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Home My WebLink About; ; 1964-65 Report Of Audit; 1965-08-29C THE CITY OF CARLSBAD WATER DEPARTMENT AUDIT REPORT June 30, 1965 EAGER AND CARROLL, ASSOCIATES CERTIFIED PUBLIC ACCOUNTANTS THE CITY OF CARLSBAD WATER DEPARTMENT AUDIT REPORT June 30, 1965 INDEX Page No. Auditor's Report 1 General Comments 2-5 Exhibit A - Balance Sheet - All Funds 6 Schedule A-l - Condensed Comparative State- ment of Financial Position 7 Schedule A-2 - Property and Equipment 8 Schedule A-3 - Bonded Indebtedness 9 Schedule A-4 - Fund Balances 10 Exhibit B - Statement of Revenues and Expenditures 11 Schedule B-l - Maintenance and Operations Expense 12 Schedule B-2 - Condensed Comparative State- ment of Revenues and Expendi- tures 13 Exhibit C - Debt Service Receipts and Expenditures \k Exhibit D - Reserve for Authorized Expenditures - I960 14 Bonds, Construction Fund WILLIAM H. EAGER. C.P.A, WAYNE CARROLL. JR.. C.P.A.EAGER AND CARROLL, ASSOCIATES CERTIFIED PUBLIC ACCOUNTANTS 334 EAST COLORADO STREET PASADENA 1. CALIFORNIA SYCAMORE 3-6OO6 MEMBERS AMERICAN INSTITUTE OF ACCOUNTANTS CERTIFIED PUB1-IC 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&5 anc' 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 circumstances. In our opinion, the accompanying balance sheet - all funds and statements of revenues, expenditures and fund balances present fairly the financial position of each fund of the City of Carls- bad Water Department at June 30, 1965, and the results of its operations for the year then ended, in conformity with generally accepted principles of fund accounting applied on a basis con- sistent with that of the preceding year. .. A.. Pasadena, California August 30, 1965 GENERAL COMMENTS The following supplementary information has been subjected to the tests and other auditing procedures applied in the examina- tion 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, 1965 set forth in Exhibit A. A comparison with the preceding year fol- lows in Schedule A-l. Working capital decreased $31,352 during the year under review primarily because of the substantial amounts ex- pended on new fixed additions from the construction fund in excess of net earnings. Water Fund: Resolutions #397 and #711 authorizing the issuance of $797,000 and $300,000 Waterworks Revenue Bonds respec- tively, 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 and operations fund. Cash transfers during the year were as follows: Bond service funds: 1958 series $ 46,681 I960 series 19,512 Reserve funds : 1958 series I960 series 1,440 Maintenance and operations fund 217,OOP Tota1 $284,633 Debt Service Funds: Bonds of 1958 and I960 are to be retired from revenues allocated from the water fund in accordance with reso- lutions 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 date. Bond interest coupons are redeemed by the trust depart- ment of Security First National Bank and an accurate accounting is made in the water department for the in- dividual coupons and trust balance. -2- 1958 Bonds Bond service Reserve fund I960 Bonds Bond service Reserve fund Fund Ba lance July 1, 1964 fund $190,777 52,357 fund 29,275 24,560 Excess of Rece ipts Exhibit C $ 2,386 7,870 1,440 Fund Ba lance June 30, 1965 $193,163 52,357 37,145 26,000 Total $2.96^969^ $_M_L696 $308.665 Fund balances - per Exhibit A consist of: Cash with treasurer $ 48,665 Time deposits 260,000 Total 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 I960 Revenue Bonds receives $120 per month from the water fund as required by Resolu- tion #711 until a maximum of $67,519 is 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 I960 were authorized to provide funds for construction and improvements to the City's waterworks system. Exhibit D shows how the funds were accounted for in 1964 - 65. The maintenance and operations fund has been installing the lines for the construction fund since inception and at June 30, 19&5 had advances $28,431 on incomplete work orders in process. Costs incurred per Exhibit D were advanced to and accounted for by the maintenance and operations fund. Property and Equipment: Schedule A-2 summarized transactions which affected the property account during the fiscal year under review. -3- Additions during the year were obtained as follows: Capital outlay per Schedule A-4 Improvements financed by construc- tion fund - Exhibit D Meters and services installed Pipelines contributed by consumers and subdividers Total Additions Deletions - Schedule A-2 Net Additions $ 36,832 73: 39: 259 841 8,402 $164,334 45J20 $119,214 Operat ions : Net revenues for 1964 - 65 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 $19,617 was offset to some extent from a $11,851 increase in operating ex- penses, including purchased water costs, summarized briefly below, by object: 1964-65 1963-64 Salaries and wages in- cluding sick leave, fringe benefits,etc. Water purchased Overhead recovered from charges to con struct ion and to others 82,804 118,791 82,416 109,962 (17,221) (14,876) Ma i ntenance, and power Deprec iat i on Other costs supplies 22,525 23,401 41,899 42,154 22,194 16,084 $270,992 $259,141 Current Year I ncrease (Decrease) 388 8,829 (2,345) (876) (255) 6, 1 10 $11,851 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 fol1ows : -4- Gross revenues - Exhibit B 340,579 Current expenses for necessary and reasonable maintenance and operations costs 270,992 Less depreciation deducted 41,899 229.093 Net Operating Revenue after excluding depreciation, a non-cash expense 111,486 Carryover of excess of net revenues over requirements - prior years 206,736 318,222 Net revenues required for the year ended June 30, 19&5: Interest and principal re- quirements 62,907 Reserve funds 1,440 64,347 Multiplication factor (per resolutions) 1 .35 86,868 Capital outlay 16,832 103.700 Excess of net revenues over require- ments at June 30, 1965 214,522 ~V -V -,V -5- BALANCE SHEET - ALL FUNDS June 30, 1965 Waterworks Revenue Bonds-1958 Waterworks Revenue Bonds-I960 ASSETS CURRENT ASSETS: Cash ba lances : With Treasurer, City of Carlsbad Bond interest & redemption account T ime depos i ts Accounts receivable - water accounts Sundry receivables, etc. Due from other funds Warehouse inventory Work in progress Total Current Assets Property & equipment - less accumulated depreciation of $718,094 Future revenues required to retire bonds and interest Amount available in sinking funds - for debt service Total Water Bond Ser- Reserve Bond Ser- Reserve Construction All Funds Fund vice Fund Fund vice Fund Fund Fund 99,207 64,149 18, 163 2,357 2,145 1,000 (16,508) 47,029 35,660 11,369370,000 80,000 155,000 50,000 30,000 25,000 30,000 34,457 34,457 4,244 28,431 81,414 28,431 664,782 178,606 208,823 52,357 43,514 26,000 41,923 1 ,612,984 1,376,970 308,665 3,963,401 178,606 208,823 52,357 43,514 26,000 41,923 LIABILITIES, RESERVES AND FUND BALANCES CURRENT LIABILITIES: Accounts payable Matured bond coupons, unredeemed Pipeline, meter & service deposits Credit due for stored meters Bonds and interest due currently (in excess of amounts in matured cou- pon account) Total Current Liabilities Waterworks revenue bonds payable: Series of 1958 Series of I960 Interest on bonds to maturity Less amounts due currently above Reserve for authorized expenditures Investment in property and equipment Fund balances - Exhibit A-4 14,745 22,029 15,660 6,369 3,083 4,898 45,969 90,724 15,660 6,369 747,000 300,000 638,635 1,776,359 45,969 1,730,390 41,923 41,923 1,612,984 578,104 178,606 193,163 52,357 37,145 26,000 3,963,401 178,606 208,823 52,357 43,514 26,000 41,923 Ma i ntenance & Operations Fund 27,901 4,244 (28,431) 81,414 28.431 113,559 EXHIBIT A Bonded I ndebtedness and Fixed Assets 113,559 1^,745 3,083 4,898 22,726 90.833 113,559 1,612,984 1,376,970 308,665 3,298,619 45.969 ^5,969 747,000 300,000 638.635 1,731,604 ^5.969 1,685,635 1,612,984 3,298,619 -6- CONDENSED COMPARATIVE STATEMENT OF FINANCIAL POSITION June 30, 1965 and June 30, 1964 SCHEDULE A-l CURRENT ASSETS: Cash Marketable securities and time deposits Accounts receivable Warehouse inventory Work in progress CURRENT LIABILITIES: Net Working Capital Property and equipment - net of deprec iat ion Future bond requirements Amounts available in sinking funds - for debt service Waterworks revenue bonds and interest payable (non-current) Reserves, Property Invest- ment and Fund Balances June 30, June 30, 1965 1964 146,236 115,917 Current Year Increase (Decrease) 30,319 370,000 38,701 81,414 28,431 664,782 90,724 574,058 1,612,984 1,376,970 308,665 3,872,677 1,639,666 2,233,011 418,238 34,473 81,529 31,475 681,632 76,222 605,410 1,524,763 1,451,573 296,969 3,878,715 1,707,088 2,171,627 (48,238) 4,228 (115) (3,044) (16,850) (14,502) (31,352) 88,221 (74,603) 11,696 (6,038) (67,422) (61,384) -7- SCHEDULE A-2 PROPERTY AND EQUIPMENT Land, water rights and rights of way Wells, reservoirs and dams Purification system Booster pumps and stations Transmission and distribution 1 ines Bu iId ings Autos and trucks Equ i pment Office fixtures and equipment Terramar transmission and dis- tr ibut i on 1ines Fi re hydrants Meters and services Total Less accumulated depreciation Property and Equip- ment - Net he Year ghts IS s tion ment dis- t i on Ended June June 30, 1964 117,695 223,359 30,315 77,994 1,157,235 10,603 25,074 16,383 16,542 163,566 8,170 364,928 2,211,864 687,101 30, 1965 Add i t ions 1^,979 50,563 6,856 7,142 37,234 77,19 39,841 164,334 41 ,899 June 30, Deletions 1965 117,695 223,359 30,315 92,973 1,918 1,205,880 10,603 1,967 29,963 23,525 16,542 10,813 189,987 15,889 30,422 374,347 45,120 2,331,078 10,906 718,094 1,524,763 122,435 34,214 1,612,984 -8- SCHEDULE A-3 BONDED INDEBTEDNESS June 30,1965 WATERWORKS REVENUE Bonds, 1958 Years of Matur i ty July 1, 1965-69 1970-74 1975-78 1979-81 1982-85 1986-87 1988 Princi pal Due Each Year 20,000 25,000 30,000 35,000 40,000 45,000 47,000 Amount Due at June 30, 1965 100,000 125,000 120,000105,000 160,000 90,000 47,000 Total 747,000 WATERWORKS REVENUE Bonds, I960 July 1, 1965-79 1980-86 1987-88 1989 1990 5,000 10,000 15,000 60,000 65,000 Total Bonded Indebtedness - June 30, 1965 75,000 70,000 30,000 60,000 65,000 300,000 1 ,047,000 -9- SCHEDULE FUND BALANCES For the Year Ended June 30, Fund balances - July 1, 1964 - Note 528,232 Net Income - Exhibit B 44,805 Depreciation (representing non-cash deduction) added back 41,899 Less: Actual assets purchased 16,832 Principal payment on 1958 bonds 20,000 36.83.2 _5,06? Fund Balances - June 30, 1965 578,104 Note 1 - This amount includes water fund, maintenance and operations fund, bond service and reserve funds. -10- EXHIBIT B STATEMENT OF REVENUES AND EXPENDITURES For the year ended June 30, OPERATING REVENUES - Note 1 Water sales 336,062 Charges for turning on water 1,190 Rent received 1,320 Other charges 2,007 340,579 OPERATING REVENUE DEDUCTIONS: Maintenance and operations expense - Schedule B-l: Water production and purification 138,166 Water transmission and distribution 86,589 General and administrative 46,237 270,992 Net Operating Income 69,587 ADD NON-OPERATING INCOME: Interest earned on investments 12,983 Other 5.334 18,317 87,904 DEDUCT NON-OPERATING EXPENSE - INTEREST ON WATER BONDS : 1958 Series 30,569 I960 Series 12,338 Handling costs 192 43,099 Net Income - to Schedule A-4 44,805 Note 1 - Pledged to requirements of Resolutions # 397 and # 711 relating to revenue bond payments. -11- SCHEDULE B-l MAINTENANCE AND OPERATIONS EXPENSE For the Year Ended June 30. 19&5 WATER PRODUCTION AND PUR!" Salaries and wages 13,082 Powe r 2,124 Supplies and expense 356 Purchased water 113,791 Depreciation 3,813 138,166 WATER TRANSMISSION AND DISTRIBUTION: Salaries and wages 39,310 Power 5,506 Ma i ntenance : Pump station and reservoirs 430 Meters and service 3,621 Transmission and distribution lines 3,238 Hydrant maintenance 1,011 Depreciation 33,^73 86,589 GENERAL AND ADMINISTRATIVE: Salaries and wages 23,828 Operation and maintenance - mobile equipment 2,970 Professional services 2,091 Office supplies, equipment maintenance and rental , etc. 7,031 Small tools and shop supplies 2,497 Maintenance and supplies - buildings 772 Taxes and insurance 10,773 Contributions to retirement end group insurance 6,584 General expense 1,704 Collect ion fees 595 . Depreciation 4,61 3 63,-58 Less portion applied to construction and installation work 17,221 46,237 Total - to Exhibit B 270,992 -12- CONDENSED COMPARATIVE STATEMENT OF REVENUES AND EXPENDITURES For the Years Ended June 30, 19^5 end June 30, 1964 SCHEDULE B-2 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, 1965 340,579 June 30, 1964 320,962 Current Year I ncrease (Decrease) 1 Q 6l 71 ^ ? u ' / 138,166 85,589 46,237 270,992 69,587 18,317 87,904 43,099 ^4,805 129,967 85,052 44,122 259,141 61 ,821 5,818 67,639 43,765 23,874 8,199 1,537 2,115 11 ,851 7,766 12,499 20,265 (666) 20,931 -13- EXHIBIT C DE3T SERVICE RECEIPTS AND EXPENDITURES For the Year Ended June 30, 19&5 1958 Bonds RECEIPTS: Advances from water fund interest on investments EXPENDITURES: Interest on indebtedness Hand 1i ng costs Principal payments Excess of Receipts Over Expend i tures oono Service Reserve ?-jnd_ Fund 46,681 No _LAli Activity C7 OO9 30,565 '.37 70 n^n/„ W -i '«. >-/ '-J 50,706 2,386 I960 Bonds Bond Service Reserve Fund Fund '9,512 751 12,393 7,870 20,263 1,440 12,338 55 1,440 * Interest on reserve fund investments is required to be depos:ted rn the water fund. RESERVE FOR AUT'-'OR'ZED EXPENDITURES I960 BONDS - CONSTRUCTION FUND Fo- the Year Ended June 30, 1965 EXHIBIT D Reserve for authorized expenditures - July 1, 1964 Add: Interest on irvestrrents 118,632 Deduct: New water lines installed Reserve for Authorized Expenditures - June 30, 1965 79,259 4K923 -14- BEST ORIGINAL