TOWN OF STONEWALL, OKLAHOMA ANNUAL FINANCIAL …Total current liabilities 34,156 Non-current...

TOWN OF STONEWALL, OKLAHOMA

ANNUAL FINANCIAL REPORT

JUNE 30, 2019

Ralph Osborn, CPAP.O. Box 1015

500 South ChestnutBristow, OK 74010-1015

INDEPENDENT AUDITORS’ REPORT

The Honorable Mayor and Members of the Board of TrusteesTown of Stonewall, Oklahoma

I have audited the accompanying modified cash basis financial statements of thegovernmental activities, the business-type activities, each major fund, and theaggregate remaining fund information of the Town of Stonewall, Oklahoma, as ofand for the year ended June 30, 2019, and the related notes to the financialstatements, which collectively comprise Town of Stonewall’s basic financialstatements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of thesefinancial statements in accordance with the modified cash basis of accountingdescribed in Note A; this includes determining that the modified cash basis ofaccounting is an acceptable basis for the presentation of the financialstatements in the circumstances. Management is also responsible for the design,implementation, and maintenance of internal control relevant to the preparationand fair presentation of financial statement that are free from materialmisstatement, whether due to error or fraud.

Auditor’s Responsibility

My responsibility is to express opinions on these financial statements based onmy audit. I conducted my audit in accordance with auditing standards generallyaccepted in the United States of America and the standards applicable to

financial audits contained in Government Auditing Standards, issued by theComptroller General of the United States. Those standards require that I plan andperform the audit to obtain reasonable assurance about whether the financialstatements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about theamounts and disclosures in the financial statements. The procedures selecteddepend on the auditor’s judgement, including the assessment of the risks ofmaterial misstatement of the financial statements, whether due to fraud or error.In making those risk assessments, the auditor considers internal control relevantto the entity’s preparation and fair presentation of the financial statements inorder to design audit procedures that are appropriate in the circumstances, butnot for the purpose of expressing an opinion on the effectiveness of the entity’sinternal control. Accordingly, I express no such opinion. An audit also includesevaluating the appropriateness of accounting policies used and the reasonablenessof significant accounting estimates made by management, as well as evaluating theoverall presentation of the financial statements.

I believe that the audit evidence I have obtained is sufficient and appropriateto provide a basis for my audit opinions.

Opinion

In my opinion, the financial statements referred to above present fairly, in allmaterial respects, the respective financial position - modified cash basis of thegovernmental activities, the business-type activities, each major fund, and theaggregate remaining fund information of Town of Stonewall as of June 30, 2019,and the respective changes in financial position - modified cash basis, thereoffor the year then ended in accordance with the basis of accounting as describedin Note A.

Basis of Accounting

I draw attention to Note A of the financial statements, which describes the basisof accounting. The financial statements are prepared on the modified cash basisof accounting, which is a basis of accounting other than accounting principlesgenerally accepted in the United States of America. My opinion is not modifiedwith respect to that matter.

Other Matters

Other information

My audit was conducted for the purpose of forming opinions on the financialstatements that collectively comprise Town of Stonewall, Oklahoma’s basicfinancial statements. The combining and nonmajor fund financial statements arepresented for purposes of additional analysis and are not a required part of thebasic financial statements.

The combining and individual nonmajor fund financial statements are theresponsibility of management and were derived from and relate directly to theunderlying accounting and other records use to prepare the basic financialstatements. Such information has been subjected to the auditing proceduresapplied in the audit of the basic financial statements and certain additionalprocedures, including comparing and reconciling such information directly to theunderlying accounting and other records used to prepare the basic financialstatements or to the basic financial statements themselves, and other additionalprocedures in accordance with auditing standards generally accepted in the UnitedStates of America. In my opinion, the combining and individual nonmajor fundfinancial statements are fairly stated in all material respects in relation tothe basic financial statements as a whole

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, I have also issued my reportdated November 26, 2019, on my consideration of Town of Stonewall’s internalcontrol over financial reporting and my tests of its compliance with certainprovisions of laws, regulations, contracts and grant agreements and othermatters. The purpose of that report is to describe the scope of our testing ofinternal control over financial reporting and compliance and the results of thattesting and not to provide an opinion on the internal control over financialreporting or on compliance. That report is an integral part of an audit performed

in accordance with Government Auditing Standards in considering Town ofStonewall, Oklahoma’s internal control over financial reporting and compliance.

Ralph OsbornCertified Public AccountantBristow, OklahomaNovember 26, 2019

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TOWN OF STONEWALL, OKLAHOMASTATEMENT OF NET POSITION - MODIFIED CASH BASIS

JUNE 30, 2019

Primary Government Business Governmental TypeASSETS Activities Activities Total Current assets:Cash and cash equivalents $ 254,488 $ 71,315 $ 325,803Investments 25,146 - 25,146Total current assets 279,634 71,315 350,949Non-current assets:Capital assets Land - - - Other capital assets net of Accumulated depreciation 1,171,008 3,206,183 4,377,191Total non-current assets 1,171,008 3,206,183 4,377,191

Total assets 1,450,642 3,277,498 4,728,140

LIABILITIES

Current liabilities: Utility deposits - 21,642 21,642 Notes payable, current - 12,514 12,514 Total current liabilities - 34,156 34,156Non-current liabilities: Notes payable, non-current - 2,858 2,858Total non-current liabilities - 2,858 2,858

Total liabilities - 37,014 37,014

NET POSITION

Capital assets, net of related debt 1,171,008 3,190,811 4,361,819 Unrestricted 279,634 49,673 329,307

Total net position $ 1,450,642 $ 3,240,484 $ 4,691,126

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

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TOWN OF STONEWALL, OKLAHOMASTATEMENT OF ACTIVITIES - MODIFIED CASH BASIS

YEAR ENDED JUNE 30, 2019

Program Revenue Charges Operating Capital For Grants and Grants and Net Expenses Services Contributions Contributions Revenue Function/Programs Governmental activities General government $ 128,773 $ 369 $ 3,993 $ 10,000 $ (114,411) Street 37,500 - 3,370 - (34,130) Nutrition Center 19,181 - 12,628 - (6,553) Public Safety 115,701 12,498 4,000 11,284 (87,919) Park 380 - - - (380) Cemetery 4,948 4,925 - - (23) Total governmental activities 306,483 17,792 23,991 21,284 (243,416) Business-type activities Utility service 338,854 204,008 - 99,999 (34,847) Total business-type activities 338,854 204,008 - 99,999 (34,847)

Total primary government $ 645,337 $ 221,800 $ 23,991 $ 121,283 $ (278,263)

Primary Government Governmental Business-type Activities Activities Total

Changes in net position:

Net (expense) revenue $ (243,416) $ (34,847) $ (278,263)

General revenues Taxes Sales/Use tax 259,143 - 259,143 Franchise 14,927 - 14,927 Other tax 2,941 - 2,941 Royalties 16,605 - 16,605 Donations 17,721 - 17,721 Rent 295 - 295 Sale of assets 7,500 - 7,500 Surety bond claim 21,485 - 21,485 Miscellaneous 5,483 - 5,483 Interest 675 141 816 Transfers 5,309 (5,309) -

Total general revenue 352,084 (5,168) 346,916 Change in net position 108,668 (40,015) 68,653 Net position - beginning 1,341,974 3,280,499 4,622,473

Net position - ending $ 1,450,642 $ 3,240,484 $ 4,691,126


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TOWN OF STONEWALL, OKLAHOMABALANCE SHEET - GOVERNMENTAL FUNDS

MODIFIED CASH BASISJUNE 30, 2019

Total General Non-Major Governmental Fund Fund Funds ASSETS Cash and cash equivalents $ 220,514 $ 33,974 $ 254,488 Investments 25,146 - 25,146

TOTAL ASSETS $ 245,660 $ 33,974 $ 279,634

FUND BALANCES Unrestricted 245,660 33,974 279,634

TOTAL FUND BALANCES 245,660 33,974 279,634

TOTAL LIABILITIES AND FUND BALANCES $ 245,660 $ 33,974

RECONCILIATION OF BALANCE SHEET - GOVERNMENTAL FUNDSWITH THE STATEMENT OF NET POSITION

Amounts reported in the Statement of Net Position aredifferent because:

Capital assets used in governmental activities are not financial resources and therefore are not reported as assets in governmental funds. Capital assets 2,896,533 Accumulated depreciation (1,725,525) 1,171,008

Total net position $1,450,642


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TOWN OF STONEWALL, OKLAHOMASTATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN

FUND BALANCES - GOVERNMENTAL FUNDSMODIFIED CASH BASIS

FOR THE YEAR ENDED JUNE 30, 2019 Nonmajor Total

Total General Non-Major Governmental Fund Funds Funds Revenue Sales tax $ 259,143 $ - $ 259,143 Franchise tax 14,927 - 14,927 Motor vehicle taxes 3,370 - 3,370 Gasoline tax 872 - 872 Cigarette tax 2,069 - 2,069 Alcoholic beverage tax 3,993 - 3,993 Mineral royalties 16,605 - 16,605 Court fines 12,188 - 12,188 Rent - 295 295 Donations - 17,721 17,721 Cemetery sales - 4,925 4,925 Licenses and permits 369 - 369 Intergovernmental 25,284 12,628 37,912 Fire revenue 310 - 310 Surety bond claim 21,485 - 21,485 Sale of assets 7,500 - 7,500 Interest 603 72 675 Other revenue 811 4,672 5,483

Total revenue 369,529 40,313 409,842

Expenditures Current General Government 77,562 16,226 93,788 Public Safety 110,273 - 110,273 Nutrition Center - 21,049 21,049 Cemetery - 4,198 4,198

Total expenditures 187,835 41,473 229,308

Excess (deficiency) of revenue over expenditures 181,694 (1,160) 180,534

Transfer in 8,000 18,426 26,426Transfer out (21,117) - (21,117)

Total transfers (13,117) 18,426 5,309

Net change in fund balance 168,577 17,266 185,843

Fund balances, beginning 77,083 16,708 93,791

Fund balances, ending $ 245,660 $ 33,974 $ 279,634


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TOWN OF STONEWALL, OKLAHOMARECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES

FOR THE YEAR ENDED JUNE 30, 2019

Net changes in fund balances - total governmental funds $ 185,843

Amounts reported for governmental activities in the Statement of Activities are different because:

Capital outlays to purchase or build capital assets are reported in governmental funds as expenditures. However, for governmental activities those cost are shown in the combined Statement of Net Position and allocated over their estimated useful lives as annual depreciation in the Statement of Activities. This is the amount by which capital outlay exceeds depreciation outlay in the period.

Depreciation expense (93,608) Capital outlay 16,433 (77,175) Change in net position $ 108,668


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TOWN OF STONEWALL, OKLAHOMASTATEMENT OF NET POSITION - PROPRIETARY FUND

MODIFIED CASH BASISJUNE 30, 2019

Public Works ASSETS

Current assets: Cash and cash equivalents $ 71,315

Total current assets 71,315

Non-current assets Capital assets: Capital assets, net of accumulated depreciation 3,206,183

Total non-current assets 3,206,183 Total assets 3,277,498

LIABILITIES

Current liabilities: Utility deposits 21,642 Notes Payable, current 12,514

Total current liabilities 34,156

Non-current liabilities: Notes Payable, non-current 2,858

Total non-current liabilities 2,858

Total liabilities 37,014 NET POSITION

Capital assets, net of related debt 3,206,183Unrestricted 34,301 Net position of business-type activities $3,240,484


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TOWN OF STONEWALL, OKLAHOMASTATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION

PROPRIETARY FUND - MODIFIED CASH BASISFOR THE YEAR ENDED JUNE 30, 2019

Public WorksOPERATING REVENUESCharges for services: Water $ 134,549 Wastewater charges 20,418 Sanitation charges 43,740 Other 5,301

Total operating revenues 204,008

OPERATING EXPENSESPersonal services 71,843 Professional Services 3,169Insurance 7,743Office expense 4,923Materials and supplies 2,375Utilities and telephone 13,011Sanitation contractor 35,078Repairs and maintenance 3,954Vehicle expense 2,339Street expense 4,191Animal control 34Other operating expenses 8,667Depreciation 180,641

Total operating expenses 337,968

Operating income (loss) (133,960)

NON-OPERATING REVENUE (EXPENSES)Interest income 141Grant 99,999Interest expense (886)

Total non-operating revenue (expenses) 99,254

Transfers in 2,691Transfers out (8,000)

Total transfers (5,309)

Change in net position of business type activities (40,015)

Total net position, beginning 3,280,499

Total net position, ending $3,240,484


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TOWN OF STONEWALL, OKLAHOMASTATEMENT OF CASH FLOWS

PROPRIETARY FUND TYPE - MODIFIED CASH BASISFOR THE YEAR ENDED JUNE 30, 2019

Cash flows from operating activities Cash received from customers $ 208,313 Cash payments to employees (71,843) Cash payments to suppliers for goods and services (85,484)

Net cash provided (used) by operating activities 50,986

Transfer to other funds, net (5,309)

Net transfers to other funds (5,309)

Cash flows from capital and related financing activities Acquisition of fixed assets (122,499) Proceeds from grant 99,999 Interest paid on notes payable (886) Principal paid on notes payable (12,370)

Net cash used for capital and related financing activities (35,756)

Cash flows from investing activities Interest revenue 141

Net cash provided by investing activities 141

Net increase in cash and cash equivalents 10,062

Cash and cash equivalents, beginning 61,253

Cash and cash equivalents, ending $ 71,315

Reconciliation of operating income (loss) to net cash provided by (used) by operating activities Operating income (loss) $ (133,960) Adjustments to reconcile operating income to net cash used by operating activities: Depreciation 180,641 Changes in assets and liabilities: Increase/(decrease) in utility deposits 4,305

Net cash provided by operating activities $ 50,986


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TOWN OF STONEWALL, OKLAHOMANOTES TO FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Town of Stonewall, Oklahoma, was incorporated under the provisions of thelaws of the State of Oklahoma. The Town operates under a Board of Trustees formof government and provides the following services: general government, publicsafety, public works, nutrition, and cemetery. The basic financial statementsinclude the departments, agencies, and other organizational units over which theBoard of Trustees exercise oversight responsibility. In evaluating how to definethe government for financial reporting purposes, management has considered allpotential component units. The decision to include a component unit in thereporting entity was made by applying the criteria set forth in GASB StatementNo. 14 and No. 39. Based on the criteria Stonewall Public Works Authority is theonly component unit. The definition of the financial reporting entity isprimarily based on the concept of financial accountability. The financialreporting entity consists of the primary government (the Town), and activitiesfor which the primary government is financially accountable, and the activitiesof Stonewall Public Works Authority. Financial accountability exists if a primarygovernment appoints a voting majority of an organizations governing body, and iseither able to impose its will on the organization or there is a potential forthe organization to provide a specific financial benefit to, or impose specificfinancial burdens on, the primary government. Based upon the application of thesecriteria, there are no other entities to include in the Town’s financialstatements.

Stonewall Public Works Authority was created December 2, 1965 under theprovisions of Title 60, Sections 176 to 180, Oklahoma Statutes 1961. TheAuthority is managed by a Board of Trustees made up of members of the Town Boardof Trustees. The Authority operates natural gas, sanitation, and sewer servicesfor the Town of Stonewall.

Government-Wide and Fund Financial Statements

The government-wide financial statements include the Statement of Net Positionand the Statement of Activities. These statements report financial informationfor the Town as a whole excluding fiduciary activities such as employee pensionplans. The primary government and component units are presented separately withinthe financial statements with the focus on the primary government. Individualfunds are not displayed but the statements distinguish governmental activities,generally supported by taxes and Town general revenues, from business-typeactivities, generally financed in whole or in part with fees charged to externalcustomers.

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JUNE 30, 2019

The Statement of Activities reports the expenses of a given function offset byprogram revenues directly connected with the functional program. A functionalprogram is an assembly of similar activities and may include portions of a fundor summarize more than one fund to capture the expenses and program revenuesassociated with a distinct functional activity. Program revenues include (1)charges for services which report fees, fines and forfeitures, and other chargesto users of the Town’s services;(2) operating grants and contributions whichfinance annual operating activities including restricted investment income; and(3) capital grants and contributions which fund the acquisition, construction, or rehabilitation of capital assets and include fees to developers. Theserevenues are subject to externally imposed restrictions to these programs uses.Taxes and other revenue sources not properly included with program revenues arereported as general revenues.

Fund Financial Statements

Fund financial statements of the Town are provided for governmental, proprietary,and fiduciary funds. Major individual governmental and enterprise funds arereported in separate columns with composite columns for non-major funds.

Measurement Focus, Basis of Accounting and Financial Statement Presentation

Measurement focus is a term used to describe “how” transactions are recordedwithin the various financial statements. Basis of accounting refers to “when”transactions are recorded regardless of the measurement focus applied.

Measurement Focus

In the government-wide Statement of Net Position and the Statement of Activities,both governmental and business-like activities are presented using the economicresources measurement focus, within limitations of the modified cash basis ofaccounting, as defined below.

In the fund financial statements, the “current financial resources” measurementfocus or the “economic resources” measurement focus, as applied to the cash basisof accounting, is used as appropriate.

A. All governmental funds utilize a “current financial resources” measurementfocus. Only current financial assets and liabilities are generally included ontheir balance sheets. Their operating statements present sources and uses ofavailable spendable financial resources during a given period. These funds usefund balance as their measure of available spendable financial resources at theend of the period.

Basis of Accounting

In the government-wide Statement of Net Position and Statement of Activities andthe fund financial statements, governmental and business-like activities arepresented using a modified cash basis of accounting. This basis recognizesassets, liabilities, Net Position/fund equity, revenues, andexpenditures/expenses when they result from cash transactions. This basis is acomprehensive basis of accounting other than accounting principles generallyaccepted in the United States of America.

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JUNE 30, 2019

As a result of the use of the modified cash basis of accounting, certain assetsand their related revenues (such as accounts receivable and revenue for billedor provided services not yet collected) and certain liabilities and their relatedexpenses (such as accounts payable and expenses for goods and services received

but not yet paid, and accrued expenses and liabilities) are not recorded in thesefinancial statements.

When both restricted and unrestricted resources are available for use, it is theTown’s policy to use restricted resources first, then unrestricted resources asneeded.

FUND TYPES AND MAJOR FUNDS

The Town reports the following major governmental funds:

General Fund - The General Fund reports as the primary fund of the Town. This fund is used to account for all financial resources not reported in other funds.

Proprietary Funds - The Town reports the following major enterprise funds:

Stonewall Public Works Authority - The Authority provides certain utilityservices for the Town.

Budgetary Accounting and Control

The Mayor submits an annual budget to the Board of Trustees in accordance withthe Oklahoma Municipal Budget Act. The budget is presented to the Board ofTrustees for review, and public hearings are held to address priorities andallocation of resources. In June, the Board of Trustees adopts the annual fiscalyear budgets for the Town operating funds. Once approved, the Board of Trusteesmay amend the legally adopted budget when unexpected modifications are requiredin estimated revenues and appropriations. Public trusts submit budget and otherplanning documents to their respective governing bodies.

Each fund’s appropriated budget is prepared on a detailed line item basis.Revenues are budgeted by sources. Expenditures are budgeted by department andclass as follows: Personal services, other services and charges, supplies,capital outlay, transfers, and debt service. Budget revisions at this level aresubject to final review by the Board of Trustees. The legal level of control isby department within a fund. Expenditures may not exceed appropriations at thislevel. Within these control levels, management may transfer appropriationswithout Board approval. Revisions to the budget were made during the year.

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JUNE 30, 2019

The budgets for the operating funds and proprietary fund operations are preparedon the cash and expenditures/encumbrances basis. Revenues are budgeted in theyear receipt is expected; and expenditures, which include encumbrances, arebudgeted in the year that the applicable purchase orders are expected to beissued. The Debt Service Fund budget is prepared to provide funding for generalobligation debt service when liabilities are due for payment. The budget andactual financial statements are reported on these bases. Unencumberedappropriations for annually budgeted funds lapse at fiscal year-end.

Investments

The Town follows Governmental Accounting Standards Board (GASB) Statement No. 31,“Accounting and Financial Reporting for Certain Investments and for ExternalInvestment Pools,” which requires marketable securities to be carried at fairvalue. The Town considers highly liquid investments with a maturity of threemonths or less when purchased to be cash equivalents. The investments reportedin the financial statements consist of Certificates of Deposits.

Encumbrances

Encumbrance accounting, under which purchase orders, contracts and othercommitments for the expenditure of funds are recorded in order to reserve thatportion of the applicable appropriations, is employed in the governmental funds.Encumbrances outstanding at year end are cancelled under the modified cash basis.The encumbrance is added to the subsequent year expenses when paid.

Inventories and Prepaids

Inventories and prepaids are not reported under the modified cash basis ofaccounting.

Capital Assets, Depreciation, and Amortization

The Town’s property, plant, equipment, and infrastructure with useful lives ofmore than one year are stated at historical cost and comprehensively reported inthe government-wide financial statements. The Town maintains infrastructureassets records consistent with all other capital assets. Proprietary andcomponent unit capital assets are also reported in their respective fund andcombining component units financial statements. Donated assets are stated at fairvalue on the date donated. The Town generally capitalizes assets with cost of$2,500 or more as purchase and construction outlay occur. The cost of normalmaintenance and repairs that do not add to the assets value or materially extenduseful lives are not capitalized. Capital assets, including those of componentunits, are depreciated using the straight-line method. When capital assets aredisposed, the cost and applicable accumulated depreciation are moved from therespective accounts, and the resulting gain or loss is recorded in operations.

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JUNE 30, 2019

Estimated useful lives, in years, for depreciable assets are as follow:

Buildings 5-60 Improvements, other than buildings 2-50 Mobile equipment 3-40 Furniture , machinery, and equipment 3-30 Utility system 5-50

Compensated Absences

The Town does not report compensated absences under the modified cash basis ofaccounting.

Reserves and Designations

Reserves represent those portions of fund balance not available for expenditureor legally segregated for a specific future use. Designated fund balancesrepresent tentative plans for future use of financial resources.

Use of Estimates

The preparation of financial statements in conformity with the modified cashbasis of accounting requires management to make estimates and assumptions thataffect the reported amounts of assets and liabilities, disclosure of contingentassets and liabilities at the date of the financial statements, and the reportedamounts of revenue and expenses during the reporting period. Actual results coulddiffer from those estimates.

NOTE B - CASH AND INVESTMENTS

Custodial Credit RiskCustodial credit risk is the risk that in the event of failure of counterparty,the Town will not be able to recover the value of its deposits or investments. Deposits are exposed to custodial credit risk if they are uninsured anduncollateralized. Investment securities are exposed to custodial credit risk ifthey are uninsured, are not registered in the name of the Town, and are held bycounterparty or the counterparty’s trust department but not in the name of theTown. The Town’s policy requires that all deposits and investments in excess ofamounts covered by federal deposit insurance be fully collateralized by theentity holding the deposits or investments. As of June 30, 2019, the Town hadon deposit $36,447 that was not covered under FDIC insurance or other collateral.This amount was considered “at risk”.

DepositsThe Town had deposits at financial institutions with a carrying amount ofapproximately $350,949 at June 30, 2019. The bank balance of the deposits atJune 30, 2019 was approximately $360,846.

Credit RiskFixed-income securities are subject to credit risk. However, the Town did nothave fixed income securities at June 30, 2019.

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JUNE 30, 2019

Interest Rate RiskInterest rate risk is the risk that changes in interest rates will adverselyaffect the fair value of an investment. The Board of Directors monitor’s theinvestment performance on an ongoing basis to limit the Town’s interest raterisk. As of June 30, 2019, the Town’s deposits consisted of demand deposits andcertificates of deposit with a maturity of 12 months or less.

NOTE C- CAPITAL ASSETS

The following table provides a summary of changes in capital assets:

CAPITAL ASSETS, DEPRECIATED Infrastructure Furniture, Capital & Improvements Machinery, Assets Not Other Than And Depreciated Buildings Buildings Equipment Totals Land PRIMARY GOVERNMENTGovernmental Activities Balance, June 30, 2018 $1,267,900 $1,510,000 $ 102,200 $2,880,100 $ - Increases 9,960 - 6,473 16,433 - Decreases - - - - - Balance, June 30, 2019 1,277,860 1,510,000 108,673 2,896,533 - Accumulated Depreciation Balance, June 30, 2018 877,288 679,500 75,129 1,631,917 Increase 48,005 37,750 7,853 93,608 Decreases - - - - Balance, June 30, 2019 925,293 717,250 82,982 1,725,525Governmental Activities Capital Assets, Net $ 352,567 $ 792,750 $ 25,691 $1,171,008 $ -

Business-type activities Balance, June 30, 2018 $ 100,000 $6,229,000 $ 48,500 $6,377,500 $ - Increases - 99,999 22,500 122,499 - Decreases - - - - - Balance, June 30, 2019 100,000 6,328,999 71,000 6,499,999 - Accumulated Depreciation Balance, June 30, 2018 72,000 3,004,750 36,426 3,113,176 Increase 4,000 171,375 5,265 180,640 Decreases - - - - Balance, June 30, 2019 76,000 3,176,125 41,691 3,293,816Business-type Activities Capital Assets, Net $ 24,000 $3,152,874 $ 29,309 $3,206,183 $ -

TOTAL Capital Assets, Net $ 376,567 $3,945,624 $ 55,000 $4,377,191 $ -

Depreciation expense was charged to functions of the primary government as follows:

GOVERNMENT ACTIVITIES BUSINESS-TYPE ACTIVITIES

General government $ 44,945 Public works $ 180,641Cemetery 750Nutrition Center 4,605Public Safety 5,428Streets 37,500 Parks 380

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JUNE 30, 2019

NOTE D - PROPRIETARY FUND NOTES PAYABLE

The following is a summary of changes in long-term debt of the proprietary fundfor the year ended June 30, 2019. Payable at Retired/ Balance at July 1, 2018 Added June 30, 2019 First American Bank $ 27,712 $ (12,340) $ 15,372 $ 27,712 $ (12,340) $ 15,372

As of June 30, 2019, the long-term debt payable from business-type activitiesresources consisted of the following:

Note payable with First American Bank dated May 24, 2012, original amount of $100,070 with an annual interest rate of 4.0%, due in monthly payments of $1,105 for 9 years. $ 15,372

Total Notes Payable $ 15,372

Debt Service Requirements to Maturity: Year Ended June 30 Principal Interest Total 2020 $ 12,514 $ 742 $ 13,256 2021 2,858 457 3,315 Total $ 15,372 $ 1,199 $ 16,571 NOTE E - CONTRIBUTED CAPITAL

The Town records grants, entitlements, contributed fixed assets, or sharedrevenues received by its funds for operations, capital acquisition, and/orconstruction as contributed capital. Depreciation is recognized on assetsacquired with these funds.

NOTE F - UTILITY DEPOSITS

The Authority recorded a liability of $21,642 for customer utility deposits atJune 30, 2019. The deposit is refundable upon termination of utility service.

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JUNE 30, 2019

NOTE G - PENSION OBLIGATIONS

The Town participates in one pension plan.

Oklahoma Firefighter’s Pension and Retirement System

Town of Stonewall participates in two statewide, cost-sharing multiple-employer defined benefit plans on behalf of police officers and firefighters. The systems are administered by agencies of the State of Oklahoma and fundedby contributions from participants, employers, insurance premium taxes, andstate appropriations, as necessary. The following is a summary of eligibilityfactors, contribution methods, and benefit provisions.

Oklahoma Police and Firefighter’s Pension and Retirement Systems

Oklahoma Firefighter’s Pension And Retirement System Eligibility to Participate All full-time or voluntary Firefighters of a participating Municipality hired hired before age 45

Authority establishing State Statute contribution obligations and benefit provisions

Plan members’ contribution rate 8% of covered payroll

Town’s contribution rate 13% of covered payroll/$60 per volunteer Period required to vest 10 years

Benefits and eligibility 20 years credited service, 2 ½% for distribution (full time) Of final average salary multiplied By the years of credited service with A maximum of 30 years considered; If vested, at or after age 50, or After 10 but before 20 years of Credited service, with reduced benefits Benefits and eligibility 20 years credited service equal to for distribution (Volunteer) $5.46 per month per year of service With a maximum of 30 Years considered

Deferred retirement option Yes, 20 years credited service with Continued service for 30 or more years Provisions for: Cost of living adjustments (normal retirement) Yes, if vested by 5/83 Death (duty, non-duty, post-retirement) Yes Disability Yes Cost of living allowances Yes

Contributions required by State Statue: Fiscal Required Percentage Year Contribution Contributed 2019 $ 720 100%

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JUNE 30, 2019

NOTE H - RISK MANAGEMENT

The Town is exposed to various risks of loss related to torts; theft of, damageto, and destruction of assets; errors and omissions; injuries to employees; andnatural disasters. The Town carries commercial insurance for risk of loss,including workers’ compensation. Settled claims resulting from these risks havenot exceeded commercial insurance coverage in any of the past three fiscal years.

NOTE I - LITIGATION

The Town is party to various legal proceedings which normally occur ingovernmental operations. These legal proceedings are not likely to have amaterial adverse impact on the affected funds of the Town. The Town retains legalcouncil for legal proceedings. The Town may also be represented by attorneysretained by its insurance carrier. NOTE J - FEDERAL AND STATE GRANTS

In the normal course of operations, the Town receives grant funds from variousfederal and state agencies. The grant programs are subject to audit by agents ofthe granting authorities the purpose of which is to ensure compliance withconditions precedent to the granting of the funds. Any liability forreimbursement which may arise as the result of these audits is not believed tobe material.

NOTE K - SUBSEQUENT EVENTS

The Town management evaluated subsequent events through November 26, 2019, thedate which the financial statements were available, to determine if any itemsneed to be disclosed. The Authority has applied for a loan and grant projectthrough the United State Department of Agriculture for the Water DistributionSystem & Wells Project in the amounts of $1,877,000 and $562,000, respectively.They have also applied for grants in the amounts of $425,000 and $500,000 fromChickasaw Nation and Indian Health Services. The Authority expects the projectto be funded and project is expected to begin in fiscal year 2020.

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TOWN OF STONEWALL, OKLAHOMACOMBINING BALANCE SHEET - NONMAJOR GOVERNMENTAL FUNDS

JUNE 30,2019

Total Nutrition Nonmajor Cemetery Community Center Funds ASSETS

Cash and cash equivalents $ 17,235 $ 6,202 $ 10,537 $ 33,974

TOTAL ASSETS $ 17,235 $ 6,202 $ 10,537 $ 33,974

LIABILITIES AND FUND BALANCES FUND BALANCES Unrestricted $ 17,235 $ 6,202 $ 10,537 $ 33,974 TOTAL FUND BALANCES 17,235 6,202 10,537 33,974

TOTAL LIABILITIES AND FUND BALANCES $ 17,235 $ 6,202 $ 10,537 $ 33,974


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TOWN OF STONEWALL, OKLAHOMACOMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCE - NONMAJOR GOVERNMENTAL FUNDSFOR THE YEAR ENDED JUNE 30, 2019

Total Nutrition Nonmajor Cemetery Community Center Funds REVENUES Cemetery lot sales $ 4,925 $ - $ - $ 4,925 Donations 250 9,020 8,451 17,721 Rentals - - 295 295 Intergovernmental - - 12,628 12,628 Miscellaneous - 2,796 1,876 4,672 Interest 37 13 22 72

TOTAL REVENUES 5,212 11,829 23,272 40,313

EXPENDITURESCurrent General government - 16,226 - 16,226 Cemetery 4,198 - - 4,198 Nutrition Center - - 21,049 21,049

TOTAL EXPENDITURES 4,198 16,226 21,049 41,473

Excess of revenues over (under) expenditures 1,014 (4,397) 2,223 (1,160) Other financing sources (uses) Transfer in 4,794 9,687 3,945 18,426 Transfer out - - - -

Total transfers 4,794 9,687 3,945 18,426

Net change in fund balances 5,808 5,290 6,168 17,266

Fund balances, beginning 11,427 912 4,369 16,708

Fund balances, ending $ 17,235 $ 6,202 $ 10,537 $ 33,974


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INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING ANDON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS

PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

To the Honorable Mayor and Members of the Town Council Town of StonewallStonewall, Oklahoma

I have audited, in accordance with the auditing standards generally accepted inthe United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General ofthe United States, the financial statements of the governmental activities, thebusiness-type activities, each major fund, and the aggregate remaining fundinformation of Town of Stonewall, Oklahoma, modified cash basis, as of and forthe year ended June 30, 2019, and the related notes to the financial statements,

which collectively comprise Town of Stonewall’s basic financial statements andhave issued my report thereon dated November 26, 2019.

Internal Control Over Financial Reporting

In planning and performing my audit of the financial statements, I consideredTown of Stonewall's internal control over financial reporting (internal control)to determine the audit procedures that are appropriate in the circumstances forthe purpose of expressing my opinions on the financial statements, but not forthe purpose of expressing an opinion on the effectiveness of Town of Stonewall’sinternal control. Accordingly, I do not express an opinion of the effectivenessof Town of Stonewall's internal control.

A deficiency in internal control exists when the design or operation of a controldoes not allow management or employees, in the normal course of performing theirassigned functions, to prevent, or detect and correct misstatements on a timelybasis. A material weakness is a deficiency, or a combination of deficiencies, ininternal control such that there is a reasonable possibility that a materialmisstatement of the entity’s financial statements will not be prevented, ordetected and corrected on a timely basis. A significant deficiency is adeficiency, 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.

My consideration of internal control over financial reporting was for the limitedpurpose described in the first paragraph of this section and was not designed toidentify all deficiencies in internal control that might be material weaknessesor, significant deficiencies. Given these limitations, during our audit we didnot identify any deficiencies in internal control that we consider to be materialweaknesses. However, material weaknesses may exist that have not been identified.

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Compliance and Other Matters

As part of obtaining reasonable assurance about whether Town of Stonewall,Oklahoma’s financial statements are free of material misstatement, I performedtests of its compliance with certain provisions of laws, regulations, contracts,and grant agreements, noncompliance with which could have a direct and materialeffect on the determination of financial statement amounts. However, providingan opinion on compliance with those provisions was not an objective of my audit,and accordingly, I do not express such an opinion. The results of my testsdisclosed no instances of noncompliance or other matters that are required to bereported under Government Auditing Standards.

Purpose of the Report

The purpose of this report is solely to describe the scope of our testing ofinternal control and compliance and the results of that testing, and not toprovide an opinion on the effectiveness of the entity’s internal control or oncompliance. This report is an integral part of an audit performed in accordancewith Governmental Auditing Standards in considering the entity’s internal controland compliance. Accordingly, this communication is not suitable for any otherpurpose.

Sincerely,

Ralph OsbornCertified Public AccountantBristow, OklahomaNovember 26, 2019

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TOWN OF STONEWALL, OKLAHOMA ANNUAL FINANCIAL …Total current liabilities 34,156 Non-current...

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