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HomeMy Public PortalAboutCarteret Port Authority Audit 2022BOROUGH OF CARTERET MUNICIPAL PORT AUTHORITY (A Component Unit of the Borough of Carteret, County of Middlesex, State of New Jersey) Financial Statements and Supplementary Schedules For the year ended December 31, 2022 (With Independent Auditor’s Report thereon) BOROUGH OF CARTERET MUNICIPAL PORT AUTHORITY (A Component Unit of the Borough of Carteret, County of Middlesex, State of New Jersey) Financial Statements and Supplementary Schedules For the year ended December 31, 2022 CONTENTS Page Independent Auditor’s Report 1-3 Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on and Audit of Financial Statements Performed in Accordance with Government Auditing Standards 5-6 Management’s Discussion and Analysis 7-9 Statement of Net Position 11 Statement of Revenues, Expenses and Change in Net Position 12 Statement of Cash Flows 13 Notes to Financial Statements 15-26 Required Supplementary Information: Schedule I – Schedule of Authority’s Proportionate Share of the Net Pension Liability – PERS 27 Schedule II – Schedule of Authority Contributions – PERS 28 Notes to the Required Supplemental Information 29 Other Supplementary Information: Schedule III – Schedule of Revenues and Costs Compared to Budget 31 Schedule IV – Schedule of Revenues, Expenses and Changes in Unrestricted and Restricted Net Position 32 Schedule V – Schedule of Unrestricted Cash Receipts, Cash Disbursements and Changes in Cash 33 Board of Commissioners 34 General Comments and Recommendations 35-36 This page intentionally left blank INDEPENDENT AUDITOR’S REPORT To the Chairman and Commissioners of the Borough of Carteret Municipal Port Authority County of Middlesex Carteret, New Jersey 07008 Report on the Audit of the Financial Statements Opinion We have audited the accompanying financial statements of the business-type activities of the Borough of Carteret Municipal Port Authority (hereafter referred to as the “Authority”), a component unit of the Borough of Carteret, County of Middlesex, State of New Jersey, as of and for the year ended December 31, 2022, and the related notes to the financial statements, which collectively comprise the Authority’s basic financial statements as listed in the table of contents. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the business-type activities of the Authority, as of December 31, 2022, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinion 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 Government Auditing Standards, issued by the Comptroller General of the United States; and in compliance with audit standards prescribed by the Local Finance Board and by the Division of Local Government Services, Department of Community Affairs, State of New Jersey. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Authority, and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. 1 In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Authority’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards, Government Auditing Standards and audit standards prescribed by the Local Finance Board and by the Division of Local Government Services, Department of Community Affairs, State of New Jersey will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with generally accepted auditing standards, Government Auditing Standards and audit standards prescribed by the Local Finance Board and by the Division of Local Government Services, Department of Community Affairs, State of New Jersey, we: x Exercise professional judgment and maintain professional skepticism throughout the audit. x Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. x Obtain an understanding of internal control relevant to the audit 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 Authority’s internal control. Accordingly, no such opinion is expressed. x Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. x Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Authority’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit. 2 Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and other required supplementary information as listed in the table of contents, 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 management’s 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. Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Authority’s basic financial statements. The schedule of revenues and costs compared to budget, schedule of revenues, expenses and changes in unrestricted and restricted net position and the schedule of unrestricted cash receipts, cash disbursements and changes in cash are presented for purposes of additional analysis, and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of 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 schedule of revenues and costs compared to budget, schedule of revenues, expenses and changes in unrestricted and restricted net position and the schedule of unrestricted cash receipts, cash disbursements and changes in cash are fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 21, 2023 on our consideration of the Authority’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of 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 Authority’s internal control over financial reporting and compliance. HOLMAN FRENIA ALLISON, P.C. Certified Public Accountants October 21, 2023 Lakewood, New Jersey 3 This page intentionally left blank 4 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 To the Chairman and Commissioners of the Borough of Carteret Municipal Port Authority County of Middlesex Carteret, New Jersey 07008 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 and audit requirements as prescribed by Local Finance Board and by the Division of Local Government Services, Department of Community Affairs, State of New Jersey, the financial statements of the business-type activities of the Borough of Carteret Municipal Port Authority as of and for the year ended December 31, 2022, and the related notes to the financial statements, which collectively comprise the Borough of Carteret Municipal Port Authority’s basic financial statements and have issued our report thereon dated October 21, 2023. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered Borough of Carteret Municipal Port Authority'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 opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Borough of Carteret Municipal Port Authority’s internal control. Accordingly, we do not express an opinion on the effectiveness of Borough of Carteret Municipal Port Authority’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the 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 internal control was for the 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. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not ben identified 5 Compliance and Other Matters As part of obtaining reasonable assurance about whether the Borough of Carteret Municipal Port Authority's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards and audit requirements as prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Borough of Carteret Municipal Port Authority’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Audit Standards and audit requirements as prescribed by the Local Finance Board and by the Division of Local Government Services, Department of Community Affairs, and State of New Jersey in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. HOLMAN FRENIA ALLISON, P.C. Certified Public Accountants October 21, 2023 Lakewood, New Jersey 6   BOROUGH OF CARTERET MUNICIPAL PORT AUTHORITY (A COMPONENT UNIT OF THE BOROUGH OF CARTERET, COUNTY OF MIDDLESEX, STATE OF NEW JERSEY) MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2022 As management of Borough of Carteret Municipal Port Authority (the “Authority”), we offer readers of the Authority’s financial statements this narrative overview and analysis of the financial activities of the Authority for the year ended December 31, 2022. The intent of this narrative is to look at Authority’s overall financial performance in terms easily understood by the lay person. Please read this in conjunction with the Authority’s financial statements which begin on page 11. Notes to the financial statements will provide the reader with additional useful information and they begin on page 15.  FINANCIAL HIGHLIGHTS ¾ The assets and deferred outflows of resources of the Authority exceeded its liabilities and deferred inflows of resources at December 31, 2022 by $4,090,442. In 2021 the excess of assets and deferred outflows of resources over liabilities and deferred inflows of resources was $3,230,694. ¾ During 2022 the Authority operated at a surplus of $859,748. In 2021 the Authority operated at a surplus of $977,414. ¾ The Authority increased their assets and deferred outflows of resources by $857,923 and increase their liabilities and deferred inflows of resources by $1,825 in 2022.  OVERVIEW OF THE FINANCIAL STATEMENTS The Authority’s basic financial statements are comprised of two components: Authority financial statements and notes to the basic financial statements. Reporting on the Authority as a Whole The Authority is a self-supporting entity and follows enterprise fund reporting. The Authority’s financial statements are presented using the economic resources measurement focus and the accrual basis of accounting in accordance with generally accepted accounting principles as promulgated by GASB. Enterprise fund statements reflect short-term and long-term financial information about the activities and operations of the Authority. These statements are presented in a manner similar to a private business. While detailed subfund information is not presented, separate accounts are maintained for each program and certain restricted funds or accounts have been established as required by bond resolutions and agreements. See the notes to the financial statements for summary of the Authority’s significant accounting policies. 7 FINANCIAL ANALYSIS Authority’s net position is a useful indicator of the Authority’s financial condition. At the end of 2022, the Authority’s assets and deferred outflows of resources exceeded its liabilities and deferred inflows of resources by $4,090,442. Statements of Net Position At the end of 2022 the net position of the Authority increased $859,748 mainly as a result of the increase in the NJSP dock lease collected in the current year, as well as the revenues from their fuel sales. Net Position Breakdown 8   Statements of Revenues, Expenses and Changes in Net Position The Statement of Revenue, Expenses and Changes in Net Position shows the cost of the operations and the revenues offsetting these costs. A summary of these activities follows: Local Subsidy constituted 46% of the total governmental activities revenues received by the Authority in 2022. In 2021 the local subsidy constituted 54% of total revenues. The Boat slip rentals, NJSP dock lease and Fuel sales constituted for 50% in 2022. In 2021 the Boat slip rentals constituted 50%. Total expenses increased 884.2% in the 2022 while decreasing 34.2% in 2021. Budgetary Highlights The Authority had total actual revenues in deficit of budgeted revenues of $71,011 in 2022. The Board anticipates in 2023 that actual revenues will exceed the budgeted revenues. The Authority spent $58,794 less than originally anticipated in the operating budget for 2022. ECONOMIC FACTORS AND NEXT YEARS BUDGET In 2022, the Authority was able to cover all its appropriations through the local subsidy and other revenues generated from the operations of the Authority. In 2022 the local subsidy amounted to 46% of total operating revenue collected and revenues from activities constituted 54%. Comparatively, in 2021 the local subsidy represented 50% of the total operating revenue and revenues from the Authority’s activities constituted 50%. Authority adopted their 2022 budget on March 28, 2023. REQUESTS FOR INFORMATION This financial report is designed to provide a general overview of the Authority’s finances for all of those with an interest in the Authority’s finances. Questions concerning any of the information provided in this report, or requests for additional financial information should be addressed to the Treasurer of the Borough of Carteret Municipal Port Authority, 61 Cooke Avenue, Carteret, New Jersey, 07008. 9 This page intentionally left blank 10 2022 ASSETS Current assets: Unrestricted assets: Cash and cash equivalents (Note 3) 4,056,362$ Prepaid expenses 41,448 Total current unrestricted assets 4,097,810 Total assets 4,097,810 DEFERRED OUTFLOWS OF RESOURCES Deferred outflows related to pensions (Note 5) 235 Total deferred outflow of resources 235 Total assets and deferred outflow of resources 4,098,045$ LIABILITIES Non-current unrestricted liabilities: Net pension liability (Note 5) 4,177$ Total non-current unrestricted liabilities 4,177 Total liabilities 4,177 DEFERRED INFLOWS OF RESOURCES Deferred inflows related to pensions (Note 5) 3,426 Total deferred inflow of resources 3,426 Total liabilities and deferred inflow of resources 7,603 NET POSITION Unrestricted net position Renewal and replacement reserve 3,120,000 Unreserved 970,442 Total net position 4,090,442 Total liabilities, deferred inflow of resources and net position 4,098,045$ BOROUGH OF CARTERET MUNICIPAL PORT AUTHORITY (A Component Unit of the Borough of Carteret, County of Middlesex, State of New Jersey) Statement of Net Position December 31, 2022 The accompanying notes to the financial statements are an integral part of this statement. 11 2022 Operating revenues: Local subsidy 500,000$ Boat slip rentals 248,888 NJ state police dock lease 107,542 Fuel sales 232,604 Miscellaneous 7,965 Total operating revenues 1,096,999 Operating expenses: Administration 40,374 Cost of Providing Services 208,867 Total operating expenses 249,241 Net income from operations 847,758 Non-operating revenues: Interest income 11,990 Total non-operating revenues 11,990 Change in net position 859,748 Net position, January 1 3,230,694 Net position, December 31 4,090,442$ BOROUGH OF CARTERET MUNICIPAL PORT AUTHORITY (A Component Unit of the Borough of Carteret, County of Middlesex, State of New Jersey) Statement of Revenues, Expenses and Change in Net Position For the year ended December 31, 2022 The accompanying notes to the financial statements are an integral part of this statement. 12 2022 Cash flows from operating activities: Cash received from service users 596,999$ Cash received from local subsidy 499,999 Cash paid to suppliers and employees (206,754) Net cash flows from operating activities 890,244 Cash flows from investing activities: Interest received 11,990 Net cash flows from investing activities 11,990 Change in cash 902,234 Cash and cash equivalents, January 1 3,154,128 Cash and cash equivalents, December 31 4,056,362$ Reconciliation of net income to cash flows from operating activities: Net change from operations 847,757 Items which did not use cash: Unbudgeted pension expense (1,965) Working capital changes which provided (used) cash: Prepaid expenses 44,452 Net cash flows from operating activities 890,244$ BOROUGH OF CARTERET MUNICIPAL PORT AUTHORITY (A Component Unit of the Borough of Carteret, County of Middlesex, State of New Jersey) Statement of Cash Flows For the year ended December 31, 2022 The accompanying notes to the financial statements are an integral part of this statement. 13 This page intentionally left blank 14 BOROUGH OF CARTERET MUNICIPAL PORT AUTHORITY (A Component Unit of the Borough of Carteret, County of Middlesex, State of New Jersey) Notes to Financial Statements For the year ended December 31, 2022 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying financial statements have been prepared in conformity with generally accepted accounting principles as prescribed by the Governmental Accounting Standards Board (GASB). Reporting Entity The Borough of Carteret Municipal Port Authority (the “Authority”), was created by Ordinance of the Borough of Carteret (the “Borough”) on September 4, 2003. The purpose of the Authority is to exercise all of the powers and privileges granted by the Port Authority Law of New Jersey (N.J.S.A. 40:68A et seq) and to thereby advance the interests of the residents of the Borough of Carteret by developing, operating, maintaining and expanding all lawful activities pertaining to the waterfront throughout the Borough on properties owned or otherwise controlled by the Authority now or in the future. The Authority is governed by five Members and one alternate member, all in accordance with the statute and the terms of the enabling Ordinance. The Members have the authority to exercise all of the powers and privileges provided under the law. The powers include the ability to sue or be sued in its corporate name, the power to establish and collect rates, rentals and other charges, the authority to acquire, construct, operate, manage and maintain facilities, the authority to buy and sell real and personal property, and the authority to issue debt for acquiring or constructing any facility or permanent improvement. The primary criterion for including activities with the Authority’s reporting entity, as set forth in Section 2100 of the GASB Codification of Governmental Accounting and Financial Reporting Standards, is whether: ƒthe organization is legally separate (can sue or be sued in their own name); ƒthe Authority holds the corporate powers of the organization; ƒthe Authority appoints a voting majority of the organization’s board ƒthe Authority is able to impose its will on the organization; ƒthe organization has the potential to impose a financial benefit/burden on the Authority ƒthere is a fiscal dependency by the organization on the Authority. There were no additional entities required to be included in the reporting entity under the criteria as described above. The Authority is a component unit of the Borough. The Authority issues separate financial statements from the Borough. However, if the Borough presented its financial statements in accordance with GAAP, these financial statements would be included in the Borough’s on a blended basis. General The Authority currently operates binocular rentals located on Borough owned property along with a marina on the waterfront and a fueling station. In 2014, the Authority rebuilt the miniature golf course which was destroyed by Superstorm Sandy in 2012. As a public body, under existing statute, the Authority is exempt from both federal and state taxes. Basis of Accounting The financial statements of the Authority have been prepared on the accrual basis of accounting and in accordance with generally accepted accounting principles (“GAAP”) applicable to enterprise funds of state and local governments. 15 BOROUGH OF CARTERET MUNICIPAL PORT AUTHORITY (A Component Unit of the Borough of Carteret, County of Middlesex, State of New Jersey) Notes to Financial Statements For the year ended December 31, 2022 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Basis of Accounting (continued) All activities of the Authority are accounted for within a single proprietary (enterprise) fund. Proprietary funds are used to account for operations that are (a) financed and operated in a manner similar to private business enterprise where the intent of the governing body is that the cost (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or (b) where the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes. The accounting and financial reporting treatment applied to the Authority is determined by its measurement focus. The transactions of the Authority are accounted for on a flow of economic resources measurement focus. With this measurement focus, all assets, liabilities and deferred inflow or outflow of resources associated with the operations are included on the statement of net position. Net position (i.e., total assets net of total liabilities) are segregated into invested in capital assets, net of related debt and unrestricted components. Use of Estimates The process of preparing financial statements in conformity with generally accepted accounting principles requires the use of estimates and assumptions regarding certain types of assets, liabilities, revenues and expenses. Such estimates primarily relate to unsettled transactions and events as of the date of the financial statements. Accordingly, upon settlement, actual results may differ from estimated amount. Prepaid Expenses Prepaid expenses recorded on the financial statements represent lease payments and also payments disbursed to the Borough of Carteret to be paid on their behalf for expenses incurred. Cash and Cash Equivalents New Jersey Authorities are required by N.J.S.A. 40A:5-14 to deposit public funds in a bank or trust company having its place of business in the State of New Jersey and organized under the laws of the United States of America or State of New Jersey or the New Jersey Cash Management Fund. N.J.S.A. 40A:5-15.1 provides a list of securities which may be purchased by New Jersey Authorities. The Authority is required to deposit funds in public depositories protected from loss under the provisions of the Governmental Unit Deposit Protection Act (“GUDPA”). GUDPA was enacted in 1970 to protect governmental units from a loss of funds on deposit with a failed banking institution in New Jersey. N.J.S.A. 17:9-42 requires governmental units to deposit public funds only in public depositories located in New Jersey, when the funds are secured in accordance with the Act. For the statements of cash flows, the Authority combines the unrestricted cash and cash equivalents with the restricted cash and cash equivalents. The Authority considers investments with maturities of three months or less at the time of purchase to be cash equivalents. 16 BOROUGH OF CARTERET MUNICIPAL PORT AUTHORITY (A Component Unit of the Borough of Carteret, County of Middlesex, State of New Jersey) Notes to Financial Statements For the year ended December 31, 2022 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Capital Expenditures The Authority has authorized expenditures for the development of the waterfront on Borough owned properties. The Authority has treated these expenditures as a contribution to the Borough and therefore has not capitalized them on their books and records. Compensated Absences Authority employees are not entitled to compensated absences for unused vacation, holiday and sick time. Operating Revenues and Expenses The Authority recognizes revenue on the accrual basis earned. The Authority classifies all fees and charges to provide services as operating revenue and all other income as nonoperating revenue. Equity Classifications Equity is classified as net position and can be displayed in three components as follows: Net Investment in capital assets – Consists of capital assets including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction or improvement of those assets. Restricted net position – Consists of net position with constraints placed on use either by (1) external groups such as creditors, grantors, contributors, laws or regulations of other governments; or (2) law through constitutional provisions or enabling legislation. Unrestricted net position – All other net position that do not meet the definition of "restricted" or “net investment in capital assets". Budgets and Budgetary Accounting Each year the Authority adopts a budget which is approved by the State of New Jersey, Department of Community Affairs, Division of Local Government Services. The budget may be amended by resolution of the Board of Commissioners of the Authority. The budgetary basis of accounting is utilized to determine if the Authority has sufficient cash to operate. As such, certain items such depreciation expense is not included in budgetary expenses. Deferred Outflows and Deferred Inflows of Resources In addition to assets, the statement of net position will sometimes report a 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(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. 17 BOROUGH OF CARTERET MUNICIPAL PORT AUTHORITY (A Component Unit of the Borough of Carteret, County of Middlesex, State of New Jersey) Notes to Financial Statements For the year ended December 31, 2022 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Deferred Outflows and Deferred Inflows of Resources (continued) In addition to liabilities, the statement of net position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to future periods and so will not be recognized as an inflow of resources (revenue) until that time. Pensions Section For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the pension plan’s fiduciary net position and additions to/deductions from the plan’s fiduciary net position have been determined on the same basis as they are reported by the plan. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Recent Accounting Pronouncements – The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. GASB adopts accounting statements to be used by governmental units when reporting financial position and results of operations in accordance with accounting principles generally accepted in the United States of America (GAAP). The municipalities in the State of New Jersey do not prepare their financial statements in accordance with GAAP and thus do not comply with all of the GASB pronouncements. The following GASB pronouncement effective for the current year did have a significant impact on the Authority’s financial statements. Accounting Pronouncements Adopted in Current Year The following GASB Statements became effective for the fiscal year ended December 31, 2022: x Statement No. 87, Leases. x Statement No. 93, Replacement of Interbank Offered Rates. x Statement No. 97, Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans – an amendment of GASB Statements No. 14 and No. 84 and a supersession of GASB Statement No. 32. Requirements of this pronouncement related to paragraphs 4 and 5 were implemented in the prior year. Management has determined that the implementation of these Statements did not have a significant impact on the Authority’s financial statements. Accounting Pronouncements Effective in Future Reporting Periods The following accounting pronouncements will become effective in future reporting periods: x Statement No. 96, Subscription-Based Information Technology Arrangements. The requirements of this Statement are effective for fiscal years beginning after June 15, 2022. x Statement No. 100, Accounting Changes and Error Corrections – an amendment of GASB Statement No. 62.The requirements of this Statement are effective for fiscal years beginning after June 15, 2023. 18 BOROUGH OF CARTERET MUNICIPAL PORT AUTHORITY (A Component Unit of the Borough of Carteret, County of Middlesex, State of New Jersey) Notes to Financial Statements For the year ended December 31, 2022 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) x Statement No. 101, Compensated Absences. The requirements of this Statement are effective for fiscal years beginning after December 15, 2023. Management has not yet determined the potential impact these Statements will have on the Authority’ financial statements. Subsequent Events The Authority has evaluated subsequent events occurring after December 31, 2022 through October 21, 2023, which is the date the financial statements were available to be issued. NOTE 2: DONATED MATERIALS AND SERVICES The Authority does not pay rent to the Borough for the use of the Borough’s property. The Borough may provide other services in the form of meeting space, administration, use of office equipment and supplies. The Borough may also engage in similar activities associated with the Authority’s purpose. The monetary value of these donated materials and services has not been established. NOTE 3: CASH AND CASH EQUIVALENTS The Authority is governed by the deposit limitations of New Jersey state law. The deposits held at December 31, 2022 reported at fair value are as follows: Carrying Value 2022 Type: Deposits: Demand deposits $4,056,362 Total deposits $4,056,362 Reconciliation to Statement of Net Position: Current unrestricted assets: Cash and cash equivalents $4,056,362 Total cash and cash equivalents $4,056,362 Custodial Credit Risk Custodial credit risk is the risk that, in the event of a bank failure, the Authority’s deposits may not be returned. The Authority does not have a deposit policy for custodial credit risk. As of December 31, 2022, the Authority’s bank balance of $4,056,362 was insured or collateralized as follows: 19 BOROUGH OF CARTERET MUNICIPAL PORT AUTHORITY (A Component Unit of the Borough of Carteret, County of Middlesex, State of New Jersey) Notes to Financial Statements For the year ended December 31, 2022 NOTE: 4: OPERATING LEASE The Authority leases three coin-operated binoculars for $500 each, annually. The Authority is not obligated to any future payments and can cancel at any time. NOTE 5: PENSION OBLIGATIONS Public Employees’ Retirement System (PERS) Plan Description - The State of New Jersey, Public Employees' Retirement System (PERS) is a cost-sharing multiple-employer defined benefit pension plan administered by the State of New Jersey, Division of Pensions and Benefits (the Division). For additional information about PERS, please refer to Division's Annual Comprehensive Financial Report (ACFR), which can be found at http://www.nj.gov/treasury/pensions/financial-reports.shtml. The vesting and benefit provisions are set by N.J.S.A. 43:15A. PERS provides retirement, death and disability benefits. All benefits vest after ten years of service. The following represents the membership tiers for PERS: Tier Definition 1 Members who were enrolled prior to July 1, 2007 2 Members who were eligible to enroll on or after July 1, 2007 and prior to November 2, 2008 3 Members who were eligible to enroll on or after November 2, 2008 and prior to May 22, 2010 4 Members who were eligible to enroll on or after May 22, 2010 and prior to June 28, 2011 5 Members who were eligible to enroll on or after June 28, 2011 Service retirement benefits of 1/55th of final average salary for each year of service credit is available to tiers 1 and 2 members upon reaching age 60 and to tier 3 members upon reaching age 62. Service retirement benefits of 1/60th of final average salary for each year of service credit is available to tier 4 members upon reaching age 62 and tier 5 members upon reaching age 65. Early retirement benefits are available to tiers 1 and 2 members before reaching age 60, tiers 3 and 4 with 25 or more years of service credit before age 62 and tier 5 with 30 or more years of service credit before age 65. Benefits are reduced by a fraction of a percent for each month that a member retires prior to the age at which a member can receive full early retirement benefits in accordance with their respective tier. Tier 1 members can receive an unreduced benefit from age 55 to age 60 if they have at least 25 years of service. Deferred retirement is available to members who have at least 10 years of service credit and have not reached the service retirement age for the respective tier. Basis of Presentation – The schedules of employer allocations and the schedules of pension amounts by employer (collectively, the Schedules) present amounts that are considered elements of the financial statements of PERS or its participating employers. Accordingly, they do not purport to be a complete presentation of the financial position or changes in financial position of PERS or the participating employers. The accompanying Schedules were prepared in accordance with U.S. generally accepted accounting principles. Such preparation requires management of PERS to make a number of estimates and assumptions 20 BOROUGH OF CARTERET MUNICIPAL PORT AUTHORITY (A Component Unit of the Borough of Carteret, County of Middlesex, State of New Jersey) Notes to Financial Statements For the year ended December 31, 2022 NOTE 5: PENSION OBLIGATIONS (continued) Public Employees’ Retirement System (PERS) (continued) relating to the reported amounts. Due to the inherent nature of these estimates, actual results could differ from those estimates. Contributions – The contribution policy for PERS is set by N.J.S.A. 43:15A and requires contributions by active members and contributing employers. State legislation has modified the amount that is contributed by the State. The State's pension contribution is based on an actuarially determined amount, which includes the employer portion of the normal cost and an amortization of the unfunded accrued liability. Funding for noncontributory group insurance benefits is based on actual claims paid. For the fiscal year 2021, the State's pension contribution was less than the actuarial determined amount. The local employers' contribution amounts are based on an actuarially determined rate, which includes the normal cost and unfunded accrued liability. Chapter 19, P.L. 2009 provided an option for local employers of PERS to contribute 50% of the normal and accrued liability contribution amounts certified for payments due in State fiscal year 2009. Such employers will be credited with the full payment and any such amounts will not be included in their unfunded liability. The actuaries will determine the unfunded liability of those retirement systems, by employer, for the reduced normal and accrued liability contributions provided under this law. This unfunded liability will be paid by the employer in level annual payments over a period of 15 years beginning with the payments due in the fiscal year ended June 30, 2012 and will be adjusted by the rate of return on the actuarial value of assets. For the year ended December 31, 2022, the Authority’s contractually required contribution to PERS plan was $349. Components of Net Pension Liability – At December 31, 2022, the Authority’s proportionate share of the PERS net pension liability was $4,177. The net pension liability was measured as of June 30, 2022. The total pension liability used to calculate the net pension liability was determined using update procedures to roll forward the total pension liability from an actuarial valuation as of July 1, 2021, which was rolled forward to June 30, 2022. The Authority’s proportion of the net pension liability was based on the Authority’s actual contributions to the plan relative to the total of all participating employers’ contributions for the year ended June 30, 2022. The Authority’s proportion measured as of June 30, 2022, was 0.0000276754% which was a decrease of 0.0000001613% from its proportion measured as of June 30, 2021. Pension Expense/(Credit) and Deferred Outflows/Inflows of Resources – At December 31, 2022, the Authority’s proportionate share of the PERS expense/(credit), calculated by the plan as of the June 30, 2022 measurement date is ($1,616). At December 31, 2022, the Authority reported deferred outflows of resources and deferred inflows of resources related to PERS from the following sources: 21 BOROUGH OF CARTERET MUNICIPAL PORT AUTHORITY (A Component Unit of the Borough of Carteret, County of Middlesex, State of New Jersey) Notes to Financial Statements For the year ended December 31, 2022 NOTE 5: PENSION OBLIGATIONS (continued) Public Employees’ Retirement System (PERS) (continued) 22 BOROUGH OF CARTERET MUNICIPAL PORT AUTHORITY (A Component Unit of the Borough of Carteret, County of Middlesex, State of New Jersey) Notes to Financial Statements For the year ended December 31, 2022 NOTE 5: PENSION OBLIGATIONS (continued) Public Employees’ Retirement System (PERS) (continued) The Authority will amortize the above sources of deferred outflows and inflows related to PERS over the following number of years: 23 BOROUGH OF CARTERET MUNICIPAL PORT AUTHORITY (A Component Unit of the Borough of Carteret, County of Middlesex, State of New Jersey) Notes to Financial Statements For the year ended December 31, 2022 NOTE 5: PENSION OBLIGATIONS (continued) Public Employees’ Retirement System (PERS) (continued) The following is a summary of the deferred outflows of resources and deferred inflows of resources related to PERS that will be recognized in future periods: Actuarial Assumptions – The total pension liability for the June 30, 2022 measurement date was determined by using an actuarial valuation as of July 1, 2021, which was rolled forward to June 30, 2022. This actuarial valuation used the following actuarial assumptions: 24 BOROUGH OF CARTERET MUNICIPAL PORT AUTHORITY (A Component Unit of the Borough of Carteret, County of Middlesex, State of New Jersey) Notes to Financial Statements For the year ended December 31, 2022 NOTE 5: PENSION OBLIGATIONS (continued) Public Employees’ Retirement System (PERS) (continued) Pre-retirement mortality rates were based on the Pub-2010 General Below-Median Income Employee Mortality Table with an 82.2% adjustment for males and 101.4% adjustment for females, and with future improvement from the base year of 2010 on a generational basis. Post-retirement mortality rates were based on the Pub-2010 General Below-Median Income Healthy Retiree mortality table with a 91.4% adjustment for males and 99.7% adjustment for females, and with future improvement from the base year of 2010 on a generational basis. Disability retirement rates used to value disabled retirees were based on the Pub-2010 Non-Safety Disabled Retiree mortality table with a 127.7% adjustment for males and 117.2% adjustment for females, and with future improvement from the base year of 2010 on a generational basis. Mortality improvement is based on Scale MP-2021. The actuarial assumptions used in the July 1, 2021 valuation were based on the results of an actuarial experience study for the period July 1, 2018 to June 30, 2021. Long-Term Expected Rate of Return – In accordance with State statute, the long-term expected rate of return on plan investments (7.00% at June 30, 2022) is determined by the State Treasurer, after consultation with the Directors of the Division of Investments and Division of Pensions and Benefits, the board of trustees and the actuaries. The long-term expected rate of return was determined using a building block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges 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. Best estimates of arithmetic rates of return for each major asset class included in PERS’s target asset allocation as of June 30, 2022 are summarized in the following table: 25 BOROUGH OF CARTERET MUNICIPAL PORT AUTHORITY (A Component Unit of the Borough of Carteret, County of Middlesex, State of New Jersey) Notes to Financial Statements For the year ended December 31, 2022 NOTE 5: PENSION OBLIGATIONS (continued) Public Employees’ Retirement System (PERS) (continued) Discount Rate - The discount rate used to measure the total pension liability was 7.00% as of June 30, 2022. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers and the nonemployer contributing entity will be based on 78% of the actuarially determined contributions for the State employer and 100% of actuarially determined contributions for the local employers. Based on those assumptions, the plan’s fiduciary net position was projected to be available to make projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all projected benefit payments to determine the total pension liability. Sensitivity of the Authority’s proportionate share of the Net Pension Liability to Changes in the Discount Rate – The following presents the Authority’s proportionate share of the net pension liability calculated using the discount rate as disclosed above, as well as what the Authority’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.00%) or 1-percentage-point higher (8.00%) than the current rate: NOTE 6: RISK MANAGEMENT The Authority is exposed to various risk of loss related to torts, theft of, damage to and destruction of assets; errors and omissions; injuries to employees; and natural disaster. The Authority has not obtained any insurance and may not be properly insured for various risks including workers’ compensation, general liability, or employee theft. NOTE 7: RELATED PARTY TRANSACTIONS All of the Authority’s revenues are received from the Borough either in the form of a direct local subsidy or miscellaneous revenues derived from Borough owned assets. NOTE 8: RENEWAL AND REPLACEMENT RESERVE AND NET POSITION The Authority budgets an annual amount to be allocated to the renewal and replacement reserve. For 2022, That amount was $3,120,000. Total net position for the authority is $4,090,442. The remaining $970,442 is Unreserved. 26 Sc h e d u l e I 20 2 2 2 0 2 1 2 0 2 0 2 0 1 9 2 0 1 8 2 0 1 7 2 0 1 6 2 0 1 5 2 0 1 4 2 0 1 3 Au t h o r i t y ' s p r o p o r t i o n o f t h e n e t p e n s i o n l i a b i l i t y (a s s e t ) 0 . 0 0 0 0 3 % 0 . 0 0 0 0 3 % 0 . 0 0 0 0 3 % 0 . 0 0 0 0 6 % 0 . 0 0 0 0 6 % 0 . 0 0 0 0 6 % 0 . 0 0 0 0 6 % 0 . 0 0 0 0 6 % 0 . 0 0 0 0 6 % 0 . 0 0 0 0 6 % Au t h o r i t y ' s p r o p o r t i o n a t e s h a r e o f t h e n e t pe n s i o n l i a b i l i t y ( a s s e t ) 4 , 1 7 7 $ 3 , 2 9 8 $ 4 , 5 1 7 $ 1 0 , 1 5 1 $ 1 1 , 2 2 4 $ 1 3 , 4 1 8 $ 1 7 , 2 3 6 $ 1 3 , 0 0 3 $ 1 1 , 0 8 4 $ 1 0 , 8 1 1 $ Au t h o r i t y ' s c o v e r e d - e m p l o y e e p a y r o l l 2 , 8 9 0 $ 3 , 3 3 3 $ 4 , 0 0 0 $ 4 , 0 0 0 $ 4 , 0 0 0 $ 4 , 0 0 0 $ 4 , 0 0 0 $ 4 , 0 0 0 $ 4 , 0 0 0 $ N / A Au t h o r i t y ' s p r o p o r t i o n a t e s h a r e o f t h e n e t pe n s i o n l i a b i l i t y ( a s s e t ) a s a p e r c e n t a g e o f i t s co v e r e d - e m p l o y e e p a y r o l l 1 4 4 . 5 3 % 9 8 . 9 5 % 1 1 2 . 9 3 % 2 5 3 . 7 8 % 2 8 0 . 6 0 % 3 3 5 . 4 5 % 4 3 0 . 9 0 % 3 2 5 . 0 8 % 2 7 7 . 1 0 % N / A Pla n f i d u c i a r y n e t p o s i t i o n a s a p e r c e n t a g e o f th e t o t a l p e n s i o n l i a b i l i t y 6 2 . 9 1 % 7 0 . 3 3 % 5 8 . 3 2 % 5 6 . 2 7 % 5 3 . 6 0 % 4 8 . 1 0 % 4 0 . 1 4 % 4 7 . 9 3 % 5 2 . 0 8 % 4 8 . 7 2 % BO R O U G H O F C A R T E R E T M U N I C I P A L P O R T A U T H O R I T Y LA S T T E N F I S C A L Y E A R S * PU B L I C E M P L O Y E E S ' R E T I R E M E N T S Y S T E M SC H E D U L E O F A U T H O R I T Y ' S P R O P O R T I O N A T E S H A R E O F T H E N E T P E N S I O N L I A B I L I T Y (A C o m p o n e n t U n i t o f t h e B o r o u g h o f C a r t e r e t , C o u n t y o f M i d d l e s e x , S t a t e o f N e w J e r s e y ) 27 Sc h e d u l e I I 20 2 2 2 0 2 1 2 0 2 0 2 0 1 9 2 0 1 8 2 0 1 7 2 0 1 6 2 0 1 5 2 0 1 4 2 0 1 3 Co n t r a c t u a l l y r e q u i r e d c o n t r i b u t i o n 3 4 9 $ 3 2 6 $ 3 0 3 $ 5 4 8 $ 5 6 7 $ 5 3 4 $ 5 1 7 $ 4 9 8 $ 4 7 6 $ 4 7 6 $ Co n t r i b u t i o n s i n r e l a t i o n t o t h e co n t r a c t u a l l y r e q u i r e d c o n t r i b u t i o n ( 3 4 9 ) ( 3 2 6 ) ( 3 0 3 ) ( 5 4 8 ) ( 5 6 7 ) ( 5 3 4 ) ( 5 1 7 ) ( 4 9 8 ) ( 4 7 6 ) ( 4 7 6 ) Co n t r i b u t i o n d e f i c i e n c y ( e x c e s s ) - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ Au t h o r i t y ' s c o v e r e d - e m p l o y e e p a y r o l l 7 , 5 0 0 $ 2 , 8 9 0 $ 3 , 3 3 3 $ 4 , 0 0 0 $ 4 , 0 0 0 $ 4 , 0 0 0 $ 4 , 0 0 0 $ 4 , 0 0 0 $ 4 , 0 0 0 $ 4 , 0 0 0 $ Co n t r i b u t i o n s a s a p e r c e n t a g e o f c o v e r e d - em p l o y e e p a y r o l l 4 . 6 5 % 1 1 . 2 8 % 9 . 0 9 % 1 3 . 7 0 % 1 4 . 1 8 % 1 3 . 3 5 % 1 2 . 9 3 % 1 2 . 4 5 % 1 1 . 9 0 % 1 1 . 9 0 % BO R O U G H O F C A R T E R E T M U N I C I P A L P O R T A U T H O R I T Y LA S T T E N F I S C A L Y E A R S * PU B L I C E M P L O Y E E S ' R E T I R E M E N T S Y S T E M SC H E D U L E O F A U T H O R I T Y C O N T R I B U T I O N S (A C o m p o n e n t U n i t o f t h e B o r o u g h o f C a r t e r e t , C o u n t y o f M i d d l e s e x , S t a t e o f N e w J e r s e y ) 28 BOROUGH OF CARTERET MUNICIPAL PORT AUTHORITY (A COMPONENT UNITY OF THE BOROUGH OF CARTERET, COUNTY OF MIDDLESEX, STATE OF NEW JERSEY) Notes to the Required Supplementary Information For the year ended December 31, 2022 Public Employees' Retirement System (PERS) Changes of Benefit Terms The June 30, 2022 measurement date includes three changes to the plan provisions, only one of which had an impact on the Total Pension Liability. Chapter 226, P.L. 2021 reopened the Prosecutors Part of PERS and made membership in the Prosecutors Part of PERS mandatory for all prosecutors. Changes of Assumptions The discount rate used as of June 30, measurement date is as follows: Year Rate Year Rate Year Rate 2022 7.00% 2019 6.28% 2016 3.98% 2021 7.00% 2018 5.66% 2015 4.90% 2020 7.00% 2017 5.00% 2014 5.39% The long-term expected rate of return used as of June 30, measurement date is as follows: Year Rate Year Rate Year Rate 2022 7.00% 2019 7.00% 2016 7.65% 2021 7.00% 2018 7.00% 2015 7.90% 2020 7.00% 2017 7.00% 2014 7.90% The mortality assumption was updated upon the direction from the Division of Pensions and Benefits. 29 This page intentionally left blank 30 Schedule III Variance December 31, Original Final Favorable 2021 Budget Budget Actual (Unfavorable) Actual Revenues: Operating revenues: Local subsidy 500,000$ 500,000$ 500,000$ -$ 500,000$ Boat slip rentals 210,000 210,000 248,888 38,888 162,460 NJ state police dock lease 100,000 100,000 107,542 7,542 162,912 Fuel sales 365,000 365,000 232,604 (132,396) 162,157 Miscellaneous 5,000 5,000 7,965 2,965 11,917 Total operating revenues 1,180,000 1,180,000 1,096,999 (83,001) 999,446 Non-operating revenues: Interest income - - 11,990 11,990 3,293 Total non-operating revenues - - 11,990 11,990 3,293 Total revenues 1,180,000 1,180,000 1,108,989 (71,011) 1,002,739 Operating appropriations: Administration Salaries and wages 5,000 5,000 7,500 (2,500) 2,890 Fringe benefits 2,500 2,500 1,022 1,478 704 Other expenses 45,000 45,000 33,817 11,183 - Total administration 52,500 52,500 42,339 10,161 3,594 Cost of providing services Other expenses 257,500 257,500 208,867 48,633 23,824 Total cost of providing services 257,500 257,500 208,867 48,633 23,824 Total operating appropriations 310,000 310,000 251,206 58,794 27,418 Other non-operating appropriations: Renewal and replacement reserve 3,120,000 3,120,000 - 3,120,000 - Less: total unrestricted net position utilized (2,250,000) (2,250,000) - (2,250,000) - Net variance -$ -$ 857,783$ 857,783$ 975,321$ Reconciliation of change in net position to Statement of Net Position: Add: unbudgeted pension credit 1,965 2,093 Change in net position per Statement of Revenues, Expenses and Changes in Net Position 859,748$ 977,414$ (With comparative totals for the year ended December 31, 2021) For the year ended December 31, 2022 Schedule of Revenues and Costs Compared to Budget BOROUGH OF CARTERET MUNICIPAL PORT AUTHORITY (A Component Unit of the Borough of Carteret, County of Middlesex, State of New Jersey) 31 Schedule IV December 31, December 31, Unrestricted Restricted 2022 2021 Operating revenues: Local subsidy 500,000$ -$ 500,000$ 500,000$ Boat slip rentals 248,888 - 248,888 162,460 NJ state police dock lease 107,542 - 107,542 162,912 Fuel sales 232,604 - 232,604 162,157 Miscellaneous 7,965 - 7,965 11,917 Total operating revenues 1,096,999 - 1,096,999 999,446 Operating expenses: Administration 40,374 - 40,374 1,501 Cost of Providing Services 208,867 - 208,867 23,824 Total operating expenses 249,241 - 249,241 25,325 Net income from operations 847,758 - 847,758 974,121 Non-operating revenues (expenses): Interest income 11,990 - 11,990 3,293 Total non-operating revenues (expenses) 11,990 - 11,990 3,293 Change in net position 859,748 - 859,748 977,413 Net position, January 1 3,230,694 - 3,230,694 2,253,280 Net position, December 31 4,090,442$ -$ 4,090,442$ 3,230,694$ Total BOROUGH OF CARTERET MUNICIPAL PORT AUTHORITY Schedule of Revenues, Expenses and Changes in Net Position Restricted and Unrestricted For the year ended December 31, 2022 (A Component Unit of the Borough of Carteret, County of Middlesex, State of New Jersey) (With comparative totals for the year ended December 31, 2021) 32 Schedule V December 31, Deember 31, Operating Change Fund 2022 2021 Cash, January 1 3,154,128$ -$ 3,154,128$ 2,274,220$ Cash receipts: Boat slip rentals 248,887 - 248,887 162,460 NJ state police dock lease 107,542 - 107,542 162,912 Fuel sales 232,604 232,604 162,157 Miscellaneous 7,965 - 7,965 11,917 Local subsidy 500,000 - 500,000 500,000 Interest Income 11,990 - 11,990 3,293 Total cash receipts 1,108,988 - 1,108,988 1,002,739 Total cash available 4,263,116 - 4,263,116 3,276,959 Cash disbursements: Operating 206,754 - 206,754 122,831 Total cash disbursements 206,754 - 206,754 122,831 Cash, December 31 4,056,362$ -$ 4,056,362$ 3,154,128$ Total BOROUGH OF CARTERET MUNICIPAL PORT AUTHORITY Schedule of Cash Receipts, Cash Disbursements and Changes in Cash Unrestricted For the year ended December 31, 2022 (A Component Unit of the Borough of Carteret, County of Middlesex, State of New Jersey) (With comparative totals for the year ended December 31, 2021) 33   BOROUGH OF CARTERET MUNICIPAL PORT AUTHORITY (A Component Unit of the Borough of Carteret, County of Middlesex, State of New Jersey) Board of Commissioners December 31, 2022 Position Hank D’Orsi ……………………………………………………... Chairman Joseph Caliguari …………………………………………………. Vice Chairman Vincent Bellino…………………………………………………... Commissioner Wesley Kaskiw…………………………………………………… Commissioner Honorable Mayor Daniel J. Reiman……………………………… Commissioner Joseph Wutkowski……………………………………………... Commissioner/Alternate 34 To the Chairman and Commissioners of the Borough of Carteret Municipal Port Authority County of Middlesex Carteret, New Jersey 07008 We have audited the financial accounts and transactions of the Borough of Carteret Municipal Port Authority, County of Middlesex, State of New Jersey for the year ended December 31, 2022. In accordance with requirements prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey, the following are the General Comments and Recommendations for the year then ended. GENERAL COMMENTS AND RECOMMENDATIONS Contracts and Agreements Required to be advertised by (N.J.S.A.40A:11-4) N.J.S.A.40A:11-4 - Every contract or agreement, for the performance of any work or furnishing or hiring of any materials or supplies, the cost or the contract price whereof is to be paid with or out of public funds not included within the terms of Section 3 of this act, shall be made or awarded only by the governing body of the contracting unit after public advertising for bids and bidding therefore, except as is provided otherwise in this act or specifically by any other Law. No work, materials or supplies shall be undertaken, acquired or furnished for a sum exceeding in the aggregate $44,000 except by contract or agreement. It is pointed out that the Members of the Authority have the responsibility of determining whether the expenditures in any category will exceed the statutory minimum within the fiscal year. Where question arises as to whether any contract or agreement might result in violation of the statute, the solicitor's opinion should be sought before a commitment is made. Review of the minutes and financial transactions did not identify any bids requested by public advertising. The minutes indicate that resolutions were adopted authorizing the awarding of contracts or agreements for "Professional Services," per N.J.S.A.40A:11-5. Inasmuch as the system of records did not provide for an accumulation of payments for categories for the performance of any work or the furnishing or hiring of any materials or supplies, the results of such an accumulation could not reasonably be ascertained. Disbursements were reviewed, however, to determine whether any clear-cut violations existed. The results or our examination did not disclose any discrepancies. The examination of expenditures revealed individual payments, contracts or agreements in excess of $6,600 from January 1, 2022 through December 31, 2022 "for the performance of any work or the furnishing or hiring of any materials or supplies", other than those where bids had been previously sought by public advertisement or where a resolution had been previously adopted under the provision of (N.J.S.A.40A:11-6.1). 35 Contracts and Agreements Required to be advertised by (N.J.S.A.40A:11-4) (continued) The supporting documentation indicated that quotes were requested for all items that required them. Examination of Bills A test check of paid bills was made and each bill, upon proper approval, was considered as a separate and individual contract unless the records disclosed it to be a part payment or estimate. The results of the examination did not disclose certain discrepancies with respect to signatures, certification or supporting documentation. Payroll Fund The examination of the payroll account included the detailed computation of various deductions or other credits from the payroll of the Authority employees and ascertained that the accumulated withholdings were disbursed to the proper agencies. Budget Adoption The State of New Jersey requires that the Authority’s operating and capital budgets be approved and adopted for each fiscal year. The Authority adopted its operating budget on March 28, 2023. Acknowledgment We received the complete cooperation of all the Authority Officials and employees and we greatly appreciate the courtesies extended to the members of the audit team. Should you have any questions concerning our comments or recommendations, or should you desire any assistance in implementing our recommendations, please call us. Respectfully Submitted, HOLMAN FRENIA ALLISON, P.C. Certified Public Accountants October 21, 2023 Lakewood, New Jersey 36