STATE OF MISSISSIPPI OFFICE OF THE STATE AUDITOR_part3 docx

PIKE COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 19 Debt Service Funds: Welfare building bonds General Fund 558 Jail bonds General Fund 6,392 Magnolia water treatment note General Fund 698 Road and bridge construction General Fund 2,401 North Pike Schools - 1983 General Fund 559 Industrial park #2 General Fund 726 Industrial redemption General Fund 2,484 Total 13,818 Agency Funds: Southwest Community College maintenance General Fund 8,374 Southwest Community College repair General Fund 8,374 Memorial Burn Center General Fund 698 Total 17,446 Total Interfund Receivable/Payables $ 111,687 (6) Fixed Assets. Changes in the General Fixed Assets Account Group at September 30, 1997, are as follows: Balance Balance Oct. 1, 1996 Additions Deletions Sept. 30, 1997 PRIMARY GOVERNMENT: Land $ 386,916 10,000 56,089 340,827 Buildings 6,229,190 2,347 178,552 6,052,985 Improvements other than buildings 820,540 820,540 Construction in progress 274,700 274,700 Mobile equipment 2,145,737 303,808 32,833 2,416,712 Other furniture and equipment 1,382,033 555,227 37,564 1,899,696 Leased property under capital leases 299,182 61,863 244,802 116,243 Total $ 11,263,598 1,207,945 549,840 11,921,703 COMPONENT UNIT - PIKE COUNTY ECONOMIC DEVELOPMENT DISTRICT: Machinery and equipment $ 3,718 4,250 7,968 Buildings and property 30,000 40,793 70,793 Total $ 33,718 45,043 0 78,761 PIKE COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 20 (7) Commitments. Pike County participates in an interlocal agreement pertaining to a Multi-Jurisdictional Narcotics Enforcement Unit formed collectively with Walthall and Lincoln Counties, the municipalities of McComb and Brookhaven, the District Attorney=s Office of the Fourteenth Circuit Court District and the Mississippi Bureau of Narcotics. The interlocal narcotics agreement, authorized under Sections 17-13-1 through 17-13-11, Miss. Code Ann. (1972), was formed as a joint effort to provide the maximum effectiveness and efficiency in the enforcement of the criminal laws of the state regarding controlled substances. Pike County=s annual share of financing the unit is $20,000, which is appropriated from the General Fund. These non-tax revenues are received from seizures made by the Narcotics Enforcement Unit and subsequently forfeited by the defendants through the courts. The agreement terminates yearly but may be renewed by the parties hereto. The county=s intention is to renew, yearly, its commitment to the agreement for the indefinite future. As of September 30, 1997, the county had the following commitment with respect to unfinished capital projects: Description of Remaining Financial Expected Date Commitment Commitment of Completion Chancery Court annex $ 1,173,719 March 1, 1998 (8) Claims and Judgments. Risk Financing. The county finances its exposure to risk of loss related to workers' compensation for injuries to its employees through the Mississippi Public Entity Workers' Compensation Trust, a public entity risk pool. The county pays premiums to the pool for its workers' compensation insurance coverage, and the participation agreement provides that the pool will be self-sustaining through member premiums. The retention for the pool is $350,000 for each accident and completely covers all statutory limits set by the Workers' Compensation Commission. Risk of loss is remote for claims exceeding the pool's retention liability. However, the pool also has catastrophic reinsurance coverage of $1,000,000 per accident, provided by Employers' Reinsurance Corporation, effective from January 1, 1997 to January 1, 1998. The pool may make an overall supplemental assessment or declare a refund depending on the loss experience of all the entities it insures. The county finances its exposure to risk of loss relating to employee health and accident coverage through the Mississippi Association of Supervisors= Employee Benefit Trust, a public entity risk pool. Premium payments to the pool are determined on an actuarial basis. The pool services all claims for risk of loss to which the county is exposed. The county purchases commercial insurance to cover all claims in excess of premium contributions. Claims expenses and liabilities are reported when it is probable that a loss has occurred and the amount of that loss can be reasonably estimated. The county had no year end liability because cash on deposit in risk pool exceeded the pool's accrued unpaid claims in the amount of $81,470 reported on the combined balance sheet in the following fund types: General $ 54,323 Special Revenue 27,147 Total $ 81,470 PIKE COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 21 (9) Capital Leases. As Lessor: The county leases the following property with varying terms and options as of September 30, 1997: Classes of Property Amount Industrial buildings $ 6,050,000 Carrying Value $ 6,050,000 The future minimum lease receivables and the present value of the net minimum lease receivables as of September 30, 1997, are as follows: General Long-term Debt Group Year Ending September 30: 1998 $ 536,490 1999 411,850 2000 411,050 2001 409,650 2002 407,650 Later years 4,469,750 Total Minimum Lease Receivables 6,646,440 Less: Amount representing interest 2,326,440 Present Value of Net Minimum Lease Receivables $ 4,320,000 As Lessee: The county is obligated for the following assets acquired through capital leases as of September 30, 1997: General Fixed Assets Classes of Property Group Mobile equipment $ 116,243 Leased Property Under Capital Leases $ 116,243 PIKE COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 22 The future minimum lease payments together with the present value of the net minimum lease payables as of September 30, 1997, are as follows: General Long-term Debt Group Year Ending September 30: 1998 $ 25,952 1999 37,070 2000 14,264 2001 14,190 2002 8,320 Total Minimum Lease Payments 99,796 Less: Amount representing interest 10,680 Present Value of Net Minimum Lease Payments $ 89,116 (10) Long-term Debt. Debt outstanding as of September 30, 1997, consisted of the following: Final Amount Interest Maturity Description and Purpose Outstanding Rates Date General Long-term Debt Account Group: A. General Obligation Bonds: North Pike Schools #3 $ 85,000 8.25 / 9.0 11-1-98 Welfare building 285,000 6.4 / 9.1 1-1-05 Jail construction 2,295,000 6.5 / 7.5 12-1-06 Pike industrial 1988 - Series A 660,000 7.3 / 10.375 9-1-08 Chancery Court annex 1,450,000 5.0 / 7.0 5-1-12 District 2 - MacMillian - Bloedell 80,000 5.25 / 5.4 12-1-97 Altamil 40,000 5.5 / 6.0 9-1-98 Sanderson Farms 4,200,000 3.0 / 6.0 11-1-12 Total General Obligation Bonds $ 9,095,000 B. Capital Leases: Countywide road fund - Cat. backhoe loader $ 32,019 5.42 3-20-99 Countywide road fund - John Deere backhoe 57,097 5.95 4-10-02 Total Capital Leases $ 89,116 PIKE COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 23 Final Amount Interest Maturity Description and Purpose Outstanding Rates Date C. Other Loans: Industrial park #2A $ 35,000 5.0 4-27-02 Industrial park #2B 25,000 5.0 4-27-02 Industrial park #2C 29,800 5.0 8-30-03 Industrial park #2D 48,000 5.0 8-30-03 Magnolia water treatment 45,000 4.5 1-1-98 Total Other Loans $ 182,800 Annual debt service requirements to maturity for the following debt reported in the General Long-term Debt Account Group are as follows: Year Ending September 30 Bonds Loans Total 1998 $ 1,188,415 78,925 1,267,340 1999 1,059,506 30,650 1,090,156 2000 1,005,963 29,400 1,035,363 2001 1,002,417 28,150 1,030,567 2002 991,860 26,900 1,018,760 Later years 8,012,715 13,450 8,026,165 Total 13,260,876 207,475 13,468,351 Less: Amounts representing interest 4,165,876 24,675 4,190,551 Total at Present Value $ 9,095,000 182,800 9,277,800 Legal Debt Margin - The amount of general obligation bonded debt that can be incurred by the county is limited by state statute. Total outstanding general obligation bonded debt during a year can be no greater than 15% of assessed value of the taxable property within the county, according to the then last completed assessment for taxation. However, the limitation is increased to 20% whenever a county issues bonds to repair or replace washed out or collapsed bridges on the public roads of the county. As of September 30, 1997, the amount of outstanding general obligation bonded debt was equal to 6.2% of the latest property assessments. PIKE COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 24 The following changes occurred in liabilities reported at year end: Balance Balance Styling Oct. 1, 1996 Additions Reductions Sept. 30, 1997 General Long-term Debt Account Group: Compensated absences $ 107,069 29,689 136,758 General obligation bonds 8,605,000 1,450,000 960,000 9,095,000 Capital leases 96,384 61,863 69,131 89,116 Other loans 249,800 67,000 182,800 Total $ 9,058,253 1,541,552 1,096,131 9,503,674 (11) Contingencies. Federal Grants - The county has received federal grants for specific purposes that are subject to audit by the grantor agencies. Entitlements to these resources are generally conditional upon compliance with the terms and conditions of grant agreements and applicable federal regulations, including the expenditure of resources for allowable purposes. Any disallowance resulting from a grantor audit may become a liability of the county. Litigation - The county is party to legal proceedings, many of which occur in the normal course of governmental operations. It is not possible at the present time to estimate ultimate outcome or liability, if any, of the county with respect to the various proceedings. However, the county's legal counsel believes that ultimate liability resulting from these lawsuits will not have a material adverse effect on the financial condition of the county. (12) No Commitment Debt (Not Included in Financial Statements). No commitment debt is repaid only by the entities for whom the debt was issued and includes debt that either bears the county's name or for which a moral responsibility may exist that is not an enforceable promise to pay. No commitment debt explicitly states the absence of obligation by the county other than possibly an agreement to assist creditors in exercising their rights in the event of default. Because a default may adversely affect the county's own ability to borrow, the principal amount of such debt outstanding at year end is disclosed as follows: Balance at Styling September 30, 1997 Hospital revenue bonds $ 5,990,000 (13) Joint Ventures. The county participates in the following joint ventures: Pike County is a participant with the City of McComb in a joint venture, authorized by Section 61-3-5, Miss. Code Ann. (1972), to operate the McComb-Pike County Airport. The joint venture was created to furnish the McComb-Pike County area with air service. The two entities each appoint three members to the six member board of commissioners. Pike County appropriated $12,500 for the support of the airport during the year. PIKE COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 25 Pike County is a participant with the City of McComb and Amite County in a joint venture, authorized by Section 41-13-15, Miss. Code Ann. (1972), to operate the Southwest Mississippi Regional Medical Center. The joint venture was created to provide medical services for the residents of the local area and is governed by seven board members. Two members are appointed by Pike County, two by the City of McComb and two jointly by Pike County and the City of McComb. Amite County appoints one board member. While the hospital is basically self-supporting, the city and counties have the power to approve or disapprove the hospital=s budget and are authorized to levy taxes for the maintenance and operation of the hospital. Complete financial statements for the Southwest Mississippi Regional Medical Center can be obtained from the hospital at McComb, Mississippi. Pike County is a participant with Amite and Walthall Counties in a joint venture, authorized by Section 39-3-9, Miss. Code Ann. (1972), to operate the Pike-Amite-Walthall Regional Library System. The joint venture was created to furnish the three counties with library service and is governed by a five member board. Pike and Amite Counties each appoint two board members and Walthall County appoints one board member. By contractual agreement, Pike County=s appropriation to the library system amounted to $180,970. Complete financial statements can be obtained from the McComb office of the library. Pike County is a participant with the Counties of Lincoln, Lawrence, Walthall, Amite, Franklin and Wilkinson and the Cities of McComb, Brookhaven and Osyka in a joint venture authorized by Section 17-17-307, Miss. Code Ann. (1972), to operate the Southwest Regional Solid Waste Authority. The joint venture was created to handle and dispose of solid waste within the aforementioned counties and cities and is governed by ten board members. Each governmental entity appoints one board member. The authority is fiscally independent of all other entities, sets its own budget, issues its own debt and sets rates and changes. The user governments are billed based on the volume of solid waste from each government. Because of the dependency on possibly up to 25% of billings coming from the City of McComb, the authority is considered a joint venture of each of the members as there is an ongoing financial responsibility created. (14) Jointly Governed Organizations. The county participates in the following jointly governed organizations: Southwest Mississippi Planning and Development District operates in a district composed of the Counties of Adams, Amite, Claiborne, Franklin, Jefferson, Lincoln, Lawrence, Pike, Wilkinson and Walthall. The governing body is a 40 member board of directors, four appointed by the Board of Supervisors of each member county. The counties contribute only a small part of the entity=s total revenues. Southwest Mississippi Mental Health Complex includes Adams, Amite, Claiborne, Franklin, Jefferson, Lawrence, Lincoln, Pike, Walthall and Wilkinson Counties. The board of commissioners is comprised of one appointee from each county Board of Supervisors. There is very little financial support by the member counties. Southwest Mississippi Community College operates in a district composed of Amite, Pike, Walthall and Wilkinson Counties. The college=s board of trustees is composed of 14 members. They are appointed by each county Board of Supervisors as follows: Amite, three; Pike, six; Walthall, two; Wilkinson, two. The 13 members elect one at large member. In each of the counties, the Superintendent of Education may hold one of his county=s seats. Each county contributes only a very small percentage of revenues toward the operation and maintenance of the college. PIKE COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 26 (15) Defined Benefit Pension Plan. Plan Description. Pike County, Mississippi, contributes to the Public Employees' Retirement System of Mississippi (PERS), a cost-sharing, multiple-employer, defined benefit pension plan. PERS provides retirement and disability benefits, annual cost-of-living adjustments and death benefits to plan members and beneficiaries. Benefit provisions are established by state law and may be amended only by the State of Mississippi Legislature. PERS issues a publicly available financial report that includes financial statements and required supplementary information. That information may be obtained by writing to Public Employees' Retirement System, PERS Building, 429 Mississippi Street, Jackson, MS 39201-1005 or by calling 1-800-444-PERS. Funding Policy of Pike County, Mississippi. PERS members are required to contribute 7.25% of their annual covered salary and the county is required to contribute at an actuarially determined rate. The current rate is 9.75% of annual covered payroll. The contribution requirements of PERS members are established and may be amended only by the State of Mississippi Legislature. The county's contributions (employer share only) to PERS for the years ending September 30, 1997, 1996 and 1995 were $315,057, $290,859 and $255,821, respectively, equal to the required contributions for each year. Funding Policy of Pike County Economic Development District. PERS members are required to contribute 7.25% of their annual covered salary and the county is required to contribute at an actuarially determined rate. The current rate is 9.75% of annual covered payroll. The contribution requirements of PERS members are established and may be amended only by the State of Mississippi Legislature. The district=s and employee contributions to PERS for the years ending September 30, 1997, 1996 and 1995 were $10,310, $8,603 and $3,215, respectively, equal to the required contributions for each year. 27 PIKE COUNTY SPECIAL REPORTS 28 PIKE COUNTY (This page left blank intentionally) [...].. .OFFICE OF THE STATE AUDITOR PHIL BRYANT AUDITOR INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF THE GENERAL-PURPOSE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS December 8, 1997 Members of the Board of Supervisors Pike County, Mississippi We have audited the general-purpose financial statements of. .. by the Comptroller General of the United States Compliance As part of obtaining reasonable assurance about whether Pike County, Mississippi' s 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 financial statement... County, Mississippi, as of and for the year ended September 30, 1997, and have issued our report thereon dated December 8, 1997 As discussed in our Independent Auditor=s Report on the General-Purpose Financial Statements, we did not audit the financial statements of the Pike County Economic Development District We conducted our audit in accordance with generally accepted auditing standards and the standards... significant deficiencies in the design or operation of the internal control over financial reporting that, in our judgment, could adversely affect Pike County, Mississippi' s ability to record, process, summarize and report financial data consistent with the assertions of management in the financial statements The reportable conditions are described in the accompanying Schedule of Findings 29 ... 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 the internal control over financial reporting However, we noted certain matters involving the internal control over financial reporting and its operation that we consider to be reportable conditions... objective of our audit and, accordingly, we do not express such an opinion The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards Internal Control Over Financial Reporting In planning and performing our audit, we considered Pike County's internal control over financial reporting in order to determine our auditing procedures for the . Lincoln Counties, the municipalities of McComb and Brookhaven, the District Attorney=s Office of the Fourteenth Circuit Court District and the Mississippi Bureau of Narcotics. The interlocal narcotics. intentionally) 29 OFFICE OF THE STATE AUDITOR PHIL BRYANT AUDITOR INDEPENDENT AUDITOR& apos;S REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF THE GENERAL-PURPOSE. County=s appropriation to the library system amounted to $180,970. Complete financial statements can be obtained from the McComb office of the library. Pike County is a participant with the Counties of Lincoln,