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HomeMy Public PortalAbout2015-2016 Audit Issued Financial StatementsMoab City Corporation Grand County, Utah ANNUAL FINANCIAL REPORT For the Year Ended June 30, 2016 Moab City Corporation TABLE OF CONTENTS June 30, 2016 Beginning on page INDEPENDENT AUDITOR'S REPORT 1 MANAGEMENT'S 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 Net Position - Proprietary Funds 23 Statement of Cash Flows - Proprietary Funds 24 Notes to Financial Statements 26 REQUIRED SUPPLEMENTARY INFORMATION 45 Notes to Required Supplementary Information 47 Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - General Fund 48 Schedule of the Proportionate Share of the Net Pension Liability 49 Schedule of Contributions 50 (Continued on following page) Moab City Corporation TABLE OF CONTENTS June 30, 2016 COMBINING STATEMENTS Combing Balance Sheet - Governmental Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds OTHER REPORTS Beginning on page 51 52 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 53 Independent Auditor's Report on Compliance in Accordance with the State Compliance Audit Guide 55 d Larson AN _ 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, 2016, 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, 2016, 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 8c Company 765 North Main, Spanish Fork, Utah 84660 Main: (801) 798-3545 Fax: (801) 798-3678 www.Iarsco.Com 1 A!ember of CPAMI=CA INTERNATRII❑NRL Crowe Hnlvealh international- 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 47-50 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 51-52) 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 November 16, 2016 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. 61tAlialf/ P� Larson & Company, PC Spanish Fork, Utah November 16, 2016 2 MANAGEMENT'S DISCUSSION AND ANALYSIS 3 This page intentionally left blank. 4 Moab City Corporation Management's Discussion and Analysis June 30, 2016 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, 2016. FINANCIAL HIGHLIGHTS *Total net position for the City as a whole increased by $1,563,297. *Total unrestricted net position for the City as a whole increased by $557,302. *Total net position for governmental activities increased by $1,266,472. *Total net position for business -type activities increased by $296,825. 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 outlfows, liabilities, and deferred inflows, with the difference between them 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, 2016 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 of 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 its general fund. 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 fund to account for the operations of the water, sewer and storm drain activities. 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, 2016 FINANCIAL ANALYSIS Moab City Corporation's Net Position Governmental Business -type Activities Activities Total Total Current Previous Current Previous Current Previous Year Year Year Year Year Year Current and other assets $ 6,684,765 5,482,678 3,932,000 4,383,582 10,616,765 9,866,260 Net capital assets 16,431,427 16,747,875 7,843,764 7,036,938 24,275,191 23,784,813 Deferred outflows 812,352 289,783 79,359 28,307 891,711 318,090 Total assets and deferred outflows 23,928,544 22,520,336 11,855,123 11,448,827 35,783,667 33,969,163 Current and other liabilities 2,314,567 2,012,675 288,776 189,840 2,603,344 2,202,515 Long-term liabilities 5,109,000 5,377,000 - 5,109,000 5,377,000 Deferred inflows 323,309 215,467 31,583 21,047 354,892 236,514 Total liabilities and deferred inflows 7,746,877 776057141 320,359 210,887 8,067,236 7,816,029 Net position: Net investment in capital assets 11,322,427 11,370,875 7,843,764 7,036,938 19,166,191 18,407,813 Restricted 366,465 118,848 2,413,127 2,413,127 2,779,592 2,531,975 Unrestricted 4,492,776 3,425,472 1,277,873 1,787,874 5,770,649 5,213,347 Total net position $ 16 181 668 14 915 195 11 534 764 11 237 939 27 716 432 26 153 134 As noted earlier, net position may serve over time as a useful indicator of financial position. Total assets and deferred outflows exceeded total liabilities and deferred inflows at the close of the year by $27,716,432, an increase of $1,563,298 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 is $5,770,649, which represents an increase of $557,302 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, 2016 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 $ 1,855,004 1,715,090 1,797,751 1,662,543 3,652,755 3,377,632 Operating grants 213,171 210,589 - 213,171 210,589 Capital grants 429,117 477,215 - - 429,117 477,215 General revenues: Sales tax 1,794,758 1,738,623 - 1,794,758 1,738,623 Other taxes 5,489,963 5,336,833 - - 5,489,963 5,336,833 Other revenues 298,500 149,610 123,564 172,124 422,064 321,733 Total revenues 10,080,514 9,627,960 1,921,315 1,834,666 12,001,829 11,462,626 Expenses: General government 2,311,388 2,011,390 - - 2,311,388 2,011,390 Public safety 2,436,681 2,202,531 - - 2,436,681 2,202,531 Highways and improvements 2,377,055 2,327,991 - 2,377,055 2,327,991 Parks and recreation 2,065,937 2,373,273 - 2,065,937 2,373,273 Interest on long-term debt 32,981 34,894 - 32,981 34,894 Water, sewer and storm drain - - 1,214,490 1,179,209 1,214,490 1,179,209 Total expenses 9,224,042 8,950,079 1,214,490 1,179,209 10,438,532 10,129,288 Excess (deficiency) before transfers and contributions 856,472 677,881 706,825 655,457 1,563,297 1,333,338 Transfers (410,000) (410,000) 410,000 410,000 Change in net position $ 1,266,472 1,087,881 296,825 245,457 1,563,297 1,333,338 Total revenues increased by $539,203, while total expenses increased by $309,244. The total net increase for the year of $1,563,297 is an increase from the previous year of $229,959. Governmental activities revenues of $10,080,514 is an increase of $452,554 from the previous year. This is primarily due to an increase in tax revenues compared to the previous year. Governmental activities expenses of $9,224,042 is an increase of $273,963 from the previous year. Expenses within all departments increased with the exception of the parks and recreation department. Business -type activities revenues of $1,921,315 is an increase of $86,648 from the previous year. Business -type activities expenses of $1,214,490 is an increase of $35,281 from the previous year. 8 Moab City Corporation Management's Discussion and Analysis June 30, 2016 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 $2,176,166 reflects a decrease of $252,284 from the previous year. Total revenues, excluding transfers in, increased by $430,956. Tax revenues increased by $209,265. Revenue from licenses and permits increased by $80,886. Intergovermnetal revenues increased by $10,443. Revenue from charges for services increased by $85,712. Revenue from fines and forfeitures decreased by $2,445. All other revenues increased by $47,095. Transfers in from the Water and Sewer Fund and the Storm Drain Fund were made during the year amounting to $410,000. Total expenditures, excluding transfers out, increased by $526,840. Expenditure changes from the previous year, by department, were: general government increased by $267,114; public safety increased by $212,980; streets and highways increased by $74,189; and parks and recreation increased by $90,333. Capital outlay expenditures decreased by $117,775. Transfers out were made during the year to the capital projects fund and recrecreation fund amounting to $2,273,836. The fund balance restricted for Class C roads is $366,465. The unassigned fund balance amounts to $1,809,701. Capital Projects Fund The fund balance of $4,099,421 reflects an increase of $1,421,326 from the previous year. Total revenue, excluding transfers, increased by $49,937. This increase is primarily a result of an increase in donations. Expenses increased during the year by $223,636. A transfer in was made during the year from the general fund for $2,171,590. Water and Sewer Fund Net income amounted to $200,881, which is an increase of $27,963 from the previous year net income. The amount restricted for construction is $2,413,127. Unrestricted net position amounts to $65,320. Storm Drain Fund The change in net position (net income) was $95,944, an increase of $23,405 from the previous year net income. Unrestricted net position amounts to $1,212,553. GENERAL FUND BUDGETARY HIGHLIGHTS Revenues for the current year, exclusive of transfers and fund balance appropriations, were originally budgeted in the amount of $8,390,095. Budgeted revenues were amended during the year to $8,515,095. Actual revenues amounted to $9,473,624. Expenditures for the current year, excluding transfers, were originally budgeted in the amount of $8,652,704. Budgeted expenditures were amended during the year to $9,205,484. Actual expenditures amounted to $7,862,072. 9 Moab City Corporation Management's Discussion and Analysis June 30, 2016 CAPITAL ASSETS AND DEBT ADMINISTRATION Moab City Corporation's Capital Assets (net of depreciation) Governmental Business -type Activities Activities Net Capital Assets: Land and water rights Buildings Improvements other than buildings Machinery and equipment Infrastructure Water system Sewer system Work in progress Totals Current Previous Year Year $ 476,884 476,884 9,890,780 10,038,564 1,906,563 1,820,408 1,693,031 1,556,156 2,464,168 2,436,076 - 419,787 Current Previous Year Year Total Current Year Total Previous Year 262,935 262,935 739,819 739,819 - - 9,890,780 10,038,564 358,170 345,663 2,770,285 2,135,723 3,364,399 3,052,518 1,087,974 1,240,098 1,906,563 1,820,408 2,051,201 1,901,819 2,464,168 2,436,076 2,770,285 2,135,723 3,364,399 3,052,518 1,087,974 1,659,886 $ 16,431,427 16,747,875 7,843,764 7,036,938 24,275,191 23,784,813 The total amount of capital assets, net of depreciation, of $24,275,191 is an increase of $490,378 from the previous year. Governmental activities capital assets, net of depreciation, of $16,431,427 is a decrease of $316,448 from the previous year. Business -type activities capital assets, net of depreciation, of $7,843,764 is an increase of $806,826 from the previous year. Additional information regarding capital assets may be found in the notes to financial statements. Moab City Corporation's Outstanding Debt Current Previous Year Year Governmental activities: 2003 Sales Tax Revenue $ 1,300,000 1,377,000 2009 Sales Tax Revenue 3,809,000 4,000,000 Total outstanding debt $ 5,109,000 5,377,000 Additional information regarding long-term liabilities may be found in the notes to financial statements. 10 Moab City Corporation Management's Discussion and Analysis June 30, 2016 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, 2016 Governmental Business -type Activities Activities Total ASSETS AND DEFERRED OUTFLOWS OF RESOURCES: Assets: Current assets: Cash and cash equivalents $ 5,393,058 3,049,273 8,442,331 Accounts receivable, net of allowances 123,712 134,041 257,753 Due from other governments 813,751 813,751 Other current assets 926 926 Total current assets 6,331,447 3,183,314 9,514,761 Non -current assets: Restricted cash and cash equivalents 350,394 748,400 1,098,794 Capital assets: Not being depreciated 476,884 1,350,910 1,827,794 Net of accumulated depreciation 15,954,543 6,492,855 22,447,397 Net pension asset 2,924 286 3,210 Total non -current assets 16,784,745 8,592,450 25,377,195 Total assets 23,116,192 11,775,764 34,891,956 Deferred outlfows of resources - pensions Total assets and deferred outlfows of resources 812,352 79,359 891,711 $ 23,928,544 11,855,123 35,783,667 LIABILITIES AND DEFERRED INFLOWS OF RESOURCES: Liabilities: Current liabilities: Accounts payable and accrued liabilities 286,698 88,411 375,109 Customer security deposits 1,625 1,625 Accrued interest payable 24,375 - 24,375 Revenue bond due within one year 270,000 270,000 Total current liabilities 581,073 90,036 671,109 Non -current liablities: Compensated absences 366,582 38,839 405,421 Revenue bonds due after one year 4,839,000 4,839,000 Net pension liability 1,636,913 159,901 1,796,814 Total non -current liablities 6,842,495 198,740 7,041,235 Total liabilties 7,423,567 288,776 7,712,344 Deferred inflows of resources - pensions Total liabilities and deferred inflow of resources 323,309 31,583 354,892 7,746,877 320,359 8,067,236 NET POSITION: Net investment in capital assets 11,322,427 7,843,764 19,166,191 Restricted: Class C roads 366,465 366,465 Construction - 2,413,127 2,413,127 Unrestricted 4,492,776 1,277,873 5,770,649 Total net position 16,181,668 11,534,764 27,716,432 Total liabilities, deferred inflows of resources, and net position $ 23,928,544 11,855,123 35,783,667 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, 2016 Net (Expense) Charges Operating Capital Revenue for Grants and Grants and (To Next Expenses Services Contributions Contributions Page) FUNCTIONS/PROGRAMS: Primary government: Governmental activities: Administration $ 2,311,388 1,381,773 Public safety 2,436,681 20,714 Streets and highways 2,377,055 Parks and recreation 2,065,937 452,517 Interest on long-term debt 32,981 - Total governmental activities 9 224 042 1 855,004 25,473 187,698 113,662 (815,952) (2,390,494) (2,189,358) 315,455 (1,297,964) (32,981) 213,171 429,117 (6,726,749) Business -type activities: Water and sewer utilities 1,214,490 1,656,808 111,060 553,378 Storm drain utility 140,944 140,944 Total business -type activities 1 214 490 1 797 751 111,060 694,321 Total primary government $ 10 438 532 3 652 755 213,171 540,177 (6,032,428) (The statement of activities continues on following 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, 2016 CHANGES IN NET POSITION: Net (expense) revenue (from previous page) Governmental Business -type Activities Activities Total $ (6,726,749) 694,321 (6,032,428) General revenues: Sales tax 1,794,758 1,794,758 Other taxes 5,489,963 5,489,963 Unrestricted investment earnings 51,826 12,504 64,329 Gain on sale of property 348 - 348 Miscellaneous 246,326 246,326 Transfers in (out) 410,000 (410,000) Total general revenues and transfers 7,993,222 (397,496) 7,595,725 Change in net position 1,266,472 296,825 1,563,297 Net position - beginning 14,915,195 11,237,939 26,153,134 Net position - ending $ 16,181,667 11,534,764 27,716,431 The notes to the financial statements are an integral part of this statement. 17 Moab City Corporation BALANCE SHEET - GOVERNMENTAL FUNDS June 30, 2016 ASSETS Cash and cash equivalents Accounts receivable, net of allowances Other current assets Restricted cash and cash equivalents TOTAL ASSETS LIABILITIES Accounts payable Accrued liabilities TOTAL LIABILITIES FUND BALANCES: Restricted for: Class C roads Assigned for: Capital projects USU Set -aside Recreation Youth city council Unassigned TOTAL FUND BALANCES General Fund Capital Projects Fund $ 1,088,473 4,175,879 935,765 1,698 926 350,394 Non -Major Total Governmental Governmental Funds Funds 128,706 5,393,058 937,463 926 350,394 $ 2,375,559 4,177,577 128,706 6,681,841 $ 127,434 58,844 71,959 19,312 199.393 78.156 366,465 - 3,649,421 - 450,000 1,809,701 9,149 195,427 91,271 9.149 286.698 116,430 3,127 366,465 3,649,421 450,000 116,430 3,127 1,809,701 2,176,166 4,099,421 119,557 6,395,143 TOTAL LIABILITIES AND FUND BALANCES $ 2,375,559 4,177,577 The notes to the financial statements are an integral part of this statement. 18 128,706 6,681,841 Moab City Corporation STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS For the Year Ended June 30, 2016 Capital Non -Major Total General Projects Governmental Governmental Fund Fund Funds Funds REVENUES: Taxes: Sales $ 1,794,758 1,794,758 Other taxes 5,489,963 - 5,489,963 Licenses and permits 266,170 - 266,170 Intergovernmental revenues 326,833 226,209 89,246 642,288 Charges for services 1,377,527 12,662 114,728 1,504,917 Fines and forfeitures 83,917 83,917 Interest 32,506 18,617 703 51,826 Miscellaneous revenue 101,949 128,885 15,840 246,674 Total revenues 9,473,624 386,374 220,516 10,080,514 EXPENDITURES: General government 1,996,102 32,018 2,028,119 Public safety 2,410,063 - 2,410,063 Highways and public improvements 2,139,836 15,304 2,155,140 Parks, recreation and public property 1,278,012 95,911 339,874 1,713,796 Capital outlay 38,060 690,980 729,040 Debt service: Prinicpal 268,000 268,000 Interest 34,425 34,425 Total expenditures Excess (Deficiency) of Revenues over (Under) Expenditures Other Financing Sources and (Uses): Transfers in Transfers (out) 7,862,072 1,136,638 339,874 9,338,583 1,611,552 (750,264) (119,357) 741,931 410,000 2,171,590 145,611 2,727,201 (2,273,836) (43,365) (2,317,201) Total other financing sources and (uses) (1,863,836) 2,171,590 102,246 410,000 Net Change in Fund Balances (252,284) 1,421,326 (17,111) 1,151,931 Fund balances - beginning 2,428,450 2,678,094 136,668 5,243,212 Fund balances - end of year $ 2,176,166 4,099,421 119,557 6,395,143 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 For the Year Ended June 30, 2016 Total Fund Balances for Governmental Funds $ 6,395,143 Total net position reported for governmental activities in the statement 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 25,891,464 Less accumulated depreciation (9,460,037) Net capital assets 16,431,427 Net pension assets are not financial resources and, therefore, are not reported in the funds. 2,924 Deferred outflows of resources, a consumption of net position that applies to future periods, is not shown in the funds statements. 812,352 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 liabilitiy Deferred inflows of resources - pensions (5,109,000) (24,375) (366,582) (1,636,913) (323,309) Total Net Position of Governmental Activities $ 16,181,668 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, 2016 Net Change in Fund Balances - Total Governmental Funds $ 1,151,931 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 os allocated over their estimated useful lives and reported as depreciation expenses. Capital outlays 729,040 Depreciation expense (1,045,488) Net (316,448) The Statement of Activities show pension benefits and pension expenses from the adoption of GASB 68 that are not shown in the fund statements. 133,062 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 268,000 Accrued interest for long-term debt is not reported as and expenditure for the current period, while it is recorded in the statement of activities. Change in accrued interest 1,444 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 activites. Change in compensated absences liability 28,484 Change in Net Position of Governmental Activities $ 1,266,472 The notes to the financial statements are an integral part of this statement. 21 Moab City Corporation STATEMENT OF NET POSITION - PROPRIETARY FUNDS June 30, 2016 Water & Sewer Storm Drain Fund Fund Total ASSETS AND DEFERRED OUTFLOWS OF RESOURCES: Assets: Current assets: Cash and cash equivalents $ 1,843,646 1,205,627 3,049,273 Accounts receivable, net 119,791 14,250 134,041 Total current assets 1,963,437 1,219,877 3,183,314 Non -current assets: Resricted cash and cash equivalents 748,400 748,400 Capital assets: Not being depreciated 1,253,919 96,991 1,350,910 Net of accumulated depreciation 6,492,855 6,492,855 Net pension asset 286 286 Total non -current assets 8,495,459 96,991 8,592,450 Total assets 10,458,896 1,316,868 11,775,764 Deferred outflows of resources - pensions 79,359 79,359 Total assets and deferred outflows of resources $ 10,538,255 1,316,868 11,855,123 LIABILITIES AND DEFERRED INFLOWS OF RESOURCES: Liabilities: Current liabilities: Accounts payable $ 81,087 7,324 88,411 Customer security deposits 1,625 - 1,625 Total current liabilities 82,712 7,324 90,036 Non -current liablities: Compensated absences 38,839 - 38,839 Net pension liability 159,901 - 159,901 Total non -current liabilities 198,740 - 198,740 Total liabilities 281,452 7,324 288,776 Deferred inflows of resources - pensions Total liabilities and deferred inflows of resources 31,583 - 31,583 313.035 7.324 320.359 NET POSITION: Net investment in capital assets 7,746,774 96,991 7,843,764 Restricted for: Construction 2,413,127 - 2,413,127 Unrestricted 65,320 1,212,553 1,277,873 Total net position 10,225,221 1,309,543 11,534,764 Total liabilities, deferred inflows of resources, and net position $ 10,538,255 1,316,868 11,855,123 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 FUNDS For the Year Ended June 30, 2016 Water & Sewer Storm Drain Fund Fund Total Operating income: Charges for sales and service $ 1,506,891 140,944 1,647,834 Connection fees 72,564 - 72,564 Other operating income 77,353 77,353 Total operating revenue 1,656,808 140,944 1,797,751 Operating expenses: Personnel services 350,240 350,240 Utilities 113,755 113,755 Repair & maintenance 58,195 - 58,195 Other supplies & expenses 378,537 378,537 Insurance expense 1,560 - 1,560 Depreciation expense 312,203 - 312,203 Total operating expense 1,214,490 1,214,490 Net operating income (loss) 442,318 140,944 583,261 Non -operating income (expense): Impact fees 111,060 - 111,060 Interest income 12,504 - 12,504 Transfers in (out) (365,000) (45,000) (410,000) Total non -operating income (expense) (241,436) (45,000) (286,436) Change in net position 200,881 95,944 296,825 Net position - beginning 10,024,340 1,213,600 11,237,939 Net position - ending $ 10,225,221 1,309,543 11,534,764 The notes to the financial statements are an integral part of this statement. 23 Moab City Corporation STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS For the Year Ended June 30, 2016 Cash flows from operating activities: Cash received from customers - service Cash paid to suppliers Cash paid to employees Net cash provided (used) in operating activities Cash flows from noncapital financing activities: Change in customer deposits Net interfund activity Net cash provided (used) in noncapital financing activities Cash flows from capital and related financing activities: Cash from impact fees Cash payments for capital assets Net cash provided (used) in capital and related financing activities Cash flows from investing activities: Cash received from interest earned Net cash provided (used) in investing activities Net increase (decrease) in cash Cash balance, beginning Cash balance, ending Cash reported on the statement of net position: Cash and cash equivalents Non -current restricted cash Total cash and cash equivalents Water & Sewer Storm Drain Fund Fund Total $ 1,634,865 140,510 1,775,375 (497,002) 7,324 (489,678) (352,917) - (352,917) 784,946 147,834 932,780 (1,300) (1,300) (365,000) (45,000) (410,000) (366,300) (45,000) (411,300) 111,060 111,060 (1,046,730) (72,300) (1,119,030) (935,670) (72,300) (1,007,969) 12,504 - 12,504 12,504 12,504 (504,520) 30,535 (473,986) 3,096,566 1,175,092 4,271,659 $ 2,592,046 1,205,627 3,797,673 $ 1,843,646 1,205,627 3,049,273 748,400 - 748,400 $ 2,592,046 1,205,627 3,797,673 The notes to the financial statements are an integral part of this statement. 24 Moab City Corporation STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS (continued) For the Year Ended June 30, 2016 Reconciliation of Operating Income to Net Cash Provided (Used) in Operating Activities: Net operating income (loss) Adjustments to reconcile operating income or (loss) to net cash provided (used) in operating activities: Depreciation and amortization Water & Sewer Storm Drain Fund Fund Total $ 442,318 140,944 583,261 312,203 - 312,203 Changes in assets and liabilities: (Increase) decrease in receivables (21,943) (433) (22,376) (Increase) decrease in non -current assets (27) - (27) (Increase) decrease in deferred outflows (51,052) (51,052) Increase (decrease) in payables 92,912 7,324 100,236 Increase (decrease) in deferred inflows 10,536 - 10,536 Net cash provided (used) in operating activities $ 784,946 147,834 932,780 The notes to the financial statements are an integral part of this statement. 25 Moab City Corporation NOTES TO FINANCIAL STATEMENTS June 30, 2016 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1-A. Reporting entity Moab City Corporation (the City), a municipal corporation located in Grand County, Utah, operates under a Mayor -Council form of government. The accompanying financial statements present the financial activities of the City. 1-B. Government -wide and fund financial statements Government -wide Financial Statements The government -wide financial statements, consisting of the statement of net position and the statement of changes in net position 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 net position reports the financial position of the governmental and business -type activities of the City at year-end. 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. 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). 26 Moab City Corporation NOTES TO FINANCIAL STATEMENTS June 30, 2016 1-C. Measurement focus, basis of accounting and financial statement presentation (continued) 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. 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. 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, 2016 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 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 water and sewer utilities. The storm drain fund is used to account for the revenues and expenditures 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 2. 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, 2016 1-E. Assets, Liabilities, and Net Position or Equity (continued) 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 position. Unspent proceeds of bonds issued to finance capital assets are also reported as restricted cash 1-E-5. Inventories and Prepaid items Inventories in governmental funds are not reported. These consist of immaterial amounts of expendable supplies for consumption. 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 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, 2016 1-E. Assets, Liabilities, and Net Position or Equity (continued) 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 Building 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 position. The governmental fund financial statements recognize the proceeds of debt and premiums as other financing sources of the current period. Issuance costs 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 does not currently have any deferred outflows of resources. 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 does not currently have any deferred inflows of resources. 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, 2016 1-E. Assets, Liabilities, and Net Position or Equity (continued) 1-E-10. Fund Equity 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 they are needed. When both committed, assigned, or unassigned resources are available for use, it is the City's policy to use committed resources first, followed by assigned resources and then unassigned resources as they are needed. Equity is classified in the government -wide financial statements and in the proprietary fund financial statements as net assets and is displayed in three components as follows: Net investment in capital assets represents capital assets, net of accumulated depreciation and reduced by the outstanding balances of any long-term debt attributable to the acquisition, construction, or improvement of those assets. Restricted net position is 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 are all other resources that do not meet the definition of "restricted" or "net investment in capital assets." Equity is classified in governmental fund financial statements as fund balance and is further classified as nonspendable, restricted, committed, assigned or unassigned as follows: Nonspendable fund balance cannot be spent because it is either (a) not in spendable form, or (b) legally or contractually required to be maintained intact. Restricted fund balance is fund balance 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. Committed fund balance includes 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 is constrained by the government's intent to be used for specific purposes, but is 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 is a 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 a specific purpose within the General Fund. 31 Moab City Corporation NOTES TO FINANCIAL STATEMENTS June 30, 2016 1-F. Estimates The preparation of financial statements, in conformity with generally accepted accounting principles, requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could 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 unassigned General Fund balance greater than 25% of the current year's actual revenues must be appropriated within the following two years. 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 net assets None of the City's funds have deficit balances. 32 Moab City Corporation NOTES TO FINANCIAL STATEMENTS June 30, 2016 NOTE 3 - DETAILED NOTES 3-A. Deposits and investments Cash and investments as of June 30, 2016 consist of the following: Fair Value Demand deposits $ 164,771 Savings 967,177 Investments - PTIF 8,409,176 Total cash $ 9,541,125 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) $ 8,442,331 1,098,794 Total cash and cash equivalents $ 9,541,125 Cash equivalents and investments are carried at fair value in accordance with GASB Statement No. 31. 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. 33 Moab City Corporation NOTES TO FINANCIAL STATEMENTS June 30, 2016 3-A. Deposits and investments (continued) 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. 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, 2016, $500,000 of the City's demand deposits are covered by FDIC insurance. 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: Governmental Business -type Activities Activities Total Customers $ 113,577 134,041 247,618 Intergovernmental receivables 813,751 - 813,751 Other receivables 10,135 - 10,135 Total $ 937,463 134,041 1,071,504 34 Moab City Corporation NOTES TO FINANCIAL STATEMENTS June 30, 2016 3-D. Capital Assets Capital asset activity for the governmental activities was as follows: Beginning Ending Balance Additions Retirements Balance Governmental activities: Capital assets, not being depreciated: Land and rights $ 476,884 Construction in progress 419,787 42,397 462,184 Total capital assets, not being depreciated 476,884 896,671 42,397 462,184 476.884 Capital assets, beind depreciated: Buildings 12,116,787 157,402 - 12,274,189 Improvements other than buildings 3,796,221 296,274 - 4,092,495 Machinery and equipment 4,623,887 517,610 - 5,141,497 Infrastructure 3,728,857 177,542 3,906,399 Total capital assets, being depreciated 24,265,753 1,148,827 - 25,414,580 Less accumulated depreciation for: Buildings 2,078,224 305,185 2,383,409 Improvements other than buildings 1,975,813 210,118 2,185,931 Machinery and equipment 3,067,731 380,735 - 3,448,466 Infrastructure 1,292,781 149,450 1,442,231 Total accumulated depreciation 8,414,549 1,045,488 - 9,460,037 Total capital assets being depreciated, net 15,851,203 103,339 - 15,954,543 Governmental activities capital assets, net $ 16,747,875 145,736 462,184 16,431,427 Depreciation expense was charged to functions/programs of the primary government governmental activities as follows: Governmental activities: General government $ 348,609 Public safety 81,685 Highways and public improvements 241,644 Parks, recreation and public property 373,549 Total $ 1,045,488 35 Moab City Corporation NOTES TO FINANCIAL STATEMENTS June 30, 2016 3-D. Capital assets (continued) Capital asset activity for business -type activities was as follows: Beginning Ending Balance Additions Retirements Balance Business -type activities: Capital assets, not being depreciated: Land and water shares $ 262,935 262,935 Construction in progress 1,240,098 448,697 600,821 1,087,974 Total capital assets, not being depreciated 1,503,034 448,697 600,821 1,350,910 Capital assets, being depreciated: Water system 5,495,990 758,153 6,254,143 Sewer system 6,931,477 432,493 7,363,970 Machinery & equipment 1,290,692 80,507 1,371,199 Total capital assets, being depreciated 13,718,158 1,271,154 - 14,989,312 Less accumulated depreciation for: Water system 3,360,267 123,591 3,483,858 Sewer system 3,878,959 120,613 3,999,571 Machinery & equipment 945,029 67,999 1,013,028 Total accumulated depreciation 8,184,254 312,203 - 8,496,457 Total capital assets being depreciated, net 5,533,904 958,951 6,492,855 Business -type activities capital assets, net $ 7,036,938 1,407,648 600,821 7,843,765 Depreciation expense was charged to functions/programs of the primary government business -type activities as follows: Business -type activities: Water $ 161,673 Sewer 150,530 Total $ 312,203 36 Moab City Corporation NOTES TO FINANCIAL STATEMENTS June 30, 2016 3-E. Long-term debt Long-term debt activity for the year was as follows: Due Original % Within Principal Rate 6/30/2015 Additions Reductions 6/30/2016 One Year Governmental activities: 2003 Sales Tax Revenue Matures 10/1/2029 $ 2,050,000 2.50$ 1,377,000 77,000 1,300,000 79,000 2009 Sales Tax Revenue Bonds Matures 10/1/2035 4,764,000 - 4,000,000 - 191,000 3,809,000 191,000 Total governmental activity long-term liabilities $5,377,000 - 268,000 5,109,000 270,000 Principal Interest Total 2017 $ 270,000 32,500 302,500 2018 272,000 30,525 302,525 2019 274,000 28,500 302,500 2020 276,000 26,425 302,425 2021 278,000 24,300 302,300 2022 - 2026 1,423,000 87,800 1,510,800 2027 - 2031 1,372,000 26,400 1,398,400 2032 - 2035 944,000 944,000 Total $5,109,000 256,450 5,365,450 Other long-term liabilities: Increase Beginning (Decrease) Ending Compensated absences: Governmental $ 395,066 (28,484) 366,582 Business -type 28,517 10,322 38,839 Total $ 423,583 (18,162) 405,421 37 Moab City Corporation NOTES TO FINANCIAL STATEMENTS June 30, 2016 3-F. Interfund receivable, payables and transfers Interfund transfers: Transfers In Transfers Out General fund $ 410,000 2,273,836 Recreation 145,611 43,365 Capital projects 2,171,590 - Water and sewer fund 365,000 Storm drain fund 45,000 Total $ 2,727,201 2,727,201 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. 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. Subsequent Events In preparing these financial statements, the City has evaluated events and transactions for potential recognition or disclosure through November 16, 2016, the date the financial statements were available to be used. 4-C. 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. 38 Moab City Corporation NOTES TO FINANCIAL STATEMENTS June 30, 2016 4-D. 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-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; Public Safety Retirement System (Public Safety System) is a mixed agent and cost -sharing, multiple - employer public employee retirement system; Tier 2 Public Employees Contributory Retirement System (Tier 2 Public Employees System) is a multiple employer cost sharing public employee retiremeny system; Tier 2 Public Safety and Firefighter Contributory Retiremeny Syste (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. 39 Moab City Corporation NOTES TO FINANCIAL STATEMENTS June 30, 2016 4-E. Pension Plans (continued) Benefits provided: URS provides retirement, disability, and death benefits. Retirement benefits are as follows: System Years of service Final required and/or Average age eligible Benefit percentage Salary for benefit per year of service Cola ** Noncontributory System Public Safety System Highest 3 30 years any age 2.0% per year all Up to 4% Years 25 years any age* years 20 years age 60* 10 years age 62* 4 vears ate 65 Highest 3 20 years any age 2.5% per year up to Up tp 2.5% or Years 10 years age 60 20 years; 2.0% per 4% depending 4 years age 65 year over 20 years upon employer Tier 2 Public Employees System Highest 5 35 years any age 1.5% per year all Years 20 years age 60* years 10 years age 62* 4 years age 65 Up to 2.5% Tier 2 Public Safety and Firefighter System Highest 5 25 years any age 1.5% per year all Years 20 years age 60* years 10 years age 62* 4 years age 65 Up to 2.5% * 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. Contribution rates are as follows: Utah Retirement Systems Employee Paid by Employer Employer Employer Rate Paid for Employee Contribution Rate for 401(k) Plan Contributory System 111 - Local Government Div - Tier 2 N/A N/A 16.67 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 40 Moab City Corporation NOTES TO FINANCIAL STATEMENTS June 30, 2016 4-B. Pension Plans (continued) 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, 2016, the employer and employee contributions to the Systems were as follows: System Noncontributory System Public Safety System Tier 2 Public Employees System Tier 2 Public Safety and Firefighter Tier 2 DC Only System Tier 2 DC Public Safety and Firefighter System Total Contributions Employer Contributions Employee Contributions $ 311,453 131,264 71,331 42,971 2,915 950 N/A N/A N/A $ 560,884 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, 2016, we reported a net pension asset of $3,210 and a net pension liability of $1, Noncontributory System Public Safety System Tier 2 Public Employees System Tier 2 Public Safety and Firefghter Total Proportionate Share Net Pension Asset 796,814. Net Pension Liability 0.2179161 % 0.3147178% 0.0396361% 0.2137309% $ 1,233,075 563,739 87 3,123 - $ 3,210 1,796,814 The net pension asset and liability was measured as of December 31, 2015, and the total pension liability used to calculate the net pension asset and liability was determined by an actuarial valuation as of January 1, 2015 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, 2016, we recognize pension expense of $415,147. 41 Moab City Corporation NOTES TO FINANCIAL STATEMENTS June 30, 2016 4-B. Pension Plans (continued) At June 30, 2016, we reported deferred outflows of resources and deferred inflows of resources relating to pensions from the following sources: Deferred Outflows Deferred Inflows of Resources of Resources Difference between expected and actual experience $ 542 $ 114,978 Changes in assumptions 107,197 Net difference between projected and actual earnings on pension plan investments 599,916 Changes in proportion and differences between contributions and proportionate share of contributions 1,709 132,717 Contributions subsequent to the measurement date 289,544 - Total $ 891,711 $ 354,892 $289,544 was 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, 2015. 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: Net Deferred Outflows (Inflows) Year Ended December 31, of Resources 2016 $ 37,233 2017 37,233 2018 53,512 2019 120,679 2020 (236) Thereafter (1,148) Actuarial assumptions: The total pension liability in the December 31, 2015, actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Inflation 2.75 Percent Salary increases 3.50 - 10.50 percent, average, including inflation Investment rate of return 7.50 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, 2015, valuation were based on the results of an actuarial experience study for the five year period ending December, 31, 2013. 42 Moab City Corporation NOTES TO FINANCIAL STATEMENTS June 30, 2016 4-B. Pension Plans (continued) 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 % 2.75% Expected arithmetic nominal return 7.98% The 7.50% assumed investment rate of return is comprised of an inflation rate of 2.75%, a real return of 4.75% that is net of investment expense. Discount rate: The discount rate used to measure the total pension liability was 7.50 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 Municpal Bond Index Rate. There was no change in the discount rate from the prior measurement date. 43 Moab City Corporation NOTES TO FINANCIAL STATEMENTS June 30, 2016 4-B. Pension Plans (continued) 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 7.50 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 (6.50 percent) or 1-percentage-point higher (8.50 percent) than the current rate: System Noncontributory System Public Safety System Tier 2 Public Employees System Tier 2 Public Safety and Firefighter Total 1% Decrease (6.50%) Discount Rate (7.50%) 1 % Increase (8.50%) $ 2,605,366 1,193,761 15,867 5,308 1,233,075 563,739 (87) (3,123) 87,488 50,785 (12,178) (9,597) $ 3,820,302 1,793,604 116,498 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. Oakley 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 Employee and employer contributions to the Utah Retirement Contribution Savings Plans for fiscal year ended June 30, 2016, were as follows: 2016 2015 2014 401(k) Plan Employer Contributions $ 37,659 27,571 25,027 Employee Contributions 48,623 76,137 74,678 457 Plan Employer Contributions Employee Contributions 53,660 60,026 40,185 Roth IRA Plan Employer Contributions N/A N/A N/A Employee Contributions 6,952 5,830 3,595 Traditional IRA Employer Contributions N/A N/A N/A Employee Contributions 650 200 - 44 REQUIRED SUPPLEMENTAL INFORMATION (Unaudited) 45 This page intentionally left blank. 46 Moab City Corporation Notes to Required Supplementary Information June 30, 2016 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 Budgets for the General Fund are legally required and are 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, 2016 was within the budget appropriations. Changes in Assumptions Related to Pensions Regarding the Schedule of the Proportionate Share of the Net Pension Liability and the Schedule of Contributions presented in this section, the following assumption changes were adopted from the most recent actuarial experience study: There was a decrease in the wage inflation assumption for all employee groups from 3.75% to 3.50%. Also there was a modification to the rate of salary increases for most groups. The payroll growth assumption was decrease from 3.5% to 3.25%. There was an improvement in the post retirement mortality assumption for female educators and minor adjustments to the pre retirement mortality assumption. There were additional changes to certain demographic assumptions that generally resulted in: (1) more members are anticipated to terminate employment prior to retirement, (2) slightly fewer members are expected to become disabled, and (3) members are expected to retire at a slightly later age. 47 Moab City Corporation SCHEDULE OF REVENUES, EXPENDITUES AND CHANGED IN FUND BALANCES - BUDGET AND ACTUAL - GENERAL FUND (Unaudited) For the Year Ended June 30, 2016 Revenues Taxes Licenses and permits Intergovernmental revenues Charges for services Fines and forfeitures Interest Miscellaneous revenue Total revenues Expenditures General government Public safety Highways and public improvements Parks and recreation Total expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures Budgeted Original $ 6,421,545 159,350 345,301 1,299,899 65,000 30,500 68,500 8,390,095 2,132,315 2,631,617 2,505,914 1,382,858 Budgeted Final 6,431,545 220,515 345,301 1,353,734 65,000 30,500 68,500 Variance with Actual Final Budget 7,284,721 266,170 326,833 1,377,527 83,917 32,506 101,949 8,515,095 9,473,624 2,238,095 2,725,617 2,551,914 1,689,858 8,652,704 9,205,484 (262,609) (690,389) Other Financing Sources and (Uses) Transfers in 410,000 410,000 Transfers out (788,616) (2,274,836) Total Other Financing Sources and (Uses) Net Change in Fund Balances Fund Balances - beginning of year Fund Balances - end of year 410,000 (2,273,836) (378,616) (1,864,836) (1,863,836) (641,225) (2,555,225) (252,284) 2,428,450 2,428,450 2,428,450 1,996,102 2,448,123 2,139,836 1,278,012 853,176 45,655 (18,468) 23,793 18,917 2,006 33,449 958,529 241,993 277,494 412,078 411,846 7,862,072 1,343,412 1,611,552 2,301,941 1,000 1,000 2,302,941 $1,787,225 (126,775) 2,176,166 2,302,941 48 Moab City Corporation SCHEDULE OF THE PROPORTIONATE SHARE OF THE NET PENSION LIABILITY June 30, 2016 Last 10 Fiscal Years* Noncontributory Retirement System Proportion of the net pension liability (asset) Proportionate share of the net pension liability (asset) Covered employee payroll Proportionate share of the net pension liability (asset) as a percentage of its covered -employee payroll Plan fiduciary net position as a percentage of the total pension liability Public Safety System Proportion of the net pension liability (asset) Proportionate share of the net pension liability (asset) Covered employee payroll Proportionate share of the net pension liability (asset) as a percentage of its covered -employee payroll Plan fiduciary net position as a percentage of the total pension liability Tier 2 Public Employees Retirement System Proportion of the net pension liability (asset) Proportionate share of the net pension liability (asset) Covered employee payroll Proportionate share of the net pension liability (asset) as a percentage of Plan fiduciary net position as a percentage of the total pension liability 2015 2014 0.2179161% 0.2429667% $ 1,233,075 $ 1,055,019 $ 1,878,267 $ 2,145,537 65.65% 87.80% 49.20% 90.20% 0.3147178% 0.3437599% $ 563,739 $ 432,307 $ 518,613 $ 567,252 108.70% 87.10% 76.20% 90.50% 0.0396361% 0.0260728% $ (87) $ (790) $ 256,204 $ 128,012 -3.00% -0.60% 100.20% 103.50% Tier 2 Public Safety and Firefighters Retirement Proportion of the net pension liability (asset) 0.2137309% 0.1428958% Proportionate share of the net pension liability (asset) $ (3,123) $ (2,114) Covered employee payroll $ 127,224 $ 59,035 Proportionate share of the net pension liability (asset) as a percentage of its covered -employee payroll Plan fiduciary net position as a percentage of the total pension liability 110.70% 120.50% -2.45% -3.60% * 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 RSL The 10-year schedule will need to be built prospectively. The schedule above is only for the last two years. 49 Firefighter DC Only System Moab City Corporation SCHEDULE OF CONTRIBUTIONS June 30, 2016 Last 10 Fiscal Years* As of fiscal year Actuarial ended Determined June 30, Contributions Contributions in relation to the contractually required contribution Contribution deficiency (excess) Covered employee payroll Contributions as a percentage of covered employee payroll Noncontributory Retirement 2014 2015 2016 System $ 373,502 366,950 311,453 $ 373,502 $ 366,950 311,453 - $2,218,242 - 2,031,635 1,712,251 16.84% 18.06% 18.19% Public Safety System 2014 2015 2016 171,445 144,696 131,264 171,445 144,696 131,264 617,222 - 506,159 481,965 27.78% 28.59% 27.24% Tier 2 Public Employees 2014 14,676 System 2015 24,084 2016 71,331 14,676 24,084 71,331 104,905 161,205 480,471 13.99% 14.94% 14.85% Tier 2 Public Safety and 2014 9,427 Firefighter System 2015 17,359 2016 42,971 9,427 17,359 42,971 45,213 76,979 190,912 20.85% 22.55% 22.51 % Tier 2 Public Employees DC 2014 Only System 2015 1,378 1,378 20,512 2016 2,915 2,915 43,531 0.00% 6.72% 6.70% Tier 2 Public Safety and 2014 2015 2016 3,336 3,700 950 3,336 3,700 950 33,558 31,279 8,030 9.94% 11.83% 11.83% * 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. 50 Moab City Corporation COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS June 30, 2016 Youth Total City Non -Major Recreation Council Governmental Fund Fund Funds ASSETS Cash and cash equivalents $ 125,579 3,127 128,706 TOTAL ASSETS LIABILITIES Accounts payable TOTAL LIABILITIES $ 125,579 3,127 128,706 $ 9,149 9,149 9.149 9.149 FUND BALANCES: Assigned for: Recreation 116,430 116,430 Youth city council 3,127 3,127 TOTAL FUND BALANCES TOTAL LIABILITIES AND FUND BALANCES 116.430 3.127 119.557 $ 125,579 3,127 128,706 The notes to the financial statements are an integral part of this statement. 51 Moab City Corporation COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS For the Year Ended June 30, 2016 Youth Total City Non -Major Recreation Council Governmental Fund Fund Funds REVENUES: Intergovernmental revenues $ 89,246 89,246 Charges for services 114,728 114,728 Interest 676 26 703 Miscellaneous revenue 15,840 15,840 Total revenues EXPENDITURES: Parks, recreation and public property Total expenditures Excess (Deficiency) of Revenues over (Under) Expenditures Other Financing Sources and (Uses): Transfers in Transfers (out) 220.490 26 220.516 339,874 339,874 339,874 339,874 (119,384) 26 (119,357) 145,611 145,611 (43,365) (43,365) Total other financing sources and (uses) 102,246 102,246 Net Change in Fund Balances (17,138) 26 (17,111) Fund balances - beginning 133,568 3,100 136,668 Fund balances - end of year $ 116,430 3,127 119,557 The notes to the financial statements are an integral part of this statement. 52 d Larson AN _ 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, 2016, and the related notes to the financial statements, which collectively comprise the City's basic financial statements and have issued our report thereon dated November 16, 2016. 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 Main, Spanish Fork, Utah 84660 Main: (801) 798-3545 FaX: (801) 798-3678 www.7aPSco.com 53 l !ember of CPA. NIiRNATMERI101VAL ..'44, Crane Harwllh InlmubonY 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. 4 (11/(4/Yea-tr 1°.' Larson & Company, PC Spanish Fork, Utah November 16, 2016 54 ��a Larson GERTIFIEB PUBLIC ACCOUNTANTS INDEPENDENT AUDITOR'S REPORT AS REQUIRED BY THE STATE COMPLIANCE AUDIT GUIDE ON COMPLIANCE WITH GENERAL STATE COMPLIANCE REQUIREMENTS AND ON INTERNAL CONTROL OVER COMPLIANCE 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, 2016. General state compliance requirements were tested for the year ended June 30, 2016 in the following areas: Budgetary Compliance Fund Balance Utah Retirement Systems Restricted Taxes and Related Revenues Open and Public Meetings Act Treasurer's Bond Cash Management Enterprise Fund Transfers, Reimbursements, Loans, and Services Impact Fees 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 and Each Major State Program 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, 2016. Larson 8c Company 765 North Main, Spanish Fork, Utah 84660 Main: (801) 798-3545 Fax: (801) 798-3678 www.larsco.cnm 55 Member of CPA MEICA INT{RNATRIp NA ���� Crowe Horwai l ln[erkatonil- 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-2016.1. 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. tlir't1/ P� Larson & Company, PC Spanish Fork, Utah November 16, 2016 56