Greenlee County single audit reporting package 2003 |
Previous | 1 of 14 | Next |
|
|
Small
Medium
Large
Extra Large
Full-size
Full-size archival image
|
This page
All
|
GREENLEE COUNTY, ARIZONA Single Audit Reporting Package June 30, 2003 GREENLEE COUNTY, ARIZONA Single Audit Reporting Package June 30, 2003 i Table of Contents Page Financial Statement Section Independent Auditors' Report………………………………………………………... 1 Combined Balance Sheet—All Fund Types and Account Groups….……………. 4 Combined Statement of Revenues, Expenditures, and Changes in Fund Balances All Governmental Fund Types…………………………………….…………………. 5 Combined Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual—General and Special Revenue Fund Types…….. 6 Combined Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual—Debt Service Fund Type………………….………. 9 Statement of Net Assets—Investment Trust Fund………………...………………. 10 Statement of Changes in Net Assets—Investment Trust Fund……………..……. 11 Notes to Financial Statements……………………………………………….………. 12 Supplementary Information Schedule of Expenditures of Federal Awards………………………….………. 29 Notes to Schedule of Expenditures of Federal Awards……………….………. 30 GREENLEE COUNTY, ARIZONA Single Audit Reporting Package June 30, 2003 ii (Continued) Report on Compliance with Requirements Applicable to Each Major Program and on Internal Control over Compliance in Accordance with OMB Circular A- 133……………………………………………………………………………………… 35 Schedule of Findings and Questioned Costs Summary of Auditors’ Results………………………………………………….… 37 Financial Statement Findings…………………………………………………..... 38 Federal Award Findings and Questioned Costs...……………………………... 38 Single AuditSection Report on Compliance and on Internal Control over Financial Reporting Based on and Audit of General Purpose Financial Statements Performed in Accordance with Government Auditing Standards...………..…………………….. 33 Independent Auditors’ Report 1 The Auditor General of the State of Arizona The Board of Supervisors of Greenlee County, Arizona We have audited the accompanying general purpose financial statements of Greenlee County, Arizona, as of and for the year ended June 30, 2003, 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 financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the general pupose 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 postion of Greenlee County, Arizona, as of June 30, 2003, and the results of its operations, and the net assets and changes in net assets of its investment trust fund 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 Greenlee County, Arizona 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. Greenlee County, Arizona March 26, 2004 2 In accordance with Government Auditing Standards, we have also issued our report dated March 26, 2004, 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. CHRISTENSEN, GALE & MCLAREN, LLP March 26, 2004 3 THIS PAGE LEFT BLANK INTENTIONALLY GREENLEE COUNTY, ARIZONA Combined Balance Sheet — All Fund Types and Account Groups June 30, 2003 4 See accompanying notes to financial statements. Fiduciary Governmental Fund Types Fund Types Account Groups Special Debt Trust and General General Long- Assets General Revenue Service Agency Fixed Assets Term Debt Cash and cash equivalents $ - $ 38,054 $ - $ - $ $ Cash and investments held by treasurer 534,173 1,895,391 - 4,668,293 Cash and investments held by trustee 276,339 Receivables (net of allowances): Property taxes 10,402 11,503 - Due from other governments 224,808 76,539 - Fixed assets: Land and improvements 1,324,908 Buildings and improvements 5,886,216 Machinery and equipment 6,403,912 Amount available in debt service fund 276,339 Amount to be provided for retirement of general long-term debt 2,387,029 Total assets 7 69,383 2,021,487 2 76,339 4 ,668,293 13,615,036 2,663,368 Liabilities and Fund Equity Accounts payable 1 03,901 43,989 - - - - Compensated absences payable 5 4,781 - 144,276 Deposits held for others 2 8,677 Obligations under capital leases 437,908 Landfill closure and postclosure care costs payable 626,184 Certificates of participation payable 1,455,000 Deferred revenues 2 42,430 8,720 Total liabilities 4 01,112 52,709 - 2 8,677 - 2,663,368 Fund equity: Investment in general fixed assets 13,615,036 Fund balances: Reserved for investment trust participants 4,639,616 Unreserved 3 68,271 1,968,778 Unreserved - designated for debt service 276,339 Total fund equity 3 68,271 1,968,778 2 76,339 4 ,639,616 13,615,036 - Total liabilities and fund equity $ 769,383 $ 2,021,487 $ 276,339 $ 4 ,668,293 $ 13,615,036 $ 2,663,368 GREENLEE COUNTY, ARIZONA Combined Statement of Revenues, Expenditures, and Changes in Fund Balances All Government Fund Types Year Ended June 30, 2003 5 See accompanying notes to financial statements. Governmental Fund Types Special Debt General Revenue Service Revenues: Taxes $ 1,965,307 $ 1,136,190 Intergovernmental 3,011,059 3,090,401 Charges for services 97,789 435,581 Fines and forfeits 57,405 18,102 Investment income - 19,222 1 ,035 Miscellaneous 84,952 47,953 - Total revenues 5,216,512 4,747,449 1,035 Expenditures: Current: General government 2,983,822 353,030 Public safety 1,697,032 890,366 Highways and streets - 1,074,131 Sanitation 320,959 213,751 Health 208,949 831,048 Welfare 416,310 - Culture and recreation 25,867 108,894 Education 153,795 161,224 Capital outlay 177,259 178,928 Debt service: Principal retirement - - 2 55,000 Interest and fiscal charges - - 86,285 Total expenditures 5,983,993 3,811,372 341,285 Excess (deficiency) of revenues over (under) expenditures (767,481) 936,077 (340,250) Other financing sources (uses): Operating transfers in 1,337,967 1,074,331 338,196 Operating transfers out (963,884) (1,786,610) - Capital lease proceeds Total other financing sources (uses) 374,083 (712,279) 338,196 Excess (deficiency) of revenues and other sources over (under) expenditures and other uses (393,398) 223,798 (2,054) Fund balances, July 1, 2002 761,669 1,744,980 278,393 Fund balances, June 30, 2003 $ 368,271 $ 1,968,778 $ 276,339 GREENLEE COUNTY, ARIZONA Combined Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual—General and Special Revenue Fund Types Year Ended June 30, 2003 6 See accompanying notes to financial statements. General Fund Special Revenue Funds Budget Actual Variance Budget Actual Variance Revenues: Taxes $ 1,816,074 $ 1,965,307 $ 149,233 1,133,570 1,136,190 2,620 Intergovernmental 2,690,056 3,011,059 3 21,003 3,385,513 3,090,401 (295,112) Charges for services 106,600 97,789 (8,811) 487,326 435,581 (51,745) Fines and forfeits 46,000 57,405 1 1,405 1,000 18,102 17,102 Investment income - - - 10,220 19,222 9,002 Miscellaneous 190,000 84,952 (105,048) 21,713 47,953 26,240 Total revenues 4,848,730 5,216,512 3 67,782 5,039,342 4,747,449 (291,893) Expenditures: General government: Board of Supervisors 245,293 241,501 3 ,792 180,490 181,222 (732) Airport 1,880 2,317 ( 437) 11,873 114 11,759 Assessor 186,402 178,348 8 ,054 3,684 - 3,684 Attorney 204,271 199,407 4 ,864 254,960 123,778 131,182 Contingency 150,780 42,973 1 07,807 - - - Constable #1 23,564 23,097 4 67 - - - Constable #2 17,721 17,116 6 05 - - - County administration 169,321 150,010 1 9,311 - - - Data processing 177,064 189,927 (12,863) - - - Elections 60,000 50,327 9 ,673 - - - General services 745,681 721,429 2 4,252 - - - GIS program 9,500 (21,422) 3 0,922 - - - Ground and maintenance 167,674 194,270 (26,596) - - - Justice of the Peace No. 1 104,636 97,287 7 ,349 1,986 4 5 1,941 Justice of the Peace No. 2 102,046 99,474 2 ,572 3,639 155 3,484 Planning and zoning 2,000 (90) 2 ,090 - - - Recorder 130,486 126,902 3 ,584 5,329 3,522 1,807 Superior court 413,670 478,487 (64,817) 59,094 44,194 14,900 Treasurer 154,430 145,772 8 ,658 1,187 - 1,187 Voter registration 11,200 6,887 4 ,313 - - - Public fiduciary 38,633 39,803 (1,170) Total general government 3,116,252 2,983,822 1 32,430 522,242 353,030 169,212 (continued) GREENLEE COUNTY, ARIZONA Combined Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual—General and Special Revenue Fund Types Year Ended June 30, 2003 7 See accompanying notes to financial statements. (continued) General Fund Special Revenue Funds Budget Actual Variance Budget Actual Variance Public Safety: Bioterrorism - - - - 76,429 (76,429) DARE program - - - - 7 8 (78) Emergency services 23,636 27,732 (4,096) 1,525 - 1,525 Jail enhancement - - - - - - Probation and juvenile facility - - - 898,716 656,817 241,899 Sheriff 1,620,681 1,669,300 (48,619) 146,083 157,042 (10,959) Total public safety 1,644,317 1,697,032 (52,715) 1,046,324 890,366 155,958 Highways and streets: Roads - - - 1,156,648 1,074,131 82,517 Total highways and streets - - - 1,156,648 1,074,131 82,517 Sanitation: Landfill - 320,959 (320,959) 448,699 213,751 234,948 Total sanitation - 320,959 (320,959) 448,699 213,751 234,948 Health: Ambulance service 113,100 146,324 (33,224) - - - Emergency food and shelter - - - 63,007 - 63,007 Health services - - - 954,067 61,232 892,835 Rabies control 58,200 62,625 (4,425) - 769,816 (769,816) Total health 171,300 208,949 (37,649) 1,017,074 831,048 186,026 Welfare: ALTCS payments 410,739 416,310 (5,571) - - - Total welfare 410,739 416,310 (5,571) - - - Culture and recreation: Fair and racing association - - - 91,702 108,894 (17,192) Parks and recreation 23,000 25,867 (2,867) - - - Total culture and recreation 23,000 25,867 (2,867) 91,702 108,894 (17,192) Education: Employment and training - - - 257,586 129,970 127,616 School superintendent 142,875 135,794 7 ,081 45,742 24,327 21,415 (continued) GREENLEE COUNTY, ARIZONA Combined Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual—General and Special Revenue Fund Types Year Ended June 30, 2003 8 See accompanying notes to financial statements. (concluded) General Fund Special Revenue Funds Budget Actual Variance Budget Actual Variance U of A extension services 13,000 18,001 (5,001) 8,621 6,927 1,694 Total education 155,875 153,795 2 ,080 311,949 161,224 150,725 Economic development: Economic development - - - 10,156 - 10,156 Total economic development - - - 10,156 - 10,156 Capital outlay: 309,083 177,259 1 31,824 1,081,111 178,928 902,183 Total expenditures 5,830,566 5,983,993 (153,427) 5,685,905 3,811,372 1,874,533 Excess (deficiency) of revenues over (under) expenditures (981,836) (767,481) 2 14,355 (646,563) 936,077 1,582,640 Other financing sources (uses) Operating transfers in 1,298,885 1,337,967 3 9,082 960,093 1,074,331 114,238 Operating transfers out (1,067,049) (963,884) 1 03,165 (1,533,033) (1,786,610) (253,577) Capital lease proceeds Total other financing sources (uses) 231,836 374,083 1 42,247 (572,940) (712,279) (139,339) Excess (deficiency) of revenues and other sources over (under) expenditures and other uses (750,000) (393,398) 3 56,602 (1,219,503) 223,798 1,443,301 Fund balances, July 1, 2002 - 761,669 7 61,669 1,744,980 1,744,980 Residual equity transfers, net 750,000 - (750,000) 1,219,503 - (1,219,503) Fund balances, June 30, 2003 $ - $ 368,271 $ 368,271 $ - $ 1,968,778 $ 1,968,778 GREENLEE COUNTY, ARIZONA Combined Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual—Deby Service Fund Type Year Ended June 30, 2003 9 See accompanying notes to financial statements. Budget Actual Variance Revenues: Investment Income $ - $ 1,035 $ 1,035 Total Revenues - 1,035 1,035 Expenditures: Principal 341,204 255,000 86,204 Interest and fiscal charges - 86,285 (86,285) Total Expenditures 341,204 341,285 (81) Excess (deficiency) of revenues over (under) expenditures ( 341,204) (340,250) 954 Other financing sources (uses): Operating transfers in 341,204 338,196 (3,008) Total other financing sources (uses) 341,204 338,196 (3,008) Excess of (deficiency) revenues and other sources over (under) expenditures and other uses - (2,054) (2,054) Fund balances, July 1, 2002 - 278,393 278,393 Fund balances, June 30, 2003 $ - $ 276,339 $ 276,339 GREENLEE COUNTY, ARIZONA Statement of Fiduciary Net Assets Fiduciary Funds June 30, 2003 10 See accompanying notes to financial statements. Investment Trust Agency Assets Fund Fund Cash and cash equivalents $ 4,639,616 $ 28,677 Total assets 4,639,616 28,677 Liabilities Deposits held for others - $ 28,677 Net assets held in trust $ 4,639,616 GREENLEE COUNTY, ARIZONA Statement of Changes in Fiduciary Net Assets Fiduciary Funds Year Ended June 30, 2003 11 See accompanying notes to financial statements. Investment Trust Fund Additions: Contributions from participants $ 13,774,472 Investment income 66,343 Total additions 13,840,815 Deductions: Distributions to participants 14,394,819 Total deductions 14,394,819 Net decrease in net assets (554,004) Net assets held in trust: July 1, 2002 5,193,620 June 30, 2003 $ 4,639,616 GREENLEE COUNTY, ARIZONA Notes to Financial Statements June 30, 2003 12 Note 1 - Summary of Significant Accounting Policies The accounting policies of Greenlee County, Arizona conform to U.S. 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, highway and street maintenance and construction, sanitation, health, welfare, culture and recreation, and education. 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. The blended component unit discussed below has a June 30 year-end. The County has no discreetly presented component units. Blended Component Unit – The Greenlee County Municipal Property Corporation was formed to finance the renovation, restruction, construction and equipping of the County’s old courthouse building. The corporation issued certificates of participation that evidence undivided proportionate interests in rent payments to be made under a lease agreement, with an option to purchase, between Greenlee County and the corporation. Although the corporation is a legally separate entity from the County, the Board of Supervisors of the County serves as the Board of Directors of the corporation. Consequently, the financial data for the corporation are blended with the data of the primary government and reported in the Debt Service Fund and the General Fixed Assets and General Long-Term Debt Account Groups. Separate financial statements of the blended compoment unit are not prepared. 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. GREENLEE COUNTY, ARIZONA Notes to Financial Statements June 30, 2003 13 Note 1 - Summary of Significant Accounting Policies (continued) B. Fund Accounting (continued) 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 that are legally restricted to expenditures for specified purposes. The Debt Service Fund accounts for resources accumulated and used for the payment of general long-term debt principal, interest, and related costs. 2. Fiduciary Funds account for assets the County holds on behalf of others, and include the following fund types. The Investment Trust Fund accounts 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. The General Long-Term Debt Account Group accounts for all of the County’s long-term obligations. GREENLEE COUNTY, ARIZONA Notes to Financial Statements June 30, 2003 14 Note 1 - Summary of Significant Accounting Policies (continued) 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; 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. The financial statements of the Investment Trust Fund 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 Debt Service Funds. 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. GREENLEE COUNTY, ARIZONA Notes to Financial Statements June 30, 2003 15 Note 1 - Summary of Significant Accounting Policies (continued) D. Budgeting and Budgetary Control (continued) 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 employed as an extension of formal budgetary control. Encumbrances outstanding at year-end for goods or services that were not received before fiscal year-end are canceled. However, the County may draw warrants against encumbered amounts for goods or services received but unpaid at June 30 for 60 days immediately following the close of the fiscal year. After 60 days the remaining encumbered balances lapse. E. Cash and Investments Nonparticipating interest-earning investment contracts are stated at cost. Money market investments and participating interest-earning investment contracts with a remaining maturity of one 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, 2003, 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, drainage, and lighting systems, are not capitalized. GREENLEE COUNTY, ARIZONA Notes to Financial Statements June 30, 2003 16 Note 1 - Summary of Significant Accounting Policies (continued) H. Compensated Absences Compensated absences consist of vacation 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. Because sick leave benefits do not vest with employees, a liability for sick leave benefits is not accrued in the financial statements. A liability of $54,781 for vested compensated absences of the Government Funds is recorded in the General Fund since it is expected to be paid from current financial resources. The long-term balance of $144,276 is shown as a liability in the General Long- Term Debt Account Group in the balance sheet at June 30, 2003. 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. Reimbursement grants are recorded as intergovernmental receivables and revenues when the related expenditures are incurred. Reimbursements not received within 60 days subsequent to fiscal year-end are reported as deferred revenues. GREENLEE COUNTY, ARIZONA Notes to Financial Statements June 30, 2003 17 Note 2 - Stewardship, Compliance and Accountability Nine General Fund departments, three Special Revenue Funds, and the Debt Service Fund had an excess of actual expenditures over appropriations as reported on the Combined Statement of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual – General and Special Revenue Fund Types and the Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – Debt Service Fund Type. Generally, the excesses were the result of unexpected expenditures in those departments during the year. 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. 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 13). Those monies are pooled with County monies for investment purposes. Deposits—At June 30, 2003, the investment pool’s deposits were entirely covered by federal depository indurance or by collateral held by the County’s custodial bank in the County’s name. Other Deposits—The County’s nonpooled deposits at June 30, 2003, were entirely covered by federal depository insurance or by collateral held by the County’s custodial bank in the County’s name. Investments—At June 30, 2003, the County’s nonpooled investments consisted of the following. Fair Value Money Market Mutual Fund $ 276,339 Total $ 276,339 GREENLEE COUNTY, ARIZONA Notes to Financial Statements June 30, 2003 18 Note 3 - Deposits and Investments (continued) The nonpooled investments at June 30, 2003, are categorized below to give an indication of the level of risk the County assumed at year-end. Catergory 1 - - insured or registered in the County’s name, or securities held by the County or its agent in the County’s name. Catergory 2 - - uninsured or unregistered with securities held by the counterparty’s trust department or agent in the County’s name. Catergory 3 - - uninsured or unregistered with securities held by the counterparty, or by its trust department or agent but not in the County’s name. Category Fair 1 2 3 Value Money Market Mutual Fund - - $ 276,339 $ 276,339 Total - - $ 276,339 $ 276,339 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 $ 7,750 $ - $ 7,750 Carrying amount of deposits 7,090,107 38,054 7,128,161 Reported amount of investments 0 276,339 276,339 Total $ 7,097,857 $ 314,393 $ 7,412,250 Combined Balance Sheet: Cash and cash equivalents $ 38,054 Cash and investments held by County Treasurer 7,097,857 Cash and investments held by trustee 276,339 Total $ 7,412,250 GREENLEE COUNTY, ARIZONA Notes to Financial Statements June 30, 2003 19 Note 4 - Property Taxes Receivable The County levies real property and personal 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 levies 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. Property taxes receivable consist of uncollected property taxes as determined from the records of the County Treasurer's Office. At June 30, 2003, the uncollected property taxes and related allowances for uncollectibles were as follows: Fiscal Year General Fund Special Revenue Funds 2003 $ 10,221 $ 11,110 Prior 2,888 3,618 13,109 14,728 Less allowances for uncollectibles 2,707 3,225 Net total $ 10,402 $ 11,503 That portion of property taxes receivable not collected within 60 days after June 30, 2003, has been deferred and, consequently, is not included in current-year revenues. Note 5 - Due from Other Governments Amounts due from other governments at June 30, 2003, consisted of the following: Governmental Fund Types Due From: General Special Revenue Arizona State Treasurer: State Sales Tax $ 147,964 $ - Auto Lieu Tax 18,584 - County Excise Tax 58,260 - Highway User Revenues - 76,539 Total $ 224,808 $ 76,539 GREENLEE COUNTY, ARIZONA Notes to Financial Statements June 30, 2003 20 Note 6 - Changes in General Fixed Assets A summary of the changes in general fixed assets follows: Balance July 1, 2002 Additions Deletions Balance June 30, 2003 Land and improvements $ 1,324,908 $ - $ - $ 1,324,908 Buildings and improvements 5,816,671 69,545 5,886,216 Machinery and equipment 6,115,415 3 360,951 72,454 6,403,912 Construction in progress 69,545 69,545 0 Total $ 13,326,539 $ 430,496 $ 141,999 $ 13,615,036 Note 7 - Certificates of Participation Payable The County issued $2,700,000 in certificates of participation with an interest rate of 4.60% - 5.40% to renovate its old courthouse. The certificates of participation are generally callable with interest payable semiannually. Principal and interest requirements at June 30, 2003, were as follows: Description Interest Rates Maturities Outstanding Principal July 1, 2002 Retirements Outstanding Principal June 30, 2003 Greenlee County Property Corporation 4.85% 5.40% 2003-2007 $ 1,710,000 $ 255,000 $ 1,455,000 Total $ 1,710,000 $ 255,000 $ 1,455,000 Certificates of participation debt service requirements to maturity, are as follows: Year ending June 30, Principal Interest Total 2004 $ 265,000 $ 73,328 $ 338,328 2005 285,000 59,555 344,555 2006 305,000 44,473 349,473 2007 600,000 28,040 628,040 Total $ 1,455,000 $ 205,396 $ 1,660,396 GREENLEE COUNTY, ARIZONA Notes to Financial Statements June 30, 2003 21 Note 8 - Obligations Under Leases Capital Leases—The County has acquired machinery and equipment under the provisions of various long-term lease agreements classified as capital leases for accounting purposes because they provide for a bargain purchase option or a transfer of ownership by the end of the lease term. Accordingly, the assets have been capitalized and a summary of assets leased under capital leases as of June 30, 2003, as follows: General Fixed Assets Machinery and equipment $ 1,208,229 The future minimum lease payments under the capital leases, together with the present value of the net minimum lease payments as of June 30, 2003, were as follows: General Long-Term Debt Account Group Year ending June 30, 2004 $ 189,582 2005 2006 2007 130,864 108,080 45,034 Total minimum lease payments 473,560 Less amount representing interest 35,652 Present value of net minimum lease payments $ 437,908 Note 9 - Landfill Closure and Postclosure Care Costs State and federal laws and regulations require the County to place a final cover on its two remaining landfill sites when it stops accepting waste and to perform certain maintenance and monitoring functions at the site for 30 years after closure. Athough, closure and postclosure care costs will not be paid until near or after the date that the landfill stops accepting waste, the County reports a portion of these closure and postclosure care costs as an addition to the General Long-Term Debt Account Group in each period based on landfill capacity used as of each balance sheet date. GREENLEE COUNTY, ARIZONA Notes to Financial Statements June 30, 2003 22 Note 9 - Landfill Closure and Postclosure Care Costs (continued) The $626,184 reported as landfill closure and postclosure care liability at June 30, 2003, represents the cumulative amount reported to date based on the use of approximately 83 percent of the estimated capacity of the landfills. The County will recognize the remaining estimated cost of closure and postclosure care of $129,404 as the remaining estimated capacity is filled. These amounts are based on what it would cost to perform all closure and postclosure care in fiscal year 2003. The County expects to close the Loma Linda Landgill in the year 2010 and the Blue Landfill in the year 2018, and the actual cost may be higher due to inflation, changes in technology, or changes in regulations. According to state and federal laws and regulations, the County must comply with the local government financial test requirements that assure the County can meet the costs of landfill closure, postclosure, and corrective action when needed. The County is in compliance with these requirements. Note 10 - 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 thre 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. 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 $7,500 per occurrence for property claims and $1,500 per occurrence for 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 three years after becoming a member; however, it may withdraw after the initial three-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. GREENLEE COUNTY, ARIZONA Notes to Financial Statements June 30, 2003 23 Note 10 - Risk Management (continued) 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 six 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. 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. The County purchases commercial insurance for other miscellaneous risks of loss, Settled claims have not exceeded this commercial coverage in ay of the past three fiscal years. Note 11 - Changes in Long-Term Liabilities A summary of changes in the liabilities reported in the General Long-Term Debt Account Group were as follows: Balance July 1, 2002 Additions Reductions Balance June 30, 2003 Compensated balances Obligations under capital Leases Landfill closure and postclosure care costs payable $ 212,370 680,952 560,833 $ 250,352 65,351 $ 318,446 243,044 $ 144,276 437,908 626,184 Certificates of participation payable 1,710,000 255,000 1,455,000 Total $ 3,164,155 $ 315,703 $ 816,490 $ 2,663,368 Note 12 - Retirement Plans Plan Descriptions—The County contributes to the three plans, two of which are described below. The Elected Officials Retirement Plan and the Attorney Investigators’ participation in the Public Safety Personnel Retirement System are not described due to their relative insignificance to the County’s financial statements. Benefits are established by state statute and generally provide retirement, death, long-term disability, survivor, and health insurance premium benefits. GREENLEE COUNTY, ARIZONA Notes to Financial Statements June 30, 2003 24 Note 12 - Retirement Plans (continued) The Arizona State Retirement System (ASRS) administers a cost-sharing multiple-employer defined benefit pension plan that covers general employees of the County. The ASRS is governed by the Arizona State Retirement System Board according to the provisions of A.R.S. Title 38, Chapter 5, Article 2. 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. Each plan issues a publicly available annual financial report that includes its financial statements and required supplementary information. A report may be obtained by writing or calling the applicable plan. ASRS PSPRS 3300 N. Central Ave. P.O. Box 33910 Phoenix, AZ 85067-3910 1020 E. Missouri Ave. Phoenix, AZ 85014 (602) 240-2000 or (800) 621-3778 (602) 255-5575 Funding Policy—The Arizona State Legislature establishes and may amend active plan members’ and the County’s contribution rates. Cost-sharing plan—For the year ended June 30, 2003, active ASRS members and the County were each required by statute to contribute at the actuarially determined rate of 2.49 percent (2.00 percent retirement and 0.49 percent long-term disability) of the members’ annual covered payroll. The County’s contributions to ASRS for the years ended June 30, 2003, 2002, and 2001 were $56,642, $50,897 and $68,885, respectively, which were equal to the required contributions for the year. Agent plans—For the year ended June 30, 2003, 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 4.79 percent. GREENLEE COUNTY, ARIZONA Notes to Financial Statements June 30, 2003 25 Note 12 - Retirement Plans (continued) Annual Pension Cost—The County’s pension cost for the agent plan for the year ended June 30, 2003, and related information follows. PSPRS Contribution rates: County 4.79% Plan members 7.65% Annual pension cost $ 41,061 Contributions made $ 41,061 The current-year annual required contributions for the PSPRS were determined as part of its June 30, 2001, actuarial valuation 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, 2001, was 20 years. Trend Information—Annual pension cost information for the current and two preceding years follows for the agent plan. Plan Year Ended June 30 Annual Pension Cost Percentage of APC Contributed Net Pension Obligation PSPRS 2003 2002 2001 $ 41,061 28,339 34,073 100% 100 100 $ 0 0 0 GREENLEE COUNTY, ARIZONA Notes to Financial Statements June 30, 2003 26 Note 12 - Retirement Plans (continued) 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 Excess (a-b) Funded Ratio (a/b) Annual Covered Payroll (c) Unfunded Liability as Percentag e of Covered Payroll ([a-b]/c) 6/30/03 6/30/02 6/30/01 $ 2,124,391 2,051,947 2,063,588 $ 1,675,274 1,584,623 1,346,809 $ 449,117 467,324 716,779 126.8% 129.5 153.2 $ 432,413 412,645 419,931 - - - Note 13 - 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. Throughout the fiscal year the County Treasurer invests idle monies in mortgage backed government agency securities in thirty day intervals with interest rates approximately 1.66%. At June 30, 2003 there were no investments outstanding. GREENLEE COUNTY, ARIZONA Notes to Financial Statements June 30, 2003 27 Note 13 - County Treasurer’s Investment Pool (continued) A condensed statement of the investment pool’s net assets and changes in net assets follows. Statement of Net Assets Assets $ 7,097,857 Net assets $ 7,097,857 Net assets held in trust for: Internal participants $ 2,458,241 External participants 4,639,616 Total net assets held in trust $ 7,097,857 Statement of Changes in Net Assets Total additions $ 23,587,183 Total deductions 23,791,135 Net increase (203,952) Net assets held in trust: July 1, 2002 7,301,809 June 30, 2003 $ 7,097,857 Note 14 – Contingent Liabilities Litigation Claims – At June 30, 2003,there were several claims and lawsuits pending against the County, the ultimate outcome of which is unpredictable. Consequently, no provision for any liability has been made. Note 15– Implementation of GASB Statement No. 34 Beginning with fiscal year 2004, the County will prepare its external financial reports following the requirements of GASB Statement No. 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments. Implementing this standard will significantly change the accounting principles and reporting format the County uses in future financial reports. 28 Supplementary Information GREENLEE COUNTY, ARIZONA Schedule of Expenditures of Federal Awards Year Ended June 30, 2003 29 Pass- Through Federal Grantor/Pass-Through CFDA Grantor's Grantor/Program Title Number Number Expenditures U.S. DEPARTMENT OF AGRICULTURE Direct program: Forest Service Drug Eradication 10.UNKNOWN N/A 9,264 Passed through the Arizona Department of Health Services Special Supplemental Food Program for Women, Infants and Children 10.557 76-1093 4 1,561 Passed through Arizona State Governor's Office Schools and Roads - Grants to States 10.666 NONE 531,178 Total U.S. Department of Agriculture 582,003 U.S. DEPARTMENT OF THE INTERIOR Direct program: Payments in Lieu of Taxes 15.226 N/A 5 30,056 Passed through the Arizona State Treasurer Taylor Grazing Act 15.UNKNOWN N/A 2 5,000 Total U.S. Department of Interior 5 55,056 U.S. DEPARTMENT OF JUSTICE Passed through the Arizona Criminal Justice Commission Byrne Formula Grant Program 16.579 AC-040-01 3,000 Passed through the State of Arizona Department of Emergency and Military Affairs Equipment Grant Program 16.007 NONE 7,000 Total U.S. Department of Justice 10,000 U.S. DEPARTMENT OF LABOR Passed through the Arizona Department of Economic Security Workforce Investment Act - Adult 17.255 E5701009 131,928 U.S. DEPARTMENT OF TRANSPORTATION Direct program: Airport Improvement Program 20.106 N/A 3,691 FEDERAL EMERGENCY MANAGEMENT AGENCY Passed through the United Way of Arizona Emergency Management-State and Local Assistance 83.534 NONE 7,088 U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES Passed through the Arizona Department of Health Services Preparedness & Response for Bio-Terroism 93.283 N/A 1 23,679 Wellwoman Healthcheck Program 93.919 23-3013 6 9,580 Preventive Health and Health Services Block Grant 93.991 30-4062 9,999 Total U.S. Department of Health and Human Services 203,258 TOTAL EXPENDITURES OF FEDERAL AWARDS $ 1,493,024 GREENLEE COUNTY, ARIZONA Notes to Schedule of Expenditures of Federal Awards Year Ended June 30, 2003 30 Note 1 - Basis of Accounting The accompanying schedule of expenditures of federal awards includes the federal grant activity of Greenlee 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) Numbers The program titles and CFDA numbers were obtained from the federal or pass-through grantor or the 2003 Catalog of Federal Domestic Assistance. When no CFDA number had been assigned to a program, and when there was no federal contract number, the two-digit federal agency identifier, a period, and the word “unknown” was used. Note 3 - Subrecipients In fiscal year 2003, the County did not pass-through any federal domestic assistance received to any subrecipients. 31 SINGLE AUDIT SECTION 32 THIS PAGE LEFT BLANK INTENTIONALLY 33 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 The Auditor General of the State of Arizona The Board of Supervisors of Greenlee County, Arizona We have audited the general purpose financial statements of Greenlee County, Arizona as of and for the year ended June 30, 2003, and have issued our report thereon dated March 26, 2004. 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. 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. Our consideration of internal control over financial reporting would not necessarily disclose all such internal control matters that might be material weaknesses. Greenlee County, Arizona Page Two March 26, 2004 34 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 would 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. We noted no matters involving internal control over financial reporting and its operation that we consider to be material weaknesses. This report is intended solely for the information and use of the members of the Arizona State Legislature, the Auditor General of the State of Arizona, the County’s Board of Supervisors, federal awarding agencies, and pass-through entities. It 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. CHRISTENSEN, GALE & MCLAREN, LLP March 26, 2004 35 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 The Auditor General of the State of Arizona The Board of Supervisors of Greenlee County, Arizona Compliance We have audited the compliance of Greenlee County, Arizona 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, 2003. 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, Greenlee County, Arizona 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, 2003. Greenlee County, Arizona Page Two March 26, 2004 36 Internal Control Over Compliance The County’s management is responsible for establishing and maintaining effective internal control over compliance with the 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. Our consideration of internal control over compliance would not necessarily disclose all such internal control matters that might be material weaknesses. 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 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. We noted no matters involving internal control over compliance and its operations that we consider to be material weaknesses. This report is intended solely for the information and use of the members of the Arizona State Legislature, Auditor General of the State of Arizona, the County’s Board of Supervisors, federal awarding agencies, and pass-through entities. It 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. CHRISTENSEN, GALE & MCLAREN, LLP March 26, 2004 GREENLEE COUNTY, ARIZONA Schedule of Findings and Questioned Costs Year Ended June 30, 2003 37 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 conditions identified not considered to be material weaknesses? X (None reported) Noncompliance material to the financial statements noted? X Federal Awards Material weakness identified in internal control over major programs? X Reportable conditions identified not considered to be material weaknesses? X (None reported) Type of auditor’s 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 15.226 Payments in Lieu of Taxes 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 GREENLEE COUNTY, ARIZONA Schedule of Findings and Questioned Costs Year Ended June 30, 2003 38 Financial Statement Findings We noted no reportable conditions, material weaknesses, or instances of noncompliance related to the general purpose financial statements that are required to be reported in accordance with Government Auditing Standards. Federal Award Findings and Questioned Costs We noted no reportable conditions, material weaknesses, or instances of noncompliance related to the audit of major programs that are required to be reported by OMB Circular A-133.
Object Description
TITLE | Greenlee County single audit reporting package year ended... |
CREATOR | Office of the Auditor General |
SUBJECT | Finance, Public--Arizona--Greenlee County--Auditing |
Browse Topic |
Government and politics |
DESCRIPTION | This title contains one or more publications |
Language | English |
Publisher | Office of the Auditor General |
TYPE |
Text |
Material Collection | State Documents |
Source Identifier | LG 6.3:A 82 G 63 |
Location | o849972385 |
REPOSITORY | Arizona State Library, Archives and Public Records--Law and Research Library |
Description
TITLE | Greenlee County single audit reporting package 2003 |
DESCRIPTION | 41 pages (PDF version). File size: 132 KB |
TYPE |
Text |
RIGHTS MANAGEMENT | Copyright to this resource is held by the creating agency and is provided here for educational purposes only. It may not be downloaded, reproduced or distributed in any format without written permission of the creating agency. Any attempt to circumvent the access controls placed on this file is a violation of United States and international copyright laws, and is subject to criminal prosecution. |
DATE ORIGINAL | 2003 |
Time Period |
2000s (2000-2009) |
ORIGINAL FORMAT | Born Digital |
Source Identifier | LG 6.3:A 82 G 63/ 2003 |
Location | o849972385 |
DIGITAL IDENTIFIER | Greenlee_County_June_30_2003_Single_Audit_Reporting_Package.pdf |
DIGITAL FORMAT | PDF (Portable Document Format) |
REPOSITORY | Arizona State Library, Archives and Public Records--Law and Research Library. |
File Size | 134357 Bytes |
Full Text | GREENLEE COUNTY, ARIZONA Single Audit Reporting Package June 30, 2003 GREENLEE COUNTY, ARIZONA Single Audit Reporting Package June 30, 2003 i Table of Contents Page Financial Statement Section Independent Auditors' Report………………………………………………………... 1 Combined Balance Sheet—All Fund Types and Account Groups….……………. 4 Combined Statement of Revenues, Expenditures, and Changes in Fund Balances All Governmental Fund Types…………………………………….…………………. 5 Combined Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual—General and Special Revenue Fund Types…….. 6 Combined Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual—Debt Service Fund Type………………….………. 9 Statement of Net Assets—Investment Trust Fund………………...………………. 10 Statement of Changes in Net Assets—Investment Trust Fund……………..……. 11 Notes to Financial Statements……………………………………………….………. 12 Supplementary Information Schedule of Expenditures of Federal Awards………………………….………. 29 Notes to Schedule of Expenditures of Federal Awards……………….………. 30 GREENLEE COUNTY, ARIZONA Single Audit Reporting Package June 30, 2003 ii (Continued) Report on Compliance with Requirements Applicable to Each Major Program and on Internal Control over Compliance in Accordance with OMB Circular A- 133……………………………………………………………………………………… 35 Schedule of Findings and Questioned Costs Summary of Auditors’ Results………………………………………………….… 37 Financial Statement Findings…………………………………………………..... 38 Federal Award Findings and Questioned Costs...……………………………... 38 Single AuditSection Report on Compliance and on Internal Control over Financial Reporting Based on and Audit of General Purpose Financial Statements Performed in Accordance with Government Auditing Standards...………..…………………….. 33 Independent Auditors’ Report 1 The Auditor General of the State of Arizona The Board of Supervisors of Greenlee County, Arizona We have audited the accompanying general purpose financial statements of Greenlee County, Arizona, as of and for the year ended June 30, 2003, 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 financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the general pupose 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 postion of Greenlee County, Arizona, as of June 30, 2003, and the results of its operations, and the net assets and changes in net assets of its investment trust fund 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 Greenlee County, Arizona 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. Greenlee County, Arizona March 26, 2004 2 In accordance with Government Auditing Standards, we have also issued our report dated March 26, 2004, 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. CHRISTENSEN, GALE & MCLAREN, LLP March 26, 2004 3 THIS PAGE LEFT BLANK INTENTIONALLY GREENLEE COUNTY, ARIZONA Combined Balance Sheet — All Fund Types and Account Groups June 30, 2003 4 See accompanying notes to financial statements. Fiduciary Governmental Fund Types Fund Types Account Groups Special Debt Trust and General General Long- Assets General Revenue Service Agency Fixed Assets Term Debt Cash and cash equivalents $ - $ 38,054 $ - $ - $ $ Cash and investments held by treasurer 534,173 1,895,391 - 4,668,293 Cash and investments held by trustee 276,339 Receivables (net of allowances): Property taxes 10,402 11,503 - Due from other governments 224,808 76,539 - Fixed assets: Land and improvements 1,324,908 Buildings and improvements 5,886,216 Machinery and equipment 6,403,912 Amount available in debt service fund 276,339 Amount to be provided for retirement of general long-term debt 2,387,029 Total assets 7 69,383 2,021,487 2 76,339 4 ,668,293 13,615,036 2,663,368 Liabilities and Fund Equity Accounts payable 1 03,901 43,989 - - - - Compensated absences payable 5 4,781 - 144,276 Deposits held for others 2 8,677 Obligations under capital leases 437,908 Landfill closure and postclosure care costs payable 626,184 Certificates of participation payable 1,455,000 Deferred revenues 2 42,430 8,720 Total liabilities 4 01,112 52,709 - 2 8,677 - 2,663,368 Fund equity: Investment in general fixed assets 13,615,036 Fund balances: Reserved for investment trust participants 4,639,616 Unreserved 3 68,271 1,968,778 Unreserved - designated for debt service 276,339 Total fund equity 3 68,271 1,968,778 2 76,339 4 ,639,616 13,615,036 - Total liabilities and fund equity $ 769,383 $ 2,021,487 $ 276,339 $ 4 ,668,293 $ 13,615,036 $ 2,663,368 GREENLEE COUNTY, ARIZONA Combined Statement of Revenues, Expenditures, and Changes in Fund Balances All Government Fund Types Year Ended June 30, 2003 5 See accompanying notes to financial statements. Governmental Fund Types Special Debt General Revenue Service Revenues: Taxes $ 1,965,307 $ 1,136,190 Intergovernmental 3,011,059 3,090,401 Charges for services 97,789 435,581 Fines and forfeits 57,405 18,102 Investment income - 19,222 1 ,035 Miscellaneous 84,952 47,953 - Total revenues 5,216,512 4,747,449 1,035 Expenditures: Current: General government 2,983,822 353,030 Public safety 1,697,032 890,366 Highways and streets - 1,074,131 Sanitation 320,959 213,751 Health 208,949 831,048 Welfare 416,310 - Culture and recreation 25,867 108,894 Education 153,795 161,224 Capital outlay 177,259 178,928 Debt service: Principal retirement - - 2 55,000 Interest and fiscal charges - - 86,285 Total expenditures 5,983,993 3,811,372 341,285 Excess (deficiency) of revenues over (under) expenditures (767,481) 936,077 (340,250) Other financing sources (uses): Operating transfers in 1,337,967 1,074,331 338,196 Operating transfers out (963,884) (1,786,610) - Capital lease proceeds Total other financing sources (uses) 374,083 (712,279) 338,196 Excess (deficiency) of revenues and other sources over (under) expenditures and other uses (393,398) 223,798 (2,054) Fund balances, July 1, 2002 761,669 1,744,980 278,393 Fund balances, June 30, 2003 $ 368,271 $ 1,968,778 $ 276,339 GREENLEE COUNTY, ARIZONA Combined Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual—General and Special Revenue Fund Types Year Ended June 30, 2003 6 See accompanying notes to financial statements. General Fund Special Revenue Funds Budget Actual Variance Budget Actual Variance Revenues: Taxes $ 1,816,074 $ 1,965,307 $ 149,233 1,133,570 1,136,190 2,620 Intergovernmental 2,690,056 3,011,059 3 21,003 3,385,513 3,090,401 (295,112) Charges for services 106,600 97,789 (8,811) 487,326 435,581 (51,745) Fines and forfeits 46,000 57,405 1 1,405 1,000 18,102 17,102 Investment income - - - 10,220 19,222 9,002 Miscellaneous 190,000 84,952 (105,048) 21,713 47,953 26,240 Total revenues 4,848,730 5,216,512 3 67,782 5,039,342 4,747,449 (291,893) Expenditures: General government: Board of Supervisors 245,293 241,501 3 ,792 180,490 181,222 (732) Airport 1,880 2,317 ( 437) 11,873 114 11,759 Assessor 186,402 178,348 8 ,054 3,684 - 3,684 Attorney 204,271 199,407 4 ,864 254,960 123,778 131,182 Contingency 150,780 42,973 1 07,807 - - - Constable #1 23,564 23,097 4 67 - - - Constable #2 17,721 17,116 6 05 - - - County administration 169,321 150,010 1 9,311 - - - Data processing 177,064 189,927 (12,863) - - - Elections 60,000 50,327 9 ,673 - - - General services 745,681 721,429 2 4,252 - - - GIS program 9,500 (21,422) 3 0,922 - - - Ground and maintenance 167,674 194,270 (26,596) - - - Justice of the Peace No. 1 104,636 97,287 7 ,349 1,986 4 5 1,941 Justice of the Peace No. 2 102,046 99,474 2 ,572 3,639 155 3,484 Planning and zoning 2,000 (90) 2 ,090 - - - Recorder 130,486 126,902 3 ,584 5,329 3,522 1,807 Superior court 413,670 478,487 (64,817) 59,094 44,194 14,900 Treasurer 154,430 145,772 8 ,658 1,187 - 1,187 Voter registration 11,200 6,887 4 ,313 - - - Public fiduciary 38,633 39,803 (1,170) Total general government 3,116,252 2,983,822 1 32,430 522,242 353,030 169,212 (continued) GREENLEE COUNTY, ARIZONA Combined Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual—General and Special Revenue Fund Types Year Ended June 30, 2003 7 See accompanying notes to financial statements. (continued) General Fund Special Revenue Funds Budget Actual Variance Budget Actual Variance Public Safety: Bioterrorism - - - - 76,429 (76,429) DARE program - - - - 7 8 (78) Emergency services 23,636 27,732 (4,096) 1,525 - 1,525 Jail enhancement - - - - - - Probation and juvenile facility - - - 898,716 656,817 241,899 Sheriff 1,620,681 1,669,300 (48,619) 146,083 157,042 (10,959) Total public safety 1,644,317 1,697,032 (52,715) 1,046,324 890,366 155,958 Highways and streets: Roads - - - 1,156,648 1,074,131 82,517 Total highways and streets - - - 1,156,648 1,074,131 82,517 Sanitation: Landfill - 320,959 (320,959) 448,699 213,751 234,948 Total sanitation - 320,959 (320,959) 448,699 213,751 234,948 Health: Ambulance service 113,100 146,324 (33,224) - - - Emergency food and shelter - - - 63,007 - 63,007 Health services - - - 954,067 61,232 892,835 Rabies control 58,200 62,625 (4,425) - 769,816 (769,816) Total health 171,300 208,949 (37,649) 1,017,074 831,048 186,026 Welfare: ALTCS payments 410,739 416,310 (5,571) - - - Total welfare 410,739 416,310 (5,571) - - - Culture and recreation: Fair and racing association - - - 91,702 108,894 (17,192) Parks and recreation 23,000 25,867 (2,867) - - - Total culture and recreation 23,000 25,867 (2,867) 91,702 108,894 (17,192) Education: Employment and training - - - 257,586 129,970 127,616 School superintendent 142,875 135,794 7 ,081 45,742 24,327 21,415 (continued) GREENLEE COUNTY, ARIZONA Combined Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual—General and Special Revenue Fund Types Year Ended June 30, 2003 8 See accompanying notes to financial statements. (concluded) General Fund Special Revenue Funds Budget Actual Variance Budget Actual Variance U of A extension services 13,000 18,001 (5,001) 8,621 6,927 1,694 Total education 155,875 153,795 2 ,080 311,949 161,224 150,725 Economic development: Economic development - - - 10,156 - 10,156 Total economic development - - - 10,156 - 10,156 Capital outlay: 309,083 177,259 1 31,824 1,081,111 178,928 902,183 Total expenditures 5,830,566 5,983,993 (153,427) 5,685,905 3,811,372 1,874,533 Excess (deficiency) of revenues over (under) expenditures (981,836) (767,481) 2 14,355 (646,563) 936,077 1,582,640 Other financing sources (uses) Operating transfers in 1,298,885 1,337,967 3 9,082 960,093 1,074,331 114,238 Operating transfers out (1,067,049) (963,884) 1 03,165 (1,533,033) (1,786,610) (253,577) Capital lease proceeds Total other financing sources (uses) 231,836 374,083 1 42,247 (572,940) (712,279) (139,339) Excess (deficiency) of revenues and other sources over (under) expenditures and other uses (750,000) (393,398) 3 56,602 (1,219,503) 223,798 1,443,301 Fund balances, July 1, 2002 - 761,669 7 61,669 1,744,980 1,744,980 Residual equity transfers, net 750,000 - (750,000) 1,219,503 - (1,219,503) Fund balances, June 30, 2003 $ - $ 368,271 $ 368,271 $ - $ 1,968,778 $ 1,968,778 GREENLEE COUNTY, ARIZONA Combined Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual—Deby Service Fund Type Year Ended June 30, 2003 9 See accompanying notes to financial statements. Budget Actual Variance Revenues: Investment Income $ - $ 1,035 $ 1,035 Total Revenues - 1,035 1,035 Expenditures: Principal 341,204 255,000 86,204 Interest and fiscal charges - 86,285 (86,285) Total Expenditures 341,204 341,285 (81) Excess (deficiency) of revenues over (under) expenditures ( 341,204) (340,250) 954 Other financing sources (uses): Operating transfers in 341,204 338,196 (3,008) Total other financing sources (uses) 341,204 338,196 (3,008) Excess of (deficiency) revenues and other sources over (under) expenditures and other uses - (2,054) (2,054) Fund balances, July 1, 2002 - 278,393 278,393 Fund balances, June 30, 2003 $ - $ 276,339 $ 276,339 GREENLEE COUNTY, ARIZONA Statement of Fiduciary Net Assets Fiduciary Funds June 30, 2003 10 See accompanying notes to financial statements. Investment Trust Agency Assets Fund Fund Cash and cash equivalents $ 4,639,616 $ 28,677 Total assets 4,639,616 28,677 Liabilities Deposits held for others - $ 28,677 Net assets held in trust $ 4,639,616 GREENLEE COUNTY, ARIZONA Statement of Changes in Fiduciary Net Assets Fiduciary Funds Year Ended June 30, 2003 11 See accompanying notes to financial statements. Investment Trust Fund Additions: Contributions from participants $ 13,774,472 Investment income 66,343 Total additions 13,840,815 Deductions: Distributions to participants 14,394,819 Total deductions 14,394,819 Net decrease in net assets (554,004) Net assets held in trust: July 1, 2002 5,193,620 June 30, 2003 $ 4,639,616 GREENLEE COUNTY, ARIZONA Notes to Financial Statements June 30, 2003 12 Note 1 - Summary of Significant Accounting Policies The accounting policies of Greenlee County, Arizona conform to U.S. 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, highway and street maintenance and construction, sanitation, health, welfare, culture and recreation, and education. 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. The blended component unit discussed below has a June 30 year-end. The County has no discreetly presented component units. Blended Component Unit – The Greenlee County Municipal Property Corporation was formed to finance the renovation, restruction, construction and equipping of the County’s old courthouse building. The corporation issued certificates of participation that evidence undivided proportionate interests in rent payments to be made under a lease agreement, with an option to purchase, between Greenlee County and the corporation. Although the corporation is a legally separate entity from the County, the Board of Supervisors of the County serves as the Board of Directors of the corporation. Consequently, the financial data for the corporation are blended with the data of the primary government and reported in the Debt Service Fund and the General Fixed Assets and General Long-Term Debt Account Groups. Separate financial statements of the blended compoment unit are not prepared. 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. GREENLEE COUNTY, ARIZONA Notes to Financial Statements June 30, 2003 13 Note 1 - Summary of Significant Accounting Policies (continued) B. Fund Accounting (continued) 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 that are legally restricted to expenditures for specified purposes. The Debt Service Fund accounts for resources accumulated and used for the payment of general long-term debt principal, interest, and related costs. 2. Fiduciary Funds account for assets the County holds on behalf of others, and include the following fund types. The Investment Trust Fund accounts 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. The General Long-Term Debt Account Group accounts for all of the County’s long-term obligations. GREENLEE COUNTY, ARIZONA Notes to Financial Statements June 30, 2003 14 Note 1 - Summary of Significant Accounting Policies (continued) 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; 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. The financial statements of the Investment Trust Fund 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 Debt Service Funds. 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. GREENLEE COUNTY, ARIZONA Notes to Financial Statements June 30, 2003 15 Note 1 - Summary of Significant Accounting Policies (continued) D. Budgeting and Budgetary Control (continued) 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 employed as an extension of formal budgetary control. Encumbrances outstanding at year-end for goods or services that were not received before fiscal year-end are canceled. However, the County may draw warrants against encumbered amounts for goods or services received but unpaid at June 30 for 60 days immediately following the close of the fiscal year. After 60 days the remaining encumbered balances lapse. E. Cash and Investments Nonparticipating interest-earning investment contracts are stated at cost. Money market investments and participating interest-earning investment contracts with a remaining maturity of one 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, 2003, 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, drainage, and lighting systems, are not capitalized. GREENLEE COUNTY, ARIZONA Notes to Financial Statements June 30, 2003 16 Note 1 - Summary of Significant Accounting Policies (continued) H. Compensated Absences Compensated absences consist of vacation 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. Because sick leave benefits do not vest with employees, a liability for sick leave benefits is not accrued in the financial statements. A liability of $54,781 for vested compensated absences of the Government Funds is recorded in the General Fund since it is expected to be paid from current financial resources. The long-term balance of $144,276 is shown as a liability in the General Long- Term Debt Account Group in the balance sheet at June 30, 2003. 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. Reimbursement grants are recorded as intergovernmental receivables and revenues when the related expenditures are incurred. Reimbursements not received within 60 days subsequent to fiscal year-end are reported as deferred revenues. GREENLEE COUNTY, ARIZONA Notes to Financial Statements June 30, 2003 17 Note 2 - Stewardship, Compliance and Accountability Nine General Fund departments, three Special Revenue Funds, and the Debt Service Fund had an excess of actual expenditures over appropriations as reported on the Combined Statement of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual – General and Special Revenue Fund Types and the Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – Debt Service Fund Type. Generally, the excesses were the result of unexpected expenditures in those departments during the year. 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. 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 13). Those monies are pooled with County monies for investment purposes. Deposits—At June 30, 2003, the investment pool’s deposits were entirely covered by federal depository indurance or by collateral held by the County’s custodial bank in the County’s name. Other Deposits—The County’s nonpooled deposits at June 30, 2003, were entirely covered by federal depository insurance or by collateral held by the County’s custodial bank in the County’s name. Investments—At June 30, 2003, the County’s nonpooled investments consisted of the following. Fair Value Money Market Mutual Fund $ 276,339 Total $ 276,339 GREENLEE COUNTY, ARIZONA Notes to Financial Statements June 30, 2003 18 Note 3 - Deposits and Investments (continued) The nonpooled investments at June 30, 2003, are categorized below to give an indication of the level of risk the County assumed at year-end. Catergory 1 - - insured or registered in the County’s name, or securities held by the County or its agent in the County’s name. Catergory 2 - - uninsured or unregistered with securities held by the counterparty’s trust department or agent in the County’s name. Catergory 3 - - uninsured or unregistered with securities held by the counterparty, or by its trust department or agent but not in the County’s name. Category Fair 1 2 3 Value Money Market Mutual Fund - - $ 276,339 $ 276,339 Total - - $ 276,339 $ 276,339 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 $ 7,750 $ - $ 7,750 Carrying amount of deposits 7,090,107 38,054 7,128,161 Reported amount of investments 0 276,339 276,339 Total $ 7,097,857 $ 314,393 $ 7,412,250 Combined Balance Sheet: Cash and cash equivalents $ 38,054 Cash and investments held by County Treasurer 7,097,857 Cash and investments held by trustee 276,339 Total $ 7,412,250 GREENLEE COUNTY, ARIZONA Notes to Financial Statements June 30, 2003 19 Note 4 - Property Taxes Receivable The County levies real property and personal 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 levies 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. Property taxes receivable consist of uncollected property taxes as determined from the records of the County Treasurer's Office. At June 30, 2003, the uncollected property taxes and related allowances for uncollectibles were as follows: Fiscal Year General Fund Special Revenue Funds 2003 $ 10,221 $ 11,110 Prior 2,888 3,618 13,109 14,728 Less allowances for uncollectibles 2,707 3,225 Net total $ 10,402 $ 11,503 That portion of property taxes receivable not collected within 60 days after June 30, 2003, has been deferred and, consequently, is not included in current-year revenues. Note 5 - Due from Other Governments Amounts due from other governments at June 30, 2003, consisted of the following: Governmental Fund Types Due From: General Special Revenue Arizona State Treasurer: State Sales Tax $ 147,964 $ - Auto Lieu Tax 18,584 - County Excise Tax 58,260 - Highway User Revenues - 76,539 Total $ 224,808 $ 76,539 GREENLEE COUNTY, ARIZONA Notes to Financial Statements June 30, 2003 20 Note 6 - Changes in General Fixed Assets A summary of the changes in general fixed assets follows: Balance July 1, 2002 Additions Deletions Balance June 30, 2003 Land and improvements $ 1,324,908 $ - $ - $ 1,324,908 Buildings and improvements 5,816,671 69,545 5,886,216 Machinery and equipment 6,115,415 3 360,951 72,454 6,403,912 Construction in progress 69,545 69,545 0 Total $ 13,326,539 $ 430,496 $ 141,999 $ 13,615,036 Note 7 - Certificates of Participation Payable The County issued $2,700,000 in certificates of participation with an interest rate of 4.60% - 5.40% to renovate its old courthouse. The certificates of participation are generally callable with interest payable semiannually. Principal and interest requirements at June 30, 2003, were as follows: Description Interest Rates Maturities Outstanding Principal July 1, 2002 Retirements Outstanding Principal June 30, 2003 Greenlee County Property Corporation 4.85% 5.40% 2003-2007 $ 1,710,000 $ 255,000 $ 1,455,000 Total $ 1,710,000 $ 255,000 $ 1,455,000 Certificates of participation debt service requirements to maturity, are as follows: Year ending June 30, Principal Interest Total 2004 $ 265,000 $ 73,328 $ 338,328 2005 285,000 59,555 344,555 2006 305,000 44,473 349,473 2007 600,000 28,040 628,040 Total $ 1,455,000 $ 205,396 $ 1,660,396 GREENLEE COUNTY, ARIZONA Notes to Financial Statements June 30, 2003 21 Note 8 - Obligations Under Leases Capital Leases—The County has acquired machinery and equipment under the provisions of various long-term lease agreements classified as capital leases for accounting purposes because they provide for a bargain purchase option or a transfer of ownership by the end of the lease term. Accordingly, the assets have been capitalized and a summary of assets leased under capital leases as of June 30, 2003, as follows: General Fixed Assets Machinery and equipment $ 1,208,229 The future minimum lease payments under the capital leases, together with the present value of the net minimum lease payments as of June 30, 2003, were as follows: General Long-Term Debt Account Group Year ending June 30, 2004 $ 189,582 2005 2006 2007 130,864 108,080 45,034 Total minimum lease payments 473,560 Less amount representing interest 35,652 Present value of net minimum lease payments $ 437,908 Note 9 - Landfill Closure and Postclosure Care Costs State and federal laws and regulations require the County to place a final cover on its two remaining landfill sites when it stops accepting waste and to perform certain maintenance and monitoring functions at the site for 30 years after closure. Athough, closure and postclosure care costs will not be paid until near or after the date that the landfill stops accepting waste, the County reports a portion of these closure and postclosure care costs as an addition to the General Long-Term Debt Account Group in each period based on landfill capacity used as of each balance sheet date. GREENLEE COUNTY, ARIZONA Notes to Financial Statements June 30, 2003 22 Note 9 - Landfill Closure and Postclosure Care Costs (continued) The $626,184 reported as landfill closure and postclosure care liability at June 30, 2003, represents the cumulative amount reported to date based on the use of approximately 83 percent of the estimated capacity of the landfills. The County will recognize the remaining estimated cost of closure and postclosure care of $129,404 as the remaining estimated capacity is filled. These amounts are based on what it would cost to perform all closure and postclosure care in fiscal year 2003. The County expects to close the Loma Linda Landgill in the year 2010 and the Blue Landfill in the year 2018, and the actual cost may be higher due to inflation, changes in technology, or changes in regulations. According to state and federal laws and regulations, the County must comply with the local government financial test requirements that assure the County can meet the costs of landfill closure, postclosure, and corrective action when needed. The County is in compliance with these requirements. Note 10 - 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 thre 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. 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 $7,500 per occurrence for property claims and $1,500 per occurrence for 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 three years after becoming a member; however, it may withdraw after the initial three-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. GREENLEE COUNTY, ARIZONA Notes to Financial Statements June 30, 2003 23 Note 10 - Risk Management (continued) 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 six 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. 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. The County purchases commercial insurance for other miscellaneous risks of loss, Settled claims have not exceeded this commercial coverage in ay of the past three fiscal years. Note 11 - Changes in Long-Term Liabilities A summary of changes in the liabilities reported in the General Long-Term Debt Account Group were as follows: Balance July 1, 2002 Additions Reductions Balance June 30, 2003 Compensated balances Obligations under capital Leases Landfill closure and postclosure care costs payable $ 212,370 680,952 560,833 $ 250,352 65,351 $ 318,446 243,044 $ 144,276 437,908 626,184 Certificates of participation payable 1,710,000 255,000 1,455,000 Total $ 3,164,155 $ 315,703 $ 816,490 $ 2,663,368 Note 12 - Retirement Plans Plan Descriptions—The County contributes to the three plans, two of which are described below. The Elected Officials Retirement Plan and the Attorney Investigators’ participation in the Public Safety Personnel Retirement System are not described due to their relative insignificance to the County’s financial statements. Benefits are established by state statute and generally provide retirement, death, long-term disability, survivor, and health insurance premium benefits. GREENLEE COUNTY, ARIZONA Notes to Financial Statements June 30, 2003 24 Note 12 - Retirement Plans (continued) The Arizona State Retirement System (ASRS) administers a cost-sharing multiple-employer defined benefit pension plan that covers general employees of the County. The ASRS is governed by the Arizona State Retirement System Board according to the provisions of A.R.S. Title 38, Chapter 5, Article 2. 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. Each plan issues a publicly available annual financial report that includes its financial statements and required supplementary information. A report may be obtained by writing or calling the applicable plan. ASRS PSPRS 3300 N. Central Ave. P.O. Box 33910 Phoenix, AZ 85067-3910 1020 E. Missouri Ave. Phoenix, AZ 85014 (602) 240-2000 or (800) 621-3778 (602) 255-5575 Funding Policy—The Arizona State Legislature establishes and may amend active plan members’ and the County’s contribution rates. Cost-sharing plan—For the year ended June 30, 2003, active ASRS members and the County were each required by statute to contribute at the actuarially determined rate of 2.49 percent (2.00 percent retirement and 0.49 percent long-term disability) of the members’ annual covered payroll. The County’s contributions to ASRS for the years ended June 30, 2003, 2002, and 2001 were $56,642, $50,897 and $68,885, respectively, which were equal to the required contributions for the year. Agent plans—For the year ended June 30, 2003, 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 4.79 percent. GREENLEE COUNTY, ARIZONA Notes to Financial Statements June 30, 2003 25 Note 12 - Retirement Plans (continued) Annual Pension Cost—The County’s pension cost for the agent plan for the year ended June 30, 2003, and related information follows. PSPRS Contribution rates: County 4.79% Plan members 7.65% Annual pension cost $ 41,061 Contributions made $ 41,061 The current-year annual required contributions for the PSPRS were determined as part of its June 30, 2001, actuarial valuation 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, 2001, was 20 years. Trend Information—Annual pension cost information for the current and two preceding years follows for the agent plan. Plan Year Ended June 30 Annual Pension Cost Percentage of APC Contributed Net Pension Obligation PSPRS 2003 2002 2001 $ 41,061 28,339 34,073 100% 100 100 $ 0 0 0 GREENLEE COUNTY, ARIZONA Notes to Financial Statements June 30, 2003 26 Note 12 - Retirement Plans (continued) 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 Excess (a-b) Funded Ratio (a/b) Annual Covered Payroll (c) Unfunded Liability as Percentag e of Covered Payroll ([a-b]/c) 6/30/03 6/30/02 6/30/01 $ 2,124,391 2,051,947 2,063,588 $ 1,675,274 1,584,623 1,346,809 $ 449,117 467,324 716,779 126.8% 129.5 153.2 $ 432,413 412,645 419,931 - - - Note 13 - 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. Throughout the fiscal year the County Treasurer invests idle monies in mortgage backed government agency securities in thirty day intervals with interest rates approximately 1.66%. At June 30, 2003 there were no investments outstanding. GREENLEE COUNTY, ARIZONA Notes to Financial Statements June 30, 2003 27 Note 13 - County Treasurer’s Investment Pool (continued) A condensed statement of the investment pool’s net assets and changes in net assets follows. Statement of Net Assets Assets $ 7,097,857 Net assets $ 7,097,857 Net assets held in trust for: Internal participants $ 2,458,241 External participants 4,639,616 Total net assets held in trust $ 7,097,857 Statement of Changes in Net Assets Total additions $ 23,587,183 Total deductions 23,791,135 Net increase (203,952) Net assets held in trust: July 1, 2002 7,301,809 June 30, 2003 $ 7,097,857 Note 14 – Contingent Liabilities Litigation Claims – At June 30, 2003,there were several claims and lawsuits pending against the County, the ultimate outcome of which is unpredictable. Consequently, no provision for any liability has been made. Note 15– Implementation of GASB Statement No. 34 Beginning with fiscal year 2004, the County will prepare its external financial reports following the requirements of GASB Statement No. 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments. Implementing this standard will significantly change the accounting principles and reporting format the County uses in future financial reports. 28 Supplementary Information GREENLEE COUNTY, ARIZONA Schedule of Expenditures of Federal Awards Year Ended June 30, 2003 29 Pass- Through Federal Grantor/Pass-Through CFDA Grantor's Grantor/Program Title Number Number Expenditures U.S. DEPARTMENT OF AGRICULTURE Direct program: Forest Service Drug Eradication 10.UNKNOWN N/A 9,264 Passed through the Arizona Department of Health Services Special Supplemental Food Program for Women, Infants and Children 10.557 76-1093 4 1,561 Passed through Arizona State Governor's Office Schools and Roads - Grants to States 10.666 NONE 531,178 Total U.S. Department of Agriculture 582,003 U.S. DEPARTMENT OF THE INTERIOR Direct program: Payments in Lieu of Taxes 15.226 N/A 5 30,056 Passed through the Arizona State Treasurer Taylor Grazing Act 15.UNKNOWN N/A 2 5,000 Total U.S. Department of Interior 5 55,056 U.S. DEPARTMENT OF JUSTICE Passed through the Arizona Criminal Justice Commission Byrne Formula Grant Program 16.579 AC-040-01 3,000 Passed through the State of Arizona Department of Emergency and Military Affairs Equipment Grant Program 16.007 NONE 7,000 Total U.S. Department of Justice 10,000 U.S. DEPARTMENT OF LABOR Passed through the Arizona Department of Economic Security Workforce Investment Act - Adult 17.255 E5701009 131,928 U.S. DEPARTMENT OF TRANSPORTATION Direct program: Airport Improvement Program 20.106 N/A 3,691 FEDERAL EMERGENCY MANAGEMENT AGENCY Passed through the United Way of Arizona Emergency Management-State and Local Assistance 83.534 NONE 7,088 U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES Passed through the Arizona Department of Health Services Preparedness & Response for Bio-Terroism 93.283 N/A 1 23,679 Wellwoman Healthcheck Program 93.919 23-3013 6 9,580 Preventive Health and Health Services Block Grant 93.991 30-4062 9,999 Total U.S. Department of Health and Human Services 203,258 TOTAL EXPENDITURES OF FEDERAL AWARDS $ 1,493,024 GREENLEE COUNTY, ARIZONA Notes to Schedule of Expenditures of Federal Awards Year Ended June 30, 2003 30 Note 1 - Basis of Accounting The accompanying schedule of expenditures of federal awards includes the federal grant activity of Greenlee 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) Numbers The program titles and CFDA numbers were obtained from the federal or pass-through grantor or the 2003 Catalog of Federal Domestic Assistance. When no CFDA number had been assigned to a program, and when there was no federal contract number, the two-digit federal agency identifier, a period, and the word “unknown” was used. Note 3 - Subrecipients In fiscal year 2003, the County did not pass-through any federal domestic assistance received to any subrecipients. 31 SINGLE AUDIT SECTION 32 THIS PAGE LEFT BLANK INTENTIONALLY 33 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 The Auditor General of the State of Arizona The Board of Supervisors of Greenlee County, Arizona We have audited the general purpose financial statements of Greenlee County, Arizona as of and for the year ended June 30, 2003, and have issued our report thereon dated March 26, 2004. 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. 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. Our consideration of internal control over financial reporting would not necessarily disclose all such internal control matters that might be material weaknesses. Greenlee County, Arizona Page Two March 26, 2004 34 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 would 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. We noted no matters involving internal control over financial reporting and its operation that we consider to be material weaknesses. This report is intended solely for the information and use of the members of the Arizona State Legislature, the Auditor General of the State of Arizona, the County’s Board of Supervisors, federal awarding agencies, and pass-through entities. It 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. CHRISTENSEN, GALE & MCLAREN, LLP March 26, 2004 35 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 The Auditor General of the State of Arizona The Board of Supervisors of Greenlee County, Arizona Compliance We have audited the compliance of Greenlee County, Arizona 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, 2003. 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, Greenlee County, Arizona 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, 2003. Greenlee County, Arizona Page Two March 26, 2004 36 Internal Control Over Compliance The County’s management is responsible for establishing and maintaining effective internal control over compliance with the 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. Our consideration of internal control over compliance would not necessarily disclose all such internal control matters that might be material weaknesses. 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 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. We noted no matters involving internal control over compliance and its operations that we consider to be material weaknesses. This report is intended solely for the information and use of the members of the Arizona State Legislature, Auditor General of the State of Arizona, the County’s Board of Supervisors, federal awarding agencies, and pass-through entities. It 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. CHRISTENSEN, GALE & MCLAREN, LLP March 26, 2004 GREENLEE COUNTY, ARIZONA Schedule of Findings and Questioned Costs Year Ended June 30, 2003 37 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 conditions identified not considered to be material weaknesses? X (None reported) Noncompliance material to the financial statements noted? X Federal Awards Material weakness identified in internal control over major programs? X Reportable conditions identified not considered to be material weaknesses? X (None reported) Type of auditor’s 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 15.226 Payments in Lieu of Taxes 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 GREENLEE COUNTY, ARIZONA Schedule of Findings and Questioned Costs Year Ended June 30, 2003 38 Financial Statement Findings We noted no reportable conditions, material weaknesses, or instances of noncompliance related to the general purpose financial statements that are required to be reported in accordance with Government Auditing Standards. Federal Award Findings and Questioned Costs We noted no reportable conditions, material weaknesses, or instances of noncompliance related to the audit of major programs that are required to be reported by OMB Circular A-133. |