Troy Industrial Development Authority

Chair Board Members Heidi Knoblauch Paul Carroll Tina Urzan Vice‐Chair Susan Farrell Vacant Elbert Watson Hon. Anasha Cummings Executive Director Steven Strichman Bill Strang AUDIT & FINANCE COMMITTEE MEETING March 22, 2019 10:00 a.m. Planning Department Conference Room AGENDA I. Minutes – January 18, 2019 II. Audit Presentation FY 2018 ‐ Wojeski & Co. III. Adjournment City Hall – 433 River Street, Suite 5001, Troy, New York 12180 Phone: 518.279.7166  January 18, 2019 10:00 AM Audit and Finance Committee Meeting Present: Heidi Knoblauch, Hon. Mark McGrath, Steve Strichman, Susan Farrell, Paul Carroll, Bill Strang, Tina Urzan, Elbert Watson and Hon. Anasha Cummings Absent: Also in attendance: Justin Miller, Esq., MaryEllen Flores, Deanna Dal Pos, Luke Nathan, Sharon Martin, Chris Stephens, Matthew Sekellick, Ken Crowe and Denee Zeigler. D The audit and finance committee meeting was called to order at 10:32 a.m. I. R Preliminary Audit Meeting Chris Stephens of Wojeski & Co. spoke to the board members about the upcoming T audit process, scope of work and the deliverables. He advised the deliverables consist of auditing the financial statements for the year ending December 31, 2018, AF assist with the preparation of the financial statements and prepare the IRS form 990 and CHAR 500. Mr. Stephens explained that we will provide a reasonable opinion on you financial statements, we do not check every transaction; we do a risk assessment. He advised we will consider the internal controls, but will not issue an opinion on the internal controls. Mr. Stephens advised that if anything comes up that is a weakness for deficiency; we will report that in our findings. He added that any other matters that come up or we need assistance; we will reach out to you. Mr. Stephens explained materiality and other terminology that may come up during the audit. He asked if the audit & finance committee had any questions or concerns. Mr. Strichman asked about the review of internal controls. Mr. Miller advised that we do this on a monthly basis when we review our financials and annually with the confidential board member evaluations. Mr. Bissember asked about the tolerable misstatement. Mr. Stephens advised that we put a quantitative figure on what we consider the level of materiality to be. He explained that we want to account for misstatements we are aware of and the ones we are unaware of. If it goes over this amount, we modify our opinion. The board asked if that amount is set on anything specific. Mr. Stephens advised that we did not set that amount yet. Mr. Ross asked about the staff. Mr. Stephens noted that there will be other staff working on the audit in the background, but the main staff is listed in the packet he handed out. Mr. Miller noted the timeframe and advised we have to have it adopted by March 31st. The board had a general discussion on the meeting timeframe. Mr. Stephens spoke about changes to GASBY and debt disclosures; noting that this board looks good. He advised that kick off meeting is today with the audit commencing on February 11th. 1  Thomas O’Donnell will be the lead auditor. Ms. Knoblauch asked that we amend the presentation to include a meeting during the first week of March. Steven Strichman made a motion to approve the auditor’s presentation with the amendment. Paul Carroll seconded the motion, motion carried. II. Adjournment With no additional business to discuss, the audit and finance committee meeting was adjourned at 10:42 a.m. Hon. Mark McGrath made a motion to adjourn the audit and finance committee meeting. Susan Farrell seconded the motion, motion carried. I. D R T AF 2  TROY INDUSTRIAL DEVELOPMENT AUTHORITY Financial Statements and Supplementary Information December 31, 2018 and 2017 FT DRA TROY INDUSTRIAL DEVELOPMENT AUTHORITY Financial Statements December 31, 2018 and 2017 Financial Statements Independent Auditor’s Report .................................................................................................... 1 Statements of Net Position ......................................................................................................... 4 Statements of Revenues, Expenses and Change in Net Position ............................................... 5 Statements of Cash Flows .......................................................................................................... 6 Notes to Financial Statements .................................................................................................... 7 Compliance Report FT Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ........................................................................................... 14 DRA Supplementary Information Schedule I – Schedule of Indebtedness .................................................................................... 16 Schedule II – Schedule of Supplemental Information – Bonds/Notes .................................... 17 Schedule III – Schedule of Supplemental Information – Straight Leases .............................. 18  INDEPENDENT AUDITOR’S REPORT To the Board of Directors Troy Industrial Development Authority Troy, New York We have audited the accompanying financial statements of the Troy Industrial Development FT Authority (the "Authority"), as of and for the years ended December 31, 2018 and 2017, and the related notes to the financial statements, which collectively comprise the Authority’s basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements D Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this RA includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. 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 involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the Authority's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Authority's internal 1 control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial 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 financial statements referred to above present fairly, in all material respects, the financial position of the Authority as of December 31, 2018 and 2017, and the 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. Other Matters Required Supplementary Information FT Management has omitted Management's Discussion and Analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate D operational, economic, or historical context. Our opinion on the basic financial statements is not affected by this missing information. RA Supplementary Information Our audit was conducted for the purpose of forming an opinion on the Authority’s basic financial statements. The supplementary information listed in the table of contents is presented for the purposes of additional analysis and is not a required part of the basic financial statements. The supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplementary information is fairly stated in all material respects in relation to the basic financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated DATE on our consideration of the Authority’s internal control over financial reporting and on our tests 2 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 effectiveness of the Authority’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Authority's internal control over financial reporting and compliance. East Greenbush, New York DATE FT DRA 3 TROY INDUSTRIAL DEVELOPMENT AUTHORITY Statements of Net Position December 31, 2018 2017 ASSETS CURRENT ASSETS Cash and cash equivalents $ 764,618 $ 557,472 Restricted cash - 85,000 Accounts receivable 28,000 499 Prepaid expenses 1,322 1,292 TOTAL CURRENT ASSETS 793,940 644,263 NONCURRENT ASSETS Land held for sale or development 287,000 500,000 LIABILITIES CURRENT LIABILITIES Accounts payable Due to other governments FT TOTAL ASSETS 1,080,940 50 - 1,144,263 1,500 85,000 DRA DEFERRED INFLOWS OF RESOURCES Land purchase option NET POSITION Unrestricted TOTAL CURRENT LIABILITIES 50 117,301 963,589 86,500 107,000 950,763 TOTAL NET POSITION $ 963,589 $ 950,763 See accompanying notes to financial statements. 5 TROY INDUSTRIAL DEVELOPMENT AUTHORITY Statements of Revenues, Expenses and Change in Net Position For the Year Ended December 31, 2018 2017 OPERATING REVENUES Administrative fees $ 362,532 $ 350,004 OPERATING EXPENSES Administrative support 100,000 100,000 Professional fees 26,806 45,619 Economic development 5,008 12,836 Insurance 2,602 2,618 Dues and memberships 1,949 502 Other expenses 2,155 12,876 TOTAL OPERATING EXPENSES 138,520 174,451 OPERATING INCOME 224,012 175,553 NON-OPERATING REVENUES (EXPENSES) Interest income Loss on impairment of assets FT TOTAL NON-OPERATING REVENUES (EXPENSES) CHANGE IN NET POSITION 1,814 (213,000) (211,186) 12,826 691 - 691 176,244 D NET POSITION, beginning of year RA NET POSITION, end of year $ 950,763 963,589 $ 774,519 950,763 See accompanying notes to financial statements. 5 TROY INDUSTRIAL DEVELOPMENT AUTHORITY Statements of Cash Flows For the Year Ended December 31, 2018 2017 CASH FLOWS FROM OPERATING ACTIVITIES Proceeds from customers $ 335,031 $ 435,004 Payments to vendors (225,000) (272,952) NET CASH PROVIDED BY OPERATING ACTIVITIES 110,031 162,052 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of land held for resale or development - (500,000) Proceeds from purchase option on land held for resale or development 10,301 107,000 Proceeds from interest income 1,814 691 NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 12,115 (392,309) FT NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS Cash and cash equivalents at beginning of year CASH AND CASH EQUIVALENTS AT END OF YEAR $ 122,146 642,472 764,618 $ (230,257) 872,729 642,472 D RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES RA Operating income Changes in operating assets and liabilities: Accounts receivable Prepaid expenses Prepaid expenses Accounts payable $ 224,012 (27,501) (30) - (1,450) $ 175,553 - 12 1,396 91 Due to other governments (85,000) (15,000) NET CASH PROVIDED BY OPERATING ACTIVITIES $ 110,031 $ 162,052 See accompanying notes to financial statements. 5 TROY INDUSTRIAL DEVELOPMENT AUTHORITY Notes to Financial Statements December 31, 2018 and 2017 NOTE A--AUTHORITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Troy Industrial Development Authority (the "Authority") was created in 1967 by the State Legislature under the provisions of Chapter 759 of the 1967 Laws of New York State for the purpose of encouraging economic growth in the City of Troy, New York (the “City”). The Authority, although established by the State Legislature, is a separate public benefit authority and operates independently of the City. The Authority’s function is to authorize the issuance of industrial revenue bonds for industrial development projects and to assist businesses in acquiring or constructing various facilities in FT order to provide job opportunities and increase economic welfare. In return for its efforts, the Authority receives application and closing fees related to this business financing. Basis of Presentation The Authority’s financial statements are prepared using the accrual basis in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). The D Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. RA The accounting and financial reporting treatment applied to the Authority is determined by its measurement focus. The transactions of the Authority are accounted for on a flow of economic resources measurement focus. With this measurement focus, all assets and liabilities associated with the operations are included on the statement of net position with revenues recorded when earned and expenses recorded when incurred. Net position is classified into three components – net investment in capital assets; restricted and unrestricted. These classifications are defined as follows: Net investment in capital assets: This component of net position consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of bonds, notes, and other borrowings that are attributable to the acquisition, construction, or improvement of those assets. If there are unspent debt proceeds at year end, the portion of the debt attributable to the unspent proceeds is not included in the calculation of investment in capital assets, net of related debt. Rather that portion of the debt is included in restricted net position. 7 TROY INDUSTRIAL DEVELOPMENT AUTHORITY Notes to Financial Statements--Continued NOTE A--AUTHORITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued Restricted net position: This component of net position represents external restrictions on net position imposed by creditors, grantors, contributors, laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabling legislation. Unrestricted net position: This component represents net position that does not meet the definition of "restricted". When both restricted and unrestricted resources are available for use, it is the Authority’s policy FT to use restricted resources first, then unrestricted resources as needed. The Authority distinguishes operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services in connection with the Authority's principal on-going operations. All revenues and expenses that do not meet this definition are reported as non-operating revenues and expenses. D Use of Estimates RA The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Cash and Cash Equivalents The Authority considers as cash all demand deposits and all highly liquid investments which are readily convertible to cash. Accounts Receivable Accounts receivable are non-interest bearing and are carried at their estimated collectible amounts. Accounts receivable are periodically evaluated for collectability based on a review of outstanding receivables, historical collection information and current economic conditions. In the opinion of Authority management, all receivable balances are considered collectible; accordingly, no allowance for doubtful accounts has been recorded. 8 TROY INDUSTRIAL DEVELOPMENT AUTHORITY Notes to Financial Statements--Continued NOTE A--AUTHORITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued Capital Assets Acquisitions of property and equipment and expenditures which materially change the capacities or extend the useful lives are capitalized and recorded at historical cost. Routine maintenance and repairs and minor replacement costs are charged to expense as incurred. When an asset is sold, or retired, the cost and accumulated depreciation are removed from their respective accounts and the resulting gain or loss is included in the change in net position. Depreciation expense is recorded using the straight-line method over the estimated useful lives of the related assets, generally ranging from 5 to 40 years. Land Held for Development and Resale FT Land held for development and resale is recorded at cost and is carried at the lower of cost or fair value. Major additions, renewals, and betterments are capitalized, whereas remediation, maintenance, and repair costs are expensed as incurred. When land held for development or resale is sold or otherwise disposed of, the appropriate accounts are relieved of costs and any resultant gain or loss is credited or charged to the change in net position. D Recognition of impairment of land held for development and resale is required when events and circumstances indicate that an entity will not be able to recover the carrying amount of these RA assets. The Authority recognizes an impairment loss, equal to the amount by which the carrying amount of an asset exceeds its fair value, if the carrying amount of the asset is not recoverable. Income Taxes The Authority is exempt from Federal, State and Local income taxes. Financing Activities Certain industrial development revenue bonds issued by the Authority are collateralized by property that is leased to companies and is returned by lease payments. The bonds are not obligations of the Authority or the State of New York. The Authority does not record the assets or liabilities resulting from completed bond transactions in its accounts since its primary function is to arrange financing between borrowing companies and bond holders, and funds arising from those transactions are controlled by trustees or banks acting as fiscal agents. For providing this service, the Authority receives project administration fees from the borrowing companies. Such administrative fee income is recognized immediately upon issuance of bonds. The outstanding balances of the bonds issued totaled $25,000,000 at December 31, 2018 and 2017. 9 TROY INDUSTRIAL DEVELOPMENT AUTHORITY Notes to Financial Statements--Continued NOTE A--AUTHORITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued Payment in Lieu of Taxes (PILOT) The Authority enters into and administers PILOT agreements for various unrelated business entities located in the City. Under the terms of the PILOT agreements, title to property owned by the unrelated business entity is transferred to the Authority for a certain period of time. During the period in which the Authority holds title, the business entity pays a PILOT to the Authority based on a calculation defined by the specific agreement. The PILOTs allow the companies to make payments that are less than the property taxes that would be paid on the related property’s assessed value. Once the PILOT is received, the Authority remits the PILOT to the respective taxing authorities. Certain requirements, as defined by each agreement, are to be met by the company to be able to maintain its PILOT. These requirements, as stated in the FT PILOT agreement, can be comprised of reaching and maintaining certain employment goals and paying its PILOT in a timely fashion. At the completion of the PILOT, title to the property is transferred back to the third-party business owner, and the property goes back on the tax rolls. PILOT receipts and PILOT payments are accounted for as pass-through transactions and are not included in the revenues or expenses of the Authority. The Authority is responsible for D collecting and remitting the funds. However, the taxing authorities bear the risk of loss if the PILOT payments are not paid to the Authority by the respective companies. Total pass-through RA PILOT payments were approximately $1,644,000 and $1,564,000 for the years ended December 31, 2018 and 2017, respectively. Subsequent Events The Authority evaluates transactions that occur subsequent to year end for potential recognition or disclosure in the financial statements through the date on which the financial statements are available to be issued. The financial statements were approved by management and available to be issued on DATE. NOTE B--CASH AND CASH EQUIVALENTS The Authority’s investment policies are governed by New York State statutes. In addition, the Authority has its own written investment policy. The Corporation is authorized to use demand deposit accounts, money market accounts, and certificates of deposit. Permissible investments include obligations of the U.S. Treasury and those of New York State and its municipalities and school districts. 10 TROY INDUSTRIAL DEVELOPMENT AUTHORITY Notes to Financial Statements--Continued NOTE B--CASH AND CASH EQUIVALENTS—Continued All cash of the Authority is maintained in accounts covered by the Federal Deposit Insurance Corporation (FDIC). In accordance with state law, collateral is required for demand deposits and certificates of deposit not covered by FDIC insurance. The Authority’s uninsured deposits are collateralized by accounts held by the pledging financial institution agent in the Authority’s name. The total amount of collateralized uninsured deposits was approximately $389,000 for the year ended December 31, 2018. The Authority has cash amounts that are restricted for the collection and remittance of payments in lieu of taxes (PILOT) to local taxing authorities. The amount of restricted cash and cash equivalents was $0 and $85,000 at December 31, 2018 and 2017, respectively. FT NOTE C--LAND HELD FOR RESALE OR DEVELOPMENT In January 2015, the Authority entered into a series of agreements related to a proposed park improvement project. The agreements allowed the Authority to undertake development activities D and included a two-year option to purchase a parcel of land to support the same project. During 2017, the Authority exercised the option and purchased the land for a total cost of $500,000. RA During 2018, the Authority determined that the carrying value of the land held for development exceeded the fair market value of the land and that the excess carrying value was unlikely to be recovered and, accordingly, the Authority recorded an impairment loss in the amount of $213,000. Land held for resale or development activity are as follows for the year ended December 31, 2018: Beginning Ending Balance Additions Subtractions Balance Land $ 500,000 $ - $ 213,000 $ 287,000 Land held for resale or development activity are as follows for the year ended December 31, 2017: Beginning Ending Balance Additions Subtractions Balance Land $ - $ 500,000 $ - $ 500,000 11 TROY INDUSTRIAL DEVELOPMENT AUTHORITY Notes to Financial Statements--Continued NOTE D--LAND PURCHASE OPTION In April 2017, the Authority entered into an exclusive option agreement to sell a 1.4-acre parcel of land to a developer of an IDA project for an exercise price of $100,000. The option agreement has a 7-year term and requires annual lease payments of $10,000 to be paid to the Authority by the developer during the option term. The first $25,000 in lease payments may be credited to the exercise price. In exchange for the option the developer paid the Authority $107,000 during the year ended December 31, 2017. The land purchase option is included on the statement of net position as under the title “deferred inflows of resources” and will be recognized as revenue when the developer exercises the option, or the option expires. The total balance of the land purchase option consists of the following as of December 31: Option price FT Lease payments received to be credited to exercise price 2018 $ 107,000 10,301 $ 117,301 2017 $ 107,000 - $ 107,000 D NOTE E--BOARD DESGINATED NET POSITION RA During 2018, the Board approved and designated funds up to $61,700 for design services related to the Troy Wayfinding System project that will help assist with parking, visitors and overall connectivity in the City of Troy. As of December 31, 2018, these funds have not been expended. NOTE F--RELATED PARTY TRANSACTIONS City of Troy In accordance with an agreement between the Authority and the City, the Authority reimburses the City annually for services and support personnel provided to the Authority during the year. The Authority reimbursed the City for support provided pursuant to this agreement for $100,000 for the years ended December 31, 2018 and 2017. Troy Capital Resource Corporation The Authority’s current Board of Directors is the same as that of the Troy Capital Resource Corporation (Corporation). The Authority was reimbursed by the Corporation for its share of the annual license fee for a grants management software for approximately $0 and $6,200 for the years ended December 31, 2018 and 2017, respectively. 12 TROY INDUSTRIAL DEVELOPMENT AUTHORITY Notes to Financial Statements--Continued NOTE F--RELATED PARTY TRANSACTIONS--Continued Troy Local Development Corporation During the year ended December 31, 2017, the Authority and the Troy Local Development Corporation (TLDC) entered into a fee sharing agreement. Under the agreement, the IDA will provide TLDC a portion of the administration fee for board approved projects that include TLDC involvement. The Authority paid administration fees to TLDC pursuant to this agreement totaling $0 and $52,500 during the years ended December 31, 2018 and 2017, respectively. FT DRA 13  COMPLIANCE REPORT FT DRA  INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Board of Directors Troy Industrial Development Authority Troy, New York FT We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of Troy Industrial Development Authority (the "Authority"), which comprise the statement of net position as of December 31, 2018, and the related statements of revenues, expenses, and change in net position, and cash flows for the year then ended, and the related D notes to the financial statements, and have issued our report thereon dated DATE. RA Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Authority's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Authority's internal control. Accordingly, we do not express an opinion on the effectiveness of the Authority's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in 14 internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Authority’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report FT The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Authority’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Authority's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. DRA East Greenbush, New York DATE 15  SUPPLEMENTARY INFORMATION FT DRA TROY INDUSTRIAL DEVELOPMENT AUTHORITY Supplementary Information - Schedule of Indebtedness For the Year Ended December 31, 2018 Original Original Current Outstanding Outstanding Final Issuance Bond Interest Beginning of Issued During Paid During End of Maturity Project Date Issued Rate Fiscal Year Fiscal Year Fiscal Year Fiscal Year Date Rensselaer Polytechnic Institute 05/02 $ 218,875,000 5.63% $ 25,000,000 $ - $ - $ 25,000,000 07/31 $ 218,875,000 FT $ 25,000,000 $ - $ - $ 25,000,000 RA D See independent auditors' report 5  TROY INDUSTRIAL DEVELOPMENT AUTHORITY Report to the Board For the Year Ended December 31, 2018 FT DRA DATE To the Board of Troy Industrial Development Authority We have audited the financial statements of Troy Industrial Development Authority (the "Authority") for the year ended December 31, 2018. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards and Government Auditing Standards, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you dated December 4, 2018. Professional standards also require that we communicate to you the FT following information related to our audit. Significant Audit Matters Qualitative Aspects of Accounting Practices D Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the Authority are described in Note A to the financial RA statements. No new accounting policies were adopted, and the application of existing policies was not changed during 2018. We noted no transactions entered into by the Authority during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. Accounting estimates are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimate affecting the Authority’s financial statements was management’s estimate of the market value of land held for development or resale. Management’s estimate of land held for development or resale is based on the exercise price of a land purchase option and a appraisal prepared by a third party apprisor. We evaluated the key factors and assumptions used by management in determining that the accounting estimates were reasonable in relation to the financial statements taken as a whole. The financial statement disclosures are neutral, consistent, and clear. 1 Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements (see attached schedule). Disagreements with Management For the purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit. Management Representations FT We have requested certain representations from management that are included in the management representation letter dated DATE. Management Consultation with Other Independent Accountants D In some cases, management may decide to consult with other accountants about auditing and RA accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the Authority’s financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the Authority's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. Other Matters Management has omitted the management’s discussion and analysis information that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be 2 an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic financial statements is not affected by this missing information. We were engaged to report on the supplementary information, which accompany the financial statements but are not required supplementary information. With respect to this supplementary information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records and other records used to prepare the financial statements or to the financial statements themselves. Restriction on Use This information is intended solely for the use of the Board of Directors and management of Troy Industrial Development Authority and is not intended to be, and should not be, used by anyone other than these specified parties. FT Very truly yours, DRA Wojeski & Company CPAs, P.C. 3 Client: 005512.AUD - Troy Industrial Development Authority Engagement: 18 AUD - Troy Industrial Development Authority Trial Balance: 3000.01 - TB Workpaper: 3700.01 - Adjusting Journal Entries Report Account Description W/P Ref Debit Credit Adjusting Journal Entries JE # 1 5100.02 To remove the Way Finding Design Liability off the books. 601.3 Way Finding Design 61,700.00 409.6 Professional Services Way Finding Design 61,700.00 Total 61,700.00 61,700.00 Adjusting Journal Entries JE # 3 4600.03 To record the impairment loss of the Mlock Parcel 410 Loss on Asset 213,000.00 101 Mlock Parcel 213,000.00 Total 213,000.00 213,000.00 Adjusting Journal Entries JE # 4 4200.01 To include the closing costs of Oakwood Ave Apts in A/R at 12/31/18. 380 Accounts Receivable 28,000.00 2117 Administration Fees 28,000.00 Total 28,000.00 28,000.00 Adjusting Journal Entries JE # 5 5100.02 To reclass the annual lease fee to increase the value on the land option 2117 Administration Fees 10,301.00 100 Land 10,301.00 Total 10,301.00 10,301.00 1 of 3  3/15/2019 10:54 AM Client: 005512.AUD - Troy Industrial Development Authority Engagement: 18 AUD - Troy Industrial Development Authority Trial Balance: 3000.01 - TB Workpaper: 3600.01 - TIDA Financial Statement Grouping Report Account Description UNADJ JE Ref # AJE ADJ JE Ref # RJE FINAL 1st PP-FINAL 12/31/2018 12/31/2018 12/31/2018 12/31/2017 Group : [4100] Cash & Equivalents Subgroup : [4100.00] Cash and Equivalents 200 Cash 0171 3,766.00 0.00 3,766.00 0.00 3,766.00 3,895.00 201 Cash in Time Deposits 0189 760,852.00 0.00 760,852.00 0.00 760,852.00 553,577.00 Subtotal [4100.00] Cash and Equivalents 764,618.00 0.00 764,618.00 0.00 764,618.00 557,472.00 Subgroup : [4100.05] Restricted Cash 202 Restricted Cash - PILOTs Paid 0.00 0.00 0.00 0.00 0.00 85,000.00 Subtotal [4100.05] Restricted Cash 0.00 0.00 0.00 0.00 0.00 85,000.00 Total [4100] Cash & Equivalents 764,618.00 0.00 764,618.00 0.00 764,618.00 642,472.00 Group : [4200] Receivables Subgroup : [4200.00] Accounts Receivable 380 Accounts Receivable 0.00 28,000.00 28,000.00 0.00 28,000.00 499.00 AJE - 4 28,000.00 Subtotal [4200.00] Accounts Receivable 0.00 28,000.00 28,000.00 0.00 28,000.00 499.00 Total [4200] Receivables 0.00 28,000.00 28,000.00 0.00 28,000.00 499.00 Group : [4400] Prepaid Expenses Subgroup : [4400.00] Prepaid Expenses 480.1 Prepaid Expense:480.1 -+ Prepaid Insurance 1,322.00 0.00 1,322.00 0.00 1,322.00 1,292.00 Subtotal [4400.00] Prepaid Expenses 1,322.00 0.00 1,322.00 0.00 1,322.00 1,292.00 Total [4400] Prepaid Expenses 1,322.00 0.00 1,322.00 0.00 1,322.00 1,292.00 Current Assets 765,940.00 28,000.00 793,940.00 0.00 793,940.00 644,263.00 Group : [4600] Property and Equipment Subgroup : [4600.00] Land 101 Mlock Parcel 500,000.00 (213,000.00) 287,000.00 0.00 287,000.00 500,000.00 AJE - 3 (213,000.00) Subtotal [4600.00] Land 500,000.00 (213,000.00) 287,000.00 0.00 287,000.00 500,000.00 Total [4600] Property and Equipment 500,000.00 (213,000.00) 287,000.00 0.00 287,000.00 500,000.00 Non-Current Assets 500,000.00 (213,000.00) 287,000.00 0.00 287,000.00 500,000.00 TOTAL ASSET 1,265,940.00 (185,000.00) 1,080,940.00 0.00 1,080,940.00 1,144,263.00 Group : [5100] Accounts Payable Subgroup : [5100.00] Accounts Payable 600 Accounts Payable (50.00) 0.00 (50.00) 0.00 (50.00) (1,500.00) Subtotal [5100.00] Accounts Payable (50.00) 0.00 (50.00) 0.00 (50.00) (1,500.00) Subgroup : [5100.10] Due to Other Governments 631 Due to Other Governments 0.00 0.00 0.00 0.00 0.00 (85,000.00) Subtotal [5100.10] Due to Other Governments 0.00 0.00 0.00 0.00 0.00 (85,000.00) Total [5100] Accounts Payable (50.00) 0.00 (50.00) 0.00 (50.00) (86,500.00) Group : [5150] Grants Payable 1 of 6  3/15/2019 10:54 AM Client: 005512.AUD - Troy Industrial Development Authority Engagement: 18 AUD - Troy Industrial Development Authority Trial Balance: 3000.01 - TB Workpaper: 3600.01 - TIDA Financial Statement Grouping Report Account Description UNADJ JE Ref # AJE ADJ JE Ref # RJE FINAL 1st PP-FINAL 12/31/2018 12/31/2018 12/31/2018 12/31/2017 Subgroup : None 601.3 Way Finding Design (61,700.00) 61,700.00 0.00 0.00 0.00 0.00 AJE - 1 61,700.00 Subtotal : None (61,700.00) 61,700.00 0.00 0.00 0.00 0.00 Total [5150] Grants Payable (61,700.00) 61,700.00 0.00 0.00 0.00 0.00 Current Liabilities (61,750.00) 61,700.00 (50.00) 0.00 (50.00) (86,500.00) Group : [5900] Deferred Inflow of Resources Subgroup : [5900.01] Land Purchase Option 100 Land (107,000.00) (10,301.00) (117,301.00) 0.00 (117,301.00) (107,000.00) AJE - 5 (10,301.00) Subtotal [5900.01] Land Purchase Option (107,000.00) (10,301.00) (117,301.00) 0.00 (117,301.00) (107,000.00) Total [5900] Deferred Inflow of Resources (107,000.00) (10,301.00) (117,301.00) 0.00 (117,301.00) (107,000.00) Non-Current Liabilities (107,000.00) (10,301.00) (117,301.00) 0.00 (117,301.00) (107,000.00) TOTAL LIABILITY (168,750.00) 51,399.00 (117,351.00) 0.00 (117,351.00) (193,500.00) Group : [6100] Equity Subgroup : [6100.00] Unrestricted Net Assets 924 Retained Earnings (950,763.00) 0.00 (950,763.00) 0.00 (950,763.00) (774,519.00) Subtotal [6100.00] Unrestricted Net Assets (950,763.00) 0.00 (950,763.00) 0.00 (950,763.00) (774,519.00) Total [6100] Equity (950,763.00) 0.00 (950,763.00) 0.00 (950,763.00) (774,519.00) Equity (950,763.00) 0.00 (950,763.00) 0.00 (950,763.00) (774,519.00) NET (INCOME) LOSS (146,427.00) 133,601.00 (12,826.00) 0.00 (12,826.00) (176,244.00) TOTAL EQUITY (1,097,190.00) 133,601.00 (963,589.00) 0.00 (963,589.00) (950,763.00) TOTAL LIABILITY AND EQUITY (1,265,940.00) 185,000.00 (1,080,940.00) 0.00 (1,080,940.00) (1,144,263.00) Group : [7100] Revenue Subgroup : [7100.00] Project fees 2116 Application Fees (9,500.00) 0.00 (9,500.00) 0.00 (9,500.00) (9,000.00) 2117 Administration Fees (335,333.00) (17,699.00) (353,032.00) 0.00 (353,032.00) (341,004.00) AJE - 4 (28,000.00) AJE - 5 10,301.00 Subtotal [7100.00] Project fees (344,833.00) (17,699.00) (362,532.00) 0.00 (362,532.00) (350,004.00) Total [7100] Revenue (344,833.00) (17,699.00) (362,532.00) 0.00 (362,532.00) (350,004.00) Revenues (344,833.00) (17,699.00) (362,532.00) 0.00 (362,532.00) (350,004.00) Group : [7400] Non-operating Rev & Exp Subgroup : [7400.03] Late Fees and Penalties 2411 Late Payments On PILOT Payments 499.00 0.00 499.00 0.00 499.00 0.00 Subtotal [7400.03] Late Fees and Penalties 499.00 0.00 499.00 0.00 499.00 0.00 2 of 6  3/15/2019 10:54 AM Client: 005512.AUD - Troy Industrial Development Authority Engagement: 18 AUD - Troy Industrial Development Authority Trial Balance: 3000.01 - TB Workpaper: 3600.01 - TIDA Financial Statement Grouping Report Account Description UNADJ JE Ref # AJE ADJ JE Ref # RJE FINAL 1st PP-FINAL 12/31/2018 12/31/2018 12/31/2018 12/31/2017 Subgroup : [7400.05] Interest Income 2401 Interest Earnings (1,814.00) 0.00 (1,814.00) 0.00 (1,814.00) (691.00) Subtotal [7400.05] Interest Income (1,814.00) 0.00 (1,814.00) 0.00 (1,814.00) (691.00) Subgroup : [4700.10] Other Expense 410 Loss on Asset 0.00 213,000.00 213,000.00 0.00 213,000.00 0.00 AJE - 3 213,000.00 Subtotal [4700.10] Other Expense 0.00 213,000.00 213,000.00 0.00 213,000.00 0.00 Total [7400] Non-operating Rev & Exp (1,315.00) 213,000.00 211,685.00 0.00 211,685.00 (691.00) Other Income (1,315.00) 213,000.00 211,685.00 0.00 211,685.00 (691.00) TOTAL REVENUE (346,148.00) 195,301.00 (150,847.00) 0.00 (150,847.00) (350,695.00) Group : [7300] General and Administrative Subgroup : [7300.00] General & Administrative 407 Management Fees 100,000.00 0.00 100,000.00 0.00 100,000.00 100,000.00 Subtotal [7300.00] General & Administrative 100,000.00 0.00 100,000.00 0.00 100,000.00 100,000.00 Subgroup : [7300.01] Professional Fees 409.1 Legal 10,530.00 0.00 10,530.00 0.00 10,530.00 27,111.00 409.2 Accounting/Auditing 16,276.00 0.00 16,276.00 0.00 16,276.00 14,908.00 409.5 Architectural/Engineering 0.00 0.00 0.00 0.00 0.00 3,600.00 Subtotal [7300.01] Professional Fees 26,806.00 0.00 26,806.00 0.00 26,806.00 45,619.00 Subgroup : [7300.02] Economic Development 1955.4 Payment in Lieu of Taxes 5,008.00 0.00 5,008.00 0.00 5,008.00 12,836.00 Subtotal [7300.02] Economic Development 5,008.00 0.00 5,008.00 0.00 5,008.00 12,836.00 Subgroup : [7300.03] Insurance 406.2 Fidelity Bond 2,602.00 0.00 2,602.00 0.00 2,602.00 2,618.00 Subtotal [7300.03] Insurance 2,602.00 0.00 2,602.00 0.00 2,602.00 2,618.00 Subgroup : [7300.07] Grant Expense 409.6 Professional Services Way Finding Design 61,700.00 (61,700.00) 0.00 0.00 0.00 0.00 AJE - 1 (61,700.00) Subtotal [7300.07] Grant Expense 61,700.00 (61,700.00) 0.00 0.00 0.00 0.00 Subgroup : [7300.25] Dues and Subscriptions 408 Dues & Subscription 1,949.00 0.00 1,949.00 0.00 1,949.00 502.00 Subtotal [7300.25] Dues and Subscriptions 1,949.00 0.00 1,949.00 0.00 1,949.00 502.00 Subgroup : [7300.42] Miscellaneous Expenses 203 Office Equipment Purchase 33.00 0.00 33.00 0.00 33.00 286.00 301 Office Supplies 24.00 0.00 24.00 0.00 24.00 277.00 304 Filing Fees 0.00 0.00 0.00 0.00 0.00 310.00 403 Printing & Advertising 146.00 0.00 146.00 0.00 146.00 0.00 403.1 Legal Notices 0.00 0.00 0.00 0.00 0.00 147.00 409.3 Marketing Expense 740.00 0.00 740.00 0.00 740.00 0.00 409.4 Professional Services Other 713.00 0.00 713.00 0.00 713.00 11,856.00 3 of 6  3/15/2019 10:54 AM Client: 005512.AUD - Troy Industrial Development Authority Engagement: 18 AUD - Troy Industrial Development Authority Trial Balance: 3000.01 - TB Workpaper: 3600.01 - TIDA Financial Statement Grouping Report Account Description UNADJ JE Ref # AJE ADJ JE Ref # RJE FINAL 1st PP-FINAL 12/31/2018 12/31/2018 12/31/2018 12/31/2017 Subtotal [7300.42] Miscellaneous Expenses 1,656.00 0.00 1,656.00 0.00 1,656.00 12,876.00 Total [7300] General and Administrative 199,721.00 (61,700.00) 138,021.00 0.00 138,021.00 174,451.00 Operating Expenses 199,721.00 (61,700.00) 138,021.00 0.00 138,021.00 174,451.00 TOTAL EXPENSE 199,721.00 (61,700.00) 138,021.00 0.00 138,021.00 174,451.00 NET (INCOME) LOSS (146,427.00) 133,601.00 (12,826.00) 0.00 (12,826.00) (176,244.00) Sum of Account Groups 0.00 0.00 0.00 0.00 0.00 0.00 4 of 6