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Home My WebLink About; ; 1965-66 Audit Report; 1966-09-12c o THE CITY OF CARLSBAD WATER DEPARTMENT AUDIT REPORT June 30, 1966 CflBKOLL & BBflllTL€y, fl5SOCIflT£S CERTIFIED PUBLIC ACCOUNTANTS THE CITY OF CARLSBAD WATER DEPARTMENT AUDIT REPORT June 30, 1966 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 Bonds - Construction Fund ]k Cfl&BOLL & BRflnTL£y,flSSOC!flT€S CERTIFIED PUBLIC ACCOUNTANTS W. T. CARROLL, C. P. A. H. W. BRANTLEY, C. P. A. 9OI DOVER DRIVE, SUITE 22O nCWPOttT BtflCH, CflLlfO&fllfl 92660 AREA CODE 714 545-77S2 MEMBERS AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS MEMBERS 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, 1966 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 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, 1966, 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. O Newport Beach, California September 12, 1966 -1- 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, 1966 set forth in Exhibit A. A comparison with the preceding year fol- lows in Schedule A-l. Working capital decreased $20,148 during the year under review primarily because of the substantial amounts ex- pended on new fixed additions from the construction and maintenance and operations funds, including a new water building ($28,635). Water Fund : Resolutions # 397 and #711 authorizing the issuance of $797,000 and $300,000 Waterworks Revenue Bonds respec- tively, provided 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 $ 46,682 I960 series 19,51 1 Reserve funds: (transfers completed) 1958 series none I960 series 41,519 Maintenance and operations fund 291,000 Total $398.712 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. -2- 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. Fund Excess Fund Balance of Balance July 15 Receipts June 30, 1965 Exhibit C 1966 1958 Bonds: Bond service fund $193,163 $ 4,714 $197,877 Reserve fund 52,357 52,357 I960 Bonds: Bond service fund 37,145 3,733 40,878 Reserve fund 26.000 41,519 67.519 Total $308,665 $49,966 $358,631 Fund balances - per Exhibit A consist of: Cash with treasurer $ 44,600 Time deposits 335.000 379,600 Less accrued interest 20,969 Tota1 $358,631 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 I960 Re- serve Fund reached its maximum in 1965-66. Interest earned on investments in these reserve funds are transferred to the water fund when received, as part of the bond requirements. Construction Fund, Bond 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 re- maining funds were expended in 1965-66. Property and Equipment: Schedule A-2 summarized transactions which affected the property account during the fiscal year under review. The additions and deletions to this account are entered quarterly by the City staff to a card system and balanced to the controls. Operations : Net revenues for 1965-66 are set forth in Exhibit B with Schedule B-l detailing maintenance and operations -3- expense. Net revenues of the current year are compared with the previous year in Schedule B-2 The increase in gross revenues of $28,609 was accompanied by increases in cost of purchased water - $10,654, water study - $12,000 and other costs, which included a portion of insurance which had been borne in the preceding year by the City. 1965-66 Salaries and wages in- cluding sick leave, fringe benefits,etc. Water purchased Overhead recovered from charges to construction and to others Maintenance, supplies and power Deprec iat ion Other costs (see note Schedule B-l) 87,838 129,445 82,804 118,791 (22,891) (17,221) Current Year Increase (Decrease) 5,034 10,654 (5,670) 26,054 46,201 41,367 $308,014 22,525 41,899 22,194 $270,992 3,529 4,302 19,173 $37,022 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 369,188 Current expenses for necessary and reasonable maintenance and operations costs 308,014 Less depreciation included 46,201 261.813 Net Operating Revenue after excluding depreciation, a non-cash expense 107,375 Carryover of excess of net revenues over requirements - prior years 214,522 (Total carried forward to page 5) 321,897 -4- (Total brought forward from page 4) 321,897 Net revenues required for the year ended June 30, 1966: Interest and principal requirements 66,939 Reserve funds 41.519 108,458 Multiplication factor 1.35 146,418 Capital outlay 60,06l 206.479 Excess of net revenues over re- quirements at June 30, 1966 115,418 *********** -5- ASSETS. CURRENT ASSETS: Cash ba1ances: With Treasurer, City of Carlsbad Time depos i ts Accounts receivable - water accounts Sundry receivables, etc. Warehouse inventory Work in progress Total Current Assets Property & equipment - less accumulated depreciation of $738,846 Future revenues required to retire bonds and interest Amount available in sinking funds - for debt service LIABIL I TIES. CURRENT RESERVES AND FUND BALANCES LIABILITIES: Accounts payable Matured bond coupons, unredeemed Pipeline, meter & service deposits Credit due for stored meters Bonds and interest due curre'-tly (in excess of amounts in matured cou- pon account) Total Current Liabilities Waterworks revenue bonds payable: Series of 1958 Series of 19&0 Interest on bonds to maturity Less amounts due currently above Investment in property and equipment Fund balances - Exhibit A-4 June 30, Total Water Al 1 Funds Fund 67, 26k 4,198 ¥+5,000 110,000 39,542 39,542 7,950 3,385 52,869 3,595 616,220 157,125 1,685,485 1,239,097 3Z9,600 3,920,402 157,125 9,688 20,969 740 5,913 25,000 62,310 727,000 295,000 596,697 1,681,0.07 25,000 1 » 656, 007 1,685,485 578,910 157,125 3,920,402 157,125 1966 V/aterworks Revenue Bonds-1958 Bond Ser- Reserve vice Fund Fund 32,787 2,357 180,000 50,000 212,787 52,357 212,787 52,357 14,910 14,910 197,877 52,357 212,787 52,357 V/aterworks Revenue Bonds-I960 Bond Ser- Reserve vice Fund Fund 6,937 2,519 40,000 65,000 6,059 46,937 67,519 46,937 67,519 6,059 EXHIBIT A Bonded Maintenance Indebtedness & Operat i ons and Fund Fixed Assets 18,466 79,495 9,688 740 5,913 16,341 1,685,485 1,239,097 379,600 3,304.182 40,878 67.519 46,937 67,519 63.154 79,495 25,000 25,000 727,000 295,000 596.697 1,643,697 25.000 1,618,697 1,685,485 3,304,182 -6- CONDENSED COMPARATIVE STATEMENT OF FINANCIAL POSITION June 30, 1966 and June 30, 1965 SCHEDULE A-l CURRENT ASSETS: Cash Marketable securities and time depos its Accounts receivable Warehouse inventory Work in progress CURRENT LIABILITIES Net Working Capital Property and equipment - net of deprec iation 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, 1966 June 30, 1965 Current Year Increase (Decrease) 67,264 146,236 (78,972) 1 1 3 1 2 445 47 52 3 616 62 553 ,685 ,239 379,858 ,593 ,264 ,000 ,492 ,869 ,595 ,220 ,310 ,910 ,485 ,097 ,600 ,092 ,697 ,395 370 38 81 28 664 90 574 1,612 1,376 308 3,872 1,639 2,233 ,000 ,701 ,414 ,782 ,724 ,058 ,984 ,970 ,665 ,677 ,666 ,011 75 8 (28 (48 (28 (20 72 (137 70 Ifii 31 ,000 ,791 ,545) ,836) ,562) ,414) ,148) ,501 ,873) ,935 ,585) .969) ,384 -7- SCHEDULE A-2 Land, water rights and rights of way Wells, reservoirs and dams Purification system Booster pumps and stations Transmission and distribution 1 ines Bu i1 dings Autos and trucks Equ ipment Office fixtures and equipment Terramar transmission and dis- tr ibut ion 1i nes Fire hydrants Meters and services Total Less accumulated depreciation Property and Equipment - Net PROPERTY AND EQUIPMENT he Year Ended June June 30, 1965 s 117,695 223,359 30,315 92,973 in 1,205,230 10,603 29,963 23,525 it 16,542 s- 189,987 16,539 374,347 2,331,078 >n 7 1 8 , 094 •Net 1,612,984 30, 1966 Add it ions 93,117 28,635 9,055 1,165 655 7,606 36,178 176,411 46,200 130,211 June 30, Deletions 1966 117,695 223,359 30,315 92,973 51,277 1,247,070 39,238 1,836 37,182 2,591 22,099 17,197 189,987 24,145 27,454 383,071 83,158 2,424,331 25,448 738,846 57,710 1,685,485 -8- SCHEDULE A-3 WATERWORKS REVENUE Bonds, 1958 BONDED INDEBTEDNESS June 30, 1966 Years of Mat u r i ty July I, 1966-69 1970-74 1975-78 1979-81 1982-85 1986-87 1988 Principal Amount Due Each Due at Year June 30,1966 20,000 25,000 30,000 35,000 40,000 45,000 47,000 80, 125, 120, 105, 160, 90, 000 000 000 000 000 000 47.000 Total 727,000 WATERWORKS REVENUE Bonds, I960 July 1, 1966-79 1980-86 1987-88 1989 1990 Total Bonded Indebtedness - June 30, 1966 5,000 10,000 15,000 60,000 65,000 70,000 70,000 30,000 60,000 65.000 295.000 1,022,000 -9" FUND BALANCES For the Year Ended June 30, 1966 SCHEDULE A-4 Fund balances - July 1, 1965 Net income - Exhibit B Add: Depreciation (representing non- cash deduction) added back Less: Principal payments on bonds Assets purchased Interest earned in construction fund (fund balance transferred to maintenance and operation) Net Increase for Current Year 578,104 40,185 46.201 86,386 25,000 60,061 519 85.580 806 Fund Balance - June 30, 1966 578,910 -10- EXHIBIT B STATEMENT OF REVENUES AND EXPENDITURES For the Year Ended June 30, 1966 ""-•vc ^yi^ES - Note 1 >;o- sales 361 ,244 j';her charges 7,174 Rent received 770 369,188 OPERATING REVENUE DEDUCTIONS: Maintenance and operations expense - Schedule B-l : Water production and purification 150,400 Water transmission and distribution 91,709 General and administrative 65,905 308.014 Net Operating Income 61,174 ADD NON-OPERATING INCOME: Interest earned on investments 17,753 Other income 3,196 20,949 82,123 DEDUCT NON-OPERATING EXPENSE - INTEREST ON WATER BONDS : 1958 Series 29,820 I960 Series 12.118 41.938 Net Income - to Schedule A-4 40,185 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, 1966 WATER PRODUCTION AND PURIFICATION: Salaries and wages 14,239 Power 2,259 Supplies and expense 901 Purchased water 129,445 Depreciation 3,556 150,400 WATER TRANSMISSION AND DISTRIBUTION: Salaries and wages 41,177 Powe r 6,195 Mai ntenance: Pump station and reservoirs 338 Meters and service 4,298 Transmission and distribution lines 3,808 Hydrant maintenance, etc. 841 Depreciation 35,052 91,709 GENERAL AND ADMINISTRATIVE: Salaries and wages 25,3^4 Operation and maintenance - mobile equipment 4,189 Professional services ''"14,390 Office supplies, equipment maintenance and rental, etc. 8,783 Small tools and shop supplies 1,523 Maintenance and supplies - buildings 1,702 Taxes and insurance 15,177 Contributions to retirement and group insurance 7,058 General expense 2,468 Collection fees 549 Depreciation 7,593 88,79$ Less portion applied to construction and installation work 22,891 65,905 Total - to Exhibit B '•' Includes $12,000 paid for water study. -12- CONDENSED COMPARATIVE STATEMENT OF REVENUES AND EXPENDITURES For the Years Ended June 30, 1966 and June 30, 1965 SCHEDULE B-2 REVENUES OPERATING EXPENSES: Water production and purification Water transmission and distribution General and administrative Met Operating !ncome Non-operating income Non-operating expense Net Revenue from Enterprise June 30, 1966 369,188 June 30, 1965 340,579 Current Year Increase (Decrease) 28,609 150,400 91,709 "65,905 308,014 61,174 20,949 82,123 41,938 40,185 138,166 86,589 46,237 270,992 69,587 18,317 87,904 43,099 44,805 12,234 5,120 19,668 37,022 (8,413) 2,632 (5,781) (1,161) ;(4,620) •'• Includes $12,000 paid for water study -13- EXHIBIT C DEBT SERVICE RECEIPTS AND EXPENDITURES •For the Year Ended June 30,1966 1958 Bonds RECEIPTS: Advances from water fund "''Interest on investments EXPENDITURES: interest on indebtedness Principal payments Excess of Receipts Over Expend!tures Bond Se rv i ce Fund Reserve Fund 46,682 No 7,852 Activity 54,534 29,820 20,.000 49,820 I960 Bonds Bond Servi ce Fund 1,340 17.118 Reserve Fund 41,519 20,851 41,519 12,118 5,000 '"' interest on reserve fund investments is required to be deposited in the water fund- RESERVE FOR AUTHORIZED EXPENDITURES 19&0 BONDS - CONSTRUCTION FUND For the Year Ended June 30, 'l 966 EXHIBIT D Reserve for authorized expenditures -July 1, ' Add: Interest on investments Deduct: New water lines installed Reserve for Authorized Expenditures - June 30, 41,923 519 42,442 42,442 None -14-