Village of Volo, Illinois

Transcription

1 Village of Volo, Illinois Annual Financial Report For the Year Ended April 30, 2014 Wolf & Company LLP Certified Public Accountants

2 Table of Contents INDEPENDENT AUDITOR'S REPORT 1-2 PAGE MANAGEMENT S DISCUSSION AND ANALYSIS 3-12 BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements Statement of Net Position 13 Statement of Activities 14 Fund Financial Statements Balance Sheet - Governmental Funds 15 Reconciliation of Balance Sheet of Governmental Funds to Statement of Net Position 16 Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds 17 Reconciliation of Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to Statement of Activities 18 Statement of Net Position - Proprietary Fund - Water Fund 19 Statement of Revenues, Expenses and Changes in Net Position - Proprietary Fund - Water Fund 20 Statement of Cash Flows - Proprietary Fund - Water Fund 21 Statement of Fiduciary Net Position - Agency Fund - Special Service Areas 22 Notes to the Financial Statements REOUIRED SUPPLEMENTARY INFORMATION Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Fund 38 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Impact Fee Fund 39 Notes to Required Supplementary Information 40

3 Table of Contents PAGE COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES GOVERNMENTAL FUND TYPES GENERAL FUND Schedule of Revenues - Budget and Actual 41 Schedule of Expenditures - Budget and Actual NON-MAJOR GOVERNMENTAL FUNDS Combining Balance Sheet 44 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 45 Schedules of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Motor Fuel Tax Fund 46 SSA #14 Fund 47 PROPRIETARY FUND TYPE ENTERPRISE FUND WATER FUND Schedule of Operating Revenues and Expenses - Budget and Actual 48 FIDUCIARY FUND TYPE AGENCY FUND SPECIAL SERVICE AREAS Schedule of Changes in Assets and Liabilities 49 SUPPLEMENTAL INFORMATION Comparative Tax Data 50

4 INDEPENDENT AUDITOR S REPORT

5 W olf & C om pany LLP Certified Public Accountantd Company Oakbrook Terrace» Chicago INDEPENDENT AUDITORS REPORT To the Board of Trustees Village of Yolo, Illinois We have audited the accompanying financial statements of the governmental activities, business-type activities, and each major fund for the Village of Volo, Illinois, as of and for the year ended April 30, 2014, and the related notes to the financial statements, which collectively comprise the Village of Volo 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. 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. Basis for Qualified Opinion As discussed in Note 3 to the financial statements, management has not recorded certain general infrastructure assets in governmental activities and, accordingly, has not recorded depreciation expense on those assets. Accounting principles generally accepted in the United States of America require that those general infrastructure assets be capitalized and depreciated, which would increase the assets, net position, and expenses of the governmental activities. The amount by which this departure would affect the assets, net position, and expenses of the governmental activities had not been determined. A PKF International Member Firm 1901 S. Meyers Road, Suite Oakbrook Terrace, Illinois main fax 4 w ww.wolfcpa.com..com

6 Qualified Opinion In our opinion, except for the effects of the matters discussed in the Basis fo r Qualified Opinion paragraph, the financial statements referred to in the first paragraph present fairly, in all material respects, the financial position of, the governmental activities, the business-type activities and each major fund of the Village of Volo, Illinois, as of April 30, 2014, and the respective changes in financial position and cash flows, where applicable, 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, on pages 3-12, and Schedules of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual for the General Fund and the Impact Fee fund on pages 38-39, 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 response 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. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Village of Volo, Illinois basic financial statements. The combining and individual fund financial statements and schedules and supplemental information are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual fund financial statements and schedules are the responsibility of management and were derived from and relate 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 individual fund financial schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The Supplemental Information on page 50 has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on it. Oakbrook Terrace, Illinois October 24,

7 MANAGEMENT S DISCUSSION AND ANALYSIS

8 MANAGEMENT S DISCUSSION AND ANALYSIS April 30,2014 f The Village of Volo s (the Village ) Management's Discussion and Analysis ( MD&A ) is designed to (1) assist the reader in focusing on significant financial issues, (2) provide an overview of the Village s financial activity, (3) identify changes in the Village s financial position (its ability to address the next and subsequent year challenges), (4) identify any material deviations from the financial plan (the approved budget), and (5) identify individual fund issues or concerns. Since the MD&A is designed to focus on the current year s activities, resulting changes and currently known facts, please read it in conjunction with the Village s financial statements. Financial Highlights The assets of the Village exceeded its liabilities at the close of the year ended April 30, 2014 by $12,261,432 (net position). Of this amount, $3,575,438 (unrestricted net position) may be used to meet the Village s ongoing obligations to citizens and creditors. The Village s total net position increased by $1,261,871. This includes the systematic and planned consumption of the Village s capital assets that is quantified as depreciation expense. Total depreciation expense for the year was $400,010. As of the close of the current fiscal year, the Village s governmental funds reported combined fund balances of $5,236,585. Of this amount, $3,871,880 is available for spending at the Village s discretion (unassigned fund balance). At the end of the current fiscal year, the fund balance of the General Corporate Fund was $5,251,913 or 254% of total General Fund expenditures during the current year. The Village s total debt increased by $853,950 during the current fiscal year. A loan with the IEPA was finalized to fund a watermain extension project. The existing debt of $4,192,071 was paid down by $361,055. USING THE FINANCIAL SECTION OF THE COMPREHENSIVE ANNUAL REPORT The financial statements focus is on both the Village as a whole (government-wide) and on the major individual funds. Both perspectives (government-wide and major fund) allow the user to address relevant questions, broaden the basis for comparison (year-to-year or govemment-to-govemment) and enhance the Village s accountability. 3

9 MANAGEMENT S DISCUSSION AND ANALYSIS (CONT.) Government-Wide Financial Statements The government-wide financial statements (see pages 13 and 14) are designed to emulate the corporate sector in that all governmental and business-type activities are consolidated into columns which add to a total for the Primary Government. The focus of the Statement of Net Position (see page 13) is designed to be similar to bottom line results for the Village and its governmental and business-type activities. This statement combines and consolidates the governmental funds current financial resources (short-term spendable resources) with capital assets and long-term obligations using the accrual basis of accounting and economic resources measurement focus. The Statement of Activities (see page 14) is focused on both the gross and net cost of various activities (including governmental and business-type), which are supported by the government s general taxes and other resources. This is intended to summarize and simplify the user s analysis of the cost of various governmental services and/or subsidy to various business-type activities. The Governmental Activities reflect the Village s basic services, including public safety and administration. Property taxes, shared state sales and income taxes, and local utility and franchise taxes finance the majority of these services. The Business-type Activities reflect private sector type operations (Water Supply), where the fee for service typically covers all or most of the cost of operation, including depreciation. Fund Financial Statements Traditional users of governmental financial statements will find the Fund Financial Statements presentation familiar. The focus is on Major Funds, rather than fund types. The Governmental Funds (see pages 15 to 18) presentation is presented on a sources and uses of liquid resources basis. This is the manner in which the financial plan (the Budget) is typically developed. The flow and availability of liquid resources is a clear and appropriate focus of any analysis of a government. Funds are established for various purposes and the Fund Financial Statements allow the demonstration of sources and uses and/or budgeting compliance associated therewith. The Village reports two governmental funds, the General and Impact Fee Funds. While the totals of the Proprietary Fund Financial Statements (see pages 19 to 21) is the same as the Business-type column on the Government-Wide Financial Statement, the Governmental Funds Total column requires a reconciliation because of the different measurement focus (current financial resources versus total economic resources) which is reflected on the page following each statement (see pages 16 and 18). The flow of current financial resources will reflect loan proceeds and interfund transfers as other financing sources as well as capital expenditures and loan principal payments as expenditures. The reconciliation will eliminate these transactions and incorporate the capital assets and long-term obligation (bonds and others) into the Governmental Activities column (in the Government-wide statements). 4

10 MANAGEMENT S DISCUSSION AND ANALYSIS (CONT.) FINANCIAL ANALYSIS OF THE VILLAGE AS A WHOLE The following table reflects the condensed Statement of Net Position: Table 1: Statement of Net Position April 30, 2014 and 2013 (in thousands) Governmental Business-type Activities Activities Totals Assets Current and Other Assets $ 6,741.9 $ 5, , , , ,019.0 Capital Assets 6, , , , , ,045.2 Total Assets 12, , , , , ,064.2 Liabilities and Deferred Inflows Long-Term Liabilities 3, , , , , ,945.8 Current Liabilities , , ,029.8 Deferred Inflows 1, , Total Liabilities and Deferred Inflows 5, , , , , ,870.9 Net Assets Net Investment in Capital Assets 4, , , , , ,091.3 Restricted for Maintenance of Roadways Unrestricted 2, , (104.2) 3, ,871.3 Total Net Position $ 7, , , , , ,193.4 For more detailed information, see the Statement of Net Position (page 13), The largest portion of the Village s net position (68%) reflects an investment in capital assets (e.g., land, buildings, equipment, improvements and construction in progress), less any debt used to acquire those assets. The Village uses these capital assets to provide service to citizens; consequently, these assets are not available for spending. Although the Village s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. The second largest portion (29%) is unrestricted position. The remaining assets (3%) are restricted for maintenance of capital projects. 5

11 MANAGEMENT S DISCUSSION AND ANALYSIS (CONT.) Normal Impacts There are six basic (normal) transactions that will affect the comparability of the Statement of Net Position summary presentation. Net Results of Activities - which will impact (increase/decrease) current assets, liabilities and unrestricted net position. Borrowing for Capital Assets - which will increase current assets and long-term debt. Spending Borrowed Proceeds on New Capital Assets - which will reduce current assets and increase capital assets. There is a second impact, an increase in net investment in capital assets and an increase in related net debt, which will not change the net investment in capital assets. Spending of Non-borrowed Current Assets on New Capital Assets - which will (a) reduce current assets and increase capital assets and (b) will reduce unrestricted net assets and increase the net investment in capital assets. Principal Payment on Debt - which will (a) reduce current assets and reduce long-term debt and (b) reduce unrestricted net assets and increase the net investment in capital assets. Reduction of Capital Assets Through Depreciation - which will reduce capital assets and the net investment in capital assets. Current Year Impacts The Village s $1,261,871 increase in combined net position (which is the Village s bottom line) was the result of the governmental activities net position increasing by $1,423,359 and the business-type activities net position decreasing by $161,488. The General Fund balance increased by $664,842, contributing much of the change in governmental net position. The balance restricted for MFT projects increased by $92,441, reflecting the revenue that came in for MFT that exceed projects funded during the fiscal year. The net position of the Village is generally not restricted. The balance of governmental unrestricted net position, $3,871,880, may be used to meet the Village s ongoing obligations to citizens and creditors. 6

12 MANAGEMENT S DISCUSSION AND ANALYSIS (CONT.) Changes in Net Position The following chart shows the revenue and expenses of the governmental and business-type activities. Prior year results presented have not been adjusted for the effects of the restatements described in Note 9. Revenues Program Revenues Table 2: Statement of Changes in Net Position Fiscal Years Ended April 30, 2014 and 2013 (in thousands) Governmental Business-type Activities Activities Totals Charges for Services $ $ , , ,737.6 Capital Grants and Contributions General Revenues Property Taxes Utility Taxes Other Taxes Income Taxes Sales Taxes 1, , , ,155.4 Use Taxes Investment Income , , , , ,694.1 Expenses General Government Public Safety Public Services , ,030.9 Interest on D ebt Water & Sewer 1, , , , , , , , , ,885.4 Change in Net Position 1, ,180.5 (161.4) (371.8) 1, Net Position, Beginning 5, , , , , ,384.7 Net Position, Ending $ 7, , , , , ,193.4 Increase/Decrease in Village Approved Rates - While certain tax rates are set by statute, the Village Board has significant authority to impose and periodically increase/decrease rates (water, impact fees, building fees, etc.) 7

13 MANAGEMENT S DISCUSSION AND ANALYSIS (CONT.) There are eight basic impacts on revenues and expenses as reflected below. Revenues: Normal Impacts Economic Condition - which can reflect a declining, stable or growing economic environment and has a substantial impact on state income, sales and. utility tax revenue as well as public spending habits for building permits, elective user fees and volumes of consumption. Increase/Decrease in Village Board Approved Rates - while certain tax rates are set by statute, the Village Board has significant authority to impose and periodically increase/decrease rates (water, impact fee, building fees, etc.) Changing Patterns in Intergovernmental and Grant Revenue (both recurring and non-recurring) such as, certain recurring revenues (state-shared revenue, etc.) may experience significant changes periodically while non-recurring (or one-time) grants are less predictable and often distorting in their impact on year-to-year comparisons. Market Impacts on Investment Income - Market conditions may cause investment income to fluctuate. Expenses: Introduction of New Programs - Within the functional expense categories (Public Safety, Public Works, General Government, etc.), individual programs may be added or deleted to meet changing community needs. Increase in Authorized Personnel - Changes in service demand may cause the Village to increase/decrease authorized staffing. Staffing costs (salary and related benefits) represent the most significant of the Village s operating costs. Salary Increases (annual adjustments/merit) - The ability to attract and retain (employees) resources requires the Village to strive to approach a competitive salary structure in the marketplace. Inflation - While overall inflation appears to be reasonably modest, the Village is a major consumer of certain commodities such as supplies, fuels and repair parts. Some functions may experience commodity specific increases. 8

14 MANAGEMENT S DISCUSSION AND ANALYSIS (CONT.) [ Governmental Activities Revenue: Current Year Impacts For the fiscal year ended April 30, 2014, revenues from the governmental activities totaled $3,543,331. State sales and use tax revenues are the Village s largest revenue source, coming in at $1,221,431 with property taxes of $874,458 and utility tax receipts of $274,000. State income and motor fuel taxes are $285,420 and $86,347, respectively. Expenses: For the fiscal year ended April 30, 2014, expenses for governmental activities totaled $2,119,972. Business-type Activities Revenues: For the fiscal year ended April 30, 2014, revenues from the business-type activities totaled $970,148, including water charges of $578,102 and refuse and hauling charges of $318,328. The major revenue source is Charges for Services to operate the Water Fund. Expenses: For the fiscal year ended April 30, 2014, expenses for business-type activities totaled $1,131,636, including depreciation and amortization of $261,086. Expenses in this activity exceeded revenues by $161,488. The Water Fund follows the same strict spending guidelines imposed on the Governmental Funds. 9

15 MANAGEMENT S DISCUSSION AND ANALYSIS (CONT.) Governmental Funds FINANCIAL ANALYSIS OF THE VILLAGE S FUNDS At April 30, 2014, the governmental funds (as presented on the balance sheet on page 15) reported a combined fund balance of $5,236,585, an increase of $1,039,761 from the restated beginning balances. General Fund Budgetary Highlights The 2014 fiscal year budget, as originally approved by the Village Board, was not amended during the current year. Below is a table that reflects the original and actual revenues and expenditures for the General Fund. Table 3: General Fund Budgetary Highlights (in thousands) Original/Final Budget Actual Revenues Taxes $ 1, Intergovernmental 1, ,506.9 Fees, Licenses and Permits Other Total 3, ,971.6 Expenditures General Government 1, ,023.0 Public Safety Public Services Total 3, ,070.9 Net Change in Fund Balance $ The General Fund s actual revenues were under budget by $394,335 and actual expenditures were $1,255,185 less than the budgeted amount. Intergovernmental revenues received were under budget by $61,677; taxes were under by $99,612. The primary favorable expenditure budget variances were in Capital Outlay of $820,011 and Debt Service of $175,780 related to lower legal and engineering services rendered and lower costs and delays in roadway construction projects. 10

16 MANAGEMENT S DISCUSSION AND ANALYSIS (CONT.) Capital Assets At the end of Fiscal Year 2014, the Village had a combined total of capital assets of $ million, net of accumulated depreciation invested in a broad range of capital assets including land, buildings, vehicles, watermains, and storm sewers. (See Table 4 below.) Table 4: Schedule of Capital Assets April 30,2014 (in thousands) Governmental Business-type Activities Activities Total Land Buildings and Improvements Equipment Vehicles Infrastructure Less Accumulated Depreciation $ (592.8) 1, ,940.9 (3,312.7) , ,817.3 (3,905.5) $ 6, , ,285.7 Table 5: Change in Capital Assets (in thousands) Governmental Activities Business-type Activities Total Beginning Balance, net $ 5, , ,196.3 Additions Non-depreciable Assets Depreciable Assets Depreciation Expense (138.9) (261.1) (400.0) Ending Balance $ 6, , ,285.7 See Note 3 for additional information of the Village s capital assets. 11

17 MANAGEMENT S DISCUSSION AND ANALYSIS (CONT.) Debt Outstanding The Village has outstanding debt for governmental activities totaling $3,883,165 as of April 30, The debt is to be used for public roadway and water projects. The Village also has entered into a borrowing agreement with the Illinois Environmental Protection Agency for water improvements. The final amount outstanding, including capitalized interest of $41,369, as of April 30, 2014 is $2,242,278. Additional information on the Village's long-term debt can be found in the Note 4 to the basic financial statements. Economic Factors The equalized assessed valuation (EAV) for the Village for the 2013 levy is $105,106,008. That represents a decrease in EAV of $4,171,951 (-3.8%) from the prior year's EAV. The levy rate approved by the citizens of the Village is.689%. CONTACTING THE VILLAGE S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, investors and creditors with a general overview of the Village s finances and to demonstrate the Village s accountability for the money it receives. Questions concerning this report or requests for additional financial information should be directed to Village of Volo Board of Trustees, 500 S. Fish Lake Road, Volo, IL

18 BASIC FINANCIAL STATEMENTS

19 Statement of Net Position April 30, 2014 ASSETS Governmental Activities Business-Type Activities Total Current Assets Cash and Investments - Unrestricted $ 4,899, ,237 5,868,563 Cash and Investments - Restricted for Developer Agreement 522, ,053 Deposit 15,000 15,000 Receivables Property Taxes 835, ,854 Other Taxes 443, ,787 Accounts 76,121 76,121 Other Receivables 17,937 17,937 Internal Balances 195 (195) Prepaid Expenses 7,758 1,708 9,466 Total Current Assets 6,741,910 1,046,871 7,788,781 Capital Assets Land and Construction in Progress 616, ,202 Other Capital Assets, Net of Depreciation 5,387,791 6,281,723 11,669,514 Total Capital Assets 6,003,993 6,281,723 12,285,716 Total Assets 12,745,903 7,328,594 20,074,497 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND NET POSITION Current Liabilities Accounts Payable and Accrued Expenses 34, , ,773 Economic Incentive Payable 111, ,049 Escrow Funds 297, ,459 Accrued Interest 17,016 17,016 Deferred Revenue 2,255 5,449 7,704 Current Portion of Long-Term Debt Note Payable - Chase 201, ,098 Note Payable - SSA #14 105, ,000 IEPA Loan 47,626 47,626 Compensated Absences 2,706 2,706 Developer Agreement 25,000 25,000 Total Current Liabilities 796, ,907 1,009,431 Noncurrent Liabilities Note Payable - Chase 1,479,541 1,479,541 Note Payable - SSA #14 1,710,000 1,710,000 IEPA Loan 2,194,652 2,194,652 Compensated Absences 8,118 8,118 Developer Agreement 351, ,702 Total Noncurrent Liabilities 3,549,361 2,194,652 5,744,013 Total Liabilities 4,345,885 2,407,559 6,753,444 Deferred Inflows of Resources Unearned Property Taxes 835, ,854 Unearned Other Taxes 223, ,767 Total Deferred Inflows of Resources 1,059,621 1,059,621 Net Position Net Investment in Capital Assets 4,323,354 4,039,445 8,362,799 Restricted for Maintenance of Roadways 323, ,195 Unrestricted 2,693, ,590.3,575,438 Total Net Position $ 7,340,397 4,921,035 12,261,432 See Independent Auditor's Report and accompanying Notes to the Financial Statements. 13

20 Statement of Activities For the Year Ended April 30, 2014 F unctions/programs Expenses Program Revenues Capital Charges for Grants and Services Contributions Net (Expense) Revenue and Changes in Net Position Primary Government Governmental Business-Type Activities Activities Total Governmental Activities General Government Public Safety $ 832, , ,121 (353,259) (195,679) (353,259) (195,679) Public Services Interest on Long-Term Debt 574, , ,146 (574,777) (149,990) (574,777) (149,990) Total Governmental Activities 2,119, , ,146 (1,273,705) (1,273,705) Business-Type Activities Water 1,131, ,779 (163,857) (163,857) Total $3,251,608 1,446, ,146 (1,273,705) (163,857) (1,437,562) General Revenues Taxes Property Utility Road & Bridge Hotel & Motel Intergovernmental Income Sales Use Unrestricted Investment Earnings 874, ,000 25,726 1, ,420 1,170,142 51, , ,000 25,726 1, ,420 1,170,142 51,289 14,552 2,369 16,921 Total General Revenues 2,697,064 2,369 2,699,433 Change in Net Position 1,423,359 (161,488) 1,261,871 Net Assets May 1 (As Restated) 5,917,038 5,082,523 10,999,561 April 30 7,340,397 4,921,035 12,261,432 See Independent Auditor's Report and accompanying Notes to the Financial Statements. 14

21 Governmental Funds Balance Sheet April 30, 2014 ASSETS Nonmajor Total General Impact Fee Governmental Governmental Fund Fund Funds Funds Cash and Investments - Unrestricted $ 4,147, , ,888 4,899,326 Cash and Investments - Restricted for Developers 522, ,053 Deposit 15,000 15,000 Receivables Property Taxes 718, , ,854 Sales and Use Taxes 254, ,884 Income Taxes 132, ,887 Motor Fuel Taxes 5,400 5,400 Telecommunication Taxes 50,616 50,616 Other Receivables 10,919 7,018 17,937 Due from Other Funds Prepaid Items 7,758 7,758 Advance to Other Fund 794, ,912 Total Assets $ 6,640, , ,411 7,536,822 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities Accounts Payable S 18,933 18,933 Accrued Expenses 16,008 16,008 Deferred Revenue 2,255 2,255 Advance from Other Funds 794, ,912 Economic Incentive Payable 111, ,049 Escrow Funds 297, ,459 Total Liabilities 445, ,912 1,240,616 Deferred Inflows of Resources Unavailable Property Taxes 718, , ,854 Unavailable Other Taxes 223, ,767 Total Deferred Inflows of Resources 942, ,105 1,059,621 Fund Balances Non-spendable Advance to Other Fund 794, ,912 Restricted for Developer Agreements 216, ,487 Maintenance of Roadways 323, ,195 Debt Service 15,111 15,111 Committed for Land Purchase 15,000 15,000 Unassigned 4,240,514 (368,634) 3,871,880 Total Fund Balances 5,251,913 (353,634) 338,306 5,236,585 Total Liabilities, Deferred Inflows of Resources and Fund Balances $ 6,640, , ,411 7,536,822 See Independent Auditor's Report and accompanying Notes to the Financial Statements. 15

22 Reconciliation of Balance Sheet of Governmental Funds to Statement of Net Position April 30, 2014 Total Fund Balances - Governmental Funds $.5,236,585 Amounts reported for governmental activities in the Statement of Net Position are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the governmental funds. 6,003,993 Some liabilities reported in the Statement of Net Position do not require the use of current financial resources and, therefore, are not reported as liabilities in governmental funds. These activities consist of: Accrued Interest Compensated Absences Notes Payable Developer Agreement (17,016) (10,824) (3,495,639) (376,702) Net Position of Governmental Activities $ 7,340,397 See Independent A uditor's R eport and accom panying N otes to the Financial Statements.

23 Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds Year Ended April 30, 2014 Nonmajor Total General Impact Fee Governmental Governmental Fund Fund Funds Funds Revenues Taxes $ 978, ,659 1,175,661 Impact Fees 280, ,799 Intergovernmental 1,506,851 86,347 1,593,198 Fines, Fees, Licenses and Permits 299, ,516 Investment Income 12,161 1,325 1,066 14,552 Miscellaneous 175,015 4, ,605 Total Revenues 2,971, , ,662 3,543,331 Expenditures Current General Government 714,142 29,281 6, ,620 Public Safety 562, ,825 Public Services 485, ,068 Total Current Expenditures 1,762,035 29,281 6,197 ' 1,797,513 Debt Service Principal 193,930 95, ,930 Interest 64,930 85, ,880 Total Debt Service 258, , ,810 Capital Outlay 50, , ,247 Total Expenditures 2,070, , ,147 2,503,570 Excess of Revenues over Expenditures 900,633 36, ,515 1,039,761 Other Financing Sources (Uses) Transfer In 235, ,791 Transfers Out (235,791) (235,791) Total Other Financing Sources (Uses) (235,791) 235,791 Net Change in Fund Balance 664,842 36, ,306 1,039,761 Fund Balances May 1 (As Restated) 4,587,071 (390,247) 4,196,824 April 30 $ 5,251,913 (353,634) 338,306 5,236,585 See Independent A uditor's R eport and accom panying N otes to the Financial Statements.

24 Reconciliation of Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to Statement of Activities For the Year Ended April 30, 2014 Net Change in Fund Balances - Total Governmental Funds $ 1,039,761 Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds report capital outlays as expenditures; however, they are capitalized in the Statement of Net Position. 212,726 Depreciation is not considered an expenditure in the governmental funds. (138,924) The change in compensated absences does not require the use of current resources, thus is not reported in the fund statements. 37,191 Repayment of principal on long-term debt is an expenditure in governmental funds, but reduces long-term liabilities in the Statement ofnet Position. 313,930 Increase in Recapture Agreement Payable does not provide current resources, thus is not reported in governmental funds. (41,325) Change in Net Position of Governmental Activities $ 1,423,359 See Independent A uditor's R eport and accom panying N otes to the Financial Statements.

25 Proprietary Fund - Water Fund Statement of Net Position April 30, 2014 Assets Current Assets Cash and Cash Equivalents $ 969,237 Accounts Receivable 76,121 Prepaid Expenses 1,708 Total Current Assets 1,047,066 Noncurrent Assets Capital Assets at Cost 9,594,449 Less Accumulated Depreciation (3,312,726) Total Noncurrent Assets 6,281,723 Total Assets 7,328,789 Liabilities Current Liabilities Accounts Payable 159,832 Deferred Revenue 5,449 Due to Other Funds 195 1EPA Loan - Current Portion 47,626 Total Current Liabilities 213,102 Noncurrent Liabilities IEPA Loan 2,194,652 Total Liabilities 2,407,754 Net Position Net Investment in Capital Assets 4,039,445 Unrestricted 881,590 Total Net Position S 4,921,035 See Independent A uditor's R eport and accom panying N otes to the Financial Statements. 19

26 Proprietary Fund - Water Fund Statement of Revenues, Expenses and Changes in Net Position Year Ended April 30, 2014 Operating Revenues Charges for Services $ 967,779 Operating Expenses Operations 870,550 Depreciation 261,086 Total Operating Expenses 1,131,636 Operating Loss (163,857) Nonoperating Revenues Investment Income 2,369 Change in Net Position (161,488) Net Position Beginning of Year (As Restated) 5,082,523 End of Year $ 4,921,035 See Independent A uditor's R eport and accom panying N otes to the Financial Statements. 20

27 Proprietary Fund - Water Fund Statement of Cash Flows Year Ended April 30, 2014 Cash Flows from Operating Activities Receipts from Customers Payments to Suppliers Payments to Employees Cash Flows from Investing Activities Earnings on Investments Cash Flows from Capital and Related Financing Activities Proceeds from IEPA Loan for Capital Purposes Interfund Repayment for Capital Purposes Acquisition of Capital Assets Net Increase in Cash and Cash Equivalents Cash and Cash Equivalents May 1 April 30 Reconciliation of Operating Loss to Net Cash Provided by Operating Activities Operating Loss Adjustments to Reconcile Operating Loss to Net Cash Provided by Operating Activities Depreciation Changes in Assets and Liabilities Decrease in Accounts Receivable Increase in Current Liabilities Net Cash Provided by Operating Activities $ 1,021,285 (689,411) (68,612) 263,262 2,369 2,242,278 (320,000) (1,718,739) 203, , ,067 $ 969,237 $ (163,857) 261,086 48, ,976 $ 263,262 See Independent A uditor's R eport and accom panying N otes to the Financial Statements. 21

28 Fiduciary Fund Statement of Fiduciary Net Position April 30, 2014 Agency Special Service Areas Assets Cash Liabilities Due to Bondholders $ 3,879,177 $ 3,879,177 See accom panying N otes to the Financial Statements.

29 Notes to the Financial Statements April 30, Summary of Significant Accounting Policies The Village of Volo (the Village) was organized and incorporated under the provisions of the Illinois Municipal Code on August 18, The Village operates under the direction of a Board of Trustees and provides public safety and services to its residents. The accounting and reporting policies of the Village included in the accompanying financial statements conform to accounting principles generally accepted in the United States of America (GAAP) as applicable to state and local governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. A summary of the significant accounting policies consistently applied in the preparation of the accompanying financial statements is described below. A. Reporting Entity The reporting entity includes the governing board and all related organizations for which the Village is financially accountable. The Village has developed criteria to determine whether outside agencies should be included within its financial reporting entity. The criteria includes, but is not limited to, whether the Village appoints a majority of the organization s Governing Board and is able to control the operation, and whether financial benefits are received, or financial burdens imposed. The Village has determined that no other outside agency meets the above criteria; therefore, no other agency has been included as a component unit in the Village s financial statements. B. Basis of Presentation The Village's basic financial statements consist of government-wide statements, including a statement of net position and a statement of activities, and fund financial statements, which provide a more detailed level of financial information. The government-wide focus is more on the sustainability of the Village as an entity and the change in aggregate financial position resulting from activities of the fiscal period. Government-wide Financial Statements The statement of net position and the statement of activities display information about the Village as a whole. In the government-wide statement of net position, both the governmental and business-type activities columns are presented on a consolidated basis by column. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The government-wide statement of activities reflects both the direct expenses and net cost of each function of the Village's governmental activities and business-type activities. Direct expenses are those that are clearly identifiable with a specific function. Program revenues include charges paid by the recipient for the goods or services offered by the program, grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues, which are not classified as program revenues, are presented as general revenues of the Village, with certain limited exceptions. The comparison of direct expenses with. program revenues identifies the extent to which each government function or business segment is self-financing or draws from the general revenues of the Village. 23

30 Notes to the Financial Statements April 30, Summary of Significant Accounting Policies B. Basis of Presentation (Cont.) Fund Financial Statements The financial transactions of the Village are recorded in individual funds. A fund is defined as a fiscal and accounting entity with a self-balancing set of accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses, as appropriate. 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 maintained is consistent with legal and managerial requirements. Separate statements for each fund category - governmental and proprietary - are presented. The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate column. Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Nonoperating revenues, such as subsidies and investment earnings, result from nonexchange transactions or ancillary activities. C. Measurement Focus and Basis of Accounting Government-wide Financial Statements The government-wide financial statements and fund financial statements for proprietary funds are reported using the economic resources measurement focus and the accrual basis of accounting. The economic resources measurement focus means all assets and liabilities (whether current or non-current) are included on the statements of net position, and the operating statements present increases (revenues) and decreases (expenses) in total net position. Under the accrual basis of accounting, revenues are recognized when earned, if measurable, and expenses are recognized as incurred, regardless of the timing of related cash flows. The Village has reported two categories of program revenues in the statement of activities: charges for services and program-specific capital grants and contributions. Program revenues are derived directly from the program itself or from external sources, such as the State of Illinois; they reduce the net cost of each function to be financed from the Village's general revenues. For identifying the function to which program revenue pertains, the determining factor for charges for services is which function generates the revenue. For grants and contributions, the determining factor is the function to which the revenues are restricted. Eliminations have been made in the statement of net position to remove the "grossing-up" effect on assets and liabilities within the governmental activities column for amounts reported in the individual funds as interfund receivables and payables and advances. 24

31 Notes to the Financial Statements April 30, Summary of Significant Accounting Policies (Cont.) C. Measurement Focus and Basis of Accounting (Cont.) Fund Financial Statements Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenue resulting from exchange transactions in which each party gives and receives essentially equal value is recorded on the accrual basis when the exchange takes place. On a modified accrual basis, revenue is recorded in the fiscal year in which the resources are measurable and become available. Taxpayer-assessed taxes, gross receipts and sales taxes are considered "measurable" when in the hands of intermediary collecting governments and are recognized as revenue at that time. The Village considers all revenues available if they are collected within 60 days after year end. Anticipated refunds of such taxes are recorded as liabilities and reductions of revenue when they are measurable and their validity seems certain. All other revenue items are considered measurable and available only when cash is received by the Village. Expenditures are recorded on an accrual basis except for expenditures for insurance and similar services extending over more than one accounting period, which are accounted for as expenditures in the period of acquisition, and inventory items, such as materials and supplies, which are considered expenditures in the period purchased, but any significant amounts of inventory are reported on the balance sheet. Nonexchange transactions, in which the Village receives value without directly giving equal in return, include income, sales and property taxes, grants, entitlements and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants, entitlements and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Eligibility requirements include timing requirements, which specify the year when the resources are required to be used or the fiscal year when use is first permitted, matching requirements in which the Village must provide local resources to be used for a specified purpose, and expenditure requirements in which the resources are provided to the Village on a reimbursement basis. On a modified accrual basis, revenue from nonexchange transactions must also be available before it can be recognized. Proprietary funds are accounted for on a flow of economic resources measurement focus and are accounted for using the accrual basis of accounting. Their revenues are recognized when they are earned, and their expenses are recognized when they are incurred. Proprietary funds separate all activity into two categories: operating and non-operating revenues and expenses. Operating revenues and expenses result from providing services and producing and delivering goods. Non-operating revenues and expenses entail all other activity not included in operating revenues and expenses. Non-operating revenues and expenses include capital and noncapital financing activities and investing activities. Differences occur from the manner in which the governmental activities and the government-wide financial statements are prepared due to the inclusion of capital asset and long-term debt activity. Governmental fund financial statements, therefore, include reconciliations with brief explanations to better identify the relationship between the government-wide statements and the statements for governmental funds. 25

32 Notes to the Financial Statements April 30, Summary of Significant Accounting Policies (Cont.) C. Measurement Focus and Basis of Accounting (Cont.) Fund Financial Statements (Cont.) Governmental Funds Governmental funds are those through which most governmental functions typically are financed. Governmental fund reporting focuses on the sources, uses and balances of current financial resources. Expendable assets are assigned to the various governmental funds according to the purposes for which they may or must be used. Current liabilities are assigned to the fund from which they will be paid. The difference between governmental fund assets and liabilities is reported as fund balance. The following is the Village's major governmental funds: General Corporate Fund - The Corporate Fund is the general operating fund of the Village. It is used to account for the revenues and expenditures used in providing services in the Village except those required to be accounted for in other funds. Impact Fee Fund - The Impact Fee Fund is used to account for the proceeds of impact fee revenue sources that are legally restricted to expenditures for specific purposes. Proprietary Fund Proprietary funds are used to account for the ongoing operations and activities, which are similar to those often found in the private sector. The measurement focus is upon determination of net income, and to the extent that charges for services are sufficient to pay operating costs. The Village's proprietary fund is classified as an enterprise fund, and is used to account for operations (a) that are financed and operated in a manner similar to private business enterprises - where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or (b) where the Village Board has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability or other purposes. The Village reports the following major proprietary fund: W ater Fund - Enterprise Funds are required to be used to account for operations for which a fee is charged to external users for goods and services. The Village reports Water Supply and Refuse Collection services to residents within this fund. The activities reported in these funds are reported as business-type activities in the government-wide financial statements. Fiduciary Fund Fiduciary fund is used to account for assets held on behalf of outside parties, including other governments. The Village utilizes an agency fund which is generally used to account for assets that the Village directs in a fiduciary capacity on behalf of others as their agent. The Village reports the following fiduciary fund: The Agency Fund (Special Service Areas) accounts for the activity in the Village s various special service areas and does not involve the measurement of operating results. 26