NATIVE VILLAGE OF BARROW. Year Ended December 31, 2016

Transcription

1 NATIVE VILLAGE OF BARROW Basic Financial Statements, Required Supplementary Information, Additional Supplementary Information, and Compliance Reports Year Ended December 31, 2016

2 NATIVE VILLAGE OF BARROW Basic Financial Statements, Required Supplementary Information, Additional Supplementary Information, and Compliance Reports Year Ended December 31, 2016

3 NATIVE VILLAGE OF BARROW Table of Contents Exhibit Page Independent Auditor s Report 1-3 Basic Financial Statements: Government-Wide Financial Statements: Statement of Net Position A-1 4 Statement of Activities B-1 5 Fund Financial Statements: Governmental Funds: Balance Sheet C-1 6 Reconciliation of Governmental Funds Balance Sheet to Statement of Net Position C-2 7 Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds D-1 8 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities D-2 9 Notes to Basic Financial Statements Required Supplementary Information: Schedule of Revenues, Expenditures and Changes in Fund Balance (Deficit) Original and Final Budget and Actual: General Fund E-1 23 BIA Compact Special Revenue Fund E-2 24 NAHASDA Special Revenue Fund E-3 25 Gaming Special Revenue Fund E-4 26

4 NATIVE VILLAGE OF BARROW Table of Contents Exhibit Page Additional Supplementary Information: Combining and Individual Fund Financial Statements: Nonmajor Governmental Funds: Combining Balance Sheet F Combining Statement of Revenues, Expenditures and Changes in Fund Balance F Combining Schedule of Revenues, Expenditures and Changes in Fund Balance G Schedule of Expenditures of Federal Awards H-1 33 Notes to Schedule of Expenditures of Federal Awards 34 Compliance Reports: Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Report on Compliance for Each Major Federal Program and Report on Internal Control Over Compliance Required by the Uniform Guidance Schedule of Findings and Questioned Costs 39-40

5 Independent Auditor s Report To the Members of the Council Native Village of Barrow Barrow, Alaska Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Native Village of Barrow as of and for the year ended December 31, 2016, and the related notes to the financial statements, which collectively comprise the Native Village of Barrow s basic financial statements as listed in the table of contents. 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. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions G Street Suite 800 Anchorage, Alaska Phone Fax Offices in Juneau and Soldotna A Professional Corporation

6 To the Members of the Council Native Village of Barrow 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 Native Village of Barrow, as of December 31, 2016, and the respective changes in financial position 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 budgetary comparison information on pages 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. Management has omitted Management s Discussion and Analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not 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. Our opinion on the basic financial statements is not affected by this missing information. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Native Village of Barrow s basic financial statements. The Additional Supplementary Information, as presented in the table of contents, which includes other governmental funds: Combing Balance Sheet, Combining Statement of Revenues, Expenditures and Changes in Fund Balance and Combining Schedule of Revenues, Expenditures and Changes in Fund Balance are presented for purposes of additional analysis and are not a required part of the basic financial statements. The schedule of expenditures of federal awards is presented for the purpose of additional analysis as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is also not a required part of the basic financial statements. 2

7 Members of the Council Native Village of Barrow The Additional Supplementary Information previously listed 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, Additional Supplementary Information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Reporting Required by Governmental Auditing Standards In accordance with Governmental Auditing Standards, we have also issued our report dated September 29, 2017 on our consideration of the Native Village of Barrow 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 effectiveness of the Native Village of Barrow s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Native Village of Barrow s internal control over financial reporting and compliance. Anchorage, Alaska September 29,

8 BASIC FINANICAL STATEMENTS

9 Exhibit A-1 NATIVE VILLAGE OF BARROW Statement of Net Position December 31, 2016 Governmental Assets Activities Current: Cash and cash equivalents $ 289,142 Grant receivable 629,970 Other receivables 5,656 Prepaid items 122,768 Inventory 1,599 Investments 1,000,716 Total current assets 2,049,851 Long-term: Housing loans receivable, net of allowance of $3,230,413 3,403,596 Property held for sale 449,936 Capital assets not being depreciated 4,429,875 Capital assets being depreciated, net of accumulated depreciation 729,587 Total long-term assets 9,012,994 Total assets 11,062,845 Liabilities Current: Accounts payable 684,131 Accrued payroll and related liabilities 100,439 Current portion of loan payable 112,486 Unearned revenue - grants 982,375 Total current liabilities 1,879,431 Non-current liabilities - loan payable 571,897 Total liabilities 2,451,328 Net Position Net invested in capital assets 9,012,994 Unrestricted (401,477) Total net position $ 8,611,517 The notes to the financial statements are an integral part of this statement. 4

10 Exhibit B-1 NATIVE VILLAGE OF BARROW Statement of Activities Year Ended December 31, 2016 Net (Expense) Revenue and Changes in Program Revenues Net Position Operating Capital Total Charges Grants and Grants and Governmental Functions/Programs Expenses Indirect Costs for Services Contributions Contributions Activities Primary government: Governmental activities: General government $ 1,160,584 (742,369) - 315,162 - (845,422) Social Services 961,480 86,427-2,234,698-1,273,218 Self-governance 1,979, , ,026,797 1,046,989 Community services 500,432 79,216-1,320, ,430 Environmental 96,171 29, ,246-67,075 Housing 240, , , ,506 Economic development 2,180, ,420,612 3, ,641 Unallocated interest 25, (25,037) Total governmental activities $ 7,144,715-2,663,328 4,037,410 3,604,377 3,160,400 General revenues: Local grants and contributions 151,241 Interest 24,456 Other 8,121 Total general revenues 183,818 Change in net position 3,344,218 Net position, beginning of year 5,267,299 Net position, end of year $ 8,611,517 The notes to the financial statements are an integral part of this statement. 5

11 Exhibit C-1 NATIVE VILLAGE OF BARROW Balance Sheet - Governmental Funds December 31, 2016 Assets Major Funds Other Total General BIA Governmental Governmental Fund Compact NAHASDA Gaming Funds Funds Cash and cash equivalents $ 184, , ,142 Grants receivable - 268, , , ,970 Housing loans receivable, net of allowance - - 3,403, ,403,596 Other receivables 5, ,656 Prepaid items 122, ,768 Inventory ,599-1,599 Investments 1,000, ,000,716 Due from other funds 169, , , , ,740 1,050,135 Total assets $ 1,483, ,391 3,714, , ,576 6,503,582 Liabilities, Deferred Inflows of Resources and Fund Balances Liabilities: Accounts payable 684, ,131 Accrued payroll and related liabilities 100, ,439 Unearned revenue - 695,391 56, , ,375 Due to other funds 880, ,836 1,050,135 Total liabilities 1,664, ,391 56, ,576 2,817,080 Deferred inflows of resources - Housing loans receivable - - 3,403, ,403,596 Total liabilities and deferred inflows of resources 1,664, ,391 3,459, ,576 6,220,676 Fund balances: Nonspendable: Prepaid items 122, ,768 Inventory ,599-1,599 Assigned , , ,422 Unassigned (303,883) (303,883) Total fund balances (181,115) - 254, , ,906 Total liabilities, deferred inflows of resources and fund balances $ 1,483, ,391 3,714, , ,576 6,503,582 The notes to the financial statements are an integral part of this statement. 6

12 Exhibit C-2 NATIVE VILLAGE OF BARROW Reconciliation of Governmental Funds Balance Sheet to Statement of Net Position Year Ended December 31, 2016 Total fund balances for governmental funds $ 282,906 Total net position reported for governmental activities in the Statement of Net Position is different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds. These assets, net of accumulated depreciation consist of: Land 94,000 Property held for sale 449,936 Construction in progress 4,335,875 Buildings and improvements 803,287 Machinery and equipment 872,992 Accumulated depreciation (946,692) Total capital assets, net of accumulated depreciation 5,609,398 Other long-term assets are not available to pay for current period expenditures and therefore are deferred in the funds. This is the amount of the receivable for housing sales. 3,403,596 Long-term liabilities, including notes payable, are not due and payable in the current period and therefore are not reported as fund liabilities. Notes payable (684,383) Total net position of governmental activities $ 8,611,517 The notes to the financial statements are an integral part of this statement. 7

13 Exhibit D-1 NATIVE VILLAGE OF BARROW Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds Year Ended December 31, 2016 Major Funds BIA Compact NAHASDA Gaming Other Total General Special Special Special Governmental Governmental Fund Revenue Fund Revenue Fund Revenue Fund Funds Funds Revenues: Intergovernmental: Federal $ - 5,338, ,580-1,448,295 7,364,709 State of Alaska ,939 13,939 Local sources: Gaming ,420,612-2,420,612 Local grants, contracts and contributions 151, , , ,532 Rent 68, ,564 Interest 24, ,456 Other 8, ,121 Total revenues 252,382 5,339, ,732 2,420,612 1,724,490 10,488,933 Expenditures: Current: General government, net of indirect cost recovery 414, ,145 Social services ,025,073 1,025,073 Self-governance - 5,553, ,553,295 Community services , ,648 Environmental , ,327 Housing - - 1,292, ,292,794 Economic development ,171,043 3,442 2,174,485 Debt service: Principal , ,617 Interest , ,037 Total expenditures 414,145 5,553,295 1,383,448 2,171,043 1,724,490 11,246,421 Excess (deficiency) of revenues over expenditures (161,763) (213,578) (631,716) 249,569 - (757,488) Other financing sources (uses): Proceeds from issuance of debt , ,000 Transfers in 156, , ,000 Transfers out (370,000) (370,000) Total other financing sources (uses) 156, , ,000 (370,000) - 750,000 Net change in fund balances (5,341) - 118,284 (120,431) - (7,488) Fund balances (deficits), beginning of year (175,774) - 136, , ,394 Fund balances (deficits), end of year $ (181,115) - 254, , ,906 The notes to the financial statements are an integral part of this statement. 8

14 Exhibit D-2 NATIVE VILLAGE OF BARROW Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities Year Ended December 31, 2016 Net change in fund balance - total governmental funds $ (7,488) The change in net position reported for governmental activities in the Statement of Activities is different because: Governmental funds report capital outlays as expenditures. However, in the Statement of Activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. Capital outlays 3,334,238 Depreciation expense (87,823) 3,246,415 Governmental funds only report revenue from the sale of assets to the extent proceeds are received from the sale. In the Statement of Activities, a gain or loss is reported for each sale. The net effect of transactions involving capital assets is decrease net position. Cost of assets sold (2,037,278) Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. This is the amount of the increase in housing loans receivable, net of allowance 2,798,442 The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Issuance of note payable (750,000) Principal paid on note payable 65,617 (684,383) Some expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. This is the amount of the decrease in accrued leave 28,510 Change in net position of governmental activities $ 3,344,218 The notes to the financial statements are an integral part of this statement. 9

15 NATIVE VILLAGE OF BARROW Notes to Basic Financial Statements September 30, 2016 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity The Native Village of Barrow (Native Village) was organized pursuant to the authority of Congress. The constitution and by-laws were ratified March 21, 1940 in accordance with Section 16 of the Indian Reorganizations Act of June 18, 1934 as amended by the Act of June 15, The purpose of this organization is to improve the general welfare of the native residents of Barrow by promoting a better life, greater security, and the ability of its members to do various kinds of business for their benefit. The Native Village is recognized by the United States Department of the Interior as the organization representing the native people of the Native Village of Barrow, Alaska. The Native Village has constitutional authority for, but not limited to the following: to contract with local, state, and federal governments for the common good of the Native Village membership, to foster native arts and customs, and to provide land use management for recognized trust property. The accompanying financial statements include all funds that are controlled by or dependent on the Native Village. The Native Village does not have any component units which require inclusion in the basic financial statements. Also, no entities exist over which the Native Village has oversight responsibility. The financial statements of the Native Village have been prepared in conformity with accounting principles generally accepted in the United States of America as applicable to governments. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant of the Native Village's accounting policies are described below. B. Government-Wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the activities of the Native Village. In general, the effect of interfund activity has been removed from these statements to minimize the double counting of internal activities. Governmental activities, which normally are supported by intergovernmental revenues, are reported separately from business-type activities, which rely primarily on fees and charges to external parties. The Native Village does not have any business-type activities. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Other items not properly included among program revenues are reported instead as general revenues. Major individual governmental funds are reported as separate columns in the fund financial statements. 10

16 NATIVE VILLAGE OF BARROW Notes to Basic Financial Statements, Continued C. Measurement Focus, Basis of Accounting and Basis of Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of the related cash flows. Grants and similar programs are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. The accounting policies of the Native Village conform to accounting principles generally accepted in the United States of America, as applicable to governmental units. The accounts of the Native Village 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 resources according to their intended purpose and is used to aid management in demonstrating compliance with finance-related legal and contractual requirements. The minimum number of funds is maintained consistent with legal and managerial requriements. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the Native Village considers revenues to be available if they are collected within 60 days after year end. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures are recorded only to the extent they have matured. Expenditure-driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other grant requirements have been met. The Native Village reports the following major governmental funds: The General Fund is the Native Village s primary operating fund. It accounts for all financial resources of the Native Village, except those required to be accounted for in another fund. The BIA Compact Special Revenue Fund accounts for the monies received from the Bureau of Indian Affairs to be used for village operations, social services, and education. The NAHASDA Special Revenue Fund accounts for funding provided by the Department of Housing and Urban Development. The Gaming Special Revenue Fund accounts for monies from gaming activities. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this rule are charges between various functions of the government. Elimination of these charges would distort the direct costs and program revenue reported for the various functions concerned. 11

17 NATIVE VILLAGE OF BARROW Notes to Basic Financial Statements, Continued Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. D. Assets, Liabilities and Equity 1. Cash and Investments Cash and investments are considered to be cash on hand, demand deposits, open-ended money market mutual funds, and short-term investments with original maturities of three months or less from the date of acquisition. 2. Short-term Interfund Receivables and Payables During the course of operations, numerous transactions occur between individual funds for goods provided or services rendered. These receivables and payables are classified as due to from other funds or due to other funds on the balance sheet of the fund financial statements and are eliminated in the preparation of the government-wide financial statements. 3. Housing Loans, Accounts Receivables As part of its NAHASDA program, the Native Village has loan agreements with program participants to pay for the homes constructed, renovated, or financed in the program. These loans are noninterest bearing and range from 10 to 30 years. Payments from these loans are recognized as program revenue in the year collected. 4. Inventory and Prepaid Items Accounting for inventory for gaming supplies is on the consumption method. The consumption method records the expenditure when consumed rather than when purchased. Inventories are valued at cost using the first-in, first-out (FIFO) method. Reported inventories are classified as nonspendable fund balance in the fund financial statements which indicates that they do not constitute available spendable resources even though they are a component of fund balance. Payments made to vendors for services that are applicable to future accounting periods are recorded as prepaid items. The prepaid assets do not reflect current available resources and, thus, an equivalent portion of fund balance is classified as nonspendable in the fund financial statements. 12

18 NATIVE VILLAGE OF BARROW Notes to Basic Financial Statements, Continued 5. Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets (e.g. roads and similar items), are reported in the applicable governmental activities column in the government-wide financial statements. The Native Village s policy establishes the following capitalization thresholds: $10,000 for land improvements and buildings, and $5,000 for all other capital assets. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated acquisition value at the date of donation. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend the useful life of the asset are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Property, plant, and equipment of the Native Village are depreciated using the straight line method over the following estimated useful lives: Buildings and improvements Machinery and equipment years 3-8 years 6. Unearned Grant Revenue Amounts received from grantor agencies include provisions for advances. All fund receipts in excess of expenditures for ongoing programs have been recorded as unearned revenue. Fund receipts in excess of expenditures for completed programs are recorded as amounts payable to funding agencies. 7. Compensated Absences The Native Village allows employees to accumulate earned but unused vacation benefits. All vacation pay is accrued when incurred in the government-wide financial statements. A liability for these amounts is reported in the governmental fund financial statements only if it has matured (e.g. the employee has terminated employment). 8. Long Term Debt In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities. In the fund financial statements the face amount of the debt issued is reported as other financing sources and an expenditure of the fund incurring the debt. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. 9. Budgets Governmental Accounting Standards Board Statement No. 34 requires supplementary information regarding budgetary information for each major fund with a legally adopted budget. 13

19 NATIVE VILLAGE OF BARROW Notes to Basic Financial Statements, Continued Annual budgets are adopted on a basis consistent with generally accepted accounting principles accepted in the United States of America for the General Fund and for all special revenue funds related to federal and State of Alaska revenues. Unexpended appropriations in Special Revenue Funds funded by the Department of the Interior are available for expenditure indefinitely, but only for the purpose originally obligated. All other intergovernmental appropriations lapse at the end of the related financial assistance award period. Amounts reflected in the financial statements represent the budget available to be expended in the current period. The appropriate budget is prepared by fund, function, object. Budgetary control is exercised at the fund level. Reported budgetary amounts are as originally adopted or as amended by resolution. 10. Net Position Government-wide net position is divided into three components: Net investment in capital assets consists of the historical cost of capital assets less accumulated depreciation and less any debt that remains outstanding that was used to finance those assets plus deferred outflows of resources less deferred inflows of resources related to those assets. Restricted net position consists of assets that are restricted by the District s creditors (for example, through debt covenants), by the state enabling legislation (through restrictions on shared revenues), by grantors (both federal and state), and by other contributors. Unrestricted all other net position is reported in this category. 11. Fund Balances In the fund financial statements fund balance components include five classifications for fund balance as follows: Non-spendable Fund Balances include items that cannot be spent. This includes activity that is not in a spendable form (inventories, prepaid amounts) and activity that is legally or contractually required to remain intact, such as a principal balance in a permanent fund. Restricted Fund Balances have constraints placed upon the use of the resources either by an external party or imposed by law through a constitutional provision or enabling legislation. Committed Fund Balances can be used only for specific purposes pursuant to constraints imposed by a formal action by the Village Council the government s highest level of decision making authority. This formal action is the passage of a resolution by the Council, creating, modifying or rescinding an action. This classification also includes contractual obligations to the extent that existing resources in the fund have been specifically committed for use in satisfying those contractual requirements 14

20 NATIVE VILLAGE OF BARROW Notes to Basic Financial Statements, Continued Assigned Fund Balances include amounts that are constrained by the Village s intent to be used for a specific purpose, but are neither restricted nor committed. Assignments are made by the Village Council or by the Tribal Administrator or designee. Such constraint is binding unless modified or eliminated by the Council or the Tribal Administrator. In governmental funds other than the General Fund, assigned fund balance represents the amounts that is not restricted or committed. Unassigned Fund Balance is the residual amount of the General Fund not included in the four categories described above. Also, any deficit fund balances within the other governmental funds are reported as unassigned. For the classification of governmental fund balances, the Village considers an expenditure to be made from the most restrictive first when more than one classification is available. Special Revenue Funds are used to account and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specific purposes other than capital projects. 12. Fair Value Measurements Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, that is, other than in a forced liquidator or distress sale. Fair values are based on quoted market prices when available. The Village does not have investments for which quoted market prices are not available. The following financial instruments are recorded at fair value or at amounts that approximate fair value: (1) cash and cash equivalents, (2) receivables, net, (3) certain other current assets, (4) accounts payable, and (5) other current liabilities. The carrying amounts reported in the balance sheet and Statement of Net Position for the above financial instruments closely approximates their fair value due to the short-term nature of these assets and liabilities, except for the Village s investments. The carrying amount of the Village s investments are determined based on quoted market prices. The carrying amount of notes payable approximates fair value for those financial instruments with interest at variable rates, as those rates approximate current market rates for notes with similar maturities and credit quality. 13. Grants and Other Intergovernmental Revenues In applying the measurable and available concepts to grants and intergovernmental revenues, the legal and contractual requirements of the numerous individual programs are used as guidance. There are, however, essentially two types of these revenues. In one, monies must be expended on the specific purpose or project before any amounts are considered earned ; therefore, revenues are recognized based upon expenditures recorded. In the other, monies are virtually unrestricted as to purpose of expenditure and are usually revocable only for failure to comply with prescribed compliance requirements. These resources are reflected as revenues at the time of receipt or earlier if the measurable and available criteria are met. 15

21 NATIVE VILLAGE OF BARROW Notes to Basic Financial Statements, Continued 14. Allocation of Indirect Costs The General Fund is used to record "indirect costs" which benefit all programs and are not directly charged to programs. Indirect costs are allocated to all of the funds based upon an agreement negotiated with the cognizant agency which provides for allocation of indirect costs based upon total direct costs of each fund less certain subcontracts and equipment purchases. Indirect costs allocated to the various funds have been made at the current negotiated rates unless otherwise limited by contractual agreement. II. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY A. Deficit Fund Balance At December 31, 2016, the Village had a deficit fund balance of $181,115 in the General Fund. The deficit will be funded by future operations, gaming, and reducing expenditures. III. CASH AND INVESTMENTS The Village maintains a cash pool that is available for use by all funds. Each fund type s portion of this pool is reported as Cash and cash equivalents or amounts Due to other funds. All deposits and investments with banks are fully collateralized at all times. An agreement, in compliance with Village policy, between the Village and the depository bank, Well Fargo, stipulates that the bank will provide acceptable collateral to the Village s agent to be held in the Village s name throughout the year. Acceptable collateral includes obligations of the U.S. Treasury and U.S. Government Agencies. The Village also has a cash equivalent account held by an Investment Company, which is insured by SPIC. Custodial Credit Risk is the risk that in the event of a bank failure or counter party failure, the Village will not be able to recover its deposits or investments. The Village s deposits were insured and/or collateralized, as per the Village policy, at December 31, 2016 while the investments were insured up to $500,000 through the SPIC program. Interest Rate Risk The Village manages its interest rate risk by limiting maturities of its securities. Investment Maturities (In Years) Investment Account: Fair Value Less Than Certificate of Deposit $ 1,000,716 1,000, Concentration of Credit Risk At December 31, 2016 the Village had 100% of its investments in Certificate of Deposits invested with the following banks: BMW Bank North America, Bank Baroda New York, Discover Bank and Everbank. 16

22 NATIVE VILLAGE OF BARROW Notes to Basic Financial Statements, Continued The Village categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. The Village has the following recurring fair value measurements as of December 31, 2016: Total Level 1 Level 2 Level 3 Investments by fair value level Certificate of Deposit $ 1,000,716 1,000, IV. ACCOUNTS RECEIVABLE AND VALUATION ALLOWANCES The Village maintains accounts receivable balances of which a portion is reserved as an allowance for doubtful receivables. At December 31, 2016, the Village's receivables were as follows: Other General BIA Governmental Fund Compact NAHASDA Funds Totals Grants and other programs $ - 268, , , ,970 Other 5, ,656 Housing loans - - 6,634,009-6,634,009 Total receivables 5, ,325 6,825, ,836 7,269,635 Allowance for doubtful accounts - - 3,230,413-3,230,413 Net receivables $ 5, ,325 3,595, ,836 4,039,222 17

23 NATIVE VILLAGE OF BARROW Notes to Basic Financial Statements, Continued V. RECEIVABLES, UNAVAILABLE AND UNEARNED REVENUES Governmental funds report unavailable revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. At the end of the current fiscal year, the various components of unearned revenue reported in the governmental funds were as follows: Unearned Unavailable Grant Total Housing loans receivable (NAHASDA) $ 3,403,596-3,403,596 Grant drawdowns prior to meeting all eligibility requirements - 982, ,375 Total unearned/unavailable revenues for governmental funds $ 3,403, ,375 4,385,971 VI. CAPITAL ASSETS Capital asset activity for the year ended December 31, 2016 follows: Balance Balance December 31, December 31, Governmental activities: 2015 Additions Deletions 2016 Capital assets not being depreciated: Land $ 235,000 - (141,000) 94,000 Property held for sale - 449, ,936 Construction in progress 3,364,452 3,317,637 (2,346,214) 4,335,875 Total assets not being depreciated 3,599,452 3,767,573 (2,487,214) 4,879,811 Capital assets being depreciated: Buildings and improvements 803, ,287 Machinery and equipment 856,391 16, ,992 Total assets being depreciated 1,659,678 16,601-1,676,279 Less accumulated depreciation for: Buildings and improvements (267,440) (18,243) - (285,683) Machinery and equipment (591,429) (69,580) - (661,009) Total accumulated depreciation (858,869) (87,823) - (946,692) Total capital assets, being depreciated, net 800,809 (71,222) - 729,587 Total capital assets, net $ 4,400,261 3,696,351 (2,487,214) 5,609,398 18

24 NATIVE VILLAGE OF BARROW Notes to Basic Financial Statements, Continued Depreciation expense was charged to the functions as follows for the year ended December 31, 2016: General government $ 49,181 Social services 22,834 Environmental 9,660 Economic development 6,148 Total depreciation expense $ 87,823 VII. LONG-TERM LIABILITIES Long-term debt activity for the year ended December 31, 2016 follows: Balance Balance Due January 1, December 31, Within 2015 Additions Reduction 2016 One Year Governmental activities: Accrued leave (net of payouts) $ 28,510-28, $750,000 note payable to Wells Fargo issued as part of the housing construction project, due in monthly principal payments of $9, and interest at 4.65% through ,000 65, , ,486 Total governmental activities $ 28, ,000 94, , ,486 The note payable is secured by U.S Department of Housing and Urban Development guarantee and expires June 5, Debt service requirements at December 31, 2016, were as follows: Governmental Activities - Notes Payable Year Ended December 31, Principal Interest Total ,486 29, , ,486 24, , ,486 18, , ,486 13, , ,486 8, , ,953 3, ,262 $ 684,383 98, ,561 19

25 NATIVE VILLAGE OF BARROW Notes to Basic Financial Statements, Continued VIII. INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS A schedule of interfund balances, advances and transfers for the year ended December 31, 2016, follows: Due from other funds: Due from the General Fund to: BIA Compact Special Revenue Fund $ 427,066 NAHASDA Special Revenue Fund 118,899 Gaming Special Revenue Fund 103,594 Other Governmental Funds 230,740 Due to the General Fund from: Other Governmental Funds 169,836 Total Due to/from other funds $ 1,050,135 Transfers From the Gaming Special Revenue Fund to: General Fund $ 156,422 BIA Compact Special Revenue Fund 213,578 Total transfers $ 370,000 A transfer to the General Fund and BIA Compact Special Revenue Fund were made from the Gaming Special Revenue Fund to cover operating activities. IX. EMPLOYEE 401(K) PLAN On May 1, 1999, the Native Village adopted the Native Village of Barrow Safe Harbor 401(k) Plan (the Plan) to provide retirement benefits for its employees. The Plan is a defined contribution plan administered by the Native Village of Barrow that provides tax-deferred salary deductions to employees as allowed under Section 401(k) of the Internal Revenue Code. Employees may contribute from 0% to 21% of their annual compensation to the Plan, limited to a maximum annual amount as set periodically by the Internal Revenue Service. The Native Village is required to match 100% of the employees first 3% of contributions plus 50% of contributions between 3% and 5%. Both employee and employer contributions are fully vested. The Native Village s matching contributions to the 401(k) Plan in 2016 were $3,567. X. RISK MANAGEMENT The Native Village faces a 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 the risk of loss, except for relatively small deductible amounts, are purchased for workers compensation, general liability, fire, and employee medical insurance. 20

26 NATIVE VILLAGE OF BARROW Notes to Basic Financial Statements, Continued XI. CONTINGENCIES Amounts received or receivable from grantors are subject to audit and adjustment by the grantor agencies. Any disallowed claims, including amounts already collected, would become a liability of the General Fund or other applicable fund. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time although the Native Village expects such amounts, if any, to be nominal. XII. CONCENTRATIONS The Village is dependent upon federal and state revenue to provide over 70% of total revenue for governmental fund types. A significant reduction of federal or state grant funding could impair the Village s ability to continue general governmental operations. XIII. NEW ACCOUNTING PRONOUNCEMENTS The Governmental Accounting Standards Board has adopted several new accounting standards with upcoming implementation dates covering several topics as follows: GASB 75 Accounting and Financial Reporting for Postemployment Benefits Other Than Pension Plans. Effective for fiscal years beginning after June 15, GASB 80 Blending Requirements for Certain Component Units an Amendment of GASB Statement No. 14. Effective for fiscal years beginning after June 15, GASB 81 Irrevocable Split Interest Agreements. Effective for fiscal years beginning after December 31, GASB 83 Certain Retirement Obligations. Effective for fiscal years beginning after June 15, GASB 84 Fiduciary Activities. Effective for fiscal years beginning after December 15, GASB 85 Omnibus Effective for fiscal years beginning after June 15, GASB 86 Certain Debt Extinguishment Issues. Effective for fiscal years beginning after June 15, GASB 87 Leases. Effective for fiscal years beginning after December 15, Statements, 75, 80, 81, 83, and 84 are not expected to have any significant impact on the financial statements of the Native Village. GASB Statement No. 85, the objective of this statement is to address practice issues that have been identified during implementation and application of certain GASB Statements. This statement addresses a variety of topics including issues related to blending component units, goodwill, fair value measurement and application, and postemployment benefits (pensions and other postemployment benefits [OPEB]). 21

27 NATIVE VILLAGE OF BARROW Notes to Basic Financial Statements, Continued GASB Statement No. 86, the primary objective of this Statement is to improve consistency in accounting and financial reporting for in-substance defeasance of debt by providing guidance for transactions in which cash and other monetary assets acquired with only existing resources resources other than the proceeds of refunding debt are placed in an irrevocable trust for the sole purpose of extinguishing debt. This Statement also improves accounting and financial reporting for prepaid insurance on debt that is extinguished and notes to financial statements for debt that is defeased in substance. GASB Statement No. 87, the objective of this Statement is to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. This Statement increases the usefulness of governments' financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. It establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Under this Statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby enhancing the relevance and consistency of information about governments' leasing activities. 22

28 REQUIRED SUPPLEMENTARY INFORMATION

29 Exhibit E-1 NATIVE VILLAGE OF BARROW Schedule of Revenues, Expenditures and Changes in Fund Balance (Deficit) - Original and Final Budget and Actual General Fund Year Ended December 31, 2016 Original and Final Budget Actual Variance Revenues: Local sources: Donations $ 151, ,241 - Rent 175,000 68,564 (106,436) Interest 40,000 24,456 (15,544) Other 30,000 8,121 (21,879) Total revenues 396, ,382 (143,859) Expenditures: Current: General government: Salaries and benefits 615, ,819 (29,842) Staff travel and per diem 15,000 11,973 3,027 Supplies and material 80,647 86,527 (5,880) Donations 7,000 9,542 (2,542) Vehicle expense 19,500 24,192 (4,692) Facilities 13,000 5,417 7,583 Equipment 21,000 42,183 (21,183) Insurance 18,000 9,533 8,467 Contractual 54,000 77,111 (23,111) Professional fees 80, ,503 (34,953) Anaktaqtitchirit payments 65,641 65,641 - Postage 8,000 10,615 (2,615) Utilities 16,750 16, Phone and fax 21,000 24,357 (3,357) Other 14,379 11,782 2,597 Indirect cost allocation (690,545) (742,369) 51,824 Total expenditures 359, ,145 (54,246) Excess (deficiency) of revenues over (under) expenditures 36,342 (161,763) (89,613) Other financing sources - transfers in - 156, ,422 Net change in fund deficit $ 36,342 (5,341) 66,809 Fund balance (deficit), beginning of year (175,774) Fund balance (deficit), end of year $ (181,115) 23