Northern Illinois Special Recreation Association Annual Financial Report For the Year Ended April 30, 2018

Transcription

1 Annual Financial Report

2 Table of Contents Page(s) INDEPENDENT AUDITORS' REPORT 1-2 MANAGEMENT'S DISCUSSION & ANALYSIS 3-6 BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements Statement of Net Position 7 Statement of Activities 8 Fund Financial Statements Statement of Fund Net Position 9 Statement of Revenues, Expenses, and Changes in Fund Net Position 10 Reconciliation of the Statement of Revenues, Expenses, and Changes in Fund Net Position to the Statement of Activities 11 Statement of Cash Flows 12 Notes to the Financial Statements REQUIRED SUPPLEMENTARY INFORMATION IMRF Pension Disclosures SUPPLEMENTAL SCHEDULE Schedule of Revenues, Expenses, and Changes in Fund Net Position - Budget and Actual 34-36

3 To the Board of Directors Northern Illinois Special Recreation Association Crystal Lake, Illinois Report on the Financial Statements INDEPENDENT AUDITORS' REPORT We have audited the accompanying financial statements of the business-type activities of the Northern Illinois Special Recreation Association as of and for the year ended April 30, 2018, and the related notes to the financial statements, which collectively comprise the Association's basic financial statements, as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these basic 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 basic financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the basic financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the basic 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 basic financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion

4 Opinion In our opinion, the basic financial statements referred to above present fairly, in all material respects, the respective financial position of the business-type activities of the Northern Illinois Special Recreation Association, as of April 30, 2018, and the respective changes in financial position and cash flows, where applicable, thereof for the year ended in conformity 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 and certain pension disclosures be presented to supplement the basic financial statements. Such information, although not 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. The supplemental schedule listed in the accompanying table of contents is presented for purposes of additional analysis and is not a required part of the basic financial statements of the Northern Illinois Special Recreation Association. The information has not been audited by us and accordingly, we express no opinion on such matters. July 20, 2018 Darien, Illinois - 2 -

5 NORTHERN ILLINOIS SPECIAL RECREATION ASSOCIATION MANAGEMENT S DISCUSSION AND ANALYSIS APRIL 30, 2018 The Northern Illinois Special Recreation Association s (the Association ) management s discussion and analysis is designed to: (1) assist the reader in focusing on significant financial issues, (2) provide an overview of the Association s financial activity, (3) identify changes in the Association s financial position (its ability to address the next and subsequent year challenges), (4) identify any material deviations from the financial plan (the approved budget) and (5) identify individual fund issues or concerns. The Management s Discussion and Analysis (MD&A) is an element of the new reporting model adopted by the Governmental Accounting Standards Board (GASB) in its Statement No. 34 Basic Financial Statements - and Management s Discussion and Analysis - for State and Local Governments issued June Certain comparative information between the current year and the prior year is required to be presented in the MD&A. Since the MD&A is designed to focus on the current year s activities, resulting changes and currently known facts, please read it in conjunction with the Association s financial statements (beginning on page 7). Financial Highlights The Association s financial status continues to be strong. The total government -wide net assets increased from $2,549,060 to $2,674,529 over the course of the year. The fund net position also increased from $888,240 to $934,364 over the course of the year. Total operating revenues this past year were $2,553,820 and operating expenses were $2,322,349 for a positive net operating income of $231,471. This net income is transferred into the NISRA Capital Replacement Fund for the timely replacement of wheelchair accessible vehicles and other essential capital. NISRA received program fee revenues of $426,288 during 2018 compared to $473,299 during 2017, a decrease of 9.94%. The NISRA Foundation, a separate not-for-profit organization, contributed $180,415 to the Association for capital projects, new program expenses and scholarship funds for individuals who are unable to pay the Association s program fees. Inclusive of the NISRA Foundation donation of $180,415, NISRA raised a total of $202,013 in contributions from the individuals, corporations, service clubs and foundations, which helps the Association s operations. Overview of the Financial Statements Management s Discussion and Analysis introduces the Association s basic financial statements. The basic financial statements include: (1) government-wide financial statements, (2) fund financial statements and (3) notes to the financial statements. The Association also includes in this report additional information to supplement the basic financial statements

6 Government -wide Financial Statements NISRA s annual report includes two government-wide financial statements. These statements provide both long-term and short-term information about the Association s overall status. Financial reporting at this level uses a perspective similar to that found in the private sector with its basis in full accrual accounting and elimination or reclassification of internal activities. The first of these government-wide statements is the Statement of Net Assets. This is the statement of position presenting information that includes all of NISRA s assets and liabilities, with the difference reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the Association as a whole is improving or deteriorating. Evaluation of the overall health of the Association would extend to other non-financial factors such as diversification of the partner base or the condition of NISRA s infrastructure in addition to the financial information provided in this report. The second government-wide statement is the Statement of Activities which reports how NISRA s net assets changed during the current fiscal year. All current year revenues and expenses are included regardless of when cash is received or paid. An important purpose of the design of the statements of activities is to show the financial reliance of the Association s distinct activities or functions on revenues provided by the Association s partner agencies. The government-wide financial statements are presented on pages 7-8 of this report. Fund Financial Statements A fund is an accountability unit used to maintain control over resources segregated for specific activities or objectives. The Association uses funds to ensure and demonstrate compliance with finance-related laws and regulations. Within the basic financial statements, fund financial statements focus on the Association s flow of financial resources rather than the Association as a whole. Business type funds are reported in the fund financial statements and encompass essentially the same functions reported as business type activities in the government-wide financial statements. However, the focus is different, with fund statements providing a distinctive view of the Association s business type fund. These statements report short-term fiscal accountability focusing on the use of spendable resources and balances of spendable resources available at the end of the year. They are useful in evaluating annual financing requirements of governmental programs and the commitment of spendable resources for the near-term. Since the government-wide focus includes the long-term view, comparisons between these two perspectives may provide insight into the long-term impact of short-term financing decisions. Both the fund balance sheet and the fund statement of revenues, expenditures and changes in fund net assets provide a reconciliation to assist in understanding the differences between these two perspectives. The basic business type fund financial statements are presented on pages 9-12 of this report

7 Notes to the Financial Statements The accompanying notes to the financial statements provide information essential to a full understanding of the government-wide and fund financial statements. The notes to the financial statements begin on page 13 of this report. Other Information In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the Association s progress in funding its obligation to provide pension benefits to its employees. Supplementary information can be found beginning on page 31 of this report. During the Budget year, the Association did not revise the annual operating budget. The general fund is reported as the only fund, and accounts for the routine program operations of NISRA. Government -wide Financial Analysis The Association implemented the new financial reporting model used in this report beginning with the fiscal year ended April 30, Over time, as year to year financial information is accumulated on a consistent basis, changes in net assets may be observed and used to discuss the changing financial position of the Association as a whole. NISRA s increase in combined net assets from $2,549,060 to $2,674,529 is a result of operations in fiscal year This increase includes $125,251 in depreciation expense and a $(23,906) change in the net pension items. Financial Analysis of the Association s Fund Business Type Funds As discussed, business type funds are reported in the fund statements with a short-term inflow and outflow of spendable resources focus. This information is useful in assessing resources available at the end of the year in comparison with upcoming financing requirements. Business type funds reported ending fund net assets of $934,364. This amount is unreserved and unrestricted, indicating availability for continuing the Association s operations

8 Capital Asset and Debt Administration Capital Assets The Association s investment in capital assets, net of accumulated depreciation for governmental activities as of April 30, 2018 was $3,204,718. Debt Administration Northern Illinois Special Recreation Association Capital Assets (net of depreciation) April 30, 2018 Special Recreation Land $ 742,670 Machinery and Equipment 63,366 Vehicles 254,191 Building 1,486,762 Leasehold Improvements 657,729 Capital Assets, net $ 3,204,718 As of April 30, 2018, the Association has $1,180,000 of debt certificates payable. This debt is entirely attributable to the purchase and remodeling of NISRA s administrative office. Factors Bearing on the Association s Future At the time these financial statements were prepared and audited, NISRA was not aware of any existing circumstances that would adversely affect its financial health in the near future. Contacting the Association s Financial Management This financial report is designed to provide a general overview of the Association s finances, comply with finance related laws and regulations and demonstrate the Association s commitment to public accountability. If you have any questions about this report or would like to request additional information please contact Jim Wiseman, Northern Illinois Special Recreation Association, 285 Memorial Drive, Crystal Lake, IL

9 Statement of Net Position April 30, 2018 Business-Type Activities ASSETS Cash $ 1,110,720 Accounts Receivable 20,848 Prepaid Expenses 2,031 Capital Assets Capital Assets Not Being Depreciated 742,670 Capital Assets, Net of Depreciation 2,462,048 Total Capital Assets 3,204,718 TOTAL ASSETS 4,338,317 DEFERRED OUTFLOWS IMRF Plan Year Adjustments 41,628 IMRF Deferred Outflows 301,440 TOTAL DEFERRED OUTFLOWS 343,068 LIABILITIES Due Within One Year Accounts Payable 49,134 Accrued Payroll 58,478 Accrued Vacation 56,513 Unearned Revenue 91,623 Bonds Payable 80,000 Due in More Than One Year Bonds Payable 1,100,000 Net Pension Liability 101,971 TOTAL LIABILITIES 1,537,719 DEFERRED INFLOWS IMRF Deferred Inflows 469,137 TOTAL DEFERRED INFLOWS 469,137 NET POSITION Net Investment in Capital Assets 2,024,718 Unrestricted Amounts 649,811 TOTAL NET POSITION $ 2,674,529 See Accompanying Notes To The Financial Statements - 7 -

10 Statement of Activities Net (Expenses) Revenues and Changes in Program Revenues Net Position Charges for Grants and Business-Type Functions/Programs Expenses Services Donations Activities BUSINESS-TYPE ACTIVITIES Program Services $ 2,412,705 $ 2,359,968 $ 202,013 $ 149,276 Interest on Long-Term Debt 29, (29,023) TOTAL BUSINESS-TYPE ACTIVITIES $ 2,441,728 $ 2,359,968 $ 202, ,253 GENERAL REVENUES Interest Income 5,217 TOTAL GENERAL REVENUES 5,217 CHANGE IN NET POSITION 125,470 NET POSITION, BEGINNING OF YEAR 2,549,059 END OF YEAR $ 2,674,529 See Accompanying Notes To The Financial Statements - 8 -

11 Statement of Fund Net Position April 30, 2018 ASSETS Cash $ 1,110,720 Accounts Receivable 20,848 Prepaid Expenditures 2,031 TOTAL ASSETS 1,133,599 TOTAL DEFERRED OUTFLOWS 0 TOTAL ASSETS AND DEFERRED OUTFLOWS 1,133,599 LIABILITIES Accounts Payable 49,134 Accrued Payroll 58,478 Unearned Revenue 91,623 TOTAL LIABILITIES 199,235 TOTAL DEFERRED INFLOWS 0 FUND NET POSITION Unassigned 934,364 TOTAL FUND NET POSITION 934,364 Amounts reported in the statement of net position are different because: Capital Assets are reported in the Government-Wide Financial Statements but are not reported in the fund financial statements. 3,204,718 Debt Certificate Payable is reported in the Government-Wide Financial Statements but is not reported in the fund financial statements. (1,180,000) Accrued Vacation is reported in the Government-Wide Financial Statements but is not reported in the fund financial statements. (56,513) Net Pension Liability and IMRF Deferred Inflows are reported in the Government-Wide Financial Statements but are not reported in the fund financial statements. (571,108) IMRF Plan Year Adjustments and IMRF Deferred Outflows are reported in the Government-Wide Financial Statements but are not reported in the fund financial statements. 343,068 NET POSITION $ 2,674,529 See Accompanying Notes To The Financial Statements - 9 -

12 Statement of Revenues, Expenses and Changes in Fund Net Position OPERATING REVENUES Member Agency Contributions $ 1,900,385 Program Fees 426,288 Contributions 202,013 Mental Health 25,134 TOTAL OPERATING REVENUES 2,553,820 OPERATING EXPENSES Personnel 1,867,356 Contractual Services 330,593 Office Operations 39,167 Commodities 67,061 Inclusion 252 Capital 17,920 TOTAL OPERATING EXPENSES 2,322,349 OPERATING INCOME 231,471 NON-OPERATING INCOME Proceeds from the Sale of Capital Assets 15,040 Interest Income 5,217 Rental Income 8,161 TOTAL NON-OPERATING INCOME 28,418 NON-OPERATING EXPENSES Capital Asset Additions 179,742 Principal Payments 5,000 Interest Expense 29,023 TOTAL NON-OPERATING EXPENSES 213,765 CHANGE IN FUND NET POSITION 46,124 FUND NET POSITION, BEGINNING OF YEAR 888,240 END OF YEAR $ 934,364 See Accompanying Notes To The Financial Statements

13 Reconciliation of the Statement of Revenues, Expenses and Changes in Fund Net Position to the Statement of Activities Net Change in Fund Net Position (Statement of Revenues, Expenses, and Changes in Fund Net Position) $ 46,124 Amounts reported for business type activities in the Statement of Activities are different because: Depreciation of capital assets is not considered an expenditure in the fund financial statements. (125,251) The purchase of capital assets is considered an expenditure in the fund financial statements. 179,742 The net book value of disposed capital assets is not considered an expenditure on the fund financial statements. (6,730) Payments of debt certificates principal are treated as an expenditure in the fund financial statements. 5,000 Payments to employees to be made in future periods are not considered an expenditure in the fund financial statements. 2,679 The change in the net pension liability is not considered an expenditure in the fund financial statements. 425,357 The change in IMRF deferred inflows and outflows are not considered an expenditure in the fund financial statements. (401,451) Change in Net Position of Business Type Activities (Statement of Activities) $ 125,470 See Accompanying Notes To The Financial Statements

14 Statement of Cash Flows CASH FLOWS FROM OPERATING ACTIVITIES Cash Received from Members and Participants $ 2,595,011 Cash Payments to Suppliers and Employees (2,284,877) NET CASH PROVIDED BY OPERATING ACTIVITIES 310,134 CASH FLOWS FROM INVESTING ACTIVITIES Interest Received 5,217 Rental Income 8,161 NET CASH PROVIDED BY INVESTING ACTIVITIES 13,378 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Payments for Capital Assets (179,742) Proceeds from Sale of Capital Assets 15,040 Debt Certificates Principal Payments (5,000) Interest Payments (29,023) NET CASH USED IN CAPITAL AND RELATED FINANCING ACTIVITIES (198,725) NET CHANGE IN CASH AND CASH EQUIVALENTS 124,787 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 985,933 END OF YEAR $ 1,110,720 RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Operating Income $ 231,471 Adjustments to Reconcile Operating Income to Net Cash Provided By Operating Activities Changes in Certain Assets and Liabilities: Accounts Receivable 26,135 Prepaid Expenses (1,281) Accounts Payable 32,725 Accrued Payroll 6,028 Unearned Revenue 15,056 Total Adjustments 78,663 NET CASH PROVIDED BY OPERATING ACTIVITIES $ 310,134 See Accompanying Notes To The Financial Statements

15 Notes to the Financial Statements NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Northern Illinois Special Recreation Association (the Association ) was established in 1976, and is located in Crystal Lake, Illinois. The Association operates under a Board-Director form of government and provides services as authorized by its charter. The Association provides a variety of services to participating communities within the boundaries of the Association and non-residents. The accounting and reporting policies of the Association relating to the funds included in the accompanying general purpose financial statements conform to generally accepted accounting principles (GAAP) applicable to state and local governments. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The following is a summary of the more significant policies. A. Reporting Entity The Association follows the provisions of Governmental Accounting Standards Board Statement No. 39, Determining Whether Certain Organizations Are Component Units an amendment of GASB Statement No. 14. As defined by generally accepted accounting principles established by GASB, the financial reporting entity consists of the primary government, as well as its component units, which are legally separate, tax-exempt entities and meet all of the following criteria: 1. The economic resources received or held by the separate organization are entirely or almost entirely for the direct benefit of the primary government, its component units, or its constituents. 2. The primary government, or its component units, is entitled to, or has the ability to otherwise access, a majority of the economic resources received or held by the separate organization. 3. The economic resources received or held by an individual organization that the specific primary government, or its component units, is entitled to, or has the ability to otherwise access, are significant to that primary government. The Association has concluded that no entities meet the criteria of Statement 39 for inclusion as a component unit. Likewise, the Association is not required to be included as a component unit of any other entity. B. Basis of Presentation GOVERNMENT -WIDE FINANCIAL STATEMENTS The Statement of Net Position and the Statement of Activities display information about the reporting government as a whole. They include all funds of the reporting entity except for fiduciary funds. The statements distinguish between governmental and business type activities, when applicable. Governmental activities generally are financed through taxes, intergovernmental revenues, and other non-exchange revenues. Business type activities are financed in whole or in part by fees charged to external parties for goods or services

16 Notes to The Financial Statements (Continued) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. Basis of Presentation (Continued) The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function. The Association allocates indirect expenses to functions in the Statement of Activities in cases where a clear and direct connection exists. Program revenues include member contributions, charges to residents who purchase, use or directly benefit from goods, services, or privileges provided by a given function, and grants and contributions that are restricted to meeting the operational and capital requirements of a particular function. Other income items that are not specifically related to a function are reported as general revenues. FUND FINANCIAL STATEMENTS Fund financial statements of the reporting entity are organized into individual funds where applicable, each of which is considered to be a separate accounting entity. Each fund is accounted for by providing a separate set of self-balancing accounts, which constitute its assets and deferred outflows, liabilities and deferred inflows, fund equity, revenues, and expenditures/expenses. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with finance-related legal and contractual provisions. Funds are organized as major funds or non-major funds within the governmental, proprietary, and fiduciary statements, when applicable. An emphasis is placed on major funds within the governmental and proprietary categories. A fund is considered major if it is the primary operating fund of the entity or meets the following criteria: Total assets and deferred outflows, liabilities and deferred inflows, revenues or expenditures/expenses of the individual governmental fund or enterprise fund are at least ten percent of the corresponding total for all funds of that category or type and Total assets and deferred outflows, liabilities and deferred inflows, revenues or expenditures/expenses of the individual governmental or enterprise fund are at least five percent of the corresponding total for all governmental and enterprise funds combined. Proprietary Funds (Business Activities) Enterprise Fund An enterprise fund is used to account for the business type operations of a governmental entity that are similar to private sector operations. Under generally accepted accounting principles (GAAP), an enterprise fund is required if the entity s fee structure is designed to recover the cost of providing services, including capital costs (depreciation) and debt service. MAJOR FUNDS The Association reports the following major proprietary fund: The Enterprise Fund

17 Notes to The Financial Statements (Continued) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Basis of Accounting In the government-wide Statement of Net Position and Statement of Activities, business activities are presented using the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred or the economic asset is used. Revenues, expenses, gains, losses, assets, and liabilities resulting from exchange and exchange -like transactions are recognized when the exchange takes place. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. The current financial resources measurement focus and the modified accrual basis of accounting are followed in the fund financial statements. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual, i.e., both measurable and available to finance the Association s operations. Measurable means the amount of the transaction can be determined, and available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Member agency contributions, investment earnings, and charges for services are the primary revenue sources susceptible to accrual. Class registration fees received by the Association are recognized as revenue when the class starts. All other revenues are recognized when cash is received. Expenditures are recorded when the related fund liability is incurred. The Association reports unearned/deferred revenues on the government-wide Statement of Net Position and the Statement of Fund Net Position. For government-wide financial statements, unearned revenues arise from program charges received before the program has started. For fund financial statements, deferred revenues occur when potential revenue does not meet both the measurable and available criteria for recognition in the current period or when resources are received by the Association before it has a legal claim to them. In subsequent periods, when both revenue recognition criteria are met, or when the Association has a legal claim to the resources, the liability for deferred revenue is removed from the Statement of Fund Net Position and revenue is recognized accordingly. D. Measurement Focus On the government-wide Statement of Net Position and Statement of Activities, business activities are presented using the flow of economic resources measurement focus, which means all assets, deferred outflows, liabilities (whether current or non-current), and deferred inflows are included on the Statement of Net Position and the operating statements present increases and decreases in net total assets. The measurement focus of the fund financial statements is the flow of current financial resources concept. Under this concept, sources and uses of financial resources, including capital outlays, debt proceeds and debt retirements are reflected in operations. Resources not available to finance expenses and commitments of the current period are recognized as deferred revenue or a reservation of fund equity. Liabilities for claims, judgments, compensated absences and pension contributions, which will not be currently liquidated using expendable available financial resources are included as liabilities in the government-wide financial statements, but are excluded from the fund financial statements. The related expenses are recognized in the fund financial statements when the liabilities are liquidated

18 Notes to The Financial Statements (Continued) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) E. 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 assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates. F. Budgetary Data Budgets are adopted on a basis consistent with generally accepted accounting principles. Annual appropriated budgets are adopted for the general fund. The Board of Directors adopts a proposed operating budget for the fiscal year commencing on the following May 1. The operating budget includes proposed expenditures and the means to finance them. The Board of Directors has the power to amend the budget in the same manner as its original enactment. The level of control where expenses may not exceed the budget is the fund level of activity. Unspent budgetary amounts lapse at year end and, therefore, are not carried over to succeeding years. The budget information stated in the financial statements includes adjustments made during the year. G. Cash and Cash Equivalents For purposes of reporting cash flows, cash and cash equivalents are defined as cash on hand, amounts held at financial institutions, and short-term highly liquid investments that are readily convertible to known amounts of cash. Investments with an original maturity of three months or less are considered short-term for these purposes. H. Investments Investments are stated at cost or amortized cost, which equals market value. I. Contributions Receivable Contributions pledged and not received prior to April 30, 2018 are presented as contributions receivable. There are no contributions receivable as of April 30, J. Capital Assets The accounting treatment over property, plant and equipment (capital assets) depends on whether the assets are reported in the government-wide or fund financial statements

19 Notes to The Financial Statements (Continued) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) J. Capital Assets (Continued) GOVERNMENT -WIDE FINANCIAL STATEMENTS In the government-wide financial statements, fixed assets are accounted for as capital assets. All capital assets are valued at historical cost, or estimated historical cost if actual cost is unavailable. Donated capital assets are stated at their fair market value as of the date donated. Depreciation of all exhaustible capital assets over the threshold of $1,000 is recorded as an allocated expense in the Statement of Activities, with accumulated depreciation reflected in the Statement of Net Position. Depreciation is provided over the assets estimated useful lives using the straight-line method of depreciation. The range of estimated useful lives by type of asset is as follows: Machinery & Equipment Vehicles Buildings 5 20 Years 8 Years 50 Years FUND FINANCIAL STATEMENTS In the fund financial statements, capital assets used in operations are accounted for as capital outlays in the fund from which the purchase was made. Public domain (infrastructure) assets consisting of roads, curbs and gutters, sidewalks, drainage systems, and lighting systems have not been capitalized in the fund financial statements. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives have not been included as capitalized assets or capitalized in the proprietary funds. K. Accrued Vacation The Association s employees are entitled to vacation in varying amounts: Years of Service Vacation Days 1-3 years 2 weeks 4-7 years 3 weeks 8-19 years 4 weeks Over 20 years 5 weeks The estimated liability for vacation commitments at April 30, 2018 is $56,

20 Notes to The Financial Statements (Continued) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) L. Debt Commitments In the government-wide financial statements, debt principal payments are reported as decreases in the balance of the liability on the Statement of Net Position. In the fund financial statements, however, debt principal payments of governmental funds have been treated as expenses. M. Equity Classifications GOVERNMENT -WIDE FINANCIAL STATEMENTS Equity is classified as net position and displayed in three components: Net Investment in capital assets consists of capital assets, net of accumulated depreciation and related debt, if applicable. Restricted Amounts consists of amounts with constraints placed on the use either by external groups such as creditors, grantors, contributors, or laws or regulations of other governments, or law through constitutional provisions or enabling legislation. Unrestricted Amounts consists of all other amounts that do not meet the definition of restricted or invested in capital assets. FUND FINANCIAL STATEMENTS Governmental fund equity is classified as fund net position. Fund Net position may further be classified as reserved and unreserved. The Association has not designated any unreserved fund net position for any particular purposes at the audit date. N. GASB Pronouncements In June 1999, The GASB issued Statement No. 34, Basic Financial Statements and Management s Discussion and Analysis for State and Local Governments. This Statement establishes new financial reporting requirements for state and local governments throughout the United States. The requirements of this Statement are effective in three phases based on a government s total revenues in the first year ending after June 15, The Association has adopted this Statement for the period beginning May 1, As of May 1, 2012, the Association has implemented GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position. The objective of this Statement is to improve financial reporting by standardizing the presentation of deferred outflows of resources and deferred inflows of resources and their effect on a government s net position. As of May 1, 2012, the Association has implemented 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. The Statement also recognizes as outflows of resources or inflows of resources certain items that were previously reported as assets and liabilities

21 Notes to The Financial Statements (Continued) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) N. GASB Pronouncements (Continued) As of April 1, 2015, the Association has implemented GASB Statement No. 68 Accounting and Financial Reporting for Pensions which is an amendment of GASB Statement No. 27. The objective of this statement is to improve accounting and financial reporting by state and local governments for pensions. It also improves information provided by state and local governmental employers about financial support for pensions that is provided by other entities. 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. Upon implementation of GASB 68, the Association has also implemented GASB Statement No. 71 Pension Transition for Contributions Made Subsequent to the Measurement Date an amendment of GASB Statement No. 68. NOTE 2 - CASH AND INVESTMENTS At April 30, 2018, the carrying amount of the Association s deposits was $1,109,920, not including petty cash of $800, and the bank balance was $1,132,227. Policies for Investments It is the policy of the Association to invest its funds in a manner which will provide the highest investment return with the maximum security while meeting the daily cash flow demands of the Association and conforming to all state and local statutes governing the investment of public funds, using the prudent person standard for managing the overall portfolio. The primary objective of the policy is safety (preservation of capital and protection of investment principal), liquidity and yield. Custodial credit risk for deposits with financial institutions is the risk that in the event of a bank s failure, the Association s deposits may not be returned to it. The Association s investment policy requires pledging of collateral of all bank balances in excess of federal depository insurance with the collateral held by a third party in the Association s name. The Association limits its exposure to credit risk, the risk that the issuer of a debt security will not pay its par value upon maturity, by primarily investing in obligations guaranteed by the United States Government or securities issued by agencies of the United States Government that are explicitly or implicitly guaranteed by the United States Government. NOTE 3 - CAPITAL ASSETS A summary of changes in the capital assets of the Enterprise Fund (Business Type Activity) for the year ended April 30, 2018 follows. Depreciation expense charged for business type activities was $125,

22 Notes to The Financial Statements (Continued) NOTE 3 - CAPITAL ASSETS (CONTINUED) Balance Balance Capital Assets May 1, 2017 Additions Retirements April 30, 2018 Not Subject to Depreciation Land $ 736,250 $ 0 $ 0 $ 736,250 Construction in Progress 0 6, ,420 Subtotal 736,250 6, ,670 Subject to Depreciation Machinery and Equipment 323,715 20,849 (25,109) 319,455 Vehicles 465, ,937 (90,069) 489,799 Building 1,724,872 38, ,763,408 Leasehold Improvements 787, ,619 3,302, ,322 (115,178) 3,360,281 Less - Accumulated Depreciation Machinery and Equipment (268,380) (12,818) 25,109 (256,089) Vehicles (259,265) (59,682) 83,339 (235,608) Building (239,759) (36,887) 0 (276,646) Leasehold Improvements (114,026) (15,864) 0 (129,890) (881,430) (125,251) 108,448 (898,233) Subtotal 2,420,707 48,071 (6,730) 2,462,048 Net Capital Assets $ 3,156,957 $ 54,491 $ (6,730) $ 3,204,718 NOTE 4 - DEBT COMMITMENTS A. Debt Transactions The following is a summary of debt transactions for business activities for the year ended April 30, Amount Due Balance May 1, 2017 New Debt Principal Paid Balance April 30, 2018 Within One Year Debt Certificates Series 2016B $ 1,185,000 $ 0 $ 5,000 $ 1,180,000 $ 80,000 $ 1,185,000 $ 0 $ 5,000 $ 1,180,000 $ 80,000 B. Long-Term Debt Series 2016B Debt Certificate, originally issued for $1,185,000 provides for annual installments varying from $100,000 to $135,000 after the first year. Interest is paid semi-annually at a 1.88% rate

23 Notes to The Financial Statements (Continued) NOTE 4 DEBT COMMITMENTS (CONTINUED) C. Annual Debt Service Requirements The annual requirements on all business-type debt to maturity as of April 30, 2018 are as follows: Fiscal Year Principal Interest Total 2019 $ 80,000 $ 22,184 $ 102, ,000 20, , ,000 18, , ,000 16, , ,000 14, , ,000 35, ,802 $ 1,180,000 $ 127,546 $ 1,307,546 NOTE 5 - REVENUE More than half of the Association s funding comes from its Member Agency Contributions. The following is a list of the Member Agencies and their respective contribution for the year ending April 30, 2018: NOTE 6 SUBSEQUENT EVENTS Agency Budget Actual Barrington Park District $ 121,672 $ 121,672 Cary Park District 111, ,993 Crystal Lake Park District 278, ,978 Dundee Township Park District 304, ,169 City of Elgin 409, ,624 Hampshire Park District 47,197 47,197 City of Harvard 22,221 22,221 City of Huntley 233, ,195 Village of Lake in the Hills 54,176 54,176 Marengo Park District 25,273 25,273 City of McHenry 124, ,443 Wauconda Park District 70,569 70,569 City of Woodstock 96,875 96,875 $ 1,900,385 $ 1,900,385 The date to which events occurring after April 30, 2018, the date of the most recent balance sheet, have been evaluated for possible adjustment to the financial statements or disclosure is July 20, 2018, the date the financial statements were available to be issued

24 Notes to The Financial Statements (Continued) NOTE 7 - RISK MANAGEMENT The Northern Illinois Special Recreation Association is exposed to various risks related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and net income losses. Since June 1, 1992, the Northern Illinois Special Recreation Association has been a member of the Park District Risk Management Agency (PDRMA) Property/Casualty Program. PDRMA is a public entity risk pool consisting of park districts, forest preserve districts, special recreation associations and certain non-profit organizations serving the needs of public entities formed in accordance with the terms of an intergovernmental cooperative agreement among its members. The following table is a summary of the property/casualty coverage in effect for the period January 1, 2018 through January 1,

25 Notes to The Financial Statements (Continued) NOTE 7 - RISK MANAGEMENT (CONTINUED) PDRMA Member Self-Insured Insurance Policy Coverage Deductible Retention Limits Company Number 1. Property Property/Bldg/Contents PDRMA Reinsurers: P All losses per occurrence $1,000 $1,000,000 $1,000,000,000/all members Various Reinsurers Declaration 11 through the Public Entity Flood/except Zones A&V $1,000 $1,000,000 $250,000,000/occurrence/annual aggregate Property Flood, Zones A&V $1,000 $1,000,000 $200,000,000/occurrence/annual aggregate Reinsurance Earthquake Shock $1,000 $100,000 $100,000,000/occurrence/annual aggregate Program (PEPIP) Auto Physical Damage Comprehensive and Collision $1,000 $1,000,000 Included Course of Construction/Builders Risk $1,000 Included $25,000,000 Business interruption, Rental $100,000,000/reported values Income, Tax Income Combined $1,000 $500,000/$2,500,000/non-reported values Service Interruption 24 hours N/A $25,000,000 OTHER SUB-LIMITS APPLY- REFER TO COVERAGE DOCUMENT Boiler and Machinery $100,000,000 Equip. Breakdown Travelers BME1 0525L478 Property Damage $1,000 $9,000 Property damage - included Indemnity Co. of Business Income 48 hours N/A Included Illinois OTHER SUB-LIMITS APPLY- REFER TO COVERAGE DOCUMENT Fidelity and Crime $1,000 $24,000 $2,000,000 National Union Seasonal Employees $1,000 $9,000 $1,000,000 Fire Insurance Co Blanket Bond $1,000 $24,000 $2,000, Workers Compensation N/A $500,000 Statutory PDRMA WC EMPLOYERS LIABILITY $500,000 $3,500,000 Employers Liability Government GEM Entities Mutual (GEM) A18001 Safety National SP Liability General None $500,000 $21,500,000/occurrence PDRMA Reinsurers: L Auto Liability None $500,000 $21,500,000/occurrence GEM, Great American GEM Employment Practices None $500,000 $21,500,000/occurrence Genesis A18001 Public Officials' Liability None $500,000 $21,500,000/occurrence Indemnity and C501 Law Enforcement Liability None $500,000 $21,500,000/occurrence Liability Co. Uninsured/Underinsured None $500,000 $1,000,000/occurrence Motorists 4. Pollution Liability Liability- third party None $25,000 $5,000,000/occurrence XL Enviornmental PEC Property- first party $1,000 $24,000 $30,000,000 3 yr. aggregate Insurance

26 Notes to The Financial Statements (Continued) NOTE 7 - RISK MANAGEMENT (CONTINUED) PDRMA Member Self-Insured Insurance Policy Coverage Deductible Retention Limits Company Number 5. Outbreak Expense 24 Hours N/A $15,000 per day Great American OB $1 million aggregate policy limit 6. Information Security and Privacy Insurance with Electronic Media Liability Coverage Information Security & Privacy Liability None $100,000 $2,000,000/occurrence/annual aggregate Beazley Lloyds PH Privacy Notification Costs None $100,000 $500,000/occurrence/annual aggregate Syndicate Regulatory Defense & AFB 2623/623 Penalties None $100,000 $2,000,000/occurrence/annual aggregate through the Website Media Content PEPIP program Liability None $100,000 $2,000,000/occurrence/annual aggregate Cyber Extortion None $100,000 Data Protection & Business Interruption $1,000 $100,000 First Pay Business Interruption 8 Hours $100,000 $2,000,000/occurrence/annual aggregate $2,000,000/occurrence/annual aggregate $25,000 hourly sublimit/$25,000 forensic experience/$100,000 dependent business interruption 7. Volunteer Medical Accident None $5,000 $5,000 medical expense and AD&D Self-Insured excess of any other collectible insurance 8. Underground Storage Tank Liability None N/A $10,000, follows Illinois Leaking Underground Tank Fund Self-Insured 9. Unemployment N/A N/A Statutory Member funded Compensation Losses exceeding the per occurrence self-insured and reinsurance limit would be the responsibility of the Northern Illinois Special Recreation Association

27 Notes to The Financial Statements (Continued) NOTE 7 - RISK MANAGEMENT (CONTINUED) As a member of PDRMA s Property/Casualty Program, the Northern Illinois Special Recreation Association is represented on the Property/Casualty Program Council and the Membership Assembly and is entitled to one vote on each. The relationship between Northern Illinois Special Recreation Association and PDRMA is governed by a contract and the by-laws that have been adopted by resolution of the Northern Illinois Special Recreation Association s governing body. The Northern Illinois Special Recreation Association is contractually obligated to make all annual and supplementary contributions to PDRMA, to report claims on a timely basis, cooperate with PDRMA, its claims administrator and attorneys in claims investigation and settlement, and to follow risk management procedures as outlined by PDRMA. Members have a contractual obligation to fund any deficit of PDRMA attributable to a membership year during which they were a member. PDRMA is responsible for administering the self-insurance program and purchasing excess insurance according to the direction of the Program Council. PDRMA also provides its members with risk management services, including the defense of and settlement of claims, and establishes reasonable and necessary loss reduction and prevention procedures to be followed by the members. The following represents a summary of PDRMA's Health Program s balance sheet at December 31, 2016 and the statement of revenues and expenses for the period ending December 31, The Northern Illinois Special Recreation Association s portion of the overall equity of the pool is 0.108% or $47,060. Assets $ 65,528,169 Deferred Outflows - Pension $ 1,031,198 Liabilities $ 22,979,446 Deferred Inflows - Pension $ 5,600 Member Balances $ 43,574,321 Revenues $ 23,353,271 Expenditures $ 17,402,060 Since 88.70% of PDRMA's liabilities are reserves for losses and loss adjustment expenses which are based on an actuarial estimate of the ultimate losses incurred, the Net Position is impacted annually as more recent loss information becomes available. NOTE 8 - HEALTH INSURANCE On February 1, 1990 the Northern Illinois Special Recreation Association became a member of the Park District Risk Management Agency (PDRMA) Health Program, a health insurance pool of park districts, special recreation associations, and public service organizations through which medical, vision, dental, life and prescription drug coverages are provided in excess of specified limits for the members, acting as a single insurable unit. The pool purchases excess insurance covering single claims over $250,000. Until January 1, 2001 the PDRMA Health Program was a separate legal entity formerly known as the Illinois Park Employees Health Network (IPEHN). Members can choose to provide any combination of coverages available to their employees, and pay premiums accordingly