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Home My WebLink About2012CITY OF CHUBBUCK, IDAHO AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 2012 AND 2011 Certified Public Accountants Management Diacusslan and Analysis CITY OF CHUBBUCK, IDAHO Statements of Net Assets 18 ANNUAL FINANCIAL REPORT 19 Balance Sheets • Governments! Funds SEPTEMBER 30, 2012 AND 2019 Statamenla of Revenues, Expenditures, and Changes in Fund Balances - GDvernmenlal TABLE OF CONTENTS 2122 Statements of Net Assets - Proprietary Funds 23 Paas Tkle Pape Statements of Cash Flown - Proprietary Funds 1 Table of Contents 27 2 Introductory Seaton Nolen to Finandel Slaternenls 2942 Letter of Transmittal 43 3-5 List of Principal Officials Nates to Required Supplementary Information B Organizational Chart 45 7 Financial Section Statement of Revenues, Expenditures, and Charges in Fund Balances - Nonmajor Independent Auditor's Report 48 s Management Diacusslan and Analysis 8-17 Statements of Net Assets 18 Statements of Activities 19 Balance Sheets • Governments! Funds 20 Statamenla of Revenues, Expenditures, and Changes in Fund Balances - GDvernmenlal Funds 2122 Statements of Net Assets - Proprietary Funds 23 Statements of Revenues, Expenses, and Changes In Net Assets - Proprietary Funds 24 Statements of Cash Flown - Proprietary Funds 25.28 Statement of Fiduclary Net Assets - Recreational Program Fund 27 Statement of Changes in Fiduciary Net Assets- Rearatlonal Program Fund 28 Nolen to Finandel Slaternenls 2942 Requited Supplementary Ida rrrrn a 43 Budgelary Comparison Schedule - General Fund 41 Nates to Required Supplementary Information 45 other Supplamentaay Infonnodon 45 Combining Balance Sheet - NonnraJor Go"mmental Funds 47 Statement of Revenues, Expenditures, and Charges in Fund Balances - Nonmajor Govemmenlal Funds 48 Budgetary Comparison Schedule - Nonmejor Govemmentat Funds 49 Compliance and Single Audit Section 50 Report on Internal Control Over Financial Reporft and on Compliance and Other Madam based on an Audit of Financial Statements Performed In Accordance with Government Auditing Standards 51 Independent Auditor's Report on Compliance with Requirements that Could have a Direct and Material Effed on each Major Program and on Internal control over compliance in Accordance with OMB Circular A-133 52 Schedule of Expenditures of Federal Awards 53 Schedule of Findings and Questioned Costs 54 Summary Schedule of Prior Audit Findings 5546 DEATON & COMPANY, CHARTERFD CITY OF CHUBBUCK March 30, 2013 Steven M. England, Mayor P.O. Boz 5604 5160 Yellowstone Avenue Chubbuck, CD 83202.0006 (209) 237.2430 (20E) 237-2404 Fox The Honorable Mayor Steven England, Members of the City Council, and Citizens of the City of Chubbuck: Idaho State Law requires that all general-purpose local governments with an annual budget that exceeds two hundred fifty thousand dollars submit copies of their audited financial statements to the legislative council. The statements must be presented in conformity with generally accepted accounting principles (GAAP) and audited in accordance with generally accepted auditing standards (GAAS) by a firm of licensed certified public accountants. Pursuant to those requirements, we hereby issue the comprehensive annual financial report for the City of Chubbuck for the fiscal year ended September 30, 2012. Management assumes full responsibility for the completeness and reliability of the information contained In this report, based upon a comprehensive frame -work of internal control that is has established for this purpose. Because the cost of internal control should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements. Deaton & Company, Chartered, a firm of licensed certified public accountants has issued an unqualified opinion on the City of Chubbuck's financial statements for the year ended September 30, 2012. The independent auditor's report is located at the front of the financial section of this report. Management's Discussion and Analysis (MD &A) immediately follows the independent auditor's report and provides a narrative introduction, overview, and analysis of the basic financial statements. MD&A complement this letter of transmittal and should be read in conjunction with it. Profile of the City of Chubbuck The City of Chubbuck (population 14,067) was incorporated in 1950. Chubbuck is located in the southeastern portion of the State of Idaho. 3 Chubbuck has a land area of 4.19 square miles and is bordered by the City of Pocatello, with its own populatlon of 54,810. The City Is located in Bannock County with a 2011 census population of 83,020. The City Is empowered to levy property taxes on both real and personal property within the city limits. It also is empowered by state statue to extend its corporate limits by annexation, which It had done from time to time. The City of Chubbuck operates under the Council -Mayor form of government. Policy-making and legislative authority are vested in a governing council (City Council) consisting of the Mayor and four other members, all elected on a non-partisan basis. The Council is responsible for passing ordinances, adopting budget, appointing committees, approval of internal control framework and hiring city management. The Mayor acts as the Chief Executive Officer and oversees the day-to-day operations of the City. The Mayor and Council members are elected at large for 4 -year terms, with two of the Council members standing for election every two years. The City of Chubbuck provides a full range of services. These services include Public Safety (police, fire, animal control, and building inspection); Environmental Health (sanitation, water, waste water treatment and storm water management); Transportation jstreet & highway maintenance and traffic engineering); Recreational (parks and recreation); Neighborhood Quality jengineering, planning and development, community services) and Administration (mayor/council, finance, elections, human resources, legal risk management and information technology). In addition to general government activities, the Mayor and City Council exercise, or have the ability to exercise, oversight of the Chubbuck Development Authority, a legally separate corporation. Therefore, its activities are included as a separate component unit in the reporting entity. The annual budget serves as the foundation for the City of Chubbuck's financial planning and control. After reviewing service levels from the previous fiscal year, the Council analyzes draft budget requests during May. The Chief Financial Officer and Mayor are responsible for preparing a draft budget for the Council. The budget is prepared by fund, function and activity, and Includes information on the past year, current year estimates and requested appropriation for the next fiscal year. Prior to August 1, the City's Chief Financial Officer and the Mayor submit the proposed budget to the City Council for review. The City Council holds public hearings and may add to, subtract from or change the proposed budget, but may not change the form of the budget. Priorto August 30, the budget is legally enacted through passage of the annual appropriation ordinance (not in excess of the proposed budget) by the City Council. Expenditures may not exceed budgeted appropriations at the fund level. City management can legally amend or transfer appropriations within Individual funds but not between funds which requires the approval of the City Council In a budget amendment, which follows a public notice, public hearing and amended ordinances adoption process similar to the adoption of the original budget. Budgets are integrated into the accounting system to facilitate management control during the year. The Council reviews service levels for all departments prior to entertaining budget requests for the next fiscal year. Revenue projectlons receive equal attention and the Council makes budget decisions 4 sufficient to balance the budget against projected revenues. Cash balances and budget to actual trends are monitored monthly. The preparation of the comprehensive annual financial report was made possible by the dedicated service of the entire staff of the City and, in particular, the Clerk's Office. Each member of these departments has our sincere appreciation for the contributions made In the preparation of this project. Credit also must be given to the Mayor and the City Council for their support for maintaining high standards of professionalism in the management of the City of Chubbuck's finances. Respectfully submitted March 30, 2013 Rich Morgan Marie Chapped City Clerk Finance Clerk CITY OF CHUBBUCK, IDAHO List of Principal Officials SEPTEMBER 30, 2012 Title Name Elected Officials Mayor Steven England Council President Kevin England Council Member Kermit Morrison Council Member Josh Ellis Council Member Brent Marshall City Officials City Attorney Tom Holmes Public Works Director Steven Smart Public Works Superintendent Bryan Hall City ClerklTreasurer Rich Morgan Human Resource Officer Eric Jablonski Financial Officer Marie Chappell City Planner Paul Andrus Police Chief Randy Severe Computer Information Systems Andy Despain Parks 8 Recreation 8111 Guinn Fire Chief Eric King DEATON & COMPANY, CHARTERED CITY OF CHUSSUCK ORGANIZATION CHART DEATON & COMPANY, CHARTERED Deaton & Company, Chartered Certified Public Accountants 215 North 9th, Suite A Pocatello, Idaho 83201-5278 (208)232-5825 Members of Idaho Society of Certified Public Acenunum Mcmhm of A merican institute of CwifiM Public Acro stems INDEPENDENT AUbITORIS REPORT To the City Council City of Chubbuck Faiiai i► 11 ■ �• TI - v wi0 We have audited the oo oompanying Inandal atalemento of the governmental attfvllies, the buaines "ei, actiWlttes, the aggregate discretely presented component units, each major fund, and the aggregate remalnktg fund Iniomlatim of City of Chubbudt as of and for the years ended September 30, 2012 and 2011, which collectively oomprise fire CHYs basic financial statements as hated In the table of cxxterlts. These fhumcial staiamerts are the responsibility of the Cay of Chttbbu&s managemard. Our responsibility Is to wipress oplrtbns on these financial statements based on our audit. The prior year summarized comparative Wbrmation has been derived from he C11y's 2011 fnandal statements and, in our report dated May 11, 2012, we expressed unqualfifed opinims on the respective financial statements of the governmental activttles, the business - type activities, the aggregate disoxetey presented component units, each major fund, and the aggregate remaining fund information. 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 Germ" 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 lest basis, evidence supporting the ernounts and disclosures in the financial statements. An suck also includes assessing Me 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 disaelely presented component units, each major fund, and the aggregate remaining fund Information of the City of Chubbuck as of September 30, 2012 and 2011, and the respective changes in financial position and casts Vows, where applicable, there& for the years then ended In corfiormity with accounlIng pdmiples, generally aowpted In fire United States of America. In accordance with Government Auditing Standards, we have also issued our report dated March 29, 2013, on our consldem#m of the City of Chubbuck's Internal control over financial reporting and on our tests of Its Campfiarroe 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 leisdrig of internal oontroi over finandal reporting and "Banco and the results of that teating, and not to provide an opinion on the idemal control over financial repo" of on compliance. That report is an Integral pari of an audit perforated in accordance with Government Aadltig Standards and Important for assessing the results of our audit. A=uning principles generely accepted In the United Stain of America require that the Managements discussion and onaysu and budgetary comparison information on pages 9 ituough 17 and 45 through 46 be presented to supplemar4 the beak financial statements. Such Information, although not a part of the basic fin incial statements, is required by the Govern renal AccoAtiing Stsndards Board, who conddem it to be an essential part of financial reporting for placing the basic financial statements In an appropriate operational, economic, or historical context. We have applied certain limited procedures to tow required supplementary information in accordance with auditing standards generally accepted In the United States of America, %fth consisted of Inquiries of managemant about the meltwda of preparing the Information and comparig the Iniorma0on for consistency with managements responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the beak financial statements. We do not express an opinion or provide any asaurance on the information bemuse the limited procedures do not provide us with suMcienl evidence to express an opinion provide arty assurance. Our audit was conducted for the purpose of forming opinions on tic filandal statements that collectively, comprise the City at ChubbucWs financial statements as a whole. The combining and individual normajor fund Handal statements are presented for purposes of additional analysis and are not a required part of the financial statements. The accornpanyig scherdub of expend ttaes of federal awards is presented for purposes of additional analysis " required by U.S. Office of Management and Budget CWmkF A-133, Audits of Statesr Local Govemrneftts, 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 tknanclal statements. The Information has been subjected 10 the auditing procedures appited in the audit of the flnandat statements and Certain additional procedures. Including comparing and reconciling such Information directly to the underlying sCtauntkug and other records used to prepare the financial statements or to the financial stwArnenis dhemaelves, and other additional procedures in accordance with auditing standards generally accepted In the United Slates of America. In our opinion, the information Is fairly stated in al material respects in relation to the financial statements as a whole. L Pocatello, Idaho March 29, 2013 City of Chubbuck Management's Discussion and Analysis For the Year Ended September 3a, x012 As management of the City of Chubbuck, we offer readers of the City of Chubbuck's financial statements this narrative overview and analysis of the financial activities for the fiscal year ended September 30, 2012. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal. Financial Highlights • The assets of the City of Chubbuck exceed Its liabilities at the close of the most recent fiscal year by $27,160,040 (net assets), • At the end of the current fiscal year, unassigned fund balances for the general fund was $2,348,830 or 40 percent of total general fund expenditures. • The governments net assets increased by $6,988,059. Approximately half of this increase, $3,804,688, is attributed to capital contributions from the Chubbuck Development Authority. • In the City's business -type activities, operating revenues increased by $516,367. And operating expenses increased by $419,964. These increases are due to a combination of increases in operating costs and a small increase in the customer rates. • During the current fiscal year, City of Chubbucles debt had an increase of $429,044. (including compensated absences). This was primarily due to an increase in sewer department long-term notes payable. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City of Chubbuck's basic financial statements. The City's basic financial statements are comprised of three components: 1) governmental -wide financial statements, 2) fund financial statements and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic flnancial- statements themselves. Government -wide financial statements. The government -wide financial statements are designed to provide readers with a broad overview of the City's finances, in a manner similar to a private -sector business. The Statement of Net Assets presents information on all of the City's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City's is improving or deteriorating. The Statement of Activities presents information showing how the City's net assets changed during the fiscal year. All changes in the assets are reported when the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in the future fiscal periods ( e.g. uncollected taxes and earned but unused compensated absences). 9 Both of the government -wide financial statements distinguish function of the City of Chubbuck that are principally supported by taxes and intergovernmental revenues (governmental activities) from functions that are intended to recover all or a significant portion of their costs through user fees and charges (business -type activities). The governmental activities of the City of Chubbuck include general government and administration, public safety, parks, and highway streets and roads. The business -type activities of the City Include water and sewer, and sanitation operations. Fund Ftnandal Statements. A fund is a grouping of related accounts that Is used to maintain control over resources that have been segregated from specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance - related legal requirements. All of the funds of the City of Chubbuck can be divided Into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental Funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government -wide financial statements. However, unlike the government -wide financial statements, governmental fund financial statements focus on current sources and uses of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluation a government's near-term financing equipments. Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government -wide financial statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. Both the governmental funds balance sheet and the governmental fund statements of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City of Chubbuck maintains seven individual governmental funds. Information's is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund, which is the City's only major governmental fund. Data from the other six funds are combined into a single, aggregated presentation. individual fund date for each of these non -major governmental funds is provided in the form of combining statements elsewhere in this report. The City of Chubbuck adopts an annual appropriated budget of its general fund, major funds, and Its nonmajor funds. Budgetary comparison schedules have been provided for these funds to demonstrate compliance with these budgets. The basic governmental fund financial statements may be found on pages 20-22 of this report. Proprietary Funds. The City of Chubbuck maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business -type activities in the government -wide financial statements. The City of Chubbuck uses enterprise funds to account for its Water department, Sewer department, and Sanitation department. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City of Chubbucl's various functions. The City of Chubbuck uses an internal service fund to accounts for its central garage operations. Because this service predominantly benefits governmental rather than the business -type 10 functions, it has been included within governmental type activities in the government -wide financial statements. Proprietary funds provide the same type of information as the government -wide financial statements, only in more detail. The proprietary fund financial statements include the operational and financial date from both the types of funds. The Water, Sewer, and Sanitation funds are major funds and their information is shown in separate columns. The internal service fund and the non -major enterprise funds are combined into a single, aggregated presentation in the proprietary funds financial statements. Individual fund data for the non -major enterprise fund is provided in the form of coming in statements elsewhere in this report. The City of Chubbuck adopts an annual appropriated budget for its proprietary funds. Budgetary comparison schedules have been provided for these funds to demonstrate compliance with these budgets. The basic proprietary fund financial statements may be found on pages 23-26 of this report. Fiduciary Funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the govemment-wide financial statements because the resources of those funds are not available to support the City of Chubbucles own programs. The accounting used for fiduciary funds is similar to proprietary funds. The City of Chubbuck adopts an annual appropriated budget for its fiduciary fund. Budgetary comparison schedules are provided for this fund to demonstrate compliance with this budget. The fiduciary fund financial statements can be found on pages 27-28 of this report. Notes to the Financial Statements. The notes provide additional information that is essential to a full understanding of the data provided in the government -wide and fund financial statements. The notes to the financial statements may be found on pages 29-42 of this report. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary Information concerning the City's budgeted expense and revenues versus actual expenses and revenues. The combining statement referred to earlier in connection with non -major governmental funds is presented following the required supplementary information on budget comparison. Government -wide Financial Analysis As noted earlier, net assets may serve over time as useful indicator of government's financial position. In the case of the City of Chubbuck, assets exceeded liabilities by $27,160,040 as of September 30, 2012. The largest portion of the City of Chubbuck's net assets (45%) reflects its investments in capital assets (e.g., land, building, equipment, Improvements, contraction in progress and infrastructure), less any debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide service to citizens; consequently these assets are not available for future spending. Although the City's Investment in capital assets Is reported net of related debt, it should be rioted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. 11 Below is a summary of the City of Chubbuck's Net Asset statement. .City of Chubbuck's Net Assets Governmental Activltles 9uslnass AttIVIVes Total 2012 2011 2012 2011 7012 2911 Current andotherass4ts ; $ 3,3711,702 i $ 2,41!6140! $ 30,269,1971 j $ 27,561493 S 33,64t,899 S 303!76!! petal assan 7,706,151 9,082,371 8446,68! Ta4alasaats 11,079,957,9Is,s13 38,515,4160 49.595,819 42,062,735 �L r'R111alIIIt4t ONtthMfl-,-263740 L_ OIh4r86bllitai _�. 2152561 ._172A51__ 212 09 2333,376 IT - "— l 20,047 25 1,176,657 20,260,48{ t� ~ y Tmal Ilab9ttat 476 996 7 394,960 -I- 21 5s 7n M 21,6271,769 - _ 7195,779 ', 22,006,779 NE7 ASTER Imeste d In a ptlal ass ats, not of releteddOt 7,706,291 5,082,171 4,402,647 7,260,622 12,108,898 7.342,993 Restricted 169,081 237,981 169.081 237,981 Unrestrlcted 2,896,706 2,451.180: 11,985,35S 10.043,852 14,882,081 12,496.032 7otalnetassets S$ W,M,957 5 7,513.351 $ 1.6.557,083.12,S42,655 SS 2160,040 S 200.076,006 An additional portion of the City of Chubbuck's net assets $169,081 represent resources that are subject to external restriction on how they may be used. The remaining balance of unrestricted net assets ($14,882,062) may be used to meet the governments' on going obligation to citizens and creditors. As of September 30, 2012, the City is able to report positive balances in all three categories of net assets, both for the government as a whole, as well as for its separate governmental and business-tye activities. At the end of the current fiscal year, 95 percent of the liabilities are made up of noncurrent liabilities. This primarily represents notes payable and bonds discussed In note 9 pages 38-41 of the notes to financials. Governmental activities. Governmental activities' key elements are broken dawn in the following charts. Government activities increased net assets by $2,958,020 and business -type activates increased net assets by $4,030,039. The City of Chubbuck's direct charges to users of governmental series made up $ 350,992. These charges are for park rentals, building permits and other fees related to public safety and administration. Public safety, the largest portion in fiscal year 2012, includes the fire department and police department and accounts for $3,884,651 in expenditures. The second largest portion of expenditures is the street department which accounts for $1,087,455. General government accounts for $235,127 in expenditures. 12 Below is summary of the City of Chubbuck's Changes in Net Assets. Ci afrChubbucks aha ` ... ty rages in Net Assets _ Gowrnmantel Activities _.._.. Business Activities Total 2022 2011 2012 2011 2012 1011 1FV1IUE8 _ i ... P rMIMI!VenWe 235,127 229,516. - _ - PuWtcsehry Ch..pr for s■rvieaa ' S 3so 992E 5 422,36!1 r S 7,7 w 119 - - s 6.712 923 s 7 491113 I $ 7 t91,o93 Operelingpentsande_ontribueians i 45,612 64,t8s .1,j45,t61 .,.. _._... 996,396- ..... __ -.. . Parbend rocriathsn 334,374 544795' 514,574 544,791' Health, we#are, and other .. 40,574 -. 15,314 _.:.. _ .. .....,......._...,; . .... _...... _.......... ... . . 41, ... 979. 45,344 W4trr + 3,398817 �P bxuandwhet4x - 4994353 I ♦ 21St€ i _ _ 3 . __...... .1.5"'353 1,547.034: ,athert■pe 1 1163901 _. 977193' I , C , - - d t_ 1161901 I 977193' OtMr I 72 506 dd 133131 5941,792 Q 921 22 649 115.427 155,061 ;Gpit■I ContribWofn 2,683,242 317,034 2,958,020 1,129,220: 41030,039 3,606,466: 211,034 T■tel llevenue4 5,906,112 6,322,OS7 6,895033 1,403,260 6,735,772 17,315,071 13,057,229 EII UUE1 Generaltovernment 235,127 229,516. - 235,327 229,616 PuWtcsehry 3,524,645 3,15S.1I2r 3284,669 3,385,128 '0411diniinspectionandstreet , .. 1,245,464 ._......_.- - + 996,396 .__. __.', ...,. _.,..... .1,j45,t61 .,.. _._... 996,396- ..... __ -.. . Parbend rocriathsn 334,374 544795' 514,574 544,791' Health, we#are, and other .. 40,574 -. 15,314 _.:.. _ .. .....,......._...,; . .... _...... _.......... ... . . 41, ... 979. 45,344 W4trr 3,398817 1355305' 1,311,837 1,!55303 sews 1,547.034: 1,66!.176 1,847,034 1,669,172 sanll4tion - ... 1,132,300 i - 1.174,725 1,132,300 1,174,725 `Totaleapenses 5941,792 3,701,277 4,379,221 '.y 4,199,205 10.327.013 9,900,415 lKWASEINNETASSM 2,958,020 620,720 41030,039 7,594564 5.988,059 3,157.344 :NFrAnMbgb94n1 7,533,351 6,895033 12,542,655 10,00.4,051 20.076006 16.901,124 `PrI-P1ripd ".1 111,526 27,541 $ 7 593.954 j 3 16,557,083 { 11542 655 ' ; 3 27,150MO ; s 20.076,009 Revenue by Source -Government Activities ■Charges for Service f aGrants & Contributions ■ Property taxes and sales tax ' ■ other taxes ■I Other 13 Expenses and Program Revenues - Governmental Activities 4,500,001) 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500.000 1,001),000 500,000 ■ Expenses ti r Revenue 0 6e& $0 b5 Ow obo \44� 5 Q� +eY The majority of the City of Chubbuck's governmental activities' revenue is received from property and sales tax (52 percentj. This amount would be 74 percent of the revenue received without this fiscal year's capital contributions from Chubbuck Development Authority. When all taxes are added together, they make up 64 percent of the budget or 42 percent without the current fiscal years' capital contributions from Chubbuck Development Authority. When revenues are compared to expenses, it shows that none of the City of Chubbuck's programs are self supporting. They all require tax support to continue at their current level of service. For the most part, increases in expenses closely paralleled inflation and growth in the demand for services. No significant transaction occurred outside of the Major funds for fiscal year 2012. No significant losses or revenues were received during the year. The major fund in the City is the general fund. Significant transactions within the general fund this year mainly consisted of payments of personnel, law enforcement expenses, fire department expenses, and street maintenance. 14 Business -type activities. Businesses -type activities' key elements are broken down in the following charts. Revenue by Source - Business Type Activities ■Charges for services ■ Other ■ Capital Contributions Expenses and Program Revenues - Business T)rpe Activities • One of the major sources of the City of Chubbuck's business -type activities' revenue is received from charges for services (86 percent). Currently, the City of Chubbuck's business type activities do not use property taxes for any type of funding. The second major source is capital construction (13 percent). These contributions were received by water only. • When revenues are compared to expenses, it shows that all of the City of Chubbuck's programs are self-supporting. 15 Financial Analysis of the Government's Funds As noted earlier, the City of Chubbuck uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. Governmental funds. The focus of the City of Chubbuck's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City of Chubbuck's financing requirements. In particular, unreserved fund balance may serve as a useful measure of the government's net recourses available for spending at the end of the fiscal year. At the end of the current fiscal year the City of Chubbuck's governmental funds reported combined ending fund balances of $2,981,667. Of which $2,248,830 of this total is unassigned fund balance (79 percent). The general fund is the chief operating fund of the City of Chubbuck. In the general fund, the City budgeted for a decrease in the fund balance of $2,905. Due to actual revenues being more than budgeted and actual expenses being less than budgeted, the actual fund balance increase for fiscal year 2012 was $335,957. As a measure of liquidity, it may be useful to compare both unassigned fund balance and to total fund expenditures. Unassigned fund balance represents 40 percent of total general fund expenditures. Proprietary funds. The City of Chubbuck's proprietary fund statements provide the same type of information found in the government -wide financial statements, but in more detail. Unrestricted net assets of the respective proprietary fund are Water - $4,799,969, Sewer - $5,592,789, and Sanitation - $1,593,083. The water funds had an increase in net assets of $2,148,987; the sewer fund had an increase in net assets of $1,385,736; and the sanitation fund and an increase in net assets of $1,090,557. General Fund Budgetary Highlights The City made no revisions to the original appropriations approved by the City Council. As stated earlier revenue was higher than budgeted and expenses were less. This accounts for a $335,957 in the general fund balance. The variance in expenditures was due to a combination of numerous small savings in the general government area. During this fiscal year the City used a very conservative approach to operating expenses due to the current economy. Capital Asset and Debt Administration Capital assets. The City of Chubbuck's investment in capital assets for its governmental and business - type activities as of September 30, 2012 amounts to $15,952,915 (net of accumulated depreciation). This investment in capital assets includes land, buildings, machinery, equipment, other improvements, and infrastructure. The total increase in the City of Chubbuck's investment in capital assets for the fiscal year was $4,267,813. The increase in assets includes contributions from the Chubbuck Development Authority of $3,308,468. 16 Additional information on the City of Chubbuck's capital assets can be found in note 8 on page 38 of this report. Long -terns debt. At the end of the current fiscal year, the City of Chubbuck had total debt outstanding of $21,317,116. Of this amount, $17,534,634 is comprised of notes to the Department of Environmental Quality for sewer infrastructure. Long-term debt also includes bonds with a remaining; balance of $1,824,814 used for purchasing water shares. City of Chubbuck Long Term Debt Debt Tyne Water Revenue Bonds Sewer Revenue Bonds Water - DEQ Loan Sewer - DEQ Loans Notes Payable Sanitation Compensated Absences 2012 Balance 2011 Balance City of Chubbuck's Capital Assets $ 1,930,000 - 65,000 267,790 (net of accumulated depreciation) 17,671,318 16,952,087 1,641,413 1,953,409 410,865 366,283 $ 21,821,386 $ 21,550,149 GovernmentalActivltles i 5uslnessActivitles Tote 1012 2011 2012 2011 2012 2011 land $- - __— -709,85d i_.... 00,20 800,720_;8 auilding & Imp. 2,854,621 i 2,868,733 9,055,315 7 919,755 11,909,936 10181&488 ` !Machinery& Equip. 5,751,745 ! 5,576,270 - 3,034,760 2,87.5,1.29 6,786,505 6,451.399 Inbastructure 3,075,550 569.275 3 Q75 550548 _. 875 I Worts In progress 21521,235..1. 3 2130,547 i 19,661 1 I i 2,340,896 2130 547 `Water) ghtm i '; i I 1,192,392 417,150 ! 1,192,392 417,850 Bond Fees��ltQ�13, + - dFee _... .. _. �y300Y 18p13� 18,300 iTotalm _- S 12,094,017 9 _1 9,235 291 1 $ 11,029,995 , S 11,971888 ; S 26,124,032 ; € $ 21,207,179 Additional information on the City of Chubbuck's capital assets can be found in note 8 on page 38 of this report. Long -terns debt. At the end of the current fiscal year, the City of Chubbuck had total debt outstanding of $21,317,116. Of this amount, $17,534,634 is comprised of notes to the Department of Environmental Quality for sewer infrastructure. Long-term debt also includes bonds with a remaining; balance of $1,824,814 used for purchasing water shares. City of Chubbuck Long Term Debt Debt Tyne Water Revenue Bonds Sewer Revenue Bonds Water - DEQ Loan Sewer - DEQ Loans Notes Payable Sanitation Compensated Absences 2012 Balance 2011 Balance $ 1,830,000 $ 1,930,000 - 65,000 267,790 283,370 17,671,318 16,952,087 1,641,413 1,953,409 410,865 366,283 $ 21,821,386 $ 21,550,149 The State of Idaho mandates a general obligation debt limit of 2% of the assessed market value of taxable property within the City boundaries. The City of Chubbuck currently does not have general obligation debt. The limit totaled $8,676,553 on September 30, 2012. The City of Chubbuck's general obligation bond above is subject to this limit. Therefore $8,676,553 is available for future general obligation indebtedness. Additional information on the City of Chubbuck's long-term debt can be found in note 9 on pages 38-41 of this report. Request for information The financial report is designed to provide our patrons of the City of Chubbuck and creditors with a general overview of the City's finances and to show the City's accountability for the money it receives. If you have question about this report or need any additional financial information, contact the Mayor and City Council at 5602 Yellowstone Ave, Chubbuck, ID 83202, telephone (208)237-2400. 17 CITY OF CHOBSUCK, IDAHO STATEMENTS OF NET ASSETS SEPTEMBER 30, 2012 ASSETS Current assets Cash and cash equivalent Property taxes receivable Intergovernmental receivables Internal balances Other accounts receivable Noncurrent assets Restricted assets Bond reserves Utility deposits Advance to joint venture Capital assets Accumulated depreciation LIABILITIES Current liabilities Accounts payable Accrued payroll Accrued bond interest Current portlon compensated absences Current portion of bonds payable Current portion of long-term debt 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 Govemmantal Businm4ype Development CIAWWC Activities Activities Total Authority Authority $ 2,808,335 $ 10,879,107 $ 13,687,442 5 2,188,384 $ 325,267 - 325,267 123,401 - 239,536 - 239,536 - 564 756,618 757,180 25,000 - 3,373,702 11,635,723 15,009,425 2,336,785 - 169,081 169,081 - - - 182,324 182,324 - - - 18,282,069 18,282,069 - 12,094,017 14,029,650 26,123,667 - 18,299,134 (4,387,766) (5,782,986 ^(10,170,752)- - 7,706,251 26,880,138 34,586,389. - 18,299,134 11,079,953 38,515,861 49,595,814 2,335,785 18,299,134 79,683 94,876 174,559 20,122 11,580 70,138 22,083 92,221 -$5,968 65,968 - - 65,435 16,737 82,172 - - - 110,000 110,000 - - - 411,413 411,413 - - - 182,324 182,324 - 215,256 903,401 1,118,657 20,122 11,580 - 1,824,814 1,824,814 - - - 19,163,609 19,163,609 - - 261,740 66,953 328,693 - - - 18,282,069 261,740 21,055,376 21,317,116 18,282,069 476,996 21,958,777 22,435,_773_ 20,122 18,293,649 7,706,251 4,402,647 12,108,898 - - - 169,081 189,081 - - 2,896,706 11,985,356 14,882,062 2,316,663 5,485 $10,602,957 $ 16,557,083 $ 27,160,040 $ 2,316,663 $ 5,485 18 See accompanying notes to financial statements DFATON & CO'N1PANY, CHARTERED CITY OF CHUSBUCK, IDAHO STATEMENTS OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2012 19 See accompanying notes to financial statements DEATON & COMPANY, CHARTERED Program Revenues Total Operating Net Charges for Grants and (Expense) Development CIAWWC Expenses Services Contributions Revenue Authority Authority FunctionafPrograms Primary Government: Governmental activities: General government S 235,127 $ 133,808 $ - $ (101,319) - Low enforcement 2,576,916 - 27,892 (2,549,024) - - Fire control 1,307,735 210,850 - (1,097,085) - - Building inspection 158,409 - - (158,409) - Street 1,087,455 - - (1,087,455) Parke and recreation 534,574 6,534 - (526,040) - - Health and welfare 31,462 - - (31,462) - - Other special revenue funds 17,113 - 15,720 (1,393) - - 5,9�48,791350,992 43,612 (5,554,187) - Business -type activities Water 1,398,887 2,386,464 - 987,577 - - Sewer 1,847,034 3,228,353 - 1,381,319 - - Sanitation 1,132,300 1,625,302 - 493,002 - - 4,378,221 7,240,119 - 2,861,898 Total primary government $ 10,327,012 $ 7,5=91,111 $ 43,512 $ (2,892,289) $� Component Unit: Chubbuck Development Authority $ 3,236,093 $ (3,236,093) $ - CIAWWC Authority 2,750- (2,750) ,236,093 $ 2,750 General Business -type Development CIAWWC Activities Activities Total Authority Authority Net (expense)/revenue $ (5,554,187) $ 2,861,898 (2,592,289) $ (3,236,093) 3 (2,750) General revenues General property taxes and sales tax 4,594,553 - 4,594,553 1,828,285 - Franchise fees 201,128 - 201,128 - - Intergovemmental 908,227 - 908,227 - 5,490 Leases and rants 52,546 - 52,546 - - Interest income 36,797 32,121 68,918 27,671 - Gain on sale of assets 17,223 10,800 28,023 - - Capital contributions 2,683,248 1,125,220 3,808,468 - Other revenue 18,488 - 18,486 - - - 8,512,208 1,_1682141 9.880,349 1,855,956 5,490 NET CHANGE IN NET ASSETS 2,958,021 4,030,039 6,988,060 (1,380,137) 2,740 BEGINNING NET ASSETS 7,533,351 12,542,655 20,076,006 3,596,800 2,745 PRIOR PERIOD ADJUSTMENT 111,585 (15,611 95,974 - - ENDING NET ASSETS $ 10,602,957 $16,557,083 $ 27,160,040 $ 2,316,663 $ 5,485 19 See accompanying notes to financial statements DEATON & COMPANY, CHARTERED 20 See accompanying notes to financial statements DEATON & COMPANY, OMRTERED CITY OF CHUSBUCK, IDAHO BALANCE SHEETS GOVERNMENTALFUNDS SEPTEMBER 30, 2012 WITH COMPARATIVE TOTALS AS OF SEPTEMBER 30, 2011 Other General Governmental Fund Funds Total 2011 ASSETS Cash $ 2,175,498 $ 632,837 $ 2,808,335 $ 3,282,793 Accounts receivable 564 - 564 Property and sales taxes receivable 325,267 325,267 276,604 Intergovernmental receivables 239,636 239,536 213,679 $ 2,740,865 S 632,837 $ 3,373,702 $ 3,773,076 LIABILITIES Accounts payable $ 79,683 $ - $ 79,683 $ 88,192 Accrued payroll 70,138 - 70,138 60,298 Interfund payable - - - 796,185 Accrued compensated absences 65,435 65,435 53,126 Deferred revenue 176,779176,779 150,185 392,035 392,0351,147,986 FUND BALANCES Unreserved, reported in: Committed - 632,837 632,837 629,440 Unassigned 2,348,830 - 2,348,830 632,837 2,348,830 2,981,667 1,995,650 2,625,D90 $ 2740 8655 _ $837 Amounts reported for governmental actlMes In the StaUnnont of Nat 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 $4,387,766, 7,706,251 Deferred tax revenue represents amounts that were not available to fund current expenditures and (herefore are not reported In the funds 176,779 Long-term liabilities are not due and payable In the current period and therefore are not reported In the funds: Accrued compensated absences ^(261,740) Net assets of governmental funds $10,602,957 20 See accompanying notes to financial statements DEATON & COMPANY, OMRTERED CITY OF CHUBBUCK, IDAHO STATEMENTS OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2012 WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2011 EXPENDITURES General government 214,382 Other 214,382 186,863 Law enforcement General Governmental 2,494,222 2,616,515 Fire oordrol Fund Funds Total 2011 REVENUES 158,409 - 158,409 165,214 General property taxes and sales tax $ 4,567,959 $ - $ 4,567,959 $ 4,435,834 Franchise fees 201,128 - 201,128 179,839 Intergovernmental 908,227 - 908,227 797,354 Parks revenue 2,399 - 2,399 1,977 Licenses, permits and fines 133,808 - 133,808 237,249 Grants 27,892 - 27,892 58,465 Fire protection and prevention 210,650 - 210,650 180,020 Leases and renis 52,546 - 52,546 50,644 Interest income 34,264 2,533 36,797 30,738 Donations - 15,720 15,720 6,220 Charges for services 4,135 - 4,135 68,923 Other revenues 16,228 2,258 16,486 35,491 Interest expense 6,159,236 20,511 6,179,747 6,082,754 EXPENDITURES General government 214,382 - 214,382 186,863 Law enforcement 2,494,222 - 2,494,222 2,616,515 Fire oordrol 1,174,659 - 1,174,659 1,127,747 Building inspection 158,409 - 158,409 165,214 Street 1,035,804 - 1,035,804 788,356 Parks and recreation 488,874 - 488,874 498,355 Health and welfare 31,462 - 31,462 44,487 Court fund - 2,780 2,780 857 Parks Fund - 14,333 14,333 - Capital outlays 225,467 - 225,467 58,690 5,823,279 17,113 5,840,392 5,487,084 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 335,957 3_,398_ 339,355 595,670 OTHER FINANCING SOURCES Proceeds from capital lease - - - - Principal payments on leases - - - (43,139) Interest expense - - - (3,064) Proceeds from sale of assets 17,223 - 17,223 16,242 17,223 - 17,223 (29,961) NET CHANGE IN FUND BALANCES 353,180 3,398 356,578 565,709 BEGINNING FUND BALANCE 1,995,650 629,440 2,625,090 1,947,795 PRIOR PERIOD ADJUSTMENT - - 111,586 ENDING FUND BALANCE $ 2,348,830 $ 632,838._ $ 2,981,668 $ _2,625,090 (Continued) 21 See accompanying notes 10 financial statements DEATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO STATEMENTS OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 34, 2012 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 Ilse 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 Acthritiea: Contributed capital assets Capital asset purchases capitalized Depreciation expense Deferred revenues are not recorded as current period receipts 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 22 See accompanying notes to financial statements & 2012 Total 356,578 2,683,575 225,467 (284,962) 26,594 (49.231) $ 2,958,421 DEATON & COMPANY, CHARTERED ASSETS Current assets Cash and cash equivalents Accounts receivable Noncurrent assets Restricted assets Bond reserves UtAigr deposits Interfund receivable Advance to joint venture Capital assets Accumulated depreciation LIABILITIES Current Liabilities Accounts payable Payroll payable Accrued compensated absences Current portion of bonds payable Accrued interest Current portion of long-term debt Payable from restrk;ted assets - Water/ Sawar deposits Noncurrent Liabigttes Revenue bonds payable, net unamortted premium Note payable Compensated absences NETASSETS Invested in capital assets, net of related debt Restricted for bond service Unrestricted CITY OF CHUBBUCK, IDAHO STATEMENTS OF NET ASSETS PROPRIETARY FUNDS SEPTEMBER 30, 2012 WITH COMPARATIVE TOTALS AS OF SEPTEMBER 30, 2011 $8,097,280 $5,6� 14` -"L69;,0;3 Adjustment to ..flea the mnsolkhOan of Internal service fund activMn .elated to enterprise activhies. 23 1005,355 $12,483,717 51,728 $ 58,938 51,728 -fT879- See accompanying nobs to financial statements DEATON & COMPANY, CHARTERED Internal Internal Service Service Water Sewer Sanitation Total 2011 Funds 2412 Funds 2011 $ 4,566,154 $ 4,847,380 $1,465,573 $10,879,107 $ 8,023,419 $ - $ - 307,701 290,486 158,429 756,618 706,D43 4,873,855 5,137,886 1,624002 11,635,723 6,729,462 159,081 - - 169,081 237,981 - - 180,NA 11780 - 162,324 154,930 - - -- - 18,282,069 -18.282,069 17,642,935 - - 7,181,628 4,133,072 2,455;107 13,770,007 11,712,245 259,643 259,843 (1,850,994) (2.910,869) 814,740 (5,576,6032 (5,171225) _ (206,383) (107,732) 5,680,479 19,506,032 1,640,367 28,826,878 25,373,051 53,260 61,911 10,554,334 24,643,898 3.264.369 38,462,601 34,102,513 53,260 61,911 26,083 58,153 9,109 93,345 39,515 1,531 2,973 9,676 7,425 4,982 22,D83 21,161 - 7,625 7,625 1,487 16,737 20,130 - 110,000 - - 110,000 165,000 - - 57,622 8,345 65,968 23,957 - 18,090 138,684 2$8,839 411,413 1,161,789 180,564 1.760 182,324 154,930 350,038 269,269 282,563 901,870 1,566,482 1,531 2,973 1,824,814 - -1.824,814 1,940,330 - 251,700 17,529,135 1,382,774 19,183,609 18,027,077 - 30,502 30,502 5,949 66,953 80,518 - 2,107,018 17,559,637 1,388,723 21,055,376 20,047,925 2,457,064 17,826,906 1,671,286 21,957,246 21,634,407 1,531 2,973 3,128,230 1,222,203 1,640,357 5,990,800 4,152,320 53,260 61,911 169,081 - - 169,081 237,981- - 4,799,9 69 5,592,789 (47,284) 10,345,474 8,093,416 _ (1,531) (2,973) $8,097,280 $5,6� 14` -"L69;,0;3 Adjustment to ..flea the mnsolkhOan of Internal service fund activMn .elated to enterprise activhies. 23 1005,355 $12,483,717 51,728 $ 58,938 51,728 -fT879- See accompanying nobs to financial statements DEATON & COMPANY, CHARTERED CITY OF CHUSBUCK, IDAHO STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2012 WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2011 NONOPERATING REVENUE (EXPENSE) Interest Income 25,390 4,417 2,314 32,121 22,549 - Internal Internal (45,911) (98,364) (204,343) (130,378) - Capital contributions 1,125,220 Service Service 1,125,220 Water Sewer Sanitation Total 2011 Funds 2012 Funda 2011 OPERATWO REVENUES - - 1,101,342 Service revenue $ 451,650 $3,228,353 $1,557,747 $5,237,750 $4,550,867 $ 87,555 $ 56,726 Revenue used as security 2,545,958 (7,210) (9,394) BEGINNING NET ASSETS 5,948,293 5,429,266 1,090.557 - 58,939 $8,332 for revenue bond: (15,611) ENDING NET ASSETS $8,097,280 Charges for services 7,934,814 $2,530,347 L.51,.729 $ 58,938 1,834,814 2,105,330 2,386,464 3,228,353 1,557,747 7,172,584 6,656,197 67,556 56,726 OPERATING EXPENSES Salaries and wages 514,285 388,882 219,155 1,122,322 1,189,982 - Personnel beneflis 193,808 141,980 81,185 416,771 687,600 13,815 - Repairs and maintenance 224,204 164,739 324,153 713,096 499,089 11,767 8,380 Supplies and tools 44,259 31,833 36,098 111,160 72,017 3.567 9,874 Garbage containers - - - - 30,722 - Travel, meetings, and training 7,713 2,243 9,956 5,529 - 2,094 Fuels and lubricants 18,826 9,477 79,696 108,002 97,421 24,765 22,552 Telephone and communications 4,631 3,968 3.967 12,766 19,409 - 72 Utilities 119,543 26,350 3,110 149,103 155.927 12.209 12,077 Treatment - Pocatello - 867,688 - 867,888 605,433 - Insurance 19,268 13,101 14,642 47,009 83,962 Other purchased services 6,510 - 838 7,346 2,023 Professional services $1,560 18,578 9,768 89,904 43,121 Facilities plan 3,396 - - 3,396 2,648 Sad debt 4,370 4,075 8,166 16,611 37,942 - - Depreciation 116,350 130,454 177,147 423,951 385,987 8,662 11,065 1,338,819 1,801,123 959.177 4,099,113 4,002,710 74,765 66,120 OPERATING INCOME 1,047,645 1,427,230 598,576 3,073,451 2,653,487 (7,210) (9,394) NONOPERATING REVENUE (EXPENSE) Interest Income 25,390 4,417 2,314 32,121 22,549 - Inlerest expense (80,068) (45,911) (98,364) (204,343) (130,378) - Capital contributions 1,125,220 - - 1,125,220 - - Gain (Loss)1rvm asset disposal 10,800 - - 10,800 - - Transfers in (out) - - 1,101,342 (41,4941 (96,050) 963,798 (107,529) NET INCOME (LOU) 2,148,987 1,385,736 502,628 4,037,249 2,545,958 (7,210) (9,394) BEGINNING NET ASSETS 5,948,293 5,429,266 1,090.557 - 58,939 $8,332 PRIOR PERIOD ADJUSTMENT (15,611) ENDING NET ASSETS $8,097,280 $8,814,692 $1,593,083 $2,530,347 L.51,.729 $ 58,938 Adjustment to mfied IM consolidation of Internal service fund advltla tabled m enterprise funds !7,210) Ghww in net assets of business -type activtlies $ 4.0030.039 24 See accompanying notes to financial stotements DEATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO STATEMENTS OF CASH FLOWS - PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2012 WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2011 25 See accompanying notes to financial statements DEATON & COMPANY,CFIASITERED Internal Internal Service Service Water Sr Server Banned" Total 2011 Funds 2012 Funds 2011 CASH FLOWS FROM OPERATING ACTIVITIES Cash rsoeived from revenues 52,362,288 $3,223,071 $1,530,023 ; 7,105,380 $ 6,634,684 S 67,555 $ 56,726 Cash paid to suppliers (509,412) (1,083,774) (472,442) (2,065,628) (1,866,328) (67,555) (56,726) Cash paid to employees 718,184) (639,202) (299,743) 1555 129 (i,810L4381 Net rash provided by operating activities 1,128,690 1,800,095 757,838 3,484,823 2,756,920 CASH FLOW FROM NONCAPITAL FINANCING ACTIVITIES Transferfrom (to)other funde 313,461 384,900 678,361 (134,409) - Internal loan from (to) outer funds - 117,824 117,824 - - Advance tojoint ventUre - (839,134) - (539,134) (7,363,420) Change in restricted Cash BOW 68,1100 (105,331) Not cash (used) in noncapital financing activitias 313,481 {205,334) 117,824 225,951 (7,823,160) CASH FLOW FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from debt - 713,732 713,732 10,081,284 Principal paid on capital debt (121,086) (65,000) (311,995) (498,082) (379,863) - interest paid cn capital debt (80,088) (3,900) (98,304) (162,332) (1a5,066) - Purchase of capital asset (782,'568) (9,848) j150,901) T940,315) (451,176) Not rash provided (used) in capital and related financing activities 963,730 _ 637,984 561,261 887,007 9,075,155 CASH FLOW FROM INVESTING ACTIVITIES Interest and dividend received 25,380 4,417 2,314 32,121 22,849 Net cash provided by financing activities 28,390 4,417 2,314 32,121 NET INCREASE IN CASH AND CASH EQUIVALENTS 501,811 2,037,162 316,715 2,655,688 4,230,764 BEGINNING CASH AND CASH EQUIVALENTS 4,084,343 2,810,218 1,148,858 8,023,419 3,792,655 ENDING CASH AND CASH EQUIVALENTS $4,588,154 $4,847,380 � $1,465,573 _.J4 $10,879,107 s. $ 8,023,419 ; $ 25 See accompanying notes to financial statements DEATON & COMPANY,CFIASITERED CITY OF CHUBBUC& IDAHO STATEMENTS OF CASH FLOWS - PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2012 WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2011 RECONCILIATIONS OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES 28 See accompanying notes to financial statements DEATON & COMPANY, CHARTERED Internal Internal Service Servire vvmw Sever Ssndsdon TOW 2011 Funds 2012 Funds 2011 OPERATING INCOME $1,047,845 $1,427,23D $ 598,576 $ 3,073,451 $ 2,653,487 S (7,210) $ (9.394) RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Depreciation 118,350 130,454 177,147 423,951 385,987 8,552 11,065 (Increase) decrease in assets Aocount9 receivable (29,806) (1,207) (19,558) (50,573) (93,298) - - Increase (decrease) in llabllitle6 Accoultspayable 868 61,971 1,925 54,752 (198,128) (1,442) (1,671) Accrued compensated absences (6,353) (8,353) (252) (18,956) 7,870 Total adjustments T9,045 172,865 159,282 411,172 102,433 7,210 9,394 NET CASH PROVIDED BY OPERATING ACTIVITIES $1,126,880 $1.800,095 $ 757,838 $ 3,464,623 $ 2,755,920 $ 28 See accompanying notes to financial statements DEATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO STATEMENT OF FIDUCIARY NET ASSETS RECREATIONAL PROGRAMS FUND FOR THE YEAR ENDED SEPTEMBER 30, 2012 WITH COMPARTIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2091 Recreation Programs Trust Fund 2012 2011 Assets Cash $ 20,797 S 9,745 20,797 9,745 Liabilities AGCounts payable - - Net Assets Held in trust for recreation programs $ 20,797 $ 9,745 27 See accompanying notes to financial statements DEATON & COMPANY, CHANTERED CITY OF CHUBSUCIK, IDAHO STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS RECREATIONAL PROGRAMS FUND FOR THE YEAR ENDED SEPTEMBER 30, 2012 WITH COMPARTNE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2011 28 See accompanying notes to financial statements DEATON & COMPANY, CHARTERED Recreation Programs Trust Fund 2812 2011 Additions Contributions: Registration Fees $ 48,325 $ 48,105 Sponsorships 16,441 15,863 Total additions 64,766 63,968 Deductions Director's compensation 4,500 4,500 Boy's baseball 25,644 25,865 Girl's softball 16,961 18,095 Teeltiger ball 6,609 5,763 Total deductions 53,714 54,223 Change in net assets 11,052 9,745 Net assets - beginning of the year - - Prior period adjustment 9,745 x,745 Net assets - end of the year 20,7 § 7 `$! 28 See accompanying notes to financial statements DEATON & COMPANY, CHARTERED CITY OF CHUBSUCK, IDAHO NOTES TO FINANCIAL STATEMENTS (PAGE 1 OF 14) NOTE 1 - Summary of SianificantAccountino Policies The City's financial statements comply with generally accepted accounting principles (GAAP). GAAP includes all relevant Governmental Accounting Standards Board (GASB) pronouncements within the codification. The government -wide financial statements, including the enterprise funds and the fund financial statements for the proprietary funds, are also under GASB codification. The accounting and reporting framework and the more significant accounting policies are discussed in subsequent subsections of this note. Applicable GASB statements have been implemented through GASB 54. A. Reporting Entity The City's financial reporting entity comprises the foilowing: 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. iscretely Presented Comi>on 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, 3160 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 residents 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 year-end totaled $18,282,069. 29 DEATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO NOTES TO FINANCIAL. STATEMENTS {PAGE 2 OF 14} NOTE 1 - 5u_mmary of Significant Accounting Policies (Continued) A. Reporting Entity (Continued) Upon termination of this Agreement, We 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 63202. 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 tt is the primary operating fund of the City or meets the following criteria: a. Total assets, liabilities, revenues or expenditurestexpenses 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 govemrnental and enterprise funds combined. GovernarintalFunds 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. 30 DEATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO NOTES TO FINANCIAL STATEMENTS (PAGE 3 OF 14) NOTE 1 - Summa i i can Accountin Policies 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 staternents, the "current financial resoureW 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 and 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 govemment-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 from exchange and exchange - like transactions are recognized when the exchange takes place. 31 DEATON & COMPAM1 V, 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, 2043. 32 DEATON & COMPANY, CHARTERED CITY OF CHUBSUCK, IDAHO NOTES TO FINANCIAL STATEMENTS (PAGE 5 OF 14) NOTE 1 - Summary of SianlfrantAccounting Policies [gondnued? 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 - 20-50 years Other structures 5-40 years Vehicles 5-30 years Equipment 2-40 years Fund Financial Statements 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. 33 DF.ATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO NOTES TO FINANCIAL. STATEMENTS (PAGE fi OF 14) NOTE 1 - Summary of Significant Accounting Policies {Continued) I. Comparative datalreclassifications 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 In the fund financial statements, governmental funds report the following classifications of fund balance: Nonspendebie items- This category includes a portion of net resources that cannot be spent because of their form or because they must be maintained intact. This includes inventories and prepaid items. Restricted flams- This category includes resources where limitations are imposed by external entities, such as grantors and creditors, or to comply with laws and regulations of governments. Committed items -This category includes amounts that can only be used for the specific purposes determined by a formal action of the City's highest level of decision-making authority for the City. Commitments may be changed or lifted only by the Council taking the same formal action that imposed the constraint originally. Assigned items -Assigned items represent the City's intent to use certain resources for specific purposes. The City Council may establish the intended use of these funds for a designated purpose. Unassigned items- Represents the remainder of the City's equity in governmental fund -type balances in excess of the aforementioned classifications. 34 DEATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO NOTES TO FINANCIAL STATEMENTS (PAGE 7 OF 14) NOTE 1 - Summary of Significant Accounting Policies (Continued) 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 - LAggL�&'rr►Qlliance - 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. 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 Paypble 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 Utility deposits Total $ 169,081 182,324 _$ 3516405__ Bond reserves are amounts the City is legally required to reserve for the repayment of outstanding bonds. Water deposits are collected from individuals who receive utility services from the City. Money on deposit may be used to pay past due balances or is returned when the payer stops utility service. Restricted utility deposits totaled $182,324 at year-end. 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 reporting purposes. At year and, an accrual is made to recognize property taxes receivable at year end. At year end, $325,267 in outstanding property taxes were expected to be collected and remitted by the County. 35 DF.ATON & COMPANY. CHAKTERED CITY OF CHUBSUCK, IDAHO NOTES TO FINANCIAL STATEMENTS (PAGE 8 OF 14) NOTE 5 • Cash and Cash Eouivalents and -Investments Primary Government: Deposits at year and consist of the following: Deposits Cash in bank - carrying amount Restricted Unrestricted $ 351,405 13,687,442 $' 14,038,847 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 year-end, the carrying amount of the City's deposits (cash and certificates of deposit) was $14,038,847 and the bank balance was $11,056,280. The deposits were covered by collateralized accounts or federal depository insurance of $250,000 per bank. Non-interest bearing account were insured up to 100°%. 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 year-end were not insured nor collateralized in the amount of $3,310,219. The State Treasurers 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 $ 2,188,384 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 year -lend the carrying amount and bank balance of CDAs deposits (cash and certificates of deposit) was $2,188,384. 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 year-end were subject to custodial credit risk. The State Treasurers 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 ET 1 DEATON & COMPANY, CHARTERED CITY OF CHUSl3UCK, IDAHO NOTES TO FINANCIAL STATEMENTS (PAGE 9 OF 14) NOTE 5 - Cash and Cash EggivaIgnts and Investments (Continued) Component Unit - Chubbuck Impact Area Waste Water Collection Authority (CIAWWCA): Deposits and Investments - The CIAWWCA has no deposits or investments. Deposits at year end consist of the following: Deposits Cash in bank - carrying amount Unrestricted $ 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 year-end the carrying amount and bank balance of CIAWWCA's deposits (cash and certificates of deposit) was $0. At year-end, all the Authority's deposits were held in a financial institution. All deposits were guaranteed by the Federal Deposit Insurance Corporation and were not subject to custodial credit risk. NOTE 6 - Receivables All trade receivables are shown net of allowance for doubtful accounts. Doubtful accounts are based on an aging delinquent balance report. Historically 100% of property taxes have been collected, therefore, there is no allowance for uncollectible property tax receivables. Receivables as of year-end for the City's business -type funds are as follows: NOTE 7 - Water Sewer Sanitation Total Accounts Receivables —5358,2 —$ 336,1 $ 190.2gr Allowance for Doubtful Accounts (50,559) (45,710) (31,862)- (128,131) $_ '307,701 $ 290,486 $ 158,425 $ 756,616 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. 37 DEATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO NOTES TO FINANCIAL. STATEMENTS JPAGE 10 OF 14j NOTE 8 - Changes in Fixed Assets A summary of general fixed assets at year end is as follows: NOTE 9 - Lona -tern Debt and Accrued Compensation Accred Compensated Absences: Current portion Noncurrent portion 38 _Governmental Business - e $ 65,435 $ 16,737 261,740 66.953 S 327.175 $ 83.890 ,,,�� DEATON & COMPANY, CHARYPRED Beginning Ending Balance Additions Deletions Balance Nondepreciable assets Land $ 90,866 $ 190,688 $ - $ 281,554 Infrastructures 582,988 2,492,562 - 3,075,550 Work in process 2,130,547 - - 2,130,547 Buildings and Improvements 2,854,621 - - 2,854,621 Vehicles and Equipment 3,576,271) 225,791 50 316 3,751,745 9,235,292 2,909,041 50,316 12,094,017 Accumulated Depreciation _ 4,153,120 284,962 50,316 4,387,766 9$ 5,082,® $ 2,624,079 _$ 7,706,251 A summary of proprietary type fixed assets at year end Is as follows: Beginning Ending Balance Additions Deletions Balance Nondepreciable assets Land $ 709,854 $ - $ - $ 709,854 Water Rights 417,850 774,542 - 1,192,392 Work in process - 19,661 19,661 Office Equipment 196,905 - 196,905 Buildings and Improvements 7,949,755 1,105,215 - 9,054,970 Vehicles and Equipment 2,678,224 178,204 18,573 2,837,855 Bond Fees 19,300 - 1,287 18,013 11,971,888 2,077,1372 19,860 14,029,650 Accumulated Depreciation 5,368,957 433,689 19,860 5,782,986 $ 6,602,.03 1. 3,733 NOTE 9 - Lona -tern Debt and Accrued Compensation Accred Compensated Absences: Current portion Noncurrent portion 38 _Governmental Business - e $ 65,435 $ 16,737 261,740 66.953 S 327.175 $ 83.890 ,,,�� DEATON & COMPANY, CHARYPRED CITY OF CHUBBUCK, IDAHO NOTES TO FINANCIAL STATEMENTS (PAGE 11 OF 14) NOTE 9 - Lonc, rm Deft and„Accrued Compmation (Contjnuedl Long-term Debt: 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 of $12,332 for 20 years. Current portion Noncurrent portion $ 16,090 251,700 $ 267,790 At year-end 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 year-end 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 year-end the balance available to the City was $1,130,736. Total Award Available Outstanding DEQ line of credit at 3%, with biannual payment of $47,504 for 20 years, and a maturity date of November 1, 2030. Loan closed April 29, 2010. Principal payments of $3,431 were made as of September 30, 2012. $ 1,400,000 $ 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 dosed April 22, 2010. DEQ line of credit at zero percent Interest, with biannual payment of $217,532 for 20 years, and a maturity date of fiscal year 2033. Loan set to close fiscal year 2013. DEQ line of credit at zero percent interest, with biannual payment of $234,739 for 20 years, and a maturity date of fiscal year 2033. Loan set to close fiscal year 2013. 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. Loan closed January 31, 2011. Less current portion Noncurrent portion 39 219,976 8,701,260 9,389,548 $ 1,396,569 203,478 1,130,736 7,570,524 - 8,364,618 130,630 - 130,630 $ 19,841,414 1,130,736 $ 17,665,819 136,684 $ 17,529,135 DEATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO NOTES TO FINANCIAL STATEMENTS (PAGE 12 OF 14) NOTE 9 - Long-term Debit and Accrued Compensation (Continued) Long-term Debt 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. These bonds were paid in full on September 10, 2012. The Water Revenue Bonds, Series 2011 was issued September 28, 2011, for 15 years in the amount of $1,930,000 at a premium of $110,330. The bond carries interest rates between 2 and 4.75% and a maturity date of September 1, 2026. Bonds Payable: Net Premium Principal Water Revenue Bond $ 104,814 - $ 1,830,000 104,814 1,830,000 Less current portion 110,000 Noncurrent portion a x«,1.720.000 Bond premiums, net amortization totaled $110,330. Bond expenses, net amortization totaled $19,300. The bond premium and expenses are amortized over fifteen (15) years, the life of the bond. Bond premium amortization of $5,516 and expense of $1,287 was recognized at year-end. Notes Payable 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 $ 137,024 Note 2 276.283 Note 3 1.228.106 1,641,413 Less current portion 258.639 Noncurrent portion $ 1,382,774 Annual Debt Service Requirements for leases, bonds and notes payable Year Ending SeMember 30 2013 2014 2015 2016 2017 2018-2022 2023-2027 2028-2032 Governmental Activities Business -type Activities Principal Interest Principal Interest $ - $ - $ 1,350,120 $ 230,610 - - 1,133,125 231,684 - - 1,143,201 233,326 - - 1,098,322 185,388 - - 1,075,803 149,557 - - 5,522,912 709,441 - - 5,615,403 635,326 - 4,471,635 99,032 $ 21,410,521 $ 2,474,364 40 DEATON & COMPANY, CHARTERED CITY OF CHUSBUCK, IDAHO NOTES TO FINANCIAL STATEMENTS JPAGE 13 OF 14) NOTE 9 - Long -.term Debt and Accrued Compensation (Continued) Changes In long-term liabilities Long-term liability activity for the year was as follows: Beginning Ending Due within Balance Additions Deductions Balance one year Govemmental activltles Compensated absences _ $ 265,635 _ _ $ _ 371,569 $ 310,029 $ 327,175 $ 65,435 $ 265,635 $ 371.569 ;�_ 310 029 $ 327.175 $ 65,435 ��_ �. Long-term portion $ 261,740 Long-term portion $ 20,956,061 NOTE 10 - 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 Tequiring that both the member and the employer to contribute. The plan provides benefits based on members' years of service, age, and oompensabon. 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 eamed 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% poiiceffirefighter) 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 year-end 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 policelfirefighter members. The City of Chubbuck contributions required and paid were $398,799, $402,921, and $336,8275, for the three years ended September 30, 2012, 2011, and 2010, respectively. NOTE 11 - Risk f,0 o�em%t The City is exposed to various risks of loss. The City has obtained commercial insurance to reduce the risk of substantial losses. 41 DEATaN & COMPANY, CHARTERED Beginning Ending Due within Balance Additions Reductions Balance one year Busines"pe activities Bonds payable $ 1,995,000 $ - $ 165,000 $ 1,830,000 $ 110,000 Notes payable 19,188,866 745,456 353,801 19,580,521 411,413 Compensated absences 100,648 101,518 118,476 83,690 16,737 $21.284,514 $ 846,974 $ 637.277 $ 21,4944211 $ 538,150 Long-term portion $ 20,956,061 NOTE 10 - 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 Tequiring that both the member and the employer to contribute. The plan provides benefits based on members' years of service, age, and oompensabon. 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 eamed 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% poiiceffirefighter) 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 year-end 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 policelfirefighter members. The City of Chubbuck contributions required and paid were $398,799, $402,921, and $336,8275, for the three years ended September 30, 2012, 2011, and 2010, respectively. NOTE 11 - Risk f,0 o�em%t The City is exposed to various risks of loss. The City has obtained commercial insurance to reduce the risk of substantial losses. 41 DEATaN & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO NOTES TO FINANCIAL STATEMENTS (PAGE 14 OF 14) NOTE 12 - Subseauent Events Subsequent events were evaluated up to May 11, 2012, the date the financial statements were available to be issued. A long-term note in the sewer fund with a balance of $1,396,567 was paid on January 7, 2013 along with accured interest of $69,331. NOTE 13 - Other Postemlovment Benefits The City complies with Idaho's requirements under the Consolidated Omnibus Budget Reconciliation Act (COBRA). The liability under state requirements related to other post -employment benefits for the medical insurance COBRA program is not required to be reported. The City does not participate in any other post - employment benefit (OPER). NOTE 14 . Correction of an Error and Prior Period Adjustments Adjustments Govemmental activities: During the year checks that should have been voided in prior years was discovered and the amounts were added to available cash in the amount of $150,496. An account that should have been recorded has a payable was recorded as revenue for $29,165, consequently accounts payable were increased by $29, 165. The recreational program fund was changed from being a govemmental fund to a fiduciary fund. This fund balance was removed from the governmental fund for the amount of $9,745 and added to the fund balance of the newly created recreational programs fiduciary fund. Adjustments Business -typo activities: In 2011 interest was not accrued in the amount of $15,610. This adjustment increased the prior years interest payable by $15,610. 42 DEATON & COMPANY, CHARTERED REQUIRED SUPPLEMENTARY INFORMATION 43 DEATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO BUDGETARY COMPARISON SCHEDULE GENERAL FUND YEAR ENDED SEPTEMBER 30, 2092 Charges to appropriations General government _ Budgeted Amounts 377,518 Variance 163,136 Law enforcement 2,755,119 Actual Positive 260,897 Original Final Amounts (Negative) Resources Building inspection 165,268 165,268 158,409 General property taxes and sales tax $ 4,517,559 $ 4,517,659 $ 4,367,959 6 50,400 Franchise fees 222,000 222,000 201,128 (20,872) Intergovernmental 785,000 785,000 908,227 123,227 Parks revenue 3,600 3,600 2,399 (1,201) Licenses, permits and lines 139,500 139,500 133,808 (5,692) Grants - - 27,892 27,892 Fire protecifon and prevention - - 210,650 210,650 Leases and rents - - 52,546 52546 Interest income 10,000 10,000 34,264 24,264 Donations - - - - Charges for services 189,740 189,740 4,135 (185,605) Other resources 279,053 279,053 16,228 (262,825) Amounts available for appropriations 6,146,452 6,146,452 6,159,236 12,784 Charges to appropriations General government 377,518 377,518 214,362 163,136 Law enforcement 2,755,119 2,755,119 2,494,222 260,897 Fire control 1,113,106 1,113,106 1,174,659 (61,553) Building inspection 165,268 165,268 158,409 6,859 Street 937,422 937,422 1,035,804 (98,382) Parks and recreation 637,349 637,349 488,874 148,475 Health and welfare 33,275 33,275 31,462 1,813 Capital Outlays 130,300 -'- 130,300 225,467 (95,167) Total charges to appropriations 6,149,357 6,149,357 5,823,279 326,078 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (2,905) (2,905) 336,957 338,867_ Other Financing Sources Principal payments on leases - - - Interest expense - - - Proceeds frorn sale of assets - - 17,2223 17,223 17,223 17,223 NET CHANGE IN FUND BALANCE (2,905) (2,905) 353,180 356,085 BEGINNING FUND BALANCE 10,000 10,000 1,995,650 1,985,650 ENDING FUND BALANCE $ 7,0 $ 2348,830 $ 2,341,735 44 DEATON & COMPANY, CHARTERED CITY OF CHUSBUCK, IDAHO NOTES TO REQUIRED SUPPLEMENTARY INFORMATION SEPTEMBER 34, 2011 NOTE 1 - EXPENDITURES IN EXCESS OF BUD ,,ET GENERALFUND Fire Control The City had expenditures in excess of budget of $61,553 due to an increase in fire control expenditures. Increased maintenance, fuel, and equipment expenditures were not accounted for in the budget. These expenditures were paid using excess revenues over budget Street The City had expenditures In excess of budget of $98,382 due to an increase in highway, streets and roads expenditures. Increased highway and street maintenance, repairs and maintenance, and personnel expenditures were not accounted for in the budget. These expenditures were paid using excess revenues over budget. Capital Outlays The City had expenditures in excess of budget of $95,167 due to the purchase of additional assets not accounted for In the budget. Theses assets included equipment and vehicles that were not accounted for in the budget. These expenditures were paid using excess revenues over budget. 45 DEA1'ON & COMPANY, CHARTERED OTHER SUPPLEMENTARY INFORMATION 46 DF.ATOh S COMPANY, CHARTERED CITY OF CHUBSUCK, IDAHO COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS SEPTEMBER 30, 2012 47 See accompanying notes to financial statements DFATON & COMPANY, CHARTERED Spec[*[ Revenue street General Juvenile Road Total Guarantee LID Referral Court Projects Parks Nonmajor Fund Fund Fund Fund Fund Fund Funds ASSETS Cash $ 15,514 198,724 $___5,059 $ 57,781 $ 164,622 $ 191,138 $ 632,838 FUND BALANCES Committed, reported in: Special revenue fund $ 15,514 $ a198724 $ 5,059 � $_L_57,781 $ 164,622 _ $ 191,138 $ 832,838 47 See accompanying notes to financial statements DFATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL, FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2012 REVENUES Interest income Donations Other revenues EXPENDITURES Other purchased services NET CHANGE IN FUND BALANCES BEGINNING FUND BALANCE ENDING FUND BALANCE DEATON & COMPANY, CHARTERED Special Revenue street General Juvenile Road Total Guarantee LID Referral Court Projects Parks Nonmajor Fund Fund Fund Fund Fund Fund Funds S 23 $ 1,388 $ 12 $ 197 $ 421 $ 492 $ 2,533 - - - 15,720 15,720 2,258 - 2,258 23 1,388 12 2,455 421 16,212 20,511 2,780 14,333 17,113 2,780 - 14,333 17,113 23 1,388 12 (325) 421 1,879 3,398 15,491 197,336 5,047 58,106 164,201 189,259 629,440 $ 15,514 $ 198,724 S 5,059 $ 57 781 $ 164 $22 $ 191,138 $ 632,838 48 See accompanying notes to financial statements CITY OF CHUBSUCK, IDAHO BUDGETARY COMPARISON SCHEDULE NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2012 Budgeted Amounts Variance Actual Positive Original Final Amounts (Negative) Resources General property taxes and sales tax $ 15,000 $ 15,000 $ - $ (15,000) Interest income 11,900 11,900 2,533 (9,367) Donations 80,000 80,000 15,720 (64,280) Other resources 40,000 40,000 2,258 (37,742) Amounts available for appropriations 146,900 146,900 20,511 (126,389) 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 15,500 15,500 - 15,500 3,600 3,600 - 3,600 500 500 - 500 42,100 42,100 2,780 39,320 1,200 1,200 - 1,200 84,000 84,000 14,333 69,667 146,900 146,900 17,113 129,787 - - 3,398 3,398 BEGINNING FUND BALANCE - 829,440 629,440 ENDING FUND BALANCE $ - $ - $ 632,838 $ 632,838 49 See accompanying notes to financial statements DEATON & COMPANY, CHARTERED COMPLIANCE AND SINGLE AUDIT SECTION sa DEATON & COMPANY, CHARTERED Denton & Company, Chartered _ Certified Public Accountants —_ 215 North 9th, Suite A Pocatello, Idaho 83201-5278 (208) 232-5825 .. Hc,ncmurWWw society or canned eget« A«oUnLLnu MembersofAmmcanInsnt*ofCentflcdPublicAamw to REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GoVERN111ENT AUDMNG STANDARDS To the City Council City of ChubbuCk We have audited the financial statements of the govemmental 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, 2012 and 2011, which collectively comprise the City of Chubbuck's basic financial statements and have Issued our report thereon dated March 29, 2013. 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 dated 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. er 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 matter's that are required to be reported under Government Auditing Standards. 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. FW Pocatello, Idaho March 29. 2013 Deaton & Company, Chartered Certified Public Accountants Osamu 215 North 9th, Suite A Pocatello, Idaho 83201-5278 i (2t18) 232-5825 ._. htambers of idaha Society orCbrtified Public ,kccmmants Membets ofAnserkan Instirim afCartified Public Acammums INDEPENDENT AUDIT'OR'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 Chubbuek complianga 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 ~ on each of City of Chubbudes major federal programs for the years ended September 30, 2012 and 2011. 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 States of America; the standards applicable to financial audits contained In Government Audffing Standards, Issued by the Comptroller General of the United Stales; and OMB Circular A-133, Audits of Staten, Local Govemments, and Nott -Profit t7rgandations. Those standards and OMB Clreular A-133 require that we plan and perform the audit to obtain reasonable assurance oboul 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 complisr" with those requirements and performing such other procedures as we considered necessary Jn 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, compiled, 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 programa for the years ended September 30, 2012 and 2011. Internal Control over Compliance Management of City of Chubbuck, is responsible for establishing and maintaining effective Intemal cordmi over compliance with the requirements of laws, regulations, contrract& 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 *(fact on a major federal program to determine the auditing procedures for the purpose of expressing our opinion on compliance and 10 teat and report on internal control over compliance in accordance with 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 ds6mW)cy in internal control over eompHance exists when the design of 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 correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A meterfei weeknoss In Irlfarnal cot" over compliance Is a deficiency, or combination of deficiencies, in internal control over compflance, such that there Is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prwenteJ, or defected 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 arty deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. City of Chubbuck's responses to the findings Iden flied 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. !�_q Pocatello, Idaho Marsh 29.2013 CITY OF CHUSBUCK, IDAHO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED SEPTEMBER 30, 2012 ` These awards were through the American Racmry and Relnvesbnent Ad. These awards wee considered major federal awards. 53 DEATON & COMPANY, CHARTERED Federal CFDA Amount Expend -tures Total FEDERAL GRANTOR/PASS—THROUGH GRANTOR Number Grant No. Awarded this Period Expenditures Grant Awards ENVIRONMENTAL PROTECTION AGENCEYIBUREAU OF LAND MANAGEMENT 15.242 1-011AC14105-0004 $ 6,000 $ 6,000 $ 6,000 S 8,000 $ 8.000 S 6,000 Loan Awards DEPARTMENT OF ENVIRONMENTALOUALITY 86-458 DW -9926 S 279,589 $ $ 279,589 88-158 VP"03 156,389 156,389 66-458 WW1009 '• 5,610,197 519.666 5,062,802 66-458 WW1014 7,171,889 80,109 7,171,899 13,218,074 599,776 12,670,479 TOTAL EXPENDITURES OF FEDERAL AWARDS $ 13,224.074 5 605,776 4 12,676,479 ` These awards were through the American Racmry and Relnvesbnent Ad. These awards wee considered major federal awards. 53 DEATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED SEPTEMBER 30, 2012 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 8 programs was $300,000. 9. City of Chubbuck was considered a high-risk audited. FINDINGS — FINANCIAL STATEMENT AUDIT None FINDINGS AND QUESTIONED COSTS — MAJOR FEDERAL AWARD PICOGRAM AUDIT None 54 DEATON & COMPANY, CHARTEREII CITY OF CHUSSUCK, IDAHO SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS (PAGE 1 OF 2) FOR THE YEAR ENDED SEPTEMBER 30, 2011 FINDINGS — FINANCIAL STATEMENT AUDIT 2011-1 Crrferia - Accounting policies require all cash accounts be recorded on the City's general ledger. The City also has an unwritten expectation to complete cash reconciliations prior to receiving the next month's bank statements. Condition - A new bank account that was opened and funded was not included in the general ledger. Also the expectation of cash reconciliations was not met. The cash reconciliations were delinquent at Effect - The City's general ledger did not accurately reflect the cash balance at yearend. 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 cash accounts are complete and reconciled within a timely manner. Recommendefiorn - We recommend the City review its policies and procedures to insure all bank accounts are recorded on the City's general ledger and that cash reconciliations are performed within a timely manner. 2011-2 Criteria - Accounting policies require all payables incurred during the period, for proprietary funds, be recorded on the City's general ledger and that payments for these liabilities show as a decrease In liabilities. Condition _ The City had entered into a bond agreement for the purchase of water rights, however, neither the assets nor liabilities were recorded on the City's general ledger. We also found that the City expensed payments on notes payable that were recorded in proprietary funds. Effect - The City's general ledger did not accurately reflect the bond payable and assets and liabilities were understated at yearend. Response - Management believes the above significant deficiency is a weakness in internal controls and has agreed to review its pollees and procedures to Insure all payables are recorded on the City's general ledger and drat payments to liabilities decrease the liabilities and are not reported as an expense. Recommendation - We recommend the City review its policies and procedures to Insure all payables are recorded on the City's general ledger and that payments to liabilities decrease the liabilities and are not reported as an expense. 55 DEATON & COMPANY, CHARTERED CITY OF CHUSSUCK, IDAHO SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS (PAGE 2 OF 2) FOR THE YEAR ENDED SEPTEMBER 30, 2011 FINDINGS AND QUESTIONED COSTS - MAJOR AWARD PROGRAM AUDIT Department of Environmental Quality 2011-2 Criteria - Accounting policies require all payables Incurred during the period, for proprietary funds, be recorded on the City's general ledger and that payments for these liabilities show as a decrease in liabilities. Condition - The City had entered Into a bond agreement for the purchase of water rights, however, neither the assets nor liabilities were recorded on the City's general ledger. We also found that the City expensed payments on notes payable that were recorded in proprietary funds. Effect - The City's general ledger did not accurately reflect the bond payable and assets and liabilities were understated at yearend. Response - Management believes the above significant deficiency is a weakness in internal controls and has agreed to review Its policies and procedures to insure all payables are recorded on the City's general ledger and that payments to liabilities decrease the liabilities and are not reported as an expense. Recommendation - We recommend the City review its policies and procedures to Insure all payables are recorded on the City's general ledger and that payments to liabilities decrease the liabilities and are not reported as an expense. 56 DEATON & COMPANY, CHARTERED