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2018 Audit t k. 11410 P:6111)1 t ■ r a ■ y LOCAL GOVERNMENTAL ENTITY AUDIT REPORT SUBMITTAL CHECKLIST Entity Name: Immokalee Water&Sewer District Contact Person Name and Title: Eva Deyo, Executive Director Contact Person Mailing Address: 1020 Sanitation Road, Immokalee, FL 34142-4238 Contact Person Phone Number: (239)658-3630 Contact Person E-mail Address: evadeyo@iw-sd.com Fiscal Year Audited: September 30, 2017 Date the auditor delivered the audit report to the entity: February 21, 2018 Does the audit report include the following items required by Section 10.557(3), Rules of the Auditor General: Required for municipalities, special districts, the county as a whole, and county agencies** YES The financial statements described in Sections 10.556(3) and (4), Rules of the Auditor General,as applicable,together with related notes to financial statements? YES Required supplementary information (RSI)such as the management's discussion and analysis (not required for county agencies), or the budgetary comparison schedule (required as RSI if not presented as part of the financial statements)? YES The auditor's report on the financial statements? YES The auditor's report on compliance and internal control? YES The management letter defined in Section 10.554(1)(i), Rules of the Auditor General? YES The written statement of explanation or rebuttal, including corrective action to be taken, required by Section 10.558(1), Rules of the Auditor General? YES The auditor's report based on an examination conducted in accordance with AICPA Professional Standards, prepared in accordance with AT-C Section 315, promulgated by the American Institute of Certified Public Accountants, regarding the compliance requirements referenced in Section 10.556(10), Rules of the Auditor General? N/A For entities that had an impact fee adopted by ordinance on their behalf, an affidavit signed and sworn to by the Chief Financial Officer before an officer authorized to administer oaths (e.g., notary public) stating that the ordinance complied with the restrictions of Section 163.31801, Florida Statutes, as referenced by Section 10.557(3)(m), Rules of the Auditor General. ** Pursuant to Section 218.39(2), Florida Statutes, an audit of the board of county commissioners is not required. However, if the county report includes an audit of the board of county commissioners, it should include the items required by Section 10.557(3), Rules of the Auditor General. Auditor General Rules Effective September 30,2017 Page 1 of 3 Required for municipalities, special districts, and the county as a whole YES If applicable, the auditor's reports and related financial information required pursuant to Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance); or other applicable Federal law? N/A Any auditor's reports and related financial information required pursuant to the Florida Single Audit Act(see Section 10.557(3)(e), Rules of the Auditor General)? N/A For any fiscal year in which funds related to the Deepwater Horizon oil spill are received or expended, a schedule of receipts and expenditures of such funds required by Section 10.557(3)(n), Rules of the Auditor General? N/A For any fiscal year in which funds related to the Deepwater Horizon oil spill are received or expended, a report that includes an opinion (or disclaimer of opinion) as to whether the schedule of receipts and expenditures of such funds required by Section 10.557(3)(n), Rules of the Auditor General, is presented fairly in all material respects in relation to the financial statements taken as a whole. The report shall be prepared in accordance with AICPA Professional Standards, AU-C Section 725, promulgated by the American Institute of Certified Public Accountants. (see Section 10.557(3)(f)), Rules of the Auditor General? In addition to the above, have the following requirements been complied with: YES Are all of the above elements of the audit report included in a single document as required by Section 10.557(3), Rules of the Auditor General? YES Are one paper copy and one electronic copy of the audit report being submitted as required by Section 10.558(3), Rules of the Auditor General? YES Is the electronic copy named using all lower case letters as follows: [fiscal year] [name of entity].pdf? Counties should include the word"county"in the entity name; however, it is not necessary for municipalities to include "city of," "town of," etc. in the entity name. For example,the converted document for the 2016-17 fiscal year for Alachua County should be named 2017 alachua county.pdf while the converted document for the 2016-17 fiscal year for the City of Alachua should be named 2017 alachua.pdf. YES Was the audit report being submitted within 45 days after receipt of the audit report from the auditor, but no later than 9 months after the end of the fiscal year? NOTE: There is no provision in law authorizing an extension for filing the audit report. N/A If the audit report is for a county or municipality, and a dependent special district was audited as part of the county or municipality audit, did the notes to financial statements clearly indicate that the special district had been included as part of the county's or municipality's reporting entity? NOTE: Pursuant to Section 218.39(3), Florida Statutes, an independent special district may not be audited as part of a county or municipality audit. When a dependent special district is audited as part of the county or municipality audit, the county or municipality notes to financial statements should clearly disclose that the special district is a component unit included within the county's or municipality's reporting entity. Auditor General Rules Effective September 30,2017 Page 2 of 3 This checklist should accompany the audit report. It is suggested that you retain a copy of the checklist for your files. Do not hesitate to contact us if assistance or clarification is needed regarding reporting requirements. Our contact information is as follows: Auditor General Local Government Audits/342 Claude Pepper Building, Room 401 111 West Madison Street Tallahassee, FL 32399-1450 Telephone: (850)412-2881 Fax: (850)488-6975 E-mail Address:flaudgen_localgovt@aud.state.fl.us Web site Address: FLAuditor.gov Auditor General Rules Effective September 30,2017 Page 3 of 3 IMMOKALEE WATER & SEWER DISTRICT 1020 SANITATION ROAD IMMOKALEE, FL 3919, TELEPHONE (239) 658-3630 October 05,2017 Please print the following in your legal notices. Thank You. NOTICE OF MEETINGS Regular Meetings of the Board of Commissioners for the Immokalee Water&Sewer District are scheduled for the third Wednesday of each month,at 4:30 P.M. at the office of the Immokalee Water&Sewer District, located at 1020 Sanitation Road, Immokalee,Florida 34142;or the following dates: October 18,2017;December 20,2017;January 17,2018;February 21,2018;March 21,2018;April 18,2018; May 16,2018;June 20, 2018;July 18,2018;August 15,2018 and September 19,2018. REGULAR MEETING AGENDA 1. Call to Order 2. Preliminaries A. Pledge of Allegiance B. Roll Call C. Public Comment/Adoption of Agenda D. Employee Recognition E. Public Concerns F Staff Good Cause Items G. Board Concerns H. Old Business 3. Public Comment/Consent Agenda A. Adoption of Minutes B. Civil Rights Compliance Report C. Monthly Budget Review D. Acquisition/Disposal Fixed Assets E. Various Reports F. USDA Reporting for Stimulus Money G. Project Change Orders H. Engineers Report-Greeley And Hansen I. Directors Report 4. Action Agenda 5. Discussion Agenda A. Attorney's Report 6. Other Public Interests 7. Adjournment SPECIAL REQUIREMENTS: If you require special aid or services as addressed in the American Disabilities Act,please contact the District office at(239)658-3630, no less than five(5)days prior to the above staled workshop date. I WSD is an equal opportunity provider and employer. IMMOKALEE WATER & SEWER DISTRICT 1020 SANITATION ROAD IMMOKALEE, FL 34142 TELEPHONE (239) 658-3630 February 27,2018 Clerk of Circuit Court Finance Department P. O. Box 413016 Naples, FL 34112-3016 To Whom It May Concern: Immokalee Water& Sewer District is located at 1020 Sanitation Road,Immokalee FL, 34142. Mrs. Eva J. Deyo, Executive Director is the Registered Agent. Both the agent and office are registered with The Florida Special District Program. Also,enclosed are the 2017-2018 Schedule of Regular Meetings and the Fiscal Year Ending September 30, 2017 and Amendment of Fiscal Year 2017 Budget Ending September 30,2017. If you have any other questions,please call the office at the above number. 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LL 3 IMMOKALEE WATER&SEWER DISTRICT L BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION TOGETHER WITH ADDITIONAL REPORTS [] YEARS ENDED SEPTEMBER 30,2017 AND 2016 L ; I r EJ I f ' c TABLE OF CONTENTS Page(s) INDEPENDENT AUDITOR'S REPORT 1-4 r i MANAGEMENT'S DISCUSSION AND ANALYSIS (MD&A) I-XI BASIC FINANCIAL STATEMENTS r 'a Statements of Net Position 5 Statements of Revenues, Expenses, and Changes in Net Position 6 0 Statements of Cash Flows 7 0 Notes to the Financial Statements 8-32 REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN MD&A Schedule of Revenues, Expenses and Changes in Net Position - Budget (Non-GAAP Budgetary Basis)and Actual with Reconciliation to GAAP L Basis- Year Ended September 30, 2017 33-38 Schedule of Expenditures of Federal Awards - Year Ended September 30,2017 39 Notes to the Schedule of Expenditures of Federal Awards 40 ADDITIONAL REPORTS Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Basic Financial Statements Performed in Accordance with Government Auditing Standards 41-42 Independent Auditor's Report on Compliance for Each Major Program/Project and on Internal Control Over Compliance in Accordance with the Uniform Guidance 43-45 Schedule of Findings and Questioned Costs - Federal Awards 46-47 j Independent Accountant's Report on Compliance with Section 218.415, Florida Statutes 48 Independent Auditor's Report to Management 49-51 Management's Response to the Independent Auditor's Report to Management Exhibit on+ E3 TUSCAN Florida Institute of Certified Public AlIIiliaccountliant, American Institute of Certified Public 1cl'ont1UU►1S Company, IDA 1'r 'ate i omp, nes I'raLlit.c',aen Ids I)1%moitEl Certified Public Accountants&Consultants n INDEPENDENT AUDITOR'S REPORT Board of Commissioners Immokalee Water& Sewer District 1020 Sanitation Road Immokalee, Florida 34142 Q [1 Report on the Financial Statements We have audited the accompanying basic financial statements of the business-type activities of Immokalee Water& Sewer District(an independent special district)(the"District")as of and for the years ended September 30,2017 and 2016,and the related notes to the financial statements, which collectively comprise the District's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America;this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement,whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States 1 of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. r An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements,whether due to fraud or error. In making those risk assessments,the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances,but not for the 3 purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, J INTEGRITY SERVICE EXPERIENCE 12621 World Plaza Lane,Building 55 • Fort Myers,FL 33907 •Phone: (239) 333-2090 •Fax: (239)333-2097 f r j I3oard of Commissioners Immokalee Water& Sewer District Page 2 1 r we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management,as well as evaluating overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. r I. L 1 Opinion In our opinion,the financial statements referred to above present fairly, in all material respects,the respective financial position of the business-type activities of Immokalee Water&Sewer District as of September 30,2017 and 2016,and the respective changes in financial position and cash flows thereof, for the years then ended in accordance with accounting principles generally EI accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on pages I-XI be presented to supplement the basic financial statements. Such information,although not a part of the basic financial statements. is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic,or historical context. We have applied certain limited procedures to the required supplementary information-management's discussion and analysis(MD&A) in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries,the basic financial statements,and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the required supplementary information-management's discussion and analysis(MD&A)because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Required Supplementary Information Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise Immokalee Water&Sewer District's basic financial statements. The required supplementary information other than MD&A-budgetary comparison information-Schedule of Revenues, Expenses and Changes in Net Position-Budget(Non-GAAP Budgetary Basis)and Actual with Reconciliation to GAAP Basis-year ended September 30,2017 is presented for purposes of additional analysis and is not a required part of the basic financial statements.The required supplementary information other than MD&A-budgetary comparison information- Schedule of Revenues,Expenses and Changes in Net Position-Budget(Non-GAAP Budgetary r i r 1 r- ' 13oard of Coinmissioners } immokalcc Water & Sewer District Page 3 L J ri Basis)and Actual with Reconciliation to GAAP Basis- year ended September 30,2017 is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying r ' accounting and other records used to prepare the basic financial statements or to the basic financial L statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. in our opinion, the required supplementary information other than MD&A budgetary comparison information- Schedule of Revenues,Expenses and Changes in Net Position- Budget(Non-GAAP Budgetary Basis)and Actual with Reconciliation to GAAP Basis- year ended September 30,2017 is fairly stated, in all material respects, in relation to the basic financial statements as a whole. Our audit was conducted for the purpose of forming an opinion on the financial statements of j immokalee Water&Sewer District that collectively comprise the Immokalee Water& Sewer District's basic financial statements. The accompanying Schedule of Expenditures of Federal 1 Awards for the year ended September 30, 2017 as required by the Title 2 U.S.Code of Federal L Regulations(CFR)Part 200, "Uniform Administrative Requirements,Cost Principles,and Audit Requirements for Federal Awards" is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements Such information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare J the financial statements or to the financial statements themselves,and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the accompanying Schedule of Expenditures of Federal Awards for the year ended September 30,2017 is fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Information Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the District's basic financial statements. The Exhibit-Management's i Response to The Independent Auditor's Report to Management is not a required part of the basic financial statements but is required by Government Auditing Standards. Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements,and accordingly,we do not express an opinion or provide any assurance on it. rt L ! ri L Board of Commissioners t. Immokalee Water& Sewer District r Page I Li r ) Other Reporting Required by Section 218.415, Florida Statutes L In accordance with Section 218.415, Florida Statutes,we have also issued a report dated January 31, 2018,on our consideration of Immokalee Water&Sewer District's compliance with provisions of Section 218.415, Florida Statutes. The purpose of that report is to describe the scope of our testing of compliance and the results of that testing,and to provide an opinion on compliance with the [ aforementioned Statute. That report is an integral part of an audit performed in accordance with Sections 218.39 and 218.415,Florida Statutes in considering Immokalec Water& Sewer District's compliance with Section 218.415, Florida Statutes. Other Reporting Required by Government Auditing Standards 0 In accordance with Government Auditing Standards,we have also issued our report dated January 31,2018 on our consideration of the District's internal control over financial reporting and on our tests of its compliance with certain provisions of laws,regulations,contract and grant agreements r . i and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing,and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District's internal control over financial reporting and compliance. ta.A.6.) (1944 pill. I ?' 41 j TUSCAN &COMPANY,P.A. Fort Myers,Florida January 31, 2018 j [] � � 11 [ �j E Lj � MANAGEMENT'S DISCUSSION [] AND ANALYSIS [] (MD&A) [ r 7.1 � I � / / 11 / / EJ 1MMOKALEE WATER& SEWER DISTRICT Required Supplementary Information Management's Discussion and Analysis September 30, 2017 The management of the Immokalec Water&Sewer District offers readers of our financial statements the following narrative overview and analysis of our financial activities for the year ended September 30, 2017. t Basic Financial Statements Our basic financial statements are prepared using proprietary fund (enterprise fund) Z J accounting that uses the same basis of accounting as private-sector business enterprises. The District is operated under one enterprise fund. Under this method of accounting, an economic resources measurement focus and an accrual basis of accounting is used. © Revenue is recorded when earned and expenses are recorded when incurred. The basic El financial statements include a statement of net position, a statement of revenues, expenses and changes in net position, a statement of cash flows, and a reconciliation of operating profit (loss) to net cash provided by operating activities. These fmancial statements are followed by notes to the financial statements. In addition to the basic financial • statements, this report also contains required supplementary information pertaining to budgetary reconciliations. • The statement of net position presents information on the District's assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the District is improving or deteriorating. The statement of revenues, expenses, and changes in net position reports the operating revenues and expenses and nonoperating revenues and expenses of the District for the fiscal year. The difference, the net income or loss, is combined with any capital grants to determine the increase or decrease in net position for the fiscal year. The increase or decrease, combined with the net position at the end of the previous year, total to the net position at the end of the current fiscal year. The statement of cash flows reports cash and cash equivalent activities for the fiscal year resulting from operating activities, capital and related financing activities, noncapital and related financing activities and investing activities. The net result of these activities added to the beginning of the year cash balance, total to the cash and cash equivalent balance at ] the end of the current fiscal year. MDAI 3 LI r , 1MMOKALI- F WA I'I:R&SI?WLR I)IS 1 RIC 1 L ) Required Supplementary Information Management's 1)iscussion and Analysis ( 1 September 30, 2017 Lj Condensed Financial Statement 1 { Condensed financial information from the statements of net position and revenues,expenses and changes in net position L i for the)cars ended September 30,2017 and 2016 are as follows: E L ; September 30, 2017 2016 L i Current and other assets $ 13.71>040 $ 12,600,777 r Capital assets net 41.855,417 38,574,891 L 1 total assets $ 55 567,457 $ 51,175,668 0 Current liabilities $ 4,748,589 $ 2,355,795 Q Long-term liabilities 17,816,936 16,962,086 Total liabilities 22,565,525 19,317.881 0 Net position. Net Investment in capital assets 23,559,719 21,156,927 Restricted 2,053,147 2,221,704 Unrestricted 7,389,066 8,479,156 Total net position 33,001,932 31,857,787 Total liabilities and net position $ 55,567,457 $ 51,175,668 Operating revenue: Water service $ 3,109,415 $ 2,769,676 4fie Wastewater service 5,040,983 4,755,135 1 Meter service charges 644,698 599,235 Late fees 85,075 87,850 Reconnection/transfer fee 108,330 103,780 ..3 Miscellaneous revenue 79,609 64 263 Cross connection control fees 340,308 305,285 1 Total operating revenues 9,408,418 8,685,224 } Operating expenses. Water treatment and distribution expense 1,650,047 1,609,111 1 Wastewater treatment expense 1,722,412 1,664,779 Wastewater collection expense 689,821 818,494 -,a Customer service and administrative expense 1,216,838 1,226,687 J Maintenance 523,385 416,892 Total operating expenses,excluding depreciation 5,802,503 5,735,963 m� Depreciation 1,858,270 1,832,144 Total operatini;expenses,including deprecation 7,660,773 7,568,107 _] Operating profit(loss) 1,747,645 1,117,117 Net nonoperating revenue/expense (644,200) (617,300) ..3 Profit(loss)before capital,rants 1,103,445 499,817 Capital grants and contributions 40,700 44,059 ] Increase(Decrease)'n net position 1,144,145 543,876 Beginning of year net position 31,857,787 31 313,9[1 I End of year net position $ 33,001,932 S 31 857 787 (Continued) _i MDA II I L ; 1 1 MMOKAI,I I? WA FPR& SEWER DIS IRICT Required Supplementary Information ij Management's Discussion and Analysis September 30, 2017 3 1 he information contained in the condensed financial information table is used as the r basis for the discussion presented on the following pages, surrounding the District's L activities for the fiscal year ended September 30, 2017. Financial Highlights • The District completed a rate study and adopted Resolution 17-01. Rate increases went into effect on November 1,2016,October 1, 2017 and October 1,2018. • The District ended the year September 30, 2017, with a net position of $33,001,932 of which $23,559,719 represented the net investment in capital assets [J and $7,389,066 was unrestricted. The ending net position was $1,144,145 more [� than the net position at the beginning of the year. This was primarily the result of the implementation of the previous rate increases. • The District had profit before capital contributions,for the years ended September 30, 2017 and 2016 of$1,103,445 and 499,817 respectively. • The District has minimized interest expense, because of utilizing low interest loans for capital projects funded through USDA Rural Development. These interest rates range from 2.5% to 5.125%. The projects are a combination of loans and grants with the highest grant ratio to date being at 57% of the total 0 project. The Series 2013 Bond had the lowest interest rate ever received by the District at 2.5%. • In 2009 the District also qualified for an EPA loan and grant through the FDEP j State Revolving Loan Program. The District received $2,324,845 as "loan forgiveness" or grant funds, and$738,425 in the form of loans. • The District ended the year September 30, 2017 with cash and cash equivalents and investments of approximately $11,578,531. However, only $8,369,525 of this amount is available for operations, with the remainder of these assets being restricted for specific purposes and unavailable for the District's general use. • The statement of cash flows identifies the sources and uses of cash activity for the fiscal year. For fiscal year 2017, cash and cash equivalents increased by $830,362 compared to an increase of$984,649 for the year ended September 30, 2016. This change resulted primarily from spending funds for District capital projects. The servicing of the District's debt resulted in the spending of nearly $1,279,000. i I J I MDA III E3 IMMOKAI.Fl• WAIFR& SI?WI?R DIS I Rl('I Required Supplementary Information Management's Discussion and Analysis El September 30, 2017 1 Revenue 'I he following charts show the major sources of operating revenues for the years ended Li September 30,2017 and September 30,2016: Operating revenue for the year ended Operating revenue for the year ended September30,2017 September30,2016 • 1% a1% a4% 1% a1% . 1% ■ 1%_ .3% a 7%_... ® 7% C' I Water service R Wastewater service to Meter service charges • Late fee charges • Reconnection/transfer fee Miscellaneous revenue I Cross Connection Control Fee As in previous years, the wastewater service revenues make up more than half of the revenues, accounting for with 53% in 2017 and in 55% in 2016. Water revenue accounted for 33% in 2017 and 32% in 2016. Meter service charges, late fee charges, reconnection fees, and miscellaneous revenues also remained constant between the two years. Cross connection control fees increased to 4%in 2017 from 3% in 2016. 1 The District was successful in receiving an increase in the District boundaries by the Florida Legislature, during the Spring 2005 session. This change in the boundaries is expected to result in increased opportunities for new users, in future years. We will be working on a capital improvement plan, in conjunction with the Immokalee Master Plan, to identify the needs within the next fiscal year. In addition, the District received donations from large landowners to pay for the cost of a Master Plan for the District. That Master Plan was completed during 2009,however the landowners have had to delay implementation of new housing plans, due to a downturn in the national and local economy. MDA IV r i:<. i IMMOKAI,1.1 WA 11.R.& SI WIFR DIS I RI('I Required Supplementary Information Management's Discussion and Analysis September 30, 2017 Expenses the Following charges show the major sources of operating expenses For the years ended September 30. 2017 and September 30,2016: Operating expenses for the year Operating expenses for the year ended September 30,2017 ended September 30,2016 n 24% • 22% 24% • 21% 0 ■ 6% • 7% 411111PAN 22% • ■ 16% ■ 9% • 16% 11% 22% a a:..4 ■ Water ® Wastewater rzi Wastewater treatment ant treatment collection distribution ■ Customer a Maintenance Depreciation service and administrative Due to the significant investments the District has in capital assets, depreciation continues to be one the largest operating expenses at 24% of total operating expenses in both years. Unlike the other expenses listed, depreciation is not a cash expense. The largest department, by expenses, at 22% of total expenses is for wastewater treatment, which remained constant between 2017 and 2016. This department is one the largest, with eight full time employees and one part time employee. One of the largest expenses, excluding salaries and benefits, in this department is Residuals Management, which accounted for over $137,000 in expenses in 2017. This expense was reduced due to the Schwing Bioset project. which was completed in May 2014. The expenses were over $400,000 per year before the project was completed. The second highest department by expenses is the water treatment and distribution department with twelve full time employees. The related expenses of 22% were an increase of 1% between 2017 and 2016. We are replacing meters that are under registering, with new Neptune auto-read meters. In addition, all new residential services are required to use the Neptune auto-read meters. This will reduce the need for additional meter readers in the MDA V I IMMOKAI 1.1 WA I ER&SFWER DISTRICT j Required Supplementary Information Management's Discussion and Analysis September 30, 2017 j water department and will improve the efficiency and accuracy of the meter reading I process. 1000 0 of the meters arc now automated. j I he third largest department is the administration department, which consists of nine full time employees and one part time employee. The related expenses remained constant at i,_.1 16%of total expenses in 2017 and 2016. The largest expense in this department. other than salaries and benefits is engineering fees. lhe next largest department by expenses is the wastewater collection department, which ` consists of five full time employees. The related expenses decreased to 9% in 2017 El compared to 11(!o for 2016. El the smallest department is the maintenance department, which was created in fiscal year 2004 to reduce maintenance-related expenses from third-party vendors. It consists of six full time employees. It increased by one percent to 7%of total expenses in 2017, from 6% in 2016. Labor costs in this department, except for those relating to the supervisor, are charged to the appropriate departments, based on the maintenance projects they are working on. Expenses by category are depicted in the charts below for 2017 and 2016. Operating Expenses by Category for year Operating Expenses by Category for year - ending September 30,2017 ending September30,2016 6% 0 24%iiii 46% 24% 6 45% up 24/0 25% �.Wages Sljenefis ■Material and Supplies OWages88enefts ■Material and Supplies [Depreciation GOtherOperating Expense ODepree,aDon OOtherOperating Expense 1 Wages and benefits increased by one percent to 46%of the expenses in 2017,making it the highest expense category. Materials and supplies decreased by one percent to 24%. Depreciation expense increased by remained constant at 24%, and other operating expenses remained constant at 6%. The District continues to monitor costs. We did give a cost of living increase and merit increases, of up to 4%, based on evaluations. We also allowed promotions for those employees that met the specified criteria and training. The District bids out contracts for I major expenses, such as health insurance, property insurance, residuals management and MDA VI rz L . E IMMOKALFF WA I FR&SI?WI?R DISTRICT Required Supplementary Information r J Management's Discussion and Analysis [ ' September 30, 2017 chemicals. The District has an arrangement with Collier County Fleet Management [j allowing the District to access their fuel tanks, located in Immokalce, to take advantage of bulk-usage savings. "fhe District utilizes SUNCOM, through the Florida Department of j Management Services for long distance services. General Fund Budgetary IIighlights [ Over the course of the year, the Board of Commissioners amended the District budget two [] times. These budget amendments were done primarily to a) increase operating revenue, increase depreciation and adjust designated funds and to b) decrease operating expenses and capital funding primarily related to the District's projects, and adjust designated funds. Original to Final Budget Variance Total operating revenues were increased by approximately $623,766 more than originally C] budgeted, and total operating expenses, excluding depreciation expense, were decreased by over$623,766 (8%). 11 [ l Contributed capital customers was increased by over$10,000. Contributed capital developers,was decreased by $70,000, and other non-operating revenue was decreased by over$11,000. l Final Budget to Actual Variance Total operating revenue was approximately$2,500 less than budgeted. Over the five departments,approximately$18,476 in budgeted operating expenses were not expended. 1 I 1 MDA VII E IMMOKALEE WATER& SEWER DISTRICT Required Supplementary Information Management's Discussion and Analysis [ ' September 30, 2017 r ' L [ , Capital Assets r 1 he District's net capital assets as of September 30, 2017 and 2016 amounted to $41,855,417 and $38,574,891 (net of accumulated depreciation), respectively. This investment in capital assets includes land, construction in progress, buildings and improvements,water and wastewater plants and systems,and machinery and equipment. Net capital asset additions included the following for the years ended September 30: 2017 2016 Construction in progress $ 3,826,685 $ 201,699 C3 Buildings and improvements 35,678 - Water and wastewater plants and systems 652,024 581,207 r ' Machinery and equipment 127,281 268,469 $ 4,641,668 $ 1,051,375 Construction in progress for 2017 was primarily for the AC Water Main and Undersized r Replacement Project funded through USDA. The District primarily acquires its assets with the proceeds from federal capital grants and revenue bonds, supplemented by user fees. USDA Rural Development is the primary source of proceeds, because they offer low interest loans for capital improvements. We also received contributed capital in the form of new water and sewer infrastructure from developers. New equipment purchases and a system expansion are part of the District's capital improvement program. Capital purchases are acquired using bids, or Florida State Contract prices. For our ongoing meter replacement program we utilize the bid prices for 1 Neptune® meters from the City of Cape Coral. In Fiscal Years 2017 and 2016, we used our own personnel to continue the meter replacement program. Debt As of September 30, 2017,the District had$16,278,969 of revenue bonds outstanding. The total amount outstanding for these categories of debt decreased, to reflect payments made j by the District in the amount of$538,000. -1 MDA VIII L3 1MMOKALEE WAIliR& SEWER DIS1RR'"1 Required Supplementary Information r , t Management's Discussion and Analysis L l September 30, 2017 Unrestricted Net Assets t , E Y As of September 30,2017,the District had designated$7,893,091 in unrestricted net assets, as recommended by their auditor. The District designated $1,000,000 for emergencies, L $3,300,690 for operations, $463,984 for vehicle replacement, $539,145 for capital equipment,and$2,589,272 for maintenance reserve. l 1 Upcoming Significant Changes or Impacts Rate Increase: The District hired a rate consultant, PRMG, to determine what rate increase was needed. The Board adopted rate increases of 8.5°o on water and 2.5°o for wastewater to go into effect on November 1,2016, October 1, 2017 and October 1,2018. Residential - There are several residential developments that are expected to impact the revenues of the District during the next fiscal year. L Arrowhead PUD, which will consist of over 1,200 residential units at completion, has completed the first phase of their water and wastewater infrastructure. The Crestview Apartments Phase I & II (304 units) were completed and connected. The first and second phase of approximately 125 single-family units were also completed. Building on these homes had been delayed due to the impact of the nationwide housing market. Habitat for Humanity continues to build homes in Immokalee. In December 2006, they completed the infrastructure in the Independence Subdivision Phases II, with 167 homes. Liberty PUD, with 162 single family homes has also been connected, to our system. They have completed the work for the Faith PUD, which included an additional 175 homes; and the Kaicasa PUD, which will consist of 400 homes. Habitat did say that they were renewing their irrigation permit on the Kaicasa PUD. This is the last place that they own in Immokalee to build homes. Other Residential: The nearby Ave Maria University campus is expected to eventually impact Immokalee with increased demand for low cost residential homes for workers. Discussions were held in previous years with Lennar Homes regarding the possibility of 5,000 to 6,000 homes in the Serenoa subdivision, however, that did not materialize following the nationwide slump in housing prices. Barron Collier has since acquired that property, and they have not yet indicated what they plan to use the property for. Collier Enterprises has withdrawn their plans to build 400 homes near the Florida Tradeport. J MDA IX to IMMOKAI,1?E WATER& SFWER DISTR[C"I Required Supplementary Information Management's Discussion and Analysis September 30,2017 Commercial E The I7DC continues to market the Florida Tradeport, but has been unable to secure a key industry for that location. Plans were previously approved for the CCAA USDA r Manufacturing Building at the airport, and that building is complete. Plans were also approved for First Stop Grocery on South IS` Street. That building replaces a building that was condemned years ago. Collier County Public Schools completed construction on the r new Bethune Education Center. Collier County Parks completed the upgrade of their South Park Community Center. We were approached by Barron Collier regarding a "big- [ ; box" application for the intersection of Westclox and IIWY 29. We completed the sewer line for the "Big Box" as well as for the new Suncoast Schools Federal Credit Union stand ❑ alone banking center, and the units in between. To date there has been no other information regarding the "Big Box". Family Dollar has completed a new building on New Market ❑ Road. The Seminole Tribe Casino approached the District to begin the process of taking CI over their existing utility service to the Casino as well as their new Hotel. They connected to our system in December 2014. A new Family Dollar and Taco Bell were completed in 2015 on North 15th Street. The Boys and Girls Club completed a new center in Immokalee on Roberts Avenue late in 2016. Saint Matthews House replaced their Thrift Store on Main Street. First 1 Bank is building a new facility on North 15th Street,also. Our Wastewater Expansion Project began construction during 2012. It included an expansion from 2.5 mgd to 3.25 mgd at the existing wastewater facility. It also included a sewer force main from Arrowhead PUD to the wastewater plant. It was completed in 2014. We began the process of switching our Residuals Management process to the Schwing Bioset Process. During 2013 we had begun the building permit process. It was completed in May 2014.This project has significantly reduced our residuals management expenses. We began construction on the A/C and Undersized Water Lines Replacement Project j during the 2017 Fiscal Year. This project is over $20,000,000 and is primarily funded by USDA. We will be replacing the majority of the water lines in Immokalee. This project was be broken down into four phases, so that smaller contractors would be able to bid on the project. It is expected to be completed by the end of the 2018 Fiscal Year. Request For Information This financial report is intended to provide an overview of the finances of the District for those with an interest in this organization. Questions concerning any information within this report, may be directed to the Executive Director of the District, 1020 Sanitation Road, Immokalee,Florida 34142. MDA X J Page 5 of 51 2017 2016 LIABILITIES AND NET POSITION r CURRENT LIABILITIES E Accounts and contracts payable $ 2,641,709 $ 465,142 r Other accrued expenses 102,316 104,688 Ls TOTAL CURRENT LIABILITIES 2,744,025 569,830 s CURRENT LIABILITIES (Payable from Restricted Assets) Revenue bonds payable, current portion 563,000 538,000 Loans payable -SRF, current portion 34,132 33,267 Accrued revenue bond interest 52,956 54,855 Retainage payable 148,493 - Customer deposits 1,205,983 1,159,843 } TOTAL CURRENT LIABILITIES (Payable from Restricted Assets) 2,004,564 1,785,965 LONG-TERM LIABILITIES Revenue bonds payable, net of current portion 15,715,969 16,278,969 Loans payable- SRF, net of current portion 533,597 567,728 Bond anticipation note 1,449,000 - Accrued compensated absences 118,370 115,389 TOTAL LONG-TERM LIABILITIES 17,816,936 16,962,086 TOTAL LIABILITIES 22,565,525 19,317,881 NET POSITION Net investment in capital assets 23,559,719 21,156,927 Restricted 2,053,147 2,221,704 Unrestricted 7,389,066 8,479,156 TOTAL NET POSITION 33,001,932 31,857,787 TOTAL LIABILITIES AND NET POSITION $ 55,567,457 $ 51,175,668 r ) r L ' IMMOKALEE WATER & SEWER DISTRICT Page 6 of 51 STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION Years ended September 30,2017 and 2016 ri L 2017 2016 ` OPERATING REVENUES El Cross connection control fee $ 340,308 $ 305,285 Water service 3,109,415 2,769,676 t t Wastewater service 5,040,983 4,755,135 Meter service charge 644,698 599,235 1 I ate fees 85,075 87,850 Reconnect and transfer fees 108,330 103,780 r Miscellaneous charges,fees and other income 79,609 64,263 L TO cm_OPFRATING REVENUES 9 408,418 8,685,224 D OPERATING EXPENSES Water treatment and distribution 1,650,047 1,609,1 11 Ci Wastewater treatment 1,722,412 1,664,779 Wastewater collection 689,821 818,494 D Customer service and administrative 1,216,838 1,226,687 Maintenance 523,385 416,892 El TO I AL OPERATING EXPFNSES El PRIORI 0 DEPRECIATION 5,802,503 5,735,963 r1 Depreciation 1,858,270 1,832,144 , TOTAL OPERATING EXPFNSFS 7,660,773 7,568,107 OPERATING PROFI r(1 OSS) 1,747,645 1,117,117 NON-OPERATING REVENUES(EXPENSES) -=+ Interest income 57,166 54,869 Gain(loss)on disposal of fixed assets (11,359) 13,072 Interest expense (705,742) (730,557) t Bad debt expense adjustment (19,294) 10,042 ---t Other income 35,029 35,274 •-1 NET NON-OPERATING EXPENSES (644,200) (617,300) PROFIT(LOSS)BEFORE CAPITAL i CONTRIBUTIONS 1,103,445 499,817 1 CAPITAL CONTRIBUTIONS USDA-grants - - Customers 40,700 44,059 11 Developers - - TOTAL CAPITAL CONTRIBUTIONS 40,700 44,059 1 INCREASE(DECREASE)IN NET POSITION 1,144,145 543,876 NET POSITION-Beginning of the year 31,857,787 31,313,911 NET POSITION-End of the year $ 33,001,932 $ 31,857387 1 The accompanying notes are an integral part of this statement. LI r- 1 ' Page 7of51 El r 2017 2016 t. ; RECONCILIATION OF OPERATING PROFIT TO NET CASH PROVIDED BY OPERATING ACTIVITIES: 4 J r > OPERATING PROFIT (LOSS) $ 1,747,645 $ 1,117,117 j Adjustments to reconcile operating profit to E3 net cash provided by operating activities: ® Depreciation(non cash) 1,858,270 1,832,144 Increase(decrease) in accrued compensated absences (non cash) 2,981 14,832 Increase decrease in accounts receivable, net (Increase) (256,591) (4,446) rL- (Increase)decrease in other receivables 200 1,232 (Increase) decrease in inventory (80,883) (85,058) L (Increase) decrease in prepaid expenses (3,307) (6,338) Increase(decrease) in accounts and contracts payable 2,176,567 148,822 Increase(decrease) in other accrued expenses (2,372) 27,227 Increase (decrease) in customer deposits 46,140 81,761 TOTAL ADJUSTMENTS 3,741,005 2,010,176 NET CASH PROVIDED BY OPERATING ACTIVITIES $ 5,488,650 $ 3,127,293 1 c I , L ' IMMOKALEE WATER& SEWER DISTRICT Page 8 of 51 NOTES TO THE FINANCIAL STATEMENTS September 30,2017 and 2016 r ; L 1 NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES r-, Organization rI Immokalee Water& Sewer District(the "District")was created by Laws of Florida, (Section) Chapter 78-494 on July 5, 1978, under the provisions of Florida Statute, I Chapter 153.53 and 189.031 for the purpose of providing water and sewer services to Immokalee, an unincorporated area of eastern Collier County, Florida. The E] District's enabling legislation was repealed, updated,reenacted, and codified by Laws of Florida, Chapter 98-495 on May 28, 1998. On July 1, 2005,Laws of Florida, Chapter 2005-298 amended Laws of Florida, Chapter 98-495 by expanding the District's boundaries. On June 10,2015, Laws of Florida,Chapter 2015-205 amended Laws of Florida, Chapter 98-495 to provide for salaries/honorariums for elected District Board members up to $250 each per month. The District owns,operates, maintains and regulates its water and sewer plants and systems as an independent special district of the State of Florida. The District is governed by a seven (7)member Board of Commissioners appointed by the Governor of the State of Florida. The Board of Commissioners(the "Board") administer the District, independent from any other local governing body and serve staggered four(4)year terms. Reporting Entity Immokalee Water& Sewer District is financially independent of all other units of government. It is responsible for financing its own activities and the payment of its own debt. The Board of Commissioners(the"Board")has the responsibility to employ management that is responsible for the day-to-day operations of the District. The Board has absolute authority over all funds included in the entity. Immokalee Water& Sewer District is not a component unit of any other governmental unit. The District adheres to Statement of Governmental Accounting Standards Board (GASB) Statement Number 14, "Financial Reporting Entity",as amended by GASB Statement Number 39, "Determining Whether Certain Organizations Are Component Units" and GASB Statement Number 61, "The Financial Reporting Entity: Omnibus- An Amendment of GASB Statements No. 14 and No. 34". These Statements require the financial statements of the District(the primary government)to include its component units, if any. A component unit is a legally separate agency for which the ri L-.; IMMOKALEE WATER& SEWER DISTRICT Page 9 of 51 NOTES TO TILE FINANCIAL STATEMENTS September 30, 2017 and 2016 L � NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,CONTINUED Reporting Entity,continued L primary government is financially accountable or organizations whose exclusion would L a cause the financial statements to be misleading because of the nature and significance E1 of their relationship with the primary government. Financial accountability is determined by the primary government's ability to appoint the voting majority of the entity's board, impose its will on the organization, the existence of a financial benefit/burden relationship or fiscal dependency. Based on this criteria, there are no component units included or required to be included in the District's financial [� statements. The Immokalee Water& Sewer District adheres to the requirements of Governmental Accounting Standards Statement Number 33 "Accounting and Financial Reporting for Non-Exchange Transactions." As such, grant revenue is recorded as non-operating revenue and is reflected on the Statements of Revenues, Expenses and Changes in Net Position. The following is a summary of the significant accounting polices used in the preparation of these financial statements: The District adheres to the requirements of Governmental Accounting Standards Board Statement Number 34, "Basic Financial Statement and Management's Discussion and Analysis for State and Local Governments" (GASB 34). The government-wide financial statements along with the notes to the financial statements and the RSI,as noted below comprise the basic financial statements. The basic financial statements of the District are comprised of the following: - Government-wide financial statements -Notes to the financial statements - Required supplementary information other than MD&A L I [ f IMMOKALEE WATER & SEWER DISTRICT Page 10 of 51 NOTES TO TILE FINANCIAL STATEMENTS September 30,2017 and 2016 r . i C NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING L . POLICIES, CONTINUED r I r , Government-Wide Financial Statements L fhe government-wide financial statements(i.e.,the Statement of Net Position and the Statement of Revenues, Expenses and Changes in Net Position)report information r on all of the activities of the District and do not emphasize fund types. These business-type activities comprise the primary government. Business-type activities rely on user fees and charges to support its activities rather than taxes and intergovernmental revenues. The purpose of the government-wide financial statements is to allow the user to be able to determine if the District is in a better or worse financial position than the prior year. The District uses only one fund. rz ` 1 Government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis of accounting, revenues, expenses, gains, losses,assets, and liabilities resulting from exchange and exchange-like transactions are recognized when the exchange takes place. Revenues, expenses, gains, losses, assets, and liabilities resulting from nonexchange transactions are recognized in accordance with the requirements of GASB Statement Number 33-"Accounting and Financial Reporting for Nonexchange Transactions." Amounts paid to acquire capital assets are capitalized as assets in the government-wide financial statements, rather than reported as expenditures. Proceeds of long-term debt are recorded as liabilities in the government-wide financial statements,rather than as other financing sources. Amounts paid to reduce long-term indebtedness of the reporting government are reported as a reduction of the related liability in the government-wide financial statements,rather than as expenditures. The Statement of Revenues,Expenses and Changes in Net Position demonstrates the degree to which the direct expenses of a given function are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include: 1)charges to customers or applicants who purchase,use or directly benefit for goods, services,or privileges provided by a given function and 2)grants and contributions that are restricted to meeting the operational or capital improvements of a particular function. 13 IMMOKALEE WATER & SEWER DISTRICT Pagc 11 of 51 j NOTES TO TILE FINANCIAL STATEMENTS r ., September 30, 2017 and 2016 NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,CONTINUED Li r, Government-Wide Financial Statements,continued Operating revenues are considered to be revenues generated by services performed and/or by fees charged such as water and sewer usage, connection, inspection fees r L ,4 and flow testing. L3 Budgetary Information As required,the District uses only one fund to account for its activities and,therefore, it is considered a major fund. The District has elected to report budgetary comparison of its major fund as required supplementary information(RSI). r Fund Accounting The District's financial practices are based upon fund accounting concepts. A fund is defined as a fiscal and accounting entity with a self-balancing set of accounts, recording cash and other financial resources,together with all related liabilities and net assets (fund equity balances) and changes therein. The accompanying financial statements reflect Business-Type Activities and are classified as a single Proprietary Fund Type-Enterprise Fund. This fund accounts for the cost of services provided by the District as well as the revenues earned by the District. `-j Business -Type Activities-Proprietary Fund Type Enterprise Fund -An enterprise fund is used to account for operations(1)that are financed and operated in a manner similar to private business enterprises where the intent of the governing body is that the costs(expenses,including depreciation)of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or(2) where the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance,public policy,management control, accountability, or other purposes. r t t r r IMMOKALEE WATER& SEWER DISTRICT Page 12 of 51 r ' NOTES TO THE FINANCIAL STATEMENTS r; September 30,2017 and 2016 [3 NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,CONTINUED r r , Measurement Focus Proprietary funds arc accounted for on a flow of economic resources measurement focus. With this measurement focus,assets and liabilities associated with the operation of these funds are included on the balance sheet. Proprietary fund-type operating statements present increases (i.e. revenues) and decreases (i.e. expenses) in total net position. Operating revenues and expenses result from providing water distribution as well as wastewater collection and treatment to members within the District's boundaries. Generally,other revenues and expenses are treated as [� non-operating revenues and expenses. When both restricted and unrestricted resources are available for use,it is the District's policy to use restricted resources first,then unrestricted resources as they are needed. Basis of Accounting The proprietary fund type is presented on the accrual basis of accounting. Under the accrual basis of accounting,revenues are recorded in the period earned and expenses are recorded in the period the liability is incurred. Budgetary Process The District operates under a fixed budget for control purposes. The budget and amendments, if any, are approved by the Board of Commissioners. The budget is prepared on a Non-GAAP accrual basis,whereby items such as capital expenditures and debt principal payments are budgeted as expenses. The annual budget serves as the legal authorization for expenditures. Expenditures cannot legally exceed the total amount budgeted. All budget amendments,which change the legally adopted total appropriation, are approved by the Board. The District follows these procedures in establishing budgetary data. 1. During the summer of each year, management submits to the Board of Commissioners a proposed operating budget for the fiscal year commencing on October 1. The operating budget includes proposed expenditures and the means of financing them. 1 [1 rj IMMOKALEE WATER& SEWER DISTRICT Page 13 of 51 j NOTES TO TIIE FINANCIAL STATEMENTS September 30,2017 and 2016 NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,CONTINUED r , Budgetary Process, continued € j 2. Public hearings are conducted to obtain citizen comments. 3. The budget is adopted by approval of the Board of Commissioners. 4. Budget amounts, as shown in these financial statements, are as originally adopted or as amended by the Board of Commissioners. 0 5. The budget is adopted on a basis consistent with accounting principles generally accepted in the United States of America,except as reflected in the supplementary information and as noted above. 6. The level of control for appropriations is exercised at the fund level. 7. Appropriations lapse at year-end. The Board of Commissioners did amend the budget during the fiscal year ended September 30, 2017 to increase total budgeted net revenue by$623,766 and an increase in budgeted expenses(including net non-operating revenue and expense)by $623,766. Cash For the purpose of the Statements of Cash Flows,the District considers all highly liquid investments, including both unrestricted and restricted, with a maturity of three months or less, when purchased,to be a cash equivalent, in accordance with District policy. Accounts Receivable/Allowance for Doubtful Accounts Receivables include user fees for water and wastewater services provided as part of the operations by the District. The accounts receivable are recorded net of the estimated allowance for doubtful accounts. The District operates using an allowance and collection policy that ultimately provides for discontinuance of water service due to nonpayment by the user. The policy also provides for application of the respective 1 user's security deposit upon certain criteria. Additionally,the policy requires a user landlord to satisfy any outstanding user fees(tenant)prior to allowing services to a future tenant for that landlord. 71 I 1 IMMOKALEE WATER& SEWER DISTRICT Page 14 of 51 NOTES TO TILE FINANCIAL STATEMENTS September 30,2017 and 2016 - , NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED Inventory Inventory consists of utility system parts and hardware supplies at year end. The inventories arc valued at cost, which approximates market. The method used to determine the value of the inventory is the FIFO (first in-first out) method. Capital Assets and Depreciation Capital assets acquired by proprietary funds are reported in those funds at historical cost or estimated historical cost if actual historical cost is not available. Donated assets are reported at estimated fair market value at the time received. Certain infrastructure-type fixed assets consisting of certain improvements such as roads, curbs, gutters and lighting systems have not been capitalized, as the District does not generally incur such expenditures. However,the systems'distribution and collection lines and pumps are capitalized and depreciated as part of the overall system. Assets acquired with a cost or fair value of$1,000 or more and a useful life of 1 year or more are capitalized. Maintenance, repairs and minor renovations are .20 not capitalized. The acquisition of land and construction projects utilizing resources received from Federal and State agencies are capitalized when the related expenditure is incurred. ..j The capital assets are depreciated using the straight-line method of depreciation over the following estimated useful lives: Ti Asset Years Buildings/Plant and Plant Equipment 10-40 Capital Improvements, Distribution Lines 5-40 Furniture, Fixtures and Equipment 3-20 Vehicles 3-7 Restricted Assets These monies are restricted by the applicable debt covenants and grant agreements or as customer deposits. C3 r* E IMMOKALEE WATER& SEWER DISTRICT Page 15 of 51 NOTES TO TILE FINANCIAL STATEMENTS September 30, 2017 and 2016 r NOTE A- ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED L Vacation Leave and Other Compensated Absences r C. _3 Accumulated unpaid vacation pay is accrued when incurred in the proprietary fund. The method of accrual is in accordance with Statement of Governmental Accounting Standards Board Number 16, "Accounting for Compensated Absences" (GASB L• . 16). This Standard provides for the measurement of accrued vacation leave and other compensated absences using the pay or salary rates in effect at the balance �� sheet date. It also requires additional amounts to be accrued for certain salary related payments associated with the payment of compensated absences such as [] FICA and retirement benefits only. Vacation is accrued and paid at termination. J Encumbrances 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 by the District because at • J present it is not considered necessary to assure budgetary control or to facilitate effective cash planning and control. Membership(Connection) Fees Water(connection) service installation fees are dedicated for the system expansion and are treated as contributed capital but recognized as revenue when received(due to the District)by the District. Income Taxes The District, as a governmental unit, is exempt from income taxes under current provisions of the Internal Revenue Code and Florida State Law. Fund Equity Grants, entitlements or shared revenues which are externally restricted for capital acquisition or construction are treated as contributed capital but recorded as revenue when due to the District. Contributed or donated fixed assets are also treated as contributed capital but recorded as revenue when due the District. Reserved retained earnings represent those portions of fund equity legally restricted by debt covenants for current and future debt service. tI r L J{{ L. 1 IMMOKALEE WATER& SEWER DISTRICT Page 16 of 51 [] NOTES TO THE FINANCIAL STATEMENTS September 30,2017 and 2016 NOTE A- ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED r/ Use of Estimates The preparation of basic financial statements in conformity with accounting principles ` generally accepted in the United States of America requires management to make LJ estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and 0 the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Q Reclassifications rCertain amounts in the financial statements have been reclassified to conform with the current year presentation. These reclassifications had no effect on the results of operations or net assets. Subsequent Events Subsequent events have been evaluated through January 31,2018,which is the date the basic financial statements were available to be issued. Application of FASB Pronouncements to Proprietary Funds In accordance with Governmental Accounting Standards Board (GASB) Statement Number 20, "Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities That Use Proprietary Fund Accounting", the District has elected not to apply those FASB Statements and Interpretations issued after November 30, 1989. Only GASB pronouncements issued after this date will be adopted by the District. Accounting Pronouncement GASB No. 42 The District adheres to Government Accounting Standards Board Statement Number 42, "Accounting and Financial Reporting for Impairment of Capital Assets and for Insurance Recoveries" (GASB 42). GASB 42 establishes accounting and financial reporting standards for impairment of capital assets. r " IMMOKALEE WATER& SEWER DISTRICT Page 17 of 51 f NOTES TO THE FINANCIAL STATEMENTS September 30, 2017 and 2016 NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED Accounting Pronouncement GASB No. 42, continued r A capital asset is considered impaired when its service utility has declined significantly and unexpectedly. Governments are required to evaluate prominent events or [ changes in circumstances affecting capital assets to determine whether impairment of a capital asset has occurred. Such events or changes in circumstances that may be indicative of impairment include evidence of physical damage,enactment or approval of laws or regulations or other changes in environmental factors,technological changes or evidence of obsolescence,changes in the manner or duration of a capital asset,and construction stoppage. A capital asset generally should be considered impaired if both(a)the decline in service utility of the capital asset is large in L magnitude and (b)the event or change in circumstance is outside the normal life cycle of the capital asset. The District incurred no capital asset impairment activity for the years ended September 30, 2017 and 2016. • NOTE B- CASH AND INVESTMENTS iki At September 30, 2017 and 2016, cash and cash equivalents (including both restricted and unrestricted cash and cash equivalents)were$10,490,168 and $9,659,805 respectively, including unrestricted cash on hand of$8,400 and$3,400, respectively. Deposits The District's deposit policy allows deposits to be held in demand deposits,savings accounts, certificates of deposit,direct obligations of the U.S.Treasury,Local Government Surplus Trust Funds,direct obligations of Federal agencies and instrumentalities and money market accounts. All cash deposits are held in qualified public depositories pursuant to Florida Statutes Chapter 280, "Florida Security for Public Deposits Act." L L I IMMOKALEE WATER & SEWER DISTRICT Page 18 of 51 NOTES TO THE FINANCIAL STATEMENTS September 30, 2017 and 2016 r L NOTE B- CASH AND INVESTMENTS, CONTINUED Deposits, continued Insured/ Bank Carrying Collateralized Balance Amount F .= September 30,2017 EJ Unrestricted Depository accounts $ 473,643 $ 473,643 $ 478,212 Money market 6,794,550 6,794,550 6,794,550 7,268,193 7,268,193 7,272,762 0 Restricted Depository accounts 1,239,865 1,239,865 1,239,865 Money market 1,969,141 1,969,141 1,969,141 3,209,006 3,209,006 3,209,006 $ 10,477,199 $ 10,477,199 $ 10,481,768 ` September 30, 2016 Unrestricted Depository accounts $ 298,907 $ 298,907 $ 199,440 Money market 6,351,051 6,351,051 6,351,051 Atto 6,649,958 6,649,958 6,550,491 Restricted Depository accounts 1,176,589 1,176,589 1,176,589 Money market 1,929,326 1,929,326 1,929,326 3,105,915 3,105,915 3,105,915 $ 9,755,873 $ 9,755,873 $ 9,656,406 Unrestricted and Restricted Deposits The District's deposits were categorized to give an indication of the level of risk assumed by the District at year-end. All deposits were fully insured by Federal Depository Insurance or collateral pursuant to the Public Depository Act(Florida Statute 280). As such,the District resolved to abide by Florida Statute 218.415(17). 1 1 L I IMMOKALEE WATER& SEWER DISTRICT Page 19 of 51 LJ NOTES TO TILE FINANCIAL STATEMENTS September 30,2017 and 2016 Li NOTE B - CASII AND INVESTMENTS, CONTINUED Restricted Deposits Restricted deposits arc required by the District's outstanding debt agreements as well as grant and other agreements. Restricted deposits also include customer deposits. Fl LI Restricted deposits (canying amounts)consist of the following at September 30: 2017 2016 Construction account $ 8,238 $ 8,168 Bond sinking fund reserve 1,513,593 1,529,549 Department of Environmental Protection- Deep Well Injection Reserve 233,842 232,676 Customer deposits 1,212,500 1,153,359 • Loan debt service 24,865 20,729 Special assessment collections 215,968 161,434 $ 3,209,006 $ 3,105,915 Investments Florida Statutes and the District's investment policy authorize investments in certificates of deposit (CD's). Certificates of deposit whose values exceed the • amount of the Federal Depository Insurance are collateralized pursuant to the Public • } Depository Security Act of the State of Florida. The District had$1,088,363 and $1,075,700 (bank and book balance) invested in certificates of deposit at September 30, 2017 and 2016, respectively. The CDs carried interest rates of 1.69%and 1.51% at September 30, 2017. The CDs mature on December 4, 2022 and July 1 17, 2021, respectively. NOTE C- ACCOUNTS RECEIVABLE Accounts receivable consist of the following at September 30: i 2017 2016 Customer receivables (water/sewer) $ 865,368 $ 608,778 Less allowance for doubtful accounts (103,003) (83,710) Net receivables $ 762,365 $ 525,068 1 r . E 1 i L ; IMMOKALEE WATER& SEWER DISTRICT Page 20 of 51 NOTES TO TILE FINANCIAL STATEMENTS September 30, 2017 and 2016 NOTE D - GRANT AND ASSESSMENT RECEIVABLES Z 2 Grant and assessment receivables consisted of the following at September 30: r 2017 2016 r , Special Assessment 848,705 901,754 $ 848,705 $ 901,754 The District levied a special assessment of$1,060,900 on system users benefitting from the system improvements funded by the $4,932,000 Series 2013 Revenue Bonds during the year ended September 30, 2014. The assessment collections are restricted to principal reduction of the Series 2013 Revenue Bonds. The assessment was initially levied through the Collier County Tax Collector on November 1, 2013. The assessment is a one time assessment payable in full or over 20 years by the affected system users. The special assessment had the following activity for the years ended September 30: rj 2017 2016 Balance, October 1 $ 901,754 $ 954,803 Assessment levied - - Collections (53,049) (53,049) $ 848,705 $ 901,754 U 7 1 aM� .w :;} I r t L 'r L } IMMOKALEE WATER & SEWER DISTRICT Page 21 of 51 I i NOTES TO THE FINANCIAL STATEMENTS September 30,2017 and 2016 NOTE E - CAPITAL ASSET ACTIVITY The following is a summary of changes in capital asset activity for the year ended September 30,2017: El Balance Balance October I Adjustments/ September 30 2016 Additions Retirements Reclassifications 2017 Capital Assets Not Being Depreciated: La Land $ 2,645,941 $ - S - $ - $ 2,645,941 Construction in Pro ress 484,882 3,826,685 (143,958) 4,167,609 rotal Capital Assets Not Being Depreciated 3,130,823 3,826,685 - (143,958) 6,813,550 Capital Assets Being Depreciated. Buildings&Improvements 1,509,938 35,678 - - 1,545,616 Water and Wastewater Plant and Systems 61,902,278 1,047,658 (395,634) 143,958 62,698,260 Machinery&Equipment 3,201,123 240,134 (112,853) - 3,328,404 Total Capital Assets Being Depreciated 66,613,339 1,323,470 (508,487) 143,958 67,572,280 Less Accumulated Depreciation: Buildings&Improvements (765,649) (38,004) - - (803,653) Plant and Systems (27,551,084) (1,588,640) 384,275 - (28,755,449) Machinery&Equipment (2,852,538) (231,626) 112,853 - (2,971,311) J Total Accumulated Depreciation (31,169,271) (1.858,270) 497,128 - (32,530,413) 77 Capital Assets,Net $ 38,574,891 $ 3,291,885 $ (11,359) $ 41,855,417 Related debt (18,295,698) Net Investment in Capital Assets $ 23,559,719 1 • `- ! IMMOKALEE WATER& SEWER DISTRICT Page 22 of 51 NOTES TO THE FINANCIAL STATEMENTS J September 30,2017 and 2016 NOTE E - CAPITAL ASSET ACTIVITY, CONTINUED l he depreciation expense for the years ended September 30,2017 and 2016 was $1,858,270 and $1,832,144, respectively. During the years ended September 30, 2017 and 2016,the District continued construction on its system-wide improvements. The District capitalized interest on the project in the amount of$0 and $0 for the years ended September 30, 2017 and 2016. NOTE F- RETIREMENT PLANS Plan Description and Provisions Section 401(a) Plan The District historically offered all its employees the opportunity to participate in an individual government employer-sponsored defined contribution 414(h) Money Purchase Pick-Up Retirement Plan and Trust(the "Plan"). Effective January 1,2009, the District restated its retirement plan. As such,the restated plan qualifies as a 401(a)Money Purchase defined contribution plan. The Plan is administered by a third party administrator. The employer funds substantially all the administrative costs of the Plan. The Plan allows all employees to participate after three(3)months creditable employment. Employees who elect to participate must contribute three (3%)percent of their gross wages, excluding overtime compensation,up to $3,000. If the employee desires to defer more than$3,000 they can defer those amounts into the IRC Section 457 Plan. The employer is required to contribute six (6%)percent of the respective participating employees' gross wages, excluding overtime compensation. Employer contributions are only required for those participating employees who contribute three (3%) of their gross wages, as defined. During the years ended September 30, 2017, 2016, and 2015,the District contributed 100%of its required contributions. The District's gross contributions (employer portion)to the plan for the years ended September 30,2017, 2016 and 2015 were$129,415, $131,368, and$118,336, respectively. Employee contributions to the plan were$65,670, $61,985 and $58,312, respectively for the years ended September 30, 2017,2016, and 2015, respectively. There were no forfeitures used to reduce employer contributions. Benefits available are limited to the value of the respective employee's individual account. Individuals direct the investment of their individual account. Benefits vest at a rate of twenty(20%)percent per year of creditable service and vest in full after five E? r ; LJ �. i IMMOKALEE WATER& SEWER DISTRICT Page 23 of 51 NOTES TO TIIE FINANCIAL STATEMENTS September 30,2017 and 2016 J } NOTE F- RETIREMENT PLANS, CONTINUED U .' Plan Description and Provisions,continued years of creditable service. A creditable year of service is defined as a year in which an eligible participant completes 1,000 hours of service. Employees immediately vest in their contributions. Normal retirement shall be considered to be attainment of age 55 and completion of five (5)creditable years of service. Employees who fail to complete five (5)years creditable service vest in their respective accounts at twenty (20%) percent per completed year of creditable service. The Plan requires Q retirement at April 1 following the date the participant reaches age 70 1/2. The Plan provides that forfeitures of employer contributions by non-vested terminated employees are to be used to offset future employer contributions. Therefore, employer contributions made to employee accounts who fail to complete the respective year revert back to the employer. The District has no liability for losses, if any, incurred by the plan. Loans to participants are permitted from the participant's specific account. Participants should refer to the complete plan document for specific detail of the Plan. r E Section 457 Plan Effective November 1, 2012,the District approved a resolution to establish a Deferred Compensation Plan to be made available to all eligible District employees pursuant to Section 457 of the Internal Revenue Code(IRC). The Plan is administered by a third party administrator. The employer funds substantially all administrative costs of the plan. All contributions made to the plan are voluntary • I deductions from employees'wages, with no contributions to the plan made by the District. Employees are eligible to participate after 3 months employment and attainment of age 18. Deferral amounts are limited per IRS Code Section 457(e)(15). For the year ended September 30,2017 the limit was$18,000. Employees are immediately vested in their salary deferral amounts. NOTE G - REVENUE BONDS PAYABLE The following is a summary of the District's revenue bonds payable for the years ended September 30: } Amount -' Balances-September 30.2015 S 17,329,969 Principal retired (513,000) -1 Bonds issued - Balances-September 30,2016 16,816,969 Principal retired (538,000) } Bonds issued - Balances-September 30,2017 S 16,278,969 II L = 1 IMMOKALEE WATER& SEWER DISTRICT Pagc 24 of 51 NOTES TO THE FINANCIAL STATEMENTS September 30,2017 and 2016 S NOTE G - REVENUE BONDS PAYABLE, CONTINUED E Revenue Bonds payable is comprised of the following at September 30: 2017 2016 [ $5,300,000 Series A, Water and Sewer Revenue Bonds, issued July 1981, through USDA Rural Development. Principal is payable annually beginning September 1, 1983 through September 1, 2020; interest payable annually at the rate of 5%; collateralized by the gross operating revenues of the system and assessments levied on the lands benefited by the i system. $ 350,000 $ 450,000 r $722,715 Series B, Water and Sewer Revenue Bonds, issued July 1981,through USDA Rural Development. Principal is payable annually beginning September 1, 1983 through September 1,2020; interest payable annually at the rate of 5%; collateralized by the gross operating revenues of the system and assessments levied on the lands benefited by the system. 116,000 157,000 $635,000 Series 1985, Water and Sewer Revenue Bonds, issued May 1987,through USDA Rural Development. Principal is payable annually beginning September 1, 1989 through September 1,2026; interest payable annually at the rate of 5%;collateralized by the gross operating revenues of the system and assessments levied on the lands benefited by the system. 241,969 264,969 J I 1 1 Li 3 IMMOKALEE WATER& SEWER DISTRICT Page 25 of 51 Cs NOTES TO TIIE FINANCIAL STATEMENTS September 30,2017 and 2016 i NOTE G - REVENUE BONDS PAYABLE,CONTINUED c .� 2017 2016 $3,750,000 Series 1989, Water and Sewer Revenue Bonds, issued October 1991, through USDA Rural Development. Principal is payable annually beginning September 1, 1994 through September 1, 2031; interest payable annually at the rate of 5%; collateralized by the gross operating revenues of the system and assessments levied on the lands benefited by the system. 2,200,000 2,307,000 $250,000 Series 1990, Water and Sewer 3 Revenue Bonds, issued October 1991, through USDA Rural Development. Principal is payable annually beginning September 1, 1994 through September 1, 2031; interest payable annually at the rate of 5%; collateralized by the gross operating revenues of the system and assessments levied on the lands benefited by the system. 147,000 154,000 I $4,313,200 Series 1996, Water and Sewer _.1 Revenue Bonds, issued August 1996,through USDA Rural Development. Principal is payable annually beginning September 1, 1998 through September 1, 2035; interest payable annually at the rate of 5.125%; collateralized by the gross operating revenues of the system and assessments levied on the lands benefited by the system. 3,008,000 3,109,000 $802,000 Series 1998, Water and Sewer Revenue Bonds, issued October 1998,through USDA Rural Development. Principal is payable annually beginning September 1, 2001 through September 1, 2038; interest payable annually at the rate of 4.5%; collateralized by the gross operating revenues of the system and assessments levied on the lands benefited by the system. 596,000 613,000 I r -o 4 J IMMOKALEE WATER & SEWER DISTRICT Page 26 of 51 r NOTES TO TIIE FINANCIAL STATEMENTS September 30,2017 and 2016 r NOTE G - REVENUE BONDS PAYABLE, CONTINUED 2017 2016 1 ' $2,252,000 Series 2001, Water and Sewer Refunding Bonds, issued December 2001, through USDA Rural Development. Principal is L payable annually beginning September 1, 2004 0 through September 1,2041; interest payable annually at the rate of 4.5%; collateralized by the gross operating revenues of the system and assessments levied on the lands benefited by the system. 1,808,000 1,850,000 $3,366,200 Series 2008, Water and Sewer r i Revenue Bonds, issued March 28, 2008 through USDA Rural Development. Principal is payable annually beginning September 1, 2008 through September 1,2047; interest payable annually at the rate of 4.375%; collateralized by the gross operating revenues of the system and assessments levied on the lands benefited by the ` 1 system. 3,028,000 3,077,000 $4,932,000 Series 2013, Water and Sewer _ Revenue Bonds, issued March 1,2013, through USDA Rural Development. Principal and interest are payable annually beginning September 1,2016 through September 1, 2052; interest payable annually at the rate of 2.5%; collateralized by the gross operating revenues of the system and a special assessment levied on the lands benefited by the system. 4,784,000 4,835,000 16,278,969 16,816,969 Less: current portion (due in one year) (563,000) (538,000) Long-term portion $15,715,969 $16,278,969 r 1 L J Elr 4 E ] IMMOKALEE WATER& SEWER DISTRICT Page 27 of 51 -i NOTES TO TILE FINANCIAL STATEMENTS September 30,2017 and 2016 [l NOTE G - REVENUE BONDS PAYABLE, CONTINUED El E Bond Resolutions El Che bond resolutions established certain accounts and determined the order in which certain revenues are to be deposited into those accounts. In addition,there E ] arc various other covenants established by the official statements and District resolutions, including such items as debt service coverage,reporting requirements, �' and maintenance of facilities. Management believes that it has complied, in all 0 material respects, with these covenants. All required balances at September 30, 2017 and 2016, were maintained and are reflected as restricted deposits within D these financial statements. ii A summary of revenue bond debt service requirements to maturity is as follows [ ' September 30: r1 Years Ending September 30 Principal Interest Total 2018 $ 563,000 $ 667,163 $ 1,230,163 2019 589,000 640,830 1,229,830 46 2020 616,000 613,262 1,229,262 2021 477,000 584,415 1,061,415 2022 499,000 562,598 1,061,598 .e.1 2023 - 2027 2,808,969 2,449,115 5,258,084 2028 - 2032 3,164,000 1,759,465 4,923,465 1 2023 - 2037 3,433,000 1,014,761 4,447,761 i 2038 -2042 1,740,000 561,406 2,301,406 2043 - 2047 1,525,000 272,063 1,797,063 ' 1 2048 -2052 864,000 66,425 930,425 $ 16,278,969 $ 9,191,503 $ 25,470,472 Revenue bond debt interest expense was$690,414 and$714,385 for the years ended September 30, 2017 and 2016, respectively. No revenue bond debt interest expense was capitalized in either year. 1 [ 1 IMMOKALEE WATER & SEWER DISTRICT Page 28 of 51 f NOTES TO THE FINANCIAL STATEMENTS September 30,2017 and 2016 1 NOTE H- LOANS PAYABLE-SRF [ ? The following is a summary of the District's loans payable activity for the year r ended September 30: DEP.SRF DEP.SRF r DW110120 DW110121 Total Balance-September 30,2015 $ 352,785 $ 280,634 $ 633,419 L J Proceeds - - - Principal retired (17,880) (14,544) (32,424) Balance-September 30,2016 334,905 266,090 600,995 Li Principal retired (18,368) (14,898) (33,266) C1 Balance-September 30,2017 $ 316,537 $ 251,192 $ 567,729 The loans payable- SRF activity for the year ended September 30 is as follows: 2017 2016 $419,681 loan payable representing 15%of a grant/loan payable to Florida Department of Environmental Protection.The maximum amount of the loan is $2,735,112,in which the FDEP has forgiven$2,324,845 of the note. The loan 4 P also required the District to capitalize interest of$9,414 during the year ended September 30,2011. Interest accrues at 2.71%.Principal and interest is payable in forty(40)semi-annual payments of$13,660 in May and November beginning November 15,2011. Final payment due May 2031.The loan is collateralized by the gross operating revenues of the system and assessments levied on the lands benefited by the system. $ 316,537 $ 334,905 J $335,504 loan payable to Florida Department of Environmental Protection. The loan requires forty(40)semi-annual payments of$10,637 in November and May beginning November 15,2011.The loan required the District to capitalize interest of$7,346 during the year ended September 30,2011. Final payment date May 2031. Interest accrues at 2.43%. The loan is collateralized by the gross operating revenues of the system and assessments levied on the lands benefited by the system. 251,192 266,090 Total loans payable 567,729 600,995 Less current portion: (34,132) (33,267) $ 533,597 $ 567,728 7' I I. r r s I i IMMOKALEE WATER& SEWER DISTRICT Page 29 of 51 NOTES TO THE FINANCIAL STATEMENTS September 30,2017 and 2016 s I NOTE II - LOANS PAYABLE- SRI?, CONTINUED Years Ending September 30 Principal Interest Total 2018 $ 34,132 $ 14,463 $ 48 595 2019 35,020 13,575 48,595 12020 35,931 12,664 48,595 L. , 2021 36,866 11,729 48,595 I J 2022 37,825 I0,770 48,595 2023-2027 204,417 38,559 242,976 2028-2031 183,538 10,844 194,382 $ 567,729 $ 112,604 $ 680,333 Loans payable- SRF related interest expense was $15,328 and$16,172 for the years ended September 30, 2017 and 2016,respectively. No loan interest costs were capitalized in either year. NOTE I - LINE OF CREDIT On October 15, 2016, the District renewed an agreement with a financial institution to establish an uncollateralized$1 million revolving Line of Credit(LOC)to be used for emergency situations. The LOC is available,although the District had not borrowed any funds from the LOC for the years ended September 30,2017 or 2016. The LOC required interest paid quarterly and principal at maturity. Interest accrues at Prime Rate plus .50%with a floor rate of 4.00%. The LOC is due in full on October 15,2018. Interest rate at September 30, 2017 was 4.75%. Upon renewal at October 15, 2016,the floor increased to 4.0%. NOTE J- BOND ANTICIPATION NOTE On July 26, 2017 the District entered into a Bond Anticipation Note(BAN)with a financial institution to provide interim construction financing for improvements to water facilities in the amount of$17,134,000. Interest payable at 1.85% is due every six months. The BAN term is twenty four(24)months with accrued interest and principal due upon maturity on July 26, 2019. The note is collateralized by a commitment from the USDA Rural Development Program. At September 30, 2017, the BAN payable balance was$1,449,000. Interest expense for the year ended September 30,2017 was$0 and no loan interest costs were capitalized. Upon completion of the related construction project, the BAN will be replaced by permanent financing from USDA. r E i C. IMMOKALEE WATER& SEWER DISTRICT Page 30 of 51 L• j NOTES TO TILE FINANCIAL STATEMENTS September 30,2017 and 2016 ✓ } NOTE K- ACCRUED COMPENSATED ABSENCES Lt Employees of the District are entitled to paid vacation based on length of service and job classification. Accrued compensated absences had the following activity for the year ended September 30: Amount j Accrued compensated absences, September 30,2015 $ 100,557 Net Increase 14,832 Accrued compensated absences, September 30,2016 115,389 Net Increase 2,981 Accrued compensated absences, • September 30, 2017 $ 118,370 ✓ ; I z r NOTE L- CONTINGENCIES Litigation The District, from time to time, is involved as a defendant or a plaintiff in certain litigation and claims arising in the ordinary course of operations. As such,the District maintains third party insurance coverages. In the opinion of legal counsel, the range • 1 of potential recoveries or liabilities will not materially affect the financial position of the j District. The District intends to vigorously defend all claims unless first settled. Potential losses, if any, may be recoverable through insurance coverages. Federal Grants Grant monies received by the District are for specific purposes and are subject to review by the grantor agencies. Such audits may result in requests for reimbursement due to disallowed expenditures. Based upon prior experience,the District does not believe that such disallowances, if any,would have a material affect on the financial position of the District. The operations of the District are dependent upon the condition of the District's facilities. These facilities are currently being rehabilitated and improved substantially through the receipt of federal funding. Loss or reduction of such funding would have a material effect on the operations of the District. L I IMMOKALEE WATER& SEWER DISTRICT Page 31 of 51 r NOTES TO TIIE FINANCIAL STATEMENTS September 30,2017 and 2016 • r NOTE M-NET ASSETS Restricted net assets consist of the following at September 30: 2017 2016 r Restricted assets $ 4,057,711 $ 4,007,669 Less: liabilities payable from restricted cash (2,004,564) (1,785,965) [ $ 2,053,147 $ 2,221,704 El Unrestricted net assets consist of the following at September 30: 2017 2016 Designated for emergencies $ 1,000,000 $ 960,000 Designated for operations 2,796,665 3,300,690 Designated for vehicle replacement 463,984 259,086 Designated for capital equipment 539,145 540,234 Designated for maintenance reserve 2,589,272 2,143,097 4 t Total Designated 7,389,066 7,203,107 Undesignated - 1,276,049 Total unrestricted net assets $ 7,389,066 $ 8,479,156 NOTE N - RISK MANAGEMENT The District is exposed to various risks of loss related to torts; theft of,damage to 1 and destruction of assets;errors and omissions; injuries to employees, and natural disasters. Insurance programs for general/professional liability, automobile,and property are through commercial insurance. The District retains the risk of loss, on insured claims, up to a deductible amount(ranging from 0%to 5% of total insured value depending on the type of loss)with the risk of loss in excess of this amount transferred to the insurance carrier. Limits of general liability are$1,000,000 per occurrence. The District is third party insured for employee health as well as workers'compensation. r 4 . L IMMOKALEE WATER& SEWER DISTRICT Page 32 of 51 r , NOTES TO THE FINANCIAL STATEMENTS ` September 30,2017 and 2016 r NOTE O- COMMITMENT The District has received approval from USDA for funding of approximately $21,000,000 to replace water lines within the District. The Letter of Obligation is for a$17,134,000 loan over 40 years at 2.25%; $4,063,900 grant; and the remaining approximately$13,000 in funding will be provided by the District. Construction began in fiscal year 2017, and it will last for approximately twenty four months. The following in a summary of the construction projects contracted by the District and not yet completed at September 30,2017: D Amounts Paid Contract Through Price September 30 IWSD AC Main Undersized WM Replacement: Phase 1 $ 5,410,360 $ 516,276 Phase 2 4,049,330 300,323 Phase 3 3,072,616 649,215 Phase 4 3,622,160 830,105 $ 16,154,466 $ 2,295,919 LI ..J r A L L .t r L r '1 L L 0 REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN MD&A f • r r t L r •i r r i , i IMMOKALEE WATER& SEWER DISTRICT Page 33 of 51 SCIIEDULE OF REVENUES, EXPENSES AND CHANGES IN NET POSITION -BUDGET (NON-GAAP BUDGETARY BASIS) AND ACTUAL WITH RECONCILIATION TO GAAP BASIS Year ended September 30,2017 Original Final Budget Budget Actual Variance 1 OPERATING REVENUES Cross connection control fee $ 315,445 $ 340,308 $ 340,308 $ - Water service 2,779,091 3,109,415 3,109,415 - Wastewater service 4,776,444 5,040,983 5,040,983 - :7] Meter service charge 602,139 644,698 644,698 - ` Late fees 89,486 85,075 85,075 - Reconnect and transfer fees 105,815 108,330 108,330 - :1 Miscellaneous charges, fees and other income 50,000 82,108 79,609 (2,499) TOTAL OPERATING REVENUES 8,718,420 9,410,917 9,408,418 (2,499) OPERATING EXPENSES WATER PLANTS/DISTRIBUTION Salaries and wages 702,062 608,678 608,678 - Overtime 86,097 25,117 25,117 - FICA 60.294 52,419 52,419 - Unemployment taxes 1,041 95 95 - Employer pension contribution 42,124 35,744 35,744 - Health/life insurance 246,499 228,838 228,838 - ` i Workers'compensation 40,984 36,592 36,592 - Travel and training 26,000 15,025 15,025 - 1 Telephone and fax 8,420 7,318 7,341 (23) 1 Electric 177,849 159,767 159,767 - General liability insurance 20,060 18,463 18,463 - _.: Comprehensive auto insurance 9,996 9,489 9,489 - Other insurance 91,455 79,396 79,396 - } Repairs and maintenance 150,338 146,891 131,207 15,684 "-1 Other contract services 26,732 33,062 33,067 (5) Vehicle fuel 26,650 21,397 23,347 (1,950) 1 Vehicle maintenance 21,806 8,125 8,125 - Licenses and permits 4,290 18,872 18,872 - Chemicals 104,737 96,087 96,087 - Other materials 131,811 34,834 34,556 278 Laboratory fees 28,080 23,761 23,761 - Uniforms/clothing allowance 3,900 2,624 2,624 - Memberships/periodicals/books 1,277 1,436 1,437 (1) SUB-TOTAL WATER PLANTS/DISTRIBUTION 2,012,502 1,664,030 1,650,047 13,983 The accompanying notes are an integral part of this statement. c1 r j i IMMOKALEE WATER& SEWER DISTRICT Page 34 of 51 L 3 SCHEDULE OF REVENUES,EXPENSES AND CHANGES IN NET POSITION-BUDGET(NON-GAAP BUDGETARY BASIS)AND ACTUAL WITH RECONCILIATION TO GAAP BASIS,CONTINUED Year ended September 30,2017 i. ; r Original Final Budget Budget Actual Variance t ' i % WASTEWATER PLANT r 1 Salaries and wages 526,074 559,850 559,850 - Overtime 26,707 10,057 10,057 - Li FICA 42,288 44,763 44,763 - 0 Unemployment taxes 1,941 80 80 - Employer pension contribution 31,564 26,082 26,082 - Q Health/life insurance 171,566 151,370 151,370 - Workers'compensation 28,745 22,362 22,362 - Travel and training 18,000 5,463 5.463 - Telephone and fax 3.713 3,338 3,405 (67) Electric 240,412 231,463 231,463 - r ; Section 8 electric 8.742 5,995 5,995 - r , General liability insurance 20,060 18,463 18,463 - Comprehensive auto insurance 4,999 4,067 4,067 - Other insurance 86,317 75,256 75,256 - Section 8 field maintenance 16,061 - - - li Repairs and maintenance 125,967 212,990 197,990 15,000 Section 8 repairs 14,510 7,862 7,862 - Other contract services 70,966 13,646 13,650 (4) Vehicle fuel 10,867 7,276 8,076 (800) 7. 3 Vehicle maintenance 14,635 9,056 9,056 - Licenses and permits 12,217 475 475 - D Chemicals 74,295 90,521 90,521 - -i Other materials 50,170 45,103 44,787 316 Laboratory fees 37,432 51,343 51,343 - Residuals management 97,460 137,877 137,877 - Uniforms/clothing allowance 2,400 1,561 1,561 - Memberships/periodicals/books 638 538 538 - SUB-TOTAL WASTEWATER PLANT 1,738,746 1,736,857 1,722,412 14,445 The accompanying notes are an integral part of this statement. I 1 IMMOKALEE WATER& SEWER DISTRICT Page 35 of 51 [ SCHEDULE OF REVENUES,EXPENSES AND CHANGES IN NET POSITION - BUDGET (NON-GAAP BUDGETARY BASIS) AND ACTUAL WITH RECONCILIATION TO GAAP BASIS,CONTINUED r Year ended September 30,2017 r_a w ' Original Final r Budget Budget Actual Variance L. WAS1 EWA fER COLLECTION L. Salaries and wages 334,054 302,794 302,794 - r , Overtime 34,773 15,435 15,435 - FICA 28,215 25,982 25,982 - 0 Unemployment taxes 892 44 44 - Employer pension contribution 20,043 16,274 16,274 llealth/life insurance 119,235 96,998 96,998 - n Workers'compensation 19,179 13,342 13,342 - Travel and training 12,000 528 528 - Telephone and fax 2,151 1,236 1,236 - Electric 40,625 33,095 35,782 (2,687) General liability insurance 20,060 18,463 18,463 - Comprehensive auto insurance 5,831 5,423 5,423 - Other insurance 1,345 1,151 1,151 - Repairs and maintenance 70,446 62,202 52,202 10,000 Other contract services 6,650 10,708 10,713 (5) Vehicle fuel 14,537 9,484 10,741 (1,257) T Vehicle maintenance 48,828 36,237 36,237 - k Licenses and permits 9,306 1,103 1,103 - Chemicals 1,755 - - - r-, I Other materials 44,670 44,211 43,976 235 ` Uniforms/clothing allowance 1,800 963 963 - Memberships/periodicals/books 421 434 434 - - 1 SUB-TOTAL WASTEWATER COLLECTION 836,816 696,107 689,821 6,286 The accompanying notes are an integral part of this statement. ✓ 4 6 a ✓ , t 1 IMMOKALEE WATER& SEWER DISTRICT Page 36 of 51 f I SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN t ' NET POSITION - BUDGET (NON-GAAP BUDGETARY BASIS) AND E ACTUAL WITH RECONCILIATION TO GAAP BASIS,CONTINUED Year ended September 30,2017 E Original Final f_ Bucket Budget Actual Vanance • s CUSTOMER SERVICE!ADMIN ra Salaries and wages 681,476 597,657 597,657 - Overtime 3,908 1,193 1,193 - Li FICA 52.432 45,054 45,054 - 13 Unemployment taxes 2,176 91 91 - Employer pension contribution 39,629 33,464 33,464 - Health/life insurance 159,095 154,094 154,094 - Workers'compensation 1,713 2,025 2,025 - El Legal services 43,000 33,000 33,000 - Other professional services 1,500 - - - Accounting/auditing 44,000 37,290 37,290 - Engineering services 127,200 97,727 97,727 - Travel and training 34,000 18,047 18,047 - Telephone and fax 4,120 4,188 4,345 (157) • 1 Postage and freight 46,211 35,645 35,645 - General liability insurance 4,194 3,874 3,874 - Ig Comprehensive auto insurance 833 678 678 - Other insurance 47,609 33,805 33,805 - Other contract services 32,312 47 47 - 3 Repairs and maintenance 36,253 40,821 40,826 (5) Vehicle fuel 256 500 500 - Vehicle maintenance 821 245 245 - Office supplies 28,520 25,046 25,046 - Miscellaneous office expense 37,109 34,986 34,986 - Miscellaneous bank fees 4,038 8.220 7,702 518 Miscellaneous expense 764 41 41 - Arrowhead assessment exp. 3,000 35 - 35 Advertising 3,773 6,086 6,086 - Licenses and permits 1,517 175 175 - Memberships/periodicals/books 9,441 5,695 3,195 2,500 Hurricane Irma payroll - 62,500 - 62,500 Hurricane Irma supplies - 20,639 - 20,639 SUB-TOTAL CUSTOMER SERVICE/ADMEN 1,450,900 1,302,868 1,216,838 86,030 The accompanying notes are an integral part of this statement. r , r • d. I Li IMMOKALEE WATER& SEWER DISTRICT Page 37 of 5I li SChIEDULE OF REVENUES,EXPENSES AND CHANGES IN NET POSITION- BUDGET (NON-GAAP BUDGETARY BASIS) AND Li ACTUAL WITH RECONCILIATION TO GAAP BASIS, CONTINUED r i Year ended September 30, 2017 w Original Final Budget Budget Actual Variance MAIN FFNANCE 1 Salaries and wages 353,480 170,741 170,741 - r ' Overtime 25,258 451 451 - FICA 28,973 13,321 13,321 - U Unemployment taxes 470 22 22 - Employer pension contribution 21,209 17,851 17,851 - D Health/life insurance 123,515 110,261 110,261 - fl Workers'compensation 19,694 15,337 15,337 - Travel and training 14,000 135 (365) 500 Telephone and fax 1,648 1,471 1,516 (45) General liability insurance 2,493 2,282 2,282 - Comprehensive auto insurance 7,497 6,778 6,778 - t - Repairs and maintenance 12,824 23,498 23,200 298 Other contract services 5,044 5,839 5,844 (5) Vehicle fuel 10,494 4,926 5,618 (692) Vehicle maintenance 17,065 12,880 12,880 - Licenses and permits 717 2,015 2,015 - Other materials 21,042 32,036 32,036 - Uniforms/clothing allowance 2,100 1,024 1,024 - Memberships/periodicals/books 486 249 249 - 7 1 Hurricane payroll - - 62,500 (62,500) Hurricane supplies - - 39,824 (39,824) SUB-TOTAL MAINTENANCE 668,009 421,117 523,385 (102,268) - 1 DEPRECIATION Depreciation 1,600,000 1,850,970 1,858,270 (7,300) SUB-TOTAL DEPRECIATION 1,600,000 1,850,970 1,858,270 (7,300) TOTAL OPERATING EXPENSES 8,306,973 7,671,949 7,660,773 11,176 OPERATING PROFIT $ 411,447 $ 1,738,968 $ 1,747,645 $ 8,677 The accompanying notes are an integral part of this statement. El , tr . ' IMMOKALEE WATER & SEWER DISTRICT Page 38 of 51 L. , SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - BUDGET(NON-GAAP BUDGETARY BASIS) AND li-s ACTUAL WITH RECONCILIATION TO GAAP BASIS, CONTINUED n Year ended September 30,2017 El Original Final Budget Budget Actual Variance El OPERATING PROFIT, BROUGHT FORWARD $ 411,447 $ 1,738,968 $ 1,747,645 $ 8,677 NON-OPERATING REVENUES(EXPENSES) Interest income 50,000 57,166 57,166 - Assessment cost,net 5,435 - (84) (84) Contributed capital-grant-FDEP EPA - - - Contributed capital-grant-USDA FHA - - - - Contributed capital-customers 30,000 40,700 40,700 - B Contributed capital-developers 70,000 - - - Debt proceeds-USDA 10,900,000 10,900,000 1,449,000 (9,451,000) Debt proceeds-FDEP - - - - Debt proceeds-FCB - - - Other non-operating revenue 46,275 35,112 33,162 (1,950) Capital outlay (11,000,000) (10,940,700) (2,503,215) 8,437,485 Principal retirement-bonds (638,169) (615,442) (538,000) 77,442 Principal retirement-SRF - - (33,266) (33,266) Net Assets-brought forward 5,694,028 5,903,842 - (5,903,842) Net Assets-carryforward (4,790,777) (6,259,566) - 6,259,566 Maintenance reserve - - - - ` Forfeited 401A - - 1,951 1,951 Interest expense (718,239) (828,721) (705,742) 122,979 1 Bad debt expense (35,000) (20,000) (19,294) 706 Gain(Loss)on disposal of assets (25,000) (11,359) (11,359) - NET NON-OPERATING - REVENUES(EXPENSES) (411,447) (1,738,968) (2,228,981) (490,013) NET PROFIT(LOSS) $ - $ - $ (481,336) $ (481,336) Reconciliation: Net profit(loss)(Non-GAAP Budgetary Basis) $ (481,336) Debt proceeds (1,449,000) Capital outlay 2,503,215 Principal retirement-bonds 538,000 Principal retirement-SRF 33,266 Increase in Net Position(GAAP Basis) 1,144,145 Net position-beginning of the year 31,857,787 Net position-end of the year $ 33,001,932 The accompanying notes are an integral part of this statement. Page 39 of 51 Receipts/ Revenue Disbursements/ Recognized Expenditures Subrecipients 0 $ 1,449,000 (I) $ 3,804,054 None 0 None 1,449,000 $ 3,804,054 f 7,1 : 3 i rt r U I IMMOKALEE WATER& SEWER DISTRICT Page 40 of 51 NOTES TO TILE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Year ended September 30,2017 is t NOTE A- BASIS OF PRESENTATION c E F The Schedule of Expenditures of Federal Awards has been prepared on an accrual t basis of accounting in conformity with accounting principles generally accepted in the United States of America and is in accordance with the provisions of the Uniform Guidance. Expenditures reported on the Schedule of Expenditures of Federal Awards include cash disbursements, whether capitalized or expensed, during the fiscal year as well as grant related amounts recorded as payable at year end. Revenues reported on the Schedule of Expenditures of Federal Awards include income recognized including grant receivables recorded at year end. Cash receipts that were deferred are , footnoted as such. NOTE B- INDIRECT COSTS The District did not routinely allocate costs to Federal Awards. Costs charged to - such programs were direct costs unless specifically incurred for the program and allowed and indicated as such. .11 The District has elected not to use the 10%de minimus indirect cost rate allowed under the Uniform Guidance. n� r J 0 ADDITIONAL REPORTS El :) ) n 1lilialion♦ TUSCANlloritin 11N11ule of Certified Public tccoun►mus \mcrican inylilule of Certified Public \rcaunlnnls & Company, PA Pm.ttc Companies I't.u.ucc Seem, -- — lax Di%isiun Certified Public Accountants&Consultants Page 41 of 51 F) INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF BASIC FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS n 0 Board of Commissioners Immokalee Water & Sewer District Li 1020 Sanitation Road Immokalee, Florida 34142 9 We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing _) Standards issued by the Comptroller General of the United States of America, the basic financial statements of the business-type activities of Immokalee Water& Sewer District(the "District") Atti which comprise the statement of net position as of September 30, 2017, and the related statements of revenues, expenses and changes in net position and cash flows for the year then ended and the related notes to the financial statements and have issued our report thereon dated January 31, 2018. J Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered Immokalee Water & Sewer District's internal control over financial reporting (internal control)to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Immokalee Water& Sewer District's internal control. Accordingly, we do not express an opinion on the effectiveness of the Immokalee Water& Sewer District's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the basic financial statements will not be prevented or detected and INTEGRITY SERVICE EXPERIENCE! 12621 World Plaza Lane, Building 55 • Fort Myers, FL 33907 •Phone: (239)333-2090 • Fax: (239)333-2097 I -,. J i Page 42 of 51 corrected on a timely basis. A significant deficiency is a deficiency, or a combination of r L J deficiencies, in internal control that is less severe than a material weakness, yet important enough E 3 to merit attention by those charged with governance. j Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did ] not identify any deficiencies in internal control that we consider to be material weaknesses, as defined previously. However, material weaknesses may exist that have not been identified. Further,we did, however, note certain other matters that we have reported in our Report to Management dated January 31, 2018. C) Compliance and Other Matters Ci As part of obtaining reasonable assurance about whether Immokalee Water& Sewer District's ] financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have j a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of a noncompliance that are required to be reported under Government Auditing Standards. raj Purpose of This Report El The purpose of this report is solely to describe the scope of our testing internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the • 3 District's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District's internal control and compliance. Accordingly,this communication is not suitable for any other purpose. 4u9e),1 , TUSCAN&COMPANY, P.A j Fort Myers, Florida January 31, 2018 1 �.a ..j 1 El Ufiliutionr PruSCAN 1'�,/ /�\ N h'larida Inslirule of Certified Public tccouuluna �J d %merleun Institute of Certified Public tccounlnnls & Company, PA ['male Lump.mies I',twee a nun lax I)i%Nnln 13 Certified Public Accountants&Consultants Page 43 of 51 Independent Auditor's Report on Compliance for Each Major • Program/Project and on Internal Control Over Compliance Required by the Uniform Guidance Board of Commissioners L Immokalec Water& Sewer District ❑ 1020 Sanitation Road Immokalce, Florida 34142 Report on Compliance for Each Major Federal Program We have audited Immokalee Water& Sewer District's compliance with the types of compliance requirements described in the OMB Compliance Supplement as applicable, that could have a direct and material effect on each of Immokalee Water& Sewer District's major federal programs for the year ended September 30, 2017. Immokalee Water& Sewer District's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Management's Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its major federal programs. Auditor's Responsibility Our responsibility is to express an opinion on compliance for each of Immokalee Water& Sewer District's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United `T] States of America; and audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, "Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards" ("Uniform Guidance"). Those standards, and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Immokalee Water& Sewer District's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. j INTEGRITY ... SERVICE ... EXPERIENCE R 12621 World Plaza Lane,Building 55 • Fort Myers, FL 33907 • Phone: (239)333-2090• Fax: (239)333-2097 Li Page 44of51 We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. 1lowever, our audit does not provide a legal determination of Immokalee Water& Sewer District's compliance with those requirements. Opinion on Each Major Federal Program In our opinion, Immokalee Water& Sewer District complied, in all material respects,with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended September 30, 2017. Report on Internal Control Over Compliance Management of Immokalce Water& Sewer District is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements 0 referred to above. In planning and performing our audit of compliance, we considered Immokalee fJ Water& Sewer District's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Unifonn Guidance,but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly,we do not express an opinion on the effectiveness of Immokalee Water& Sewer District's internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions,to prevent, or detect and correct noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over i., compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis.A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies,in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance,yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However,material weaknesses may exist that have not been identified. [ i J Page 45 of 51 r Purpose of the Report The purpose of this report on internal control over compliance is solely to describe the scope of Li our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Lj E Li aoht) buy f 4 TUSCAN& COMPANY, P.A. 0 Fort Myers, Florida January 31, 2018 r t ; • I I rL � ' IMMOKALEE WATER& SEWER DISTRICT Page 46 of 51 E SCHEDULE OF FINDINGS AND QUESTIONED COSTS - FEDERAL AWARDS Year ended September 30,2017 Section I Signatory of Auditor's Results 111 Financial Statements Type of auditor's report issued Unmodified Internal control over financial reporting: Control deficiency(ies) identified? Yes X No Significant deficiency(ies) identified? Yes X No Material weakncss(cs)identified? Yes X None reported Noncompliance material to financial statements -� noted? Yes X No Federal Awards Internal control over major programs: Control deficiency(ies) identified? Yes X No Significant deficiency(ies) identified? Yes X No Material weaknesses) identified? Yes X None reported Type of auditors report issued on compliance for major programs Unmodified Zig Any audit findings disclosed that are required to be reported in accordance with 2 CFR, Section 200.516(a)? Yes X No Identification of major programs (Type A): CFDA 1 Number(s) Name of Federal Program or Cluster 10.760 U.S. Department of Agriculture Dollar threshold used to distinguish between Type A and Type B programs Threshold used was$750,000. Auditee qualified as low-risk auditee? Yes X No P j r 4 i IMMOKALEE WATER& SEWER DISTRICT Page 47 of 51 SCHEDULE OF FINDINGS AND QUESTIONED COSTS - FEDERAL AWARDS, CONTINUED a Year ended September 30,2017 Listing of Subrecipients and matching amounts passed-through: None - not applicable [3 Section II-Financial Statement Findings There were no deficiencies, material weaknesses, or instances of noncompliance related to El the financial statements. Section III-Federal Award Findings and Questioned Costs 0 There were no audit findings related to Federal Awards required to be reported by 2 CFR, Section 200.516(a). Section IV-Status of Federal Prior Year Findings There were no prior year findings. J 0 El .J . ) l _ Afliliofi.m, TUSCANI1 rid,Institute of Certified Public 1ccounUurM American Institute of Certified Public tccountants & Company PA I'matc Compatuc.I'r,!uicr',colon II)INNmn Certified Public Accountants&Consultants Page 48of51 INDEPENDENT ACCOUNTANT'S REPORT ON COMPLIANCE WITII SECTION 218.415,FLORIDA STATUTES Board of Commissioners Immokalee Water& Sewer District 1020 Sanitation Road Immokalee, Florida 34142 Li We have examined Immokalce Water&Sewer District's compliance with Section 218.415, Florida Statutes, regarding the investment of public funds during the year ended September 30, 2017. Management is responsible for Immokalee Water& Sewer District's compliance with L those requirements. Our responsibility is to express an opinion on Itnmokalee Water&Sewer { District's compliance based on our examination. Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants and, accordingly, included examining, on a test basis, evidence about Immokalee Water& Sewer District's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our examination provides a reasonable basis for our opinion. Our examination does not provide a legal determination on Immokalee Water& Sewer District's compliance with specified requirements. In our opinion, Immokalee Water& Sewer District complied, in all material respects, with the aforementioned requirements for the year ended September 30,2017. This report is intended solely for the information and use of the Immokalee Water& Sewer District and the Auditor General, State of Florida, and is not intended to be and should not be used by anyone other than these specified parties. 744)144#0 eroivel, TUSCAN&COMPANY, P.A. Fort Myers, Florida January 31,2018 INTEGRITY SERVICE EXPERIENCE R 12621 World Plaza Lane, Building 55 •Fort Myers, FL 33907 •Phone: (239)333-2090•Fax: (239)333-2097 Al 111'1111011S TUSCANFlorida Institute of Certified Public Accountants lmerican Institute of Certified Public'.ccoualatils & Company, PA I'mate Companies I'ractice SeLItou El IJY I)t%itiioi rj Certified Public Accountants&Consultants Page 49 of 51 INDEPENDENT AUDITOR'S REPORT TO MANAGEMENT Board of Commissioners Immokalcc Water& Sewer District 1020 Sanitation Road Immokalcc, Florida 34142 We have audited the accompanying basic financial statements of Immokalee Water& Sewer District(the "District") as of and for the year ended September 30,2017 and have issued our report thereon dated January 31, 2018. We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States of America and Chapter j 10.550,Rules of the Florida Auditor General. We have issued our Independent Auditor's Report on Internal Control over Financial Reporting and Compliance and Other Matters based on an `' Audit of the Financial Statements Performed in Accordance with Government Auditing Standards. Disclosures in that report,which is dated January 31,2018, should be considered in conjunction with this report to management. Additionally,our audit was conducted in accordance with Chapter 10.550, Rules of the Auditor General, which governs the conduct of local governmental entity audits performed in the State of Florida. This letter included the following information,which is not included in the aforementioned auditor's report: • Section 10.554(1)(i)1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. There were no financially significant prior year comments. 1 INTEGRITY SERAICE EXPERIENCE R 12621 World Plaza Lane, Building 55 •Fort Myers,FL 33907 •Phone: (239) 333-2090• Fax: (239) 333-2097 r r Page 50of51 • Section 10.554(1)(i)2., Rules of the Auditor General,requires that we address in the management letter any recommendations to improve financial management. No such recommendations were noted to improve financial management except as noted below. Section 10.554(1)(i)3.,Rules of the Auditor General,requires that we address noncompliance with provisions of contracts or grant agreements, or abuse, that have an effect on the financial statements that is less than material but more than inconsequential. In connection with our audit, we did not have any such findings. - j • Section 10.554(1)(i)4., Rules of the Auditor General, requires that the name or official title and legal authority for the primary government and each component unit if the reporting entity be disclosed in the management letter, unless disclosed in the notes to the financial statements. The District discloses this information in the notes to the financial statements. • Section 10.554(1)(i)5.a., Rules of the Auditor General, requires a statement be included as to whether or not the local government entity has met one or more of the conditions described in Section 218.503(1), Florida Statutes, and identification of the specific condition(s) met. In connection with our audit, we determined that the District did not meet any of the conditions described in Section 218.503(1), Florida Statutes. • Section 10.554(1)(i)5.b.,Rules of the Auditor General, requires that we determine whether the annual financial report for the District for the fiscal year ended September 30, 2017, filed with the Florida Department of Financial Services pursuant to Section 218.32(1)(a) Florida Statutes, is in agreement with the annual financial audit report for the fiscal year ended September 30, 2017. In connection with our audit,we determined that these two reports were in agreement. 1 • Pursuant to Sections 10.554(1)(i)5.c. and 10.556(7),Rules of the Auditor General,we have applied financial condition assessment procedures. It is management's responsibility 1 to monitor the District's financial condition,and our financial condition assessment was based in part on representations made by management and the review of financial information provided by same. • Pursuant to Section 10.554(1)(i)5.d., Rules of the Auditor General,requires a statement indicating a failure, if any,of a component unit special district to provide financial information necessary to a proper reporting of the component unit within the audited financial statements of this entity(F.S. Section 218.39(3)(b)). There are no known component special districts required to report within these financial statements. r � L J L ' Page 51 of 51 • Section 10.556(10)(a), Rules of the Auditor General, requires that the scope of our audit to determine the entity's compliance with the provisions of Section 218.415, Florida Statutes, regarding the investment of public funds. In connection with our audit, we ' determined that the Authority complied with Section 218.415, Florida Statutes as r i reported in our Independent Accountant's Report on Compliance with Section 218.415, Florida Statutes dated January 31, 2018, included herein. '.. s PRIOR YEAR COMMENTS: H No financially significant comments noted. CURRENT YEAR COMMENTS: II 2017-1 Reconciliation of Account Balances Should Be Performed Routinely and Timely n During the audit, it was noted that the District was unable to provide an accounts payable listing and fixed asset reconciliation that agreed to the balances recorded at fiscal year-end. In addition, it was noted that amounts were dispersed directly from the bond anticipation note and not recorded in the general ledger. This resulted in an understatement of assets (CIP) and the note balance. lb We recommend that the accounting staff reconcile all account balances on a monthly basis, ensuring that all balance sheet accounts agree to subsidiary ledgers. These reconciliations should be performed on a monthly basis and any differences or discrepancies investigated and corrected. Pursuant to Chapter 119, Florida Statutes,this management letter is a public record and its distribution is not limited. Auditing standards generally accepted in the United States of America require us to indicate that this letter is intended solely for the information and use of the Board of Commissioners, management,the Auditor General of the State of Florida and other federal and state agencies. This report is not intended to be and should not be used by anyone other than these specified parties. 7eAAA,A,,,,40 (Iimvp , TUSCAN& COMPANY, P.A. Fort Myers,Florida January 31, 2018 r t r L r , L r r r 0 0 EXHIBIT U E ' 6.. $ - 1 1 1 0 Immokalce Water&Sewer District 1020 Sanitation Road Immokalce,Florida 34142 • • (239)658-3630 • : FAX(239)658-3634 j Immokalee Water & Sewer District 0 0 February 22,2018 Sherrill F.Norman,CPA Auditor General,State of Florida Claude Denson Pepper Building 111 West Madison Street O Tallahassee,Florida 32399-1450 1110 Dear Ms.Norman: This letter is in response to the Management Letter in the District's Year Ending September 30,2017 audit, performed by Tuscan & Company, P.A.; which was presented to the Board on February 21, 2018 and accepted by the Board on February 21,2018. El CURRENT YEAR COMMENTS: C3 2017-1 Reconciliation of Account Balances Should Be Performed Routinely and Timely. During the audit,it was noted that the District was unable to provide an accounts payable listing and fixed asset reconciliation that agreed to the balances recorded at fiscal year-end. In addition, it was noted that amounts were dispersed directly from the bond anticipation note and not recorded in the general ledger. This resulted in an understatement of assets (C/P) and the note J balance. We recommend that the accounting staff reconcile all account balances on a monthly basis, ensuring that all balance sheet accounts agree to subsidiary ledgers. These reconciliations should be performed on a monthly basis and any differences or discrepancies investigated and corrected. We have changed our upper level accounting person, and will ensure that she begins reconciling the accounts on a monthly basis. As usual, we have enjoyed working with Tuscan & Company P.A., during the course of our audit. The field personnel are always professional and knowledgeable.They understand the importance we place on accountability both to Rural Development and to the citizens of Immokalee,whom we serve. Please contact our office if you have any questions. Sincerely, /./0Y49 Eva J.Deyo Executive Director I Visit our Web Page at: www.iw-sd.com 1 E-mail: evadeyo@iw-sd.com