Tuscaloosa County Commission

Transcription

1 Report on the Commission, Alabama October 1, 2012 through September 30, 2013 Filed: January 30, 2015 Department of Examiners of Public Accounts 50 North Ripley Street, Room 3201 P.O. Box Montgomery, Alabama Website: Ronald L. Jones, Chief Examiner

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3 Ronald L. Jones Chief Examiner State of Alabama Department of Examiners of Public Accounts P.O. Box , Montgomery, AL North Ripley Street, Room 3201 Montgomery, Alabama Telephone (334) FAX (334) Honorable Ronald L. Jones ChiefExaminer ofpublic Accounts Montgomery, Alabama Dear Sir: Under the authority of the Code of Alabama 1975, Section , we submit this report on the results of the audit of the Commission,, Alabama, for the period October 1, 2012 through September 30, Sworn to and subscribed before me this the -r /ld Za!!:_ day of r 10'"'~"'1, 20 JL. Notary Public Sworn to and subscribed before me this the ~ day of :Tem~M'f'L(, 20!). ~f/!df Notary Pubhc rb Respectfully submitted, (A ()JJJOJ ry)~ Laura Madison Examiner ofpublic Accounts #--r--- Joshua D. Taylor Examiner ofpublic Accounts

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5 Table of Contents Page Summary A Contains items pertaining to federal, state and local legal compliance, Commission operations, and other matters. Schedule of State and Local Compliance and Other Findings C Contains detailed information about findings pertaining to state and local legal compliance, and other findings. Independent Auditor s Report E Reports on whether the financial information constitutes a fair presentation of the financial position and results of financial operations in accordance with generally accepted accounting principles (GAAP). Management s Discussion and Analysis I Provides information required by the Governmental Accounting Standards Board (GASB) that is prepared by management of the Commission introducing the basic financial statements and providing an analytical overview of the Commission s financial activities for the year. This information has not been audited, and no opinion is provided about the information. Basic Financial Statements 1 Provides the minimum combination of financial statements and notes to the financial statements that is required for the fair presentation of the Commission s financial position and results of operations in accordance with GAAP. Exhibit #1 Statement of Net Position 2 Exhibit #2 Statement of Activities 3 Exhibit #3 Balance Sheet Governmental Funds 5 Exhibit #4 Exhibit #5 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position 7 Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds 8 Commission

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7 Table of Contents Page Exhibit #6 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 10 Exhibit #7 Statement of Fiduciary Net Position 11 Exhibit #8 Statement of Changes in Fiduciary Net Position 12 Notes to the Financial Statements 13 Required Supplementary Information 34 Provides information required by the GASB to supplement the basic financial statements. This information has not been audited and no opinion is provided about the information. Exhibit #9 Exhibit #10 Exhibit #11 Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual General Fund 35 Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual Road and Bridge Fund 39 Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual Reappraisal Fund 43 Exhibit #12 Schedule of Funding Progress Defined Benefit Pension Plan 45 Exhibit #13 Schedule of Funding Progress Other Postemployment Benefits 46 Supplementary Information 47 Contains financial information and notes relative to federal financial assistance. Exhibit #14 Schedule of Revenues and Expenditures Community Corrections Program 48 Exhibit #15 Schedule of Expenditures of Federal Awards 49 Notes to the Schedule of Expenditures of Federal Awards 53 Commission

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9 Table of Contents Page Additional Information 54 Provides basic information related to the Commission, including reports and items required by generally accepted government auditing standards and/or U. S. Office of Management and Budget (OMB) Circular A-133 for federal compliance audits. Exhibit #16 Exhibit #17 Exhibit #18 Exhibit #19 Exhibit #20 Commission Members and Administrative Personnel a listing of the Commission members and administrative personnel. 55 Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards a report on internal controls related to the financial statements and on whether the Commission complied with laws and regulations which could have a direct and material effect on the Commission s financial statements. 56 Report on Compliance for Each Major Federal Program and Report on Internal Control Over Compliance Required by OMB Circular A-133 a report on internal controls over compliance with requirements of laws, regulations, contracts, and grants applicable to major federal programs and an opinion on whether the Commission complied with laws, regulations, and the provisions of contracts or grant agreements which could have a direct and material effect on each major program. 59 Schedule of Findings and Questioned Costs a schedule summarizing the results of audit findings relating to the financial statements as required by Government Auditing Standards and findings and questioned costs for federal awards as required by OMB Circular A Auditee Response/Corrective Action Plan a response by the Commission on the results of the audit and a corrective action plan for federal audit findings. 64 Commission

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11 Department of Examiners of Public Accounts SUMMARY Commission October 1, 2012 through September 30, 2013 The Commission (the Commission ) is governed by a five-member body elected by the citizens of. The members and officials in charge of governance of the Commission are listed on Exhibit 16. The Commission is the governmental agency that provides general administration, public safety, construction and maintenance of county roads and bridges, sanitation services, health and welfare services and educational services to the citizens of. This report presents the results of an audit the objectives of which were to determine whether the financial statements present fairly the financial position and results of financial operations and whether the Commission complied with applicable laws and regulations, including those applicable to its major federal financial assistance program. The audit was conducted in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States as well as the requirements of the Department of Examiners of Public Accounts under the authority of the Code of Alabama 1975, Section An unmodified opinion was issued on the financial statements, which means that the Commission s financial statements present fairly, in all material respects, its financial position and the results of its operations for the fiscal year ended September 30, Findings are numbered and reported by the fiscal year in which the finding originally occurred. A finding was presented in the prior audit that has not been resolved and is shown on the Schedule of State and Local Compliance and Other Findings and it is summarized below. UNRESOLVED PRIOR FINDING relates to the Commission having a deficit fund balance in the Road and Bridge Fund A

12 A problem was found with the Commission s internal controls over financial reporting (Exhibit 19) and it is summarized below: relates to internal control weaknesses in the Community Corrections Program. The following officials/administrative personnel were invited to an exit conference to discuss the results of this report: Administrator of the County Commission: Melvin Vines; Chief Financial Officer of the County Commission: William Lamb; Commission Chairman: Hardy McCollum; and County Commissioners: Stan Acker, Reginald Murray, Bobby Miller, Jerry Tingle, Gary Youngblood, and Don Wallace. The following individuals attended the exit conference, held at the offices of the County Commission: Melvin Vines, Administrator; William Lamb, Chief Financial Officer; Commission Chairman: Hardy McCollum; and County Commissioners: Stan Acker, Reginald Murray, Bobby Miller and Jerry Tingle. Also in attendance were representatives of the Department of Examiners of Public Accounts: Shelley Patrenos, Audit Manager, Laura Madison, Examiner, and Josh Taylor, Examiner B

13 Schedule of State and Local Compliance and Other Findings C

14 Schedule of State and Local Compliance and Other Findings For the Year Ended September 30, 2013 Ref. No. Finding/Noncompliance Finding: Deficit fund balances result when the Commission expends more funds than it has in available resources. The Code of Alabama 1975, Section , provides that a County Commission should issue no warrant unless funds are available for payment. The following fund had deficit fund balance at September 30, Road and Bridge Fund $3,434, Recommendation: The Commission should take proper measures to eliminate and prevent deficit fund balances. Commission D

15 Independent Auditor s Report E

16 Independent Auditor s Report To: Members of the Commission, County Administrator and Chief Financial Officer Report on Financial Statements We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Commission, as of and for the year ended September 30, 2013, and related notes to the financial statements, which collectively comprise the basic financial statements of the Commission as listed in the table of contents as Exhibits 1 through 8. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements F

17 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Commission, as of September 30, 2013, and the respective changes in financial position, thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management s Discussion and Analysis (MD&A) and the Schedules of Revenues, Expenditures and Changes in Fund Balances Budget and Actual, and Schedules of Funding Progress (Exhibits 9 through 13), be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Commission s basic financial statements. The accompanying Schedule of Revenues and Expenditures Community Corrections Program (Exhibit 14) as required by the Alabama Department of Corrections and the Schedule of Expenditures of Federal Awards (Exhibit 15) as required by U. S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the basic financial statements G

18 The Schedule of Expenditures of Federal Awards is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Schedule of Expenditures off ederal Awards is fairly stated in all material respects in relation to the basic financial statements taken as a whole. Other Reporting Required hv Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 10, 2014, on our consideration of the Commission's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Tuscaloosa County Commission's internal control over financial reporting and compliance. Montgomery, Alabama December 10,2014 ~,JJQ(~ Ronald L. Jones Chief Examiner Department of Examiners of Public Accounts H

19 Management s Discussion and Analysis (Required Supplementary Information) I

20 Management s Discussion and Analysis Commission As management of the Commission, we offer readers of the Commission s financial statements this narrative overview and analysis of the financial activities of the Commission for the fiscal year ended September 30, We encourage readers to read the information presented here in conjunction with additional information that we have furnished in the County s financial statements, which follow this narrative. Financial Highlights The assets of the Commission exceeded its liabilities at the close of the fiscal year by $112,244, (net position). As of the close of the current fiscal year, the Commission s governmental funds reported combined ending fund balances of $57,295, Of this amount $30,955, is available for spending at the government s discretion (unassigned fund balance). At the end of the current fiscal year, unassigned fund balance for the General Fund was $35,847, Commission currently has no long term debt. Commission maintained its AA+ (Standard & Poor s - upgraded), Aa2 (Moody s) bond rating for the 12th consecutive year. Overview of the Financial Statements This discussion and analysis are intended to serve as an introduction to the Commission s basic financial statements. The County s basic financial statements consist of three components; 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements (see Figure 1). The basic financial statements present two different views of the County through the use of government-wide statements and fund financial statements. In addition to the basic financial statements, this report contains other supplementary information that will enhance the reader s understanding of the financial condition of the Commission. J

21 Required Components of Annual Financial Report Figure 1 Management s Discussion and Analysis Basic Financial Statements Government-wide Financial Statements Fund Financial Statements Notes to the Financial Statements Summary Detail Basic Financial Statements The first two statements (Exhibits 1 and 2) in the basic financial statements are the Governmentwide Financial Statements. They provide both short and long-term information about the County s financial status. The next statements (Exhibits 3 through 8) are Fund Financial Statements. These statements focus on the activities of the individual parts of the County s government. These statements provide more detail than the government-wide statements. There are two parts to the Fund Financial Statements: 1) the governmental funds statements and 2) the fiduciary fund statements. The next section of the basic financial statements is the notes. The notes to the financial statements explain in detail some of the data contained in those statements. K

22 Required supplementary information is provided to show details about the County s major governmental funds' budget information as required by the General Statutes and by the Governmental Accounting Standards Board. Government-wide Financial Statements The government-wide financial statements are designed to provide the reader with a broad overview of the County s finances, similar in format to a financial statement of a private-sector business. The government-wide statements provide short and long-term information about the County s financial status as a whole. The two government-wide statements report the County s net position and how it has changed. Net position is the difference between the County s total assets and total liabilities. Measuring net position is one way to gage the County s financial condition. The government-wide financial statements are on Exhibits 1 and 2 of this report. Fund Financial Statements The fund financial statements provide a more detailed look at the County s most significant activities. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Commission, like all other governmental entities in Alabama, uses fund accounting to ensure and reflect compliance (or non-compliance) with finance-related legal requirements, such as the General Statutes or the County s budget resolution. All of the funds of the Commission can be divided into two categories: governmental funds and fiduciary funds. Governmental Funds Governmental funds are used to account for those functions reported as governmental activities in the government-wide financial statements. Most of the County s basic services are accounted for in governmental funds. These funds focus on how assets can readily be converted into cash flow in and out, and what monies are left at year-end that will be available for spending in the next year. Governmental funds are reported using an accounting method called modified accrual accounting. This method also has a current financial resources focus. As a result, the governmental fund financial statements give the reader a detailed short-term view that helps him or her determine if there are more or less financial resources available to finance the County s programs. The relationship between government activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds is described in reconciliations that are a part of the financial statements. L

23 Fiduciary Funds Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Commission has thirteen fiduciary funds. Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. Other Information In addition to the basic financial statements and accompanying notes, this report includes certain required supplementary information. Government-Wide Financial Analysis As noted earlier, net position may serve over time as one useful indicator of a government s financial condition. The assets of Commission exceeded liabilities by $112,244, as of September 30, For the year ending September 30, 2013, s net position is presented in figure 2 as follows: s Net position Figure Current and other assets $87,705,374 $86,612,241 Capital Assets, net $76,050,816 $79,312,065 Total Assets $163,756,190 $165,924,306 Long-term liabilities outstanding $21,101,954 $17,554,430 Other liabilities $30,410,161 $31,658,038 Total liabilities $51,512,115 $49,212,469 Net position: Net Investment in Capital Assets $76,050,816 $79,312,065 Restricted $8,987,060 $6,941,357 Unrestricted $27,206,199 $30,458,415 Total net position $ 112,244,075 $ 116,711,837 One aspect of the County s financial operations that positively influenced the total unrestricted governmental net position was the continued low cost of debt due to the County s high bond rating and relative small amount of debt. M

24 s changes in net position are presented in figure 3 as follows: Financial Analysis of the County s Funds Changes in Net Position Figure 3 As noted earlier, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Activities Revenues: Program revenues: Charges for services $9,094,861 $8,736,930 Operating grants and contributions $13,161,303 $10,501,076 Capital grants and contributions General revenues: Property taxes $26,302,324 $25,831,709 Other taxes $26,447,351 $23,060,205 Grants and contributions not restricted to specific programs $3,849,398 $2,624,107 Other $9,621,575 $8,451,359 Total revenues $88,476,812 $79,205,386 Expenses: General government $29,586,977 $29,041,346 Public safety $29,423,556 $28,140,713 Highways and Roads $27,803,507 $27,394,889 Sanitation $615,293 $428,689 Health $663,917 $533,706 Welfare $200,912 $173,136 Culture and Recreation $4,456,999 $3,784,631 Education $193,415 $180,407 Miscellaneous $0 $0 Interest on Long-Term Debt $0 $0 Total expenses $92,944,574 $89,677,517 Decrease in Net position ($4,467,762) ($10,472,131) Net position, October 1 $116,711,838 $127,183,969 Net position, September 30 $112,244,075 $116,711,838 N

25 Governmental Funds. The focus of s governmental funds is to provide information on near-term inflows, outflows, and balances of usable resources. Such information is useful in assessing s financing requirements. Specifically, unreserved fund balance can be a useful measure of a government s net resources available for spending at the end of the fiscal year. The General Fund is the chief operating fund of. At the end of the current fiscal year, total fund balance of the General Fund was $53,199,915.36, an increase of $2,130, The primary factor contributing to this increase was a one time sales tax collection settlement. Other major funds of the County are the Road and Bridge Fund and the Reappraisal Fund. The Road and Bridge Fund s purpose is to account for the expenditures of funds earmarked for the building and maintenance of the County s roads and bridges. The fund balance of the Road and Bridge Fund decreased $1,431, during the year. This was primarily due to infrastructure upgrades. The Reappraisal Fund accounts for expenditures related to the Commission s property reappraisal program. The Reappraisal Fund expenditures equal its revenues. At September 30, 2013, the governmental funds of reported a combined fund balance of $57,295, Capital Asset and Debt Administration Capital Assets. s capital assets for its governmental activities as of September 30, 2013, totals $76,050, (net of accumulated depreciation). These assets include buildings, roads and bridges, land, machinery and equipment, and vehicles. Major capital asset transactions during the year include: Purchased new equipment for the Public Safety Department Purchased new vehicles for County motor pool Disposed of old equipment in the Public Safety Department Addition of construction in progress on Infrastructure O

26 A breakdown of Capital Assets is presented in figure 4 as follows: s Capital Assets Figure 4 Governmental Governmental Activities Activities Land $ 2,749,305 $ 2,749,305 Buildings and improvements $39,018,826 $39,018,826 Improvements other than buildings $5,651,321 $5,651,321 Equipment and Furniture $17,229,363 $17,172,254 Infrastructure $174,213,708 $174,213,708 Data Processing Equipmment $2,538,558 $2,521,763 Vehicles and motorized equipment $11,684,211 $10,748,790 Construction in progress $3,668,982 $3,275,045 Less:Accumulated Depreciation ($180,703,458) ($176,038,947) Total $76,050,816 $79,312,066 Additional information on the County s capital assets can be found in Note 6 of the Basic Financial Statements. Long-term Debt. As of September 30, 2013, had no bonded debt outstanding. Economic Factors and Next Year s Budgets and Rates The following key economic indicators reflect the growth and prosperity of the County. The County had new jobs and capital invested this year. New manufacturing jobs announced totaled 686. New private capital announced totaled $ million. P

27 Budget Information The Commission adopts an annual budget for its General Fund, as required by the General Statutes. The budget is a legally adopted document that incorporates input from the management of the County, and the decisions of the County Commission about which services to provide and how to pay for them. It also authorizes the County to obtain funds from identified sources to finance these current period activities. The budgetary statement provided for the General Fund demonstrates how well the County complied with the budget resolution and whether or not the County succeeded in providing the services as planned when the budget was adopted. The budgetary comparison statements use the budgetary basis of accounting and are presented using the same format, language, and classifications as the legal budget document. The statements shows three columns: 1) the original budget as adopted by the Commission; 2) the final budget as amended by the Commission; and 3) the actual resources, charges to appropriations, and ending balances in each fund on a budgetary basis of accounting. To account for the difference between the budgetary basis of accounting and the modified accrual basis, a reconciliation showing the differences in the reported activities is shown at the end of each budgetary statement. Governmental Activities: Taxes (benefiting from the economic growth) are expected to lead the increase in revenue projections by 3.0 percent. The County will use these increases in revenues to finance programs currently in place. Requests for Information This report is designed to provide an overview of the County s finances for those with an interest in this area. Questions concerning any of the information found in this report or requests for additional information should be directed to William M. Lamb, the Chief Financial Officer of, Commission, P.O. Box 20113, Tuscaloosa, AL Q

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29 Basic Financial Statements 1

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31 Statement of Net Position September 30, 2013 Governmental Activities Assets Cash $ 56,490, Investments 3,657, Receivables (Note 4) 3,629, Ad Valorem Taxes Receivable 23,815, Inventories 112, Capital Assets (Note 6): Nondepreciable 6,418, Depreciable, Net 69,632, Total Assets 163,756, Liabilities Payables (Note 11) 3,026, Deferred Revenue 25,225, Accrued Wages Payable 1,553, Health Claims Payable 124, Worker's Compensation Claims Payable 479, Long-Term Liabilities: Portion Due or Payable Within One Year: Compensated Absences 177, Portion Due or Payable After One Year: Compensated Absences 5,029, Net Other Postemployment Benefit Obligation 15,894, Total Liabilities 51,512, Net Position Net Investment in Capital Assets 76,050, Restricted for Other Purposes 8,987, Unrestricted 27,206, Total Net Position $ 112,244, The accompanying Notes to the Financial Statements are an integral part of this statement. Commission 2 Exhibit #1