Park Carmel Parks Parks Lease Cumulative Impact City Program Monon Rental Capital Fee Court Fund Fund Fund Sewer Fund Cash and investments-beginning . $ 637,261 $ 1,173.986 $ 1,509,331 S 3,834 $ 912,349 $ 1,905,206 Receipts: Taxes - - - - - - Licenses and permits - - - - - 813,790 Intergovernmental - - - - - - Chargesforservices - 3,597,001 4,792,691 - - - Fines and forfeits 1,922,391 - - - - - Utility fees - - - - - - Other receipts - 10,771 80,395 6 720 2,926 Total receipts 1,922,391 3,607,772 4,873,086 6 720 816,716 Disbursements: Personal services - 2,366,904 2,222,792 - - - Supplies - 259,410 346,641 - - - Other services and charges - 387,688 1,925,654 - - - - - Debt service-principal and interest - Capital outlay - 14,292 26,862 - 385,311 - Utility operating expenses - - - - - - Other disbursements 2,393,492 - 16,000 - - 843.897 Total disbursements 2,393,492 3,028,294 4,537,949 - 385,311 843,897 Excess(deficiency)of receipts over disbursements (471,101) 579,478 335,137 6 (384,591) (27.181) Cash and investments-ending $ 166.160 S 1,753,464 $ 1,844,468 $ 3,840 $ 527,758 $ 1,878,025 • • CITY OF CARMEL COMBINING SCHEDULE OF RECEIPTS,DISBURSEMENTS,AND CASH AND INVESTMENT BALANCES-REGULATORY BASIS For the Year Ended December 31,2013 (Continued) Civic Barrett Square Old Keystone Health Law Construction Town/126Th Ave Historic Insurance Fund Fund Street Fund Preservation Fund Cash and investments-beginning $ 6 $ 596 $ 457 $ 2,903,739 5 - $ 3,377,675 • Receipts: Taxes - - - - - - Licenses and permits - - - - - - Intergovernmental - - - - - - Charges for services - - - - - - Fines and forfeits - - - - - - Utility fees - - - - - - Other receipts - - 1 3,295 18,900 11,985,566 Total receipts - - 1 3,295 18,900 11,985,566 Disbursements: Personal services - - - - - - Supplies - - - - - - • Other services and charges - - - - - - Debt service-principal and interest - - - - - - Capital outlay - - - 95,893 - - Utility operating expenses - - - - - - Other disbursements .. 596 - 2,569,200 16,110 12,091.018 Total disbursements - 596 - 2,665,093 16,110 12,091,018 Excess(deficiency)of receipts over disbursements - (596) 1 (2,661,798) 2,790 (105,452) Cash and investments-ending $ 6 S - $ 458 $ 241,941 $ 2,790 $ 3,272,223 • CITY OF CARMEL COMBINING SCHEDULE OF RECEIPTS,DISBURSEMENTS,AND CASH AND INVESTMENT BALANCES-REGULATORY BASIS For the Year Ended December 31,2013 (Continued) Support Sewage Workers For Barrett Works Comp The Payroll Law Revenue Sewer Fund Arts Fund Surplus Bonds Operating Cash and investments-beginning $ 36,170 $. 119,856 5 277,146 $ 165,445 $ 8,103,357 5 65,159 Receipts: Taxes - - - - - - Licenses and permits - - - - - - Intergovernmental - - - - - 346,475 Charges for services - - - - - - Fines and forfeits - - - - - - Utility fees - - - - - 2,196,391 Other receipts 270,969 740,036 44,637,421 250 51,082 6,699,218 Total receipts 270,969 740,036 44,637,421 250 51,082 9,242,084 Disbursements: Personal services - - - - - 2,669,769 Supplies - - - - -Other services and charges - 842,756 - - - 187,979 Debt service-principal and interest - - - - - - Capital outlay - - - - 4,339,129 - Utility operating expenses - - - - - 3,324,113 Other disbursements 307,139 - 44,709,101 - - 3,104,994 Total disbursements 307,139 842,756 44,709,101 - 4,339,129 9,286,855 Excess(deficiency)of receipts over disbursements (36,170) (102,720) (71,680) 250 (4,288,047) (44,771) Cash and investments-ending $ - S 17,136 S 205,466 5 165,695 $ 3,815,310 5 20,388 CITY OF CARMEL COMBINING SCHEDULE OF RECEIPTS,DISBURSEMENTS,AND CASH AND INVESTMENT BALANCES-REGULATORY BASIS For the Year Ended December 31,2013 (Continued) Wastewater Bond Water Sewer Sewer & Bond Sewer Connection Availability Interest Water & Depreciating Fund Fund At Bony Operating Interest Cash and investments-beginning $ 1 $ 5,735 $ 5,365 $ 2,450,635 $ 222,297 $ 1,146,140 Receipts: , Taxes - - - - - - Licenses and permits - - - - - - Intergovernmental - - - - - - Charges for services - - - - - - Fines and forfeits - - - - - _ Utility fees - 403,848 108,782 - 24,617,911 - Other receipts 229,455 7,001 9,900 1,763,977 520,930 80,574 Total receipts 229,455 410,849 118,682 1,763,977 25,138,841 80,574 Disbursements: Personal services - - - - 3,099,716 - Supplies - - - - - - Other services and charges - - - - 217,503 - Debt service-principal and interest - - - 1,414,238 - - Capital outlay 227,429 2,996 - - - - Utility operating expenses - - - - 10,172,906 - Other disbursements 2,027 231,397 3,156 - 11,851,755 - Total disbursements • 229,456 234,393 3,156 1,414,238 25,341,880 - Excess(deficiency)of receipts over disbursements (1) 176,456 115,526 349,739 (203,039) 80,574 Cash and investments-ending $ - S 182,191 $ 120,891 $ 2,800,374 $ 19,258 $ 1,226,714 CITY OF CARMEL COMBINING SCHEDULE OF RECEIPTS,DISBURSEMENTS,AND CASH AND INVESTMENT BALANCES-REGULATORY BASIS For the Year Ended December 31,2013 (Continued) Hydrant Meter Water Water Deposit Water Water Sinking Depreciation Fund Connection Availability Fund Totals Cash and investments-beginning $ 2 $ 36,965 $ 16,609 $ 1 $ 922,465 $ 59,537,329 Receipts: Taxes - - - - - 64,140,118 Licenses and permits - - - - - 3,672,773 Intergovernmental - - - - - 34,754,211 Charges for services - - - - - 15,866,249 Fines and forfeits - - - - - 2,630,851 Utility fees - - 1,592,563 1,158,794 - 30,078,289 Other receipts 225,994 2,725 518,599 1,868,400 4,265,710 84,212,327 Total receipts 225,994 2,725 2,111,162 3,027,194 4,265,710 235,354,818 Disbursements: Personal services - - - - - 63,882,408 Supplies - - - - - 3,442,517 Other services and charges - - - - - 20,690,292 Debt service-principal and interest - - - - 4,855,569 30,559,959 Capital outlay 225,028 - 438,181 3,017,391 - 17,395,210 Utility operating expenses - - - - - 13,497,019 Other disbursements 968 500 1,689,500 9,791 4,850 92,198,189 Total disbursements 225,996 500 2,127,681 3,027,182 4,860,419 241,665,594 Excess(deficiency)of receipts over disbursements (2) 2,225 (16,519) 12 (594,709) (6,310,776) • Cash and investments-ending $ - $ 39,190 $ 90 $ 13 S 327,756 $ 53,226,553 • CITY OF CARMEL SCHEDULE OF PAYABLES AND RECEIVABLES December 31,2013 Accounts Accounts Government or Enterprise Payable Receivable Wastewater S 835,696 S 2,124,789 Water 558,398 1,037,097 Governmental activities 433,124 - Totals $ 1,827,218 S 3,161,886 • CITY OF CARMEL SCHEDULE OF LEASES AND DEBT December 31,2013 Annual Lease Lease Lease Beginning Ending Lessor Purpose Payment Date Date Governmental activities: Fifth Third Bank Mobile Command Vehicle $ 88,424 5/24/2005 8/1/2015 PNC Bank Golf Carts 52,565 1/1/2008 6/11/2014 PNC Bank Golf equipment-mowers 39440 9/1/2009 3/1/2015 Huntington National Bank Commercial irrigation pump 31,700 3/1/2010 9/1/2014 Huntington National Bank Purchase Ford F-150's 7,590 9/1/2010 9/1/2014 Huntington National Bank Purchase Ambulance 37,050 10/1/2010 4/1/2015 Huntington National Bank Purchase Fire Trucks 143,048 2/15/2011 8/15/2020 Huntington National Bank Irrigation system 139,150 10/1/2010 10/1/2017 Huntington National Bank purchase police cars 202,974 4/15/2011 10/16/2014 Huntington National Bank 15 Monitor/Defb CPR and accessories 88,410 9/15/2012 3115/2017 Huntington National Bank 2 Ambulances 80,040 11/1/2012 5/1/2017 Huntington National Bank Radios chargers batteries 47,070 9/15/2012 3/15/2017 Huntington National Bank purchase police cars 198,496 5/12/2012 11/15/2015 Huntington National Bank. turn out gear 72,620 3/15/2013 9/15/2018 Huntington National Bank police vehicles 197,770 5/15/2013 11/15/2016 Huntington National Bank street sweeper 48,410 6/15/2013 12/15/2015 Carmel Redevelopment Authority 2012A Lease Rental Multipurpose 4,403,935 8/1/2013 2/1/2038 Carmel Redevelopment Authority 2012B Lease Rental Multipurpose 4,100,065 8/1/2013 2/1/2038 Carmel Redevelopment Authority City of Carmel(IN)Redevelopment Authority County Option Income Tax Lease Rental Revenue Refunding Bonds of 2004-Hazel Dell 2,668,000 6/15/2004 12/15/2017 Carmel Redevelopment Authority City of Carmel(IN)Redevelopment Authority County Option Income Tax Lease Rental Revenue Bonds Series 2006-Road Bonds 5,986,000 12/15/2008 12/15/2027 Carmel Redevelopment Authority City of Carmel(IN)Redevelopment Authority County Option Income Tax Lease Rental Revenue Bonds of 2010-Keystone 1,430,000 12/15/2011 12/15/2030 Carmel Redevelopment Authority City of Carmel(Indiana)Redevelopment Authority Lease Rental Revenue Refunding Bonds of 2011-Refi 2004 Road Bond Clay West 2,972,500 7/15/2012 7/15/2024 Carmel Redevelopment Authority 2005 Performing Arts Center 5,775,000 7/1/2010 7/2/2033 Total governmental activities 28,810,277 Total of annual lease payments 5 28,810,277 Principal and Ending Interest Due Description of Debt Principal Within One Type . Purpose Balance Year Governmental activities: Revenue bonds - 1998 Merchants Square TIE $ 1,290,000 $ 278,475 Revenue bonds Redevelopment District Tax Increment Revenue Bonds Series 2004 A (Clarian Hospital)Illinois Street Project 6,825,000 911,215 Revenue bonds Carmel Redevelopment District Taxable County Option Income Tax Revenue Refunding Bonds Series 2006(1998 City Center refunded in 2006) 4,175,000 963,762 Revenue bonds 2003 Parkwood East 2,605,000 399,125 Revenue bonds 2006 Parkwood West 3,935,000 395,272 Revenue bonds Carmel Redevelopment District Certificates of Participation Series 2010C 15,955,000 1,365,963 Revenue bonds County Option Income Tax Revenue Refunding Bonds of 2011(Street department) 6,165,000 762,120 Revenue bonds 2013 Illinois St Project Bond 6,535,000 134,460 Total governmental activities 47,485,000 5,210,392 Wastewater: Revenue bonds 2005 Wastewater Plant Expansion 8,140,000 819,717 Revenue bonds 2009 Wastewater Expansion 4,904,958 298,970 Revenue bonds 2012 Wastewater Revenue 11,040,000 748,125 Total Wastewater 24,084,958 1,866,812 Water: Revenue bonds 2012 Jr Waterworks Rev Bonds 62,400,000 3,620,856 Revenue bonds 2008 Plant Expansion Cap Appreciation Bonds 27,796,859 - Revenue bonds 2008 Plant Expansion Coupon Bonds 20,805,000 1,466,350 Notes and loans payable IWC Lines 15,596,594 1,800,000 Total Water 126,598,453 6,887,206 Totals $198,168,411 $ 13,964,410 • CITY OF CARMEL SCHEDULE OF CAPITAL ASSETS December 31,2013 Capital assets are reported at actual or estimated historical cost based on appraisals or deflated current replacement cost. Contributed or donated assets are reported at estimated fair value at the time received. Ending Balance Governmental activities: Land S 227,180,474 Infrastructure 495,971,344 Buildings 17,723,185 Improvements other than buildings 6,571,920 Machinery,equipment,and vehicles 24,230,472 Construction in progress 1,398,200 Total governmental activities 773,075,595 Wastewater: Land 117,691 Infrastructure 47,026,364 Buildings 36,966,873 Machinery,equipment,and vehicles 11,406,274 Construction in progress 9,281,574 Total Wastewater 104,798,776 Water: Land 3,464,195 Infrastructure 130,520,898 Buildings 59,008,998 Machinery,equipment,and vehicles 9,379,913 Construction in progress 6,905,115 Total Water 209,279,119 Total capital assets $ 1,087,153,490 SUPPLEMENTAL AUDIT OF FEDERAL AWARDS -31- i `4`..k STATE OF INDIANA is,,,,,,,..f, "` ,c' N; AN EQUAL OPPORTUNITY EMPLOYER STATE BOARD OF ACCOUNTS Ittk +.: ',,i% 302 WEST WASHINGTON STREET a ROOM E418 INDIANAPOLIS,INDIANA 46204-2769 Telephone:(317)232-2513 Fax:(317)232-4711 Web Site: www.in.gov/sboa • INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE TO: THE OFFICIALS OF THE CITY OF CARMEL, HAMILTON COUNTY, INDIANA Report on Compliance for Each Major Federal Program We have audited the City of Carmel's (City) compliance with the types of compliance requirements described in the U.S. Office of Management and Budget(OMB)CircularA-133 Compliance Supplement that could have a direct and material effect on each of its major federal programs for the year ended December 31,2013. The City's major federal programs are identified in the Summary of Auditor's Results section of the accompanying Schedule of Findings and Questioned Costs. Management's Responsibility Management is responsible for compliance with the requirements of laws, regulations,contracts,and grants applicable to its federal programs. Auditor's Responsibility Our responsibility is to express an opinion on compliance for each of the City's major federal pro- grams based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America;the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States;and OMB Circular A-133,Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance require- ments referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining,on a test basis,evidence about the City's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the City's compliance. Opinion on Each Major Federal Program In our opinion,the City complied, in all material respects,with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended December 31, 2013. -32- INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE (Continued) Report on Internal Control Over Compliance Management of the City is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance,we considered the City's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing proce- dures that are appropriate in the circumstances for the purpose of expressing our opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly,we do not express an opinion on the effectiveness of the City's internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions,to prevent,or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or com- bination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented,or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over com- pliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose. Po.,.,-.0. Paul D. Joyce, CPA State Examiner December 8, 2014 -33- (This page intentionally left blank.) -34- SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND ACCOMPANYING NOTE The Schedule of Expenditures of Federal Awards and accompanying note presented were approved by management of the City. The schedule and note are presented as intended by the City. -35- • CITY OF CARMEL SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the Year Ended December 31,2013 Pass-Through Federal Entity(or Other) Total Federal Grantor Agency CFDA Identifying Federal Awards Cluster Title/Program Title/Project Title Pass-Through Entity or Direct Grant Number Number Expended Department of Justice Bulletproof Vest Partnership Program Direct Grant 16.607 FY 2013 5 5,805 Total-Department of Justice 5,805 Department of Transportation Highway Planning and Construction Cluster Highway Planning and Construction Indiana Department of Transportation 20.205 1297240 715,319 0710207 1,698 Total-Highway Planning and Construction Cluster 717.017 Highway Safety Cluster State and Community Highway Safety Hamilton County 20.600 Dangerous Driving Enforcement Program 2093 3,114 Operation Pullover(OPO)Enforcement Program 1498 10,332 Total-State and Community Highway Safety 13.446 Alcohol Impaired Driving Countermeasures Incentive Grants I Hamilton County 20.601 DUI Task Force Enforcement Program 1520 6,644 Total-Alcohol Impaired Driving Countermeasures Incentive Grants I 6,644 Total-Highway Safety Cluster 20,090 Total-Department of Transportation 737,107 Environmental Protection Agency Congressionally Mandated Projects Direct Grant 66.202 106th St Pump Station Improvements XP-00E56101 346.475 Total-Environmental Protection Agency 346,475 Department of Homeland Security Homeland Security Grant Program Indiana Department of Homeland Security 97.067 FY 2013 6,429 Total-Department of Homeland Security 6,429 Total federal awards expended $ 1,095,816 The accompanying note is an integral part of the Schedule of Expenditures of Federal Awards. CITY OF CARMEL NOTE TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Basis of Presentation The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of the City and is presented in accordance with the cash and investment basis of accounting used in the preparation of the financial statement. Accordingly,the amount of federal awards expended is based on when the disburse- ment related to the award occurs except when the federal award is received on a reimbursement basis. In these instances the federal awards are considered expended when the reimbursement is received. -37- CITY OF CARMEL SCHEDULE OF FINDINGS AND QUESTIONED COSTS Section I-Summary of Auditor's Results Financial Statement: Type of auditor's report issued: Adverse as to GAAP; Unmodified as to Regulatory Basis Internal control over financial reporting: Material weaknesses identified? yes Significant deficiencies identified? none reported Noncompliance material to financial statement noted? yes Federal Awards: Internal control over major programs: Material weaknesses identified? no Significant deficiencies identified? none reported Type of auditor's report issued on compliance for major programs: Unmodified Any audit findings disclosed that are required to be reported in accordance with section 510(a) of OMB Circular A-133? no Identification of Major Programs: CFDA Number Name of Federal Program or Cluster Highway Planning and Construction Cluster 66.202 Congressionally Mandated Projects Dollar threshold used to distinguish between Type A and Type B programs: $300,000 Auditee qualified as low-risk auditee? no Section II-Financial Statement Findings FINDING 2013-001 -INTERNAL CONTROLS OVERREPORTING OF EXPENDITURES OF FEDERAL AWARDS The City did not have a proper system of internal control in place to prevent, or detect and correct, errors on the Schedule of Expenditures of Federal Awards(SEFA). The City should have proper controls in place over the preparation of the SEFA to ensure accurate reporting of federal awards. Without a proper system of internal control in place that operates effectively, material misstatements of the SEFA could remain undetected. -38- CITY OF CARMEL SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) During the audit of the SEFA, we noted the following errors: (a) total federal expenditures were incorrectly reported with$712,850 in expenditures being omitted from the schedule; (b)amounts reported for three of five grant awards were incorrect; and (c) information such as grantor agency, program title, pass- through entity,Catalog of Federal Domestic Assistance(CFDA)number,and pass-through identifying number were omitted for some grant awards. We believe the deficiencies discussed above constitute material weaknesses. The errors and omissions on the SEFA were partially caused by a lack of sufficient internal controls over the preparation of the SEFA and due to insufficient familiarity with some of the required elements of the SEFA. Audit adjust- ments were proposed, accepted by the City, and made to the SEFA presented in this report. These adjust- ments resulted in a presentation of the SEFA that is materially correct in relation to the financial statement. Governmental units should have internal controls in effect which provide reasonable assurance regarding the reliability of financial information and records,effectiveness and efficiency of operations, proper execution of management's objectives,and compliance with laws and regulations. Among other things,seg- regation of duties,safeguarding controls over cash and all other assets,and all forms of information process- ing are necessary for proper internal control. Controls over the receipting, disbursing, recording, and accounting for the financial activities are necessary to avoid substantial risk of invalid transactions, inaccurate records and financial statements and incorrect decision making. (Accounting and Uniform Compliance Guidelines Manual for Cities and Towns, Chapter 7) OMB Circular A-133, Subpart C, section .300 states in part: "The auditee shall: . . . (d) Prepare appropriate financial statements, including the schedule of expenditures of Federal Awards in accordance with section.310." OMB Circular A-133, Subpart C, section .310(b) states: "Schedule of expenditures of Federal awards: The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. While not required,the auditee may choose to provide information requested by Federal award- ing agencies and pass-through entities to make the schedule easier to use. For example,when a Federal program has multiple award years,the auditee may list the amount of Federal awards expended for each award year separately. At a minimum, the schedule shall: (1) List individual Federal programs by Federal agency. For Federal programs included in a cluster of programs, list individual Federal programs within a cluster of programs. For R&D, total Federal awards expended shall be shown either by individual award or by Federal agency and major subdivision within the Federal agency. For example, the National Institutes of Health is a major subdivision in the Department of Health and Human Services. (2) For Federal awards received as a subrecipient,the name of the pass-through entity and indentifying number assigned by the pass-through entity shall be included. (3) Provide the total Federal awards expended for each individual Federal program and the CFDA number or other identifying number when the CFDA information is not available. -39- CITY OF CARMEL SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (4) Include notes that describe the significant accounting policies used in preparing the schedule. (5) To the extent practical, pass-through entities should identify in the schedule the total amount provided to subrecipients from each Federal program. (6) Include, in either the schedule or a note to the schedule,the value of the Federal awards expended in the form of non-cash assistance,the amount of insurance in effect during the year,and loans or loan guarantees outstanding at year end. While not required, it is preferable to present this information in the schedule." Section 111-Federal Award Findings and Questioned Costs No matters are reportable. -40- • AUDITEE PREPARED DOCUMENT The subsequent document was provided by management of the City. The document is presented as intended by the City. -41- CITY DF CAI MEL 1 CIVIC SQUARE CARMEL, IN 46032 Corrective Action Plans FEDERAL FINDING 2013-001 - INTERNAL CONTROLS OVER REPORTING OF EXPENDITURES OF FEDERAL AWARDS Auditee Contact Person: Diana L. Cord ray Title of Contact Person: Clerk-Treasurer Phone Number: 317-571-2414 Expected Completion Date: 9-8-2014 • Corrective Action: As it regards to internal controls of the City of Carmel, we plan to increase oversight of our day-to-day operations and verify the information reported by the departments with regards to grant monies spent and received against grant paperwork. Also, the Clerk-Treasurer's Office shall request copies of all grant paperwork from all departments. &Le Diana L. Cordray, Clerk-Treausurei OTHER REPORT In addition to this report, a Supplemental Compliance Report has been issued for the City. That report can be found on the Indiana State Board of Accounts'website: http://www.in.gov/sboa/. • -43-