Atwood Regional Water and Sewer District Tuscarawas County
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ATWOOD REGIONAL WATER AND SEWER DISTRICT TUSCARAWAS COUNTY REGULAR AUDIT FOR THE YEARS ENDED DECEMBER 31, 2011-2010 ATWOOD REGIONAL WATER AND SEWER DISTRICT TUSCARAWAS COUNTY TABLE OF CONTENTS TITLE PAGE Independent Accountants’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Required by Government Auditing Standards ........................................................................................... 1 Schedule of Findings ..................................................................................................................................... 3 This page intentionally left blank. INDEPENDENT ACCOUNTANTS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS REQUIRED BY GOVERNMENT AUDITING STANDARDS Atwood Regional Water and Sewer District Tuscarawas County PO Box 100 Dellroy, Ohio 44620 To the Board of Trustees: We have audited the financial statements the business-type activities of Atwood Regional Water and Sewer District, Tuscarawas County, Ohio (the District) as of and for the years ended December 31, 2011 and 2010, which collectively comprise the District’s basic financial statements and have issued our report thereon dated June 1, 2012. 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 the Comptroller General of the United States’ Government Auditing Standards. Internal Control Over Financial Reporting In planning and performing our audit, we considered the District’s internal control over financial reporting as a basis for designing our audit procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of opining on the effectiveness of the District’s internal control over financial reporting. Accordingly, we have not opined on the effectiveness of the District’s internal control over financial reporting. Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses. Therefore, we cannot assure that we have identified all deficiencies, significant deficiencies or material weaknesses. However, as described in the accompanying Schedule of Findings we identified a certain deficiency in internal control over financial reporting, that we consider a material weakness. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, when performing their assigned functions, to prevent, or detect and timely correct misstatements. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and timely corrected. We consider Finding 2011-001 described in the accompanying Schedule of Findings to be a material weakness. 101 Central Plaza South, 700 Chase Tower, Canton, Ohio 44702‐1509 Phone: 330‐438‐0617 or 800‐443‐9272 Fax: 330‐471‐0001 www.ohioauditor.gov 1 Atwood Regional Water and Sewer District Tuscarawas County Independent Accountants’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Required by Government Auditing Standards Page 2 Compliance and Other Matters As part of reasonably assuring whether the District’s financial statements are free of material misstatement, we tested its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could directly and materially affect 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 an opinion. The results of our tests disclosed no instances of noncompliance or other matters we must report under Government Auditing Standards. We also noted certain matters not requiring inclusion in this report that we reported to the District’s management in a separate letter dated June 1, 2012. The District’s response to the finding identified in our audit is described in the accompanying Schedule of Findings. We did not audit the District response and, accordingly, we express no opinion on it. We intend this report solely for the information and use of management, the Board of Trustees, and others within the District. We intend it for no one other than these specified parties. Dave Yost Auditor of State June 1, 2012 2 ATWOOD REGIONAL WATER AND SEWER DISTRICT TUSCARAWAS COUNTY SCHEDULE OF FINDINGS DECEMBER 31, 2011 AND 2010 FINDINGS RELATED TO THE FINANCIAL STATEMENTS REQUIRED TO BE REPORTED IN ACCORDANCE WITH GAGAS 1. Financial Reporting Finding Number 2011-001 MATERIAL WEAKNESS As a result of audit procedures performed, errors were noted in the District’s 2011 financial statements that required audit adjustments and reclassifications as follows: • The District did not report $180,629 in intergovernmental revenue received; • The District reported $153,209 more in construction in progress than what was supported by District records; • The District reported $216,905 more in non current loans payable that was actually due; • The invested in capital assets, net of related debt equity balance was over stated by $1,376,208, in total, due to various reporting errors; • The unrestricted net assets equity balance was under stated by $1,224,805, in total, due to various reporting errors. As a result of audit procedures performed, errors were noted in the District’s 2010 financial statements that required audit adjustments and reclassifications as follows: • The District did not report $19,370 in intergovernmental revenue received; • The District sold land for $140,260 in 2010. When the District removed the value of the land, $78,856, from capital assets, the revenue received was not reduced which is necessary in order to properly reflect the gain (revenue less net cost value of the asset) on the sale of land; • As a result of not reporting intergovernmental revenue and not properly reporting the land sale, equity was misstated by $59,486. The District adjusted capital assets - construction in progress and equity balances by $59,486 in order to match income statement equity to statement of net assets equity. However, these increases were unsupported; • The invested in capital assets, net of related debt equity balance was over stated by $1,003,206, in total, due to various reporting errors; • The unrestricted net assets equity balance was under stated by $941,721, in total, due to various reporting errors. 3 Atwood Regional Water & Sewer District Tuscarawas County Schedule of Findings Page 2 Finding Number 2011-001 (Continued) Sound financial reporting is the responsibility of the Treasurer and Board and is essential to ensure the information provided to the readers of the financial statements is complete and accurate. To help ensure the District’s financial statements and notes to the financial statements are complete and accurate, the District should adopt policies and procedures, including a final review of the statements and notes by the Treasurer and Board, to identify and correct errors and omissions. The financial statements have been adjusted accordingly. Official’s Response: The District concurs with the audit finding. At the onset of this audit, the District Superintendent and Treasurer informed the Audit Manager of several financial statement issues. There were specific questions about the Net Asset balance for each fiscal year. The Audit Manager agreed to examine these items of concern and offered to provide consultant services in the resolution of the issues. The audit team quickly identified the two items causing most of the difficulty. A sale of land that occurred in December of 2010 was not properly classified for net income from the sale, and the Ohio Public Works Commission (OPWC) grant received both years 2010 and 2011 was not properly classified as intergovernmental revenue. The consultant services by the audit staff provided the District officials with the explanations and procedures for the proper accounting treatment of these two extraordinary transactions. The OPWC grant was the first grant received since 1980. The land sale is only the second such transaction since the District was organized in 1970. 4 ATWOOD REGIONAL WATER AND SEWER DISTRICT Carroll and Tuscarawas Counties, Ohio COMPREHENSIVE ANNUAL FINANCIAL REPORT PROPRIETARY ENTERPRISE - OPERATING FUND For the Year Ended December 31, 2011 ARWSD Prepared by: Larry Lloyd Vicki Winkler Superintendent Secretary-Treasurer This page reserved ATWOOD REGIONAL WATER AND SEWER DISTRICT Carroll and Tuscarawas Counties, Ohio Comprehensive Annual Financial Report For the Year Ending December 31, 2011 TABLE OF CONTENTS Page Table of Contents I INTRODUCTORY SECTION Letter of Transmittal 1 Organization Chart 5 Administrative Personnel 6 FINANCIAL SECTION Independent Accountant’s Report 9 Management Discussion and Analysis 11 Statement of Net Assets Proprietary Enterprise Fund 17 Statement of Revenues, Expenses and Changes in Fund Net Assets Proprietary Enterprise Fund 18 Cash Flow Statement Proprietary Enterprise Fund 19 Notes to the Financial Statements 20 STATISTICAL SECTION Demographic Summary 33 Principal