HomeMy WebLinkAbout2010CITY OF CHUBBUCK, IDAHO
AUDITED FINANCIAL STATEMENTS
FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 2010 AND 2009
DEATON & COMPANY, CHARTERED
CITY OF CHUBBUCK, IDAHO
ANNUAL FINANCIAL REPORT
SEPTEMBER 30, 2010 AND 2009
TABLE OF CONTENTS
Page
Title Page 1
Table of Contents 2
Auditor's Reports
Independent Auditor's Report
3
Financial Statements
Statements of Net Assets
q
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
13-26
Required Supplementary Information
27
Budgetary Comparison Schedule - General Fund
28
Notes to Required Supplementary Information
29
Other Supplementary Information
30
Combining Balance Sheet - Nonmajor Governmental Funds
31
Statement of Revenues, Expenditures, and Changes in Fund Balances -
NonmajorGovemmental Funds
32
Budgetary Comparison Schedule - Nonmajor Governmental Funds
33
Compliance and Single Audit Section
34
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
35
Independent Auditor's Report on Compliance with Requirements that Could
have a Direct and Material Effect on each Major Program and on Internal
control over compliance in Accordance with OMB Circular A-133
36
Schedule of Expenditures of Federal Awards
37
Schedule of Findings and Questioned Costs
38-39
Summary Schedule of Prior Audit Findings
40
DEATON & COMPANY, CHARTERED
Deaton & Company, Chartered
Certified Public Accountants
215 North 9th, Suite A
Pocatello, ID 83201-52' -
(208) 232-5825
Members of Idaho Society of Cenitietl Public Accouman¢
Members ofAmerican Insiiwie of Certifetl Public Accouman�s
INDEPENDENT AUDITOR'S REPORT
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, 2010 and 2009, 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, 2010 and 2009, 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 June 22, 2011, 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 28 through 33, 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 financial statements as a whole. The combining and individual nonmajor fund financial statements are presented for
purposes of additional analysis and are not a required part of the financial statements. The accompanying schedule of expenditures
of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-
133, Audits of States, Local Governments, and Non -Profit Organizations, and is also not a required part of the financial statements.
The combining and individual nonmajor fund financial statements and the schedule of expenditures of federal awards are the
responsibility of management and were derived from and relate directly to the underlying accounting and other records used to
prepare the financial statements. The 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 financial statements or to the financial statements themselves, and other additional
procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information
is fairly stated in all material respects in relation to the financial statements 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.
!nm
Pocatello, Idaho
June 22, 2011
CITY OF CHUBBUCK, IDAHO
STATEMENTS OF NET ASSETS
SEPTEMBER 30, 2010
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 -
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
$ 2,561,374 $
3,792,655
$ 6,354,029
$ 3,039,331
$
256,991
-
256,991
99,375
11,542,722 12,114,938
214,003
-
214,003
_
(661,776)
661,776
-
-
612,747
612,747
25,000
2,370,592
5,067,178
7,437,770
3,163,706
-
132,650
132,650
-
152,109
152,109
-
-
12,114,939
12,114,939
-
_
8,912,131
11,520,710
20,432,841
-
12,114,938
(3,799,051)
(4,971,904)
(8,770,955)
-
_
5,113,080
18,948,504
24,061,584
12,114,938
7,483,672
24,015,682
31,499,354
3,163,706
12,114,938
62,586
2,053,313
2,115,899
83,905
-
149,335
65,559
214,894
-
-
-
63,036
63,036
-
-
66,715
18,557
85,272
-
_
-
60,000
60,000
-
_
-
321,159
321,159
-
_
43,139
-
43,139
-
_
- 152,109 152,109
321,775 2,733,733 3,055,508 83,905
65,000
65,000
- 11,136,636
11,136,636
266,864 74,222
341,086 _
- -
- 12,114,938
266,864 11,275,858
11,542,722 12,114,938
588,639 14,009,591
14,598,230 83,905 12,114,938
5,069,941 3,876,095 8,946,036
- 132,650 132,650 -
1,825,092 5,997,346 7,822,438 3,079,801
$ 6,895,033 $ 10,006,091 $ 16,901,124 $ 3,079,801 $
4
See accompanying notes to financial statements
DEATON & COMPANY, CHARTERED
CITY OF CHUBBUCK, IDAHO
STATEMENTS OF ACTIVITIES
FOR THE YEAR ENDED SEPTEMBER 30, 2010
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
CIAWWC Authority
Program Revenues Total
Operating Net
Charges for Grants and (Expense) Development CIAWWC
Expenses Services Contributions Revenue Authority Authority
$ 297,342
$ 121,602
$ - $ (175,740) $ - $ -
2,512,720
-
158,025 (2,354,695) - -
1,172,846
195,564
- (977,282) - -
159,482
-
- (159,482) - -
771,777
-
- (771,777) - -
625,569
59,186
- (566,383) - -
58,154
-
- (58,154) - -
30,419
-
26,240 _ (4,179) - -
5,628,309
376,352
184,265 (5,067,692) - -
1,438,541
2,193,212
- 754,671
_ _
1,821,036
2,322,331
- 501,295
_ _
1,192,962
1,602,525
- 409,563
_ _
4,452,539
6,118,068
- 1,665,529
- _
$10,080,848
$ 6,494,420
$ 184,265 $ (3,402,163)
$ - $ -
$ 215,230
4,176,298
-
$ (215,230) $ -
$ 215,230
Franchise fees
227,744
$ (215,230) $
5
See accompanying notes to financial statements
DEATON & COMPANY, CHARTERED
General
Business -type
Development
CIAWWC
Activities
Activities
Total
Authority
Authority
Net
$ (5,067,692)
$ 1,665,529
$ (3,402,163)
$ (215,230)
$
General revenues
General property taxes and sales tax
4,176,298
-
4,176,298
1,688,770
Franchise fees
227,744
-
227,744
_
_
Intergovernmental
817,906
-
817,906
Leases and rents
19,491
-
19,491
_
Interest income
19,292
22,844
42,136
13,742
-
Capital contributions
11,073
-
11,073
-
Other revenue
34,088
34,088
Transfers in (out)
_
_
_
-
-
5,305,892
22,844
5,328,736
1,702,512
-
NET CHANGE IN NET ASSETS
238,200
1,688,373
1,926,573
1,487,282
-
BEGINNING NET ASSETS
6,587,781
8,338,932
14,926,713
1,592,519
-
PRIOR PERIOD ADJUSTMENT
69,052
(21,214)
47,838
-
ENDING NET ASSETS
$ 6,895,033
$10,006,091
$16,901,124
$ 3,079,801
$
5
See accompanying notes to financial statements
DEATON & COMPANY, CHARTERED
CITY OF CHUBBUCK, IDAHO
BALANCE SHEETS
GOVERNMENTALFUNDS
SEPTEMBER 30, 2010
WITH COMPARATIVE TOTALS AS OF SEPTEMBER 30, 2009
ASSETS
Cash
Property and sales taxes receivable
Intergovernmental receivables
LIABILITIES
Accounts payable
Accrued payroll
Employee benefit fund
Interfund payable
Accrued compensated absences
Deferred revenue
FUND BALANCES
Unreserved, reported in:
General fund
Special revenue fund
Other
General Governmental
Fund Funds Total
2nna
$ 1,948,342 $
613,032 $ 2,561,374
$ 1,888,237
256,991
- 256,991
204,542
214,003
- 214,003
207,438
$ 2,419,336 $
613,032 $ 3,032,368
$ 2,300,217
$ 62,586 $
$ 62,586
$ 57,933
149,335
149,335
33,149
-
-
107,519
661,776
661,776
339,069
66,715
66,715
76,338
144,161
144,161
101,572
1,084,573
1,084,573
715,580
1,334,763 - 1,334,763 962,458
- 613,032 613,032 622,179
1,334,763 613,032 1,947,795 1,584,637
$ 2,419,336 $ 613,032
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 $3,799,051. 5,113,080
Deferred tax revenue represents amounts that were not available to fund current
expenditures and therefore are not reported in the funds 144,161
Long-term liabilities are not due and payable in the current period and therefore are not
reported in the funds:
Capital lease (43,139)
Accrued compensated absences (266,864)
Net assets of governmental funds $ 6,895,033
0
See accompanying notes to financial statements
$ 2,300,217
DEATON 3 COMPANY, CHAR"rERED
CITY OF CHUBBUCK, IDAHO
STATEMENTS OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
GOVERNMENTALFUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2010
WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2009
EXPENDITURES
General government
301,208
Other
301,208
169,192
Law enforcement
General
Governmental
2,409,109
2,439,011
Fire control
Fund
Funds
Total
2009
REVENUES
157,675
-
157,675
152,361
General property taxes and sales tax
$ 4,133,709
$ -
$ 4,133,709
$ 3,911,681
Franchise fees
227,744
-
227,744
222,369
Intergovernmental
817,906
-
817,906
815,486
Parks revenue
2,499
-
2,499
3,379
Licenses, permits and fines
121,602
-
121,602
135,984
Grants
158,025
-
158,025
87,840
Fire protection and prevention
195,564
-
195,564
164,847
Leases and rents
19,491
-
19,491
34,660
Interest income
15,193
4,099
19,292
26,714
Donations
12,390
13,850
26,240
33,713
Donation of infrastructures
11,073
-
11,073
-
Charges for services
56,687
-
56,687
48,438
Other revenues
30,765
3,323
34,088
39,323
Interest expense
5,802,648
21,272
5,823,920
5,524,434
EXPENDITURES
General government
301,208
-
301,208
169,192
Law enforcement
2,409,109
-
2,409,109
2,439,011
Fire control
1,024,047
-
1,024,047
971,009
Building inspection
157,675
-
157,675
152,361
Street
732,617
-
732,617
758,550
Parks and recreation
578,779
-
578,779
527,601
Health and welfare
58,154
-
58,154
30,850
Street guarantee fund
-
-
-
3,734
Court fund
-
-
11,699
Parks Fund
-
30,419
30,419
116,440
Capital outlays
177,694
-
177,694
131,803
5,439,283
30,419
5,469,702
5,312,250
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
363,365
(9,147)
354,218
212,184
OTHER FINANCING SOURCES
Proceeds from capital lease
85,772
85,772
58,491
Principal payments on leases
(72,089)
(72,089)
(153,670)
Interest expense
(4,743)
(4,743)
-
Proceeds from sale of assets
15,750
Transfers in (out)
-
-
28,000
8,940
8,940
(51,429)
NET CHANGE IN FUND BALANCES
372,305
(9,147)
363,158
160,755
BEGINNING FUND BALANCE
962,458
622,179
1,584,637
1,423,882
ENDING FUND BALANCE
$ 1,334,763
$ 613,032
$ 1,947,795
$ 1,584,637
(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, 2010
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
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
2010
Total
363,158
11,073
166,621
(370,048)
42,589
(13,683)
38,490
$ 238,200
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, 2010
WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2009
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
Insurance
Other purchased services
Professional services
Facilities plan
Bad debt
Depreciation
OPERATING INCOME
NONOPERATING REVENUE (EXPENSE)
Interest income
Interest expense
Capital contributions
Loss from asset disposal
Transfers in (out)
NET INCOME (LOSS)
BEGINNING NET ASSETS
PRIOR PERIOD ADJUSTMENT
ENDING NET ASSETS
570,171
364,130
220,498
1,154,799
1,259,592
Internal
Internal
241,567
175,055
129,789
546,411
533,127
Service
Service
177,535
Water Sewer
Sanitation
Total
2009
Funds 2010
Funds 2009
OPERATING REVENUES
21,058
23,161
69,955
90,139
26,665
2,133
Service revenue
$2,193,212 $2,197,331
$1,540,753
$5,931,296
$5,177,691
$ 61,772
$ 65,683
Revenue used as security
-
1,802
10,959
9,256
774
-
for revenue bond:
5,409
50,150
71,671
47,953
5,088
21,518
Charges for services
- 125,000
4,103
125,000
385,000
66
146
130,900
2,193,212 2,322,331
1,540,753
6,056,296
5,562,691
61,772
65,683
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
Insurance
Other purchased services
Professional services
Facilities plan
Bad debt
Depreciation
OPERATING INCOME
NONOPERATING REVENUE (EXPENSE)
Interest income
Interest expense
Capital contributions
Loss from asset disposal
Transfers in (out)
NET INCOME (LOSS)
BEGINNING NET ASSETS
PRIOR PERIOD ADJUSTMENT
ENDING NET ASSETS
570,171
364,130
220,498
1,154,799
1,259,592
-
-
241,567
175,055
129,789
546,411
533,127
-
-
177,535
149,344
306,759
633,638
1,169,862
19,958
15,121
25,736
21,058
23,161
69,955
90,139
26,665
2,133
-
-
7,314
7,314
-
-
-
9,157
-
1,802
10,959
9,256
774
-
16,112
5,409
50,150
71,671
47,953
5,088
21,518
4,798
4,105
4,103
13,006
8,952
66
146
130,900
5,723
3,082
139,705
130,158
12,555
18,057
-
852,719
-
852,719
804,357
-
-
34,744
100,752
26,783
162,279
88,177
-
-
8,219
-
5,353
13,572
48,293
-
48
53,563
10,035
-
63,598
50,706
-
-
8,197
-
-
8,197
14,930
-
-
4,041
-
33,971
38,012
20,284
-
-
130,687
121,906
175,373
427,966
413,921
11,065
11,065
1,415,427
1,810,236
988,138
4,213,801
4,689,707
76,171
68,088
777,785
512,095
552,615
1,842,495
872,984
(14,399)
(2,405)
12,522
6,778
3,544
22,844
58,039
-
-
(19,644)
(10,800)
(128,653)
(159,097)
(181,164)
-
-
-
-
-
-
116,041
-
-
(3,470)
-
-
(3,470)
-
-
-
-
-
(28,000)
(10,592)
(4,022)
(125,109)
(139,723)
(35,084)
767,193
508,073
427,506
1,702,772
837,900
(14,399)
(2,405)
4,317,390
3,757,891
180,920
7,418,301
82,731
85,136
(21,215)
$5,084,583 $4,244,749 $ 608,426
Adjustment to reflect the consolidation of internal
service fund activities related to enterprise funds (14,399)
Change in net assets of business -type activities $1,688,373
10
$8,256,201 $ 68,332 $ 82,731
See accompanying notes to financial statements
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CITY OF CHUBBUCK, IDAHO
NOTES TO FINANCIAL STATEMENTS (PAGE 1 OF 14)
NOTE 1 - Summary of Significant 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.
The City of Chubbuck provides loans to the Authority with no interest or maturity date. Outstanding balance of
loans to the authority at yearend totaled $12,114,939.
13
DEATON & COMPANY, CHARTERED
CITY OF CHUBBUCK, IDAHO
NOTES TO FINANCIAL STATEMENTS (PAGE 2 OF 14)
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 14)
NOTE 1 - Summary of Significant Accounting Policies (Continued)
B. Basis of Presentation (Continued)
Proorietary 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 14)
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 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 14)
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 14)
NOTE 1 - Summary of Significant Accounting Policies (Continued)
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 CHUBSUCK, IDAHO
NOTES TO FINANCIAL STATEMENTS (PAGE 7 OF 14)
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
NOTE 4
NOTE
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
$ 132,650
152,109
$ 284,759
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 $152,109 at yearend.
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.
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, $256,991 in outstanding
$ 284,759
6,354,029
$ 6,638,788
DEATON & COMPANY, CHARTERED
CITY OF CHUBBUCK, IDAHO
NOTES TO FINANCIAL STATEMENTS (PAGE 8 OF 14)
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 $6,638,788 and the bank balance was $7,545,534. 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, some of the City's deposits including the State of Idaho,
Local Government Investment Pool (LGIP) at yearend were not insured nor colateralized in the amount of
$505,471.
The State Treasurer's Investment Pools (LGIP) operates in accordance with appropriate state laws and
regulations. The reported value of the pools is the same as the fair value of the pool shares.
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
$ 3,039,331
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 $3,039,331. 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.
The State Treasurer's Investment Pools (LGIP) operates in accordance with appropriate state laws and
regulations. The reported value of the pools is the same as the fair value of the pool shares.
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
Sewer
Sanitation
Total
Accounts Receivables -F-3-89,-98-6
267,29479,89
837,17
Allowance for Doubtful Accounts (118,578)
(64,375)
(41,474)
(224,427)
$ 271,408
$ 202,919
$ 138,420
$ 612,747
20
DEATON & COMPANY, CHARTERED
CITY OF CHUBBUCK, IDAHO
NOTES TO FINANCIAL STATEMENTS (PAGE 9 OF 14)
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.
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:
21
DEATON & COMPANY, CHARTERED
Beginning
Ending
Balance
Additions
Deletions
Balance
Work in process
$ 2,116,290
$ -
$
$ 2,116,290
Infrastructures
355,025
11,073
366,098
Nondepreciable assets - Land
90,866
-
90,866
Office Equipment
232,894
-
6,845
226,049
Buildings and Improvements
2,837,922
30,811
-
2,868,733
Vehicles and Equipment
3,289,836
207,344
253,085
3,244,095
8,922,833
249,228
259,930
8,912,131
Accumulated Depreciation
3,686,441
370,048
257,438
3,799,051
$ 5,236,392
$(120,820)
$ 2.492
$ 5,113.080
A summary of proprietary type fixed assets at year end is as
follows:
21
DEATON & COMPANY, CHARTERED
Beginning
Ending
Balance
Additions
Deletions
Balance
Nondepreciable assets - Land
$ 709,854
$ -
$
$ 709,854
Office Equipment
162,405
34,500
196,905
Buildings and Improvements
7,813,773
135,982
7,949,755
Vehicles and Equipment
2,649,233
68,082
53,119
2,664,196
11,335,265
238,564
53,119
11,520,710
Accumulated Depreciation
4,561,307
439,031
28,434
4,971,904
$ 6,773,958
$ (200,467)
$ 24,685
$ 6,548,806
21
DEATON & COMPANY, CHARTERED
CITY OF CHUBBUCK, IDAHO
NOTES TO FINANCIAL STATEMENTS (PAGE 10 OF 14)
NOTE 9 - Interfund Receivables Payables and Transfers
Interfund balances at yearend consisted of the following amounts:
Due to
Water Fund
Sewer Fund
Due from
General Fund
$ 154,011
507,765
$ 661,776
The balance of $507,765 due to the sewer fund from the general fund resulted from three 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. Outstanding balance at year end was $237,021. 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. No
payments have been made as of September 30, 2010. The third loan, in the amount of $168,696, was to assist
in the payment of the employee benefit expenditures. This loan has a zero percent interest rate and will be paid
back as funds become available.
The balance of $154,011 due to the water fund from the general fund was to assist in the payment of the
employee benefit expenditures. This loan has a zero percent interest rate and will be paid back as funds
become available.
NOTE 10 - Long-term Debt and Accrued Compensation
Accrued Compensated Absences:
Current portion
Noncurrent portion
Long-term Debt:
Governmental Business -type
$ 66,715 $ 18,557
266,864 74,222
$ 333.579 _$ 92.779
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 $85,772; dated March 2, 2010;
interest rate of 4.25% with final maturity dated February 1, 2011.
Less current portion
Noncurrent portion
22
43,139
43,139
DEATON & COMPANY, CHARTERED
CITY OF CHUBBUCK, IDAHO
NOTES TO FINANCIAL STATEMENTS (PAGE 11 OF 14)
NOTE 10 - Long-term Debt and Accrued Compensation (Continued)
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
Noncurrent portion
$ 15,085
283,369
$ 298,454
At yearend the City was authorized, on a line -of -credit, to borrowed $19,841,414 from the Department of
Environmental Quality (DEQ) under five (5) separate loans. One loan of $1,400,000 requires the principal and
3% interest to be paid in biannual installments over 20 years. The other four (4) loans have zero percent
interest rate and are required to be paid in biannual installments over 20 years at the close of the loan. At
yearend two of the five loans were closed. The notes are 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
$10,931,330.
DEQ line of credit at 3%, with biannual payment of $47,504
for 20 years, and a maturity date of June 20, 2028. Loan
closed April 29, 2010.
DEQ line of credit at zero percent interest, with biannual
payment of $5,499 for 20 years, and a maturity date of
November 1, 2030. Loan closed April 22, 2010.
DEQ line of credit at zero percent interest, with biannual
payment of $86,273 for 20 years, and a maturity date of
February 16, 2030.
DEQ line of credit at zero percent interest, with biannual
payment of $93,698 for 20 years, and a maturity date of
February 16, 2030.
Total Award Available Outstanding
$ 1,400,000 $ $ 1,400,000
219,976 219,976
8,701,260 5,250,340 3,450,920
9,389,548 5,641,610 3,747,938
DEQ line of credit at zero percent interest, with biannual
payment of $2,281 for 20 years, and a maturity date of
February 16, 2030. 130,630 39,380 91,250
$ 19,841,414 $ 10,931,330 $ 8,910,084
Less current portion 8,931
Noncurrent portion $ 8,901,153
23
DEATON & COMPANY, CHARTERED
CITY OF CHUBBUCK, IDAHO
NOTES TO FINANCIAL STATEMENTS (PAGE 12 OF 14)
NOTE 10 - Lona -term Debt and Accrued Compensation (Continued)
Business -type activities (continued):
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
$ 125,000
Water Fund Certificates
-
Note 2
125,000
Less current portion
60.000
Noncurrent portion
$ 65.000
On June 4, 2008, the City issued three notes to purchase assets needed in order to collect sanitation for the
City. Notes one and two were issued at 5.50% and the third note at 5.25%. 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, respectively until the maturity date of May 5, 2013, 2016 and 2029, respectively.
Notes Payable:
Balance
Note 1
$ 528,095
Note 2
405,520
Note 3
1.315.642
Principal Interest
2,249,257
Less current portion
297.143
Noncurrent portion
$ 1,952,114
Annual Debt Service Requirements for leases, bonds and notes payable
Year Ending
Governmental Activities
Business -type
Activities
September 30
Principal Interest
Principal
Interest
2011
$ 43,139 $ 779
$ 381,158
$ 210,767
2012
- -
824,305
150,130
2013
- -
701,118
128,737
2014
- -
573,649
117,209
2015
- -
582,852
108,006
2016-2020
- -
2,656,433
431,820
2021-2025
- -
2,767,204
267,959
2026-2030
- -
2,679,270
78,956
2031
-
416,806
702
$ 43,139 $ 779
$ 11,582,795
$ 1,494,286
24
DEATON & COMPANY, CHARTERED
CITY OF CHUBBUCK, IDAHO
NOTES TO FINANCIAL STATEMENTS (PAGE 13 OF 14)
NOTE 10 - Long-term Debt and Accrued Compensation (Continued)
Changes in long-term liabilities
Long-term liability activity for the year 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. At yearend 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 $368,275, $381,576, and $360,332, for the three
years ended September 30, 2010, 2009, and 2008, 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.
NOTE 13 - Subsequent Events
Subsequent events were evaluated up to June 22, 2011, the date the financial statements were available to be
issued.
25
DEATON & COMPANY, CHARTERED
Beginning
Ending
Due within
Balance
Additions Reductions
Balance
one year
Governmental activities
Capital leases
$ 29,466
$ 85,772 $ 72,099
$ 43,139
$ 43,139
Compensated absences
381,692
- 48,113
333,579
66,715
Compensated absences
$ 411,158
$ 85,772 $ 120,212
$ 376,718
$ 109.854
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. At yearend 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 $368,275, $381,576, and $360,332, for the three
years ended September 30, 2010, 2009, and 2008, 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.
NOTE 13 - Subsequent Events
Subsequent events were evaluated up to June 22, 2011, the date the financial statements were available to be
issued.
25
DEATON & COMPANY, CHARTERED
Beginning
Ending
Due within
Balance
Additions Reductions
Balance
one year
Business -type activities
Bonds payable
$ 385,000
$ - $ 260,000
$ 125,000
$ 60,000
Notes payable
3,880,699
8,116,165 539,069
11,457,795
321,159
Compensated absences
142,187
- 49,408
92,779
18,557
$4,407,886
$ 8,116,165 $ 848,477
$ 11,675,574
$ 399,716
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. At yearend 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 $368,275, $381,576, and $360,332, for the three
years ended September 30, 2010, 2009, and 2008, 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.
NOTE 13 - Subsequent Events
Subsequent events were evaluated up to June 22, 2011, the date the financial statements were available to be
issued.
25
DEATON & COMPANY, CHARTERED
CITY OF CHUBBUCK, IDAHO
NOTES TO FINANCIAL STATEMENTS (PAGE 14 OF 14)
NOTE 14 - Other Postemolovment Benefits
The City does not participate in other post -employment benefit (OPEB). The City complies with the Consolidated
Omnibus Budget Reconciliation Act (COBRA).
NOTE 15 - Correction of an Error and Prior Period Adjustments
During the year, the City found vehicles and equipment, in the general and sewer fund, that had been depleted
in prior years but were reported on the books at $2,482, and $21,214, respectively. The City also found vehicles
and equipment, in the general fund, that had been added in prior years but were not recorded on the books with
a book value of $71,534. These adjustments increased the governmental assets in the government wide
statement of activities in the amount of $69,052. The decrease in business -type assets in the statement of
activities and statement of net assets totaled $21,214 in the sewer fund. Due to the governmental financials
reporting on the modified accrual basis, the governmental financial statements were not affected.
26
DEATON & COMPANY, CHARTERED
REQUIRED SUPPLEMENTARY INFORMATION
M
DEATON & COMPANY, CHARTERED
CITY OF CHUBBUCK, IDAHO
BUDGETARY COMPARISON SCHEDULE
GENERALFUND
YEAR ENDED SEPTEMBER 30, 2010
Charges to appropriations
General government
Budgeted Amounts
233,361
Variance
(67,847)
Law enforcement
2,458,900
Actual
Positive
49,791
Original
Final
Amounts
(Negative)
Resources
Building inspection
159,351
159,351
157,675
General property taxes and sales tax
$ 4,134,794
$ 4,134,794
$ 4,133,709
$ (1,085)
Franchise fees
207,000
207,000
227,744
20,744
Intergovernmental
772,099
772,099
817,906
45,807
Parks revenue
53,600
53,600
52,629
(971)
Licenses, permits and fines
133,265
133,265
121,602
(11,663)
Grants
-
-
107,895
107,895
Fire protection and prevention
162,740
162,740
195,564
32,824
Leases and rents
-
-
19,491
19,491
Interest income
19,000
19,000
15,193
(3,807)
Donations
-
-
12,390
12,390
Donation of infrastructures
-
-
11,073
11,073
Charges for services
27,000
27,000
56,687
29,687
Other resources
20,200
20,200
30,765
10,565
Amounts available for appropriations
5,529,698
5,529,698
5,802,648
272,950
Charges to appropriations
General government
233,361
233,361
301,208
(67,847)
Law enforcement
2,458,900
2,458,900
2,409,109
49,791
Fire control
1,060,803
1,060,803
1,024,047
36,756
Building inspection
159,351
159,351
157,675
1,676
Street
851,175
851,175
732,617
118,558
Parks and recreation
654,688
654,688
578,779
75,909
Health and welfare
33,275
33,275
58,154
(24,879)
Capital Outlays
-
-
177,694
(177,694)
Total charges to appropriations
5,451,553
5,451,553
5,439,283
12,270
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
78,145
78,145
363,365
285,220
Other Financing Sources
Proceeds from capital leases
-
-
85,772
85,772
Principal payments on leases
(80,000)
(80,000)
(72,089)
7,911
Interest expense
(8,145)
(8,145)
(4,743)
3,402
(88,145)
(88,145)
8,940
97,085
NET CHANGE IN FUND BALANCE
(10,000)
(10,000)
372,305
382,305
BEGINNING FUND BALANCE
10,000
10,000
962,458
952,458
ENDING FUND BALANCE
$ -
$ -
$ 1,334,763
$ 1,334,763
28
DEATON & COMPANY, CHARTERED
CITY OF CHUBBUCK, IDAHO
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
SEPTEMBER 30, 2010
NOTE 1 - EXPENDITURES IN EXCESS OF BUDGET
GENERALFUND
General government
The City had expenditures in excess of budget of $67,847 due to an increase of self insured
employee benefit expenditures. These expenditures were paid by borrowing additional monies from
the proprietary funds.
Health and Welfare
The City did not budget a sufficient amount for the "Economic development strategy" and "Senior
Citizen" program expenditures within the health and welfare expenditures. Expenditures exceeded
budget by $24,879. These expenditures were paid using under budgeted expenditures in other
departments.
Capital Outlays
The City did not budget a sufficient amount for capital outlays purchased. Capital outlays exceeded
the budget by $177,694. These expenditures were paid using capital leases provided by a
commercial bank, donations of infrastructures, and under bugeted expendutes within the department.
29
DEATON & COMPANY, CHARTERED
OTHER SUPPLEMENTARY INFORMATION
30
DEATON & COMPANY, CHARTERED
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CITY OF CHUBBUCK, IDAHO
BUDGETARY COMPARISON SCHEDULE
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2010
Budgeted Amounts Variance
Actual Positive
Original Final Amounts (Negative)
Resources
General property taxes and sales tax
$ 15,000
$ 15,000
$ -
$ (15,000)
Interest income
11,400
11,400
4,099
(7,301)
Donations
80,000
80,000
13,850
(66,150)
Other resources
40,500
40,500
3,323
(37,177)
Amounts available for appropriations
146,900
146,900
21,272
(125,628)
Charges to appropriations
Street guarantee fund
15,500
15,500
-
15,500
General LID fund
3,600
3,600
-
3,600
Juvenile referral fund
500
500
-
500
Court fund
42,100
42,100
-
42,100
Road projects fund
1,200
1,200
-
1,200
Parks fund
84,000
84,000
30,419
53,581
Total charges to appropriations
146,900
146,900
30,419
116,481
NET CHANGE IN FUND BALANCE
-
-
(9,147)
(9,147)
BEGINNING FUND BALANCE
622,179
622,179
ENDING FUND BALANCE
$
$
$ 613,032
$ 613,032
33
See accompanying notes to financial statements
DEATON & COMPANY, CHARTERED
COMPLIANCE AND SINGLE AUDIT SECTION
34
DEATON & COMPANY, CHARTERED
Deaton & Company, Chartered
Certified Public Accountants
215 North 9th, Suite A
Pocatello, ID 83201-5278
(208) 232-5825
Members of Idaho Sociny of Certified Public Acconnlams
Members of An,encan Institute of Certified Public Accoumama
is
rr n; M � . •�
.ate
�.. 0 fl \ I ■�
�f ■ If dl a , M \L
I IL
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, 2010 and 2009, which collectively comprise the City of Chubbuck's basic financial statements and have
issued our report thereon dated June 22, 2011. 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'g 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 (2010-1 and 2010-2) in
internal control over financial reporting, described in the accompanying schedule of findings and questioned costs 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 June 22, 2011.
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.
L
Pocatello, Idaho
June 22, 2011
Deaton & Company, Chartered
Certified Public Accountants
215 North 9th, Suite A
Pocatello, ID 83201-5278
(208)232-5825
Members of Idaho Saciety of Cenified Public Aceoumnnis
Members of American Innimhe of C,nified Public Accountants
■ 1 I16L� I r ■ Ik
ME a
Elf MLI ■ 1! YI e • 1 1I &_
M1 MM a IG a A J�MIL
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT
ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133
To the City Council
City of Chubbuck
Compliance
We have audited City of Chubbuck's compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance
Supplement that could have a direct and material effect on each of City of Chubbuck's major federal programs for the years ended September 30,
2010 and 2009. City of Chubbuck's major federal programs are identified in the summary of auditor's results section of the accompanying
schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its
major federal programs is the responsibility of City of Chubbuck's management. Our responsibility is to express an opinion on City of Chubbuck's
compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United Slates of America; the standards
applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB
Circular A-133, Audits of States, Local Governments, and Non -Profit Organizations. Those standards and OMB Circular A-133 require that we
plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to
above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence
about City of Chubbuck's compliance with those requirements and performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of City of
Chubbuck's compliance with those requirements.
In our opinion, City of Chubbuck, complied, in all material respects, with the compliance requirements referred to above that could have a direct
and material effect on each of its major federal programs for the years ended September 30, 2010 and 2009.
Internal Control over Compliance
Management of City of Chubbuck, is responsible for establishing and maintaining effective internal control over compliance with the requirements
of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered City of Chubbuck's
internal control over compliance with the requirements that could have a direct and material effect on a major federal program to determine the
auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in
accordance wHh OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance.
Accordingly, we do not express an opinion on the effectiveness of City of Chubbuck's internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or
employees, in the normal course of performing their assigned functions, to prevent, or detect and cored, noncompliance with a type of
compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or
combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type
of compliance requirement of a federal program 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 (2010-1 and 2010-2) in internal control over financial reporting, described in the
accompanying schedule of findings and questioned costs 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.
City of Chubbuck's responses to the findings identified in our audit are described in the accompanying schedule of findings and questioned costs.
We did not audit City of Chubbuck's responses and, accordingly, we express no opinion on the responses.
This report is intended solely for the information and use of management, City Council, others within the entity, federal awarding agencies, and
pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Pocatello, Idaho
June 22, 2011
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CITY OF CHUBBUCK, IDAHO
SCHEDULE OF FINDINGS AND QUESTIONED COSTS (PAGE 1 OF 2)
FOR THE YEAR ENDED SEPTEMBER 30, 2010
SUMMARY OF AUDIT RESULTS
1. The auditor's report expresses an unqualified opinion on the financial statements of City of Chubbuck.
2. No reportable conditions disclosed during the audit of the financial statements are reported in the
Independent Auditor's Report.
3. No instances of noncompliance material to the financial statements of City of Chubbuck were
disclosed during the audit.
4. Reportable conditions relating to the audit of major federal award programs included significant
deficiencies due to a lack of controls over asset additions and deletions reporting and the lack of
controls over notes and lease liability reporting. These significant deficiencies are reported in the
Report on Compliance with Requirements Applicable to Each Major Program and on Internal Control
Over Compliance in accordance with OMB Circular A-133.
5. The Auditor's report on compliance for the major federal award programs for City of Chubbuck
expresses an unqualified opinion on all major federal programs.
6. Audit findings relative to major federal programs for City of Chubbuck are reported in this Schedule.
7. The programs tested as major programs included Department of Environmental Quality, CFDA #66-
458
8. The threshold for distinguishing Types A and B programs was $300,000.
9. City of Chubbuck was considered a high-risk auditee.
FINDINGS — FINANCIAL STATEMENT AUDIT
2010-1 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.
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.
2010-2 The City's controls over recording and reporting all liabilities did not provide a proper classification 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 or netted with
expenses.
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.
38
DEATON & COMPANY, CHARTERED
CITY OF CHUBBUCK, IDAHO
SCHEDULE OF FINDINGS AND QUESTIONED COSTS (PAGE 2 OF 2)
FOR THE YEAR ENDED SEPTEMBER 30, 2010
FINDINGS — FINANCIAL STATEMENT AUDIT (CONTINUED)
FINDINGS AND QUESTIONED COSTS — MAJOR FEDERAL AWARD PROGRAM AUDIT
Department of Environmental Quality
2010-1 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.
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.
2010-2 The City's controls over recording and reporting all liabilities did not provide a proper classification 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 or netted with
expenses.
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.
39
DEATON & COMPANY, CHARTERED
CITY OF CHUBBUCK, IDAHO
SUMARY SCHEDULE OF PRIOR AUDIT FINDINGS
FOR THE YEAR ENDED SEPTEMBER 30, 2010
FINDINGS — FINANCIAL STATEMENT AUDIT
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.
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 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 or netted with
expenses.
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.
FINDINGS AND QUESTIONED COSTS — MAJOR FEDERAL AWARD PROGRAM AUDIT
Department of Environmental Quality None
40
DEATON & COMPANY, CHARTERED