FRANKLIN-WILLIAMSON BI-COUNTY HEAL TH DEPARTMENT, ILLINOIS ANNUAL FINANCIAL REPORT JUNE 30, 2016

Transcription

1 FRANKLIN-WILLIAMSON BI-COUNTY HEAL TH DEPARTMENT, ILLINOIS ANNUAL FINANCIAL REPORT JUNE 30, 2016

2 Independent Auditor's Report TABLE OF CONTENTS Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 3 Financial Statements Combined Statement of Net Position and Governmental Funds Balance Sheet - Modified Cash Basis 5 Combined Statement of Activities and Governmental Funds Revenues, Expenditures, and Changes in Fund Balances - Modified Cash Basis 6 Notes to Financial Statements 7 Supplemental Information Combining Statement of Governmental Funds Balance Sheet - Other Funds - Modified Cash Basis 13 Combining Statement of Governmental Funds Revenues, Expenditures, and Changes in Fund Balances - Other Funds - Modified Cash Basis 14 Assessed Valuations, Tax Rates and Extensions 15 Schedule of Funding Progress for Pension Plan 16 Independent Auditor's Report on Compliance for Each Major Federal Program and on Internal Control Over Compliance Required by Uniform Guidance 1 7 Schedule of Expenditures offederal Awards 19 Notes to Schedule of Expenditures of Federal Awards 20 Schedule of Findings and Questioned Costs 21 Summary Schedule of Prior Audit Findings 22 Page 1

3 Member Cl't<TI t'i to 1J PL HI.IC ACCOl1'TA1'T Independent Auditor's Report Board of Health Franklin-Williamson Bi-County Health Department, Illinois Report on the Financial Statements I have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Franklin-Williamson Bi-County Health Department, as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the Department'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 the modified cash basis of accounting as described in Note 1. This includes determining that the modified cash basis of accounting is an acceptable basis for the preparation of the financial statements in the circumstances. Management is also responsible for 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 My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with auditing standards generally accepted in the United States of America and standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, I 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 financial statements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit OplillOns. Opinions In my opinion, the financial statements referred to in the first paragraph present fairly, in all material respects, the respective financial position-modified cash basis of the governmental activities, each major fund and the aggregate remaining fund information of the Franklin-Williamson Bi-County Health Department, as of June 30, 2016, and the respective changes in the financial position-modified cash basis thereof, for the year then ended, on the basis of accounting described in Note KHOURY LEAGUE ROAD MARION, ILLINOIS PHONE (618) FAX (618) cabcpa@frontier.com 1

4 Other Matters My audit was conducted for the purpose of forming opinions on the financial statements as a whole that collectively comprise Franklin-Williamson Bi-County Health Department's basic financial statements. The combining governmental balance sheet, the combining statement of governmental funds revenues, expenditures and changes in fund balance, the assessed valuation, tax rates and extensions, the schedule of funding progress for the pension plan and the schedule of expenditures of federal awards as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards are presented for purposes of additional analysis and are not a required part of the basic financial statements. This supplemental information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the 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 records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In my opinion, the supplemental information listed above is fairly stated in all material respects in relation to the basic financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, I have also issued a report dated November 8, 2016 on my consideration Of Franklin-Williamson Bi-County Health Department's internal control over financial reporting and on my tests of its compliance with certain provisions oflaws, regulations, contracts and grants. The purpose of that report is to describe the scope of my testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Franklin-Williamson Bi-County Health Department's internal control over financial reporting and compliance. Basis of Accounting I draw attention to Note 1 of the financial statements that describes the basis of accounting. The financial statements are prepared on a modified cash basis of accounting, which is a basis of accounting other than accounting principles generally accepted in the United States of America. My opinions are not modified with respect to this matter. November 8, 2016 bbf(~ Certified Public Accountant 2

5 Member CH~Tlt'I flj PL Bl.IC ACCOll\TAl\T Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Board of Health Franklin-Williamson Bi-County Health Department, Illinois I have audited, in accordance with auditing standards generally accepted in the United States of Anierica and the standards applicable to :financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the :financial statements of the governmental activities, each major fund and the aggregate remaining fund information of the Franklin-Williamson Bi-County Health Department as of and for the year ended June 3 0, 2016, and the related notes to the :financial statements, which collectively comprise the Franklin-Williamson Bi-County Health Department's basic :financial statements, and have issued my report thereon dated November 8, Internal Control Over Financial Reporting In planning and performing my audit, I considered the Franklin-Williamson Bi-County Health.Department's internal control over :financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the. purpose of expressing my opinion on the :financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Department's internal control. Accordingly, I do not express an opinion on the effectiveness of the Department's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. My consideration of internal control over :financial reporting was for the limited purpose described in the first paragraph ofthis section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during my audit I did not identify any deficiencies in internal control that I consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether Franklin-Williamson Bi-County Health Department's financial statements are free of material misstatement, I performed tests of its compliance with certain provisions oflaws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of :financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of my audit, and accordingly, I do not express such an opinion. The results of my tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards KHOURY LEAGUE ROAD MARION, ILLlNOIS PHONE (618) FAX (618) cabcpa@frontier.com 3

6 Purpose of this Report The purpose of this report is solely to describe the scope of my testing of internal control and compliance and the result of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. November 8, 2016 ~/!!~ Certified Public Accountant 4

7 Financial Statements

8 Franldin-Williamson Bi-County Health Department, Illinois Combined Statement of Net Position and Governmental Funds Balance Sheet Modified Cash Basis June 30, 2016 General Other Adjustments Statement of Fund Funds Total (Note 5) Net Position Assets: Cash $ 1,345,174 $ 113,121 $ 1,458,295 $ $ 1,458,295 Due From Other Funds 643, ,747 (643,747) Land 20,000 20,000 Other Capital Assets, Net of Accumulated Depreciation 246, ,552 - Total Assets $ 1,988,921 $ 113,12 1 $ 2,102,042 $ (377,195) $ 1,724,847 Liabilities: Due To Other Funds $ $ 643,747 $ 643,747 $ (643,747) $ Payroll Withholdings Payable 33,422 33,422 33,422 Total Liabilities 33, , ,169 (643,747) 33,422 Fund Balances/Net Position: Fund Balance: Restricted for: Social Security 113, ,121 (113,121) Tuberculosis 110, ,049 (110,049) Unassigned 1,845,450 (643,747) 1,201,703 (1,20 1,703) Total Fund Balances 1,955,499 (530,626) 1,424,873 (1,424,873) Total Liabilities and Fund Balances $ 1,988,92 1 $ 113,121 $ 2,102,042 Net Position: Invested in Capital Assets 266, ,552 Restricted for Other Purposes 223, ,170 Unrestricted 1,201,703 1,20 1,703 Total Net Position 1,691,425 1,691,425 Total Liabilities and Net Position $ (377,195) $ 1,724,847 The accoinpanying notes are an integral part of this statement. 5

9 Franklin-Williamson Bi-County Health Department, Illinois Combined Statement of Activities and Governmental Funds Revenues, Expenditures, and Changes in Fund Balances - Modified Cash Basis For the Fiscal Year Ended June 30, 2016 Revenues: Taxes Interest Income Intergovernmental Fees From Services Miscellaneous Income Total Revenues Ex11enditures/Expenses: Personal Services Fringe Benefits Contractual Services Commodities Depreciation Travel Capital Outlay Miscellaneous Expenses Total Expenditures/Expenses Excess of Revenues Over (Under) Expenditures Change in Net Position Fund Balances/Net Position: Beginning of the Year End of the Year General Other Adjustments Fund Funds Total (Note 5) $ 258,3 17 $ 355,333 $ 613,650 $ 13, ,941 1,162,616 1,162,6 16 1,816,442 1,816,442 23,615 23, ,274, ,333 3,630,264 1,666,592 1,666, , , , ,602 63, , , ,545 31, , ,580 4,552 4,552 (4,552) 202, ,803 3,209, ,480 3,453,709 27,077 65, , ,555 (176,555) 149,478 1,889,797. (641,479) 1,248, ,625 $ 1,955,499 $ (530,626) $ 1,424,873 $ 266,548 Statement of Activities $ 613,650 13,941 1, 162,616 1,816,442 23,615 3,630,264 1,666, , , ,545 31, , ,803 3,480, ,478 1,541,943 - $ 1,691,421 The accompanying notes are an integral part of this statement. 6

10 Franklin-Williamson Bi-County Health Department, Illinois Notes to Financial Statements Note 1 - Summary of Significant Accounting Policies As discussed further in Note 1 C, these financial statements are presented on a modified cash basis of accounting. This modified basis of accounting differs from accounting principles generally accepted in the United States of America (GAAP). Generally accepted accounting principles include all relevant Governmental Accounting Standards Board pronouncements. A. Reporting Entity The Department's reporting entity includes the Department's governing board and all related organizations for which it exercises oversight responsibility. Franklin-Williamson Bi-County Health Department has developed criteria to determine whether outside agencies should be included within its financial reporting entity. The criteria includes, but is not limited to, whether the Department exercises oversight responsibility (which includes financial interdependency, selection of governing authority, designation of management, ability to significantly influence operations, and accountability for fiscal matters), scope of public service, and special binding relationships. Franklin-Williamson Bi-County Health Department has determined that no other outside agency meets the above criteria, and therefore, no other outside agency has been included as a component unit in the Department's financial statements. In addition, Franklin-Williamson Bi-County Health Department is not aware of any entity which would exercise such oversight resulting in the Department's being considered a component unit of the entity. B. Basis of Presentation Government-Wide Financial Statements The Statement of Net Position and Statement of Activities display information about the reporting government as a whole. They include all funds ~f the reporting entity. Governmental activities generally are financed through taxes, intergovernmental revenues, and other non-exchange revenues. Fund Financial Statements Fund financial statements of Franklin-Williamson Bi-County Health Department are organized into funds, each of which is considered a separate accounting entity. Each fund is accounted for with a separate set of self-balancing accounts that comprise its assets and liabilities, fund equity, revenues and expenditures/expenses. The General Fund is considered the major fund of the Department because it is.the primary operating fund. The funds of the financial reporting entity are described below: Governmental Funds 1. General Fund The General Fund is the primary operating fund of the Department and always classified as a major fund. It is used to account for all activities except those legally or administratively required to be accounted for in other funds. 2. Special Revenue Funds Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes. The Retirement, Social Security, and Insurance Funds are Special Revenue Funds. They are all accounted for as other funds. C. Measurement Focus and Basis of Accounting Measurement focus is a term used to describe "how" transactions are recorded within the various financial statements. Basis of accounting refers to when transactions are recorded regardless of the measurement focus applied. 7

11 Measurement Focus In the government-wide Statement of Net Position and the Statement of Activities columns, governmental activities are presented using the economic resources measurement focus, within the limitation of the modified cash basis of accounting as described below. The governmental funds in the fund financial statement columns, utilize a "current financial resources" measurement focus. Only current financial assets and liabilities are generally included on their balance sheets. Their operating statements present sources and uses of available spendable financial resources during a given period. These funds use the fund balances as their measure of available spendable financial resources at the end of the period. Basis of Accounting In the government-wide Statement of Net Position and Statement of Activities and the fund financial statements, governmental activities are presented using a modified cash basis of accounting. This basis recognizes assets, liabilities, net position/fund equity, revenues, and expenditures/expenses when they result from cash transactions with a provision for depreciation in the government-wide statements. This basis is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. As a result ofthis modified cash basis of accounting, certain assets and their related revenues (such as accounts receivable and revenue for billed or provided services not yet collected) and certain liabilities and their related expenses (such as accounts payable and expenses for goods or services received but not yet paid, and accrued expenses and liabilities) are not recorded in these financial statements. If the Department utilized the basis of accounting recognized as generally accepted, the fund financial statements for governmental funds would use the modified accrual basis of accounting. D. Assets and Equity Cash and Cash Equivalents For the purpose of financial reporting, "cash and cash equivalents" includes all demand and savings accounts and certificates of deposit or short-term investments with an original maturity of three months or less. Capital Assets The Department's modified cash basis of accounting reports capital assets resulting from cash transactions and reports depreciation where appropriate. The accounting treatment over property, plant and equipment (capital assets), depends on whether they are reported in the government-wide or fund financial statements. 1. Government-Wide Statements - In the government-wide financial statements, capital assets arising from cash transactions are accounted for as assets in the Statement of Net Position. All capital assets are valued at historical cost, or estimated historical cost if actual is unavailable. Depreciation of all exhaustible capital assets arising from cash transactions is recorded as an unallocated 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: Buildings Building Improvements Parking Lots and Sidewalks Furniture and Equipment 40 years 20 years 20 years 3 years 2. Fund Financial Statements - In the fund financial statements, capital assets arising from cash transactions acquired for use in governmental fund operations are accounted for as capital outlay expenditures of the governmental fund upon acquisition. 8

12 Equity Classification 1. Government-Wide Statements - Equity is classified as net position and displayed in three components: a. Invested in capital assets - consists of capital assets including restricted capital assets, net of accumulated depreciation. b. Restricted net. position - consists of the balance of amounts levied for a specific purpose. c. Unrestricted net position - all other net position that does not meet the definition of "restricted" or "invested in capital assets." 2. Fund Financial Statements - In the fund financial statements, governmental funds report the following classifications of fund balance: a. Restricted - includes amounts restricted by external sources or by constitutional provision or enabling legislation. b. Unassigned - includes amounts that have not been assigned to other funds or restricted, committed or assigned to a specific purpose within the General Fund. It is the Department's policy to first use restricted resources prior to the use of unrestricted resources when an expense is incurred for the purposes for which both restricted and unrestricted resources are available. E. Use of Estimates The preparation of financial statements in conformity with the modified cash basis of accounting used by the Department requires management to make estimates and assumptions that affect certain reported amounts and disclosures (such as estimated useful lives in determining depreciation expense); accordingly, actual results could differ from those estimates. F. Budgets and Budgetary Accounting The budget for all governmental fund types is prepared on the modified cash basis of accounting which is the same basis that is used in financial reporting. This allows for comparability between budget and actual amounts. For each fund, total fund expenditures disbursed may not legally exceed the budgeted amounts. The budget lapses at the end of each fiscal year. The budget was adopted on May 11, G. Internal and Interfund Balances and Activities In the process of aggregating the financial information for the government-wide Statement of Net.Position and Statement of Activities, some amounts reported as interfund activity and balances in the fund financial statements have been eliminated or reclassified. 1. Government-Wide Statements Interfund activity and balances, if any, are eliminated or reclassified in the government-wide financial statements as follows: Internal balances - Amounts reported in the fund financial statements as interfund receivables and payables are eliminated in the Statement of Net Position. 2. Fund Financial Statements Interfund activity, if any, is reported as follows: Interfund loans - Amounts provided with a requirement for repayment are reported as due to other funds and due from other funds. Short-term loans are made for cash flow purposes. H. Inventory Inventory is expensed as purchased. 9

13 Note 2 - Cash and Investments Custodial credit risk is the risk that in the event of a bank failure, the government's deposits may not be returned to the government. The Department's Investment Policy requires that deposits in excess of the Federally insured amount to be collateralized to the extent of one hundred percent (100%) and evidenced by an approved written agreement. At June 30, 2016, the book balance of the Department's deposits was $1,458,295 and bank balance was $1,509,107. All deposits were insured or collateralized. Note 3 - Risk Management The Department is exposed to various risks ofloss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters for which the Department purchases msurance. During the year ended June 30, 2016, the Department did not reduce insurance coverages from coverage levels in place as ofjune 30, No settlements have exceeded coverage levels in place during the past three fiscal years. Note 4 - CaQital Assets A summary of changes in capital assets follows: Balance Balance 7/01/2015 Additions Deletions 6/30/2016 Land (non-depreciable) $20,000 $0 $0 $20,000 Buildings 651, ,888 Building Improvements 83, ,238 Parking Lots and Sidewalks 105, ,958 Furniture/Equipment 509,192 4,552 10, ,756 Total Capital Assets 1,370,276 4,552 10,988 1,363,840 Accumulated Depreciation 1,076,647 31,629 10,988 1,097,288 Capital Assets, Net of Accumulated Depreciation $293,629 ($27,077) _$_Q $266,552 Note 5 - Adjustments The adjustments posted to the Governmental Funds Balance Sheet to convert to the Statement of Net Position represent the addition of capital assets and accumulated depreciation, and moving the equity from fund balance to the three categories of net position. Note 6 - Land Lease The Department entered into a 75-year lease, effective June 11, 1986, for the 1 1/4 acre site on which its Williamson County office is located. This lease called for a one-time payment of $75,000. One-half ofthis was paid in the fiscal year ended June 30, 1986, and one-half was paid in the fiscal year ended June 30, No further payments are due under the lease. The lease gives the Department the option to extend the lease for two additional periods of 25 years each at a price to be negotiated at expiration of the current term of 75 years. Note 7 - SQecial Tax Levies Tuberculosis tax levy revenue and the related expenditures of this restricted tax levy are accounted for in the General Fund. As of June 30, 2016, Franklin-Williamson Bi-County Health Department had a balance of $110,049 of the levied funds which is reported as restricted fund balance and is included with the social security balance of$113,121 for a total of$223,170 ofrestricted net position. Note 8 - Property Tax The Department's property tax is levied each year on all taxable real property located in Franklin and Williamson Counties on or before the last Tuesday in December. Property taxes attach as an enforceable lien 10

14 on property as of January 1 and are payable in two installments later in the year. The Department receives significant distributions of tax receipts approximately one month after the due dates. During the year, the Department received amounts collected for the tax year Note 9 - Common Bank Account Separate bank accounts are not maintained for all Department funds; instead, certain funds maintain their uninvested cash balances in a common checking account, with accounting records being maintained to show the portion of the common bank account balance attributable to each participating fund. Fund deficits are covered by the General Fund and are reported as interfund loans. Note 10 - Vacation and Sick Pay Vacation and sick pay is considered to be an expenditure in the year paid. Accumulated sick pay benefits are available to all full-time employees for use in future years. Note 11 - Vaccine Inventory During the year, vaccine totaling $235,245 was received in the form of commodities from a grant passed through the State of Illinois Department of Public Health by the U.S. Department of Health and Human Services. The value of the vaccine inventory on hand as of June 30, 2016 was $51,879 (Centers for Disease Control cost per dose). This vaccine is not recorded in the modified cash basis financial statements for the fiscal year ended June 30, Note 12 - Defmed Benefit Pension Plan Plan Description and Benefits Provided. The Franklin-Williamson Bi-County Health Department's defined benefit pension plan for Regular employees provides retirement and disability benefits, post-retirement increases, and death benefits to plan members and beneficiaries. The Department's plan is affiliated with the Illinois Municipal Retirement Fund (IMRF), an agent multiple employer plan. Benefit provisions are established by statute and may only be changed by the General Assembly of the State of Illinois. IMRF issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained on-line at Employees covered by the benefit terms. As of June 30, 2016, the following employees were covered by the benefit terms: Inactive employees or beneficiaries currently receiving benefits 50 Inactive employees entitled to but not yet receiving benefits 7 Active Employees 40 Contributions. As set by statute, the Department's Regular plan members are required to contribute 4.5 percent of their annual covered salary. The statutes require employers to contribute the amount necessary, in addition to member contributions to finance the retirement coverage of its own employees. The employer annual required contribution rate for calendar year 2015 was percent. Franklin-Williamson Bi-County Health Department also contributes for disability benefits, death benefits and supplemental retirement benefits, all of which are pooled at the IMRF level. Contribution rates for disability and death benefits are set by the IMRF Board of Trustees, while the supplemental retirement benefits rate is set by statute. Annual Pension Cost. The Department's required contribution for calendar 2015 was $262,506. Three-Year Trend Information for the Regular Plan Calendar Percentage Year Annual Pension ofapc Net Pension Ending Cost (APC) Contributed Obligation 12/31 /2015 $262, % $0 12/31/2014 $341, % $0 12/31/2013 $358, % $0 11

15 The required contribution for 2015 was determined as part of the December 31, 2013 actuarial valuation using the entry age actuarial cost method. The actuarial assumptions at December 31, 2013 included (a) 7.5 percent investment rate ofreturn (net of administrative expenses and direct investment expenses), (b) projected salary increases of 4 percent a year, attributable to inflation, ( c) additional projected salary increases ranging from 0.4 percent to I 0 percent per year depending on age and service, attributable to seniority/merit, and ( d) postretirement benefit increases of 3 percent annually. The actuarial value of Franklin-Williamson Bi-County Health Department's plan assets was determined using techniques that spread the effects of short-term volatility in the market value of investments over a five-year period with a 20 percent corridor between the actuarial and market value of assets. Franklin-Williamson Bi-County Health Department's Regular plan's unfunded actuarial accrued liability at December 31, 2013 is being amortized as a level percentage of projected payroll on an open 10-year basis. Funded Status and Funding Progress. As of December 31, 2015, the most recent actuarial valuation date, the Regular plan was percent funded. The actuarial accrued liability for benefits was $6,479,961 and the actuarial value of assets was $5, 755,65 8, resulting in an underfunded actuarial accrued liability (UAAL) of $724,303. The covered payroll for calendar year 2015 (annual payroll of active employees covered by the plan) was $1,907,751 and the ratio of the UAAL to the covered payroll was 38 percent. Because of the use of the cash basis of accounting in the preparation of these financial statements, this proportionate share of the accrued liability is not reported in these financial statements as a liability, and is instead disclosed herein as a commitment. In accordance with the modified cash basis of accounting, pension expense or expenditures are only reported when contributions are paid by the Department. The Schedule of Funding Progress, presented as supplemental information, presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. Note 13 - Building Lease On June 1, 1997, the Department entered into a lease agreement for the office building at 2312 West Main Street in Marion, Illinois. The term of the lease is one year with the right to extend by giving ninety days' notice. The Department shall pay $1,500 per month on the lease. On January 1, 2009 the lease payment was changed to $1,700 per month or $20,400 annually. The lease also requires the Department to maintain a policy of general liability insurance against personal injury and/or property damage during the term of the lease. The lease was terminated on November 30, During the year ended June 30, 2016, the Department paid $6,800 on this lease. Note 14 - Copier Lease In June of2013, the Department entered into lease agreements with Xerox for five new copiers. The term of the leases is 60 months with a monthly base price varying from $145 to $597 plus.006 to.065 cents per copy for excess copies. The base price of the aggregate of all copiers for each year is $24,230. During the year ended June 30, 2016, the Department paid $28,532 on these leases. Note 15 - Deficit Fund Balances The Insurance Fund and the Retirement Fund had deficit fund balances as of the end of the year of $194, 178 and $449,569 respectively. 12

16 Supplemental Information

17 Franklin-Williamson Bi-County Health Department, Illinois Combining Statement of Governmental Funds Balance Sheet Other Funds - Modified Cash Basis June 30, 2016 Social Insurance Retirement Security Fund Fund Fund Total Assets: Cash $ $ $ 113,121 $ 113,121 Total Assets $ $ $ 113,121 $ 113,121 Liabilities: Due To Other Funds $ 194,178 $ 449,569 $ $ 643,747 Total Liabilities 194, , ,747 Fund Balances: Unassigned (194, 178) (449,569) 113,121 (530,626) Total Fund Balances (194,178) (449,569) 113,121 (530,626) Total Liabilities and Fund Balances $ $ $ 113,121 $ 113,121 13

18 Franklin-Williamson Bi-County Health Depart~ent, Illinois Combining Statement of Governmental Funds Revenues, Expenditures, and Changes in Fund Balances - Other Funds Modified Cash Basis For the Fiscal Year Ended June 30, 2016 Social Insurance Retirement Security Fund Fund Fund Revenues: Taxes $ 29,960 $ 192,265 $ 133,108 Intergovernmental Total $ 355,333 Total Revenues 29, , ,108 Expenditures/Expenses: Contractual Services 63,550 Fringe Benefits 6, ,661 61,977 Total Expenditures/Expenses 69, ,661 61,977 Excess of Revenues Over (Under) Expenditures (39,882) 79,604 71,131 Fund Balance: Beginning of the Year (154,296) (529,173) 41,990 End of the Year $ (194,178) $ (449,569) $ 113, ,333 63, , , ,853 (641,479) $ (530,626) 14

19 Franklin-Williamson Bi-County Health Department, Illinois Assessed Valuations, Tax Rates and Extensions Tax Year 2014 FRANKLIN COUNTY Assessed Valuation $313,413,829 Tax Rate Per $100: General IMRF Insurance Social Security Tuberculosis Total % % Tax Extension: General IMRF Insurance Social Security Tuberculosis. Total $58, ,336 15,044 63,310 0 $252,298 WILLIAMSON COUNTY Assessed Valuation $952,017,884 Tax Rate Per $100: General IMRF Insurance Social Security Tuberculosis Total % % Tax Extension: General IMRF Insurance Social Security Tuberculosis Total $163,747 68,640 14,661 68,640 33,321 $349,009 15

20 Franklin-Williamson Bi-County Health Department, Illinois Illinois Municipal Retirement Fund Schedule of Funding Progress for Pension Plan UAAL as a Excess as a Actuarial Excess of Percentage Percent of Actuarial Value of Actuarial Accrued Unfunded Assets over Funded Covered of Covered Covered Valuation Assets Liability (AAL) AAL(UAAL) AAL Ratio Payroll Payroll Payroll Date.w Entrv Age (b} (b-a} (a-b} (alb} ~ ((b-a}/c} ((a-b}/c} 12/31/ 15 $5,755,658 $6,479,961 $724, % $1,907, % 12/31/14 5,367,050 6,528,330 1,161, % 2,148,883 54,04% 12/31/13 4,834,889 5,952,265 1,1 17, % 2,112, % 12/31/12 4,109,226 5,610,690 1,501,464 73,24% 2,066, % 12/ ,810,795 5,320,875 1,510, % 1,984, % 12/31/10 3,723,313 5,264,251 1,540, % 2,004, % 12/31/09 3,214,758 4,981,856 1,767, % 2,083, % 12/31/08 4,347,717 5,835,489 1,487, % 2,082, % 12/31/07 5,215,416 5,146,624 68, % 1,803, % 12/31/06 4,769,529 4,731,476 38, % 1,732, % 12/31/05 4,306,941 4,344,492 37, % 1,644, % On a market value basis, the actuarial value of assets as of December 31, 2015 is $5,612,502. On a market basis, the funded ratio would be percent. The actuarial value of assets and accrued liability cover active and inactive members who have service credit with Franklin-Williamson Bi-County Health Department. They do not include amounts for retirees. The actuarial liability for retirees is 100 percent funded. 16

21 Member CEHTU'H'U Pl HI.IC ACCOU\TAl\T Independent Auditor's Report on Compliance for Each Major Federal Program and on Internal Control Over Compliance Required by Uniform Guidance Board of Health Franklin-Williamson Bi-County Health Department, Illinois Report on Compliance for Each Major Federal Program I have audited Franklin-Williamson Bi-County Health Department with the types of compliance requirements described in the US. Office of Management and Budget (OMB) Compliance Supplement that could have a direct and material effect on each of Franklin-Williamson Bi-County Health Department's major federal programs for the year ended June 30, Franklin-Williamson Bi-County Health Department's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Management's Responsibility Management is responsible for compliance with the federal statutes, regulations, contracts and the terms and conditions of its federal awards applicable to its federal programs. Auditor's Responsibility. My responsibility is to express an opinion on compliance for.each of Franklin-Williamson Bi-County Health Department's major federal programs based on my audit of the types of compliance requirements referred to above. I conducted my audit of compliance in accordance with auditing standards generally accepted in the United States of America, the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and Uniform Guidance require that I plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Franklin-Williamson Bi County Health Department's compliance with those requirements and performing such other procedures as I considered necessary in the circumstances. I believe that my audit provides a reasonable basis for my opinion on compliance for each major federal program. However, my audit does not provide a legal determination on Franklin-Williamson Bi-County Health Department's compliance. Opinion on Each Major Federal Program In my opinion, Franklin-Williamson Bi-County Health Department complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, KHOURY LEAGUE ROAD MARIO, ILLINOIS PHONE (618) FAX (618) cabcpa@frontier.com 17

22 Report on Internal Control Over Compliance Management of Franklin-Williamson Bi-County Health Department is responsible for establishing and maintaining effective internal control over compliance with the types of requirements referred to above. In planning and performing my audit, I considered Franklin-Williamson Bi-County Health Department's internal control over compliance with requirements that could have a direct and material effect on a major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing my opinion on compliance for each major program and to test and report on internal control over. compliance in accordance with Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, I do not express an opinion on the effectiveness of the Department's internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct noncompliance with a type of compliance requirement of a federal. program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented or detected and corrected on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a 11laterial weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. My consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. I did not identify any deficiencies in internal control over compliance that I consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of my testing of internal control over compliance and the results of that testing based on the requirements of Uniform Guidance. Accordingly, this report is not suitable for any other purpose. November 8,

23 Franklin-Williamson Bi-County Health Department, Illinois Schedule of Expenditures of Federal Awards For the Fiscal Year Ended June 30, 2016 Federal Grantor I Federal Pass-through Pass-through Grantor I CFDA Grantor's Federal Program Title Number Number Expenditures U.S. Department of Agriculture: Passed through the Illinois Department of Public Health: Summer Food Service Program For Children C $300 Passed through the Illinois Department of Human Services: M Women, Infants and Children (WIC) FCSUQ ,033 M Women, Infants and Children - Farmer's Market FCSUQ ,000 M Women, Infants and Children - Breast Feeding Peer Counseling FCSTQ M Women, Infants and Children - Breast Feeding Peer Counseling FCSUQ ,446 EB, M Women, Infants and Children (WIC) FCSUQ ,191,169 Total U.S. Department of Agriculture U.S. Department of Health and Human Services: Passed through the Illinois Department of Public Health: 1,554,817' EB Preventive Health and Health Services NIA 235,245 Bioterrorism Preparedness D 181,961 Bioterrorism Preparedness C 12,811 Bioterrorism Preparedness - Ebola D 12, 122 Passed through the Illinois Department of Health Care and Family Services: Medical Assistance Program NIA 22,981 Total U.S. Department of Health and Human Services 465,120 U.S. Environmental Protection Agency: Passed through the Illinois Department of Public Health: State Pulic Water System Supervision C 75 Performance Partnership Grants - Water Program D 163 Total U.S. Environmental Protection Agency 238 Total Expenditures of Federal Awards $2,020,175 EB M See Accompanying Notes to Schedule Non-cash award Major Program 19

24 Franklin-Williamson Bi-County Health Department, Illinois Notes to Schedule of Expenditures of Federal Awards June 30, 2016 Note 1 - General The accompanying Schedule of Expenditures of Federal Awards presents the activity of all federal awards programs of Franklin-Williamson Bi-County Health Department. Franklin-Williamson Bi-County Health Department reporting entity is defined in Note 1 of these financial statements. All federal awards received directly from federal agencies as well as federal awards passed through other government agencies are included on the schedule. Note 2 - Basis of Accounting The accompanying Schedule of Expenditures of Federal Awards is presented using the cash basis of accounting as described in Note 1 of the Notes to Financial Statements. Note 3-Cost Rate The Department did not elect to use the 10 percent de minimus cost rate. Note 4 -Major Programs The following programs were tested as a major program under the requirements of the Single Audit Act: Women, Infants and Children (10.557), Women, Infants and Children - Farmers Market (10.572) 20

25 Franklin-Williamson Bi-County Health Department, Illinois Schedule of Findings and Questioned Costs June 30, 2016 Section I - Summary of Auditor's Results Financial Statements Type of Auditor's Report Issued: Internal Control over Financial Reporting: Material Weakness Identified? Significant Deficiency that is not Considered to be a Material Weakness? Noncompliance Material to Financial Statements Noted? Unqualified No No No Federal Awards Internal Control over Major Programs: Material Weakness. Identified? Significant Deficiency Identified that is not Considered to be a Material Weakness?. Type of Auditor's Report Issued on Compliance for Major Programs: Audit Findings required to be reported under section Identification of Major Program and CFDA Number: Women, Infants and.children (10.557) Women, Infants and Children - Farmers Market (10.572) Dollar Threshold used to Distinguish Between Type A and Type B Programs: Did auditee qualify as a low risk auditee? No None Reported Unqualified No $750,000 Yes Section II - Financial Statement Findings Audit Findings Required to be Reported in Accordance with Paragraphs 5.18 Through 5.20 of Government Auditing Standards: Section III - Federal Award Findings and Questioned Costs Audit Findings Required to be Reported in Accordance with Section : None Reported None Reported 21

26 Franklin-Williamson Bi-County Health Department, Illinois Summary Schedule of Prior Audit Findings June 30, 2016 NONE 22