La Paz County Arizona single audit reporting package for the year ...

              LA PAZ COUNTY, ARIZONA
Single Audit Reporting Package
June 30, 2001
LA PAZ COUNTY, ARIZONA
Single Audit Reporting Package
June 30, 2001
Table of Contents Page
Report on Audit of General Purpose Financial Statements
Independent Auditors’ Report 1
Combined Balance Sheet—All Fund Types and Account Groups 2
Combined Statement of Revenues, Expenditures, and Changes in Fund Balances
All Governmental Fund Types 4
Combined Statement of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual—General and Special Revenue Fund Types 5
Statement of Revenues, Expenditures, and Changes in Fund Balance
Budget and Actual—Capital Projects Fund Type 9
Statement of Revenues, Expenses, and Changes in Retained Earnings—Enterprise Fund 10
Statement of Cash Flows—Enterprise Fund 11
Combining Statement of Net Assets—Investment Trust Funds 13
Combining Statement of Changes in Net Assets—Investment Trust Funds 14
Notes to Financial Statements 15
Supplementary Information
Schedule of Expenditures of Federal Awards 36
Notes to Schedule of Expenditures of Federal Awards 37
Reports on Compliance and Internal Control
Report on Compliance and on Internal Control over Financial Reporting
Based on an Audit of General Purpose Financial Statements Performed in Accordance
with Government Auditing Standards 38
Report on Compliance with Requirements Applicable to Each Major Program and on
Internal Control over Compliance in Accordance with OMB Circular A-133 40
Schedule of Findings and Questioned Costs
Summary of Auditors’ Results 42
Financial Statement Findings 43
Federal Award Findings and Questioned Costs 44
County Responses
Corrective Action Plan 45
2910 NORTH 44 th STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • (602) 553 -0333 • FAX (602) 553 -0051
DEBRA K. DAVENPORT, CPA
AUDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL WILLIAM THOMSON
DEPUTY AUDITOR GENERAL
Independent Auditors’ Report
Members of the Arizona State Legislature
The Board of Supervisors of
La Paz County, Arizona
We have audited the accompanying general purpose financial statements of La Paz County as of and
for the year ended June 30, 2001, as listed in the table of contents. These general purpose financial
statements are the responsibility of the County’s management. Our responsibility is to express an
opinion on these general purpose financial statements based on our audit.
We conducted our audit in accordance with U.S. generally accepted auditing standards 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 general purpose financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the general purpose financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the
overall general purpose financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the general purpose financial statements referred to above present fairly, in all material
respects, the financial position of La Paz County as of June 30, 2001, and the results of its operations,
the cash flows of its enterprise fund, and the net assets and changes in net assets of its investment
trust funds for the year then ended in conformity with U.S. generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the general purpose financial statements
of La Paz County taken as a whole. The accompanying schedule of expenditures of federal awards
listed in the table of contents is presented for purposes of additional analysis as required by U.S. Office
of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit
Organizations, and is not a required part of the general purpose financial statements. Such information
has been subjected to the auditing procedures applied in the audit of the general purpose financial
statements and, in our opinion, is fairly stated, in all material respects, in relation to the general purpose
financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued our report dated May 23,
2002, on our consideration of the County’s internal control over financial reporting and our tests of its
compliance with certain provisions of laws, regulations, contracts, and grants. That report is an integral
part of an audit performed in accordance with Government Auditing Standards and should be read in
conjunction with this report in considering the results of our audit.
Debbie Davenport
Auditor General
May 23, 2002
LA PAZ COUNTY
Combined Balance Sheet—All Fund Types and Account Groups
June 30, 2001
Proprietary Fiduciary
Governmental Fund Types Fund Type Fund Type Account Groups
Special Capital Trust and General General Long-
Assets General Revenue Projects Enterprise Agency Fixed Assets Term Debt
Cash and cash equivalents $ 1,048,873 $ 3,971,045 $ 94,393 $ 33,072 $ 17,749,635
Cash and investments held by trustees 410,121 482,825 629,776
Receivables:
Property taxes 366,178 593
Accounts 46,541
Accrued interest 14,500
Due from:
Others 110,651 7,413
Other funds 771,558 5,657
Other governments 395,125 1,059,002
Prepaid items 78,067 1,228 280
Fixed assets:
Golf course and improvements 2,800,454
Land $ 585,757
Buildings 8,952,001
Improvements other than buildings 383,309
Machinery and equipment 824,384 10,561,227
Total Accumulated depreciation (1,742,645)
Amount available for certificates of participation $ 892,946
Amount to be provided for retirement of general
long-term debt 4,740,330
Total assets $ 3,227,114 $ 5,527,763 $ 94,393 $ 2,545,321 $ 17,764,135 $ 20,482,294 $ 5,633,276
(Continued)
See accompanying notes to financial statements.
2
LA PAZ COUNTY
Combined Balance Sheet—All Fund Types and Account Groups
June 30, 2001
(Continued)
Proprietary Fiduciary
Governmental Fund Types Fund Type Fund Type Account Groups
Special Capital Trust and General General Long-
Liabilities and Fund Equity General Revenue Projects Enterprise Agency Fixed Assets Term Debt
Liabilities:
Accounts payable $ 201,320 $ 628,765 $ 93,571 $ 64,005
Accrued payroll and employee benefits 169,967 244,047 23,141
Due to:
Others 5,186
Other funds 5,657 771,558
Deposits held for others $ 1,031,404
Compensated absences payable 17,512 $ 365,528
Claims and judgments payable 289,000
Obligations under capital leases 13,592 180
Certificates of participation payable 2,440,000 3,530,000
Loan payable 1,448,568
Deferred revenues 353,008 511
Total liabilities 724,295 884,166 93,571 3,329,808 1,031,404 5,633,276
Fund equity:
Investment in general fixed assets $ 20,482,294
Accumulated deficit (784,487)
Fund balances:
Reserved for certificates of participation
retirement 410,121 482,825
Reserved for prepaid items 78,067 1,228
Reserved for investment trust participants 16,732,731
Unreserved 2,014,631 4,159,544 822
Total fund equity (deficit) 2,502,819 4,643,597 822 (784,487) 16,732,731 20,482,294
Total liabilities and fund equity $ 3,227,114 $ 5,527,763 $ 94,393 $ 2,545,321 $ 17,764,135 $ 20,482,294 $ 5,633,276
See accompanying notes to financial statements.
3
LA PAZ COUNTY
Combined Statement of Revenues, Expenditures, and Changes in Fund Balances
All Governmental Fund Types
Year Ended June 30, 2001
Governmental Fund Types
Special Capital
General Revenue Projects
Revenues:
Taxes $ 2 ,861,913 $ 3 75,117
Licenses and permits 1 22,557 7 ,140
Intergovernmental 3 ,758,355 7 ,351,629
Charges for services 4 75,910 2 ,628,816
Fines and forfeits 7 23,573 2 ,842
Investment income 1 64,976 2 05,520
Miscellaneous 3 33,682 2 89,946
Total revenues 8 ,440,966 1 0,861,010
Expenditures:
Current:
General government 3 ,972,356 8 03,157
Public safety 3 ,163,723 3 ,916,921
Highways and streets 5 ,435,062
Sanitation 3 1,715 4 ,893
Health 1 ,205,580 5 48,616
Welfare 7 2,632 2 65,096
Culture and recreation 5 27,552
Education 1 39,767
Capital outlay $ 372,663
Total expenditures 8 ,585,773 1 1,501,297 372,663
Excess of expenditures over revenues (144,807) (640,287) (372,663)
Other financing sources (uses):
Operating transfers in 1 ,100,000 7 83,248 377,185
Operating transfers out (1,061,547) (1,198,886)
Loan proceeds 1 ,448,568
Total other financing sources 3 8,453 1 ,032,930 377,185
Excess of revenues and other sources over (under)
expenditures and other uses (106,354) 3 92,643 4,522
Fund balances (deficit), July 1, 2000 2 ,609,173 4 ,250,954 (3,700)
Fund balances, June 30, 2001 $ 2 ,502,819 $ 4 ,643,597 $ 822
See accompanying notes to financial statements.
4
LA PAZ COUNTY
Combined Statement of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual—General and Special Revenue Fund Types
Year Ended June 30, 2001
General Fund Special Revenue Funds
Budget Actual Variance Budget Actual Variance
Revenues:
Taxes $ 2 ,930,000 $ 2 ,861,913 $ ( 68,087) $ 2 59,236 $ 375,117 $ 1 15,881
Licenses and permits 1 40,000 1 22,557 ( 17,443) 5 ,000 7,140 2 ,140
Intergovernmental 3 ,885,000 3 ,758,355 ( 126,645) 7 ,118,938 7,351,629 2 32,691
Charges for services 4 33,000 4 75,910 4 2,910 2 ,699,758 2,628,816 ( 70,942)
Fines and forfeits 6 75,000 7 23,573 4 8,573 7 ,079 2,842 ( 4,237)
Investment income 8 0,000 1 64,976 8 4,976 1 25,700 205,520 7 9,820
Miscellaneous 1 ,440,000 3 33,682 ( 1,106,318) 1 ,089,153 289,946 ( 799,207)
Total revenues 9 ,583,000 8 ,440,966 ( 1,142,034) 1 1,304,864 10,861,010 ( 443,854)
Expenditures:
Current:
General government:
Assessor 3 18,972 3 11,797 7 ,175
County attorney 4 31,832 3 53,715 7 8,117
Board of supervisors 4 42,243 2 05,195 2 37,048
Clerk superior court 2 85,746 2 63,914 2 1,832
Constable 1 ,648 6 63 9 85
Elections 6 7,159 5 8,991 8 ,168
Justice of the Peace #4 2 83,248 2 89,706 ( 6,458)
Justice of the Peace #5 1 58,182 1 53,618 4 ,564
Justice of the Peace #6 2 25,117 2 25,570 ( 453)
Planning and zoning 2 28,618 2 19,436 9 ,182
Recorder 1 74,939 1 58,249 1 6,690
Municipal property corporation 5 3,517 5 3,215 3 02
Superior court 2 82,555 2 91,408 ( 8,853)
Treasurer 1 96,231 1 34,431 6 1,800
Contingency 6 40,000 7 0,188 5 69,812
Public private partnership 5 3,547 1 ,006 5 2,541
Management information services 9 8,184 8 8,403 9 ,781
Law library 6 ,500 8 ,191 ( 1,691)
Public defender 3 42,443 3 42,067 3 76
Miscellaneous 1 77,076 1 79,390 ( 2,314)
Finance/personnel 1 80,871 1 25,300 5 5,571
GIS/master planning 1 7,451 1 2,514 4 ,937
Facilities management 4 95,460 4 25,389 7 0,071
Conciliation court 1 1,748 3,283 8 ,465
Law library 7 ,079 6,522 5 57
Mitigation grant—wenden 64,977 ( 64,977)
County extension fund 5 9,940 59,940
Fill the gap 109 ( 109)
Growing smarter planning grant 3,857 ( 3,857)
LAG grant 5 7,000 5 7,000
CA RICO 3 4,764 28,638 6 ,126
Casa Court-appointed special advocate 1 2,441 9,526 2 ,915
Court Improvement Project 1 ,500 835 6 65
Public defender fees 2 ,500 2 ,500
Task force prosecutor 6 2,523 76,819 ( 14,296)
Criminal justice enhancement 7 8,478 80,853 ( 2,375)
Public defender training 3 ,500 2,656 8 44
(Continued)
See accompanying notes to financial statements.
5
LA PAZ COUNTY
Combined Statement of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual—General and Special Revenue Fund Types
Year Ended June 30, 2001
(Continued)
General Fund Special Revenue Funds
Budget Actual Variance Budget Actual Variance
CDBG programs $ 2 27,713 $ 557 $ 2 27,156
DES child support 2 76,800 251,588 2 5,212
Document storage—recorder 3 5,700 7,973 2 7,727
Document storage—superior court 4 ,596 4 ,596
Child support SSRE/incentives 1 0,000 1 0,000
County antiracketeering 1 37,054 132,575 4 ,479
Victim's rights 5 ,241 3,632 1 ,609
Victim's witness program (state) 1 5,463 20,526 ( 5,063)
Juvenile victim's rights fund 7 ,007 4,986 2 ,021
Endangered species fund 1 0,000 43,305 ( 33,305)
Taxpayer information 3 0,000 3 0,000
Drug treatment and education fund 4 0,000 4 0,000
Total general government $ 5 ,161,539 $ 3 ,972,356 $ 1 ,189,183 1 ,131,047 803,157 3 27,890
Public safety:
Regional dispatch 4 83,283 4 84,040 ( 757)
Sheriff 1 ,963,259 1 ,975,404 ( 12,145)
Probation 8 2,001 8 5,097 ( 3,096)
Aircraft 2 4,850 1 4,065 1 0,785
Maintenance of effort 5 38,519 5 38,519
Juvenile probation 7 8,568 6 6,598 1 1,970
Emergency services 4 4,911 41,574 3 ,337
Rabies control 218 ( 218)
Drug enforcement probation 8 ,416 9,416 ( 1,000)
LLEBG—sheriff's overtime 2 5,000 11,815 1 3,185
COPS universal 810 ( 810)
Search and rescue contribution 5 ,000 87 4 ,913
Parent education fund 2 ,160 2,160
Wenden street lighting 4 ,400 4,383 1 7
Salome street lighting 2 ,047 3,055 ( 1,008)
Lakeside 5 street lighting 3 ,951 3 ,951
La Paz estates SLID 1 ,497 1,296 2 01
AORCC boat patrol grant 1 69,813 169,897 ( 84)
Jail enhancement grant 1 47,750 100,948 4 6,802
ACJC drug enforcement 1 30,600 113,571 1 7,029
Fill-the-gaps courts 1 5,000 1 5,000
Adult state aid enhancement 1 13,582 119,590 ( 6,008)
State aid for juvenile probation 3 8,300 38,301 ( 1)
Family counseling 6 ,846 10,265 ( 3,419)
Juvenile school resource fund 4 5,050 43,042 2 ,008
Adult community punishment grant 2 ,712 2,689 2 3
Juvenile probation fees 1 3,500 7,457 6 ,043
County probation services 1 16,000 119,878 ( 3,878)
Adult intensive probation 6 3,082 57,427 5 ,655
Juvenile intensive probation 7 1,600 57,792 1 3,808
CJEF contract sheriff 5,990 ( 5,990)
SLIF project boats-2001 51,851 ( 51,851)
Jail commissary 5 5,804 53,866 1 ,938
DARE contributions 1 0,000 62 9 ,938
Highway safety grant 2 6,000 206 2 5,794
(Continued)
See accompanying notes to financial statements.
6
LA PAZ COUNTY
Combined Statement of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual—General and Special Revenue Fund Types
Year Ended June 30, 2001
(Continued)
General Fund Special Revenue Funds
Budget Actual Variance Budget Actual Variance
Cops in school $ 4 9,481 $ 69,126 $ ( 19,645)
Drug treatment and education fund 11,455 ( 11,455)
Juvenile diversion fund intake 6 1,377 45,809 1 5,568
Juvenile diversion consequences 1 7,844 10,278 7 ,566
La Paz County jail district 2 ,573,925 2,752,607 ( 178,682)
Total public safety $ 3 ,170,480 $ 3 ,163,723 $ 6 ,757 3 ,825,648 3,916,921 ( 91,273)
Highways and streets:
Road 3 ,970,807 2,832,004 1 ,138,803
Wenden flood-Oct 2000 1,154,490 ( 1,154,490)
Help Loan 1,448,568 ( 1,448,568)
Total highways and streets 3 ,970,807 5,435,062 ( 1,464,255)
Sanitation:
Sanitary landfill 1 0,000 1 0,000
County department of environmental
quality 3 7,642 3 1,715 5 ,927
ADEQ—waste tire disposal 6 0,000 2,586 5 7,414
ADEQ DPA contract 2 ,510 2,307 2 03
Total sanitation 4 7,642 3 1,715 1 5,927 6 2,510 4,893 5 7,617
Health:
Indigent health 5 15,044 5 05,443 9 ,601
County long term care 11-29302 6 45,551 6 26,732 1 8,819
C.M.I. chronically mentally ill 5 8,150 2 4,272 3 3,878
Health department transit 9 1,477 4 9,133 4 2,344
Rabies control 6 2,165 46,584 1 5,581
Health department 3 23,355 321,168 2 ,187
TB grant (state) 2 1,563 5,787 1 5,776
Wenden domestic water 167 ( 167)
Transit 1 1,000 48,152 ( 37,152)
Tobacco grant 1 54,108 111,275 4 2,833
Maternal child health 2 8,193 3,106 2 5,087
Family planning 1 4,530 12,377 2 ,153
Total health 1 ,310,222 1 ,205,580 1 04,642 6 14,914 548,616 6 6,298
Welfare:
Public fiduciary 7 5,314 7 2,632 2 ,682
Job training partnership act 2 71,042 160,647 1 10,395
WIA 104,449 ( 104,449)
Total welfare 7 5,314 7 2,632 2 ,682 2 71,042 265,096 5 ,946
Culture and recreation:
La Paz County park 4 53,008 427,373 2 5,635
Park grants 7 36,000 3,958 7 32,042
Parker library 7 8,259 83,192 ( 4,933)
OHV grant 13,029 ( 13,029)
Total culture and recreation 1 ,267,267 527,552 7 39,715
Education:
School superintendent 1 41,108 1 39,767 1 ,341
Total education 1 41,108 1 39,767 1 ,341
Total expenditures 9 ,906,305 8 ,585,773 1 ,320,532 1 1,143,235 11,501,297 ( 358,062)
(Continued)
See accompanying notes to financial statements.
7
LA PAZ COUNTY
Combined Statement of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual—General and Special Revenue Fund Types
Year Ended June 30, 2001
(Continued)
General Fund Special Revenue Funds
Budget Actual Variance Budget Actual Variance
Excess of revenues over (under) expenditures $ ( 323,305) $ (144,807) $ 1 78,498 $ 1 61,629 $ ( 640,287) $ ( 801,916)
Other financing sources (uses):
Operating transfers in 8 1,404 1 ,100,000 1 ,018,596 3 64,900 783,248 4 18,348
Operating transfers out ( 604,900) (1,061,547) ( 456,647) ( 1,198,886) ( 1,198,886)
Loan proceeds 1,448,568 1 ,448,568
Total other financing sources (uses) ( 523,496) 3 8,453 5 61,949 3 64,900 1,032,930 6 68,030
Excess of revenues and other sources over
(under) expenditures and other uses ( 846,801) (106,354) 7 40,447 5 26,529 392,643 ( 133,886)
Fund balances (deficit), July 1, 2000 8 46,801 2 ,609,173 1 ,762,372 (526,529) 4,250,954 4 ,777,483
Fund balances, June 30, 2001 $ - $ 2 ,502,819 $ 2 ,502,819 $ - $ 4,643,597 $ 4 ,643,597
See accompanying notes to financial statements.
8
LA PAZ COUNTY
Statement of Revenues, Expenditures, and Changes in Fund Balance
Budget and Actual—Capital Projects Fund Type
Year Ended June 30, 2001
Capital Projects Fund
Budget Actual Variance
Revenues:
Total revenues
Expenditures:
Capital outlay $ 240,000 $ 372,663 $ (132,663)
Excess of expenditures over revenues (240,000) (372,663) (132,663)
Other financing sources:
Operating transfers in 240,000 377,185 1 37,185
Excess of revenues and other financing sources
over expenditures 4,522 4 ,522
Fund deficit, July 1, 2000 (3,700) (3,700)
Fund balance, June 30, 2001 $ - $ 822 $ 8 22
See accompanying notes to financial statements.
9
LA PAZ COUNTY
Statement of Revenues, Expenses, and Changes in Retained Earnings—Enterprise Fund
Year Ended June 30, 2001
Operating revenues:
Golf course fees $ 1 ,461,944
Miscellaneous 7 ,069
Total operating revenues 1 ,469,013
Operating expenses:
Personnel services 5 13,712
Supplies 2 64,698
Professional services 4 3,231
Communication 5 ,655
Repairs and maintenance 8 5,350
Public utility service 5 6,762
Depreciation 1 82,025
Other 5 1,334
Total operating expenses 1 ,202,767
Operating income 2 66,246
Nonoperating revenues (expenses):
Investment income 2 5,487
Interest expense (195,479)
Net nonoperating expenses (169,992)
Net income 9 6,254
Accumulated deficit, July 1, 2000, as restated (880,741)
Accumulated deficit, June 30, 2001 $ (784,487)
See accompanying notes to financial statements.
10
LA PAZ COUNTY
Statement of Cash Flows—Enterprise Fund
Year Ended June 30, 2001
Cash flows from operating activities:
Cash received for services $ 1,480,553
Cash paid to suppliers (468,381)
Cash paid to employees (506,204)
Net cash provided by operating activities 505,968
Cash flows from noncapital financing activities:
Negative cash balance implicitly financed 771,558
Negative cash balance implicitly repaid (734,313)
Net cash provided by noncapital financing activities 37,245
Cash flows from capital and related financing activities:
Acquisition of capital assets (114,126)
Principal payments on long-term debt (243,496)
Interest paid on long-term debt (195,479)
Net cash used for capital and related financing activities (553,101)
Cash flows from investing activities:
Proceeds from sale of investments 11,673
Interest received on investments 25,487
Net cash provided by investing activities 37,160
Net increase in cash and cash equivalents 27,272
Cash and cash equivalents, July 1, 2000 5,800
Cash and cash equivalents, June 30, 2001 $ 33,072
(Continued)
See accompanying notes to financial statements.
11
LA PAZ COUNTY
Statement of Cash Flows—Enterprise Fund
Year Ended June 30, 2001
(Continued)
Reconciliation of operating income to net cash provided by
operating activities:
Operating income $ 266,246
Adjustments to reconcile operating income to net cash
provided by operating activities:
Depreciation 182,025
Decrease in accounts receivable 11,540
Increase in prepaid items (260)
Increase in accounts payable 39,755
Decrease in due to others (846)
Increase in accured payroll and employee benefits 6,406
Increase in compensated absences payable 1,102
Net cash provided by operating activities $ 505,968
See accompanying notes to financial statements.
12
LA PAZ COUNTY
Combining Statement of Net Assets
Investment Trust Funds
Year Ended June 30, 2001
Treasurer's Individual
Investment Investment
Assets Pool Accounts Total
Cash and cash equivalents $ 1 6,683,989 $ 34,242 $ 1 6,718,231
Interest receivable 1 2,746 1,754 1 4,500
Total assets 1 6,696,735 $ 35,996 1 6,732,731
Liabilities
Total liabilities
Net assets held in trust $ 1 6,696,735 $ 35,996 $ 1 6,732,731
See accompanying notes to financial statements.
13
LA PAZ COUNTY
Combining Statement of Changes in Net Assets
Investment Trust Funds
Year Ended June 30, 2001
Treasurer's Individual
Investment Investment
Pool Accounts Total
Additions:
Contributions from participants $ 28,199,675 $ 4,345 $ 28,204,020
Investment income 826,106 3,236 829,342
Total additions 29,025,781 7,581 29,033,362
Deductions:
Distributions to participants 29,899,882 - 29,899,882
Net increase (decrease) in net assets (874,101) 7,581 ( 866,520)
Net assets held in trust:
July 1, 2000 17,570,836 28,415 17,599,251
June 30, 2001 $ 16,696,735 $ 35,996 $ 16,732,731
See accompanying notes to financial statements.
14
LA PAZ COUNTY
Notes to Financial Statements
June 30, 2001
15
Note 1 - Summary of Significant Accounting Policies
The accounting policies of La Paz County conform to generally accepted accounting
principles applicable to governmental units adopted by the Governmental
Accounting Standards Board (GASB). A summary of the County's more significant
accounting policies follows.
The County's major operations include general government, public safety, highways
and streets, sanitation, health, welfare, culture and recreation, and education. In
addition, the County owns and operates one enterprise activity: a golf course.
A. Reporting Entity
The County is a general purpose local government that is governed by a separately
elected board of three county supervisors. These general purpose financial
statements present all the fund types and account groups of the County (a primary
government) and its component units.
Component units are legally separate entities for which the County is considered to
be financially accountable. Blended component units, although legally separate
entities, are in substance part of the County's operations. Therefore, data from
these units is combined with data of the primary government. Discretely presented
component units, on the other hand, are reported in a separate column in the
combined financial statements to emphasize they are legally separate from the
County. Each blended component unit discussed below has a June 30 year-end.
The County has no discretely presented component units.
Blended Component Units—The La Paz County Jail District is a tax-levying public
improvement district that acquires, constructs, operates, maintains, and finances
county jails and jail systems, pursuant to Arizona Revised Statutes. The District is
included in the accompanying financial statements since the District’s governing
body is the same as the governing body of La Paz County and provides services to
the entire County. The District’s financial statements are included in the County’s
financial statements in the Special Revenue Fund Types and the General Fixed
Assets and the General Long-Term Debt Account Groups. Complete financial
statements may be obtained at the La Paz County Jail District’s administrative
offices, 1108 Joshua Avenue, Parker, Arizona 85344.
The La Paz County Municipal Property Corporation (Corporation) is a nonprofit
corporation created by the County to assist in the acquisition of real and personal
property for the County. The transactions of the Corporation are included in the
County’s financial statements in the General Fund. Separate financial statements of
the Corporation are not prepared.
LA PAZ COUNTY
Notes to Financial Statements
June 30, 2001
16
B. Fund Accounting
The County's accounts are maintained in accordance with the principles of fund
accounting to ensure that limitations and restrictions on the County's available
resources are observed. The principles of fund accounting require that resources be
classified for accounting and reporting purposes into funds or account groups in
accordance with the activities or objectives specified for those resources. Each fund
is considered a separate accounting entity, and its operations are accounted for in a
separate set of self-balancing accounts that comprise its assets, liabilities, fund
equity, revenues, and expenditures or expenses. Account groups are reporting
devices to account for certain assets and liabilities of the governmental funds not
recorded directly in those funds.
Accounts are separately maintained for each fund and account group; however, in
the accompanying financial statements, funds that have similar characteristics have
been combined into generic fund types that are further classified into broad fund
categories. A description of the County’s fund categories, types, and account
groups follows.
1. Governmental Funds account for the County's general government activities
using the flow of current financial resources measurement focus and include the
following fund types.
The General Fund is the County's primary operating fund. It accounts for all financial
resources of the County, except those required to be accounted for in other funds.
The Special Revenue Funds account for specific revenue sources, other than major
capital projects, that are legally restricted to expenditures for specified purposes.
The Capital Projects Fund accounts for resources to be used for acquiring or
constructing major capital facilities, other than those financed by Proprietary Funds.
2. Proprietary Funds account for the County's ongoing activities that are similar to
those found in the private sector using the flow of economic resources measurement
focus. The County applies all applicable Financial Accounting Standards Board
Statements and Interpretations, Accounting Principles Board Opinions, and
Accounting Research Bulletins to its proprietary activities unless those
pronouncements conflict with or contradict GASB pronouncements. The County’s
proprietary fund includes the following fund type.
LA PAZ COUNTY
Notes to Financial Statements
June 30, 2001
17
The Enterprise Fund accounts for operations that are financed and operated in a
manner similar to private business enterprises, in which the intent of the Board of
Supervisors is that the costs (expenses, including depreciation) of providing goods
or services to the general public on a continuing basis be financed or recovered
primarily through user charges; or for which the Board of Supervisors has decided
that periodic determination of revenues earned, expenses incurred, or net income is
appropriate for capital maintenance, public policy, management control,
accountability, or other purposes.
3. Fiduciary Funds account for assets the County holds on behalf of others, and
include the following fund types.
The Investment Trust Funds account for investments made by the County on behalf
of other governmental entities using the economic resources measurement focus.
The Agency Fund is custodial in nature and does not present results of operations or
have a measurement focus. This fund is used to account for assets that the
government holds for others in an agency capacity.
4. Account Groups are used to establish control and accountability for certain
County assets and liabilities that are not recorded in the funds and include the
following two groups.
The General Fixed Assets Account Group accounts for all of the County’s fixed
assets, except those accounted for in the Enterprise Fund.
The General Long-Term Debt Account Group accounts for all of the County’s long-term
obligations, except those accounted for in the Enterprise Fund.
C. Basis of Accounting
The financial statements of the Governmental and Agency Funds are presented on
the modified accrual basis of accounting. Revenues are recognized when they
become measurable and available to finance current-period expenditures.
Expenditures are recognized when the related fund liability is incurred, except for
principal and interest on general long -term debt that are recognized when due.
Revenues susceptible to accrual are property taxes; franchise taxes; special
assessments; licenses and permits; intergovernmental aid, grants, and
reimbursements; interest revenue; charges for services; and sales taxes collected
and held by the State at year-end on the County’s behalf. Fines and forfeits, rents,
contributions, and miscellaneous revenues are not susceptible to accrual because
generally they are not measurable until received in cash.
LA PAZ COUNTY
Notes to Financial Statements
June 30, 2001
18
The financial statements of the Proprietary and Investment Trust Funds are
presented on the accrual basis of accounting. Revenues are recognized when they
are earned, and expenses are recognized when they are incurred.
D. Budgeting and Budgetary Control
Arizona Revised Statutes (A.R.S.) require the County to prepare and adopt a
balanced budget annually for each separate fund. The Board of Supervisors must
approve such operating budgets on or before the third Monday in July to allow
sufficient time for the legal announcements and hearings required for the adoption of
the property tax levy on the third Monday in August. A.R.S. prohibit expenditures or
liabilities in excess of the amounts budgeted.
Essentially, the County prepares its budget on the same modified accrual basis of
accounting used to record actual revenues and expenditures.
The County has adopted budgets in accordance with the A.R.S. requirements for the
General, Special Revenue, and Capital Projects Funds. Formal budget integration is
not employed for the Enterprise Fund because effective budgetary control is
alternatively achieved through the capability of cost recovery.
Expenditures may not legally exceed appropriations at the department level. In
certain instances, transfers of appropriations between departments or from the
contingency account to a department may be made upon approval of the Board of
Supervisors. With the exception of the General Fund, each fund includes only one
department.
Encumbrance accounting, under which purchase orders, contracts, and other
commitments to expend monies are recorded to reserve that portion of the
applicable fund balance, is not employed by the County during the year. However,
the County must encumber amounts necessary and available to pay liabilities
outstanding for goods or services received but unpaid at June 30, after which
warrants may be drawn against the encumbered amounts for 60 days immediately
following the close of the fiscal year. After 60 days, the remaining encumbered
balances lapse.
LA PAZ COUNTY
Notes to Financial Statements
June 30, 2001
19
E. Cash and Investments
For purposes of its statement of cash flows, the County considers only those highly
liquid investments with a maturity of 3 months or less when purchased to be cash
equivalents.
Nonparticipating interest-earning investment contracts are stated at cost. Money
market investments and participating interest-earning investment contracts with a
remaining maturity of 1 year or less at time of purchase are stated at amortized cost.
All other investments are stated at fair value.
F. Inventories
Purchases of inventory items are recorded at the time of purchase as expenditures
in the funds from which the purchases were made, and because the amounts on
hand at June 30, 2001, were immaterial, they are not included in the balance sheet.
G. Fixed Assets
Purchased fixed assets capitalized in the General Fixed Assets Account Group are
recorded at the time of purchase as expenditures in the funds from which the
expenditures were made. Such assets are capitalized at cost. Donated fixed assets
are capitalized at their estimated fair market value at the time received.
Depreciation on general fixed assets is not recorded, and interest incurred during
construction is not capitalized. Also, public domain (infrastructure) general fixed
assets consisting of certain improvements other than buildings, such as roads,
bridges, curbs and gutters, streets and sidewalks, and drainage and lighting
systems, are not capitalized.
Purchased fixed assets of the Enterprise Fund are capitalized in that fund at cost.
Major outlays for assets or improvements to them are capitalized as projects are
constructed. Interest incurred during the construction phase of the project is
capitalized net of interest earned on the invested proceeds over the same period.
Donated fixed assets are capitalized at their estimated fair market value at the time
received. Depreciation of fixed assets in the Enterprise Fund is charged as an
expense against operations. These assets are depreciated over their estimated
useful lives using the straight-line method. The estimated useful lives are as follows:
Golf course and improvements 30 years
Machinery and equipment 2-10 years
LA PAZ COUNTY
Notes to Financial Statements
June 30, 2001
20
H. Compensated Absences
Compensated absences consist of vacation leave and a calculated amount of sick
leave earned by employees based on services already rendered.
Employees may accumulate up to 160 hours of vacation depending on years of
service, but any vacation hours in excess of the maximum amount that are unused
at year-end are forfeited. Upon termination of employment, all unused and
unforfeited vacation benefits are paid to employees. Accordingly, vacation benefits
are accrued as a liability in the financial statements.
Employees may accumulate an unlimited number of sick leave hours. Generally,
sick-leave benefits provide for ordinary sick pay and are cumulative but are forfeited
upon termination of employment. However, employees who accumulate unused sick
leave in excess of 384 hours are paid a percentage of the excess unused sick leave
based on the number of years of consecutive service with the County and, therefore,
are accrued.
The liability for vested compensated absences of the Governmental Funds is
recorded in the General Long-Term Debt Account Group since the amount expected
to be paid from current financial resources is not significant. Vested compensated
absences of the Enterprise Fund are recorded as expenses and liabilities of that
fund as the benefits accrue to employees.
I. Investment Income
Investment income is composed of interest, dividends, and net changes in the fair
value of applicable investments.
J. Property Taxes
Property taxes are recognized as revenues in the fiscal year they are levied and
collected or if they are collected within 60 days subsequent to fiscal year-end.
Property taxes not collected within 60 days subsequent to fiscal year-end or
collected in advance of the fiscal year for which they are levied are reported as
deferred revenues.
K. Intergovernmental Grants and Aid
Grants and assistance awards made on the basis of entitlement periods are
recorded as intergovernmental receivables and revenues when entitlement occurs.
All other reimbursement grants are recorded as intergovernmental receivables and
revenues when the related expenditures are incurred.
LA PAZ COUNTY
Notes to Financial Statements
June 30, 2001
21
Note 2 - Individual Fund Deficits
The following individual funds had significant fund deficits at June 30, 2001:
Fund Description Deficit
Special Revenue Funds
Health department $ 18,475
La Paz county park 18,492
WIA (Workforce Investment Act) 46,459
LAG grant 7,212
ACJC drug enforcement 21,312
County probation serv 12-267 20,735
Task force prosecutor 15,735
Criminal justice enhancement 18,637
DES child support program 20,160
County antiracketeering 25,434
Victim's rights 9,533
COPS/FAST 6,529
OHV grant 14,755
COPS in school 17,981
Enterprise Fund
La Paz County golf course 784,487
The above fund deficits resulted from operations during the year or a carryover from
prior years and are expected to be corrected through normal operations in the future.
Note 3 - Deposits and Investments
Arizona Revised Statutes authorize the County to invest public monies in the State
Treasurer's investment pool; U.S. Treasury obligations; specified state and local
government bonds; and interest-earning investments such as savings accounts,
certificates of deposit, and repurchase agreements in eligible depositories. The
statutes require collateral for demand deposits, certificates of deposit, and
repurchase agreements at 101 percent of all deposits not covered by federal
depository insurance.
LA PAZ COUNTY
Notes to Financial Statements
June 30, 2001
22
County Treasurer’s Investment Pool—Arizona Revised Statutes require
community colleges, school districts, and other local governments to deposit certain
public monies with the County Treasurer (see Note 4). Those monies are pooled
with County monies for investment purposes.
Deposits—At June 30, 2001, the carrying amount of the investments pool’s total
cash in bank was $214,668, and the bank balance was $399,808. Of the bank
balance, $100,000 was covered by federal depository insurance, and $299,808 was
covered by collateral held by the pledging financial institution’s agent in the County’s
name.
Investments—At June 30, 2001, the investments in the County Treasurer’s
investment pool consisted of the following:
Fair
Value
Investment in State Treasurer’s
investment pool $22,139,519
The State Board of Deposit provides oversight for the State Treasurer’s pools, and
the Local Government Investment Pool Advisory Committee provides consultation
and advice to the Treasurer. The fair value of a participant’s position in the pool
approximates the value of that participant’s pool shares. Those shares are not
identified with specific investments and are not subject to custodial credit risk.
Other Deposits—At June 30, 2001, the total nonpooled cash on hand was $2,446. The
carrying amount of the County’s total nonpooled cash in bank was $540,385, and the bank
balance was $658,918. Of the bank balance, $286,311 was covered by federal depository
insurance and $372,607 was covered by collateral held by the pledging financial
institution in County's name.
Other Investments—The County’s nonpooled investments at June 30, 2001, are
categorized below to give an indication of the level of risk assumed by the County at
year-end.
Category 1—insured or registered in the County’s name, or securities held by the
County or its agent in the County’s name.
Category 2—uninsured and unregistered with securities held by the counterparty’s
trust department or agent in the County’s name.
Category 3—uninsured and unregistered with securities held by the counterparty, or
by its trust department or agent but not in the County’s name.
LA PAZ COUNTY
Notes to Financial Statements
June 30, 2001
23
Category
1 2 3
Fair
Value
U.S. government securities
Money market investments
$ 658,608
864,114
$ 658,608
864,114
$1,522,722 $1,522,722
A reconciliation of cash and investments to amounts shown on the combined
balance sheet follows.
Cash and investments:
County Treasurer’s
Investment Pool Other Total
Cash on hand $ 2,446 $ 2,446
Carrying amount of
deposits $ 214,668 540,385 755,053
Reported amount of
investments 22,139,519 1,522,722 23,662,241
Total $22,354,187 $2,065,553 $24,419,740
Combined balance sheet:
Cash and cash equivalents $22,897,018
Cash and investments held by
trustees 1,522,722
Total $24,419,740
Note 4 - County Treasurer’s Investment Pool
Arizona Revised Statutes require community colleges, school districts, and other
local governments to deposit certain public monies with the County Treasurer. The
Treasurer has a fiduciary responsibility to administer those and the County monies
under her stewardship. The Treasurer invests, on a pool basis, all idle monies not
specifically invested for a fund or program. In addition, the Treasurer determines the
fair value of those pooled investments annually at June 30.
The County Treasurer’s investment pool is not registered with the Securities and
Exchange Commission as an investment company and there is no regulatory
oversight of its operations. The pool’s structure does not provide for shares, and the
County has not provided or obtained any legally binding guarantees to support the
value of the participants’ investments.
LA PAZ COUNTY
Notes to Financial Statements
June 30, 2001
24
A condensed statement of the investment pool’s net assets and changes in net
assets follows.
Statement of Net Assets
Assets $22,366,933
Liabilities -
Net assets $22,366,933
Net assets held in trust for:
Internal participants $ 5,670,198
External participants 16,696,735
Total net assets held in trust $22,366,933
Statement of Changes in Net Assets
Total additions $54,324,782
Total deductions 54,695,760
Net decrease (370,978)
Net assets held in trust:
July 1, 2000 22,737,911
June 30, 2001 $22,366,933
Note 5 - Property Taxes Receivable
The County levies real property taxes on or before the third Monday in August that
become due and payable in two equal installments. The first installment is due on
the first day of October and becomes delinquent after the first business day of
November. The second installment is due on the first day of March of the next year
and becomes delinquent after the first business day of May.
During the year, the County also le vies various personal property taxes that are due
the second Monday of the month following receipt of the tax notice and become
delinquent 30 days later.
A lien assessed against real and personal property attaches on the first day of
January preceding assessment and levy.
LA PAZ COUNTY
Notes to Financial Statements
June 30, 2001
25
Property taxes receivable consist of uncollected property taxes as determined from
the records of the County Treasurer's Office, and at June 30, 2001, were as follows:
Fiscal Year
General
Fund
Special
Revenue
Funds
2000-01 $140,910 $291
Prior 225,268 302
Total $366,178 $593
That portion of property taxes receivable not collected within 60 days after June 30,
2001, has been deferred and, consequently, is not included in current-year
revenues.
Note 6 - Due from Other Governments
Amounts due from other governments in the General Fund at June 30, 2001, include
$190,367 in sales taxes, auto lieu tax, and excise tax from the State of Arizona and
$179,500 for Disproportionate Housing revenue sharing from the State of Arizona.
Amounts due from other governments in the Special Revenue Funds include
$260,480 in highway user taxes from the State of Arizona; $113,330 in auto lieu and
jail tax from the State of Arizona; $342,312 in inmate housing fees from the U.S.
Department of Treasury; and $178,323 from the Federal Emergency Management
Agency for flood assistance.
The remaining balance of $25,258 and $164,557 in the General and Special
Revenue Funds, respectively, consists of grants and contracts from the state and
federal governments.
Note 7 - Changes in General Fixed Assets
A summary of the changes in the General Fixed Asset Account Group fixed assets
follows:
Balance
July 1, 2000 Additions Deletions
Balance
June 30, 2001
Land $ 585,757 $ 585,757
Buildings 8,948,668 $ 3,333 8,952,001
Improvements other than
buildings 383,309 383,309
Machinery and equipment 9,471,410 1,318,492 $228,675 10,561,227
Total $19,389,144 $1,321,825 $228,675 $20,482,294
LA PAZ COUNTY
Notes to Financial Statements
June 30, 2001
26
A summary of the changes in the Enterprise Fund fixed assets follows:
Balance
July 1, 2000 Additions Deletions
Balance
June 30, 2001
Golf course and improvements $2,766,319 $ 34,135 $ - $ 2,800,454
Machinery and equipment 744,393 79,991 - 824,384
Subtotal $3,510,712 $114,126 $ - $ 3,624,838
Less: Accumulated depreciation (1,742,645)
Total $ 1,882,193
Note 8 - Certificates of Participation Payable
The County has issued certificates of participation to finance construction of the
courthouse and government center complex, the jail facility, and the Emerald
Canyon golf course. The certificates are generally callable with interest payable
semi-annually.
Principal and interest requirements at June 30, 2001, were as follows:
Description
Interest
Rates Maturities
Outstanding
Principal
July 1, 2000 (Retirements)
Outstanding
Principal
June 30, 2001
General Long-Term Debt
Account Group (GLTDAG)
Jail facility—series 1994 5.30-5.75% 2002-2009 $2,060,000 $(185,000) $1,875,000
Courthouse and government
center complex—series 1994 5.40-5.75% 2002-2009 1,815,000 (160,000) 1,655,000
Municipal property corporation 4.97% 2001 52,211 (52,211)
Total $3,927,211 $(397,211 ) $3,530,000
Enterprise Fund
Emerald Canyon Golf Course –
Refunding Series 1995 7.55-7.70% 2002-2009 $2,625,000 $(185,000) $2,440,000
LA PAZ COUNTY
Notes to Financial Statements
June 30, 2001
27
Certificates of participation debt service requirements to maturity, including $936,187
and $953,395 of interest for the Enterprise Fund and GLTDAG, respectively, are as
follows:
Year ending June 30,
Enterprise
Fund GLTDAG
2002 $ 379,003 $ 561,775
2003 373,525 562,090
2004 376,915 561,505
2005 373,984 559,850
2006 374,535 562,225
Thereafter 1,498,225 1,675,950
Total $3,376,187 $4,483,395
Note 9 - Loan Payable
On December 15, 2000, the County obtained a $1,448,568 Highway Expansion and
Extension Loan Program (HELP) loan from the Arizona Department of
Transportation (ADOT) to provide emergency services and repairs relating to a flood
that occurred in the County during October of 2000. The agreement requires the
loan to be repaid by January 1, 2004, with interest, or upon receipt of emergency
relief monies, whichever comes first. Additionally, the entire loan is expected to be
repaid from emergency relief monies that are to be provided to ADOT directly from
the Federal Highway Administration (FHWA).
Note 10 - Landfill Closure and Postclosure Care Costs
The County has contracted with an outside agency to provide operations for its solid
waste facilities. The contract requires the outside agency to reserve funds in
accordance with the closure plan for closure and post-closure care costs. In the
event of termination of the contract, the required reserve funds are to be remitted to
the County. Consequently, no liability for landfill closure and post-closure care costs
has been recorded on the general purpose financial statements.
Note 11 - Risk Management
The County is exposed to various risks of loss related to torts; theft of, damage to,
and destruction of assets; errors and omissions; injuries to employees; and natural
disasters; but was unable to obtain insurance at a cost it considered to be
economically justifiable. Therefore, the County joined and is covered by three public
entity risk pools: the Arizona Counties Property and Casualty Pool, the Arizona
Counties Workers’ Compensation Pool, and the Arizona Local Government
Employee Benefit Trust, which are described below.
LA PAZ COUNTY
Notes to Financial Statements
June 30, 2001
28
The Arizona Counties Property and Casualty Pool is a public entity risk pool
currently composed of 11 member counties. The pool provides member counties
catastrophic loss coverage for risks of loss related to torts; theft of, damage to, and
destruction of assets; errors and omissions; and natural disasters and provides risk
management services. Such coverage includes all defense costs as well as the
amount of any judgment or settlement. The County is responsible for paying a
premium, based on its exposure in relation to the exposure of the other
participants, and a deductible of $5,000 for each property and liability claims.
The County is also responsible for any payments in excess of the maximum
coverage of $100 million per occurrence for property claims and $15 million per
occurrence for liability claims. A County must participate in the pool at least 3 years
after becoming a member; however, it may withdraw after the initial 3-year period. If
the pool were to become insolvent, the County would be assessed an additional
contribution.
The Arizona Counties Workers’ Compensation Pool is a public entity risk pool
currently composed of 11 member counties. The pool provides member counties
with workers’ compensation coverage, as required by law, and risk management
services. The County is responsible for paying a premium, based on an experience
rating formula that allocates pool expenditures and liabilities among the members.
The Arizona Counties Property and Casualty Pool and the Arizona Counties
Workers’ Compensation Pool receive independent audits annually and an audit by
the Arizona Department of Insurance triennially. Both pools accrue liabilities for
losses that have been incurred but not reported. These liabilities are determined
annually based on an independent actuarial valuation.
The County provides life, health, and disability benefits to its employees and their
dependents through the Arizona Local Government Employee Benefit Trust currently
composed of five member counties. The Trust provides the benefits through a self-funding
agreement with its participants and administers the program. The County is
responsible for paying the premium and may require its employees to contribute a
portion of that premium through co-pays, deductibles, etc. If it withdraws from the
Trust, the County is responsible for any claims run-out costs, including claims
reported but not settled, claims incurred but not reported, and administrative costs.
If the Trust were to terminate, the County would be responsible for its proportional
share of any Trust deficit.
LA PAZ COUNTY
Notes to Financial Statements
June 30, 2001
29
Note 12 - Changes in Long-Term Liabilities
A summary of changes in the liabilities reported in the General Long -Term Debt
Account Group follows:
Balance
July 1, 2000
(As restated) Additions Reductions
Balance
June 30, 2001
Compensated absences
payable $ 340,219 $ 25,309 $ 365,528
Certificates of participation
payable 3,927,211 $397,211 3,530,000
Obligations under capital
leases 82,425 82,245 180
Claims and judgments
payable 159,500 129,500 289,000
Loan payable 1,448,568 1,448,568
Total $4,509,355 $1,603,377 $479,456 $5,633,276
LA PAZ COUNTY
Notes to Financial Statements
June 30, 2001
30
Note 13 - Interfund Receivables, Payables, and Operating Transfers
The interfund receivables, payables, and operating transfers by fund, are as follows:
Fund
Due from
Other
Funds
Due to
Other
Funds
Operating
Transfers
from
Other Funds
Operating
Transfers to
Other Funds
General $771,558 $1,100,000 $1,061,547
Special Revenue:
Wenden Flood—Oct 2000 5,657
Road $ 5,657
La Paz County jail district 1,100,000
Task force prosecutor 5,000
Anti-gang enforce and
prosecution 5,000
Rabies control 110,707
Health department 211,112
La Paz County extension 119,987
USDOJ-COPS Universal 95,496
Parker Library 119,520
DES Child Support Program 54,488
Boating Safety Grant 38,833
Parks Grant 4,408
La Paz County Park 4,408 2,230
Victim Witness Program (State) 13,717
Juvenile Victim’s Rights 13,717
JTPA 2,230
Emergency services 6,143
Maternal child health 540 28,193
Family planning 15,070
TB Grant (State) 20,993
Lag Grant 9,275
Highway Safety Grant 1,067
Capital Projects:
Courthouse JP 4 377,185
Enterprise Fund 771,558
Total $777,215 $777,215 $2,260,433 $2,260,433
LA PAZ COUNTY
Notes to Financial Statements
June 30, 2001
31
Note 14 - Retirement Plans
Plan Descriptions—The County contributes to the three plans described below.
Benefit are established by state statute and generally provide retirement, death,
long-term disability, survivor, and health insurance premium benefits.
The Employee Security Plan (ESP) is a defined contribution plan administered by
Massachusetts Mutual Life Insurance Company that covers all permanent full-time
employees of the County except for participants in the Public Safety Retirement
System and the Elected Officials Retirement Plan (EORP). In a defined contribution
plan, benefits depend solely on amounts contributed to the plan plus investment
earnings.
The Public Safety Personnel Retirement System (PSPRS) is an agent multiple-employer
defined benefit pension plan that covers public safety personnel who are
regularly assigned hazardous duty as employees of the State of Arizona or one of its
political subdivisions. The PSPRS, acting as a common investment and
administrative agent, is governed by a five-member board, known as The Fund
Manager, and 189 local boards according to the provisions of A.R.S. Title 38,
Chapter 5, Article 4.
The Elected Officials Retirement Plan (EORP) is a cost-sharing multiple-employer
defined benefit pension plan that covers elected officials and judges of certain state
and local governments. The EORP is governed by The Fund Manager of PSPRS
according to the provisions of A.R.S. Title 38, Chapter 5, Article 3.
Each defined benefit plan issues a publicly available financial report that includes its
financial statements and required supplementary information. A report may be
obtained by writing or calling the applicable plan.
PSPRS and EORP
1020 E. Missouri Ave.
Phoenix, AZ 85014
(602) 255-5575
Funding Policy—The Arizona State Legislature establishes and may amend active
plan members’ and the County’s contribution rates.
ESP—All employees under this plan, excluding elected officials, were allowed to
elect a contribution rate of 6 to 15 percent. The plan also requires that the County
contribute an amount equal to 6 percent of the employees’ compensation for
employees with service of 4 years or less, 8 percent for employees with service of at
least 4 years but less than 7 years, and 10 percent for employees with service
greater than 7 years.
LA PAZ COUNTY
Notes to Financial Statements
June 30, 2001
32
Both the County and covered employees made the required contributions of 6 to 15
percent amounting to contributions of $480,997 by the County and $609,293 by
covered employees.
Cost-sharing plans—For the year ended June 30, 2001, active EORP members
were required by statute to contribute 7 percent of the members’ annual covered
payroll. The County was required to remit a designated portion of court docket fees
plus additional contributions of 3.07 percent of the member’s annual covered payroll,
as determined by actuarial valuation. The County’s contributions to EORP for the
years ended June 30, 2001, 2000, and 1999 were $5,248, $4,808, and $5,200,
respectively, which were equal to the required contributions for the year.
Agent plans—For the year ended June 30, 2001, active PSPRS members were
required by statute to contribute 7.65 percent of the members’ annual covered
payroll, and the County was required to contribute at the actuarially determined rate
of 10.36 percent.
Annual Pension Cost—The County’s pension cost for the agent plan for the year
ended June 30, 2001, and related information follows.
PSPRS
Contribution rates 10.36%
County 7.65%
Plan members $132,008 
Annual pension cost
Contributions made $132,008
The current-year annual required contributions for PSPRS were determined as part
of their June 30, 1999, actuarial valuations using the entry-age actuarial cost
method. The actuarial assumptions included (a) 9 percent investment rate of return
and (b) projected salary increases ranging from 6.5 percent to 9.5 percent per year.
Both (a) and (b) included an inflation component of 5.5 percent. The assumptions
did not include cost-of-living adjustments. The actuarial value of assets was
determined using techniques that smooth the effects of short-term volatility in the
market value of investments over a 4-year period. The unfunded actuarial accrued
liability is being amortized as a level percentage of projected payroll on an open
basis. The remaining amortization period at June 30, 1999, was 20 years.
LA PAZ COUNTY
Notes to Financial Statements
June 30, 2001
33
Trend Information—Annual pension cost information for the current and 2
preceding years follows for each of the agent plans .
Plan
Year Ended
June 30
Annual Pension
Cost (APC)
Percentage of
APC
Contributed
Net Pension
Obligation
PSPRS 2001
2000
1999
$ 132,008
94,973
99,582
100 %
100
100
$0
0
0
Analysis of Funding Progress—The following information was obtained from the
three most recent actuarial valuations of the agent plans.
PSPRS
Actuarial
Valuation
Date
Actuarial
Value of
Plan Assets
(a)
Actuarial
Accrued
Liability
(b)
Funding
(Liability)
Excess
(a-b )
Funded
Ratio
(a/b)
Annual
Covered
Payroll
(c)
Unfunded
Liability as
Percentage
of Covered
Payroll
([a-b]/c)
6/30/01
6/30/00
6/30/99
$5,211,418
4,709,109
4,033,317
$4,653,857
4,434,870
4,070,481
$557,561
274,239
(37,164)
112.0%
106.2%
99.1%
$1,357,608
1,219,364
1,167,327
----%
----%
3.2%
Note 15 - Restatement of Beginning Balances
The fund balances of the Debt Service Fund, and Enterprise Fund and the General
Long-Term Debt Account Group balances at June 30, 2000, have been restated as
follows:
LA PAZ COUNTY
Notes to Financial Statements
June 30, 2001
34
Debt Service
Fund
Enterprise
Fund
General Long-
Term Debt
Account Group
Fund balances (deficit) and account
group balance at June 30, 2000, as
previously reported $45,985 $(1,000,505) $4,572,355
Corrections for special assessment
debt that did not constitute a
general obligation of the County (45,985) (63,000)
Correction of overstatement of
expenditures for interest accrued in
prior financial statements 119,764
Obligations under capital leases
reclassified as certificates of
participation (2,625,000) (3,875,000)
Certificates of participation
reclassified from obligations under
capital leases 2,625,000 3,875,000
Fund balances (deficits) and account
group balance at July 1, 2000, as
restated $ -0- $ (880,741) $4,509,355
Note 16 - Subsequent Event
On September 26, 2001, the Arizona Department of Transportation (ADOT) received
$1,184,811 in Federal Highway Administration (FHWA) Emergency Relief monies for
repayment of principal ($1,162,578) and interest ($22,233) relating to the $1,448,568
Highway Expansion and Extension Loan Program (HELP) loan owed by the County
to ADOT at June 30, 2001. Also, it is FHWA’s intent to pay the remaining principal
balance of $263,757 when federal monies become available.
Supplementary Information
LA PAZ COUNTY
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2001
Federal Grantor / Pass-Through CFDA Number Pass-Through
Grantor / Program or Cluster Title (Note 2) Grantor's Number Expenditures
U.S. Department of the Interior
Payments in Lieu of Taxes 15.226 $ 473,763
U.S. Department of Justice
Local Law Enforcement Block Grants Program 16.592 11,815
Passed through the Arizona Criminal Justice Commission
Byrne Formula Grant Program 16.579 PC-160-01, AC-120-01 119,088
Public Safety Partnership and Community Policing Grants 16.710 2000SHWX0155 52,895
Total U.S. Department of Justice 183,798
U.S. Department of Labor
Passed through the Mohave County Board of Supervisors
Welfare-to-Work Grants to States and Localities 17.253 E5709051 4,417
Workforce Investment Act 17.255 E5701014 95,622
Total U.S. Department of Labor 100,039
U.S. Federal Emergency Management Agency
Passed through the Arizona Division of Emergency Management
Public Assistance Grants 83.544 1347-DR-AZ-012-99012-00 1,230,278
U.S. Department of Education
Passed through the Arizona Department of Education
Adult Education—State Grant Program 84.002 V002A010003 47,059
U.S. Department of Health and Human Services
Passed through the Arizona Department of Health Services
Immunization Grants 93.268 152050 8,245
Child Support Enforcement 93.563 E7200012, E7201012 209,259
Preventive Health and Health Services Block Grant 93.991 953023 3,211
Maternal and Child Health Services Block
Grant to the States 93.994 761110 12,377
Total U.S. Department of Health and Human Services 233,092
Total Expenditures of Federal Awards $2,268,029
See accompanying notes to schedule.
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37
LA PAZ COUNTY
Notes to Schedule of Expenditures of Federal Awards
Year Ended June 30, 2001
Note 1 – Basis of Accounting
The accompanying schedule of expenditures of federal awards includes the federal
grant activity of La Paz County and is presented on the modified accrual basis of
accounting. The information in this schedule is presented in accordance with the
requirements of OMB Circular A-133, Audits of States, Local Governments, and
Non-Profit Organizations. Therefore, some amounts presented in this schedule may
differ from amounts presented in, or used in the preparation of, the financial
statements.
Note 2 – Catalog of Federal Domestic Assistance (CFDA) Number
The program titles and CFDA numbers were obtained from the federal or pass-through
grantor, the 2001 Catalog of Federal Domestic Assistance or the 2001 A-
133 Compliance Supplement.
Note 3 – Subrecipients
The County did not award federal monies to subrecipients for the fiscal year ended
June 30, 2001.
2910 NORTH 44 th STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • (602) 553 -0333 • FAX (602) 553 -0051
DEBRA K. DAVENPORT, CPA
AUDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL WILLIAM THOMSON
DEPUTY AUDITOR GENERAL
Independent Auditors’ Report on Compliance and on Internal Control over
Financial Reporting Based on an Audit of General Purpose Financial Statements
Performed in Accordance with Government Auditing Standards
Members of the Arizona State Legislature
The Board of Supervisors of
La Paz County, Arizona
We have audited the general purpose financial statements of La Paz County as of and for the
year ended June 30, 2001, and have issued our report thereon dated May 23, 2002. We
conducted our audit in accordance with U.S. generally accepted auditing standards and the
standards applicable to financial audits contained in Government Auditing Standards, issued
by the Comptroller General of the United States.
Compliance
As part of obtaining reasonable assurance about whether the County’s general purpose
financial statements are free of material misstatement, we performed tests of its compliance
with certain provisions of laws, regulations, contracts, and grants, noncompliance with which
could have a direct and material effect on the determination of general purpose 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 that are required to be reported under
Government Auditing Standards. However, we noted certain immaterial instances of
noncompliance that we will report to the County’s management in a separate letter that will be
issued at a later date.
Internal Control over Financial Reporting
In planning and performing our audit, we considered the County’s internal control over financial
reporting in order to determine our auditing procedures for the purpose of expressing our
opinion on the general purpose financial statements and not to provide assurance on internal
control over financial reporting. However, we noted a certain matter involving internal control
over financial reporting and its operation that we consider to be a reportable condition.
Reportable conditions involve matters coming to our attention relating to significant
deficiencies in the design or operation of internal control over financial reporting that, in our
judgment, could adversely affect the County’s ability to record, process, summarize, and report
financial data consistent with the assertions of management in the general purpose financial
statements. The reportable condition is described in the accompanying Schedule of Findings
and Questioned Costs as item 01-01.
38
39
A material weakness is a condition in which the design or operation of one or more of the
internal control components does not reduce to a relatively low level the risk that
misstatements in amounts that could be material in relation to the general purpose financial
statements being audited may occur and not be detected within a timely period by employees
in the normal course of performing their assigned functions. Our consideration of internal
control over financial reporting would not necessarily disclose all such internal control matters
that might be reportable conditions and, accordingly, would not necessarily disclose all
reportable conditions that are also considered to be material weaknesses. However, we do
not believe the reportable condition described above to be a material weakness. We also
noted other matters involving internal control over financial reporting that we will report to the
County’s management in a separate letter that will be issued at a later date .
This report is intended solely for the information and use of the members of the Arizona State
Legislature, the Board of Supervisors, federal awarding agencies, and pass-through entities
and is not intended to be and should not be used by anyone other than these specified parties.
However, this report is a matter of public record and its distribution is not limited.
Debbie Davenport
Auditor General
May 23, 2002
2910 NORTH 44 th STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • (602) 553 -0333 • FAX (602) 553 -0051
DEBRA K. DAVENPORT, CPA
AUDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL WILLIAM THOMSON
DEPUTY AUDITOR GENERAL
Independent Auditors’ Report on Compliance with Requirements
Applicable to Each Major Program and on Internal Control over Compliance in
Accordance with OMB Circular A-133
Members of the Arizona State Legislature
The Board of Supervisors of
La Paz County, Arizona
Compliance
We have audited the compliance of La Paz County with the types of compliance requirements
described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance
Supplement that are applicable to each of its major federal programs for the year ended
June 30, 2001. The County’s major federal programs are identified in the Summary of
Auditors’ Results section of the accompanying Schedule of Findings and Questioned Costs.
Compliance with the requirements of laws, regulations, contracts, and grants applicable to
each of its major federal programs is the responsibility of the County’s management. Our
responsibility is to express an opinion on the County’s compliance based on our audit.
We conducted our audit of compliance in accordance with U.S. generally accepted auditing
standards; the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States; and OMB Circular A-133,
Audits of States, Local Governments, and Non-Profit Organizations. Those standards and
OMB Circular A-133 require that we 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 the County’s compliance with those
requirements and performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion. Our
audit does not provide a legal determination on the County’s compliance with those
requirements.
In our opinion, La Paz County complied, in all material respects, with the requirements referred
to above that are applicable to each of its major federal programs for the year ended
June 30, 2001. However, the results of our auditing procedures disclosed an instance of
noncompliance with those requirements that is required to be reported in accordance with
OMB Circular A-133 and is described in the accompanying Schedule of Findings and
Questioned Costs as item 01-101.
40
41
Internal Control over Compliance
The County’s management is responsible for establishing and maintaining effective internal
control over compliance with requirements of laws, regulations, contracts, and grants
applicable to federal programs. In planning and performing our audit, we considered the
County’s internal control over compliance with requirements that could have a direct and
material effect on a major federal program in order to determine our auditing procedures for
the purpose of expressing our opinion on compliance and to test and report on internal control
over compliance in accordance with OMB Circular A-133.
We noted a certain matter involving internal control over compliance and its operation that we
consider to be a reportable condition. Reportable conditions involve matters coming to our
attention relating to significant deficiencies in the design or operation of internal control over
compliance that, in our judgment, could adversely affect the County’s ability to administer a
major federal program in accordance with applicable requirements of laws, regulations,
contracts, and grants. The reportable condition is described in the accompanying Schedule of
Findings and Questioned Costs as item 01-101.
A material weakness is a condition in which the design or operation of one or more internal
control components does not reduce to a relatively low level the risk that noncompliance with
applicable requirements of laws, regulations, contracts, and grants that would be material in
relation to a major federal program being audited may occur and not be detected within a
timely period by employees in the normal course of performing their assigned functions. Our
consideration of internal control over compliance would not necessarily disclose all such
internal control matters that might be reportable conditions and, accordingly, would not
necessarily disclose all reportable conditions that are also considered to be material
weaknesses. However, we do not believe that the reportable condition described above is a
material weakness.
This report is intended solely for the information and use of the members of the Arizona State
Legislature, the Board of Supervisors, federal awarding agencies, and pass-through entities
and is not intended to be and should not be used by anyone other than these specified parties.
However, this report is a matter of public record and its distribution is not limited.
Debbie Davenport
Auditor General
May 23, 2002
42
LA PAZ COUNTY
Schedule of Findings and Questioned Costs
Year Ended June 30, 2001
Summary of Auditors’ Results
Financial Statements
Type of auditors’ report issued: Unqualified
Yes No
Material weakness identified in internal control over financial reporting? X
Reportable condition identified not considered to be a material weakness? X
Noncompliance material to the financial statements noted? X
Federal Awards
Material weakness identified in internal control over major programs? X
Reportable condition identified not considered to be a material weakness? X
Type of auditors’ report issued on compliance for major programs: Unqualified
Any audit findings disclosed that are required to be reported in accordance with Circular
A-133 (section .510[a])? X
Identification of major programs:
CFDA Number Name of Federal Program or Cluster
83.544 Public Assistance Grants
93.563 Child Support Enforcement
Dollar threshold used to distinguish between Type A and Type B programs: $300,000
Auditee qualified as low-risk auditee? X
Other Matters
Auditee's summary schedule of prior audit findings required to be reported in
accordance with Circular A-133 (section .315[b])? X
43
LA PAZ COUNTY
Schedule of Findings and Questioned Costs
Year Ended June 30, 2001
Financial Statement Findings
01-01
The County needs to establish adequate internal
controls to protect its information system from
unauthorized use, damage, loss, or modification
The County’s access, backup, and recovery controls did not adequately protect its information
system from unauthorized use, damage, loss, or modification. Specifically, the County has
not:
· Developed written procedures for physical access to the computer room or limit access to
the appropriate employees. Also, all County personnel have unrestricted access to the
local area network servers that are located in a building separate from management
information system personnel.
· Developed written procedures for logical access to applications or limited access to
appropriate personnel. In addition, all Treasurers’ Office personnel have access to both the
general ledger and the tax management software, and all Finance Department personnel
have access to the general ledger, accounts payable, payroll, and human resources
software.
· Provided adequate protection to prevent and detect computer viruses. Also, the County
has not installed an anti-virus protection package on the County’s computer system.
· Developed and documented a formal disaster recovery plan. Also, the County does not
have formal plans or agreements with vendors or other sites for interim processing in the
event of a disaster.
To maintain the integrity of the County’s data files and prevent manipulation of the operating
and application software, the County should adequately restrict access to its information
system. Physical access to the computer room should be restricted to operating personnel,
and application software should be restricted to essential personnel.
Also, to help ensure the continued operation of critical applications, the County should prepare
a formal disaster recovery plan. At a minimum, this plan should address the following:
· Backup data and program files
· Each employee’s duties and responsibilities
· Data recovery site location
· Recovery procedures for each critical system
· Provisions for regular system testing
44
LA PAZ COUNTY
Schedule of Findings and Questioned Costs
Year Ended June 30, 2001
· Formal contract arrangements with vendors to provide services in the event recovery is
needed, i ncluding a backup site facility
In addition, a copy of this plan should be stored at an off-site location.
Federal Award Findings and Questioned Costs
01-101
CFDA No.: 83.544 Public Assistance Grants
Federal Emergency Management Agency passed through Arizona Division of Emergency
Management
Award Year: October 21, 2000 through April 27, 2002
Award Number: 1347-DR-AZ-012-99012-00
Activities Allowed or Unallowed
Questioned Cost: $12,808
The La Paz County Public Works Department received excess reimbursements totaling
$12,808 relating to equipment rental costs charged to the program. Specifically, the costs of
renting equipment from outside contractors was charged as a direct cost to the program and
was also included on the worksheets used by the County to obtain reimbursement for the
internal use of County equipment. OMB Circular A-87, “Cost Principles for State and Local
and Indian Tribal Governments”, Attachment A, General Principles for Determining Allowable
Costs, Section C.2 and 44 Code of Federal Regulations (CFR) §13.22 requires program costs
to be necessary and reasonable for the administration of federal awards, reasonable in
amount, and chargeable in relation to the relative benefits received. To help ensure
compliance with OMB Circular A-87 and 44 CFR §13.22, the County should establish internal
control policies and procedures to ensure that only proper a nd reasonable costs are charged
to federal programs.
La Paz County Finance
1108 S. Joshua Avenue Office (928) 669-2247
Parker, Arizona 85344 Facsimile (928) 669-9709
June 25, 2002
Debra K. Davenport, CPA
Auditor General
2910 N. 44th Street, Suite 410
Phoenix, AZ 85018
Dear Ms Davenport:
The following corrective action plan has been prepared as required by U.S. Office of
Management and Budget Circular A-133. Specifically, we are providing you with the
names of the contact persons responsible for corrective action, the corrective action
planned, and the anticipated completion date for each audit finding included in the
current year’s schedule of findings and questioned costs.
Sincerely,
Ava Alcaida
Finance Director
La Paz County, Arizona
Corrective Action Plan
Year Ended June 30, 2001
Page 1
Financial Statement Findings
01-01 – Information System Internal Controls
Name of Contact Person: Ava Alcaida
Anticipated completion date: December 31, 2003
Effective June 24, 2002, La Paz County has restricted physical access to the computer
room to Board of Supervisor, Finance, and MIS staff only. The door to the computer
room will remain locked at all times, with access controlled and monitored by Finance
staff. Appropriate signage is in place.
La Paz County will develop written procedures for logical access to applications by the
completion date noted above. Currently, all Treasurers’ Office personnel have access
to both the Treasurer’s general ledger and tax management software, and all Finance
Department personnel have access to Finance’s general ledger, accounts payable, and
payroll software. Such access is necessary due to software design, cross training, and
the small size of both departments’ staff.
La Paz County installed virus protection software in July 2001.
La Paz County will develop and document a formal disaster recovery plan by the
completion date noted above. At a minimum, the plan will address the following:
• Backup data and program files
• Each employee’s duties and responsibilities
• Data recovery site location
• Recovery procedures for each critical system
• Provisions for regular system testing
• Formal contract arrangements with recovery service providers
• Offsite plan storage
Federal Award Findings and Questioned Costs
01-101 – Public Works Job Costing Internal Controls
Name of Contact Person: Ava Alcaida
Anticipated completion date: December 31, 2003
Finance personnel will work with Public Works personnel to develop tools and
procedures to use to reconcile job cost amounts to La Paz County’s general ledger.