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Home My WebLink About1983 04 30 Financial Report - Clearwoods Improvement District (2) !I 4! 11 A CLEARWOODS IMPROVEMENT DISTRICT 4 4111 REPORT ON FINANCIAL STATEMENTS (With Supplemental Material) , 11111 YEAR ENDED APRIL 30, 1983 , I I I QEEDLOVE (SCO CERTIFIED PUBLIC ACCOUNTANTS TABLE OF CONTENTS 11 Exhibits Page Auditors' Report 1 71 Combined Balance Sheet - All Fund Types and A 2 Account Groups Combined Statement of Revenues, Expenditures B 4 11 and Changes in Fund Balances - All Governmental 4 Fund Types MI Statement of Revenues, Expenditures and Changes C 6 in Fund Balances - Budget and Actual - General Fund I A Summary of Accounting Policies and Notes to 7 Financial Statements Supplemental Schedules A Schedules 1111 Auditors' Report on Other Financial Information 15 Analysis of Changes in Cash and Temporary A-1 17 Investments - All Governmental Fund Types # General Long-Term Debt and Debt Service A-2 18 Requirements Analysis of Changes in General Long-Term Debt A-3 20 41 ... Schedule of Temporary Investments A-4 21 4110 Analysis of Taxes Receivable A-5 22 Analysis of Organizational Costs A-6 23 14, Analysis of Changes in General Fixed Assets A-7 25 4 Comparative Schedule - Revenues and Expenditures A-8 26 MI Five Years lf Insurance Coverage A-9 28 MO Board Members, Key Personnel and Consultants A-10 30 I Questionnaire Completed by the Auditor A-11 33 Certificate of the Board of Directors A-12 41 • 11 Management Letter A-13 45 4 RP a mEEDLovE0-co CERTIFIED PUBLIC ACCOUNTANTS RICHARD W.BREEDLOVE DONN A.LAND 3730 F.M.1960 West,Suite 300 363 North Belt,Suite 450 * Houston,Texas 77068 Houston,Texas 77060 (713)440-3347 (713)448-2221 4 ql .June 27, 1983 4 4 Board of Directors Clearwoods Improvement District Harris County, Texas 111 We have examined the Combined Financial Statements of Clearwoods Improvement District, Harris County, Texas, as of and for the year ended April 30, 1983, as listed in the table of contents. Our examination was made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we 1411 considered necessary in the circumstances. In our opinion, the Combined Financial Statements referred to above present +* fairly the financial position of Clearwoods Improvement District, Harris County, Texas, and the results of its operations for the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year. 4111 III 4 MI 4 Account Groups ill Long-Term General Memorandum Debt Fixed Assets Total 4110 $ - $ - $ 122 964 441 - - 58 673 4 - - 181 637 fl, _ - 67 115 - - 370 - - 382 qi - - 130 - 2 815 583 2 815 583 - 299 879 299 879 . 131 999 - 131 999 IQ 2 123 001 - 2 123 001 An $2 255 000 $3 115 462 $5 620 096 Ill $ - $ - $ 45 644 - - 14 609 411, - - 370 - - 13 899 2 255 000 - 2 255 000 2 255 000 - 2 329 722 ii - - 131 999 - _ 42 913 li - 3 115 462 . _ 3 115 462 - 3 115 462 3 290 374 MI $2 255 000 $3 115 462 $5 620 096 a 411 4 li a IP 3 a Exhibit A ~ CLE8RWO}oS IMPROVEMENT DISTRICT --------- --= -~=�=----- NP COMBINED BALANCE SHEET - ALL FUND TYPES AND ACCOUNT GROUPS ~. AeBIL 30, 1983 Governmental Fund Types Debt Capitol � General Service Projects � �� ASSETS w Cash $ 49 026 $ 73 641 * 297 OP Temporary investments - restricted - 58 673 - � Total Cask a Temporary Invoatzneota 49 026 132 314 297 op Accounts receivable - net and accrued receivables Sl 882 15 233 - . ° Due from other funds 370 - - Prepaid expenses 382 - - Deposits 130 - - PP Physical plant - organizational coats - - - Amount available in Debt Service Food - - - op Amount to be provided for retirement of / general long-term debt - - - Total Assets $IOl 790 4 $ 397 - --=` ==------ � | ^ LIABILITIES AND FUND E_QoITY Liabilities: � Accounts payable and accrued expenses 45 275 $ 369 Deferred tax revenue - 14 809 - Due to other funds - 370 Refundable deposits 13 899 - Bonded debt payable _ - - - Total Liabilities 59 174 15 548 Fund Equity: Unreserved - V Designated for debt service - 131 999 - � Dodaoigua±ed 43 616 - 297 Investment in general fixed assets - �- - Total Fund Equity 42 616 131 999 �297 w TOTAL LIABILITIES AND FUND EQUITY $101 790 297 See the accompanying Summary of Accounting Policies and Notes to Financial Statements. � 2 � Exhibit B A CLEARWOODS IMPROVEMENT DISTRICT PP COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - ALL GOVERNMENTAL FUND TYPES FOR THE YEAR ENDED APRIL 30, 1983 p L Debt General Service Fund Fund rill i REVENUES: Service revenue $299 326 $ - P Tap connection fee 32 428 - 4 Property taxes - 278 877 Penalty and interest revenues 8 887 15 855 r Insurance claim proceeds 3 241 - Total Revenues 343 882 294 732 . EXPENDITURES: i Purchased sewer services 64 394 - Professional fees 21 920 2 081 PP Purchased and contracted services 63 150 8 162 r Consumable supplies and materials 861 - Recurring operating expenses 126 275 3 645 Water tap expense 6 620 - r Principal retirement - 105 000 Interest & fees - 153 333 Total Expenditures 283 220 272 221r EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 60 662 22 511 r OTHER FINANCING SOURCES (USES) : Reclassification of investment in uncollected taxes - (21 955) Operating transfers in - - Operating transfers out (2 856) - Total Other Financing Sources (Uses) (2 856) (21 955) EXCESS OF REVENUES & OTHER SOURCES OVER (UNDER) EXPENDITURES & OTHER USES 57 806 556 FUND BALANCE AT MAY 1, 1982 (15 190) 131 443 ril FUND BALANCE AT APRIL 30, 1983 $ 42 616 $131 999 r r r See the accompanying Summary of Accounting Policies and Notes to Financial Statements. 4 411 41 4 4 Capital Projects Memorandum 4 Fund Total $ - $299 326 32 428 4 278 877 40 24 742 ___.__ 3 241 - 638 614 10 _ 64 394 24 001 41 - 71 312 - 861 - 129 920 - 6620 105 000 153 333 - 555 441 83 173 11 - (21 955) 23 924 23 924 - (2 856) 23 924 (887) 23 924 82 286 41 (23 627) 92 626 S 297 $174 912 41 40 4 4 A 5 4 Exhibit C ow CLEARWOODS IMPROVEMENT DISTRICT PP STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL, - GENERAL FUND FOR THE YEAR ENDED APRIL 30, 1983 PP Favorable (Unfavorable) Actual Budget Variance P i REVENUES: Service revenue $299 326 $270 000 $ 29 326 Pi Tap connection fees 32 428 5 000 27 428 Penalty and interest revenues 8 887 7 000 1 887 Insurance Claim Proceeds 3 241 - 3 241 PP Total Revenues 343 882 282 000 61 882 EXPENDITURES: r Purchased sewer services 64 394 105 000 40 606 Professional fees 21 920 21 500 (420) Purchased and contracted services 63 150 63 000 (150) Consumable supplies and materials 861 900 39 IP Recurring operating expenses 126 275 89 500 (36 775) a Water tap expense 6 620 - (6 620) Total Expenditures 283 220 279 900 (3 320) r EXCESS OF REVENUES OVER EXPENDITURES 60 662 2 100 58 562 ri OTHER FINANCING SOURCES (USES) f Operating Transfers Out (2 856) - (2 856) - EXCESS OF REVENUES & OTHER SOURCES OVER (FINDER) .EXPENDITURES & OTHER USES 57 806 2 100 55 706 FUND BALANCE AT MAY 1, 1982 (15 190) (15 190) - r FUND BALANCE AT APRIL 30, 1983 $ 42 616 $(13 090) $ 55 706 r r F p p See the accompanying Summary of Accounting Policies and Notes to Financial Statements. 6 CLEARWOODS IMPROVEMENT DISTRICT 0 SUMMARY OF ACCOUNTING POLICIES AND NOTES TO FINANCIAL STATEMENTS APRIL 30, 1983 A 411 NOTE (1) CREATION OF DISTRICT Clearwoods Improvement District, Harris County, Texas was created by Acts of the 59th Legislature, Regular Session 1965. The Board of 411 Directors held its organizational meeting on August 10, 1965, and the 4 first bonds were sold on March 21, 1967. NOTE (2) SIGNIFICANT ACCOUNTING POLICIES A The accompanying financial statements have been prepared on the modified 41111 accrual basis of accounting applicable to governmental funds in accordance with the standards established by Statement No. 1 issued by the National Council on Governmental Accounting. Under this method, all expenditures, except bond interest, and all revenues currently MR available are accrued. The transactions of the District are accounted for in the following funds and account groups: Governmental Funds General Fund - To account for all revenues and expenditures not required to be accounted for in other funds. Debt Service Fund - To account for the accumulation of financial resources for, and the payment of, general long-term debt principal and interest, paid principally from property taxes levied by the District. 0 Capital Projects Fund - To account for financial resources designated to construct or acquire capital facilities and improvements. Such resources , are derived principally from proceeds of the sale of bonds. Account Groups General Fixed Assets - To account for the facilities of the District. General Long-Term Debt - To account for the outstanding principal balance of General Long-Term Debt obligations. i Memorandum Totals i The memorandum totals represent the aggregate amount of all governmental 4111 funds and account groups included in the statements. No eliminations have been made and this total does not present consolidated financial information. 41 7 CLEARWOODS IMPROVEMENT DISTRICT p. SUMMARY OF ACCOUNTING POLICIES AND NOTES TO FINANCIAL STATEMENTS APRIL 30, 1983 Continued p NOTE (2) SIGNIFICANT ACCOUNTING POLICIES (continued) rft General Fixed Assets The District capitalizes all costs associated with the creation of the OP District. All costs directly associated with the sale of bonds are being capitalized. From the date of the sale of bonds, through the date of the completion of related improvements, interest revenues and interest expen- /s ditures related to bond proceeds are being capitalized. These amounts are shown on the Balance Sheet as District Organizational Costs and are not being amortized. P. The District capitalized the cost of meters and boxes and residential lines as part of the water system in General Fixed Assets. The District does not maintain detailed fixed asset records, and thus detailed cost PP information on individual assets is not readily available. The full cost of facilities owned by the District is capitalized; funds provided by others are shown as contributions in the Balance Sheet. Depreciation of general fixed assets is not recorded in the accounts of governmental funds. NOTE (3) WATER AND SEWER SERVICE RATES ro The District has established the following rates effective September 7, 1978: Water Service Residential and Commercial Monthly Charge: r First 8,000 Gallons of Water Used (Minimum Bill) $ 7.00 Each 1,000 Gallons of Water Used Thereafter .65 Sewer Service Residential and Commercial Monthly Charge: First 50,000 Gallons of Water Used (Minimum Bill) $ 8.00* Each 1,000 Gallons of Water Used Thereafter .25 OP I *Amended September 1, 1980. " 8 CLEARWOODS IMPROVEMENT DISTRICT 44. SUMMARY OF ACCOUNTING POLICIES AND NOTES TO FINANCIAL STATEMENTS APRIL 30, 1983 Continued NOTE (3) WATER AND SEWER SERVICE RATES (continued) Tap Fees Residential Tap Fee (3/4" Tap) $475.00 The above fee includes the cost of meter, box and installation. 'R For connection of over 3/4 inch, the Distirct will establish tapping charges by separate order or agreement. "o Commercial tap-on fee shall be a negotiated amount per square foot of land in addition to the cost of meter, box and in- stallation. Residential and commercial sewer inspection fee $ 25.00 Deposits °AA Per customer $ 15.00 .411, The following rates were established effective June 1, 1982: Water Service Residential and Commercial Monthly Charge: First 7,000 Gallons of Water Used (Minimum Bill) $ 7.00 44. Each 1,000 Gallons of Water Used Thereafter .75 Sewer Service Residential and Commercial Montly Charge: First 20,000 Gallons of Water Used (Minimum Bill) $ 10.00 Each 1,000 Gallons of Water Used Thereafter .50 Tap Fees Residential Tap Fee (3/4" Tap) $600.00 Residential Tap Fee (3/4" Tap) non-residents 750.00 1111 The above fee includes the cost of meter, box, and installation for connections of over 3/4 inch, the District will establish tapping charges by separate order or agreement. Commercial tap-on fee shall be five cents per square foot of land in addition to the cost of meter, box, and installation. 9 CLEARWOODS IMPROVEMENT DISTRTCT PP SUMMARY OF ACCOUNTING POLICIES AND NOTES TO FINANCIAL STATEMENTS APRIL 30, 1983 Continued OP NOTE (3) WATER AND SEWER SERVICE RATES (continued) PP The following rates were established effective December 1, 1982: r Tap Fees Residential Tap Fee (3/4" Tap) $750.00 Residential Tap Fee (3/4" Tap) non-residents $850.00 The above fee includes the cost of meter, box, and installation for connections of over 3/4 inch, the District will establish tapping P" charges by separate order or agreement. Commercial tap-on fee shall be ten cents per square foot of land in addition to the cost of meter, box, and installation. There is an inspection fee of $50.00 for each commercial sewer tap. NOTE (4) PLEDGE OF TAX AND OPERATING EXPENSES PP The bonds are payable from the proceeds of an ad valorem tax levied upon all taxable property subject to taxation within the District, without limitation as to rate or amount, and are further payable from and secured by a lien on and pledge of the net revenues to he received from the operation of the District's waterworks and sanitary sewer system. NOTE (5) ENGINEERING REPORT The Bond Order states that a complete engineering inspection report of the operations and physical condition of the plant and system shall be made each year by an independent qualified engineer. At the Balance Sheet date, said report had not been made. NOTE (6) REDEMPTION OF BONDS P The outstanding bonds of Clearwoods Improvement District, Harris County, Texas, are callable for redemption prior to maturity at the option of the District. The bonds may be called in whole or in part in inverse OP numerical order for the purpose of retirement or refunding, or both, at par, in addition to unpaid accrued interest. Bonds of the Series 1967, Series 1967-A, Series 1972, and Series 1974 may be called on February 1, 1982, August 1, 1982, April 1, 1937, and September 1, 1989, respective- ly, or any interest date thereafter. As of the report date, no bonds had been called. PP p 10 , 411 CLEARWOODS IMPROVEMENT DISTRICT 411, SUMMARY OF ACCOUNTING POLICIES AND NOTES TO FINANCIAL STATEMENTS APRIL 30, 1983 Continued 4 11 NOTE (7) WATER AND SEWER SERVICE CUSTOMERS 11 The following is a comparison of the number of metered water and sewer service customers serviced by the District: 4 April 30, 1982 1,221 April 30, 1983 1 364 MI NOTE (8) OPERATING AND TAX FUND PAYMENTS TO DEBT SERVICE FUND 4 The Bond Orders state that the District is to transfer on a monthly basis to the Debt Service Fund, commencing when any part of the water and sewer MI system is placed in operation, an amount not less than one-sixth of the s next maturing installment of interest and an amount not less than one- twelfth of the next maturing installment of principal. In addition, a sum equal to 20% of such monthly payments is to be paid to the Debt Service Fund until the fund balance is equal to the total principal and interest requirements for the current year and the next succeeding year. ; 1411 At the Balance Sheet date, the Operating and Tax Fund Revenues have not been sufficient to make payments required by the Bond Order. However, the ad valorem tax levied by the District and the restricted cash and temporary investments have been sufficient to meet the annual bond principal and interest payments, not provided by funds from the bond sales. 4 NOTE (9) RESTRICTED CASH AND TEMPORARY INVESTMENTS The following balances were restricted by the Bond Orders as of April 30, 1983: Restricted For Servicing of Acquisition of Bonded Debt Fixed Assets Cash $ 73 641 $297 Temporary Investments _ 58 673MI - $132 314 $297 NOTE (10) INSURANCE MI The Bond Orders state that so long as any of the bonds are outstanding, the District agrees to maintain insurance for the benefit of the holders 441 of bonds, on the system of a kind and in an amount which usually would be carried by private companies engaged in a similar type of business The District has physical damage coverage of $209,500 with an 80% 11 4 w CLEARWOODS IMPROVEMENT DISTRICT _ SUMMARY OF ACCOUNTING POLICIES AND NOTES TO FINANCIAL STATEMENTS 0 APRIL 30, 1983 Continued PP NOTE (10) INSURANCE (continued) PP co-insurance provision and flood coverage of $15,000 on the sewer pump building and one lift station and $10,000 on the building PP contents. The District has comprehensive general liability coverage with a maximum limit of $300,000. Since no objective criteria has been established for insurance coverage a determination could not be made whether or not the District complied with the requirement. PP NOTE (11) SETTLEMENT PP During the year, the District settled in its favor an amount payable p, of $25,907 due to the City of Freiendswood by the general operating account. The amount related to payments due for the District's use PO of the City of Friendswood's North Interceptor, lift station and force main, to transport sewage to the Blackhawk Regional Sewage Treatment Plant. There was also a disputed amount of $21,068 concerning the cost PP of expansion of this regional sewage treatment plant. This amount was also settled in favor of the District. The District negotiated the settlement for a total cost to the District of $5,000. PP op r r r 12 441 SUPPLEMENTAL SCHEDULES 111 14 414 41111 CAS co 8�.EEDI,OVE CERTIFIED PUBLIC ACCOUNTANTS RICHARD W.BREEDLOVE DONNA.LAND 3730 F.M.1960 West,Suite 300 363 North pelt,Suite 450 Houston,Texas 77068 Houston,Texas 77060 (713)440 3347 (713)448-2221 I June 27, 1983 4/1 141 Board of Directors Clearwoods Improvement District qi Harris County, Texas 4 RI In our opinion, the accompanying information is stated fairly in all material respects in relation to the combined financial statements taken as a whole, of Clearwoods Improvement District for the year ended April 30, 1983, which are covered by our opinion presented in the first section of this report. The accompanying information is supplemental to the financial statements and is not essential for a fair presentation of the financial position and results of operations. I Our examination, which was made primarily for the purpose of forming 4 an opinion on the financial statements taken as a whole, included such tests of the accounting records, from which the supplementary information was compiled, and such other auditing procedures as we considered necessary in the circumstances. 41 t ot P46. I 4 111 111 The Schedule of Notes Payable has been omitted from the Supplemental Schedules because the District had no notes payable outstanding as of the balance sheet date. PP PP F ekR 1 c r PP r r r F 16 Schedule A-1 4 CLEARWOODS IMPROVEMENT DISTRICT 411 ANALYSIS OF CHANGES IN CASH AND TEMPORARY INVESTMENTS - ALL GOVERNMENTAL FUND TYPES FOR THE YEAR ENDED APRIL 30, 1983 u Debt Capital General Service Projects Memorandum Fund Fund Fund Total 11 SOURCES OF CASH AND TEMPORARY INVESTMENTS: - Cash receipts from revenues $322 640 $301 622 $ $624 262 Cash transfers from other funds - - - - Total Cash and Temporary Investments 322 640 301 622 - 624 262 4 APPLICATIONS OF CASH AND TEMPORARY INVESTMENTS: RI Cash disbursements for - Current expenditures 305 110 21 037 - 326 147 Debt service - 258 333 - 258 333 Transfer to other funds Total Cash and Temporary Investments Applied 305 110 279 370 - 584 480 INCREASE (DECREASE) IN CASH AND TEMPORARY INVESTMENTS 17 530 22 252 - 39 782 t CASH AND TEMPORARY INVESTMENT BALANCES BEGINNING OF YEAR 31 496 110 062 297 141 855 CASH AND TEMPORARY INVESTMENT BALANCES END OF YEAR $ 49 026 $132 314 $ 297 $131 637 111 41 1111 41 A 41 - 17 d Schedule A-2 CLEARWOODS IMPROVEMENT DISTRICT GENERAL LONG-TERM DEBT AND DEBT SERVICE REQUIREMENTS APRIL 30, 1983 Series 1967 Series 1967A Principal Interest Due Principal Interest Due For the Years Due August 1, Due August 1, FP Ending April 30 February 1 February 1 Total February 1 February 1 Total et 1984 $ 75 000 $ 16 250 $ 91 250 $ 10 000 $ 38 400 $ 48 400 i 1985 75 000 12 500 87 500 10 000 37 800 47 800 1986 75 000 8 750 83 750 10 000 37 200 47 200 pp 1987 75 000 5 000 80 000 10 000 36 600 46 600 6 1988 25 000 1 250 26 250 75 000 36 000 111 000 1989 - - 75 000 31 500 106 500 1990 - - - 75 000 27 000 102 000 1991 75 000 22 500 97 500 1992 - - - 100 000 18 000 118 000 1993 - - - 100 000 12 000 112 000 rp 1994 - - - 100 000 6 000 106 000 1; 1995 - - - - - - 1996 - - - - - - FP 1997 - - - - - - 1998 - - - - - - 1999 - - - - - - 2000 -- - - - - - ri 2001 - - - - - - 2002 - - - - - - 2003 - - - - - - fill 2004 - - - - - - TOTALS $325 000 $ 43 750 $368 750 $640 000 $303 000 $943 000 IIP CASH AND TEMPORARY INVESTMENTS BALANCES AT APRIL 30, 1983 Debt Service Fund $132 314 P. r r r r 18ri 1 4 Series 1972 Series 1974 Principal Interest Due Principal Interest Due Total Due October 1, Due September 1, Annual April 1 April 1 Total March 1 March 1 Total Requirements $ 10 000 $ 37 125 $ 47 125 $ 10 000 $ 55 360 $ 65 360 $ 252 135 15 000 36 500 51 500 20 000 54 685 74 685 261 485 15 000 35 438 50 438 20 000 53 335 73 335 254 723 20 000 34 425 54 425 20 000 51 985 71 985 253 010 20 000 33 075 53 075 30 000 50 635 80 635 270 960 20 000 37 725 51 725 30 000 48 565 78 565 236 790 20 000 30 375 50 375 30 000 46 465 76 465 228 840 a 30 000 29 025 59 025 30 000 44 335 74 335 230 860 30 000 27 000 57 000 30 000 42 160 72 160 247 160 191 30 000 24 975 54 975 30 000 39 940 69 940 236 915 30 000 22 850 52 850 40 000 37 690 77 690 236 540 40 000 20 925 60 925 40 000 34 650 74 650 135 575 40 000 18 225 58 225 40 000 31 570 71 570 129 795 III 40 000 15 525 55 525 40 000 28 490 68 490 124 015 40 000 12 825 52 825 40 000 25 410 65 410 118 235 50 000 10 125 60 125 40 000 22 330 62 330 122 455 50 000 6 750 56 750 50 000 19 250 69 250 126 000 4 50 000 3 375 53 375 50 000 15 400 65 400 118 775 - - - 50 000 11 550 61 550 61 550 Oil - - - 50 000 7 700 57 700 57 700 - - - 50 000 3 850 53 850 53 850 $550 000 $430 263 $980 263 $740 000 $725 355 $1 465 355 $3 757 368 II 41, !! ___ _ ___ — 11, 411 4 RI A RI 19 4 Schedule A-3 CLEARWOODS IMPROVEMENT DISTRICT ANALYSIS OF CHANGES IN GENERAL LONG-TERM DEBT FOR THE YEAR ENDED APRIL 30, 1983 PO Bond Issues Series Series Series Series 1967 1967-A 1972 1974 Totals PO t+. Interest Rate 5.00% 6.00% 6.75% 6.75% to 7.70% Dates Interest Payable 8/1, 2/1 8/1, 2/1 10/1, 4/1 9/1, 3/1 - p Bonds Outstanding at Beginning of Current Year $400 000 $650 000 $560 000 $750 000 $2 360 000 Bonds Sold During Current Year - - - - - Retirements: Principal $ 75 000 $ 10 000 $ 10 000 $ 10 000 $ 105 000 Bonds Outstanding at End of Current Year $325 900 $640 000 $550 000 $740 000 $2 255 000 rP Retirements: Interest $ 20 000 $ 39 000 $ 37 800 $ 56 035 $ 152 835 r Paying Agent's Name & Address Series /A 1967: Allied Bank of Texas, Houston, Texas Series 1967A: Allied Bank of Texas, Houston, Texas [111 Series 1972: Allied Bank of Texas, Houston, Texas 1! Series 1974: Allied Bank of Texas, Houston, Texas I! Bonds Voted: $6,480,000 Bonds Approved: $4,500,000 Bonds Sold: $2,850,000 1! 20 Schedule A-4 !! CLEARWOODS IMPROVEMENT DISTRICT SCHEDULE OF TEMPORARY INVESTMENTS FOR THE YEAR ENDED APRIL 30, 1983 1/ 4 Accrued 71 Interest Interest Maturity Face Receivable Rate Date Amount April 30, 1983 7! Debt Service Fund Certificate of Deposit 8.00% 7/25/83 $58 673 $424 No. 480401364 11, 4111 411, 71 1! 11 I 0 4 4 11, 401 21 Schedule A-5 4, CLEARWOODS IMPROVEMENT DISTRICT 1111 ANALYSIS OF TAXES RECEIVABLE AS OF APRIL 30, 1983 p Taxes Receivable, May 1, 1982 $ 21 956 1982 Original Tax Roll $272 16111 Adjustments 448 271 713 Total to be accounted for 293 669 OR Tax Collections - Current year 260 381 Prior year 18 479 278 860 Taxes Receivable, April 30, 1983 $ 14 809 Taxes Receivable by Years: 1982 $ 11 780 1981 945 1980 1 228 1979 395 1978 235 1977 226 ri Total Taxes Receivable $ 14 809 Assessed Valuation Summary Property Valuations 1982 1981 1980 1979 1978 Land $ 7 691 700 $ 7 716 700 $ 8 167 700 $ 7 998 200 $ 8 087 200 Personal Property 797 940 795 600 910 800 777 900 718 400 Improvements 33 381 300 33 343 300 37 100 600 35 572 700 33 430 6G0 !, Total Valuations $41 870 940 $41 855 600 $46 179 100 $44 348 800 $42 236 200 Tax Rate per $100 Valuation $0.65 $0.65 $0.65 $0.65 $0.65 Tax Year: January 1, 1982 to December 31, 1982 Percent of the assessed valuation to fair market price 100 % Percent of current taxes collected to current taxes levied 95.7% 111 Percent of current and deliquent taxes collected to current and delinquent taxes outstanding at beginning of tax year 95.0% r r r 22 Schedule A-6 CLEARWOODS IMPROVEMENT DISTRICT 4 DISTRICT ORGANIZATIC)NAL COSTS APRIL 30, 1983 Balances Balances May 1, 1982 April 30, 1983 Financial Advisors Fees $ 16 250 $ 16 250 7! Discount on Sale of Bonds 14 414 14 414 Bond Issue Costs 1 821 1 821 Bond Interest 245 349 245 349 Other Costs 3 066 3 066 Interest on Temporary Investments (135 825) (135 825) 41 Legal Fees 154 804 154 804 41 TOTAL $299 879 $299 879 14, Amounts Provided By: Capital Projects Fund $299 879 $299 879 11 4, 4 41 a qi 140 23 ANNUAL FILING AFFIDAVIT THE STATE OF TEXAS COUNTY OF HARRIS Before me, the undersigned authority, on this day personally appeared ROBERT H. BOGER , President of the Board of CLEARWOODS IMPROVEMENT DISTRICT, known to me to be the person whose name is hereunder subscribed, and who, being by me duly sworn, upon oath says: I hereby duly swear that to the best of my knowledge the District named above has complied in full with all annual audit report filing requirements of Section 50.374 of the the Texas Water Code by filing copies of its annual audit report for the fiscal year ending April 30, 1983, in the District's office and with the following city or county listed below: City of itn.a7s=7 Ti(e-n e s w- County of Harris Dated /& ' , 1983 By P sident , OBERT1 OGER Sworn to and subscribed before me this (v day of &44: 1983. Notaf public, Harris Cou yf exas Commission Exp. October 31, 1985 November 14 , 1983 To: Jim Morgan, City Manager From: Jan Jordan Subject: Annexation on November 21 , 1983 of Clear Woods Improvement District by the City of Frien.dswood ************************************************************************ I have reviewed the minutes of the Clear Woods Improvement District meetings for the last six months and have found the following items which you should check on . You should clear these inquiries with Mr. Robert Boger , President of the board of directors of the. district . 1 . Ask Smith & Murdaugh to deliver its files to City Hall so that we may review all of the district ' s contractual obligations. This should be done this week. 2. Ask Smith & Murdaugh if the district ' s audit as of April 30, \CP-rjHrA;A,1983, is available yet , even if only in draft form. Thisqaudit would provide a lot of information concerning districto bank account locations . If no draft is available, ask for the audit for FYE 4-30-82. 3. Is there a contract whereby CWID sells water to Harris County for the Frankie Carter Randolph park? There is mention in the minutes of possible "overusage" by the County at the park. 4. Designate one city official to work with Betty Hillman in coVrdinating water and sewer pilling. Betty and Mr . Boger have both told me they will cooperate in whatever way possible . Betty has suggested that someone from the city visit her office to pick up a computer printout of the billing list , complete with name , address and last meter reading. Betty also highly recommends that a city employee ride with her meter readers this month to ascertain the location of all meters . This should be done this week as her readers will be out reading meters this week . 5. Ask Smith & Murdaugh if the sewage treatment plant is leased ( in which case, find out who owner is and get a copy of the lease agreement) . There is mention in the minutes of a "Royal leased sewage treatment plant . " If the plant was purchased by the district , when was it purchased? I �s made **************** Mr, Kent any writte me ce to the egarding n nts were req`ir pes�ed tie s. b L!t mindr utes e 8 if delinq�1e to del inquentidgestone qt taxes Provide The Tax Part_ • Also, possiPrintout of NHS inujui terdon & bly this in �,� s. Al s Gordon, delis P v1ew of °"Idgeston,, A o, fend out i gi1ent lannin tr, partments. ,is might 17� 9 and zon - s t for a be useful inform If tuseful ation this coming Thursday, Novemberbe . Reference the Se September minutes, is the District withholdin Y payments from Gulf Coast Waste Disposal g sewage treatment service? If so, how far in arrearso(lty for is the district? wise) ) . Attached for your reference are the minutes and the following are names , address and phone numbers which may be of assistance to you: Mr . W . James Murdaugh, Attorney Mrs . Betty Hillman, c/o Smith & Murdaugh system operator and keeper 1811 Houston Natural Gas Building of records for operating fun Houston, TX 77002 658-8315 c/o Water District Services 4234 Richmond Myrtle CruzHouston, TX 77027 623-6185 c/o Myrtle Cruz , Inc . (bookkeeper) 1617 Fannin #900 Mr . Robert Boger 482-5847 Houston, TX 77002 759_1368 Bill Spencer (tax assessor/collector) 5318 Pasadena Blvd. 479-7798 .,p Deer Park, TX 77536 Hillman , we need to SinceSchenk in executive session (personnel) next the district has nocontract with rs . contract with her 10 , with Larry will want to discuss 21 whether the City Week and get the billing Monday Nov . t her office this her meter readers , we can If we visit ee Tide be considerable . I or not , our employ could on this . ..1,65 and h�v that expense , n manage s comments -.; t v 11/ Schedule A=7 CLEARWOODS IMPROVEMENT DISTRICT IP ANALYSIS OF CHANGES IN GENERAL FIXED ASSETS APRIL 30, 1983 May 1, 1982 *Reductions April 30, 1983 Drainage System $ 608 329 $ 608 329 imp Sewer System 1 289 873 $ (21 068) 1 268 805 Water System 653 800 653 800 MI Engineering 255 027 255 027 41 Land 29 622 29 622 TOTAL $2 836 651 $ (21 068) $2 815 583 140 Amounts Provided By: 41 General Fund $ 105 920 $ 105 920 41 Capital Projects Fund 2 727 231 $ (21 068) 2 706 1E3 Contributed by Developers 3 500 3 500 MO $2 836 651 $ (21 068) $2 815 583 101 *The reduction of $21,068 relates to the settlement by the District during 1982 of an amount previously disputed related to the 1981 expansion of the Blackhawk Regional Sewage Treatment Plant. See Note (11) . 41 41 4 40 25 SMITH 8 MURDAUGH ATTORNEYS AT LAW W. JAMES MURDAUGH, JR. CYRIL J. SMITH HERMAN I. LITTLE, JR. 1811 HOUSTON NATURAL GAS BUILDING (1904-1982) CLAY E. CRAWFORD 1200 TRAVIS STREET JAMES D. BONHAM HOUSTON TEXAS 77002 ERIK POAG LITTLEJOHN 713/S58-8315 STEVEN D. KATZ October 24 , 1983 Ms. Bobbie Henry City Secretary City of Friendswood 109 Willowick Friendswood, Texas 77546 Re: Clearwoods Improvement District Dear Ms. Henry: Pursuant to the requirements of Section 50.734 (c) of the. Texas Water Code, I am enclosing for the City' s files the audit of the above district' s fiscal accounts. through April 30 , 1983. Very truly ours , ames Murdaugh, t orney for the D ' rict WJM/pl Enclosures Schedule A-8 IP 4- 4 CLEARWOODS IMPROVEMENT DISTRICT OP COMPARATIVE SCHEDULE - REVENUES AND EXPENDITURES FIVE YEARS ENDED APRIL 30, 1983 IP Amount 1983 1982 1981 GENERAL FUND REVENUES: OP Service revenues $299 326 $238 366 $231 304 t* Tap connection revenues 32 428 105 168 3 100 Penalty and interest revenues 8 887 6 613 10 493 Insurance claim proceeds 3 241 - _ PO w Total General Fund Revenues 343 882 350 147 244 897 IIP GENERAL FUND EXPENDITURES: Purchased sewer services 64 394 104 230 - " Professional fees 21 920 21 271 20 414 Purchased & contracted services 63 150 60 725 63 245 PP Consumable supplies and materials 4 486 1 599 3 010 Recurring operating expense 122 650 112 115 151 860 Water tap expense 6 620 1 585 2 175 IP Total General Fund Expenditures 283 220 301 525 240 704 EXCESS GENERAL FUND REVENUES PP OVER EXPENDITURES $ 60 662 $ 48 622 $ 4 193 DEBT SERVICE FUND REVENUES: p Tax revenues $278 877 $276 487 $290 178 i Penalty and interest 4 933 6 911 2 300 Interest on investments 10 922 6 211 20 578 , Total Debt Service Revenues 294 732 289 609 313 056 DEBT SERVICE FUND EXPENDITURES: OP Tax collection expenditures 13 888 9 912 9 973 Debt service interest and fees 153 333 157 510 164 713 Debt service principal _ 105 000 80 000 80 000 PO Total Debt Service Expenditures 272 221 247 422 254 686 EXCESS DEBT SERVICE REVENUES OVER EXPENDITURES $ 22 511 $ 42 187 $ 58 370 Average Annual Unpaid Bond Principal and Interest $178 922 $182 509 $184 890 Coverage (Excess General Fund Revenue plus net Tax Revenue : Average PP Annual Unpaid Bond Principal and Interest) 1.68 1.73 1.54 100 No. of Water & Sewer Customers (year end) 1 364 1 221 1 220 Total Water Pumped into System ('000's gallons) 146 989 136 810 159 466 OP Total Water Billed to Customers ( '000's gallons) 144 808 123 595 139 394 26 IP MO 11. Percent of Fund Totals 1980 1979 1983 1982 1981 1980 1979 $227 463 $193 956 87.1% 68.1% 94.4% 87.5% 90.0% 10 552 13 580 9.4 30.0 1.3 4.1 6.3 21 964 7 874 2.6 1.9 4.3 8.4 3.7 411 - - .9 - - - - 259 979 215 410 100.0 100.0 100.0 100.0 100.0 RR - - 18.7 29.8 - -• - 24 979 22 250 6.4 6.1 8.3 9.6 10.3 Mil 42 434 37 275 18.4 17.3 25.8 16.3 17.3 2 540 2 230 1.3 0.5 1.2 1.0 1.0 112 136 94 873 35.7 32.0 62.0 43.1 44.0 In 4 545 6 325 1.9 0.5 0.9 1.7 2.9 186 634 162 953 82.4 86.2 98.2 71.7 75.5 411 4 $ 73 345 $ 52 457 17.6% 13.8% 1.8% 28.3% 24.5% MI , $289 630 $275 212 94.6% 95.5% 92.7% 94.3% 93.2% 5 264 3 258 1.7 2.4 0.7 1.7 1.1 S 12 197 16 868 3.7 2.1 6.6 _ 4.0 _ 5.7 307 091 295 338 100.0 100.0 100.0 100.0 100.0 MO 8 900 11 132 4.7 3.4 3.2 2.9 3.8 168 693 169 644 52.0 54.4 52.6 54.9 57.4 75 000 65 000 35.6 27.6 25.6 24.4 22.0 MI 252 593 245 776 92.3 85.4 81.4 82.2 83.2 gm $ 54 498 $ 49 562 7. 7% 14.6% 18.6% 17.8% 16.8% III $187 260 $189 403 ill 1.89 1.67 4411 1 210 1 117 4' MO 122 346 146 404 w 112 372 139 432 27 Schedule A-9 CLEARWOODS IMPROVEMENT DISTRICT INSURANCE COVERAGE APRIL 30, 1983 OP Amount OP of Type of Coverage From To Coverage PLANT AND EQUIPMENT O' Fire and lightning, extended coverage, explosion, vandalism and malicious p mischief 6-14-80 6-14-83 $209,500 EMPLOYEE HONESTY, ETC. OP Tax Assessor/Collector 1-01-83 12-31-84 10,000 Directors 2-15-82 2-15-85 5,000 PP each directo* FLOOD INSURANCE / Sewer Pump Building and one Lift Station - 15,000 Building Contents 9-01-82 9-01-83 10,000 Po COMPREHENSIVE GENERAL LIABILITY Liability and Contractual Liability Bodily injury, per person and aggregate 6-22-82 6-22-83 300,000 Property damage, per person and aggregate 6-22-82 6-22-83 100,000 PP I PP 1110 r s fp r 28 p 011 Type of Policy 11 Corporation Clause Ai Insurer Stock/Mutual Co-Insurance 11 National Surety Corporation Stock Yes 80% 411 The St. Paul Insurance Company Stock No 41 The St. Paul Insurance Company Stock No 41 National Flood Insurers Corporation Stock Yes 80% IR 111 National Surety Corporation Stock No 41 A 4 410 4110 40 R1 41 41 29 A Schedule A-10 a CLEARWOODS IMPROVEMENT DISTRICT BOARD MEMBERS, KEY PERSONNEL AND CONSULTANTS APRIL 30, 1983 OP Relationship with Major Land Term of _ Board Members Owners, Engi- !► Office Resident neer, Attorney Elected & Annual of & Tax Assessor- Expires Salary Title District Collector PP Robert H. Boger 4-02-83 Per Diem President Yes None 5115 Royal Parkway 4-02-85 Friendswood, Texas 77546 PP w Lee B. Simmons 4-02-83 Per Diem Vice Pres. Yes None 15747 Wandering Trail 4-02-85 PP Friendswood, Texas 77546 Herman M. Hayley 5-01-82 Per Diem Secretary Yes None PP 5315 Shady Oaks Lane 4-30-84 Friendswood, Texas 77546 William M. Fuss 4-02-83 Per Diem Yes None P 16330 Forest Bend 4-02-85 Friendswood,Texas 77546 OP Peter S. Cunningham 5-01-82 Per Diem Yes Noneii 5219 Shady Oaks Lane 4-30-84 Friendswood, Texas 77546 r Fees Date Paid Hired District Operator PP G' Water District Service Co. 2-15-67 $61 650 No 4234 Richmond A Houston, Texas 77027 District (Legal Counsel) PP W. James Murdaugh 4-29-66 $13 312 No (Smith & Murdaugh) 1811 Houston Natural Gas Bldg. r Houston, Texas77002 District Tax (Assessor-Collector) William Spencer 3-07-73 $ 8 162 No 5318 Pasadena Blvd. Deer Park, Texas 77536r r 30 I I I I I U U U U QUESTIONNAIRE COMPLETED BY AUDITOR U U U U q U U U 40 g Scheule A-11 CLEARWOODS IMPROVEMENT DISTRICT p QUESTIONNAIRE TO BE COMPLETED BY AUDITOR FOR THE YEAR ENDED APRIL 30, 1983 p 1. At the time that you were engaged by the Board of Directors of the above named district to perform this audit, was a copy of the Water District Accounting Manual made available to you? X Yes No 110 2. The Water District Accounting Manual prescribes accounting methods and policies. After taking these into consideration, did the local water district: a. Maintain a proper classification of expenditures and revenues? X Yes No b. Record expenditures and revenues according to GAAP and consistent with the type of accounting system utilized? X Yes No c. Maintain the double-entry system of accounting? X _ Yes No A d. Keep a general ledger in accordance with the uniform classification of general ledger accounts prescribed in the Water District Accounting Manual? X Yes No WI e. Adhere to other provisions of the Water District Accounting Manual? X _ Yes No 3. Did the Board of Directors of the water district impose on you any audit requirements in addition to those stated in the Annual Audit Report Requirements? X Yes No 4. Did you identify, during the course of your examination of the financial statements of the water district, any areas pertaining to accounting matters in which action should be taken by the Board of Directors of the water district? X Yes No 5. Did you obtain representation from the Board of Directors of the water district that all records of the water district were made available to you for your examination? X Yes No S 6. Did the water district: RI a. Use the capital projects fund and debt service fund only for the purposes authorized by the Board of Directors of the water district and/or within the provisions of the applicable bond resolutions? .X 33 Yes No PO CLEARWOODS IMPROVEMENT DISTRICT O► QUESTIONNAIRE TO BE COMPLETED BY AUDITOR FOR THE YEAR ENDED APRIL 30, 1983 OP Continued b. Properly escrow the required amount of cash as prescribed OP by the Texas Water Commission or disburse the escrowed cash according to the terms prescribed by the Texas Water Commission? X OP Yes No c. Do business only with firms or corporations in which members of the Board of Directors had no pecuniary interest? X OP Yes No d. Observe the conditions for obtaining grants, gifts, etc. , OP or observe agreements with governmental agencies for the purpose of securing funds or services? X Yes No IPP e. Have a contract for Social Security coverage for its employees with the Texas Employees Retirement System? X* Yes No P 4 f. Make remittances of Social Security taxes according to the terms of the contract for Social Security coverage with OP the Social Security Division of the Texas Employees Retirement System? X* Yes NO OP g. Deposit receipts to the proper funds kept by the approved depository bank? X Yes No h. Draw checks only on funds approved by the Board of Directors and signed by authorized personnel? X Or Yes No 7. Did you issue a management letter to administrative officials of 01/ the water district which sets forth your comments (based on matters which came to your attention during your examination) for strength- ening internal controls and improving administrative efficiency and procedures? X k Yes No a. Were your recommendations explained to and discussed with administrative officials of the water district? X Yes No b. The date of your most recent management letter was 0 June 27 1983. 0 *The District has no paid employees. 0 34 PI CLEARWOODS IMPROVEMENT DISTRICT QUESTIONNAIRE TO BE COMPLETED BY AUDITOR FOR THE YEAR ENDED APRIL 30, 1983 01 Continued c. Is there evidence indicating that your previous year's 400 recommendations have been or are being implemented? X ` Yes No 01 d. Has a copy of the management letter been filed with the Texas Department of Water Resources? X Yes No 8. The Texas Water Code makes specific provisions relating to security provided by depository banks. After consideration 01 of the applicable laws pertaining to the specific water district, did the depository bank provide adequate security of the correct type? X 4, Yes No Please indicate for each depository: 01 a. Name Texas Commerce Community Commonwealth Bank Nat'l Bank Savings 4, b. Amount of I .D.I.C. coverage $500 000.00 $100 000.00 $100 000.00 40 c. Amount of bond or other security pledged 1110 as of the end of the fiscal year - - - d. Largest cash balance $130 832.72 $ 57 202.36 $ 75 958.42 41 e. Date of largest cash balance 12-17-82 03-31-83 02-28-83 40 f. Amount of bond or security pledged at the time of the largest cash balance (exclud- ing F.D.I.C. coverage) 0 1111 35 CLEARWOODS IMPROVEMENT DISTRICT OP QUESTIONNAIRE TO BE COMPLETED BY AUDITOR FOR THE YEAR ENDED APRIL 30, 1983 OP Continued OP 9. The water district's taxes were collected by (check one) : OP a. An employee of the district p b. The county tax assessor-collector ` O c. A city or other tax assessor-collector X 01 d. More than one of the above PP 10. Was the tax-assessor collector bonded as required by law? X Yes No 11. What was: OP a. The tax assessor-collector bonded for? $ 10 000.00 b. The greatest amount of the district's taxes in the tax assessor-collector's possession at any one time? $ 73 268.65 c. The frequency of the tax receipts deposited with the bonded depository? /R 1) Daily (December) X 2) Weekly (balance of year) 3) Monthly d. The precent of the assessed valuation to fair market value? 100.0% PP 0 PP p 36 ON CLEARWOODS IMPROVEMENT DISTRICT QUESTIONNAIRE TO BE COMPLETED BY AUDITOR FOR THE YEAR ENDED APRIL 30, 1983 411 Continued 40 12. We (check one) : a. Actually examined the records of the tax assessor-collector. X MO b. Received written confirmation for tax data from the tax assessor-collector. MO c. Accepted tax data furnished by the district's office. 4111 13. As a result, were local tax revenues (including delinquent taxes and interest and penalties on taxes) properly separated for debt service? X °0 Yes No 14. Was the water district in compliance with applicable bond 44 resolutions, with the general or special legislation under which the district was created and with specific statutes excerpted and included in the Legal Compliance Guidelines in Section 70-03-1 of the Water District Accounting Manual? X* 4111 Yes No '* *The District bond resolutions require a complete engineering inspection report annually. A complete inspection report has not been made, however, specific engineering reports are made and the Engineer is consulted for all additions +m and expansions. The provisions of the bond resolutions relating to debt service requirements have not been met. The bond Orders state that the District is to transfer on A a monthly basis to the Debt Service Fund, commencing when any part of the water and sewer system is placed in operation, an amount not less than one-sixth of the next maturing installment of interest and an amount not less than one- '. twelfth of the next maturing installment of the principal. In addition, an amount equal to 20% of such monthly payments is to be paid to the Debt Service Fund until the balance is equal to the total principal and interest requirements for the current year and the next succeeding year. At the Balance Sheet date, 44 the Operating and Tax Fund Revenues have not been sufficient to make payments required by the Bond Order. However, the ad valorem tax levied by the District and the restricted cash and temporary investments have been sufficient to meet 44 the annual bond principal and interest payments in the past and there is no indication that the requirements will not be met in the future. MO 44 37 I� ■ I I 10 U • CERTIFICATE OF THE BOARD OF DIRECTORS II qi A Schedule A-12 40 1111 .44 11 CERTIFICATE OF THE BOARD OF DIRECTORS .444 CLEARWOODS IMPROVEMENT DISTRICT Harris 40 Name of Water District 40 4 qi We, the undersigned, do hereby certify that the audit report of the above named water district for the fiscal year ended April 30, 1983 was received by the Board of Directors on the 8th day of August , 1983 l! and was reviewed and /x/ approved / / disapproved at a meeting of the Board of Directors on the rtzry of ZepLcmLc� , 1983. tom Rohe-+� Signature of Boar • .ry Signature/eI oard 1110 4e 1410 41 4 410 4 4 t a I I 4 I MANAGEMENT LETTER gll 41111 SO 4111 qi IR bQEEDLOVE oco CERTIFIED PUBLIC ACCOUNTANTS RICHARD W.BREEDLOVE DONN A.LAND 3730 F.M.1960 West,Suite 300 363 North Belt,Suite 450 Houston,Texas 77068 Houston,Texas 77060 (713)440 3347 (713)448-2221 August 1, 1983 Board of Directors Clearwoods Improvement District Harris County, Texas RE: Year ended April 30, 1983 Dear Board Members: We have examined the financial statements of the above named District. As AN part of our examination, we made a study and evaulation of the District's System of internal accounting control to the extent we considered necessary to evaluate the system as required by generally accepted auditing standards. Under these standards, the purpose of such evaluation is to establish a basis for reliance thereon in determining the nature, timing, and extent of 11 other auditing procedures that are necessary for expressing an opinion on the financial statements. There are inherent limitations that should be recognized in considering the potential effectiveness of any system of internal accounting control. Pro- jection of any evaluation on internal accounting control to future periods is subject to the risk that the procedures may become inadequate because of changes in conditions and that the degree of compliance with the procedures may deteriorate. Our study and evaluation of the District's system of internal accounting control for this specific year ended, which was made for the purposes set forth in the first paragraph above was not designed for the purpose of ex- pressing an opinion on internal accounting control, and it would not neces- sarily disclose all weaknesses in the system. No major internal control 4 weaknesses were noted during the examination of the District's financial statements for the period then ended. Very truly yours, 47c/..4. Richard W. Breedlove I I