FY12 ACOG Audit Report - Appalachian Council of Governments

44 Pages·2012·0.76 MB·English

SOUTH CAROLINA APPALACHIAN
COUNCIL OF GOVERNMENTS

AUDITED FINANCIAL STATEMENTS

YEAR ENDED JUNE 30, 2012
SOUTH CAROLINA APPALACHIAN
COUNCIL OF GOVERNMENTS

AUDITED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2012

TABLE OF CONTENTS

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Independent Auditor's Report 1-2

Management’s Discussion and Analysis 3-7

Basic Financial Statements
Government-wide Financial Statements
Statement of Net Assets 8
Statement of Activities 9
Fund Financial Statements
Balance Sheet – Governmental Funds 10-11
Statement of Revenues, Expenditures and Changes in Fund Balances -
Governmental Funds 12
Reconciliation of the Statement of Revenues, Expenditures, and Changes
in Fund Balances of the Governmental Funds to the Statement of Activities 13
Statement of Revenues, Expenditures and Changes in Fund Balance – Budget
and Actual – General Fund and Annually Budgeted Major Special Revenue Fund 14

Notes to Financial Statements 15-26

Supplementary Information
Individual Program Schedules
Schedule of Revenues and Expenditures – Transportation Programs 27
Schedule of Revenues and Expenditures – Aging Programs 28-29

Governmental Auditing Reports
Schedule of Expenditures of Federal Awards 30-32
Notes to the Schedule of Expenditures of Federal Awards 33-35
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 36-37
Report on Compliance that Could have a Direct and Material Effect on
Each Major Federal Program and Internal Control Over Compliance
in Accordance with OMB Circular A-133 38-39
Schedule of Findings and Questioned Costs 40-41
Schedule of Prior Audit Findings 42
INDEPENDENT AUDITOR’S REPORT

The Board of Directors
South Carolina Appalachian
Council of Governments
Greenville, South Carolina

We have audited the accompanying financial statements of the governmental activities, each major
fund, and the aggregate remaining fund information of the South Carolina Appalachian Council of
Governments as of and for the year ended June 30, 2012, which collectively comprise the
Council’s basic financial statements as listed in the table of contents. These financial statements
are the responsibility of South Carolina Appalachian Council of Governments’ management. Our
responsibility is to express an opinion 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 and the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the
financial position of the governmental activities, each major fund, and the aggregate remaining
fund information of the South Carolina Appalachian Council of Governments as of June 30, 2012,
and the respective changes in financial position thereof and the budgetary comparison for the
general fund and the annually budgeted major special revenue fund for the year then ended, in
conformity with accounting principles generally accepted in the United States of America.

In accordance with Government Auditing Standards, we have also issued our report dated
November 15, 2012, on our consideration of the South Carolina Appalachian Council of
Government’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 the
internal control over financial reporting or on compliance. That report is an integral part of an
audit performed in accordance with Government Auditing Standards and should be considered
in assessing the results of our audit.
South Carolina Appalachian
Council of Governments
Greenville, South Carolina
November 15, 2012

Accounting principles generally accepted in the United States of America require that the
management’s discussion and analysis 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.

Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the South Carolina Appalachian Council of Governments’ financial
statements as a whole. The supplemental schedules are presented for purposes of additional
analysis and are not a required part of the financial statements. The accompanying schedule of
expenditures of federal awards is presented for purposes of additional analysis as required by
U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments
and Non-Profit Organizations, and is also not a required part of the financial statements. The
supplemental schedules and the schedule of expenditures of federal awards are the
responsibility of management and were derived from and relate directly to the underlying
accounting and other records used to prepare the financial statements. The information has
been subjected to the auditing procedures applied in the audit of the financial statements and
certain additional procedures, including comparing and reconciling such information directly to
the underlying accounting and other records used to prepare the financial statements or to the
financial statements themselves, and other additional procedures in accordance with auditing
standards generally accepted in the United States of America. In our opinion, the information is
fairly stated, in all material respects, in relation to the financial statements as a whole.

November 15, 2012

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Management’s Discussion and Analysis

Management of the South Carolina Appalachian Council of Governments presents the following
overview of the financial performance of the Council for the year ended June 30, 2012. This
information should be read in conjunction with the audited financial statements and the
accompanying notes.

Financial Highlights

• The Council’s assets exceeded its liabilities at June 30, 2012, by $2,424,297 (shown as total
net assets).
• As of the close of the fiscal year, the Council’s governmental funds reported combined
ending fund balances of $1,735,544, an increase of $26,773 from the prior year. A total of
$688,088 is nonspendable or assigned, resulting in a balance of $1,047,456 available for
spending at the Council’s discretion (shown as unassigned fund balance).
• The Council’s fiscal obligation for accumulated annual leave and salary-related fringe
benefits was $120,350.

Overview of the Financial Statements

The Council’s basic financial statements consist of three parts: government-wide financial
statements, fund financial statements, and notes to the financial statements.

Government-wide Financial Statements

The government-wide statements present a view of the Council’s finances as a whole. There are
two government-wide financial statements:

Statement of Net Assets: This statement presents information on all of the Council’s assets and
liabilities, both short-term (current) and long-term (non-current). It also reports the differences
between assets and liabilities as net assets. Over time, increases or decreases in net assets may
indicate whether the Council’s financial position is improving or deteriorating.

Statement of Activities: This statement presents information showing how the Council’s overall
net assets changed during the year.

The government-wide financial statements are shown on pages 8-9 of this report.

Fund Financial Statements

The fund financial statements provide more detailed information about the Council’s funds,
focusing on its most significant or “major” funds – not the entity as a whole. Funds are
accounting devices used to keep track of specific sources of funding and spending for particular
purposes.

Governmental funds are used to account for the same Council activities reported in the
government-wide financial statements. However, unlike the government-wide financial statements,
governmental fund financial statements focus on how money flows in and out of the funds and the
balances left at yearend that are available for spending. These funds are reported based on the
modified accrual method of accounting, which measures cash and all other financial assets that
can readily be converted to cash. Governmental fund statements provide a short-term view of the
Council’s financial operations.

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Because the focus of governmental funds is narrower than that of government-wide financial
statements, it may be useful to compare the information presented for governmental funds with
similar information presented for governmental activities in the government-wide financial
statements. Both the governmental fund balance and statement of revenues, expenditures, and
changes in funds balances provide a reconciliation to facilitate this comparison.

The Council’s governmental funds consist of the General Fund and Special Revenue Fund, which
are reported as major funds. The General Fund is the general operating fund used to account for
all financial resources except those required to be accounted for in another fund. The Special
Revenue Fund is used to account for the proceeds of specific revenue sources that are restricted
to specific purposes. Information is presented separately in the governmental balance sheet and
statement of revenues, expenditures, and changes in fund balances for each of these funds.

The fund financial statements are shown on pages 10-14 of this report.

Notes to Financial Statements

The notes to the financial statements provide required disclosures and other information that are
essential to a full understanding of material data provided in the statements. These notes present
information about the accounting policies, significant account balances and activities of the
Council.

Other Information

In addition to the financial statements and accompanying notes, this report also presents certain
supplementary information.

Government-wide Financial Analysis

The government-wide financial statements are condensed in the following two tables:

Table 1: Condensed Statement of Net Assets

Table 2: Change in Net Assets

Table 1
Condensed Statement of Net Assets
Year Ended June 30, 2012

Governmental Activities
2012 2011
Current and other assets $ 2,880,599 $ 3,651,796
Capital assets 966,589 1,073,972
Total assets 3,847,188 4,725,768
Current liabilities 1,190,534 1,988,504
Long-term liabilities 232,357 269,774
Total liabilities 1,422,891 2,258,278
Investment in capital assets, net of related debt 707,908 769,812
Unrestricted net assets 1,716,389 1,697,678
Total net assets $ 2,424,297 $ 2,467,490

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As noted earlier, net assets may serve over time as one useful indicator of a government’s
financial condition. The assets of the Council exceeded liabilities by $2,424,297 as of June 30,
2012. The Council’s net assets decreased by $43,193 for the fiscal year ended June 30, 2012.

Table 2
Change in Net Assets
Year Ended June 30, 2012

Governmental Activities
2012 2011
General revenues
Intergovernmental
Federal $ 7,323,210 $ 8,760,778
State 1,010,051 1,270,321
Local 435,687 435,687
Interest and other 72,144 12,103
Program revenues
Contracts and fees 941,293 696,569
Total revenues 9,782,385 11,175,458
Expenses
Administration 112,390 89,529
Administrative services 317,733 590
Government services 386,546 378,978
Grant services 321,102 341,066
Aging services 4,485,369 4,503,250
Information services 379,696 378,463
Planning services 319,701 352,014
Workforce services 3,442,753 5,077,598
Loan services 60,288 51,523
Total expenses 9,825,578 11,173,011
Increase (decrease) in net assets (43,193) 2,447
Beginning net assets 2,467,490 2,465,043
Ending net assets $ 2,424,297 $ 2,467,490

Financial Analysis of Council’s Funds

As noted earlier, the Council uses fund accounting to ensure and demonstrate compliance with
finance-related legal requirements.

Governmental Funds: The focus of the Council’s governmental funds is to provide information
on near-term inflows, outflows and balances of usable resources. Such information is useful in
assessing the Council’s financing requirements. Specifically, unreserved fund balance can be a
useful measure of a government’s net resources available for spending at the end of the fiscal
year.

The General Fund is the chief operating fund of the Council. At the end of the current fiscal
year, total fund balance of the General Fund was $1,735,544, of which $60,609 is
nonspendable, $627,479 has been assigned for equipment replacement, debt retirement,
unemployment, future expansion, building maintenance and repair, and salary increases, and
$1,047,456 is unassigned.

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General Fund Budgetary Highlights: During the fiscal year, the Council revised the budget to
adjust the estimates used to prepare the original budget, to add or delete funding sources used
in the original budget, and to add or delete projected expenditures based on changing funding
sources.

Revenues exceeded expenditures by $26,773, an increase of $19,672 over the final budget
projection of $7,101.

Capital Assets

The Council’s capital assets, net of accumulated depreciation, consisted of the following at June
30, 2012 and 2011:
2012 2011
Land $ 400,961 $ 400,961
Land improvements 18,145 21,763
Buildings 466,980 524,109
Franchise and equipment 12,756 22,272
Grant funded assets 23,618 95,486
Automobiles 44,129 9,381
Total capital assets $ 966,589 $ 1,073,972

Major capital asset transactions during the year included additions of $41,164 and disposals of
$62,092. The additions consisted of an automobile and miscellaneous furniture and equipment.
The deletions consisted of miscellaneous items of furniture and equipment. The gain on assets
which were sold during the year was $195.

Long-term Obligations

The Council’s long-term obligations are made up of the following at June 30, 2012 and 2011:

2012 2011
Accrued compensated absences $ 139,505 $ 132,845
Notes payable 258,681 304,160
398,186 437,005
Less: current portion (165,829) (167,231)
Total long-term obligations $ 232,357 $ 269,774

Budget Highlights for the Fiscal Year Ending June 30, 2013

The Council has a conservative budget for the upcoming fiscal year. In response to projected
budget cuts facing the state of South Carolina and the continuation of significant fiscal
challenges facing member local governments, the Council’s budgeted revenue and expenditure
figures for FY 2013 are approximately 5 percent lower than those final figures for FY 2012. The
Council continues to seek new and additional revenue sources and ways to cut costs.

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Requests for Financial Information

This report is designed to provide a general overview of the Council’s finances and to show
accountability for the money it receives. Questions concerning any of the information provided in
this report or requests for additional information should be directed to:

Steve Pelissier, Executive Director
or Don Zimmer, Finance Director
South Carolina Appalachian Council of Governments
30 Century Circle
Greenville, SC 29607

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SOUTH CAROLINA APPALACHIAN COUNCIL OF GOVERNMENTS
STATEMENT OF NET ASSETS
JUNE 30, 2012
Primary
Government
Governmental
Activities
Assets
Current assets
Cash $ 919,418
Cash equivalents 647,065
Due from other governments
Federal, state, and local 1,251,947
Due from other sources 1,560
Prepaid items 60,609
Total current assets 2,880,599
Capital assets
Land 400,961
Property and equipment, net of depreciation 565,628
Total capital assets 966,589
Total assets 3,847,188
Liabilities
Current liabilities
Accounts payable and accrued expenses 868,377
Due to other governments 46,708
Current portion of compensated absences and related benefits 120,350
Current portion of notes payable 45,479
Deferred revenue 109,620
Total current liabilities 1,190,534
Noncurrent liabilities
Compensated absences and related benefits 19,155
Notes payable 213,202
Total noncurrent liabilities 232,357
Total liabilities 1,422,891
Net assets
Invested in capital assets, net of related debt 707,908
Unrestricted 1,716,389
Total net assets $ 2,424,297
The accompanying notes are an integral part of these financial statements.
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