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BRANDON TOWNSHIP PUBLIC LIBRARYOAKLAND COUNTY, MICHIGANANNUAL FINANCIAL REPORTYEAR ENDED DECEMBER 31, 2021
TABLE OF CONTENTSPageINDEPENDENT AUDITOR'S REPORT1MANAGEMENT’S DISCUSSION AND ANALYSIS4BASIC FINANCIAL STATEMENTSGovernment-wide Financial StatementsStatement of Net PositionStatement of Activities1112Fund Financial StatementsGovernmental FundsBalance SheetReconciliation of Governmental Fund Balance Sheet to the Statement of Net PositionStatement of Revenues, Expenditures, and Changes in Fund BalanceReconciliation of Statement of Revenues, Expenditures, and Changes in Fund Balance with the Statement of Activities13141516Notes to the Financial Statements18REQUIRED SUPPLEMENTARY INFORMATIONSchedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Fund28
Gabridge & Company, PLC3940 Peninsular Dr SE, Suite 200Grand Rapids, MI 49546Tel: 616-538-7100Fax: 616-538-2441gabridgeco.comINDEPENDENT AUDITOR’S REPORTTo the Members of the Library BoardBrandon Township Public LibraryOrtonville, MichiganOpinions0We have audited the accompanying financial statements of the governmental activities and the generalfund of the Brandon Township Public Library (the “Library”), as of and for the year ended December 31,2021, and the related notes to the financial statements, which collectively comprise the Library’s basicfinancial statements as listed in the table of contents.In our opinion, the financial statements referred to above present fairly, in all material respects, therespective financial position of the governmental activities and the general fund of the Library as ofDecember 31, 2021, and the respective changes in financial position for the year then ended in accordancewith accounting principles generally accepted in the United States of America.Basis for OpinionsWe conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica Our responsibilities under those standards are further described in the Auditor’s Responsibilitiesfor the Audit of the Financial Statements section of our report. We are required to be independent ofLibrary to meet our other ethical responsibilities, in accordance with the relevant ethical requirementsrelating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinions.Responsibilities of Management for the Financial StatementsManagement is responsible for the preparation and fair presentation of the financial statements inaccordance with accounting principles generally accepted in the United States of America, and for thedesign, implementation, and maintenance of internal control relevant to the preparation and fairpresentation of financial statements that are free from material misstatement, whether due to fraud or error.In preparing the financial statements, management is required to evaluate whether there are conditions orevents, considered in the aggregate, that raise substantial doubt about the Library’s ability to continue asa going concern for twelve months beyond the financial statement date, including any currently knowninformation that may raise substantial doubt shortly thereafter.Auditor’s Responsibilities for the Audit of the Financial StatementsOur objectives are to obtain reasonable assurance about whether the financial statements as a whole arefree from material misstatement, whether due to fraud or error, and to issue an auditor’s report thatincludes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance andtherefore is not a guarantee that an audit conducted in accordance with generally accepted auditingstandards will always detect a material misstatement when it exists. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error, as fraud may involvecollusion, forgery, intentional omissions, misrepresentations, or the override of internal control.-1-
Misstatements are considered material if there is a substantial likelihood that, individually or in theaggregate, 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, we: Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due tofraud or error, and design and perform audit procedures responsive to those risks. Such proceduresinclude examining, on a test basis, evidence regarding the amounts and disclosures in the financialstatements. Obtain an understanding of internal control relevant to the audit in order to design audit proceduresthat are appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the Library’s internal control. Accordingly, no such opinion is expressed. Evaluate the appropriateness of accounting policies used and the reasonableness of significantaccounting estimates made by management, as well as evaluate the overall presentation of thefinancial statements. Conclude whether, in our judgment, there are conditions or events, considered in the aggregate,that raise substantial doubt about the Library’s ability to continue as a going concern for areasonable period of time.We are required to communicate with those charged with governance regarding, among other matters, theplanned scope and timing of the audit, significant audit findings, and certain internal control-relatedmatters that we identified during the audit.Required Supplementary InformationAccounting principles generally accepted in the United States of America require that the management’sdiscussion and analysis and budgetary comparison information be presented to supplement the basicfinancial statements. Such information is the responsibility of management and, although not a part of thebasic financial statements, is required by the Governmental Accounting Standards Board, who considersit to be an essential part of financial reporting for placing the basic financial statements in an appropriateoperational, economic, or historical context. We have applied certain limited procedures to the requiredsupplementary information in accordance with auditing standards generally accepted in the United Statesof America, which consisted of inquiries of management about the methods of preparing the informationand comparing the information for consistency with management’s responses to our inquiries, the basicfinancial 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 proceduresdo not provide us with sufficient evidence to express an opinion or provide any assurance.Gabridge & Company, PLCGrand Rapids, MichiganMarch 16, 2022-2-
Management's Discussion and Analysis-3-
Brandon Township Public LibraryManagement’s Discussion and AnalysisDecember 31, 2021As management of the Brandon Township Public Library (the “Library” or “government”), weoffer readers of the Library’s financial statements this narrative overview and analysis of thefinancial activities of the Library for the fiscal year ended December 31, 2021. We encouragereaders to consider the information presented here in conjunction with the financial statements asa whole.Financial Highlights The assets of the Library exceeded its liabilities and deferred inflows at the close of thisfiscal year by 3,694,870 (shown as net position). Of this amount, 1,010,396 isunrestricted and may be used to meet the Library’s ongoing obligations to citizens andcreditors. During the year, the Library received 1,220,236 in revenues and incurred 1,090,965 inexpenses, resulting in an increase in net position of 129,271. The general fund increased its fund balance by 221,711 during the year for an endingfund balance of 1,010,396. At the end of the current fiscal year, the unassigned fund balance for the general fund was 576,194, or 57.7% of the general fund’s total expenditures. The Board has committed 150,000 of fund balance for future HVAC buildingimprovements and another 250,000 for Library parking lot improvements.Overview of the Financial StatementsThe Library’s financial statements consist of three components: 1) government-wide financialstatements, 2) fund financial statements, and 3) notes to the financial statements. The report alsocontains other supplementary information in addition to the basic financial statementsthemselves.Government-wide Financial Statements. The government-wide financial statements aredesigned to provide a broad overview of the Library’s financial position. They are presentedusing a method of accounting that is similar to a private sector business.The statement of net position presents information on all of the Library’s assets, liabilities, anddeferred inflows of resources, with the difference being reported as the net position. Over time,increases or decreases in net position can serve as a useful indicator of whether the financialposition of the Library is improving or deteriorating.-4-
The statement of activities presents information showing how the Library’s net position changedduring the most recent fiscal year. All changes in net position are reported as soon as theunderlying event giving rise to the change occurs, regardless of the timing of related cash flows.Thus, revenues and expenses are reported in this statement for some items that will result in cashflows in future fiscal periods (e.g., depreciation of capital assets).Fund Financial Statements. A fund is a grouping of related accounts that is used to maintaincontrol over resources that have been segregated for specific activities or objectives. Each fundis operated similar to a completely separate entity, with its own set of balancing accounts. TheLibrary uses fund accounting to ensure compliance with finance-related legal requirements.Governmental Funds. The Library’s basic services are reported in the governmental funds.Governmental funds account for essentially the same functions as governmental activities in thegovernment-wide financial statements. However, unlike the government-wide financialstatements, governmental fund financial statements focus on near-term inflows and outflows ofspendable resources, as well as on balances of spendable resources available at the end of thefiscal year. This is known as the modified accrual system of accounting. Under this reportingsystem, capital items, debt payments, and certain other items are treated differently than on thegovernment-wide statements. These items are recorded in the government fund balance asexpenditures. No depreciation is recorded on capital items. The balance sheet for governmentalfunds does not include any capital items or long-term debt. The Library has one governmentalfund, its general fund.The Library adopts an annual appropriated budget for its general fund. A budgetary comparisonschedule has been provided for the general fund to demonstrate compliance with this budget.Notes to the Financial Statements. The notes to the financial statements provide additionalinformation that is essential to a complete understanding of the information provided in both thegovernment-wide and the fund financial statements.Other information. In addition to the basic financial statements and accompanying notes, thisreport further presents required supplementary information (RSI) that explains the informationpresented in the financial statements.-5-
Government-wide Financial AnalysisAs noted earlier, net position may serve over time as a useful indicator of overall financialposition. In the case of the Library, assets exceeded liabilities and deferred inflows by 3,694,870 at the close of the most recent fiscal year. The following table illustrates the varyingresults of the governmental activities that combine to capture the Library’s total net position.Brandon Township Public Library's Net Position2021ASSETSCurrent AssetsCash and Cash Equivalents Taxes ReceivablePrepaid ItemsOther ReceivablesTotal Current AssetsNoncurrent AssetsCapital Assets not being DepreciatedCapital Assets being Depreciated, netTotal AssetsLIABILIITESCurrent LiabilitiesAccounts PayablePayroll LiabilitiesTotal LiabilitiesDEFERRED INFLOWS OF RESOURCESTaxes Levied for a Subsequent PeriodTotal Deferred Inflows of ResourcesNET POSITIONInvestment in Capital AssetsUnrestrictedTotal Net Position 1,098,8721,087,00334,2022,220,0772020 ,565,599 By far, the largest portion of the Library’s net position (72.7%) reflects its investment in capitalassets (e.g., land, buildings and improvements, equipment and furniture, and library materials).The Library uses these capital assets to provide a variety of services to its patrons. Accordingly,these assets are not available for future spending.The remaining portion of the Library’s net position of 1,010,396 is unrestricted and may beused to meet the Library’s ongoing obligations to its patrons and creditors and makes up 27.3%of the total net position.Cash and cash equivalents increased by 257,055 in comparison to the prior year. The Libraryincreased its fund balance during the year by 221,711 and, accordingly, experienced a similarincrease in cash and cash equivalents.-6-
Capital assets being depreciated decreased by 92,440 as a result of depreciation expenseexceeding capital asset additions.At the end of the current fiscal year, the Library was able to report positive balances in allreported categories of net position and fund balance.Governmental Activities. During the current fiscal year, net position increased 129,271 fromthe prior fiscal year for an ending balance of 3,694,870.Brandon Township Public Library's Changes in Net Position2021Program RevenuesCharges for ServicesOperating Grants and ContributionsTotal Program RevenuesGeneral RevenuesProperty TaxesPenal FinesIntergovernmentalInterestTotal General RevenuesTotal RevenuesExpensesRecreation and CultureTotal ExpensesChange in Net PositionNet Position at Beginning of PeriodNet Position at End of Period 10,1922,92213,1142020 1,048,1471,048,147149,9233,415,6763,565,599 Property tax revenue increased by 44,939 due to increases in the total taxable values ofproperties in the Library’s service area. Operating grants and contributions decreased by 12,109mainly due to not receiving a Cares Act grant during the year. Total expenses increased by 42,818 compared to the prior year, primarily due to repairs and maintenance increasing by 40,360 for various repair and maintenance projects.-7-
Governmental ActivitiesThe following chart details the revenue sources for the Library for the most recent fiscal yearend:Two of the largest expenses for the Library were salaries and fringe benefits expense of 586,767 and depreciation expense of 186,385, which represented 53.8% and 17.1%,respectively, of the total expenses within the Library.Financial Analysis of the Government’s FundsThe Library uses fund accounting to ensure and demonstrate compliance with finance-relatedlegal requirements.General Fund - The general fund is the main operating fund of the Library. The general fundbalance increased during the year by 221,711, increasing the fund balance to 1,010,396. As ameasure of the general fund’s liquidity, it may be useful to compare unassigned fund balance tototal general fund expenditures. Unassigned fund balance represents approximately 57.7% oftotal general fund expenditures.All revenues and expenditures were closely monitored by the Board and management during theyear resulting in an increase of fund balance of 221,711. The increase is mainly contributed toa decrease in spending due to the COVID-19 pandemic. The Library is also planning onspending a significant amount of funds on capital projects in the coming years.General Fund Budgetary HighlightsOriginal budget compared to final budget. During the year there were no significantadjustments between original and final budgets.-8-
Final budget compared to actual results. The Library did not have any expenditures in excess ofappropriations during the year.Capital AssetsThe Library’s investment in capital assets at year-end amounted to 2,684,474 (net ofaccumulated depreciation). Capital assets of the Library include any items purchased that havean expected useful life of over one year and a cost of over 500. The Library has invested in abroad range of capital assets. More information about the Library’s capital assets can be foundin the Notes to the Financial Statements section of this document.Economic Factors and Next Year’s Budgets and RatesManagement estimates a similar level of revenues (compared to 2021) will be available forappropriation in the general fund in the 2022 budget. Property tax revenue is expected toincrease by approximately 26,000 due to the increased taxable value of properties in theLibrary’s service area.Management estimates general operating expenditures to change by small amounts and to becomparable to 2021 operations. The Library continues to review all budget line items foropportunities to reduce expenditures when possible. The budget will be monitored during theyear to identify any necessary amendments. In 2022, the Library plans again to use currentrevenues to provide essential services and to use reserves for capital improvements based on theStrategic Plan. The ongoing costs of providing essential services for the citizens of the Librarywill again need to be monitored in order to maintain the financial condition of the Library.Additionally, management is currently working to determine the significance that the COVID-19Pandemic will have on the Library’s upcoming revenues and expenditures. The Library plans tomonitor expenditures in these areas carefully.Contacting the Library’s ManagementThis financial report is designed to provide the wide variety of users of this document with ageneral overview of the Library’s finances and demonstrate the Library’s accountability for themoney entrusted to it. If you have any questions regarding this report or need additionalfinancial information, please direct your requests to:Brandon Township Public Library304 South StreetOrtonville, Michigan 48462-9-
Basic Financial Statements-10-
Brandon Township Public LibraryStatement of Net PositionDecember 31, 2021ASSETSCurrent AssetsCash and Cash EquivalentsTaxes ReceivablePrepaid ItemsTotal Current AssetsNoncurrent AssetsCapital Asset not Being DepreciatedCapital Assets Being Depreciated, netTotal AssetsLIABILITIESCurrent LiabilitiesAccounts PayablePayroll LiabilitiesTotal Current LiabilitiesDEFERRED INFLOWS OF RESOURCESTaxes Levied for Subsequent PeriodTotal Deferred Inflows of ResourcesNET POSITIONInvestment in Capital AssetsUnrestrictedTotal Net Position ,904,55127,78610,13137,9171,171,7641,171,764 2,684,4741,010,3963,694,870The Notes to the Financial Statements are an integral part of these Financial Statements-11-
Brandon Township Public LibraryStatement of ActivitiesFor the Year Ended December 31, 2021Functions/ProgramsRecreation and CultureTotal Expenses1,090,9651,090,965 Charges forServices10,19210,192Program RevenuesOperatingCapital GrantsGrants andandContributionsContributions 2,922 - 2,922 --General Purpose Revenues:Penal FinesIntergovernmentalProperty TaxesInterestTotal General RevenuesChange in Net PositionNet Position at Beginning of PeriodNet Position at End of PeriodThe Notes to the Financial Statements are an integral part of these Financial Statements-12-Net (Expense)Revenue (1,077,851)(1,077,851) 93,694,870
Brandon Township Public LibraryBalance SheetGovernmental FundDecember 31, 2021GeneralASSETSCash and Cash EquivalentsTaxes ReceivablePrepaid ItemsTotal AssetsLIABILITIESAccounts PayablePayroll LiabilitiesTotal LiabilitiesDEFERRED INFLOWS OF RESOURCESTaxes Levied for Subsequent PeriodTotal Liabilities and Deferred Inflows of ResourcesFUND BALANCENonspendableCommittedUnassignedTotal Fund BalanceTotal Liabilities, Deferred Inflows of Resources and Fund Balance 71,171,7641,209,681 34,202400,000576,1941,010,3962,220,077The Notes to the Financial Statements are an integral part of these Financial Statements-13-
Brandon Township Public LibraryReconciliation of Governmental Fund Balance Sheet to the Statement of Net PositionDecember 31, 2021Total Fund Balance - Governmental Fund General government capital assets of 5,687,044, net of accumulated depreciation of 3,002,570, are not financial resources and, accordingly, are not reported in the funds.Total Net Position - Governmental Activities1,010,3962,684,474 The Notes to the Financial Statements are an integral part of these Financial Statements-14-3,694,870
Brandon Township Public LibraryStatement of Revenues, Expenditures, and Changes in Fund BalanceGovernmental FundFor the Year Ended December 31, 2021GeneralRevenuesProperty TaxesPenal FinesIntergovernmentalCharges for ServicesLibrary Fines and FeesInterestOther IncomeTotal RevenuesExpendituresStaff Wages and Fringe BenefitsSuppliesTechnologyCooperative ExpendituresProfessional and Contractual ServicesProfessional DevelopmentProperty and Liability InsuranceCommunity RelationsPublic UtilitiesRepairs and MaintenanceAdministrative ExpendituresLibrary Collection MaterialsTotal ExpendituresExcess of Revenues Over(Under) ExpendituresNet Change in Fund BalanceFund Balance at Beginning of PeriodFund Balance at End of Period 537122,8551,49498,067998,525 221,711221,711788,6851,010,396The Notes to the Financial Statements are an integral part of these Financial Statements-15-
Brandon Township Public LibraryReconciliation of Governmental Fund Statement of Revenues, Expenditures, andChanges in Fund Balance with Statement of ActivitiesFor the Year Ended December 31, 2021Total Net Change in Fund Balances - Governmental Fund Governmental fund report capital outlay as expenditures; however, in the statement ofactivities, the cost of those assets is allocated over the estimated useful lives as depreciationexpense. This is the amount by which depreciation expense of 186,385 exceeds capitaloutlay expenditures of 93,945.Changes in Net Position - Governmental Activities221,711(92,440) The Notes to the Financial Statements are an integral part of these Financial Statements-16-129,271
Notes to the Financial Statements-17-
Brandon Township Public LibraryNotes to the Financial StatementsNote 1 - Summary of Significant Accounting PoliciesThe accounting policies of the Brandon Township Public Library (the “Library”) conform toaccounting principles generally accepted in the United States of America as applicable togovernmental units. The following is a summary of the Library’s significant accounting policies.Reporting EntityBrandon Township Public Library is located in the Charter Township of Brandon, OaklandCounty, Michigan. The Library is primarily funded through tax levies, fines and fees, and stateaid.The Library is governed by an elected six-member board. The accompanying basic financialstatements have been prepared in accordance with criteria established by the GovernmentalAccounting Standards Board for determining the various governmental organizations to beincluded in the reporting entity. Based on these criteria, there are no component units that are tobe included in these financial statements.The Library’s financial statements are included in the Charter Township of Brandon’s financialstatements for the year ended December 31, 2021 as a discretely presented component unit.Government-wide and Fund Financial StatementsThe government-wide financial statements (e.g., the statement of position and the statement ofactivities) report information on all of the activities of the Library. The Library only reportsgovernment activities, which are supported by taxes and intergovernmental revenues.The statement of activities demonstrates the degree to which the direct expense of a givenfunction or segment is offset by program revenues. Direct expenses are those that are clearlyidentifiable with a specific function or segment. Program revenues include: 1) charges to Librarypatrons who purchase, use, or directly benefit from goods, services, or privileges provided by agiven function or segment and 2) grants and contributions that are restricted to meet theoperational or capital requirements of a particular function or segment. Taxes and other items arenot properly included among program revenues, and are reported instead as general revenue.The statement of net position includes and recognizes all long-term assets and receivables as wellas long-term debt and obligations. The Library’s net position is reported in three parts: 1)investment in capital assets, 2) restricted net position, and 3) unrestricted net position.Measurement Focus, Basis of Accounting, and Financial Statement PresentationThe government-wide financial statements are reported using the economic resourcesmeasurement focus and the accrual basis of accounting. Revenues are recorded when earned and-18-
Brandon Township Public LibraryNotes to the Financial Statementsexpenses are recorded when a liability is incurred, regardless of the timing of related cash flows.Grants and similar items are recognized as revenue as soon as all eligibility requirementsimposed by the provider have been met.Governmental fund financial statements are reported using the current financial resourcesmeasurement focus and the modified accrual basis of accounting. Revenues are recognized assoon as they are both measurable and available. Revenues are considered to be available whenthey are collectible within the current period or soon enough thereafter to pay liabilities of thecurrent period. For this purpose, the Library considers revenues to be available if they arecollected within 60 days of the end of the current fiscal period. Expenditures generally arerecorded when a liability is incurred, as under accrual accounting. However, debt serviceexpenditures, as well as expenditures related to compensated absences, are recorded only whenpayment is due. General capital asset acquisitions are reported as expenditures in governmentalfunds.Intergovernmental revenue, charges for services, and interest associated with the current fiscalperiod are all considered to be susceptible to accrual and so have been recognized as revenues ofthe current fiscal period. All other revenue items are considered to be measurable and availableonly when cash is received by the Library.The Library reports the following major governmental funds:The general fund is the Library’s primary operating fund. It accounts for all financialresources of the Library, except those required to be accounted for in another fund.Financial Statement AmountsDeposits and Investments - Cash and cash equivalents are considered to be cash on hand,demand deposits, and short-term investments with a maturity of 90 days or less when acquired.Investments are stated at fair value based on quoted market price and include certificates ofdeposit with an original maturity of greater than 90 days from the date of purchase. Certificatesof deposit are stated at cost which approximates fair value.Prepaid Items - Certain payments to vendors reflect costs applicable to future accounting periodsand are recorded as prepaid items in both the government-wide and fund financial statements.The cost of prepaid items is recorded as expenditures / expenses when consumed rather thanwhen purchased.Receivables - All trade and property tax receivables are shown as net of allowance foruncollectible amounts, the library has no allowance recorded for any of its receivables.Property Taxes - Properties are assessed as of December 31 and the related property taxes arebilled and become a lien on December 1 of the following year. They are considered delinquent-19-
Brandon Township Public LibraryNotes to the Financial Statementson March 1st of the next year, and are then added to the county tax rolls. Property taxes billedduring the month of December will be used to finance the following year’s operations. As such,these taxes are recorded as deferred inflows of resources at December 31.The Library levied 1.9207 operating mills per 1,000 of taxable valuation. The 2020 taxablevalues were 598,192,250 and were recognized as revenues during 2021 (the year that the taxrevenues were intended to finance).Capital Assets - Capital assets are defined by the Library as assets with an initial cost of morethan 500 and an estimated useful life in excess of one year. Such assets are recorded athistorical cost. Donated assets are reported at acquisition value at the date of donation.Additions, improvements, and other capital outlays that significantly extend the useful life of anasset are capitalized. Other costs incurred for repairs and maintenance are expensed as incurred.Depreciation on all assets is provided on the straight-line basis over the following estimateduseful lives:DescriptionBuildings and ImprovementsComputer EquipmentEquipmentFurniture and FixturesLibrary Collection lineStraight-lineStraight-lineLife5 - 40 years3 - 10 years5 - 15
BRANDON TOWNSHIP PUBLIC LIBRARY OAKLAND COUNTY, MICHIGAN ANNUAL FINANCIAL REPORT YEAR ENDED DECEMBER 31, 2021 . Page. INDEPENDENT AUDITOR'S REPORT. 1 MANAGEMENT'S DISCUSSION AND ANALYSIS 4 . BASIC FINANCIAL STATEMENTS Government-wide Financial Statements. Statement of Net Position 11 Statement of Activities 12 . Fund Financial Statements .
