Yell County, Arkansas

Regulatory Basis Financial Statements and Other Reports

December 31, 2013

LEGISLATIVE JOINT AUDITING COMMITTEE

YELL COUNTY, ARKANSAS TABLE OF CONTENTS FOR THE YEAR ENDED DECEMBER 31, 2013

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 – Regulatory Basis (Unaudited) 4

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

Yell 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 Yell County, Arkansas, as of and for the year ended December 31, 2013, as listed in the table of contents, and the related notes to the financial statements.

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 Arkansas Code, 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 of 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 controls. 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 Arkansas Code, 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 Yell County, Arkansas, as of December 31, 2013, 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

Basis for Qualified Opinions on Regulatory Basis of Accounting

The County’s financial statements do not disclose all the required information concerning deposit risks. In our opinion, disclosure of this information is required by the regulatory basis of accounting described in Note 1.

Qualified Opinions on Regulatory Basis of Accounting

In our opinion, except for the omission of the information described in the “Basis for Qualified Opinions on Regulatory Basis of Accounting” paragraph, 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 Yell County, Arkansas, as of December 31, 2013, and 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 the Arkansas Code described in Note 1.

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, except for the omission of the information described above, the 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 such information.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated July 21, 2015 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 July 21, 2015 LOCO07513

-2-

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

Yell 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 Yell County, Arkansas, as of and for the year ended December 31, 2013, and the related notes to the financial statements, and have issued our report thereon dated July 21, 2015. We issued an adverse opinion because the financial statements are prepared by the County on the basis of the financial reporting provisions of Arkansas Code, which is a basis of accounting other than accounting principles generally accepted in the United States of America. The effect 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 qualified because required disclosures were not made concerning deposit risks.

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:

2013-1 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 County officials, as specified in the Other Issues section of this report, did not segregate these duties to sufficiently reduce the risks of fraud or error and properly safeguard the County’s assets, because of limited financial resources. We recommend that the financial accounting duties in each office be segregated among employees to the extent possible.

The County officials, as specified in the Other Issues section of this report, 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 2013:

County Judge: Mark Thone Treasurer: Brandi Rolen Sheriff/Tax Collector: Bill Gilkey County/Circuit Clerk: Sharon Barnett Assessor: Sandy Bottoms County Librarian: Stacie Laurie District Court Clerk: Vicki George

Our audit procedures indicated that the offices of Treasurer, Sheriff/Tax Collector, Assessor, County Librarian, and District Court Clerk 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 and County/Circuit Clerk. Noncompliance with accepted accounting practices was noted in the office of District Court Clerk.

County Judge

Sanitation fee revenue of $62,607 was not deposited during the period January 1, 2013 through April 30, 2015. Sanitation Supervisor Lance Wilkins, who resigned May 14, 2015, was charged with theft of property on July 9, 2015. Sanitation records were not available prior to January 1, 2013.

County/Circuit Clerk

Child support and marriage license revenue totaling $4,382 was not deposited during the period January 1, 2013 through February 19, 2015. County Clerk Chief Deputy Crista Weber, whose employment was terminated February 19, 2015, indicated to a Sheriff’s Department Investigator and audit staff that she misappropriated county funds.

District Court Clerk

The following information system weaknesses were discovered during a review of computers:

Backups were not stored at a suitable off-site facility. Failing to maintain backups at a secure off-site facility could result in loss of data and the inability to continue operations in the event of a disaster.

There was no formally documented and approved Disaster Recovery or Business Continuity Plan. This situation could cause the entity to be without computer processing for an extended period of time in the event of a disaster or major interruption and could place undue financial and personnel burdens on the resources of the entity.

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

June M. Barron, CPA, CFE Deputy Legislative Auditor

Little Rock, Arkansas July 21, 2015

-4- YELL COUNTY, ARKANSAS Exhibit A BALANCE SHEET - REGULATORY BASIS DECEMBER 31, 2013

Other Funds in the General Road Aggregate ASSETS Cash and cash equivalents $ 960,683 $ 96,624 $ 1,853,328 Accounts receivable 337,740 5,718 38,911 Interfund receivables 2,482 1,308

TOTAL ASSETS $ 1,298,423 $ 104,824 $ 1,893,547

LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 80,646 $ 28,304 $ 17,433 Interfund payables 3,790 Settlements pending 408,581 Total Liabilities 84,436 28,304 426,014

Fund Balances: Restricted 1,467,533 Assigned 174,940 76,520 Unassigned 1,039,047 Total Fund Balances 1,213,987 76,520 1,467,533

TOTAL LIABILITIES AND FUND BALANCES $ 1,298,423 $ 104,824 $ 1,893,547

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

-5- YELL COUNTY, ARKANSAS Exhibit B STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - REGULATORY BASIS FOR THE YEAR ENDED DECEMBER 31, 2013

Other Funds in the General Road Aggregate REVENUES State aid $ 521,292 $ 1,217,633 $ 347,722 Federal aid 637,961 188,934 384,926 Property taxes 912,609 332,575 337,876 Sales taxes 887,442 228,181 Fines, forfeitures, and costs 152,185 90,779 Interest 3,754 147 4,168 Officers' fees 17,111 154,153 Sanitation fees 325,060 Prisoner fees 694,712 911 fees 238,964 Treasurer's commission 117,489 16,847 Collector's commission 185,837 36,852 Taxes apportioned - Assessor's salary and expense 241,743 Other 318,734 24,226 18,840

TOTAL REVENUES 5,015,929 1,763,515 1,859,308

Less: Treasurer's commission 65,300 31,433 15,242

NET REVENUES 4,950,629 1,732,082 1,844,066

EXPENDITURES Current: General government 1,251,661 168,448 Law enforcement 2,875,769 83,283 Highways and streets 2,090,279 Public safety 210,621 395,982 Sanitation 327,021 Health 57,819 Recreation and culture 443,634 Economic development 318,308 Total Current 4,722,891 2,090,279 1,409,655

Debt Service: Bond principal 215,000 Bond interest and other charges 37,222 Lease principal 37,464 Lease interest 3,841 Note principal 86,470 10,744 Note interest 4,857 1,026

TOTAL EXPENDITURES 4,814,218 2,143,354 1,661,877

-6- YELL COUNTY, ARKANSAS Exhibit B STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - REGULATORY BASIS FOR THE YEAR ENDED DECEMBER 31, 2013

Other Funds in the General Road Aggregate EXCESS OF REVENUES OVER (UNDER) EXPENDITURES $ 136,411 $ (411,272) $ 182,189

OTHER FINANCING SOURCES (USES) Transfers in 193,223 485,000 101 Transfers out (485,101) (602) (192,621)

TOTAL OTHER FINANCING SOURCES (USES) (291,878) 484,398 (192,520)

EXCESS OF REVENUES AND OTHER SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES (155,467) 73,126 (10,331)

FUND BALANCES - JANUARY 1 1,369,454 3,394 1,477,864

FUND BALANCES - DECEMBER 31 $ 1,213,987 $ 76,520 $ 1,467,533

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

-7- YELL 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, 2013

General Road Variance Variance Favorable Favorable Budget Actual (Unfavorable) Budget Actual (Unfavorable) REVENUES State aid $ 501,255 $ 521,292 $ 20,037 $ 1,316,497 $ 1,217,633 $ (98,864) Federal aid 491,159 637,961 146,802 183,146 188,934 5,788 Property taxes 949,499 912,609 (36,890) 270,039 332,575 62,536 Sales taxes 1,301,000 887,442 (413,558) 485,000 (485,000) Fines, forfeitures, and costs 301,863 152,185 (149,678) Interest 319 3,754 3,435 146 147 1 Officers' fees 163,508 17,111 (146,397) Sanitation fees 46,903 325,060 278,157 Prisoner fees 272,734 694,712 421,978 Treasurer's commission 113,095 117,489 4,394 Collector's commission 275,662 185,837 (89,825) Taxes apportioned - Assessor's salary and expense 241,844 241,743 (101) Other 158,728 318,734 160,006 18,245 24,226 5,981

TOTAL REVENUES 4,817,569 5,015,929 198,360 2,273,073 1,763,515 (509,558)

Less: Treasurer's commission 63,289 65,300 (2,011) 39,490 31,433 8,057

NET REVENUES 4,754,280 4,950,629 196,349 2,233,583 1,732,082 (501,501)

EXPENDITURES Current: General government 1,508,437 1,251,661 256,776 Law enforcement 2,985,573 2,875,769 109,804 Highways and streets 2,435,016 2,090,279 344,737 Public safety 299,704 210,621 89,083 Sanitation 425,498 327,021 98,477 Health 64,239 57,819 6,420 Social services 64,294 64,294 Total Current 5,347,745 4,722,891 624,854 2,435,016 2,090,279 344,737

Debt Service: Lease principal 37,464 37,464 Lease interest 3,841 3,841 Note principal 79,631 86,470 (6,839) 10,744 10,744 Note interest 4,857 (4,857) 1,026 1,026

TOTAL EXPENDITURES 5,427,376 4,814,218 613,158 2,488,091 2,143,354 344,737

-8- YELL 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, 2013

General Road Variance Variance Favorable Favorable Budget Actual (Unfavorable) Budget Actual (Unfavorable) EXCESS OF REVENUES OVER (UNDER) EXPENDITURES $ (673,096) $ 136,411 $ 809,507 $ (254,508) $ (411,272) $ (156,764)

OTHER FINANCING SOURCES (USES) Transfers in 427,660 193,223 (234,437) 485,000 485,000 Transfers out (485,101) (485,101) (602) (602)

TOTAL OTHER FINANCING SOURCES (USES) 427,660 (291,878) (719,538) 484,398 484,398

EXCESS OF REVENUES AND OTHER SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES (245,436) (155,467) 89,969 (254,508) 73,126 327,634

FUND BALANCES - JANUARY 1 288,449 1,369,454 1,081,005 298,579 3,394 (295,185)

FUND BALANCES - DECEMBER 31 $ 43,013 $ 1,213,987 $ 1,170,974 $ 44,071 $ 76,520 $ 32,449

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

-9- YELL COUNTY, ARKANSAS NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2013

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.

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 Arkansas Code. 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, Emergency, Risk Watch, Juvenile Detention Center, Sales Tax, Sanitation, County Jail, Automated Recorder’s System Grant, War Memorial, and General Improvement.

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, federal aid, property taxes, interest, and other revenues 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: County Public Library, Public Defender, Emergency 911, Jail Restoration, Treasurer’s Automation, Nuclear Response, Recorder’s Automation, County Recorder, Collector’s Automation, Firefighter’s Training, West Nile Virus, District Court Automation, Assessor’s Amendment no. 79, Support Cost Collections, District Court Cost, Juvenile Probation, Public Defender’s Investigator, Circuit Court Automation, Boating Safety and Enforcement, County Security, Communication Facility and Equipment, Drug Control, County Clerk’s Cost, Information Sharing Grant, County Security (Act 576) Grant, Drug Court, Custom Wood Grant, Reappraisal, Fire Equipment and Training (Act 833), General Improvement Grant, and Prosecutor’s Victim/Witness.

Capital Projects Funds - Capital Projects Funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlay, including the acquisition or construction of capital facilities and other capital assets. The following Capital Project Fund is reported with other funds in the aggregate: Pet Solutions.

Debt Service Funds - Debt Service Funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for principal and interest. The following Debt Service Fund is reported with other funds in the aggregate: Sales and Use Tax Bonds 2005.

- 10 - YELL COUNTY, ARKANSAS NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2013

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: County Treasurer (Treasurer Commission, County Investment, Title III, Circuit Clerk Commission Fee, County Law Library, and Sanitation Sales Tax), Collector (Delinquent Tax), Sheriff (Fee, Bond and Fine, and Circuit Bond), County/Circuit Clerk (Fee, Trust, and Child Support), and District Court (County Court, Dardanelle City, Small Claims, District Court Bond and Fine, Danville City, and Ola City).

C. Basis of Accounting

The financial statements are prepared on the regulatory basis of accounting as prescribed or permitted by Arkansas Code. 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 accounts and certificates of deposit.

Settlements Pending

Settlements pending are considered fines, forfeitures, costs, excess commissions, trust funds, officers’ fees, and property taxes 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. 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.

3. 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 - YELL COUNTY, ARKANSAS NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2013

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.

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.

There were no committed fund balances at year-end.

NOTE 2: Cash

Deposit risks related to credit risk, concentration of credit risk, interest rate risk, and foreign currency risk have not been provided as required by Governmental Accounting Standards Board Statement no. 40.

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 - YELL COUNTY, ARKANSAS NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2013

NOTE 4: Accounts Receivable

The accounts receivable balance at December 31, 2013 is composed of the following:

General Road Other Funds Description Fund Fund in the Aggregate

State aid $ 31,167 $ 2,482 Officers' fees 1,569 9,064 Sales taxes 72,461 18,631 911 fees 5,151 Fines, forfeitures, and costs 7,489 811 Prisoner fees 6,544 Sanitation fees 89,965 Treasurer's commission 117,489 Excess treasurer's commission 11,056 $ 5,718 2,772

Totals $ 337,740 $ 5,718 $ 38,911

NOTE 5: Accounts Payable

The accounts payable balance at December 31, 2013 is composed of the following:

General Road Other Funds Description Fund Fund in the Aggregate

Vendor payables $ 78,537 $ 27,950 $ 17,433 Salaries payable 41 161 Payroll taxes payable 64 193 Other 2,004

Totals $ 80,646 $ 28,304 $ 17,433

- 13 - YELL COUNTY, ARKANSAS NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2013

NOTE 6: Interfund Balances

Individual fund interfund receivable and payable balances are as follows:

December 31, 2013 Interfund Interfund Fund Receivables Payables

General $ 3,790 Road $ 2,482 Other Funds in the Aggregate: Special Revenue: County Public Library 643 Public Defender 5 Emergency 911 296 Jail Restoration 1 Nuclear Response 126 Recorder's Automation 44 County Recorder 127 Collector's Automation 44 District Court Automation 3 Support Cost Collections 3 Dis tric t Court Cos t 8 Juvenile Probation 5 Circuit Court Automation 2 County Clerk's Cost 1

Totals $ 3,790 $ 3,790

Interfund receivables and payables consist of errors in depositing restricted revenues and interfund loans. These balances were repaid by January 31, 2014.

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, 2013, the legal debt limit for bonded debt was $19,856,673. 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, 2013, the legal debt limit for short-term financing obligations was $5,353,336. The amount of short-term financing obligations was $185,481 leaving a legal debt margin of $5,167,855.

- 14 - YELL COUNTY, ARKANSAS NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2013

NOTE 8: Details of Fund Balance Classifications

Fund balance classifications at December 31, 2013 are composed of the following:

General Road Other Funds in Description Fund Fund the Aggregate Fund Balances: Restricted for: General government $ 361,326 Law enforcement 250,623 Public safety 359,708 Debt service 194,817 Recreation culture 301,059 Total Restricted 1,467,533

Assigned to: Law enforcement $ 84,409 Highw ays and streets $ 76,520 Sanitation 34,760 Recreation culture 749 Capital outlay 55,022 Total Assigned 174,940 76,520

Unassigned 1,039,047

Totals $ 1,213,987 $ 76,520 $ 1,467,533

NOTE 9: Commitments

Total commitments consist of the following at December 31, 2013:

December 31, 2013

Long-term liabilities $ 790,481 Reappraisal Contract 373,080

Total Commitments $ 1,163,561

- 15 - YELL COUNTY, ARKANSAS NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2013

NOTE 9: Commitments (Continued)

Long-term Liabilities

Long-term liabilities at December 31, 2013 are comprised of the following:

December 31, 2013 A 4.6% note payable agreement with Scott Financial Services dated September 26, 2011 for the purchase of a 2006 Case 580SM backhoe. Yearly payments of $11,769 for three years are to be paid from the Road Fund. $ 11,245

A 6% note payable with Chambers Bank dated August 2, 2011 for the purchase of a 2008 Chevrolet Trailblazer. Monthly payments of $547 for 36 months are to be paid from the General Fund. 4,292

A 6% note payable with Chambers Bank dated March 4, 2011 for the purchase of 11 vehicles in the Sheriff's office. Monthly payments of $4,667 for 36 months are to be paid from the General Fund. 10,630

Series 2005 Sales and Use Tax bonds dated January 1, 2006 with interest rates ranging from 4.25% to 4.75% and annual payments for 29 years. Payments are due on January 1 of each year. Bonds are subject to an optional redemption on or after January 1, 2011. Payments are to be paid from the Debt Service Fund. 605,000

A 2.5% lease-purchase agreement with John Deere Financial dated February 21, 2012 for the purchase of a motor grader. Monthly payments of $3,193 for 60 months and $22,329 for one month are to be paid from the Road Fund. 134,215

A 5.75% note payable with Chambers Bank dated March 14, 2012 for the purchase of a 2012 Ford Fusion. Monthly payments of $464 for 36 months are to be paid from the General Fund. 5,795

A 5.75% note payable with Chambers Bank dated March 21, 2013 for the purchase of a Chevrolet Tahoe. Monthly payments of $765 for 36 months are to be paid from the General Fund. 19,304

Total Long-Term Liabilities $ 790,481

Due to the County’s regulatory basis of accounting, these liabilities are not recorded in the financial statements.

Compensated Absences

Compensated absences do vest or accumulate. The amount of compensated absences was not determined.

Post Employment Benefits Other Than Pensions

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

- 16 - YELL COUNTY, ARKANSAS NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2013

NOTE 9: Commitments (Continued)

Debt Service Requirements to Maturity

The County is obligated for the following amounts at December 31, 2013:

Years Ending December 31, Bonds Notes Leases Total

2014 $ 67,640 $ 41,921 $ 38,320 $ 147,881 2015 70,940 9,418 38,320 118,678 2016 68,960 2,294 38,320 109,574 2017 66,980 25,523 92,503 2018 70,000 70,000 2019 through 2023 344,280 344,280 2024 through 2025 106,480 106,480 Total Obligations 795,280 53,633 140,483 989,396 Less Interest 190,280 2,367 6,268 198,915

Total Principal $ 605,000 $ 51,266 $ 134,215 $ 790,481

Reappraisal Contract

On November 30, 2011, the County entered into a contract with Total Assessment Solutions Corporation for appraisal service in the amount of $621,800. Terms of the contract requires 60 monthly payments of $10,363. The first payment was due on January 15, 2012 with subsequent payments being due the 15th of each month thereafter.

The County is obligated for the following amounts at December 31, 2013:

Year Amount 2014 $ 124,360 2015 124,360 2016 124,360 Total $ 373,080

NOTE 10: Interfund Transfers

The General Fund transferred $485,000 to the Road Fund and $101 to Other Funds in the Aggregate (County Public Library) to supplement operations. Other Funds in the Aggregate (various funds) and the Road Fund transferred $192,621 and $602, respectively, to the General Fund for reimbursement of expenditures.

NOTE 11: Subsequent Events

On March 10, 2014, the County issued $7,960,000 of Sales and Use Tax Bonds. The bond proceeds will be used to acquire, construct, equip, and furnish a new jail facility, Sheriff’s office, and communications center. The bonds were sold on April 22, 2014 with interest rates ranging from 2.2 to 3 percent.

On September 14, 2014, the County received bids and awarded contracts for the Yell County Jail Project. Estimated cost of the project is $7,050,000, and the estimated completion date is March 16, 2016.

NOTE 12: Pledged Revenues

The County pledged future .125% sales and use taxes to repay $1,725,000 in bonds that were issued in 2005 to provide funding for construction and renovation of a courthouse. Total principal and interest remaining on the bonds are $605,000 and $190,280, respectively, payable through January 1, 2025. For 2013, principal and interest paid were $215,000 and $35,022, respectively.

- 17 - YELL COUNTY, ARKANSAS NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2013

NOTE 12: Pledged Revenues (Continued)

The Debt Service Fund received $228,181 in sales taxes in 2013. Any sales taxes collected in excess of debt service payments on these bonds is to be used for payment on the bonds.

NOTE 13: Joint Venture: Arkansas River Valley Regional Library

Franklin, Johnson, Logan, and Yell Counties entered into an agreement in July 1985, in accordance with Ark. Code Ann. § 13-2-401, to establish the Arkansas River Valley Regional Library (Library). The agreement states that services shall be made available to all residents of the counties who entered into the agreement. Bookmobile services will be given select areas in each county; the areas are to be recommended by the county library boards and approved by the Regional Library Board and the Arkansas Library Board. The County Public Library paid $60,933 for regional library expenditures in 2013. Separate financial statements of the Library are available at 501 N. Front Street, Dardanelle, Arkansas 72834.

NOTE 14: Jointly Governed Organizations

West River Valley Solid Waste Management District

Conway, Crawford, Franklin, Johnson, Logan, Perry, Pope, Scott, and Yell Counties and the Cites of Van Buren, Ozark, Atkins, Booneville, Alma, Clarksville, Russellville, Paris, Charleston, Morrilton, Waldron, and Dardanelle entered into an agreement in 1991 to form the West River Valley Solid Waste Management District in accordance with Ark. Code Ann. § 8-6-708. The County did not provide any funding for the West River Valley Solid Waste Management District. Separate financial statements may be obtained at: 24087 Highway 164, Clarksville, AR 72830.

Fifteenth Judicial District Drug Task Force

The Prosecuting Attorney of the Fifteenth Judicial District, the Sheriff’s Departments of Yell, Conway, Scott, and Logan Counties, and the Police Departments of Paris, Booneville, Magazine, Waldron, Plainview, Ola, Dardanelle, Danville, Morrilton, Oppelo, Menifee, Mansfield, and Plumerville entered into an agreement to establish the Fifteenth Judicial District Drug Task Force. Funding was provided through a Drug Law Enforcement Program grant applied for by the Prosecuting Attorney of the Fifteenth Judicial District. The County did not provide any funding to the Fifteenth Judicial District Drug Task Force. Financial statements of the Fifteenth Judicial District Drug Task Force are not available.

NOTE 15: 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 Arkansas Public Entities Insurance Cooperative – Workers’ Compensation Trust (APCI-WCT) public entity risk pool for workers’ compensation coverage. This program provides benefits for losses incurred by County officials, employees, volunteer fire fighters, and prisoners while performing work for the County. Rates for counties participating in this program are based on the cost experience of the particular county or group, the National Council on Workers’ Compensation Insurance and the Workers’ Compensation Commission.

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

Building and Contents Program - This program is a blanket policy with coverage up to $100,000,000 for any one loss with a $500 deductible. The County shall pay into the program each year a charge established annually by the Risk Management Fund Board for covered county property.

- 18 - YELL COUNTY, ARKANSAS NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2013

NOTE 15: Risk Management (Continued)

Vehicle Program

A. Liability - This program may pay all sums the County legally must pay as damages because of bodily injury, death, or property damage to which this agreement applies involving a covered county vehicle and for which the County is liable. The limit of payment for in-state claims is $25,000 for bodily injury per person, $50,000 for bodily injury per accident, and $25,000 for property damage per accident ($100,000 respectively for out-of-state claims). The County shall pay into the program each year a charge established annually by the Risk Management Fund Board for covered county vehicles owned or leased by the County.

B. Physical Damage - This program covers vehicles and mobile equipment which are the property of the participating county. Property is valued at the cost to repair or replace the property after deduction for depreciation. Loss amounts will be reduced by the deductible amount of $1,000 for Sheriff’s Department vehicles and $500 for all other covered vehicles and mobile equipment. The County agrees to pay into the program each year a service charge established annually by the Risk Management Fund Board for covered property.

General Liability Program - The program shall provide legal defense in civil rights suits against the county government of a participating county and pay judgments imposed on County officials and employees and the county government and county-formed boards and commissions. Coverage is limited to $350,000 per case with an annual aggregate of $350,000. The County shall pay into the program each year a charge established annually by the Risk Management Fund Board for this coverage.

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 16: Arkansas Public Employees Retirement System

Plan Description

The County contributes to the Arkansas Public Employees Retirement System (PERS), a cost-sharing multiple- employer defined benefit pension plan. PERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. Benefit provisions are established by State law and 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 PERS. 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.

Funding Policy

PERS has contributory and non-contributory plans. Contributory members are required by code to contribute 5% of their salary. Each participating employer is required by code 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, 2013 were $440,176.

- 19 - YELL COUNTY, ARKANSAS Schedule 1 COMBINING BALANCE SHEET - OTHER FUNDS IN THE AGGREGATE - REGULATORY BASIS DECEMBER 31, 2013

SPECIAL REVENUE FUNDS

County Public Public Emergency Jail Treasurer's Nuclear Recorder's County Collector's Library Defender 911 Restoration Automation Response Automation Recorder Automation ASSETS Cash and cash equivalents $ 303,561 $ 6,084 $ 297,451 $ 87,776 $ 8,064 $ 57,269 $ 20,834 $ 61,626 $ 203,877 Accounts receivable 1,148 11 5,875 1 307 2,439 6,393 109 Interfund receivables 643 5 296 1 126 44 127 44

TOTAL ASSETS $ 305,352 $ 6,100 $ 303,622 $ 87,778 $ 8,064 $ 57,702 $ 23,317 $ 68,146 $ 204,030

LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 4,293 $ 5,295 $ 27 $ 467 Settlements pending Total Liabilities 4,293 5,295 27 467

Fund Balances: Restricted 301,059 $ 6,100 298,327 $ 87,778 8,037 57,235 $ 23,317 $ 68,146 $ 204,030

TOTAL LIABILITIES AND FUND BALANCES $ 305,352 $ 6,100 $ 303,622 $ 87,778 $ 8,064 $ 57,702 $ 23,317 $ 68,146 $ 204,030

-20- YELL COUNTY, ARKANSAS Schedule 1 COMBINING BALANCE SHEET - OTHER FUNDS IN THE AGGREGATE - REGULATORY BASIS DECEMBER 31, 2013

SPECIAL REVENUE FUNDS

Assessor's Public Firefighter's West Nile District Court Amendment Support Cost District Court Juvenile Defender's Circuit Court Training Virus Automation no. 79 Collections Cost Probation Investigator Automation ASSETS Cash and cash equivalents $ 2,916 $ 1,637 $ 8,494 $ 36,365 $ 3,932 $ 13,708 $ 5,458 $ 81,403 $ 1,395 Accounts receivable 152 385 544 11 1 110 Interfund receivables 3 3 8 5 2

TOTAL ASSETS $ 2,916 $ 1,637 $ 8,649 $ 36,365 $ 4,320 $ 14,260 $ 5,474 $ 81,404 $ 1,507

LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 407 $ 4,374 $ 87 Settlements pending Total Liabilities 407 4,374 87

Fund Balances: Restricted 2,509 $ 1,637 4,275 $ 36,365 $ 4,320 $ 14,260 $ 5,474 $ 81,404 1,420

TOTAL LIABILITIES AND FUND BALANCES $ 2,916 $ 1,637 $ 8,649 $ 36,365 $ 4,320 $ 14,260 $ 5,474 $ 81,404 $ 1,507

-21- YELL COUNTY, ARKANSAS Schedule 1 COMBINING BALANCE SHEET - OTHER FUNDS IN THE AGGREGATE - REGULATORY BASIS DECEMBER 31, 2013 CAPITAL DEBT PROJECTS SERVICE SPECIAL REVENUE FUNDS FUND FUND

Communication Sales and County Facility and County Clerk's County Security Use Tax Security Equipment Drug Control Cost (Act 576) Grant Drug Court Reappraisal Pet Solutions Bonds 2005 ASSETS Cash and cash equivalents $ 34,378 $ 155 $ 8,431 $ 2,828 $ 2,175 $ 4,499 $ 14,245 $ 176,186 Accounts receivable 239 37 35 $ 2,483 18,631 Interfund receivables 1

TOTAL ASSETS $ 34,378 $ 394 $ 8,431 $ 2,866 $ 2,175 $ 4,534 $ 14,245 $ 2,483 $ 194,817

LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 2,483 Settlements pending Total Liabilities 2,483

Fund Balances: Restricted $ 34,378 $ 394 $ 8,431 $ 2,866 $ 2,175 $ 4,534 $ 14,245 $ 194,817

TOTAL LIABILITIES AND FUND BALANCES $ 34,378 $ 394 $ 8,431 $ 2,866 $ 2,175 $ 4,534 $ 14,245 $ 2,483 $ 194,817

-22- YELL COUNTY, ARKANSAS Schedule 1 COMBINING BALANCE SHEET - OTHER FUNDS IN THE AGGREGATE - REGULATORY BASIS DECEMBER 31, 2013

AGENCY FUNDS

County/Circuit Treasurer's Collector's Sheriff's Clerk's District Court Accounts Accounts Accounts Accounts Accounts Totals ASSETS Cash and cash equivalents $ 189,897 $ 194 $ 16,306 $ 163,204 $ 38,980 $ 1,853,328 Accounts receivable 38,911 Interfund receivables 1,308

TOTAL ASSETS $ 189,897 $ 194 $ 16,306 $ 163,204 $ 38,980 $ 1,893,547

LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 17,433 Settlements pending $ 189,897 $ 194 $ 16,306 $ 163,204 $ 38,980 408,581 Total Liabilities 189,897 194 16,306 163,204 38,980 426,014

Fund Balances: Restricted 1,467,533

TOTAL LIABILITIES AND FUND BALANCES $ 189,897 $ 194 $ 16,306 $ 163,204 $ 38,980 $ 1,893,547

-23- YELL 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, 2013

SPECIAL REVENUE FUNDS

County Public Public Emergency Jail Treasurer's Nuclear Recorder's County Collector's Library Defender 911 Restoration Automation Response Automation Recorder Automation REVENUES State aid $ 63,293 $ 2,352 $ 81,250 Federal aid 24,599 Property taxes 337,876 Sales taxes Fines, forfeitures, and costs 9,349 $ 23,941 Interest 945 29 $ 943 383 $ 41 182 $ 60 $ 216 $ 718 Officers' fees 37,486 103,643 911 fees 238,964 Treasurer's commission 16,847 Collector's commission 36,852 Other 11,075 11 2,823 3 260 3,584 153 465 325

TOTAL REVENUES 413,189 11,741 242,730 24,327 17,148 109,615 37,699 104,324 37,895

Less: Treasurer's commission 6,142 63 3,979 6 1,690 602 1,707 751

NET REVENUES 407,047 11,678 238,751 24,321 17,148 107,925 37,097 102,617 37,144

EXPENDITURES Current: General government 4,833 21,202 11,728 Law enforcement 13,376 33,165 Public safety 222,088 92,687 Recreation and culture 424,634 Economic development Total Current 424,634 13,376 222,088 33,165 4,833 92,687 21,202 11,728

Debt Service: Bond principal Bond interest and other charges

TOTAL EXPENDITURES 424,634 13,376 222,088 33,165 4,833 92,687 21,202 11,728

EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (17,587) (1,698) 16,663 (8,844) 12,315 15,238 15,895 102,617 25,416

OTHER FINANCING SOURCES (USES) Transfers in 101 Transfers out (722) (2,000) (10,000) (2,000) (137,579)

TOTAL OTHER FINANCING SOURCES (USES) (621) (2,000) (10,000) (2,000) (137,579)

EXCESS OF REVENUES AND OTHER SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES (18,208) (1,698) 16,663 (10,844) 2,315 15,238 13,895 (34,962) 25,416

FUND BALANCES - JANUARY 1 319,267 7,798 281,664 98,622 5,722 41,997 9,422 103,108 178,614

FUND BALANCES - DECEMBER 31 $ 301,059 $ 6,100 $ 298,327 $ 87,778 $ 8,037 $ 57,235 $ 23,317 $ 68,146 $ 204,030

-24- YELL 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, 2013

SPECIAL REVENUE FUNDS Assessor's Public Firefighter's West Nile District Court Amendment Support Cost District Court Juvenile Defender's Circuit Court Training Virus Automation no. 79 Collections Cost Probation Investigator Automation REVENUES State aid Federal aid $ 3,631 Property taxes Sales taxes Fines, forfeitures, and costs $ 2,496 $ 32,268 $ 2,604 $ 1,656 Interest 23 29 $ 144 $ 19 49 $ 16 320 6 Officers' fees 2,826 3,750 911 fees Treasurer's commission Collector's commission Other 30 31 43 8 2 14

TOTAL REVENUES 3,654 2,555 144 2,876 32,360 3,774 2,926 1,676

Less: Treasurer's commission 52 52 100 60 5 27

NET REVENUES 3,654 2,503 144 2,824 32,260 3,714 2,921 1,649

EXPENDITURES Current: General government 2,315 Law enforcement 4,374 1,709 1,734 Public safety 6,280 Recreation and culture Economic development Total Current 6,280 4,374 2,315 1,709 1,734

Debt Service: Bond principal Bond interest and other charges

TOTAL EXPENDITURES 6,280 4,374 2,315 1,709 1,734

EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (2,626) (1,871) 144 509 32,260 2,005 2,921 (85)

OTHER FINANCING SOURCES (USES) Transfers in Transfers out (30,000)

TOTAL OTHER FINANCING SOURCES (USES) (30,000)

EXCESS OF REVENUES AND OTHER SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES (2,626) (1,871) 144 509 2,260 2,005 2,921 (85)

FUND BALANCES - JANUARY 1 5,135 $ 1,637 6,146 36,221 3,811 12,000 3,469 78,483 1,505

FUND BALANCES - DECEMBER 31 $ 2,509 $ 1,637 $ 4,275 $ 36,365 $ 4,320 $ 14,260 $ 5,474 $ 81,404 $ 1,420

-25- YELL 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, 2013

SPECIAL REVENUE FUNDS Boating Safety Communication and County Facility and County Clerk's Information County Security Custom Wood Enforcement Security Equipment Drug Control Cost Sharing Grant (Act 576) Grant Drug Court Grant REVENUES State aid $ 1,230 $ 300 $ 500 Federal aid $ 34,378 $ 4,010 Property taxes Sales taxes Fines, forfeitures, and costs $ 4,563 230 Interest 1 $ 10 23 Officers' fees $ 6,062 386 911 fees Treasurer's commission Collector's commission Other 11 2

TOTAL REVENUES 1,242 34,378 6,062 4,563 398 300 753 4,010

Less: Treasurer's commission 6

NET REVENUES 1,242 34,378 6,062 4,563 392 300 753 4,010

EXPENDITURES Current: General government 4,010 Law enforcement 5,976 6,000 3,277 Public safety 490 Recreation and culture Economic development Total Current 5,976 6,000 490 3,277 4,010

Debt Service: Bond principal Bond interest and other charges

TOTAL EXPENDITURES 5,976 6,000 490 3,277 4,010

EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 1,242 34,378 86 (1,437) 392 (190) (2,524) 0

OTHER FINANCING SOURCES (USES) Transfers in Transfers out (1,333) $ (8,987)

TOTAL OTHER FINANCING SOURCES (USES) (1,333) (8,987)

EXCESS OF REVENUES AND OTHER SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES (91) 34,378 86 (1,437) 392 (8,987) (190) (2,524)

FUND BALANCES - JANUARY 1 91 308 9,868 2,474 8,987 2,365 7,058

FUND BALANCES - DECEMBER 31 $ 0 $ 34,378 $ 394 $ 8,431 $ 2,866 $ 0 $ 2,175 $ 4,534 $ 0

-26- YELL 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, 2013

CAPITAL DEBT PROJECTS SERVICE SPECIAL REVENUE FUNDS FUND FUND Fire Equipment General Sales and Use and Training Improvement Prosecutor's Tax Bonds Reappraisal (Act 833) Grant Victim/Witness Pet Solutions 2005 Totals REVENUES State aid $ 124,360 $ 59,437 $ 15,000 $ 347,722 Federal aid $ 318,308 384,926 Property taxes 337,876 Sales taxes $ 228,181 228,181 Fines, forfeitures, and costs $ 13,672 90,779 Interest 11 4,168 Officers' fees 154,153 911 fees 238,964 Treasurer's commission 16,847 Collector's commission 36,852 Other 18,840

TOTAL REVENUES 124,360 59,437 15,000 13,672 318,308 228,192 1,859,308

Less: Treasurer's commission 15,242

NET REVENUES 124,360 59,437 15,000 13,672 318,308 228,192 1,844,066

EXPENDITURES Current: General government 124,360 168,448 Law enforcement 13,672 83,283 Public safety 59,437 15,000 395,982 Recreation and culture 19,000 443,634 Economic development 318,308 318,308 Total Current 124,360 59,437 34,000 13,672 318,308 1,409,655

Debt Service: Bond principal 215,000 215,000 Bond interest and other charges 37,222 37,222

TOTAL EXPENDITURES 124,360 59,437 34,000 13,672 318,308 252,222 1,661,877

EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 0 0 (19,000) 0 0 (24,030) 182,189

OTHER FINANCING SOURCES (USES) Transfers in 101 Transfers out (192,621)

TOTAL OTHER FINANCING SOURCES (USES) (192,520)

EXCESS OF REVENUES AND OTHER SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES (19,000) (24,030) (10,331)

FUND BALANCES - JANUARY 1 14,245 19,000 218,847 1,477,864

FUND BALANCES - DECEMBER 31 $ 14,245 $ 0 $ 0 $ 0 $ 0 $ 194,817 $ 1,467,533

-27- YELL COUNTY, ARKANSAS NOTES TO SCHEDULES 1 AND 2 DECEMBER 31, 2013

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

Fund Name Fund Description

County Public Library Ark. Code Ann. § 13-2-404 and Yell County Ordinance no. 2002-7 (November 11, 2002) established fund to account for property tax millage levied by the Quorum Court for the support, operation, and maintenance of the public library. Public Defender Ark. Code Ann. § 16-10-307 established the County Administration of Justice Fund which continued to finance this fund used for defense of indigents. Emergency 911 Ark. Code Ann. § 12-10-318 established fund to receive fees collected by telephone providers for 911 emergency services. Jail Restoration Ark. Code Ann. § 16-10-307 established the County Administration of Justice Fund which continued to finance this fund for maintenance of the county jail. 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 record keeping system. Nuclear Response Ark. Code Ann. § 19-6-435 established a fund to be used for operation and maintenance of the Arkansas Nuclear and Planning Program. Recorder's Automation Ark. Code Ann. § 21-6-413 established fund to receive at least 35% of fees collected by County Clerks to be used to purchase, maintain, and operate an automated records system. County Recorder 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. 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. Firefighter's Training Established fund to account for federal grant for fire safety and training. West Nile Virus Established fund to account for federal grant for the eradication of mosquitoes. 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. Assessor's Amendment no. 79 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. Support Cost Collections Ark. Code Ann. § 9-10-109 established fund to receive fees to offset administrative costs in the Clerk's office.

-28 - YELL COUNTY, ARKANSAS NOTES TO SCHEDULES 1 AND 2 DECEMBER 31, 2013

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

Fund Name Fund Description

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. Juvenile Probation Ark. Code Ann. § 16-13-326 established fund to receive juvenile fees to provide services and supplies to juveniles at the discretion of the juvenile division of Circuit Court. Public Defender's Investigator Ark. Code Ann. § 16-10-307 established the County Administration of Justice Fund which continued to finance this fund used for defense of indigents. 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. Boating Safety and Enforcement 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. County Security Established fund to account for federal grant for updating the security system at the courthouse. 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. Drug Control Ark. Code Ann. § 5-64-505 established fund to receive asset forfeitures resulting from drug offense cases due to arresting agency. County Clerk's Cost Ark. Code Ann. § 16-20-407 established fund to account for a $2 marriage license fee to be used for operation of the County Clerk's office. Information Sharing Grant Established fund to account for federal grant for Bureau of Justice Assistance, 2009 Recovery Act for sharing information between the various law enforcement agencies in the County. County Security (Act 576) Grant Ark. Code Ann. § 16-10-1006 established fund for the purpose of providing financial assistance to local governments to assist in the implementation of local security and emergency preparedness plans for circuit and district courts. Drug Court Ark. Code Ann. § 16-98-304 established fund to receive program user fees set by Drug Court judges to be used for the benefit and administration of the drug court program. Custom Wood Grant Fund established to account for state grant for Arkansas Community and Economic Development Program. Reappraisal Ark. Code Ann. § 26-26-1907 established fund to pay reappraisals of real property with revenue received from State. -29 - YELL COUNTY, ARKANSAS NOTES TO SCHEDULES 1 AND 2 DECEMBER 31, 2013

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

Fund Name Fund Description

Fire Equipment and Training (Act 833) Ark. Code Ann. § 14-284-403 requires fire protection premium 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. General Improvement Grant Fund established to account for state grant from the Arkansas Department of Rural Services and the West Central Arkansas Planning and Development District, Inc.

Prosecutor's Victim/Witness Ark. Code Ann. § 16-21-151 established fund to receive District Court costs levied to be used by Prosecuting Attorney for operating Victim/Witness program. Pet Solutions Yell County Ordinance no. 2013-2 (January 3, 2013) set up the Pet Solutions fund to account for a federal grant through the Arkansas Department of Economic Development. The grant was used to build a pretreatment sewer pond, needed to bring the Pet Solutions company to Yell County, Arkansas. Sales and Use Tax Bonds 2005 Yell County Ordinance no. 2005-13 (September 12, 2005) approved issuance of bonds ($1,725,000) and established a fund for debt payments from the 0.125% sales tax approved by voters.

Treasurer's accounts consist primarily of Treasurer's commissions and interest not yet distributed to the appropriate entities. 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, and restitution not yet distributed. County/Circuit Clerk's accounts consist of fee money to be settled with Treasurer and trust monies awaiting disposition by court. District Court accounts consist primarily of fines and costs not yet distributed to the county and/or state.

-30 - YELL COUNTY, ARKANSAS Schedule 3 OTHER INFORMATION SCHEDULE OF CAPITAL ASSETS DECEMBER 31, 2013 (Unaudited)

December 31, 2013

Land $ 191,076 Buildings 7,148,544 Equipment 5,645,098

Total $ 12,984,718

-31- YELL COUNTY, ARKANSAS Schedule 4 SCHEDULE OF SELECTED INFORMATION FOR THE LAST FIVE YEARS - REGULATORY BASIS DECEMBER 31, 2013 (Unaudited)

General 2013 2012 2011 2010 2009

Total Assets $ 1,298,423 $ 1,450,664 $ 1,615,902 $ 1,797,751 $ 1,718,594

Total Liabilities 84,436 81,210 115,545 154,911 106,901

Total Fund Balances 1,213,987 1,369,454 1,500,357 1,642,840 1,611,693

Net Revenues 4,950,629 4,641,763 4,489,291 4,595,261 4,606,390

Total Expenditures 4,814,218 4,606,554 4,667,355 4,226,885 4,102,226

Total Other Financing Sources/Uses (291,878) (106,239) (31,064) (337,229) (261,000)

Road

Total Assets $ 104,824 $ 15,641 $ 399,605 $ 323,976 $ 227,404

Total Liabilities 28,304 12,247 33,730 40,440 42,813

Total Fund Balances 76,520 3,394 365,875 283,536 184,591

Net Revenues 1,732,082 1,658,998 1,816,478 1,909,914 1,790,114

Total Expenditures 2,143,354 2,287,936 2,236,389 2,375,969 2,380,769

Total Other Financing Sources/Uses 484,398 540,000 502,250 565,000 625,674

Other Funds in the Aggregate

Total Assets $ 1,893,547 $ 2,257,632 $ 1,933,458 $ 2,111,031 $ 2,315,521

Total Liabilities 426,014 779,768 468,995 533,564 759,386

Total Fund Balances 1,467,533 1,477,864 1,464,463 1,577,467 1,556,135

Net Revenues 1,844,066 2,183,497 1,568,514 1,736,399 2,127,940

Total Expenditures 1,661,877 1,955,618 1,364,144 1,487,296 2,407,035

Total Other Financing Sources/Uses (192,520) (218,478) (250,729) (227,771) (364,674)

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