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HomeMy WebLinkAboutFY Ended September 30, 19772200 FORT WORTH NA~L. BANK BLDG FORT WORTH. TEXAS 76102 July 22, 1977 Mr. John R. Pipes, President Denton County Municipal Utility District NO. 1 1800 Commerce Building Fort Worth, Texas 76101 Dear Ilk. Pipes: Our examination of the financial statements of Denton County Municipal Utility District No. 1 at %arch 31, 1977 and for the year then ended, disclosed certain areas for improvement in internal accounting controls and enabled ~1.s to identify other matters which may be of concern to you. The internal control items are not of such a nature as to affect our ability to express an opinion on the District's financial statements, and they did not require us to perform additional auditing procedures or to extend certain procedures. Items which we believe should be brought to your attenticn "re set forth below. Internal Accounting Controls and Suggestions for Improvements In any system where essentially all accounting func- tions are perfornied by a single individual, there are in her en^; weaknesses due to a lack of proper segregation of duties. Under such circumstances, implementation of certain controls would not be practicable. However, we would reconlmenci consicl- eration of the following, in order to achieve minimal segregation between the handling of District assets and recording of transactions. (I) Use of a "lock-box" depository system for cash receipts. Under this system, payments are received and deposited by the bank directly with remittance advices and check copies furnished to support deposit. (2) Checks should not be returned to Mr. Brown after signing. Responsibility for mailing of checks should be assumed by the Board of Directors or a designated individual, independent of their preparation. ARTHUR YOUNG 8 COMPANY Mr. John R. Pipes, President July 22, 1977 Page 2 (3) Adequate internal controls are now in effect to properly account fcr collection of tap fees. However, prior to implementation of these controls one tap fee has not been properly accounted for. Administrative Control Problems and Other Matters of Concern to ivlanagement As the day to day activity of the District increases, the current system of handling cash disbursements will become increasingly cumbersome. We mould recommend that a petty cash bank account be established in the system fund with blr. Brovn an authorized signator. The fund would be kept on an imprest basis and be reimbursed from the regular account at the following Soard meeting. A specific limit would be authorized for any single disbursement. Establishment of such an account would enable hlr. Brown to handle small, recurring items without undue delay by waiting until the nest Board meeting or having to seek out three Board members to sign a check on the regular account. At March 31, 1977 there are seven customer accounts receivables over six months old totaling $921 or 55% of the total receivables. lire recommend that a stated policy be dev- eloped to deal with these situations before such accounts become too material in total dollar value. Our review and evaluation of the District's system of internal accounting controls were conducted to establish a basis for reliance thereon in determining auditing procedures necessary for expressing an opinion on the District's financial statements. This study was not designed to enable us to express an opinion on the effectiveness of internal control. Our comments with respect to both internal accounting controls and other matters result from information which came to our attention during our examination of the financial statements. This report is issued solely for the information of the District's management; it should not be presented or quoted to anyone outside the District because of the possibility of ARTHUR YOUNG & COMPANY Mr. John R. Pipes, President July 22, 1977 Page 3 misunderstanding by other persons who may not be aware of the objectives ancl lirnit~ticns of iater:lal contrcls e11d of our study and evaluation thereof. We would be pleased to discuss the matters reported or to answer any questions you may have at your convenience. Very truly yours, I.lcGOV/I~J.GOGFREY, CECKER.~4cF.lACIiiI~i. SliIPi4Al.l Z i4cCLAPJC LAW orl'lcEs I,ljl~lilLEP<lH FLOLiii COi.ll.iEi?iB UUiLOilCS ,;t:# ,.>#<> :~ ~L;>L#;;,~:.,.:.> FORT WORTH,TEXAS iel02 GI,:, L$,-.,< r c. ,;..,:<,T c,:. .. ,c: c, :.:.,,, 8.3 TELiPI-ION1 817 338-0581 'i.ii-,.>.:a. ,i.,,iii,ir< c.;~,?, f., ,.,,:+7,:.: t;:.:t.;<>*,u 3 ?,<,~L, ;I; &ir,Li i.Sih,",.,irG July 27, 1977 /' TO tii& Directors OE Dentori Couni:y ~lprhcipal Utility District No. 1 , Dear Directors: Enclosed is a copy of the final audit report anc1 manageiilt2nt 1-etter prepared by Arthur Young & Company relati~ng to the District's activities for the fiscal year ended I'iarch ?I., 1977. 'The management letter wa:; received, and the audit report was approved, by the noarc1 of Directors at its last meeting on July 22, 1977. If you have any c~uestions or cornrnents r-egarding the audit or the management letter, please notify me. Very truly yours, i ,. .<:;: ,,, . .~ >.., ;;,.; ." ,' ;' . , -. . ,/ . . t' ! , :; c ~. ~.ober< G. West i:GW/iiis F Enclosures cc: Mr. Dean T'esltos? Mr. Charl-es Acf~e rman blr. Pete Tart .. , Mr. V?illis Erown/--, Mr. Joe !.!apes cap* FRO* MeGOWN . GODFREY - DECKER. McMACKIN . SHIPMAN & McCUIME 8.7'" *LOOW COUULI1CL mVILDI*D lDbT WO"T*. TEX*. 7e1C.3 . -. : Stepil?ns Arti1i:r' Youji~j an<? Coinpany 2200 Port Worth National Bank Buildinq Fort \~7a::t!l, ;C:.; 76132 Also, it its monthlii 3eet.ii-!c; k.o{?z;, - tlii: 3o:lrcl of Direc- tors votod to change the fiscal. .,?car - of ~istrjct to en? on -. :.larch 31. Tl~erefore, - vour rl.rst ar?j;<?.,31 ali<lit iji.SI. he for i::1~ fiscal yeax eliding ??arc11 31, 197'7, 'The Board is ;i~,la-c $:ilfit -!-?-is "2 - -" . ..ndnge in fiscal yoar nay srrect tnz cost of vour firxl for can--' -. 6usti.i?!:j th:i.s first auali:, TABLE OF CONTENTS Auditor's Opillion Balance Sheet - All Funds Statement of Revenues, Expenses and Fund Balances - All Funds Statement of Changes in Financial Position - All Funds General Long-term Debt Service Require~nents - by Years Analysis of Changes in General Long-term Debt Schedule of Temporary Investments Analysis of Taxes Receivable Analysis of Organizational Costs Analysis of Changes in General Fixed Assets Notes to Financial Statemen-ts Supplementary Informat ion: Certificate 01 Board of Directors Ques.tionnaire to be Completed by Auditor- Insurance Coveyage Schedule Number Page Board Mernbeys , Key Administrative Peysonnel and Legal Counsel 2200 FORT WOGTH NA~L BANK BLDG FORT WORT+!. TEXAS 76102 Board of Directors Denton County Municipal Utility District No. 1 Denton County, Texas We have examined the balance sheets of all funds of Denton County Municipal Utility District No. 1 as of March 31, 1977, all funds' 'elated statements of revenues, expenses and fund balances and changes in financial position for the year the11 ended and the related exhibit and schedules (Exhibit D and Schedules A-l through A-5). 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. The District is in the developmental stage and construction of the fixed assets is not complete at the balance sheet date, In accordance with the suggestions of the Texas Water Rights Co~naiis-. sion, the district did not depreciate its general fixed assets. We observed no departures by the District from the requirements of the bond orders or from applicable laws and regulations. In our opinion, the accompanyillg fillailcia1 statemellts examined by us present fairly the financial position of the Denton County Municipal Utility District No. 1 for all funds as of March 31, 1977 and the results of its operations and the changes in financial position for the year then ended, and in our opinion, Exhibit D and Schedules A-1 through A-5 present fairly the information stated therein, in conformity with gellei-ally accep-ted accounting principles. Our examil~atio~l has been made primarily for the purpose of expressing an opinion 011 the financial statements, taken as a whole. The accompanying supplementary information is presenLed for analysis purposes and is not necessary for a Pair presentation of the financial information referred to in the preceding paragraph. It has been subjected to the tests and other auditing procedures applied in the examination of the financial statements meiltiolled above and, in our opinion, is fairly stated in all respects material in relation to the fillancia1 stateiilents talten as a whole May 5: 1977 -- 98B'OTP BZE'OW ZOP'LOES -- ZOP'LOF --- * S 862 ZOL'L $ $ $ $ 6 LGG'L $ S6Z u: $ ZOL'L 4 SaaircTcg ponj poc sar7r[Tqcr? ~ozo~ a=ucToa pun^ ~cxo~ ZadoTanaa dq patnqrLluo3 spuoa lo aTss uozs pa$cooTtg "0~13n~*SuoJ Pazr.loq?nv "ox spoag JO aTog mo.zx paloJoTT\i . . ~ POTJsd uoTlJnlxaua3 Bulzna &saJaluI puoO ray paTcJoTTy sam,~ PazaarToaon UT auarnxsanu1 sa3ocIra pund paxe=oT[run sa>ucp* puns saT%nrqnr? IcwL L SXON :a lTq7tlxz put T-Q arnpeqzs - a~qodcd xaaa pepuon sai$TIrqzT? xoarxna ~c*o~, 51Tsodaa axqopunjay sasoadwg panxmv por arqcbcd exunoajv SST3?ITqPT? 1UBJS"J S33NV'IVB (INfld ONV SZILI?IEVI? Sl=ssv TnloL lqao pvpuog .rox oorsjnold LLGT 'TE 4JX7lY .TO SV SLlNfld 'ITV - .LZPHS PJNV'IVB T 'ON i131UJsSIa h.LI'I1Ul lVd131NilIY bLNfl03 NO,LNP(I n LIOIUXP i "kz zz OOhmNNmO g>?^ :Er ECIh 2; 1 * "" V; % EZESZ:~: mkf/ i";<G;N-;; ; - 3 = w - rim ma 3 004 rm C 0 DENTON COUNTY hlUNICIPdL UTILITY DISTRICT NO. 1 SPATEBEN'I' OF REVENUES, EXPENSES AND FUND BALANCES - ALL FUNDS For tile yenr ended hlarcll 31, 1977 (Continued) Deductions irom Fund Bnlvnces 'TrnnsIerred to Debt Service Fund Transferred to General Fined Asset Fund Total Deductions from Fund Bnlunce - - Net Chnnge in Fund Balance for the Yenr fund Balance at April 1, 1976 Fund Bnlances nt hiarch 31, 1877 Totzl - General Debt Gcnernl hlenlorandum Pixed Construction Service Tux Operating total Asset Fund Fund Fund Fuliil - - Fund .'I- See accompanying notes EXIlIBIT C DENTON COUNTY hlUNICIPAL UTILITY DISTRICT NO. 1 STATEllENT OF CHANGES IN FINANCIAL POSITION - ALL FUNDS For the year ended hlnrch 31. 1977 Debt Genernl hiernorandurn Construction Service Tnx OpcratinE total Fund Fund Fund -- Fund Sources of Cnsh Cash Receipts Irom Operations Cash Disbursements for Operations: Contract Lobar hletcr Expense Tap Connection Expense Professional Fees Service Account Collection Booktreeping Utilities Recurring Operating Expenses Tax Aesessar-Collector Debt Service Expense Totnl Cnsll Disbursements for Operations Net Cusli fraln Operntions Sale of Bonds (Cnsh Allocated to Debt Service and Construction Funds) Cn~ll TrnnsSers Irom Other Funds Totnl Cash Provided Applicntion of Cneh Purchase oi District Orgvnizntional Casts (Asset Trnnsterred to Geliernl Fired Asset Fund) Payments of Contracts Pnynble Cnsh Transfers to Other Funds Total Cnsh Amlied Increase in ensh Cash and Temporary Investment Balance nt April 1, 1976 Cash and Temporary Investment Balance at hlarch 31, 1977 -5- See accompanying notes. EXHIBIT D DENTON COUNTY MUNICIPAL UTILITY DISTRICT NO. 1 GENERAL LONG-TERM DEBT SERVICE REQUIREMENTS - BY YEARS As of March 31, 1977 Due during Series 1976 fiscal Principal Interest due years due (March 1 and ending (March 1) September 1) Totals 15,000 15,000 20,000 20,000 25,000 25,000 30,000 30,000 35,000 40,000 40,000 45,000 50,000 55,000 GO, 000 65,000 70,000 80,000 85,000 95,000 105.000 115,000 125,000 135,000 150,000 Cash and Temporary Invest~nel~ts Bala!~ces At March 31, 1977 Tax Fu!ld $ 2,676 Debt Service Fund 253,502 Total $"56 17s = .L---L Total allnual requirements $ 137,675 137,675 137,675 137,675 152,675 151,363 155,050 153,300 156,550 154,363 157,175 154,550 156,925 158, 863 155,363 156,863 157,925 158,550 158,738 158,488 157.800 ooo'oes 'I$ SL~'LEI$ $ ooo'oes'r$ -0 - $ oooioe9 SLZ '€15 000 'OE~ SCHEDULE A-a DENTON COUNTY RlUNICIPAL UTILITY DISTRICT NO, 1 SCHEDULE OF TERlPORARY INVESTIvIENTS For the year ended March 31, 1977 Identification 0 r Certificate Funds Number - Debt Service Fund Certificate of Deposit 27966 Certificate of Deposit 27959 Certificate of Deposit 27963 Certificate of Deposit 30730 Certificate of Deposit 30729 Certificate of Deposit 30728 Total - All Funds Accrued Interest Receivable Interest Maturity Balances at At End Rate Date End of Year Of Year SCHEDULE 8-3 DENTON COUNTY VIUNICIPAL UTILITY DISTRICT NO. 1 ANALYSIS OF TAXES RECEIVABLE As at klarch 31, 1977 Taxes Receivable at Beginning of Year 1976 Year-Original Tax Roll Less: Abatements to Original Tax Roll Adjusted Tax Roll Total to be Accounted For Less: Collections: Current Year Pyior Years' Taxes Taxes Receivable at End of Year Taxes Receivable by Years 1976 Assessed Valuation Summary Property Valuations: Land $8,783,000 Improvemen-ts 490,000 Total Valuations $9,273,000 Tax Rate Per $100 Valuation $0.95 Tax Year: Front: January 1, 1976 to December 31, 1976 Percent of the assessed valuation to fair market value 100.0% Percent of current taxes collected to current taxes levied 91.3% Percent of c,urrent and delincluent taxes collected to current and delinquent taxes outstanding at tbe beginning of the tax year (1) (1) - Initial Taxable Year SCHEDULE 9-4 DENTON COUNTY MUNICIPAL UTILITY DISTRICT NO, 1 ANALYSIS OF ORGANIZBTIONAL COSTS For the Year Ended March 31, 1977 Organizational Costs - Creation Period Engineering and Surveys Filing Fees, Licenses, Legal Notices, and Permits Legal Fees Director Fees and Per Diem Other Costs Total Organizational Costs - Creation Period Balances at Beginning Addit ions of Year (Decreases) Rala~lces at End of Year Organizational Costs - Construct ion Period Legal Fees 8 $ 31,665 $ 31,665 Financial Consulting Fees 30, 600 30,600 Operating Expenses 13,027 13,027 Bond Interest Expense 100,580 100,580 Amortized Bond Discount 2,044 2,044 Total Organizational Costs - Construction Period $ $177,916 $177,916 Total Organizational Costs $ - $206 033 ___.L-- Amounts Provided: For District Organizatioual Costs - Creation Period by Construe-tion Fund $ - $ 28,117 --. $ 28,117 For District Organizational Costs - Coilstruetion Period By Consti-uction Fund $ - $ 75,292 $ 75,292 By Debt Seivice Fund - 102,624 102,624 Total District Organiza- tional Costs - Construct ion Period $ - $177,916 --- $177,916 Total Provided $ - - -- $206,033 $206,033 SCHEDULE A-5 DENTON COUNTY MUNIClPAL UTILITY DISTRICT NO, 1 ANALYSIS OF CHANGES IN GENERAL FIXED ASSETS For the Year Ended March 31, 1977 Balances at Balances Beginning at End of Year Additions (Deletions) of Year - Land Water System Sewage System Drainage System Engineering Fees Totals Additions Provided By: Const~uction Fund Contributions by Developers Total DENTON COUNTY MUNICIPAL UTILITY DISTRICT NO. 1 NOTES TO FINANCIAL STATEMENTS Note 1: Creation of District - Denton County Municipal Utility Dist'ict No. 1 was cyeated by an order of the Texas Water Rights Commission on March 4, 1975 and confirmed by the electorate of Dent011 Cou~lty Municipal Utility District No. 1 at a confirmation election held on October 7, 1975. The Board of Directors held its filist meeting on April 24, 1975, and the first bonds were sold on June 8, 1976. Note 2: Basis of Accounting - The exhibits and supporting schedules contailled in this report were prepared on the accrual basis of accounting except for the sta'tenrent of changes in financial position--all funds, which is a cash basis statement. Furthermore, tax revenues, pulichases of supplies for inven-tory and bond inter'est are not accrued and the amounts shown for these item reflect cash basis accounting treatment. No-te 3: Bond Interest - In accordance with -the bond resolution dated October 29, 1975, a portion of the bond proceeds was deposited into the Debt Service Fund for the payment of bond interest during the construction period. This bond in-terest has been capitalized as an 01-ganizational cost for the construction period. Note 4: Organiza-tional Costs - The Dis-trict, in confornlance with -- req~~i.r.ernents of the Texas Water IZights Co~~~mission, capitalizes and charges to organization costs fo~ tile ci3eation period, all costs incurl-ecl in the c.reatio1-I of the District allowed by statute. The Texas Water Rlghts DENTON COUNTY MUNICIPAL UTILITY DISTRICT NO. 1 NOTES TO FINANCIAL STATEMENTS Note 4: Organization Costs - (Continued) - Commission also requires capitalization as organizational costs for the construction period all costs incurred in the issue and sale of bonds, bond interest and amortized bond premium and discount, losses on sales of investments, accrued interest on investments purchased, attorney fees and some administrative expenses until construc-tion aud acceptance or use of the first revenue producing facility has occurred. As the District purchased its facilities already compleLed by the developer, only those costs being funded by bond proceeds are being capitalized. Administrative expenses of $13,027 were funded From the bond proceeds. As this amount, due to nature of the District's initial operations, could not be associated with specific disbursements, it is reflected as a reduction of operating expenses for the General Operating Fund. Note 5: %edge of Revenues - The bonds are payable from the proceeds of an ad valorem tax levied upon all property subject to taxa-tion witiiin tile District, without limitation as to rate or arnouilt, and are further payable fro111 and secured by a lien on and pledge of the net revenues to be received from the operation of the District's waterworks and sani-tary sewer system. DENTON COUNTY MUNICIPAL UTILITY DISTRICT NO. 1 NOTES TO FINANCIAL STATEMENTS March 31, 1977 Note 6: Compliance with Debt Service Requirements - The provisions of the boncl resolution relating to debt service requiret~lents have been met and the cash allocated for these purposes is sufficient to meet debt service requirements for the fiscal year ending March 31, 1978. The ability of t11e District to meet future debt service requirelnents depeuds primayily on successful collection of taxes levied against property cvithin the District and operations of the waterworlts and sanitary sewer system. Note 7: Redemption of Bonds - The outstanding bonds of Denton County Municipal Utility District No. 1 are callable for rede~nption prior to maturity at the optioll of the District. The bonds rnay be called in whole 01. in part for the purpose of retirement or refunding, or both, a.l: par in addition to unpaid accrued interest. DENTON COUNTY ilUNICIPAL UTILITY DISTRICT NO. 1 NOTES TO FINLVCIAL STATEMENTS March 31, 1977 Note 8: Water and Sewer Service Rates - The Denton County hlui~icipal Utility District No. 1 bas established the following water and sewer service rates effective as of April 1, 1977. Tap Fee $275.00 Sewer Inspection Fee $ 15.00 Water Service Only Treated Water - First 8,000 gallons of water used - minimum bill $ 8.00 Each 1,000 gallons of wa-te~ used thereafter 1.00 Untreated Water - First 8,000 gallons of water used - minimum bill $ 8.00 Each 1,000 gallons of water used theyeafter to 15,000 gallons of water used 1.00 Each 1,000 gallons of water used thereafter .15 Standby Fee Per Month $ 5.00 Sewer Charge Per Month $ 5.00 SUPPLEMENTARY INFORMATION CERTIFICATE OF TI-IE BOARD OF DIRECTORS Denton County Municipal Utility District No. 1 Name of Water District We, the undersigned, do hereby certify that the audit yeport of the above named Water District for the fiscal year ended March 31, 1977 was received by the Board of Directors on the 22nd day of July, 1977 and was reviewed and approved disapproved at a rneetiilg of the Board of Directors of the Water District on the 22nd day of July, 1977. Signature of Board Secretary Page - 1 of - 6 QUESTIONNAIRE TO BE COMPLETED BY AUDITOR FOR THE YEAR ENDED NARCK 31, 1977 Denton County klunicipal Utility Distrzict No. 1 -- Name of Water District 1. At -the time that you (your firm) we17e 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 -- Yes No If No is checked for clues-tion l., please indicate or- describe the instruct ions that you used for comple-t ing the audi-t (a-t-tach a continuation page, if necessary). 2. The Water District Accounting Manual p~~escuibes account- ing principles and policies. After taliina these into - conside~*ation, did the local water dlstrict : a. Maintain a proper classification of expenses and revenues? x -- Yes No b. Record expenses and revenues on the basis of full accl-ual ac,coun-t ing except for the specific revenue ancl expense iter~ls required to be rriaintained on the cash basis by the Water District Accounting - Man~~al? x -- - Yes No c. ivlaintair~ the double entry systein of accounting x -- Yes No d. Keep a general ledgel: in aceo~dance with the unii orin classification of gener-a1 ledger accounts prescl-i bed in Water District Accounting Rlanual'? -- X .- Yes No e. Adhel-e to ol;bei3 p~~ovislons of Water Dist~ict -- Accoun-t ing Manual? X -- Yes Nn --- A,- If No is checked for ally ite~ii unde~; cjues-tion 2., lull c1isclosu1-e as to -the natill,e ancl i.eason for the negative reply 1s footnoted 01; otl~e~:wi.se indicated in t11i.s aucll-t report 011 the followiilg no-te(s) to the f'inancial. statements and pnge(sj of ?,lie audit repoict (attach a ?or,-ti:iuati.or, page, if necsssal~y) . Page - 2 of - 6 QUESTIONNAIRE TO BE COMPLETED BY AUDITOR FOR THE YEAR ENDED MARCH 31, 1977 (Continued) 3. Did the Board of Directors of the water district impose on you (your firm) any audit requirements in addition to those nii~limum audit requii3enlents of the Water District Accounting Manual? x -- - Yes No If Yes is checked for question 3., please identify the exhibit (s) or schedule (s) (or the opinion letter, if applicable) on which these additional requiremellts are reflected (attach a continuation page, if necessary). 4. Did you identify, during the course of your examination of the financial statements of the water district, ally 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 beell discussed in a lna~laeement letter to the wa-ter - district's Board of Directors? x -- - Yes No 5. Did you obtain representation from tile Board of Directors of the water district that all records of - the water district were made available to vou for your examination? x -- - Yes No IT No is checked Por question 5., please explain why the above representation was not so obtained (attach a continuation page, if necessary). 6. Did the waLer district: a. Use the col~struc-tion Puncl, tax fund and deb-t service fund ollly for pllrpoces authorized by the Boar,d of Directors of the water district ancl;/'or within the pi-ovislons of applicable bond resolu- tions'? x ---- Yes No Page 3 of G - - QUEST IONNAIIIE TO BE COhlPLETED BY AUDITOR FOR THE YEAR ENDED MARCH 31, 1977 (Continued) 6. Did the water district: (continued) b . Properly segregate and maintain the required amount of cash escrowed by the Texas Water Rights Commission or disburse the escrowed cash accordine -to the terms urescribed bv the Texas - A Water Rights Commission? x -- Yes No c. Do business only with firms or co'poratiol~s in which members of the Board of Direc-tors had no pecuniary interest'? x -- Yes No d . Obsei-ve the 'onclit ions for obtaining grants, gifts, etc. , or obse1:ve agreemellts with goveynmental agencies for the purpose of securing funds or services? (1) -- Yes No e. Have a c,ontract for Social Security coverage for its employees with the Texas Department of Public Welfare, Social Securi-ty Division? (2) -- Yes No f . Make remittances of Social Security taxes according to the terms of the contract for Social Security coverage with the Social Security ~ivision of the Texas Department of Public Welfare? (2) -- Yes No g. Deposit recei1J.t~ 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 perso~~lle 1'2 x -- Yes No If No is checked for any item under question G., detailed explariation is made in this repor-t on the following exhibit (s) or schedule (s) (a-ttach a con-t inuat ion page, if necessary 1. NOTE: See Page 6 01' 6 lox' explanation of references (1) - (7) -19- Page 4 of G - - QUESTIONN.4IRE TO BE CObIPLETED BY AUDITOR ITOR TllF YEAR ENDED AlARC1.i 31, 1977 (Cant inued) 7. Do you issue a managelnellt letter to aclministyative officials of the water clistl'ict tit least an~lually which sets forth your co~i~rnellts (based on matters which came to pour attention during your examina- tion) for strengthening internal accounting controls and improving administrative efficiency and procedures? I% Yes is clleclted Tor question 7: a. Were you' recommendations explained to and discussed with administrative officials of the water district? b. The da-te of your most recent managemei~t letter was July 22, 1977. c. Is there evidel~ce indicating -that your previous year(s) l'ecom~nendations have been or are being ilnplen~ell led? d. Iias a copy of -the ~nanagement letter been filed with -the Texas Water Rights Comrnissioi~? 8. The Texas Water Code makes specific provisions relating to security provided by depository banks. After considera'tion of the applicable laws pertain- ing to the specific water dis-trict, did the depository balk provide adequate sec,uri-ty of -the correct type? Please indicate Col- each depository: (7) - a. Tl~e name of the clepositozs,y bank - First National Banlc, Fort Worth ; b . Amount of F . D ,I. C , coverage (ii lr~e~nber bank) c. Arnouilt 01 bond or- otl?ey security pledged as of the end of the I'iscal year d. Largest cash balance e. Date of largest c.ash balance f. The alnouut of hol~cl or security pledged at the time of the largest cash balance (exclucli~~g F.D.I.C. eove1;age) x -- Yes No X -- Yes No (3) -- Yes No i.1) -- Yes No X -- Yes No Page 5 of G - - QUESTIONNAIRE TO BE COMPLETED BY AUDITOR FOR THE YEAR ENDED MARCH 31, 1977 (Continued 9. The watel- district's tases were collected by (check one): a. An employee of the district - /T b. The couilty tax assessor-collec-tor -- \: 1 c. A city or other tax asses so^--collector - /x/ d. More than one of the above /7 10. Was the tax assessor-collector bonded as required by law? x -- Yes No 11. What was: a. The tax assessor-collector bonded for? $ 10,000 b. The grea-test an~ount of the district's taxes in the tax assessor-collector 's possession at any one time? $ (5) c. The frequency of tax receipts deposits wi-th the bonded deposi-toi-y? (check one) (1) Daily (5) i2) Weekly (3) hlonthly /7 d. The percent of the assessed valuation to fair market value? 1000!, 12. We (check one): a. Actually exar~li~ied the recor;ds of the -tax assessoy-collec~ol,.. !----7 -. b. Received wl:l-tten conlirmatioll for tax data from the tax asses so^-collectoi-. 13 -- c. Accepted tax data furnished by -the disl;rict 's ,-- administrat i.ve offices. i- 13. As a result, weye local tax revenues (including delinquent taxes and inte~x!sr ancl penalties on taxes) properly separ.atec1 1 or debt service? x .. -- Yes No 14. Was the water- dis-trict in com~~lianie ivl-tll a~plicable bond 'esolut i ons vvi tli the general or special legislation under which the district was created and with the specli-ic statutes excerpted and included in the Legal Compliance Guidelines In Sectlon 70-03-1 01 the Water Page 6 of 6 - - QUESTIONNAIRE TO BE COMPLETED BY AUDITOR FOR THE YEAR ENDED MARCH 31, 1977 (Continued) 14. (continued) District Accounting Manual? (Attach a continuation page, i1 necessa~=y. ) 15. Other Commel~ts of -the Audi-toi-: (1) No intergovernmental transactions. (2) District has no employees (3) Initial engagement (4) To be filed at same time as audit yepor-t (5) Receipts are deposited as received into district account (6) Cash balances fluctuated significantly, due to bond proceeds. Based on audit review, security pledged exceeded cash and teniporary inves-tment balance a't all times . (7) The District also main-tains a tax depository account at Jetero Bank, Westf ield, Texas. It is the policy of the District that deposits held in the account are not to exceed F,D,I .C. coverage of $40,000. X - Yes No z'2 "( .i 3 or+. 0, LiAZ 0.0-, hey FLU 0 0 U' Y1 X X - " - - - " u u - i) Y .2 U 0 0 0 0 w s Y " +A 2 m m YI ~1 y1 YI DENTON COUNTY hlUNICIPAL UTILITY DISTRICT NO. 1 BOARD hIEIBERS, KEY AD~IINISTRI~TIVE PEllSONNEL AND LEGAL COUNSEL hlnrch 31. 1977 Jolin n. Pipes 3.179 IY. Viclrery Fort IVortll, Texns J. Don Willinmson 509 m. vickery Fort Wol.th, Texas Issbcllc R. Lobdell 3479 IY. Viclrery Fort IYorth, Tcsne Lee A. Smitll 1203 Ridglen Bonk Bldg. Fort IYorrh, Texas Charles n. Lewis 5936 Eden Drive Fort Worth. Texas IVillis P. Brown 1200 sun,mir Fort Wortli. Tesns hIcGown, Godircy, Decker. hlchlnclrin, Shipmnn 6 hlcclane 1800 Comerce Building Fort IYoTLII. Texas l(cnneth R. Byr'd P. 0. Bo:r 90663 tloust~ll, Texns 77090 Term 01 OiIlce Elected and Exp1sCS Date Hired - Con trnc t Board hlembers Rcletionsliip !\'ill> Major Reaidcllt Land Oivnc1.5, Engineer, Allnuol of Atcorney nod Tnx Snlary 'ritlc District? Assessor-Collecror - per Diem President No None Per Dicni Vicc President No per ~icm SCCTC Lory No Per Diem Dil.ect01. No None Par Diem Dircctor No None District hlnnugcr and Otlicr Key Administrative Personnel District Legnl Counsel Fees Pnid $20,772 NO None None