DEPARTMENT OF TREASURY Nick A. Khouri, State Treasurer

Transcription

1 STATE OF MICHIGAN Rick Snyder, Governor DEPARTMENT OF TREASURY Nick A. Khouri, State Treasurer Report on Financial Statements VILLAGE OF CASSOPOLIS COUNTY OF CASS June 2016 Local Government Financial Services Division Bureau of Local Government Services

2 VILLAGE OF CASSOPOLIS CASS COUNTY VILLAGE COUNCIL (November 30, 2015) Dianna K. McGrew President David L. Johnson President Pro-Tem Katherine Yoder Trustee Cynthia Jackson-Ash Trustee William Blount Trustee Geraldine Norwood-Sims Trustee Eugene Wagner Trustee Cynthia M. LaGrow Manager Tonia Betty Clerk TOWNSHIP POPULATION ,774 TAXABLE VALUATION $29,545,252

3 4425 (Rev ) RICK SNYDER GOVERNOR STATE OF MICHIGAN DEPARTMENT OF TREASURY LANSING NICK A. KHOURI STATE TREASURER October 6, 2016 Village of Cassopolis 117 S. Broadway Street Cassopolis, Michigan Independent Auditor's Report Dear Council Members: Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Village of Cassopolis, Cass County, Michigan, as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the Village of Cassopolis basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of 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 P.O. BOX LANSING, MICHIGAN

4 Village of Cassopolis Page 2 October 6, 2016 for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 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 of Cassopolis, Cass County, Michigan, as of June 30, 2016, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis on pages 1 through 7 as well as budgetary comparison information in Exhibits H through J be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary and Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Village of Cassopolis basic financial statements. The accompanying supplementary and related information presented in Exhibits K and L, is presented for the purpose of additional analysis and is not a required part of the basic financial statements.

5 Village of Cassopolis Page 3 October 6, 2016 The accompanying supplementary and related information presented in Exhibits K and L is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the accompanying supplementary and related information presented in Exhibits K and L is fairly stated in all material respects in relation to the basic 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 October 6, 2016, on our consideration of the Village of Cassopolis internal control over financial reporting and 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 of Cassopolis internal control over financial reporting and compliance. Sincerely, Cary Jay Vaughn, CPA, CGFM Audit Manager Local Government Financial Services Division

6 VILLAGE OF CASSOPOLIS TABLE OF CONTENTS MANAGEMENT S DISCUSSION AND ANALYSIS... 1 BASIC FINANCIAL STATEMENTS EXHIBIT A--Government-Wide Statement of Net Position... 8 EXHIBIT B--Government-Wide Statement of Activities... 9 EXHIBIT C--Balance Sheet--Governmental Funds Reconciliation of the Balance Sheet to the Statement of Net Position EXHIBIT D--Statement of Revenues, Expenditures, and Changes in Fund Balances--Governmental Funds EXHIBIT D-1--Reconciliation of the Statement of Revenues, Expenditures, and Change in Fund Balances of Governmental Funds to the Statement of Activities EXHIBIT E--Statement of Net Position--Proprietary Funds EXHIBIT F--Statement of Revenues, Expenses, and Changes in Net Position Proprietary Funds EXHIBIT G--Statement of Cash Flows--Proprietary Funds NOTES TO FINANCIAL STATEMENTS REQUIRED SUPPLEMENTARY INFORMATION EXHIBIT H--Budgetary Comparison Schedule--General Fund EXHIBIT I--Budgetary Comparison Schedule--Major Street-- Major Special Revenue Fund EXHIBIT J--Budgetary Comparison Schedule--Local Street-- Major Special Revenue Fund EXHIBIT K--Schedule of Revenues--Budget and Actual--General Fund EXHIBIT L--Schedule of Expenditures and Other Financing Uses Budget and Actual--General Fund Page i

7 VILLAGE OF CASSOPOLIS TABLE OF CONTENTS (CONTINUED) Page Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance With Government Auditing Standards Report to Those Charged With Governance Schedule of Findings and Responses ii

8 MANAGEMENT S DISCUSSION AND ANALYSIS For the Fiscal Year Ended June 30, 2016 Our discussion and analysis of the Village of Cassopolis (Village) financial performance provides an overview of the Village s financial activities for the year ended June 30, USING THIS ANNUAL REPORT This annual report consists of three parts: management s discussion and analysis (this section), the basic financial statements, and required supplementary information. This report also contains supplementary information in addition to the basic financial statements. The basic financial statements include a series of financial statements. The Statement of Net Position and the Statement of Activities on Exhibit A and B provide information about the activities of the Village as a whole and present a longer-term view of the Village s finances. Fund financial statements start with Exhibit C. For governmental activities, these statements tell how these services were financed in the short term as well as what remains for future spending. Fund financial statements also report the Village s operations in more detail than the government-wide statements by providing information about the Village s most significant funds. The remaining statements provide financial information about activities for which the Village acts solely as a trustee or agent for the benefit of those outside of the government. REPORTING THE VILLAGE AS A WHOLE The Statement of Net Position and the Statement of Activities One of the most important questions asked about the Village s finances is, Is the Village as a whole better or worse off as a result of the year s activities? The Statement of Net Position and the Statement of Activities report information about the Village as a whole and about its activities in a way that helps answer this question. These statements include all assets and liabilities using accrual basis of accounting, which is similar to the accounting used by most private-sector companies. All of the current year s revenues and expenses are taken into account regardless of when cash is received or paid. These two statements report the Village s net position and changes in them. You can think of the Village s net position the difference between assets and liabilities as one way to measure the Village s financial health, or financial position. Over time, increases or decreases in the Village s net position are one indicator of whether its financial health is improving or deteriorating. You will need to consider other nonfinancial factors, however, such as changes in the Village s property tax base and the condition of Village s infrastructure, to assess the overall health of the Village. In the Statement of Net Position and the Statement of Activities we divide the Village into two kinds of activities: Governmental activities--most of the Village s basic services are reported here, including the police, fire, public works, and general administration. Property taxes, franchise fees, and state grants finance most of these activities. 1

9 MANAGEMENT S DISCUSSION AND ANALYSIS For the Fiscal Year Ended June 30, 2016 Business-type activities--the Village charges a fee to customers to help it cover all or most of the cost of certain services it provides. The Village s sewer, water and garbage systems are reported here. REPORTING THE VILLAGE S MAJOR FUND Fund Financial Statements Our analysis of the Village s major funds begins with Exhibit C and D with additional information provided in Note A of the Notes to the Financial Statements. The special revenue funds are required to be established by state law such as the Major Street Fund and the Local Street Fund. The Village s two kinds of funds, governmental and proprietary, use different accounting approaches. Governmental funds Most of the Village s basic services are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end that are available for spending. These funds are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the Village s general government operations and the basic services it provides. Governmental fund information helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance the Village s programs. We describe the relationship (or differences) between governmental activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds in a reconciliation at the bottom of the fund financial statements of Exhibit C and Exhibit D-1. Proprietary funds When the Village charges customers for the services it provides, these services are generally reported in proprietary funds. Proprietary funds are reported in the same way that all activities are reported in the Statement of Net Position and the Statement of Activities. In fact, the Village s enterprise funds (a component of proprietary funds) are the same as the business-type activities we report in the government-wide statements but provide more detail and additional information, such as cash flows, for proprietary funds. Additional Required Supplementary Information (RSI) Following the basic financial statements is additional Required Supplementary Information that further explains and supports the information in the financial statements. The Required Supplementary Information includes budgetary comparison schedules. 2

10 MANAGEMENT S DISCUSSION AND ANALYSIS For the Fiscal Year Ended June 30, 2016 THE VILLAGE AS A WHOLE The Village s combined net position increased from $6,012,444 to $6,430,411 or $417,967 for the year ended June 30, This is similar to the previous year when the net position increased $328,061. Our analysis focuses on the net position (Table 1) and changes in net position (Table 2) of the Village s governmental and business-type activities. Table 1 Net Position of Governmental and Business Type Activities Total Governmental Activities Business-Type Activities Primary Government Current and Other Assets $ 929,732 $ 1,145,493 $ 1,168,964 $ 1,314,614 $ 2,098,696 $ 2,460,107 Noncurrent Assets 1,524,885 1,488,417 3,296,769 3,469,645 4,821,654 4,958,062 Total Assets 2,454,617 2,633,910 4,465,733 4,784,259 6,920,350 7,418,169 Current Liabilities 20,085 58,070 60, ,371 80, ,441 Noncurrent Liabilities 81,263 77, , , , ,482 Total Liabilities 101, , , , , ,923 Deferred Inflows of Resources Unavailable Revenue 7,955 7, ,955 7,835 Net Position Net Investment in Capital Assets 1,479,533 1,461,078 2,509,302 2,702,159 3,988,835 4,163,237 Restricted 186, ,353 64,467 64, , ,839 Unrestricted 679, ,833 1,093,361 1,173,502 1,772,968 2,016,335 Total Net Position $ 2,345,314 $ 2,490,264 $ 3,667,130 $ 3,940,147 $ 6,012,444 $ 6,430,411 The net position of the Village s governmental activities increased by 6%, or $144,950 ($2,490,264 compared to $2,345,314). The net investment in capital assets decreased as the Village s capital assets continuing to depreciate despite the purchase of park equipment, new police vehicle, and lawn mower. This increase in the unrestricted net position was due to keeping expenses at a minimum with less building repairs performed, no drain assessment this year, less capital outlay purchases, and the final debt payment on a police vehicle was made last year. 3

11 MANAGEMENT S DISCUSSION AND ANALYSIS For the Fiscal Year Ended June 30, 2016 The net position of the Village s business-type activities increased by 7.4%, or $273,017 ($3,940,147 compared to $3,667,130). The net investment in capital assets increased with the lift station #1 rebuild, a new generator, and new meters offset by the continued depreciation of the sewer and water systems. The increase in the unrestricted net position was due to increased revenues from installing the new meters to gain more accurate readings and keeping expenses to a minimum. Table 2 Changes in Net Position Total Governmental Activities Business-Type Activities Primary Government Program Revenue Charges for Services $ 242,917 $ 230,503 $ 1,469,567 $ 1,631,282 $ 1,712,484 $ 1,861,785 Operating Grants and Contributions 357, ,416 64, , , ,086 Capital Grants and Contributions 127, ,800 - General Revenue Property Taxes 562, , , ,203 State-Shared Revenues 181, , , ,683 Franchise Fees 12,632 13, ,632 13,490 Rents 34,302 33, ,302 33,180 Unrestricted Investment Earnings 14,217 5, ,716 14,275 14,191 Other 39,362 42, ,362 42,574 Transfers - (20,000) - 20, Total Revenues 1,573,595 1,547,524 1,533,800 1,914,668 3,107,395 3,462,192 Program Expenses General Government 322, , , ,647 Public Safety 383, , , ,788 Public Works 352, , , ,741 Community and Economic Development 198, , , ,355 Recreation and Cultural 23,806 26, ,806 26,803 Interest on Debt 3,795 2, ,795 2,240 Sewer , , , ,787 Water , , , ,954 CAUA , , , ,241 Garbage ,363 99, ,363 99,669 Total Expenses 1,284,876 1,402,574 1,494,458 1,641,651 2,779,334 3,044,225 Change in Net Position $ 288,719 $ 144,950 $ 39,342 $ 273,017 $ 328,061 $ 417,967 4

12 MANAGEMENT S DISCUSSION AND ANALYSIS For the Fiscal Year Ended June 30, 2016 Governmental Activities The total revenues for the Village s governmental activities decreased by 1.7% ($26,071), while expenses increased 9.2% ($117,698). The primary reason for the decrease in revenues is the Community Development Block Grant (CDBG) received as a capital grant to help fund the Labar Drive extension project. The operating grants and contribution increased due to a CDBG grant received for Postle Operating that also increased the community and economic development expense as the grant was a pass through grant for increasing jobs in the Village. Business-Type Activities The revenues for the Village s business-type activities increased by 24.8% ($380,868), while expenses also increased 9.8% ($147,193). The primary increase in the revenues and the expenses are due to the Sewer and Wastewater (SAW) grant received and the costs incurred through the process of creating a wastewater and storm water asset management plan. The Village Council also approved to have water asset management plan performed on the Village s water system, but this amount is not covered by a grant. THE VILLAGE S FUNDS As the Village completed the year, its governmental fund (as presented in the balance sheet on Exhibit C) reported a fund balance of $871,102, which is more than last year s $751,025. The primary reasons for the governmental funds decrease mirror the governmental activities analysis highlighted in the prior paragraph. The Village s major funds in 2016 were the General Fund, Major Street Fund, Local Street Fund, Sewer Fund, Water Fund, and CAUA Fund. The General Fund pays for most of the Village s governmental services. The most significant are for general government, public safety, and public works activities. These services are supported by the operating millage and State-shared revenues. The Major Street Fund and the Local Street Fund performs public works and account for the Michigan Transportation Funds received from the State and the maintenance performed on the Village s street system. The Sewer, Water and CAUA Funds are described above. 5

13 MANAGEMENT S DISCUSSION AND ANALYSIS For the Fiscal Year Ended June 30, 2016 GENERAL FUND BUDGETARY HIGHLIGHT Over the course of the year, the Village s budget was monitored monthly to continuously evaluate the financial position of the Village. Adjustments were approved throughout the year to try and take into account the activities of the Village for the year. The Village continues to be conservative in its budgeting. However, significant amendments were made to increase the tax revenues and cemetery expenses for the increased activity for the year in the General Fund. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets As of June 30, 2016, the Village had $4,893,576 invested in a broad range of capital assets, including land, buildings, land improvements, vehicles, equipment, street and sidewalk infrastructure, and water and sewer infrastructure. This amount represents a net increase (including additions and deductions) of $136,390. This fiscal year s capital asset addition in the governmental activities was a new public works vehicle for $28,890, new mower and brush hog for $10,916, and park equipment for $31,020. The capital asset additions in the business-type activities were sewer system improvements of $317,268, a generator for $31,780, and $46,020 for new meters. Table 3 Capital Assets at Year-End Total Governmental Activities Business-Type Activities Primary Government Land $ 137,006 $ 137,006 $ 63,597 $ 63,597 $ 200,603 $ 200,603 Land Improvements 376, , , ,394 Construction in Progress ,557-33,557 - Buildings and Improvements 744, ,332 88,225 88, , ,557 Equipment and Furniture 162, , , , , ,721 Vehicles 494, , , ,568 Park Improvments 72, , , ,231 Infrastructure 788, , , ,678 Sewer System - - 3,456,264 3,796,542 3,456,264 3,796,542 Water System - - 3,753,233 3,776,243 3,753,233 3,776,243 Total Capital Assets 2,775,056 2,823,182 7,551,844 7,913,355 10,326,900 10,736,537 Total Accumulated Depreciation (1,250,171) (1,334,765) (4,319,543) (4,508,196) (5,569,714) (5,842,961) Total Net Capital Assets $ 1,524,885 $ 1,488,417 $ 3,232,301 $ 3,405,159 $ 4,757,186 $ 4,893,576 The Village s fiscal-year capital budget calls for one new debt obligation along with a grant received to finance future sewer projects. More detailed information about the Village s capital assets is presented in Note F to the financial statements. 6

14 MANAGEMENT S DISCUSSION AND ANALYSIS For the Fiscal Year Ended June 30, 2016 Debt As of June 30, 2016, the Village had $730,339 in bonds and installment purchase agreements outstanding versus $768,352 from the previous year, a decrease of $38,013, as shown in Table 4. The Village did not issue any new debt for fiscal year ending June 30, The decrease in long term debt is due to the continued scheduled payments on the debt obligations. Table 4 Outstanding Debt at Year-End Total Governmental Activities Business-Type Activities Primary Government Installment Purchases $ 45,352 $ 27,339 $ - $ - $ 45,352 $ 27,339 Bonds Payable , , , ,000 Total Outstanding Debt $ 45,352 $ 27,339 $ 723,000 $ 703,000 $ 768,352 $ 730,339 More detailed information about the Village s long term debt obligations is presented in Note H to the financial statements. In addition to the debt obligations shown in Table 4, the Village had $58,143 in vested employee benefits payable presented in more detail in Note I to the financial statements. ECONOMIC FACTORS AND NEXT YEAR S BUDGET The upcoming fiscal year will present many challenges to the Village as it moves forward trying to reduce its expenses while still trying to provide the services at a level. The Village also may see a decrease in personal property tax collections as it relates to the phasing out of the tax in the next year as well as projected decreases in the assessed value of homes in the community for the fiscal year. The Village will be continuously analyzing its budget as the year progresses to continue to try and implement the difficult decisions that lie ahead. CONTACTING THE VILLAGE S FINANCIAL MANAGEMENT This financial report is intended to provide our citizens, taxpayers, customers and investors with a general overview of the Village s finances and to show accountability for the money it receives. If you have questions about this report or need additional information, we welcome you to contact the Village's office at: 117 S. Broadway Street, Cassopolis, MI (Phone Number ). 7

15 EXHIBIT A GOVERNMENT-WIDE STATEMENT OF NET POSITION June 30, 2016 Governmental Business-Type ASSETS Activities Activities Total Current Assets Cash and Cash Equivalents $ 1,048,520 $ 1,124,663 $ 2,173,183 Receivables (Net) Loans 7,835-7,835 Accounts 5, , ,115 Due From State 67,964 49, ,057 Due From Other Governments - 24,102 24,102 Internal Balances 4,098 (4,098) - Prepaid Expenses 11,513 9,302 20,815 Total Current Assets 1,145,493 1,314,614 2,460,107 Noncurrent Assets Restricted Cash - 64,486 64,486 Capital Assets--Nondepreciating 137,006 63, ,603 Capital Assets--Depreciating 1,351,411 3,341,562 4,692,973 Total Noncurrent Assets 1,488,417 3,469,645 4,958,062 Total Assets 2,633,910 4,784,259 7,418,169 LIABILITIES Current Liabilities Accounts Payable 30,370 86, ,076 Accrued Liabilities 27,700 8,332 36,032 Deposits Payable - 20,355 20,355 Interest Payable - 17,978 17,978 Total Current Liabilities 58, , ,441 Long-Term Liabilities Installment Purchase Agreements Payable Due Within One Year 19,130-19,130 Due in More Than One Year 8,209-8,209 Bonds Payable Due Within One Year - 21,000 21,000 Due in More Than One Year - 682, ,000 Vested Employee Benefits Due Within One Year 12,000 6,000 18,000 Due in More Than One Year 38,402 1,741 40,143 Total Long-Term Liabilities 77, , ,482 Total Liabilities 135, , ,923 DEFERRED INFLOWS OF RESOURCES Unavailable Revenue 7,835-7,835 NET POSITION Net Investment in Capital Assets 1,461,078 2,702,159 4,163,237 Restricted for Construction Code Activity 18,794-18,794 Major Street 113, ,528 Local Street 47,944-47,944 Drug Law Enforcement 6,087-6,087 Debt Service - 64,486 64,486 Unrestricted 842,833 1,173,502 2,016,335 Total Net Position $ 2,490,264 $ 3,940,147 $ 6,430,411 The Notes to Financial Statements are an integral part of this statement. 8

16 GOVERNMENT-WIDE STATEMENT OF ACTIVITIES For the Fiscal Year Ending June 30, 2016 PROGRAM REVENUES NET (EXPENSE) REVENUE AND CHANGES IN NET POSITION EXHIBIT B Operating Charges for Grants and Governmental Business-Type Functions/Programs Expenses Services Contributions Activities Activities Total Primary Government Governmental Activities General Government $ 277,647 $ 22,284 $ - $ (255,363) $ - $ (255,363) Public Safety 412,788 22,358 2,285 (388,145) - (388,145) Public Works 352, , ,131 10,131-10,131 Community and Economic Development , , ,070 Recreational and Cultural 26, (26,753) - (26,753) Interest 2, (2,240) - (2,240) Total Governmental Activities 1,072, , ,416 (332,300) - (332,300) Business-Type Activities Sewer 789, , ,670-45,349 45,349 Water 417, , ,866 38,866 CAUA 334, , , ,601 Garbage 99, , ,485 2,485 Total Business-Type Activities 1,641,651 1,631, , , ,301 Total Primary Government $ 2,713,870 $ 1,861,785 $ 764,086 (332,300) 244,301 (87,999) General Revenues Property Taxes 551, ,203 State-Shared Revenues 181, ,683 Franchise Fees 13,490-13,490 Rents 33,180-33,180 Unrestricted Investment Earnings 5,475 8,716 14,191 Other 42,574-42,574 Transfers (20,000) 20,000 - Total General Revenues Change in Net Position Net Position--Beginning Net Position--Ending The Notes to Financial Statements are an integral part of this statement ,605 28, , , , ,322 2,345,314 3,667,130 6,012,444 $ 2,820,619 $ 3,940,147 $ 6,760,766

17 BALANCE SHEET--GOVERNMENTAL FUNDS RECONCILIATION TO THE STATEMENT OF NET POSITION June 30, 2016 ASSETS Non-Major MAJOR FUNDS Governmental Total Major Local Drug Law Governmental General Street Street Enforcement Funds Cash and Cash Equivalents $ 695,962 $ 96,369 $ 36,751 $ 6,087 $ 835,169 Receivables Loans 7, ,835 Accounts 5, ,563 Due From State 38,477 17,856 11,631-67,964 Due From Other Funds 4, ,098 Prepaid Expenses 11, ,426 Total Assets $ 763,042 $ 114,392 $ 48,534 $ 6,087 $ 932,055 LIABILITIES AND FUND BALANCE Liabilities Accounts Payable $ 25,600 $ 110 $ - $ - $ 25,710 Accrued Liabilities 26, ,408 Total Liabilities 51, ,118 DEFERRED INFLOWS OF RESOURCES Unavailable Revenue 7, ,835 Fund Balances Nonspendable 11, ,426 Restricted Construction Code Activity 18, ,794 Major Street - 113, ,361 Local Street ,792-47,792 Drug Law Enforcement ,087 6,087 Unassigned 673, ,642 Total Fund Balance 703, ,528 47,944 6, ,102 Total Liabilities and Fund Balance $ 763,042 $ 114,392 $ 48,534 $ 6,087 $ 932,055 Fund Balances--Total Governmental Funds $ 871,102 Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. 1,488,417 Internal service funds are used by management to charge the costs of certain activities such as insurance and telephone service to individual governmental funds. The assets and liabilities of the internal service funds are included in governmental activities in the Statement of Net Position. 208,486 Certain liabilities, such as bonds payable, compensated absences and other post-employment benefits are not due and payable in the current period and, therefore, are not reported in the funds. (77,741) Net Position of Governmental Activities $ 2,490,264 The Notes to Financial Statements are an integral part of this statement. 10 EXHIBIT C

18 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For the Fiscal Year Ending June 30, 2016 EXHIBIT D Non-Major MAJOR FUNDS Governmental Total Major Local Drug Law Governmental General Street Street Enforcement Funds Revenues Taxes $ 551,203 $ - $ - $ - $ 551,203 Licenses and Permits 31, ,102 Federal Grants 330, ,000 State Grants 191, ,581 59, ,167 Charges for Services 21, ,347 Fines and Forfeitures 5, ,803 Interest and Rentals 38, ,943 Other Revenue 42, ,574 Total Revenues 1,211, ,547 59,661-1,381,139 Expenditures Current General Government 250, ,249 Public Safety 395, ,151 Public Works 33,511 95,220 65, ,448 Community and Economic Development 330, Recreational and Cultural 19, ,586 Capital Outlay 31, ,020 Debt Service 20, ,253 Total Expenditures 1,080,085 95,220 65, ,707 Excess of Revenues Over (Under) Expenditures 131,846 14,327 (6,056) (40) 470,432 Other Financing Sources (Uses) Interfund Transfers In , ,845 Interfund Transfers (Out) (73,845) (54,000) - - (127,845) Total Other Financing Sources (Uses) (73,845) (54,000) 107,845 - (20,000) Net Change in Fund Balance 58,001 (39,673) 101,789 (40) 450,432 Fund Balance--July 1, , ,201 (53,845) 6, ,025 Fund Balance--June 30, 2016 $ 703,543 $ 113,528 $ 47,944 $ 6,087 $ 1,201,457 The Notes to Financial Statements are an integral part of this statement. 11

19 EXHIBIT D-1 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For the Fiscal Year Ending June 30, 2016 NET CHANGE IN FUND BALANCES--TOTAL GOVERNMENTAL FUNDS $ 450,432 Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds report capital outlays as expenditures. However, in the Statement of Activities the costs of those assets is allocated over their estimated useful lives and reported as depreciation expense. Add--Capital Outlay 31,020 Deduct--Depreciation Expense (92,406) Repayment of bond principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the Statement of Net Position. Add--Principal Payments on Long-Term Liabilities 18,013 Internal service funds are used by management to charge the costs of certain activities such as insurance and telephone service to individual governmental funds. The net revenue (expense) attributable to those funds is reported with governmental activities. Add--Net Operating Income (Loss) From Governmental Activities in Internal Service Funds 82,737 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 the funds: Increase in Compensated Absences (14,491) CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES $ 475,305 The Notes to Financial Statements are an integral part of this statement. 12

20 STATEMENT OF FUND NET POSITION-- PROPRIETARY FUNDS June 30, 2016 BUSINESS-TYPE ACTIVITIES ENTERPRISE FUNDS EXHIBIT E GOVERNMENTAL ACTIVITIES INTERNAL SERVICE FUND ASSETS Sewer Water CAUA (Village fund only) Non-Major Garbage Total Enterprise Funds Motor Vehicle Pool Current Assets Cash and Cash Equivalents $ 573,568 $ 541,916 $ - $ 9,179 $ 1,124,663 $ 213,351 Accounts Receivable 57,256 45,892-8, ,552 - Due From State 49, ,093 - Due From Other Governments ,102-24,102 - Prepaid Expenses 3,510 3,417 2,375-9, Total Current Assets 683, ,225 26,477 17,583 1,318, ,438 Noncurrent Assets Restricted Cash - 64, ,486 - Capital Assets--Nondepreciating 29,114 34, ,597 - Capital Assets--Depreciating 1,669,589 1,671, ,341,562 84,468 Total Noncurrent Assets 1,698,703 1,770, ,469,645 84,468 Total Assets 2,382,130 2,362,167 26,477 17,583 4,788, ,906 LIABILITIES Current Liabilities Accounts Payable 52,463 23,197 3,331 7,715 86,706 4,660 Accrued Liabilities 2,666 2,702 2,964-8, Deposits Payable - 20, ,355 - Interest Payable - 17, ,978 - Due to Other Funds - - 4,098-4,098 - Total Current Liabilities 55,129 64,232 10,393 7, ,469 4,952 Noncurrent Liabilities Bonds Payable- Due Within One Year - 21, ,000 - Due in More Than One Year - 682, ,000 - Vested Employee Benefits Due Within One Year 3,000 3, ,000 - Due in More Than One Year ,741 - Total Noncurrent Liabilities 3, , ,741 - Total Liabilities 59, ,000 10,393 7, ,210 4,952 NET POSITION Net Investment in Capital Assets 1,698,703 1,003, ,702,159 84,468 Restricted for Debt Service - 64, ,486 - Unrestricted 624, ,225 16,084 9,868 1,173, ,486 Total Net Position $ 2,323,028 $ 1,591,167 $ 16,084 $ 9,868 $ 3,940,147 $ 292,954 The Notes to Financial Statements are an integral part of this statement. 13

21 STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION--PROPRIETARY FUNDS For the Fiscal Year Ending June 30, 2016 BUSINESS-TYPE ACTIVITIES ENTERPRISE FUNDS EXHIBIT F GOVERNMENTAL ACTIVITIES INTERNAL SERVICE FUND CAUA (Village fund only) Non-Major Garbage Total Enterprise Funds Motor Vehicle Pool Sewer Water Operating Revenues Charges for Services $ 580,466 $ 456,820 $ 330,325 $ 102,154 $ 1,469,765 $ 185,741 Total Operating Revenues 580, , , ,154 1,469, ,741 Operating Expenses Wages and Fringes 147, , , ,221 12,899 Operating Expenses 8,888 16,481 11,653-37,022 28,194 Repairs and Maintenance 41,466 13,984 29,654-85,104 41,394 Contracted Services 449,842 57,841 87,540 99, ,892 3,072 Utilities 19,187 21,140 30,468-70,795 3,201 Insurance 8,419 1,340 1,909-11,668 - Vehicle Rental 31,959 20,775 35,026-87,760 - Depreciation 82, , ,654 14,888 Total Operating Expenses 789, , ,241 99,669 1,609, ,648 Operating Income (Loss) (209,321) 71,401 (3,916) 2,485 (139,351) 82,093 Nonoperating Revenues (Expenses) State Grant 254, ,670 - Contributions From Local Units 161, ,517 - Interest Earned on Investments 6,764 1, , Interest Expense - (32,535) - - (32,535) - Total Nonoperating Revenues (Expenses) 422,951 (30,583) , Income (Loss) Before Contributions and Transfers 213,630 40,818 (3,916) 2, ,017 82,737 Interfund Transfers Transfers In ,000-20,000 - Change in Net Position 213,630 40,818 16,084 2, ,017 82,737 Total Net Position--July 1, ,109,398 1,550,349-7,383 3,667, ,217 Total Net Position--June 30, 2016 $ 2,323,028 $ 1,591,167 $ 16,084 $ 9,868 $ 3,940,147 $ 292,954 The Notes to Financial Statements are an integral part of this statement. 14

22 EXHIBIT G STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Fiscal Year Ending June 30, 2016 GOVERNMENTAL ACTIVITIES BUSINESS-TYPE ACTIVITIES INTERNAL SERVICE ENTERPRISE FUNDS FUND CAUA (Village fund only) Non-Major Garbage Total Enterprise Funds Motor Vehicle Pool Sewer Water Cash Flows From Operating Activities Cash Received From Customers $ 581,063 $ 451,511 $ 422,580 $ 104,825 $ 1,559,979 $ 185,741 Cash Payments to Employees for Services and Benefits (148,422) (148,548) (135,027) - (431,997) (12,607) Cash Payments to Suppliers for Goods and Services (517,099) (110,729) (205,902) (91,954) (925,684) (73,547) Net Cash Provided by Operating Activities (84,458) 192,234 81,651 12, ,298 99,587 Cash Flows From Noncapital Financing Activities State Grants 205, ,576 - Due To Other Funds - - (101,651) (3,692) (105,343) - Transfer In 20,000-20,000 - Net Cash Provided by Noncapital Financing Activities 205,576 - (81,651) (3,692) 120,233 - Cash Flows From Capital and Related Financing Activities Acquisition of Capital Assets (338,501) (23,008) - - (361,509) (39,806) Capital Contributions 161, ,517 - Reduction of Debt - (20,000) - - (20,000) - Interest Paid on Bonds - (32,535) - - (32,535) - Net Cash Provided by Capital and Related Financing Activities (176,984) (75,543) - - (252,527) (39,806) Cash Flows From Investing Activities Interest on Cash Equivalents 6,764 1, , Net Cash Provided by Investing Activities 6,764 1, , Net Increase (Decrease) in Cash and Cash Equivalents (49,102) 118,643-9,179 78,720 60,425 Cash and Cash Equivalents at Beginning of Year 622, , ,110, ,926 Cash and Cash Equivalents at End of Year $ 573,568 $ 606,402 $ - $ 9,179 $ 1,189,149 $ 213,351 15

23 EXHIBIT G STATEMENT OF CASH FLOWS (CONTINUED) PROPRIETARY FUNDS For the Fiscal Year Ending June 30, 2016 BUSINESS-TYPE ACTIVITIES ENTERPRISE FUNDS GOVERNMENTAL ACTIVITIES INTERNAL SERVICE FUND CAUA (Village fund only) Non-Major Garbage Total Enterprise Funds Motor Vehicle Pool Sewer Water Reconciliation of Operating Income to Net Cash Provided by Operating Activities Operating Income (Loss) $ (209,321) $ 71,401 $ (3,916) $ 2,485 $ (139,351) $ 82,093 Adjustments to Reconcile Operating Income to Net Cash Provided by Operating Activities Depreciation Expense 82, , ,654 14,888 (Increase) Decrease in Accounts Receivable (1,149) (5,309) - 2,671 (3,787) - (Increase) Decrease in Due from Other Governments 1,746-92,255-94,001 - (Increase) Decrease in Prepaid Expenses (1,018) (649) (1,061) - (2,728) (45) Increase (Decrease) in Accounts Payable 43,680 21,481 (8,591) 7,715 64,285 2,359 Increase (Decrease) in Accrued Liabilities (860) (880) 2,964-1, Net Cash Provided by Operating Activities $ (84,458) $ 192,234 $ 81,651 $ 12,871 $ 202,298 $ 99,587 The Notes to Financial Statements are an integral part of this statement. 16

24 NOTES TO FINANCIAL STATEMENTS For the Fiscal Year Ending June 30, 2016 NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the Village of Cassopolis (Village) have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant of the Village s accounting policies are described below. REPORTING ENTITY The Village of Cassopolis is located in Cass County which covers an area of 1.9 square miles and operates under a general law Village form of government. The Village provides services to its 1,774 residents in many areas including: public safety (police), public works, and general government. The Village is governed by a seven-member council, including a president, elected by the citizens of the Village. In accordance with generally accepted accounting principles and GASB Statement No. 61, "The Financial Reporting Entity," these financial statements present the Village (the primary government) and its component units. The criteria established by GASB for determining the reporting entity includes oversight responsibility, fiscal dependency and whether the financial statements would be misleading if data were not included. JOINT VENTURE The Cassopolis Area Utility Authority (CAUA) was created under the provisions of Act 233, Public Acts of Michigan, 1955, as amended by the Village of Cassopolis, and the Townships of Calvin, Jefferson, LaGrange and Penn, all located in Cass County. The express purpose of the Authority is to acquire, construct, purchase, finance, own, improve, enlarge, operate, maintain, administer and manage sewage disposal systems and water supply systems in accordance with Act 233, Public Acts of Michigan, 1955, as amended. Complete financial statements for CAUA can be obtained from the CAUA s administration office located at: 117 South Broadway, Suite 100, Cassopolis, Michigan 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 non-fiduciary activities of the primary government. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, normally 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. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable. 17

25 NOTES TO FINANCIAL STATEMENTS For the Fiscal Year Ending June 30, 2016 NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 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 revenue. Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. 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 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 are recognized as revenue 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. Revenue is recognized when it is both measurable and available. Revenues are considered to be available if they are collected 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, expenditures relating to compensated absences, and claims and judgments are recorded only when payment is due. Revenues are recognized in the accounting period in which they become susceptible to accrual, that is, when they become both measurable and available to finance expenditures of the fiscal period. Property taxes, intergovernmental revenue, charges for services 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. 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 Village. 18

26 NOTES TO FINANCIAL STATEMENTS For the Fiscal Year Ending June 30, 2016 NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) The Village reports the following major governmental funds: The General Fund is the Village 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 Major Street Fund accounts for the resources of State gas and weight tax revenues that are restricted for use on major streets. The Local Street Fund accounts for the resources of State gas and weight tax revenues that are restricted for use on local streets. The Village reports the following major proprietary funds: The Sewer Fund accounts for the sewer operations of the Village. The Water Fund accounts for the water operations of the Village. The CAUA Fund is designated to separately account for the operations and maintenance according to the intergovernmental agreement between the CAUA and the Village as the CAUA owns their own separate sewage collection system. It only reflects activities of the Village alone and not those of the Authority. Additionally, the Village reports the following internal service activities: Internal Service Fund - The Internal Service Fund accounts for operations that provide services to other departments of the Village on a cost-reimbursement basis. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Amounts reported as program revenues include: 1) charges to customers or applicants for goods, services, or privileges provided; 2) operating grants and contributions; and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services, and producing and delivering goods in connection with a proprietary fund s principal ongoing operations. The principal operating revenues of the water, sewer, and CAUA funds are collection fees for water and sewer consumption. The Water and Sewer Funds also recognize the portion of tap fees intended to recover current costs (e.g., labor and materials to hook up new customers) as operating revenue. The portion intended to recover the cost of the infrastructure is recognized as non-operating revenue. Operating expenses for proprietary funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenue and expenses not meeting this definition are reported as non-operating revenue and expenses. 19

27 NOTES TO FINANCIAL STATEMENTS For the Fiscal Year Ending June 30, 2016 NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) When both restricted and unrestricted resources are available for use, it is the policy of the Village to use restricted resources first, then unrestricted resources as they are needed. Bank Deposits and Investments The bank deposits are considered to be cash on hand, demand deposits, and short-term investments with a maturity of three months or less from the date of acquisition. The statement of cash flows include both restricted and unrestricted cash and cash equivalents. Investments are stated at fair value and short-term investments are reported at cost, which approximates fair value. Earnings from investments are allocated to numerous funds as required by Federal regulations, State statutes, and local ordinances. Interfund Receivables and Payables Transactions between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either "interfund receivables/payables" (i.e., the current portion of interfund loans) or "advances to/from other funds" (i.e., the noncurrent portion of interfund loans). All other outstanding balances between funds are reported as "due to/from other funds." Unavailable Revenue Governmental funds report unavailable revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period or for resources that have been received, but not yet earned. Capital Assets Capital assets include property, plant and equipment, and infrastructure assets (e.g., streets, sidewalks, and similar items), and are reported in the applicable governmental or business-type activities column in the government-wide financial statements. Capital assets are defined by the government as assets with an initial individual cost of more than $1,000 and an estimated useful life in excess of two years. Such assets are recorded at cost or estimated historical cost if purchased or constructed. 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. 20

28 NOTES TO FINANCIAL STATEMENTS For the Fiscal Year Ending June 30, 2016 NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Property, plant and equipment are depreciated using the straight-line method over the following useful lives: Governmental Funds Enterprise Funds Land Improvements 10 to 20 years Buildings 10 to 50 years 10 to 40 years Vehicles 5 to 10 years Equipment 5 to 10 years 5 to 10 years Park Improvements 15 years Infrastructure--Streets 10 to 20 years Sewer System 10 to 40 years Water System 10 to 40 years Compensated Absences (Vacation and Sick Leave)--Primary Government It is the policy of the Village to permit employees to accumulate earned but unused sick and vacation pay benefits. The liability for unpaid accumulated sick leave is time available according to the Village s union contracts and personnel policies. All vacation pay is accrued when incurred in the government-wide financial statements. A liability for these amounts is reported only in governmental funds for employee terminations as of year-end. Long-Term Obligations In the government-wide financial statements and proprietary fund type statements, the long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type Statement of Net Position. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of the following: assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from those estimates. 21

29 NOTES TO FINANCIAL STATEMENTS For the Fiscal Year Ending June 30, 2016 NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Other Financing Sources (Uses) The transfers of cash between the various Village funds are budgeted but reported separately from revenues and expenditures as operating transfers in or (out), unless they represent temporary advances that are to be repaid; in which case, they are carried as assets and liabilities of the advancing or borrowing funds. Fund Balance Classifications In the fund financial statements, governmental funds report the following components of fund balance which comprise a hierarchy based on the extent to which the Village is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. Non-spendable Fund Balance Non-spendable fund balance includes fund balance amounts in governmental funds to designate amounts which are not available for spending, or are legally or contractually required to be maintained. The non-spendable amount reported in the General Fund of $11,107, the Major Street Fund of $167, and the Local Street Fund of $152 are related to prepaid expenditures. Restricted Fund Balances Restricted fund balance category includes amounts that can be spent only for the specific purposes stipulated by constitution, external resource providers, or through enabling legislation. The Village of Cassopolis reports the following restricted fund balances. Major Street Fund - This fund is used to account for revenues from Federal and Michigan Transportation Fund (MTF) monies distributed which are earmarked by law to control expenditures for the construction and maintenance of the major street system. Local Street Fund - This fund is used to account for revenues primarily from MTF monies distributed which are earmarked by law to control expenditures for the construction and maintenance of the local street system. Drug Law Enforcement Fund - This fund is used to account for revenues from seized property involved in the violation of controlled substances statute, Act 135 PA

30 NOTES TO FINANCIAL STATEMENTS For the Fiscal Year Ending June 30, 2016 NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Unassigned Fund Balance Unassigned fund balance is the residual classification for the Village s general fund and includes all spendable amounts not contained in the other classifications and is therefore available to be spent as determined by the Village Council. The Village Council has not established a policy for its use of unrestricted fund balance amounts. However, if the Village had committed and/or assigned fund balances, the committed amounts would be reduced first, followed by assigned amounts, and then unassigned amounts when expenditures are incurred for purposes for which amounts in any of those unrestricted fund balance classifications could be used. The Village of Cassopolis does not have a formal minimum fund balance policy. NOTE B--STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY Budgets and Budgetary Accounting Budgets are adopted by the Village Council for the General Fund and Special Revenue Funds after a public hearing is held. The budget basis of accounting does not differ significantly from the modified accrual basis used to reflect actual revenues and expenditures for these funds. The budget is adopted at the activity level and control is exercised at the activity level. The Village Council monitors and amends the budgets as necessary. Unexpended appropriations lapse at year end. NOTE C--BANK DEPOSITS AND INVESTMENTS Michigan Compiled Laws (MCL) authorizes the Village to deposit and invest in the accounts of federally insured banks, credit unions, savings and loan associations; bonds, securities and other direct obligations of the United States, or any agency or instrumentality of the United States; United States government or federal agency obligation repurchase agreements, bankers' acceptance of United States banks; commercial paper rated within the two highest classifications, which mature not more than 270 days after the date of purchase, obligations of the State of Michigan or its political subdivisions which are rated as investment grade; and mutual funds composed of investment vehicles which are legal for direct investment by local units of government in Michigan. Financial institutions eligible for deposit of public funds must maintain an office in Michigan. Deposits are carried at cost. The Village has designated one bank for the deposit of Village funds. The investment policy adopted by the Village Council in accordance with Public Act 20 of 1943, as amended, has authorized investment in the instruments described in the preceding paragraph. The Village s deposit and investment policy is in accordance with statutory authority. At year end, the Village s deposits and investments were reported in the basic financial statements in the following categories: 23

31 NOTES TO FINANCIAL STATEMENTS For the Fiscal Year Ending June 30, 2016 NOTE C--BANK DEPOSITS AND INVESTMENTS (Continued) Governmental Business-Type Total Primary Activities Activities Government Cash and Cash Equivalents $ 1,048,520 $ 1,124,663 $ 2,173,183 Restricted Cash - 64,486 64,486 Total $ 1,048,520 $ 1,189,149 $ 2,237,669 The breakdown between deposits and investments is as follows: Primary Government Bank Deposits (Checking and Savings Accounts) $ 2,237,619 Petty Cash and Cash on Hand 50 Total $ 2,237,669 Custodial Credit Risk The custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, the Village s deposits may not be recovered. The Village does not have a deposit policy for custodial credit risk. At June 30, 2016, the bank balance of the Village s deposits is $2,285,047, of which $250,000 is covered by Federal depository insurance. The remaining $2,035,047 is uncollateralized. NOTE D--RECEIVABLES Accounts Receivable The General Fund has an accounts receivable amount of $5,563 for franchise fees, mowing, and other reimbursements not received at June 30, In regards to the Sewer, Water, and Garbage Funds, the receivables are based on the sewer, water and garbage services provided by the village. The receivables do not have an allowance for doubtful accounts because any receivables not collected are placed on the customer s tax bill. The receivable for the Sewer Fund is $57,256, the receivable for the Water Fund is $45,892, and the receivable for the Garbage Fund is $8,

32 NOTES TO FINANCIAL STATEMENTS For the Fiscal Year Ending June 30, 2016 NOTE D--RECEIVABLES (Continued) Loans Receivable The amount recorded as loans receivable is long-term mortgage notes in the General Fund, consisting of grants and loans made to individuals pursuant to community development block grants received from the State of Michigan. Certain homes are secured with mortgages and grants with liens to qualified applicants. The receivable is offset with unavailable revenue, with revenue being recognized on a cash basis when collected. The loans were made for the purpose of repair, renovation or rehabilitation of residential buildings. At June 30, 2016, the total outstanding loans were $7,835. The outstanding loan receivable is offset by deferred inflows of resources which is unavailable revenue. NOTE E--PROPERTY TAXES Property Taxes The Village's 2015 ad valorem tax is levied and collectible on July 1, It is the Village's policy to recognize revenues from the current tax levy in the current year when the proceeds of this levy are budgeted and made available for financing of the Village operations. Property taxes are recognized when received. The 2015 State taxable valuation of the Village amounted to $29,545,252, on which ad valorem taxes levied for all Village purposes are $551,203. There are mills for general operations and the tax revenue is recognized in the General Fund. 25

33 NOTES TO FINANCIAL STATEMENTS For the Fiscal Year Ending June 30, 2016 NOTE F--CAPITAL ASSETS Capital asset activity of the Village s governmental funds for the current year was as follows: Account Account Balances Balances Governmental Activities 07/01/15 Additions Deductions 06/30/16 Capital Assets Not Being Depreciated Land $ 137,006 $ - $ - $ 137,006 Subtotal 137, ,006 Capital Assets Being Depreciated Land Improvements 376,094-22, ,394 Buildings and Building Improvements 744, ,332 Equipment and Furniture 162,057 10, ,973 Vehicles 494,678 28, ,568 Park Improvements 72,211 31, ,231 Infrastructure 788, ,678 Total 2,638,050 70,826 22,700 2,686,176 Less Accumulated Depreciation Land Improvements 224,834 14,617 22, ,751 Buildings and Building Improvements 285,912 17, ,274 Equipment and Furniture 117,914 15, ,670 Vehicles 426,672 15, ,424 Park Improvements 66,195 4,265-70,460 Infrastructure 128,644 39, ,186 Total 1,250, ,294 22,700 1,334,765 Net Capital Assets Being Depreciated 1,387,879 (36,468) - 1,351,411 Governmental Activities Capital Total Capital Assets--Net of Depreciation $ 1,524,885 $ (36,468) $ - $ 1,488,417 26

34 NOTES TO FINANCIAL STATEMENTS For the Fiscal Year Ending June 30, 2016 NOTE F--CAPITAL ASSETS (Continued) Capital asset activity of the Village s enterprise funds for the current year was as follows: Account Account Balances Balances Business-Type Activities 07/01/15 Additions Deductions 06/30/16 Capital Assets Being Not Depreciated Land-Sewer System $ 29,114 $ - $ - $ 29,114 Land-Water System 34, ,483 Construction in Progress 33,557-33,557 - Subtotal 97,154-33,557 63,597 Capital Assets Being Depreciated Machinery and Equipment 156,968 31, ,748 Water System and Improvements 3,753,233 23,010-3,776,243 Sewer System and Improvements 1,632, ,278-1,972,307 Interceptor System 1,824, ,824,235 Building 88, ,225 Total 7,454, ,068-7,849,758 Less Accumulated Depreciation Machinery and Equipment 102,009 17, ,975 Water System and Improvements 2,038,729 95,810-2,134,539 Sewer System and Improvements 1,083,020 36,333-1,119,353 Interceptor System 1,040,264 36,585-1,076,849 Building 55,521 1,959-57,480 Total 4,319, ,653-4,508,196 Net Capital Assets Being Depreciated 3,135, ,415-3,341,562 Business-Type Activities Capital Total Capital Assets--Net of Depreciation $ 3,232,301 $ 206,415 $ - $ 3,405,159 27

35 NOTES TO FINANCIAL STATEMENTS For the Fiscal Year Ending June 30, 2016 NOTE F--CAPITAL ASSETS (Continued) Depreciation expense was charged to programs of the Village as follows: Governmental Activities General Government $ 27,206 Public Safety 8,772 Public Works 64,099 Recreational and Cultural 7,217 Total Governmental Activities $ 107,294 Business-Type Activities Sewer $ 82,463 Water 106,190 Total Business-Type Activities $ 188,653 NOTE G--INTERFUND RECEIVABLES AND PAYABLES/TRANSFERS The interfund receivables and payables for the Village are as follows: Due To CAUA (Village fund only) Due From General $ 4,098 The interfund receivable balance at year end is to remove the negative cash balance in the CAUA Fund. The 2015 operating transfers from Exhibit D can be summarized as follows: Transfers Out Transfers In General Major Street Total Local Street $ 53,845 $ 54,000 $ 107,845 CAUA 20,000 20,000 Total Government $ 73,845 $ 54,000 $ 127,845 28

36 NOTES TO FINANCIAL STATEMENTS For the Fiscal Year Ending June 30, 2016 NOTE G--INTERFUND RECEIVABLES AND PAYABLES/TRANSFERS The inter-fund transfer between the General Fund and Local Street Fund was to eliminate the prior year deficit the Local Street Fund ended with. The inter-fund transfer between the General Fund and CAUA Fund was to establish additional reserves in the fund as the Village is transitioning into providing more public services to other entities in addition to the CAUA Fund. The inter-fund transfer is to transfer Michigan Transportation Fund gas tax revenues from the Major Street Fund to the Local Street Fund to help fund the operations of the Local Street Fund as allowed under Public Act 51 of NOTE H--LONG-TERM DEBT The Village issues bonds to provide for the acquisition and construction of major capital improvements. General obligation bonds are direct obligations and pledge the full faith and credit of the Village. Water System Revenue bonds involve a pledge of specific income derived from the acquired or constructed assets to pay debt service. The individual long-term debt of the Village and the changes therein, may be summarized as follows: Governmental Activities Balance Balance Due Within 07/01/15 Additions (Reductions) 06/30/16 One Year 2002 Installment Purchase Agreement Payable of $200,000 for 15 years at an interest rate of 6% due in monthly installments for the establishment of a village hall. $ 45,352 $ - $ (18,013) $ 27,339 $ 19,130 Vested Employee Benefits Payable 35,911 14,491-50,402 12,000 Total Governmental Activities $ 81,263 $ 14,491 $ (18,013) $ 77,741 $ 31,130 Business-Type Activities Village 1998 Water System Revenue Bonds, issued by the United States Department of Agriculture, $1,025,000 maturing serially through 2038 at an interest rate of 4.5%. $ 723,000 $ - $ (20,000) $ 703,000 $ 21,000 Vested Employee Benefits Payable 14,849 - (7,108) 7,741 6,000 Total Business-Type Activities $ 737,849 $ - $ (27,108) $ 710,741 $ 27,000 Total Long-Term Debt $ 819,112 $ 14,491 $ (45,121) $ 788,482 $ 58,130 29

37 NOTES TO FINANCIAL STATEMENTS For the Fiscal Year Ending June 30, 2016 NOTE H--LONG-TERM DEBT (Continued) Annual Principal and Interest Requirements The annual requirements to pay the principal and interest on the Village s long-term debt obligations excluding vested employee benefits outstanding at June 30, 2016, are as follows: Governmental Activities Business-Type Activities Year Principal Interest Total Principal Interest Total 2017 $ 19,130 $ 1,126 $ 20,256 $ 21,000 $ 34,132 $ 55, , ,335 22,000 33,165 55, ,000 32,153 55, ,000 31,095 55, ,000 29,992 54, , , , ,000 95, , ,000 50, , ,000 3,758 46,758 Total $ 27,339 $ 1,252 $ 28,591 $ 703,000 $ 441,922 $ 1,144, Installment Purchase Agreement Date of Issue: November 22, 2002 Amount: $200,000 Purpose: Village Hall Year Ending Annual June 30 Principal Interest Total 2017 $ 19,130 $ 1,126 $ 20, , ,335 $ 27,339 $ 1,252 $ 28,591 30

38 NOTES TO FINANCIAL STATEMENTS For the Fiscal Year Ending June 30, 2016 NOTE H--LONG-TERM DEBT (Continued) 1998 Water System Revenue Bonds The annual water fund principal and interest required to maturity for the bonds payable outstanding is as follows: Date of Issue: March 1, 1998 Amount: $1,025,000 Purpose: Water Supply and Sewage Disposal System Annual Total Interest Date of Maturity Interest Annual Rate Maturity March 1 Payments Requirements 4.5% 2017 $ 21,000 $ 34,132 $ 55, ,000 33,165 55, ,000 32,153 55, ,000 31,095 55, ,000 29,992 54, , , , ,000 95, , ,000 50, , ,000 3,758 46,758 $ 703,000 $ 441,922 $ 1,144,922 Interest is payable semi-annually at the rate indicated on March 1 and September 1. NOTE I--COMPENSATED ABSENCES Vested Employee Benefits Payable The Village's employment policies provide for vacation benefits to be earned in varying amounts depending on the employee's years of service. Vacation benefits earned are credited to each employee on a bi-weekly basis. The Village has established a formal policy regarding a maximum authorized accumulation of vacation hours per individual union agreement. The Village's employment policies provide for sick leave benefits to be earned in varying amounts depending on the employee s hours worked and union agreements. Sick leave is earned by all Village employees at the rate of 12 days annually with each day being made available as of the last day of the month. A maximum of 24 days may be accrued. 31

39 NOTES TO FINANCIAL STATEMENTS For the Fiscal Year Ending June 30, 2016 NOTE I--COMPENSATED ABSENCES (Continued) As of June 30, 2016, the Village has an accrued vested employee benefits payable of $50,402 recorded in the governmental activities relating to the Clerk and Police Department and $7,741 in the business-type activities relating to the Department of Public Works. NOTE J--DEFINED CONTRIBUTION PENSION PLAN The Village provides pension benefits to all of its full-time employees through a defined contribution plan which is titled Village of Cassopolis Group Pension Plan. A full-time employee is defined by the plan as an employee who works 32 or more hours a week. In a defined contribution plan, benefits depend solely on amounts contributed to the plan plus investment earnings. The Village contributes 5 percent of employees' eligible compensation and employees are required to contribute 3 percent of their eligible compensation. Employer contributions for each employee, plus interest allocated to the employee's account, are fully vested at age 55 or in the event of disability, death, or termination. Plan provisions and contribution requirements are established and may be amended by the Village Council. Employee contributions are immediately vested. Contributions actually made by plan members and the Village amounted to $23,244 for the fiscal year ending June 30, NOTE K--CONSTRUCTION CODE FEES The Village oversees building construction, in accordance with the State's Construction Code Act, including inspection of building construction and renovation to ensure compliance with the building codes. The Village charges fees for these services. The law requires that collection of these fees be used only for construction code costs, including an allocation of estimated overhead costs. A summary of the current year activity and the cumulative surplus generated since March 1, 2007, is as follows: Surplus at July 1, 2015 $ 26,846 Current year construction permit revenue 17,612 Related expenses - Direct costs (15,664) Related expenses - Indirect costs (10,000) Current year shortfall (8,052) Cumulative surplus at June 30, 2016 $ 18,794 32

40 NOTES TO FINANCIAL STATEMENTS For the Fiscal Year Ending June 30, 2016 NOTE L--RISK MANAGEMENT The Village is exposed to various risks of loss related to property loss, torts, and errors and omissions and employee injuries (workers compensation). The Village has purchased commercial insurance coverage through various policies for general liability, property, vehicle and workers' compensation claims. Settled claims relating to the commercial insurance have not exceeded the amount of insurance coverage in any of the past three years. The Michigan Township s Participating Plan operates as an insurance pool for local units of government in Michigan. The Plan purchases commercial insurance on behalf of its members at a lower cost than would be available on an individual basis. NOTE M--COMMITMENT In March 2016, the Village was approved to receive a water and waste disposal loan and grant for sewer collection system improvements. The United States Department of Agriculture informed the Village that it was approved for a loan of $814,000 and a grant of $666,000 for the improvements. NOTE N--UPCOMING REPORTING CHANGE In August 2015, the GASB issued Statement No. 77, Tax Abatement Disclosures. This Statement requires disclosure of tax abatement information about (1) a reporting government s own tax abatement agreements and (2) those that are entered into by other governments and that reduce the reporting government s tax revenues. This Statement requires governments that enter into tax abatement agreements to disclose the following information about the agreements: (1) brief descriptive information, such as the tax being abated, the authority under which tax abatements are provided, eligibility criteria, the mechanism by which taxes are abated, provisions for recapturing abated taxes, and the types of commitments made by tax abatement recipients; (2) the gross dollar amount of taxes abated during the period; (3) commitments made by a government, other than to abate taxes, as part of a tax abatement agreement. GASB Statement No. 77 is effective for fiscal years beginning after December 15, The Village is currently evaluating the effect of the new pronouncement. 33

41 EXHIBIT H REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE-- GENERAL FUND For the Fiscal Year Ended June 30, 2016 BUDGETED AMOUNTS Variance With Final Final Budget Original Amended Positive Budget Budget Actual (Negative) Revenues Taxes $ 471,048 $ 554,566 $ 551,203 $ (3,363) Licenses and Permits 37,200 37,200 31,102 (6,098) Federal Grants 550, , ,000 (220,000) State Grants 195, , ,247 (4,097) Charge for Services 13,200 13,200 21,347 8,147 Fines and Forfeitures 8,500 8,500 5,803 (2,697) Interest and Rentals 21,700 32,800 38,655 5,855 Other Revenue 7,100 7,100 42,574 35,474 Total Revenue 1,304,092 1,398,710 1,211,931 (186,779) Expenditures General Government 259, , ,249 25,781 Public Safety 405, , ,111 12,850 Public Works 25,000 35,000 33,511 1,489 Community and Economic Development 551, , , ,010 Recreational and Cultural 11,983 20,963 19,586 1,377 Capital Outlay 30,000 31,020 31,020 - Debt Service 20,253 20,253 20,253 - Total Expenditures 1,304,092 1,342,592 1,080, ,507 Excess of Revenues Over (Under) Expenditures - 56, ,846 75,728 Other Financing Sources Operating Transfers (Out) (53,845) (73,845) (73,845) - Total Other Financing Sources (Uses) (53,845) (73,845) (73,845) - Net Change in Fund Balance (53,845) (17,727) 58,001 75,728 Fund Balance--July 1, , , ,542 (7,955) Fund Balance--June 30, 2016 $ 599,652 $ 635,770 $ 703,543 $ 67,773 34

42 REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE-- MAJOR STREET--MAJOR SPECIAL REVENUE FUND For the Fiscal Year Ended June 30, 2016 EXHIBIT I BUDGETED AMOUNTS Variance With Final Final Budget Original Amended Positive Budget Budget Actual (Negative) Revenues Federal Grant $ 130,157 $ - $ - $ - State Grants Michigan Transportation Funds 99,834 99, ,581 8,747 Interest Total Revenues 230, , ,547 9,113 Expenditures Public Works Routine and Preventive Maintenance 106,177 70,177 58,638 11,539 Traffic 2,000 2, ,339 Winter Routine and Preventive Maintenance 24,959 24,959 24, Roadside Park 5,068 8,068 4,894 3,174 Administration 9,788 9,788 6,399 3,389 Total Expenditures 147, ,992 95,220 19,772 Excess of Revenues Over (Under) Expenditures 82,599 (14,558) 14,327 28,885 Other Financing Sources (Uses) Interfund Transfers In - 70,000 - (70,000) Interfund Transfers (Out) (55,000) (55,000) (54,000) 1,000 Total Other Financing Sources (Uses) (55,000) 15,000 (54,000) (69,000) Net Change in Fund Balance 27, (39,673) (40,115) Fund Balance--July 1, , , ,201 - Fund Balance--June 30, 2016 $ 180,800 $ 153,643 $ 113,528 $ (40,115) 35

43 REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE-- LOCAL STREET--MAJOR SPECIAL REVENUE FUND For the Fiscal Year Ended June 30, 2016 EXHIBIT J BUDGETED AMOUNTS Variance With Final Final Budget Original Amended Positive Budget Budget Actual (Negative) Revenues State Grants Michigan Transportation Funds $ 34,412 $ 34,412 $ 37,445 $ 3,033 Other - 6,000 21,894 15,894 Interest Total Revenues 34,512 40,512 59,661 19,149 Expenditures Public Works Routine and Preventive Maintenance 58,802 64,802 41,040 23,762 Winter Routine and Preventive Maintenance 24,259 24,259 21,692 2,567 Administration 6,451 6,451 2,985 3,466 Total Expenditures 89,512 95,512 65,717 29,795 Excess of Revenues Over (Under) Expenditures (55,000) (55,000) (6,056) 48,944 Other Financing Sources (Uses) Interfund Transfers In 108, , ,845 (1,000) Total Other Financing Sources (Uses) 108, , ,845 (1,000) Net Change in Fund Balance 53,845 53, ,789 47,944 Fund Balance--July 1, 2015 (53,845) (53,845) (53,845) - Fund Balance--June 30, 2016 $ - $ - $ 47,944 $ 47,944 36

44 SCHEDULE OF REVENUES BUDGET AND ACTUAL--GENERAL FUND For the Fiscal Year Ended June 30, 2016 REVENUES EXHIBIT K Variance With Final Final Budget Original Amended Positive Budget Budget Actual (Negative) Property Taxes Current Taxes $ 471,048 $ 554,566 $ 551,203 $ (3,363) Total Property Taxes 471, , ,203 (3,363) Licenses and Permits Building Permit Fees 16,000 16,000 10,401 (5,599) Building Plan Review 1,200 1, (800) Mechanical Permit 3,000 3,000 1,895 (1,105) Plumbing Permit 2,000 2,000 1,309 (691) Electrical Permit 3,000 3,000 3, Franchise Fees 12,000 12,000 13,490 1,490 Total Licenses and Permits 37,200 37,200 31,102 (6,098) Federal Grants Community Development Block Grant 550, , ,000 (220,000) Total Federal Grants 550, , ,000 (220,000) State Grants Liquor Law Enforcement 1,500 1,500 1,471 (29) Revenue Sharing 187, , ,683 (5,411) Metro Fund 6,000 6,000 7,279 1,279 Police Training Total State Grants 195, , ,247 (4,097) 37

45 EXHIBIT K SCHEDULE OF REVENUES (CONTINUED) BUDGET AND ACTUAL--GENERAL FUND For the Fiscal Year Ended June 30, 2016 Variance With Final Final Budget Original Amended Positive Budget Budget Actual (Negative) Charges for Services Sale of Supplies - - 1,780 1,780 Code Enforcement Fee 3,000 3,000 4,400 1,400 Grave Opening and Closing 5,000 5,000 7,100 2,100 Sale of Lots - - 4,888 4,888 Perpetual Care 1,000 1, (137) Rental Inspection Fee 3,300 3,300 1,650 (1,650) Non-sufficient Funds Check Fee (100) Police Reports (54) Zoning Fees (130) Park Fees Total Charges for Services 13,200 13,200 21,347 8,147 Fines and Forfeitures Traffic and Ordinance Fines 8,500 8,500 5,803 (2,697) Total Fines and Forfeitures 8,500 8,500 5,803 (2,697) Interest and Rentals Interest 2,500 2,500 5,475 2,975 Borgess Lee Lease Payment 11,100 22,200 22,200 - Borgess Lee Lease Utilities 8,100 8,100 10,980 2,880 Total Interest and Rentals 21,700 32,800 38,655 5,855 Other Revenue Contributions from Private Sources 1,800 1,800 21,300 19,500 Refunds/Reimbursements ,325 16,025 Other Miscellaneous 5,000 5,000 4,949 (51) Total Other Revenue 7,100 7,100 42,574 35,474 Total Revenue $ 1,304,092 $ 1,398,710 $ 1,211,931 $ (186,779) 38

46 SCHEDULE OF EXPENDITURES AND OTHER FINANCING USES BUDGET AND ACTUAL--GENERAL FUND For the Fiscal Year Ended June 30, 2016 EXHIBIT L Variance With Final Final Budget Original Amended Positive Budget Budget Actual (Negative) General Government Village Council $ 61,029 $ 61,029 $ 58,967 $ 2,062 Village Manager 22,400 22,400 18,109 4,291 Clerk 21,925 21,925 21, Treasurer 12,551 14,051 13, Building and Grounds 79,762 79,762 62,770 16,992 Other Property 33,537 33,537 33, Cemetery 28,326 43,326 42,053 1,273 Total General Government 259, , ,249 25,781 Public Safety Police Department 374, , ,696 6,636 Crossing Guards 10,479 12,479 11, Building Inspector 21,150 21,150 15,664 5,486 Total Public Safety 405, , ,111 12,850 Public Works Street Lights 25,000 35,000 33,511 1,489 Total Public Works 25,000 35,000 33,511 1,489 Community and Economic Development Planning Commission 1,080 1, Zoning Board of Appeals Economic Development 550, , , ,000 Total Community and Economic Development 551, , , ,010 Recreational and Cultural Parks Department 11,983 20,963 19,586 1,377 Total Recreational and Cultural 11,983 20,963 19,586 1,377 Capital Outlay 30,000 31,020 31,020 - Debt Service Principal 18,013 18,013 18,013 - Interest 2,240 2,240 2,240 - Total Debt Service 20,253 20,253 20,253 - Total Expenditures 1,304,092 1,342,592 1,080, ,507 Other Financing Uses Operating Transfers (Out) 53,845 73,845 73,845 - Total Other Financing Uses 53,845 73,845 73,845 - Total Expenditures and Other Financing Uses $ 1,357,937 $ 1,416,437 $ 1,153,930 $ 262,507 39

47 4425 (Rev ) RICK SNYDER GOVERNOR STATE OF MICHIGAN DEPARTMENT OF TREASURY LANSING NICK A. KHOURI STATE TREASURER October 6, 2016 Village of Cassopolis 117 S. Broadway Street Cassopolis, Michigan RE: Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance With Government Auditing Standards Dear Council Members: 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, the business-type activities, each major fund, and the aggregate remaining fund information of the Village of Cassopolis, Cass County, Michigan, as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the Village of Cassopolis basic financial statements, and have issued our report thereon dated October 6, Internal Control Over Financial Reporting In planning and performing our audit, we considered the Village of Cassopolis internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Village of Cassopolis internal control. Accordingly, we do not express an opinion on the effectiveness of the Village of Cassopolis 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 a 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. P.O. BOX LANSING, MICHIGAN

48 Village of Cassopolis Page 2 October 6, 2016 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. However, material weaknesses may exist that have not been identified. We consider the deficiency described in the accompanying Schedule of Findings and Responses listed as Finding to be a material weakness. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Village of Cassopolis financial statements are free of 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 is required to be reported under Government Auditing Standards. Village of Cassopolis Responses to Findings The Village of Cassopolis responses to the findings identified in our audit are described in the accompanying Schedule of Findings and Responses. The Village s responses were not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on them. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Village of Cassopolis internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Village of Cassopolis internal control and compliance. Accordingly, this communication is not suitable for any other purpose. However, this report is a matter of public record and its distribution is not limited. Sincerely, Cary Jay Vaughn, CPA, CGFM Audit Manager Local Government Financial Services Division 41

49 4425 (Rev ) RICK SNYDER GOVERNOR STATE OF MICHIGAN DEPARTMENT OF TREASURY LANSING NICK A. KHOURI STATE TREASURER October 6, 2016 Village of Cassopolis 117 S. Broadway Street Cassopolis, Michigan RE: Report to Those Charged With Governance Dear Council Members: We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Village of Cassopolis, Cass County, Michigan, for the fiscal year ended June 30, 2016, and have issued our report thereon dated October 6, Professional standards require that we provide you with information related to our audit. Our Responsibility Under U.S. Generally Accepted Auditing Standards and Government Auditing Standards As stated in the engagement letter dated May 31, 2016, our responsibility, as described by professional standards, is to express an opinion about whether the financial statements prepared by management with your oversight are fairly presented, in all material respects, in conformity with accounting principles generally accepted in the United States of America. Our audit of the financial statements does not relieve you or management of your responsibilities. As part of our audit, we considered the internal control of the Village of Cassopolis. Such considerations were solely for the purpose of determining our audit procedures and not to provide any assurance concerning internal control. As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we performed tests of the Village of Cassopolis compliance with certain provisions of laws, regulations, contracts, and grants. However, the objective of our tests was not to provide an opinion on compliance with such provisions. Other information in Documents Containing Audited Financial Statements Our responsibility for the supplementary information accompanying the financial statements, as described in professional standards, is to evaluate the presentation of supplementary information in relation to the financial statements as a whole and to report on whether the supplementary information is fairly stated, in all material respects, in relation to the financial statements as a 42 P.O. BOX LANSING, MICHIGAN