Kiwash Electric Cooperative Inc

“Ralph cunningham (board member) and john schaufele (secretary/treasurer) both served on the board of western farmers electric cooperative at the request of and for the benefit of the cooperative.”

“The cooperative was formed by the members to provide electric service at cost on a cooperative basis.”

“The members of the cooperative vote on the board of directors. Elections are done on a one member one vote basis.”

“The following acts require approval of the members of the cooperative. 1. Dissolution/liquidation of the cooperative; 2. Merger or consolidation of the cooperative with another organization; 3. The disposal of a substantial portion of the cooperative's assets; 4. Amendment to the articles of incorporation; 5. Amendment to the bylaws”

“Executive session minutes from time to time the entire board will go into executive session for discussing items of a sensitive and confidential nature. When this occurs management and others in attendance are removed from the meeting room. Items discussed in executive session are not documented. However, actions taken by the board after executive sessions are adjourned are fully documented in the written minutes.”

“Management presented a copy of the form 990 to the board for discussion, review and approval prior to filing. The discussion and review was performed at the board meeting immediately before filing the form 990.”

“The board of directors and general manager periodically review the conflict of interest policy to ensure it is enforced.”

“The cooperative provides a summarized copy of the audited financial statements to the members of the cooperative at the annual meeting. The cooperative will provide a complete copy of the audited financial statements, conflict of interest policy, or governing documents to any member who requests a copy.”

“In order to provide retirement benefits to its employees, the cooperative has established a defined contribution plan under section 401(k) of the internal revenue code. The cooperative does not provide a matching contribution to the 401(k) plan. Additionally, the cooperative participates in a multi-employer defined benefit plan. Contributions to this plan are based on the full funding limitation of such plan. Employer contributions to the multi-employer defined benefit plan are available to participating employees, including officers, meeting the eligibility requirements of the plan. The cooperative also provides health and life insurance to all eligible employees, including officers, through a qualified plan. The amounts reported on part vii, column (f) for the officer is the total amount contributed by the cooperative to the pension plan and insurance paid on behalf of and for their benefit.”

“The board of directors consider the general manager to be both the top management official and the top financial official. Therefore, only the general manager is listed as an employee officer.”

“Patronage dividends result from the purchase of wholesale power from a generation & transmission cooperative. Patronage dividends also result from the payment of interest from cooperative banks and the purchase of supplies and services from other cooperative organizations. The expenses associated with purchases from and payments to such cooperative organizations are a direct component of cost of the electric service provided by the cooperative to its members.”

“The accounting records of the cooperative are maintained in accordance with the rural utilities service (rus) uniform system of accounts as prescribed by rus electric borrowers. The uniform system of accounting does not record expenses in the general expense categories provided on part ix lines 1 - 23. The cooperative separately reports salaries and wages, employee benefits and payroll taxes that will be allocated in accordance with their accounting system, but other expenses that are described in lines 1 - 23 are reported on line 24 under the expense categories required by the uniform system of accounts.”

“Salaries and wages are allocated to asset, liability, and expense accounts based on the accounting system described above. The following schedule reconciles amounts reported on lines 5-7 to total wages accrued and/or paid: total per lines 5-7 $1,450,342 less directors fees reported on 1099-misc (45,688) less employee officer benefits reported on line 5 (51,167) plus salaries and wages capitalized directly to plant 259,683 plus salaries and wages capitalized/expensed indirectly through clearing & other accounts 354,206 total wages accrued and/or paid $1,967,376”

“Administrative and general expense is comprised of the following: office supplies and expense $102,582 outside services employed 49,780 other insurance 17,812 dues to associated organizations 51,206 maintenance of general plant 18,498 duplicate charges (credit) (6,415) injuries and damages 54,836 economic development 2,950 miscellaneous general expense 120,861 total administrative and general expense per 990 $412,110”

“Pursuant to the form 990 instructions, the amount of patronage dividends paid to the members (hereinafter referred to as "patrons") should be reported on part ix, line 4. The phrase "patronage dividends paid" refers to the process, subsequent to year-end, by which the cooperative allocates patronage capital to and, therefore, operates at cost with its patrons. The cooperative's tax exempt purpose is to provide electricity to its patrons and to do so on a cooperative basis. Tax law defines "operating on a cooperative basis" as subordination of capital, democratic control, and operation at cost. The cooperative operates at cost through the allocation of true patronage dividends (also referred to as allocations of patronage capital) to its patrons. Patronage dividends are considered paid if the allocation is made (1) pursuant to a pre-existing obligation, (2) from the margins produced from the transactions done with or for patrons, and (3) in a fair and equitable manner on the basis of patronage (i.e. Purchases). Additionally, the allocation of patronage dividends should be made within a reasonable time period after the close of the cooperative's year-end of december 31. Each one of these requirements for a true patronage dividend is provided for in the non-profit operation article of the cooperative's bylaws. Excess of operating costs and expenses properly chargeable against such services (i.e. Margins from the provision of electric energy). The amount reported on part ix, line 4 represents the amount of patronage capital that is either allocated or to be allocated to the patrons resulting from their purchase of electricity from the cooperative for the 2015 calendar year. Please note, however, that because patronage dividends is the process by which the cooperative operates at cost with its patrons and thereby a key component to accomplishing its exempt purpose, the cooperative has reported the amount of its 2015 margin that has been or is to be allocated to the patrons subsequent to year-end. Such amounts are an expense for form 990 reporting and is not an expense for financial statements prepared in accordance with generally accepted accounting principles (gaap).”

“THE FOLLOWING IS A BREAKDOWN OF THE EXPENSES REPORTED AS OTHER EXPENSES ON FORM 990, PART IX, LINE 24e CUSTOMER SERVICE EXPENSE $235,725 TOTAL OTHER EXPENSES PER FORM 990, LINE 24e $235,725”

“Net change in memberships -12,815. Net change in donated capital 3,669. Retirement of capital credits -452,431. Gain on retirement of capital credits 206,515. Patronage capital assignable 1,551,186.”

“The board as a whole is responsible for overseeing the financial statement audit and selecting the financial statement independent auditor. Procedural changes did not occur during the year.”