--- type: document title: 2012-Audit file: ../2012-Audit.pdf tags: - Russell_County - Audit_and_Budget_Information - '2012' docDate: '2012' contentType: application/pdf contentLength: 2533534 sha256sum: a84ee8db3208bca356288e7e06e21043d389b45cd32456745c233bfd2fa8b860 sha1sum: b5a727f1ca289b954b84dcfad0b3871920dfe4da --- COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED JUNE 30, 2012 CouNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED JUNE 30, 2012 INTRODUCTORY SECTION COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED JUNE 30, 2012 TABLE OF CONTENTS List of Elected and Appointed Officials ............................................................................................... . FINANCIAL SECTION Independent Auditors' Report ....... ............. ..... ...... ............. ..... ..... ...... ... ...... ... ...................... ... ..... ..... .. 2-3 Management's Discussion and Analysis................................................................ ..... ...... ...... .. .......... 4-13 Exhibit Page Basic Financial Statements: Government-wide Financial Statements: Statement of Net Assets ................................................................................................................ . 1 14 Statement of Activities .................................................................................................................... . 2 15 Fund Financial Statements: Balance Sheet- Governmental Funds .......................................................................................... . 3 16 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets .............................................................................................................................. . 4 17 Statement of Revenues, Expenditures and Changes in Fund Balances- Governmental Funds .................................................................................................................. . 5 18 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities .................................. . 6 19 Statement of Net Assets- Proprietary Funds ................................................................................. . 7 22 Statement of Revenues, Expenses, and Changes in Fund Net Assets- Proprietary Funds ................................................................................................................... . 8 21 Statement of Cash Flows- Proprietary Funds ............................................................................... . 9 22 Statement of Fiduciary Net Assets- Fiduciary Funds .................................................................... . 10 23 Notes to Financial Statements ......................................................................................................... . 24-62 Required Supplementary Information: Schedule of Revenues, Expenditures and Changes in Fund Balances- Budget and Actual General Fund ........................................................................................................................................ 11 63 Special Revenue Fund- Industrial Development............................................................................ 12 64 Special Revenue Fund- Coal Road ........ .................. ..... .......... .. ...... ...... ................... ............. ... ..... 13 65 Special Revenue Fund- Workforce Investment Board................................................................... 14 66 Schedule of Pension and OPEB Funding Progress............................................................................. 15 67 CouNTY OF RUSSELL, VIRGINIA ‘ANNUAL FINANCIAL REPORT FiscAL YEAR ENDED JUNE 30, 2012 TABLE OF CONTENTS INTRODUCTORY SECTION Page List of Elected and Appointed Officials... 1 FINANCIAL SECTION Independent Auditors’ Report .....cccssccssssesusessnsesisesennesen 23 Management's Discussion and Analysis... 443, Exhibit Page Basic Financial Statements: Government-wide Financial Statements: Statement of Net Assets 1 14 Statement of Activities 2 15 Fund Financial Statements: Balance Sheet ~ Governmental Funds ... 3 16 Reconciliation of the Balance Sheet of Governmental Funds 'o ‘the ‘Statement Of Net Assets oo... 4 17 Statement of Revenues, Expenditures and Changes it in Fund Balances - Governmental Funds. 5 18 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities . 6 19 Statement of Net Assets — Proprietary Funds...» 7 2 Statement of Revenues, Expenses, and Changes in Fund Net Assets - Proprietary Funds . est . 8 2 Statement of Cash Flows - Proprietary Funds... 9 22 Statement of Fiduciary Net Assets — Fiduciary Funds. 10 23 Notes to Financial Statements. sosescteen = 24-62 Required Supplementary Information: ‘Schedule of Revenues, Expenditures and Changes in Fund Balances — Budget and Actual General Fund... estinenstntaeneaetesnanesennes enneseensee . wf 63 Special Revenue Fund — Industrial Development....... 12 64 Special Revenue Fund - Coal Road..... 13 65 Special Revenue Fund - Workforce investment Board. 14 66 Schedule of Pension and OPEB Funding Progress........... 18 67 FINANCIAL SECTION (CONTINUED) COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED JUNE 30,2012 TABLE OF CONTENTS (CONTINUED) Exhibit Page Other Supplementary Information: Statement of Changes in Assets and Liabilities- Agency Funds......................................................... 16 68 Discretely Presented Component Unit- School Board: Balance Sheet................................................................................................................................. 17 69 Statement of Revenues, Expenditures, and Changes in Fund Balances- Governmental Funds................................................................................................................... 18 70 Schedule of Revenues, Expenditures, and Changes in Fund Balances- Budget and Actual........................................................................................................................ 19 71 Schedule Page Supporting Schedules: Schedule of Revenues- Budget and Actual - Governmental Funds ................................................ . Schedule of Expenditures- Budget and Actual - Governmental Funds .......................................... .. Other Statistical Information: Government-wide Information: Government-Wide Expenses by Function ...................................................................................... . Government-Wide Revenues ......................................................................................................... . Fund Information: General Governmental Expenditures by Function .......................................................................... . General Governmental Revenues by Source ................................................................................. . Property Tax Levies and Collections .............................................................................................. . Assessed Value of Taxable Property .............................................................................................. . Property Tax Rates ........................................................................................................................ . Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt Per Capita .......................................................................................................................... . Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General Governmental Expenditures ................................................................................ . 1 72-77 2 78-81 1 2 3 4 5 6 7 8 9 82 83 84 85 86 87 88 89 90 COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT FiscaL YEAR ENDED JUNE 30, 2012 TABLE OF CONTENTS (CONTINUED) FINANCIAL SECTION (CONTINUED) Other Supplementary Information: Statement of Changes in Assets and Liabilities ~ Agency FUMES... Discretely Presented Component Unit - School Board: Balance Sheet 7 Statement of Re Governmental Funds... ses 18 Schedule of Revenues, Expenditures, and Changes ir in Fund | Balances - - Budget and Actual... sosonen nssansnsnersnsnsaneessesnsaniere 19 Schedule Supporting Schedules: Schedule of Revenues ~ Budget and Actual - Governmental Funds .. 1 Schedule of Expenditures - Budget and Actual - Governmental Funds . 2 Other Statistical Information: Table ‘Government-wide Information: Government-Wide Expenses by Function... 1 Government-Wide REVEnUes .......rssesceisse 2 Fund Information: General Governmental Expenditures by Function. 3 General Governmental Revenues by Source..... 4 Property Tax Levies and Collections. 5 Assessed Value of Taxable Property 6 Property Tax Rates...... 7 Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt Per Capita. cso senna — 8 Ratio of Annual Debt Service Expenditures for General Bonded Debt ‘O Total General Governmental Expenditures .... senna 9 69 70 74 Page 72-17 78-81 Page 82 83 84 85 86 87 88 89 90 COMPLIANCE SECTION Compliance: COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED JUNE 30,2012 TABLE OF CONTENTS {CONTINUED) 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 ..................................................................... . Independent Auditors' Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program and on Internal Control over Compliance in Accordance with OMB Circular A-133 ........................................................ .. Schedule of Expenditures of Federal Awards .................................................................................... . Schedule of Findings and Questioned Costs .................................................................................... .. 91-92 93-94 95-98 99-102 COUNTY OF RUSSELL, VIRGINIA ANNUAL FINANCIAL REPORT FisCAL YEAR ENDED JUNE 30, 2012 TABLE OF CONTENTS (CONTINUED) COMPLIANCE SECTION Page Compliance: 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... se 91-92 Independent Auditors’ Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program and on Internal Control over ‘Compliance in Accordance with OMB Circular A-133......... . 93-94 ‘Schedule of Expenditures of Federal Awards, 95-98 99-102 Schedule of Findings and Questioned Costs. INTRODUCTORY SECTION INTRODUCTORY SECTION COUNTY OF RUSSELL, VIRGINIA Joseph Puckett, Vice Chairman Bob Gibson Rebecca Dye Carl Jackson, Vice Chairman Fayrene Plaster Tom Griffith Bill W. Wampler, Vice Chairman Bill Hale BOARD OF SUPERVISORS Jon Bowerbank, Chairman COUNTY SCHOOL BOARD Charlie Collins, Chairman SOCIAL SERVICES BOARD Harry Ferguson, Jr., Chairman OTHER OFFICIALS Larry Rasnake Earnest (Shy) Kennedy Danny L. Brown Bob Hillman Linda Cross Roger Brown Clerk of the Circuit Court... .................................................................................. Ann S. McReynolds Commonwealth's Attorney .............................................................................................. Brian Patton Commissioner of the Revenue ............................................................................... Randy N. Williams Treasurer ............................................................................................................... Patrick Thompson Sheriff ................................................................................................................................. Steve Dye Superintendent of Schools ............................................................................................. Mike Puckett Interim Director of Social Services .................................................................................. Carol Brunty County Administrator ................................................................................................. Marycarol White County Attorney ............................................................................................................ Dennis Jones -1- County OF RUSSELL, VIRGINIA BOARD OF SUPERVISORS Jon Bowerbank, Chairman Joseph Puckett, Vie Chairman Larry Rasnake Bob Gibson Eamest (Shy) Kennedy Rebecca Dye Danny L. Brown COUNTY SCHOOL BOARD Charlie Colins, Chairman Cari Jackson, Viee Chairman Bob Hillman Fayrene Plaster Linda Cross Tom Griffith SOCIAL SERVICES BOARD Harry Ferguson, Jr., Chairman Bil W. Wampler, Vice Chairman Roger Brown Bil Hale OTHER OFFICIALS Clerk of the Circult Court. cus Ann §, MeReynolds Commonwealth's Attorney ......... sss Brian Patton Commissioner of the Revenue... Randy N. Williams: Treasurer... .Patrick Thompson Sherif... ssonnuome Stove Dye Superintendent of Schools... ovens Mike Puckett Interim Director of Social Services se Carol Brunty County Administrator. Marycarol White County Attorney... _..Dennis Jones FINANCIAL SECTION FINANCIAL SECTION ROBINSON, FARMER, COX ASSOCIATES C!R 111 !lD P! !BLJC /1 CCOt TN 1 !L'V IS Independent Auditors' Report To the Members of the Board of Supervisors County of Russell, Virginia Lebanon, Virginia 11 PRO/ L\<::JONI!L L/,\1/Jl-D U~1Bllfl Y COAJPA,V} We have audited the accompanying financial statements of the governmental activities, the business-type activities, the discretely presented component units (School Board and Russell County Industrial Development Authority), the major funds, and the aggregate remaining fund information of the County of Russell, Virginia, as of and for the year ended June 30, 2012, which collectively comprise the County's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the County of Russell, Virginia's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the Specifications for Audits of Counties, Cities, and Towns, issued by the Auditor of Public Accounts of the Commonwealth of Virginia. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit and the report of other auditors provide a reasonable basis for our opinions. The financial statements do not include financial data for the County's legally separate component units (Russell County Public Service Authority and Castlewood Water and Sewage Authority). Accounting principles generally accepted in the United States of America require the financial data for those component units to be reported with the financial data of the County's primary government unless the County also issues financial statements for the financial reporting entity that include the financial data for its component units. The County has not issued such reporting entity financial statements. In our opinion, because of the omission of the discretely presented component units, as discussed previously, the financial statements referred to previously do not present fairly, in conformity with accounting principles generally accepted in the United States of America, the financial position of the aggregate discretely presented component units of the County of Russell, Virginia as of June 30, 2012, or the changes in financial position thereof for the year then ended. In addition, in our opinion, the financial statements referred to previously present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the discretely presented component units (School Board and Russell County Industrial Development Authority), the major funds, and the aggregate remaining fund information of the County of Russell, Virginia as of June 30, 2012, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. -2- ROBINSON, FARMER, COX ASSOCIATES CERI ID PUBLIC ACCOUNTANTS A PROFISSIONAL LIMITED LIABILITY COMPANY Independent Auditors’ Report To the Members of the Board of Supervisors County of Russell, Virginia Lebanon, Virginia We have audited the accompanying financial statements of the governmental activities, the business-type activities, the discretely presented component units (School Board and Russell County Industrial Development Authority), the major funds, and the aggregate remaining fund information of the County of Russell, Virginia, as of and for the year ended June 30, 2012, which collectively comprise the County's basic financial statements as listed in the table of contents. These financial statements are the responsibil of the County of Russell, Virginia's management, Our responsibility is to express opinions on these financial statements based on our audit We conducted our audit in accordance with auditing standards generally accepted in the United States of America: the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the Speoifications for Auoits of Counties, Cities, and Towns, issued by the Auditor of Public Accounts of the Commonwealth of Virginia, Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overal financial statement presentation. We believe that our audit and the report of other auditors provide a reasonable basis for our opinions. The financial statements do not include financial data for the County's legally separate component units (Russell County Public Service Authority and Castlewood Water and Sewage Authority). Accounting principles generally accepted in the United States of America require the financial data for those component units to be reported with the financial data of the County's primary government unless the County also issues financial statements for the financial reporting entity that include the financial data for its component units. The County has not issued such reporting entity financial statements. In our opinion, because of the omission of the discretely presented component units, as discussed previously, the financial statements referred to previously do not present fairly, in conformity with accounting principles generally accepted in the United States of America, the financial position of the aggregate discretely presented component Units of the County of Russel, Virginia as of June 30, 2012, or the changes in financial position thereof for the year then ended. In addition, in our opinion, the financial statements referred to previously present fairy, in all material respects, the respective financial position of the governmental activities, the business-type activities, the discretely presented component units (School Board and Russell County Industrial Development Authority), the major funds, and the aggregate remaining fund information of the County of Russell, Virginia as of June 30, 2012, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated December 19, 2012, on our consideration of the County of Russell, Virginia's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. Accounting principles generally accepted in the United States of America require that the management's discussion and analysis, budgetary comparison information, and schedules of pension and OPEB funding progress 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 management's discussion and analysis and schedules of funding progress in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about 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 management's discussion and analysis and schedules of funding progress because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. The budgetary comparison information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the County of Russell, Virginia's, financial statements as a whole. The introductory section, other supplementary information, supporting schedules, and other statistical information are presented for purposes of additional analysis and are not a required part of the financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is also not a required part of the financial statements. The other supplementary information, supporting schedules, and the schedule of expenditures of federal awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, based on our audit and the report of other auditors, the information is fairly stated in all material respects in relation to the financial statements as a whole. The introductory section and other statistical information have not been subjected to the auditing procedures applied by us and the other auditors in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. lf~d1/.1 ~~ '~tJa~ Blacksburg, Virginia December 19, 2012 -3- In accordance with Government Auditing Standards, we have also issued our report dated December 19, 2012, on our consideration of the County of Russell, Virginia's internat 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 intemal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on intemal control over financial reporting ot on compliance, That report is an integral part of an audit performed in accordance with Goverment Auditing Standards and should be considered in assessing the results of our audit. Accounting principles generally accepted in the United States of America require that the management's discussion and analysis, budgetary comparison information, and schedules of pension and OPEB funding progress 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 ito 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 management's discussion and analysis and schedules of funding progress in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about 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 management's discussion and analysis and schedules of funding progress because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. The budgetary comparison information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the County of Russell, Virginia's, financial statements as a whole. The introductory section, other supplementary information, supporting schedules, and other statistical information are presented for purposes of additional analysis and are not a required part of the financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is also not a required part of the financial statements, The other supplementary information, supporting schedules, and the schedule of expenditures of federal awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconcling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, based on our audit and the report of other auditors, the information is fairly stated in all material respects in relation to the financial statements as a whole, The introductory section and other statistical information have not been subjected to the auditing procedures applied by us and the other auditors in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Hateimoan, Sharan, by lhsccicttes- Blacksburg, Virginia December 19, 2012 Management's Discussion and Analysis As management of the County of Russell, Virginia, we offer readers of the County of Russell's financial statements this narrative overview and analysis of the financial activities of the County of Russell, Virginia for the fiscal year ended June 30, 2012. Financial Highlights • The assets of the County of Russell, Virginia exceeded its liabilities at the close of the most recent fiscal year by $16,271,527 (net assets). Of this amount, $5,140,399 (unrestricted net assets) may be used to meet the government's ongoing obligations to citizens and creditors. • The government's total net assets decreased by $84,977. No single factor is responsible for this reduction in net assets, but is spread over a number of changes. • As of the close of the current fiscal year, the County of Russell's governmental funds reported combined ending fund balances of $8,178,009, a decrease of $1,219,476 in comparison with the prior year. Most of this total amount, $6,744,967 is available for spending at the government's discretion (unassigned fund balance). • At the end of the current fiscal year, unassigned fund balance for the general fund was $6,884,605, or 23.2% of total general fund expenditures. • The County of Russell's total long-term debt decreased by $1,894,241 (8.8%) during the current fiscal year. The key factors in this decrease were the principal payments on outstanding issues. The County of Russell's only fiscal year 2012 issuance was a capital lease in the amount of $512,094 for school buses and other equipment. Overview of the Financial Statements This discussion and analysis are intended to serve as an introduction to the County of Russell's basic financial statements. The County of Russell's basic financial statements comprise three components: 1) government-side financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the County of Russell's finances, in a manner similar to a private-sector business. The statement of net assets presents information on all of the County of Russell's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the County of Russell is improving or deteriorating. The statement of activities presents information showing how the government's net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of the related cashflows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned, but unused vacation leave). Both of the government-wide financial statements distinguish functions of the County of Russell that are principally supported by taxes and intergovernmental revenues (governmental -4- Management's Discussion and Analysis As management of the County of Russell, Virginia, we offer readers of the County of Russell's financial statements this narrative overview and analysis of the financial activities of the County of Russell, Virginia for the fiscal year ended June 30, 2012. Financial Highlights * The assets of the County of Russell, Virginia exceeded its liabilities at the close of the most recent fiscal year by $16,271,527 (net assets). Of this amount, $5,140,399 (unrestricted net assets) may be used to meet the government's ongoing obligations to citizens and creditors, * The government's total net assets decreased by $84,977. No single factor is responsible for this reduction in net assets, but is spread over a number of changes. * As of the close of the current fiscal year, the County of Russell's governmental funds reported combined ending fund balances of $8,178,009, a decrease of $1,219,476 in comparison with the prior year. Most of this total amount, $6,744,967 is available for spending at the government's discretion (unassigned fund balance). ‘* At the end of the current fiscal year, unassigned fund balance for the general fund was $6,884,605, or 23.2% of total general fund expenditures. * The County of Russell's total long-term debt decreased by $1,894,241 (8.8%) during the current fiscal year. The key factors in this decrease were the principal payments on outstanding issues. The County of Russell's only fiscal year 2012 issuance was a capital lease in the amount of $512,094 for school buses and other equipment. Overview of the Financial Statements This discussion and analysis are intended to serve as an introduction to the County of Russell's basic financial statements. The County of Russell's basic financial statements comprise three components: 1) government-side financial statements, 2) fund financial statements, and 3) notes fo the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the County of Russell's finances, in a manner similar to a private-sector business. The statement of net assets presents information on all of the County of Russell's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the County of Russell is improving or deteriorating. The statement of activities presents information showing how the government's net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of the related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned, but unused vacation leave), Both of the government-wide financial statements distinguish functions of the County of Russell that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the County of Russell include general government administration, judicial administration, public safety, public works, health and welfare, education (including the Russell County School Board), parks, recreation and cultural activities, community development and the Industrial Development Authority. The business-type activities of the County of Russell include the Russell County Public Service Authority and the Castlewood Water and Sewer Authority. The government-wide financial statements include not only the County of Russell itself (known as the primary government), but also the legally separate Russell County School Board, Russell County Industrial Development Authority, Russell County Public Service Authority and the Castlewood Water and Sewer Authority for which the County of Russell is financially accountable. Financial information for these component units is reported separately from the financial information presented for the primary government itself. The government-wide financial statements can be found on pages 14-15 of this report. Fund financial statements. Afund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The County of Russell, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the County of Russell can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances o.f spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental(unds and governmental activities. The County of Russell maintains five different governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the general fund, industrial development fund, coal road fund, workforce investment board fund and rental assistance fund, each of which are considered to be rnajor funds. The basic governmental fund financial statements can be found on pages 16-19 of this report. Proprietary funds. The County of Russell maintains two different types of proprietary funds. Enterprise funds are those used to report the same functions presented as business-type -5- activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the County of Russell include general government administration, judicial administration, public safety, public works, health and welfare, education (including the Russell County Schoo! Board), parks, recreation and cultural activities, community development and the Industrial Development Authority. The business-type activities of the County of Russell include the Russell County Public Service Authority and the Castlewood Water and Sewer Authority. The government-wide financial statements include not only the County of Russell itself (known as the primary government), but also the legally separate Russell County School Board, Russell County Industrial Development Authority, Russell County Public Service Authority and the Castlewood Water and Sewer Authority for which the County of Russell is financially accountable. Financial information for these component units is reported separately from the financial information presented for the primary goverment itself. The government-wide financial statements can be found on pages 14-15 of this report. Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The County of Russell, ike other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the County of Russell can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, itis useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements, By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The County of Russell maintains five different governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the general fund, industrial development fund, coal road fund, workforce investment board fund and rental assistance fund, each of which are considered to be major funds. The basic governmental fund financial statements can be found on pages 16-19 of this report. Proprietary funds, The County of Russell maintains two different types of proprietary funds. Enterprise funds are those used to report the same functions presented as business-type activities in the government-wide financial statements. The County of Russell uses an enterprise fund to account for its water treatment system (in Dante). Internal service funds are an accounting device used to accumulate and allocate costs internally among the County of Russell's various functions. The County of Russell uses an internal service fund to account for its health insurance. Because both of these services predominantly benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The basic proprietary fund financial statements can be found on pages 20-22 of this report. Fiduciary Funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statement because the resources of those funds are not available to support the County of Russell's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The basic fiduciary funds financial statements can be found on page 23 of this report. Notes to the .financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 24-62 of this report. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information. The County of Russell adopts an annual appropriated budget for its general fund and special revenue funds. Budgetary comparison statements have been provided for the general fund and each of the special revenue funds to demonstrate compliance with this budget. Information concerning the County of Russell's progress in funding its obligation to provide pension benefits to its employees. Required supplementary information can be found on pages 63-67 of this report. Government-wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. In the case of the County of Russell, assets exceeded liabilities by $16,271 ,527 at the close of the most recent fiscal year. A significant portion of the County of Russell's net assets (60.5%) reflects its investment in capital assets (e.g., land, buildings, machinery, and equipment); less any related debt used to acquire those assets that is still outstanding. The County of Russell uses these assets to provide services to citizens; consequently, these assets are not available for future spending. Although the County of Russell's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the County of Russell's net assets (8.0%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets ($5, 140,399) may be used to meet the government's ongoing obligations to citizens and creditors. -6- activities in the government-wide financial statements. The County of Russell uses an enterprise fund to account for its water treatment system (in Dante). Internal service funds are an accounting device used to accumulate and allocate costs internally among the County of Russell's various functions. The County of Russell uses an intemal service fund to account for its health insurance. Because both of these services predominantly benefit governmental rather than business-lype functions, they have been included within governmental activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The basic proprietary fund financial statements can be found on pages 20-22 of this report. Fiduciary Funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statement because the resources of those funds are not available to support the County of Russell's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The basic fiduciary funds financial statements can be found on page 23 of this report. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 24-62 of this report. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information. The County of Russell adopts an annual appropriated budget for its general fund and special revenue funds. Budgetary comparison statements have been provided for the general fund and each of the special revenue funds to demonstrate compliance with this budget. Information concerning the County of Russell's progress in funding its obligation to provide pension benefits to its employees. Required supplementary information can be found on pages 63-67 of this report. Government-wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. In the case of the County of Russell, assets exceeded liabilities by $16,271,527 at the close of the most recent fiscal year. A significant portion of the County of Russell’s net assets (60.5%) reflects its investment in capital assets (e.g., land, buildings, machinery, and equipment); less any related debt used to acquire those assets that is still outstanding. The County of Russell uses these assets to provide services to citizens; consequently, these assets are not available for future spending. Although the County of Russell's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the County of Russell's net assets (8.0%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets ($5,140,399) may be used to meet the government's ongoing obligations to citizens and creditors. At the end of the current fiscal year, the County of Russell is able to report positive balances in all three categories of net assets for the government as a whole. Within the governmental and business-type activities, positive balances are reported for each category except the unrestricted balance for the business-type activity which reported negative net assets of $15,118. In the prior fiscal year each separate category for both governmental and business­ type activities reported positive balances. County of Russell's Net Assets Governmental activities Business-type activities Total 1012 1011 1011 1011 1011 1011 Current and other assets l 10,699,938 l 11,630,507 l 56,744 l 54,411 l 10,756,681 l 11,684,919 Capital assets 10,151,631 10,607,061 3,385,617 3,516,644 13,538,158 14,113,705 Total assets l 40,851,569 l 41,137,568 l 3,441,371 l 3,571,066 l 44,194,940 l 45,808,634 long-term liabilities outstanding l 19,811,686 l 11,705,917 l 731,955 l 751,555 l 10,544,641 l 11,457,481 Other liabilities 7,456,485 6,974,614 11,187 10,014 7,478,771 6,994,648 Total liabilities l 17,168,171 l 18,680,551 l 755,141 l 771,579 l 18,013,413 l 19,451,130 Net assets: Invested in capital assets, net of related debt l 7,183,413 l 6,031,847 l 1,651,671 l 1,765,089 l 9,836,085 l 8,797,936 Restricted 1,145,468 1,515,561 49,575 49,571 1,195,043 1,565,134 Unrestricted 5,155,517 5,008,608 (15,118) (15,174) 5,140,399 4,993,434 Total net assets l 13,584,398 l 13,557,017 l 1,687,119 l 1,799,487 l 16,171,517 l 16,356,504 There was an increase of $146,965 in unrestricted net assets reported in connection with the County of Russell's governmental activities. Most of the change in net assets is attributable to a reduction in long-term debt. Governmental activities. Governmental activities increased the County of Russell's net assets by $27,381, which is a 0.2% change indicating the revenue was sufficient to cover the expenditures. A notable change in expenditures was an increase in Public Works cost in the amount of $1,946,574 which is mainly due to coal road expenditures. The remainder of this page is left blank intentionally. -7- At the end of the current fiscal year, the County of Russell is able to report positive balances in all three categories of net assets for the government as a whole. Within the governmental and business-type activities, positive balances are reported for each category except the unrestricted balance for the business-type activity which reported negative net assets of $15,118. In the prior fiscal year each separate category for both governmental and business- type activities reported positive balances. County of Russell’s Net Assets Goverment acts uses ype atts Total io ‘ot For) Fy Fa on Curent and other assets $ 19989938 § DysansOT §§— STH § SHAN § NOS6R § — N1gR4ERD Capital ass 2052631 2060761 3.385627 __— SLB 23588258 24,123,705 Totelassels $ anssasey § azzvnsea $ Suman § 37106 $ a429NaW § saNRRRE longterm ibis outstanding —-«§ «1981686. $ DU RAIT § ~—THDSSS $ —TSNSSS § © TOSKBML $ 22457882 Ober abies 1486485 6974606 2287 too 74 _ 694688 Tot abities $_m2gin $ Besse § HIN $ TMS § 1803413 § —29452,130 Netasets Invested in capital asets, nt of related debt § TABRAIB $6 0R28K7 $ 2652672 $ 2765089 § 983508 $ 8797936 festicted 1Msase 2515862 44515 ayn 198508 1565,134 Unestcted 585517 5008608 (i518) (578) 5403994983 434 Total netassets $ 19884398 § 13557017 $ 268729 § 2799487 $ 16271527 $ _ 16356504 There was an increase of $146,965 in unrestricted net assets reported in connection with the County of Russell's governmental activities. Most of the change in net assets is attributable to a reduction in long-term debt. Governmental activities. Governmental activities increased the County of Russell's net assets by $27,381, which is a 0.2% change indicating the revenue was sufficient to cover the expenditures. A notable change in expenditures was an increase in Public Works cost in the amount of $1,946,574 which is mainly due to coal road expenditures. The remainder of this page is left blank intentionally. County of Russell Changes in Net Assets Governmental activities Business-type activities Total 2012 2011 2012 2011 2012 2011 Revenues: Program revenues: Charges for services $ 428,699 $ 364,326 $ 59,709 $ 72,073 $ 488,408 $ 436,399 Operating grants and contributions 9,677,480 10,635,876 9,677,480 10,635,876 Capital grants and contributions 761,738 761,738 General revenues: Property taxes 13,142,777 13,683,476 13,142,777 13,683,476 Other taxes 6,881,302 6,340,919 6,881,302 6,340,919 Grants and contributions not restricted to specific programs 2,445,435 2,638,202 2,445,435 2,638,202 Other 215,361 267,254 234 215,361 267,488 Total revenues 33,552,792 33,930,053 59 709 72 307 33,612,501 34,002,360 Expenses: General government 2,267,145 1,691,031 2,267,145 1,691,031 Judicial administration 2,119,900 2,112,758 2,119,900 2,112,758 Public safety 5,296,188 5,091,612 5,296,188 5,091,612 Public works 6,060,973 4,003,987 6,060,973 4,003,987 Health and welfare 8,397,896 8,592,042 8,397,896 8,592,042 Education 4,589,631 5,681,243 4,589,631 5,681,243 Parks, recreation and cultural 539,126 563,123 539,126 563,123 Community development 3,493,655 3,191,256 3,493,655 3,191,256 Interest on long-term debt 522,300 756,064 522,300 756,064 Service Authority 410,664 423,945 410,664 423,945 Total expenses 33,286,814 31,683,116 410,664 423,945 33,697,478 32,107,061 Change in net assets before transfers 265,978 2,246,937 (350,955) (351,638) (84,977) 1,895,299 Transfers (238,597) (245,887) 238,597 245,887 Change in net assets 27,381 2,001,050 (112,358) (105,751) (84,977) 1,895,299 Net assets- July 1, 2011 as restated 13,557,017 11,555,967 2,799,487 2,905,238 16,356,504 14,461,205 Net assets- June 30, 2012 $ 13,584,398 $ 13,557,017 $ 2,687,129 $ 2,799,487 $ 16,271,527 $ 16,356,504 -8- County of Russell Changes in Net Assets Governmental activites Business type activites Total wR au md mon wR au Revenues: Program revenues: Charges for services $ 4609 $ 364A $5979 $s TOT $ «ABHOR S485 399 Operating grantsand contributions 9677480 10,635,876 : - 9.67480 10635876 Copital grants and contributions 761,738 : 761,738 General revenues: - . Property taxes 13,142,777 13,683,476 - - 13,142,777 13,683,476 Other tares 6881302 6340.919 : - 6881302 © 46 MogI9 Grants and contributions not restricted to specificprograms 2485438 2,638.202 : - 2085488 2,638202 Other 215,361 267,254 : Ba 215,361 267,488 Total revenues 33,552,792 __ 33,930,053 59709 nay __ seins 34002360 Expenses : - General government 2260051651081 - - 22S 169081 Judicial administration 21990 2.112 758 : : 210990 2,112,758 Publicsafety 5296188 5081612 - - 5295188 5,081,612 Publicworks eomgrs 4003987 : : eomg7s 4.03987 Health and welfare 83978 8.591, - : 839789 859,042 Education 4589631 5,681,208, : : 4580,681 5,681,208 Parks, recreation and cultural 539,126 563,123 - : 539,126 363,123 Community development 3493.655 3,191,256 : : 3498.65 3,191 256 Interest on long-term debt 512,300 736.064 : 522,300 755064 Service Authority : : 410,554 43.945 410,654 45 Total expenses 35286814 31,683,116, 410,664 43S 33,697.78 __ 32107061 Changeinnetassetsbefore transfers 265978 2,246,937 (350955) (351,638) (3477) 1.895299 Transfers (238597) (245,887) 238597 25,887 Change innet assets m38 2,001,060 (112358) ———(105751) (39977) 1.895209 Netassets-July 1, 20Ltasrestated _ 13,557,017 _11,555,967 _ 2,799,487 2,905,238 __ 1635650 __ 14,461,205 Net assets- June 30, 2012 $ 13584398 $ 13,557,017 $ 2,687,129 $ 2,799,487 § 16,271,577 $ _ 16,356,504 Expenses and Program Revenues- Governmental Activities $9,000,000 $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $ 11 Expenses i'l Program Revenues Revenues by Source- Governmental Activities 11 Charges for services 1111 Operating grants and contributions 1!11 Capital grants and contributions 11 Property taxes 111 Other taxes Grants and contributions not restricted to specific programs "Other -9- Expenses and Program Revenues - Governmental Activities $9,000,000 $8,000,000 $7,000,000 $6,000,000 $5,000,000 3,000,000 $3,000,000 $2,000,000 $1,000,00¢ $ = Expenses Program Revenues Charges for services @ Operating grants and contributions Capital grants and contributions 1 Property taxes Other taxes Grants and contributions not restricted to specific programs e Other Business-type activities. Business-type activities decreased the County of Russell's net assets by $112,358. The Dante Water Treatment System referred to as "the Service Authority," incurred expenses of $410,664 and collected program revenue of $59,709. The Service Authority also received a General Fund subsidy of $238,597. By policy, the Dante Service Authority is not an enterprise activity and therefore is not expected to be self-supporting. $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $- Service Authority (Dante Water Treatment System) Expenses Program Revenue Revenues by Source - Business Type Activities 0% m1 Charges for services i!l Other -10- Business-type activities. Business-type activities decreased the County of Russell's net assets by $112,358. The Dante Water Treatment System referred to as “the Service Authority,” incurred expenses of $410,664 and collected program revenue of $59,709, The Service Authority also received a General Fund subsidy of $238,597. By policy, the Dante Service Authority is not an enterprise activity and therefore is not expected to be self-supporting. Service Authority (Dante Water Treatment System) $450,000 $400,000 + $350,000 $300,000 $250,000 +—— $200,000 $150,000 $100,000 +————} $50,000 Expenses Program Revenue Revenues by Source - Business Type Activities 0% 1 Charges for services Other -10- Financial Analysis of the Governmental Funds As noted earlier, the County of Russell uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds. The focus of the County of Russell's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the county of Russell's financing requirements. In particular, unassigned fimd balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the County of Russell's governmental funds reported combined ending fund balances of $8,178,009, a decrease of $1,219,476 in comparison with the prior year. The majority of this fund balance represents unassigned fund balance (6,884,605), which is available for spending at the government's discretion. The remainder of fund balance is restricted or committed to indicate that it is not available for new spending because it has already been restricted for the Coal Road/Revenue Sharing projects or debt service and bond covenants. The general fund is the chief operating fund of the County of Russell. At the end of the current fiscal year, unassigned fund balance was $6,884,605, while total fund balance was $6,884,605. As a measure of the general fund's liquidity, it may be useful to compare both unassigned and total fund balance to total fund expenditures. Unassigned fund balance represents 23.2% of general fund expenditures, while total fund balance represents 23.2% of that same amount. The fund balance of the County of Russell's General Fund increased by $1 ,875,021 during the current fiscal year. The key factor in the increase is: • A transfer from the Industrial Development Authority (IDA) in the amount of $1,852,814. The IDA is the fund within the County's accounting structure used primarily to pay the debt service incurred by the Russell County Industrial Development Authority on behalf of the County of Russell. The Coal Road Fund provides the 50% match required for the Virginia Department of Transportation's (VDOT) Revenue Sharing Program. Part of the coal and gas severance taxes collected are deposited into this fund and used to fund the approved projects. Several projects are approved and were in the planning stages at July 1, 2011. Construction on these projects, along with the related expenditures, occurred during fiscal year 2012. As a result, the fund balance in the Coal Road Fund decreased by approximately one million dollars during the fiscal year. The balance of $1,245,468 at the end of the year is committed for various projects. The Workforce Investment Board Fund is a state and federal funded program. No County funds are used to support this program. The fund balance increased $24,878 during the year ended June 30, 2012. The entire fund balance of $47,936 is committed for future program support. Proprietwy funds. The County of Russell's proprietary funds provide the same type information found in the government-wide financial statements, but in more detail. -11- Financial Analysis of the Governmental Funds As noted earlier, the County of Russell uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds. The focus of the County of Russell's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the county of Russell's financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the County of Russell's governmental funds reported combined ending fund balances of $8,178,009, a decrease of $1,219,476 in comparison with the prior year. The majority of this fund balance represents unassigned fund balance (6,884,605), which is available for spending at the government's discretion. The remainder of fund balance is restricted or committed to indicate that it is not available for new spending because it has already been restricted for the Coal Road/Revenue Sharing projects or debt service and bond covenants. The general fund is the chief operating fund of the County of Russell. At the end of the current fiscal year, unassigned fund balance was $6,884,605, while total fund balance was $6,884,605. As a measure of the general fund’s liquidity, it may be useful to compare both unassigned and total fund balance to total fund expenditures. Unassigned fund balance represents 23.2% of general fund expenditures, while total fund balance represents 23.2% of that same amount. The fund balance of the County of Russell’s General Fund increased by $1,875,021 during the current fiscal year. The key factor in the increase is: * A transfer from the Industrial Development Authority (IDA) in the amount of $1,852,814. The IDA is the fund within the County's accounting structure used primarily to pay the debt service incurred by the Russell County Industrial Development Authority on behalf of the County of Russell The Coal Road Fund provides the 50% match required for the Virginia Department of Transportation's (VDOT) Revenue Sharing Program. Part of the coal and gas severance taxes. collected are deposited into this fund and used to fund the approved projects. Several projects ate approved and were in the planning stages at July 1, 2011. Construction on these projects, along with the related expenditures, occurred during fiscal year 2012. As a result, the fund balance in the Coal Road Fund decreased by approximately one million dollars during the fiscal year. The balance of $1,245,468 at the end of the year is committed for various projects. ‘The Workforce Investment Board Fund is a state and federal funded program. No County funds are used to support this program. The fund balance increased $24,878 during the year ended June 30, 2012. The entire fund balance of $47,936 is committed for future program support. Proprietary funds, The County of Russell's proprietary funds provide the same type information found in the government-wide financial statements, but in more detail Unrestricted net assets of the Service Authority at the end of the year amounted to ($15, 118), and those for the Health Insurance Fund amounted to $2,404,656. The total growth or (decline) in the net assets for both funds was ($112,358) and ($620,399), respectively. Other factors concerning the finances of these two funds have been addressed in the discussion of the County of Russell's business-type activities and proprietary funds. General Fund Budgetary Highlights For many years, management in Russell County simply adjusted the final budget at June 30 to equal the actual expenditures. In fiscal year 2011, this practice was stopped. Beginning with fiscal year 2012 proper procedures were followed in which the original budget was adjusted to reflect supplemental appropriations adopted by the Board of Supervisors throughout the year or during a public hearing to formally amend the budget. This provides a properly appropriated Final Budget for CAFR presentation. Capital Asset and Debt Administration Capital assets The County of Russell's investment in capital assets for its governmental and business-type activities as of June 30, 2012, amounts to $23,538,258 (net of accumulated depreciation). This investment in capital assets includes land, buildings, a utility plant, and machinery and equipment. The total investment in the County of Russell's capital assets for the current fiscal year decreased by 2.5% (2.3% decrease for governmental activities and 3.9% decrease for business-type activities). The decrease in investment is due to additional accumulated depreciation. Due to the continued depressed economy, the County did not expend significant funds on capital assets in fiscal year 2012. Governmental activities Business-type activities Total 2012 2011 2012 2011 2012 2011 Land $ 1,541,333 $ 1,541,333 $ - $ - $ 1,541,333 $ 1,541,333 Construction in Progress - 1,494,450 - - - $ 1,494,450 Buildings 17,007,601 16,390,487 - - $17,007,061 $16,390,487 Utility plant - - 3,385,627 3,516,644 $ 3,385,627 $ 3,516,644 Machinery and equipment 1 603 697 1 180 791 - - ~ 1,603,697 ~ 1,180,791 Total $ 2Q 152 631 $20 607 061 $3 385 627 $3516644 $23 538 258 $24 123 705 Additional information on the County of Russell's capital assets can be found in note 10 on pages 50-51 of this report. Long-term debt. At the end of the current fiscal year, the County of Russell had total debt outstanding of $19,811,686. Of this total, $14,869,887 comprises general obligation and revenue bonds all backed by the full faith and credit of the County and $3,194,980 comprise Literary Fund Loans and Literary Anticipation Note on the financial statements of the component unit School Board. -12- Unrestricted net assets of the Service Authority at the end of the year amounted to ($15,118), and those for the Health Insurance Fund amounted to $2,404,656. The total growth or (decline) in the net assets for both funds was ($112,358) and ($620,399), respectively. Other factors concerning the finances of these two funds have been addressed in the discussion of the County of Russell’s business-type activities and proprietary funds. General Fund Budgetary Highlights For many years, management in Russell County simply adjusted the final budget at June 30 to equal the actual expenditures. In fiscal year 2011, this practice was stopped, Beginning with fiscal year 2012 proper procedures were followed in which the original budget was adjusted to reflect supplemental appropriations adopted by the Board of Supervisors throughout the year or during a public hearing to formally amend the budget. This provides a properly appropriated Final Budget for CAFR presentation. Capital Asset and Debt Administration Capital assets The County of Russell's investment in capital assets for its governmental and business-type activities as of June 30, 2012, amounts to $23,538,258 (net of accumulated depreciation). This investment in capital assets includes land, buildings, a utility plant, and machinery and equipment. The total investment in the County of Russell's capital assets for the current fiscal year decreased by 2.5% (2.3% decrease for governmental activities and 3.9% decrease for business-type activities). The decrease in investment is due to additional accumulated depreciation. Due to the continued depressed economy, the County did not expend significant funds on capital assets in fiscal year 2012. Governmental activities Business-type activities Total 2012 201 2012 2011 2012 20it Land $ 1,541,333 | $ 1,541,333 | $ $ - $ 1,541,333 | $ 1,541,333 ‘Construction in Progress - 1,494,450, - - - $ 1,494,450 Buildings: 17,007,601 16,390,487, - $17,007,061 $16,390,487 Utility plant - - 3,385,627 | 3,516,644 | $ 3,385,627 | $ 3,516,644 ‘Machinery and equipment 1,603,697 1,180,791 = = $ 1,603,697 ‘$1,180,791 Total ‘$20,152,631 | $20,607,001 | $3,385,627 | $3.516,644 | $23,598,258 | $24,123,705 Additional information on the County of Russell's capital assets can be found in note 10 on pages 50-51 of this report Long-term debt. At the end of the current fiscal year, the County of Russell had total debt outstanding of $19,811,686. OF this total, $14,869,887 comprises general obligation and revenue bonds all backed by the full faith and credit of the County and $3,194,980 comprise Literary Fund Loans and Literary Anticipation Note on the financial statements of the component unit School Board AQ The remainder of Russell County's debt represents lease purchase agreements, landfill post­ closure liabilities, OPEB obligations and compensated absences. I General i i , bonds Literary loans bonds, as restated Literary i i i ' note Bone Lease, ~liability OP1013_ i i Total 2QJ2 $ 9,471,649 5,114,923 630,395 283,315 617,454 526,868 59~~ Requests for Information I i i 357,060 1,100,175 '153 2QJ2 £Q1.1 $ $ 732,955 751,555 5 17 $ 73< 955 Total 2QJ2 £Q1.1 $9,471.649 $1• 5,847, 78 6, )3,520 630,395 28: 15 61 ~ 454 52E 868 609 81>8 357,060 1,100,775 ,153 $22.451 .482 This financial report is designed to provide a general overview of the County of Russell's finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to Rufus W. Hood, Interim County Administrator, County of Russell, P.O. Box 1208, 137 Highland Drive, Lebanon, VA 24266. -13- I The remainder of Russell County's debt represents lease purchase agreements, landfill post- closure liabilities, OPEB obligations and compensated absences. i ‘Governmental Activites Business type Activities, Total 2012 2011 2012 201 De on ‘Geheral obligation bonds Saar g49_| ¥70.083.208 | S iB 0,471,649 _| $10,083,228 Literary foans 2,564,585 | 2,990,863 2,564,585 | 2,900,863 Revenue bonds, as restated 5.114.923 | 5,351,965 | 750055 | 751.585 5,847,878_| 6.103.520 Literary anticipation note, 630.395 992,638) 630,395, 992,638 Deferred amounts: ‘Bond premium PCa 3007 2S, BOTS Tease purchase agreements 617.454 357,060. 617.484 357,060, ‘losure/post-closure liabilt 526,868 | 1,100.75) 526,968 | 7,100,775) ‘OPEB obiigations 6,608 7.153, 6,609 7.163 ‘Compensated absences 305,888, 52228, 05.688 322.1285 Total Sidar.se6 | $21. 706.097 |S 7az968 |S Tar Bo sadeer | H2457 480 Requests for Information This financial report is designed to provide a general overview of the County of Russell's finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to Rufus W. Hood, Interim County Administrator, County of Russell, P.O. Box 1208, 137 Highland Drive, Lebanon, VA 24266. Basic Financial Statements Basic Financial Statements Exhibit 1 County of Russell, Virginia Statement of Net Assets June 30, 2012 Component Units Prima!I Government Industrial Governmental Business-type Development Activities Activities Total School Board Authority ASSETS Cash and cash equivalents $ 7,539,771 $ 658 $ 7,540,429 $ 342,189 $ 286,706 Receivables (net of allowance for uncollectibles): Taxes receivable 8,745,550 8,745,550 Accounts receivable 325,616 6,511 332,127 52,840 Notes receivable 220,005 220,005 371,207 Grants receivable 8,200 Due from component unit 908,695 908,695 Due from other governmental units 1,840,602 1,840,602 1,785,603 Prepaid expenses 402,669 Other assets: Bond issuance costs 16,306 Restricted assets: Temporarily restricted: Cash and cash equivalents 1,119,699 49,575 1,169,274 196,523 Noncurrent assets: Lease purchase receivable - net of current portion Capital assets (net of accumulated depreciation}: Land 1,541,333 1,541,333 4,643,707 1,864,397 Land improvements 386,410 Buildings and improvements 17,007,601 17,007,601 10,641,935 6,751,755 Machinery and equipment 1,603,697 1,603,697 2,113,158 445,042 Utility plant in service 3,385,627 3,385,627 Total assets $ 40,852,569 $ 3,442,371 $ 44,294,940 $ 19,929,261 $ 10,379,386 LIABILITIES Accounts payable $ 2,298,766 $ 20,510 $ 2,319,276 $ 297,543 $ 23,824 Accrued liabilities 774 774 1,054,270 Accrued interest payable 254,990 1,777 256,767 28,994 Due to primary government 708,695 200,000 Unearned revenue 4,901,955 4,901,955 Long-term liabilities: Due within one year 2,071,399 19,371 2,090,770 589,734 2,391,849 Due in more than one year 17,740,287 713,584 18,453,871 290,905 6,068,180 Total liabilities $ 27,268,171 $ 755,242 $ 28,023,413 $ 2,941,147 $ 8,712,847 NET ASSETS Invested in capital assets, net of related debt $ 7,183,413 $ 2,652,672 $ 9,836,085 $ 17,398,800 $ 3,030,360 Restricted for: Coal Road 1,245,468 1,245,468 Debt service and bond covenants 49,575 49,575 196,523 Unrestricled {deficil) 5,155,517 (15,118) 5,140,399 (410,686) (1,560,344) Total net assets $ 13,584,398 $ 2,687,129 $ 16,271,527 $ 16,988,114 $ 1,666,539 The accompanying notes to the financial statements are an integral part of this statement -14- Exhibit County of Russel, Virginia ‘Statement of Net Assets June 30,2012 Component Units Primary Government Industria “Governmental Businesstype Development Activities Activities Total School Board Authority ASSETS Cash and cash equivalents $ 7538771 $ 658 § T5H0429$ 342,189. $ 206,708 Receivables (net of ellance for uncalectibes): Taos roceivatle 8,745,560 : 8,745,580 : Accounts recsvable 325,618 eatt 382,127 - 52,540 Noles receivable 720,005 - 20,005 : art207 rans receivable : : : : 8200 Due from component unit 908,695 : 906,695 : : Due from other governmental ur 1340 602 - 4540,602 4,785,603, : Prepaid expenses : : . 402,889 : Other asses: Bond issuance costs : : : : 18206 Resticled asses: Tempoatlyresticted: Cash and cash equivalents 41199699 49575 seg2re : 196.523 Noncurent assets: Lease purchase receiveble - net of curt partion : - - - - Capital esets (net of accumuisted depreciation} Land 4561 358 : 1541333 4983,107 1964,307 Lend improvements - : : : 365,410, Buikings end improvements ‘7.007.601 - 7,007,601 10.641,995, 6 751,755 Machinery and equipment 1603.697 : 11603,697 2,413,158 445 002 tity plentin service - 3.385.627 3,385,627 - - Total assets S___ Oe F SMS $M 294940_§ TOSTRTET STO sTa eS uasILiTiEs ‘Accounis payable 8 2,208,788 $ 20510 § 2318278 $ 27583 $ 2524 Acered lilies 7 : 7a 4,054,270 : ‘Accrued interes payable 254,990, am 256,767 : 28,904 Due to primary government - - : 706,695, 200,000, ‘Unearnd revenue 404,955 : 4,901,955, . : Longer bites: ‘ue within one year 2071;388 19371 2,080,770 580,734 2,391,869 ‘ue in more than one year s7740,287 713,584 48,453,871 200,905, 6,068,160 Total bites 527208, § 755282 $ 28,003.613_§ Zou 14S ari 847 NET ASSETS Invested in capital asses, net of related det 8 7.183.413. $ 2652872 $ 9a06085 § —17,098.000 § 3,030,260 Resbicled fr Coal Road 1248, 468 : 41285 468 . Debt sonice and bond covenants - 49575 49575 : 198,523 Unresticod (deficit) 5.155517 (15.118) 5,140,389 (410.686) (7,580,344) Total net assets S___13.584, 308 _F 7ee7.i09 §__ve.271 5278 688,114 _S 4,566,539, The accompanying noles othe fancial statements are an integral part ofthis statement ode ' ~ '1' Functions/Programs PRIMARY GOVERNMENT: Governmental activities: General government administration Judicial administration Public safety Public works Health and welfare Education Parks, recreation, and cultural Community development Interest on long-term debt Total governmental activities Business-type activities: SeNice Authority Total primary government COMPONENT UNITS: School Board Industrial Development Authority Total component units County of Russell, Virginia Statement of Activities For the Year Ended June 30, 2012 Expenses Charges for Services Program Revenues Operating Grants and Contributions $ 2,267,145 $ 2,119,900 5,296,188 6,060,973 8,397,896 4,589,631 $ 340,675 $ $ $ $ $ $ 539,126 3,493,655 522,300 33,286,814 $ 410,664 $ 33,697,478 $ 39,783,118 $ 874,175 40,657,293 $ 9,110 123,173 253,521 13,958 28,937 428,699 $ 59,709 $ 488,408 $ 786,940 $ 786,940 $ General revenues: General property taxes Other local taxes: local sales and use taxes Coal road and severence taxes Consumers' utility taxes Motor vehicle licenses Other local taxes 586,923 1,663,369 10,844 6,996,715 78,954 9,677,480 $ $ 9,677,480 $ 33,234,975 $ 3,872 33,238,847 $ Unrestricted revenues from use of money and property Miscellaneous Payments from the County of Russell, Virginia Grants and contributions not restricted to specific programs Transfers Total general revenues and transfers Change in net assets Net assets- beginning, as restated Net assets -ending Capital Grants and Contributions 150,000 611,738 761,738 761,738 The accompanying notes to the financial statements are an integral part of this statement. Net {Expense) Revenue and Changes in Net Assets Primary Government Governmental Business-type Exhibit 2 Component Units Industrial Development Activities Activities Total School Board Authoritv $ (1,926,470) $ (1,523,867) (3,359,646) (5,796,608) (1,401,181) (4,589,631) (446,214) (2,852,980) “Gl County of Russel, Virglia ‘Statement of Actives Forthe Year Ended June 30,2012 exist FunetionsPrograms ‘PRIMARY GOVERNMENT: (Goverment ects ‘General govemmment administration iia edition Pualeseely Publowerts Heath and wetare ucaton Paks, eceaon, and uta ‘Community development Interest on ong debt Tota govormenta ectes Business ype acts: Sonice Aubry Total primary govemmant ‘COMPONENT UNITS: ‘School Boar Indusval Development Authority Toll component unis ‘Nt (Expense) Revenue and Program Revenues ‘Changes in Not Assets Panay ‘Component Government sits Operating Capital Taal Charges for Gaantsand——_Granlsand Governmental Businoss-ypo Development Bxoenses —-—«“Serviews-—« 2003-04 9,070,812 8,274,805 , 2002-03 8,989,461 8,106,975 (1) Exclusive of penalties and interest. County of Russell, Virginia Property Tax Levies and Collections Last Ten Fiscal Years Percent Delinquent Total of Levy Tax Tax Collected Collections (1) Collections 89.82% $ 723,190 $ 13,909,181 90.78% 1,330,697 14,659,879 92.02% 886,480 13,925,386 93.76% 496,787 13,709,369 91.54% 411,887 13,030,856 69.69% 863,735 9,299,342 97.87% 797,364 11,915,763 92.09% 537,362 10,277,981 91.22% 324,217 8,599,022 90.18% 361,604 8,468,579 Table 5 Percent of Percent of Total Tax Outstanding Delinquent Collections Delinquent Taxes to to Tax Levy Taxes (1) Tax Levy 94.74% $ 4,693,121 31.97% 99.84% 3,847,456 26.20% 98.28% 3,624,318 25.58% 97.29% 3,506,132 24.88% 94.53% 3,234,367 23.46% 76.83% 1,628,182 13.45% 104.89% 1,854,243 16.32% 97.17% 1 ,849,194 17.48% 94.80% 1,772,141 19.54% 94.21% 1,853,569 20.62% -9g- County of Russell, Virginia Property Tax Levies and Collections. Last Ten Fiscal Years Table 5 Percent of Percent of Total Curent Petoent Delinquent Total Total Tax Outstanding Delinquent Fiscal Tax Tax ofLevy Tax Tax Collections Delinquent Taxes to Year Lew (1) Collections (1) __Collected_ Collections (1)__Collections to TaxLewy Taxes (1) Tax Lew 2011-12 14,681,089 13,185,991 89.82% § 723,190 $ 13,909,181 94.74% § 4,693,121 31.97% 2010-11 14,682,949 13,329,182, 90.78% 1,330,697 14,659,879 99.84% 3,847,456 26.20% 2009-10 14,169,807 13,038,906 92.02% 886,480 13,925,386 98.28% 3,624,318 25.58% 2008-09 14,091,178 13,212,582 93.76% 496,787 13,709,369 97.29% 3,506,132 24.88% 2007-08 43,784,900 12,618,969 91.54% 41,887 13,030,858 459% © 3,234,967 23.46% 2006-07 12,104,262 8,435,607 69.69% 863,735 9,299,342 76.83% 1,628,182 13.45% 2005-06 11,380,623, 11,118,399 97.87% 797,364 11,915,763 104.89% 1,854,243, 16.32% 2004-05 10,576,870 9,740,619 92.09% 537,362 10,277,981 7.17% 1,849, 194 17.48% 2003-04 9,070,812 8,274,805 91.22% 324,217 8,599,022 94.80% 41,772,144 19.54% 2002-03 8,989,461 8,106,975 90.18% 361,604 8,468,579 94.21% 1,853,569 20.62% (1) Exclusive of penalties and interest Co -;-' Fiscal Real Personal Year Estate (1) Properly 2011-12 $ 1,214,673,535 $ 251,383,699 $ 2010-11 1 '197, 720,260 235,114,151 2009-10 1,181,352,276 224,871,200 2008-09 1 '153,488,246 239,254,757 2007-08 1 '130,643, 127 243,837,948 2006-07 931,095,586 152,418,7 44 2005-06 927,558,386 241,849,424 2004-05 905,496,7 46 220,786,936 2003-04 885,323,887 205,377,101 2002-03 842,179,548 114,427,984 (1) Real estate is assessed al100% of fair market value. County of Russell, Virginia Assessed Value of Taxable Property Last Ten Fiscal Years Machinery and Merchant's Tools Capital 60,747,073 $ 5,340,902 $ 82,948,411 5,136,529 96,552,183 5,402,115 93,960,621 5,501,882 107,205,468 5,742,600 99,124,678 4,954,226 92,859,770 5,113,134 102,287,891 4,160,621 77,287,167 3,438,802 78,930,645 3,051,245 (2) Assessed values are established by the State Corporation Commission-includes all property types. Table 6 Mobile Public Homes Service (2) Total 23,401,571 $ 269,503,982 $ 1 ,825,050, 762 23,320,148 326,871 ,285 1,871,110,784 22,864,821 253,750,196 1 '784,792, 791 23,139,220 234,196,018 1,749,540,744 23,608,064 231,981,492 1,743,018,699 23,802,666 199,922,460 1,411,318,360 26,020,997 206,306,945 1,499,708,656 24,774,536 222,627,640 1 ,480,134,370 23,763,122 226,411 ,983 1,421,602,062 24,231,179 226,477,438 1,289,298,039 Le County of Russell, Virginia ‘Assessed Value of Taxable Property Last Ten Fiscal Years Table 6 Machinery Fiscal Real Personal and Merchant's Mobile Public Year Estate (1) Property Tools Capital Homes Service (2) Total 2011-12 4,214,873,595 $ 251,383,699 § 60,747,073 $ 5,340,902 $ 23.401.571 $ 269,503,982 $ _1,825,050,762 2010-11 1,197,720,260 235,114,181 82,948,441 5,136,529 23,320,148 326,871,285 1,871,110,784 2009-10 1,181,352,276 224,871,200 96,552,183 5,402,116 22,864,824 253,750,196 41,784,792,791 2008-08 1,153,488,246 289,254,757 99,960,621 5,501,882 23,199,200 234,196,018 1,749,540, 744 2007-08 1,130,643,127 243,837,048 107,205,468 5,742,600 23,608,064 231,981,492 1,743,018,699 2006-07 931,095,586 182,418,744 99,124,678 4,954,226 23,802,668, 199,922,460 1,811,318,360 2005-06 927,558,386 241,849,424 92,859,770 5,113,134 26,020,997 206,306,045 1,499,708 656 2004-05 905,496,746 220,786,936 102,287,891 4,160,621 24,774,536 222,627,640 41,480,134,370 2008-04 885,923,887 205,377,101 77,287,167 3,498,802 23,763,122 228,411,983 4,421,602,062 2002-03 842,179,548 114,427,984 78,930,645 3,081,245, 24,231,179 228,477,438 1,289,208,038 (1) Realestate is assessed at 100% of fair market value. (2) Assessed values are established by the State Corporation Commission-includs all property types. Fiscal Real Year Estate 2011-12 (4) $ 0.61/0.70 $ 2010-11 0.61 2009-10 0.61 2008-09 0.61 2007-08(3) 0.56/0.61 2006-07(2) 0.65/0.56 2005-06 0.65 2004-05 0.60 2003-04 0.60 2002-03 0.55 (1) Per $100 of assessed value. (2) 2nd half 2006/1 st half 2007 (3) 2nd half 2007/1st half 2008 (4) 2nd half 2011/1st half 2012 County of Russell, Virginia Property Tax Rates (1) Last Ten Fiscal Years Personal Machinery Property & Tools 1.65 $ 1.65 1.65 1.65 1.65 1.65 1.65 1.65 1.65 1.65 1.65 1.65 1.65 1.65 1.45 2.45 1.45 1.45 1.45 1.45 -88- Table 7 Merchant's Mobile Capital Homes $ 0.65 $ 0.61 0.65 0.61 0.65 0.61 0.65 0.61 0.65 0.56 NA 0.64 NA 0.64 NA NA NA NA NA NA Table7 County of Russell, Virginia Property Tax Rates (1) Last Ten Fiscal Years Fiscal Real Personal Machinery Merchant's Mobile Year Esiate Property & Tools Capital Homes 2011-12(4) $ 0610.70 § 1.85 $ 165 § 085 $ ost 2010-11 061 1.85 1.85 0.65 ost 2009-10 ost 1.85 1.65 0.65 ost 2008-08 0st 1.85 165 0.85 ost 2007-08(3) 0.5610.61 1.85 185 0.65 0.56 2006-07(2) 0.65/0.58 1.85 1.65 NA 0.64 2005-06 0.85 1.65 1.65 NA 0.64 2004-05 0.60 1.45 2.45 NA NA 2003-04 0.80 1.45 1.45 NA NA 2002-03 0.55 1.45 1.45 NA NA (1) Per $100 of assessed value (2) 2nd haf 2006/tst half 2007 (3) 2nd haf 2007/1st half 2008 (4) 2nd hatf 2014/1st half 2012 -88- Table 8 County of Russell, Virginia Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt Per Capita Last Ten Fiscal Years Ratio of Net Bonded Net Assessed Gross Net Debt to Bonded Fiscal Value (in Bonded Bonded Assessed Debt per Year Population (1) thousands) (2) Debt (3) Debt Value Capita 2011-12 28,897 $ 1,825,051 $ 12,666,629 $ 12,666,629 0.69% $ 438 2010-11 28,897 1,871,111 14,066,729 14,066,729 0.75% 487 2009-10 28,790 1 ,784,793 15,315,245 15,315,245 0.86% 532 2008-09 28,790 1,749,541 14,878,819 14,878,819 0.85% 517 2007-08 28,790 1,743,019 14,584,265 14,584,265 0.84% 507 2006-07 28,790 1,411,318 14,836,861 14,836,861 1.05% 515 2005-06 28,790 1,499,709 12,594,094 12,594,094 0.84% 437 2004-05 28,830 1 ,480,134 13,633,304 13,633,304 0.92% 473 2003-04 28,795 1,421,602 14,670,561 14,670,561 1.03% 509 2002-03 28,940 1,289,298 15,770,006 15,770,006 1.22% 545 (1) Bureau of the Census. (2) Real property assessed at 100% of the fair market value. (3) Includes all long-term general obligation bonded debt, bonded anticipation notes, and literary fund loans. Excludes revenue bonds, landfill closure/post-closure care liability, capital leases, and compensated absences. -89- Table 8 County of Russell, Virginia Ratio of Net General Bonded Debt to ‘Assessed Value and Net Bonded Debt Per Capita Last Ten Fiscal Years Ratio of Net Bonded Net Assessed Gross Net Debt to Bonded Fiscal Value (in Bonded Bonded Assessed Debt per Year Population (1) thousands) (2) Debi (3) Debt Value. Capita 2011-12 28007 $ 1,825,051 $ 12,686,629 § ©~——12,686,629 069% $ 438 2010-11 28.897 1871411 14,086,728 14,066,729 0.75% 487 2009-10 28,790 1,784,793 16,315,266 15,315,245 0.86% 532 2008-09 28,790 1,749,541 14,878,819 14,878,819 0.85% sir 2007-08, 28,790 1,743,018 14,584,265 14,584,265, 0.84% 507 2006-07 28,790 1,411,318 14,836,861 14,836,861 1.05% 515 2006-06, 28,790 1,499,709 12,594,094 12,594,094 0.84% 437 2004-05, 28,830 1,480,134 13,633,304 13,633,304 0.92% 3 2008-04 28,795 1,421,602 14,670,561 14,670,564 1.03% 509 2002-03, 28,940 41,289,298 16,770,006 18,770,006 1.22% 545 (1) Bureau of the Census. (2) Real property assessed at 100% of the far market value. {@) Includes at long-term general obligation bonded debt, bonded anticipation notes, and literary fund toans. Excludes revenue bonds, andfil closurelpostclosure care liability, capital leases, and compensated absences, Table 9 County of Russell, Virginia Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General Governmental Expenditures (1) Last Ten Fiscal Years Ratio of Total Debt Service Total General to General Fiscal Debt Governmental Governmental Year Service Expenditures Expenditures 2011-12 $ 2,526,021 $ 71,017,651 3.56% 2010-11 2,537,376 67,593,280 3.75% 2009-10 2,504,631 66,185,342 3.78% 2008-09 2,547,424 70,616,832 3.61% 2007-08 2,669,081 66,777,351 4.00% 2006-07 2,429,487 65,517,828 3.71% 2005-06 2,546,073 66,468,920 3.83% 2004-05 1,775,036 56,151,677 3.16% 2003-04 1,742,481 52,479,334 3.32% 2002-03 1,658,923 48,181,088 3.44% (1) Includes all governmental funds of the Primary Government and funds of the Discretely Presented Component Unit-School Board. -90- Table 9 County of Russell, Vir Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General Governmental Expenditures (1) Last Ten Fiscal Years Ratio of Total Debt Service Total General to General Fiscal Debt Governmental Governmental Year Sewice Expenditures __ Expenditures 2ott-t2 $ 2526021 $ 71,017,851 3.56% 2010-11 2,587,376 87,593,280 3.75% 2009-10 2,504,631 66,185,342 3.78% 2008-09 2,547,424 70,816,832 361% 2007-08 2,868,081 66,777,361 4.00% 2008-07 2,429,487 65.517.828 3.71% 2005-08 2,546,073 66,468,920 3.83% 2004-05 4,775,036 $6,151,877 3.16% 2003-04 1.742.481 52,879,384 3.32% 2002-08 4,658,923 48,181,088 3.44% (1) Includes al governmental funds ofthe Primary Government and funds of the Discretely Presented Component Unit-School Board. COMPLIANCE SECTION COMPLIANCE SECTION ROBINSON, F ARMJER, Cox ASSOCIATES ClR 1 if ILD PUBLJC tiCCOfl/V 1 !ltV IS 11 PROJLSSJONAL L!Mll LD Lli1BJLJJ Y CO!I1P!lNY 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 To the Members of the Board of Supervisors County of Russell, Virginia Lebanon, Virginia We have audited the financial statements of the governmental activities, the business-type activities, the discretely presented component units (School Board and Russell County Industrial Development Authority), each major fund, and the aggregate remaining fund information of the County of Russell, Virginia, as of and for the year ended June 30, 2012, which collectively comprise the County of Russell, Virginia's basic financial statements and have issued our report thereon dated December 19, 2012. The report on the aggregate discretely presented component units was qualified because of the omission of the discretely presented component units (Russell County Public Service Authority and Castlewood Water and Sewage Authority). We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the Specifications for Audits of Counties, Cities, and Towns, issued by the Auditor of Public Accounts of the Commonwealth of Virginia; and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting Management of the County of Russell, Virginia is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered the County of Russell, Virginia's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the County of Russell, Virginia's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the County of Russell, Virginia's internal control over financial reporting. Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses and therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses have been identified. However, as described in the accompanying schedule of findings and questioned costs, we identified certain deficiencies in internal control over financial reporting that we consider to be material weaknesses. 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 deficiencies 2012-1 and 2012-2 described in the accompanying schedule of findings and questioned costs to be material weaknesses. -91- ROBINSON, FARMER, COX ASSOCIATES CUR IW ILD PUBLIC ACCOUNTANTS A PROFESSIONAL LIMITED LIABILITY COMPANY 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 To the Members of the Board of Supervisors County of Russell, Virginia Lebanon, Virginia We have audited the financial statements of the govemmental activities, the business-ype activities, the discretely presented component units (School Board and Russell County Industrial Development Authority), each major fund, and the aggregate remaining fund information of the County of Russell, Virginia, as of and for the year ended June 30, 2012, which collectively comprise the County of Russel, Virginia's basic financial statements and have issued ‘our report thereon dated December 19, 2012. The report on the aggregate disoretely presented component units was qualified because of the omission of the discretely presented component units (Russell County Public Service Authority and Castlewood Water and Sewage Authority). We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the Specifications for Audits of Counties, Cities, and Towns, issued by the Auditor of Public Accounts of the Commonwealth of Virginia; and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. {intemal Control Over Financial Reporting Management of the County of Russell, Virginia is responsible for establishing and maintaining effective intemal control over financial reporting. In planning and performing our audit, we considered the County of Russell, Virginia's intemal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the County of Russell, Virginia's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the County of Russell, Virginia's internal control over financial reporting, ur consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses and therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses have been identified. However, as described in the accompanying schedule of findings and questioned costs, we identified certain deficiencies in internal control over financial reporting that we consider to be material weaknesses 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 deficiencies 2012-1 and 2012-2 described in the accompanying schedule of findings and questioned costs to be material weaknesses, Compliance and Other Matters As part of obtaining reasonable assurance about whether the County of Russell, Virginia's financial statements are free of 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 instances of noncompliance or other matters that are required to be reported under Government Auditing Standards and which are described in the accompanying schedule of findings and questioned costs as items 2012- 3and 2012-4. We noted certain matters that we reported to management of the County of Russell, Virginia, in a separate letter dated December 19, 2012. The County of Russell, Virginia's responses to the findings identified in our audit are described in the accompanying schedule of findings and questioned costs. We did not audit the County of Russell, Virginia's responses and, accordingly, we express no opinion on them. This report is intended solely for the information and use of management, the Board of Supervisors, others within the entity, federal awarding agencies, and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. if'~tnz_, ~~ Cttiuaa~ Blacksburg, Virginia December 19,2012 -92- Compliance and Other Matters As part of obtaining reasonable assurance about whether the County of Russell, Virginia's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracis, 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 instances of noncompliance or other matters that are required to be reported under Government Auditing Standards and which are described in the accompanying schedule of findings and questioned costs as items 2012- 3 and 20124 We noted certain matters that we reported to management of the County of Russell, Virginia, in a separate letter dated December 19, 2012. The County of Russel, Virginia's responses to the findings identified in our audit are described in the accompanying schedule of findings and questioned costs. We did not audit the County of Russell, Virginia's responses and, accordingly, we express no opinion on them. This repor is intended solely for the information and use of management, the Board of Supervisors, others within the entity, federal awarding agencies, and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Hatemaon., Saumur, ly, lhsccicter Blacksburg, Virginia December 19, 2012 -92- ROBINSON, fARMER, COX ASSOCIATES ClR 111 liD PI !JJLJC ACCOUN /;1N 15 A PROJ-LSS!Oi'L1L LIM/liD LfllBILIJY COAfPAl'd' Independent Auditors' Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133 To the Members of the Board of Supervisors County of Russell, Virginia Lebanon, Virginia Compliance We have audited the County of Russell, Virginia's compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of the County of Russell, Virginia's major federal programs for the year ended June 30, 2012. The County of Russell, Virginia's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major federal programs is the responsibility of the County of Russell, Virginia's management. Our responsibility is to express an opinion on the County of Russell, Virginia's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the County of Russell, Virginia's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of the County of Russell, Virginia's compliance with those requirements. As described in item 2012-5 in the accompanying schedule of findings and questioned costs, the County of Russell, Virginia did not comply with requirements regarding allowable costs that are applicable to its Adult Education program. Compliance with such requirements is necessary, in our opinion, for the County of Russell, Virginia to comply with the requirements applicable to that program. In our opinion, except for the noncompliance described in the preceding paragraph, the County of Russell, Virginia complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2012. Internal Control Over Compliance Management of the County of Russell, Virginia is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered the County of Russell, Virginia's internal control over compliance with the requirements that could have a direct and material effect on a major federal program to -93- ROBINSON, FARMER, COX ASSOCIATES CERTIIED PUBLIC ACCOUNTANTS 11 PROFESSIONAL LIMITED LIABILIT > COMPANY Independent Auditors’ Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133 To the Members of the Board of Supervisors County of Russell, Virginia Lebanon, Virginia Compliance We have audited the County of Russell, Virginia's compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of the County of Russell, Virginia's major federal programs for the year ended June 30, 2012. The County of Russell, Virginia's mejor federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major federal programs is the responsibility of the County of Russell, Virginia's management. Our responsibilty is to express an opinion on the County of Russell, Virginia's compliance based on our audit We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred fo above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the County of Russell, Virginia's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of the County of Russell, Virginia’s compliance with those requirements. ‘As described in item 2012-6 in the accompanying schedule of findings and questioned costs, the County of Russell, Virginia did not comply with requirements regarding allowable costs that are applicable to its Adult Education program. Compliance with such requirements is necessary, in our opinion, for the County of Russell, Virginia to comply with the requirements applicable to that program. In our opinion, except for the noncompliance described in the preceding paragraph, the County of Russell, Virginia complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each ofits major federal programs for the year ended June 30, 2012. Internal Control Over Compliance Management of the County of Russell, Virginia is responsible for establishing and maintaining effective intemal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered the County of Russell, Virginia's internal control over compliance with the requirements that could have a direct and material effect on a mejor federal program to -93- determine the auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the County of Russell, Virginia's internal control over compliance. Our consideration of internal control over compliance was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over compliance that might be significant deficiencies or material weaknesses and therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses have been identified. However, as discussed below, we identified certain deficiencies in internal control over compliance that we consider to be material weaknesses. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. We consider the deficiency in internal control over compliance described in the accompanying schedule of findings and questioned costs as item 2012-5 to be a material weakness. The County of Russell, Virginia's response to the finding identified in our audit is described in the accompanying schedule of findings and questioned costs. We did not audit the County of Russell, Virginia's response and, accordingly, we express no opinion on the response. This report is intended solely for the information and use of management, the Board of Supervisors, others within the entity, federal awarding agencies, and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. R~~~~,d,c~oa~ Blacksburg, Virginia December 19, 2012 -94- determine the auditing procedures for the purpose of expressing our opinion on compliance and to test and report cn internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the County of Russell, Virginia's internal control over compliance. Our consideration of internal control over compliance was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over compliance that might be significant deficiencies or material weaknesses and therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses have been identified. However, as discussed below, we identified certain deficiencies in internal control over compliance that we consider to be material weaknesses. AA deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. ‘A material weakness in internal contro! over compliance is @ deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. We consider the deficiency in internal control over compliance described in the accompanying schedule of findings and questioned costs as item 2012-5 to be a material weakness. The County of Russell, Virginia's response to the finding identified in our audit is described in the accompanying schedule of findings and questioned costs. We did not audit the County of Russell, Virginia's response and, accordingly, we express no opinion on the response. This report is intended solely for the information and use of management, the Board of Supervisors, others within the entity, federal awarding agencies, and pass-through enlilies and is not intended to be and should not be used by anyone other than these specified partes. Halsinaon,, Gaumer, ly Lescciates Blacksburg, Virginia December 19, 2012 County of Russell, Virginia Page 1 of 4 Schedule of Expenditures of Federal Awards For the Year Ended June 30,2012 Pass-through Federal Entity Federal Grantor/State Pass· Through Grantor/ CFDA Identifying Federal Program Cluster or Title Number Number Expenditures Department of Health and Human Services: Pass Through Payments: Department of Social Services: Promoting Safe and Stable Families 93.556 0950111,0950112 $ 24,912 Temporary Assistance for Needy Families 93.558 0400111,0400112 419,053 Refugee and Entrant Assistance· State Administered Programs 93.566 0500t11,0500112 504 Low-Income Home Energy Assistance 93.568 0600411,0600412 34,013 Child Care and Development Fund Cluster: Child Care and Development Block Grant 93.575 0770110,0770111 11,659 Child Care Mandatory and Matching Funds of the 93.596 0760111,0760112 72,318 Child Care and Development Fund Stephanie Tubbs Jones Child Welfare Services Program 93.645 0900111,0900112 1,346 Foster Care· Tille IV-E 93.658 1100111,1100112 413,488 Adoption Assistance 93.659 1120111, 1120112 320,174 Social Services Block Grant 93.667 1000111,1000112 269,259 Chafee Foster Care Independence Program 93.674 9150111,9150112 12,340 Children's Health Insurance Program 93.767 0540111,0540112 9,528 Medical Assistance Program 93.778 1200111,1200112 200,229 Total Department of Health and Human Services $ 1,788,823 Department of Agriculture: Pass Through Payments: Department of Agriculture: Child Nutrition Cluster: Food Distribution-Schools (Note 3) 10.555 Not applicable $ 88,581 Department of Education: Child Nutrition Cluster: National School Lunch Program 10.555 40623 919,243 National School Lunch Program Subtotal $ 1,007,824 Department of Education: Child Nutrition Cluster: School Breakfast Program 10.553 40591 315,966 Fresh Fruit and Vegetable Program 10.582 40599 29,189 Department of Social Services: Slate Administrative Matching Grants for the Supplemental 10.561 0010111,0010112 $ 329,696 Nutrition Assistance Program 0040111,0040112 Total Department of Agriculture $ 1,682,675 U.S. Election Assistance Commission Pass Through Payments: Virginia Board of Elections: Help America Vote Act Requirements Payments 90.401 40040 $ 11 ,400 -95- County of Russol, Virginia Page 1 of 4 ‘Schedule of Expenditures of Federal Awards For the Year Ended June 30, 2012 Pass-through Federal Entity Federal GrantoriState Pass - Through Grantor! CFDA Iontitying Federal Program Cluster or Title Number Number Expenditures Department of Heath and Human Services: ass Through Payments Deparment of Sacal Series Promoting Safe and Stable Farias 93.558 ogsortt,casor12 $24.2 Temporary Assistance fr Neody Farias 93.558 0400111, 0400112 419,058 Refugee end Entrant Assistance - State Administered Programs 93.586 0600111, 0500112 504 Low-income Home Energy Assistance 93.568 oso04, 0600412 34.018 ‘Child Care and Development Fund Cluster: Child Care and Development Block Grant 93.575 770110, 0770111 11.658 Child Care Mandatory and Maing Funds ofthe 93.596 76014, o7eott2 72318 Chile Care and Development Fund Stephanie Tubbs Jones Child Weare Services Program 93.645 0900111, g00t12 1346 Foster Care - Tile W-E 98658 sn0ottt, 1400112 413,488 ‘Adoption Assisiznce 93,659 siaontt, 1120112 oT Social Services Block Grant 93.887 1000114, 1000112 269,259 Chafee Foster Care Independence Program 93.674 9160141, g150112 1200 Ciéen’s Heath insurance Program 93.787 sort, 0540112 9528 Medical Assistance Program 93.778 ‘200%, 1200112 200,228 Total Department of Heath and Human Services $__1708.625 Department of Agriculture: Pass Through Payments: Depariment of Agriculture: Cig Netti Closter Food Distribution Schools (Note 3) 10.585 Not appticable $68.58 ‘Department of Education: Chi Nation Custer: National School Lunch Program 101885 i) National School Lunch Program Subtotal Department of Education Cid Nutriion Guster Schoo! Breakfast Program 10.559 40601 316,986 Fresh Ful and Vegoible Program 10582 40599 29,188 Department of Social Services State Administrative Metcing Gren forthe Supplemental 10564 10141, 10112 32900 Nation Assistznce Program oo4ot tt, ondort2 Total Deparment of Agriculture 1,982,675, U.S, Election Assistance Commission ess Through Payments Virginia Board of Etctions Hel Ameria Vote Act Requirements Payments 90401 40040 -95- County of Russell, Virginia Page 2 of 4 Schedule of Expenditures of Federal Awards For the Year Ended June 30,2012 Pass-through Federal Entity Federal Grantor/State Pass· Through Grantor/ CFDA Identifying Federal Program Cluster or Title Number Number Expenditures Department of Justice: Direct Payments: Bulletproof Vest Partnership Program 16.607 Not applicable $ 6,746 Pass Through Payments: Department of Criminal Justice Services: Violence Against Women Formula Grants 16.588 10WFAX0041 20,688 T olaf Department of Justice $ 27,434 Department of Transportation: Pass Through Payments: Department of Motor Vehicles: State and Community Highway Safety 20.600 SC-2012 52260 4638 $ 12,722 SC-2011 51346 4288 Department of Education: Pass Through Payments: Department of Education: Adult Education - Basic Grants to Stales 84.002 42801 $ 444,681 Tille I Cluster: Title 1: Grants to Local Educational Agencies 84.010 42901 1,731,003 ARRA ·Title 1: Grants to Local Educational Agencies 84.389 42913 100,000 Special Education Cluster: Special Education- Grants to States 84.027 43071 1,183,568 Special Education- Preschool Grants 84.173 62521 35,770 ARRA ·Special Education- Preschool Grants 84.392 61247 30,058 Career and Technical Education: Basic Grants to States 84.048 61095 93,778 Even Start - State Educational Agencies 84.213 42950 259,316 Twenty-First Century Community Learning Centers 84.287 60565 967,797 Education Technology State Grants 84.318 61600 1,795 Rural Education 84.358 43481 203,452 ARRA. Education Jobs Funds 84.410 62700 80,948 Improving Teacher Quality State Grants 84.367 61480 294,856 Total Department of Education $ 5,427,022 Department of Housing and Urban Development: Pass Through Payments: Department of Housing and Community Development: Community Development Block GranUState's Program and Non-entitlement 14.228 50791 $ 589,252 Grants in Hawaii Corporation on National and Community Service: Pass Through Payments: Department of Education: Learn and Serve America- School and Community Based Programs 94.004 60185 $ 23,723 -96- County of Russel, Vis Page 2 of 4 ‘Schedule of Expenditures of Federal Awards For the Year Ended June 30, 2012 Pass-through Federal Entity Federal GrantoriState Pass - Through Grantor! CFDA Identifying Federal Program Cluster or Tile Number Number Expenditures Department of Justo: sect Payments: ‘Bulleiproot Vest Partnership Program 16607 ‘Not applicable $ are Pess Through Payments: Deparment of Criminal Juice Services Vilenoe Against Women Fomula Grants 16588 ‘OWFAXOO¢1 20.808 Total Department of stioe 27434 Deparment of Trensprtaton: ass Through Payments Department of Motor Vehicles: ‘State and Community Highway Safety 20.600 ‘SC-2012 52260 4698 80-2011 519464288 Deparment of Education Pass Through Paymenis: Departmen of Edaton: ‘Adult Education - Basic Grants to States 4.002 42801 $444.68 Tie | Custer Tite | Grants to Local Educational Agencies 84010 42201 4731,003 ARRA Tie |: Grants to Local Educational Agencies 84.368 423 100.000 ‘Special Education Custer: ‘Special Education - Grants to States 24.027 sort 1,183,568 ‘Special Education - Preschool Grants 84173 62521 35770 ‘ARPA - Special Education - Preschool Grants 84.392 6107 30,088 Career and Technical Eoucaton: Basic Granls to States 24.048 81085 978 Even Stet Siete Edvcational Agencies 213 42950 259316 “Twonly-Fist Century Community Leeming Centors 84.287 60865 967,797 Education Technology State Grants este 6600 1795 Rural Education 84.358 4381 703.452 |ARRA - Education Jobs Funds 84.410 62700 Improving Teacher Gualty State Grants 84.67 61460 “Total Department of Education Department of Housing and Urban Development Pss Through Payments: Department of Housing and Community Development ‘Community Development Block Gren¥State's Program and Norenttlement 4208 50791 S$ 589.252 Granisin Hawai Corporation on National and Community Servic: Pss Through Payments: Department of Educaton: Loam and Serve America - School and Communily Besed Programs 94.004 60185 23723 County of Russell, Virginia Schedule of Expenditures of Federal Awards For the Year Ended June 30,2012 Federal Grantor/State Pass- Through Grantor/ Program Cluster or Title Federal CFDA Number Department of Labor: Pass Through Payments: Department of Education: Workforce Investment Acl Cluster: WIA Adult Program Virginia Community College System: Workforce Investment Act Cluster: WIA Adult Program WIA Adult Program Total WIA Youth Activities WIA Dislocated Workers Total Department of Labor U.S. Department of Homeland Security: Pass Through Payments: Department of Emergency Management: Stale Homeland Security Program Emergency Management Performance Grant Homeland Security Grant Program Total U.S. Department of Homeland Security Total Expenditures of Federal Awards Note 1 -- Basis of Presentation 17.258 17.258 17.258 17.259 17.260 97.073 97.Q42 97.053 Pass-through Entity Identifying Number 53427 53427 53427 53427 53427 52707. 527 41 146 52727 Page 3 of 4 Federal Expenditures $ $ 38,000 768,424 806,424 987,669 236,963 $ 2,031,056 $ 16,767 14,060 8,000 $ 38,827 $ 11,632,934 The accompan~ng schedule of expenditures of federal awards (the Schedule) includes lhe federal grant acl'lvity of Russell County, Virginia under programs of lhe federal government for the year ended June 30, 2012. The information in lhis Schedule is presented in accordance with lhe requirements of OMB Circular A-133, Audffs of States, Local Governments, and Non-Profit Organizations. Because the Schedule presents only a selected portion of lhe operations of Russell County, Virginia, it is not intended to and does not present the financial position, changes in net assets, or cash flows of Russell County, Virginia. Nole 2 --Summary of Significant Accounting Policies (1) Expenditures reported on the Schedule are reported on lhe accrual basis of accounting. Such expenditures are recognized following the cosl principles contained in OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments, wherein certain types of expenditures are not allowable or are limited as to reimbursement. (2) Pass-through entity identifying numbers are presented where available. Nole 3 -- Food Dislnbulion Nonmonetary assistance is reported in the schedule at lhe fair market value of the commodities received and disbursed. At June 30, 2012 Russell County, Virginia had food commodities totaling $0 in inventory. Note 4 -- Subrecipients Of lhe federal expenditures presented in the Schedule, Russell County, Virginia provided federal awards lo subrecipients as follows: CFDA Number Program Name Amount 14.228 Community Development Block Grant $ 589,252 17.258, 17.259, 17.260 Workforce Investment Act Cluster 1,993,056 -97- County of Russel, Virginia Page 30f 4 ‘Schedule of Expenditures of Federal Awards For the Year Ended June 20, 2012 Passhrough Federal Entity Fedora GrantorState Pass-Through Grantor! CFDA entitying Federal Program Cluster or Title Number Number Expenditures Department of Labor: Pass Through Paynents Deparment of Education ‘Workforce investment Act Custer: WIA Adu Program 17.2058 swat $s 38000 Vigiia Communty Colege System ‘Wortorce Imesiment Act Custer: WU Adit Program 17258 sar 788,404 WU Aut Program Total 17258 5327 5m 424 \WIA Youth Activites 17259 suaT WIA Dislocated Workers 47260 5327 Toll Department of Labor U.S, Deparment of Homeland Secu Pass Through Payments Deparment of Emergency Management Slate Homeland Senuly Program 97.073 2707, 82741 3 16767 Emerganey Management Perermance Grant sr 146 +4080 Homeland Secuty Grant Program 97.053 sum 8000 Total US. Department of Homeland Security ‘Total Expenditures of Federal Awards Note + ~ Bass of Presentation ‘Te accompenying schedule of expenditures of federal awards (the Schedule) includes the federal gent ecivty of Russell Coun, Virginia under programs ‘ofthe federal goverment far the year ended June 20, 2012, The information inthis Schedule is presented in accordance with the requirements of OMB Circular A193, Audits of States, Local Governments, and Non-Proft Organizations. Because the Schedule presents only @ selected portion of the ‘operations of Russel County, Virginia, itis not intended to and does not present the financial poston, changes in nat asses, or cash flows of Russell County, Vegi Note 2 ~- Summary of Significant Accounting Potiies (1) Expenditures reported onthe Schedule ae reported on the accrual basis of aocounting. Such expenditures are recognized folowing the cost princigtes ‘contained in OMB Circular A‘7, Cost Prnooles for Stat, Local, end indian Tribal Governments , wherein certain types of expencttures are not allowable or ate Brite 2 to reimbursement (2) Pass-through enity identifying numbers ae presected wire avaiable. Note 3 Food Distribution [Norwmonetary assistance is reported in the schedule atthe fir market value of the commodities roceived and disbursed, AL June $0, 2012 Russell County, Virginia had food commodities toting $0 in inventory. Note 4 ~ Subreciplents ‘Ofte federal expenditures presented inthe Schedule, Russell Couniy, Vigna provided federal awards to subrecipients as flows: CEDA Numer Program Name ‘Amount 14228 Cominunity Development Bock Grant $589,252 1.258, 17.259, 17.280 Worsorce Investment Act Custer 1,908,056 Note 5 -- Relationship to the Financial Slalemenls County of Russell, Virginia Schedule of Expenditures of Federal Awards For the Year Ended June 30,2012 Federal expenditures, revenues and capital contributions are reported in the County's basic financial statements as follows: Intergovernmental federal revenues per the basic financial statements: Primary government: General Fund Workforce Investment Board Fund Total primary government: Component Unit Schools: School Operating Fund Total federal expenditures per the Schedule of Expenditures of Federal Awards -98- Page 4 of 4 $ 2,798,154 1,993,056 $ 4,791,210 $ 6,841,724 $ 11,632,934 County of Russell, Virginia, Schedule of Expenditures of Federal Awards For the Year Ended June 30, 2012 Page dof 4 ‘Note 6 ~ Relationship fo the Financial Statements Federal expenditures, revenues and capital contributions are reported inthe County’ basic nancial statements as flows: Intergovornmental federal revonves per the basic financial stalements: Primary government General Fund Workforce Investment Board Fund Total pimary government ‘Component Unit Schools: ‘School Operating Fund ‘Total federal expenditures per the Schedule of Expenditures of Federal Awards 8 $ 4791210 Seas 7o4 County of Russell, Virginia Schedule of Findings and Questioned Costs Year Ended June 30, 2012 Section I . Summary of Auditor's Results Financial Statements Type of auditor's report issued: Internal control over financial reporting: Material weakness(es) identified? Significant deficiency(ies) identified? Noncompliance material to financial statements noted? Federal Awards Internal control over financial reporting: Material weakness(es) identified? Significant deficiency(ies) identified? Type of auditor's report issued on compliance for major programs: Any audit findings disclosed that are required to be reported in accordance with Circular A-133, Section .510 (a)? Identification of major programs: CFDA# Name of Federal Program or Cluster 84.173/84.027/84.392 84.010184.389 10.553110 555 14.228 Special Education Cluster Title 1: Part A Cluster Child Nutrition Cluster Community Development Block Grant 84.002 84.287 Adult Education - Basic Grants to States Twenty-first Century Community Learning Centers Dollar threshold used to distinguish between Type A and Type B programs: Auditee qualified as low-risk auditee? -99- Qualified Yes No Yes Yes No Qualified Yes $348,988 No County of Russell, Virginia ‘Schedule of Findings and Questioned Costs Year Ended June 30, 2012 Section |- Summary of Auditor's Results Financial Statements Type of auditor's repor issued Quelied Internal control over financial reporting Material weakness(es)identiied”? Yes Significant deficiencyies) identified? No Noncompliance materia to financial statements noted? Yes Federal Awards Internat control over financial reporting ‘Material weakness(es)identtiod? Yes Significant deficiency(ies) identified? No ‘Type of auditors report issued on compliance for major programs: ‘Qualified Any aucit findings disclosed that are required to be ‘reported in accordance with Circular A-133, Section .510 (a)? Yes Identification of major programs: CFDA Name of Federal Program or Cluster 84.173184,027184.392 Special Education Cluster 84.010/84.389 Title: Part A Cluster 10.553/10.585 Child Nutrition Cluster 14.228 Community Development Block Grant 84.002 Adult Education - Basic Grants to States 84.287 Twenty-first Century Community Learning Centers Dolar threshold used to distinguish between Type A and Type B programs: $348,988 Auditee qualified as low-risk auditee? No -99- County of Russell, Virginia Schedule of Findings and Questioned Costs Year Ended June 30, 2012 Section II • Financial Statement Findings 2012·1 Criteria: Condition: Cause of Condition: Effect of Condition: Recommendation: Management's Response: 2012·2 Criteria: Condition: Cause of Condition: Effect of Condition: Recommendation: Management's Response: Per Statement on Auditing Standards 115 (SAS 115), identification of a material adjustment to the financial statements lhat was not detected by the entity's internal controls indicates that a material weakness exists. The financial statements, as presented for audit, did not contain all necessary adjustments to comply with generally accepted accounting principles (GMP). As such, the auditor proposed adjustments that were material to the financial statements. The County does not have proper controls in place to detect and correct errors in closing their year end financial statements. There is more than a remote likelihood that a misstatement of the County's financial statements that is more than inconsequential will not be prevented or detected by the County's internal controls over financial reporting. The County should review the auditors' proposed audit adjustments for 2012 and develop a plan to ensure the tr'1al balances and related schedules are accurately presented for audit. The County will review the auditors' proposed audit adjustments for 2012 and will develop a plan of action to ensure that all adjusting entries are made prior to final audit fieldwork next year. A key concept of internal controls is the segregation of duties. No one employee should have access to both accounting records and related assets. The School Board lacks proper segregation of duties over payroll. The School Board lacks the funding to fully support a completely segregated finance department. There is more than a remote likelihood that a misstatement of the County's financial statements that is more than inconsequential will not be prevented or detected by the County's internal controls over financial reporting. Management should further try to segregate duties amongst current staff to help alleviate risk created by improper segregation of duties. Management acknowledges that internal controls over School Board payroll lacks proper segregation of duties and has hired a Finance Director that should reduce the risk due to segregagtion of duties. The new Director was hired at the end of fiscal year 2012 which should alleviate the issue for fiscal year 2013. ·100- County of Russell, Virginia ‘Schedule of Findings and Questioned Costs Year Ended June 30, 2012 ‘Section Il - Financial Statement Findings 20124 Criteria: Per Statement on Auditing Standards 115 (SAS 115), identification of a material adjustment to the financial statements that was not detected by the entity’s intemal controls indicates that a material weakness exists Coneiton: ‘The financial statements, as presented for audit, did not contain all necessary axjustments to comply with generally accepted accounting principles (GAAP). As such, the auditor proposed adjustments that were material tothe Financial statements, Cause of Condition: The County does not have proper controls in place to detect and correct errors in closing their year end financial statements Effect of Condition: There is more than a remote likelihood that a misstatement of the County's financial statements that is more than inconsequential wil not be prevented or detected by the County's internal controls ‘over financial reporting. Recommendation: The County should review the auditors' proposed audit adjustments for 2012 and develop a plan to ensure the tial balances and related schedules are accurately presented for audit Management's ‘The County will review the auditors' proposed audit adjustments for 2012 and will develop a plan of Response action to ensure that all adjusting entries are made prior to final aut fieldwork next year 2012-2 Criteria AA key concept of intemal controls is the segregation of duties. No one employee should have ‘access fo both accounting records and related assets. Condition: ‘The Schoo! Board lacks proper segregation of duties over payroll Cause of Condition: The School Board lacks the funding to fully support a completely segregated finance department. Effect of Condition: There is more than a remote likelihood that a misstatement of the County financial statements that is more than inconsequential wil not be prevented or detected by the County's internal contols ‘over financial reporting Recommendation: Management should further try to segregate duties amongst current staff to help alleviate risk ‘created by improper segregation of duties, Management's Management acknowledges that internal controls over School Board payroll lacks proper Response: segregation of duties and has hired @ Finance Director that should reduce the risk due to segregagtion of duties. The new Ditector was hired at the end of fiscal year 2012 which should alleviate the issue for fiscal year 2013, -100- County of Russell, Virginia Schedule of Findings and Questioned Costs Year Ended June 30,2012 Section II • Financial Statement Findings (continued) 2012·3 Criteria: Condition: Cause of Condition: Effect of Condition: Recommendation: Management's Response: 2012-4 Criteria: Condition: Context: Cause of Condition: Effect of Condition: Recommendation: Management's Response: The Code Qf Virginia, (1950), as amended requires that an appropriation exists prior to the expenditure of funds. The IDA Debt Reduction Fund, VPA Expenditures Fund, Cannery Fund, Textbook Fund, Workforce Investment Fund and Law Library Fund overspent the budget. Numerous departments within the General fund also overspent their budget. The County has never posted supplemental appropriations to the accounting system. The County has not met the requirements of the Code of Virginia, (1950), as amended. The County should budget to include appropriations for all necessary expenditures. Management will post additional appropriations to the accounting system and pay closer attention to budgeted and actual expenditures. The Code Qf Virginia, (1950), requires that GSA pool expenditures be related to public or private nonresidential or residential services for troubled youths and families. The Auditor of Public Accounts (APA) requires that requests for these expenditures be supported with written contracts, service agreements, or invoices. The County requested and received reimbursement for one month of GSA pool expenditures twice. Reimbursement requests exceeded annual expenditures by $125,649. Staff turnover and job responsibility transitions. The County received a duplicate reimbursement for expenses totaling $125,649 resulting in an overpayment from the Commonwealth. The County should closely monitor expenses that are requested for reimbursement. Management will closely review all expenses that are requested for reimbursement and ensure that transfers of job responsibilities go smoother in the future. -101- County of Russell, Virginia ‘Schedule of Findings and Questioned Costs, Year Ended June 30, 2012 ‘Section lI - Financial Statement Findings (continued) 2012-3 Criteria: Condition: Cause of Condition: The Code of Virginia, (1950), as amended requires that an appropriation exists prior to the expenditure of funds, The IDA Debt Reduction Fund, VPA Expenditures Fund, Cannery Fund, Textbook Fund, Workforce Investment Fund and Law Library Fund overspent the budget. Numerous departments within the General fund also overspent their budget ‘The County has never posted supplemental appropriations tothe accounting system. Effect of Condition: The County has not met the requirements ofthe Code of Virainia, (1950), as amended. Recommendation: The County should budget to include appropriations for all necessary expenditures. Management's Management will post additional appropriations tothe accounting system and pay closer attention Response: to budgeted and actual expenditures. 202-4 Criteria: ‘The Code of Virginia, (1950), requires that CSA pool expensitures be retated to public or private nonresidential or residential services for troubled youths and families. The Auditor of Pubéc Accounts (APA) requires that requests for these expenditures be supported with written contracts, service agreements, or invoices. Condition ‘The County requested and received reimbursement for one month of CSA pool expenditures twice. Context Reimbursement requests exceeded annul expenditures by $125,649. Cause of Condition: Staff turnover and job responsibilty transitions, Effect of Condition: The County received a duplicate reimbursement for expenses totaling $125,649 resulting in an ‘overpayment from the Commonwealth Recommendation: The County should closely monitor expenses that are requested for reimbursement Management's Management wil closely review all expenses that are requested for reimbursement and ensure that Response: transfers of ob responsibilities go smoother inthe future. -101- County of Russell, Virginia Schedule of Findings and Questioned Costs Year Ended June 30, 2012 Section Ill · Federal Award Findings and Questioned Costs Statement of Condition: Criteria: Context: Cause: Effect: Questioned Costs: Recommendation: Management's Response and Planned Corrective Actions: Adult Education • Basic Grants to States -CFDA 84.002 Award Number V002A10047, Award Year 2010 and V002A110047, Award Year 2011 Allowable costs: The School Board charged a number of bills to the Program based on budgeted amounts and not actual amounts spent. In addition, a large portion of these expenditures were paid in advance of receiving the goods or services. Expenditures submitted for reimbursement should be traced to an exact cost and documented appropriately. Eighteen invoices were selected for review. The above instances of noncompliance were noted in six of the invoices. Desire to use up money prior to losing it. Reimbursement requests are not supported by documentation specifically related to the program. The School Board has $35,450 in questioned costs. The School Board should review each reimbursement request to verify that it is supported appropriately by allowable expenditures. The School Board will review each reimbursement request to verify that it is supported appropriately by allowable expenditures. Section IV · Status of Prior Audit Findings and Questioned Costs Financial Statement Findings 2011-1, 2011-2, and 2011-3 recurred during fiscal year 2012. Federal Award Findings and Questioned Costs 2011-5 recurred during fiscal year 2012 but was not material to the Financial Statements. Federal Award Findings and Questioned Costs 2011-6 was corrected during fiscal year 2012. -102- County of Russell, Virginia Schedule of Findings and Questioned Costs Year Ended June 30, 2012 Section lll - Federal Award Findings and Questioned Costs 20125 ‘Adult Education - Basic Grants to States -CFDA 84.002 Award Number V002A10047, Award Year 2010 and V002A110047, Award Year 2011 Statement of Allowable costs: The School Board charged a number of bls to the Program based on budgeted Coneition ‘amounts and not actual amounts spent. In addlion, a lage portion of these expenditures were paid in advance of receiving the goods or services. Criteria Expenditures submitted for reimbursement should be traced to an exact cost and documented appropriately Eighteen invoices were selected for review. The above instances of noncompliance were noted in Context six f the invoices. Cause Desire to use up money prior to losing It Effect Reimbursement requests are not supported by documentation specficaly related to the program. ‘Questioned Costs: The School Board has $35,450 in questioned costs, The School Board should review each reimbursement request to verify that it is. supported Recommendation: ar cropriately by allowable expenditures, Management's Response and ‘The School Board wil review each reimbursement request (0 very that itis supported Planned Corrective appropriately by allowable expenditures. Actions ‘Section IV - Status of Prior Audit Findings and Questioned Costs Financial Statement Findings 2011-1, 2011-2, and 2011-3 recurred during fiscal year 2012. Federal Award Findings and ‘Questioned Costs 2011-5 recurred during fiscal year 2012 but was not material to the Financial Statements. Federal Award Findings and Questioned Costs 2011-6 was corrected during fiscal year 2012. -102-