THE TOWN OF GOLDSBY (Including the Goldsby … accompanying notes are an integral part of these financial statements 4 THE TOWN OF GOLDSBY STATEMENT OF ACTIVITIES - MODIFIED CASH BASIS

THE TOWN OF GOLDSBY

(Including the Goldsby Airport Trust, the Goldsby Water Authority, and theGoldsby Public Works Authority)

FINANCIAL STATEMENTS

AS OF AND FOR THE YEAR ENDED JUNE 30, 2016

TABLE OF CONTENTS

INDEPENDENT AUDITOR'S REPORT………………………………....................................................………………1

GOVERNMENT-WIDE FINANCIAL STATEMENTS

STATEMENT OF NET POSITION - MODIFIED CASH BASIS………….………..………………………………….….….. 3

STATEMENT OF ACTIVITIES - MODIFIED CASH BASIS ……………………………………………………….……..…... 4

FUND FINANCIAL STATEMENTS

BALANCE SHEET - MODIFIED CASH BASIS - GOVERNMENTAL FUNDS……………………………………..….… 5

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE -MODIFIED CASH BASIS - GOVERNMENTAL FUND ………………………………………………………..….. 6

STATEMENT OF NET POSITION - MODIFIED CASH BASIS - PROPRIETARY FUNDS………………….………. 7

STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION -MODIFIED CASH BASIS - PROPRIETARY FUNDS …..…………………………………………………….….…. 8

STATEMENT OF CASH FLOWS - MODIFIED CASH BASIS - PROPRIETARY FUNDS ……………………………. 9

NOTES AND OTHER INFORMATION

NOTES TO THE BASIC FINANCIAL STATEMENTS ………………………………………………..………………….…....10

BUDGETARY COMPARISON SCHEDULE - GENERAL FUND ……………………………………….…………………. 19

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS ……………………………………………………………..…. 20

SCHEDULE OF EXPENDITURES OF STATE AWARDS ………………………………………….…………………………. 20

INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVERFINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERSBASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMEDIN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS…………………………………….………. 21

SCHEDULE OF FINDINGS AND RESPONSES …………………………………………………………………………..……. 23

BECKY FLEMING, C.P.A., INC.

7920 108th Ave NE Office: 405.217.4575Norman, OK 73026-9761 Cell: 405.641.5794

Email: [email protected]

Member of the American Institute of Certified Public Accountants

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INDEPENDENT AUDITOR'S REPORT

To the Board of TrusteesThe Town of Goldsby, Oklahoma

Report on Financial Statements

We have audited the accompanying modified cash basis financial statements of the governmental activities, thebusiness-type activities, and each major fund of the Town of Goldsby, Oklahoma, as of and for the year ended June 30,2016, and the related notes to the financial statements, which collectively comprise the Town’s basic financialstatements 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 withthe modified cash basis of accounting described in Note 1; this includes determining that the modified cash basis ofaccounting is an acceptable basis for the preparation of the financial statements in the circumstances. Management isalso responsible for the design, implementation, and maintenance of internal control relevant to the preparation andfair 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 inaccordance with auditing standards generally accepted in the United States of America and the standards applicable tofinancial audits contained in Governmental 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 financialstatements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financialstatements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks ofmaterial misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, theauditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements inorder to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing anopinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit alsoincludes evaluating the appropriateness of accounting policies used and the reasonableness of significant accountingestimates 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 auditopinions.

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Opinions

In our opinion, the financial statements referred to in the first paragraph present fairly, in all material respects, therespective modified cash basis financial position of the governmental activities, the business-type activities, and eachmajor fund of the Town of Goldsby, Oklahoma, as of June 30, 2016, and the respective changes in modified cash basisfinancial position and, where applicable, cash flows thereof for the year then ended in accordance with the modifiedcash basis of accounting described in Note 1.

Basis of Accounting

We draw attention to Note 1 of the financial statements, which describes the basis of accounting. The financialstatements are prepared on the modified cash basis of accounting, which is a basis of accounting other than accountingprinciples generally accepted in the United States of America. Our opinions are not modified with respect to this matter.

Other Matters

Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise theTown of Goldsby’s basic financial statements. The budgetary comparison schedule on page 19, which is theresponsibility of management, is presented for purposes of additional analysis and is not a required part of the basicfinancial statements. Such information has not been subjected to the auditing procedures applied in the audit of thebasic financial statements, and accordingly, we do not express an opinion or provide any assurance on it.

The schedules of expenditures of federal and state awards are the responsibility of management and were derived fromand relate directly to the underlying accounting and other records used to prepare the basic financial statements. Suchinformation has been subjected to the auditing procedures applied in the audit of the basic financial statements andcertain additional procedures, including comparing and reconciling such information directly to the underlyingaccounting and other records used to prepare the basic financial statements or to the basic financial statementsthemselves, and other additional procedures in accordance with auditing standards generally accepted in the UnitedStates of America. In our opinion, the information is fairly stated, in all material respects, in relation to the basicfinancial statements as a whole.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated January 30, 2017, on ourconsideration of the internal control over financial reporting of the Town of Goldsby and on our tests of its compliancewith certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of thatreport is to describe the scope of our testing of internal control over financial reporting and compliance and the resultsof that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. Thatreport is an integral part of an audit performed in accordance with Government Auditing Standards in considering theTown of Goldsby’s internal control over financial reporting and compliance.

Becky Fleming, C.P.A., Inc.January 30, 2017

The accompanying notes are an integral part of these financial statements3

THE TOWN OF GOLDSBY

STATEMENT OF NET POSITION - MODIFIED CASH BASIS

JUNE 30, 2016

Governmental Business-type Total

ASSETS Activities Activities 2016

Current Assets

Cash and demand deposits 2,705,038 1,412,168 4,117,206

Certificates of deposit 733,431 0 733,431

Restricted cash and investments 212,556 529,133 741,689

Prepaid employee insurance 4,312 0 4,312

Internal balances (695) 695 0

Inventory 0 12,613 12,613

Total current assets 3,654,642 1,954,609 5,609,251

Depreciable property and equipment 5,947,505 9,598,488 15,545,993

Accumulated depreciation (2,272,556) (2,797,502) (5,070,058)

Land 641,922 86,289 728,211

Construction in progress 0 891,520 891,520

Total capital assets 4,316,871 7,778,795 12,095,666

TOTAL ASSETS 7,971,513 9,733,404 17,704,917

LIABILITIES

Current Liabi lities

Payroll and related withholding 1,244 0 1,244

Court bonds and fees payable 4,861 0 4,861

Total current liabi lities 6,105 0 6,105

Noncurrent Liabi lities

Refundable deposits 0 68,335 68,335

Sewer fees payable 0 5,429 5,429

Development fees payable 0 3,623 3,623

Impact fees payable 0 402,131 402,131

Total noncurrent liabilities 0 479,518 479,518

TOTAL LIABILITIES 6,105 479,518 485,623

NET POSITION

Net investment in capital assets 4,316,871 7,778,795 12,095,666

Restricted for:

Fire department 210,001 0 210,001

Unrestricted 3,438,536 1,475,091 4,913,627

TOTAL NET POSITION $7,965,408 $9,253,886 $17,219,294


THE TOWN OF GOLDSBY

STATEMENT OF ACTIVITIES - MODIFIED CASH BASIS

FOR THE YEAR ENDED JUNE 30, 2016

Program Revenues Net (Expense) Revenues

Operating Capital and Changes in Net Assets

Charges for Grants and Grants and Governmental Business-type Total

Functions/Programs Expenses Services Contributions Contributions Activities Activi ties 2016

Governmental activities:

Court (25,141) 47,890 0 0 22,749 22,749

General government (441,691) 55,314 281 0 (386,096) (386,096)

Park (119,762) 22,500 0 0 (97,262) (97,262)

Security (109,412) 45,833 0 0 (63,579) (63,579)

Fire (129,439) 45,833 64,672 0 (18,934) (18,934)

Streets (284,391) 162 18,397 107,000 (158,832) (158,832)

Total governmental activities (1,109,836) 217,532 83,350 107,000 (701,954) 0 (701,954)

Business-type activities:

Airport * (265,499) 149,028 0 785,040 668,569 668,569

Water (680,485) 820,190 0 60,000 199,705 199,705

Trash (167,216) 80,410 0 0 (86,806) (86,806)

Total business-type activities (1,113,200) 1,049,628 0 845,040 0 781,468 781,468

Total all activities (2,223,036) 1,267,160 83,350 952,040 (701,954) 781,468 79,514

General revenues:

Taxes:

* Includes $3,193 interest expense Sales and use taxes levied for general purposes 1,291,477 0 1,291,477

Payments in lieu of taxes for general purposes 32,771 0 32,771

Franchise and publ ic service taxes 179,426 0 179,426

Intergovernmental 7,650 0 7,650

Investment income 7,478 1,443 8,921

Miscellaneous income 18,431 0 18,431

Transfers (534,632) 534,632 0

Total general revenues and transfers 1,002,601 536,075 1,538,676

Change in net position 300,647 1,317,543 1,618,190

Beginning net position 7,664,761 7,940,395 15,605,156

Prior period adjustments 0 (4,052) (4,052)

Ending net position $7,965,408 $9,253,886 $17,219,294


THE TOWN OF GOLDSBY

BALANCE SHEET - MODIFIED CASH BASIS

GOVERNMENTAL FUNDS

JUNE 30, 2016

2016

General

ASSETS Fund

Cash and demand deposits 2,705,038

Court bond account 2,555

County sales tax fund 210,001

Certificates of deposit 733,431

Prepaid expenses 4,312

TOTAL ASSETS $3,655,337

LIABILITIES

Payroll and related withholding 1,244

Court bonds and fees payable 4,861

Due to other funds 695

TOTAL LIABILITIES 6,800

FUND BALANCE

Restricted:

County fire tax for fire department 210,001

Unrestricted:

Unassigned 3,438,536

TOTAL FUND BALANCE 3,648,537

TOTAL LIABILITIES AND FUND BALANCE $3,655,337

Reconciliation of general fund balance

to net assets of governmental activities:

Fund balance 3,648,537

Capital assets 6,589,427

Accumulated depreciation (2,272,556)

Net assets $7,965,408


THE TOWN OF GOLDSBY

STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCE - MODIFIED CASH BASIS

GOVERNMENTAL FUNDS


2016

General

REVENUES Fund

Taxes 1,470,903

Payments in lieu of taxes 32,771

Shared taxes 84,050

Fines and fees 47,890

Permits, licenses, inspections 48,842

Rents and royalties 28,700

Sales and services 91,939

Donations 1,381

Grants 5,569

Other revenues 18,592

Interest 7,477

TOTAL REVENUES 1,838,114

EXPENDITURES

Court 25,141

General government 400,869

Park department 75,467

Security department 109,412

Fire department 76,331

Street department 134,970

Capital outlay 311,824

TOTAL EXPENDITURES 1,134,014

REVENUES OVER (UNDER) EXPENDITURES 704,100

OTHER FINANCING SOURCES (USES)

Interfund transfers (534,632)

NET CHANGE IN FUND BALANCES 169,468

BEGINNING FUND BALANCE 3,479,069

ENDING FUND BALANCE 3,648,537$

Reconcil iation of the change in the general fund balance

to the change in net assets of governmental activities:

Net change in fund balances - total governmental funds 169,468

Capital asset purchases capital ized 418,824

Depreciation expense (287,645)

Change in Net Assets of Governmenal Activities $300,647


THE TOWN OF GOLDSBY

STATEMENT OF NET POSITION

PROPRIETARY FUNDS - MODIFIED CASH BASIS

JUNE 30, 2016

Goldsby 2016

Goldsby Goldsby Public Total

Airport Water Works Proprietary

ASSETS Trust Authority Authority Funds

Current Assets

Cash and demand deposits 87,034 1,314,237 10,897 1,412,168

Restricted cash and investments 0 529,133 0 529,133

Due from other funds 834 0 654 1,488

Inventory 12,613 0 0 12,613

Total current assets 100,481 1,843,370 11,551 1,955,402

Noncurrent Assets

Depreciable property and equipment 5,230,862 3,870,926 496,700 9,598,488

Accumulated depreciation (1,002,851) (1,684,648) (110,003) (2,797,502)

Land 0 86,289 0 86,289

Construction in progress 646,827 244,693 0 891,520

Total capital assets 4,874,838 2,517,260 386,697 7,778,795

TOTAL ASSETS 4,975,319 4,360,630 398,248 9,734,197

LIABILITIES

Current Liabilities

Due to other funds 0 793 0 793

Total current liabilities 0 793 0 793

Noncurrent Liabilities

Refundable deposits 0 68,335 0 68,335

Sewer fees payable 0 5,429 0 5,429

Development fees payable 0 3,623 0 3,623

Impact fees payable 0 402,131 0 402,131

Total noncurrent l iabilities 0 479,518 0 479,518

TOTAL LIABILITIES 0 480,311 0 480,311

NET POSITION

Net investment in capital assets 4,874,838 2,517,260 386,697 7,778,795

Unrestricted 100,481 1,363,059 11,551 1,475,091

TOTAL NET POSITION $4,975,319 $3,880,319 $398,248 $9,253,886


THE TOWN OF GOLDSBY

STATEMENT OF REVENUES, EXPENSES, AND

CHANGES IN NET POSITION - MODIFIED CASH BASIS

PROPRIETARY FUNDS


Goldsby 2016



OPERATING REVENUES Trust Authority Authority Funds

Rentals 99,862 0 0 99,862

Fuel and oi l sales 48,222 0 0 48,222

Water revenue 0 762,371 0 762,371

Keycard revenue 0 0 80,410 80,410

Other income 944 57,819 0 58,763

TOTAL OPERATING REVENUES 149,028 820,190 80,410 1,049,628

OPERATING EXPENSES

Personal services 43,066 191,839 19,016 253,921

Materials and supplies 7,278 192,529 2,642 202,449

Cost of goods sold 38,386 95,895 115,688 249,969

Other services and charges 36,531 68,734 5,425 110,690

Depreciation 137,045 131,488 24,445 292,978

TOTAL OPERATING EXPENSES 262,306 680,485 167,216 1,110,007

OPERATING INCOME (LOSS) (113,278) 139,705 (86,806) (60,379)

NON-OPERATING REVENUES (EXPENSES)

Interest income 75 1,368 0 1,443

Grants 785,040 0 0 785,040

Interest expense (3,193) 0 0 (3,193)

TOTAL NON-OPERATING REVENUES (EXPENSES) 781,922 1,368 0 783,290

INCOME (LOSS) BEFORE OTHER REVENUES, 668,644 141,073 (86,806) 722,911

EXPENSES, GAINS, LOSSES AND TRANSFERS

Capital contributions 0 60,000 0 60,000

Interfund transfers 459,632 0 75,000 534,632

CHANGE IN NET POSITION 1,128,276 201,073 (11,806) 1,317,543

BEGINNING NET POSITION 3,851,095 3,679,246 410,054 7,940,395

Prior period adjustment (4,052) 0 0 (4,052)

ENDING NET POSITION $4,975,319 $3,880,319 $398,248 $9,253,886


THE TOWN OF GOLDSBY

STATEMENT OF CASH FLOWS - MODIFIED CASH BASIS

PROPRIETARY FUNDS


Goldsby 2016



Cash flows from operations: Trust Authority Authority Funds

Cash received from:

Customers 149,028 820,190 80,410 1,049,628

Cash payments for:

Goods and services (66,186) (362,826) (131,935) (560,947)

Employees (43,066) (191,839) (19,016) (253,921)

Net cash provided from operations 39,776 265,525 (70,541) 234,760

Cash flows from capital financing activities:

Grants 785,040 0 0 785,040

Interfund transfers 459,632 0 0 459,632

Capital expenditures (1,085,190) (178,583) 0 (1,263,773)

Principal payments (161,826) 0 0 (161,826)

Interest payments (3,193) 0 0 (3,193)

Net cash from capital financing activities (5,537) (178,583) 0 (184,120)

Cash flows from non-capital financing activities:

Interfund transfers 0 0 75,000 75,000

Net cash from non-capital financing activities 0 0 75,000 75,000

Cash flows from investing activities:

Interest income 30 1,088 1,118

Net increase (decrease) in cash 34,269 88,030 4,459 126,758

Beginning cash 52,765 1,226,207 6,438 1,285,410

Ending cash $87,034 $1,314,237 $10,897 $1,412,168

Reconcil iation of income from operations

to net cash from operations:

Operating income (loss) (113,278) 139,705 (86,806) (60,379)

Adjustments to income from operations:

Depreciation and amortization 137,045 131,488 24,445 292,978

Change in assets and liabilities:

(Increase) decrease in due from other funds 834 0 (653) 181

(Increase) decrease in inventories 18,606 0 0 18,606

Increase (decrease) in sewer payables 0 (1,050) 0 (1,050)

Increase (decrease) in due to other funds (3,431) (4,618) (7,527) (15,576)

Net cash provided by operations $39,776 $265,525 ($70,541) $234,760

** Activity in restricted accounts:

Beginning cash and investments 437,367

Impact and development fees 84,678

Developer fee payments (4,692)

Net meter deposits 11,500

Investment income 280

Ending cash and investments 529,133

** Activity in restricted accounts is presented as supplemental information.

The Town of GoldsbyNotes to the Basic Financial StatementsAs of and for the Year Ended June 30, 2016

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1. Summary of Significant Accounting Policies

1A. Introduction

The Town’s financial statements are prepared using the modified cash basis of accounting, which is a basis of accountingother than generally accepted accounting principles (GAAP) in the United States of America. The GovernmentalAccounting Standards Board (GASB) is responsible for establishing GAAP for state and local governments through itspronouncements (Statements and Interpretations). These modified cash basis financial statements generally meet thepresentation and disclosure requirements applicable to GAAP in substance, but are limited to the elements presented inthe financial statements and the constraints of the measurement and recognition criteria of the modified cash basis ofaccounting. Generally, that means that only items arising from cash transactions are recorded. Accounts receivable andaccounts payable, for instance, are not recorded.

1B. Financial Reporting Entity

The Town of Goldsby, Oklahoma, was organized in 1962 and incorporated under the laws of the State of Oklahoma. TheTown of Goldsby (Town) operates under the Statutory Town Board of Trustees form of government and provides thefollowing major services: public safety, streets, public improvements, planning and zoning, and generaladministration. In addition, the Town owns and operates an airport, a water system, and a trash service.

These financial statements present the Town (the primary government) and its component units in conformity withGASB-14. The financial statements of the Town’s Title 60 Trusts have been included in the financial reporting entity asblended component units because their operating and financial relationships are significant to the Town.

1B1. Blended Component Units

The Goldsby Airport Trust (GAT) was established April 4, 1991, to operate the David J. Perry Airport. GAT is a legallyseparate entity from the Town and is governed by a board of 5 trustees appointed by the Town board. For financialreporting purposes, the GAT is reported as if it were part of the Town's operations. GAT does not present separatefinancial statements.

The Goldsby Water Authority (GWA) was established May 2, 1988, to finance and operate the Town’s water system.GWA is a legally separate entity from the Town and is governed by a board of 5 trustees, 3 of whom are Town trusteesand 2 of whom are customers living outside the Town limits. For financial reporting purposes, the GWA is reported as ifit were part of the Town's operations. GWA does not present separate financial statements.

The Goldsby Public Works Authority (GPWA) was established March 24, 2003, to finance, establish, and operate awireless internet service for the citizens of the Town. GPWA is a legally separate entity from the Town and is governedby the same board of trustees that governs the Town. For financial reporting purposes, the GPWA is reported as if itwere part of the Town’s operations. The GPWA sold its internet service in June, 2006, and is currently operating theTown’s trash service. GPWA does not present separate financial statements.


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1C. Basis of Presentation

1C1. Fund Accounting

The Town uses fund accounting to maintain its financial records. A fund is defined as a fiscal and accounting entity witha self-balancing set of accounts that comprises its assets, deferred outflows of resources, liabilities, deferred inflows ofresources, fund equity, revenues and expenditures/expenses. The Town’s funds are organized into two categories:governmental and proprietary. Within these categories, funds are further defined as major or non-major. The emphasisin fund financial statements is on major funds in either the governmental or business-type activities categories asdefined by GASB 34. The Town has one governmental fund and three business-type funds.

1C2. Basis of Accounting and Measurement Focus

Basis of accounting refers to the point at which revenues or expenditures/expenses are recognized in the accounts andreported in the financial statements. It relates to the timing of the measurements made regardless of the measurementfocus applied. Measurement focus is a term used to describe which transactions are recorded.

1C2a. Modified Cash Basis of Accounting

The modified cash basis of accounting is a comprehensive basis of accounting other than GAAP, and is a modification ofthe pure cash basis of accounting. Professional standards define the cash basis of accounting as a basis of accounting anentity uses to record cash receipts and disbursements, and modifications of the cash basis having substantial support (forexample, recording depreciation on fixed assets.) Although the modified cash basis of accounting is not separatelydefined by professional standards, the modifications to the cash basis have evolved over time through common practice,and generally result when cash receipts or disbursements provide a benefit or obligation covering multiple reportingperiods, and the reporting of the cash transaction would be more meaningful to financial statement users if spread overthose multiple periods.

For modifications to be considered to have substantial support, they should:

1. be made as a result of cash receipts or disbursements;2. have substantial support in GAAP or other accounting literature; and3. be logical.

The government-wide financial statements are highly aggregated financial statements that present financial informationfor all assets, deferred outflows, liabilities, deferred inflows, and net assets using the economic resources measurementfocus within the limitations of the modified cash basis of accounting. This means that revenues are recorded whenreceived and expenses, with the exception of capitalizing and depreciating capital assets, are recorded when paid. Thegovernment-wide financial statements required are the statement of net assets and the statement of activities. Thesefinancial statements are designed to help users asses the finances of a government in its entirety, including the year’soperating results; determine whether the government’s overall financial position improved or deteriorated; andevaluate whether the government’s current-year revenues were sufficient to pay for current year services. They are alsodesigned to help users assess the cost of providing services to its citizenry; determine how the government finances itsprograms; understand the extent to which the government has invested in capital assets; and make better comparisonsbetween governments.


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1C4. Governmental Fund Financial Statements

The general fund of the Town is a governmental fund. The governmental fund financial statements focus primarily onthe sources, uses, and balances of current financial resources. They are presented using the current financial resourcesmeasurement focus and the modified cash basis of accounting. Revenues are recognized when they are received andexpenditures are recorded when paid. The financial statements required for governmental funds are the balance sheetand the statement of revenues, expenditures, and changes in fund balance. The governmental fund balance sheet doesnot present capital assets or long-term liabilities. Instead, the statement of revenues, expenditures and changes in fundbalance reports the financial resource inflows and outflows arising from the disposition and acquisition of capital assets,the issuance and repayment of long-term debt, and maturation of non-debt long-term liabilities. Capital assets andlong-term liabilities associated with and generally arising from activities reported in governmental funds are reportedonly in the government-wide financial statements.

1C5. Proprietary Fund Financial Statements

The Title 60 trusts of the town are proprietary funds. The proprietary funds utilize an economic resources measurementfocus within the limitations of the modified cash basis of accounting, the objectives of which involves the determinationof operating income, changes in net position, net position, and cash flows. The accounting principles applicable arethose similar to businesses in the private sector. The Town maintains three proprietary funds, which are enterprisefunds. Enterprise funds are used to account for operations for which a fee is charged to external users for goods orservices and the activity is financed with debt that is solely secured by a pledge of the net revenues; has third partyrequirements that the cost of providing services, including capital costs, be recovered with fees and charges; orestablishes fees and charges based on a pricing policy designed to recover similar costs.

1D. Cash and Cash Equivalents

Cash and cash equivalents for purposes of the statement of cash flows are defined as cash on hand, demand deposits,and short-term investments with original maturities of three months or less from the date of acquisition.

1E. Investments

The governing body has not formally adopted deposit and investment policies that limit the government’s allowabledeposits or investments and address the specific types of risk to which the government is exposed. However, it isthe policy of the governing body to require deposits in excess of FDIC limits to be collateralized as required by OklahomaStatutes.

Investments are accounted for in accordance with GASB-31, Accounting and Financial Reporting for Certain Investments,which states that investments held at year end with original maturities greater than one year are stated at fair value.Fair value is estimated based on quoted market prices at year-end. All investments not required to be reported at fairvalue are stated at cost or amortized cost.

1F. Inventories

Inventories are valued using the average cost basis (AVCO), which approximates market. GAT inventories consist of fuelfor resale.


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1G. Interfund Activity

Interfund activity is reported either as loans, services provided, reimbursements or transfers. Loans are reported asinterfund receivables and payables as appropriate and are subject to elimination upon consolidation. Services provided,deemed to be at market or near market rates, are treated as revenues and expenditures/expenses. Reimbursementsare when one fund incurs a cost, charges the appropriate benefiting fund and reduces its related cost as areimbursement. All other Interfund transactions are treated as transfers. Transfers between governmental orproprietary funds are netted as part of the reconciliation to the government-wide financial statements.

1H. Capital Assets

Capital assets purchased or acquired with an original cost of $2,000 or more are reported at historical cost or estimatedhistorical cost. Contributed assets are reported at fair market value as of the date received. Depreciation on all assets isprovided on the straight-line basis over the following estimated useful lives:

Buildings and improvements 30 to 40 yearsVehicles and equipment 3 to 20 yearsInfrastructure 20 to 50 years

GASB-34 required the Town to report and depreciate new infrastructure assets effective with the 2004 year.Infrastructure assets include roads, sidewalks, bridges, traffic signals, etc. These infrastructure assets are likely to be thelargest asset class of the Town. Neither their historical cost nor related depreciation has been reported in the financialstatements. Retroactive reporting is not required.

1I. Equity Classifications

In the government-wide statements, equity is classified as net position and reported in three components as follows:

1. Net investment in capital assets – Capital assets, net of accumulated depreciation, are reduced by theoutstanding balances of any debt attributable to their acquisition, construction, or improvement.

2. Restricted – Net assets that have had constraints placed upon them either by external sources such ascreditors, grantors, contributors, or laws or regulations of other governments; or law through constitutionalprovisions or enabling legislation.

3. Unrestricted – All other net assets that do not meet the definition of the previous two classifications.

In the fund financial statements, governmental fund equity is classified as fund balance and reported as needed in fivecomponents as follows:

1. Nonspendable – amounts not in a spendable form, or legally or contractually required to be maintainedintact.

2. Restricted – constraints placed on fund balance are externally imposed by creditors, grantors, or othergovernments; or are imposed by law through constitutional provisions or enabling legislation.

3. Committed – amounts that can only be used for specific purposes as a result of constraints imposed byformal action of the individual government’s highest level of decision making authority.

4. Assigned – constraints placed on fund balance are imposed by the government’s intent that it be used forspecific purposes, but are neither restricted nor committed. An individual government must define and


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disclose how it expresses its intent for purposes of making assignments. For the Town, this intent isexpressed by the use of purchase orders encumbering amounts for assigned purposes as approved by theboard of trustees.

5. Unassigned – remaining fund balance in excess of all other classifications.

1J. Revenues and Expenditures

Program revenues in the government-wide statements include charges paid by the recipients of the goods or servicesoffered by the programs, and grants and contributions that are restricted to meeting the operational or capitalrequirements of a particular program. Revenues not classified as program revenues are presented as general revenues.In proprietary funds, operating revenues and expenses result from providing the goods or services that are the fundsprincipal ongoing operations. Revenues and expenses not meeting this definition are nonoperating revenues andexpenses. Subsidies and grants to proprietary funds, which finance either capital or current operations, are reported asnonoperating revenue based on GASB-33. In applying GASB-33 to grant revenues, the provider recognizes liabilities andexpenses and the recipient recognizes receivables and revenue when the applicable eligibility requirements, includingtime requirements, are met. Resources transmitted before eligibility requirements are met are reported as advances bythe provider and deferred revenue by the recipient.

1K. Use of Restricted Resources

When both restricted and unrestricted resources are available for use, it is the government’s policy to use restrictedresources first, and then unrestricted resources as needed. When both assigned and unassigned resources are availablefor use, it is the government’s policy to use assigned resources first, and then unassigned resources as needed.

2. Budgets and Budgetary Accounting

The board of trustees adopts legally required annual operating budgets each year for each fund. The same modifiedcash basis of accounting used for fund financial reporting purposes is used for budgetary purposes. At the fund level,actual expenditures cannot exceed budgeted appropriations at the department level. Budgetary transfers betweendepartments of the same fund are approved by the board when required. Supplemental appropriations, if needed, areapproved by the board and submitted to the state auditor's office as required by state statutes. All appropriations lapseat the end of the fiscal year. Encumbrance accounting is not used. For the year just ended, five general fundamendments were approved by the trustees.

3. Risk Management

The Town is exposed to various risks of losses related to torts; thefts of, damage to, and destruction of assets; errors andomissions; injuries to employees; and natural disasters. The Town manages this risk through the purchase ofcommercial insurance policies. Risk management activities are accounted for by fund, and claims are recognized when itis probable that a loss has occurred and the amount of the loss can be reasonably estimated. In determining claims,events that might create claims, but for which none have been reported, are considered. There was no claims activity forthe year.


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4. Deposits and Investments

The State of Oklahoma allows municipalities to invest in the following: direct obligations of the U.S. Government, itsagencies or instrumentalities; collateralized or insured certificates of deposit; insured savings accounts or savingscertificates; and county, municipal or school district direct debt.

The Town has deposits at year-end that are exposed to custodial credit risk (bank balances not covered bydepository insurance) as follows:

Collateralized by securities held by the pledging financial insitutions' trust

department or agent but not in the Town's name $4,924,271

5. Restricted Cash and Investments

County Fire Department Sales Tax Funds

County sales tax funds restricted for the Town’s fire department are reported in the Town’s financial statements foraccountability and control purposes. The county spends the funds for Town operations at the Town’s request and titlefor all equipment purchased with these funds resides with the Town. Balances reflected in the financial statements are:cash - $210,001; intergovernmental revenues - $58,003; expenditures: $101,624.

Water Facilities Impact Fees

June 20, 2000, the GWA approved resolution 2000-01 establishing a connection fee for new water customers. Thesefunds may be used only for acquiring, equipping, and/or making capital improvements to the water facilities and shallnot be used for maintenance and operations. The funds are to be expended in the order collected; and any funds notexpended or obligated by the end of the calendar quarter immediately following six years from the date the fee waspaid are subject to refunding with 3% interest at the written request of the customer. The amount in the fund and itsassociated liability at June 30 was $457,175 and $402,131 respectively, and includes interest earned on the account. Itdoes not include accrued interest payable due to the unlikelihood of having to refund the full amount collected.

Development Reimbursement Fees

February 18, 2014, the Town adopted ordinance 2014-2 providing for a reimbursement policy for major water lineextension projects and providing that such reimbursement obligations shall become a liability against the propertywithin the defined service area of such projects subject to certain reimbursement agreements. At year end, only onesuch reimbursement agreement is in effect. Deposits and the associated liability subject to the agreement at June 30,were $$3,623.

6. Long-term Debt

Long-term debt activity for the year ended June 30, 2016, was as follows:

Beginning Ending Due in

Business-type activities Balance Additions Reductions Balance One Year

Airport note payable 161,826 0 (161,826) 0 0


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7. Capital Assets

Capital asset activity for the year just ended is summarized as follows:

Governmental activities Beginning Ending

Assets not depreciated Balance Additions Disposals Balance

Construction in progress 0 0 0 0

Land 641,922 0 0 641,922

Total assets not depreciated 641,922 0 0 641,922

Depreciable assets

Buildings 1,655,941 56,271 0 1,712,212

Vehicles and equipment 1,269,437 129,476 0 1,398,913

Streets, bridges, sidewalks 2,603,302 233,078 0 2,836,380

Total depreciable assets 5,528,680 418,824 0 5,947,505

Accumulated depreciation

Buildings (398,097) (54,970) 0 (453,067)

Vehicles and equipment (772,058) (93,964) 0 (866,022)

Streets, bridges, sidewalks (814,756) (138,711) 0 (953,467)

Total depreciation (1,984,911) (287,645) 0 (2,272,556)

Net depreciable assets 3,543,770 131,179 0 3,674,949

Net governmental assets 4,185,692 131,179 0 4,316,871

Business-type activities

Assets not depreciated

Construction in progress 234,083 759,554 (102,117) 891,520

Land 86,289 0 0 86,289

Total assets not depreciated 320,372 759,554 (102,117) 977,809

Depreciable assets

Buildings 1,242,111 536,132 0 1,778,243

Vehicles and equipment 239,439 42,368 0 281,807

Infrastructure 7,450,603 268,632 (180,797) 7,538,439

Total depreciable assets 8,932,153 847,132 (180,797) 9,598,489

Accumulated depreciation

Buildings (261,098) (57,590) 0 (318,688)

Vehicles and equipment (181,038) (22,591) 0 (203,629)

Infrastructure (2,062,388) (212,797) 0 (2,275,185)

Total depreciation (2,504,524) (292,978) 0 (2,797,502)

Net depreciable assets 6,427,629 554,154 (180,797) 6,800,986

Net business-type assets 6,748,001 1,313,708 (282,913) 7,778,796

Depreciation was charged to functions as follows:

Governmental activities Business-type activities

General government 40,822 Airport 137,045

Park 44,295 Water 131,488

Fire 53,108 Trash 24,445

Streets 149,421 Total business-type depreciation 292,978

Total governmental depreciation 287,645


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8. Pension Plans

Defined Contribution Pension Plan

The Town employees participate in the Oklahoma Municipal Retirement Fund (Fund), administered by JPMorgan ChaseBank of Oklahoma City. Title 11, Oklahoma Statutes 1981, sections 48-101 et. seq. assigns the authority to establish andamend the benefit provisions of the plans that participate in the Fund to the respective employer entities. All full-timeand part-time employees of the Town are eligible to participate in the Fund and full-time employees are fully vestedafter 10 years. Covered employees contribution is 8% of their gross payroll while the Town contribution is 4%.Employee contributions over 8% are optional. The payroll for Town employees for the year was $515,835. The payrollfor Town employees covered by the Fund for the year was $465,242. Actual Town and employee contributions for theyear were $18,610 and $38,453 respectively.

Defined Benefit Pension Plan

Plan Description. The Town contributes to the Oklahoma Firefighters Pension and Retirement System (the System), acost-sharing multiple-employer defined benefit pension plan administered by a 13-member board which acts asfiduciary for investment of funds and the application of plan interpretations. The System provides retirement anddisability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. The Systemis a component unit of the State of Oklahoma and is authorized under Title 11, Oklahoma Statutes 1981, sections 48-101et. seq. The System issues a publicly available financial report that includes financial statements and requiredsupplementary information for the plan and may be obtained from their offices at 4545 N. Lincoln Blvd., Suite 265,Oklahoma City, OK 73105, or by calling 1-800-525-7461.

Funding Policy. Volunteer firefighters are not required to contribute, but the Town is required to contribute $60 pervolunteer per year. The contribution requirements of the System are an established rate determined by OklahomaStatute and are not based on actuarial calculations. The Town's contribution to the System for the year ended June 30,2016, 2015 and 2014 was $1,020, $1,140 and $1,320 respectively equal to the required contribution for each year.

9. Workers’ Compensation Plan

The Town participates in the Oklahoma Municipal Assurance Group Workers’ Compensation Plan (the Plan). ThePlan became effective October 1, 1984. The purpose of the Plan is to provide workers’ compensation coveragethrough the State Insurance Fund to participating municipalities in the State of Oklahoma. In that capacity, the Planis responsible for providing loss control services and certain fiscal activities including obtaining contractarrangements for the underwriting, excess insurance agreements, claims processing, and legal defense for any andall claims submitted to it during the Plan year. A plan year normally begins at 12:01 am July 1 in any year and endsat midnight June 30 of the following year. The Plan, or its designated agent, has a right to audit at all reasonabletimes such books and records of the participant as necessary to determine the monies owed for benefits provided tothe municipality or its employees.

Plan participants have the responsibility to pay fees set by the Plan and to pay those fees from funds appropriated forthat purpose according to the established payment schedule. In addition, participants are responsible for complyingwith all requirements of the Oklahoma Workers’ Compensation Act. Participants have the right to the return of any LossFunds set aside for claims which have not been paid out as benefits. Losses are limited to amounts set aside by the plan.Town funds on deposit with OMAG at year end were $6,300.


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10. Subsequent Events

Management performed an evaluation of the Town’s activity through January 30, 2017, the date the audit report wasavailable to be released, and has concluded that there are no significant subsequent events requiring disclosure throughthat date.

11. Inter-fund Transactions

General

Inter-fund Receivables and Payables Fund GAT GWA GPWA Total

Routine operating expenses (695) 834 (793) 654 0

General

Inter-fund Transfers Fund GAT GWA GPWA Total

Operating funds (75,000) 0 0 75,000 0

Capital projects (459,632) 459,632 0 0 0

Total transfers (534,632) 459,632 0 75,000 0

12. Prior Period Adjustment

The GAT changed its method of valuing fuel inventory from FIFO to the average cost method (AVCO) during 2016.The adjustment to beginning inventory as a result of this change was $4,052.

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THE TOWN OF GOLDSBY

BUDGETARY COMPARISON SCHEDULE

GENERAL FUND


Budget Variance

Original Final Basis Favorable

REVENUES Budget Budget Actual (Unfavorable)

Taxes 1,485,700 1,485,700 1,470,903 (14,797)

Payments in lieu of taxes 0 0 32,771 32,771

Shared taxes 23,700 23,700 84,050 60,350

Fines and fees 63,812 63,812 47,890 (15,922)

Permits, licenses, inspections 62,900 62,900 48,842 (14,058)

Rents and royalties 0 0 28,700 28,700

Sales and services 100,000 100,000 91,939 (8,061)

Donations 0 0 1,381 1,381

Grants 8,000 8,000 5,569 (2,431)

Other revenues 5,100 5,100 18,592 13,492

Interest 10,000 10,000 7,477 (2,523)

TOTAL REVENUES 1,759,212 1,759,212 1,838,114 78,902

EXPENDITURES

Court 26,050 26,050 25,141 909

General government 954,600 954,600 493,872 460,728

Park department 296,985 296,985 75,467 221,518

Security department 132,000 132,000 109,412 22,588

Fire department 105,375 105,375 169,075 (63,700)

Street department 304,800 304,800 261,047 43,753

TOTAL EXPENDITURES 1,819,810 1,819,810 1,134,014 685,796

REVENUES OVER (UNDER) EXPENDITURES (60,598) (60,598) 704,100 764,698

OTHER FINANCING SOURCES (USES)

Interfund transfers (1,050,000) (1,050,000) (534,632) 515,368

NET CHANGE IN FUND BALANCES (1,110,598) (1,110,598) 169,468 1,280,066

BEGINNING FUND BALANCE 3,479,069 3,479,069 3,479,069 0

ENDING FUND BALANCE $2,368,471 $2,368,471 $3,648,537 $1,280,066

Notes to the budgetary comparison schedule:

1. This schedule is prepared using the modified cash basis of accounting.2. The fire department includes expenditures from the county fire tax fund of $101,624 which were not

budgeted by the Town.

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THE TOWN OF GOLDSBY

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS


(Modified Cash Basis)

FEDERAL GRANTOR/ FEDERAL PASS-THROUGH

PASS-THROUGH GRANTOR/ CFDA GRANTOR'S

PROGRAM TITLE NUMBER NUMBER EXPENDITURES

U.S. Department of Transportation, Federal Aviation Administration

Oklahoma Aeronautics Commission

Airport Improvement Program 20.106 3-40-0066-009-2015 471,091

TOTAL FEDERAL AWARDS $471,091

THE TOWN OF GOLDSBY

SCHEDULE OF EXPENDITURES OF STATE AWARDS


(Modified Cash Basis)

STATE GRANTOR/

PASS-THROUGH GRANTOR GRANTOR'S

PROGRAM TITLE NUMBER EXPENDITURES

Oklahoma Aeronautics Commission

Airport Improvement Program 1K4-16-FS 103,788

Airport Improvement Program 1K4-16-S 210,161

Total Oklahoma Aeronautics Commission 313,949

Oklahoma Department of Agriculture, Food, and Forestry

Association of Central Oklahoma Governments

Rural Fire Protection 4,290

TOTAL STATE AWARDS $318,239

BECKY FLEMING, C.P.A., INC.

7920 108th Ave NE Cell: 405.641.5794Norman, OK 73026-9761 Fax: 405.217.4575

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INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCEAND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH

GOVERNMENT AUDITING STANDARDS

To the Board of TrusteesThe Town of Goldsby, Oklahoma

We have audited, in accordance with auditing standards generally accepted in the United States of America and thestandards applicable to financial audits contained in Government Auditing Standards issued by the ComptrollerGeneral of the United States, the modified cash basis financial statements of the governmental activities, thebusiness-type activities, and each fund of the Town of Goldsby, Oklahoma, as of and for the year ended June 30,2016, and the related notes to the financial statements, which collectively comprise the basic financial statements ofthe Town of Goldsby, and have issued our report thereon dated January 30, 2017.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered the internal control over financialreporting of the Town of Goldsby to determine the audit procedures that are appropriate in the circumstances forthe purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinionon the effectiveness of the Town of Goldsby’s internal control. Accordingly, we do not express an opinion on theeffectiveness of the Town of Goldsby’s internal control.

Our consideration of internal control was for the limited purpose described in the preceding paragraph and was notdesigned to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies,and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, asdescribed in the accompanying schedule of findings and questioned costs, we identified certain deficiencies ininternal control that we consider to be material weaknesses and significant deficiencies.

A deficiency in internal control exists when the design or operation of a control does not allow management oremployees, in the normal course of performing their assigned functions, to prevent, or detect and correct,misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internalcontrol such that there is a reasonable possibility that a material misstatement of the entity’s financial statementswill not be prevented, or detected and corrected on a timely basis. We consider the deficiency 2016-1 described inthe accompanying schedule of findings and responses to be a material weakness.

A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is less severe than amaterial weakness, yet important enough to merit attention by those charged with governance.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the financial statements of the Town of Goldsby are freeof 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

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determination of financial statement amounts. However, providing an opinion on compliance with those provisionswas not an objective of our audit, and accordingly, we do not express such an opinion. The results of our testsdisclosed no instances of noncompliance or other matters that are required to be reported under GovernmentAuditing Standards.

The Town of Goldsby’s Response to Findings

The Town of Goldsby’s response to the findings identified in our audit is described in the accompanying schedule offindings and responses. The Town of Goldsby’s response was not subjected to the auditing procedures applied inthe audit of the financial statements and, accordingly, we express no opinion on it.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and theresult of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or oncompliance. This report is an integral part of an audit performed in accordance with Government AuditingStandards in considering the entity’s internal control and compliance. Accordingly, this communication is notsuitable for any other purpose.

Becky Fleming, C.P.A., Inc.January 30, 2017

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The Town of GoldsbySchedule of Findings and ResponsesFor the Year Ended June 30, 2016

2016-1 This is a repeat finding from 2015.

Criteria: Internal controls should be in place to insure all reports related to water and trash billings andrelated fees are printed at least monthly and reconciled to the general ledger.

Condition: Reports related to water and trash billings and related fees are not being printed regularly orreconciled to the general ledger at least monthly.

Cause: There are no established procedures to insure that all reports related to water and trash billingsand related fees are printed regularly or reconciled to the general ledger at least monthly.

Effect: Because water and trash billings and related fees are not being reconciled between the billingsystem, the general ledger, or other subsidiary schedules at least monthly, errors in either the billingsystem, the general ledger, customer accounts, or impact or other fees may exist and not be correctedon a timely basis.

Recommendation: We recommend that procedures be established to make sure billing reports areprinted timely and reconciled to the general ledger monthly.

Response: In April of 2016 we set up a schedule of billing reports that need to be printed and reconciledto the general ledger monthly and are now making sure that the reports are printed and thereconciliations are performed monthly.

Documents

THE TOWN OF GOLDSBY (Including the Goldsby … accompanying notes are an integral part of these financial statements 4 THE TOWN OF GOLDSBY STATEMENT OF ACTIVITIES - MODIFIED CASH BASIS