HomeMy WebLinkAbout; ; Water Utility Fund Financial Statements 1987-1988; 1988-06-30CIT7 OF CARLSBAD
Water Utility Fund
Financial Statements
June 30, 1988
Peat Marwick
Certified Public Accountants
Peat Marwick Main & Co.
225 Broadway, Suite 1400
San Diego, CA 92101
INDEPENDENT AUDITORS' REPORT
The Honorable Mayor and City Council
City of Carlsbad, Califomia:
We have audited the component unit financial statements of the Water Utility
Fund of the City of Carlsbad, Califomia as of and for the year ended June 30,
1988. These component unit financial statements are the responsibility of the
City's management. Our responsibility is to express an opinion on these
financial statements based on our audit. The financial statements of the Water
Utility Fund of the City of Carlsbad, Califomia as of and for the year ended
June 30, 1987 were audited by other auditors whose report dated October 9, 1987
expressed an unqualified opinion on these statements.
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 1988 component unit financial statements referred to above
present fairly, in all material respects, the financial position of the Water
Utility Fund of the City of Carlsbad, Califomia as of June 30, 1988, and the
results of its operations and the changes in its financial position for the
year then ended in conformity with generally accepted accounting principles.
October 14, 1988
Member Firm of
CITY OF CARLSBAD
Water Utility Fund
Balance Sheets
June 30, 1988 and 1987
Assets
Current assets;
Cash and investments
Receivables, net of allowance for doubtful
accounts of $61,908 in 1988 and $116,903
in 1987
Due from the City of Carlsbad
Accrued interest receivable
Inventory, at cost
Total current assets
Restricted assets:
Cash and investments
Accmed interest receivable
Total restricted assets
Property, plant and equipment:
Land and water rights
Buildings and improvements
Wells, reservoirs and dams
Transmission and distribution lines
Equipment and vehicles
Total property, plant and equipment
Less accumulated depreciation
Property, plant and equipment - net
Total assets
1988
$ 893,217
1,527,539
11,274
15,708
156,683
2,604,421
50,816
4,143,883
231,956
37,188
1,212,852
4,014,196
214,005
1987
(3,793)
1,381,132
11,360
152,926
1,541,625
4,093,067 4,052,206
37,348
4,089,554
231,956
37,188
1,289,152
4,068,674
211,994
5,710,197 5,838,964
(2,199,223) (2,126,123)
3,510,974
$ 10,259,278
3,712,841
9,344,020
See accoB^anying notes to financial statements. (Continued)
CITY OF CARLSBAD
Water Utility Fund
Balance Sheets, Continued
June 30, 1988 and 1987
Liabilities 1988 1987
Current liabilities;
Accounts payable
Due to the City of Carlsbad
Accmed wages
Deposits payable
Current portion of revenue bonds payable
Accmed interest
Total current liabilities
$ 1,701,273
88,340
28,227
61,121
157,000
14,131
859,044
76,094
26,097
38,794
150,000
17,283
2,050,092 1,167,312
Long-term liabilities - revenue bonds payable
(net of unanaortized discount)
Total liabilities
Fund equity:
Contributed capital
Retained eamings;
Reserved for debt service
Reserved for construction
Unreserved
Total retained eamings
Total fund equity
Total liabilities and fund equity
322,532
2,372,624
2,425,080
520,437
4,941,137
5,461,574
7,886,654
$ 10,259,278
478,298
1,645,610
2,425,080
911,291
445,851
3,916,188
5,273,330
7,698,410
9,344,0 20
See accoiqjanying notes to financial statements.
CITY OF CARLSBAD
Water Utility Fund
Statements of Operations and Retained Eamings
For the years ended June 30, 1988 and 1987
1988 1987
Operating revenues;
Metered water sales
Other charges for services
Miscellaneous revenue
$ 1,056,722
185,982
16
1,007,568
235,126
458
Total operating revenues
Operating expenses:
Personnel services
Repairs and maintenance
Office expenses
Depreciation and amortization
Insurance
Professional services
Purchased water
Bad debt expense
Total operating expenses
Operating income (loss)
Non-operating revenues (expenses):
Interest income
Interest and fiscal charges
Loss on sale of property
Non-operating income
Net income
Retained eamings, beginning of year
Retained eamings, end of year
1 ,242,720
634,212
422,436
135,939
123,185
7,330
7,099
4,198
126
1 ,334,525
(91,805)
395,099
(29,096)
(85,954)
280,049
188,244
5,273,330
$ 5,461,574
1,243,152
526,336
167,974
91,666
122,146
5,417
8,971
4,191
6,667
933,368
309,784
289,801
(37,299)
252,502
562,286
4,711,044
5,273,330
See accompanying notes to financial statements.
CITY OF CARLSBAD
Water Utility Fund
Statements of Changes in Financial Position
For the years ended June 30, 1988 and 1987
Net increase (decrease) in working capital
(unrestricted)
1988 1987
Sources of working capital (unrestricted);
Operations;
Ne t inc ome
Items not requiring working capital;
Depreciation and amortization
Loss on disposal of property, plant and
equipment
$ 188,244
123,185
85,954
562,286
122,146
Total sources of working capital 397,383 684,432
Uses of working capital;
Acquisition of property, plant and equipment
Current portion and repayment of revenue bonds
payable
Increase in restricted assets
6,038
157,000
54,329
9,044
150,000
3,532,033
Total uses of working capital 217,367 3,691,077
Net increase (decrease) in working capital
(unrestr ic ted) $ 180^^016 (3,006,645)
Net increase (decrease) in elements of working
capital (unrestricted);
Cash and investments
Receivables, net
Accmed interest receivable
Inventory
Accounts payable
Accmed wages
Deposits payable
Current portion of revenue bonds payable
Accmed interest payable
897,010
146,321
15,708
3,757
(854,475)
(2,130)
(22,327)
(7,000)
3,152
(3,505,705)
109,691
(23,649)
17,708
402,869
(3,568)
2,027
(10,000)
3,982
$ 180,016 (3,006,645)
See accompanying notes to financial statements.
CITY OF CARLSBAD
Water Utility Fund
Notes to Financial Statements
June 30, 1988 and 1987
(1 ) Summary of Significant Accounting Policies
The Water Utility Fund (the Fund) is an enterprise fund of the City of
Carlsbad, Califomia (the City), which is used to account for activities
necessary to provide water services to the residents of the City
including, but not limited to, operations, maintenance, financing and
related debt service, billing and collection, and the acquisition of
fixed assets that are utilized in providing these services.
As an enterprise fund, its operations are financed and operated in a manner
similar to a private business enterprise. The intent of the City Council
is that the expenses (including depreciation) of providing goods and
services to the general public on a continuing basis be financed or
recovered primarily through user charges.
The accounting policies of the City with regard to this fund conform to
generally accepted accounting principles as applicable to govemments.
The following is a suimnary of the more significant accounting policies;
(a) Relationship to the City of Carlsbad
The Fund is an integral part of the reporting entity of the City of
Carlsbad. The accounts of the Fund 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 Fund. Only the accounts of the Fund are included
herein; therefore, these financial statements do not purport to
represent the financial position or results of operations of the City
of Carlsbad, Califomia.
(b) Measurement Focus
The Fund is accounted for on an "income determination" or "cost of
services" measurement focus. Accordingly, all assets and liabilities
are included on the balance sheet, and the reported fund equity
provides an indication of the economic net worth of the Fund. The
operating statement for the Fund reports increases (revenues) and
decreases (expenses) in total economic net worth.
(c) Basis of Accounting
The Fund is accounted for using the accmal basis of accounting.
Accordingly, revenues are recognized when they are earned and
expenses are recognized when the related liability is incurred.
(Continued)
CITY OF CARLSBAD
Water Utility Fund
Notes to Financial Statements, Continued
(1 ) Suimnary of Significant Accounting Policies, Continued
(c) Basis of Accounting, Continued
Unbilled water revenue is recognized as eamed when the water is
c on sumed.
(d) Cash and Investments
The Fund participates in the pooled cash and investment fund of the
City of Carlsbad. Pooled investments are stated at cost or amortized
cost. The Fund's equity in the pooled cash is shown on the financial
statements as cash and investments. Interest earned as a result of
the pooling is allocated to the Fund based on its average monthly
cash balances.
Authorized deposits and investments include demand and time deposits,
obligations of the U.S. Treasury, its agencies and instmmentalities,
commercial paper rated A-1 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 insured by 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.
( e) Inventories
Inventories consist of materials and supplies which are stated at
historical cost.
( f) Property, Plant and Equipment
Property, plant and equipment is stated at cost, or if donated, at
estimated fair market value at the date of contribution.
Depreciation is provided over the estimated useful lives of the
assets using the straight-line method.
( Continued)
CITY OF CARLSBAD
Water Utility Fund
Notes to Financial Statements, Continued
(1 ) Suimnary of Significant Accounting Policies, Continued
(f) Property, Plant and Equipment, Continued;
The estimated useful lives of the assets are as follows;
Years
Buildings and improvements 10 - 50
Wells, reservoirs and dams 10 - 100
Transmission and distribution lines 40 - 70
Equipment and vehicles 4-50
(g) Compensated Absences;
Vacation pay is payable to employees at the time used or upon
termination of employment. Sick leave accmed but unused is
cumulative from year to year. The cost of vacation and sick leave is
recorded as a liability when earned.
(h) Reclassifications;
Certain reclassifications have been made to the prior year amounts to
conform with the current year presentation.
(2) Long-Term Liabilities
Revenue bonds payable at June 30, 1988 and 1987 were as follows;
1988 1987
1958 Waterworks Revenue Bonds, principal due
July 1, 1988, interest payable on July 1,
1988 at 4.1% per annum $ 47,000 92,000
1960 Waterworks Revenue Bonds, principal due
in amounts ranging from $15,000 to $65,000
on July 1 of each year through 1990,
interest payable on January 1 and July 1
of each year at rates varying from 3.9%
to 4.3% per annum 140,000 155,000
(Continued)
CITY OF CARLSBAD
Water Utility Fund
Notes to Financial Statements, Continued
(2) Long-Term Liabilities, Continued
19 70 Waterworks Revenue Bonds, principal
due in amounts ranging from $95,000 to
$100,000 on July 1 of each year through
1990, interest payable on January 1
and July 1 of each year at rates varying
from 6.0% to 6.8% per annum 295,000 385,000
Total revenue bonds payable 482,000 632,000
Less unamortized discount (2,468) (3,702)
Less current portion (157,000) (150,000)
Total long-term liabilities $ 322,532 478,298
At June 30, 1988, aggregate maturities of revenue bonds payable were as
follows:
Year Ending
June 30
1989 $ 157,000
1990 160,000
1991 165,000
Total $ 482,000
At June 30, 1988, the City was in compliance with all debt covenants
required by the Waterworks Revenue Bonds.
(3) Pension Plan
The Water Utility Fund employees are included in the City of Carlsbad's
pension plan which is administered by the Califomia Public Employees
Retirement System (PERS). PERS is an agent milt iple-einp loy er public
employee retirement system that acts as a coimnon investment and
administrative agent for participating public entities within the State
of Califomia.
(Continued)
CITY OF CARLSBAD
Water Utility Fund
Notes to Financial Statements, Continued
(3) Pension Plan, Continued
All full-time employees are eligible to participate as menibers of the PERS.
Benefits vest after an employee has been a meniber of the plan for five
years. Employees are eligible to retire after the age of 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
eamings based on the highest thirty-six consecutive months average for
safety employees, and based on the highest twelve consecutive months
average for miscellaneous employees. 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 ranging from 7 to 9 percent of
gross pay. The City is 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 Govemmental Accounting Standards Board
Statement No. 5 are not available for the Water Utility Fund 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.
(4) Transactions with the City of Carlsbad
The Water Utility Fund has borrowed $88,340 from the Sewer fund of the City
of Carlsbad and has lent $11,274 to the same fund.
The Water Utility Fund pays an intemal service fund of the City for
liability and workmen's compensation insurance. The City is self-insured
for these claims. The premiums are determined annually based on the
insured funds' claims experience. The premium was $7,330 and $5,417 for
the Fund for the fiscal years ended June 30, 1988 and 1987, respectively.