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HomeMy WebLinkAbout2010 CDACHUBBUCK DEVELOPMENT AUTHORITY A COMPONENT UNIT OF THE CITY OF CHUBBUCK, IDAHO FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2010 WITH COMPARATIVE TOTALS AS OF SEPTEMBER 30, 2009 DEATON & COMPANY, CHARTERED CHUBBUCK DEVELOPMENT AUTHORITY TABLE OF CONTENTS Page Title Page 1 Table of Contents 2 AUDITOR'S REPORTS 3 FINANCIAL STATEMENTS Government Wide Statements of net assets 4 Statements of activities 5 Governmental Funds Balance sheets 6 Statements of revenues, expenditures, and changes in fund balances 7 NOTES TO FINANCIAL STATEMENTS 8-11 REQUIRED SUPPLEMENTARY INFORMATION 12 Statement of revenues and expenditures - budget to actual 13 Notes to the statement of revenues and expenditures - budget to actual 14 REPORTS REQUIRED BY GENERALLY ACCEPTED GOVERNMENT AUDITING STANDARDS Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards 15-16 2 DEATON & COMPANY, CHARTERED Deaton & Company, Chartered Certified Public Accountants RLJV 215 North 9th, Suite A Pocatello, ID 83201-5278 (208)232-5825 Members of ldaho Society of Certified Public Accountants Members of American Institute of Certified Public Accountants INDEPENDENT AUDITOR'S REPORT To the Board of Commissioners Chubbuck Development Authority Chubbuck, Idaho We have audited the accompanying financial statements of the governmental activities, and each major fund, of Chubbuck Development Authority, as of and for the years ended September 30, 2010 and 2009, which collectively comprise the Authority's basic financial statements as listed in the table of contents. These financial statements are the responsibility of Chubbuck Development Authority's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and 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, and each major fund of the Chubbuck Development Authority, as of September 30, 2010 and 2009, and the respective changes in financial position for the years then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated May 31, 2011, on our consideration of the Chubbuck Development Authority's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. The required supplementary information on page 13 is not a required part of the basic financial statements but is supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Chubbuck Development Authority's basic financial statements. The combining and individual nonmajor fund financial statements are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The Authority has not presented the required Management's discussion and analysis that accounting principles generally accepted in the United States has determined is necessary to supplement, although not required to be part of, the basic financial statements. Chubbuck, Idaho May 31, 2011 CHUBBUCK DEVELOPMENT AUTHORITY STATEMENTS OF NET ASSETS SEPTEMBER 30, 2010 WITH COMPARATIVE TOTAL AT SEPTEMBER 30, 2009 ASSETS Cash and cash equivalents Other receivables Property tax receivable LIABILITIES Accounts payable NET ASSETS Unrestricted Governmental Activities 2010 2009 $ 3,039,331 $ 1,568,413 25,000 - 99,375 45,422 3,163, 706 1,613,835 83,905 21,316 83,905 21,316 $ 3,079,801 $ 1,592,519 The accompanying notes are an integral part of these financial 1W HWI, CONIPANY, CHARTERED Page 4 CHUBBUCK DEVELOPMENT AUTHORITY STATEMENTS OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2010 WITH COMPARATIVE TOTAL FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2009 EXPENSES Administration Project payments REVENUES Property taxes Interest and other CHANGE IN NET ASSETS BEGINNING NET ASSETS ENDING NET ASSETS Governmental Activities 2010 2009 $ - $ 7,636 215,230 1,587,659 215,230 1,595,295 1,688,770 1,821,068 13,742 149,993 1,702,512 1,487,282 1,592,519 $ 3,079,801 1,971,061 375,766 1,216, 753 $ 1,592,519 The accompanying notes are an integral part of these financial VeA"9A COMPANY, CHARTERED Page 5 CHUBBUCK DEVELOPMENT AUTHORITY BALANCE SHEETS GOVERNMENTALFUNDS SEPTEMBER 30, 2010 WITH COMPARATIVE TOTAL AT SEPTEMBER 30, 2009 FUND BALANCES Unreserved General fund 3,005,830 3,005,830 1,549,644 3,005,830 3,005,830 1,549,644 $ 3,163,706 Amounts reported for governmental activities in the statements of net assets are different because: Certain receivables are not current resources and are reported as deferred revenues in the governmental funds 73,971 42,875 Net Assets of Governmental Activities $ 3,079,801 $ 1,592,519 The accompanying notes are an integral part of these financial Ii tMtk, COMPANY, CHARTERED Page 6 General Fund 2010 2009 ASSETS Cash and cash equivalents $ 3,039,331 $ 3,039,331 $ 1,568,413 Other receivables 25,000 25,000 - Property tax receivable 99,375 99,375 45,422 $ 3,163,706 $ 3,163,706 $ 1,613,835 LIABILITIES Accounts payable $ 83,905 $ 83,905 $ 21,316 Deferred tax revenues 73,971 73,971 42,875 157,876 157,876 64,191 FUND BALANCES Unreserved General fund 3,005,830 3,005,830 1,549,644 3,005,830 3,005,830 1,549,644 $ 3,163,706 Amounts reported for governmental activities in the statements of net assets are different because: Certain receivables are not current resources and are reported as deferred revenues in the governmental funds 73,971 42,875 Net Assets of Governmental Activities $ 3,079,801 $ 1,592,519 The accompanying notes are an integral part of these financial Ii tMtk, COMPANY, CHARTERED Page 6 CHUBBUCK DEVELOPMENT AUTHORITY STATEMENTS OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTALFUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2010 WITH COMPARATIVE TOTAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 REVENUES Property taxes Interest revenue Reimbursements and other revenue EXPENDITURES Administration Projects and grants EXCESS REVENUES OR (EXPENDITURES) BEGINNING FUND BALANCE ENDING FUND BALANCE Net change in fund balances -total governmental funds General Fund 2010 2009 $ 1,657,674 $ 1,657,674 $ 1,812,231 13,742 13,742 23,808 - - 126,185 1,671,416 1,671,416 1,962,224 - - 7,636 215,230 215,230 1,587,659 215,230 215,230 1,595,295 1,456,186 1,456,186 366,929 1,549,644 1,549,644 1,182,715 $ 3,005,830 $ 3,005,830 $ 1,549,644 Amounts reported for governmental activities in the statements of activities are different because: Governmental funds only report taxes received within sixty days as current fund revenues. All taxes receivable are treated as revenues in the statement of activities. Change in Net Assets of Governmental Activities $ 1,456,186 $ 366,929 31,096 8,837 $ 1,487,282 $ 375,766 The accompanying notes are an integral part of these financial �WRVNtk, COMPANY, CHARTERED Page 7 CHUBBUCK DEVELOPMENT AUTHORITY NOTES TO FINANCIAL STATEMENTS NOTE 1 - Summary of Significant Accounting Policies A. Reporting Entity The Idaho Urban Renewal Law of 1965 authorized the Mayor, with advice and consent of the City Council, to appoint a board of commissioners for an urban renewal agency to function within the municipality of Chubbuck, provided that the Council has first passed a resolution finding that one or more such areas are necessary, and that there is a need for an urban renewal agency to function in the City. Chubbuck's urban renewal agency, Chubbuck Development Authority (CDA), was found necessary by resolution in 1992 and the board members were appointed thereafter. Unlike other advisory boards to the City Council, state law declares this agency to be "an independent public body corporate and politic" and gives it a wide range of authority to effectuate urban renewal. Under generally accepted accounting principles, as adopted by the Governmental Accounting Standards Board, the CDA is included in the Annual Financial Statements of the City of Chubbuck as a discretely presented component unit. B. Government -wide and fund financial statements The government -wide financial statements (i.e., the statement of net assets and the statement of changes in net assets) report information on all of the nonfiduciary activities of the government. For the most part, the effect of interfund activity has been removed from these statements. C. Measurement focus, basis of accounting, and financial statement presentation The government -wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the authority considers revenues to be available if they are collected within 60 days of the end of the current fiscal year. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. All other revenue items are considered to be measurable and available only when cash is received by the authority. As a general rule, the effect of interfund activity has been eliminated from the government -wide financial statements. Page 8 DEATON & COMPANY, CHARTERED CHUBBUCK DEVELOPMENT AUTHORITY NOTES TO FINANCIAL STATEMENTS NOTE 1 - Summary of Significant Accounting Policies (Continued D. Assets, liabilities, and net assets or equity 1. Deposits and investments Unrestricted cash balances from all funds are combined and invested in investments authorized under Idaho State Code. Earnings from these investments are credited to the funds based on the monthly balance of cash in each fund. Cash includes cash on hand, deposits and other investments which are immediately convertible to cash or have a maturity of less than 90 days. CDA is authorized under State Code to invest in obligations of the U.S. Treasury, U.S. Government backed institutions, commercial paper, and repurchase agreements. CDA's policy is to restrict investment to highly liquid money market accounts. 2. Receivables and payables Property taxes receivable are recorded when certified by the State Tax Commission in October of each year. Taxes not received within sixty days of year-end are deferred. The taxing authorities within each tax increment financing district levy property taxes by the third Monday of September on a market value basis. These taxes are billed to the taxpayers in November and are due December 20. Real property taxes not paid constitute a lien on the property when entered on the real property assessment roll as delinquent on the first day of January of the succeeding year. Property taxes are assessed and collected for the Authority by Bannock County. 3. Restricted assets reported on the statement of net assets It is the Authorities policy to first apply restricted resources when an expense is incurred for purposes for which both restricted and unrestricted net assets are available. 4. Capital Assets The Authority has no capital assets 5. Compensated Absences The Authority has no liability for compensated absences 6. Fund Equity In the fund financial statements, governmental funds report reservation of fund balance for amounts that are not available for appropriation or are legally segregated by outside third -party for use for specific purposes. Designations of fund balance represent tentative management plans that are subject to change. NOTE 2 - Reconciliation of Government -wide and Fund Financial Statements A. Explanation of certain differences between the governmental fund balance sheet and the government -wide statement of net assets. The governmental fund balance sheet includes the reconciliation between fund balance - total governmental funds and net assets - governmental activities as reported in the government -wide statement of net assets. One element of the reconciliation explains that "Certain receivables are not current resources and are reported as deferred revenues in the governmental funds". The detail of this difference is as follows: Deferred Property Taxes $ 73,971 Page 9 DEATON & COMPANY, CHARTERED CHUBBUCK DEVELOPMENT AUTHORITY NOTES TO FINANCIAL STATEMENTS NOTE 3 - Stewardship, compliance and accountability A. Budgetary Information 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. The Board of the Chubbuck Development Authority does not and is not required to hold public meeting in conjunction with adoption of its annual budget. The new budget is submitted to the board at its meeting in October as part of the cash report presented by the Treasurer. When the cash report is approved by the board the budget is approved as well. Budgets may be amended by the same procedure used to adopt the budget. NOTE 4. Detailed notes on all funds A. Deposits and Investments Cash and cash equivalents at yearend consist of the following: Deposits Bank Book Cash in Local Government Investment Pool (LGIP) $ 3,039,331 $ 3,039,331 The Authority has no investments. Deposits - Custodial Credit Risk for deposits is the risk that, in the event of bank (financial institute) failure, the government's deposits may not be returned to it. 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. The State Treasurer's Investment Pools (LGIP) operates in accordance with appropriate state laws and regulations. The reported value of the pools is the same as the fair value of the pool shares. Deposits and Investment transactions are subject to a variety of risks. Interest Rate Risk is the risk that changes in interest rates will adversely affect the value of an investment. This risk in null since the Authority has no investments. Credit Risk is the risk that an issuer or a counter party to an investment will not fulfill its obligations. Concentration of Credit Risk is the risk of loss attributed to the magnitude of an investment in a single issuer. The Authority has a concentration risk of $1,568,413 due to all trust deposits held within one trust department and invested in the same fund. Page 10 DEA'fON &COMPANY, CHAR'CERED CHUBBUCK DEVELOPMENT AUTHORITY NOTES TO FINANCIAL STATEMENTS NOTE 4. Detailed notes on all funds (continued) B. Receivables 1. Property Taxes Property tax revenues are recognized and accrued when billed by Bannock County. CDA's property taxes, levied by the third Monday of September on a market value basis, are billed to the taxpayers in November. Half of the real, personal and mobile home property taxes are due on December 20 and the remainder is due the following June 20. Other property taxes are due December 20. Real property taxes not paid constitute a lien on the property when entered on the real property assessment roll as delinquent on the first day of January of the succeeding year. Property taxes are assessed and collected for CDA by Bannock County. 2. Property Tax Receivable and Deferred Property Taxes At yearend, property tax receivable and deferred tax revenues consisted of the following: General fund NOTE 5. Other Information A. Contingent Liabilities Receivables Deferred Tax _$ 99,375 $ 73.971 The majority of the revenue collected by CDA is derived from tax increment financing. Tax increment financing is a method of segregating a portion of the property taxes paid on properties within an urban renewal district to fund improvements for which the district was formed. This is accomplished by freezing the market value of property within the district. A contingent liability exists when the market value increase in the district is not large enough to fund any debt incurred by the district to finance the improvements within the district. B. Subsequent Events Subsequent events were evaluated up to May 31, 2011, the date the financial statements were available to be issued. Page 11 DEATON & COMPANY, CHARTERED REQUIRED SUPPLEMENTARY INFORMATION Page 12 DEATON & COMPANY, CHARTERED CHUBBUCK DEVELOPMENT AUTHORITY STATEMENT OF REVENUES AND EXPENDITURES - BUDGET TO ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2010 REVENUES GENERALFUND Property taxes Interest revenue EXPENDITURES GENERAL FUND Administration Projects and grants Playground equipment Hawthorne Pavilion Evans Lane Capell park Briscoe Road Hiline Road Afton Meadows Adams Street/ Park Lawn West Chubbuck Road Philbin intersect Hawthorne/Chubbuck signal NET CHANGE IN FUND BALANCE BEGINNING FUND BALANCE ENDING FUND BALANCE Original Amended 1,746 (1,746) Budget Budget Actual (10,461) Amounts Amounts Amounts Variance - - 816 (816) $ 1,873,928 $ 1,873,928 $ 1,657,674 $ (216,254) 15,000 15,000 13,742 (1,258) 1,888,928 1,888,928 1,671,416 (217,512) - - 1,746 (1,746) 10,000 10,000 20,461 (10,461) 15,000 15,000 11,843 3,157 - - 816 (816) 3,752 (3,752) - - 9,851 (9,851) 25,000 25,000 73,907 (48,907) - - 16,709 (16,709) 3,000 3,000 23,300 (20,300) - - 2,448 (2,448) 1,300,000 1,300,000 22,618 1,277,382 535,928 535,928 27,779 508,149 1,888,928 1,888,928 215,230 1,673,698 $ - $ - 1,456,186 $ 1,456,186 1,549,644 $ 3,005,830 Page 13 DEATON & COMPANY, CHARTERED CHUBBUCK DEVELOPMENT AUTHORITY NOTES TO REQUIRED SUPPLEMENTAL INFORMATION NOTE 1 -EXPENSES IN EXCESS OF BUDGET PROJECTS The Authority did not budget sufficient expenditures for increased administration expenditures in the following projects. Playground equipment Evans Lane East Chubbuck intersection Capell park Briscoe Road Hiline Road Afton Meadows Adams Street/ Park Lawn West Chubbuck Road REVENUE IN EXCESS OF BUDGET Decreased expenditures in other projects were used to pay under -budgeted expenditures. 14 DEATON & COMPANY, CHARTERED Deaton & Company, Chartered Certified Public Accountants 215 North 9th, Suite A Pocatello, ID 83201-5278 (208) 232-5825 Mmnbers of &ha Society 4Cenified Public Aceoundnt, W,nbe nFA.eflwan(natms of Cenihed Nbk Acro. mwn REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Board of Commissioners Chubbuck Development Authority Chubbuck, Idaho We have audited the financial statements of the governmental activities, and each major fund information of Chubbuck Development Authority, as of and for the years ended September 30, 2010 and 2009, which collectively comprise the Chubbuck Development Authority's basic financial statements and have issued our report thereon dated May 31, 2011. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered Chubbuck Development Authority'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 Chubbuck Development Authority's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Chubbuck Development Authority's internal control over financial reporting. A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the Chubbuck Development Authority's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the Chubbuck Development Authority's financial statements that is more than inconsequential will not be prevented or detected by the Chubbuck Development Authority's internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the Chubbuck Development Authority's internal control. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be 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. Compliance and Other Matters As part of obtaining reasonable assurance about whether Chubbuck Development Authority's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. This report is intended solely for the information and use of management, Board of Commissioners, others within the entity, and 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. •�-c-_-'�.-..- ,c_ Gam.._-�-' Chubbuck, Idaho May 31, 2011 DEATON & COMPANY, CHARTERED