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HomeMy WebLinkAbout2021 CIAWWCAChubbuck Impact Area Wastewater Collection Authority / -06? �*/-- Cc \ CHUBBUCK 1 0 R H 0 *atello A MUNICIPAL GORPORATION OF IDAHO AUDITED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2021 WITH COMPARATIVE TOTALS AS OF SEPTEMBER 30, 2020 CHUBBUCK IMPACT AREA WASTEWATER COLLECTION AUTHORITY TABLE OF CONTENTS TITLE PAGE Page TABLE OF CONTENTS 2 FINANCIAL STATEMENTS Independent Auditor's Report 3-4 Statements of Net Position 5 Statements of Activities 6 Statement of Cash Flows 7 Notes to Financial Statements 8-11 Report on Internal Control Over Financial Reporting 12-13 Schedule of Findings and Responses 14 Deaton & Company, Chartered Certified Public Accountants 215 North 9th, Suite A Pocatello, ID 83201-5278 (208) 232-5825 31W 311 Members of the Idaho Society of Certified Public Accountants Members ofthe American Institute of Certified Public Accountants INDEPENDENT AUDITOR'S REPORT To the Board of Directors Chubbuck Impact Area Wastewater Collection Authority Chubbuck, Idaho Report on the Financial Statements We have audited the accompanying financial statements of the business -type activities information of Chubbuck Impact Area Wastewater Collection Authority, a component unit of City of Chubbuck as of and for the year ended September 30, 2021, and the related notes to the financial statements, which collectively comprise the Authority'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 from 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, 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 business -type activities information of the Chubbuck Impact Area Wastewater Collection Authority, as of September 30, 2021, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Management has omitted the management's discussion and analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing 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. Our opinion on the basic financial statements is not affected by this missing information. Other Information We also have previously audited, in accordance with auditing standards generally accepted in the United States of America, the Authority's basis financial statements of the year ended September 30, 2020, which are presented as comparative totals only with the accompanying financial statement and we expressed unmodified opinions on the respective financial statements of the governmental active, and the aggregate remaining fund information. That audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Chubbuck Impact Area Wastewater Collection Authority's basic financial statements as a whole. The summarized comparative information is consistent, in all material respects, with the audited financial statements form which it has been derived. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 15, 2021, on our consideration of the Authority's internal control over financial reporting and on 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 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 Authority's internal control over financial reporting and compliance. Pocatello, Idaho December 15, 2021 CHUBBUCK IMPACT AREA WASTEWATER COLLECTION AUTHORITY STATEMENT OF NET POSITION PROPRIETARY FUND AS OF SEPTEMBER 30, 2021 WITH COMPARATIVE TOTAL AS OF SEPTEMBER 30, 2020 2021 ASSETS Cash and cash equivalents $ - Capital assets, net of accumulated Depreciation, where applicable: Land - Infrastructure - LIABILITIES Long-term liabilities (Note - 4) Due after one year FUND BALANCE/NET ASSETS NET POSITION Net investment in capital assets Unrestricted 5 2020 386,226 15,152,662 15,538,888 $ 228,000 $ 16,558,880 228,000 16,558,880 (228,000) $ (228,000) The accompanying notes are an integral part of these statements (1,019,992) $ (1,019,992) CHUBBUCK IMPACT AREA WASTEWATER COLLECTION AUTHORITY STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION PROPRIETARY FUND FOR THE YEAR ENDED AS OF SEPTEMBER 30, 2021 WITH COMPARATIVE TOTAL AS OF SEPTEMBER 30, 2020 OPERATING REVENUES Charges for services OPERATING EXPENSES Professional fees Depreciation expense OPERATING INCOME (LOSS) NONOPERATING REVENUES Capital grant revenue Gain (Loss) from asset disposal CHANGE IN NET POSITION NET POSITION — BEGINNING OF THE YEAR NET POSITION — ENDING OF THE YEAR 0 2021 2020 $ 54,900 $ 95,330 54,900 95,330 3,050 2,957 303,054 606,106 306,104 609,063 (251,204) (513,733) 228,000 228,000 815,196 - 1,043,196 228,000 791,992 (285,733) (1,019,992) (734,259) $ (228,000) $ (1,019,992) The accompanying notes are an integral part of these financial statements CHUBBUCK IMPACT AREA WASTEWATER COLLECTION AUTHORITY STATEMENT OF CASH FLOWS PROPRIETARY FUND FOR THE YEAR ENDED AS OF SEPTEMBER 30, 2021 WITH COMPARATIVE TOTAL AS OF SEPTEMBER 30, 2020 BEGINNING CASH AND CASH EQUIVALENTS - - ENDING CASH AND CASH EQUIVALENTS RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Net operating loss $ (251,204) $ (513,733) Depreciation 303,054 606,106 NET CASH PROVIDED BY OPERATING ACTIVITIES $ 51,850 $ 92,373 7 The accompanying notes are an integral part of these financial statements 2021 2020 CASH FLOW FROM OPERATING ACTIVITIES Cash received from customers $ 54,900 $ 95,330 Cash paid to suppliers (3,050) (2,957) Net cash provided by operating activities 51,850 92,373 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from debt 3,050 2,957 Proceeds from capital grants 228,000 228,000 Principal paid on obligations (282,900) (323,330) Net cash used by capital and related financing activities (51,850) (92,373) NET INCREASE (DECREASE) IN CASH - - BEGINNING CASH AND CASH EQUIVALENTS - - ENDING CASH AND CASH EQUIVALENTS RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Net operating loss $ (251,204) $ (513,733) Depreciation 303,054 606,106 NET CASH PROVIDED BY OPERATING ACTIVITIES $ 51,850 $ 92,373 7 The accompanying notes are an integral part of these financial statements CHUBBUCK IMPACT AREA WASTEWATER COLLECTION AUTHORITY NOTES TO FINANCIAL STATEMENTS (PAGE 1 OF 4) The Chubbuck Impact Area Wastewater Collection Authority (the Authority) was created in August 2007, as a separate legal entity pursuant to Section 67-2328, of the Idaho Code. The Authority was, at the time of creation, a legal joint venture between the City of Chubbuck, the City of Pocatello, and Bannock County. Effective June 30, 2020, Bannock County withdrew as a member of the Authority. The City of Chubbuck and City of Pocatello are the only current members of the Authority. Prior to the transfer of operations, the purpose of the Authority was to acquire, construct, own, operate, and maintain the Facility, and to provide wastewater transmission and disposal services. Subsequent to the transfer of operations, the purpose of the Authority will be to acquire, construct, own, operate, and maintain a future facility, and to provide wastewater transmission and disposal services. NOTE 1 - Summary of Significant Accounting Policies A. Reporting Entity For financial reporting purposes, management has considered potential component units. The decision to include a potential component unit in the reporting entity is made by applying the criteria set forth in generally accepted accounting principles. The basic criterion for including a potential component unit within the reporting entity is the governing body's responsibility for financial accountability. Financial accountability is defined as the level of accountability that exists if a primary government appoints a voting majority of an organization's governing board and is either able to impose its will on that organization or there is potential for the organization to provide specific financial benefits to, or impose specific financial burdens on, the primary government. A primary government may also be financially accountable for governmental organizations that are fiscally dependent on it. Based upon the application of these criteria, the Authority has no potential component units. Under generally accepted accounting principles, as adopted by the Governmental Accounting Standards Board, the Authority is included in the Annual Financial Statements of the City of Chubbuck as a blended component unit. B. Fund Accounting The Authority uses funds to report its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain government functions or activities. A fund is a separate accounting entity with a self -balancing set of accounts. The Operating Fund is used to account for all business type transactions in a manner similar to commercial enterprises. C. Basis of Accounting The accrual basis of accounting is used. Under the accrual basis of accounting, revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The Authority considers assessments as available when they are assessed. A one- year availability period is used for revenue recognition. Expenditures are recorded when the related fund liability is incurred. D. Cash and Cash Equivalents For the purpose of the proprietary fund Statement of Cash Flows, "cash and cash equivalents" include all demand and savings accounts, and certificates of deposit or short-term investments with an original maturity of three months or less. H. CHUBBUCK IMPACT AREA WASTEWATER COLLECTION AUTHORITY NOTES TO FINANCIAL STATEMENTS (PAGE 2 OF 4) NOTE 1 - Summary of Significant Accounting Policies (Continued) E. Property, Plant, and Equipment In the financial statements, the assets are accounted for as capital assets. All capital assets are valued at historical cost, or estimated historical cost if actual is unavailable, except for donated assets which are recorded at their estimated fair value at the date of donation. All purchases expected to last longer than one year and exceed $11,000 are capitalized. Depreciation of all exhaustible capital assets is recorded as an allocated expense in the Statement of Activities, with accumulated depreciation reflected in the Statement of Net Position. Depreciation is provided over the assets' estimated useful lives using the straight-line method of depreciation. The range of estimated useful lives by type of asset is as follows: Infrastructure 30 years F. Operating and Nonoperating Revenue Operating revenue is revenue generated from the Authority's primary business activities. The operating revenues are produced through charges for services. Nonoperating revenue is the portion of the Authority's revenue that is derived from activities not related to its core operations. Grant revenue is the source of the nonoperating revenue for the Authority. G. Reclassification Various account balances were reclassified during the year, as previously reported. These reclassifications were required for the comparability to the current year's financial statements and must be considered when comparing the financial statements of this report with those of prior reports. H. Restricted Resources It is the Authority's policy to first apply restricted resources when an expense is incurred for purposes for which both restricted and unrestricted net position is available. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Authority's management to make estimates and assumptions that affect certain reported amount and disclosures. Accordingly, actual results could differ from those estimates. J. Recently Issued Accounting Pronouncements GASB Statement No. 92 - Omnibus 2020. Was issued to disclose the extension of the implementation of various standards. The requirements related to the measurement of liabilities (and assets, if any) associated with asset retirement obligations (ARO's) in a government acquisition are effective for government acquisitions occurring in reporting periods beginning after June 15, 2021. GASB No. 73, 74, and 84 are effective for reporting periods beginning after June 15, 2021. 9 CHUBBUCK IMPACT AREA WASTEWATER COLLECTION AUTHORITY NOTES TO FINANCIAL STATEMENTS (PAGE 3 OF 4) NOTE 1 - Summary of Significant Accounting Policies (Continued) J. Recently Issued Accounting Pronouncements (Continued) GASB Statement No. 87, Leases, was issued to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. The requirements of GASB Statement No. 87 are effective for fiscal year 2022. The Authority has early implemented GASB Statement No. 87, as encouraged by the standard. There was no impact to the financial statements as no leases were noted. GASB Statement No. 89, Accounting for Interest Cost Incurred before the End of a Construction Period, was issued to enhance the relevance and comparability of information about capital assets and the costs of borrowing for a period and to simplify accounting for interest cost incurred before the end of a construction period. The requirements of GASB Statement No. 89 are effective for fiscal year 2021. The Authority is currently evaluating the impact GASB Statement No. 89 may have on its financial statements. NOTE 2 - Deposits Deposits at yearend consist of the following: Deposits Cash in bank Bank Book Deposits - Custodial Credit Risk for deposits is the risk that, in the event of bank failure, the government's deposits may not be returned to it. The Authority's deposits at yearend, were entirely covered by federal depository insurance. NOTE 3 - Transfer of Operations The Authority is a separate legal entity and is presented in the City of Chubbuck's (the City) fiscal year- end financial statements as a blended component unit -enterprise fund. After its formation, the Authority acquired and maintained possessions of wastewater facility, transmission mains, and lift stations. The City provided loans to the Authority with no interest or maturity dates. On March 4, 2021, the Authority authorized the City of Chubbuck to take possession and administer the assets of land, buildings, and improvements from the Authority. This transfer does not conclude the City will automatically take possession of future asset acquisitions of the Authority. The assets transferred to the City represent a possession managed for the purpose of providing wastewater transmission and disposal services, thus meeting the definition of an operation. The service continuation is presumed because the assets used by the Authority will be used in the same manner by the City to provide the same service. The Authority derecognizes the assets related to its wastewater transmission and disposal service operations as of March 4, 2021. The assets were capitalized at $386,226 for land and $18,183,193 for buildings and improvements with accumulated depreciation of $3,333,585. The Authority recognizes a liability payment of $16,051,030 to the City with a remaining balance of $228,000. The Authority realizes a gain on disposal of assets of $815,196. The City recognizes the carrying value of assets in the amount of $16,051,030 and receipt of a receivable reduction of the same amount. The City discloses the transfer of operations in the notes to its financial statements. 10 CHUBBUCK IMPACT AREA WASTEWATER COLLECTION AUTHORITY NOTES TO FINANCIAL STATEMENTS (PAGE 4 OF 4) NOTE 3 - Transfer of Operations (Continued) The primary reason for the transfer of operations was a satisfaction of a majority balance of the Authority's liabilities. The remaining balance of $228,000 will be satisfied by a grant revenue received in fiscal year 2022. NOTE 4 - Fixed Assets All fixed assets are valued at historical cost or estimated historical cost if actual historic cost is not available. Donated fixed assets are valued at their estimated fair value on the date donated. Beginning Ending Balance Additions Deletions Balance Land (nondepreciated) $ 386,226 $ - $ 386,226 $ - Infrastructure 18,183,193 - 18,183,193 - Accumulated Depreciation (3,030,531) (303,054) 3,333,585 - Book Value $15,538,888 $(303,054) $ 21,903,004 $ - The Authority assigned possession of the asset/facility of the Northwest Interceptor to the City NOTE 5 - Long -Term Debt The Authority has received advances from the City of Chubbuck. The advances have an undetermined schedule of payment with zero percent (0%) interest and are paid when funds are available. Long-term Debt transactions Beginning Ending Balance Additions Deletions Balance City of Chubbuck Advances $16,558,880 $ 3,050 $ (16,333,930) $ 228,000 The Authority made a liability payment of $16,051,030 with a remaining balance of $228,000 to be satisfied by a grant revenue in 2022. NOTE 6 - Deficit Fund Balance The fund had a deficit fund balance as of the date of this report in the amount of $228,000. NOTE 7 - Subsequent Events Subsequent events were evaluated up to December 15, 2021, the date the financial statements were available to be issued. 11 Deaton & Company, Chartered Certified Public Accountants 215 North 9th, Suite A Pocatello, ID 83201-5278 (208) 232-5825 Members of the Idaho Society of Certified Public Accountants Members of the American Institute of Certified Public Accountants 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 To the Board of Directors Chubbuck Impact Area Wastewater Collection Authority Chubbuck, Idaho We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standardsd issued by the Comptroller General of the United States, the financial statements of the governmental activities and each major fund, and the aggregate remaining fund information of Chubbuck Impact Area Wastewater Collection Authority, as of and for the years ended September 30, 2021, and the related notes to the financial statements, which collectively comprise Chubbuck Impact Area Wastewater Collection Authority's basic financial statements, and have issued our report thereon dated December 15, 2021. Internal Control Over Financial Reporting In planning and performing our audit, we considered Chubbuck Impact Area Wastewater Collection Authority's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Chubbuck Impact Area Wastewater Collection Authority's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Chubbuck Impact Area Wastewater Collection Authority's internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we 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 the Authority's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the 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. Chubbuck, Idaho December 15, 2021 CHUBBUCK IMPACT AREA WASTEWATER COLLECTION AUTHORITY SCHEDULE OF FINDINGS AND RESPONSES FOR THE YEAR ENDED SEPTEMBER 30, 2021 Findings Of Significant Deficiency And Responses NONE 14