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

TEMECULA ELSINORE ANZA MURRIETA
RESOURCE CONSERVATION DISTRICT
AUDIT REPORT
For the Fiscal Year Ended
June 30, 2018TEMECULA ELSINORE ANZA MURRIETA RESOURCE CONSERVATION DISTRICT
For the Fiscal Year Ended June 30, 2018
Table of Contents
FINANCIAL SECTION
Page
Independent Auditors’ Report .................................................................................................................................................................. 1
Management’s Discussion and Analysis ............................................................................................................................................... 3
Basic Financial Statements:
Government‐wide Financial Statements:
Statement of Net Position .................................................................................................................................................... 9
Statement of Activities ........................................................................................................................................................ 10
Governmental Funds Financial Statements:
Balance Sheet .......................................................................................................................................................................... 11
Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position .............. 12
Statement of Revenues, Expenditures, and Changes in Fund Balance ........................................................... 13
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and
Changes in Fund Balance to the Government‐Wide Statement of Activities and Changes
in Net Position ............................................................................................................................................................. 14
Notes to Financial Statements ............................................................................................................................................................... 15
REQUIRED SUPPLEMENTARY INFORMATION
Budgetary Comparison Schedule – General Fund ......................................................................................................................... 25
Notes to the Required Supplementary Information .................................................................................................................... 26
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 ..................................................................................................................................................... 27
FINDINGS AND RESPONSES
Schedule of Audit Findings and Responses:
Current Year Audit Findings and Responses .......................................................................................................................... 29
Summary Schedule of Prior Audit Findings ............................................................................................................................ 30Financial SectionINDEPENDENT AUDITORS’ REPORT
Board of Directors
Temecula Elsinore Anza Murrieta Resource Conservation District
Temecula, California
We have audited the accompanying financial statements of the governmental activities and each major fund of
Temecula Elsinore Anza Murrieta Resource Conservation District, as of and for the fiscal year ended June 30,
2018, and the related notes to the financial statements, which collectively comprise the District's basic
financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes the
design, implementation, and maintenance of internal control relevant to the preparation and fair presentation
of financial statements that are free from material misstatement, whether due to fraud or error.
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.
Unmodified Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial
position of the governmental activities and each major fund of the Temecula Elsinore Anza Murrieta Resource
Conservation District as of June 30, 2018, 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.
1Other 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 25, 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 March 7,
2019, 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
March 7, 2019
2TEMECULA ELSINORE ANZA MURRIETA RESOURCE CONSERVATION DISTRICT
Management’s Discussion and Analysis (Unaudited)
For the Fiscal Year Ended June 30, 2018
This discussion and analysis of Temecula Elsinore Anza Murrieta Resource Conservation District’s financial
performance provides an overview of the District’s financial activities for the fiscal year ended June 30, 2018.
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 $44,087, or 3.9% during the fiscal year.
Governmental expenses were $43,913. Program revenues were $87,886.
There were no additions to capital assets during the year, and there were no depreciation expenses.
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 district‐wide 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 A‐1. Organization of Temecula Elsinore Anza Murrieta Resource
Conservation District’s Annual Financial Report
The financial statements
also include notes that
explain
some
of
the
information
in
the
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.
Management’s
Discussion
and Analysis
District‐
Wide
Financial
SUMMARY
Basic
Financial
Information
Fund
Financial
Statements
Required
Supplementary
Information
Notes to
Financial
Statements
DETAIL
3TEMECULA ELSINORE ANZA MURRIETA RESOURCE CONSERVATION DISTRICT
Management’s Discussion and Analysis (Unaudited)
For the Fiscal Year Ended June 30, 2018
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 A‐2. Major Features of the District‐Wide and Fund Financial Statements
Type of
Statements
District‐Wide
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  Balance Sheet
 Statement of
Activities
 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
4TEMECULA ELSINORE ANZA MURRIETA RESOURCE CONSERVATION DISTRICT
Management’s Discussion and Analysis (Unaudited)
For the Fiscal Year Ended June 30, 2018
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.
District‐Wide 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.
5TEMECULA ELSINORE ANZA MURRIETA RESOURCE CONSERVATION DISTRICT
Management’s Discussion and Analysis (Unaudited)
For the Fiscal Year Ended June 30, 2018
ORGANIZATION STRUCTURE
The District was formed in 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.
Board of Directors
Rose Corona President
David Kuhlman Vice President
Stacy Kuhns Secretary/Treasurer
Michael W. Newcomb Director
Judy Guglielmana Director
Randy Feeney Associate Director
Rick Neugebauer Associate Director
6TEMECULA ELSINORE ANZA MURRIETA RESOURCE CONSERVATION DISTRICT
Management’s Discussion and Analysis (Unaudited)
For the Fiscal Year Ended June 30, 2018
FINANCIAL ANALYSIS OF THE DISTRICT AS A WHOLE
Net Position. The District’s combined net position was higher on June 30, 2018, than it was the year before –
increasing to $1.18 million. (See Table A‐1).
Table A‐1
Current and other assets
Capital assets
Total assets
Total liabilities
Net position
Net investment in capital assets
Restricted
Unrestricted
Total net position
$
$
Governmental Activities
2017
2018
390,478
$
428,879
747,750
747,750
1,138,228
1,176,629
6,856
1,170
747,750
296,375
87,247
1,131,372
$
747,750
298,395
129,314
1,175,459
Variance
Increase
(Decrease)
$
38,401

38,401
(5,686)
$

2,020
42,067
44,087
Changes in net position, governmental activities. The District’s total revenues increased 63.8% to $92,191
(See Table A‐2). The increase is primarily due to an increase in Cropswap and Western pond turtle activity,
as well as being approved to receive a grant through the Department of Conservation.
The total cost of all programs and services increased 28.9% to $48,104. The increase is due to program costs
due to increased activity in Cropswap and Western pond turtle activity.
Table A‐2
Variance
Increase
(Decrease)
Governmental Activities
2017
2018
Revenues
Program Revenues:
Cropswap
SAWA stipends
Western pond turtle survey income
Water audits
Grant revenue
Other program revenues
General Revenues:
Interest income
Total Revenues
Expenses
Administrative expenses
Program expenses
Unrealized loss on investments
Total Expenses
Net Increase (Decrease)
Total net position
$
8,840
21,532
5,407
15,500

687
$
27,850
23,168
15,779
14,500
4,957
1,632
$
19,010
1,636
10,372
(1,000)
4,957
945
4,305
56,271 4,305
92,191 ‐
35,920
$ 6,681
26,736
3,903
37,320
18,951 $ 6,771
37,142
4,191
48,104
44,087 90
10,406
288
10,784
25,136
$ 1,131,372 $ 1,175,459
$
7TEMECULA ELSINORE ANZA MURRIETA RESOURCE CONSERVATION DISTRICT
Management’s Discussion and Analysis (Unaudited)
For the Fiscal Year Ended June 30, 2018
FINANCIAL ANALYSIS OF THE DISTRICT AS A WHOLE (continued)
General Fund Budgetary Highlights
While the District’s adopted and final budget for the General Fund anticipated revenues would exceed
expenditures by $42,782, the actual results for the year show that revenues exceeded expenditures by
$44,004. Actual revenues were $19,535 more than budgeted, but expenditures were $18,313 more than
planned.
CAPITAL ASSETS
By the end of 2017‐18 the District had invested $747,750 in capital assets, net of accumulated depreciation.
(More detailed information about capital assets can be found in Note 5 to the financial statements). Capital
assets are fully depreciated and there was no depreciation expense for the year.
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 Temecula Elsinore Anza Murrieta Resource
Conservation District budget for the 2018‐19 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..
8TEMECULA ELSINORE ANZA MURRIETA RESOURCE CONSERVATION DISTRICT
Statement of Net Position
June 30, 2018
Governmental
Activities
ASSETS
Cash
Investments
Accounts receivable
Capital assets:
Non‐depreciable assets
Total assets
$
747,750
1,176,629
LIABILITIES
Accounts payable
Total liabilities
NET POSITION
Net investment in capital assets
Restricted for:
Mitigation projects:
Nonspendable
Expendable
Unrestricted
Total net position
The notes to financial statements are an integral part of this statement.
213,486
198,064
17,329
1,170
1,170
747,750
$
200,000
98,395
129,314
1,175,459
9TEMECULA ELSINORE ANZA MURRIETA RESOURCE CONSERVATION DISTRICT
Statement of Activities
For the Fiscal Year Ended June 30, 2018
Governmental
Activities
Expenses:
Program expense
Administrative
$
Total program expenses
37,142
6,771
43,913
Program revenues:
CropSwap income
SAWA stipend income
Western turtle pond income
Water audit income
Grant revenue
Other program revenues
27,850
23,168
15,779
14,500
4,957
1,632
Total program revenues 87,886
Net program income (expenses) 43,973
General revenues and expenses:
Interest income
Unrealized loss on investments
4,305
(4,191)
Total general revenues and expenses
114
Change in Net Position
44,087
Net Position, Beginning of Year
Net Position, End of Year
The notes to financial statements are an integral part of this statement.
1,131,372
$
1,175,459
10TEMECULA ELSINORE ANZA MURRIETA RESOURCE CONSERVATION DISTRICT
Balance Sheet
June 30, 2018
General
Fund
ASSETS
Cash
Investments
Accounts receivable
Total assets
LIABILITIES
Accounts payable
Total
Governmental
Funds
$ 213,486

17,329 $ ‐
198,064
‐ $ 213,486
198,064
17,329
$ 230,815 $ 198,064 $ 428,879
$ 1,170 $ $ 1,170
Total liabilities
1,170
FUND BALANCE
Restricted for:
Mitigation projects:
Nonspendable
Expendable
Unrestricted
Total fund balance
Total Liabilities and Fund Balance
Permanent
Fund
$


1,170

98,395
131,250 200,000

(1,936) 200,000
98,395
129,314
229,645 198,064 427,709
230,815
The notes to financial statements are an integral part of this statement.
$
198,064
$
428,879
11TEMECULA ELSINORE ANZA MURRIETA RESOURCE CONSERVATION DISTRICT
Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position
For the Fiscal Year Ended June 30, 2018
Total fund balances ‐ governmental funds
$
427,709
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:
Total net position ‐ governmental activities
The notes to financial statements are an integral part of this statement.
747,750
$
1,175,459
12TEMECULA ELSINORE ANZA MURRIETA RESOURCE CONSERVATION DISTRICT
Statement of Revenues, Expenditures, and Changes in Fund Balance
For the Fiscal Year Ended June 30, 2018
General
Fund
REVENUES
CropSwap income
SAWA stipend income
Western pond turtle income
Water audit income
Grant revenue
Interest and investment income
Other program revenues
$
Total Revenues
EXPENDITURES
Current:
Administrative
Accounting
Audit
Membership dues
Travel
Postage
Printing
Insurance
Website
Transcription
Office Supplies
Unrealized gain/loss on investments
Operational
Contract services:
Water audit expenses
Consulting
CropSwap management
Western turtle pond management
Biological Monitoring
Total Expenditures
Excess (Deficiency) of Revenues
Over (Under) Expenditures
27,850
23,168
15,779
14,500
4,957
30
1,632
Permanent
Fund
$





4,275

Total
Governmental
Funds
$
27,850
23,168
15,779
14,500
4,957
4,305
1,632
87,916 4,275 92,191
264
1,500
789
61
93
48
1,248
900
483
1,385
‐ ‐









4,191 264
1,500
789
61
93
48
1,248
900
483
1,385
4,191
5,825
5,544
11,361
10,930
3,482 ‐



‐ 5,825
5,544
11,361
10,930
3,482
43,913 4,191 48,104
44,003 84 44,087
OTHER FINANCING SOURCES (USES)
Interfund transfers in
Interfund transfers out 4,275
‐ ‐
(4,275) 4,275
(4,275)
Total Other Financing Sources and Uses 4,275 (4,275) ‐
48,278 (4,191) 44,087
Net Change in Fund Balances
Fund Balances, beginning of year
Fund Balances, end of year
181,367
$
229,645
The notes to financial statements are an integral part of this statement.
202,255
$
198,064
383,622
$
427,709
13TEMECULA ELSINORE ANZA MURRIETA RESOURCE CONSERVATION DISTRICT
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes
in Fund Balance to the Government‐Wide Statement of Activities and Changes in Net Position
For the Fiscal Year Ended June 30, 2018
There were no differences between the total net change in fund balances‐governmental funds and the
change in net position of governmental activities.
The notes to financial statements are an integral part of this statement.
14TEMECULA ELSINORE ANZA MURRIETA RESOURCE CONSERVATION DISTRICT
Notes to Financial Statements
June 30, 2018
NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES
Temecula Elsinore Anza Murrieta 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:
A. 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
Temecula Elsinore Anza Murrieta 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.
B. Basis of Presentation, Basis of Accounting
1.
Basis of Presentation
Government‐Wide 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.
15TEMECULA ELSINORE ANZA MURRIETA RESOURCE CONSERVATION DISTRICT
Notes to Financial Statements
June 30, 2018
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
Government‐Wide 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 Non‐Exchange 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.
16TEMECULA ELSINORE ANZA MURRIETA RESOURCE CONSERVATION DISTRICT
Notes to Financial Statements
June 30, 2018
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. Investments are reported at fair value except for short‐term investments, which
are reported at cost, which approximates fair value. Cash deposits are reported at carrying amount,
which reasonably estimates fair value.
In accordance with fair value measurements, the District categorizes its assets and liabilities
measured at fair value into a three‐level hierarchy based on the priority of the inputs to the valuation
technique used to determine fair value. The fair value hierarchy gives the highest priority to quoted
prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to
unobservable inputs (Level 3). If the inputs used in the determination of the fair value measurement
fall within different levels of the hierarchy, the categorization is based on the lowest level input that is
significant to the fair value measurement.
Financial assets and liabilities recorded on the balance sheet are categorized based on the inputs to
the valuation techniques as follows:
Level 1 – Inputs that reflect unadjusted quoted prices in active markets for identical investments,
such as stocks, corporate and government bonds. The District has the ability to access the holding and
quoted prices as of the measurement date.
Level 2 – Inputs, other than quoted prices, that are observable for the asset or liability either directly
or indirectly, including inputs from markets that are not considered to be active.
17TEMECULA ELSINORE ANZA MURRIETA RESOURCE CONSERVATION DISTRICT
Notes to Financial Statements
June 30, 2018
NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (continued)
E. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources, and Net
Position (continued)
2.
Investments (continued)
Level 3 – Inputs that are unobservable. Unobservable inputs reflect the District’s own assumptions
about the factors market participants would use in pricing an investment, and is based on the best
information available in the circumstances.
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.
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.
As of June 30, 2018, the Organization has no depreciable assets.
6. 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.
18TEMECULA ELSINORE ANZA MURRIETA RESOURCE CONSERVATION DISTRICT
Notes to Financial Statements
June 30, 2018
NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (continued)
E. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources, and Net
Position (continued)
7.
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.
8. 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.
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.
19TEMECULA ELSINORE ANZA MURRIETA RESOURCE CONSERVATION DISTRICT
Notes to Financial Statements
June 30, 2018
NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (continued)
E. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources, and Net
Position (continued)
9.
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.
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, 2018, are reported at fair value and consisted of the following:
Cash ‐ Deposits with financial institutions
Investments ‐ Certificates of deposit
$
$
213,486
198,064
411,550
20TEMECULA ELSINORE ANZA MURRIETA RESOURCE CONSERVATION DISTRICT
Notes to Financial Statements
June 30, 2018
NOTE 2 – CASH AND INVESTMENTS (continued)
Custodial Credit Risk – Deposits
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, 2018, 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.” 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
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
21TEMECULA ELSINORE ANZA MURRIETA RESOURCE CONSERVATION DISTRICT
Notes to Financial Statements
June 30, 2018
NOTE 2 – CASH AND INVESTMENTS (continued)
Disclosures Relating to Interest Rate Risk
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, 2018, are as follows:
Investment Type
Certificates of Deposit
$
Fair Value
198,064
Investment Maturity in Years
Less than
1
1‐5
$

$
198,064
NOTE 3 – FAIR VALUE HIERARCHY
The District’s elected fair value method of investments held at June 30, 2018, consisted of:
Total
Certificates of deposit:
UnionBanc Investment Services
$ 198,064
Elected Input Technique
Level 1
Level 2
$ 198,064
$

Level 3
$

NOTE 4 – ACCOUNTS RECEIVABLE
Accounts receivable as of June 30, 2018, consisted of the following:
Bear Creek Association
California Water District
Santa Ana Watershed Association
Department of Conservation ‐ Boot Strap Grant
$
$
10,276
2,900
1,960
2,193
17,329
NOTE 5 – INTERFUND TRANSFERS
The District transferred interest earnings of $4,275 from the Permanent Fund to the General Fund during the
fiscal year.
22TEMECULA ELSINORE ANZA MURRIETA RESOURCE CONSERVATION DISTRICT
Notes to Financial Statements
June 30, 2018
NOTE 6 – CAPITAL ASSETS AND DEPRECIATION
Capital assets activity for the year ended June 30, 2018, is shown below:
Balance,
July 1, 2017
Capital assets not being depreciated:
Land
Greer Ranch easement
Adeline Farms/Benson Channel easement
Total capital assets not being depreciated
Governmental activity capital assets
Additions
Balance,
June 30, 2018
Retirements
$ 475,000
110,000
162,750
747,750 $ ‐


‐ $ ‐


‐ $ 475,000
110,000
162,750
747,750
$ 747,750 $ ‐ $ ‐ $ 747,750
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/Benson Channel
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. In 2018, the easement name was changed to “Benson Channel”.
NOTE 7 – 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 $98,395 as of June 30,
2018.
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.
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/Benson Channel”, 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.
23TEMECULA ELSINORE ANZA MURRIETA RESOURCE CONSERVATION DISTRICT
Notes to Financial Statements
June 30, 2018
NOTE 8 – 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.
NOTE 9 – SUBSEQUENT EVENTS
The District has evaluated subsequent events through March 7, 2019, the date which the financial statements
were available to be issued.
24Required Supplementary InformationTEMECULA ELSINORE ANZA MURRIETA RESOURCE CONSERVATION DISTRICT
Budgetary Comparison Schedule ‐ General Fund
For the Fiscal Year Ended June 30, 2018
Original and
Final Budget
REVENUES
Cropswap income
SAWA stipend income
Western pond turtle survey income
Water audit income
Grant revenue
Other program revenues
Investment income
$
Total Revenues
9,250
21,000
5,407
15,500
15,000

2,225
Actual
$
27,850
23,168
15,779
14,500
4,957
1,632
30
Variance
$
18,600
2,168
10,372
(1,000)
(10,043)
1,632
(2,195)
68,382 87,916 19,534
150
1,800
500



1,300
1,000
600
‐ 264
1,500
789
61
93
48
1,248
900
483
1,385 (114)
300
(289)
(61)
(93)
(48)
52
100
117
(1,385)
7,500
750
8,000

4,000 5,825
5,544
10,930
11,361
3,482 1,675
(4,794)
(2,930)
(11,361)
518
25,600 43,913 (18,313)
42,782 44,003 1,221
OTHER FINANCING SOURCES (USES)
Interfund transfers ‐ 4,275 4,275
Total Other Financing Sources and Uses ‐ 4,275 4,275
42,782 48,278 5,496
181,367 181,367 ‐
EXPENDITURES
Current:
Administrative
Accounting
Audit
Membership dues
Other
Postage
Printing
Insurance
Website
Transcription
Office Supplies
Operational
Contract services:
Water audit expenses
Consulting
CropSwap management
Western pond turtle management
Biological Monitoring
Total Expenditures
Excess (Deficiency) of Revenues
Over (Under) Expenditures
Net Change in Fund Balances
Fund Balances, beginning of year
Fund Balances, end of year
$
See accompanying note to supplementary information.
224,149
$
229,645
$
5,496
25TEMECULA ELSINORE ANZA MURRIETA RESOURCE CONSERVATION DISTRICT
Notes to the Required Supplementary Information
For the Fiscal Year Ended June 30, 2018
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, 2018, the District incurred excess expenditures over appropriations in the individual major fund
presented in the Budgetary Comparison Schedule, as follows:
Administrative
Office supplies
Membership dues
Accounting
Postage
Other
Printing
Operational
Contract services:
Western pond turtle management
Consulting
CropSwap management
$
1,385
289
114
93
61
48
11,361
4,794
2,930
26Other Independent Auditors' ReportsINDEPENDENT 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
Temecula Elsinore Anza Murrieta Resource Conservation District
Temecula, California
We have audited, in accordance with the 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, the financial statements of the governmental activities, each
major fund, and the aggregate remaining fund information of Temecula Elsinore Anza Murrieta Resource
Conservation District as of and for the year ended June 30, 2018, and the related notes to the financial
statements, which collectively comprise Temecula Elsinore Anza Murrieta Resource Conservation District’s
basic financial statements, and have issued our report thereon dated March 7, 2019.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered Temecula Elsinore Anza
Murrieta 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 Temecula Elsinore Anza Murrieta Resource Conservation District's internal control. Accordingly, we do
not express an opinion on the effectiveness of the Temecula Elsinore Anza Murrieta Resource Conservation
District's internal control.
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. 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.
Our consideration of internal control was for the limited purpose described in the first paragraph of this
section and was not designed to identify all deficiencies in internal control that might be material weaknesses
or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in
internal control that we consider to be material weaknesses. However, material weaknesses may exist that
have not been identified.
27Compliance and Other Matters
As part of obtaining reasonable assurance about whether Temecula Elsinore Anza Murrieta 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.
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
March 7, 2019
28Findings and ResponsesTEMECULA ELSINORE ANZA MURRIETA RESOURCE CONSERVATION DISTRICT
Schedule of Audit Findings and Responses
For the Fiscal Year Ended June 30, 2018
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.
There were no financial statement findings in 2017‐18.
29TEMECULA ELSINORE ANZA MURRIETA RESOURCE CONSERVATION DISTRICT
Summary Schedule of Prior Audit Findings
For the Fiscal Year Ended June 30, 2018
There were no findings in 2016‐17.
30

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