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HomeMy Public PortalAbout2016-2017 Audit Issued financial statementsMoab City Corporation ANNUAL FINANCIAL REPORT For the Year Ended June 30, 2017 Moab City Corporation TABLE OF CONTENTS June 30, 2017 INDEPENDENT AUDITOR'S REPORT Beginning on page 1 MANAGEMENT DISCUSSION AND ANALYSIS 3 BASIC FINANCIAL STATEMENTS 13 Government -wide Financial Statements: Statement of Net Position 15 Statement of Activities 16 Fund Financial Statements: Balance Sheet - Governmental Funds 18 Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds 19 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position 20 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 21 Statement of Net Position - Proprietary Funds 22 Statement of Revenues, Expenses and Changes in Fund Net Position - Proprietary Funds 23 Statement of Cash Flows - Proprietary Funds 24 Notes to Financial Statements 26 REQUIRED SUPPLEMENTARY INFORMATION 47 Notes to Required Supplementary Information 49 Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - General Fund 50 Schedule of the Proportionate Share of the Net Pension Liability 51 Schedule of Contributions 52 COMBINING STATEMENTS Combining Balance Sheet - Governmental Funds 53 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds 54 OTHER REPORTS Report on Internal control over Financial Reporting and on Compliance and Other Matters based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Independent Auditor's Report on Compliance and Report on Internal Control over Compliance as Required by the State Compliance Audit Guide 55 57 ��A Larson CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITOR'S REPORT Honorable Mayor Members of the City Council Moab, Utah We have audited the accompanying financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of Moab City, Utah (herein referred to as the "City"), as of and for the year ended June 30, 2017, and the related notes to the financial statements, which collectively comprise the City'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 opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of Moab City, as of June 30, 2017, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Larson & Company 765 North Main, Spanish Fork, Urals 84660 Main: (801) 798-3545 I Fax: (801) 798-3678 www.larsco.com 1 rl lrnbrr e90 CPAMERICA INTERNATIONAL ,�� Gvw Harm& lnlem.1613,4 Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and other required supplementary information on pages 5-11 and 49-52 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 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 information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise Moab City's basic financial statements. The combining and individual nonmajor fund financial statements (pages 53-54) are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements are the responsibility of management and were derived from and relate 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 accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements are fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued a report dated December 5, 2017 on our consideration of Moab City's internal control over financial reporting 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 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 Moab City's internal control over financial reporting and compliance. 6jt/l� P� Larson & Company, PC Spanish Fork, Utah December 5, 2017 2 MANAGEMENT'S DISCUSSION AND ANALYSIS 3 This page intentionally left blank. 4 Moab City Corporation Management's Discussion and Analysis June 30, 2017 As management of Moab City Corporation (the City), we offer readers of the City's financial statements this narrative overview and analysis of financial activities of the City for the fiscal year ended June 30, 2017. FINANCIAL HIGHLIGHTS *Total net position for the City as a whole increased by $2,342,930 *Total unrestricted net position for the City as a whole increased by $4,636,274 *Total net position for governmental activities increased by $509,902 *Total net position for business -type activities increased by $1,833,028 BASIC FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the basic financial statements of Moab City Corporation. The basic financial statements comprise three components: (1) government wide financial statements, (2) fund financial statements, and (3) notes to the financial statements. Government -wide financial statements. The government -wide financial statements are designed to provide readers with a broad overview of the City's finances, in a manner similar to a private -sector business. The statement of net position presents information on all of the City's assets, deferred outflows, liabilities, and deferred inflows, 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 City is improving or deteriorating. The statement of activities presents information showing how the City's net position changed during the fiscal year reported. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods. Both of the government -wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business -type activities). The statement of activities is presented on two pages. The first page reports the extent to which each function or program is self-supporting through fees and intergovernmental aid. The second page identifies the general revenues of the City available to cover any remaining costs of the functions or programs. 5 Moab City Corporation Management's Discussion and Analysis June 30, 2017 Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City also uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. All of the funds of the City can be divided into two categories: governmental funds and proprietary funds. Governmental funds. These funds are used to account for the same functions reported as governmental activities in the government -wide financial statements. Governmental fund financial statements focus on near -term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the information presented for government funds with similar information presented for governmental activities in the government -wide financial statements. By doing so, readers may better understand the long-term impact of the government's near -term financing decisions. Both the government fund balance sheet and the government fund statement of the revenues, expenditures, and changes in fund balances provide reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains two major governmental funds, the general fund and the capital projects fund. The City adopts an annual appropriated budget for all its funds A budgetary comparison schedule has been provided to demonstrate legal compliance with the adopted budget for the general fund. The basic governmental fund financial statements can be found later in this report; see Table of Contents. Proprietary funds. The City maintains one type of proprietary fund. Enterprise funds are used to report the same functions presented as business -type activities in the government -wide financial statements. The City uses two enterprise funds to account for the operations of the water, sewer, and storm drain utilities. Proprietary funds provide the same type of information as the government -wide financial statements, only in more detail. The enterprise funds are considered major funds of the City. The proprietary fund financial statements can be found later in this report; see Table of Contents. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government -wide and fund financial statements. The notes to the financial statements are reported later in this report; see Table of Contents. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City. 6 Moab City Corporation Management's Discussion and Analysis June 30, 2017 FINANCIAL ANALYSIS Moab City Corporation's Net Position Current and other assets Net capital assets Deferred outflows of resources Total assets and deferred outflows Long-term debt outstanding Other liabilities Deferred inflows of resources Total liabilities and deferred inflows Net position: Net investment in capital assets Restricted Unrestricted Total net position Governmental Activities Business -type Activities Current Year Total Total Previous Current Previous Current Previous Year Year Year Year Year $ 8,204,068 15,634,107 1,039,279 6,684,765 5,906,417 3,932,000 14,110,485 10,616,765 16,431,427 10,607,735 7,843,764 26,241,842 24,275,191 812,352 101,529 79,359 1,140,808 891,711 $ 24,877,454 23,928,544 16,615,681 11,855,123 41,493,135 35,783,667 $ 4,839,000 2,955,926 390,959 5,109,000 2,314,567 323,309 2,920,000 289,697 38,192 7,759,000 5,109,000 288,776 3,245,623 2,603,343 31,583 429,151 354,892 8,185,885 7,746,876 3,247,889 320,359 11,433,774 8,067,235 10,795,107 11,322,427 7,687,735 7,843,764 18,482,842 19,166,191 673,837 366,465 495,759 2,413,127 1,169,596 2,779,592 5,222,625 4,492,776 5,184,298 1,277,873 10,406,923 5,770,649 $ 16,691,570 16,181,668 13,367,792 11,534,764 30,059,361 27,716,432 As noted earlier, net position may serve over time as a useful indicator of financial position. Total assets and deferred outflows of resources exceeded total liabilities and deferred inflow of resources at the close of the year by $30,059,361, an increase of $2,342,929 from the previous year. This change is equivalent to the net income for the year, in private sector terms. Total unrestricted net position at the end of the year are $10,406,923 which represents an increase of $4,636,274 from the previous year. Unrestricted net position are those resources available to finance day-to-day operations without constraints established by debt covenants, enabling legislation, or other legal requirements. The amount of current and other assets represent the amounts of cash and receivables on hand at the end of each year. Other liabilities are the amounts of current and other liabilities due, at year end, for goods and services acquired. Changes in capital assets are the result of the difference, in the current year, of the cost of acquisition of capital assets and any depreciation charges on capital assets. Change in long-term debt is the difference in the amount of debt issued and that which has been paid during the year. 7 Moab City Corporation Management's Discussion and Analysis June 30, 2017 FINANCIAL ANALYSIS (continued) Moab City Corporation's Change in Net Position Governmental Business -type Activities Activities Total Total Current Previous Current Previous Current Previous Year Year Year Year Year Year Program revenues: Charges for services $ 2,028,166 1,855,004 2,149,899 1,797,751 4,178,064 3,652,755 Operating grants 661,964 213,171 - - 661,964 213,171 Capital grants 60,000 429,117 1,623,591 - 1,683,591 429,117 General revenues: Sales tax 1,939,516 1,794,758 - 1,939,516 1,794,758 Other taxes 6,247,900 5,489,963 - 6,247,900 5,489,963 Other revenues 223,900 298,500 58,632 123,564 282,532 422,064 Total revenues 11,161,446 10,080,513 3,832,122 1,921,315 14,993,568 12,001,828 Expenses: General government 2,559,772 2,311,388 - 2,559,772 2,311,388 Public safety 2,946,128 2,436,681 - 2,946,128 2,436,681 Highways and improvements 2,517,022 2,377,055 - 2,517,022 2,377,055 Parks and recreation 2,970,750 2,065,937 - 2,970,750 2,065,937 Interest on long-term debt 31,019 32,981 - 31,019 32,981 Water and sewer - 1,618,598 1,214,490 1,618,598 1,214,490 Storm drain 7,350 7,350 Total expenses 11,024,690 9,224,042 1,625,948 1,214,490 12,650,638 10,438,532 Transfers in (out) 373,146 410,000 (373,146) (410,000) Change in net position $ 509,902 1,266,471 1,833,028 296,825 2,342,930 1,563,296 For the City as a whole, total revenues increased by $2,991,740 compared to the previous year, while total expenses increased by $2,212,106 The total net change of $2,342,930 is, in private sector terms, the net income for the year which is $779,634 more than the previous year. Governmental activities revenues of $11,161,446 is an increase of $1,080,933 from the previous year. All significant items of revenue increased, with the largest increase occurring in the other taxes. Governmental activities expenses of $11,024,690 is an increase of $1,800,648 from the previous year. Expenses across all departments increased, with the largest increase occurring in the parks and recreation department. Business -type activities revenue of $3,832,122 is an increase of $1,910,807 from the previous year. Service revenues increased by $352,148 and capital grants increased by $1,623,591. Business -type activities expenses of $1,625,948 is an increase of $411,458 from the previous year. This is due to an overall increase in operation expenses. 8 Moab City Corporation Management's Discussion and Analysis June 30, 2017 BALANCES AND TRANSACTIONS OF INDIVIDUAL FUNDS Some of the more significant changes in fund balances and fund net position and any restrictions on those amounts is described below: General Fund The fund balance of $3,394,018 reflects an increase of $1,217,852 from the previous year. Total revenues increased by $1,016,619. Tax revenues increased by $902,695. All other revenues increased by a total of $113,924. Transfers in from the water and sewer fund and the storm drain fund were made during the year amounting to $373,146. Total expenditures increased by $1,248,660. General government expenditures increased by $129,271; public safety expenditures increased by $360,731; streets and highways expenditures increased by $115,778; and parks and recreation expenditures increased by $642,878. Total transfers out of $534,805 were comprised of a transfer to the capital projects fund of $235,949 and a transfer to the recreation fund of $298,856. The fund balance restricted for Class C roads is $673,837. The unassigned fund balance amounts to $2,720,181. Water Fund The change in net position (net income) was $1,701,783, which included capital grants of $800,000. The amount of $495,759 is restricted for construction. Unrestricted net position amounts to $3,867,978. Storm Drain Fund The change in net position (net income) was $131,245. Unrestricted net position amounts to $1,316,320. GENERAL FUND BUDGETARY HIGHLIGHTS Revenues for the current year, exclusive of transfers and fund balance appropriations, were originally budgeted in the amount of $9,570,436. This amount was amended in the final budget to $10,313,850. Actual revenues, excluding transfers, amounted to $10,490,243. Expenditures for the current year, excluding transfers, were originally budgeted in the amount of $10,234,989. This amount was amended in the final budget to $10,740,936. Actual expenditures amounted to $9,110,732. Transfers in were budget both in the original budget and final budget at $373,146, which was equal to actual transfers in. Transfers out were originally budgeted in the amount of $287,338 and amended to $534,805 in the final budget, which was equal to the actual transfers out. 9 Moab City Corporation Management's Discussion and Analysis June 30, 2017 CAPITAL ASSETS AND DEBT ADMINISTRATION Moab City Corporation's Capital Assets (net of depreciation) Governmental Business -type Activities Activities Total Total Current Previous Current Previous Current Previous Year Year Year Year Year Year Net Capital Assets: Land and water rights $ 476,884 476,884 262,935 262,935 739,819 739,819 Buildings 9,592,047 9,890,780 9,592,047 9,890,780 Improvements other than buildings 1,792,301 1,906,563 - - 1,792,301 1,906,563 Automobiles & Trucks 546,730 632,214 12,823 24,321 559,553 656,535 Machinery and equipment 786,424 921,572 518,369 333,849 1,304,794 1,255,422 Office equipment 87,739 139,245 87,739 139,245 Infrastructure 2,351,981 2,464,168 - - 2,351,981 2,464,168 Water system - 2,686,104 2,770,285 2,686,104 2,770,285 Sewer system - 3,233,424 3,364,399 3,233,424 3,364,399 Work in progress - 3,894,080 1,087,974 3,894,080 1,087,974 Totals $ 15,634,107 16,431,427 10,607,735 7,843,764 26,241,842 24,275,191 The total amount of capital assets, net of depreciation, of $26,241,842 is an increase of $1,966,651 from the previous year. Governmental activities capital assets, net of depreciation, of $15,634,107 is a decrease of $797,320 from the previous year. Business -type activities capital assets, net of depreciation, of $10,607,735 is an increase of $2,763,971 from the previous year. Additional information regarding capital assets may be found in the notes to financial statements. 10 Moab City Corporation Management's Discussion and Analysis June 30, 2017 CAPITAL ASSETS AND DEBT ADMINISTRATION (continued) Moab City Corporation's Outstanding Debt - Revenue Bonds Current Previous Year Year Governmental activities: 2003 Sales Tax Revenue $ 1,221,000 1,300,000 2009 Sales Tax Revenue 3,618,000 3,809,000 Total governmental 4,839,000 5,109,000 Business -type activities: 2017 Wastewater Revenue 2,920,000 - Total business -type 2,920,000 - Total outstanding debt $ 7,759,000 5,109,000 Additional information regarding the long-term liabilities may be found in the notes to financial statements. ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES No significant economic changes that would affect the City are expected for the next year. Budgets have been set on essentially the same factors as the current year being reported. REQUESTS FOR INFORMATION This financial report is designed to provide a general overview of the Moab City Corporation's finances for all those with an interest in the City's finances. Questions concerning any information provided in this report or requests for additional financial information should be addressed to: City Recorder, 217 East Center Street, Moab, UT 84532. 11 This page intentionally left blank. 12 BASIC FINANCIAL STATEMENTS 13 This page intentionally left blank. 14 Moab City Corporation STATEMENT OF NET POSITION June 30, 2017 Governmental Business -type Activities Activities Total ASSETS AND DEFERRED OUTFLOWS OF RESOURCES: Assets: Current assets: Cash and cash equivalents $ 6,519,626 5,258,765 11,778,391 Accounts receivable, net 1,009,928 151,677 1,161,605 Other current assets 11,736 - 11,736 Total current assets 7,541,289 5,410,442 12,951,732 Non -current assets: Restricted cash and cash equivalents 660,562 495,759 1,156,321 Capital assets: Not being depreciated 476,884 4,157,015 4,633,899 Net of accumulated depreciation 15,157,223 6,450,720 21,607,943 Net pension assets 2,216 217 2,433 Total non -current assets 16,296,885 11,103,710 27,400,596 Total assets 23,838,175 16,514,152 40,352,327 Deferred outflows of resources - pensions Total assets and deferred outflows of resources 1,039,279 101,529 1,140,808 $ 24,877,454 16,615,681 41,493,135 LIABILITIES AND DEFERRED INFLOWS OF RESOURCES: Liabilities: Current liabilities: Accounts payable $ 431,530 46,478 478,009 Accrued liabilities 292,500 - 292,500 Customer deposits - 3,725 3,725 Accrued interest payable 22,894 22,894 Long-term debt outstanding, current portion 272,000 - 272,000 Total current liabilities 1,018,924 50,203 1,069,127 Non -current liabilities: Compensated absences 408,518 63,613 472,131 Long-term debt outstanding, non -current portion 4,567,000 2,920,000 7,487,000 Net pension liability 1,800,484 175,881 1,976,365 Total non -current liabilities 6,776,002 3,159,494 9,935,496 Total liabilities 7,794,926 3,209,697 11,004,623 Deferred inflows of resources - pensions Total liabilities and deferred inflows of resources 390,959 38,192 429,151 8,185,885 3,247,889 11,433,774 NET POSITION: Net investment in capital assets 10,795,107 7,687,735 18,482,842 Restricted for: Class C roads 673,837 673,837 Construction 495,759 495,759 Unrestricted 5,222,625 5,184,298 10,406,923 Total net position 16,691,570 13,367,792 30,059,361 Total liabilities, deferred inflows of resources and net position $ 24,877,454 16,615,681 41,493,135 The notes to the financial statements are an integral part of this statement. 15 Moab City Corporation STATEMENT OF ACTIVITIES For the Year Ended June 30, 2017 Net (Expense) Charges Operating Capital Revenue for Grants and Grants and (To Next Expenses Services Contributions Contributions Page) FUNCTIONS/PROGRAMS: Primary government: Governmental activities: General government $ 2,559,772 451,654 - (2,108,118) Public safety 2,946,128 85,824 39,313 - (2,820,991) Streets and highways 2,517,022 989,796 223,244 - (1,303,981) Parks, recreation and public property 2,970,750 500,891 399,407 60,000 (2,010,451) Interest on long-term debt 31,019 - - (31,019) Total governmental activities 11,024,690 2,028,166 661,964 60,000 (8,274,560) Business -type activities: Water and sewer utilities 1,618,598 2,007,304 1,623,591 2,012,296 Storm drain utility 7,350 142,595 135,245 Total business -type activities 1,625,948 2,149,899 1,623,591 2,147,541 Total primary government $ 12,650,638 4,178,064 661,964 1,683,591 (6,127,019) (continued on next page) The notes to the financial statements are an integral part of this statement. 16 Moab City Corporation STATEMENT OF ACTIVITIES (continued) For the Year Ended June 30, 2017 Governmental Business -type Activities Activities Total CHANGES IN NET POSITION: Net (expense) revenue (from previous page) $ (8,274,560) 2,147,541 (6,127,019) General revenues: Sales tax 1,939,516 1,939,516 Other taxes 6,247,900 6,247,900 Unrestricted investment earnings 88,476 58,632 147,109 Miscellaneous 135,424 - 135,424 Total general revenues 8,411,316 58,632 8,469,948 Transfers in (out) 373,146 (373,146) Change in net position 509,902 1,833,028 2,342,930 Net position - beginning restated 16,181,668 11,534,764 27,716,432 Net position - ending $ 16,691,570 13,367,792 30,059,361 The notes to the financial statements are an integral part of this statement. 17 Moab City Corporation BALANCE SHEET - GOVERNMENTAL FUNDS June 30, 2017 Capital Non -Major Total General Projects Governmental Governmental Fund Fund Funds Funds ASSETS Cash and cash equivalents $ 2,237,494 4,172,708 109,424 6,519,626 Accounts receivable, net of allowances 995,711 14,217 1,009,928 Other current assets 11,736 11,736 Restricted cash and cash equivalents 660,562 660,562 TOTAL ASSETS $ 3,905,502 4,186,925 109,424 8,201,851 LIABILITIES Accounts payable $ 328,635 100,386 2,510 431,530 Accrued liabilities 182,850 109,650 - 292,500 TOTAL LIABILITIES FUND BALANCES: Restricted for: Class C roads Assigned for: Capital projects USU Set -aside Recreation Youth city council Unassigned TOTAL FUND BALANCES 511,484 210,036 2,510 724,030 673,837 2,720,181 673,837 3,451,889 - 3,451,889 525,000 525,000 103,747 103,747 3,167 3,167 - - 2,720,181 3,394,018 3,976,889 106,914 7,477,821 TOTAL LIABILITIES AND FUND BALANCES $ 3,905,502 4,186,925 109,424 8,201,851 The notes to the financial statements are an integral part of this statement. 18 Moab City Corporation STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS For the Year Ended June 30, 2017 Capital Non -Major Total General Projects Governmental Governmental Fund Fund Funds Funds Revenues: Taxes: Sales $ 1,939,516 1,939,516 Other taxes 6,247,900 6,247,900 License and permits 396,032 396,032 Intergovernmental revenues 347,142 285,794 89,028 721,964 Charges for services 1,375,375 39,846 151,367 1,566,588 Fines and forfeitures 65,546 - 65,546 Interest 37,999 50,144 334 88,476 Miscellaneous revenue 80,734 51,505 3,185 135,424 Total revenues 10,490,243 427,289 243,914 11,161,446 Expenditures: General government 2,163,433 114,666 2,278,099 Public safety 2,770,794 112,734 - 2,883,528 Highways and public improvements 2,255,614 42,823 2,298,437 Parks, recreation and public property 1,920,890 213,047 555,413 2,689,350 Debt service: Principal 270,000 - 270,000 Interest 32,500 32,500 Total expenditures 9,110,732 785,769 555,413 10,451,914 Excess (deficiency) of revenues over (under) expenditures 1,379,511 (358,481) (311,499) 709,532 Other financing sources and (uses): Transfers in 373,146 235,949 298,856 907,951 Transfers (out) (534,805) (534,805) Total other financing sources and (uses) (161,659) 235,949 298,856 373,146 Net change in fund balances 1,217,852 (122,532) (12,643) 1,082,678 Fund balances - beginning of year 2,176,166 4,099,421 119,557 6,395,143 Fund balance - end of year $ 3,394,018 3,976,889 106,914 7,477,821 The notes to the financial statements are an integral part of this statement. 19 Moab City Corporation RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION June 30, 2017 Total Fund Balance for Governmental Funds $ 7,477,821 Total net position reported for governmental activities in the statement of net position is different because: Capital assets used in governmental funds are not financial resources and therefore are not reported in the funds: Capital assets, at cost 26,181,428 Less accumulated depreciation (10,547,321) Net capital assets 15,634,107 Net pension assets are not financial resources and, therefore, are not reported in the funds. 2,216 Deferred outflows of resources - pensions, a consumption of net position that applies to future periods, is not shown in the funds statements. 1,039,279 Long-term liabilities, for funds other than enterprise funds, are recorded in the government -wide statements but not in the fund statements. General long-term debt Interest accrued but not yet paid on long-term debt Compensated absences Net pension liability Deferred inflows of resources - pensions Total Net Position of Governmental Activities (4,839,000) (22,894) (408,518) (1,800,484) (390,959) $ 16,691,570 The notes to the financial statements are an integral part of this statement. 20 Moab City Corporation RECONCILIATION 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, 2017 Net Change in Fund Balances - Total Governmental Funds $ 1,082,678 Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities, assets with a material cost are capitalized and the cost is allocated over their estimated useful lives and reported as depreciation expenses. Capital outlays 289,965 Depreciation expense (1,087,284) Net (797,320) The statement of activities show pension benefits, pension expenses, and non -employer contributions related to GASB 68 that are not shown in the fund statements. (5,001) Repayment of debt principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net position. Long-term debt principal repayments Accrued interest for long-term debt is not reported as expenditure for the current period, while it is recorded in the statement of activities. Change in accrued interest Compensated absences expenses reported in the statement of activities do not require the use of current financial resources and are not reported as expenditures in governmental funds. Change in compensated absence liability 270,000 1,481 (41,936) Change in Net Position of Governmental Activities $ 509,902 The notes to the financial statements are an integral part of this statement. 21 Moab City Corporation STATEMENT OF NET POSITION - PROPRIETARY FUND June 30, 2017 Total Water & Sewer Storm Drain Proprietary Fund Fund Funds ASSETS AND DEFERRED OUTFLOWS OF RESOURCES: Assets: Current assets: Cash and cash equivalents $ 3,956,606 1,302,159 5,258,765 Accounts receivable, net 137,516 14,161 151,677 Total current assets 4,094,122 1,316,320 5,410,442 Non -current assets: Restricted cash and cash equivalents 495,759 495,759 Capital assets: Not being depreciated 4,032,547 124,468 4,157,015 Net of accumulated depreciation 6,450,720 6,450,720 Net pension assets 217 217 Total non -current assets 10,979,242 124,468 11,103,710 Total assets 15,073,364 1,440,788 16,514,152 Deferred outflows of resources - pensions Total assets and deferred outflows of resources 101,529 - 101,529 $ 15,174,893 1,440,788 16,615,681 LIABILITIES AND DEFERRED INFLOWS OF RESOURCES: Liabilities: Current liabilities: Accounts payable $ 46,478 46,478 Customer security deposits 3,725 3,725 Total current liabilities 50,203 50,203 Non -current liabilities: Compensated absences 63,613 63,613 Long-term debt outstanding, non -current portion 2,920,000 2,920,000 Net pension liability 175,881 175,881 Total non -current liabilities 3,159,494 3,159,494 Total liabilities 3,209,697 3,209,697 Deferred inflows of resources - pensions 38,192 - 38,192 Total liabilities and deferred inflows of resources 3,247,889 3,247,889 NET POSITION: Net investment in capital assets 7,563,267 124,468 7,687,735 Restricted for: Construction 495,759 495,759 Unrestricted 3,867,978 1,316,320 5,184,298 Total net position 11,927,004 1,440,788 13,367,792 Total liabilities, deferred inflows of resources and net position $ 15,174,893 1,440,788 16,615,681 The notes to the financial statements are an integral part of this statement. 22 Moab City Corporation STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION - PROPRIETARY FUND For the Year Ended June 30, 2017 Total Water & Sewer Storm Drain Proprietary Fund Fund Funds Operating income: Charges for sales and service $ 1,816,780 142,595 1,959,375 Connection fees 83,566 83,566 Other operating income 106,959 - 106,959 Total operating income 2,007,304 142,595 2,149,899 Operating expenses: Personnel services 700,028 700,028 Utilities 139,659 139,659 Repair and maintenance 267,966 7,350 275,316 Professional and technical 135,119 135,119 Other supplies and expenses 17,490 - 17,490 Insurance expense 1,560 - 1,560 Depreciation expense 356,776 - 356,776 Total operating expense 1,618,598 7,350 1,625,948 Net operating income (loss) 388,705 135,245 523,950 Non -operating income (expense): Impact fees 823,591 823,591 Interest income 58,632 58,632 Total non -operating income (expense) 882,223 882,223 Income (loss) before transfers and capital contributions 1,270,929 135,245 1,406,174 Transfers out (369,146) (4,000) (373,146) Capital contributions 800,000 800,000 Change in net position 1,701,783 131,245 1,833,028 Net position - beginning 10,225,221 1,309,543 11,534,764 Net position - ending $ 11,927,004 1,440,788 13,367,792 The notes to the financial statements are an integral part of this statement. 23 Moab City Corporation STATEMENT OF CASH FLOWS For the Year Ended June 30, 2017 Total Water & Sewer Storm Drain Proprietary Fund Fund Funds Cash flows from operating activities: Cash received from customers - service $ 1,989,579 142,684 2,132,263 Cash paid to suppliers (596,402) (14,674) (611,077) Cash paid to employees (674,766) - (674,766) Net cash provided (used) in operating activities 718,411 128,009 846,420 Cash flows from noncapital financing activities: Interfund balances (369,146) (4,000) (373,146) Change in customer deposits 2,100 - 2,100 Net cash provided (used) in noncapital financing activities (367,046) (4,000) (371,046) Cash flows from capital and related financing activities: Cash received from capital contributions 800,000 800,000 Cash received from impact fees 823,591 823,591 Cash received from bond proceeds 2,920,000 2,920,000 Cash payments for capital assets (3,093,270) (27,477) (3,120,747) Net cash provided (used) in capital and related financing activities 1,450,322 (27,477) 1,422,844 Cash flows from investing activities: Cash received from interest earned 58,632 - 58,632 Net cash provided (used) in investing activities 58,632 58,632 Net increase (decrease) in cash 1,860,319 96,532 1,956,851 Cash balance, beginning 2,592,046 1,205,627 3,797,673 Cash balance, ending $ 4,452,364 1,302,159 5,754,523 Cash reported on the statement of net position: Cash and cash equivalents $ 3,956,606 1,302,159 5,258,765 Non -current restricted cash 495,759 - 495,759 Total cash and cash equivalents $ 4,452,364 1,302,159 5,754,523 The notes to the financial statements are an integral part of this statement. 24 Moab City Corporation STATEMENT OF CASH FLOWS (continued) For the Year Ended June 30, 2017 Reconciliation of Operating Income to Net Cash Provided (Used) in Operating Activities: Net operating income (expense) Adjustments to reconcile operating income or (loss) to net cash provided (used)in operating activities: Depreciation and amortization Total Water & Sewer Storm Drain Proprietary Fund Fund Funds $ 388,705 135,245 523,950 356,776 356,776 Changes in assets and liabilities: (Increase) decrease in receivables (17,725) 89 (17,636) (Increase) decrease in net pension assets 69 69 (Increase) decrease in deferred outflows (22,170) (22,170) Increase (decrease) in payables (34,608) (7,324) (41,933) Increase (decrease) in compensated absences 24,774 24,774 Increase (decrease) in net pension liabilities 15,980 15,980 Increase (decrease) in deferred inflows 6,609 6,609 Net cash provided (used) in operating activities $ 718,411 128,009 846,420 The notes to the financial statements are an integral part of this statement. 25 Moab City Corporation NOTES TO FINANCIAL STATEMENTS June 30, 2017 NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1-A. Reporting entity Moab City Corporation (the City), is a municipal corporation located in Grand County, Utah. The City operates under Mayor -Council form of government. The accompanying financial statements present the City and its component units, entities for which the City is considered to be financially accountable. The financial statements of the City have been prepared in conformity with Generally Accepted Accounting Principles (GAAP) as applied to government units. The Governmental Accounting Standards Board is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant of the government's accounting policies are described below. 1-B. Government -wide and fund financial statements Government -wide Financial Statements The government -wide financial statements, consisting of the statement of net assets and the statement of changes in net assets report information on all of the non -fiduciary activities of the primary government and its component units. For the most part, the effect of inter -fund activity has been removed from these statements. Governmental activities , which normally are supported by taxes and intergovernmental revenues, are reported separately from business -type activities , which rely to a significant extent on fees and charges for support. The statement of activities reports the expenses of a given function offset by program revenues directly connected with the functional program. A function is an assembly of similar activities and may include portions of a fund or summarize more than one fund to capture the expenses and program revenues associated with a distinct functional activity. Direct expenses are those that are clearly identifiable with a specific function or segment. Indirect expenses are not allocated. All expenses are included in the applicable function. Program revenues include (1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privilege provided by a given function or segment and (2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues . Fund Financial Statements Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, if any, even though the latter are excluded from the government -wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statement. 26 Moab City Corporation NOTES TO FINANCIAL STATEMENTS June 30, 2017 1-C. Measurement focus, basis of accounting and financial statement presentation The financial statements of the City are prepared in accordance with generally accepted accounting principles (GAAP). The government -wide statements are reported using the economic resources measurement focus and the accrual basis of accounting, generally including the reclassification of internal activity (between or within funds). However, internal eliminations do not include utility services provided to City departments or payments to the general fund by other funds for providing administrative and billing services for such funds. Reimbursements are reported as reductions to expenses. Proprietary and any fiduciary fund financial statements are also reported using this same focus and basis of accounting although internal activity is not eliminated in these statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property tax revenues are recognized in the year for which they are levied while grants are recognized when the grantor eligibility requirements are met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. The City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes, sales taxes, intergovernmental revenues, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessments, if any, receivable within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the government. Proprietary funds distinguish operating revenues and expenses from non -operating items. Operating income and expense reported in proprietary fund financial statements include those revenues and expenses related to the primary, continuing operations of the fund. Principal operating revenues for proprietary funds are charges to customers for sales or services. Principal operating expenses are the costs of providing goods or services, including administrative expenses and depreciation of capital assets. Other revenues and expenses are classified as non -operating in the financial statements. Policy regarding use of restricted resources When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first, then unrestricted resources as needed. Restricted assets and liabilities payable from restricted assets current in nature are reported with current assets and current liabilities. Restricted assets, non -current reports assets restricted for acquisition or construction of non -current assets, or are restricted for liquidation of long-term debt. 27 Moab City Corporation NOTES TO FINANCIAL STATEMENTS June 30, 2017 1-D. Fund types and major funds Governmental funds The City reports the following major governmental funds: The general fund is the government's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The capital projects fund accounts for financial resources used for the acquisition or construction of the capital facilities of the City (other than those of the enterprise funds). The City reports the following as non -major governmental funds: The recreation fund accounts for the revenues and expenditures for the activities in relation to recreation. The youth city council fund accounts for revenues and expenditures for activities with the youth city council. Proprietary funds The City reports the following major proprietary funds: The water and sewer fund is used to account for the activities of the water and sewer utlities. The storm drain fund is used to account for the revenues and expenses of the storm drain utility. 1-E. Assets, Liabilities, and Net Position or Equity 1-E-1. Deposit and Investments Investments are reported at fair value. Deposits are reported at cost, which approximates fair value. Investments of the City are accounts at the Utah Public Treasurers Investments Fund. Additional information is contained in Note 3. 1-E-2. Cash and Cash Equivalents The City's cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition. 1-E-3. Receivables and Payables Accounts receivable other than intergovernmental receivables are from customers primarily for utility services. Intergovernmental receivables are considered collectible. Customer accounts are reported net of an allowance for uncollectible accounts. The allowance amount is estimated using accounts receivable past due more than 90 days. 28 Moab City Corporation NOTES TO FINANCIAL STATEMENTS June 30, 2017 1-E-3. Receivables and Payables (continued) During the course of operations, there may be transactions occur between funds that are representative of lending/borrowing arrangements outstanding at year-end. These are reported as either due to or due from other funds . 1-E-4. Restricted Assets In accordance with certain revenue bond covenants, resources may be required to be set aside for the repayment of such bonds, and, on occasion, for the repair and maintenance of the assets acquired with the bond proceeds. These resources are classified as restricted assets on the balance sheet because of their limited use. Most capital grant agreements mandate that grant proceeds be spent only on capital assets. Unspent resources of this nature are also classified as restricted. The limited use resources described above involve a reported restriction of both cash and net assets. Unspent proceeds of bonds issued to finance capital assets are also reported as restricted cash. 1-E-5. Inventories and Prepaid items Inventories, which mainly consist of immaterial amounts of expendable supplies for consumption, are not reported. Such supplies are acquired as needed. Proprietary fund inventories, where material, are stated at the lower of cost or market, using the first -in, first -out basis. Prepaid items record payments to vendors that benefit future reporting and are reported on the consumption basis. Both inventories and prepayments are similarly reported in government -wide and fund financial statements. 1-E-6. Capital Assets Capital assets includes property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), and are reported in the applicable governmental or business -type activities columns in the government -wide financial statements. Capital assets are defined by the government as assets with an initial, individual cost of $5,000 or more and an estimated useful life in excess of two years. Such assets are recorded at historical cost or at estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. Infrastructure is depreciated. The cost of normal maintenance and repairs that does not add to the value of an asset or materially extend the assets' life is not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business -type activities is included as part of the capitalized value of the assets constructed. 29 Moab City Corporation NOTES TO FINANCIAL STATEMENTS June 30, 2017 1-E-6. Capital Assets (continued) Upon retirement or disposition of capital assets, the cost and related accumulated depreciation are removed from the respective accounts. Depreciation of capital assets is computed using the straight-line method over their estimated useful lives. Property, plant, and equipment of the primary government, as well as the component units if any, is depreciated using the straight line method over the following estimated useful lives: Assets Years Buildings and structures 30-45 Infrastructure 30 Vehicles and equipment 5-15 1-E-7. Long-term Obligations In the government -wide and proprietary fund financial statements, long-term debt and obligations are reported as liabilities in the applicable governmental activities, business -type activities, or proprietary fund statement of net assets. The governmental fund financial statements recognize the proceeds of debt and premiums as other financing sources of the current period. Issuance costs (if any) are reported as expenditures. 1-E-8. Deferred Outflows/Inflows of Resources In addition to assets, the statement of net position will sometimes include a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The City reports deferred outflows of resources related to pensions as required by GASB 68. In addition to liabilities, the statement of net position will sometimes include a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until then. The City also reports deferred inflows of resources related to pensions as required by GASB 68. 1-E-9. Pensions For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Utah Retirement Systems Pension Plan (URS) and additions to/deductions from URS's fiduciary net position have been determined on the same basis as they are reported by URS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. 30 Moab City Corporation NOTES TO FINANCIAL STATEMENTS June 30, 2017 1-E-10. Fund Equity Government -wide Financial Statements Equity is classified in the government -wide financial statements as net position and is displayed in three components: Net investment in capital assets - Capital assets including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. Restricted net position - Net position with constraints placed on the use either by (1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments; or (2) law through constitutional provisions or enabling legislation. Unrestricted net position - All other net position that does not meet the definition of "restricted" or "net investment in capital assets." Fund Financial Statements In the fund financial statements governmental fund equity is classified as fund balance. Governmental fund balance is further classified as Nonspendable, Restricted, Committed, Assigned or Unassigned. Descriptions of each follow: Nonspendable fund balance - Amounts that cannot be spent because they are either (a) not in spendable form, or (b) legally or contractually required to be maintained intact. Restricted fund balance - Net fund resources that are subject to external constraints that have been placed on the use of the resources either a) imposed by creditors (such as through a debt covenant), grantors, contributors, or laws or regulations of the government or b) imposed by law through constitutional provisions or enabling legislation. Committed fund balance - Amounts that can only be used for specific purposes established by formal action of the City Council, with is the City's highest level of decision making authority. Fund balance commitments can only be removed or changed by the same type of action (for example resolution) of the City Council. This classification also includes contractual obligations to the extent that existing resources have been specifically committed for use in satisfying those contractual requirements. Assigned fund balance - Amounts that the City intends to be used for a specific purpose but are neither restricted nor committed. The City Recorder is authorized to assign amounts to a specific purpose in accordance with the City's budget policy. Unassigned fund balance - Residual classification of the General Fund. This classification represents fund balance that has not been assigned to other funds and that has not been restricted, committed, or assigned to specific purposes within the General Fund. Proprietary fund equity is classified the same as in the government -wide statements. 31 Moab City Corporation NOTES TO FINANCIAL STATEMENTS June 30, 2017 1-F. Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Actual results may differ from those estimates. NOTE 2 - STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY 2-A. Budgetary data Annual budgets are prepared and adopted by ordinance by total for each department, in accordance with State law, by the Mayor and City Council on or before June 22 for the following fiscal year beginning July 1. Estimated revenues and appropriations may be increased or decreased by resolution of the City Council at any time during the year. A public hearing must be held prior to any proposed increase in a fund's appropriations. Budgets include activities in the General Fund. The level of the City's budgetary control (the level at which the City's expenditures cannot legally exceed appropriations) is established at the department level. Each department head is responsible for operating within the budget for their department. All annual budgets lapse at fiscal year end. Utah State law prohibits the appropriation of unreserved General Fund balance to an amount less than 5% of the General Fund revenues. The 5% reserve that cannot be budgeted is used to provide working capital until tax revenue is received, to meet emergency expenditures, and to cover unanticipated deficits. Any unreserved General Fund balance greater than 25% of the current year's actual revenues must be appropriated within the following two years. The general fund balance exceeded the legal allowable limit for the year ended June 30, 2017. Once adopted, the budget may be amended by the City Council without hearing provided the budgeted expenditures do not exceed budgeted revenues and appropriated fund balance. A public hearing must be held if the budgeted expenditures will exceed budgeted revenues and any fund balance which is available for budgeting. With the consent of the Mayor, department heads may reallocate unexpended appropriated balances from one expenditure account to another within that department during the budget year. Budgets for the General Fund are prepared on the modified accrual basis of accounting. Encumbrances are not used. 2-B. Deficit fund balance or net position None of the City's funds have deficit fund balances. 32 Moab City Corporation NOTES TO FINANCIAL STATEMENTS June 30, 2017 NOTE 3 - DETAILED NOTES 3-A. Deposits and investments Cash and investments as of June 30, 2017 consist of the following: Fair Value Cash on hand $ 650 Demand deposits - checking 496,574 Savings 120,739 Deposits - PTIF 12,316,748 Total cash $ 12,934,712 Cash and investments listed above are classified in the accompanying government -wide statement of net position as follows: Cash and cash equivalents (current) Restricted cash and cash equivalents (non -current) Total cash and cash equivalents $ 7,821,785 5,112,926 $ 12,934,712 Cash equivalents and investments are carried at fair value in accordance with GASB Statement No. 72. The Utah Money Management Act (UMMA) establishes specific requirements regarding deposits of public funds by public treasurers. UMMA requires that city funds be deposited with a qualified depository which includes any depository institution which has been certified by the Utah State Commissioner of Financial Institutions as having met the requirements specified in UMMA Section 51, Chapter 7. UMMA provides the formula for determining the amount of public funds which a qualified depository may hold in order to minimize risk of loss and also defines capital requirements which an Institution must maintain to be eligible to accept public funds. UMMA lists the criteria for investments and specifies the assets which are eligible to be invested in, and for some investments, the amount of time to maturity. UMMA enables the State Treasurer to operate the Public Treasurer's Investment Pool (PTIF). PTIF is managed by the Utah State Treasurer's investment staff and comes under the regulatory authority of the Utah Money Management Council. This council is comprised of a select group of financial professionals from units of local and state government and financial institutions doing business in the state. PTIF operations and portfolio composition is monitored at least semi-annually by the Utah Money Management Council. PTIF is unrated by any nationally recognized statistical rating organizations. Deposits in PTIF are not insured or otherwise guaranteed by the State of Utah. Participants share proportionally in any realized gains or losses on investments which are recorded on an amortized cost basis. The balance available for withdrawal is based on the accounting records maintained by PTIF. The fair value of the investment pool is approximately equal to the value of the pool shares. The City maintains monies not immediately needed for expenditure in PTIF accounts. Deposit and Investment Risk The City maintains no investment policy containing any specific provisions intended to limit the City's exposure to interest rate risk, credit risk, and concentration of credit risk other than that imposed by UMMA. The City's compliance with the provisions of UMMA addresses each of these risks. 33 Moab City Corporation NOTES TO FINANCIAL STATEMENTS June 30, 2017 3-A. Deposits and investments (continued) Fair Value of Investments The City measures and records its investments using fair value measurement guidelines established by generally accepted accounting principles. These guidelines recognize a three -tiered fair value hierarchy, as follows: Level 1--Quoted prices for identical investments in active markets; Level -- Observable inputs other than quoted market prices; and, Level3--Unobservableinputs. At June 30, 2017 the City had $12,316,7481 invested in the PTIF, which uses a Level fair value measurement. Interest rate risk Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. All deposits and investments of the City are available immediately. Credit risk Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligations. Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits. At June 30, 2017, the City's bank balance of demand and bank trust deposits total $1,187,190 and the book balance is $464,562. Of these deposits, $265,673 is covered by FDIC insurance; $921,517 is uninsured and uncollateralized. Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker -dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. This risk is addressed through the policy of investing excess monies only in PTIF. Concentration of credit risk Concentration of credit risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer. PTIF falls under the constraints of UMMA in limiting concentrations of investments. 3-B. Receivables The allowance policy is described in Note 1-E-3. Receivables as of year end for the City's funds are shown below: Capital Water and General Projects Sewer Storm Drain Fund Fund Fund Fund Total Customers $ 95,106 14,217 153,275 14,161 276,759 Intergovernmental receivables 890,289 - 890,289 Other receivables 10,316 - - 10,316 Total receivables 995,711 14,217 153,275 14,161 1,177,364 Allowance for uncollectibles (15,759) (15,759) Total receivables, net of allowances $ 995,711 14,217 137,516 14,161 1,161,605 34 Moab City Corporation NOTES TO FINANCIAL STATEMENTS June 30, 2017 3-C. Capital Assets Capital asset activity for the governmental activities was as follows: Beginning Ending Governmental activities Balance Additions Retirements Balance Capital assets, not being depreciated: Land and rights $ 476,884 476,884 Total capital assets, not being depreciated 476,884 476,884 Capital assets, being depreciated: Buildings 12,274,189 8,130 12,282,319 Improvements other than buildings 4,092,495 112,696 4,205,191 Autos and trucks 2,347,653 65,796 - 2,413,449 Machinery and equipment 2,224,802 58,519 2,283,321 Office equipment 569,041 - 569,041 Infrastructure 3,906,399 44,824 - 3,951,223 Total capital assets, being depreciated 25,414,580 289,965 - 25,704,544 Less accumulated depreciation for: Buildings 2,383,409 306,863 - 2,690,272 Improvements other than buildings 2,185,931 226,959 - 2,412,890 Autos and trucks 1,715,439 151,280 - 1,866,719 Machinery and equipment 1,303,230 193,666 - 1,496,897 Office equipment 429,797 51,505 - 481,302 Infrastructure 1,442,231 157,011 1,599,242 Total accumulated depreciation 9,460,037 1,087,284 10,547,321 Total capital assets being depreciated, net 15,954,543 (797,320) 15,157,223 Governmental activities capital assets, net $ 16,431,427 (797,320) 15,634,107 Depreciation expense was charged to functions/programs of the primary government governmental activities was follows: Governmental activities: General government $ 352,206 Public safety 82,429 Highways and public improvements 255,720 Parks, recreation and public property 396,929 Total $ 1,087,284 35 Moab City Corporation NOTES TO FINANCIAL STATEMENTS June 30, 2017 3-C. Capital Assets (continued) Capital asset activity for the business -type activities was as follows: Beginning Ending Business -type activities Balance Additions Retirements Balance Capital assets, not being depreciated: Land and water shares $ 262,935 262,935 Construction in progress 1,087,974 2,806,105 3,894,080 Total capital assets, not being depreciated 1,350,910 2,806,105 - 4,157,015 Capital assets, being depreciated: Water system 6,254,143 60,885 6,315,028 Sewer system 7,363,970 - - 7,363,970 Machinery and equipment 1,136,067 253,756 1,389,823 Autos and trucks 235,132 235,132 Total capital assets, being depreciated 14,989,312 314,642 15,303,954 Less accumulated depreciation for: Water system 3,483,858 145,067 3,628,925 Sewer system 3,999,571 130,974 4,130,546 Machinery and equipment 802,218 69,236 871,454 Autos and trucks 210,811 11,498 222,309 Total accumulated depreciation 8,496,457 356,776 8,853,234 Total capital assets being depreciated, net 6,492,855 (42,135) - 6,450,720 Business -type activities capital assets, net $ 7,843,764 2,763,971 10,607,735 Depreciation expense was charged to functions/programs of the primary government business -type activities was follows: Business -type activities: Water $ 183,724 Wastewater 173,053 Total $ 356,776 36 Moab City Corporation NOTES TO FINANCIAL STATEMENTS June 30, 2017 3-D. Long-term debt Long-term debt activity for the governmental activities was as follows: Original Principal % Beginning Rate Balance Additions Reductions Ending Balance Due Within One Year 2003 Sales Tax Revenue Matures 2030 $ 2,050,000 2.50 2009 Sales Tax Revenue Matures 2036 4,764,000 0.00 3,809,000 Total governmental activity long-term liabilities $ 1,300,000 79,000 1,221,000 81,000 191,000 3,618,000 191,000 $ 5,109,000 270,000 4,839,000 272,000 Bond debt service requirements to maturity for governmental activities are as follows: Principal Interest Total 2018 $ 272,000 30,525 2019 274,000 28,500 2020 276,000 26,425 2021 278,000 24,300 2022 280,000 22,125 2023-2027 1,434,000 76,100 2028-2032 1,272,000 15,975 2033-2036 753,000 302,525 302,500 302,425 302,300 302,125 1,510,100 1,287,975 753,000 Total $ 4,839,000 223,950 5,062,950 Long-term debt activity for the business -type activities was as follows: Original % Beginning Principal Rate Balance Ending Additions Reductions Balance Due Within One Year 2017 Wastewater Revenue Matures 2039 $14,200,000 1.15 $ - 2,920,000 2,920,000 Total business -type activity long-term liabilities $ 2,920,000 - 2,920,000 The 2017 Wastewater Revenue Bonds were issued during the 2017 fiscal year. As of June 30, 2017, $2,920,000 of the total issued amount of $14,200,000 had been advanced to the City. The remaining amount of $11,280,000 will be advanced to the City as future construction costs occur. The requirements to maturity in the schedule following represent required payments should the entire issue amount be advanced to the City. 37 Moab City Corporation NOTES TO FINANCIAL STATEMENTS June 30, 2017 3-D. Long-term debt (continued) Bond debt service requirements to maturity for business -type activities are as follows: Principal Interest Total 2018 $ varies 2019 varies - 2020 635,000 163,300 798,300 2021 643,000 155,998 798,998 2022 650,000 148,603 798,603 2023-2027 3,363,000 629,178 3,992,178 2028-2032 3,563,000 431,298 3,994,298 2033-2037 3,775,000 221,560 3,996,560 2038-2039 1,571,000 27,152 1,598,152 Total $ 14,200,000 1,777,089 15,977,089 Other long-term liabilities: Increase Compensated absences: Beginning (Decrease) Ending Governmental $ 366,582 41,936 408,518 Business -type 38,839 24,774 63,613 Total $ 405,421 66,710 472,131 Net pension liability: Governmental $ 1,636,913 163,571 1,800,484 Business -type 159,901 15,980 175,881 Total $ 1,796,814 179,551 1,976,365 3-E. Interfund transfers Transfers In Transfers Out General fund $ 373,146 534,805 Capital projects fund 235,949 Recreation fund 298,856 - Water and sewer fund 369,146 Storm drain fund 4,000 Total $ 907,951 907,951 Transfers are used to move unrestricted general fund revenues to finance various programs that the government must account for in other funds in accordance with budgetary authorizations, including amounts provided as subsidies or matching funds for various grant programs. 38 Moab City Corporation NOTES TO FINANCIAL STATEMENTS June 30, 2017 NOTE 4 - OTHER INFORMATION 4-A. Risk management The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters. The City participates in the Utah Local Government Trust, a public agency insurance mutual, which provides coverage for property damage and general liability. The City is subject to a minimal deductible for claims. There have been no significant reductions in insurance coverage from coverage in the prior year. Amounts of settlements have not exceeded insurance coverage in any of the past three fiscal years. 4-B. Landfill agreement Moab City entered into an agreement with the Grand County Solid Waste Management Special Service District No. 1 and Grand County in which the City agreed to guarantee the performance of closure and post -closure care at the Klondike and Moab Landfills. Should the escrow moneys set aside by the District not cover all costs associated with the closure and post -closure of the landfill, Moab would be liable for one half of the uncovered costs. Total closure and post -closure costs are currently estimated to be no more than $175,400 for the Klondike Landfill and for the Moab Landfill. 4-C. Rounding Convention A rounding convention to the nearest whole dollar has been applied throughout this report, therefore the precision displayed in any monetary amount is plus or minus $1. These financial statements are computer generated and the rounding convention is applied to each amount displayed in a column, whether detail item or total. As a result, without the overhead cost of manually balancing each column, the sum of displayed amounts in a column may not equal the total displayed. The maximum difference between any displayed number or total and its actual value will not be more than $1. 4-D. Subsequent Events In preparing these financial statements, the City has evaluated events and transactions for potential recognition or disclosure through December 5, 2017, the date the financial statements were available to be used. 39 Moab City Corporation NOTES TO FINANCIAL STATEMENTS June 30, 2017 4-E. Pension Plans General Information about the Pension Plan Plan description: Eligible plan participants are provided with pensions through the Utah Retirement Systems. The Utah Retirement Systems are comprised of the following Pension Trust funds: Public Employees Noncontributory Retirement System (Noncontributory System) is a multiple employer, cost sharing, public employee retirement system; The Public Safety Retirement System (Public Safety System) is a mixed agent and cost -sharing, multiple -employer public retirement system; Tier 2 Public Employees Contributory Retirement System (Tier 2 Public Employees System) is a multiple employer cost sharing public employer retirement system; Tier 2 Public Safety and Firefighter Contributory Retirement System (Tier 2 Public Safety and Firefighters System) is a multiple employer, cost sharing, public employee retirement system. The Tier 2 Public Employees System became effective July 1, 2011. All eligible employees beginning on or after July 1, 2011, who have no previous service credit with any of the Utah Retirement Systems, are members of the Tier 2 Retirement System. The Utah Retirement Systems (Systems) are established and governed by the respective sections of Title 49 of the Utah Code Annotated 1953, as amended. The Systems' defined benefit plans are amended statutorily by the State Legislature. The Utah State Retirement Office Act in Title 49 provides for the administration of the Systems under the direction of the Board, whose members are appointed by the Governor. The Systems are fiduciary funds defined as pension (and other employee benefit) trust funds. URS is a component unit of the State of Utah. Title 49 of the Utah Code grants the authority to establish and amend the benefit terms. URS issues a publicly available financial report that can be obtained by writing Utah Retirement Systems, 560 E. 200 S., Salt Lake City, Utah 84102 or visiting the website: www.urs.org. 40 Moab City Corporation NOTES TO FINANCIAL STATEMENTS June 30, 2017 4-E. Pension Plans (continued) Benefits provided: URS provides retirement, disability, and death benefits. Retirement benefits are as follows: System Years of service required Final Average and/or age eligible for Benefit percentage Salary benefit per year of service Cola ** Noncontributory System Highest 3 Years 30 years any age 2.0% per year all years Up to 4% 25 years any age* 20 years age 60* 10 years age 62* 4 years age 65 Public Safety System Highest 3 Years 20 years an age 10 years age 60 4 years age 65 2.5% per year up to 20 years; 2.0% per year over 20 years Up to 2.5 % to 4% depending on the employer Tier 2 Public Highest 5 Years Employees System 35 years any age 20 years any age 60* 10 years age 62* 4 years age 65 1.5% per year all years Up to 2.5% Tier 2 Public Safety and Firefighter System Highest 5 Years 35 years any age 1.5% per year all years Up to 2.5% 20 years any age 60* 10 years age 62* 4 years age 65 * with actuarial reductions ** All past -retirement cost -of -living adjustments are non -compounding and are based on the original benefit except for Judges, which is a compounding benefit. The cost -of -living adjustments are also limited to the actual Consumer Price Index (CPI) increase for the year, although unused CPI increases not met may be carried forward to subsequent years. Contributions: As a condition of participation in the Systems, employers and/or employees are required to contribute certain percentages of salary and wages as authorized by statute and specified by the URS Board. Contributions are actuarially determined as an amount that, when combined with employee contributions (where applicable) is expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded actuarial accrued liability. 41 Moab City Corporation NOTES TO FINANCIAL STATEMENTS June 30, 2017 4-E. Pension Plans (continued) Contribution rates are as follows: Paid by Employer Employer Employee Employer Contribution Rate for Utah Retirement Systems Paid for Employee Rate 401(k) Plan Contributory System 111 - Local Government Div - Tier 2 N/A N/A 14.91 1.78 Noncontributory System 15 - Local Government Div - Tier 1 N/A N/A 18.47 N/A Public Safety System Contributory 122 - Tier 2 DB Hybrid Public Safety N/A N/A 22.50 1.33 Noncontributory 43 - Other Div A with 2.5% COLA N/A N/A 34.04 N/A Tier 2 DC Only 211 - Local Government N/A N/A 6.69 10.00 222 - Public Safety N/A N/A 11.83 12.00 Tier 2 rates include a statutory required contribution to finance the unfunded actuarial accrued liability of the Tier 1 plans. For the fiscal year ended June 30, 2017, the employer and employee contributions to the Systems were as follows: Employer Employee System Contributions Contributions Noncontributory System $ 349,063 N/A Public Safety System 150,874 Tier 2 Public Employees System 107,879 Tier 2 Public Safety and Firefighter 57,774 Tier 2 DC Only System 5,495 N/A Total Contributions $ 671,085 Contributions reported are the URS Board approved required contributions by System. Contributions in the Tier 2 Systems are used to finance the unfunded liabilities in the Tier 1 Systems. Pension Assets, Liabilities, Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2017, we reported a net pension asset of $2,432 and a net pension liability of $1,976,364. 42 Moab City Corporation NOTES TO FINANCIAL STATEMENTS June 30, 2017 4-E. Pension Plans (continued) Noncontributory System Public Safety System Tier 2 Public Employees System Tier 2 Public Safety and Firefighter Total (Measurement Date): December 31, 2016 Net Pension Net Pension Proportionate Asset Liability Share Proportionate Share 12/31/2015 Change (Decrease) $ 1,317,621 650,545 8,198 2,432 $ 2,432 $ 1,976,364 0.2051978% 0.3205798% 0.0734958% 0.2801501% 0.2179161% 0.3147178% 0.0396361 % 0.2137309% -0.0127183% 0.0058620% 0.0338597% 0.0664192% The net pension asset and liability was measured as of December 31, 2016, and the total pension liability used to calculate the net pension asset and liability was determined by an actuarial valuation as of January 1, 2016 and rolled -forward using generally accepted actuarial procedures. The proportion of the net pension asset and liability is equal to the ratio of the employer's actual contributions to the Systems during the plan year over the total of all employer contributions to the System during the plan year. For the year ended June 30, 2017, we recognize pension expense of $674,426. At June 30, 2017, we reported deferred outflows of resources and deferred inflows of resources relating to pensions from the following sources: Difference between expected and actual experience Changes in assumptions Net difference between projected and actual earnings on pension plan investments Changes in proportion and differences between contributions and proportionate share of contributions Contributions subsequent to the measurement date Total Deferred Outflows of Resources Deferred Inflows of Resources $ 30,418 298,255 434,067 12,210 365,857 $ 95,455 66,607 128,199 138,890 $ 1,140,807 $ 429,151 $365,857 reported as deferred outflows of resources related to pensions results from contributions made by us prior to our fiscal year end, but subsequent to the measurement date of December 31, 2016. These contributions will be recognized as a reduction of the net pension liability in the upcoming fiscal year. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year Ended December 31, 2017 2018 2019 2020 2021 Thereafter Net Deferred Outflows (Inflows) of Resources $ 89,686 106,174 160,035 (15,089) 386 4,603 43 Moab City Corporation NOTES TO FINANCIAL STATEMENTS June 30, 2017 4-E. Pension Plans (continued) Actuarial assumptions: The total pension liability in the December 31, 2016, actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Inflation Salary increases Investment rate of return 2.60 Percent 3.35 - 10.35 percent, average, including inflation 7.20 percent, net of pension plan investment expense, including inflation Mortality rates were developed from actual experience and mortality tables, based on gender, occupation and age, as appropriate, with adjustments for future improvement in mortality based on Scale AA, a model developed by the Society of Actuaries. The actuarial assumptions used in the January 1, 2016, valuation were based on the results of an actuarial experience study for the five year period ending December, 31, 2013. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best- estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Assets class Equity securities Debt securities Real assets Private equity Absolute return Cash and cash equivalents Totals Inflation Expected Return Arithmetic Basis Target Asset Allocation Real Return Arithmetic Basis Long Term expected portfolio real rate of return 40% 20% 13% 9% 18% 0% 7.06% 0.80% 5.10% 11.30% 3.15% 0.00% 2.82% 0.16% 0.66% 1.02% 0.57% 0.00% 100.00% 5.23 % 2.60% Expected arithmetic nominal return 7.83% The 7.20% assumed investment rate of return is comprised of an inflation rate of 2.60%, a real return of 4.60% that is net of investment expense. 44 Moab City Corporation NOTES TO FINANCIAL STATEMENTS June 30, 2017 4-E. Pension Plans (continued) Discount rate: The discount rate used to measure the total pension liability was 7.20 percent. The projection of cash flows used to determine the discount rate assumed that employee contributions will be made at the current contribution rate and that contributions from all participating employers will be made at contractually required rates that are actuarially determined and certified by the URS Board. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. The discount rate does not use the Municupal Bond Index Rate. The discount rate was reduced to 7.20 percent from 7.50 percent from the prior measurement period. Sensitivity of the proportionate share of the net pension asset and liability to changes in the discount rate: The following presents the proportionate share of the net pension liability calculated using the discount rate of 7.20 percent, as well as what the proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.20 percent) or 1-percentage-point higher (8.20 percent) than the current rate: System 1% Decrease (6.20%) Discount Rate (7.20%) 1 % Increase (8.20%) Noncontributory System $ 2,729,240 $ 1,317,621 $ 139,703 Public Safety System 1,352,986 650,545 79,556 Tier 2 Public Employees System 55,804 8,198 (28,017) Tier 2 Public Safety and Firefighter 17,014 (2,432) (17,376) Total $ 4,155,044 $ 1,973,932 $ 173,866 Pension plan fiduciary net position: Detailed information about the pension plan's fiduciary net position is available in the separately issued URS financial report. Defined Contribution Savings Plan: The Defined Contribution Savings Plans are administered by the Utah Retirement Systems Board and are generally supplemental plans to the basic retirement benefits of the Retirement Systems, but may also be used as a primary retirement plan. These plans are voluntary tax -advantaged retirement savings programs authorized under sections 401(k), 457(b) and 408 of the Internal Revenue code. Detailed information regarding plan provisions is available in the separately issued URS financial report. The City participates in the following Defined Contribution Savings Plans with the Utah Retirement Systems: - 401(k) Plan - 457(b) Plan - Roth IRA Plan - Traditional IRA Plan 45 Moab City Corporation NOTES TO FINANCIAL STATEMENTS June 30, 2017 4-E. Pension Plans (continued) Employee and employer contributions to the Utah Retirement Contribution Savings Plans for fiscal year ended June 30, 2017, were as follows: 2017 2016 2015 401(k) Plan Employer Contributions $ 47,117 $ 37,659 $ 27,571 Employee Contributions 39,929 48,623 76,137 457 Plan Employer Contributions - Employee Contributions 35,528 53,660 60,025 Roth IRA Plan Employer Contributions N/A N/A N/A Employee Contributions 2,027 6,952 5,830 Traditional IRA Plan Employer Contributions N/A N/A N/A Employee Contributions 650 650 200 46 REQUIRED SUPPLEMENTARY INFORMATION (Unaudited) 47 This page intentionally left blank. 48 Moab City Corporation Notes to Required Supplementary Information June 30, 2017 Budgetary Comparison Schedules The Budgetary Comparison Schedule presented in this section of the report is for the City's General Fund. Budgeting and Budgetary Control The budget for the General Fund is legally required and is prepared and adopted on the modified accrual basis of accounting. Original budgets represent the revenue estimates and spending authority authorized by the City Council prior to the beginning of the year. Final budgets represent the original budget amounts plus any amendments made to the budget during the year by the Council through formal resolution. Final budgets do not include unexpended balances from the prior year because such balances automatically lapse to unreserved fund balance at the end of each year. Current Year Excess of Expenditures over Appropriations For the year ended June 30, 2017, expenditures within all departments were under the appropriated budget. Changes in Assumptions Related to Pensions The following actuarial assumption changes were adopted January 1, 2016. The assumed investment return assumption was decreased from 7.50% to 7.20% and the assumed inflation rate was decreased from 2.75% to 2.60%. With the decrease in the assumed rate of inflation, both the payroll growth and wage inflation assumptions were decreased by 0.15% from the prior year's assumption. 49 Moab City Corporation SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - GENERAL FUND For the Year Ended June 30, 2017 Budgeted Budgeted Variance with Original Final Actual Final Budget Revenues Taxes $ 7,550,882 8,178,296 8,187,416 9,120 Licenses and permits 159,350 196,650 396,032 199,382 Intergovernmental revenues 337,814 337,814 347,142 9,328 Charges for services 1,333,399 1,403,099 1,375,375 (27,724) Fines and forfeitures 80,000 80,000 65,546 (14,454) Interest 31,355 31,355 37,999 6,644 Miscellaneous revenue 77,636 86,636 80,734 (5,902) Total revenues 9,570,436 10,313,850 10,490,243 176,393 Expenditures General government 2,393,175 2,493,944 2,163,433 330,511 Public safety 2,618,736 2,837,950 2,770,794 67,156 Highways and public improvements 2,898,102 2,985,766 2,255,614 730,152 Parks, recreation and public property 2,324,976 2,423,276 1,920,890 502,386 Total expenditures 10,234,989 10,740,936 9,110,732 1,630,204 Excess (deficiency) of revenues over (under) expenditures (664,553) (427,086) 1,379,511 1,806,597 Other financing sources and (uses) Transfers in 373,146 373,146 373,146 Transfers out (287,338) (534,805) (534,805) Total other financing sources and (uses) 85,808 (161,659) (161,659) Net change in fund balances (578,744) (588,744) 1,217,853 1,806,597 Fund balances - beginning of year 2,176,166 2,176,166 2,176,166 Fund balances - end of year $ 1,597,422 1,587,422 3,394,019 1,806,597 50 Moab City Corporation SCHEDULE OF THE PROPORTIONATE SHARE OF THE NET PENSION LIABILITY June 30, 2017 Last 10 Fiscal Years* 2016 2015 2014 Noncontributory Retirement System Proportion of the net pension liability (asset) 0.2051978% 0.2179161% 0.2429667% Proportionate share of the net pension liability (asset) $ 1,317,621 $ 1,233,075 $ 1,055,019 Covered employee payroll $ 1,658,246 $ 1,878,267 $ 2,145,537 Proportionate share of the net pension liability (asset) as a percentage of its covered -employee payroll 79.46% 65.65% 49.20% Plan fiduciary net position as a percentage of the total pension liability 87.30% 87.80% 90.20% Public Safety System Proportion of the net pension liability (asset) 0.3205798% 0.3147178% 0.3437599% Proportionate share of the net pension liability (asset) $ 650,545 $ 563,739 $ 432,307 Covered employee payroll $ 485,395 $ 518,613 $ 567,252 Proportionate share of the net pension liability (asset) as a percentage of its covered -employee payroll 134.02% 108.70% 76.20% Plan fiduciary net position as a percentage of the total pension liability 86.50% 87.10% 90.50% Tier 2 Public Employees Retirement System Proportion of the net pension liability (asset) 0.0734958% 0.0396361% 0.0260780% Proportionate share of the net pension liability (asset) $ 8,198 $ (87) $ (790) Covered employee payroll $ 602,722 $ 256,204 $ 128,012 Proportionate share of the net pension liability (asset) as a percentage of its covered -employee payroll 1.36% -0.03% -0.06% Plan fiduciary net position as a percentage of the total pension liability 95.10% 100.20% 103.50% Tier 2 Public Safety and Firefighters Retirement Proportion of the net pension liability (asset) 0.2801501% 0.2137309% 0.1428958% Proportionate share of the net pension liability (asset) $ (2,432) $ (3,123) $ (2,114) Covered employee payroll $ 231,468 $ 127,224 $ 59,035 Proportionate share of the net pension liability (asset) as a percentage of its covered -employee payroll -1.05% -2.45% -3.60% Plan fiduciary net position as a percentage of the total pension liability 103.60% 110.70% 120.50% * In accordance with paragraph 81.a of GASB 68, employers will need to disclose a 10-year history of their proportionate share of the Net Pension Liability (Asset) in their RSI. The 10-year schedule will need to be built prospectively. The schedule above is only for the last two years. 51 Moab City Corporation SCHEDULE OF CONTRIBUTIONS June 30, 2017 Last 10 Fiscal Years* As of Contributions in Contributions fiscal relation to the as a percentage year Actuarial contractually Contribution Covered of covered ended Determined required deficiency employee employee June 30, Contributions contribution (excess) payroll payroll Noncontributory Retirement 2014 $ 373,502 $ 373,502 $ - $2,218,242 16.84% System 2015 366,950 366,950 - 2,031,635 18.06% 2016 311,453 311,453 - 1,712,251 18.19% 2017 349,063 349,063 - 1,888,219 18.49% Public Safety System 2014 171,445 171,445 - 617,222 27.78% 2015 144,696 144,696 - 506,159 28.59% 2016 131,264 131,264 - 481,965 27.24% 2017 150,874 150,874 - 467,586 32.27% Tier 2 Public Employees 2014 14,676 14,676 - 104,905 13.99% Retirement System** 2015 24,084 24,084 - 161,205 14.94% 2016 71,331 71,331 - 480,471 14.85% 2017 107,879 107,879 - 723,538 14.91% Tier 2 Public Safety and 2014 9,427 9,427 - 45,213 20.85% Firefighter System** 2015 17,359 17,359 - 76,979 22.55% 2016 42,971 42,971 - 190,912 22.51% 2017 57,774 57,774 - 256,776 22.50% Tier 2 Public Employees DC 2014 - 0.00% Only System** 2015 1,378 1,378 - 20,512 6.72% 2016 2,915 2,915 - 43,531 6.70% 2017 5,495 5,495 - 77,713 7.07% Tier 2 Public Safety and 2014 3,336 3,336 - 33,558 9.94% Firefighter DC Only 2015 3,700 3,700 - 31,279 11.83% System** 2016 950 950 - 8,030 11.83% 2017 - 0.00% * Paragraph 81.b of GASB 68 requires employers to disclose a 10-year history of contributions in RSI. The 10-year schedule will need to be built prospectively. The schedule above is only for the past 3 years. ** Contributions as a percentage of covered -payroll may be different than the board certified rate due to rounding and other administrative issues. 52 ASSETS Cash and cash equivalents TOTAL ASSETS LIABILITIES Accounts payable TOTAL LIABILITIES Moab City Corporation COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS June 30, 2017 Youth Total City Non -Major Recreation Council Governmental Fund Fund Funds $ 106,257 3,167 109,424 $ 106,257 3,167 109,424 $ 2,510 2,510 2,510 2,510 FUND BALANCES: Assigned for: Recreation 103,747 103,747 USU Set -aside 3,167 3,167 TOTAL FUND BALANCES 103,747 3,167 106,914 TOTAL LIABILITIES AND FUND BALANCES $ 106,257 3,167 109,424 53 Moab City Corporation COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS For the Year Ended June 30, 2017 Youth Total City Non -Major Recreation Council Governmental Fund Fund Funds Revenues: Intergovernmental revenues $ 89,028 89,028 Charges for services 151,367 151,367 Interest 294 40 334 Miscellaneous revenue 3,185 3,185 Total revenues 243,874 40 243,914 Expenditures: Parks, recreation and public property 555,413 555,413 Total expenditures 555,413 555,413 Excess (deficiency) of revenues over (under) expenditures (311,539) 40 (311,499) Other financing sources and (uses): Transfers in 298,856 298,856 Total other financing sources and (uses) 298,856 298,856 Net change in fund balances (12,683) 40 (12,643) Fund balances - beginning of year 116,430 3,127 119,557 Fund balance - end of year $ 103,747 3,167 106,914 54 ��A Larson CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS The Honorable Mayor, and Members of the City Council Moab City, Utah We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of Moab City, Utah (herein referred to as the "City"), as of and for the year ended June 30, 2017, and the related notes to the financial statements, which collectively comprise the City's basic financial statements and have issued our report thereon dated December 5, 2017. Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered the City's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City'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 a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. 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 and therefore, material weaknesses or significant deficiencies may exist that were not identified. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether the City's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Larson & Company 765 North Alain, Spanish Fork, [rah 84660 Main: (801) 798-3545 I Fax: (80 798-3678 www.larsco.com 55 Member n�� CPAMERICA INTERNATIONAL ,�� Crone HonM1alh Inirrraliurn9 Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. el 6t/11)1/ P. Larson & Company, PC Spanish Fork, Utah December 5, 2017 56 d Larson J■ CERTIFIED PUBLIC ALCO UM iiN jY INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER COMPLIANCE AS REQUIRED BY THE STATE COMPLIANCE AUDIT GUIDE The Honorable Mayor, and Members of the City Council Moab City, Utah Report on Compliance with General State Compliance Requirements We have audited Moab City's (herein referred to as the "City") compliance with the applicable general state compliance requirements described in the State Compliance Audit Guide, issued by the Office of the Utah State Auditor, that could have a direct and material effect on the City for the year ended June 30, 2017. General state compliance requirements were tested for the year ended June 30, 2017 in the following areas: Budgetary Compliance Fund Balance Utah Retirement Systems Restricted Taxes and Related Revenues Open and Public Meetings Act Public Treasurer's Bond Management's Responsibility Management is responsible for compliance with the general state requirements referred to above. Auditor's Responsibility Our responsibility is to express an opinion on the City's compliance based on our audit of the 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 States; and the State Compliance Audit Guide. Those standards and the State Compliance Audit Guide require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the compliance requirements referred to above that could have a direct and material effect on the City occurred. An audit includes examining, on a test basis, evidence about the City's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance with general state compliance requirements. However, our audit does not provide a legal determination of the City's compliance. Opinion on General State Compliance Requirements In our opinion, Moab City, complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on the City for the year ended June 30, 2017. Larson & Company 765 North Main, Spanish Fork, Urah 84660 Main: (801) 798-3545 I Fax: (801) 798-3678 www.larsco.com 57 Member of CPAMERICA INTERNATIONAL 44. cr.., Nm+alh International. Other Matters The results of our auditing procedures disclosed an instance of noncompliance, which is required to be reported in accordance with the State Compliance Audit Guide and which is described in our letter to management as item SC-2017.1. Our opinion on compliance is not modified with respect to these matters. Moab City's response to the noncompliance finding identified in our audit is described in the accompanying Management Letter. The City's response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. Report on Internal Control Over Compliance Management of the City is responsible for establishing and maintaining effective internal control over compliance with the compliance requirements referred to above. In planning and performing our audit of compliance, we considered the City's internal control over compliance with the compliance requirements that could have a direct and material effect on the City to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance with general state compliance requirements and to test and report on internal control over compliance in accordance with the State Compliance Audit Guide, but not for the purpose of expressing an opinion on the effectiveness of the internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City'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 general state compliance requirement on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a general state compliance requirement 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 general state compliance requirement 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 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. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control and compliance and the results of that testing based on the requirements of the State Compliance Audit Guide. Accordingly, this report is not suitable for any other purpose. AifrU Larson & Company, PC Spanish Fork, Utah December 5, 2017 58