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Home My WebLink About1979 03 31 Single Audit Report - Harris county water control and improvement district No.108 (2) HARRIS COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 108 TABLE OF CONTENTS March 31 , 1979 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 10 Schedule of Temporary Investments Schedule 1 11 Analysis 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 17 Questionnaire To Be Completed By Board of Directors Schedule B 22 lio Board Members , Key Administrative Personnel, and Legal Counsel Schedule C 23 Certificate of Board of Directors Schedule D 24 LAFRANCE, WALKER, tTACKLEY & SAVILLE CERTIFIED PUBLIC ACCOUNTANTS 110 112❑ NASA RD_ ONE • HOUSTON, TEXAS 77058 OFFICES IN PRINCIPAL CITIES-FOREIGN AFFILIATES 713/48B-8324 May 21, 1979 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 subdivision of the State of Texas) as of March 31 , 1979 , 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. 41 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 , 1979 , 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 applied on a basis consistent with that of the preceding year. Zaf; 44,..czeti Gf/� vc 111 HARRIS COUNTY WATER CONTROL AND I BALANCE SHEETS, ALL FUND ASSETS AND OTHER DEBITS Current assets - Unrestricted cash Restricted cash Total cash 4 Unrestricted temporary investments Restricted temporary investments Reserve account - Series 1971 bonds Total temporary investments - Sched Total cash and temporary investment Accounts receivable and accrued inter Unexpired insurance Total current assets Taxes receivable - Schedule 2 General fixed assets (at cost) - Schedu Intangible and other assets - District organizational costs Sched Bond discount, less amortization of $ Total intangible and other as Provision for bonded debt Total assets and other debits LIABILITIES AND FUND BALANCES Current liabilities - Accounts payable and accrued expenses Refundable deposits Total current liabilities Bonds payable, EXHIBIT D 4 Fund balances - Unallocated fund balances Investment in uncollected taxes Allocated from net system revenues Allocated from sale of bonds Unamortized discount on sale of bonds ft Reserve account reserve - Series 1971 Total fund balances Total liabilities and fund ba - 1 - HARRIS COUNTY WATER CONTROL AND IMPROVEMENT STATEMENT OF REVENUES, EXPENSES AND FUND BAI For The Fiscal Year Ended March 3 M i Operating revenues - Water and sewer service $ Taxes collected Penalty and interest Total operating revenues Operating expenses - Purchased sewer services Contracted services Professional fees Utilities 4, Repairs and maintenance Recurring operating expenses Total operating expenses Net revenues from operations +11 Non-operating revenues/(expenses) - Assessments Tap connection fees Interest earned EPA reimbursement grant Miscellaneous revenue and expenses - (net) Tap connection expenses 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 General Operating Fund Increase in uncollected taxes Total additions to fund balances Deductions from fund balances - Transferred to Debt Service Fund Transferred to General Fixed Assets Fund Conveyed to other governmental agencies Total deductions from fund balances Net change in fund balances for the year Fund balances , March 31 , 1978 Fund balances, March 31, 1979 - 2 - EXHIBIT C S HARRIS COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 108 STATEMENT OF CHANGES IN CASH, ALL FUNDS For The Fiscal Year Ended March 31, 1979 General Debt Memorandum Operating Tax Service Totals Fund Fund Fund Sources of cash - Cash receipts from operations $417 ,416 $174 ,085 $243 ,331 Cash disbursements for operations 182 ,444 177 ,099 5 ,345 S Net cash from operations 234 ,972 (3 ,014) 237 ,986 Cash received from non- operating revenues 62 ,137 49 ,405 $ 12 ,732 Cash transfers from other funds 238 ,000 238 ,000 Cash received from customer deposits 615 615 Total cash provided 535 ,724 47 ,006 237 ,986 250 ,732 Application of cash - AI Non-operating expenses 247 ,893 595 247 ,298 Cash transfers to other funds 238 ,000 238 ,000 Fixed asset expenditures 21,042 21 ,042 Total cash applied 506 ,935 21,637 238 ,000 247 ,298 1 Increase/ (decrease) in cash and temporary investments 28 ,789 25 ,369 (14) 3 ,434 Cash and temporary investment balances, at March 31, 1978 209 ,952 71,275 2 ,215 136 ,462 1 Cash and temporary investment balances, at March 31, 1979 $238 ,741 $ 96 ,644 $ 2 ,201 $139 ,896 See notes to financial statements S 1 - 3 - EXHIBIT D HARRIS COUNTY WATER CONTI ANALYSIS OF CHANGI For The Fiscal 4 Bonds Dutstanding arch 31 , 1979 Paying Agents Harris County Water Control a Allied Bank of Texas Improvement District No. 10 Houston, Texas Waterworks and Sewer System 4 First National Bank Combination Tax and Revenues 350 ,000 Denver , Colorado Bonds , Series 1970A Harris County Water Control a Allied Bank of Texas Improvement District No. 10 Houston, Texas Waterworks and Sewer System First National Bank Combination Tax and Revenue 580 ,000 Denver , Colorado Refunding Bonds , Series 197 Harris County Water Control a Improvement District No. 1C Waterworks and Sewer Systen Allied Bank of Texas Combination Tax and Revenue 1 ,215 ,000 Houston, Texas Bonds , Series 1971A , Harris County Water Control C Allied Bank of Texas Improvement District No . 1( Houston , Texas 4 Waterworks and Sewer Syster First National Bank Combination Tax and Revenue 510 ,000 Denver , Colorado Bonds , Series 1972 $2 ,655 ,000 Totals 4 statements Bonds voted $3 ,( === Bonds approved for sale $2 , === Bonds sold $2 , === II EXHIBIT E A HARRIS COUNTY WATER CONTROL AND IMl GENERAL LONG-TERM DEBT SERVICE REQ1 March 31 , l' Series 1970-A Series 1972 • Interest Interest Principal Due lal Due Total Fiscal Due April 1, April 1 , Annual Years October 1 October 1 Total 1 October 1 Total Requirements 1980 $ 10 ,000 $ 14 ,622 $ 24 ,622 $ 17 , 213 $ 17 , 213 $ 109 ,398 • 1981 10 , 000 28 , 395 38 ,395 i0 34 ,087 44 , 087 251,313 1982 10 ,000 27 , 445 37 , 445 i0 33 ,412 43 , 412 247 ,100 1983 10 ,000 25 ,845 35 ,845 10 32 ,738 42 ,738 247 ,058 1984 15 , 000 24 , 995 39 ,995 10 32 ,062 42 ,062 247 ,582 1985 15 ,000 23 ,720 38 ,720 i0 31,387 41,387 252 ,307 ' 1986 15 , 000 22 , 445 37 , 445 i0 30 ,713 40 ,713 246 ,658 1987 15 ,000 21 ,170 36 ,170 )0 29 ,869 44 ,869 250 ,65R 1988 15 ,000 19 ,970 34 , 970 )0 28 ,856 43 ,856 249 ,18C 1989 15 ,000 18 ,770 33 ,770 )0 27 ,844 42 ,844 247 ,345 1990 15 , 000 17 , 570 32 , 570 )0 26 ,831 41,831 249 , 883 1991 15 , 000 16 ,370 31, 370 )0 25 ,650 45 ,650 246 ,813 ,' 1992 15 ,000 15 ,110 30 ,110 )0 24 ,300 44 ,300 248 ,135 1993 15 , 000 13 ,850 28 ,850 )0 22 , 950 42 ,950 243 ,888 1994 20 ,000 12 ,590 32 ,590 )0 21, 600 41, 600 248 ,990 1995 20 , 000 10 , 910 30 , 910 )0 20 , 081 45 , 081 247 ,847 1996 20 ,000 9 ,230 29 ,230 )0 18 ,394 43 ,394 245 ,955 1997 20 , 000 7 ,550 27 , 550 )0 16 ,200 56 ,200 252 ,975 40 1998 20 ,000 5 ,870 25 ,870 )0 13 , 331 58 ,331 253 ,739 1999 20 , 000 4 , 190 24 , 190 )0 10 ,125 60 , 125 258 ,196 2000 20 , 000 2 ,510 22 , 510 )0 6 ,412 66 ,412 265 ,985 2001 20 ,000 830 20 ,830 )0 2 ,194 67 ,194 258 ,455 Totals $350 ,000 $343 ,957 $693 ,957 )0 $506 ,249 $1 ,016 ,249 $5 , 369 ,468 4 See notes to financial statements • Cash and Temporary Investment Balances Debt Service Fund $139 ,896 Tax Fund 2 ,201 $142 ,097 • - 5 - EXHIBIT F Page 1 of 4 HARRIS COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 108 NOTES TO FINANCIAL STATEMENTS 4 March 31, 1979 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 4 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 expenses and tax revenues are reported on the cash basis , but the net change in taxes receivable is recorded and included in the fund balance of the Tax Fund. 440 Note 3 : Debt service payments - Bond interest of $100,666 due on April 1, 1979 was paid to the paying agent prior to the fiscal year end and is included in Debt Service Fund expenditures; this amount was not included in the debt service requirements A schedules for the 1980 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 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 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 costs are shown as an addition to the General Operating Fund when received. A 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. 440 - 6 - EXHIBIT F Page 2 of 4 Bond Order and legal requirements - Note 5 : 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 4 of the 52nd Legislature of Texas , 1951 . Note 6 : Debt service requirements - Series 1970-A - 1971-A - 1972 : 416 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 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 '# 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 4 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. ,* - 7 - EXHIBIT F Page 3 of 4 Bond Order and legal requirements - (Continued) Note 7 : Supplemental interest coupons - The Series 1971 refunding bonds have supplemental coupons attached s so that the total interest paid on each bond will be equal to 10o per year from October 1 , 1973 to April 1 , 1978 . The Series 1972 bonds matu- ring in the years 1982 through 2000 , aggregating $490 ,000 , also had supplemental coupons attached so that the total interest paid on each bond was 9% per year from June 1, 1972 to April 1 , 1976 . 4 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 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 April 1 , 1987 , respectively, or any interest payment date thereafter. Note 9 : Engineers ' report - `b 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 fur- nished a report on the District' s water plant. Note 10 : Water and sewer service rates and customers - The following monthly water and sewer service rates were established effective February 1, 1979 and are currently in effect. The water service rates remained unchanged but the sewer service rate was increased, in stages , to $7 .00 beginning with the November 1978 customer billing. Water Service Residential and commercial : First 5 ,000 gallons of water used (minimum bill) * $5. 00 Each 1,000 gallons of water used thereafter .45 44 *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 50 ,000 gallons of water used (minimum bill) * $7 .00 Each 1, 000 gallons of water used thereafter .25 *Master metered townhouses and apartment projects are charged $7 . 00 for each unit - 8 - EXHIBIT F Page 4 of 4 Note 10 : Water and sewer service rates and customers - (Continued) Five year summary of customers at March 31: 1979 1978 1977 1976 1975 1, 158 1,153 1,150 1,150 838 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. Since December 1, 1975, the District has paid $3 .50 per connection, per month for sewage treatment service. Durnig the year the District agreed to rate increases, in stages , to $4 .75 per connection effective with January 1979 billing; additional increases are being requested by the • City which have not as yet been agreed to by the District. Note 12: Special grant - A sewer rehabilitation contract of approximately $125 ,000 has been authorized by the District in conjunction with the City of Friendswood in the construction of a regional waste treatment plant. A special grant of 75% of the contract price has been awarded to the District by the Environmental Protection Agency, payable through the City of Friendswood. S Note 13 : 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 a 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 insurance provi- ft sion of the Bond Orders have been complied with in all material respects. Note 14 : Legal matters - The District is a named party defendant in a lawsuit in which the plaintiff is claiming damages in the aggregate amount of $1,400,000 due "* to alleged infractions concerning water control in the stream known as Clear Creek. The case has been dismissed and judgment will be final when the time permitted by the court for motions for rehearing has lapsed. S '� - 9 - S May 21 , 1979 4 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 , 1979 , 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, 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. a w 4 a - 10 - Schedule 1 S HARRIS COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 108 SCHEDULE OF TEMPORARY INVESTMENTS March 31, 1979 Interest Maturity Face Accrued Rate Date Amount Interest • Debit Service Fund - Time deposits - No. 162191-2 10 .75% 9/22/79 $126 ,046 $1 ,374 No. 193994-2 9 .43% 9/26/79 13 ,722 7 Total - Debt Service Fund 139 ,768 1 ,381 Unallocated for Debt Service 85 ,206 Reserve account - Series 1971 bonds 54 ,562 $139 ,768 General Operating Fund - Time deposit - No. 2297 8% 4/19/79 $ 86 ,434 208 • Total - all funds $226 ,202 $1,589 See notes to financial statements a • a '� - 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 , 1979 Taxes receivable - March 31 , 1978 $ 7 ,117 4 Less - revaluation adjustments : 1978 4 1977 917 1976 890 • 1 ,811 Adjusted taxes receivable - March 31 , 1978 5 ,306 1978 Original tax roll 245 ,717 Total to be accounted for 251 ,023 Tax Collections - Current year 238 ,617 Prior years 3 ,922 242 ,539 Taxes receivable - March 31 , 1979 $ 8 ,484 Taxes receivable by fiscal years - 1973 48 1974 167 1975 - 1976 326 1977 847 1978 7 ,096 $ 8 ,484 Assessed Valuations Summary Tax rate Personal per $100 Land Im rovements Property Total Valuation 1978 $4 ,257 ,740 $26 ,022 ,370 $434 ,490 $30 ,714 ,600 80G 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 1975 4 , 287 ,000 19 , 128 ,450 318 ,470 23 ,733 ,920 90 1974 4 , 292 ,700 15 ,189 ,780 209,040 19 ,691,520 90 Tax collection year - From October 1 , 1978 to September 30 , 1979 Percent of assessed valuation to fair market value 100 .0% Percent of current taxes collected to current taxes levied 97 .1% Percent of current and delinquent taxes collected to current and delinquent taxes outstanding at the beginning of the tax year 96 .6% See notes to financial statements - 12 - Schedule 3 HARRIS COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 108 ANALYSIS OF CHANGES IN GENERAL FIXED ASSETS For The Fiscal Year Ended March 31 , 1979 s Balances Balances March 31 , Addi- Deduc- March 31, 1978 tions tions 1979 as Land $ 1 ,675 $ 1 ,675 Water system 525 ,426 525 ,426 Sewage system 712 ,732 $21 ,042 733 ,774 Drainage system 642 ,735 $80 ,000* 562 ,735 Engineering fees 174 ,159 174 ,159 Totals $2 ,056 ,727 $21 ,042 $80 ,000 $1 ,997 ,769 Amounts provided by - Construction fund, bond sales $1, 962 ,158 $80 ,000 $1 ,882 ,158 General operating fund, net system revenues 94 ,569 $21,042 115 ,611 Total amounts provided $2 ,056 ,727 $21 ,042 $80 ,000 $1 ,997 ,769 See notes to financial statements *Estimated cost - storm drain and easement out of Forest Bend, conveyed to Harris County Flood Control District. a a a - 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, 1979 Balances AU March 31, 1978 and 1978 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 S Total $270 ,812 See notes to financial statements • s s - 14 - 0 HARRIS COUNTY WATER CONTR INSU Ma 0 S Employee honesty, etc. : Tax Assessor and Collector Public official Fire, lightning, extended cover vandalism and malicious misch O Water plants and sewage treatment plants General liability: Bodily injury, aggregate • Property damage, aggregate Auto liability, non-owned car Bodily injury Property damage 0 ft 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 4 March 31 , 1979 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 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 * 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 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 Accounting 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 - 17 - Schedule A # Page 2 of 5 YES NO 6 . Did the water district: 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 4 interest? *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? *The answer to this question does not fall within the scope of 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, 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 s 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 officials s 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 w - 18 - Schedule A Page 3 of 5 ft 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 May 21 , 1979 . 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. *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 . *This question answered on the statement that follows : w s w • - 19 - HARRIS COUNTY WATER CONTROL AND IMPROVEMENT DI STATEMENT RELATING TO QUESTION NO. March 31, 1979 A a. Name of depository bank or savings association b. Amount of FDIC or FSLIC coverage - demand deposits time deposit or savings deposits ,, c. Cash balance at year end - demand deposits time or savings deposits d. Amount of bond or par value of security pledged as of year end (not including FDIC or FSLIC coverage) e. Was security adequate at year end according to criteria enumerated above f. Largest cash balance amounted to - demand deposits time deposits or savings deposits g. Date of largest cash balance h. Amount of bond or par value of security pledged at time of largest balance i. Was security adequate at date of highest balance according to criteria enumerated above Note: By adoption of the Bond Orders of all the bonds issued by the District, the District has p7 the bondholders the net revenues from the operati system and the taxes levied by the District. Sec par. (b) of the FDIC Rules and Regulations statE Public Bond Issues . Where an officer, ager • employee of a public unit has custody of cE funds which by law or under the bond indent are required to be paid to the holders of k issued by the public unit, any deposit of E funds in an insured bank shall be deemed tc deposit by a trustee of trust funds of whic 4 bondholders are pro rata beneficiaries , and such beneficial interest shall be separatel insured for $40 ,000 . # - 20 - Schedule A Page 5 of 5 YES NO 9 . The District' s taxes were collected by an independent A tax assessor-collector. 10 . Was the tax assessor-collector bonded as required by law? X 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? $92 ,438 This question has been interpreted to mean the largest deposit for the year by the tax assessor-collector. 41 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 • 13 . As a result, were local tax revenues (including delin- quent taxes and interest and penalties on taxes) properly separated for debt service? X 14 . Was the water district in compliance with applicable bond resolutions , with the general or special legisla- • 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 Exceptions noted during the course of our audit of the • financial statements are described in the management letter. This question has also been answered by the Board of Directors in Schedule B. • 15 . Other comments of the Auditor : None • - 21 - Schedule B 4 HARRIS COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 108 QUESTIONNAIRE TO BE COMPLETED BY BOARD OF DIRECTORS March 31 , 1979 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 agencies 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 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 • 4 A 4 - 22 - Schedule C HARRIS COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 108 BOARD MEMBERS, KEY ADMINISTRATIVE PERSONNEL AND LEGAL COUNSEL March 31 , 1979 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 16906 Townes Rd. Per Vice Friendswood, Texas 4/1/80 Diem President Yes Margaret George 3960 Laura Leigh Per Friendswood, Texas 4/1/80 Diem Secretary Yes # Sandra Lindsey 17002 Townes Rd. Per Friendswood, Texas 4/1/81 Diem Member Yes Gina Runnels 16731 David Glen Per O Friendswood, Texas 4/1/81 Diem Member Yes Date Hired Fees Paid A Key Administrative Personnel District Tax Assessor-Collector Alta Carbone Friendswood, Texas 1/19/70 $4 ,800 No s Legal Counsel Smith, Bacon & Murdagh 1200 Travis Street Houston, Texas 1/19/70 $4 ,028 No Note : None of the directors listed above had any relationship with major land owners , engineers , attorneys or tax assessor/collector of the District. a - 23 - • Schedule D HARRIS COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 108 4 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 , 1979 and the other supplemental statements and other supplemental information included A herein was received by the Board of Directors on and was reviewed and approved* pgrevc-d* at a meeting of the Board of Directors of the Water District on 7 Signature of Board President s SSiignat re of B d cretary 1 *Strike out the word which does not apply. 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