7 ALCORN COUNTY Exhibit B Combined Statement of Revenues, Expenditures and Changes in Fund Balances - All Governmental Fund Types For the Year Ended September 30, 1996 Totals Governmental Memorandum Fund Types Only Special Debt Capital Primary General Revenue Service Projects Government Revenues Property taxes $ 2,109,747 1,381,498 861,327 4,352,572 Licenses, commissions and other revenue 265,166 369,767 634,933 Fines and forfeitures 155,982 155,982 Intergovernmental revenues: Federal sources 369,593 369,593 State and local sources 909,424 791,656 1,701,080 Charges for services 169,628 1,534,082 1,703,710 Use of money and property 83,662 71,271 7,604 1,114 163,651 Miscellaneous revenues 17,051 8,306 25,357 Total Revenues 3,710,660 4,526,173 868,931 1,114 9,106,878 Expenditures Current: General government 2,159,461 310,231 2,469,692 Public safety 979,586 282,167 1,261,753 Public works 353 3,856,614 3,856,967 Health & welfare 334,489 334,489 Culture & recreation 89,715 177,172 266,887 Conservation of natural resources 40,106 39,048 79,154 Economic development & assistance 1,226 189,014 190,240 Capital projects 313,768 212,496 526,264 Debt service: Principal retirement 42,561 257,607 757,451 1,057,619 Interest and fiscal charges 5,899 30,195 122,100 158,194 Total Expenditures 3,653,396 5,455,816 879,551 212,496 10,201,259 Excess of Revenues over (under) Expenditures 57,264 (929,643) (10,620) (211,382) (1,094,381) Other Financing Sources (Uses) Proceeds of general obligation bonds 295,000 295,000 Proceeds of other debt 96,777 471,521 568,298 Proceeds from sale of assets 23,025 23,025 Insurance recoveries 8,317 8,317 Operating transfers in 2,589 54,529 57,118 Operating transfers out (57,118) (57,118) Total Other Financing Sources (Uses) 39,659 800,452 0 54,529 894,640 Excess of Revenues and Other Sources over (under) Expenditures and Other Uses 96,923 (129,191) (10,620) (156,853) (199,741) Fund Balances Beginning of year 273,493 1,337,243 57,445 156,882 1,825,063 Residual equity transfers (33,794) 33,794 End of year $ 370,416 1,174,258 80,619 29 1,625,322 The notes to the financial statements are an integral part of this statement. 8 ALCORN 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, l996 General Special Fund Revenue Funds Variance Variance Favorable Favorable Budget Actual (Unfavorable) Budget Actual (Unfavorable) Revenues Property taxes $ 2,096,910 2,099,545 2,635 1,382,314 1,380,465 (1,849) Licenses, commissions and 260,889 260,889 379,320 368,655 (10,665) other revenue Fines and forfeitures 155,982 155,982 Intergovernmental revenues: Federal sources 207,271 477,120 269,849 State and local sources 933,931 909,424 (24,507) 1,039,826 767,156 (272,670) Charges for services 169,628 169,628 1,526,288 1,534,082 7,794 Use of money and property 83,865 83,865 70,058 71,271 1,213 Miscellaneous revenues 17,885 17,051 (834) 52,232 8,306 (43,926) Total Revenues 3,719,090 3,696,384 (22,706) 4,657,309 4,607,055 (50,254) Expenditures General government 1,889,873 1,956,482 (66,609) 275,495 305,372 (29,877) Public safety 1,014,506 965,704 48,802 436,145 417,531 18,614 Public works 4,073,815 3,548,615 525,200 Health and welfare 310,757 326,312 (15,555) Culture and recreation 121,000 83,911 37,089 216,423 169,895 46,528 Conservation of natural resources 81,328 36,095 45,233 309,401 39,048 270,353 Economic development and assistance 18,000 18,000 226,529 226,529 Capital projects 210,565 259,919 (49,354) Debt service 48,460 (48,460) 287,802 (287,802) Total Expenditures 3,435,464 3,416,964 18,500 5,748,373 5,254,711 493,662 Excess of Revenues over (under) Expenditures 283,626 279,420 (4,206) (1,091,064) (647,656) 443,408 Other Financing Sources (Uses) (404,853) (75,861) 328,992 1,039,518 562,351 (477,167) Excess of Revenues and Other Sources over (under) Expenditures and Other Uses (121,227) 203,559 324,786 (51,546) (85,305) (33,759) Fund Balances Beginning of year 740,514 419,181 1,420,046 1,446,852 End of year $ 619,287 622,740 1,368,500 1,361,547 The notes to the financial statements are an integral part of this statement. 9 Exhibit C Debt Capital Service Funds Projects Funds Variance Variance Favorable Favorable Budget Actual (Unfavorable) Budget Actual (Unfavorable) 852,274 852,274 7,604 7,604 1,114 1,114 859,878 859,878 0 1,114 1,114 0 212,496 212,496 879,551 879,551 879,551 879,551 0 212,496 212,496 0 (19,673) (19,673) 0 (211,382) (211,382) 0 (10,926) 22,868 33,794 54,529 54,529 0 (30,599) 3,195 33,794 (156,853) (156,853) 0 124,665 90,870 156,882 156,882 94,066 94,065 29 29 ALCORN COUNTY Notes to Financial Statements For the Year Ended September 30, 1996 10 (1) Significant Accounting Policies. A. Financial Reporting Entity. Alcorn 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 Alcorn 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 unit which has a significant operational or financial relationship with the county. Accordingly, the financial statements do not include the data of this component unit necessary for reporting in conformity with generally accepted accounting principles. Alcorn County Human Resource Agency 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. ALCORN COUNTY Notes to Financial Statements For the Year Ended September 30, 1996 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 for major capital projects) 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. Capital Projects - These funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities. Such resources are derived principally from proceeds of general obligation bond issues and federal grants. FIDUCIARY FUND TYPE 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 Agency Funds - All Governmental 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. ALCORN COUNTY Notes to Financial Statements For the Year Ended September 30, 1996 12 The modified accrual basis of accounting is used by all Governmental Fund Types 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. ALCORN COUNTY Notes to Financial Statements For the Year Ended September 30, 1996 13 H. Receivables. Receivables are reported net of allowances for uncollectible accounts, where applicable. 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." 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. 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. 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. ALCORN COUNTY Notes to Financial Statements For the Year Ended September 30, 1996 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 Capital General Revenue Service Projects Budget (Cash Basis) $ 203,559 (85,305) 3,195 (156,853) Increase (Decrease) Net adjustment for revenue accruals (36,012) (87,113) 10,926 Net adjustment for expenditure accruals (70,624) 9,433 9,053 Other reconciling items: Residual equity transfers 33,794 (33,794) GAAP Basis $ 96,923 (129,191) (10,620) (156,853) ALCORN COUNTY Notes to Financial Statements For the Year Ended September 30, 1996 15 (3) Deposits. The carrying amount of the county's total deposits with financial institutions at September 30, 1996, was $2,280,703 and the bank balance was $2,353,605. 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. $ 200,000 Amount collateralized with securities held by the pledging financial institution's agent in the county's name. 2,153,605 Total Bank Balance $ 2,353,605 (4) Deferred Compensation Plan. The county offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan, available to all employees of the county, permits participants to defer a portion of their salary until future years, thereby deferring taxation on the portion deferred. The deferred compensation is not available to employees until they are separated from service or face an unforeseeable financial emergency. All amounts of compensation deferred under the plan, all property rights purchased with those amounts and all income attributable to those amounts, property or rights are (until paid or made available to the employee or his beneficiary) solely the property of the employer (without being restricted to the provisions of benefits under the plan), subject only to the claims of the employer's general creditors. Participants' rights under the plan are equal to those of the employer's general creditors in an amount equal to the fair market value of the deferred account for each participant. At June 30, 1996, assets held for participants employed by the county and reported in an Agency Fund totaled $25,482. The county believes that it is unlikely that it will use the assets to satisfy the claims of general creditors in the future. The county has no liability for losses under the plan, but the Board of Trustees of the Public Employees' Retirement System, as plan administrator, does have the duty of due care that would be required of an ordinary prudent investor. (5) Interfund Receivables and Payables. The composition of interfund balances at September 30, 1996, consists of the following: Receivable Fund Payable Fund Amount Recreational commission General Fund $ 3,114 The Alliance General Fund 4,152 Sanitary landfill General Fund 3,761 Sanitary landfill Countywide road construction 29,203 Volunteer fire General Fund 679 Reappraisal General Fund 1,889 District 1 road maintenance General Fund 7,199 ALCORN COUNTY Notes to Financial Statements For the Year Ended September 30, 1996 16 Receivable Fund Payable Fund Amount District 2 road maintenance General Fund 7,199 District 3 road maintenance General Fund 7,199 District 4 road maintenance General Fund 7,199 District 5 road maintenance General Fund 7,199 District 1 bridge & culvert General Fund 892 District 2 bridge & culvert General Fund 892 District 3 bridge & culvert General Fund 892 District 4 bridge & culvert General Fund 892 District 5 bridge & culvert General Fund 892 Airport general obligation bond General Fund 1,868 Countywide road construction General Fund 8,718 Solid waste transfer station General Fund 1,245 Human services note General Fund 3,926 Northeast Community College Maintenance General Fund 2,824 Northeast Community College enlargement General Fund 2,927 Northeast Community College Vo-tech General Fund 477 Tombigbee River Valley Water Management District General Fund 1,225 Total $ 106,463 (6) Fixed Assets. Changes in the General Fixed Assets Account Group at September 30, 1996, are as follows: Balance Balance Oct. 1, 1995 Additions Deletions Sept. 30, 1996 Governmental Funds: Land $ 652,762 46,500 699,262 Buildings 3,251,786 704,000 3,955,786 Improvements other than buildings 2,750 2,750 Construction in progress 446,405 219,419 446,405 219,419 Mobile equipment 587,945 348,573 75,250 861,268 Other furniture and equipment 421,038 108,902 56,652 473,288 Leased property under capital leases 1,419,367 328,254 377,555 1,370,066 Total $ 6,779,303 1,758,398 955,862 7,581,839 (7) Commitment. As of September 30, 1996, the county had the following commitment with respect to an unfinished capital project: Remaining Description of Financial Expected Date Commitment Commitment of Completion Juvenile detention center $ 380,581 December 1, 1997 . by the Government Finance Officers Association and the Mississippi County Financial Accounting Manual as revised in 1993 by the Office of the State Auditor. ALCORN COUNTY Notes to Financial Statements For. available to the employee or his beneficiary) solely the property of the employer (without being restricted to the provisions of benefits under the plan), subject only to the claims of the employer's. Resource Agency 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