Milwaukee Metropolitan Sewerage District Policy, Finance and Personnel Committee Meeting July 13, 2020 Presentation of December 31, 2019 Audit The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments. Baker Tilly Virchow Krause, LLP trading as Baker Tilly is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. © 2018 Baker Tilly Virchow Krause, LLP Audit Discussion Agenda Milwaukee Metropolitan Sewerage District Agenda Audit Overview Condensed Financial Data Required Communication to Governing Body Discussion Introduction Milwaukee Metropolitan Sewerage District Audit Team Partner – Jodi Dobson Concurring Reviewer – Russ Hissom Manager – Ryan O’Donnell Senior Accountant – Sara Schnelle Minority Business Enterprise Partner Firm – M.L. Tharps & Associates 3 Audit Overview Milwaukee Metropolitan Sewerage District Audit assesses internal controls “….a means by which an organization’s resources are directed, monitored, and measured. It plays an important role in preventing and detecting fraud and protecting the organization’s resources.” Controls must meet the goal and objectives of Operations, Reporting and Compliance Audit Overview Milwaukee Metropolitan Sewerage District Controls reviewed in key transaction areas Expenditures Payroll Customer billings Information technology Capital assets Financial close Financial Audit (Comprehensive Annual Financial Report) Milwaukee Metropolitan Sewerage District Financial statements received a “clean” Unmodified Opinion The financial statements are the responsibility of management Management Discussion and Analysis and the Statistical Section provide an excellent summary of key financial and operating results in tables and narrative 2018 CAFR was awarded GFOA Certificate of Achievement for Excellence in Financial for the 41st Consecutive Year 6 Milwaukee Metropolitan Sewerage District Single Audit • Required because you receive federal and state funding • Conclusion is you complied with all requirements Indirect Cost Allocation • Done to review compliance with Uniform Guidance as used for federally funded projects • Conclusion is costs are reasonable and supported 7 Condensed Financial Statements ($000) Milwaukee Metropolitan Sewerage District Income Statement Operating Revenues Operation and Maintenance Expenses Depreciation Operating Loss Property Taxes and Capital Charges 2019 $ 99,129 109,160 99,124 (109,155) 132,269 2018 $ 96,744 73,312 Increase from GASB 75 implementation in 2018 96,356 Additional plant in service (72,924) Includes depreciation, excludes capital charges 130,028 Increase based on budget Increase in capital program expenditures Other Non-Operating (24,592) (23,528) Capital Contributions 2,628 2,682 $ 1,150 $ 36,258 Change in Net Position Increase in user flow/volume 8 Condensed Financial Statements ($000) Milwaukee Metropolitan Sewerage District Statement of Net Position Unrestricted Cash and Investments Restricted Cash and Investments Net Plant Other Assets Total Assets Deferred Outflows of Resources 2019 2018 $ 36,914 Represents 3.5 months of O&M 99,481 131,949 Draw down of bond proceeds for capital projects as planned 3,298,910 3,322,297 159,617 157,274 3,590,723 3,648,434 $ 32,715 35,119 10,652 Increase in pension deferred outflows due to GASB 68 and OPEB deferred outflows due to GASB 75 9 Condensed Financial Statements ($000) Milwaukee Metropolitan Sewerage District Statement of Net Position (cont.) 2019 2018 Long-term Debt 760,051 827,696 16,280 17,555 Intergovernmental Loan Post Retirement Benefits Other Liabilities Deferred Inflows of Resources 138,428 120,212 57,112 34,890 135,868 141,780 2,525,563 2,513,765 83,758 85,071 (91,218) (81,883) 2,518,103 2,516,953 Impact of actuarial assumptions including discount rate Increase in pension liability based on market performance and mortality assumption Net Position Investment in capital assets Restricted Unrestricted Total Net Position 77% of net plant 10 Condensed Financial Statements ($000) Milwaukee Metropolitan Sewerage District Legal Debt Margin Equalized Valuation as Determined by the WI Department of Revenue in 2018 2019 $ 65,909,580 Statutory debt limit rate 5% Statutory debt limit 3,295,479 General obligation indebtedness Outstanding bonds issued by the District (262,395) Clean Water Fund Program loans (486,837) Total Borrowing Legal debt margin (749,232) $ 2,546,247 Borrowing is at 23% of maximum allowed or 1.14% of total equalized value 11 Auditor Communication to Those Charged with Governance Milwaukee Metropolitan Sewerage District Area to be Communicated Area to be Communicated Our responsibility under Auditing Other Information in Documents Standards Generally Accepted in Containing Audited Financial the United States and Statements Government Auditing Standards Planned Scope and Timing of the Audit Accounting Policies Accounting Estimates Financial Statement Disclosures Auditor Communication to Those Charged with Governance Milwaukee Metropolitan Sewerage District Area to be Communicated Area to be Communicated Difficulties Encountered in Performing the Audit Corrected and Uncorrected Misstatements Audit Adjustments Disagreements with Management Consultations with Other Independent Accountants Management Representations Auditor Independence Other Audit Findings or Issues Audit Summary Milwaukee Metropolitan Sewerage District We appreciate the work done by MMSD accounting staff and management in preparing for and assisting in the audit! Questions… Contact Information: Jodi Dobson, Partner jodi.dobson@bakertilly.com 608.240.2469 14
