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W 1700.3 .C623f 2008-2009 c.1 I. State of Oklahoma WATER RESOURCES BOARD the water agency OKLAHOMA CLEAN WATER STATE REVOLVING FUND LOAN ACCOUNT ADMINISTRATIVE FUND ANNUAL FINANCIAL STATEMENTS AS OF AND FOR THE FISCAL YEARS ENDED JUNE 30, 2009 AND 2008 AND INDEPENDENT AUDITOR'S REPORTS OKLAHOMA CLEAN WATER STATE REVOLVING FUND LOAN ACCOUNT ADMINISTRATIVE FUND ANNUAL FINANCIAL STATEMENTS AS OF AND FOR THE FISCAL YEARS ENDED JUNE 30, 2009 AND 2008 AND INDEPENDENT AUDITOR'S REPORTS OKLAHOMA WATER RESOURCES BOARD OKLAHOMA CLEAN WATER STATE REVOLVING FUND LOAN ACCOUNT ADMINISTRATIVE FUND ANNUAL FINANCIAL REPORT As of and for the Years Ended June 30, 2009 and 2008 ITABLE OF CONTENTS Page Independent Auditor's Report on Financial Statements 3 Management's Discussion and Analysis 5-8 The Basic Financial Statements Statements of Net Assets 10 Statements of Revenues, Expenses, and Changes in Net Assets 11 Statements of Cash Flows 12 Footnotes to Statements 13-17 Internal Control over Financial Reporting and Compliance 18-19 Independent Auditor's Report on Internal Control and Compliance 2 JOHN M. ARLEDGE & ASSOCIATES, P.C. CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITOR'S REPORT To the Members of the Oklahoma Water Resources Board We have audited the accompanying statements of net assets of the Oklahoma Water Resources Board/Oklahoma Clean Water State Revolving Fund Loan Account Administrative Fund (the "Fund") as of June 30, 2009 and 2008, and the related statements of revenues, expenses and changes in net assets and cash flows for the years then ended. These fmancial statements are the responsibility of the Fund's management. 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 audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the fmancial statements referred to above present fairly, in all material respects, the financial position of the Fund as of June 30, 2009 and 2008, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated September 23, 2009, on our consideration of the Fund'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 fmancial 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 and should be considered in assessing the results of our audit. The Management's Discussion and Analysis section on page 4 is not a required part of the basic financial statements but is supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. 309 NORTH BRYANT. EDMOND, OKLAHOMA 73034 • (405) 348-{)615 • FAX(405) 348-{)931 • www.jmacpas.com MEMBER OF AICPA AND OSCPA OKLAHOMA WATER RESOURCES BOARD OKLAHOMA CLEAN WATER STATE REVOLVING FUND LOAN ACCOUNT ADMINISTRATIVE FUND ANNUAL FINANCIAL REPORT As of and for the Years Ended June 30, 2009 and 2008 MANAGEMENT'S DISCUSSION AND ANALYSIS Our discussion and analysis of the Oklahoma Clean Water State Revolving Fund Loan Account Administrative Fund's (the "Fund") financial performance provides an overview of the Fund's financial activities for the fiscal year ended June 30, 2009. Please read it in conjunction with the Fund's financial statements, which begin on page 10. The Oklahoma Water Resources Board (the "Board") administers the Fund in conjunction with the Oklahoma Clean Water State Revolving Fund Loan Account Program (the "Program"). Financial Highlights • The Fund's net assets decreased 6.7%. Ending net assets decreased from $924,524 to $826,180 between FY 2008 and FY 2009. • The Fund's net assets decreased around I% from FY 2007 to FY 2008. Ending net assets decreased from $934,508 to $924,524 between FY 2007 and FY 2008. Using This Annual Report This annual report is presented in a format that substantially meets the presentation requirements of the Governmental Accounting Standards Board (GASB) in accordance with generally accepted accounting principles. The Fund is accounted for and presented similar to a special-purpose government engaged solely in business-type activities. The financial statements for the Fund are presented after the Management's Discussion and Analysis in this annual report and then followed by the footnotes in this order: • Management's Discussion and Analysis - that provides useful analysis that facilitates a better understanding of the Fund's financial condition and changes therein. • Basic Financial Statements o Statements of Net Assets o Statements of Revenues, Expenses and Changes in Net Assets o Statements of Cash Flows • Footnotes - that elaborate on the accounting principles used in the preparation of the financial statements and further explain financial statement elements. A Financial Analysis of the Fund One of the most frequently asked questions about the Fund's finances is, "Has the overall financial condition improved, declined or remained steady over the past year?" The Statement of Net Assets and the Statement of Revenues, Expenses, and Changes in Net Assets report information about the Fund as a whole and about its activities in a way that helps answer this question. The following tables present a condensed comparative presentation of net assets and changes therein. (Unaudited. See accompanying auditor's report.) 5 OKLAHOMA WATER RESOURCES BOARD OKLAHOMA CLEAN WATER STATE REVOLVING FUND LOAN ACCOUNT ADMINISTRATIVE FUND ANNUAL FINANCIAL REPORT As of and for the Years Ended June 30, 2009 and 2008 Oklahoma Water Resources Board CWSRF Loan Account Administrative Fund Net Assets Business-Type Activities June 30 2009 2008 2007 Current assets $ 1,017,540 $ 1,280,205 $ 1,295,881 Capital assets, net 17,996 30,028 42,060 Total assets 1,035,536 1,310,233 1,337,941 Current liabilities 173,356 385,709 403,433 Total liabilities 173,356 385,709 403,433 Net assets Invested in capital assets, net 17,996 30,028 42,060 Unrestricted 844,184 894,496 892,448 Total net assets $ 862,180 $ 924,524 $ 934,508 Significant variances between 2008 and 2009 related to current liabilities is the result of the fund paying back the overpayment of administrative fees received in fiscal year 2007 to the Drinking Water administrative fund. (Unaudited. See accompanying auditor's report.) 6 OKLAHOMA WATER RESOURCES BOARD OKLAHOMA CLEAN WATER STATE REVOLVING FUND LOAN ACCOUNT ADMINISTRATIVE FUND ANNUAL FINANCIAL REPORT As of and for the Years Ended June 30, 2009 and 2008 Oklahoma Water Resources Board CWSRF Loan Account Administrative Fund Revenues, Expenses, and Changes in Net Assets Business- Type Activities Years Ended June 30, 2009 2008 2007 Revenues Operating revenues $ 1,016,003 $ 931,959 $ 935,329 Non-operating revenues 19,130 33,968 23,432 Total revenues 1,035,133 965,927 958,761 Expenses Personnel expense 646,935 588,397 533,992 Indirect cost expense 345,344 294,208 262,498 Other administrative expenses 78,678 69,869 55,827 Depreciation expense 12,032 12,032 10,044 Total expenses 1,082,989 964,506 862,361 Net Income (loss) before transfers (47,856) 1,421 96,400 Transfers to other programs (14,488) (11,405) (9,655) Increase in net assets (62,344) (9,984) 86,745 Total net assets - beginning 924,524 934,508 847,763 Total net assets - ending $ 862,180 $ 924,524 $ 934,508 There were no significant variances between the years. Capital Assets At the end of June 30, 2009, the Fund had $17,996 invested in capital assets, net of depreciation, including computer software and an automobile. This represents a net decrease of $12,032 over the prior year. (Unaudited. See accompanying auditor's report.) 7 OKLAHOMA WATER RESOURCES BOARD OKLAHOMA CLEAN WATER STATE REVOLVING FUND LOAN ACCOUNT ADMINISTRA TIVE FUND ANNUAL FINANCIAL REPORT As of and for the Years Ended June 30, 2009 and 2008 Oklahoma Water Resources Board CWSRF Loan Account Administrative Fund Capital Assets (Net of accumulated depreciation) Business-Type Activities Years Ended June 30, Software Automobile $ 8,058 9,938 $ 16,115 13,913 $ 24,172 17,888 Totals $ 17,996 $ 30,028 $ 42,060 Other than depreciation, there were no additions or deletions to capital assets in FY 2009 or 2008. See Note 3 to the financial statements for more detailed information on the Fund's capital assets and changes therein. Economic Factors and Next Year's Outlook The Oklahoma Clean Water State Revolving Fund has been extremely popular with communities that borrow from the program. The Program's financing strategy of providing long-term loans at 60% of market rate has been consistent since program start up in 1990. No additional staff is planned at this time, therefore Fund expenses should be fairly consistent with the amount expended in FY 2009. Contacting the Fund's Financial Management This financial report is designed to provide the Board's accountability of the Fund. If you have questions about this report or need additional financial information, contact the Financial Assistance Division of the Oklahoma Water Resources Board at 3800 N. Classen Blvd, Oklahoma City, OK 73118. (Unaudited. See accompanying auditor's report.) 8 OKLAHOMA WATER RESOURCES BOARD OKLAHOMA CLEAN WATER STATE REVOLVING FUND LOAN ACCOUNT ADMINISTRATIVE FUND ANNUAL FINANCIAL REPORT As of and for the Years Ended June 30, 2009 and 2008 BASIC FINANCIAL STATEMENTS 9 OKLAHOMA WATER RESOURCES BOARD OKLAHOMA CLEAN WATER STATE REVOLVING FUND LOAN ACCOUNT ADMINISTRA TIVE FUND ANNUAL FINANCIAL REPORT As of and for the Years Ended June 30, 2009 and 2008 2009 2008 $694,603 $868,735 320,988 304,223 103,915 1,949 3,332 1,017,540 1,280,205 Statements of Net Assets - June 30, 2009 and 2008 ASSETS: Current Assets: Cash and cash equivalents Administrative fee receivable Other receivable Interest receivable Total CUITentassets Noncurrent Assets: Depreciable capital assets, net 17,996 Total noncurrent assets 17,996 Total assets 1,035,536 LIABILITIES: Current Liabilities: Accounts payable Due to Drinking Water Treatment Loan Administrative Fund 130,489 42,867 Total current liabilities 173,356 NET ASSETS: Invested in capital assets, net of related debt Unrestricted 17,996 844,184 Total net assets $862,180 See accompanying notes to the basic financial statements. 10 30,028 30,028 1,310,233 55,861 329,848 385,709 30,028 894,496 $924,524 OKLAHOMA WATER RESOURCES BOARD OKLAHOMA CLEAN WATER STATE REVOLVING FUND LOAN ACCOUNT ADMINISTRATIVE FUND ANNUAL FINANCIAL REPORT As of and for the Years Ended June 30, 2009 and 2008 Statements of Revenues, Expenses, and Changes in Net Assets - Years Ended June 30, 2009 and 2008 Change in net assets 2009 2008 $1,006,153 $ 929,459 9,850 2,500 1,016,003 931,959 646,935 588,397 345,344 294,208 78,678 69,869 12,032 12,032 1,082,989 964,506 (66,986) (32,547) 18,730 33,968 400 19,130 33,968 (47,856) 1,421 (14,488) (11,405) (62,344) (9,984) 924,524 934,508 $862,180 $924,524 OPERATING REVENUES: Administrative fee income Application fee income Total operating revenues OPERATING EXPENSES: Personnel expense Indirect cost expense Other administrative expenses Depreciation expense Total operating expenses OPERATING INCOME (LOSS) NON-OPERATING REVENUES (EXPENSES): Interest income Other income Total non-operating revenues (expenses) Net income (loss) before transfers Transfers to Oklahoma Clean Water State Revolving Loan Account Program Total net assets - beginning Total net assets - ending See accompanying notes to the basic financial statements. 11 OKLAHOMA WATER RESOURCES BOARD OKLAHOMA CLEAN WATER STATE REVOLVING FUND LOAN ACCOUNT ADMINISTRATIVE FUND ANNUAL FINANCIAL REPORT As of and for the Years Ended June 30, 2009 and 2008 Statements of Cash Flows - Years Ended June 30, 2009 and 2008 2009 2008 CASH FLOWS FROM OPERATING ACTIVITIES Administrative fee income s 989,388 s 923,556 Application fee income 9,850 2,500 Payments to employees (646,935) (588,397) Payments to other suppliers (532,460) (275,572) Other income 400 Net Cash Provided by Operating Activities (179,757) 62,087 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers to Oklahoma Clean Water State Revolving Loan Account Program (14,488) (11,405) Net Cash Provided by (Used in) Noncapital Financing Activities (14,488) (11,405) CASH FLOWS FROM INVESTING ACTIVITIES Interest income 20,113 33,740 Net Cash Provided by Investing Activities 20,113 33,740 Net Increase (Decrease) in Cash and Cash Equivalents (174,132) 84,422 Balances - beginning of the year 868,735 784,313 Balances - end of the year s 694,603 s 868,735 Reconciliation of operating income to net cash provided by operating activities: Operating income (loss) s (66,986) s (32,547) Adjustments to reconcile operating income to net cash provided by (used in) operating activities: Depreciation 12,032 12,032 Other income 400 Change in assets and liabilities: Decrease (Increase) in administration fee receivable (16,765) (5,903) Decrease (Increase) in other receivable 103,915 106,229 Increase (Decrease) in accounts payable 74,628 (17,724) Increase (Decrease) in Due to OWAdmin fund (286,981 ) Net Cash Provided by Operating Activities s (179,757) $ 62,087 See accompanying notes to the basic financial statements. 12 OKLAHOMA WATER RESOURCES BOARD OKLAHOMA CLEAN WATER STATE REVOLVING FUND LOAN ACCOUNT ADMINISTRATIVE FUND ANNUAL FINANCIAL REPORT As of and for the Years Ended June 30, 2009 and 2008 Footnotes to the Basic Financial Statements: 1. Summary of Significant Accounting Policies Reporting Entity The Oklahoma Water Resources Board/Oklahoma Wastewater Facility Construction Revolving Loan Account Program (the "Program") was created pursuant to the 1987 Amendments (P.L. 100-4) to the "Clean Water Act" (P.L. 92-S00) to provide a perpetual fund for financing the construction of wastewater treatment facilities for municipalities and other public entities. The Program funds loans with Federal grants, State matching funds, principal repayments, bond proceeds, and interest received on loans and invested cash balances. State matching funds are provided through State appropriations or through the issuance of notes payable. The Oklahoma Water Resources Board/Oklahoma Wastewater Facility Construction Revolving Loan Account (the "Program"), Title 82 Oklahoma Statutes, Sections 108S.S1 et seq. was created pursuant to the 1987 Amendments (P.L. 100-4) to the Federal Clean Water Act (P.L. 92-S00) set apart from all other Oklahoma Water Resources Board accounts and programs to be permanent and perpetual; not subject to fiscal year limitations. Title 82, Section 108S.64 created the Oklahoma Water Resources Board/Oklahoma Wastewater Facility Construction Revolving Loan Administrative Fund (the "Fund") for the purpose of administering the Program, transferring monies into the Program and for other purposes authorized by the Federal Clean Water Act. The Fund consists of revenues primarily from loan administrative fees, Fund investment earnings and loan processing and application processing fees. Administrative fees are assessed on loans made from the Program. Fees are assessed to each participating borrower at the rate of one-half of one percent (O.S%) per annum of the amount of each borrower's loan balance outstanding, and loan application fees. The significant accounting principles and practices followed by the Fund are presented below: Basis of Accounting and Measurement Focus The Fund is accounted for and presented similar to a special-purpose government engaged solely in business type activities. The Fund uses the accrual basis of accounting whereby expenses are recognized when the liability is incurred and revenues are recognized when earned. The Fund uses the economic resources measurement focus where all assets, liabilities, net assets, revenues, expenses and transfers relating to the Program and net income and capital maintenance are measured. The accompanying financial statements have been prepared in conformity with generally accepted accounting principles as prescribed by the Governmental Accounting Standards Board ("GASB"). Under the guidelines of GASB Statement 20, the Fund has elected not to apply 13 OKLAHOMA WATER RESOURCES BOARD OKLAHOMA CLEAN WATER STATE REVOLVING FUND LOAN ACCOUNT ADMINISTRATIVE FUND ANNUAL FINANCIAL REPORT As of and for the Years Ended June 30, 2009 and 2008 1. Summary of Significant Accounting Policies (cont'd) Financial Accounting Standards Board Statements and Interpretations issued after November 30, 1989. Cash and Cash Equivalents The Fund considers all highly liquid debt instruments purchased with an original maturity of three months or less and money market funds to be cash equivalents. Capital Assets Capital assets are stated at cost, less accumulated depreciation. Depreciation is charged to operating expense and is computed using the straight-line method. The useful life of software has been estimated at 7 years. The useful life of automobiles has been estimated at 6 years. Maintenance and repairs are charged to operations when incurred and improvements are capitalized. The Fund's policy is to capitalize purchases in excess of $5,000. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the respective accounts and the resulting gain or loss is reflected in operations. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Due to the Drinking Water Administrative Fund During the 2007 fiscal year the Clean Water State Revolving Fund Loan Account Administrative Fund received a lump sum amount for administrative fees revenue. This was intended to be split between the two administrative funds in which $329,848 was payable to the Drinking Water Treatment Loan Administrative Fund at year end. Due to an administrative error, this amount was not paid in fiscal year 2008. During fiscal year 2009 the amount was paid with the exception of$42,867. 2. Cash Deposits and Investment Risk Cash of $694,603 and $868,735 at June 30, 2009 and 2008 respectively, was on deposit in the State Treasurer's office's internal investment pool- OK Invest. Investment Interest Rate Risk - the Fund does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. 14 OKLAHOMA WATER RESOURCES BOARD OKLAHOMA CLEAN WATER STATE REVOLVING FUND LOAN ACCOUNT ADMINISTRA TIVE FUND ANNUAL FINANCIAL REPORT As of and for the Years Ended June 30, 2009 and 2008 2. Cash Deposits and Investment Risk (cont'd) Investment Credit Risk and Custodial Credit Risk - the Fund has no investment policy that limits its investment choices other than the limitation of state law imposed on the State Treasurer as follows: a. U.S. Treasury Bills, Notes and Bonds and u.s. Government Agency Securities with certain ratings and maturity limitations. b. Collateralized or insured certificates of deposit and other evidences of deposit issued by a bank, savings bank, savings and loan association or credit union located in the state. c. With certain ratings and maturity limitations, negotiable certificates of deposit, bankers acceptances and commercial paper. d. Obligations of state and local governments, including obligations of Oklahoma state public trusts, with certain ratings and maturity limitations. e. Collateralized repurchase agreements tri-party repurchase agreements. f. Money market mutual funds and short term bond funds regulated by the SEC and in which investments consist of obligations of the U.S. Government and its agencies and instrumentalities and repurchase agreements collateralized by obligations of the U.S. Government and its agencies and instrumentalities. The state treasurer has determined that current holdings in OK Invest should be limited to obligations of the United States government, its agencies and instrumentalities, tri-party repurchase agreements collateralized at 102% with the collateral held by a third party in the name of the Oklahoma State Treasurer and money market mutual funds which either directly or indirectly invest in U.S. Treasury and/or Agency securities and repurchase agreements related to such securities. OK Invest is not rated by a national rating agency. The overall weighted average maturity of OK Invest is less than 2 years. OK Invest is not insured or guaranteed by the State of Oklahoma, the Federal Deposit Insurance Corporation or any other government agency. Concentration of Investment Credit Risk - the Fund places no limit on the amount it may invest in anyone issuer. Limits are indirectly imposed through the Fund's participation in OK Invest. The Fund has the following concentration of credit risk: 100% or $694,603 is invested in OK Invest. 15 OKLAHOMA WATER RESOURCES BOARD OKLAHOMA CLEAN WATER STATE REVOLVING FUND LOAN ACCOUNT ADMINISTRATIVE FUND ANNUAL FINANCIAL REPORT As of and for the Years Ended June 30, 2009 and 2008 3. Capital Assets A summary of equipment activity follows: Beginning Balance July 1,2007 Additions Deletions Ending Balance June 30, 2008 Other capital assets: Computer software $ 56,400 $ 56,400 Automobile 19,875 19,875 Total other capital assets, historical cost 76,275 76,275 Less: accumulated depreciation for: Computer software 32,228 8,057 40,285 Automobile 1,987 3,975 5,962 Total accumulated depreciation 34,215 12,032 46,247 Other capital assets, net 42,060 (12,032) 30,028 Beginning Balance July 1,2008 Additions Deletions Ending Balance June 30, 2009 Other capital assets: Computer software $ 56,400 $ 56,400 Automobile 19,875 19,875 Total other capital assets, historical cost 76,275 76,275 Less: accumulated depreciation for: Computer software 40,285 8,057 48,342 Automobile 5,962 3,975 9,937 Total accumulated depreciation 46,247 12,032 58,279 Other capital assets, net 30,028 (12,032) 17,996 16 OKLAHOMA WATER RESOURCES BOARD OKLAHOMA CLEAN WATER STATE REVOLVING FUND LOAN ACCOUNT ADMINISTRATIVE FUND ANNUAL FINANCIAL REPORT As of and for the Years Ended June 30, 2009 and 2008 4. Indirect Costs Indirect costs represent recoverable personnel costs charged to the Program by the Fund in connection with administering and accounting for activities of the Program. The amount allocated to the Program is based on a percentage of the Fund personnel costs as established in an indirect cost allocation plan. The indirect cost rate for the year ended June 30, 2009 and 2008 was 81.54% and 83.03%. 17 OKLAHOMA WATER RESOURCES BOARD OKLAHOMA CLEAN WATER STATE REVOLVING FUND LOAN ACCOUNT ADMINISTRATIVE FUND ANNUAL FINANCIAL REPORT As of and for the Years Ended June 30, 2009 and 2008 INTERNAL CONTROL OVER FINANCIAL REPORTING AND COMPLIANCE 18 JOHN M. ARLEDGE & ASSOCIATES, P.C. CERTIFIED PUBLIC ACCOUNTANTS 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 A UDITING STANDARDS To the Members of the Oklahoma Water Resources Board We have audited the fmancial statements of the Oklahoma Water Resources Board/Oklahoma Clean Water State Revolving Fund Loan Account Administrative Fund (the "Fund") as of and for the year ended June 30, 2009, and have issued our report thereon dated September 23, 2009. We conducted our audit 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. Internal Control Over Financial Reporting In planning and performing our audit, we considered the Fund's internal control over financial reporting as a basis for designing our auditing procedures 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 Fund's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Fund's internal control over financial reporting. A control deficiency 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 significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the Fund's ability to initiate, authorize, record, process, or report fmancial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the Fund's financial statements that is more than inconsequential will not be prevented or detected by the Fund's internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the Fund's internal control. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defmed above. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Fund'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 audit, 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. 309 NORTH BRYANT. EDMOND, OKLAHOMA 73034· (405) 348-0615· FAX (405) 348-0931 • www.jmacpas.com MEMBER OF AICPA AND OS CPA This report is intended solely for the information and use of the audit committee, management, and the members of the Oklahoma Water Resources Board and is not intended to be and should not be used by anyone other than these specified parties.
Object Description
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Title | OCWSRF Fund |
OkDocs Class# | W1700.3 C623f 2008-2009 |
Digital Format | PDF, Adobe Reader required |
ODL electronic copy | Deposited by agency in print; scanned by Oklahoma Department of Libraries 7/2011 |
Rights and Permissions | This Oklahoma state government publication is provided for educational purposes under U.S. copyright law. Other usage requires permission of copyright holders. |
Language | English |
Full text | W 1700.3 .C623f 2008-2009 c.1 I. State of Oklahoma WATER RESOURCES BOARD the water agency OKLAHOMA CLEAN WATER STATE REVOLVING FUND LOAN ACCOUNT ADMINISTRATIVE FUND ANNUAL FINANCIAL STATEMENTS AS OF AND FOR THE FISCAL YEARS ENDED JUNE 30, 2009 AND 2008 AND INDEPENDENT AUDITOR'S REPORTS OKLAHOMA CLEAN WATER STATE REVOLVING FUND LOAN ACCOUNT ADMINISTRATIVE FUND ANNUAL FINANCIAL STATEMENTS AS OF AND FOR THE FISCAL YEARS ENDED JUNE 30, 2009 AND 2008 AND INDEPENDENT AUDITOR'S REPORTS OKLAHOMA WATER RESOURCES BOARD OKLAHOMA CLEAN WATER STATE REVOLVING FUND LOAN ACCOUNT ADMINISTRATIVE FUND ANNUAL FINANCIAL REPORT As of and for the Years Ended June 30, 2009 and 2008 ITABLE OF CONTENTS Page Independent Auditor's Report on Financial Statements 3 Management's Discussion and Analysis 5-8 The Basic Financial Statements Statements of Net Assets 10 Statements of Revenues, Expenses, and Changes in Net Assets 11 Statements of Cash Flows 12 Footnotes to Statements 13-17 Internal Control over Financial Reporting and Compliance 18-19 Independent Auditor's Report on Internal Control and Compliance 2 JOHN M. ARLEDGE & ASSOCIATES, P.C. CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITOR'S REPORT To the Members of the Oklahoma Water Resources Board We have audited the accompanying statements of net assets of the Oklahoma Water Resources Board/Oklahoma Clean Water State Revolving Fund Loan Account Administrative Fund (the "Fund") as of June 30, 2009 and 2008, and the related statements of revenues, expenses and changes in net assets and cash flows for the years then ended. These fmancial statements are the responsibility of the Fund's management. 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 audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the fmancial statements referred to above present fairly, in all material respects, the financial position of the Fund as of June 30, 2009 and 2008, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated September 23, 2009, on our consideration of the Fund'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 fmancial 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 and should be considered in assessing the results of our audit. The Management's Discussion and Analysis section on page 4 is not a required part of the basic financial statements but is supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. 309 NORTH BRYANT. EDMOND, OKLAHOMA 73034 • (405) 348-{)615 • FAX(405) 348-{)931 • www.jmacpas.com MEMBER OF AICPA AND OSCPA OKLAHOMA WATER RESOURCES BOARD OKLAHOMA CLEAN WATER STATE REVOLVING FUND LOAN ACCOUNT ADMINISTRATIVE FUND ANNUAL FINANCIAL REPORT As of and for the Years Ended June 30, 2009 and 2008 MANAGEMENT'S DISCUSSION AND ANALYSIS Our discussion and analysis of the Oklahoma Clean Water State Revolving Fund Loan Account Administrative Fund's (the "Fund") financial performance provides an overview of the Fund's financial activities for the fiscal year ended June 30, 2009. Please read it in conjunction with the Fund's financial statements, which begin on page 10. The Oklahoma Water Resources Board (the "Board") administers the Fund in conjunction with the Oklahoma Clean Water State Revolving Fund Loan Account Program (the "Program"). Financial Highlights • The Fund's net assets decreased 6.7%. Ending net assets decreased from $924,524 to $826,180 between FY 2008 and FY 2009. • The Fund's net assets decreased around I% from FY 2007 to FY 2008. Ending net assets decreased from $934,508 to $924,524 between FY 2007 and FY 2008. Using This Annual Report This annual report is presented in a format that substantially meets the presentation requirements of the Governmental Accounting Standards Board (GASB) in accordance with generally accepted accounting principles. The Fund is accounted for and presented similar to a special-purpose government engaged solely in business-type activities. The financial statements for the Fund are presented after the Management's Discussion and Analysis in this annual report and then followed by the footnotes in this order: • Management's Discussion and Analysis - that provides useful analysis that facilitates a better understanding of the Fund's financial condition and changes therein. • Basic Financial Statements o Statements of Net Assets o Statements of Revenues, Expenses and Changes in Net Assets o Statements of Cash Flows • Footnotes - that elaborate on the accounting principles used in the preparation of the financial statements and further explain financial statement elements. A Financial Analysis of the Fund One of the most frequently asked questions about the Fund's finances is, "Has the overall financial condition improved, declined or remained steady over the past year?" The Statement of Net Assets and the Statement of Revenues, Expenses, and Changes in Net Assets report information about the Fund as a whole and about its activities in a way that helps answer this question. The following tables present a condensed comparative presentation of net assets and changes therein. (Unaudited. See accompanying auditor's report.) 5 OKLAHOMA WATER RESOURCES BOARD OKLAHOMA CLEAN WATER STATE REVOLVING FUND LOAN ACCOUNT ADMINISTRATIVE FUND ANNUAL FINANCIAL REPORT As of and for the Years Ended June 30, 2009 and 2008 Oklahoma Water Resources Board CWSRF Loan Account Administrative Fund Net Assets Business-Type Activities June 30 2009 2008 2007 Current assets $ 1,017,540 $ 1,280,205 $ 1,295,881 Capital assets, net 17,996 30,028 42,060 Total assets 1,035,536 1,310,233 1,337,941 Current liabilities 173,356 385,709 403,433 Total liabilities 173,356 385,709 403,433 Net assets Invested in capital assets, net 17,996 30,028 42,060 Unrestricted 844,184 894,496 892,448 Total net assets $ 862,180 $ 924,524 $ 934,508 Significant variances between 2008 and 2009 related to current liabilities is the result of the fund paying back the overpayment of administrative fees received in fiscal year 2007 to the Drinking Water administrative fund. (Unaudited. See accompanying auditor's report.) 6 OKLAHOMA WATER RESOURCES BOARD OKLAHOMA CLEAN WATER STATE REVOLVING FUND LOAN ACCOUNT ADMINISTRATIVE FUND ANNUAL FINANCIAL REPORT As of and for the Years Ended June 30, 2009 and 2008 Oklahoma Water Resources Board CWSRF Loan Account Administrative Fund Revenues, Expenses, and Changes in Net Assets Business- Type Activities Years Ended June 30, 2009 2008 2007 Revenues Operating revenues $ 1,016,003 $ 931,959 $ 935,329 Non-operating revenues 19,130 33,968 23,432 Total revenues 1,035,133 965,927 958,761 Expenses Personnel expense 646,935 588,397 533,992 Indirect cost expense 345,344 294,208 262,498 Other administrative expenses 78,678 69,869 55,827 Depreciation expense 12,032 12,032 10,044 Total expenses 1,082,989 964,506 862,361 Net Income (loss) before transfers (47,856) 1,421 96,400 Transfers to other programs (14,488) (11,405) (9,655) Increase in net assets (62,344) (9,984) 86,745 Total net assets - beginning 924,524 934,508 847,763 Total net assets - ending $ 862,180 $ 924,524 $ 934,508 There were no significant variances between the years. Capital Assets At the end of June 30, 2009, the Fund had $17,996 invested in capital assets, net of depreciation, including computer software and an automobile. This represents a net decrease of $12,032 over the prior year. (Unaudited. See accompanying auditor's report.) 7 OKLAHOMA WATER RESOURCES BOARD OKLAHOMA CLEAN WATER STATE REVOLVING FUND LOAN ACCOUNT ADMINISTRA TIVE FUND ANNUAL FINANCIAL REPORT As of and for the Years Ended June 30, 2009 and 2008 Oklahoma Water Resources Board CWSRF Loan Account Administrative Fund Capital Assets (Net of accumulated depreciation) Business-Type Activities Years Ended June 30, Software Automobile $ 8,058 9,938 $ 16,115 13,913 $ 24,172 17,888 Totals $ 17,996 $ 30,028 $ 42,060 Other than depreciation, there were no additions or deletions to capital assets in FY 2009 or 2008. See Note 3 to the financial statements for more detailed information on the Fund's capital assets and changes therein. Economic Factors and Next Year's Outlook The Oklahoma Clean Water State Revolving Fund has been extremely popular with communities that borrow from the program. The Program's financing strategy of providing long-term loans at 60% of market rate has been consistent since program start up in 1990. No additional staff is planned at this time, therefore Fund expenses should be fairly consistent with the amount expended in FY 2009. Contacting the Fund's Financial Management This financial report is designed to provide the Board's accountability of the Fund. If you have questions about this report or need additional financial information, contact the Financial Assistance Division of the Oklahoma Water Resources Board at 3800 N. Classen Blvd, Oklahoma City, OK 73118. (Unaudited. See accompanying auditor's report.) 8 OKLAHOMA WATER RESOURCES BOARD OKLAHOMA CLEAN WATER STATE REVOLVING FUND LOAN ACCOUNT ADMINISTRATIVE FUND ANNUAL FINANCIAL REPORT As of and for the Years Ended June 30, 2009 and 2008 BASIC FINANCIAL STATEMENTS 9 OKLAHOMA WATER RESOURCES BOARD OKLAHOMA CLEAN WATER STATE REVOLVING FUND LOAN ACCOUNT ADMINISTRA TIVE FUND ANNUAL FINANCIAL REPORT As of and for the Years Ended June 30, 2009 and 2008 2009 2008 $694,603 $868,735 320,988 304,223 103,915 1,949 3,332 1,017,540 1,280,205 Statements of Net Assets - June 30, 2009 and 2008 ASSETS: Current Assets: Cash and cash equivalents Administrative fee receivable Other receivable Interest receivable Total CUITentassets Noncurrent Assets: Depreciable capital assets, net 17,996 Total noncurrent assets 17,996 Total assets 1,035,536 LIABILITIES: Current Liabilities: Accounts payable Due to Drinking Water Treatment Loan Administrative Fund 130,489 42,867 Total current liabilities 173,356 NET ASSETS: Invested in capital assets, net of related debt Unrestricted 17,996 844,184 Total net assets $862,180 See accompanying notes to the basic financial statements. 10 30,028 30,028 1,310,233 55,861 329,848 385,709 30,028 894,496 $924,524 OKLAHOMA WATER RESOURCES BOARD OKLAHOMA CLEAN WATER STATE REVOLVING FUND LOAN ACCOUNT ADMINISTRATIVE FUND ANNUAL FINANCIAL REPORT As of and for the Years Ended June 30, 2009 and 2008 Statements of Revenues, Expenses, and Changes in Net Assets - Years Ended June 30, 2009 and 2008 Change in net assets 2009 2008 $1,006,153 $ 929,459 9,850 2,500 1,016,003 931,959 646,935 588,397 345,344 294,208 78,678 69,869 12,032 12,032 1,082,989 964,506 (66,986) (32,547) 18,730 33,968 400 19,130 33,968 (47,856) 1,421 (14,488) (11,405) (62,344) (9,984) 924,524 934,508 $862,180 $924,524 OPERATING REVENUES: Administrative fee income Application fee income Total operating revenues OPERATING EXPENSES: Personnel expense Indirect cost expense Other administrative expenses Depreciation expense Total operating expenses OPERATING INCOME (LOSS) NON-OPERATING REVENUES (EXPENSES): Interest income Other income Total non-operating revenues (expenses) Net income (loss) before transfers Transfers to Oklahoma Clean Water State Revolving Loan Account Program Total net assets - beginning Total net assets - ending See accompanying notes to the basic financial statements. 11 OKLAHOMA WATER RESOURCES BOARD OKLAHOMA CLEAN WATER STATE REVOLVING FUND LOAN ACCOUNT ADMINISTRATIVE FUND ANNUAL FINANCIAL REPORT As of and for the Years Ended June 30, 2009 and 2008 Statements of Cash Flows - Years Ended June 30, 2009 and 2008 2009 2008 CASH FLOWS FROM OPERATING ACTIVITIES Administrative fee income s 989,388 s 923,556 Application fee income 9,850 2,500 Payments to employees (646,935) (588,397) Payments to other suppliers (532,460) (275,572) Other income 400 Net Cash Provided by Operating Activities (179,757) 62,087 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers to Oklahoma Clean Water State Revolving Loan Account Program (14,488) (11,405) Net Cash Provided by (Used in) Noncapital Financing Activities (14,488) (11,405) CASH FLOWS FROM INVESTING ACTIVITIES Interest income 20,113 33,740 Net Cash Provided by Investing Activities 20,113 33,740 Net Increase (Decrease) in Cash and Cash Equivalents (174,132) 84,422 Balances - beginning of the year 868,735 784,313 Balances - end of the year s 694,603 s 868,735 Reconciliation of operating income to net cash provided by operating activities: Operating income (loss) s (66,986) s (32,547) Adjustments to reconcile operating income to net cash provided by (used in) operating activities: Depreciation 12,032 12,032 Other income 400 Change in assets and liabilities: Decrease (Increase) in administration fee receivable (16,765) (5,903) Decrease (Increase) in other receivable 103,915 106,229 Increase (Decrease) in accounts payable 74,628 (17,724) Increase (Decrease) in Due to OWAdmin fund (286,981 ) Net Cash Provided by Operating Activities s (179,757) $ 62,087 See accompanying notes to the basic financial statements. 12 OKLAHOMA WATER RESOURCES BOARD OKLAHOMA CLEAN WATER STATE REVOLVING FUND LOAN ACCOUNT ADMINISTRATIVE FUND ANNUAL FINANCIAL REPORT As of and for the Years Ended June 30, 2009 and 2008 Footnotes to the Basic Financial Statements: 1. Summary of Significant Accounting Policies Reporting Entity The Oklahoma Water Resources Board/Oklahoma Wastewater Facility Construction Revolving Loan Account Program (the "Program") was created pursuant to the 1987 Amendments (P.L. 100-4) to the "Clean Water Act" (P.L. 92-S00) to provide a perpetual fund for financing the construction of wastewater treatment facilities for municipalities and other public entities. The Program funds loans with Federal grants, State matching funds, principal repayments, bond proceeds, and interest received on loans and invested cash balances. State matching funds are provided through State appropriations or through the issuance of notes payable. The Oklahoma Water Resources Board/Oklahoma Wastewater Facility Construction Revolving Loan Account (the "Program"), Title 82 Oklahoma Statutes, Sections 108S.S1 et seq. was created pursuant to the 1987 Amendments (P.L. 100-4) to the Federal Clean Water Act (P.L. 92-S00) set apart from all other Oklahoma Water Resources Board accounts and programs to be permanent and perpetual; not subject to fiscal year limitations. Title 82, Section 108S.64 created the Oklahoma Water Resources Board/Oklahoma Wastewater Facility Construction Revolving Loan Administrative Fund (the "Fund") for the purpose of administering the Program, transferring monies into the Program and for other purposes authorized by the Federal Clean Water Act. The Fund consists of revenues primarily from loan administrative fees, Fund investment earnings and loan processing and application processing fees. Administrative fees are assessed on loans made from the Program. Fees are assessed to each participating borrower at the rate of one-half of one percent (O.S%) per annum of the amount of each borrower's loan balance outstanding, and loan application fees. The significant accounting principles and practices followed by the Fund are presented below: Basis of Accounting and Measurement Focus The Fund is accounted for and presented similar to a special-purpose government engaged solely in business type activities. The Fund uses the accrual basis of accounting whereby expenses are recognized when the liability is incurred and revenues are recognized when earned. The Fund uses the economic resources measurement focus where all assets, liabilities, net assets, revenues, expenses and transfers relating to the Program and net income and capital maintenance are measured. The accompanying financial statements have been prepared in conformity with generally accepted accounting principles as prescribed by the Governmental Accounting Standards Board ("GASB"). Under the guidelines of GASB Statement 20, the Fund has elected not to apply 13 OKLAHOMA WATER RESOURCES BOARD OKLAHOMA CLEAN WATER STATE REVOLVING FUND LOAN ACCOUNT ADMINISTRATIVE FUND ANNUAL FINANCIAL REPORT As of and for the Years Ended June 30, 2009 and 2008 1. Summary of Significant Accounting Policies (cont'd) Financial Accounting Standards Board Statements and Interpretations issued after November 30, 1989. Cash and Cash Equivalents The Fund considers all highly liquid debt instruments purchased with an original maturity of three months or less and money market funds to be cash equivalents. Capital Assets Capital assets are stated at cost, less accumulated depreciation. Depreciation is charged to operating expense and is computed using the straight-line method. The useful life of software has been estimated at 7 years. The useful life of automobiles has been estimated at 6 years. Maintenance and repairs are charged to operations when incurred and improvements are capitalized. The Fund's policy is to capitalize purchases in excess of $5,000. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the respective accounts and the resulting gain or loss is reflected in operations. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Due to the Drinking Water Administrative Fund During the 2007 fiscal year the Clean Water State Revolving Fund Loan Account Administrative Fund received a lump sum amount for administrative fees revenue. This was intended to be split between the two administrative funds in which $329,848 was payable to the Drinking Water Treatment Loan Administrative Fund at year end. Due to an administrative error, this amount was not paid in fiscal year 2008. During fiscal year 2009 the amount was paid with the exception of$42,867. 2. Cash Deposits and Investment Risk Cash of $694,603 and $868,735 at June 30, 2009 and 2008 respectively, was on deposit in the State Treasurer's office's internal investment pool- OK Invest. Investment Interest Rate Risk - the Fund does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. 14 OKLAHOMA WATER RESOURCES BOARD OKLAHOMA CLEAN WATER STATE REVOLVING FUND LOAN ACCOUNT ADMINISTRA TIVE FUND ANNUAL FINANCIAL REPORT As of and for the Years Ended June 30, 2009 and 2008 2. Cash Deposits and Investment Risk (cont'd) Investment Credit Risk and Custodial Credit Risk - the Fund has no investment policy that limits its investment choices other than the limitation of state law imposed on the State Treasurer as follows: a. U.S. Treasury Bills, Notes and Bonds and u.s. Government Agency Securities with certain ratings and maturity limitations. b. Collateralized or insured certificates of deposit and other evidences of deposit issued by a bank, savings bank, savings and loan association or credit union located in the state. c. With certain ratings and maturity limitations, negotiable certificates of deposit, bankers acceptances and commercial paper. d. Obligations of state and local governments, including obligations of Oklahoma state public trusts, with certain ratings and maturity limitations. e. Collateralized repurchase agreements tri-party repurchase agreements. f. Money market mutual funds and short term bond funds regulated by the SEC and in which investments consist of obligations of the U.S. Government and its agencies and instrumentalities and repurchase agreements collateralized by obligations of the U.S. Government and its agencies and instrumentalities. The state treasurer has determined that current holdings in OK Invest should be limited to obligations of the United States government, its agencies and instrumentalities, tri-party repurchase agreements collateralized at 102% with the collateral held by a third party in the name of the Oklahoma State Treasurer and money market mutual funds which either directly or indirectly invest in U.S. Treasury and/or Agency securities and repurchase agreements related to such securities. OK Invest is not rated by a national rating agency. The overall weighted average maturity of OK Invest is less than 2 years. OK Invest is not insured or guaranteed by the State of Oklahoma, the Federal Deposit Insurance Corporation or any other government agency. Concentration of Investment Credit Risk - the Fund places no limit on the amount it may invest in anyone issuer. Limits are indirectly imposed through the Fund's participation in OK Invest. The Fund has the following concentration of credit risk: 100% or $694,603 is invested in OK Invest. 15 OKLAHOMA WATER RESOURCES BOARD OKLAHOMA CLEAN WATER STATE REVOLVING FUND LOAN ACCOUNT ADMINISTRATIVE FUND ANNUAL FINANCIAL REPORT As of and for the Years Ended June 30, 2009 and 2008 3. Capital Assets A summary of equipment activity follows: Beginning Balance July 1,2007 Additions Deletions Ending Balance June 30, 2008 Other capital assets: Computer software $ 56,400 $ 56,400 Automobile 19,875 19,875 Total other capital assets, historical cost 76,275 76,275 Less: accumulated depreciation for: Computer software 32,228 8,057 40,285 Automobile 1,987 3,975 5,962 Total accumulated depreciation 34,215 12,032 46,247 Other capital assets, net 42,060 (12,032) 30,028 Beginning Balance July 1,2008 Additions Deletions Ending Balance June 30, 2009 Other capital assets: Computer software $ 56,400 $ 56,400 Automobile 19,875 19,875 Total other capital assets, historical cost 76,275 76,275 Less: accumulated depreciation for: Computer software 40,285 8,057 48,342 Automobile 5,962 3,975 9,937 Total accumulated depreciation 46,247 12,032 58,279 Other capital assets, net 30,028 (12,032) 17,996 16 OKLAHOMA WATER RESOURCES BOARD OKLAHOMA CLEAN WATER STATE REVOLVING FUND LOAN ACCOUNT ADMINISTRATIVE FUND ANNUAL FINANCIAL REPORT As of and for the Years Ended June 30, 2009 and 2008 4. Indirect Costs Indirect costs represent recoverable personnel costs charged to the Program by the Fund in connection with administering and accounting for activities of the Program. The amount allocated to the Program is based on a percentage of the Fund personnel costs as established in an indirect cost allocation plan. The indirect cost rate for the year ended June 30, 2009 and 2008 was 81.54% and 83.03%. 17 OKLAHOMA WATER RESOURCES BOARD OKLAHOMA CLEAN WATER STATE REVOLVING FUND LOAN ACCOUNT ADMINISTRATIVE FUND ANNUAL FINANCIAL REPORT As of and for the Years Ended June 30, 2009 and 2008 INTERNAL CONTROL OVER FINANCIAL REPORTING AND COMPLIANCE 18 JOHN M. ARLEDGE & ASSOCIATES, P.C. CERTIFIED PUBLIC ACCOUNTANTS 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 A UDITING STANDARDS To the Members of the Oklahoma Water Resources Board We have audited the fmancial statements of the Oklahoma Water Resources Board/Oklahoma Clean Water State Revolving Fund Loan Account Administrative Fund (the "Fund") as of and for the year ended June 30, 2009, and have issued our report thereon dated September 23, 2009. We conducted our audit 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. Internal Control Over Financial Reporting In planning and performing our audit, we considered the Fund's internal control over financial reporting as a basis for designing our auditing procedures 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 Fund's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Fund's internal control over financial reporting. A control deficiency 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 significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the Fund's ability to initiate, authorize, record, process, or report fmancial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the Fund's financial statements that is more than inconsequential will not be prevented or detected by the Fund's internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the Fund's internal control. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defmed above. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Fund'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 audit, 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. 309 NORTH BRYANT. EDMOND, OKLAHOMA 73034· (405) 348-0615· FAX (405) 348-0931 • www.jmacpas.com MEMBER OF AICPA AND OS CPA This report is intended solely for the information and use of the audit committee, management, and the members of the Oklahoma Water Resources Board and is not intended to be and should not be used by anyone other than these specified parties. |
Date created | 2011-07-11 |
Date modified | 2011-07-11 |