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BIG MUSKEGO LAKE ANNUAL MEETING Packet - 7/28/2020CITY OF MUSKEGO BIG MUSKEGO LAKE ANNUAL MEETING AGENDA 07/28/2020 5:45 PM Muskego City Hall, W182 S8200 Racine Avenue, W182 S8200 Racine Avenue CALL TO ORDER PLEDGE OF ALLEGIANCE STATEMENT OF PUBLIC NOTICE PUBLIC HEARING ON NEXT YEAR'S BUDGET 2021 Budget Presentation APPROVAL OF MINUTES OF ANNUAL MEETING July 23, 2019 DEPUTY COMMISSIONERS' REPORT REGARDING STATUS OF LAKE NEW BUSINESS Review 2019 Audit and Approve Engagement Letter for 2020 Audit Adopt 2021 Budget Select 2021 Quarterly Meeting Dates: January 26, 2021, March 23, 2021, May 25, 2021and September 28, 2021 and 2021 Annual Meeting Date: July 27, 2021 Elect Deputy Commissioners COMMUNICATIONS AND ANY OTHER BUSINESS AS AUTHORIZED BY LAW ADJOURNMENT NOTICE IT IS POSSIBLE THAT MEMBERS OF AND POSSIBLY A QUORUM OF MEMBERS OF OTHER GOVERNMENTAL BODIES OF THE MUNICIPALITY MAY BE IN ATTENDANCE AT THE ABOVE-STATED MEETING TO GATHER INFORMATION; NO ACTION WILL BE TAKEN BY ANY GOVERNMENTAL BODY AT THE ABOVE-STATED MEETING OTHER THAN THE GOVERNMENTAL BODY SPECIFICALLY REFERRED TO ABOVE IN THIS NOTICE. ALSO, UPON REASONABLE NOTICE, EFFORTS WILL BE MADE TO ACCOMMODATE THE NEEDS OF DISABLED INDIVIDUALS THROUGH APPROPRIATE AIDS AND SERVICES. FOR ADDITIONAL INFORMATION OR TO REQUEST THIS SERVICE, CONTACT MUSKEGO CITY HALL, (262) 679-4100. Packet Page 1 Notice is hereby given that at the Annual Meeting of the Big Muskego Lake/Bass Bay Protection and Rehabilitation District to be held on Tuesday, July 28, 2020, at 5:45 p.m. at the Muskego City Hall, W182 S8200 Racine Avenue, a PUBLIC HEARING on the PROPOSED BUDGET will be held. The proposed budget in detail is available for inspection at City Hall in the Clerk-Treasurer's office from 8:00 a.m. to 4:30 p.m. on Monday through Friday. Following is a summary of the proposed Big Muskego Lake/Bass Bay Protection and Rehabilitation District 2021 Budget: Sharon Mueller, Finance & Administration Director 2021 2020 PROPOSED % BUDGET BUDGET CHANGE NON-MAJOR SPECIAL REVENUE FUND Revenues Grant Revenue $0 $0 Public Charges for Services $30,570 $30,550 Commercial Revenues $675 $625 Total Revenues $31,245 $31,175 -0.22% Appropriation of Fund Balance $56,878 $57,148 Total Available Funds $88,123 $88,323 Expenditures Salaries and Benefits $3,974 $4,173 Legal and Professional $2,750 $2,750 Water Quality Monitoring $750 $750 Postage, Office Expenses and Other $6,650 $6,650 Projects: Weed/Goose Control & Land Purchase $69,000 $69,000 Total Expenditures $83,124 $83,323 0.24% Designated Fund Balance/Land Conservancy $5,000 $5,000 Total Expenditures including Designated Funds $88,124 $88,323 ALL GOVERNMENTAL FUND BALANCE Undesignated Undesignated Fund Total Fund Balance Total Operating Balance January 1, 2021 Revenues Expenditures Dec. 31, 2021 Non-Major Special Revenue Fund $104,422 $31,175 $38,323 $97,274 * Property tax Levy: The District did not and will not levy taxes to finance 2020 or 2021 operations. * $5,000 of Undesignated Fund Balance is designated for Land Conservancy. PLEASE NOTE: It is possible that members of and possibly a quorum of members of other governmental bodies of the municipality may be in attendance at the above-stated meeting to gather information; no action will be taken by any governmental body at the above-stated meeting other than the governmental body specifically referred to above in this notice. Also, upon reasonable notice, efforts will be made to accommodate the needs of disabled individuals through appropriate aids and services. For additional information or to request this service, contact the Finance & Administration Director, Muskego City Hall, (262) 679-5622. NOTICE OF ANNUAL MEETING AND PUBLIC HEARING FOR THE BIG MUSKEGO LAKE/BASS BAY PROTECTION AND REHABILITATION DISTRICT Page 1 of 8 2021 Budget Presentation Packet Page 2 Big Muskego Lake - Bass Bay Protection and Rehabilitation District 2021 Proposed Budget & 2019 Audit Summary Prepared by City of Muskego Finance & Administration Department 1 Page 2 of 8 2021 Budget Presentation Packet Page 3 REVENUES 2019 ACTUAL 2020 BUDGET PROJECTED 12/31/2020 PROPOSED 2021 BUDGET Public Charges for Services $30,640 $30,570 $30,570 $30,550 Interest Income $565 $425 $400 $375 Donations $0 $0 $0 $0 Other - Penalty $353 $250 $275 $250 Total Revenues $31,558 $31,245 $31,245 $31,175 Big Muskego Lake – Bass Bay Protection and Rehabilitation District • 166 On Lake @ $80 • 494 Off Lake @ $35 2Page 3 of 8 2021 Budget Presentation Packet Page 4 Big Muskego Lake – Bass Bay Protection and Rehabilitation District EXPENSES 2019 ACTUAL 2020 BUDGET PROJECTED 12/31/2020 PROPOSED 2021 BUDGET Personnel $3,945 $3,974 $4,063 $4,173 Travel/Training $0 $1,100 $550 $1,100 Maint./Rental $250 $1,500 $500 $1,500 Computer $175 $175 $175 $175 Supplies $2,372 $2,500 $2,250 $2,500 Outside Service $1,250 $2,750 $1,250 $2,750 Other Expenses $1,000 $1,950 $1,950 $1,950 Insurance $175 $175 $175 $175 Weed Control $11,160 $16,000 $12,000 $16,000 Goose Control $0 $3,000 $1,500 $3,000 Land Purchases $0 $50,000 $0 $50,000 Total Expenses $20,327 $83,124 $24,413 $83,323 3Page 4 of 8 2021 Budget Presentation Packet Page 5 Big Muskego Lake – Bass Bay Protection and Rehabilitation District Revenues vs. Expenditures - For the Years 2017 - 2021 0 10000 20000 30000 40000 50000 60000 70000 80000 90000 2017 2018 2019 2020 2021 Revenue Expense BudgetedProjected 4Page 5 of 8 2021 Budget Presentation Packet Page 6 Big Muskego Lake – Bass Bay Protection and Rehabilitation District FUND BALANCE 2019 ACTUAL 2020 BUDGET PROJECTED 12/31/2020 PROPOSED 2021 BUDGET Revenues over/ (under) Expenses $11,231 ($51,879) $6,832 ($52,148) Other Sources: Appropriations Land Reserve ($6,231) ($5,000) $56,878 ($5,000) ($1,832) ($5,000) $57,148 ($5,000) End Fund Balance: Unreserved Designated $102,590 $60,000 $95,711 $15,000 $104,422 $65,000 $97,274 $20,000 5Page 6 of 8 2021 Budget Presentation Packet Page 7 Big Muskego Lake – Bass Bay Protection and Rehabilitation District Fund Balance - For the Years 2017 - 2021 0 20000 40000 60000 80000 100000 120000 2017 2018 2019 2020 2021 Designated Undesignated BudgetedProjected 6 Page 7 of 8 2021 Budget Presentation Packet Page 8 Big Muskego Lake – Bass Bay Protection and Rehabilitation District STATEMENT OFACTIVITIES FOR THE YEAR ENDED DECEMBER 31, 2019 Function Expenses Program Revenues Charges for Services/Grants Net (Expense) Revenue and Changes In Net Position General Government $9,167 $0 ($9,167) Weed Treatment $11,160 $30,640 $19,480 Investment Earnings $565 Other Revenues $353 Total Activities (Net Change)$918 Net Position, End of Year $162,590 7Page 8 of 8 2021 Budget Presentation Packet Page 9 CITY OF MUSKEGO BIG MUSKEGO LAKE ANNUAL MEETING MINUTES July 23, 2019 5:45 PM Muskego City Hall, W182 S8200 Racine Avenue CALL TO ORDER Mayor Chiaverotti called the meeting to order at 5:45 p.m. Present were Commissioners Borgman, Hammel, Kapusta, Engelhardt, Kubacki and Madden. Also present: Conservation Coordinator Zagar and Deputy Commissioners Larry Schweitzer, Leonard Pilak, Tom Kies and Greg Burmeister and Planner Trzebiatowski. Absent: Commissioner Wolfe. STATEMENT OF PUBLIC NOTICE The Assistant Deputy Clerk stated that the meeting was noticed in accordance with the open meeting law. PUBLIC HEARING ON 2020 BUDGET Director Mueller stated that overall the proposed 2019 budget is consistent with the prior year. Total revenues are projected to reach $31,245, which consist mainly of resident fees for various services. Those fees are $80.00 for On Lake Properties and $35 for Off Lake Properties. Lastly, the 2019 Fund Balance is expected to reach approximately $86,870 and includes no increase in resident fees. APPROVAL OF MINUTES OF ANNUAL MEETING - August 28, 2018 Leonard Pilak made a motion to approve. Seconded by Larry Schweitzer; motion carried. DEPUTY COMMISSIONERS' REPORT REGARDING STATUS OF LAKE Water level is 1 ½” over the dam. Bogs continued to be an issue. Two active osprey. No sign of algae; milfoil is almost nonexistent. Lots of Starry Stonewort. There are fewer cattails. Tom Zagar just received results of DNR Fish Survey. Fishing is good, but threatened by murky water and carp. NEW BUSINESS Review 2018 Audit and Approve Engagement Letter for 2019 Audit Director Mueller stated that the 2018 audit results show a balance of $151,359. Baker Tilly Engagement Letter to remain the same as previous years with the cost not to exceed $1,250.00. Leonard Pilak made a motion to approve the Engagement Letter for the 2019 Audit. Seconded by Larry Schweitzer; motion carried. Adopt 2020 Budget Motion by Tom Kies. Seconded by Leonard Pilak; motion carried.Page 1 of 2 July 23, 2019 Packet Page 10 Big Muskego Lake Annual Meeting Minutes 2 July 23, 2019 Select 2020 Quarterly Meeting Dates: January 28, March 24, May 26 and September 22 Select 2020 Annual Meeting Date: July 28, 2020 Motion by Leonard Pilak to approve the proposed meeting dates. Seconded by Tom Kies; motion carried. Elect Deputy Commissioners Motion by Tom Kies to nominate the existing Deputy Commissioners to serve for another year. Seconded by Leonard Pilak; motion carried. Those District residents present elected the five nominees to serve as Deputy Commissioners. ADJOURNMENT Motion by Greg Burmeister. Seconded by Larry Schweitzer at 5:57 pm; motion carried. Minutes transcribed by Aaron Fahl, Associate Planner. Page 2 of 2 July 23, 2019 Packet Page 11 Baker Tilly Virchow Krause, LLP 777 E Wisconsin Ave, 32nd Fl Milwaukee, WI 53202-5313 T: +1 (414) 777 5500 F: +1 (414) 777 5555 bakertilly.com June 15, 2020 Board of District Commissioners C/O Ms. Sharon Mueller, Finanace Director Big Muskego Lake - Bass Bay Protection and Rehabilitation District W182 S8200 Racine Avenue Muskego, Wisconsin 53150-0749 Dear Commissioners: Thank you for using Baker Tilly Virchow Krause, LLP ("Baker Tilly" or "we" or "our") as your auditors. The purpose of this letter (the "Engagement Letter") is to confirm our understanding of the terms and objectives of our engagement and the nature of the services we will provide as independent accountants of the City of Muskego ("you" or "your"). Service and Related Report We will audit the basic financial statements of he Big Muskego Lake - Bass Bay Protection and Rehabilitation District as of and for the year ended December 31, 2020, and the related notes to the financial statements. Upon completion of our audit, we will provide the Big Muskego Lake - Bass Bay Protection and Rehabilitation District with our audit report on the financial statements referred to below. If, for any reasons caused by or relating to the affairs or management of the Big Muskego Lake - Bass Bay Protection and Rehabilitation District, we are unable to complete the audit or are unable to or have not formed an opinion, or if we determine in our professional judgment the circumstances necessitate, we may withdraw and decline to issue a report as a result of this engagement. Our Responsibilities and Limitations The objective of a financial statement audit is the expression of an opinion on the financial statements. We will be responsible for performing that audit in accordance with auditing standards generally accepted in the United States of America ("GAAS"). These standards require that we plan and perform our audit to obtain reasonable, rather than absolute assurance about whether the financial statements are free of material misstatement, whether caused by error or fraud. The audit will include examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit does not relieve management and the audit committee or equivalent group charged with governance of their responsibilities. Baker Tilly Virchow Krause, LLP trading as Baker Tilly is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. © 2018 Baker Tilly Virchow Krause, LLP Rev.Sept2016 Page 1 of 26 Review 2019 Audit and Approve Engagement Letter for... Packet Page 12 Board of District Commissioners Big Muskego Lake - Bass Bay Protection and Rehabilitation District June 15, 2020 Page 2 The audit will include obtaining an understanding of he Big Muskego Lake - Bass Bay Protection and Rehabilitation District and its environment, including internal controls, sufficient to assess the risks of material misstatement of the financial statements and to determine the nature, timing and extent of further audit procedures. An audit is not designed to provide assurance on internal controls or to identify deficiencies in internal control. However, during the audit, we will communicate to management and the audit committee or equivalent group charged with governance internal control matters that are required to be communicated under professional standards. We will design our audit to obtain reasonable, but not absolute, assurance of detecting misstatements due to errors or fraud that would have a material effect on the financial statements as well as other illegal acts having a direct and material effect on financial statement amounts. An audit is not designed to detect error or fraud that is immaterial to the financial statements. Our audit will not include a detailed audit of transactions, such as would be necessary to disclose errors or fraud that did not cause a material misstatement of the financial statements. It is important to recognize that there are inherent limitations in the auditing process. Audits are based on the concept of selective testing of the data underlying the financial statements, which involves judgment regarding the areas to be tested and the nature, timing, extent and results of the tests to be performed. Our audit is not a guarantee of the accuracy of the financial statements and, therefore, is subject to the limitation that material errors or fraud or other illegal acts having a direct and material financial statement impact, if they exist, may not be detected. Because of the characteristics of fraud, particularly those involving concealment through collusion, falsified documentation and management's ability to override controls, an audit designed and executed in accordance with GAAS may not detect a material fraud. Further, while effective internal control reduces the likelihood that errors, fraud or other illegal acts will occur and remain undetected, it does not eliminate that possibility. For these reasons, we cannot ensure that errors, fraud or other illegal acts, if present, will be detected. However, we will communicate to you, as appropriate, any such matters that we identify during our audit. We are also responsible for determining that the audit committee or equivalent group charged with governance is informed about certain other matters related to the conduct of the audit, including (i) our responsibility under GAAS, (ii) an overview of the planned scope and timing of the audit, and (iii) significant findings from the audit, which include (a) our views about the qualitative aspects of your significant accounting practices, accounting estimates, and financial statement disclosures; (b) difficulties encountered in performing the audit; (c) uncorrected misstatements and material corrected misstatements that were brought to the attention of management as a result of auditing procedures; and (d) other significant and relevant findings or issues (e.g., any disagreements with management about matters that could be significant to your financial statements or our report thereon, consultations with other independent accountants, issues discussed prior to our retention as independent auditors, fraud and illegal acts, and all significant deficiencies and material weaknesses identified during the audit). Lastly, we are responsible for ensuring that the audit committee or equivalent group charged with governance receives copies of certain written communications between us and management including written communications on accounting, auditing, internal controls or operational matters and representations that we are requesting from management. The audit will not be planned or conducted in contemplation of reliance of any specific third party or with respect to any specific transaction. Therefore, items of possible interest to a third party will not be specifically addressed and matters may exist that would be addressed differently by a third party, possibly in connection with a specific transaction. Rev.Sept2016 Page 2 of 26 Review 2019 Audit and Approve Engagement Letter for... Packet Page 13 Board of District Commissioners Big Muskego Lake - Bass Bay Protection and Rehabilitation District June 15, 2020 Page 3 Management's Responsibilities Big Muskego Lake - Bass Bay Protection and Rehabilitation District's management is responsible for the financial statements referred to above. In this regard, management is responsible for establishing policies and procedures that pertain to the maintenance of adequate accounting records and effective internal controls over financial reporting, the selection and application of accounting principles, the authorization of receipts and disbursements, the safeguarding of assets, the proper recording of transactions in the accounting records, and for reporting financial information in conformity with accounting principles generally accepted in the United States of America ("GAAP"). Management is also responsible for the design and implementation of programs and controls to prevent and detect fraud, and for informing us in the management representation letter (i) about all known or suspected fraud affecting the Big Muskego Lake - Bass Bay Protection and Rehabilitation District involving: (a) management, (b) employees who have significant roles in internal control over financial reporting, and (c) others where the fraud or illegal acts could have a material effect on the financial statements; and (ii) of its knowledge of any allegations of fraud or suspected fraud affecting the Big Muskego Lake - Bass Bay Protection and Rehabilitation District received in communications from employees, former employees, analysts, grantors, regulators, or others. Management is responsible for (i) adjusting the basic financial statements to correct material misstatements and for affirming to us in a management representation letter that the effects of any uncorrected misstatements aggregated by us during the current engagement and pertaining to the latest period under audit are immaterial, both individually and in the aggregate, to the basic financial statements taken as a whole, and (ii) notifying us of all material weaknesses, including other significant deficiencies, in the design or operation of your internal control over financial reporting that are reasonably likely to adversely affect your ability to record, process, summarize and report external financial data reliably in accordance with GAAP. Management is also responsible for identifying and ensuring that the Big Muskego Lake - Bass Bay Protection and Rehabilitation District complies with the laws and regulations applicable to its activities. As part of management’s responsibility for the financial statements and the effectiveness of its system of internal control over financial reporting, management is responsible for making available to us, on a timely basis, all of your original accounting records and related information and for the completeness and accuracy of that information and your personnel to whom we may direct inquiries. As required by GAAS, we will make specific inquiries of management and others about the representations embodied in the financial statements and the effectiveness of internal control over financial reporting. GAAS also requires that we obtain written representations covering audited financial statements from certain members of management. The results of our audit tests, the responses to our inquiries, and the written representations, comprise the evidential matter we intend to rely upon in forming our opinion on the financial statements. Baker Tilly Virchow Krause, LLP is not a municipal advisor as defined in Section 975 of the Dodd-Frank Wall Street Reform and Consumer Protection Act or under Section 15B of the Securities Exchange Act of 1934 (the "Act"). Baker Tilly Virchow Krause, LLP is not recommending an action to the Big Muskego Lake - Bass Bay Protection and Rehabilitation District; is not acting as an advisor to you and does not owe a fiduciary duty pursuant to Section 15B of the Act to you with respect to the information and material contained in the deliverables issued under this engagement. Any municipal advisory services would only be performed by Baker Tilly Municipal Advisors LLC ("BTMA") pursuant to a separate engagement letter between you and BTMA. You should discuss any information and material contained in the deliverables with any and all internal and external advisors and experts that you deem appropriate before acting on this information or material. Rev.Sept2016 Page 3 of 26 Review 2019 Audit and Approve Engagement Letter for... Packet Page 14 Board of District Commissioners Big Muskego Lake - Bass Bay Protection and Rehabilitation District June 15, 2020 Page 4 Nonattest Services Prior to or as part of our audit engagement, it may be necessary for us to perform certain nonattest services. For purposes of this letter, nonattest services include services that Government Auditing Standards refers to as nonaudit services. Nonattest services that we will be providing are as follows: Financial statement preparation Propose adjusting journal entries Compile regulatory reports Civic Systems software None of these nonattest services constitute an audit under generally accepted auditing standards including Government Auditing Standards. We will not perform any management functions or make management decisions on your behalf with respect to any nonattest services we provide. In connection with our performance of any nonattest services, you agree that you will: Continue to make all management decisions and perform all management functions, including approving all journal entries and general ledger classifications when they are submitted to you. Designate an employee with suitable skill, knowledge, and/or experience, preferably within senior management, to oversee the services we perform. Evaluate the adequacy and results of the nonattest services we perform. Accept responsibility for the results of our nonattest services. Establish and maintain internal controls, including monitoring ongoing activities related to the nonattest function. On a periodic basis, as needed, we will meet with you to discuss your accounting records and the management implications of your financial statements. We will notify you, in writing, of any matters that we believe you should be aware of and will meet with you upon request. Other Documents If you intend to reproduce or publish the financial statements in an annual report or other information (excluding official statements), and make reference to our firm name in connection therewith, you agree to publish the financial statements in their entirety. In addition, you agree to provide us, for our approval and consent, proofs before printing and final materials before distribution. Rev.Sept2016 Page 4 of 26 Review 2019 Audit and Approve Engagement Letter for... Packet Page 15 Board of District Commissioners Big Muskego Lake - Bass Bay Protection and Rehabilitation District June 15, 2020 Page 5 The Big Muskego Lake - Bass Bay Protection and Rehabilitation District may wish to include our report on these financial statements in an official statement or some other securities offering. You agree that the aforementioned audit report or reference to Baker Tilly Virchow Krause, LLP will not be included in such offering without our prior written permission or consent. Upon notification, auditing standards will require our involvement with the official statement, and any procedures related to this involvement will be a separate agreement. With regard to the electronic dissemination of audited financial statements, including financial statements published electronically on your Internet website, you understand that electronic sites are a means to distribute information and, therefore, we are not required to read the information contained in these sites or to consider the consistency of other information in the electronic site with the original document. The documentation for this engagement, including the workpapers, is the property of Baker Tilly Virchow Krause, LLP and constitutes confidential information. We may have a responsibility to retain the documentation for a period of time sufficient to satisfy any applicable legal or regulatory requirements for records retention. If we are required by law, regulation, or professional standards to make certain documentation available to regulators, the Big Muskego Lake - Bass Bay Protection and Rehabilitation District hereby authorizes us to do so. Timing and Fees Completion of our work is subject to, among other things, (i) appropriate cooperation from the Big Muskego Lake - Bass Bay Protection and Rehabilitation District personnel, including timely preparation of necessary schedules, (ii) timely responses to our inquiries, and (iii) timely communication of all significant accounting and financial reporting matters. When and if for any reason the Big Muskego Lake - Bass Bay Protection and Rehabilitation District is unable to provide such schedules, information, and assistance, Baker Tilly Virchow Krause, LLP and you will mutually revise the fee to reflect additional services, if any, required of us to complete the audit. Delays in the issuance of our audit report beyond the date that was originally contemplated may require us to perform additional auditing procedures which will likely result in additional fees. Revisions to the scope of our work will be communicated to you and may be set forth in the form of an "Amendment to Existing Engagement Letter." In addition, if we discover compliance issues that require us to perform additional procedures and/or provide assistance with these matters, fees at our standard hourly rates apply. We estimate that our fee will be $1,250. A charge of 1.5 percent per month shall be imposed on accounts not paid within thirty (30) days of receipt of our statement for services provided. In accordance with our firm policies, work may be suspended if your account becomes thirty (30) days or more overdue and will not be resumed until your account is paid in full. If we elect to terminate our services for nonpayment, our engagement will be deemed to have been completed upon written notice of termination, even if we have not completed our report. You will be obligated to compensate us for all time expended and to reimburse us for all out-of-pocket expenditures through the date of termination. We may use temporary contract staff to perform certain tasks on your engagement and will bill for that time at the rate that corresponds to Baker Tilly Virchow Krause, LLP staff providing a similar level of service. Upon request, we will be happy to provide details on training, supervision, and billing arrangements we use in connection with these professionals. Additionally, we may from time to time, and depending on the circumstances, use service providers (e.g., to act as a specialist or audit an element of the financial statements) in serving your account. We may share confidential information about you with these service providers, but are committed to maintaining the confidentiality and security of your information. Rev.Sept2016 Page 5 of 26 Review 2019 Audit and Approve Engagement Letter for... Packet Page 16 Board of District Commissioners Big Muskego Lake - Bass Bay Protection and Rehabilitation District June 15, 2020 Page 6 Any additional services that may be requested, and we agree to provide, may be the subject of a separate engagement letter. We may be required to disclose confidential information to federal, state and international regulatory bodies or a court in criminal or other civil litigation. In the event that we receive a request from a third party (including a subpoena, summons or discovery demand in litigation) calling for the production of information, we will promptly notify the Big Muskego Lake - Bass Bay Protection and Rehabilitation District, unless otherwise prohibited. In the event we are requested by the Big Muskego Lake - Bass Bay Protection and Rehabilitation District or required by government regulation, subpoena or other legal process to produce our engagement working papers or our personnel as witnesses with respect to services rendered to the Big Muskego Lake - Bass Bay Protection and Rehabilitation District, so long as we are not a party to the proceeding in which the information is sought, we may seek reimbursement for our professional time and expenses, as well as the fees and legal expenses, incurred in responding to such a request. Our fees are based on known circumstances at the time of this Engagement Letter. Should circumstances change significantly during the course of this engagement, we will discuss with you the need for any revised audit fees. This can result from changes at the Big Muskego Lake - Bass Bay Protection and Rehabilitation District, such as the turnover of key accounting staff, the addition of new funds or significant federal or state programs or changes that affect the amount of audit effort from external sources, such as new accounting and auditing standards that become effective that increase the scope of our audit procedures. This Engagement Letter currently includes all auditing and accounting standards and the current single audit guidance in effect as of the date of this letter. We would expect to continue to perform our services under the arrangements discussed above from year to year, unless for some reason you or we find that some change is necessary. We will, of course, be happy to provide the Big Muskego Lake - Bass Bay Protection and Rehabilitation District with any other services you may find necessary or desirable. Resolution of Disagreements In the unlikely event that differences concerning services or fees should arise that are not resolved by mutual agreement, both parties agree to attempt in good faith to settle the dispute by mediation administered by the American Arbitration Association ("AAA") under its mediation rules for professional accounting and related services disputes before resorting to litigation or any other dispute-resolution procedure. Each party shall bear their own expenses from mediation. Rev.Sept2016 Page 6 of 26 Review 2019 Audit and Approve Engagement Letter for... Packet Page 17 Board of District Commissioners Big Muskego Lake - Bass Bay Protection and Rehabilitation District June 15, 2020 Page 7 If mediation does not settle the dispute or claim, then the parties agree that the dispute or claim shall be settled by binding arbitration. The arbitration proceeding shall take place in the city in which the Baker Tilly Virchow Krause, LLP office providing the relevant services is located, unless the parties mutually agree to a different location. The proceeding shall be governed by the provisions of the Federal Arbitration Act ("FAA") and will proceed in accordance with the then current Arbitration Rules for Professional Accounting and Related Disputes of the AAA, except that no pre hearing discovery shall be permitted unless specifically authorized by the arbitrator. The arbitrator will be selected from AAA, Judicial Arbitration & Mediation Services ("JAMS"), the Center for Public Resources or any other internationally or nationally recognized organization mutually agreed upon by the parties. Potential arbitrator names will be exchanged within fifteen (15) days of the parties’ agreement to settle the dispute or claim by binding arbitration, and arbitration will thereafter proceed expeditiously. The arbitration will be conducted before a single arbitrator, experienced in accounting and auditing matters. The arbitrator shall have no authority to award non monetary or equitable relief and will not have the right to award punitive damages. The award of the arbitration shall be in writing and shall be accompanied by a well reasoned opinion. The award issued by the arbitrator may be confirmed in a judgment by any federal or state court of competent jurisdiction. Each party shall be responsible for their own costs associated with the arbitration, except that the costs of the arbitrator shall be equally divided by the parties. The arbitration proceeding and all information disclosed during the arbitration shall be maintained as confidential, except as may be required for disclosure to professional or regulatory bodies or in a related confidential arbitration. In no event shall a demand for arbitration be made after the date when institution of legal or equitable proceedings based on such claim would be barred under the applicable statute of limitations. Our services shall be evaluated solely on our substantial conformance with the terms expressly set forth herein, including all applicable professional standards. Any claim of nonconformance must be clearly and convincingly shown. Limitation on Damages and Indemnification The liability (including attorney’s fees and all other costs) of Baker Tilly Virchow Krause, LLP and its present or former partners, principals, agents or employees related to any claim for damages relating to the services performed under this Engagement Letter shall not exceed the fees paid to Baker Tilly Virchow Krause, LLP for the portion of the work to which the claim relates, except to the extent finally determined to have resulted from the willful misconduct or fraudulent behavior of Baker Tilly Virchow Krause, LLP relating to such services. This limitation of liability is intended to apply to the full extent allowed by law, regardless of the grounds or nature of any claim asserted, including the negligence of either party. Additionally, in no event shall either party be liable for any lost profits, lost business opportunity, lost data, consequential, special, incidental, exemplary or punitive damages, delays or interruptions arising out of or related to this Engagement Letter even if the other party has been advised of the possibility of such damages. As Baker Tilly Virchow Krause, LLP is performing the services solely for your benefit, you will indemnify Baker Tilly Virchow Krause, LLP, its subsidiaries and their present or former partners, principals, employees, officers and agents against all costs, fees, expenses, damages and liabilities (including attorney's fees and all defense costs) associated with any third-party claim, relating to or arising as a result of the services, or this Engagement Letter. Because of the importance of the information that you provide to Baker Tilly Virchow Krause, LLP with respect to Baker Tilly’s ability to perform the services, you hereby release Baker Tilly Virchow Krause, LLP and its present and former partners, principals, agents and employees from any liability, damages, fees, expenses and costs, including attorney's fees, relating to the services, that arise from or relate to any information, including representations by management, provided by you, its personnel or agents, that is not complete, accurate or current. Rev.Sept2016 Page 7 of 26 Review 2019 Audit and Approve Engagement Letter for... Packet Page 18 Board of District Commissioners Big Muskego Lake - Bass Bay Protection and Rehabilitation District June 15, 2020 Page 8 Each party recognizes and agrees that the warranty disclaimers and liability and remedy limitations in this Engagement Letter are material bargained for bases of this Engagement Letter and that they have been taken into account and reflected in determining the consideration to be given by each party under this Engagement Letter and in the decision by each party to enter into this Engagement Letter. The terms of this section shall apply regardless of the nature of any claim asserted (including, but not limited to, contract, tort or any form of negligence, whether of you, Baker Tilly Virchow Krause, LLP or others), but these terms shall not apply to the extent finally determined to be contrary to the applicable law or regulation. These terms shall also continue to apply after any termination of this Engagement Letter. You accept and acknowledge that any legal proceedings arising from or in conjunction with the services provided under this Engagement Letter must be commenced within twelve (12) months after the performance of the services for which the action is brought, without consideration as to the time of discovery of any claim. Other Matters Neither this Engagement Letter, any claim, nor any rights or licenses granted hereunder may be assigned, delegated, or subcontracted by either party without the written consent of the other party. Either party may assign and transfer this Engagement Letter to any successor that acquires all or substantially all of the business or assets of such party by way of merger, consolidation, other business reorganization, or the sale of interest or assets, provided that the party notifies the other party in writing of such assignment and the successor agrees in writing to be bound by the terms and conditions of this Engagement Letter. Our dedication to client service is carried out through our employees who are integral in meeting this objective. In recognition of the importance of our employees, it is hereby agreed that the Big Muskego Lake - Bass Bay Protection and Rehabilitation District will not solicit our employees for employment or enter into an independent contractor arrangement with any individual who is or was an employee of Baker Tilly Virchow Krause, LLP for a period of twelve (12) months following the date of the conclusion of this engagement. If the Big Muskego Lake - Bass Bay Protection and Rehabilitation District violates this non-solicitation clause, the Big Muskego Lake - Bass Bay Protection and Rehabilitation District agrees to pay to Baker Tilly Virchow Krause, LLP a fee equal to the hired person's annual salary at the time of the violation so as to reimburse Baker Tilly Virchow Krause, LLP for the costs of hiring and training a replacement. Baker Tilly Virchow Krause, LLP, trading as Baker Tilly, is an independent member of Baker Tilly International. Baker Tilly International Limited is an English company. Baker Tilly International provides no professional services to clients. Each member firm is a separate and independent legal entity and each describes itself as such. Baker Tilly Virchow Krause, LLP is not Baker Tilly International’s agent and does not have the authority to bind Baker Tilly International or act on Baker Tilly International’s behalf. None of Baker Tilly International, Baker Tilly Virchow Krause, LLP, nor any of the other member firms of Baker Tilly International has any liability for each other’s acts or omissions. The name Baker Tilly Virchow Krause, LLP and its associated logo is used under license from Baker Tilly International Limited. This Engagement Letter constitutes the entire agreement between the Big Muskego Lake - Bass Bay Protection and Rehabilitation District and Baker Tilly Virchow Krause, LLP regarding the services described in this Engagement Letter and supersedes and incorporates all prior or contemporaneous representations, understandings or agreements, and may not be modified or amended except by an agreement in writing signed between the parties hereto. Rev.Sept2016 Page 8 of 26 Review 2019 Audit and Approve Engagement Letter for... Packet Page 19 Board of District Commissioners Big Muskego Lake - Bass Bay Protection and Rehabilitation District June 15, 2020 Page 9 The provisions of this Engagement Letter, which expressly or by implication are intended to survive its termination or expiration, will survive and continue to bind both parties. If any provision of this Engagement Letter is declared or found to be illegal, unenforceable or void, then both parties shall be relieved of all obligations arising under such provision, but if the remainder of this Engagement Letter shall not be affected by such declaration or finding and is capable of substantial performance, then each provision not so affected shall be enforced to the extent permitted by law or applicable professional standards. If because of a change in the Big Muskego Lake - Bass Bay Protection and Rehabilitation District's status or due to any other reason, any provision in this Engagement Letter would be prohibited by, or would impair our independence under laws, regulations or published interpretations by governmental bodies, commissions or other regulatory agencies, such provision shall, to that extent, be of no further force and effect and this agreement shall consist of the remaining portions. This agreement shall be governed by and construed in accordance with the laws of the state of Wisconsin, without giving effect to the provisions relating to conflict of laws. We appreciate the opportunity to be of service to you. If there are any questions regarding this Engagement Letter, please contact Wendi M. Unger, the engagement partner on this engagement who is responsible for the overall supervision and review of the engagement and determining that the engagement has been completed in accordance with professional standards. Wendi M. Unger is available at 414 777 5423, or at wendi.unger@bakertilly.com. Sincerely, BAKER TILLY VIRCHOW KRAUSE, LLP Enclosure The services and terms as set forth in this Engagement Letter are agreed to by: __________________________________________________ Official's Name __________________________________________________ Official's Signature __________________________________________________ Title __________________________________________________ Date Rev.Sept2016 Page 9 of 26 Review 2019 Audit and Approve Engagement Letter for... Packet Page 20 BIG MUSKEGO LAKE – BASS BAY PROTECTION AND REHABILITATION DISTRICT A component-unit of the CITY OF MUSKEGO Muskego, Wisconsin FINANCIAL STATEMENTS Including Independent Auditors’ Report As of and for the year ended December 31, 2019 Page 10 of 26 Review 2019 Audit and Approve Engagement Letter for... Packet Page 21 BIG MUSKEGO LAKE – BASS BAY PROTECTION AND REHABILITATION DISTRICT A component-unit of the CITY OF MUSKEGO TABLE OF CONTENTS As of and for the year ended December 31, 2019 Page Independent Auditors’ Report 1 – 2 Basic Financial Statements Government-wide Financial Statements Statement of Net Position 3 Statement of Activities 4 Fund Financial Statements Balance Sheet – Governmental Fund 5 Statement of Revenues, Expenditures and Changes in Fund Balance – Governmental Fund 6 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 7 Statement of Revenues, Expenditures and Changes in Fund Balance – Actual and Budget – General Fund 8 Notes to Financial Statements 9 – 15 Page 11 of 26 Review 2019 Audit and Approve Engagement Letter for... Packet Page 22   Baker Tilly Virchow Krause, LLP trading as Baker Tilly is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. Page 1 INDEPENDENT AUDITORS' REPORT To the Board of District Commissioners Big Muskego Lake-Bass Bay Protection and Rehabilitation District Muskego, Wisconsin Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities and the major fund of the Big Muskego Lake-Bass Bay Protection and Rehabilitation District (the "District"), a component unit of the City of Muskego, Wisconsin, as of and for the year ended December 31, 2019, and the related notes to the financial statements, which collectively comprise the District's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes 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. Auditors' Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the District's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the District's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Page 12 of 26 Review 2019 Audit and Approve Engagement Letter for... Packet Page 23 To the Board of District Commissioners Big Muskego Lake-Bass Bay Protection and Rehabilitation District Page 2 Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and the major fund of the district as of December 31, 2019 and the respective changes in financial position and the respective budgetary comparison for the General Fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Management has omitted 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. Milwaukee, Wisconsin July 17, 2020 Page 13 of 26 Review 2019 Audit and Approve Engagement Letter for... Packet Page 24 See accompanying notes to financial statements. Page 3 ASSETS CURRENT ASSETS Cash and cash equivalents 159,809$ Due from the City of Muskego 3,294 Total assets 163,103$ LIABILITIES CURRENT LIABILITIES Unearned revenue 513$ Total liabilities 513 NET POSITION Unrestricted 162,590$ BIG MUSKEGO LAKE-BASS BAY PROTECTION AND REHABILITATION DISTRICT a component unit of the STATEMENT OF NET POSITION As of December 31, 2019 CITY OF MUSKEGO Page 14 of 26 Review 2019 Audit and Approve Engagement Letter for... Packet Page 25 See accompanying notes to financial statements. Page 4 Net (Expense) Capital Revenue and Charges for Grants and Changes Expenses Services Contributions in Net Position Functions General government 9,167$ -$ -$ (9,167)$ Weed treatment 11,160 30,640 - 19,480 Total activities 20,327$ 30,640$ -$ 10,313 General revenues Investment earnings 565 Other revenues 353 Total activities 918 Change in Net Position 11,231 NET POSITION, BEGINNING OF YEAR 151,359 NET POSITION, END OF YEAR 162,590$ Program Revenues BIG MUSKEGO LAKE-BASS BAY PROTECTION AND REHABILITATION DISTRICT a component unit of the STATEMENT OF ACTIVITIES For the year ended December 31, 2019 CITY OF MUSKEGO Page 15 of 26 Review 2019 Audit and Approve Engagement Letter for... Packet Page 26 See accompanying notes to financial statements. Page 5 General Fund ASSETS Cash and cash equivalents 159,809$ Due from the City of Muskego 3,294 Total assets 163,103$ LIABILITIES AND FUND EQUITY Liabilities: Unearned revenues 513$ Total liabilities 513 Fund balance Committed 162,590 Total liabilities and fund balance 163,103$ CITY OF MUSKEGO a component unit of the BIG MUSKEGO LAKE-BASS BAY PROTECTION AND REHABILITATION DISTRICT As of December 31, 2019 GOVERNMENTAL FUND BALANCE SHEET Page 16 of 26 Review 2019 Audit and Approve Engagement Letter for... Packet Page 27 See accompanying notes to financial statements. Page 6 General Fund REVENUES Public charges for services - assessments 30,640$ Investment income 565 Other revenues 353 Total revenues 31,558 EXPENDITURES Current: Salaries and benefits 3,946 Accounting and auditing 1,250 Insurance 175 Postage 2,134 Computer charges 175 Miscellaneous 820 Land conservancy 237 Weed treatment 11,160 Total expenditures 20,327 Net change in Fund Balance 11,231 FUND BALANCE, BEGINNING OF YEAR 151,359 FUND BALANCE, END OF YEAR 162,590$ CITY OF MUSKEGO BIG MUSKEGO LAKE-BASS BAY PROTECTION AND REHABILITATION DISTRICT a component unit of the For the year ended December 31, 2019 GOVERNMENTAL FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE Page 17 of 26 Review 2019 Audit and Approve Engagement Letter for... Packet Page 28 See accompanying notes to financial statements. Page 7 Net change in fund balances - total governmental funds 11,231$ Amounts reported for governmental activities in the statement of activities are different because: Receivables not currently available are reported as revenue when collected or currently available in the fund financial statements but are recognized as revenue when earned in the government-wide financial statements - CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES 11,231$ For the year ended December 31, 2019 EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS BIG MUSKEGO LAKE-BASS BAY PROTECTION AND REHABILITATION DISTRICT a component unit of the CITY OF MUSKEGO RECONCILIATION OF THE STATEMENT OF REVENUES, TO THE STATEMENT OF ACTIVIIES Page 18 of 26 Review 2019 Audit and Approve Engagement Letter for... Packet Page 29 See accompanying notes to financial statements. Page 8 Original and Final Variance with Actual Budget Final Budget REVENUES Public charges for services - assessments 30,640$ 29,100$ 1,540$ Investment income 565 200 365 Other revenues 353 250 103 Total revenues 31,558 29,550 2,008 EXPENDITURES Current: Salaries and benefits 3,946 4,035 89 Accounting and auditing 1,250 1,200 (50) Insurance 175 175 - Postage 2,134 1,500 (634) Computer charges 175 175 - Dues/conventions - 1,000 1,000 Legal fees - 1,500 1,500 Maintenance of equipment 250 1,500 1,250 Miscellaneous 820 1,200 380 Gasoline, oil, grease, tires 237 500 263 Water quality monitoring 180 750 570 Goose control - 3,000 3,000 Weed treatment 11,160 16,000 4,840 Economic development - 50,000 50,000 Total expenditures 20,327 82,535 62,208 Net change in Fund Balance 11,231 (52,985)$ 64,216$ FUND BALANCE, BEGINNING OF YEAR 151,359 FUND BALANCE, END OF YEAR 162,590$ GENERAL FUND For the year ended December 31, 2019 IN FUND BALANCE - ACTUAL AND BUDGET BIG MUSKEGO LAKE-BASS BAY PROTECTION AND REHABILITATION DISTRICT a component unit of the CITY OF MUSKEGO STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES Page 19 of 26 Review 2019 Audit and Approve Engagement Letter for... Packet Page 30 BIG MUSKEGO LAKE – BASS BAY PROTECTION AND REHABILITATION DISTRICT a component-unit of the CITY OF MUSKEGO NOTES TO FINANCIAL STATEMENTS As of and for the year ended December 31, 2019 Page 9 NOTE 1 - SUMMARY OF S IGNIFICANT A CCOUNTING POLICIES The accounting policies of the Big Muskego Lake-Bass Bay Protection and Rehabilitation District conform to accounting principles generally accepted in the United States of America as applicable to governmental units. The accepted standard-setting body for establishing governmental accounting and financial reporting principles is the Governmental Accounting Standards Board (GASB). A. REPORTING E NTITY The Big Muskego Lake-Bass Bay Protection and Rehabilitation District the (“District”) is a component unit of the City of Muskego. These financial statements do not include the balances and transactions of the City of Muskego. Therefore, these financial statements are not intended to, and do not present the financial position and results of operations of the City of Muskego. The District was established by a resolution of the Common Council of the City of Muskego on September 12, 1978 under authority of the Statutes of the State of Wisconsin. The District was established for the purpose of undertaking programs of lake protection and rehabilitation. The District is comprised of property and territory lying within the boundaries of the City of Muskego. The governing body or District Commissioners shall be the members of the Common Council of the City of Muskego with the Mayor acting as Chairman. In order to carry out the program of lake protection and rehabilitation, the District may do the following: 1. Make contracts, accept gifts, purchase, lease, devise or otherwise acquire, hold or dispose of real or personal property. 2. Disburse money, contract debt and do such other acts as are necessary to carry out the program. 3. Borrow money or issue Special Assessment "B" Bonds for financing projects. 4. Apply for state aids as provided by statute. 5. Levy special assessments in order to carry out District projects. 6. Approve a budget. 7. Levy a tax upon all taxable property within the District for the cost of operation for the ensuing year which tax shall not exceed a rate of 2.5 mills of equalized valuation. Page 20 of 26 Review 2019 Audit and Approve Engagement Letter for... Packet Page 31 BIG MUSKEGO LAKE – BASS BAY PROTECTION AND REHABILITATION DISTRICT a component-unit of the CITY OF MUSKEGO NOTES TO FINANCIAL STATEMENTS As of and for the year ended December 31, 2019 Page 10 NOTE 1 - S UMMARY OF SIGNIFICANT ACCOUNTING P OLICIES (cont.) B. GOVERNMENT-WIDE AND F UND FINANCIAL STATEMENTS Government-wide Financial Statements The statement of net position and statement of activities display information about the reporting government as a whole. They include all funds of the reporting entity except for fiduciary funds. The statements distinguish between governmental and business-type activities. Governmental activities generally are financed by user charges, intergovernmental revenues, and other nonexchange revenues. The District does not report any business-type activities, or fiduciary funds. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. The District does not allocate indirect expenses to functions in the statement of activities. Program revenues included 1) charges to customers or applicants who purchase, use or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Other items not properly included among program revenues are reported instead as general revenues. Fund Financial Statements Financial statements of the District are organized into funds, each of which are considered to be a separate accounting entity. Each fund is accounted for by providing a separate set of self- balancing accounts, which constitute its assets, liabilities, net position/fund balance, revenues, and expenditures. Funds are organized as major funds or non-major funds within the governmental statements. An emphasis is placed on major funds within the governmental category. A fund is considered major if it is the primary operating fund of the organization or meets the following criteria: a. Total assets/deferred outflows of resources, liabilities/deferred inflows of resources, revenues, or expenditures/expenses of that individual governmental are at least 10% of the corresponding total for all funds of that category or type, and Page 21 of 26 Review 2019 Audit and Approve Engagement Letter for... Packet Page 32 BIG MUSKEGO LAKE – BASS BAY PROTECTION AND REHABILITATION DISTRICT a component-unit of the CITY OF MUSKEGO NOTES TO FINANCIAL STATEMENTS As of and for the year ended December 31, 2019 Page 11 NOTE 1 - S UMMARY OF SIGNIFICANT ACCOUNTING P OLICIES (cont.) B. G OVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (cont.) Fund Financial Statements (cont.) b. The same element of the individual governmental fund that met the 10% test is at least 5% of the corresponding total for all governmental funds combined. c. In addition, any other governmental fund that the District believes if particularly important to financial statement users may be reported as a major fund. The District reports the following governmental fund: Major Fund - General Fund – accounts for the District’s general operating activities. It is used to account for all financial resources except those required to be accounted for in another fund. C. M EASUREMENT F OCUS, B ASIS OF A CCOUNTING, AND F INANCIAL S TATEMENT P RESENTATION Government–Wide Statements The government-wide statement of net position and statement of activities are reported using the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred or economic asset used. Revenues, expenses, gains, losses, assets, and liabilities resulting from exchange and exchange-like transactions are recognized when the exchange takes place. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider are met. Fund Statements Governmental funds financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recorded when they are both measurable and available. Available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. For this purpose, the District considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures are recorded when the related fund liability is incurred, except for claims and judgments, which are recorded as a fund liability when expected to be paid with expendable available financial resources. All Financial Statements The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, deferred outflows of resources, liabilities, and deferred inflows of resources and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates. Page 22 of 26 Review 2019 Audit and Approve Engagement Letter for... Packet Page 33 BIG MUSKEGO LAKE – BASS BAY PROTECTION AND REHABILITATION DISTRICT a component-unit of the CITY OF MUSKEGO NOTES TO FINANCIAL STATEMENTS As of and for the year ended December 31, 2019 Page 12 NOTE 1 - S UMMARY OF SIGNIFICANT ACCOUNTING P OLICIES (cont.) D. EQUITY C LASSIFICATIONS Government–Wide Statements Equity is classified as net position and displayed in three components: a. Net investment in capital assets – Consists of capital assets including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances (excluding unspent debt proceeds) of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. b. Restricted net position – Consists of net position with constraints placed on the use either by 1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments or, 2) law through constitutional provisions or enabling legislation. c. Unrestricted net position – All other net positions that do not meet the definition of “restricted” or “net investment in capital assets.” When both restricted and unrestricted resources are available for use, it is the District’s policy to use restricted resources first, then unrestricted resources as they are needed. Fund Statements Governmental fund balances are displayed as follows: a. Nonspendable – Includes fund balance amounts that cannot be spent either because they are not in spendable form or because legal or contractual requirements require them to be maintained intact. b. Restricted – Consists of fund balances with constraints place on their use either by 1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments or 2) law through constitutional provisions or enabling legislation. c. Committed - Includes fund balance amounts that are constrained for specific purposes that are internally imposed by the government through formal action of the highest level of decision making authority. Fund balance amounts are committed through a formal action (resolution) of the Board of District Commissioners. This formal action must occur prior to the end of the reporting period, but the amount of the commitment, which will be subject to the constraints, may be determined in the subsequent period. Any changes to the constraints imposed require the same formal action of the District that originally created the commitment. d. Assigned - Includes spendable fund balance amounts that are intended to be used for specific purposes that do not meet the criteria to be classified as restricted or committed. Fund balance may be assigned through the following; 1) The District has adopted a financial policy authorizing the Board of District Commissioners to assign amounts for a specific purpose. 2) All remaining positive spendable amounts in governmental funds, other than the general fund, that are neither restricted nor committed. Assignments may take place after the end of the reporting period. Page 23 of 26 Review 2019 Audit and Approve Engagement Letter for... Packet Page 34 BIG MUSKEGO LAKE – BASS BAY PROTECTION AND REHABILITATION DISTRICT a component-unit of the CITY OF MUSKEGO NOTES TO FINANCIAL STATEMENTS As of and for the year ended December 31, 2019 Page 13 NOTE 1 - S UMMARY OF SIGNIFICANT ACCOUNTING P OLICIES (cont.) D. EQUITY C LASSIFICATIONS (cont.) Fund Statements e. Unassigned - Includes residual positive fund balance within the general fund which has not been classified within the other above mentioned categories. Unassigned fund balance may also include negative balances for any governmental fund if expenditures exceeds amounts restricted, committed, or assigned for those purposes. The District considers restricted amounts to be spent first when both restricted and unrestricted fund balance is available unless there are legal documents / contracts that prohibit doing this, such as in grant agreements requiring dollar for dollar spending. Additionally, the District would first use committed, then assigned and lastly unassigned amounts of unrestricted fund balance when expenditures are made. E. OTHER POLICIES 1. The District owns certain capital assets with insignificant values that have been excluded for the financial statement reporting. 2. The District adopts annual budgets for its General Fund which is prepared on a basis consistent with generally accepted accounting principles. All appropriations lapse at year-end. Budgetary control is exercised at the total fund level. NOTE 2 - CASH AND CASH E QUIVALENTS The Big Muskego Lake - Bass Bay Protection and Rehabilitation District, a component unit of the City of Muskego, invests its funds in accordance with the provisions of the Wisconsin Statutes 66.0603 and 67.11(2). The District’s carrying values and bank balances of cash and cash equivalents as of December 31, 2019 consisted of the following: Carrying Bank Associated Value Balance Risks Cash and cash equivalents Demand deposits 159,809$ 189,851$ Custodial Credit Risk Total Cash and Cash Equivalents 159,809$ 189,851$ Deposits in each local and area bank are insured by the FDIC in the amount of $250,000 for time and saving accounts (including NOW accounts) and $250,000 for demand deposit accounts (interest-bearing and noninterest-bearing). In addition, if deposits are held in an institution outside of the state in which the government is located, insured amounts are further limited to a total of $250,000 for the combined amount of all deposit accounts. Page 24 of 26 Review 2019 Audit and Approve Engagement Letter for... Packet Page 35 BIG MUSKEGO LAKE – BASS BAY PROTECTION AND REHABILITATION DISTRICT a component-unit of the CITY OF MUSKEGO NOTES TO FINANCIAL STATEMENTS As of and for the year ended December 31, 2019 Page 14 NOTE 2 - CASH AND CASH E QUIVALENTS (cont.) Bank accounts are also insured by the State Deposit Guarantee Fund in the amount of $400,000. However, due to the nature of this fund, recovery of material principal losses may not be significant to individual municipalities. This coverage has been considered in computing custodial credit risk. Custodial Credit Risk Custodial credit risk is the risk that in the event of a financial institution failure, the District’s deposits may not be returned to the District. As of December 31, 2019, the District’s total bank balance of $189,851 was fully insured. The District has not adopted a formal investment policy and is covered under an investment policy adopted by the City of Muskego. Please reference the City of Muskego financial statements for details of this investment policy and its assessment of deposit and investment risks on commingled cash and investments. The District, as a component unit of the City of Muskego, also maintains commingled cash and investment with the City. Federal depository insurance and the State of Wisconsin Guarantee Fund insurance apply to the City of Muskego as an individual municipality and accordingly, the amount of insured funds is not determinable for the Big Muskego Lake - Bass Bay Protection and Rehabilitation District as a component unit of the City. Investments are stated at fair value, which is the amount at which an investment could be exchanged in a current transaction between willing parties. Fair values are based on quoted market prices. No investments are reported at amortized cost. Adjustments necessary to record investments at fair value are recorded in the operating statement as increases or decreases in investment income. Investment income on commingled investments of municipal accounting funds is allocated based on average balances. The difference between the bank statement balance and carrying value is due to outstanding checks and/or deposits in transit. NOTE 3 - R ISK M ANAGEMENT The District is exposed to various risks of loss related to torts; theft of, damage to, or destruction of assets; errors and omissions; workers compensation; health care of its employees; and environmental damage for which the District purchases commercial insurance. Settled claims have not exceeded the commercial coverage in any of the past three years. There were no significant reductions in coverage compared to the prior year. Page 25 of 26 Review 2019 Audit and Approve Engagement Letter for... Packet Page 36 BIG MUSKEGO LAKE – BASS BAY PROTECTION AND REHABILITATION DISTRICT a component-unit of the CITY OF MUSKEGO NOTES TO FINANCIAL STATEMENTS As of and for the year ended December 31, 2019 Page 15 NOTE 4 – OTHER INFORMATION A. EFFECT OF NEW ACCOUNTING STANDARDS ON C URRENT-PERIOD FINANCIAL STATEMENTS The Governmental Accounting Standards Board (GASB) has approved the following:  Statement No. 87, Leases  Statement No. 89, Accounting for Interest Cost Incurred before the End of a Construction Period  Statement No. 90, Majority Equity Interests – an amendment of GASB Statement No. 14 and No. 61  Statement No. 91, Conduit Debt Obligations  Statement No. 92, Omnibus  Statement No. 93, Replacement of Interbank Offered Rates  Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements The statements listed above through Statement No. 93 had their required effective dates postponed by one year with the issuance of Statement No. 95, Postponement of Effective Dates of Certain Authoritative Guidance, with the exception of Statement No. 87 which was postponed by one and a half years. When they become effective, application of these standards may restate portions of these financial statements. Page 26 of 26 Review 2019 Audit and Approve Engagement Letter for... Packet Page 37 Notice is hereby given that at the Annual Meeting of the Big Muskego Lake/Bass Bay Protection and Rehabilitation District to be held on Tuesday, July 28, 2020, at 5:45 p.m. at the Muskego City Hall, W182 S8200 Racine Avenue, a PUBLIC HEARING on the PROPOSED BUDGET will be held. The proposed budget in detail is available for inspection at City Hall in the Clerk-Treasurer's office from 8:00 a.m. to 4:30 p.m. on Monday through Friday. Following is a summary of the proposed Big Muskego Lake/Bass Bay Protection and Rehabilitation District 2021 Budget: Sharon Mueller, Finance & Administration Director 2021 2020 PROPOSED % BUDGET BUDGET CHANGE NON-MAJOR SPECIAL REVENUE FUND Revenues Grant Revenue $0 $0 Public Charges for Services $30,570 $30,550 Commercial Revenues $675 $625 Total Revenues $31,245 $31,175 -0.22% Appropriation of Fund Balance $56,878 $57,148 Total Available Funds $88,123 $88,323 Expenditures Salaries and Benefits $3,974 $4,173 Legal and Professional $2,750 $2,750 Water Quality Monitoring $750 $750 Postage, Office Expenses and Other $6,650 $6,650 Projects: Weed/Goose Control & Land Purchase $69,000 $69,000 Total Expenditures $83,124 $83,323 0.24% Designated Fund Balance/Land Conservancy $5,000 $5,000 Total Expenditures including Designated Funds $88,124 $88,323 ALL GOVERNMENTAL FUND BALANCE Undesignated Undesignated Fund Total Fund Balance Total Operating Balance January 1, 2021 Revenues Expenditures Dec. 31, 2021 Non-Major Special Revenue Fund $104,422 $31,175 $38,323 $97,274 * Property tax Levy: The District did not and will not levy taxes to finance 2020 or 2021 operations. * $5,000 of Undesignated Fund Balance is designated for Land Conservancy. PLEASE NOTE: It is possible that members of and possibly a quorum of members of other governmental bodies of the municipality may be in attendance at the above-stated meeting to gather information; no action will be taken by any governmental body at the above-stated meeting other than the governmental body specifically referred to above in this notice. Also, upon reasonable notice, efforts will be made to accommodate the needs of disabled individuals through appropriate aids and services. For additional information or to request this service, contact the Finance & Administration Director, Muskego City Hall, (262) 679-5622. NOTICE OF ANNUAL MEETING AND PUBLIC HEARING FOR THE BIG MUSKEGO LAKE/BASS BAY PROTECTION AND REHABILITATION DISTRICT Page 1 of 1 Adopt 2021 Budget Packet Page 38