Pulaski County, Arkansas

Regulatory Basis Financial Statements and Other Reports

December 31, 2015

LEGISLATIVE JOINT AUDITING COMMITTEE

PULASKI COUNTY, ARKANSAS TABLE OF CONTENTS FOR THE YEAR ENDED DECEMBER 31, 2015

Independent Auditor's Report Report on Internal Control Over Financial Reporting, Compliance and Other Matters, and Other Issues Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards

REGULATORY BASIS FINANCIAL STATEMENTS

Exhibit

Balance Sheet – Regulatory Basis A Statement of Revenues, Expenditures, and Changes in Fund Balances – Regulatory Basis B Statement of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual – General and Road Funds – Regulatory Basis C Notes to Financial Statements

SUPPLEMENTARY INFORMATION

Schedule

Combining Balance Sheet – Other Funds in the Aggregate – Regulatory Basis 1 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – Other Funds in the Aggregate – Regulatory Basis 2 Notes to Schedules 1 and 2

OTHER INFORMATION

Schedule of Capital Assets (Unaudited) 3 Schedule of Selected Information for the Last Five Years – General Fund - Regulatory Basis (Unaudited) 4-1 Schedule of Selected Information for the Last Five Years – Road Fund - Regulatory Basis (Unaudited) 4-2 Schedule of Selected Information for the Last Five Years – Other Funds in the Aggregate - Regulatory Basis (Unaudited) 4-3

Sen. Jimmy Hickey, Jr. Rep. Mary Broadaway Senate Chair House Chair

Rep. Sue Scott Sen. Linda Chesterfield Senate Vice Chair House Vice Chair

Roger A. Norman, JD, CPA, CFE, CFF Legislative Auditor

LEGISLATIVE JOINT AUDITING COMMITTEE ARKANSAS LEGISLATIVE AUDIT

INDEPENDENT AUDITOR'S REPORT

Pulaski County, Arkansas Officials and Quorum Court Members Legislative Joint Auditing Committee

Report on the Financial Statements

We have audited the accompanying regulatory basis financial statements of the general fund, road fund, and other funds in the aggregate of Pulaski County, Arkansas, as of and for the year ended December 31, 2015, and the related notes to the financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with the financial reporting provisions of Ark. Code Ann. § 10-4-412, as described in Note 1, to meet the requirements permitted by the State of Arkansas; this includes determining that the regulatory basis of accounting is an acceptable basis for the preparation of the financial statements in the circumstances. Management is also responsible for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles

As described in Note 1 of the financial statements, the financial statements are prepared by the County on the basis of the financial reporting provisions of Ark. Code Ann. § 10-4-412, which is a basis of accounting other than accounting principles generally accepted in the United States of America, to meet the requirements permitted by the State of Arkansas.

The effects on the financial statements of the variances between the regulatory basis of accounting described in Note 1 and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material.

Adverse Opinion on U.S. Generally Accepted Accounting Principles

In our opinion, because of the significance of the matter discussed in the “Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles” paragraph, the financial statements referred to above do not present fairly, in accordance with accounting principles generally accepted in the United States of America, the financial position of Pulaski County, Arkansas, as of December 31, 2015 or the revenues, expenditures, and changes in net position and, where applicable, cash flows thereof for the year then ended.

500 WOODLANE STREET, SUITE 172 • LITTLE ROCK, ARKANSAS 72201-1099 • PHONE: (501) 683-8600 • FAX: (501) 683-8605 www.arklegaudit.gov

Unmodified Opinions on Regulatory Basis of Accounting

In our opinion, the financial statements referred to above present fairly, in all material respects, the regulatory basis financial position of the general fund, road fund, and other funds in the aggregate of Pulaski County, Arkansas, as of December 31, 2015, the regulatory basis revenues, expenditures, and changes in net position, and the budgetary comparisons for the general fund and road fund for the year then ended in accordance with the financial reporting provisions of Ark. Code Ann. § 10-4-412 described in Note 1.

Emphasis of Matter

As discussed in Note 1 to the financial statements, the County would have included some funds under accounting principles generally accepted in the United States of America (GAAP) as established by the Government Accounting Standards Board. However, under the regulatory basis, these funds are not required to be included as part of the reporting entity.

Other Matters

Supplementary and Other Information

Our audit was conducted for the purpose of forming opinions on the accompanying regulatory basis financial statements. The accompanying supplementary information and other information listed in the table of contents are presented for purposes of additional analysis and are not a required part of the financial statements.

The supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. Such information has been subjected to the auditing procedures applied in the audit of the regulatory basis financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplementary information is fairly stated, in all material respects, in relation to the regulatory basis financial statements as a whole on the basis of accounting described in Note 1.

The other information has not been subjected to the auditing procedures applied in the audit of the regulatory basis financial statements, and accordingly, we do not express an opinion or provide any assurance on it.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated December 19, 2016, on our consideration of the County's internal control over financial reporting and on our tests of its compliance with certain provisions of the state constitution, laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the County’s internal control over financial reporting and compliance.

ARKANSAS LEGISLATIVE AUDIT

Roger A. Norman, JD, CPA, CFE Legislative Auditor Little Rock, Arkansas December 19, 2016 LOCO06015

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Sen. Jimmy Hickey, Jr. Rep. Mary Broadaway Senate Chair House Chair

Sen. Linda Chesterfield Rep. Sue Scott Senate Vice Chair House Vice Chair

Roger A. Norman, JD, CPA, CFE, CFF Legislative Auditor

LEGISLATIVE JOINT AUDITING COMMITTEE ARKANSAS LEGISLATIVE AUDIT

REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING, COMPLIANCE AND OTHER MATTERS, AND OTHER ISSUES BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

INDEPENDENT AUDITOR’S REPORT

Pulaski County, Arkansas Officials and Quorum Court Members Legislative Joint Auditing Committee

We have audited in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the accompanying regulatory basis financial statements of the general fund, road fund, and other funds in the aggregate of Pulaski County, Arkansas, as of and for the year ended December 31, 2015, and the related notes to the financial statements, and have issued our report thereon dated December 19, 2016. We issued an adverse opinion because the financial statements are prepared by the County on the basis of the financial reporting provisions of Ark. Code Ann. § 10-4-412, which is a basis of accounting other than accounting principles generally accepted in the United States of America. The effects on the financial statements of the variances between the regulatory basis of accounting described in Note 1 and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material. However, with respect to the regulatory basis of accounting described in Note 1, our opinions on the general fund, road fund, and other funds in the aggregate were unmodified.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered the County’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the County’s internal control. Accordingly, we do not express an opinion on the effectiveness of the County’s internal control.

Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as discussed below, we identified a certain deficiency in internal control that we consider to be a material weakness.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the County’s financial statements will not be prevented, or detected and corrected on a timely basis. We consider the following deficiency to be a material weakness:

2015-1 To ensure the proper safeguarding of assets, financial accounting duties relating to initiating, receipting, depositing, disbursing, and recording transactions should be distributed among appropriate employees. The Treasurer, Sheriff, District Court Clerk, and Sanitation Director again did not segregate these duties to sufficiently reduce the risks of fraud or error and properly safeguard the County’s assets. We recommend that the financial accounting duties in each office be segregated among employees to the extent possible.

The Treasurer, Sheriff, District Court Clerk, and Sanitation Director responded and indicated that their offices will segregate the duties relating to initiating, receipting, depositing, disbursing, and recording transactions to the extent possible with the current staffing levels.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the County’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of the state constitution, laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

500 WOODLANE STREET, SUITE 172 • LITTLE ROCK, ARKANSAS 72201-1099 • PHONE: (501) 683-8600 • FAX: (501) 683-8605 www.arklegaudit.gov

Entity’s Response to Finding

The County’s response to the finding identified in our audit is described above. The County’s response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it.

Other Issues

The following issues are not significant deficiencies, material weaknesses, or material instances of noncompliance, but are issues that are presented to assist in the efficient operation of the County.

The commentary contained in this section relates to the following officials that held office during 2015:

County Judge: Barry Hyde Treasurer/Collector: Debra Buckner Sheriff: Doc Holladay County/Circuit Clerk: Larry Crane Assessor: Janet Troutman Ward District Court Clerk: Carol Wilkins Sanitation Director: Kathy Botsford

Our audit procedures indicated that the offices of Assessor, District Court Clerk, and Sanitation Director were in substantial compliance with Arkansas fiscal and financial laws. Noncompliance with state law and accepted accounting practices was noted in the offices of County Judge, Treasurer/Collector, Sheriff, and County/Circuit Clerk.

County Judge

1. Without a contract for services, the County Judge approved a $5,000 contribution to the Argenta Community Theater and the County received 32 tickets to a show, a full page ad in the program, recognition before the show, and refreshments, in violation of the “public purpose” doctrine and Ark. Const. art. 12 § 5, which states, in part, “No…county…shall…appropriate money for…any corporation, association, institution, or individual”:

2. Wanda Wyatt, a Road Department employee, was charged with 73 counts of theft of property and 80 counts of computer fraud by the Pulaski County Sheriff’s Department on June on 21, 2016, the same day her employment ended. According to the arrest report, Wyatt fabricated accident reports involving County vehicles, submitted the reports to Central Arkansas Risk Management Association (CARMA), the County’s insurance provider, and deposited insurance payments totaling $248,530 into her personal bank account. A jury trial has been set in January 2017.

Sheriff

According to the Sheriff, a detention center employee, who resigned on April 28, 2016, had devised a scheme in which he would purchase uniforms for employees and subsequently return the uniforms to the vendor for “store credit” in his name. The Sheriff indicated this employee purchased approximately 83 guns with an estimated value of $115,000 with the store credit during the period April 14, 2009 through April 20, 2016. As of report date, the FBI was investigating this matter.

County Judge and Treasurer/Collector

The County did not implement the revised County Financial Management System on or before January 1, 2014, in noncompliance with Ark. Code Ann. § 14-21-101. The County implemented the system on September 6, 2016. A similar finding was noted in the prior report.

County/Circuit Clerk

The remaining balance in the Circuit Bond and Fine account was not identified with receipts issued but not yet settled, as required by Ark. Code Ann. § 14-25-116.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the result of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. However, pursuant to Ark. Code Ann. § 10-4-417, all reports presented to the Legislative Joint Auditing Committee are matters of public record and distribution is not limited.

ARKANSAS LEGISLATIVE AUDIT

Marti Steel, CPA Deputy Legislative Auditor Little Rock, Arkansas December 19, 2016 -4- PULASKI COUNTY, ARKANSAS Exhibit A BALANCE SHEET - REGULATORY BASIS DECEMBER 31, 2015

Other Funds in the General Road Aggregate ASSETS Cash and cash equivalents $ 10,075,474 $ 12,931,056 $ 42,798,242 Accounts receivable 8,057,043 486,071 1,145,469 Interfund receivables 6,914 2,479

TOTAL ASSETS $ 18,139,431 $ 13,417,127 $ 43,946,190

LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 1,640,418 $ 718,515 $ 1,171,728 Interfund payables 1,702 7,691 Settlements pending 25,682,757 Total Liabilities 1,640,418 720,217 26,862,176

Fund Balances: Restricted 249,185 12,696,910 13,675,013 Committed 449 Assigned 1,247,321 3,408,552 Unassigned 15,002,507 Total Fund Balances 16,499,013 12,696,910 17,084,014

TOTAL LIABILITIES AND FUND BALANCES $ 18,139,431 $ 13,417,127 $ 43,946,190

The accompanying notes are an integral part of these financial statements.

-5- PULASKI COUNTY, ARKANSAS Exhibit B STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - REGULATORY BASIS FOR THE YEAR ENDED DECEMBER 31, 2015

Other Funds in the General Road Aggregate REVENUES State aid $ 4,859,297 $ 8,375,963 $ 493,441 Federal aid 3,038,800 327,640 1,889,119 Property taxes 33,040,147 9,880,600 1,937,837 Sales taxes 10,399,164 Fines, forfeitures, and costs 4,437,442 2,027,352 Interest 25,822 22,117 19,207 Officers' fees 866,087 3,155,101 Franchise fees 247,239 911 fees 61,408 275,172 Insurance premiums collected 1,131,236 Sanitation fees 4,179,610 Jail fees 10,860,145 Treasurer's commission 341,208 396,006 Collector's commission 3,556,966 1,495,549 Taxes apportioned - Assessor's salary and expense 5,492,356 Other 2,910,073 122,820 117,180

TOTAL REVENUES 81,267,390 18,729,140 15,985,574

Less: Treasurer's commission 169,194 66,450 25,104

NET REVENUES 81,098,196 18,662,690 15,960,470

EXPENDITURES Current: General government 27,849,594 2,860,464 Law enforcement 51,106,534 485,927 Highways and streets 17,534,558 Public safety 408,711 228,868 Sanitation 63,450 3,810,771 Health 310,031 Recreation and culture 2,221,213 Social services 1,251,151 1,585,416 Water extension 806,901

TOTAL EXPENDITURES 81,796,372 17,534,558 11,192,659

-6- PULASKI COUNTY, ARKANSAS Exhibit B STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - REGULATORY BASIS FOR THE YEAR ENDED DECEMBER 31, 2015

Other Funds in the General Road Aggregate EXCESS OF REVENUES OVER (UNDER) EXPENDITURES $ (698,176) $ 1,128,132 $ 4,767,811

OTHER FINANCING SOURCES (USES) Transfers in 3,164,527 605,047 Transfers out (604,867) (675,000) (2,489,707)

TOTAL OTHER FINANCING SOURCES (USES) 2,559,660 (675,000) (1,884,660)

EXCESS OF REVENUES AND OTHER SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES 1,861,484 453,132 2,883,151

FUND BALANCES - JANUARY 1, AS PREVIOUSLY REPORTED 14,520,610 12,243,778 13,549,732

Restatement adjustment (Note #12) 116,919 651,131

FUND BALANCES - JANUARY 1, AS RESTATED 14,637,529 12,243,778 14,200,863

FUND BALANCES - DECEMBER 31 $ 16,499,013 $ 12,696,910 $ 17,084,014

The accompanying notes are an integral part of these financial statements.

-7- PULASKI COUNTY, ARKANSAS Exhibit C STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - GENERAL AND ROAD FUNDS - REGULATORY BASIS FOR THE YEAR ENDED DECEMBER 31, 2015

General Road Variance Variance Favorable Favorable Budget Actual (Unfavorable) Budget Actual (Unfavorable) REVENUES State aid $ 2,498,865 $ 4,859,297 $ 2,360,432 $ 9,507,451 $ 8,375,963 $ (1,131,488) Federal aid 3,038,800 3,038,800 327,640 327,640 Property taxes 32,081,469 33,040,147 958,678 8,580,887 9,880,600 1,299,713 Sales taxes 10,000,000 10,399,164 399,164 Fines, forfeitures, and costs 4,430,990 4,437,442 6,452 Interest 10,000 25,822 15,822 8,278 22,117 13,839 Officers' fees 1,167,928 866,087 (301,841) Franchise fees 191,154 247,239 56,085 911 fees 145,894 61,408 (84,486) Insurance premiums collected 1,131,236 1,131,236 Available for appropriation 20,338,565 (20,338,565) Jail fees 7,735,905 10,860,145 3,124,240 Treasurer's commission 341,208 341,208 Collector's commission 3,556,966 3,556,966 Taxes apportioned - Assessor's salary and expense 5,492,356 5,492,356 Other 6,300,359 2,910,073 (3,390,286) 935,476 122,820 (812,656)

TOTAL REVENUES 84,901,129 81,267,390 (3,633,739) 19,032,092 18,729,140 (302,952)

Less: Treasurer's commission 169,194 (169,194) 66,450 (66,450)

NET REVENUES 84,901,129 81,098,196 (3,802,933) 19,032,092 18,662,690 (369,402)

EXPENDITURES Current: General government 29,341,432 27,849,594 1,491,838 Law enforcement 55,363,558 51,106,534 4,257,024 Highways and streets 22,593,825 17,534,558 5,059,267 Public safety 416,804 408,711 8,093 Sanitation 3,693,376 63,450 3,629,926 Health 667,683 310,031 357,652 Recreation and culture 1,495,174 1,495,174 Social services 1,711,978 1,251,151 460,827 Water extension 972,131 806,901 165,230

TOTAL EXPENDITURES 93,662,136 81,796,372 11,865,764 22,593,825 17,534,558 5,059,267

-8- PULASKI COUNTY, ARKANSAS Exhibit C STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - GENERAL AND ROAD FUNDS - REGULATORY BASIS FOR THE YEAR ENDED DECEMBER 31, 2015

General Road Variance Variance Favorable Favorable Budget Actual (Unfavorable) Budget Actual (Unfavorable) EXCESS OF REVENUES OVER (UNDER) EXPENDITURES $ (8,761,007) $ (698,176) $ 8,062,831 $ (3,561,733) $ 1,128,132 $ 4,689,865

OTHER FINANCING SOURCES (USES) Transfers in 1,619,913 3,164,527 1,544,614 Transfers out (604,867) (604,867) (675,000) (675,000)

TOTAL OTHER FINANCING SOURCES (USES) 1,619,913 2,559,660 939,747 (675,000) (675,000)

EXCESS OF REVENUES AND OTHER SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES (7,141,094) 1,861,484 9,002,578 (3,561,733) 453,132 4,014,865

FUND BALANCES - JANUARY 1, AS PREVIOUSLY REPORTED 14,520,610 14,520,610 12,243,778 12,243,778

Restatement adjustment (Note 12) 116,919 116,919

FUND BALANCES - JANUARY 1, AS RESTATED 14,520,610 14,637,529 116,919 12,243,778 12,243,778

FUND BALANCES - DECEMBER 31 $ 7,379,516 $ 16,499,013 $ 9,119,497 $ 8,682,045 $ 12,696,910 $ 4,014,865

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The accompanying notes are an integral part of these financial statements.

-9- PULASKI COUNTY, ARKANSAS NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015

NOTE 1: Summary of Significant Accounting Policies

A. Financial Reporting Entity

The County is a political subdivision of the state governed by an elected quorum court. The reporting entity includes all the funds of the County. Under accounting principles generally accepted in the United States of America (GAAP) as established by the Government Accounting Standards Board, the following fund of the County would have been included in the reporting entity: Pulaski County Public Facilities Board. However, under Arkansas’s regulatory basis described below, inclusion of this fund is not required and this fund is not included in this report.

B. Basis of Presentation - Regulatory Fund Accounting

The financial statements are presented in accordance with the regulatory basis of presentation as prescribed or permitted by Ark. Code Ann. § 10-4-412. The law requires that the financial statements be presented on a fund basis with, as a minimum, the general fund and road fund presented separately with all other funds included in the financial statements presented in the aggregate. This law also stipulates that the financial statements consist of a balance sheet; a statement of revenues, expenditures, and changes in fund balances; a comparison of the final adopted budget to actual expenditures for the general and road funds; notes to financial statements; and a supplemental schedule of capital assets.

A fund is defined as a fiscal and accounting entity with a self-balancing set of accounts recording cash and other financial resources, together with related liabilities and residual balances, and changes therein, which are segregated for purposes of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions, or limitations.

The following types of funds are recognized in the accompanying regulatory basis financial statements.

General Fund - The General Fund is used to account for and report all financial resources not accounted for and reported in another fund. The General Fund heading as it appears in the financial statements includes the following accounts: General, Assessor’s Salary and Expense, Treasurer’s Salary and Expense, Employee Self-Insured Benefits, Emergency Reserve, Real Property Appraisal, Collector’s Salary and Expense, 911 Capital, Capital Maintenance and Technology, and Grants.

Road Fund - The Road Fund (Special Revenue Fund) is used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects. The Road Fund accounts for and reports proceeds of state highway turnback, property taxes, and federal aid that are restricted or committed for maintaining and constructing roads,

Other Funds in the Aggregate - Other Funds in the Aggregate consist of all funds included in the financial statements except for the General and Road Funds. The following types of funds are included in this column as follows:

Special Revenue Funds - Special Revenue Funds are used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects. The following Special Revenue Funds are reported with other funds in the aggregate: Vending Machine Commission, Central Arkansas Library, Support Collection Cost, Drug Control, Fire Equipment and Training (Act 833), District Court Cost, Boating Safety, District Court Probation, Youth Accident and Prevention Program (YAPP Court Cost), Drug Seizure, Communication Facility, County Recorder’s Cost, CMRS 911 Board (Commercial Mobile Radio Service), Treasurer’s Automation, Collector’s Automation, District Court Automation, Regional Detention Act 1188, Child Passenger Protection, Regional Detention Act 117, Public Safety, District Court Auto/Trucks, Communication Facility and Equipment, Circuit Court Collection Cost, Circuit Court Automation, Sheriff’s Internal Revenue Service (IRS) Seizure, Circuit Clerk Commissioner Fees, Assessor’s Property Relief 1%, Arkansas Housing, Housing Family Self Sufficiency (FSS) Escrow, Disaster Housing Assistance, Housing, and Brownfields Revolving Loan.

Enterprise Funds – Enterprise Funds are used to report activity that is financed with debt that is secured solely by a pledge of the net revenues from fees and charges of the activity; activity that is legally required to recover its costs through fees or charges; or activity that the government’s policy is to establish fees or charges designed to recover the cost of providing services. The following Enterprise Fund is reported with other funds in the aggregate: Sanitation.

-10- PULASKI COUNTY, ARKANSAS NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015

NOTE 1: Summary of Significant Accounting Policies (Continued)

B. Basis of Presentation - Regulatory Fund Accounting (Continued)

Other Funds in the Aggregate (Continued)

Agency Funds - Agency Funds are used to report resources held by the reporting government in a purely custodial capacity (assets equal liabilities). The following Agency Funds are reported with other funds in the aggregate: Treasurer (Treasurer’s Commission, Unapportioned Tax, Treasurer’s Interest Income, Payroll, State Land Redeemed, 911 Operating, Central Arkansas Library System (CALS), and County Property Tax Relief); Collector (Suspense, Ad Valorem Tax Protest, and Delinquent Tax); Sheriff (Fee, Criminal and Accident Records, Inmate Meals, and Extradition); County/Circuit Clerk (General Non-Court, Criminal Bond, Bond, Child Support, and Marriage License); District Court (County).

C. Basis of Accounting

The financial statements are prepared on the regulatory basis of accounting as prescribed or permitted by Ark. Code Ann. § 10-4-412. This regulatory basis differs from accounting principles generally accepted in the United States of America. Revenues generally are recognized as soon as they are both measurable and available except for Treasurer’s and Collector’s commission and Taxes apportioned – Assessor’s salary and expense which are recognized when earned. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current period. However, most state aid received from the State Treasury is by state law revenue of the year in which it was received by the government. Expenditures generally are recorded when a liability is incurred. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. As a result of the use of this regulatory basis of accounting, capital assets and long-term debt are not recorded in these financial statements.

D. Assets, Liabilities, and Fund Balances

Cash and Cash Equivalents

For the purpose of financial reporting, “cash and cash equivalents” includes all demand and savings accounts, certificates of deposit, treasury bills, and short-term investments with an original maturity of three months or less.

Settlements Pending

Settlements pending are considered fines, forfeitures, costs, commission, interest, trust accounts, and property tax that have not been transferred to the appropriate entities.

Fund Balance Classifications

1. Restricted fund balance – amounts that are restricted when constraints placed on the use of resources are either (a) externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments; or (b) imposed by law through constitutional provisions or enabling legislation.

2. Committed fund balance – amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the Quorum Court.

3. Assigned fund balance – amounts that are constrained by the Quorum Court’s intent to be used for specific purposes, but are neither restricted nor committed.

4. Unassigned fund balance – amounts that have not been assigned to other funds and that have not been restricted, committed, or assigned to specific purposes within the general fund. This classification may also include negative amounts in other governmental funds, if expenditures incurred for specific purposes exceeded the amounts restricted, committed, or assigned to those purposes.

E. Property Taxes

A lien attaches to the real property in January and on personal property in June of each year. Property taxes are collectible beginning the first business day of March of the subsequent year, but are not considered delinquent until after October 15.

-11- PULASKI COUNTY, ARKANSAS NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015

NOTE 1: Summary of Significant Accounting Policies (Continued)

F. Budget Law

1. Legal Requirements

State law requires that the Quorum Court, before the end of each fiscal year, make appropriations, by ordinance, for the expenditures of County government for the following year. The Quorum Court may make appropriation amendments at any time during the current fiscal year. Appropriations lapse at the end of each year. Under certain conditions, the budget may be amended subsequent to the year-end.

2. Accounting

The County prepared an annual budget on the regulatory basis for the General Fund, Road Fund, and the other operating funds except for the Central Arkansas Library Fund.

G. Fund Balance Classification Policies and Procedures

The County’s highest level of decision-making authority is its Quorum Court. The establishment of amounts classified as committed fund balances and any subsequent modifications to such balances are the result of formal action taken by the Quorum Court through passage of an ordinance. The Quorum Court is authorized to assign amounts to a specific purpose, although a formal policy has not been established.

The County does not have a policy addressing whether it considers restricted or unrestricted amounts to have been spent when an expenditure is incurred for purposes for which both restricted and unrestricted amounts are available. For classification of fund balance amounts, restricted resources are considered spent before unrestricted. The County does not have a policy addressing which resources to use within the unrestricted fund balance when committed, assigned, or unassigned fund balances are available. When expenditures are incurred for purposes for which amounts in any of the unrestricted fund balance classifications could be used, committed amounts are reduced first, followed by assigned amounts, and then unassigned amounts.

NOTE 2: Cash Deposits with Financial Institutions

Cash deposits are carried at cost (carrying value). A comparison of the bank balance and carrying value is as follows:

Carrying Bank Amount Balance

Insured (FDIC) $ 2,957,987 $ 2,941,975 Collateralized: Collateral held by the County's agent, pledging bank, or pledging bank's trust department or agent in the County's name 62,829,061 65,401,535

Total Deposits $ 65,787,048 $ 68,343,510

The above total deposits do not include cash on hand of $ 17,724.

Custodial credit risk is the risk that in the event of a bank failure, the County’s deposits may not be returned to it. The County does not have a deposit policy for custodial credit risk. As of December 31, 2015, none of the County’s bank balances were exposed to custodial credit risk.

NOTE 3: Legal or Contractual Provisions for Deposits and Investments

State law generally requires that county funds be deposited in federally insured banks located in the State of Arkansas. The county deposits may be in the form of checking accounts, savings accounts, and time deposits. Public funds may be invested in eligible investment securities having a maturity of not longer than 5 years from the date of acquisition unless, as documented at the time of acquisition, the investment is to fund or support a specific purpose and there are no expectations that the investment will be sold before maturity; an Arkansas bank certificate of deposit; an account established by a local government joint investment trust; or an Arkansas financial institution repurchase agreement for eligible investment securities in which the seller agrees to repurchase the investment at a price including interest earned during the holding period as determined by the repurchase agreement.

-12- PULASKI COUNTY, ARKANSAS NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015

NOTE 4: Accounts Receivable

The accounts receivable balance at December 31, 2015, is composed of the following:

General Road Other Funds Description Fund Fund in the Aggregate

State aid $ 66,446 Federal aid $ 1,016,629 146,241 Sales taxes 825,016 Fines, forfeitures, and costs 105,824 108,680 Officer's fees 81,552 229,687 Jail fees 2,215,018 911 fees 66,436 Sanitation fee 376,088 Treasurer's commission 341,208 Excess treasurer's commission 834,614 $ 295,399 111,600 Excess collector's commission 2,056,967 184,456 40,291 Other 580,215 6,216

Totals $ 8,057,043 $ 486,071 $ 1,145,469

NOTE 5: Accounts Payable

The accounts payable balance at December 31, 2015, is composed of the following:

General Road Other Funds Description Fund Fund in the Aggregate

Vendor payables $ 1,640,418 $ 718,515 $ 1,171,728

NOTE 6: Interfund Balances

Individual fund interfund receivable and payable balances are as follows:

December 31, 2015 Interfund Interfund Fund Receivables Payables

General $ 6,914 Road $ 1,702 Other Funds in the Aggregate: Special Revenue: Boating Safety 7,691 Enterprise: Sanitation 2,479

Totals $ 9,393 $ 9,393

Interfund receivables and payables consist of reimbursements for vehicle repairs and maintenance. These reimbursements are made on a monthly basis.

-13- PULASKI COUNTY, ARKANSAS NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015

NOTE 7: Legal Debt Limit

A. Property Tax Secured Bonded Debt

The County is subject to a constitutional limitation for bonded indebtedness equal to 10% of the total assessed value for tax purposes of real and personal property as determined by the last tax assessment. At December 31, 2015, the legal debt limit for bonded debt was $648,851,350. There were no property tax secured bond issues.

B. Short-term Financing Obligations

The County is subject to a constitutional limitation for short-term financing obligations equal to 2.5% of the assessed value of taxable property within the County as determined by the last tax assessment. At December 31, 2015, the legal debt limit for short-term financing obligations was $172,928,109. There were no short-term financing obligations.

NOTE 8: Details of Fund Balance Classifications

Fund balance classifications at December 31, 2015, are composed of the following:

General Road Other Funds in Description Fund Fund the Aggregate Fund Balances Restricted for: General government $ 249,185 $ 5,315,668 Law enforcement 4,973,569 Highw ays and streets $ 12,696,910 Public safety 2,451,300 Recreation and culture 76,098 Social services 858,378 Total Restricted 249,185 12,696,910 13,675,013

Committed for: General government 449

Assigned to: General government 79,844 Sanitation 3,408,552 Capital Outlay 1,167,477 Total Assigned 1,247,321 3,408,552

Unassigned 15,002,507

Totals $ 16,499,013 $ 12,696,910 $ 17,084,014

NOTE 9: Commitments

Total commitments consist of the following at December 31, 2015:

December 31, 2015

Long-term liabilities $ 3,326,918 Noncancellable lease 2,436,512

Total Commitments $ 5,763,430

-14- PULASKI COUNTY, ARKANSAS NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015

NOTE 9: Commitments (Continued)

Long-term Liabilities

Long-term liabilities at December 31, 2015, are comprised of the following:

December 31, 2015

Compensated absences $3,326,918

Due to the County’s regulatory basis of accounting, these liabilities are not recorded in the financial statements. . Post Employment Benefits Other Than Pensions

The amount of any actuarially determined accrued liability for post employment benefits other than pensions was not determined.

Noncancellable Lease

The County entered into noncancellable lease agreements for computer equipment, software licenses, storage building, and copy machines. At the end of the lease term, the County may purchase the computer equipment and copy machines for fair market value. The County is obligated for the following amounts for the next five years:

Year December 31, 2015

2016 $ 1,114,764 2017 885,168 2018 235,723 2019 190,857 2020 10,000

Total $ 2,436,512

Rental expense for 2015 was $1,256,944.

NOTE 10: Interfund Transfers

$675,000 was transferred from the Road Fund to the General Fund for reimbursement of administrative expenses. Fines, forfeitures, and costs, officers’ fees, and vending machine commissions totaling $2,489,527 were transferred from the Other Funds in the Aggregate to the General Fund to defray a portion of operating expenses. $180 was transferred within Other Funds in the Aggregate to close a special revenue fund. General Fund transferred $604,867 to Other Funds in the Aggregate to defray operating expenses.

NOTE 11: Prior Year Restatement

The General Fund beginning fund balance was increased $116,919 to include the Federal Grants Fund, and the Other Funds in the Aggregate beginning fund balance was increased $651,131 to include the Arkansas Housing, Housing FSS Escrow, Disaster Housing Assistance, and Housing NRA Funds.

NOTE 12: Joint Venture: Regional Library

The Cities of Little Rock, Jacksonville, Maumelle and Sherwood and Pulaski and Perry Counties entered into an agreement dated January 28, 1998, in accordance with Ark. Code. Ann. § 25-20-101.The purpose of this agreement is for the constructing, operating and maintaining a public library system for the central Arkansas area which will offer library services to the public within the communities of each of the participating entities. Funding for this agreement will be derived from the tax millage assessed by the participating entities, state formula distribution, and fines and endowment fund earnings and gifts. Pulaski County’s millage rate for this purpose will be 1.6 mills. The Board of Directors shall consist of seven directors for the City of Little Rock, one each for the Cities of Jacksonville, Maumelle, and Sherwood; two directors from Pulaski County and one director representing Perry County. The County paid $2,221,213 to Central Arkansas Library System in 2015. Separate financial Statements of the Central Arkansas Library System are available at 100 Rock Street, Little Rock, Arkansas.

-15- PULASKI COUNTY, ARKANSAS NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015

NOTE 13: 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; and natural disasters. These risks are covered by commercial insurance purchased from independent third parties and participation in a public entity risk pool. The amount of settlements, if any, has not exceeded the insurance coverage for each of the past three years. There were no significant reductions in insurance coverage in the major categories of risk from coverage in the prior year.

The County participates in the Central Arkansas Risk Management Association (CARMA) public entity risk pool for coverage in the following areas:

Property-This program covers County owned property as listed on the Statement of Values. Coverage is limited to $250,000 limit per building/location. Excess limits are provided up to the Actual Replacement Cost limits of the property as per the Statement of Values, annual aggregate of $75,000,000 per location for buildings and contents and electronic data processing equipment. The program provides $10,000,000 annual aggregate flood and earthquake coverage. The program provides $100,000 each occurrence for extra expense, valuable papers and accounts receivable.

General Liability- This program provides general liability, police professional, and errors and omissions liability coverage. Coverage is limited to $250,000 per occurrence for bodily injury and property damage only if immunity does not apply. Police professional is limited to $250,000 per occurrence if immunity does not apply. Errors and omissions are limited to $250,000 per occurrence.

Vehicle Program- This program provides automobile liability and auto physical damage coverage. Automobile liability is limited to $25,000 for bodily injury per person, $50,000 for bodily injury per accident and $25,000 for property damage per accident. Auto physical damage comprehensive/collision coverage is actual cash value of the vehicle.

This program also provides for loss of money, $50,000 each and every loss; employee fidelity, $100,000 each and every loss; electronic data processing equipment, media, and extra expense, $100,000 each occurrence; miscellaneous contractors equipment, $100,000 each and every loss.

Participating members deductible is $1,000 for each occurrence except auto comprehensive, which is actual cash value.

Members will be assessed if collected loss fund is exhausted. $2,705,000 Assessable Loss Fund to pay losses within pooled retention.

The County participates in the Association of Arkansas Counties Program (public entity risk pools) for coverage in the following areas:

Workers’ Compensation - This program provides statutory benefits for losses incurred by County officials, employees, and volunteer fire fighters while performing work for the County. Rates for counties participating in this program are revised annually based on the cost experience of the particular county or group as determined by the Workers’ Compensation Commission.

The County also participates in the Self-Insured Fidelity Bond Program administered by the Governmental Bonding Board. This program covers actual losses sustained by the participating entity through any fraudulent or dishonest act or acts committed by any of the officials or employees, acting alone or in collusion with others, during the bond period to an amount not exceeding the lesser of $250,000 or the amount of the bond. Premiums for coverage are determined by the State Risk Manager and approved by the Board. These premiums are paid by the State Treasurer from funds withheld from the County Aid Fund. There is a $2,500 deductible per occurrence.

NOTE 14: Arkansas Public Employees Retirement System

Plan Description

The County contributes to the Arkansas Public Employees Retirement System (APERS), a cost-sharing multiple-employer defined benefit pension plan. APERS, administered by a Board of Trustees, 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 can be amended only by the Arkansas General Assembly. The Arkansas Public Employees Retirement System issues a publicly available financial report that includes financial statements and required supplementary information for APERS. That report may be obtained by writing to Arkansas Public Employees Retirement System, 124 W. Capitol, Suite 400, Little Rock, Arkansas 72201, by calling 1-800-682-7377, or on their website www.apers.org.

-16- PULASKI COUNTY, ARKANSAS NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015

NOTE 14: Arkansas Public Employees Retirement System

Funding Policy

APERS has contributory and non-contributory plans. Contributory members are required by State law to contribute 5% of their salary. Each participating employer is required by State law to contribute at a rate established by the Board of Trustees of the system based on the annual actuarial valuation. The County’s contributions to the plan for the year ended December 31, 2015 were $6,754,018.

Net Pension Liability

The County’s proportionate share of the collective net pension liability at June 30, 2015 (actuarial valuation date and measurement date) was $45,122,821.

-17- PULASKI COUNTY, ARKANSAS Schedule 1 COMBINING BALANCE SHEET - OTHER FUNDS IN THE AGGREGATE - REGULATORY BASIS DECEMBER 31, 2015

SPECIAL REVENUE FUNDS

Fire Vending Central Support Equipment Machine Arkansas Collection and Training District Court Boating District Court Commission Library Cost Drug Control (Act 833) Cost Safety Probation ASSETS Cash and cash equivalents $ 53,783 $ 417,997 $ 38,604 $ 36,778 Accounts receivable $ 449 $ 76,098 537 2,880 63,566 $ 2,300 $ 17,403 Interfund receivables

TOTAL ASSETS $ 449 $ 76,098 $ 54,320 $ 420,877 $ 102,170 $ 2,300 $ 36,778 $ 17,403

LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Interfund payables $ 7,691 Settlements pending Total Liabilities 7,691

Fund Balances: Restricted $ 76,098 $ 54,320 $ 420,877 $ 102,170 $ 2,300 29,087 $ 17,403 Committed $ 449 Assigned Total Fund Balances 449 76,098 54,320 420,877 102,170 2,300 29,087 17,403

TOTAL LIABILITIES AND FUND BALANCES $ 449 $ 76,098 $ 54,320 $ 420,877 $ 102,170 $ 2,300 $ 36,778 $ 17,403

-18- PULASKI COUNTY, ARKANSAS Schedule 1 COMBINING BALANCE SHEET - OTHER FUNDS IN THE AGGREGATE - REGULATORY BASIS DECEMBER 31, 2015

SPECIAL REVENUE FUNDS

Youth Accident and Prevention CMRS 911 Board Program County (Commercial (YAPP Court Communication Recorder's Mobile Radio Treasurer's Collector's District Court Cost) Drug Seizure Facility Cost Service) Automation Automation Automation ASSETS Cash and cash equivalents $ 480,431 $ 1,707,249 $ 777,490 $ 505,754 $ 1,848,159 $ 3,146,810 $ 200,952 Accounts receivable $ 714 39,736 188,400 66,436 4,099 Interfund receivables

TOTAL ASSETS $ 714 $ 480,431 $ 1,746,985 $ 965,890 $ 572,190 $ 1,848,159 $ 3,146,810 $ 205,051

LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 6,516 $ 12,657 $ 878,501 Interfund payables Settlements pending Total Liabilities 6,516 12,657 878,501

Fund Balances: Restricted $ 714 $ 480,431 $ 1,746,985 959,374 $ 572,190 1,835,502 2,268,309 $ 205,051 Committed Assigned Total Fund Balances 714 480,431 1,746,985 959,374 572,190 1,835,502 2,268,309 205,051

TOTAL LIABILITIES AND FUND BALANCES $ 714 $ 480,431 $ 1,746,985 $ 965,890 $ 572,190 $ 1,848,159 $ 3,146,810 $ 205,051

-19- PULASKI COUNTY, ARKANSAS Schedule 1 COMBINING BALANCE SHEET - OTHER FUNDS IN THE AGGREGATE - REGULATORY BASIS DECEMBER 31, 2015

SPECIAL REVENUE FUNDS

Regional Child Regional Communication Circuit Court Sheriff's Internal Detention Act Passenger Detention Act Facility and Collection Circuit Court Revenue Service 1188 Protection 117 Public Safety Equipment Cost Automation (IRS) Seizure ASSETS Cash and cash equivalents $ 979,708 $ 17,914 $ 223,854 $ 1,074,557 $ 533,578 $ 44,328 $ 14,158 $ 170,111 Accounts receivable 81,095 25 4,205 1,160 585 Interfund receivables

TOTAL ASSETS $ 1,060,803 $ 17,939 $ 228,059 $ 1,074,557 $ 533,578 $ 45,488 $ 14,743 $ 170,111

LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Interfund payables Settlements pending Total Liabilities

Fund Balances: Restricted $ 1,060,803 $ 17,939 $ 228,059 $ 1,074,557 $ 533,578 $ 45,488 $ 14,743 $ 170,111 Committed Assigned Total Fund Balances 1,060,803 17,939 228,059 1,074,557 533,578 45,488 14,743 170,111

TOTAL LIABILITIES AND FUND BALANCES $ 1,060,803 $ 17,939 $ 228,059 $ 1,074,557 $ 533,578 $ 45,488 $ 14,743 $ 170,111

-20- PULASKI COUNTY, ARKANSAS Schedule 1 COMBINING BALANCE SHEET - OTHER FUNDS IN THE AGGREGATE - REGULATORY BASIS DECEMBER 31, 2015

SPECIAL REVENUE FUNDS

Circuit Clerk Assessor's Housing Family Disaster Commissioner Property Relief - Arkansas Self Sufficiency Housing Brownfields Fees 1% Housing (FSS) Escrow Assistance Housing Revolving Loan ASSETS Cash and cash equivalents $ 54,018 $ 142,483 $ 324,801 $ 70,036 $ 141,255 $ 176,045 $ 702,383 Accounts receivable 1,662 146,241 Interfund receivables

TOTAL ASSETS $ 55,680 $ 142,483 $ 471,042 $ 70,036 $ 141,255 $ 176,045 $ 702,383

LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Interfund payables Settlements pending Total Liabilities

Fund Balances: Restricted $ 55,680 $ 142,483 $ 471,042 $ 70,036 $ 141,255 $ 176,045 $ 702,383 Committed Assigned Total Fund Balances 55,680 142,483 471,042 70,036 141,255 176,045 702,383

TOTAL LIABILITIES AND FUND BALANCES $ 55,680 $ 142,483 $ 471,042 $ 70,036 $ 141,255 $ 176,045 $ 702,383

-21- PULASKI COUNTY, ARKANSAS Schedule 1 COMBINING BALANCE SHEET - OTHER FUNDS IN THE AGGREGATE - REGULATORY BASIS DECEMBER 31, 2015

ENTERPRISE FUND AGENCY FUNDS

Treasurer's Collector's Sheriff's County/Circuit District Court Sanitation Accounts Accounts Accounts Clerk's Accounts Accounts Totals ASSETS Cash and cash equivalents $ 3,232,249 $ 15,691,372 $ 4,248,214 $ 313,612 $ 5,248,086 $ 181,473 $ 42,798,242 Accounts receivable 447,878 1,145,469 Interfund receivables 2,479 2,479

TOTAL ASSETS $ 3,682,606 $ 15,691,372 $ 4,248,214 $ 313,612 $ 5,248,086 $ 181,473 $ 43,946,190

LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 274,054 $ 1,171,728 Interfund payables 7,691 Settlements pending $ 15,691,372 $ 4,248,214 $ 313,612 $ 5,248,086 $ 181,473 25,682,757 Total Liabilities 274,054 15,691,372 4,248,214 313,612 5,248,086 181,473 26,862,176

Fund Balances: Restricted 13,675,013 Committed 449 Assigned 3,408,552 3,408,552 Total Fund Balances 3,408,552 17,084,014

TOTAL LIABILITIES AND FUND BALANCES $ 3,682,606 $ 15,691,372 $ 4,248,214 $ 313,612 $ 5,248,086 $ 181,473 $ 43,946,190

-22- PULASKI COUNTY, ARKANSAS Schedule 2 COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - OTHER FUNDS IN THE AGGREGATE - REGULATORY BASIS FOR THE YEAR ENDED DECEMBER 31, 2015

SPECIAL REVENUE FUNDS

Fire Equipment Vending Machine Central Arkansas Support Collection and Training (Act District Court Commission Library Cost Drug Control 833) District Court Cost Boating Safety Probation REVENUES State aid $ 259,700 $ 2,880 $ 162,051 $ 20,802 Federal aid Property taxes 1,937,837 Fines, forfeitures, and costs 46,992 $ 20,760 $ 152,184 Interest 194 321 Officers' fees $ 5,569 911 fees Sanitation fees Treasurer's commission Collector's commission Other $ 26,111 37,080

TOTAL REVENUES 26,111 2,234,811 5,569 50,193 162,051 20,760 20,802 152,184

Less: Treasurer's commission 101 8,055 31 79 547

NET REVENUES 26,010 2,226,756 5,538 50,193 162,051 20,681 20,802 151,637

EXPENDITURES Current: General government Law enforcement 3,252 Public safety 98,485 25,705 Sanitation Recreation and culture 2,221,213 Social services

TOTAL EXPENDITURES 2,221,213 3,252 98,485 25,705

EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 26,010 5,543 5,538 46,941 63,566 20,681 (4,903) 151,637

OTHER FINANCING SOURCES (USES) Transfers in Transfers out (28,059) (21,342) (148,393)

TOTAL OTHER FINANCING SOURCES (USES) (28,059) (21,342) (148,393)

EXCESS OF REVENUES AND OTHER SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES (2,049) 5,543 5,538 46,941 63,566 (661) (4,903) 3,244

FUND BALANCES - JANUARY 1, AS PREVIOUSLY REPORTED 2,498 70,555 48,782 373,936 38,604 2,961 33,990 14,159

Restatement adjustment (Note 12)

FUND BALANCES - JANUARY 1, AS RESTATED 2,498 70,555 48,782 373,936 38,604 2,961 33,990 14,159

FUND BALANCES - DECEMBER 31 $ 449 $ 76,098 $ 54,320 $ 420,877 $ 102,170 $ 2,300 $ 29,087 $ 17,403

-23- PULASKI COUNTY, ARKANSAS Schedule 2 COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - OTHER FUNDS IN THE AGGREGATE - REGULATORY BASIS FOR THE YEAR ENDED DECEMBER 31, 2015

SPECIAL REVENUE FUNDS Youth Accident CMRS 911 Board and Prevention (Commercial Program (YAPP Communication County Recorder's Mobile Radio Treasurer's Collector's District Court Court Cost) Drug Seizure Facility Cost Service) Automation Automation Automation REVENUES State aid Federal aid Property taxes Fines, forfeitures, and costs $ 7,615 $ 442,802 $ 60,788 Interest 654 $ 1,608 $ 1,082 $ 4,661 $ 7,678 Officers' fees 752,306 2,276,297 911 fees $ 275,172 Sanitation fees Treasurer's commission 396,006 Collector's commission 1,495,549 Other 1,149

TOTAL REVENUES 7,615 443,456 753,914 2,278,528 275,172 400,667 1,503,227 60,788

Less: Treasurer's commission 28

NET REVENUES 7,587 443,456 753,914 2,278,528 275,172 400,667 1,503,227 60,788

EXPENDITURES Current: General government 1,587,306 139,379 1,133,779 Law enforcement 379,545 Public safety 104,569 Sanitation Recreation and culture Social services

TOTAL EXPENDITURES 379,545 1,587,306 104,569 139,379 1,133,779

EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 7,587 63,911 753,914 691,222 170,603 261,288 369,448 60,788

OTHER FINANCING SOURCES (USES) Transfers in 180 Transfers out (7,485) (212,249) (720,000)

TOTAL OTHER FINANCING SOURCES (USES) (7,485) (212,249) (720,000) 180

EXCESS OF REVENUES AND OTHER SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES 102 63,911 541,665 (28,778) 170,603 261,288 369,448 60,968

FUND BALANCES - JANUARY 1, AS PREVIOUSLY REPORTED 612 416,520 1,205,320 988,152 401,587 1,574,214 1,898,861 144,083

Restatement adjustment (Note 12)

FUND BALANCES - JANUARY 1, AS RESTATED 612 416,520 1,205,320 988,152 401,587 1,574,214 1,898,861 144,083

FUND BALANCES - DECEMBER 31 $ 714 $ 480,431 $ 1,746,985 $ 959,374 $ 572,190 $ 1,835,502 $ 2,268,309 $ 205,051

-24- PULASKI COUNTY, ARKANSAS Schedule 2 COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - OTHER FUNDS IN THE AGGREGATE - REGULATORY BASIS FOR THE YEAR ENDED DECEMBER 31, 2015

SPECIAL REVENUE FUNDS

Regional Regional Communication Sheriff's Internal Detention Act Child Passenger Detention Act District Court Facility and Circuit Court Circuit Court Revenue Service 1188 Protection 117 Public Safety Auto/Trucks Equipment Collection Cost Automation (IRS) Seizure REVENUES State aid Federal aid Property taxes Fines, forfeitures, and costs $ 1,201,957 $ 915 $ 58,778 $ 15,285 $ 10,139 $ 9,137 Interest $ 1,244 $ 262 419 Officers' fees 92,346 911 fees Sanitation fees Treasurer's commission Collector's commission Other

TOTAL REVENUES 1,201,957 915 58,778 1,244 92,608 15,285 10,139 9,556

Less: Treasurer's commission

NET REVENUES 1,201,957 915 58,778 1,244 92,608 15,285 10,139 9,556

EXPENDITURES Current: General government Law enforcement 82,899 20,231 Public safety 95 Sanitation Recreation and culture Social services

TOTAL EXPENDITURES 95 82,899 20,231

EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 1,201,862 915 58,778 1,244 9,709 15,285 (10,092) 9,556

OTHER FINANCING SOURCES (USES) Transfers in Transfers out (1,333,999) $ (180) (18,000)

TOTAL OTHER FINANCING SOURCES (USES) (1,333,999) (180) (18,000)

EXCESS OF REVENUES AND OTHER SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES (132,137) 915 58,778 1,244 (180) 9,709 15,285 (28,092) 9,556

FUND BALANCES - JANUARY 1, AS PREVIOUSLY REPORTED 1,192,940 17,024 169,281 1,073,313 180 523,869 30,203 42,835 160,555

Restatement adjustment (Note 12)

FUND BALANCES - JANUARY 1, AS RESTATED 1,192,940 17,024 169,281 1,073,313 180 523,869 30,203 42,835 160,555

FUND BALANCES - DECEMBER 31 $ 1,060,803 $ 17,939 $ 228,059 $ 1,074,557 $ 0 $ 533,578 $ 45,488 $ 14,743 $ 170,111

-25- PULASKI COUNTY, ARKANSAS Schedule 2 COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - OTHER FUNDS IN THE AGGREGATE - REGULATORY BASIS FOR THE YEAR ENDED DECEMBER 31, 2015

ENTERPRISE SPECIAL REVENUE FUNDS FUND

Circuit Clerk Assessor's Housing Family Commissioner Property Relief - Arkansas Self Sufficiency Disaster Housing Brownfields Fees 1% Housing (FSS) Escrow Assistance Housing Revolving Loan Sanitation Totals REVENUES State aid $ 48,008 $ 493,441 Federal aid $ 1,749,342 $ 42,361 $ 97,416 1,889,119 Property taxes 1,937,837 Fines, forfeitures, and costs 2,027,352 Interest 525 51 $ 178 $ 206 114 $ 10 19,207 Officers' fees $ 28,583 3,155,101 911 fees 275,172 Sanitation fees 4,179,610 4,179,610 Treasurer's commission 396,006 Collector's commission 1,495,549 Other 52,840 117,180

TOTAL REVENUES 28,583 48,008 1,749,867 42,412 178 206 97,530 4,232,460 15,985,574

Less: Treasurer's commission 114 16,149 25,104

NET REVENUES 28,469 48,008 1,749,867 42,412 178 206 97,530 4,216,311 15,960,470

EXPENDITURES Current: General government 2,860,464 Law enforcement 485,927 Public safety 14 228,868 Sanitation 3,810,771 3,810,771 Recreation and culture 2,221,213 Social services 1,585,386 10 10 10 1,585,416

TOTAL EXPENDITURES 1,585,386 10 10 10 14 3,810,771 11,192,659

EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 28,469 48,008 164,481 42,402 168 196 97,516 405,540 4,767,811

OTHER FINANCING SOURCES (USES) Transfers in 604,867 605,047 Transfers out (2,489,707)

TOTAL OTHER FINANCING SOURCES (USES) 604,867 (1,884,660)

EXCESS OF REVENUES AND OTHER SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES 28,469 48,008 164,481 42,402 168 196 702,383 405,540 2,883,151

FUND BALANCES - JANUARY 1, AS PREVIOUSLY REPORTED 27,211 94,475 3,003,012 13,549,732

Restatement adjustment (Note 12) 306,561 27,634 141,087 175,849 651,131

FUND BALANCES - JANUARY 1, AS RESTATED 27,211 94,475 306,561 27,634 141,087 175,849 3,003,012 14,200,863

FUND BALANCES - DECEMBER 31 $ 55,680 $ 142,483 $ 471,042 $ 70,036 $ 141,255 $ 176,045 $ 702,383 $ 3,408,552 $ 17,084,014

-26- PULASKI COUNTY, ARKANSAS NOTES TO SCHEDULES 1 AND 2 DECEMBER 31, 2015

The following funds and descriptions represent all funds reported as other funds in the aggregate.

Fund Name Fund Description

Vending Machine Commission Pulaski County Ordinance 00-OR-31 (May 24, 2000) established fund to receive commissions on vending machines to be used for employee recognition, training, education and tuition. Central Arkansas Library Ark. Code Ann. § 13-2-404 established fund to account for property tax millage levied by the quorum court for the support, operation, and maintenance of the public library. Support Collection Cost Ark. Code Ann. § 9-10-109 established fund to receive fees to offset administrative costs in the clerk's office. Drug Control Ark. Code Ann. § 5-64-505 established fund to receive asset forfeitures resulting from drug offense cases due to arresting agency. Fire Equipment and Training (Act 833) Ark. Code Ann. § 14-284-403 requires fire protectionpremium tax funds to be distributed by the county to local fire districts for equipment, training, capital improvements, insurance for buildings, utility costs, or other expenditures necessary for upgrading fire service. District Court Cost Ark. Code Ann. § 16-17-126 authorizes district court filing fees for writs of garnishment and executions to be appropriated for any permissible use in the administration of the district court. Boating Safety Ark. Code Ann. § 27-101-111 established fund to receive fees to be used for operating a patrol on the waterways within a county or for emergency rescue services if the county has not established a patrol. District Court Probation Ark. Code Ann. § 5-4-322 authorizes district court probation fees for probation and public service work supervision. Ark. Code Ann. § 14-20-116 established fund to preceive u to $5 of every fine, penalty, and forfeiture for moving traffic Youth Accident and Prevention Program offenses in district court to be used in educating students on the dangers of driving while intoxicated. (YAPP Court Cost) Drug Seizure Established to receive Federal drug seizure cases. Communication Facility Ark. Code Ann. § 12-41-105 established fund to receive 50% of the commissions on prisoner telephone services to be used for maintenance and operation of the county jail. County Recorder's Cost Ark. Code Ann. § 21-6-306 established fund to receive at least 25% of the fees collected by circuit clerks to be used to purchase, maintain, and operate automated records system. CMRS 911 Board (Commercial Mobile Ark. Code Ann. § 12-10-318 established fund to receive fees collected by commercial mobile radio service providers for 911 Radio Service) emergency services.

-27 - PULASKI COUNTY, ARKANSAS NOTES TO SCHEDULES 1 AND 2 DECEMBER 31, 2015

The following funds and descriptions represent all funds reported as other funds in the aggregate.

Fund Name Fund Description

Treasurer's Automation Ark. Code Ann. § 21-6-302 established fund to receive up to 10% of treasurer's gross commissions to operate the treasurer's office and to purchase, maintain, and operate an automated accounting and record keeping system. Collector's Automation Ark. Code Ann. § 21-6-305 established fund to receive up to 10% of collector's gross commissions to operate the collector's office and to purchase, maintain, and operate an automated record keeping system. District Court Automation Ark. Code Ann. § 16-13-704 established fund to receive district court installment fees to be used solely for district court-related technology. Regional Detention Act 1188 Ark. Code Ann. § 16-17-129 allows a county to levy an additional fine, not to exceed $20. Funds shall be used exclusively to defray the cost of incarcerating county prisoners; construction, maintenance, and operation of the county jail; purchase and maintenance of jail equipment; and training, salaries, and certificate pay for jailers and deputy sheriffs. Pulaski County Ordinance no. 03-OR-54 (June 27, 2003) established fund to receive $5 fine to be used for maintenance and operation of regional facility. Child Passenger Protection Ark. Code Ann. § 27-34-108 established fund to receive 25% of the district court fines collected for violations of the Child Passenger Protection Act to be used solely for promotion of public safety. Regional Detention Act 117 Ark. Code Ann. § 12-41-505 established fund to receive a $20 booking and administration fee assessed on persons convicted of a felony or Class A misdemeanor to be used exclusively for the maintenance, operation, and capital expenditures of a county jail or regional detention facility. Public Safety Pulaski County Ordinance No. 07-OR-50 (September 28, 2007) established fund for designating County revenues to be appropriated for purposes of public safety. District Court Auto/Trucks Ark. Code Ann. § 27-50-311 established fund to receive two percent of the District Court fines levied for large truck speeding violations. Communication Facility and Equipment Ark. Code Ann. §§ 21-6-307, 12-41-105 established fund to receive 25% of sheriff's fees collected and phone commission funds to be used for communications equipment and repair and to train operations staff. Circuit Court Collection Cost Ark. Code Ann. § 16-13-704 established fund to receive $5 per month per person authorized to pay a fine on an installment basis to be used to defray the cost of fine collection. Circuit Court Automation Ark. Code Ann. § 16-13-704 established fund to receive circuit court installment fees to be used for circuit court-related technology and to defray the cost of fine collection.

-28 - PULASKI COUNTY, ARKANSAS NOTES TO SCHEDULES 1 AND 2 DECEMBER 31, 2015

The following funds and descriptions represent all funds reported as other funds in the aggregate.

Fund Name Fund Description

Sheriff's Internal Revenue Service (IRS) Established to receive Federal drug seizure cases. Seizure Circuit Clerk Commissioner Fees Ark. Code Ann. § 21-6-412 established fund to receive fee awarded, when appointed as Commissioner, for a sale of real or personal property under judicial decree. The funds are to be used to offset administrative costs associated with the performance of the Commissioner's duties and for general operations expenses of the office of Circuit Clerk. Assessor's Property Relief - 1% Ark. Code Ann. § 26-26-310 provides that 1% of the county's share of surplus funds from the Property Tax Relief Trust Fund be allocated to county assessors for the costs of administering Arkansas Constitution, Amendment no. 79. Arkansas Housing Established to account for Arkansas Housing federal grants. Housing Family Self Sufficiency (FSS) Established to account for Housing FSS Escrow federal grants. Escrow Disaster Housing Assistance Established to account for Disaster Housing Assistance federal grants. Housing Established to account for Housing federal grants. Brownfields Revolving Loan Established to account for Brownfields cleanup federal grants. Sanitation Ark. Code Ann. § 8-6-12 authorizes counties to fund a solid waste management system for the County by assessing fees, charges, and licenses. Each fee, charge, and license shall be based on a fee schedule contained in an ordinance. Pulaski County Ordinance no. 09-OR-59 (August 26, 2009) authorized solid waste management fees.

Treasurer's accounts consist primarily of commission, property taxes, and amounts due agencies. Collector's accounts consist primarily of delinquent taxes not yet distributed to the various taxing units. Sheriff's accounts consist primarily of fees, settlement, bond, evidence, and inmate trust money. County/Circuit Clerk's accounts consist primarily of trust money awaiting disposition by the applicable court and settlements due to the Treasurer and other entities. District Court accounts consist primarily of fines and costs not yet distributed to the county and/or state.

-29 - PULASKI COUNTY, ARKANSAS Schedule 3 OTHER INFORMATION SCHEDULE OF CAPITAL ASSETS DECEMBER 31, 2015 (Unaudited)

December 31, 2015

Land and buildings $ 84,662,579 Equipment 32,887,440

Total $117,550,019

Enterprise Fund Capital Assets Equipment $ 681,359

-30- PULASKI COUNTY, ARKANSAS Schedule 4-1 SCHEDULE OF SELECTED INFORMATION FOR THE LAST FIVE YEARS - GENERAL FUND - REGULATORY BASIS DECEMBER 31, 2015 (Unaudited)

General 2015 2014 2013 2012 2011 Total Assets $ 18,139,431 $ 15,263,214 $ 13,593,994 $ 15,715,667 $ 23,949,900

Total Liabilities 1,640,418 742,604 924,083 1,133,089 2,114,921

Total Fund Balances 16,499,013 14,520,610 12,669,911 14,582,578 21,834,979

Net Revenues 81,098,196 79,251,006 74,605,263 75,421,085 72,964,756

Total Expenditures 81,796,372 80,243,474 80,252,161 85,667,151 80,161,041

Total Other Financing Sources/Uses 2,559,660 2,843,167 3,734,231 3,164,927 5,732,975

General Fund $90,000,000 $80,000,000 2015 $70,000,000

$60,000,000 2014 $50,000,000 2013 $40,000,000 $30,000,000 2012 $20,000,000 2011 $10,000,000 $0 Total Assets Total Liabilities Total Fund Net Revenues Total Balances Expenditures

-31 - PULASKI COUNTY, ARKANSAS Schedule 4-2 SCHEDULE OF SELECTED INFORMATION FOR THE LAST FIVE YEARS - ROAD FUND - REGULATORY BASIS DECEMBER 31, 2015 (Unaudited)

Road 2015 2014 2013 2012 2011 Total Assets $ 13,417,127 $ 12,726,911 $ 11,615,143 $ 9,640,470 $ 10,351,859

Total Liabilities 720,217 483,133 270,147 436,221 596,535

Total Fund Balances 12,696,910 12,243,778 11,344,996 9,204,249 9,755,324

Net Revenues 18,662,690 18,800,040 16,270,688 15,377,435 19,129,262

Total Expenditures 17,534,558 17,226,258 13,522,314 14,837,431 19,226,611

Total Other Financing Sources/Uses (675,000) (675,000) (607,627) (646,179) (644,736)

Road Fund $20,000,000 $18,000,000 $16,000,000 2015 $14,000,000 2014 $12,000,000 $10,000,000 2013 $8,000,000 2012 $6,000,000 $4,000,000 2011 $2,000,000 $0 Total Assets Total Liabilities Total Fund Net Revenues Total Balances Expenditures

-32 - PULASKI COUNTY, ARKANSAS Schedule 4-3 SCHEDULE OF SELECTED INFORMATION FOR THE LAST FIVE YEARS - OTHER FUNDS IN THE AGGREGATE - REGULATORY BASIS DECEMBER 31, 2015 (Unaudited)

Other Funds in the Aggregate 2015 2014 2013 2012 2011 Total Assets $ 43,946,190 $ 39,041,412 $ 38,074,177 $ 39,167,109 $ 39,304,419

Total Liabilities 26,862,176 25,491,680 25,035,241 26,452,521 28,617,193

Total Fund Balances 17,084,014 13,549,732 13,038,936 12,714,588 10,687,226

Net Revenues 15,960,470 11,858,123 12,100,773 13,937,415 12,953,231

Total Expenditures 11,192,659 9,179,160 9,033,915 9,760,005 8,769,249

Total Other Financing Sources/Uses (1,884,660) (2,168,167) (2,898,322) (2,416,771) (4,964,759)

Other Funds in the Aggregate $45,000,000 $40,000,000 2015 $35,000,000

$30,000,000 2014 $25,000,000 2013 $20,000,000 $15,000,000 2012 $10,000,000 2011 $5,000,000 $0 Total Assets Total Liabilities Total Fund Net Revenues Total Balances Expenditures

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