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Home My WebLink About1991 Financial Statement June 30� u, c � i _ I � � I � � TOWN OF MARANA 1• 1• • • • • � • • �arana, Ari:ona P'INANCIAL STATEMENTS Year Snded JIINS 30, 1991 �� I � J ERHIBIT �f 1• 1• E!� `_ � � ��•�`�1 �� ; 4 �F=3 1 2 3 4 IND]3P$ND1�I+iT AIIDITOR� 8 REPORT C�ENERAL PORPOSF �INl�iCIAL ST!►TBMENTS: Combined Balance Sheet, All Fund Types and Account Groups Co�bined Statement of Revenues, Expen- ditures and Changes in Fund Balances, Al1 Governmental Fund Types Combined Statement of Revenues, Expen- ditures and Changes in Fund Balances, Budget and Actual, General and Spe- cial Revenue Fund Types Combined Statement of Revenues, Expenses and Changes in Deficit, Ali Proprietary F'und Types Combined Statement of Cash Flows, Al1 Proprietary Fund Types Summary of Significant Accounting Policies Notes to Combined Financial Statements • 5 • • ! � � Independent Auditor's Combined Report on Internal Control Structure PA(�E 1 2 3 4 5 6 7-12 13-22 23-27 Independent Auditor's Report on Compliance with Laws and Regulations Based on an Audit of Financial Statements Performed in Accor- dance with Government Auditing Standards 28-29 Independent Auditor's Combined Report on Com- pliance with General Requirements Applicable to Nonma�or Federal Financial Assistance Programs and Specific Requirements Applic- able to Nonmajor Program Transactions Schedule of Findings and Questioned Costs Independent Auditor's Report on Schedule of Federal Financial Assistance Schedule of Federal Financia] Assistance 30-31 32 33 34 i• � Clifton, ' Gunderson & Co. Certified Public AccounTants & Consultanis �� v �� I• I• �� - 1• I• �• �• �� Honorable Mayor and Town Council Town of Marana Marana, Arizona Independent Audito=�s Report We have audited the accompanying general purpose financi,al statements of the Town of Marana, Arizona, as of and for the year ended June 30, 1991. These general purpose financial statements are the responsibility of the Town's management. Our responsibility is ta express an opinion on these general purpose financial sta�ements based on our audit. We conducted our audit in accordance with generally accepted audit-� ing standards, "Government Auditing Standards,�' issued by the Camp- troller General of the United States, and the provisions af Office of Management and Budget Circular A-128, "Audits of State and Local Governments." Those standards require that we plan and perfarm the audit to obtain reasonable assurance about whether the gene�a�. purpose financial statements are free of material misstatement. �in audit includes examining, on a test basis, evidence supporting t3�e amounts and disclosures in the general purpose financial state-� ments. An audit also includes assessing the aceounting principles used and significant estimates made by management, as well as �valuating the overall financial statement presentation. We beiieve that c�ur audit provides a reasonable basis for our oginion. In our opinion, the general purpose financial statements ref�rred �o above present fairly, in all material respects, the financial position of the Town of Marana, Arizona, at June 30, 1991, and the results of its operations and cash flows of its proprietaxy fund types for the year then ended in conformity with generally accepted accounting principles. . .� � �� • / � Tucson, Arizona February 7, 1992 F� MEMBERS OF AMERICAN INSTITUTE OF CERTIFIED ARIZONA COLORADO ILLINOIS INDIANA IOWA MARYLAND M�SSOURI NEW MEXICO OHIO WISCONSIN PUBLIC ACCOUNTANTS � •� � � � � M � N � O M H �- � �O � � = a- � M �� ao�� e�f �n .- � .� � s N ^ �M��0��p � �f 1� OD O EO N Y1 CO �A ^1�PN�.N�ON �. � � �~ J O e� L E � H ��~ � M1 � � < < < xH� �� • N � D w � A'i W CJ O� � J •- V � _ � � � � � F M • �''�C�ic� \ � " � _ � � C IQ O A 1�1 � M O � � � M � � � O � � � O�C � � H V �L �i �- � H °� -� a � � t9 LL �gt ` . � � N �1 � � 1� � . � , I �O �� u�i O� a� �t� AO . O W If1 � O M � N � � � � N N � � N N � A � � « �- °� � c� � � M �t �O N � M �O � N M M � �� o �� M � � P N NO � f� � � � S � INNP�00 � � � N � � N � � N g a � S s � � � N N M A �� {f'► / �T. ��Q. � M N M � � � M IA P � r w N N a0 1� � �O ��ff N OD �O N � � � �N� � � : o�. . � o �o � �o � w r M � � � O � v e N 3 P � � N tR � � N 0 � tH �. � � � M1 � H � w N s N 69 ,. .. M M �O v � � ( N �O N N I N N � � � M w P P � � � � � � � e y O. � � w � e� dt a� t 'O W + O � a Cr V�1 I �� M� ��v� � � � w � � « � � � � « W � � A ° d ��r��.. � � �� o�i��`��d,�� orn w . t ��»� � �m�� C � � O ( y � � O a�C+ a�+ �d � � N N qq � � �+ � W N y C W �+ . t r. a+ J W fA O C `�O �� 7 10 � � � F M O CI � � 'i {y �+ i� Y� W F � � N i' 10� u L Y � $ J J �� j �+ p� L i CI W�d J � m t M y C V�- rn W W> L J V �� ~ � Z � � � � 2 1� � � � M < � O J C C "" � � � � J �I � � F� C •� a 8 � U � W Y GJ N L ,,,� a+ � ;' • C '_ � o �= �� u " �' y o" �g C� a @ N O � � y N L� � � � IJ 3 i O a L V N V N � ,� �, c � � � � �+ � � .� � � N � � • N �U � C � C �' L w � N y a L f- I . i• I� � �� a TOWN OF l[ARANA, ARI80NA COMBINBD 8!TATLMENT OF RSVENQLS, LBPIRNDITIIREB AND CHAN(iE8 IN B'OND BALANCBB ALL t30VER�ZiTAL �'UND TYP88 - LBBIBIT 2 Year Ended Jun� 30, 1991 REYEIII�S Taxes Sales - �dit - Marana Sales - Marana Sales - Arizona Urban sharin� Auto lieu licenses, fees and per�its fines, forfeitures ar�d penalties Grants and contrihution� Highway �xser fees • Arizona P�lic safety - Tucs� P�tic safety - Arizona Bl�k grants - Pi� Ca�nty LTAF funds - Arizona Public safety- Pime Cax�ty otx Parks - Pime County Public works - Arizone other Total revenues D(PENDITi1RES Administration Development �d plsming services Toun Attor�ey P�l i c safety Magistrate court Public works Trensportation Capital projects Parks Total experditures Excess (defici�ncy) of revenues over (�der) expenditures Othe� financing source, conversion of accounts to notes peyable FIArD BALANCES, eE6lINIIM6 FlA1D BAIANCES. EIDIN6 Special Gene�el Revenue S 450,016+^` 310,326✓ 112,1�7✓' 112,735✓' 38,793 110,276 ✓ 124,802,.r`' 18,636 30.909 1.308.680 357,996 56,185 37,475 503,600 81,838 39,331 r• �. f 148, 838 `'' ,: 27, 832 � 20, 000 �` 207,180 ✓"� . 18,685 ✓ 43,150 47.486 513,1y1 60,342 5,000 171,192 203,D85 439.619 213,649 T3,552 70,730 C120,451) 51.730 S 1 S 12�282 rotals CMemorandum Onlv) 1991 1990 f 450,016 310,326 112,187 112,735 38,793 110,276 124,802 148,838 27,832 20,000 207,180 18,685 18,636 43,150 78.395 1,829.851 S 312,872 107,Sb7 702,356 31,800 724,919 88,635 139,872 28,b73 30,000 15$,742 21,228 38,206 36,385 1.221.255 357,996 56,185 3T,475 563,942 86,838 210,523 203,085 18.636 7.534,680 797,784 82,687 81,26b 545,b43 b2,751 220,223 23,885 106,690 1.314,929 287,171 (93,674> 70,730 (68.721) 24.953 f 289�,180 S ( 68�721 > These fin�ciat state�ments should be reed onty in comection with the accompanying s�ry af si�ificant �counting poticies and notes to finsncial statements. 3 i• I!� �� I� _ �� sow�r o� M�, �ti sorn� COKSII�iBD 8TAT81L�pT OF RllVB1�1088, LBP$NDITIIREB AND CHANQES I�i FIIND Bl1LANC88 - BIIDQ�T AND AGTIIAL 68N�1tAL AND 8P8CIAL REVBZiQB FIIND TYPBB - SBHIBIT 3 Year Bnded June 30, 1991 REVEMIES Taxes Sales - audit - Narana Sales - Marana Sales - Arizona Urban sharing Auto lieu Licerises, fees md per�its Fir�es, forfeiture� �d penalties Grants end ca�tributians Highway user fers - Ariz Public safety - Tucg� Public safety - Arizona Block grents - Piais County LTAF fun� - Arizono Parks - Piare Gounty Public rwrks - A�iza�a Other Total reverwes EXPEIDI7l�S Aciministration Devetopment and plaming services Town Attorney P�lic safety Magistrate court Pubtic works Capital projects Parks Other Total expenditures Excess (deficiency) ot r�verx�es over (under) expenditures Other financi� source, corwersion of ecco�ts to notes peyable FI�D BAIAMCES, BEGIINfIN6 ftND BAIAMCES, EIDINC General Soecial Revenue Actuat Budget Ce) Variance Actual Bud9et (a) Variance S 450,016 S -0- 31d,32b 475,� 412,187 113,927 112,735 113,926 38,793 38,� 190,276 190,EbU 124,802 175,000 S 450,016 t164,674) (1,740) (1,191) 7'93 (T9,724) (50,998) a� S 148,838 E 140,934 27,832 -0- 20,000 -0- 207,180 377,322 18,685 18,742 18,636 1�,000 <81,364) 43,150 -0- 3Q.909 62,500 C31.59Y) 4T"486 425,500 1.308.6d0 t.E68.3S3 40.327 S13"171 %2.498 357,99�6 418,213 60,21T 56,185 6a,527 12,342 3Z,475 -0- <37,475) 5a3,600 421,420 C�,180> 89,538 76,728 (5,110) 39,331 �i5,871 6,540 18,63b 25,Q� 6,364 -0- 21 .? 594 212.594 1. Q�Q,¢1 1.268.353 173.292 213,619 -0- 213,619 60,342 37,500 5,000 -0- 171,192 159,67b 203,085 37T,322 -0- 388,000 439•619 4b2.498 73,552 -0- S 7,904 27,832 20,000 (170,142> (57) 43,150 C378.014) C449.327) (22,842) (5,000) t11,516> 174,237 388,000 522.879 73,552 70,T30 -0- 70,730 c120.451> -0- C120.451) 51,T30 -0- 51.730 ;� �� ...� � f 1�282 (a) The ToWn�s budgei ir�ctuded m additionet =59,Q35 for �ter enterprise activities that is not inctuded in tMis state�nent because thesa activities are proprietary in nature. These fit�enciat statements should be read only in cornection with the accompanying summary of si�rific�t accounting poticies and notes to finerxiel state�aents. 4 �� TOW�I O� MAR� � ARI �ONA _ COMBINSD STAT�1�1'P OF REVSNII$8, 8BP8NSE8 AND CBANaEB IN DLFICIT - ALL PROPRIBTARY FU�1D TYPES - 88HIBIT 4 � Year 8nd�d Juae 30, 1991 I� ' Proprietary Totals Fund Tv�es (Memorandum Only) Water Bond/Lease 1991 1990 �� _ 1 • �• �� OPBRATINGS RRVENIILB� CIIRRLNT II88 CHAR(�F8 OPERATINt�3 E%P8NSS8 Material, supplies and other expenses Depreciation expense Total operating expenses OPERl�iTIN(3 INCOMIR NONOPERATINa REVB�TTQEB (EBPENSBS) Interest income Lease income Bond interest expense Bond fees Lease expense NET LO88 DEFICIT � B�GiINNINQr DEFICIT, ENDINQ� c 31,174 10.153 41.327 7.306 �21,039) (21.039) (13,733) �1�624) � (15,357) $ 48,633 S 11.019 31,174 4,375 10.153 1,620 41,327 5,995 7.306 5.024 $ 2,875 2,875 2,61I 21,039 21,039 5,291 (a2,s5�� (22,857) (6,286) (1,057) (1,057) (1,616) (21.039) {6,648} -0- (21,039) (6,648) -0- (13,733) (1,624) -0- (1,624) -0- �� •�'.i57) 1 624) These financial statements should be read only in connection - with the accompanying summary of significant accounting policies and notes to financial statements. 5 � TOWN OF MARANA, l�RI�ONA _ COMBINSD BTATEMENT OF CABH FLOWS ALL PROPRI8T1lRY �IIND TYPSS - 888IBIT 5 ' Year 8naed June 30, 1991 �� C11SH FLOWi FRqI OPERATIM6 ACTIYITIES Net Loss Adjustments to recor�ile net toss to net cash used in operating ectivities Depreciati� Decrease (increase) in accounts receivable Increase in accounts peyabte assxiated r►ith operatir►g activities Cash used in operating sctivities CASH FLd�S FRa! IMYESTIN6 /rCTIY1TlES Purchase of fixed assets CASN FL�IS FRpI FIMANCIIIG ACTIYITIES Increase in due to other #und Proceeds from lwg-term debt Cash provided by #ir�ing �tivities NET IMCREASE IN CASM CASN, BEGIIp1IM6 OF YEAR CJ1SN, EID OF YEAR (e) Prcprietary F�d Tvpes Water Baid/Lease S (13,T33) Totals CMemorandum Onlv) 1991 1990 S(13,733) S (1,624) � `" � � � i �' � � Cash Cash with trusteelfiscat agents Total 10,153 10,153 1,620 456 456 (7,177> 458 458 2.969 C2.666> 2 66 > (4•212> (23.316) 2C 3,316) 25,583 25,583 4,330 20•766 20.766 4 9 46,349 4,330 20,367 20,367 118 118 178 -0- s 2� : 2� � f 20,485 S -0- S 20,485 S 118 -0- 1,308 1"308 7.983 s „�a5 �1 s zi a� (a) Cash a�the belance sh�et consiats of cash the Town can access �d cesh on deposit with trustee/fiscal agents. Cash flows from cash with trustee/fisca[ agents are not presented above because these activities represent noncash tra�aciions. SUPPLEIEMTAL Sq1�lA.E OF NONGI3N I�TIYITIES GSN FL�IS YITa TRUSTEE/fISC11l A6EYTS FRpI IMVE8TIN6 ND OTIIER ACTIYITIES lnterest and {ease income Decreese (increase) in invest�ents Net irwest�ent in lease and purchase of fixed sssets Cash with trustee/fiscal agents provided by (used in) investi�g and other activities G►SH PLONS MITR TRUSTEE/FISGU. A6EMTS FRa1 FIMANCIM6 AID OTt�R ACTIYITiES Interest and other obtigat9a�s Proceeds fro� tong-tera� debt Ir�crease in accounts pay�le Cash with trustee/fiscat agents provided by (used in) financing and other activities NET INCREJtSE (DECREASE) IN GSII WITN TRUSTEE/FISCJLL A6ENTS G1SN YITN TRUSTEE/FISGt ABENTS, �6IIMIINC OF YEAR GSN YITN TRUSTEE/FISGL 116ENTS, EID OF YEAR f 23,914 E 23,914 E 7,902 21,178 21,778 (47,446) t C10.099) (30,865) 4t 0,964) 51( 2,842) (10.099) 14.227 4.128 55( 2,386) t23,914) 10,099 3"012 (23,914) (7,902> 10,099 512,988 3.012 55.283 10.099 (20.902) -0- (6,675> -0- 7"483 f -0- S 1,308 � �� 1( 0,803) 560,3b9 (6,675) 7,983 7,983 -0- S 1, 308 S 7�983, These fir�ncial �tatements should be reed onty in ca�x�ection with the accompanying sumnary of si�ificant accounting poticies and nates to financial statements. 6 TOWN OF MARANA� ARIZONA SOMbiARY OF SIaNIFICAI�t'P ACCOONTINti POLICIES Year Bnd�d June 30, 1991 The Town of Marana was incorporated on March 21, 1977, under the provisions of the Constitution of Arizona and the Arizona Revised Statutes. The Town operates under a council-mayor form of govern- ment. All funds and entities related to the Town that are con- trolled by the Mayor and Council are included in this annual financial report. This control is determined on the basis of budget adoption, taxing authority and the ability to issue outstanding debt secured by revenues or which is a general obligation of the Town, as well as selection of governing authority, designation of management, ability to significantly influence operations and accountability for fiscal matters. The Tawn provides a full range of services including general governmental administration, development and planning, legal, public safety, public works, transportation and parks services. The accounting policies of the Town conform to generally accepted accounting principles as applicable to governments. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing accounting and financial reporting principles. The following is a summary of the more significant policies: FIIND ACCOIINTINa The accounts of the Town are arganized on the basis of funds and account groups, each of which is considered a separate accounting entity. The operations of each €und are accounted for with a separata set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures. Government resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. The various funds are grouped, in the financial statements in this report, into generic fund types and broad fund categories as follows: Governmental funds: General fund - This fund is the general operating fund of the Town. It is used to account for all financial resources, except those required to be accounted for in another fund. Special revenue funds - These funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes. • Debt service fund - Although such a fund is normally used to , account for the accumulation of resources for the payment of general long-term debt principal, interest and related costs, the Town has not yet established such a fund. Most debt is funded directly from other funds with no amounts accumulated. - 7 � I � T01iN OF �d�iRANA, ARISONA 8IIM1tARY O� SIaNISIClI�i'P ACCOIII�1TINa POLICI88 Y�ar Ended June 30, 1991 FIIND ACCOtTNTINQ (CONTINUED) Proprietary funds: Enterprise funds - These funds are used to account for water utility and bond/lease operations that are financed and operated in � a manner similar to private business enterprises. The intent of the governing body is that the costs (expenses, including depreciation) of providing water services to the general public on a continuing basis be financed or recovered primarily through user charges. The bond/lease fund, which is a separate corporate entity under Town auspices, is to receive lease payments funded by these user charges to retire the bonds and related interest associated with the � acquisition of the water facilities. Cash and investments in this fund are restricted as to their use under the terms of the bond and lease agreement� MEASUREMENT �OCOB, FIB$D A881:T8 AND LO�tti-TERM LIAB*LITIES • The accounting and reporting treatment applied to the fixed assets and long-term liabilities associated with a fund are determined by its measurement focus. All governmentai funds are accounted for on � a spending or "financial flow'� measurement focus. This means that only current assets and current liabilities are generally included i'_ on their balance sheets. Their reported fund balance (net current assets) is considered a measure of "available spendable resources." Governmental fund operating statements present increases (revenues and other financial sources) and decreases (expenditures and other financial uses) in net current assets, as appropriate. Accordingly, they are said to present a summary of sources and uses of • "available spendable resources" during a period. Fixed assets used in governmental fund type operations (general fixed assets) are accounted for in the general fixed assets group of accounts, rather than in govern2nental funds. • Public domain ("infra�tructure") general fixed assets consisting of certain improvements other than buildings, including roads, curbs and gutters, streets and sidewalks, bridges and lighting systems, are not capitalized. No depreciation is being provided on general fixed assets. �' All general fi�ed assets are valued at historical cost. Donated general fixed assets are valued at their estimated fair values on the dates of donation. Long-term liabilities e�ected to be financed from governmental funds are accounted for in the generai long-term debt group of • accounts, not in the governmental funds. . 8 • TOWN O� �ARANA� ARISONA SUMMARY OF BI��IFICAI�T'1' ACCOONTING POLICIES Year Bnded June 30, 1991 MFASIIREMENT FOCUB, �'I88D 1188ET8 l�iD LO'iG4-T�RM LIABILITI88 (CONTINUED) Because of their spanding measurement focus, expenditure recogni- tion of governmental fund types is limited to exclude amounts represented by noncurrent liabilities. Sinae they do not affect net current �ssets, such long-term amounts are not recognized as governmental fund type expenditures or fund liabilities. They are instead reported as liabilities in the general long-term debt group of accounts. The aforementioned two account groups are not funds. They are concerned only with the measurement of financial position. They are not involved with measurement of results of operations. All proprietary funds are accounted for in a cost of services or "capital maintenance" measurement focus. This means that all assets and all liabilities, whether current or noncurrent, associated with their activity are ineluded on their balance sheets. Their reported fund equity, net total assets, is segregated into contributed capital and retained earnings components. Proprietary fund operating statements present increases (revenues} and decreases (expenses) in net total assets. Water operation� property is stated at cost or fair values on the dates of donation. Depreciation (amortization) of all exhaustible fixed assets used by water operations is charged as an expense against its operations. Accumulated depreciation is reported on the water operations balance sheet. Depreciation is provided over the estimated useful lives of such assets using the straight-line method. These e�timated useful lives are as fallows: Estimated Useful Lives (Years� Property under capital lease Organization costs 20 40 E�enditures €or water repairs and maintenance are charged to income. Additions, major renewals and replacements that increase the water properties� useful lives are capitalized. The cost of property sold or retired, together with the reiated accumulated depreciation, is removed from the appropriate accounts and resulting gain or loss is included in net income of the utility. The Town no longer carries any inventory. Supplies needed for operations are now being purchased on an as-needed basis. � i• �♦- I• I• �� _ li I !' I♦ I� To�x oa� �x�, �i�orrA SDI�UiRY OB SI(�NI�ICANT liCCOO�TTINQ POLICISS Year Bnded June 30, 1991 BASIS OF ACCOII�iTIN�i Basis of accounting refers to when revenues and expenditures are recognized in the accounts and regorted in the financial statements. Basis of accounting relates to the timing of the measurements made, reqardless of the measurement focus applied. The proprietary funds are maintained on an accrual basis of accounting. The governmental funds are maintained on a modified accrual basis. The modified accrual basis of accounting recognizes expenditures on an accrual basis, but revenues are recognized when received, except for material revenues determined to be both measurable and "available." "Available" means collectible within the current period or soon enough fihereafter to be used to pay liabilities of the current period. Deferred revenue in the governmental €unds arises when grant monies are received prior to the incurrence of qualifying expenditures. BIID(3ET8 AND BIIDCiETARY ACCOOZiTINQ The budgets formally adopted by the Mayor and Council are prepared on a purpose, not ob�ect basis. All appropriations lapse at year end, and the budgetary infor�atior� reflected on the financial statements represents the original adopted budget for fiscal 1991 with no augmentations. LNCUMBRANCEB Encumbrance accounting, under which purchase orders, contracts and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is not employed as an extension of formal budgetary integration in the general fund and special revenue funds. RE88RVE8 No reservations o€ €und balances have been established by the Mayor and Council at the end of fiscal 1991. io TOWN OF IdARANA, lIRI SONA SUMMARY OF SIQNIFICA'�iT ACCOUNTINQ P4LICISB Year Bnded June 30, 1991 NOTSS RECEIVABLB The Town grants commercial loans to businesses in Marana, Arizona, from monies received under its Community Development Block Grant Program. At June 30, 1991, two such loans had been made to local businesses in Marana. A substantial portion of the debtors' ability to honor the terms of these loans is dependent upon the economic conditions in Arizona. The Town requires collateral for all notes receivable. The extent and type of collateral is determined on a case by case basis. IN�TLBTIL�NTB Investments consist of U.S. Government fund obligations, a category 1 investment. Category 1 investments are investments that are insured, registered or held by the Town's agent in the Town's name, or by the Town itself. All investments are made through the Town's trustee/ fiscal agents. Investments are stated at cost, which equals market. NET IN988TMENT I� LEAS$ As described in Note 2, the Town accounts for its water utility lease as a financing lease, in which the net investment in the lease represents the difference between the bonds and related ob- ligations over the eash and investments in the bond/lease fund. This difference represents the minimum lease payments to be made by the Town's water utility over the term of the lease. Interest on investments and lease income earned is recognized over the lease term in an amount equal to interest and other e�enses. Conse- quently, no unearned revenue has been recorded. Correspondingly, the lease obligation recorded in long-term debt under the water fund equals the net investment in lease recorded in the bond/lease fund. COMPLNSATBD ABSRNCI:B In the general long-term debt group of accounts, essentially the entire accumulated liability for compensated absences is reflected, since the liability at June 30, 1991, will most likely not be paid ! within the current accounting cycle. Rather, in fiscal 1992 the Town will probably pay that year's accrual without utilizing _ amounts accrued from prior years. 11 � T011N OF �tPiRANA � ARI80NA SUM�iARY O� BICi�IFICANT ACCODNTINQ POLICIES Year Ended Juae 30, 1991 COMPARATIVS DATl�i •- Comparative total data for the prior year is presented in the accompanying g�neral purpose financial statements in order to provide an understanding of changes in the Town's financial position and operations. However, presentation of prior year totals by fund type have not been presented in each of the statements, � since their inclusion would make the statements unduly complex and difficult to read. TOTAL COLIII�NS ON TSR COMBI�D FINA�TCIAL 8TAT8MENT8 � Total columns an the combined financial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns does not present financial position or results of operations in conformity with generally accepted accounting principles. Neither is such data comparable to a consolidation. Interfund eliminations have • not been made in the aggregation of this data. BEIBSD PROPERTY The Town Police have in their custody certain assets seized in � criminal proceedings. Until formal procedures have been finalized, the ownership of this property is not deterYninable. In addition, legal requirements dictate that such assets not be reflected on the Town's €inancia�l records in an aqency capacity until any Town ownership has been determined. Consequently, no such assets are recorded on these financial statements. • • •� I• This information is an integral part of the accompanying financial �tatements. � 12 • � � - • • T011N O! I�ARANA, ARI80NA NQTLS TO COIdBI�D �'INANCIAL BTATLMENTS Year Ended June 30, 1991 NOTE i - NOTES R3�C8IVABLB Note receivable (Community Development B1ock Grant Program) collateralized by certificates of deposit, bearing interest at 4$, interest paid manthly, with annual principal payments of $5,000 due in April, 1992, 1994 and 1995, with the remaining unpaid principal due Apri1 1996. Note receivable (Community Development Block Grant Program), collateralized by a deed of trust, bear- ing interest at 4�, pa�rable in monthly installments of principal and interest of $553, due August 1995. Balance Balance July 1, June 30, 1990 Additions Deletions 1991 $ 97,830 • � C� � NOTE 2- N1�T INVBSTMI�NT I�T LEASE Concurrent with the issuance of bonds (See Note 4), the Town entered into a lease agreement with the Town of Marana's water municipal property corporation, which is an entity controlled by the Town and accounted for as the bond/lease fund. The agreement specifies that the �own lease from the bond/lease fund the water utility property. The lease requires the Town to pay lease payments equivalent to all costs and charges relating to the leased property for a period of twenty years. Such costs and charges include the principal, interest and periodic costs associated with the bond issue. All rights, privileges and obligatians related to the leased property inure to the Town, and at the end of the lease term, the leased property reverts to the Town. NOTE 3 FIBBD ASBLTS� �T OF ACCIIMQLATED DSPRECIATION The following is a summary of the changes in general fixed assets for fiscal 1991: Land �' Land improvements Assets under eapital lease ' Machinery, equipment and other assets Marana park • • $ 7,134 123,412 $ 72,455 25,375 $ 7,134 123,412 289,353 $ 342,651 $(152,668) 479,336 277,333 157,621 (20,994) 413,960 15Q.000 150,000 $ 697.232 S 650,272 „fi�f173,662) $1,173,842 13 TOW�? O!' MARANA, ARISONA NOTES TO COILBINBD FZNANCIAL STATEMENTB Year $nded June 30, 1991 NOTB 3- FIBED A888T8, NET OF ACCUMIILI�TLD D1lPRECIATION (CONTINUED) A summary of water fund property, plant and equipment at June 30, 1991, is as follows: Property under capital lease $ 266,403 Organization costs 47,523 Construction work-in-progress 20,272 334,198 Less accumulated depreciation (11,773) $ 322,425 NOTB 4 - LONa-T�Rl�id DBBT During fiscal 1991, the Town negotiated the following notes payable with vendors thereby converting outstanding accounts payable balances: Note payable, requiring monthly installments of $2,013, ineluding interest at 12� per year, with the final payment due in November 1992. $ 31,320 Note payable, requiring interest at 10� per year, with the final balanee due in October i993. 60.962 $ 92,282 Only the current portion of the notes payable are recorded in the general fund. The expenditures underlying the accounts payable balances have been recognized in prior fiscal years. Maturities in excess of one year have been recorded in the general long-term debt account group. Future maturities are as follows: Years Ending June 30 1992 1993 1994 $ 21,552 9,768 60.962 $ 92.282 •� The water fund leases water utility as�ets under an agreement classified as a eapital lease. As discussed in Note 2, the water . fund has an obl,igation to pay lease payments equivalent to all costs and charges associated with the underlying bond issue in the bond/lease fund, which was issued to finance the purchase of the utility. The following is a schedule by years of the future minimum • lease payments required under thi� capital lease as of June 30, 1991: • 14 � � �- • • • • • • �. • • TOII� OF �LPiRANA, ARI�iONA NOTLB TO COMBI�D FINl�NCIlIL STATEI��T'1'S Year Bnded June 30, 1991 NOTE 4 - LONt�-TSRId DLBT (CONTINUED) Years Ending June 30 1992 1993 1994 1995 1996 Thereafter Total net minimum lease payments Less amount representing interest and other costs Present value of net minimum lease payments $ 22,858 22,858 22,858 32,858 32,103 417,011 550,546 (286,693) $ 263,853 The long-term debt in the bond/lease fund represents bonds payable as follows at June 30, 1991: Issue Lease Revenue Bonds - 1990 Year of Final Maturitv 2009 Original Issue :� e�e Currently Outstandina $ 280,000 These 1990 Bonds can�ist of a series of issues with fixed interest rates ranging from 7.55� to 8.30�, depending upon the maturity dates of the various issues, The bond interest and principal requirements are paid through the lease rentals received from the Town's water utility and earnings on investments from bond proceeds. The bonds are collateralized by such lease payments and investmente, as well as a first lien against all excise, transaetion, privilege, franchise and income taxes which the Town collects. Periodie principal payments are due July 1, 1995, through July 1, 2009, in amounts ranging from $10,000 to $30,000 at�nually. All cash and securities are held on deposit with the trustee and are restricted for retirement of indebtedness and payment of improvement costs. 15 TOWN OF MARANA, ARIZONA N4TE8 TO COISBINBD BINANCIAL STATSMENTS Year 8nded June 30, 1991 0 • C • NOT$ 4 - IANQ-T�RI[ DBBT (CONTINtJED) The following is a summary of general long-term debt transactions for fiscal 1993: Balances-July 1, 1990 Capital leases entered Retirements Balances-June 30, 1991 Long-term portion of accrued vacation and compensatory time Long-term portion of negotiated notes pay- able Total general long-term debt Years Endinq June 30 1992 1993 1994 1995 1996 Thereafter Capital Leases (a) $ 91,444 342,651 (45.728) S 388.367 Land Contract(b) $ 3,252 (235) $ 3.017 (a) The following is a schedule by years of the future minimum lease payments under capital leases as of June 30, 1991: • • (b) • • • Total $ 94,696 342,651 �45,963) 391,384 40,454 70,730 502 568 $ 80,618 64,539 62,332 56,589 39,882 770, 000 Total net minimum lease payment� 1,073,960 Less amount representing interest (685,593) Present value of net minimum l�ase payments S 388,367 In 1979, the Town borrowed $7,134 at 7� interest from the State of Arizona to purchase a 2.5 acre parcel of land. Principal and interest is payable in yearly installments of approximately $575. 16 ' TOWN O� �LARANA, 1�iRI80NA NOTEB TO COMBINED FINANCIAL STATEMSNTS Ymar Ende!! June 30, 1991 NOTE 5 - DBB'ERRSD REVBNOL During fiscal 1991, P3ma County transferred the Marana Park to the Town. In consideration of this transfer, Pima County agreed to subsidize the Town with $250,000 for the maintenance and operation of the Marana Park. This $250,000 subsidy is being paid in $50,000 installments over a 2 1/2 year period. The Town received $100,000 of this subsidy during fiscal 1991 and incurred $18,636 in expenditures for the maintenance and operation of the Marana Park. Therefore, at June 30, 1991, there was $81,364 in deferred revenue from the subsidy received from Pima County. NOTE 6- SAL88 TllB 1�iIIDIT6 During fiscal 1991, the Town contracted with an independent consul- tant to audit local' Marana busi.nesses to determine whether these businesses were properly remitting sales taxes to the Town. The consultant determined that there were several local businesses that were not properly remitting sales taxes and the Town assessed $581,909 to these local businesses for unpaid Town sales taxes. As of June 30, 1991, $314,542 of these assessments had been collected and another $267,36? were receivable. The independent consultant was paid fees of $82,997, which was an hourly rate plus a commission based on the gross assessments. Of the $267,367 of receivables, $231,893 has been re�erved as uncollectible to meet the needs of the current accounting cycle {see Note 9 for additional information regardinq the sales taxes). NOTL 7 - ADDITIONAL DISCLOSIIRES The Town does not budget on an object basis; therefore, the expenditures on the general purpose financial statements have been grouped by purpose, which is the Town's budgetary approach. Although this facilitates budget to actual comparisons, the following analysis is necessary to analyze expenditures by current, capital and debt service (capital lease payments) categories: Pu�gose Administration Development and �� planning services Town Attorney � Public safety Magistrate court Public works Capital outlay/projects • Parks Current O�e=ations $ 335,581 56,185 37,475 521,007 82,093 198,104 . .. �• � _'_ Capital Outlay $ 5,275 4,178 4,000 203,085 216 538 38,757 745 12,419 69 061 Debt Service $ 17,140 � 17 • TOW�T O!" ltARANA i ARI SON!► N4T$S TO COMBI�D FINl�iCIAL BTATLMENTS Year gaded June 30, 1991 • • • • •� • • NOTL 7 - ADDITION1�lI. DIBCLOSIIREB (CONTINUED) The Town budget� by purpose and not by fund; however, the budgeting by purpose closely correlates to what would be, in substance, budgeting by fund, There were no excesses of expenditures over appropriations for fiscal 1991 by fund, considering the Town's contingency appropriations. NOTB 8- pIIBLIC 8AF8TY PENSIOW PLAN All of the Town's full-time police officers are covered by the Marana Marshal's Arizona Public Safety Personnel Retirement System, which is a multiple-employer, public employee retirement system (PERSj. The pension plan provides pension benefits, deferred allowances, death and disability benefits and health insurance benefits. A member is eligible if he is employed in a covered position prior to attaining age 50 years, for at least 20 hours a week for more than 6 months a year. A member may retire after reaching the age of 62 and completion of 15 years service, or completion of 20 years service with the Town. Benefits vest after 10 years of credited service. Police officers who retire with 25 or more years of credited service are entitled to monthly pension payments for the remainder of their lives equal to 50� of average monthly compensation for the first 20 years of credited service with the Town, plus 2 1/2� of average manthly compensation for each year of credited service above 20 years with the Town. Police officers who retire with 20 years of credited service, but less than 25 years of credited service, are entitled to monthly pension payments for the remainder of their lives equal to 50� of average monthly compensation for the first 20 years of credited service with the Town, plus 2� of average �onthly compensation for each year of credited service between 20 and 25 years with the Town. Police officers who retire with less than 20 years of credited service with the Town are entitled to monthly pension payments for the remainder of their lives equal to at least 30� of the average monthly compensation far the entire service period increased at a rate of 4$ a year for each service year above the minimum 15 years of service. The maximum monthly pension payment cannot exceed 80� of the average monthly compensation. Pension provisions include deferred allowances whereby a police officer may terminate hi� employment with the Town after accumulating 10 or more years credited service. Pension benefits are then equal to twice the amount of pension benefits based on the police officer's accumulated contributions. If the police officer does not withdraw his accumulated contributions, the police officer is entitled to these pension benefits upon reaching the age of 62. 18 TOWN OF 1�1RAN� � ARI BONA NO!TE8 TO COI�IBINBD FINANCIAL STAT8M8NT8 Year End�d June 30, 1941 NOTE 8- POBLIC Sl�FETY PENSION PLAN (CONTINUED) Pens:ion provisions include disability and death benefits. Disabled officers are entitled to monthly payments for life of 50� of their average monthly compensation or normal pension amount, whichever is greater, if their disability is service connected, regardless of years of credited service. Average monthly compensation (AMC) is one-thirty-sixth of total compensation paid a member during the 3 years, out of the last ].O years of credited service, in which the amount paid was highest. If the police officer's disability was not service connected, the disabled officer is entitled to monthly payments for life of 25� of AMC, if the credited service is less than 7 years, 50� of AMC, if the credited service is 7 through 13 years, or 75� of AMC, if the credited service is 14 through 19 years. If the police officer is only temporarily disabled, he is entitled to monthly payments equal to one-twelfth of 50� of com- pensation paid during the year preceding the date the disability was incurred. The payments terminate after 12 months or prior recovery. Surviving spouses are entitled to two-thirds of the monthly payments, or 100� if duty related, the deceased active police officer would have been paid for disability or, in the case of a retired police o€ficer, two-thirds of the retired officer's monthly pension payments. To qualify as a surviving spouse, the spouse must have been married to the deceased for at least 2 years. The spouse's benefits terminate upon her death. Each dependent child of a deceased police officer is entitled to one-ninth of the monthly payments the deceased active police officer would have been paid for disability or, in the case of a retired police officer, one-ninth of the reti.red officer's monthly pension payments. When the dependent child reaches the aqe of 18 or 23, if the dependent is a full-time student, the monthly payments will terminate. Pension provisions include health insurance benefits, whereby the retired police offieer or his surviving spouse can elect to be covered by a health insurance plan provided by the Town or State of Arizona. The retired police officer or his surviving spouse pay for this coverage. However, they cannot be charged more than $60 per month plus an amount up to $25 per month for dependent coverage, if any. The Town's current year payroll for eligible police officers amounts to approximately $242,000. Police officers of the Town are required to pay 7.65� of their gross earnings to the pension plan. The Town makes periodic contributions to the pension plan at actuarially determined rates that, expressed as percentages of annual covered payroll, are designed to accumulate sufficient assets to pay benefits when due. The normal cost and actuarial accrued liability are determined using an entry age actuarial funding method. Unfunded actuarial accrued liabilities are being amortized as a level percent of payroll over a period of 40 years ( from July Z, 1978 ). During 1991, the Town was required to contribute 5.85� of its police officers' covered payroll to the plan. 19 To�rr o� a�A, �xiaortA NOT88 TO COILBINFD �INANCIAL BTAT�NTB Year Snded June 30, 1991 NOTL 8- PUBLIC 8l�BETY P]�NNBIOI�T PLAN (CONTINUED) Total contributions made during fiscal 1991 amounted to $34,418, of which $14,538 was made by the Town and $19,880 was made by police officers. The contributed amounts were actuarially determined as described above and were based on an actuarial valuation as of June 30, 1989. The pen�ion contributions represent funding for normal cost ($12,624) and the amortization of the unfunded actuarial accrued liability ($1,914). Significant actuarial assumptiQns used to compute pension contri- bution requirements are the same as those used to determine the standardized measure of the pension obligation. The computation of the pension contribution requirements for fiscal 1991 was based on the same actuarial assumptions, benefit provi- sions, actuarial funding method, and other significant factors as used to determine pension contribution requirements in the previous years. Presented below is the total pension benefit obligation of the Town's PERS. The amount of the total pen�ion benefit obligation is based on a standardized measurement established by GASB-5 that, with some exceptions, must be used by a PERS. The standardized measurement is the actuarial present value of credited projected benefits. This pension valuation method reflects the present value of estimated pension benefits that will be paid in future years as a result of police officer services performed to date and is adjusted for the effects of pro�ected salary increases. A stan- dardized measure of the pension benefit obligation was adopted by the GASB to enable readers of PERS financial statements to assess the Town's PERS funding status on a going-concern basis, assess progress made in accumulating sufficient assets to pay benefits when due and make comparisons among such plans. Because the standardized measure is used only for disclosure purposes by the Town's PERS, the measurement is independent of the actuarial eomputation made to determine contributions to the PERS, as previously e�tplained. A variety of signifieant actuarial assumptions are used to determine the standardized measure of the pension benefit obligation and these assumptions are summarized below: The present value of future pension payments is computed by usinq a discount rate of 9�. The discount rate is equal to the esti- mated long-term rate of return on current and future investments of the pension plan. Future pension payments reflect an assumption of 6.5� (compounded annually) salary increases as a result of inflation. Future pension payments reflect an assumptiom of additional projected salary increases ranging from 0.0� to 3.0� per year, depending on age, attributable to seniority/merit. 20 � �' • • C� [� I� �� TOWN O�' l[ARANA, ARI�ONA NOTES TO COMBII�ED FINA�TCIAL BTATEMENTS Year 8nded Jun� 30, 1991 NOTE 8- PIIBLIG 81�$TY PENSION PLAN (CONTINUED) The standardized measure of the assets in excess of benefit obligation as of June 30, 1991, is as follows: Retirees and beneficiaries currently receiving benefits and terminated employees not yet receiving benefits Current employees Accumulated employee contributions including allocated investment income Employer-financed vested Employer-finaneed nonvested Health insurance Total pension benefit obligation Net assets available for benefits Assets in excess of the pension benefit obligation the pension $ -0- 67,780 -0- 59,122 2,030 128,932 �194,437) 65 505) No changes in actuarial assumptions or benefit provisions that would significantly affect the valuation of the pension benefit obligation occurred during fiscal 1991. During fiscal 1�991 and as of June 30, 1991, the Marana Marshal's Arizona PERS he1.d no securities issued by the Town or other related parties. Historical trend information for the Town's PERS is presented below: Fiscal Year 1991 1990 1989 . Net assets available for benefits as a percentage of the pension benefit obligation appiicable to the Town's police officers. 150.8� . Unfunded pension benefit obligation as a percentage of the Town's annual covered payro3l for police officers. . Town's contributions to the pension plan as a percentage of annual cov- ered payroll for police officers. 118.3� 117.8� -�- $ -0- � -0- $ 5.85$ 6.89� 5.85� _ Historical trend information is presented in order for a reader to assess the progress made in accumulating sufficient assets to pay pension benefits as they become payable. • • F�� TOWN OF MARANl1, ARISONA NOTLS TO COMBINBD !'IN�ICIAL BTATBMFIdTB Y�ar Ended June 30, 1991 NOTE 9- CO�bIIT1t�ZITB A�ID COl+i'1'INC�LNCI88 �` The Town is subj ect to having audits performed on certain grant programs. Contingent liabilities to grantors, if any, as a result of completed and possible future audits are not determinable at year end. Town'management feels no such liabilities exist at June � 30, 1991, even though $13,001 of grant costs are questioned as a result of the current annual audit. The Town is continuously liable with respect to other claims incidental to the ordinary course of its operations. At June 30, 1991, it is the opinion of Town management, based on the advice of the Town Attorney, that any such claims would not have a material � effect on the Town's financial position. The Town has determined that $33,721 in prior year costs incurred in organizing the sewer activity, a separate municipal property corporation that was never activated, were never authorized and are under dispute. The creditors at this date have not pushed for � payment on these amounts. Of the $581,909 assessed in the sales tax audits discussed in Note 6, certain amounts have been contested. $325,289 has been - protested, of which $100,000 has been collected as of June 30, 1991. In order�to continue with the protests the businesses must • remit $93,396 by June 30, 1992. The Town feels that it will prevail in any legal proceedings involving these matters. Outside legal counsel retained for the protests has determined that the Town�s position is stronq and wi11 more than likely prevail. If the Town should lose the protests, any monies collected would have to be returned. • NOTE 10 - CONCBNTRATIONS OF CRBDIT RIS� The Town maintains most of its cash in one commercial bank located in Marana, Arizona. Balances on deposit are insured by the Federal • Deposit Insurance Corporation (FDIC) up to specified limits. Balances in excess of FDIC limits are uninsured. Total cash held by this bank was $146,036 at June 30, 1991. •� � This information is an integral part of the accompanyinq financial statements. ' 22 � Clifton, Gunderson & Co. Certified Public Accountants & Consultants Honorable Mayor and Tawn Council Town of Marana Marana, Arizona =ndependeat Anditor�s Combined Report oa Internal Coatrol 8tructure We have audited the general purpose financial statements of the Town of Marana, 'Arizona as of and for the year ended June 30, 1991, and have issued our report thereon dated February 7, 1992. We have also audited the Town of Marana, A=izona's compiiance with requirements applicable to nonmajor federal financial assistance programs and have issued our report thereon dated February 7, 1992. We conducted our audit in accordance with generally accepted auditing standards, �'Government Auditing Standards," issued by the Comptroller General of the United States, and Office of Management and Budget (OMB) Circular A-128, "Audits of State and Local Govern- ments." Those standards and OMB Circular A-128 require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement and about whether the Town of Marana, complied with laws and regulations, noncompliance with which would be material to a nonmajor federal financial assistance program, Tn planning and perfonaing our audit of the general purpose finan- cial statements of the Town for the year ended June 30, 1991, we considered its internal control structure in order to determine our auditing procedures for the purpose of expressing an opinion on the general purpose financial statements and not to provide assurance on the internal control structure. i • • • The management of the Town is responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility, estimates and judqments by management are required to assess the expected benefits and related costs of internal control structure policies and procedures. The objectives of an internal control structure are to provide management with reason- able, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, that transac- tions are executed in accordance with management's authorizat�on and recorded properly to permit the preparation of general purpose financial statements in accordance with generally accepted account- ing principles, and that federal financial assistance programs are managed in compliance with applicable laws and regulations. Because of inherent limitat�.ons in any internal control structure, error�, irregularities, or instances of noncompliance may nevertheless occur and not be detected. �lso, projection of any evaluation of the structure to future periods is subject to the risk that procedures may become inadeguate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate. 2 3 MEMBERS OF AMERICAN INSTITUTE OF CERTIFIED ARIZONA COLORADO ILLINOIS INDIANA IOWA MARYLAND MISSOURI NEW MEXICO OHIO WISCONSIN PUBLIC ACCOUNTANTS �� •' I• I• I• �� - 1• 1• �• 1• �� Honorable Mayor and Town Council Page 2 Town of Marana For the purpose of this report, we have classified the significant internal control structure policies and procedures in the following categories: Cash management (Not applicable) Relocation assistance and real property acquisition (Not Cash Fixed assets Long-term debt Revenue, receivables, and receipts Expenditures and accounts payable Governmental financial assistance programs: General requirements: Political activity Davis-Bacon Act Civil rights applicable) Federal financial reports (Not applicable) Allowable costs/cost principles Drug-free workplace Administrative requirements Specific requirements: Eligibility Matchir�g For all of the internal control structure categories listed above, we obtained an understanding of the design of relevant policies and procedures and determined whether they have been placed in opera- tion, and we assessed control risk. federal finaneial assistance proqrams: During the year ended June 30, 1991, the Town had no major federal financial assi�tance programs and expended 100� percent of its total federal financial assistance under the following nonmajor c. Federal Emergency Management Agency Grant a. Community Development Block Grant b. Metropolitan Area Narcotics Tactical Investigative Squads Grant We performed tests of controls, as required by OMB Circular A-128, to evaluate th� effectiveness of the design and operation of internal control structure policies and procedures that we have considered relevant to preventing or detecting material noncompliance with specific requirements and general requirements that are applicable to the aforementioned nonmajor programs. Our procedures were less in scope than would be necessary to render an opinion on these internal control structure policies and procedures. Accordingly, we do not express such an opinion. 24 I� Honorable Mayor and Town Council Page 3 Town of Marana I•_ I• I• We noted certain matters involving the internal control structure and its operation that we consider to be reportabie conditions under standards established by the American Institute of Certified Public Accountants. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control structure that, in our judgment, could adversely affect the entity's ability to record, process, summarize, and report financial data consistent with the assertions of management in the general purpose financial statements or to administer federal financial assistance programs in accordance with applicable laws and regulations. We noted the following reportable conditions: 1. ACCODI+�TINi3 SYSTEM Condition: The Town's accounting system utilized for fiscal 1991 resulted in the following conditions: I• �� _ I! I� I •- C: �� a. The general ledger was not segregated by fund. b. The general ledger did not incorporate any of the activity associated with the water fund, bond/lease fund, and the account group types for general €ixed assets and general long-term debt. c. The general ledger contained numerous misclassifications between accounts. Some of the fiscal 1990 audit adjustments had been misposted or not posted at all, resulting in additional adjustment to the general ledger. d. Monthly bank reconciliations were not being evidenced as approved. e. There were certain cash receipts in the cash receipts journal that could not be identified as to source or docum�nted. f. The activity in the cash receipts journal was not being reconciled to monthly activity reports prepared by the various departments. g. There were activitie� that were not appropriately being coded in the general ledger, such as small business loans made with Community Development Block Grant funds. h. There were invoices that were paid that were not evidenced as approved for payment, evidenced as tied in amount to supporting documentation, or evidenced as mathematically accurate. i. There were several disbursements made in which no supporting invoices could be located. Recommendation: We recommend the Town upgrade its current general ledger accounting system to segregate activity by fund, to include all activity under the direct control of the Town, and to eliminate mispostings. We also suggest accounting procedure� be adopted to include approving monthly bank recon- ciliations for all cash accounts, maintaining documentation and support for all cash receipts recorded in the cash re- ceipts journal, reconciling cash receipts recorded in the cash 25 I� Honorable Mayor and Town Council Page 4 Town of Marana I•- I• I• receipts journal with departmentai reports, approving and maintaining all invoices with appropriate and supportable general ledger account distributions on all cash disburse- ments, and calculating the math accuracy of all invoices prior to payment. Management's resgonse: For the first time, the Town has recently hired a full-time accountant. This new Town employee is in the process of upgrading the Town's internal controls and accounting procedures. As a part of this process, he will assess the auditor�s recommendations and incorporate them into the upgrading of the Town's accounting system. 2. BIID(i�TB Conditionz The Town still budgets by purpose and not by object. In addition, budgets are not sugmented on an ongoing basi�, re�ulting in difficulty in comparing actual activity with budgeted activity. I• �� - Recommendation : We recom�annend that management budget by ob� ect and augment this budget on a periodic basis, especially for federal programs, so as to insure the ability to compare bud- geted and actual data in a meaningful manner. Management also needs to ,prepare budgets that are reflective of expected activity. The benefit is an improved means by which management can make decisions and insure adherence to budgetary require- ments. Management's response: Management will work closely with the auditors to improve procedures for the development of better budgets. I! �• �� 3. FI%ED ABBBT I�iVSNT4RY Condition: The Town has not recently conducted a reconcilia- tion of its physieal property records and the items reflect�d in its general fixed assets group of accounts, In addition, the Town is not recording donated assets. Recommendation: We recommend that a physical inventory of property be conducted in the near future, and that a reconciliation of that inventory be made to the general ledger, with all appropriate adjustments being investigated and made, includinq those for donated assets. Management's response: As soon as it is practicable, manage- ment will work with its auditors to implement procedures to perform such a fixed asset inventory. [7 �� 26 I• I �- I• I• I• �� _ I� I• I •' I• �• Hanorable Mayor and Town Council Page 5 Town of Marana A material weakness is a reportable condition in which the design or operation of the specific internal control structure elements does not reduce to a relatively low level the risk that errors cr irregularities in amaunts that would be material in relation to the general purpose financial statements being audited or that noncom- pliance with laws and regulations that would be material to a federal financial assistance program may occur and not be detected within a timely period by employees in the nonaa]. course of per- forming their assigned functions. Our consideration of the internal control structure would not necessarily disclose all matters in the internal control structure that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also consi- dered to be material weaknesses as defined above. However, we be- lieve all of the reportable conditions described above are material weaknesses. It should be noted that comments 1, 2, and 3 are re- occurring. This report is intended Council, management, and intended to limit the matter of public record. for the information of the Mayor and Town grantor agencies. This restriction is not distribution of this report, which is a r,�.�, � `"V . � �°�� i Tucson, Arizona F'ebruary 7, 1992 27 � �- • Clifton, Gunderson & Co. Certified Public Accountants & Consultants Honorable Mayor and Town Council Town of Marana Marana, Arizona =ndependent Auditor�s Report on Compliance �ith La�s and Requlations Based on an Audit of �inancial Statements Performed in Acco=dance with Qoverament Auditinq Standards We have audited the general purpose financial statements of the Town of Marana, Arizona as of and for the year ended June 30, 1991, and have issued our report thereon dated February 7, 1992. C I• I• '• We conducted our audit in accordance with generally accepted auditing standards, "Government Auditing Standards," issued by the Comptroller General of the United States, and the provisions of Office of Management and Budget Circular A-128, "Audits of State and Local Gavernments." Those standards and OMB Circular A-128 require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement. Compliance with laws, regulations, contracts, and grants applicable to the Town is the responsibility of the Town's management. As part of our abtaining reasonable assurance about whether the gene=al purpose financial statements are free of material mxsstatement, we performed tests of the Town's compliance with certain provisions of laws, regulations, contracts, and grants. However, our objective was not to provide an opinion on overall compliance with such provisions. Material instances of noncompliance are failures to follow requirements, or violations of prohibitions, contained in laws, regulations, contracts, or grants, that cause us to conclude that the aggregation of misstatements resulting from those failures or vioiations is material to the general purpose financial statements. The results of our tests of compliance disclosed the following material instance of noncompliance. The noncompliance has been disclosed in the 1991 general purpose financial statements of the Town of Marana, Arizona, but those financial statements do not include any adjustments for the possible effects of the noncompliance because th� gossible outcome is uncertain at this time. 28 MEMBERS OF AMERICAN INSTITUTE OF CERTIFIED ARIZONA COLORADO ILLINOIS INDIANA IOWA MARYLAND MISSOURI NEW MEXICO OHIO WISCONSIN PUBLIC ACCOUNTANTS � �_ • • I• �� . �� • I•' I• I� Honorable Mayor and Town Council Page 2 Town of Marana The Town received reimbursements under its Community Development Block Grant Program. Some of these costs appeared to not have sufficient supportinq documentation to determine if they were eligible for reimbursement. This situation is further described in the sehedule of findings and questioned costs accompanying the "Independent Auditor�s Combined Report on Compliance with General Requirements Applicable to Nonma�or Federal Financial Assistance Programs and Specific Requirements Applicabie to Nonma�or Program Transactions.'� We considered these material instances of noncompliance in forming our opinion on whether the 1991 general purpose financial state- ments are presented fairly, in all material respects, in conformity with generally accepted accounting principles, and this regort does not affect our report dated February 7, 1992, on those general purpose financial statements. Excegt as described above, the results of our tests of compliance indicate that, with respect to the items tested, the Town of Marana, Arizona, complied, in all material respects, with the provisions referred to in the third paragraph of this report, and with respect to items not tested, nothing came to our attention that caused us to believe that the Town had not complied, in all material respects, with those provisions. This report is intended Council, management, and intended to limit the matter of public record. for the information of the Mayor and Town grantor agencies. This restriction is not distribution of this report, which is a � G�I �� • w . i Tucson, Arizona February 7, 1992 a9 i• � Clifton, • Gunderson & Co. Cerfified Public Accounianis & Consultanis � �' I• I• I• �� . I� Honorable Mayor and Town Council Town of Marana Marana, Arizona Independent Auditor�s Combiaed Report on Compliance with General Requirementa Applicable to Nonmajor Federal Fiaanaial Assis- tance Proqrams and specific Requirements Applicable to Nonmajor Proqram Transactions In connection with our audit of the 1991 general purpose financial statements of the Town of Marana, Arizona, and with our consider- ation of the Town's internal control structure used to administer federal financial assistance programs, as required by Office of Management and Budget Circular A-128, ��Audits of State and Local Governments,° we selected certain transactions applicable to cer- tain nonmajor federal financial assistance programs for the year ended June 30, 1991. As required by OMB Circular A-128, we have performed auditing pro- cedures to test compliance with the requirements governing types of servic�s allowed or unallowed; eligibility; matching; and the provisions contained within the Town's contracts for its nonmajor federal financial assistance programs that are applicable to those transactions, Also, we have applied procedures to test the Town's compliance with the following requirements applicable to each of its nonmajor federal financial assistance programs for the yea� ended June 30, 1991: Political activity Davis-Bacon Act Civil rights �• Cash management (Not applicable) Relocation assistance and real property acquisition (Not applicable) Federal financial reports (Not applicable) Allowable eosts/cost principles Drug-free workplace Administrative sequirements I�' I• I• Our procedures for testing the aforementioned requiremen�s applic-� able to the nonmajor programs which are listed in the preceding paragraph were limited to the applicable procedures described in the Office of Management and Budget's "Compliance Supplement far Single Audits of State and Local Governments". Our procedures fo.r 30 MEMBERS OF AMERICAN INSTITUTE OF CERTIFIED ARIZONA COLORADO ILLINOIS INDIANA IOWA MARYLAND MISSOURI NEW MEXICO OHIO WISCONSIN PUBUC ACCOUNTANTS I� Honorable Mayo= and Town Council Town of Marana __ testing compliance with the requirements applicable programs were substantially less in scope than �- ob�ective of which is the expression of an opinio compliance with the requirements. Accordingly, we such an opinion. Page 2 to the nonmaj or an sudit, the n on the Town's do not express Material instances of noncompliance are failures to follow require- ments, or violations of prohibitions, contained in statutes, � regulation, contracts, or grants that cause us to conclude that the aggregation of the misstatements resulting from those failures or violations is material to the general purpose financial statements. With respect to the items tested, the results of those procedures disclased a material instance of noncompliance with the require- '� ments listed in the second paragraph that is described in the accompanying s�hedule of findings and questioned costs. With respect to items not tested, nothing came to our attention that caused us to believe that the Town of Marana, Arizona, had not complied, in all material respects, with those requirements. The results of our procedures also disclosed an immaterial instance of I• noncompl.iance with those requirements, which is described in the accompanying schedule of findings and questioned costs. This report is intended Council, management, and intended to limit the matter of public record. for the information of the Mayor and Town grantor agencies. This restriction is not distribution of this report, which is a y ,l��,� ��v � c.�1 . Tucson, Arizona' February 7, 1992 31 l• I �. Clifton, Gunderson & Co. Cerfified Public Accountants & Consultants Honorable Mayor and Town Council Town of Marana Marana, Arizona 1• 1• �• ��. 1• 1• 1•• Independent Auditor�s Report oa schedule of �'ederal Financial Assistance We have audited the general purpose financial statements of the Town of Marana, Arizona as of and for the year ended June 3D, 1991, and have issued our report thereon dated February 7, 1992. These general purpose financial statements are the responsibility of the Town's management. Our responsibility is to express an opinion on �hese general purpose financial statements based on our audit. We conducted our audit in accordance with qenerally accepted auditing standards, "Government Auditing Standards," issued by the Comptroller General of the United States, and the provisions of Office of Management and Budget Circular A-128, '�Audits of State and Laca1 Governments.�� Those standards and OMB Circular A-128 rec1uire that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements ar� free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the general purpose financial statements. An audit also includes assessing the accoun�ing principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. our audit was conducted for the purpose of forming an opinion on the general purpose financial statements of the Town, taken as a whole. The accompanying schedule of federal financial assistance is presented for purposes of additional analysis and is not a required part of the general purpose financial statements. The informatian in that schedule has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, in our opinion, is fairly presented in all material respects in relation to the general purpose financial statements taken as � whole. . �, �„a�t, : � � Tucson, Arizona February 7, 1992 1• �• 33 MEMBERS OF AMERICAN INSTITUTE OF CERTIFIED ARIZONA COLORADO ILLINOIS INDIANA IOWA MARYLAND MISSOURI NEW MEXICO OHIO WISCONSIN PUBLIC ACCOUNTANTS �� . � •. 1 � 1 � 1� . '•. I• 1� • r � r • � W w � c �� N� � w � � N � W � � � O► N a � & � n �H � V o M aza H � � w �7 Q,' � y O W OwW 8C �' � w� �om � a � , A '� � U GO � � � W � ° 4 � � ° � � � � �O � e-1 N fJ� � cn d' � � � � N � tJY � O I s!!� .. � .. M �D � � O► M �O t� e� 01 u � � 00 � � O N �-i � � O N • • O O O � O �O 111 O l� rl e� t�l � �G t!} � � g � M � �g � � � � N e�i i R � 0 � � � � M 00 �� 0 � � N d' �i � O M � � M � o� � � N e�i l c� n � � � M � o� � �-�1 N e�-i �� i °�� °�� °�� a �� . . . . .� � � � � � � '�y �� , �, �� }� C* CO G1 O 0�1 � 0�1 t� 0�1 � UI . (� � �-1 e-1 �-1 � w� a 0 � � 10 ch _ . N N M O CO N C`� ci N t� N � r�-1 00 N � M N t� A N � O O O � � � O N N � �-�i 0�0 O c'��1 N � � � N .� � z z '� O a 0 0 � �0 d1 � �-�-I U •� � � � � •rl � � � �� N -�., w � � � � � �o �� .� o �� - o� �..� .� ro :� � �� o � � +�-� � �., � U VlAiT �0 � H • • � � A • • � � � v d' M . . .. . . . .. ... . . . . .. . .. � . .. . . . �_. r� �'{�� 335 Norm tA/ilmot Road V �.. Wn' Suite 30r� � � „Q� � Tucson, Arizona � 8571 1� � � � � � ��li L7G �Q• � � � � � � <602) 790 3500 Telephone �� ` 1 I � � � Cert�fied Publlc Accounianis & Consultanis � � � � � � � � (b02) 79C-01 1 1 Fax � May 20, 1991 Roy B. Laos, Town Manager Town of Marana n_ n , 13 2 51 N. Lon Adams Rd . y C�,�.� Marana, Arizona 85653 � � �� Dear Roy: (� We are pleased to serve you as your independent accountants. The purpose of this letter is to confirm the terms of our engagement and to clarify the nature and extent of the auditing and accounting services to be provided. . Frank Auletta will be the client partner responsible for these services to be provided to you. Ron Kovar will also be assigned to you. The purpose of this arrangement is to have another person known to you and your associates, who is f�miliar with your opera= tions and who can substitute for Frank should he not be available to you. We hope you will call either of these persons when you believe the firm can be of assistance. Our serviees will include: Auditinq services. We will audit the combined financial statements and the supplementary schedule of federal financial assistance of the Town of Marana as of June 30, 1991-1993, and for the years then ended. 0ur audits will include an examination of your compliance with laws, xules and regulations including those related to the expenditure of federal financial assistance. 0ur audits will be made in accordance with generally accepted auditing standards, the Single Audit Act of 1984, OMB Circular A-128, and the financial and compliance requirements set forth in Government Audit Standards issued by the Comptroller General of the United States, an essen- tial part of which is the review and evaluation of your systems of internal control (accounting and administrative), and will include tests of your accounting records and other procedures we consider necessary to enable us to express our opinions on these financi��l statements, our opinions or comments on your compliance with laws, rules and regulations, and our comments on your systems of internal control. We will also audit your annual expenditure limitation reports. _ Accountinq services. Such services are not a part of this engage- ment letter and are available upon request under mutually accept- able arrangements. , .,�,� �.> u� �,r.: v�� ,rv �`;� Na� � � . . . � . . . � �. .. . � � . . . . � � � . . � . � . � .. � :A W,v �w.Ud .y55� � i�71��.n . . .. . � . � . � . . . �I �f« ( .�i�:1r:r' �cC-JUniln�j : . . � � . . �. �. �� . . � . . . � � � � � � � MEM9EI2S�OF AMEfi1CAN � � iPJSTIr�iIE��C}F CF181F!ED� � `� AR!7nh4 �� C( iul�v:llC tN�'S�h1F1 IC�bVA 1"A(7YLANII � MIS$C��I_;RI � NFW MfYI<: O iIHIC� 'aVIS( '`hv�W �'�JF � 1� ` � Rc�y;B. Laos, Town Manaqer May 20, 1991 Town of Marana Page 2 It is understood that although the purpose and objective of'our audits is to lead to the expression of unqualified opinions with respect to the combined financial statements, circumstances may exist or may arise which would preclude submittinq such opinions. Should circumstances be discovered which would have an effect on our opinions, we will inform you as promptly as possible and attempt to arrive at conclusions acceptable to both of us. If our opinions will be other than unqualified, the reasons will be fully disclosed. If, in the course of our audits, we should discover evidence indicating the possible existence of fraud, defalcations, other illegal acts or similar irregularities on the part of an officer or employee of the Town of Marana, we reserve the right to promptly make a report of such discovery to the appropriate law enforcement authorities and/or appropriate federal government officials, in accordance with the requirements of the Single Audit Act of 1984 and related fe�ieral government pronouncements. A copy of the audit reports and any related workpapers may also be proVided to such law enforcement authorities and/or federal government officials for appropriate follow up action. We will, of course, inform you promptly of any findings which appear to be unusual or abnormal. We call your attention to the fact that management has the re- sponsibility_for the proper recording of transactions, for the safeguarding of assets, and for the substantial accuracy of the fi- nancial statements. Although our firm may have prepared or assisted in preparing your financial statements, the statements are the representations of management. : In connection with this responsibility, you agree to provide us, prior to the delivery date of the financial statements, with written confirmations of the representations made to us by you and your staff during the course of our engagement. If reproduction or publication of the financial statements which we have audited, or any part of them, is anticipated for purposes of distribution outside your management, we require that we be permit- ted to approve the masters or printer's proofs before publication, if our firm's name is to be connected with the statements or report in any way. Fees for our services will be $8, 000 a year, for a total of '$24 ,`000 for the next three years. If any additional services are required, or any unanticipated problems arise, we will discuss any additional fees before providing the necessary services. Our fees include out- of-pocket costs, and will be billed and are payable every two weeks as the work proqresses. If the above terms are'in accordance with your understanding and acceptable to you, please sign, date, and return the duplicate copy of this letter to us.' GLl�OII, ��t�+P�c?n �t �tJ. i �. RQy, B. Laos, , Town Manager May 20, 1991 Town of Marana Page 3 We very much`appreciate the`opportunity to serve you, and will be pleased to discuss any questions you may have. Very truly yours, �� o�V f � The services described in the foregoing letter are in accordance with our requirements and we understand the terms and conditions recited above. Acknowledged: TOWN OF MARANA Ma�q `�� w� a� Na e/Ti le 2- - � l � q 1 , Date Clifton, ` Gunderson & Cc�. . •M� . � � - - �' Cliftori, . l- ' Gundersor� & Ca. `— Ge��'�� Pub��c F.��co.rnso�-:r_ $ Cons�.,�fa�t� Honorable Mayor and Town Council Town of Marana Marana, Arizona . . INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH LAWS AND REGULATIONS BASED ON AN AUDIT OF FZNANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS we have audited the general purpose financial statements of the Town of Marana, Arizona as of and for the year ended June 30, 1990, and have issued our report there�n dated February 18, 1991. We canducted our audit in accordance with generally accepted auditing standards, Government Auditing Standards, issued by the Comptroller General of the United States, and the provisions of Office of Management and Budget Circular A-128, "Audits of State and Loca1 Governments." Those standards and OMB Circular A-128 require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement. Compliance with Iaws, regulations, contracts, and grants applicable to the Town is the responsibility of the Town's management. As part of our obtaining reasonable assurance about whether the financial statements are free of material misstatement, we performed tests of the Town's compliance with certain provisions of laws, regulations, �� contracts, and grants. However, our objective was not to provide an opinion on overall compliance with such provisions. The results of our tests indicate that, with respect to the items tested, the Town complied, in all material respects, with the provisions in the preceding paragraph. With respect to items not tested, nathing came to our attention that caused us to believe that the Tawn had not complied, in all material respects, with those provisions. �This report is intended for the information of management and grantor agencies. This restriction is not intended to Iimit the distribution of this report, which is a matter of public record. . �� , �J.ltJ4 • ! TUCSOn, Ari2ona February 18, 1991 K� �HDiip(.h COft)='F.,'>G R,It.J�S iKDiANA . IC`WA � MPRY.At3✓. M!SSJU��! NEW'MEkiCO OHIU WiSCONSIN `•MEMBERS OF �!R INTERNATIONA: A WoACw�de Assoo ypllndYp�nOeM ,�1CCOUnth� fmr iutEMBERS tjF M�tE� �1SiRUTF OF GfRr� PUBLIC I�CCOL)h i �, P � '' � �' Clift�on, , � ' Gunderson & Co. ` Len��',e;7 Pub+�:� ac�uu�for,ts & ConsuNoni, Honorable Mayor and Town Council Town of Marana Marana, Arizona INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO NONMAJOR FEDER.AL FINANCIAL ASSISTANCE PROGR.AM TRANSACTIONS In connection with our audit of the 1990 general purpose financial statement of the Town of Marana, Arizona, and with our study and evaluation of the Town's internal control systems used to adminis- ter federal financial assistance proqrams, as required by Office of Management and Budget Circular A-128, "Audits of State and Local Governments," we selected certain transactions applicable ta cer- tain nonmajor federal financial assistance programs for the year ended June 30, 1990. As reguired by OMB Circular A-128, we have perf,�rmed auditing pro- cedures to test compliance with the requirements governing types of services allowed or unallowed; eligibility; and the provisions con- tained within the Town's contracts for its nonmajor federal finan- cial assistance programs that are applicable to those transactions. Our procedures were substantially less in scope than an audit, the objective of which is the expression of an opinion on the Town's compliance with these requirements. Accordingly, we do not express such an opinion. With respect to the items tested, the results of those procedures disclosed no material instances of noncompliance with the require- ments listed in the preceding paragraph. With respect to items not tested, nothing came to aur attention that caused us to believe that the Town had not complied, in all material respects, with those requirements. This report is intended for the information of management and grantor agencies. This restriction is not intended to limit the distribution of this report, which is a matter of public record. Tucson, Arf2ona February 18, 1991 . • A �+ � �►c./ ' t4 . 31 ARIZONA LOtO�+ALiU�� .. IlUNU1$ IND�ANA IOWl. MAi7v�AND �M1550ufri NEW MEkiGU GHiO WISCONSW #AEMBERS OF tiR INTERNATtCriA; #� Woridwkfe �ssoce Df lndepende*:' /lccovrdlnp fbms �M1EMBERS OF J#MEU, �NStiiU3E flF G£&Tr:� -#ilBLIC I�CGOtR�tt�a '��`x_ �' Clifton f �` ' Gunderso� & Co. , Ce� heo �„b!�c Acco,;�ta^:+s & Co�sul Honorable Mayor and Town Council Town of Marana -� Marana, Arizona . . INDEPENDENT AUDITOR'S REPORT ON SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE We have audited the general purpose financial statements of the Town of Marana, Arizona as of and for the year ended June 30, 1390, and have issued our report thereon dated February 18, 1991. These general purpose financial statements are the responsibility of the Town's management. Our responsibility is to express an opinion on these general purpose financial statements based on our audi�. We conducted our audit in accordance with generally accepted auditing standards, Government Auditing Standards, issued by the Comptroller General of the United States, and the provisions of Office of Management and Budget Circular A-128, "Audits of State and Loca1 Governments." Those standards and OMB Circular A-128 require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the general purpose financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. Our audit was conducted for the purpose of forming an opinion on the general purpose financial statements of the Town, taken as a whole. The accompanying schedule of federal financial assistance is presented for purposes of additional analysis and is not a required part of the general purpose financial statements. The information in that schedule has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, in our opinion, fs �airly presented in all material respects in relation to the general purpose financial statements taken as a whole. Tucson, Arizona February 18, 1991 ' �►t � f 32 ARI?UNA CGi G�rP'��G � II t INDiRNk MARVIAND � MI NEN` MFY �� . /! AC t.�0 • � #AEM9ERS Of �1R HJTERNATIONA; �1 i+JOrldwidc ltssos= ; 3>t lnO�D��fsn� �1Ce0Unfli�q irm� ?A�EMBERS OF !�►F� �NSTRUTE Of CERt�r+ SC�NS�N PUBt1C ACCOtiNT� ' �;,_ ;� �- . �: � � ro .� � °` . . - ��o- � �� a � � � -.� N _� � {� � � �L � � .�{ � w �a z � oa a H � � � zQo � �� oa�' �ac� H az° ,�z � ��+� H �� Q a u �� w oWw Cz� f"� 3 � � �' H � >+ W a o ' w cn � U N �y � � G� U �i � �� (sr � 0 �� L7 H � � � � � . � i i o 0 4 4 �� a � , .� � rn o � c"�'- .�-� , ,-� �r �--+ t� �a v� �'1 � � � N � i/T In Q� � N � � � ��V' � � � �!' � � � � N � � � � � o � t11 N O O N I C�I r-1 � � i � � � � � � � � � a- � ° o 0 0 � � � �D 111 O e-1 00 Q� � � � � � � N � � � � N e'i I� � � O � N � -� j � � � � O 1 1 Q 0 � 00 M CO t'1 CO `�i �� 0 �° o� o`-+ a� � � � O t►r .�-� e� I Qti N .�-�1 e�-I � � ,� N N N . . • • �D � �-�-{ e�-1 �-'� � � � � � � � �� j � N .� . ..� . .r1 • -.i N U oa u � u �+� N� �� .� �� '� '� '� � � �� 'N �,. t �.� � ,� � � a�c o�c m � � � � � :n � � � . • � v� � � �s r�^ > � � " $ s-�e �cp - 1 E r-� �� ,�.«e� l `".� -� �%"�' Cli�t.on, �"'` � Gunderson & Co. U �' Certified Pubiic Accountanis & Conswtonts l Evelyn Casuga, Town Manager Town of Marana 12775 North Sanders Rd. Marana, Arizona 85653 D c�t Z �s .k'-a�-�. • �� August 30, 1990 ReK �I�'<ff �� Dear Evelyn: We are pleased to serve you as your independent accountants. The purpose of this letter is to confirm the terms of our engagement and to clarify the nature and extent of the auditing and accounting services to be provided. Frank Auletta wiil �e the ciient part:�er respansibZe for thesa services to be provided to you. Ron Kovar will also be assigned to you. The purpose of this arrangement is to have another person known to you and your associates, who is familiar with your opera- tions and who can substitute for Frank should he not be available to you. We hope you will call either of these persons when you believe the firm can be of assistance. Our services will include: Auditinq services. We will audit the combined financial statements t and the supplementary schedule of federal financial assistance of - the Town of Marana as of June 30, 1990, and for the year then ended. Our audit will include an examination of your compliance with laws, rules�and regulations,including those related to the expenditure of federal financial assistance. Our audit will be made ' in accordance with generally accepted auditing standards, the Single Audit Act of 1984, OMB Circular A-128, and the financial and compliance requirements set forth in Government Audit Standards issued by the Comptroller General of the United States, an essential part of which is the review and evaluation of your systems of internal control (accounting and administrative), and will include tests of your accountinq records and other procedures` we consider necessary to enable us to express our opinion on these financial statements, our opinion or comments on"your compliance with laws, rules,and regulations, and our comments on your systems of internal control. We will also audit your annual expenditure limitation report. � Accountinq services. We will also provide you with the following nonaudit servicess 1. Assistance with the preparation of your financial state- ments. 2. Assistance with adjusting journal entries and accounting services work required to make the records auditable. MEMBERS Of NR iNiERNATiONAt A wonaW+ae wswcio+io- ot tnoepenasnf . � � . � � � � � . � �:f.CCOUf11iBQ Ft(TS � � � . -MEMBfRS Of AMERICAk u�lsnTUTE Qf GERnr�rEf3 ARIZONA . COLORADO ILUNOIS INDIANA IOWA MARVLRND MISSOUR� NEW MEXICG� � bHiO WISCONSIN �. �� PUBLIC�ACGOUNiANt$ <.r�'- f J f� e Evelyn Casuga, Town Manager Town of Marana August 30, Page 2 1990 t It is understaod that although the purpose and objective of our audit is to lead to the expression of an unqualified opinion with respect to the combined financial statements, circumstances may exist or may arise which would preclude submitting such an opinion. Should circumstances be discovered which would have an effect on our opinion, we will inform you as promptly as possible and attempt to arrive at a conclusion acceptable to both of us. Zf our opinion will be other than unqualified, the reasons will be fully disclosed. If, in the course of our audit, we should discover evidence indicating the possible existence of fraud, defalcations, other illegal acts or similar irregularities on the part of an officer or employee of the Town of Marana, we reserve the right ta promptly make a report af such discovery to the appropriate law enforcement authvrities and/or appropriate federai government officials, in accordance with the requirements of the Single Audit Act of 1984 and related federal government pronouncements. A copy of the audit report and any related workpapers may also be provided to such law enforcement authorities and/or federal government officials for appropriate follow up action. We will, of course, inform you promptly of any findings which appear to be unusual or abnormal. We call your attention to the fact that management has the re- sponsibility for the proper recording of transactions, for the safeguarding of assets, and for the substantial accuracy of the fi- � nancial statements. Although our firm may have prepared or assisted in preparing your financial statements, the statements are the representations of management. � In connection with this responsibility, you agree to provide us, prior to the delivery date of the financial statements, with written confirmation of the representations made to us by you and your staff during the course of our engagement. If reproduction or publication of the financial statements which we have audited, or any part of them, is anticipated for purposes of distribution outside your management, we require that we be permitted to approve the maste�s or printer's �roofs ��f�r� pu�Zi- cation, if our firm's name is to be connected with the statements or report in any way. Fees for aur services will be approximately $8,000, and will be based on our normal billing rates. If any additional services are required, or any unanticipated problems arise, we will discuss any additivnal fees before providing the necessary services. Our fees include out-of-pocket costs, and wi13 be billed and are payable every two weeks as the work progresses. Zf the above terms are in accordance with your understanding and acceptable to you, please sign, date, and return the duplicate copy of this letter to us. Clifton, : Gunder�on&Co. t �-�? �, .` ' Evelyn Casuga, Town Manager August 30,1990 - Town of Marat�a Paqe 3 i We very much appreciate the opportunity to serve you, and will be pieased to discuss any questions you may have. Very truly yours, • �' �� f � The services described in the foregoing letter are in accordance with our requirements and we understand the terms and conditions recited above. Acknowledged: � ! Town of Marana 9 �{ � a Date � � Clifton, Gunderson��o. _ , ��-? : :l,f Clifton, Gunderson & Co. CerTified Public AccountanTs & Consultants 335 North Wilmot Road Suite 300 Tucson, Arizona 8571 1 (602) 790-3500 Telephone (602) 790-0111 Fax May 20, i991 Roy B. Laos, Town Manager Town of Marana 13251 N, Lon Adams Rd. Marana, Arizona 85653 Dear Roy: Enclosed is the final billing we discussed for the Town of Marana. The year's work is summarized as follows; Audit services Accounting services Less amount paid to date $ 8,000 7,750 15,750 6 80�} Balance due per attached invoice $ 954 The above fees represent a$4, 700 discount from our standard rates. This discount was given due to what we feel is fair to the Town and us under the cireumstances. It represents primarily write-affs for audit time to get in iine with the market and some accounting services write-offs. Enelosed please find our engagement ietter for the next three years. It is set at $8,000 a year for each year. This fee quote represents our charges for audit work alone, and does not anticipate any accounting services or significant ehanges in the scope of the audits. Hopefully, the $7,750 savings in accounting services wo�k will help pay fvr the Town's new accountaflt. We have kept the fee constant over the three year period to repay some of the confidence the Town has exhibited in us over the years. If you have any questians, please call. FAjrw enclasure Sincerely, �Q� Frank Auletta, CPA ARIZONA COLORADO ILLINOIS INDIANA IOWA MAf7YLAND MISSOURI NEW MEXICO OHIO WISCONSIN MEMBERS OF NR. INTERNATIONAL A Worldwide Association of IndependenT AccounTing Firms MEMBERS OF AMERICAN INSfITUTE Of CERfIFIED PUBLIC ACCOUMANTS. C�OIl, ' Gunderson & Co. Certified Public AccounianTs & Consultanis May 2Q, 1991 Roy B. Laos, Town Manager Town of Marana 13251 N. Lon Adams Rd. Marana, Arizona 85653 Dear Roy: We are pleased to serve you as your independent accountants. The purpose of this letter is to confirm the terms of our engagement and tr� clarify the nature and extent of the auditing and accounting serviees to be provided. Frank Au3etta wili be the client partner responsible for these services to be provided to you. Ron Kovar will alsa be assigned to you. The purpose of this arrangement is to have another person known to you and your associates, who is €ami].iar with your opera- tions and who can substitute for Frank should he not be available to you. We hope you will call either of these persons when you believe the firm can be of assistance. Our services will include: Auditinq services. �+1e will audit the combined financial statements and the supplementary schedule of federal financial assistance o€ the Town of Marana as of June 30, 1991 and for the years tt�en ended. Our audits will include an examination of your complianee with laws, rules and regulations including those related to the expenditure of federal financial assistance. Our audits will be made in accardance with generally aceepted auditing standards, the Single Audit Act of 1984, OMB Circular A-128, and the financial and eompl�ance requirements set forth in Government Audit Standards issued by the Comptroller General of the United States, an essen- tial part of which is the review and evaluation of your systems of internal control {accounting and administrative), and will include tests of your accounting records and other procedures we consider necessary to enable us to express our opinions on these financial statements, our opinions or comments on your campliance with laws, rules and regulations, and our comments on your systems of internal control. We wi12 also audit your annual expenditure limitation reports. Accountinq services. Such services are not a part of this engage- ment letter and are available upon request under mutually accept- able arrangements. ARIZONA COLORADO ILLINOIS INDIANA IOWA MARYLAND MISSOURI NEW MEXICO OHIO WISCONSIN 335 North Wilmot Road Suite 300 Tucson, Arizona 8571 1 (602) 790-3500 Telephone (602) 790-011l Fax MEMBERS OF NR INTERNATIONAL A Worldwide AssociaTion of Independent Accounting Firms MEMBERS OF AMERICAN INSTtTUTE OF CERfIFIED PUBLIC ACCOUNTANTS. RQy B. Laos, Town Manager Town of Marana May 20, 1991 Page 2 It is understood that although the purpose and abjective of our audits is to lead to the expression of unqualified opinions with respect to the combined financial statements, eircumstances may exist or may arise which would preclude submitting such opinions. Should circumstances be discovered which would have an effect on our opinions, we will inform you as promptly as possible and attempt to arrive at conelusions acceptable to both of us. If our opinions wiil be other than unqualified, the reasons will be fully diselosed. If, in the course of our audits, we should discover evidenca indicating the possib3e existence of fraud, defalcations, other illegal acts or similar irregu],arities on the part of an offieer or employee of the'Town of Marana, we reserve the riqht to promptly make a report of such discovery to the appropriate law enf4rcement authorities andfor appropriate federal government offieials, in accordance with the requirements of the Single Audit Act of 1984 and reiated federal government pronouncements. A copy of the audit reports and any reiated workpapers may also be pravided to such law enforcement authorities and/or federal government officials for appropriate follow up action. We will, of course, inform you promptly of any findings which appear to be unusuai or abnormal. We call your attention to the fact that management has the re- sponsibility for the proper recording of transactions, for the safeguarding of assets, and for the substantial accuracy of the fi- nancial statements. Aithough our firm may have prepared or assisted in preparing your financiai statements, the statements are the representations'af management. In connection with this responsibility, you agree to provide us, prior to the delivery date of the financial statements, with written eonfirmations of the representations made to us by you and your staff during the course of our engagement. If reproduction or publieation of the financiai statements whieh we have audited, or any part of them, is anticipated for purposes of distribution outside your management, we require that we be pexmit- ted to approve the masters or printer's proofs before publication, if our firm's name is to be connected with the statements ar report in any way. Fees for our services will be $8, 000 a year, for : a total of $24 , 000 for the next three years. If any additional services are required, or any unanticipated problems arise, we wi11 discuss any additional fees before providing the necessary services. Our fees include out- of-pocket costs, and will be billed and are payable every two weeks as the work progresses. If the above terms are in accordance with your understanding and acceptabie to you, please sign, date, and return the duplicate copy of this letter to us. ��i ii��li�� ii : � i : s �� oy B. Laos, Town Manager May 20, 1991 Town of Marana Page 3 We very much appreciate the opportunity to serve you, and will be pleased to discuss any questions you may have. Very truly yours, �� f.�. � The services described in the foregoing letter are in accordance with our requirements and we understand the terms and conditions recited above. Acknowledged: TOWN OF MAR.ANA Name/Title Date a • t ' M a i