CITY OF DUNCAN, OKLAHOMA

CITY OF

DUNCAN, OKLAHOMA

ANNUAL FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR'S REPORT AS OF AND FOR THE FISCAL YEAR ENDED DECEMBER 31, 2016

THE CITY OF DUNCAN, OKLAHOMA

Annual Financial Statements And Independent Auditor's Report

As of and For the Fiscal Year Ended December 31, 2016

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CITY OF DUNCAN, OKLAHOMA TABLE OF CONTENTS

As of and for the Year Ended December 31, 2016

TABLE OF CONTENTS

Page

Independent Auditor's Report on Financial Statements....................................

1-3

Management's Discussion and Analysis.................................................................

5-15

The Basic Financial Statements:

Government-Wide Financial Statements: Statement of Net Position .............................................................................. 18 Statement of Activities ............................................................................... 19

Governmental Funds Financial Statements: Balance Sheet ............................................................................................. 21 Statement of Revenues, Expenditures, and Changes in Fund Balances........................... 22 Reconciliation of Governmental Fund and Government-Wide Financial Statements......... 23-24

Proprietary Funds Financial Statements: Statement of Net Position............................................................................... 26 Statement of Revenues, Expenses, and Changes in Net Position................................ 27 Statement of Cash Flows................................................................................. 28

Fiduciary Funds Financial Statements: Statement of Net Position............................................................................... 30 Pension Trust Fund Statement of Changes in Plan Net Position................................. 31

Combining Discretely Presented Component Units Financial Statements: Statement of Net Position............................................................................... 33 Statement of Changes in Net Position................................................................. 34

Footnotes to the Basic Financial Statements ......................................................... 35-80

Required Supplementary Information:

Budgetary Comparison Information

Budgetary Comparison Schedule (Budgetary Basis) ? General Fund.............................. 82 Budgetary Comparison Schedule (Budgetary Basis) ? DEDTA.................................... 83 Footnotes to Budgetary Comparison Schedule...................................................... 83-84

Pension and Other Employee Benefit Plans Information

Pension Fund Schedule of Change in Net Pension Liability and Related Ratios............. 85

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CITY OF DUNCAN, OKLAHOMA TABLE OF CONTENTS

As of and for the Year Ended December 31, 2016

Pension Fund Schedule of City's Contributions ?Last Ten Years................................ 86

Pension Fund Schedule of Investment Returns...................................................... 87

Schedule of City's Proportionate Share of Net Pension Liability ? Police Pension System..... 88

Schedule of City Contributions ? Police Pension System ........................................... 88

Schedule of City's Proportionate Share of Net Pension Liability ? Firefighter's Pension System ...................................................................................................... 89

Schedule of City Contributions ? Firefighter's Pension System .................................... 89

Schedule of Funding Progress ? OPEB............................................................... 90

Supplementary Information:

Combining Balance Sheet ? General Fund Accounts................................................... 92

Combining Schedule of Revenues, Expenditures and Changes in Fund Balance ? General Fund Accounts ...................................................................................................... 93

Combining Balance Sheet - Non-Major Governmental Funds....................................... 94-95

Combining Statement of Revenues, Expenditures and Changes in Fund Balance - Non-Major Governmental Funds....................................................................................... 96-97

Combining Schedule of Net Position ? Duncan Public Utility Authority - Enterprise Fund Accounts...................................................................................................... 98

Combining Schedule of Revenues, Expenses and Changes in Net Position? Duncan Public Utility Authority ? Enterprise Fund Accounts ......................................................... 99

Combining Schedule of Cash Flows ?Duncan Public Utility Authority ? Enterprise Fund Accounts...................................................................................................... 100

Combining Statement of Net Position ? Internal Service Funds..................................... 101

Combining Statement of Revenues, Expenses and Changes in Net Position? Internal Service Funds........................................................................................................... 102

Combining Statement of Cash Flows ? Internal Service Funds ....................................... 103

Combining Statement of Fiduciary Net Position ? Pension Trust Funds........................... 104

Combining Statement of Changes in Net Plan Position ? Pension Trust Funds..................... 105

Debt Service Coverage Schedule........................................................................ 106

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CITY OF DUNCAN, OKLAHOMA TABLE OF CONTENTS

As of and for the Year Ended December 31, 2016

Internal Control and Compliance over Financial Reporting

Independent Auditor's Report on Internal Control and Compliance........................... Schedule of Findings and Responses................................................................

109-110 111-114

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CITY OF DUNCAN, OKLAHOMA TABLE OF CONTENTS

As of and for the Year Ended December 31, 2016

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Independent Auditor's Report

Honorable Mayor and City Council City of Duncan Duncan, Oklahoma

Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Duncan, Oklahoma (the City), as of and for the year ended December 31, 2016, and the related notes to the financial statements, which collectively comprise the City'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.

Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the Duncan Industrial Authority and Duncan Area Economic Development Foundation, Inc., discretely presented component units of the City, which represent 99.8%, 99.8% and 99.8%, respectively, of the assets, net position, and revenues of the aggregate discretely presented component units. Those statements were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for the Duncan Industrial Authority and Duncan Area Economic Development Foundation, Inc. are based solely on the reports of the other auditors.

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. The financial statements of Duncan Area Economic Development Foundation, Inc. were audited by other auditors and were not audited in accordance with Government Auditing Standards.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's 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.

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