Town of Bermuda Run Bermuda Run, North Carolina For the year ended June 30, 2017  Independent Auditors' Reports Basic Financial Statements Information Accompanying the Basic Financial Statements  And    Town of Bermuda Run Table of Contents June 30, 2017  Independent. Auditor's Report Management's Discussion and Analysis Basic Financial Statements:  1-2 3-12  Government-wide Financial Statements:  Exhibit 1 Exhibit 2  Statement of Net Position Statement of Activities  13 14  Fund Financial Statements Exhibit3 3 Exhibit 4 Exhibit5 5  Balance Sheet - Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds Reconciliation of the Statement of Revenues, Expenditures And Changes in Fund Balances of Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances - General Fund and Annually Budgeted Statement of Fund Net Position - Proprietary Fund Statement of Revenues, Expenses, and Changes in Fund Net Position - Proprietary Fund Statement of Cash Flows - Proprietary Funds  15 16  tot the Statement of Activities Special Revenue Fund  17  Exhibit6  18 19 20 21 22-39  Exhibit7 Exhibit8 8 Exhibit9  Notes to the Financial Statements    Required Supplementary Information:  Schedule oft the Proportionate Share oft the Net Pension Asset-Local Government Employees' Retirement System Schedule of Contributions- - Local Government Employees'  40 41  Retirement System  Individual Funds Statements and Schedules:  Statement of Revenues, Expenditures, and Changes in Fund Balances - Statement of Revenues, Expenditures, and Changes in Fund Balances- - Budget and Actual - General Capital Projects Fund Statement of Revenues, Expenditures, and Changes in Fund Balances- - Budget and Actual - Special Revenue Fund - Gated Security Schedule of Revenues and Expenditures Budget and Actual - (Non-GAAP)  Budget and Actual - General Fund  42-43 44 45 46-47 48 49  Water and Sewer Fund  Other Schedules:  Schedule of Changes in Ad' Valorem Taxes Receivable  Analysis of Current Tax Levy  Compliance Section:  Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government, Auditing Standards  50-51    EDDIECARRICK, CPA, PC Certified Public Accountant INDEPENDENT AUDITOR'S REPORT  Tot the Town Council Town of Bermudal Run Bermuda Run, North Carolina Report on the Financial Statements  We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component unit, each major fund, and the aggregate remaining fund information oft the Town of Bermuda Run, North Carolina, as of and for the year ended June 30, 2017, and the related notes to the financial statements, which collectively comprise the Town of Bermuda Run, North Carolina's basic financial  statements as listedi in the table of contents.  Management's Responsibility for the Financial Statements  Management is responsible fort the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Govemment Auditing Standards, issued by the Comptroller General of the United States. The financial statements of the Town of Bermuda Run Tourism Development Authority were not audited in accordance with Government Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether thet financial statements are freet from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit  free from material misstatement, whether due to fraud or error.  Auditor's Responsibility  statements. opinions. Opinions  Ino our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the aggregate discretely presented component unit, each major fund, and the aggregate remaining fund information oft the Town of Bermuda Run, North Carolina, as of June 30, 2017, and the respective changes in financial position, and, where applicable, cash flows thereof and the respective budgetary comparison of the General Fund and Special Revenue Fund for the year then ended in accordance with accounting principles generally acceptedi in the United States of America.  Member oft the American Institute of Certified Public Accountants  Eddie Carrick  151 Young Drive, Lexington, NC 27292 336-249-2545, Fax3 336-249-4745    Other Matters  Required. Supplementary Information  Accounting principles generally accepted in the United States of America require that Management's Discussion and Analysis on pages 3 through 12 and the Local Government Employees' Retirement System's Schedules of the Proportionate Share of the Net Pension Asset (Liability) and Contributions, on pages 40 through 41 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with managements responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Town of Bermuda Run, North Carolina's basic financial statements. The budgetary schedules and other schedules are presented for purposes of additional analysis and are not a required part of the basic financial The budgetary schedules and other schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit oft the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the budgetary schedules and other schedules are fairly stated in all material Ina accordance with Government Auditing Standards, we have also issued our report dated September 6, 2017, on our consideration oft the Town of Bermuda Run, North Carolina's internal control over financial reporting and on our tests ofi its compliance with certain provisions ofl laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results oft that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Town of Bermuda Run, North Carolina's internal control over financial reporting and  Supplementary and Other Information  statements.  respects in relation to thel basic financial statements as av whole. Other Reporting Required by Government. Auditing Standards  compliance. Eddie Carrick, CPA,PC RCL.c Lexington, North Carolina September 6,2 2017  2    *  TOwN DF  Bermida RRn NORTH CAROLINA 120 Kinderton Boulevard, Suite IOO Bermuda Run, NC 27006 336.998.0906 Fax 336.998.7209 towmofbr.com  Management's Discussion and Analysis  As management of the Town of Bermuda Run, we offer the readers of the Town of Bermuda Run's financial statements this narrative overview and analysis of the financial activities of the Town of Bermuda Run for the fiscal year ended June 30, 2017. We encourage readers to read the information presented here in conjunction with additional information that we have furnished in the Town's financial statements, which  follow this narrative. Financial highlights  The assets and deferred outflows of resources oft the Town of Bermuda Run exceeded its liabilities and deferred inflows of resources at the ciose of thef fiscal year by $9,986,988 (net position). The government's total net position increased by $862,645, primarily due to governmental activities, capital grants for road improvements, and a conservative approach to spending. As of the close of the current fiscal year, the Town of Bermuda Run's governmental funds reported combined ending fund balances of $2,842,129 with a net change of $402,531 in fund balance. Approximately 23% oft this total amount, or $655,282, is restricted or assigned. At the end of the current fiscal year, unassigned fund balance for the general fund was $2,186,848, or 101% oft total general fund expenditures for thei fiscal year. The Town of Bermuda Run's total debt decreased by $39,568 due to payments on the debt for Town Hall of $85,000, an increase in accrued vacation of $774, and an increase in net pension liability of  $44,640.  Overview of the Financial Statements  This discussion and analysis is intended to serve as introduction to the Town of Bermuda Run's basic financial statements. The Town's basic financial statements consist of three components: 1) government- wide financial statements, 2) fund financial statements, and 3) notes to thei financial statements (see Figure 1). The basic financial statements present two different views of the Town through the use of government- wide statements and fund financial statements. In addition to the basic financial statements, this report contains other supplemental information that will enhance the reader's understanding of the financial  condition oft the Town of Bermuda Run.  3    Management Discussion and Analysis Town of Bermuda Run Figure 1  Required Components of Annual Financial Report  Management's Discussion and Analysis  Basic Financial Statements  Government-wide Financial Statements  Fund Financial Statements  Notes to the Financial Statements Detail  Summary  Basic Financial Statements  The first two statements (Exhibits 1 and 2) in the basic financial statements are the Government-wide Financial Statements. They provide both short and long-term information about the Town's financial status. Ther next statements (Exhibit 31 through 9) are Fund Financial Statements. These statements focus on the activities of the individual parts of the Town's government. These statements provide more detail than the government-wide statements. There are three parts to the Fund Financial Statements: 1) the governmental fund statements 2) the budgetary comparison statements and 3) the proprietary fund statements. The next section of the basic financial statements is the notes. The notes to the financial statements explain in detail some of the data contained in those statements. After the notes, supplemental information is provided to show details about the Town's individual funds. Budgetary information required  by the General Statutes also can bei found in this part of the statements.    Management Discussion and Analysis Town of Bermuda Run Government-Wide Financial Statements  The government-wide financial statements are designed to provide the reader with al broad overview of the Town's finances, similar in format to ai financial statement of a private-sector business. The government- wide statements provide short and long-term information about the Town's financial status as awhole. The two government-wide statements report the Town's net position and how they have changed. Net position is the difference between the Town's total assets and deferred outflows of resources and total liabilities and deferred inflows of resources. Measuring net position is one way to gauge the Town's The government-wide statements are divided into three categories: 1) governmental activities 2) business- type activities and 3) component units. The governmental activities include most of the Town's basic services such as safety and security, transportation and administration. Property tax and state shared revenues finance these activities. The business-type activities are those that the Town charges customers to provide. These include water and sewer services offered by the Town. The final category is component unit. Although legally separate from the Town, the Tourism Development Authority is important to the Town.  financial condition.  The Town exercises control over the Authority by appointing its members. The government-wide financial statements are on Exhibits 1 and 2 oft this report.  Fund Financial Statements  The fund financial statements (see Figure 1) provide a more detailed look at the Town's most significant activities. A fund is a group of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Town of Bermuda Run, like all other governmental entities in North Carolina, uses fund accounting to ensure and reflect compliance (or non-compliance) with finance-related legal requirements, such as General Statutes or the Town's budget ordinance. All of the funds of the Town of Bermuda Run can be divided into two categories: governmental funds and proprietary Governmental Funds - Governmental funds are used to account for those functions reported as governmental activities in the government-wide financial statements. Most of the Town's basic services are accounted fori in governmental funds. These funds focus on how assets can readily be converted into cash flow in and out, and what monies are left at year-end that will be available for spending in the next year. Government funds are reported using an accounting method called modified accrual accounting which provides a short term spending focus. As a result, the governmental fund financial statements give the reader a detailed short-term view that helps him determine if there are more or less financial resources available to finance the Town's programs. The relationship between governmental activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds is described in a  funds.  reconciliation thati is part of the fund financial statements.  5    Management Discussion and Analysis Town of Bermuda Run  The Town of Bermuda Run adopts an annual budget for the General Fund and Special Revenue Fund, as required by the General Statutes. The budget is a legally adopted document that incorporates input from the citizens of the Town, the management of the Town, andt the decisions oft the board about which services to provide and how to pay for them. It also authorizes the Town to obtain funds from identified sources to finance the current period activities. The budgetary statement provided for the General Fund and Special Revenue Fund demonstrates how well the Town complied with the budget ordinance and whether or not the Town succeeded in providing the services as planned when the budget was adopted. The budgetary comparison statement uses the budgetary basis of accounting and is presented in the same format, language and classifications as the legal budget document. The statement shows four columns: 1) the original budget as adopted by the board 2) the final budget as amended by the board 3) the actual resources, charges to appropriations, and ending balances ini the General Fund and Special Revenue Fund, and 4) the differences or variance between thet final budget and actual resources and charges. To account for the difference between the budgetary basis of accounting andi the modified accrual basis, a reconciliation showing the differences int the reported activities is shown at the end oft the budgetary statement. Proprietary funds The Town of Bermuda Run has one type of proprietary fund. Enterprise Funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The Town uses an enterprise fund to account fori its water and sewer activity. This fund is the same as the functions shown in the business-type activities ini the Statement of Net Position and Statement Notes to the Financial Statements - The notes provide additional information that is essential to the full understanding of data provided in the government-wide and fund financial statements. The notes to the Other Information In addition to the basic financial statements and accompanying notes, this report includes certain supplemental information detailing thei information provided ini the basic financial statements and is presented to allow the reader to gain an in-depth understanding of the financial information Interdependence with Other Entities = The Town depends on financial resources flowing from, or associated with, both the Federal Govemment and the State of North Carolina. Because of this dependency, the Town is subject to changes in specific flows of intergovernmental revenues based on modifications to Federal and State laws and Federal and State appropriations. It is also subject to changes in investment earings and asset values associated with U.S. Treasury Securities because of actions by  of Activities.  financial statements begin on page 22 of this report.  presented.  foreign government and other holders of publicly held U.S. Treasury Securities.  6    Management Discussion and Analysis Town of Bermuda Run Government-Wide Financial Statements  Town of Bermuda Run's Net Position (Figure2 2) Governemental. Activities Business-T Type Activities  Total 2017 2016  2017  2016  2017  2016  Current and other assets Capitala assets Deferred outflows ofr resources Total assets and deferred outflows ofr resources Long-term liabilities Otherl liabilities Deferred inflows ofr resources Total liabilities and deferred inflows of resources Net position: Neti investment in capital assets Restricted for: Stabilization by State Statute Streets Unrestricted Total net position  $2,889,140 $ 2,487,549 $ 1,007,944 $ 637,986 $ 3,897,083 $ 3,125,535 4,009,981 3,953,614 2,180,229 2,259,056 6,190,210 6,212,670 6,955,450 6,455,971 3,188,173 $2,897,043 10,143,623 9,353,014  56,329  14,808  56,329  14,808  39,436 106,572 8,868 154,876  146,158 37,711 8,677 192,546  39,436 146,158 108,330 8,868 156,634 228,671  1,758 1,758  36,125 36,125  73,836 8,677  3,967,481 3,826,114 2,180,229 2,259,056 6,147,710 6,085,170  148,583 305,753  825,082 243,586  148,583 825,082 305,753 243,586  2,378,756 1,368,642 1,006,186  601,861 3,384,943 1,970,503  $6,800,573 $ 6,263,424 $ 3,186,415 $ 2,860,917 $ 9,986,988 $ 9,124,341  As noted earlier, net position may serve over time as one useful indicator of a government's financial condition. The assets and deferred outflows of resources of the Town exceeded liabilities and deferred inflows by $9,986,988 as of June 30, 2017. The Town's net position increased by $862,645 for the fiscal year ended June 30, 2017. However, the largest portion (62%) reflects the Town's neti investment in capital assets (road improvements, equipment, machinery, utility plant), less any related debt still outstanding that was issued to acquire those items. The Town uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the Town's net investment in capital assets is reported net of the outstanding debt, the resources needed to repay that debt must be provided by other sources, since capital assets cannot be used to liquidate these liabilities. An additional portion of the Town's net position, $454,336, represents resources that are subject to external restrictions  on how they may be used. The remaining balance of $3,384,943 is unrestricted.  7    Management Discussion and Analysis Town of Bermuda Run government net position:  Several particular aspects of the Town's financial operations positively influenced the total unrestricted  Continued diligence in the collection of property taxes by maintaining at tax collection percentage of  99.63%, compared to the state average of97%. Timely maintenance of Town assets tor maximize lives. NCDOT grants for road improvements of $231,996  Town of Bermudal Run's Changes in Net Position (Figure 3)  Governmental Activities 2017 2016  Business-type Activities 2017 2016  Total 2017 2016  Revenues Program revenues: Charges for services Operating grants and contributions Capital grants and contributions General revenues: Properly taxes Othert taxes Other Totalr revenues Expenses: General government Safety Gate operations Transportation Interest onl long- term debt Waler ands sewer Totale expenses  518,476 $ 512,025 $ 757,816 $ 739,552 $ 1,276,292 $ 1,251,577  62,167 231,996 748,149 809,268 792,793 588,810 511,317 523,824 499,593 1,048,315 806,319 515,022 491,975 630,585 616,979 3,471  63,759  62,167 231,996 809,268 588,810 528,074 1,048,315 515,022 630,585 3,471 436,568  63,759 748,149 792,793 511,317 506,643 806,319 28 491,975 616,979 6,888 476,612  4,250  7,050  2,734,541 3,127,636 762,066 746,602 3,496,607 3,874,238  28 6,888  436,568 476,612  2,197,393 1,922,188 436,568 476,612 2,633,961 2,398,801  Increasei inr net position before transfers  537,147 1,205,448 325,498 269,990  862,645 1,475,438 862,645 1,475,438  Transfers Increasei in net position Netp position, July1 1 Netp position, June 30  537,147 1,205,448 325,498 269,990  6,263,424 5,057,976 2,860,917 2,590,927 9,124,341 7,648,903 $6,800,573 $6,263,424 $ 3,186,415 $ 2,860,917 $ 9,986,988 $ 9,124,341  8    Management Discussion and Analysis Town of Bermuda Run  Governmental activities. Governmental activities increased the Town's net position by $537,147, thereby accounting for 63% oft the total growth in net position oft the Town, Though a recession affected the Town, thei increase in net position was the result of a concerted effort to control costs and manage expenditures to minimize the impact of the recession on its citizens. Town management reduced non-essential programs to a minimum and implemented cost saving strategies across Town departments. Certain nonrecurring expenses were either postponed or renegotiated in an attempt to maintain a healthy net position. Management believes healthy investment in the Town will result in additional revenues, and in that vein added to the Town's net position byi investing in capital assets. Though many of the Town's residents were hit hard by the recession, tax revenue did not appreciably decline in the current year. Town management acknowledges that 2017 was a successful year and plans on improving upon these approaches as a long-  term strategy to realize continued fiscal health. Key elements oft this increase are as follows: Tax revenues remained steady  Town council has adopted a conservative approach to general fund spending  NCDOT grants for road improvements of $231,996  Business-type activities: Business-type activities increased the Town's net position by $325,498, accounting for 37% oft the total growth in the government's net position. Key elements of this increase area as  follows:  Water costs Water and sewer charges Conservative approach to spending Financial Analysis of the Town's Funds related legal requirements.  As noted earlier, the Town uses fund accounting to ensure and demonstrate compliance with finance- Governmental Funds: The focus of the Town's governmental funds is to provide information on near-term inflows, outflows, and balances of usable resources. Such information is useful in assessing the Town's financing requirements. Specifically, unreserved fund balance can be a useful measure ofa a government's The General Fund is the chief operating fund of the Town. Att the end of the current fiscal year, the Town of Bermuda Run's fund balance available in the General Fund was $2,186,848, while total fund balance reached $2,641,182. The Town currently has an available fund balance of 101% of general fund At. June 30, 2017, the governmental funds of the Town reported a combined fund balance of $2,842,129 with ar net increase in fund balance of $402,531. Included in this change ini fund balance are decreases in the General Fund of $192,590, an increase in the General Capital Projects Fund of $671,303, and a  net resources available for spending at the end of thet fiscal year.  expenditures, while total fund balance represents 122% oft the same amount.  decrease in Special Revenuel Fund of $76,182.  9    Management Discussion and Analysis Town of Bermuda Run  General Fund Budgetary Highlights: During the fiscal year, the Town revised the budget on two occasions. Generally, budget amendments fall into one of three categories: 1)amendments made to adjust the estimates that are used to prepare the original budget ordinance once exact information is available; 2) amendments made to recognize new funding amounts from extérnal sources, such as Federal and State grants; and 3)i increases in appropriations that become necessary to maintain services. The Town amended the budget in order to account for the General Fund's and Special Revenue Fund's portion of the general capital project to construct a roundabout. The Town also amended the budget to Proprietary Funds: The Town's proprietary funds provide the same type of information found in the government-wide statements but in more detail. Unrestricted net position in the Water and Sewer Fund at the end of the fiscal year amounted to $1,006,186. The total change in net position was $325,498. Other factors concerning the finances of this fund have already been addressed in the discussion of the Town's  account for an increase in water purchases.  business-type activities.  Capital Asset and Debt Administration roads, machinery and equipment.  Capital Assets. The Town's investment in capital assets for its governmental and business-type activities as of June 30, 2017, totals $6,190,210 (net of accumulated depreciation). These assets include buildings,  Major capital asset transactions during the year included the following additions:  Roundabout capital project construction $118,321 Community services roundabout construction $137,153  Town of Bermudal Run's Capital Assets (net of depreciation) (Figure 4)  Governmental Activities 2017 2016 $1 1,771,626 $ 2,941,115 993,050 535,500 571,200 511,076 589,950 22,290  Business-type Activities 2017 2016 $  Total 2017 2016 $1,771,626 2,941,115 993,050 535,500 571,200 511,076 589,950 22,290  Construction inj process $ Roadi mprovements Buildings Otheri improvements Equipment andf furishings Planta and distribution  27,788  27,788  2,180,229 2,259,056 2,180,229 2,259,056  $4,009,981 $'3,953,614 $ 2,180,229 $ 2,259,056 $6,190,210 $6,212,670  Additional information on the Town's capital assets can be found in the Note IL.A.4 of the Basic Financial  Statements.  10    Management Discussion and Analysis Town of Bermuda Run outstanding amount of $42,500.  Long-term Debt. As of June 30, 2017, the Town had an installment note with Bank of the Carolinas with an  Town of Bermuda Run's Long-term Debt (Figure 5)  Govemmental Activities 2017 2016  Business-type Activities 2017 2016 $ $  Total 2017 2016  Installment note Bank oft the Carolinas  42,500 $127,500 $ 42,500 $127,500 $  P 42,500 $127,500 $ 4 42,500 $127,500  Town of Bermuda Run's Outstanding Debt  The Town's debt decreased by $85,000 during they yeart based on principal payments made of $85,000. North Carolina general statutes limit the amount of general obligation debt that a unit of government can issue to8 8 percent of the total assessed value of property located within that government's boundaries. The Additional information regarding the Town's long-term debt can bei foundi in Note IL.B.6 oft this report.  legal debt margin for the Town is $43,177,813.  Economic Factors and Next' Year's Budgets and Rates  The following key economic indicators reflect the growth and prosperity of the Town.  The continued build out of Kinderton Village Residential Community with a new 72 unit single Ai fully operational 501 bed tower in for the Davie Medical Center- - Bermuda Run Campus, as well The expansion of services for Bermuda' Village Premier Retirement Community Increased commercial and retail growth int the Town and surrounding areas  family section  asaf fully operational joint replacement unit  Increased destination driven economic impact from the Twin City Soccer Association tournaments Continued increased use of WinMock at Kinderton for corporate events, weddings, and regional  and special events programs.  11    Management Discussion and Analysis Town of Bermuda Run  Budget Highlights for the Fiscal Year Ending June 30, 2018  Governmental Activities: Property tax revenues are expected to increase slightly in conjunction with new construction in the commercial areas, as well as renewed residential family home construction in the residential zoned areas. The Town has budgeted monies to enhance quality of life by interconnecting residential and retail areas with multi-use paths. Other revenues and expenses are expected to remain The Town has chosen not to appropriate fund balance in the fiscal year 2018 budget. Management believes that increased revenues and continued restrictions on spending will maintain the Town's financial position. As the Town considers future revenue sources, it has determined that a $0.01 increase in the property tax rate will result in additional revenues of approximately $53,773 at current values and collection rate. Though management believes current growth will generate enough revenue to support Town operations, a careful analysis of property tax revenue will be considered ini future years' budgets. Business-type Activities: Revenues for the 2017-2018 year are expected to increase slightly due to projected volume increase in sales tax distribution from the State of North Carolina. However, this will be tempered with a change from per capita to ad valorem method of sales tax distribution by the Davie County This report is designed to provide an overview of the Town's finances for those with an interest in this area. Questions concerning any of the information foundi in this report or requests for additional information should be directed to the Town Manager, Town of Bermuda Run, 120 Kinderton Blvd, Suite 100, Bermuda Run, NC  consistent with the 2016-2017 fiscal year.  Commissioners. Requests for Information  27006.  12    Exhibit1  Town of Bermuda Run, North Carolina Statement of Net Position June 30,2017  Component Unit Town of Bermuda Run Tourism Development Authority  Primary Government Business-type Activities  Governmental Activities  Total  ASSETS Currenta assets: Cash andi investments Properly taxes receivable (net) Accounts receivable (net) Restricted cash Total current assets Non-current assets: Capital assets (Note 4): Non-depreciable construction inp progress Other capital assets, net of depreciation Tolal Capital assets Total assets DEFERRED OUTFLOWS OF RESOURCES Pension deferrals Total deferredi inflows of resources LIABILITIES Current liabilities: Accounts payable Long-term! liabilities: Netp pension liabilitly Accrued vacation Due within oney year Duei in more than oney year Totall liabilities DEFERRED INFLOWS OF RESOURCES Pension deferrals Total deferredi inflows ofr resources NET POSITION Neti investmenti in capital assets Restricted for: Stabilization by Slate Statute Streets Tourism Development Unrestricted Total net position  2,427,228 $ 1,007,944 $ 3,435,172 $  7,574 148,585 305,753 2,889,140  7,574 148,585 305,753 3,897,083  13,806 243,290 257,096  1,007,944  4,009,981 4,009,981 6,899,121 56,329 56,329  2,180,229 2,180,229 3,188,173  6,190,210 6,190,210 10,087,294 56,329 56,329  257,096  39,436 61,335 2,737 42,500 146,008. 8,868 8,868 3,967,481 148,583 305,753 2,378,756  1,758  41,194 61,335 2,737 42,500 147,766 8,868 8,868 6,147,710 148,583 305,753 3,384,943  1,758  2,180,229  13,806 243,290 257,096  1,006,186  6,800,573 $ 3,186,415 $ 9,986,988 $  The accompanying notes are ani integral parto oft thei financial statements  13        Exhibit3  Town of Bermuda Run, North Carolina Governmental Funds Balance Sheet June 30, 2017 General 2,221,965 $ 305,753 7,574 148,585 2,683,877 $ $ 35,119 $ 35,119 7,574 7,574 148,583 305,753 2,186,848 2,641,182 2,683,877 $  Major Capital Project  Total Governmental Funds 305,753 7,574 148,585 2,889,140 39,436 7,574 7,574 148,583 305,753 200,946 2,186,848 2,842,129  Special Revenue  ASSETS Casha andi nvestments Restricted cash Duet to (from) otherf funds Property taxes receivable (net) Accounts receivable (net) LIABILITIES Accounts payable  $ 205,263 $ 2,427,228  205,263 $ 4,317 $ 39,436 4,317  DEFERRED INFLOWS OF RESOURCES Property taxes receivable Total deferredi inflows ofr resources Fund balances: Restrictedi for: Stabilization bys states statute Streets Assigned for gate operations Unassigned Total Fund Balances Totall liabilities, deferredi inflows ofr resources and fund! balances Amounts reported for governmental activities int thes statement ofr net position (Exhibit 1)a are different because: Capital assets usedi in governmental activities are not financial resources andt therefore arer notr reportedi int thet funds. ofr resources ont the Statement of Net Position Liabilitiest for earnedr revenues considered deferred inflows ofr resources inf funds statements. Pension related deferrals governmental: activities: Netp position oft the governmental activities  200,946 200,946 $ 205,263  4,009,981 (61,335) 56,329 7,574 (8,868)  Netp pension liability  Contributions tot thep pension plani int thec currentf fiscaly year are deferred outflows  Some liabilities, including bonds payable, are not due and payable int the current period and are therefore not reportedi int ther net position oft the  Accrued vacation Installment note  $ (2,737) (42,500)  (45,237) 6,800,573  Thea accompanyingi notes are ani integral part oft thei financial statements  15    Exhibit4  Town of Bermuda Run, North Carolina Governmental Funds Fort the Year Ended June 30, 2017  Statement of Revenues, Expenditures and Changes in Fund Balance  Major Capital Project  Total Governmental Funds $ 811,935 588,810 239,684 441,350 5,837 518,476 131,115 2,737,208 557,628 3,294,836 968,927 498,049 779,229 88,471 2,334,676 557,628 2,892,304 402,531 2,439,596  Special Revenue $  General 811,935 $ 588,810 239,684 209,354 5,837 131,115 1,986,736  Revenues: AdValoremt taxes Othert taxes andi licenses Unrestricted intergovernmental revenues Restrictedi intergovernmental revenues Investment earnings Gate fees Other revenues Other financing sources: Proceeds froml long-term debt Appropriatedi fund! balance Transfer from otherf funds Total revenues and others sources Expenditures: General government Safety Gate operations Transportation Debt service Other Financing Uses: Transfer to capital projectf fund Total Expenditures and Other Uses Excess ofr revenues and others sources over (under) expenditures and other uses FundE Balances Beginning ofy year, July1 End ofy year, June 30  231,996 231,996 557,628 789,624  518,476 518,476  1,986,736 968,927 660,908 88,471 1,718,307 461,019 2,179,326 (192,590) 2,833,772 2,641,182 $  518,476  498,049 498,049 96,609 594,658 (76,182) 277,127  118,321 118,321  118,321 671,303 (671,303)  200,946 $ 2,842,129  The accompanying notes are ani integral part oft thet financial statements  16    Exhibit 5  Town of Bermuda Run, North Carolina Governmental Funds For the Year Ended June 30, 2016  Statement of Revenues, Expenditures and Changes in Fund Balance  Amounts reportedi for governmental activities in the statement of activities are different because:  Neto changes inf fund balances total governmental funds  $ 402,531  Governmental funds report capital outlays as expenditures. However, int the Statement ofA Activities, the cost of those assetsi is allocated over their estimated usefull lives andr reported as depreciation expense. Thisi is the amount! by which capital outlays exceeded depreciation for the current period.  Construction inj progress Capital outlay Depreciation  $ 337,365 280,999  56,366 (2,667)  Revenues int the statement ofa activities that dor not provide current financial resources are not reported as revenues int thet funds. Changei inu unavailable revenue for tax revenues Changes inp pension expense Changes in net pension assets Changes inc deferred outflows Changes inr net pension liability Changes in deferred inflows  41,521 (44,640) (190)  (3,309)  Thei issuance of! long-term debt provides current financial resources to governmental funds, whilet the repayment oft thep principal ofl long-term debt consumes thec current financial resources of governmental funds. Neither transaction has anye effecto on net position. This amount ist the net effect oft these differences int the treatmento ofl long-term debt Some oft the expenses reported int the statement ofa activities dor not require the use of current financial resources and, therefore, are not reported as  andr relatedi items.  85,000  expenditures in governmental: funds. Compensated: absences  (773) 537,147  Total changes inr net position of governmental activities  The accompanying notes are ani integral part of thet financial statements  17    8    Exhibit7  Town of Bermuda Run, North Carolina Proprietary Funds Statement of Fund Net Position June 30, 2017  Assets Current assets: Cash andi investments Accounts receivable (net) Total current assets Noncurrent assets: Capital assets: Construction inp progress Other capital assets, net of depreciation Total non-current: assets Total assets Liabilities Current liabilities: Current maturities onl long- -term debt Accounts payable Total current! liabilities Long-term liabilities: Duei ini more than one year Total liabilities Net Position Neti investment in capital assets Unrestricted  $1,007,944 1,007,944  2,180,229 2,180,229 3,188,173  1,758 1,758  1,758  2,180,229 1,006,186 $3,186,415  Total net position of business-type: activities  The accompanying notes are ani integral part of the financial statements  19    Exhibit 8  Town of Bermuda Run, North Carolina Proprietary Funds Fort the Year Ended June 30, 2017  Statement of Revenues, Expenses and Changes in Fund Net Position  Operating revenues: Water charges Sewer charges Operating expenses: Administration Water operations Sewer operations Depreciation  $  231,429 526,387 757,816 50,960 24,285 268,906 92,417 436,568 321,248  Operating income Nonoperating revenue (expense): Interest income Otheri income Interest expense  4,250 4,250 325,498  Totalr nonoperating revenue (expense) Income before operating transfers Operating transfers in (out)  Change in net position business type activities  325,498 2,860,917 3,186,415  Total net position- July1 Total net position June 30  $  The accompanying notes are ani integral part of the financial statements  20    Exhibit9  Town of Bermuda Run, North Carolina Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2017  Cash flows from operating activities: Cash received from customers Cash payment to suppliers of goods ands services Cash payment to employees and! benefits Net Cash Provided By Operating Activities Cash flows from noncapital financial activities: Transfer from General Fund Sewer assessments  757,816 (378,518) 379,298  4,250 4,250  Net Cash Provided by Noncapital Financing Activities Cash from capital and related financing activities:  Interest paid Payments on long-term debt Purchase of capital assets  (13,590) (13,590)  Net Cash Used by Capital and Related Financing Activities  Cash flows fromi investing activities: Interest oni investments Net Cash Provided byl Investing. Activities Netl Increase (Decrease) In Cash Cash- Beginning of Year, July1 1 Cash- End of Year, June 30  369,958 637,986 1,007,944  Adjustments to Reconcile Net Operating Income tol Net Cash Provided by Operating Activities: Changes in current assets andl liabilities: (Increase) decrease ina accounts receivable Increase (decrease) ina accounts payable Net Cash Provided (Used) By Operating Activities  Net operatingi income Depreciation  321,248 92,417 (34,367) 379,298 $  Interest paid  The accompanying notes are ani integral part oft the financial statements  21    Town of Bermuda Run, North Carolina NOTES TOI FINANCIAL STATEMENTS As of or for the Year Ended. June 30, 2017  Description of the unit  The Town of Bermudal Run is located in Davie County, which isi ini the Piedmont area of North Carolina. The Town has aj population of approximately 2,606 and covers approximately two thirds of one square mile. The  Town provides water and sewer services toi its residents. LS Summary of Significant Accounting Policies the more significant accounting policies: A. Reporting entity  The accounting policies oft the Town of Bermuda Run and its discretely presented component unit conform to generally accepted accounting principles as applicable to governments. The following is a summary of  The Town of Bermuda Run is a municipal corporation governed by an elected mayor and council. As required by generally accepted accounting principles, these financial statements present the Town and its component unit, a legally separate entity for which the Town is financially accountable. The discretely presented component unit presented below is reported in a separate column in the Town's financial  statements in order to emphasize that iti is legally separate fort the Town. Town of Bermuda Run Tourism Development Authority  The Town of Bermuda Run Tourism Development Authority was established December 1, 2010 for the purpose of collecting a 3% occupancy tax to be used for the promotion of tourism in Bermuda Run. The members of the Tourism Development Authority's governing board are appointed by the Town. The Tourism Development Authority, which has a June 30 year-end, is presented as ifi it were a special revenue fund. Information concerning the Tourism Development Authority can be obtained by contacting the Finance  Officer, Town of Bermuda Run, Bermuda Run, NC.  B. Basis of presentation  Government-wide Statements: The statement of net position and the statement of activities display the information about the government and its component unit. These statements include the activities of the overall government. Eliminations have been made to minimize the double counting of internal activities. These statements distinguish between the governmental and business-type activities of the Town. Governmental activities generally are financed through taxes, intergovernmental revenues, and other non- exchange transactions. Business-type activities are financed in whole or part by fees charged to external The statement of activities presents a comparison between direct expenses and program revenues for the different business-type activities of the Town and for each function of the Town's governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expense allocations that have been made in the funds have been reversed for the statement of activities. Program revenues include (a) fees and charges paid by the recipients of goods and services offered by the programs and (b) grants and contributions that are restricted to meeting the operational and capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.  parties.  22    Notes to the Financial Statements (continued)  B. Basis of presentation (continued)  Fund Financial Statements: The fund financial statements provide information about the Town's funds. Separate statements for each fund category - governmental and proprietary - are presented. The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed ina a separate column. All remaining governmental and enterprise funds are aggregated and reported as non- Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each parly receives and gives up essentially the equal values. Non-operating revenues, such as subsidies and  major funds.  investment earnings, result from non-exchange transactions or ancillary activities.  The Town reports thei following major governmental funds:  General Fund  The General Fund is the general operating fund of the Town. Itis used to account for allf financial resources except those required to be accounted for in other funds. The primary revenue sources are ad valorem taxes and state-shared revenues. The primary expenditures are for streets and general government  services.  General Capital Projects Fund Special Revenue Fund  This fund is used to account for the construction ofar new roundabout.  The Special Revenue Funds account for specific revenue sources (other than expendable trusts or major capital projects) that are legally restricted to expenditures for specific purposes. The Town maintains one  Special Revenue Fund, the Gated Security Fund. The Town reports thei following major enterprise funds:  Water and Sewer Fund  The Town maintains an Enterprise Fund, the Water and Sewer Fund, to account for its water and sewer services. This fund is financed and operated ini thes same manner as a private business enterprise. Itis the intent of the governing body that costs (expenses, including depreciation) of providing these services to the public on a continuing basis be financed or recovered primarily through user charges. Therefore, periodic accounting is necessary for determination of neti income and rate control.  C.M Measurement Focus and Basis of Accounting using the modified basis of accounting.  Ina accordance with North Carolina General Statutes, all funds of the Town are maintained during the year  23    Notes to the Financial Statements (continued)  C.A Measurement. Focus and Basis of Accounting (continued)  Government-wide and Proprietary Fund Financial Statements: The government-wide and proprietary fund financial statements are reported using the economic resources measurement focus. The government-wide and proprietary fund financial statements are reported using the accrual basis of accounting. Revenues are recorded when earned and expenses recorded at the time liabilities are incurred regardless of when the related cash flows take place. Non-exchange transactions, in which the Town gives (or receives) value without directly receiving (or giving) equal value in exchange, including property taxes, grants, and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants and donations is recognized in the fiscal year in which all eligibility Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the Town enterprise fund are charges to customers for sales and services. The Town also recognizes as operating revenue the portion of tap fees intended to recover the cost of connecting new customers to the water and sewer system. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this Govemmental Fund Financial Statements: Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. Expenditures are recorded when the related fund liabilityi is incurred, except for principal and interest on general long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long- term debt and acquisitions under capital leases are reported as other financial sources. The Town considers all revenues available if they are collected within 90 days after year end, except for property. taxes. Ad valorem taxes receivable are not accrued as revenue because the amount is not susceptible to accrual. At June 30, taxes receivable for property other than motor vehicles are materially past due and are not considered to be an available resource to finance the operations of the current year. Also, as of September 1, 2013, 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, the State of North Carolina is responsible for billing and collecting the property taxes on registered motor vehicles on behalf of all municipalities and special tax districts. Property taxes are due when vehicles are registered. The billed taxes are applicable to the fiscal year in which they are received. Uncollected taxes that were billed in periods prior to September 1, 2013 and for limited registration plates are shown as a receivable ini these financial statements and are offset by deferred inflows of resources.  requirements have been satisfied.  as program revenues. Likewise, general revenues include all taxes.  definition are reported as non-operating revenues and expenses.  24    Notes to the Financial Statements (continued)  C. Measurement. Focus and Basis of Accounting (continued)  Sales taxes and certain intergovernmental revenues, such as the beer and wine tax, collected and held by the State aty year-end on behalf oft the Town are recognized as revenue. Sales taxes are considered shared revenue for the Town because the tax is levied by Davie County and then remitted to and distributed by the State. Most intergovernmental revenues and sales and services are not susceptible to accrual because generally they are not measurable until received in cash. All taxes, including those dedicated for specific purposes are reported as general revenues rather than program revenues. Under the terms of grant agreements, the Town funds certain programs by a combination of specific cost-reimbursement grants, categorical block grants, and general revenues. Thus, when program expenses are incurred, there is both restricted and unrestricted net position available to finance the program. Itist the Town's policy to first apply cost-reimbursement grant resources to such programs, followed by categorical block grants, and then The Town's budgets are adopted as required by the North Carolina General Statutes. An annual budget is adopted for the General Fund, the Gated Security Special Revenue Fund and the Enterprise Fund. All annual appropriations lapse at the fiscal-year end. Project ordinances are adopted for the Roundabout Capital Projects Fund. All budgets are prepared using the modified accrual basis of accounting. Expenditures may not legally exceed appropriations at the departmental level for all annually budgeted funds and at the project level for the multi-year funds. The Town does not have a current policy which  general revenues. D. Budgetary data  allows for departmental transfers without council approval.  E. Assets, Liabilities, Deferred Outlows/Inflows of Resources, and Fund Equity:  1. Deposits and Investments  All deposits of the Town and the Tourism Development Authority are made in board-designated official depositories and are secured as required by State law (G.S. 159-31). The Town and the Tourism Development Authority may designate, as an official depository, any bank or savings association whose principal office is located in North Carolina. Also, the Town and the Tourism Development Authority may establish time deposit accounts such as NOW and SuperNOW accounts, money market accounts, and State law [G.S. 159-30(c)] authorizes the Town and the Tourism Development Authority to invest in obligations of the United States or obligations fully guaranteed both as to principal andi 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 bankers' acceptances, and the North Carolina Capital Management Trust (NCCMT). The Town's and the Tourism Development Authority investments are reported at fair value. Non- participating interest earning contracts are accounted for at cost. The NCCMT Government Portfolio, a SEC-registered (2a-7) external investment pool, is measured at amortized cost, which is the NCCMT's share price. The NCCMT- Term Portfolio's securities are valued at fair value. The Town does not have a  certificates of deposit.  formal investment or credit risk policy. 2. Cash and Cash Equivalents  The Town pools money from several funds to facilitate disbursements and investment and to maximize investment income. Therefore, all cash and investments are essentially demand deposits and are considered cash and cash equivalents. The Tourism Development Authority considers all highly liquid investments (including restricted assets) with a maturity of three months or less when purchased to be cash  and cash equivalents.  25    Notes to the Financial Statements (continued)  3. Restricted Assets  Powell Bill funds are classified as restricted cash because it can be expended only for the purposes of maintaining, repairing, constructing, reconstructing or widening of local streets per G.S. 136-41.1 through  136-41.4.  Town of Bermua Run Restricted Cash Governmental Activities General Fund Total Restricted Cash 4. Ad Valorem Taxes Receivable  Streets $305,753 $305,753  Ina accordance with State law (G.S. 105-347 and G.S. 159-13(a)), the Town levies ad valorem taxes on. July 1,t the beginning oft the fiscal year. The taxes are due on September 1; however, interest does not accrue until the following January 6. These taxes are based on the assessed values as of. January 1, 2016. As allowed by State law, the Town has established a schedule of discounts that apply to taxes which are paid prior to the due date. In the Town's General Fund, ad valorem tax revenues are reported net of such  discounts.  5. Allowances for Doubtful Accounts  All receivables that historically experience uncollectible accounts are shown net of an allowance for doubtful accounts. This account is estimated by analyzing the percentage ofr receivables that were written offi in prior  years. 6. Capital Assets  Capital assets are defined by the government as assets with an initial, individual cost of more than $2,500 and an estimated useful life of more than two years. Purchased or constructed capital assets are reported at cost or estimated historical cost. Donated capital assets are recorded at their estimated fair value at the date of donation. General infrastructure assets acquired prior to July 1, 2003, consist of the road network and improvements that were acquired or that received substantial improvements subsequent to July 1, 1980, and are reported at estimated historical cost using deflated replacement cost. The cost of normal maintenance and repairs that do not add tot the value of the asset or materially extend assets' lives are not Capital assets are depreciated using the straight-line method over the following estimated useful lives:  capitalized.  Asset Class Road improvements Furniture and office equipment Infrastructure  Useful Life- ) Yrs 25 10-15 15-40  26    Notes to the Financial Statements (continued)  7. Deferred Outtlows/Inflows of Resources  Ina addition to assets, the statement of financial position will sometimes report as separate section for deferred outflows of resources. This separate financial statement element, Deferred Outflows of Resources, represents a consumption of net position that applies to a future period and SO will not be recognized as an expense or expenditure until then. The Town has one that meet this criterion, contributions made to the pension plan in the 2017 fiscal year. In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial element, Deferred Inflows of Resources, represents an acquisition of net position that applies to a future period and SO will not be recognized as revenue until then. The Town has one item that meets the criterion for this category -deferrals of pension expense that result from the implementation of GASB Statement 68. Int the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statements of net position. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight-line discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight-line method that approximates the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance cost, except for prepaid insurance costs, are expensed in the reporting period in which they are incurred. Prepaid insurance costs are expensed over In fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are ported as other financing uses. Issuance costs, whether or not withheld  8. Long-Term Obligations  thel life oft the debt.  from the actual net proceeds received, are reported as debt service expenditures.  9. Compensated. Absences  The vacation policy of the Town provides for the accumulation of up to thirty days earned vacation leave with such leave being fully vested when eamed. For the Town's government-wide funds, an expense and liability for compensated absences and the salary-related payments are recorded as the leave is eared. The Town has not recognized a current liability due to thei immaterial nature of this liability. The Town'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 ofs service for retirement benefit purposes. Since the Town does not have any obligation for the accumulation of sick leave until iti is actually taken, no accrual for sick leave has been made.  10. Net Position/ Fund Balances  Net Position  Net position in government-wide and proprietary fund financial statements are classified as net investment in capital assets, net of related debt; restricted and unrestricted. Restricted net position represent constraints on resources that are either externally imposed by creditors, grantors, contributors, or laws or  regulations of other governments or imposed by law through state statute.  27    Notes to the Financial Statements (continued)  10. Net Position/ Fund Balances (continued)  Fund Balances  Int the governmental fund financial statements, fund balance is composed of five classifications designed to  disclose the hierarchy of constraints placed on! how fund balance can be spent. The governmental fund types classify fund balances as follows:  Nonspendable Fund Balance - This classification includes amounts that cannot be spent because they are either (a) noti ins spendable form or (b) legally or contractually required to be maintained intact. Restricted Fund Balance This classification includes amounts that are restricted to specific purposes  externally imposed by creditors ori imposed by law.  Restricted for Stabilization by State statute - portion of fund balance that is restricted by State Restricted for Streets Powell Bill portion of fund balance that is restricted by revenue source for street construction and maintenance expenditures. This amount represents the balance oft thet total Committed Fund Balance -portion of fund balance that can only be used for specific purposes imposed by majority vote by quorum of Town of Bermuda Run's governing body (highest level of decision-making authority). The governing body can, by adoption of an ordinance prior to the end of the fiscal year, commit fund balance. Once adopted, the limitation imposed by the ordinance remains in place until a similar action Assigned fund balance - portion of fund balance that Town of Bermuda Run intends to use for specific  Statute [G.S. 159-8(a)).  unexpended Powell Bill funds.  ist taken (the adoption of another ordinance) to remove or revise the limitation.  purposes.  Gate Operations - portion of fund balance that intended to be used for the security gate Unassigned fund balance - the portion of fund balance that has not been restricted, committed, or assigned The Town of Bermuda Run has ar revenue spending policy that provides guidance forp programs with multiple revenue sources. The Finance Officer will use resources in the following hierarchy: bond proceeds, federal funds, State funds, local non-town funds, town funds. For purposes of fund balance classification expenditures are to be spent from restricted fund balance first, followed by in-order by committed fund balance, assigned fund balance and lastly unassigned fund balance. The Finance Officer has the authority  operations.  tos specific purposes or other funds.  to deviate from this policy ifiti isi ini the besti interest of the Town.  28    Notes to the Financial Statements (continued)  11. Defined Benefit Cost-Sharing Plans  For purposes of measuring the net pension asset, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Local Governmental Employees' Retirement System (LGERS) and additions to/deductions from LGERS' fiduciary net position have been determined on the same basis as they are reported by LGERS. For this purpose, plan member contributions are recognized in the period in which the contributions are due. The Town of Bermuda Run's employer contributions are recognized when due and the Town of Bermuda Run has a legal requirement to provide the contributions. Benefits and refunds are recognized when due and payable in accordance with thet terms OfLGERS. Investments are reported at fair value.  I.S Stewardship, Compliance, and Accountability:  A. Material Violations of Finance-Related Legal and Contractual Provisions: None  B. Excess of Expenditures over Appropriations: None IL. Detail Notes on All Funds and Account Groups:  A. Assets: 1. Deposits  All the deposits oft the Town and the Tourism Development. Authority are either insured or collateralized by using one of two methods. Under the Dedicated Method, all deposits that exceed the federal depository insurance coverage level are collateralized with securities held by the Town's or the Tourism Development Authority's agents in these units' names. 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 Town and the Tourism Development Authority, these deposits are considered to be held by the Town's and the Tourism Development Authority's agents in their names. The amount of the pledged collateral is based on an approval averaging method for non-interest 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 Town, the Tourism Development Authority, or the escrow agent. Because of the inability to measure the exact amounts of collateral pledged for the Town and the Tourism Development. Authority under the Pooling Method, the potential exists to undercolaterization, 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. The Town has no formal policy regarding custodial credit risk for deposits, but relies on the State Treasurer to enforce standards of minimum capitalization for all pooling method financial institutions and to monitor them for compliance. The Town complies with provisions of GS 159-31 when designating official depositories and verifying that deposits are properly secured. The Tourism Development Authority has noi formal policy regarding custodial At June 30, 2017, the Town's deposits had a carrying amount of $3,132,420 and a bank balance of $3,146,991. The bank balances of the Town were covered by $250,000 of federal depository insurance. The remaining balance of deposits is collateralized under the Pooling Method as enumerated above.  credit risk for deposits.  29    Notes to the Financial Statements (continued)  1. Deposits (continued)  At. June 30, 2017, the TDA's deposits had a carrying amount of $243,290 and al bank balance of $243,290. The bank balances of the TDA were covered by $250,000 of federal depository insurance. Any excess  balance of deposits is collateralized under the Pooling Method as enumerated above.  2. Investments credit risk.  At. June 30, 2017, the Town had $302,752i invested with the North Carolina Capital Management Trust Cash Portfolio which carried a credit rating of AAAm by Standard and Poor's. The Town has no policy regarding  3. Receivable Allowances for Doubtful Accounts 30, 2017 are net of the following allowances for doubtful accounts:  The amounts presented in the Balance Sheet and the Statement of Net Position for the year ending June  Fund None  June 30,2017 -0-  4. Capital Assets Primary Government  Capital asset activity for the Primary Government for the year ended June 30, 2017:  Beginning Balances  Ending  Increases (Decreases) Balances  Governmental activities: Capital assets not being depreciated: Roundabout construction inp process Capital assets being depreciated: Roadi improvements Building Other improvements Equipment andf furnishings Total capital assets being depreciated: Less, accumulated depreciation for: Roadi improvemenis Building Otheri improvements Equipment Total accumulated depreciation Governmental activity capital assets, net  $1 1,771,626 $ 118,321 $( (1,889,946) $ $2 2,164,063 $2,108,991 $ 892,500 955,181 571,519 4,583,263 2,108,991 1,171,012 321,300 526,043 382,920 2,401,275  $4,273,054 892,500 955,181 571,519 6,692,254 1,331,939 357,000 587,944 405,391 2,682,274 $4,009,981  160,927 35,700 61,901 22,471 280,999  $ 3 3,953,614 $ 1,827,992 $  30    Notes to the Financial Statements (continued)  4. Capital Assets Primary Government (continued)  Depreciation expense was charged to functions of the primary government as follows:  General government Gate operations Transportation  $75,305 16,973 188,720 $280,999  Beginning  Ending  Balances Increases Decreases Balances  Business-type activities: Water and sewer fund: Capital assets not being depreciated: Sewer construction Capital assets being depreciated: Plant and distribution Total capital assets being depreciated: Less, accumulated depreciation for: Plant and distribution Total accumulated depreciation  $ 3,251,456 3,251,456 992,398 992,398  $  13,590 13,590 92,417 92,417  3,265,046 3,265,046 1,084,815 1,084,815 $2,180,229  Business-type activity capital assets, net $2,259,056 $ (78,827) $  31    Notes to the Financial Statements (continued)  B. Liabilities:  1. Pension Plan Obligations:  a. Local Governmental Employees' Retirement System  Plan Description. The Town is a participating employer in the statewide Local Governmental Employees' Retirement System (LGERS), a cost-sharing multiple-employer defined benefit pension plan administered by the State of North Carolina. LGERS membership is comprised of general employees and local law entorcement officers (LEOs) of participating local governmental entities. Article 3 of G.S. Chapter 128 assigns the authority to establish and amend benefit provisions to the North Carolina General Assembly. Management of the plan is vested in the LGERS Board of Trustees, which consists of 13 members - nine appointed by the Governor, one appointed by the State Senate, one appointed by the State House of Representatives, and the State Treasurer and State Superintendent, who serve as ex-officio members. The Local Governmental Employees' Retirement System is included in the Comprehensive Annual Financial Report (CAFR) for the State of North Carolina. The State's CAFR includes financial statements and required supplementary information for LGERS. That report may be obtained by writing to the Office of the State Controller, 1410 Mail Service Center, Raleigh, North Carolina 27699-1410, by calling (919) 981-5454, Benefits Provided. LGERS provides retirement and survivor benefits. Retirement benefits are determined as 1.85% of the member's average final compensation times the member's years of creditable service. A member's average final compensation is calculated as the average of a member's four highest consecutive years of compensation. Plan members are eligible to retire with full retirement benefits at age 65 with five years of creditable service, at age 60 with 25 years of creditable service, or at any age with 30 years of creditable service. Plan members are eligible to retire with partial retirement benefits at age 50 with 20 years of creditable service or at age 60 with five years of creditable service (age 55 for firefighters). Survivor benefits are available to eligible beneficiaries ofr members who die while in active service or within 180 days of their last day of service and who have either completed 20 years of creditable service regardless of age (15) years of creditable service fort firefighters and rescue squad members who are killed in the line of duty) or have completed five years of service and have reached age 60. Eligible beneficiaries may elect to receive ar monthly Survivor's Alternate Benefit for life or a return of the member's contributions. The plan does not provide for automatic post-retirement benefit increases. Increases are contingent upon LGERS plan members who are LEOS are eligible to retire with full retirement benefits at age 55 with five years of creditable service as an officer, or at any age with 30 years of creditable service. LEO plan members are eligible to retire with partial retirement benefits at age 50 with 15 years of creditable service as an officer. Survivor benefits are available to eligible beneficiaries of LEO members who die while in active service or within 180 days of their last day of service and who also have either completed 20 years of creditable service regardless of age, or have completed 15 years of service as a LEO and have reached age 50, or have completed five years of creditable service as a LEO and have reached age 55, or have completed 15 years of creditable service as a LEO if killed in the line of duty. Eligible beneficiaries may elect to receive a monthly Survivor's Alternate Benefit for life or ar return oft the member's contributions. Contributions. Contribution provisions are established by General Statute 128-30 and may be amended only by the North Carolina General Assembly. Town employees are required to contribute 6% of their compensation. Employer contributions are actuarially determined and set annually by the LGERS Board of Trustees. The Town's contractually required contribution rate for the year ended. June 30, 2017, was7.25% forg general employees actuarially determined as an amount that, when combined with employee  oraty www.0Sc.nc.gov.  actuarial gains of the plan.  32    Notes to the Financial Statements (continued)  a. Local Governmental Employees' Retirement System (continued)  contributions, is expected to finance the costs of benefits earned by employees during the year. Contributions toi the pension plan from the Town were $13,012 for the year ended. June 30,2017. Refunds of Contributions - Town employees who have terminated service as a contributing member of LGERS, may file an application for ar refund of their contributions. By state law, refunds to members with at least five years of service include 4% interest. State law requires a 60 day waiting period after service termination before the refund may be paid. The acceptance of a refund payment cancels the individual's Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of At June 30, 2017, the Town reported a liability of $61,335 for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2016. The total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of December 31, 2015. The total pension liability was then rolled forward to the measurement date of June 30, 2016 utilizing update procedures incorporating the actuarial assumptions. The Town's proportion of the net pension liability was based on a projection oft the Town's long-term share of future payroll covered by the pension plan, relative to the projected future payroll covered by the pension plan of all participating LGERS employers, actuarially determined. At June 30, 2016, the Town's proportion was 0.00289%, which was an increase of 0.00083% For the year ended June 30, 2017, the Town recognized pension expense of $16,322. At June 30, 2017, the Town reported deferred outflows of resources and deferred inflows of resources related to pensions  right to employer contributions or any other benefit provided by LGERS.  Resources Related to Pensions  from its proportion measured as of June 30, 2015.  from the following sources:  Deferred Outflows Deferred Inflows  of Resources $  of Resources 2,149  Differences between expected and actual experience Net difference between projected and actual earnings on Changes inj proportion and differences between Town contributions and proportionate share of contributions Town contributions subsequent to the measurement date  1,152 $ 4,201 33,910 4,054 13,012 56,329 $  Changes of assumptions pension plani investments  6,719 8,868  Total  $  33    Notes to the Financial Statements (continued)  a. Local Governmental Employees' Retirement System (continued)  $13,012 reported as deferred outflows of resources related to pensions resulting from Town contributions subsequent tot the measurement date will be recognized as a decrease of the net pension asseti in the year ended June 30, 2017. Other amounts reported as deferred inflows of resources related to pensions will be  recognized in pension expense as follows:  Year ended. June 30: 2018 2019 2020 2021 2022 Thereafter  $  5,547 5,545 15,111 8,246  Actuarial Assumptions. The total pension liability in the December 31, 2015 actuarial valuation was determined using the following actuarial assumptions, applied to allp periods included ini the measurement:  Inflation Salaryi increases Investment rate of return  3.0 percent factor including inflation  3.50 to7.75 percent, including inflation and productivity 7.25 percent, net of pension plan investment expense,  The plan currently uses mortality tables that vary by age, gender, employee group (i.e. general, law enforcement officer) and health status (ie. disabled and healthy). The current mortality rates are based on published tables and based on studies that cover significant portions of the U.S. population. The healthy mortality rates also contain ap provision to reflect future mortality improvements. The actuarial assumptions used in the December 31, 2015 valuation were based on the results of an actuarial experience study for the period. January1,2010 through December 31,2014. Future ad hoc COLA amounts are not considered to be substantively automatic and are therefore not The projected long-term investment returns and inflation assumptions are developed through review of current and historical capital markets data, sell-side investment research, consultant whitepapers, and historical performance of investment strategies. Fixed income return projections reflect current yields across the U.S. Treasury yield curve and market expectations of forward yields projected and interpolated for multiple tenors and over multiple year horizons. Global public equity return projections are established through analysis of the equity risk premium and the fixed income return projections. Other asset categories and strategies' return projections reflect the foregoing and historical data analysis. These projections are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class as of June 30, 2016 are  included ini the measurement.  summarized in the following table:  34    Notes to the Financial Statements (continued)  a. Local Governmental Employees' Retirement System (continued)  Long-Term Expected Real Rate of Return  Asset Class Fixed Income Global Equity Real Estate Alternatives Credit Inflation Protection Total  Target Allocation  29.0% 42.0% 8.0% 8.0% 7.0% 6.0% 100%  1.4% 5.3% 4.3% 8.9% 6.0% 4.0%  The information above is based on 30 year expectations developed with the consulting actuary fort the 2016 asset, liability, and investment policy study for the North Carolina Retirement Systems, including LGERS. The long-term nominal rates of return underlying the real rates of return are arithmetic annualized figures. The real rates ofr return are calculated from nominal rates by multiplicatively subtracting al long- term inflation Discount rate. The discount rate used to measure the total pension liability was 7.25%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will ber made at the current contribution rate and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on these assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of the current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of Sensitivity of the Town's proportionate share of the net pension asset to changes in the discount rate. The following presents the Town's proportionate share of the net pension asset calculated using the discount rate of7.25 percent, as well as what the Town's proportionate share of the net pension asset or net pension liability would bei ifit were calculated using a discount rate that is one percentage point lower (6.25 percent)  assumption of3.00%. All rates of return and inflation are annualized.  projected benefit payments to determine the total pension liability.  or one percentage point higher (8.25 percent) than the current rate:  1% Decrease (6.25%) $  Discount Rate (7.25%)  1% Increase (8.25%) (9,030)  Town's proportionate share of the net pension liability (asset)  145,578 $  61,335 $  Pension plan fiduciary net position. Detailed information about the pension plan's fiduciary net position is available in the separately issued Comprehensive Annual Financial Report (CAFR) for the State of North  Carolina.  35    Notes to the Financial Statements (continued)  b. Law Enforcement Officers Special Separation. Allowance The Town contracts all security and has no eligible law enforcement employees. The Town contracts alls security and has no eligible law enforcement employees.  C.S Supplemental Retirement Income Plan  Plan Description. The Town contributes to the Supplemental Retirement Income Plan (Plan), a defined contribution pension plan administered by the Department of State Treasurer and al Board of Trustees. The Plan provides retirement benefits to employees employed by the Town. Article 5 of G.S. Chapter 135 assigns the authority to establish and amend benefit provisions to the North Carolina General Assembly. The Supplemental Retirement Income Plan for employees is included in the Comprehensive Annual Financial Report (CAFR) for the State of North Carolina. The State's CAFR includes the pension trust fund financial statements for the Internal Revenue Code Section 401(K) plan that includes the Supplemental Retirement Income Plan for employees. That report may be obtained by writing to the Office of the State Controller, 1410 Mail Service Center, Raleigh, North Carolina 27699-1410, or by calling (919)981-5454. Funding Policy. Article 12E of G.S. Chapter 143 requires the Town to contribute each month an amount equal to five percent ofe each employee's salary, and all amounts contributed are vested immediately. Also,  the employees may make voluntary contributions to the plan.  The Town made contributions of $869 for the reporting year. No amounts were forfeited.  d. Other Post-employment. Benefits  The Town has not established policies concerning post-employment benefits as of June 30, 2017.  2. Deferred Outflows and Inflows of Resources Deferred outflows of resources are comprised oft thet following:  Source  Amount $  Differences between expected and actual experience Net difference between projected and actual earnings on Changes in proportion and differences between employer contributions and proportionate share of contributions Town contributions subsequent to ther measurement date  1,152 4,201 33,910 4,054 13,012 56,329  Changes in assumptions pension plani investments  Total  $  36    Notes to the Financial Statements (continued)  2. Deferred Outflows and Inflows of Resources (continued) Deferred inflows ofr resources at year-end are comprised of thet following:  Differences between expected and actual experience $ Changes in proportion and differences between employer contributions and proportional share of contributions  2,149 6,719 8,868  $  3. Risk Management  The Town is exposed to various risks of loss related to torts; theft or damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The Town participates in three self- funded risk financing pools administered by the North Carolina League of Municipalities. Through these pools, the Town obtains general liability and auto liability coverage of $3 million per occurrence, property coverage up to $20 million per building per occurrence, workers' compensation coverage up to the statutory limits, and employee health coverage up to a $1 million lifetime limit. The pools are reinsured through commercial companies for single occurrence claims against general liability and auto liability in excess of $500,000, up to $500,000 for property, and $250,000 upt to $5 million for workers' compensation. The pools are reinsured for annual employee health claims in excess of $150,000. The property liability pool has an aggregate limit of $1,000,000 fort the aggregate losses in a single year. After the property pool has paid out $1,000,000, then the pool will be liable for a $10,000 per claim maintenance deductible on future property The Town has a public officials bond of $50,000 on the Finance Officer and $10,000 on the Tax Collector.  losses for that year. The remainder of each claim will be borne by the re-insurer.  The Town currently has nof flood insurance coverage.  4. Long-Term Obligations: a. Installment Purchase  The Town's installment notes are serviced by the General Fund for the town hall building and the Water and Sewer Fund for sewer improvements. These notes are secured by assets pledged. Principal and interest  requirements are appropriated when due.  The following obligations were outstanding at June 30, 2017:  Serviced by the General Fund:  Installment Note with Bank of the Carolinas, commitment of $850,000 at 4.12% payable over 10 years;  monthly payments of $7,083 plusi interest; balance at June 30, 20170f$42,500.  37    Notes to the Financial Statements (continued)  a. Installment Purchase (continued)  Annual debt service requirements to maturity fori installment note are as follows:  General Fund Year Ending June 30 2018  Principal  Interest  Total P 45,981  42,500 $ 3,481 $ 45,981 42,500 $ 3,481  At. June 30, 2017, the Town of Bermuda Run had bonds authorized but un-issued of $-0- and a legal debt  margin of $43,177,813. b. Changes in Long-term Liabilities Governmental activities: Installment Note Net Pension Liability (LGERS) Accrued Vacation Proprietary activities: Installment Note  Balance $ 127,500 $ 16,695 1,963  Balance Current Portion  June 30, 2016 Increases Decreases June 30,2017 of Balance  85,000 $ 42,500 $ 42,500  44,640 774  61,335 2,737  $ 146,158 $4 45,414 $ 85,000 $ 106,572 $ 42,500  $  $  $  Compensated absences for governmental activities have typically been liquidated in the General Fund.  C. Interfund Balances and Activity (continued) Transfers to /(from) Other Funds:  Transfers tol /(from) other funds at. June 30, 2017, consist oft thef following:  Governmental activities: From General Fund From Security Fund To General Capital Projects Total Governmental Activities  $(461,019) (96,609) 557,628  Transfers are used to move unrestricted revenues to finance various programs that the government must account for in other funds in accordance with budgetary authorizations, including amounts provided by During the 2017 fiscal year, the Town made a one-time transfer from the General Fund and the Security Fund of $461,019 and 96,609, respectively, as per the terms of a matching grant to the General Capital  matching funds for various programs.  Projects Fund for the new construction of a roundabout.  38    Notes to the Financial Statements (continued)  D. Net! Investment. in Capital Assets  Governmental Business-type $ 4,009,981 $ 2,180,229 42,500 $ 3,967,481 $ 2,180,229  Capital Assets less: long-term debt add: unexpended debt proceeds Neti investment in capital assets E.F Fund Balance  The following schedule provides management and citizens with information on the portion of General fund  balance thati is available for appropriation:  Total fund balance General Fund Less: Stabilization by State Statute Streets Powell Bill Remaining Fund Balance  $ 2,641,182 148,583 305,753 $ 2,186,848  The outstanding encumbrances are amounts needed to pay any commitments related to purchase orders  and contracts that remain unperformed at year-end.  Encumbrances  General Fund $0  Non-Major Funds  IX. Summary Disclosure of Significant Contingencies Federal and State Assisted Programs  The Town has received proceeds from several federal and State grants. Periodic audits of these grants are required and certain costs may be questioned as not being appropriate expenditures under the grant agreements. Such audits could result in the refund of grant moneys to the grantor agencies. Management believes that any required refunds will be immaterial. No provision has been made in the accompanying  financial statements for the refund of grant moneys. IV. Significant Effects of Subsequent Events  Subsequent events occurring after the statement of financial position date have been evaluated through September 6, 2017, which is the date the financial statements were available to be issued. There werer no subsequent events that came to our attention after the audit that would have a significant effect on the  Town.  39    Town of Bermuda Run, North Carolina Required Supplementary Information Last Four Fiscal Years*  Town of Bermuda Run's Proportionate Share of Net Pension Liability (Asset)  Local Government Employees' Retirement System  2017  2016  2015  2014  Bermudal Run's proportion of the net pension liability (asset) (%6) Bermuda Run's proportion of the net pension liability (asset) ($) Bermudal Run's covered-employee payroll percentage ofi its covered-employee payroll  0.00289% 0.00372% 0.00290% 0.00260% $61,335 $ 16,695 $(17,103) $ 30,555 $179,470 $146,070 $175,030 $162,623 34.18% 11.43% (9.77%) 18.79% 91.47% 98.09% 102.64% 94.35%  Bermuda Run's proportionate share of the net pension liability (asset) as a Planf fiduciary net positiona as a percentage of thet total pension! liability"  The amounts presented for each fiscal year were determined as of the prior fiscal year ending June 30. ** This will be the same percentagei for all participant employers in thel LGERS plan.  40    Town of Bermuda Run, North Carolina Town of Bermuda Run's Contributions Required Supplementary Information Last Four Fiscal Years  Local Government Employees' Retirement System  2017 56,329 $  2016 14,808  2015 12,375  2014 14,538  Contractually required contribution Contribution deficiency (excess) Bermudal Run's covered-employee payroll Contributions as aj percentage of covered-employee payroll  $56,329 $ 14,808 $ 12,375 $ 14,538  Contributions inr relation to the contractually required contribution  $179,470 $146,070 $175,030 $162,623  31.39% 10.14%  7.07%  8.94%  41    Town of Bermuda Run, North Carolina For the Year Ended June 30, 2017  General Fund  Statement of Revenues, Expenditures and Changes in Fund Balance- Budget and Actual  (With Comparative Actual Amounts fort the Year Ended June 30, 2016)  Variance Favorable (Unfavorable)  Actual- Year Ended June 30,2016 $ 782,250 8,946 2,164 793,359 511,317 511,317 246,921 4,460 11,464 262,845 63,759 94,819 158,578 4,242 37,688 100,000 137,688 1,868,029  Budget  Actual $ 806,614 3,557 1,764 811,935 $ 588,810 588,810 222,219 5,801 11,664 239,684 62,167 147,187 209,354 5,837 31,115 100,000 131,115 1,986,736  Revenues: AdValorem taxes (net ofr refunds) Current levies Priorl levies Penalties andi interest Other taxes andl licenses: Local option sales tax mesicadintepvermena. revenues: Utilities franchise tax Cable franchise Beer and wine tax Restricted intergovernmenta revenues: Powell Billa allocation ABC revenues Investment earnings Other revenues: Other income Grants  $ 790,500  21,435 8,810  580,000  190,000  49,684  120,000 2,000  89,354 3,837  Reimbursement for administrative charges  112,500 1,795,000  18,615 191,736  Total Revenues Other financing sources: Proceeds from! long-term debt Appropriatedi fundb balance Total revenues and other financing sources  557,628 2,352,628  (557,628) (365,892)  1,986,736  1,868,029  42    Town of Bermuda Run, North Carolina  Statement of Revenues, Expenditures and Changes in Fund Balance- Budget and Actual (continued)  Variance Favorable (Unfavorable) June 30, 2016  Actual- Year Ended  Budget  Actual  Expenditures: General Government Governing Body Administration: Salaries andE Employee Benefits Operaling Expenses Professional Services Tax collection fees Townk Halle expenses Capilal oullay Election costs Communily Services: Planning andz zoning Communily ande economic development Ground/ generalr mainlenance Leafr removal Waste removal Towny projecis Post office Capilal outlay Olher Tolal General Government Safely- Traffice enforcement Transporlation: Sireet Department: Capital oullay- Right ofv waya acquisitions Slormy waler project Olher capital projects Engineering Repairs Olher Sireetl lights Tolal Transporlalion Debl service: Principal Interest Tolal Expenditures Revenues over Expendilures Olher Financing Sources (Uses) Transfer tog general capital project Transfert lov waler ands sewer fund Excess ofr revenues and other sources over (under) expenditures ando other uses FundB Balance: BeginningofYear, July1 EndofYear, June 30  $ 11,400 $ 11,250 $  150 $ 12,889  209,130 82,771 32,350 16,820 27,685 368,757 56,022 90,250 26,110 168,524 63,660 2,722 137,153 44,479 588,920 968,927  164,041 62,726 31,961 15,615 21,833 3,477 299,653 49,069 13,701 85,008 27,090 172,289 36,134 2,379 32,585 418,255 730,797 28  382,100  13,343  720,300 1,113,800  131,380 144,873  81,891 42,601 312,004 113,467 110,946 660,908 85,000 3,471 88,471 1,718,307 268,429 (461,019) (192,590) 2,833,772 2,641,182  24,539 268,390 109,281 110,408 512,618 85,000 6,888 91,888 1,335,330 532,699  688,809  27,901  89,000 1,891,609 461,019 (461,019)  529 173,302 (192,590)  (192,590)  532,699 2,301,073 2,833,772  43    Town of Bermuda Run North Carolina General Capital Projects Fund  Statement of Revenues, Expenditures and Changes in Fund Balance Budget and Actual  Frominception and for the fiscal year ended June 30, 2017  Actual Current Year  Variance Favorable (Unfavorable)  Project Authorization  Prior Year  Total to Date  Revenues: Resticedintegpvemmemtal Grants NCDOT Total revenues Expendtures:  1,365,040 1 1,100,323 $ 231,996 $1 1,332,318 $ (32,722)  1,365,040  1,100,323  231,996  1,332,318  (32,722)  Roundabout construction Total expenditures Revenues over expenditures Other financing sources: Transfer froms security fund Transfer from operating fund Total other financing sources Revenues and other sources over (under) expenditures  1,899,518 1,899,518 (534,478) 96,609 437,869 534,478 $  1,771,626 1,771,626 (671,303)  118,321 118,321 113,675 96,609 461,019 557,628  1,889,946 1,889,946 (557,628) 96,609 461,019 557,628  9,572 9,572 23,150  23,150 23,150  (671,303) $ 671,303 $  44    Town of Bermuda Run, North Carolina Special Revenue Fund Gated Security For the Year Ended June 30, 2017  Statement of Revenues, Expenditures and Changes in Fund Balance. Budget and Actual  (With Comparative Actual Amounts for the Year Ended June 30, 2016)  Variance Favorable (Unfavorable) $  Actual -Year Ended June 30, 2016 $ 512,025 512,025  Budget $ 512,247 96,609 608,856  Actual $ 518,476 518,476  Operating revenues: Gatei fees  6,229 96,609 102,838  Fundb balance appropriated Totalr revenue and other financing sources Operating expenditures: Administrative Gate operations expense  518,476  512,025  50,000 448,049 498,049 (96,609) (96,609) 594,658  50,000 425,002 475,002  512,247  14,198  Other Financing Sources (Uses) Transfer to capital project Total other financing sources (uses) Total expenditures and other financing uses Revenues over (under) expenditures Fund Balance: Beginning of year Endofy year  (96,609) 608,856  14,198  475,002 37,023 240,104 277,127  $  (76,182) $ (76,182)  277,127 200,946  45    Town of Bermuda Run, North Carolina Water and Sewer Fund Fort the' Year Ended. June 30, 2017  Schedule of Revenues and Expenditures- Budget and Actual- (Non-GAAP) With Comparative Actual Amounts fort the Year Ended June 30, 2016).  Variance Favorable (Unfavorable) June 30, 2016  Actual- Year Ended 241,312 498,240 7,050 746,602  Budget  Actual 231,429 526,387 4,250 762,066 $ 35,122  Operating revenues: Water charges Sewer charges Tap fees Nonoperating/ revenues: Sewer assessments HOAP project reimbursement Otherf financing sources: Transfer from general fund Appropriated fundi balance Totalr revenue and other financings sources Operating expenditures: Administrative Licenses Charges from general fund Water operations: Bulk water purchases Line repairs Sewer operations: Engineering Planto operations Maintenance Repairs plant Repairs- lines Utilities Capital outlay Other  726,944 2,800  (2,800)  729,744  762,066  32,322  746,602  960 50,000 50,960 137,503 24,285 161,788 58,874 4,644 7,451 13,019 30,136 13,590 17,278 144,993 357,741  960 45,813 46,773 199,379 5,202 204,580 11,302 46,411 6,756 8,243 12,720 32,074 6,840 14,810 139,156 390,509 95,277 1,205 96,482 486,991 259,611  51,500 224,044  540 62,256  454,200 729,744  309,207 372,003  Total operating expenditures Other budgetary appropriations: Principal paid on long-t termo debt Interestp paid Total expenditures and budgetary appropriations Total revenue: and other financing sources over (under) expenditures andbudgetary appropriations  729,744  357,741 404,325  372,003 404,325  46    Town of Bermuda Run, North Carolina Water and Sewer Fund (continued) For the Year Ended June 30, 2017  Schedule of Revenues and Expenditures - Budget and Actual (Non-GAAP) (With Comparative Actual Amounts for the Year Ended June 30, 2016)  2017 Actual  2016 Actual  Reconciliation of Modified Accrual Basis to Full Accrual Basis:  Total Revenues and Other Financing Sources Total Expenditures and Budgetary Appropriations Excess of Revenues Over (Under) Expenditures Debtp principal retirement Capital outlay Depreciation  $ 762,066  $ 746,602  357,741 404,325  486,991 259,611 95,277 6,840 (91,737)  13,590 (92,417)  Change in net position  325,498  $ 269,990  47    Town of Bermuda Run, North Carolina Schedule of Changes in Ad Valorem Taxes Receivable For the' Year ended June 30, 2017  Balance June 30, 2016  Collections and Credits $ 806,614 3,239 1,671 771 (110) 25 10 31  Balance June 30, 2017 $  Yearc ofLevy 2016-2017 2015-2016 2014-2015 2013-2014 2012-2013 2011-2012 2010-2011 2009-2010 2008-2009 2007-2008 2006-2007 2005-2006  Additions $ 809,584  2,970 1,575 1,066 156 317 206 67 19 11 196 169 822  $  4,814 2,737 927 207 206 67 44 21 227 169 822 10,241  $  1  809,584  $  812,251  AdValorem Taxes Receivable Net Reconcilement with Revenues: Tax- Ad Valorem Adjustments  7,574 810,171 2,080 812,251  $  Total collections and credits  48    Town of Bermuda Run, North Carolina Analysis of Current Taxl Levy For the Year Ended June 30, 2017  Total Levy  Property excluding Registered Motor Vehicles $ 746,309 2,549  Registered Motor Vehicles $ 60,726  Property  Total  Valuation Rate Levy $538,023,333 0.15 $ 807,035  Tax Levy Town Wide Discoveries Abatements and Releases Total for Year  1,699,333  2,549  $539,722,667  809,584 2,970 $ 806,614  748,858 2,970 $ 745,888  60,726  Less, Uncollected" Tax at. June 30, 2017 Current Year's Taxes Collected Percent Current Year Collected  $ 60,726  99.63%  99.60%  100.00%  49    EDDIE CARRICK, CPA, PC Certified Public Accountant  Report On Internal Control Over Financial Reporting And On Compliance and Other Matters Based On An Audit Of Financial Statements Performed In Accordance With Government Auditing  Standards Independent Auditor's Report  Tot thel Honorable Mayor and Town Council Town of Bermuda Run, North Carolina  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 the governmental activities, the business-type activities, the aggregate discretely presented component unit, each major fund and aggregate remaining fund information of the Town of Bermuda Run, North Carolina, as of and for the year ended June 30, 2017, and the related notes to the financial statements, which collectively comprises the Town of Bermuda Run's basic financial statements, and have issued our report thereon dated  September 6, 2017.  Internal Control Over Financial Reporting  Inp planning and performing our audit of the financial statements, we considered the Town of Bermuda Run's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Town of Bermuda Run's internal control. Accordingly, we do note express an opinion on the effectiveness oft the Town's internal control. Ad deficiency in internal control exists when the design or operation of a control does not allow management ore employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on ai timely basis. A. material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of the internal control was, for limited purpose described in the preceding paragraph 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 following paragraph, we identified certain deficiencies in Currently, one individual is recording all of the financial transaction of the Town. This does not allow for significant segregation of duties to provide for a good internal control environment. The Town recognizes this but does not consider the cost of additional personnel as warranted. The Mayor and governing council will monitor transactions and reconciliations. The financial statements of the entity have been prepared by the auditor. The entity does not currently have adequate controls in place to take, responsibility for those financials due to lack of sufficient expertise by staff in presentation and disclosure necessary to prepare financial statements in accordance with generally accepted accounting principles. The Town will consider havingi its financials reviewed by an outside CPA in order tot take responsibility for the financials.  internal control that we consider to be material weaknesses.  Member oft the American Institute of Certified PublicA Accountants  Eddie Carrick  50  151 Young Drive, Lexington, NC 27292 336-249-2545, Fax 336-249-4745    Compliance and Other Matters  As part of obtaining reasonable assurance about whether the Town of Bermuda Run' financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The Town of Bermuda Run, North Carolina's response to the findings identified in our audit is described previously. The Town of Bermuda Run, North Carolina's response was not subjected to the auditing procedures applied int the audit oft thef financial statements and, accordingly, we express no opinion oni it. The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the result of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in the accordance with Govemment. Auditing Standards in considering the entity's internal control and compliance. Accordingly, this  The Town's Response to Findings  Purpose of this Report  communication is not suitable for any other purpose.  Eddie Carrick, CPA  LL. C Lexington, North Carolina September 6, 2017  51