7 YALOBUSHA COUNTY Exhibit B Combined Statement of Revenues, Expenditures and Changes in Fund Balances - All Governmental Fund Types and Expendable Trust Funds For the Year Ended September 30, 1997 Totals Governmental Fiduciary Memorandum Fund Types Fund Type Only Special Debt Expendable Primary General Revenue Service Trust Government Revenues Property taxes $ 1,779,128 555,043 155,033 2,489,204 Licenses, commissions and other revenue 61,410 127,997 189,407 Fines and forfeitures 104,159 104,159 Intergovernmental revenues: Federal sources 12,421 12,421 State and local sources 317,844 1,116,491 1,434,335 Charges for services 44,630 339,125 383,755 Use of money and property 65,872 57,009 10,797 2,966 136,644 Miscellaneous revenues 56,744 3,492 16,974 3,916 81,126 Total Revenues 2,442,208 2,199,157 182,804 6,882 4,831,051 Expenditures Current: General government 1,410,462 84,923 1,308 1,496,693 Public safety 406,004 67,688 473,692 Public works 75 1,520,875 1,520,950 Health & welfare 297,082 297,082 Culture & recreation 42,528 42,528 Conservation of natural resources 24,530 24,530 Economic development & assistance 12,474 12,474 Capital projects 985 17,290 18,275 Debt service: Principal retirement 1,704 418,715 129,176 549,595 Interest and fiscal charges 321 26,057 45,053 71,431 Total Expenditures 2,196,165 2,135,548 174,229 1,308 4,507,250 Excess of Revenues over (under) Expenditures 246,043 63,609 8,575 5,574 323,801 Other Financing Sources (Uses) Proceeds of general obligation bonds 150,000 150,000 Proceeds of other debt 101,048 101,048 Proceeds from sale of assets 3,151 3,151 Operating transfers in 50,514 50,514 Operating transfers out (549) (49,965) (50,514) Total Other Financing Sources (Uses) (549) 254,748 0 0 254,199 Excess of Revenues and Other Sources over (under) Expenditures and Other Uses 245,494 318,357 8,575 5,574 578,000 Fund Balances Beginning of year 717,926 1,105,610 141,012 42,192 2,006,740 Residual equity transfers 1,467 (1,467) End of year $ 963,420 1,425,434 148,120 47,766 2,584,740 The notes to the financial statements are an integral part of this statement. 8 YALOBUSHA COUNTY Combined Statement of Revenues, Expenditures and Changes in Fund Balances - Budget (Non-GAAP Budgetary Basis) and Actual - All Governmental Fund Types For the Year Ended September 30, l997 General Special Fund Revenue Funds Variance Variance Favorable Favorable Budget Actual (Unfavorable) Budget Actual (Unfavorable) Revenues Property taxes $ 1,774,341 1,774,191 (150) 552,294 552,426 132 Licenses, commissions and other revenue 61,799 62,038 239 127,292 127,161 (131) Fines and forfeitures 104,374 104,159 (215) Intergovernmental revenues: Federal sources 12,421 12,421 8,321 (8,321) State and local sources 358,099 307,942 (50,157) 1,122,889 1,130,502 7,613 Charges for services 37,647 37,647 321,823 332,623 10,800 Use of money and property 89,312 65,818 (23,494) 241,625 174,008 (67,617) Miscellaneous revenues 33,187 56,728 23,541 33,458 33,458 Total Revenues 2,421,112 2,420,944 (168) 2,407,702 2,350,178 (57,524) Expenditures General government 1,432,713 1,432,713 85,899 85,899 Public safety 403,685 403,685 142,991 142,991 Public works 75 75 1,528,187 1,500,201 27,986 Health and welfare 301,264 301,264 119,434 119,434 Culture and recreation 42,528 42,528 Conservation of natural resources 23,637 23,637 Economic development and assistance 12,474 12,474 Capital projects 985 985 17,290 17,290 Debt service 2,025 2,025 444,772 444,772 Total Expenditures 2,219,386 2,219,386 0 2,338,573 2,310,587 27,986 Excess of Revenues over (under) Expenditures 201,726 201,558 (168) 69,129 39,591 (29,538) Other Financing Sources (Uses) (281,515) (260,210) 21,305 1,639,945 432,125 (1,207,820) Excess of Revenues and Other Sources over (under) Expenditures and Other Uses (79,789) (58,652) 21,137 1,709,074 471,716 (1,237,358) Fund Balances Beginning of year 839,238 841,502 1,447,327 1,290,238 End of year $ 759,449 782,850 3,156,401 1,761,954 The notes to the financial statements are an integral part of this statement. 9 Exhibit C Debt Service Funds Variance Favorable Budget Actual (Unfavorable) 155,102 155,102 643 643 161,554 161,554 16,974 16,974 317,299 334,273 16,974 325,629 325,629 325,629 325,629 0 (8,330) 8,644 16,974 (1,467) 0 1,467 (9,797) 8,644 18,441 137,362 137,362 127,565 146,006 YALOBUSHA COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 10 (1) Significant Accounting Policies. A. Financial Reporting Entity. Yalobusha County is a political subdivision of the State of Mississippi. The county is governed by an elected five-member Board of Supervisors. Generally accepted accounting principles require Yalobusha County to present these financial statements on the primary government and its component units which have significant operational or financial relationships with the county. Management has chosen to omit from these financial statements the following component units which have significant operational or financial relationships with the county. Accordingly, the financial statements do not include the data of all of the county's component units necessary for reporting in conformity with generally accepted accounting principles. $ Yalobusha General Hospital $ Yalobusha County Public Library System State law pertaining to county government provides for the independent election of county officials. The following officials are all part of the county legal entity and therefore are reported as part of the primary government financial statements. $ Board of Supervisors $ Chancery Clerk $ Circuit Clerk $ Justice Court Clerk $ Purchase Clerk $ Tax Assessor-Collector $ Sheriff B. Basis of Presentation. The accompanying financial statements of the primary government have been prepared in conformity with generally accepted accounting principles as prescribed by the Governmental Accounting Standards Board. However, the primary government financial statements, because they do not include the financial data of the county's component units, do not present fairly, in all material respects, the financial position and results of operations for the entire reporting entity. C. Account Classifications. The account classifications used in the financial statements conform to the broad classifications recommended in Governmental Accounting, Auditing and Financial Reporting as issued in 1994 by the Government Finance Officers Association and the Mississippi County Financial Accounting Manual as revised in 1993 by the Office of the State Auditor. YALOBUSHA COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 11 D. Fund Accounting. The financial activities of the county are recorded in individual funds and account groups used to report financial position and results of operations. Fund accounting is used to demonstrate legal compliance and to aid financial management by segregating transactions relating to certain government functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts, segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with specific regulations, restrictions or limitations. An account group is a financial reporting device designated to provide accountability for certain assets and liabilities that are not recorded in funds because they do not directly affect net expendable available financial resources. The following fund categories, which are further subdivided into separate "fund types", are utilized by the county: GOVERNMENTAL FUND TYPES General Fund - This fund is used to account for all activities of the general government for which a separate fund has not been established. Special Revenue Funds - These funds are used to account for the proceeds of specific revenue sources (other than expendable trusts) that are legally restricted to expenditures for specified purposes. Special Revenue Funds account for, among others, certain federal grant programs, taxes levied with statutorily defined distributions and other resources restricted as to purpose. Debt Service Funds - These funds are used to account for the accumulation of resources for, and the payment of, general long-term debt principal, interest and related costs. FIDUCIARY FUND TYPES Expendable Trust Funds - These funds are used to account for assets held by the county in a formal trustee capacity where the principal and income may be expended in the course of designated operations. Agency Funds - These funds account for various taxes, deposits and other monies collected or held by the county, acting in the capacity of an agent, for distribution to other governmental units or designated beneficiaries. ACCOUNT GROUPS - The General Fixed Assets Account Group is used to account for general fixed assets. The General Long-term Debt Account Group is used to account for general long-term debt and certain other liabilities. E. Basis of Accounting/Measurement Focus. Governmental Fund Types and Expendable Trust and Agency Funds - All Governmental Funds and Expendable Trust Funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities are generally included on the balance sheet. Operating statements of these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. YALOBUSHA COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 12 The modified accrual basis of accounting is used by all Governmental Fund Types, Expendable Trust Funds and Agency Funds. Under this method, revenues are recognized in the accounting period in which they become both available and measurable to finance operations during the year or to liquidate liabilities existing at the end of the year. Available means collected in the current year or soon enough after year end to liquidate liabilities existing at the end of the year. Expenditures are recognized in the accounting period in which the fund liability is incurred. Modifications to the accrual basis of accounting include: $ Licenses, fees, fines and forfeits and other miscellaneous revenues are recognized when received since they normally are only measurable at that time. $ Property taxes are recognized as revenue when received because the remaining delinquent property taxes not collected before the close of the fiscal year are considered immaterial. See Note 1L for further explanation. $ Principal and interest on general long-term debt are recognized when due. F. Budgetary Process and Accounting. Process: Statutory requirements dictate how and when the county's budget is to be prepared. Generally, in the month of August, prior to the ensuing fiscal year beginning each October 1, the Board of Supervisors of the county, using historical and anticipated fiscal data and proposed budgets submitted by the Sheriff and the Tax Assessor-Collector for his or her respective department, prepares an original budget for each of the Governmental Funds for said fiscal year. The completed budget for the fiscal year includes for each fund every source of revenue, each general item of expenditure and the unencumbered cash and investment balances. When during the fiscal year it appears to the Board of Supervisors that budgetary estimates will not be met, it may make revisions to the budget. Accounting: The county's budget is prepared principally on the cash basis of accounting. All appropriations lapse at year end and there are no encumbrances to budget because state law does not require that funds be available when goods or services are ordered, only when payment is made. G. Cash and Investments. State law authorizes the county to invest in interest bearing time certificates of deposit for periods of fourteen days to one year with depositories and in obligations of the U.S. Treasury, State of Mississippi, or any county, municipality or school district of this state. Further, the county may invest in certain repurchase agreements that have a term of less than fourteen days. Cash includes cash on hand, demand deposits, all certificates of deposit and cash equivalents, which are short- term highly liquid investments that are readily convertible to cash (generally three months or less). Investments in governmental securities are stated at cost or amortized cost. However, the county did not invest in any governmental securities during the fiscal year. H. Receivables. Receivables are reported net of allowances for uncollectible accounts, where applicable. YALOBUSHA COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 13 I. Interfund Receivables/Payables. Transactions between funds that are representative of short-term lending/borrowing arrangements, and transactions that have not resulted in the actual transfer of cash at the end of the fiscal year are referred to as "interfund receivables/payables." Noncurrent portions of interfund receivables and payables are reported as "advances to/from other funds." Advances between funds are offset by a fund balance reserve account in applicable Governmental Funds to indicate that they are not available for appropriation and are not expendable available financial resources. J. Fixed Assets. Fixed assets are not capitalized in the funds used to acquire or construct them. Instead, capital acquisition and construction are reflected as expenditures in Governmental Funds and the related assets are reported in the General Fixed Assets Account Group. All purchased fixed assets are stated at cost where historical records are available and at an estimated historical cost where no historical records exist. Donated assets are valued at market value at the time of donation. The costs of normal maintenance and repairs that do not add to the value of assets or materially extend their respective lives are not capitalized; however, improvements are capitalized. Interest expenditures are not capitalized on general fixed assets. Most public domain (infrastructure) fixed assets consisting of certain improvements other than buildings, such as roads, bridges, sidewalks, drainage systems, lighting systems and similar assets that are immovable and of value only to the county, are not capitalized. However, certain infrastructure which consisted of a fence surrounding the county rubbish pit was capitalized. Depreciation is not provided on general fixed assets. K. Fund Equity. Unreserved fund balance represents the amount available for budgeting future operations. Reservations of fund balance represent amounts that are not appropriable or are legally segregated for a specific purpose. L. Property Tax Revenues. Numerous statutes exist under which the Board of Supervisors may levy property taxes. The selection of authorities is made based on the objectives and responsibilities of the county. Restrictions associated with property tax levies vary with the statutory authority. The amount of increase in certain property taxes is limited by state law. Generally, this restriction provides that these tax levies shall produce no more than 110% of the amount which resulted from the assessments of the previous year. The Board of Supervisors, each year at a meeting in September, levies property taxes for the ensuing fiscal year which begins on October 1. Real property taxes become a lien on January 1 of the current year and personal property taxes become a lien on March 1 of the current year. Taxes on both real and personal property, however, are due on or before February 1 of the next succeeding year. Taxes on motor vehicles and mobile homes become a lien and are due in the month that coincides with the month of original purchase. YALOBUSHA COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 14 Generally accepted accounting principles require property taxes to be recognized at the levy date if measurable and available. All property taxes are recognized as revenue when received. Real property taxes are recognized as revenue when received because most delinquent real property taxes are collected by selling real property for taxes, together with all fees, penalties and damages accruing until date of sale, before the close of the fiscal year. The remaining amount of real property not sold for taxes at the tax sale is considered immaterial; therefore, no end of year delinquent taxes receivable is recorded. The amount of delinquent personal property taxes unpaid at year end is also considered immaterial. Motor vehicle and mobile home taxes do not meet the measurability and collectibility criteria for property tax recognition because the lien and due date cannot be established until the date of original purchase occurs. M. Intergovernmental Revenues in Governmental Funds. Intergovernmental revenues, consisting of grants, entitlements and shared revenues, are usually recorded in Governmental Funds when measurable and available. However, the "available" criterion applies for certain federal grants and shared revenues when the expenditure is made because expenditure is the prime factor for determining eligibility. Similarly, if cost sharing or matching requirements exist, revenue recognition depends on compliance with these requirements. N. Total Column on Primary Government Financial Statements. The total column on the primary government financial statements is captioned "Memorandum Only" to indicate that it is presented only to facilitate financial analysis. Data in this column does not present financial position and results of operations in conformity with generally accepted accounting principles. Neither is such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data. (2) Budgetary Basis vs. GAAP. The accompanying Combined Statement of Revenues, Expenditures and Changes in Fund Balances - Budget (Non-GAAP Budgetary Basis) and Actual - All Governmental Fund Types presents comparisons of the legally adopted budget with actual data on a budgetary basis. Since the budgetary and GAAP presentations of actual data differ, a reconciliation of the results of operations for the year follows: Excess of Revenues and Other Sources Over (Under) Expenditures and Other Uses Governmental Fund Types Special Debt General Revenue Service Budget (Cash Basis) $ (58,652) 471,716 8,644 Increase (Decrease) Net adjustment for revenue accruals 283,879 48,379 (69) Net adjustment for expenditure accruals 20,267 (221,200) Other reconciling item: Residual equity transfer 19,462 GAAP Basis $ 245,494 318,357 8,575 YALOBUSHA COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 15 (3) Deposits. The carrying amount of the county's total deposits with financial institutions at September 30, 1997, was $2,904,827 and the bank balance was $2,951,201. The bank balance is categorized below to reflect the level of credit risk assumed by the county at year end. Bank Balance Amount federally insured or collateralized with securities held by the county or its agent in the county's name. $ 174,131 Amount collateralized with securities held by the pledging financial institution's trust department or agent in the county's name. 2,777,070 Total Bank Balance $ 2,951,201 (4) Interfund Receivables and Payables. The composition of interfund balances at September 30, 1997, consists of the following: Interfund Receivables/Payables: Receivable Fund Payable Fund Amount General Fund Reseal SAP 81 (10) S $ 259,611 Rural fire General Fund 657 Reappraisal maintenance General Fund 3,023 District 1 road General Fund 2,974 District 2 road General Fund 2,512 District 3 road General Fund 2,512 District 4 road General Fund 2,512 District 5 road General Fund 2,512 District 1 bridge General Fund 1,782 District 2 bridge General Fund 904 District 3 bridge General Fund 1,377 District 4 bridge General Fund 904 District 5 bridge General Fund 1,918 District 2 road note General Fund 283 District 3 road note General Fund 1,160 District 4 road note General Fund 312 Rubbish note General Fund 533 Hospital improvements I & S General Fund 685 Rural fire I & S General Fund 608 Northwest Community College maintenance General Fund 953 Northwest Community College improvements General Fund 914 Total $ 288,646 Advances to/from Other Funds: District 3 road District 3 garbage $ 9,692 Total $ 9,692 (5) Fixed Assets. YALOBUSHA COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 16 Changes in the General Fixed Assets Account Group at September 30, 1997, are as follows: Balance Balance Oct. 1, 1996 Additions Deletions Adjustments * Sept. 30, 1997 Governmental Funds: Land $ 167,754 167,754 Buildings 2,146,913 18,275 31,057 2,196,245 Improvements other than buildings 10,818 10,818 Mobile equipment 1,679,160 247,558 36,881 1,889,837 Other furniture and equipment 185,267 10,989 1,210 195,046 Leased property under capital leases 780,825 67,348 78,027 (7,344) 762,802 Total $ 4,959,919 344,170 116,118 34,531 5,222,502 * These adjustments are to correct prior year errors. (6) Claims and Judgments. Risk Financing. The county finances its exposure to risk of loss related to workers' compensation for injuries to its employees through the Mississippi Public Entity Workers' Compensation Trust, a public entity risk pool. The county pays premiums to the pool for its workers' compensation insurance coverage and the participation agreement provides that the pool will be self-sustaining through member premiums. The retention for the pool is $350,000 for each accident and completely covers all statutory limits set by the Workers' Compensation Commission. Risk of loss is remote for claims exceeding the pool's retention liability. However, the pool also has catastrophic reinsurance coverage of $1,000,000 per accident, provided by Employers= Reinsurance Corporation, effective from January 1, 1997 to January 1, 1998. The pool may make an overall supplemental assessment or declare a refund depending on the loss experience of all the entities it insures. The county finances its exposure to risk of loss relating to employee health and accident coverage through the Mississippi Association of Supervisors Employee Benefit Trust, a public entity risk pool. Premium payments to the pool are determined on an actuarial basis. The pool services all claims for risk of loss to which the county is exposed. The county purchases commercial insurance to cover all claims in excess of premium contributions. Claims expenses and liabilities are reported when it is probable that a loss has occurred and the amount of that loss can be reasonably estimated. Liabilities include an amount for claims that have been incurred but not reported (IBNRs). Changes in the balances of claims liabilities during the year are as follows: Unpaid Claims, Beginning of Fiscal Year $ 11,176 Plus: Incurred Claims (Including IBNRs) 482,148 Less: Claims Payments 474,985 Unpaid Claims, End of Fiscal Year $ 18,339 . the Government Finance Officers Association and the Mississippi County Financial Accounting Manual as revised in 1993 by the Office of the State Auditor. YALOBUSHA COUNTY Notes to Financial Statements For. Library System State law pertaining to county government provides for the independent election of county officials. The following officials are all part of the county legal entity and therefore are. (1,467) End of year $ 963,420 1,425,434 148,120 47,766 2,584,740 The notes to the financial statements are an integral part of this statement. 8 YALOBUSHA COUNTY Combined Statement of Revenues,