STATE OF MISSISSIPPI OFFICE OF THE STATE AUDITOR PHIL BRYANT _part2 docx

8 SUNFLOWER COUNTY Combined Statement of Revenues, Expenditures and Changes in Fund Balances - Budget (Non-GAAP Budgetary Basis) and Actual - All Governmental Fund Types For the Year Ended September 30, l997 General Special Fund Revenue Funds Variance Variance Favorable Favorable Budget Actual (Unfavorable) Budget Actual (Unfavorable) Revenues Property taxes $ 2,646,682 2,614,552 (32,130) 1,206,755 1,201,221 (5,534) Licenses, commissions and other revenue 156,125 179,963 23,838 230,000 246,863 16,863 Fines and forfeitures 506,529 439,999 (66,530) Intergovernmental revenues: Federal sources 19,600 22,803 3,203 620,268 305,951 (314,317) State and local sources 485,717 400,129 (85,588) 801,000 895,504 94,504 Charges for services 313,380 250,551 (62,829) 287,555 308,023 20,468 Use of money and property 198,666 201,837 3,171 31,943 31,943 Miscellaneous revenues 68,653 24,953 (43,700) 18,265 26,784 8,519 Total Revenues 4,395,352 4,134,787 (260,565) 3,163,843 3,016,289 (147,554) Expenditures General government 3,350,185 2,650,752 699,433 263,690 134,672 129,018 Public safety 985,166 900,188 84,978 452,258 206,160 246,098 Public works 2,482,579 3,265,388 (782,809) Health and welfare 370,271 319,001 51,270 132,800 65,602 67,198 Conservation of natural resources 89,880 76,515 13,365 Economic development and assistance 136,723 123,316 13,407 2,154,324 2,119,249 35,075 Capital projects 316,000 128,333 187,667 Debt service 267,290 16,210 251,080 681,190 603,475 77,715 Total Expenditures 5,199,515 4,085,982 1,113,533 6,482,841 6,522,879 (40,038) Excess of Revenues over (under) Expenditures (804,163) 48,805 852,968 (3,318,998) (3,506,590) (187,592) Other Financing Sources (Uses) 693,915 173,260 (520,655) 2,814,283 5,274,070 2,459,787 Excess of Revenues and Other Sources over (under) Expenditures and Other Uses (110,248) 222,065 332,313 (504,715) 1,767,480 2,272,195 Fund Balances Beginning of year 434,600 1,286,521 824,325 1,879,507 End of year $ 324,352 1,508,586 319,610 3,646,987 The notes to the financial statements are an integral part of this statement. 9 Exhibit C Debt Service Funds Variance Favorable Budget Actual (Unfavorable) 730,000 742,130 12,130 14,000 35,314 21,314 744,000 777,444 33,444 764,760 695,607 69,153 764,760 695,607 69,153 (20,760) 81,837 102,597 (50,990) 121,250 172,240 (71,750) 203,087 274,837 107,000 361,993 35,250 565,080 SUNFLOWER COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 10 (1) Significant Accounting Policies. A. Financial Reporting Entity. Sunflower County is a political subdivision of the State of Mississippi. The county is governed by an elected five-member Board of Supervisors. Generally accepted accounting principles require Sunflower County to present these financial statements on the primary government and its component units which have significant operational or financial relationships with the county. Management has chosen to omit from these financial statements the following component units which have significant operational or financial relationships with the county. Accordingly, the financial statements do not include the data of all of the county's component units necessary for reporting in conformity with generally accepted accounting principles. $ North Sunflower County Hospital $ South Sunflower County Hospital $ Sunflower County Library State law pertaining to county government provides for the independent election of county officials. The following officials are all part of the county legal entity and therefore are reported as part of the primary government financial statements. $ Board of Supervisors $ Chancery Clerk $ Circuit Clerk $ Justice Court Clerk $ Purchase Clerk $ Tax Assessor-Collector $ Sheriff B. Basis of Presentation. The accompanying financial statements of the primary government have been prepared in conformity with generally accepted accounting principles as prescribed by the Governmental Accounting Standards Board. However, the primary government financial statements, because they do not include the financial data of the county's component units, do not present fairly, in all material respects, the financial position and results of operations for the entire reporting entity. C. Account Classifications. The account classifications used in the financial statements conform to the broad classifications recommended in Governmental Accounting, Auditing and Financial Reporting as issued in 1994 by the Government Finance Officers Association and the Mississippi County Financial Accounting Manual as revised in 1993 by the Office of the State Auditor. SUNFLOWER COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 11 D. Fund Accounting. The financial activities of the county are recorded in individual funds and account groups used to report financial position and results of operations. Fund accounting is used to demonstrate legal compliance and to aid financial management by segregating transactions relating to certain government functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts, segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with specific regulations, restrictions or limitations. An account group is a financial reporting device designated to provide accountability for certain assets and liabilities that are not recorded in funds because they do not directly affect net expendable available financial resources. The following fund categories, which are further subdivided into separate "fund types", are utilized by the county: GOVERNMENTAL FUND TYPES General Fund - This fund is used to account for all activities of the general government for which a separate fund has not been established. Special Revenue Funds - These funds are used to account for the proceeds of specific revenue sources (other than expendable trusts) that are legally restricted to expenditures for specified purposes. Special Revenue Funds account for, among others, certain federal grant programs, taxes levied with statutorily defined distributions and other resources restricted as to purpose. Debt Service Funds - These funds are used to account for the accumulation of resources for, and the payment of, general long-term debt principal, interest and related costs. FIDUCIARY FUND TYPES Expendable Trust Fund - This fund is used to account for assets held by the county in a formal trustee capacity where the principal and income may be expended in the course of designated operations. Agency Funds - These funds account for various taxes, deposits and other monies collected or held by the county, acting in the capacity of an agent, for distribution to other governmental units or designated beneficiaries. ACCOUNT GROUPS - The General Fixed Assets Account Group is used to account for general fixed assets. The General Long-term Debt Account Group is used to account for general long-term debt. E. Basis of Accounting/Measurement Focus. Governmental Fund Types and Expendable Trust and Agency Funds - All Governmental Funds and Expendable Trust Funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities are generally included on the balance sheet. Operating statements of these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. SUNFLOWER COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 12 The modified accrual basis of accounting is used by all Governmental Fund Types, Expendable Trust Funds and Agency Funds. Under this method, revenues are recognized in the accounting period in which they become both available and measurable to finance operations during the year or to liquidate liabilities existing at the end of the year. Available means collected in the current year or soon enough after year end to liquidate liabilities existing at the end of the year. Expenditures are recognized in the accounting period in which the fund liability is incurred. Modifications to the accrual basis of accounting include: $ Licenses, fees, fines and forfeits and other miscellaneous revenues are recognized when received since they normally are only measurable at that time. $ Property taxes are recognized as revenue when received because the remaining delinquent property taxes not collected before the close of the fiscal year are considered immaterial. See Note 1L for further explanation. $ Principal and interest on general long-term debt are recognized when due. F. Budgetary Process and Accounting. Process: Statutory requirements dictate how and when the county's budget is to be prepared. Generally, in the month of August, prior to the ensuing fiscal year beginning each October 1, the Board of Supervisors of the county, using historical and anticipated fiscal data and proposed budgets submitted by the Sheriff and the Tax Assessor-Collector for his or her respective department, prepares an original budget for each of the Governmental Funds for said fiscal year. The completed budget for the fiscal year includes for each fund every source of revenue, each general item of expenditure and the unencumbered cash and investment balances. When during the fiscal year it appears to the Board of Supervisors that budgetary estimates will not be met, it may make revisions to the budget. Accounting: The county's budget is prepared principally on the cash basis of accounting. All appropriations lapse at year end and there are no encumbrances to budget because state law does not require that funds be available when goods or services are ordered, only when payment is made. G. Cash and Investments. State law authorizes the county to invest in interest bearing time certificates of deposit for periods of fourteen days to one year with depositories and in obligations of the U.S. Treasury, State of Mississippi, or any county, municipality or school district of this state. Further, the county may invest in certain repurchase agreements that have a term of less than fourteen days. Cash includes cash on hand, demand deposits, all certificates of deposit and cash equivalents, which are short- term highly liquid investments that are readily convertible to cash (generally three months or less). Investments in governmental securities are stated at cost or amortized cost. However, the county did not invest in any governmental securities during the fiscal year. SUNFLOWER COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 13 H. Receivables. Receivables are reported net of allowances for uncollectible accounts, where applicable. I. Interfund Receivables/Payables. Transactions between funds that are representative of short-term lending/borrowing arrangements, and transactions that have not resulted in the actual transfer of cash at the end of the fiscal year are referred to as "interfund receivables/payables." J. Fixed Assets. Fixed assets are not capitalized in the funds used to acquire or construct them. Instead, capital acquisition and construction are reflected as expenditures in Governmental Funds and the related assets are reported in the General Fixed Assets Account Group. All purchased fixed assets are stated at cost where historical records are available and at an estimated historical cost where no historical records exist. Donated assets are valued at market value at the time of donation. The costs of normal maintenance and repairs that do not add to the value of assets or materially extend their respective lives are not capitalized; however, improvements are capitalized. Interest expenditures are not capitalized on general fixed assets. Public domain (infrastructure) fixed assets consisting of certain improvements other than buildings, such as roads, bridges, sidewalks, drainage systems, lighting systems and similar assets that are immovable and of value only to the county, are not capitalized. Depreciation is not provided on general fixed assets. K. Fund Equity. Unreserved fund balance represents the amount available for budgeting future operations. Reservations of fund balance represent amounts that are legally segregated for a specific purpose. L. Property Tax Revenues. Numerous statutes exist under which the Board of Supervisors may levy property taxes. The selection of authorities is made based on the objectives and responsibilities of the county. Restrictions associated with property tax levies vary with the statutory authority. The amount of increase in certain property taxes is limited by state law. Generally, this restriction provides that these tax levies shall produce no more than 110% of the amount which resulted from the assessments of the previous year. The Board of Supervisors, each year at a meeting in September, levies property taxes for the ensuing fiscal year which begins on October 1. Real property taxes become a lien on January 1 of the current year and personal property taxes become a lien on March 1 of the current year. Taxes on both real and personal property, however, are due on or before February 1 of the next succeeding year. Taxes on motor vehicles and mobile homes become a lien and are due in the month that coincides with the month of original purchase. SUNFLOWER COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 14 Generally accepted accounting principles require property taxes to be recognized at the levy date if measurable and available. All property taxes are recognized as revenue when received. Real property taxes are recognized as revenue when received because most delinquent real property taxes are collected by selling real property for taxes, together with all fees, penalties and damages accruing until date of sale, before the close of the fiscal year. The remaining amount of real property not sold for taxes at the tax sale is considered immaterial; therefore, no end of year delinquent taxes receivable is recorded. The amount of delinquent personal property taxes unpaid at year end is also considered immaterial. Motor vehicle and mobile home taxes do not meet the measurability and collectibility criteria for property tax recognition because the lien and due date cannot be established until the date of original purchase occurs. M. Intergovernmental Revenues in Governmental Funds. Intergovernmental revenues, consisting of grants, entitlements and shared revenues, are usually recorded in Governmental Funds when measurable and available. However, the "available" criterion applies for certain federal grants and shared revenues when the expenditure is made because expenditure is the prime factor for determining eligibility. Similarly, if cost sharing or matching requirements exist, revenue recognition depends on compliance with these requirements. N. Total Column on Primary Government Financial Statements. The total column on the primary government financial statements is captioned "Memorandum Only" to indicate that it is presented only to facilitate financial analysis. Data in this column does not present financial position and results of operations in conformity with generally accepted accounting principles. Neither is such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data. (2) Stewardship, Compliance and Accountability. Excess of Actual Expenditures Over Budget in Individual Funds. The following fund had an excess of actual expenditures over budget for the year ended September 30, 1997: Fund Excess Special Revenue 1997 general obligation bond issue $ 1,114,940 (3) Budgetary Basis vs. GAAP. The accompanying Combined Statement of Revenues, Expenditures and Changes in Fund Balances - Budget (Non-GAAP Budgetary Basis) and Actual - All Governmental Fund Types presents comparisons of the legally adopted budget with actual data on a budgetary basis. Since the budgetary and GAAP presentations of actual data differ, a reconciliation of the results of operations for the year follows: SUNFLOWER COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 15 Excess of Revenues and Other Sources Over (Under) Expenditures and Other Uses Governmental Fund Types Special Debt General Revenue Service Budget (Cash Basis) $ 222,065 1,767,480 203,087 Increase (Decrease) Net adjustment for revenue accruals (22,313) 4,254 1,439 Net adjustment for expenditure accruals (136,313) (250,895) (22,455) GAAP Basis $ 63,439 1,520,839 182,071 (4) Deposits. The carrying amount of the county's total deposits with financial institutions at September 30, 1997, was $5,985,195 and the bank balance was $6,247,395. The bank balance is categorized below to reflect the level of credit risk assumed by the county at year end. Bank Balance Amount federally insured or collateralized with securities held by the county or its agent in the county's name. $ 699,427 Amount collateralized with securities held by the pledging financial institution's trust department or agent in the county's name. 5,547,164 Amount uncollateralized. 804 Total Bank Balance $ 6,247,395 (5) Interfund Receivables and Payables. The composition of interfund balances at September 30, 1997, consists of the following: Receivable Fund Payable Fund Amount General Fund Payroll clearing $ 64 General Fund Bail bond 1,273 Solid waste General Fund 3,915 County road maintenance General Fund 32,398 County bridge and culvert General Fund 7,306 County fire protection General Fund 450 SUNFLOWER COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 16 Receivable Fund Payable Fund Amount General obligation bond issue 1997 General Fund 201 Jail construction I & S General Fund 4,694 Solid waste bonds General Fund 3,812 Road and bridge I & S General Fund 2,173 South Sunflower County Hospital I & S General Fund 2,878 North Sunflower County Hospital I & S General Fund 117 County library General Fund 3,195 North Sunflower County Hospital ambulance General Fund 207 South Sunflower County Hospital maintenance General Fund 869 South Sunflower County Hospital ambulance General Fund 557 North Sunflower County Hospital maintenance General Fund 1,913 Yazoo-Mississippi Joint Water District General Fund 1,090 Mississippi Delta Community College maintenance General Fund 6,063 Mississippi Delta Community College building General Fund 1,425 Total $ 74,600 (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 Governmental Funds: Land $ 177,478 10,750 750 187,478 Buildings 3,633,174 117,583 3,750,757 Mobile equipment 1,426,253 1,358,334 66,833 2,717,754 Other furniture and equipment 838,736 81,797 3,036 917,497 Leased property under capital leases 229,123 19,402 21,066 227,459 Total $ 6,304,764 1,587,866 91,685 7,800,945 (7) 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. SUNFLOWER COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 17 (8) Capital Leases. 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 $ 224,231 Other furniture and equipment 3,228 Leased Property Under Capital Leases $ 227,459 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 $ 65,199 1999 33,683 2000 1,159 Total Minimum Lease Payments 100,041 Less: Amount representing interest 5,703 Present Value of Net Minimum Lease Payments $ 94,338 (9) 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 Sunflower County Hospital $ 50,000 5.5/5.6 1-02 Bond issue 1987 135,000 10.4/10.5 9-00 Road and bridge bonds 365,000 5.9/6.2 8-01 Jail construction 1,450,000 4.75/5.8 2-08 [...]... 925,000 7,120,000 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... 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 6.78% of the latest property assessments 18 ... 6,195,000 $ 24,806 484 7,853 5.5 7.5 4.559 10-97 7-98 12-98 46,908 14,287 4.685 4.759 4-99 11-99 7.5 1-98 Total Capital Leases $ 94,338 C Other Loans: 1997 Dollar General negotiable note $ 925,000 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 1998 1999 2000 2001 2002 Later years Bonds Total Less:...SUNFLOWER COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 Amount Outstanding Total General Obligation Bonds B Capital Leases: 3 John Deere tractors - road department Xerox copier - Tax Assessor/Collector Crown Victoria . the Government Finance Officers Association and the Mississippi County Financial Accounting Manual as revised in 1993 by the Office of the State Auditor. SUNFLOWER COUNTY Notes to Financial Statements For. County Library State law pertaining to county government provides for the independent election of county officials. The following officials are all part of the county legal entity and therefore are. how and when the county's budget is to be prepared. Generally, in the month of August, prior to the ensuing fiscal year beginning each October 1, the Board of Supervisors of the county, using