Comprehensive Annual Financial Report
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State of Alaska Comprehensive Annual Financial Report For the Fiscal Year July 1, 2006 – June 30, 2007 Prepared by: Department of Administration Division of Finance The FY 2007 CAFR is expected to be available on or after December 31, 2007 on our Internet web site at http://fin.admin.state.ak.us/dof/financial_reports/cafr_toc.jsp. This publication was released by the Department of Administration, Division of Finance to report on the State’s financial status. Produced and printed in Juneau, Alaska at a cost of $20.83 per copy. This publication is required by AS 37.05.210. This page intentionally left blank. STATE OF ALASKA COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Fiscal Year Ended June 30, 2007 TABLE OF CONTENTS Page Statement INTRODUCTORY SECTION Letter of Transmittal i Certificate of Achievement viii Exhibits ix Organizational Chart xiv Functions of State Departments xv Alaska State Legislature xvii FINANCIAL SECTION 1 INDEPENDENT AUDITOR'S REPORT 3 MANAGEMENT'S DISCUSSION AND ANALYSIS 5 BASIC FINANCIAL STATEMENTS: 15 Government-wide Financial Statements Statement of Net Assets 17 1.01 Statement of Activities 18 1.02 Fund Financial Statements Governmental Funds 21 Balance Sheet 22 1.11 Reconciliation of the Balance Sheet to the Statement of Net Assets 23 1.12 Statement of Revenues, Expenditures, and Changes in Fund Balances 24 1.13 Reconciliation of the Change in Fund Balances to the Statement of Activities 25 1.14 Proprietary Funds 27 Statement of Net Assets 28 1.21 Statement of Revenues, Expenses, and Changes in Fund Net Assets 29 1.22 Statement of Cash Flows 30 1.23 Fiduciary Funds 33 Statement of Fiduciary Net Assets 34 1.31 Statement of Changes in Fiduciary Net Assets 35 1.32 Component Units 37 Statement of Net Assets 39 1.41 Statement of Activities 40 1.42 Notes to the Basic Financial Statements 43 REQUIRED SUPPLEMENTARY INFORMATION: 125 Budgetary Comparison Schedule - General Fund 126 2.01 Notes to Required Supplementary Information - Budgetary Reporting 127 STATE OF ALASKA COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Fiscal Year Ended June 30, 2007 TABLE OF CONTENTS Page Statement SUPPLEMENTARY INFORMATION COMBINING FUND STATEMENTS: 129 Governmental Funds General Fund 131 Combining Balance Sheet 138 3.01 Combining Schedule of Revenues, Expenditures, and Changes in 140 3.02 Fund Balances Nonmajor Governmental Funds 143 Combining Balance Sheet 144 3.11 Combining Statement of Revenues, Expenditures, and Changes in 146 3.12 Fund Balances Permanent Funds 149 Schedule of Revenues, Expenditures, and Changes in Fund Balances - 150 3.23 Budget and Actual Nonmajor Special Revenue Funds 153 Combining Balance Sheet 156 3.31 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 158 3.32 Schedule of Revenues, Expenditures, and Changes in Fund Balances - 160 3.33 Budget and Actual Nonmajor Debt Service Funds 169 Combining Balance Sheet 170 3.41 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 171 3.42 Nonmajor Capital Projects Funds 173 Combining Balance Sheet 174 3.51 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 176 3.52 Proprietary Funds Nonmajor Enterprise Funds 179 Combining Statement of Net Assets 182 4.01 Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets 183 4.02 Combining Statement of Cash Flows 184 4.03 Commercial Assistance Enterprise Funds Combining Statement of Net Assets 186 4.11 Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets 188 4.12 Combining Statement of Cash Flows 190 4.13 Energy Assistance Enterprise Funds Combining Statement of Net Assets 192 4.21 Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets 193 4.22 Combining Statement of Cash Flows 194 4.23 Other Agencies Enterprise Funds Combining Statement of Net Assets 196 4.31 Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets 198 4.32 Combining Statement of Cash Flows 200 4.33 Internal Service Funds 203 Combining Statement of Net Assets 204 4.41 Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets 206 4.42 Combining Statement of Cash Flows 208 4.43 STATE OF ALASKA COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Fiscal Year Ended June 30, 2007 TABLE OF CONTENTS Page Statement Fiduciary Funds 211 Pension and Other Employee Benefit Trust Funds Combining Statement of Fiduciary Net Assets 214 5.01 Combining Statement of Changes in Fiduciary Net Assets 216 5.02 Agency Funds Combining Statement of Fiduciary Assets and Liabilities 218 5.11 Combining Statement of Changes in Assets and Liabilities 220 5.12 Component Units Nonmajor Component Units 223 Combining Statement of Net Assets 224 6.01 Combining Statement of Activities 226 6.02 STATISTICAL SECTION 229 INDEX OF FUNDS 255 LEGEND OF ACRONYMS 261 This page intentionally left blank. Introductory Section This page intentionally left blank. December 15, 2007 The Honorable Sarah Palin, Governor Members of the Legislature Citizens of the State of Alaska In accordance with Alaska Statute (AS) 37.05.210, it is our pleasure to present the Comprehensive Annual Financial Report (CAFR) of the State of Alaska for the fiscal year ending June 30, 2007. This report has been prepared by the Department of Administration, Division of Finance. Responsibility for both the accuracy of the data, and the completeness and fairness of the presentation, including all disclosures, rests with the State. To the best of our knowledge and belief, the enclosed data is accurate in all material respects and reported in a manner designed to present fairly the financial position and results of operations of the State. Statistical and demographic information are included to enable the reader to gain an understanding of the State's financial activities. INTRODUCTION Internal Controls The Department of Administration, Division of Finance, is primarily responsible for the overall operation of the State’s central accounting system. The State's system of internal controls over the accounting system has been designed to provide reasonable, but not absolute, assurance regarding the safeguarding of assets against loss from unauthorized use or disposition, and the reliability of financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance recognizes that the cost of a control should not exceed the benefits likely to be derived, and the evaluation of costs and benefits requires estimates and judgements by management. Some discretely presented component units operate outside the State’s central accounting system. Those component units are responsible for establishing and maintaining their own separate internal control structures. Audits The Division of Legislative Audit is the principal auditor of the State’s reporting entity. The audit of the CAFR was conducted in accordance with generally accepted auditing standards (GAAS). The independent auditor’s report is the first item in the financial section of the CAFR and precedes the MD&A and basic financial statements. The goal of the independent audit is to provide reasonable assurance that the financial statements of the State for the fiscal year ended June 30, 2007, are free of material misstatement. The audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the CAFR, assessing the accounting principles used, and evaluating the overall financial statement presentation. i The Honorable Sarah Palin December 15, 2007 In addition to the annual audit of the State’s CAFR, the State is required to undergo an annual single audit in conformity with the provisions of the Single Audit Act of 1984 and the U.S. Office of Management and Budget’s Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Information related to this single audit, including a schedule of expenditures of federal awards, the auditor’s reports on internal controls and compliance with applicable laws and regulations, and a schedule of findings and questioned costs will be published at a later date under separate cover by the Division of Legislative Audit. Management’s Discussion and Analysis (MD&A) Governmental Accounting Standards Board Statement No. 34 requires that management provide a narrative introduction, overview, and analysis of the State’s financial activities. This transmittal letter is intended to complement the MD&A and should be read in conjunction with it. The MD&A can be found immediately following the independent auditor’s report. PROFILE OF THE STATE OF ALASKA The State of Alaska was the 49th state admitted into the Union in 1959. The Alaska Constitution was adopted by the Constitutional Convention February 5, 1956, ratified by the people of Alaska April 24, 1956, and became operative with the formal proclamation of statehood January 3, 1959. There are three branches of government: legislative, executive, and judicial. The legislative power of the State is vested in a legislature consisting of a Senate with a membership of 20 and a House of Representatives with a membership of 40. The executive power of the State is vested in the governor. The judicial power of the State is vested in a supreme court, a superior court, and the courts established by the legislature. The jurisdiction of courts and judicial districts are prescribed by law. The courts constitute a unified judicial system for operation and administration. The State of Alaska reporting entity reflected in this CAFR, which is described more fully in Note 1 to the basic financial statements, conforms with the requirements of Governmental Accounting Standards Board Statement No. 14, The Financial Reporting Entity. These criteria include financial accountability, fiscal dependency, and legal standing. The concept underlying the definition of the financial reporting entity is that elected officials are accountable to their constituents. The financial statements should allow users to distinguish between the primary government (the State) and its component units, with the emphasis being on the primary government.