Apache County single audit: year ended June 30,...

              Single Audit
A REPORT
TO THE
ARIZONA LEGISLATURE
Apache County
Year Ended June 30, 2001
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
Apache County, Arizona
Single Audit Reporting Package
June 30, 2001
Table of Contents Page
Report on Audit of General Purpose Financial Statements
Independent Auditors' Report 1
Combined Balance Sheet—All Fund Types and Account Groups 3
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 and Capital Projects Fund Types 9
Statement of Revenues, Expenses, and Changes in Retained Earnings—
Proprietary Fund Type 10
Statement of Cash Flows—Proprietary Fund Type 11
Statement of Net Assets—Investment Trust Fund 12
Statement of Changes in Net Assets—Investment Trust Fund 13
Notes to Financial Statements 14
Supplementary Information
Schedule of Expenditures of Federal Awards 35
Reports on Compliance and Internal Control
Report on Compliance and on Internal Control over Financial Reporting Based on an
Audit of General Purpose Financial Statements Performed in Accordance with
Government Auditing Standards 39
Report on Compliance with Requirements Applicable to Each Major Program and on
Internal Control over Compliance in Accordance with OMB Circular A-133 41
Schedule of Findings and Questioned Costs
Summary of Auditors’ Results 43
2910 NORTH 44 th STREET • SUITE 410 • PHOENI X, 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
Apache County, Arizona
We have audited the accompanying general purpose financial statements of Apache County as of
and for the year ended June 30, 2001, as listed in the table of contents. These general purpose
financial statements are the responsibility of the County’s management. Our responsibility is to
express an opinion on these general purpose financial statements based on our audit.
We conducted our audit in accordance with U.S. generally accepted auditing standards and the
standards applicable to financial audits contained in Government Auditing Standards, issued by
the Comptroller General of the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the general purpose financial
statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the general purpose financial statements.
An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall general purpose financial statement
presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the general purpose financial statements referred to above present fairly, in all
material respects, the financial position of Apache County as of June 30, 2001, and the results of
its operations, the cash flows of its internal service fund, 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 Apache County taken as a whole. The accompanying schedule of expenditures of
federal awards listed in the table of contents is presented for purposes of additional analysis as
required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local
Governments, and Non-Profit Organizations, and is not a required part of the general purpose
financial statements. Such information has been subjected to the auditing procedures applied in
the audit of the general purpose financial statements and, in our opinion, is fairly stated, in all
material respects, in relation to the general purpose financial statements taken as a whole.
2
In accordance with Government Auditing Standards, we have also issued our report dated
June 20, 2002, on our consideration of the County’s internal control over financial reporting
and our tests of its compliance with certain provisions of laws, regulations, contracts, and
grants. That report is an integral part of an audit performed in accordance with
Government Auditing Standards and should be read in conjunction with this report in
considering the results of our audit.
Debbie Davenport
Auditor General
June 20, 2002
Apache County
Combined Balance Sheet—All Fund Types and Account Groups
June 30, 2001
Proprietary Fiduciary
Fund Type Fund Type Account Groups
Special Debt Capital Internal Trust and General General Long-
Assets General Revenue Service Projects Service Agency Fixed Assets Term Debt
Cash in bank and on hand $ 55,869 $ 45,513 $ 347,058
Cash and investments held by
County Treasurer 7,492,028 4,609,966 $ 327,309 $ 3,274,649 $ 328,624 113,101,229
Receivables:
Property taxes 94,464 158,985 52,531
Accounts 19,076 22,072
Accrued interest 50,680 31,454 2,401 12,079 1,641 799,327
Due from:
Other funds 413,356 58,187 1,686 18,392 800
Other governments 1,045,810 2,605,039
Inventories 8,948 229,110
Prepaid items 75,800 11,260
Fixed assets:
Land $ 1,462,625
Buildings and improvements 9,789,761
Improvements other than buildings 310,987
Machinery and equipment 15,629,847
Construction in progress 737,214
Amount available in Debt Service Funds $ 318,401
Amount to be provided for retirement of
general long-term debt 6,108,579
Total assets $ 9,256,031 $ 7,771,586 $ 383,927 $ 3,305,120 $ 331,065 $ 114,247,614 $ 27,930,434 $ 6,426,980
(Continued)
See accompanying notes to financial statements.
3
Governmental Fund Types
Apache County
Combined Balance Sheet—All Fund Types and Account Groups
June 30, 2001
(Continued)
Proprietary Fiduciary
Fund Type Fund Type Account Groups
Special Debt Capital Internal Trust and General General Long-
Liabilities and Fund Equity General Revenue Service Projects Service Agency Fixed Assets Term Debt
Liabilities:
Accounts payable $ 375,052 $ 1,255,619 $ 61,005 $ 5,072
Accrued payroll and employee benefits 296,875 272,125 $ 1,488,612
Due to other funds 55,107 117,136 $ 18,392 1,686 300,100
Deposits held for others $ 3 47,058
Obligations under capital leases 236,368
General obligation bonds payable 4,170,000
Special assessment bonds with
governmental commitment payable 532,000
Deferred revenues 87,378 141,747 47,134
Total liabilities 814,412 1,786,627 65,526 62,691 305,172 3 47,058 6,426,980
Fund equity:
Investment in general fixed assets $ 2 7,930,434
Retained earnings:
Unreserved 25,893
Fund balances:
Reserved for inventories 8,948 229,110
Reserved for investment trust participants 1 13,900,556
Unreserved 8,432,671 5,755,849 318,401 3,242,429
Total fund equity 8,441,619 5,984,959 318,401 3,242,429 25,893 1 13,900,556 2 7,930,434 -
Total liabilities and fund equity $ 9,256,031 $ 7,771,586 $ 383,927 $ 3,305,120 $ 331,065 $ 114,247,614 $ 2 7,930,434 $ 6,426,980
See accompanying notes to financial statements.
4
Governmental Fund Types
Special Debt Capital
General Revenue Service Projects
Revenues:
Taxes $ 2,166,612 $ 4,698,364 $ 678,941
Special assessments 72,515
Licenses and permits 95,092
Intergovernmental 6,890,271 10,567,545 185,544
Charges for services 229,220 825,912
Fines and forfeits 375,469 84,092
Investment income 410,338 239,518 50,857 $ 36,842
Contributions 302,727
Miscellaneous 276,252 20,921 18
Total revenues 10,443,254 16,739,079 987,875 36,842
Expenditures:
Current:
General government 7,205,556 788,586
Public safety 3,001,192 4,079,081
Highways and streets 42,569 8,285,281
Sanitation 74,293
Health 644,345 1,359,729
Welfare 173,087
Culture and recreation 16,000 605,729
Education 301,562 1,641,059
Capital outlay 911,693
Debt service:
Principal retirement 973,000
Interest and fiscal charges 120,660
Total expenditures 11,211,224 17,006,845 1,093,660 911,693
Excess of expenditures over revenues (767,970) (267,766) (105,785) (874,851)
Other financing sources (uses):
Operating transfers in 1,221,098 1,041,323 59,136
Operating transfers out (1,041,323) (1,221,098) (59,136)
General obligation bond proceeds 3,000,000
Total other financing sources (uses) 179,775 (179,775) 59,136 2,940,864
Excess of revenues and other sources
over (under) expenditures and other uses (588,195) (447,541) (46,649) 2,066,013
Fund balances, July 1, 2000, as restated 9,030,107 6,458,518 365,050 1,176,416
Decrease in reserve for inventories (293) (26,018)
Fund balances, June 30, 2001 $ 8,441,619 $ 5,984,959 $ 318,401 $ 3,242,429
5
See accompanying notes to financial statements.
Apache County
Combined Statement of Revenues, Expenditures, and Changes in Fund Balances
Year Ended June 30, 2001
All Governmental Fund Types
Apache County
Combined Statement of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual—General and Special Revenue Fund Types
Year Ended June 30, 2001
General Fund Special Revenue Funds
Budget Actual Variance Budget Actual Variance
Revenues:
Taxes $ 2,115,887 $ 2,166,612 $ 50,725 $ 4,860,596 $ 4,698,364 $ (162,232)
Licenses and permits 100,000 95,092 (4,908)
Intergovernmental 7,435,854 6,890,271 (545,583) 11,609,265 10,567,545 (1,041,720)
Charges for services 176,870 229,220 52,350 734,400 825,912 91,512
Fines and forfeits 388,600 375,469 (13,131) 208,000 84,092 (123,908)
Investment income 305,000 410,338 105,338 95,000 239,518 144,518
Contributions 523,447 302,727 (220,720)
Miscellaneous 15,000 276,252 261,252 20,921 20,921
Total revenues 10,537,211 10,443,254 (93,957) 18,030,708 16,739,079 (1,291,629)
Expenditures:
Current:
General government:
Assessor 585,095 556,968 28,127
Attorney 766,996 735,210 31,786
Board of Supervisors 792,867 700,580 92,287
Board of Supervisors—District #1 324,468 324,468
Board of Supervisors—District #2 321,989 213,286 108,703
Board of Supervisors—District #3 146,484 102,825 43,659
Building inspector 198,479 198,479
Clerk of the court 404,661 397,629 7,032
Communication specialist 97,860 96,876 984
Contingencies 5,896,713 14,632 5,882,081
Data processing 367,462 367,462
Elections 355,050 336,194 18,856
Finance 259,117 232,700 26,417
Grounds and maintenance 590,364 590,364
Insurance 164,291 148,546 15,745
Justice Court—Chinle 164,674 155,919 8,755
Justice Court—Puerco 235,441 235,028 413
Justice Court—St. Johns 142,371 137,418 4,953
Justice Court—Round Valley 226,221 222,259 3,962
Legal services and judgments 350,000 69,551 280,449
Planning and zoning 136,900 122,520 14,380
Purchasing 52,302 40,096 12,206
Recorder 312,501 299,557 12,944
Superior Court 257,075 255,499 1,576
Treasurer 290,929 261,812 29,117
Public defenders 375,965 372,544 3,421
Salary adjustments/Retirement incentive 137,431 17,134 120,297
Accent/Attorney 93,701 97,137 (3,436)
Bad check prosecution 42,400 8,525 33,875
Case processing assistance 68,117 69,742 (1,625)
CDBG 274,050 31,899 242,151
Child issues education 14,285 1,645 12,640
Child support automation 5,418 4,681 737
Children's justice 10,000 5,000 5,000
Criminal justice records improvement—Attorney 8,800 (8,800)
Data processing services—Schools 275,214 169,009 106,205
Domestic relations education 3,810 3,810
ECO 39,635 26,364 13,271
EECO 258,510 122,256 136,254
Emergency water shed 1,404 (1,404)
Expenditures support & visitation 15,575 15,575
E-Rate 135,700 9,437 126,263
Field trainer 5,108 (5,108)
Fill the gap—Attorney 8,552 992 7,560
(Continued)
See accompanying notes to financial statements.
6
Apache County
Combined Statement of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual—General and Special Revenue Fund Types
Year Ended June 30, 2001
(Continued)
General Fund Special Revenue Funds
Budget Actual Variance Budget Actual Variance
Fill the gap—Courts $ 81,890 $ 81,890
Fill the gap—Indigent defense 8,118 $ 6,036 2,082
Juvenile case processing 14,443 (14,443)
Law library 12,950 16,985 (4,035)
Norviel decree 13,790 7,624 6,166
Recorder's surcharge 62,160 30,767 31,393
Superior Court docket storage 28,000 10,601 17,399
Victim's assistance 77,500 79,178 (1,678)
Victim's compensation 55,563 56,055 (492)
VOCA 5,800 4,898 902
Total general government $ 13,953,706 $ 7,205,556 $ 6,748,150 1,590,738 788,586 802,152
Public safety:
Adult probation 296,693 281,771 14,922
Constables 63,174 61,920 1,254
Contingencies 199,906 199,906
Emergency services 83,085 47,045 36,040
Juvenile probation 432,053 351,296 80,757
Medical examiner 17,429 17,429
Sheriff 2,047,247 2,041,825 5,422
ACCENT/Sheriff 286,868 267,137 19,731
Adult intensive supervision 289,789 283,777 6,012
Adult probation enhancement 153,926 133,378 20,548
Adult probation fees 119,000 75,462 43,538
Architectural planning 225,000 5 224,995
CASA 28,652 28,763 (111)
Community punishment 4,475 4,665 (190)
Criminal justice records improvement 780 (780)
Detention center 23,160 (23,160)
Diversion consequence 24,737 19,676 5,061
Diversion fees 4,200 4,200
Diversion intake 139,603 126,475 13,128
Drug testing 30,359 26,256 4,103
Drug treatment and education 25,920 14,237 11,683
Family counseling 20,685 16,179 4,506
Fire district assistance 227,973 217,117 10,856
Ganado school deputies 15,586 (15,586)
J.I.P.S. 155,617 130,430 25,187
JAIBG detention 30,000 (30,000)
Jail district 1,805,473 1,773,641 31,832
Jail enhancement 212,500 58,172 154,328
Jail services 182,270 17,784 164,486
JCRF detention 376,211 (376,211)
Juvenile crime reduction 71,120 20,454 50,666
Juvenile probation fees 42,600 16,662 25,938
Juvenile treatment service 52,209 36,655 15,554
Local law block grant 10,250 10,253 (3)
Parole 285 (285)
R.A.P. 24,913 45,418 (20,505)
RICO, federal justice 58,590 4,629 53,961
RICO, federal treasury 51,970 1,970 50,000
RICO, state and other 79,634 20,197 59,437
Safe schools 82,574 82,985 (411)
State aid to probation 154,987 143,972 11,015
State gang task force 52,008 56,710 (4,702)
Total public safety 3,139,587 3,001,192 138,395 4,617,902 4,079,081 538,821
(Continued)
See accompanying notes to financial statements.
7
Apache County
Combined Statement of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual—General and Special Revenue Fund Types
Year Ended June 30, 2001
(Continued)
General Fund Special Revenue Funds
Budget Actual Variance Budget Actual Variance
Highways and streets:
Salary adjustments/retirement $ 42,569 $ 42,569
ADOT trails $ 500,000 $ 500,000
Eager cinderpit 26,736 $ 1,559 25,177
Engineer's inspections 13,420 1,912 11,508
Flood control 262,634 33,650 228,984
Flood/dam projects 1,593,866 677,079 916,787
GIS 91,252 94,597 (3,345)
Roads 9,445,619 7,034,925 2,410,694
Rural addressing 14,997 14,997
Special roads 94,410 94,410
TEA21, bus routes 250,000 247,625 2,375
Transit fund 405,399 193,934 211,465
Total highways and streets 42,569 42,569 12,698,333 8,285,281 4,413,052
Health:
AHCCCS/ALTCS 644,345 644,345
Health 1,469,107 1,348,407 120,700
Luna Lake improvement 11,322 (11,322)
Total Health 644,345 644,345 1,469,107 1,359,729 109,378
Welfare:
JTPA/WIA 308,500 173,087 135,413
Sanitation:
Waste tire disposal 71,000 74,293 (3,293)
Culture and recreation:
Agriculture extension 16,000 16,000
County free library 653,331 605,729 47,602
Total culture and recreation 16,000 16,000 653,331 605,729 47,602
Education:
School superintendent 301,562 301,562
Detention education 70,024 18,302 51,722
Forest fees 23,309 22,295 1,014
Junior college tuition 1,107,185 1,054,462 52,723
Post secondary education 626,790 531,158 95,632
Schools indirect cost 28,238 14,842 13,396
Total education 301,562 301,562 1,855,546 1,641,059 214,487
Total expenditures 18,097,769 11,211,224 $ 6,886,545 23,264,457 17,006,845 6,257,612
Excess of revenues over (under) expenditures (7,560,558) (767,970) 6,792,588 (5,233,749) (267,766) 4,965,983
Other financing sources (uses):
Operating transfers in 1,221,097 1,221,098 1 1,032,014 1,041,323 9,309
Operating transfers out (1,032,014) (1,041,323) (9,309) (1,221,097) (1,221,098) (1)
Net other financing sources (uses) 189,083 179,775 (9,308) (189,083) (179,775) 9,308
Excess of revenues and other sources over
(under) expenditures and other uses (7,371,475) (588,195) 6,783,280 (5,422,832) (447,541) 4,975,291
Fund balances, July 1, 2000, as restated 7,371,475 9,030,107 1,658,632 5,422,832 6,458,518 1,035,686
Decrease in reserve for inventories (293) (293) (26,018) (26,018)
Fund balances, June 30, 2001 $ - $ 8,441,619 $ 8,441,619 $ - $ 5,984,959 $ 5,984,959
See accompanying notes to financial statements.
8
Apache County
Combined Statement of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual—Debt Service and Capital Projects Fund Types
Year Ended June 30, 2001
Debt Service Funds Capital Projects Funds
Budget Actual Variance Budget Actual Variance
Revenues:
Taxes $ 689,644 $ 678,941 $ (10,703)
Special assessments 76,764 72,515 (4,249)
Intergovernmental 186,245 185,544 (701)
Investment income 50,857 50,857 $ 36,842 $ 36,842
Miscellaneous - 18 18
Total revenues 952,653 987,875 35,222 - 36,842 36,842
Capital outlay $ 1,145,182 911,693 233,489
Debt service:
Principal retirement 1,080,738 973,000 107,738
Intereset and fiscal charges 126,693 120,660 6,033
Total debt service 1,207,431 1,093,660 113,771
Total expenditures 1,207,431 1,093,660 113,771 1,145,182 911,693 233,489
Excess of revenues over (under) expenditures (254,778) (105,785) 148,993 (1,145,182) (874,851) 270,331
Other financing sources (uses):
Operating transfers in 59,136 59,136
Operating transfers out (59,136) (59,136)
General obligation bond proceeds 3,000,000 3,000,000
Total other financing sources 59,136 59,136 2,940,864 2,940,864
Excess of revenues and other sources over
(under) expenditures and other uses (254,778) (46,649) 208,129 (1,145,182) 2,066,013 3,211,195
Fund balances, as restated, July 1, 2000 254,778 365,050 110,272 1,145,182 1,176,416 31,234
Fund balances, June 30, 2001 $ - $ 318,401 $ 318,401 $ - $ 3,242,429 $ 3,242,429
See accompanying notes to financial statements.
9
Internal Service
Fund
Operating revenues:
Charges for services $ 1,785,781
Miscellaneous 11,748
Total operating revenues 1,797,529
Operating expenses:
Professional services 2,569
Insurance premiums 1,634,209
Total operating expenses 1,636,778
Operating income 160,751
Nonoperating revenues (expense):
Investment income 21,012
Interest expense (11,045)
Total net nonoperating revenues 9,967
Net income 170,718
Accumulated deficit, July 1, 2000 (144,825)
Retained earnings, June 30, 2001 $ 25,893
See accompanying notes to financial statements.
10
Apache County
Statement of Revenues, Expenses, and Changes in
Retained Earnings—Proprietary Fund Type
Year Ended June 30, 2001
Internal Service
Fund
Cash flows from operating activities:
Operating income $ 160,751
Adjustments to reconcile operating income to net cash
provided by (used for) operating activities:
Changes in assets and liabilities:
Increase in:
Due from other funds (800)
Decrease in:
Accounts receivable 2,001
Accounts payable (7,666)
Due to other funds (13,472)
Net cash provided by operating activities 140,814
Cash flows from noncapital financing activities:
Interest paid (11,045)
Net cash used for noncapital financing activities (11,045)
Cash flows from investing activities:
Interest received on investments 22,993
Net cash provided by investing activities 22,993
Net increase in cash and equivalents 152,762
Cash and cash equivalents, July 1, 2000 175,862
Cash and cash equivalents, June 30, 2001 $ 328,624
Cash and cash equivalents, June 30, 2001, consist of:
Cash and investments held by County Treasurer $ 328,624
See accompanying notes to financial statements.
11
Apache County
Statement of Cash Flows—Proprietary Fund Type
Year Ended June 30, 2001
Apache County
Statement of Net Assets
Investment Trust Fund
June 30, 2001
Treasurer's
Investment
Assets Pool
Cash and cash equivalents $ 113,101,229
Interest and dividends receivable 799,327
Total assets 113,900,556
Liabilities
Total liabilities
Net assets held in trust $ 113,900,556
See accompanying notes to financial statements.
12
Apache County
Statement of Changes in Net Assets
Investment Trust Fund
Year Ended June 30, 2001
Treasurer's
Investment
Pool
Additions:
Contributions from participants $ 220,336,293
Investment income:
Interest and dividend income 7,190,596
Total investment income 7,190,596
Total additions 227,526,889
Deductions:
Distributions to participants 218,982,185
Total deductions 218,982,185
Net increase in net assets 8,544,704
Net assets held in trust:
July 1, 2000 105,355,852
June 30, 2001 $ 113,900,556
See accompanying notes to financial statements.
13
Apache County
Notes to Financial Statements
June 30, 2001
14
Note 1 - Summary of Significant Accounting Policies
The accounting policies of Apache County conform to generally accepted
accounting principles applicable to governmental units adopted by the
Governmental Accounting Standards Board (GASB). A summary of the County's
more significant accounting policies follows.
The County's major operations include general government, public safety,
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. Each blended component unit discussed below
has a June 30 year-end. The County has no discretely presented component
units.
Blended Component Unit—Greer Acres, a special improvement district, and the
Apache County Jail District, which is a tax-levying public improvement district
that acquires, constructs, operates, maintains, and finances county jails and jail
systems, pursuant to Arizona Revised Statutes, are included in the accompanying
financial statements since the districts’ governing bodies are the same as the
governing body of Apache County and they provide services to the entire County.
The districts’ financial statements are included in the County’s financial
statements in the Special Revenue Fund Types and the General Fixed Assets and
General Long-Term Debt Account Groups.
Separate financial statements of the blended component units are not prepared.
Apache County
Notes to Financial Statements
June 30, 2001
15
B. Fund Accounting
The County's accounts are maintained in accordance with the principles of fund
accounting to ensure that limitations and restrictions on the County's available
resources are observed. The principles of fund accounting require that resources
be classified for accounting and reporting purposes into funds or account groups
in accordance with the activities or objectives specified for those resources.
Each fund is considered a separate accounting entity, and its operations are
accounted for in a separate set of self-balancing accounts that comprise its
assets, liabilities, fund equity, revenues, and expenditures or expenses. Account
groups are reporting devices to account for certain assets and liabilities of the
governmental funds not recorded directly in those funds.
Accounts are separately maintained for each fund and account group; however,
in the accompanying financial statements, funds that have similar characteristics
have been combined into generic fund types that are further classified into
broad fund categories. A description of the County’s fund categories, types, and
account groups follows:
1. Governmental Funds account for the County's general government activities
using the flow of current financial resources measurement focus and include the
following fund types:
The General Fund is the County's primary operating fund. It accounts for all
financial resources of the County, except those required to be accounted for in
other funds.
The Special Revenue Funds account for specific revenue sources that are legally
restricted to expenditures for specified purposes.
The Debt Service Funds account for resources accumulated and used for the
payment of general long-term debt principal, interest, and related costs.
The Capital Projects Funds account for resources to be used for acquiring or
constructing major capital facilities.
2. Proprietary Funds account for the County’s ongoing activities that are similar
to those found in the private sector using the flow of economic resources
measurement focus. The County applies all applicable Financial Accounting
Standards Board Statements and Interpretations, Accounting Principles Board
Opinions, and Accounting Research Bulletins to its proprietary activities unless
those pronouncements conflict with or contradict GASB pronouncements. The
County’s proprietary fund includes the following fund type:
Apache County
Notes to Financial Statements
June 30, 2001
16
The Internal Service Fund accounts for the financing of goods or services
provided by the department or agency to other County departments or agencies,
or to other governments on a cost-reimbursement basis.
3. 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.
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. However, since debt service resources are provided during the current year
for payment of general long-term debt principal and interest due early in the
following year, those expenditures and related liabilities have been recognized in
the Debt Service Funds.
Revenues susceptible to accrual are property taxes; special assessments; licenses
and permits; intergovernmental aid, grants, and reimbursements; interest
revenue; charges for services; and sales taxes collected and held by the State at
year-end on the County’s behalf. Fines and forfeits and miscellaneous revenues
are not susceptible to accrual because generally they are not measurable until
received in cash.
Apache County
Notes to Financial Statements
June 30, 2001
17
The financial statements of the Propriety and Investment Trust Funds are
presented on the accrual basis of accounting. Revenues are recognized when
they are earned, and expenses are recognized when they are incurred.
D. Budgeting and Budgetary Control
Arizona Revised Statutes (A.R.S.) require the County to prepare and adopt a
balanced budget annually for each separate fund. The Board of Supervisors must
approve such operating budgets on or before the third Monday in July to allow
sufficient time for the legal announcements and hearings required for the
adoption of the property tax levy on the third Monday in August. A.R.S. prohibit
expenditures or liabilities in excess of the amounts budgeted.
Essentially, the County prepares its budget on the same modified accrual basis of
accounting used to record actual revenues and expenditures.
The County has adopted budgets in accordance with the A.R.S. requirements for
the General, Special Revenue, Debt Service, and Capital Projects Funds. Formal
budget integration is not employed for the Internal Service Fund because
effective budgetary control is alternately achieved through the capability of cost
recovery.
Expenditures may not legally exceed appropriations at the department level. In
certain instances, transfers of appropriations between departments or from the
contingency account to a department may be made upon approval of the Board
of Supervisors.
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
For purpose of its statement of cash flows, the County considers only those
highly liquid investments with a maturity of 3 months or less when purchased to
be cash equivalents.
Apache County
Notes to Financial Statements
June 30, 2001
18
Nonparticipating interest-earning investment contracts are stated at cost.
Money market investments and participating interest-earning investment
contracts with a remaining maturity of 1 year or less at time of purchase are
stated at amortized cost. All other investments are stated at fair value.
F. Inventories
Inventories of the Governmental Funds consist of expendable supplies held for
consumption and are recorded as expenditures at the time of purchase. Amounts
on hand at year-end are shown on the balance sheet as an asset for informational
purposes only and are offset by a fund balance reserve to indicate that they do
not constitute “available spendable resources.” These inventories are stated at
cost using the first-in, first-out method.
G. Fixed Assets
Purchased fixed assets capitalized in the General Fixed Assets Account Group are
recorded at the time of purchase as expenditures in the funds from which the
expenditures were made. Such assets are capitalized at cost. Donated fixed
assets are capitalized at their estimated fair market value at the time received.
Depreciation on general fixed assets is not recorded, and interest incurred during
construction is not capitalized. Also, public domain (infrastructure) general
fixed assets consisting of certain improvements other than buildings, such as
roads, bridges, curbs and gutters, streets and sidewalks, and drainage and
lighting systems, are not capitalized.
H. Compensated Absences
Compensated absences consist of vacation leave and a calculated amount of sick
leave earned by employees based on services already rendered.
Employees may accumulate up to 240 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.
Apache County
Notes to Financial Statements
June 30, 2001
19
Employees may accumulate up to 1,500 hours of sick leave. Generally, sick leave
benefits provide for ordinary sick pay and are cumulative but are forfeited upon
termination of employment. However, for employees who retire with an
accumulation of sick leave of at least 500 hours, sick leave benefits do vest and,
therefore, are accrued.
The liability for vested compensated absences of the Governmental Funds is
recorded in the General Long-Term Debt Account Group since the amount
expected to be paid from current financial resources is not significant.
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.
Note 2 - Stewardship, Compliance, and Accountability
Individual Fund Deficits—The following significant deficits resulted from
operations during the year but are expected to be corrected through normal
operations in fiscal year 2001-02 or through General Fund operating transfers.
Apache County
Notes to Financial Statements
June 30, 2001
20
Fund Deficit
Special Revenue:
GIS $ 5,181
JCRF detention 151,211
Detention center 9,511
ACCENT/Attorney 5,855
Diversion intake 6,812
State gang task force 29,950
Excess of Expenditures Over Appropriations in Individual Funds—Operating
transfers out within the General Fund as reported on the General Fund Schedule
of Revenues, Expenditures, and Changes in Fund Balance—Budget and Actual had
an excess of transfers over appropriations. The excess transfers were primarily
the result of unexpected expenditures in various funds. Certain Special Revenue
Funds, as listed below, had a significant excess of actual expenditures over
appropriations.
The excess in the JAIBG detention, JCRF detention, and detention center
expenditures resulted from the County charging the construction costs of the
new juvenile justice facility to these funds, although budgeting for these
expenditures in a different fund. Also, these funds incurred additional
expenditures that the County did not budget for. The excess in field trainer,
criminal justice records improvement—attorney, juvenile case processing,
Ganado school deputies, R.A.P. and Luna Lake improvement expenditures
resulted from the County receiving more federal and state grant revenues than
budgeted for, which resulted in increased expenditures.
Fund
Excess
Expenditures
Special Revenue:
Field trainer $ 5,108
Criminal Justice records improvement—Attorney 8,800
Juvenile case processing 14,443
JAIBG detention 30,000
JCRF detention 376,211
Detention center 23,160
Ganado school deputies 15,586
R.A.P. 20,505
Luna Lake improvement 11,322
Apache County
Notes to Financial Statements
June 30, 2001
21
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 Pool¾Arizona Revised Statutes require
community colleges, school districts, and other local governments to deposit
certain public monies with the County Treasurer (see Note 14). Those monies
are pooled with County monies for investment purposes.
Deposits¾At June 30, 2001, the investment pool had cash on hand of $12,000.
The carrying amount of the investment pool’s total cash in bank was $760,118
and the bank balance was $3,617,402. Of the bank balance $200,000 was
covered by federal depository insurance and $3,417,402 was covered by
collateral held by the pledging financial institution’s trust department or agent
in the County’s name.
Investments—At June 30, 2001, the investments in the County Treasurer’s
investment pool consisted of the following:
Fair
Value
Investment in State Treasurer’s
investment pool $117,363,417
U.S. government securities 10,998,270
Total $128,361,687
The State Board of Deposit provides oversight for the State Treasurer’s pools, and
the Local Government Investment Pool Advisory Committee provides consultation
and advice to the Treasurer. The fair value of a participant’s position in the pool
approximates the value of that participant’s pool shares. Those shares are not
identified with specific investments and are not subject to custodial credit risk.
All other investments were insured or registered in the County’s name, or were
held by the County or its agent in the County’s name.
Apache County
Notes to Financial Statements
June 30, 2001
22
Other Deposits—At June 30, 2001, the County had cash on hand of $2,210. The
carrying amount of the County’s total nonpooled cash in bank was $446,230, and
the bank balance was $524,785. Of the bank balance, $408,669 was covered by
federal depository insurance and $116,116 was covered by collateral held by the
pledging financial institution’s trust department or agent in the County’s name.
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 $ 12,000 $ 2,210 $ 14,210
Carrying amount of
deposits 760,118 446,230 1,206,348
Reported amount of
investments 128,361,687 128,361,687
Total $129,133,805 $448,440 $129,582,245
Combined Balance Sheet:
Cash in bank and on hand $ 448,440
Cash and investments held by
County Treasurer 129,133,805
Total $129,582,245
Note 4 - Property Taxes Receivable
The County levies real property taxes on or before the third Monday in August
that become due and payable in two equal installments. The first installment is
due on the first day of October and becomes delinquent after the first business
day of November. The second installment is due on the first day of March of the
next year and becomes delinquent after the first business day of May.
During the year, the County also 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.
A lien assessed against real and personal property attaches on the first day of
January preceding assessment and levy.
Property taxes receivable consist of uncollected property taxes as determined
from the records of the County Treasurer's Office, and at June 30, 2001, were as
follows:
Apache County
Notes to Financial Statements
June 30, 2001
23
Fiscal Year
General
Fund
Special
Revenue
Funds
Debt
Service
Funds
2000-01 $48,941 $ 93,896 $25,501
Prior 45,523 65,089 27,030
Total $94,464 $158,985 $52,531
That portion of property taxes receivable not collected within 60 days after June 30,
2001, has been deferred and, consequently, is not included in current-year
revenues.
Note 5 - Due from Other Governments
Amounts due from other governments at June 30, 2001, in the General Fund
include $794,016 in sales taxes and $36,818 in auto lieu taxes from the State of
Arizona. The remaining balance consists of various grants and contracts with
other governmental entities. Amounts due from other governments in the
Special Revenue Funds include $1,101,716 in highway user taxes from the State
of Arizona. The remaining balance consists of grants and contracts with other
governmental entities.
Note 6 - Changes in General Fixed Assets
A summary of the changes in general fixed assets follows:
Balance
July 1, 2000
(as restated) Additions Deletions
Balance
June 30, 2001
Land $ 1,458,535 $ 4,090 $ 1,462,625
Buildings 9,754,460 35,301 9,789,761
Improvements other than
buildings 287,963 23,024 310,987
Machinery and equipment 14,109,214 2,115,017 $594,384 15,629,847
Construction in progress 737,214 737,214
Total $25,610,172 $2,914,646 $594,384 $27,930,434
The estimated cost to complete construction in progress at June 30, 2001, was
$1,366,280.
Apache County
Notes to Financial Statements
June 30, 2001
24
Note 7 - Obligations Under Capital Leases
The County has acquired five road graders 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, such assets totaling $808,508 at June 30, 2001, are
capitalized in the General Fixed Assets Account Group.
The future minimum lease payments under the capital leases, together with the
present value of the net minimum lease payments at June 30, 2001, were as follows:
General
Long-Term
Debt Account
Group
Year ending June 30, 2002 $128,605
Year ending June 30, 2003 128,608
Total minimum lease payments 257,213
Less amount representing interest 20,845
Present value of net minimum lease
payments
$236,368
Note 8 - Bonds Payable
The County's bonded debt consists of general obligation bonds and special assessment
bonds with governmental commitment.
General Obligation Bonds—General obligation bonds payable at June 30, 2001,
consisted of the outstanding general obligation bonds presented below. The bonds are
noncallable with interest payable semiannually.
Principal and interest requirements at June 30, 2001, were as follows:
Description
Interest
Rates Maturities
Outstanding
Principal
July 1, 2000
Issues/
(Retirements)
Outstanding
Principal
June 30, 2001
General Obligation
Series 1998 4 to 6% 7/1/02-04 $2,100,000 $ (930,000) $1,170,000
General Obligation
Series 2001 4.3 to 6.4% 7/1/05-10 3,000,000 3,000,000
Total $2,100,000 $2,070,000 $4,170,000
Apache County
Notes to Financial Statements
June 30, 2001
25
General obligation bond debt service requirements to maturity, including
$1,075,534 of interest, are as follows:
Year ending June 30,
2002 $ 591,596
2003 573,369
2004 567,769
2005 601,769
2006 598,081
Thereafter 2,312,950
Total $5,245,534
During the year ended June 30, 2001, the County issued $3,000,000 in general
obligation bonds, with an average interest rate of 4.9 percent. The proceeds of
these bonds were used to acquire equipment and improve roads and highways.
Special Assessment Bonds with Governmental Commitment—Special assessment
bonds are secured by pledges of revenues from special assessments levied
against the benefiting property owners. The proceeds of the bond issues were
used to finance construction in this district. The bonds are noncallable with
interest payable semiannually.
The following special assessment district had bonds outstanding at June 30,
2001.
Description
Interest
Rate Maturities
Outstanding
Principal
July 1, 2000 Retirements
Outstanding
Principal
June 30, 2001
Greer Acres –
Little Colorado
Improvement
District 6.1% 1/1/02-10 $575,000 $43,000 $532,000
Special assessment bond debt service requirements to maturity, including
$158,844 of interest, are as follows:
Apache County
Notes to Financial Statements
June 30, 2001
26
Year ending June 30,
2002 $ 77,049
2003 77,152
2004 77,071
2005 76,807
2006 76,361
Thereafter 306,404
Total $690,844
Note 9 - Landfill Closure and Postclosure Care Costs
The County has contracted with an outside agency to operate its solid waste
facilities. The outside agency is also responsible for closure and postclosure
costs. The County believes that it is unlikely that the outside agency will default
on the agreement.
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
three public entity risk pools: the Arizona Counties Property and Casualty Pool,
the Arizona Counties Workers’ Compensation Pool, and the Arizona Local
Government Employee Benefit Trust, which are described below.
The Arizona Counties Property and Casualty Pool is a public entity risk pool
currently composed of 11 member counties. The pool provides member counties
catastrophic loss coverage for risks of loss related to torts; theft of, damage to,
and destruction of assets; errors and omissions; and natural disasters; and
provides risk management services. Such coverage includes all defense costs as
well as the amount of any judgment or settlement. The County is responsible for
paying a premium, based on its exposure in relation to the exposure of the
other participants, and a deductible of $5,000 for each occurrence. The
County is also responsible for any payments in excess of the maximum coverage of
$100 million per occurrence for property claims and $15 million per occurrence
for liability claims. A county must participate in the pool at least 3 years after
becoming a member; however, it may withdraw after the initial 3-year period. If
the pool were to become insolvent, the County would be assessed an additional
contribution.
Apache County
Notes to Financial Statements
June 30, 2001
27
The Arizona Counties Workers’ Compensation Pool is a public entity risk pool
currently composed of 11 member counties. The pool provides member counties
with workers’ compensation coverage, as required by law, and risk management
services. The County is responsible for paying a premium, based on an
experience rating formula, that allocates pool expenditures and liabilities among
the members.
The Arizona Counties Property and Casualty Pool and the Arizona Counties
Workers’ Compensation Pool receive independent audits annually and an audit by
the Arizona Department of Insurance triennially. Both pools accrue liabilities for
losses that have been incurred but not reported. These liabilities are
determined annually based on an independent actuarial valuation.
The County provides life, health, and disability benefits to its employees and
their dependents through the Arizona Local Government Employee Benefit Trust
currently composed of five member counties. The Trust provides the benefits
through a self-funding agreement with its participants and administers the
program. The County is responsible for paying the premium and requires 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.
Note 11 - Changes in Long-Term Liabilities
A summary of changes in the liabilities reported in the General Long-Term Debt
Account Group follows.
Balance
July 1, 2000 Additions Reductions
Balance
June 30, 2001
Accrued payroll and employee
benefits $1,137,183 $ 351,429 $1,488,612
Obligations under capital leases 344,889 $ 108,521 236,368
General obligation bonds payable 2,100,000 3,000,000 930,000 4,170,000
Special assessment bonds with
governmental commitment
payable 575,000 43,000 532,000
Total $4,157,072 $3,351,429 $1,081,521 $6,426,980
Note 12 - Interfund Receivables, Payables, and Operating Transfers
The interfund receivables, payables, and operating transfers by fund are as
follows:
Apache County
Notes to Financial Statements
June 30, 2001
28
Due from
Other Funds
Due to
Other Funds
Operating
Transfers from
Other Funds
Operating
Transfers to
Other Funds
General Fund $413,356 $ 55,107 $1,221,098 $1,041,323
Special Revenue Funds:
Accent/Attorney 25,000 19,552
Accent/Sheriff 440 60,710 69,773
Adult probation services 4,556
CASA 1,868
Children’s justice 5,000
County library 49 81,436
Data processing services—Schools 3,480 13,107
GIS 46,256
Health services 1,514 508,290
Jail district 2,308 351,820
JCRF detention 4,740
J.I.P.S. 4,644
JTPA/WIA 3,538
Roads 30,989 1,709 1,137,000
State aid to probation 9,656
State gang task force 8,000
Victim’s assistance 3,416 27,000
Victim’s compensation 2,166
Other 204 1,336 5,525 2,662
Debt Service Funds:
County bonds I&R 1,686 651 48,881
Greer Acres bond I&R 17,741 10,255
Capital Projects Funds:
1998 Bond issue—General Fund 16,200
1998 Bond issue—Roads 23,266
2001 Bond issue—General Fund 651 1,686 9,415
Greer Acres bond issue 17,741 10,255
Internal Service Fund 800 300,100
Total $492,421 $492,421 $2,321,557 $2,321,557
Note 13 - Retirement Plans
Plan Descriptions—The County contributes to the four plans described below.
Benefits are established by state statute and generally provide retirement,
death, long-term disability, survivor, and health insurance premium benefits.
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.
Apache County
Notes to Financial Statements
June 30, 2001
29
The Public Safety Personnel Retirement System (PSPRS) is an agent multiple-employer
defined benefit pension plan that covers public safety personnel who
are regularly assigned hazardous duty as employees of the State of Arizona or
one of its political subdivisions. The PSPRS, acting as a common investment and
administrative agent, is governed by a five-member board, known as The Fund
Manager, and 189 local boards according to the provisions of A.R.S. Title 38,
Chapter 5, Article 4.
The Corrections Officer Retirement Plan (CORP) is an agent multiple-employer
defined benefit pension plan that covers certain employees of the State of
Arizona, Departments of Corrections and Juvenile Corrections, and County
employees whose primary duties require direct inmate contact. The CORP is
governed by The Fund Manager of PSPRS and 12 local boards according to the
provisions of A.R.S. Title 38, Chapter 5, Article 6.
The Elected Officials Retirement Plan (EORP) is a cost-sharing multiple-employer
defined benefit pension plan that covers elected officials and judges of certain
state and local governments. The EORP is governed by The Fund Manager of
PSPRS according to the provisions of A.R.S. Title 38, Chapter 5, Article 3.
Each plan issues a publicly available financial report that inc ludes its financial
statements and required supplementary information. A report may be obtained
by writing or calling the applicable plan.
ASRS PSPRS, CORP, and EORP
3300 North Central Avenue
P.O. Box 33910
Phoenix, AZ 85067-3910
1020 East Missouri Avenue
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 plans—For the year ended June 30, 2001, active ASRS members and
the County were each required by statute to contribute at the actuarially
determined rate of 2.66 percent (2.17 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, 2001, 2000, and 1999, were
$245,883, $233,836, and $279,133, respectively, which were equal to the
required contributions for the year.
Apache County
Notes to Financial Statements
June 30, 2001
30
In addition, active EORP members were required by statute to contribute 7
percent of the members’ annual covered payroll. The County was required to
remit a designated portion of court docket fees plus additional contributions of
0.73 percent of the member’s annual covered payroll, as determined by actuarial
valuation. The County’s contributions to EORP for the years ended June 30,
2001, 2000, and 1999, were $5,942, $5,910, and $0, respectively, which were
equal to the required contributions for the year.
Agent plans—For the year ended June 30, 2001, active PSPRS members were
required by statute to contribute 7.65 percent of the members’ annual covered
payroll, and the County was required to contribute at the actuarially determined
rate of 11.96 percent. Active CORP members were required by statute to
contribute 8.5 percent of the members’ annual covered payroll, and the County
was required to contribute at the actuarially determined rate of 2.49 percent.
Annual Pension Cost—The County’s pension cost for the two agent plans for the
year ended June 30, 2001, and related information follows:
PSPRS CORP
Contribution rates:
County 11.96% 2.49%
Plan members 7.65% 8.5%
Annual pension cost $135,953 $12,925
Contributions made $135,953 $12,925
The current-year annual required contribution for both the PSPRS and CORP were
determined as a part of their June 30, 1999, 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, 1999, was 20 years.
Trend Information—Annual pension cost information for the current and 2
preceding years follows for each of the agent plans:
Apache County
Notes to Financial Statements
June 30, 2001
31
Plan
Year Ended
June 30
Annual Pension
Cost (APC)
Percentage of
APC
Contributed
Net Pension
Obligation
PSPRS 2001 $135,953 100% $0
2000 73,981 100 0
1999 42,548 100 0
CORP 2001 $ 12,925 100% $0
2000 24,632 100 0
1999 27,671 100 0
Analysis of Funding Progress—The following information was obtained from the
three most recent actuarial valuations of the agent plans:
PSPRS
Actuarial
Valuation
Date
Actuarial
Value of
Plan Assets
(a)
Actuarial
Accrued
Liability
(b)
Funding
(Liability)
Excess
(a-b)
Funded
Ratio
(a/b)
Annual
Covered
Payroll
(c)
Unfunded
Liability as
Percentage
of Covered
Payroll
([a-b]/c)
6/30/01 $3,153,292 $3,324,313 ($171,021) 94.9% $1,228,926 (13.9%)
6/30/00 2,952,523 3,427,926 (475,403) 86.1 1,045,000 (45.5)
6/30/99 2,525,548 2,831,709 (306,161) 89.2 976,764 (31.3)
CORP
Actuarial
Valuation
Date
Actuarial
Value of
Plan Assets
(a)
Actuarial
Accrued
Liability
(b)
Funding
(Liability)
Excess
(a-b)
Funded
Ratio
(a/b)
Annual
Covered
Payroll
(c)
Unfunded
Liability as
Percentage
of Covered
Payroll
([a-b]/c)
6/30/01 $800,495 $452,179 $348,316 177.0% $534,228 -
6/30/00 742,627 438,200 304,427 169.5 495,541 -
6/30/99 622,523 410,677 211,846 151.6 533,675 -
Apache County
Notes to Financial Statements
June 30, 2001
32
Note 14 – 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.
Details of each investment classification follow:
Investment
Type Principal
Interest
Rates Maturities Fair Value
Investment in Arizona State
Treasurer’s Investment Pool $117,363,417 None stated None stated $117,363,417
U.S. government securities 11,000,000 3.46 – 5.625% 12/01 – 5/02 10,998,270
A condensed statement of the investment pool’s net assets and changes in net
assets follows:
Statement of Net Assets
Assets $130,031,387
Liabilities 0
Net assets $130,031,387
Net assets held in trust for:
Internal participants $ 16,130,831
External participants 113,900,556
Total net assets held in trust $130,031,387
Statement of Changes in Net Assets
Total additions $266,764,326
Total deductions 257,178,840
Net increase 9,585,486
Net assets held in trust:
July 1, 2000 120,445,901
June 30, 2001 $130,031,387
Apache County
Notes to Financial Statements
June 30, 2001
33
Note 15 – Restatement of Beginning Balances
The fund balances of the General and Special Revenue Funds and the General
Fixed Assets Account Group balance at June 30, 2000, have been restated as
follows:
General
Fund
Special
Revenue Funds
General
Fixed Assets
Account Group
Fund balances and account group
balance at June 30, 2000, as
previously reported $7,911,189 $6,088,928 $31,245,907
Correction for understatement of
intergovernmental revenue 1,118,918 369,590
Correction for improperly classified
assets and unrecorded prior year
deletions (5,635,735)
Fund balances and account group
balance, as restated June 30, 2000, $9,030,107 $6,458,518 $25,610,172
Supplementary Information
Apache County
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2001
CFDA Pass-Through
Federal Grantor / Pass-Through Number Grantor's
Grantor / Program Title (Note 2) Number Expenditures
U.S. Department of Agriculture
Cooperative Law Enforcement Agreement 10.unknown $ 738
Special Supplemental Nutrition Program for Women,
Infants and Children, passed through the Arizona
Department of Health Services 10.557 761088 93,405
Schools and Roads—Grants to States,
passed through the Arizona State Treasurer 10.665 None 44,591
Total U.S. Department of Agriculture 138,734
U.S. Department of Housing and Urban Development
Community Development Block Grants/Entitlement Grants,
passed through the Arizona Department of Commerce 14.218 073-01
074-01 31,899
U.S. Department of the Interior
Payments in Lieu of Taxes 15.226 523,885
U.S. Department of Justice
Crime Victim Compensation, passed through the
Arizona Criminal Justice Commission 16.576 VC-01-049 4,899
Byrne Formula Grant Program, passed through the
Administrative Office of the Courts 16.579 None 26,194
Byrne Formula Grant Program, passed through the
Arizona Criminal Justice Commission 16.579 AC-170-01
PC-110-01
CRI-01-028 232,574
Rural Domestic Violence and Child Victimization
Enforcement Grant Program, passed through the
Governor's Office for Domestic Violence Prevention 16.589 None 26,692
Local Law Enforcement Block Grants Program, passed
through the Arizona Criminal Justice Commission 16.592 LLBG-00-107 9,225
Total U.S. Department of Justice 299,584
U.S. Department of Labor
Workforce Investment Act, passed through the
Arizona Department of Economic Security 17.255 E5709023
E5701025 105,811
One Stop Career Center Initiative, passed through the
Governor's Office of Employment and Training 17.257 E5709047 888
Total U.S. Department of Labor 106,699
(Continued)
See accompanying notes to schedule.
35
Apache County
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2001
(Continued)
CFDA Pass-Through
Federal Grantor / Pass-Through Number Grantor's
Grantor / Program Title (Note 2) Number Expenditures
U.S. Department of Transportation
Highway Planning and Construction, passed through
the Arizona Department of Transportation 20.205 INDRES-NIR-0(004)
H5167 10X $ 247,625
Interagency Hazardous Materials Public Sector
Training and Planning Grants, passed through the
Arizona Department of Emergency and Military Affairs 20.703 None 2,725
Total U.S. Department of Transportation 250,350
U.S. Institute of Museum and Library Services
State Library Program, passed through the Arizona
Department of Library, Archives, and Public Records 45.310 2000-CIP-0100 17,100
U.S. Federal Emergency Management Agency
Emergency Management—State and Local Assistance,
passed through the Arizona Department of Emergency
and Military Affairs 83.534 None 39,579
U.S. Department of Education
Title I, Technology and Training, passed through the
Arizona Department of Library, Archives, and Public Records 84.034 92-I-2-(22) 1,051
U.S. Department of Health and Human Services
Immunization Grants, passed through the Arizona
Department of Health Services 93.268 30-4056
152037 16,032
Grants to States for Access and Visitation Programs, passed
through the Arizona Department of Economic Security 93.597 None 1,645
Children's Justice Grants to States, passed through the
Arizona Governor's Community Policy Office Division
for Children 93.643 CJAG2001-64 5,000
HIV Prevention Activities—Health Department Based, passed
through the Arizona Department of Health Services 93.940 852030
152009 7,198
Prevention Health and Health Services Block Grant, passed
through the Arizona Department of Health Services 93.991 952025 32,021
Maternal and Child Health Services Block Grant to the States,
passed through the Arizona Department of Health Services 93.994 961084
761140
161064
761102 62,036
(Continued)
See accompanying notes to schedule.
36
Apache County
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2001
(Continued)
CFDA Pass-Through
Federal Grantor / Pass-Through Number Grantor's
Grantor / Program Title (Note 2) Number Expenditures
Maternal and Child Health Services Block Grant to the
States, passed through the Northern Arizona Council
of Governments Services to the Elderly 93.994 866000385BA $ 69,455
Total U.S. Department of Health and
Human Services 193,387
Total Expenditures of Federal Awards $ 1,602,268
See accompanying notes to schedule.
37
Apache County
Notes to Schedule of Expenditures of Federal Awards
Year Ended June 30, 2001
38
Note 1 - Basis of Accounting
The accompanying schedule of expenditures of federal awards includes the federal
grant activity of Apache 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 2001 Catalog of Federal Domestic Assistance.
Note 3 - Subrecipients
From the federal expenditures presented in the schedule, the County awarded the
following to subrecipients:
Program Title CFDA Number Amount
Schools and Roads—Grants to States 10.665 $22,295
2910 NORTH 44 th STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • (602) 553 -0333 • FAX (602) 553 -0051
DEBRA K. DAVENPORT, CPA
AUDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL
WILLIAM THOMSON
DEPUTY AUDITOR GENERAL
Independent Auditors’ Report on Compliance and on Internal Control over
Financial Reporting Based on an Audit of General Purpose Financial Statements
Performed in Accordance with Government Auditing Standards
Members of the Arizona State Legislature
The Board of Supervisors of
Apache County, Arizona
We have audited the general purpose financial statements of Apache County as of and for the year
ended June 30, 2001, and have issued our report thereon dated June 20, 2002. We conducted our
audit in accordance with U.S. generally accepted auditing standards and the standards applicable
to financial audits contained in Government Auditing Standards, issued by the Comptroller General
of the United States.
Compliance
As part of obtaining reasonable assurance about whether the County’s general purpose financial
statements are free of material misstatement, we performed tests of its compliance with certain
provisions of laws, regulations, contracts, and grants, noncompliance with which could have a
direct and material effect on the determination of general purpose financial statement amounts.
However, providing an opinion on compliance with those provisions was not an objective of our
audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no
instances of noncompliance that are required to be reported under Government Auditing
Standards. However, we noted certain immaterial instances of noncompliance that we will report
to the County’s management in a separate letter.
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. 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
39
40
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. However, we noted other matters involving internal control over financial
reporting that we will report to the County’s management in a separate letter.
This report is intended solely for the information and use of the members of the Arizona
State Legislature, the Board of Supervisors, federal awarding agencies, and pass-through
entities and is not intended to be and should not be used by anyone other than these
specified parties. However, this report is a matter of public record and its distribution is not
limited.
Debbie Davenport
Auditor General
June 20, 2002
2910 NORTH 44 th STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • (602) 553 -0333 • FAX (602) 553 -0051
DEBRA K. DAVENPORT, CPA
AUDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL
WILLIAM THOMSON
DEPUTY AUDITOR GENERAL
Independent Auditors’ Report on Compliance with Requirements
Applicable to Each Major Program and on Internal Control over Compliance in
Accordance with OMB Circular A-133
Members of the Arizona State Legislature
The Board of Supervisors of
Apache County, Arizona
Compliance
We have audited the compliance of Apache County with the types of compliance requirements
described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance
Supplement that are applicable to each of its major federal programs for the year ended June 30,
2001. The County’s major federal programs are identified in the Summary of Auditors’ Results
section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the
requirements of laws, regulations, contracts, and grants applicable to each of its major federal
programs is the responsibility of the County’s management. Our responsibility is to express an
opinion on the County’s compliance based on our audit.
We conducted our audit of compliance in accordance with U.S. generally accepted auditing
standards; the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits
of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-
133 require that we plan and perform the audit to obtain reasonable assurance about whether
noncompliance with the types of compliance requirements referred to above that could have a
direct and material effect on a major federal program occurred. An audit includes examining, on a
test basis, evidence about the County’s compliance with those requirements and performing such
other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion. Our audit does not provide a legal determination on
the County’s compliance with those requirements.
In our opinion, Apache County complied, in all material respects, with the requirements referred to
above that are applicable to each of its major federal programs for the year ended June 30, 2001.
41
42
Internal Control over Compliance
The County’s management is responsible for establishing and maintaining effective internal
control over compliance with requirements of laws, regulations, contracts, and grants
applicable to federal programs. In planning and performing our audit, we considered the
County’s internal control over compliance with requirements that could have a direct and
material effect on a major federal program in order to determine our auditing procedures
for the purpose of expressing our opinion on compliance and to test and report on internal
control over compliance in accordance with OMB Circular A-133.
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 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 Board of Supervisors, federal awarding agencies, and pass-through
entities and is not intended to be and should not be used by anyone other than these
specified parties. However, this report is a matter of public record and its distribution is not
limited.
Debbie Davenport
Auditor General
June 20, 2002
Apache County
Schedule of Findings and Questioned Costs
Year Ended June 30, 2001
43
Summary of Auditors’ Results
Financial Statements
Type of auditors’ report issued: Unqualified
Yes No
Material weakness identified in internal control over financial reporting? X
Reportable condition identified not considered to be a material weakness? X
(None
reported)
Noncompliance material to the financial statements noted? X
Federal Awards
Material weakness identified in internal control over major programs? X
Reportable condition identified not considered to be a material weakness? X
(None
reported)
Type of auditors’ report issued on compliance for major programs: Unqualified
Any audit findings disclosed that are required to be reported in accordance
with Circular A-133 (section .510[a])? X
Identification of major programs:
CFDA Number Name of Federal Program or Cluster
15.226 Payment 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