FINANCIAL STATEMENTS HALIWA-SAPONI INDIAN TRIBE HOLLISTER, NORTH CAROLINA JUNE 30, 2016

Transcription

1 FINANCIAL STATEMENTS HALIWA-SAPONI INDIAN TRIBE HOLLISTER, NORTH CAROLINA JUNE 30, 2016

2 TRIBAL COUNCIL Dr. B. Ogletree Richardson Chief Archable Lynch Tribal Administrator (Ex Officio) Alfred Richardson Vice-Chair Rev. John Lee Treasurer Ladonna D. Richardson Council Reginald Lynch, Sr. Council Jeffery Anstead Vice-Chief Rev. Michael Richardson Chair Ella Viverette Secretary Earl Evans Council Ladonna E. Richardson Council Roena Daniel Council 2

3 HALIWA-SAPONI INDIAN TRIBE TABLE OF CONTENTS JUNE 30, 2016 EXHIBIT PAGE FINANCIAL SECTION Independent Auditors' Report Management's Discussion and Analysis 5 7 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position Statement of Activities Fund Financial Statements: Balance Sheet - Governmental Funds Reconciliation of the Balance Sheet - Governmental Funds to the Statement of Net Position Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds to the Statement of Activities Statement of Net Position - Proprietary Fund Statement of Revenues, Expenses, and Changes in Fund Net Position - Proprietary Fund Statement of Cash Flows - Proprietary Fund Notes to the Basic Financial Statements Individual Fund Financial Statements and Schedules: COMPLIANCE SECTION Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual, Government-Wide Budget Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual (Non-GAAP) Independent Auditors' 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 Independent Auditors' Report on Compliance for Each Major Federal Program and on Internal Control over Compliance Required By Uniform Guidance Schedule of Findings and Questioned Costs Corrective Action Plan Summary Schedule of Prior Years' Audit Findings Schedule of Expenditures of Federal and State Awards STATEMENT PAGE

4 FINANCIAL SECTION 4

5 PM&P PETWAY MILLS & PEARSON, PA CERTIFIED PUBLIC ACCOUNTANTS C. Briggs Petway, Jr. Phyllis M. Pearson Zebulon Office P.O. Box N. Arendell Ave. Zebulon, NC Fax Raleigh Office 9121 Anson Way Raleigh, NC Memberships: North Carolina Association of Certified Public Accountants American Institute Of Certified Public Accountants Medical Group Management Association Tribal Council Haliwa-Saponi Indian Tribe Hollister, North Carolina Report on the Financial Statements INDEPENDENT AUDITOR S REPORT We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component unit and each major fund of the Haliwa-Saponi Indian Tribe, as of and for the year ended June 30, 2016 and the related notes to the financial statements, which collectively comprise Haliwa-Saponi Indian Tribe 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 an opinion 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 opinion. Opinion In our opinion, based upon our audit, the financial statements referred to above present fairly, in all material respects, the financial position of the governmental activities, the business-type activities, the aggregate discretely presented component unit and each major fund of Haliwa-Saponi Indian Tribe as of June 30, 2016, and the respective changes in its net position and its cash flows, where applicable, for the year then ended in accordance with accounting principles generally accepted in the United States of America. 5

6 Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that Management s Discussion and Analysis on pages 7 through 14 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 the 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 consist of inquiries of management about the methods of preparing 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. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise Haliwa-Saponi Indian Tribe s basic financial statements. The budgetary schedules and the Schedule of Expenditures of Federal and State Awards, as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, are presented for purposes of additional analysis and are not a required part of the financial statements. The budgetary schedules and the Schedule of Expenditures of Federal and State Awards are the responsibility of management and were derived from and related 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 financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America by us. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated January 24, 2017, on our consideration of Haliwa-Saponi Indian Tribe 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 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 Haliwa-Saponi Indian Tribe s internal control over financial reporting and compliance. PETWAY MILLS & PEARSON, PA Certified Public Accountants Zebulon, North Carolina January 24,

7 Management's Discussion and Analysis Haliwa-Saponi Indian Tribe June 30, 2016 As management of Haliwa-Saponi Indian Tribe, we offer readers of Haliwa-Saponi Indian Tribe's audited financial statements this narrative overview and analysis of the financial activities of Haliwa-Saponi Indian Tribe for the fiscal year ended June 30, We encourage readers to read the information presented herein in conjunction with additional information furnished in the Tribe's financial statements, which follow this narrative. Financial Highlights The assets of Haliwa-Saponi Indian Tribe exceeded its liabilities and deferred inflows at the close of the fiscal year by $3,122,316 (net position). The tribe's total net position decreased by $40,204. As of the close of the current fiscal year, Haliwa-Saponi Indian Tribe's governmental funds reported combined ending fund balances of $491,339. As of the close of the current fiscal year, Haliwa-Saponi Indian Tribe's enterprise funds reported a combined ending net position of $0. The Haliwa-Saponi Indian Tribe had no debt during the current fiscal year. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to Haliwa-Saponi Indian Tribe's basic financial statements. The Tribe's basic financial statements consist of three components; 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements (see Figure 1). The basic financial statements present two distinct financial perspectives of the Tribe through the use of government- wide statements and fund financial statements. In addition to the basic financial statements, this report contains other supplemental information that will enhance the reader's understanding of the financial condition of Haliwa- Saponi Indian Tribe, independent of the Tribal School's financial status. Haliwa-Saponi Tribal School The members of the Tribal School Board are appointed by the Tribal Council. The Tribal School promotes the Culture of the Haliwa-Saponi Indian Tribe, while meeting the academic standards of the students. The Tribal School, which has a June 30 year-end, is presented as if it were a proprietary fund (discrete presentation). 7

8 Management's Discussion and Analysis Haliwa-Saponi Indian Tribe June 30, 2016 Figure 1 Required Components of Annual Financial Report Management's Discussion and Basic Financial Statements Analysis l I Government-wide Financial Statements I I Fund Financial Statements Notes to the Financial Statements Summary Detail Basic Financial Statements The first two statements (Exhibits 1 and 2) in the basic financial statements are the Government-wide Financial Statements. They provide both short and long-term information about the Tribe's financial standing. The next statements (Exhibits 3 and 4) are Fund Financial Statements. These statements focus on the activities of the individual segments of the Tribe's government. These statements are more detailed than the government-wide financial statements. There are two parts to the Fund Financial Statements: 1) the governmental funds statements; and 2) the proprietary fund statements. Immediately following the fund financial statements are the Notes to the Financial Statements (i.e. "Notes"). The Notes offer a detailed explanation of the data contained in those statements. Next, supplemental information is provided to show details about the Tribe's funds. Budgetary information for the Tribe can also be found in this section of the statements. 8

9 Management's Discussion and Analysis Haliwa-Saponi Indian Tribe June 30, 2016 Government-wide Financial Statements The government-wide financial statements are designed to provide the reader with a broad overview of the Tribe's finances, similar in format to the financial statements of a private-sector business. The government-wide statements provide short and long-term information about the Tribe's financial status, as a whole. The two government-wide statements report the Tribe's net position and how it has changed. Net position equals the difference between the Tribe's total assets and total liabilities and deferred inflows of resources. Measuring net position is one way to gauge the Tribe's financial condition. The government-wide statements are divided into two categories: 1) governmental activities; and 2) businesstype activities. The governmental activities include most of the Tribe's basic functions such as managing building rehabilitation, providing work experience, offering health and wellness reimbursement programs, and supplying other services for its Tribal members. These functions are funded almost entirely through state, county, and federal funds. The business-type activities are those services that the Tribe charges its renters, advertisers, tribal members and other customers. These include the Day Care and Affordable Housing services carried out by Haliwa-Saponi Indian Tribe. The government-wide financial statements are enumerated in Exhibits 1 and 2 of this report. Fund Financial Statements The fund financial statements provide a more detailed look at the Tribe's most significant activities. A fund is a grouping of related accounts used to maintain control over resources that have been segregated for specific activities or objectives. Haliwa-Saponi Indian Tribe, like all other governmental entities in North Carolina, uses fund accounting to ensure and reflect compliance (or non-compliance) with finance-related statutory requirements, such as the North Carolina General Statutes or the Tribe's budget ordinance, where and when applicable. All of the funds of Haliwa-Saponi Indian Tribe can be divided into two categories: governmental funds and proprietary funds. Governmental Funds - Governmental funds are used to account for functions reported as governmental activities in the government-wide financial statements. Most of the Tribe's basic services and grant activities are accounted for in governmental funds. These funds focus on how assets can readily be converted into cash flow in and out, and monies remaining at year-end that will be available for spending in the next fiscal year. Governmental funds are reported using the modified accrual accounting method, which provides a short-term spending focus. The governmental fund financial statements assist the reader in determining whether there has been an increase or a decrease in the financial resources available to finance the Tribe's programs. The relationship between government activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds is described in the reconciliation, which is an integral part of the fund financial statements. Although not compelled or required to do so by federal, state, or local law, Haliwa-Saponi Indian Tribe has elected to adopt an annual budget. Since the budget is not required by law, the budgetary comparison statements are not included in the basic financial statements, but are part of the supplemental statements and schedules following the notes. The budget incorporates input from the faculty and management of the Tribe, and the Tribal Council, and specifies which activities will be pursued and which services the Tribe will provide during the year. It also authorizes the Tribe to obtain funds from identified sources to finance current period activities. The budgetary statement demonstrates how well the Tribe has complied with the budget ordinance and whether or not the Tribe has succeeded in providing the services as originally planned. Proprietary Funds - Haliwa-Saponi Indian Tribe has two proprietary funds, both of which are enterprise funds. Enterprise Funds are used to report the same functions presented as business-type activities in the governmentwide financial statements. Haliwa-Saponi Indian Tribe uses enterprise funds to account for its Day Care and Affordable Housing functions. These functions are Red Earth and Tomahawk Meadows. 9

10 Management's Discussion and Analysis Haliwa-Saponi Indian Tribe June 30, 2016 Notes to the Financial Statements - The notes provide additional information essential to facilitating a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements begin on page 23 of this report. Government-Wide Financial Analysis As noted earlier, net position may serve over time as one useful indicator of a Tribe's financial condition. The assets of Haliwa-Saponi Indian Tribe exceeded liabilities by $3,122,316 as of June 30, As of June 30, 2015, the net position of Haliwa-Saponi Indian Tribe stood at $3,162,520. The Tribe's net position decreased by $40,204 for the fiscal year ended June 30, 2016, compared to a decrease of $69,141 in The amount of $2,639,437 reflects the Tribe's investment in capital assets (e.g. land, building, land improvements, furniture and equipment, and vehicles), less any related debt still outstanding that was issued to acquire those items. Haliwa- Saponi Indian Tribe uses these capital assets to provide services to its tribal members; consequently, these assets are not available for future spending. Although Haliwa-Saponi Indian Tribe's investment in its capital assets is reported net of the outstanding related debt, the resources needed to repay that debt must be provided by other sources, since the capital assets cannot be used to liquidate these liabilities. Restricted net position totaled $-0- and remaining balance of $501,696 is unrestricted. In 2015, the amount of net investment in capital assets was $2,724,681, with restricted net position totaling $137,850 and unrestricted net position standing at $308,803. Figure 2 Haliwa-Saponi Indian Tribe Net Position Governmental Business-Type Haliwa-Saponl Activities Activities Total Tribal School Current and other assets $593,826 $525,486 $593,826 $525,486 $167,135 $163,244 Capital assets, net of depreciation 2,639,437 2,724,681 2,639,437 2,724,681 30,690 50,886 Total assets 3,233,263 3,250,167 3,233,263 3,250, , ,130 Deferred Outflows of Resources Other liabilities 51,368 43,466 51,368 43,466 10,923 1,756 Long-term liabilities outstanding 237,693 Total liabilities Deferred Inflows of Resources 59,579 44, Net Position: Net Investment In capital assets 2,639,437 2,724,681 2,639,437 2,724,681 30,690 50,886 Restricted 137, ,850 Unrestricted 501, , , ,803 (51,106) (86,327) Accumlated other comprehensive income (loss) (18,817) (8,814) (18,817) (8,814) Total net position $3,122,316 $3,162,520 $3,122,316 $3,162,520 ($20,416) ($35,441) 10

11 Management's Discussion and Analysis Haliwa-Saponi Indian Tribe June 30, 2016 Several aspects of the Tribe's financial operations positively influenced the total unrestricted governmental net assets: The Tribe adopted an annual budget. The Tribe's performance was measured using this budget on a monthly and quarterly basis, allowing changes to be made to remain within the confines of the budget. The Tribe applied for and was awarded several federal, state and local grants to assist with childcare, health and wellness reimbursements, senior nutrition and building rehabilitation for its Tribal members. Figure 3 Haliwa-Saponi Indian Tribe Changes in Net Position Governmental Business-Type Haliwa-Saponi Activities Activities Total Tribal School Program Revenues: Charges for Services 153, , , , Operating Grants and Contributions 947, , , , , ,811 General Revenues and Transfers: 450, ,205 (21,755) (10,929) ,642,787 1,634,514 Total revenues , ,529,990 1,470, Expenses: General government 1,272,311 1,179,478 1,272,311 1,179,478 Indirect cost allocation 85,153 85,973 85,153 85,973 Culture and recreation 80, ,613 80, ,613 Affordable housing 36,007 47,610 36,007 47,610 Daycare 95,909 96,919 95,909 96,919 Interest on long-term debt Educational support 10,602 10,602 Tribal School 1, ,492 Total expenses , , , Increase (Decrease) in net position {40,204) {69,141) {40,204) {69,141) 15,025 96,272 Net position, July 1 3,162,520 3,231,661 3,162,520 3,231,661 {35,441) (131,713) Net position, June 30 $3,122,316 $3,162,520 $3,122,316 $3,162,520 ($20,416) ($35.441) 11

12 Management's Discussion and Analysis Haliwa-Saponi Indian Tribe June 30, 2016 Governmental Activities. Governmental activities decreased the Tribe's net position by $40,204. Business-type Activities. Business-type activities increased Haliwa-Saponi Indian Tribe's net position by $21,755. The Tribe accounts for the Day Care and the Affordable Housing funds in the business type activities. Financial Analysis of the Tribe's Funds As noted earlier, Haliwa-Saponi Indian Tribe uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds. The focus of Haliwa-Saponi Indian Tribe's governmental funds is to provide information on near-term inflows, outflows, and balances of usable financial resources. Such information is useful in assessing Haliwa-Saponi Indian Tribe's financing requirements. Specifically, unassigned fund balance can be a useful measure of a government's net resources available for spending at the end of the fiscal year. The general fund is the chief operating fund of Haliwa-Saponi Indian Tribe. At the end of the current fiscal year, unassigned fund balance of the General Fund was $491,339 while total fund balance reached $491,339. The restricted fund balance of the General Fund totals $-0-. Proprietary Funds. The Tribe's proprietary funds provide the same type of information found in the governmentwide statements but in more detail. Unrestricted net position of the Day Care Fund at the end of the fiscal year amounted to $-0-, while the Affordable Housing Fund reached $-0- at the end of the fiscal year. Other factors concerning the finances of this fund have already been addressed in the discussion of the Tribe's business-type activities. 12

13 Management's Discussion and Analysis Haliwa-Saponi Indian Tribe June 30, 2016 Capital Asset and DebtAdministration Capital Assets. Haliwa-Saponi Indian Tribe's investment in capital assets for its governmental activities as of June 30, 2016, totals $2,639,437 (net of accumulated depreciation). Capital assets include land, buildings and improvements, land improvements, furniture and equipment, and vehicles. The Tribe expended $-0- in additional capital assets for the current fiscal year. Figure 4 Haliwa-Saponi Indian Tribe Capital Assets (Net of Depreciation) Governmental Activities Business-Type Activities Total Land $ Construction in Progress Building and Improvements Land improvements Vehicles Equipment Furniture & fixtures 860,230 $ 851,718 $ $ 8,513 1,677,233 1,743,828 63,701 71,033 34,788 39,846 5,022 3,485 4,721 $ 860,230 $ 860,231 1,677,233 1,743,828 63,701 71,033 34,788 44,868 3,485 4,721 Total $ $ $ $ $ 2 639,437 $ 2, Additional information about the Tribe's capital assets can be found in Note 2.A.2. of the Basic Financial Statements. Long-term Debt. As of June 30, 2016, Haliwa-Saponi Indian Tribe had no outstanding debt. Economic Factors The following key economic indicators reflect the growth and prosperity of the Tribe: The Tribe is currently working to become a federally recognized Indian Tribe. Requests for Information This report is designed to provide an overview of the Tribe's finances for those with an interest in this area. Questions concerning any of the information found in this report or requests for additional information should be directed to Trina Lynch, Finance Officer, Haliwa-Saponi Indian Tribe, PO Box 99, Hollister, NC 27844, Telephone (252) x

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15 Haliwa-Saponi Indian Tribe Statement of Net Position JUNE 30, 2016 Exhibit 1 Prima!}'. Government Governmental Business-type Haliwa-Saponi Activities Activities Total Tribal School ASSETS Cash and cash equivalents $ 286,062 $ - $ 286,062 $ 165,921 Certificate of deposit 20,385 20,385 Investments 156, ,703 Grants receivable Due from other governments 1,038 Due from employees Accounts receivable 130, , Prepaid expenses 58 Capital assets: Land 860, ,230 Other capital assets, net of depreciation 1,779,207 1,779,207 30,690 Total capital assets 2,639,437 2,639,437 30,690 Total assets 3,233,263 3,233, ,825 DEFERRED OUTFLOWS OF RESOURCES 120,834 LIABILITIES Accounts payable 26,411 26,411 10,923 Other liabilities 24,957 24, ,693 Total liabilities 51,368 51, ,616 DEFERRED INFLOWS OF RESOURCES 59,579 59,579 90,459 NET POSITION Net investment in capital assets 2,639,437 2,639,437 30,690 Restricted Unrestricted 501, ,696 (51,106) Accumulated other comprehensive income (loss) {18,817} {18,817} Total net position $ 3,122,316 $ - $ 3,122,316 $ {20,416) The notes to the financial statements are an integral part of this statement. 15

16 Haliwa-Saponi Indian Tribe Statement of Activities For the Year Ended June 30, 2016 Exhibit2 Program Revenues Net (Exeense} Revenue and Changes in Net Position Prima!}': Government Charges for Operating Grants and Governmental Business-type Haliwa-Saponi Functions/Programs Exeenses Services Contributions Activities Activities Total Tribal School Primary government: Governmental Activities: General government $ 1,272,311 $ - $ 947,435 $ (324,876) $ - $ (324,876) $ Indirect cost allocation 85,153 (85,153) (85,153) Culture and recreation 80,814 (80,814) (80,814) Educational support Total governmental activities 1,438, ,435 (490,843} (490,843} Business-type Activities: Affordable housing 36,007 62,163 26,156 26,156 Daycare 95,909 91,508 (4,401} (4,401} Total business-type activities 131, ,671 21,755 21,755 Total primary government $ 1,570,194 $ 153,671 $ 947,435 (490,843) 21,755 (469,088) Component unit: Tribal School $ 1,809,489 $ 45 $ 181,682 (1,627,762) General revenues: Unrestricted activities revenue 250, ,990 1,642,787 Contributions and donations 14,619 14,619 Allocation of indirect costs 82,591 82,591 Miscellaneous, unrestricted 99,501 99,501 Unrestricted investment earnings Unrealized loss on Investments (18,817) (18,817) Transfers 21,755 (21,755} Total general revenues and transfers 450,639 (21,755} 428,884 1,642,787 Change in net position (40,204) (40,204) 15,025 Net position-beginning 3,162,520 3,162,520 (35,441} Net position-ending $ 3,122,316 $ - $ 3,122,316 $ (20,416} The notes to the financial statements are an integral part of this statement. 16

17 Haliwa-Saponi Indian Tribe Balance Sheet Governmental Funds JUNE 30, 2016 Exhibit 3 ASSETS Cash and cash equivalents Certificate of deposit Investments Accounts receivable Prepaid expenses Total assets General Major Funds Operating Grants $ - $ 286,062 20, , ,676 $ 177,088 $ 416,738 $ $ Total Governmental Funds 286,062 20, , , ,826 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 26,411 $ - $ Other liabilities 16,497 Total liabilities 26,411 16,497 DEFERRED INFLOWS OF RESOURCES 59,579 26,411 16,497 42,908 59,579 Fund balances: Restricted Nonspendable: Prepaid items Unassigned Total fund balances Total liabilities, deferred inflows of resources and fund balances 150, , , ,662 $ 177,088 $ 416, , ,339 Amounts reported for governmental activities in the statement of net position (Exhibit 1) are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds. Compensated Absences 2,639,437 (8,460) Net position of governmental activities $ 3,122,316 The notes to the financial statements are an integral part of this statement. 17

18 Haliwa-Saponi Indian Tribe Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Year Ended June 30, 2016 Exhibit 4 Maior Funds Operating General Grants REVENUES Unrestricted activities income $ 181,332 $ - $ U.S. Government 947,435 State revenues 26,185 Local revenues 55,073 Allocation of indirect support 82,591 Contributions and donations 14,619 Miscellaneous 214,557 Unrestricted investment earnings 8,198 Total revenues 418,706 1,111,284 Total Governmental Funds 181, ,435 26,185 55,073 82,591 14, ,557 8,198 1,529,990 EXPENDITURES Current: General government 296,264 1,025,452 Indirect costs 85,153 Culture and recreation 80,814 Educational support Capital outlay Debt service: Principal Interest and other charges Total expenditures 377,078 1,110,605 Excess (deficiency) of revenues over expenditures 41, OTHER FINANCING SOURCES (USES) Transfers to other funds Proceeds from short-term notes Proceeds from long-term notes Total other financing sources (uses) Net change in fund balance 41, Fund balances-beginning 109, ,983 Fund balances-ending $ 150,677 $ 340,662 $ 1,321,716 85,153 80,814 1,487,683 42,307 42, , ,339 The notes to the financial statements are an integral part of this statement. 18

19 Exhibit 5 Haliwa-Saponi Indian Tribe Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds to the Statement of Activities For the Year Ended June 30, 2016 Amounts reported for governmental activities in the statement of activities are different because: Net changes in fund balances - total governmental funds Change in fund balance due to change in reserve for inventory 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. This is the amount by which capital outlays exceeded depreciation in the current period 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. Compensated absences Gain on disposal of assets Total changes in net position of governmental activities $ 42,307 (85,244) 2,733 $ (40,204) The notes to the finanical statements are an integral part of this statement. 19

20 ASSETS Current assets: Cash and cash equivalents Due from other governments Receivables (net) Inventories Total current assets Haliwa-Saponi Indian Tribe Statement of Net Position Proprietary Fund JUNE 30, 2016 Ma'or Fund Da Care $ - $ Enter rise Funds Non - Ma'or Fund Affordable Housing - $ Total Exhibit 6 Noncurrent assets: Capital assets: Kitchen equipment, net Computer equipment, net Total noncurrent assets Total assets LIABILITIES Current liabilities: Accounts payable and accrued expenses - trade Cash overdraft Total current liabilities $ - $ $ - $ - $ - $ Long-term liabilities: Due within one year Total long-term liabilities Total liabilities NET POSITION Net investment in capital assets Unrestricted Total net position $ - $ - $ The notes to the financial statements are an integral part of this statement. 20

21 Haliwa-Saponi Indian Tribe Statement of Revenues, Expenses, and Changes in Fund Net Position Proprietary Fund For the Year Ended June 30, 2016 Exhibit 7 OPERATING REVENUES Rental revenues Child care fees Fundraising Total operating revenues Major Fund Day Care $ - 89,513 1,995 91,508 Enterorise Funds Non - Maior Fund Affordable Housing $ 62,163 62,163 Total $ 62,163 89,513 1, ,671 I OPERATING EXPENSES Insurance Salaries and benefits Materials and supplies Fundraising Repairs and maintenance Utilities Telephone Miscellaneous expenses Total operating expenses Operating income (loss) 7,209 78,074 3, ,499 3, ,194 95,909 {4,401} 18,436 12, ,945 36,007 26,156 25,645 78,074 3, ,525 3, , ,916 21,755 Transfers to other funds Change in net position Total net position - beginning Total net position - ending 4,401 $ - {26,156} $ - $ {21,755} The notes to the financial statements are an integral part of this statement. 21

22 Haliwa-Saponi Indian Tribe Statement of Cash Flows Proprietary Fund For the Year Ended June 30, 2016 Exhibit 8 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers Cash paid for goods and services Cash paid to employees for services Net cash provided (used) by operating activities $ Ma"or Fund Da Care 91,508 $ (17,835) {78,074) {4,401) Enter rise Funds Non - Ma or Fund Affordable Housin 62,163 (36,007) 26,156 $ Total 153,671 (53,842) {78,074) 21,755 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Cash received (paid) from transfers 4,401 {26,156) {21,755) Net cash (used) by capital and related financing activities Balances-beginning of the year Balances-end of the year $ $ - $ Reconciliation of operating income to net cash provided by operating activities Operating income $ {4,401) $ 26,156 $ 21,755 Net cash provided by operating activities $ {4,401) $ 26,156 $ 21,755 The notes to the financial statements are an integral part of this statement. 22

23 Haliwa-Saponi Indian Tribe, North Carolina Notes to the Financial Statements For the Fiscal Year Ended June 30, 2016 I. Summary of Significant Accounting Policies The accounting policies of Haliwa-Saponi Indian Tribe, North Carolina and its discretely presented component unit conform to generally accepted accounting principles (GAAP) as applicable to governments. The following is a summary of the more significant accounting policies: A. Reporting Entity Haliwa-Saponi Indian Tribe, North Carolina (the Tribe) is a recognized Indian Tribe that owns a nonprofit organization dedicated to protecting the interest, identity and rights of the Haliwa-Saponi Indian people, promoting their culture and heritage, promoting their educational and economic development, and promoting goodwill, peace and harmony within the Indian community. Haliwa-Saponi Tribal School, the discretely presented component unit described below, is reported in a separate column in the Tribe's financial statements in order to emphasize that it is legally separate from the Tribe. The members of the Tribal School are appointed by the Tribe. In addition, the Tribal School exists to develop the knowledge of tribal culture and traditions of the learner. The Tribal School, which has a June 30 year-end, is presented as if it were a proprietary fund (discrete presentation). Complete financial statements for the Tribal School may be obtained from the School's administrative offices at Haliwa-Saponi Tribal School, Highway 561, Hollister, North Carolina, B. Basis of Presentation Government-wide Statements: The statement of net position and the statement of activities display information about the Tribe. These statements include the financial activities of the overall government. Eliminations have been made to minimize the double counting of internal activities. These statements distinguish between the governmental and business-type activities of the Tribe. Governmental activities generally are financed through inter-governmental revenues, and other non-exchange transactions. Business-type activities are financed in whole or in part by fees charged to external parties. The statement of activities presents a comparison between direct expenses and program revenues for the different business-type activities of the Tribe and for each function of the Tribe's governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expense allocations that have been made in the funds have been reversed for the statement of activities. Program revenues include (a) fees and charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues are presented as general revenues. Fund Financial Statements: The fund financial statements provide information about the Tribe's funds. 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. All remaining governmental and enterprise funds are aggregated and reported as non-major funds. 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. Non-operating revenues, such as subsidies and investment earnings, result from nonexchange transactions or ancillary activities. The Tribe reports the following major governmental funds: General Fund. The General Fund is the general operating fund of the Tribe. The General Fund accounts for all financial resources except those that are required to be accounted for in another fund. 23

24 Haliwa-Saponi Indian Tribe, North Carolina Notes to the Financial Statements For the Fiscal Year Ended June 30, 2016 I. Summary of Significant Accounting Policies (continued) B. Basis of Presentation (continued) Operating Grants. The Operating Grants Fund includes appropriations from the federal and State awarding agencies for the current operating needs of the Tribe. The Tribe reports the following major enterprise fund: Day Care. The Day Care Fund is used to account for the operational activity of the day care program offered by the Tribe. C. Measurement Focus and Basis of Accounting Government-wide and Proprietary Fund Financial Statements. The government-wide and proprietary fund financial statements are reported using the economic resources measurement focus. The government-wide and proprietary fund financial statements are reported using the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Non-exchange transactions, in which the Tribe gives (or receives) value without directly receiving (or giving) equal value in exchange, include grants and donations. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Governmental Fund Financial Statements. Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The Tribe considers all revenues reported in the governmental funds to be available if the revenues are collected within sixty days after year-end. These could include federal, State, and county grants, and some charges for services. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and acquisitions under capital leases are reported as other financing sources. Under the terms of grant agreements, the Tribe funds certain programs by a combination of specific costreimbursement grants and general revenues. Thus, when program expenses are incurred, there are both restricted and unrestricted net position available to finance the program. It is the Tribe's policy to first apply costreimbursement grant resources to such programs, and then general revenues. D. Budgetary Data Annual budgets are adopted for all funds on a government-wide basis. All budgets are prepared using the modified accrual basis of accounting. The governing board has voluntarily established the policy, as a sound business practice, that expenditures may not exceed appropriations, for all of the Tribe's funds, based on the adopted budget and subsequent amendments. During the year, several amendments to the original budget were necessary, the effects of which were not material. The budget presented in the supplemental data represents the budget of the Tribe at June 30, All appropriations lapse at year end. E. Assets, Liabilities, Deferred Outflows and Inflows of Resources and Fund Equity 1. Deposits and Investments All deposits of the Tribe are made in a local bank, whose accounts are FDIC insured. Also, the Tribe has established time deposit accounts such as NOW and SuperNOW accounts, money market accounts, and certificates of deposit. 24

25 Haliwa-Saponi Indian Tribe, North Carolina Notes to the Financial Statements For the Fiscal Year Ended June 30, 2016 I. Summary of Significant Accounting Policies (continued) E. Assets, Liabilities, Deferred Outflows and Inflows of Resources and Fund Equity (continued) The Tribe's investments with a maturity of more than one year at acquisition and non-money market investments are reported at fair value as determined by quoted market prices. 2. Cash and Cash Equivalents The Tribe pools money from several funds to facilitate disbursement. Therefore, all cash is essentially demand deposits and is considered cash and cash equivalents. 3. Grants Receivable Grants receivable primarily consist of amounts from various federal and State awarding agencies. The Tribe uses the allowance method to determine uncollectible grants receivable. The allowance is based on management's analysis of the receivables. As of June 30, 2016, management deemed all receivables to be fully collectible. 4. Prepaid Expenses Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items. 5. Capital Assets Donated assets received prior to July 1, 2015 are recorded at their estimated fair value at the date of donation or forfeiture. Donated capital assets received after July 1, 2015 are recorded at acquisition value. All other capital assets are recorded at original cost. The total of these estimates is not considered large enough that any errors would be material when capital assets are considered as a whole. It is the policy of the Tribe to capitalize all capital assets costing more than $5,000 with an estimated useful life of two or more years. In addition, other items which are purchased and used in large quantities such as student desks and office furniture are capitalized. Improvements are capitalized and depreciated over the remaining useful lives of the related capital assets. All depreciable assets are depreciated using the straight-line method of depreciation. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Capital assets are depreciated over the following estimated useful lives: Building and improvements Land improvements Vehicles Equipment Furniture and Fixtures Years Deferred Outflows/Inflows of Resources In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, Deferred Outflows of Resources, represents a consumption of net position that applies to a future period and so will not be recognized as an expense or expenditure until then. The Tribe has no items that meet this criterion. In addition to liabilities, the statement of financial position will sometimes report a separate element, Deferred Inflows of Resources, represents an acquisition of net position that applies to a future period and will not be recognized as a revenue until then. The Tribe has one item that meets the criterion for this category - unavailable revenue. 25

26 Haliwa-Saponi Indian Tribe, North Carolina Notes to the Financial Statements For the Fiscal Year Ended June 30, 2016 I. Summary of Significant Accounting Policies (continued) E. Assets, Liabilities, Deferred Outflows and Inflows of Resources and Fund Equity (continued) 7. Long-Term Obligations In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, businesstype activities, or proprietary fund-type statement of net position. In the fund financial statements, governmental fund types report the face amount of debt issued as other financing sources. 8. Net Position/Fund Balances Net Position Net position in the government-wide and proprietary fund financial statements is classified as invested in capital assets, net of related debt; restricted; and unrestricted. Restricted net position represents constraints on resources that are either externally imposed by creditors, grantors, contributors, or laws or regulations of other governments or imposed by law through State statute. Fund Balance In the governmental fund financial statements, fund balance is composed of classifications designed to disclose the hierarchy of constraints placed on how fund balance can be spent. The governmental fund types classify fund balances as follows: Nonspendable Fund Balance - This classification includes amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact. Prepaid Items- portion of fund balance that is not an available resource because it represents the year-end balance of prepaid rent on the school facility which is not a spendable resource. Restricted Fund Balance - This classification includes amounts that are restricted to specific purposes externally imposed by creditors or imposed by law. The Tribe has received contributions that have been restricted to provide scholarships to qualified individuals. Unassigned fund balance - the portion of fund balance that has not been assigned to another fund or restricted, committed, or assigned to specific purposes within the general fund. The Tribe has revenue spending policy that provides guidance for programs with multiple revenue sources. The Tribe will use resources in the following hierarchy: federal funds, State funds, and local funds. For purposes of fund balance classification, expenditures are to be spent from restricted fund balance first, then unassigned fund balance. The Tribe has the authority to deviate from this policy if it is in the best interest of the Tribe. 9. Reconciliation Between Government-wide and Fund Statements The governmental fund balance sheet includes a reconciliation between governmental funds' total fund balance and governmental activities as reported in the government-wide statement of net position. The net adjustment of $2,630,977 consists of several elements as follows: 26

27 Haliwa-Saponi Indian Tribe, North Carolina Notes to the Financial Statements For the Fiscal Year Ended June 30, 2016 I. Summary of Significant Accounting Policies (continued) E. Assets, Liabilities, Deferred Outflows and Inflows of Resources and Fund Equity (continued) DESCRIPTION Capital assets used in governmental activities are not financial resources and are therefore not reported in the funds (total capital assets on government-wide statement in governmental activities column). Less accumulated depreciation AMOUNT $ 4,203,118 (1,563,681) Liabilities that, because they are not due and payable in the current period, do not require current resources to pay and are therefore not reported in the fund statements: Compensated Absences Total adjustment {8,460) $ 2,630,977 F. Revenues, Expenditures, and Expenses 1. Funding The Haliwa-Saponi Indian Tribe, North Carolina is funded in large part by various federal and State awards. The Tribe had federal awards that accounted for 67% of total revenue. Amounts received from this federal agency totaled $947,435 at June 30, Reconciliation Between Government-wide and Fund Statements The governmental fund statement of revenues, expenditures, and changes in fund balance is followed by reconciliation between the change in fund balance - governmental activities and the change in net position - governmental funds as reported on the government-wide statement of activities. The net difference of ($85,244) between the two amounts consists of the following elements: Description Capital outlay expenditures recorded in the fund statements but capitalized as assets on the statement of activities. Depreciation expense that is recorded on the statement of activities but not in the fund statements. $ Amount (85,244) Gain on the sale of assets Difference due to rounding Total $ (85,244) Management uses estimates and assumptions in preparing financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenditures. 27

28 Haliwa-Saponi Indian Tribe, North Carolina Notes to the Financial Statements For the Fiscal Year Ended June 30, 2016 II. Detail Notes on All Funds A. Assets 1. Deposits At June 30, 2016, the Tribe had deposits with banks and savings and loans with a carrying amount of $306,448. The bank balance with the financial institutions was $358,763. $250,000 is covered by Federal Deposit Insurance Corporation (FDIC) and $108,763 is uninsured. The Tribe does not have a deposit policy for custodial credit risk. 2. Investments At June 30, 2016, the Tribe had investments valued at $156,703. The portfolio consists of 100% mutual funds. The cost basis for the mutual funds is $175, Capital Assets Capital asset activity for the year ended June 30, 2016, was as follows: Beginning Ending Balances Increases Decreases Balances Governmental activities: Capital assets not being depreciated: Land $ 860,230 $ $ - $ 860,230 Construction in Progress Total capital assets not being depreciated 860, ,230 Capital assets being depreciated: Buildings and improvements 2,645,166 2,645,166 Land improvements 146, ,303 Vehicles 326, ,791 Equipment 164, ,226 Furniture and Fixtures 60,401 60,401 Total capital assets being depreciated 3,342,887 3,342,887 Less accumulated depreciation for: Buildings and improvements 901,337 66, ,933 Land improvements 75,270 7,332 82,602 Vehicles 281,923 10, ,003 Equipment 159,505 1, ,741 Furniture and Fixtures 60,401 60,401 Total accumulated depreciation 1,478,436 $ 85,244 $ 1,563,680 Total capital assets being depreciated, net 1,864,451 1,779,207 Governmental activity capital assets, net $ 2,724,68~ $ 2,639,437 28

29 Haliwa-Saponi Indian Tribe, North Carolina Notes to the Financial Statements For the Fiscal Year Ended June 30, 2016 Depreciation expense was charged to governmental functions as follows: Instructional Programs Supporting Services $ 85,244 $ 85,244 B. Liabilities 1. Pension Plan Obligations The Tribe provides a 403(b) retirement plan for its employees. The Tribe matches up to 3% of the employee's salary. The employee may make voluntary contributions, pursuant to a salary reduction agreement, of a percentage of annual compensation not to exceed the limits set by the Internal Revenue Code. For the year ended June 30, 2016, the pension cost to the Tribe was $5, Deferred Inflows of Resources The balance in deferred inflows of resources at year-end is composed of the following elements: Operating grants - unavailable revenue 3. Risk Management $ 59,579 The Tribe is exposed to various risks of losses related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The Tribe maintains general liability and errors and omissions insurance coverage of $1 million per occurrence with a commercial carrier. The Tribe has obtained a major medical insurance policy for its personnel through a commercial insurer. Through the plan, permanent, full-time employees of the Tribe are eligible to receive health care benefits. The Tribe carries commercial coverage for all other risks of loss. There have been no significant reductions in insurance coverage in the prior year, and claims have not exceeded coverage in any of the past two fiscal years. 4. lnterfund Balances and Activity Transfers to/from other funds at June 30, 2016, consist of the following: From the General Fund to the Day Care fund to accumulate resources for the operations of that fund To the General Fund from the Affordable Housing fund to accumulate resources for the operations of that fund Total $ 4,401 (26,156) $ (21,755) Ill. Fund Balance The Tribe has a revenue spending policy that provides guidance for programs with multiple revenue sources. The Tribe will use resources in the following hierarchy: federal funds, State funds, and local funds. For purposes of fund balance classification, expenditures are to be spent from restricted fund balance first, followed in-order by restricted fund balance, and lastly unassigned fund balance. The Tribe may deviate from this policy if it is in the best interest of the Tribe. 29

30 Haliwa-Saponi Indian Tribe, North Carolina Notes to the Financial Statements For the Fiscal Year Ended June 30, 2016 The following schedule provides management and citizens with information on the portion of General Fund that is available for appropriation. Total fund balance Restricted fund balance Prepaid items Remaining fund balance $ 491,339 $ 491,339 IV. Summary Disclosure of Significant Contingencies Federal and State Assisted Programs The Tribe has received proceeds from several federal and State grants. Periodic audits of these grants are required and certain costs may be questioned as not being appropriate expenditures under the grant agreements. Such audits could result in the refund of grant moneys to the grantor agencies. Management believes that any required refunds will be immaterial. No provision has been made in the accompanying financial statements for the refund of grant moneys. V. Subsequent Events The Tribe has evaluated subsequent events from the date of the balance sheet through the date the report is available to be issued which is the date of the independent auditors' report. The Tribe has not evaluated subsequent events after that date. There were no subsequent events during this period that require disclosure. 30

31 Haliwa-Saponi Indian Tribe All Governmental Fund Types Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual For the Year Ended June 30, 2016 Statement Favorable Final (Unfavorable) Budget Actual Variance Revenues: Rent revenues $ 50,000 $ 47,693 $ (2,307) U.S. Government 950, ,435 (2,565) State revenues 27,000 26,185 (815) Local revenues 55,000 55, Allocation of indirect support 89,171 82,591 (6,580) Miscellaneous 335, ,342 (118,408) Total revenues 1,506,921 1,376,319 (130,602) Expenditures: Salaries and benefits 530, ,449 (55,808) Supplies 148, ,333 17,061 Maintenance 63,023 63, Utilities 23,925 25,076 (1,151) General operating 830, , ,787 Total Expenditures 1,596,679 1,355, ,912 Other financing sources (uses): Apportionated fund balance 89,758 89,758 Transfers from other funds 21,755 21,755 Total other financing sources and (uses) 89,758 21,755 (68,003) Excess of revenues over expenditures $ $ 42,307 $ 42,307 31

32 Haliwa-Saponi Indian Tribe Proprietary Funds Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual (Non- GAAP) For the Year Ended June 30, 2016 Statement Favorable Final (Unfavorable) Budget Actual Variance Revenues: Rental revenues $ 57,800 $ 62,163 $ 4,363 Child care fees 103,850 89,513 (14,337) Fund raising 850 1,995 1,145 Total revenues 162, ,671 (8,829) Expenditures: Salaries and benefits 133,882 78,074 55,808 Materials and supplies 1,513 3,355 (1,842) Repairs and maintenance 10,000 13,525 (3,525) Utilities 3,755 3, Miscellaneous expenses 61,318 33,599 27,719 Total expenditures 210, ,916 78,552 Other financing sources (uses): Apportionated fund balance 47,968 47,968 Transfers to other funds f21,755~ 21,755 Total other financing sources and (uses) 47,968 21,755 69,723 Excess of revenues over expenditures $ $ $ 32

33 PM&P PETWAY MILLS & PEARSON, PA CERTIFIED PUBLIC ACCOUNTANTS C. Briggs Petway, Jr. Phyllis M. Pearson Zebulon Office P.O. Box N. Arendell Ave. Zebulon, NC Fax Memberships: North Carolina Association of Certified Public Accountants American Institute of Certified Public Accountants Medical Group Management Association INDEPENDENT AUDITOR'S 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 Board of Directors Haliwa-Saponi Indian Tribe Hollister, North Carolina We have audited, in accordance with the 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, the financial statements of the governmental activities, business-type activities, the aggregate discretely presented component unit and each major fund of Haliwa-Saponi Indian Tribe (the Organization), as of and for the year ended June 30, 2016 and the related notes to the financial statements, and have issued our report thereon dated January 24, Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered Haliwa Saponi Indian Tribe's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Haliwa-Saponi Indian Tribe's internal control. Accordingly, we do not express an opinion on the effectiveness of the Organization's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether Haliwa-Saponi Indian Tribe's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. 33