washington county johnson city animal ... county ‐ johnson city animal control center, inc....
TRANSCRIPT
WASHINGTONCOUNTY‐JOHNSONCITY
ANIMALCONTROLCENTER,INC.
FINANCIALSTATEMENTS
FortheFiscalYearEndedJune30,2016
WASHINGTONCOUNTY‐JOHNSONCITYANIMALCONTROLCENTER,INC.
FINANCIALSTATEMENTS
FortheFiscalYearEndedJune30,2016
WASHINGTONCOUNTY‐JOHNSONCITYANIMALCONTROLCENTER,INC.TABLEOFCONTENTS
June30,2016 PAGE NUMBER SECTION I ‐ INTRODUCTORY
Letter of Transmittal 1
Roster of Board Members and Management Officials 3
SECTION II ‐ FINANCIAL
Independent Auditors’ Report 4
Management’s Discussion and Analysis 7
BASIC FINANCIAL STATEMENTS
Statement of Net Position 12
Statement of Revenues, Expenses, and Changes in Net Position 14
Statement of Cash Flows 15
Notes to the Financial Statements 17
REQUIRED SUPPLEMENTARY INFORMATION
Schedule of Changes in Washington County ‐ Johnson City Animal Control Center’s Net Pension Liability (Asset) and Related Ratios Based on Participation in the Public Employee Pension Plan of TCRS 30
Schedule of Washington County ‐ Johnson City Animal Control Center’s Contributions Based on Participation in the Public Employee Pension Plan of TCRS 31
SUPPLEMENTAL SECTION
Schedule of Functional Expenses 32
SECTION III ‐ COMPLIANCE SECTION
Independent Auditors’ 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 33
Schedule of Prior Year Findings and Responses 35
Schedule of Findings and Responses 36
1
February 8, 2017 To the Board of Directors of Washington County – Johnson City Animal Control Center, Inc. Johnson City, Tennessee This report consists of management’s representations concerning the finances of Washington County‐Johnson City Animal Control Center, Inc. (the Center). Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management of Washington County ‐ Johnson City Animal Control Center, Inc. has established a comprehensive internal control framework that is designed both to protect the Center’s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the Center’s financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the Center’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The Center’s financial statements have been audited by Blackburn, Childers and Steagall, PLC, a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the Center for the fiscal year ended June 30, 2016 are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that the Center’s financial statements for the fiscal year ended June 30, 2016 are fairly presented in conformity with GAAP. The independent auditors’ report is presented as the first component of the financial section of this report. GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The Center’s MD&A can be found immediately following the report of the independent auditor.
2
ProfileoftheCenter Washington County ‐ Johnson City Animal Control Center, Inc. was chartered as a non‐profit in 1985 and is designed to provide a community wide resource. The Center provides adoption and low cost spay / neuter programs and pick‐up for stray and unwanted animals. In addition, the Center serves the community by investigating suspected animal cruelty, removing dead animals from roadways and private property, and educating the general public about animal care. During the fiscal year ended June 30, 2016, the shelter took in 6,425 animals. The Center operates under the board‐director form of government. The board is responsible, among other things, for adopting the budget and hiring the Center’s director. The Center’s director is responsible for carrying out the policies of the board and for overseeing the day‐to‐day operations of the Center.
Respectfully submitted,
Debbie Dobbs Executive Director
3
WASHINGTONCOUNTY‐JOHNSONCITYANIMALCONTROLCENTER,INC.ROSTEROFBOARDMEMBERSANDMANAGEMENTOFFICIALS
June30,2016 BOARDMEMBERS
Gary McAllister, Board President Dr. Ralph VanBrocklin, City Representative Linda Bearfield, Vice President Joe Grandy, County Representative M. Denis “Pete” Peterson, City Representative
MANAGEMENTOFFICIALS Title Name
Director, Board Secretary Debbie Dobbs Assistant Director Joy Sexton
4
Johnson City 801B Sunset Drive, Johnson City, TN 37604 423.282.4511 Kingsport 1361 South Wilcox Drive, Kingsport, TN 37660 423.246.1725 Greeneville 550 Tusculum Boulevard, Greeneville, TN 37745 423.638.8516
www.BCScpa.com
INDEPENDENTAUDITORS’REPORT To the Board of Directors of Washington County ‐ Johnson City Animal Control Center, Inc. Johnson City, Tennessee
ReportontheFinancialStatements We have audited the accompanying financial statements of the business‐type activities of the Washington County ‐ Johnson City Animal Control Center, Inc. (the Center), as of and for the fiscal year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the Center’s basic financial statements as listed in the table of contents.
Management’sResponsibilityfortheFinancialStatements
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.
Auditors’Responsibility
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 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 auditors’ 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 opinion.
Washington County ‐ Johnson City Animal Control Center, Inc. Independent Auditors’ Report
5
OpinionIn our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the business‐type activities of the Washington County ‐ Johnson City Animal Control Center, Inc., as of June 30, 2016, and the respective changes in financial position and cash flows thereof for the fiscal year then ended in accordance with accounting principles generally accepted in the United States of America. OtherMatters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis on pages 7 through 11 and the required supplementary information as listed in the table of contents on pages 30 through 31 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 an opinion on the financial statements that collectively comprise the Center’s basic financial statements. The introductory section and the schedule of functional expenses are presented for purposes of additional analysis and are not a required part of the basic financial statements. The schedule of functional expenses is the responsibility of management and was 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 schedule of functional expenses is fairly stated in all material respects in relation to the basic financial statements as a whole. The introductory section has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on it.
Washington County ‐ Johnson City Animal Control Center, Inc. Independent Auditors’ Report
6
OtherReportingRequiredbyGovernmentAuditingStandards In accordance with Government Auditing Standards, we have also issued our report dated February 8, 2017, on our consideration of the Center’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 in considering the Center’s internal control over financial reporting and compliance.
BLACKBURN, CHILDERS & STEAGALL, PLC Johnson City, Tennessee
February 8, 2017
7
WASHINGTONCOUNTY‐JOHNSONCITYANIMALCONTROLCENTER,INC.Management’sDiscussionandAnalysis
This section of the Washington County – Johnson City Animal Control Center, Inc.’s (the Center) annual financial report presents management’s discussion and analysis of the Center’s financial performance during the fiscal year that ended on June 30, 2016. Please read it in conjunction with the transmittal letter at the front of this report and the Center’s financial statements, which follow this section. FINANCIALHIGHLIGHTS The Center’s total net position decreased by $41,046 during the fiscal year. Unrestricted net position increased by $206,877. During the year, the Center’s expenses were $41,046 more than the $815,207 generated in revenues. This is $968,767 less than last year, when revenues exceeded expenses by $927,721 due to significant capital contributions received in prior year for the new facility. OVERVIEWOFTHEFINANCIALSTATEMENTS This annual report consists of four parts – management’s discussion and analysis (this section), the basic financial statements, required supplementary information, and supplemental information. The basic financial statements of the Center are proprietary fund statements. Proprietary fund statements offer short‐ and long‐term financial information about activities that operate like a business. The financial statements also include notes that explain some of the information in the financial statements and provide more detailed data. Figure A‐1 summarizes the major features of the Center’s financial statements, including the types of information they contain. The remainder of this overview section of management’s discussion and analysis explains the structure and contents of each of the statements.
FigureA‐1MajorFeaturesoftheCenter’sFundFinancialStatements
Fund Statements Proprietary Funds
Scope Activities the Center operates similar to private businesses
Required financial statements
Statement of net position Statement of revenues, expenses, and changes in net positionStatement of cash flows
Accounting basis and measurement focus
Accrual accounting and economic resources focus
Type of asset / deferred outflow of resources / liability / deferred inflow of resources information
All assets, deferred outflows of resources, liabilities, anddeferred inflows of resources, both financial and capital andshort‐term and long‐term
Type of inflow / outflow information
All revenues and expenses during the year, regardless of when cash is received or paid
8
WASHINGTONCOUNTY‐JOHNSONCITYANIMALCONTROLCENTER,INC.Management’sDiscussionandAnalysis
FundFinancialStatementsThe fund financial statements provide more detailed information about the Center. Proprietary funds – Services for which the Center charges customers a fee are generally reported in proprietary funds. Proprietary funds provide both long‐term and short‐term financial information. FINANCIALANALYSISOFTHECENTERASAWHOLE Net position. The Center’s combined net position decreased $41,046 between fiscal years 2015 and 2016 with an ending balance of $2,159,171. (See Table A‐1.) In comparison, last year net position increased $927,721. The change between years is primarily due to the decrease in capital contributions that were received in fiscal year 2015 for the new facility.
Net position of the Center decreased approximately 2 percent to $2,159,171. However, some components of net position either are restricted as to the purposes they can be used for or are invested in capital assets (buildings, equipment, office equipment, and so on). Consequently, the unrestricted portion of net position showed a $206,877 increase at the end of this year and net position – net investment in capital assets decreased $115,342.
Percentage
2015 2016 Change
Current and other assets $ 147,477 108,186 ‐26.6%
Capital assets 3,592,825 3,514,811 ‐2.2%
Noncurrent assets 133,880 16,197 ‐87.9%
Total assets 3,874,182 3,639,194 ‐6.1%
Deferred outflows of resources 0 19,061
Current liabilities 261,679 70,883 ‐72.9%
Long‐term debt outstanding 1,371,185 1,402,406 2.3%
Total liabilities 1,632,864 1,473,289 ‐9.8%
Deferred inflows of resources 41,101 25,795 ‐37.2%
Net position
Net investment in capital assets 2,175,896 2,060,554 ‐5.3%
Restricted 143,664 11,083 ‐92.3%
Unrestricted (119,343) 87,534 173.3%
Total net position $ 2,200,217 2,159,171 ‐1.9%
TableA‐1WashingtonCounty‐JohnsonCityAnimalControlCenter,Inc.'sNetPosition
9
WASHINGTONCOUNTY‐JOHNSONCITYANIMALCONTROLCENTER,INC.Management’sDiscussionandAnalysis
Changes in net position. The Center’s total revenues decreased by about 46 percent to $815,207. (See Table A‐2.) Approximately 62 percent of the Center’s revenue comes from city and county appropriations. Approximately 14 percent comes from fees charged for services. Approximately 24 percent comes from capital contributions, public donations and other sources. The total cost of all programs increased approximately $314,602, or about 58 percent, partly because of the increase in depreciation, interest expense and salaries related to the new facility and the increase in the number of employees. The Center’s expenses cover a range of services with approximately 44 percent related to salaries.
10
WASHINGTONCOUNTY‐JOHNSONCITYANIMALCONTROLCENTER,INC.Management’sDiscussionandAnalysis
TableA‐2ChangesinWashingtonCounty‐JohnsonCityAnimalControlCenter,Inc.'s
NetPosition
Percentage
2015 2016 Change
Revenues
Charges for Sales and Services $ 83,664 111,019 33%
Appropriations 460,123 504,077 10%
Insurance Reimbursements 1,385 5,386 289%
Public Donations 94,775 155,493 64%
Capital Contributions 929,886 24,229 ‐97%
Investment Income 520 3,425 559%
Construction Reimbursements ‐ 11,578 100%
Gain (Loss) on Disposal of Fixed Assets (73,048) ‐ ‐100%
Total revenues 1,497,305 815,207 ‐46%
Expenses
Accounting and Auditing 6,975 8,080 16%
Maintenance ‐ Structures and Equipment 8,033 13,457 68%
Depreciation Expense 12,329 99,223 705%
Employee Benefits 36,009 41,553 15%
Insurance 11,064 13,789 25%
Office Expenses 12,856 17,429 36%
Supplies 54,981 85,693 56%
Other Operating Expenses 16,126 38,397 138%
Payroll Taxes 22,982 31,923 39%
Salaries 300,838 374,587 25%
Utilities 25,574 42,215 65%
Vehicle and Travel 25,127 26,265 5%
Property Taxes 8,757 ‐ ‐100%
Interest Expense ‐ 63,642 100%
Total expenses 541,651 856,253 58%
Revenues Exceed Expenses 955,654 (41,046) ‐104%
Cumulative Effect of
Change in Accounting Principle (27,933) ‐
Change in Net Position 927,721$ (41,046) ‐104%
11
WASHINGTONCOUNTY‐JOHNSONCITYANIMALCONTROLCENTER,INC.Management’sDiscussionandAnalysis
CAPITALASSETANDDEBTADMINISTRATIONCapitalAssets At the end of fiscal year 2016 the Center had invested $3,748,705 in capital assets, including land, equipment and building. This amount represents $21,208 increase from last year. Long‐termDebtOn June 30, 2014, the Center entered into a loan agreement with Eastman Credit Union for the construction of the new facility. The construction loan converted to permanent long‐term debt on July 29, 2015, with a principal disbursement of $1,500,000 to pay off the construction mortgage. CONTACTINGTHECENTER’SFINANCIALMANAGEMENTThis financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the Center’s finances and to demonstrate the Center’s accountability for the money it receives. If you have any questions about this report or need additional financial information, contact Washington County – Johnson City Animal Control Center, Inc., 3411 North Roan Street, Johnson City, TN 37601.
(Continued)
12
ASSETS
CURRENT ASSETS
Cash 52,851$
Accounts Receivable, Net 380
Prepaid Items 9,797
Pledges Receivable, Net 45,158
Total Current Assets 108,186
NONCURRENT ASSETS
Capital Assets
Land 502,210
Land Improvements 7,358
Building 3,049,187
Equipment and Vehicles 189,950
Less: Accumulated Depreciation (233,894)
Net Capital Assets 3,514,811
Cash ‐ Donor Restricted 11,083
Net Pension Asset 5,114
Total Noncurrent Assets 3,531,008
TOTAL ASSETS 3,639,194
DEFERRED OUTFLOWS OF RESOURCES
Pension Contributions After Measurement Date 15,458
Pension Changes in Experience 3,603
TOTAL DEFERRED OUTFLOWS OF RESOURCES 19,061
WASHINGTONCOUNTY‐JOHNSONCITYANIMALCONTROLCENTER,INC.STATEMENTOFNETPOSITION
June30,2016
The accompanying notes are an integral part of these financial statements.
13
LIABILITIES
CURRENT LIABILITIES
Spay / Neuter Fees Payable 5,180
Accrued Expenses 13,853
Current Portion of Long‐Term Debt 51,850
Total Current Liabilities 70,883
NONCURRENT LIABILITIES
Note Payable 1,402,406
TOTAL LIABILITIES 1,473,289
DEFERRED INFLOWS OF RESOURCES
Pension Changes in Experience 19,192
Net Pension Changes in Investment Earnings 6,603
TOTAL DEFERRED INFLOWS OF RESOURCES 25,795
NET POSITION
Net Investment in Capital Assets 2,060,555
Restricted ‐ Capital Projects 11,083
Unrestricted 87,533
TOTAL NET POSITION 2,159,171$
WASHINGTONCOUNTY‐JOHNSONCITYANIMALCONTROLCENTER,INC.STATEMENTOFNETPOSITION
June30,2016
The accompanying notes are an integral part of these financial statements.
14
OPERATING REVENUES
Charges for Sales and Services 111,019$
Total Operating Revenues 111,019
OPERATING EXPENSES
Accounting and Auditing 8,080
Maintenance ‐ Structures and Equipment 13,457
Depreciation Expense 99,223
Employee Benefits 41,553
Insurance 13,789
Office Expense 17,429
Supplies 85,693
Other Operating Expenses 38,397
Payroll Taxes 31,923
Salaries 374,587
Utilities 42,215
Vehicle and Travel 26,265
Total Operating Expenses 792,611
Operating Income (Loss) (681,592)
NONOPERATING REVENUES (EXPENSES)
City of Johnson City, TN Appropriation 304,077
Washington County, TN Appropriation 200,000
Insurance Reimbursements 5,386
Public Donations 155,493
Construction Reimbursment 11,578
Investment Income 3,425
Interest Expense (63,642)
Total Nonoperating Revenues (Expenses) 616,317
Income (Loss) Before Capital Contributions (65,275)
Capital Contributions 24,229
CHANGE IN NET POSITION (41,046)
NET POSITION, JULY 1 2,200,217
NET POSITION, JUNE 30 2,159,171$
WASHINGTONCOUNTY‐JOHNSONCITYANIMALCONTROLCENTER,INC.STATEMENTOFREVENUES,EXPENSES,ANDCHANGESINNETPOSITION
FortheFiscalYearEndedJune30,2016
(Continued)
15
STATEMENTOFCASHFLOWSFortheFiscalYearEndedJune30,2016
CASH FLOWS FROM OPERATING ACTIVITIESCash Received from Customers 115,223$ Cash Payments to Suppliers for Goods and Services (412,198) Cash Payments to Employees for Services (392,608) Cash Payments for Employee Benefits (80,466)
NET CASH USED FOR OPERATING ACTIVITIES (770,049)
CASH FLOWS FROM NONCAPITAL FINANCINGACTIVITIES
Operating Appropriations Received 504,077 Insurance Reimbursement 5,386 Unrestricted Gifts Received 158,776
NET CASH PROVIDED BY NONCAPITAL FINANCING ACTIVITIES 668,239
CASH FLOWS FROM CAPITAL AND RELATEDFINANCING ACTIVITIES
Gifts Restricted for Capital Purposes 24,229 Construction Reimbursement 11,578 Proceeds from Capital Debt 83,068 Payments on Capital Debt (45,741) Interest Paid (68,186) Acqusition of Capital Assets (21,208)
NET CASH USED FOR CAPITAL AND RELATED FINANCING ACTIVITIES (16,260)
CASH FLOWS FROM INVESTING ACTIVITIESInterest Received 3,425
NET CASH PROVIDED BY INVESTING ACTIVITIES 3,425
NET DECREASE IN CASH (114,645)
CASH AT BEGINNING OF FISCAL YEAR 178,579
CASH AT END OF FISCAL YEAR 63,934$
WASHINGTONCOUNTY‐JOHNSONCITYANIMALCONTROLCENTER,INC.
The accompanying notes are an integral part of these financial statements.
16
WASHINGTONCOUNTY‐JOHNSONCITYANIMALCONTROLCENTER,INC.STATEMENTOFCASHFLOWS
FortheFiscalYearEndedJune30,2016
RECONCILIATION OF OPERATING LOSS TO NET CASH USED FOR OPERATING ACTIVITIES
Operating Loss (681,592)$ Adjustments
Depreciation 99,223 Changes in Deferred Outflows for Pensions (19,061) Changes in Deferred Inflows for Pensions (15,306) (Increase) Decrease in Assets Accounts Receivable 4,204 Prepaid Items 10,812 Net Pension Asset 24,030 Increase (Decrease) in Liabilities Accounts Payable (182,285) Spay/Neuter Fees Payable 4,600 Accrued Expenses (14,674)
NET CASH USED FOR OPERATING ACTIVITIES (770,049)$
RECONCILIATION TO STATEMENT OF NET POSITION
Cash 52,851$
Donor Restricted Cash 11,083
CASH AND CASH EQUIVALENTS AT END OF FISCAL YEAR 63,934$
17
WASHINGTONCOUNTY‐JOHNSONCITYANIMALCONTROLCENTER,INC.NOTESTOTHEFINANCIALSTATEMENTS
JUNE30,2016 NOTE1‐SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESNatureofOperationsWashington County ‐ Johnson City Animal Control Center, Inc. (the Center) was organized under the laws of the State of Tennessee in April 1985. The Center’s Board of Directors serves as its governing body. The Center enforces the city and state ordinances relating to animal control and animal welfare. The Center also operates an animal shelter providing adoption programs and spay / neutering programs. The Center receives funding from the City of Johnson City and Washington County, Tennessee and must comply with the requirements of the funding source entities. The Center is included in the footnotes of those governmental reporting entities as a joint venture. BasisofAccounting The Center is reported as an enterprise fund, a proprietary fund type. The accompanying basic financial statements are reported using the economic measurement focus and the accrual basis of accounting. Revenues are recognized when earned and expenses are recognized when incurred regardless of the timing of related cash flows. The Governmental Accounting Standards Board (GASB) is the accepted standard‐setting body for establishing governmental accounting and financial reporting principles. OperatingRevenuesandExpenses Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and delivering goods in connection with the Center’s principal ongoing operations. The principal operating revenues of the Center are charges to customers for sales and services. All revenues not meeting this definition are reported as nonoperating revenues. Operating expenses of the Center include salaries and associated taxes and benefits as well as costs of feeding and caring for the animals and maintaining the Center’s building, grounds and equipment. RestrictedandUnrestrictedResources When both restricted and unrestricted resources are available or use, it is the Center’s policy to use restricted resources first, then unrestricted resources as they are needed. UseofEstimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimate
18
WASHINGTONCOUNTY‐JOHNSONCITYANIMALCONTROLCENTER,INC.NOTESTOTHEFINANCIALSTATEMENTS
JUNE30,2016 NOTE1‐SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(CONTINUED) Cash For purposes of the Statement of Cash Flows, the Center considers all highly liquid investments with maturities of three months or less when purchased to be cash and cash equivalents. The Center maintains separate cash accounts for monies restricted by donors or designated by the board for future building projects. AccountsReceivableAccounts receivable are reported at the net realizable amounts from third‐party payers for services rendered. Accounts receivable are reported net of an allowance for uncollectible amounts. The allowance for uncollectible amounts is based on prior collection history of receivables, known collection risks, including the age of the receivables. PledgesReceivable Pledges Receivable are reported at the net realizable amounts from donors based primarily upon historical data. The allowance is affected by management’s evaluation of the quality, character, current trends and inherent risks associated with the receivables. DonorRestrictedAssets At June 30, 2016, $11,083 of the Center’s cash was restricted by donors for the Building Fund. There were $24,229 private donations to the Building Fund during the fiscal year ended June 30, 2016. CapitalAssetsandDepreciation Property and equipment are stated at cost, or in the case of contributed assets, at their fair value at the time of the gift. Depreciation is computed using the straight‐line method over the estimated useful lives of the respective assets. The Center’s capitalization policy is to capitalize assets costing $1,500 or more with a life greater than one year. Buildings are depreciated over forty years and building improvements over ten years. Equipment is depreciated over five or seven years. The cost of maintenance and repairs is expensed as incurred; significant renewals and betterments are capitalized. Depreciation expense at June 30, 2016 amounted to $99,223. DeferredOutflows/InflowsofResources In addition to assets, the Statement of Net Position will sometimes report 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.
19
WASHINGTONCOUNTY‐JOHNSONCITYANIMALCONTROLCENTER,INC.NOTESTOTHEFINANCIALSTATEMENTS
JUNE30,2016 NOTE1‐SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(CONTINUED)DeferredOutflows/InflowsofResources(Continued)The Center has two items reported as deferred outflows. (1) The Pension Contributions After Measurement Date are equivalent to the Center’s pension contributions made to the Tennessee Consolidated Retirement System (TCRS) during fiscal year 2016, and will be recognized as a reduction to net pension liability in the following measurement period, and (2) The Pension Changes in Experience is a result of the June 30, 2015 actuarial study for the Center’s agent multiple‐employer pension plan through TCRS, and is being amortized over the average remaining service period. In addition to liabilities, the Statement of Net Position will sometimes report 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 that time. The Center has two items reported as deferred inflows. (1) The Pension Changes in Experience is a result of the June 30, 2015 actuarial study for the Center’s agent multiple‐employer pension plan through TCRS, and is being amortized over the average remaining service period and (2) The Net Pension Changes in Investment Earnings is a result of the June 30, 2015 actuarial study for the Center’s agent multiple‐employer pension plan through TCRS, and is being amortized over a five‐year period. Pensions For the 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 Center’s participation in the Public Employee Retirement Plan of the TCRS, and additions to/deductions from the Center’s fiduciary net position have been determined on the same basis as they are reported by the TCRS for the Public Employee Retirement Plan. For this purpose, benefits (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms of the Public Employee Retirement Plan of TCRS. Investments are reported at fair value. NOTE2‐DEPOSITSANDINVESTMENTS The Center maintains deposit accounts at one commercial bank and at a credit union in Johnson City, Tennessee. The deposit accounts at the commercial bank are insured through the Federal Deposit Insurance Corporation (FDIC) up to $250,000. The deposit accounts at the credit union are insured through the National Credit Union Administration (NCUA) up to $250,000. The Center had no uninsured deposits as of June 30, 2016. All deposits with financial institutions must be collateralized in an amount equal to 105% of the market value of uninsured deposits. If the financial institution does not participate in the Bank Collateral Pool, the financial institution must provide a monthly statement of securities pledged to collateralize the balance. The Center does not have a policy for interest rate risk or for credit risk.
20
WASHINGTONCOUNTY‐JOHNSONCITYANIMALCONTROLCENTER,INC.NOTESTOTHEFINANCIALSTATEMENTS
JUNE30,2016 NOTE3‐PLEDGESRECEIVABLEPledges receivable are summarized as follows at June 30, 2016:
NOTE4–CAPITALASSETSANDDEPRECIATIONProperty and equipment are comprised of the following:
Unconditional Promises Expected to be Collected in:
Less than One Year 50,624$
Less: Allowance for Uncollectible Pledges (5,466)
Net Pledges Receivable 45,158$
Beginning Ending
Balance Increases Decreases Balance
Capital Assets, Not Being Depreciated
Land $ 502,210 ‐ ‐ 502,210
Total Capital Assets, Not Being Depreciated 502,210 0 0 502,210
Capital Assets, Being Depreciated
Land Improvements ‐ 7,358 ‐ 7,358
Building 3,035,337 13,850 ‐ 3,049,187
Equipment 103,758 ‐ ‐ 103,758
Vehicles 86,192 ‐ ‐ 86,192
Total Capital Assets, Being Depreciated 3,225,287 21,208 0 3,246,495
Accumulated Depreciation
Land Improvements ‐ (3,863) ‐ (3,863)
Building (22,036) (83,485) ‐ (105,521)
Equipment (27,022) (11,297) ‐ (38,319)
Vehicles (85,613) (578) ‐ (86,191)
Total Accumulated Depreciation (134,671) (99,223) 0 (233,894)
Net Capital Assets, Being Depreciated 3,090,616 (78,015) 0 3,012,601
Net Capital Assets $ 3,592,826 (78,015) 0 3,514,811
21
WASHINGTONCOUNTY‐JOHNSONCITYANIMALCONTROLCENTER,INC.NOTESTOTHEFINANCIALSTATEMENTS
JUNE30,2016 NOTE5‐COMPENSATEDABSENCES Employees of the Center are entitled to receive paid sick leave. Starting with the first day of employment, all regular full‐time employees accrue one day of sick leave each month. Part‐time employees accumulate sick leave prorated based on the number of hours worked each week. Temporary employees are not eligible for sick leave. An employee is allowed to accumulate a maximum of ninety days sick leave. Employees have the option of receiving payment, at the employee’s regular rate, for those days in excess of sixty days toward the maximum ninety days allowable. Upon termination of an employee, no payment for sick leave will be made. Subsequent to June 30, 2016, no employees exercised the cash option; therefore, no accrued sick leave is included in accrued expenses as of June 30, 2016. Full‐time employees, with less than fifteen years of service, are entitled to ten days of vacation per year. Full‐time employees with fifteen years of service or more of continuous service are granted fifteen days of vacation per year. Part‐time employees are granted vacation time based on the number of hours worked. Vacation time is encouraged to be used by the end of each calendar year. Full‐time employees may carry over into the next year a maximum of 40 hours. Part‐time employees may carry over a maximum of 10 hours. Upon termination, an employee with at least twelve consecutive months of service may be entitled to payment for accrued vacation time, provided the requested two‐week notice of resignation is given. Accrued vacation of $6,831 is included is accrued liabilities as of June 30, 2016. NOTE6‐PENSIONPLAN GeneralInformationaboutthePensionPlan PlanDescription Employees of the Center are provided a defined benefit pension plan through the Public Employee Retirement Plan, an agent multiple‐employer pension plan administered by the TCRS. The TCRS was created by state statute under Tennessee Code Annotated Title 8, Chapters 34‐37. The TCRS Board of Trustees is responsible for the proper operation and administration of the TCRS. The Tennessee Treasury Department, an agency in the legislative branch of state government, administers the plans of the TCRS. The TCRS issues a publically available financial report that can be obtained at www.treasury.tn.gov/tcrs.
22
WASHINGTONCOUNTY‐JOHNSONCITYANIMALCONTROLCENTER,INC.NOTESTOTHEFINANCIALSTATEMENTS
JUNE30,2016 NOTE6‐PENSIONPLAN(CONTINUED) GeneralInformationaboutthePensionPlan(Continued)BenefitsProvided Tennessee Code Annotated Title 8, Chapters 34‐37 establishes the benefit terms and can be amended only by the Tennessee General Assembly. The chief legislative body may adopt the benefit terms permitted by statute. Members are eligible to retire with an unreduced benefit at age 60 with 5 years of service credit or after 30 years of service credit regardless of age. Benefits are determined by a formula using the member’s highest five consecutive year average compensation and the member’s years of service credit. Reduced benefits for early retirement are available at age 55 and vested. Members vest with five years of service credit. Service related disability benefits are provided regardless of length of service. Five years of service is required for non‐service related disability eligibility. The service related and non‐service related disability benefits are determined in the same manner as a service retirement benefit but are reduced 10 percent and include projected service credits. A variety of death benefits are available under various eligibility criteria. Member and beneficiary annuitants are entitled to automatic cost‐of‐living adjustments (COLAs) after retirement. A COLA is granted each July for annuitants retired prior to the 2nd of July of the previous year. The COLA is based on the change in the consumer price index (CPI) during the prior calendar year, capped at 3 percent, and applied to the current benefit. No COLA is granted if the change in the CPI is less than one‐half percent. A one percent COLA is granted if the CPI change is between one‐half percent and one percent. A member who leaves employment may withdraw their employee contributions, plus any accumulated interest. EmployeesCoveredbyBenefitTerms At the measurement date of June 30, 2015, the following employees were covered by the benefit terms:
Contributions Contributions for employees are established in the statutes governing the TCRS and may only be changed by the Tennessee General Assembly. The Center has adopted a noncontributory plan and makes employer contributions at the rate set by the Board of Trustees as determined by an actuarial valuation. For the fiscal year ended June 30, 2015, the Actuarially Determined Contribution (ADC) for the Center was $20,867 based on a rate of 11.95 percent of covered payroll. By law, employer contributions are required to be paid. The TCRS may intercept the Center’s state shared taxes if required employer contributions are not remitted. The employer’s ADC and member contributions are expected to finance the costs of benefits earned by members during the year, the cost of administration, as well as an amortized portion of any unfunded liability.
Inactive employees or beneficiaries currently receiving benefits 2
Inactive employees entitled to but not yet receiving benefits 3
Active employees 5
10
23
WASHINGTONCOUNTY‐JOHNSONCITYANIMALCONTROLCENTER,INC.NOTESTOTHEFINANCIALSTATEMENTS
JUNE30,2016 NOTE6‐PENSIONPLAN(CONTINUED) NetPensionLiability(Asset) The Center’s net pension liability (asset) was measured as of June 30, 2015, and the total pension liability used to calculate net pension liability (asset) was determined by an actuarial valuation as of that date. ActuarialAssumptions The total pension liability (asset) as of June 30, 2015 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:
Inflation 3.0 percent
Salary increases Graded salary ranges from 8.97 to 3.71 percent based on age, including inflation, averaging 4.25 percent
Investment rate of return 7.5 percent, net of pension plan investment expenses,
including inflation
Cost‐of‐Living Adjustment 2.5 percent Mortality rates were based on actual experience from the June 30, 2012 actuarial experience study adjusted for some of the expected future improvement in life expectancy. The actuarial assumptions used in the June 30, 2015 actuarial valuation were based on the results of an actuarial experience study performed for the period July 1, 2008 through June 30, 2012. The demographic assumptions were adjusted to more closely reflect actual and expected future experience. The long‐term expected rate of return on pension plan investments was established by the TCRS Board of Trustees in conjunction with the June 30, 2012 actuarial experience study by considering the following three techniques: (1) the 25‐year historical return of the TCRS at June 30, 2012, (2) the historical market returns of asset classes from 1926 to 2012 using the TCRS investment policy asset allocation, and (3) capital market projections that were utilized as 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. Four sources of capital market projections were blended and utilized in the third technique. The blended capital market projection established 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 inflation of 3 percent. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:
24
WASHINGTONCOUNTY‐JOHNSONCITYANIMALCONTROLCENTER,INC.NOTESTOTHEFINANCIALSTATEMENTS
JUNE30,2016 NOTE6‐PENSIONPLAN(CONTINUED)NetPensionLiability(Asset)(Continued)ActuarialAssumptions(Continued)
The long‐term expected rate of return on pension plan investments was established by the TCRS Board of Trustees as 7.50 percent based on a blending of the three factors described above. DiscountRate 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 rate and that contributions from the Center will be made at the actuarially determined contribution rate pursuant to an actuarial valuation in accordance with the funding policy of the TCRS Board of Trustees and as required to be paid by state statute. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make projected future benefit payments of current active and inactive members. 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.
Long‐Term
Expected Real
Rate of Return Target Allocation
U.S. Equity 6.46% 33.00%
Developed Market International Equity 6.26% 17.00%
Emerging Market International Equity 6.40% 5.00%
Private Equity and Strategic Lending 4.61% 8.00%
U.S. Fixed Income 0.98% 29.00%
Real Estate 4.73% 7.00%
Short‐Term Securities 0.00% 1.00%
100.00%
Asset Class
25
WASHINGTONCOUNTY‐JOHNSONCITYANIMALCONTROLCENTER,INC.NOTESTOTHEFINANCIALSTATEMENTS
JUNE30,2016 NOTE6‐PENSIONPLAN(CONTINUED) ChangesintheNetPensionLiability(Asset)
SensitivityoftheNetPensionLiability(Asset)toChangesintheDiscountRate The following presents the net pension liability (asset) of the Center calculated using the discount rate of 7.50 percent, as well as what the net pension liability (asset) would be if it were calculated using a discount rate that is 1.00‐percentage‐point lower (6.50 percent) or 1.00‐percentage‐point higher (8.50 percent) than the current rate:
Total Pension
Liability
Plan Fiduciary
Net Position
Net Pension
Liability (Asset)
(a) (b) (a) ‐ (b)
Balance at 6/30/2014 584,702$ 613,846 (29,144)
Changes for the fiscal year:
Service Cost 14,777 ‐ 14,777
Interest 44,558 ‐ 44,558
Differences Between Expected and
Actual Experience 4,324 ‐ 4,324
Contributions ‐ Employer ‐ 20,867 (20,867)
Net Investment Income ‐ 19,057 (19,057)
Benefits Payments, Including Refunds
of Employee Contributions (10,738) (10,738) ‐
Administrative Expense ‐ (295) 295
Net Changes 52,921 28,891 24,030
Balance at 6/30/2015 637,623$ 642,737 (5,114)
Increase (Decrease)
1.00% Decrease Discount Rate 1.00% Increase
(6.50%) (7.50%) (8.50%)
Washington County ‐ Johnson City
Animal Control Center's
Net Pension Liability (Asset) 68,634$ (5,114) (68,172)
26
WASHINGTONCOUNTY‐JOHNSONCITYANIMALCONTROLCENTER,INC.NOTESTOTHEFINANCIALSTATEMENTS
JUNE30,2016 NOTE6‐PENSIONPLAN(CONTINUED)Pension Expense andDeferredOutflows ofResources andDeferred Inflows ofResourcesRelatedtoPensions PensionExpense For the fiscal year ended June 30, 2016, the Center recognized pension expense of $5,121. DeferredOutflowsofResourcesandDeferredInflowsofResources For the fiscal year ended June 30, 2016, the Center reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:
The amount shown above for “Contributions Subsequent to the Measurement Date of June 30, 2015,” will be recognized as a reduction (increase) to net pension liability (asset) in the following measurement period.
Deferred Deferred
Outflows of Inflows of
Resources Resources
Differences Between Expected and
Actual Experience 3,603$ 19,192
Net Difference Between Projected and
Actual Earnings on Pension Plan
Investments 21,880 28,483
Contributions Subsequent to the
Measurement Date of June 30, 2015 15,458 (not applicable)
Total 40,941$ 47,675
27
WASHINGTONCOUNTY‐JOHNSONCITYANIMALCONTROLCENTER,INC.NOTESTOTHEFINANCIALSTATEMENTS
JUNE30,2016 NOTE6‐PENSIONPLAN(CONTINUED) Pension Expense andDeferredOutflows ofResources andDeferred Inflows ofResourcesRelatedtoPensions(Continued)DeferredOutflowsofResourcesandDeferredInflowsofResources(Continued) Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:
In the table shown above, positive amounts will increase pension expense while negative amounts will decrease pension expense. PayabletothePensionPlanAt June 30, 2016, the Center reported a payable of $1,056 for the outstanding amount of contributions to the pension plan required at the fiscal year ended June 30, 2016..
Fiscal Year Ended June 30:
2017 (8,102)$
2018 (8,102)
2019 (8,102)
2020 1,393
2021 721
Thereafter ‐
28
WASHINGTONCOUNTY‐JOHNSONCITYANIMALCONTROLCENTER,INC.NOTESTOTHEFINANCIALSTATEMENTS
JUNE30,2016 NOTE7‐LONG‐TERMDEBTOn June 30, 2014, the Center closed on a $1,500,000 loan with Eastman Credit Union for the purpose of constructing a new facility. The terms include 13 monthly consecutive interest payments, beginning July 1, 2014, with interest calculated on the unpaid principal balance using an interest rate of 4% per annum; 180 monthly consecutive principal and interest payments in the amount of $9,090 each, beginning August 1, 2015, with interest calculated on the unpaid principal balance using an interest rate of 4% per annum based on a year of 360 days; 59 monthly consecutive principal and interest payments in the initial amount of $9,118 each beginning August 1, 2030, with interest calculated on the unpaid balance using an interest rate based on the weekly average yield on United States securities adjusted to a constant maturity of five years, as made available by the Federal Reserve Board. The minimum interest rate on this note will be 4% per annum and the maximum will be 7% per annum. On July 29, 2015, the Center’s construction loan was converted to a permanent loan secured by the facility. The balance on the note as of June 30, 2016 was $1,454,256 and interest expense for the year was $63,642.
Following is a schedule of future maturities of long‐term debt at June 30, 2016:
Balance
Beginning of
Year Additions
Retirements/
Reductions
Balance End
of Year
Due Within
One Year
Note Payable 1,416,929$ 83,068 45,741 1,454,256 51,850 Total Long‐Term Debt 1,416,929$ 83,068 45,741 1,454,256 51,850
Fiscal
Year Ending Principal Annual
June 30 Payments Interest Total
2017 51,850$ 57,227 109,077
2018 53,962 55,115 109,077
2019 56,161 52,916 109,077
2020 58,449 50,628 109,077
2021 60,830 48,247 109,077
2022 ‐ 2026 343,409 201,973 545,382
2027 ‐ 2031 419,081 126,607 545,688
2032 ‐ 2036 410,514 36,245 446,759
1,454,256$ 628,958 2,083,214
29
WASHINGTONCOUNTY‐JOHNSONCITYANIMALCONTROLCENTER,INC.NOTESTOTHEFINANCIALSTATEMENTS
JUNE30,2016 NOTE8‐INSURANCEThe Center is subject to a variety of claims ranging from workers’ compensation claims, employment claims and a multiplicity of other liability claims. The Center has purchased insurance coverage for general liability, personal injury, automobile and workers’ compensation. The Center is not covered by insurance of any other governmental entity. There have been no significant reductions in insurance coverage. Settlement amounts have not exceeded insurance coverage for the current year or the three prior years NOTE9‐ADVERTISING The Center expenses advertising costs as incurred. Total advertising expense for the year ended June 30, 2016 was $3,352. NOTE10‐ECONOMICDEPENDENCYThe Center receives the majority of its revenue from Johnson City and Washington County, Tennessee and must comply with the requirements of these funding source entities. NOTE11‐INCOMETAXES The Center did not have unrecognized tax liabilities as of June 30, 2016 and does not expect this to change significantly over the next 12 months. The Center’s policy is to recognize interest and penalties accrued on any unrecognized tax liabilities as a component of income tax expense in the financial statements. No interest or penalties were recorded during the fiscal year ended June 30, 2016. NOTE12‐SUBSEQUENTEVENTSSubsequent events have been evaluated through February 8, 2017, which is the date that the Center’s financial statements were available to be issued. NOTE13‐ACCOUNTINGCHANGE Provisions of Governmental Accounting Standards Board (GASB) Statement No. 82, Pension Issues – An Amendment of GASB Statements No. 67, No. 68, and No. 73 was early implemented for the fiscal year ended June 30, 2016. GASB Statement No. 82 modified the definition of covered employee payroll to be the payroll on which contributions to a pension plan are based. As a result of implementing the provisions of GASB Statement No. 82, the Center presented the employer’s covered payroll as the total pensionable payroll for employees covered under the pension plan. There was no effect on the financial statements.
30
2014 2015
Total Pension Liability
Service Cost 14,996$ 14,777
Interest 43,172 44,558
Differences between Actual and Expected Experience (28,788) 4,324
Benefit Payments, including Refunds of Employee Contributions (10,601) (10,738)
Net Change in Total Pension Liability 18,779 52,921
Total Pension Liability ‐ Beginning 565,923 584,702
Total Pension Liability ‐ Ending (a) 584,702$ 637,623
Plan Fiduciary Net Position
Contributions ‐ Employer 19,239$ 20,867
Net Investment Income 86,694 19,057
Benefit Payments, including Refunds of Employee Contributions (10,601) (10,738)
Administrative Expense (237) (295)
Net Change in Plan Fiduciary Net Position 95,095 28,891
Plan Fiduciary Net Position ‐ Beginning 518,751 613,846
Plan Fiduciary Net Position ‐ Ending (b) 613,846$ 642,737
Net Pension Liability (Asset) ‐ Ending (a) ‐ (b) (29,144)$ (5,114)
Plan Fiduciary Net Position as a Percentage of Total Pension Liability 104.98% 100.80%
Covered Payroll 160,194$ 174,615
Net Pension Liability (Asset) as a Percentage of Covered Payroll ‐18.19% ‐2.93%
LastFiscalYearEndingJune30
This is a 10‐Year Schedule; however, the information in this Schedule is not required to be presented retroactively. Years will be added
to this Schedule in future fiscal years until 10 fiscal years of information is available.
WASHINGTONCOUNTY‐JOHNSONCITYANIMALCONTROLCENTER,INC.REQUIREDSUPPLEMENTARYINFORMATION
SCHEDULEOFCHANGESINWASHINGTONCOUNTY‐JOHNSONCITYANIMALCONTROLCENTER'SNETPENSIONLIABILITY(ASSET)ANDRELATEDRATIOSBASEDONPARTICIPATIONINTHEPUBLICEMPLOYEEPENSIONPLANOFTCRS
31
NotestoSchedule
2015 2016
Actuarially Determined Contribution $ 19,239 20,867 15,458
Contributions in relation to the
Actuarially Determined Contribution 19,239 20,867 15,458
Contribution Deficiency (Excess) $ 0 0 0
Covered Payroll $ 160,194 174,615 129,356
Contributions as a Percentage of
Covered Payroll 12.01% 11.95% 11.95%
BASEDONPARTICIPATIONINTHEPUBLICEMPLOYEEPENSIONPLANOFTCRSLastFiscalYearEndingJune30
This is a 10‐Year Schedule; however, the information in this Schedule is not required to be presented retroactively.
Years will be added to this Schedule in future fiscal years until 10 fiscal years of information is available.
2014
WASHINGTONCOUNTY‐JOHNSONCITYANIMALCONTROLCENTER,INC.REQUIREDSUPPLEMENTARYINFORMATION
SCHEDULEOFWASHINGTONCOUNTY‐JOHNSONCITYANIMALCONTROLCENTER'SCONTRIBUTIONS
Valuation date:
Methods and assumptions used to determine contribution rates:
Actuarial Cost Method
Amortization Method
Remaining Amortization Period
Asset Valuation
Inflation
Salary Increases
Investment Rate of Return
Retirement Age
Mortality
Cost‐of‐Living Adjustments
3.0 percent
Actuarially determined contribution rates for 2016 were calculated based on the July 1, 2013 actuarial valuation.
10‐year smoothed within a 20 percent corridor to market value
6 Years
Level Dollar, Closed (not to exceed 20 years)
Frozen Initial Liability
2.5 percent
Customized table based on actual experience including an
adjustment for some anticipated improvement
Pattern of retirement determined by experience study
7.5 percent, net of investment expense, including inflation
Graded salary ranges from 8.97 to 3.71 percent based on age,
including inflation
See Independent Auditors’ Report. 32
Program Management
Services and General Total
Accounting and Auditing ‐$ 8,080 8,080
Maintenance ‐ Structures and Equipment 11,035 2,422 13,457
Depreciation Expense 92,277 6,946 99,223
Employee Benefits 35,320 6,233 41,553
Insurance 11,307 2,482 13,789
Office Expense ‐ 17,429 17,429
Supplies 77,124 8,569 85,693
Other Operating Expenses 38,397 ‐ 38,397
Payroll Taxes 27,135 4,788 31,923
Salaries 318,399 56,188 374,587
Utilities 34,616 7,599 42,215
Vehicle and Travel 26,265 ‐ 26,265
671,875$ 120,736 792,611
WASHINGTONCOUNTY‐JOHNSONCITYANIMALCONTROLCENTER,INC.SCHEDULEOFFUNCTIONALEXPENSESFortheFiscalYearEndedJune30,2016
33
Johnson City 801B Sunset Drive, Johnson City, TN 37604 423.282.4511 Kingsport 1361 South Wilcox Drive, Kingsport, TN 37660 423.246.1725 Greeneville 550 Tusculum Boulevard, Greeneville, TN 37745 423.638.8516
www.BCScpa.com
INDEPENDENTAUDITORS’REPORTONINTERNALCONTROLOVERFINANCIALREPORTINGANDONCOMPLIANCEANDOTHERMATTERSBASEDONANAUDITOFFINANCIAL
STATEMENTSPERFORMEDINACCORDANCEWITHGOVERNMENTAUDITINGSTANDARDS To the Board of Directors of Washington County ‐ Johnson City Animal Control Center, Inc. Johnson City, Tennessee We have audited, 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, the financial statements of the business‐type activities of the Washington County ‐ Johnson City Animal Control Center, Inc. (the Center) as of and for the fiscal year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the Center’s basic financial statements and have issued our report thereon dated February 8, 2017. InternalControloverFinancialReporting In planning and performing our audit of the financial statements, we considered the Center’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 opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Center’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Center’s internal control. Our consideration of internal control was for the limited purpose described in the preceding paragraph 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. However, as described in the accompanying schedules of findings and responses, we identified certain deficiencies in internal control that we consider to be a material weakness and significant deficiencies. 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. We consider the deficiency described in the accompanying schedule of findings and responses to be a material weakness: 2015‐001. 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. We consider the deficiencies described in the accompanying schedule of findings and responses to be significant deficiencies: 2016‐001 and 2016‐002.
Washington County ‐ Johnson City Animal Control Center, Inc. Independent Auditors’ Report on Internal Control
34
ComplianceandOtherMatters As part of obtaining reasonable assurance about whether the Center’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. WashingtonCounty‐JohnsonCityAnimalControlCenter,Inc.’sResponsetoFindingsThe Center’s response to the findings identified in our audit are described in the accompanying schedule of findings and responses. The Center’s response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it. PurposeofthisReport 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 Center’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 Center’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
BLACKBURN, CHILDERS & STEAGALL, PLC Johnson City, Tennessee February 8, 2017
35
WASHINGTONCOUNTY‐JOHNSONCITYANIMALCONTROLCENTER,INC.SCHEDULEOFPRIORYEARFINDINGSANDRESPONSES
FortheFiscalYearEndedJune30,2016
Finding
Number Finding Title Status
2015‐001 Financial Statements Materially Misstated Repeated
2015‐002 Negative Net Position Corrected
36
WASHINGTONCOUNTY‐JOHNSONCITYANIMALCONTROLCENTER,INC.SCHEDULEOFFINDINGSANDRESPONSES
JUNE30,2016
FINANCIALSTATEMENTAUDITFINDINGSCurrentYearAuditFindings2016‐001SignificantDeficiency:JournalEntryDocumentation
Condition: During the audit, it was noted journal entries are not being signed off by a preparer and reviewer, if applicable, are not accompanied by supporting documentation, and are not given a description. Criteria: Journal entries should be signed off by a preparer and reviewer, accompanied by supporting documentation, and given a description. Effect: The preparer of each journal entry, whether or not each journal entry had been reviewed and the purpose of each journal entry was not readily determined. Recommendation: We recommend that all journal entries are given a description, have supporting documentation and are approved. Management’s Comments: We will ensure all journal entries are given a description, are approved and continue to have supporting documentation.
2016‐002SignificantDeficiency:CashReceiptNumbering
Condition: Multiple cash receipt books are in use at the same time. Criteria: Cash receipts numbers should be issued in sequential order to ensure all receipts are properly recorded. Effect: Cash receipt numbers are not being issued in sequential order, therefore completeness of all cash receipts issued was not readily determined. Recommendation: We recommend the Center adopt a system to issue all cash receipts in sequential order. Management’s Comments: All receipts will be used in sequential order.
37
WASHINGTONCOUNTY‐JOHNSONCITYANIMALCONTROLCENTER,INC.SCHEDULEOFFINDINGSANDRESPONSES
JUNE30,2016
FINANCIALSTATEMENTAUDITFINDINGS(CONTINUED)PriorYearFindingNotImplemented2015‐001 Material Weakness: Financial Statements Materially Misstated (repeated from6/30/2015report)
Condition: Before proposed audit adjustments were made, the financial statements were materially misstated. Criteria: Financial statements should not be materially misstated. Effect: Total assets were overstated $71,943; total liabilities were overstated $130,584; total expenses were overstated $282,185; and the change in net position was understated $278,902. Recommendation: We recommend the proper steps be taken to ensure the financial statements are materially correct. Management’s Comments: The proper steps will be taken to ensure the financial statements are materially correct.