AUDIT - 2010

REPORT OF AUDIT BOROUGH OF MILFORD COUNTY OF HUNTERDON DECEMBER 31, 2010

BOROUGH OF MILFORD, N.J. TABLE OF CONTENTS

YEAR ENDED DECEMBER 31, 2010

PART I

Page

Exhibit

1 - 2

Independent Auditor's Report

CURRENT FUND A

3 - 4

Comparative Balance Sheet - Current Fund

A-1 Comparative Statement of Operations and Changes in Fund Balance - Regulatory Basis - Current Fund A-2 Statement of Revenues - Regulatory Basis A-3 Statement of Expenditures - Regulatory Basis

5

6 - 7

8 - 12

TRUST FUND B

13

Comparative Balance Sheet - Regulatory Basis

GENERAL CAPITAL FUND C Comparative Balance Sheet - Regulatory Basis C-1 Schedule of Fund Balance - Regulatory Basis

14 15

WATER UTILITY FUND D

16 - 17

Comparative Balance Sheet - Regulatory Basis

D-1 Comparative Statement of Operations and Changes in Fund Balance Regulatory Basis

18 19 19 20

D-2 Statement of Fund Balance - Regulatory Basis D-3 Statement of Revenues - Regulatory Basis D-4 Statement of Expenditures - Regulatory Basis

SEWER UTILITY FUND E

21 - 22

Comparative Balance Sheet - Regulatory Basis

E-1 Comparative Statement of Operations and Changes in Fund Balance - Regulatory Basis E-2 Statement of Fund Balance - Regulatory Basis E-3 Statement of Revenues - Regulatory Basis E-4 Statement of Expenditures - Regulatory Basis

23 24 24 25

PUBLIC ASSISTANCE FUND F

26

Comparative Balance Sheet - Regulatory Basis

FIXED ASSETS G Comparative Statement of General Fixed Assets - Regulatory Basis

27

Exhibit

Page

NOTES TO FINANCIAL STATEMENTS

28 - 49

SUPPLEMENTARY DATA

OFFICIALS IN OFFICE AND SURETY BONDS

50

COMPARATIVE SCHEDULES

51 - 55

CURRENT FUND A-4

56 57 58 59 60 61 62 63 66 67 68 69 70 71 72 73 74 75 76 77 77 78

Schedule of Cash - Treasurer

Schedule of Cash - Tax Collector - Change Fund

A-5 A-6 A-7 A-8 A-9

Schedule of Taxes Receivable and Analysis of Property Tax Levy

Schedule of Tax Title Liens Receivable Schedule of Revenue Accounts Receivable Schedule of Due from Frenchtown

A-10 Schedule of Amount Due to State of New Jersey for Veterans and Senior Citizens Deductions

A-11 Schedule of Interfunds Receivables/(Payables) A-12 Schedule of Appropriation Reserves A-13 Schedule of Various Cash Liabilities and Reserves

64 - 65

A-14 Schedule of Prepaid Taxes A-15 Schedule of County Taxes Payable

A-16 Schedule of Local School District Taxes Payable A-17 Schedule of Regional High School Taxes Payable

A-18 Schedule of Interfunds A-19 Schedule of Grants Receivable

A-20 Schedule of Appropriated Reserves for Grants A-21 Schedule of Unappropriated Reserves for Grants

TRUST FUNDS B-1

Schedule of Cash

Reserve/(Deficit) for Animal Control Trust Fund Expenditures

B-2 B-3 B-4 B-5

Schedule of Interfunds

Schedule of Due to State Department of Health

Schedule of Other Trust Funds

Pa ge

Exhibit

GENERAL CAPITAL FUND C-2 Schedule of Cash

79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 93 94 95 96

Analysis of Cash

C-3 C-4 C-5 C-6 C-7 C-8 C-9

Schedule of Interfund Accounts Receivable (Payable)

Schedule of Grants Receivable - Delaware River Joint Toll Bridge Commission Schedule of Deferred Charges to Future Taxation - Unfunded

Schedule of Capital Improvement Fund Schedule of Improvement Authorizations

Schedule of Various Reserves

C-10 Schedule of Bond Anticipation Notes Payable

C-11 Schedule of Bonds and Notes Authorized But Not Issued

WATER UTILITY FUND

Schedule of Cash

D-5 D-6 D-7 D-8 D-9

Schedule of Water Utility Collector Cash

Schedule of Change Fund

Schedule of Water Utility Capital Cash Schedule of Consumer Accounts Receivable

D-10 Schedule of Water Overpayments

D-11 Schedule of Interfund Accounts Receivable (Payable)

D-12 Schedule of Fixed Capital

D-13 Schedule of Fixed Capital Authorized and Uncompleted

97 98 99

D-14 Schedule of Appropriation Reserves

D-15 Schedule of Accrued Interest on Loan And Notes D-16 Schedule of Improvement Authorizations D-17 Schedule of USDA-Rural Development Loan Payable

100 101 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115

D-18 Schedule of Reserve for Amortization

D-19 Schedule of Reserves

D-20 Schedule of Deferred Reserve for Amortization D-21 Schedule of Bond Anticipation Notes Payable D-22 Schedule of Bonds and Notes. Authorized but Not Issued

SEWER UTILITY FUND E-5 Schedule of Cash

Schedule of Sewer Utility Collector Cash Schedule of Sewer Utility Capital Cash Schedule of Consumer Accounts Receivable

E-6 E-7 E-8 E-9

Schedule of Interfund Accounts Receivable (Payable)

E-10 Schedule of Sewer Overpayments

E-11 Schedule of Fixed Capital

E-12 Schedule of Fixed Capital Authorized and Uncompleted

E-13 Schedule of Appropriation Reserves E-14 Schedule of Accrued Interest on Notes

E-15 Schedule of Sewer Capital Bond Anticipation Notes

Exhibit

Page

E-16 Schedule of U. S .D.A. Development Loan E-17 Schedule of Improvement Authorizations E-18 Schedule of Capital Improvement Fund E-19 Schedule of Reserve for Amortization

116 117 118 118 119 120 121

E-20 E-21

Schedule of Deferred Reserve for Amortization Schedule of Various Reserve for Sewer Capital

E-22 Schedule of Bonds and Notes Authorized but Not Issued

PUBLIC ASSISTANCE FUND

122 123 124 125 125 126 126

F-1 F-2 F-3 F-4 F-5 F-6 F-7

Schedule of Cash - Treasurer

Schedule of Cash and Reconciliation Per N.J.S. 40A:5-5

Schedule of Cash and Reconciliation Schedule of Revenues - Cash Basis Schedule of Expenditures - Cash Basis Schedule Reserve for Public Assistance Schedule of Interfund Current Fund

PART II

SINGLE AUDIT SECTION

Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133 and N.J. OMB Circular 04-04

127 - 128

129 - 130

131 132 133

Schedule of Expenditures of Federal Awards

Schedule of Expenditures of State Financial Assistance

Notes to the Schedules of Expenditures of Federal and State Awards

134 - 136

Schedule of Findings and Questioned Costs Summary Schedule of Prior Audit Findings

137

Rag. e

PART III

COMMENTS AND RECOMMENDATIONS

GENERAL COMMENTS

Cash Balances

138 138 139 140 140 140 141

Contracts and Agreements Required

Collection of Interest on Delinquent Taxes and Assessments

Delinquent Taxes and Tax Title Liens

Verification of Delinquent Taxes and Other Charges

Segregation of Duties

Other Comments

141

RECOMMENDATIONS

STATUS OF PRIOR YEAR'S AUDIT FINDINGS/RECOMMENDATIONS

141

BOROUGH OF MILFORD

PART I

REPORT OF AUDIT ON FINANCIAL STATEMENTS

AND SUPPLEMENTARY DATA

YEAR ENDED DECEMBER 31, 2010

Ferraioli, Wielkotz, Cerullo & Cuva, P.A.

Charles J. Ferraioli, Jr., MBA, CPA, RMA Steven D. Wielkotz, CPA, RMA James J. Cerullo, CPA, RMA Paul J. Cuva, CPA, RMA Thomas M. Ferry, CPA, RMA

Certified Public Accountants 401 Wanaque Avenue Pompton Lakes, New Jersey 07442 973-835-7900 Fax 973-835-6631

Newton Office 100B Main Street Newton, N.J. 07860 973-579-3212 Fax 973-579-7128

INDEPENDENT AUDITOR'S REPORT

June 8, 2011

The Honorable Mayor and Members of the Borough Council Borough of Milford 30 Water Street P.O. Box 507 Milford, New Jersey 08848

We have audited the accompanying balance sheets - regulatory basis of the various funds and account group of the Borough of Milford in the County of Hunterdon, as of and for the years ended December 31, 2010 and 2009, and the related statements of operations and changes in fund balance - regulatory basis for the years then ended, and the related statement of revenues - regulatory basis and statement of expenditures - regulatory basis of the various funds for the year ended December 31, 2010. These financial statements are the responsibility of the Borough's management. Our responsibility is to express an opinion on these financial statements based on our audits. Except as discussed below, we conducted our audits in accordance with auditing standards generally accepted in the United States of America, the audit requirements prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey, and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Borough's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provides a reasonable basis for our opinion. As described in Note 1, these financial statements were prepared in conformity with accounting practices prescribed or permitted by the Division of Local Government Services, Department of Community Affairs, State of New Jersey, that demonstrates compliance with the modified accrual basis, with certain exceptions, and the budget laws of New Jersey, which practices differ from accounting principles generally accepted in the United States of America. The affect on the financial statements of the variances between the prescribed basis of accounting and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material.

1

Honorable Mayor and Borough Council Borough of Milford June 8, 2011 Page 2

In our opinion, because of the Borough of Milford's policy to prepare its financial statements on the basis of accounting discussed in the preceding paragraph, the financial statements referred to above do not present fairly, in conformity with accounting principles generally accepted in the United States of America, the financial position of the Borough of Milford, New Jersey as of December 31, 2010 and 2009 or the results of its operation for the years then ended. However, in our opinion, the financial statements referred to above present fairly, in all material respects, the financial position - regulatory basis of the various funds and account group of the Borough of Milford, New Jersey at December 31, 2010 and 2009, and the results of its operations and the changes in fund balance - regulatory basis of such funds for the years then ended and the statement of revenues - regulatory basis, and statement of expenditures - regulatory basis for the year ended December 31, 2010, on the basis of accounting described in Note 1. In accordance with the Government Auditing Standards, we have also issued a report dated June 8, 2011 on our consideration of the Borough of Milford, New Jersey internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. Our audit was conducted for the purpose of forming an opinion on the financial statements of the Borough of Milford, State of New Jersey, taken as a whole. The accompanying supplementary information, schedules and exhibits listed in the table of contents are presented for purposes of additional analysis as required by the U.S. Office of Management and Budget Circular A-133, "Audits of States, Local Governments and Non-Profit Organizations"; and State Circular OMB 04-04, Single Audit Policy for Recipients of Federal Grants, State Grants and State Aid and are not a required part of the financial statements of the Borough of Milford, State of New Jersey. Such information has been subject to auditing procedures applied in the audit of the financial statements and, in our opinion, is fairly presented in all material respects, in relation to the financial statements taken as a whole, on the basis of accounting described in Note 1.

Thomas M. Fen-y, C.P.A. Registered Municipal Accountant No. 497

FERRAIOLI, WIELKOTZ, CERULLO & CUVA, P.A. Certified Public Accountants

2

A Page 1 of 2

Borough of Milford, N.J. Comparative Balance Sheet - Regulatory Basis Current Fund December 31, 2010 and 2009

Ref.

2010

2009

Assets Current Fund: Cash

A-4 A-5

984,754.65

1,013,433.19

Change Fund

50.00

50.00

984,804.65

1,013,483.19

Receivables and Other Assets with Full Reserves: Delinquent Taxes Receivable

A-6 A-7

113,219.90 59,964.63

62,180.73 52,047.62

Tax Title Liens Receivable Interfund Receivables: Federal and State Grant Fund Animal Control Trust Fund

A-11 A-11 A-11 A-11

46,334.87

49,023.70

0.03

0.14

Other Trust Fund General Capital

6,015.27 63,594.55 289,129.25 1,273,933.90

6,015.05 58,910.73 228,177.97 1,241,661.16

Federal and State Grant Fund: Interfund Receivable - General Capital

A-18 A-19

40,000.00 11,584.87 51,584.87

40,000.00 11,584.87 51,584.87

Grants Receivable

1,325,518.77

1,293,246.03

The accompanying "Notes to Financial Statements" are an integral part of these financial statements.

3

A Page 2 of 2

Borough of Milford, N.J.

Comparative Balance Sheet - Regulatory Basis

Current Fund

December 31, 2010 and 2009

Ref.

2010

2009

Liabilities, Reserves and Fund Balance

Current Fund: Appropriation Reserves

A-3;A-12

186,388.38

138,797.31

Due to State of New Jersey: Senior Citizen and Veteran Deductions

A-10

4,893.19

4,893.19

Due to State of New Jersey: Marriage Surcharge

A-13 A-13 A-13 A-14 A-15 A-16 A-17

50.00 54.85

7,539.96

Tax Overpayments

Reserve for:

7,921.00 15,918.59 49,674.93 78,337.87 351,029.26 289,129.25 633,775.39 1,273,933.90 355.34

11,881.80 9,137.77 38,957.50 142,805.80 346,870.10 228,177.97 666,613.09 1,241,661.16 291.88

Garden State Trust

Prepaid Taxes

County Taxes Payable District School Taxes Payable Regional School Taxes Payable

Contra

Reserve for Receivables

A-1

Fund Balance

Federal and State Grant Fund: Interfund Payable - Current Fund Appropriated Reserve for Grants Unappropriated Reserve for Grants

49,023.70 1,468.16 1,093.01 51,584.87

46,334.87 1,250.00 4,000.00 51,584.87

A-18 A-20 A-21

1,293,246.03

1,325,518.77

The accompanying "Notes to Financial Statements" are an integral part of these financial statements.

4

A-1

Borough of Milford, N.J. Comparative Statement of Operations and Changes in Fund Balance - Regulatory Basis Current Fund Years Ended December 31, 2010 and 2009 Ref. 2010 2009 Revenues and Other Income: Fund Balance Utilized A-2 139,000.00 241,000.00 Miscellaneous Revenue Anticipated A-2 327,547.72 896,510.81 Receipts from Delinquent Taxes A-2 61,410.63 50,438.60 Receipts from Current Taxes A-2 3,734,127.90 3,558,758.05 Non-Budget Revenue A-2 44,371.24 43,973.10 Other Credits to Income: Refund of Health Insurance from Frenchtown Court 202.05 Interfunds Returned A-11 2,688.94 69,221.54 Appropriated Grants Cancelled 605,292.26 Unexpended Balance of Appropriation Reserves A-12 64,586.16 104,926.63 Cancellation of Tax Overpayments A-13 0.62 Total Revenues and Other Income 4,373,733.21 5,570,323.04 Expenditures: Budget and Emergency Appropriations: Operations - Within Caps: Salaries and Wages A-3 208,714.00 208,414.00 Other Expenses A-3 650,894.00 633,553.00 Deferred Charges and Statutory Expenditures Municipal - Within Caps A-3 44,371.00 42,733.00 Operations - Excluded From CAPS: Salaries and Wages 19,030.00 Other Expenses A-3 97,461.01 83,175.16 Capital Improvements - Excluded from Caps A-3 81,000.00 566,000.00 Municipal Debt Service - Excluded from Caps A-3 94,784.59 103,013.70 Deferred Charges and Statutory Expenditures - Municipal - Excluded from Caps A-3 36,350.00 36,350.00 Interfund Advances A-11 4,684.04 55,038.75 Grants Receivable Cancelled 500,000.00 County Taxes including Added Taxes A-15 511,681.05 486,243.58 Local District School Tax A-16 1,741,646.00 1,661,827.00 Regional High School Tax A-17 795,985.22 707,190.27 Total Expenditures 4,267,570.91 5,102,568.46 Excess (Deficit) Revenue Over Expenditures 106,162.30 467,754.58 Adjustment to Income Before Fund Balance

Expenditures Included above Which are by Statute Deferred Charges to Budget of Succeeding Year Statutory Excess to Fund Balance

467,754.58 439,858.51 907,613.09 241,000.00 666,613.09

106,162.30 666,613.09 772,775.39 139,000.00 633,775.39

A-1

Fund Balance, January 1,

Decreased by: Fund Balance Utilized as Budget Revenue

A

Fund Balance, December 31,

The accompanying "Notes to Financial Statements" are an integral part of these financial statements.

5

A-2 Page 1 of 2

Borough of Milford, N.J. Statement of Revenues - Regulatory Basis Current Fund Year Ended December 31, 2010

Excess or (Deficit)

Realized

Budget

Ref.

139,000.00

A-1

139,000.00

Fund Balance Anticipated

Miscellaneous Revenues: Licenses: Alcoholic Beverages

2.30

5,802.30

5,800.00

A-8

Fines and Costs:

(9,367.44) 9,259.58 (1,642.25) (135.88)

2,532.56 22,159.58 3,557.75 67,132.12 211,046.00 11,881.80

11,900.00 12,900.00 5,200.00 67,268.00 211,046.00 11,881.80

A-8 A-8 A-8 A-8 A-8 A-8

Municipal Court

Interest and Costs on Taxes

Interest on Investments and Deposits

Consolidated Municipal Property Tax Relief Act

Energy Receipts Tax Garden State Trust

Special Items of General Revenue Anticipated With Prior Written Consent of Director of

Local Government Services: Public and Private Revenues: Recycling Tonnage Grant Other Special Items: Uniform Fire Safety Act

1,093.01

1,093.01

A-19

(95.40)

2,342.60 327,547.72 61,410.63 527,958.35

2,438.00 329,526.81 52,000.00 520,526.81

A-8 A-1

(1,979.09) 9,410.63 7,431.54

Total Miscellaneous Revenues

A-1;A-2

Receipts from Delinquent Taxes Subtotal General Revenues

Amount to be Raised by Taxes for Support of Municipal Budget-Local Tax for Municipal Purposes Including Reserve for Uncollected Taxes A-2

(29,027.57) (21,596.03) 44,371.24 22,775.21

775,043.63

804,071.20

1,324,598.01 1,303,001.98

Budget Totals

44,371.24

A-1;A-2

Non-Budget Revenue

1,324,598.01 1,347,373.22

The accompanying "Notes to Financial Statements" are an integral part of these financial statements.

6

A-2 Page 2 of 2

Borough of Milford, N.J. Statement of Revenues - Regulatory Basis Current Fund Year Ended December 31, 2010

Analysis of Realized Revenues

if

Revenue from Collections

A-1;A-6

3,734,127.90

Allocated to School and County Taxes

A-6

3,049,312.27

Balance for Support of Municipal Budget Appropriations Add : Appropriation - Reserve for Uncollected Taxes Amount for Support of Municipal Budget Appropriations

684,815.63

A-3

90,228.00

A-2

775,043.63

Receipts from Delinquent Taxes: Delinquent Taxes Taxes Receivable

A

2;A

6

61,410.63

-

-

Analysis of Non-budget Revenues

Miscellaneous Revenues Not Anticipated: Revenues Accounts Receivable: Borough Clerk

A-8

2,545.00

Cable T.V. Franchise Fee

4,741.00 2,441.00 345.00 25,801.53 2,742.00 5,755.71

PAIC Rebate

Sr. Citizen and Veteran Admin. Fees Water and Sewer Health Care Reimbursement

Fire Official / Fire Safety

Miscellaneous

A-4

41,826.24

A-2

44,371.24

The accompanying "Notes to Financial Statements" are an integral part of these financial statements.

7

• 4

cn S 0

1-1

CD N VI v- N cn 06 N ,..I '4. r-- r n en co s „.., 7tr

V- ) rn

N "Zr N

n 0 (-91 N 00 0 ,--+ oo i.n tri ,--I oci cNi 6 t .--: C) O WI ":1- co In oo tr.) 7t- c. n 1 71".. oo tr.) oti 06 C 00 r--.„ ....4 "4. N N N

co vl co vo

CD M

CD

CD CN (--- en

• 00 V") t--.

•

cl

CN 00 Cl

r-- en N *q• 11-1 N ' ,-4

4 :)

Cl CD ,--1

r. V1

N N Cr;

O

00 t 7 .,

CD

(\I"' 7 4 d.. r... -

In WI

(1

VI en cn CD d" ,....4

t)„

Vis 00 C Ms cn c)

kr)

M

en

r-4

VI

N

0 0 0 0 0 0 0 0 o c: c: 6 6 cri 0 v...4 N

0

CD CD CD 0 t--: tri 00 V:› *. t.CJI _ .., r- Ch

0 0 0 0 0 6 6 cgi

CD CD CD CD 6 6 CD CD

oo

0 0 oo O

co ez>

'-:fr (r) 0., .`,:rn

N 0 ,--4 c:s

0

CD.,

„ , n

7 ,..-4

'

Ln

N

kr) N

Modification : 1 0

0 0 0 0 0 0 0 0 c). 0 0 0 0 c) 0 0 o 6 6 er; 6 oci 6 6 6 6 0 N 0 O n 0 0 0 0 C:),, oc, 0 ,--4 fT, 01 VI 0, 0, _ ., 00 7t 7r? n CD 00 ,-.4 v-) 7• VI v.) N r--I .-- v--4 v7 0

CD CD O CD CD CD 6 6 cNi 6 0 0 kr) 0 0 `71- 0, S ‘...., r'-•:' 0 "I' N — CD CD

Current Fund

Borough ofMi

Year EndedDece mber 31,2010

Statement of Expenditures -Regulatory Basis

m

trl .1- C5

.- at 4....

di 0

›

U) U) 0 "0 U) g c`? a) m 0 fa, •

m

o m

m

CS

'Fci

4-I

( go

to

m %pc') u ,

orn otou

cg g m 0

V) En

The accompanying "Notes toFinancial Statements" are anintegral part of these financial

1:1 a) • cc:1 ou) g

t; g cd -':1

, e

r vi:1 E-' rd 09 E--. '71

0 /J 0 • "c:1

at

v)

< 6 W 71 84.10° 6 P 4 •. s., cq •-g 6.. n ..0(.)

t1 0

&- n '' a) .,..,

0

0>

09 -5(t) v) 0 a ct 0 u) -8 Cl)

- 8 0 a)

,1), cn 0

•

0

. 5

C.7

8

70 u

M vn

"0

^0 0 o =I 0 0 = T) 0. cd c..) o G Q 0

O

)

W

44

ch

CD CD kr; CD vn

'I CD CD CD 00 v6 cS CN CD r-

CD CD

—

N '71: '1" v6 ,...+ cp; r- 00 CD O H O ^

0 0 0

N eri • oo vn 00

00 r- 7t1'

ol

N

eel

rf;s

(4")'

cn

P4

CA V..

0 ON 0 0 N ,--i '1'. " "

0 C.) C.) 0 cc> c; oo 0

C.) C;J 0 0 ,d kr) 7-4 CA ,---4 .1-

\ .0 oo 00 ,--In

O CD,

tr)

Ch r....4 c6 N

r --1

C-- kr) kr) cei ofi c6 qD "1.:, (l ?)., N

0 00 C.r . n

c,-3 0

O

"

,....i

00

41 . .-4 r...i

tr) 01

en

' \ f ' V;* ,..-+ en

t"--' MC) Ntr)

i--I

0 0 c; C.) C:).,

00 00 000 0 0 0 0 0 CD 0 CD 0 0 0 c> c> c> 0 0 c>

CD CD

0 0 0 0 0 0

ci 0 N ,i c6 c6 c6 c6. 4 0 N 0 0 0 0 ,--4 0 cs, s 00 tin s ,-444 0

00 0 s kr) .1 ' V:5 ,—, en

r - eel M

" Zt r re) ectr CD

N. en en

i-..4 1-4

e-4

`71"

Modification

0 0 c6 0 c) 1...4 —4

0 C. ) 0 C.) 0 0 C. ) 0 0 0 0 0 0 0 0. 0 000 00 0 0 0

0 c6 c6 0 0 0 en c) en N ,t- en

<6 0 N c6 0 0 0 d: 0 oo 0 t--.4 0 0 0 0 4-4 0 0 kn 01 0 00 tr) 0 ,....4 c>

s s s S

.4' c5

--r —

d- vD.' 4' en

—.

,t-

— .en

Current Fund

Year Ended December 31, 2010

..--, en 00 cn

Statement of Expenditures -Regulatory Basis

9.. 0 .01 ,... 0 0 crc U 00

0 ... 0 4... ....

CN

0 0

44 s-1

1.-

.,

I.) 0,...4 a 0 a)

- 5 a .s •E 0

0

"a

+3 0 (1)

cn

0

0

;. A c) . - . . 0 t. N> DO "0

0

0 °

5

• th

O

as

C..7

P4

t/0

tO 1 =1 14:)/ )

...... M • C

c te4

tn

,..0 rn rel o Et1 roi ezi rn

c/3 0 ,-4CD

v) rn

.---cl ,Drn

cn -4-' C)

; - 1 "CS <1.) o 06. 4_, o 0 .

The accompanying "Notes toFinancial Statements" are anintegral part of these financial statements.

0 2 z a)

2 , a)

cn a) ci)

77 2 t tOci)nz) 2 c,)

- T'"

u

U

d 0 N al

f.) "C$U„d>

P. .5 .7J x

tat 1

w

cn ill ,,..,:n^ gi , ,... ..

en w bi)

r:4 ci, .o

V-1 0

a)

a)

41

(1-8 W 077 44 0

00

4--,

›, 5 .— ,.. O 7:1

- 0 a) 015 • ‘,4 -4., 0

,i ;

2 - 8

'.. c.) 0 .- 0 cn o cr, Cl) c) 8 *-0 4D C) tr) p4 ti .4,0 Ol- d • ..., < bp cn s•- n 0 .4— n 0 'i "0 7: 1 .-C 'i

n _

0

"" C

• ,I

N :8 0 (421 00

0 O

.

m 00

—. W

O rz-,

C/D

P.I.,

9

O O 00 kr) O N

O 00 Vl O N kr)

O co ocE.

O N

N O N N N

0 kr)

tr) 00 O OA s N v—I

kr) O O N C--

O O

00 N. 00 0. tr.;

"0 a)

O 00 ktIn

kr; C.; C-- 0 00 -7t

c/a P.4

1-1

0 0 (el 0 0, co 0: oo N N N;, N d N

V-I

00 c:r.; N

1-4

N N

O O O O O N

0 0 0 0 C.) C) O n O N 00 C) 00 Crls 00 v-4 N N 06 Cr)

O O O O O N

co O O O N O C). O O If) N

bA

N ,71-„ 06s N

PC1

Modification

co, O v:3

O co <2:3 O O

0 0 0 0 01 N

O O O O O N

tr).

O 00 00

N N

1-1 1-4

Current Fund

Year EndedDecember 31, 2010

Statement of Expenditures - Regulatory Basis

ci) 0

O

a) 7, c1

cl)

eluding Contingent)

a)

The accompanying "Notes toFinancial Statements" are anintegral part of these financial statements.

.4'

8

a) a)

Salaries and W

C.7

10

a)

00 O kr) kr) c•I

00

O 00

O 1-1 C O kr)

V) N

O C R 00 Cr is Isr)

C> O N cr) tr)

C> C> C> 0 0 0 0 0 0 0 0 0" 1.1"j‘ trj 1-1

O O 00 Crls

v--:

vo4

cr; cri S Ch - rooi

r—I •SD

0

71-" \

,

\

01

Modification

O

C) C> 0 C> 0 O C> c;

, n 4

O O 00

C)

Cri Cr; 0 0 0

C)

00

diN

f,

Ca

tr) tn

v:) 0.

ON

\

1 -1

a'

4

Current Fund

Borough of Milford, N.J.

Year Ended December 31,2010

Statement of Expenditures -Regulatory Basis

5 0

a)

5

•"0-. •1-4

Other Expenses Cd

11

N N

kr) N O N

N en N

N N

kr) CN N O N

00 00 00

00 en 00 00 en 00 v--I

00

N N

N N

N

0 0 O 0 6 kr) kr) • cel, M re-)

CD CD ON 0 CD kr) 6 r-: 1---: CD 1-4 N ‘.0 kr) 41 ,s6 r, 00 00

O O 00 N O

N N

C.)

kr) 00 N

C).

M CD

re; c:),

00 N

ct ct N v--I

en 00 N

00

M N <6CT'vD CT 00 cn

N N O ri

r-4

0 0 O 0 6 6 kr) kr) • v:) cn

O O 00 N N O CN

O O O O c) kr; 0., kr) kr) „

O O N N O kr) CN

O 00

O O

O Cri rn 00 O Cr)

kr)

7r"

e--I 00

,

N M.

00

N ri

O O

Modification

0 0 00 6 6 kr) kr)

O 0 0 O 0 0 kri

CD

O

0 O

z

00 N N O

M 00 O n s O

N N CD. kr)

C)

N 0

a)

cnn o

N

t45 ,

- n 0

11

C"

ce) N 1-4

M en

•

00

00

O t)i) 0

N I F) 4 <14

Current Fund

O 0:1

Year Ended Dec

Statement of Expenditures -Regulatory Basis

0

0

OE - 0 a) - 0

xcluded From "Caps" Total General Appropriations Appropriations Subtotal Gene

X 0 1

a) a)

icipation Notes and Capital Notes

V)

Interest on Notes

Total General Appropriations

Reserve for Uncollected Taxes

12

B

Borough of Milford, N.J.

Comparative Balance Sheet - Regulatory Basis

Trust Funds

December 31, 2010 and 2009

Ref.

2009

2010

Assets

Animal Control Trust Fund: Cash

1,283.86

1,407.55

B-1

Other Trust Funds: Cash

96,145.12

101,500.19

B-1

97,428.98

102,907.74

Liabilities, Reserves & Fund Balance

Animal Control Fund: Reserve for Animal Control Trust Fund Expenditures

1,264.52

1,388.32

B-2 B-3 B-4

0.14

0.03

Interfund - Current Fund

19.20

19.20

Due to State Department of Health

1,283.86

1,407.55

Other Trust Fund: Interfund - Current Fund

6,015.05

6,015.27

B-3

Reserve for: Engineering & Inspection Fees

29,166.09 3,031.50 57,932.48 96,145.12

24,115.19 3,330.12 68,039.61 101,500.19

B-5 B-5 B-5

Payroll Deductions

COAH

97,428.98

102,907.74

The accompanying "Notes to Financial Statements" are an integral part of these financial statements.

13

Borough of Milford, N.J. Comparative Balance Sheet - Regulatory Basis General Capital Fund December 31, 2010 and 2009

Ref.

2010

2009

Assets Cash

C-2

875,826.81

179,652.91

Grants Receivable - Delaware River Joint Toll Bridge Commission Deferred Charges to Future Taxation - Unfunded

C-5 C-6

373,791.47 1,799,003.29

642,087.20 1,603,620.29

3,048,621.57

2,425,360.40

Liabilities, Reserves and Fund Balance Interfund - Federal and State Grant Fund

C-4 C-4 C-4 C-7 C-8 C-8 C-9 C-9 C-9

40,000.00 63,594.55

40,000.00 58,910.73 528,070.00 87,198.86 19,465.06 1,136,219.32

Interfund - Current Fund Interfund - Sewer Capital Fund Capital Improvement Fund Improvement Authorizations: Funded Reserve for: Fire Apparatus and Equipment Unfunded

132,448.86

11,965.06 907,524.88 65,661.60 150,000.00 11,000.00 1,501,654.00 164,772.62

50,661.60

Debt Service Ambulance

Bond Anticipation Notes Payable

C-10

341,471.00 163,363.83

Fund Balance

C-1

3,048,621.57

2,425,360.40

There were Bonds and Notes Authorized But Not Issued in the amount of $337,259.50 on December 31, 2010 - Per C-11

The accompanying "Notes to Financial Statements" are an integral part of these financial statements.

14

C- 1

Borough of Milford, N.J. Schedule of Fund Balance - Regulatory Basis General Capital Fund Year Ended December 31, 2010

Ref.

Balance - December 31, 2009 Increased by: Voided Checks Balance - December 31, 2010

163,363.83

C

C-2

1,408.79

164,772.62

C

The accompanying "Notes to Financial Statements" are an integral part of these financial statements.

15

D Page 1 of 2

Borough of Milford, N.J. Comparative Balance Sheet - Regulatory Basis Water Utility Fund December 31, 2010 and 2009

Ref.

2010

2009

Assets

Operating Fund: Cash-Treasurer

D-5 D-7

397,856.45

455,597.95

Cash-Change Fund

50.00

50.00

455,647.95

397,906.45

Receivables with Full Reserves: Consumers Account Receivable

D-9

14,062.85

10,725.33

Total Operating Fund

408,631.78

469,710.80

Capital Fund: Cash

481,419.59 299,890.64 1,973,833.74 1,237,000.00 3,992,143.97

D-5;D-8

56,685.57 369,993.91 1,973,833.74 1,264,500.00 3,665,013.22

Due from Water Operating Fund

D-11 D-12 D-13

Fixed Capital*

Fixed Capital Authorized and Uncompleted*

Total Capital Fund

4,400,775.75

4,134,724.02

Total Assets

* The fixed capital reported is taken from the municipal records and does not necessarily reflect the true condition of such fixed capital.

The accompanying "Notes to Financial Statements" are an integral part of these financial statements.

16

D Page 2 of 2

Borough of Milford, N.J. Comparative Balance Sheet - Regulatory Basis Water Utility Fund December 31, 2010 and 2009

Liabilities, Reserves and Fund Balance

Ref.

2010

2009

Operating Fund:

Appropriation Reserve Water Overpayments

D-4;D-14

16,963.94

6,798.85 785.48 16,474.42 299,890.64 323,949.39 10,725.33 73,957.06 408,631.78

D-10 D-15

370.19

Accrued Interest on Loans and Notes

32,681.51

Interfund Payable: Water Capital

D-11

369,993.91 420,009.55 14,062.85 35,638.40 469,710.80

Reserve for Receivables

Contra

Fund Balance

D-1

Total Operating Fund

Capital Fund: Improvement Authorizations: Funded

610.50

D-16 D-16 D-17 D-18 D-19 D-20 D-21

28,110.50 616,166.30 891,975.54 1,358,783.20 123,528.19 59,500.00 578,075.00 8,874.49 3,665,013.22 4,134,724.02

Unfunded

620,797.05 907,060.54 1,273,698.20 151,028.19 32,000.00 998,075.00

Loans Payable

Reserve for Amortization Reserve for Capital Outlay

Reserve for Deferred Amortization Bond Anticipation Notes Payable

D-2

8,874.49

Fund Balance

Total Capital Fund

3,992,143.97 4,400,775.75

Footnote D There were Bonds and Notes Authorized But Not Issued on December 31, 2010 in the amount of $350,000.00 per schedule D-22.

The accompanying "Notes to Financial Statements" are an integral part of these financial statements.

17

D-1

Borough of Milford, N.J.

Comparative Statement of Operations and Changes in Fund Balance - Regulatory Basis

Water Utility Operating Fund

Years Ended December 31, 2010 and 2009

Ref.

2010

2009

Revenue and Other Income Realized: Operating Surplus Anticipated

D-3 D-3 D-3 D-3

65,000.00 276,815.91 15,180.00

91,600.00 258,278.52 15,180.00

Rents

Rents- Hydrants Miscellaneous

6,072.81

7,111.17

Other Credits to Income: Unexpended Balance of Appropriation Reserves

D-14

1,939.62

Total Income

365,008.34

372,169.69

Expenditures: Operating

D-4 D-4

161,822.00 166,055.00

151,750.00 185,146.00

Debt Service

Deferred Charges and Statutory Expenditures

D-4

10,450.00

9,700.00

338,327.00

346,596.00

Total Expenditures

26,681.34

25,573.69

Statutory Excess to Surplus

D-1

139,983.37

Fund Balance - January 1,

73,957.06

165,557.06

100,638.40

Decreased by: Utilized as Anticipated Revenue

D-1

65,000.00

91,600.00

73,957.06

Fund Balance - December 31,

D

35,638.40

The accompanying "Notes to Financial Statements" are an integral part of these financial statements.

18

D - 2

Borough of Milford, N.J. Statement of Fund Balance - Regulatory Basis Water Utility Capital Fund Year Ended December 31, 2010

Ref.

8,874.49

Balance - December 31, 2009

D

Balance - December 31, 2010

8,874.49

D

D-3

Statement of Revenues - Regulatory Basis Water Utility Operating Fund Year Ended December 31, 2010

Excess (Deficit)

Realized

Ref.

Anticipated

65,000.00 276,815.91 15,180.00

D-1

65,000.00 258,250.00 15,077.00

Operating Surplus Anticipated

18,565.91

D-1;D-9 D-1;D-6 D-1;D-3

Rents

103.00

Rents- Hydrants Miscellaneous

6,072.81

6,072.81

338,327.00

363,068.72

24,741.72

Budget Totals

D-4

Analysis of Realized Revenues Miscellaneous: Interest on Deposits: Water Operating Fund

1,905.08

D-6

580.94

Water Capital Fund

D-11

D-6 D-3

3,586.79

Miscellaneous

6,072.81

The accompanying "Notes to Financial Statements" are an integral part of these financial statements.

19

v6 cl

VD CD VD

TY' CN Cr) VD CN .6

C;) 0 0i CA C:0 'cr 00 (7 CA

\ci

N 00 cris

CD

VD N 00

crj

N

VD CD CD VD CD CD CD CD cri 6 O M Ch CD r- VD 01 O CN Cr) O O On C- 00 CI on

O CD tr; V1 O

00 0 VD CD N VD N Cr)

Tt CD T• T• CD CI col 6 0 CD CD —4 CD N 4'M

O CD CD CD O 000 • tri tri CD Tt 00 tri N O Tzt O V-) (D V7 O 1 • ‘1•

00

ON N

VD

CD CD CD CD CD CD 6 6 6 CD c). tr) CD T• Sri

CD CD O 41 O

CD O rz, cq 00

CD CD CD CD CD CD CD CD O kr; lr) V7 CD N • 00 N CD Tto CD tin O tri • Tt re)

CD O kr; V-) CD

C) CD

00

VD

VD

CD CD O I) O

C0 C) r4 Cr) 00 Cr)

CD CD C7 CD CD CD 6 6 6 C) C) 41 CD CD T• tri Ins

CD CD C) CD CD CD CD CD c5 vi vi vi O Nt. o 0 cq c) o v-) r, 01

CD C)

CD C) C*4 CI 00 4.4-4° VD

v-) O

- ++4 ++1 66 6

CQ

Borough of Milford, N.J.

Water Utility Operating Fund

Year Ended December 31,2010

04 Cd

0 a)

ai

U "tj

7i.

E 09 a) .., cA--:, n v) .-._, '"'" 4 V v.„,3 8 a) -4., --4 . ci N s0^.. 6 •5 E Q. 212 5 -. r o

tat V

.

Statement ofExpenditures -Regulatory Basis CC; 5

a)

0

.c # a 4

C/) -4 5 a)

a9 c). x

z 0 0 • g g O .4 ,_. ---, 5 5 5 G . a) a) P 5 E E .4.., • o. o. a") ir) 0 O ° C-) r::) -.c o o -

tory Expenditures Total Deferred Charges andSta

41

2 (J

' a) a.) cn A

U

-0 ., o = , a) o c) >-, bzi R. 0 r ,.., c ( 1 .0 ) 0 1 "-1 (4 0 0 .— n g‘ = ,j3 • •- n MI U 70 '5 2 -0 2 ° ° a) n 0 P. cn 0 O ZI a)

0

`1) 0 to

C'l Z -cTi' -crs O '" ..,-. 6 `18 o E E —4 te, o r:4 p4

The accompanying "Notes toFinancialStateme

bo0 w o 0 a 0 n. .t4 .c,d1--,— A 0 cn 1.- cri 4. , c d +2 CI) cn 0 -.-. -'°' a 4 0. a) 0 0 cd

i< < t, L1 C.)

Debt Service

20

E

Page 1 of 2

Borough of Milford, N.J. Comparative Balance Sheet - Regulatory Basis Sewer Utility Fund December 31, 2010 and 2009

2009

2010

Ref.

Assets

Operating Fund: Cash-Treasurer

769,983.90

883,578.30

E-5

Receivables with Full Reserves: Consumers Account Receivable

51,760.05

47,222.11

E-8

821,743.95

930,800.41

Total Operating Fund

Capital Fund: Cash

1,141,322.84 38,500.38 528,070.00 1,723,210.22 6,723,000.00

480,660.44 183,769.61

E-5;E-7

E-9 E-9

Due from Sewer Operating Fund Due from General Capital Fund

3,388,210.22 5,085,500.00

E-11 E-12

Fixed Capital*

Fixed Capital Authorized and Uncompleted*

10,154,103.44

9,138,140.27

Total Capital Fund

10,975,847.39

10,068,940.68

Total Assets

* The fixed capital reported is taken from the municipal records and does not necessarily reflect the true condition of such fixed capital.

The accompanying "Notes to Financial Statements" are an integral part of these financial statements.

21

E

Page 2 of 2

Borough of Milford, N.J. Comparative Balance Sheet - Regulatory Basis Sewer Utility Fund December 31, 2010 and 2009

Ref.

2010

2009

Liabilities, Reserves and Fund Balance

Operating Fund:

Appropriation Reserve Interfund Payable: Sewer Capital Fund Sewer Overpayments Accrued Interest on Notes

E-4;E-13

55,803.85

19,679.14

E-9

183,769.61

38,500.38

E-10 E-14

482.72

543.69

26,314.63 266,370.81 47,222.11 617,207.49 930,800.41

103,771.93 162,495.14 51,760.05 607,488.76 821,743.95

Reserve for Receivables

Contra

Fund Balance

E-1

Total Operating Fund

Capital Fund: Bond Anticipation Note Payable

3,370,000.00

E-15 E-16 E-17 E-17 E-18 E-19 E-20 E-21

320,000.00 4,800,000.00

Serial Bonds Payable

Improvement Authorizations: Funded

27,500.00

1,142,729.51

4,346,606.62

Unfunded

48,538.75

76,038.75

Capital Improvement Fund Reserve for Amortization

2,030,110.22 323,600.00 418,863.29

1,980,110.22 296,100.00

Reserve for Deferred Reserve for Amortization

73,935.35 11,312.50

Reserve for Various Reserves

E-2

26,798.50

Fund Balance

9,138,140.27

10,154,103.44

Total Capital Fund

10,068,940.68

10,975,847.39

Total Liabilities, Reserves and Fund Balances

Footnote: There were Bonds and Notes Authorized But Not Issued as of December 31, 2010 in the amount of $1,000,000.00 as per E-22.

The accompanying "Notes to Financial Statements" are an integral part of these financial statements.

22

E

1

-

Borough of Milford, N.J.

Comparative Statement of Operations and Changes in Fund Balance - Regulatory Basis

Sewer Utility Operating Fund

Years Ended December 31, 2010 and 2009

Ref.

2010

2009

Revenue and Other Income Realized: Operating Surplus Anticipated

82,065.00 298,598.52 311,677.87 15,724.48

301,403.12 200,000.00

E-3 E-3 E-3 E-3

Rents

Holland Township Share

7,729.62 1,128.56

Interest on Deposits

9,521.04

Miscellaneous

Other Credits to Income: Unexpended Balance of Appropriation Reserves

2,709.74

1,057.43

E-13

720,296.65

511,318.73

Total Income

Expenditures: Operating

336,000.00 199,405.00

372,820.00 116,100.00

E-4 E-4

Debt Service

Deferred Charges and Statutory Expenditures

11,660.00

12,680.00

E-4

547,065.00

501,600.00

Total Expenditures

173,231.65

9,718.73

Statutory Excess to Surplus

516,322.11

607,488.76

E-1

Fund Balance - January 1,

689,553.76

617,207.49

Decreased by: Utilized as Anticipated Revenue

82,065.00

607,488.76

617,207.49

E

Fund Balance - December 31,

The accompanying "Notes to Financial Statements" are an integral part of these financial statements.

23

E - 2

Borough of Milford, N.J. Statement of Fund Balance - Regulatory Basis Sewer Utility Capital Fund Year Ended December 31, 2010

Ref.

Balance - December 31, 2009

11,312.50

Increased by: Bond Anticipation Note Premium

15,486.00

E-5

Balance - December 31, 2010

26,798.50

E-3

Statement of Revenues - Regulatory Basis Sewer Utility Operating Fund Year Ended December 31, 2010

Excess

Ref.

Anticipated

Realized

(Deficit)

E-1;E-8 E-1;E-6 E-1;E-3 E-1;E-3

238,300.00 248,300.00 15,000.00

301,403.12 200,000.00

63,103.12 (48,300.00) (7,270.38)

Rents

Holland Township Share

7,729.62 1,128.56

Interest on Deposits

1,128.56

Miscellaneous

501,600.00

510,261.30

8,661.30

Budget Totals

E-4

Analysis of Realized Revenues Interest on Deposits: Sewer Operating Fund

E-3;E-5

7,729.62

Analysis of Realized Revenues

E-3;E-5

1,128.56

Miscellaneous

The accompanying "Notes to Financial Statements" are an integral part of these financial statements.

24

Vn 00

CD N N 01 CD VD cn O CD 01 01 CD 'Tt \00 Oen (NI VD.,

O 00 Vn

N

C) CD C5 C) r—t

0 0 0 0 0 0 .6 tr)

O O N O O

v3 N Vn

1/443 CV

01 cn

6 co 6 6 6 6 6 c5 c5 s 6 6 00 ocC

O O O O

O O 00 N

C) CD 0 CD 1/4. 6

0 0 0 0 0 6 0 0 O v$

n 0

O

O 0 0 c> 6 0 6 0 0 a> 0 0 V) '1' 00'

O O O O O v1

O O O

O O O 00 N

m a) a) o ..

Year EndedDecember 31, 2010

1

E .(12

c„ 0

cr9),q, A ell

o

° ti

Z

P.,

o .54 .. rd

Pi) E a &I P4 -5 5 r ,c) cn — cn -in rA 0

2

ei5 cu et i,5

--

rn

^Li

"ri cn 0 (3)

.41 l' til)

a) b.1) cd En inn

;:5 O 41

c'0„

- 0 C1)

,,, .c)

,..9

a) 0

The accompanying "Notes toFinancial Statements" are anintegral part

0.) cn

..

X CI., • ... n

no . 8

0 /

- a

o

0

F

Borough of Milford, N.J.

Comparative Balance Sheet - Regulatory Basis

Public Assistance Fund

December 31, 2010 and 2009

2009

2010

Ref.

Assets Cash

1,512.20

1,512.20

F-1

Liabilities and Reserves Reserve for Public Assistance

1,512.20

1,512.20

F-6

The accompanying "Notes to Financial Statements" are an integral part of these Financial Statements.

26

G

Borough of Milford, N.J. Comparative Statement of General Fixed Assets - Regulatory Basis December 31, 2010 and 2009

2010

2009

General Fixed Assets:

Land

1,964,400.00 1,702,100.00 806,590.00

1,964,400.00 1,702,100.00 757,796.00

Buildings

Equipment (Including Vehicles)

Total

4,473,090.00

4,424,296.00

4,424,296.00

Investment in Fixed Assets

4,473,090.00

The accompanying "Notes to Financial Statements" are an integral part of these Financial Statements.

27

BOROUGH OF MILFORD, N.J.

NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2010 AND 2009

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The GASB Codification establishes seven fund types and two account groups to be used by governmental units when reporting financial position and results of operations in accordance with accounting principles generally accepted in the United States of America (GAAP). The financial statements of the Borough of Milford have been prepared in conformity with accounting principles and practices prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey (the "Division") which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. Such principles and practices are designed primarily for determining compliance with legal provisions and budgetary restrictions and as a means of reporting on the stewardship of public officials with respect to public funds. Under this method of accounting, the Borough accounts for its financial transactions through separate funds which differ from the fund structure required by GAAP. The Borough of Milford (the "Borough") operates under a Mayor/Council form of government. The Borough's major operations include public safety, road repair and maintenance, sanitation, fire protection, recreation and parks, health services, water utility and sewer utility and general administrative services. GASB has issued Statement No. 14 which requires the financial reporting entity to include both the primary government and those component units for which the primary government is financially accountable. Financial accountability is defined as appointment of a voting majority of the component unit's board, and either a) the ability to impose will be by the primary government, orb) the possibility that the component unit will provide a financial benefit to or impose a financial burden on the primary government. However, the municipalities in the State ofNew Jersey do not prepare financial statements in accordance with GAAP and thus do not comply with all of the GASB pronouncements. The financial statements contained herein include only those boards, bodies, officers or commissions as required by NJS 40A:5-5. Accordingly, the financial statements of the Borough do not include the volunteer fire department or volunteer first aid squad which are considered component units under GAAP. Complete financial statements of the above components can be obtained by contacting the Treasurer of the respective entity. A. Reporting Entity

28