HomeMy WebLinkAbout20222243.tiffWELD COUNTY
FEDERAL MINERAL LEASE ACT DISTRICT
FINANCIAL STATEMENTS
AND
REQUIRED SUPPLEMENTARY INFORMATION
Years Ended December 31, 2021 and 2020
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2022-2243
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CONTENTS
Independent Auditor's Report 1
Management's Discussion and Analysis (Required Supplementary Information) 4
Financial Statements
Balance Sheets (Statements of Net Position) 6
Statements of Revenues, Expenditures, and Changes in Fund Balance
(Statements of Activities) 7
Notes to Financial Statements 8
Required Supplementary Information 11
Budgetary Comparison Schedule - General Fund 12
Note to Required Supplementary Information 13
Independent Auditor's 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 14
MHP
CPAs I TRUSTS I CONSULTING
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Weld County Federal Mineral Lease Act District
Greeley, Colorado
Report on the Audit of the Financial Statements
Opinions
We have audited the financial statements of the governmental activities of the Weld County Federal Mineral
Lease Act District (the District) as of and for the years ended December 31, 2021 and 2020, and the related
notes to the financial statements, which collectively comprise the District's basic financial statements as
listed in the table of contents.
In our opinion, the accompanying financial statements referred to above present fairly, in all material
respects, the respective financial position of the District as of December 31, 2021 and 2020, and the
respective changes in its financial position for the years then ended in accordance with accounting principles
generally accepted in the United States of America.
Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of
America (GAAS) and the standards applicable to financial audits contained in Government Auditing
Standards (Government Auditing Standards), issued by the Comptroller General of the United States. Our
responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit
of the Financial Statements section of our report. We are required to be independent of the District and to
meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our
audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinions.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in
accordance with accounting principles generally accepted in the United States of America; and for 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.
In preparing the financial statements, management is required to evaluate whether there are conditions or
events, considered in the aggregate, that raise substantial doubt about the District's ability to continue as a
going concern for 12 months beyond the financial statement date, including any currently known
information that may raise substantial doubt shortly thereafter.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our
opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is
not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will
always detect a material misstatement when it exists. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered
material if there is a substantial likelihood that, individually or in the aggregate, they would influence the
judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS and Government Auditing Standards, we:
Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud
or error, and design and perform audit procedures responsive to those risks. Such procedures include
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Obtain an understanding of internal control relevant to the audit 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 District's internal control. Accordingly, no such opinion is expressed.
Evaluate the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluate the overall presentation of the financial
statements.
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that
raise substantial doubt about the District's ability to continue as a going concern for a reasonable period
of time.
We are required to communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit, significant audit findings, and certain internal -control -related matters
that we identified during the audit.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require Management's
Discussion and Analysis on pages 4 and 5 and the required supplementary information (budgetary
information and related note) on pages 11 through 13 to be presented to supplement the basic financial
statements. Such information is the responsibility of management and, although not a part of the basic
financial statements, is required by the Governmental Accounting Standards Board who considers it to be
an essential part of financial reporting for placing the basic financial statements in an appropriate
operational, economic, or historical context. 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.
2
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated June 30, 2022 on
our consideration of the District's internal control over financial reporting and our tests of its compliance
with certain provisions of laws, regulations, contracts and grant agreements, and other matters. The purpose
of that report is solely 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 the effectiveness of the District's
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.
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Fort Collins, Colorado
June 30, 2022
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WELD COUNTY FEDERAL MINERAL LEASE ACT DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2021
The discussion and analysis of the Weld County Federal Mineral Lease Act District's (the "District")
financial performance provides an overall review of the District's financial activities as of December
31, 2021 and for the period from January 1, 2021 to December 31, 2021. The intent of this
discussion and analysis is to look at the District's financial performance as a whole. Readers should
also review the financial statements and the notes to the financial statements to broaden their
understanding of the District's financial performance.
Management's Discussion and Analysis ("MD&A") is an element of the reporting model adopted by
the Governmental Accounting Standards Board ("GASB") in Statement No. 34, Basic Financial
Statements and Management's Discussion and Analysis for State and Local Governments, issued in
June 1999. Normally, certain comparative information between the current year and the prior year
is required to be presented in the MD&A.
Financial Highlights
The District was created in accordance with Colorado Revised Statute Sections 30-20-1301 through
-1306 for the purpose of receiving monies distributed by the Colorado State Department of Local
Affairs from the Local Government Mineral Impact Fund to mitigate the social and economic impacts
on the areas of unincorporated Weld County (the "County") impacted by the development,
processing, or energy conversion of fuels and minerals leased under the Federal Mineral Lease Act.
The District was created on August 17, 2011, nunc pro tunc, June 29, 2011. The District's assets
exceeded its liabilities at the close of 2021 by $946,221 (fund balance/net position). As of December
31, 2021, except as expended for administrative expenses as permitted by Colorado Revised
Statutes, the fund balance of the District is restricted for use on areas within the unincorporated
areas of the County that are impacted by the development, processing, or energy conversion of fuels
and minerals leased under the Federal Mineral Lease Act of February 25, 1920, as amended.
The District had total revenues of $932,458 in 2021. The total operating revenues were $930,958,
and investment earnings were $1,500 for the 11th year of operation. The total expenses were
$1,056,173.
Using the Basic Financial Statements
The Basic Financial Statements consist of Management's Discussion and Analysis (this section),
financial statements and the notes to those statements. These statements are organized so that the
reader can understand the District as an entire operating entity.
Page 4
Since the District has no differences between the modified accrual and full accrual bases of
accounting, the presentation of the District -wide financial statements is essentially the same as the
presentation of funds. Therefore, only one set of combined financial statements is presented.
The Balance Sheet/Statement of Net Position presents information on the District's assets and
liabilities, with the difference between the two reported as fund balance/net position. Over time,
increases or decreases in fund balance/net position may serve as a useful indicator of whether the
financial position of the District is improving or deteriorating.
The Statement of Revenues, Expenditures, and Changes in Fund Balance/Statement of Activities
presents information showing how the District's fund balance/net position changed during 2021.
This statement shows how general District services were financed in the short term, as well as what
remains for future spending.
The District has only one fund, which is a governmental fund. The financial statements also include
notes that explain some of the information in the financial statements.
Financial Analysis of the District as a Whole
Reporting the District's Fund
Fund financial reports provide detailed information about the District's single fund. For 2021,
Federal mineral lease revenues were $930,958 and investment earnings were $1,500.
Budget and Actual Comparisons
For 2021, actual total revenues were less than budgeted revenue by ($77,542). Actual expenditures
were $447,527 less than budgeted expenditures.
The Future of the District
The District has adopted policies for the distribution of grants to mitigate the social and economic
impacts on the unincorporated areas of the County affected by the development, processing, or
energy conversion of fuels and minerals leased under the Federal Mineral Lease Act. Since 2013,
the District has granted funds to mitigate traffic impacts from oil and gas drilling activities on
County roads and to fund a water quality testing program for landowners with oil and gas wells
near their water wells in the County, and plans to continue this in the future.
Request for Information
The financial report is designed to provide information for regulatory reporting to state agencies
and those with an interest in the District's finances. Questions concerning this or any additional
information should be addressed to Don Warden, District Secretary, PO Box 758, Greeley, Colorado
80632.
Page 5
WELD COUNTY
FEDERAL MINERAL LEASE ACT DISTRICT
BALANCE SHEETS (Statements of Net Position)
December 31, 2021 and 2020
2021 2020
Assets
Deposits with County Treasurer (Note 3)
Total Assets
$ 949.921 $ 1.069.936
$ 949,921 $ 1,069,936
Liabilities and Fund Balance (Net Position)
Accounts Payable - Accrual $ 3,700 $ 0
Fund Balance (Net Position) - Restricted 946,221 1,069.936
Total Liabilities and Fund Balance (Net Position) $ 949,921 $ 1,069,936
See Notes to Financial Statements.
Page 6
WELD COUNTY
FEDERAL MINERAL LEASE ACT DISTRICT
STATEMENTS OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCE (Statement of Activities)
For the Years Ended December 31, 2021 and 2020
2021 2020
Expenditures
General Government $1,056,173 $ 1,503,700
Program Revenue
Net Expenditures
General Revenue
Federal Mineral Lease
Investment Income
Total General Revenues
Change in Fund Balance (Net Position)
Fund Balance (Net Position)
Beginning of the Year
End of the Year
See Notes to Financial Statements.
0 0
1,056,173 1,503,700
930,958 849,742
1,500 2,967
932,458 852,709
(123,715) (650,991)
1,069,936 1,720,927
$ 946,221 $ 1,069,936
Page 7
WELD COUNTY
FEDERAL MINERAL LEASE ACT DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 1: Nature of Business and Summary of Significant Accounting Policies
Basis of presentation: The accompanying financial statements of the Weld County Federal Mineral
Lease Act District (the "District") have been prepared in conformity with accounting principles
generally accepted in the United States of America ("GAAP") applicable to governmental entities.
Since the District has no differences in accounting between the modified accrual and full accrual
bases, the presentation of the District's financial statements is essentially the same as the
presentation of funds. Therefore, one combined set of financial statements is presented.
Financial reporting entity: In the 2011 Colorado Legislative Session, House Bill 11-1218 was
passed, which allowed counties to create a "Federal Mineral Lease Act District" to receive direct
distribution Federal mineral lease payments from the Colorado Department of Local Affairs. The
District was established for the purpose of transferring these payments to the District to streamline
the mitigation of impacts according to the guidance in the Federal Mineral Lease Act 30 U.S.C. 191
and provisions of Colorado Revised Statutes.
As explained below, the District's funds are on deposit with the Weld County (the "County")
Treasurer; as such, the County reports these funds in a custodial fund in its financial statements.
Government -wide financial statements: The government -wide financial statements include the
statement of net position and statement of activities, which illustrate the District's financial position
as a whole to demonstrate operational accountability and sustainability of the District as an entity
and the change in the aggregate financial position resulting from activities of the period.
The statement of activities demonstrates the degree to which the direct expenses of a function or a
segment are offset by program revenues. This balance identifies the extent to which a government
function or a segment is offset by program revenues. This balance identifies the extent to which a
government function is self -funded and the extent to which it draws from general District revenues.
The District does not have program revenues and all revenue is reported as general revenue.
Page 8
Fund financial statements: The accounts of the District are organized on the basis of funds. The
operations of a fund are accounted for with a separate set of self -balancing accounts that comprise
its assets, liabilities, fund balance, revenues and expenditures. The District only has one fund, the
General Fund. The General Fund's principal source of revenue is intergovernmental revenue, and
its expenditures are for general and administrative expenses and the distribution of the
intergovernmental funds received.
Basis of accounting: The District uses the modified accrual basis of accounting. Under the modified
accrual basis of accounting, revenues are recognized when susceptible to accrual (that is, when they
become both measurable and available). "Measurable" means the amount of the transaction can be
determined, and "available" means collectible within the current period or soon enough thereafter
to be used to pay liabilities of the current period. Expenditures are recorded when the related fund
liability is incurred. As stated above, the District has no differences in accounting between the
modified and full accrual basis of accounting.
Use of estimates: The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
Deposits with County Treasurer: The District's cash is pooled with the County's cash in an account
managed by the Weld County Treasurer. The account is reported at the fair market value of the cash
and securities underlying the investment pool.
Fund equity: The Governmental Accounting Standards Board ("GASB") has issued Statement No.
54, Fund Balance Reporting and Governmental Fund Type Definitions ("GASB 54"). As prescribed by
GASB 54, governmental funds report fund balance in classifications based primarily on the extent
to which the District is bound to honor constraints on specific purposes for which amounts in the
funds can be spent.
Restricted fund balance includes amounts that can be spent only for specific purposes stipulated by
constitution or external resource providers, or through enabling legislation. Restrictions may
effectively be changed or lifted only with the consent of the resource providers.
Except as expended for administrative expenses as permitted by Colorado Revised Statutes, the
fund balance of the District is restricted for use on areas within the unincorporated areas of the
County that are impacted by the development, processing, or energy conversion of fuels and
minerals leased under the Federal Mineral Lease Act of February 25, 1920, as amended.
Page 9
Net position: Net position represents the difference between assets and liabilities. Net position is
reported as restricted when there are limitations imposed on their use either through enabling
legislation adopted by the District or through external restrictions imposed by creditors, grantors,
laws or regulations of other governments.
Note 2: Contingencies and Commitments
The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction
of assets; errors and omissions; injuries; and natural disasters. The District does not have specific
insurance coverage beyond the insurance policies and risk management of Weld County.
In 1992, Colorado voters approved the Taxpayer's Bill of Rights (TABOR). The District believes that
it is exempt from TABOR since it does not have the authority to levy taxes.
Note 3: Deposits
Deposits for the District are invested in the pooled cash and investments account managed by the
Weld County Treasurer. State Statutes authorize the Treasurer to invest in obligations of the United
States and certain U.S. agency securities, certain international agency securities, general obligation
and revenue bonds of U.S. local government entities, bankers' acceptance of certain banks,
commercial paper, written repurchase agreements collateralized by certain authorized securities,
certain money market funds, and guaranteed investment contracts. The County has no provisions
in its investment policy that would further limit investment choices. Detailed information on the
County Treasurer's pooled cash and investments is available from the County Treasurer.
Page 10
REQUIRED SUPPLEMENTARY INFORMATION
The District's required supplementary information includes the budgetary
comparison schedule as described in the accompanying Note to Required
Supplementary Information following the schedule.
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WELD COUNTY
FEDERAL MINERAL LEASE ACT DISTRICT
BUDGETARY COMPARISON SCHEDULE - GENERAL FUND
2021
Budgeted Amounts
Original Final
Actual
Variance with
Final Budget
Revenues
Intergovernmental Revenue -
Federal Mineral Lease Revenue $ 1,000,000 $ 1,000,000 $ 930,958 $ (69,042)
Investment Income 10.000 10.000 1.500 (8.500)
Total Revenues $ 1,010,000 $ 1,010,000 $ 932,458 $ (77,542)
Expenditures
General Government $ 1.503.700 $ 1,503.700 $ 1,056,173 $ 447.527
Net Change in Fund Balance
$ (493,700) $ (493,700) $ (123,715) $ 369,985
2020
Budgeted Amounts
Original Final Actual Variance with
Final Budget
Revenues
Intergovernmental Revenue -
Federal Mineral Lease Revenue $ 1,000,000 $ 1,000,000 $ 849,742 $ (150,258)
Investment Income 10.000 10.000 2,967 (7.033)
Total Revenues $ 1,010,000 $ 1,010,000 $ 852,709 $ (157,291)
Expenditures
General Government
$ 1.503.700 $ 1.503.700 $ 1.503.700 $ 0
Net Change in Fund Balance $ (493,700) $ (493,700) $ (650,991) $ (157,291)
See Note to Required Supplementary Information.
Page 12
WELD COUNTY
FEDERAL MINERAL LEASE ACT DISTRICT
NOTE TO REQUIRED SUPPLEMENTARY INFORMATION
Budget
The budgetary comparison schedule presents a comparison of the legally adopted budget with
actual data. The District prepares its budget on a cash basis, and the revenues and expenditures
presented in the aforementioned schedule are on the modified accrual basis. Any differences in
revenues and expenditures as a result of the difference in the accounting basis are considered
immaterial. Appropriations lapse at fiscal year-end. All budget amendments are approved by the
Board of Directors and are presented within the final budget figures.
Colorado State Statutes require the preparation of an annual budget that provides documentation
that all sources and uses of District resources are properly planned, budgeted, and approved. The
budget, upon adoption, is the legal document that places restrictions and limitation on the purposes
and amounts for which District monies maybe expended.
Page 13
MHP
CPAs I TRUSTS I CONSULTING
INDEPENDENT AUDITOR'S 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
Weld County Federal Mineral Lease Act District
Greeley, Colorado
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 of the Weld County Federal Mineral Lease Act District (the District) as of and for the year ended
December 31, 2021, and the related notes to the financial statements, which collectively comprise the
District's basic financial statements, and have issued our report thereon dated June 30, 2022.
Report on Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the District's internal
control over financial reporting (internal control) as a basis for designing 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 District's internal control.
Accordingly, we do not express an opinion on the effectiveness of the 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.
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the District's financial statements are free from
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
financial statements. 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.
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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.
Fort Collins, Colorado
June 30, 2022
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