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HomeMy WebLinkAboutDeschutes County Road Agency FY23 Issued Financials1 Financial Statements For the Fiscal Year Ended June 30, 2023 Deschutes County Road Agency A Component Unit of Deschutes County, Oregon Prepared by: Deschutes County Finance Department Robert Tintle, MPA - Chief Financial Officer Jana Cain, CPA - Controller -1- Deschutes County Road Agency A Component Unit of Deschutes County, Oregon Table of Contents June 30, 2023 INTRODUCTORY SECTION 3 Listing of Principal Officials FINANCIAL SECTION 4 Report of Independent Auditors 8 Management’s Discussion and Analysis Financial Statements 12 Statement of Net Position 13 Statement of Activities 14 Balance Sheet – Governmental Funds – General Fund 15 Statement of Revenues, Expenditures, and Changes in Fund Balance – General Fund 16 Notes to Financial Statements Required Supplementary Information 21 Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – General Fund AUDIT COMMENTS AND GOVERNMENT AUDITING STANDARDS SECTIONS Government Auditing Standards 22 Report of Independent Auditors 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 Audit Comments 24 Audit Comments and Disclosures Required by State Regulations 25 Report of Independent Auditors Required by Oregon State Regulations -2- Listing of Principal Officials As of June 30, 2023 ELECTED OFFICIALS Board Of County Commissioners Name Position Term Expiration Anthony DeBone, Chair Position 1 January 4, 2027 Patti Adair, Vice Chair Position 3 January 4, 2027 Philip Chang Position 2 January 6, 2025 Other Elected Officers Name Office Term Expiration Scot Langton County Assessor January 4, 2027 Steve Dennison County Clerk January 4, 2027 Shane Nelson County Sheriff January 6, 2025 William Kuhn County Treasurer January 4, 2027 Steve Gunnels County District Attorney January 4, 2027 Charles Fadeley Justice of the Peace January 1, 2029 APPOINTED OFFICIALS Nick Lelack County Administrator David Doyle County Counsel Robert Tintle Chief Financial Officer David Givans County Internal Auditor Deschutes County Administrative Offices 1300 NW Wall Street, Suite 200 Bend, Oregon 97703 -3- Report of Independent Auditors Deschutes County Commissioners Deschutes County Road Agency (A Component Unit of Deschutes County, Oregon) Bend, Oregon Report on the Audit of the Financial Statements Opinions We have audited the financial statements of the governmental activities and the major fund of the Deschutes County Road Agency (the Agency), a component unit of Deschutes County, Oregon, as of and for the period ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the Agency’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 governmental activities and the major fund of the Agency, as of June 30, 2023, 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. 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 Agency 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. Financial Reporting Entity As discussed in Note 1, the financial statements present only the Agency and do not purport to, and do not, present fairly the financial position of Deschutes County, Oregon as of June 30, 2023, or the changes in its financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. Our opinions are not modified with respect to this matter. Responsibilities of Management 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, 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 Agency’s -4- ability to continue as a going concern for twelve 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 Agency'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 Agency’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 that the management’s discussion and analysis and schedule of revenues, expenditures, and changes in fund balance – budget and actual – General Fund (budgetary comparison), as listed in the table of contents, 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 management’s discussion and analysis 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 -5- statements. We do not express an opinion or provide any assurance on the management’s discussion and analysis because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Agency’s basic financial statements. The budgetary comparison information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The budgetary comparison information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the budgetary comparison information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Information Management is responsible for the other information included in the financial statements. The other information comprises the introductory section but does not include the basic financial statements and our auditor’s report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form assurance thereon. In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report November 30, 2023 on our consideration of the Agency'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 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 Agency'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 Agency's internal control over financial reporting and compliance. -6- Other Reporting Required by Minimum Standards for Audits of Oregon Municipal Corporations In accordance with the Minimum Standards for Audits of Oregon Municipal Corporations, we have also issued our report dated November 30, 2023, on our consideration of the Agency’s compliance with certain provisions of laws, regulations, contracts, and grant agreements, including the provisions of Oregon Revised Statutes as specified in Oregon Administrative Rules 162-010-0000 through 162- 010-0330 of the Minimum Standards for Audits of Oregon Municipal Corporations. The purpose of that report is to describe the scope of our testing of compliance and the results of that testing and not to provide an opinion on compliance. Amanda McCleary-Moore, Partner For Moss Adams LLP Eugene, Oregon November 30, 2023 -7- Deschutes County Road Agency A Component Unit of Deschutes County, Oregon Management’s Discussion and Analysis June 30, 2023 As management of Deschutes County Road Agency (the Agency), a component unit of Deschutes County, Oregon, we offer readers of the Agency’s financial statements this narrative overview and analysis of the financial activities of the Agency for the period ended June 30, 2023. Financial Highlights  The Deschutes County Road Agency is a new agency formed on March 1, 2023.  The assets, ending fund balance and net position of the Agency are zero, as all resources have been used during the period. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the Agency’s basic financial statements. These basic financial statements comprise three components: 1) government-wide financial statements; 2) fund financial statements and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-Wide Financial Statements The Government-wide financial statements are designed to provide readers with a broad overview of the Agency’s finances in a manner similar to a private-sector business. The Statement of Net Position presents information on all of the Agency’s assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the Agency is improving or deteriorating. The Statement of Activities presents information showing how the Agency’s net position changed during the period ended June 30, 2023. Changes in net position are reported when the underlying event giving rise to the change occurs, regardless of the timing of the related cash flows. Each of these government-wide financial statements, Statement of Net Position and Statement of Activities, show the functions of the Agency that are supported primarily by inter-governmental revenues (governmental activities). The governmental activity of the Agency is providing funding for road construction to the residents of Deschutes County, Oregon. The government-wide financial statements can be found on pages 12-13 of this report. -8- Deschutes County Road Agency A Component Unit of Deschutes County, Oregon Management’s Discussion and Analysis June 30, 2023 Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Agency, like other state and local government entities, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The fund utilized by the Agency is classified as a governmental fund. Governmental funds are used to account for the same functions as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. Because net position equaled fund balance at the end of the period, no reconciliation from the Governmental Fund Balance Sheet for the General Fund to the Government-wide Statement of Net Position, or a reconciliation from the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balance for the General Fund to the Government-wide Statement of Activities has been included in this report. The Agency reported activity in one governmental fund during the period ended June 30, 2023. Information is presented in the Governmental Fund Balance Sheet for the General Fund and in the Governmental Fund Statement of Revenues, Expenditures and Changes in Fund Balance for the General Fund. The Agency adopts an annual budget for its fund. A budgetary comparison statement has been provided for this fund to demonstrate compliance with the annual budget. The General Fund Financial Statements can be found on pages 14-15 of this report. Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 16-19 of this report. Government-wide Financial Analysis Net position, at a specific point in time, serves as a useful indicator of an entity's financial position. In the case of the Agency, assets, liabilities, and net position were $0 as of June 30, 2023. -9- Deschutes County Road Agency A Component Unit of Deschutes County, Oregon Management’s Discussion and Analysis June 30, 2023 Government-wide Financial Analysis (Continued) The summarized government-wide statements are as follows: June 30, 2023 ASSETS Total assets -$ LIABILITIES Total liabilities - NET POSITION Total net position -$ Period Ended June 30, 2023 GENERAL REVENUES Intergovernmental 695,036$ Total revenues 695,036 EXPENSES General expenses 695,036 Total expenses 695,036 Change in net position - Net position - beginning of period - Net position - end of period -$ Statements of Net Position Statements of Activities -10- Deschutes County Road Agency A Component Unit of Deschutes County, Oregon Management’s Discussion and Analysis June 30, 2023 Governmental Activities Governmental activities did not change the Agency’s net position during the period ended June 30, 2023. Financial Analysis of the Agency’s Funds The Agency uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds - The focus of the Agency’s governmental funds is to provide information on near-term inflows, outflows and balances of spendable resources. Such information is useful in assessing the Agency’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government's net resources available for spending as of the end of the fiscal period. As of June 30, 2023, $0 is the reported ending fund balance for the Agency’s governmental fund. As of June 30, 2023, the unassigned fund balance for the Agency’s General Fund is $0. General Fund Budgetary Highlights The Agency received $695,036 in revenue from the U.S. Forest Service, which is $104,964 less than the $800,000 the Agency budgeted to receive. Key Economic Factors and Budgets Information for the Future The Agency has budgeted revenue of $792,322 for the fiscal year ending June 30, 2024. Requests for Information This financial report is designed to provide a general overview to those parties interested in Deschutes County Road Agency’s finances. Questions concerning any of the information provided in this report or requests for additional information should be addressed to Deschutes County Finance Department, 1300 NW Wall Street, Suite 200, Bend, Oregon, 97703. -11- Deschutes County Road Agency A Component Unit of Deschutes County, Oregon Statement of Net Position June 30, 2023 The notes to the financial statements are an integral part of this statement. Primary Government - Governmental Activities ASSETS Total assets -$ LIABILITIES Total liabilities - NET POSITION Total net position -$ -12- Deschutes County Road Agency A Component Unit of Deschutes County, Oregon Statement of Activities For the Period Ended June 30, 2023 The notes to the financial statements are an integral part of this statement. Primary Government - Governmental Activities EXPENSES General services 695,036$ GENERAL REVENUES Intergovernmental 695,036 Total general revenues 695,036 Change in net position - Net position - beginning of period - Net position - end of period -$ -13- Deschutes County Road Agency A Component Unit of Deschutes County, Oregon Balance Sheet – Governmental Fund - General Fund June 30, 2023 The notes to the financial statements are an integral part of this statement. ASSETS Total assets -$ LIABILITIES Total liabilities -$ FUND BALANCES Total fund balances - Total liabilities and fund balances -$ -14- Deschutes County Road Agency A Component Unit of Deschutes County, Oregon Statement of Revenues, Expenditures and Changes in Fund Balance – General Fund For the Period Ended June 30, 2023 The notes to the financial statements are an integral part of this statement REVENUES Intergovernmental 695,036$ Total revenues 695,036 EXPENDITURES Current County Roads 695,036 Total expenditures 695,036 Net change in fund balance - Fund balance - beginning of period - Fund balance - end of period -$ -15- Deschutes County Road Agency A Component Unit of Deschutes County, Oregon Notes to Financial Statements June 30, 2023 Note 1 - Principal Business Activity and Significant Accounting Policies The Agency The Deschutes County Road Agency (the Agency), a component unit of Deschutes County, Oregon, was established under ORS 294.346 on March 1, 2023, for the purpose of receiving and distributing U.S Forest Service Secure Rural School funds for road construction in Deschutes County. The Deschutes County Board of Commissioners is the governing body of the Agency. Government-wide and Fund Financial Statements The government-wide financial statements (i.e., the Statement of Net Position and the Statement of Activities) report information on all the activities of the government. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The Agency has no business- type activities or fiduciary funds. The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include: 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or section. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds. Measurement Focus, Basis of Accounting and Financial Statement Presentation 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 when a liability is incurred. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. It is the Agency’s policy to first apply restricted resources when an expense is incurred for purposes for which both restricted and unrestricted net position/fund balance are available. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the Agency considers revenues to be available if they are collected within sixty days of the end of the current period. Revenues received after this period are considered unavailable. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. -16- Deschutes County Road Agency A Component Unit of Deschutes County, Oregon Notes to Financial Statements June 30, 2023 Note 1 - Principal Business Activity and Significant Accounting Policies (Continued) The Agency reports the following governmental fund: General Fund - The General Fund is utilized to account for the transactions of the Agency. U.S. Forest Service Secure Rural Schools funds are the principal source of revenue. Expenditures are for road construction in Deschutes County. Budget Policy The Agency prepares a budget for all funds which meet the requirements of state law. The budget is prepared on the modified accrual basis of accounting, with exceptions. The resolution authorizing appropriations for each fund sets the level for which it is unlawful to over expend. Program, debt service, transfers out, and contingency are the levels of control established by resolution. The detailed budget document provides specific detailed information for the above-mentioned categories. Unexpected additional resources may be added to the budget through the use of a supplemental budget and appropriations resolution. Original and supplemental budgets may be modified by the use of appropriation transfers between the levels of control. For the first budget period ending June 30, 2023, the board of the Agency authorized appropriations via resolution. Reporting Entity The Agency’s financial statements include the accounts of all Agency operations. The Agency is includable as a component unit in the financial statements of Deschutes County, Oregon since the Agency’s governing board is comprised of the Deschutes County Commissioners. The Agency is included in the financial statements of the County as a special revenue fund, a blended component unit. Cash and Investments Cash and investments are comprised of funds held by the Deschutes County Treasurer, in the County's cash and investment pool. The Agency’s cash and investments participate in this pool rather than specific, identifiable securities. The Agency’s share of County pooled cash and investments can be drawn upon demand, and therefore, the entire amount on deposit with the County is considered cash and cash equivalents. Interest earned on pooled investments is allocated monthly based on the average daily balance of the Agency in relation to total investments in the pool. It is not practical to determine the investment risk, collateral, or insurance coverage for the Agency’s share of these pooled investments. This pool generally includes demand deposits, investments in the Oregon State Treasurer's Local Government Investment Pool (LGIP), obligations of the United States Treasury and United States Government agencies and instrumentalities, certain high-grade commercial paper and corporate bonds. This policy is in accordance with ORS 294.035 which specifies the types of investments authorized for municipal corporations. -17- Deschutes County Road Agency A Component Unit of Deschutes County, Oregon Notes to Financial Statements June 30, 2023 Note 1 - Principal Business Activity and Significant Accounting Policies (Continued) State statutes authorize the County to invest in obligations of the U.S. Treasury, commercial paper, corporate bonds, municipal bonds, banker’s acceptances, repurchase agreements, and the State Treasurer’s Local Government Investment Pool (LGIP). Investments for the County, as well as for its component units, are reported at fair value. The LGIP operates in accordance with appropriate state laws and regulations. Information about the pooled cash and investments is included in the County’s annual comprehensive financial report may be obtained by contacting the Deschutes County Finance Department, 1300 NW Wall Street, Suite 200, Bend, Oregon, 97703. Fund Balance Reporting The Governmental Accounting Standards Board Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions (GASB 54), defines the different types of fund balances that a governmental entity must use for financial reporting purposes. GASB 54 requires the fund balance amounts to be properly reported within one of the fund balance categories listed below: Nonspendable, such as fund balance associated with inventories, prepaids, long-term loans and notes receivable, and property held for resale (unless the proceeds are restricted, committed or assigned). Restricted fund balance category includes amounts that can be spent only for specific purposes stipulated by constitution, external resource providers or through enabling legislation. Committed fund balance classification includes amounts that can be used only for the specific purposes determined by a formal action of the Agency’s governing board (the Agency’s highest level of decision-making authority). Once adopted, the limitation imposed by the ordinance remains in place until a similar action is taken (the adoption of another ordinance) to remove or revise the limitation. Assigned fund balance classification is intended to be used by the government for specific purposes but do not meet the criteria to be classified as restricted or committed. Assignments are made by the County Administrator based on the County Commissioner’s direction. Unassigned fund balance is the residual classification for the Agency’s general fund and includes all spendable amounts not contained in the other classifications. -18- Deschutes County Road Agency A Component Unit of Deschutes County, Oregon Notes to Financial Statements June 30, 2023 Note 1 - Principal Business Activity and Significant Accounting Policies (Continued) The Agency reduces restricted amounts first when expenditures are incurred for purposes for which both restricted and unrestricted (committed, assigned or unassigned) amounts are available. The Agency reduces committed amounts first, followed by assigned amounts and then unassigned amounts when expenditures are incurred for the purpose for which amounts in any of those unrestricted fund balance classifications could be used. Net Position Net position represents the difference between assets and liabilities, all of which is not restricted. 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 effect certain reported amounts and disclosures. Accordingly, actual results could differ from these estimates. Note 2 - Cash and Investments As of June 30, 2023, the Agency had no deposits with the Deschutes County Treasurer. The Agency did have deposits at some points during the period, and the deposits were adequately insured or collateralized by securities held by the pledging financial institution in the financial institution’s name during the period. Note 3 - Risk Management In the agreement described in Note 1, Deschutes County covenants and agrees to defend, indemnify and hold and save harmless the Agency and each of the Agent’s officers, agents and employees, if any, from and against any and all claims whatsoever that might arise against the Agency or any of its officers, agents or employees, if any, by reason of any alleged act or failure to act or failure of Deschutes County to act. -19- Required Supplementary Information For the Period Ended June 30, 2023 Deschutes County Road Agency A Component Unit of Deschutes County, Oregon -20- Deschutes County Road Agency A Component Unit of Deschutes County, Oregon Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual – General Fund For the Period Ended June 30, 2023 Actual Variance with Original Final Amounts Final Budget REVENUES Intergovernmental -$ 800,000$ 695,036$ (104,964)$ Total revenues - 800,000 695,036 (104,964) EXPENDITURES Current: County roads - 800,000 695,036 104,964 Total expenditures - 800,000 695,036 104,964 Net change in fund balances - - - - Fund balances, budget basis - beginning of period - - -- Fund balances, budget basis - end of period -$ -$ -$ -$ Budgeted Amounts -21- Report of Independent Auditors 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 Deschutes County Commissioners Deschutes County Road Agency (A Component Unit of Deschutes County, Oregon) Bend, Oregon 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 and the major fund of the Deschutes County Road Agency (the Agency), a component unit of Deschutes County, Oregon, as of and for the period ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the Agency’s basic financial statements, and have issued our report thereon dated November 30, 2023. Report on Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Agency’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 Agency’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Agency’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 Agency'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 or significant deficiencies may exist that were not identified. -22- Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether the Agency’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. 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 Agency’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 entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Eugene, Oregon November 30, 2023 -23- Deschutes County Road Agency A Component Unit of Deschutes County, Oregon Audit Comments and Disclosures Required by State Regulations June 30, 2023 Audit Comments and Disclosures Required by State Regulations Oregon Administrative Rules 162-010-0000 through 162-010-0320 of the Minimum Standards for Audits of Oregon Municipal Corporations, prescribed by the Secretary of State in cooperation with the Oregon State Board of Accountancy, enumerate the financial statements, schedules, comments, and disclosures required in audit reports. The required statements and schedules are set forth in the preceding sections of this report. Required comments and disclosures related to the audit of such statements and schedules are set forth in the following pages. -24- Report of Independent Auditors Required by Oregon State Regulations Deschutes County Commissioners Deschutes County Road Agency (A Component Unit of Deschutes County, Oregon) Bend, Oregon We have audited, 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 the financial statements of the governmental activities and the major fund of Deschutes County Road Agency (the Agency), a component unit of Deschutes County, Oregon, as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the Agency’s basic financial statements, and have issued our report thereon dated November 30, 2023. Compliance As part of obtaining reasonable assurance about whether the Agency’s basic financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, including provisions of Oregon Revised Statutes (ORS) as specified in Oregon Administrative Rules (OAR) 162-010-0000 to 162-010-0330, of the Minimum Standards for Audits of Oregon Municipal Corporations, 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. We performed procedures to the extent we considered necessary to address the required comments and disclosures which included, but were not limited to, the following: • Accounting records and internal control • Public fund deposits • Insurance and fidelity bonds • Investments In connection with our testing, nothing came to our attention that caused us to believe the Agency was not in substantial compliance with certain provisions of laws, regulations, contracts, and grant agreements, including the provisions of ORS as specified in OAR 162‐010‐0000 through 162‐010‐0330 of the Minimum Standards for Audits of Oregon Municipal Corporations. -25- Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Agency’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 Agency’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Agency’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 entity'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 or significant deficiencies may exist that have not been identified. 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 entity’s internal control or on compliance. Accordingly, this communication is not suitable for any other purpose. This report is intended solely for the information and use of the County Commissioners and management of the Agency and the Oregon Secretary of State and is not intended to be and should not be used by anyone other than these parties. Amanda McCleary-Moore, Partner For Moss Adams LLP Eugene, Oregon November 30, 2023 -26-