HomeMy WebLinkAbout1990-02-13; City Council; 10493 Exhibit 4; Water Utility Fund financial statements0
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CITY OF CARLSBAD
Water Utility Fund
Financial Statements
June 30, 1989 and 1988
(With Independent Auditors' Report Thereon)
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* KPMG Peat Marwick
Certified Public Accountants
Peat Marwick Main & Co.
750 B Street
San Diego, CA 92101
Independent Auditors' Report
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The Honorable Mayor and City Council
City of Carlsbad, California:
We have audited the accompanying financial statements of the Water Ut
Fund of the City of Carlsbad as of and for the years ended June 30, 198'
1988. These financial statements are the responsibility of the C
management. Our responsibility is to express an opinion on these fina
statements based on our audits.
We conducted our audits in accordance with generally accepted aud:
standards. Those standards require that we plan and perform the audi
obtain reasonable assurance about whether the financial statements are frc
material misstatement. An audit includes examining, on a test basis, evic
supporting the amounts and disclosures in the financial statements. An L
also includes assessing the accounting principles used and signif j
estimates made by management, as well a6 evaluating the overall final
statement presentation. We believe that our audits provide a reasonable E
for our opinion.
As discussed more fully in Note l(a), these financial statements present
the Water Utility Fund and are not intended to present fairly the finar e position and results of operations of the City of Carlsbad in conformity
generally accepted accounting principles.
In our opinion, the financial statements referred to above present fairly
all material respects, the financial position of the Water Utility Fund of
City of Carlsbad at June 30, 1989 and 1988, and the results of its operat a and the changes in its financial position for the years then endec
conformity with generally accepted accounting principles.
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3 October 20, 1989
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Member Firm of Klynveld Peat Marwick Goerdeler
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CITY OF CARLSBAD
Water Utility Fund
e Balance Sheets
June 30, 1989 and 1988
Assets w m 0
Current assets:
Cash and investments $ 408,344 893,
Receivables, net of allowance for doubtful
accounts of $58,064 in 1989 and $61,908
in 1988 1,724,168 1,527,
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Accrued interest receivable 2,470 15 ,
Inventory, at cost 152.487 --ul-L
Total current assets 2.297.486 2.604,
Due from the City of Carlsbad 10,017 e
* Restricted assets:
Cash and investments 4,396 , 934 4,093,
Accrued interest receivable 45.302 2
Total restricted assets 4,442,236 4,143(
Property, plant and equipment:
Land and water rights 231 , 956 231 a
Buildings and improvements 37 , 188 37 3
Wells, reservoirs and dams 1,212,852 1,212,
Transmission and distribution lines 4,023,869 4,014,
Equipment and vehicles 228.174 214 I
Total property, plant and equipment 5,734,039 5,710, a
Less accumulated depreciation (2.318.954 )m
Property, plant and equipment - net 3.415.089 3.510
Total assets $ 10.154.811, 10.259 e
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CITY OF CARLSBAD
Water Utility Fund * Balance Sheets, Continued
June 30, 1989 and 1988
Liabilities and Fund Equity 1989 E3
Current liabilities:
Accounts payable $ 1,207,757 1,701,
Due to the City of Carlsbad 96 , 306 88 9
Accrued wages 22 , 849 28 ¶
61 9 Deposits payable 65,951 0 Current portion of revenue bonds payable 160,000 157,
Accrued interest 8.459 14,
Total current liabilities 1,561,322 2,050,
Long-term liabilities - revenue bonds payable e (net of unamortized discount and
current portion) 163.766 322.
Total liabilities 1.725.088 2.372.
Fund equity: e Contributed capital 2.425.080 2.425,
Reserved for debt service 175,259 520 ,
Unreserved 5.829.384 4.941%
Total retained earnings 6 .OO 4.643 5.461,
Total fund equity 8.429.722 7.886.
Retained earnings:
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Total liabilities and fund equity $ 10.154.811, UUzL
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See accompanying note6 to financial statements.
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CITY OF CARLSBAD
Water Utility Fund
Statements of Operations and Retained Earnings
For the years ended June 30, 1989 and 1988
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Operating revenues:
Metered water sales $ 1,114,737 1,056,
Other charges for services 260 , 454 185,
Miscellaneous revenue 31.839
e Total operating revenues 1.407.03Q 1.242,
Operating expenses:
Personnel services 692 , 679 634:
Off ice expenses 205,538 135 q
Repairs and maintenance 154,415 422! 3 Depreciation and amortization 121 , 732 123 ,
Insurance 7 , 330 7,
Professional services 10,303 7,
Purchased water 3,825 4,
Bad debt expense -
e Total operating expenses 1.195.82e lt334,
Operating income (loss) 211.208 (91.
Interest income 353,072 395 ,
Interest and fiscal charges (21,211) (29, - (85.
Total non-operating income 331 .a61 280.
Net income 543,069 188 ,
Retained earnings, beginning of year 5.461.574 5.273.
Non-operating revenues (expenses):
Loss on sale of property
Retained earnings, end of year $ 6.00 4.642 5.461.
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See accompanying notes to financial statements.
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CITY OF CARLSBAD
Water Utility Fund
Statements of Changes in Financial Position
For the years ended June 30, 1989 and 1988
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Sources of working capital:
Operations:
Net income $ 543,069 188, Items not requiring working capital:
Depreciation and amortization 121,732 123,
Loss on disposal of property, plant and
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664,801397,
Acquisition of property, plant and equipment 24,613 6,
Increase in restricted assets 298,35354.
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Total sources of working capital
Uses of working capital:
Current portion and repayment of revenue bonds
payab 1 e 160,000 157,
Total uses of working capital 482.966 217.
Net increase in working capital $ 181.835 180.
Net increase (decrease) in elements of working
capital :
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Cash and investments (484,873) 897,
Receivables, net 196,629 146,
Due from the City of Carlsbad (1,257)
Accrued interest receivable (13,238) 15,
Inventory (4 , 196 1 3,
Accounts payable 493,516 (842,
Due to the City of Carlsbad (7,966) (12,
Accrued wages 5,378 (2,
Deposits payable (4,830) (229
Current portion of revenue bonds payable (3,000) (7,
Accrued interest payable 5,6723.
Net increase in working capital $ 181.835 180.
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See accompanying notes to financial statements.
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CITY OF CARLSBAD
Water Utility Fund
e Notes to Financial Statements
June 30, 1989 and 1988
(1) Organization and Suttxnarv of Significant Accoun ting Policies
The Water Utility Fund (the Fund) is an enterprise fund of the Cit
Carlsbad (the City), which is used to account for activities neceg
to provide water services to the residents of the City including,
not limited to, operations, maintenance, financing and related
service, billing and collection, and the acquisition of fixed ai
that are utilized in providing these services.
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As an enterprise fund, its operations are financed and operated
manner similar to a private business enterprise. The intent of
City Council is that the expenses (including depreciation) of provi
goods and services to the general public on a continuing basi
financed or recovered primarily through user charges. a
The Fund is an integral part of the reporting entity of the Cit
Carlsbad. The accounts of the Fund have been included within the t
of the general purpose financial statements of the City because
City Council exercises oversight responsibility over the operation e the Fund. Only the accounts of the Fund are included he1
financial position or results of operations of the City of Carlsbad.
The accounting policies of the City with regard to this fund confor
generally accepted accounting principles as applicable to governmc
The following is a summary of the more significant accounting policj
therefore, these financial statements do not purport to represent
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(a) Measurement Focus:
The Fund is accounted for on an "income determination" or "cos
services" measurement focus. Accordingly, all assets e liabilities are included on the balance sheets, and the rep(
fund equity provides an indication of the economic net worth 01
Fund. The operating statement for the Fund reports incrc
(revenues) and decreases (expenses) in total economic net worth
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CITY OF CARLSBAD e Water Utility Fund
Notes to Financial Statements, Continued
(1) Organization and Summary of Significant Accountinn Policies. Co n t inuec
(b) Basis of Accounting:
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The Fund is accounted for using the accrual basis of accouni
Accordingly, revenues are recognized when they are earned
expenses are recognized when the related liability is incurred. @
Unbilled water revenue is recognized as earned when the wate
consumed.
(c) Cash and Investments:
The Fund participates in the pooled cash and investment fund oi City of Carlsbad. Pooled investments are stated at cos'
amortized cost. The Fund's equity in the pooled cash is shov
the financial statements as cash and investments. Interest ei
as a result of the pooling is allocated to the Fund based or
average monthly cash balances.
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Authorized deposits and investments include demand and time depot
obligations of the U.S. Treasury, its agencies
instrumentalities, commercial paper rated A-1 by Standard
Poor's Corporation or P-1 by Moody's Commercial Paper ret
banker's acceptances with a maximum maturity of 270 I e repurchase and reverse repurchase agreements, certificates
deposit insured by national and state licensed or chartered 1
or federal or state savings and loan associations, money markei
mutual funds whose portfolios consist of one or more of
foregoing investments, and the State Treasurer's investment poo
0 (d) Inventories:
Inventories consist of materials and supplies which are state
historical cost.
(e) Property. Plant and Equipment :
(I) Property, plant and equipment is stated at cost, or if donatec
estimated fair market value at the date of contribu
Depreciation is provided over the estimated useful lives of
assets using the straight-line method.
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CITY OF CARLSBAD
Water Utility Fund
Notes to Financial Statements, Continued
(1) Organization and Summa ry of Significant Accoun ting Policies, Co n t inued e
(e) Prouerty. Plant and Eauipment, Continued:
The estimated useful lives of the assets are as follows:
Years
Buildings and improvements
Transmission and distribution lines 40 - 70
Equipment and vehicles 4 - 50
10 - 50 Wells, reservoirs and dams 10 - 100
e (f) Comuensated Absences:
Sick leave accrued but unused is cumulative from year to year.
cost of vacation is recorded as a liability when earned.
(8) Reclassifications: e
Certain reclassifications have been made to the prior year amount
conform with the current year presentation.
(2) Long-Term Liabilities
Revenue bonds payable at June 30, 1989 and 1988 were as follows:
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full on July 1, 1988 $- 47, 1958 Waterworks Revenue Bonds, paid in
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1960 Waterworks Revenue Bonds, principal
due in amounts of $60,000 and $65,000 on
July 1 of 1989 and 1990 respectively,
with interest payable on January 1 and
July 1 of each year at rates varying a from 3.9% to 4.0% per annum 125,000 140
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CITY OF CARLSBAD 6 Water Utility Fund
Notes to Financial Statements, Continued
(2) Long-Term Liabilities. Co n t inued a
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1970 Waterworks Revenue Bonds, principal
due in the amount of $100,000 on July 1
of 1989 and 1990, interest payable on 0 January 1 and July 1 of each year at the
rate of 6.0% per annum 200.000 233
Total revenue bonds payable 325,000 482
Less unamortized discount (1,234) (2
Less current portion UmmQ) (157
$ 163.766 22.
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To tal long- t em 1 iab i 1 it ies
At June 30, 1989, aggregate maturities of revenue bonds payable wer
follows :
Year Ending
June 30
1990 $ 160,000 a 1991 165.ooo
Total $325.ooo
At June 30, 1989, the City was in compliance with all debt cove]
required by the Waterworks Revenue Bonds.
(3) Pension Plan a
The Water Utility Fund employees are included in the City of Carls
pension plan which is administered by the California Public Fmpl
Retirement System (PERS). PERS is an agent multiple-employer p 0 employee retirement system that acts as a comon investment
administrative agent for participating public entities within the
of California.
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CITY OF CARLSBAD e Water Utility Fund
Notes to Financial Statements, Continued
(3) Pension Plan. Continued
All full-time employees are eligible to participate as members of
PERS. Benefits vest after an employee has been a member of the
for five years. Employees are eligible to retire after the age o
with 5 years of credited service. Annual retirement benefits
determined based on age at retirement, the length of membership ser e and the amount of earnings based on the highest thirty-six consecu
months average for safety employees, and based on the highest tw
consecutive months average for miscellaneous employees. The PERS
provides death and disability benefits. These benefit provisions
all other requirements are established by state statute.
0 Employees are required to make contributions ranging from 7 to 9 per
of gross pay. The City is required to contribute the remaining amc
necessary to fund the benefits for its members, using the actua
basis recommended by the PERS actuaries and actuarial consultants
adopted by the PERS Board of Administration.
Additional disclosures required by Governmental Accounting Stanc
Board Statement No. 5 are not available for the Water Utility Fund
separate entity. This information for the City's reporting entit
presented in the Comprehensive Annual Financial Report of the Cit
Carlsbad.
0 (4) Transactions with the City of Car1sba.d
The Water Utility Fund has borrowed $96,306 from the Sewer fund of
City of Carlsbad and has loaned $10,017 to the same fund.
The Water Utility Fund pays an internal service fund of the City 0 liability and workmen's compensation insurance. The City
self-insured for these claims. The premiums are determined annt
based on the insured funds' claims experience. The premiums
$9,413 and $10,763 for the fiscal years ended June 30, 1989 and 1
respectively.
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