HARPER COUNTY, KANSAS I Financial Statement With

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HARPER COUNTY, KANSAS

Financial Statement With Independent Auditors' Report

For the Year Ended December 31, 2013

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HARPER COUNTY, KANSASFinancial Statement With Independent Auditors' Report


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TABLE OF CONTENTS

Independent Auditors' Report 1

Summary Statement of Receipts, Expenditures and Unencumbered Cash - Regulatory Basis 4

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Notes to Financial Statement 6

Regulatory-Required Supplementary Information

Schedule 1 - Summary of Expenditures - Actual and Budget - Regulatory Basis : 18

I Schedule 2 - Schedule of Receipts and Expenditures - Regulatory BasisIndividually presented by fund

IGovernmental Type Funds

General Fund2-1 General Fund 19

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Special Purpose Funds2-2 Appraiser's Cost Fund 252-3 Department on Aging Fund 262-4 Employee Benefits Fund 272-5 Health Fund 282-6 911 Emergency Tax Fund 292-7 Noxious Weed Fund 302-8 Road and Bridge Fund 312-9 Special Alcohol Fund 322-10 Special Bridge Fund 332-11 Special Liability Fund 342-12 Capital Equipment Reserve Fund 352-13 Capital Improvement Reserve Fund 362-14 County Attorney Equipment Fund 372-15 County Attorney Special Equipment Fund 382-16 Sheriff Equipment Fund 392-17 Special Highway Improvement Fund 402-18 Special Machinery Fund 412-19 Register of Deeds Technology Fund 422-20 Plumb Thicket Monitoring Fund 432-21 Courthouse Preservation Fund 442-22 Microloan Fund 452-23 SCLEPG Fund 462-24 CDBG Fund 472-25 DARE Program Fund 48

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ICapital Project Funds2-26 150th Road Project Fund 49

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HARPER COUNTY, KANSASFinancial Statement With Independent Auditors' Report


I TABLE OF CONTENTS (continued)

I Trust Funds2-27 Prosecutor Training Assistance Fund 502-28 Law Enforcement Grant Fund 512-29 Special Motor Vehicle License Fund 522-30 Oil/Gas Value Depletion Fund 532-31 Ambulance Memorial Fund 542-32 EMS Education Grant Fund 55

II Related Municipal Entity

2-33 Extension Council 56

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Schedule 3 - Summary of Receipts and Disbursements - Regulatory Basis3-1 Distributable Funds, State Funds, and Subdivision Funds 573-2 Agency Funds 58

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ADAMSBROWNBERAN& BALL

Phone (6201663-5659 • Fax (6201663-6745 • www.abbb.com1701 Landon StreetHutchinson, Kansas 67502

CertifiedPublic

Accountants

I INDEPENDENT AUDITORS' REPORT

I To the County CommissionHarper County, KansasAnthony, KansasI

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We have audited the accompanying fund summary statement of regulatory basis receipts, expenditures,and unencumbered cash balances of Harper County, Kansas, as of and for the year ended December31,2013 and the related notes to the financial statement.

Management's Responsibility for the Financial Statement

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Management is responsible for the preparation and fair presentation of this financial statement inaccordance with the Kansas Municipal Audit and Accounting Guide as described in Note 1 to meet thefinancial reporting requirements of the State of Kansas; this includes determining that the regulatory basisof accounting is an acceptable basis for the preparation of the financial statement in the circumstances.Management is also responsible for the design, implementation and maintenance of internal controlrelevant to the preparation and fair presentation of the financial statement that is free from materialmisstatement, whether due to fraud or error.

IAuditors' Responsibility

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Our responsibility is to express an opinion on the financial statement based on our audit. We conductedour audit in accordance with auditing standards generally accepted in the United States of America andthe Kansas Municipal Audit and Accounting Guide. Those standards require we plan and perform theaudit to obtain reasonable assurance about whether the financial statement is free from materialmisstatement.

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An audit involves performing procedures to obtain audit evidence about the amounts and disclosures inthe financial statement. The procedures selected depend on auditor's judgment, including theassessment of the risks of material misstatement of the financial statement, whether due to fraud or error.In making those risk assessments, the auditor considers internal control relevant to the entity'spreparation and fair presentation of the financial statement in order to design audit procedures that areappropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness ofthe entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluatingthe appropriateness of accounting policies used and the reasonableness of significant accountingestimates made by management, as well as evaluating the overall presentation of the financial statement.

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We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion.

Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles

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As described in Note 1, the financial statement is prepared by Harper County, Kansas to meet therequirements of the State of Kansas on the basis of the financial reporting provisions of the Kansas

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Harper County, KansasPage 2

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Municipal Audit and Accounting Guide, which is a basis of accounting other than accounting principlesgenerally accepted in the United States of America. The effects on the financial statement of thevariances between the regulatory basis of accounting described in Note 1 and accounting principlesgenerally accepted in the United States of America, although not reasonably determinable, are presumedto be material.

Adverse Opinion on U.S. Generally Accepted Accounting Principles

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In our opinion, because of the significance of the matters discussed in the "Basis for Adverse Opinion onU.S. Generally Accepted Accounting Principles" paragraph, the financial statement referred to abovedoes not present fairly, in conformity with accounting principles generally accepted in the United States ofAmerica, the financial position of Harper County, Kansas as of December 31, 2013, or changes infinancial position and cash flows thereof for the year then ended.

Opinion on Regulatory Basis of Accounting

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In our opinion, the financial statement referred to above presents fairly, in all material respects, theaggregate cash and unencumbered cash balance of Harper County, Kansas as of December 31, 2013,and the aggregate receipts and expenditures for the year then ended in accordance with the financialreporting provisions of the Kansas MunicipalAudit and Accounting Guide as described in Note 1.

Report on Supplementary Information

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Our audit was conducted for the purpose of forming an opimon on the fund summary statement ofregulatory basis receipts, expenditures and unencumbered cash balances (basic financial statement) as awhole. The summary of regulatory basis expenditures - actual and budget, individual fund schedules ofregulatory basis receipts and expenditures - actual and budget, and summary of regulatory basis receiptsand disbursements - agency funds (Schedules 1, 2 and 3 as listed in the table of contents) are presentedfor analysis and are not a required part of the basic financial statement; however, are required to bepresented under the provisions of the Kansas MunicipalAudit and Accounting Guide. Such information isthe responsibility of management and was derived from and relates directly to the underlying accountingand other records used to prepare the basic financial statement. The information has been subjected tothe auditing procedures applied in the audit of the basic financial statement and certain additionalprocedures, including comparing and reconciling such information directly to the underlying accountingand other records used to prepare the basic financial statement or to the basic financial statement itself,and other additional procedures in accordance with auditing standards generally accepted in the UnitedStates of America. In our opinion, the information is fairly stated, in all material respects, in relation to thebasic financial statement as a whole, on the basis of accounting described in Note 1.

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The 2012 Actual column presented in the individual fund schedules of regulatory basis receipts andexpenditures - actual and budget (Schedule 2 as listed in the table of contents) is also presented forcomparative analysis and is not a required part of the 2013 basic financial statement upon which werendered an unmodified opinion dated June 17, 2014. The 2012 basic financial statement and ouraccompanying report are not presented herein, but are available in electronic form from the web site ofthe Kansas Department of Administration at the following link http://da.ks.gov/ar/muniservl. Such 2012comparative information is the responsibility of management and was derived from and relates directly tothe underlying accounting and other records used to prepare the 2012 basic financial statement. The2012 comparative information was subjected to the auditing procedures applied in the audit of the 2012basic financial statement and certain additional procedures, including comparing and reconciling suchinformation directly to the underlying accounting and other records used to prepare the 2012 basicfinancial statement or to the 2012 basic financial statement itself, and other additional procedures in

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Harper County, KansasPage 3

Iaccordance with auditing standards generally accepted in the United States of America. In our opinion,the 2012 comparative information is fairly stated in all material respects in relation to the 2012 basicfinancial statement as a whole, on the basis of accounting described in Note 1.

I Fd~(nS} Bf""ow") Bu-4.KI +- Be....1f ) ~ftT P.

ADAMS, BROWN, BERAN & BALL, CHTD.Certified Public Accountants

I June 17, 2014

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HARPER COUNTY, KANSASSummary Statement of Receipts, Expenditures and Unencumbered Cash

Regulatory BasisFor the Year Ended December 31, 2013

AddBeginning Prior Year Ending Encumbrances

Unencumbered Cancelled Unencumbered and Accounts EndingFunds Cash Balance Encumbrances Receipts Expenditures Cash Balance ~able Cash Balance

Governmental Type FundsGeneral Fund

General Fund $ 883,459 6,382,355 6,125,270 1,140,544 173,212 1,313,756Special Purpose Funds

Appraiser's Cost Fund 13,222 178,118 166,537 24,803 10,671 35,474Department on Aging Fund 77,980 221,473 232,292 67,161 16,782 83,943Employee Benefits Fund 61,193 1,708,425 1,763,906 5,712 5,712Health Fund 241,192 710,754 765,312 186,634 42,719 229,353911 Emergency Tax Fund 19,719 50,038 39,899 29,858 13 29,871Noxious Weed Fund 6,122 164,870 141,769 29,223 5,549 34,772Road and Bridge Fund 720,917 2,856,364 2,486,318 1,090,963 113,888 1,204,851Special Alcohol Fund 15,680 6,036 10,000 11,716 11,716Special Bridge Fund 3,885 437,544 253,324 188,105 6,265 194,370Special Liability Fund 24,991 5,000 19,991 19,991Capital Equipment Reserve Fund 185,752 68,000 109,389 144,363 144,363Capital Improvement Reserve Fund 182,484 503,567 573,409 112,642 14,790 127,432County Attorney Equipment Fund 6,564 1,491 3,464 4,591 969 5,560County Attorney Special Equipment Fund (569) 570 1 1Sheriff Equipment Fund 17,494 8,957 9,548 16,903 105 17,008Special Highway Improvement Fund 1,125,687 1,758,405 1,341,417 1,542,675 1,542,675Special Machinery Fund 27,260 14,000 23,081 18,179 18,179Register of Deeds Technology Fund 100,966 18,932 21,826 98,072 98,072Plumb Thicket Monitoring Fund 7,259,305 181,623 219,720 7,221,208 7,221,208Courthouse Preservation Fund 10,001 40 425 9,616 9,616Microloan Fund 41,342 41,342 41,342SCLEPG Fund (2,649) 77,757 66,860 8,248 3,313 11,561CDBG Fund 444 376,926 376,919 451 451Dare Program Fund 1,500 5,475 6,030 945 945

Capital Project Fund150th Road Fund (872,747) 50,287 39,507 (861,967) (861,967)

Trust FundsProsecutor Training Assistance Fund 2,293 2,093 820 3,566 3,566Law Enforcement Grant Fund 449 5,500 4,733 1,216 1,216Special Motor Vehicle License Fund (11,975) 60,436 48,461Oil/Gas Value Depletion Fund 493,353 493,353 493,353Ambulance Memorial Fund 3,078 3,078 3,078EMS Education Grant Fund 2,081 708 1,373 1,373

Total Primary Government $ 10,640,473 15,850,036 14,835,944 11,654,565 388,276 12,042,841

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

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HARPER COUNTY, KANSASSummary Statement of Receipts, Expenditures and Unencumbered Cash

Regulatory BasisFor the Year Ended December 31,2013

FundsRelated Municipal Entity

Extension Council

Total Reporting Entity (ExcludingDistributable and Agency Funds)

Beginning Prior YearUnencumbered CancelledCash Balance Encumbrances

$ 106,010

$ 10,746,483

EndingUnencumberedCash Balance

AddEncumbrancesand Accounts

PayableEnding

Cash BalanceExpendituresReceipts

110,545110,545181,714186,249

16,036,285 15017658 11,765,110 388276 12,153,386

Composition of Cash Checking Accounts $ 16,745,857Municipal Investment Pool 6,757,636Certificates of Deposit 521,089

Cash 640

Total Primary Government 24,025,222

Related Municipal Entity 110,545

Total Reporting Entity 24,135,767Distributable Funds per Schedule 3-1 (10,916,967)Agency Funds per Schedule 3-2 (1,065,414)

Total Reporting Entity (ExcludingDistributable and Agency Funds: $ 12,153,386

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

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HARPER COUNTY, KANSASNotes to Financial Statement

December 31,2013

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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Harper County, Kansas has established a uniform system of accounting maintained to reflectcompliance with the applicable laws of the State of Kansas. The accompanying financial statement ispresented to conform to the cash basis and budget laws of the State of Kansas, which is acomprehensive basis of accounting other than accounting principles generally accepted in the UnitedStates of America. The following is a summary of such significant policies.

IUse of EstimatesThe preparation of financial statements on a prescribed basis of accounting that demonstratescompliance with the cash basis and budget laws of the State of Kansas requires management to makeestimates and assumptions that affect the reported amount of unencumbered cash balances andaccounts payable during the reporting period. Actual results could differ from these estimates.

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Financial Reporting EntityThe County is a municipal corporation governed by an elected three-member commission. This financialstatement presents the County (the municipality) and its related municipal entity shown below. Therelated municipal entity is included in the County's reporting entity because it was established to benefitthe County and/or its constituents.

IExtension CouncilHarper County Extension Council provides services in such areas as agriculture, home economics,and 4-H clubs, to all persons in the County. The Council is an elected nine-member executive board.The County annually provides significant operating subsidies to the Council.

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Basis of Presentation - Fund AccountingThe accounts of the County are organized and operated on the basis of funds. In governmentalaccounting, a fund is defined as an independent fiscal and accounting entity with a self-balancing set ofaccounts. Fund accounting segregates funds according to their intended purpose and is used to aidmanagement in demonstrating compliance with finance related legal and contractual provisions. Theminimum number of funds is maintained consistent with legal and managerial requirements.

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The following types of funds comprise the financial activities of the County for the year ended December31,2013.

Regulatory Basis Fund Types'

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General Fund - the chief operating fund. Used to account for all resources except those required tobe accounted for in another fund.

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Special Purpose Fund - used to account for the proceeds of specific tax levies and other specificrevenue sources (other than Capital Project and tax levies for long-term debt) that are intended forspecified purposes.

Capital Project Fund - used to account for the debt proceeds and other financial resources to beused for the acquisition or construction of major capital facilities or equipment.

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Trust Fund - fund used to report assets held in trust for the benefit of the municipal financialreporting entity (i.e. pension funds, investment trust funds, private purpose trust funds which benefitthe municipal reporting entity, scholarship funds, etc.).

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Agency Fund - fund used to report assets held by the municipal reporting entity in a purely custodialcapacity (payroll clearing fund, county treasurer tax collection accounts, etc.).

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Basis of AccountingThe KMAAG regulatory basis of accounting involves the recognition of cash, cash equivalents, marketableinvestments, and certain accounts payable and encumbrance obligations to arrive at a net unencumberedcash and investments balance on a regulatory basis for each fund, and the reporting of changes inunencumbered cash and investments of a fund resulting from the difference in regulatory basis receiptsand regulatory basis expenditures for the fiscal year. All recognized assets and liabilities are measuredand reported at cost, unless they have been permanently impaired and have no future cash value orrepresent no future obligation against cash. The KMAAG regulatory basis does not recognize capitalassets, long-term debt, accrued receivables and payables, or any other assets, liabilities or deferredinflows or outflows, other than those mentioned above.

IThe County has approved a resolution that is in compliance with K.SA 75-1120a(c), waiving therequirement for application of generally accepted accounting principles and allowing the County to usethe regulatory basis of accounting.

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Departure From Accounting Principles Generally Accepted in the United States of AmericaThe basis of accounting described above results in a financial statement presentation which shows cashreceipts, expenditures, cash and unencumbered cash balances, and expenditures compared to budget.Balance sheets that would have shown noncash assets such as receivables, inventories, and prepaidexpenses, liabilities such as deferred revenue and matured principal and interest payable, andreservations of the fund balance are not presented. Under accounting principles generally accepted in theUnited States of America, encumbrances are only recognized as a reservation of fund balance;encumbrances outstanding at year end do not constitute expenditures or liabilities. Consequently, theexpenditures as reported do not present the cost of goods and services received during the fiscal year inaccordance with generally accepted accounting principles. Capital assets that account for the land,buildings, and equipment owned by the County are not presented in the financial statement. Also, long-term debt such as general obligation bonds, revenue bonds, capital leases, and temporary notes are notpresented in the financial statement.

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Property Tax CalendarCollection of current year property tax by the County Treasurer is not completed, apportioned nordistributed to the various subdivisions until the succeeding year, such procedure being in conformity withgoverning state statutes. Property taxes are collected and remitted to the County Treasurer. Taxes leviedannually on November 1 st are due one-half by December 20th and one-half by May 10th. Major taxdistributions are made in the months of December through July. Lien dates for personal property are inMarch and August and lien dates for real property are in September. Taxes are recognized as revenue inthe year received. Delinquent tax payments are recognized as revenue in the year received.

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Restricted AssetsRestricted cash balances are reported in various funds that are legally restricted for specified uses suchas the payment of debt service and fiscal fees on long-term debt and for expenditures approved in federaland state grant contracts. Also, cash is restricted in the trust and agency funds of the County for specialpurposes.

IReimbursementsThe County records reimbursable expenditures in the fund that makes the disbursement and records

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reimbursements as a receipt to the fund that receives the reimbursement. For purposes of budgetarycomparisons, the expenditures are properly offset by the reimbursements under KMAAG regulatory basisof accounting.

NOTE 2 - BUDGETARY INFORMATION

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Kansas statutes require that an annual operating budget be legally adopted for the general fund, specialpurpose funds (unless specifically exempted by statute), bond and interest funds, and business funds.Although directory rather than mandatory, the statutes provide for the following sequence and timetable inthe adoption of the legal annual operating budget:

a. Preparation of the budget for the succeeding calendar year on or before August 1 st.

b. Publication in local newspaper on or before August 5th of the proposed budget and notice of publichearing on the budget.

c. Public hearing on or before August 15th, but at least 10 days after publication of notice of hearing.

d. Adoption of the final budget on or before August 25th.

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The statutes allow for the governing body to increase the originally adopted budget for previouslyunbudgeted increases in revenue other than ad valorem property taxes. To do this, a notice of publichearing to amend the budget must be published in the local newspaper. At least 10 days after publication,the hearing may be held and the governing body may amend the budget at that time. There was onebudget amendment for this year for the General Fund.

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The statutes permit transferring budgeted amounts between line items within an individual fund. However,such statutes prohibit expenditures in excess of the total amount of the adopted budget of expenditures ofindividual funds. Budget comparison schedules are presented for each fund showing actual receipts andexpenditures compared to legally budgeted receipts and expenditures.

All legal annual operating budgets are prepared using the regulatory basis of accounting, in whichrevenues are recognized when cash is received and expenditures include disbursements, accountspayable, and encumbrances, with disbursements being adjusted for prior year's accounts payable andencumbrances. Encumbrances are commitments by the County for future payments and are supportedby a document evidencing the commitment, such as a purchase order or contract. Any unused budgetedexpenditure authority lapses at year end.

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A legal operating budget is not required for capital project funds, trust funds, and the following specialpurpose funds: Capital Equipment Reserve, Capital Improvement Reserve Fund, County AttorneyEquipment Fund, County Attorney Special Equipment Fund, Sheriff Equipment Fund, Special HighwayImprovement Fund, Special Machinery Fund, Register of Deeds Technology Fund, Plumb ThicketMonitoring Fund, Courthouse Preservation Fund, Microloan Fund, CDBG Fund, 150th Road Fund, andDare Program Fund.

ISpending in funds which are not subject to the legal annual operating budget requirement is controlled byfederal regulations, other statutes, or by the use of internal spending limits established by the governingbody.

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HARPERCOUNT~KANSASNotes to Financial Statement

December 31, 2013

I NOTE 3 - DEPOSITS AND INVESTMENTS

I Harper County, Kansas follows the practice of pooling cash and investments of all funds. Each fund'sportion of total cash and investments is summarized by fund category in the summary statement ofreceipts, expenditures and unencumbered cash.

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K.SA 9-1401 establishes the depositories which may be used by the County. The statute requires bankseligible to hold the County's funds have a main or branch bank in the county in which the County islocated, or in an adjoining county if such institution has been designated as an official depository, and thebanks provide an acceptable rate of return on funds. In addition, K.SA 9-1402 requires the banks topledge securities for deposits in excess of FDIC coverage. The County has no other policies that wouldfurther limit interest rate risk.

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K.SA 12-1675 limits the County's investment of idle funds to time deposits, open accounts, andcertificates of deposit with allowable financial institutions; U.S. government securities; temporary notes;no-fund warrants; repurchase agreements; and the Kansas Municipal Investment Pool. The County hasno investment policy that would further limit its investment choices. The rating of the County's investmentsis noted below.

I As of December 31,2013, the County had the following investments and maturities.

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Investment Type Fair Value6,757,636

InvestmentMaturities (in years)

Less than One RatingKansas Municipal Investment Pool $ 6,757,636 S&P AAAf/S1+

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Concentration of Credit RiskState statutes place no limit on the amount the County may invest in anyone issuer as long as theinvestments are adequately secured under K.SA 9-1402 and K.SA 9-1405. The County's allocation ofinvestments as of December 31, 2013, is as follows:

IInvestments

Percentage ofInvestments

Kansas Municipal Investment Pool 100%

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Custodial Credit Risk - DepositsCustodial credit risk is the risk that in the event of a bank failure, the County's deposits may not bereturned to it. State statutes require the County's deposits in financial institutions to be entirely covered byfederal depository insurance or by collateral held under a joint custody receipt issued by a bank within theState of Kansas, the Federal Reserve Bank of Kansas City, or the Federal Home Loan Bank of Topeka,except during designated "peak periods" when required coverage is 50%. The County does not use "peakperiods". All deposits were legally secured at December 31,2013.

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At December 31, 2013, the County's carrying amount of deposits was $17,267,586 and the bank balancewas $17,480,742. The bank balance was held by four banks resulting in a concentration of credit risk. Ofthe bank balance, $1,295,182 was covered by federal depository insurance, $16,138,678 wascollateralized with securities held by the pledging financial institutions' agents in the County's name, and$46,882 was uncollateralized.

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IAt December 31, 2013, the Extension Council's carrying amount of deposits was $110,545 and the bankbalance was $122,326. The bank balance was held by one bank resulting in a concentration of creditrisk. Of the bank balance, all was covered by federal depository insurance.

ICustodial Credit Risk - InvestmentsFor an investment, this is the risk that, in the event of the failure of the issuer or counterparty, the Countywill not be able to recover the value of its investments or collateral securities that are in the possession ofan outside party. State statutes require investments to be adequately secured.

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At December 31, 2013, the County had invested $6,757,739 in the State's municipal investment pool. Themunicipal investment pool is under the oversight of the Pooled Money Investment Board. The board iscomprised of the State Treasurer and four additional members appointed by the State Governor. Theboard reports annually to the Kansas legislature. State pooled monies may be invested in directobligations of, or obligations that are insured as to principal and interest, by the U.S. government or anyagency thereof, with maturities up to four years. No more than 10 percent of those funds may be investedin mortgage-backed securities. In addition, the State pool may invest in repurchase agreements withKansas banks or with primary government securities dealers.I

INOTE 4 - INTERFUND TRANSFERS

IInterfund transfers within the reporting entity are substantially for the purpose of subsidizing operatingfunctions, funding capital projects and asset acquisitions or maintaining debt service on a routine basis asauthorized by Kansas statutes. Harper County, Kansas' interfund transfers and regulatory authority forthe year ended December 31,2013 were as follows:

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RegulatoryFrom To Authority Amount

General Fund Capital Improvements Reserve Fund K.SA 12-120 $ 503,567General Fund Capital Equipment Reserve Fund K.SA12-119 50,000General Fund Plumb Thicket Monitoring Fund K.S.A.19-120 181,623Road and Bridge Fund Special Machinery Fund K.SA 68-141g 5,000Road and Bridge Fund Special Highway Improvement Fund K.SA 68-590 290,000Department on Aging Fund Capital Equipment Reserve Fund K.SA 12-119 3,000Noxious Weed Fund Capital Equipment Reserve Fund K.S.A.12-119 15,000Special Motor Vehicle Fund General Fund K.S.A 8-145 582

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II NOTE 5 - CAPITAL PROJECTS

ICapital project authorizations with approved change orders compared with cash disbursements andaccounts payable from inception are as follows:

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150th Road Project $

ProjectAuthorization

ExpendituresTo Date

1,121,338 1,121,338

NOTE 6 - LITIGATION

IHarper County, Kansas is a party to various legal proceedings which normally occur in governmentaloperations. These legal proceedings are not likely to have a material financial impact on the affectedfunds of the County.

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I NOTE 7 - RISK MANAGEMENT

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Harper County, Kansas is exposed to various risks of loss related to torts; theft of, damage to, anddestruction of assets; errors and omissions; injuries to employees; and natural disasters. The County hasbeen unable to obtain property and liability insurance at a cost it considered to be economically justifiable.For this reason, the County joined together with other counties in the State to participate in KansasCounty Association Multi-line Pool (KCAMP), a public entity risk pool currently operating as a commonrisk management and insurance program for 59 participating members.

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The County pays an annual premium to KCAMP for its property and liability insurance coverage. Theagreement to participate provides that the KCAMP will be self-sustaining through member premiums andwill reinsure through commercial companies for claims in excess of $300,000 for each insured event.Additional premiums may be due if total claims for the pool are different than what has been anticipatedby KCAMP management.

The County has been unable to obtain workers compensation insurance at a cost it considered to beeconomically justifiable. For this reason, the County joined together with other counties in the State toparticipate in the Kansas Workers Risk Cooperation for Counties (KWORC), a public entity risk poolcurrently operating as a common risk management and insurance program for 67 participating members.

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The County pays an annual premium to KWORC for its workers compensation insurance coverage. Theagreement to participate provides that the KWORC will be self-sustaining through member premiums andwill reinsure through commercial companies for claims in excess of $650,000 for each insured event.Additional premiums may be due if total claims for the pool are different than what has been anticipatedby KWORC management.

NOTE 8 - GRANTS AND SHARED REVENUES

IHarper County, Kansas participates in numerous state and federal grant programs, which are governedby various rules and regulations for the grantor agencies. Costs charged to the respective grant programsare subject to audit and adjustment by the grantor agencies; therefore, to the extent that the County hasnot complied with the rules and regulations governing the grants, refunds of any money received may berequired. In the opinion of the County, any liability for reimbursement, which may arise as the result of theaudit, is not believed to be material.I

INOTE 9 - STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY

Harper County, Kansas had $46,882 in unsecured deposits at December 31, 2013, which is a violationof K.S.A. 9-1402.

I The Sherriff's commissary account has checks outstanding longer than two years. This is a violation ofK.S.A.10-815and K.S.A. 58-3934.

I Register of Deeds office did not remit the mortgage registration fees daily to the Treasurer as per K.S.A.79-3104.

I The department heads did not investigate or inspect the inventory listing prepared by the County Clerk.This is in violation of K.S.A. 19-2687.

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I Expenditures exceeded the budgeted amount by $8,899 in the 911 Emergency Tax Fund and by $2,810in the SCLEPG Fund, which are violations of K.S.A 79-2935.

I The County's Equipment Reserve Fund had expenditures which are not allowed under K.S.A. 19-119.

IThe County's Capital Improvement fund had expenditures which are not allowed under K.S.A. 19-120.

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The quarterly report for cash and debt balances published in the newspaper for the fourth quarter of 2012did not include capital lease balances and did not list all the funds' cash balances. This is in violation ofK.S.A. 19-228.

Inventory listings were not completed by all departments. This is in violation of K.S.A. 19-2687.

NOTE 10 - OPERATING LEASES

IHarper County, Kansas entered into a lease agreement with First Bank for the use of a Bobcat plusskid-steer loader for one year. The County made one payment in the amount of $4,739 for the year endedDecember 31, 2013. The County had the option to purchase this equipment at the end of the year;however, they opted to return the equipment.

I NOTE 11 - DEFERRED COMPENSATION PLAN

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Harper County, Kansas sponsors a deferred compensation plan under Internal Revenue Code Section457(b). Permanent and part-time employees are eligible to participate under the plan. The employee isresponsible for the amount of deferred compensation to be contributed. The County is not required tomake any contributions.

NOTE 12 - DEFINED BENEFIT PENSION PLAN

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Plan DescriptionHarper County, Kansas participates in the Kansas Public Employees Retirement System (KPERS), acost-sharing, multiple-employer defined benefit pension plan as provided by Kansas law. KPERSprovides retirement benefits, life insurance, disability income benefits, and death benefits. Kansas lawestablishes and amends benefit provisions. KPERS issues a publicly available financial report thatincludes financial statements and required supplementary information. That report may be obtained bywriting to KPERS (611 S Kansas, Suite 100; Topeka, KS 66603) or by calling 1-888-275-5737.

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Funding PolicyK.S.A. 74-4919 and K.S.A. 74-49,210 establish the KPERS member-employee contribution rates.Effective July 1, 2009 KPERS has two benefit structures and funding depends on whether the employeeis a Tier 1 or Tier 2 member. Tier 1 members are active and contributing members hired before July 1,2009. Tier 2 members were first employed in a covered position on or after July 1, 2009. Kansas lawestablishes the KPERS member-employee contribution rate at 4% of covered salary for Tier 1 membersand at 6% of covered salary for Tier 2 members. The employer collects and remits member-employeecontributions according to the provisions of Section 414(h) of the Internal Revenue Code. Kansas lawprovides that employer contribution rates be determined annually based on the results of an annual

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I actuarial valuation. KPERS is funded on an actuarial reserve basis. Kansas law sets a limitation onannual increases in the employer contribution rates.

I NOTE 13 - OTHER POST EMPLOYMENT BENEFITS

As provided by K.S.A. 12-5040, Harper County, Kansas allows retirees to participate in the group healthinsurance plan. While each retiree pays the full amount of the applicable premium, conceptually, theCounty is subsidizing the retirees because each participant is charged a level of premium regardless ofage. However, the cost of this subsidy has not been quantified in this financial statement.

II Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), the County makes health care

benefits available to eligible former employees and eligible dependents. Certain requirements are outlinedby the federal government for this coverage. The premium is paid in full by the insured.I

INOTE 14 - COMPENSATED ABSENCES

VacationVacation is granted to full-time employees based on the following schedule:

I Years of Service0-12-45-9

10- 1415+I

I

5 days10 days12 days15 days18 days

Vacation may not be used until one year of employment is completed. Employees may accumulate amaximum of 80 hours and may carry over 80 hours to the next year. Unused vacation will be due to anemployee who terminates employment with the County to be paid on the payroll following the final date ofemployment. The potential liability for vacation at December 31, 2013 was $64,155. This is reflected inthe financial statement.ISick LeaveAll full-time employees are eligible for sick leave. Sick leave is granted at the rate of eight hours of leavefor each full month beginning with the date of employment. Any employee voluntarily leaving Countyemployment with 10 or more years of continuous service shall be reimbursed for any unused sick leave atthe rate of $20 per day. Employees may accumulate a maximum of 1,040 hours of sick leave. Thepotential liability for sick leave at December 31, 2013 was $24,173. This is not reflected in the financialstatement.

IIII

All full-time employees of the Extension Council accrue sick leave at the rate of 3.7 hours per pay period.Vacation is granted to full-time employees based on the following schedule:

Years of Service0-55 -1010 - 1515+I

II

11 days14 days17 days20 days

13

II


December 31, 2013

II

The Extension Council's policies regarding vacation permit employees to accumulate a maximum of 240hours of vacation and there is no limit on the amount of sick leave that may be accumulated. Thepotential liability for vacation and sick leave at December 31, 2013 was $1,984. This is not reflected in thefinancial statement.

INOTE 15 - LANDFILL CLOSURE AND POST-CLOSURE COSTS

I

Harper County, Kansas has a municipal solid waste landfill that was closed on April 9, 1994. State andfederal laws and regulations require the County to perform certain maintenance and monitoring functionsat the landfill site for 30 years after closure. Estimates of future costs are not maintained for this closedlandfill. The County maintains a small landfill for industrial and construction waste only. State and federallaws and regulations require the County to place a final cover on its landfill site when it stops acceptingwaste and perform certain maintenance and monitoring functions at the site for 30 years after closure.Although closure and post-closure care costs will be paid only near or after the date that the landfill stopsaccepting waste, the County has a potential liability for a portion of this closure and post-closure carecosts in each period based on the landfill capacities used as of each year end. At December 31,2013,the estimated closure and post-closure care costs are $97,132.

I

II

The above figure has been estimated and the potential for change due to inflation or deflation,technology, or applicable laws or regulations, exists to affect the above calculations.

IThe primary landfill commenced operations in February 2006. The landfill is owned and operated byWaste Connections, Inc. The County has negotiated a host agreement with Waste Connections, Inc. andas such, Waste Connections is solely responsible for closure, post-closure, financial and maintenanceresponsibilities in connection with the landfill. Furthermore, the County does not have any financial orenvironmental liability for the landfill.

I NOTE 16 - JOINTLY GOVERNED ORGANIZATIONS

ISouth Central Kansas Coalition for Public HealthHarper County, Kansas participates in the South Central Kansas Coalition for Public Health (Coalition),which is a jointly governed organization comprised of Barber, Comanche, Edwards, Harper, Kingman,Kiowa, and Pratt Counties. The Coalition is governed by an Executive Board composed of a CountyCommissioner from each of the respective counties, a consumer of medical services from each of therespective counties, and a provider of medical services from each of the respective counties. TheCoalition was formed to create a larger base of operation from which to serve the public on an equalbasis with the enhancement and development of core public health functions. The Coalition has receivedfunding from the Kansas Department of Health and Environment and through other private foundations.Grant programs are administered by the Coalition through its member counties as sub-agencies.

IIII

Any member county of the Coalition may terminate its activities and membership by submitting aresolution declaring its intention to withdraw from the agreement no later than the first Friday in June ofeach year, and the withdrawal shall become effective at the end of such year. Should three or more of themember counties terminate its membership, the Coalition will terminate.

II

Mid-Kansas Transit District, Inc.Harper County, Kansas participates in Mid-Kansas Transit District, Inc. (Transit District), a nonprofitcorporation, which is a jointly governed organization comprised of public transportation service providersin Harper, Kingman, Reno, Rice, and Sumner Counties. The Transit District is governed by its memberswho annually elect officers from its membership for the positions of Chairperson, Vice Chairperson,Secretary, and Treasurer. The Transit District was formed for the purpose of lessening government

I

14

III


December 31,2013

II

burden of state and federal funds to public and private not-for-profit agencies providing publictransportation services. The Transit District receives funding from grant programs through the KansasDepartment of Transportation, and such funding is then distributed to its membership. The Countyprovides administrative services to the Transit District and all grant funding received and expended by theTransit District is included in the Mid-Kansas Transit District Fund of the County. The District has its ownaudit which is not part of the County's audit.

NOTE 17 - LONG-TERM DEBT

I Harper County, Kansas has the following type of long-term debt.

ILease ObligationsThe County has entered into lease agreements with an option to purchase at the expiration of the leaseterms. The leases contain a fiscal funding clause.

IIIIIIIIIIII 15

- - - - - - - - - - - - - - - - - -HARPER COUNTY, KANSASNotes to Financial Statement

December 31, 2013

--

Changes in long-term liabilities for the County for the year ended December 31,2013, were as follows:

Date of Balance BalanceInterest Date of Amount Final Beginning Reductionsl End of Interest

Issue Rates Issue of Issue Maturity of Year Additions Payments Year PaidCapital Leases Payable

2008 Caterpillar Track Loader 3.75% 06/24/08 $ 213,843 6/24/2013 $ 83,332 (83,332) 1,6672008 Komatsu Loader 4.00% 10102/08 153,127 8/15/2013 105,186 (105,186) 1,6842008 Komatsu Dozer 3.50% 09/08/08 194,530 8/15/2013 97,905 (97,905) 67

2010 JD 670G Motor Grader 3.45% 05/01110 298,148 7/1/2015 268,858 (13,538) 255,320 8,436

2009 Komatsu Crawler Dozer 3.75% 04/05/10 198,791 4/5/2015 138,996 (19,978) 119,018 5,154

2011 120M Caterpillar Motor Grader 2.85% 08/18/11 1,280,816 9/16/2016 1,154,017 (75,144) 1,078,873 32,358

2012 Komatsu Loader 2.91% 07/23/12 129,612 7/23/2017 124,099 (7,472) 116,627 3,543

2013 Caterpillar Track Loader 2.80% 10/24/13 240,229 10/24/2018 240,229 (16,889) 223,340 560

2013 Caterpillar Motor Graders (2) 3.20% 07/26/13 399,300 7/26/2015 399,300 399,300

2013 Caterpillar Motor Grader 2.50% 10101/13 203,800 10/1/2018 203,800 (8,938) 194,862

2013 Caterpillar Dozer 2.83% 05/09/13 272,822 5/9/2017 272,822 (22,465) 250,357

Total Contractual Indebtedness $ 1,972,393 1,116,151 (450,847) 2,637,697 53,469

16

IIIIIIIIIIIIIIIIIII


December 31, 2013

Current maturities of long-term debt and interest for the next five years through maturity are as follows:

YEAR2014 2015 2016 2017 2018 Total

PrincipalCapital Leases

2010 JD 670G Motor Grader $ 13,216 242,104 255,3202009 Komatsu Crawler Dozer 20,863 98,155 119,0182011 120M Caterpillar Motor Grader 77,301 79,520 922,052 1,078,8732012 Komatsu Loader 7,691 7,915 8,147 92,874 116,6272013 Caterpillar Track Loader 28,810 29,627 30,468 31,332 103,103 223,3402013 Caterpillar Motor Graders (2) 11,663 12,347 12,544 362,745 399,3002013 Caterpillar Motor Grader 13,085 13,414 13,751 14,097 140,515 194,8622013 Caterpillar Dozer 36,237 39,119 40,239 134,762 250,357

Total Principal 208,867 522,201 1,027,202 635,811 243,618 2,637,697

InterestCapital Leases

2010 JD 670G Motor Grader 8,758 4,884 13,6422009 Komatsu Crawler Dozer 4,269 1,844 6,1132011 120M Caterpillar Motor Grader 30,201 27,211 25,699 83,1112012 Komatsu Loader 3,336 3,235 2,879 2,641 12,0912013 Caterpillar Track Loader 6,089 5,272 4,431 3,567 2,679 22,037

2013 Caterpillar Motor Graders (2) 6,886 6,202 6,005 5,804 24,896

2013 Caterpillar Motor Grader 4,790 4,461 4,124 3,778 3,423 20,576

2013 Caterpillar Dozer 8,694 5,812 4,692 2,721 21,919

Total Interest 73,023 58,921 47,830 18,511 6,102 204,386

Total Principal and Interest $ 281,889 581,122 1,075,031 654,321 249,719 2,842,083

17

IIIIIIIIIIIIIIIIIII


Regulatory-Required Supplementary Information

- - - - - - - - - - - - - - - - -- -HARPER COUNTY, KANSAS

Summary of Expenditures - Actual and BudgetRegulatory Basis

For the Year Ended December 31,2013

Schedule 1

Funds

Adjustment for Total ExpendituresCertified Qualifying Budget for Chargeable toBudget Budget Credits Comparison Current Year

$ 6,540,522 6,540,522 6,125,270

186,397 - 186,397 166,537290,079 290,079 232,292

1,785,769 - 1,785,769 1,763,906901,279 901,279 765,31231,000 - 31,000 39,899

174,877 174,877 141,7692,515,967 2,515,967 2,486,318

10,000 10,000 10,000256,739 256,739 253,32424,991 24,991 5,00064,050 64,050 66,860

Governmental Type FundsGeneral Fund

General FundSpecial Purpose Funds

Appraiser's Cost FundDepartment on Aging FundEmployee Benefits FundHealth Fund911 Emergency Tax FundNoxious Weed FundRoad and Bridge FundSpecial Alcohol FundSpecial Bridge FundSpecial Liability FundSCLEPG

18

VarianceOver(Under)

(415,252)

(19,860)(57,787)(21,863)

(135,967)8,899

(33,108)(29,649)

(3,415)(19,991)2,810

I Schedule 2-1Page 1 of6

IHARPER COUNTY, KANSAS

General FundSchedule of Receipts and Expenditures - Actual and Budget

Regulatory Basis

I For the Year Ended December 31, 2013(With Comparative Actual Totals for the Prior Year Ended December 31,2012)

I Current YearPrior VarianceYear Over

I Actual Actual Budget (Under)Receipts

Taxes and Shared Revenues

I Ad Valorem Tax $ 1,976,152 2,252,125 2,334,888 (82,763)

Delinquent Tax 47,159 59,581 59,581Vehicle Tax 137,115 179,632 144,780 34,852

Mineral Production Tax 88,154 191,222 80,000 111,222

I Total Taxes and Shared Revenues 2,248,580 2,682,560 2,559,668 122,892

Intergovernmental

I Local Alcoholic Liquor Tax 1,897 3,018 2,600 418

District Coroner 723 701 700 1

Emergency Management Grants 5,012 12,601 12,000 601

ILocal Sales Tax (CID) 10,000 (10,000)

State Aid 2,500Total Intergovernmental 10,132 16,320 25,300 (8,980)

ILicenses and Fees

Mortgage Registration Fees 675,228 179,907 35,000 144,907

County Officers' Fees 97,711 65,979 102,000 (36,021)

Total Licenses and Fees 772,939 245,886 137,000 108,886

I Charges for ServicesJail Keep Fees 8,844 13,801 3,000 10,801

I Solid Waste Disposal Fees 104,892 88,060 60,000 28,060

Recording Fees 123,950 61,704 50,000 11,704

Ambulance Run Fees 314,503 393,439 350,000 43,439

ITotal Charges for Services 552,189 557,004 463,000 94,004

Use of Money and PropertyInterest on Investments 4,994 9,288 10,000 (712)

I Interest on Delinquent Taxes 69,520 47,486 50,000 (2,514)

Rents 1,404 1,400 (1,400)

Total Use of Money and Property 75,918 56,774 61,400 (4,626)

I MiscellaneousCounty Farm Income 10,320 35,429 45,120 (9,691)

Zoning Fees 13,440 7,111 4,000 3,111

I Tonnage Fees 1,804,935 1,881,066 1,787,000 94,066

Miscellaneous 11,230 2,853 2,853

Shell Oil EMS Reimbursement 210,000

INRP Application Fee 44,560 44,560

PILOT 849,600 850,000 (400)

Reimbursed Expenses 195 2,610 2,610

Transfers In 582 582

I Total Miscellaneous 2,050,120 2,823,811 2,686,120 137,691

Total Receipts $ 5,709,878 6,382,355 5,932,488 449,867

I 19

I Schedule 2-1Page 2 of6


General FundSchedule of Receipts and Expenditures - Actual and Budget

Regulatory Basis

I For the Year Ended December 31,2013(With Comparative Actual Totals for the Prior Year Ended December 31,2012)


I Actual Actual Budget (Under)

ExpendituresCounty Commission $ 56,477 63,358 91,662 (28,304)

I County Clerk 143,420 152,799 148,738 4,061County Treasurer 110,091 122,695 149,890 (27,195)

County Attorney 116,082 108,902 143,588 (34,686)

IRegister of Deeds 132,043 133,133 161,686 (28,553)

Judicial Court (Unified Court) 119,708 116,129 119,800 (3,671 )

Courthouse General 468,713 511,142 480,600 30,542

Election 35,005 24,877 31,250 (6,373)

I Sheriff 372,554 436,541 368,536 68,005

Jail 262,693 223,733 248,907 (25,174)

Dispatch 197,613 187,791 234,655 (46,864)

IAmbulance 595,901 652,552 641,257 11,295

Emergency Management 36,458 30,459 31,700 (1,241)

Solid Waste Disposal 211,574 181,903 275,622 (93,719)

County Administrator 144,814 128,630 134,345 (5,715)

I Zoning 65,131 59,337 151,545 (92,208)

GIS 3,472 31,562 31,562

Community Work Service 10,460 19,895 22,380 (2,485)

IBuildings and Grounds 86,684 86,585 92,043 (5,458)

County Counselor 25,700Appropriations 596,893 1,906,932 362,318 1,544,614

IT 62,251 62,251

I Neighborhood Revitalization 38,804 34,024 34,024

Plumb Thicket Expenditures 114,850 114,850

Transfers Out 1,380,817 735,190 2,650,000 (1,914,810)

I Total Expenditures 5,211,107 6,125,270 6,540,522 (415,252)

IReceipts Over (Under) Expenditures 498,771 257,085

Unencumbered Cash - Beginning 384,688 883,459

I Unencumbered Cash - Ending $ 883459 1,140,544

III

20

I

I Schedule 2-1Page 3 of 6


I General FundSchedule of Receipts and Expenditures - Actual and Budget

Regulatory Basis

IFor the Year Ended December 31,2013

(With Comparative Actual Totals for the Prior Year Ended December 31,2012)


I Actual Actual Budget (Under)County Commission

Personal Services $ 50,625 54,012 54,462 (450)Contractual Services 4,861 4,500 36,500 (32,000)

I Commodities 991 4,846 700 4,146Department Total 56,477 63,358 91,662 (28,304)

I County ClerkPersonal Services 135,074 139,156 134,038 5,118Contractual Services 6,244 11,711 9,700 2,011

ICommodities 1,778 1,932 3,000 (1,068)Capital Outlay 324 2,000 (2,000)

Department Total 143,420 152,799 148,738 4,061

I County TreasurerPersonal Services 94,566 104,600 127,340 (22,740)Contractual Services 13,560 16,579 20,050 (3,471)

ICommodities 1,965 1,516 2,500 (984)

Department Total 110,091 122,695 149,890 (27,195)

County Attorney

I Personal Services 82,340 92,756 102,278 (9,522)Contractual Services 27,349 8,150 34,810 (26,660)Commodities 4,083 5,759 5,000 759

I Capital Outlay 2,310 2,237 1,500 737Department Total 116,082 108,902 143,588 (34,686)

Register of Deeds

I Personal Services 121,332 124,256 133,486 (9,230)Contractual Services 4,241 5,387 16,200 (10,813)Commodities 5,199 3,490 9,000 (5,510)

I Capital Outlay 1,271 3,000 (3,000)Department Total 132,043 133,133 161,686 (28,553)

IJudicial Court (Unified Court)

Contractual Services 107,722 95,874 100,300 (4,426)Commodities 9,170 11,148 8,500 2,648Capital Outlay 2,816 9,107 11,000 (1,893)

I Department Total 119,708 116,129 119,800 (3,671 )

Courthouse General

IPersonal Services 5,069 50,000 50,000Contractual Services 390,356 368,813 449,800 (80,987)Commodities 66,635 80,639 24,800 55,839Capital Outlay 6,653 11,690 6,000 5,690

I Department Total $ 468,713 511,142 480,600 30,542

21

I

I Schedule 2-1Page 4 of 6


I General FundSchedule of Receipts and Expenditures - Actual and Budget

Regulatory Basis

I For the Year Ended December 31,2013(With Comparative Actual Totals for the Prior Year Ended December 31,2012)


I Actual Actual Budget (Under)Election

Personal Services $ 11,006 8,807 6,000 2,807

IContractual Services 17,447 12,007 17,050 (5,043)Commodities 4,339 685 1,700 (1,015)Capital Outlay 2,213 3,378 6,500 (3,122)


I SheriffPersonal Services 288,299 329,795 268,556 61,239

IContractual Services 31,931 32,552 39,950 (7,398)Commodities 50,754 67,832 56,630 11,202Capital Outlay 1,570 6,362 3,400 2,962

Department Total 372,554 436,541 368,536 68,005

I JailPersonal Services 143,494 149,202 144,107 5,095

IContractual Services 84,879 32,907 57,700 (24,793)

Commodities 33,070 40,437 45,100 (4,663)Capital Outlay 1,250 1,187 2,000 (813)


I DispatchPersonal Services 182,845 173,058 212,555 (39,497)

I Contractual Services 9,599 10,865 15,400 (4,535)Commodities 4,047 3,228 4,200 (972)

Capital Outlay 1,122 640 2,500 (1,860)Department Total 197,613 187,791 234,655 (46,864)

I AmbulancePersonal Services 477,699 535,293 546,204 (10,911)

I Contractual Services 36,705 70,374 31,058 39,316Commodities 53,662 46,543 57,680 (11,137)

Capital Outlay 27,835 342 6,315 (5,973)

IDepartment Total 595,901 652,552 641,257 11,295

Emergency ManagementPersonal Services 24,198 19,852 20,000 (148)

I Contractual Services 3,826 3,939 3,900 39Commodities 3,816 1,848 6,800 (4,952)Capital Outlay 4,618 4,820 1,000 3,820

IDepartment Total $ 36,458 30,459 31,700 (1,241)

I22

I

I Schedule 2-1Page 50f6

I HARPERCOUNT~KANSASGeneral Fund

Schedule of Receipts and Expenditures - Actual and Budget

I Regulatory BasisFor the Year Ended December 31, 2013


I Current YearPrior Variance

I Year OverActual Actual Budget (Under)

Solid Waste DisposalPersonal Services $ 111,698 90,910 106,272 (15,362)

I Contractual Services 35,629 34,848 59,350 (24,502)Commodities 28,078 20,738 53,600 (32,862)Capital Outlay 36,169 35,407 56,400 (20,993)

I Department Total 211,574 181,903 275,622 (93,719)

County Administrator

IPersonal Services 114,492 117,667 115,066 2,601Contractual Services 25,798 9,405 14,842 (5,437)

Commodities 4,524 1,558 2,937 (1,379)Capital Outlay 1,500 (1,500)

I Department Total 144,814 128,630 134,345 (5,715)

Zoning

IPersonal Services 20,220 33,319 133,000 (99,681)Contractual Services 44,227 24,204 17,500 6,704Commodities 684 1,814 1,045 769


I GISCommodities 3,472 31,562 31,562

I Community Work ServicePersonal Services 6,988 11,427 12,730 (1,303)Contractual Services 2,381 4,728 6,150 (1,422)

I Commodities 1,091 1,468 1,200 268Capital Outlay 2,272 2,300 (28)


I Buildings and GroundsPersonal Services 47,295 43,071 41,843 1,228Contractual Services 12,361 15,023 21,200 (6,177)

I Commodities 9,714 15,603 8,000 7,603Capital Outlay 17,314 12,888 21,000 (8,112)


I County CounselorContractual Services 25,599

ICommodities 101Capital Outlay

Department Total $ 25,700

I23

I

IIIIIIIIIIIIIIIIIII

Schedule 2-1Page 6 of6

HARPER COUNTY, KANSASGeneral Fund

Schedule of Receipts and Expenditures - Actual and BudgetRegulatory Basis

For the Year Ended December 31,2013(With Comparative Actual Totals for the Prior Year Ended December 31,2012)

Current YearPrior VarianceYear OverActual Actual Budget (Under)

AppropriationsSoil Conservation $ 20,306 10,000 10,000Historical Society 2,000 2,000 2,000SCKEDD and RC&D 1,776 1,776 3,500 (1,724)Harper County Economic Development 90,000 90,000 90,000Harper County Community Foundation 200,000 1,471,734 54,000 1,417,734Mental Health 75,493 75,500 75,500Mental Retardation 54,620 54,620 54,620South Central Community Corrections 10,000 10,000SCLEPG 24,400 24,400Rural Opportunity Zone Program 14,204 14,204County Extension 134,998 134,998 134,998County Fair 8,500 8,500 8,500County Fair Building 9,200 9,200 9,200

Total Appropriations 596,893 1,906,932 362,318 1,544,614

ITPersonal Services 60,951 60,951Contractual Services 1,300 1,300

Department Total 62,251 62,251

Neighborhood Revitalization 38,804 34,024 34,024

Plumb Thicket Expenditures 114,850 114,850

Transfers Out 1,380,817 735,190 2,650,000 (1,914,810)

Total Expenditures $ 5211107 6,125,270 6,540,522 (415,252}

24

ISchedule 2-2

I HARPER COUNTY, KANSASAppraiser's Cost Fund



II

I


ReceiptsTaxes and Shared Revenues

Ad Valorem Tax $ 129,331 156,906 162,641 (5,735)Delinquent Tax 4,071 4,344 4,344Vehicle Tax 11,404 12,283 9,495 2,788

Miscellaneous 8,075 4,585 4,585

Total Receipts 152,881 178,118 172,136 5982

ExpendituresPersonal Services 164,511 143,763 158,000 (14,237)Contractual Services 13,904 16,763 10,700 6,063Commodities 7,370 3,352 9,000 (5,648)Capital Outlay 1,305 7,500 (7,500)Neighborhood Revitalization Program 2,960 2,659 1,197 1,462

Total Expenditures 190,050 166,537 186397 (19,860)

Receipts Over (Under) Expenditures (37,169) 11,581


Unencumbered Cash - Ending $ 13,222 24,803

IIII

IIIIII

II

25

I

ISchedule 2-3

I HARPER COUNTY, KANSASDepartment on Aging Fund



II

I



Ad Valorem Tax $ 82,533 83,355 86,400 (3,045)Delinquent Tax 2,435 2,490 2,490Vehicle Tax 7,250 7,865 6,051 1 ,814

IntergovernmentalState Aid 116,006 75,408 105,242 (29,834)Mid Kansas Transit District 8,497 7,566 8,500 (934)

MiscellaneousDonations 57,357 44,789 29,000 15,789

Total Receipts 274,078 221,473 235,193 (13,720)

ExpendituresPersonal Services 117,985 121,288 129,733 (8,445)Contractual Services 87,616 80,137 125,210 (45,073)Commodities 28,164 26,488 31,500 (5,012)Capital Outlay 39,320Transfers Out 4,000 3,000 3,000Neighborhood Revitalizaton Rebate 1,930 1,379 636 743


Receipts Over (Under) Expenditures (4,937) (10,819)


Unencumbered Cash - Ending $ 77 980 67161

IIIIIIII

IIIII

26

I

ISchedule 2-4

I HARPER COUNTY, KANSASEmployee Benefits Fund


For the Year Ended December 31, 2013(With Comparative Actual Totals for the Prior Year Ended December 31, 2012)

II

I



Ad Valorem Tax $ 1,308,531 1,542,348 1,598,880 (56,532)Delinquent Tax 33,901 40,977 40,977Vehicle Tax 117,309 125,100 95,852 29,248

Miscellaneous 10,127

Total Receipts 1,469,868 1,708,425 1,694,732 13693

ExpendituresSocial Security 290,872 286,668 324,800 (38,132)KPERS 370,145 340,958 379,700 (38,742)Workmen's Compensation 122,609 142,369 150,000 (7,631)Unemployment Insurance 9,730 7,206 12,000 (4,794)Health Insurance 825,412 958,291 900,000 58,291Life Insurance 6,122 6,192 7,500 (1,308)Neighborhood Revitalization Program 30,492 22,222 11,769 10,453

Total Expenditures 1,655,382 1,763,906 1,785769 (21 ,863)



Unencumbered Cash - Ending $ 61 193 5712

IIIIII

IIIIIII

27

I

III

Schedule 2-5

I

HARPER COUNTY, KANSASHealth Fund


For the Year Ended December 31, 2013(With Comparative Actual Totals for the Prior Year Ended December 31,2012)

I




IntergovernmentalState Grants 44,768 49,035 49,035Federal Grants 21,786 20,260 20,260

Charges for ServicesPublic Health Receipts 192,979 212,602 299,000 (86,398)Home Health Receipts 192,836 172,595 210,000 (37,405)

Total Receipts 689,498 710,754 759041 (48,287)

ExpendituresPersonal Services 578,693 592,919 701,445 (108,526)Contractual Services 89,342 80,749 101,500 (20,751)Commodities 85,177 80,685 86,600 (5,915)Capital Outlay 274 7,000 10,000 (3,000)Grants Expense 9,400Neighborhood Revitalization Program 6,217 3,959 1,734 2,225

Total Expenditures 769,103 765,312 901 279 (135,967)



Unencumbered Cash - Ending $ 241 192 186,634

IIIIIII

IIIIII

28

I

ISchedule 2-6

I HARPER COUNTY, KANSAS911 Emergency Tax Fund



III


Receipts911 Fees $ 68,699 50,038 30000 20,038

ExpendituresContractual Services 21,614 21,678 30,000 (8,322)Commodities 39,849 18,221 1,000 17,221

Total Expenditures 61,463 39,899 31000 8899

Receipts Over (Under) Expenditures 7,236 10,139


Unencumbered Cash - Ending $ 19719 291858

IIIIIIIIIIIII

29

I

ISchedule 2-7

I HARPER COUNTY, KANSASNoxious Weed Fund


For the Year Ended December 31, 2013(With Comparative Actual Totals for the Prior Year Ended December 31, 2012)

III




MiscellaneousChemical Sales 20,887 29,419 25,750 3,669

Total Receipts 163,899 164,870 159633 5237

ExpendituresPersonal Services 65,984 50,593 85,041 (34,448)Contractual Services 13,754 15,175 12,083 3,092Commodities 86,754 52,911 76,838 (23,927)Capital Outlay 4,916 5,941 5,941Transfers Out 15,000 15,000Neighborhood Revitalization Rebate 2,681 2,149 915 1,234




Unencumbered Cash - Ending $ 6122 29,223

IIIIIIIIIIIII

30

I

II

Schedule 2-8

HARPER COUNTY, KANSASRoad and Bridge Fund


For the Year Ended December 31 , 2013(With Comparative Actual Totals for the Prior Year Ended December 31,2012)



Ad Valorem Tax $ 1,407,487 1,518,715 1,573,581 (54,866)Delinquent Tax 40,533 43,996 99,080 (55,084)Vehicle Tax 119,296 132,293 4,285 128,008

IntergovernmentalSpecial County Highway 325,406 335,956 332,667 3,289County Equalization 24,488 24,581 24,581Federal and State Aid 74,052 215,621 215,621

MiscellaneousReimbursements 126,294 61,468 61,468Right of Way 385,812 494,350 50,000 444,350Miscellaneous 26,311 29,384 29,384

Total Receipts 2,529,679 2,856,364 2,059,613 796751

ExpendituresPersonal Services 947,531 992,264 1,019,385 (27,121)Contractual Services 95,525 110,897 51,000 59,897Commodities 713,631 788,853 837,500 (48,647)Capital Outlay 308,544 273,200 301,500 (28,300)Transfers Out 295,000 295,000 295,000Neighborhood Revitalization 30,608 26,104 11,582 14,522

Total Expenditures 2,390,839 2,486,318 2,515,967 (29,649)



Unencumbered Cash - Ending $ 720,917 1,090,963

IIIIIIIIIIIIIIII

31

I

II

Schedule 2-9

IHARPERCOUNT~KANSAS

Special Alcohol FundSchedule of Receipts and Expenditures - Actual and Budget


(With Comparative Actual Totals for the Prior Year Ended December 31, 2012)

II

Current YearPrior VarianceYear overActual Actual Budget (under)

ReceiptsIntergovernmental

Local Alcoholic Liquor Tax $ 3,793 6,036 6636 (600)

ExpendituresApportionment 10,000 10,000 10000




IIIIIIIIIIIII

32

I

II

Schedule 2-10


Special Bridge FundSchedule of Receipts and Expenditures - Actual and Budget



II




State Aid 199,900 199,900

Total Receipts 210,536 437,544 236,785 200759

ExpendituresPersonal Services 95,947 98,294 98,100 194Contractual Services 15,911 157,000 (157,000)Commodities 111,288 151,590 151,590Capital Outlay 2,324Neighborhood Revitalization Rebate 3,673 3,440 1,639 1,801

Total Expenditures 229,143 253,324 256,739 (3,415)




IIIIIIIIIIIII

33

I

ISchedule 2-11

I HARPER COUNTY, KANSASSpecial Liability Fund



III


Receipts $

ExpendituresContractual Services 5,000 24,991 (19,991 )

Receipts Over (Under) Expenditures (5,000)



IIIIIIIIIIIII

34

I

II

Schedule 2-12


Capital Equipment Reserve FundSchedule of Receipts and Expenditures



II

Prior CurrentYear YearActual Actual

ReceiptsReimbursements $ 2,777Transfers In 4,000 68,000

Total Receipts 6,777 68,000

ExpendituresCapital Outlay 107,090 109,389




IIIIIIIIIIIII

35

I

ISchedule 2-13

I HARPER COUNTY, KANSASCapital Improvement Reserve FundSchedule of Receipts and Expenditures



III


ReceiptsTransfers In $ 50,000 503,567





IIIIIIIIIIIII

36

I

IIII

HARPER COUNTY, KANSASCounty Attorney Equipment Fund

Schedule of Receipts and ExpendituresRegulatory Basis


Schedule 2-14

I ReceiptsDiversion FeesBad Check FeesMiscellaneousI

ITotal Receipts

ExpendituresCommodities

I

PriorYearActual

$65567

722

Total Expenditures

722

IReceipts Over (Under) Expenditures

5,842Unencumbered Cash - Beginning

I Unencumbered Cash - Ending $ ==~6~5~64;,.

IIIIIIIII

37

CurrentYearActual

985224282

1,491

3,464

3,464

(1,973)

6,564

4591

II HARPER COUNTY, KANSAS

County Attorney Special Equipment FundSchedule of Receipts and Expenditures



II

Schedule 2-15

IPriorYearActual

ReceiptsReimbursed Expenses $

ExpendituresCapital Outlay 11,228

Receipts Over (Under) Expenditures (11,228)

Unencumbered Cash - Beginning 10,659

Unencumbered Cash - Ending $ (569)

IIIIIIIIIIIII

38

I

CurrentYearActual

570

570

(569)

II

Schedule 2-16


Sheriff Equipment FundSchedule of Receipts and Expenditures

Regulatory BasisFor the Year Ended December 31, 2013


II


ReceiptsDonations $ 9,700 1,301Miscellaneous 4,965 7,656


ExpendituresContractual Services 724 9,548

Receipts Over (Under) Expenditures 13,941 (591)



IIIIIIIIIIIII

39

I

ISchedule 2-17

I HARPER COUNTY, KANSASSpecial Highway Improvement FundSchedule of Receipts and Expenditures



III


ReceiptsReimbursements $ 321,726 1,468,405Transfers In 290,000 290,000

Total Receipts 611,726 1,758,405

ExpendituresCommodities 810,143 1,341,417


Unencumbered Cash - Beginning 1,324,104 1,125,687

Unencumbered Cash - Ending $ 1,125,687 1,542,675

IIIIIIIIIIIII

40

I

ISchedule 2-18

I HARPERCOUNT~KANSASSpecial Machinery Fund



III

PriorYearActual Actual

ReceiptsTransfers In $ 5,000 5,000Reimbursed Expenses 9,000


ExpendituresCapital Outlay 23,081

Receipts Over (Under) Expenditures 5,000 (9,081)



IIIIIIIIIIIII

41

I

ISchedule 2-19

I HARPER COUNTY, KANSASRegister of Deeds Technology FundSchedule of Receipts and Expenditures


(With Comparative Actual Totals for the Prior Year Ended December 31, 2012)III


ReceiptsCollections $ 35,478 18,932


Receipts Over (Under) Expenditures 24,796 (2,894)


Unencumbered Cash - Ending $ 100966 981°72

IIIIIIIIIIIII

42

I

IIII

HARPER COUNTY, KANSASPlumb Thicket Monitoring Fund


For the Year Ended December 31,2013(With Comparative Actual Totals for the Prior Year Ended December 31, 2012)

Schedule 2-20

I ReceiptsTransfers In

I ExpendituresCapital Outlay

I

PriorYearActual

$ 1,290,817

1,290,817Receipts Over (Under) Expenditures

5,968,488Unencumbered Cash - Beginning

I Unencumbered Cash - Ending $ ==7~,2~5~9-=,3=05~

IIIIIIIIIII

43

CurrentYearActual

181,623

219,720

(38,097)

7,259,305

7,221 ,208

IIII

HARPER COUNTY, KANSASCourthouse Preservation Fund



Schedule 2-21

I ReceiptsOrnament Sales

I ExpendituresCommodities

I

PriorYearActual

$

Receipts Over (Under) Expenditures


I Unencumbered Cash - Ending $ ===1;,;;0,0,;;0=0==1

IIIIIIIIIII

44

CurrentYearActual

35 40

425

35 (385)

10,001

9616

IIII

HARPER COUNTY, KANSASMicroloan Fund



Schedule 2-22

I ReceiptsLoan Repayments

I ExpendituresContractual

I

PriorYearActual

$

7

(7)

41,349

$ 41,342


Unencumbered Cash - Beginning

I Unencumbered Cash - Ending

IIIIIIIIIII

45

CurrentYearActual

41,342

41342

ISchedule 2-23

I HARPER COUNTY, KANSASSCLEPG Fund



II Current Year

Prior VarianceYear OverActual Actual Budget (Under)

ReceiptsLocal Contributions $ 22,800 68,350 69,400 (1,050)

Licenses, Permits, and Fees 7,439 7,554 34,006 (26,452)

Miscellaneous 345 1,853 1,853

Total Receipts 30,584 77,757 103406 (25,649)

ExpendituresPersonal Services 47,768 52,998 52,000 998

Contractual Services 5,217 7,487 4,350 3,137

Commodities 5,153 943 6,700 (5,757)

Capital Outlay 310 5,432 1,000 4,432

Total Expenditures 58,448 66,860 64050 2810

Cash Receipts Over (Under) Expenditures (27,864) 10,897

Unencumbered Cash - Beginning 25,215 (2,649)

Unencumbered Cash - Ending $ (2,649) 8,248

IIIIIIIIIIIIII

46

I

IIII

HARPER COUNTY, KANSASCOBG Fund



Schedule 2-24

I ReceiptsElkhorn ReceiptsFederal AidI

Total Receipts

I ExpendituresElkhorn Payments

PriorYearActual

$ 64,042

64,042

64,042

I Receipts Over (Under) Expenditures

444Unencumbered Cash - Beginning

I Unencumbered Cash - Ending $ ===~4~44~

IIIIIIIIII

47

CurrentYearActual

23,295353,631

376,926

376,919

7

444

451

IIII

HARPER COUNTY, KANSASDare Program Fund



Schedule 2-25

I ReceiptsReimbursement


I

PriorYearActual

$ 1,500

Receipts Over (Under) Expenditures 1,500


I Unencumbered Cash - Ending $ ==:=:.1 ~5,;;,;00~

IIIIIIIIIII

48

CurrentYearActual

5,475

6,030

(555)

1,500

945

ISchedule 2-26

I HARPER COUNTY, KANSAS150th Road Project Fund



II

I


ReceiptsReimbursement $ 173,000 50,287

ExpendituresContractual Services 6,070 39,507


Unencumbered Cash - Beginning (1,039,677) (872,747)

Unencumbered Cash - Ending $ (872,747) (861,967)

III

IIIIIIIIII

49

I

I50 Schedule 2-27

I HARPER COUNTY, KANSASProsecutor Training Assistance FundSchedule of Receipts and Expenditures



III


ReceiptsCollections $ 1,906 2,093

ExpendituresCommodities 1,975 820

Receipts Over (Under) Expenditures (69) 1,273



IIIIIIIIIIIII

50

I

IIII

HARPER COUNTY, KANSASLaw Enforcement Grant Fund



Schedule 2-28

II

ReceiptsFoundation Grant

IExpenditures

Commodities

PriorYearActual

$


449I Unencumbered Cash - Beginning

Unencumbered Cash - Ending $ ===~4,,;;49==

IIIIIIIIIII

51

CurrentYearActual

5,500

4,733

767

449

1 216

ISchedule 2-29

I HARPER COUNTY, KANSASSpecial Motor Vehicle License FundSchedule of Receipts and Expenditures


(With Comparative Actual Totals for the Prior Year Ended December 31, 2012)II

I


ReceiptsLicenses, Permits, and Fees $ 57,119 60,436Miscellaneous 558


ExpendituresPersonal Services 47,268 43,968

Contractual Services 3,564 3,820

Commodities 12,858 91

Capital Outlay 535Transfers Out 582

Total Expenditures 64,225 48,461


Unencumbered Cash - Beginning (5,427) (11,975)

Unencumbered Cash - Ending $ (11,975}

IIIII

IIIIIIII

52

I


Oil/Gas Value Depletion FundSchedule of Receipts and Expenditures



II

Schedule 2-30

IPriorYearActual

ReceiptsOil and Gas Valuation Distribution $ 493,353

I Expenditures

IReceipts Over (Under) Expenditures 493,353


I Unencumbered Cash - Ending $ ==4~9;;;3~,3,;;;53~

IIIIIIIIII

53

I

CurrentYearActual

493,353

493,353


Ambulance Memorial FundSchedule of Receipts and Expenditures



II

Schedule 2-31

IPriorYearActual

Receipts $

I Expenditures

IReceipts Over (Under) Expenditures


I Unencumbered Cash - Ending $ ==~3;;;;0.;,,;78~

IIIIIIIIII

54

I

CurrentYearActual

3,078

3078

IIII

HARPER COUNTY, KANSASEMS Education Grant Fund



Schedule 2-32

I ReceiptsGrant Proceeds


I

PriorYearActual

$ 470

470



I Unencumbered Cash - Ending $ ==~2~0,;;;.81;..,

IIIIIIIIIII

55

CurrentYearActual

708

(708)

2,081

1373

ISchedule 2-33

I HARPER COUNTY, KANSASExtension Council


For the Year Ended December 31,2013(With Comparative Actual Totals for the Prior Year Ended December 31, 2012)

II

I


ReceiptsCounty Appropriations $ 134,998 134,998KSU Salary Participation 37,721 38,688Educational Services 8,384 12,413Interest and Miscellaneous Income 4,945 150


ExpendituresAudit, Printing, and Treasury Bond 2,463 6,549Telephone 2,284 2,833Postage and Supplies 3,457 2,507Equipment 4,113 5,032Miscellaneous 6,809 7,466Transportation 3,787 4,235Subsistence 1,399 1,890Salaries 120,489 117,350Social Security and Retirement 20,662 20,759

Reimbursed Items 8,912 13,093

Total Expenditures 174,375 181,714




IIIIIII

IIIIII

56

I

ISchedule 3-1

I HARPER COUNTY, KANSASDistributable Funds, State Funds, and Subdivision Funds

I Summary of Receipts and DisbursementsRegulatory Basis


I Beginning EndingCash Cash

IFund Balance Receipts Disbursements Balance

Distributable FundsAdvance Tax $ (4,858) 51,982 37,983 9,141NRP Rebate (53,705) 234,705 181,000

I Neighborhood Revitalization Program 39,310 39,310Current Tax 8,769,749 15,535,152 13,789,698 10,515,203Delinquent Personal Property 8,213 188,855 187,570 9,498

IDelinquent Real Estate Tax 94,971 335,398 318,630 111,739Delinquent 16/20M Tax 2,209 2,014 195Motor Vehicle Tax 181,080 1,099,701 1,110,761 170,020Motor Vehicle 16/20M Tax 22,747 30,795 30,697 22,845

I Motor Vehicle Sales Tax 17,548 229,801 247,349Rental Excise Tax 124 124TaX/MV Clearing Fund (450) 41,700 41,250

I Total Distributable Funds 9,074,605 17,750,422 15,986,262 10,838,765

State Funds

I State Drivers Licenses (500) 40,172 39,672State Educational Building Tax 97,571 97,571State Institutional Building Tax 48,785 48,785

I Total State Funds (500) 186,528 186,028

Subdivision Funds

I Cemetery Districts 128,718 128,718Cities 523 1,659,327 1,659,015 835Hospital Districts 8 1,735,483 1,735,491School Districts 14,563 4,500,942 4,438,138 77,367

I 215,125 215,125South Central KS Library - General 80,421 80,421South Central KS Library - EE Benefits 4,634 4,634

I Total Subdivision Funds 15,094 8,324,650 8,261,542 78,202

Total $ 9,089,199 26,261,600 24,433,832 1019161967

IIII

57

I

ISchedule 3-2

I HARPER COUNTY, KANSASAgency Funds

Summary of Receipts and DisbursementsRegulatory Basis

For the Year Ended December 31,2013III

Beginning EndingCash Cash

Fund Balance Receipts Disbursements Balance

Clerk of District Court Office $ 51,881 1,207,569 988,753 270,697Law Library 40,554 5,919 2,713 43,760Sheriff's Commissary Fund 13,477 82,415 80,073 15,819Operating Returned Checks (3,647) 9,350 5,703Mid-Kansas Transit District 918,078 918,078South Central KS Clerks Association Fund 1,099 347 554 892Payroll Clearing Fund 2,374 1,241,083 1,242,236 1,221Motor Vehicle Licenses 27,949 459,330 440,928 46,351Fish and Game Licenses (14) 4,750 4,736Jury Duty Clearing Fund 10,147 10,147Harper County CID Fund 269,886 441,466 25,142 686,210Master Gardner Grant 1,000 536 464

Total $ 403559 4380454 3,719,063 1,065,414

IIIIIIIIIIIII

58

I

ADAMSBROWNBERAN& BALL

Phone (620)663-5659 • Fax (620)663-6745. www.abbb.com1701 Landon StreetHutchinson, Kansas 67502

CertifiedPublic

Accountants

June 17, 2014

To the County Commission and ManagementHarper County, KansasAnthony, Kansas

Management Letter

In planning and performing our audit of the financial statement of Harper County, Kansas as of and for theyear ended December 31,2013, in accordance with auditing standards generally accepted in the UnitedStates of America, we considered the County's internal control over financial reporting (internal control) as abasis for designing audit procedures that are appropriate in the circumstances for the purpose of expressingour opinion on the financial statement, but not for the purpose of expressing an opinion on the effectiveness ofthe County's internal control. Accordingly, we do not express an opinion on the effectiveness of the County'sinternal control.

Our consideration of internal control was for the limited purpose described in the preceding paragraph andwas not designed to identify all deficiencies in internal control that might be material weaknesses or significantdeficiencies and, therefore, material weaknesses or significant deficiencies may exist that were not identified.However, as discussed below, we identified certain deficiencies in internal control that we consider to be amaterial weakness and other deficiencies that we consider to be significant deficiencies.

A deficiency in internal control exists when the design or operation of a control does not allow management oremployees, in the normal course of performing their assigned functions, to prevent, or detect and correctmisstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies ininternal control, such that there is a reasonable possibility that a material misstatement of the entity's financialstatements will not be prevented, or detected and corrected, on a timely basis. We consider the followingdeficiency in the County's internal control to be a material weakness.

• Harper County, Kansas does not have proper segregation of duties necessary to establish a goodsystem of internal control. We understand that the size of the County's accounting and administrativestaff and related budget constraints preclude management from hiring additional personnel to achieveproper segregation of duties. However, limited segregation can and should be implemented to reducethe risk of errors or fraud. Where possible, duties should be segregated. Involvement by theCommission can also mitigate the risks of error or fraud. The Commission should remain involved inthe financial affairs of the County to provide oversight and independent review functions.

A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severethan a material weakness, yet important enough to merit attention by those charged with governance. Weconsider the following deficiencies in the County's internal control to be significant deficiencies.

• One employee in the Clerk's office inputs vouchers into the system, prints checks, reconciles, andmails the checks. These activities, if all completed by one person, can lead to an opportunity tocommit fraud. Although the Clerk's office has minimal staff for segregation of duties, the reconcilingand mailing of the checks should be performed by another employee in the Clerk's office.

http://www.abbb.com

Harper County, KansasPage 2June 17, 2014

• There are a large number of employees with access to the various fuel refilling locations. A manualfuel log is kept for each department. No tracking of fuel inventory is kept due to the manual fuel logsystem being unreliable. Stronger controls should be implemented, such as a fuel card system, toprevent unauthorized fueling and to help track inventory.

• The Sheriff's Department has a checking account tor the prison commissary. There is one individualwho records receipts, takes deposits to the bank, is an authorized check signer, and reconciles thebank account. These duties should be segregated between two individuals or the Sheriff could reviewthe unopened bank statements and reconciliations to· provide oversight. This individual has access tothe Sheriff's signature stamp as well. The Sheriff should keep his signature stamp inaccessible toothers. Also, the Sheriff's records need to be reconciled to the Treasurer's records to verify accuracyand completeness. . > r ', •

• The County is responsible for the oversight of anyaqeney'or activity that is under their control. TheSCLEPG is being accounted for by the couhty 'C!.nd as such, the Commission should be receiving amonthly or quarterly report of the revenue collected by the individual. This should be compared andensure that the actual records agree with the County's receipts of revenue. The expenditures arebeing approved by the County Commission. already.

We would like to express our appreciation for the opportunity to perform the December 31,2013 audit forHarper County, Kansas and to the employees for the cooperation and assistance given to us during theaudit.

This communication is intended solely for the information and use of management, the County Commission,others within the organization, and State of Kansas, and is not intended to be, and should not be, used byanyone other than these specified parties.' •. ~ .J

;jdA.fYl» :Bro WII) 8-e.1'''''''-. .•.. 13'-'1/ CJFrP.

ADAMS, BROWN, BERAN & BALL, CHTD.Certified Public Accountants

Documents

HARPER COUNTY, KANSAS I Financial Statement With