HomeMy WebLinkAbout; ; 1989 Carlsbad Redevelopment Agency audit report; 1993-06-30CARLSBAD REDEVELOPMENT AGENCY
Component Unit Financial Statements
Year Ended June 30, 1993
(With Independent Auditors' Report)
CARLSBAD REDEVELOPMENT AGENCY
Component Unit Financial Statements
Year Ended June 30, 1993
TABLE OF CONTENTS
Financial Section: Page
Independent Auditors' Report 1
Component Unit Financial Statements:
Combined Balance Sheet - All Governmental Fund Types
and Account Groups 2
Combined Statement of Revenues, Expenditures and Changes
in Fund Balances - All Governmental Fund Types 3
Combined Statement of Revenues, Expenditures and
Changes in Fund Balances - Budget and Actual -
Special Revenue and Debt Service Funds 4
Notes to Component Unit Financial Statements 5
Auditors' Opinion on Compliance with Audit Guidelines
for California Redevelopment Agencies 14
CONRAD CERTIFIED PUBLIC ACCOUNTANTS
A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
1100 MAIN STREET. SUITE C
IRVINE, CALIFORNIA 92714
(714)474-2020
The Board of Commissioners
Carlsbad Redevelopment Agency
Carlsbad, California
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying financial statements of the Carlsbad Redevelopment
Agency, a component unit of the City of Carlsbad, as of and for the year ended June 30,
1993, as listed in the table of contents. These component unit financial statements are the
responsibility of the management of the Carlsbad Redevelopment Agency. Our responsibility
is to express an opinion on these component unit financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those
standards require that we plan and perform the audit to obtain reasonable assurance about
whether the component unit financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in
the component unit financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the
overall component unit financial statement presentation. We believe that our audit provides
a reasonable basis for our opinion.
In our opinion, the component unit financial statements referred to above present fairly, in
all material respects, the financial position of the Carlsbad Redevelopment Agency at June
30, 1993, and the results of operations for the year then ended, in conformity with generally
accepted accounting principles.
October 8, 1993
-1-
MEMBERS CF AICPA AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES PRACTICE SECTION
CARLSBAD REDEVELOPMENT AGENCY
Combined Balance Sheet
All Governmental Fund Types and Account Groups
June 30, 1993
Governmental Fund Types Account Group Totals
Assets and Other Debits
Cash and investments (note 3)
Loan receivable
Taxes receivable
Interest receivable
Amount available in debt service fund
Amount to be provided for retirement
of advances
Amount to be provided for retirement
of bonds
Total assets and other debits
Special
Revenue
$2,301,076
102,387
10,229
35,517
-
Debt
Service
1,739,951
-
40,916
6,905
-
Capital
Projects
2,836,635
-
-
5,615
-
Long-term
Debt
-
-
-
1,787,772
(Memorandum
1993
6,877,662 7
102,387
51,145
48,037
1,787,772 1
Onlv)
1992
,244,993
127,375
-
53,798
,757,057
S2.449.209 1.787.772
7,924,846 7,924,846 7,460,785
9.397.228 9.397.228 9.717.943
2.842.250 19.109.846 26.189.077 26.361.951
Liabilities and Fund Balances
Liabilities:
Accounts payable
Accrued expenses
Advances from the City of Carlsbad
(note 5)
Bonds payable (note 5)
Total liabilities
$127
8,026
-
8.153
35,222
13,547
-
48.769
-
7,924,846
11.185.000
19.109.846
35,349
21,573
7,924,846
11.185.000
19.166.768
8,990
11,271
7,460,785
11.475.000
18.956.046
Fund balances:
Reserved for loan receivable (note 7)
Reserved for debt service (note 7)
Reserved for low and moderate income
housing (note 7)
Reserved for encumbrances (note 7)
Unreserved:
Designated for approved capital
projects (note 7)
Undesignated (note 7)
Total fund balances
Total liabilities and fund
balances
102,387
2,319,379
19,290
1,787,772
192,242
2,459,371
141.868
2.441.056 1.787.772 2.793.481
102,387 127,375
1,787,772 1,757,057
2,319,379 1,891,697
211,532 290,969
2,459,371 2,582,808
141.868 755.999
7.022.309 7.405.905
S2.449.209 1.787.772 2.842.250 19.109.846 26.189.077 26.361.951
See accompanying notes to component unit financial statements.
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CARLSBAD REDEVELOFMEffT AGENCY
Coabined Statement of Revenues, Expenditures
and Changes in Fund Balances - All Governmental Fund Types
Year Ended June 30, 1993
Totals
Revenues:
Tax increment
Intergovernmental
Charges for services
Interest
Miscellaneous
Total revenues
Expenditures:
General government
Capital outlay
Debt service:
Principal
Interest and fiscal charges
State mandated payment (note 9)
Total expenditures
Excess (deficiency) of
revenues over (under)
expenditures
Other financing sources (uses):
Operating transfers in
Operating transfers out
Proceeds from advances from
the City of Carlsbad (note 5)
Administrative fee received from
bond refunding
Total other financing sources
(uses)
Excess (deficiency) of revenues
and other financing sources
over (under) expenditures and
other financing uses
Special
Revenue
$ 330,515
125,715
4.379
460.609
81,437
-
Debt
Service
1,322,061
121,515
1.443.576
-
290,000
1,329,644
257.278
Capital
Projects
29,800
750
109,520
14.795
154.865
753,104
231,860
-
(Memorandum
1993
1,652,576
29.800
750
356,750
19.174
2.059.050
834,541
231,860
290,000
1,329,644
257.278
Onlv)
1992
1,588,363
450,408
2.038.771
752,601
589,494
299,800
1,364,057
81.437
379.172
36.616
36.616
415,788
Fund balances at beginning of year 2.025.268
Fund balances at end of year S2.441.QS6
1.876.922 984.964 2.943.323 3.005.952
(433.346) (830.0991 (884.273) (967.181)
464,061 464,061 1,125,238
(464,061) (464,061)
464,061 464,061
36.616
(1,125,238
500,731
_
464.061 500.677 500.731
30,715 (830,099) (383,596) (466,450)
1.757.057 3.623.580 7.405.905 7.872.355
1.787.772 2.793.481 7.022.309 7.405.905
See accompanying notes to component unit financial statements.
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CARLSBAD REDEVELOPMENT AGENCY
Combined Statement of Revenues, Expenditures
and Changes in Fund Balances - Budget and Actual -
Special Revenue and Debt Service Funds
Year Ended June 30, 1993
Special Revenue Debt Service
Revenues:
Tax increment
Interest
Miscellaneous
Total revenues
Expenditures:
General government
Debt service:
Principal
Interest and fiscal charges
State mandated payment (note 9)
Total expenditures
Excess (deficiency) of
revenues over (under)
expenditures
Other financing sources (uses):
Operating transfers in
Administrative fee received
from bond refunding
Total other financing
sources (uses)
Excess (deficiency) of
revenues and other
financing sources over
(under) expenditures and
other financing uses
Fund balances at beginning of year
Fund balances at end of year
Budget
$ 400.000
100,000
500.000
126,925
126.925
373.075
373,075
2.025.268
Actual on
Budgetary Variance-
Basis Favorable
(Note 2) (Unfavorable)
330.515 (69.485)
125.715 25,715
4.379 4.379
460.609
100,727
100.727
359.882
36.616
36.616
(39.3911
26,198
26.198
(13.1931
36.616
36.616
396,498 23,423
2.025.268
Actual on
Budgetary Variance-
Basis Favorable
Budget (Note 2) (Unfavorable)
1,600,000 1,322,061 (277,939)
60,000 121,515 61,515
290,000 290,000
847,939 865,583
257.278 257.278
1.395.217 1.412.861
264.783
1.660.000 1.443.576 (216.4241
(17,644)
464,061 464,061
464.061 464.061
$2.398.343 2.421.766 23.423
264,783 494,776 229,993
1.757.057 1.757.057 -
2.021.840 2.251.833 229.993
See accompanying notes to component unit financial statements.
-4-
CARLSBAD REDEVELOPMENT AGEfNCY
Notes to Component Unit Financial Statements
Year Ended June 30, 1993
(1) Organization and Summary of Significant Accounting Policies
The Carlsbad Redevelopment Agency (the Agency) was established in July 1976 with
the adoption of Ordinance No. 1191 by the Carlsbad City Council pursuant to the
California Community Redevelopment Law, now codified as Part 1, Division 24, of the
State of California Health and Safety Code. The Agency has the broad authority to
acquire, rehabilitate, develop, administer and sell or lease property. The Agency is not
subject to federal or state income taxes.
The principal objectives of the Agency are to eliminate blighted influences within the
"Village Area" of the City of Carlsbad, stimulate and attract private investment,
generate added employment through increased specialty goods and services and expand
the City's sales tax revenue.
The Agency is an integral part of the reporting entity of the City of Carlsbad (the
City). The funds and account group of the Agency have been included within the scope
of the general purpose financial statements of the City because the City Council
exercises oversight responsibility over the operations of the Agency. Only the funds
and account group of the Agency are included herein; therefore, these financial
statements do not purport to represent the financial position or results of operations of
the City of Carlsbad, California.
The accounting policies of the Agency conform to generally accepted accounting
principles as applicable to governmental units. The following is a summary of the more
significant policies:
(a) Basis of Presentation
The accounts of the Agency are organized on the basis of funds and an account
group, each of which is considered to be a separate accounting entity. The
operations of each fund and account group are accounted for by providing a
separate set of self-balancing accounts that comprise its assets, liabilities, fund
balance, revenues, and expenditures. The various funds and account group are
summarized by type in the financial statements. The fund types and account
group used by the Agency are as follows:
GOVERNMENTAL FUND TYPES
Governmental funds are used to account for the Agency's expendable financial
resources and related liabilities. The measurement focus is upon determination
of changes in financial position. The following are the Agency's governmental
fund types:
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CARLSBAD REDEVELOPMENT AGENCY
Notes to Component Unit Financial Statements
(Continued)
(1) Organization and Summary of Significant Accounting Policies„ (Continued)
(a) Basis of Presentation. (Continued)
Special Revenue Funds
Special revenue funds are used to account for revenues derived from
specific sources (other than major capital projects) that are restricted by
law or administrative regulation to expenditures for specified purposes.
Debt Service Funds
Debt service funds are used to account for the accumulation of resources
for, and payment of general long-term debt principal, interest and related
costs.
Capital Projects Funds
Capital projects funds are used to account for financial resources to be
used for the acquisition or construction of major capital facilities.
GENERAL LONG-TERM DEBT ACCOUNT GROUP
This account group is used to establish accounting control and accountability for
the Agency's general long-term debt. This account group is used to account for
all long-term obligations of the Agency.
(b) Measurement Focus and Basis for Accounting
Governmental fund types are accounted for on a "spending" measurement focus.
Accordingly, only current assets and current liabilities are included on their
balance sheets, and the reported fund balance provides an indication of available,
spendable resources. Operating statements for governmental fund types report
increases (revenues) and decreases (expenditures) in available spendable resources.
The modified accrual basis of accounting is utilized by the governmental fund
types. Revenues are recognized when susceptible to accrual, i.e., both
measurable and available. Available means collectible within the current period
or soon enough thereafter to be used to pay liabilities of the current period.
Revenues that are accrued include the tax increment on real property taxes and
interest income.
-6-
CARLSBAD REDEVELOPMENT AGEi^Y
Notes to Component Unit Financial Statements
(Continued)
(1) Organization and Summary of Significant Accounting Policies. (Continued)
(b) Measurement Focus and Basis for Accounting. (Continued)
Real property taxes are levied on October 15 against owners of record at March
1. The taxes are due in two installments, on November 1 and February 1, and
become delinquent after December 10 and April 10, respectively. Tax liens
attach annually as of 12:01 a.m. on the first day of March in the fiscal years for
which the taxes are levied. Under the provisions of NCGA Interpretation 3,
property tax revenue is recognized in the fiscal year for which the taxes have
been levied, provided it is collected within 60 days of the end of the fiscal year.
Governmental fund expenditures are recognized when the liability is incurred,
except for principal and interest on long-term debt which is recognized when due.
(c) Encumbrances
Encumbrance accounting, under which purchase orders, contracts and other
commitments for the expenditure of monies are recorded in order to reserve that
portion of the applicable appropriation, is employed as an extension of formal
budgetary control in the governmental funds. Encumbrances outstanding at
year-end do not constitute expenditures or liabilities, but are reported as
reservations of fund balance for subsequent-year expenditures.
(d) Cash and Investments
The Agency participates in the pooled cash and investment fund of the City of
Carlsbad. Pooled investments are stated at cost or amortized cost. The
Agency's equity in the pooled cash is included in the financial statements as cash
and investments. Interest earned as a result of the pooling is allocated to the
Agency based on its average monthly balances.
(e) Compensated Absences
Vacation pay is payable to employees at the time used or upon termination of
employment. The cost of accumulated vacation expected to be paid in the next
12 months is recorded as a fund liability; currently no amounts are expected to be
paid after 12 months.
-7-
CARLSBAD REDEVELOPMENT AGENCY
Notes to Component Unit Financial Statements
(Continued)
(1) Organization and Summary of Significant Accounting Policies. (Continued)
(f) Total Columns
Total columns on the accompanying combined financial statements are captioned
"Totals (Memorandum Only)" to indicate that they are presented only to
facilitate financial analysis. Data in these columns do not present financial
position, results of operations, or changes in fund balance in conformity with
generally accepted accounting principles. Such data is not comparable to a
consolidation. Interfund eliminations have not been made in the aggregation of
this data.
(2) Budgetary Data
The budget for the Agency is established by the City of Carlsbad. The City Manager is
authorized to make transfers of appropriated amounts within a fund for up to $25,000.
Revisions that alter the total appropriations of any fund must be approved by the City
Council. A mid-year budget review is conducted each year. Any major changes to the
adopted budget are approved by the City Council at that time.
Budgets are adopted on the modified accrual basis, except that encumbrances are
treated as budgeted expenditures in the year purchases are committed. Expenditures
may not exceed budgeted appropriations at the departmental level. Unencumbered
appropriations lapse at year-end. Annual budgets are adopted for the special revenue
and debt service funds.
The following schedule is a reconciliation of the budgetary and GAAP fund balances:
Special Revenue Debt Service
Fund balance - budgetary basis $2,421,766 2,251,833
Encumbrances outstanding at year-end 19,290
Debt service on advances from
City of Carlsbad - not budgeted - (464.061)
Fund balance - GAAP basis $2.441.056 1.787.772
-8-
CARLSBAD REDEVELOPMENT AGEi,^Y
Notes to Component Unit Financial Statements
(Continued)
(3) Cash and Investments
The Agency participates in the pooled cash fund of the City.
Authority for Deposits and Investments
The Agency's investment policy and state statutes authorize the Agency to invest in
demand and time deposits, obligations of the U.S. Treasury, its agencies and
instrumentalities, commercial paper rated A-l by Standard and Poor's Corporation or
P-l by Moody's Commercial Paper record, banker's acceptances with a maximum
maturity of 270 days, repurchase and reverse repurchase agreements, certificates of
deposit with national and state licensed or chartered banks or federal or state savings
and loan associations, money market and mutual funds whose portfolios consist of one
or more of the foregoing investments, and the State Treasurer's investment pool.
State statutes require that all deposits be insured or collateralized. Depositories
holding public funds on deposit are required to maintain collateral in the form of a pool
of securities with the agent of the depository having a market value of at least 10 to
50 percent in excess of the total amount of all public funds on deposit.
Classification of Investments bv Credit Risk:
As defined in Governmental Accounting Standards Board Statement No. 3, the
Agency's investments in securities are categorized in the following manner:
Category 1 - Investments that are insured or registered, which are held by
the Agency or its agent in the Agency's name.
Category 2 - Uninsured and unregistered investments, for which the
securities are held by the counterparty's trust department or
agent in the Agency's name.
Category 3 - Uninsured and unregistered investments, for which the
securities are held by the counterparty or by its trust
department or agent, but not in the Agency's name.
At June 30, 1993, the Agency had the following investments which are not
categorizable by credit risk:
Carrying
Investment Amount
Investment in mutual funds $3,994,188
Investment in City's pooled cash fund 2.883.474
$6.877.662
The carrying amount equals the market value.
-9-
CARLSBAD REDEVELOPMENT AGENCY
Notes to Component Unit Financial Statements
(Continued)
(4) Pension Plan
The Agency's employees are included in the City's pension plan which is administered
by the California Public Employees Retirement System (PERS). PERS is an agent
multiple-employer public employee retirement system that acts as a common
investment and administrative agent for participating public entities within the State
of California.
All full-time employees are eligible to participate as members of the PERS. Benefits
vest after an employee has been a member of the plan for five years. Employees are
eligible to retire after age 50 with 5 years of credited service. Annual retirement
benefits are determined based on age at retirement, the length of membership service
and the amount of earnings based on the highest twelve consecutive months average.
The PERS also provides death and disability benefits. These benefit provisions and all
other requirements are established by state statute.
Employees are required to make contributions equaling 7% of gross pay. This is paid by
the City for the benefit of the employees in lieu of salary. The City is also required to
contribute the remaining amounts necessary to fund the benefits for its members, using
the actuarial basis recommended by the PERS actuaries and actuarial consultants and
adopted by the PERS Board of Administration.
Additional disclosures required by Governmental Accounting Standards Board
Statement No. 5 are not available for the Agency as a separate entity. This
information for the City's reporting entity is presented in the Comprehensive Annual
Financial Report of the City of Carlsbad.
(5) Long-term Debt
The following is a summary of changes in long-term debt for the year ended June 30,
1993:
Principal Principal
Balance at Additional Principal Balance at
July 1. 1992 Obligations Retirements June 30. 1993
Advances from
the City of
Carlsbad $ 7,460,785 464,061 - 7,924,846
Bonds payable 11.475.000 - 290.000 11.185.000
$18.935.785 464.061 290.000 19.109.846
Since activation of the Redevelopment Agency in July 1976, the City has advanced the
Agency monies for approved expenditures. Advances from the City bear interest equal
to the City's interest rate received on pooled investments. There is no stated maturity
date.
-10-
CARLSBAD REDEVELOPMENT AGENCY
Notes to Component Unit Financial Statements
(Continued)
(5) Long-term Debt. (Continued)
Bonds payable consist of $11,185,000 in 1988 Carlsbad Housing and Redevelopment
Commission Tax Allocation Bonds. Principal is due in amounts ranging from $305,000
to $595,000 on April 1 of each year through 2003, a principal payment of $2,890,000 on
April 1, 2007, and a principal payment of $3,950,000 on April 1, 2011. The principal
payments of $2,890,000 and $3,950,000 are subject to mandatory sinking fund
redemption which amounts are reflected in the debt service requirements below.
Interest is payable each year on October 1 and April 1 at rates varying from 5.9% to
7.8% per annum.
Debt service requirements to maturity for the bonds, including sinking fund payments,
are as follows:
1994 $ 1,135,828
1995 1,142,222
1996 1,146,598
1997 1,148,522
1998 1,148,062
1999-2003 5,806,054
2004-2008 5,876,260
2009-2011 3.567.180
20,970,726
Less amounts representing interest (9.785.726)
Bonds payable $11.185.000
At June 30, 1993, the Agency was in compliance with all significant debt covenants.
(6) Obligations Under Operating Leases
In June 1988, the Agency entered into an agreement to lease a parking lot from a
private party. The lease requires monthly rental payments for twenty years. Total
annual rent payments are $44,091 for fiscal year ending June 30, 1994 with annual
cost of living adjustments required and market value adjustments required every 5
years after fiscal year ending June 30, 1988. The future minimum rental payments
have been calculated with a 6% annual cost of living adjustment.
In May 1990, the Agency entered into an agreement to lease a parking lot on
Carlsbad Village Drive from a private party. The lease requires monthly rental
payments of $4,350 commencing July 1, 1991 for five years. Total annual rent
expense is $52,200 for fiscal year ending June 30, 1994 and $43,500 for fiscal year
ending June 30, 1995.
The following is a schedule by year of future minimum rental payments required
under operating leases at June 30, 1993:
-11-
CARLSBAD REDEVELOPMENT AGENCY
Notes to Component Unit Financial Statements
(Continued)
(6) Obligations Under Operating Leases. (Continued)
Year Ending June 30. Annual Rental Payments
1994 $ 96,291
1995 90,236
1996 49,541
1997 52,513
1998 55,664
Thereafter 777.717
Total minimum lease payments $1.121.962
(7) Fund Balances
Reserves for the loan receivable and low and moderate income housing are
established to show that certain assets are already committed for other purposes and
are not available for discretionary expenditures.
Reserve for debt service represents resources legally restricted to the payment of
general long-term debt principal and interest maturing in future years.
Reserve for encumbrances represents commitments related to unperformed
contracts for services and undelivered goods.
Unreserved-designated for approval capital projects represents the fund balance
expected to be used for the acquisition or construction of major capital facilities.
Unreserved-undesignated balances represent the fund balance remaining after
reduction for reserved and designated fund balances.
(8) Other Required Individual Fund Disclosures
Expenditures exceeded appropriations in the following fund:
Expenditure Appropriation
Debt service fund $865,583 847,939
The excess of expenditures over appropriations in the debt service fund relates to
fiscal charges.
-12-
CARLSBAD REDEVELOPMENT AGENCY
Notes to Component Unit Financial Statements
(Continued)
(9) State Mandated Payment
The Agency was required by the State Department of Finance, pursuant to a letter
dated October 1, 1992, to shift a portion of tax increment money to the Educational
Revenue Augmentation Fund. The Agency funded its $257,278 payment from Agency
tax increment funds.
(10) Subsequent Events
On September 1, 1993, the Agency issued $15,495,000 in tax allocation bonds. The
bonds were issued to defease the outstanding 1988 tax allocation bonds, and to provide
money to finance redevelopment activities within the project area. The interest rate
is 5.25%, payable semi-annually.
-13-
CERTIFIED PUBLIC ACCOUNTANTS
A WRTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
1100 MAIN STREET, SUITE C
IRVINE, CALIFORNIA 92714
(714)474-2020
The Board of Commissioners
Carlsbad Redevelopment Agency
Carlsbad, California
Auditors' Opinion On Compliance With
Audit Guidelines for California Redevelopment Agencies
We have audited the combined financial statements of the Carlsbad Redevelopment
Agency (a component unit of the City of Carlsbad, California) as of and for the year ended
June 30, 1993, and have issued our report thereon dated October 8, 1993. We conducted
our audit in accordance with generally accepted auditing standards. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.
Compliance with laws and regulations applicable to the Carlsbad Redevelopment Agency is
the responsibility of the Carlsbad Redevelopment Agency's management. As part of
obtaining reasonable assurance about whether the financial statements are free of
material misstatement, we performed tests of the Carlsbad Redevelopment Agency's
compliance with provisions of laws and regulations contained in the Guidelines For
Compliance Audits of California Redevelopment Agencies issued by the State Controller's
Office, Division of Local Government Fiscal Affairs.
The results of our tests indicated that, with respect to the items tested, the Carlsbad
Redevelopment Agency complied, in all material respects, with the provisions referred on
the preceding paragraph. With respect to items not tested, nothing came to our attention
that caused us to believe that the Carlsbad Redevelopment Agency had not complied, in
all material respects, with those provisions.
This report is intended for the information of the Carlsbad Redevelopment Agency, and
the State Controller's Office. However, this report is a matter of public record and its
distribution is not limited.
October 8, 1993
-14-
MEMBERS OF AICPA AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES PRACTICE SECTION
CITY OF CARLSBAD
Carlsbad, California
Single Audit Report on
Federal Assistance Programs
For the fiscal year ended June 30, 1993
CITY OF CARLSBAD
Single Audit Report on
Federal Assistance Programs
For the fiscal year ended June 30, 1993
TABLE OF CONTENTS
Page
Independent Auditors' Report on Schedule of
Federal Financial Assistance 1
Schedule of Federal Financial Assistance 2
Independent Auditors' Report on Internal Control
Structure Based on an Audit of General Purpose
or Basic Financial Statements Performed in Accordance
with Government Auditing Standards 3
Independent Auditors' Report on Internal Control
Structure Used in Administering Federal
Financial Assistance Programs 5
Independent Auditors' Report on Compliance Based
on an Audit of General Purpose or Basic
Financial Statements Performed in Accordance with
Government Auditing Standards 8
Independent Auditors' Report on Compliance
with Specific Requirements Applicable to Major
Federal Financial Assistance Programs 9
Independent Auditors' Report on Compliance
with General Requirements Applicable to
Federal Financial Assistance Programs 11
Independent Auditors' Report on Compliance with
Specific Requirements Applicable to Nonmajor
Federal Financial Assistance Program Transactions 12
Findings and Recommendations 13
Status of Prior Audit Findings 15
CONRAD CERTIFIED PUBLIC ACCOUNTANTS
SSOC1ATES
A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
1100 MAIN STREET, SUITE C
IRVINE, CALIFORNIA 92714
(714) 474-2020
The Honorable Members of City Council
City of Carlsbad, California
INDEPENDENT AUDITORS' REPORT ON
SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE
We have audited the general purpose financial statements of the City of Carlsbad,
California, as of and for the year ended June 30, 1993, and have issued our report thereon
dated October 8, 1993. These general purpose financial statements are the responsibility of
the management of the City of Carlsbad, California. Our responsibility is to express an
opinion on these general purpose financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards,
Government Auditing Standards, issued by the Comptroller General of the United States, and
the provisions of Office of Management and Budget Circular A-128, "Audits of State and
Local Governments". Those standards and OMB Circular A-128 require that we plan and
perform the audit to obtain reasonable assurance about whether the general purpose
financial statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the general purpose financial
statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our opinion.
Our audit was conducted for the purpose of forming an opinion on the general purpose
financial statements of the City of Carlsbad, California, taken as a whole. The
accompanying schedule of federal financial assistance is presented for purposes of additional
analysis and is not a required part of the general purpose financial statements. The
information in that schedule has been subjected to the auditing procedures applied in the
audit of the general purpose financial statements and, in our opinion, is fairly presented in
all material respects in relation to the general purpose financial statements taken as a whole.
October 8, 1993
-1-
MEMBERS OF AICPA AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
MEMBER Of AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES PRACTICE SECTION
CITY OF CARLSBAD
Schedule of Federal Financial Assistance
For the fiscal year ended June 30, 1993
U.S. Department of Housing and
Urban Development
Direct Assistance:
Lower Income Housing Assistance Program
Section 8 Housing Voucher Program
Community Development Block Grant
Subtotal
Federal
Domestic Program Federal Federal
Assistance Identification Assistance Assistance
Number Number Received (1) Expenditures
14.156
14.177
14.218
CA16E077012 and
CA16E077003/013 $2,064,231
CA16V077002/005
B-92-MC-06-0563
339,141
409.767
2,097,629*
353,629*
266.250
2.813.139 2.717.508
U.S. Department of Health and
Human ServicesPass-through from the County of
San Diego:
Senior Nutrition Program
U.S. Department of Agriculture
Pass-through from the County of
San Diego:Senior Nutrition Program
U.S. Department of the Interior
Pass-through from the California
Department of Parks and Recreation:National Park Service
13.635 30718E
10.558 30718E
15.904 06-91-60002
65.308 76.695
29.176 29.176
778 778
U.S. Department of Education
Pass-through from the California
State Library:
Library Services
U.S. Federal Emergency Management
Agency (FEMA)
Pass-through from the California
Office of Emergency Services:
FEMA Assistance
Total federal financial assistance
40-2251
40—2422
84.034 40-2576 53.238 78.588
83.516 979-073-11194 47.511 127.935
S3.009.ISO 3.030.680
* Tested as a major program.
(1) Based on actual cash receipts from July 1, 1992 through June 30, 1993.
See accompanying independent auditors' report.
-2-
CONRAD CERTIFIED PUBLIC ACCOUNTANTS
SSOC1ATES
A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
1100 MAIN STREET. SUITE C
IRVINE, CALIFORNIA 92714
(714) 474-2020
The Honorable Members of City Council
City of Carlsbad, California
INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL
STRUCTURE BASED ON AN AUDIT OF GENERAL PURPOSE
OR BASIC FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE
WITH GOVERNMENT AUDITING STANDARDS
We have audited the general purpose financial statements of the City of Carlsbad,
California, as of and for the year ended June 30, 1993, and have issued our report thereon
dated October 8, 1993.
We have conducted our audit in accordance with generally accepted auditing standards,
Government Auditing Standards, issued by the Comptroller General of the United States, and
the provisions of Office of Management and Budget Circular A-128, "Audits of State and
Local Governments". Those standards and OMB Circular A-128 require that we plan and
perform the audit to obtain reasonable assurance about whether the general purpose
financial statements are free of material misstatement.
In planning and performing our audit of the general purpose financial statements of the City
of Carlsbad, California, for the year ended June 30, 1993, we considered its internal control
structure in order to determine our auditing procedures for the purpose of expressing our
opinion on the general purpose financial statements and not to provide assurance on the
internal control structure.
The management of the City of Carlsbad, California, is responsible for establishing and
maintaining an internal control structure. In fulfilling this responsibility, estimates and
judgments by management are required to assess the expected benefits and related costs of
internal control structure policies and procedures. The objectives of an internal control
structure are to provide management with reasonable, but not absolute, assurance that
assets are safeguarded against loss from unauthorized use or disposition, and that
transactions are executed in accordance with management's authorization and recorded
properly to permit the preparation of financial statements in accordance with generally
accepted accounting principles. Because of inherent limitations in any internal control
structure, errors or irregularities may nevertheless occur and not be detected. Also,
projection of any evaluation of the structure to future periods is subject to the risk that
procedures may become inadequate because of changes in conditions, or that the
effectiveness of the design and operation of policies and procedures may deteriorate.
For the purposes of this report, we have classified the significant internal control structure
policies and procedures in the following categories: revenues/receipts,
purchases/disbursements and payroll/personnel.
-3-
MEMBERS OF AICPA AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES PRACTICE SECTION
The Honorable Members of City Council
City of Carlsbad, California
Page Two
For all of the control categories listed above, we obtained an understanding of the design of
relevant policies and procedures and whether they have been placed in operation, and we
assessed control risk.
Our consideration of the internal control structure would not necessarily disclose all matters
in the internal control structure that might be material weaknesses under standards
established by the American Institute of Certified Public Accountants. A material weakness
is a reportable condition in which the design or operation of one or more of the internal
control structure elements does not reduce to a relatively low level the risk that errors or
irregularities in amounts that would be material in relation to the general purpose financial
statements being audited may occur and not be detected within a timely period by employees
in the normal course of performing their assigned functions. We noted no matters involving
the internal control structure and its operation that we consider to be material weaknesses
as defined above.
However, we noted certain matters involving the internal control structure and its operation
that we have reported to the management of the City of Carlsbad, California, in a separate
letter dated October 8, 1993.
This report is intended for the information of City management and the agencies that
provided federal financial assistance to the City. This restriction is not intended to limit the
distribution of this report, which is a matter of public record.
October 8, 1993
-4-
V_>OIN fyvL)CERTIFIED PUBLIC ACCOUNTANTS
A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
HOOMAIN STREET. SUITE c
IRVINE, CALIFORNIA 92714
(714) 474-2020
The Honorable Members of City Council
City of Carlsbad, California
INDEPENDENT AUDITORS' REPORT ON INTERNAL
CONTROL STRUCTURE USED IN ADMINISTERING
FEDERAL FINANCIAL ASSISTANCE PROGRAMS
We have audited the general purpose financial statements of the City of Carlsbad,
California, for the year ended June 30, 1993, and have issued our report thereon dated
October 8, 1993. We have also audited the City's compliance with requirements applicable
to major federal financial assistance programs and have issued our report thereon dated
October 8, 1993.
We conducted our audits in accordance with generally accepted auditing standards,
Government Auditing Standards, issued by the Comptroller General of the United States, and
Office of Management and Budget (OMB) Circular A-128, "Audits of State and Local
Governments". Those standards and OMB Circular A-128 require that we plan and perform
the audit to obtain reasonable assurance about whether the general purpose financial
statements are free of material misstatement and about whether the City of Carlsbad,
California, complied with laws and regulations, noncompliance with which would be material
to a major federal financial assistance program.
In planning and performing our audits for the year ended June 30, 1993, we considered the
internal control structure of the City of Carlsbad, California, in order to determine our
auditing procedures for the purpose of expressing our opinions on the general purpose
financial statements of the City of Carlsbad, California, and on the compliance of the City
of Carlsbad, California with requirements applicable to major programs and to report on the
internal control structure in accordance with OMB Circular A-128. This report addresses
our consideration of internal control structure policies and procedures relevant to
compliance with requirements applicable to federal financial assistance programs. We have
addressed internal control structure policies and procedures relevant to our audit of the
general purpose financial statements in a separate report dated October 8, 1993.
The management of the City of Carlsbad, California, is responsible for establishing and
maintaining an internal control structure. In fulfilling this responsibility, estimates and
judgments by management are required to assess the expected benefits and related costs of
internal control structure policies and procedures. The objectives of an internal control
structure are to provide management with reasonable, but not absolute, assurance that
assets are safeguarded against loss from unauthorized use or disposition, that transactions
are executed in accordance with management's authorization and recorded properly to
permit the preparation of general purpose financial statements in accordance with generally
accepted accounting principles, and that federal financial assistance programs are managed
in compliance with applicable laws and regulations. Because of inherent limitations
-5-
MEMBERS OF AICPA AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES PRACTICE SECTION
The Honorable Members of City Council
City of Carlsbad, California
Page Two
in any internal control structure, errors, irregularities, or instances of noncompliance may
nevertheless occur and not be detected. Also, projection of any evaluation of the structure
to future periods is subject to the risk that procedures may become inadequate because of
changes in conditions or that the effectiveness of the design and operation of policies and
procedures may deteriorate.
For the purpose of this report, we have classified the significant internal control structure
policies and procedures used in administering federal financial assistance programs in the
following categories.
Accounting Controls
• Purchases/Disbursements
• Payroll/Personnel
• Revenues/Receipts
Administrative Controls
General Requirements:
Political Activity
Davis-Bacon Act
Civil Rights
Cash Management
Relocation Assistance and Real Property Management
Federal Financial Reports
Allowable Costs/Cost Principles
Drug-Free Workplace Act
Administration Requirements
Specific Requirements:
Types of Services
Eligibility
Matching, Level of Effort, or Earmarking
Reporting
Release of Funds
Environmental Review
Program Income
Monitoring Subrecipients
Claims for Reimbursements
Specific Requirements
For all of the internal control structure categories listed above, we obtained an
understanding of the design of relevant policies and procedures and whether they have been
placed in operation, and we assessed control risk.
-6-
The Honorable Members of City Council
City of Carlsbad, California
Page Three
During the year ended June 30, 1993, the City of Carlsbad, California, expended 81 percent
of its total federal financial assistance under major federal financial assistance programs.
We noted certain matters involving the internal control structure and its operation that we
consider to be reportable conditions under standards established by the American Institute of
Certified Public Accountants. Reportable conditions involve matters coming to our
attention relating to significant deficiencies in the design or operation of the internal
control structure that, in our judgment, could adversely affect the City of Carlsbad,
California's ability to administer federal financial assistance programs in accordance with
applicable laws and regulations.
These reportable conditions are found in the Findings and Recommendations section,
Findings 1, 2 and 3.
A material weakness is a reportable condition in which the design or operation of one or
more of the internal control structure elements does not reduce to a relatively low level the
risk that noncompliance with laws and regulations that would be material to a federal
financial assistance program may occur and not be detected within a timely period by
employees in the normal course of performing their assigned functions.
Our consideration of the internal control structure policies and procedures used in
administering federal financial assistance would not necessarily disclose all matters in the
internal control structure that might be reportable conditions and, accordingly, would not
necessarily disclose all reportable conditions that are also considered to be material
weaknesses as defined above. However, we believe none of the reportable conditions
described above is a material weakness.
We also noted other matters involving the internal control structure and its operation that
we have reported to the management of the City of Carlsbad, California, in a separate letter
dated October 8, 1993.
This report is intended for the information of the City management, and the agencies that
provided federal financial assistance to the City. This restriction is not intended to limit the
distribution of this report, which is a matter of public record.
October 8, 1993
-7-
CONRAD CERTIFIED PUBLIC ACCOUNTANTS
SSOC1ATES
A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
1100 MAIN STREET, SUITE C
IRVINE. CALIFORNIA 92714
(714) 474-2020
The Honorable Members of City Council
City of Carlsbad, California
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE
BASED ON AN AUDIT OF GENERAL PURPOSE OR BASIC
FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE
WITH GOVERNMENT AUDITING STANDARDS
We have audited the general purpose financial statements of the City of Carlsbad,
California, as of and for the year ended June 30, 1993, and have issued our report thereon
dated October 8, 1993.
We conducted our audit in accordance with generally accepted auditing standards,
Government Auditing Standards, issued by the Comptroller General of the United States, and
the provisions of Office of Management and Budget Circular A-128, "Audits of State and
Local Governments". Those standards and OMB Circular A-128 require that we plan and
perform the audit to obtain reasonable assurance about whether the general purpose
financial statements are free of material misstatement.
Compliance with laws, regulations, contracts, and grants applicable to the City of Carlsbad,
California, is the responsibility of the management of the City of Carlsbad, California. As
part of obtaining reasonable assurance about whether the general purpose financial
statements are free of material misstatement, we performed tests of the City's compliance
with certain provisions of laws, regulations, contracts, and grants. However, our objective
was not to provide an opinion on overall compliance with such provisions. Accordingly, we
do not express such an opinion.
The results of our tests indicate that for the items tested, the City of Carlsbad, California,
complied, in all material respects, with the provisions referred to in the preceding
paragraph. With respect to items not tested, nothing came to our attention that caused us to
believe that the City had not complied, in all material respects, with those provisions. The
results of our audit procedures disclosed no immaterial instances of noncompliance with the
requirements referred to above.
This report is intended for the information of City management and agencies that provided
federal financial assistance to the City. This restriction is not intended to limit the
distribution of this report, which is a matter of public record.
October 8, 1993
-8-
MEMBERS OF AICPA AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES PRACTICE SECTION
CONRAD CERTIFIED PUBLIC ACCOUNTANTS
SSOC1ATES
A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
1100 MAIN STREET, SUITE C
IRVINE, CALIFORNIA 92714
(714) 474-2020
The Honorable Members of City Council
City of Carlsbad, California
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE
WITH SPECIFIC REQUIREMENTS APPLICABLE TO MAJOR
FEDERAL FINANCIAL ASSISTANCE PROGRAMS
We have audited the general purpose financial statements of City of Carlsbad, California, as
of and for the year ended June 30, 1993, and have issued our report thereon dated October 8,
1993.
We have also audited compliance by the City of Carlsbad, California, with the requirements
governing types of services allowed or unallowed; eligibility; matching, level of effort, or
earmarking; reporting; release of funds; environmental review; program income; monitoring
subrecipients; and claims for reimbursements that are applicable to each of its major federal
financial assistance programs, which are identified in the accompanying schedule of federal
financial assistance, for the year ended June 30, 1993. The management of the City of
Carlsbad, California, is responsible for the City's compliance with those requirements. Our
responsibility is to express an opinion on compliance with those requirements based on our
audit.
We conducted our audit of compliance with those requirements in accordance with generally
accepted auditing standards, Government Auditing Standards, issued by the Comptroller
General of the United States, and the Office of Management and Budget Circular A-128,
"Audits of State and Local Governments". Those standards and OMB Circular A-128 require
that we plan and perform the audit to obtain reasonable assurance about whether material
noncompliance with the requirements referred to above occurred. An audit includes
examining, on a test basis, evidence about the City's compliance with those requirements.
We believe that our audit provides a reasonable basis for our opinion.
The results of our audit procedures did not disclose any immaterial instances of
noncompliance with the requirements referred to above.
In our opinion, the City of Carlsbad, California, complied, in all material respects, with the
requirements governing types of services allowed or unallowed; eligibility; matching, level of
effort, or earmarking; reporting; release of funds; environmental review; program income;
monitoring subrecipients; and claims for reimbursements that are applicable to each of its
major federal financial assistance programs for the year ended June 30, 1993.
-9-
MEMBERS OF AICPA AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES PRACTICE SECTION
The Honorable Members of City Council
City of Carlsbad, California
Page Two
This report is intended for the information of City management and agencies that provided
federal financial assistance to the City. This restriction is not intended to limit the
distribution of this report, which is a matter of public record.
October 8, 1993
-10-
CONRAD CERTIFIED PUBLIC ACCOUNTANTS
SSOC1ATES
A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
1100 MAIN STREET. SUITE C
IRVINE, CALIFORNIA 92714
(714)474-2020
The Honorable Members of City Council
City of Carlsbad, California
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE
WITH GENERAL REQUIREMENTS APPLICABLE TO
FEDERAL FINANCIAL ASSISTANCE PROGRAMS
We have audited the general purpose financial statements of City of Carlsbad, California, as
of and for the year ended June 30, 1993, and have issued our report thereon dated October 8,
1993.
We have applied procedures to test whether the City of Carlsbad, California, has complied
with the following requirements applicable to its federal financial assistance programs, the
major programs of which are identified in the schedule of federal financial assistance, for
the year ended June 30, 1993: political activity, Davis-Bacon Act, civil rights, cash
management, relocation assistance and real property management, federal financial reports,
allowable costs/cost principles, Drug-Free Workplace Act and administrative requirements.
Our procedures were limited to the applicable procedures described in the Office of
Management and Budget's "Compliance Supplement for Single Audits of State and Local
Governments". Our procedures were substantially less in scope than an audit, the objective
of which is the expression of an opinion on the City's compliance with the requirements
listed in the preceding paragraph. Accordingly, we do not express such an opinion.
With respect to the items tested, the results of those procedures disclosed no material
instances of noncompliance with the requirements listed in the second paragraph of this
report. With respect to items not tested, nothing came to our attention that caused us to
believe that the City of Carlsbad, California, had not complied, in all material respects, with
those requirements. Also, the results of our procedures did not disclose any immaterial
instances of noncompliance with those requirements.
This report is intended for the information of City management and agencies that provided
federal financial assistance to the City. This restriction is not intended to limit the
distribution of this report, which is a matter of public record.
C0+IAA
October 8, 1993
-11-
MEMBERS OF AICPA AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES PRACTICE SECTION
CONRAD CERTIFIED PUBLIC ACCOUNTANTS
SSOCIATES
< PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
1100 MAIN STREET. SUITE C
IRVINE, CALIFORNIA 92714
(714) 474-2020
The Honorable Members of City Council
City of Carlsbad, California
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE
WITH SPECIFIC REQUIREMENTS APPLICABLE TO NONMAJOR
FEDERAL FINANCIAL ASSISTANCE PROGRAM TRANSACTIONS
We have audited the general purpose financial statements of City of Carlsbad, California, as
of and for the year ended June 30, 1993, and have issued our report thereon dated October 8,
1993.
In connection with our audit of the 1993 general purpose financial statements of the City of
Carlsbad, California, and with our consideration of the City's internal control structure used
to administer federal financial assistance programs, as required by Office of Management
and Budget Circular A-128, "Audits of State and Local Governments", we selected
transactions applicable to certain nonmajor federal financial assistance programs for the
year ended June 30, 1993.
As required by OMB Circular A-128, we have performed auditing procedures to test
compliance with the requirements governing types of services allowed or unallowed,
eligibility, and special requirements that are applicable to those transactions. Our
procedures were substantially less in scope than an audit, the objective of which is the
expression of an opinion on the City's compliance with these requirements. Accordingly, we
do not express such an opinion.
With respect to the items tested, the results of those procedures disclosed no material
instances of noncompliance with the requirements listed in the preceding paragraph. With
respect to items not tested, nothing came to our attention that caused us to believe that the
City of Carlsbad, California, had not complied, in all material respects, with those
requirements. Also, the results of our procedures did not disclose any immaterial instances
of noncompliance with those requirements.
This report is intended for the information of City management and agencies that provided
federal financial assistance to the City. This restriction is not intended to limit the
distribution of this report, which is a matter of public record.
October 8, 1993
-12-
MEMBERS OF AICPA AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES PRACTICE SECTION
CITY OF CARLSBAD
Findings and Recommendations
For the fiscal year ended June 30, 1993
(1) Separate Allowances Should be Used for HUD Section 8 Utility Allowances
During our single audit testwork over the Section 8 Housing Assistance Payments
Program, we noted four instances where the utility allowances were incorrectly
calculated based upon the approved utility allowance schedule. The utility allowance
schedule identifies a fixed amount for water/trash. If the tenant is paying only for
water, the caseworkers would assign a partial amount from the water/trash allowance.
The method used to determine the partial amount is not documented or supported.
Recommendation
We recommend that the Authority develop and implement a utility allowance schedule
that identifies separate allowances for water and trash.
City Response Regarding Corrective Actions Planned
The Housing Authority has developed and implemented a utility allowance schedule
which identifies separate allowances for water and trash.
(2) Reconciliation of HUD Section 8 Payments
During our single audit testwork, we found that the "HUD payment register", which
identifies Section 8 housing assistance payments, was not reconciled to the general
ledger. The HUD payment register details the amount of payment the City housing
department requested on behalf of each recipient and the general ledger details actual
payments made to landlords on behalf of recipients.
Recommendation
For proper accounting control, the HUD payment register and the general ledger should
be reconciled monthly. Any differences between the two documents should be
investigated and resolved.
Citv Response Regarding Corrective Actions Planned
A first quarter reconciliation has been completed; a reconciliation for the second
quarter will be done by the end of January 1994. Monthly reconciliations will be done
starting with the month of January 1994.
(3) Monitoring Subrecipients in the Community Development Block Grant (CDBG)
Program
During our single audit review of controls over the CDBG program, we noted that the
City did not perform any on-site visits for those subrecipients receiving over $25,000
during the fiscal year.
-13-
CITY OF CARLSBAD
Findings and Recommendations
(Continued)
(3) Monitoring Subrecipients in the Community Development Block Grant (CDBG)
Program. (Continued)
Recommendation
We recommend that the City implement its on-site monitoring system for those
subrecipients receiving over $25,000.
City Response Regarding Corrective Actions Planned
The City will implement an on-site monitoring process for all CDBG subrecipients
regardless of funding amount. The City intends to conduct formal onsite visits at least
one time per program year. Informal visits will be made periodically throughout the
year to monitor subrecipients who require additional/special assistance from City staff.
-14-
CITY OF CARLSBAD
Status of Prior Audit Findings
The prior year single audit findings have been adequately resolved.
-15-
PARKING AUTHORITY
OF THE CITY OF CARLSBAD
Combined Financial Statements
Year Ended June 30, 1993
(With Independent Auditor's Report Thereon)
AUTHORITY OF THE CITY OF CA. .BAD
Combined Financial Statements
Year Ended June 30, 1993
TABLE OF CONTENTS
Page
Independent Auditors' Report 1
Combined Balance Sheet - All Governmental Fund Types
and Account Group 2
Combined Statement of Revenues, Expenditures and Changes
in Fund Balances - All Governmental Fund Types 3
Notes to Combined Financial Statements 4
Supplementary Statements and Schedule:
Combining Balance Sheet - Debt Service Funds 10
Combining Statement of Revenues, Expenditures and Changes in
Fund Balances - Debt Service Funds 11
Schedule of Insurance Coverage 12
CONRAD CERTIFIED PUBLIC ACCOUNTANTS
SSOC1ATES
A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
1100 MAIN STREET. SUITE C
IRVINE, CALIFORNIA 92714
(714) 474-2020
The Board of Directors
Parking Authority of the City of Carlsbad
Carlsbad, California
Independent Auditors' Report
We have audited the accompanying component unit financial statements of the Parking
Authority of the City of Carlsbad (the Authority), as of and for the year ended June 30,
1993, as listed in the accompanying table of contents. These component unit financial
statements are the responsibility of the Authority's management. Our responsibility is to
express an opinion on these component unit financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those
standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the component unit financial statements referred to above present fairly, in
all material respects, the financial position of the Parking Authority of the City of Carlsbad
as of June 30, 1993, and the results of its operations for the year then ended in conformity
with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion of the component unit financial
statements taken as a whole. The combining financial statements and schedule listed in the
accompanying table of contents are presented for purposes of additional analysis and are not
a required part of the component unit financial statements of the Parking Authority of the
City of Carlsbad. Such information has been subjected to the auditing procedures applied in
the audit of the component unit financial statements and, in our opinion, is fairly stated in
all material respects in relation to the component unit financial statements taken as a whole.
September 3, 1993
-1-
MEMBERS Of AICPA AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES PRACTICE SECTION
PAu -NG AUTHORITY OF THE CITY OF CA. jBAD
Combined Balance Sheet
All Governmental Fund Types and Account Group
June 30, 1993
Governmental
Fund Types
Assets and Other Debits
Cash and investments (note 2)
Net investment in direct financing
leases (note 3)
Accrued interest receivable
Due from other funds (note 5)
Amount available in debt service funds
Amount to be provided for retirement
of general long-term debt
General
$2,084
916
Debt
Service
586,854
611,147
11,315
14,558
Account
Group
General
Long-term
Debt
597,253
677.747
Totals
(Memorandum Only)
588,938
677,747
11,315
15,474
597,253
677.747
Total assets and other debits $3.000 1.290.474 1.275.000 2.568.474
Liabilities and Fund Balances
Liabilities:
Due to other funds (note 5)
Deferred revenue
Revenue bonds payable (note 4)
Total liabilities
Fund balances:
Reserved for debt service
Unreserved - undesignated
Total fund balances
Total liabilities and fund
balances
$-15,474
677,747
597.253
1.275.000
693.221 1.275.000
597,253
$3.000 1.290.474 1.275.000
15,474
677,747
1.275.000
1.968.221
597,253
3.000
600.253
2.568.474
See accompanying notes to combined financial statements.
-2-
PA. iNG AUTHORITY OF THE CITY OF CA JBAD
Combined Statement of Revenues, Expenditures and Changes in Fund Balances -
All Governmental Fund Types
Year Ended June 30, 1993
Revenues:
Lease payments
Interest income
Total revenues
General Debt Service
130,500
41.793
172.293
Totals
(Memorandum Only)
130,500
41.793
172.293
Expenditures:
Principal retirement
Interest
Administrative
Total expenditures
Excess (deficiency) of
revenues over (under)
expenditures
Other financing sources (uses):
Operating transfers in
Operating transfers out
Total other financing
sources (uses)
Excess (deficiency) of
revenues and other financing
sources over (under)
expenditures and other
financing uses
Fund balances at beginning of year
Fund balances at end of year
2.799
2.799
2.799
175,000
105,600
280.600
(2.799)
175,000
105,600
2.799
283.399
(2.799)
2,799
(108.307)
18,074
(20.873)
(111.106)
20,873
(20.873)
3.000
$3.000
(111,106)
708.359
597.253
(111,106)
711.359
600.253
See accompanying notes to combined financial statements,
-3-
PARK J AUTHORITY OF THE CITY OF C .LSBAD
Notes to Combined Financial Statements
Year Ended June 30, 1993
(1) Organization and Summary of Significant Accounting Policies
The Parking Authority of the City of Carlsbad (the Authority) was created pursuant to
the Parking Law of 1949 and was authorized by the City Council on April 19, 1966 for
the purpose of providing and expanding public parking facilities for the City of
Carlsbad (the City). A five-member commission appointed by the City Council governs
the Authority. The Authority is not subject to federal or state income taxes.
The Authority is an integral part of the reporting entity of the City. The accounts of
the Authority have been included within the scope of the general purpose financial
statements of the City because the City Council exercises oversight responsibility over
the operations of the Authority. Only the accounts of the Authority are included
herein; therefore, these financial statements do not purport to represent the financial
position or results of operations of the City of Carlsbad.
The accounting policies of the Authority conform to generally accepted accounting
principles as applicable to governmental units. The following is a summary of the more
significant policies:
(a) Basis of Presentation
The accounts of the Authority are organized on the basis of funds and an
account group, each of which is considered to be a separate accounting entity.
The operations of each fund and account group are accounted for by providing a
separate set of self-balancing accounts that comprise its assets, liabilities, fund
balance, revenues, and expenditures. The various funds and the account group
are summarized by type in the financial statements. Fund types and the
account group used by the Authority are as follows:
GOVERNMENTAL FUND TYPES
Governmental funds are used to account for the Authority's expendable
financial resources and related liabilities. The measurement focus is upon
determination of changes in financial position. The following are the
Authority's governmental fund types:
General Fund
The general fund is the general operating fund of the Authority. It is used to
account for all financial resources except those required to be accounted for in
another fund.
Debt Service Funds
Debt service funds are used to account for the accumulation of resources for,
and payment of, general long-term debt principal, interest and related costs.
-4-
PARK .G AUTHORITY OF THE CITY OF v *LSBAD
Notes to Combined Financial Statements
(Continued)
(1) Organization and Summary of Significant Accounting Policies. (Continued)
(a) Basis of Presentation. (Continued)
GENERAL LONG-TERM DEBT ACCOUNT GROUP
This account group is used to establish accounting control and accountability for
the Authority's general long-term debt. It is used to account for all long-term
obligations of the Authority.
(b) Measurement Focus and Basis for Accounting
Governmental fund types are accounted for on a "spending" measurement focus.
Accordingly, only current assets and current liabilities generally are included on
their balance sheets, and the reported fund balance provides an indication of
available, spendable resources. Operating statements for governmental fund
types report increases (revenues) and decreases (expenditures) in available
spendable resources.
Governmental fund types use the modified accrual basis of accounting.
Revenues are recognized when susceptible to accrual (i.e., both measurable and
available). Available means collectible within the current period or soon enough
thereafter to be used to pay liabilities of the current period. Revenues that are
accrued include interest income.
Governmental fund expenditures are recognized when the liability is incurred,
except for principal and interest on long-term debt, which is recognized when
due.
(c) Budgets
The Authority does not adopt an annual budget; thus, no budgetary comparisons
are presented.
(d) Investments
Investments are stated at cost or amortized cost which approximates market
value.
(e) Total Columns
Total columns on the combined statements are captioned "Totals (Memorandum
Only)" to indicate that they are presented only to facilitate financial analysis.
Data in these columns do not present financial position, results of operations, or
changes in fund balance in conformity with generally accepted accounting
principles. Such data is not comparable to a consolidation. Interfund
eliminations have not been made in the aggregation of this data.
-5-
PARK G AUTHORITY OF THE CITY OF ^ .*LSBAD
Notes to Combined Financial Statements
(Continued)
(2) Cash and Investments
Cash and investments held by the Authority at June 30, 1993 consisted of the following:
Deposits $ 2,084
Investments 586.854
$588.938
The Authority's investment policy and state statutes authorize the Authority to invest
in obligations of the U.S. Treasury, its agencies and instrumentalities, commercial
paper rated A-l by Standard and Poor's Corporation or P-l by Moody's Commercial
Paper, banker's acceptances with a maximum maturity of 270 days, repurchase and
reverse repurchase agreements, certificates of deposit with national and state licensed
or chartered banks or federal or state savings and loan associations, money market and
mutual funds whose portfolios consist of one or more of the foregoing investments, San
Diego County investment pool and the State Treasurer's investment pool.
Under the California Government Code, a financial institution is required to secure
deposits made by state or local governmental units by pledging securities held in the
form of an undivided collateral pool. The market value of the pledged securities in the
collateral pool must equal at least 110% of the total amount deposited by the public
agencies.
As of June 30, 1993, all of the Authority's deposits were classified as category 1. The
bank balance equals the carrying amount.
Classification of Investment by Credit Risk
As defined in Governmental Accounting Standards Board Statement No. 3, investments
in securities are categorized in the following manner:
Category 1 - Investments that are insured or registered, which are held by the
Authority or its agent in the Authority's name.
Category 2 - Uninsured and unregistered investments, for which the securities are
held by the counterparty's trust department or agent in the Authority's
name.
Category 3 - Uninsured and unregistered investments, for which the securities are
held by the counterparty or by its trust department or agent, but not in
the Authority's name.
-6-
PARK G AUTHORITY OF THE CITY OF I 1LSBAD
Notes to Combined Financial Statements
(Continued)
(2) Cash and Investments. (Continued)
Category Carrying Market
Type of Investment 1 2 3 Amount Value
U.S. Treasury notes and bills $ - 309,346 - 309,346 313,000
Government agency obligations - 151.406 _= 151.406 150.000
$ - 460.752 - 460,752 463,000
Investment in mutual funds -
Pacific Horizons 126.102 126.102
Total investments $586.854
(3) Lease Agreements
Leases have been executed between the Authority and the City under which the City
agreed to make annual payments of $138,000 and $174,000 for the lease of a parking
facility and its subsequent expansion, respectively. The leases have been recorded by
the Authority as direct financing leases.
Lease payments are due quarterly and terminate on the date of retirement of the
related revenue bonds. Under the terms of the lease agreements and the bond
resolutions, Debt Service Funds in excess of the next interest and principal payments
may be used as follows: First, to maintain a reserve of $68,000 and $156,000,
respectively, for the 1969 and the 1981 Bonds. Next, to pay the General Fund for any
expenses of the Authority and to maintain the fund balance at $3,000, and then as
credits to the City for rentals due under the leases. Due to the excess monies in the
1969 Bond Service Fund during the fiscal year ending June 30, 1993, no lease payments
were required from the City under the parking facility lease. A lease payment of
$130,500 was required during the fiscal year ending June 30, 1993 from the City under
the expansion lease to cover debt service payments during the year for the 1981 bond
issue.
(4) Revenue Bonds Payable
The following is a summary of changes in revenue bonds payable for the year ended
June 30, 1993:
-7-
PARKi.. J AUTHORITY OF THE CITY OF C .LSBAD
Notes to Combined Financial Statements
(Continued)
(4) Revenue Bonds Payable. (Continued)
Series 1969 Series 1981 Totals
Revenue bonds payable
June 30, 1992 $450,000 1,000,000 1,450,000
Bonds retired 100.000 75.000 175.000
Revenue bonds payable,
June 30, 1993 $350.000 925.000 1.275.OOP
Revenue bonds payable at June 30, 1993 were comprised of the following individual
issues:
1969 Parking Revenue Bonds:
1969 Carlsbad Parking Authority Revenue Bonds, remaining principal due in amounts
ranging from $100,000 to $125,000 on October 1 of each year through 1995, interest
payable on October 1 and April 1 at 6.4% per annum. The bonds are subject to call in
whole or in part at the option of the Authority at prices ranging from 100.5% to 105%
of the principal amount of the bonds.
1981 Parking Revenue Bonds:
1981 Carlsbad Parking Authority Revenue Bonds, remaining principal due in amounts
ranging from $75,000 to $150,000 on February 1 of each year through 2001, interest
payable on August 1 and February 1 at 8.0% per annum. Bonds maturing on or after
February 1, 1991 are subject to call in whole or in part at the option of the Authority
at prices ranging from 100.25% to 102% of the principal amount of the bonds.
Debt service requirements to maturity for the revenue bonds payable are as follows:
Year Ending June 30. Series 1969 Series 1981 Total
Less amounts
interest
1994
1995
1996
1997
1988
Thereafter
representing
$119,200
137,000
129,000
-
-_
385,200
35.200
174,000
166,000
158,000
150,000
167,000
466.000
1,281,000
356.000
293,200
303,000
287,000
150,000
167,000
466.000
1,666,200
391.200
Total revenue bonds payable $350.000 925.OOP 1.275.0PP
-8-
PARKi. J AUTHORITY OF THE CITY OF C .LSBAD
Notes to Combined Financial Statements
(Continued)
(4) Revenue Bonds Payable. (Continued)
At June 30, 1993, the Authority was in compliance with all significant debt covenants.
(5) Due To and From Other Funds
The following table shows amounts due from funds within the Authority to other funds
within the Authority at June 30, 1993:
Due To:
General Fund Bond Service Funds
Series 1969 Series 1981
Due from:
Bond Service Funds:
Series 1969 $ 24
Series 1981 892
Reserve Funds:
Series 1969 - 2,060
Series 1981 _= - 12.498
Total $916 2.060 12.498
-9-
SUPPLEMENTARY STATEMENTS AND SCHEDULE
.iRKING AUTHORITY OF THE CITY OF CARLSB,
Combining Balance Sheet
Debt Service Funds
June 30, 1993
Assets
Investments
Net investment in direct financing lease
Accrued interest receivable
Due from other funds
Total assets
Bond Service Funds Reserve Funds
Series 1969 Series 1981 Series 1969 Series 1981 Totals
68,009$246,344
29,372
4,247
2.060
108,752
648,375
268
12.498
$282.023 769.893
163,749 586,854
677,747
2,051 4,749 11,315
- - 14.558
70.060 168.498 1.290.474
Liabilities and Fund Balances
Liabilities:
Due to other funds
Deferred revenue
Total liabilities
Fund balances - reserved for debt service 252.627
Total liabilities and fund balances $282.023
$ 24
29.372
29.396
892
648.375
649.267
120.626
769.893
2,060
2.060
68.000
70.060
12,498 15,474
- 677.747
12.498 693.221
156.000 597.253
168.498 1.290.474
-10-
JIKING AUTHORITY OF THE CITY OF CARLSBA
Combining Statement of Revenue, Expenditures and Changes in Fund Balance
Debt Service Funds
Year Ended June 30, 1993
Revenues:
Lease payments
Interest income
Total revenues
Bond Service Funds Reserve Funds
Series 1969 Series 1981 Series 1969 Series 1981 Totals
20.195
20.195
130,500
5.628 12.446 41.793
5.628 12.446 172.293
Expenditures:
Principal retirement
Interest
Total expenditures
Excess (deficiency) of revenues over
(under) expenditures
Other financing sources (uses):
Operating transfers in
Operating transfers out
Total other financing sources (uses)
Excess (deficiency) of revenues and
other financing sources over (under)
expenditures and other financing uses
Fund balances at beginning of year
Fund balances at end of year
100,000
25.600
5,628
(8101
4.818
75,000
80.000
125.600 155.000
12,446
(1.9891
(100,587) (10,519)
353.214 131.145
S2S2.627 120.626
175,000
105.600
280.600
(5.6281
(5.628)
68.000
12.446 (108.307)
18,074
(12.4461 (20.8731
(2.799)
(111,106)
156.000 708.359
156.000 597.253
-11-
PAR; G AUTHORITY OF THE CITY OF RLSBAD
Schedule of Insurance Coverage
Year Ended June 30, 1993
Insurance coverage maintained by the City of Carlsbad with the Authority listed as
additional insured at June 30, 1993 includes:
Type of Coverage Amount of Coverage Term
All risk including valuable papers
and rental income $37,973,804 10/01/92 to 10/01/93
Equipment floater 517,410 10/01/92 to 10/01/93
Honesty Blanket Bond 1,500,000 04/16/93 to 04/16/94
Effective January 1, 1986, the Authority has not been covered under a liability insurance
policy but has been included under the City of Carlsbad's self-insurance program.
-12-
CITY OF CARLSBAD
PUBLIC IMPROVEMENT CORPORATION
Combined Financial Statements
Year Ended June 30, 1993
(With Independent Auditors' Report Thereon)
CITY CARLSBAD PUBLIC IMPROVEMENT CC JRATION
Combined Financial Statements
Year Ended June 30, 1993
TABLE OF CONTENTS
Page
Independent Auditors' Report 1
Combined Balance Sheet - Governmental Fund Type
and Account Group 2
Combined Statement of Revenues, Expenditures and
Changes in Fund Balances - Debt Service Funds 3
Notes to Combined Financial Statements 4
Supplementary Statements:
Combining Balance Sheet - Debt Service Funds 8
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances - Debt Service Funds 9
CONRAD CERTIFIED PUBLIC ACCOUNTANTS
SSOC1ATES
A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
1100 MAIN STREET. SUITE C
IRVINE, CALIFORNIA 92714
(714)474-2020
The Board of Directors
City of Carlsbad Public Improvement Corporation
Carlsbad, California
Independent Auditors' Report
We have audited the accompanying component unit financial statements of the City of
Carlsbad Improvement Corporation (the Corporation) as of and for the year ended June 30,
1993, as listed in the accompanying table of contents. These component unit financial
statements are the responsibility of the Corporation's management. Our responsibility is to
express an opinion on these component unit financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those
standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the component unit financial statements referred to above present fairly, in
all material respects, the financial position of the City of Carlsbad Public Improvement
Corporation as of June 30, 1993, and the results of its operations for the year then ended in
conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the component unit financial
statements taken as a whole. The combining financial statements listed in the accompanying
table of contents are presented for purposes of additional analysis and are not a required
part of the component unit financial statements of the City of Carlsbad Public Improvement
Corporation. Such information has been subjected to the auditing procedures applied in the
audit of the component unit financial statements and, in our opinion, is fairly stated in all
material respects in relation to the component unit financial statements taken as a whole.
September 8, 1993
-1-
MEMBERS OF AICPA AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES PRACTICE SECTION
CITY t :ARLSBAD PUBLIC IMPROVEMENT COL .NATION
Combined Balance Sheet
Governmental Fund Type and Account Group
June 30, 1993
Governmental
Fund Tvoe
Debt
Service
Assets
Cash and investments held by trustee (note 2) $ 876,096
Net investment in direct financing lease (note 3) 6,926,549
Interest receivable 29,980
Amount available in debt service funds
Amount to be provided for retirement of
certificates of participation -
Total assets $7.832.625
Account
Group
General Totals
Long-term (Memorandum
Debt Only)
876,096
6,926,549
29,980
903,451903,451
6.926.549
7.830.OOP
6.926.549
15.662.625
Liabilities and Fund Balance
Liabilities:
Deferred revenue $6,926,549
Certificates of participation payable (note 4) -
Total liabilities 6.926.549
7.830.000
7.830.000
6,926,549
7.830.000
14.756.549
Fund balances:
Reserved for arbitrage (note 5)
Reserved for debt service (note 5)
Total fund balances
Total liabilities and fund balances
2,625
903.451
906.076
2,625
903.451
906.076
$7.832.625 7.830.000 15.662.625
See accompanying notes to combined financial statements,
-2-
CITY CARLSBAD PUBLIC IMPROVEMENT Cl. ORATION
Combined Statement of Revenues, Expenditures
and Changes in Fund Balance -
Debt Service Funds
Year Ended June 30, 1993
Revenues:
Lease payments
Interest on investments
Total revenues
$735,051
74.977
810.028
Expenditures:
Principal
Interest
Arbitrage rebate
Administrative
Total expenditures
Excess (deficiency) of revenues
over (under) expenditures
Other financing sources (uses):
Operating transfers in
Operating transfers out
Transfers to the City of Carlsbad
Total other financing sources (uses)
Excess (deficiency) of revenues
and other financing sources over
(under) expenditures and other
financing uses
Fund balances at beginning of year
Fund balances at end of year
260,000
606,448
23,200
7.600
897.248
(87.220)
68,896
(68,896)
Q6)
(76)
(87,296)
993.372
$906.076
See accompanying notes to combined financial statements,
-3-
CITY OF *, ^LSBAD PUBLIC IMPROVEMENT ^ . RPORATION
Notes to Combined Financial Statements
Year Ended June 30, 1993
(1) Organization and Summary of Significant Accounting Policies
The City of Carlsbad Public Improvement Corporation (the Corporation) was organized
on June 1, 1988 under the Nonprofit Public Benefit Corporation law for the purpose of
financing and constructing certain improvements on the parcel of property known as
Hosp Grove. The Corporation is not subject to federal or state income taxes.
The Corporation is an integral part of the reporting entity of the City of Carlsbad,
California (the City). The accounts of the Corporation have been included within the
scope of the general purpose financial statements of the City because the City Council
exercises oversight responsibility over the operations of the Corporation. Only the
accounts of the Corporation are included herein; therefore, these financial statements
do not purport to represent the financial position or results of operations of the City of
Carlsbad.
The accounting policies of the Corporation conform to generally accepted accounting
principles as applicable to governmental units. The following is a summary of the more
significant policies:
(a) Basis of Presentation
The accounts of the Corporation are organized on the basis of funds and an
account group, each of which is considered to be a separate accounting entity.
The operations of each fund and account group are accounted for by providing a
separate set of self-balancing accounts that comprise its assets, liabilities, fund
balance, revenues, and expenditures. The various funds and the account group
are summarized by type in the financial statements. The fund types and the
account group used by the Corporation are as follows:
GOVERNMENTAL FUND TYPE
Governmental funds are used to account for the Corporation's expendable
financial resources and related liabilities. The measurement focus is upon
determination of changes in financial position. The following is the
Corporation's governmental fund type:
Debt Service Funds
Debt service funds are used to account for the accumulation of resources for,
and payment of, general long-term debt principal, interest and related costs.
GENERAL LONG-TERM DEBT ACCOUNT GROUP
This account group is used to establish accounting control and accountability for
the Corporation's general long-term debt. It is used to account for all
long-term obligations of the Corporation.
CITY OF C vLSBAD PUBLIC IMPROVEMENT <_ .tPORATION
Notes to Combined Financial Statements
(Continued)
(1) Organization and Summary of Significant Accounting Policies. (Continued)
(b) Measurement Focus and Basis for Accounting
Governmental fund types are accounted for on a "spending" measurement focus.
Accordingly, only current assets and current liabilities are generally included on
their balance sheets, and the reported fund balance provides an indication of
available, spendable resources. Operating statements for governmental fund
types report increases (revenues) and decreases (expenditures) in available,
spendable resources.
Governmental fund types use the modified accrual basis of accounting.
Revenues are recognized when susceptible to accrual (i.e., both measurable and
available). Available means collectible within the current period or soon enough
thereafter to be used to pay liabilities of the current period. Revenues that are
accrued include interest income.
Governmental fund expenditures are recognized when the liability is incurred,
except for principal and interest on long-term debt, which is recognized when
due.
(c) Budgets
The Corporation does not adopt an annual budget, therefore, no budgetary
comparisons are presented.
(d) Investments
Investments are stated at cost or amortized cost which approximates market
value.
(e) Total Columns
Total columns on the combined statements are captioned "Totals (Memorandum
Only)" to indicate that they are presented only to facilitate financial analysis.
Data in these columns do not present financial position, results of operations, or
changes in fund balances in conformity with generally accepted accounting
principles. Such data is not comparable to a consolidation. Interfund
eliminations have not been made in the aggregation of this data.
-5-
CITY OF I .iLSBAD PUBLIC IMPROVEMENT c ^PORATION
Notes to Combined Financial Statements
(Continued)
(2) Cash and Investments
Authority for Investments
The Trust Agreement by and among the Bank of America, as successor trustee, the
Corporation and the City of Carlsbad, dated June 1, 1988, authorizes the trustee to
invest in Federal Treasury Securities, Federal Agency Securities, interest-bearing
demand or time deposits, obligations of U.S. corporations having assets in excess of
$500,000,000 and carrying one of the three highest ratings by Moody's and Standard and
Poor's Corporation, repurchase agreements, money market funds, commercial paper
rated A-l by Standard and Poor's Corporation and P-l by Moody's Commercial Paper
with original maturities of not more than 180 days, bankers acceptances with
maturities of not more than 270 days, and tax-exempt obligations rate in one of the
three highest ratings by Moody's and Standard and Poor's Corporation.
Classification of Investment by Credit Risk
As defined in Governmental Accounting Standards Board Statement No. 3, investments
in securities are categorized in the following manner:
Category 1 - Investments that are insured or registered, which are held by the
Corporation or its agent in the Corporation's name.
Category 2 - Uninsured and unregistered investments, for which the securities are held
by the counterparty's trust department or agent in the Corporation's
name.
Category 3 - Uninsured and unregistered investments, for which the securities are held
by the counterparty or by its trust department or agent, but not in the
Corporation's name.
As of June 30, 1993, the Corporation had $7,096 invested in mutual funds and $869,000
invested in a guaranteed investment contract which are not categorizable by credit
risk.
(3) Lease Agreements
Under the terms of a lease agreement dated June 1, 1988, the City has leased property
known as Hosp Grove to the Corporation and the Corporation has leased back to the
City the same property and all improvements constructed thereon. The Agreement
requires the City to pay seminannual lease payments to the Corporation equal to the
debt service requirements of the Certificates of Participation issued by the
Corporation on June 1, 1988 (the Certificates). The lease payments are due on each
January 15 and July 15 until the Certificates have been paid in full. In addition, the
City must pay all taxes, assessments, insurance, maintenance and utilities on the
property and its improvements. The lease expires on August 1, 2008 or upon the date
of retirement of the Certificates. The lease has been accounted for as a direct
financing lease.
-6-
CITY OF C .<LSBAD PUBLIC IMPROVEMENT L ^PORATION
Notes to Combined Financial Statements
(Continued)
(4) Certificates of Participation
The Corporation issued the Certificates on June 1, 1988 in the amount of $8,690,000
pursuant to a Trust Agreement by and among the Corporation, the City and the
Trustee. The Certificates represent an undivided interest in the lease payments made
by the City of Carlsbad to the Corporation. Interest is payable at rates ranging from
5.75% to 7.6% per annum. The Certificates mature on August 1 of each year through
2008. Certificates maturing on August 1, 2008 are subject to mandatory redemption on
August 1 in each year on or after August 1, 2001, in amounts reflected in the debt
service requirements below. Certificates maturing on or after August 1, 1999 are
subject to call in whole or in part at the option of the Corporation at prices ranging
from 100% to 102% of the principal amount of the Certificates. The Corporation is
required to maintain a debt service reserve of $869,000. As of June 30, 1993, the
balance is $903,451.
Debt service requirements to maturity for the Certificates are as follows:
Year ending June 30.
1994 $ 865,054
1995 866,873
1996 866,733
1997 859,795
1998 860,985
1999-2003 4,284,040
2004-2008 4,256,800
2009 851.600
13,711,880
Less amounts representing interest (5.881.880)
$ 7.830.OOP
Changes in general long-term debt from the previous year result from payments of
principal and interest on the Certificates.
At June 30, 1993, the Corporation was in compliance with all significant debt
covenants.
(5) Fund Balances
The reserve for arbitrage represents amounts which may be owed to the federal
government under the Tax Reform Act of 1986.
The reserve for debt service represents resources legally restricted to the payment of
general long-term debt principal and interest maturing in future years.
-7-
SUPPLEMENTARY STATEMENTS
CITY C JARLSBAD PUBLIC IMPROVEMENT COk .{ATION
Combining Balance Sheet -
Debt Service Funds
June 30, 1993
Assets
Cash and investments held by trustee
Net investment in direct financing lease
Interest receivable
Total assets
Lease Payment Reserve
873,151$ 2,945
6,926,549
6.929.494
29.980
903.131
Total
876,096
6,926,549
29.980
7.832.625
Liabilities and Fund Balances
Liabilities:
Deferred revenue
Total liabilities
$6.926.549
6.926.549
6.926.549
6.926.549
Fund balances:
Reserves for arbitrage
Reserves for debt service
Total fund balances
2,625
320
2.945
903.131
903.131
2,625
903.451
906.076
Total liabilities and fund balances $6.929.494 7.832.625
-8-
CITY CARLSBAD PUBLIC IMPROVEMENT CC ;RATION
Combining Statement of Revenues, Expenditures
and Changes in Fund Balances -
Debt Service Funds
Year ended June 30, 1993
Revenues:
Lease payments
Interest on investments
Total revenues
Lease Payment Reserve Total
$ 735,051
2.113
737.164
72.864
72.864
735,051
74.977
810.028
Expenditures:
Principal
Interest
Arbitrage rebate
Administrative
Total expenditures
Excess (deficiency) of revenues
over (under) expenditures
Other financial sources (uses):
Operating transfers in
Operating transfers out
Transfer to the City of Carlsbad
Total other financing sources (uses)
260,000
606,448
23,200
7.600
897.248
260,000
606,448
23,200
7.600
897.248
(160.084)
68,896
(76)
68.820
Excess (deficiency) of revenues and
other financing sources over (under)
expenditures and other financing uses (91,264)
Fund balances at beginning of year
Fund balances at end of year
94.210
$ 2.946
72.864 (87.220)
68,896
(68,896) (68,896)
- (76)
(68.896)(76)
3,968 (87,296)
899.162 993.372
903.130 906.076
-9-