Comprehensive Annual Financial Report


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SINGLE AUDIT SECTION 
 

EXHIBIT “K-1" 
 
 
 
 
 
 
 
 
 
 
 
 
                                  
INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL 
OVER FINANCIAL REPORTING AND ON COMPLIANCE AND 
OTHER MATTERS BASED ON AN AUDIT OF BASIC FINANCIAL 
STATEMENTS PERFORMED IN ACCORDANCE WITH 
GOVERNMENT AUDITING STANDARDS 
 
 
Honorable President and Members 
 of the Board of Education 
Borough of South Bound Brook School District  
County of Somerset 
South Bound Brook, New Jersey 08880 
 
 
We have audited, in accordance with the auditing standards generally accepted in the 
United States of America, and the standards applicable to financial audits contained in 
Government Auditing Standards issued by the Comptroller General of the United States, the 
financial statements of Borough of South Bound Brook School District (the "District") as of and 
for the year ended June 30, 2016, and the related notes to the financial statements, which 
collectively comprise the District’s  financial statements, and have issued our report thereon 
dated November 18, 2016.   
 
Internal Control Over Financial Reporting 
 
In planning and performing our audit of the financial statements, we considered the  
District’s control over financial reporting (internal control) to determine the audit procedures that 
are appropriate in the circumstances for the purpose of expressing our opinions on the financial 
statements but not for the purpose of expressing an opinion on the effectiveness of the  
District’s internal control.  Accordingly, we do not express an opinion on the effectiveness of the 
Borough of South Bound Brook School District’s internal control.   
 
deficiency in internal control exists when the design or operation of a control does not 
allow management or employees, in the normal course of performing their assigned functions, 
to prevent, or detect and correct, misstatements on a timely basis.  A  material weakness  is a 
deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable 
possibility that a material misstatement of the District’s financial statements will not be 
prevented, or detected and corrected on a timely basis.  A significant deficiency is a deficiency, 
or a combination of deficiencies, in internal control that is less severe than a material weakness, 
yet important enough to merit attention by those charged with governance. 
 
  
 
 
SCC 
S
U P LE E

C
L O O N E Y
 & 
C
O M P A NY 
 
     
C
E R T I F I E D
 P
U B L I C
 A
C C O U N T A N T S
 
 
 
           
308
 East Broad Street, Westfield, New Jersey 
07090-2122
 
 
 
 
 
            
     Telephone
 
908-789-9300
        
Fax
 
908-789-8535
 
 
 
 
 
 
 
   
E-mail  
info@scnco.com
 
 
 
 
  
 
 
 
 
 
 
133

134

EXHIBIT “K-2" 
 
 
 
 
 
 
 
 
 
 
 
INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE 
WITH REQUIREMENTS APPLICABLE TO MAJOR  
STATE FINANCIAL ASSISTANCE PROGRAMS AND  
INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY 
NEW JERSEY OMB CIRCULAR 15-08 
 
 
Honorable President and Members 
 of the Board of Education 
Borough of South Bound Brook School District  
County of Somerset 
South Bound Brook, New Jersey 08880 
 
 
Report on Compliance for Each Major State Program 
 
We have audited the Borough of South Bound Brook  School District’s compliance with 
the types of compliance requirements described  in the  New Jersey OMB State Grant 
Compliance Supplement that could have a direct and material effect on each of the Borough of 
South Bound Brook  School District’s major state programs for the year ended June 30, 2016.  
The District’s major state 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 state programs. 
 
Auditor’s Responsibility 
 
Our responsibility is to express an opinion on compliance for each of the Borough of 
South Bound Brook School District’s major federal and state programs 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; and
 
New Jersey OMB Circular 15-08. Those standards and New Jersey OMB Circular 15-08 require 
that we plan and perform the audit to obtain reasonable assurance about whether 
noncompliance with the types of compliance requirements referred to above that could have a 
direct and material effect on a major state program occurred. An audit includes examining, on a 
test basis, evidence about the Borough of South Bound Brook School District’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 state program.  However, our audit does not provide a legal determination of the 
Borough of South Bound Brook School District’s compliance. 
 
SCC 
S
U P LE E

C
L O O N E Y
 & 
C
O M P A NY 
 
     
C
E R T I F I E D
 P
U B L I C
 A
C C O U N T A N T S
 
 
 
           
308
 East Broad Street, Westfield, New Jersey 
07090-2122
 
 
 
 
 
      
     Telephone
 
908-789-9300
        
Fax
 
908-789-8535
 
 
 
 
 
 
 
   
E-mail  
info@scnco.com
 
 
 
 
  
 
 
 
 
 
 
135

136

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138

EXHIBIT “K-5” 
Borough of South Bound Brook School District 
Notes to the Schedules of Expenditures of Federal Awards 
and State Financial Assistance 
Year Ended June 30, 2016 
 
 
NOTE 1: 
GENERAL 
 
The accompanying schedules of expenditures of federal awards and state 
financial assistance include federal and state activity of the Board of Education, 
Borough of South Bound Brook  School District.  The Board of Education is 
defined in Note 1 to the Board’s basic financial statements.  All federal and state 
awards received directly from the federal and state agencies, as well as federal 
awards and state financial assistance passed through other government 
agencies is included on the schedule of expenditures of federal awards and state 
financials assistance. 
 
NOTE 2: 
BASIS OF ACCOUNTING 
 
The accompanying schedules of expenditures of awards and federal awards and 
state financial assistance are presented on the budgetary basis of accounting 
with the exceptions of programs recorded in the food service fund, which are 
presented using the accrual basis of accounting.  These bases of accounting are 
described in Note 1 of the Board’s basic financial statements.  The information in 
this schedule is presented in accordance with the requirements of OMB Uniform 
Guidance, Audits of States, Local Governments, and Non-Profit  Organizations.  
Therefore, some amounts presented in this schedule may differ from amounts 
presented in, or used in the preparation of, the basic financial statements.  The 
District  has elected not to use the 10 percent de minimis indirect cost rate as 
allowed under the Uniform Guidance. 
 
NOTE 3: 
RELATIONSHIP TO BASIC FINANCIAL STATEMENTS 
 
The basic financial statements present the general fund and special revenue 
fund on a GAAP basis.  Budgetary comparison statements or schedule (RSI) are 
presented for the general fund and special revenue fund to demonstrate finance-
regulated legal compliance in which certain revenue is permitted by law or grant 
agreement to be recognized in the audit year, whereas for GAAP reporting, 
revenue is not recognized until the subsequent year or when expenditures have 
been made. 
 
The General fund is presented in the accompanying schedules on the modified 
accrual basis with the exception of the revenue recognition of the last state aid 
payment in the current budget year, which is mandated pursuant to N.J.S.A. 
18A:22-44.2.  For GAAP purposes, that payment is not recognized until the 
subsequent budget year due to the state deferral and recording of the last state 
aid payment in the subsequent year.  The special revenue fund is presented in 
the accompanying schedules on the grant accounting budgetary basis which 
recognizes  encumbrances as expenditures and also recognizes the related 
revenue, whereas GAAP basis does not.  The special revenue fund also 
recognizes the last state aid payment in the current budget year, consistent with 
N.J.S.A. 18A:22-44.2. 
139

Borough of South Bound Brook School District 
Notes to the Schedules of Expenditures of Federal Awards 
and State Financial Assistance 
Year Ended June 30, 2016 
 
 
NOTE 3: 
RELATIONSHIP TO BASIC FINANCIAL STATEMENTS (CONTINUED) 
 
The net adjustment to reconcile from the budgetary basis to the GAAP  basis is 
($4,081.00) for the general fund, ($584.04) for the special revenue fund. See the 
notes to the required supplementary information for a reconciliation of the 
budgetary basis to the modified accrual basis of accounting for the general and 
special revenue funds.  Federal awards and state financial assistance revenues 
are reported in the Board’s basic financial statements on a GAAP basis as 
follows: 
 
Federal
State
Total
General Fund
$4,231,186.27
$4,231,186.27
Special Revenue Fund
$274,853.02
274,853.02
Capital Projects Fund
297,400.02
297,400.02
Food Service Fund
135,813.05
2,589.62
138,402.67
$410,666.07
$4,531,175.91
$4,941,841.98
GAAP Adjustment
(584.04)
(4,081.00)
(4,665.04)
Total Awards &
  Financial Assistance
$410,082.03
$4,527,094.91
$4,937,176.94
 
NOTE 4: 
RELATIONSHIP TO FEDERAL AND STATE FINANCIAL REPORTS 
 
Amounts reported in the accompanying schedules agree with the amounts 
reported in the related federal and state financial reports. 
 
 
NOTE 5: 
OTHER 
 
Revenues and expenditures reported in the Food Distribution Program represent 
current year value received and current year distributions respectively.  The 
amount reported as TPAF pension contributions represents the amount paid by 
the state on behalf of the district for the year ended June 30, 2016.  TPAF Social 
Security contributions represent the amount reimbursed by the state for the 
employer’s share of Social Security contributions for TPAF members for the year 
ended June 30, 2016. 
 
 
140

EXHIBIT “K-6” 
Borough of South Bound Brook School District 
Schedule of Findings and Questioned Costs 
For the Fiscal Year Ended June 30, 2016 
 
Section I – Summary of Auditor’s Results 
 
Financial Statements 
 
(1) 
Type of Auditor’s Report Issued: 
 
 
 
 
 
Unmodified 
 
(2) 
Internal Control Over Financial Reporting: 
 
(a) 
Material weakness identified? 
 
 
 
 
No 
 
(b) 
Significant deficiencies identified that are not considered 
to be material weaknesses?   
 
 
 
 
No 
 
(3) 
Noncompliance material to basic financial statements noted? 
 
No 
 
 
Federal Program(s) -     Not Applicable  
 
State Program(s) 
 
(1) 
Internal Control Over Major State Programs: 
 
 
(a) 
Material weakness identified? 
 
 
 
          No 
 
(a) 
Significant deficiencies identified that are not considered 
to be material weaknesses?   
 
 
 
          No 
 
(2) 
Type of Auditor’s Report issued on compliance for major state 
 
program(s)?   
 
 
 
 
 
 
          Unmodified 
 
(3) 
Any audit findings disclosed that are required to be reported in 
 
accordance with N.J. OMB Circular 15-08?   
 
 
          No 
 
 (4) 
Identification of Major State Program(s): 
 
 
Grant
Program
Number
Reimbursed TPAF Social
  Security Contributions
16-495-034-5094-003
State Aid Public Cluster:
 Special Education
    Categorical Aid
16-495-034-5120-011
    Equalization Aid
16-495-034-5120-078
    Categorical Security Aid
16-495-034-5120-084
    PARCC Readiness Aid
16-495-034-5120-098
    Per Pupil Growth Aid
16-495-034-5120-097
 
141

Borough of South Bound Brook School District 
Schedule of Findings and Questioned Costs 
For the Fiscal Year Ended June 30, 2016 
 
 
Section I – Summary of Auditor’s Results (Continued) 
 
 
 (5) 
Program Threshold Determination: 
 
  Type A State Program Threshold >   $750,000.00 
 
  Type B State Program Threshold <= $750,000.00 
 
(6) 
Auditee qualified as a low-risk auditee under N.J. OMB Circular 15-08? 
Yes 
 
 
 
 
Internal Control Findings 
 
None Reported 
 
 
Compliance Findings 
 
None Reported 
 
 
 
Section III – Findings and Questioned Costs Relative to Major State Programs 
 
State Programs – None Reported 
142

EXHIBIT “K-7” 
 
 
Borough of South Bound Brook School District 
 
Schedule of Prior Year Audit Findings 
 
 
 
Not Applicable 
143

Document Outline

  • 06- Opinions - fed and state single audit- no comments.pdf
    • 308 East Broad Street, Westfield, New Jersey 07090-2122
  • 07- MD&A.pdf
    • Financial Highlights
    • Overview of the Financial Statements
    • Financial Analysis of the District as a Whole
      • Governmental Activities
        • General Fund Budgeting Highlights
      • Debt Administration
    • Contacting the District’s Financial Management
  • Exhiba.pdf
    • Title Basic
    • Title District 
    • A.1
    • A.2
  • Exhibb1.pdf
    • Title
    • B-1
    • B-1.1
  • Exhibb2.pdf
    • B.2
  • Exhibb3..pdf
    • B 3
  • Exhibb4 5 6.pdf
    • TITLE
    • B.4
    • B.5
    • B.6
  • Exhibb7 8.pdf
    • B.7
    • B.8
  • 08- FNOTES.pdf
  • Exhibc1.pdf
    • Title
    • C-1
  • Exhibc2.pdf
    • C.2
  • Exhibc3.pdf
    • C 3
  • RSI - GASB68..pdf
    • RSI III
    • Pension Cover
    • L-1
    • L-2
    • L-3
    • L-4
  • Exhibe.pdf
    • title.spec.
    • title.oth.
    • E.01
  • Exhibf..pdf
    • title
    • f-1
    • f-2
    • f-2a
    • f-2b
  • Exhibh.pdf
    • Title page
    • H.1
    • H.2
    • H.3
    • H.4
  • Exhibi..pdf
    • Title Page
    • I.1
    • I.3
  • J-Section.pdf
    • Index
    • J-1
    • J-2
    • J-3
    • J-4
    • J-5
    • J-6
    • J-7
    • J-8
    • J-9
    • J-10
    • J-11
    • J-12
    • J-13
    • J-14
    • J-15
    • J-16
    • J-17
    • J-18
    • J-19
    • J-20
  • 06- Opinions - fed and state single audit- no comments.pdf
    • 308 East Broad Street, Westfield, New Jersey 07090-2122
  • Exhibk3.scheda..pdf
    • A
  • Exhibk4.schedb..pdf
    • A
  • 09- EXHIB.K5.K6.K7..pdf
    • EXHIBIT “K-5”
    • Borough of South Bound Brook School District
    • NOTE 1: GENERAL
    • Borough of South Bound Brook School District
    • NOTE 3: RELATIONSHIP TO BASIC FINANCIAL STATEMENTS (CONTINUED)
    • NOTE 4: RELATIONSHIP TO FEDERAL AND STATE FINANCIAL REPORTS
    • EXHIBIT “K-6”
    • Borough of South Bound Brook School District
    • Schedule of Findings and Questioned Costs
    • Section I – Summary of Auditor’s Results
    • Financial Statements
    • (2) Internal Control Over Financial Reporting:
    • Federal Program(s) -     Not Applicable
    • State Program(s)
    • (1) Internal Control Over Major State Programs:
    • (2) Type of Auditor’s Report issued on compliance for major state
    • (3) Any audit findings disclosed that are required to be reported in
    • (4) Identification of Major State Program(s):
    • Borough of South Bound Brook School District
    • Schedule of Findings and Questioned Costs
    • Section I – Summary of Auditor’s Results (Continued)
    • (5) Program Threshold Determination:
    • Internal Control Findings
    • None Reported
    • Compliance Findings
    • None Reported
    • Section III – Findings and Questioned Costs Relative to Major State Programs
    • State Programs – None Reported
    • EXHIBIT “K-7”
    • Borough of South Bound Brook School District
    • Schedule of Prior Year Audit Findings
  • Exhibg - not used.pdf
    • Title
  • Blank Page
  • Blank Page
  • Blank Page


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