State of New Mexico Village of Cloudcroft Annual Financial Report June 30, 2014

Transcription

1 State of New Mexico Annual Financial Report June 30, 2014 Alamogordo Albuquerque Carlsbad Clovis Hobbs Roswell Lubbock, TX

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3 STATE OF NEW MEXICO VILLAGE OF CLOUDCROFT ANNUAL FINANCIAL REPORT JUNE 30, 2014

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5 INTRODUCTORY SECTION

6 STATE OF NEW MEXICO Table of Contents June 30, 2014 Exhibit Page INTRODUCTORY SECTION Table of Contents 4-5 Official Roster 6 FINANCIAL SECTION Independent Auditors Report 9-10 BASIC FINANCIAL STATEMENTS Government-wide Financial Statements Statement of Net Position A Statement of Activities A Fund Financial Statements Balance Sheet- Governmental Funds B Reconciliation of the Balance Sheet to the Statement of Net Position 19 Statement of Revenues, Expenditures, and Change in Fund Balances- Governmental Funds B Reconciliation of the Statement of Revenues, Expenditures, and Change in Fund Balances of Governmental Funds to the Statement of Activities 23 Statement of Revenues, Expenditures, and Change in Fund Balance- Budget (Non-GAAP Budgetary Basis) and Actual General Fund C-1 24 Fire Protection Special Revenue Fund C-2 25 EMS Special Revenue Fund C-3 26 Statement of Net Position- Proprietary Fund D-1 27 Statement of Revenues, Expenses, and Change in Net Position- Proprietary Fund D-2 28 Statement of Cash Flows- Proprietary Fund D-3 29 Statement of Fiduciary Assets and Liabilities- Agency Funds E-1 30 Notes to Financial Statements SUPPLEMENTARY INFORMATION Statement Nonmajor Governmental Funds Descriptions 53 Combining and Individual Fund Statements and Schedules Combining Balance Sheet- Nonmajor Governmental Funds A Combining Statement of Revenues, Expenditures, and Change in Fund Balances- Nonmajor Governmental Funds A Statement of Revenues, Expenditures, and Change in Fund Balance- Budget (Non-GAAP Budgetary Basis) and Actual- Governmental Funds Local Government Corrections Special Revenue Fund B-1 58 Federal Disaster Relief Special Revenue Fund B-2 59 Law Enforcement Protection Special Revenue Fund B-3 60 Lodger s Tax Special Revenue Fund B-4 61 Recreation Special Revenue Fund B-5 62 Fire Department Special Revenue Fund B-6 63 Tree Thinning Special Revenue Fund B-7 64 Municipal Streets Capital Projects Fund B-8 65 Infrastructure Capital Projects Fund B nd Street Station & Training Fire Station Capital Projects Fund B Statement of Revenues, Expenses, and Change in Net Position- Budget (GAAP Budgetary Basis) and Actual- Proprietary Fund Water and Sewer Fund B

7 STATE OF NEW MEXICO Table of Contents June 30, 2014 Statement/Schedule Page SUPPORTING SCHEDULES Schedule of Deposit and Investment Accounts I 71 Schedule of Collateral Pledged by Depository for Public Funds II 72 Schedule of Change in Fiduciary Assets and Liabilities- Agency Funds III 73 Schedule of Joint Powers Agreements and Memorandums of Understanding IV COMPLIANCE SECTION 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 Schedule of Findings and Responses V OTHER DISCLOSURES 86 5

8 STATE OF NEW MEXICO Official Roster June 30, 2014 Name David C. Venable Bradley Rasch James Maynard W.A. (Andy) Olsen Bruce A. Smaga Village Council Administration Title Mayor Mayor Pro Tem Trustee Trustee Trustee Jini S. Turri Anne Turri Village Clerk/Treasurer/Administrator Accounting/Payroll Clerk 6

9 FINANCIAL SECTION 7

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11 INDEPENDENT AUDITORS REPORT Hector H. Balderas New Mexico State Auditor The Village Council Cloudcroft, New Mexico Report on Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, the aggregate remaining fund information, and the budgetary comparisons for the general fund and major special revenue funds of the, New Mexico (the Village ), as of and for the year ended June 30, 2014, and the related notes to the financial statements which collectively comprise the Village s basic financial statements as listed in the table of contents. We have also audited the financial statements of each of the Village s nonmajor governmental funds and the budgetary comparisons of all nonmajor funds and the proprietary fund presented as supplementary information, as defined by the Governmental Accounting Standards Board, in the accompanying combining and individual fund financial statements as of and for the year ended June 30, 2014 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 misstatements, 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. 400 N. Pennsylvania, Suite 800 Roswell, NM T: F:

12 Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Village as of June 30, 2014, and the respective changes in financial position and where applicable, cash flows thereof and the respective budgetary comparisons for the general fund and major special revenue funds for the year then ended in accordance with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of each nonmajor governmental fund of the Village as of June 30, 2014, and the respective changes in financial position and cash flows where applicable, thereof and the respective budgetary comparisons for all nonmajor funds and the proprietary fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Management has not presented the Management s Discussion and Analysis that governmental accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic financial statements is not affected by this missing information. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Village s basic financial statements. The introductory section and the additional schedules listed as schedules I through IV in the table of contents are required by NMAC and are presented for purposes of additional analysis. They are not a required part of the basic financial statements. The additional 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 additional schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory section 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. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 20, 2014 on our consideration of the Village s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Village s internal control over financial reporting and compliance. Accounting & Consulting Group, LLP Roswell, New Mexico November 20,

13 BASIC FINANCIAL STATEMENTS 11

14 STATE OF NEW MEXICO Statement of Net Position June 30, 2014 Governmental Activities Assets Current assets Cash and cash equivalents 1,817,667 Primary Government Business-type Activities $ $ 501,236 $ 2,318,903 Receivables Taxes 127, ,189 Intergovernmental 66,428-66,428 Other 9, , ,672 Total current assets 2,021, ,095 2,676,192 Noncurrent assets Restricted cash - 94,227 94,227 Capital assets 9,377,020 9,382,080 18,759,100 Less: accumulated depreciation (7,558,688) (4,920,623) (12,479,311) Total noncurrent assets 1,818,332 4,555,684 6,374,016 Total assets $ 3,839,429 $ 5,210,779 $ 9,050,208 Total The accompanying notes are an integral part of these financial statements 12

15 Exhibit A-1 Governmental Activities Liabilities Current liabilities Accounts payable 41,214 Primary Government Business-type Activities $ $ 63,319 $ 104,533 Accrued payroll 20,622 14,223 34,845 Current portion of accrued compensated absences 10,816 6,136 16,952 Deposits - 5,875 5,875 Accrued interest 1,221 8,510 9,731 Current portion of loans payable - 376, ,461 Total current liabilities 73, , ,397 Noncurrent liabilities Accrued compensated absences ,057 Loans payable 584, , ,886 Total noncurrent liabilities 585, , ,943 Total liabilities 659, ,180 1,327,340 Net position Net investment in capital assets 1,233,949 3,891,493 5,125,442 Restricted for Special revenue 864, ,421 Capital projects 293, ,103 Unrestricted 788, ,106 1,439,902 Total net position 3,180,269 4,542,599 7,722,868 Total liabilities and net position $ 3,839,429 $ 5,210,779 $ 9,050,208 Total 13

16 STATE OF NEW MEXICO Statement of Activities For the Year Ended June 30, 2014 Functions/Programs Program Revenues Expenses Primary government Governmental activities General government 584,948 Charges for Services Operating Grants and Contributions Capital Grants and Contributions $ $ 28,948 $ 100,398 $ - Public safety 614,643 70, , ,800 Public works 158, Health and welfare Culture and recreation 77,947 1,000-3,107 Conservation and development 27, Interest on long-term debt 1, Total governmental activities 1,464, , , ,907 Business-type activities Water and sewer 1,864, , ,894 Total business-type activities 1,864, , ,894 Total primary government $ 3,329,232 $ 1,082,931 $ 339,187 $ 548,801 General revenues Taxes Property taxes, levied for general purposes Gross receipts taxes Gasoline and motor vehicle taxes Other taxes Investment income Fines and forfeitures Miscellaneous income Transfers Total general revenues Change in net position Net position, beginning Restatement (Note 17) Net position, beginning as restated Net position, ending The accompanying notes are an integral part of these financial statements 14

17 Exhibit A-2 Net (Expense) Revenue and Change in Net Position Governmental Activities Business-Type Activities Total $ (455,602) $ - $ (455,602) (183,953) - (183,953) (158,421) - (158,421) (523) - (523) (73,840) - (73,840) (27,125) - (27,125) (1,221) - (1,221) (900,685) - (900,685) - (457,628) (457,628) - (457,628) (457,628) (900,685) (457,628) (1,358,313) 54,670-54, ,300 12, ,821 31,184-31, , ,905 3,917 1,302 5,219 7,173-7, ,668 3, ,129 43,877 (43,877) - 1,013,694 (26,593) 987, ,009 (484,221) (371,212) 8,034,901 5,237,147 13,272,048 (4,967,641) (210,327) (5,177,968) 3,067,260 5,026,820 8,094,080 $ 3,180,269 $ 4,542,599 $ 7,722,868 15

18 STATE OF NEW MEXICO Balance Sheet Governmental Funds June 30, 2014 General Fund Fire Protection EMS Assets Cash $ 174,833 $ 690,267 $ 510,225 Receivables Taxes 105, Intergovernmental Other 8, Total assets $ 288,820 $ 690,275 $ 510,678 Liabilities Accounts payable $ 14,340 $ 2,812 $ 1,189 Accrued payroll 20, Total liabilities 34,962 2,812 1,189 Deferred inflows of resources Property taxes 3, Total deferred inflows of resources 3, Fund balances Spendable Restricted - 687, ,489 Unassigned 250, Total fund balances 250, , ,489 Total liabilities, deferred inflows of resources, and fund balances $ 288,820 $ 690,275 $ 510,678 The accompanying notes are an integral part of these financial statements 16

19 Exhibit B-1 Page 1 of 2 Other Governmental Funds Total $ 442,342 $ 1,817,667 21, ,189 66,428 66, ,813 $ 531,324 $ 2,021,097 $ 22,873 $ 41,214-20,622 22,873 61,836-3,269-3, ,451 1,705, , ,451 1,955,992 $ 531,324 $ 2,021,097 17

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21 STATE OF NEW MEXICO Exhibit B-1 Page 2 of 2 Governmental Funds Reconciliation of the Balance Sheet to the Statement of Net Position June 30, 2014 Amounts reported for governmental activities in the Statement of Net Position are different because: Fund balances- total governmental funds $ 1,955,992 Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds 1,818,332 Delinquent property taxes not collected within sixty days after year end are not considered "available" revenues and are considered to be deferred inflows of resources in the fund financial statements, but are considered revenue in the Statement of Activities 3,269 Certain liabilities, including loans payable and current and long-term portions of accrued compensated absences, are not due and payable in the current period and, therefore, are not reported in the funds: Accrued interest payable (1,221) Accrued compensated absences not due and payable at year end (11,720) Loans payable (584,383) Total net position of governmental activities $ 3,180,269 The accompanying notes are an integral part of these financial statements 19

22 STATE OF NEW MEXICO Statement of Revenues, Expenditures, and Change in Fund Balances Governmental Funds For the Year Ended June 30, 2014 General Fund Fire Protection EMS Revenues Taxes Property $ 55,688 $ - $ - Gross receipts 557, Gasoline and motor vehicle taxes 11, Other 15, Intergovernmental income State operating grants 103, ,634 22,830 State capital grants - 100,000 - Charges for services 41,098-70,101 Investment income ,103 Fines and forfeitures 5, Miscellaneous 32,951-70,000 Total revenues 823, , ,034 Expenditures Current General government 314, Public safety 299, ,753 91,393 Public works 138, Health and welfare 2, Culture and recreation 66, Conservation and development 27, Capital outlay 14,378 84,677 74,253 Total expenditures 863, , ,646 Excess (deficiency) of revenues over expenditures (40,117) 47,628 (1,612) Other financing sources (uses) Operating transfers in Operating transfers (out) (13,001) (16,327) (37,200) Proceeds from debt issuance - 584,383 - Total other financing sources (uses) (13,001) 568,056 (37,200) Net change in fund balances (53,118) 615,684 (38,812) Fund balances, beginning 261,710 71, ,301 Restatement (Note 17) 41, Fund balances, beginning as restated 303,707 71, ,301 Fund balance, ending $ 250,589 $ 687,463 $ 509,489 The accompanying notes are an integral part of these financial statements 20

23 Exhibit B-2 Page 1 of 2 Other Governmental Funds Total $ - $ 55,688 50, ,300 20,038 31, , ,905 78, ,987 3, ,107 1, ,199 1,985 3,917 1,440 7,173 21, , ,684 1,534, , ,579 93, ,894 25, ,820-2,360 10,990 77,947-27,125 22, , ,835 1,537,230 (8,151) (2,252) 145, ,812 (35,407) (101,935) - 584, , , , , ,994 1,283,784 4,203 46, ,197 1,329,984 $ 508,451 $ 1,955,992 21

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25 STATE OF NEW MEXICO Exhibit B-2 Page 2 of 2 Reconciliation of the Statement of Revenues, Expenditures, and Change in Fund Balances of Governmental Funds to the Statement of Activities For the Year Ended June 30, 2014 Amounts reported for governmental activities in the Statement of Activities are different because: Net change in fund balances- total governmental funds $ 626,008 Governmental funds report capital outlays as expenditures. However in the Statement of Activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense: Capital outlay 195,505 Depreciation expense (121,873) Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenue in the governmental funds: Decrease in deferred inflows of resources (1,018) Expenditures in the Statement of Activities that do not require the use of current financial resources and therefore are not reported as expenditures in the governmental funds: Increase in accrued compensated absences (9) Increase in accrued interest (1,221) The issuance of long-term debt (e.g. bonds, notes, leases) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds report the effect premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the Statement of Activities: Loan proceeds (584,383) Change in net position of governmental activities $ 113,009 The accompanying notes are an integral part of these financial statements 23

26 Revenues Taxes STATE OF NEW MEXICO Exhibit C-1 General Fund Statement of Revenues, Expenditures, and Change in Fund Balance Budget (Non-GAAP Budgetary Basis) and Actual For the Year Ended June 30, 2014 Variances Budgeted Amounts Actual Favorable (Unfavorable) Original Final Amounts Final to Actual Property taxes $ 51,533 $ 56,198 $ 56,197 $ (1) Gross receipts 565, , ,477 (1) Gasoline and motor vehicle 11,500 11,146 11,146 - Other 25,000 27,763 27,762 (1) Intergovernmental income Federal operating grants Federal capital grants State operating grants 154, , ,052 - State capital grants Charges for services 45,990 41,009 41,009 - Investment income Fines and forfeitures 8,000 5,957 5,957 - Miscellaneous income 21,250 28,391 28,392 1 Total revenues 883, , ,384 (2) Expenditures Current General government 319, , ,650 15,733 Public safety 319, , ,069 13,428 Public works 150, , ,243 11,683 Health and welfare 4,240 4,240 2,360 1,880 Culture and recreation 83,749 77,262 67,482 9,780 Conservation and development 27,000 30,400 26,711 3,689 Capital outlay 22,100 20,355 18,062 2,293 Total expenditures 926, , ,577 58,486 Excess (deficiency) of revenues over expenditures (43,181) (100,677) (42,193) 58,484 Other financing sources (uses) Designated cash (budgeted increase in cash) 43, ,677 - (100,677) Operating transfers in Operating transfers (out) - - (13,001) (13,001) Total other financing sources (uses) 43, ,677 (13,001) (113,678) Net change in fund balance - - (55,194) (55,194) Fund balance, beginning , ,705 Restatement (Note 17) - - (4,678) (4,678) Fund balance, beginning as restated , ,027 Fund balance, ending $ - $ - $ 174,833 $ 174,833 Net change in fund balance (non-gaap budgetary basis) $ (55,194) Adjustments to revenues for taxes and other receivables 3,818 Adjustments to expenditures for accounts payable and accrued payroll (1,742) Net change in fund balance (GAAP basis) $ (53,118) The accompanying notes are an integral part of these financial statements 24

27 Revenues Taxes STATE OF NEW MEXICO Exhibit C-2 Fire Protection Special Revenue Fund Statement of Revenues, Expenditures, and Change in Fund Balance Budget (Non-GAAP Budgetary Basis) and Actual For the Year Ended June 30, 2014 Variances Budgeted Amounts Actual Favorable (Unfavorable) Original Final Amounts Final to Actual Property taxes $ - $ - $ - $ - Gross receipts Gasoline and motor vehicle Other Intergovernmental income Federal operating grants Federal capital grants State operating grants 156, , ,634 - State capital grants - 100, ,000 - Charges for services Investment income Fines and forfeitures Miscellaneous income Total revenues 157, , , Expenditures Current General government Public safety 134, , ,652 10,151 Public works Health and welfare Culture and recreation Capital outlay 90, ,122 84, ,368 Total expenditures 224, , , ,519 Excess (deficiency) of revenues over expenditures (66,891) (67,931) 45, ,575 Other financing sources (uses) Designated cash (budgeted increase in cash) 66,891 67,931 - (67,931) Operating transfers in Operating transfers (out) - - (16,327) (16,327) Proceeds from debt issuance , ,383 Total other financing sources (uses) 66,891 67, , ,125 Net change in fund balance , ,700 Fund balance, beginning ,567 76,567 Fund balance, ending $ - $ - $ 690,267 $ 690,267 Net change in fund balance (non-gaap budgetary basis) $ 613,700 Adjustments to revenues for other receivables 8 Adjustments to expenditures for accounts payable 1,976 Net change in fund balance (GAAP basis) $ 615,684 The accompanying notes are an integral part of these financial statements 25

28 Revenues Taxes STATE OF NEW MEXICO Exhibit C-3 EMS Special Revenue Fund Statement of Revenues, Expenditures, and Change in Fund Balance Budget (Non-GAAP Budgetary Basis) and Actual For the Year Ended June 30, 2014 Variances Budgeted Amounts Actual Favorable (Unfavorable) Original Final Amounts Final to Actual Property taxes $ - $ - $ - $ - Gross receipts Gasoline and motor vehicle Other Intergovernmental income Federal operating grants Federal capital grants State operating grants 23,251 22,830 22,830 - State capital grants Charges for services 113,000 77,741 77,741 - Investment income 1,520 1,067 1,067 - Fines and forfeitures Miscellaneous income 10,000 70,000 70,000 - Total revenues 147, , ,638 - Expenditures Current General government Public safety 150, ,983 94,057 61,926 Public works Health and welfare Culture and recreation Capital outlay 105,500 99,838 74,330 25,508 Total expenditures 255, , ,387 87,434 Excess (deficiency) of revenues over expenditures (108,050) (84,183) 3,251 87,434 Other financing sources (uses) Designated cash (budgeted increase in cash) 108,050 84,183 - (84,183) Operating transfers in Operating transfers (out) - - (37,200) (37,200) Total other financing sources (uses) 108,050 84,183 (37,200) (121,383) Net change in fund balance - - (33,949) (33,949) Fund balance, beginning , ,174 Fund balance, ending $ - $ - $ 510,225 $ 510,225 Net change in fund balance (non-gaap budgetary basis) $ (33,949) Adjustments to revenues for other receivables (7,604) Adjustments to expenditures for accounts payable 2,741 Net change in fund balance (GAAP basis) $ (38,812) The accompanying notes are an integral part of these financial statements 26

29 STATE OF NEW MEXICO Exhibit D-1 Statement of Net Position Proprietary Fund June 30, 2014 Proprietary Fund Water and Sewer Assets Current assets Cash $ 501,236 Accounts receivable 153,859 Total current assets 655,095 Noncurrent assets Restricted cash 94,227 Capital assets 9,382,080 Less: accumulated depreciation (4,920,623) Total noncurrent assets 4,555,684 Total assets $ 5,210,779 Liabilities and net position Liabilities Current liabilities Accounts payable $ 63,319 Accrued payroll 14,223 Current portion of accrued compensated absences 6,136 Deposits 5,875 Accrued interest 8,510 Current portion of loans payable 376,461 Total current liabilities 474,524 Noncurrent liabilities Accrued compensated absences 153 Loans payable 193,503 Total noncurrent liabilities 193,656 Total liabilities 668,180 Net position Net investment in capital assets 3,891,493 Unrestricted 651,106 Total net position 4,542,599 Total liabilities and net position $ 5,210,779 The accompanying notes are an integral part of these financial statements 27

30 STATE OF NEW MEXICO Exhibit D-2 Statement of Revenues, Expenses, and Change in Net Position Proprietary Fund For the Year Ended June 30, 2014 Proprietary Fund Water and Sewer Operating revenues Charges for services $ 995,403 Total operating revenues 995,403 Operating expenses Personnel services 329,122 Contractual services 532,500 Supplies 13,047 Maintenance and materials 205,506 Utilities 98,251 Depreciation 289,222 Other operating expenditures 394,946 Total operating expenses 1,862,594 Operating income (loss) (867,191) Nonoperating revenues (expenses) Investment income 1,302 Miscellaneous income 3,461 Interest expense (1,810) Total nonoperating revenues (expenses) 2,953 Capital grants and contributions 423,894 Operating transfers in 3,086 Operating transfers (out) (46,963) Capital grants and net transfers 380,017 Change in net position (484,221) Total net position, beginning 5,237,147 Restatement (Note 17) (210,327) Total net position, beginning as restated 5,026,820 Total net position, ending $ 4,542,599 The accompanying notes are an integral part of these financial statements 28

31 STATE OF NEW MEXICO Exhibit D-3 Statement of Cash Flows Proprietary Fund For the Year Ended June 30, 2014 Proprietary Fund Water and Sewer Cash flows from operating activities Cash received from user charges $ 1,045,325 Cash payments to employees for services (857,410) Cash payments to suppliers for goods and services (738,889) Net cash provided (used) by operating activities (550,974) Cash flows from noncapital financing activities Miscellaneous income 3,461 Change in noncurrent accrued compensated absences (144) Interfund advances (payments) and transfers (43,877) Net cash provided (used) by noncapital financing activities (40,560) Cash flows from capital and related financing activities Capital grants and contributions 423,894 Interest paid (539) Proceeds from issuance of long-term debt 94,227 Principal payments on long-term debt (5,838) Acquisition of capital assets (41,809) Net cash provided (used) by capital and related financing activities 469,935 Cash flows from investing activities Interest on investments 1,302 Net cash provided (used) by investing activities 1,302 Net increase (decrease) in cash and cash equivalents (120,297) Cash and cash equivalents- beginning of year 715,760 Cash and cash equivalents- end of year $ 595,463 Reconciliation of operating income (loss) to net cash provided (used) by operating activities Operating income (loss) $ (867,191) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities Depreciation 289,222 Changes in assets and liabilities Receivables 49,922 Accounts payable (33,014) Accrued payroll expenses 4,033 Current accrued compensated absences 179 Customer deposits 5,875 Net cash provided (used) by operating activities $ (550,974) The accompanying notes are an integral part of these financial statements 29

32 STATE OF NEW MEXICO Exhibit E-1 Statement of Fiduciary Assets and Liabilities Agency Funds June 30, 2014 Assets Cash $ - Total assets $ - Liabilities Accounts payable $ - Total liabilities $ - The accompanying notes are an integral part of these financial statements 30

33 STATE OF NEW MEXICO Notes to Financial Statements June 30, 2014 NOTE 1. Summary of Significant Accounting Policies The (the Village ) was incorporated in 1948 under the laws of the State of New Mexico. The Village operates under a Council-Mayor form of government and provides the following services as authorized by its charter: public safety (police, ambulance, and fire), streets, sanitation, culture-recreation, education, public improvements, planning and zoning, and general administrative services. The is a body politic and corporate under the name and form of government selected by its qualified electors. The Village may: 1. Sue or be sued; 2. Enter into contracts and leases; 3. Acquire and hold property, both real and personal; 4. Have common seal, which may be altered at pleasure; 5. Exercise such other privileges that are incident to corporations of like character or degree that are not inconsistent with the laws of New Mexico; 6. Protect generally the property of its municipality and its inhabitants; 7. Preserve peace and order within the municipality; and 8. Establish rates for services provided by municipal utilities and revenue-producing projects, including amounts which the governing body determines to be reasonable in the operation of similar facilities. This summary of significant accounting policies of the Village is presented to assist in the understanding of Village s financial statements. The financial statements and notes are the representation of Village s management who is responsible for their integrity and objectivity. The financial statements of the Village have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to governmental units. During the year ended June 30, 2014, the Village adopted Governmental Accounting Standards Board (GASB) Statements No. 65, 66 and 67. GASB Statement No. 65, Items Previously Reported as Assets and Liabilities. The objective of this Statement is to establish accounting and financial reporting standards that reclassify, as deferred outflows of resources or deferred inflows of resources, certain items that were previously reported as assets and liabilities and recognizes, as outflows of resources or inflows or resources, certain items that were previously reported as assets and liabilities. The implementation of GASB 65 is not expected to have a significant impact on the Village s financial statements. GASB Statement No. 66, Technical Corrections-2012-An Amendment of GASB Statements No. 10 and No. 62. This objective of this Statement is to improve accounting and financial reporting for a governmental financial reporting entity by resolving conflicting guidance that resulted from the issuance of two pronouncements, Statements No. 54 and No. 62. The implementation of GASB 66 is not expected to have a significant impact on the Village s financial statements. GASB Statement No. 67. Financial Reporting for Pension Plans-An Amendment of GASB Statement No. 25. The objective of this Statement is to improve financial reporting by state and local governmental pension plans. This Statement results from a comprehensive review of the effectiveness of existing standards of accounting and financial reporting for pensions with regard to providing decision-useful information, supporting assessments of accountability and interperiod equity, and creating additional transparency. The implementation of GASB 67 is not expected to have a significant impact on the Village s financial statements. A. Financial Reporting Entity The financial reporting entity consists of (a) the primary government, (b) organizations for which the primary government is financially accountable and (c) other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity s financial statements to be misleading or incomplete. In evaluating how to define the Village for financial reporting purposes, management has considered all potential component units. The decision to include any potential component units in the financial reporting entity was made by applying the criteria set forth in GASB Statement No. 14, as amended by GASB Statement No. 39 and GASB Statement No. 61. Blended component units, although legally separate entities, are in substance part of the government s operations. Each discretely presented component unit is reported in a separate column in the government-wide financial statements to emphasize that it is legally separate from the government. 31

34 STATE OF NEW MEXICO Notes to Financial Statements June 30, 2014 NOTE 1. Summary of Significant Accounting Policies (continued) A. Financial Reporting Entity (continued) The basic, but not the only, criterion for including a potential component unit within the reporting entity is the governing body s ability to exercise oversight responsibility. The most significant manifestation of this ability is financial interdependency. Other manifestations of the ability to exercise oversight responsibility include, but are not limited to, the selection of governing authority, the designation of management, the ability to significantly influence operations, and accountability for fiscal matters. A second criterion used in evaluating potential component units is the scope of public service. Application of this criterion involves considering whether the activity benefits the government and/or its citizens. A third criterion used to evaluate potential component units for inclusion or exclusion from the reporting entity is the existence of special financing relationships, regardless of whether the government is able to exercise oversight responsibilities. Finally, the nature and significance of a potential component unit to the primary government could warrant its inclusion within the reporting entity. Based upon the application of these criteria, the Village does not have any component units required to be reported under GASB Statements No. 14, No. 39, or No. 61. B. Government-wide and fund financial statements The government-wide financial statements (i.e., the Statement of Net Position and the Statement of Activities) report information on all of the nonfiduciary activities of the primary government. 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 Statement of Net Position and the Statement of Activities were prepared using the economic resources measurement focus and the accrual basis of accounting. Revenues, expenses, gains, losses, assets and liabilities resulting from exchange-like transactions are recognized when the exchange takes place. Revenues, expenses, gains, losses, assets and liabilities resulting from non-exchange transactions are recognized in accordance with the requirements of GASB Statement No. 33, Accounting and Financial Reporting for Non-exchange Transactions. In the government-wide Statement of Net Position, both the governmental and business-type activities columns (a) are presented on a consolidated basis by column, (b) and are reported on a full accrual, economic resource basis, which recognizes all long-term assets and receivables as well as long-term debt and obligations. The Village s net position is reported in three parts- net investment in capital assets; restricted net assets; and unrestricted net assets. The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. 32

35 STATE OF NEW MEXICO Notes to Financial Statements June 30, 2014 NOTE 1. Summary of Significant Accounting Policies (continued) C. Measurement focus, basis of accounting, and financial statement presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes, net of estimated refunds, are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes, franchise taxes, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period, subject to the availability criterion. Sales and use taxes are classified as derived tax revenues and are recognized as revenue when the underlying exchange takes place and the revenues are measurable and available. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met, subject to the availability criterion. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the government. Program revenues included in the Statement of Activities are derived directly from the program itself or from parties outside the Village s taxpayer or citizenry, as a whole; program revenues reduce the cost of the function to be financed from the Village s general revenues. Program revenues are categorized as (a) charges for services, which include revenues collected for fees and use of Village facilities, etc., (b) program-specific operating grants, which includes revenues received from state and federal sources such as small cities assistance to be used as specified within each program grant agreement, and (c) program-specific capital grants and contributions, which include revenues from state sources to be used for capital projects. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. The Village reports all direct expenses by function in the Statement of Activities. Direct expenses are those that are clearly identifiable with a function. The Village does not currently employ indirect cost allocation systems. Depreciation expense is specifically identified by function and is included in the direct expense of each function. Interest on general long-term debt is considered an indirect expense and is reported separately on the Statement of Activities. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services in connection with the fund s principal ongoing operations. The principal operating revenue of the Village s enterprise fund is charges for services for the Village s utilities. Operating expenses for enterprise funds include the cost of services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the Village s policy to use restricted resources first, then unrestricted resources as they are needed. 33

36 STATE OF NEW MEXICO Notes to Financial Statements June 30, 2014 NOTE 1. Summary of Significant Accounting Policies (continued) C. Measurement focus, basis of accounting, and financial statement presentation (continued) Under the requirements of GASB Statement No. 34, the Village is required to present certain of its governmental funds as major based upon certain criteria. The major funds presented in the fund financial statements include the following, which includes funds that were not required to be presented as major but were at the discretion of management: The Village reports the following major governmental funds: The General Fund is the government s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Fire Protection Special Revenue Fund was created to account for the operations and maintenance of the fire department. (Village Ordinance) The EMS Special Revenue Fund was created to account for monies received for providing emergency medical services to the residents of the Village. (Village Ordinance) The Village reports its proprietary fund as a major fund. The proprietary fund includes: The Water and Sewer Fund is used to account for the activities of the Village s water and sewer operations. Additionally, the government reports the following fund types: The Special Revenue Funds account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes. The Capital Projects Funds account for the acquisition of capital assets or construction of major capital projects not being financed by proprietary or nonexpendable trust funds. The Fiduciary Funds account for resources held for others. They are purely custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. These funds are used to account for assets that the Village holds for others in an agency capacity. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are payments-in-lieu of taxes and other charges between the government s enterprise funds and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported in the Statement of Activities. Deposits and Investments: The Village s cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition. State statutes authorize the Village to invest in Certificates of Deposit, obligations of the U.S. Government, and the State Treasurer s Investment Pool. Investments for the Village are reported at fair value. The State Treasurer s Pool operates in accordance with appropriate state laws and regulations. The reported value of the pool is the same as the fair value of the pool shares. 34

37 STATE OF NEW MEXICO Notes to Financial Statements June 30, 2014 NOTE 1. Summary of Significant Accounting Policies (continued) D. Assets, Liabilities, and Net Position or Equity Receivables and Payables: Interfund activity is reported as loans, services provided, reimbursements, or transfers. Loans are reported as interfund receivables and payables as appropriate and are subject to elimination upon consolidation. Services provided, deemed to be at market or near market rates, are treated as revenues and expenditures/expenses. Reimbursements are when one fund incurs a cost, charges the appropriate benefiting fund, and reduces its related cost as a reimbursement. All other interfund transactions are treated as transfers. Transfers between governmental or between proprietary funds are netted as part of the reconciliation to the government-wide financial statements. Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources in the event they are not received within 60 days of year end. All receivables are reported at their gross value and, where appropriate, are reduced by the estimated portion that is expected to be uncollectible. In the government-wide and governmental fund financial statements, delinquent property taxes are recorded when levied. Property taxes are considered to be 100% collectible. Property taxes are levied on November 1 based on the assessed value of property as listed on the previous January 1 and are due in two payments by November 10th and April 10th. Property taxes uncollected after November 10 th and April 10 th are considered delinquent and the Village may assess penalties and interest. The taxes attach as an enforceable lien on property thirty (30) days thereafter, at which time they become delinquent. Property taxes are collected by Otero County and remitted monthly to the Village. Prepaid Expenses: Prepaid expenses include insurance and contract payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both the government-wide and fund financial statements. Restricted Assets: Restricted assets consist of those funds expendable for operating purposes but restricted by donors or other outside agencies as to the specific purpose for which they may be used. Capital Assets: Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the government as assets with an initial, individual cost of more than $5,000 (amount not rounded) and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Pursuant to the implementation of GASB Statement No. 34, the historical cost of infrastructure assets, (retroactive to 1979) are included as part of the governmental capital assets reported in the government wide statements. Information Technology Equipment including software is being capitalized and included in furniture, fixtures, and equipment in accordance with NMAC C (5). Donated capital assets are recorded at estimated fair market value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed. The total interest expense capitalized by the Village during the current fiscal year was $0. No interest was included as part of the cost of capital assets under construction. 35