North Carolina State Board of Barber Examiners : financial statements for the years ended ... and independent auditors' report |
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NORTH CAROLINA STATE BOARD OF BARBER EXAMINERS FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2016 AND 2015NORTH CAROLINA STATE BOARD OF BARBER EXAMINERS Table of Contents Page No. Management's Discussion and Analysis ………………………………………………… 1 - 3 Independent Auditor's Report …………………………………………………………… 4 - 5 Financial Statements Statements of Net Position …………………………………………………………… 6 Statements of Revenues, Expenses and Changes in Net Position …………………… 7 Statements of Cash Flows …………………………………………………………… 8 Notes to Financial Statements ……………………………………………………… 9 - 18 Supplementary Information Proportionate Share of Net Pension Liability and Schedule of Board Contributions Teachers' and State Employees' Retirement System ……………………………… 19Page 1 NORTH CAROLINA STATE BOARD OF BARBER EXAMINERS Management's Discussion and Analysis For The Fiscal Year Ended June 30, 2016 Financial Highlights Overview of the Basic Financial Statements ThefollowingisadiscussionandanalysisoftheNorthCarolinaStateBoardofBarberExaminers'(the"Board")financialperformanceforthefiscalyearendedJune30,2016.Thefollowingfinancialstatementsandfootnotescompriseourcompletesetoffinancialinformation.TheManagement'sDiscussionandAnalysisidentifiessignificanttransactionsthathavefinancialimpactandhighlightsfavorableandunfavorabltrends.Comparativedataforthecurrentyearandthepreviousyearsarepresented in the analysis. TheoperatingrevenuesoftheBoarddecreasedby$71,659,or8.6%,primarilyduetoareductioninlatefees.TheBoardcreatedanonlinerenewalsystemthatallowedindividualstopaylicensefeesonline.Asaresult,therewerefewerlaterenewals.TheBoardalsosawadecreaseinthenumberofshops that were opened or that renewed their permits during the fiscal year. TheoperatingexpensesoftheBoarddecreasedby$153,821,or16.6%,primarilyduetotwocauses.First,theBoardmadestaffcutstosubstantiallyreduceitsexpenditures.Second,thefiscalyear2015expendituresincludedanaccruedworker'scompensationclaimsettlement.Sincethesettlementendedthecase,theBoardonlyhadadditionalclaimcostsrelatedtothiscaseofapproximately$4,900infiscalyear 2016. ThisdiscussionandanalysisisanintroductiontotheBoard’sbasicfinancialstatements,whicharecomprisedofthefollowingcomponents:1)StatementsofNetPosition,2)StatementsofRevenues,ExpensesandChangesinNetPosition,3)StatementsofCashFlows,and4)NotestoFinancialStatements.ThesefinancialstatementsarepreparedinaccordancewithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmericaasprescribedbtheGovernmentalAccountingStandardsBoard (GASB).Page 2 NORTH CAROLINA STATE BOARD OF BARBER EXAMINERS Management's Discussion and Analysis For The Fiscal Year Ended June 30, 2016 Basic Financial Statements 2016 2015 2014 Current assets 430,010$ 473,089$ 407,436$ Capital assets - net of depreciation 48,873 65,089 77,523 Deferred outflows of resources 35,680 65,659 33,688 Total assets 514,563 603,837 518,647 Current liabilities 493,044 525,976 333,118 Noncurrent liabilities 101,179 71,517 186,989 Deferred inflows of resources 30,123 103,321 - Total liabilities 624,346 700,814 520,107 Investment in capital assets 48,873 65,089 77,523 Unrestricted (158,656) (162,066) (78,983) Total net position (109,783)$ (96,977)$ (1,460)$ Operating revenues 759,599$ 831,258$ 768,736$ Operating expenses 774,379 928,200 900,404 Operating loss (14,780) (96,942) (131,668) Non-operating revenues 1,974 1,425 1,794 Changes in net position (12,806)$ (95,517)$ (129,874)$ ThebasicfinancialstatementsoftheBoardreportinformationabouttheBoardusingaccountingmethodssimilartothoseusedbyprivatesectorcompaies.Thesestatementsoffershortandlong-termfinancial information about the activities of the Board. TheStatementsofNetPositionpresentthecurrentandnoncurrentpositionsofassetsandliabilitiesseparately. TheStatementsofRevenues,Expenses,andChangesinNetPositionpresentinformationonhowtheBoard's net position changed as a result of the year’s operations. ThefollowingpresentscondensedfinancialinformationontheoperationsoftheBoardasofandforthe year ended June 30: TheStatementsofCashFlowspresentinformationonhowtheBoard'scashchangedasaresultoftheyear's activity.Page 3 NORTH CAROLINA STATE BOARD OF BARBER EXAMINERS Management's Discussion and Analysis For The Fiscal Year Ended June 30, 2016 Events Affecting Future Operations Contacting the Board's Management ThisfinancialreportisdesignedtoprovideageneraloverviewoftheBoard'sfinancesandtodemonstratetheBoard'saccountabilityforthemoneyiteceivesandexpends.Ifyouhaveanyquestionsaboutthisreportorneedadditionalinformation,contacttheNorthCarolinaStateBoardofBarber Examiners, 5809 Departure Drive, Suite 102, Raleigh, NC 27616-1858. InOctober2015,theBoardmadesignificantcutstoitsoperationalexpensesinordertoaddressaspendingdeficitinpreviousyears.ThesecutshaveallowedtheBoardtoimproveitslong-termfinancialoutlook,buttheyhavehadanimpactonoperations.TheBoardisfocusedonmovingmoretransactionsonlinetoimprovetheefficiencyofitsoperationsandtoallowittooperatewithamorelimitedstaff.However,theBoardwillcontinuetorequestauthorizationfromtheGeneralAssemblytoincrease fees and allow the Board to improve operations.Certified Public Accountants and Advisors Since 1947 Greensboro, NC | Raleigh, NC | Winston-Salem, NC Office: 1501 Highwoods Blvd., Suite 300 ~ Greensboro, NC 27410 Mailing: P.O. Box 19608 ~ Greensboro, NC 27419-9608 Phone (336) 294-4494 ~ Fax (336) 294-4495 ~ www.brccpa.com Member of a Global Association of Independent Accounting Page 4 and Consultancy Firms Independent Auditor's Report Members of the Board North Carolina State Board of Barber Examiners Raleigh, North Carolina Report on the Financial Statements We have audited the accompanying financial statements of the North Carolina State Board of Barber Examiners (the "Board"), an enterprise fund of the State of North Carolina, which comprise the statements of net position as of June 30, 2016 and 2015, and the related statements of revenues, expenses and changes in net position, and cash flows for the years then ended, and the related notes to the financial statements, which collectively comprise the Board's basic financial statements. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these basic 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 basic financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these basic financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the basic financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the basic financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the basic financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Board's preparation and fair presentation of the basic 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 Board'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 basic financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the basic financial statements referred to above present fairly, in all material respects, the financial position of the North Carolina State Board of Barber Examiners as of June 30, 2016 and 2015, and its changes in financial position and cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Page 5 Emphasis of Matter AsdiscussedinNote1,thesefinancialstatementsarepresentedonlyfortheNorthCarolinaStateBoardofBarberExaminersanddonotpurporttoanddonotpresentfairlytheinancialpositionoftheStateofNorthCarolinaasofJune30,2016and2015,northechangesinitsfinancialpositionanditscashflowsthereoffortheyearsthenendedinconformitywithaccountingprinciplesgenerallyaccepedintheUnitedStatesofAmerica. Other Matters Required Supplementary Information AccountingprinciplesgenerallyacceptedintheUnitedStatesofAmericarequirethatManagement'sDiscussionandAnalysis,onpages1-3andtheSchedulesofProportionateShareofNetPensionLiabilityandBoardContributionsTeachers'andStateEmployees'RetirementSystemonpage9,bepresentedtosupplementthebasicfinancialstatements.Suchinformation,althoughnotapartofthebasicfinancialstatements, is required by the Governmental Accounting Standards Board, who considers it to be an essential partoffinancialreportingforplacingthebasicfinancialstatementsinanappropriateoperational,economic,orhistoricalcontext.WehaveappliedcertainlimitedprocedurestotherequiredsupplementaryinformationinaccordancewithauditingstandardsgenerallyacceptedinteUnitedStatesofAmerica,whichconsistedofinquiriesofmanagementaboutthemethodsofpreparingtheinformationandcomparingtheinformationforconsistencywithmanageent’sresponsestoourinquiries,thebasicfinancialstatements,andotherknowledgeweobtainedduringourauditofthebasicfinancialstatements.Wedonotexpressanopinionorprovideanyassuranceontheinformationbecausethelimitedproceduresdonotprovideuswithsufficientevidence to express an opinion or provide any assurance. Raleigh, North Carolina October 21, 2016See Notes to Financial Statements Page 6 NORTH CAROLINA STATE BOARD OF BARBER EXAMINERS Statements of Net Position June 30, 2016 and 2015 2016 2015 ASSETS: Current assets: Cash - State Treasurer 418,138$ 462,739$ Accounts receivable, net 7,185 10,350 Prepaid expenses 4,687 - Total current assets 430,010 473,089 Capital assets - net of depreciation 48,873 65,089 Total assets 478,883 538,178 DEFERRED OUTFLOWS OF RESOURCES: Pension deferrals 4,466 6,066 Contributions to pension plan in current fiscal year 31,214 59,593 Total deferred outflows of resources 35,680 65,659 LIABILITIES: Current liabilities: Accounts payable 22,318 30,327 Due to employees 1,118 1,279 Unearned revenue 469,608 409,870 Liability under workers compensation claim settlement - 84,500 Total current liabilities 493,044 525,976 Noncurrent liabilities: Accrued vacation 32,634 42,910 Net pension liability 68,545 28,607 Total noncurrent liabilities 101,179 71,517 Total liabilities 594,223 597,493 DEFERRED INFLOWS OF RESOURCES: Pension deferrals 30,123 103,321 NET POSITION: Investment in capital assets 48,873 65,089 Unrestricted (158,656) (162,066) Total net position (109,783)$ (96,977)$ See Notes to Financial Statements Page 7 NORTH CAROLINA STATE BOARD OF BARBER EXAMINERS Statements of Revenues, Expenses and Changes in Net Position Years Ended June 30, 2016 and 2015 2016 2015 Operating revenues: Registered certificates 292,926$ 281,560$ Apprentice certificates 35,450 40,520 Instructor certificates 9,199 13,526 Apprentice exam fees 97,920 64,770 Registered exam fees 24,990 26,660 Instructor exam fees 7,260 8,415 Shop permits 113,857 133,525 Student permits 31,350 30,300 School permits 4,810 4,260 Inspection fees 23,480 33,960 Late fees 71,715 100,705 Fines and penalties 12,923 27,573 Legal fees reimbursed 24,076 44,936 Miscellaneous 9,643 20,548 Total operating revenues 759,599 831,258 Operating expenses: Salaries and wages 336,862 393,430 Payroll taxes 24,967 28,775 Pension expense 48,981 13,846 Medical insurance contributions 37,391 43,019 Board members' per diem 2,200 3,800 Travel - board members 2,262 3,815 Travel - staff 47,422 65,381 Other contracted services 18,939 20,006 Office rent 66,481 63,273 Telephone 10,479 12,975 Exam 10,818 9,054 Depreciation 16,216 16,381 Equipment rental and maintenance 9,504 10,694 Office supplies 20,138 22,108 Printing 2,066 6,632 Postage 16,334 11,566 Insurance and bonding 9,085 8,946 Legal services 30,138 5,099 Accounting and auditing 9,300 6,900 Computer services 35,075 23,718 Seminar and educational materials 20 460 Civil penalties remitted 9,686 25,834 Workers' compensation claim 4,893 125,512 Miscellaneous 5,122 6,976 Total operating expenses 774,379 928,200 Operating loss (14,780) (96,942) Non-operating revenues: Interest income 1,974 1,425 Total non-operating revenues 1,974 1,425 Changes in net position (12,806) (95,517) Net position - beginning of year (96,977) (1,460) Net position - end of year (109,783)$ (96,977)$ See Notes to Financial Statements Page 8 NORTH CAROLINA STATE BOARD OF BARBER EXAMINERS Statements of Cash Flows Years Ended June 30, 2016 and 2015 2016 2015 Cash flows from operating activities: Cash received from fees 817,815$ 928,929$ Cash payments to employees for services (461,919) (525,998) Cash payments for suppliers of goods and services (262,582) (211,857) Cash payments for other operating expenses (139,889) (130,802) Net cash provided by (used in) operating activities (46,575) 60,272 Cash flows from capital and investing activities: Purchase of capital assets - (4,042) Interest 1,974 1,425 Net cash provided by (used in) capital and investing activities 1,974 (2,617) Increase (decrease) in cash (44,601) 57,655 Cash - beginning of year 462,739 405,084 Cash - end of year 418,138$ 462,739$ Reconciliation of operating loss to net cash provided by (used in) operating activities: Operating loss (14,780)$ (96,942)$ Adjustments to reconcile operating loss to net cash provided by (used in) operating activities: Depreciation 16,216 16,381 Loss on disposal of equipment - 95 Changes in assets and liabilities: Accounts receivable 3,165 (10,350) Prepaid expenses (4,687) 2,352 Deferred outflows of resources 29,979 (31,971) Accounts payable (8,009) 5,495 Due to employees (161) (2,806) Accrued vacation (10,276) 1,625 Unearned revenue 59,738 105,669 Net pension liability 39,938 (117,097) Liability under workers compensation claim settlement (84,500) 84,500 Deferred inflows of resources (73,198) 103,321 Total adjustments (31,795) 157,214 Net cash provided by (used in) operating activities (46,575)$ 60,272$ Supplemental disclosures of noncash capital activities: Capital asset write-offs -$ 29,408$ Page 9 NORTH CAROLINA STATE BOARD OF BARBER EXAMINERS Notes to Financial Statements NOTE 1 - NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES Description of Organization Financial Reporting Entity Basis of Presentation Basis of Accounting TheNorthCarolinaStateBoardofBarberExaminers(the"Board")isanindependentStateagency.ItisanoccupationallicensingboardauthorizedbyChapter86AoftheNorthCarolinaGeneralStatutes.ThefiveBoardmembersareappointedbytheGovernoroftheStateofNorthCarolina.The Board is entitled to the services of the Attorney General of North Carolina. TheBoard'sfunctionistomaintainminimumstandardsforservicesprovidedbybarbers,barberapprentices,barberinstructors,barbershops,andbarberschools.TheBoard'soperationsarefundedprimarily through license fees, license examination fees and other income. TheaccompanyingbasicfinancialstatementshavebeenpreparedinaccordancewithaccountingprinciplesgenerallyacceptedintheUnitedStatesofmericaasprescribedbyGovernmentalAccounting Standards Board (GASB). Proprietaryfundsareusedtoaccountforoperationsthatarefinancedandoperatedinamannersimilartoprivatebusinessenterpriseswheretheintetofthegoverningbodyisthatthecostofprovidinggoodsorservicestothegeneralpubliconacontinuingbasisbefinancedorrecoveredprimarily through user charges. ThebasicfinancialstatementsoftheBoardhavebeenpreparedusingtheeconomicresourcemeasurementfocusandtheaccrualbasisofaccounting.Undertheaccrualbasis,revenuesarerecognizedwhenearned,andexpensesarerecordedwhenaliabilityhasbeenincurred,regardlessofthetimingofthecashflows.Feesreceivedforthevariouslicensesaredeemedearnedwhenthelicense period begins. Theconceptunderlyingthedefinitionofthefinancialreportingentityisthatelectedofficialsareaccountabletotheirconstituentsfortheiracions.AsrequiredbyaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica(GAAP),thefinancialreportingentityincludesboththeprimarygovernmentandallofitscomponentunits.Anorganizationotherthanaprimarygovernmentservesasanucleusforareportingentitywhenitissuesseparatefinancialstatements.TheaccompanyingfinancialstatementspresentallfundsandactivitiesforwhichtheBoardisresponsible. Forfinancialreportingpurposes,theBoardisanonmajorenterprisefundoftheprimarygovernmentof the State of North Carolina and is reported as such in the State's Comprehensive Annual Financial Report(CAFR).ThesefinancialstatementsfortheBoardareseparateandapartfromthoseoftheStateofNorthCarolinaanddonotpresentthefinancialpositionofthStatenorchangesintheState's financial position and cash flows. Page 10 NORTH CAROLINA STATE BOARD OF BARBER EXAMINERS Notes to Financial Statements NOTE 1 - NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES (Continued) Basis of Accounting (Continued) Cash - State Treasurer Accounts Receivable Capital Assets 3 - 10 years Unearned Revenues Accrued Vacation Non-operatingrevenuesandexpensesincludeactivitiesthathavecharacteristicsofnon-exchangetransactions and consist primarily of investment activities. ThevacationpolicyoftheBoardprovidesfortheaccumulationofupto30daysearnedvacationleavewithsuchleavebeingfullyvestedwhenearned.Inaddition,effectiveSeptember1,2014allfulltimepermanentemployeesweregivenanadditionalfivedaysofannualleavewhichshallremainavailable until used. TheBoardclassifiesitsrevenuesandexpensesasoperatingornon-operatingintheaccompanyingStatementsofRevenues,Expenses,andChangesinNetPosition.OperatingrevenuesandexpensesgenerallyresultfromprovidingservicesthatarenecessarytotheBoard’sprincipalongoingoperations.Operatingrevenuesincludeactivitiesthathavecharacteristicsofexchangetransactionsandconsistprimarilyoflicenserenewalandexaminatiofees.OperatingexpensesareallexpensetransactionsotherthanthoserelatedtocapitalandnoncapitalfinancingorinvestingactivitiesasdefinedbyGSBStatementNo.9,ReportingCashFlowsofProprietaryandNonexpendableTrustFunds and Governmental Entities that Use Proprietary Fund Accounting. ThisclassificationconsistsoffundsdepositedbytheBoardwiththecashaccountsoftheNorthCarolinaStateTreasurer.Becausethesefundsareimmediatelyavailableforexpenditure,theyareconsidered a cash equivalent. Capitalassetsarerecordedatcostatthedateofacquisition.TheBoardcapitalizesassetsthathaveacostof$5,000orgreateratthedateofacquisitionandanexpectedusefullifeoftwoyearsorgreater.Depreciation is computed using the straight-line method over the following useful lives: Licensesarerenewedforaperiodofoneyear.Licenseapplications,renewalfees,andexamfeesreceived in advance are deferred and recognized as revenue in the period to which they relate. Equipment, furniture and software Whenanassetisdisposedof,thecostoftheassetandtherelatedaccumulateddepreciationareremovedfromthebooks.Anygainorlossondispositionisreflectedinnon-operatingrevenueorexpense for the period. Accountsreceivableconsistofcivilpenaltiesandlegalfeesduefromadministrativeproceedingsandareshownatbookvaluelessanallowancefordobtfulaccountsof$6,500and$1,800atJune30,2016 and 2015, respectively.Page 11 NORTH CAROLINA STATE BOARD OF BARBER EXAMINERS Notes to Financial Statements NOTE 1 - NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES (Continued) Deferred Outflows and Inflows of Resources Net Position Use of Estimates NOTE 2 - DEPOSITS - CUSTODIAL CREDIT RISK Cash - State Treasurer Inadditiontoassets,theStatementofNetPositionwillsometimesreportaseparatesectionfordeferredoutflowsofresources.Thisseparatefinancialstatementelementcalleddeferredoutflowsofresources,representsaconsumptionofnetpositionthatappliestoafutureperiodandsowillnotberecognizedasanexpenseuntilthen.TheBoardhastwoitemsthatmeetthecriterionforthiscategory-contributionsmadetothepensionplaninthe2016fiscalyear,anddeferralsofpensionassetsthatresultedfromtheimplementationofGASBStatementNo.68.Inadditiontoliabilities,theStatementofNetPositionwillsometimesreportaseparatesectionfordeferredinflowsofresources.Thisseparatefinancialstatementelement,deferredinflowsofresources,representsanacquisitionofnetpositionthatappliestoafutureperiodandsowillnotberecognizedasrevenueuntilthen.TheBoardhasoneitemthatmeetsthecriterionforthiscategory-deferralsofpensionexpense that result from the implementation of GASB Statement No. 68. The Board's net position is classified as follows: ThepreparationoffinancialstatementsinconformitywithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmericarequiresmanagmenttomakeestimatesandassumptionsthataffectcertainreportedamountsofassetsandliabilitiesatthedateofthefinancialstatementsandtherportedamountsofrevenueandexpensesduringthereportingperiod.Accordingly,actualresultscould differ from those estimates, resulting in adjustments in future periods. DepositsincludecashondepositwiththeStateTreasurer.ItistheStateTreasurer'spolicyandpracticefordepositsnotcoveredbyfederaldepositoryinsurancetobecoveredbycollateralheldbythe State of North Carolina's agent in the name of the State. InvestedinCapitalAssets-ThisrepresentstheBoard'stotalinvestmentincapitalassets,netofaccumulated depreciation. Unrestricted-Thisrepresentsassetswithnoexternalrestrictionastouseorpurpose.Unrestrictednetassetscanbeemployedforanypurposedesignatedbythegoverningboard,asdistinguishedfromfunds restricted externally for specific purposes.Page 12 NORTH CAROLINA STATE BOARD OF BARBER EXAMINERS Notes to Financial Statements NOTE 3 - CAPITAL ASSETS Cost Cost Accum. Net 6/30/15 Additions Disposals 6/30/16 Depreciation Amount Equipment/ furniture/ software 174,405$ -$ -$ 174,405$ 125,532$ 48,873$ Cost Cost Accum. Net 6/30/14 Additions Disposals 6/30/15 Depreciation Amount Equipment/ furniture/ software 199,771$ 4,042$ 29,408$ 174,405$ 109,316$ 65,089$ NOTE 4 - ACCRUED VACATION Accrued vacation consisted of the following at June 30: 2016 2015 Beginning accrued vacation 42,910$ 41,285$ Vacation earned 23,936 36,495 Vacation used (34,212) (34,870) Ending accrued vacation 32,634$ 42,910$ NOTE 5 - RETIREMENT PLAN Plan Administration TheStateofNorthCarolinaadministerstheTeachers'andStateEmployees'RetirementSystem(TSERS)plan.Thisplanisacost-sharing,multiple-employer,definedbenefitplanestablishedbytheStatetoprovidepensionbenefitsforgeneralemployeesandlawenforcementofficers(LEOs)oftheState,generalemployeesandLEOsofitscomponentunits,andemployeesofLocalEducationAgencies(LEAs)andcharterschoolsnotinthereportingentity.MembershipiscomprisedofemployeesoftheState(stateagenciesandinstitutions),universities,communitycolleges,andcertainproprietarycomponentunitsalongwiththeLEAsandcharterschools.BenefitprovisionsareestablishedbyGeneralStatute135-5andmaybeamendedonlybytheNorthCarolinaGeneralAssembly. Capital assets are comprised of the following:Page 13 NORTH CAROLINA STATE BOARD OF BARBER EXAMINERS Notes to Financial Statements NOTE 5 - RETIREMENT PLAN (Continued) Benefits Provided Contributions TSERS Basis of Accounting ContributionprovisionsareestablishedbyGeneralStatute135-8andmaybeamendedonlybytheNorthCarolinaGeneralAssembly.Employeesarerequiredtocontribute6%oftheircompensation.ThecontributionrateforemployersisseteachyearbytheNCGeneralAssemblyintheAppropriationsActbasedontheactuarially-determinedraterecommendedbytheactuary.TheBoard'scontractually-requiredcontributionratefortheyearendedJune30,2016was9.32%ofcoveredpayroll.TheBoard'scontributionstothepensionplanwere$31,214andemployeecontributions were $19,575 for the year ended June 30, 2016. ThefinancialstatementsoftheTSERSplanwerepreparedusingtheaccrualbasisofaccounting.Planmembercontributionsarerecognizedintheperiodinwhichthecontributionsaredue.Employercontributionsarerecognizedwhendueandtheemployerhasalegalrequirementtoprovidethecontributions.Benefitsandrefundsarerecognizedwhendueandpayableinaccordancewiththetermsofeachplan.Theplan'sfiduciarynetpositionwasdeterminedonthesamebasisusedby the pension plan. TheTSERSPlan'sfinancialinformation,includingallinformationabouttheplan'sassets,deferredoutflowsofresources,liabilities,deferredinflowsofresources,andfiduciarynetposition,isincludedintheStateofNorthCarolina'sfiscalyear2015ComprehensiveAnnualFinancialReport.AnelectronicversionofthisreportisavailablebyaccessingtheNorthCarolinaOfficeoftheStateController'sInternethomepagehttp://www.osc.nc.gov/andclickingon"Reports"orbycallingtheState Controller's Financial Reporting Section at (919) 707-0500. TSERSprovidesretirementandsurvivorbenefits.Retirementbenefitsaredeterminedas1.82%ofthemember’saveragefinalcompensationtimesthemember'syearsofcreditableservice.Amember'saveragefinalcompensationiscalculatedastheaverageofamember'sfourhighestconsecutiveyearsofcompensation.Generalemployeeplanmembersareeligibletoretirewithfullretirementbenefitsatage65withfiveyearsofcreditableservice,atage60with25yearsofcreditableservice,oratanyagewith30yearsofcreditableservice.Generalemployeeplanmembersareeligibletoretirewithpartialretirementbenefitsatage50with20yearsofcreditableserviceoratage60withfivyearsofcreditableservice.Survivorbenefitsareavailabletoeligiblebeneficiariesofgeneralmemberswhodiewhileinactiveserviceorwithin180daysoftheirlastdayofsericeandwhoalsohaveeithercompleted20yearsofcreditableserviceregardlessofage,orhavecompletedfiveyearsofserviceandhavereachedage60.EligiblebeneficiariesmayelecttoreceiveamonthlySurvivor'sAlternateBenefitforlifeorareturnofthemember'scontributions.Theplandoesnotprovideforautomaticpost-retirementbenefitincreases.Increasesarecontingentuponactuarial gains of the plan.Page 14 NORTH CAROLINA STATE BOARD OF BARBER EXAMINERS Notes to Financial Statements NOTE 5 - RETIREMENT PLAN (Continued) Methods Used to Value TSERS Investment Net Pension Liability Actuarial Assumptions Valuation Date 12/31/2014 Inflation 3% Salary Increases* 4.25% - 9.10% Investment Rate of Return** 7.25% TSERScurrentlyusesmortalitytablesthatvarybyage,gender,employeegroup(i.e.teacher,general,lawenforcementofficer)andhealthstatus(i.e.disabledandhealthy).ThecurrentmortalityratesarebasedonpublishedtablesandbasedonstudiesthatcoversignificantportionsoftheU.S.population.Thehealthymortalityratesalsocontainaprovisiontoreflectfuturemortalityimprovements. PursuanttoNorthCarolinaGeneralStatutes,theStateTreasureristhecustodianandadministratoroftheretirementsystems.TheStateTreasurermaintainsvariousinvestmentportfoliosinitsInvestmentPool.ThepensiontrustfundsaretheprimaryparticipantsintheLong-termInvestmentportfolioandthesoleparticipantsintheExternalFixedIncomeInvestment,EquityInvestment,RealEstateInvestment,AlternativeInvestment,CreditInvestment,andInflationProtectionInvestmentportfolios.Theinvestmentbalanceofeachpensiontrustfundrepresentsitsshareofthefairmarketvalueofthenetpositionofthevariousportfolioswithintheool.DetaileddescriptionsofthemethodsandsignificantassumptionsregardinginvestmentsoftheStateTreasurerareprovidedinthe2015 Comprehensive Annual Financial Report. Thefollowingtablepresentstheactuarialassumptionsusedtodeterminethetotalpensionliabilityfor the TSERS plan at the actuarial valuation date: * Salary increases include 3.5% inflation and productivity factor. AtJune30,2016,theBoardreportedaliabilityof$68,545foritsproportionateshareofthecollectivenetpensionliability.ThenetpensionliabilitywasmeasuredasofJune30,2015.ThetotalpensionliabilityusedtocalculatethenetpensionliabilitywasdeterminedbyanactuarialvaluationasofDecember31,2014,andupdateprocedureswereusedtorollforwardthetotalpensionliabilitytoJune30,2015.TheBoard'sproportionofthenetpensionliabilitywasbasedonthepresentvalueoffuturesalariesfortheBoardrelativetothepresentvalueoffutuesalariesforallparticipatingemployers,actuarially-determined.AsofJune30,2015,theBoard'sproportionwas0.00186%, which was a decrease of 0.00058% from its proportion measured as of June 30, 2014. ** Investment rate of return is net of pension plan investment expense, including inflation. TheactuarialassumptionsusedintheDecember31,2014valuationswerebasedontheresultsofanactuarial experience study for the period January 1, 2005 through December 31, 2009. FutureadhocCostofLivingAdjustment(COLA)amountsarenotconsideredtobesubstantivelyautomatic and are therefore not included in the measurement. Page 15 NORTH CAROLINA STATE BOARD OF BARBER EXAMINERS Notes to Financial Statements NOTE 5 - RETIREMENT PLAN (Continued) Actuarial Assumptions (Continued) Discount Rate Sensitivity of the Net Pension Liability to Changes in the Discount Rate Long-Term Expected Asset Class Real Rate of Return Fixed Income 3.40% Theinformationaboveisbasedon30-yearexpectationsdevelopedwiththeconsultingactuaryforthe2013asset,liabilityandinvestmentpolicystudyfortheNorthCarolinaRetirementSystems.Thelong-termnominalratesofreturnunderlyingtherealratesofreturnarearithmeticannualizedfigures.Therealratesofreturnarecalculatedfromnominalratesbymultiplicativelysubtractingalong-term inflation assumption of 3.19%. All rates of return and inflation are annualized. Thefollowingpresentsthenetpensionliabilityoftheplancalculatedusingthediscountrateof7.25%,aswellaswhatthenetpensionliabilitywouldbeifitwerecalculatedusingadiscountratethatis1-percentagepointlower(6.25%)or1-percentagepointhigher(8.25%)thanthecurrentrate(dollars in thousands): Thediscountrateusedtomeasurethetotalpensionliabilitywas7.25%.Theprojectionofcashflowsusedtodeterminethediscountrateassumedthatcontributionsfromplanmemberswillbemadeatthecurrentcontributionateandthatcontributionsfromemployerswillbemadeatstatutorilyrequiredrates,actuariallydetermined.Basedonthoseassumptions,thepensionplan'sfiduciarynetpositionwasprojectedtobeavailabletomakeallprojectedfuturebenefitpaymentsofthecurrentplanmembers.Therefore,thelong-termexpectedrateofreturnonpensionplaninvestmentswasappliedtoallperiodsofprojectedbenefitpaymentstodeterminethetotalpensionliabiity. Alternatives Credit 9.80% 6.80% Real Estate 2.20% 5.80% 5.20% Global Equity Inflation Protection Theprojectedlong-terminvestmentreturnsandinflationassumptionsaredevelopedthroughreviewofcurrentandhistoricalcapitalmarketsdata,sell-sideinvestmentresearch,consultantwhitepapers,andhistoricalperformanceofinvestmentstrategies.FixedincomereturnprojectionsreflectcurrentyieldsacrosstheU.S.Treasuryyieldcurveandmarketexpectationsofforwardyieldsprojectedandinterpolatedformultipletenorsandovermultipleyearhorizons.Globalpublicequityreturnprojectionsareestablishedthroughanalysisoftheequityriskpremiumandthefixedincomereturnprojections.Otherassetcategoriesandstrategies'returnprojectionsreflecttheforegoingandhistoricaldataanalysis.Theseprojectionsarecombinedtoproducethelong-termexpectedrateofreturnbyweightingtheexpectedfuturerealratesofreturnbythetargetassetallocationpercentageandbyaddingexpectedinfation.Bestestimatesofarithmeticrealratesofreturnforeachmajorassetclassincludedinthepensionplan'stargetassetallocationasofJune30,2015(thevaluationdate) are summarized in the following table:Page 16 NORTH CAROLINA STATE BOARD OF BARBER EXAMINERS Notes to Financial Statements NOTE 5 - RETIREMENT PLAN (Continued) Sensitivity of the Net Pension Liability (Asset) to Changes in the Discount Rate Deferred Outflows of Resources Deferred Inflows of Resources Difference between actual and expected experience -$ 7,794$ Changes of assumptions - - Net difference between projected and actual earnings on pension plan investments - 7,426 Changes in proportion and differences between employer contributions and proportionate share of contributions 4,466 14,903 Employer contributions subsequent to the measurement date 31,214 - $ 35,680 $ 30,123 $ (11,453) (11,453) (11,507) 8,756 - $ (25,657) 1% Decrease (6.25%) Current Discount Rate 1% Increase (8.25%) EmployerBalancesofDeferredOutflowsofResourcesandDeferredInflowsofResourcesRelated to Pension by Classification 2020 2021 Deferredoutflowsofresourcesanddeferredinflowsofresourcesthatwillberecognizedinpensionexpense: Years Ending June 30: 2017 2018 2019 Deferred Inflows of Resources and Deferred Outflows of Resources Related to Pensions Theamountreportedasdeferredoutflowsofresourcesrelatedtopensionsof$31,214willbeincludedasareductionofthenetpensionliabilityinthefiscalyearendedJune30,2017.Otheramountsreportedasdeferredoutflowsofresourcesanddeferredinflowsofresourcesrelatedtopensions will be recognized in pension expense as follows: $206,301 $68,545 ($48,357) FortheyearendedJune30,2016,theBoardrecognizedpensionexpenseof$48,981.AtJune30,2016,theBoardreporteddeferredoutflowsofresourcesanddeferredinflowsofresourcesrelatedtopensions from the following sources:Page 17 NORTH CAROLINA STATE BOARD OF BARBER EXAMINERS Notes to Financial Statements NOTE 5 - RETIREMENT PLAN (Continued) Deferred Outflow Amount $ 31,214 Changes in Long-Term Liabilities Net Pension Liability Balance July 1, 2015 28,607$ Prior year adjustments - Additions 39,938 Deletions - Balance, June 30, 2016 68,545$ Due within one year -$ NOTE 6 - OPERATING LEASES The following is a schedule of future minimum rental payments under the leases at June 30, 2016: Years Ending June 30: 2017 66,242$ 2018 67,132 2019 62,852 2020 62,041 2021 10,391 268,658$ TheBoardexercisedthefinaloptiontorenewitsbuildingleaseforanadditionalfive-yearperiodeffectiveSeptember1,2015.Theleaseratesforthefive-yearrenewalaresubjecttotheConsumerPrice Index increase not to exceed 1.5%. AmountoftheEmployer'sBalanceofDeferredOutflowsofResourcesthatwillbeIncludedasa Reduction of the Net Pension Liability in the Fiscal Year Ended June 30, 2017. TheBoardhasacopierleasewithmonthlypaymentsofapproximately$576expiringSeptember30,2018. Totalleaseexpenseunderoperatingleaseschargedtooperationswas$66,481and$63,273fortheyears ended June 30, 2016 and 2015, respectively.Page 18 NORTH CAROLINA STATE BOARD OF BARBER EXAMINERS Notes to Financial Statements NOTE 7 - RISK MANAGEMENT NOTE 8 - CONTINGENT LIABILITIES NOTE 9 - RELATED PARTY TRANSACTION NOTE 10 - NET DEFICIT NOTE 11 - SUBSEQUENT EVENTS ManagementoftheBoardevaluatedsubsequenteventsthroughOctober21,2016,whichisthedatethefinancialstatementswereavailabletobeissued.Managementdiscoverednosubsequenteventswhich should be disclosed. The audit was conducted in approximately 110 hours at a cost of $9,670. TheBoardpaysfeestoafamilymemberofitsstaffrelatedtojanitorialserviceswhichamountedto$4,200 for the fiscal years ended June 30, 2016 and 2015. TheBoardisexposedtovariousrisksoflossrelatedtotorts;theftof,damageto,andthedestructionofassets;errorsandomissions;injuriestoemployees;andnaturaldisasters.TortclaimsofBoardmembersareself-insuredbytheStateundertheauthorityoftheStateTortClaimsAct.AdditionalcoverageisprovidedtotheBoardundertheState'spublicofficers'andemployees'liabilityinsurancecontractwithaprivateinsuranccompany.TheBoardalsoprotectsitselffromexposurestolossthroughthepurchaseofcommercialinsurance,ofwhichcoverageincludesbuildingandcontents,commercial liability, workers' compensation and employers' liability. TheBoardisinvolvedinanumberofdisciplinaryhearingsthroughouttheyearwhichariseintheordinarycourseofitsoperations.Intheopinionofmanagement,theresultsofsuchactionsduringthe years under audit do not materially affect the financial position of the Board at year-end. TheBoardhasexperiencednetoperatinglossesforthepastfouryears.TheBoard'srequestforafeeincreasedidnotpassinOctober2015.TheBoardeliminatedcertainstaffpositionseffectiveJanuary 31,2016,resultinginadecreaseinoperatingexpensesandoperatinglossfortheyearendedJune30,2016.Managementestimatesthedecreaseinoperatingexpensesforthenextfiscalyearwillresultinbudgetedrevenuesexceedingexpenditures(cashbasis)byapproximately$89,000fortheyearendingJune30,2017.ThefeeincreaseproposalwillcomebeforetheNorthCarolinaLegislature again in 2017. InSeptember2015theBoardreachedthefinalsettlementofaworker'scompensationclaimmadebyaformeremployee.DuringtheyearsendedJune30,2016and2015,theBoardpaidworkers'compensationclaimsofapproximately$89,000and$41,000,respectively,relatedtothisclaim,ofwhichestimatedsettlementcostsof$84,500wereaccruedatJune30,2015.TheBoardisnowcovered under a workers' compensation insurance policy.See Independent Auditor's Report Page 19 NORTH CAROLINA STATE BOARD OF BARBER EXAMINERS Proportionate Share of Net Pension Liability and Schedule of Board Contributions Teachers' and State Employees' Retirement System Years Ended June 30, 2016 and 2015 2016 2015 Proportionate share percentage of the net pension liability (asset) 0.00186% 0.00244% Proportionate share of the net pension liability (asset) 68,545$ 28,607$ Covered-employee payroll 336,862 393,430 Proportionate share of net pension liability (asset) as a percentage of its covered-employee payroll 20.35% 7.27% Plan fiduciary net position as a percentage of the total pension liability 94.64% 98.24% Contributions: Contractually required contribution 50,789$ 82,935$ Contributions in relation to the contractually required contribution 50,789 82,935 Contributions deficiency (excess) -$ -$ Covered-employee payroll 336,862$ 393,430$ Contributions as a percentage of covered- employee payroll 15.08% 21.08%
Object Description
Description
Title | North Carolina State Board of Barber Examiners : financial statements for the years ended... and independent auditors' report |
Other Title | Financial statements for the years ended... and independent auditors' report; Financial statements |
Date | 2015; 2016 |
Description | June 30, 2016 and 2015 |
Digital Characteristics-A | 216 KB; 21 p. |
Digital Format |
application/pdf |
Pres File Name-M | pubs_serial_boardbarberexaminersfinancial20152016.pdf |
Full Text | NORTH CAROLINA STATE BOARD OF BARBER EXAMINERS FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2016 AND 2015NORTH CAROLINA STATE BOARD OF BARBER EXAMINERS Table of Contents Page No. Management's Discussion and Analysis ………………………………………………… 1 - 3 Independent Auditor's Report …………………………………………………………… 4 - 5 Financial Statements Statements of Net Position …………………………………………………………… 6 Statements of Revenues, Expenses and Changes in Net Position …………………… 7 Statements of Cash Flows …………………………………………………………… 8 Notes to Financial Statements ……………………………………………………… 9 - 18 Supplementary Information Proportionate Share of Net Pension Liability and Schedule of Board Contributions Teachers' and State Employees' Retirement System ……………………………… 19Page 1 NORTH CAROLINA STATE BOARD OF BARBER EXAMINERS Management's Discussion and Analysis For The Fiscal Year Ended June 30, 2016 Financial Highlights Overview of the Basic Financial Statements ThefollowingisadiscussionandanalysisoftheNorthCarolinaStateBoardofBarberExaminers'(the"Board")financialperformanceforthefiscalyearendedJune30,2016.Thefollowingfinancialstatementsandfootnotescompriseourcompletesetoffinancialinformation.TheManagement'sDiscussionandAnalysisidentifiessignificanttransactionsthathavefinancialimpactandhighlightsfavorableandunfavorabltrends.Comparativedataforthecurrentyearandthepreviousyearsarepresented in the analysis. TheoperatingrevenuesoftheBoarddecreasedby$71,659,or8.6%,primarilyduetoareductioninlatefees.TheBoardcreatedanonlinerenewalsystemthatallowedindividualstopaylicensefeesonline.Asaresult,therewerefewerlaterenewals.TheBoardalsosawadecreaseinthenumberofshops that were opened or that renewed their permits during the fiscal year. TheoperatingexpensesoftheBoarddecreasedby$153,821,or16.6%,primarilyduetotwocauses.First,theBoardmadestaffcutstosubstantiallyreduceitsexpenditures.Second,thefiscalyear2015expendituresincludedanaccruedworker'scompensationclaimsettlement.Sincethesettlementendedthecase,theBoardonlyhadadditionalclaimcostsrelatedtothiscaseofapproximately$4,900infiscalyear 2016. ThisdiscussionandanalysisisanintroductiontotheBoard’sbasicfinancialstatements,whicharecomprisedofthefollowingcomponents:1)StatementsofNetPosition,2)StatementsofRevenues,ExpensesandChangesinNetPosition,3)StatementsofCashFlows,and4)NotestoFinancialStatements.ThesefinancialstatementsarepreparedinaccordancewithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmericaasprescribedbtheGovernmentalAccountingStandardsBoard (GASB).Page 2 NORTH CAROLINA STATE BOARD OF BARBER EXAMINERS Management's Discussion and Analysis For The Fiscal Year Ended June 30, 2016 Basic Financial Statements 2016 2015 2014 Current assets 430,010$ 473,089$ 407,436$ Capital assets - net of depreciation 48,873 65,089 77,523 Deferred outflows of resources 35,680 65,659 33,688 Total assets 514,563 603,837 518,647 Current liabilities 493,044 525,976 333,118 Noncurrent liabilities 101,179 71,517 186,989 Deferred inflows of resources 30,123 103,321 - Total liabilities 624,346 700,814 520,107 Investment in capital assets 48,873 65,089 77,523 Unrestricted (158,656) (162,066) (78,983) Total net position (109,783)$ (96,977)$ (1,460)$ Operating revenues 759,599$ 831,258$ 768,736$ Operating expenses 774,379 928,200 900,404 Operating loss (14,780) (96,942) (131,668) Non-operating revenues 1,974 1,425 1,794 Changes in net position (12,806)$ (95,517)$ (129,874)$ ThebasicfinancialstatementsoftheBoardreportinformationabouttheBoardusingaccountingmethodssimilartothoseusedbyprivatesectorcompaies.Thesestatementsoffershortandlong-termfinancial information about the activities of the Board. TheStatementsofNetPositionpresentthecurrentandnoncurrentpositionsofassetsandliabilitiesseparately. TheStatementsofRevenues,Expenses,andChangesinNetPositionpresentinformationonhowtheBoard's net position changed as a result of the year’s operations. ThefollowingpresentscondensedfinancialinformationontheoperationsoftheBoardasofandforthe year ended June 30: TheStatementsofCashFlowspresentinformationonhowtheBoard'scashchangedasaresultoftheyear's activity.Page 3 NORTH CAROLINA STATE BOARD OF BARBER EXAMINERS Management's Discussion and Analysis For The Fiscal Year Ended June 30, 2016 Events Affecting Future Operations Contacting the Board's Management ThisfinancialreportisdesignedtoprovideageneraloverviewoftheBoard'sfinancesandtodemonstratetheBoard'saccountabilityforthemoneyiteceivesandexpends.Ifyouhaveanyquestionsaboutthisreportorneedadditionalinformation,contacttheNorthCarolinaStateBoardofBarber Examiners, 5809 Departure Drive, Suite 102, Raleigh, NC 27616-1858. InOctober2015,theBoardmadesignificantcutstoitsoperationalexpensesinordertoaddressaspendingdeficitinpreviousyears.ThesecutshaveallowedtheBoardtoimproveitslong-termfinancialoutlook,buttheyhavehadanimpactonoperations.TheBoardisfocusedonmovingmoretransactionsonlinetoimprovetheefficiencyofitsoperationsandtoallowittooperatewithamorelimitedstaff.However,theBoardwillcontinuetorequestauthorizationfromtheGeneralAssemblytoincrease fees and allow the Board to improve operations.Certified Public Accountants and Advisors Since 1947 Greensboro, NC | Raleigh, NC | Winston-Salem, NC Office: 1501 Highwoods Blvd., Suite 300 ~ Greensboro, NC 27410 Mailing: P.O. Box 19608 ~ Greensboro, NC 27419-9608 Phone (336) 294-4494 ~ Fax (336) 294-4495 ~ www.brccpa.com Member of a Global Association of Independent Accounting Page 4 and Consultancy Firms Independent Auditor's Report Members of the Board North Carolina State Board of Barber Examiners Raleigh, North Carolina Report on the Financial Statements We have audited the accompanying financial statements of the North Carolina State Board of Barber Examiners (the "Board"), an enterprise fund of the State of North Carolina, which comprise the statements of net position as of June 30, 2016 and 2015, and the related statements of revenues, expenses and changes in net position, and cash flows for the years then ended, and the related notes to the financial statements, which collectively comprise the Board's basic financial statements. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these basic 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 basic financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these basic financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the basic financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the basic financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the basic financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Board's preparation and fair presentation of the basic 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 Board'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 basic financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the basic financial statements referred to above present fairly, in all material respects, the financial position of the North Carolina State Board of Barber Examiners as of June 30, 2016 and 2015, and its changes in financial position and cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Page 5 Emphasis of Matter AsdiscussedinNote1,thesefinancialstatementsarepresentedonlyfortheNorthCarolinaStateBoardofBarberExaminersanddonotpurporttoanddonotpresentfairlytheinancialpositionoftheStateofNorthCarolinaasofJune30,2016and2015,northechangesinitsfinancialpositionanditscashflowsthereoffortheyearsthenendedinconformitywithaccountingprinciplesgenerallyaccepedintheUnitedStatesofAmerica. Other Matters Required Supplementary Information AccountingprinciplesgenerallyacceptedintheUnitedStatesofAmericarequirethatManagement'sDiscussionandAnalysis,onpages1-3andtheSchedulesofProportionateShareofNetPensionLiabilityandBoardContributionsTeachers'andStateEmployees'RetirementSystemonpage9,bepresentedtosupplementthebasicfinancialstatements.Suchinformation,althoughnotapartofthebasicfinancialstatements, is required by the Governmental Accounting Standards Board, who considers it to be an essential partoffinancialreportingforplacingthebasicfinancialstatementsinanappropriateoperational,economic,orhistoricalcontext.WehaveappliedcertainlimitedprocedurestotherequiredsupplementaryinformationinaccordancewithauditingstandardsgenerallyacceptedinteUnitedStatesofAmerica,whichconsistedofinquiriesofmanagementaboutthemethodsofpreparingtheinformationandcomparingtheinformationforconsistencywithmanageent’sresponsestoourinquiries,thebasicfinancialstatements,andotherknowledgeweobtainedduringourauditofthebasicfinancialstatements.Wedonotexpressanopinionorprovideanyassuranceontheinformationbecausethelimitedproceduresdonotprovideuswithsufficientevidence to express an opinion or provide any assurance. Raleigh, North Carolina October 21, 2016See Notes to Financial Statements Page 6 NORTH CAROLINA STATE BOARD OF BARBER EXAMINERS Statements of Net Position June 30, 2016 and 2015 2016 2015 ASSETS: Current assets: Cash - State Treasurer 418,138$ 462,739$ Accounts receivable, net 7,185 10,350 Prepaid expenses 4,687 - Total current assets 430,010 473,089 Capital assets - net of depreciation 48,873 65,089 Total assets 478,883 538,178 DEFERRED OUTFLOWS OF RESOURCES: Pension deferrals 4,466 6,066 Contributions to pension plan in current fiscal year 31,214 59,593 Total deferred outflows of resources 35,680 65,659 LIABILITIES: Current liabilities: Accounts payable 22,318 30,327 Due to employees 1,118 1,279 Unearned revenue 469,608 409,870 Liability under workers compensation claim settlement - 84,500 Total current liabilities 493,044 525,976 Noncurrent liabilities: Accrued vacation 32,634 42,910 Net pension liability 68,545 28,607 Total noncurrent liabilities 101,179 71,517 Total liabilities 594,223 597,493 DEFERRED INFLOWS OF RESOURCES: Pension deferrals 30,123 103,321 NET POSITION: Investment in capital assets 48,873 65,089 Unrestricted (158,656) (162,066) Total net position (109,783)$ (96,977)$ See Notes to Financial Statements Page 7 NORTH CAROLINA STATE BOARD OF BARBER EXAMINERS Statements of Revenues, Expenses and Changes in Net Position Years Ended June 30, 2016 and 2015 2016 2015 Operating revenues: Registered certificates 292,926$ 281,560$ Apprentice certificates 35,450 40,520 Instructor certificates 9,199 13,526 Apprentice exam fees 97,920 64,770 Registered exam fees 24,990 26,660 Instructor exam fees 7,260 8,415 Shop permits 113,857 133,525 Student permits 31,350 30,300 School permits 4,810 4,260 Inspection fees 23,480 33,960 Late fees 71,715 100,705 Fines and penalties 12,923 27,573 Legal fees reimbursed 24,076 44,936 Miscellaneous 9,643 20,548 Total operating revenues 759,599 831,258 Operating expenses: Salaries and wages 336,862 393,430 Payroll taxes 24,967 28,775 Pension expense 48,981 13,846 Medical insurance contributions 37,391 43,019 Board members' per diem 2,200 3,800 Travel - board members 2,262 3,815 Travel - staff 47,422 65,381 Other contracted services 18,939 20,006 Office rent 66,481 63,273 Telephone 10,479 12,975 Exam 10,818 9,054 Depreciation 16,216 16,381 Equipment rental and maintenance 9,504 10,694 Office supplies 20,138 22,108 Printing 2,066 6,632 Postage 16,334 11,566 Insurance and bonding 9,085 8,946 Legal services 30,138 5,099 Accounting and auditing 9,300 6,900 Computer services 35,075 23,718 Seminar and educational materials 20 460 Civil penalties remitted 9,686 25,834 Workers' compensation claim 4,893 125,512 Miscellaneous 5,122 6,976 Total operating expenses 774,379 928,200 Operating loss (14,780) (96,942) Non-operating revenues: Interest income 1,974 1,425 Total non-operating revenues 1,974 1,425 Changes in net position (12,806) (95,517) Net position - beginning of year (96,977) (1,460) Net position - end of year (109,783)$ (96,977)$ See Notes to Financial Statements Page 8 NORTH CAROLINA STATE BOARD OF BARBER EXAMINERS Statements of Cash Flows Years Ended June 30, 2016 and 2015 2016 2015 Cash flows from operating activities: Cash received from fees 817,815$ 928,929$ Cash payments to employees for services (461,919) (525,998) Cash payments for suppliers of goods and services (262,582) (211,857) Cash payments for other operating expenses (139,889) (130,802) Net cash provided by (used in) operating activities (46,575) 60,272 Cash flows from capital and investing activities: Purchase of capital assets - (4,042) Interest 1,974 1,425 Net cash provided by (used in) capital and investing activities 1,974 (2,617) Increase (decrease) in cash (44,601) 57,655 Cash - beginning of year 462,739 405,084 Cash - end of year 418,138$ 462,739$ Reconciliation of operating loss to net cash provided by (used in) operating activities: Operating loss (14,780)$ (96,942)$ Adjustments to reconcile operating loss to net cash provided by (used in) operating activities: Depreciation 16,216 16,381 Loss on disposal of equipment - 95 Changes in assets and liabilities: Accounts receivable 3,165 (10,350) Prepaid expenses (4,687) 2,352 Deferred outflows of resources 29,979 (31,971) Accounts payable (8,009) 5,495 Due to employees (161) (2,806) Accrued vacation (10,276) 1,625 Unearned revenue 59,738 105,669 Net pension liability 39,938 (117,097) Liability under workers compensation claim settlement (84,500) 84,500 Deferred inflows of resources (73,198) 103,321 Total adjustments (31,795) 157,214 Net cash provided by (used in) operating activities (46,575)$ 60,272$ Supplemental disclosures of noncash capital activities: Capital asset write-offs -$ 29,408$ Page 9 NORTH CAROLINA STATE BOARD OF BARBER EXAMINERS Notes to Financial Statements NOTE 1 - NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES Description of Organization Financial Reporting Entity Basis of Presentation Basis of Accounting TheNorthCarolinaStateBoardofBarberExaminers(the"Board")isanindependentStateagency.ItisanoccupationallicensingboardauthorizedbyChapter86AoftheNorthCarolinaGeneralStatutes.ThefiveBoardmembersareappointedbytheGovernoroftheStateofNorthCarolina.The Board is entitled to the services of the Attorney General of North Carolina. TheBoard'sfunctionistomaintainminimumstandardsforservicesprovidedbybarbers,barberapprentices,barberinstructors,barbershops,andbarberschools.TheBoard'soperationsarefundedprimarily through license fees, license examination fees and other income. TheaccompanyingbasicfinancialstatementshavebeenpreparedinaccordancewithaccountingprinciplesgenerallyacceptedintheUnitedStatesofmericaasprescribedbyGovernmentalAccounting Standards Board (GASB). Proprietaryfundsareusedtoaccountforoperationsthatarefinancedandoperatedinamannersimilartoprivatebusinessenterpriseswheretheintetofthegoverningbodyisthatthecostofprovidinggoodsorservicestothegeneralpubliconacontinuingbasisbefinancedorrecoveredprimarily through user charges. ThebasicfinancialstatementsoftheBoardhavebeenpreparedusingtheeconomicresourcemeasurementfocusandtheaccrualbasisofaccounting.Undertheaccrualbasis,revenuesarerecognizedwhenearned,andexpensesarerecordedwhenaliabilityhasbeenincurred,regardlessofthetimingofthecashflows.Feesreceivedforthevariouslicensesaredeemedearnedwhenthelicense period begins. Theconceptunderlyingthedefinitionofthefinancialreportingentityisthatelectedofficialsareaccountabletotheirconstituentsfortheiracions.AsrequiredbyaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica(GAAP),thefinancialreportingentityincludesboththeprimarygovernmentandallofitscomponentunits.Anorganizationotherthanaprimarygovernmentservesasanucleusforareportingentitywhenitissuesseparatefinancialstatements.TheaccompanyingfinancialstatementspresentallfundsandactivitiesforwhichtheBoardisresponsible. Forfinancialreportingpurposes,theBoardisanonmajorenterprisefundoftheprimarygovernmentof the State of North Carolina and is reported as such in the State's Comprehensive Annual Financial Report(CAFR).ThesefinancialstatementsfortheBoardareseparateandapartfromthoseoftheStateofNorthCarolinaanddonotpresentthefinancialpositionofthStatenorchangesintheState's financial position and cash flows. Page 10 NORTH CAROLINA STATE BOARD OF BARBER EXAMINERS Notes to Financial Statements NOTE 1 - NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES (Continued) Basis of Accounting (Continued) Cash - State Treasurer Accounts Receivable Capital Assets 3 - 10 years Unearned Revenues Accrued Vacation Non-operatingrevenuesandexpensesincludeactivitiesthathavecharacteristicsofnon-exchangetransactions and consist primarily of investment activities. ThevacationpolicyoftheBoardprovidesfortheaccumulationofupto30daysearnedvacationleavewithsuchleavebeingfullyvestedwhenearned.Inaddition,effectiveSeptember1,2014allfulltimepermanentemployeesweregivenanadditionalfivedaysofannualleavewhichshallremainavailable until used. TheBoardclassifiesitsrevenuesandexpensesasoperatingornon-operatingintheaccompanyingStatementsofRevenues,Expenses,andChangesinNetPosition.OperatingrevenuesandexpensesgenerallyresultfromprovidingservicesthatarenecessarytotheBoard’sprincipalongoingoperations.Operatingrevenuesincludeactivitiesthathavecharacteristicsofexchangetransactionsandconsistprimarilyoflicenserenewalandexaminatiofees.OperatingexpensesareallexpensetransactionsotherthanthoserelatedtocapitalandnoncapitalfinancingorinvestingactivitiesasdefinedbyGSBStatementNo.9,ReportingCashFlowsofProprietaryandNonexpendableTrustFunds and Governmental Entities that Use Proprietary Fund Accounting. ThisclassificationconsistsoffundsdepositedbytheBoardwiththecashaccountsoftheNorthCarolinaStateTreasurer.Becausethesefundsareimmediatelyavailableforexpenditure,theyareconsidered a cash equivalent. Capitalassetsarerecordedatcostatthedateofacquisition.TheBoardcapitalizesassetsthathaveacostof$5,000orgreateratthedateofacquisitionandanexpectedusefullifeoftwoyearsorgreater.Depreciation is computed using the straight-line method over the following useful lives: Licensesarerenewedforaperiodofoneyear.Licenseapplications,renewalfees,andexamfeesreceived in advance are deferred and recognized as revenue in the period to which they relate. Equipment, furniture and software Whenanassetisdisposedof,thecostoftheassetandtherelatedaccumulateddepreciationareremovedfromthebooks.Anygainorlossondispositionisreflectedinnon-operatingrevenueorexpense for the period. Accountsreceivableconsistofcivilpenaltiesandlegalfeesduefromadministrativeproceedingsandareshownatbookvaluelessanallowancefordobtfulaccountsof$6,500and$1,800atJune30,2016 and 2015, respectively.Page 11 NORTH CAROLINA STATE BOARD OF BARBER EXAMINERS Notes to Financial Statements NOTE 1 - NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES (Continued) Deferred Outflows and Inflows of Resources Net Position Use of Estimates NOTE 2 - DEPOSITS - CUSTODIAL CREDIT RISK Cash - State Treasurer Inadditiontoassets,theStatementofNetPositionwillsometimesreportaseparatesectionfordeferredoutflowsofresources.Thisseparatefinancialstatementelementcalleddeferredoutflowsofresources,representsaconsumptionofnetpositionthatappliestoafutureperiodandsowillnotberecognizedasanexpenseuntilthen.TheBoardhastwoitemsthatmeetthecriterionforthiscategory-contributionsmadetothepensionplaninthe2016fiscalyear,anddeferralsofpensionassetsthatresultedfromtheimplementationofGASBStatementNo.68.Inadditiontoliabilities,theStatementofNetPositionwillsometimesreportaseparatesectionfordeferredinflowsofresources.Thisseparatefinancialstatementelement,deferredinflowsofresources,representsanacquisitionofnetpositionthatappliestoafutureperiodandsowillnotberecognizedasrevenueuntilthen.TheBoardhasoneitemthatmeetsthecriterionforthiscategory-deferralsofpensionexpense that result from the implementation of GASB Statement No. 68. The Board's net position is classified as follows: ThepreparationoffinancialstatementsinconformitywithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmericarequiresmanagmenttomakeestimatesandassumptionsthataffectcertainreportedamountsofassetsandliabilitiesatthedateofthefinancialstatementsandtherportedamountsofrevenueandexpensesduringthereportingperiod.Accordingly,actualresultscould differ from those estimates, resulting in adjustments in future periods. DepositsincludecashondepositwiththeStateTreasurer.ItistheStateTreasurer'spolicyandpracticefordepositsnotcoveredbyfederaldepositoryinsurancetobecoveredbycollateralheldbythe State of North Carolina's agent in the name of the State. InvestedinCapitalAssets-ThisrepresentstheBoard'stotalinvestmentincapitalassets,netofaccumulated depreciation. Unrestricted-Thisrepresentsassetswithnoexternalrestrictionastouseorpurpose.Unrestrictednetassetscanbeemployedforanypurposedesignatedbythegoverningboard,asdistinguishedfromfunds restricted externally for specific purposes.Page 12 NORTH CAROLINA STATE BOARD OF BARBER EXAMINERS Notes to Financial Statements NOTE 3 - CAPITAL ASSETS Cost Cost Accum. Net 6/30/15 Additions Disposals 6/30/16 Depreciation Amount Equipment/ furniture/ software 174,405$ -$ -$ 174,405$ 125,532$ 48,873$ Cost Cost Accum. Net 6/30/14 Additions Disposals 6/30/15 Depreciation Amount Equipment/ furniture/ software 199,771$ 4,042$ 29,408$ 174,405$ 109,316$ 65,089$ NOTE 4 - ACCRUED VACATION Accrued vacation consisted of the following at June 30: 2016 2015 Beginning accrued vacation 42,910$ 41,285$ Vacation earned 23,936 36,495 Vacation used (34,212) (34,870) Ending accrued vacation 32,634$ 42,910$ NOTE 5 - RETIREMENT PLAN Plan Administration TheStateofNorthCarolinaadministerstheTeachers'andStateEmployees'RetirementSystem(TSERS)plan.Thisplanisacost-sharing,multiple-employer,definedbenefitplanestablishedbytheStatetoprovidepensionbenefitsforgeneralemployeesandlawenforcementofficers(LEOs)oftheState,generalemployeesandLEOsofitscomponentunits,andemployeesofLocalEducationAgencies(LEAs)andcharterschoolsnotinthereportingentity.MembershipiscomprisedofemployeesoftheState(stateagenciesandinstitutions),universities,communitycolleges,andcertainproprietarycomponentunitsalongwiththeLEAsandcharterschools.BenefitprovisionsareestablishedbyGeneralStatute135-5andmaybeamendedonlybytheNorthCarolinaGeneralAssembly. Capital assets are comprised of the following:Page 13 NORTH CAROLINA STATE BOARD OF BARBER EXAMINERS Notes to Financial Statements NOTE 5 - RETIREMENT PLAN (Continued) Benefits Provided Contributions TSERS Basis of Accounting ContributionprovisionsareestablishedbyGeneralStatute135-8andmaybeamendedonlybytheNorthCarolinaGeneralAssembly.Employeesarerequiredtocontribute6%oftheircompensation.ThecontributionrateforemployersisseteachyearbytheNCGeneralAssemblyintheAppropriationsActbasedontheactuarially-determinedraterecommendedbytheactuary.TheBoard'scontractually-requiredcontributionratefortheyearendedJune30,2016was9.32%ofcoveredpayroll.TheBoard'scontributionstothepensionplanwere$31,214andemployeecontributions were $19,575 for the year ended June 30, 2016. ThefinancialstatementsoftheTSERSplanwerepreparedusingtheaccrualbasisofaccounting.Planmembercontributionsarerecognizedintheperiodinwhichthecontributionsaredue.Employercontributionsarerecognizedwhendueandtheemployerhasalegalrequirementtoprovidethecontributions.Benefitsandrefundsarerecognizedwhendueandpayableinaccordancewiththetermsofeachplan.Theplan'sfiduciarynetpositionwasdeterminedonthesamebasisusedby the pension plan. TheTSERSPlan'sfinancialinformation,includingallinformationabouttheplan'sassets,deferredoutflowsofresources,liabilities,deferredinflowsofresources,andfiduciarynetposition,isincludedintheStateofNorthCarolina'sfiscalyear2015ComprehensiveAnnualFinancialReport.AnelectronicversionofthisreportisavailablebyaccessingtheNorthCarolinaOfficeoftheStateController'sInternethomepagehttp://www.osc.nc.gov/andclickingon"Reports"orbycallingtheState Controller's Financial Reporting Section at (919) 707-0500. TSERSprovidesretirementandsurvivorbenefits.Retirementbenefitsaredeterminedas1.82%ofthemember’saveragefinalcompensationtimesthemember'syearsofcreditableservice.Amember'saveragefinalcompensationiscalculatedastheaverageofamember'sfourhighestconsecutiveyearsofcompensation.Generalemployeeplanmembersareeligibletoretirewithfullretirementbenefitsatage65withfiveyearsofcreditableservice,atage60with25yearsofcreditableservice,oratanyagewith30yearsofcreditableservice.Generalemployeeplanmembersareeligibletoretirewithpartialretirementbenefitsatage50with20yearsofcreditableserviceoratage60withfivyearsofcreditableservice.Survivorbenefitsareavailabletoeligiblebeneficiariesofgeneralmemberswhodiewhileinactiveserviceorwithin180daysoftheirlastdayofsericeandwhoalsohaveeithercompleted20yearsofcreditableserviceregardlessofage,orhavecompletedfiveyearsofserviceandhavereachedage60.EligiblebeneficiariesmayelecttoreceiveamonthlySurvivor'sAlternateBenefitforlifeorareturnofthemember'scontributions.Theplandoesnotprovideforautomaticpost-retirementbenefitincreases.Increasesarecontingentuponactuarial gains of the plan.Page 14 NORTH CAROLINA STATE BOARD OF BARBER EXAMINERS Notes to Financial Statements NOTE 5 - RETIREMENT PLAN (Continued) Methods Used to Value TSERS Investment Net Pension Liability Actuarial Assumptions Valuation Date 12/31/2014 Inflation 3% Salary Increases* 4.25% - 9.10% Investment Rate of Return** 7.25% TSERScurrentlyusesmortalitytablesthatvarybyage,gender,employeegroup(i.e.teacher,general,lawenforcementofficer)andhealthstatus(i.e.disabledandhealthy).ThecurrentmortalityratesarebasedonpublishedtablesandbasedonstudiesthatcoversignificantportionsoftheU.S.population.Thehealthymortalityratesalsocontainaprovisiontoreflectfuturemortalityimprovements. PursuanttoNorthCarolinaGeneralStatutes,theStateTreasureristhecustodianandadministratoroftheretirementsystems.TheStateTreasurermaintainsvariousinvestmentportfoliosinitsInvestmentPool.ThepensiontrustfundsaretheprimaryparticipantsintheLong-termInvestmentportfolioandthesoleparticipantsintheExternalFixedIncomeInvestment,EquityInvestment,RealEstateInvestment,AlternativeInvestment,CreditInvestment,andInflationProtectionInvestmentportfolios.Theinvestmentbalanceofeachpensiontrustfundrepresentsitsshareofthefairmarketvalueofthenetpositionofthevariousportfolioswithintheool.DetaileddescriptionsofthemethodsandsignificantassumptionsregardinginvestmentsoftheStateTreasurerareprovidedinthe2015 Comprehensive Annual Financial Report. Thefollowingtablepresentstheactuarialassumptionsusedtodeterminethetotalpensionliabilityfor the TSERS plan at the actuarial valuation date: * Salary increases include 3.5% inflation and productivity factor. AtJune30,2016,theBoardreportedaliabilityof$68,545foritsproportionateshareofthecollectivenetpensionliability.ThenetpensionliabilitywasmeasuredasofJune30,2015.ThetotalpensionliabilityusedtocalculatethenetpensionliabilitywasdeterminedbyanactuarialvaluationasofDecember31,2014,andupdateprocedureswereusedtorollforwardthetotalpensionliabilitytoJune30,2015.TheBoard'sproportionofthenetpensionliabilitywasbasedonthepresentvalueoffuturesalariesfortheBoardrelativetothepresentvalueoffutuesalariesforallparticipatingemployers,actuarially-determined.AsofJune30,2015,theBoard'sproportionwas0.00186%, which was a decrease of 0.00058% from its proportion measured as of June 30, 2014. ** Investment rate of return is net of pension plan investment expense, including inflation. TheactuarialassumptionsusedintheDecember31,2014valuationswerebasedontheresultsofanactuarial experience study for the period January 1, 2005 through December 31, 2009. FutureadhocCostofLivingAdjustment(COLA)amountsarenotconsideredtobesubstantivelyautomatic and are therefore not included in the measurement. Page 15 NORTH CAROLINA STATE BOARD OF BARBER EXAMINERS Notes to Financial Statements NOTE 5 - RETIREMENT PLAN (Continued) Actuarial Assumptions (Continued) Discount Rate Sensitivity of the Net Pension Liability to Changes in the Discount Rate Long-Term Expected Asset Class Real Rate of Return Fixed Income 3.40% Theinformationaboveisbasedon30-yearexpectationsdevelopedwiththeconsultingactuaryforthe2013asset,liabilityandinvestmentpolicystudyfortheNorthCarolinaRetirementSystems.Thelong-termnominalratesofreturnunderlyingtherealratesofreturnarearithmeticannualizedfigures.Therealratesofreturnarecalculatedfromnominalratesbymultiplicativelysubtractingalong-term inflation assumption of 3.19%. All rates of return and inflation are annualized. Thefollowingpresentsthenetpensionliabilityoftheplancalculatedusingthediscountrateof7.25%,aswellaswhatthenetpensionliabilitywouldbeifitwerecalculatedusingadiscountratethatis1-percentagepointlower(6.25%)or1-percentagepointhigher(8.25%)thanthecurrentrate(dollars in thousands): Thediscountrateusedtomeasurethetotalpensionliabilitywas7.25%.Theprojectionofcashflowsusedtodeterminethediscountrateassumedthatcontributionsfromplanmemberswillbemadeatthecurrentcontributionateandthatcontributionsfromemployerswillbemadeatstatutorilyrequiredrates,actuariallydetermined.Basedonthoseassumptions,thepensionplan'sfiduciarynetpositionwasprojectedtobeavailabletomakeallprojectedfuturebenefitpaymentsofthecurrentplanmembers.Therefore,thelong-termexpectedrateofreturnonpensionplaninvestmentswasappliedtoallperiodsofprojectedbenefitpaymentstodeterminethetotalpensionliabiity. Alternatives Credit 9.80% 6.80% Real Estate 2.20% 5.80% 5.20% Global Equity Inflation Protection Theprojectedlong-terminvestmentreturnsandinflationassumptionsaredevelopedthroughreviewofcurrentandhistoricalcapitalmarketsdata,sell-sideinvestmentresearch,consultantwhitepapers,andhistoricalperformanceofinvestmentstrategies.FixedincomereturnprojectionsreflectcurrentyieldsacrosstheU.S.Treasuryyieldcurveandmarketexpectationsofforwardyieldsprojectedandinterpolatedformultipletenorsandovermultipleyearhorizons.Globalpublicequityreturnprojectionsareestablishedthroughanalysisoftheequityriskpremiumandthefixedincomereturnprojections.Otherassetcategoriesandstrategies'returnprojectionsreflecttheforegoingandhistoricaldataanalysis.Theseprojectionsarecombinedtoproducethelong-termexpectedrateofreturnbyweightingtheexpectedfuturerealratesofreturnbythetargetassetallocationpercentageandbyaddingexpectedinfation.Bestestimatesofarithmeticrealratesofreturnforeachmajorassetclassincludedinthepensionplan'stargetassetallocationasofJune30,2015(thevaluationdate) are summarized in the following table:Page 16 NORTH CAROLINA STATE BOARD OF BARBER EXAMINERS Notes to Financial Statements NOTE 5 - RETIREMENT PLAN (Continued) Sensitivity of the Net Pension Liability (Asset) to Changes in the Discount Rate Deferred Outflows of Resources Deferred Inflows of Resources Difference between actual and expected experience -$ 7,794$ Changes of assumptions - - Net difference between projected and actual earnings on pension plan investments - 7,426 Changes in proportion and differences between employer contributions and proportionate share of contributions 4,466 14,903 Employer contributions subsequent to the measurement date 31,214 - $ 35,680 $ 30,123 $ (11,453) (11,453) (11,507) 8,756 - $ (25,657) 1% Decrease (6.25%) Current Discount Rate 1% Increase (8.25%) EmployerBalancesofDeferredOutflowsofResourcesandDeferredInflowsofResourcesRelated to Pension by Classification 2020 2021 Deferredoutflowsofresourcesanddeferredinflowsofresourcesthatwillberecognizedinpensionexpense: Years Ending June 30: 2017 2018 2019 Deferred Inflows of Resources and Deferred Outflows of Resources Related to Pensions Theamountreportedasdeferredoutflowsofresourcesrelatedtopensionsof$31,214willbeincludedasareductionofthenetpensionliabilityinthefiscalyearendedJune30,2017.Otheramountsreportedasdeferredoutflowsofresourcesanddeferredinflowsofresourcesrelatedtopensions will be recognized in pension expense as follows: $206,301 $68,545 ($48,357) FortheyearendedJune30,2016,theBoardrecognizedpensionexpenseof$48,981.AtJune30,2016,theBoardreporteddeferredoutflowsofresourcesanddeferredinflowsofresourcesrelatedtopensions from the following sources:Page 17 NORTH CAROLINA STATE BOARD OF BARBER EXAMINERS Notes to Financial Statements NOTE 5 - RETIREMENT PLAN (Continued) Deferred Outflow Amount $ 31,214 Changes in Long-Term Liabilities Net Pension Liability Balance July 1, 2015 28,607$ Prior year adjustments - Additions 39,938 Deletions - Balance, June 30, 2016 68,545$ Due within one year -$ NOTE 6 - OPERATING LEASES The following is a schedule of future minimum rental payments under the leases at June 30, 2016: Years Ending June 30: 2017 66,242$ 2018 67,132 2019 62,852 2020 62,041 2021 10,391 268,658$ TheBoardexercisedthefinaloptiontorenewitsbuildingleaseforanadditionalfive-yearperiodeffectiveSeptember1,2015.Theleaseratesforthefive-yearrenewalaresubjecttotheConsumerPrice Index increase not to exceed 1.5%. AmountoftheEmployer'sBalanceofDeferredOutflowsofResourcesthatwillbeIncludedasa Reduction of the Net Pension Liability in the Fiscal Year Ended June 30, 2017. TheBoardhasacopierleasewithmonthlypaymentsofapproximately$576expiringSeptember30,2018. Totalleaseexpenseunderoperatingleaseschargedtooperationswas$66,481and$63,273fortheyears ended June 30, 2016 and 2015, respectively.Page 18 NORTH CAROLINA STATE BOARD OF BARBER EXAMINERS Notes to Financial Statements NOTE 7 - RISK MANAGEMENT NOTE 8 - CONTINGENT LIABILITIES NOTE 9 - RELATED PARTY TRANSACTION NOTE 10 - NET DEFICIT NOTE 11 - SUBSEQUENT EVENTS ManagementoftheBoardevaluatedsubsequenteventsthroughOctober21,2016,whichisthedatethefinancialstatementswereavailabletobeissued.Managementdiscoverednosubsequenteventswhich should be disclosed. The audit was conducted in approximately 110 hours at a cost of $9,670. TheBoardpaysfeestoafamilymemberofitsstaffrelatedtojanitorialserviceswhichamountedto$4,200 for the fiscal years ended June 30, 2016 and 2015. TheBoardisexposedtovariousrisksoflossrelatedtotorts;theftof,damageto,andthedestructionofassets;errorsandomissions;injuriestoemployees;andnaturaldisasters.TortclaimsofBoardmembersareself-insuredbytheStateundertheauthorityoftheStateTortClaimsAct.AdditionalcoverageisprovidedtotheBoardundertheState'spublicofficers'andemployees'liabilityinsurancecontractwithaprivateinsuranccompany.TheBoardalsoprotectsitselffromexposurestolossthroughthepurchaseofcommercialinsurance,ofwhichcoverageincludesbuildingandcontents,commercial liability, workers' compensation and employers' liability. TheBoardisinvolvedinanumberofdisciplinaryhearingsthroughouttheyearwhichariseintheordinarycourseofitsoperations.Intheopinionofmanagement,theresultsofsuchactionsduringthe years under audit do not materially affect the financial position of the Board at year-end. TheBoardhasexperiencednetoperatinglossesforthepastfouryears.TheBoard'srequestforafeeincreasedidnotpassinOctober2015.TheBoardeliminatedcertainstaffpositionseffectiveJanuary 31,2016,resultinginadecreaseinoperatingexpensesandoperatinglossfortheyearendedJune30,2016.Managementestimatesthedecreaseinoperatingexpensesforthenextfiscalyearwillresultinbudgetedrevenuesexceedingexpenditures(cashbasis)byapproximately$89,000fortheyearendingJune30,2017.ThefeeincreaseproposalwillcomebeforetheNorthCarolinaLegislature again in 2017. InSeptember2015theBoardreachedthefinalsettlementofaworker'scompensationclaimmadebyaformeremployee.DuringtheyearsendedJune30,2016and2015,theBoardpaidworkers'compensationclaimsofapproximately$89,000and$41,000,respectively,relatedtothisclaim,ofwhichestimatedsettlementcostsof$84,500wereaccruedatJune30,2015.TheBoardisnowcovered under a workers' compensation insurance policy.See Independent Auditor's Report Page 19 NORTH CAROLINA STATE BOARD OF BARBER EXAMINERS Proportionate Share of Net Pension Liability and Schedule of Board Contributions Teachers' and State Employees' Retirement System Years Ended June 30, 2016 and 2015 2016 2015 Proportionate share percentage of the net pension liability (asset) 0.00186% 0.00244% Proportionate share of the net pension liability (asset) 68,545$ 28,607$ Covered-employee payroll 336,862 393,430 Proportionate share of net pension liability (asset) as a percentage of its covered-employee payroll 20.35% 7.27% Plan fiduciary net position as a percentage of the total pension liability 94.64% 98.24% Contributions: Contractually required contribution 50,789$ 82,935$ Contributions in relation to the contractually required contribution 50,789 82,935 Contributions deficiency (excess) -$ -$ Covered-employee payroll 336,862$ 393,430$ Contributions as a percentage of covered- employee payroll 15.08% 21.08% |
OCLC number | 33934902 |