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SWCASR FINANCIAL REPORT 12-31-2001 1 SHERBURNE/WRIGHT COUNTIES CABLE COMMUNICATION COMMISSION MINNEAPOLIS,MINNESOTA ANNUAL FINANCIAL REPORT YEAR ENDED ' DECEMBER 31, 2001 1 1 I 1 1 1 1 1 I SHERBURNE/WRIGHT COUNTIES CABLE COMMUNICATION COMMISSION MINNNEAPOLIS,MINNESOTA TABLE OF CONTENTS DECEMBER 31,2001 Page No. I. INTRODUCTORY SECTION Board of Directors 1 II. FINANCIAL SECTION Independent Auditor's Report 2 Financial Statements U Balance Sheet 3 Statement of Revenue,Expenditures and Changes in Fund Balance 4 Notes to Financial Statements 5-6 III. OTHER REPORT Report on Minnesota Legal Compliance 7 1 I I I 1 1 I I 1 1 1 1 1 1 1 INTRODUCTORY SECTION SHERBURNE/WRIGHT COUNTIES CABLE COMMUNICATION COMMISSION MINNEAPOLIS, MINNESOTA 1 1 YEAR ENDED DECEMBER 31, 2001 I 1 1 1 1 t 1 1 i 1 SHERBURNE/WRIGHT COUNTIES CABLE COMMUNICATION COMMISSION MINNEAPOLIS,MINNESOTA BOARD OF DIRECTORS DECEMBER 31,2001 BOARD OF DIRECTORS 1 Name Member City Position on Board Sandra Peine Elk River Director David Mandt Watertown Director ' Don Levens Cokato Director Phil Kern Delano Director Merton Auger Buffalo Director Mei Dallman Rockford Director ' Linda Hrby Maple Lake Director Rick Wolfstellar Monticello Director Pat Wussow Big Lake Director Dan Buchholz Dassel Director I 1 I I I I I I I 1 -1- 1 1 1 1 I FINANCIAL SECTION SHERBURNE/WRIGHT COUNTIES CABLE COMMUNICATION COMMISSION MINNEAPOLIS, MINNESOTA I 1 YEAR ENDED DECEMBER 31, 2001 1 i 1 1 t 1 I 1 1 1 I l • •ABDO C; EICK � J M1 _ MEYERS LLP ' Certified Public Accountants &Consultants Grandview Square 5201 Eden Avenue Suite 370 Edina,MN 55436 1 INDEPENDENT AUDITOR'S REPORT Board of Directors Sherburne/Wright Counties Cable Communication Commission Minneapolis,Minnesota I We have audited the accompanying financial statements of the Sherburne/Wright Counties Cable Communication Commission (the Commission)as of and for the year ended December 31,2001 as listed in the table of contents. These fmancial statements are the responsibility of the Commission's management. Our responsibility is to express an opinion on these fmancial 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 fmancial statements are free 1 of material misstatement. An audit includes examining,on a test basis,evidence supporting the amounts and disclosures in the fmancial statements. An audit also includes assessing the accounting principles used and significant estimates made by management,as well as evaluating the overall fmancial statement presentation. We believe that our audit provides a reasonable basis for our opinion. ' In our opinion,the financial statements referred to above present fairly,in all material respects,the fmancial position of the Commission at December 31,2001 and the results of its operations for the year then ended,in conformity with accounting principles generally accepted in the United States of America. 1 I October 30,2002 abdOdt !Mei" P ABDO,EICK&MEYERS,LLP Minneapolis,Minnesota Certified Public Accountants 1 I I i 1 ' 952.835.9090 Fax 952.835.3261 www.aemcpas.com I I 1 I i FINANCIAL STATEMENTS I SHERBURNE/WRIGHT COUNTIES CABLE COMMUNICATION COMMISSION MINNEAPOLIS,MINNESOTA I YEAR ENDED DECEMBER 31, 2001 I I I I 1 I I I I I 1 SHERBURNE/WRIGHT COUNTIES 1 CABLE COMMUNICATION COMMISSION MINNEAPOLIS,MINNESOTA BALANCE SHEET DECEMBER 31,2001 ASSETS Cash $ 266,652 1 Accounts receivable 254,243 TOTAL ASSETS $ 520,895 LIABILITIES AND FUND BALANCE LIABILITIES Accounts payable $ 102,804 FUND BALANCE Undesignated 418,091 ' TOTAL LIABILITIES AND FUND BALANCE $ 520,895 i 1 1 1 1 1 1 1 1 1 See Notes to Financial Statements. SHERBURNE/WRIGHT COUNTIES CABLE COMMUNICATION COMMISSION MINNEAPOLIS,MINNESOTA STATEMENT OF REVENUE,EXPENDITURES AND CHANGES IN FUND BALANCE YEAR ENDED DECEMBER 31,2001 1 REVENUE Charges for services Franchise fees $ 254,244 Interest income 1,701 Miscellaneous 1 Refunds and reimbursements 110 TOTAL REVENUE 256,055 EXPENDITURES Current Administrative 16,248 Contract labor 121,636 Dues and subscriptions 1,085 Professional fees 35,282 1 Utilities 2,433 Miscellaneous 3,806 Capital outlay 107,372 TOTAL EXPENDITURES 287,862 EXCESS OF EXPENDITURES OVER REVENUE (31,807) FUND BALANCE,JANUARY 1 449,898 FUND BALANCE,DECEMBER 31 $ 418,091 111 I I 1 See Notes to Financial Statements. ' -4- I SHERBURNE/WRIGHT COUNTIES CABLE COMMUNICATION COMMISSION NOTES TO FINANCIAL STATEMENTS DECEMBER 31,2001 ' Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity The Sherburne/Wright Counties Cable Communication Commission(the Commission)was established under the State of Minnesota statutes, section 238.085,subdivision 5 and 471.59 as amended to monitor the operation and activities of cable communications to the members. The Commission provides coordination of administration and enforcement of one or more franchises by the members for their respective communication systems. The Commission consists of member cities located in the cities of Big Lake,Buffalo,Cokato,Dassel,Delano,Elk River,Maple Lake,Monticello,Rockford and Watertown,with each member city entitled to two Directors to represent it on the Board. Board officers include chair,vice chair,secretary and treasurer. The Commission has considered all potential units for which it is financially accountable,and other organizations for which the nature and significance of their relationship with the Commission are such that exclusion would cause the Commission's financial statements to be misleading or incomplete. The Governmental Accounting Standards Board(GASB)has set forth criteria to be considered in determining financial accountability. These criteria include appointing a voting majority of an organization's governing body,and(1)the ability of the primary government to impose its will on that organization or(2)the potential for the organization to provide specific benefits to,or impose specific financial burdens on the primary government. Blended component units, although legally separate entities are,in substance,part of the Commission's operations and so data from these units are combined with data of the primary government. The Commission does not have any component units. B. Measurement Focus,Basis of Accounting and Basis of Presentation The Commission has the following fund type: ' A Governmental fund is used to account for the Commission's activities. Governmental fund types use the flow of current fmancial resources measurement focus and the modified accrual basis of accounting. Under the modified accrual basis of accounting,revenues are recognized when susceptible to accrual(i.e.,when they are "measurable and available"). "Measurable"means the amount of the transaction can be determined and ' "available"means collectible within the current period or soon enough thereafter to pay liabilities of the current period. The Commission considers all revenues available if they are collected within 60 days after year end. Expenditures are recorded when the related fund liability is incurred. i Fines,dues,licenses and interest become measurable and available when cash is received by the Commission and are recognized as revenue at that time. 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 certain reported amounts and disclosures. Accordingly,actual results could differ from those estimates. Entitlements and shared revenues are recorded at the time of receipt or earlier if the susceptible to accrual criteria are met. Expenditure driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other grant requirements have been met. Governmental funds include the following fund type: 1 The general fund is the Commission's primary operating fund. It accounts for all financial resources of the Commission. C. Assets,Liabilities and Equity Deposits and Investments The Commission's cash and cash equivalents are considered to be cash on hand,demand deposits and short term investments with original maturities of three months or less from the date of acquisition. Minnesota statutes authorize the Commission to invest in obligations of the U.S.Treasury,commercial paper, corporate bonds,repurchase agreements and shares of investment companies registered under the Federal Investment Company Act of 1940 and whose only investments are obligations guaranteed by the United States of America and its agencies. 1 -5 SHERBURNE/WRIGHT COUNTIES CABLE COMMUNICATION COMMISSION NOTES TO FINANCIAL STATEMENTS DECEMBER 31,2001 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-CONTINUED Receivables and Payables Receivables consist of amounts the Commission was entitled to but did not receive in 2001. The Commission utilizes the direct write off method of accounting for receivables. All accounts are considered fully collectable at year end. Payables consist of expenses incurred in 2001 but not paid until 2002. Note 2: DETAILED NOTES ON ACCOUNTS ' A. Deposits In accordance with Minnesota statutes,the Commission maintains deposits at those depository banks,all of which are members of the Federal Reserve System. Minnesota statutes require that all Commission deposits be protected by insurance,surety bond or collateral. The market value of collateral pledged must equal 110 percent of the deposits not covered by insurance or bonds(140 percent in the case of mortgage notes pledged). ' Authorized collateral includes the legal investments described below,as well as certain first mortgage notes,and certain other State or local government obligations. Minnesota statutes require that securities pledged as collateral be held in safekeeping by the Commission or in a financial institution other than that furnishing the ' collateral. For year ended December 31,2001,the Commission's carrying amount and bank balance of deposits were $266,652 and$268,005,respectively. The bank balance was covered by federal depository insurance totaling ' $100,000 and the remaining balance was covered by collateral. Note 3: OTHER INFORMATION Risk Management The Commission 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 Commission carries insurance. The Commission obtains insurance through participation in the League of Minnesota Cities Insurance Trust(LMCIT), which is a risk sharing pool with approximately 800 other governmental units. The Commission pays an annual premium to LMCIT for its workers compensation and property and casualty insurance. The LMCIT is self-sustaining ' through member premiums and will reinsure for claims above a prescribed dollar amount for each insurance event. Settled claims have not exceeded the Commission's coverage in any of the past three fiscal years. Liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably ' estimated. Liabilities,if any,include an amount for claims that have been incurred but not reported(IBNRs). The Commission's management is not aware of any incurred but not reported claims. I 1 1 1 1 1 i OTHER REPORT 1 SHERBURNE/WRIGHT COUNTIES CABLE COMMUNICATION COMMISSION MINNEAPOLIS,MINNESOTA 1 YEAR ENDED DECEMBER 31, 2001 1 1 i 1 1 1 1 1 1 1 1 I I ' A ABDO j7EIcK & �, _ MEYERS LLP I Certified Public Accountants& Consultants Grandview Square 5201 Eden Avenue I Suite 370 Edina,MN 55436 REPORT ON MINNESOTA LEGAL COMPLIANCE IBoard of Directors Sherburne/Wright Counties Cable Communication Commission Minneapolis,Minnesota I We have audited the fmancial statements of the Sherburne/Wright Counties Cable Communication Commission(the Commission) as of and for the year ended December 31,2001,and have issued our report thereon dated October 30,2002. IWe conducted our audit in accordance with auditing standards generally accepted in the United States of America and the provisions of the Minnesota Legal Compliance Audit Guide for Local Government,promulgated by the Legal Compliance Task I Force pursuant to Minnesota statutes,section 6.65. Accordingly,the audit included such tests of the accounting records and such other auditing procedures,as we considered necessary in the circumstances. The Minnesota Legal Compliance Audit Guide for Local Government covers five main categories of compliance to be tested: I contracting and bidding,deposits and investments, conflicts of interest,public indebtedness and claims and disbursements. Our study included all of the listed categories. The results of our tests indicate that for the items tested,the Commission complied with the material terms and conditions of I applicable legal provisions. This report is intended solely for the information and use of the Board,management and the Minnesota Office of the State Auditor,and is not intended to be and should not be used by anyone other than these specified parties. I 0,610,611 :11�JLL2 IOctober 30,2002 ABDO,EICK&MEYERS,LLP Minneapolis,Minnesota Certified Public Accountants I I I I I 952.835.9090 Fax 952 835.3261 -7- www.aemcpas.com • o • 'ABDO JC F'i. 1 MEYERS LLP CertifiedPublic Accountants& Consultants October 30,2002 Grandview Square 5201 Eden Avenue Suite 370 Edina,MN 55436 To the Board of Directors Sherburne/Wright Counties Cable Communication Commission Minneapolis,Minnesota We have audited the financial statements of the Sherburne/Wright Counties Cable Communication Commission(the Commission) for the year ended December 31,2001 and have issued our report thereon dated October 30,2002. Professional standards require that we provide you with the following information related to our audit. Our Responsibility under Auditing Standards Generally Accepted in the United States of America and Government Auditing Standards As stated in our engagement letter,our responsibility, as described by professional standards,is to plan and perform our audit to obtain reasonable,but not absolute,assurance about whether the financial statements are free of material misstatement and are fairly presented in accordance with accounting principles generally accepted in the United States of America. Because an audit is designed to provide reasonable,but not absolute,assurance and because we did not perform a detailed examination of all transactions,there is a risk that material errors,fraud or illegal acts may exist and not be detected by us. In planning and performing our audit of the fmancial statements of the Commission for the year ended December 31,2001,we considered its internal control in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control.However,we noted certain matters involving the internal control and its operation that we consider to be reportable conditions under standards established by the American Institute of Certified Public Accountants.Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of internal control that, in our judgment,could adversely affect the Commission's ability to record, process,summarize,and report financial data consistent with the assertions of management in the financial statements. We noted one reportable condition: Segregation of Duties Our study and evaluation disclosed that because of the limited size of your office staff,the Commission has limited segregation of duties. Good internal control contemplates an adequate segregation of duties so that no one individual handles a transaction from inception to completion. While we recognize that the Commission is not large enough to permit an adequate segregation of duties in all respects,it is important,however,that you be aware of this condition. A material weakness is a reportable condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that errors or fraud in amounts that would be material in relation to the fmancial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their aecianerl fiinrtinne 952.835.9090 Fax 952 835.3261 www.aemcpas.com O Sherburne/Wright Counties Cable Communication Commission October 30,2002 Page Two 0 As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement,we performed tests of compliance with certain provisions of laws,regulations, contracts and grants. However,the objective of our tests was not to provide an opinion on compliance with such provisions. We noted no instances of noncompliance with provisions of laws, regulations,contracts and grants. Significant Accounting Policies Management has the responsibility for selection and use of appropriate accounting policies. In accordance with the terms of our engagement letter,we will advise management about the appropriateness of accounting policies and their application. The significant accounting policies used by the Commission are described in Note 1 to the fmancial statements. No new accounting policies were adopted and the application of existing policies was not changed during 2001. We noted no transactions entered into by the Commission during the year that were both significant and unusual, and of which,under professional standards,we are required to inform you,or transactions for which there is a lack of authoritative guidance or consensus. Accounting Estimates Accounting estimates are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the general-purpose financial statements and because of the possibility that future events affecting them may differ significantly from those expected. Audit Adjustments For purposes of this letter,professional standards define an audit adjustment as a proposed correction of the fmancial statements that, in our judgment,may not have been detected except through our auditing procedures. An audit adjustment may or may not indicate matters that could have a significant effect on the Commission's financial reporting process(that is,cause future financial statements to be materially misstated).In our judgment,none of the adjustments we proposed,whether recorded or unrecorded by the Commission,either individually or in the aggregate,indicate matters that could have a significant effect on the Commission's financial reporting process. Disagreements with Management For purposes of this letter,professional standards define a disagreement with management as a matter,whether or not resolved to our satisfaction,concerning a financial accounting,reporting or auditing matter that could be significant to the general-purpose financial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit. Consultations with Other Independent Accountants hi some cases,management may decide to consult with other accountants about auditing and accounting matters,similar to obtaining a"second opinion"on certain situations. If a consultation involves application of an accounting principle to the Commission's financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge,there were no such consultations with other accountants. Issues Discussed Prior to Retention of Independent Auditors We generally discuss a variety of matters,including the application of accounting principles and auditing standards,with management each year prior to retention as the Commission's auditors. However,these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. Difficulties Encountered in Performing the Audit We encountered no difficulties in dealing with management in performing our audit. Sherburne/Wright Counties Cable Communication Commission 9 October 30,2002 0 Page Three f _ This report is intended solely for the information and use of the Board and management and is not intended to be and should not be used by anyone other than those specified parties. Our audit would not necessarily disclose all weaknesses in the system because it was based on selected tests of the accounting records and related data. The comments and recommendations in the report are purely constructive in nature,and should be read in this context. If you have any questions or wish to discuss any of the items contained in this letter,please feel free to contact us at your convenience. We wish to thank you for the continued opportunity to be of service and for the courtesy and cooperation extended to us by your staff. am LI ; LLf October 30,2002 ABDO,EICK&MEYER ,LLP Minneapolis,Minnesota Certified Public Accountants 4. 9:30 AM . Sherburne-Wright County Cable Communications Commission 12/05/02 Reconciliation Detail Accrual Basis Wells Fargo Bank Minnesota, NA, Period Ending 11/30/2002 Type Date Num Name Clr Amount Balance Beginning Balance 255,145.85 Cleared Transactions Checks and Payments-5 items Bill Pmt-Check 10/31/2002 2116 Bill Bruce X -908.94 -908.94 Bill Pmt-Check 10/31/2002 2117 Creighton Bradley&... X -222.50 -1,131.44 Check 10/31/2002 2118 Thomas D.Creighton X -1,354.00 -2,485.44 Bill Pmt-Check 11/18/2002 2119 Creighton Bradley&... X -1,914.70 -4,400.14 Check 11/30/2002 X -7.00 -4,407.14 Total Checks and Payments -4,407.14 -4,407.14 Deposits and Credits-1 item Deposit 11/30/2002 X 18.68 18.68 Total Deposits and Credits 18.68 18.68 Total Cleared Transactions -4,388.46 -4,388.46 Cleared Balance -4,388.46 250,757.39 , Uncleared Transactions Checks and Payments-2 items Check 11/25/2002 2120 Thomas D.Creighton -1,354.00 -1,354.00 Bill Pmt-Check 11/26/2002 2121 Bill Bruce -3,768.75 -5,12235 Total Checks and Payments -5,122.75 -5,122.75 Total Uncleared Transactions -5,122.75 -5,122.75 Register Balance as of 11/30/2002 -9,511.21 245,634.64 New Transactions Deposits and Credits-1 item Deposit 12/3/2002 0.16 0.16 Total Deposits and Credits 0.16 0.16 Total New Transactions 0.16 0.16 Ending Balance -9,511.05 245,634.80 • Page 1 • • 9:01 AM Sherburne-Wright County Cable Communications Commission 11/14/02 Reconciliation Detail Accrual Basis Wells Fargo Bank Minnesota, NA, Period Ending 10/31/2002 Type Date Num Name Clr Amount Balance Beginning Balance 260,933.25 Cleared Transactions Checks and Payments-4 items Bill Pmt-Check 9/30/2002 2113 Bill Bruce X -3,650.00 -3,650.00 Bill Pmt-Check 10/3/2002 2114 Qwest X -795.99 - -4,445.99 Check 10/7/2002 2115 Thomas D.Creighton X -1,354.00 -5,799.99 Check 10/31/2002 X -7.00 -5,806.99 Total Checks and Payments -5,806.99 -5,806.99 Deposits and Credits-1 item Deposit 10/31/2002 X 19.59 19.59 Total Deposits and Credits 19.59 19.59 • Total Cleared Transactions -5,787.40 -5,787.40 Cleared Balance -5,787.40 255,145.85 Uncleared Transactions Checks and Payments-3 items Bill Pmt-Check 10/31/2002 2116 Bill Bruce -908.94 -908.94 Check 10/31/2002 2118 Thomas D.Creighton -1,354.00 -2,262.94 Bill Pmt-Check 10/31/2002 2117 Creighton Bradley&... -222.50 -2,485.44 Total Checks and Payments -2,485.44 -2,485.44 Total Uncleared Transactions -2,485.44 -2,485.44 Register Balance as of 10/31/2002 -8,272.84 252,660.41 Ending Balance -8,272.84 252,660.41 Page 1 a) a) a a I-- O O O O O co a) N to 0 0 0 to 0) C) C) <O LO Co Co Co co to C) N O O O N CA O O N O Oto 0 CO CO C) O) (O C'C) O O O C') to In Co N C) Co co O r- 0) co to 0 LP) co C) 0) () co 0 7 to to to a C) CO CO CO N I . 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