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Home My WebLink About1981 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 telN March 31, 1981 Page No. Auditors ' Report Balance Sheets , All Funds EXHIBIT A 1 Statement of Revenues , Expenses and Fund Balances , All Funds EXHIBIT B 2 Statement of Changes in Cash, All Funds EXHIBIT C 3 Analysis of Changes in General Long-Term Debt EXHIBIT D 4 General Long-Term Debt Service Requirements , By Years EXHIBIT E 5 Notes to Financial Statements EXHIBIT F 6 Auditors ' Report on Supplemental Statements Schedule of Temporary Investments Schedule 1 11 Anaylsis of Changes in Taxes Receivable Schedule 2 12 Analysis of Changes in General Fixed Assets Schedule 3 13 Analysis of Changes in District Organizational Costs Schedule 4 14 Insurance Coverage Schedule 5 15 Other Supplemental Information: Questionnaire To Be Completed By Auditors Schedule A 16 Questionnaire To Be Completed By Board of Directors Schedule B 21 Board Members, Key Administrative Personnel, and Legal Counsel Schedule C 22 Certificate of Board of Directors Schedule D 23 a.. LAFRANCE, WALKER, LTACKLEY & SAVILLE CERTIFIED PUBLIC ACCOUNTANTS 112 0 NASA RD. ONE • HOUSTON, TEXAS T7058 OFFICES IN PRINCIPAL CITIES-FOREIGN AFFILIATES 713/48B-8324 July 10 , 1981 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 County Water Control and Improvement District No. 108 (a political sub- division of the State of Texas) as of March 31, 1981, 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 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, 1981, and the results of its operations and the changes in its cash position for the year then ended, in con- formity with generally accepted accounting principles, as pronounced by the Texas Department of Water Resources, applied on a basis con- sistent with that of the preceding year, except for the change, with which we concur, in regarding Debt Service Fund bond and interest payments as described in the related note to the financial statements. Q \l//4-,7t-ee 6aa-1-4&-A 91,-A-11--y /41°-4'1:4111-j / J 411 EXHIBIT A HARRIS COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 108 BALANCE SHEETS, ALL FUNDS - March 31, 1981 General Debt General General Memorandum Operating Tax Service Construction Long-Term Fixed Assets Totals Fund Fund Fund Fund Debt Fund Fund ASSETS AND OTHER DEBITS Current assets - Unrestricted cash $ 23,985 $ 23,637 $ - $ - $ 348 $ - $ - Restricted cash 9,184 - 9,184 - - - - Cash with fiscal agent 43,597 - - 43,597 - - - Total cash 76,766 23,637 9,184 43,597 348 - - »-Unrestricted temporary inv- estments - Schedule 1 143,668 90,980 - - 52,688 - - ---- Reserve account - Series 1971 -»---- - ~ •�-» and 1971A Bonds - Cash (25,597) - - (25,597) - - - Cash with fiscal agent 98,269 - - 98,269 - - - Temporary investments • Schedule 1 183,327 - - 183,327 - - - Accrued interest 1,893 - - 1,893 - - - Due from General Operating . Fund 73,827 - - 73,827 - - - Total reserve account _- (note 6) 331,719 - - 331,719 - - - Total cash, temporary inv- estments and reserve account 552,153 114,617 9,184 375,316 53.036 - - Accounts receivable and accrued interest 39,170 38,542 - - 628 - - Unexpired insurance 1,304 1,304 - - - - - Total current assets 592,627 154,463 9,184 375,316 53,664 - - Taxes receivable - Schedule 3 21,973 - 21,973 - - - - General fixed assets (at cost) - - -- ----»_-- Schedule 3 1,998,247 - - - 1,998,247 Intangible and other assets - District organizational costs - Schedule 4 270,012 - - - - - 270,812 Bond discount, less amortization . of $34,952 43,612 - - 43,612 - - - -------- ------- ------- ------- Total intangible and other assets 314,424 - - 43,612 - - 270,812 -------- ------- Provision for bonded debt 2,590,000 - - - • 2,590,000 - Total assets and other debits $5,517,271 $154,463 $31,157 $418,928 $53,664 $2,590,000 $2,269,059 -----a. aafaaaaa Ya-- aa.aaW WSW Waaaaaas aaaaaaaaaa LIABILITIES AND FUND BALANCES Current liabilities - Accounts payable and accrued expenses $ 23,105 $ 23,105 $ - $ - $ - $ - $ - Refundable deposits 4,466 4,466 - - - - - Due to Debt Service Fund - Reserve Account 73,827 73,827 - - - - - --Total current liabilities 101,398 101,398 - --- - - - - Bonds payable, EXHIBIT D 2,590,000 - - --» - 2,590,000 - -Fund balances - ------- - »~ ------ -�---� Unallocated fund balances 159,510 53,065 9,184 43,597 53,664 - - Investment in uncollected taxes 21,973 - 21,973 - - - - Allocated from net system Ilik revenues 116,089 _ _ _ - • - 116,089 Allocated from sale of bonds 2,152,970 2,152,970 Unamortized discount on sale of bonds 43,612 - - 43,612 - - - Reserve account reserve - Series 1971 and 1971A Bonds 331,719 - - 331,719 - - - ---- Total fund balances 2,825,873 53,065 31,157 418,928 53,664 - 2,269,059 ------- ------ ---------- Total liabilities and fund balances $5,517,271 $154,463 $31,157 $418,928 $53,664 $2,590,000 $2,269,059 aaaaaW as aaaaaW -- Waaaaa Was» WWaao MAP aaaaaaaa See notes to financial statements - 1 - EXHIBIT B HARRIS COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT N0. 108 STATEMENT OF REVENUES, EXPENSES AND FUND BALANCES, ALL FUNDS For The Fiscal Year Ended March 31, 1981 General Debt General Memorandum Operating Tax Service Construction Fixed Assets Totals Fund Fund Fund Fund Fund Operating revenues - Water and sewer service $ 264,643 $264,643 $ - 6 - $ - $ - Taxes collected 257,599 - 257,599 - - - Penalty and interest 8,309 6,635 1,674 - - - Total operating revenues 530,551 271,278 259,273 - - - Operating expenses - Purchased serer services 109,800 109,808 - - - - Contracted services 46,013 41,213 4,800 - - - Professional fees 21,075 21,075 - - - - Utilities 15,521 15,521 - - - - Repairs and maintenance 36,173 36,173 - - - - Recurring operating expenses 14,822 13,425 1,397 - - - - Total operating expenses 243,412 237,215 6,197 - - - Net revenues from operations 287,139 34,063 253,076 - - - Non-operating revonues/(expenses) - Tap connection fees 295 295 - Interest earned 30,835 7,467 - 19,231 4,137 - Miscellaneous revenue and expenses - (net) 205 360 - (155) - - Tap connection expenses (305) (305) - - - - Bond principal paid (55,000) - - (55,000) - - Bond interest paid (196,314) - - (196,314) - - Amortization of bond discount (3,681) - - (3,681) - - Total non-operating revenues/ (expenses) (223,965) 7,817 - (235,919) 4,137 - Net revenues/(expenses) 63,174 41,880 253,076 (235,919) 4,137 - Additions to fund balances - - - - - Transferred from Tax Fund 248,000 248,000 - Transferred from General Operating Fund 49,527 49,527 Increase in uncollected taxes 314 - 314 - - - Decrease in amount due to Debt Service Fund - Reserve Account 16,930 16,930 - - - - Total additions to fund balances 377,945 58,810 253,390 12,081 53,664 - Deductions from fund balances - Transferred to Debt Service Fund 248,000 - 248,000 - - - Transferred to Construction Fund 49,527 49,527 - - - - Decrease in amount due from General Operating Fund 16,930 - - 16,930 - - Total deductions from fund balances 314,457 49,527 248,000 16,930 - - -------- -------- ------- ---------- Met change in fund balances for the year 63,488 9,283 5,390 (4,849) 53,664 - Fund balance, March 31, 1980 2,618,413 43,782 25,767 279,105 .. 2,269,059 Adjustment (note 5) 143,972 - - 143,972 - - 0.1•4111 a.=ME OD Restated fund balance, March 31, 1980 2,762,315 43,782 25,767 423,777 - 2,269,059 Fund balance, March 31, 1901 $2,825,873 i 53,065 $ 31,157 1418,128 $53,664 $2,269,059 M.Y.Y.. 0a.... WOMMIOMMIO 41111MMIMMO Y_MO sonwYWY Bee notes to financial statements 1111 - 2 - HARRIS COUNTY WATER CONTROL AND IMPROVEMENT DISTI STATEMENT OF CHANGES IN CASH, ALL FUND; For The Fiscal Year Ended March 31, 198: ` Genera: Memorandum Operatic Totals Fund Sources of cash - Cash receipts from operations $520,288 $261,01! Cash disbursements for operations 236,477 230,281 Net cash from operations 283,811 30,73! Cash received from non-operating revenues 30,296 7,93! Cash transfers from other funds 297,527 - Cash received from customer deposits - Total cash provided 611,634 38,67, Application of cash - Non-operating expenses 251,468 - Cash transfers to other funds 297,527 49,52' Total cash applied 548,995 49,52' Increase/(decrease) in cash and temporary investments 62,639 (10,85 Adjustment prior year (note 5) 143,972 - Cash and temporary investment. balances, at March 31, 1980 269,823 125,471 Cash and temporary investment balances, at March 31, .1981 $476,434 $114,61' • - 3 - MAR Harris County W Improvement D Waterworks an Combination T Bonds, Series Harris County W Improvement D Waterworks an Combination T Refunding Bon Harris County W. Improvement D Waterworks an Combination T. jek Bonds, Series Harris County W. Improvement D. Waterworks an( Combination T. Bonds, Series Totals Bonds Voted Bonds approved Bonds sold 4111 EXHIBIT E HARRIS COUNTY WATER CONTROL AND GENERAL LONG-TERM DEBT SERVICE l March 31, AO"' Series 1970-A -ies 1972 Interest Cnterest Principal Due Due Total Fiscal Due April 1, April 1, Annual Years October 1 October 1 Total)ctober 1 Total Requirements 1982 $ 10,000 $ 27,445 $ 37,44$ 33 ,412 $ 43 ,412 $ 247,100 1983 10,000 25,845 35,84! 32,738 42,738 247,058 _ 1984 15,000 24,995 39,99`! 32,062 42,062 247,582 1985 15,000 23,720 38,72( 31,387 41,387 252,307 1986 15,000 22,445 37,44! 30 ,713 40 ,713 246,658 . 1987 15,000 21,170 36,17( 29,869 44,869 250 ,658 1988 15,000 19,970 34,97( 28 ,856 43 ,856 249,188 1989 15,000 18,770 33,77( 27 ,844 42,844 247 ,345 1990 15,000 17,570 32,57( 26,831 41,831 249,883 1991 15 ,000 16,370 31,37( 25,650 45 ,650 246 ,813 1992 15,000 15,110 30 ,11( 24,300 44,300 248,135 1993 15,000 13,850 28,85E 22,950 42,950 243 ,888 1994 20,000 12,590 32,59E 21,600 41,600 248 ,990 1995 20,000 10,910 30,91E 20,081 45 ,081 247,847 1996 20 ,000 9 ,230 29,23C 18 ,394 43 ,394 245 ,955 400.4 1997 20 ,000 7,550 27 ,55( 16,200 56 ,200 252,975 1998 20,000 5,870 25,87( 13 ,331 58 ,331 253 ,739 1999 20,000 4,190 24,19C 10,125 60 ,125 258,196 2000 20,000 2,510 22,51( 6,412 66,412 265,985 2001 20 ,000 830 20 ,83C 2,194 67 ,194 258 ,455 Totals $330,000 $300,940 $630 ,94hp454,949 $954 ,949 $5,008 ,757 notes to financial statements Cash and Temporary Investment Balances Construction Fund $ 53 ,036 • Debt Service Fund 299,596 Tax Fund 9,184 $361,816 - 5 EXHIBIT F Page 5 of 5 Note 13 : Subsequent events - 401016. On September 16 , 1980 the Board of Directors of the District authorized the issuance of additional bonds in the amount of $200 ,000 . The bonds are all that remain unissued from the original $3 ,000 ,000 voted. As of July 10 , 1981 the bonds have not been sold and procedures are being taken so that the State of Texas may purchase the bonds. irk - 10 - 400114 July 10, 1981 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, 1981, 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 supplemental statements presented hereinafter, al- though 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. jA,c/ezii &1442h14, 56,4,0eiv 44-1A1-11--)Lj Schedule 1 HARRIS COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 108 SCHEDULE OF TEMPORARY INVESTMENTS March 31, 1981 Interest Maturity Face Accrued Rate Date Amount Interest Debt Service Fund - Reserve Account, Series 1971 and 1971A bonds - Time deposits - No. 12294 15% 4/1/81 $130,814 $1,559 No. 257 8% 4/1/81 52,513 334 Total - Debt Service Fund - Reserve Account 183,327 1, 893 Construction Fund - Time deposit No. 12294 15% 4/1/81 52,688 628 General Operating Fund - Time deposits - No. 1701 8% 4/22/81 60 ,848 243 No. 6268 8% 4/22/81 30,132 60 • Total - General Operating Fund 90,980 303 TOTAL - ALL FUNDS $326,995 $2,824 See notes to financial statements t -11- Schedule 2 HARRIS COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 108 ANALYSIS OF CHANGES IN TAXES RECEIVABLE FOR THE FISCAL YEAR ENDED MARCH 31, 1981 Taxes receivable - March 31, 1980 $ 21,659 1980 Original tax roll 257,913 Total to be accounted for 279,572 Tax Collections - . Current year 248 ,503 Prior years 9 ,096 257 ,599 Taxes receivable - March 31, 1981 $ 21,973 Taxes receivable by fiscal years - 1976 and prior $ 493 1977 11 1978 2,824 1979 9 ,235 1980 9,410 $ 21,973 Assessed Valuations Summary Tax rate Personal per $100 Land Improvements Property Total Valuation 1980 $4,257 ,740 $26 ,418 ,880 $776,180 $31,452,800 824 1979 4,257 ,740 26 ,414 ,180 745,780 31,417 ,700 82 1978 4,257 ,740 26 ,022,370 434,490 30,714,600 80 1977 4,287 ,150 25 ,395,590 420,170 30 ,102 ,910 90 1976 4,287 ,150 23,455,580 397,780 28 ,140 ,510 90 Tax collection year - From October 1, 1980 to September 30, 1981 Percent of assessed valuation to fair market value 100 .0% Percent of current taxes collected to current tax levied 96 .4% Percent of current and delinquent taxes collected to cur- rent and delinquent taxes outstanding at the beginning of the tax year 92 .1% See notes to financial statements - 12 - Schedule 3 HARRIS COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 108 ANALYSIS OF CHANGES IN GENERAL FIXED ASSETS "'wi` FOR THE FISCAL YEAR ENDED MARCH 31, 1981 Balances Balances March 31, Addi- Deduc- March 31, 1980 tions tions 1981 Land $ 1,675 $ - $ - $ 1,675 Water system 525,426 - - 525,426 Sewage system 734,252 - - 734 ,252 Drainage system 562,735 - - 562,735 Engineering fees 174 ,159 - - 174,159 Total $1,998,247 $ - $ - $1,998 ,247 Amounts provided by - Construction Fund bond sales $1,882 ,158 $ - $ - $1,882 ,158 General Operating Fund net system revenues 116 ,089 - - 116 ,089 Total amounts provided $1,998 ,247 $ - $ - $1,998 ,247 See notes to financial statements - 13 - 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, 1981 Balances March 31, 1980 and 1981 Costs during organization and construction - 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 - 14 - EXHIBIT F Page 1 of 5 HARRIS COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 108 NOTES TO FINANCIAL STATEMENTS March 31, 1981 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 Account- ing 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 Dis- trict 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 tax revenues are reported on the cash basis , but the net change in taxes receivable is recorded and included in the fund balances of the Tax Fund . Note 3 : Construction Fund - By vote of the Board of Directors of the District a Construction Fund was established for the purpose of physical plant improvements . The District transferred $49,527 to the Construction Fund which represented funds provided by an environmental protection agency reimbursement grant and by a federal disaster service grant. Additional funds are to be provided by a proposed $200 ,000 bond issue, see note 13 . 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 expenses 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 organiza- tional costs and, as recommended by the Manual, are not being amortized . Bond discounts have been deferred and are being amortized over the life of the applicable bond issue in relation to the principal amount outstand- ing; 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 costs are shown as an addition to the General Operating Fund when received. - 6 - EXHIBIT F Page 2 of 5 Note 4 : Accounting for capital items - (Continued) �* Detailed fixed assets records are not presently maintained and the Dis- trict has the policy of expensing currently any repair or maintenance item which does not extend the life of the asset or increase of assets ' valuation. Depreciation is not provided in accordance with the recom- mendations of the Manual. Note 5 : Prior year adjustment - Transfers to the District' s fiscal agent for bond and interest requirements due April 1 of each year have been recorded in prior years as expenditures of the debt service fund and a reduction of general long-term debt instead of an increase in cash with fiscal agent. The accumulated effect of the error on the balance sheet of the Debt Service Fund as of March 31 , 1980 was to understate cash with fiscal agent and fund balance by $143 ,972. The effect on net income of the Debt Service Fund for the year then ended was immaterial. The effect on the general long-term debt fund was to understate amount to be provided and bonds payable by $45 ,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 1970A - 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 AO 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 - 7 - EXHIBIT F Page 3 of 5 Note 7 : Debt service requirements - (Continued) necessity to again levy taxes to avoid default in the payments of the District' s obligations as they may mature. Series 1971 and 1971A: The Bond Orders for the Series 1971 and 1971A bonds require (1) the establishment 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 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 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 principal 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 : Redemption of bonds - 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 retirement 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 April 1, 1987 , respectively, or • any interest payment date thereafter. Note 9 : 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. During the fiscal year the District' s independent engineer investigated and re- ported on certain sections of the system for planned rehabilitation and expansion. 411 Note 10 : Water and sewer rates and customers - The following monthly water and sewer service rates are currently in effect. - 8 - EXHIBIT F Page 4 of 5 Note 10 : Water and sewer rates and customers - (Continued) Water Service Residential and commercial : First 5, 000 gallons of water used (minimum bill) * $6 .00 Each 1,000 gallons of water used thereafter .95 *Master metered townhouses and apartment projects are based on first 5 ,000 gallons of water used. times the number of units . Sewer Service Residential and commercial : First 3,000 gallons of water used (minimum bill) * $7 .00 • Each 1, 000 gallons of water used thereafter .90 *Master metered townhouses and apartment projects are charged $8 . 00 for each unit. Five year summary of customers at March 31: 1981 1980 1979 1978 1977 1, 158 1,158 1, 158 1,153 1,150 ' Note 11: 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 on 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 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. On February 26 , 1980 , the District entered into another contract with the City whereby 85% of the sewer charges of its residents is to be paid for waste disposal. Retroactive to October, 1980 this agreement has in- creased the District' s sewer treatment cost from $88 ,240 in fiscal year 1980 to $105, 210 in 1981. Note 12 : 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 agent/consultant of the District has determined that the in- surance provision of the Bond Orders have been complied with in all material respects. - 9 - HARRIS COUNTY WATER CONTROL INS URA Marc From Employee honesty, etc. : Tax Assessor and collector 1/1/83 Public Official 4/2/8C Fire, Lightning, extended coverage, vandalism and maliciaous mischief: Water plants and sewage treatment plants 11/22/1 General Liability: Bodily injury, aggregate 11/22/E Property damage, aggregate Auto liability, non-owned cars : Bodily injury • Property damage Flood insurance: Comfort station, control house and contents 9/24/E 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 AUDITORS March 31, 1981 Yes No 1. At the time that your firm was engaged by the Board of 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 2 . The Water District Accounting Manual prescribed 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 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 c. Maintain the double entry system of accounting? X d. Keep a general ledger in accordance with the uniform rift classification of general ledger accounts prescribed in the Water District Accounting Manual? X e . Adhere to other provisions of the Water District Accounting Manual ? X 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 Account- ing Manual? X 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 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 5. Did you obtain representation from the Board of Directors • of the water district that all records of the water dis- trict were made available to you for your examination? X -16- Schedule A Page 2 of 5 Yes No 6 . Did the water district: frik a. Use the construction fund, tax fund and debt service fund only for purposes authorized by the Board of Directors of the water district and/or within the provisions of applicable bond resolutions? X 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 prescribed by the Texas Water Rights Commission? N/A c. Do business only with firms or corporations in which members of the Board of Directors had no pecuniary interest? * Answered by the Board of Directors - 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? * Answered by the Board of Directors - Schedule B. 1" e . Have a contract for Social Security coverage for its employees with the Texas Department of Public Welfare, Social Security Division? X 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 Department of Public Welfare? N/A g. Deposit receipts to the proper funds kept by the approved depository bank? X • h. Draw checks only on funds approved by the Board of Directors and signed by authorized personnel? X 7. Do you issue a management letter to administrative offi- cials of the water district at least annually which sets forth your comments (based on matters which came to your attention during your examination) for strengthening in- ternal accounting controls and improving administrative efficiency and procedures? X I —17— Schedule A Page 3 of 5 Yes No If Yes is checked for question 7: a. Were your recommendations explained to and discussed with administrative officials of the water district? X b. The date of your most recent management letter was July 10, 1981 . c. Is there evidence indicating that your previous • year(s) recommendations have been or are being implemented? X d. Has a copy of the management letter been filed with the Texas Water Rights Commission? * Answered by the Board of Directors - Schedule B. 8 . The Texas Water Code makes specific provisions relating to security provided by depository banks. After consider- ation of the applicable laws pertaining to the specific water district, did the depository bank or savings assoc- iation provide adequate security of the correct type? * This question answered on the statement that follows . -18- Schedule A Page 4 of 5 HARRIS COUNTY WATER CONTI STATEMENT RELY Ma. llied Humble mpion Bank National Bank ouston, Houston, a. Name of depository bank or savin4Texas Texas b. Amount of FDIC or FSLIC coverage demand deposits 00,000 $ 100,000 time deposit or savings depos.00,000 100,000 c. Cash balance at year end - demand deposits - - time or savings deposits 83, 502 52, 513 d. Amount of bond or par value of sI pledged as of year end (not including FDIC or FSLIC 400,000 52,000 e. Was security adequate at year en( according to criteria enumera+ yes yes f. Largest cash balance amounted to demand deposits - - '!� time deposits or savings depo:83,502 52,513 g. Date of largest cash balance /31/81 3/31/81 h. Amount of bond or par value of sE pledged at time of largest bab0,000 52,000 i. Was security adequate at date of according to criteria enumeratjes yes Note: By adoption of the Bond O? bonds issued by the District, the bondholders the net revenues fron and the taxes levied by the Disti of the FDIC Rules and Regulation Public Bond Issues. Where an of a public unit has custody c law or under the bond indentux to the holders of bonds issued deposit of such funds in an in to be a deposit by a trustee C bondholders are pro rata benef beneficial interest shall be s -19- Schedule A Page 5 of 5 Yes No 9. The District's taxes were collected by an independent tax assessor-collector. X 10 . Was .the tax-assessor bonded, as required by law? X 11 . What was: a. The tax assessor-collected bonded for? $5,000 b. The greatest amount of the district's taxes in the tax assessor-collector's possession at any one time? $79,203 • This question has been interpreted to mean the lar- gest deposit for the year by the tax assessor-collec- tor. c. The frequency of tax receipts deposits with the bonded depository? (check one) (1) Daily (2) Weekly X* (3) Monthly * Deposited monthly after substantially all current taxes are collected. d. The percent of the assessed valuation to fair market 100% 10.111. value? This information was furnished by the District without audit. 12. We actually examined the records of the tax assessor- X collector. 13. As a result, were local tax revenues (including delin- quent taxes and interest and penalties on taxes) proper- ly separated for debt service? X 14 . 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 speci- fic statutes excerpted and included in the Legal Compli- ance Guidelines in Section 70-03-1 of the Water District Accounting Manual? X Exceptions noted during the course of our audit of the financial statements are described in the�, man- agement letter. This question has also been answered by the Board of Directors in Schedule B. 15. Other comments of the Auditor: NONE -20- Schedule B HARRIS COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 108 QUESTIONNAIRE TO BE COMPLETED BY BOARD OF DIRECTORS March 31, 1981 eh Yes No 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 b. Observe the conditions for obtaining grants, gifts, etc. , or observe agreements with governmental agen- ' cies for the purpose of securing funds or services? X 2. Has a copy of the management letter been filed with the Texas Water Rights Commission? X 3. Was the water district in compliance with applicable bond resolutions, with the general or special legislation un- der 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 Accoun- ting Manual? X r -21- Schedule C HARRIS COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 108 BOARD MEMBERS, KEY ADMINISTRATIVE PERSONNEL AND LEGAL COUNSEL March 31, 1981 Board Members Term Annual District Name and Address Expires Salary Title Resident Tom Nicodemus 17007 Barcelona Per Friendswood, Texas 4/1/81 Diem President Yes Dallas Martin 4/1/81 Per Vice 16906 Townes Road Diem President Yes Friendswood, Texas Margaret George 4/1/81 Per 3960 Laura Leigh Diem Secretary Yes Friendswood, Texas Gina Runnels 4/1/81 Per 16731 David Glen Diem Member Yes Friendswood, Texas 4.11116 David T. Nolan 4/1/81 Per 3832 Laura Leigh Diem Member Yes Friendswood, Texas Date Hired Fees Paid Key Administrative Personnel - District Tax Assessor-Collector Alta Carbone Friendswood, Texas 1/19/70 $4,800 No • Legal Counsel Smith & Murdaugh 1200 Travis Street Houston, Texas 1/19/70 $3,326 No Note: None of the directors listed above had any relation- ship with major land owners, engineers, attorneys or tax assessor/collector of the District. -22- Schedule D HARRIS COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 108 HARRIS COUNTY, TEXAS CERTIFICATE OF THE BOARD OF DIRECTORS We, the undersigned, do hereby certify that the audit report of the above-named Water District for the fiscal year ended March 31, 1981, and the other supplemental statements and other supplemental infor- mation included herein was received by the Board of Directors on and was reviewed and approved * dis- approved * at a meeting of the Board of Directors of the Water Dis- trict on ClUi lOW Signature of Board President rl Signature of oard Secretary * Strike out the word which does not apply. -23-