DEPARTMENT OF TREASURY Andy Dillon, State Treasurer

Transcription

1 STATE OF MICHIGAN Rick Snyder, Governor DEPARTMENT OF TREASURY Andy Dillon, State Treasurer Report on Financial Statements VILLAGE OF CHESANING February 2013 Local Audit and Finance Division Bureau of Local Government Services

2 VILLAGE OF CHESANING VILLAGE COUNCIL Joseph Sedlar, Jr. President William Boyd Council Member Paul Gross Council Member Damion Frasier President Pro-Tem Donald Swartzmiller Council Member Michael Cicalo Council Member Matthew Hoover Council Member Denise Ebenhoeh Clerk Kenneth Valentine Treasurer Lisa Hitchcock Administrator VILLAGE POPULATION ,394 TAXABLE VALUATION $48,168,358

3 4425 (Rev ) RICK SNYDER GOVERNOR STATE OF MICHIGAN DEPARTMENT OF TREASURY LANSING ANDY DILLON STATE TREASURER August 7, 2013 Village Council Village of Chesaning 1100 West Broad Street Chesaning, 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, the discretely presented component units, each major fund and the aggregate remaining fund information of the Village of Chesaning, Saginaw County, Michigan, as of and for the fiscal year ended February 28, 2013, and the related notes to the financial statements, which collectively comprise the Village of Chesaning s basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express 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 P.O. BOX LANSING, MICHIGAN (517)

4 Village of Chesaning (Saginaw County) August 7, 2013 Page 2 statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit 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, the discretely presented component units, each major fund and the aggregate remaining fund information of the Village of Chesaning, Saginaw County, Michigan, as of February 28, 2013, and the respective changes in financial position and cash flows, where applicable, thereof 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 6, the budgetary comparison information in Exhibits J and K, and the schedules of funding progress for pensions and other postemployment benefits 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.

5 Village of Chesaning (Saginaw County) August 7, 2013 Page 3 Supplementary and Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Village of Chesaning s basic financial statements. The accompanying supplementary and related information presented as Exhibits L through R are presented for purposes of additional analysis and are not a required part of the basic financial statements. The information presented in Exhibits L through R 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 statement 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 Exhibits listed above are 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 August 7, 2013, on our consideration of the Village of Chesaning s 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 Village of Chesaning s internal control over financial reporting and compliance. Cary Jay Vaughn, CPA, CGFM Audit Manager Local Audit and Finance Division

6 VILLAGE OF CHESANING TABLE OF CONTENTS MANAGEMENT S DISCUSSION AND ANALYSIS...1 BASIC FINANCIAL STATEMENTS EXHIBIT A--Government-Wide Statement of Net Position...7 EXHIBIT B--Government-Wide Statement of Activities...8 EXHIBIT C-- Balance Sheet--Governmental Funds and Reconciliation to Statement of Net Position...9 EXHIBIT D-- Statement of Revenues, Expenditures and Changes in Fund Balances, Governmental Funds and Reconciliation to Statement of Activities...10 EXHIBIT E--Statement of Net Position--Proprietary Funds...11 EXHIBIT F--Statement of Revenues, Expenses and Changes in Net Position Proprietary Funds...12 EXHIBIT G--Statement of Cash Flows--Proprietary Funds...13 EXHIBIT H--Statement of Net Position--Component Units EXHIBIT I--Statement of Activities--Component Units NOTES TO FINANCIAL STATEMENTS...16 REQUIRED SUPPLEMENTARY INFORMATION Schedule of Funding Progress--Pension and Other Postemployment Benefits EXHIBIT J--Budgetary Comparison Schedule--General Fund...42 EXHIBIT K--Budgetary Comparison Schedule--Major Street Major Special Revenue Fund...43 Page

7 VILLAGE OF CHESANING TABLE OF CONTENTS (CONTINUED) Page SUPPLEMENTARY INFORMATION AND SCHEDULES EXHIBIT L--Combining Balance Sheet--Non-Major Governmental Funds...44 EXHIBIT M--Combining Statement of Revenues, Expenditures and Changes in Fund Balances--Non-major Governmental Funds...45 EXHIBIT N--Combining Statement of Net Position--Non-Major Enterprise Funds...46 EXHIBIT O--Combining Statement of Revenues, Expenses and Changes in Net Position--Non-Major Enterprise Funds...47 EXHIBIT P--Combining Statement of Cash Flows--Non-Major Enterprise Funds...48 EXHIBIT Q--Schedule of Revenues and Other Financing Sources By Source--Budget and Actual--General Fund...49 EXHIBIT R--Schedule of Expenditures and Other Financing Uses By Activity--Budget and Actual--General Fund...50 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...51 Report to Those Charged With Governance...53 Schedule of Findings and Responses...56

8 VILLAGE OF CHESANING--SAGINAW COUNTY MANAGEMENT S DISCUSSION AND ANALYSIS Our discussion and analysis of the Village of Chesaning s financial performance provides an overview of the Village s financial activities for the fiscal year ended February 28, 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 assets and changes in them. You can think of the Village s net assets 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 assets 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, public works, parks department, and general administration. Property taxes, franchise fees, and state grants finance most of these activities. 1

9 VILLAGE OF CHESANING--SAGINAW COUNTY MANAGEMENT S DISCUSSION AND ANALYSIS 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 water and sewer system are reported here. Component units The Village includes the Downtown Development Authority and Economic Development Corporation, which are separate legal entities in this report. Although legally separate, the component unit is important because the Village is financially accountable for them. Report 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. Some funds are required to be established by state law such as Major Street, and Local Street while others are established by the Village Council to help it control and manage money for particular reasons such as the Street Lighting. 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 reconciliation at the bottom of the fund financial statements of Exhibit C and D. 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 and schedules of funding progress for pensions and other postemployment benefits. 2

10 VILLAGE OF CHESANING--SAGINAW COUNTY MANAGEMENT S DISCUSSION AND ANALYSIS Other Supplementary Information Other supplementary information includes combining financial statements for the non-major governmental funds in Exhibit L and M. These exhibits provide the balance sheet and income statement for the individual funds that are combined into the non-major governmental column in Exhibits C and D. The Village as a Whole The Village s combined net position increased from $6,229,214 to $6,417,805 or $188,591 for the year ended February 28, 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 Activities Total Governmental Activities Business-Type Activities Primary Government Current and Other Assets $ 1,181,409 $ 1,199,654 $ 367,660 $ 640,882 $ 1,549,069 $ 1,840,536 Noncurrent Assets 1,519,035 1,424,768 4,757,561 4,475,518 6,276,596 5,900,286 Total Assets 2,700,444 2,624,422 5,125,221 5,116,400 7,825,665 7,740,822 Current Liabilities 31,782 74, ,032 47, , ,387 Noncurrent Liabilities 75, ,946 1,295,915 1,110,914 1,371,637 1,228,860 Total Liabilities 107, ,433 1,488,947 1,158,814 1,596,451 1,351,247 Net Position Net Investment in Capital Assets 1,519,035 1,424,768 3,385,145 3,037,493 4,904,180 4,462,261 Restricted 400, , , ,025 1,015, ,982 Unrestricted 673, ,264 (364,287) 574, ,366 1,150,332 Total Net Position $ 2,592,940 $ 2,431,989 $ 3,636,274 $ 3,957,586 $ 6,229,214 $ 6,389,575 Net position of the Village s governmental activities decreased by 6.2% or $160,951 ($2,592,940 compared to $2,431,989). This decrease is due to a larger decrease in revenues than expenses. Net position of the Village s business-type activities increased by 8.8%, or $321,312 ($3,636,274 compared to $3,957,586). This increase is due to the completion of the sewer system project (Fourth Street Pump Station Replacement) which increased the invested in capital assets. 3

11 VILLAGE OF CHESANING--SAGINAW COUNTY MANAGEMENT S DISCUSSION AND ANALYSIS Table 2 Changes in Net Position of Governmental Activities Total Governmental Activities Business-Type Activities Primary Government Program Revenue Charges for Services $ 162,903 $ 164,639 $ 875,772 $ 1,000,886 $ 1,038,675 $ 1,165,525 Operating Grants and Contributions 207, , , , ,463 Capital Grants and Contributions General Revenue Property Taxes 658, , , ,917 State-Shared Revenues 201, , , ,407 Unrestricted Investment Earnings 2, , Rents - 32, ,394 Other 145,569 25, ,569 25,503 Transfers (72,083) (60,513) 72,083 63,208-2,695 Total Revenues 1,306,832 1,250, ,832 1,396,521 2,255,664 2,646,662 Program Expenses General Government 476, , , ,453 Public Safety 183, , , ,857 Public Works 525, , , ,759 Community and Economic Development 57,740 30, ,740 30,354 Recreation and Cultural 79,341 81, ,341 81,758 Capital Outlay 33, ,637 - Debt Service 7,968 7,968-57,470 7,968 65,438 Other 35,480 90, ,480 90,943 Sewer/Water - - 1,103,649 1,017,739 1,103,649 1,017,739 Total Expenses 1,399,167 1,411,092 1,103,649 1,075,209 2,502,816 2,486,301 Change in Net Position $ (92,335) $ (160,951) $ (154,817) $ 321,312 $ (247,152) $ 160,361 Governmental Activities Total revenues for the Village s governmental activities decreased $68,261 (or by 5%) from $1,378,915 in fiscal year 2012 to $1,310,654 in fiscal year Total governmental activities expenses including transfers increased by $355 from $1,471,250 to $1,471,605. The revenues decrease is partially due to lower taxable values. Total 2013 expenses remained almost the same as in 2012 with a decrease in total revenues. Business-Type Activities Total revenues for the Village s business-type activities increased by 47.2% ($447,689), while expenses decreased 2.6% ($28,440) from fiscal year 2012 to The revenue increased as the Village increased the water and sewer rates and the Village received grant funds. The decrease in the expenses is due to completion of the Fourth Street Pump Station. 4

12 VILLAGE OF CHESANING--SAGINAW COUNTY MANAGEMENT S DISCUSSION AND ANALYSIS 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 $793,685 which is slightly more than last year s $792,858. The primary reasons for the governmental funds increase mirror the governmental activities analysis highlighted in the prior paragraph. 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 largest adjustments were to account for the infrastructure improvements. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets As of February 28, 2013, the Village had $10,049,136 invested in a broad range of capital assets, including land, buildings, vehicles, equipment, street and sidewalk infrastructure, and water and sewer infrastructure. This amount represents a net increase (including additions and deductions) of $163,980. Table 3 Capital Assets at Year-End Total Governmental Activities Business-Type Activities Primary Government Land $ 4,000 $ 4,000 $ 91,135 $ 91,135 $ 95,135 $ 95,135 Construction in Progress ,105 12, ,105 12,506 Buildings and Improvements 126, , , ,996 Equipment 477, , , ,861 Vehicles 461, , , ,462 Infrastructure 1,445,058 1,445, ,445,058 1,445,058 Sewer System - - 4,982,982 5,240,919 4,982,982 5,240,919 Water System - - 2,171,200 2,171,200 2,171,200 2,171,200 Total Capital Assets 2,515,735 2,533,377 7,369,422 7,515,760 9,885,157 10,049,137 Total Accumulated Depreciation (996,700) (1,108,609) (3,227,377) (3,386,367) (4,224,077) (4,494,976) Total Net Capital Assets $ 1,519,035 $ 1,424,768 $ 4,142,045 $ 4,129,393 $ 5,661,080 $ 5,554,161 5

13 VILLAGE OF CHESANING--SAGINAW COUNTY MANAGEMENT S DISCUSSION AND ANALYSIS This year s major capital asset additions included the following: Vehicle $ 17,642 Sewer System 257,936 Total Additions $ 275,578 The Village s fiscal-year 2014 capital budget calls for continued improvement to the Village s sewer system. More detailed information about the Village s capital assets is presented in Note G to the financial statements. Debt At year-end, the Village had $1,127,078 in bonds and notes outstanding versus $1,318,353 last year, a decrease of $191,325, as shown in Table 4. The decrease is due to making scheduled payments. Table 4 Outstanding Debt at Year-End Governmental Business-Type Total Activities Activities Primary Government Installment Purchase Agreements $ 14,983 $ 7,492 $ - $ - $ 14,983 $ 7,492 Bonds Payable - - 1,277,000 1,092,000 1,277,000 1,092,000 Compensated Absenses 7,455 8,622 18,915 18,914 26,370 27,536 Total Outstanding Debt $ 22,438 $ 16,114 $ 1,295,915 $ 1,110,914 $ 1,318,353 $ 1,127,028 ECONOMIC FACTORS AND NEXT YEAR S BUDGET The Village s budget for 2013/2014 has been designed to continue to address the Village s infrastructure. More water, sewer and street projects are planned for the upcoming fiscal year and more funds will be set aside as the Village also continues reserving funds to replace older equipment. 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: 1100 West Broad Street, Chesaning, Michigan (Phone # ). 6

14 VILLAGE OF CHESANING--SAGINAW COUNTY GOVERNMENT-WIDE STATEMENT OF NET POSITION February 28, 2013 EXHIBIT A Governmental Business-Type Component ASSETS Activities Activities Total Units Current Assets Cash and Cash Equivalents $ 893,771 $ 261,911 $ 1,155,682 $ 106,600 Investment 150, , ,286 - Receivables (Net) Taxes--Delinquent 48,672-48,672 - Accounts 40,035 28,912 68,947 - Due From State 66,949-66,949 - Due From Other Units of Governments ,516 Total Current Assets 1,199, ,882 1,840, ,116 Noncurrent Assets Restricted Cash - 346, ,025 - Capital Assets--Net of Accumulated Depreciation 1,424,768 4,129,493 5,554, ,919 Total Assets 2,624,422 5,116,400 7,740, ,035 LIABILITIES Current Liabilities Accounts Payable 48,417 27,427 75,844 - Accrued Liabilities 18,578 20,473 39,051 8,638 Installment Purchase Agreement-Due within One Year 7,492-7,492 - Total Current Liabilities 74,487 47, ,387 8,638 Long-Term Liabilities Vested Employee Benefits 8,622 18,914 27,536 - Other Postemployment Benefits 109, ,324 - Bonds Payable--Due Within One Year - 200, ,000 20,000 Bonds Payable--Due in More Than One Year - 892, , ,000 Total Long-Term Liabilities 117,946 1,110,914 1,228, ,000 Total Liabilities 192,433 1,158,814 1,351, ,638 NET POSITION Net Investment in Capital Assets 1,424,768 3,037,493 4,462,261 25,281 Restricted for Major Street 134, ,516 - Nonmajor Governmental 296, ,441 - Downtown Development Authority ,116 Restricted Cash - 346, ,025 - Unrestricted 576, ,068 1,150,332 - Total Net Position $ 2,431,989 $ 3,957,586 $ 6,389,575 $ 159,397 The Notes to Financial Statements are an integral part of this statement. PRIMARY GOVERNMENT 7

15 VILLAGE OF CHESANING--SAGINAW COUNTY EXHIBIT B GOVERNMENT-WIDE STATEMENT OF ACTIVITIES NET (EXPENSE) REVENUE AND CHANGES IN NET POSITION PROGRAM REVENUES PRIMARY GOVERNMENT Operating Charges for Grants and Governmental Business-Type Component Functions/Programs Expenses Services Contributions Activities Activities Total Units Primary Government Governmental Activities General Government $ 403,453 $ - $ 19,674 $ (383,779) $ - $ (383,779) $ - Public Safety 181,857 16,429 2,382 (163,046) - (163,046) - Public Works 614, , ,678 (292,730) - (292,730) - Community and Economic Development 30,354 1,625 - (28,729) - (28,729) - Recreation and Culture 81,758 25,234 - (56,524) - (56,524) - Debt Service 7, (7,968) - (7,968) - Other 90, (90,943) - (90,943) - - Total Governmental Activities 1,411, , ,734 (1,023,719) - (1,023,719) - Business-Type Activities Sewer 742, , , , ,532 - Water 269, , ,839 70,839 - Non-Major 5,576 16, ,505 10,505 - Total Business-Type Activities 1,017,739 1,000, , , ,876 - Total Primary Government $ 2,428,831 $ 1,165,525 $ 554,463 $ (1,023,719) $ 314,876 $ (708,843) $ - Component Units Downtown Development Authority $ 95,909 $ 1,319 $ - $ - $ - $ - $ (94,590) EDC Total Component Units $ 95,909 $ 1,319 $ - $ - $ - $ - $ (94,590) General Revenues Property Taxes $ 654,917 $ - $ 654,917 $ 90,031 State-Shared Revenues 210, ,407 - Unrestricted Investment Earnings Interest (Expense) - (57,470) (57,470) - Rents/Royalties 32,394-32,394 - Other Revenues 25,503-25,503 - Transfers (60,513) 63,208 2,695 (2,695) Total General Revenues and Transfers 862,768 6, ,204 87,616 Change in Net Position (160,951) 321, ,361 (6,974) Net Position--Beginning 2,592,940 3,636,274 6,229, ,371 Net Position--Ending $ 2,431,989 $ 3,957,586 $ 6,389,575 $ 159,397 The Notes to Financial Statements are an integral part of this statement. 8

16 VILLAGE OF CHESANING--SAGINAW COUNTY BALANCE SHEET-- GOVERNMENTAL FUNDS AND RECONCILIATION TO THE STATEMENT OF NET POSITION February 28, 2013 EXHIBIT C ASSETS MAJOR FUNDS Total Major Nonmajor Governmental General Street Funds Funds Cash and Cash Equivalents $ 300,243 $ 109,443 $ 286,302 $ 695,988 Receivables Taxes--Delinquent 44,690-3,982 48,672 Accounts 35,611-4,424 40,035 Due From State 32,757 25,107 9,085 66,949 Total Assets $ 413,301 $ 134,550 $ 303,793 $ 851,644 LIABILITIES AND FUND EQUITY Liabilities Accounts Payable $ 32,110 $ - $ 7,352 $ 39,462 Accrued Liabilities 18, ,497 Total Liabilities 50, ,352 57,959 Fund Equity Fund Balances (Deficits) Restricted for Major Street - 134, ,516 Nonmajor Governmental , ,441 Unassigned 362, ,728 Total Fund Equity 362, , , ,685 Total Liabilities and Fund Equity $ 413,301 $ 134,550 $ 303,793 $ 851,644 Fund Balances--Total Governmental Funds $ 793,685 Capital assets used in governmental actitvities are not financial resources and, therefore, are not reported in the funds. 1,424,768 Internal service funds are used by management to charge the costs of equipment to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the Statement of Net Position. 338,974 Certain liabilities, such as bonds payable, compensated absences and other post-employement benefits are not due and payable in the current period and, therefore, are not reported in the funds. (125,438) Net Position of Governmental Activities $ 2,431,989 The Notes to Financial Statements are an integral part of this statement. 9

17 VILLAGE OF CHESANING--SAGINAW COUNTY STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES--GOVERNMENTAL FUNDS AND RECONCILIATION TO STATEMENT OF ACTIVITIES EXHIBIT D MAJOR FUNDS Total Major Non-Major Governmental General Street Funds Funds Revenues Taxes $ 611,600 $ - $ 43,317 $ 654,917 Licenses and Permits 35, ,836 State Grants 212, ,359 49, ,467 Charges for Services 146, ,795 Fines and Forfeits 6, ,846 Interest and Rentals 7, ,616 Other Revenue 43,677-1,500 45,177 Total Revenues 1,065, ,359 94,197 1,310,654 Expenditures Current General Government 369, ,926 Public Safety 173, ,980 Public Works 336,740 94, , ,330 Community and Economic Development 30, ,354 Recreation and Cultural 80, ,682 Debt Service 7, ,968 Other 41, ,074 Total Expenditures 1,040,724 94, ,579 1,249,314 Excess of Revenues Over (Under) Expenditures 24,374 57,348 (20,382) 61,340 Other Financing Sources (Uses) Interfund Transfers In 60,991 7,605 63, ,039 Interfund Transfers (Out) (115,243) - (77,309) (192,552) Total Other Financing Sources (Uses) (54,252) 7,605 (13,866) (60,513) Net Change in Fund Balance (29,878) 64,953 (34,248) 827 Fund Balance (Deficit)--March 1, ,606 69, , ,858 Fund Balance (Deficit)--February 28, 2013 $ 362,728 $ 134,516 $ 296,441 $ 793,685 Net Change in Fund Balances--Total Governmental Funds $ 827 Governmental funds report capital outlays as expenditures. However, in the Statement of Activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. Add--Capital Outlay 17,642 Deduct--Depreciation Expense (111,909) Internal service funds are used by management to charge the costs of equipment to individual funds. Net revenue of the internal service fund is reported within the governmental activities, net of depreciation expense and capital asset additions included above. 14,856 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: Net Increase (Decrease) in Vested Employee Benefits, OPEB and Installment Purchase Agreements. (82,367) Change in Net Position of Governmental Actitivities $ (160,951) The Notes to Financial Statements are an integral part of this statement. 10

18 VILLAGE OF CHESANING--SAGINAW COUNTY EXHIBIT E STATEMENT OF NET POSITION PROPRIETARY FUNDS February 28, 2013 BUSINESS-TYPE ACTIVITIES ENTERPRISE FUNDS GOVERNMENTAL ACTIVITIES INTERNAL SERVICE Major Funds ASSETS Sewer Water Non-Major Enterprise Total Enterprise Funds Equipment Pool Fund Current Assets Cash and Cash Equivalents $ 88,101 $ 132,351 $ 41,459 $ 261,911 $ 197,783 Investment 350, , ,227 Accounts Receivable 23,594 5,318-28,912 - Total Current Assets 461, ,669 41, , ,010 Noncurrent Assets Restricted Cash 196, , ,025 - Capital Assets--Net of Accumulated Depreciation 2,841,588 1,287,905-4,129, ,830 Total Noncurrent Assets 3,037,660 1,437,858-4,475, ,830 Total Assets 3,499,414 1,575,527 41,459 5,116, ,840 LIABILITIES Current Liabilities Accounts Payable 14,263 13,164-27,427 8,956 Other Current Liabilities 11,814 8,659-20, Total Current Liabilities 26,077 21,823-47,900 9,037 Noncurrent Liabilities Vested Employee Benefits 7,843 11,071-18,914 - Bonds Payable--Due Within One Year 130,000 70, ,000 - Bonds Payable--Due in More Than One Year 737, , ,000 - Total Noncurrent Liabilities 874, ,071-1,110,914 - Total Liabilities 900, ,894-1,158,814 9,037 NET POSITION Net Investment in Capital Assets 1,974,588 1,062,905-3,037, ,830 Restricted 196, , ,025 - Unrestricted 427, ,775 41, , ,973 Total Net Position $ 2,598,494 $ 1,317,633 $ 41,459 $ 3,957,586 $ 559,803 The Notes to Financial Statements are an integral part of this statement. 11

19 VILLAGE OF CHESANING--SAGINAW COUNTY EXHIBIT F STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION--PROPRIETARY FUNDS BUSINESS-TYPE ACTIVITIES ENTERPRISE FUNDS GOVERNMENTAL ACTIVITIES INTERNAL SERVICE Major Funds Sewer Water Non-Major Enterprise Total Enterprise Funds Equipment Pool Fund Operating Revenues Charges for Services $ 644,100 $ 340,705 $ 833 $ 985,638 $ 147,137 Miscellaneous ,248 15,248 - Total Operating Revenues 644, ,705 16,081 1,000, ,137 Operating Expenses Wages and Fringes 247, , ,220 72,337 Operating Expenses 81,565 68, ,223 33,476 Repairs and Maintenance 33, ,226 26,695 Contracted Services 213,499 15, ,964 - Utilities 47,415 20,979-68,394 - Insurance 3, ,166 - Miscellaneous - - 5,556 5,556 - Depreciation 115,064 43, ,990 - Total Operating Expenses 742, ,866 5,576 1,017, ,508 Operating Income (Loss) (98,197) 70,839 10,505 (16,853) 14,629 Nonoperating Revenues (Expenses) Interest Earned on Investments Interest Expense (41,520) (15,950) - (57,470) - Total Nonoperating Revenues (Expenses) (40,891) (15,882) - (56,773) 227 Income (Loss) Before Contributions (139,088) 54,957 10,505 (73,626) 14,856 Capital Contributions 331,729 Interfund Transfers Transfers In 238, , ,000 1,142,277 - Transfer (Out) (757,000) - (322,069) (1,079,069) - Change in Net Position (325,671) 201, ,436 (10,418) 14,856 Total Net Position--March 1, ,924,165 1,116,086 (403,977) 3,636, ,947 Total Net Position--February 28, 2013 $ 2,598,494 $ 1,317,632 $ 41,459 $ 3,625,856 $ 559,803 The Notes to Financial Statements are an integral part of this statement. 12

20 VILLAGE OF CHESANING--SAGINAW COUNTY STATEMENT OF CASH FLOWS PROPRIETARY FUNDS EXHIBIT G BUSINESS-TYPE ACTIVITIES ENTERPRISE FUNDS Major Funds GOVERNMENTAL ACTIVITIES INTERNAL SERVICE Sewer Water Non-Major Enterprise Total Enterprise Funds Equipment Pool Fund Cash Flows From Operating Activities Cash Received From Customers $ 638,229 $ 338,701 $ 833 $ 977,763 $ 147,137 Cash Payments to Employees for Services and Benefits (237,929) (114,340) - (352,269) (72,686) Cash Payments to Suppliers for Goods and Services (386,014) (135,265) (20) (521,299) (53,446) Net Cash Provided by Operating Activities 14,286 89, ,195 21,005 Cash Flows From Noncapital Financing Activities Due (To) From (109,509) 15, ,460 57,199 - Transfers In (Out) (518,312) 146, ,931 63,208 - Net Cash Provided by Noncapital Financing Activities (627,821) 161, , ,407 - Cash Flows From Capital and Related Financing Activities Acquisition of Capital Assets (133,833) (12,506) - (146,339) (17,642) Capital Contributions 331, ,729 - (Reduction) Increase of Debt 637,000 (65,000) (757,000) (185,000) - Interest Paid on Bonds (41,520) (15,950) - (57,470) - Net Cash Provided by Capital and Related Financing Activities 793,376 (93,456) (757,000) (57,080) (17,642) Cash Flows From Investing Activities Interest on Cash Equivalents Net Cash Provided by Investing Activities Net Increase (Decrease) in Cash and Cash Equivalents 180, ,545 (169,796) 168,222 3,590 Cash and Cash Equivalents at Beginning of Year 453, , , , ,420 Cash and Cash Equivalents at End of Year $ 634,232 $ 282,304 $ 41,459 $ 957,995 $ 348,010 Reconciliation of Operating Income to Net Cash Provided by Operating Activities Operating Income (Loss) $ (98,197) $ 70,839 $ 10,505 $ (16,853) $ 14,629 Adjustments to Reconcile Operating Income to Net Cash Provided by Operating Activities Depreciation Expense (115,064) (43,926) - (158,990) - (Increase) Decrease in Accounts Receivable (5,868) (8,632) 5,556 (8,944) - Increase (Decrease) in Accounts Payable 245,254 62,530 (15,248) 292,536 6,725 Increase (Decrease) in Accrued Liabilities (11,839) 8,285 - (3,554) (349) Net Cash Provided by Operating Activities $ 14,286 $ 89,096 $ 813 $ 104,195 $ 21,005 The Notes to Financial Statements are an integral part of this statement. 13

21 VILLAGE OF CHESANING--SAGINAW COUNTY STATEMENT OF NET POSITION COMPONENT UNITS February 28, 2013 EXHIBIT H ASSETS Downtown Total Development Component Authority EDC Units Cash and Cash Equivalents $ 106,600 $ - $ 106,600 Due From Other Units of Government 27,516-27,516 Net Capital Assets 368, ,919 Total Assets 503, ,035 LIABILITIES Bonds Payable-Due within One Year 20,000-20,000 Bonds Payable-Due within More than One Year 315, ,000 Accrued Interest Payable 8,638-8,638 Total Liabilities 343, ,638 NET POSITION Net Investment in Capital Assets, 25,281-25,281 Unrestricted 134, ,116 Total Net Position $ 159,397 $ - $ 159,397 The Notes to Financial Statements are an integral part of this statement 14

22 VILLAGE OF CHESANING--SAGINAW COUNTY EXHIBIT I STATEMENT OF ACTIVITIES COMPONENT UNITS Downtown Total Development Component Authority EDC Units Program Expenses Public Works $ 95,909 $ - $ 95,909 Total Program Expenses 95,909-95,909 Program Revenue Miscellaneous-Charge for Services 1,319-1,319 Total Program Revenue 1,319-1,319 Net Program Revenue (94,590) - (94,590) General Revenue Taxes 90,031-90,031 Interest Total General Revenue 90,311-90,311 Transfers In (Out) - (2,695) (2,695) Change in Net Position (4,279) (2,695) (6,974) Net Position Beginning of Year 163,676 2, ,371 End of Year $ 159,397 $ - $ 159,397 The Notes to Financial Statements are an integral part of this statement. 15

23 VILLAGE OF CHESANING NOTES TO FINANCIAL STATEMENTS NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Village of Chesaning is located in Saginaw County and provides services to its 2,394 residents in many areas including: public safety (police), public works, and general government. The Village is a general law village incorporated under Public Act 3 of The Village is governed by a seven-member council, including a president elected by the citizens of the Village. The accounting policies of the Village of Chesaning (Village) conform to accounting principles generally accepted in the United States of America (GAAP) as applicable to governmental units. The following is a summary of the significant accounting policies used by the Village. Reporting Entity The criteria established by the Governmental Accounting Standards Board (GASB) Statement No. 61, "The Financial Reporting Entity," for determining the reporting entity includes oversight responsibility, fiscal dependency and whether the financial statements would be misleading if data were not included. Based on the above criteria, these financial statements present the financial statements of the Village (the primary government) and its component units. The individual component units discussed below is included in the Village s reporting entity because of the significance of their operational or financial relationships with the Village. The following discretely presented component units are reported within the "component unit" column in the government-wide financial statements. DISCRETELY PRESENTED COMPONENT UNITS The following component units are reported within the "component unit" column in the combined financial statements. The discretely presented component units are an entity that is legally separate from the Village, but for which the Village is financially accountable or its relationship with the Village is such that exclusion would cause the financial statements to be misleading or incomplete. Downtown Development Authority The Downtown Development Authority (Authority) exists to encourage economic development in the downtown area of the Village. The governing body of the component unit is appointed by the Village Council. The component unit maintains a general fund as its sole operating fund. Separate financial statements of the individual component unit have not been issued as management believes these general purpose financial statements, including disclosures, contain complete information to constitute a fair presentation of the component unit. The Village has the ability to significantly influence operations of the Authority. 16

24 VILLAGE OF CHESANING NOTES TO FINANCIAL STATEMENTS NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Economic Development Corporation The Economic Development Corporation exists to encourage economic development in the Village. The governing body of the component unit is appointed by the Village Council. The component unit maintains a general fund as its sole operating fund. Separate financial statements of the individual component unit have not been issued as management believes these general purpose financial statements, including disclosures, contain complete information to constitute a fair presentation of the component unit. The Village has the ability to significantly influence operations of the Authority. Joint Operations Under authorization of state statutes, the Village of Chesaning joined Chesaning Township and Brady Township to establish and operate a Joint Fire Protection Authority for the mutual advantage of the governments. Two members of the Board of Directors for the Authority are appointed by each Township and one member is appointed by the Village. The records are maintained and funds held by Chesaning Township. The operating and capital budgets are to be funded by a millage from each government. The tax for the Fire Authority is collected by Chesaning Township on all Village assessed property. Basis of Presentation--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. 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. 17

25 VILLAGE OF CHESANING NOTES TO FINANCIAL STATEMENTS NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 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. When an expense is incurred for purposes for which both restricted and unrestricted net assets are available, restricted resources are applied first. 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. 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 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. 18

26 VILLAGE OF CHESANING NOTES TO FINANCIAL STATEMENTS NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are payments-in-lieu-of taxes and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. 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 and Sewer Funds relate to charges to customers for sales and services. The Water and Sewer Funds also recognizes the portion of tap fees intended to recover current costs (e.g., labor and material to hook up new customers) as operating revenue. The portion intended to recover the cost of the infrastructure is recognized as nonoperating 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 revenues and expenses. When both restricted and unrestricted resources are available for use, it is the Village s policy to use restricted resources first, then unrestricted resources as they are needed. Bank Deposits and Investments For the purposes of the statement of cash flows, demand deposits and short-term investments with a maturity of three months or less, when acquired, are considered to be cash equivalents. The statement of cash flows includes both restricted and unrestricted cash. 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. 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." 19