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Home My WebLink About; ; 1963-64 Report Of Audit; 1964-08-27c THE CITY OF CARLSBAD WATER DEPARTMEM1 AUDIT REPORT June 30, 1961}. EAGER AND CARROLL, ASSOCIATES CERTIFIED PUBLIC ACCOUNTANTS TII3 CIIY OF CARLSBAD WATER DEPARTMENT AUDIT REPORT June 30, 196!}. INDEX Page No. Auditor's Report 1 General Comments 2-5 Exhibit A - Balance Sheet - All Funds 6 Schedule A-l - Condensed Comparative Statement of Financial Position 7 Schedule A-2 - Property and Equipment 8 Schedule A-3 - Bonded Indebtedness 9 Schedule A-Ij. - Fund Bslrnces 10 Exhibit B - Statement of Revenues and Expenditures 11 Schedule B-l - Maintenance and Operations Expense 12 Schedule 3-2 - Condensed Comparative Statement of Revenues and Expenditures 13 Exhibit C - Debt Service Receipts and Expenditures llj. Exhibit D - Reserve for Authorized Expenditures - I960 Bonds, Construction Fund lif. WILLIAM H. EAGER. C.P.A. WAYNE CARROLL., JR., C.P.A,EAGER AND CARROLL, ASSOCIATES CERTIFIED PUBLIC ACCOUNTANTS 234 EAST COLORADO STREET PASADENA 1, CALIFORNIA SYCAMORE 3-6OC6 MEMBERS AMERICAN INSTITUTE OF ACCOUNTANTS THE CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS AUDITOR'S REPORT The Honorable Mayor and City Council City of Carlsbad, California We have examined the balance sheet - all funds of the City of Carlsbad Water Department as of June 30, 19&4 and the related statements of revenues, expenditures and fund balances for the year then ended. Our examination 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 circumstances0 In our opinion, the accompanying balance sheet - all funds and statements of revenues, expenditures and fund balances oresent fairly the financial position of each fund of the City of Carlsbad Water Department at June 30, 1964, and the results of its operations for the year then ended, in conformity with generally accepted principles of fund accounting applied on a basis consistent with that of the preceding year. Pasadena, California August 27, 196if GENERAL 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 material as related to the financial statements taken as a whole. Balance Sheet - All Funds: The ending balances of assets, liabilities, reserves and fund balances are reflected for every fund in the City's Water Department at June 30, 196^ set forth in Exhibit A. A comparison with the preceding year follows in Schedule A-l. Working capital increased $95,9^1-1 during the year under review compared to a $llf,311 increase the preceding year. Liabilities were reduced $9»332 and cash and marketable securities increased $9l|,991* The sale of the Elm Street property for $9<^-»202 was primarily responsible for the increase. Water Fund: Resolutions #397 and #711 authorizing the issuance of $797,000 and $300,000 Waterworks Revenue Bonds respectively, provide that gross revenues of the enterprise be placed in the water fund and monthly transfers made to the bond service funds, the reserve funds and the maintenance find operations fund. Cash transfers during the year were as follows: Bond service funds: 1958 series $ 1^6,682 I960 series 19,511 Reserve funds: 1958 series I960 series 1,^0 Maintenance and operations fund 222.000 Total $239.6 Debt Service Funds: Bonds of 1958 and 1960 are to be retired from revenues allocated from the water fund in accordance with resolutions discussed above. Exhibit C provides a summary of the transactions affecting these funds and Schedule A-3 indicates the years of maturity and the outstanding indebtedness at the balance sheet date0 Bond interest coupons are redeemed by the trust department of Security First National Bank and an accurate accounting is made in the water department for the individual coupons and trust balance. -2- Fund Balance July, i,19b4 Excess of Receipts Exhibit C Fund Balance June 30, 1964 1958 Bonds Bond service fund 78,639 112,138 190,777 Reserve fund 52,357 - 52,357 I960 Bonds Bond service fund 21,492 7,733 29,275 Reserve fund 23,120 1.140 2k.560 Total 175.608 121.361 296.969 Fund balances - per Exhibit A consist of: Cash with treasurer 38,731 Investments: Time deposits 165,000 U.S. Government securities 93*238 258.238 Total 296.969 The maximum accumulation required in the 1958 Reserve Fund has been achieved in prior years hence no addition was made during the current fiscal year. The reserve fund for 1960 Revenue Bonds receives |?120 per month from the water fund as required by Resolution #711 until a maximum of $67s519 1s reached in order to provide for the largest annual principal and interest payment which is in 1990. Section 17 of the resolution required an initial deposit of $20,000 into this fund which was effected when the bonds were sold. Interest earned on investments in these reserve funds are transferred to the water fund when received, as part of the bond requirements. Construction Fund, Bonds of I960: The waterworks revenue bonds of 1960 were authorised to provide funds for construction and improvements to the City's waterworks system. Exhibit D shows how the funds were accounted for in 1963-64* The maintenance and operations fund has been installing the lines for the construction fund since inception and at June 30, 1964 had advanced $31,475 on incomplete work orders in process. Costs incurred per Exhibit D were advanced to and accounted for by the maintenance and operations fund. -3- Property and Equipment: Schedule A-2 summarized transactions which affected the property account during the fiscal year under review. Additions during the year were obtained as follows: Capital outlay per Schedule A-lj. 13,977 Improvements financed by construction fund - Exhibit D 54,18? Meters and services installed 37 Pipelines contributed by consumers and subdividers 5 » Total additions 160,318 Deletions - Schedule A-2 65.164 Net additions Operations: Net revenues for 1963-64 are set forth in Exhibit B with Schedule B-l detailing maintenance and operations expense. Net revenues of the current year are compared with the previous year in Schedule B-2. The increase in gross revenues of $15,939 w»3 offset to some extent from a $7,829 increase in operating expenses, including purchased water costs, summarized briefly below, by object: T Y\f* T*Q fl S A 1963-64 1962-63 (Decrease) Salaries and wages including sick leave, fringe benefits, etc. 82,4l6 79,584 2,832 Water purchased 109,962 37,520 22,436 Overhead recovered from charges to construction and to others (14,876) (7,575) (7,301) Maintenance, suroplies and power 23,401 27,592 (4,191) Depreciation 42,154 42,382 (228) Other costs l6.084 21.803 (5.719) Totals 259.141 251.312 7.829 -4- Requirements of Covenant No.9» Section 21, of Resolutions #397 and #711 prescribe in general that rates and charges shall be sufficient to meet certain obligations of the enterprise, as follows: Gross revenues - Exhibit B 320,962 Current expenses for necessary and reasonable maintenance and operations costs 259»l4^ Less depreciation deducted Ij2 j l5li 2l6,98,7 Net operating revenue after excluding depreciation, a non-cash expense 103,975 Carryover of excess of net revenues over requirements - prior years Net revenues required for the year ended June 30, 196!}.: Interest and principal requirements ij.3 Reserve funds 1 ii|Jj.O Multiplication factor (per resolutions) 1.35 6l,027 Capital outlay 13.977 75.00JI Excess of net revenues over requirements at June 30, 196ij. 206«736 The first principal payments on the bonds commence July 1, 196!)., per schedule A-3. Exhibit A ASSETS CURRENT ASSETS: Cash balances: With Treasurer, City of Carlsbad Security First National Bank: Bond and interest redemption account Time deposits Bank of America - time deposits Investments in U.S. Government securities Accounts receivable - water accounts Sundry receivables, etc. Due from other funds Warehouse stock Work in progress Total Current Assets Property and equipment - less accumulated depreciation of $687,101 Future revenues required to retire bonds and interest Amount available in sinking funds - for debt service LIABILITIES. RESERVES AND FUND BALANCES CURRENT LIABILITIES: Accounts payable Matured bond interest coupons, unredeemed Due other funds Pipeline, meter and service deposits Credit due for stored meters Total Current Liabilities Waterworks revenue bonds payable: Series of 1958 Series of 19&0 Interest on bonds to maturity Reserve for authorized expenditures Investment in property and equipment Fund balances - Exhibit C Total All Water Funds Fund 74,088 2,872 41,829 145,000 180,000 80,000 93,23833,966 33,966 50728,329 81,529 31,475 709,961 116,838 1,52^,763 1,451,573 296,969 3,983,266 116,838 \NCES 7,825 21,829 28,329 1,601 3,513 63,097 767,000 300,000 631,542 118,632 1,52k, 763 528,232 116.838 3^83^266 116^838 BALANCE SHEET - ALL June 30, 196ij. Waterworks Revenue Bonds, 1958 Bond Service Reserve Fund Pand 2,539 2,357 35,660 20,000 5,00055,000 45,000 93,238 206,437 52,357 206,437 52,357 I5,66o I5,66o 190,777 52,357 206,437 52,357 FUNDS Waterworks Revenue Bonds. I960 Bond Service Reserve Construction Fund Fund Fund 9,275 4,56o 10,303 6,169 20,000 20,000 80,000 28,329 35, iM 24,560 118,632 35,4h4 24,560 118,632 6,169 6,169 118,632 29,275 24,56o 35,Wi- 24,560 118,632 Maintenance & Operations Bonded Fund Debt 42,182 507 81,529 31,475 155,693 1,451,573 296,969 155,693 1,748,542 7,325 28,329 1,601 3,513 41,268 767,000300,000681,542 114,425 155,693 1,748,542 Property And Equipment 1,524,763 1,524.763 1,524,763 1,524,763 .6- Schedule A-l CONDENSED COMPARATIVE STATEMENT OP FINANCIAL POSITION June 30, 1964 and CURRENT ASSETS: Cash Marketable securities and time deposits Accounts receivable and accrued interest Warehouse stock Work in progress CURRENT LIABILITIES June 30, 1963 June 30, 1964 115,917 418,238 34,473 81,529 31. £75 681,632 34.768 June 30, 1963 173,933 265,231 29,703 Il8,5i|47.612 595,023 44,100 Current Year Increase (Decrease) (58,016) 153,00? 4»770 (37,015) 23.863 86,609 (9.332) Net Working Capital Property and equipment - net of depreciation Future bond requirements Amounts available in sinking funds - for debt service Waterworks revenue bonds and interest payable Reserves, Property Investment and Fund Balances 646,864 550,923 95,94l 1,524,763 1,451,573 296.969 3,920,169 1,748.542 1,444,330 I,6l6,822 175.377 3,737,452 1.792.199 80,433 -"-(165,249) •x- 121.592 132,717 (43.657) 2,171.627 1.995.253 176.374 •»-Sale of Elm Street property resulted in an additional $94*^02 being placed in the sinking fund in excess of normal requirements. This amount also decreased the future funds necessary for retirement of bonds and interest. -7- Schedule A-2 Land, water rights and rights of way Wells, reservoirs and dams Purification system Booster pumps and stations Transmission and distribution lines Buildings Autos and trucks Equipment Office fixtures and equipment Terramar transmission and distribution lines Fire hydrants Meters and services Total Less accumulated depreciation Property and Equipment - net PROPERTY AND EQUIPMENT he Year Ended June 30, 1964 June 30, 1963 123,503 223,359 27,687 ons 78,225 lfl.070.232/ ^18,234 J26.719 16, 881 . 15, 753 nd ^163,566 352,551 2,116,710 672,380 1, 41^-, 330 Additions 2,628^ 105,376' 3,333 2,184 1,219 8,170 37,408 160,318 42.153 118,165 Deletions 5,808 231 18,373 7,631 4,978 2,682 430 25,031 65,164 27.ii.32 37,732 June 30, 1964 117, 695^ 223, 359/ 30.315/ 77, 994 / 1,157,235-* 10,603 25,074 16,383 16,542 163,5664- 8,170 364,928 2,211,864 687,101 1.524,763 -8- Schedule A-3 Waterworks Revenue Bonds, 1958 Total Waterworks Revenue Bonds, I960 Total BONDED INDEBTEDNESS June 30, 196!]. Years of Maturity July 1, 19611-69 1970-741975-78 1979-81 1982-851986-87 1988 July 1, 1965-79 1980-86 1987-88 1989 1990 Principal Due Each Year 20,00025,000 30,000 35,ooo Ij.0,000ij.5,000 lj.7,000 5,000 10,00015,00060,00065,000 Amount Due at June 30, 196IJ. 120,000125,000 120,000 105,000 160,000 ,000 .000 75,000 70,000 30,000 60,000 65. OOP 767,000 Bonded Indebtedness June 30, 1961j. 300.000 1.067.000 -9- Schedule A-k FUND BALANCES For the Year Ended June 30, Fund balences July 1, 1963 - Note 1 Add: Net income - Exhibit B Sale of Elm Street property Depreciation (representing non-cash deduction) added back Less actual assets purchased during the year Available for bonds and interest, capital outlay and other water department purposes Fund Balances June 30 » 381,979 23,37495-, 202 13.977 28.177 llj.6.253 528.232 Note 1 - This amount includes water fund, maintenance and operations fund, bond service and reserve funds. -10- Exhibit B STATEMENT OF REVENUES A HP EXPENDITURES For the Year Ended June 30, 19&J. Operating Revenues: - Note 1 Water sales 320,390 Penalties for late payment 1,580 Rent received 1,320 Pipeline fees 2,383 Charges for turning on water 1»3?6 Loan meter charges Jj75 327,62i|. Less reduction for disputed accounts 6 , 662 320,962 Operating Revenue Deductions: Maintenance and operations expense - Schedule B-l: Water production and purification 129,96? Water transmission and distribution 8^,052 General and administrative Uj.,122 259.llll Net Operating Income 6l,82l Add Nonoperatlng Income: Interest earned on investments 5,7^8 Miscellaneous 70 £ 67,639 Deduct Nonoperatlng Expense - Interest on water bonds: 19£8 series 31,320 I960 series 12,338 Handling costs 107 lj.3.765 Net Income - to Schedule A-lf 23.37k Note 1 - Pledged to requirements of Resolutions #397 and #711. -11- Schedule B-l MAINTENANCE AND OPERATIONS EXPENSE For the Year Ended June 30, 196I| Water production and purification: Salaries and wages 13»3&9 Power 1,718 Supplies and expense 280 Maintenance - water production facilities 2k6 Purchased water " 10Q,962 Depreciation k.392 129,967 Water transmission and distribution: Salaries and wages 37,0i}.6 Power " 5, 5lf2 Maintenance: Pump station and reservoirs 10k Meters and services 7»312 Transmission and distribution lines 2,068 Depreciation 32,980 85,052 General and Administrative: Salaries end wages 25,912 Operation and maintenance - mobile equipment Professional services Office supplies, equipment maintenance, etc. Small tools and shop supplies Maintenance and supplies - buildings Taxes and insurance Contributions to retirement and group insurance 6,089 General expense 1,963 Collection fees 711 Depreciation 14,782 58,998 Less portion applied to construction and installation work lit.876 jjjj.,122 Total - to Exhibit B 259.llq -12- Schedule B-2 CONDENSED COMPARATIVE STATEMENT OF REVENUES AND EXPENDITURES For the Years Ended June 30, 1961j. and June 30, 1963 Revenues Operating expenses: Water production and purification Water transmission and distribution General and administrative Net Operating Income Nonoperating income Nonoperating expense Net Revenue from Enterprise June 30, 196J4. 129,96785,052 14.122 259.ilq 61,821 5.818 67,6391+3.765 June 30, 1963 108,121]. 85,821 57,367 251.312 53,711 H.257 57,968 111.. Current Year Increase (Decrease) 320,962 305,023 15,939 21, 8M (769) 7.829 8,110 1.561 9,6711 -13- Exhibit C DEBT SERVICE RECEIPTS AND EXPENDITURES For the Year Ended June 30, 19614. 1958 Bonds Bond Service Reserve Fund Fund I960 Bonds Bond Service Reserve Fund Fund Receipts: Advances from water fund Sale of Elm Street property Interest on investments Expenditures: Interest on bonded indebtedness (Includes handling costs) Excess of Receipts over Expenditures 46,682 94,2022.656 143,540 31.402 112.138 No Activity 19,511 635 20,146 12.363 7.783 1,140 1,440 Exhibit D RESERVE FOR AUTHORIZED EXPENDITURES - I960 BONDS, CONSTRUCTION FUND For the Year Ended June 30, 1964 Reserve for authorized expenditures July 1, 1963 Add: Interest earned on investments Deduct: New water lines installed 168,944 3.875 172,319 54.187 Reserve for Authorized Expenditures June 30, 1964 118.632 -14-