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JWC Agenda 06-04-2025 AGENDA JOINT WATER COMMISSION June 4, 2025 – 1:30 pm Remote Attendance: Members of the public may attend this meeting via Microsoft Teams by calling 1-872-256-4160 and entering access code 119 801 16#. Questions/Comments: Members of the public who have questions about the commission or any items on the agenda should contact the staff commission liaison Matthew Rowedder, Utilities Supervisor, City of New Hope, mrowedder@newhopemn.gov, 763-592-6760. 1. Call to Order—Roll Call 2. Approval of Minutes – May 7, 2025 3. Discuss 2024 Financial Statement Audit Completed by CDS 4. TAC Update 5. Adjournment Joint Water Commission, May 7, 2025 Page 1 of 2 JOINT WATER COMMISSION MINUTES Golden Valley - Crystal - New Hope Meeting of May 7, 2025 The Golden Valley - Crystal - New Hope Joint Water Commission (JWC) meeting was called to order at 1:32 pm. Roll Call Present Noah Schuchman, City Manager, Golden Valley Adam Bell, City Manager, Crystal Reece Bertholf, City Manager, New Hope Staff Present Derek Goddard, Water Distribution Specialist, Golden Valley Dave Lemke, Operations Manager, New Hope Analeigh Moser, Accountant, Golden Valley Lyle Hodges, Finance Director, Golden Valley Bernie Weber, Public Works Director, New Hope Carrie Nelson, Engineering Assistant, City of Golden Valley Approval of Minutes – March 5, 2025 Moved by Bertholf and seconded by Bell to approve the minutes from the March 5, 2025 Joint Water Commission (JWC) Meeting. Upon a roll call vote the following voted in favor: Schuchman, Bell and Bertholf. The following voted against: None. Motion carried. Financial Presentations Commissioners heard presentations from Creative Planning, Clifton Larson Allen, and Abdo Financial Solutions on the proposals found in the May 7, 2025 Agenda Packet for Joint Water Commission Audit and Accounting Services. Moved by Bertholf and seconded by Bell to approve moving forward with the discussion with Abdo Financial Solutions and tell them we are looking at other options that have a lower price tag and ask them if they can make their proposal a little more competitive. Upon a roll call vote the following voted in favor: Schuchman, Bell and Bertholf. The following voted against: None. Motion carried. Hydrant Pressure Monitoring Moved by Bell and seconded by Bertholf to approve the purchase of hydrant monitoring equipment to monitor water pressure on the water distribution system within the JWC. Upon a roll call vote the following voted in favor: Schuchman, Bell and Bertholf. The following voted against: None. Motion carried. Security Cameras at New Hope Water Towers Moved by Bertholf and seconded by Bell to approve proceeding with installing cameras at both locations now and utilizing reserve funds for the second site. Upon a roll call vote the Joint Water Commission, May 7, 2025 Page 2 of 2 following voted in favor: Schuchman, Bell and Bertholf. The following voted against: None. Motion carried. TAC Update Staff provided an update from the April 17, 2025 TAC Meeting. Adjournment Chair Schuchman adjourned the meeting at 2:34 pm. ATTEST: Carrie Nelson, Recording Secretary Chair Noah Schuchman Joint Water Commission June 4, 2025 Agenda Item #3 Discuss 2024 Financial Statement Audit Completed by CDS Prepared by Lyle Hodges, Golden Valley Finance Director Summary The firm of Conway, Deuth & Schmiesing, PLLP has completed the audit of the Joint Water Commission for the year ended December 31, 2024. A representative from the firm will join the meeting virtually to present the results of the audit including a brief overview of the financial performance as well as a review of the findings. Attachments Financial Statements, Management Letter, Presentation PowerPoint Recommended Action Receive and file a presentation on the 2024 audit of the Joint Water Commission. LITCHFIELD, MINNESOTA GOLDEN VALLEY-CRYSTAL-NEW HOPE JOINT WATER COMMISSION MANAGEMENT LETTER DECEMBER 31, 2024 CONWAY, DEUTH & SCHMIESING, PLLP CPAS & ADVISORS This page intentionally left blank Page Required Communications 1-2 Schedule of Findings on Internal Accounting Issues and Internal Controls 3 GOLDEN VALLEY-CRYSTAL-NEW HOPE JOINT WATER COMMISSION TABLE OF CONTENTS DECEMBER 31, 2024 This page intentionally left blank Board of Commissioners and Management, Golden Valley-Crystal-New Hope Joint Water Commission Qualitative Aspects of Accounting Practices 1 We have audited the accompanying financial statements of the governmental activities and each major fund of the Golden Valley-Crystal-New Hope Joint Water Commission, for the year ended December 31, 2024. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards and Government Auditing Standards, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you dated April 7, 2025. Professional standards also require that we communicate to you the following information related to our audit. Management's estimate of lease terms and discount rates on leases is based on information stated in the lease agreement and expectations of the lease. The lease terms and discount rates determine the amount of interest revenue that will be recorded during each reporting period as well as the amount of deferred inflows of resources and lease receivable that is reported at the end of a reporting period. The financial statement disclosures are neutral, consistent, and clear. Significant Audit Findings Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the Golden Valley-Crystal-New Hope Joint Water Commission are described in Note 1 to the financial statements. No new accounting policies were adopted and the application of existing policies was not changed during 2024. We noted no transactions entered into by the Commission during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimate affecting the financial statements were: Management’s estimate of depreciation is based on the number of years an asset is in service. We evaluated the key factors and assumptions used to develop the depreciation estimate in determining that it is reasonable in relation to the financial statements taken as a whole. Difficulties Encountered in Performing the Audit Other Matters CONWAY, DEUTH & SCHMIESING, PLLP CPAS & ADVISORS LITCHFIELD, MINNESOTA 2 Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the Commission's financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Other Audit Findings or Issues We were not engaged to report on the Elected Officials and Administration page, which accompany the financial statements but are not required supplementary information. We did not audit or perform other procedures on this other information and we do not express an opinion or provide any assurance on it. We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the Commission’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. This information is intended solely for the use of the Commission and management of Golden Valley-Crystal-New Hope Joint Water Commission, Golden Valley, Minnesota, and is not intended to be, and should not be, used by anyone other than these specified parties. June 4, 2025 We have requested certain representations from management that are included in the management representation letter dated June 4, 2025. We encountered no significant difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. In addition, none of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to the financial statements taken as a whole. Disagreements with Management For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s report. We are pleased to report that no such disagreements arose during the course of our audit. Management Representations INTERNAL CONTROL GOLDEN VALLEY-CRYSTAL-NEW HOPE JOINT WATER COMMISSION SCHEDULE OF FINDINGS ON INTERNAL ACCOUNTING ISSUES AND INTERNAL CONTROLS DECEMBER 31, 2024 3 GENERAL RECOMMENDATIONS The purpose of financial statements is to provide the users with insight as to the financial condition and the results of operations of the organization. In order to make financial decisions on a timely basis, financial statements must be prepared timely and correctly. Throughout the course of the audit, we spoke with management regarding certain items that we see as an opportunity to improve. None of these were considered significant within the scope of the audit. The items discussed requiring action have been resolved or are in the process of resolution. We would like to acknowledge the assistance and courtesies extended to us by the personnel of the Golden Valley-Crystal-New Hope Joint Water Commission. We noted certain matters involving the internal control structure and its operation that we consider being deficiencies in internal control under standards established by the American Institute of Certified Public Accountants. 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. The objective of internal accounting control is to provide reasonable, but not absolute, assurance as to the safeguarding of assets against loss from unauthorized use or disposition, and the reliability of financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance recognizes that the cost of a system of internal accounting control should not exceed the benefits derived and also recognizes that the valuation of these factors necessarily requires estimates and judgments by management. It should be recognized that within the Commission, an inherent risk is present with certain positions. It is very common for organizations such as the Golden Valley-Crystal-New Hope Joint Water Commission, to assign many major responsibilities to a few key individuals in an attempt to operate within limited budgets. The inherent risk is again addressed only to maintain the awareness of the internal control structure and to encourage the Board's continual review of financial information at monthly meetings. CPAS & ADVISORS LITCHFIELD, MINNESOTA GOLDEN VALLEY-CRYSTAL-NEW HOPE AUDITED FINANCIAL STATEMENTS DECEMBER 31, 2024 CONWAY, DEUTH & SCHMIESING, PLLP JOINT WATER COMMISSION This page intentionally left blank PAGE ELECTED OFFICIALS AND ADMINISTRATION 1 INDEPENDENT AUDITOR'S REPORT 2-4 BASIC FINANCIAL STATEMENTS Statement of Net Position 5 Statement of Activities 6 Balance Sheet - Governmental Funds 7 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position 8 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds 9 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 10 Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - General Fund 11 Notes to the Financial Statements 12-20 COMPLIANCE SECTION Independent Auditor's Report on Minnesota Legal Compliance 21 Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 22-23 Schedule of Findings 24-25 GOLDEN VALLEY-CRYSTAL-NEW HOPE JOINT WATER COMMISSION DECEMBER 31, 2024 TABLE OF CONTENTS This page intentionally left blank Name Position Governmental Unit Term Expires Noah Schuchman Chairperson City of Golden Valley December 31, 2026 Reece Bertholf Vice Chairperson City of New Hope December 31, 2025 Adam Bell Secretary/Treasurer City of Crystal December 31, 2024 Lyle Hodges Finance Director Analeigh Morrow Accountant GOLDEN VALLEY-CRYSTAL-NEW HOPE JOINT WATER COMMISSION ELECTED OFFICIALS AND ADMINISTRATION DECEMBER 31, 2024 1 This page intentionally left blank Board of Commissioners and Management, Golden Valley-Crystal-New Hope Joint Water Commission Report on the Audit of the Financial Statements Opinions Basis for Opinions Responsibilities of Management for the Financial Statements 2 INDEPENDENT AUDITOR'S REPORT We have audited the financial statements of the governmental activities and each major fund of the Golden Valley-Crystal- New Hope Joint Water Commission (the Commission), as of and for the year ended December 31, 2024 and the related notes to the financial statements, which collectively comprise the Commission's basic financial statements as listed in the table of contents. 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 , 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 Commission, 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. Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of the Commission, as of December 31, 2024, and the respective changes in financial position, and, where applicable, cash flows thereof and the budgetary comparison for the General Fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. Responsibilities of Management for the Financial Statements (Cont'd) Auditor's Responsibilities for the Audit of the Financial Statements Required Supplementary Information In performing an audit in accordance with GAAS and Government Auditing Standards , we 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. Management has omitted the Management's Discussion and Analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic financial statements is not affected by this missing information. 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 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 Commission’s 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. 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 Commission'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 Commission's ability to continue as a going concern for a reasonable period of time. Exercise professional judgment and maintain professional skepticism throughout the audit. 3 Other Information Other Reporting Required by Government Auditing Standards CONWAY, DEUTH & SCHMIESING, PLLP CPAS & ADVISORS LITCHFIELD, MINNESOTA June 4, 2025 4 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. In accordance with Government Auditing Standards, we have also issued our report dated June 4, 2025 on our consideration of the Commission'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 Commission'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 Commission's internal control over financial reporting and compliance. Management is responsible for the other information included in the annual report. The other information comprises the Elected and Appointed Officials 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 of assurance thereon. This page intentionally left blank BASIC FINANCIAL STATEMENTS This page intentionally left blank ASSETS Current Assets Cash and Investments 11,680,839$ Due from Other Governments 1,415,360 Leases Receivable 266,641 Prepaid Items 62,206 Total Current Assets 13,425,046 Noncurrent Assets Assets Not Being Depreciated 513,802 Other Capital Assets, Net of Depreciation 11,262,805 Total Noncurrent Assets 11,776,607 Total Assets 25,201,653$ LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND NET POSITION Liabilities Current Liabilities Accounts and Contracts Payable 25,294$ Deposits Payable 8,915 Due to Other Governments 741,452 Total Liabilities 775,661 Deferred Inflows of Resources Related to Leases 266,641 Net Position Net Investment in Capital Assets 11,764,393 Restricted for Capital Improvements 9,170,160 Restricted for Emergency Water Supply 1,700,000 Unrestricted 1,524,798 Total Net Position 24,159,351 Total Liabilities and Net Position 25,201,653$ See Accompanying Notes to the Financial Statements 5 GOLDEN VALLEY-CRYSTAL-NEW HOPE JOINT WATER COMMISSION STATEMENT OF NET POSITION GOVERNMENTAL FUND DECEMBER 31, 2024 PROGRAM REVENUES Charges for Services Member Assessments 8,417,451$ Capital Grants and Contributions 1,605,897 Total Program Revenues 10,023,348 PROGRAM EXPENSES Water Distribution Water Purchases 7,944,038 Administration and Maintenance 521,992 Depreciation 491,462 Total Program Expenses 8,957,492 GENERAL REVENUES Investment Income 591,430 Rental Income 72,202 Total General Revenues 663,632 Change in Net Position 1,729,488 NET POSITION, BEGINNING OF YEAR 22,429,863 NET POSITION, END OF YEAR 24,159,351$ See Accompanying Notes to the Financial Statements YEAR ENDED DECEMBER 31, 2024 6 GOLDEN VALLEY-CRYSTAL-NEW HOPE JOINT WATER COMMISSION STATEMENT OF ACTIVITIES Improvement Total Capital Projects Governmental General Fund Funds ASSETS Cash and Investments 679,574$ 11,001,265$ 11,680,839$ Due from Other Governments 1,415,360 1,415,360 Leases Receivable 266,641 266,641 Prepaid Items 62,206 62,206 Total Assets 2,423,781$ 11,001,265$ 13,425,046$ LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCE Liabilities Accounts and Contracts Payable 13,080$ 12,214$ 25,294$ Deposits Payable 8,915 8,915 Due to Other Governments 622,561 118,891 741,452 Total Liabilities 644,556 131,105 775,661 Deferred Inflows of Resources Related to Leases 266,641 266,641 Fund Balance Nonspendable 62,206 62,206 Restricted for Capital Improvements 9,170,160 9,170,160 Restricted for Emergency Water Supply 1,700,000 1,700,000 Unassigned 1,450,378 1,450,378 Total Fund Balance 1,512,584 10,870,160 12,382,744 Total Liabilities, Deferred Inflows of Resources and Fund Balance 2,423,781$ 11,001,265$ 13,425,046$ See Accompanying Notes to the Financial Statements GOLDEN VALLEY-CRYSTAL-NEW HOPE JOINT WATER COMMISSION BALANCE SHEET GOVERNMENTAL FUNDS DECEMBER 31, 2024 7 2024 Total Fund Balances - Governmental Funds 12,382,744$ Capital Assets 22,850,966 Less: Accumulated Depreciation (11,074,359) Total Net Position - Governmental Activities 24,159,351$ See Accompanying Notes to the Financial Statements RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION DECEMBER 31, 2024 8 GOLDEN VALLEY-CRYSTAL-NEW HOPE JOINT WATER COMMISSION Amounts reported for governmental activities in the Statement of Net Position are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported as assets in the governmental funds. Improvement Capital Projects General Fund Total REVENUES Member Assessments Charges for Services 8,408,737$ $ 8,408,737$ Nonoperating Surcharges 8,714 8,714 Construction Charges 1,605,897 1,605,897 Other Revenue Investment Income 116,863 474,567 591,430 Rental Income 72,202 72,202 Total Revenues 8,606,516 2,080,464 10,686,980 EXPENDITURES Current Water Purchased 7,944,038 7,944,038 Insurance 64,107 64,107 Utilities 195,635 195,635 Labor 45,175 45,175 Maintenance 53,783 53,783 Professional Services 13,112 13,112 Administrative Charges Paid to Members 34,857 34,857 Rent Remitted to Members 72,202 72,202 Miscellaneous 10,860 10,860 Capital Outlay 952,712 952,712 Total Expenditures 8,433,769 952,712 9,386,481 Net Change in Fund Balances 172,747 1,127,752 1,300,499 FUND BALANCE, BEGINNING OF YEAR 1,339,837 9,742,408 11,082,245 FUND BALANCE, END OF YEAR 1,512,584$ 10,870,160$ 12,382,744$ See Accompanying Notes to the Financial Statements GOLDEN VALLEY-CRYSTAL-NEW HOPE JOINT WATER COMMISSION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS YEAR ENDED DECEMBER 31, 2024 9 YEAR ENDED DECEMBER 31, 2024 2024 Total Net Change in Fund Balances - Governmental Funds 1,300,499$ Capital Outlays 920,451 Depreciation Expense (491,462) Change in Net Position - Governmental Activities 1,729,488$ See Accompanying Notes to the Financial Statements 10 GOLDEN VALLEY-CRYSTAL-NEW HOPE JOINT WATER COMMISSION RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES Amounts reported for governmental activities in the Statement of Activities are different because: Capital outlays are reported in governmental funds as expenditures. However, in the Statement of Activities, the cost of those assets is allocated over the estimated useful lives as depreciation expense. Over (Under) Final Original Final Actual Budget REVENUES Member Assessments Charges for Services 8,866,703$ 8,866,703$ 8,408,737$ (457,966)$ Nonoperating Surcharges 8,714 8,714 Other Revenue Investment Income 116,863 116,863 Rental Income 72,202 72,202 Total Revenues 8,866,703 8,866,703 8,606,516 (260,187) EXPENDITURES Current Water Purchased 8,350,353 8,350,353 7,944,038 (406,315) Insurance 79,000 79,000 64,107 (14,893) Utilities 257,350 257,350 195,635 (61,715) Labor 120,000 120,000 45,175 (74,825) Maintenance 53,783 53,783 Professional Services 15,000 15,000 13,112 (1,888) Administrative Charges Paid to Members 45,000 45,000 34,857 (10,143) Rent Remitted to Members 72,202 72,202 Miscellaneous 10,860 10,860 Total Expenditures 8,866,703 8,866,703 8,433,769 (432,934) Net Change in Fund Balance 0$ 0$ 172,747 172,747$ FUND BALANCE, BEGINNING OF YEAR 1,339,837 FUND BALANCE, END OF YEAR 1,512,584$ See Accompanying Notes to the Financial Statements Budgeted Amounts 11 GOLDEN VALLEY-CRYSTAL-NEW HOPE JOINT WATER COMMISSION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL GENERAL FUND YEAR ENDED DECEMBER 31, 2024 This page intentionally left blank NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. REPORTING ENTITY As a result of applying the criteria above, the Commission does not have any component units. B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment is 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; 2) operating grants and contributions; and 3) capital grants and contributions. Other internally directed revenues are reported as general revenues. GOLDEN VALLEY-CRYSTAL-NEW HOPE JOINT WATER COMMISSION NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2024 12 The Golden Valley-Crystal-New Hope Joint Water Commission (the "Commission") was formed under the authority of Minnesota Statues § 471.59. Its purpose is to provide for the operation and ownership of a water supply system in and for the Commission. The Commission is governed by a Board of Commissioners, which consists of three members, one from each of the participating cities. The government-wide financial statements (i.e., the Statement of Net Position and the Statement of Activities) report information about the reporting government as a whole. These statements include all of the financial activities of the Commission. Original construction costs for the water supply system were allocated to the member cities based on percentages agreed upon in the Joint Powers Agreement. All subsequent operating and maintenance costs are apportioned to each member city based on water usage. All property acquired under this agreement is owned by the member cities in proportion to the amount of construction costs each city pays. The criteria used to determine if the Commission is financially accountable for a component unit includes whether or not 1) the Commission appoints the voting majority of the potential component unit's governing body and is able to impose its will on the potential component unit or is in a relationship of financial benefit or burden with the potential component unit, or 2) the potential component unit is fiscally dependent on and there is a potential for the potential component unit to provide specific financial benefits to, or impose specific financial burdens on, the Commission. A joint venture is a legal entity resulting from a contractual agreement that is owned, operated, or governed by two or more participants as a separate and specific activity subject to joint control, in which the participants retain either an ongoing financial interest or an ongoing financial responsibility. The Commission, as described above, is considered a joint venture of the cities of Golden Valley, Crystal, and New Hope, and is included as such in the financial statements. GOLDEN VALLEY-CRYSTAL-NEW HOPE JOINT WATER COMMISSION NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2024 NOTE 1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd) C. D. BUDGET E. USE OF ESTIMATES The General Fund is the general operating fund of the Commission. This accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Improvement Capital Projects Fund is used to account for financial resources set aside for the construction of infrastructure improvements. MEASUREMENT FOCUS, BASIS OF ACCOUNTING AND FINANCIAL STATEMENT PRESENTATION The preparation of financial statements, in accordance with accounting principles generally accepted in the United States of America, required management to make estimates that affect the amounts reported in the basic financial statements. Actual results could differ from these estimates. A budget for the General Fund is adopted annually on the modified accrual basis of accounting. Budgetary control is at the fund level. All appropriations lapse at year-end. 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 Commission considers revenues to be available if they are collected within 60 days after the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. It is generally the Commission's policy to use restricted resources first, then unrestricted resources as they are needed when an expense is incurred for purposes for which both restricted and unrestricted net position are available. The accounts of the Commission are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounts for with a separate set of self- balancing accounts that comprise its assets, liabilities, deferred outflows/inflows of resources, fund equity, revenue, and expenditures. Separate fund financial statements are provided for governmental funds. Major governmental funds are reported as separate columns in the fund financial statements. The resources of the Commission are accounted for in the following two major governmental funds: 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, regardless of the timing of related cash flows. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. 13 GOLDEN VALLEY-CRYSTAL-NEW HOPE JOINT WATER COMMISSION NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2024 NOTE 1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd) F. DEPOSITS AND INVESTMENTS (1) (2) (3) (4) (5) (6) Cash and cash equivalents were comprised of an external investment pool. The Commission does not have an investment policy in place that addresses interest rate risk, credit risk, concentration of credit risk or custodial credit risk. 14 Cash balances from all funds of the Commission are pooled and invested, to the extent available, in allowable cash management accounts and time deposits. Earnings from such accounts are allocated to the respective funds on the basis of applicable cash balance participation by each fund. The Commission invests in an external investment pool, the Minnesota Municipal Money Market Fund (4M Fund), which is created under a joint powers agreement pursuant to Minn. Stat. §471.59. The 4M Fund is not registered with the Securities Exchange Commission (SEC), but does satisfy the requirements of Rule 2a-7 prescribed by the SEC pursuant to the Investment Company Act of 1940 (17 CFR §270.2a-7), as amended. The investment in the pool is measured at the net asset value per share provided by the pool. time deposits that are fully insured by the Federal Deposit Insurance Corporation or bankers acceptances of United States bank; commercial paper issued by United States corporations or their Canadian subsidiaries that is rated in the highest quality category by at least two nationally recognized rating agencies and matures in 270 days or less; and with certain restrictions, in repurchase agreements, securities lending agreements, joint powers investment trusts, and guaranteed investment contracts. general obligations of the State of Minnesota and its municipalities, and in certain state agency and local obligations of Minnesota and other states provided such obligations have certain specified bond ratings by a national bond rating service; The Commission may invest in the following types of investments as authorized by Minn. Stat. §§118A.04 and 118A.05: securities which are direct obligations or are guaranteed or insured issues of the United States, its agencies, its instrumentalities, or organizations created by an act of Congress, except mortgage-backed securities defined as "high risk" by Minn. Stat. §118A.04, subd. 6; mutual funds through shares of registered investment companies provided the mutual fund receives certain ratings depending on its investments; The Commission's cash and cash equivalents are considered to be cash on hand, deposits and highly liquid debt instruments purchased with original maturities of three months or less from the date of acquisition. GOLDEN VALLEY-CRYSTAL-NEW HOPE JOINT WATER COMMISSION NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2024 NOTE 1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd) F.DEPOSITS AND INVESTMENTS (Cont'd) G.RECEIVABLES Custodial Credit Risk - Deposits: For deposits, this is the risk that in the event of bank failure, the Commission's deposits may not be returned to it. Minnesota Statutes require all Commission deposits be protected by federal deposit insurance, corporate surety bonds, or collateral. The market value of collateral pledged must be 110 percent more than the amount on deposit plus accrued interest at the close of the financial institution's banking day, not covered by Federal Deposit Insurance Corporation (FDIC) insurance or corporate surety bonds. The Commission has no formal policy in place to address custodial credit risk for deposits. Authorized collateral includes the obligations of the U.S. Treasury, agencies, and instrumentalities, shares of investment companies whose only investments are in the aforementioned securities, obligations of the State of Minnesota or its municipalities, bankers' acceptances, futures contracts, repurchase and reverse purchase agreements, and commercial paper of the highest quality with a maturity of no longer than 270 days, as well as certain first mortgage notes, and certain other state or local government obligations. Minnesota Statutes require that securities pledged as collateral be held in safekeeping by the Commission treasurer or in a financial institution other than that furnishing the collateral. Interest Rate Risk: This is the risk that market values of securities in a portfolio would decrease due to changes in market interest rates. The Commission minimizes its exposure to interest rate risk by investing in short-term and long-term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations. However, the Commission does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. Credit Risk: Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligation to the holder of the investment. Minnesota Statutes §118A.04 and §118A.05 limits investments that are in the top two ratings issued by nationally recognized statistical rating organizations. The Commission does not have an investment policy that further limits credit risk. Concentration of Credit Risk: This is the risk of loss attributed to the magnitude of an investment in a single issuer. Investments should be diversified to avoid incurring unreasonable risk inherent in over investing in specific instruments, individual financial institutions or maturities. The Commission does not have a formal policy to address concentration of credit risk. 15 Lease receivables represent amounts receivable from individuals, firms and corporations for the right to use of Commission assets. No substantial losses are anticipated from the present receivables balances and therefore, no allowance for uncollectible amounts is deemed necessary. Custodial Credit Risk: For investments, this is the risk that in the event of the failure of the counterparty, the Commission will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The Commission does not have a formal policy to address custodial credit risk. GOLDEN VALLEY-CRYSTAL-NEW HOPE JOINT WATER COMMISSION NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2024 NOTE 1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd) H. PREPAID ITEMS I. CAPITAL ASSETS Years Distribution System 5-40 Storage Facilities 10-30 The Commission does not possess any material amounts of intangible assets. J. DEFERRED INFLOWS OF RESOURCES In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. Deferred inflows of resources represents an acquisition of net position that applies to a future reporting period. During that future period, it will be recognized as an inflow of resources (revenue). The Commission has items that qualify for reporting in this category on both the government-wide Statement of Net Position and the governmental fund financial statements related to leases. Capital Assets 16 Such assets are recorded at their historical cost or estimated historical cost if purchased or constructed. Donated assets are recorded as capital assets at their estimated acquisition value at the date of donation. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items. Capital assets, both tangible and intangible, are reported in the applicable governmental columns in the government-wide financial statements. Capital Assets are defined by the Commission as assets with an initial, individual cost of $5,000 or more, which benefit more than one fiscal year. Tangible and intangible assets of the Commission are depreciated using the straight-line, full month convention method over the following estimated useful lives: GOLDEN VALLEY-CRYSTAL-NEW HOPE JOINT WATER COMMISSION NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2024 NOTE 1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd) K. FUND BALANCE L. RISK MANAGEMENT The Commission's fund balance policy includes goals for maintaining minimums of $900,000 of unassigned fund balance in the General Fund and $1,000,000 of fund balance restricted for capital projects in the Improvement Capital Projects Fund. In the governmental fund financial statements, fund balance is divided into five classifications based primarily on the extent to which the Commission is bound to observe constraints imposed upon the use of resources reported in governmental funds. These classifications are as follows: There were no significant reductions in insurance coverage from the previous year or settlements in excess of insurance coverage during the current fiscal year. 17 The Commission purchases commercial insurance coverage through the League of Minnesota Cities Insurance Trust (LMCIT), which is a public entity risk pool currently operating as a common risk management and insurance program, with other cities in the state. The Commission pays an annual premium to the LMCIT for its insurance coverage. The LMCIT is self-sustaining through commercial companies for excess claims. The Commission is covered through the pool for any claims incurred but unreported, but retains risk for the deductible portion of its insurance policies. The amount of these deductibles is considered immaterial to the financial statements. Nonspendable - consists of amounts that cannot be spent because it is not in spendable form or are legally or contractually required to be maintained intact, such as inventories and prepaid items. Restricted - consists of amounts related to externally imposed constraints established by creditors, grantors or contributors; or constraints imposed by state statutory provisions. Committed - consists of amounts that are constrained for specific purposes that are internally imposed by formal action of the Board of Commissioners. Those committed amounts cannot be used for any other purpose unless the Board removes or changes the specified use by taking the same type of action it employed to previously commit those amounts. These constraints are established by Resolution of the Board of Commissioners. Unassigned - is the residual classification for the General Fund and also reflects negative residual amounts in the remaining governmental funds. When both restricted and unrestricted resources are available for use, it is the Commission's policy to first use restricted resources, and then use unrestricted resources as they are needed. When committed, assigned, or unassigned resources are available for use, it is the Commission's policy to use resources in the following order: 1) committed, 2) assigned, 3) unassigned. Assigned - consists of amounts intended to be used by the Commission for specific purposes but do not meet the criteria to be classified as restricted or committed. In governmental funds other than the General Fund, assigned fund balance represents the remaining amount that is not restricted or committed. In the General Fund, assigned amounts represent intended uses established by the governing body itself or by an official to which the governing body delegates the authority. GOLDEN VALLEY-CRYSTAL-NEW HOPE JOINT WATER COMMISSION NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2024 NOTE 2. DEPOSITS AND INVESTMENTS A. INVESTMENTS The Commission had the following investments: Investments at Amortized Cost: External Investment Pool - 4M Fund 2,150,514$ External Investment Pool - 4MP Fund 9,530,325 Total Investments 11,680,839$ Deposits and investments are presented in the basic financial statements as follows: Statement of Net Position Cash and Investments 11,680,839$ NOTE 3. LEASE RECEIVABLES The Commission's leases are summarized as follows: Amounts not Scheduled for Collection During the Subsequent Year Verizon Site Lease 156,730$ 33,458$ 5,744$ 121,086 T-Mobile Site Lease 109,911 28,438 4,562 85,429 Total Lease Receivables 266,641$ 61,896$ 10,306$ 206,515$ Verizon Wireless Antenna Site Lease - On May 1, 2013 the Commission entered into a five-year lease agreement with Verizon Wireless, for an antenna site lease. There are renewal options in 5 year increments through 2028 included in this lease agreement. Based on this agreement, the Commission is receiving annual payments through 2028. T-Mobile Antenna Site Lease - On September 10, 2008 the Commission entered into a lease agreement with T- Mobile USA, Inc, for an antenna site lease. The initial lease term was through September 2019 and was then renewed with updated terms which included renewal options in 5 year increments through 2043. On November 8, 2024, the Commission received notice of T-Mobile's intent to not renew the lease beyond 2028. Based on this agreement, the Commission is receiving annual payments through 2028. Lease payments do not include contingent payments that may be received under certain lease agreements based on usage in excess of specified amounts. Commission practice is to defer recognition of such contingent payments until the specified usage levels are met. Contingent payments during the year totaled $0. Lease Receivable Balance Lease Revenue Lease Interest Revenue 18 GOLDEN VALLEY-CRYSTAL-NEW HOPE JOINT WATER COMMISSION NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2024 NOTE 4. CAPITAL ASSETS Beginning Ending Balance Additions Disposals Balance Capital Assets Not Being Depreciated Construction in Progress 154,596$ 920,451$ (561,245)$ 513,802$ Capital Assets, Being Depreciated 18,560,959 561,245 19,122,204 3,214,960 3,214,960 21,775,919 561,245 0 22,337,164 Less Accumulated Depreciation for 7,635,920 469,676 8,105,596 2,946,977 21,786 2,968,763 10,582,897 491,462 0 11,074,359 11,193,022 69,783 0 11,262,805 11,347,618$ 990,234$ (561,245)$ 11,776,607$ Total Capital Assets, Net Total Accumulated 19 Distribution System Capital asset activity was as follows: Being Depreciated, Net Storage Facilities Total Capital Assets, Distribution System Total Capital Assets, Being Depreciated Depreciation Storage Facilities GOLDEN VALLEY-CRYSTAL-NEW HOPE JOINT WATER COMMISSION NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2024 NOTE 5. RELATED PARTY TRANSACTIONS A. REVENUE AND RELATED RECEIVABLES City of Golden Valley 3,281,845$ 854,461$ 450,231$ City of Crystal 2,319,832 354,210 City of New Hope 2,815,774 751,436 610,919 8,417,451$ 1,605,897$ 1,415,360$ B. EXPENDITURES AND RELATED PAYABLES City of Golden Valley 422,601$ 24,068$ 21,519$ City of Crystal 577,391 24,067 95,188 City of New Hope 86,311 24,067 30,790 1,086,303$ 72,202$ 147,497$ 20 Expenditures The Commission transacts business with the three member cities affiliated through common ownership of the joint venture. The Commission charges the member cities for water costs, system maintenance and improvement, administrative expenditures generated in the ordinary course of business, and a nonoperating surcharge. Revenue from charges to the member cities in 2024, along with any remaining receivable, is as follows: General Fund Revenue Improvement Capital Projects Fund Revenue Receivable at December 31, 2024 Lease Revenues Remitted Included in Payables at December 31, 2024 The member cities charge the Commission for expenditures incurred or services performed on the Commission's behalf, as well as an administrative charge. In addition, the Commission remits revenue received on antenna leases to the member cities. Expenditures made to the member cities and rental revenues passed through to the member cities during the year, along with any liabilities remaining at year- end, are as follows: This page intentionally left blank COMPLIANCE SECTION This page intentionally left blank Members of Golden Valley-Crystal-New Hope Joint Water Commission Golden Valley, Minnesota CONWAY, DEUTH & SCHMIESING, PLLP CPAS & ADVISORS LITCHFIELD, MINNESOTA INDEPENDENT AUDITOR'S REPORT ON MINNESOTA LEGAL COMPLIANCE of the United States, the financial statements of the governmental activities and each major fund of the Golden Valley- Crystal-New Hope Joint Water Commission, as of and for the year ended December 31, 2024, and the related notes to the financial statements, and have issued our report thereon dated June 4, 2025. 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 21 The purpose of this report is solely to describe the scope of our testing of compliance and the results of that testing, and not to provide an opinion on compliance. Accordingly, this communication is not suitable for any other purpose. June 4, 2025 In connection with our audit, nothing came to our attention that caused us to believe that the Commission failed to comply with the provisions of the contracting-bid laws, depositories of public funds and public investments, conflicts of interest, claims and disbursements and miscellaneous provisions sections of the Minnesota Legal Compliance Audit Guide for Other Politcal Subdivisions, promulgated by the State Auditor pursuant of Minn. Stat. § 6.65, insofar as they relate to accounting matters. However, our audit was not directed primarily toward obtaining knowledge of such noncompliance. Accordingly, had we performed additional procedures, other matters may have come to our attention regarding the Commission's noncompliance with the above referenced provisions, insofar as they relate to accounting matters. This page intentionally left blank Members of Golden Valley-Crystal-New Hope Joint Water Commission Golden Valley, Minnesota Report on Internal Control Over Financial Reporting 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 each major fund of the Golden Valley- Crystal-New Hope Joint Water Commission, as of and for the year ended December 31, 2024, and the related notes to the financial statements, which collectively comprise the Commission's basic financial statements and have issued our report thereon dated June 4, 2025. In planning and performing our audit of the financial statements, we considered the Commission’s internal control over financial reporting (internal control) as a basis for designing the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Commission’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Commission’s internal control. INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL 22 REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS 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 and therefore, material weaknesses or significant deficiencies may exist that were not identified. We identified certain deficiencies in internal control, described in the accompanying Schedule of Findings as Findings 2024-001 and 2024-002 that we consider to be significant deficiencies. Report on Compliance and Other Matters Commission's Response to Findings Purpose of this Report CONWAY, DEUTH & SCHMIESING, PLLP CPAS & ADVISORS LITCHFIELD, MINNESOTA June 4, 2025 23 As part of obtaining reasonable assurance about whether the Commission'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 determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Government Auditing Standards requires the auditor to perform limited procedures on the Commission's response to the findings identified in our audit and described in the accompanying Schedule of Findings. The Commission's response was not subjected to the other auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on the response. The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the result of that testing, and not to provide an opinion on the effectiveness of the Commission'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 Commission's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. I. FINDING: 2024-001 Condition: Criteria: Cause: Effect: Recommendation: CORRECTIVE ACTION PLAN (CAP): Explanation of Disagreement with Audit Findings: There is no disagreement with the audit finding. Actions Planned in Response to Finding: Official Responsible for Ensuring CAP: Analeigh Morrow, Accountant Planned Completion Date for CAP: Plan to Monitor Completion of CAP: The Commissioner's will monitor the completion of this corrective action plan. 24 December 31, 2025 GOLDEN VALLEY-CRYSTAL-NEW HOPE JOINT WATER COMMISSION SCHEDULE OF FINDINGS DECEMBER 31, 2024 FINDINGS RELATED TO FINANCIAL STATEMENTS AUDITED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS LIMITED SEGREGATION OF DUTIES There is an absence of appropriate segregation of duties consistent with appropriate control objectives due to a limited number of employees. The basic premise is that no one person should have access to both physical assets and the related accounting records or to all phases of a transaction. The lack of such controls could result in the occurrence of a material error or fraud in relation to the financial statements not being detected by management. The Commission has assigned duties to staff based on a cost-benefit relationship to the Commission and the practicality of the level of staffing the Commission maintains. The lack of adequate segregation of duties could adversely affect the Commission's ability to initiate, record, process and report financial data consistent with the assertions of management in the financial statements. The Commission should continue to monitor and evaluate the job responsibilities assigned to staff to determine whether there is an unacceptable risk. The Commission is aware of the limited segregation of duties and will continue to review internal controls and make changes when they can be made. I. FINDING: 2024-002 AUDITOR PREPARED FINANCIAL STATEMENTS Condition: Criteria: Cause: Effect: Recommendation: CORRECTIVE ACTION PLAN (CAP): Explanation of Disagreement with Audit Finding: None Actions Planned in Response to Finding: Official Responsible for Ensuring CAP: Analeigh Morrow, Accountant Planned Completion Date for CAP: Plan to Monitor Completion of CAP: The Commissioner's will monitor the completion of this corrective action plan. There are a limited number of office employees and resources available to allow for the adequate preparation of the financial statements and the related notes by the Commission. This could result in a material misstatement to the financial statements and related notes that would not be prevented, or detected and corrected as a result of the Commission's current internal control. The Commission should continue to request the assistance to draft the financial statements and related notes and thoroughly review these financial statements after they have been prepared so the Commission can take responsibility for them. The Commission is aware of this; however, due to significant cost and a limited number of employees, it is in the Commission's best financial interest to contract for the preparation of the financial statements. 25 December 31, 2025 The preparation of the financial statements and the related notes are the responsibility of management. GOLDEN VALLEY-CRYSTAL-NEW HOPE JOINT WATER COMMISSION SCHEDULE OF FINDINGS DECEMBER 31, 2024 FINDINGS RELATED TO FINANCIAL STATEMENTS AUDITED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS (Cont'd) The Commission does not have an internal control system designed to provide for the preparation of the financial statements and the related notes being audited. However, based on the degree of complexity and level of detail needed to prepare the financial statements in accordance with accounting principles generally accepted in the United States of America (GAAP), the Commission has requested the auditors to prepare them. Golden Valley- Crystal-New Hope Joint Water Commission Audit Report December 31, 2024 Independent Auditor’s Report Pages 2-4: •Financial statements are presented fairly in our opinion •Conducted audit in accordance with Generally Accepted Auditing Standards and Government Auditing Standards •Financial statements are the responsibility of the Commission’s management •Our responsibility is to express opinions on these financial statements based on our audit •Obtain reasonable assurance financials are free from material misstatement •Internal control letter on pages 22-23 1 Statement of Net Position 2 2024 2023 ASSETS Current and Other 13,425,046$ 12,419,421$ Capital 11,776,607 11,347,618 Total Assets 25,201,653$ 23,767,039$ LIABILITIES AND NET POSITION Liabilities Current Liabilities 775,661$ 588,368$ Deferred Inflows of Resources Related to Leases 266,641 748,808 Net Position Net Investment in Capital Assets 11,764,393 11,347,618 Restricted 10,870,160 9,742,408 Unrestricted 1,524,798 1,339,837 Total Net Position 24,159,351 22,429,863 Total Liabilities and Net Position 25,201,653$ 23,767,039$ General Fund Cash and Investment Balances 3 $1,563,953 $1,137,993 $679,574 $0 $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 $1,600,000 $1,800,000 2022 2023 2024 General Fund 4 2022 2023 2024 Total Revenues and Other Financing Sources $8,333,645 $9,335,860 $8,606,516 Total Expenditures and Other Financing Uses 8,231,598 9,131,121 8,433,769 Fund Balance 1,135,098 1,339,837 1,512,584 $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $9,000,000 $10,000,000 Improvement Capital Projects Fund Cash and Investment Balances 5 $7,104,821 $9,756,048 $11,001,265 $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $9,000,000 $10,000,000 $11,000,000 $12,000,000 2022 2023 2024 Improvement Capital Projects Fund 6 2022 2023 2024 Total Revenues and Other Financing Sources $1,829,213 $1,859,019 $2,080,464 Total Expenditures and Other Financing Uses 313,552 268,707 952,712 Fund Balance 8,152,096 9,742,408 10,870,160 $0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 Compliance Section Minnesota Legal Compliance (page 21) •In accordance with Audit Guide issued by OSA •No compliance issues noted Generally Accepted Auditing Standards (pages 22-23) •Internal Control •Two significant deficiencies noted: •Limited Segregation of Duties •Auditor Prepared Financial Statements 7 Required Communications •Accounting Practices •No Difficulties Encountered •Corrected and Uncorrected Misstatements •No Disagreements with Management •Management Representations •Management Consultations with Other Accountants •Other Audit Findings or Issues 8 Questions or Comments? Contact Information: Crystal Vossen Seiffert, CPA cseiffert@cdscpa.com 320-221-8030 9 Joint Water Commission TAC Meeting Tuesday May 20, 2025, 1:30 PM 1) Towers a) MLR tower i) Move construction to 2025. Updated budget to 3 million for construction and engineering. This will include a new altitude valve and hydrant at tower location within the fenced in area. On schedule, weekly meetings Thursdays at 9am. Working inside the tower currently. ii) Parts storage – Parts in Connex boxes. iii) Altitude Vault – need to seal leaks and make electrical repairs. Possibly line inside of vault. Valve has not come in yet. b) Tower replacement i) GV tower to get replaced 2028/2029. Going to hold off on lining until tower location is definite. 2) Projects a) MCC / motor, pump, VFD replacement at both pump houses – Pumps and motors removed i) GV construction 2024/2025 (pump #4) (1) Switch Gear / Transfer Switch (a) Consulting engineer is following up on lead times for equipment at the GV station. Fall of 2025. Minneapolis would like to start butterfly valve after Labor day. Demands still high, request 9/22 start date. (b) Parts being stored at pumphouse ii) Crystal construction 2025/2026 (pump #3) (1) Review change order for new door between pump room and control room. Still pending, currently with Bolton and Menk. Follow up with Bolton and Menk, discussed 5/20. b) Effluent Meters i) GV (1) Access the condition of the existing structures when time allows. ii) Crystal construction 2026/2027 tentative (1) After the MCC project is complete, the effluent meters along with 3 valves will be replaced. (2) Have meters on site. c) Reservoirs i) Golden Valley (1) MPLS will be installing a 48” valve to isolate intake 1 and 2 in case of emergency. Delayed to fall 2025. ii) Crystal (1) KLM completed the robotic inspection in 2023. Working with KLM to review inspection. Crystal to follow up on report. (2) Drain down and perform in-person inspection while pumphouse is down spring 2026 d) SCADA i) Met with Total Control (1) Total Control recommended security upgrades at all JWC properties which included cameras, door fobs, etc. Will be done after the MCC project. Schedule for late 2026. Access coordination still in progress 5/20/25 (2) Commision approved North and South tower security for amounts below (a) North Tower was $23,500 (b) South Tower was $20,000 e) Valve replacement. i) GV (1) 18” @ Olympia and Louisiana Ave – Valley Rich is low bid at $21,200. Late summer or early fall (2) Golden Valley Rd (x2) 24” - within Three Rivers trail project limits. Precision Utilities low bid. Later summer or early fall. ii) Crystal (1) Crystal pumphouse (x3). Concurrent with 2026 pump house work. (2) Replacing 24” butterfly intake valve from Minneapolis next week iii) New Hope (1) Altitude valve – will be completed at end of tower work 3) Miscellaneous a) Emergency Wells i) GV – Final payment was made in 2024. No collection have been reported in 2025. There is $107,803 in surplus. Ordinance doesn’t specify what to do with the remaining balance. (1) TAC proposes to look for a suitable site in Golden Valley. Currently under review with the TAC and legal. Wait for comprehensive study to be done to determine what to do with surplus b) County will be replacing pavement (reclaim) on Douglas from Medicine Lake Road to Broadway in ADA and pavement in 2027. 3 miles of reclaim. i) Bolton & Menk feasibility study approved by Crystal council 3/18 (1) Look at directional drilling and open cutting as main two options (2) Install 24” main throughout, eliminate 16” c) Asset condition assessment – TAC met with consultants to go over scope of work. Anticipate proposals late May.