POWDER MOUNTAIN WATER AND SEWER DISTRICT. Financial Statements - December 31, (With Accountants Compilation Report Thereon)

Transcription

1 Financial Statements - (With Accountants Compilation Report Thereon)

2 Table of Contents Independent Accountants Compilation Report... 3 Statement of Net Assets Proprietary Fund As of... 4 Statement of Revenues, Expenses and Changes in Net Assets Proprietary Fund As of... 5 Statements of Cash Flows Proprietary Fund As of... 6 Notes to Financial Statements Page

3 Powder Mountain Water and Sewer District Farmington, UT Management is responsible for the accompanying financial statements of the business-type activities of Powder Mountain Water and Sewer District, as of and for the year ended, and related notes to the financial statements, which collectively comprise the district s basic financial statements as listed in the table of contents, in accordance with accounting principles generally accepted in the United States of America. We have performed a compilation engagement in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the AICPA. We did not audit or review the financial statements nor were we required to perform any procedures to verify the accuracy or completeness of the information provided by management. Accordingly, we do not express an opinion, a conclusion, nor provide any form of assurance on these financial statements. Management has omitted the Management Discussion and Analysis that accounting principles generally accepted in the United States of America requires to be presented to supplement the basic financial statements. Such missing 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. September 5, 2017 Ogden, UT 3

4 Statement of Net Assets Proprietary Fund Current Assets: Cash and cash equivalents $ 360,871 Connection Inventory 132,128 Accounts Receivable 106,960 Deferred Connection Fees 44,000 Prepaid Water 12, Total Current Assets 656,851 Non-Current Assets: Capital Improvement in Process 10,426 Land 1,337 Net Water and Sewer Systems 908,531 Total Noncurrent Assets 920,294 Total Assets $ 1,577,145 Current Liabilities: Accounts payable 125,421 Connection Fee Payable 122,480 Total Current Liabilities 247,901 Net Assets: Net Investment in Capital Assets 920,294 Unrestricted 485,550 Total Net Assets 1,405,844 Total Liabilities and Net Assets $ 1,577,145 See Accountants Compilation Report and accompanying notes. Statement of Revenues, Expenses and Changes in Net Assets 4

5 Proprietary Fund For the Year Ended Operating Revenues: Charges for Services $ 447,376 Total Operating Revenues 447,376 Expenses: Salaries and Benefits 65,038 Supplies and Materials 345 Maintenance and Repairs 56,209 Utilities 39,513 Contracted Services 48,223 Depreciation 37,138 Land Rental 18,349 Insurance 6,368 Bank Charges 1,343 Conference 275 Dues and Subscriptions 1,659 Taxes 1,001 Permits Fee 302 Misc. 3,990 Office 4,050 Total Expenses 283,803 Operating Income 163,573 Non-Operating Revenues (Expenses): Interest Revenue 1,147 Total Non-Operating Revenues(Expenses) 1,147 Total Change in Net Assets 164,720 Net Assets - beginning of year 1,241,124 Net Assets - end of year $ 1,405, See Accountants Compilation Report and accompanying notes. Statement of Cash Flows Proprietary Fund 5

6 For the Year Ended Cash flows from operating activities: Cash received from customers $ 453,798 Cash payments to employees (65,038) Cash payments to suppliers (133,905) Net cash provided (used) by operating activities 254,855 Cash flows from investing activities: Interest earned on cash deposits 1,147 Net cash provided by investing activities 1,147 Cash flows from capital and related financing activities: Cash payments for property and equipment purchases (251,110) Payments on connection fee debt (8,520) Net cash used for capital and related financing activities (259,630) 2016 Net change in cash and cash equivalents (3,628) Cash and cash equivalents at beginning of year 364,499 Cash and cash equivalents at end of year $ 360,871 RECONCILIATION OF OPERATING INCOME TO NET CASH USED BY OPERATING ACTIVITIES: Cash flows from operating activities: Net income (loss) $ 163,573 Adjustment to reconcile operating income to net Cash provided by (used in) operating activities: Depreciation 37,138 Decrease in accounts receivable 6,422 Increase in accounts payable 47,722 Net cash provided by operating activities ` $ 254, See Accountants Compilation Report and accompanying notes. Notes to Compiled Financial Statements NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 6

7 Reporting Entity The Powder Mountain Water and Sewer District (the District) is a special district organized in 1978 by the Weber County Commission for the purpose of providing sewage treatment services in the Powder Mountain area. The District operates under a Board of Trustees form of government. The financial statements of the District have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to government units. The more significant of the government s accounting policies are described below. Fund Accounting The accounts of the District are organized and operated on the basis of funds. 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 is maintained consistent with legal and managerial requirements. The District's only fund is a Proprietary Fund type, which is based on the flow of economic resources measurement focus and uses the accrual basis of accounting. Under this method, revenues are recorded when earned and expenses are recorded at the time liabilities are incurred. The District applies all FASB pronouncements issued unless they contradict GASB pronouncements The District's operations are accounted for in an Enterprise Fund. This category included operations for which a fee is charged to external users for goods or services and the activity (a) is financed with debt that is solely secured by a pledge of the net revenues, (b) has third party requirements that the cost of providing services, including capital costs, be recovered with fees and charges or (c) established fees and charges based on a pricing policy designed to recover similar costs. Basis of Accounting The District's financial statements are presented on the full accrual basis of accounting. Reporting Entity In evaluating how to define the government for financial purposes, management has considered all potential component units. The decision to include a potential component unit in the reporting entity was made by applying the criteria set forth in accounting principles generally accepted in the United States of America (GAAP). The basic but not the only criterion for including a potential component unit within the reporting entity is the governing body s ability to exercise oversight responsibility. The most significant manifestation of this ability is financial interdependency. Other manifestations of this ability to exercise oversight responsibility include, but are not limited to, the selection of governing authority, the designation of management, the ability to significantly influence operations and accountability of fiscal matters. A second criterion used in evaluating potential component units is the scope of public services. Application for this criterion involves considering whether the activity benefits the government, and/or its citizens, or whether the activity is conducted within the geographic boundaries of the government and is generally available to its citizens. A third criterion used to evaluate potential component units for inclusion or exclusion from the reporting entity is the existence of special financing relationships, regardless of whether the government is able to exercise oversight responsibilities. Based upon the applications of these criteria, the District has no component units. Cash and Investments Cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with original maturities of 3 months or less. State statutes authorize a government unit to invest in obligations of the U.S. Treasury, commercial paper, repurchase agreements, and the State Treasurer's Investment Pool. Investments are stated at cost, which approximates fair value. Inventories and Prepaid Items Notes to Compiled Financial Statements The District does not normally maintain any significant inventories; however, in 2007 the District purchased 7

8 12 connections from a customer and in 2009 the District capitalized 60 connections taken back from a developer in bankruptcy. The connections are available to be resold and are thus properly reported without impairment in the "Other Current Assets" section of the balance sheet. Certain payments to vendors reflect costs applicable to future accounting periods and are properly reported as prepaid items. Capital Assets All purchased capital assets are valued at cost. Depreciation is calculated using the straight line method over 50 years for the water and sewer system, 30 years for tanks, and 5-10 years for equipment. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Improvements are capitalized and depreciated over the remaining useful life of the related fixed assets as applicable. Operating Revenues and Expenses Operating revenues and expenses consist of those revenues that result from the ongoing principal operations of the District. Operating revenues include charges for services and property taxes received. Non-operating revenues and expenses consist of those revenues and expenses that are related to financing and investing activities or result from ancillary activities. Budgets Annual budgets are prepared and adopted by the District in accordance with the "Uniform Fiscal Procedures Act" during December for the following fiscal year, which begins on January 1. Budgets are prepared and approved by the Board of Directors. A public budget hearing is set at which time taxpayers' comments can be heard. At the conclusion of the public hearing, the budget, as amended, is legally enacted through the passage of a resolution. Compensated Absences District policy does not provide for vested or accumulated vacation leave. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Subsequent Events Management has evaluated subsequent events through September 5, 2017 the date the financial statements were available to be issued. NOTE 2 - CASH AND INVESTMENTS Included in the caption "Cash and cash equivalents" in the District's financial statements are its cash and investments. The District follows the requirements of the Utah Money Management Act (Utah Code, Section 51, Chapter 7) in handling its depository and investment transactions. This Act requires the depositing of District funds in a "qualified depository," which is defined as any financial institution whose deposits are insured by an agency of the Federal Government and which has been certified by the State Commissioner of Financial Institutions as meeting the requirements of the Act and adhering to the rules of the Utah Money Management Council. Deposits Custodial Credit Risk Notes to Compiled Financial Statements Custodial credit is the risk that, in the event of a bank failure, the District's deposits may not be returned to it. 8

9 The District does not have a formal policy for custodial credit risk. The District maintains its cash in bank demand deposits. As of, all of the District's bank balance of $79,714 was covered by federal depository insurance. Investments The Money Management Act defines the types of securities authorized as appropriate investments for the District's funds and the conditions for making investment transactions. Investment transactions may be conducted only through qualified depositories, certified dealers, or directly with issuers of the investment securities. These statutes authorize the District to invest in negotiable or nonnegotiable deposits of qualified depositories and permitted negotiable depositories; repurchase and reverse repurchase agreements; commercial paper that is classified as "first tier" by two nationally recognized statistical rating organizations - one of which must be Moody's investors Services or Standard & Poor's; bankers acceptances; obligations of the U.S. Treasury including bills, notes, and bonds; bonds, notes and other evidence of indebtedness of political subdivisions of the State; fixed rate corporate obligations and variable rate securities rated "A" or higher, or the equivalent of "A" or higher by 2 nationally recognized statistical rating organizations; shares or certificates in a money market mutual fund as defined in the Money Management Act; and the Utah State Public Treasurer's Investment Fund (PTIF). The Utah State Treasurer's Fund (PTlF) is not registered with the SEC as an investment company. The PTIF is authorized and regulated by the Money Management Act, Section 51-7, Utah Code Annotated, 1953, as amended. The Act established the Money Management Council which oversees the activities of the State Treasurer and the PTlF and details the types of authorized investments. Deposits in the PTlF are not insured or otherwise guaranteed by the State of Utah, and participants share proportionally in any realized gains or losses on investments. The PTlF operates and reports to participants on an amortized cost basis. The income, gains and losses, net of administrations fees, of the PTlF are allocated based on the participant's average daily balance. The fair value of the PTlF investment pool is approximately equal to the value of the pool shares. At the District's investments: Carrying Amount Maturity Utah State PTIF $ 281, Days* *Weighted-average maturity. NOTE 3-ACCOUNTS RECEIVABLE Customers are billed quarterly for water and sewer service fees. The balances of all accounts at were: Accounts Receivable $106,960 The District had no receivables written off as bad debt as of. Notes to Compiled Financial Statements NOTE 4 - CAPITAL ASSETS Depreciation on capital assets used in the enterprise fund has been provided on a straight-line basis as follows: Depreciation Cost Accumulated Cost Less 9

10 Rate Basis Depreciation Depreciation Capital Improvements in Process NA $ 10,426 - $ 10,426 Land NA 1,337-1,337 Water and Sewer System 2-20% 1,766,244 $ (857,713) 908,531 $1,778,007 $ (857,713) $ 920,924 NOTE 5- RENTS AND EASEMENTS The District pays property easements to Eden Heights LLC which owns the land upon which the sewer lagoons are situated. Lease and easement agreements have been negotiated with Eden Heights, wherein the District pays rent of $2,039 per month. Charges for the year ended was $18,349. NOTE 6 - CONNECTION FEE AGREEMENT On October 30, 1986, the District purchased the water system from Powder Mountain, Inc. A down payment of $35,000 was made. In addition, the District will pay Powder Mountain, Inc. $2,000 for each new water connection until an additional sum of $165,000 has been paid. The current balance is $110,000. The District will also furnish, at no additional cost, 60 water connections to Powder Mountain, Inc. upon request. 51 connections remain to be issued, and no connections were issued in On August 4, 1997, the District passed a resolution adopting a water and sewer connection fee. The sewer connection fee is $6,500. The water connection fee is $5,000 per connection. NOTE CONTINGENT LIABILITIES The District has no outstanding contingent liabilities. NOTE 8 - PENSION PLAN OBLIGATION The District has no established pension plans, nor any such obligations. NOTE 9 - PROPERTY TAX CALENDAR Lien date Jan. 1 Taxing districts notify the county of date, time, and place of public hearing Mar. 1 County auditor send valuation certified tax rate and levy worksheets to each taxing district Jun 8 Taxing district must adopt a proposed tax rate, certify the rate and levy, and submit to the county auditor Before June 22 Taxing district adopts a final tax rate if there is no increase in certified tax rate Aug 17 Taxing district adopts final budget Dec 15 Copy of the budget is submitted to state auditor within 30 days of adoption Notes to Compiled Financial Statements NOTE 10 - RISK MANAGEMENT Powder Mountain Water and Sewer District is exposed to various risks of loss related to torts, theft of, damage to and destruction of assets, errors and omissions, and natural disasters for which the District carries commercial insurance. The District maintains comprehensive insurance coverage in aggregate amounts sufficient to protect against all reasonably foreseeable liability risks. Specific liability policies purchased include automobile, general liability, 10

11 property, bond (employee dishonesty), treasurer, public officials and officers, excess liability, and workman's compensation. As of December 31,2016, there is no anticipation of unpaid claims. As previously stated, deposits and investments are governed by the Utah Money Management Act. Following are discussions of the District's exposure to various risks related to its cash management activities. Interest Rate Risk Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. The District manages its exposure to declines in fair value by investing mainly in the PTIF and by adhering to the Money Management Act. The Act requires that the remaining term to maturity of investments may not exceed the period of availability of the funds to be invested. The Act further limits the remaining term to maturity on all investments in commercial paper, bankers' acceptances, fixed rate negotiable deposits, and fixed rate corporate obligations to days or less. In addition, variable rate negotiable deposits and variable rate securities may not have a remaining term to final maturity exceeding 2 years. Concentration of credit risk Concentration of credit risk is the risk of loss attributed to the magnitude of a government s investment in a single issuer. The District s policy to limit this risk is to adhere to the rules of the Money Management Council and to invest most of its available funds in the PTIF. The Council rules do not limit the amount of investments a government may make in any one issuer except for Rule 2 regarding certain endowments and funds with a long-term perspective, and Rule 17 which limits investments in a single issuer of commercial paper and corporate obligations to between 5 and 10 percent depending upon the total dollar amount held in the government s portfolio at the time of purchase NOTE 10- SUBSEQUENT EVENT On January 5, 2017 the District entered into a purchase agreement for 15 shares of stock in the Wolf Creek Irrigation Company. The purchase price is $9,000 for each share for a total purchase price of $135,