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HomeMy WebLinkAbout1977 03 31 Single Audit Report - Harris county water control and improvement district No.108 HARRIS COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 108 TABLE OF CONTENTS March 31, 1977 Auditors ' Report Balance sheets , all funds EXHIBIT A Statement of revenues, expenses and fund balance, all funds EXHIBIT B Statement of changes in cash, all funds EXHIBIT C Analysis of changes in general long-term debt EXHIBIT D • General long-term debt service requirements, by years EXHIBIT E 411/4. Notes to financial statements EXHIBIT F Auditors ' Report on Supplemental Statements Schedule of temporary investments Schedule 1 Analysis of changes in taxes receivable Schedule 2 Analysis of changes in general fixed assets Schedule 3 Analysis of changes in district organizational costs Schedule 4 Insurance coverage Schedule 5 Other Supplemental Information: Questionnaire To Be Completed By Auditors Schedule A Questionnaire To Be Completed By Board Of Directors Schedule B Board Members, Key Personnel, and Legal Counsel Schedule C Certificate of Board of Directors Schedule D LAFRANCE, WALKER, XJACKLEY & SAVILLE • CERTIFIED PUBLIC ACCOUNTANTS • 1110 NASA RD_ ONE • HOUSTON, TEXAS 77058 OFFICES IN PRINCIPAL CITIES-FOREIGN AFFILIATES 713/488-8324 June 15, 1977 To the Board of Directors of Harris County Water Control and Improvement District No. 108 We have examined the balance sheet, all funds, of Harris CountyWater Control and Improvement District No. 108 p ( a political subdivision of the State of Texas) as of March 31, 1977, and the related statements of revenues, expenses and fund balances, all funds, and changes in cash, all funds, for the year then ended. The analysis of changes in general long-term debt and general long-term debt service requirements by years were also included in this examination. 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 considered necessary OW- in the circumstances. } In our opinion, the statements referred to above present fairly the financial position of Harris County Water Control and Improvement District No . 108 at March 31, 1977, and the results of its operations and, the changes in its cash position for the year then ended, in conformity with generally accepted accounting principles, as appli- cable to governmental units, applied on a basis consistent with that of the preceding year. X41.4.04-1-e-1 Aft `w { 1 EXHIBIT A HARRIS COUNTY WATER CONTROL AND IME BALANCE SHEET, ALL FUNDS General General Long-Term Fixed Assets Debt-Fund Fund ASSETS AND OTHER DEBITS Current assets - Unrestricted cash 1.014 Restricted cash Total cash - - Unrestricted temporary investments Restricted temporary investments Reserve account - Series 1971 bonds Total temporary investments - Schedule 1 - - Total cash and temporary investments Accounts receivable and accrued revenues Prepaid insurance Total current assets - - Taxes receivable - Schedule 2 - - General fixed assets (at cost) - Schedule 3 - $2, 033, 938 Intangible and other assets - District organizational costs - Schedule 4 270, 812 Bond discount, less.. amortization of $19, 999 Total intangible and other assets - 270812 Provision for bonded debt 2, 730, 000 - Total assets and other debits >2, 730, 000 $2, 304, 750 LIABILITIES AND FUND BALANCES Current liabilities - Accounts payable and accrued expenses Refundable deposits Total current liabilities - - Long-term liabilities - bonds payable, EXHIBIT 12,730,000 - Fund balances - Unallocated fund balances Investment in uncollected taxes Allocated from net system revenues $ 113, 990 Allocated from sale of bonds 2,190, 760 Unamortized discount on sale of bonds Reserve account reserve - Series 1971 bonds Total fund balances - 2, 304, 750 Total liabilities and fund balances >2,730,000 $2, 304 ,750 * Fund closed out. ) financial statements EXHIBIT B HARRIS COUNTY WATER CONTROL AND IMPRO _ _ STATEMENT OF REVENUES, EXPENSES AND F For The Fiscal Year Ended Cons- General auction Fixed Assets Fund Fund Operating revenues - Water and sewer service Ark Taxes collected Penalty and interest Total operating revenues - - Operating expenses - Purchased sewer services Contracted services Professional fees Utilities Repairs and maintenance Recurring operating expenses Total operating expenses - - Net revenues from operations - - Non-operating revenues/ (expenses) - Tap connection fees Interest earned Miscellaneous revenue and expense - (net) Tap connection expense Bond principal paid Bond interest paid Amortization of bond discount Total non-operating revenues/ (expenses) - - Net revenues/ (expenses) - - Additions to fund balances - Transferred from Tax Fund Transferred from Construction Fund Transferred from General Operating Fund Taps capitalized $ 830 Total additions to fund balances - 830 Deductions from fund balances - Transferred to Debt Service Fund Transferred to General Operating Fund ;3,1066 Decrease in uncollected taxes Prior years adjustment - (Note 14) Total deductions from fund balances 3,106 - kook Net change in fund balances for the year :3,106) 830 Fund balances, March 31, 1976 3,106 2, 303, 920 Fund balances, March 31, 1977 - $2, 304, 750 financial statements HARRIS COUNTY WATER CONZ STATEMENT OF C For The Fiscal Ark Sources of cash - Cash receipts from operations Cash disbursements for operations Net cash from operations Cash received from non-operating r Cash transfers from other funds Cash received from customer deposi Total cash provided Application of cash - Non-operating expenses Cash transfers to other funds Total cash applied Increase/ (decrease) in cash Cash and temporary investment balanc' at March 31, 1976 Cash and temporary investment balanc( at March 31, 1977 EXHIBIT D HARRIS COUNTY WATER CO ANALYSIS OF CHA For The Fisca Bonds Outstanding March 31, 1977 Paying Agents Harris County Water Control and Im] Allied Bank of Texas ment District No. 108 Waterworks Houston, Texas Sewer System Combination Tax and First National Bank Revenue Bonds, Series 1970A $ 360,000 Denver, Colorado Harris County Water Control and Im] Allied Bank of Texas ment District No. 108 Waterworks Houston, Texas Sewer System Combination Tax and First National Bank Revenue Refunding Bonds, Series : 590,000 Denver, Colorado Harris County Water Control and Im' ment District No. 108 Waterworks Sewer System Combination Tax and Allied Bank of Texas Revenue Bonds, Series 1971A 1 ,260,000 Houston, Texas Harris County Water Control and Imp Allied Bank of Texas ment District No. 108 Waterworks Houston, Texas Sewer System Combination Tax and First National Bank Revenue Bonds, Series 1972 520,000 Denver, Colorado Totals $ 2, 730, 000 Bonds voted $3,000,,1 statements Bonds approved for sale $2 ,800, Bonds sold $2,800, EXHIBIT E HARRIS COUNTY WATER CONTROL . 'walk GENERAL LONG-TERM DEBT SERVI March Series 1970-A Series 1972 Interest Interest Principal Due al Due Total Fiscal Due April 1, April 1, Annual Years October 1 October 1 Total October 1 Total Requirements 1978 $15, 260 $15, 2 $17,550 $17,550 $109,029 1979 $10, 000 30, 095 40, 00 34, 869 39, 869 249, 845 1980 10, 000 29,245 39,20 34 ,531 39,531 245,002 1981 10, 000 28 ,395 38 , 30 34, 087 44 ,087 251,313 1982 10, 000 27,545 37, 50 33,412 43,412 247,200 1983 10, 000 26,695 36 , 60 32, 738 42, 738 247, 908 1984 15, 000 25, 845 40,80 32,062 42,062 248,432 1985 15, 000 24, 570 39,50 31,387 41, 387 253,157 1986 15, 000 23,295 38, 20 30,713 40,713 247,508 1987 15, 000 22,020 37 ,00 29, 869 44 ,869 251,508 1988 15, 000 20, 820 35, 80 28, 856 43,856 250, 038 1989 15, 000 19,620 34 ,60 27,844 42,844 248,195 1990 15, 000 18 ,420 33 , 40 26 , 831 41, 831 250,733 filik 1991 15, 000 17,220 32,20 25,650 45,650 247,663 1992 15, 000 15, 960 30, 90 24, 300 44, 300 248, 985 1993 15, 000 14, 700 29,70 22, 950 42, 950 244,738 1994 20, 000 13 ,440 33,40 21, 600 41, 600 249, 840 1995 20, 000 11,760 31,70 20,081 45,081 248,697 1996 20,000 10,080 30, 00 18 , 394 43,394 246,805 1997 20, 000 8,400 28,40 16,200 56,200 253,825 1998 20,000 6,720 26,70 13,331 58, 331 254,589 1999 20, 000 5, 040 25, 00 10,125 60,125 259,046 2000 20,000 3,360 23,30 6,412 66,412 266,835 2001 20, 000 1, 680 21, 60 2,194 67,194 259,305 Totals $360, 000 $420,185 $780 ,10 $575, 986 $1,095, 986 . $5, 880,196 See notes to financial statements Cash and Temporary Investment Balanc Debt Service Fund $103 ,8 Tax Fund 12,3 illim $116,1 EXHIBIT F Page 1 of 5 HARRIS COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 108 NOTES TO FINANCIAL STATEMENTS March 31, 1977 Note 1: Creation of the District - Harris County Water Control and Improvement District No. 108 was created by an order of the Texas Water Rights Commission on October 22, 1968 . The Board of Directors held its first meeting on November 7, 1968 and the first bonds were sold on August 31, 1970 . Summary of accounting policies - Note 2 : Accounting requirements of the Texas Water Rights Commission - The Texas Water Rights Commission adopted a "Water District Accounting Manual" in 1974 , and the use of the Manual by all water districts was required by the Commission beginning January 1, 1975 . The financial statements contained in this report generally conform to the requirements of the Manual . The accrual basis of accounting is followed by the District and all financial statements were prepared on this basis, except for the statement of changes in cash-all funds, which was prepared on the cash basis of accounting. Also bond interest expense and tax revenues are reported on the cash basis, but the net change in taxes receivable is included in the fund balance of the Tax Fund. Note 3: Debt service payments - Debt service of $140,172 due on April 1, 1977 and bond principal of $5, 000 due on October 1, 1977 were paid prior to the fiscal year end and are included in Debt Service Fund expenses; these amounts were not included in debt service requirements schedules for the 1978 fiscal year. Note 4 : Accounting for capital items The District capitalized all costs associated with its creation which included all direct costs of the sale of bonds, except for bond discounts. From the date of the sale of bonds through the date of completion of related improvements , interest expense and interest income related to these funds, and amortization of bond discount, were also capitalized. These amounts have been shown on the balance sheet as district organizational costs and are not being amortized as recommended by the Manual. Bond discounts have been deferred and are being amortized over the life of the applicable bond issue in relation to the principal amount outstanding; the amounts amortized are included in Debt Service Fund expenses. The costs of meters and boxes and residential lines are included in the General Fixed Assets Fund. Any reimbursements received to offset such 411 costs are shown as an addition to the General Operating Fund when received. Detailed fixed assets records are not presently maintained and the District has the policy of expensing currently any repair or maintenance item which does not extend the life of the asset or increase the assets ' valuation. Depreciation is not provided in accordance with the recommendations of the Manual. EXHIBIT F Page 2 of 5 Summary of accounting policies - (Continued) Note 5 : Water and sewer service billings - Monthly billing dates for water and sewer service were changed during the fiscal year from reading meters on or about the 25th of the month to the 15th of the month. Accordingly, the estimated water and sewer service "a' revenue from March 16, 1977 to March 31, 1977 have not been included in revenues for the fiscal year, but this revenue is offset, in part, by the inclusion of revenue for the period March 26 , 1976 to March 31, 1976, which pertains to the prior fiscal year. The fiscal year beginning April 1, 1977 will include one full year of revenue covering the period from March 16, 1977 to March 15, 1978; each year thereafter will similarly include one full year of revenue . The net effect of this change for fiscal 1977 is not material, having understated water and sewer revenues by approximately $3 , 000 . Bond Order and legal requirements - Note 6 : Pledge of revenues - All of the District's 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 be received from the operation of the District's waterworks and sanitary sewer system after deduction of reasonable cost of administration, effi- cient operation and adequate maintenance of the District's service faci- lities in the manner provided by Chapter 217 , Acts of the Regular Session ' of the 52nd Legislature of Texas, 1951 . Note 7: Debt service requirements - Series 1970-A - 1971-A - 1972: The Bond Orders for the above-named series of bonds require that while said bonds or any part of the principal and interest thereof are outstanding and unpaid, there shall be levied an ad valorem tax upon all taxable property within the District sufficient in amount to pay the interest on such bonds, together with an additional amount to be placed in the sinking fund sufficient to redeem such bonds at their maturity. At such time as the net revenues from operation of the system, pledged to the payment of these bonds, together with money derived from taxes, may have accumulated a surplus in the sinking fund equal to the sum to be required in the succeeding year to pay the interest and principal of the District 's obligations maturing in that year, the District' s annual tax levies may be lowered to produce not less than 25% of the bond matu- rities for each succeeding year. Whenever the actual experience of three consecutive years demonstrates that the net revenues are adequate to protect the maturities of the District ' s obligations, the District's tax may be wholly abated, until further experience demonstrates the 'k necessity to again levy taxes to avoid default in the payments of the District's obligations as they may mature . Series 1971: The Bond Orders of the Series 1971 bonds require (1) the establish- ment of a Reserve Account, (2) setting out from the net revenues of the system an amount equal to 1/6th of the next maturing installment of EXHIBIT F Page 3 of 5 Note 7 : Debt service requirements - (Continued) interest, and (3) commencing not later than one year prior to the first maturity of principal, an amount equal to 1/12th of the next maturing installment of principal, and (4) a sum equal to 20% of the total monthly principal and interest requirements for the next maturity of principal and interest shall be paid into the Bond Fund (i.e. Debt Service Fund) until A► said fund, including the Reserve Account, shall consist of a sum equal to the total principal and interest requirements for the current year, plus • a sum sufficient to pay the principal and interest for the next succeeding year. After such Reserve Account shall have been accumulated, as provided above, and so long as it shall be so retained, the amount of net revenues from the operation of the system to be paid into the Bond Fund each month shall equal not less than 1/6th of the interest and 1/12th of the princi- pal payments provided for above. The Board of Directors agrees that the rates to be fixed and the charges to be collected for services, together with taxes levied, shall at all times be sufficient to make the payment into the Bond Fund, including the Reserve Account.. Note 8 : Supplemental interest coupons - . The Series 1971 refunding bonds have supplemental coupons attached so that the total interest paid on each bond will be equal to 10% per year from October 1, 1973 to April 1, 1978 . The Series 1972 bonds maturing in the years 1982 through 2000, aggregating $490,000, have supplemental coupons attached so that the total interest paid on each bond shall be 9% per year from June 1, 1972 to April 1, 1976 . Note 9: Redemption of bonds - ilk The outstanding bonds of the District 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 numerical order, for the purpose of re- tirement or refunding, or both, at par plus accrued interest. Bonds of the Series 1970A, 1971, 1971A and 1972, may be called on October 1, 1985, April 1, 1985, April 1, 1986, and Apri1. 1, 1987 , respectively, or any interest payment date thereafter. Note 10: Engineers ' report - The Bond Orders of the Series 1971 bonds require a complete engineer- ing inspection and report of the operations and physical condition of the system to be made each year by an independent qualified engineer. As of the date of this report such inspections and report had not been made . Note 11: Water and sewer service rates and customers - The following monthly water and sewer service rates were established effective June 16, 1976. Water Service Residential and commercial: 4110, First 5,000 gallons of water used (minimum bill) * $5 .00 Each 1,000 gallons of water used thereafter .45 *Master metered townhouses and apartment projects are based on first 5,000 gallons of water used times the number of units . EXHIBIT F Page 4 of 5 Note 11 : Water and sewer service rates and customers - (Continued) Sewer Service Residential and commercial: First 50,000 gallons of water used (minimum bill) * $4 .25 Each 1,000 gallons of water used therafter . 25 *Master metered townhouses and apartment projects are charged $4.25 for each unit Water and Sewer Customers Five year summary of customers at March 31 : 1977 1976 1975 1974 1973 1,150 1,150 838* 654* 383* (*Approximate) Note 12 : Contract with City of Friendswood - On October 19 , 1971, the District entered into a waste disposal contract with the City of Friendswood, Texas. Under the terms of this contract, the District constructed lines and facilities to transport waste to the sanitary sewer trunk line facilities of the City. Also, on March 30, 1972, the District paid the City $239, 000 for expansion and improvement of the City's sewage treatment facilities to meet all state and federal regulations . Under this contract the District is entitled '"*ft. to have up to 460 ,000 gallons per day treated by the City and the City is responsible for all maintenance and operation of the plant. Since December 1, 1975, the District has paid $3.50 per 'connection, per month for sewage treatment service. Note 13 : Special grant - A special grant of $78, 665 has been awarded to the District by the Environmental Protection Agency, payable through the City of Friendswood, for sewer system rehabilitation. No funds were received and no contracts for rehabilitation work were made during the fiscal year. Note 14 : Prior years adjustment - In prior years the District had made an agreement with a land devel- oper to provide potable water and sewer service. As at March 31, 1976 the District had an account receivable of $12,398 for water tap costs which was disputed by the developer. During the year the Board of Directors voted to settle the dispute by accepting the developer' s offer of $7 ,500 in cash and an agreement to furnish 4,000 to 6,000 cubic yards of fill dirt needed by the District. The cash loss of $4,898 is shown as a prior years adjustment to the fund balance of the General Operating Fund. ■► Note 15 : Insurance coverages - The bond orders require that so long as any of the bonds are out- standing, the District agrees to maintain insurance for the benefit of the bondholders, of a kind and in an amount which would usually be carried by private companies engaged in a similar type of business. The insurance EXHIBIT F Page 5 of 5 Note 15 : Insurance coverages - (Continued) agent/consultant of the district has determined that the insurance provi- sion of the Bond Orders have been complied with in all material respects . The insurance coverage currently in force is outlined below. Coverages Amounts Employee honesty, etc . - Tax assessor and collector $5,000 Public official $5, 000 Fire and extended coverage, vandalism and malicious mischief - Storage tank and equipment, all steel pressure tank, brick veneer chlorinator and control house, comfort station and sewage lift station - 80% co-insurance $170,000 General liability - Bodily injury $300, 000 Property damage $25, 000 Auto liability, non-owned cars - Bodily injury $100,000/$300,000 Property damage $25,000 In addition to the coverages outlined above, the contractor/operator carries the following liability insurance coverages as shown on a certi- ficate of insurance dated June 3 , 1977 . Coverages Amount Comprehensive auto liability - Bodily injury $250,000/$500,000 Property damage $100,000 Comprehensive general liability, contractual liability, completed operations liability and product liability - Bodily injury $500,000/$500,000 Property damage $100,000/$300,000 Workmens compensation Texas legal require- ments Employers liability Coverage B, $100,000 Note 16: Pending litigation - oh The District is a named party defendant in a lawsuit in which the plaintiff is claiming damages in the amount of $600 ,000 due to alleged infractions concerning water control in the stream known as Clear Creek. Counsel for the District has stated that in their opinion it is diffi- cult to ascertain with absolute certainty any liability which may be incurred by the District, but their feeling is that the plaintiff will have a very difficult time sustaining his burden of proof. June 15 , 1977 HARRIS COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 108 AUDITORS ' REPORT ON SUPPLEMENTAL STATEMENTS The basic financial statements of the Harris County Water Control and Improvement District No. 108 for the year ended March 31, 1977, and our report thereon, are presented in the preceding section of this report. Our examination was made primarily for the purpose of formulating an overall opinion on those financial statements . The examination of the financial statements for the prior year was made by other accountants and they have previously rendered their opinion on those statements . The supplemental statements presented hereinafter, although not considered necessary for a fair presentation of the basic statements, are presented as supplementary information and have been subjected to the audit procedures applied in the examination of the basic financial statements. In our opinion, the supplemental statements are fairly stated in all material respects in relation to the basic financial statements taken as a whole. 24;40:......4c..) ‘‘eAtt Schedule 1 • HARRIS COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 108 SCHEDULE OF TEMPORARY INVESTMENTS March 31, 1977 Accrued Interest Receivable Interest Maturity Face March 31, Rate Date Amount 1977 Debt Service Fund - Certificates of Deposit No. 16454-5 6.75% 9/15/77 $ 3, 000 $ 73 No. 13-087900-0 6 .75% 9/15/77 100,000 188 Totals - Debt Service Fund 103 ,000 261 Unallocated for debt service 45, 831 Reserve account - Series 1971 bonds 57,169 $103 ,000 General Operating Fund - Certificates of Deposit No. 36-0092-4 6 .75% 4/24/77 $ 20,575 - No. 46-234667-4 7.75% 4/30/77 10,075 - Total - General Operating Fund 30, 650 - Totals - all funds $133,650 $261 See notes to financial statements HARRIS COUNTY WATER CONTRI ANALYSIS OF CHA: For The Fiscal Y Taxes receivable - March 31, 1976 1976 Original tax roll, less adjustment o Total to be accounted for Tax collections - Current year Prior years Taxes receivable - March 31, 1977 Taxes receivable by fiscal years - 1972 1973 1974 1975 1976 Nam Property valuations - 1'. Land $ 4 ,2! Improvements 23,4! Personal property 3 Total valuations $28,1, Tax rate per $100 valuation 91 Tax collection year - From October 1, 1971 Percent of assessed valuation to fair mi Percent of current taxes collected to ci oakPercent of current and delinquent taxes current and delinquent taxes outstand: beginning of the tax year Schedule 3 HARRI.S COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 108 ANALYSIS OF CHANGES IN GENERAL FIXED ASSETS For the Fiscal Year Ended March 31, 1977 Ate. Balances Balances March 31, March 31, 1976 Additions 1977 Land $ 1, 675 $ 1, 675 Water system 521, 328 $830 522,158 Sewage system 712,732 712,732 Drainage system 623 ,214 623 ,214 Engineering fees 174 ,159 174 ,159 Totals - Schedule 5 $2, 033,108 $830 $2,033, 938 Amounts provided by - Construction fund, bond sales $1, 962,158 - $1,962,158 General operating fund, net system revenues 70, 950 $830 71,780 Total amounts provided $2,033,108 $830 $2,033 , 938 See notes to financial statements Schedule 4 • HARRIS COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 108 ANALYSIS OF CHANGES IN DISTRICT ORGANIZATIONAL COSTS For The Fiscal Year Ended March 31, 1977 Law Balances March 31, 1977 and 1976 Legal fees $109,125 Bond interest 169,468 Amortized bond discount 3,705 Fiscal agent fees 44,000 Bond issue expenses 4,527 Interest on temporary investments (60, 013) Total $270,812 Amounts provided by - Construction Fund, bond sales $157,652 Debt Service Fund, bond sales 113,160 Total $270,812 See notes to financial statements Schedule 5 HARRIS COUNTY WATER CONTROL AND ID INSURANCE COVE March 31, l5 p Type of From _ Company Co-insurance Employee honesty, etc. : Tax Assessor and Collector 1/01/77 Public official 4/02/75 Stock None Fire, lightning, extended coverage, vandalism and malicious mischief: Water plants and sewage treatment plants 11/22/76 Stock 80% General liability: Bodily injury, aggregate 11/22/76 401 Property damage, aggregate Stock None Auto liability, non-owned cars: 11/22/76 Bodily injury Property damage o financial statements 401 OTHER SUPPLEMENTAL INFORMATION (Not Subjected to Audit Procedures) Schedule A Page 1 of 5 HARRIS COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 108 QUESTIONNAIRE TO BE COMPLETED BY AUDITOR March 31, 1977 1. At the time that your firm was engaged by the Board of 41111 Directors of the above-named water district to perform this audit, was a copy of the Water District Accounting Manual made available to you? X Yes No 2 . The Water District Accounting Manual prescribes account- ing principles and policies . After taking these into consideration, did the local water district: a. Maintain a proper classification of expenses and revenues? X Yes No b. Record expenses and revenues on the basis of full accrual accounting except for the specific revenue and expense items required to be maintained on the cash basis by the Water District Accounting Manual? X Yes No c . Maintain the double entry system of accounting? X Yes No 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 e. Adhere to other provisions of the Water District Accounting Manual? X Yes No If No is checked for any item under question 2, dis- closure as to the nature and reason for the negative reply is indicated in the management letter. 3 . Did the Board of Directors of the water district impose on your firm any audit requirements in addition to those minimum audit requirements of the Water District Accounting Manual? 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 If Yes is checked for question 4 , have these topics been cited in a management letter to the water district's Board of Directors? 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 Schedule A Page 2 of 5 6. Did the water district: a. Use the contruction fund, tax fund and debt service fund only for purposes authorized by the Board of kOW Directors of the water district and/or within the provisions of applicable bond resolutions? X Yes No b. Properly segregate and maintain the required amount of cash escrowed by the Texas Water Rights Commission or disburse the escrowed cash according to the terms N/A prescribed by the Texas Water Rights Commission? Yes No c. Do business only with firms or corporations in which members of the Board of Directors had no pecuniary interest? Yes No * The answer to this question does not fall within the scope of a normal audit engagement and has been answered by the Board of Directors in schedule B. d. Observe the conditions for obtaining grants, gifts, etc . , or observe agreements with governmental agencies for the purpose of securing funds or services? Yes No * The answer to this question does not fall within the scope of a normal audit engagement and has been answered by the Board of Directors in schedule B. e. Have a contract for Social Security coverage for its employees with the Texas Department of Public Welfare, N/A Social Security Division? Yes No f. Make remittances of Social Security taxes according to the terms of the contract for Social Security cov- erage with the Social Security Division of the Texas N/A Department of Public Welfare? Yes No 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 Yes No 7 . Do you issue a mangement letter to administrative officials of the water district at least annually which sets forth your comments (based on matters which came to your atten- tion during your examination) for strengthening internal accounting controls and improving administrative efficiency and procedures? X Yes No Schedule A Page 3 of 5 If Yes is checked for question 7 : 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 June 15, 1977 . c. Is there evidence indicating that your previous year (s) recommendations have been or are being implemented? Yes No *Previous years recommendations made by other accountants - See management letter for details . d. Has a copy of the management letter been filed with the Texas Water Rights Commission? Yes No • The answer to this question does not fall within the scope of a normal audit engagement and has been answered by the Board of Directors in Schedule B. 8 . The Texas Water Code makes specific provisions, relating to security provided by depository banks . After consideration of the applicable laws pertaining to the specific water district, did the depository bank or savings association provide adequate security of the correct type? Yes No This question answered on the statement that follows: Schedule A Page 4 of 5 HARRIS COUNTY WATER C STATEMENT Aft 3 Beltway Community Home Bank Bank Savings Houston, Houston, Houston, a. Name of depository bank or sav Texas Texas Texas b. Amount of FDIC or FSLIC covers demand deposits $40, 000 $40,000 -0- time deposit or savings depc $100,000 $100,000 $100,000 c. Cash balance at year end - demand deposits $12, 055 $12,310 -0- time or savings deposits -0- -0- -0- d. Amount of bond or par value of pledged as of year end None None Not (not including FDIC or FSLIC required required applicable e. Was security adequate at year Not according to criteria enumes yes yes applicable f. Largest cash balance amounted demand deposits $27,170 $108,429 -0- time deposits or savings de I -0- -0- $21, 672 g. Date of largest cash balance 11-12-76 10-23-76 9-23-76 h. Amount of bond or par value oi at time of largest balance i. Was security adequate at date balance according to criter: yes no yes * On November 24, 1976 the D: $10,000 to Buffalo Sevin( Note; By adoption of the Bon( bonds issued by the District, the bondholders the net reveni system and the taxes levied b' par. (b) of the FDIC Rules an; Public Bond Issues. Whert employee of a public unit funds which by law or undi are required to be paid tf e. issued by the public unit funds in an insured bank deposit by a trustee of t bondholders are pro rata such beneficial interest insured for $40,000. Schedule A Page 5 of 5 9. The water district' s taxes were collected by an independent tax assessor-collector. 10 . Was the tax assessor-collector bonded as required by law? X Yes No 11. What was: a. The tax assessor collector bonded for? $5, 000 b. The greatest amount of the district's taxes in the tax assessor-collector' s possession at any one time? $104,344 This question has been interpreted to mean the largest deposit for the year by the tax assessor-collector. c. The frequency of tax receipts deposits with the bonded depository? (check one) (1) Daily X* (2) Weekly (3) Monthly * Deposited monthly after substantially all current taxes are collected. d. The percent of the assessed valuation to fair market value? 100% This information was furnished by the District without audit. 12 . We actually examined the records of the tax assessor- collector. X Yes No 13 . As a result, were local tax revenues (including delin- quent taxes and interest and penalties on taxes) properly separated for debt service? X Yes No 14 . Was the water district in compliance with applicable bond resolutions, with the general or special legisla- i tion under which the district was created and with the specific statutes excerpted and included in the Legal Compliance Guidelines in Section 70-03-1 of the Water District Accounting Manual? X Yes No Significant exceptions noted during the course of our audit of the financial statements are described in the management letter and notes to the financial statements. This question has also been answered by the Board of ' Directors in schedule B. 15. Other Comments of the Auditor: None I Schedule B HARRIS COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 108 QUESTIONNAIRE TO BE COMPLETED BY BOARD OF DIRECTORS March 31, 1977 1 . Did the district: a. Do business only with firms or corporations in which members of the Board of Directors had no pecuniary interest? X Yes No b. Observe the conditions for obtaining grants, gifts, etc . , or observe agreements with governmental agencies for the purpose of securing funds or services? X Yes No 2 . Has a copy of the management letter been filed with the Texas Water Rights Commission? X Yes No 3 . Was the water district in compliance with applicable bond resolutions, with the general or special legislation under which the district was created and with the specific statutes excerpted and included in the Legal Compliance Guidelines in Section 70-03-1 of the Water District Accounting Manual? X Yes No All significant exceptions known to the Board of Directors have been described in the Notes to Financial Statements, EXHIBIT F. e above_ t report ° that the audl g11 and the a y� rtifYtoll 31 i 1 n in°lvae 1 hereby Ce enaea Mar n�ormatl° T -= scat Year elemental 1 ra of ,, 5u9 nttithe e $oa tr -;.ng ° HARRIS BOARD mEmBER8 WATER CONTROL schedule CY ADMINIST AND IM�'ROVEMENT DISTRICT NO. 108 MarchA31 TIVE PERSONNEL AND LEGAL COUNSEL 1977 I. Relationship With Major Land Owners, Term of Board Members Engineers, Office Resident Attorney & Elected & Annual id Tax Assessor- Name and Address Expires Salary Title District Tax Lubert J. Leger 16818 Hibiscus Lane 4/3/76 Per FriendSWOOd, Texas 4/3/78 Diem President Yes No John P. Chioma 4/5/75 Per Vice 4443 Raven Drive yes No Friendswood, Texas 4/2/77 Diem President Margaret George 4/3/76 Per Yes No 3960 Laura Leigh 4/3/78 Diem Secretary Friendswood, Texas Tom Nicodemus 10/1/76 Per yes No 17007 Barcelona 4/3/76 Diem Member Friendswood, Texas Sandra Lindsey 4/6/77 per Yes No 1700 d. Frie Townes Texas 4/6/79 Diem Member ri Townes Date Key Administrative fitted personnel Le al Counsel Fees Paid No & Bacon No 1/ Rowe, Hay $5 ,358 Smith, Street 19/70 1200 Travis Houston, Texas District Tax p,ssessor- Collector Fees Paid No No 4 ,800 1/19/70 $ Alta Carbone Friendswood, Texas onship family relat C, Gilmore► who resigned Includes business or of Sheldon ` (2) Filled unexpired tern►