Temecula-Elsinore-Anza-Murrieta Resource Conservation District
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Thursday, January 9, 2019 4:00 PM
Truax Building
41923 Second Street, Fourth Floor
Temecula, CA 92590

ELSINORE MURRIETA ANZA RESOURCE CONSERVATION DISTRICT

AUDIT REPORT

For the Fiscal Year Ended June 30, 2015

ELSINORE MURRIETA ANZA RESOURCE CONSERVATION DISTRICT

For the Fiscal Year Ended June 30, 2015 Table of Contents

Financial Section

INDEPENDENT AUDITORS’ REPORT

Board of Directors
Elsinore Murrieta Anza Resource Conservation District Wildomar, California

Elsinore Murrieta Anza Resource Conservation District,

We have audited the accompanying financial statements of the governmental activities and each major fund of

statements as listed in the table of contents.

as of and for the fiscal year ended June 30, 2015, and

the related notes to the financial statements, which collectively comprise the District's basic financial

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.

Auditors' 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 and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to

obtain reasonable assurance about whether the financial statements are free 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.

Basis for Qualified Opinion on Governmental Activities and General Fund

The District does not maintain records for the balance recorded as deposits payable. There is no process in place regarding the collection and classification of developer deposits and no master list of developers that we could contact to independently verify the existence of the liability. Therefore, we were unable to substantiate the balance asserted.

Qualified Opinion

In our opinion, except for the effects of the matter described in the “Basis for Qualified Opinion on Governmental Activities and General Fund” paragraph, the financial statements referred to above present fairly, in all material respects, the financial position of the governmental activities and the General Fund of the Elsinore Murrieta Anza Resource Conservation District as of June 30, 2015, and the changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Unmodified Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the Permanent Fund of the Elsinore Murrieta Anza Resource Conservation District as of June 30, 2015, 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.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that management's discussion and analysis on pages 3 to 8, and budgetary comparison information on page 24, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historic context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our 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.

Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued a separate report dated February 11, 2016, on our consideration of the District's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District's internal control over financial reporting and compliance.

Murrieta, California February 11, 2016

ELSINORE MURRIETA ANZA RESOURCE CONSERVATION DISTRICT

Management’s Discussion and Analysis (Unaudited) For the Fiscal Year Ended June 30, 2015

This discussion and analysis of Elsinore Murrieta Anza Resource Conservation District’s financial performance provides an overview of the District’s financial activities for the fiscal year ended June 30, 2015. Please read it in conjunction with the District’s financial statements, which immediately follow this section.

FINANCIAL HIGHLIGHTS

  •   The net position of the District increased by $3,397, or 0.3% during the fiscal year.

  •   Governmental expenses were approximately $35,000. Revenues were about $38,400.

  •   There were no additions to capital assets during the year. Depreciation expense was $1,368.

    OVERVIEW OF THE FINANCIAL STATEMENTS

    This annual report consists of three parts – management discussion and analysis (this section), the basic financial statements, and required supplementary information. The basic financial statements include two kinds of statements that present different views of the District:

  •   The first two statements are districtwide financial statements that provide both short‐term and long‐term information about the District’s overall financial status.

  •   The remaining statements are fund financial statements that focus on individual parts of the District, reporting the District’s operations in more detail than the district‐wide statements.
    The governmental funds statements tell how basic services were financed in the short term as well as

    what remains for future spending.

Figure A1. Organization of Elsinore Murrieta Anza Resource Conservation District’s Annual Financial Report

The financial statements

also include
explain some
information
statements and provide more detailed data. Figure A‐1 shows how the various parts of this annual report are arranged and related to one another.

notes that of the in the

Management’s Discussion and Analysis

Basic Financial Information

Required Supplementary Information

DistrictWide Financial

Fund Financial Statements

Notes to Financial Statements

SUMMARY

DETAIL

ELSINORE MURRIETA ANZA RESOURCE CONSERVATION DISTRICT

Management’s Discussion and Analysis (Unaudited) For the Fiscal Year Ended June 30, 2015

OVERVIEW OF THE FINANCIAL STATEMENTS (continued)

Figure A‐2 summarizes the major features of the District’s financial statements, including the portion of the District’s activities they cover and the types of information they contain.

Figure A2. Major Features of the DistrictWide and Fund Financial Statements

Type of Statements

DistrictWide

Governmental Funds

Scope

Entire district, except fiduciary activities

The activities of the district that are not proprietary or fiduciary

Required financial statements

Statement of Net Assets

Statement of Activities

  •   Balance Sheet

  •   Statement of Revenues,

    Expenditures & Changes in Fund Balances

Accounting basis and measurement focus

Accrual accounting and economic resources focus

Modified accrual accounting and current financial resources focus

Type of asset/liability

information

All assets and liabilities, both financial and capital, short‐term and long‐ term

Only assets expected to be used up and liabilities that come due during the year or soon thereafter; no capital assets included

Type of inflow/outflow information

All revenues and expenses during year, regardless of when cash is received or paid

Revenues for which cash is received during or soon after the end of the year; expenditures when goods or services have been received and payment is due during the year or soon thereafter

ELSINORE MURRIETA ANZA RESOURCE CONSERVATION DISTRICT

Management’s Discussion and Analysis (Unaudited) For the Fiscal Year Ended June 30, 2015

OVERVIEW OF THE FINANCIAL STATEMENTS (continued)

The remainder of this overview section of management’s discussion and analysis highlights the structure and contents of each of the statements.

DistrictWide Statements

The district‐wide statements report information about the District as a whole using accounting methods similar to those used by private‐sector companies. The statement of net position includes all of the District’s assets and liabilities. All of the current year’s revenues and expenses are accounted for in the statement of activities regardless of when cash is received or paid.

The two district‐wide statements report the District’s net position and how it has changed. Net position – the difference between the District’s assets, deferred outflows of resources, liabilities, and deferred inflows of resources – is one way to measure the District’s financial health or position.

  •   Over time increases and decreases in the District’s net position are an indicator of whether its financial position is improving or deteriorating.

  •   To assess the overall health of the District, you need to consider additional nonfinancial factors, such as the amount of building construction in the area, and the political climate affecting conservation.

  •   In the district‐wide financial statements, the District’s activities are categorized as Governmental Activities. Most of the District’s basic services are included here, such as mitigation, public outreach and partnering with similar groups and agencies seeking to protect local watersheds.

    Fund Financial Statements

    The fund financial statements provide more detailed information about the District’s most significant funds – not the District as a whole. Funds are accounting devices the District uses to keep track of specific sources of funding and spending on particular programs. Some funds are required by State law and by bond covenants.

    The District has two funds, the General Fund and Permanent Fund.

ELSINORE MURRIETA ANZA RESOURCE CONSERVATION DISTRICT

Management’s Discussion and Analysis (Unaudited) For the Fiscal Year Ended June 30, 2015

ORGANIZATION STRUCTURE

The Elsinore Murrieta Anza Resource Conservation District was formed 1949 under Public Resource Code Section 9074‐9801 of the State of California. The District’s mission is to promote conservation practices of natural resources, opportunities for public education and participation, and a sustainable quality of life for communities within the District. The District’s territory includes 505,000 acres, or approximately 789 square miles, extending south from Scott Road in Menifee to the San Diego County line, and from the east of Anza west to the Orange County line. It also includes the loop around the north of Lake Elsinore. The District accepts many forms of mitigation to allow projects to run smoothly through the permitting process and promote a healthy environment for the respective communities.

201415 Board of Directors

201516 Board of Directors

Vickie Long, President

Pam Nelson,
Secretary/Treasurer 2015

Danny Martin, Director

Rose Corona, Director

Kelcey Stricker, Director

Dave McElroy, Director

July 1, 2014 ‐ 2015

July 1, 2014 ‐ 2015

July 1, 2014 ‐ 2015

June 4, June 4, June 4, June 4,

Danny Martin, President

Rose Corona, Vice President

David Kuhlman, Secretary/Treasurer

Vicki Long, Director

Pam Nelson, Director

Carol Lee Brady, Director

Dave McElroy, Associate Director

Randy Feeney, Associate Director

Rick Neugebauer, Associate Director

June 5, 2015 ‐ November 30, 2015

June 5, 2015 ‐ Present

June 5, 2015 ‐ Present

June 5, 2015 ‐ Present

June 5, 2015 ‐ September 9, 2015

September, 2015 ‐ Present

March, 2015 ‐ Present

April, 2015 ‐ Present

April, 2015 ‐ Present

July 1, 2014 ‐

July 1, 2014 ‐ April, 2015

July 1, 2014 ‐ November, 2014

ELSINORE MURRIETA ANZA RESOURCE CONSERVATION DISTRICT

Management’s Discussion and Analysis (Unaudited) For the Fiscal Year Ended June 30, 2015

FINANCIAL ANALYSIS OF THE DISTRICT AS A WHOLE
Net Position.
The District’s combined net position was higher on June 30, 2015, than it was the year before –

increasing to $1.09 million. (See Table A‐1).

Table A1

Current and other assets Capital assets

Total assets

Total liabilities Net position

Net investment in capital assets Restricted
Unrestricted
Total net position

Governmental Activities (In thousands)

Variance Increase (Decrease)

$ 5.1 (1.3)

3.8 0.4

(1.4) ‐

4.8 $ 3.4

$

$

2014

372.7

750.4 1,123.1 37.6

750.5 298.0 37.0 1,085.5

2015

$ 377.8 749.1 1,126.9 38.0

749.1 298.0 41.8 $ 1,088.9

Changes in net position, governmental activities. The District’s total revenues increased 12.5% to $38,400 (See Table A‐2). The increase is primarily due to additional irrigation evaluations performed in the current year.

The total cost of all programs and services increased 84% to $34,700. The increase is due to increased rent costs.

Table A2

Total Revenues $ Total Expenses
Increase (decrease) in net position $

Governmental Activities (In thousands)

Variance Increase (Decrease) $ 4.3

2.7 $ 1.6

2014

2015

34.1 $ 32.3

1.8 $

38.4 35.0 3.4

ELSINORE MURRIETA ANZA RESOURCE CONSERVATION DISTRICT

Management’s Discussion and Analysis (Unaudited) For the Fiscal Year Ended June 30, 2015

FINANCIAL ANALYSIS OF THE DISTRICT AS A WHOLE (continued)

General Fund Budgetary Highlights

While the District’s final budget for the General Fund anticipated revenues would equal expenditures, the actual results for the year show that revenues exceeded expenditures by $4,051. Actual revenues were $9,173 more than budgeted, but expenditures were $5,122 more than planned.

CAPITAL ASSETS

By the end of 2014‐15 the District had invested $749,117 in capital assets, net of accumulated depreciation. (More detailed information about capital assets can be found in Note 5 to the financial statements). Total depreciation expense for the year was $1,368.

FACTORS BEARING ON THE DISTRICT’S FUTURE

The District will continue to work with the communities of Lake Elsinore, Wildomar, Murrieta, Temecula, and Anza by providing education and mitigation services, protection of resources and the watershed through building stronger partnerships within the District’s boundaries.

The District anticipates future revenue streams in partnership with the Santa Ana Watershed Association (SAWA), state grants and by accepting and monitoring new easements.

This and other factors were considered in preparing the Elsinore Murrieta Anza Resource Conservation District budget for the 2015‐16 fiscal year.

CONTACTING THE DISTRICT’S FINANCIAL MANAGEMENT

This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the District’s finances and to demonstrate the District’s accountability for the money it receives. If you have any questions about this report or need additional financial information, contact Rose Corona at This email address is being protected from spambots. You need JavaScript enabled to view it..

ELSINORE MURRIETA ANZA RESOURCE CONSERVATION DISTRICT

Statement of Net Position June 30, 2015

ASSETS

Cash
Investments Accounts receivable Prepaid expenses Capital assets:

Non‐depreciable assets Depreciable assets
Less, accumulated depreciation Total assets

LIABILITIES

Accounts payable Unavailable revenue Deposits payable

Total liabilities

NET POSITION

Net investment in capital assets Restricted for:

Mitigation projects: Expendable

Non‐expendable Unrestricted

Total net position

Governmental Activities

$

172,185 200,714 2,793 2,116

747,750 9,570

(8,203)

1,126,925

500 2,000 35,476 37,976

749,117

98,023 200,000 41,809 1,088,949

$

The notes to financial statements are an integral part of this statement.

ELSINORE MURRIETA ANZA RESOURCE CONSERVATION DISTRICT

Statement of Activities
For the Fiscal Year Ended June 30, 2015

Expenses:

Administrative
Program expense Depreciation (unallocated)

Total program expenses

Program revenues:

SAWA stipend income Water audit income

Total program revenues

Net program income (expenses)

General revenues and expenses:

Interest income
Unrealized loss on investments

Total general revenues and expenses Change in Net Position
Net Position, Beginning of Year
Net Position, End of Year

$

Governmental Activities

21,403 11,903 1,368

34,674

25,119 9,550

34,669 (5)

3,718 (316)

3,402

3,397 1,085,552 1,088,949

$

The notes to financial statements are an integral part of this statement.

ELSINORE MURRIETA ANZA RESOURCE CONSERVATION DISTRICT

Balance Sheet June 30, 2015

ASSETS

Cash
Investments Accounts receivable Prepaid expenditures

Total assets

LIABILITIES

Accounts payable Unavailable revenue Deposits payable

Total liabilities

FUND BALANCE

General
Fund Fund

Governmental Funds

Permanent

$

$ $

172,185 $‐$

172,185 200,714 2,793 2,116

377,808

500 2,000 35,476

37,976

202,116

98,737 38,979

339,832 377,808

‐ 2,793 2,116

177,094 $

500 $ 2,000

35,476

37,976

200,714 ‐

200,714 $

‐ $ ‐

‐ 200,000

714 ‐

200,714 200,714 $

Nonspendable 2,116 Restricted for:

Mitigation projects:
Expendable 98,023

Unrestricted 38,979 Total fund balance 139,118

Total Liabilities and Fund Balance $ 177,094 $

The notes to financial statements are an integral part of this statement.

ELSINORE MURRIETA ANZA RESOURCE CONSERVATION DISTRICT

Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position For the Fiscal Year Ended June 30, 2015

Total fund balances governmental funds

Amounts reported for governmental activities in the statement of net position are different because:

Capital assets used in governmental activities are not financial resources and therefore are not reported as assets in governmental funds. The cost of these assets is $757,320, and the accumulated depreciation is $8,203. The difference is:

Total net position governmental activities

$ 339,832

749,117

$ 1,088,949

The notes to financial statements are an integral part of this statement.

ELSINORE MURRIETA ANZA RESOURCE CONSERVATION DISTRICT

Statement of Revenues, Expenditures, and Changes in Fund Balance For the Fiscal Year Ended June 30, 2015

General Fund

25,119 9,550 3,004

37,673

2,000 5,000 182 10 439 8,772 1,842 506 518 1,575 115 444 316

2,973 8,930

33,622

4,051

1,030 ‐

1,030

5,081 134,037

139,118

Permanent Fund

Total Governmental Funds

REVENUES

SAWA stipend income Water audit income Investment income

Total Revenues

EXPENDITURES

Current: Administrative

Accounting
Audit
Legal
Administrative bank charges Membership dues

Rent expense
Utilities
Postage
Printing
Insurance
Website
Other
Unrealized loss on investments

Operational
Contract services:

Easement reporting Water audit expenses

Total Expenditures

Excess (Deficiency) of Revenues
Over (Under) Expenditures

OTHER FINANCING SOURCES (USES)

Interfund transfers in Interfund transfers out

Total Other Financing Sources and Uses Net Change in Fund Balances
Fund Balances, beginning of year
Fund Balances, end of year

$

$

‐ 714

714

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

‐ ‐

714

‐ (1,030)

(1,030)

(316) 201,030

200,714

$

25,119 9,550 3,718

38,387

2,000 5,000 182 10 439 8,772 1,842 506 518 1,575 115 444 316

2,973 8,930

33,622

4,765

1,030 (1,030)

4,765 335,067

339,832

$

$

$

The notes to financial statements are an integral part of this statement.

ELSINORE MURRIETA ANZA RESOURCE CONSERVATION DISTRICT

Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balance to the GovernmentWide Statement of Activities and Changes in Net Position For the Fiscal Year Ended June 30, 2015

Total net change in fund balances governmental funds

Amounts reported for governmental activities in the statement of activities are different because:

In governmental funds, the costs of capital assets are reported as expenditures in the period when the assets are acquired. In the statement of activities, costs of capital assets are allocated over their estimated useful lives as depreciation expense. The difference between capital outlay expenditures and depreciation expense for the period is:

$ 4,765

(1,368) $ 3,397

Change in net position of governmental activities

Expenditures for capital outlay Depreciation expense Net:

‐ (1,368)

The notes to financial statements are an integral part of this statement.

ELSINORE MURRIETA ANZA RESOURCE CONSERVATION DISTRICT

Notes to Financial Statements June 30, 2015

NOTE 1 SIGNIFICANT ACCOUNTING POLICIES

Elsinore Murrieta Anza Resource Conservation District (the "District") accounts for its financial transactions in accordance with accounting principles generally accepted in the United States of America as prescribed by the Governmental Accounting Standards Board. The following is a summary of the more significant policies:

  1. Reporting Entity

    A reporting entity is comprised of the primary government, component units, and other organizations that are included to ensure the financial statements are not misleading. The primary government of the District consists of all funds, departments, and agencies that are not legally separate from the District. For Elsinore Murrieta Anza Resource Conservation District, this includes the General and Permanent Funds.

    Component units are legally separate organizations for which the District is financially accountable. Component units may also include organizations that are fiscally dependent on the District, in that the District approves their budget, the issuance of their debt or the levying of their taxes. In addition, component units are other legally separate organizations for which the District is not financially accountable but the nature and significance of the organization's relationship with the District is such that exclusion would cause the District's financial statements to be misleading or incomplete.

    The District has identified no organizations that are required to be reported as component units.

  2. Basis of Presentation, Basis of Accounting

1. Basis of Presentation

GovernmentWide Financial Statements

The statement of net position and the statement of activities display information about the primary government (the District). These statements include the financial activities of the overall government. Eliminations have been made to minimize the double‐counting of internal activities. Governmental activities generally are financed through developer fees.

The statement of activities presents a comparison between direct expenses and program revenues for each function of the District's governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Program revenues include (a) fees, fines, and charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues are presented as general revenues.

Fund Financial Statements

The fund financial statements provide information about the District's funds. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column.

ELSINORE MURRIETA ANZA RESOURCE CONSERVATION DISTRICT

Notes to Financial Statements June 30, 2015

NOTE 1 SIGNIFICANT ACCOUNTING POLICIES (continued) B. Basis of Presentation, Basis of Accounting (continued)

  1. Basis of Presentation (continued)

    Fund Financial Statements (continued)

    Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Nonoperating revenues, such as subsidies and investment earnings, result from nonexchange transactions or ancillary activities. The District does not operate any proprietary funds.

    Governmental Funds

    The District maintains the following major governmental funds:

    General Fund: This fund is used to account for and report all financial resources not accounted for and reported in another fund.

    Permanent Fund: This fund is used to account for principal and interest related to endowments paid to the District as part of easement agreements.

  2. Measurement Focus, Basis of Accounting

    GovernmentWide Financial Statements

    The government‐wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place.

    Governmental Fund Financial Statements

    Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. Expenditures are recorded when the related fund liability is incurred. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long‐term debt and financing from capital leases are reported as other financing sources.

  3. Revenues Exchange and NonExchange Transactions

    Revenue resulting from exchange transactions, in which each party gives and receives essentially equal value, is recorded on the accrual basis when the exchange takes place. On a modified accrual basis, revenue is recorded in the fiscal year in which the resources are measurable and become available. Available means that the resources will be collected within the current fiscal year. Generally, available is defined as collectible within 60 days.

    Non‐exchange transactions, in which the District receives value without directly giving equal value in return, include revenue from certain grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Eligibility requirements include time and purpose requirements. On a modified accrual basis, revenue from non‐exchange transactions must also be available before it can be recognized.

ELSINORE MURRIETA ANZA RESOURCE CONSERVATION DISTRICT

Notes to Financial Statements June 30, 2015

NOTE 1 SIGNIFICANT ACCOUNTING POLICIES (continued)

C. Budgetary Data

Annual budgets are adopted on a basis consistent with generally accepted accounting principles for all government funds. By state law, the District's governing board must adopt a tentative budget no later than July 1 and adopt a final budget no later than October 1. A public hearing must be conducted to receive comments prior to adoption.

The District annually adopts a budget based on estimated revenues, estimated operation expenses, and capital expenditure requirements. The District’s policy is to prepare its budgets on the modified accrual basis of accounting, which recognizes revenues when they are accrued, and expenses and capital assets are recorded as expenditures, and depreciation is not recorded.

D. Encumbrances

Encumbrance accounting is used in all budgeted funds to reserve portions of applicable appropriations for which commitments have been made. Encumbrances are recorded for purchase orders, contracts, and other commitments when they are written. Encumbrances are liquidated when the commitments are paid. All encumbrances are liquidated as of June 30.

E. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources, and Net Position

  1. Cash

    The District’s cash consists of cash on hand, demand deposits and short‐term investments with original maturities of less than 90 days from the date of acquisition.

  2. Investments

    Investments consist of certificates of deposits with average maturity date of 90 days or more from the date of acquisition.

  3. Accounts Receivable

    Accounts receivables represent amounts due to the District as of fiscal year end from conservation services rendered and interest.

  4. Prepaids

    Prepaid expenses arise when the District has paid for an expense, but the corresponding goods or services have not been received at the end of the fiscal year.

  5. Capital Assets

    The accounting and reporting treatment applied to the capital assets associated with a fund is determined by its measurement focus. Capital assets are reported in the government‐wide statement of net assets, but are not reported in the fund financial statements.

    Capital assets are capitalized at cost (or estimated historical cost) and updated for additions and retirements during the year. Donated fixed assets are recorded at their estimated fair market values as of the date received. The District does not currently define a threshold for capital assets. However, these assets are estimated to have an initial, individual cost of more than $500 and an estimated useful life in excess of two years. Capital assets are depreciated during the expected life of the asset on the straight‐line method. The District does not own any infrastructure as defined in GASB No. 34. Improvements are capitalized; the costs of normal maintenance and repairs that do not add to the value of the asset or materially extend an asset’s life are not capitalized.

ELSINORE MURRIETA ANZA RESOURCE CONSERVATION DISTRICT

Notes to Financial Statements June 30, 2015

NOTE 1 SIGNIFICANT ACCOUNTING POLICIES (continued)

E. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources, and Net Position (continued)

  1. Capital Assets (continued)

    All reported capital assets, except for land and construction in progress, are depreciated. Improvements are depreciated over the remaining useful lives of the related capital assets. Depreciation is computed using the straight‐line method over the following estimated useful lives:

    Description Estimated Lives Office Equipment 7 years

    Depreciation expense for the year ended June 30, 2015, was $1,368.

  2. Unavailable Revenue

    Unavailable revenue arises when potential revenue does not meet both the "measurable" and "available" criteria for recognition in the current period or when resources are received by the District prior to the incurrence of qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met, or when the District has a legal claim to the resources, the liability for unavailable revenue is removed from the combined balance sheet and revenue is recognized.

  3. Deferred Outflows/Inflows of Resources

    In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period and so will not be recognized as an outflow of resources (expense/expenditure) until then. The District has no items that qualify for reporting in this category.

    In addition to liabilities, the statement of net position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period and will not be recognized as an inflow of resources (revenue) until that time. The District has no items that are reported as deferred inflows of resources.

  4. Fund Balance Reserves and Designations

    Fund balance reporting for governmental funds is reported in classifications that comprise a hierarchy based primarily on the extent to which the District is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. Some governments may not have policies or procedures that are comparable to those policies that underlie these fund balance classifications and therefore would not report amounts in all possible fund balance classifications.

    Nonspendable: The nonspendable fund balance classification includes amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact. The “not in spendable form” criterion includes items that are not expected to be converted to cash, for example, revolving cash, inventories, and prepaid amounts.

ELSINORE MURRIETA ANZA RESOURCE CONSERVATION DISTRICT

Notes to Financial Statements June 30, 2015

NOTE 1 SIGNIFICANT ACCOUNTING POLICIES (continued)

E. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources, and Net Position (continued)

  1. Fund Balance Reserves and Designations (continued)

    Restricted: Fund balances should be reported as restricted when constraints placed on the use of resources are either (a) externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments; or (b) imposed by law through constitutional provisions or enabling legislation.

    Committed: Amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the government’s highest level of decision‐making authority should be reported as committed fund balance. Those committed amounts cannot be used for any other purpose unless the government removes or changes the specified use by taking the same type of action it employed to previously commit those amounts.

    Assigned: Amounts that are constrained by the government’s intent to be used for specific purposes, but are neither restricted nor committed, should be reported as assigned fund balance.

    Unassigned: Unassigned fund balance is the residual classification for the General Fund. This classification represents fund balance that has not been assigned to other funds and that has not been restricted, committed, or assigned to specific purposes within the General Fund.

  2. Net Position

    Net position is classified into three components: net investment in capital assets; restricted; and unrestricted. These classifications are defined as follows:

    •   Net investment in capital assets ‐ This component of net position consists of capital assets, including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. If there are significant unspent related debt proceeds at year‐end, the portion of the debt attributable to the unspent proceeds are not included in the calculation of net investment in capital assets. Rather, that portion of the debt is included in the same net position component as the unspent proceeds.

    •   Restricted ‐ This component of net position consists of constraints placed on net position use through external constraints imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments or constraints imposed by law through constitutional provisions or enabling legislation.

    •   Unrestricted net position ‐ This component of net position consists of net position that does not meet the definition of "net investment in capital assets" or "restricted".

      When both restricted and unrestricted resources are available for use, it is the District's policy to use restricted resources first, then unrestricted resources as they are needed.

ELSINORE MURRIETA ANZA RESOURCE CONSERVATION DISTRICT

Notes to Financial Statements June 30, 2015

NOTE 1 SIGNIFICANT ACCOUNTING POLICIES (continued)

F. Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures during the reported period. Actual results could differ from those estimates.

NOTE 2 – CASH AND INVESTMENTS

Cash and investments at June 30, 2015, are reported at fair value and consisted of the following:

Cash ‐ Deposits with financial institutions $ Investments ‐ Certificates of deposit

Custodial Credit Risk – Deposits

172,185

200,714 $ 372,899

Custodial credit risk is the risk that in the event of a bank failure, the District’s deposits may not be returned to it. The District does not have a policy for custodial credit risk for deposits. Cash balances held in banks are insured up to $250,000 by the Federal Depository Insurance Corporation (FDIC) and are collateralized by the respective financial institutions. In addition, the California Government Code requires that a financial institution secure deposits made by State or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under State law (unless so waived by the governmental unit).

The market value of the pledged securities in the collateral pool must equal at least 110 percent of the total amount deposited by the public agencies. California law also allows financial institutions to secure public deposits by pledging first trust deed mortgage notes having a value of 150 percent of the secured public deposits and letters of credit issued by the Federal Home Loan Bank of San Francisco having a value of 105 percent of the secured deposits. Cash balances in banks as of June 30, 2015, are fully insured by the Federal Depository Insurance Corporation.

Cash and Investments

Cash and investments are reported at fair market value. The District considers certificates of deposit with a maturity date of 90 days or longer to be investments.

Authorized Investments

The investment policy adopted by the District is summarized as follows: “The District shall invest public funds in a manner which will safeguard principal, meet liquidity and achieve return on investments as referenced in government code section 53600.5.”

ELSINORE MURRIETA ANZA RESOURCE CONSERVATION DISTRICT

Notes to Financial Statements June 30, 2015

NOTE 2 – CASH AND INVESTMENTS (continued)

Authorized Investments (continued)

All investments of the District shall conform to the requirements of applicable law and policy, whichever is more restrictive. The District is authorized to invest in the following:

Permitted Investment/Deposits
U.S. Government Securities & Agencies Federal Agency Sponsored Obligations Register State Treasury Notes/Bonds Certificates of Deposit Negotiable Certificates of Deposit Bankers Acceptances
Prime Commercial Paper
Local Agency Investment Fund Repurchase Agreements Reverse Repurchase Agreements Designated Mutual Funds Medium Term Notes California Asset Management Program Mortgage‐Backed Securities County Pooled Funds

Disclosures Relating to Interest Rate Risk

Limit

Unlimited Unlimited Unlimited Unlimited 30%

30%

25% 50 mm 20% 20% 20% 30% Unlimited 20% Unlimited

Maximum Maturity/Duration 5 years

5 years 5 years 5 years 5 years 180 days 270 days 5 years 1 year 92 days N/A

5 years N/A 5 years N/A

Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the District manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flows and liquidity needed for operations.

Maturities of investments as of June 30, 2015, are as follows: Investment Type Fair Value

Certificates of Deposit $ 200,714 NOTE 3 – ACCOUNTS RECEIVABLE

Investment Maturity in Years Less than

1 1‐5
$ 138,055 $ 62,659

Accounts receivable as of June 30, 2015, consisted of $2,000 due from the California Department of Food and Agriculture and $793 due from Union Banc Investment Services.

NOTE 4 – INTERFUND TRANSFERS

The District transferred interest of $1,030 from the Permanent Fund to the General Fund during the fiscal year.

ELSINORE MURRIETA ANZA RESOURCE CONSERVATION DISTRICT

Notes to Financial Statements June 30, 2015

NOTE 5 – CAPITAL ASSETS AND DEPRECIATION

Capital assets activity for the year ended June 30, 2015, is shown below: Balance,

Balance, June 30, 2015

475,000 110,000 162,750 747,750

9,570 9,570

(8,203) 1,367

749,117

July 1, 2014

475,000 110,000 162,750 747,750

9,570 9,570

(6,835) 2,735

750,485 $

Capital assets not being depreciated:
Land $ Greer Ranch easement
Adeline Farms easement

Additions Retirements

$ ‐ $ ‐ ‐ ‐ ‐ ‐ ‐ ‐

‐ ‐ ‐ ‐

(1,368) ‐ (1,368) ‐

(1,368) $ ‐

$

$

Total capital assets not being depreciated

Capital assets being depreciated: Machinery and equipment

Total capital assets being depreciated

Accumulated depreciation for: Machinery and equipment

Total capital assets being depreciated, net Governmental activity capital assets, net

Easements

Greer Ranch Community

$

In March of 2009, the District executed an agreement with Lennar Greer Ranch Venture, LLC, granting a conservation easement, in perpetuity, over property known as “Greer Ranch Community”. The purpose of the Conservation Easement is to ensure the property will be preserved in a natural condition, in perpetuity, for gnatcatcher, vireo and other wildlife conservation, and to prevent, subject to the duties and rights retained by Grantor, any other use of the property that will impair or interfere with the conservation values of the property. The District is responsible for monitoring for compliance with this conservation easement and in‐ perpetuity, ongoing, long‐term maintenance and management of the property.

Adeline Farms

In 2007, the District executed an agreement with Shea Homes Limited Partnership granting a conservation easement over property known as “Adeline Farms”. The purpose is to ensure the property will be retained in a natural condition and to prevent any use of the property that will impair or interfere with the conservation values of the property.

NOTE 6 – CASH RESTRICTED FOR SPECIFIC PROGRAMS

The District accepted funds from a series of private development projects in the Murrieta and Temecula areas, which need offsite mitigation credit for permanent impacts to U.S. wildlife, open spaces, and watershed lands that is deemed appropriate and acceptable by the resource and regulatory agencies of $98,023 at year end and deposits in the amount of $35,476 as of June 30, 2015.

The District accepted endowment funds from Lennar Greer Ranch, LLC, a land developer, which will be used to maintain the Greer Ranch Conservation Easement associated with approximately 250 acres at Lennar’s Greer Ranch residential community in the City of Murrieta, California in the amount of $125,000.

ELSINORE MURRIETA ANZA RESOURCE CONSERVATION DISTRICT

Notes to Financial Statements June 30, 2015

NOTE 6 – CASH RESTRICTED FOR SPECIFIC PROGRAMS (continued)

The District accepted endowment funds from Shea Homes, a land developer, of which the income will be used, to maintain a conservation easement on the property marketed as “Adeline’s Farm”, in the vicinity of Washington Street and Benton Road, just west of Lake Skinner, in the French Valley area, in the amount of $75,000.

NOTE 7 – RISK MANAGEMENT

The District is insured under a plan managed by the Special District Risk Management Authority for commercial general liability in the amount of $2,500,000 and carries workers’ compensation insurance in statutory amounts from the State Compensation Insurance Fund.

NOTE 8 RENTAL AGREEMENT

The District office occupies approximately 576 square feet of a standard multi‐tenant office building, located at 21535 Palomar Road in the city of Wildomar, California, at an expense of $765 per month.

NOTE 9 RELATED PARTY TRANSACTION

Former Board President and current Director Vicki Long serves as the President of the Board of Directors for the Santa Ana Watershed Association (SAWA). Revenues from SAWA totaled $25,119 during the fiscal year.

NOTE 10 GRANTS AND CONTRACTS

Agreement – Santa Ana Watershed Association

The work plan with SAWA has the goal to reduce the threat of invasive plants (especially giant reed and tamarisk) on native habitat and river function. SAWA will hold and disperse funds as indicated by the work plan. A total of $25,119 was billed and received in the current year.

Agreement – Riverside Corona Resource Conservation District

Due to the District’s size and lack of employees, the District has an agreement with Riverside Corona Resource Conservation District (RCRCD) to use RCRCD’s employees for assistance in biological monitoring and reporting, mitigation work, development of project costs and other projects in which employee assistance may be required. The District paid RCRCD $8,930 in the current year.

NOTE 11 – SUBSEQUENT EVENTS

The District closed its office and sold the furniture and equipment in August, 2015, and is no longer operating out of a business facility. Records are kept in a storage facility and business is operated out of board member homes.

The District has evaluated subsequent events through February 11, 2016, the date which the financial statements were available to be issued.

Required Supplementary Information

ELSINORE MURRIETA ANZA RESOURCE CONSERVATION DISTRICT

Budgetary Comparison Schedule General Fund For the Fiscal Year Ended June 30, 2015

Original and Final Budget

Actual

25,119 9,550 3,004

37,673

7,000 182 10 439 8,772 1,842 506 518 1,575 115 444 316

2,973

8,930 33,622

4,051

1,030 1,030

5,081 134,037 139,118

Variance with Final Budget

REVENUES

SAWA stipend income Other revenues Investment income

Total Revenues

EXPENDITURES

Current: Administrative

Accounting and audit
Legal
Administrative bank charges Membership dues

Rent expense
Utilities
Postage
Printing
Insurance
Website
Other
Unrealized loss on investments

Operational Contract services Consulting

Total Expenditures

Excess (Deficiency) of Revenues
Over (Under) Expenditures

OTHER FINANCING SOURCES (USES)

Interfund transfers in
Total Other Financing Sources and Uses

Net Change in Fund Balances Fund Balances, beginning of year Fund Balances, end of year

$

25,000 1,500 2,000

28,500

‐ 250 600

9,000 2,200 ‐
‐ 1,500 ‐ 3,950 ‐

7,000

4,000 28,500

‐ ‐

‐ 134,037

134,037

$

$

119 8,050 1,004

9,173

(7,000) (182)

240 161 228 358 (506) (518)

(75) (115)

3,506 (316)

4,027 (4,930) (5,122)

4,051

1,030 1,030

5,081 ‐ 5,081

$

$

$

See accompanying note to supplementary information.

ELSINORE MURRIETA ANZA RESOURCE CONSERVATION DISTRICT

Notes to the Required Supplementary Information For the Fiscal Year Ended June 30, 2015

NOTE 1 – PURPOSE OF SCHEDULES

Budgetary Comparison Schedule

This schedule is required by GASB Statement No. 34 as required supplementary information (RSI) for the General Fund and for each major special revenue fund that has a legally adopted annual budget. The budgetary comparison schedule presents both (a) the original and (b) the final appropriated budgets for the reporting period as well as (c) actual inflows, outflows, and balances, stated on the District’s budgetary basis. A separate column to report the variance between the final budget and actual amounts is also presented, although not required.

NOTE 2 – EXCESS OF EXPENDITURES OVER APPROPRIATIONS

At June 30, 2015, the District incurred excess expenditures over appropriations in the individual major fund presented in the Budgetary Comparison Schedule, as follows:

General Fund Administrative $ 4,104 Operational 1,018

Other Independent Auditors' Reports

INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

Board of Directors
Elsinore Murrieta Anza Resource Conservation District Wildomar, California

We have audited the financial statements of the governmental activities and major funds of Elsinore Murrieta Anza Resource Conservation District as of and for the year ended June 30, 2015, which collectively comprise Elsinore Murrieta Anza Resource Conservation District's basic financial statements and have issued our report thereon dated February 11, 2016. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered Elsinore Murrieta Anza Resource Conservation District’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Elsinore Murrieta Anza Resource Conservation District’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Elsinore Murrieta Anza Resource Conservation District’s internal control.

Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed 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, as described in the accompanying schedule of findings and questioned costs, we identified a certain deficiency in internal control that we consider to be a material weakness and a significant deficiency.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the District's financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiency described in the accompanying schedule of findings and responses as Finding 2015‐1 to be a material weakness.

A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider the deficiency described in the accompanying schedule of findings and responses to be a significant deficiency as Finding 2015‐2.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether Elsinore Murrieta Anza Resource Conservation District’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Elsinore Murrieta Anza Resource Conservation District’s Responses to Findings

Elsinore Murrieta Anza Resource Conservation District’s responses to the findings identified in our audit are described in the accompanying schedule of findings and questioned costs. The District’s responses were not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on them.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Murrieta, California February 11, 2016

Findings and Responses

ELSINORE MURRIETA ANZA RESOURCE CONSERVATION DISTRICT

Schedule of Audit Findings and Responses For the Fiscal Year Ended June 30, 2015

SECTION I FINANCIAL STATEMENT FINDINGS

This section identifies the significant deficiencies, material weaknesses, and instances of noncompliance related to the financial statements that are required to be reported in accordance with Government Auditing Standards.

Finding 20151: Developer Fees

Condition & Criteria: In our liability testing, we noted that the balance in developer deposits was unchanged from the prior year. Inquiry of both the District's Board and the District's accountant revealed that there are no records maintained that support the balance asserted. Additionally, there is no process in place regarding the collection and classification of developer deposits and no master list of developers that we could contact to independently verify the existence of the liability. Therefore, we were unable to test the balance asserted.

Recommendation: We recommend that the District develop a process for collecting, classifying and expensing deposits received by developers and to keep a master list of all developer fees in order to substantiate any amounts reflected on the financial statements.

District Response: The District agrees with the recommendations put forth by the auditors. The action by the District will be to completely re‐build all files to reflect Developer deposits going back as far as possible to correctly reflect the history of payments and deposits for all easements and owned land with information that presently exists in the files. The District will also contact all Developers and agencies if information is lacking in an effort to re‐build those files if the information does not presently exist in the District’s files. At which point, a spreadsheet will be created in order to reflect for future audits, the liabilities and/or revenue and responsibilities of the District for those monies.

Finding 20152: Capital Assets & Equipment

Condition & Criteria: The District has no policy in place to track the purchase, depreciation or disposal of capital assets and the Board has not adopted a threshold for the classification of capital assets. Currently, only a small portion of the District's capital assets are considered depreciable. However, it is important to establish policies and procedures in order to better budget for large purchases, to help prevent theft of smaller assets and to ensure that capital items are Board approved prior to purchase.

Recommendation: We recommend that the Board adopt a capitalization threshold and policy for the purchase, classification, depreciation and disposal of capital assets. Further, we recommend that the District update its capital asset listing to include a detailed and itemized listing of assets.

District Response: The depreciated assets(furniture and equipment) of the District were sold in August 2015 since the lease for the office was terminated. The incoming tenant bought all the equipment with the exception of a printer and two filing cabinets for $1,000.00. A list of the liquidated assets is available upon request.

ELSINORE MURRIETA ANZA RESOURCE CONSERVATION DISTRICT

Summary Schedule of Prior Audit Findings For the Fiscal Year Ended June 30, 2015

There were no audit findings in 201314.

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