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HomeMy WebLinkAbout2004CITY OF CHUBBUCK AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2004 DEATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO ANNUAL FINANCIAL REPORT SEPTEMBER 30, 2004 TABLE OF CONTENTS Page Title Page 1 Table of Contents 2 Auditor's Reports Independent Auditor's Report 3-4 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 6 Financial Statements Statement of Net Assets 6 Statement of Activities 7 Balance Sheet - Governmental Funds 8 Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds 9-10 Statement of Net Assets - Proprietary Funds 11 Statement of Revenues, Expenses, and Changes in Net Assets - Proprietary Funds 12 Statement of Cash Flows - Proprietary Funds 13 Notes to Financial Statements 14-23 Required Supplementary Information 24 Budgetary Comparison Schedule - General Fund 25 Budgetary Comparison Schedule - Development Fund 26 Other Supplementary Information 27 Combining Balance Sheet - Nonmajor Governmental Funds 28 Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Governmental Funds 29 Budgetary Comparison Schedule - Nonmajor Governmental Funds 30 DEATON & COMPANY, CHARTERED Deaton & Company, Chartered Certified Public ACCOL1Z]tantS 215 North 9th, Suite A Pocatello, ID 83201-5278 (208)232-5825 Menhets of ldahu Society of Ce] Iified Public Accountants Mem burs of Atnerican Institute of Ccr6fied Public Accountants INDEPENDENT AUDITOR'S REPORT To the City Council City of Chubbuck, Idaho We have audited the accompanying financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of City of Chubbuck as of and for the year ended September 30, 2004, which collectively comprise the City's basic financial statements as listed in the table of contents. These financial statements are the responsibility of City of Chubbuck's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. 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 opinion. 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, each major fund, and the aggregate remaining fund information of the City of Chubbuck as of September 30, 2004, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. As described in Note 1, the City has implemented a new financial reporting model required by the provisions of GASB Statement No. 34, Basic Financial Statements and Management's Discussion and Analysis for State and Local Governments, as amended and interpreted, as of September 30, 2004. In accordance with Government Auditing Standards, we have also issued our report dated June 8, 2005, on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. The required supplementary information is not a required part of the basic financial statements but is supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Chubbuck's basic financial statements. The combining and individual nonmajor fund financial statements are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The City has not presented the required Management's discussion and analysis that accounting principles generally accepted in the United States has determined is necessary to supplement, although not required to be part of, the basic financial statements. Pocatello, Idaho June 8, 2005 DEATON & COMPANY, CHARTERED Deaton & Company, Chartered Certified PUblic Accountants 215 North 9th. Suite A Pocatello. ID $3201-5278 (208) 232-5825 N lem6er, "I" Idaho Sa wly 4-CmiGrd Public Aucuuntane, Menflicr+ of Amerirm Itl,ii Rile of CM11Wd Public Accu ,nfdfira REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the City Councii City of Chubbuck, Idaho We have audited the financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of City of Chubbuck as of and for the year ended September 30, 2004, which collectively comprise the City of Chubbuck's basic financial statements and have issued our report thereon dated June 8, 2005. 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 City of Chubbuck's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinions on the financial statements and not to provide an opinion on the internal control over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a reportable condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements caused by error or fraud in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over financial reporting and its operation that we consider to be material weaknesses. Compliance and Other Matters As part of obtaining reasonable assurance about whether City of Chubbuck's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. However, we noted certain matters that we reported to management of City of Chubbuck in a setarate letter dated June 8, 2005. This report is intended for the information and use of management, City Council, and federal awarding agencies. However, this report is a matter of public record and its distribution is not limited. Pocatello, Idaho June 8, 2005 CITY OF CHUBBUCK, IDAHO STATEMENT OF NET ASSETS SEPTEMBER 30, 2004 See accompanying notes to financial sataternents Total $ 859,144 1,450,707 187,332 171,396 494,567 3,163,146 181,022 872,128 119,065 461,949 13,868,496 (6,950,576) 8,552,084 11,715,230 124,747 28,335 150,000 38,174 71,122 181,022 119,065 712,465 1,085,000 461,949 187,971 255,016 1,989,936 2,702,401 5,423,827 872,128 2,716,874 $ 9,012,829 D)EATON & COMPANY, CHARTERED Governmental Business -type Activities Activities ASSETS Current assets Cash $ 495,830 $ 363,314 Investments 837,233 613,474 Property taxes receivable 187,332 - Intergovernmental receivables 171,396 Other accounts receivable 21,044 473,523 1,712,835 1,450,311 Noncurrent assets Restricted assets - cash Employee benefit fund 181,022 - Bond reserves - 872,128 Water deposits - 119,065 Note Receivable - General Fund - 461 949 Capital assets 6,495,951 7,372,545 Accumulated depreciation (3,621,033) (3,329,543) 3,055,940 5,496,144 4,768,775 6,946,455 LIABILITIES Current Liabilities Accounts payable 61,098 63,649 Accrued compensated absences 19,250 9,085 Current portion of bonds payable - 150,000 Accrued bond interest - 38,174 Capital lease obligation 71,122 Payable from restricted assets - Employee benefit fund 181,022 - Water deposits - 119,065 332,492 379,973 Noncurrent Liabilities Bonds payable - 1,085,000 Note payable - Proprietary fund 461,949 Capital lease obligation 187,971 - Accrued compensated absences 173,251 81,765 823,171 1,166,765 1,155,663 1,546,738 NET ASSETS Invested in capital assets, net of related debt 2,615,825 2,808,002 Restricted for bond service - 872,128 Unrestricted 997,287 1,719,587 $ 3,613,112 $ 5,399,717 6 See accompanying notes to financial sataternents Total $ 859,144 1,450,707 187,332 171,396 494,567 3,163,146 181,022 872,128 119,065 461,949 13,868,496 (6,950,576) 8,552,084 11,715,230 124,747 28,335 150,000 38,174 71,122 181,022 119,065 712,465 1,085,000 461,949 187,971 255,016 1,989,936 2,702,401 5,423,827 872,128 2,716,874 $ 9,012,829 D)EATON & COMPANY, CHARTERED EXPENDITURES General government Law enforcement Fire control Building inspection Street Parks and recreation Health and welfare Development fund Other special revenue funds Business -type activities Utilities CHANGES IN NET ASSETS CITY OF CHUBBUCK, IDAHO STATEMENT OF ACTIVITIES YEAR ENDED SEPTEMBER 30, 2004 Net (expense)/revenue General revenues General property taxes and sales tax Franchise fees Intergovernmental Operating grants Leases and rents Interest income Miscellaneous NET CHANGE IN NET ASSETS BEGINNING NET ASSETS General Business -type Activities Activities $ (4,378,967) $ 116,831 Total $ (4,262,136) 3,840,304 Program Revenues 3,840,304 138,537 - Capital Net - Charges for Grants and (Expense)/ Expenses Services Contributions Revenue 25,776 23,492 49,268 $ 142,298 $ 101,786 $ - $ (40,512) 1,882,924 - 255,008 (1,882,924) 673,837 102,546 22,903 (548,388) 92,411 219,535 - 127,124 571,318 - (571,318) 381,424 38,728 - (342,696) 17,616 - - (17,616) 1,216,438 75,636 - (1,140,802) 38,035 - 76,200 38,165 5,016,301 538,231 99,103 (4,378,967) 3,071,425 3,188,256 - 116,831 $ 8,087,726 $ 3,726,487 $ 99,103 $ (4,262,136) Net (expense)/revenue General revenues General property taxes and sales tax Franchise fees Intergovernmental Operating grants Leases and rents Interest income Miscellaneous NET CHANGE IN NET ASSETS BEGINNING NET ASSETS General Business -type Activities Activities $ (4,378,967) $ 116,831 Total $ (4,262,136) 3,840,304 - 3,840,304 138,537 - 138,537 525,148 - 525,148 57,988 - 57,988 22,733 - 22,733 25,776 23,492 49,268 23,489 - 23,489 4,633,975 ZAK 4,657,467 255,008 140,323 395,331 3,358,104 5,449,801 8,807,905 PRIOR PERIOD ADJUSTMENT - (190,407) (190,407) ENDING NET ASSETS $ 3,613,112 $ 5,399,717 $ 9,012,829 7 See accompanying notes to financial satatements DFATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO BALANCE SHEET GOVERNMENTAL FUNDS SEPTEMBER 30, 2004 LIABILITIES Accounts payable Employee benefit fund Accrued compensated absences Deferred revenue FUND BALANCES Unreserved, reported in: General Fund Special revenue fund 61,098 181,022 - 19,250 - 59,977 26,250 321,347 26,250 61,098 181,022 - 19,250 86,227 347,597 347,855 - - 347,855 - 711,376 487,029 1,198,405 347,855 711,376 487,029 1,546,260 $ 669,202 $ 737,626 $ 487,029 Amounts reported for governmental activities in the Statement of Net Assets are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds, net of accumulated depreciation of $3,621,033 2,874 918 Deferred tax revenue represents amounts that were not available to fund current Other Total 86,227 General Development Governmental Governmental Remodel loan to sewer fund Fund Fund Funds Funds ASSETS Net assets of governmental funds $3,613,112 Cash $ 59,685 $ 254,996 $ 181,149 $ 495,830 Investments 100,781 430,572 305,880 837,233 Property taxes receivable 156,318 31,014 - 187,332 Intergovernmental receivables 171,396 - - 171,396 Other receivables - 21,044 - 21,044 Restricted assets - cash 181,022 - - 181,022 $ 669,202 $ 737,626 $ 487,029 $1,893,857 LIABILITIES Accounts payable Employee benefit fund Accrued compensated absences Deferred revenue FUND BALANCES Unreserved, reported in: General Fund Special revenue fund 61,098 181,022 - 19,250 - 59,977 26,250 321,347 26,250 61,098 181,022 - 19,250 86,227 347,597 347,855 - - 347,855 - 711,376 487,029 1,198,405 347,855 711,376 487,029 1,546,260 $ 669,202 $ 737,626 $ 487,029 Amounts reported for governmental activities in the Statement of Net Assets are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds, net of accumulated depreciation of $3,621,033 2,874 918 Deferred tax revenue represents amounts that were not available to fund current expenditures and therefore are not reported in the funds 86,227 Long-term liabilities are not due and payable in the current period and therfore are not reported in the funds: Remodel loan to sewer fund (461,949) Capital lease (259,093) Accrued compensated absences (173,251) Net assets of governmental funds $3,613,112 See accompanying notes to financial satatements DEATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS YEAR ENDED SEPTEMBER 30, 2004 REVENUES General property taxes and sales tax Franchise fees Intergovernmental Parks revenue Licenses, permits and fines Grants Fire protection and prevention Leases and rents Interest income Donations Miscellaneous EXPENDITURES General government Law Enforcement Fire control Building inspection Street Parks and recreation Health and Welfare Development fund Street guarantee fund Court fund Parks Fund NET CHANGE IN FUND BALANCES BEGINNING FUND BALANCE ENDING FUND BALANCE Other Total General Development Governmental Governmental Fund Fund ;=Ilnrlr $ 2,614,916 $ 1,139,161 $ - $ 3,754,077 138,537 - - 138,537 575,443 - - 575,443 38,728 - - 38,728 271,026 - - 271,026 80,891 - - 80,891 102,546 - - 102,546 22,733 - - 22,733 9,876 10,974 4,926 25,776 - - 76,200 76,200 4,487 75,636 19,002 99,125 3,859,183 1,225,771 100,128 5,185,082 140,843 - - 140,843 1,815,421 - - 1,815,421 675,666 - - 675,666 92,411 - - 92,411 582,395 - - 582,395 424,368 - - 424,368 17,616 - - 17,616 - 1,216,438 - 1,216,438 - - 15,000 15,000 - - 435 435 - - 22,600 22,600 3,748,720 1,216,438 38,035 5,003,193 110,463 9,333 62,093 181,889 237,392 702,043 424,936 1,364,371 $ 347,855 $ 711,376 $ 487,029 $1,546,260 0 See accompanying notes to financial satatements (Continued) DEATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS YEAR ENDED SEPTEMBER 30, 2004 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 $ 181,889 Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds report capital outlays as expenditures while governmental activities report depreciation expense to allocate those expenditures over the life of the assets: Capital asset purchases capitalized 158,873 Depreciation expense (249,247) Deferred revenues are not recorded as current period receipts 86,227 Repayment of debt principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the Statement of Net Assets: Capital lease obligation principal payments 71,829 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 5,437 Change in net assets $ 255,008 10 See accompanying notes to financial satatements DEATON & COMPANY, CHARTERED ASSETS Current assets Cash Investments Accounts receivable Noncurrent assets Restricted assets - cash Bond reserves Water deposits Note receivable - General Fund Capital assets Accumulated depreciation LIABILITIES Current Liabilities Accounts payable Accrued compensated absences Current portion of bonds payable Accrued bond interest Payable from resticted assets - Water deposits Noncurrent Liabilities Bonds payable Compensated absences NET ASSETS Invested in capital assets, net of related debt Restricted for bond service Unrestricted CITY OF CHUBBUCK, IDAHO STATEMENT OF NET ASSETS PROPRIETARY FUNDS SEPTEMBER 30, 2004 11 See accompanying notes to financial satatements Total Proprietary Funds $ 363,314 613,474 473,523 1,450,311 872,128 119,065 461,949 7,372,545 (3,329,543) 5,496,144 6,946,455 63,649 9,085 150,000 38,174 119,065 379,973 1,085,000 81,765 1,166, 765 1,546,738 2,808,002 872,128 1,719,587 $ 5,399,717 DEA.TON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS PROPRIETARY FUNDS YEAR ENDED SEPTEMBER 30, 2004 Total Proprietary OPERATING REVENUES Funds Service revenue $ 3,188,256 OPERATING EXPENSES Salaries and wages Personnel benefits Repairs and maintenance Supplies Travel, meetings, and training Fuels and lubricants Telephone and communications Utilities Treatment - Pocatello Sanitation contract Insurance Other purchased services Facilities Plan Depreciation OPERATING INCOME NONOPERATING REVENUE (EXPENSE) Interest income Interest expense NET INCOME BEGINNING NET ASSETS PRIOR PERIOD ADJUSTMENT ENDING NET ASSETS 12 See accompanying notes to financial satatements 674,556 347,657 319,158 206,006 14,844 27,767 8,977 89,737 530,710 474,453 31,713 71,480 20,755 175.47 L,yy�,Ltit3 194,968 23,492 (78,137) (54,645) 140,323 5,449,801 (190,407) $ 5,399,717 DEATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2004 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from revenues Cash paid to suppliers and employees Change in water deposits Interest income Interest expense Net cash provided by operating activities CASH FLOW FROM CAPITAL AND RELATED FINANCING ACTIVITIES Capital expenditures Investing in notes receivable Net cash used in financing activities CASH FLOW FROM FINANCING ACTIVITIES Bond principal payments NET DECREASE IN CASH BEGINNING CASH ENDING CASH RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES NET INCOME ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Depreciation (Increase) decrease in assets Accounts receivable Increase (decrease) in liabilities Accounts payable Accrued compensated absences Accrued bond interest Water deposits payable Total adjustments NET CASH PROVIDED BY OPERATING ACTIVITIES 13 See accompanying notes to financial satatements $ 3,138, 731 (2,822,329) 17,027 23,492 (82,434) 274.487 (88,156) (461,949) (550,105) (145,000) (420,618) 2,388,599 $ 1,967,981 $ 140,323 175,475 (49,525) (6,998) 2,482 (4,297) 17,027 134,164 $ 274,487 DEATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO NOTES TO FINANCIAL STATEMENTS (PAGE 1 OF 10) NOTE 1 - Summary of Significant Accounting Policies The City's financial statements comply with generally accepted accounting principles (GAAP). GAAP includes all relevant Governmental Accounting Standards Board (GASB) pronouncements. In the government -wide financial statements and the fund financial statements for the proprietary funds, Financial Accounting Standards Board (FASB) pronouncements and Accounting Principles Board (APB) opinions issued on or before November 30, 1989, have been applied unless those pronouncements conflict with or contradict GASB pronouncements, in which case, GASB prevails. For enterprise funds, GASB Statement Nos. 20 and 34 provide the City the option of electing to apply FASB pronouncements issued after November 30, 1989. The City has elected not to apply those pronouncements. The accounting and reporting framework and the more significant accounting policies are discussed in subsequent subsections of this Note. For the fiscal year ended September 30, 2004 the City implemented the new financial reporting requirements of GASB Statement Nos. 33 and 34. As a result, an entirely new financial presentation format has been implemented. A. Reporting Entity The City's financial reporting entity comprises the following: Primary Government In determining the financial reporting entity, the City complies with the provisions of GASB Statement No. 14, "The Financial Reporting Entity," and includes all component units of which the City appointed a voting majority of the units' board; the City is either able to impose its will on the unit or a financial benefit or burden relationship exists. Currently, the City has no potential component units. 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 expenditurelexpenses. Funds are organized into three major categories: Governmental, proprietary, and fiduciary. An emphasis is placed on major funds within the governmental and proprietary categories. A fund is considered major if it is the primary operating fund of the City or meets the following criteria: a. Total assets, liabilities, revenues or expenditures/expenses of that individual governmental or enterprise fund are at least 10 percent of the corresponding total for all funds of that category or type; and Total assets, liabilities, revenues, or expend itures/expenses of the individual governmental fund or enterprise fund are at least 5 percent of the corresponding total for all governmental and enterprise funds combined. 14 DEATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO NOTES TO FINANCIAL STATEMENTS (PAGE 2 OF 10) NOTE 1 - Summary of Significant Accounting Policies (Continued) B. Basis of Presentation (Continued) Governmental Funds General Fund The General Fund is the general operating fund of the City and is always classified as a major fund. All financial resources, except those required to be accounted for in another fund, are accounted for in the General Fund. Special Revenue Funds Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specific purposes. 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. C. Measurement Focus and Basis of Accounting Measurement focus is a term used to describe "which" transactions are recorded within the various financial statements. Basis of accounting refers to "when" transactions are recorded regardless of the measurement focus applied. Measurement Focus On the government -wide Statement of Net Assets and the Statement of Activities, both governmental and business -like activities are presented using the economic resources measurement focus as defined in item b. below. In the fund financial statements, the "current financial resources" measurement focus or the "economic resources" measurement focus is used as appropriate: a. All governmental funds utilize a "current financial resources" measurement focus. Only current financial assets and liabilities are generally included on their balance sheets. Their operating statements present sources and uses of available spendable financial resources during a given period. These funds use fund balance as their measure of available spendable financial resources at the end of the period. b. The proprietary fund utilizes an "economic resources" measurement focus. The accounting objectives of this measurement focus are the determination of operating income, changes in net assets (or cost recovery), financial position, and cash flows. All assets and liabilities (whether current or noncurrent) associated with their activities are reported. Proprietary fund equity is classified as net assets. 15 CITY OF CHUBBUCK, IDAHO NOTES TO FINANCIAL STATEMENTS (PAGE 3 OF 10) NOTE 1 - Summary of Significant Accountinq Policies Continued C. Measurement Focus and Basis of Accounting (Continued) Basis of Accounting In the government -wide Statement of Net Assets and Statement of Activities, both governmental and business- like activities are presented using the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred or economic asset used. Revenues, expenses, gains, losses, assets, and liabilities resulting form exchange and exchange - like transactions are recognized when the exchange takes place. 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. D. Budgets and Encumbrances Budgets are adopted on a basis consistent with generally accepted accounting principles. Annual appropriated budgets are adopted for the general and special revenue funds. All annual appropriations lapse at fiscal year end. Each month the City prepares a financial report that reflects the actual and budgeted financial data. A strict purchase order system is used in controlling and maintaining expenditures within budget categories. This data is reviewed by the City Council. The City does not use the encumbrance method of accounting. The General Fund incurred expenditures in excess of appropriations of the following amounts for the year ended September 30, 2004: Fire control $ 2,449 Street $ 48,449 Parks and recreation $ 5,167 Health and Welfare $ 3,216 Street guarantee fund $ 9,500 The excess expenditures were provided by available fund balance in the fund. E. Cash and Investments For the purpose of the Statement of Net Assets, "cash, including time deposits" includes all demand, savings accounts, and certificates of deposits 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. 16 DE ETON & C'!h'!i1',1NY, CHARTERED CITY OF CHUBBUCK, IDAHO NOTES TO FINANCIAL STATEMENTS (PAGE 4 OF 10) NOTE 1 - Summary of Significant Accountinq Policies Continued F. Property, Plant, and Equipment Investments are carried at fair value except for short-term U.S. Treasury obligations with a remaining maturity at the time of purchase of one year or less. Those investments are reported at amortized cost. Fair value is based on quoted market price. The accounting treatment for property, plant and equipment depends on whether the assets are used in governmental fund operations or proprietary fund operations and whether they are reported in the government - wide or fund financial statements. Government -wide Statements In the government -wide financial statements, fixed assets are accounted for as capital assets. All fixed assets are valued at historical cost, or estimated historical cost if actual is unavailable, except for donated fixed assets which are recorded at their estimated fair value at the date of donation. Estimated historical cost was used to value the majority of the assets acquired prior to September 30, 2003. Prior to October, 2003, governmental fund infrastructure assets were not capitalized. Only new purchases after October 1, 2003 will be capitalized. Depreciation of all exhaustible fixed assets is recorded as an allocated expense in the Statement of Activities, with accumulated depreciation reflected in the Statement of Net Assets. Depreciation is provided over the assets' estimated useful lives using the straight-line method of depreciation. The range of estimated useful lives by type of asset is as follows: Buildings Other structures Vehicles Equipment Fund Financial Statements 20-50 years 5-40 years 5-30 years 2-40 years In the fund financial statements, fixed assets used in governmental fund operations are accounted for as capital outlay expenditures of the governmental fund upon acquisition. Fixed assets used in proprietary fund operations are accounted for the same as in the government -wide statements. 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. G. 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. 17 DEATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO NOTES TO FINANCIAL STATEMENTS (PAGE 5 OF 10) NOTE 1 - Summary of Significant Accounting Policies Continued G. Long-term Debt (Continued) 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 proceeds are reported as other expenditures. The accounting fo government -wide statements. H. Compensated Absences funds is not reported as liabilities in the fund financial statements. Debt financing sources. Payment of principle and interest are reported as r proprietary funds is the same in the fund statements as it is in the 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. Equity Classifications Government -wide Statements Equity is classified as net assets and displayed in three components: 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. 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. Unrestricted net assets - All other net assets that do not meet the definition of "restricted" or "invested in capital assets, net of related debt." Fund Statements Governmental fund equity is classified as fund balance. Fund Balance is further classified as reserved and unreserved. Unreserved can be further split between designated and undesignated. Proprietary fund equity is classified the same as in the government -wide statements. 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. 18 DEATON & COMPANY, CHARTERED CITY OF CHUBSUCK, IDAHO NOTES TO FINANCIAL STATEMENTS (PAGE 6 OF 10) NOTE 2 - regal Compliance - Budgets Approximately six to seven months before the start of a new fiscal year, the City's financial officer submits to the City Council a proposed operating budget for the fiscal year commencing the following October 1. The budget is prepared by fund, function and activity, and includes information on the past year, current year estimates and requested appropriations for the next fiscal year. 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 - Cash and Cash Equivalents and Cash Flow Activities For purposes of the statement of cash flows, the proprietary fund types considers all highly liquid investments with a maturity of three months or less when purchased or time certificates of deposit redeemable on demand with no penalty to be cash equivalents. NOTE 4 - Restricted_ Assets and Payable from Restricted Assets Assets have been set aside for special items and are restricted for that purpose. To date cash has been restricted for the following items: Governmental Employee benefit fund $ 181,022 Proprietary Bond reserves $ 872,128 Water deposits 119,065 Total $ 991,193 Bond reserves are amounts the City is legally required to reserve for the repayment of outstanding bonds. Water deposits are collected from individuals who have a history of collection problems. Money on deposit may be used to pay past due balances or is returned when the payer's payment history improves. NOTE 5 - Property Tax Bannock County has the responsibility of assessing and collecting all property taxes. Taxes levied for the year are payable in two installments due December 20th of the current year and June 20th of the following year. The County remits property taxes collected to the City monthly. Property taxes are recognized as revenue when received for monthly accrual is made to recognize property taxes receivable at year end. property taxes were expected to be collected and remitted by the County 19 reporting purposes. At year end, an At year end, $187,332 in outstanding DEATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO NOTES TO FINANCIAL_ STATEMENTS (PAGE 7 OF 10) NOTE 6 - Concentration of Credit Risk The City is subject to credit risk on deposits with banks that exceed the FDIC maximum insured balance amount. Additionally, the City grants credit to customers in the City for utility service. This extension of credit potentially subjects the City to credit risk. NOTE 7 - Cash and Cash Deposits At September 30, 2004 the carrying amount of the City's deposits (cash and certificates of deposit) was $2,031,360 and the bank balance was $2,085,718. The deposits were covered by federal depository insurance of $100,000 per bank. The City was uninsured for $1,785,718 in its bank accounts. Investments The City's investments are categorized below to give an indication of the level of risk assumed by the City at year-end. Category 1 includes investments that are insured or registered, or for which the securities are held by the City or its agent in the City's name. Category 2 includes uninsured or unregistered investments for which the securities are held by the counterparty's trust department or agent in the City's name. Category 3 includes uninsured and unregistered investments for which the securities are held by the counterparty or by its trust department or agent but not in the City's name. At September 30, 2004, the City did not have any investments in Category 1, Category 2 or Category 3. Investments in external investment pools are not required to be categorized. As of September 30, 2004, investments consisted of the following: Not Required to Carrying/ Be Categorized Fair Value State of Idaho Local Government Investment Pool $1,450,707 $ 1.450.707 NOTE 8 - Changes in General Fixed Assets A summary of general fixed assets at September 30 is as follows: 20 DEATON & COMPA's Y, C11ArrTJAZFD Balance Balance 10/1/2003 Additions Deletions 9/30/2004 Land $ 62,404 $ - $ - $ 62,404 Office Equipment 203,147 - - 203,147 Buildings and Improvements 2,022,163 573,002 - 2,595,165 Vehicles and Equipment 3,587,416 47,820 - 3,635,236 Total $ 5.875.130 620 822 $ - 6.495.952 20 DEATON & COMPA's Y, C11ArrTJAZFD CITY OF CHUBBUCK, IDAHO NOTES TO FINANCIAL STATEMENTS (PAGE 8 OF 10) NOTE 8 - Changes in General Fixed Assets Continued A summary of proprietary type fixed assets at September 30 is as follows: Land Office Equipment Buildings and Improvements Vehicles and Equipment Total NOTE 9 - Long-term Debt Balance $ 10/1/2003 Additions Deletions $ 172,612 $ 90,500 $ - 154,970 7,435 - 6,113,369 450,751 _ 382,908 - _ 6.823.859 $ 548.686 $ Balance 9/30/2004 $ 263,112 162,405 6,564,120 382,908 7.3Z2,54,9 The City's long-term debt is segregated between the amounts to be repaid from governmental activities and amounts to be repaid from business -type activities. Governmental Activities: As of September 30, 2004, the governmental long-term debt of the City consisted of the following: Accrued Compensated Absences. Current portion $ 19,250 Noncurrent portion 173,251 $ 192,501 Capital Lease Obligation: Caterpillar capital lease; issue amount $233,437; dated June 26, 2001; interest rate of 5.25% with final maturity dated June 26, 2006. $ 44,816 Fire Engine capital lease; issue amount $194,190; dated March 7, 2001; interest rate of 5.75% with final maturity dated March 8, 2007. 105,338 Telephone System capital lease; issue amount $30,986; dated May 30, 2003; interest rate of 4.25% with final maturity dated September 30, 2007. 24,609 Back Noe capital lease; issue amount of $97,740; dated November 12, 2003; interest rate of 3.6% with final maturity dated November 12, 2008. 84,330 $ 259,093 Current portion $ 71,122 Noncurrent portion 187,971 $ 259,093 21 DEATON & CONiPANY, CHARTERED CITY OF CHUBBUCK, IDAHO NOTES TO FINANCIAL_ STATEMENTS (PAGE 9 OF 10) NOTE 9 - Long-term Debt (Continued) Business -type Activities: Accrued Compensated Absences: Current portion Noncurrent portion Bonds Payable: Sewer Revenue Bond Water Fund Certificates Current portion Noncurrent portion Annual Debt Service Requirements Year Ending September 30 2005 2006 2007 2008 2009 2010-2013 NOTE 10 - Pension Disclosures Governmental Activities Principal interest $ 71,122 $ 12,579 74,823 8,878 54,530 4,984 18,077 2,153 40,541 1,459 259.093 S 30,053 9,085 81,765 $ 90,850 $ 455,000 780,000 $ 1,235,000 $ 150,000 1,085,000 $ 1,235,000 Business -type Activities Principal Interest $ 150,000 $ 75,148 160,000 66,148 170,000 56,158 180,000 45,583 190,000 34,160 385,000 38,850 1235.000 316.045 The Public Employee Retirement System of Idaho (PERSI), a cost sharing multi-employer public retirement system, was created by the Idaho State Legislature. It is a defined benefit plan requiring that both the member and the employer to contribute. The plan provides benefits based on members' years of service, age, and compensation. in addition, benefits are provided for disability, death, and survivors of eligible members or beneficiaries. The authority to establish and amend benefit provisions is established in Idaho Code. Designed as a mandatory system for eligible state and school district employees, the legislation provided for other political subdivisions to participate by contractual agreement with PERSI. Financial reports for the pian are available from PERSI upon request. After 5 years of credited service, members become fully vested in retirement benefits earned to date. Members are eligible for retirement benefits upon attainment of the ages specified for their employment classification. For each month of credited service, the annual service retirement allowance is 2.0% (2.3% policelfirefighter) of the average monthly salary for the highest consecutive 42 months. The contribution requirements of the City of Chubbuck and its employees are established and may be amended by the PERSI Board of Trustees. For the year ended September 30, 2004 the required contribution rate for general employees was 9.77% and 5.86% of covered payroll for the City of Chubbuck and its employees, respectively, and 10.11% and 7.21% for policelfirefighter employees, for the City of Chubbuck and its employees, respectively. The City of Chubbuck contributions required and paid were $215,956, $338,710, and $355,148 for the three years ended September 30, 2004, 2003, and 2002 respectively. 22 DEATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO NOTE 11 -Risk Management NOTES TO FINANCIAL STATEMENTS (PAGE 10 OF 10) The City is exposed to various risks of loss all being covered by commercial insurance except for the first $20,000. NOTE 12 - Prior Period Adjustment The City has incurred a correction of prior years unrestricted net assets in the amount of $190,406 in the Proprietary Funds. The correction consists of understatement of water deposits payable of $102,038 and under• accrual of accrued compensated absences in the amount of $88,368. 23 DEATON & COMPANY, CHARTERED REQUIRED SUPPLEMENTARY INFORMATION DEATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO BUDGETARY COMPARISON SCHEDULE GENERALFUND YEAR ENDED SEPTEMBER 30, 2004 Beginning budgetary fund balance Resources General property taxes and sales tax Franchise fees Intergovernmental Parks revenue Licenses, permits and fines Grants Fire protection and prevention Leases and rents Interest income Miscellaneous Amounts available for appropriations Charges to appropriations General government Law Enforcement Fire control Building inspection Street Parks and recreation Health and Welfare Total charges to appropriations Ending budgetary fund balance Budgeted Amounts Original Final $ 18,399 $ 18,399 2,597,890 153,165 581,548 43,700 173,207 87,090 140,000 25,364 13,500 910,000 4,725,464 1,021,886 1,982,674 673,217 98,539 533,946 419,201 14,400 4.743.863 2,597,890 153,165 581,548 43,700 173,207 87,090 140,000 25,364 13,500 910,000 4,725,464 1,021,886 1,982,674 673,217 98,539 533,946 419,201 14,400 4.743 3F3 25 See accompanying notes to financial statements Actual Amounts $ 237,392 2,614,916 138,537 575,443 38,728 271,026 80,891 102,546 22,733 9,876 4,487 3,859,183 140,843 1,815,421 675,666 92,411 582,395 424,368 17 R i f; �J,146, 120 $ 347,855 Variance Positive (Negative) $ 218,993 17,026 (14,628) (6,105) (4,972) 97,819 (6,199) (37,454) (2,631) (3,624) (905,513) (866,281) 881,043 167,253 (2,449) 6,128 (48,449) (5,167) (3,216) 995 14:3 $ 347,855 DEATON & COMPANY, CHARTERED CITY OF CHUBBUCK, IDAHO BUDGETARY COMPARISON SCHEDULE DEVELOPMENT FUND YEAR ENDED SEPTEMBER 30, 2004 Budgeted Amounts Original Final Beginning budgetary fund balance $ - $ _ Resources Actual Variance Positive (Negative) $ 702,043 General property taxes and sales tax 1,462,000 1,462,000 1,139,161 (322,839) Interest income 11,000 11,000 10,974 (26) Miscellaneous - - 75,636 75,636 Amounts available for appropriations 1,473,000 1,473,000 1,225,771 (247,229) Charges to appropriations Development fund 1,473,000 1,473,000 1,216,438 256,562 Ending budgetary fund balance $ - $ - $ 711,376 $ 711,376 26 See accompanying notes to financial statements DEATON & COMPANY, CHAR'T'ERED U OTHER SUPPLEMENTARY INFORMATION DEATON & COMPANY, CHAWFERED n a § ?L� u �U�k k LU 2q �Um 2 772 a (n 2QWLLJ ƒ\ n 0 § 5mmm 3 0 Zc= ui �oR L j 0 \ � \ \ o02 a m z O / 2 \ U) u k C 0 � ' 2 .( 2 2 < \ ƒ\ n 0 § Zc= \ L j / § § \ � \ \ o U - a m /ƒL / z f's In, a G o 0 0 /q m� 7 7 -NCE Go w M� LO CD % f U)- m G7 % 2 2/ \ 0ƒ \ IL m a /R / / —= y� a a 7 \ ƒ f _ m q' 2 A 2 2 Iw r Cli \ J § + >0LL t m c c • 1101 = 7 @ 7 7 7 3 / R \ \ U- C m _ _ 2 / \ \ \ co / ƒ ƒ \ § e _ Ga GO, \ U) u Q n e 2 w .( 2 2 < \ ƒ\ n 0 § Zc= \ L j & §co >/ / t % \ n e7 a m /ƒL / \ U) W U Q J m Q z m LL z LU 0a 0 oa N _ = LL a V J M ❑nam �aWm LLI W m��a =p O LzCD L LLI O W W o IL Waw Q' U � O W z z W LCI w LL O z W 2 W h - Q 1— W CD 0 c m L CD O N co LO LCA M CD C3) N w N o 0 ca o 0 0) o Cfl C606 00 N -q' r f� O (+) Ch CD CN co Ip p LL z GO- C'7 O 1 Ce) ' 1 1 0 0 co CD CA 'p ti 0 Ln ti O CD O CD !� CD N N Q <Z LO T Gey N C r 1 N C) N 1 r i 1 i Cn N O CJ) � co CD 1� O .5-:3 M ce) Ix L- LL �} UY Cl) 1 N T.. 1 1 1 LO LSA CD CD N i CJD O CA O W CD C ) d C'7 rY Ln LCA co co a m ,- U LL o r 1 N I N i 1 1 N L L � � > m LL CO 1 C+) 1 ! 1 C+7 LO co R L m ❑ c C = N N N ` c7 a) LLNT 64 E{} LO 1 1 co LC"] O 1 1 0 0 LC7 co 0 0o C4 � d CLO L6 LCA d N ++ LL T' r M N U) W U z a W a U U ❑ Q Z J a U z a>`� m c v' ❑ `' Z7 LL ❑ Q m ? ca C) O LU C ❑W o L= z °w z z LL ZD was o W a ai L) z z w c❑ IL r� O 0 X x LLQ z CO w m N U) c m E L) N -U C {U 0 m 0 c c .T C c� a U U L4 (D a) [A CITY OF CHUBBUCK, IDAHO BUDGETARY COMPARISON SCHEDULE NONMAJOR GOVERNMENTAL FUNDS YEAR ENDED SEPTEMBER 30, 2004 Beginning budgetary fund balance Resources General property taxes and sales tax Interest income Donations Miscellaneous Amounts available for appropriations Charges to appropriations Street guarantee fund General LID fund Juvenile referral fund Court fund Road projects fund Parks fund Total charges to appropriations Ending budgetary fund balance Budgeted Amounts Actual Original Final Amounts $ - $ - $ 424,936 Variance Positive (Negative) $ 424,936 5,000 5,000 - (5,000) 9,900 9,900 4,926 (4,974) 105,000 105,000 76,200 (28,800) 46,000 46,000 19,002 (26,998) 165,900 165,900 100,128 (65,772) 5,500 3,000 200 48,000 1,200 i nn nnn 1 eo,uuu 5,500 3,000 200 48,000 1,200 108,000 165,900 30 See accompanying notes to financial statements 15,000 435 22,600 $ 487,029 (9,500) 3,000 200 47,565 1,200 85,400 127,865 $ 487,029 DEATON & COMPANY, CHARTERED