HomeMy WebLinkAbout2018 CIAWWCAChubbuck Impact Area Wastewater Collection Authority
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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
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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
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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)
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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.
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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.
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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.
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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
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