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HomeMy WebLinkAbout2012 CDACHUBBUCK DEVELOPMENT AUTHORITY A COMPONENT UNIT OF THE CITY OF CHUBBUCK, IDAHO FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2012 WITH COMPARATIVE TOTALS AS OF SEPTEMBER 30, 2011 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 215 North 9th, Suite A Pocatello, Idaho 83201-5278 (208)232-5825 'Members of Idaho Society of Certified Public Accountants Members of American Institute of Certified Public Accowg nts 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, component unit of City of Chubbuck, as of and for the years ended September 30, 2012 and 2011, 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. The prior year summarized comparative information has been derived from the Authority's 2011 financial statements and, in our report dated March 22, 2012, we expressed unqualified opinions on the respective financial statements of the governmental activities, and each major 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 General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable 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, 2012, 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 March 25, 2013, 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. Accounting principles generally accepted in the United States of America require that budgetary comparison information on page 13 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers 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 the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion provide any assurance. 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. Pocatello, Idaho March 25, 2013 CHUBBUCK DEVELOPMENT AUTHORITY STATEMENTS OF NET ASSETS SEPTEMBER 30, 2012 WITH COMPARATIVE TOTAL AT SEPTEMBER 30, 2011 ASSETS Cash and cash equivalents Other receivables Property tax receivable LIABILITIES Accounts payable NET ASSETS Unrestricted Governmental Activities 2012 2011 $2,188,384 $ 3,656,886 25,000 25,000 123,401 132,270 2,336,785 3,814,156 20,122 117,356 20,122 117,356 $ 2,316,663 $ 3,696,800 The accompanying notes are an integral part of these financial statements Page 4 DEATON & COMPANY, CHARTERED CHUBBUCK DEVELOPMENT AUTHORITY STATEMENTS OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2012 WITH COMPARATIVE TOTAL FOR THE YEAR ENDED SEPTEMBER 30, 2011 Governmental Activities EXPENSES Administration $ 3,150 $ - Project payments 3,232,943 1,227,258 3,236,093 1,227,258 REVENUES Property taxes 1,828,285 1,825,321 Interest and other 27,671 18,936 1,855,956 1,844,257 CHANGE IN NET ASSETS (1,380,137) 616,999 BEGINNING NET ASSETS 3,696,800 3,079,801 ENDING NET ASSETS $ 2,316,663 $ 3,696,800 The accompanying notes are an integral part of these financial statements Page 5 DEATON & COMPANY, CHARTERED CHUBBUCK DEVELOPMENT AUTHORITY BALANCE SHEETS GOVERNMENTALFUNDS SEPTEMBER 30, 2012 WITH COMPARATIVE TOTAL AT SEPTEMBER 30, 2011 Certain receivables are not current resources and are reported as deferred revenues in the governmental funds 73,733 110,340 Net Assets of Governmental Activities $ 2,316,663 $ 3,696,800 The accompanying notes are an integral part of these financial statements Page 6 DEATON & COMPANY, CHARTERED General Fund 2012 2011 ASSETS Cash and cash equivalents $ 2,188,384 $ 2,188,384 $ 3,656,886 Other receivables 25,000 25,000 25,000 Property tax receivable 123,401 123,401 132,270 $ 2,336,785 $ 2,336,785 $ 3,814,156 LIABILITIES Accounts payable $ 20,122 $ 20,122 $ 117,356 Deferred tax revenues 73,733 73,733 110,340 93,855 93,855 227,696 FUND BALANCES Committed 228,000 228,000 - Unassigned 2,014,930 2,014,930 3,586,460 2,242,930 2,242,930 3,586,460 $ 2,336,785 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 73,733 110,340 Net Assets of Governmental Activities $ 2,316,663 $ 3,696,800 The accompanying notes are an integral part of these financial statements Page 6 DEATON & COMPANY, CHARTERED CHUBBUCK DEVELOPMENT AUTHORITY STATEMENTS OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2012 WITH COMPARATIVE TOTAL FOR THE YEAR ENDED SEPTEMBER 30, 2011 REVENUES Property taxes Interest revenue EXPENDITURES Projects and grants NET CHANGE IN FUND BALANCE BEGINNING FUND BALANCE ENDING FUND BALANCE Net change in fund balances -total governmental funds General Fund 2012 2011 $ 1,864,892 $ 1,864,892 $ 1,788,951 27,671 27,671 18,936 1,892,563 1,892,563 1,807,887 3,236,093 3,236,093 1,227,258 3,236,093 3,236,093 1,227,258 (1,343,530) (1,343,530) 580,629 3,586,460 3,586,460 3,005,831 $ 2,242,930 $ 2,242,930 $ 3,586,460 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 $ (1,343,530) $ 580,629 (36,607) 36,370 $ (1,380,137) $ 616,999 The accompanying notes are an integral part of these financial statements Page 7 DEATON & COMPANY, CHARTERED 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 Sianlficant 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 the following classifications of fund balance: Nonspendable 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 items- 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 Authority's highest level of decision-making authority for the Authority. Commitments may be changed or lifted only by the Board taking the same formal action that imposed the constraint originally. Assigned items -Assigned items represent the Authority's intent to use certain resources for specific purposes. The Board may establish the intended use of these funds for a designated purpose. Unassigned items- Represents the remainder of the Authority's equity in governmental fund -type balances in excess of the aforementioned classifications. Page 9 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 The Authority has committed funds to assist in the loan payments for the sewer interceptor within the City of Chubbuck. The Authority committed $228,000 which is calculated using the portion of the sewer intercept within the CDA's legal jurisdiction. 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 govemmental funds and net assets - governmental activities as reported in the government -wide statement of net assets. One element of the reconcillation 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 NOTE 3 - Stewardship, compliance and accountability A. Budgetary Information $ 73,733 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 Cash in bank The Authority has no investments. Bank Book 2,203,994 2,188,384 21203,_994 $ 2,188,384_ Deposits - Custodial Credit Risk for deposits is the risk that, in the event of bank (financial instituted failure, the government's deposits may not be returned to it. The Authority's deposit are covered by federal Deposit Insurance Corporation or collateralized during the year and were therefore, not subject to custodial credit risk. 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. Page 10 DFATON & COMPANY, CHARTERED CHUBBUCK DEVELOPMENT AUTHORITY NOTES TO FINANCIAL STATEMENTS NOTE 4. Detailed notes on all funds (continued) A. Deposits and Investments (Continued) 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. 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 $ 123,401 $ 73,733 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 March 25, 2013, 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, 2012 Original Amended Budget Budget Amounts Amounts REVENUES GENERALFUND Actual Amounts Variance Property taxes $ 1,663,000 $ 1,663,000 $ 1,864,892 $ 201,892 Interest revenue 15,000 15,000 27,671 12,671 1,678,000 1,678,000 1,892,563 214,563 EXPENDITURES GENERAL FUND Administration and other expenses - - 9,025 (9,025) Projects and grants Playground equipment 25,000 25,000 25,000 Hockey Rink 9,500 (9,500) Evans Lane 528,000 528,000 1,729,349 (1,201,349) Hiline Road 248,532 (248,532) Knudsen Lane 19,241 (19,241) Joy Street 200,000 200,000 22,111 177,889 Water system 350,000 350,000 349,656 344 Afton Meadows 25,000 25,000 176,955 (151,955) Allstate project 450,000 450,000 544,927 (94,927) Chubbuck/Philbin Intersection 100,000 100,000 126,796 (26,796) 1,678,000 1,678,000 3,236,093 (1,558,093) NET CHANGE IN FUND BALANCE $ - $ - (1,343,530) $ (1,343,530) BEGINNING FUND BALANCE 3,586,460 ENDING FUND BALANCE $ 2,242,930 Page 13 DF,ATON & 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. Other expenses Hiline Road Afton Meadows Adams Street] Park Lawn Chubbuck]Philbin Intersection REVENUE IN EXCESS OF BUDGET Revenues in excess of budget, decreased expenditures in other projects, and prior fund balance were used to pay under -budgeted expenditures. 14 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 Accountants Members of American Tnstitute of Certified Public Ac—tants 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 year ended September 30, 2012, which collectively comprise the Chubbuck Development Authority's basic financial statements and have issued our report thereon dated March 25, 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 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. Pocatello, Idaho March 25, 2013 DEATON & COMPANY, CHARTERED