Graham County single audit reporting package: year ended June 30,...

              Graham County, Arizona
Single Audit Reporting Package
June 30, 2001
Graham County Arizona
Single Audit Reporting Package
June 30, 2001
Table of Contents
Page
Report on Audit of General Purpose Financial Statements
Independent Auditor’s Report .......................................1
Combined Balance Sheet - All Fund Types and Account Groups ...............................2
Combined Statement of Revenues, Expenditures, and Changes in Fund
Balances - All Governmental Fund Types..............................................................4
Combined Statement of Revenues, Expenditures, and Changes in Fund
Balances - Budget and Actual - General and Special Revenue
Fund Types............................................................................................................. 5
Combined Statement of Revenues, Expenditures, and Changes in
Fund Balances - Budget and Actual - Capital Projects Fund Type........................8
Combining Statement of Net Assets - Investment Trust Funds ...................................9
Combining Statement of Changes in Net Assets - Investment Trust Funds..............10
Notes to Financial Statements....................................................................................11
Supplementary Information
Schedule of Expenditures Of Federal Awards......................................................27
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.........................30
Report on Compliance with Requirements Applicable to Each Major
Program and on Internal Control over Compliance in Accordance with
OMB Circular A-133..............................................................................................32
Schedule of Findings and Questioned Costs
Summary of Auditor’s Results...............................................................................34
Financial Statement Findings................................................................................35
Federal Award Findings and Questioned Costs...................................................37
County Responses
Corrective Action Plan...........................................................................................39
Graham County
Combined Balance Sheet- All Fund Types and Account Groups
June 30, 2001
Fiduciary
Governmental Fund Types Fund Types Account Groups
Special Capital Trust and General General Long-
General Revenue Projects Agency Fixed Assets Term Debt
Assets
Cash and cash equivalents $ 869,833 $ 5,426,920 $ 225,870 $ 61,629,495 $ - $ -
Receivables:
Property taxes 282,992 7,745 - - - -
Accrued interest - - - 202,447 - -
Due from:
Other funds - 45,587 - - - -
Other governments 701,643 382,069 - - - -
Inventories - 216,057 - - - -
Fixed assets:
Land - - - - 2,444,215 -
Buildings - - - - 10,368,987 -
Machinery and equipment - - - - 5,479,405 -
Amount to be provided for retirement
of general long-term debt - - - - - 1,796,965
Total assets $ 1,854,468 $ 6,078,378 $ 225,870 $ 61,831,942 $ 18,292,607 $ 1,796,965
See accompanying notes to financial statements.
2
Graham County
Combined Balance Sheet- All Fund Types and Account Groups
June 30, 2001
(Continued)
Fiduciary
Governmental Fund Types Fund Types Account Groups
Special Capital Trust and General General Long-
General Revenue Projects Agency Fixed Assets Term Debt
Liabilities and Fund Equity
Liabilities:
Accounts payable $ 154,791 $ 57,206 $ - $ - $ - $ -
Accrued payroll and employee benefits 126,366 67,644 - - - -
Due to:
Other funds 12,996 32,591 - - - -
Other governments - 54,161 - - - -
Compensated absences payable - - - - - 427,036
Deposits held for others 51,852 - - 528,578 - -
Landfill closure and postclosure care
costs payable - - - - - 1,369,929
Deferred revenues 258,168 81,424 - - - -
Total liabilities 604,173 293,026 - 528,578 - 1,796,965
Fund equity:
Investment in general fixed assets - - - - 18,292,607 -
Fund balances:
Reserved for inventories - 216,057 - - - -
Reserved for investment trust participants - - - 61,303,364 - -
Unreserved 1,250,295 5,569,295 225,870 - - -
Total fund equity 1,250,295 5,785,352 225,870 61,303,364 18,292,607 -
Total liabilities and fund equity $ 1,854,468 $ 6,078,378 $ 225,870 $ 61,831,942 $ 18,292,607 $ 1,796,965
See accompanying notes to financial statements.
3
Graham County
Combined Statement of Revenues, Expenditures,
and Changes in Fund Balances- All Governmental Fund Types
Year Ended June 30, 2001
Governmental Fund Types
Special Capital
General Revenue Projects
Revenues:
Taxes $ 1,798,230 $ 51,375 $ -
Licenses and permits 17,237 - -
Intergovernmental 7,108,088 5,315,494 -
Charges for services 456,783 364,620 -
Fines and forfeits 266,616 1,990 -
Investment income 120,611 276,806 40,419
Rents 12,000 47,693 -
Miscellaneous 90,358 335,362 -
Total revenues 9,869,923 6,393,340 40,419
Expenditures
Current:
General government 4,254,681 441,323 -
Public safety 3,297,418 1,187,951 -
Highways and streets - 1,992,438 -
Sanitation 290,203 323,212 -
Health 196,755 482,125 -
Welfare 1,795,655 - -
Culture and recreation 142,445 243,960 -
Education 138,042 573,248 -
Capital outlay 420,897 341,160 88,002
Total expenditures 10,536,096 5,585,417 88,002
Excess of revenues over (under) expenditures (666,173) 807,923 (47,583)
Other financing sources (uses):
Operating transfers in 200,000 272,035 132,347
Operating transfers out (132,647) (271,735) (200,000)
Total other financing sources (uses) 67,353 300 (67,653)
Excess of revenues and other sources over
(under) expenditures and other uses (598,820) 808,223 (115,236)
Fund balances, July 1, 2000, as restated 1,849,115 4,946,019 341,106
Increase in reserve for inventories - 31,110 -
Fund balances, June 30, 2001 $ 1,250,295 $ 5,785,352 $ 225,870
See accompanying notes to financial statements.
4
Graham 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
Annually
Budgeted
Budget Actual Variance Budget Actual Variance
Revenues:
Taxes $ 1,745,958 $ 1,798,230 $ 52,272 $ 60,546 $ 51,375 $ (9,171)
Licenses and permits 25,000 17,237 (7,763) - - -
Intergovernmental 8,349,955 7,108,088 (1,241,867) 5,019,653 4,636,589 (383,064)
Charges for services 662,418 456,783 (205,635) 230,730 328,401 97,671
Fines and forfeits 350,000 266,616 (83,384) 1,500 1,990 490
Investment income 192,011 120,611 (71,400) 134,932 202,825 67,893
Rents 13,000 12,000 (1,000) - - -
Miscellaneous 180,000 90,358 (89,642) 265,540 133,436 (132,104)
Total revenues 11,518,342 9,869,923 (1,648,419) 5,712,901 5,354,616 (358,285)
Expenditures:
Current:
General government:
Board of Supervisors 448,568 444,111 4,457 - - -
Treasurer 226,564 206,642 19,922 12,365 - 12,365
Assessor 315,807 300,191 15,616 - - -
Recorder 166,091 163,051 3,040 46,875 20,104 26,771
Elections 99,490 99,671 (181) - - -
Attorney 482,278 430,612 51,666 27,697 7,942 19,755
Clerk of the Court 277,702 269,807 7,895 42,821 14,543 28,278
Superior Court 367,362 423,139 (55,777) 296,351 185,287 111,064
Justice of the Peace No. 1 198,013 189,568 8,445 32,564 1,250 31,314
Justice of the Peace No. 2 109,002 106,045 2,957 7,500 - 7,500
Victim witness 48,665 47,051 1,614 74,680 71,108 3,572
Public Fiduciary 67,209 66,647 562 - - -
Planning and zoning 140,009 123,960 16,049 - - -
Engineering - - - 18,682 - 18,682
Building maintenance 142,385 127,361 15,024 - - -
Electrical maintenance 52,806 49,247 3,559 - - -
Overtime 12,137 12,795 (658) - - -
General services 231,482 212,230 19,252 - - -
Contingency 625,000 154,663 470,337 - - -
Miscellaneous 589,206 334,870 254,336 - - -
See accompanying notes to financial statements.
5
Graham 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
Annually
Budgeted
Budget Actual Variance Budget Actual Variance
Medical Examiner $ 21,500 $ 10,480 $ 11,020 $ - $ - $ -
Information Technology 491,449 482,540 8,909 - - -
Total general government 5,112,725 4,254,681 858,044 559,535 300,234 259,301
Public safety:
Probation 50,064 48,922 1,142 908,987 921,753 (12,766)
Sheriff 2,466,875 2,458,201 8,674 403,121 235,169 167,952
Search and rescue 13,870 7,468 6,402 - - -
Juvenile detention center 1,070,920 782,827 288,093 - - -
Total public safety 3,601,729 3,297,418 304,311 1,312,108 1,156,922 155,186
Highways and streets:
Roads - - - 2,947,254 1,926,333 1,020,921
Flood control - - - 312,561 66,105 246,456
Total highway and streets - - - 3,259,815 1,992,438 1,267,377
Sanitation:
Sanitary landfill 338,738 290,203 48,535 447,574 274,382 173,192
Waste tire facility - - - 45,000 48,830 (3,830)
Total sanitation 338,738 290,203 48,535 492,574 323,212 169,362
Health:
Health services 195,173 196,755 (1,582) 733,263 474,771 258,492
Total health 195,173 196,755 (1,582) 733,263 474,771 258,492
Welfare:
Attorney for the indigent 350,000 237,017 112,983 - - -
Indigent medical 1,770,609 1,558,638 211,971 - - -
Total welfare 2,120,609 1,795,655 324,954 - - -
See accompanying notes to financial statements.
6
Graham 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
Annually
Budgeted
Budget Actual Variance Budget Actual Variance
Culture and recreation:
Parks and recreation $ 168,868 $ 142,445 $ 26,423 $ - $ - $ -
Total culture and recreation 168,868 142,445 26,423 - - -
Education:
School superintendent 132,152 129,527 2,625 - - -
Employment and training 8,829 8,515 314 - - -
Total education 140,981 138,042 2,939 - - -
Capital outlay 1,236,286 420,897 815,389 2,994,672 326,086 2,668,586
Total expenditures 12,915,109 10,536,096 2,379,013 9,351,967 4,573,663 4,778,304
Excess of revenues over (under) expenditures (1,396,767) (666,173) 730,594 (3,639,066) 780,953 4,420,019
Other financing sources (uses):
Operating transfers in - 200,000 200,000 - 239,895 239,895
Operating transfers out - (132,647) (132,647) - (36,250) (36,250)
Total other financing sources (uses) - 67,353 67,353 - 203,645 203,645
Excess of revenues and other sources over
(under) expenditures and other uses (1,396,767) (598,820) 797,947 (3,639,066) 984,598 4,623,664
Fund balances, July 1, 2000, as restated 1,396,767 1,849,115 452,348 3,639,066 3,840,228 201,162
Increase in reserve for inventories - - - - 31,110 31,110
Fund balances, June 30, 2001 $ - $ 1,250,295 $ 1,250,295 $ - $ 4,855,936 $ 4,855,936
See accompanying notes to financial statements.
7
Graham County
Combined Statement of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual- Capital Projects Fund Type
Year Ended June 30, 2001
Capital Projects Funds
Budget Actual Variance
Revenues:
Investment income $ 42,000 $ 40,419 $ (1,581)
Total revenues 42,000 40,419 (1,581)
Expenditures:
Capital outlay 509,319 88,002 421,317
Total expenditures 509,319 88,002 421,317
Excess of revenue over (under) expenditures (467,319) (47,583) 419,736
Other financing sources (uses):
Operating transfers in - 132,347 132,347
Operating transfers out - (200,000) (200,000)
Total other financing sources (uses) - (67,653) (67,653)
Excess of revenues and other sources over
(under) expenditures and other uses (467,319) (115,236) 352,083
Fund balances, July 1, 2000 467,319 341,106 (126,213)
Fund balances, June 30, 2001 $ - $ 225,870 $ 225,870
See accompanying notes to financial statements.
8
See accompanying notes to financial statements.
9
Graham County
Combining Statement of Net Assets
Investment Trust Funds
June 30, 2001
Treasurer’s
Investment
Individual
Investment
Pool Accounts Total
Assets
Cash and cash equivalents $ 33,885,353 $ 27,215,564 $ 61,100,917
Interest and dividends receivable 81,822 120,625 202,447
Total assets 33,967,175 27,336,189 61,303,364
Liabilities -0- -0- -0-
Net assets held in trust $ 33,967,175 $ 27,336,189 $ 61,303,364
See accompanying notes to financial statements.
10
Graham County
Combining Statement of Changes in Net Assets
Investment Trust Funds
Year Ended June 30, 2001
Treasurer’s
Investment
Individual
Investment
Pool Accounts Total
Additions:
Contributions from participants $ 41,148,356 $ 14,579,896 $ 55,728,252
Investment income 2,140,070 1,706,701 3,846,771
Total additions 43,288,426 16,286,597 59,575,023
Deductions:
Distributions to participants 40,023,629 12,043,000 52,066,629
Total deductions 40,023,629 12,043,000 52,066,629
Net increase in net assets 3,264,797 4,243,597 7,508,394
Net assets held in trust:
July 1, 2000, as restated 30,702,378 23,092,592 53,794,970
June 30, 2001 $ 33,967,175 $ 27,336,189 $ 61,303,364
Graham County
Notes to Financial Statements
June 30, 2001
11
Note 1 - Summary of Significant Accounting Policies
The accounting policies of Graham 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, education, and
culture and recreation.
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 County has no component units.
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. 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
Graham County
Notes to Financial Statements
June 30, 2001
12
categories. A description of the County's fund categories, types, and account groups
follows.
1. Governmental Funds account for the County's general government activities
using the flow of current financial resources measurement focus and include the
following fund types.
The General Fund is the County's primary operating fund. It accounts for all financial
resources of the County, except those required to be accounted for in other funds.
The Special Revenue Funds account for specific revenue sources, other than major
capital projects, that are legally restricted to expenditures for specified purposes.
The Capital Projects Funds account for resources to be used for acquiring or
constructing major capital facilities.
2. Fiduciary Funds account for assets the County holds on behalf of others, and
include the following fund types.
The Investment Trust Funds account for investments made by the County on behalf
of other governmental entities using the economic resources measurement focus.
The Agency Fund is custodial in nature and does not present results of operations or
have a measurement focus. This fund is used to account for assets that the
government holds for others in an agency capacity.
3. 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 fixed assets of the County.
The General Long-Term Debt Account Group accounts for all long-term obligations of
the County.
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.
Graham County
Notes to Financial Statements
June 30, 2001
13
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 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, some Special Revenue Funds as explained in Note 11, and Capital Projects
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.
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.
Graham County
Notes to Financial Statements
June 30, 2001
14
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
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, or estimated cost if
historical records are not available. At June 30, 2001, 7% of total fixed assets were
estimated at historical cost calculated by backtrending the current cost to the date of
acquisition using the appropriate price index. 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 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.
Graham County
Notes to Financial Statements
June 30, 2001
15
Employees may accumulate an unlimited number of sick leave hours. Generally, sick
leave benefits provide for ordinary sick pay and are cumulative but are forfeited upon
termination of employment. However, for employees with sick leave in excess of 360
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 - Individual Fund Deficits
The Special Revenue listed below had individual fund deficits at June 30, 2001, which
resulted from operations during the year. The deficits are expected to be corrected
through normal operations in fiscal year 2001-2002.
Special Revenue Funds
Fort Thomas Resource Officer
$ 4,484
ACJC Drug Grant 3,291
Juvenile Standard Probation 2,878
Adult Intensive Probation Services 2,603
Adult Probation State Aid
Enhancement
3,546
Graham County
Notes to Financial Statements
June 30, 2001
16
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 – The investment pool deposits at June 30, 2001, 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, 2001, the investments in the County Treasurer’s investment
pool consisted of the following.
Fair
Value
Investment in State Treasurer’s investment pool $ 19,807,339
U.S. government securities 20,038,047
Total $ 39,845,386
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 the 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.
The investment pool’s investments at June 30, 2001 are categorized below to give an
indication of the level of risk assumed by the County at year-end.
Category 1 - insured or registered in the County’s name, or securities held by the
County or its agent in the County’s name.
Category 2 - uninsured and unregistered with securities held by the counterparty’s
trust department or agent in the County’s name.
Graham County
Notes to Financial Statements
June 30, 2001
17
Category 3 - uninsured and unregistered with securities held by the counterparty, or
by its trust department or agent but not in the County’s name.
Category Fair
1 2 3 Value
U.S. government securities $ 20,038,047 $ 20,038,047
Investments not subject to
categorization:
State Treasurer’s investment pool 19,807,339
Total $ 39,845,386
Other Deposits - At June 30, 2001, the carrying amount of the County’s total
nonpooled cash in bank was $608,278, and the bank balance was $677,573. Of the
bank balance, $517,718 was covered by federal depository insurance or by collateral
held by the County or its agent in the County’s name; $125,678 was covered by
collateral held by the pledging financial institution’s trust department or agent in the
County’s name; and $34,177 was uninsured and uncollateralized.
Other Investments - At June 30, 2001, the County’s nonpooled investments
consisted of the following.
Fair
Value
Investment in State Treasurer’s
investment pool $ 27,215,564
Total $ 27,215,564
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.
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 $ 263,295 $ 263,295
Carrying amount of deposits 219,595 $ 608,278 827,873
Reported amount of investments 39,845,386 27,215,564 67,060,950
Total $ 40,328,276 $ 27,823,842 $ 68,152,118
Combined balance sheet:
Cash and cash equivalents $ 68,152,118
Graham County
Notes to Financial Statements
June 30, 2001
18
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:
Fiscal Year
General
Fund
Special
Revenue
Funds
2000-2001 $ 169,233 $ 6,135
Prior 113,759 1,610
Total $ 282,992 $ 7,745
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, include $134,412 in state-shared
revenue from sales tax, $207,800 in auto lieu tax, $99,288 in county excise
tax distributions due from the State Treasurer, $46,504 in state motor vehicle license
taxes from the Arizona Department of Transportation, $202,089 in prisoner detention
fees from the U.S. Department of Justice, and $11,550 in other fees from federal,
state, and local governments recorded in the General Fund; $236,459 in state-shared
revenue from highway user taxes, and $145,610 in grants and other fees from
federal, state, and local governments recorded in the Special Revenue Funds.
Note 6 - Interfund Receivables and Payables
The composition of interfund balances as of June 30, 2001 follows:
Graham County
Notes to Financial Statements
June 30, 2001
19
Receivable Fund Payable Fund Amount
Special Revenue – Highway Road Fund General $ 12,996
Special Revenue – Highway Road Fund Special Revenue-Regional Solid Waste 9,615
Special Revenue – Adult Probation Fees Special Revenue – Adult Intensive
Probation Services
8,559
Special Revenue – Adult Probation Fees Special Revenue – Adult Probation State
Aid Enhancement
14,417
$ 45,587
Note 7 - Changes in General Fixed Assets
A summary of the changes in general fixed assets follows.
Balance
July 1, 2000
Additions
Deletions
Balance
June 30, 2001
Land $ 2,427,750 $ 16,465 $ 2,444,215
Buildings 10,746,051 6,930 $ 383,994 10,368,987
Machinery and equipment 5,706,644 _ 361,150 588,389 ___5,479,405
Total $ 18,880,445 $ 384,545 $ 972,383 $ 18,292,607
Note 8 - Landfill Closure and Postclosure Care Costs
State and federal laws and regulations require the County to place final covers on its
two landfill sites (Central and Regional) when they stop accepting waste and to
perform certain maintenance and monitoring functions at the sites for 30 years after
closure. Although 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 the landfill capacity used as of each
balance sheet date. The $1,369,929 reported as landfill closure and postclosure care
liability at June 30, 2001, represents the cumulative amount reported to date on the
use of 100.00 and 27.16 percent respectively of the estimated capacity of the two
landfills. The County will recognize the remaining estimated cost of closure and
postclosure care of $1,834,486 as the remaining estimated capacity is filled. These
cumulative amounts are based on what it would cost to perform all closure and
postclosure care in fiscal year 2001, and have been adjusted for changes in
estimates during the fiscal year. The County expects to close the Central landfill in the
year 2004 and the Regional landfill in the year 2019, 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.
Graham County
Notes to Financial Statements
June 30, 2001
20
Note 9 - 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 Graham Combined 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 deductibles 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 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.
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 health benefits to its employees and their dependents through
the Graham Combined Trust, currently composed of three member Counties. The
Trust provides 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. The County is not
liable for claims in excess of coverage limits and cannot be assessed retroactive
premium adjustments. If it withdraws from the Trust, the County would be
Graham County
Notes to Financial Statements
June 30, 2001
21
responsible for its proportional share of 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 10 - 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
Compensated absences payable $ 341,552 $ 85,484 $ 427,036
Landfill closure and postclosure care
costs payable
2,593,949 $1,224,020 1,369,929
Total $2,935,501 $ 85,484 $1,224,020 $ 1,796,965
During the current fiscal year the County changed the estimated capacity used for
one of its landfills and the estimated closure dates for both County landfills. The
change in estimates has resulted in a reduction in the current period of the liability for
the landfill closure and postclosure care costs payable.
Note 11 -Budgetary Basis of Accounting
The County’s adopted budget is prepared on a basis consistent with accounting
principles generally accepted in the United States of America, except for the
following. Of the 120 Special Revenue Funds, only 80 are budgeted. The remaining
Special Revenue Funds were not budgeted. Consequently, the following adjustments
are necessary to present only those Special Revenue Funds budgeted for the year
ended June 30, 2001, in order to provide a meaningful comparison.
Special Revenue Funds
Total
Other
Fund
Financing Balances, Fund
Total Total Sources June 30, 2000, Balances,
Revenues Expenditures (Uses) As restated June 30, 2001
Combined Statement of
Revenues, Expenditures and
Changes in Fund Balance $ 6,393,340 $5,585,417 $300 $4,946,019 $5,785,352
Funds not budgeted (1,038,724) (1,011,754) 203,345 (1,105,791) (929,416)
Combined Statement of
Revenues, Expenditures and
Changes in Fund Balance -
Budget and Actual $5,354,616 $4,573,663 $203,645 $3,840,228 $4,855,936
Graham County
Notes to Financial Statements
June 30, 2001
22
Note 12 - Retirement Plans
Plan Descriptions - The County contributes to three plans, two of which are
described below. The Elected Officials Retirement Plan is not described due to its
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.
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
(602) 240-2000 or (800) 621-3778
1020 E. Missouri Ave.
Phoenix, AZ 85014
(602) 255-5575
Funding Policy - The Arizona State Legislature establishes and may amend active
plan members' and the County's contribution rates.
Cost-sharing plan - 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 $132,288, $115,519, and $102,834,
respectively, which were equal to the required contributions for the year.
Agent plan - For the year ended June 30, 2001, active PSPRS members were
required by statute to contribute 7.65 percent of the members' annual covered
Graham County
Notes to Financial Statements
June 30, 2001
23
payroll, and the County was required to contribute at the actuarially determined rate
of 12.33 percent.
Annual Pension Cost - The County's pension cost for the agent plan for the year
ended June 30, 2001, and related information follow.
PSPRS
Contribution rates:
County 12.33%
Plan members 7.65%
Annual pension cost $69,471
Contributions made $69,471
The current-year annual required contributions for the PSPRS was determined as
part of their June 30, 1999, actuarial valuations using the entry-age actuarial cost
method. The actuarial assumptions included (a) 9 percent investment rate of return
and (b) projected salary increases ranging from 6.5 percent to 9.5 percent per year.
Both (a) and (b) included an inflation component of 5.5 percent. The assumptions did
not include cost-of-living adjustments. The actuarial value of assets was determined
using techniques that smooth the effects of short-term volatility in the market value of
investments over a 4-year period. The unfunded actuarial accrued liability is being
amortized as a level percentage of projected payroll on an open basis. The remaining
amortization period at June 30, 1999, was 20 years.
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 (APC)
Percentage of
APC
Contributed
Net Pension
Obligation
PSPRS 2001 $ 69,471 100% $ -0-
2000 46,096 100% -0-
1999 47,744 100% -0-
Analysis of Funding Progress - The following information was obtained from the
three most recent actuarial valuations of the agent plan.
Graham County
Notes to Financial Statements
June 30, 2001
24
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 $ 1,315,876 $ 1,239,251 $ 76,625 106.2% $ 563,028 - %
6/30/00 1,106,151 1,243,942 (137,791) 88.9% 533,797 25.8%
6/30/99 913,542 1,112,679 (199,137) 82.1% 509,541 39.1%
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
values of the participants' investments.
Details of each major investment classification follow.
Investment Type
Principal
Interest
Rate(s)
Maturities
Fair
Value
U.S. Government securities $19,542,042 4.59-6.75% 8/01-5/04 $20,038,047
Investment in State
Treasurer’s investment pool
19,807,339
6.06%
19,807,339
A condensed statement of the investment pool's net assets and changes in net assets
follow.
Statement of Net Assets
Assets $ 40,410,098
Liabilities -0-
Net assets $ 40,410,098
Graham County
Notes to Financial Statements
June 30, 2001
25
Net assets held in trust for:
Internal participants $ 6,442,923
External participants 33,967,175
Total net assets held in trust $ 40,410,098
Statement of Changes in Net Assets
Total additions $ 60,725,514
Total deductions 57,433,704
Net increase 3,291,810
Net assets held in trust:
July 1, 2000 37,118,288
June 30, 2001 $ 40,410,098
Note 14 - Implementation of GASB Statement No. 34
Beginning with fiscal year 2002, 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 used by the County in future financial reports.
Note 15 - Restatement of Beginning Fund Balance/Net Assets
Beginning fund balance of the special revenue funds has been restated to correct for
the accumulated net errors of recording, in prior years, the operating activities of
special revenue funds within a trust fund.
Special
Revenue
Funds
Investment
Trust
Funds
Fund balance/net assets, June 30, 2000, as previously reported $4,552,049 $54,188,940
Correction of error 393,970 (393,970)
Fund balance/net assets, July 1, 2000, as restated $4,946,019 $53,794,970
26
Supplementary Information
See accompanying notes to schedule.
27
Graham County
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2001
Federal Grantor/Pass-Through Grantor/Program Title
CFDA
Number
Pass-Through
Grantor's Number
Expenditures
U.S. Department of Agriculture
Pass-through programs from:
Arizona Department of Health Services
Special Supplemental Nutrition Program for Women,
Infants, and Children
10.557
76-1092
$ 123,650
Special Supplemental Nutrition Program for Women,
Infants, and Children
10.557
76-1092
52,533
Arizona State Treasurer
Schools and Roads – Grants to States 10.665 None 39,097
Total U.S. Department of Agriculture 215,280
U.S. Department of the Interior
Direct grants
Payment in Lieu of Taxes 15.226 817,881
U.S. Department of Justice
Direct grants
Local Law Enforcement Block Grants Program 16.592 11,687
Local Law Enforcement Block Grants Program 16.592 12,460
Local Law Enforcement Block Grants Program 16.592 3,248
Public Safety Partnership and Community Policing Grants 16.710 35,161
Pass-through programs from:
Arizona Governor’s Office of Community Policy
Juvenile Accountability Incentive Block Grant 16.523 99JAIBG-03 4,894
Juvenile Accountability Incentive Block Grant 16.523 00JAIBG-06 4,756
Arizona Criminal Justice Commission
Crime Victim Assistance/Discretionary Grants 16.582 2001-005 31,015
Byrne Formula Grant Program 16.579 AC-130-01 29,182
Total U.S. Department of Justice 132,403
U.S. Federal Emergency Management Agency
Pass-through programs from:
Arizona Department of Emergency and Military Affairs
Emergency Management – State and Local Assistance 83.534 None 21,088
U.S. Department of Labor
Pass-through programs from:
Arizona Department of Economic Security
WIA Administration 17.255 E5701021 29,897
WIA Youth Activities 17.255 E5701021 116,454
WIA Adult Program 17.255 E5701021 84,976
Total U.S. Department of Labor 231,327
See accompanying notes to schedule.
28
Graham County
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2001
(Continued)
Federal Grantor/Pass-Through Grantor/Program Title
CFDA
Number
Pass-Through
Grantor's Number
Expenditures
U.S. Department of Health and Human Services
Pass-through programs from:
Arizona Department of Health Services
Maternal and Child Health Services Block Grant to the States 93.994 76-1105 $ 16,912
Maternal and Child Health Services Block Grant to the States 93.994 76-1105 20,233
HIV Prevention Program 93.940 852019 4,288
Immunization Grants 93.268 30-4061 8,668
Total U.S. Department of Health and Human Services 50,101
U.S. Department of Education
Pass-through programs from:
Arizona Department Education
Eisenhower Professional Development State Grant 84.281 99-006ED 27,295
Total Expenditures of Federal Awards $ 1,495,375
29
Graham County
Notes to Schedule of Expenditures of Federal Awards
Year Ended June 30, 2001
Note 1 - Basis of Accounting
The accompanying schedule of expenditures of federal awards includes the federal
grant activity of Graham 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. When no
CFDA number had been assigned to a program, the federal contract number was
used.
Note 3 - Subrecipients
The County did not provide federal awards to subrecipients during the year ended
June 30, 2001.
34
Graham County
Schedule of Findings and Questioned Costs
Year Ended June 30, 2001
Section I - Summary of Auditor's Results
Financial Statements
Type of auditor's report issued: Unqualified
YES NO
Material weakness identified in internal control over financing reporting? ___ X
Reportable conditions identified not considered to be material weaknesses?
X
___
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)
Types 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 Payment of 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
Graham County
Schedule of Findings and Questioned Costs
Year Ended June 30, 2001
35
Section II - Financial Statement Findings
Item: 01-1
Subject: Payroll
Condition: The payroll department maintains the employee personnel records.
Recommendation: To help reduce the risk of fictitious employees, the Human Resources
Department should maintain original employee records and periodically compare that
information to information used to prepare payroll.
Item: 01-2
Subject: Payroll
Condition: Payroll is not subject to a final review and approval before payment.
Recommendation: To help ensure that payroll is proper and to make corrections on a timely
basis, a final review and approval of payroll should be performed by an individual independent
of the payroll function.
Item: 01-3
Subject: Payroll
Condition: The County does not use Personnel Action Forms to document changes in
employment status.
Recommendation: To help ensure that all changes in employment status are properly
documented, a Personnel Action Form should be used. The form would document salary
increases, promotions, and changes in salary funding sources.
Item: 01-4
Subject: Segregation of Duties
Condition: We noted insufficient segregation of duties as evidenced by the following:
a. The same individual responsible for preparing accounts payable has access to
signed checks and also mails them.
b. The same individual responsible for preparing payroll has access to signed
checks, distributes signed checks and receives unclaimed checks.
Graham County
Schedule of Findings and Questioned Costs
Year Ended June 30, 2001
36
c. The same individual that performs the accounts payable function also maintains
the general fixed asset listing.
d. The same individual performed all accounting duties of the Public Fiduciary,
except for the review and signature of checks written to vendors, however, the
individual that performs the accounting duties also prepares and signs checks
written to trustees.
Recommendation: To help ensure that the assets of the County are properly safeguarded,
accounting duties should be segregated. If this is not possible, due to size of available staff,
then employees’ supervisor or another staff member should review and approve the activity.
Item: 01-5
Subject: Journal Entries
Condition: One individual, in a management position, has the ability to initiate, approve and
record journal entries.
Recommendation: To strengthen controls over journal entries, we recommend an authorized
employee other that the preparer should review and approve all journal entries prior to posting
them to the general ledger.
Graham County
Schedule of Findings and Questioned Costs
Year Ended June 30, 2001
37
Section III – Federal Award Findings and Questioned Costs
No matters were reported.
38
County Responses
Graham County
Corrective Action Plan
Year Ended September 30, 2001
39
Financial Statement Findings
Item: 01-1
Subject: Payroll
Contract Person: Dortheia Lee, Finance Officer
Anticipated Completion Date: Ongoing
Corrective Action: The Board of Supervisors will review budget capacity to determine if it is
feasible to establish a position in the Human Resources Department to maintain personnel files.
Item: 01-2
Subject: Payroll
Contract Person: Dortheia Lee, Finance Officer
Anticipated Completion Date: Present
Corrective Action: A final review and approval of payroll is now performed prior to payment by
the County Finance Officer.
Item: 01-3
Subject: Payroll
Contract Person: Dortheia Lee, Finance Officer
Anticipated Completion Date: Present
Corrective Action: Personnel Action Forms are now being utilized.
Item: 01-4
Subject: Segregation of Duties
Contract Person: Dortheia Lee, Finance Officer
Anticipated Completion Date: Ongoing
Graham County
Corrective Action Plan
Year Ended September 30, 2001
40
Corrective Action: The County is in the process of reviewing its internal controls over accounts
payable, payroll, general fixed assets, and the Public Fiduciary. An employee has been
assigned to review and approve the activities that are performed by a single employee.
Item: 01-5
Subject: Journal Entries
Contract Person: Dortheia Lee, Finance Officer
Anticipated Completion Date: Present
Corrective Action: A final review and approval is now performed by the County Manager
subsequent to journal entries being posted in the general ledger.