HomeMy WebLinkAboutAzusa RMCA FS FY2021 - FINALFinancial Statements and Independent
Auditors’ Reports
For the year ended June 30, 2021
Azusa Rivers and Mountains Conservancy Authority
Table of Contents
For the year ended June 30, 2021
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Page
Independent Auditors’ Report ................................................................................................................................. 1
Basic Financial Statements:
Statements of Net Position ................................................................................................................................... 6
Statements of Activities ........................................................................................................................................ 7
Balance Sheet – General Fund ............................................................................................................................. 10
Reconciliation of the Balance Sheet of the General Fund to the
Statement of Net Position ..................................................................................................................................... 11
Statement of Revenues, Expenditures and Changes in Fund Balance – General Fund .............................. 12
Reconciliation of the Statement of Revenues, Expenditures, and Changes
In Fund Balance of the General Fund to the Statement of Activities ............................................................. 13
Notes to Financial Statements ............................................................................................................................. 16
Required Supplementary Information:
Notes to the Required Supplementary Information ......................................................................................... 24
Budgetary Comparison Schedule, General Fund ............................................................................................. 24
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INDEPENDENT AUDITOR’S REPORT
To the Board of Directors
of the Azusa Rivers and Mountains Conservancy Authority
Azusa, California
We have audited the accompanying financial statements of the governmental activities and each major fund of
the Azusa Rivers and Mountains Conservancy Authority (Authority) as of and for the year ended June 30, 2021,
and the related notes to the financial statements, as listed in the table of contents.
Management’s Responsibility for the Financial Statements
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.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our
audit in accordance with auditing standards generally accepted in the United States of America. Those standards
require that we plan and perform the audit 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 auditor’s 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 entity’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
opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective
financial position of the governmental activities and each major fund of the Authority, as of June 30, 2021, and the
respective changes in financial position for the year then ended in accordance with accounting principles
generally accepted in the United States of America.
To the Board of Directors
of the Azusa Rivers and Mountains Conservancy Authority
Azusa, California
Page 2
Other Matters
Required Supplementary Information
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 audit 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.
Management has omitted the management, discussion, and analysis that accounting principles generally accepted
in the United States of America require to be presented to supplement the basic financial statements. Such
missing 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.
Badawi & Associates, CPAs
Berkeley, California
June 16, 2022
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BASIC FINANCIAL STATEMENTS
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GOVERNMENT-WIDE FINANCIAL STATEMENTS
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Azusa Rivers and Mountains Conservancy Authority
Statement of Net Position
June 30, 2021
Governmental
Activities
ASSETS
Cash and investments 635$
Prepaid items 3,053
Total assets 3,688
LIABILITIES
Accounts payable -
Total liabilities -
NET POSITION
Unrestricted 3,688
Total net position 3,688$
See accompanying Notes to Basic Financial Statements.
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Azusa Rivers and Mountains Conservancy Authority
Statement of Activities
For the year ended June 30, 2021
Net (Expense)
Revenue and
Changes in
Net Position
Operating
Charges for Grants and Governmental
Functions/Programs Expenses Services Contributions Total Activities
Governmental activities:
Rivers and mountains conservation 7,857$ -$ -$ -$ (7,857)$
Total primary government 7,857$ -$ -$ -$ (7,857)
General revenues:
Investment income -
Total general revenues -
Change in net position (7,857)
Net position - beginning of year 11,545
Net position - end of year 3,688$
See accompanying Notes to Basic Financial Statements.
Revenues
Program
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FUND FINANCIAL STATEMENTS
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Azusa Rivers and Mountains Conservancy Authority
Balance Sheet
June 30, 2021
ASSETS
Cash and investments 635$
Prepaid items 3,053
Total assets 3,688$
LIABILITIES AND
FUND BALANCES
Liabilities:
Accounts payable -$
Total liabilities -
Fund balance:
Unassigned 3,688
Total fund balances 3,688
Total liabilities and fund balances 3,688$
See accompanying Notes to Basic Financial Statements.
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Azusa Rivers and Mountains Conservancy Authority
Reconciliation of the Balance Sheet of the General Fund to the
Statement of Net Position
Total Fund Balances for the General Fund 3,688$
There were no reconciling differences for fiscal year 2021.
Net Position of Governmental Activities 3,688$
See accompanying Notes to Basic Financial Statements.
June 30, 2021
Amounts reported for governmental activities in the Statement of Net
Position were different because:
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Azusa Rivers and Mountains Conservancy Authority
Statement of Revenues, Expenditures and Changes in Fund Balance
For the year ended June 30, 2021
REVENUES:
Member contributions -$
Total revenues -
EXPENDITURES:
Current - Rivers and Mountain Conservation:
Insurance 5,210
Attorney fees 147
Other expenditures 2,500
Total expenditures 7,857
Net change in fund balances (7,857)
FUND BALANCES:
Beginning of year 11,545
End of year 3,688$
See accompanying Notes to Basic Financial Statements.
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Azusa Rivers and Mountains Conservancy Authority
Reconciliation of the Statement of Revenues, Expenditures and Changes in
Fund Balance of the General Fund to the Statement of Activities
For the year ended June 30, 2021
Net Changes in Fund Balances - General Fund (7,857)$
There were no reconciling differences for fiscal year 2021.
Change in Net Position of Governmental Activities (7,857)$
See accompanying Notes to Basic Financial Statements.
Amounts reported for governmental activities in the Statement of
Activities are different because:
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NOTES TO BASIC FINANCIAL STATEMENTS
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Azusa Rivers and Mountains Conservancy Authority
Notes to Basic Financial Statements
For the year ended June 30, 2021
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Azusa Rivers and Mountains Conservancy Authority (Authority) is a joint powers authority
between the City of Azusa (City) and the San Gabriel and Lower Los Angeles Rivers and Mountains
Conservancy (Conservancy). The Authority was created to conserve 180 acres of open space land in the
hillsides of north Azusa from a developer. The following is a summary of the significant accounting
policies of the Azusa Rivers and Mountains Conservancy Authority (the Authority) in conformity with
accounting principles generally accepted in the United States of America.
A. Relationship to the City of Azusa
The City of Azusa provides administrative and accounting services for the Authority and acts in a
fiduciary capacity for the Authority. The Authority’s activities are accounted for in its own set of
financial statements.
B. Basis of Accounting and Measurement Focus
The basic financial statements of the Authority are composed of the following:
x Government-wide financial statements
x Fund financial statements
x Notes to basic financial statements
Government - wide Financial Statements
Government-wide financial statements display information about the reporting government as a whole,
except for its fiduciary activities. The Authority has no fiduciary activities. Government-wide financial
statements are presented using the economic resources measurement focus and accrual basis of
accounting. Under the economic resources measurement focus, all (both current and long-term)
economic resources and obligations of the reporting government are reported in the government-wide
financial statements. Basis of accounting refers to when revenues and expenditures are recognized in
the accounts and reported in the financial statements. Under the accrual basis of accounting, revenues,
expenses, gains, losses, assets and liabilities resulting from exchange and exchange-like transactions are
recognized when the exchange takes place. Revenues, expenses, gains, losses, assets and liabilities
resulting from nonexchange transactions are recognized in accordance with requirements of GASB
Statement No. 33.
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Azusa Rivers and Mountains Conservancy Authority
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2021
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
B. Basis of Accounting and Measurement Focus, Continued
Government - wide Financial Statements, Continued
Amounts paid to acquire capital assets are capitalized as assets in the government-wide financial
statements, rather than reported as an expenditure. Proceeds of long-term liabilities are recorded as a
liability in the government-wide financial statements, rather than as another financial source. Amounts
paid to reduce long-term indebtedness of the reporting government are reported as a reduction of the
related liability, rather than as an expenditure.
Fund Financial Statements
Fund financial statements for the Authority’s governmental fund are presented after the government-
wide financial statements. These statements display information about the Authority’s major fund.
In the fund financial statements, governmental funds are presented using the modified-accrual basis of
accounting. Revenues are recognized when they become measureable and available as net current
assets. Measurable means that the amounts can be estimated or otherwise determined. Available
means that the amounts were collected during the reporting period or soon enough thereafter to be
available to finance the expenditures accrued for the reporting period. The Authority uses an
availability period of 60 days.
Revenue recognition is subject to the measurable and availability criteria for the governmental funds in
the fund financial statements. Member contributions and investment income associated with the current
period are considered to be susceptible to accrual. Exchange transactions are recognized as revenues in
the period in which they are earned (i.e., the related goods or services are provided). Locally imposed
derived tax revenues are recognized as revenues in the period in which the underlying exchange
transaction upon which they are based takes place. Imposed nonexchange transactions are recognized
as revenues in the period for which they were imposed. If the period of use is not specified, they are
recognized as revenues when an enforceable legal claim to the revenues arises or when they are
received, whichever occurs first. Government-mandated and voluntary nonexchange transactions are
recognized as revenues when all applicable eligibility requirements have been met.
Unavailable revenues arise when potential revenues do not meet both the “measurable” and “available”
criteria for recognition in the current period. Unavailable revenues also arise when the government
receives resources before it has a legal claim to them, as when grant monies are received prior to
incurring qualifying expenditures. In subsequent periods when both revenue recognition criteria are
met or when the government has a legal claim to the resources, the unavailable revenue is removed
from the combined balance sheet and revenue is recognized.
In the fund financial statements, governmental funds are presented using the current financial resources
measurement focus. This means that only current assets and current liabilities are generally included
on their balance sheets. The reported fund balance (net current assets) is considered to be a measure of
“available spendable resources.” Governmental fund operating statements present increases (revenues
and other financing sources) and decreases (expenditures and other financing uses) in net current assets.
Accordingly, they are said to present a summary of sources and uses of “available spendable resources”
during a period.
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Azusa Rivers and Mountains Conservancy Authority
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2021
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
B. Basis of Accounting and Measurement Focus, Continued
Fund Financial Statements, Continued
Recognition of governmental fund type revenue represented by noncurrent receivables is deferred until
they become current receivables. Noncurrent portions of long-term receivables are offset by
nonspendable fund balance.
Due to the nature of their spending measurement focus, expenditure recognition for governmental fund
types exclude amounts represented by noncurrent liabilities. Since they do not affect current assets,
such long-term amounts are not recognized as government fund type expenditures or fund liabilities.
Amounts expended to acquire capital assets are recorded as expenditures in the year that resources
were expended, rather than as fund assets. The proceeds of long-term liabilities are recorded as other
financing sources rather than as a fund liability. Amounts paid to reduce long-term indebtedness are
reported as fund expenditures.
When both restricted and unrestricted resources are combined in a fund, expenses are considered to be
paid first from restricted resources, and then from unrestricted resources.
C. Activities in Major Fund
The following fund is presented as a major fund in the accompanying basic financial statements:
General Fund – all revenues have been accounted for in this fund. Expenditures of this fund include
general operating expenses.
D. Net Position
Government-Wide Financial Statements
In the Government-Wide Financial Statements, net position are classified in the following categories:
Net Investment in Capital Assets – This amount consists of capital assets net of accumulated depreciation
and reduced by outstanding debt that attributed to the acquisition, construction, or improvement of the
assets. The Agency did not have any amount reported in this category as of June 30, 2020 as the
Authority did not have any capital assets as of June 30, 2020.
Restricted – This amount is restricted by external creditors, grantors, contributors, or laws or regulations
of governments. The Agency did not have any amount reported in this category as of June 30, 2020.
Unrestricted – This amount is all net position that do not meet the definition of “net investment in capital
assets” or “restricted net position” as defined above.
When an expense is incurred for purposes for which both restricted and unrestricted net position are
available, the Authority’s policy is to apply restricted net position first.
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Azusa Rivers and Mountains Conservancy Authority
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2021
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
E. Fund Balances
Fund Financial Statements
In February 2009, the Governmental Accounting Standards Board (GASB) issued Statement 54, Fund
Balance Reporting and Governmental Fund Type Definitions (GASB 54). The new classification of fund
balances is as follows:
Nonspendable Fund Balances
These include amounts that cannot be spent because they are either (a) not in spendable form or (b)
legally or contractually required to be maintained intact, e.g., the principal of an endowment fund.
Examples of “not in spendable form” include inventory, prepaid amounts, long-term notes and loans,
property held for resale and other items not expected to be converted to cash. However, if the proceeds
from the eventual sale or liquidation of the items would be considered restricted, committed or assigned
(as defined further on) then these amounts would be included in the restricted, committed or assigned
instead of the nonspendable classification. A debt service reserve fund held by a trustee is an example
of fund balance in nonspendable form that is classified as restricted instead of nonspendable since the
reserve is eventually liquidated to make the final debt service principal payment.
Restricted Fund Balances
Restricted fund balances have externally enforceable limitations on use. The limitations on use can be
imposed by creditors, grantors, or contributors as well as by constitutional provisions, enabling
legislation, laws and government regulations.
Committed Fund Balances
Amounts that can only be used for specific purposes pursuant to constraints imposed by formal action
(Resolution) of the Board are classified as committed fund balances.
Assigned Fund Balances
Fund balance amounts for which the Board has expressed intent for use but not taken formal action to
commit are reported as assigned under GASB 54.
Unassigned Fund Balance
These are either residual positive net resources of the General Fund in excess of what can properly be
classified in one of the other four categories, or negative balances.
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Azusa Rivers and Mountains Conservancy Authority
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2021
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
G. New Pronouncements
In 2021, the Authority adopted new accounting standards in order to conform to the following
Governmental Accounting Standards Board Statements:
¾GASB Statement No. 84, Fiduciary Activities – The objective of this statement is to improve guidance
regarding the identification of fiduciary activities for accounting and financial reporting purposes
and how those activities should be reported. The statement establishes criteria for identifying
fiduciary activities of all state and local government. The focus of the criteria generally is on (1)
whether a government is controlling the assets of the fiduciary activity and (2) the beneficiaries with
whom a fiduciary relationship exists. Separate criteria are included to identify fiduciary component
units and postemployment benefit arrangements that are fiduciary activities. There was no impact
on net position as a result of implementation of this statement.
¾GASB Statement No. 90, Majority Equity Interest – The objective of this statement is to improve the
consistency and comparability of reporting a government’s majority equity interest in a legally
separate organization and to improve the relevance of financial statement information for certain
component units. It defines a majority equity interest and specifies that a majority equity interest in
a legally separate organization should be reported as an investment if the government’s holding of
the equity meets the definition of an investment. A majority equity interest that meets the definition
of an investment should be measured using the equity method, unless it is held by a special purpose
government engaged only in fiduciary activities, a fiduciary fund, or an endowment (including
permanent and term endowments) or permanent fund. There was no impact on net position as a
result of implementation of this statement.
¾GASB Statement No. 93, Replacement of Interbank Offered Rates – The objective of this statement is to
address the accounting and financial reporting implications that result from the elimination of the
London Interbank Offered Rate (LIBOR) that is notably used in most agreements in which variable
payments made or received depend on an interbank offered rate (IBOR). As a result of global
reference rate reform, LIBOR is expected to cease to exist in its current form at the end of 2021,
prompting governments to amend or replace financial instruments for the purpose of replacing
LIBOR with other reference rates, by either changing the reference rate or adding or changing
fallback provisions related to the reference rate. There was no impact on net position as a result of
implementation of this statement.
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Azusa Rivers and Mountains Conservancy Authority
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2021
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
G. New Pronouncements, Continued
¾GASB Statement No. 97, Certain Component Unit Criteria, and Accounting and Financial Reporting for
Internal Revenue Code Section 457 Deferred Compensation Plans – an amendment of GASB Statements No.
14 and No. 84, and a supersession of GASB Statement No. 32 – The objectives of this statement are to (1)
increase consistency and comparability related to the reporting of fiduciary component units in
circumstances in which a potential component unit does not have a governing board and the
primary government performs the duties that a governing board typically would perform; (2)
mitigate costs associated with the reporting of certain defined contribution pension plans, defined
contribution other postemployment benefit (OPEB) plans, and employee benefit plans other than
pension plans or OPEB plans as fiduciary component units in fiduciary fund financial statements;
and (3) enhance the relevance, consistency, and comparability of the accounting and financial
reporting for Internal Revenue Code (IRC) Section 457 deferred compensation plans that meet the
definition of a pension plan and for benefits provided through those plans. There was no impact on
net position as a result of implementation of this statement.
¾GASB Statement No. 98, The Annual Comprehensive Financial Report – The objective of this statement
is to address references in authoritative literature to the term comprehensive annual financial report .
There was no impact on net position as a result of implementation of this statement.
2. CASH AND INVESTMENTS
The City of Azusa (City) maintains a cash and investment pool used by all funds of the City, including
the Authority. The Authority does not own specifically identifiable securities of the City’s pool. The
Authority’s portion of this pool is reported on the financial statements as “cash and investments”.
Investment policies and associated risk factors applicable to the Authority’s funds are those of the City
of Azusa and are included in the City’s Comprehensive Annual Financial Report.
Cash and investments are reported as follows:
Statement of Net Position:
Cash and Investments $635
3. LAND HELD BY THE AUTHORITY
The Authority currently holds 180 acres of hillside property received via the City of Azusa from a Developer.
No acquisition value could be determined as of the acquisition date of the land, and as such is not currently
presented on the Authority’s Statement of Net Position on the Government-Wide Statements.
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REQUIRED SUPPLEMENTARY INFORMATION
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Azusa Rivers and Mountains Conservancy Authority
Notes to Required Supplementary Information, Budget Comparison Schedule
For the year ended June 30, 2021
1. BUDGETS AND BUDGETARY ACCOUNTING
The Agency adopted an annual budget prepared on the modified accrual basis for the General Fund,
which is consistent with accounting principles generally accepted in the United States of America.
Budgetary Comparison Schedule, General Fund
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