West Almanor Mutual Water Company Reviewed Financial Statements For the Year Ended December 31, 2017

Transcription

1 i i.! l J West Almanor Mutual Water Company Reviewed Financial Statements For the Year Ended December 31, 2017 Mary Cheek, CPA A Professional Accountancy Corporation Chester, California

2 I West Almanor Mutual Water Company Table of Contents For the Year Ended December 31, 2017 Page No. Board of Directors 1 Independent Accountant's Review Report 2 Statement of Financial Position 4 Statement of Activities 5 Statement of Cash Flows 6 Notes to the Financial Statements 7 Supplementary Information Schedule of Actual to Budget 16 Future Major Repairs and Replacements 17

3 West Almanor Mutual Water Company Board of Directors As of December 31,2017 President Vice President Secretary Treasurer Director Dale Bornhorst Bob Sloan Debbie Holden Gary Hiltunen John Probst

4 Mary Cheek, CPA A Professional Accountancy Corporation INDEPENDENT ACCOUNTANT'S REVIEW REPORT To the Board of Directors of West Almanor Mutual Water Company Chester, California We have reviewed the accompanying financial statements of West Almanor Mutual Water Company (a California Mutual Benefit Corporation), which comprise the Statement of Financial Position as of December 31, 2017, and the related Statement of Activities and Cash Flows for the year then ended, and the related notes to the financial statements. A review includes primarily applying analytical procedures to management's financial data and making inquiries of management. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, we do not express such an opinion. 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. Accountant's Responsibility Our responsibility is to conduct the review engagement in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the AICPA. Those standards require us to perform procedures to obtain limited assurance as a basis for reporting whether we are aware of any material modifications that should be made to the financial statements for them to be in accordance with accounting principles generally accepted in the United States of America. We believe that the results of our procedures provide a reasonable basis for our conclusion. Accountant's Conclusion Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in accordance with accounting principles generally accepted in the United States of America. 130 E. Willow Street, P.O. Box 1966 Chester, CA Fax: MaryCheekCP A@FrontierNet.Net A. Com

5 Required Supplementary Information Accounting principles generally accepted in the United States of America require that the information about future major repairs and replacements of common property on page 17 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Financial Accounting Standards Board, which 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 not audited, reviewed, or compiled the required supplementary information and, accordingly, do not express an opinion, a conclusion, nor provide any assurance on it. Supplementary Information The Schedule of Actual to Budget on page 16 is presented for purposes of additional analysis and is not required part of the basic financial statement. Such information is the responsibility of management. We have not audited or reviewed such information and, accordingly, we do not express an opinion, a conclusion, nor provide any assurance on it. Sincerely, Mary Cheek, CPA A Professional Accountancy Corporation June 01, E. Willow Street, P.O. Box 1966 Chester, CA Fax: MaryCheekCP A@FrontierNet.Net A. Com

6 1 I I West Almanor Mutual Water Company Statement of Financial Position December 31, 2017 and 2016 ASSETS Current Assets Cash & Cash Equivalents - Operating Cash & Cash Equivalents - Reserve Investments - Reserve Accounts Receivable Prepaid Expense Total Current Assets Fixed Assets Property and Equipment Accumulated Deprecation (Reviewed) (Reviewed) $ 180,876 $ 147,439 89, , , ,192 2,489 8,458 1,623 1,612 $ 839,766 $ 727,081 2,008,666 2,008,666 (1,429,981) (1,372,112) Total Property and Equipment, Net 578, ,554 Total Assets $ 1,418,451 $ 1,363,635 Variance $ 33,437 (18,384) 103,590 (5,969) 11 $ 112,685 (57,869) (57,869) $ 54,816 Liabilities & Net Assets Current Liabilities $ 7,439 $ Net Assets Capital Stock, $1 par, 695 Shares issued and Outstanding Unrestricted Net Assets 1,410,317 1,362,940 Total Net Assets 1,411,012 1,363,635 Total Liabilities & Net Assets $ 1,418,451 $ 1,363,635 $ 7,439 47,377 47,377 $ 54,816 4 See Independent Accountant's Review Report

7 West Almanor Mutual Water Company Statement of Activities For the Year Ended December 31,2017 and Revenue (Reviewed) (Reviewed) Variance Improved Lot Fees $ 140,307 $ 138,953 $ 1,354 Unimproved Lot Fees 34,600 34, Surcharge Billings 85,399 77,964 7,436 Interest 8,162 6,799 1,363 Fees 6,594 6, Other Revenue 2,500 4,162 (1,662) Total Revenue 277, ,431 9,132 Cost of Sales Contract Services 53,978 51,324 2,654 Repairs and Maintenance 40,888 25,602 15,286 Electricity 43,934 41,106 2,828 Total Cost of Sales 138, ,032 20,767 Expenses Office Services 10,285 10,560 (275) Depreciation 57,869 59,889 (2,020) Insurance 6,482 6,904 (422) Permits and Licenses 2,959 3,184 (225) Professional Fees 4,420 6,670 (2,250) Office Expenses 6,236 4,865 1,371 Ca Franchise Tax 3,134 2,008 1,126 Total Expenses 91,385 94,079 (2,694) Change in Net Assets 47,378 56,320 (8,942) Unrestricted Net Assets at the Beginning of the Year l,362,940 1,306,620 56,320 Unrestricted Net Assets at the End of the Year $ 1,410,317 $ 1,362,940 $ 47,378 5 See Independent Accountant's Review Report

8 West Almanor Mutual Water Company Statement of Cash Flows For the Year Ended December 31,2017 and Cash Flow From Operating Activities: (Reviewed) (Reviewed) Net Revenues Over Expenses $ 47,378 $ 56,320 Variance $ (8,942) Adjustments to Reconcile Net Revenue to Net Cash Provided (Used) by Operating Activities: Depreciation 57,869 Accrued Interest on Series EE Sa\1 (3,048) Accrued Interest on Cal First CDS (877) 59,889 (2,928) (700) (2,020) (120) (177) (Increase) Decrease In : Accounts Receivable 5,969 Prepaid Expense (11) Accounts Payable Increase 7,439 (10) 1,531 5,979 (1,542) 7,439 Net Cash Provided or (Used) by Operating Activi 114, , Cash Flows From Investing Activities: Maturity of Investments 285,335 Purchase of Capital Assets Purchase of Investments (385,000) 195,000 (25,334) (395,000) 90,335 25,334 10,000 Net Cash Provided or (Used) by Investing Activit (99,665) (225,334) 125,669 Net Increase or (Decrease) in Cash 15,054 (111,232) 126,286 Cash at the Beginning of the Year 255, ,051 (111,232) Cash at the End of the Year $ 270,873 $ 255,819 $ 15,054 Supplemental Disclosure of Cash Flow Information: Cash Paid for California Franchise Taxes $ 3,134 $ 2,008 $ I,126 6 See Independent Accountant's Review Report

9 WEST ALMANOR MUTUAL WATER COMPANY Notes to Financial Statements For the Year Ended December 31, 2017 Note 1- Nature of Entity West Almanor Mutual Water Company (the "Company") was formed in California as a nonprofit corporation on May 2, The Company provides water utility services to its members. Each Lake Almanor West property owner holds one share of stock in the Company, which Is governed by a five-person Board of Directors selected by the property owners at the annual stockholders meeting. Note 2- Summary of Significant Accounting Policies a. Basis of Presentation - The Company's financial statements are presented in conformity with Statement of Accounting Standards Codification Not-For-Profit Entities - Presentation offinancial Statements. b. Revenue Recognition: The Company recognizes lot fees, utility surcharges, transfer and connection fees, and investment revenue when earned. Other revenues are generally insignificant and are recorded as revenue when received. c. Contributions - All contributions are considered to be available for unrestricted use unless specifically restricted by the donor. The Company's contributions consist primarily of water storage and distribution assets contributed by contractors at the completion of housing subdivision construction within the Company's boundaries. The Company has not received any contributions with donor-imposed restrictions that would result in temporarily or permanently restricted net assets. d. Cash and Cash Equivalents - For the purpose of reporting cash flows, cash and cash equivalents include petty cash, cash in bank, and readily marketable equivalents in investment accounts with initial maturity dates of 3 months or less. 7

10 WEST ALMANORMUTUAL WATER COMPANY Notes to Financial Statements For the Year Ended December 31,2017 Note 2- Summary of Significant Accounting Policies (Continued) e. Property and Equipment - Purchased or constructed capital assets are reported at cost or estimated historical cost. Contributed assets are recognized at their estimated fair value at the date of contribution. The cost of normal maintenance and repairs that do not add to the value of the assets or materially extend assets' lives are not capitalized. Purchased or constructed assets are depreciated using the accelerated cost recovery method over useful estimated lives from 5 to 39 years. Contributed assets are depreciated using the straight-line method over the assets useful lives. Maintenance and repairs are charged to expense as incurred. Renewals and betterments which extend the useful lives of assets are capitalized. f. Prepaid Utility Fees- Cash received for utility fees are recognized as revenue to the extent that revenues for the related services have been earned. g. 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 expenses during the reporting period. Actual results may differ from those estimates. h. Investments - Investments are reported at face value plus accrued interest which approximates cost. Note 3 - Fair Value Measurements The Company follows the provisions off ASB ASC 820, Fair Value Measurement. Under ASC , fair value is defined as "the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date". 8

11 1 l I i I ; WEST ALMANORMUTUAL WATER COMPANY Notes to Financial Statements For the Year Ended December 31,2017 Note 3- Fair Value Measurements (Continued) ASC establishes a fair value hierarchy which categorizes inputs into three levels as follows: Level 1: Values are unadjusted quoted prices for identical assets or liabilities in active markets accessible at the measurement date. Level 2: Inputs include quoted prices for similar assets or liabilities in active markets, quoted proceeds from those willing to trade in markets that are not active, or other inputs that are observable or can be corroborated by market data for the term of the instrument. Level 3: Certain inputs are unobservable (supported by little or no market activity) and significant to the fair value measurement. Unobservable inputs reflect the Company's best estimate of what hypothetical market participants would use to determine a transaction price for the asset or liability at the reporting date. In accordance with ASC all of the Company's certificates of deposit and the investment in Series EE Savings Bonds are classified as Level 2 investments. Note 4- Income Taxes The Company has received tax-exempt status under Internal Revenue Code Section 50l(c)(l2) and has been granted status as a tax-exempt corporation under California Tax Law. Accordingly, no provision for income taxes has been reflected in these financial statements. The regular annual flat rate billing for water usage is not taxable, however, the State of California does tax the net surcharge revenue for excess water usage. The Company's tax filings are subject to audit by various taxing authorities. Federal income tax returns for the previous three years remain open to examination by the Internal Revenue Service and California income tax returns for the previous four years remain open to examination by the Franchise Tax Board. In evaluating the Company's tax provisions and accruals, the Company believes that its estimates are appropriate based on current facts and circumstances. The Company has adopted F ASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes. The Company has evaluated potential tax liabilities for the current and prior years, and does not anticipate any future liability due to tax uncertainties. 9

12 WEST ALMANOR MUTUAL WATER COMPANY Notes to Financial Statements For the Year Ended December 31,2017 Note 5- Cash and Cash Eguivalents The Company maintains its cash balances at several financial institutions. Accounts at each institution are secured by the Federal Deposit Insurance Corporation up to $250,000. The Company did not have any uninsured balances at December 31,2016. The following is a schedule of cash and cash equivalents reported in the financial statements: 2017 Operating Cash Cash on Hand 1,328 Plumas Bank Checking 41,960 Plumas Bank Money Market 1,849 Edward Jones Money Market 50,679 Edward Jones Cap Imp CD 25,000 Edward Jones Cap Imp CD 40,000 Plumas Bank Cap Imp CD 20,060 Total $ 180, ,461 5,843 50,105 20,000 20,000 20,030 $ 147,439 Reserve Cash Edward Jones Money Market 25,107 Cal First National Money Market 64,889 Total $ 89,996 ======== 43,990 64,390 $ 108,380 10

13 J WEST ALMANORMUTUAL WATER COMPANY Notes to Financial Statements For the Year Ended December 31, 2017 Note 6- Investments The Company holds several investments in US Savings Bonds and Certificates of Deposits with maturity dates greater than 3 months. Interest on these investments is recognized in the period in which it was earned Investments - Reserve Amount Amount Series EE Savings Bonds ,984 38,436 Series EE Savings Bonds ,556 37,056 EJ American Express 3/1/19 70,000 EJ Discover Bank 70,000 25,000 EJ-AIIy Bank 05/01/17 50,000 EJ-AIIy Bank 05/25/18 25,000 25,000 EJ Citibank 2/20/18 25,000 EJ-ZB Bank 9/5/17 25,000 EJ-Capital One Bank 8/3/18 35,000 35,000 EJ-AIIy Bank 2/5/18 35,000 35,000 Cal First CD 7/18/17 70,335 Cal First cd 7/18/18 71,242 70,365 EJ-Discover bk 11/30/18 25,000 25,000 EJ Bank of America 05/17/18 35,000 EJ Am ex Bank 08117/18 35,000 EJ BankUnited 02/15/19 25,000 EJ State Bank of India 11/23/18 35,000 EJ Bank of China 11116/17 25,000 Total $ 564,782 $ 461,192 11

14 WEST ALMANORMUTUAL WATER COMPANY Notes to Financial Statements For the Year Ended December 31, 2017 Note 7- Investment Returns Investment income is generated by interest on cash held in money market accounts, certificates of deposit and savings bonds. Total return is interest income in the amount of $7,479 in 2017 and $6,799 in Note 8- Property and Eguipment As of December 31, 20 16, the Company held the following property, equipment, and accumulated depreciation as reported on the balance sheet. Certain amounts in the prior periods presented have been reclassified to conform to the current period financial statement presentation. These reclassifications have no effect on previously reported net mcome. 12/ Additions I Dispositions 12/ Land and Improvements 52,935 Water System 1,913,015 Equipment 38,171 Hydrants 4,545 Sub Total 2,008,666 Accumulated Depreciation (1,372,112) Total, Net $ 636,554 (57,869) $ (57,869) 52,935 1,913,015 38,171 4,545 2,008,666 (1,429,981) $ 578,685 12

15 WEST ALMANOR MUTUAL WATER COMPANY Notes to Financial Statements For the Year Ended December 31,2017 Note 9- Future Major Repairs and Replacements The Board ofdirectors hired Association Reserves -SF, LLC to conduct a reserve study in October 2016 to estimate the remaining useful lives and the replacement costs of the components of common property. The table included in the un-audited supplementary information on future Major Repairs and Replacements is based on that study. Funding requirements consider an annual inflation rate of3.0% and interest at 1.0%, net of taxes, on amounts funded for future major repairs and replacements. Funds are being accumulated for the replacement fund based on estimates of future needs for repairs and replacements of common property components. Actual expenditures may vary from the estimated future expenditures, and the variations may be material. Therefore, amounts accumulated for the replacement fund may not be adequate to meet all future needs for major repairs and replacements. If additional funds are needed, the Company has the right, subject to shareholder approval, to increase regular assessments, pass special assessments, or delay major repairs and replacements until funds are available. Note 10- Benefits The Company currently contracts for all services and does not have employees. Health Insurance and pension plans are therefore neither currently being provided for nor budgeted for. Note 11: -Commitments The Company enters into contracts for services in the normal course of its business operations, as follows: Water Service Contract Water Service Operation is managed by Durkin Construction, Inc. under a five-year contract commencing May 1, 2016 and continuing in effect until April 30, The contract provides for a monthly fee of $4,277 per month. Accounting Contract Annual and interim financial statement services and tax preparation services are contracted with Singleton-Auman CPAs, for a monthly fee of $330 per month. Management and administrative services are now contracted with Singleton Auman CPAs, commencing July 1, 2017 through December 31, The contract provides for an additional monthly fee of $550 per month. 13

16 WEST ALMANORMUTUAL WATER COMPANY Notes to Financial Statements For the Year Ended December 31,2017 Note 12- Subsequent Events The Company has evaluated subsequent events through June 1, 2018, the date which the financial statements were available to be issued. The Company does not believe that there are any material subsequent events. 14

17 WEST ALMANORMUTUAL WATER COMPANY Notes to Financial Statements For the Year Ended December 31, 2017 Supplementary Information 15

18 West Almanor Mutual Water Company Schedule of Actual to Budget For the Year Ended December 31,2017 Variance Favorable Actual Budget (Unfavorable) Revenue Unimproved Lot Fees $ 34,600 $ 34,254 $ 346 Improved Lot Fees 140, , Surcharge Billings 85,399 70,000 15,399 Transfer Fees 2,275 1,125 1,150 Connection Fees 2,168 1,084 1,084 Meter Reading fees 1, Interest Savings I Interest Owner fees Rebilling & Late Fees 254 1,100 (846) I Prior Years Annual Fees l j Total Revenue 267, ,683 18,900 Cost of Sales Contract Services 51,324 51,324 l Equipment & System Repairs 33,419 20,000 13,419 Supplies & Parts 4,402 1,500 2,902 Reserve Repairs 900 6,569 (5,669) Laboratory Fees 2,167 3,000 (833) Electricity -Pumping Costs 43,934 35,000 8,934 Scada Service Contract 2,654 2, Total Cost of Sales 138, ,503 19,297, Expenses Annual Meeting Lunch (9) Accounting Services 10,285 10,560 (275) Audit-Independent 3,000 3,000 Billing Software 1, Director CPE 500 (500) Dues, Publications, Education (295) Insurance General 6,482 6,500 (18) Legal Expenses 1,000 (1,000) Office Supplies & Bank Charges 2,266 1,000 1,266 Outside Professional Services 1,420 1,420 Permits & Licenses 2,959 3,200 (241) Postage & Mailing 1,606 1, Taxes -Ca Franchise Board 3,134 2,100 1,034 Telephone 1,123 1, Total Expenses 33,515 32, Other Income & Expanse Interest -Savings Reserves 7,479 5,500 1,979 Shop Rent Income 2,500 3,600 (1,100) Depreciation Expense (57,869) (57,869) Total Other Income & Expense (47,890) 9,100 (56,990) Change in Net Assets $ 47,378 $ 105,500 $ (58,122) 16 See Independent's Accountant's Review Report

19 West Almanor Mutual Water Company Future Major Repairs and Replacements For the Year Ended December 31, 2017 Current Estimated Estimated Estimated Cost Component Remaining of Repairs or Components Useful Life Useful Life Replacement Asphalt $ 128,110 Fences ,795 Well Houses 4 0 4,335 Roofs ,770 Generator ,600 Well Pump l ,800 Holding Tank 3-50 l ,865 Pipe ,409,000 Electrical Panels ,300 Fire Hydrants 10 l 13,100 Pressure Regulators ,950 Total Replacement Fund Current Costs $ 3,989,625 Replacement Fund Balance at December 31, 2016 $ 569,572 Replacement Fund Balance at December 31, 2017 $ 654,778 Increase in Replacement Fund Balance $ 85,206 Contribution Amount Recommended by Reserve Study $ 145, See Independent's Accountant's Review Report