THE TOWN OF

BROOKSIDE, ALABAMA

ANNUAL FINANCIAL REPORT

September 30, 2020

INTRODUCTORY SECTION

PRINCIPAL TOWN OFFICIALS

TABLE OF CONTENTS
THE TOWN OF BROOKSIDE, ALABAMA
PRINCIPAL TOWN OFFICIALS

September 30, 2020

MAYOR
Roger McCondichie

TOWN COUNCIL
Mike Bryan
Daryl Burr
Jimmy Hall
Dale McGuire
Mark Wolfe

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THE TOWN OF BROOKSIDE, ALABAMA
ANNUAL FINANCIAL REPORT
For the Year Ended September 30, 2020

TABLE OF CONTENTS

Introductory Section
Principal Town Officials............................................................................................................... i
Table of Contents.......................................................................................................................... iii
Financial Section
Independent Auditors’ Report.......................................................................................................... 1
Management’s Discussion and Analysis.......................................................................................... 4

Basic Financial Statements

Government-Wide Financial Statements
Statement of Net Position .......................................................................................................... 14
Statement of Activities .............................................................................................................. 16
Fund Financial Statements
Balance Sheet - Governmental Funds ....................................................................................... 17
Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds 18
Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances
of Governmental Funds to the Statement of Activities .......................................................... 20
Statement of Net Position - Proprietary Funds .......................................................................... 21
Statement of Revenues, Expenses and Changes in Net Position - Proprietary Funds ............... 22
Statement of Cash Flows - Proprietary Funds ........................................................................... 23
Notes to Financial Statements ...................................................................................................... 26
Combining Financial Statements
Nonmajor Governmental Funds:
Combining Balance Sheet............................................................................................................. 41
Combining Statement of Revenues, Expenditures and Changes in Fund Balances ..................... 42

Government Audit Section

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 ................................................................... 45
Schedule of Findings and Responses ........................................................................................ 47

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 FINANCIAL SECTION

INDEPENDENT AUDITORS’ REPORT

MANAGEMENT’S DISCUSSION AND ANALYSIS

BASIC FINANCIAL STATEMENTS

COMBINING FINANCIAL STATEMENTS

 
 INDEPENDENT AUDITORS’ REPORT
To the Town Council
The Town of Brookside, Alabama
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major
fund, and the aggregate remaining fund information of the Town of Brookside, Alabama (the “Town”), as of and for the year
ended September 30, 2020, and the related notes to the financial statements, which collectively comprise the Town’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 opinions 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 and the standards applicable to financial audits
contained in Government Auditing Standards, issued by the Comptroller General of the United States. 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 entity’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 entity’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 opinions.

Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position
of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the
Town, as of September 30, 2020, and the respective changes in financial position and, where applicable, cash flows thereof for
the year then ended in accordance with accounting principles generally accepted in the United States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management's discussion and analysis
be presented to supplement the basic financial statements. Such 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. We have applied certain
limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the
United States of America, which consisted of inquiries of management about the methods of preparing the information and
comparing the information for consistency with management’s responses to our inquiries, the financial statements, and other
knowledge we obtained during our audit of the financial statements. We do not express an opinion or provide any assurance on
the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any
assurance.

Phone: 205.969.3443 3176 Cahaba Heights Road, Suite 100 pmorgan@morgancpas.com

Fax: 205.969.3445 Birmingham, AL 35243 www.morgancpas.com

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Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Town’s
basic financial statements. The combining financial statements are presented for purposes of additional analysis and are not a
required part of the basic financial statements.
The combining financial statements are the responsibility of management and were derived from and relate directly to the
underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to
the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing
and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial
statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards
generally accepted in the United States of America. In our opinion, the combining financial statements are fairly stated in all
material respects in relation to the basic financial statements as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated December 28, 2020, on our
consideration of the Town’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 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
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 Town’s internal control over financial reporting and compliance.

Birmingham, Alabama
December 28, 2020
PHILLIP MORGAN & COMPANY P.C.

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THE TOWN OF BROOKSIDE, ALABAMA
MANAGEMENT’S DISCUSSION AND ANALYSIS
September 30, 2020

As management of The Town of Brookside, Alabama, we offer this narrative overview and analysis as a
means to assist readers of the Town’s financial statements for the fiscal year ended September 30, 2020.
Our discussion and analysis focuses on significant financial issues, provides an overview of the Town’s
financial activity, notes changes in the Town’s financial position, and identifies individual fund issues and
concerns.

Financial Highlights

The net position of the Town of Brookside as of September 30, 2020 totaled $4,083,056. The portion of
net position that may be used to meet the Town’s ongoing obligations to citizens and creditors
(unrestricted net position) was $487,398. The Town’s total net position increased by $14,679 in fiscal year
2020.

Overview of the Financial Statements

This discussion and analysis is intended to serve as an introduction to the Town’s basic financial
statements that are comprised of three components: (1) government-wide financial statements, (2) fund
financial statements, and (3) notes to financial statements.

Government-wide Financial Statements

The government-wide financial statements are designed to provide readers with an overview of the Town’s
finances, in a manner similar to private-sector business.

The Statement of Net Position presents information on the Town’s assets and liabilities, with the
difference between the two reported as net position. This statement combines governmental funds current
financial resources with capital assets and long-term obligations. With sufficient history, increases or
decreases may serve as a useful indicator of the improvement or deterioration of the financial position of
the Town.

The Statement of Activities focuses on the functions of the Town and how net position changed during
the most recent fiscal year. The intent is to simplify the user’s analysis of revenue and expense of the
various government services to the business-type activities. All changes in net position are reported as
soon as the underlying event causing the change occurs, regardless of the timing or related cash flows.
Consequently, revenues and expenses are reported in this statement for some items that will only result
in cash flows in future fiscal periods.

The government-wide financial statements describe functions of the Town of Brookside that are
principally supported by taxes and intergovernmental revenues (governmental activities) as opposed to
those functions that are intended to recover all or a significant portion of the cost of operations, including
depreciation, through fees and charges for services (business-type activities). The governmental activities
of the Town of Brookside include general government, police protection, fire protection, streets and
parks, and recreation. The business-type activities of the Town of Brookside reflect operations of the gas
and water systems.

A component unit is a legally separate organization over which the Town can exercise influence and/or
may be obligated to provide financial subsidies. The Town of Brookside has no component units.

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THE TOWN OF BROOKSIDE, ALABAMA
MANAGEMENT’S DISCUSSION AND ANALYSIS
September 30, 2020

Fund Financial Statements

Fund Financial Statements focus on the Town’s major funds rather than the Town as a whole. A fund is
a grouping of related accounts that is used to maintain control over resources that have been segregated
for specific activities. The Town of Brookside uses fund accounting to ensure compliance with finance-
related legal requirements. Governmental and proprietary are the two categories of fund types currently
used by the Town.

Governmental Funds

The general fund is the primary operating fund of the Town. It includes all revenues that are not
associated with the proprietary fund. Expenditures applicable to the general operations of the Town are
paid from the general fund.

The greenway fund is used to account for the financial activities of the Town’s campground and canoe
rental facilities.

The capital projects fund is used to account for Alabama Trust Fund revenues (which are to be used
only for capital outlays), along with other revenues and debt proceeds intended for capital projects.

The USDA repayment fund is a debt service fund of the Town. Amounts accounted for in this fund
consist of funds set aside for the payment of principal and interest on the Town’s Series 2009 General
Obligation Warrants.

Additionally, the Town maintains several special revenue funds to account for resources that are legally
restricted to expenditure for specific purposes, not including those accounted for in capital projects funds,
debt service funds, or permanent funds.

The Town of Brookside does not adopt an annual budget.

Proprietary Funds

The Town of Brookside maintains two proprietary funds. The gas system fund and the water system fund
report the business-type activities of the Town. These funds include information on natural gas and water
activities.

Notes to the Financial Statements

The notes to the financial statements give additional information designed to enhance the readers
understanding of the data contained in the report.

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THE TOWN OF BROOKSIDE, ALABAMA
MANAGEMENT’S DISCUSSION AND ANALYSIS
September 30, 2020

Government-wide Financial Analysis

Statement of Net Position

Condensed Statements of Net Position

As of September 30, 2020 and 2019

Governmental Activities Business-Type Activities Total

2020 2019 2020 2019 2020 2019
Assets
Current and other assets…………… $ 584,076 $ 516,883 $ 337,288 $ 256,301 $ 921,364 $ 773,184
Net capital assets…………………… 3,488,907 3,624,517 598,881 623,035 4,087,788 4,247,552
Total Assets………………… 4,072,983 4,141,400 936,169 879,336 5,009,152 5,020,736

Liabilities
Current and other liabilities………… 44,753 43,518 107,183 96,841 151,936 140,359
Long-term liabilities………………. 774,160 812,000 - - 774,160 812,000
Total Liabilities…………… 818,913 855,518 107,183 96,841 926,096 952,359

Net Position
Invested in capital assets, net
of related debt………………… 2,691,747 2,790,517 598,881 623,035 3,290,628 3,413,552
Restrictred………………………… 305,030 301,443 - - 305,030 301,443
Unrestricted………………………… 257,293 193,922 230,105 159,460 487,398 353,382
Total Net Position………… $ 3,254,070 $ 3,285,882 $ 828,986 $ 782,495 $ 4,083,056 $ 4,068,377

The largest portion of the Town’s net position is its investment in capital assets, less any related debt
used to acquire those assets that is still outstanding. The Town uses these capital assets to provide
services to its citizens therefore; the assets are not available for future spending. Those capital assets
relating to business-type activities (such as gas and water) provide services to our citizens and generate
revenues, however, those capital assets cannot be used to liquidate any debt associated with those assets
unless the Town should choose to sell those assets to another provider.

The restricted portion of the Town’s net position as of September 30, 2020 was $305,030. This amount
represents resources that are subject to external restrictions on how they are used.

The remaining unrestricted net position was $487,398.

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 THE TOWN OF BROOKSIDE, ALABAMA
MANAGEMENT’S DISCUSSION AND ANALYSIS
September 30, 2020

Statement of Activities

Condensed Statements of Activities

For the Years Ended September 30, 2020 and 2019

Governmental Activities Business-Type Activities Total

2020 2019 2020 2019 2020 2019
Revenues
Program revenues:
Charges for services……………………… $ 812,003 $ 365,514 $ 937,894 $ 891,268 $ 1,749,897 $ 1,256,782
Operating grants and contributions………… 16,392 3,853 - - 16,392 3,853
Capital grants and contributions…………… 15,610 174,820 - - 15,610 174,820
General revenues:
Taxes……………………………………… 287,652 208,064 - - 287,652 208,064
Licenses and permits……………………… 71,069 68,388 - - 71,069 68,388
Other……………………………………… 33,243 91,664 76 9 33,319 91,673
Total Revenues……………………… 1,235,969 912,303 937,970 891,277 2,173,939 1,803,580
Expenses
Governmental activities:
Governmental administration……………… 431,279 337,521 - - 431,279 337,521
Police protection…………………………… 566,509 254,628 - - 566,509 254,628
Fire protection……………………………… 109,210 129,968 - - 109,210 129,968
Streets……………………………………… 30,346 25,622 - - 30,346 25,622
Parks and recreation……………………… 87,745 89,406 - - 87,745 89,406
Interest on long-term debt………………… 45,739 29,812 - - 45,739 29,812
Business-type activities:
Gas system………………………………… - - 180,631 202,700 180,631 202,700
Water system……………………………… - - 707,801 660,606 707,801 660,606
Total Expenses………………………. 1,270,828 866,957 888,432 863,306 2,159,260 1,730,263

Change in Net Position Before Transfers……… (34,859) 45,346 49,538 27,971 14,679 73,317

Transfers………………………………………… 3,047 15,260 (3,047) (15,260) - -

Change in Net Position………………………… $ (31,812) $ 60,606 $ 46,491 $ 12,711 $ 14,679 $ 73,317

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THE TOWN OF BROOKSIDE, ALABAMA
MANAGEMENT’S DISCUSSION AND ANALYSIS
September 30, 2020

Fund Financial Analysis

Governmental Funds
Fund Balances
As of September 30, 2020 and 2019

Fund Fund
Balance Balance Increase
2020 2019 (Decrease)

Nonspendable………………………………………………… $ 4,565 $ 4,841 $ (276)

Restricted……………………………………………………… 305,030 301,443 3,587
Assigned……………………………………………………… 53,238 32,090 21,148
Unassigned…………………………………………………… 172,550 132,317 40,233

Total Fund Balance……………………………………… $ 535,383 $ 470,691 $ 64,692

Several factors accounted for the increase in the fund balance of the Town’s governmental funds. Some of
the primary factors were increased tax revenues, increased revenues at the campground, and the transfers
to and from proprietary funds.

Proprietary Funds
Net Position
September 30, 2020 and 2019

Net Net
Position Position Increase
2020 2019 (Decrease)

Total net position…………………………… $ 828,986 $ 782,495 $ 46,491

The proprietary funds comprise those assets and liabilities associated with the provision of utility services
for the citizens of the Town of Brookside, including natural gas and water. The primary factors for the
current year increase were gas system operating losses (including depreciation of capital assets), water
system operating income, and transfers to and from governmental funds.

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 THE TOWN OF BROOKSIDE, ALABAMA
MANAGEMENT’S DISCUSSION AND ANALYSIS
September 30, 2020

Capital Assets and Debt Administration

Capital Assets
As of September 30, 2020 and 2019

Governmental Activities Business-Type Activities Total

2020 2019 2020 2019 2020 2019

Land…………………………………………… $ 307,084 $ 307,084 $ 2,000 $ 2,000 $ 309,084 $ 309,084

Buildings………………………………………. 2,590,576 2,661,674 6,671 6,768 2,597,247 2,668,442
Equipment……………………………………… 307,007 363,762 5,653 8,419 312,660 372,181
Infrastructure…………………………………… 284,240 291,997 584,557 605,848 868,797 897,845
Construction in progress……………………… - - - - - -
Net Capital Assets………………………… $ 3,488,907 $ 3,624,517 $ 598,881 $ 623,035 $ 4,087,788 $ 4,247,552

Investments in capital assets include land, equipment, and utility systems (water and natural gas). The
major components of the capital assets of the governmental activities are the municipal complex and
equipment related to the police, fire, and emergency medical service operations. The major component of
the capital assets of the business-type activities is the distribution systems associated with the water and
natural gas operations of the Town.

Debt Outstanding

Outstanding Debt
September 30, 2020 and 2019

2020 2019

Governmental activities:
General Obligation Warrants, Series 2008 .................................... $ 652,000 $ 674,000
Capital Lease – Police Vehicles .................................................... 145,160 160,000

Total Long-Term Debt .......................................................... $ 797,160 $ 834,000

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THE TOWN OF BROOKSIDE, ALABAMA
MANAGEMENT’S DISCUSSION AND ANALYSIS
September 30, 2020

Economic Factors

The Town of Brookside relies on taxes (sales and ad valorem) and fees (business license and building
permits) for their governmental activities. Other primary sources include intergovernmental revenues and
fines and forfeitures.

The business-type activities are primarily the utility operations of the Town (natural gas and water.). The
Town owns and operates all of those distribution systems and sells the utility to its customers. Transfers
from the profits of these utilities are made from time to time to the governmental activities.

The level of fees, taxes, and charges for services (primarily utilities) directly affect the Town’s ability to
provide the necessary public safety functions, provide for necessary infrastructure improvements, and
promote economic development and expand.

Uncertainty continues to exist about the ultimate economic impact the Town will experience due to the
COVID-19 pandemic.

The Town’s water system continues to experience a high percentage of water loss.

Financial Information Contact

The financial statements of the Town of Brookside are designed to present to the users of the statements
(citizens, customers, taxpayers, creditors) a general overview of the finances of the Town. Additional
information, if needed, may be obtained by contacting the office of the Town Clerk at P.O. Box 142,
Brookside, Alabama 35036.

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BASIC FINANCIAL STATEMENTS

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THE TOWN OF BROOKSIDE, ALABAMA
STATEMENT OF NET POSITION
September 30, 2020

Business-
Governmental Type
Activities Activities Total
Assets
Cash and cash equivalents……………………………… $ 506,001 $ 150,892 $ 656,893
Receivables, net of allowance for uncollectibles………… 73,956 99,824 173,780
Internal balances………………………………………… (446) 446 -
Inventories……………………………………………… - 3,064 3,064
Prepaids………………………………………………… 4,565 9,130 13,695
Restricted cash………………………………………… - 73,932 73,932
Capital assets, net of accumulated depreciation:
Land………………………………………………… 307,084 2,000 309,084
Buildings…………………………………………… 2,590,576 6,671 2,597,247
Equipment…………………………………………… 307,007 5,653 312,660
Infrastructure………………………………………… 284,240 584,557 868,797
Total Assets………………………………… 4,072,983 936,169 5,009,152

Liabilities
Accounts payable and other current liabilities…………… 21,753 107,183 128,936
Noncurrent liabilities:
Due within one year………………………………… 23,000 - 23,000
Due in more than one year………………………… 774,160 - 774,160
Total Liabilities……………………………… 818,913 107,183 926,096

Net Position
Invested in capital assets, net of related debt…………… 2,691,747 598,881 3,290,628
Restricted for:
Capital projects……………………………………… 50,655 - 50,655
Police protection…………………………………… 45,187 - 45,187
Streets……………………………………………… 27,636 - 27,636
Debt service………………………………………… 181,552 - 181,552
Unrestricted……………………………………………… 257,293 230,105 487,398
Total Net Position…………………………… $ 3,254,070 $ 828,986 $ 4,083,056

The notes to financial statements are an integral part of this statement

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THE TOWN OF BROOKSIDE, ALABAMA
STATEMENT OF ACTIVITIES
For the Year Ended September 30, 2020

Program Revenues Changes in Net Position

Operating Capital
Charges for Grants and Grants and Governmental Business-Type
FUNCTIONS/PROGRAMS Expenses Services Contributions Contributions Activities Activities Total

Governmental Activities
Governmental administration………………… $ 431,279 $ 87,264 $ 2,433 $ 15,610 $ (325,972) $ - $ (325,972)
Police protection……………………………… 566,509 610,307 13,959 - 57,757 - 57,757
Fire protection………………………………… 109,210 - - - (109,210) - (109,210)
Streets………………………………………… 30,346 - - - (30,346) - (30,346)
Parks and recreation…………………………… 87,745 114,432 - - 26,687 - 26,687
Interest on long-term debt…………………… 45,739 - - - (45,739) - (45,739)
Total Governmental Activities………… 1,270,828 812,003 16,392 15,610 (426,823) - (426,823)

Business-Type Activities
Gas system…………………………………… 180,631 145,147 - - - (35,484) (35,484)
Water system………………………………… 707,801 792,747 - - - 84,946 84,946
Total Business-Type Activities………… 888,432 937,894 - - - 49,462 49,462

Total……………………………………………… $ 2,159,260 $ 1,749,897 $ 16,392 $ 15,610 (426,823) 49,462 (377,361)

General Revenues
Taxes……………………………………………………………………………………………………… 287,652 - 287,652
Licenses and permits……………………………………………………………………………………… 71,069 - 71,069
Gain on sales of assets…………………………………………………………………………………… - - -
Other……………………………………………………………………………………………………… 33,243 76 33,319
Transfers……………………………………………………………………………………………………… 3,047 (3,047) -

Total General Revenues and Transfers…………………………………………………………………… 395,011 (2,971) 392,040

Change in Net Position……………………………………………………………………………………… (31,812) 46,491 14,679

Beginning Net Position……………………………………………………………………………………… 3,285,882 782,495 4,068,377

Ending Net Position………………………………………………………………………………………… $ 3,254,070 $ 828,986 $ 4,083,056

The notes to financial statements are an integral part of this statement

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THE TOWN OF BROOKSIDE, ALABAMA
BALANCE SHEET - GOVERNMENTAL FUNDS
September 30, 2020
Capital USDA Other Total
General Greenway Projects Repayment Governmental Governmental
Fund Fund Fund Fund Funds Funds
Assets
Cash and cash equivalents………………………….. $ 153,925 $ 53,238 $ 47,805 $ 181,552 $ 69,481 $ 506,001
Receivables, net:
Taxes……………………………………………. 62,111 - - - - 62,111
Accounts………………………………………. 7,840 - - - - 7,840
Intergovernmental………………………………. 1,614 - - - 2,391 4,005
Due from other funds……………………………… - - 2,850 - 951 3,801
Prepaids……………………………………………. 4,565 - - - - 4,565
Total Assets……………………………….. $ 230,055 $ 53,238 $ 50,655 $ 181,552 $ 72,823 $ 588,323

Liabilities, Deferred Inflows of

Resources, and Fund Balances

Liabilities
Accounts payable and other liabilities…………...…… $ 191 $ - $ - $ - $ - $ 191
Due to other funds……………………...…………… 4,247 - - - - 4,247
Total Liabilities……………………………… 4,438 - - - - 4,438

Deferred Inflows of Resources

Unavailable revenues…………………..…………… 48,502 - - - - 48,502
Total Liabilities and Deferred
Inflows of Resources…………………… 52,940 - - - - 52,940

Fund Balances
Nonspendable - prepaids…………………………. 4,565 - - - - 4,565
Restricted for:
Capital projects………………………………… - - 50,655 - - 50,655
Police protection……………………………….. - - - - 45,187 45,187
Streets…………………………………………. - - - - 27,636 27,636
Debt service…………………………………… - - - 181,552 - 181,552
Assigned for parks and recreation…………………. - 53,238 - - - 53,238
Unassigned……………………………………….. 172,550 - - - - 172,550
Total Fund Balances………………………… 177,115 53,238 50,655 181,552 72,823 535,383

Total Liabilities, Deferred Inflows

of Resources and Fund Balances……… $ 230,055 $ 53,238 $ 50,655 $ 181,552 $ 72,823

Amounts reported for governmental activities in the statement of net position are different because:
Capital assets used in governmental activities are not expendable, available financial resources and,
therefore, are not reported in the funds……………………………………………………………………………………… 3,488,907
Certain revenues reported in the statement of activities are not available to pay the liabilities of the
current year, and, therefore, are reported as deferred inflows of resources in the funds……………………………………. 48,502
Long-term liabilities are not due and payable in the current year, and therefore, are not reported in the funds………………… (818,722)

Net Position of Governmental Activities………………………………………………………………………………….. $ 3,254,070

The notes to financial statements are an integral part of this statement

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THE TOWN OF BROOKSIDE, ALABAMA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
For the Year Ended September 30, 2020
Capital USDA Other Total
General Greenway Projects Repayment Governmental Governmental
Fund Fund Fund Fund Funds Funds
Revenues
Taxes…………………………………………… $ 243,446 $ - $ - $ - $ - $ 243,446
Liceneses and permits………………………… 71,069 - - - - 71,069
Intergovernmental……………………………… 23,129 - 15,610 - 32,536 71,275
Charges for services…………………………… 66,264 114,432 - - - 180,696
Fines and forfeitures…………………………… 544,077 - - - 66,230 610,307
Other revenues………………………………… 56,581 - - 95 - 56,676
Total Revenues………………………… 1,004,566 114,432 15,610 95 98,766 1,233,469

Expenditures
Current:
Governmental administration……………… 352,142 - 13,544 70 - 365,756
Police protection…………………………… 499,495 - - - 24,630 524,125
Fire protection……………………………… 50,574 - - - - 50,574
Streets……………………………………… - - - - 26,146 26,146
Parks and recreation………………………… - 80,609 - - - 80,609
Capital Outlays………………………………… 31,469 10,800 - - - 42,269
Debt Service:
Principal…………………………………… - - - 36,840 - 36,840
Interest and fiscal charges…………………… - - - 45,505 - 45,505
Total Expenditures…………………… 933,680 91,409 13,544 82,415 50,776 1,171,824

Excess (Deficiency) of Revenues

Over (Under) Expenditures…………………… 70,886 23,023 2,066 (82,320) 47,990 61,645

Other Financing Sources (Uses)

Transfers in……………………………………… 181,113 - - 58,857 2,869 242,839
Transfers out…………………………………… (212,042) (1,875) - - (25,875) (239,792)
Net Other Financing Sources (Uses)… (30,929) (1,875) - 58,857 (23,006) 3,047

Net Change in Fund Balances…………………… 39,957 21,148 2,066 (23,463) 24,984 64,692

Beginning Fund Balances…………………………… 137,158 32,090 48,589 205,015 47,839 470,691

Ending Fund Balances…………………………… $ 177,115 $ 53,238 $ 50,655 $ 181,552 $ 72,823 $ 535,383

The notes to financial statements are an integral part of this statement

18
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19
THE TOWN OF BROOKSIDE, ALABAMA
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO
THE STATEMENT OF ACTIVITIES
For the Year Ended September 30, 2020

Amounts reported for governmental activities in the statement of activities are different because:

Net change in fund balances - total governmental funds .................................................... $ 64,692

Governmental funds report capital outlays as expenditures; however, in the statement of

activities the cost of those assets is allocated over their estimated useful lives and
reported as depreciation expense. .................................................................................... (135,610)

Revenues are recognized in the governmental funds when they are both measurable and
available to pay the liabilities of the current period. Revenues are recognized in the
statement of activities when they are earned.

Increase (Decrease) in earned but unavailable deferred revenue in government funds... 2,500

The issuance of long-term debt provides current financial resources to governmental funds,
while the repayment of the principal of long-term debt consumes the current financial
resources of governmental funds. Neither transaction, however, has any effect on net
position. Also, governmental funds report the effect of premiums and discounts when debt
is first issued, whereas these amounts are deferred and amortized in the statement of
activities............................................................................................................................ 36,840

Some expenses reported in the statement of activities differ from amounts reported as
expenditures in governmental funds.

Decrease (Increase) in accrued interest payable .............................................................. (234)

Change in net position of governmental activities .............................................................. $ (31,812)

The notes to financial statements are an integral part of this statement

20
THE TOWN OF BROOKSIDE, ALABAMA
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
September 30, 2020
Gas Water
System System Totals
Assets
Current Assets
Cash and cash equivalents………………………………… $ 44,647 $ 106,245 $ 150,892
Receivables, net of allowances for uncollectibles………… 8,649 91,175 99,824
Due from other funds……………………………………… 14 432 446
Inventories………………………………………………… 3,064 - 3,064
Prepaids…………………………………………………… 4,565 4,565 9,130
Total Current Assets………………………………… 60,939 202,417 263,356

Restricted cash………………………………………………… 7,201 66,731 73,932

Capital assets, net of accumulated depreciation:
Land……………………………………………………… 1,000 1,000 2,000
Buildings…………………………………………………… 544 6,127 6,671
Equipment………………………………………………… 899 4,754 5,653
Infrastructure……………………………………………… 28,214 556,343 584,557
Total Assets…………………………………………. 98,797 837,372 936,169

Liabilities
Current Liabilities
Accounts payable and other current liabilities…………… 16,300 90,883 107,183
Total Current Liabilities…………………………… 16,300 90,883 107,183

Net Position
Invested in capital assets, net of related debt……………… 30,657 568,224 598,881
Unrestricted……………………………………………… 51,840 178,265 230,105
Total Net Position……………………………….…… $ 82,497 $ 746,489 $ 828,986

The notes to financial statements are an integral part of this statement

21
THE TOWN OF BROOKSIDE, ALABAMA
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
PROPRIETARY FUNDS
For the Year Ended September 30, 2020

Gas Water
System System Total

Operating Revenues
Charges for sales and services………………………………… $ 145,147 $ 792,747 $ 937,894

Operating Expenses
Cost of sales and services…………………………………… 178,411 685,867 864,278
Depreciation of capital assets………………………………… 2,220 21,934 24,154
Total Operating Expenses……………………………… 180,631 707,801 888,432

Operating Income (Loss)……………………………………… (35,484) 84,946 49,462

Non-operating revenue - interest earned………………………… 76 - 76

Income (Loss) Before Contributions and Transfers………… (35,408) 84,946 49,538

Contributions and Transfers

Transfers in…………………………………………………… 66,059 17,569 83,628
Transfers out………………………………………………… (17,206) (69,469) (86,675)
Total Contributions and Transfers……………………… 48,853 (51,900) (3,047)

Changes in Net Position………………………………………… 13,445 33,046 46,491

Beginning Net Position…………………………………………… 69,052 713,443 782,495

Ending Net Position…………………………………………… $ 82,497 $ 746,489 $ 828,986

The notes to financial statements are an integral part of this statement

22
THE TOWN OF BROOKSIDE, ALABAMA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
For the Year Ended September 30, 2020

Gas Water
System System Total
Cash Flows From Operating Activities
Receipts from customers and users……………………………… $ 144,195 $ 801,265 $ 945,460
Payments to suppliers……………………………………………… (90,542) (529,914) (620,456)
Payments to employees…………………………………………… (82,780) (150,058) (232,838)
Net Cash Provided (Used) by
Operating Activities…………………………………… (29,127) 121,293 92,166

Cash Flows From Noncapital Financing Activities

Transfers from other funds………………………………………… 66,059 - 66,059
Transfers to other funds…………………………………………… (17,206) (51,900) (69,106)
Net Cash Provided (Used) by Noncapital
Financing Activities…………………………………… 48,853 (51,900) (3,047)

Cash Flows From Capital and Related Financing Activities

Acquisition and construction of capital assets……………………… - - -
Net Cash Provided (Used) by Capital and
Related Financing Activities………………………… - - -

Cash Flows From Investing Activities

Decrease (Increase) in restricted assets - customer deposits……… (1,590) (6,772) (8,362)
Interest received…………………………………………………… 76 - 76
Net Cash Provided (Used) by
Investing Activities…………………………………… (1,514) (6,772) (8,286)

Net Increase (Decrease) in Cash and Cash Equivalents…………… 18,212 62,621 80,833

Beginning Cash and Cash Equivalents………………………………… 26,435 43,624 70,059

Ending Cash and Cash Equivalents………………………………… $ 44,647 $ 106,245 $ 150,892

The notes to financial statements are an integral part of this statement

23
THE TOWN OF BROOKSIDE, ALABAMA
STATEMENT OF CASH FLOWS - CONTINUED
PROPRIETARY FUNDS
For the Year Ended September 30, 2020
Gas Water
System System Total
Reconciliation of Operating Income (Loss) to Net
Cash Provided (Used) by Operating Activities
Operating income (loss)…………………………………… $ (35,484) $ 84,946 $ 49,462
Depreciation………………………………………………… 2,220 21,934 24,154
Change in receivables……………………………………… (2,497) 132 (2,365)
Change in prepaids………………………………………… 276 276 552
Change in inventories……………………………………… 10,021 - 10,021
Change in accounts payable and other liabilities…………… (3,663) 14,005 10,342
Change in due from/due to other funds…………………… - - -
Change in accrued payroll and related liabilities…………… - - -

Net Cash Provided (Used) By Operating Activities…………… $ (29,127) $ 121,293 $ 92,166

Noncash Investing, Capital and Financing Activities

None………………………………………………………… $ - $ - $ -

The notes to financial statements are an integral part of this statement

24
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25
THE TOWN OF BROOKSIDE, ALABAMA
NOTES TO FINANCIAL STATEMENTS
September 30, 2020

Note 1 - Summary of Significant Accounting Policies

Reporting Entity

The Town of Brookside, Alabama (the “Town”) was incorporated as a municipality in 1897. The Town
operates under the Mayor-Council form of government and provides the following services: public safety
(police and fire), infrastructure maintenance, parks and recreation, gas system, water system, planning and
zoning, and general administration.

Description of Government-Wide Financial Statements

The government-wide financial statements (i.e., the statement of net position and the statement of
activities) report information on all of the activities of the Town. Governmental activities, which
normally are supported by taxes, intergovernmental revenues, and other nonexchange transactions, are
reported separately from business-type activities, which rely to a significant extent on fees and charges to
external customers for support.

Basis of Presentation – Government-Wide Financial Statements

While separate government-wide and fund financial statements are presented, they are interrelated. The
governmental activities column incorporates data from governmental funds, while the business-type
activities column incorporates data from the Town’s enterprise funds. Separate financial statements are
provided for governmental and proprietary funds.

As a general rule, the effect of interfund activity has been eliminated from the government-wide financial
statements. Exceptions to this general rule are payments in lieu of taxes where the amounts are
reasonably equivalent in value to the interfund services provided and other charges between the Town’s
water and gas functions and various other functions of the Town. Elimination of these charges would
distort the direct costs and program revenues reported for the various functions concerned.

As required by GAAP, these financial statements present the Town and its component units, legally separate
entities for which the Town is considered to be financially accountable. The Town has no blended or
discretely presented component units.

Brookside Gas System, Brookside Water System, and Brookside Parks and Recreation Board - Because
these entities are not legally separate from the Town, they are considered, for financial reporting
purposes, part of the primary government that holds their corporate powers. Their financial information
has been included with the financial data of the Town.

Basis of Presentation – Fund Financial Statements

The fund financial statements provide information about the Town’s funds. Separate statements for each
fund category – governmental and proprietary – are presented. The emphasis of fund financial statements
is on major governmental and enterprise funds, each displayed in a separate column. All remaining
governmental and enterprise funds are aggregated and reported as nonmajor funds. Major individual
governmental and enterprise funds are reported in separate columns in the fund financial statements.

26
THE TOWN OF BROOKSIDE, ALABAMA
NOTES TO FINANCIAL STATEMENTS
September 30, 2020

Note 1 - Summary of Significant Accounting Policies - Continued

Basis of Presentation - Fund Financial Statements - Continued

The Town reports the following major governmental funds:

The general fund is the primary operating fund of the Town. General tax revenues and other
receipts that are not allocated by law or contractual agreement to some other fund are accounted for
in this fund. Expenditures applicable to the general operations of the Town are paid from the
general fund.

The greenway fund is used to account for the revenues and expenditures associated with the
Town’s campground and canoe rental activities.
The capital projects fund is used to account for Alabama Trust Fund revenues (which are to be
used only for capital outlays), along with other revenues and debt proceeds intended for capital
projects.

The USDA repayment fund is a debt service fund of the Town. Amounts accounted for in this
fund consist of funds set aside for the payment of principal and interest on the Town’s Series 2008
General Obligation Warrants.

The Town reports the following major proprietary funds:

The gas system fund accounts for the activities of the Town’s natural gas system.

The water system fund accounts for the activities of the Town’s water system.

Additionally, the Town reports the following fund types:

The Town’s nonmajor special revenue funds are used to account for resources that are legally
restricted to expenditure for specific purposes, not including those accounted for in capital projects
funds or permanent funds.

During the course of operations, the Town has activity between funds for various purposes. Any residual
balances outstanding at year end are reported as due from/due to other funds and advances to/advances from
other funds. While these balances are reported in fund financial statements, certain eliminations are made in
the preparation of the government-wide financial statements. Balances between the funds included in
governmental activities are eliminated so that only the net amount is included as internal balances in the
governmental activities column. Similarly, balances between the funds included in business-type activities
are eliminated so that only the net amount is included as internal balances in the business-type activities
column.

27
THE TOWN OF BROOKSIDE, ALABAMA
NOTES TO FINANCIAL STATEMENTS
September 30, 2020

Note 1 - Summary of Significant Accounting Policies – Continued

Basis of Presentation - Fund Financial Statements - Continued

Further, certain activity occurs during the year involving transfers of resources between funds. In fund
financial statements these amounts are reported at gross amounts as transfers in/transfers out. While
reported in fund financial statements, certain eliminations are made in the preparation of government-wide
financial statements. Transfers between the funds included in governmental activities are eliminated so that
only the net amount is included as transfers in the governmental activities column. Similarly, transfers
between the funds included in business-type activities are eliminated so that only the net amount is included
as transfers in the business-type activities column.

Measurement Focus and Basis of Accounting

The accounting and financial reporting treatment is determined by the applicable measurement focus and
basis of accounting. Measurement focus indicates the type of resources being measured such as current
financial resources or economic resources. The basis of accounting indicates the timing of transactions
or events for recognition in the financial statements.
The government-wide financial statements are reported using the economic resources measurement focus
and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements.
Revenues are recorded when earned and expenses are recorded when the related liability is incurred.
Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items
are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.

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 available when they are collectible within the current
period or soon enough thereafter to pay liabilities of the current period. For this purpose, the Town
considers revenues to be available if they are collected within 60 days of the end of the current fiscal
period. Expenditures generally are recorded when a liability is incurred. However, debt service
expenditures, as well as expenditures related to compensated absences and claims and judgments, are
recorded only when payment is due.
The preparation of financial statements in conformity with accounting principles generally accepted in the
United States requires management to make estimates and assumptions that affect reported amounts and
disclosures in the financial statements. Accordingly, actual results could differ from these estimates.

Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position/Fund Balance

Cash and Investments: Cash includes cash on hand, amounts in demand deposits, and short-term
investments with a maturity date within three months of the date acquired by the Town. State statutes
authorize the Town to invest in U.S. Government obligations, U.S. Government agency obligations, U.S.
corporate stock, U.S. corporate debt, State of Alabama Government obligations, County Government
obligations, and other Municipal Government obligations. All investments are reported at fair value.

28
THE TOWN OF BROOKSIDE, ALABAMA
NOTES TO FINANCIAL STATEMENTS
September 30, 2020

Note 1 - Summary of Significant Accounting Policies – Continued

Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position/Fund Balance -

Continued

For purposes of the statements of cash flows, cash and cash equivalents include short-term investments
with an original maturity date of three months or less.

Receivables and Payables: Activity between funds that are representative of lending and borrowing
arrangements, as well as all other outstanding balances between funds at year end are referred to as either
due to/from other funds (for the current portion) or advances to/from other funds (for the noncurrent
portion). Any outstanding balances between governmental activities and business-type activities are
reported in the government-wide Statement of Net Position as internal balances.

Receivables and Payables – Continued: Advances to other funds are offset by a fund balance reserve in
the fund financial statements to indicate that they are not available for appropriation and are not
expendable available financial resources.

All receivables are shown net of an allowance for uncollectibles.

Inventories and Prepaid Items: All inventories are valued at cost using the first in/first out method.
Inventories of governmental funds are recorded as expenditures when consumed rather than when
purchased.

Certain payments to vendors reflect costs applicable to future periods and are recorded as prepaid items in
both government-wide and fund financial statements.

Restricted Assets: Certain proceeds of long-term debt, as well as certain resources set aside for its
repayment, are classified as restricted assets because they are maintained in separate bank accounts and
their use is limited by applicable debt agreements.

Capital Assets: Capital outlays are recorded as expenditures in governmental fund financial statements.
In contrast, capital assets, which include land, buildings, improvements other than buildings, equipment,
construction in progress, and infrastructure (e.g., roads, bridges, sidewalks and similar items), are reported
in the government-wide and proprietary fund financial statements.

Capital assets are recorded at historical cost or estimated historical cost if purchased or constructed.
Donated capital assets are recorded at estimated fair 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 the asset’s life are
not capitalized. Capital assets are defined by the Town as assets with an estimated useful life in excess of
one year, and are depreciated using the straight-line method over their estimated useful lives. Interest
incurred during the construction phase of major capital projects is expensed as incurred.

29
THE TOWN OF BROOKSIDE, ALABAMA
NOTES TO FINANCIAL STATEMENTS
September 30, 2020

Note 1 - Summary of Significant Accounting Policies – Continued

Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position/Fund Balance -

Continued

Deferred Outflows/Inflows of Resources: In addition to assets, the statement of financial position will
sometimes report a separate section for deferred outflows of resources. This separate financial statement
element, deferred outflows of resources, represents a consumption of net position that applies to a future
period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then.

In addition to liabilities, the statement of financial position will sometimes report a separate section for
deferred inflows of resources. This separate financial statement element, deferred inflows of resources,
represents an acquisition of net position that applies to a future period(s) an so will not be recognized as
an inflow of resources (revenue) until then. The Town reports unavailable revenue from property taxes in
the governmental funds balance sheet as a deferred inflow of resources.

Long-Term Obligations: In the government-wide and proprietary fund financial statements, long-term
debt and other long-term obligations are reported as liabilities in the applicable governmental activities,
business-type activities, or proprietary fund. Premiums, discounts, and deferred amounts on refunding
transactions are deferred and amortized over the life of the related debt using the straight-line method.
Long-term debt is reported net of the unamortized portion of these amounts. Long-term obligations are
not reported in governmental funds.

Net Position Flow Assumption: Sometimes the Town will fund outlays for a particular purpose from both
restricted and unrestricted sources. In order to calculate the amounts to report as restricted net position
and unrestricted net position in the government-wide and proprietary fund financial statements, a flow
assumption must be made about the order in which the resources are considered to be applied. It is the
Town’s policy to consider restricted net position to have been depleted before unrestricted net position is
applied.

Fund Balance Flow Assumption: Sometimes the Town will fund outlays for a particular purpose from
both restricted and unrestricted resources. In order to calculate the amounts to report as restricted,
committed, assigned, and unassigned fund balance in the governmental fund financial statements, a flow
assumption must be made about the order in which the resources are considered to be applied. It is the
Town’s policy to consider restricted fund balance to been depleted before using any of the components of
unrestricted fund balance. Further, when the components of unrestricted fund balance can be used for the
same purpose, committed fund balance is depleted first, followed by assigned fund balance. Unassigned
fund balance is applied last.

Fund Balance Policies: Fund balance of governmental funds is reported in various categories based on
the nature of any limitations requiring the use of resources for specific purposes. The Town itself can
establish limitation on the use of resources through either a commitment (committed fund balance) or and
assignment (assigned fund balance).

30
THE TOWN OF BROOKSIDE, ALABAMA
NOTES TO FINANCIAL STATEMENTS
September 30, 2020

Note 1 - Summary of Significant Accounting Policies – Continued

Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position/Fund Balance -

Continued

The committed fund balance classification includes amounts that can be used only for the specific
purposes determined by a formal action of the Town Council. The Town Council is the highest level of
decision-making authority for the Town that can, by adoption of an ordinance prior to the end of the fiscal
year, commit fund balance. Once adopted, the limitation imposed by the ordinance remains in place until
a similar action is taken (the adoption of another ordinance) to remove or revise the limitation.

Amounts in the assigned fund balance classification are intended to be used by the Town for specific
purposes but do not meet the criteria to be classified as committed. Unlike commitments, assignments
generally only exist temporarily. In other words, an additional action does not normally have to be taken
for the removal of an assignment.

Revenues and Expenditures/Expenses

Program Revenues: Amounts reported as program revenues include 1 - Charges to customers who
purchase, use, or directly benefit from goods, services, or privileges provided by a given function or
segment of the Town and 2 - grants and contributions (including special assessments) that are restricted to
meeting the operational or capital requirements of a particular function or segment. All taxes, including
those dedicated for a specific purpose, and other internally dedicated resources are reported as general
revenues rather than as program revenues.

Accrued Revenues – Governmental Fund Financial Statements: Property taxes, sales and use taxes, beer
taxes, occupational taxes, lodging taxes, rental and leasing taxes, payments in lieu of taxes,
intergovernmental revenues and interest associated with the current fiscal period are all considered to be
susceptible to accrual and so have been recognized as revenues of the current fiscal year. All other
revenues are considered to be measurable and available only when cash is received by the Town.

Compensated Absences: Town employees do not earn vesting accumulating rights to receive vacation or
sick leave.

Proprietary Funds Operating and Nonoperating Revenues and Expenses: Proprietary funds distinguish
operating revenues and expenses from nonoperating items. Operating revenues and expenses generally
result from providing services and producing and delivering goods in connection with a proprietary fund’s
principal ongoing operations. The principal operating revenues of the Town’s enterprise funds and
internal service fund are charges to customers and users for sales and services. Operating expenses for
enterprise funds and the internal service fund include the cost of sales and services and depreciation of
capital assets. All revenues and expenses not meeting this definition are reported as nonoperating
revenues and expenses.

31
THE TOWN OF BROOKSIDE, ALABAMA
NOTES TO FINANCIAL STATEMENTS
September 30, 2020

Note 1 - Summary of Significant Accounting Policies – Continued

Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally
are followed in both the government-wide and proprietary fund financial statements to the extent that those
standards do not conflict with or contradict the guidance of the GASB. The Town also has the option of
following subsequent private-sector guidance for its business-type activities and enterprise funds, subject to
this same limitation. The Town has elected not to follow subsequent private-sector guidance.

Subsequent Events: In preparing the financial statements, management evaluated subsequent events
through December 28, 2020, the date the financial statements were available to be issued.

Note 2 - Reconciliation of Government-Wide and Fund Financial Statements

Explanation of certain differences between the governmental funds balance sheet and the government-
wide statement of net position:

The governmental funds balance sheet includes a reconciliation between fund balance – total
governmental funds and net position – governmental activities as reported in the statement of net position.
One element of that reconciliation explains that long-term liabilities are not due and payable in the current
year, and, therefore, are not reported in the funds. The details of this difference are as follows:

General Obligation Warrants and Capital Leases Payable ................................................. $ (797,160)

Accrued Interest Payable .................................................................................................... (21,562)

Net adjustment to decrease fund balance – total governmental funds

to arrive at net position – governmental activities ........................................................... $ (818,722)

Explanation of certain differences between the governmental funds statement of revenues,

expenditures and changes in fund balances and the government-wide statement of activities:

The governmental funds statement of revenues, expenditures and changes in fund balances includes a
reconciliation between net change in fund balances – total governmental funds and changes in net
position – governmental activities as reported in the government-wide statement of activities. One
element of that reconciliation explains that governmental funds report capital outlays as expenditures.
However, in the statement of activities the cost of those assets is allocated over their estimated useful
lives and reported as depreciation expense. The details of this difference are as follows:

Capital outlays .................................................................................................................... $ 42,269

Depreciation expense .......................................................................................................... (177,879)

Net adjustment to decrease Net Change in Fund Balances – total governmental funds
to arrive at changes in net position of governmental activities ........................................ $ (135,610)

32
THE TOWN OF BROOKSIDE, ALABAMA
NOTES TO FINANCIAL STATEMENTS
September 30, 2020

Note 2 - Reconciliation of Government-Wide and Fund Financial Statements

Explanation of certain differences between the governmental funds statement of revenues,

expenditures and changes in fund balances and the government-wide statement of activities -
Continued:

Another element of that reconciliation states that the issuance of long-term debt provides current financial
resources to governmental funds, while the repayment of the principle of long-term debt consumes the
current financial resources of governmental funds. Neither transaction, however, has any effect on net
position. Also, governmental funds report the effect of issuance costs, premiums, discounts, and similar
items when debt is first issued, whereas these amounts are deferred and amortized in the statement of
activities. The details of this difference are as follows:

Proceeds of long-term debt ................................................................................................. $ —

Long-term debt principal repayments ................................................................................ 36,840

Net adjustment to increase Net Change in Fund Balances – total governmental

funds to arrive at changes in net position of governmental activities .............................. $ 36,840

Note 3 - Stewardship, Compliance, and Accountability

Budgetary Information: The Town does not adopt annual budgets.

Note 4 - Deposits and Investments

Deposits - At September 30, 2020, the carrying amount of the Town’s demand deposits and certificates of
deposits in all funds was $730,825, and the bank balance was $763,915. All of the bank balance was covered
by federal depository insurance or by the State of Alabama’s SAFE Program. The SAFE Program requires all
covered public entities to deposit their funds with financial institutions that meet the requirements of the SAFE
Program and that have been designated as Qualified Public Depositories (“QPD’s”). These funds are protected
by a collateral pool administered by the State Treasurer. In the event of a failure of a QPD, securities pledged
by that QPD would be liquidated by the State Treasurer to replace the public deposits not covered by the
FDIC. A reconciliation of deposits and investments to the statement of net position for the primary
government follows:

Cash on hand ....................................................................................................................... $ —

Carrying amount of deposits ............................................................................................... 730,825
Total ................................................................................................................................. $ 730,825

Cash and cash equivalents .................................................................................................. $ 656,893

Restricted assets - cash........................................................................................................ 73,932
Total ................................................................................................................................. $ 730,825

33
THE TOWN OF BROOKSIDE, ALABAMA
NOTES TO FINANCIAL STATEMENTS
September 30, 2020

Note 5 - Receivables

Receivables of the Town’s individual major funds and non-major funds in the aggregate were as follows
at year-end:
General Gas Water Nonmajor
Fund System System Funds Total

Taxes receivable…………………… $ 62,111 $ - $ - $ - $ 62,111

Accounts receivable……………… 8,001 9,092 95,107 - 112,200
Intergovernmental receivables…… 1,614 - - 2,391 4,005
Gross receivables………………… 71,726 9,092 95,107 2,391 178,316
Allowance for uncollectibles……… (161) (443) (3,932) - (4,536)

Net receivables…………………… $ 71,565 $ 8,649 $ 91,175 $ 2,391 $ 173,780

The Town reports revenues net of uncollectible amounts. Total uncollectible amounts related to revenues
of the current year were:
Gas Water
General System System Total

$ 8 $ 133 $ — $ 141

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34
THE TOWN OF BROOKSIDE, ALABAMA
NOTES TO FINANCIAL STATEMENTS
September 30, 2020

Note 6 - Capital Assets

The following table summarizes the changes in capital assets during the year:
Beginning Ending
Balance Additions Disposals Balance
GOVERNMENTAL ACTIVITIES:

Capital Assets Not Being Depreciated

Land…………………………………………… $ 307,084 $ - $ - $ 307,084
Construction in progress………………………… - - - -
Total Capital Assets Not
Being Depreciated……………………… 307,084 - - 307,084
Capital Assets Being Depreciated
Buildings………………………………………… 3,400,370 - - 3,400,370
Equipment……………………………………… 1,205,660 42,269 (13,995) 1,233,934
Infrastructure…………………………………… 392,834 - - 392,834
Total Capital Assets
Being Depreciated……………………… 4,998,864 42,269 (13,995) 5,027,138
Less Accumulated Depreciation On
Buildings………………………………………… (738,696) (71,098) - (809,794)
Equipment……………………………………… (841,898) (99,024) 13,995 (926,927)
Infrastructure…………………………………… (100,837) (7,757) - (108,594)
Total Accumulated Depreciation………… (1,681,431) (177,879) 13,995 (1,845,315)

Net Capital Assets

Being Depreciated……………………… 3,317,433 (135,610) - 3,181,823

Net Capital Assets Used in the Operation

of Govermental Activities…………………… $ 3,624,517 $ (135,610) $ - $ 3,488,907

BUSINESS-TYPE ACTIVITIES

Capital Assets Not Being Depreciated

Land…………………………………………… $ 2,000 $ - $ - $ 2,000
Construction in progress………………………… - - - -
Total Capital Assets Not
Being Depreciated……………………… 2,000 - - 2,000
Capital Assets Being Depreciated
Buildings………………………………………… 24,311 - - 24,311
Equipment……………………………………… 104,326 - - 104,326
Infrastructure…………………………………… 1,853,116 - - 1,853,116
Total Capital Assets
Being Depreciated……………………… 1,981,753 - - 1,981,753
Less Accumulated Depreciation On
Buildings………………………………………… (17,443) (97) - (17,540)
Equipment……………………………………… (96,004) (2,766) - (98,770)
Infrastructure…………………………………… (1,247,271) (21,291) - (1,268,562)
Total Accumulated Depreciation………… (1,360,718) (24,154) - (1,384,872)

Net Capital Assets

Being Depreciated……………………… 621,035 (24,154) - 596,881

Net Capital Assets Used in the Operation

of Business-Type Activities…………………… $ 623,035 $ (24,154) $ - $ 598,881

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THE TOWN OF BROOKSIDE, ALABAMA
NOTES TO FINANCIAL STATEMENTS
September 30, 2020

Note 6 - Capital Assets - Continued

Depreciation expense was charged to functions of the Town as follows:

Governmental Activities:
Governmental administration…………………………………………………… $ 65,523
Police protection………………………………………………………………… 42,384
Fire protection…………………………………………………………………… 58,636
Streets…………………………………………………………………………… 4,200
Parks and recreation……………………………………………………………… 7,136
Total Depreciation Expense - Governmental Activities………………… $ 177,879
Business-Type Activities:
Gas system……………………………………………………………………… $ 2,220
Water system…………………………………………………………………… 21,934
Total Depreciation Expense - Business-Type Activities………………… $ 24,154

Note 7 - Interfund Receivables, Payables and Transfers

The following is a detailed listing of interfund balances at year-end:

Interfund Interfund
Receivable Payable

General Fund………………………………………………… $ - $ 4,247

State Four Cent and Five Cent Gas Tax Fund……………… 951 -
Capital Projects Fund………………………………………… 2,850 -
Gas System…………………………………………………… 14 -
Water System………………………………………………… 432 -

$ 4,247 $ 4,247

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THE TOWN OF BROOKSIDE, ALABAMA
NOTES TO FINANCIAL STATEMENTS
September 30, 2020

Note 7 - Interfund Receivables, Payables and Transfers - Continued

The following is a detailed listing of interfund transfers during the year:

Purpose Fund Transferred From Fund Transferred To Amount

Cash for operations Water System Gas System $ 56,469

Cash for debt service Water System USDA Repayment Fund 13,000
Cash for debt service Gas System USDA Repayment Fund 13,000
Cash for debt service General Fund USDA Repayment Fund 32,857
Cash for operations General Fund Gas System 9,590
Cash for operations General Fund Water System 17,569
Cash for operations General Fund 7 Cent Gas Tax Fund 2,869
Cash for operations Greenway Fund General Fund 1,875
Cash for operations Corrections Fund General Fund 25,875

$ 173,104

Note 8 - Long-term Liabilities

Changes in long-term liabilities during the year are summarized as follows:

Due Due in
Beginning Ending Within More Than
Balance Additions Reductions Balance One Year One Year
Governmental Activities:
General Obligation Warrants,
Series 2008…………………………………………… $ 674,000 $ - $ (22,000) $ 652,000 $ 23,000 $ 629,000
Capital Lease…......................................................... 160,000 - (14,840) 145,160 - 145,160

Total…..................................................................... $ 834,000 $ - $ (36,840) $ 797,160 $ 23,000 $ 774,160

Warrants, Notes, and Capital Leases

The Town issues long-term warrants, notes, and capital leases to provide funds for the acquisition and
construction of major capital facilities and equipment. The outstanding debt was issued for governmental
activities.

General Obligation Warrants -

$846,000 General Obligation Warrants, Series 2008; due in annual principal installments
ranging from $14,000 to $49,000 beginning January 9, 2010 and continuing through
January 9, 2039; with interest payable annually on January 9 at 4.375 percent. .......................... $ 652,000

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THE TOWN OF BROOKSIDE, ALABAMA
NOTES TO FINANCIAL STATEMENTS
September 30, 2020

Note 8 - Long-term Liabilities - Continued

General Obligation Warrants - Continued

The following schedule shows debt service to maturity for warrants and notes payable outstanding at
September 30, 2020:
Governmental Activities:
Principal Interest Total
Year ending September 30,
2021…………………………………………………………… $ 23,000 $ 28,525 $ 51,525
2022…………………………………………………………… 24,000 27,519 51,519
2023…………………………………………………………… 25,000 26,469 51,469
2024…………………………………………………………… 26,000 25,375 51,375
2025…………………………………………………………… 27,000 24,238 51,238
2026-2030……………………………………………………… 153,000 102,463 255,463
2031-2035……………………………………………………… 190,000 65,888 255,888
2036-2040……………………………………………………… 184,000 20,562 204,562
Total…………………………………………………………… $ 652,000 $ 321,039 $ 973,039

Capital Lease -
Capital lease of 4 Police vehicles; dated June 5, 2019; due in annual installments of $30,857
beginning October 1, 2020 and continuing through October 1, 2026. Future minimum
lease payments are as follows for the fiscal years ending September 30:

2021…............................................................................................ $ -
2022…............................................................................................ 30,857
2023…............................................................................................ 30,857
2024…............................................................................................ 30,857
2025…............................................................................................ 30,857
2026…............................................................................................ 30,857
2027…............................................................................................ 30,857

Total…............................................................................................ 185,142
Less: Amounts representing interest…........................................... (39,982)

Net Present Value of Future Minimum Lease Payments…............... $ 145,160

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THE TOWN OF BROOKSIDE, ALABAMA
NOTES TO FINANCIAL STATEMENTS
September 30, 2020

Note 9 - Claims and Judgments

The Town is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets;
errors and omissions; job-related illnesses and injuries to employees; and natural disasters. The Town has
purchased commercial insurance coverage with varying coverage amounts and deductibles. Settlements
have not exceeded coverages in any of the last three fiscal years.

Note 10 - Contingencies
Various lawsuits are filed against the Town from time to time. In addition, potential claims may exist which
have not yet resulted in lawsuits. In the opinion of the Town’s management, the potential adverse impact of
all these claims, individually or in the aggregate, would not be material to the financial statements of the
Town.
The Town from time to time receives federal and state grants for specific purposes that are subject to
review and audit by the grantor agencies. Such audits could lead to requests for reimbursements to the
grantor agencies for expenditures disallowed under the terms of the grants. Town management believes
such disallowances, if any, will be immaterial.

While there have been minimal interruptions of service or business operations from the COVID-19
pandemic to date, the ultimate operational and financial impact to the Town from the pandemic has not
yet been determined.

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COMBINING FINANCIAL
STATEMENTS

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THE TOWN OF BROOKSIDE, ALABAMA
NONMAJOR GOVERNMENTAL FUNDS
COMBINING BALANCE SHEET
September 30, 2020

State Four
Cent and State
Five Cent Seven Total
Gas Tax Cent Gas Corrections Nonmajor
Fund Tax Fund Fund Funds
Assets
Cash and cash equivalents……………………… $ 23,701 $ 593 $ 45,187 $ 69,481
Intergovernmental receivables…………………… 1,109 1,282 - 2,391
Due from other funds…………………………… 951 - - 951

Total Assets………………………………… $ 25,761 $ 1,875 $ 45,187 $ 72,823

Liabilities and Fund Balances

Liabilities
Accounts payable and other liabilities…………… $ - $ - $ - $ -

Fund Balances
Restricted………………………………………… 25,761 1,875 45,187 72,823
Assigned………………………………………… - - - -
Total Fund Balances………………………… 25,761 1,875 45,187 72,823

Total Liabilities and Fund Balances……… $ 25,761 $ 1,875 $ 45,187 $ 72,823

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THE TOWN OF BROOKSIDE, ALABAMA
NONMAJOR GOVERNMENTAL FUNDS
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
For the Year Ended September 30, 2020

State Four
Cent and State
Five Cent Seven Total
Gas Tax Cent Gas Corrections Nonmajor
Fund Tax Fund Fund Funds
Revenues
Intergovernmental……………………………………… $ 19,305 $ 13,231 $ - $ 32,536
Fines and forfeitures…………………………………… - - 66,230 66,230
Total Revenues…………………………………… 19,305 13,231 66,230 98,766

Expenditures
Current:
Police protection…………………………………… - - 24,630 24,630
Streets……………………………………………… 10,479 15,667 - 26,146
Capital outlays………………………………………… - - - -
Total Expenditures……………………………… 10,479 15,667 24,630 50,776

Excess (Deficiency) of Revenues

Over (Under) Expenditures…………………… 8,826 (2,436) 41,600 47,990

Other Financing Sources (Uses)

Transfers in…………………………………………… - 2,869 - 2,869
Transfers out………………………………………… - - (25,875) (25,875)
Total Other Financing Sources (Uses)………… - 2,869 (25,875) (23,006)

Net Change in Fund Balances………………………… 8,826 433 15,725 24,984

Beginning Fund Balances………………………………… 16,935 1,442 29,462 47,839

Ending Fund Balances…………………………………… $ 25,761 $ 1,875 $ 45,187 $ 72,823

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GOVERNMENT AUDIT SECTION

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 INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING AND COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF
FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENTAUDITING STANDARDS

To the Honorable Mayor and Members of the Town Council

of The Town of Brookside, Alabama
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, the business-type activities, each major fund, and the aggregate remaining fund information of
the Town of Brookside, Alabama (the “Town”), as of and for the year ended September 30, 2020, and the
related notes to the financial statements, which collectively comprise the Town’s basic financial
statements, and have issued our report thereon dated December 28, 2020.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the Town’s internal
control over financial reporting (internal control) to determine 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 Town’s internal control. Accordingly, we do
not express an opinion on the effectiveness of the Town’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination
of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement
of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A
significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less
severe than a material weakness, yet important enough to merit attention by those charged with
governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this
section and was not designed to identify all deficiencies in internal control that might be material
weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may
exist that were not identified. Given these limitations, during our audit we did not identify any
deficiencies in internal control that we consider to be material weaknesses. However, material
weaknesses may exist that have not been identified. We did identify certain deficiencies in internal
control, described in the accompanying schedule of findings and responses as items 04-01, 04-02, and 13-
01, that we consider to be significant deficiencies.

Phone: 205.969.3443 3176 Cahaba Heights Road, Suite 100 pmorgan@morgancpas.com

Fax: 205.969.3445 Birmingham, AL 35243 www.morgancpas.com

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Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Town’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.

The Town’s Response to Findings

The Town’s response to the findings identified in our audit is described in the accompanying schedule of
findings and responses. The Town’s response was not subjected to the auditing procedures applied in the
audit of the financial statements and, accordingly, we express no opinion on it.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance
and the results of that testing, and not to provide an opinion on the effectiveness of the Town’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 Town’s internal control and compliance.
Accordingly, this communication is not suitable for any other purpose.

Birmingham, Alabama
December 28, 2020
Phillip Morgan & Company P.C.

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THE TOWN OF BROOKSIDE, ALABAMA
SCHEDULE OF FINDINGS AND RESPONSES

For the Year Ended September 30, 2020

I. Summary of Auditors’ Results

Financial Statements

 Type of auditor’s report issued: Unmodified

 Internal control over financial reporting:
o Material weakness(es) identified? Yes X No
o Significant deficiency(ies) identified not
considered to be material weaknesses? X Yes None Reported
 Noncompliance material to financial
statements noted? Yes X No

II. Financial Statement Findings

04-01

Condition: Due to the Town’s small staff size, a lack of segregation of duties exists in one or
more areas.

Context: During the performance of our audit, we observed the operation of some controls
in place that compensate somewhat for this weakness.

Effect: The Town’s assets are not completely safeguarded from loss occurring because
of employees performing incompatible job functions.

Cause: Small staff size.

Recommendation: The mayor and council should continue to closely monitor this situation.

Views of Responsible
officials and planned
corrective actions: We agree that we have a lack of segregation of duties, but we have no funds to
hire additional office staff at this time.

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II. Financial Statement Findings - Continued

04-02

Condition: The Town does not have an annual budget.

Context: Budget controls are essential to (1) set public policy, (2) act as Town Council
control over taxing and spending by the mayor, and (3) to serve as a financial
planning tool.

Effect: The Town’s sources and uses of funds are not controlled by or monitored in
relation to budgeted amounts.

Cause: The Town does not have a policy of adopting an annual budget.

Recommendation: The Town should adopt and adhere to a policy of utilizing a formal budgetary
process.

Views of Responsible
officials and planned
corrective actions: The Town’s personnel will work on preparing a budget in the future.

13-01

Criteria: The Town should attempt to reduce the amount of water lost through leaks, etc.

Condition: The Town continues to experience very high water loss percentages.

Context: The Town purchases water from a large municipal water system and in turn sells
the water to the Town’s customers. Large differences between the amount of
water purchased and the amount of water sold have resulted in significant losses
to the Town.

Effect: During the fiscal year ended September 30, 2020, the Town’s water loss totaled
23,714,435 gallons. This loss represented 30.74% of the water purchased by the
Town, and had a total cost of approximately $124,556.

Cause: The age of the water system, the materials used to construct the water system,
and difficulty in locating leaks all contribute to the water loss.

Recommendation: Management should continue to strive to reduce the water loss.

Views of Responsible
Officials and Planned
Corrective Actions: The Town management is aware of this problem, and will continue to work find
solutions.

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