HomeMy WebLinkAbout; ; 1960-61 Report of Audit; 1961-10-17CITY OF CARLSBAD WATER DEPARTMENT
Carlsbad, California
Audi t Report
For the Year Ended June 30, 1961
EVERTS AND ESENOFF
CERTIFIED PUBLIC ACCOUNTANTS
San Diego, California
Oceanside, California El Cajon, California
CARL M. ESENOFF, C. P. A.
ALBERT M. HUDSON, C.P. A.
JOHN T. SWAN, C.P. A.
HAMILTON MOODY, C.P.A.
HERBERT L. BECKETT, C. P. A.
CHARLES W. LAMDEN.C.P.A.
ROY M.HERAMB.C.P.A.
JOE D.MCCARTHY. C.P.A.
RICHARD W.JENSEN, C.P. A.
DARRELL F. PERIUS, C. P. A.
RUSSELL S.WYCOFF, C.P.A.
EVERTS AND ESENOFF
CERTIFIED PUBLIC ACCOUNTANTS
1850 FIFTH AVENUE
SAN DIEGO I.CALIFORNIA
MEMBERS
AMERICAN INSTITUTE OF
CERTIFIED PUBLIC ACCOUNTANTS
CALIFORNIA SOCIETY OF
CERTIFIED PUBLIC ACCOUNTANTS
SAN DIEGO, CALIFORNIA
BELMONT 4-61O1
EL CAJON, CALIFORNIA
HICKORY 4-94U
OCEANSIDE, CALIFORNIA
SARATOGA 2-7689
VISTA. CALIFORNIA
PALACE 4-6252
The Honorable Mayor and City Counci
Ci ty of Car 1sbad
Car 1sbad , Ca1i forni a
We have examined the balance sheet—all funds of the City of Carlsbad Water
Department, Carlsbad, California as of June 30, 19&1 and the related statements of
revenues, expenditures and unappropriated surplus for the year then ended. Our ex-
amination was made in accordance with generally accepted auditing standards, and
accordingly included such tests of the accounting records and such other auditing
procedures as we considered necessary in the circumstances.
In our opinion, the accompanying balance sheet—all funds and statements of
revenues, expenditures and unappropriated surplus present fairly the financial posi-
tion of each fund of the City of Carlsbad Water Department at June 30, 1961, and the
results of its operations for the year then ended, in conformity with generally ac-
cepted principles of fund accounting applied on a basis consistent with that of the
precedi ng year ,
Certified Public AccodnJ/ants
Oceanside. California
October 17, 19&1
EXPLANATORY COMMENTS
The following supplementary information has been subjected to the tests and
other auditing procedures applied in the examination of the financial statements
mentioned above and, in our opinion, is fairly stated in all respects that are mate-
rial as related to the financial statements taken as a whole,
COMMENTS RESPECTING FINANCIAL POSITION
The balance sheet—all funds of the City of Carlsbad Water Department is pre-
sented in exhibit A, A condensed comparative statement of financial position at
June 30, 196! and June 30, I960 follows:
$
11
2
1
$1
June
1961
419,627.59
90,235.69
32,810.35
38,235.60
219.22
125.60
581,254.05
42 , 2 1 6 . 90
539,037.15
,348,160.11
,067,000.00
,954,197.26
,067,000.00
.887. 197,26
i 30,
I960
$ 91,389.08
64,564.58
27,952.25
28,124.68
5,816.67
115.29
217,962.55
29,517.46
188,445.09
1 ,316,634.62
767,000.00
2,272,079.71
767,000.00
$1 .505.079.71
1 ncrease
(Decrease)
$328,238.51
25,671.11
4,858.10
10, 1 10.92
(5,597.45)
10.31
363,291.50
12,699.44
350,592.06
31,525.49
300,000.00
682,117.55
300,000.00
$mjJLL5i
Current assets:
Cash
Marketable investments
Accounts receivable and accrued
i nterest
Warehouse stock
Work i n progress
Prepaid expenses
Total current assets
Current 1 i abi 1 i ti es
Net work!ng capi ta1
Property and equipment—net
Future bond requirements
Total
Waterworks revenue bonds payable
Reserves and surplus
Following are comments regarding each fund shown in exhibit A.
WATER FUND:
The gross revenues of the enterprise are placed in the water fund. In accord-
ance with Resolution #397 and #711, monthly transfers are made to the bond service
funds, the reserve funds, and the maintenance and operation fund. Cash transfers
during the year were as follows:
Bond service funds:
1958 Series $ 45,661.17
I960 Series 10,875.16
Reserve funds:
1958 Series 4,837.00
I960 Series 240.00
Maintenance and operations fund 214,154.60
Total
Two water accounts receivable are in dispute and a reserve of $7,933.13 for
possible loss has been provided. Legal action is pending in this matter. The water
accounts may be shown as follows:
Total water accounts receivable $35,387.18
Less reserve for disputed accounts 7,933.13
Net--per exh i bi t A
!t wi 11 be noted that an item of accrued interest receivable is shown among the
assets of the water fund, although no investments are owned by this fund. Resolutions
#397 and #711 require interest earned on investments of the reserve funds be deposited
in the water fund. Therefore, computed interest due on the investments of the reserve
funds is shown as a water fund asset.
BOND SERVICE FUND, BONDS OF 1958:
The investments of this fund are U. S. Treasury bonds, 2-1/2%, with a face value
of $20,000.00. The discount received upon purchase of the bonds is being allocated
rateably to interest income as the investment matures.
The following shows the activity of the fund during the year.
Cash with Treasurer, July 1, I960 $11,097.58
Transfers from water fund 45,661.17
Interest received on investments 500.00
Area inclusion fees 204.00
Total 57,462.75
Paid to fiscal agent for payment of
matured bond coupons 31.319.50
Cash with Treasurer, June 30, 1961 $26.143.25
The Waterworks Revenue Bonds of 1958 are dated July 1, 1958 and are due as
fo1 lows:
Years Due Each Year Total
1964-69 $20,000.00 $120,000.00
1970-74 25,000.00 125,000.00
1975-78 30,000.00 120,000.00
1979-81 35,000.00 105,000.00
1982-85 40,000.00 160,000.001986-87 ^5,000.00 90,000.00
1988 47,000.00 47.000.00
Total $767.000.00
interest coupon numbers three, and four were redeemed by the fiscal agent during
the year. Coupon number five was due and payable at June 30, 1961, and $15,659-75
had been transferred to the fiscal agent for payment thereof.
BOND SERVICE FUND, BONDS OF I960:
The Waterworks Revenue Bonds, i960, authorized by the election of July 28, 1959,
were issued in March, 1961. Under the terms of Resolution #711, which governs the
use of the bond proceeds and the redemption of the bonds, funds are to be transferred
monthly to this fund from the water fund sufficient to pay the interest and principal
on the bonds as they become due.
The cash in this fund was derived as follows:
Cash transfers from water fund $10,875.16
Accrued interest sold with bonds 8,636.30
Cash with. Treasurer, June 30, 19&1
The bonds are dated July 1, I960 and are due as follows:
Years Due Each Year Tota
1965-79 $ 5,000.00 $ 75,000.00
1980-86 10,000.00 70,000.00
1987-88 15,000.00 30,000.00
1989 60,000.00 60,000.00
1990 65,000.00 65;000.00
Total $300.000.00
Sufficient cash was deposited with the City Treasurer for payment of Coupon #1,
due July 1, 1961, in the amount of $12,337.50.
RESERVE FUND, BONDS OF 1958:
Resolution #397 requires that monthly transfers of $120.00 be made to this fund
from the water fund unti 1 such time as an amount equal to the maximum annual debt
service has been accumulated in the fund. The year of maximum requirements is 1982,
when interest and principal totaling $52,357.00 will be payable.
Prior to the issuance of the Waterworks Revenue Bonds, I960, and upon the advice
of Schwalbacher and Co., bond specialists, an amount was transferred to this fund to
meet these maximum requirements. Additional monthly transfers from the water fund
wi 1 1 not be requi red,
RESERVE FUND, BONDS OF I960:
Resolution #711 requires monthly transfers of $120.00 from the water fund to
this fund until sufficient funds are accumulated to equal the maximum annual interest
and principal requirements. The year of maximum requirements is 1990, when $67,518.75
will be payable .
When the bonds were issued in March5 a required deposit of $20,000.00 was made
in this fund from the bond proceeds. This amount was invested in U. S. Treasury
notes, 2-1/2%, which were purchased at a face value of $20,000.00 plus a premium
$300.00. The premium is being allocated as a deduction against interest income over
the life of the notes,
CONSTRUCTION FUND, BONDS OF I960:
The proceeds of the revenue bonds of I960 were received on March 13, 1961. An
accounting of the receipt and use of these funds to June 30, 1961 follows:
Principal amount of bonds $300,000.00
Accrued interest sold with bonds 8,636.30
Total received 308,636.30
Transfers:
To bond service fund--accrued
interest sold with bonds $ 8,636.30
To reserve fund--per Section 17,
Resolution #711 20,000.00 28.636.30
Available for purposes of proposition W 280,000.00
Dj sbursements:
Financial consultants 4,960,0^
Legal advice 1,015.60
Printing of resolutions and bonds 1,538.68
Miscellaneous 8.43
Total disbursements 7,522.75
Reserved for construction from bond proceeds 272,477.25
Interest earned on time deposits 1,710.07
Reserve for authorized expenditures,
June 30, 1961 $274.187.32
At June 30, 1961 the following time deposits had been made by the construction
fund:
Interest
Depos i t Date Haturi ty Date Rate Amount
March 23, 1961 September 23, 1961 3 % $175,000.00
May 2, 1961 August 2, !961 2-1/2% 65,000.00
Total $240.000.00
MAINTENANCE AND OPERATIONS FUND:
Monthly sums sufficient for the necessary and reasonable maintenance and opera-
tions costs of the enterprise have been transferred to this fund from the water fund,
As shown in exhibit B, the amount necessary for current expenses during the year was
$169,550.41.
Property and equipment shown in exhibit A are composed of the following:
Land, water rights, and rights of way
We 1 1 ss reservoirs and dams
Purification system
Booster pumps and stations
Transmission and distribution lines
Bui 1di ngs
Autos and trucks
Equi pment
Office fixtures and equipment
Terramar fixed assets (unclassified)
Meters and services
Total--per exhibit A
$ 123,502.73
223,358.75
27,686.73
78,224.99
931,901.93
18,233.99
22,861.21
12S291.93
15,353.18
163,566.00
33U32.90
$1.948.114.34
Additions during the year were as follows:
Capital outlay — per exhibit C
Pipelines contributed by consumers and
subdi vi ders
Meters and services contributed
Total
$39,892.68
27,605.12
29,444.00
$96.941.80
Disposals were as follows;
Distribution lines removed
Meters and services removed from ground
Total
$ 6,938.52
19.018.00
$25.956.52
COMMENTS RESPECTING OPERATIONS
The statement of revenues and expenditures is shown in exhibit B. A condensed
statement of revenues and expenditures at June 30, 1961 and June 305 I960 follows:
Revenues
Operating expenses
Net revenues before interest
and depreciation
Interest on bonds
Depreci ation
Total
Net revenues after interest
and depreciation
Depreciation, a non-cash outlay
Net revenues — to surplus
Year hndec
1961
$299,694.37
169,550.41
130,143.96
35S020.70
43,890. 16
78,910.86
51,233.10
43,890. 16
J June 30_i
I960
$277,897.22
165,799.60
112,097.62
3U319.50
43,572.54
74,892.04
37,205.58
43,572.54
1 ncrease
(Decrease)
$21,797.15
3,750.81
18,046.34
3,701.20
317.62
4,018.82
14,027.52
317.62
$ 95.123.26 $ 80.778.12 $14.345.14
The increased net revenues are due to three major factors:
(1) increased volume,
(2) use of more pumped water, which is less expensive to
produce than the cost of purchased water, and
(3) a decreased cost per acre foot of purchased water.
Following is a computation of the requirements of the gross revenues of the
enterprise, in accordance with Covenant No. 9, Section 21, of Resolution #397 and
#711:
Gross revenues of enterprise—exhibit B $299,69^.37
Current expenses for necessary and reasonable
maintenance and operations costs 169,550.41
Net revenues—year ended June 30, 19& 1 130,143.96
Carryover of excess of net revenues over
requirements—previous years 57,433.78
Total net revenues available to meet
current requirements 187,577-74
Net revenues required for year ended June 30, 1961:
Interest and principal requirements $35,020.70
Reserve funds 1,680.00
Total 36,700.70
Multiplication factor (per resolutions) ] .35
49,545.95
Capital outlay 39,892.68
Total net revenues required
Excess of net revenues over requirements at June 30, 1961
The excess of net revenues over requirements should continue to increase at a
•apid rate until principal payments become due on the bonds in 1964 and years follow-
I ng.
Balance Sheet—A]] Funds
For the year ended June 30, 196
Exh ib it A
CITY OF CARLSBAD WATER DEPARTMENT
Balance Sheet—All Funds
For the year ended June 30, 19&1
ASSETS
CURRENT ASSETS:
Cash with Treasurer, City of Carlsbad
Cash in Security First National Bank—Trust #C-6574
Cash in Security First National Bank—time deposits
investments in U. S. Government securities
Accounts receivable--water accounts (net of reserve
for losses)
Accounts receivable--other
Accrued interest receivable
Warehouse stock
Work in progress
Prepaid expenses
Total current assets
PROPERTY AND EQUIPMENT
Less accumulated depreciation
Net property and equipment
FUTURE BOND REQUIREMENTS
LIABILITIES, RESERVES AND SURPLUS
CURRENT LIABILI TIES:
Accounts payable
Matured bond interest coupons
Pipeline, meter and service deposits
Total current liabilities
WATERWORKS REVENUE
Series of 1958
Series of I960
BONDS PAYABLE:
RESERVES AND SURPLUS:
Reserve for capital invested in property and
equi pment
Reserve for bond principal and interest
Reserve for authorized expenditures
Unappropriated surplus—exhibit C
$
1
1
$2
$
1
Total —
All
Funds
163,967.84
15,659.75
240,000.00
90,235.69
27,454.05
2,908.20
2 , 448 . 1 0
38,235.60
219.22
125.60
581,254.05
,348,160.11
,067,000.00
.996.414.16
12,341 .08
27,997.25
1,878.57
42 , 2 1 6 . 90
767,000.00
300,000.00
, 348,160.1 1
125,857.95
274,187.32
138,991 .88
Water
Fund
$ 83,476.66
27,454.05
156.50
792.20
1 11 ,879.41
$1 11.879.41
$
111,879.41
Exhibi t A
Waterworks Revenue
Bonds, 1958
Bond Service Reserve
Fund Fund
CITY OF CARLSBAD WATER DEPARTMENT
Balance Sheet—All Funds
For the year ended June 30, 1961
Waterworks Revenue Bonds, I960 Maintenance
Bond Service Reserve Construction and Operations
Fund Fund Fund Fund
$ 26,143.25 $ 2,286.11 $ 19,511.46 $ (43.56) $ 32,593.92 $
15,659.75
240,000.00
19,881.24 50,070.89 20,283.56
62.50
767.000.00
1,593.40
61.746.74 52,357.00 19,511.46 20,240.00 274.187.32
300.000.00
2,751.70
38,235.60
219.22
125.60
41.332.12
1,948,114.34
599.954.23
1,348,160.11
$828.746.74 $52.357.00 $319.511.46 $20.240.00 $274.187.32 $1.389.492.2j
$ $
15,659.75
"757659775
$ $
12,337.50
12,337.50
$ 12,341.08
1.878.57
14,219.65
767,000.00
300,000.00
46,086.99 52,357.00 7,173.96 20,240.00
274,187.32
,348,160.
27.112.47
$828.746.74 $52.357.00 $319.511.46 $20.240.00, $274.187.32 $1.389.492.23
CITY OF CARLSBAD WATER DEPARTMENT
Statement of Revenues and Expenditures
For the year ended June 30, 19&1
Exhibi t B
REVENUES — pledged to requirements of Resolutions
#397 and #711:
Water sales
Penalties for late payment of water accounts
Rents received
Pipeline inclusion fees
Charges for turning on water
Interes t earned
Loan meter fees
Miscellaneous revenues
Total
Less reduction for water charges to disputed accounts
Total revenues
EXPENSES:
Maintenance and operations expense--schedule B-l:
Water production and purification
Water transmission and distribution
General and administrative
Total expenses—except interest and depreciation
deducted below
Net revenues before interest and depreciation
INTEREST ON BONDS:
1958 Series
I960 Series
DEPRECIATION
Total
Net revenues—after deducting current expenses,
interest and depreciation
PROVISION FOR DEPRECIATION, an expense which did not
require a current cash outlay
Net revenues available for retirement of bonds,
capital outlay and other Water Department
purposes~-to exhibit C
$71,581.39
52,049.16
45.919.86
31,319.50
3,701.20
43,890.16
$290,168.89
2,763.51
3,018.00
1,340.32
358.13
1,932.91
435.00
6.50
300,023.26
328.89
299,694.37
169,550.41
130,143.96
78,910.86
51,233.10
43.890.16
Exhibi t C
CITY OF CARLSBAD WATER DEPARTMENT
Statement of Unappropriated Surplus
For the year ended June 30, 1961
UNAPPROPRIATED SURPLUS, JULY 1, I960 $110,200.43
ADDITIONS:
Net revenues for year--exhibit B 95,123.26
Prior year correction on capital outlay 153.50
Total avai lable 205,477.'9
DEDUCTIONS:
Transfers to bond service funds in excess of
current payment requirements on interest
and pri nci pa 1:
1958 Series $14,341.67
I960 Series 7.173.96 $21,515.63
Transfers to reserve funds:
1958 Series 4,837.00
I960 Series 240.00 5,077.00
Cap!ta1 out lay:
Transmission and distribution lines installed
at Water Department expense 36,698.18
Ferguson tractor 3.194.50 39,892.68
Total deductions 66,485.31
UNAPPROPRIATED SURPLUS, JUNE 30, 196l--exhibit A $138.991.88
CITY OF CARLSBAD WATER DEPARTMENT
Schedule of Maintenance and Operations Expense
For the year ended June 30, 196]
Schedule B-l
WATER PRODUCTION AND PURIFICATION:
Salaries and wages
Power
Supplies and expense
Maintenance—water production facilities
Purchased water
Mi seellaneous
Total
WATER TRANSMISSION AND DISTRIBUTION:
Salaries and wages
Power
Mai ntenance:
Pump station and reservoir
Meters and services
Transmission and distribution lines
Mi see 1 laneous
Total
GENERAL AND ADMINISTRATIVE:
Salaries and wages
Operation and maintenance--mobi le equipment
Professional services
Office supplies and expense
Small tools and shop supplies
Maintenance and supplies—buildings
Insurance and taxes
Contributions to retirement and group insurance
Sick leave and vacation salaries
Other general and administrative expense
Total
Less portion applied to construction work
Net
$ 4,483.39
5,871.39
1,242.91
119.06
595862.99
1.65
28,946.32
15,119.59
1,375.79
2,704.74
3,890.65
12.07
17,309.38
6,503.72
1,008.69
2,533.89
291 .48
14,146.37
4,605.99
2,233.27
2,464.72
53,868.25
7,948.39
$ 71,581.39
52,049.16
45.919.86
Tot a I—exh. i bi t B