Muskogee County Rural Water District No. 5 Muskogee, Oklahoma · 2 Muskogee County Rural Water...
Transcript of Muskogee County Rural Water District No. 5 Muskogee, Oklahoma · 2 Muskogee County Rural Water...
Muskogee County Rural Water District No. 5Muskogee, Oklahoma
Financial Statements and Auditor’s Reports
Year Ended December 31, 2017
Audited by
SANDERS, BLEDSOE & HEWETTCERTIFIED PUBLIC ACCOUNTANTS, LLP
BROKEN ARROW, OK
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Muskogee County Rural Water District No. 5Muskogee, Oklahoma
Board of DirectorsDecember 31, 2017
BOARD OF DIRECTORS
Chairman
T.A. Staton
Vice Chairman
Robert Plunkett
Secretary/Treasurer
Beverly Delmedico
Member
Wayne Herriman
Member
Bobby Jones, Sr.
MANAGER
Kentley D. McCullar
ASSISTANT MANAGER
Eugene Rhodes
BOOKKEEPER
Rita Boydstun
CLERK
Linda Roberts
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Muskogee County Rural Water District No. 5Muskogee, Oklahoma
December 31, 2017
TABLE OF CONTENTSPage
Board of Directors 1
Table of Contents 2
Independent Auditor’s Report 3
Management’s Discussion and Analysis 5
Independent Auditor’s Report on Internal Control Over FinancialReporting and on Compliance and Other Matters Based onan Audit of Financial Statements Performed in Accordancewith Government Auditing Standards 9
Disposition of Prior Year’s Significant Deficiencies 11
Schedule of Audit Results 12
COMBINED FINANCIAL STATEMENTS:
Statement of Net Position 13
Statement of Revenue, Expenses and Changes in Net Position 14
Statement of Cash Flows 15
Notes to Financial Statements 16
OTHER SUPPLEMENTARY INFORMATION:
Schedule of Rates and Customers (unaudited) 21
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INDEPENDENT AUDITOR’S REPORT
Board of DirectorsMuskogee County Rural Water District No. 5Muskogee, Oklahoma
We have audited the accompanying financial statements of the business-type activities ofthe Muskogee County Rural Water District No. 5 (the District), Muskogee, Oklahoma, asof and for the year ended December 31, 2017, which collectively comprise the District’sbasic 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 financialstatements. Management is also responsible for the design, implementation, andmaintenance of internal control relevant to the preparation and fair presentation offinancial statements that are free from material misstatement, whether due to fraud orerror.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit.We conducted our audit in accordance with auditing standards generally accepted in theUnited States of America and the standards applicable to financial audits contained inGovernment Auditing Standards, issued by the Comptroller General of the United States.Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor’sjudgment, including the assessment of the risks of material misstatement of the financialstatements, whether due to fraud or error. In making those risk assessments, the auditorconsiders internal control relevant to the District’s preparation and fair presentation of thefinancial statements in order to design audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness ofthe District’s internal control. Accordingly, we express no such opinion. An audit alsoincludes evaluating the appropriateness of accounting policies used and thereasonableness of significant accounting estimates made by management, as well as
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evaluating the overall presentation of the financial statements. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for ouropinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all materialrespects, the respective financial position of the business-type activities of the District asof December 31, 2017, and the respective changes in financial position and cash flowsthereof for the year then ended in conformity with accounting principles generallyaccepted in the United States of America.
Other Matters
Accounting principles generally accepted in the United States of America require that themanagement’s discussion and analysis on pages 5-8 be presented to supplement the basicfinancial statements. Such information, although not a part of the basic financialstatements is required by the Governmental Accounting Standards Board, who considersit to be an essential part of financial reporting for placing the basic financial statements inan appropriate operational, economic, or historical context. We have applied certainlimited procedures to the required supplemental information in accordance with auditingstandards generally accepted in the United States of America, which consisted ofinquiries of management about the methods of preparing the information and comparingthe information for consistency with management’s responses to our inquiries, the basicfinancial statements, and other knowledge we obtained during our audit of the financialstatements. We do not express an opinion or provide any assurance on the informationbecause the limited procedures do not provide us with sufficient evidence to express anopinion or provide any assurance.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report datedMarch 21, 2018 on our consideration of the District’s internal control over financialreporting and on our tests of its compliance with certain provisions of laws, regulations,contracts, and grant agreements and other matters. The purpose of that report is todescribe the scope of our testing of internal control over financial reporting or oncompliance and the results of that testing and not to provide an opinion on internalcontrol over financial reporting or on compliance. That report is an integral part of anaudit performed in accordance with Government Auditing Standards in considering theAuthority’s internal control over financial reporting and compliance.
Sanders, Bledsoe & HewettCertified Public Accountants, LLP
March 21, 2018
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RURAL WATER DISTRICT NO. 5, MUSKOGEE COUNTY
MANAGEMENT’S DISCUSSION AND ANALYSIS
DECEMBER 31, 2017
Our discussion and analysis of the Rural Water District No. 5, Muskogee County’s financialperformance provides an overview of the District’s financial activities for the fiscal yearended December 31, 2017. Please read it in conjunction with the District’s financialstatements that begin on page 13.
FINANCIAL HIGHLIGHTS
The District’s total operating revenues exceeded total operating expenses by $16,552.Overall, the District’s cash and cash equivalents decreased by $109,140 in the currentfiscal year.
The District paid off their only outstanding note to the Oklahoma Water ResourcesBoard during 2017.
The District had $5,622 in interest earnings during the current fiscal year. On April 24, 2017, the District increased water rates by $0.20 per thousand gallons. We seem to be moving into a new era. Business as usual is no longer the cliché. New
technology requires us to change with the times. Overall it is always for the better asit helps us to provide safe water quality and better service to you, our customers. Allof us are being forced to pay higher fuel prices which have escalated along with theprice of brass and PVC supplies that it takes to maintain the District.
Using This Report
This report is presented in a format consistent with the presentation requirements of theGovernmental Accounting Standards Board (GASB) Statement No. 34, as applicable to theDistrict’s basis of accounting.
Basis of Accounting
The District has elected to present its financial statements in the accrual basis of accounting.According to the accrual basis, revenues are recorded when earned and expenses arerecognized when incurred. This policy is in accordance with generally accepted accountingprinciples.
The Financial Statements
One of the most important questions asked about the District’s finances is, “Is the District asa whole better off or worse off as a result of the year’s activities?” The Statement of Net
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Position, the Statement of Revenues, Expenses and Changes in Net Position, and theStatement of Cash Flows report information about the District and about its activities in away that helps answer this question. These three statements report the District’s net positionand the changes in them. You can think of the District’s net position – the difference betweenassets and liabilities – as one way to measure the District’s financial health or financialposition. Over time, increases or decreases in the District’s net position are one indicator ofwhether its financial health is improving or deteriorating. You will need to consider othernonfinancial factors, however, such as changes in water rates paid or charged and thecondition of the District’s water system, to assess the overall health of the District.
The District has only one type of fund or activity, which is defined as Business-typeactivities. This is considered a proprietary fund. This means the District charges a fee tocustomers to help it cover all or most of the cost of certain services it provides.
Net Position, and Changes in Net Position
The District’s Net Position was higher in 2017, increasing from $2,845,097 to $2,874,967.Our analysis below focuses on the Net Position (Table 1) and Changes in Net Position (Table2) of the District’s business-type activities.
Table 1 – Net Position:
2017 2016 Variances
Current and other assets 1,092,891$ 1,191,666 (98,775)Capital assets, net 1,792,488 1,835,897 (43,409) Total Assets 2,885,379$ 3,027,563 (142,184)
Current liabilities 10,412$ 84,080 73,668Long-term liabilities 0 98,386 98,386 Total Liabilities 10,412$ 182,466 172,054
Invest. In capital assets, net of related debt 1,792,488$ 1,660,397 132,091Restricted 0 233,854 (233,854)Unrestricted 1,082,479 950,846 131,633Total Net Position 2,874,967$ 2,845,097 29,870
Net Position of the District increased by 1.05 percent ($2,874,967 compared to $2,845,097).Unrestricted net position – the part of net position that can be used to finance day-to-dayoperations without constraints established by debt covenants, enabling legislation, or otherlegal requirements – increased from $950,097 to $1,082,479.
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Table 2 – Changes in Net Position:2017 2016 Variances
Revenues: Charges for services 780,036$ 772,027 8,009 Sale of fixed assets 9,765 0 9,765 Interest 5,622 4,926 696 Total Revenues 795,423$ 776,953 18,470
Expenses: Salaries, taxes and benefits 201,248$ 197,728 (3,520) Maintenance and repairs 107,328 119,143 11,815 Other expenses 356,311 384,337 28,026 Depreciation 98,597 88,059 (10,538) Interest on debt 2,069 3,444 1,375 Total Expenses 765,553$ 792,711 27,158
Changes in Net Position 29,870 (15,758) 45,628
Net Position, Beginning 2,845,097 2,860,855 (15,758)
Net Position, Ending 2,874,967$ 2,845,097 29,870
The District’s total revenues increased by 2.4 percent ($18,470). The total cost of all servicesdecreased by 3.4 percent (-$27,158).
Fixed Assets
At December 31, 2017 the District had $1,792,488 invested in fixed assets, net ofdepreciation, including land, the water system, vehicles and equipment. The Districtpurchased a new truck and fire proof cabinets for the office during 2017. Our membernumbers have grown to 1,736 during 2017. Growth in our area is still a major factor and theCity has yet to offer us additional allocation of water. Without the City of Muskogeeallocating additional water the district may, in the future, be required to restrict or deny newtaps.
Long-Term Debt
The District paid off the note to the Oklahoma Water Resources Board during the 2017 year.As of December 31, 2017, the district has no outstanding debt.
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Economic Factors and Next Year’s Budget and Rates
December 31, 2017 revenue did not prove to be a large increase as compared to December31, 2016 revenue. We are still within the same guidelines on our budget expenses. The factthat the price increases, our large growth rate and the age of our system will cause us to raisewater rates periodically to keep your District in a financially sound condition. Gradualincreases will be more effective and easier to absorb than if we have to have a large increaseat once. The Board has our rate studies prepared by Community Resource Group, a StateAgency, to analyze our income to debt/expense ratio.
The Board of Directors may change the budget for the fiscal year 2018 somewhat to allowfor a more compatible ratio between income and expenses. To better allow for office andfield personnel operations, and if there is a need for added staffing or equipment. With theexpansion of Muskogee City Water Treatment Plant, their cost of water to us increased over5% in 2012. Water rates will need to be adjusted to be able to pay for the increases imposedby the City of Muskogee.
The District’s budget for fiscal year 2018 will remain much like previous year budget, withthe exceptions allowing for the increased expenses and our recent rate increase for addedincome. Your Board of Directors may change the budget somewhat to better allow for officeand field personnel operations, and if there is a need for added staffing.
Contacting the District’s Management
This report is designed to provide our customers and creditors with a general overview of theDistrict’s finances and to demonstrate the District’s accountability for the money it receives.If you have questions about this report or need additional financial information contact theDistrict Office at 7181 South Cherokee St., Muskogee, OK 74403 or call (918) 682-6380.
As always, our office personnel, Rita Boydstun and Linda Roberts are prepared to assist youwith your water district questions. Our manager, Kentley McCullar and assistant manager,Eugene Rhodes will be happy to assist you with water line and meter questions.
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INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVERFINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED INACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Board of DirectorsMuskogee County Rural Water District No. 5Muskogee, Oklahoma
We have audited, in accordance with auditing standards generally accepted in the UnitedStates of America and the standards applicable to financial audits contained inGovernment Auditing Standards, issued by the Comptroller General of the United States,the accompanying financial statements of the Muskogee County Rural Water District No.5 (the District), Muskogee, Oklahoma, as of and for the year ended December 31, 2017,and the related notes to the financial statements, which collectively comprise theDistrict’s basic financial statements and have issued our report thereon dated March 21,2018.
Internal Control Over Financial ReportingManagement of the District is responsible for establishing and maintaining effectiveinternal control over financial reporting. In planning and performing our audit of thefinancial statements, we considered the District’s internal control over financial reportingin order to determine our auditing procedures that are appropriate for the purpose ofexpressing our opinion on the financial statements, but not for the purpose of expressingan opinion on the effectiveness of the District’s internal control. Accordingly, we do notexpress an opinion on the effectiveness of the District’s internal control over financialreporting.
Our consideration of the internal control over financial reporting was for the limitedpurpose described in the preceding paragraph and was not designed to identify alldeficiencies in internal control that might be material weaknesses or significantdeficiencies and therefore, material weaknesses or significant deficiencies may exist thatwere not identified. We identified no deficiencies in the internal controls that weconsidered to be material weaknesses.
A deficiency in internal control exists when the design or operation of a control does notallow management or employees, in the normal course of performing their assignedfunctions, to prevent, or detect and correct, misstatements on a timely basis. A material
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weakness is a deficiency, or combination of deficiencies, in internal control such thatthere is a reasonable possibility that a material misstatement of the District’s financialstatements will not be prevented or detected and corrected on a timely basis. A significantdeficiency is a deficiency, or a combination of deficiencies, in internal control that is lesssevere than a material weakness, yet important enough to merit attention by thosecharged with governance.
ComplianceAs part of obtaining reasonable assurance about whether the District’s financialstatements are free of material misstatement, we performed tests of its compliance withcertain provisions of laws, regulations, contracts and grants, noncompliance with whichcould have a direct and material effect on the determination of financial statementamounts. However, providing an opinion on compliance with those provisions was notan objective of our audit and, accordingly, we do not express such an opinion. The resultsof our tests disclosed no instances of noncompliance that are required to be reportedunder Government Auditing Standards.
The purpose of this report is solely to describe the scope of our testing of internal controland compliance and the results of that testing, and not to provide an opinion on theeffectiveness of the District’s internal control or on compliance. This report is an integralpart of an audit performed in accordance with Government Auditing Standards inconsidering the District’s internal control and compliance. Accordingly, thiscommunication is not suitable for any other purpose.
Sanders, Bledsoe & HewettCertified Public Accountants, LLP
March 21, 2018
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MUSKOGEE COUNTY RURAL DISTRICT NO. 5Disposition of Prior Year’s Significant Deficiencies
December 31, 2017
There were no prior year significant deficiencies.
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MUSKOGEE COUNTY RURAL WATER DISTRICT NO. 5Schedule of Audit Results
December 31, 2017
Section 1 – Summary of Auditor’s Results
1. An unmodified opinion report was issued on the financial statements.
2. The audit disclosed no significant deficiencies in the internal controls.
3. The audit disclosed no instances of noncompliance.
Section 2 – Findings relating to the financial statements required to be reported inaccordance with GAGAS:
NONE
-Memorandum--Only-
ASSETS: 2017 2016
Current Assets: Cash and cash equivalents 242,340$ 219,515 Investments 751,672 648,872 Current portion of receivables 56,234 56,006 Inventory of supplies 32,129 22,289 Prepaid assets 10,516 10,218 Total current assets 1,092,891 956,900
Noncurrent Assets: Restricted cash- Reserve account 0 98,000 ORWB project trust funds 0 136,766 Capital Assets- Land 13,272 13,272 Building, plant and water systems, net 1,678,866 1,747,758 Other capital assets, net 100,350 74,867 Total noncurrent assets 1,792,488 2,070,663
TOTAL ASSETS 2,885,379$ 3,027,563
LIABILITIES:
Current Liabilities: Accounts payable 3,762$ 6,030 Accrued liabilities 0 936 Deferred revenues 6,650 0 Current portion of long-term debt 0 77,114 Total current liabilities 10,412 84,080
Noncurrent Liabilities: Long-term debt 0 98,386
Total Liabilities 10,412 182,466
NET POSITION:
Invested in capital assets, net of related debt 1,792,488 1,660,397Restricted for debt service 0 233,854Unrestricted assets 1,082,479 950,846
Total Net Position 2,874,967 2,845,097
TOTAL LIABILITIES AND NET POSITION 2,885,379$ 3,027,563
The accompanying notes to the financial statements are an integral part of this statement
MUSKOGEE COUNTY RURAL WATER DISTRICT NO. 5Statement of Net Position
December 31, 2017
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-Memorandum--Only-
2017 2016Operating Revenues: Water sales 743,496$ 734,748 Fees and fines 32,992 33,693 Miscellaneous 3,548 3,586 Total revenue from operations 780,036 772,027
Operating Expenses: Salaries and benefits 201,248 197,728 Water purchases 279,117 309,194 Repairs and maintenance 82,902 92,406 Contract labor 5,250 1,500 Vehicle expense 19,176 25,237 Utilities and telephone 18,613 17,184 Insurance 15,876 15,346 Office expense and postage 28,152 26,086 Depreciation 98,597 88,059 Professional fees 4,450 3,200 Water testing 4,370 5,175 Miscellaneous 5,733 8,152 Total expenses from operations 763,484 789,267
Operating Income (Loss) 16,552 (17,240)
Non-Operating Revenues (Expenses): Sale of fixed assets 9,765 0 Interest income 5,622 4,926 Interest paid on long-term debt (2,069) (3,444) Total Non-Operating Revenues (Expenses) 13,318 1,482
Change in Net Position 29,870 (15,758)
Total Net Position, beginning of period 2,845,097 2,860,855
Total Net Position, end of period 2,874,967$ 2,845,097
The accompanying notes to the financial statements are an integral part of this statement
MUSKOGEE COUNTY RURAL WATER DISTRICT NO. 5Statement of Revenues, Expenses and Changes in Net Position
For The Year Ended December 31, 2017
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-Memorandum--Only-
2017 2016Cash Flows from Operating Activities:
Receipts from customers 763,785$ 765,477Payments to employees (173,720) (172,277)Payments to vendors (481,836) (519,025)
Net Cash Provided by Operating Activities 108,229 74,175
Cash Flows from Financing Activities:
Principal paid on long-term debt (175,500) (78,700) Interest paid on long-term debt (2,067) (3,670)
Net Cash Provided by (used in) Financing Activities (177,567) (82,370)
Cash Flows from Investing Activities:
Sale of capital assets 9,765 0 Purchase of capital assets (55,189) 0 Interest earned on investments 5,622 4,926
Net Cash Provided by (used in) Investing Activities (39,802) 4,926
Net Increase (Decrease) in Cash (109,140) (3,269)
Cash and cash equivalents, beginning of period 1,103,153 1,106,422
Cash and cash equivalents, end of period 994,013$ 1,103,153
Reconciliation of operating income (loss) to net cash provided by operating activities: Operating Income 16,552$ (17,240) Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation Expense 98,597 88,059 Change in assets and liabilities: (Increase) decrease in accounts receivable (228) 3,018 (Increase) decrease in supplies inventory (9,840) 4,029 (Increase) decrease in prepaid insurance (298) 311 Increase (decrease) in accounts payable (2,268) (4,002) Increase (decrease) in accrued liabilities (936) 0 Increase (decrease) in deferred revenues 6,650 0
Net cash provided by operating activities 108,229$ 74,175
The accompanying notes to the financial statements are an integral part of this statement
MUSKOGEE COUNTY RURAL WATER DISTRICT NO. 5Statement of Cash Flows
For the Year Ended December 31, 2017
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MUSKOGEE COUNTY RURAL WATER DISTRICT NO. 5Muskogee, Oklahoma
Notes to the Financial StatementsDecember 31, 2017
Note A – Significant Accounting Policies
Organization
Muskogee County Rural Water District No. 5 (the District) is an Oklahoma water districtorganized under Title 82 of Oklahoma Statutes, Sections 1324.1-1324.26 inclusive, toprovide water service to rural residents of Muskogee County, Oklahoma. The District isconsidered a subdivision of the State of Oklahoma. The District is exempt from federaland state income taxes. The membership consists of approximately 1,700 members.
The District is an independent, self-contained reporting entity with no associatedcomponent units. It is operated in a manner similar to a private business enterprise wherethe cost (expenses, including depreciation) of providing water services is financedthrough user charges. The District purchases its water supply from the City of Muskogee.
Basis of Accounting
The accrual basis of accounting in accordance with Generally Accepted AccountingPrinciples (GAAP) promulgated in the United States of America is followed for allaccounts. Revenues are recorded when earned and liabilities are recognized whenincurred. This policy is in accordance with generally accepted accounting principles. TheDistrict has also complied with GASB Statement No. 34 financial reporting requirements.
Deposits and Investments
Oklahoma Statutes authorize the District to invest in certificates of deposit, repurchaseagreements, passbooks, bankers’ acceptances, and other available bank investmentsprovided that all deposits are fully covered by approved securities pledged to secure thosefunds. In addition, the District can invest in direct debt securities of the United Statesunless such an investment is expressly prohibited by law.
Bank deposits are held at several financial institutions and are carried at cost. Forpurposes of statements of cash flows, the District considers cash and all highly liquidinvestments with an initial maturity of three months or less to be cash equivalents.
Custodial Credit Risk - At December 31, 2017, the District held deposits ofapproximately $994,012 at financial institutions. The District’s cash deposits, includinginterest-bearing certificates of deposit, are entirely covered by Federal DepositoryInsurance (FDIC) or direct obligation of the U.S. Government insured or collateralizedwith securities held by the District or by its agent in the District’s name.
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MUSKOGEE COUNTY RURAL WATER DISTRICT NO. 5Muskogee, Oklahoma
Notes to the Financial StatementsDecember 31, 2017
Note A – Significant Accounting Policies – cont’d
Investment Interest Rate Risk - The District does not have a formal investment policy thatlimits investment maturities as a means of managing its exposure to fair value lossesarising from increasing interest rates.
Investment Credit Risk – The District has no policy that limits its investment choicesother than the limitations of state law, as follows:
a. Direct obligations of the U.S. Government, its agencies and instrumentalities towhich the full faith and credit of the U.S. Government is pledged, or obligationsto the payment of which the full faith and credit of the State is pledged.
b. Certificates of deposits or savings accounts that are either insured or secured withacceptable collateral with in-state financial institutions, and fully insuredcertificates of deposit or savings accounts in out-of-state financial institutions.
c. With certain limitation, negotiable certificates of deposit, prime bankersacceptances, prime commercial paper and repurchase agreements with certainlimitations.
d. County, municipal or school district tax supported debt obligations, bond orrevenue anticipation notes, money judgments, or bond or revenue anticipationnotes of public trusts whose beneficiary is a county, municipality or schooldistrict.
e. Notes or bonds secured by mortgage or trust deed insured by the Federal HousingAdministrator and debentures issued by the Federal Housing Administrator, andin obligations of the National Mortgage Association.
f. Money market funds regulated by the SEC and in which investments consist ofthe investments mentioned in the previous paragraphs (a-d).
The investments held at December 31, 2017 are as follows:
Wtd. AvgMaturity Credit Rating Market Cost
Money market/checking N/A AAAm 242,340$ 242,340Certificates of deposit 1.0 Yr N/A 751,672 751,672
Total Deposits 994,012$ 994,012
Concentration of Investment Credit Risk – The District places no limit on the amount itmay invest in any one issuer. The District has the following of credit risk: 76% inCertificates of Deposit ($751,672) and 24% in Money Market funds ($242,340).
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MUSKOGEE COUNTY RURAL WATER DISTRICT NO. 5Muskogee, Oklahoma
Notes to the Financial StatementsDecember 31, 2017
Note A – Significant Accounting Policies – cont’d
Fair Value of Financial Instruments – The District’s financial instruments include cashand cash equivalents, accounts receivable, accounts payable and notes payable. TheDistrict’s estimate of the fair value of all financial instruments does not differ materiallyfrom the aggregate carrying values of its financial instruments recorded in theaccompanying statement of net position. The carrying amount of these financialinstruments approximates fair values because of the short maturity of these instruments.
Accounts Receivable
Billings for accounts receivable at December 31, 2017 were $54,435. No allowance fordoubtful accounts was computed because the effect of bad debts on the financialstatements is not considered material.
Memorandum Totals
The “Memorandum Only” captions above the total columns mean that amounts arepresented for overview information purposes only.
Inventories
Inventories consist primarily of materials and supplies for repairs and improvements ofexisting water lines, meters and all other capital assets. Inventory is valued at cost,principally on a first-in, first-out basis, but not in excess of market.
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MUSKOGEE COUNTY RURAL WATER DISTRICT NO. 5Muskogee, Oklahoma
Notes to the Financial StatementsDecember 31, 2017
Note A – Significant Accounting Policies – cont’d
Fixed Assets
Any items purchased or constructed in excess of $1,000 and a useful life of over twoyears is considered a fixed asset by the District, and will be depreciated over a specifictime. Fixed assets are valued at cost, depreciation is computed by use of the straight-linemethod. The estimated useful lives of these assets are as follows:
Land N/AOffice furniture & fixtures 3-7 yearsEquipment & tools 5-10 yearsTransportation equipment 5 yearsWater & sewer system 50 yearsBuildings 31 years
The fixed asset information for the District is shown below:
12/31/2016 12/31/2017Amount Additions Deletions Amount
Land 13,272$ - - 13,272
Building 86,062 - - 86,062
Office equipment 57,740 2,201 - 59,941
Plant and water sys. 3,356,095 - - 3,356,095
Vehicles and equip. 358,251 52,988 - 411,239
Total Fixed Assets 3,871,420 55,189 - 3,926,609
Less: Accumulated Depreciation (2,035,523) (98,598) - (2,134,121)
Total 1,835,897$ (43,409) - 1,792,488
Accumulated Unpaid Vacation and Sick Pay
At December 31, 2017, no determination of the aggregate dollar value of vacation or sickpay had been made.
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MUSKOGEE COUNTY RURAL WATER DISTRICT NO. 5Muskogee, Oklahoma
Notes to the Financial StatementsDecember 31, 2017
Note B – Notes Payable
The District paid off the promissory note with the Oklahoma Water Resources Board(OWRB), dated August 14, 2003 during the 2017 fiscal year. The district has nooutstanding debt as of December 31, 2017.
2017 2016
Oklahoma Water Resources Board note payable, issued for $1,390,000, dated 8-14-03, at 1.47% interest, due in semi-annual installments, until paid; $ 0 175,500
Less: Current maturities of long-term debt 0 (77,114)
Total Long-Term Debt $ 0 98,386
Note C – Other Commitments/Contingencies
Contributed capital was provided by payments of $131,998 from the OklahomaDepartment of Transportation to reimburse the District for relocation of lines in 2003 anda $100,000 Emergency Grant from the Oklahoma Water Resources Board to assist inbuilding and improving the water system in 2005.
Management has evaluated subsequent events through March 21, 2018, which is the datethe financial statements were available to be issued and have determined that noadditional information needs to be added to the financial statements.
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MUSKOGEE COUNTY RURAL DISTRICT NO. 5Schedule of Water Rates and Customers
-Unaudited Information-December 31, 2017
Water Rates
0 – 1,000 gallons = $17.00 minimum bill1,001 – 4,000 gallons = $4.20 per 1,000 gallons4,001 – 7,000 gallons = $4.40 per 1,000 gallons
7,001 – 10,000 gallons = $4.60 per 1,000 gallonsOver 10,000 gallons = $4.80 per 1,000 gallons
Water Loss
Total gallons purchased and produced 126,343,932Total gallons sold to District customers (92,962,939)Total 2017 water loss 33,380,993Percentage of water loss 26.42%
Customers
The District had 1,736 active customers at the close of the fiscal year.
Current membership fee structure: $1,575 per meter if meter is already in place $1,875 per meter for new meter with line on side of road $2,625 per meter for new meter that requires road bore (line on other side of road)