HomeMy WebLinkAboutFY 16/17 Audited Financials Statements CLAY COUNTY UTILITY AUTHORITY
FINANCIAL STATEMENTS
SEPTEMBER 30,2017 AND 2016
CLAY COUNTY UTILITY AUTHORITY
FINANCIAL STATEMENTS
SEPTEMBER 30,2017 AND 2016
TABLE OF CONTENTS
Page
Number(s)
Independent Auditors' Report 1 —2
Management's Discussion and Analysis 3 —7
Basic Financial Statements
Statements of Net Position 8
Statements of Revenues,Expenses, and Changes in Net Position 9
Statements of Cash Flows 10
Notes to Financial Statements 11 — 18
Independent Auditors' Report on Internal Control Over Financial Reporting and
on Compliance and Other Matters Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards 19—20
Independent Auditors' Management Letter Required by Chapter 10.550,Rules of
the State of Florida Office of the Auditor General 21 —22
Independent Accountants' Examination Report 23
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A,)14,, .James Moore
Certified Public Accountants and Consultants
INDEPENDENT AUDITORS' REPORT
To the Board of Supervisors,
Clay County Utility Authority:
Report on the Financial Statements
We have audited the accompanying financial statements of the Clay County Utility Authority (the
Authority), as of and for the years ended September 30, 2017 and 2016, and the related notes to the
financial statements, which collectively comprise the Authority's basic financial statements as listed in
the table of contents.
Management's Responsibility for the Financial Statements
The Authority's management is responsible for the preparation and fair presentation of these financial
statements in accordance with accounting principles generally accepted in the United States of America;
this includes the design, implementation, and maintenance of internal control relevant to the preparation
and fair presentation of financial statements that are free from material misstatement, whether due to
fraud or error.
Auditors'Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We
conducted our audits in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States. Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditors' judgment, including the
assessment of the risks of material misstatement of the financial statements,whether due to fraud or error.
In making those risk assessments,the auditor considers internal control relevant to the entity's preparation
and fair presentation of the financial statements in order to design audit procedures that are appropriate in
the circumstances,but not for the purpose of expressing an opinion on the effectiveness of the Authority's
internal control. Accordingly, we express no such opinion. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of significant accounting estimates
made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
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121 Executive Circle 133 East Indiana Avenue 5931 NW 1st Place 2477 Tim Gamble Place,Suite 200
Daytona Beach,FL 32114-1180 DeLand,FL 32724-4329 Gainesville,FL 32607-2063 Tallahassee,FL 32308-4386
Telephone:386-257-4100 Telephone:386-738-3300 Telephone:352-378-1331 Telephone:850-386-6184
Website:www.jmco.com I Email: info@jmco.com I Member of AGN International with offices in principal cities worldwide
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the
financial position of the Authority as of September 30, 2017 and 2016, and the respective changes in
financial position and cash flows thereof for the years then ended in accordance with accounting
principles generally accepted in the United States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that management's
discussion and analysis, as listed in the table contents, be presented to supplement the basic financial
statements. Such information, although not a part of the basic financial statements, is required by the
Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting
for placing the basic financial statements in an appropriate operational, economic, or historical context.
We have applied certain limited procedures to the required supplementary information in accordance with
auditing standards generally accepted in the United States of America, which consisted of inquiries of
management about the methods of preparing the information and comparing the information for
consistency with management's responses to our inquiries, the basic financial statements, and other
knowledge we obtained during our audits of the basic financial statements. We do not express an opinion
or provide any assurance on the information because the limited procedures do not provide us with
sufficient evidence to express an opinion or provide any assurance.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated December 8,
2017, on our consideration of the Authority's internal control over financial reporting and on our tests of
its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other
matters. The purpose of that report is to describe the scope of our testing of internal control over financial
reporting and compliance and the results of that testing, and not to provide an opinion on the internal
control over financial reporting or on compliance. That report is an integral part of an audit performed in
accordance with Government Auditing Standards in considering the Authority's internal control over
financial reporting and compliance.
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Daytona Beach,Florida
December 8,2017
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Management's Discussion and Analysis
Managerial Philosophy and Strategic Objectives
The senior management staff of the Clay County Utility Authority (Authority) is pleased to offer
interested parties additional insight, a strategic perspective and further analysis of key operational factors
that may help the reader gain a deeper understanding of the financial statements for the year ended
September 30, 2017.
The Authority is an Independent Special District in the State of Florida. The Florida Legislature created
the Authority on October 1, 1994 by special act (F.S. 94-491) to manage the water, wastewater and
reclaimed water systems in the unincorporated areas of Clay County, Florida. The Authority also serves
adjacent jurisdictions per specific inter-local governmental agreements. The Authority serves customers
in Clay, Duval, and Bradford Counties and uses proprietary fund accounting to report the Authority's
financial position.
One of the core managerial philosophies of the Authority is the commitment to operate, to the extent
possible, the publicly owned utility using the sound business practices of private enterprise. We are
charged with the responsibility of providing our customers with the best long-term value at the lowest
possible cost.
A second core principle is the desire to lead the way in improving the quality of life for the members of
our community. We recognize our responsibility to be good stewards of our limited water resources and
our environment. Furthermore, we clearly understand that the continued economic vitality of our
community relies on an abundant, safe and economical supply of drinking water. We have voluntarily
invested in the technology and infrastructure needed to accomplish these important objectives.
To date, we are one of the few utilities in Northeast Florida voluntarily using advanced wastewater
treatment techniques. In addition, we continue to expand our reclaimed water initiative. Our reclaimed
water distribution system includes seven storage and pumping plants. Our reclaimed water customers
irrigated their lawns with an average of 3.62 million gallons per day during the fiscal year ending
September 30, 2017, this equates to conserving approximately 1.32 billion gallons of drinking water per
year. We also augmented our reclaimed water supply by partnering with the Town of Orange Park and the
St. Johns River Water Management District. Since 2012,the Town now discharges to our reclaimed water
distribution system during high demand periods rather than the St. Johns River. This collaborative
approach has significant water conservation and very positive environmental impacts.
By virtue of a very cost effective public-private partnership, we have taken a leadership role in
constructing the first operational deployment of an exciting new bio-solid residual treatment and disposal
technology. The new treatment technology produces an environmentally superior product while using
approximately half the energy of existing treatment methods.
Our accomplishments have been acknowledged by the receipt of thirty-nine awards, varying from
"Excellence of Operations" for both our water and wastewater system, "Municipal Water Use Efficiency"
award for the most innovative and effective reclamation and reuse program for the Southeastern United
States, Region Four, presented by the Environmental Protection Agency, "Best in Construction"
presented by Florida Transportation Builders Association for utility coordination and damage prevention
during construction on the most heavily traveled urban corridor in Northeast Florida and our most recent
receipt of the "Biosolids Program Excellence Award for BCR Neutralizer Installations" presented by
Florida Water Environmental Association.
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Financial Overview
The Authority is continuing its facility expansions to support the population growth of its service area and
to expand its water reuse capacity. Service rates remained unchanged from fiscal year 2010 to 2014
however, in 2015, service rates were increased 5.4% to address the cost of renewal and replacement of
existing infrastructure and in 2016, an increase of$1.00 per water bill was implemented for alternative
water supply (AWS), a sustainable water source that does not originate from the Floridan Aquifer.
Service rates remained unchanged for fiscal year 2017.
Management estimated a 15.0% reduction in water demand from our base year 2009 to our current fiscal
year, 2016/2017. Customers have aggregately decreased water use 7.63%, even though our customer base
has grown by 5,279 accounts during this time.
The Authority's cash reserves, borrowing capacity and scheduled fiscal year 2017/2018 service rates are
adequate to support currently planned maintenance and expansion projects. Contributions in aid of
construction continue to be a major source of capital.
Condensed Statement of Net Position($000)
For the Year Ended September 30,
2017 2016 Change 2015 Change
Capital assets-net 246,675 239,538 3.0 238,047 .6
Current assets 45,405 40,508 12.1 35,793 13.2
Investments, current 5,906 5,843 1.1 7,125 (18.0)
Other non-current assets 1,674 5,694 (70.6) 1,332 327.5
Investments,non-current 5,316 5,253 1.2 5,770 (9.0)
Deferred Outflow of Resources 2,871 3,110 (7.7) 3,353 (7.2)
Totals 307,847 299,946 2.6 291,421 2.9
Liabilities and fund equity
Net position 229,123 220,447 3.9 210,108 4.9
Long-term liabilities,net 66,620 70,797 (5.9) 72,094 (1.8)
Current liabilities, including restricted 12,104 8,702 39.1 9,219 (5.6)
Totals 307,847 299,946 2.6 291,421 2.9
Capital Assets-Net
Net Capital assets increased $7,137,000 during the fiscal year 2016/2017. The increase is mainly
attributed to $16,539,000 of various utility expansions and dispositions, offset by $9,402,000 of
depreciation expense. Developers contributed$4,037,000 of those assets.
For the year 2016, capital assets, net of depreciation, increased $1,491,000. The increase is mainly
attributed to $11,220,000 of various utility expansions and dispositions, including the land contribution
exchanged for future connections (See Note 11), offset by $9,729,000 of depreciation expense.
Developers contributed$1,622,000 of those assets.
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Current Assets
The change in current assets is due to the increase in cash. Cash in excess of operations is used to fund
capital projects.
Net Position
The net position can serve as a useful indicator of our financial position, with an increase of$8,677,000
the net investment in capital assets, the largest portion of the Authority's net position, 78%, reflects the
net investment in capital assets (e.g., land, buildings, equipment, infrastructure and intangible assets),
these assets are used to provide services to customers; consequently, these assets are not available for
future spending. The restricted portion of the net position, 2%, is capacity charges that are subject to
capital improvements which decreased significantly from prior year due capital outlay exceeding the
capacity fee revenue and debt service for future payments. Developer and other contributions of
$6,335,000 were received in fiscal year 2017, approximately $2,319,000 of which was cash. The
unrestricted portion, 20%, increased 0.5%. Net income is an unrestricted reserve used for future capital
funding.
In the previous year, the increase in net position of$10,339,000 was largely attributable to the increase in
capital assets of$2,453,000, Developer and other contributions of$5,825,000 and governmental grants of
$259,000 and timing of expense outlays.
Long-Term Debt-Net
In fiscal year 2017, the Net long-term debt decreased $4,177,000. This decrease is due to scheduled debt
payments in addition to the payoff of three small loans totaling $1,845,000 as well as the increase in the
current portion of debt.
In fiscal year 2016, the Net long-term debt decreased $1,297,000. This decrease is due to scheduled debt
payments offset by$378,000 in debt proceeds from Clean Water State Revolving Fund.
Current Liabilities-
Current liabilities increased $3,402,000 due largely to accounts and retainage payable, as well as the
current portion of the long-term debt.
In fiscal year 2016, current liabilities decreased$517,000 due mainly to accounts and retainage payable.
Condensed Statement of Revenues,Expenses, and Changes in Net Position($000)
For the Year Ended September 30,
2017 2016 Change 2015 Change
Operating revenues 42,379 41,499 2.1 39,047 6.3
Operating expenses (38,308) (35,302) 8.5 (32,921) 7.2
Operating income 4,071 6,197 (34.3) 6,126 1.2
Non-operating(expenses),net (1,750) (1,942) (9.9) (2,372) (18.1)
Contributions and grants 6,356 6,084 4.5 2,377 156.0
Increase in Net Position 8,677 10,338 (16.1) 6,131 68.6
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Operating Revenues
Operating revenue was within 1% of management projections. Operating revenue is 51% fixed through
base charges and 49% is variable through usage charges. Consequently, climatic conditions such as
rainfall and temperature will cause revenue fluctuations. A large majority (90.6%) of residential
customers continue to use no more water than the second tier allowance in fiscal 2017.
In the prior year, operating revenue was within 2.7% of management projections. A large majority
(90.6%) of residential customers continue to use no more water than the second tier allowance in fiscal
2016.
Operating Expenses
The increase of$3,006,000 in operating expenses in 2017, is largely due to $974,000 increase in wages
and related benefits resulting from additional staffing, hurricane pay and a 2.0% cost of living allowance
and merit, and $1,311,000 increase in subcontractors largely due to the reclaim supervisory control and
data acquisition system and$1,073,000 increase in depreciation.
The increase of $2,381,000 in operating expenses in 2016, is due to $742,000 increase in wages and
related benefits resulting from additional staffing, a 2% merit, a 17.5% or $285,000 increase in health
insurance premiums, $333,000 increase in network infrastructure upgrades and $543,000 increase in
depreciation.
Non-Operating Revenue and Expenses
The decrease of $192,000 in non-operating revenue and expenses is due to an increase of $79,000 in
interest income, a reduction of$57,000 in interest expense and an increase of$56,000 on sale of assets.
During fiscal 2016, the decrease of $430,000 in non-operating expenses is due to reduction in interest
expense and debt issuance costs incurred in fiscal 2015 with the advance refunding of 2007 bonds.
Contributions in Aid of Construction
Developers and others are required to contribute property (water, wastewater and reclaimed water lines)
in their developments and cash for their proportional share of existing water, wastewater, and reclaimed
water plant capacity in order to connect to the Authority's systems. Contributed property was $4,036,736
in 2017, compared to $1,622,000 in 2016. Cash contributions totaled $2,319,000 in 2017, of which
$11,000 was grant money compared to cash contributions of$2,372,000, of which $259,000 was grant
money in 2016. In addition to the cash and property contributions in aid of construction, contributions and
grants also include the land contribution for future capacity fees, as discussed in Note 11.
Utility Service Demand Trend
An Equivalent Residential Connection (ERC) is the equivalent flow that can be anticipated from one
residential connection.
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The following table provides historical information on average annual usage per ERC, expressed in
thousands of gallons. The calculation of ERCs is derived by Annual Base Revenue divided by the
Annual Residential Base Rate and the Usage per ERC is a calculation of the gallons divided by the ERCs.
Water Sewer Reuse
Fiscal Yr
Ending ERCs Use/ERC ERCs Use/ERC ERCs Use/ERC
9/30/2006 44,083 107.9 38,636 79.5 6,437 254.4
9/30/2007 45,188 110.8 40,230 79.9 6,923 266.7
9/30/2008 46,453 99.8 41,717 76.6 7,230 252.3
9/30/2009 46,267 90.7 41,643 71.0 7,392 203.7
9/30/2010 47,069 88.4 42,490 69.6 7,736 202.3
9/30/2011 46,423 94.6 41,750 75.2 6,769 215.5
9/30/2012 47,982 79.5 43,463 68.1 8,325 121.9
9/30/2013 48,364 74.2 43,729 65.7 8,706 107.4
9/30/2014 49,382 71.3 44,614 64.0 9,279 94.7
9/30/2015 49,810 73.5 45,017 64.8 9,640 103.2
9/30/2016 51,735 75.6 46,845 66.0 10,342 120.3
9/30/2017 52,419 76.0 47,613 66.2 10,860 131.6
Economic Factors and Next Year's Rate
The Authority's financial condition is generally affected less by the local economy than by climatic
conditions and water use restrictions.Water,wastewater and reclaimed water service is a public necessity;
thus revenue typically remains stable as long as the number of customers, and customer usage does not
decline. Conservation will moderate future water revenue, however Authority's rates are designed to
absorb a 20%decrease in water demand and still generate sufficient revenue to operate the business.
The Authority has adopted an Alternative Water Supply (AWS) surcharge of$1.00 per water bill and an
AWS capacity charge of$325 to support the development of AWS. An AWS is simply any sustainable
water source with its supporting infrastructure for processing and delivery that does not originate from the
upper Florida Aquifer. The AWS surcharge and capacity charge are necessary to address AWS
requirements from the St. Johns River Water Management District (SJRWMD), the Suwannee River
Water Management District(SRWMD), and the Florida Department of Environmental Protection(FDEP)
associated with Minimum Flows and Levels (MFL) and North Florida Regional Water Supply Planning.
The AWS surcharge and capacity charge are also necessary in order to put the Authority in the best
position possible to develop the infrastructure to provide all of the rate payers of the Authority with a
sustainable water supply. The first project that will be funded by the AWS surcharge and capacity charge
will be the Florida Department of Transportation (FDOT) Storm Water Harvesting Pilot Project. For
additional information,please visit: https://www.clayutility.org/aws/default.aspx .
Request for Information
This financial report is designed to provide a general overview of the Authority's finances. Questions
concerning any of the information provided in this report or requests for additional financial information
should be addressed to Patricia Barthlow, Chief Financial Officer, 3176 Old Jennings Road, Middleburg,
Florida, 32068.
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CLAY COUNTY UTILITY AUTHORITY
STATEMENTS OF NET POSITION
SEPTEMBER 30,2017 AND 2016
2017 2016
ASSETS
Current assets
Cash and cash equivalents $ 38,306,325 $ 35,705,817
Restricted cash and cash equivalents 3,555,871 1,220,749
Investments 5,906,360 5,842,981
Accounts receivable,net 2,947,320 2,456,474
Prepaid items and inventory 595,616 1,124,990
Total current assets 51,311,492 46,351,011
Non-current assets
Restricted cash and cash equivalents 1,311,369 5,196,981
Investments 5,315,633 5,252,921
Notes receivable 362,272 497,132
Utility plants 357,343,194 350,266,947
Construction in process 16,113,351 6,650,356
Accumulated depreciation (126,782,037) (117,379,592)
Total non-current assets 253,663,782 250,484,745
Total Assets $304,975,274 $296,835,756
DEFERRED OUTFLOWS OF RESOURCES
Deferred loss on bond refunding $ 2,871,275 $ 3,110,053
LIABILITIES
Current liabilities
Accounts and retainage payable $ 1,457,099 $ 1,219,570
Accrued expenses 1,090,229 1,088,397
Unearned revenues 313,457 318,856
Customer deposits 3,354,534 3,179,651
Liabilities payable from current restricted assets:
Accounts and retainage payable 2,760,343 355,350
Interest payable 795,528 865,399
Current portion of long-term debt 2,332,857 1,674,417
Total current liabilities 12,104,047 8,701,640
Non-current liabilities
Non-current portion of long-term debt 66,619,770 70,797,485
Total non-current liabilities 66,619,770 70,797,485
Total Liabilities $ 78,723,817 $ 79,499,125
NET POSITION
Net investment in capital assets $180,593,156 $170,175,862
Restricted for:
Capital projects 1,746,384 4,281,347
Debt service 1,490,932 915,634
Unrestricted 45,292,260 45,073,841
Total Net Position $229,122,732 $220,446,684
The accompanying notes to financial statements are an integral part of these statements.
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CLAY COUNTY UTILITY AUTHORITY
STATEMENTS OF REVENUES,EXPENSES,AND CHANGES IN NET POSITION
FOR THE YEARS ENDED SEPTEMBER 30,2017 AND 2016
2017 2016
Operating revenues
Charges for services $ 41,307,273 $ 40,418,933
Miscellaneous revenues 1,071,613 1,080,076
Total operating revenues 42,378,886 41,499,009
Operating expenses
Wages and related benefits 12,878,008 11,903,639
Operating expenses 8,367,505 8,486,407
Subcontractors 4,147,857 3,109,725
In lieu of taxes 1,858,994 1,818,852
Depreciation expense 11,056,001 9,983,245
Total operating expenses 38,308,365 35,301,868
Operating income 4,070,521 6,197,141
Nonoperating revenues(expenses)
Interest income 381,619 302,846
Interest expense (2,199,430) (2,256,923)
Gain(loss)on sale of assets 67,444 11,692
Total nonoperating revenues(expenses) (1,750,367) (1,942,385)
Income(loss)before capital contributions 2,320,154 4,254,756
Capital contributions
Developer and other contributions 6,344,562 5,824,669
Grants 11,332 258,890
Total capital contributions 6,355,894 6,083,559
Change in net position 8,676,048 10,338,315
Net position,beginning of year 220,446,684 210,108,369
Net position,end of year $ 229,122,732 $220,446,684
The accompanying notes to financial statements are an integral part of these statements.
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CLAY COUNTY UTILITY AUTHORITY
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30,2017 AND 2016
2017 2016
Cash flows from operating activities
Receipts from customers $ 42,192,384 $ 41,103,732
Payments to suppliers (11,748,459) (11,454,863)
Payment in lieu of taxes (1,858,994) (1,818,852)
Payments to employees (12,876,176) (11,779,068)
Net cash provided by operating activities 15,708,755 16,050,949
Cash flows from capital and related financing activities
Proceeds from issuance of bonds and loans - 378,126
Principal paid on long-term debt (3,519,275) (1,583,548)
Interest paid on long-term debt (2,030,523) (1,997,475)
Payments to acquire and construct plant property (11,683,625) (10,716,276)
Capital contributions 2,307,826 4,203,012
Grants 11,332 1,110,393
Net cash used in capital and related financing activities (14,914,265) (8,605,768)
Cash flows from investing activities
Purchases of investments (5,860,423) (5,200,000)
Sales of investments 5,734,332 6,999,271
Interest income 381,619 302,846
Net cash provided by investing activities 255,528 2,102,117
Net increase in cash and cash equivalents 1,050,018 9,547,298
Cash and cash equivalents,beginning of year 42,123,547 32,576,249
Cash and cash equivalents,end of year $ 43,173,565 $ 42,123,547
Cash and cash equivalents classified as:
Unrestricted $ 38,306,325 $ 35,705,817
Restricted 3,555,871 1,220,749
Restricted-noncurrent 1,311,369 5,196,981
Total cash and cash equivalents $ 43,173,565 $ 8,220,020
Reconciliation of operating income to net cash provided by operating activities
Cash flows from operating activities
Operating income $ 4,070,521 $ 6,197,141
Adjustments to reconcile operating income to net
cash provided by operating activities:
Depreciation expense 11,056,001 9,983,245
Changes in assets and liabilities
Decrease(Increase)in accounts receivable (490,846) (208,822)
Decrease(Increase)in prepaid items and inventory 529,374 (84,291)
Decrease(Increase)in notes receivable 134,860 (87,985)
Increase(Decrease)in accounts and retainage payable 237,529 225,560
Increase(Decrease)in accrued expenses 1,832 124,571
Increase(Decrease)in unearned revenue (5,399) (101,850)
Increase(Decrease)in customer deposits 174,883 3,380
Total adjustments 11,638,234 9,853,808
Net cash provided by operating activities $ 15,708,755 $ 16,050,949
Supplemental schedule of noncash investing,capital,and financing activities
Deferred loss on refunding amortization $ 238,778 $ 243,399
Utility plant property contributed by developers 4,036,736 1,621,657
The accompanying notes to financial statements are an integral part of these statements.
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CLAY COUNTY UTILITY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2017 AND 2016
(1) Summary of Significant Accounting Policies:
The accounting policies of the Clay County Utility Authority (the Authority) conform to generally
accepted accounting principles applicable to governmental units. The following is a summary of
significant policies.
(a) Reporting entity—The Authority is an independent special district established on October 1,
1994, pursuant to Chapter 94-491, Laws of Florida (1994), to provide Clay County, Florida and
other territorial limits near the County with certain publicly owned water, wastewater and reclaimed
water facilities. The governing body of the Authority consists of seven members acting as the Board
of Supervisors. The Authority has adopted Governmental Accounting Standards Board (GASB)
Codification and has determined that there are no component units that meet the criteria for
inclusion in the Authority's financial statements.
(b) Measurement focus, basis of accounting, and financial statement presentation—The
accounts of the Authority are organized and reported as a proprietary fund type Enterprise Fund.
The operations of this fund are accounted for with a set of self-balancing accounts that comprise its
assets, liabilities, net assets, revenues and expenses. Enterprise Funds are used to account for
operations that are financed and operated in a manner similar to private business enterprises where
the intent of the governing body is that the costs (expenses, including depreciation) of providing
goods or services to the general public on a continuing basis are financed or recovered primarily
through user charges.
The principal operating revenues of the Authority are charges for water, wastewater, and reclaimed
water services, and operating expenses include the cost of sales and services, administrative
expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition
are reported as non-operating revenues and expenses.
Basis of accounting refers to when revenues and expenses are recognized in the accounts and
reported in the financial statements. Basis of accounting relates to the timing of the measurements
made, regardless of the measurement focus applied. The Authority uses the accrual basis of
accounting in accordance with the GASB Codification. Revenues are recognized when earned and
measurable, and expenses are recognized when incurred.
(c) Cash and cash equivalents Cash and cash equivalents consists of cash on hand and on
deposit in banks and money market accounts.
(d) Investments—Investments solely consist of certificates of deposit and are valued at cost plus
accrued interest,which approximates fair value.
(e) Accounts receivable—The Authority's accounts receivable consists of amounts due from
consumers. The Authority performs account evaluations on their consumers and requires collateral
deposits.
(f) Inventories and prepaid items—The cost of inventory is accounted for on the consumption
basis wherein inventories are charged as expenditures when used, rather than when purchased. All
inventories are valued at cost. Certain payments to vendors reflect costs applicable to future
accounting periods and are recorded as prepaid items.
(g) Restricted assets and net position—Certain assets are required to be segregated from other
assets due to various bond indenture agreements and restricted revenue streams. These assets are
legally restricted for specific purposes such as debt service, construction, and renewals and
replacements. The remaining excess of restricted assets over liabilities is reflected as restricted net
position.
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CLAY COUNTY UTILITY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2017 AND 2016
(1) Summary of Significant Accounting Policies: (Continued)
(h) Due from other governments—Due from other governments consists of amounts due from
grantor agencies for capital grants and/or proceeds on state revolving fund loans.
(i) Property and plant—Property and plant are recorded at cost less accumulated depreciation,
except contributed assets which are recorded at fair value on the date of contribution. Expenditures
of$1,000 or more are capitalized. Construction period interest cost, net of interest earned on the
unexpended proceeds of tax-exempt borrowings, is capitalized as part of the asset cost.
Depreciation, on a straight-line basis, is charged over estimated useful lives as follows:
Buildings and Building Improvements 25 years
Water,Wastewater,and Reclaimed Water Lines 40 years
Equipment 7, 15, 25 years
(j) Bond discounts, premiums, and deferred amounts—Bond discounts, premiums, and
deferred amounts, consisting of deferred outflows from loss on refunding of long-term debt, are
deferred and amortized over the term of the bonds using the effective interest method.
(k) Deferred outflows/inflows of resources—In addition to assets, the statements of net position
will sometimes report a separate section for deferred outflows of resources. This separate financial
statement element represents a consumption of net position that applies to a future period(s) and so
will not be recognized as an outflow of resources (expense/expenditure) until then. The Authority
has only one item, deferred loss on bond refunding, which qualifies for reporting in this category. A
deferred charge on refunding results from the difference in the carrying value of refunded debt and
its reacquisition price. This amount is deferred and amortized over the shorter of the life of the
refunded or refunding debt.
In addition to liabilities, the statement of financial position will sometimes report a separate section
for deferred inflows of resources. This separate financial statement element represents an acquisition
of net position that applies to a future period and will not be recognized as an inflow of resources
(revenue)until that time. The Authority had no deferred inflows at September 30,2017 and 2016.
(1) Net position flow assumption—Sometimes the Authority will fund outlays for a particular
purpose from both restricted and unrestricted resources. In order to determine amounts reported as
restricted and unrestricted net position, it is the Authority's policy to consider restricted net position
to have been used before unrestricted net position is applied.
(m) Revenue recognition—Operating revenue consists primarily of charges for services, which
are billed to customers for water, wastewater, and reclaimed water service. Billings are included in
revenue as meters are read each month. Unbilled revenues are accrued based on estimated
consumption of the most recent billing.
(n) Capital contributions Capital contributions represent contributions of certain water
distribution and wastewater collection systems. Such contributions are recognized as increases in
net position in the period they are received.
- 12 -
CLAY COUNTY UTILITY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2017 AND 2016
(1) Summary of Significant Accounting Policies: (Continued)
(o) Use of estimates—The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amount of assets, liabilities, and changes
therein, and disclosure of contingent assets and liabilities. Actual results could differ from
those estimates.
(2) Deposits and Investments:
(a) Deposits—In addition to insurance provided by the Federal Depository Insurance Corporation,
deposits are held in banking institutions approved by the State Treasurer of the State of Florida to
hold public funds. Under Florida Statutes Chapter 280,Florida Security for Public Deposits Act, the
State Treasurer requires all Florida qualified public depositories to deposit with the Treasurer or
another banking institution eligible collateral. In the event of failure of a qualified public depository,
the remaining public depositories would be responsible for covering any resulting losses. The
Authority's deposits at year end are considered insured for custodial credit risk purposes.
(b) Investments—At September 30,2017,the Authority's investments consisted of the following:
Credit
Quality
Types of Investments Maturities (Moody's) Amount
Investments and restricted investments
Certificates of deposit 0.97 N/A $ 11,221,993
Cash on deposit 43,173,565
Total cash and investments (unrestricted and restricted) $ 54,395,558
At September 30,2016,the Authority's investments consisted of the following:
Credit
Quality
Types of Investments Maturities (Moody's) Amount
Investments and restricted investments
Certificates of deposit 1.29 N/A $ 11,095,902
Cash on deposit 42,123,547
Total cash and investments(unrestricted and restricted) $ 53,219,449
(c) Custodial credit risk—For an investment, custodial credit is the risk that, in the event of the
failure of the counterparty, the Authority will not be able to recover the value of its investments or
collateral securities that are in the possession of an outside party. In order to manage the custodial
credit risk, the Authority's investment policy specifies certain requirements to pre-qualify financial
institutions and brokers/dealers and an annual review of the institutions used.
(d) Credit risk— Credit risk is the risk that an issuer or other counter party to an investment will
not fulfill its obligations. The Authority does have a formal investment policy that limits its
investments to high quality investments to control credit risk, which requires diversification of
investments, limited investments in securities with higher credit risks, investing in securities with
varying maturities, and continuously investing a portion of the portfolio in readily available funds
such as local government investment pools or money market funds.
- 13 -
CLAY COUNTY UTILITY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2017 AND 2016
(2) Deposits and Investments: (Continued)
(e) Interest rate risk—Interest rate risk is the risk that changes in interest rates will adversely
affect the fair value of an investment. The Authority has no formal policy relating to a specific
investment-related risk. In accordance with the provisions of the state statutes governing allowable
investments, the Authority manages its exposure to declines in fair values by limiting the maturity
of specific investments to provide sufficient liquidity to pay obligations as they come due.
(3) Accounts Receivable:
Unbilled receivables represent amounts earned which have not yet been billed, along with other amounts
which can be invoiced upon completion or attainment of contract objectives. Allowance for doubtful
accounts is estimated by analysis of accounts receivable balance over 60 days, and historical collection
trends. Accounts receivable at September 30,2017 and 2016,consist of the following:
2017 2016
Billed customer receivables $ 1,552,963 $ 1,010,718
Unbilled customer receivables 1,360,294 1,378,182
Notes receivable—current portion 48,597 51,928
Other receivables 314,012 385,749
Gross accounts receivable 3,275,866 2,826,577
Less:Allowance for uncollectables (328,546) (370,103)
Net total receivables $ 2,947,320 $ 2,456,474
(4) Capital Assets:
Changes in the Authority's capital assets for the years ended September 30, 2017 and 2016, were as
follows:
Balance Balance
October 1, September 30,
2016 Increases Decreases 2017
Capital assets not being depreciated:
Land $ 5,064,827 $ 650,149 $ (505,792) $ 5,209,184
Construction in progress 6,650,356 12,957,526 (3,494,531) 16,113,351
Total capital assets not being
depreciated 11,715,183 13,607,675 (4,000,323) 21,322,535
Capital assets being depreciated:
Machinery and equipment 335,896,703 13,424,601 (1,764,871) 347,556,433
Buildings 9,305,417 45,376 (4,773,216) 4,577,577
Accumulated depreciation (117,379,592) (11,160,036) 1,757,591 (126,782,037)
Total capital assets being depreciated,net 227,822,528 2,309,941 (4,780,496) 225,351,973
Capital Assets,net $239,537,711 $ 15,917,616 $ (8,780,819) $246,674,508
- 14 -
CLAY COUNTY UTILITY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2017 AND 2016
(4) Capital Assets: (Continued)
Balance Balance
October 1, September 30,
2015 Increases Decreases 2016
Capital assets not being depreciated:
Land $ 2,975,785 $ 2,089,798 $ (756) $ 5,064,827
Construction in progress 8,737,398 6,227,839 (8,314,881) 6,650,356
Total capital assets not being
depreciated 11,713,183 8,317,637 (8,315,637) 11,715,183
Capital assets being depreciated:
Machinery and equipment 324,724,660 11,572,053 (400,010) 335,896,703
Buildings 9,259,814 45,603 - 9,305,417
Accumulated depreciation (107,650,555) (10,100,131) 371,094 (117,379,592)
Total capital assets being depreciated,net 226,333,919 1,517,525 (28,916) 227,822,528
Capital Assets,net $238,047,102 $ 9,835,162 $ (8,344,553) $239,537,711
Depreciation expense for 2017 and 2016 was $11,056,001 and $9,983,245, respectively. Additional
depreciation amounts of $104,035 and $116,886 in 2017 and 2016, respectively, related to equipment
used for construction in progress and was capitalized as part of the cost of construction in progress.
Total interest expense incurred by the Authority during the years ended September 30, 2017 and 2016
was $2,223,640 and $2,284,511, respectively. Of these amounts, $24,210 and $27,588 was capitalized in
2017 and 2016,respectively, and included as part of the cost of construction in progress.
Commitments on outstanding construction contracts for improvements and maintenance of the utility
systems totaled$24,656,438 at September 30,2017.
(5) Compensated Absences:
Vacation leave is earned on a bi-weekly basis (regular 80 hours worked) at established rates based upon
years of service. Employees with one full year of service or more are required to take no less than forty
consecutive hours of vacation each calendar year.
In December of each year, employees are paid for any hours in excess of forty hours (eighty at
employee's request) in their vacation accrual account. Employees with less than six (6) months of service
are not eligible for payment of unused vacation.
Sick leave is earned for each regularly scheduled compensated hour with sick pay not to exceed 10 days
per year. In December of each year, employees are paid for any hours in excess of forty hours (eighty at
employee's request) in their sick pay accrual account. Employees with less than six (6)months of service
are not eligible for payment of unused sick hours.
Because annual leave time accrued exceeds limitations on compensated absence balances at calendar
year-end, all balances are considered to be current, and no long-term portion has been calculated. As such,
these amounts have not been included in the long-term debt rollforward in Note 6.
Outstanding compensated absences, included in accrued expenses on the statements of net position,
totaled$574,348 and$574,708 at September 30, 2017 and 2016,respectively.
- 15 -
CLAY COUNTY UTILITY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2017 AND 2016
(6) Bonds and Notes Payable:
Long-term debt at September 30,2017 and 2016, is comprised of the following:
2017 2016
$42,210,677 Utility System Revenue and Refunding Note, Series 2015;
with variable payment amounts due semi-annually and principal
payments due from 2016 through 2031. Interest is fixed at 2.82%. $42,010,667 $42,110,667
$10,000,000 Clay County Utility Authority Utilities System Revenue
Note, Series 2009; due in semi-annual installments commencing on May
1, 2009 through 2029, with interest at 4.24%. Interest rate amended to
2.97%in August 2013. 6,584,324 7,058,269
$10,236,041 Utility System Revenue and Refunding Bonds, Series 2012;
due in annual installments varying from $237,103 to $1,901,056 plus
interest payable semi-annually at 1.86%through 2024. 9,505,178 9,757,924
$2,332,115 Clean Water State Revolving Fund; due in semi-annual
installments of$156,866 including interest at 3.05%. - 918,602
$4,066,297 Clean Water State Revolving Funds; due in semi-annual
installments commencing on November 15, 2010, through 2030 with
interest at 2.92%. 2,891,375 3,072,217
$10,300,628 Clean Water State Revolving Fund; due in semi-annual
installments commencing on May 15, 2010, through 2030 with interest
ranging from 2.85%to 3.24%. 6,558,388 7,588,116
$461,195 The School Board of Clay County, Florida,present value annual
services of capital lease in which ownership will be transferred at the
end of the term in 2021. 162,551 201,775
$1,735,142 Clean Water State Revolving Fund; due in semi-annual
installments of$54,020 including interest ranging from 1.29%to 3.10%,
beginning on January 15, 2017,through 2032. 1,240,144 1,764,332
Bonds and notes payable 68,952,627 72,471,902
Less: Current portion of bonds and notes payable (2,332,857) (1,674,417)
Long-term bonds and notes payable,net $ 66,619,770 $ 70,797,485
Activity in bonds and notes payable for the years ended September 30, 2017 and 2016, is as follows:
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
2017 $ 72,471,902 $ - $ (3,519,275) $ 68,952,627 $ 2,332,857
2016 $ 73,677,324 $ 378,126 $ (1,583,548) $ 72,471,902 $ 1,674,417
- 16 -
CLAY COUNTY UTILITY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2017 AND 2016
(6) Bonds and Notes Payable: (Continued)
Debt service requirements to maturity are as follows at September 30,2017:
Total Debt
September 30 Principal Interest Service
2018 $ 2,332,857 $ 1,898,205 $ 4,231,062
2019 4,196,149 1,813,866 6,010,015
2020 4,303,291 1,705,615 6,008,906
2021 4,404,827 1,592,765 5,997,592
2022 4,483,381 1,469,584 5,952,965
2023—2027 23,944,478 5,467,750 29,412,228
2028—2032 25,287,644 1,929,269 27,216,913
Totals $ 68,952,627 $ 15,877,054 $ 84,829,681
Net revenues of the water,wastewater, and reclaimed water utility system are pledged as collateral for the
revenue bonds and the Clean Water State Revolving Funds.
(7) Retirement Benefits:
The Authority provides retirement benefits for all of its full-time employees through the Clay County
Utility Authority Employees Plan(the Plan),which is a defined contribution plan administered by BB&T,
included as part of the Authority's reporting entity. The Authority has the right to amend the Plan at any
time, provided that no amendment or modification shall reduce the account balances of any participant.
The Plan's benefits depend solely on amounts contributed plus investment income. The covered payroll
for employees covered by this plan for the years ended September 30, 2017 and 2016, was $9,131,267
and $8,286,714, respectively, and the total payroll was $9,313,709 and $8,423,803 for the same years,
respectively. Participants are fully vested after 5 years of service; rollovers from other qualified plans are
100% vested. No employee contributions are allowed by the Plan. The Authority contributes an amount
equal to 10% of the participant's compensation for the year to the Plan. The Authority contributed
$913,127 and$828,671 for the years ended September 30,2017 and 2016,respectively.
(8) Deferred Compensation Plan:
The Authority offers its employees a deferred compensation plan created in accordance with Internal
Revenue Code Section 457 and administered by BB&T Bank. Participation is on a voluntary basis and
contributions are made via payroll deduction. The plan permits deferral of compensation until future
years. According to the plan, the deferred compensation is not available until termination, retirement,
death, or an unforeseeable emergency. All plan assets are held in trust by BB&T Bank, and as such, no
provision for plan assets or liabilities has been recorded on the Authority's financial statements.
(9) Risk Management:
The Authority is exposed to various risks of loss related to torts; theft of, damage to, and destruction of
assets; errors and omissions; injuries to employees; and natural disasters for which the Authority
purchases commercial insurance. During the year ended September 30, 2017,the Authority did not reduce
insurance coverage levels in place as of September 30, 2016. The Authority has no settled claims
resulting from these risks that exceeded its commercial coverage in any of the past three fiscal years.
- 17 -
CLAY COUNTY UTILITY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2017 AND 2016
(10) Other Post-Employment Benefits(OPEB):
In 2015, the Authority engaged an actuary to calculate the outstanding liability for certain post-
employment healthcare benefits provided by the Authority.
Retirees and their dependents are permitted to remain covered under the Authority's respective health
care plans as long as they pay a full premium applicable to the coverage elected. This conforms to the
minimum required of Florida governmental employers per Chapter 112.08 of Florida Statutes. According
to the Authority's employee handbook,retirees are defined as"Any full time employee age sixty-five(65)
or older with at least five(5)years of continuous eligible service at the time of his/her retirement."
Based on the Authority's policies, the OPEB cost, required contribution, and net OPEB liability at
September 30, 2015, were all actuarially determined to be zero. There have been no changes to the
Authority's policies or state statutes since that time which management believes would impact this
determination as of September 30, 2017. As such, no disclosures regarding funding progress or OPEB
cost and obligation have been prepared.
(11) Commitments and Contingencies:
In accordance with the Master Utility Services Agreement between the Authority and a developer, the
Authority has granted connection fee credits which can be used by the developer or its assignee toward
future connections in the specified development.
As part of this agreement, the developer contributed land valued at $2,091,708 during the year ended
September 30, 2016, which was recorded in the statement of revenues, expenses, and changes in net
position as in developer and other contributions. In return, the developer received connection fee credits
for future connections within the development equal to the agreed-upon value of the contributed land;
however, should the developer cease plans to develop the land, no amounts will be due to the developer
from the Authority,nor will the contributed property revert back to the developer.
At September 30, 2017, no connections have been made in this development and the total future
connection fee credits available to the developer totaled$2,091,708.
- 18 -
Al James Moore
Certified Public Accountants and Consultants
INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT
OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
To the Board of Supervisors,
Clay County Utility Authority:
We have audited, in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in the Government Auditing Standards
issued by the Comptroller General of the United States of America, the financial statements of the Clay
County Utility Authority(the Authority) as of and for the year ended September 30, 2017, and the related
notes to the financial statements, which collectively comprise the Authority's basic financial statements,
and have issued our report thereon dated December 8,2017.
Internal Control over Financial Reporting
In planning and performing our audits of the financial statements, we considered the Authority's internal
control over financial reporting (internal control) to determine audit procedures that are appropriate in the
circumstances for the purpose of expressing our opinion on the financial statements, but not for the
purpose of expressing an opinion on the effectiveness of the Authority's internal control. Accordingly,we
do not express an opinion on the effectiveness of the Authority's internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent or
detect misstatements on a timely basis. A material weakness is a deficiency, or combination of
deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of
the Authority's financial statements will not be prevented, or detected and corrected on a timely basis. A
significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less
severe than a material weakness, yet important enough to merit attention by those charged with
governance.
Our consideration of internal control over financial reporting was for the limited purpose described in the
first paragraph of this section and was not designed to identify all deficiencies in internal control over
financial reporting that might be material weaknesses or significant deficiencies. Given these limitations,
during our audits we did not identify any deficiencies in internal control over financial reporting that we
consider to be material weaknesses. However, material weaknesses may exist that have not been
identified.
- 19 -
121 Executive Circle 133 East Indiana Avenue 5931 NW 1st Place 2477 Tim Gamble Place,Suite 200
Daytona Beach,FL 32114-1180 DeLand,FL 32724-4329 Gainesville,FL 32607-2063 Tallahassee,FL 32308-4386
Telephone:386-257-4100 Telephone:386-738-3300 Telephone:352-378-1331 Telephone:850-386-6184
Website:www.jmco.com I Email: info@jmco.com I Member of AGN International with offices in principal cities worldwide
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Authority's financial statements are free of
material misstatement, we performed tests of its compliance with certain provisions of laws, regulations,
contracts, and grant agreements,noncompliance with which could have a direct and material effect on the
determination of financial statement amounts. However, providing an opinion on compliance with those
provisions was not an objective of our audits and, accordingly, we do not express such an opinion. The
results of our tests disclosed no instances of noncompliance or other matters that are required to be
reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance
and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal
control or on compliance. This report is an integral part of an audit performed in accordance with
Government Auditing Standards in considering the entity's internal control and compliance. Accordingly,
this communication is not suitable for any other purpose.
al""^"." Aft( i to • .i
Daytona Beach, Florida
December 8,2017
-20 -
.4A James Moore
Certified Public Accountants and Consultants
INDEPENDENT AUDITORS' MANAGEMENT LETTER REQUIRED
BY CHAPTER 10.550,RULES OF THE STATE OF FLORIDA
OFFICE OF THE AUDITOR GENERAL
To the Board of Supervisors,
Clay County Utility Authority:
Report on the Financial Statements
We have audited the basic financial statements of the Clay County Utility Authority (the Authority), as of
and for the fiscal year ended September 30, 2017, and have issued our report thereon dated December 8,
2017.
Auditors' Responsibility
We conducted our audit in accordance with auditing standards generally accepted in the United States of
America; the standards applicable to financial audits contained in Government Auditing Standards, issued
by the Comptroller General of the United States and Chapter 10.550,Rules of the Auditor General.
Other Reports and Schedule
We have issued our Independent Auditors' Report on Internal Control over Financial Reporting and
Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance
with Government Auditing Standards; and Independent Accountants' Report on an examination
conducted in accordance with AICPA Professional Standards, Section 601, regarding compliance
requirements in accordance with Chapter 10.550, Rules of the Auditor General. Disclosures in those
reports, which are dated December 8, 2017, should be considered in conjunction with this management
letter.
Prior Audit Findings
Section 10.554(1)(i)1.,Rules of the Auditor General,requires that we determine whether or not corrective
actions have been taken to address findings and recommendations made in the preceding annual financial
audit report. No such findings or recommendations were identified in the preceding annual financial audit
report.
Official Title and Legal Authority
Section 10.554(1)(i)4., Rules of the Auditor General, requires that the name or official title and legal
authority for the primary government and each component unit of the reporting entity be disclosed in this
management letter, unless disclosed in the notes to the financial statements. The Clay County Utility
Authority was established by special act by the Florida Legislature. There are no component units related
to the Authority.
- 21 -
121 Executive Circle 133 East Indiana Avenue 5931 NW 1st Place 2477 Tim Gamble Place,Suite 200
Daytona Beach,FL 32114-1180 DeLand,FL 32724-4329 Gainesville,FL 32607-2063 Tallahassee,FL 32308-4386
Telephone:386-257-4100 Telephone:386-738-3300 Telephone:352-378-1331 Telephone:850-386-6184
Website:www.jmco.com I Email: info@jmco.com I Member of AGN International with offices in principal cities worldwide
Financial Condition
Sections 10.554(1)(i)5.a. and 10.556(7), Rules of the Auditor General, require that we apply appropriate
procedures and report the results of our determination as to whether or not the Authority has met one or
more of the conditions described in Section 218.503(1), Florida Statutes, and identification of the specific
condition(s)met. In connection with our audits, we determined that the Authority did not meet any of the
conditions described in Section 218.503(1),Florida Statutes.
Pursuant to Sections 10.554(1)(i)5.c. and 10.556(8), Rules of the Auditor General, we applied financial
condition assessment procedures. It is management's responsibility to monitor the Authority's financial
condition, and our financial condition assessment was based in part on representations made by
management and the review of financial information provided by same.
Annual Financial Report
Section 10.554(1)(i)5.b. and 10.556(7),Rules of the Auditor General,requires that we report the results of
our determination as to whether the annual financial report for the Authority for the fiscal year ended
September 30, 2017, filed with the Florida Department of Financial Services pursuant to Section
218.32(1)(a), Florida Statutes, is in agreement with the annual financial audit report for the fiscal year
ended September 30, 2017. In connection with our audit, we determined that these two reports were in
agreement.
Other Matters
Section 10.554(1)(i)2., Rules of the Auditor General, requires that we address in the management letter
any recommendations to improve financial management. In connection with our audit, we did not have
any such recommendations.
Section 10.554(1)(i)3., Rules of the Auditor General, requires that we address noncompliance with
provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred,
that have an effect on the financial statements that is less than material but which warrants the attention of
those charged with governance. In connection with our audit,we did not have any such findings.
Purpose of this Letter
Our management letter is intended solely for the information and use of the Legislative Auditing
Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor
General, Federal and other granting agencies, and applicable management and the Board of Supervisors,
and is not intended to be and should not be used by anyone other than these specified parties.
a,, Awe (0 . .l .
Daytona Beach,Florida
December 8,2017
-22 -
J11 James Moore
Certified Public Accountants and Consultants
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Supervisors,
Clay County Utility Authority:
We have examined the Clay County Utility Authority's (the Authority) compliance with Section 218.415,
Florida Statutes, Local Government Investment Policies, for the year ended September 30, 2017. The
Authority's management is responsible for the Authority's compliance with those requirements. Our
responsibility is to express an opinion on the Authority's compliance based on our examination.
Our examination was conducted in accordance with attestation standards established by the American
Institute of Certified Public Accountants. Those standards require that we plan and perform the
examination to obtain reasonable assurance about whether the Authority complied with Section 218.415,
Florida Statutes, Local Government Investment Policies, for the year ended September 30, 2017, in all
material respects. An examination involves performing procedures to obtain evidence about the
Authority's compliance with those requirements. The nature,timing, and extent of the procedures selected
depend on our judgment, including an assessment of risks of material noncompliance with those
requirements, whether due to fraud or error. We believe that the evidence we obtained is sufficient and
appropriate to provide a reasonable basis for our opinion.
In our opinion, the Clay County Utility Authority complied, in all material respects, with the
aforementioned requirements for the year ended September 30,2017.
ak-0-, MAPte " Le• I--
Daytona Beach,Florida
December 8,2017
- 23 -
121 Executive Circle 133 East Indiana Avenue 5931 NW 1st Place 2477 Tim Gamble Place,Suite 200
Daytona Beach,FL 32114-1180 DeLand,FL 32724-4329 Gainesville,FL 32607-2063 Tallahassee,FL 32308-4386
Telephone:386-257-4100 Telephone:386-738-3300 Telephone:352-378-1331 Telephone:850-386-6184
Website:www.jmco.com I Email: info@jmco.com I Member of AGN International with offices in principal cities worldwide