HomeMy WebLinkAbout; ; 1989-90 Audit; 1990-09-28e
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CITY OF CARLSBAD
Water Utility Fund
0 Financial Statements
June 30, 1990 and 1989
(With Independent Auditors' Report Thereon)
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CITY OF CARLSBAD
WATER UTILITY FUND
Table of Contents
June 30, 1990
Independent Auditors' Report ............................................
Balance Sheets ..........................................................
Statements of Operations and Retained Earnings ..........................
0 Statements of Cash Flows ................................................
Notes to Financial Statements ...........................................
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- Peat Marwick
Certified Public Accountants
North County Office Telephone 619 931- 8700 Telecopier 619 438-4291
2011 Palomar Airport Road
Carlsbad, CA 92008
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Independent Auditors' Report 0
The Honorable Mayor and City Council
City of Carlsbad, California: *
We have audited the accompanying financial statements of the Water Ut:
Fund of the City of Carlsbad as of and for the years ended June 30, 199C
statements are the responsibility of the City's management. Our responsib:
is to express an opinion on these financial statements based on our audits<
We conducted our audits in accordance with generally accepted aud:
standards. Those standards require that we plan and perform the audi
obtain reasonable assurance about whether the financial statements are frc
material misstatement. An audit includes examining, on a test basis, evic
supporting the amounts and disclosures in the financial statements. An i
also includes assessing the accounting principles used and signif:
estimates made by management, as well as evaluating the overall final
statement presentation. We believe that our audits provide a reasonable 1.
for our opinion.
As discussed more fully in Note l(a), these financial statements present
the Water Utility Fund and are not intended to present fairly the final
position and results of operations of the City of Carlsbad in conformity
generally accepted accounting principles.
In our opinion, the financial statements referred to above present fair11
all material respects, the financial position of the Water Utility Fund oj
City of Carlsbad at June 30, 1990 and 1989, and the results of its opera
and cash flows for the years then ended in conformity with generally accl
accounting principles.
As discussed in Note l(g) to the financial statements, the District ad!
Statement of Government Standards No. 9, "Reporting Cash Flows of Proprii
and Nonexpendable Trust Funds and Governmental Entities That Use Proprii
Fund Acount ing . "
1989, as listed in the accompanying table of contents, These final
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September 28, 1990 1,
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Member Firm of __ Klynveld Peat Mawick Goerdeler
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CITY OF CARLSBAD
Water Utility Fund
0 Balance Sheets
June 30, 1990 and 1989
Assets leea h9
Current assets : a
Cash and investments $ 517,524 408
Receivables, net of allowance for doubtful
accounts of $13,766 in 1990 and $58,064
in 1989 1,659,248 1,724
Due from the City of Carlsbad 10,413 10
Accrued interest receivable 3 , 405 2 e
Inventory, at cost 129.474 152
Total current assets 2.320.064 2.297
Restricted assets:
Cash and investments 4,644,163 4,396
Accrued interest receivable 44.946 45
Total restricted assets 4.689cl1514. 4.442
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Property, plant and equipment: Land and water rights 231 , 956 231
Wells, reservoirs and dams X,212,852 1,212
Transmission and distribution lines 4,023,869 4,023
Equipment and vehicles 243 , 963 228
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Buildings and improvements 37 , 188 37
c Construction in progress 126.350
Total property, plant and equipment 5,876,178 5,734
Less accumulated depreciation (2.435.828 l(2.318
e Property, plant and equipment - net 3.440.m 3.415
Total assets $ 10.449.523 10.154
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CITY OF CARLSBAD Water Utility Fund * Balance Sheets, Continued
June 30, 1990 and 1989
Liabilities and Fund Eauitv lppn 1p
Accounts payable $ 111,586 90
Due to the City of Carlsbad 98 , 049 96
Due to the Carlsbad Municipal Water District 963,798 1,117
Deposits payable 80,927 65
Current portion of revenue bonds payable
(net of unamortized discount) 163,766 160
Accrued interest - 8.
Total current liabilities 1,442,842 1,561
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Current 1 iabil i t ies :
Accrued wages 24 , 716 22
0 Long-term liabilities - revenue bonds payable
(net of unamortized discount and
current portion) - 163
Total liabilities 1.442.842 1.725 0
Fund equity:
Contributed capital 2.425.080 2,425
Reserved for debt service 9 , 210 175
Unreserved 6.572.391-
Total retained earnings 6.581.6016,004
Total fund equity 9.006.6818.429
Total liabilities and fund equity $ 10.449.5U 10.154
Retained earnings:
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See accompanying no tea to financial 6 tatements.
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CITY OF CARLSBAD
Water Utility Fund
Statements of Operations and Retained Earnings
For the years ended June 30, 1990 and 1989
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Metered water sales $ 1,332,791 1,114
Other charges for services 267,913 260
Miscellaneous revenue 1.64Q 31
c Total operating revenues 1.602.3L4 1.407
Operating expenses:
Personnel services 809 , 385 692
Office expenses 240,068 205 Repairs and maintenance 228,204 154
Insurance 8 , 800 i
e Depreciation and amortization 123,190 121
Professional services 2,717 IC
Purchased water 3.178-
Total operating expenses 1,415,542 1.195
Income from operations 186.802211
Interest income 396,731 35:
Interest and fiscal charges (9,332) (21
Total non-operating income -L?aL!b331
Net income 576,958 54:
Non-operating revenues (expenses):
0 Gain on sale of property 2.757-
e Retained earnings, beginning of year 6 -00 4.643 5.461
Retained earnings, end of year $g.58L.6oL 6.001
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See accompanying notes to financial statements.
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CITY OF CARLSBAD
Water Utility Fund
a Statements of Cash flows
For the years ended June 30, 1990 and 1989
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Income from operations $ 186,802 21 1
Depreciation and amortization 123,190 121
Carlsbad (396) 1
(Increase) decrease in inventory 23,013 4
0 Increase in due to City of Carlsbad 1,743 7
Municipal Water District (153.820 1126
operating activities 274.348 (336
Cash flows from operating activities:
Adjustments to reconcile income from operations
to net cash provided by operating activities: * (Increase) decrease in receivables 63,985 (183
(Increase) decrease in due from City of
Increase (decrease) in accounts and deposits
payable and accrued wages 29,831 (625
Increase (decrease) in due to Carlsbad
Net cash provided by (used in)
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Cash flows from capital and related financing activities ;
Acquisition and construction of capital assets (148,451) ( 24
Principal payments on bonds (160,000) (157
Interest paid on bonds (9,332) (21
Decrease in restricted interest receivable 3565
* Gain on sale of property 2,757
Net cash used in capital and
related financial activities (314,670) (197
0 Cash flows from investing activities -
Interest on investments 396.731353
Net increase (decrease) in cash 356,409 (181
Cash and cash equivalents at beginning of period 4.805.278 4.986 e
Cash and cash equivalenta at end of period 45,161.681 4.805
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See accompanying notes to financial statements.
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CITY OF CARLSBAD Water Utility Fund
e Notes to Financial Statements
June 30, 1990 and 1989
(1) Oraanization and Summarv of Significant Accoun ting Policiea
The Water Utility Fund (the Fund) is an enterprise fund of the Ci
Carlsbad (the City), which is used to account for activities nect
to provide water services to the residents of the City including
not limited to, operations, maintenance, financing and related
service, billing and collection, and the acquisition of fixed i
that are utilized in providing these services. 8
The Fund operates under a water service agreement with the Cai
Municipal Water District (the District), a subsidiary district c
City, whereby the District provides all capital facility financir
development, operations and maintenance and planning for
consolidated water system, and the Fund provides all customer st
functions for essentially the entire City of Carlsbad. 0
As an enterprise fund, its operations are financed and operated
manner similar to a private business enterprise. The intent o
City Council is that the expenses (including depreciation) of proT e goods and services to the general public on a continuing bas
financed or recovered primarily through user charges.
The Fund is an integral part of the reporting entity of the Ci
Carlsbad. The accounts of the Fund have been included within the
of the general purpose financial statements of the City becaus e City Council exercises oversight responsibility over the operatic
the Fund. Only the accounts of the Fund are included ht
therefore, these financial statements do not purport to represen
financial position or results of operations of the City of Carlsbad
The accounting policies of the City with regard to thia fund confa a generally accepted accounting principles as applicable to governn
The following is a summary of the more significant accounting polic
(a) Measurement:
The Fund is accounted for on an "income determination" or "co a services" measurement focus. Accordingly, all assets
liabilities are included on the balance sheet, and the rei
fund equity provides an indication of the economic net worth o
Fund. The operating statement for the Fund reports incr
(revenues) and decreases (expenses) in total economic net wortk
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CITY OF CARLSBAD
Water Utility Fund
Notes to Financial Statements, Continued 0
(1) Oreanization and Summa rv of Significant Accoun tina Policies. Co ntinue
(b) Basis of Accounting: e
The Fund is accounted for using the accrual basis of accoun
Accordingly, revenues are recognized when they are earned expenses are recognized when the related liability is incurred.
Unbllled water revenue is recognized as earned when the wate
0 consumed.
(c) Cash and Investmentg:
The Fund participates in the pooled cash and investment fund o
City of Carlsbad. Fooled investments are stated at cos 0 amortized cost. The Fund's equity in the pooled cash is shov
the financial statements as cash and investments. Interest ea
as a result of the pooling is allocated to the Fund based or
average monthly cash balances.
Authorized deposits and investments include demand and time depo
instrumentalities, commercial paper rated A-1 by Standard
Poor's Corporation or P-1 by Moody's Commercial Paper re
banker's acceptances with a maximum maturity of 270
repurchase and reverse repurchase agreements, certificate{
or federal or state savings and loan associations, money marke
mutual funds whose portfolios consist of one or more of
foregoing investments, and the State Treasurer's investment poo:
e obligations of the U.S. Treasury, its agencies
deposit insured by national and state licensed or chartered ' e
(d) Inventories:
0 Inventories consist of materials and supplies which are state
historical cost.
(e) Prooertpd!lant and Rubment:
Property, plant and equipment is stated at cost, or if donatec e estimated fair market value at the date of contribu
Depreciation is provided over the estimated useful lives of
assets using the straight-line method.
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CITY OF CARLSBAD
Water Utility Fund
a Notes to Financial Statements, Continued
(1) Orga nization and Summa rv of Significant Accoun ting Policies. Co n t inuel
(e> ProPertg. Plant and EquiDment. Continued: a
The estimated useful lives of the assets are as follows:
Years
Buildings and improvements 10 - 50
Transmission and distribution lines 40 - 70
Equipment and vehicles 4 - 50
* Wells, reservoirs and dams 10 - 100
(f) Comuensated:
0 Sick leave accrued but unused is cumulative from year to year.
cost of vacation is recorded as a liability when earned.
(g) Statement of Cash Flows and Cas h Eauivalenta:
a In September 1989, the Governmental Accounting Standards Board ir
Statement No. 9, "Reporting Cash Flows of Proprietary
Nonexpendable Trust Funds and Governmental Entities That
Proprietary Fund Accounting." Effective July 1, 1989, the
adopted the provisions of Statement No. 9 and has presentc
statement of cash flows instead of statement of change6 a financial position. The statement of changes in financial posi
for the year ended June 30, 1989 has been replaced with a state
of cash flows.
For purposes of the statement of cash flows, cash and
equivalents consist of all highly liquid instruments purchased
0 a maturity of three months or less.
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CITY OF CARLSBAD
Water Utility Fund
Notes to Financial Statements, Continued e
(2) Long-term Liabilities
Revenue bonds payable at June 30, 1990 and 1989 were as follows: 0 m u
1960 Waterworks Revenue Bonds, interest
payable on January 1 and July 1 of each
year at rates varying from 3.9% to 4.0%
per annum, principal paid in full in July
1990. $ 65,000 125
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1970 Waterworks Revenue Bonds, interest
payable on January 1 and July 1 of each
year at the rate of 6.0% per annum, * principal paid in full in July 1990. 100.000 2M.
To tal revenue bonds payable 165,000 3 25
Less unamortized discount (1,234) (1
Less current portion (163.766) (hha
UiL - Total long-term liabilities $
At June 30, 1990, the City was in compliance with all debt cover a required by the Waterworks Revenue Bonds.
(3) Pension Plan
The Water Utility Fund employees are included in the City of Carlst
pension plan which is administered by the California Public Emplc a Retirement System (PERS). PERS is an agent multiple-employer p~
employee retirement system that acts as a common investment
adninifitrative agent far parkhipakbg public entlties within the E of California.
All full-time employees are eligible to participate as members of
PERS. Benefits vest after an employee has been a member of the
for five years. Employees are eligible to retire after the age c
with 5 years of credited service. Annual retirement benefits
determined based on age at retirement, the length of membership sei
and the amount of earnings based on the highest thirty-six consecu
months average for safety employees, and based on the highest tw
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CITY OF CARLSBAD Water Utility Fund
a Notes to Financial Statements, Continued
(3) Pension Plan. Continued
consecutive months average for miscellaneous employees. The PERS 0 provides death and disability benefits. These benefit provisions
all other requirements are established by state statute.
Employees are required to make contributions of seven percent of l
pay. This is paid by the City for the benefit of the employees in
of salary. The City is also required to contribute the rema. 0 amounts necessary to fund the benefits for its members, using
actuarial basis recommended by the PERS actuaries and actui
consultants and adopted by the PERS Board of Administration.
Additional disclosures required by Governmental Accounting Stanc
Board Statement No. 5 are not available for the Water Utility Fund 0 separate entity. This information for the City's reporting entit
presented in the Comprehensive Annual Financial Report of the Cit
Carlsbad.
ter District Agreemen t with the Carlsbad Municiual Wa .. (4)
a As part of an agreement with the District, the Fund has set i
$4,689,109 as of June 30, 1990 for the District to be used in
acquisition and construction of certain specific projects which
benefit the District.
(5) Transactions with Affiliates
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The Water Utility Fund has billed $98,049 in sales for the Sewer Fun
the City of Carlsbad which have not been reimbursed to the Sewer
at June 30, 1990.
receivable from the Sewer Fund for amounts billed on behalf of
Sewer Fund that have not been collected at June 30, 1990.
Additionally, the Water Utility Fund has a $IC
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The Water Utility fund has collected $963,798 in water sales on behal
the District, which have not been reimbursed to the District
June 30, 1990. This amount represents water sales in which the W
Utility Fund acts as a collection agent for the District.
a The Water Utility Fund pays an internal service fund of the City
liability and workmen's compensation insurance. The City
self-insured for these claims. The premiums are determined annu
based on the insured funds' claims experience. The premiums
$16,908 and $9,413 for the fiscal years ended June 30, 1990 and 1
respectively. a
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