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HomeMy WebLinkAbout2018 CIAWWCAChubbuck Impact Area Wastewater Collection Authority zaa�, CHUBBUCK atello 1 a R H 0 A MUNICIPAL CORPORATION OF IDAHO AUDITED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2018 WITH COMPARATIVE TOTALS AS OF SEPTEMBER 30, 2017 CHUBBUCK IMPACT AREA WASTEWATER COLLECTION AUTHORITY TABLE OF CONTENTS Page TITLE PAGE 1 TABLE OF CONTENTS 2 FINANCIAL STATEMENTS Independent Auditor's Report 3-5 Statements of Net Position 6 Statements of Activities 7 Statement of Cash Flows 8 Notes to Financial Statements 9-11 Report on Internal Control Over Financial Reporting 12-13 Schedule of Findings and Responses 14 N Deaton 8r Company, Chartered Certified Public Accountants 215 north 9%S&eA Pocatello, 11) 83201-5278 (208)232-5825 Marrbers oftheidahoSWE4 ofCsCed Pub"c Accounkants Members offthrercan Ins'o+rte oNerHied Pub:c Accountants To the Committee Members Chubbuck Impact Area Waste Water Collections Authority F ' �� IA 71 v ' h Idi w ! A ! We have audited the financial statements of the governmental activities, the business -type activities, the aggregate discretely presented component units, each majorfund, and the aggregate remaining fund information of Chubbuck Impact Area Waste Water Collections Authority for the year ended September 30, 2018. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you dated August 7, 2018. Professional standards also require that we communicate to you the following information related to our audit. Significant Audit Findings Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by Chubbuck Impact Area Waste Water Collections Authority are described in Note 1 to the financial statements. All new accounting policies up through GASB standard No. 77 were adopted and the application of existing policies was not changed during 2018. We noted no transactions entered into by the governmental unit during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. Accounting estimates are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the opinion units reported in the Authority's financial statements were: Management's estimate of the fixed asset life is based on tax life and professional judgment. We evaluated the key factors and assumptions used to develop the depreciation expense allocation in determining that it is reasonable in relation to the financial statements taken as a whole. The financial statement disclosures are neutral, consistent, and clear. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. In addition, none of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to each opinion unit's financial statements taken as a whole. Disagreements with Management For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit. Management Representations We have requested certain representations from management that are included in the management representation letter dated January 18, 2019. Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the governmental unit's financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the governmental unit's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. Other Matters With respect to the supplementary information accompanying the financial statements, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. This information is intended solely for the use of Committee Members and management of Chubbuck Impact Area Waste Water Collections Authority and is not intended to be, and should not be, used by anyone other than these specified parties. Very truly yours, Pocatello, Idaho January 18, 2019 Deaton & Company, Chartered Certified Public Accountants 215 North 9th, Suite A Pocatello, Idaho 83201-5278 (208)232-5825 Members of Idaho Society of Certified Public Accountants Members of American Institute of Certified Public Acwum-L, 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, and the aggregate remaining fund information of Chubbuck Impact Area Wastewater Collection Authority, a component unit of City of Chubbuck as of and for the year ended September 30, 2018, 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 inciudes 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 aiso 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, and the aggregate remaining fund information of the Chubbuck Impact Area Wastewater Collection Authority, as of September 30, 2018, 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, 2017, 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 January 18, 2019, 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 January 18, 2019 CHUBBUCK IMPACT AREA WASTEWATER COLLECTION AUTHORITY STATEMENT OF NET POSITION PROPRIETARY FUND AS OF SEPTEMBER 30, 2018 WITH COMPARATIVE TOTAL AS OF SEPTEMBER 30, 2017 2018 ASSETS Cash and cash equivalents $ 1,035 Capital assets, net of accumulated Depreciation, where applicable: Land 386,226 Infrastructure 16.364.874 16,752,135 LIABILITIES Long-term liabilities (Note - 4) Due after one year 17,127,318 17,127,318 FUND BALANCE/NET ASSETS NET POSITION Net investment in capital assets (376,218) Unrestricted 1,035 $ _Q75,183) 111 The accompanying notes are an integral part of these statements 2017 386,226 16,970,980 17,357,206 17,418,268 17,418,268 (61,062) $ (61,062) 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, 2018 WITH COMPARATIVE TOTAL AS OF SEPTEMBER 30, 2017 OPERATING REVENUES Charges for services OPERATING EXPENSES Professional fees Depreciation Expense OPERATING INCOME (LOSS) NONOPERATING REVENUES Grant revenue CHANGE IN NET POSITION NET ASSETS — BEGINNING OF THE YEAR NET ASSETS — ENDING OF THE YEAR 2018 2017 $ 66,915 $ 10,980 66,915 10,980 2,930 2,930 606,106 606,106 609,036 609,035 (542,121) (598,056) 228,000 228,000 228,000 228,000 (314,121) (370,056) (61,062) 308,994 $ (375,183) $ (61,062) 7 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, 2018 WITH COMPARATIVE TOTAL AS OF SEPTEMBER 30, 2017 BEGINNING CASH AND CASH EQUIVALENTS ENDING CASH AND CASH EQUIVALENTS $ 1,035 $ RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Net operating loss $ (542,121) $ (5987056) Depreciation 606,106 606,106 NET CASH PROVIDED BY OPERATING ACTIVITIES $ 63,985 $ 8,050 :- The accompanying notes are an integral part of these financial statements 2018 2017 CASH FLOW FROM OPERATING ACTIVITIES Cash received from customers $ 66,915 $ 10,980 Cash paid to suppliers (2,930) (2,930) Net cash provided by operating activities 63,985 8,050 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from debt 2,930 2,930 Proceeds from capital grants 228,000 228,000 Principal paid on obligations (293,880) (238,980) Net cash used by capital and related financing activities (62,950) (8,050) NET INCREASE (DECREASE) IN CASH 1,035 - BEGINNING CASH AND CASH EQUIVALENTS ENDING CASH AND CASH EQUIVALENTS $ 1,035 $ RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Net operating loss $ (542,121) $ (5987056) Depreciation 606,106 606,106 NET CASH PROVIDED BY OPERATING ACTIVITIES $ 63,985 $ 8,050 :- The accompanying notes are an integral part of these financial statements CHUBBUCK IMPACT AREA WASTEWATER COLLECTION AUTHORITY NOTES TO FINANCIAL STATEMENTS (PAGE 1 OF 3) The Chubbuck Impact Area Wastewater Collection Authority (the Authority) is a legal joint venture between the City of Chubbuck, the City of Pocatello, and Bannock County. The Authority was created in August 2407, as a separate legal entity pursuant to Section 67-2328, of the Idaho Code. The purpose of the Authority is to acquire, construct, own, operate, and maintain the 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. 0 CHUBBUCK IMPACT AREA WASTEWATER COLLECTION AUTHORITY NOTES TO FINANCIAL STATEMENTS (PAGE 2 OF 3) NOTE i - 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. Alf 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 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. NOTE 2 - Deposits Deposits at yearend consist of the following: Deposits Cash in bank Bank $ 1,035 Book $ 1,035 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. 10 NOTE 3 - NOTE 4 - CHUBBUCK IMPACT AREA WASTEWATER COLLECTION AUTHORITY NOTES TO FINANCIAL STATEMENTS (PAGE 3 OF 3) 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. Land Infrastructure Accumulated depreciation Capital assets, net Long -Term Debt Beginning Balance Additions $ 386,226 $ - 18,183,193 - (1,212,213) (606,106) $17,357,206 $(606,106) Deletions Ending Balance $ - $ 386,226 18,183,193 (1,818,319) $ - $ 16,751,100 The Authority has received loans from the City of Chubbuck. The loans have an undetermined schedule of payment with zero percent (0%) interest. Long-term debt transactions Beginning Balance Additions Deletions Ending Balance City of Chubbuck advances $17,418,268 $ 2,930 $(293,880) $ 17,127,318 NOTE 5 - Subsequent Events Subsequent events were evaluated up to January 18, 2019, the date the financial statements were available to be issued. 11 Deaton & Company, Chartered Certified Pudic Accountants 215 North 9th, Suite A Pocatello, Idaho 83201-5278 (208)232-5825 Members of Idaho society of Certified Public Accotmtants Members orAmerican Institatc of Certified Public AcceuAws 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 year ended September 30, 2018, 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 January 18, 2019. 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 January 18, 2019 CHUBBUCK IMPACT AREA WASTEWATER COLLECTION AUTHORITY SCHEDULE OF FINDINGS AND RESPONSES FOR THE YEAR ENDED SEPTEMBER 30, 2018 Findings Of Significant Deficiency And Responses NONE 14