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Home My WebLink About2009CITY OF CHUBBUCK AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 2009 AND 2008 DEATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO ANNUAL FINANCIAL REPORT SEPTEMBER 30, 2009 AND 2008 TABLE OF CONTENTS Paqe Title Page 1 Table of Contents 2 Auditor's Reports Independent Auditor's Report 3 Financial Statements Statements of Net Assets 4 Statements of Activities 5 Balance Sheets - Governmental Funds 6 Statements of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds 7-8 Statements of Net Assets - Proprietary Funds 9 Statements of Revenues, Expenses, and Changes in Net Assets - Proprietary Funds 10 Statements of Cash Flows - Proprietary Funds 11-12 Notes to Financial Statements 13-25 Required Supplementary Information 26 Budgetary Comparison Schedule - General Fund 27 Notes to Required Supplementary Information 28 Other Supplementary Information 29 Combining Balance Sheet - Nonmajor Governmental Funds 30 Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Governmental Funds 31 Budgetary Comparison Schedule - Nonmajor Governmental Funds 32 Compliance Section 33 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 34 Schedule of Findings and Responses 35 DEATON & COMPANY, CHARTERED Deaton & Company, Chartered Certified Public Accountants 215 North 9th, Suite A Pocatello, ID 83201-5278 (208) 232-5825 -Mi Me,nbers of Idaho Society of Certified Public Accountants Members of American Institute of Ceelaed Public Accountants To the City Council City of Chubbuck 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 City of Chubbuck as of and for the years ended September 30, 2009 and 2008, which collectively comprise the City's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City of Chubbuck's management. 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 of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our 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, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Chubbuck as of September 30, 2009 and 2008, and the respective changes in financial position and cash flows, where applicable, thereof for the years then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated November 29, 2010, on our consideration of the City of Chubbuck'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 the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and important for assessing the results of our audit. The budgetary comparison information on pages 27 through 32, is not a required part of the basic financial statements but is supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Chubbuck's basic financial statements. The combining and individual nonmajor fund financial statements are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The City has not presented the required Management's discussion and analysis that accounting principles generally accepted in the United States has determined is necessary to supplement, although not required to be part of, the basic financial statements. L Pocatello, Idaho November 29, 2010 CITY OF CHUBBUCK, IDAHO STATEMENTS OF NET ASSETS SEPTEMBER 30, 2009 ASSETS Current assets Cash and cash equivalent Property taxes receivable Intergovernmental receivables Internal balances Other accounts receivable Noncurrent assets Restricted assets Bond reserves Water deposits Advance to joint venture Capital assets Accumulated depreciation LIABILITIES Current liabilities Accounts payable Accrued payroll Accrued bond interest Current portion compensated absences Current portion of bonds payable Current portion of long-term debt Current portion capital lease obligation Payable from restricted assets - Employee benefit fund Water deposits Noncurrent liabilities Bonds payable Note payable Accrued compensated absences Advance payable NET ASSETS Invested in capital assets, net of related debt Restricted for bond service Unrestricted Governmental Business -type Development CIAWWC Activities Activities Total Authority Authority $ 1,888,237 $ 3,363,393 $ 5,251,630 $ 1,568,413 204,542 204,542 . 45,422 207,438 - 207,438 - (339,069) 339,069 - - 573,711 573,711 - 1,961,148 4,276,173 6,237,321 1,613,835 1,265,697 - 1,265,697 1,613, 835 1,265,697 57,933 819,972 819,972 21,316 150,251 150,251 - 1,265,697 1,265,697 8,922,833 11,335,265 20,258,098 (3,686,441) (4,561,307) (8,247,748) 5,236,392 9,009,878 14,246,270 7,197,540 13,286,051 20,483,591 1,265,697 - 1,265,697 1,613, 835 1,265,697 57,933 339,607 397,540 21,316 33,149 14,770 47,919 - - - 34,605 34,605 - - 76,338 28,437 104,775 - - - 205,000 205,000 - - - 295,238 295,238 - - 29,466 - 29,466 - - 107,519 - 107,519 - - 150,251 150,251 - 304,405 1,067,908 1,372,313 21,316 - 180,000 180,000 - - 3,585,461 3,585,461 - 305,354 113,750 419,104 - - - - - 1,265,697 305,354 3,879,211 4,184,565 - 1,265,697 609,759 4,947,119 5,556,878 21,316 1,265,697 5,206,926 2,508,259 7,715,185 - - - 819,972 819,972 - 1,380,855 5,010,701 6,391,556 1,592,519 $ 6,587,781 $ 8,338,932 $ 14,926,713 $ 1,592,519 $ 4 See accompanying notes to financial statements DEATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO STATEMENTS OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2009 Functions/Programs Primary Government: Governmental activities: General government Law enforcement Fire control Building inspection Street Parks and recreation Health and welfare Other special revenue funds Business -type activities Water Sewer Sanitation Total primary government Component Unit: Chubbuck Development Authority Sewer Intercept Authority Program Revenues Total Operating Net Charges for Grants and (Expense) Development CIAWWC Expenses Services Contributions Revenue Authority Authority $ 206,342 $ 135,984 $ - $ (70,358) $ - $ - 2,518,618 - 87,840 (2,430,778) - - 1,094,307 164,847 - (929,460) - - 154,402 - - (154,402) - - 797,537 - - (797,537) - - 571,561 51,817 - (519,744) - - 30,850 - - (30,850) - - 131,873 - 33,713 (98,160) - - 5,505,490 352,648 121,553 (5,031,289) - - 1,909,528 2,080,766 - 171,238 - - 1,792,591 2,207,254 - 414,663 - - 1,236,840 1,340,354 - 103,514 - - 4,938,959 5,628,374 - 689,415 - - $10,444,449 $ 5,981,022 $ 121,553 _LJ,1,341,874) $ - $ - $ 1,595,295 3,973,326 - $ (1,595,295) $ - $ 1,595,295 Franchise fees 222,369 $ (1,595,295) $ - 5 See accompanying notes to financial statements DEATON & COMPANY, CHARTERED General Business -type Development CIAWWC Activities Activities Total Authority Authority Net (expense)/revenue $ (5,031,289) $ 689,415 $ (4,341,874) $ (1,595,295) $ - General revenues General property taxes and sales tax 3,973,326 - 3,973,326 1,821,068 Franchise fees 222,369 - 222,369 - - Intergovernmental 815,486 - 815,486 Leases and rents 34,660 - 34,660 - - Interest income 26,714 58,039 84,753 23,808 - Gain on sale of assets 6,541 - 6,541 - - Capital contributions 1,323,278 116,041 1,439,319 - Other revenue 39,323 - 39,323 126,185 - Transfers in (out) 28,000 (28,000) - - - 6,469,697 146,080 6,615,777 1,971,061 - NET CHANGE IN NET ASSETS 1,438,408 835,495 2,273,903 375,766 - BEGINNING NET ASSETS 5,143,288 7,503,437 12,646,725 1,216,753 - PRIOR PERIOD ADJUSTMENT 6,085 - 6,085 - - ENDING NET ASSETS $ 6,587,781 $ 8,338,932 $14,926,713 $ 1,592,519 $ 5 See accompanying notes to financial statements DEATON & COMPANY, CHARTERED Unreserved, reported in General fund 962,458 - 962,458 734,822 Special revenue fund - 622,179 622,179 689,060 962,458 622,179 1,584,637 1,423,882 $ 1,678,038 $ 622,179 $ 2,054,424 Amounts reported for governmental activities in the Statement of Net Assets are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds, net of accumulated depreciation of $3,686,441. 5,236,392 Deferred tax revenue represents amounts that were not available to fund current expenditures and therefore are not reported in the funds 101,572 Long-term liabilities are not due and payable in the current period and therefore are not reported in the funds: Capital lease (29,466) Accrued compensated absences (305,354) Net assets of governmental funds $ 6,587,781 E See accompanying notes to financial statements DEATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO BALANCE SHEETS GOVERNMENTAL FUNDS SEPTEMBER 30,2009 WITH COMPARATIVE TOTALS AS OF SEPTEMBER 30, 2008 Other General Governmental Fund Funds Total 2008 ASSETS Cash $ 1,266,058 $ 622,179 $ 1,888,237 $ 1,568,325 Property and sales taxes receivable 204,542 - 204,542 189,630 Intergovernmental receivables 207,438 207,438 216,223 Restricted assets - cash - 80,246 $ 1,678,038 $ 622,179 $ 2,300,217 $ 2,054,424 LIABILITIES Accounts payable $ 57,933 $ - $ 57,933 $ 66,635 Accrued payroll 33,149 - 33,149 17,780 Employee benefit fund 107,519 - 107,519 80,246 Interfund payable 339,069 - 339,069 395,301 Accrued compensated absences 76,338 - 76,338 30,653 Deferred revenue 101,572 - 101,572 39,927 715,580 - 715,580 630,542 FUND BALANCES Unreserved, reported in General fund 962,458 - 962,458 734,822 Special revenue fund - 622,179 622,179 689,060 962,458 622,179 1,584,637 1,423,882 $ 1,678,038 $ 622,179 $ 2,054,424 Amounts reported for governmental activities in the Statement of Net Assets are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds, net of accumulated depreciation of $3,686,441. 5,236,392 Deferred tax revenue represents amounts that were not available to fund current expenditures and therefore are not reported in the funds 101,572 Long-term liabilities are not due and payable in the current period and therefore are not reported in the funds: Capital lease (29,466) Accrued compensated absences (305,354) Net assets of governmental funds $ 6,587,781 E See accompanying notes to financial statements DEATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO STATEMENTS OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTALFUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2009 WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2008 EXPENDITURES General government 169,192 Other 169,192 217,346 Law enforcement General Governmental 2,439,011 2,240,447 Fire control Fund Funds Total 2008 REVENUES 152,361 - 152,361 147,877 General property taxes and sales tax $ 3,911,681 $ - $ 3,911,681 $ 3,623,783 Franchise fees 222,369 - 222,369 208,853 Intergovernmental 815,486 - 815,486 902,580 Parks revenue 3,379 - 3,379 48,949 Licenses, permits and fines 135,984 - 135,984 195,206 Grants 87,840 - 87,840 72,224 Fire protection and prevention 164,847 - 164,847 183,189 Leases and rents 34,660 - 34,660 27,606 Interest income 22,325 4,389 26,714 55,095 Donations 11,021 22,692 33,713 43,200 Donation of infrastructures - - - - Charges for services 48,438 - 48,438 - Other revenues 23,852 15,471 39,323 22,752 Proceeds from sale of assets 5,481,882 42,552 5,524,434 5,383,437 EXPENDITURES General government 169,192 - 169,192 217,346 Law enforcement 2,439,011 - 2,439,011 2,240,447 Fire control 971,009 - 971,009 985,968 Building inspection 152,361 - 152,361 147,877 Street 758,550 - 758,550 727,758 Parks and recreation 527,601 - 527,601 509,437 Health and welfare 30,850 - 30,850 38,814 Street guarantee fund - 3,734 3,734 12,910 Court fund - 11,699 11,699 3,507 Parks Fund 22,440 94,000 116,440 117,600 Capital outlays 131,803 - 131,803 207,704 5,202,817 109,433 5,312,250 5,209,368 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 279,065 (66,881) 212,184 174,069 OTHER FINANCING SOURCES Proceeds from capital lease 58,491 - 58,491 124,610 Principal payments on leases (153,670) - (153,670) (131,565) Proceeds from sale of assets 15,750 - 15,750 19,914 Transfers in (out) 28,000 - 28,000 (12,687) (51,429) (51,429) 272 NET CHANGE IN FUND BALANCES 227,636 (66,881) 160,755 174,341 BEGINNING FUND BALANCE 734,822 689,060 1,423,882 1,365,671 ENDING FUND BALANCE $ 962,458 $ 622,179 $ 1,584,637 $ 1,540,012 (Continued) 7 See accompanying notes to financial statements DEATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO STATEMENTS OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTALFUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2009 Reconciliation of the change in fund balances - total governmental funds to the change in net assets of governmental activities: Net change in fund balances - total governmental funds Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds report capital outlays as expenditures while governmental activities report depreciation expense to allocate those expenditures over the life of the assets. Capital asset contributions from other entities are not recognized as a revenue for governmental purposes, but are required to be recognized on the Statement of Activities: Contributed capital assets Capital asset purchases capitalized Depreciation expense The net affect of sales transactions involving capital assets Deferred revenues are not recorded as current period receipts The issuance of long-term debt (e.g., bonds, leases) 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 assets. This amount is the net effect of these differences in the treatment of long-term debt and related items Some expenses reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental fund: Accrued compensated absences Change in net assets See accompanying notes to financial statements 2009 Total 160,755 1,323,278 131,803 (295,569) (9,209) 61,645 95,179 (29,474) $ 1,438,408 DEATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO STATEMENTS OF NET ASSETS PROPRIETARY FUNDS SEPTEMBER 30,2009 WITH COMPARATIVE TOTALS AS OF SEPTEMBER 30, 2008 9 See accompanying notes to financial statements DEATON & COMPANY,. CHARTERED Internal Internal Service Service ASSETS Water Sewer Sanitation Total 2008 Funds 2009 Funds 2008 Current assets Cash and cash equivalents $1,209,552 $1,537,211 $ 616,630 $3,363,393 $2,408,954 $ - $ - Accounts receivable 244,298 186,545 142,868 573,711 563,035 1,453,850 1,723,756 759,498 3,937,104 2,971,989 - Noncurrent assets Restricted assets Bond reserves 312,209 507,763 - 819,972 819,972 - - Water deposits 150,251 - - 150,251 148,005 - - Interfund receivable - 339,069 - 339,069 395,301 - - Advance tojoint venture - 1,265,697 - 1,265,697 188,970 - - Capital assets 4,672,313 4,117,051 2,286,258 11,075,622 10,874,914 259,643 259,643 Accumulated depreciation (1,532,562) (2,566,982) (286,160) (4,385,704) (4,118,197) (175,603) (164,538) 3,602,211 3,662,598 2, 000,098 9,264,907 8,308,965 84,040 95,105 5,056,061 5,386,354 2,759,596 13,202,011 11,280,954 84,040 95,105 LIABILITIES Current Liabilities Accounts payable 45,337 264,483 28,478 338,298 335,669 1,309 9,969 Payroll payable 7,641 4,477 2,652 14,770 9,017 - - Accrued compensated absences 13,516 13,516 1,405 28,437 11,434 - - Current portion of bonds payable 150,000 55,000 - 205,000 190,000 - - Accrued interest 4,800 18,413 11,392 34,605 33,815 - - Current portion of long-term debt 14,607 - 280,631 295,238 1,162,202 - - Payable from restricted assets - Water deposits 150,251 150,251 148,005 386,152 355,889 324,558 1,066,599 1,890,142 1,309 9,969 Noncurrent Liabilities Bonds payable - 180,000 - 180,000 385,000 - - Note payable 298,454 1,038,509 2,248,498 3,565,461 1,484,599 - - Compensated absences 54,065 54,065 5,620 113,750 102,912 - 352,519 1,272,574 2,254,118 3,879,211 1,972,511 - 738,671 1,628,463 2,578,676 4,945,810 3,862,653 1,309 9,969 NETASSETS Invested in capital assets, net of related debt 2,676,690 276,560 (449,638) 2,503,612 3,614,309 84,040 95,105 Restricted for bond service 312,209 507,763 - 819,972 819,972 - - Unrestricted 1,328,491 2,973,568 630,558 4,932,617 2,984,020 (1,309) (9,969) $4,317,390 $3,757,891 $ 180,920 8,256,201 $7,418,301 $ 82,731 $ 85,136 Adjustment to reflect the consolidation of internal service fund activities related to enterprise activities. 82,731 $ 8,338,932 9 See accompanying notes to financial statements DEATON & COMPANY,. CHARTERED CITY OF CHUBBUCK, IDAHO STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2009 WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2008 OPERATING REVENUES Service revenue Revenue used as security for revenue bond: Charges for services OPERATING EXPENSES Salaries and wages Personnel benefits Repairs and maintenance Supplies and tools Garbage containers Travel, meetings, and training Fuels and lubricants Telephone and communications Utilities Treatment - Pocatello Sanitation - disposal Insurance Other purchased services Professional services Facilities plan Bad debt Depreciation OPERATING INCOME NONOPERATING REVENUE (EXPENSE) Interest income Interest expense Capital contributions Transfers in (out) NET INCOME (LOSS) BEGINNING NET ASSETS ENDING NET ASSETS Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds (2,405) Change in net assets of business -type activities $ 835,495 10 See accompanying notes to financial statements DEATON & COMPANY, CHARTERED Internal Internal Service Service Water Sewer Sanitation Total 2008 Funds 2009 Funds 2008 $1,930,766 $1,972,254 $1,274,671 $5,177,691 $4,755,474 $ 65,683 $ 57,203 150,000 235,000 385,000 575,000 2,080,766 2,207,254 1,274,671 5,562,691 5,330,474 65,683 57,203 639,083 414,137 206,372 1,259,592 1,039,671 - - 264,268 171,978 96,881 533,127 198,476 - - 580,491 178,933 410,438 1,169,862 377,508 15,121 23,352 44,088 24,258 21,793 90,139 147,702 2,133 1,236 - - - - 554,813 - - 7,247 - 2,009 9,256 27,115 - - 12,094 2,491 33,368 47,953 101,269 21,518 31,790 3,458 2,734 2,760 8,952 8,214 146 59 121,819 6,244 2,095 130,158 90,323 18,057 10,019 - 804,357 - 804,357 692,468 - - - - - - 344,808 - - 31,615 27,784 28,778 88,177 345,167 - - 5,370 - 42,923 48,293 - 48 - 37,210 13,496 - 50,706 37,803 - - 14,930 - - 14,930 49,145 - - 9,940 6,490 3,854 20,284 19,203 - - 115,372 125,589 172,960 413,921 331,206 11,065 11,065 1,886,985 1,778,491 1,024,231 4,689,707 4,364,891 68,088 77,521 193,781 428,763 250,440 872,984 965,583 (2,405) (20,318) 36,318 21,721 - 58,039 78,510 - - (22,543) (14,100) (144,521) (181,164) (140,406) - - 116,041 - - 116,041 493,445 - - (9,730) (18,270) (28,000) 12,687 120,086 (10,649) (144,521) (35,084) 444,236 313,867 418,114 105,919 837,900 1,409,819 (2,405) (20,318) 4,003,523 3,339,777 75,001 5,180,962 85,136 105,454 $4,317,390 $3,757,891 $ 180,920 $6,590,781 $ 82,731 $ 85,136 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds (2,405) Change in net assets of business -type activities $ 835,495 10 See accompanying notes to financial statements DEATON & COMPANY, CHARTERED 0 M Cl) a W Z m 2 LL O F } o a NLu F M y Ow W aamz a00w jOW v�w} m W 2 O LLJ O ~ U x Z x0 W LL 0 Ix U. W J >.U y W O f2xr- W M > wU¢ F a h m 0 O U x F M(Oo rNa-O m hI�O � OO m r O M M of O ON N �MOcO (ONmMr mOOr m V) V) (p (� 00 N N r mN (° N N r m M o N (O 0606 (h V O N O Nm VJro� =' mMm m rr 0 d N N t0 N M v M- M M C N O (+ fA V N N O N N LL M m d M N V) O M N N m m m r W V M c'J M V r V ONr d' (Or MO 7 O O V Q N (O (O O M N N N V 0 O M (° N .- m V V) r v m m V N M M w m V1 tQ cow N �- Vl d'rM O 0 O LO V V N � c N — v (o c O M N Q N V V (OD W M(Oo rNa-O m hI�O � OO m r O M M of �MOcO (ONmMr mOOr m V) V) (p (� 00 N N r mN (° N N r m M o N (O 0606 (h V O N O Nm VJro� =' mMm m rr 0 d N N t0 N M v M- M M O (+ fA V N N O N N O N V M m m m d M N V) O M N N m m m r W V M c'J M V r V ONr d' (Or MO 7 O O V Q N (O (O M N N N V 0 O M (° N .- m V V) r v m m V N M M w m V1 tQ (O C c �- Vl d'rM O 0 O LO — v (o c O M N Q N V V (OD W N ty N O M (O rMN (O OOMcp m NN C N Or V)M NNr r V)ON(O N rr m (+: 3 MN N� N d mm �� fn Nd'N O " ' O SMO V r N M M M O N O N m V d' r r r V (° M M OJ (C R 0 (D ci V: co OD (p W M(66 N M O v N W F N U° D Z a > W U i m J W N _ZLLI U) m 4 Na H > U ~ c w ° > Z c 7 W F > Z< J m F a > O J U m > w a a o LL c x a F m x> C7 G J -NO 0 U Q a o F N N �L z D C U W ((a�� N N a D l0 J N Z> N Z y a> ai a Z o N c ~ y m v°i ° N w d >' a U OE°1Om Zo�aci aDi-C U~�mn((—°d.> Z> ¢ Z O°na:° f^E�TiD a>°Uum'q, dD U a F c c a> m �:°.'> N�oo� LLo�o�t KQoa Ovr 0 w Q m°°N wo°CN Cz°-am°N�c (Ln Q U O d a a 0- -i5 v° v O Z 'No maw v c 30 m y W U LL LLL N LL Ul N J Z N '�' N L Ul w J N N U Z x m m mZ = 'U. >OL Z xa L C jZ x d Z — Z aIUUU NF �aU (qua` �a c LL N_ r 0 U U U U Z m F z W J D O w x Q v z Z a x co U z Z 0 Z w r Op O C y U N M O N M OJ O C _ y O OV O N y (OO d0' C U N N W N C N = LL M m D o O O N o c m v O M N N O O N ro M N W N V M 0 O O N V (p N D N N U) O 0 r (M O N N MN O m N V V M z2 �mW tl1 d 9 LLQC Q N w Q u W W ov M �zH W O—�OWOFF> 2� W A (O ^ O n V (O N oo2wmwa N » » a Q OU Y �W- Z jy W} z- M m N N N O M i y W ~ K m lo:W d N O N00 ((D M O w Z a S LL Ow IL (A U= W 00>m LL 41 LL cot) fA eA J O LLj O M m N a 1O m V w 0¢> y ov �SHd0 m rn (ri (o M ZF- W UK 3 M wx>za p » » w < O K FQ d U) i O U y w F W 3 > > 0� r U > w W Q 1- 20 OZ Q ~ Z Z U � y NIL W N Q F O N W m o a o Q W N y a C m w i O O> m E E U j z0 Oa C« y 2 N Z J Q U U U U O S F �U ��Q�QQF y K U s C U O w d w Z w o m z r CITY OF CHUBBUCK, IDAHO NOTES TO FINANCIAL STATEMENTS (PAGE 1 OF 13) NOTE 1 - Summary of Sia_nificant Accountinq Policies The City's financial statements comply with generally accepted accounting principles (GAAP). GAAP includes all relevant Governmental Accounting Standards Board (GASB) pronouncements. In the government -wide financial statements and the fund financial statements for the proprietary funds, Financial Accounting Standards Board (FASB) pronouncements and Accounting Principles Board (APB) opinions issued on or before November 30, 1989, have been applied unless those pronouncements conflict with or contradict GASB pronouncements, in which case, GASB prevails. For enterprise funds, GASB Statement Nos. 20 and 34 provide the City the option of electing to apply FASB pronouncements issued after November 30, 1989. The City has elected not to apply those pronouncements. The accounting and reporting framework and the more significant accounting policies are discussed in subsequent subsections of this Note. A. Reporting Entity The City's financial reporting entity comprises the following Primary Government In determining the financial reporting entity, the City complies with the provisions of GASB Statement No. 14, "The Financial Reporting Entity". Currently, the City reports two component unit; the Chubbuck Development Authority and the Chubbuck Impact Area Waste Water Authority. Discretely Presented Component Units Chubbuck Development Authority (CDA) One component unit reported in the combined financial statements represents the financial balances and transactions of the Chubbuck Development Authority (CDA). CDA is a legally separate entity incorporated under the State of Idaho's urban renewal laws. CDA works with the City to develop blighted areas within the City using tax increment financing to fund projects. These projects could include providing infrastructures, purchasing land and demolishing blighted structures or rehabilitating structures to provide for low income housing, among others. The Board of Commissioners of the Authority consists of 7-9 members, which are appointed by the Mayor Complete financial statements of the Authority can be obtained from the Treasury, City of Chubbuck, 5160 Yellowstone Ave, Chubbuck, Idaho 83202. Chubbuck Impact Area Waste Water Collection Authority (CIAWWCA) Effective September 1, 2007, Bannock County, Idaho, City of Pocatello, Idaho and the City of Chubbuck, Idaho entered into a Joint Powers Agreement creating the Chubbuck Impact Area Wastewater Collection Authority for the purpose of financing, designing, acquiring, constructing, managing, and operating a sewage collection facility along with transmission mains and lift stations to serve those who own and operate a collection system under Idaho Law for the residence of the City of Chubbuck, Idaho. The Authority is a public entity of the State of Idaho, therefore, the Authority's income is exempt form Federal and Idaho income taxes. A six -member board governs the Chubbuck Impact Area Wastewater Collection Authority with two members representing Bannock County, two members representing the City of Pocatello and two members representing the City of Chubbuck. During the year, the City of Chubbuck advanced $1,265,697 to the Authority with no interest or maturity date. 13 DEATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO NOTES TO FINANCIAL STATEMENTS (PAGE 2 OF 13) NOTE 1 - Summary of Significant Accounting Policies (Continued) A. Reporting Entity (Continued) Upon termination of this Agreement, title to all buildings, improvements, facilities, equipment and personal property held by the Authority shall vest in the City of Chubbuck. Complete financial statements of the Authority can be obtained from the Treasury, City of Chubbuck, 5160 Yellowstone Ave, Chubbuck, Idaho 83202. B. Basis of Presentation Government -wide Statements The Statement of Net Assets and Statement of Activities display information about the reporting government as a whole. They include all funds of the reporting entity except for fiduciary funds. The statements distinguish between governmental and business -type activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other non-exchange revenues. Business -type activities are financed in whole or in part by fees charged to external parties for goods or services. Fund Financial Statements Fund financial statements of the reporting entity are organized into funds, each of which is considered to be separate accounting entities. Each fund is accounted for by providing a separate set of self -balancing accounts that constitute its assets, liabilities, fund equity, revenues, and expenditure/expenses. Funds are organized into three major categories: Governmental, proprietary, and fiduciary. An emphasis is placed on major funds within the governmental and proprietary categories. A fund is considered major if it is the primary operating fund of the City or meets the following criteria: a. Total assets, liabilities, revenues or expenditures/expenses of that individual governmental or enterprise fund are at least 10 percent of the corresponding total for all funds of that category or type. b. Total assets, liabilities, revenues, or expenditures/expenses of the individual governmental fund or enterprise fund are at least 5 percent of the corresponding total for all governmental and enterprise funds combined. Governmental Funds General Fund The General Fund is the general operating fund of the City and is always classified as a major fund. All financial resources, except those required to be accounted for in another fund, are accounted for in the General Fund. Special Revenue Funds Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specific purposes. 14 DEATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO NOTES TO FINANCIAL STATEMENTS (PAGE 3 OF 13) NOTE 1 - Summary of Significant Accounting Policies (Continued) B. Basis of Presentation (Continued) Proprietary Funds Enterprise Funds Enterprise funds are used to account for business -like activities provided to the general public. These activities are financed primarily by user charges and the measurement of financial activity focuses on net income measurement similar to the private sector. The reporting entity includes the water, sewer and sanitation funds. Internal Service Funds Internal service funds account for repairs and maintenance service for vehicles and equipment provided to other departments or agencies of the City on a cost reimbursement basis. C. Measurement Focus and Basis of Accounting Measurement focus is a term used to describe "which" transactions are recorded within the various financial statements. Basis of accounting refers to "when" transactions are recorded regardless of the measurement focus applied. Measurement Focus On the government -wide Statement of Net Assets and the Statement of Activities, both governmental and business -like activities are presented using the economic resources measurement focus as defined in item b. below. In the fund financial statements, the "current financial resources" measurement focus or the "economic resources" measurement focus is used as appropriate: a. All governmental funds utilize a "current financial resources" measurement focus. Only current financial assets and liabilities are generally included on their balance sheets. Their operating statements present sources and uses of available spendable financial resources during a given period. These funds use fund balance as their measure of available spendable financial resources at the end of the period. b. The proprietary fund utilizes an "economic resources" measurement focus. The accounting objectives of this measurement focus are the determination of operating income, changes in net assets (or cost recovery), financial position, and cash flows. All assets and liabilities (whether current or noncurrent) associated with their activities are reported. Proprietary fund equity is classified as net assets. Basis of Accounting In the government -wide Statement of Net Assets and Statement of Activities, both governmental and business- like activities are presented using the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred or economic asset used. Revenues, expenses, gains, losses, assets, and liabilities resulting form exchange and exchange - like transactions are recognized when the exchange takes place. 15 DEATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO NOTES TO FINANCIAL STATEMENTS (PAGE 4 OF 13) NOTE 1 - Summary of Significant Accounting Policies (Continued) C. Measurement Focus and Basis of Accounting (Continued) In the fund financial statements, governmental funds are presented on the modified accrual basis of accounting. Under this modified accrual basis of accounting, revenues are recognized when "measurable and available." Measurable means knowing or being able to reasonably estimate the amount. Available means collectible within the current period or within sixty days after year end. Expenditures (including capital outlay) are recorded when the related fund liability is incurred, except for general obligation bond principal and interest which are reported when due. All proprietary funds utilize the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred or economic asset used. The effect of interfund activity has been eliminated from the government -wide financial statements. D. Budgets and Encumbrances Budgets are adopted on a basis consistent with generally accepted accounting principles. Annual appropriated budgets are adopted for the general and special revenue funds. All annual appropriations lapse at fiscal year end. Each month the City prepares a financial report that reflects the actual and budgeted financial data. A strict purchase order system is used in controlling and maintaining expenditures within budget categories. This data is reviewed by the City Council. The City does not use the encumbrance method of accounting. The General Fund incurred expenditures in excess of appropriations of the following amounts for the year: Capital Outlays Principal payments on leases 131,803 153,670 The excess expenditures were funded by donated capital outlays, decreased expenditures in other functional expenditures, and proceeds in excess of the amount budgeted. E. Cash and Cash Equivalents For the purpose of the Statement of Net Assets, "cash and cash equivalents' includes all demand, savings accounts, certificates of deposits, and state investing pools of the City. For the purpose of the proprietary fund Statement of Cash Flows, "cash and cash equivalents" include all demand and savings accounts, and certificates of deposit or short-term investments with an original maturity of three months or less. F. Property, Plant, and Equipment The accounting treatment for property, plant and equipment depends on whether the assets are used in governmental fund operations or proprietary fund operations and whether they are reported in the government - wide or fund financial statements. Government -wide Statements In the government -wide financial statements, fixed assets are accounted for as capital assets. All fixed assets are valued at historical cost, or estimated historical cost if actual is unavailable, except for donated fixed assets which are recorded at their estimated fair value at the date of donation. Estimated historical cost was used to value the majority of the assets acquired prior to September 30, 2003. 16 DEATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO NOTES TO FINANCIAL STATEMENTS (PAGE 5 OF 13) NOTE 1 - Summary of Significant Accounting Policies (Continued) F. Property, Plant, and Equipment (Continued) Governmental fund infrastructure assets were not capitalized prior to October 1, 2003. Depreciation of all exhaustible fixed assets is recorded as an allocated expense in the Statement of Activities, with accumulated depreciation reflected in the Statement of Net Assets. Depreciation is provided over the assets' estimated useful lives using the straight-line method of depreciation. The range of estimated useful lives by type of asset is as follows: Buildings Other structures Vehicles Equipment Fund Financial Statements 20-50 years 5-40 years 5-30 years 2-40 years In the fund financial statements, fixed assets used in governmental fund operations are accounted for as capital outlay expenditures of the governmental fund upon acquisition. Fixed assets used in proprietary fund operations are accounted for the same as in the government -wide statements. G. Restricted Assets Restricted assets include cash and investments of the general fund that are legally restricted as to their use. The primary restricted assets are related to employee benefits. Restricted assets include cash and investments of the proprietary fund that are legally restricted as to their use. The primary restricted assets are related to utility deposits and bond reserve requirements. When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first, then unrestricted resources as they are needed. H. Long-term Debt The accounting treatment of long-term debt depends on whether the assets are used in governmental fund operations or proprietary fund operations and whether they are reported in the government -wide or fund financial statements. All long-term debt to be repaid from governmental and business -type resources are reported as liabilities in the government -wide statements. The long-term debt consists primarily of notes payable, capital leases, and accrued compensated absences. Long-term debt for governmental funds is not reported as liabilities in the fund financial statements. Debt proceeds are reported as other financing sources. Payment of principal and interest are reported as expenditures. The accounting for proprietary funds is the same in the fund statements as it is in the government - wide statements. 17 DEATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO NOTES TO FINANCIAL STATEMENTS (PAGE 6 OF 13) NOTE 1 - Summary of Significant Accounting Policies (Continued) I. Comparative data/reclassifications Comparative total data for the prior year has been presented in the fund financial statements in order to provide an understanding of the changes in assets and operations of these funds. Also, certain amounts presented in the prior year data have been reclassified in order to be consistent with the current year's presentation. J. Compensated Absences The City's policies regarding vacation time permit employees to accumulate earned but unused vacation leave. The liability for these unpaid compensated absences is recorded as long-term debt in the government -wide statements. The current portion of this debt is estimated based on historical trends. In the fund financial statements, governmental funds report only the compensated absence liability payable from expendable available financial resources, while the proprietary funds report the liability as it is incurred. K. Equity Classifications Government -wide Statements Equity is classified as net assets and displayed in three components: a. Invested in capital assets, net of related debt - Consists of capital assets including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages notes, or other borrowings that are attributable to the acquisition, construction, or improvement of these assets. b. Restricted net assets - Consists of net assets with constraints placed on the use either by (1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments; or (2) law through constitutional provisions or enabling legislation. c. Unrestricted net assets - All other net assets that do not meet the definition of "restricted" or "invested in capital assets, net of related debt." Fund Statements Governmental fund equity is classified as fund balance. Fund balance is further classified as reserved and unreserved. Unreserved can be further split between designated and undesignated. Proprietary fund equity is classified the same as in the government -wide statements. L. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires the City to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. NOTE 2 - Legal Compliance - Budgets Approximately six to seven months before the start of a new fiscal year, the City's financial officer submits to the City Council a proposed operating budget for the fiscal year commencing the following October 1. The budget is prepared by fund, function and activity, and includes information on the past year, current year estimates and requested appropriations for the next fiscal year. 18 DEATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO NOTES TO FINANCIAL STATEMENTS (PAGE 7 OF 13) NOTE 2 - Legal Compliance - Budgets (Continued) The City Council holds public hearings and may add to, subtract from or change appropriations, but may not change the form of the budget. Any changes in the budget must be within the revenues and reserves estimated as available to the City or the revenue estimates must be changed by an affirmative vote of a majority of the City Council. After public hearings and before the end of the fiscal year, the City Council formally adopts the budget. Expenditures may not legally exceed budgeted appropriations at the activity level. During the year, several supplementary appropriations may be necessary. NOTE 3 - Restricted Assets and Payable from Restricted Assets Assets have been set aside for special items and are restricted for that purpose. Restricted resources are used only after the unrestricted resources are depleted. To date cash has been restricted for the following items: Proprietary Bond reserves Water deposits Total $ 819,972 150,251 $ 970,223 Bond reserves are amounts the City is legally required to reserve for the repayment of outstanding bonds. Water deposits are collected from individuals who have a history of collection problems. Money on deposit may be used to pay past due balances or is returned when the payer's payment history improves. Restricted water deposits totaled $150,251 at yearend. NOTE 4 - Property Tax Bannock County has the responsibility of assessing and collecting all property taxes. Taxes levied for the year are payable in two installments due December 20th of the current year and June 20th of the following year. The County remits property taxes collected to the City monthly. Property taxes are recognized as revenue when received for monthly accrual is made to recognize property taxes receivable at year end. property taxes were expected to be collected and remitted by the County. NOTE 5 - Cash and Cash Equivalents and Investments Primary Government: Deposits at year end consist of the following: Deposits Cash in bank - carrying amount Restricted Unrestricted 19 reporting purposes. At year end, an At year end, $204,542 in outstanding $ 970,223 5,251,630 $ 6,221,853 DEATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO NOTES TO FINANCIAL STATEMENTS (PAGE 8 OF 13) NOTE 5 - Cash and Cash Equivalents and Investments (Continued) Bank Deposits - Custodial Credit Risk for deposits is the risk that, in the event of bank failure, the government's deposits may not be returned to it. At yearend, the carrying amount of the City's deposits (cash and certificates of deposit) was $6,221,853 and the bank balance was $7,978,120. The deposits were covered by colateralized accounts or federal depository insurance of $250,000 per bank. The City uses various commercial banks to limit their exposure to custodial credit risk, however, the City's deposits in the State of Idaho, Local Government Investment Pool (LGIP) at yearend were not insured nor colateralized in the amount of $3,286,359. Investments - The City has no investments Component Unit - Chubbuck Development Authority (CDA): Deposits at year end consist of the following: Deposits Cash in bank - carrying amount Unrestricted $ 1,568,413 Bank Deposits - Custodial Credit Risk for deposits is the risk that, in the event of bank failure, the government's deposits may not be returned to it. At yearend the carrying amount and bank balance of CDA's deposits (cash and certificates of deposit) was $1,568,413. At year-end, all the Authority's deposits were held in the LGIP. Deposits in the LGIP are not insured or guaranteed by the Federal Deposit Insurance Corporation, the State of Idaho or any other government agency. CDA's deposits in the bank at yearend were subject to custodial credit risk. Investments - The CDA has no investments Component Unit - Chubbuck Impact Area Waste Water Collection Authority (CIAWWCA): Deposits and Investments - The CIAW WCA has no deposits or investments. NOTE 6 - Receivables All trade receivables are shown net of allowance for doubtful accounts. Doubtful accounts are based on an aging delinquent balance report. Historically 100% of property taxes have been collected, therefore, there is no allowance for uncollectible property tax receivables. Receivables as of year-end for the City's business -type funds are as follows: Water Accounts Receivables 35 35 Sewer 7F 262, 39 Sanitation �5 371 Total X1,845 Allowance for Doubtful Accounts (114,537) (76,094) (7,503) (198,134) $ 244,298 $ 186,545 $ 142,868 $ 573,711 NOTE 7 - Concentration of Credit Risk Interest Rate Risk is the risk that changes in interest rates will adversely affect the value of a deposit. The City manages its exposure to declines in fair value by limiting the average maturity of its deposits to one year or less, or redeemable on demand with no penalty. Credit Risk is the risk that an issuer or a counterparty to a deposit will not fulfill its obligations. The City seeks to minimize credit risk through diversification of deposits within the choices allowed under state statutes. 20 DEATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO NOTES TO FINANCIAL STATEMENTS (PAGE 9 OF 13) NOTE 7 - Concentration of Credit Risk (Continued) Concentration of Credit Risk is the risk of loss attributed to the magnitude of an investment in a single issuer. Exclusive of the State of Idaho LGIP, the City's deposits in any one issuer does not represent a concentration of total credit risk. The funds in the State of Idaho LGIP are in a variety of investments which are required to have an A quality credit rating or better. The City is subject to credit risk on deposits in banks that exceed the FDIC maximum insured balance amount. Additionally, the City grants credit to customers in the City for utility service. This extension of credit potentially subjects the City to credit risk. NOTE 8 - Changes in Fixed Assets A summary of general fixed assets at year end is as follows: NOTE 9 - Interfund Receivables. Pavables and Transfers Interfund balances at yearend consisted of the following amounts: Due to Due from General Fund Sewer Fund $ 339,069 21 DEATON & COMPANY, CHARTERED Beginning Ending Balance Additions Deletions Balance Work in process $ 1,251,228 $ 1,200,429 $ 335,367 $ 2,116,290 Infrastructures 19,658.00 335,367 - 355,025 Nondepreciable assets - Land 90,866 - 90,866 Office Equipment 232,894 - 146,414 232,894 Buildings and Improvements 2,715,073 122,849 146,414 2,837,922 Vehicles and Equipment 4,279,272 300,120 1,289,556 3,289,836 8,588,991 1,958,765 7289,556 8,922,833 Accumulated Depreciation 4,508,997 371,801 1,194,357 3,686,441 $ 4,079,994 $ 1,586,964 $ 95,199 $ 5,236,392 A summary of proprietary type fixed assets at year end is as follows: NOTE 9 - Interfund Receivables. Pavables and Transfers Interfund balances at yearend consisted of the following amounts: Due to Due from General Fund Sewer Fund $ 339,069 21 DEATON & COMPANY, CHARTERED Beginning Ending Balance Additions Deletions Balance Nondepreciable assets - Land $ 495,573 $ 214,281 $ $ 709,854 Office Equipment 162,405 - 162,405 Buildings and Improvements 7,813,773 - 7,813,773 Vehicles and Equipment 2,662,806 132,841 146,414 2,649,233 11,134,557 347,122 146,414 11,335,265 Accumulated Depreciation 4,282,735 424,986 146,414 4,561,307 6,851,822 $ (77,864) $ - $ 6,773,958 NOTE 9 - Interfund Receivables. Pavables and Transfers Interfund balances at yearend consisted of the following amounts: Due to Due from General Fund Sewer Fund $ 339,069 21 DEATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO NOTES TO FINANCIAL STATEMENTS (PAGE 10 OF 13) NOTE 9 - Interfund Receivables. Pavables and Transfers (Continued) The balance of $339,069 due to the sewer fund from the general fund resulted from two loans. The first loan originated in July 2005, in the amount of $461,949, with annual payments of $56,232, to assist the general fund in a legal payment. The second loan originated in February 2007, in the amount of $102,048, with annual payments of $32,000, was to assist in purchasing fixed assets. Interfund transfers: Transfer out: Water Fund Sewer Fund Transfer in General Fund $ 9,730 18,270 $ 28.000 The balance of $28,000 transfered to the general fund from the water and sewer fund was for the assistance in purchasing a backhoe wich is used by all departments. NOTE 10 - Long-term Debt and Accrued Compensation Accrued Compensated Absences: Current portion Noncurrent portion Long-term Debt: Governmental Business -type $ 76,338 $ 28,437 305,354 113,750 $ 381.692 $ 142.187 The City's long-term debt is segregated between the amounts to be repaid from governmental activities and amounts to be repaid from business -type activities. Governmental Activities: As of year end, the governmental long-term debt of the City consisted of the following: Capital Lease Obligation: Vehicles capital lease; issue amount $58,491; dated April 22, 2009; interest rate of 4.5% with final maturity dated February 15, 2010. $ 29,466 Less current portion 29,466 Noncurrent portion $ Business -type activities: In 2006, the City refinanced a construction line of credit for a note payable with the Department of Environmental Quality (DEQ) with an interest rate of 3.25% and semi-annual payments for 20 years. Current portion $ 14,607 Noncurrent portion 298,454 $ 313,061 22 DEATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO NOTES TO FINANCIAL STATEMENTS (PAGE 11 OF 13) NOTE 10 - Long-term Debt and Accrued Compensation (Continued) Business -type activities (Continued): In July 2008, the City was authorized, on a line -of -credit, to borrowed $1,400,000 from the Department of Environmental Quality at 3% to be paid in biannual installments over 20 years. The note is used to finance the designing and constructing of the Chubbuck Northwest Sewer Interceptor. It may also be used to finance services to provide environmental field studies, public involvement, and agency permit applications. If funds allow, it may include the purchase of needed right-of-way for construction of the sewer system. At yearend the balance available to the City was $361,491. $ 1,038,509 The City issued two utility bonds. On October 1, 1972, the City issued its Sewer Revenue Bonds, at 5.425% and mature on October 1, 2013. The Water Fund Certificate was issued in May of 1995, with interest rates up to 7.25% and a maturity date of April 1, 2010. Bonds Payable: Sewer Revenue Bond Water Fund Certificates Less current portion Noncurrent portion $ 235,000 150,000 385,000 205,000 $ 180.000 On June 4, 2008, the City issued three notes to purchase assets needed in order to collect sanitation for the City. Two notes were issued at 5.50%. The third note was refinanced in 2009. The notes were issued for $936,576, $541,537 and $1,375,000 with monthly payments of $17,890, $6,985, and $9,321 until the maturity date of May 5, 2013, 2016 and 2029. Notes Payable: Balance Note 1 $ 708,012 Note 2 465,016 Note 3 1.356.101 2,529,129 Less current portion 280,631 Noncurrent portion $ 2,248,498 Annual Debt Service Requirements Year Ending Governmental Activities Business -type Activities September 30 Principal Interest Principal Interest 2010 $ 29,466 $ 534 $ 1,538,746 $ 163,486 2011 - - 366,470 134,353 2012 - - 388,603 113,920 2013 - - 335,436 92,806 2014 - - 141,300 79,046 2014-2018 - - 517,924 301,596 2019-2023 - - 493,216 189,388 2024-2026 - - 484,004 57,013 $ 29,466 $ 534 $ 4,265,699 $ 1,131,608 23 DEATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO NOTES TO FINANCIAL STATEMENTS (PAGE 12 OF 13) NOTE 10 - Long-term Debt and Accrued Compensation (Continued) Changes in long-term liabilities Long-term liability activity for the year ended, was as follows The Public Employee Retirement System of Idaho (PERSI), a cost sharing multi-employer public retirement system, was created by the Idaho State Legislature. It is a defined benefit plan requiring that both the member and the employer to contribute. The plan provides benefits based on members' years of service, age, and compensation. In addition, benefits are provided for disability, death, and survivors of eligible members or beneficiaries. The authority to establish and amend benefit provisions is established in Idaho Code. Designed as a mandatory system for eligible state and school district employees, the legislation provided for other political subdivisions to participate by contractual agreement with PERSI. Financial reports for the plan are available from PERSI upon request. After 5 years of credited service, members become fully vested in retirement benefits earned to date. Members are eligible for retirement benefits upon attainment of the ages specified for their employment classification. For each month of credited service, the annual service retirement allowance is 2.0% (2.3% police/firefighter) of the average monthly salary for the highest consecutive 42 months. The contribution requirements of the City of Chubbuck and its employees are established and may be amended by the PERSI Board of Trustees. For the year ended September 30, 2006 the required contribution rate as a percentage of covered payroll for members was 6.23% for general members and 7.65% for police/firefighters. The employer rate as a percentage of covered payroll was 10.39% for general members and 10.73% for police/firefighter members. The City of Chubbuck contributions required and paid were $381,576, $360,332, and $329,628, for the three years ended September 30, 2009, 2008, and 2007, respectively. NOTE 12 - Risk Management The City is exposed to various risks of loss. The City has obtained commercial insurance to reduce the risk of substantial losses. 24 DEATON & COMPANY, CHARTERED Beginning Ending Due within Governmental activities Balance Additions Reductions Balance one year Capital leases $ 124,635 $ 58,501 $ 153,670 $ 29,466 $ 29,466 Compensated absences 306,533 75,159 381,692 76,338 1,492,632 $ 431,168 $ 133,660 $ 153.670 $ 411.158 $ 105,804 The Public Employee Retirement System of Idaho (PERSI), a cost sharing multi-employer public retirement system, was created by the Idaho State Legislature. It is a defined benefit plan requiring that both the member and the employer to contribute. The plan provides benefits based on members' years of service, age, and compensation. In addition, benefits are provided for disability, death, and survivors of eligible members or beneficiaries. The authority to establish and amend benefit provisions is established in Idaho Code. Designed as a mandatory system for eligible state and school district employees, the legislation provided for other political subdivisions to participate by contractual agreement with PERSI. Financial reports for the plan are available from PERSI upon request. After 5 years of credited service, members become fully vested in retirement benefits earned to date. Members are eligible for retirement benefits upon attainment of the ages specified for their employment classification. For each month of credited service, the annual service retirement allowance is 2.0% (2.3% police/firefighter) of the average monthly salary for the highest consecutive 42 months. The contribution requirements of the City of Chubbuck and its employees are established and may be amended by the PERSI Board of Trustees. For the year ended September 30, 2006 the required contribution rate as a percentage of covered payroll for members was 6.23% for general members and 7.65% for police/firefighters. The employer rate as a percentage of covered payroll was 10.39% for general members and 10.73% for police/firefighter members. The City of Chubbuck contributions required and paid were $381,576, $360,332, and $329,628, for the three years ended September 30, 2009, 2008, and 2007, respectively. NOTE 12 - Risk Management The City is exposed to various risks of loss. The City has obtained commercial insurance to reduce the risk of substantial losses. 24 DEATON & COMPANY, CHARTERED Beginning Ending Duewithin Business -type activities Balance Additions Reductions Balance one year Bonds payable $ 575,000 $ - $ 190,000 $ 385,000 $ 205,000 Notes payable 2,646,801 1,492,632 258,734 3,880,699 295,238 Compensated absences 114,346 113,750 85,909 142,187 28,437 $3,336,147 $ 1,606,382 $ 534,643 $ 4,407,886 $ 528.675 NOTE 11 - Pension Disclosures The Public Employee Retirement System of Idaho (PERSI), a cost sharing multi-employer public retirement system, was created by the Idaho State Legislature. It is a defined benefit plan requiring that both the member and the employer to contribute. The plan provides benefits based on members' years of service, age, and compensation. In addition, benefits are provided for disability, death, and survivors of eligible members or beneficiaries. The authority to establish and amend benefit provisions is established in Idaho Code. Designed as a mandatory system for eligible state and school district employees, the legislation provided for other political subdivisions to participate by contractual agreement with PERSI. Financial reports for the plan are available from PERSI upon request. After 5 years of credited service, members become fully vested in retirement benefits earned to date. Members are eligible for retirement benefits upon attainment of the ages specified for their employment classification. For each month of credited service, the annual service retirement allowance is 2.0% (2.3% police/firefighter) of the average monthly salary for the highest consecutive 42 months. The contribution requirements of the City of Chubbuck and its employees are established and may be amended by the PERSI Board of Trustees. For the year ended September 30, 2006 the required contribution rate as a percentage of covered payroll for members was 6.23% for general members and 7.65% for police/firefighters. The employer rate as a percentage of covered payroll was 10.39% for general members and 10.73% for police/firefighter members. The City of Chubbuck contributions required and paid were $381,576, $360,332, and $329,628, for the three years ended September 30, 2009, 2008, and 2007, respectively. NOTE 12 - Risk Management The City is exposed to various risks of loss. The City has obtained commercial insurance to reduce the risk of substantial losses. 24 DEATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO NOTES TO FINANCIAL STATEMENTS (PAGE 13 OF 13) NOTE 13 - Subsequent Events December 30, 2009, the City received judicial confirmation for a loan in the amount of $18,090,808. The City received and has expensed $12,326,946 at the time the financial statements were available to be issued. Subsequent events were evaluated up to November 29, 2010, the date the financial statements were available to be issued. NOTE 14 - Other Postemoloyment Benefits The City does not participate in other postemployment benefits (OPEB). The City complies with the Consolidated Omnibus Budget Reconciliation Act (COBRA). NOTE 15 - Correction of an Error and Prior Period Adiustments During the year, the City found vehicles and equipment that had been depleted in prior years but were reported on the books at $86,000. The City also found vehicles and equipment that had been added in prior years but were not recorded on the books with a book value of $92,085. These adjustments increased the governmental assets in the government wide statement of activities in the amount of $6,085. Due to the governmental financials reporting on the modified accrual basis, the governmental financial statements were not affected. 25 DEATON & COMPANY, CHARTERED REQUIRED SUPPLEMENTARY INFORMATION DEATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO BUDGETARY COMPARISON SCHEDULE GENERALFUND YEAR ENDED SEPTEMBER 30, 2009 Resources General property taxes and sales tax Franchise fees Intergovernmental Parks revenue Licenses, permits and fines Grants Fire protection and prevention Leases and rents Interest income Donations Charges for services Other resources Amounts available for appropriations Charges to appropriations General government Law enforcement Fire control Building inspection Street Parks and recreation Health and welfare Capital Outlays Total charges to appropriations EXCESS OF REVENUES OVER (UNDER) EXPENDITURES Other Financing Sources Proceeds from capital leases Principal payments on leases Proceeds from sale of assets Transfers in (out) NET CHANGE IN FUND BALANCE BEGINNING FUND BALANCE ENDING FUND BALANCE Budgeted Amounts Variance Actual Positive Original Final Amounts (Negative) $ 3,570,718 $ 3,570,718 $ 3,911,681 $ 340,963 204,000 204,000 222,369 18,369 1,484,612 1,484,612 815,486 (669,126) 49,450 49,450 3,379 (46,071) 255,000 255,000 135,984 (119,016) - 245,917 87,840 (158,077) 207,755 207,755 164,847 (42,908) 11,200 11,200 34,660 23,460 5,000 5,000 22,325 17,325 - - 11,021 11,021 - - 48,438 48,438 10,000 10,000 23,852 13,852 5,797,735 6,043,652 5,481,882 (561,770) 196,097 595,691 169,192 426,499 2,772,269 2,990,431 2,439,011 551,420 1,094,914 1,122,669 971,009 151,660 199,782 199,782 152,361 47,421 854,235 854,235 758,550 95,685 657,043 657,043 550,041 107,002 33,395 33,395 30,850 2,545 - - 131,803 (131,803) 5,807,735 6,453,246 5,202,817 1,250,429 (10,000) (409,594) 279,065 688,659 399,594 399,594 58,491 (153,670) 15,750 28,000 (51,429) 58,491 (153,670) 15,750 (371,594) (451,023) (10,000) (10,000) 227,636 237,636 10,000 10,000 734,822 724,822 $ $ $ 962,458 $ 962,458 27 DEATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO NOTES TO REQUIRED SUPPLEMENTARY INFORMATION SEPTEMBER 30, 2009 NOTE 1 - EXPENDITURES IN EXCESS OF BUDGET GENERALFUND Capital Outlays The City did not budget a sufficient amount for capital outlays purchased. Capital outlays exceeded the budget by $131,803. These expenditures were paid using capital leases provided by a commercial bank. Other Financing Sources The City did not budget a sufficient amount for other financing sources. The disbursement included lease principal payments in the amount of $153,670. This disbursement was paid using under budgeted revenues. 28 DEATON & COMPANY, CHARTERED OTHER SUPPLEMENTARY INFORMATION DEATON & COMPANY, CHARTERED L N W U co W Z J c a a mo F C 7 (ND (ND O LL LL Z m NCL N `c U m U N U3 V � y L M M R 7 rn m G. LL r � V3 N n co •O V "O m co N •� LL CL ea » O �•' � M M 7 C M M O 3 0 0 U LL (» f» V V d o 0 O I r w ? t0 N 7 d LL � EA fA m C co v v d 0 M Cl) J W m LL VJ (A 4) oo a0 d co (D D) m N 7 LL (A fH O M T N W U co W Z J c a a mo Z n c L >m LL Z 'v m NCL N `c U m U 7 O M T U) w U Z J Q m ❑ z LL LL Z m (n o W U) N Z Z M S = LL W Q U J m O Oa � F Y Lu a W F a D LU mDLU❑ U ❑ O Z LL W O W 0 CL }K F W Q W U W 7 O F W Z K > O w LL K LL O H Z W 2 W F a F N N O Y C n.L LL N y c O LL CL _, ❑ C J L LL 9 M N N co m r LO M (O V U V N O N m W N N N M N v) rn N N o O CO m C O (n vo M V M O M o 0 0 N N Im I® co M 0 r n (o Co M .r. U) W U Z Q J a m ❑ Z U. LL K W a z a 2 U w w Z O m OC6 C4 r co N O M EH O V K M 00 W N V3, o � v m V (n O Cl) M LO m 0 V W O O v ui (n m O N M � O 0) fR 00 OI (3 W U Z w U Z m J z m 7 ❑ LL Z LL Z LL z Z m W rl CITY OF CHUBBUCK, IDAHO BUDGETARY COMPARISON SCHEDULE NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2009 Resources General property taxes and sales tax Interest income Donations Other resources Amounts available for appropriations Charges to appropriations Street guarantee fund General LID fund Juvenile referral fund Court fund Road projects fund Parks fund Total charges to appropriations NET CHANGE IN FUND BALANCE BEGINNING FUND BALANCE ENDING FUND BALANCE Budgeted Amounts Original $ 15,000 11,900 80,000 40,000 146,900 Final $ 15,000 11,900 80,000 40,000 146,900 Actual Amounts 4,389 22,692 15,471 42,552 Variance Positive (Negative) $ (15,000) (7,511) (57,308) (24, 529) (104,348) 15,500 15,500 3,734 11,766 3,600 3,600 - 3,600 500 500 - 500 42,100 42,100 11,699 30,401 1,200 1,200 - 1,200 84,000 84,000 94,000 (10,000) 146,900 146,900 109,433 37,467 (66,881) (66,881) 689,060 689,060 $ $ $ 622,179 $ 622,179 32 See accompanying notes to financial statements DEATON & COMPANY, CHARTERED COMPLIANCE SECTION DEATON & COMPANY, CHARTERED Deaton & Company, Chartered Certified Public Accountants 215 North 9th, Suite A Pocatello, ID 83201-5278 (208) 232-5825 Members of Idaho Society of Cenified Nbk Accmnmms Members of American 1.s,iwte of Certified Public Attom Wms 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 To the City Council City of Chubbuck We have audited the financial statements of the governmental activities, the business -type activities, the aggregate discretely presented componenet units, each major fund, and the aggregate remaining fund information of City of Chubbuck as of and for the years ended September 30, 2009 and 2008, which collectively comprise the City of Chubbuck's basic financial statements and have issued our report thereon dated November 29, 2010. 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. Internal Control Over Financial Reporting In planning and performing our audit, we considered the City of Chubbuck's internal control over financial reporting as a basis for designing our auditing procedures 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 City of Chubbuck's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City of Chubbuck's internal control over financial reporting. 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. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. However, we identified certain deficiencies (2009-1 and 2009-2) in internal control over financial reporting, described in the accompanying schedule of findings and responses that we consider to be significant deficiencies in internal control over financial reporting. 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. Compliance and Other Matters As part of obtaining reasonable assurance about whether City of Chubbuck's financial statements are free of 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. We noted certain matters that we reported to management of City of Chubbuck, in a separate letter dated November 29, 2010. This report is intended for the information and use of management, City Council, and federal awarding agencies. However, this report is a matter of public record and its distribution is not limited. Pocatello, Idaho November 29, 2010 CITY OF CHUBBUCK, IDAHO SCHEDULE OF FINDINGS AND RESPONSES FOR THE YEAR ENDED SEPTEMBER 30, 2009 Findings Of Significant Deficiency And Responses 2009-1 The City's controls over recognizing asset additions and deletions did not provide all additions of assets in the governmental and proprietary funds. The City's policy requires all goods received with a useful life of more than one year and a historical cost of $11,000 or greater to be capitalized. We recommend that the City review its policy for reporting and capitalizing fixed assets. Management Response Management believes the above significant deficiency is a weakness in internal controls and has agreed to review their policy to insure the recording and reporting of all capital assets. 2009-2 The City's controls over recording and reporting all liabilities did not provide a proper classification or reporting of monies received. Monies received through note agreements or capital leases within business• type entities are required to be reported on the balance sheet as notes and/or lease payables. Monies received in the proprietary funds as note payables should not be reported as revenues. We recommend that the City review its policy for reporting all notes payable, and lease payables as a liability. Management Response Management believes the above significant deficiency is a weakness in internal controls and has agreed to review their policy to insure the recording and reporting of all liabilities. 35 DEATON & COMPANY, CHARTERED