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CITY OF CARLSBAD WATER DEPARTMENT
AUDIT REPORT
As of June 30, 1967
Cflfc&OLL & B&flnTLEY, flSSOCIflTES
CERTIFIED PUBLIC ACCOUNTANTS
CITY OF CARLSBAD WATER DEPARTMENT
AUDIT REPORT-
As of June 30, 1967
INEO
Page^Np.
Auditor's Report
General Comments 1-3
Exhibit A - Balance Sheet - All Funds n
Schedule A-l - Condensed Comparative State-
ment of Financial Position 5
Schedule A-2 - Property and Equipment 6
Schedule A-3 - Bonded Indebtedness 7
Schedule A-1 - Fund Balances 8
Exhibit B - Statement of Revenues and Expenditures 9
Schedule B-l - Maintenance and Operations
Expense 10
Schedule B-2 - Condensed Comparative State-
raert of Revenues and Expendi- n
tures
Exhibit C - Debt Service Receipts and Expenditures 12
Cfl&ftOLL & BfcflnTLiy, flSSOCIflTCS
CERTIFIED PUBLIC ACCOUNTANTS
W. T. CARROLL, C. P. A.
H. W. BRANTLEY. C. P. A.
9OI DOVER DRIVE, SUITE 23O
n€UJPOBT B€flCH, CflLlfORtllfl 92660
AREA CODE 71-4
S46-442S • 5-45-7792
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, 1967 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, 1967, 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.
Newport Beach, California
August 25, 1967
GENERAL COMMENTS
The following supplementary information has been subjected to
the tests and other auditing procedures applied in the exami-
nation of the financial statements mentioned in our report and,
in our opinion, is fairly stated in all respects' that are ma-
terial as related to the financial statements taken as a whole.
Balance Sheet - All Funds:
The balance sheet reflects the ending balances of
each fund or classification at June 30 t 1967 and is
compared with the preceding year's balances on
Schedule A-l.
Working capital increased by $25,818 during the year
while the overall net assets (after depreciation) in-
creased $53,533,
Cash with the Treasurer was invested in time de-
posits when funds were available. At the year's
end, 80.^% of the funds were bearing interest at
current rates,
Water Fund:
The terms of the two revenue bond issues require
that transfers be made from the water revenues to
bond service funds (and reserve funds to protect
the bondholder in a financially depressed period) in
an amount which will retire bonds and interest as the
obligations mature. During 1966-67 transfers were
made as follows to the sinking funds:
1958 series $U68683
1960 series 19 ,,511
In addition 9 funds are transferred monthly to the
maintenance and operations fund for working capital
as needed.
The reserve fund transfers are complete and require
no further expenditures,
Debt Service Funds:
Revenue bond issues of 1958 and 1960 are not general
obligations of the Citys but are secured solely by
water revenues at rates which are set by the City
Council,
-1-
Debt Service Funds: (continued)
Rates were recently increased to take care of the
loss of water revenues from the lease-sale of North
Carlsbad area and increasing water costs.
Schedule A-3 indicates the years of maturity and
the outstanding balances of each issue. Exhibit C
shows how monies coming into the sinking fund were
were accounted Jor.
Bond interest coupons and bonds redeemed are ac-
counted for thru the City's paying agent and are
audited by us. Changes in the debt service fund
balances may be explained by the following chart:
1958 Bonds:
Bond service fund
Reserve fund
1960 Bonds
Bond service fund
Reserve fund
TOTAL
Fund
Balances
July 1,
__1966_
197,877
52,357
40,878
67,519
Excess
of
Receipts
Exhibit C
6,741
4,476
Fund
Balances
June 30,
_ 1967 |
204,618
52,357
45,354
67,519
358,631 11,217 369,848
54,848
290,000
25.000
Fund balances - per Exhibit A consist of:
Cash with Treasurer
Time deposits
Cash with Trustee - for bonds matur-
ing July 1, 1967
TOTAL
Interest earned on reserve funds (funds equaling
the largest annual debt service during the life of
the issue) are required to be transferred from the
water fund as part of the bond indenture require-
ments. As noted above, no more contributions are
required.
Property and Equipment:
Schedule A-2 shows how the department's fixed as-
sets have changed during the year, both as to new
additions and as to retirement, trade or sales.
Of the total additions 8 subdividers and others ac-
counted for $51,379 and the water department pur-
chased $51,671, bringing the total additions to
$103,050, Detailed records are maintained on a
card system by the City's staff and balanced to
perpetual controls.
-2-
Operations :
Net income for the current year increased $15,236
over the previous year, (Exhibit B) The basic
reason for the increase resulted from an increase
in interest and other non- operating income ($1,757),
the decrease in interest expense ($813) and the pay-
ment in 1965-66 for a water study of $12,000. Altho
revenues increased, expenses increased also, which
resulted in little difference in net operating in-
come after giving effect to the aforementioned water
study. (Schedule B-2)
The bond indentures provide in general that rates
and charges shall be sufficient to meet certain ob-
ligations of the enterprise, as follows:
Gross revenues - Exhibit B 38^,907
Current expenses for necessary
and reasonable maintenance
and operating costs 311,067
Less depreciation included 7*
Net Operating Revenues after
excluding depreciation, a
non— cash expense 120,938
Carryover of excess of net
revenues over requirements -
prior years
Net revenues required for the
year ended June 30, 1967:
Interest and principal re-
quirements 66,126
Reserve funds completed
~"'CTe>6 ,126"
Multiplication factor ^_^1.35
897270'
Capital outlay 51^671 110
Excess of net revenues over
requirements at June 30,1967 95?U15
* ft ft ft ft ft * ft ft ft ft
-3-
BALANCESHEET - ALL FUNDS Exnrair A
ASSETS
CURRENT ASSETS:
Cash balances :
With Treasurer, City of Carlsbad
Time deposits
With bond trustee
Accounts receivable - water accounts
Sundry receivables , etc.
Warehouse inventory
Work in progress
Total Current Assets
Property & equipment - less accumulated
depreciation of $776,710
Future revenues required to retire bonds
and interest
Amount available in sinking funds - for
debt service
LIABILITIESf RESERVES AND FUND BALANCES
CURRENT LIABILITIES:
Accounts payable
Matured bond coupons , unredeemed
Pipeline, meter £ service deposits
Credit due for stored meters
Bonds due currently
Total Current Liabilities
Waterworks revenue bonds payable:
Series of 1958
Series of 1960
Interest on bonds to maturity
Less amounts due currently above
Investment in property and equipment
Fund balances - Exhibit A-4
June "50, 1967
Waterworks Revenue
Bonds-1958
Total Water Bond Ser- Reserve
All Funds Fund vice Fund Fund
98,664 22,917 39,618 2,357
405,000 115,000 145,000 50,000
45,486 34,535
37,326 37,326
4,894 153
47,838
639,679 175,396 219,153 52,357
1,713,170
1,207,878
31414 1 848
3,905,575 175,396 219,153 52,357_=_ _,„ __ _
8,038
20,486 14,535
300
6,097
25,000
59",921 14,535
707,000
290,000
l", 5 5 2, 7 26"
25,000
1, 5 27, 726
1,713,170
604,758 175,396 204^618 52,357
3, 905^575 175,396 219,153 52^357
V/aterworks Revenue
Bonds-1960
Bond Ser- Reserve
vice Fund Fund
10,354 2,519
30,000 65,000
10,951
51,305" 67,519
5T730 5 ^L'J519__ _
5,951
5,951
•
45,354 67?519
sTjS'OS1 67^.519^
Maintenance
6 Operations
Fund
20,899
4,741
47,838
471
73,949
7379 49~
8,038
300
6,097
14,435
59,514
73^949^
EC r. led
Indebtedness
-IV .-1an j
Fixed Assets
1,713,170
1,207,878
3 u n , 848
3,2;?. 5,896
25,000
707,000
290,000
555,726
1,552,726
1,527,726
1,713,170
3^265,896
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SCHEDULE A-l
CONDENSED COMPARATIVE^ STATEMOIT^OF
F JKANCIAI^JPO^mpJY
June 30*™ 1967 and""june 30 „ 1966
CURRENT ASSETS:
Cash
Time deposits
Deposits with bond trustee
Accounts receivable
Warehouse inventory
Work in progress
CURRENT LIABILITIES
Net Working Capital
Property and equipment - net of
depreciation
Future bend requirements
Amount available in sinking funds
for debt service
Waterworks revenue bonds and interest
payable (non-current)
Property Investment and
Fund Balances
June 30,
1967
J59,921
579,758
18713»170
1,207,878
_iJ^.S4i|
3,8"4~57654
1,527,726
Juna 30,
19S6
67,26^
445,000
47,492
52*869
^3^595
616", 220
62,310
553,910
1,685,485
1,239,097
379,600
Current
Year
Increase
(Decrease)
31,400
(40,000)
45,485
(5,272)
(5,031)
<(3JL124)
23,459
il>Hi)
25,848
27,685
(31,219)
(34,752)
(157438)
* Payments to trustee for 1966 bonds were not made until July 1, 1966.
-5-
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 dis-
tribution lines
Fire hydrants
Meters and services
Total
Less accumulated depreciation
Property and Equipment- Net
:he Year Ended June
June 30 ,
_JL966 __
:s "*
117,695
223,359
30,315
92 j,973
>n
1,247,070
39,238
37,182
22,099
it 17,197
.s-
189,987
24^145
383 ,,071
2S424,331
»n 738,846
30, 1967
Additions
60,932
249
1,468
576
2^024
4,895
^32^9p_6_
103,050
47»098
June 30,
Deletion^ ^ ^1967
117,695
223,359
987
30,315
91,986
13,148 1,294,854
39,487
173 37,009
3,955 19,612
1,187 16,586
192,011
29,040
18,051 397,925mMMMMMWHXttt* «natttfMami*mwo>*'9«-?j!»
37,501 2,489,880
__9*234 776^710
28,267 1,713,170
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SCHEDULE A-3
BONDED INDEBTEDNESS
June 30. 1967
WATERWORKS REVENUE
Bonds, 1958
Years
of
Maturity
July 19
1967-68
1969
1970-74
1975-76
1977-78
1979-81
1982-84
1985
1986-87
1988
Interest
Rate
3.75%
4,00
4,00
4.00
4,25
4,25
4,25
4,10
4,10
4.10
Principal
Due Each
Year
208000
20,000
25,000
30,000
30 ,,000
35 .,000
40,000
40,000
45,000
47,000
Amount
Due at
Juno 30 f 1967
40,000
20,000
125,000
60S000
60,000
105,000
120,000
40,000
90,000
47jOOO 707,000
WATERWORKS REVENUE
Bonds, 1960 July 1,
1967-73
1974-79
1980-86
1987-88
1989
1990
4.375
4,25
4.25
4.00
4,00
3.875
5,000
5,000
lOj.000
15,000
60,000
65,000
35S000
30,000
70^000
30 ,,000
60$000
65,000 290,000
Bonded Indebtedness - June 30, 1967 997,000
Currently owed
Long-term
25,000
972*000
997,000
-7-
SCHEDULE A~
FUND ..BALANCES
For the Year Ended June 30 9 1967
Fund balances - July 1, 1966
Net income » Exhibit B
Add: Depreciation (representing
non-cash deduction) added
back
Less: Principal payments on bonds
Assets purchased
Net Increase for Current Year
578,910
25B000
51,671
J?Zj,? 98,
1024bl9
76,671
25,8'tS
Fund Balance - June 30, 1967
-8-
EXHIBIT B
STATEMENT OF REVENUES AND EXPENDITURES
For the Year Ended" June" 30,' 1967
OPERATING REVENUES - Note 1
Water sales 37*4 8757
Other charges 9,550
Rent received 600 38U,907
OPERATING REVENUE DEDUCTIONS:
Maintenance and operations expense -
Schedule B-l:
Water production and purification 160,571
Water transmission and distribution 919^86
General and administrative 59,010 311,067
Net Operating Income 7388UO
ADD NON-OPERATING INCOME;
Interest earned on investments 22,,706
DEDUCT NON-OPERATING EXPENSE - INTEREST
ON WATER BONDS:
1958 Series 29,170
1960 «i!.5?J?JL J^lrl.25
Net Income - to Schedule A-U 55.U21
Note 1 - Pledged to requirements of Resolutions # 397 and # 711 relating to
revenue bond payments.
-9-
SCHEDULE B-l
MAINTENANCE AND OPERATIONS EXPENSE
For the Year Ended June 30, 1967
WATER PRODUCTION AND PURIFICATION:
Salaries and wages 11 .,712
Power 1,725
Supplies ar.d expense 1S099
Purchased water 1H2,708
Depreciation _2iHZ 160,571
WATER TRANSMISSION AND DISTRIBUTION:
Salaries and wages 34S07U
Power ^4388
Maintenance:
Pump station and reservoirs 322
Meters and services 10S975
Transmission and distribution lines 6,531
Hydrant maintenanceB etc. 495
Depreciation 3U,701 91^86
GENERAL AND ADMINISTRATIVE?
Salaries and wages 25S937
Operation and maintenance - mobile equipment 3S311
Professional services 2,,735
Office supplies, equipment maintenance and
rental9 etc. 9^,062
Small tools and shop supplies 1,178
Maintenance and supplies - buildings 650
Taxes and insurance 129553
Contributions to retirement and group insurance 7^977
General expense 2S220
Collection fees 520
Depreciation 9*9.ZP,
"757213"
Less portion applied to construction and
installation work 16,203
Total - to Exhibit B
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SCHEDULE B-2
CONDENSED jCOMPAR/TIVE STATENfEKT
'^v£Nt^£2tLl?Si^^M§For the Years Ended" June" '30', 1967 'and 'June 30, 1966
Current
Year
June 30, June 30t Increase
1967 1966 (Decrease)
REVENUES 384,907 369S188 15,719
OPERATING EXPENSES:
Water production and purification 1609571 150,400 10S171
Water transmission and distribution 91,i*86 91^709 (223)
General and administrative 59
311,067 IS8-0^ iL..9.5i
Net Operating Income 73,840 61,17U 12..666
Non-operating income ^22^706^ 20s?jr9 ^-i^57
96,546 82S123 14,423
Non-operating expense 41,,125 41^938 ^^-^^
Net Revenue from Enterprise 55,U21 ^0,185 15.236
* Includes $12,000 paid for water study,
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DEBT SERVICE RECEIPTS AIO EXPENDITURES
Tor the*"*YeaV Ended June"3cT,"T967"'™'
Excess of Receipts Over
Expenditures
EXHIBIT C
1953 I960
Bond Bond
Service Service
Fund Fund
RECEIPTS:
Advances from water fund 1*6,5683 19,511
Interest on investments 9S229 1,920
55,912 21,U31
EXPENDITURES:
Interest on indebtedness 29S070 11,900
Principal payments 20^000 5,000
Handling costs 101 55
16,955
ORIGINAL
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