Pinal County Arizona report on audit of annual expenditure limitation report

              Expenditure Limitation Report
A REPORT
TO THE
ARIZONA LEGISLATURE
Pinal County
Year Ended June 30, 2002
Financial Audit Division
Debra K. Davenport
Auditor General
The Auditor General is appointed by the Joint Legislative Audit Committee, a bipartisan committee composed of five
senators and five representatives. Her mission is to provide independent and impartial information and specific
recommendations to improve the operations of state and local government entities. To this end, she provides financial
audits and accounting services to the State and political subdivisions, investigates possible misuse of public monies, and
conducts performance audits of school districts, state agencies, and the programs they administer.
Copies of the Auditor General’s reports are free.
You may request them by contacting us at:
Office of the Auditor General
2910 N. 44th Street, Suite 410 • Phoenix, AZ 85018 • (602) 553-0333
Additionally, many of our reports can be found in electronic format at:
www.auditorgen.state.az.us
Pinal County
Report on Audit of Annual Expenditure Limitation Report
Year Ended June 30, 2002
Table of Contents Page
Independent Auditors' Report 1
Annual Expenditure Limitation Report—Part I 2
Annual Expenditure Limitation Report—Part II 3
Annual Expenditure Limitation Report—Reconciliation 4
Notes to Annual Expenditure Limitation Report 5
2910 NORTH 44th STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • (602) 553 -0333 • FAX (602) 553-0051
DEBRA K. DAVENPORT, CPA
AUDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL
WILLIAM THOMSON
DEPUTY AUDITOR GENERAL
Independent Auditors' Report
Members of the Arizona State Legislature
The Board of Supervisors of
Pinal County, Arizona
We have audited the accompanying Annual Expenditure Limitation Report of Pinal County for the year ended
June 30, 2002. This report is the responsibility of the County's management. Our responsibility is to express an
opinion on this report based on our audit.
We conducted our audit in accordance with U.S. generally accepted auditing standards. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the report is free of
material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the report. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall report presentation. We believe that our
audit provides a reasonable basis for our opinion.
The accompanying Annual Expenditure Limitation Report was prepared for the purpose of complying with the
uniform expenditure reporting system as discussed in Note 1, and is not intended to be a presentation in
conformity with U.S. generally accepted accounting principles.
In our opinion, the Annual Expenditure Limitation Report of Pinal County for the year ended June 30, 2002,
referred to above presents fairly, in all material respects, the information required by the uniform expenditure
reporting system on the basis of accounting described in Note 1.
This report is intended solely for the information and use of the members of the Arizona State Legislature and
the Board of Supervisors, and for filing with the Auditor General of the State of Arizona, and is not intended to
be and should not be used by anyone other than these specified parties. However, this report is a matter of
public record, and its distribution is not limited.
Dennis L. Mattheisen, CPA
Financial Audit Director
May 28, 2003
Pinal County
Annual Expenditure Limitation Report—Part I
Year Ended June 30, 2002
2
1. Economic Estimates Commission expenditure limitation $77,494,943
2. Amount subject to the expenditure limitation (total amount from
Part II, Line C)
77,494,942
3. Amount under the expenditure limitation $ 1$
I hereby certify, to the best of my knowledge and belief, that the information contained in this report is accurate
and in accordance with the requirements of the uniform expenditure reporting system.
Signature of Chief Fiscal Officer:
Name and Title: Maureen Arnold, CPA, CGFM, CPFO, Chief Financial Officer
Telephone Number: (520) 866-6225 Date:
See accompanying notes to report.
Pinal County
Annual Expenditure Limitation Report—Part II
Year Ended June 30, 2002
Internal
Governmental Enterprise Service Fiduciary
Description Funds Funds Funds Funds Total
A. Amounts reported on the Reconciliation, Line D $103,169,221 $29,059,618 $573,650 $322,181,047 $ 454,983,536
B. Less exclusions claimed:
Debt service requirements on other long-term obligations (Note 2) 3,655,349 4,027 3,659,376
Dividends, interest, and gains on the sale or redemption of
investment securities 128,514 128,514
Trustee or custodian (Note 3) 2,715,596 322,181,047 324,896,643
Grants and aid from the federal government (Note 4) 10,736,186 10,736,186
Amounts received from the State of Arizona (Note 4) 2,325,345 33,000 2,358,345
Quasi-external interfund transactions (Note 5) 2,829,660 2,829,660
Contracts with other political subdivisions 25,885,247 25,885,247
Amounts received for distribution to school districts (Notes 4) 6,811,426 6,811,426
Prior years carryforward (Note 6) 183,197 183,197
Total exclusions claimed 26,243,902 29,059,618 4,027 322,181,047 377,488,594
C. Amounts subject to the expenditure limitation $ 76,925,319 $ - $569,623 $ - $ 77,494,942
See accompanying notes to report.
3
Pinal County
Annual Expenditure Limitation Report—Reconciliation
Year Ended June 30, 2002
Internal
Governmental Enterprise Service Fiduciary
Description Funds Funds Funds Funds Total
A. Total expenditures/expenses/deductions and applicable other
financing uses, special items, and extraordinary items reported within the
fund-based financial statements $115,672,220 $29,840,252 $ 579,898 $ 322,181,047 $ 468,273,417
B. Subtractions:
Items not requiring use of working capital:
Depreciation 58,612 12,845 71,457
Loss on disposal of capital assets 5,602 5,602
Claims incurred but not reported (Note 7) 3,230,452 3,230,452
Expenditures of separate legal entities established under Arizona
Revised Statutes (Note 8) 5,018,034 5,018,034
Long-term care contributions withheld by the State Treasurer (Note 9) 6,738,332 6,738,332
Present value of net minimum capital lease and installment purchase contract
payments recorded as expenditures at inception of the agreements 307,549 307,549
Charges paid to the Internal Service Funds (Note 10) 439,084 56,193 6,216 501,493
Total subtractions 12,502,999 3,350,859 19,061 15,872,919
C. Additions:
Principal payments on long-term debt 6,927 4,027 10,954
Acquisition of capital assets 31,635 8,786 40,421
Claims paid in the current year but reported as expenses incurred but not
reported in previous years (Note 11) 2,531,663 2,531,663
Total additions 2,570,225 12,813 2,583,038
D. Amounts reported on Part II, Line A $103,169,221 $29,059,618 $ 573,650 $ 322,181,047 $ 454,983,536
See accompanying notes to report.
4
Pinal County
Notes to Annual Expenditure Limitation Report
Year Ended June 30, 2002
5
Note 1 - Summary of Significant Accounting Policies
The Annual Expenditure Limitation Report (AELR) is presented on the basis of accounting
prescribed by the uniform expenditure reporting system (UERS) as required by Arizona Revised
Statutes §41-1279.07, which excludes expenditures, expenses, or deductions of certain revenues
specified in the Arizona Constitution, Article IX, §20 from the total expenditures, expenses, or
deductions reported in the fund-based financial statements.
In accordance with the UERS requirements, a note to the AELR is presented below for any
exclusion claimed on Part II and each deduction or addition in the Reconciliation that cannot be
traced directly to an amount reported in the fund-based financial statements. All references to
financial statement amounts in the following notes refer to the Statement of Revenues,
Expenditures, and Changes in Fund Balances for the Governmental Funds, Statement of
Revenues, Expenses, and Changes in Fund Net Assets for the Proprietary Funds, Statement of
Cash Flows for the Proprietary Funds, and the Statement of Fiduciary Net Assets for the Fiduciary
Funds.
Note 2 - The exclusion claimed for debt service requirements on other long-term obligations consists of
principal and interest payments on obligations under capital leases. These payments consist of
$3,637,969 of general government and $17,380 of highways and streets expenditures in the
Governmental Funds.
Note 3 - The exclusion claimed for trustee or custodian in the Governmental Funds consists of $2,715,596
in contributions by the County to the Arizona Health Care Cost Containment System for acute
care, and in the Fiduciary Funds, the exclusion consists of $322,181,047 in distributions to
investment pool participants.
Note 4 - The following schedule presents revenues from which exclusions have been claimed for federal
grants and aid and amounts received from the State of Arizona in the Governmental Funds.
Description
Grants and aid from the federal government $10,736,186
Amounts received from the State of Arizona 2,325,345
Amounts received for distribution to school districts 6,811,426
Other revenues—(nonexcludable) 28,942,244
Amount carried forward 3,676,353
Total intergovernmental revenues as reported
in the fund-based financial statements $52,491,554
Pinal County
Notes to Annual Expenditure Limitation Report
Year Ended June 30, 2002
6
Note 5 - The exclusion claimed for quasi-external interfund transactions of $2,829,660 consists of
$2,658,671 of medical services to members of the Pinal County Long-Term Health Care Plan by
Pinal County Nursing Center, Pinal County Home Health Department, Palm Villa Day Care, and
Homemaking Services of Pinal County; plus $170,989 in allocated administrative costs. These
exclusions are reported as a long-term healthcare expense in the Enterprise Funds.
Note 6 - Prior years carryforward consists of $183,197 of contracts with other political subdivisions that
were constitutionally excludable revenues unexpended in the year of receipt that have been
accumulated and were expended in the current year.
Note 7 - The subtraction of $3,230,452 for claims incurred but not reported consists of the estimated costs
of claims incurred and expensed in the current year but not yet paid in the Enterprise funds.
Note 8 - The deduction of $5,018,034 for separate legal entities established under Arizona Revised
Statutes consists of expenditures of special assessment districts and municipal property
corporations included within the County’s reporting entity, but not included in the Economic
Estimates Commission base limit calculations, and are reported in the Governmental Funds
category in the basic financial statements:
Special Assessment Districts
Highways and streets $ 783,162
Sanitation 12,854
Culture and recreation 387,323
Principal retirement 835,000
Interest and fiscal charges 251,906
Total $2,270,245
Municipal Property Corporations
General government $2,747,789
Note 9 - The amount of transaction privilege taxes withheld by the State Treasurer to meet the County's
share of long-term care costs was reported as a revenue and an offsetting expenditure in the
County's Governmental Funds. Consequently, this expenditure has been deducted on the
Reconciliation.
Pinal County
Notes to Annual Expenditure Limitation Report
Year Ended June 30, 2002
7
Note 10 - The subtraction of charges paid to the Internal Service Fund was allocated based on the original
charges to the funds. The remaining charges for services were to external entities.
Note 11 - The addition of $2,531,663 for claims paid in the current year, but reported as expenses incurred
but not reported in previous years consists of cash outlays for those claims that were paid in the
current year and recognized as an expense in previous years in the Enterprise funds.