Loading...
AUDIT: 1995 AND 1996 AUDIT REPORT 1 1 1 FIB, ! `.JUN 4 51997 1 JEFFERSON WoNTY Clerk & ReCorder 1 1 Jefferson County, Montana 1 Fiscal years ended June 30, 1995 and 1996 1 1 AUDIT REPORT 1 1 1 1 1 1 Nordwick, Denning & Downey 1 CERTIFIED PUBLIC ACCOUNTANTS 1 1 JEFFERSON COUNTY, MONTANA TABLE OF CONTENTS ' Fiscal Years Ended June 30 1995 and 1996 Page Organization 1 ' Independent Auditor's Report 2 ' General Purpose Financial Statements Combined Balance Sheet - All Fund Types and Account Groups 3 - 4 Combined Statement of Revenues, Expenditures, and Changes in Fund Balances - All 5 - 6 Governmental Fund Types ' Combined Statement of Revenues, Expenditures, and Changes in Fund Balances - 7 - 8 Budget and Actual - General, Budgeted Special Revenue, and Debt Service Fund ' Types Combined Statement of Revenues, Expenses, and Changes in Retained Earnings - All 9 - 10 Proprietary Fund Types Combined Statement of Cash Flows - All Proprietary Fund Types 11 - 12 Notes to Financial Statements 13 - 32 Single Audit Section 33 ' Independent Auditor's Report on Supplemental Information 34 Supplemental Schedules Schedules of Federal Financial Assistance 35 - 36 ' Independent Auditor's Report on Compliance Based on an Audit of General Purpose 37 Financial Statements Performed in Accordance With Government Auditing Standards ' Independent Auditor's Report on the Internal Control Structure Based on an Audit of 38 - 40 ' General Purpose Financial Statements Performed in Accordance With Government Auditing Standards ' Independent Auditor's Report on the Internal Control Structure Used in Administering 41 - 43 Federal Financial Assistance Programs JEFFERSON COUNTY, MONTANA ' TABLE OF CONTENTS - cont. ' Paee ' Independent Auditor's Report on Compliance With the General Requirements 44 Applicable to Federal Financial Assistance Programs ' Independent Auditor's Report on Compliance With Specific Requirements Applicable 45 to Nonmajor Federal Financial Assistance Program Transactions , Independent Auditor's Report on Other Compliance, Financial, and Internal 46 - 47 Accounting Control Matters ' Independent Auditor's Report on Prior Audit Report Recommendations 48 Response to Audit Findings 49 - 50 1 -ii- ' JEFFERSON COUNTY, MONTANA ' ORGANIZATION Fiscal Years Ended June 30, 1995 and 1996 Fiscal Year Fiscal Year ' Ended June 30, 1995 Ended June 30 1996 BOARD OF COUNTY COMMISSIONERS ' Mr. Leonard Wortman Chairman Mr. Leonard Wortman Mr. Chuck Notbohm Commissioner Mr. Chuck Notbohm ' Ms. Glenna Obie Commissioner Ms. Glenna Obie ' OFFICIALS Ms. Bonnie Ramey Assessor Ms. Bonnie Ramey Mr. Richard Llewellyn Attorney Ms. Valerie Wilson ' Ms. Bonnie Ramey Clerk and Recorder Ms. Bonnie Ramey Ms. Marilyn Stevens Clerk of Court Ms. Marilyn Stevens Mr. Duane Scott Coroner Mr. Duane Scott Mr. Dennis Giulio Justice of the Peace Mr. Dennis Giulio Mr. Joe Adams Public Administrator Mr. Joe Adams Mr. Tom Dawson Sheriff Mr. Tom Dawson ' Ms. Sandy Streib Superintendent of Schools Ms. Sandy Streib Mrs. Susan Miller Treasurer Ms. Susan Miller -1- i Nordwick, Denning & Downey CERTIFIED PUBLIC ACCOUNTANTS i 1801 S.Russell•Missoula,MT 59801•543-8174 1103S.Main•Kalispell,MT 59901 •756-6879 iINDEPENDENT AUDITOR'S REPORT iBoard of Commissioners Jefferson County iBoulder, Montana We have audited the general-purpose financial statements of Jefferson County, Montana, as of and for the years ended June 30, 1995 and 1996, as listed in the table of contents. These general-purpose financial statements are the responsibility of the County's management. Our responsibility is to express an opinion on these general-purpose financial statements based on our audit. iWe conducted our audit in accordance with generally accepted auditing standards; Government Auditing Standards, issued by the Comptroller General of the United States; and Office of Management and Budget i (OMB)Circular A-128,Audits of State and Local Governments. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the general-purpose financial statements i are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the general-purpose financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall i general-purpose financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. i In our opinion, the general-purpose financial statements referred to above present fairly, in all material respects, the financial position of Jefferson County as of June 30, 1995 and 1996, and the results of its operations and the cash flows of its proprietary fund types for the year then ended in conformity with igenerally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued reports dated April 8, 1997, on i our consideration of the County's internal control structure and on its compliance with laws and /regulations. / C� i 1/o>�vick, eLJenniru� nn�t vLlowne� iApril 8, 1997 i 1 1 2 Stan Nordwick,CPA •Robert K Denning, CPA•Kim M.Downey,CPA •Nancy S. Everson, CPA JEFFERSON COUNTY,MONTANA COMBINED BALANCE SHEET-ALL FUND TYPES AND ACCOUNT GROUPS June 30, 1995 PROPRIETARY FIDUCIARY GOVERNMENTAL FUND TYPES FUND TYPES FUND TYPES ACCOUNT GROUPS General General TOTALS Special Debt Trust And Fixed Long-Term (MEMORANDUM General Revenue Service Enterprise Agency_ Assets Debt ONLY) ASSETS Cashlinvestments $ 488,504 $ 4,386,673 $ 30,242 $ 270,860 $ 6,618,101 $ - $ - $ 11,794.380 Taxeslassessments receivable 15,272 102,499 3,582 54,218 494,375 - - 669,946 Other receivables - - - 13,891 - - - 13,891 Due from other funds 3,830 - - - - - - 3,830 Amount available in debt service funds - - - - - - 30,242 30,242 Amount to be provided for retirement of general long-term debt - - - - - - 905,188 905,188 Fixed assets - - 385,383 _ 4,748.449 _ 5,133,832 W TOTAL ASSETS $ 507 606_$ 4,489 172 $ 33,824 $ 724,352 $ 7 112.476 $ ,4748,449 $ 935430 $ 18,551 309 , LIABILITIES AND FUND EQUITY Liabilities: Warrants payable $ - $ - $ - $ - $ 314,868 $ - $ - $ 314,868 Accounts payable - - - - 31,364 - - 31,364 Due to other funds - 3,830 - - - - - 3,830 Due to other governments - - - - 6,571,935 - - 6,571,935 Deferred revenue 15,272 102,499 3,582 - - - - 121,353 Deferred compensation payable - - - - 194,309 - - 194,309 Long-term liabilities _ - _ - 330,692 - - 935,430 1,266,122 Total Liabilities 15,272 106,329 3,582 330,692 7,112,476 - 935,430 8,503,781 Fund Equity: Investment in general fixed assets - - - - - 4,748,449 - 4,748,449 Retained earnings: Reserved - - - 121,610 - - - 121,610 Unreserved - - - 272,050 - - - 272,050 Fund Balance: Reserved - - 30,242 - - - - 30,242 Unreserved 492,334 4,382,843 _ _ _ _ _ _ 4,875,177 Total Fund Equity 492,334 4,382,843 30,242 --- 393,660 - 4,748,449 _ - _ 10,047,528 TOTAL LIABILITIES AND FUND EQUITY $ 507,606 $__ 4 489 172 $_. 33,824 $ 724352 $ 7,112,476 $ 4,748,449 $ 935,430 $ _ _ 18,551,309 See accompanying Notes to Financial Statements JEFFERSON COUNTY,MONTANA COMBINED BALANCE SHEET-ALL FUND TYPES AND ACCOUNT GROUPS June 30,1996 PROPRIETARY FIDUCIARY GOVERNMENTAL FUND TYPES FUND TYPES FUND TYPES ACCOUNT GROUPS General General TOTALS Special Debt Trust And Fixed Long-Term (MEMORANDUM General Revenue Service Ente my se A en _ Assets Debt ONLY) ASSETS - Cashlnveslments $ 450,722 $ 4,597,728 $ 24,425 $ 319,603 $ 6,202,439 $ - $ - $ 11,594,917 Taxes/assessments receivable 11,835 50,434 2,321 80,954 512,887 - - 658,431 Other receivables - - - 10,793 - - - 10,793 Amount available in debt service fund - - - - - - 24,425 24,425 Amount to be provided for retirement of general long-term debt - - - - - - 824,017 824,017 Fixed assets - 369,273 _ 4,_868,255 _ - _ 5,23.7,528 TOTAL ASSETS $ 41612,557 $ 4,646 162 $ _ _26,746 $ 780 623 $ 6,715,326 $ 4,868 2� 55 $_ 848,442 $ - 18,350,111_ r LABILITIES AND FUND EQUITY Liabilities: Warrants payable $ - $ - $ - $ - $ 275,263 $ - $ - $ 275,263 Accounts payable - - - - 397,177 - - 397,177 Due to other governments - - - - 5,803,479 - - 5,803,479 Deferred revenue 11,835 50,434 2.321 - - - - 64,590 Deferred compensation payable - - - - 239,407 - - 239,407 Long-term liabilities _ _ . - _304,222 _ 848,442 1,152,664 Total Liabilities 11,835 50,434 2,321 - 304,222 6,715,326 -848442 7,932,580 Fund Equity: Investment in general fixed assets - - - - - 4,868,255 - 4,868,255 Retained earnings: Reserved - - - 148,127 - - - 148,127 Unreserved - - - 328,274 - - - 328,274 Fund Balance: Reserved - - 24,425 - - - - 24,425 Unreserved 450,722 4,597,728 - 5,048,450 Total Fund Equity 450,722 _!4,597,728 24 425 476,401 - - 4,868,255 - 10,417,531 TOTAL LIABILITIES AND FUND EQUITY $ 4.62,557 $ 4,648,162 $ _26_746 $ _ _____780,623 $ 6,715,326 $ 4,868 255. $ 848 442 $ 18 350111 See accompanying Notes to Financial Statements JEFFERSON COUNTY,MONTANA COMBINED STATEMENT OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES- ALL GOVERNMENTAL FUND TYPES For Fiscal Year Ended June 30, 1995 GOVERNMENTAL FUND TYPES TOTALS Special Debt (MEMORANDUM General Revenue Service ONLY) REVENUES Taxes/special assessments $ 211,711 $ 1,666,328 $ 51,371 $ 1,929,410 Licenses and permits 28 98,389 - 98,417 Intergovernmental revenue 136,645 744,412 2,534 883,591 Charges for services 73,045 218,818 - 291,863 Fines and forfeitures 77,523 7,543 - 85,066 Miscellaneous revenues 698 27,149 - 27,847 Investment and royalty earnings _ 137,103 135,079 1,496 1,496 _ 273,678 Total Revenues 636,753 2,897,718 55,401 3,589,872 EXPENDITURES Current: General government 756,774 191,666 - 948,440 Public safety 30,963 760,303 - 791,266 Public works 696 625,619 - 626,315 Cn Public health 22,259 128,726 - 150,985 Social and economic services 3,590 118,257 - 121,847 Culture and recreation - 139,443 - 139,443 Housing and community development - 18,071 - 18,071 Miscellaneous - 239,193 - 239,193 Capital outlay 57,968 365,828 - 423,796 Debt service 40,606 38,394 81,575 160,575 Total Expenditures __ 912,856 2,625,500 81,575 3,619,931 Excess(Deficiency of Revenues Over Expenditures (276,103) 272,218 26,174 _ (30,059) Other Financing Sources(Uses): Proceeds of general long-term debt - 219,590 - 219,590 Proceeds of general fixed asset disposition - 17,223 - 17,223 Operating transfers in 90,132 222,317 - 312,449 Operating transfers(out) _ (312,449) _ _ (312,449) Total Other Financing Sources(Uses) 90,132 146,681 236,813 Excess(Deficiency)of Revenues and Other Sources Over Expenditures and Other Uses .__ (185,971) __418.899 L 26,174) 206,754 Fund Balances-July 1, 1994-as previously reported 678,305 3,963,443 56,416 4,698,164 Restatements 501 - 501 Fund Balances-July 1, 1994-as restated 678,305 3,963,944 56,416 4,698,665 Fund Balances-June 30, 1995 $ 492,3U $ 4,382 843 $_ _. 30,242 $ 4,905,419_ See accompanying Notes to Financial Statements JEFFERSON COUNTY,MONTANA COMBINED STATEMENT OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES- ALL GOVERNMENTAL FUND TYPES For Fiscal Year Ended June 30, 1996 _GOVERNMENTAL FUND TYPES TOTALS Special_ Debt (MEMORANDUM General _- Revenue-__ Service ONLY)___ RFV_ENUES - -- -_- _._ . __ _ Taxes/special assessments $ 280,369 $ 1,572.056 $ 71,508 $ 1,923,933 Licenses and permits - '101,175 - 101,175 Intergovernmental revenue 156,974 877,221 4,369 1,038,564 Charges for services 69,072 254,554 - 323,626 Fines and forfeitures 109,745 3,910 - 113,655 Miscellaneous revenues 2,598 13.464 - 16,062 Investment and royalty earnings 123,923 148,891 _ 1,251 _ 274,065 Total Revenues 742,681 - _ 2,971,271 _ 77,128 - --3,791,080 EXPENDITURES Current: General government 777,915 193.915 - 971,830 Public safety 43,615 844,494 - 888,109 Public works 4 678,034 - 678,038 ' Public health 15,515 133,366 - 148,881 Social and economic services 2,780 133,595 - 136,375 Culture and recreation - 111,715 - 111,715 Housing and community development - 34,058 - 34,058 Miscellaneous - 310,230 - 310,230 Capital outlay 99,047 99,138 - 198,185 Debt service 43,219 30,339 _ _ 82,945 _ 156,503 Total Expenditures _ - 982,095 2,56$884 82,945 3,633,924 Excess(Deficiency of Revenues Over Expenditures _ (239,414) _ _ 402,387 (5,817) 157,156 Other Financing Sources(Uses): Proceeds of general fixed asset disposition 300 10,000 - 10,300 Operating transfers in 181,907 100,759 - 282,666 Operating transfers(out) _ - ---(282,666) _ _ (282,666) Total Other Financing Sources(Uses) _182,207 - 71,907) _. __ 10,300 Excess(Deficiency)of Revenues and Other Sources Over Expenditures and Other Uses (57,207) 230,480 (5,817) 167,456 Fund Balances-July 1, 1995 492,334 4,382,843 30,242 4,905,419 Residual equity transfers 15,595 (15,595) - - Fund Balances-June 30, 1996 $ _. 450,722 $_ 4 597 728 $ 24,425 $_ _ 5 072 875 See accompanying Notes to Financial Statements JEFFERSON COUNTY,MONTANA COMBINED STATEMENT OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL GENERAL,SPECIAL REVENUE,AND DEBT SERVICE FUND TYPES For Fiscal Year Ended June 30, 1995 GENERAL FUND SPECIAL REVENUE FUNDS _ DEBT SERVICE FUNDS _ Variance - Variance Variance Favorable Favorable Favorable Budget _ __Actual Unfavorable) Budget _ Actual (Unfavorable) Budget Actual (Unfavorable) REYENUES Taxeslspecial assessments $ 187,682 $ 211,711 $ 24,029 $ 1,631,787 $ 1,666,328 $ 34,541 $ 48,243 $ 51,371 $ 3,128 Licenses and permits 5 28 23 91,545 98,389 6,844 - - - Intergovernmental revenue 134,552 136,645 2,093 714,026 744,412 30,386 2,635 2,534 (101) Charges for services 89,507 73,045 (16,462) 198,815 218,818 20,003 - - Fines and forfeitures 92,300 77,523 (14,777) 12,264 7,543 (4,721) -Miscellaneous revenues 650 698 48 18,322 27,149 8,827 - - Investment and royalty earnings _ 105,000 137,103 32,103 69,300 135,079 65,779 1,800 1,496 _ __�304) Total Revenues 609,696 636,753 27,057 2,736,059 2,897,718 161,659 52,678 55,401 2,723 EXPENDITURES Cument: General government 891,885 756,774 135,111 244,127 191,666 52,461 - Public safety 44,940 30,963 13,977 833,173 760,303 72,870 - - V Public works 3,700 696 3,004 1,239,428 625,619 613,809 - - i Public health 36,652 22,259 14,393 223,755 128,726 95,029 - - Socialandeconomicservices 5,000 3,590 1,410 155,165 118,257 36,908 - - - Culture and recreation - - - 151,650 139,443 12,207 - - - Housing and community development - - - 259,715 18,071 241,644 - - - Miscellaneous - - - 373,395 239,193 134,202 - - - Capital outlay 86,555 57,968 28,587 563,073 365,828 197,245 - -Debt service 40,607 40,606 1 39,399 38,394 1,005 82,025 81,575 450 Total Expenditures 1,`109,339 912,856 196,483 4,082,880 2,625,500 1,457,380 _ 82,025 81,575 450 Excess(Deficiency of Revenues Over Expenditures (499,643) (276,103) 223,540 (1,346,821) 272,218 1,619,039 (29,347) 2( 6,174) _ _ 3,173 Other Financing Sources(Uses). Proceeds of general long-term debt - - - 219,590 219,590 - - - - Proceeds of general fixed asset disposition - - - 1,723 17,223 15,500 - - - Operating transfers in 96,132 90,132 (6,000) 216,368 222,317 5,949 - - - Operating transfers(cut) _ - - - (324,885) (312,449) _ _ 12,436 - - - Total Other Financing Sources(Uses) 96,132 - 90,132 - (6,000) 112,796 146,661 33,885 Excess(Deficiency)of Revenues and Other Sources Over Expenditures and Other Uses $ (403,511) (185,971)$ .217 540 $X1,234,025) 418,899 $_1 652,924 $ (29,347) _ (26,174)$ 3,173 Fund Balances-July 1, 1994-as previously reported 678,305 3,963,443 56,416 Restatements 501 Fund Balances-July 1, 1994-as restated 678,305 3,963,944 56,416 Fund Balances-June 30, 1.995 $_ 492,334 $_ 4,382 843 $ 30,242 See accompanying Notes to Financial Statements JEFFERSON COUNTY,MONTANA COMBINED STATEMENT OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL GENERAL,SPECIAL REVENUE,AND DEBT SERVICE FUND TYPES For Fiscal Year Ended June 30, 1996 GENERAL FUND SPECIAL REVENUE FUNDS DEBT SERVICE FUNDS Variance Variance Variance Favorable Favorable Favorable Budd. _ _ Actual (Unfavorable) Budget Actual .(Unfavorable) Budget Actual (Unfavorable) REVENUES Taxes/special assessments $ 263,232 $ 280,369 $ 17,137 $ 1,511,695 $ 1,572,056 $ 60,361 $ 69,356 $ 71,508 $ 2,152 Licenses and permits 5 - (5) 103,038 101,175 (1,863) - - - Intergovernmental revenue 140,811 156,974 16,163 892,498 877,221 (15,277) 2,538 4,369 1,831 Charges for services 67,885 69,072 1,187 197,748 254,554 56,806 - - - Finesandforfeitures 75,945 109,745 33,800 1,510 3,910 2,400 - - - Miscellaneous revenues 620 2,598 1,978 54,024 13,464 (40,560) - - - Investment and royalty earnings 138,000 123,923 __. __(14.077) 136,755 148,891 _._. . 12,136 _ 1,500 1,251 (249) Total Revenues 686,498 742,681 56,183 2,897,268 2,971,271 74,003 73,394 77,128 3,734 EXPENDITURES Current: General government 849,672 777,915 71,757 239,540 193,915 45,625 - - - W Public safety 56,175 43,615 12,560 904,366 844,494 59,872 - -Public works 3,700 4 3,696 1,318,572 878,034 640,538 - - - Public health 33,991 15,515 18,476 182,938 133,366 49,572 - - - Social and economic services 5,500 2,780 2,720 144,824 133,595 11,229 - - - Culture and recreation - - - 145,807 111,715 34,092 - - Housing and community development - - - 36,308 34,058 2,250 - - - Miscellaneous - - - 396,387 310,230 86,157 - - Capital outlay 99,049 99,047 2 361,958 99,138 262,820 - - - Debt service 43,220 43,219 1 31,240 30,339 901 83,272 _ 82,945 327 Total Expenditures 1,091,307 982,095 109,212 3,761,940 2,568,884 1,193,058 83,272 82,945 327 Excess(Deficiency of Revenues Over Expenditures (04,809) __(239,414) 165,395 (864,672) 402,387 _ 1,267,059 (9,878) 5,817) 4,061 Other Financing Sources(Uses): Proceeds of general fixed asset disposition - 300 300 - 10,000 10,000 - - - Operatingtransfersin 181,933 181,907 (26) 103,258 100,759 (2,499) - - - Operatingtransfers(out) _. -_ - - (300,177) (282,666) - _17,511 Total Other Financing Sources(Uses) 181,933 182,207 274 _. 196,91 (171,907) 25,012 - Excess(Deficiency)of Revenues and Other Sources Over Expenditures and Other Uses $ (222&76) (57,207)$ 165,669 $ 1,G61,591) 230,480 $ 1,292,071 $ _ (9,878 5,817 $ 4 061_ Fund Balances-July 1, 1995 492,334 4,382,843 30,242 Residual equity transfers 15,595 15,595 Fund Balances-June 30, 1996 $ 450 722 $ 4 597 728 $24,425 See accompanying Notes to Financial Statements JEFFERSON COUNTY, MONTANA COMBINED STATEMENT OF REVENUES, EXPENSES, AND , CHANGES IN RETAINED EARNINGS -ALL PROPRIETARY FUND TYPES For Fiscal Year Ended June 30, 1995 , PROPRETARY ' FUND TYPES_ Enterprise Operating Revenues: , Charges for services $ 482,289 Miscellaneous revenues 1,045 Total Operating Revenues 483,334 ' Operating Expenses: Personal services 151,162 ' Supplies 28,925 Purchased services 271,569 Losses/bad debt expenses 3,092 ' Depreciation 32,798 Total Operating Expenses 487,546 ' Operating Loss (4,212) Non-Operating Revenues(Expenses): ' Tax revenue 5,652 Intergovernmental revenue 5,777 ' Interest 4,608 Debt service interest expense (9,713) Loss on sale of fixed assets _ (4,555) , Total Non-Operating Revenues(Expenses) 1,769 Increase(Decrease) in Retained Earnings (2,443) ' Retained Earnings - July 1, 1994 396,103 Retained Earnings - June 30, 1995 $ 393 660 , See accompanying Notes to Financial Statements ' -9- ' JEFFERSON COUNTY, MONTANA ' COMBINED STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN RETAINED EARNINGS -ALL PROPRIETARY FUND TYPES ' For Fiscal Year Ended June 30, 1996 PROPRIETARY FUND TYPES Enterprise Operating Revenues: 1 Charges for services $ 503,433 Miscellaneous revenues 666 Total Operating Revenues 504,099 ' Operating Expenses: ' Personal services 162,481 Supplies 42,644 Purchased services 170,538 ' Fixed charges 500 Losses/bad debt expenses 6,831 Depreciation 36,974 ' Total Operating Expenses 419,968 Operating Income 84,131 ' Non-Operating Revenues(Expenses): Tax revenue 5,381 ' Intergovernmental revenue 7,936 Interest 5,257 Debt service interest expense (24,659) ' Gain on sale of fixed assets - 4,695 Total Non-Operating Revenues(Expenses) (1,390) ' Increase(Decrease) in Retained Earnings 82,741 Retained Earnings - July 1, 1995 393,660 Retained Earnings - June 30, 1996 $ -476,401 ' See accompanying Notes to Financial Statements -10- 1 JEFFERSON COUNTY, MONTANA ' COMBINED STATEMENT OF CASH FLOWS- , ALL PROPRIETARY FUND TYPES Fiscal Year Ended June 30, 1995 ' PROPRIETARY FUND TYPES , Enterprise Cash flows from operating activities: ' Operating loss $ (4,212) Adjustments to reconcile operating income(loss) to net cash provided: ' Depreciation 32,798 Changes in assets and liabilities: Increase in accounts receivable (8,064) , Increase in taxes/assessments receivable (12,751) Increase in compensated absences payable 2,384 Total adjustments 14,367 Net cash provided by operating activities 10,155 Cash flows from noncapital financing activities: ' Receipt of property taxes 5,652 Receipt from federal grant 5,777 Net cash flows from noncapital financing activities 11,429 ' Cash flows from capital and related financing activities: Purchase of fixed assets (50,977) , Principal payments on intercap loans (11,885) Interest payments on intercap loans (9,713) Sale of fixed assets 10,000 ' Proceeds from intercap loans 52,645 Net cash used for capital and related financing activities __ (9,930) Cash flows from investing activities: ' Interest received 4,608 Net increase in cash and cash equivalents 16,262 ' Cash and cash equivalents at July 1, 1994 254,598 Cash and cash equivalents at June 30, 1995 $_ 27(:C860 , Noncash investing, capital, and financing activities: ' The County sold a compactor for$10,000 which had a book value of$145,555 and accumulated depreciation of$130,999, resulting in a loss on the sale of$4,555 ' _11_ I ' JEFFERSON COUNTY, MONTANA ' COMBINED STATEMENT OF CASH FLOWS- ALL PROPRIETARY FUND TYPES Fiscal Year Ended June 30, 1996 PROPRIETARY FUND TYPES Enterprise ' Cash Flows from Operating Activities: Operating income $ 84,131 Adjustments to reconcile operating income to net cash provided: t Depreciation 36,974 Changes in assets and liabilities: Decrease in accounts receivable 3,098 Increase in taxes/assessments receivable (26,736) Decrease in compensated absences payable (2,935) Total adjustments 10,401 ' Net cash provided by operating activities 94,532 Cash flows from noncapital financing activities: ' Receipt of property taxes 5,381 Receipt from federal grant _ 7,936 Net cash flows from noncapital financing activities _ 13,317_ Cash flows from capital and related financing activities: Purchase of fixed assets (26,169) ' Principal payments on intercap loans (27,864) Interest payments on intercap loans (24,659) Sale of fixed assets 10,000 Proceeds from intercap loans 4,329 ' Net cash flows used for capital and related financing activities _(64,363) Cash flows from investing activities: ' Interest received 5,257 Net increase in cash and cash equivalents 48,743 ' Cash and cash equivalents at July 1, 1995 270,860 ' Cash and cash equivalents at June 30, 1996 $ __ _319 603 Noncash investing, capital, and financing activities: ' The County sold a scraper which belonged one-half to the road fund and one-half to the solid waste fund. The solid waste fund received $10,000 in proceeds for the scraper. The book value recorded in the solid waste fund was $10,610 and accumulated depreciation was $5,305, resulting in a gain of$4,695. ' -12- 1 JEFFERSON COUNTY, MONTANA NOTES TO FINANCIAL STATEMENTS ' June 30, 1996 1. Summary of Significant Accounting Policies , The following is a summary of the County's significant accounting policies: Reporting Entity Jefferson County is a political division of the State and is governed by an elected, three- member Board of County Commissioners. The County is considered a primary government ' because it is a general purpose local government. Further it meets the following criteria: (a) It has a separately elected governing body (b) It is legally separate and (c) It is fiscally independent from the State and other local governments. The accompanying combined financial statements include all funds, account groups, ' agencies, boards, commissions, and authorities which meet the criteria of Statement No. 14 for inclusion in Jefferson County's financial report. These criteria include financial accountability, appointment of a majority of the secondary government and the financial ' benefit or burden derived by the primary government from the secondary government. Certain activities such as the Fair, Library, Weed and Planning have separate boards but are ' included in the general purpose financial statements as special revenue funds because they are not legally separate or fiscally independent from the County and the County is financially accountable. Other activities such as the Soil Conservation District, Water and Sewer ' District, and the rural fire districts and school districts are reflected only in the combined balance sheets as agency funds, since the County is responsible, by law, for the collection of taxes and/or maintenance of cash funds for those entities. These entities are all considered ' primary governments and not a part of the County. The television district is considered to be a related organization of the County because the , County Commissioners appoint the board members of the district. However, the County is not financially accountable for the district because it does not have the ability to impose its will on the district and there is not a potential financial benefit or burden relationship. The t district is included in the combined balance sheet as an agency fund because the County Treasurer must collect and disburse funds for the district. -13- ' Summary of Significant Accounting Policies - cont. ' Measurement Focus, Basis of Accounting and Basis of Presentation The accounts of the County are organized and operated on the basis of funds and account ' groups. A fund is an independent fiscal and accounting entity with a self-balancing set of accounts. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with finance-related legal and contractual ' provisions. The minimum number of funds are maintained consistent with legal and managerial requirements. Account groups are a reporting device to account for certain assets and liabilities of the governmental funds not recorded directly in those funds. Jefferson County has the following fund types and account groups: ' Governmental funds are used to account for the County's general government activities. Governmental fund types use the flow of current financial resources measurement focus and ' the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual. (i.e., when they are "measurable and available"). "Measurable" means the amount of the transaction can be determined and ' "available" means collectible within the current period or soon enough thereafter to pay liabilities of the current period. The County considers all revenues available if they are collected within 60 days after year-end. Expenditures are recorded when the related fund ' liability is incurred, except for unmatured interest on general long-term debt which is recognized when due, and certain compensated absences and claims and judgements which are recognized when the obligations are expected to be liquidated with expendable available ' financial resources. The County however, records expenditures when paid in all governmental funds rather than when the liability was incurred as required by generally accepted accounting principles. No material differences resulted. Real and personal property taxes (excluding motor vehicle taxes), special assessments, charges for current services, and interest earnings are susceptible to accrual. Other receipts ' and taxes become measurable and available when cash is received by the County and are recognized as revenue at that time. The County recorded real and personal property taxes and assessments levied for the current year as revenue. Taxes and assessments receivable ' remaining unpaid at year-end and not expected to be collected soon enough thereafter to be available to pay obligations of the current year were recorded as deferred revenue, with a corresponding reduction in revenues, as required by generally accepted accounting principles. ' In addition, prior period delinquent taxes and assessments collected in the current period were recorded as revenue in the current period as required by generally accepted accounting ' principles. Entitlements and shared revenues are recorded at the time of receipt or earlier if the susceptible to accrual criteria are met. Expenditure driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other grant ' requirements have been met. t -14- 1 1. Summary of Significant Accounting Policies - cont. Governmental funds include the following fund types: , The general fund is the County's primary operating fund. It accounts for all financial ' resources of the general government, except those required to be accounted for in another fund. The special revenue funds account for revenue sources that are legally restricted to , expenditures for specific purposes (not including expendable trusts or major capital projects). The debt service funds account for the servicing of general long-term debt and special ' assessment debt not being financed by proprietary or nonexpendable trust funds, and for , which the County is obligated in some manner for payment. The capital project funds account for the acquisition of fixed assets or construction of ' major capital projects not being financed by proprietary or nonexpendable trust funds. Proprietary funds are accounted for on the flow of economic resources measurement focus ' and use the accrual basis of accounting. Under this method, revenues are recorded when earned and expenses are recorded at the time liabilities are incurred. The County, however, records expenses when paid, except for depreciation and compensated absences, rather than ' when the expense is incurred. No material differences resulted. The County has elected not to apply FASB pronouncements issued after November 30, 1989. The enterprise funds are used to account for those operations that are financed and operated in a manner similar to private business or where the Board of Commissioners has decided that the determination of revenues earned, cost incurred and/or net income is necessary for ' management accountability. The agency fund is custodial in nature and does not present results of operations or have a ' measurement focus. Agency funds are accounted for using the modified accrual basis of accounting. This fund is used to account for assets that the County holds for others in an agency capacity. ' Account Groups. The general fixed assets account group is used to account for fixed '. assets not accounted for in proprietary or trust funds. The general long-term debt account group is used to account for general long-term debt and certain other liabilities that are not specific liabilities of proprietary or trust funds. ' -15- , Summary of Significant Accounting Policies - cont. ' Cash and Cash Equivalents The County's cash and cash equivalents are considered to be cash on hand, demand deposits, ' repurchase agreements, U.S. treasury obligations, general obligations of certain agencies of the United States, mortgage backed securities, and investments with the State of Montana's short-term investment pool (STIP) The cash resources of the individual funds are combined to form a pool of cash and investments which is managed by the County Treasurer. Investments are carried at cost, which approximates market value for all funds, except for ' investments in the deferred compensation agency fund which are reported at market value. For purposes of the statement of cash flows, the enterprise funds consider all funds ' (including restricted assets) held in the County's cash management pool to be cash equivalents. ' Budgets and udg to ary Accounting A. Budget Process An annual appropriated operating budget is adopted each fiscal year for the General Fund, ' Special Revenue Funds, and Debt Service Funds on the cash basis of accounting, which is a basis of accounting not in accordance with generally accepted accounting principles. The ' appropriated budget is prepared by fund, function, and for the General fund and certain other funds, by department. ' A non-binding management budget is adopted for the Enterprise Fund. The final budget is legally enacted by the County on the second Monday in August after ' holding public hearings as required by State statutes. Budget appropriation transfers may be made between the general classifications of salaries ' and wages, maintenance and operation and capital outlay. Reported budget amounts represent the originally adopted budget as amended by resolution of the County Commissioners. It is management's responsibility to see that the budget is followed to the budgetary line item. ' The County Commissioners may amend a final budget when shortfalls in budgeted revenues require reductions in approved appropriations to avert deficit spending; when savings result from unanticipated adjustments in projected expenditures; when unanticipated state or federal monies are received; or when a public emergency occurs which could not have been foreseen at the time of adoption. The procedure to amend the budget in total can be made ' only after the County prepares a resolution, notice is published of a public hearing, and a public hearing is held in accordance with state law. ' -16- 1. Summary of Significant Accounting Policies - cont. , All appropriations, except for construction in progress, lapse at the end of the fiscal year. ' Encumbrance accounting is not used by the County. B. Budget/GAAP Reconciliation ' A reconciliation is not necessary for the two fiscal years because the County did not record accruals. Accruals normally recorded were not material to the financial statements. ' Fixed Assets All purchased fixed assets are valued at cost where historical records are available and at t estimated historical cost where no historical records exist. Donated fixed assets are valued at their estimated fair market value on the date received. The costs of normal maintenance and repairs that do not add to the value of the assets or materially extend asset lives are not , capitalized. Improvements are capitalized and, in proprietary funds, depreciated over the remaining useful lives of the related fixed assets. General fixed assets are not capitalized in the funds used to acquire or construct them. Instead, capital acquisition and construction are reflected as expenditures in governmental ' funds, and the related assets are reported in the general fixed assets account group. Assets in the general fixed assets account group are not depreciated. Public domain ('infrastructure") general fixed assets consisting of roads, bridges, curbs and ' gutters, streets and sidewalks, drainage systems, and lighting systems are not capitalized, as these assets are immovable and of value only to the government. ' Major outlays for capital assets and improvements are capitalized in proprietary funds as projects are constructed. Interest incurred during the construction phase of proprietary fund ' fixed assets is reflected in the capitalized value of the asset constructed, net of interest earned on the invested proceeds over the same period. Fixed assets purchased or acquired by proprietary fund types are recorded in the individual fund making the purchase. Any fixed assets donated specifically for an enterprise fund are also recorded in that individual fund. Depreciation on proprietary fund fixed assets is ' provided over their estimated useful lives on the straight-line method. The useful lives of these assets have been estimated as follows: Buildings 40 years ' Improvements 40 years Machinery and equipment 5 years ' Vehicles and heavy equipment 10 years -17- ' Summary of Significant Accounting Policies - cont. ' Taxes and Assessments An allowance for uncollectible accounts was not maintained for real and personal property ' taxes and special assessments receivable. The direct write-off method is used for these accounts. Enterprise Account Receivable No reserve for estimated uncollected accounts receivable is maintained. Accounts receivable are reported as net of revenues collected in advance. Inventories Inventories of materials and supplies are expensed at the time of purchase. Inventories of ' materials and supplies on hand are not maintained. Inventories were not, however, considered material. ' Warrants Payable The County pays its claims by issuing a warrant ordering the County Treasurer to pay for the ' warrant upon presentation. Warrants issued but not presented for payment are reported as warrants payable. ' Compensated Absences It is the County's policy and state law to permit employees to accumulate a limited amount of earned but unused vacation benefits, which will be paid to employees upon separation ' from County service. Employees are allowed to accumulate and carry over a maximum of two times their annual accumulation of vacation, but no more than 90 days into the new calendar year. There is no restriction on the amount of sick leave that may be accumulated. Upon separation, employees are paid 100 percent of accumulated vacation and 25 percent of accumulated sick leave. The liability associated with governmental fund-type employees is reported in the general long-term debt account group, while the liability associated with ' proprietary fund-type employees is recorded in the respective fund. A long-term liability of $157,176 and$187,504 for compensated absences at June 30, 1995 and 1996, respectively, has been recorded in the general long-term debt account group, representing the County's ' commitment to fund such costs from future operations. Long-Term Obligations ' The County reports long-term debt of governmental funds at face value in the general long- term debt account group. Certain other governmental fund obligations not expected to be financed with current available financial resources are also reported in the general long-term ' debt account group. Long-term debt and other obligations financed by proprietary funds are reported as liabilities in the appropriate funds. ' Fund Equuty Reservations of fund balance represent amounts that are not appropriable or are legally ' segregated for a specific purpose. Reservations of retained earnings are limited to outside third-party restrictions. ' -18- 1. Summary of Significant Accounting Policies - cont. Interfund Transactions , Interfund transactions consisting of identified services performed for other funds or costs billed to other funds are treated as expenditures in the fund receiving the services and as ' revenue in the fund performing the services. Transactions which constitute reimbursements of a fund for expenditures or expenses ' initially made from it which are properly applicable to another fund are recorded as expenditures in the reimbursing fund and as reductions of expenditures in the fund that is reimbursed. ' Advances between funds are accounted for in the appropriate interfund receivable and payable accounts. ' Memorandum Only- Total Columns ' Total columns on the general-purpose financial statements are captioned "memorandum only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position, results of operation, or cash flows in accordance ' with generally accepted accounting principles. Neither is such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data. 2. Property Taxes ' Property tax levies are set in August in connection with the budget process, and are based on taxable values listed as of January 1 for all property located in the County. Taxable values ' are established by the State Department of Revenue based on market values. A revaluation of all property is required to be completed on a periodic basis. Taxable value is defined by State statute as a fixed percentage of market value. , Real property taxes and special assessments are generally billed in October and are payable 50%by November 30 and 50%by May 31. After these dates, taxes and assessment become , delinquent and become a lien on the property. Personal property is assessed and personal property taxes are billed throughout the year, with a significant portion generally billed in May, June and July. Personal property taxes are based on levies set during the prior August. , These taxes become delinquent 30 days after billing. Taxes and assessments that become delinquent are charged interest at the rate of 5/6 of 1% ' per month plus a penalty of 2%. Real property on which taxes and assessments remain delinquent and unpaid may be sold at tax sales. In the case of personal property, the ' property is to be seized and sold after the taxes become delinquent. -19- ' 2. Property Taxes - cont. ' The County is permitted by State statutes to levy taxes up to certain fixed limits for various purposes. The taxes levied by the County for the years ended June 30, 1995 and 1996, were ' within the legal limits. The tax levies for the fiscal years ended June 30, 1995 and 1996, were based upon taxable valuations of $25,845,850 and $25,319,871, respectively. Current tax collections for the years ended June 30, 1995 and 1996, were approximately 99% and 98%, respectively, of the amount levied. ' 3. Deficit Fund Balances The MCH Block Grant, a Special Revenue Fund, had a deficit fund balance of$3,830 as of ' June 30, 1996. This was due to expenditures exceeding revenues and will be eliminated by the receipt of federal monies in the next fiscal year. ' 4. Budget OverdraftsNariances Significant favorable budget to actual variances in the amounts of$613,809 and $604,538 occurred in the public works expenditure category of the Special Revenue Funds for fiscal ' years 1995 and 1996, respectively. The variances were due to the County establishing sufficient budget authority in the Road and Bridge Funds to cover certain conditions that might occur such as snow removal and flood repair costs. 5. Cash and Investments The County maintains a cash and investment pool for all funds under the control of the ' Treasurer. Cash and investments may include cash and cash items, demand, time, savings, and fiscal ' agent deposits; investments in the State Short-Term Investment Pool (STIP); repurchase agreements;registered warrants of the County or of municipalities or school districts located in the county; U.S. government treasury bills, notes, bonds and other treasury obligations ' such as state and local government series; general obligations of certain agencies of the United States such as Federal Home Land Bank; and U.S. government security money market funds if the fund meets certain conditions. ' -20- 1 5. Cash and Investments- cont. The composition of cash and investments on June 30, 1995 and 1996, was as follows: June 30 1995 June 30, 1996 ' Cash on Hand $ 723 $ 1,361 Petty Cash 1,600 1,600 Cash in Banks: , Demand Deposits 538,322 607,728 Time Deposits 300,000 1,150,000 Fiscal Agent Deposits 5 5 ' State Short-Term Investment Pool (STIP) 5,847,749 8,209,720 U.S. Government Securities 1,730,096 501,517 ' Repurchase Agreements 3,181,576 883,579 Deferred Compensation 194,309 239,407 Total per Balance Sheet $ $ 11.594.917 ' Deposits- At June 30, 1995, the carrying amounts of the County's deposits were $568,327 and the bank balances were$827,809. These deposits include demand, time, and fiscal agent ' deposits. Of the bank balance, $ 300,000 was covered by Federal Depository Insurance, and the remaining balance was covered by securities held by the pledging financial institution's trust department or agent in the County's name. , At June 30, 1996, the carrying amount of the County's deposits were $1,757,733 and the bank balances were $1,724,894. These deposits include demand, time and fiscal agent ' deposits. Of the bank balance, $400,000 was covered by Federal Depository Insurance, $900,000 was covered by securities held by the pledging financial institution's trust department or agent in the County's name, and$424,894 was uninsured and uncollateralized. ' Montana statutes require that the County obtain securities for the uninsured portion of the deposits as follows: 1. securities equal to 50% of such deposits if the institution in which the ' deposits are made has a net worth to total assets ratio of 6% or more, or 2. securities equal to 100% of the uninsured deposits if the institution in which the deposits are made has a net , worth to total assets ratio of less than 6%. The State statutes do not specify in whose custody or name the collateral is to be held. The amount of collateral held for County deposits as June 30, 1996, equaled or exceeded the amount required by State statutes. ' Investments - as noted above, statutes authorize the County to invest in direct obligations of the United States Government, general obligation of certain agencies of the United States, , U.S. government security money market funds if the fund meets certain conditions, repurchase agreements, and the State Short-Term Investment Pool (STIP).These investments are in addition to time and savings deposits, which are included in deposits above. The ' County investments are categorized below to give an indication of the level of risk assumed by the County at June 30, 1995 and 1996. -21- t 5. Cash and Investments - cont. Category 1 - Includes investments that are insured, registered, or for which the securities are held by the County or its agent in the County's name. Category 2 - Includes uninsured and unregistered investments for which the securities are held by the financial institution's, broker's or dealer's trust department or ' agent in the County's name. Categoly 3 - Includes uninsured and unregistered investments for which the securities are ' held by the financial institution, broker or dealer, or by its trust department or agent but not in the County's name. ' June 30, 1995: Category Carrying Market 2 Value Value ' U.S. Government Securities $1,730,096 $ 1,730,096 $ 1,685,445 Repurchase Agreements 3181,576 3,181,576 3,181,576 ' $4.911 672 Investments not subject to categorization: Investment in State Short-Term Investment ' Pool (STIP) 5,847,749 5,847,749 Deferred compensation plan 194,309 194 309 Total Investments $ 0 953 730 $ 0.9 ' June 30, 1996: Category Carrying Market ' 2 Value Value U.S. Government Securities $ 501,517 $ 501,517 $ 490,220 Repurchase Agreements 88 883,579 883,579 ' $1 385 096 Investments not subject to categorization: Investment in State Short-Term Investment ' Pool (STIP) 8,209,720 8,209,720 Deferred compensation plan 239,407 239A07 Total Investments $ 1 Section 7-6-202, MCA, was amended effective April 13, 1995, and now limits authorized ' investments in certain securities that previously were permissible investments. The amendment does not apply to and does not require the sale of securities that were legal investments before the effective date of this act. However, the investments reported as U.S. ' Government Securities above are not authorized investments at the current time. -22- 1 5. Stash and Investments - cont. Governmental Accounting Standards Board (GASB) Technical Bulletin No. 94-1, effective ' for periods ending after December 31, 1994, requires governmental entities participating in an investment pool to disclose certain types of securities held in the pool. As noted above, , the County invests in the Short-Term Investment Pool managed by the State of Montana. This pool contains two types of investments required to be disclosed, which are Asset-backed Securities and Variable Rate(Floating Rate) Securities. ' Amounts (unaudited) invested by STIP in each type as of June 30, 1995, were as follows: Category 1 % Category 2 % ' Asset-backed $ 127,258,945 15.8 $ - - t Variable Rate 152,724,124 18.9 249,239 .5 Other Securities 527,226,475 65 3 49 060 887 995 Total $ 807209.541 100.0 $ 49.310.126 1000 , Amounts (unaudited) invested by STIP in each type as of June 30, 1996, were as follows: , Category 1 % Category 2 % Asset-backed $ 234,352,045 20.8 $ - ' Variable Rate 311,174,229 27.7 - - Other Securities 578.201_634 51.5 64,182770 100.0 Total $1.123 727.908 100.0 $ 64.182.770 100.0 ' Amounts invested by the County in STIP may be redeemed at any date at the carrying value on that date. ' Audited financial statements for the State of Montana's Board of Investments are available at 555 Fuller Avenue in Helena, Montana. ' The County invests in various mortgage-backed securities, such as collateralized mortgage obligations and principal-only strips. These investments are mortgage-backed and are ' commonly referred to as derivatives, meaning that the value of the security is derived from underlying instruments or market indices. The County invests in these derivatives in a effort ' to maximize yields. These securities are based on cash flows from the underlying mortgages. Therefore, they are sensitive to the mortgagees payments, which may vary based on raises and declines in interest rates. These securities are reported at cost in the balance sheet. They ' are reported in aggregate as U.S. Government Securities under the previous risk categorization schedule. -23- ' 6. Fixed Assets ' A summary of changes in general fixed assets follows: Balance Balance July L 1994 Additions Deletions June 30 1995 Land $ 61,430 $ 1,500 $ $ 62,930 Buildings 2,498,895 28,923 - 2,527,818 Machinery and Equipment 1 821 312 425267 88.878 2157-701 Total $ 4 3. 81.637 $ 455.690 $ 88 878 $ 4 748 449 Balance Balance July, 1995 Additions Deletions June 30 1996 ' Land $ 62,930 $ 10,378 $ 8,800 $ 64,508 Buildings 2,527,818 118,187 2,646,005 ' Improvements other than buildings 18,001 18,001 Machinery and Equipment 2-157-701 51 618 69,E 2.39 741 Total $ 4 7. 48.449 $ 198 184 $ 78 378 $ 4.868.255 A summary of proprietary fund type property, plant, and equipment at June 30, 1995 and ' 1996, follows: FY 1995 FY 1996 Enterprise Enterurise Land $ 27,713 $ 27,713 Buildings 4,453 4,453 Improvements Other Than Buildings 315,324 315,324 ' Machinery and Equipment 200,458 216,017 Total $ 547,948 $ 563,507 Less Accumulated Depreciation 162 565 194.234 Net $ 385 383 $ 369 273 7. Long-Term Debt ' The following is a summary of long-term debt transactions of the County for the fiscal years ended June 30, 1995 and 1996: Balance Balance ' July L 1994 Additions Reductions June 30 1995 General Obligation Bonds (1) $ 485,000 $ - $ 60,000 $ 425,000 ' Loans/Contracted Debt (1)(2) 459,534 52,645 45,781 466,398 Compensated Absences (1)(2) 163,359 4,226 167,585 Capital Lease (1) 17.216 219,590 29 667 207,139 ' Total $ 1.125.109 $ 276.461 $ 135.448 $ 1266.122 -24- 7. Long-Term Debt- cont. Balance Balance July 1, 1995 Additions Reductions June 30, 1996 General Obligation Bonds (1) $ 425,000 $ - $ 65,000 $ 360,000 Loans/Contracted Debt (1)(2) 466,398 4,329 62,282 408,445 Compensated Absences (1)(2) 167,585 30,328 2,935 194,978 Capital Lease (1) 207,139 17,898 189 241 Total $ 1.266.122 $ 34 657 $ 148.115 $ 1152.664 (1) Reported in general long-term debt account group ' (2) Reported in Enterprise Fund Bonded Debt , Bonds payable at June 30, 1995 and 1996, were comprised of the following individual issues: 1. General Obligation Bonds ' Balance Balance Issue Bond Bonds June 30 June 30 Purpose Date Term Issued 1995 1996 Refunding Bonds 7/1/93 9 yrs $ 505.000 $ 425 000 $ 360.000 The interest rates and annual payments on the bonds vary. ' General obligation bonds of the County are secured by the general credit and revenue-raising ' powers of the County. For fiscal years 1995 and 1996, $30,242 and $24,425, respectively, was available in the Debt ' Service Fund to service the general obligation bonds. Loans/Contracted Debt ' Origination Interest Due Principal Balance , Date Rate Term Date Amount June 30. 1995 Remodeling (1) 411/94 varies 5 yrs 2/15/99 $ 180,011 $ 146,115 Container Sites (2) 4/29/94 varies 10 yrs 8/14/04 336,497 320 283 ' Total $ 516.508 $ 466.398 Origination Interest Due Principal Balance Date Rate Term Date Amount June 30. 1996 Remodeling (1) 4/1/94 varies 5 yrs 2/15/99 $ 180,011 $ 111,697 Container Sites (2) 4/29/94 varies 10 yrs 8/14/04 336,497 296,748 ' Total $ 516 508 $ 408.445 (1)Reported in general long-term debt account group , (2) Reported in Enterprise Fund -25- ' 7. Lone-Term Debt- cont. ' Compensated Absences Payable Compensated absences payable, which represent vacation and sick leave earned by ' employees which is payable upon termination, were as follows: June 30 1995 June 30, 1996 Enterprise Fund $ 10,409 $ 7,474 General Long-Term Debt 157,176 197,504 $ 167.585 $ 194.978 ' Capital Leases The County entered into a lease agreement for the purchase of two road graders which meet the criteria of a capital lease. Statement of Financial Accounting Standards No, 13, "Accounting for Leases," defines a capital lease generally as one which transfers benefits and ' risks of ownership to the lessee. As such, $219,590 has been capitalized as equipment in the general fixed assets account group. This amount represents the present value of the minimum lease payments at the beginning of the lease agreement. ' The following is a schedule of future minimum lease payments under the capitalized lease together with the present value of net minimum lease payments at June 30, 1995 and 1996: ' Year Ending Tune 30 FY 1995 FY 1996 ' 1996 $ 30,024 $ - 1997 30,024 30,024 1998 30,024 30,024 ' 1999 30,024 30,024 2000 131,70 131,700 Total Minimum Lease Payments $251,796 $221,772 ' Less: Amount representing interest 44,657 32531 Present value of net minimum lease payments $ 0 $141 ' Requirements to Amortize Debt The annual requirements to amortize all long-term debt outstanding, except compensated ' absences payable, as of June 30, 1995 and 1996, including interest payments of$197,215 and $146,777, respectively, were as follows: ' -26- 1 7. Long-Term Debt- cont. Annual Requirements to Amortize Long-Term Debt June 30, 1995 General , Year Ending Obligation Contracted Capital June 30 Bonds Debt Leases Totals 1996 $ 82,571 $ 81,988 $ 30,024 $ 194,583 1997 79,061 81,988 30,024 191,073 1998 76,055 81,988 30,024 188,067 1999 73,455 81,988 30,024 185,467 ' 2000 65,895 42,081 131,700 239,676 2001-2005 109,343 187.543 - 301,215 ' Total $ 6 38 $ 55 $ 51 $ .295.752 Annual Requirements to Amortize Lone-Term Debt ' June 30, 1996 General Year Ending Obligation Contracted Capital , June 30 Bonds Debt Leases Totals 1997 $ 79,061 $ 81,758 $ 30,024 $ 190,843 1998 76,055 81,758 30,024 187,837 1999 73,455 81,758 30,024 185,237 2000 65,895 42,019 131,700 239,614 2001 63,330 42,019 - 105,349 2002-2006 46-013 149.570 195 583 Total $ 403 809 $ 478.882 $ 221.772 $1.104.463 Advance Refunding of Long-Term Debt In prior years,the County defeased certain general obligation bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. In March 1995, these defeased bonds were completely paid and the trust account ' closed. 8. State-Wide Retirement plans ' All full-time County employees are covered under one of the following retirement plans: Montana Public Employees Retirement System(PEAS), Sheriffs' Retirement System(SRS) and Teachers retirement System (TRS). The plans are established by State law and , administered by the State of Montana. The plans are cost-sharing multiple-employer defined benefit plans that provide retirement, disability and death benefits to plan members and beneficiaries, with amounts determined by the State. ' -27- ' 1 8. State-Wide Retirement Plans - cont. ' Contribution rates are required and determined by State law. The contribution rates, expressed as a percentage of covered payroll for the fiscal years ended June 30, 1995 and 1996, were: FY 1995 FY 1996 PERS TRS SRS SRS ' Employer 6.70% 7.470% 7.67% 8.535% Employee 6.70% 7.044% 7.00% 7.865% ' Publicly available financial reports that include financial statements and required supplementary information may be obtained for the plans by writing or calling: ' Public Employees Retirement Division, P.O. Box 200131, Helena, Montana 59620-0131, Phone: 1-406-444-3154 ' Teachers' Retirement System, P.O. Box 200319, Helena, Montana, 59620-0139 Phone: 1-406-444-3134 ' The County's contributions for the years ended June 30, 1993, 1994, 1995, and 1996, as listed below, were equal to the required contributions for each year. ' PERS SRS TR 1993 $65,838 $19,001 $2,035 1994 70,180 20,980 2,095 1995 77,557 21,711 2,157 1996 82,773 26,581 2,210 9. Post Employment Benefits The County provides employees who retire an option to continue to participate in the County's group health insurance plan. The retiree pays 100% of the premium and no cost is assumed by the County. ' 10. Local Retirement Plan ' Deferred Compensation Plan The County offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan available to all County employees, permits ' them to defer a portion of their salary until future years. Participation in the plan is optional. The deferred compensation is not available to employees until termination, retirement, death or unforeseeable emergency. ' -28- 1 10. Local Retirement Plans - cont. All amounts of compensation deferred under the plan, all property and rights purchased with ' those amounts, and all income attributable to those amounts, property or rights are (until paid or made available to the employee or other beneficiary) solely the property and rights of the , County (without being restricted to the provisions of benefits under the plan), subject only to the claims of the County's general creditors. Participants' rights under the plan are equal to those of general creditor of the County in an amount equal to the fair market value of the ' deferred account for each participant. It is the opinion of the County's legal counsel that the County has no liability for losses under ' the plan but does have the duty of due care that would be required of an ordinary prudent investor. The County believes that it is unlikely that it will use the assets to satisfy the claims , of general creditors in the future. Investments are managed by the plan's trustee under one of 29 investment options, or a ' combination thereof. The choice of the investment options is made by the participants. The plan assets of$194,309 and $239,407 were recorded in an agency fund at June 30, 1995 ' and 1996, respectively, as required by generally accepted accounting principles. 11. Amounts Due to Other Governments ' The amounts due from and due to other governments consist of the following: Fiscal Year Fiscal Year , 1995 1996 Trust and Agency Funds: Due to State of Montana $ 157,952 $ 232,547 ' Due to Special Districts 173,079 151,290 Due to School Districts 6,208,341 5,374,498 Due to Cities and Towns 31,063 28,232 Due to Other 195,809 256,31 Total $6 4 $6 04 12. Amounts Due From and To Other Funds ' Due from other funds and due to other funds as of June 30, 1995, consisted of the following: Receivable Fund Payable Fund Amount General Fund MCH Block Grant Fund $ 3,830 -29- ' 13. Restricted Cash/investments ' The following restricted cash/investments were held by the County as of June 30, 1995 and 1996. These amounts are reported within the cash/investment account on the Combined Balance Sheet. ' Fiscal Year Fiscal Year 1995 1996 Special Revenue Funds: ' Library $ 83_0 $ 99 Enterprise Fund: ' Solid Waste Replacement and Depreciation $ 93,746 $ 118,995 Solid Waste Loan Repayment 27-864 29-132 Total Enterprise Fund $ 121.610 $ 148.127 14. Fund Equi ' Reserved retained earnings/fund balances of the County at June 30, 1995 and 1996, consisted of: Fiscal Year Fiscal Year 1995 1996 Debt Service Fund: Reserved for G.0. Bond Repayment $ 30 $ 24,425 ' Enterprise Fund: Reserved for Solid Waste Replacement and ' Depreciation $ 93,746 $ 118,995 Reserved for Solid Waste Loan Repayment 27,864 29,132 Total $ $ 48 ' 15. Restatements During the fiscal year ended June 30, 1995, the following adjustment relating to prior years' transactions was made to the fund balance accounts. ' Eund Amon t Reason for Adjust n ' Road Fund $ 501 To correct prior year revenue 16. Residual al Equity Transfers ' Residual equity transfers are made to transfer the remaining equity balance of a discontinued fund to another fund. Transfers made during the fiscal year ended June 30, 1996, consist of the following: ' Fund Making Transfer Fund Receiving✓Transfer Amount Study Commission General Fund $15,595 ' -30- 1 17. Services Provided to Other Governments Jefferson County provides various financial services to other governmental entities located ' within the County. The County serves as the billing agent, cashier and treasurer for tax and assessment collections for various taxing jurisdictions. The County also serves as a bank for such agencies as school districts, irrigation districts, rural fire districts, and other special , purpose districts. The funds collected and held by the County for other entities are accounted for in agency funds. Funds collected for incorporated cities and towns are periodically remitted to those entities by the County Treasurer. The County has not recorded any service ' charges for the services it provides other governmental entities. 18. Risk Management ' The County faces considerable number of risks of loss, including (a) damage to and loss of property and contents, (b) employee torts, (c)professional liability, i.e., errors and omissions, , (d) environmental damage, (e) workers' compensation, i.e., employee injuries, and (f) medical insurance costs of employees. Commercial policies transferring all risks of loss, except for relatively small deductible amounts are purchased for property and content ' damage, employees torts, and professional liabilities. Employee medical insurance is provided for by a commercial carrier. And, given the lack of coverage available, the County has no coverage for potential losses from environmental damages. Settled claims resulting ' from these risks have not exceeded commercial insurance coverage in any of the past three fiscal years. Jefferson County has joined with other Montana counties to form a self- insurance pool offering workers' compensation coverage. This pool, named the Montana , Association of Counties Workers' Compensation Trust, has entered into an agreement with a private management firm to provide claim administrative services. The Trust has also entered into an agreement with the Montana Association of Counties to provide general , administrative services. The Counties do not exercise specific control over the budgeting and financing of the Trusts activities. In February 1990, the Trust issued $7.645 million in tax exempt bonds to provide aggregate , excess coverage and resources for previously unfunded liabilities. The County signed a note with the Trust for $62,000, its pro rata share of the debt, in order to help secure the bonds. ' Most of the debt service on the bonds is expected to be paid through interest earnings on bond proceeds and premiums and assessments from the participant counties. The County , has, therefore, elected not to record this potential liability as a long-term liability in its accounting records and report it as such in its financial statements. Audited financial statements for fiscal years ended June 30, 1995 and 1996, are available ' from the Montana Association of Counties Workers' Compensation Trust. The County's share of these assets, liabilities, and changes in net assets is not available. ' Premiums paid to the Trust during the fiscal years ended June 30, 1995 and 1996, amounted to $64,968 and $52,268, respectively. The County paid premiums from several funds. ' -31- ' 18. Risk Manag ment- cont. ' The County has joined with 28 other Montana Counties to form a self-insurance pool offering liability and general insurance coverage. This pool, named the Montana Association ' of Counties Joint Powers Insurance Authority Trust, provides for property, liability, public officials' errors and omissions, and crime coverage in the amount of$50,000 each. The Trust also provides for additional coverages for the above areas through excess insurance ' lines for varying amounts. The Trust has entered into an agreement with a private insurance agency to provide claim administrative services. The Trust has also entered into an agreement with the Montana Association of Counties to provide general administrative services. The counties do not exercise control over the budgeting and financing of the Trust's activities. ' Audited financial statements for the fiscal years ended June 30, 1995 and 1996, are available from the Montana Association of Counties Join Powers Insurance Trust. ' The County's share of these assets, liabilities, and changes in net assets is not available. Premiums paid to the Trust during the fiscal years ended June 30, 1995 and 1996, amounted ' to $2,364 and $74,584, respectively. Prior to fiscal year 1995, the County prepaid the subsequent fiscal years premium in June. Starting fiscal year 1995, the County began to pay the premium in installments throughout the year. Thus, for fiscal year 1995, the transition ' year, payments to the Trust were minimal. 19. Pending Litigation ' The County had several lawsuits pending at June 30, 1995 and 1996. However, it was the assessment of the County Attorney that any judgements against the County would be fully covered by the County's liability insurance. The County would only incur actual expenses up to the amount of the deductible on the insurance. ' -32- 1 1 1 1 1 1 1 SINGLE AUDIT SECTION 1 i 1 1 1 1 1 1 1 1 1 -33- 1 Nordwick, Denning & Downey CERTIFIED PUBLIC ACCOUNTANTS 2801 S.Russell•Missoula,MT 59801 •543-8174 1103 S.Main•Kalispell,MT 59901 • 756-6879 ' INDEPENDENT AUDITOR'S REPORT ON SCHEDULE OF ' FEDERAL FINANCIAL ASSISTANCE ' Board of Commissioners Jefferson County Boulder, Montana We have audited the general-purpose financial statements of Jefferson County, Montana, as of and for the years ended June 30, 1995 and 1996, and have issued our report thereon dated April 8, 1997. These ' general-purpose financial statements are the responsibility of the County's management. Our responsibility is to express an opinion on these general-purpose financial statements based on our audit. ' We conducted our audit in accordance with generally accepted auditing standards; Government Auditing Standards, issued by the Comptroller General of the United States, and Office of Management and Budget (OMB) Circular A-128, Audits of State and Local Governments. Those standards and OMB Circular A- 1 128 require that we plan and perform the audit to obtain reasonable assurance about whether the general- purpose financial statements are free of material misstatement. An audit includes examining, on a test ' basis, evidence supporting amounts and disclosures in the general-purpose financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall general-purpose financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. Our audit was conducted for the purpose of forming an opinion on the general-purpose financial statements of Jefferson County, Montana, taken as a whole. The accompanying Schedule of Federal Financial Assistance is presented for purposes of additional analysis and is not a required part of the general-purpose financial statements. The information in that schedule has been subjected to the auditing procedures ' applied in the audit of the general-purpose financial statements and, in our opinion, is fairly presented in /all material respects in relation to the general-purpose financial statements taken as a whole. Nordwick, eCJennin� and eLlawne� April 8, 1997 ' -34- Stan Nordwick, CPA •Robert K Denning, CPA •Kim M.Downey, CPA •Nancy S.Everson, CPA JEFFERSON COUNTY,MONTANA SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE Fiscal Year Ended June 30,1995 Federal Pass-Through Program or Beginning Receipts Ending CFDA Grantor's Award Balance Fedeal Matching/ Balance Federal G t /P -Through Grantor/Program Title Numt>4r Number Amount July 1,19204 Funds Income/Other Disbursements June 30,1996 U.S.Department of A r) ulq tum Passed thmugh Stale Auditors Office: Schools and Roads-Ganls to Stale(Forest Reserved) 10.665 $ - $ 115,009 $ - $ 115,009 $ - Passed Mmugh Slate Department of Natural Resources and Conservation: Title IV,Rural Community Fire Protection Program 94-22-01 $ 1,400 - 1,400 1,400 2,800 Total U.S.Department of Agriculture 116,409 1,400 _117,809 U.&Department of Health and Human Services Passed through the State t)apartment of Health and Environmental Sdences: Childhood Immunization Grants 93.268 330208 3,683 (174) 1,278 - 1,104 - r;,t Childhood Immunization Grams 93.268 350213 5.291 - 652 - 977 (325) T Maternal and Child Health Services Block Grant 93.994 340202 10,591 - 9,590 - 13.420 (3,830) MIAMI 93994 350130 3,125 - 2,550 - 3,225 (675) Total U.S.Department of Health and Human Services (174) 14,070 _ = 18,728 _ (4830) U.S.Department Justice Direct Program: Community Oriented Policing Services(COPS) 16310 95-CF-M-0828 75,000 - - - 1,207 (1,207) Deprrtment of Veteran Affairs Direct Program: Service Members Ooeupebonel Conversion Training Act NIA 360018626 NIA _ 5,777 _ 5,777 _ U.S.Department of Transportation Passetl through the Stale Department of Justice: Stale and Community Highway Safety 20.600 95-01-07-03 1,229 1,229 - 1,229 - US DepartmentofJnterior Passed through Stale Department of Administration: Taylor Grazing Ad N/A NIA - 856 - 856 - Dired Program: Payment in Lieu of Taxes N/A N/A _ 44 70,094 _ 240,885 _ 298,5 12.435 Total U.S.Department of Interior 70,094 241,741 - 299,400 12,435 Total Federal Financial Assistance $ 69.920 $ 379228_ $ 1,400 $ 444.148 $ 6398 (1) The Count's portion of funds received under the Schools and Roads-Grants to States programs were accounted for within the Road Fund. The amounts shown as Federal funs received represents 2(3 of the amount paid to the County. The other 1/3 of the amount received was distributed to the county-wide levied school funds as required by State law. JEFFERSON COUNTY,MONTANA SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE Fiscal Year Ended June 30,1996 Federal Pass-Through Program or Beginning Receipts Ending GFDA Grantor's Award Balance Federal Matching/ Balance Federal Grantor/Pass•Through GLanta iRafgataLTItle Number Number Amount ,Iply-1.1995 Funds Inoome/Other Disbursements June 30 199 U.S.Department W Agdcuhure Passed through State Auditor's Office. Schools and Roads-Grants to State(Forest Reserve)(1) 10.665 $ - $ 137,216 $ - $ 137,216 $ - Passed through Stale Department of Natural Resources and Conservation: Title IV,Rural Community Fire Protection Program 95.22-00 $ 1,633 1,633 1,633 3,266 Total U.S.Department of Agriculture - 138,849 1,633 740,482 - U.S.Department gf Health and Human.Services Passed through the State Department of Health and Environmental Sciences: Childhood Immunization Grants 93.268 350213 5,291 (325) 4,639 - 4,314 - ChildhoodlmmunixationGrams 93268 360153 3,484 - 1,518 - 2,022 (504) Maternal and Child Health Services Block Grant 93.994 340202 10,591 (3,830) 3,830 - - - Maternal and Child Health Services Block Grant 93.994 360153 8,230 - 6,501 - 6,501 - MIAMI 93.994 350130 3,125 (675) 675 - - - MIAMI 93.994 360153 3,400 - 2,246 - 3,400 (1,154) Preventive Heath Block Grant for HIVlAICS Health Education 93.116 500 500 __ _ 500 _ Total U.S.Department of Health and Human Services 3n(4,8 19,909 _ - 16.737 __ (1,658) US Department of JLatli3 Direct Program: Community Oriented Policing Services(COPS) 16.710 95-CF-WY-W215 75,000 (1,207) _9,972 _ _ - 31,881 2( 3,116) Department o1 Vatenn Attalm Direct Program: Service Members Occupational Conversion Training Act NIA 360018626 NIA 7,936 - 7,936 EOVlronmental PotecBgn Aeenev Passed through the Mid-Continent Recycling Association: Solid Waste Management Assistance 66.808 %1998125-01 3,500 2,800 - 88 2,712 Fs9enl Emergency liamementAaenev Passed through the State Department of Military Affairs: State and Local Emergency Management Assistance-Civil Defense 83.503 N/A WA 3,465 3,465 U.$_Department gf Interior Passed through State Department of Administration. Taylor Grazing Act - 705 - 705 - Direct Program: Payment in Lieu of Taxes 12,435 275,987 261,000 27,422 __- 7obl U.S.Department of Interior 12,435 276,692 - 261,705 27,422 Total Federal Financial Assistance $ 6,398 $ 459623 $ 1,633 $ 462.294 $__ 5360 (1) The County's portion of funds received under the Schools and Roads-Grants to Stales programs were accounted for within the Road Fund. The amounts shown as Federal funds received represents 213 of the amount paid to the County. The other 113 of the amount received was distributed to the county-wide levied school funds as required by State law. Nordwick, Denning & Downey ' CERTIFIED PUBLIC ACCOUNTANTS 2801 S.Russell•Missoula,MT 59801 •543-8174 ' 1103S.Main•Kalispell,,W 59901- 756-6879 t INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE BASED ON AN AUDIT OF GENERAL PURPOSE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Board of Commissioners Jefferson County Boulder, Montana ' We have audited the general-purpose financial statements of Jefferson County, Montana, as of and for the years ended June 30, 1995 and 1996, and have issued our report thereon dated April 8, 1997. ' We conducted our audit in accordance with generally accepted auditing standards and 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. Compliance with laws, regulations, contracts, and grants applicable to the County is the responsibility of the County's management. As part of obtaining reasonable assurance about whether the financial , statements are free of material misstatement, we performed tests of the County's compliance with certain provisions of laws, regulations, contracts, and grants. However, the objective of our audit of the general- purpose financial statements was not to provide an opinion on overall compliance with such provisions. Accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported herein ' under Government Auditing Standards. This report is intended for the information of the Board of Commissioners, management, the State ' Department of Commerce, and other appropriate state and federal agencies. However, this report is a matter of(public record/ and its distribution is not limited. /)/) ll "L4, _2)..einy and aCJo.V ' April 8, 1997 -37- Stan Nordwick, CPA •Robert K Denning, CPA•Kim M.Downey,CPA•Nancy S. Everson,CPA ' Nordwick, Denning & Downey CERTIFIED PUBLIC ACCOUNTANTS 2801 S.Russell•Missoula,MT 59801 •543-8174 1103 S.Main•Kalispell,MT 59901 • 756-6879 ' INDEPENDENT AUDITOR'S REPORT ON THE INTERNAL CONTROL STRUCTURE ' BASED ON AN AUDIT OF GENERAL PURPOSE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENTA UDITING STANDARDS ' Board of Commissioners Jefferson County ' Boulder, Montana We have audited the general-purpose financial statements of Jefferson County, Montana, as of and for the 1 years ended June 30, 1995 and 1996, and have issued our report thereon dated April 8, 1997. We conducted our audit in accordance with generally accepted auditing standards and 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 general-purpose financial statements are free of material misstatement. The management of the County is responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of internal control structure policies and procedures. The objectives of an internal control structure are to provide management with reasonable, but not absolute, assurance that: ■ Assets are safeguarded against loss from unauthorized use or disposition. ■ Transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of general-purpose financial statements in accordance with generally ' accepted accounting principles. Because of inherent limitations in any internal control structure, errors or irregularities may nevertheless occur and not be detected. Also, projection of any evaluation of the structure to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate. -38- 1 Stan Nordwick,CPA•Robert K Denning, CPA•Kim M.Downey,CPA•Nancy S.Everson, CPA In planning and performing our audit of the general-purpose financial statements of the County for the years ended June 30, 1995 and 1996, we obtained an understanding of the internal control structure. With ' respect to the internal control structure, we obtained an understanding of the design of relevant policies and procedures and whether they have been placed in operation, and we assessed control risk in order to t determine our auditing procedures for the purpose of expressing our opinion on the general-purpose financial statements and not to provide an opinion on the internal control structure. Accordingly, we do not express such an opinion. , We noted certain matters involving the internal control structure and its operation that we consider to be reportable conditions under standards established by the American Institute of Certified Public Accountants. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control structure, that, in our judgement, could adversely affect the entity's ability to record, process, summarize, and report financial data consistent with , the assertions of management in the general-purpose financial statements. Justice Court System ' Our review of the automated Justice Court Accounting system installed by the State Supreme Court revealed the following internal control weaknesses. 1. A transaction number is issued by the system for each receipt and disbursement transaction. The same sequence of transaction numbers are used for both receipts and disbursements. As a result, it is difficult to account for receipts and checks issued by the Court. 2. The transaction number can be changed and the same number can be input again. It appears as if this ' has to be done within the same day's transactions, however, it is possible to change a transaction or completely erase a prior transaction and replace with a new transaction. 3. Monthly receipt and check registers are not generated by the system. The Justice Court is required to ' submit a report to the County Treasurer on a monthly basis and without monthly registers it is difficult to present this report. Also, auditing the system is difficult because monthly registers that include a recording ' of all receipts and checks issued in numerical sequence are not available. Recommendation We recommend that the County request the Supreme Court Administrator's Office to take steps to correct the above weaknesses in the system. Separate receipt numbers and appropriate check numbers should be used so that all receipts and checks can be accounted for in numerical order. Further, transaction numbers should not be able to be changed. If a transaction is voided, a record should be maintained of the transaction and the number should not be able to be used again. Because the reporting requirements of the Justice Court require monthly reporting, monthly ' receipt and disbursement registers would be very useful for both the Justice Court and for audit purposes. 1 -39- ' A material weakness is a reportable condition in which the design or operation of one or more of the specific internal control structure elements does not reduce to a relatively low level the risk that errors or irregularities in amounts that would be material in relation to the general-purpose financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. ' Our consideration of the internal control structure would not necessarily disclose all matters in the internal control structure that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses as defined above. However, we do not consider the reportable condition described above to be a material weakness. We noted other matters involving the internal control structure and its operation that we have reported to the management of the County in our Independent Auditor's Report of Other Compliance, Financial and Internal Control Matters on pages 46 and 47 of this audit report. This report is intended for the information of the Board of Commissioners, management, the State Department of Commerce, and other appropriate state and federal agencies. However, this report is a /matt/er of public record/ caned its distribution is not limited. JorcGua, eLJe. .q ari6 eL.l .y ' April 8, 1997 1 -40- Nordwick, Denning & Downey ' CERTIFIED PUBLIC ACCOUNTANTS 2801 S.Russell•Missoula,MT 59801 •543-8174 , 1103 S.Main-Kalispell,MT 59901 •756-6879 INDEPENDENT AUDITOR'S REPORT ON THE INTERNAL CONTROL STRUCTURE USED IN ADMINISTERING FEDERAL FINANCIAL ASSISTANCE PROGRAMS ' Board of Commissioners ' Jefferson County Boulder, Montana We have audited the general-purpose financial statements of Jefferson County, Montana, as of and for the , years ended June 30, 1995 and 1996, and have issued our report thereon dated April 8, 1997. We conducted our audit in accordance with generally accepted auditing standards; Government Auditing ' Standards, issued by the Comptroller General of the United States; and Office of Management and Budget ' (OMB)Circular A-128, Audits of State and Local Governments. Those standards and OMB Circular A- 128 require that we plan and perform the audit to obtain reasonable assurance about whether the general- purpose financial statements are free of material misstatement. , In planning and performing our audit for the years ended June 30, 1995 and 1996, we considered the County's internal control structure in order to determine our auditing procedures for the purpose of , expressing our opinion on the County's general-purpose financial statements and to report on the internal control structure in accordance with OMB Circular A-128. This report addresses our consideration of internal control structure policies and procedures relevant to compliance with requirements applicable to ' federal financial assistance programs. We have addressed internal control structure policies and procedures relevant to our audit of the general-purpose financial statements in this audit report on pages 38-40. The management of the County is responsible for establishing and maintaining an internal control ' structure. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs ofinternal control structure policies and procedures. The objectives ' of an internal control structure are to provide management with reasonable, but not absolute, assurance that: ■ Assets are safeguarded against loss from unauthorized use or disposition. ' ■ Transactions are executed in accordance with management's authorization and recorded property ' to permit the preparation of general-purpose financial statements in accordance with generally accepted accounting principles. , ■ Federal financial assistance programs are managed in compliance with applicable laws and regulations. ' -41- , Stan Nordwick, CPA •Robert K Denning,CPA•Kim M Downey, CPA •Nancy S.Everson, CPA 1 Because of inherent limitations in any internal control structure, errors, irregularities, or instances of ' noncompliance may nevertheless occur and not be detected. Also, projection of any evaluation of the structure to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may ' deteriorate. ' For the purpose of this report, we have classified the significant internal control structure policies and procedures used in administering federal financial assistance programs into the following categories. ' Accounting Controls: Cash receipts Purchasing/expenditures ' Payroll Fixed assets ' General Requirements: Specific Requirements: Political activity Types of services Civil rights Eligibility ' Cash management Matching, level of effort, earmarking Federal financial reports Reporting Allowable costs/cost principles Special requirements ' Drug-Free Workplace Act Cost allocation Administrative requirements tClaims for Advances and Reimbursements Amounts Claimed or Used for Matching For all of the internal control structure categories listed above, we obtained an understanding of the design ' of relevant policies and procedures and determined whether they have been placed in operation and we assessed control risk. ' During the years ended June 30, 1995 and 1996, the County had no major federal financial assistance programs and expended 67 and 57 percent, respectively, of its total federal financial assistance under the following nonmajor federal financial assistance program: ■ U.S. Department of Interior - Payment in Lieu of Taxes ' -42- 1 We performed tests of controls, as required by OMB Circular A-128, to evaluate the effectiveness of the design and operation of internal control structure policies and procedures that we considered relevant to , preventing or detecting material noncompliance with specific requirements, general requirements, and requirements governing claims for advances and reimbursements and amounts claimed or used for ' matching that are applicable to the aforementioned nonmajor programs. Our procedures were less in scope than would be necessary to render an opinion on these internal control structure policies and procedures. Accordingly, we do not express such an opinion. , Our consideration of the internal control structure policies and procedures used in administering federal financial assistance would not necessarily disclose all matters in the internal control structure that might , constitute material weaknesses under standards established by the American Institute of Certified Public Accountants. A material weakness is a condition in which the design or operation of one or more of the internal control structure elements does not reduce to a relatively low level the risk that noncompliance ' with laws and regulations that would be material to a federal financial assistance program may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control structure and its operation that we consider to be material weaknesses as defined above. This report is intended for the information of the Board of Commissioners, management, the State Department of Commerce, and other appropriate state and federal agencies. However, this report is a matter of(p'uublic record/ and its distribution is not limited. !/orQUiick, -A..inq aced eClouine� April 8, 1997 ' 1 -43- ' Nordwick, Denning & Downey CERTIFIED PUBLIC ACCOUNTANTS 2801 S.Russell•Missoula,MT 59801•543-8174 1103 S.Main•Kalispell,MT 59901• 756-6879 INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH THE GENERAL ' REQUIREMENTS APPLICABLE TO FEDERAL FINANCIAL ASSISTANCE PROGRAMS Board of Commissioners Jefferson County Boulder, Montana We have audited the general-purpose financial statements of Jefferson County, Montana, as of and for the years ended June 30, 1995 and 1996, and have issued our report thereon dated April 8, 1997. We have applied procedures to test the County's compliance with the following requirements applicable to its federal financial assistance programs, which are identified in the Schedules of Federal Financial Assistance, for the years ended June 30, 1995 and 1996: ■Political activity ■Drug-Free Workplace Act ■Civil rights ■Administrative requirements ' ■Cash management ■Federal financial reports ■Allowable costs Our procedures were limited to the applicable procedures described in the Office of Management and Budget's Compliance Supplement for Single Audits of State and Local Governments. Our procedures were ' substantially less in scope than an audit, the objective of which is the expression of an opinion on the County's compliance with the requirements listed in the preceding paragraph. Accordingly, we do not express such an opinion. ' With respect to the items tested, the results of those procedures disclosed no material instances of noncompliance with the requirements listed in the second paragraph of this report. With respect to items ' not tested,nothing came to our attention that caused us to believe that the County had not complied, in all material respects, with those requirements. This report is intended for the information of the Board of Commissioners, management, the State Department of Commerce, and other appropriate state and federal agencies. However, this report is a /] ( matter o/f cpu�blic record/ and its distribution is not limited. April 8, 1997 1 -44- Stan Nordwick,CPA •Robert K Denning, CPA•Kim M Downey, CPA•Nan cy S. Everson, CPA Nordwick, Denning & Downey , CERTIFIED PUBLIC ACCOUNTANTS 2801 S.Russell•Missoula,MT 59801•543-8174 1103S.Main•Kalispell,MT 59901•756-6879 INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO NONMAJOR FEDERAL FINANCIAL ' ASSISTANCE PROGRAM TRANSACTIONS Board of Commissioners Jefferson County Boulder, Montana ' We have audited the general-purpose financial statements of Jefferson County, Montana, as of and for the years ended June 30, 1995 and 1996, and have issued our report thereon dated April 8, 1997. In connection with our audit of the general-purpose financial statements of the County for the years ended June 30, 1995 and 1996, and with our consideration of the County's control structure used to administer federal financial assistance programs, as required by Office of Management and Budget Circular A-128, Audits of State and Local Governments, we selected certain transactions applicable to certain nonmajor federal financial assistance programs for the years ended June 30, 1995 and 1996. As required by OMB , Circular A-128, we have performed auditing procedures to test compliance with the requirements governing types of services allowed or unallowed that are applicable to those transactions. Our procedures were substantially less in scope than an audit, the objective of which is the expression of an opinion on the ' County's compliance with these requirements. Accordingly, we do not express such an opinion. With respect to the items tested, the results of those procedures disclosed no material instances of , noncompliance with the requirements listed in the preceding paragraph. With respect to items not tested, nothing came to our attention that caused us to believe that the County had not complied, in all material respects, with those requirements. This report is intended for the information of the Board of Commissioners, management, the State Department of Commerce, and other appropriate state and federal agencies. However, this report is a ' matt er of public record and its distribution is not limited. har%"//, vU "ing a>d-Awney April 8, 1997 -45- Stan Nordwick, CPA•Robert K Denning,CPA•Kim M Downey, CPA•Nancy S. Everson,CPA ' Nordwick, Denning & Downey CERTIFIED PUBLIC ACCOUNTANTS ' 2801 S.Russell•Missoula,MT 59801•543-8174 11033.Main•Kalispell,MT 59901• 756-6879 INDEPENDENT AUDITOR'S REPORT ON OTHER COMPLIANCE, ' FINANCIAL,AND INTERNAL ACCOUNTING CONTROL MATTERS Board of Commissioners ' Jefferson County Boulder, Montana ' Immaterial instances of noncompliance along with findings relating to financial or accounting matters, as well as our recommendations, are presented below. Also, other matters involving the internal control structure and its operation that are not considered to be reportable conditions under standards established ' by the American Institute of Certified Public Accountants are disclosed below for your information, along with our recommendations for improvement where applicable. ' Loss on Sale of Investments Losses on sale of investments of$35,625 and $11,377 were incurred for the fiscal years ended June 30, 1995 and 1996, respectively. However, the cash/investment balance was not reduced and an expenditure, ' loss on sale of investments, was not recognized as required by generally accepted accounting principles. Recommendation ' In the future, if the County incurs losses on the sale of investments, the loss should be accounted for properly by recording a loss on sale of investments and by reducing the cash/investment balance. ' Board of Prisoners Revenue The Sheriff's office did not bill for board of state and federal prisoners on a monthly basis. Further, ' receivables were not recorded at the time billing was made and the recognition of revenue was delayed until the cash was received. Often, the billing was not done for several months. As of June 30, 1995 and 1996, there was approximately $34,000 and $44,000 in outstanding receivables. These amounts ' represented several months billing to most agencies. Further, receivables and revenue were understated by $34,000 and $44,000 for the fiscal years ended June 30, 1995 and 1996, respectively. However, the misstatements were not material to the Special Revenue Fund. Recommendation In the future, billing for services should be done on a monthly basis to ensure timely collection ' and recognition of revenue. Further, receivables should be recorded when the charges for prisoner board are billed and also revenue should be recognized at the time charges are billed rather than when collected. ' Federal Financial Reports Expenditures reported for the Immunization grant and Aids grant on year-end federal financial reports as ' of June 30, 1996, did not agree to expenditures reported by the County in the year-end trial balance. The differences were not material, but expenditures reported in federal financial reports and expenditures recorded in the County's accounting system should agree. -46- Stan Nordwick, CPA •Robert K Denning,CPA•Kim M Downey,CPA •Nancy S Everson, CPA Recommendation A monthly reconciliation should be performed by the grant administrator to agree expenditures ' reported for the grant to the monthly county report. Any differences should be investigated and corrected. All federal financial reports should agree to expenditures reported by the County. Solid Waste Collections A prenumbered three-part invoice was used by the solid waste department to bill for charges of waste disposal. However, the invoices were not recorded in numerical sequence to a billing register. Consequently, accountability over the amount of charges billed, collected, and outstanding was not maintained. Good internal control procedures require that billing invoices be accounted for in numerical sequence and also that accountability be established over amounts billed, paid, and outstanding. ' Recommendation The solid waste department should account for all invoices in numerical order for each collection ' site. This would ensure accountability of all billings and collections and enable the County to correctly record billings and corresponding receivables as required by generally accepted accounting principles. ' Attorney's Office The County Attorney's office collects a minimal amount of money, such as for bad check charges, and the ' Attorney's Office requires, in some instances, a contribution to be made to the DUI Task Force for dismissal of minor in possession cases. However, a cash receipting system has not been implemented to account for these collections. Checks collected for contributions were payable to the DUI Task Force and ' not to the County Attorney's Office. Good internal control procedures require that accountability be established at the point of collection, Since ' the contribution is required by the County Attorney and collected by her office, a receipt should be issued for each collection. Further, as provided for by Section 7-4-2715, MCA, the County Attorney is required to "on the first Monday of January, April, July, and October in each year file with the county clerk an , account, verified by his oath, of all money received by him in his official capacity during the preceding three months..." We were unable to find any evidence that this report was filed during the audit period. Recommendation , We recommend that the County Attorney's office implement a cash receipting system to account for all collections. In addition, the quarterly report required by Section 7-4-2715, MCA, should , be filed with the Clerk and Recorder and at the same time all collections, if not remitted /�// /pre/vioCuusly, should/be paid to the County Treasurer. //ordwick, -,Anna and -2)ownety ' April 8, 1997 -47- ' Nordwick, Denning & Downey CERTIFIED PUBLIC ACCOUNTANTS ' 2801 S.Russell•Mimoula,Aff 59801•543-8174 11033—Wain•Kalispell MT 59901 •756-6879 INDEPENDENT AUDITOR'S REPORT ON PRIOR AUDIT REPORT RECOMMENDATIONS Board of Commissioners ' Jefferson County Boulder, Montana ' The prior audit report contained eight recommendations. Of those recommendations, seven were implemented and one was not implemented. The following recommendation was not implemented and has been repeated in this report. ' ■ Board of Prisoners Revenue ' //wick, eU¢nning anti eUow"y ' April 8, 1997 ' -48- Stan Nordwick,CPA•Robert K Denning,CPA•Kim M.Downey, CPA •Nancy S Everson, CPA 1 JEFFERSON COUNTY COMMISSIONERS COURTHOUSE, PO BOX H BOULDER, MT 59632 ' PHONE 406-225—ZIOZS FAX 1106-225-4148 G*ENNA OBIS CRAM LEONARD WORTMAN SAM SAMSON May 29, 1997 Montana Department of Commerce ' Local Government Services 1424 9th Avenue P.O. Box 200501 Helena, MT 59620 Ladies/Gentlemen:: , The following comments constitute the response of Jefferson County to the findings of instances of immaterial noncompliance as reported in the auditors report of the certified public accounting , firm ofNordwick, Denning& Downey. Items are addressed in the order in which they were listed in the audit report. Loss on Sale of Investments County had sold investments that were "CMG's" and were longer term than what was recommended by revised investment laws in the 1995 legislative session. As a result, the money was reinvested in a recognized investment and the revenue earned offset the loss on the sale. The interest earned was deposited on the original investment as required. The step to offset the loss , was not completed in the budget year in which the loss was incurred. Investment practices will be corrected for future investments. An investment policy will be developed. Board of Prisoners Revenue The Sheriff's Office has automated the billing for the Board of Prisoner's and it will be the policy of the Sheriff's Office to send out statements to the various agencies by the I Oth of each month for the preceding month's bills. The Sheriffs Office will also send a statement, by the 10th of each month, to the Clerk and Recorder's Office itemizing each agency billed and the amount billed. This will enable the Clerk and Recorder to record the amounts receivable from each agency and recognize the revenue when it is remitted. Federal Financial Reports--Health Department , The Jefferson County Health nurse supervisor has instituted new practices and procedures as recommended by the auditor to better account for the federal immunization (IAP) grant and the , HIV/AIDS grant. A monthly reconciliation format has been implemented which requires the county grants administrator to reconcile the monthly expenditures reports from the Clerk and Recorder's office with those expenditures reported to the grant programs. -49- 1 Solid Waste Collections The Jefferson County Solid Waste District will be implementing an accounts payable/receivable database computer software package for the tracking and billing of volume waste fees. This new Program is scheduled for implementation on July_ 1, 1997, coinciding with the beginning of the new fiscal year. Attorneys Office Collections The Attorney's Office has on occasion collected contributions to the DUI Task Force and to the DARE program. In these cases the Attorney's Office simply served as an intermediary for the ' purposes of transferring these contributions to these programs. The contributions were made to the DARE and DUI programs and were not a source of revenue to the County Attorney's Office. However, the County Attorney's Office will no longer handle such contributions for DARE, the t DUI Task Force or any other program. In addition, if the County Attorney's Office decides to defer prosecution of a matter, no fines will be collected. It has been the policy of the County Attorney's Office to not be in receipt of revenue as a result of prosecutions. Now, this policy is ' expanded to include contributions to any other office or program, specifically the DUI Task Force and DARE Program. The Attorney's Office has, in the past, collected a nominal $5 bad check collection charge. This charge will be discontinued. ' Justice Court System ' The automated accounting system of the Justice Court was installed by the State Supreme Court. The issues mention in the audit report have been of concern to Jefferson County for some time but must be corrected by the Supreme Court. Jefferson County will communicate with the Supreme Court urging corrections of the weaknesses in the accounting system. These remedies have been recommended by and agreed to by the pertinent elected officials and ' are already implemented or scheduled for implementation. If you have any questions, please contact us. ' Glenna Obie, Chair Leonard Wortman Sam Samson cc: Bonnie Ramey, Clerk and Recorder Sue Miller, Treasurer Nordwick, Denning and Downey 1 -50-