HomeMy Public PortalAbout2007 AuditBERBERICHTRAHAN&fCO.,P.A .
Certifie d Public Accountant s
CITY OF PARKVILLE, MISSOURI
BASIC FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2007
CITY OF PARKVILLE, MISSOURI
BASIC FINANCIAL STATEMENTS
Year Ended December 31, 2007
TABLE OF CONTENTS
Independent Auditors' Report
Management's Discussion and Analysis
Basic Financial Statements:
Government-Wide Financial Statements:
Statement of Net Assets
Statement of Activities
Fund Financial Statements:
Balance Sheet - Governmental Funds
Reconciliation of the Balance Sheet of the Governmental Funds to the
Statement of Net Assets
Statement of Revenues, Expenditures and Changes in Fund
Balances - Governmental Funds
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances of Governmental Funds to the
Statement of Activities
Statement of Revenues, Expenditures and Changes in Fund
Balances - Budget and Actual - General Fund
Statement of Net Assets - Proprietary Funds
Statement of Revenues, Expenses and Changes in Fund Net
Assets - Proprietary Funds
Statement of Cash Flows - Proprietary Funds
Notes to Basic Financial Statements
Required Supplementary Information
CITY OF PARKVILLE, MISSOURI
BASIC FINANCIAL STATEMENTS
Year Ended December 31, 2007
TABLE OF CONTENTS
(Continued)
Other Supplementary Information:
Combining and Individual Fund Statements and Schedules:
Combining Balance Sheet - Nonmajor Governmental Funds
Combining Statement of Revenues, Expenditures and Changes in Fund
Balances -Nonmajor Governmental Funds
Report on Internal Control Over Financial Reporting and on Compliance and
Other Matters Based on an Audit of Financial Statements Performed in
Accordance with Government Auditing Standards
Schedule of Findings and Responses
Schedule of Prior Year Findings
BTMo .
BERBER!CHTRAHANyCO.,P.A .
Certified Public Accountant s
INDEPENDENT AUDITORS' REPORT
The Honorable Mayor and Board of Aldermen
City ofParkville, Missouri
We have audited the accompanying financial statements of the governmental activities, the business-type
activities, each major fund, and the aggregate remaining fund information of the City of Parkville,
Missouri (the City) a s of and for the year ended December 31, 2007, which collectively comprise the
City's basic financial statements a s listed in the table of contents. These financial statements ar e the
responsibility of the City's management. Our responsibility is to expres s opinions on thes e financial
statements base d on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United State s of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements ar e 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, a s well a s evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis for our opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects , the
respective financial position of the governmental activities, the business-type activities, each major fund,
and the aggregate remaining fund information of the City ofParkville, Missouri, a s of December 31,
2007. and the respective changes in financial position and cas h flows, where applicable, thereof and the
respective budgetary comparison for the general fund for the year then ended in conformity with
accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued a report dated December 18,
2008. on our consideration of the City's internal control over financial reporting and on our tests of its
compliance with certain provisions of laws, regulations, contracts and grant agreements and other
matters. The purpose of that report is to describe the scope of our testing of internal control over
financial reporting and compliance and the results of that testing, and not to provide an opinion on the
internal control over financial reporting or on compliance. That report is an integral part of an audit
performed in accordance with Government Auditing Standards and should be considered in assessin g the
results of our audit.
RSMMcGladrey Network
A n liilependBitl y Owne d Manta -
The Management's Discussion and Analysis and the Required Supplementary Information on page s 3
through 1 3 and 54 through 55, respectively, ar e not a required part of the basic financial statements but
ar e supplementary information required by accounting principles generally accepted in the United State s
of America. We have applied certain limited procedures, which consisted principally of inquiries of
management regarding the methods of measurement and presentation of the required supplementary
information. However, we did not audit the information and expres s no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City's basic financial statements. The accompanying introductory section and
supplementary section ar e presented for purposes of additional analysis and ar e not a required part of the
basic financial statements. The supplementary information ha s been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material
respects, in relation to the basic financial statements taken a s a whole.
December 18,2008
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Management's Discussion and Analysis
As management of the City ofParkville, we offer readers of the City ofParkville's fmancial statements
this narrative overview and analysis of the financial activities of the City of Parkville for the fiscal year
ended December 31, 2007. We encourage readers to consider the information presented here in
conjunction with additional information that we have furnished in our letter oftransmittal.
Financial Highlights
• The assets of the City of Parkville exceeded its liabilities a t the close of the most recent fiscal
year by $4,798,691 (net assets). Of this amount, $1,189,604 (unrestricted net assets) may be
used to meet the government's ongoing obligations to citizens and creditors.
• The government's total net assets increased by $1,776,753. The net assets increase is found in
governmental activities where there is a positive $1,516,555 net change, and a positive $260,198
change in net assets reported in business-type activities including Sewer service and Grinder
pump operations.
• As of the close of the current fiscal year, the City of Parkville's governmental funds reported
combined ending fund balances of $8,368,207, an increase of $3,396,303 in comparison with the
prior year. Nearly 98% of the total fund balances, $8,164,219, is available for spending at the
government's discretion (unreserved, undesignated fund balance).
• At the end of the current fiscal year, unreserved, undesignated fund balance for the general fund
was $653,914, or approximately 21% of total general fund expenditures.
• The City of Parkville's total debt, including compensated absences, increased by $5,666,940,
(42.6%) during the fiscal year. The key factor was the initiation of the Neighborhood
Improvement District projects. Brink Meyer Road and Rush Creek, construction loan limited
obligation temporary notes.
Overview of the Financial Statements
This discussion and analysis are intended to serve a s an introduction to the City of Parkville's basic
financial statements. The City ofParkville's basic financial statements comprise three components: 1)
government-wide financial statements, 2) fund financial statements, and 3) notes to the financial
statements. This report also contains other supplementary information in addition to the basic financial
statements themselves.
Government-wide financial statements. The government-wide financial statements are designed to
provide readers with a broad overview of the City of Parkville's finances, in a manner similar to a
private-sector business.
The statement of net assets presents information on all of the City ofParkville's assets and liabilities,
with the difference between the two reported a s net assets. Over time, increases or decreases in net
assets may serve a s a useful indicator of whether the financial position of the City of Parkville is
improving or deteriorating.
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The statement of activities presents information showing how the government's net assets changed
during the most recent fiscal year. All changes in net assets ar e reported a s soon a s the underlying event
giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and
expense s are reported in this statement for some items that will only result in cash flows in future fiscal
periods (e.g., uncollected taxes and earned but unused vacation leave).
Both of the government-wide financial statements distinguish functions of the City of Parkville that are
principally supported by taxes and intergovernmental revenues (governmental activities) from other
functions that are intended to recover all or a significant portion of their costs through user fees and
charges {business-type activities). The governmental activities of the City of Parkville include general
government, public safety, streets, economic development, and culture and recreation. The business-
type activities of the City of Parkville include Sewer service and Grinder pump service.
The government-wide financial statements can be found on pages 14-15 of this report.
Fund financial statements. A . fund is a grouping of related accounts that is used to maintain control
over resources that have been segregated for specific activities or objectives. The City of Parkville, like
other state and local governments, use s fund accounting to ensure and demonstrate compliance with
finance-related legal requirements. All of the funds of the City of Parkville can be divided into two
categories: governmental funds and proprietary funds.
Governmental funds. Governmental funds are used to account for essentially the same functions
reported a s governmental activities in the government-wide financial statements. However, unlike the
government-wide financial statements, governmental fund financial statements focus on near-term
inflows and outflows of spendable resources, a s well a s on balances of spendable resources available a t
the end of the fiscal year. Such information may be useful in evaluating a government's near-term
financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government-wide financial statements. By
doing so, readers may better understand the long-term impact of the government's near-term financing
decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues,
expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison
between governmental funds and governmental activities.
The City of Parkville maintains three individual major governmental funds. Information is presented
separately in the governmental fund balance sheet and in the governmental fund statement of revenues,
expenditures, and changes in fund balances for the general fund, capital projects fund, and debt service
fund, each of which are considered to be major funds. Data from the other eleven governmental funds
are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor
governmental funds is provided in the form of combining statements elsewhere in this report.
The City of Parkville adopts an annual appropriated budget for its general fund. A budgetary
comparison statement has been provided for the general fund to demonstrate compliance with this
budget.
The basic governmental fund financial statements can be found on pages 16-21 of this report.
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Proprietary funds. The City ofParkville maintains one type of proprietary fund. Enterprise funds ar e
used to report the same functions presented a s business-type activities in the government-wide financial
statements. The City ofParkville used enterprise funds to account for its Sewer Service and for Grinder
Pump operations.
Proprietary funds provide the same type of information a s the government-wide financial statements,
only in more detail. The proprietary fund financial statements provide separat e information for the
Sewer Service and for the Grinder Pump operation, with the former considered to be a major fund and
the latter a nonmajor fund of the City ofParkville.
The basic proprietary fund financial statements can be found on page s 22-25 of this report.
Notes to the financial statements. The notes provide additional information that is essential to a full
understanding of the data provided in the government-wide and fund financial statements. The notes to
the financial statements can be found on pages 26-53 of this report.
Other Information, m addition to the basic financial statements and accompanying notes, this report
presents certain required supplemental information concerning the City of Parkville's infrastructure
reporting. As recommended by American Public Works Association, the modified approach for
infrastructure was developed a s a compromise to provide an alternative to depreciating eligible
infrastructure assets. The basic premise behind the modified approach is that no depreciation is incurred
if infrastructure assets are being maintained or preserved at a certain level. The City of Parkville
provides an up-to-date inventory of eligible assets by location, type and physical parameters and
performs replicable condition assessments , triennially. Results are summarized using a measurement
scale, seen on pages 54-55 of this report. Estimated amounts needed to maintain and preserve these
assets at the City's established service level are budgeted for annually.
The combining and individual fund statements referred to earlier in connection with nonmajor
governmental funds are presented on page s 56-59 of this report.
Government-wide Financial Analysis
As noted earlier, net assets may serve over time a s a useful indicator of a government's financial
position. In the case of the City ofParkville, assets exceeded liabilities by $4,798,691 at the close of the
most recent fiscal year.
The City of Parkville use s capital assets to provide services to citizens; consequently, thes e assets are
not available for future spending. Although the City of Parkville's investment in its capital assets is
reported net of related debt, it should be noted that the resources needed to repay this debt must be
provided from other sources, since the capital assets themselves cannot be used to liquidate these
liabilities.
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City of Parkville's Net Assets
Governmental activities___Business-type activities________Total_______
2007 2006 2007 2006 2007 2006
Current and
other assets $10,243,456 $7,568,976 $791,269 $485,733 $11,034,725 $8,054,709
Capital assets 9,708,845 5,717.663 4,823.640 5.032,617 14.532.485 10.750,280
Total Assets 19,952.301 13.286.639 5.614.909 5.518.350 25,567,210 18.804.989
Long-term
liabilities
outstanding 15,951,285 10,088,077 2,972,411 3,162,304 18,923,696 13,250,381
Other liabilities 1.785.728 2.499.829 59.095 32.841 1,844.823 2.532.670
Total
Liabilities 17.737.013 12.587.906 3,031,506 3.195.145 20,768.519 15.783.051
Net assets:
invested in
capital assets,
net of related
debt (3,498,492) (1,483,029) 2,015,940 2,097,133 (1,482,552) 614,104
Restricted 5,091,639 1,754,946 0 0 5,091,639 1,754,946
Unrestricted 622.141 426.816 567,463 226,072 1.189.604 652.888
Total net
assets $2.215.288 $698.733 $2.583.403 $2.323.205 $4.798.691 $3.021.93^
A portion ($5,091,639) of the City of Parkville's net assets represents resources that ar e subject to
external restrictions on how they may be used. An additional portion of the City of Parkville's net assets
(approximately 25 percent) reflect the balance ofunrestricted net asset s ($1,189,604) that may be used
to meet the government's ongoing obligations to citizens and creditors.
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Revenues:
Program revenues:
Charges for services
Operating grants and
contributions
Capital grants and
contributions
General revenues:
Property taxes
Transportation taxes
Other taxes
Franchise taxes
Sales taxes
Licenses and permits
Other
Transfers
Sale of Capital Assets
Unrestricted invest-
ment earnings
Total revenues
Expenses:
General government
Public safety
Municipal Court
Public works
Economic
development
Culture and recreation
Interest on long-term
debt
Sewer
Grinder pump
Total expenses
Change in net assets
Net assets -1/1/07
Prior period
adjustments
Net assets - 1/1/06
(restated)
Net assets - 12/31/07
c
Government
2007
$514,602
114,304
1,433,647
1,112,720
5,930
666,839
1,539,184
(227,640)
347,361
309.615
5.816,562
1,050,407
1,036,955
143,544
1,299,433
283,184
47,579
438,905
0
4.300.007
1,516,555
698,733
0
0
$2,215,288
"ity of ParkviIIe Changes in Net Assets
:al activities Business-type activities
2006 2007 2006
$574,719 $970,778 $1,028,410
32,576 0 0
805,367 0 0
1,030,254
4,101
496,479
1,511,586
227,640
193.820 295 93.140
4,648.902 1,198,713 1,121,550
843,143
976,696
125,744
1,331,631
301,758
56,989
445,167
888,542 987,158
0 49,973 274.367
4.081.128 938,515 1,261.525
567,774 260,198 (139,975)
19,852,455 2,323,205 598,141
fl9.721.496) 0 $1.865.039
130.959 0 $2,463,180
$698,733 $2,583,403 $2.323.205
Tota
2007
$1,485,380
114,304
1,433,647
1,112,720
5,930
666,839
1,539,184
0
347,361
309.910
7,015,275
1,050,407
1,036,955
143,544
1,299,433
283,184
47,579
438,905
888,542
49.973
5.238.522
1,776,753
3,021,938
0
0
$4,798,691
1
2
$1,603,
32,
805,
1,030,
4,
496,
1,511,
286.
5,770,
843,
976,
125,
1,331,
301,
56,
445,
987,
274.
5,342,
427.
20,450,
(17,856,4
2,594,
$3.021,
;006
,129
,576
,367
,25 4
,101
,47 9
586
960
452
143
696
744
631
758
989
167
15 8
367
653
799
596
•57)
139
938
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Governmental activities. Governmental activities increased the City of Parkville's net assets by
$1,516,555, and business-type activities increased by $260,198, affecting a total net gain of $1,776,753.
Key elements of this increase ar e a s follows:
a In the Change in Net Assets table, property taxes report an increase of $82,466 in the current
fiscal year, about 8%. Franchise taxes were up $170,360 due to the releas e of protested funds
held in escrow. Sale s taxes increased slightly, $27,598, les s than 2%.
a Another main source of increase in net assets is in unrestricted investment earnings. An increase
of $115,795 come s predominately from Neighborhood Improvement District construction funds
including Brink Meyers Road and Brush Creek projects.
Operating grants for governmental activities increased by $81,728. The new grant awards
included $59,449.80 FEMA assistanc e for the May, 2007 flood, a $49,277.00 grant from Platte
County for Rush Creek, and $2,323 for Police Training.
a Capital grants and contributions include the River Park bond, and Parkville Special Road District
contributions, hi 2007 they were $333,599 and $100,047 respectively.
For the most part, increases in expenses , 5%, closely paralleled inflation and growth in the demand for
services.
a
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Revenues by Source - Governmental Activities
Unrestricted
investment earnings
5%
Sale s taxeqSB i
27%
Franchise taxg^
12% '"'asw
Charges for services
9%
Operatin g grants and
contributions
Mteas 2%
Capital grants and
contributions
25%
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Business-type activities. The change in net assets for business-type activities increased the City of
Parkville's net assets by $260,198. The net assets for business-type activities in the current fiscal year
are $2,583,403, approximately 54 percent of the total primary government activities.
Expenses and Program Revenues -
Business-type Activities
I D Expenses
• Program revenue s
Sewe r Grinde r pum p
Revenues by Source - Business-type Activities
E Sewe r charges
• Grinde r pum p fees
D Other charges
Financial Analysis of the Government's Funds
As noted earlier, the City ofParkville use s fund accounting to ensure and demonstrate compliance with
finance-related legal requirements.
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Governmental funds. The focus of the City ofParkville's governmental funds is to provide information
on near-term inflows, outflows, and balances of spendable resources. Such information is useful in
assessing the City of Parkville's financing requirements, hi particular, unreserved fund balance may
serve a s a useful measure of a government's net resources available for spending at the end of the fiscal
year.
As mentioned earlier in this analysis, a t the end of the current fiscal year, the City of Parkville's
governmental funds reported combined ending fund balances of $8,368,207. Of that, $31,829 is
reserved or designated to indicate that it is not available for new spending because it has already been
committed to prepaid items in general fund ($31,170 employee health insurances) and capital projects
fund ($659 salt & sand, and other items ordered in December, 2007 and paid in January, 2008).
The general fund is the chief operating fund of the City of Parkville. At the end of the current fiscal
year, unreserved, undesignated fund balance of the general fund was $653,914, while total fund balance
reached $685,084. As a measure of the general fund's liquidity, it may be useful to compare both
unreserved fund balance and total fund balance to total fund expenditures. Unreserved, undesignated
fund balance represents 21.3 percent of total general fund expenditures, while total fund balance
represents 22.3 percent of that same amount.
The fund balance of the City ofParkville's general fund increased by $189,147 during the current fiscal
year. Overall, expenditures and revenues reflect the City's conservative approach in establishing a
reliable budget. Although the sale s tax revenue was $77,191 less than budgeted and Court revenues
were $51,231 less, all other revenue sources exceeded the budget projections with an overall variance of
positive $141,433. Further, expenditures were $47,714 less than expected.
The debt service fund has a total fund balance of $172,159, all of which is reserved for the payment of
debt service. A net decrease in the fund balance during the current year of $12,195 was due to the total
revenues (taxes, special assessments, investment earnings, and transfers in) of $828,883 , and total
expenditures (principal, interest, and fees) of $841,078. This reduction was budgeted with the
application of existing debt service funds toward bond payments.
The capital projects fund has a total fund balance of $6,311,155. The prepaid amount of $659 included
in this total is from a prior year purchase in the street department.
Proprietary funds. The City of Parkville's proprietary funds provide the same type of information
found in the government-wide financial statements, but in more detail.
Unrestricted net assets of the Sewer Service at the end of the year total $567,463. The Grinder pump
repair fund is in the process of being made inactive by means of transferring the related assets and
obligations to the Riss Lake Home Owners Association. The Grinder pump fund balance, $34,792,
comes from machinery and equipment valued at $49,703 less $14,911 depreciation. Other factors
concerning the finances of these two funds have already been addressed in the discussion of the City of
Parkville's business-type activities.
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General Fund Budgetary Highlights
There were no amendments to the general fund budget for the current fiscal year. Revenues were
slightly more than four percent above projected figures and expenditures were one and one-half percent
below expected amounts.
General fund revenues were $141,433 more than projected. Contributing factors include an increase in
property taxes of $17,023 due to new homes construction and $140,839 increase in utilities franchise
fees that includes the release of portions of accumulated revenues held in escrow pending litigation.
Revenues that fell below budget projections include sale s taxes a t $77,191 less than expected which is
indicative of the economy a s a whole. Licenses and permit fees were also down due to a decline in new
construction. Another are a of note, fines and fees, were $51,231 les s than budgeted and that decrease is
attributed to a shortage of patrol personnel in the Police Department. Intergovernmental revenues show
the greatest increase, $61,773 and is attributed to the FEMA and police training grants mentioned earlier
in this report.
General fund expense s were $47,714 les s than projected. The largest portion of costs over budget
occurred in professional fees , legal and engineering, incurred by administrative needs. Construction of a
second nature sanctuary, Sullivan, also resulted in expenditures greater than budgeted. Lastly, vehicle
ga s prices soared across the nation and patrol car s and street department vehicles and equipment
gasoline expenses exceeded that part of the budget. All other departments effectively kept overall
expenditures under budget with the greater savings in Community Development at 11.6% under, Court
at 8.7%, Police Department at 5%, and Street Department at 4%.
Capital Asset and Debt Administration
Capital assets. The City ofParkville's investment in capital assets for its governmental and business-
type activities a s of December 31, 2007, totals $14,532,485.
City ofParkville's Capital Assets
(net of depreciation)
Buildings and improvements
Machinery and equipment
Infrastructure
Land
Construction in process
Infrastructure not being depreciated
Total
Governmental
activities
2007
$3,871,284
472,769
42,111
806,486
1,105,892
3,410,303
$9.708,845
Business-
type
activities
2007
$3,292,846
61,630
1,272,335
59,975
136,854
0
$4,823,640
Total
2007
$7,164,130
534,399
1,314,446
866,461
1,242,746
3,410,303
$14,532,485
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During 2006, the City entered into a leas e agreement with First Bank of Missouri to construct a new
City Hall. The construction started in the fall of 2006. initial expenditures for the City during 2006
were $1,749,303, including $ 250,000 for land. Construction costs during 2007 were $2,035,562. Total
project costs were estimated to be $3,570,000 and actual costs totaled $3,784,865.
Additional capital projects included $213,183 for stree t asphalt overlay, and $34,814 for curb and
sidewalk repairs.
Additional information on the City ofParkville's capital assets ca n b e found in note 5, page 41 of this
report.
Long-term debt. At the end of the current fiscal year, the City of Parkville had total debt outstanding
of$16,107,066.
Cit y o f Parkville's Outstanding Debt
General Obligatio n an d Revenue Bond s
Governmental activities____Business-typ e activities_______Total_____
_____2007_____2006____2007____2006_____2007_____2006
General obligatio n bonds $ 3,374,446 $ 3,665,000 $ 3,374,446 $ 3,665,000
Accreted interes t payable 30,554 65,000 30,554 65,000
Revenu e bond s $ 2,640,000 $ 2,815,00 0 2,640,000 2,815,000
NI D Limite d Obligatio n Temp Note s 6,275,000 6,275,000
Certificate s o f Participatio n 6,330,000 6,405,000 6,330,000 6,405,000
Compensated Absences 62,943 69,12 1 2,97 3 2,52 1 65,91 6 71,64 2
Capita l leases/lease-purchase 34,123____53,35 3 213,582 221,686 247,705 275,039
Total $ 16,107,06 6 $ 10,257,47 4 $ 2,856,555 $ 3,039,207 $ 18,963,62 1 $ 13,296,68 1
The City ofParkville's total debt increased by $5,666,940 (42.6 percent) during the current fiscal year .
Economic Factors and Next Year's Budgets and Rates
For 2008, the City of Parkville is expecting Property Tax revenue to increase about 6.2%. This
represent s normal growth for the City of Parkville. Building permits ar e anticipated to remain constant a t
about $160,000. The City is expecting Franchise fees to increase about 18 % over 2007 budget due to
telecommunications tax being collected. Before 2007 telecommunications companies were not paying
the 5% fee on cell phones usage . The City expects Sale s Tax to remain constant over 2007. Over all City
of Parkville is expecting normal growth.
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CITY OF PARKVILLE, MISSOURI
STATEMENT OF NET ASSETS
December 31,2007
Assets:
Cash and cash equivalents
Receivables, net of allowance foruncollectibles:
Taxes
Accounts
Other
Restricted cash and investments
Deferred charges
Prepaid items
Capital assets not being depreciated:
Land
Construction in process
Infrastructure
Capital assets , net of accumulated depreciation:
Buildings and improvements
Machinery and equipment
Infrastructure
Total assets
Liabilities:
Accounts payable and other current liabilities
Accrued interest payable
Customer deposits
Unearned revenue
Noncurrent liabilities:
Due within one year
Due in more than one year
Total liabilities
Net assets:
Invested in capital assets, net of related debt
Restricted for:
Debt service
Capital projects
Other purposes
Unrestricted
Total net assets
Governmental Business-type
Activities Activities Total
$ 1,541,978 $ 365,716 $ 1,907,694
1,654,160 - 1,654,160
34,097 121,963 156,060
191 - 191
6,748,605 175,223 6,923,828
232,596 128,047 360,643
31,829 320 32,149
806,486 59,975 866,461
1,105,892 136,854 1,242,746
3,410,303 - 3,410,303
3,871,284 3,292,846 7,164,130
472,769 61,630 534,399
42,111 1,272,335 1,314,446
19,952,301
320,609
143,075
-
1,322,044
383,930
15,567,355
17,737,013
5,614,909
40,336
5,274
13,485
-
203,088
2,769,323
3,031,506
25,567,210
360,945
148,349
13,485
1,322,044
587,018
18,336,678
20,768,519
(3,498,492) 2,015,940 (1,482,552)
29,084 - 29,084
3,862,746 - 3,862,746
1,199,809 - 1,199,809
622,141 567,463 1,189,604
$ 2,215,288 $ 2,583,403 $ 4,798,691
See accompanying notes to basic financial statements.
-14-
CITY OF PARKVILLE, MISSOURI
STATEMENT OF ACTIVITIES
Year Ended December 31, 2007
Functions/Programs
Primary government
Governmental activities
General government
Public safety - police
Public safety - court
Public works
Culture and recreation
Economic development
Interest on long-term debt
Total governmental activities
Business-type activities
Sewer
Grinder pump
Total business-type activities
Total government
General revenue s
Unrestricted investment earnings
Gain on sale of capital assets
Total general revenues 3,754,009
Net assets, beginning of year
Net assets, end of year
$
$
Char
Expenses Se i
1,050,407 $
1,036,955
143,544
1,299,433
47,579
283,184
438,905
4,300,007
888,542
49,973
938,515
5,238,522 $ 1
Property tax
Franchise tax
Sales tax
Other taxes
Transfers
Change in net assets
ges for
rvices
299,401
3,210
195,186
(1,299,433) - (1,299,433)
16,805
-
(438,905)
514,602
943,258
27,520
970,778
,485,380
(227,640)
4,254
54,716
(22,453)
Progra
C
G
Co
$
$
.m Revenues
)perating
Grants and
ntiibutions
110,050
-
-
-
114,304
-
114,304
(
C
$
$
Capital
3rants and G
ontnbutions
1,433,647 $
(1,029,491) - (1,029,491)
-
-
.-
1,433,647
-
1,433,647
$
N
overnmental
Activities
792,691
51,642
(30,774)
(283,184)
(2,237,454)
-
(2,237,454)
1,112,720
666,839
1,539,184
5,930
309,615
347,361
1,516,555
698,733
2,215,288
et (Exp
Chang
BL
$
(2,237,454)
$
ense ) Revenue;
:e s in Net Asset;
ismess-Type
Activities
$ 792,691
-
-
-
32,263
32,263
-
-
-
-
295
-
227,640
227,935
260,198
2,323,205
2,583,403
and
3
Total
51,642
(30,774)
(283,184)
(438,905)
54,716
(22,453)
32,263
(2,205,191)
1,1)2,720
666,839
1,539,184
5,930
309,910
347,361
-
3,981,944
1,776,753
3,021,938
$ 4,798,691
See accompanying notes to basic financial statements
CITY OF PARKVILLE, MISSOURI
BALANCE SHEET
GOVERNMENTAL FUNDS
Decembe r 31,2007
Assets:
Cas h and cas h equivalents
Receivables (net of allowance
for uncollectibles)'
Taxes
Accounts
Other
Restricted cas h and investments
Prepaid items
Total assets
Liabilities and fund balances :
Liabilities:
Accounts payable
Accrued payroll liabilities
Deferred revenue
Total liabilities
Fund balances:
Reserved for:
Prepaid items
Unreserved, reported in:
General fund
Special revenue funds
Capital projects funds
Permanent fund
Debt service fund
Total fund balance s
Total liabilities and fund balance s
See accompanying notes to basi c financial statements .
General
$ 389,405
1,136,155
3,988
-
6,217,603
31,170
$ 1,560,718
$ 66,945
25,645
783,044
875,634
31,170
653,914
684,958
-
-
172,159
685,084
$ 1,560.718
Capital
Projects
$ 253,892
518,005
30,109
-
659
$ 6,502,263
$ 191,10 8
-
539,000
191,10 8
659
-
6,310,496
-
6,311,155
$ 6,502,263
Other
Governmental
Debt Service Funds
$ 177,003 $ 721,678
-
191
16,151 514,851
-
$ 711,159 $ 1,236,720
S - $ 36,911
-
539,000 36,911
-
6,310,496
514,851
172,159 1,199,80 9
$ 711,159 $ 1,236,720
Total
Governmental
Funds
$ 1,541,978
1,654,160
34,097
191
6,748,605
31,829
$ 10,010,860
$ 294,964
25,645
1,322,044
1,642,653
31,829
653,914
684,958
514,851
172,159
8,368,207
$ 10,010,860
CITY OF PARKVILLE, MISSOURI
RECONCILIATION OF THE BALANCE SHEET OF THE GOVERNMENTAL
FUNDS TO THE STATEMENT OF NET ASSETS
December 31,2007
Total fund balance in Governmental Fund Balance Sheet $ 8,368,207
Amounts reported for governmental activities in the statement of net assets are
different because:
Capital assets used in governmental activities are not financial resources
and therefore are not reported in the funds. 9,708,845
Long-term liabilities, including bonds payable, are not due and payable in
the current period and therefore are not reported in the funds. (15,861,764)
Net assets of governmental activities $ 2,215,288
See accompanying notes to basic financial statements.
-17-
CITY OF PARKVILLE, MISSOURI
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
Year Ended December 31, 2007
Revenues:
Taxes
Licenses and permits
Intergovernmental
Charges for services
Fines and fees
Special assessments
Investment earnings
Miscellaneous
Total revenue s
General
2,956,671
219,819
61,773
25,816
191,469
26,588
38,997
3,521,133
Expenditures:
Current:
General government 648,189
Public safety - police 964,163
Public safet y - court 143,50 5
Public works 975,997
Economic development 281.183
Debt service:
Principal
Interest
Bond issuance cost s
Other
Capital outlay _______56,892
Total expenditures ______3,069,929
Excess (deficiency) of revenues over (under)
expenditures S_____451,204
Capital
Projects Debt Service
Other
Governmental
Funds
Total
Governmental
Funds
118,875 S
48,277
100,047
201,977
26,463
243,197
495,639
128,044
4,243,816
4,371,860
(3,876,221)
333,600
48,068
624,865
365,553
471,989
3,536
841,078
32,981
22,222
55,203
117,802
55,096
2,738
49,704
225,340
(216,213)(170,137)
3,318,743
219,819
110,050
25,816
191,469
433,647
309,614
87,682
4,696,840
765,991
964,163
143,505
975,997
281,183
420,649
474,727
128,044
3,536
4,350,412
8,508,207
(3,811,367)
(Continued)
CITY OF PARKVILLE, MISSOURI
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
(Continued)
Year Ended December 31, 2007
Other financing sources (uses):
Transfers in
Transfers out
Capital lease s
Sale of capital assets
Bonds issue d
Total other financing sources (uses)
Net change in fund balance s
Fund balances, beginning of year
Fund balances, end of year
General
$
(1.386,501)
1,124,444
(262,057)
189,147
495,937
S 685,084
Capital
Projects
S 726,602
(204,018)
6,275,000
6,797,584
2,921,363
3,389,792
$ 6,311,155
Debt Service
$
$
204,018
204,018
(12,195)
184,354
172,159
Other
Governmental
Funds
S 432,259
35,86 6
468,125
297,988
901,821
S 1,199,809
Total
Governmental
Funds
$
$
1,362,879
(1,590,519)
35,866
1,124,444
6,275,000
7,207,670
3,396,303
4,971,904
8,368,207
See accompanying notes to basic financial statements .
CITY OF PARKVILLE, MISSOURI
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
Year Ended December 31, 2007
Amounts reported for governmental activities in the statement of activities
ar e different because :
Net change in fund balances - total governmental funds $ 3,396,303
Governmental funds report capital outlays a s expenditures. However, in
thestatement of activities the cost of those assets is allocated over their
estimated useful lives and reported a s depreciation expense . 3,768,264
Revenues in the statement of activities that do not provide current financial
resources ar e not reported a s revenues in the funds. 1,000,000
The net effect of various miscellaneous transactions involving capital assets
(i.e., sales, trade-ins, and donations) is to decreas e net assets. (777,083)
The issuance of long-term debt (e.g., bonds, leases ) provides current financial
resources to governmental funds, while the repayment of the principal of long-
term debt consumes the current financial resource s of governmental funds.
Neither transaction, however, ha s any effect on net assets. Also,
governmental funds report the effect of issuance costs, premiums, discounts
and similar items when debt is first issued, whereas thes e amounts ar e
deferred and amortized in the statement of activities. This amount is the net
effect of thes e differences in the treatment of long-term debt and related items. (5,890,216)
Some expense s reported in the statement of activities do not require the us e of
current financial resource s and, therefore, ar e not reported a s expenditures in
governmental funds.19,287
Change in net assets of governmental activities $ 1,516,555
See accompanying note s to basic financial statements.
-20-
CITY OF PARKVILLE, MISSOURI
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN
FUND BALANCES - BUDGET AND ACTUAL
Year Ended December 31, 2007
Revenues :
Taxes:
Property
Franchise
Sale s
Intergovernmental
Licenses and permits
Charges for services
Fines and fees
Investment income
Miscellaneous
Total revenue s
Expenditures:
Administrative
Police
Court
Public works
Community development
Street
Parks
Neighborhood development
Nature sanctuary
Channel 2/website
Contingency
Total expenditures
Excess of revenue s over expenditures
Other financing sources (uses):
Transfer s out
Sale of capital assets
Total other financing sources (uses )
Net chang e in fund balance s
Fund balances , beginning of yea r
Fund balances , end of yea r
Original
and Final
Budgeted
Amounts
852,500
526,000
1,497,500
204,000
22,000
242,700
15,000
20,000
3,379,700
593,231
1,032,075
157,444
125,754
318,107
568,392
267,452
11,000
8,600
32,455
3,133
3,117,643
262,057
(262,057)
(262,057)
Actual
Amounts
$ 869,523
666,839
1,420,309
61,773
219,819
25,816
191,469
26,588
38,997
3,521,133
689,175
979,901
143,703
114,30 8
281,183
546,178
262,073
1,939
17,790
28,846
4,833
3,069,929
451,204
(1,386,501)
1,124,444
(262,057)
189,147
495,937
$ 685,084
See accompanying notes to basic financial statements.
-21-
CITY OF PARKVILLE, MISSOURI
STATEMENT OF NET ASSETS
PROPRIETARY FUNDS
December 31,2007
Assets:
Current assets:
Cas h and cash equivalents
Accounts receivable
Restricted cash and investments
Prepaid items
Total current assets
Noncurrent assets:
Deferred charge s
Capital assets:
Land
Buildings and improvements
Machinery and equipment
Construction in progress
Infrastructure
Less accumulated depreciation
Total capital assets, net of accumulated depreciation
Total noncurrent assets
Total assets
Liabilities:
Current liabilities:
Accounts payable and other current liabilities
Accrued interest payable
Accrued compensated absences
Customer deposit s payable
Current portion of revenu e bond s payable
Current portion of leases payable
Total current liabilities
Noncurrent liabilities:
Revenue bond s payable, net
Lease s payable
Total noncurrent liabilities
Total liabilities
Net assets:
Invested in capital assets, net of related debt
Unrestricted
Total net assets
Major Fund Non-Major Fund
Sewer Grinder Pump
Service Repair
$ 365,716 S
121,96 3
175,22 3
320
663,222
128,047
59,975
4,767,271
194,40 6 49,703
136,854
1,847,350
(2,217,008) (14,911)
4,788,848 34,792
4,916,895 34,792
5,580,117 34,792
40,336
5,274
2,973
13,485
192,241
7,874
262,183
2,563,615
205,708
2,769,323
3,031,506
1,981,148 34,792
567,463
$ 2,548,611 $ 34,792
See accompanying notes to basic financial statements.
-22-
CITY OF PARKVILLE, MISSOURI
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS
PROPRIETARY FUNDS
Year Ended December 31, 2007
Operating revenues:
Charges for sales and services:
Sewe r charges
Grinder pump fees
Total operating revenues
Operating expenses :
Costs of sale s and service s
Administration
Depreciation
Total operating expense s
Operating income (loss)
Nonoperating revenues (expenses):
Interest revenue
Interest expens e
Transfers in
Total nonoperating revenues (expenses )
Change in net assets
Total net assets (deficit), beginning of year
Total net assets, end of year
Major Fund
Sewe r
Service
$ 943,258
943,258
466,961
87,736
287,936
842,633
100,625
295
(45,909)
(45,614)
55,011
2,493,600
$ 2,548,611
Non-Major Fund
Grinder Pump
Repair
$
27,520
27,52 0
40,032
9,941
49,973
(22,453)
227,640
227,640
205,187
(170,395)
$ 34,792
Total
$ 943,258
27,520
970,778
466,961
127,768
297,877
892,606
78,172
295
(45,909)
227,640
182,026
260,198
2,323,205
$ 2,583,403
See accompanying notes to basic financial statements.
-23-
CITY OF PARKVILLE, MISSOURI
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
Year Ended December 31, 2007
Cash flows from operating activities:
Receipts from customers
Payments to suppliers
Payments to employees
Interfund reimbursements
Net cash provided by (used in) operating
activities
Cash flows from financing activities:
Noncapital transfers from other funds
Cash flows from capital and related financing activities:
Payments on leases payable
Acquisition and construction of capital assets
Principal paid on capital debt
Interest paid on capital debt
Net cash used in capital and related
financing activities
Cash flows from investing activities:
Interest received
Increase in cash and cash equivalents
Cash, beginning of year
Cash, end of year
Cash consists of:
Cash and cash equivalents
Restricted deposits and investments
Maj or Fund Non-Maj or Fund
Sewer Grinder Pump
Service Repair
$ 930,726 $ 27,520 $
(440,707) (40,032)
(87,284)
215,128 (215,128)
617,863 (227,640)
227,640
S:
(8,104)
(88,900)
(175,000)
(48,091)
(320,095)
295
298,063
242,876
$ 540,939 $ - $
$ 365,716 $ - $
175,223
$ 540,939 $ - $
(Continued)
-24-
Total
958,246
(480,739)
(87,284)
390,223
227,640
(8,104)
(88,900)
(175,000)
(48,091)
(320,095)
295
298,063
242,876
540,939
365,716
175,223
540,939
CITY OF PARKVILLE, MISSOURI
STATEMENT OF CASH FLOWS
(Continued)
PROPRIETARY FUNDS
Year Ended December 31, 2007
Reconciliation of operating income (loss) to net cash
provided by (used in) operating activities:
Operating income (loss)
Adjustments to reconcile operating income (loss)
to net cash provided by (used in) operating
activities:
Depreciation expense
Changes in assets and liabilities:
Accounts receivable
Due from (to) other funds
Accounts payable
Accrued compensated absence s
Net cash provided by (used in) operating activities
Major Fund
Sewer
Service
Non-Major Fund
Grinder Pump
Repair
100,625 $
Total
(22,453) $78,172
287,936
(12,532)
215,128
26,254
452
$ 617,863 $
9,941
(215,128)
(227,640) $
297,877
(12,532)
26,254
452
390,223
See accompanying notes to basic financial statements.
-25-
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS
December 31,2007
1 - Summary of Significant Accounting Policies
Reporting Entity
The City of Parkville, Missouri (the City), is incorporated under the provisions of the State of
Missouri a s a fourth class city, which operates under an elected Mayor/Board of Aldermen form
of government.
Government-Wide and Fund Financial Statements
The government-wide financial statements (i.e., the statement of net assets and the statement of
activities) report information on all of the activities of the government. Governmental activities,
which normally are supported by taxes and intergovernmental revenues, are reported separately
from business-type activities, which rely to a significant extent on fees and charges for support.
The statement of activities demonstrates the degree to which the direct expenses of a given
function or segment are offset by program revenues. Direct expenses are those that are clearly
identifiable with a specific function or segment. Program revenues include 1) charges to
customers or applicants who purchase, use, or directly benefit from goods, services, or privileges
provided by a given function or segment and 2) grants and contributions that are restricted to
meeting the operational or capital requirements of a particular function or segment. Taxes and
other items not properly included among program revenues are reported instead a s general
revenues.
Separate financial statements are provided for governmental funds and proprietary funds. Major
individual governmental funds and the major individual enterprise fund are reported a s separate
columns in the fund financial statements.
Measurement Focus, Basis of Accounting, and Financial Statement Presentation
The government-wide financial statements are reported using the economic resources
measurement focus and the accrual basis of accounting, a s are the proprietary fund financial
statements. Revenues are recorded when earned and expenses are recorded when a liability is
incurred, regardless of the timing of related cash flows. Property taxes are recognized a s
revenues in the year for which they are levied. Grants and similar items are recognized a s
revenue a s soon a s all eligibility requirements imposed by the provider have been met.
-26-
CITY OF PARKVILLE. MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
1 - Summary of Significant Accounting Policies (Continued)
Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued)
Governmental fund financial statement s ar e reported using the current financial resource s
measurement focus and the modified accrual basi s of accounting. Revenues ar e recognized a s
soon a s they ar e both measurable and available. Revenues ar e considered to b e available when
they ar e collectible within the current period or soon enough thereafter to pay liabilities of the
current period. A 90-day availability period is use d for revenue recognition for all governmental
funds revenues except property taxes for which a 60-day availability period is used .
Expenditures generally ar e recorded when a liability is incurred, a s under accrual accounting.
However, debt service expenditures, a s well a s expenditures related to compensated absence s
and claims and judgments, ar e recorded only when payment is due.
In applying the susceptible to accrual concept to intergovernmental revenues, the legal and
contractual requirements of the numerous individual programs ar e use d a s guidance. There are,
however, essentially two types of thes e revenues, hi one, monies must be expended for the
specific purpose or project before any amounts will be paid to the City; therefore, revenues ar e
recognized based upon the expenditures recorded. £1 the other, monies ar e virtually unrestricted
a s to purpose of expenditure and ar e usually revocable only for failure to comply with prescribed
requirements. Thes e resource s ar e reflected a s revenues a t the time of receipt, or earlier if the
susceptible to accrual criteria ar e met.
Property taxes, sale s taxes, franchise taxes, interest associated with the current fiscal period, and
certain state and federal grants and entitlements ar e all considered to be susceptible to accrual
and so have been recognized a s revenues of the current fiscal period. Only the portion of special
assessment s receivable due within the current fiscal period is considered to be susceptible to
accrual a s revenue of the current period. All other revenue items are considered to b e
measurable and available only when cas h is received by the City. While property taxes ar e
shown on the balance shee t a s current assets of the City, they ar e not recognized a s revenue a t
year end because statutory provisions prohibit their us e until the year for which they were raised
and budgeted. Instead, they ar e offset by deferred revenue accounts .
-27-
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
1 - Summary of Significant Accounting Policies (Continued)
Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued)
The City reports the following major governmental funds:
General Fund - This fund is the City's primary operating fund. It accounts for all
financial resources of the general government, except those required to be accounted for
in another fund.
Debt Service - This fund accounts for the accumulation of resources for, and the payment
of, principal and interest on long-term general obligation debt of governmental funds.
Capital Projects - This fund accounts for the financing and acquisition and construction
of various citywide improvements.
The City reports the following major proprietary fund:
Sewer Service - This fund accounts for the provision of waste and sewer services to the
general public. All activities necessar y to provide such services ar e accounted for in this
fund, including administration, operations, maintenance, financing and related debt
service, and billing and collection.
Private-sector standards of accounting and financial reporting issued prior to December 1, 1989 ,
generally ar e followed in both the government-wide and proprietary fund financial statements to
the extent that those standards d o not conflict with or contradict guidance of the Governmental
Accounting Standards Board. Governments als o have the option of following subsequent
private-sector guidance for their business-type activities and enterprise funds, subject to this
sam e limitation. The City ha s elected not to follow subsequent private-sector guidance.
As a general rule the effect of interfund activity has been eliminated from the government-wide
financial statements. Exceptions to this general rule ar e charges between the City's sewer and
grinder pump function and various other functions of the City. Elimination of these charge s
would distort the direct costs and program revenues reported for the various functions concerned.
-28-
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
1 - Summary of Significant Accounting Policies (Continued)
Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued)
Amounts reported a s program revenues include 1) charges to customers or applicants for goods,
services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and
contributions, including special assessments . Internally dedicated resource s ar e reported a s
general revenues rather than a s program revenues. Likewise, general revenues include all taxes.
Proprietary funds distinguish operating revenues and expense s from nonoperating items.
Operating revenues and expense s generally result from providing services and producing and
delivering goods in connection with a proprietary fund's principal ongoing operations. The
principal operating revenues of the sewer fund and the grinder pump fund ar e charges to
customers for sale s and services. Operating expense s for the sewer fund and the grinder pump
fund include the cost of sale s and services, administrative expenses, and depreciation on capital
assets. All revenues and expense s not meeting this definition ar e reported a s nonoperating
revenues and expenses .
When both restricted and unrestricted resources are available for use, it is the City's policy to us e
restricted resource s first, then unrestricted resources a s they ar e needed.
Cash. Cash Equivalents and Investments
Cash and investments of the individual funds ar e combined to form a pool which is managed by
the Finance Department. Each fund's equity in the pool is included in "cash and cas h
equivalents" in the financial statements. Investment earnings, including interest income, ar e
allocated to the funds required to accumulate interest. If a fund is not required to account for its
own earnings by law or regulation, the earnings are allocated to the General Fund.
Missouri state statute s authorize the City, with certain restrictions, to deposit funds in open
accounts and certificates of deposit. Missouri state statute s also require that collateral pledged
must have fair market value equal to 100% of the funds on deposit, les s amounts insured by
federal deposit insurance. Collateral securities must be held by the City or a disinterested third
party and may include U.S. Government and government agency bonds and securities; general
obligation bonds of any of the 50 states ; general obligation bonds of any Missouri county, certain
cities, and special districts; and revenue bonds of certain Missouri agencies. Obligations pledged
to secur e deposits ar e delivered to the banks' joint custody accounts a t the custodial bank.
Written custodial agreements ar e required that provide, among other things, that the collateral be
held separat e from the assets of the custodial bank.
-29-
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
1 - Summary of Significant Accounting Policies (Continued)
Statement of Cash Flows
The City's cash and cash equivalents are considered to be cash on hand, demand deposits, and
short-term investments with original maturities of three months or less from the date of
acquisition.
Receivables and Payables
Activities between funds that are representative of lending/borrowing arrangements outstanding
at the end of the fiscal year are referred to a s "due to/from other funds" (i.e., the current portion
ofinterfund loans). Any residual balances outstanding between the governmental activities and
business-type activities ar e reported in the government-wide financial statements a s "internal
balances."
All trade accounts receivable ar e shown net of an allowance for uncollectibles. Management
records a trade accounts receivable allowance based on percentages of collection estimated from
the aging of accounts receivable. At December 31, 2007, management determined that no
allowance was necessary.
Governmental funds report deferred revenue in connection with receivables for revenues that are
not considered to be available to liquidate liabilities of the current period. Governmental funds
deferred revenue is reported a s follows:
General fund property tax receivable $ 783,044
Debt service fund property tax receivable 539,000
$ 1,322,044
Property Taxes
Property taxes ar e legally restricted for use in financing operations of the ensuing year.
Accordingly, the City defers revenue recognition until the year for which they are to be used.
-30-
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
1 - Summary of Significant Accounting Policies ('Continued')
Property Taxes (Continued')
The City's property taxes ar e levied eac h November 1 based on the assessed value a s of the prior
January 1 for all real property and personal property located within the City. Property taxes ar e
billed immediately following the levy dat e and considered delinquent after December 31
following the levy date . Assessed values are established by county assessors, subject to review
by the county's Board of Equalization.
The City is permitted by Missouri state statute s t o levy taxes up to $ 1.00 per $ 100 of assessed
valuation for general governmental service s other than the payment of principal and interest on
long-term debt and in unlimited amounts for the payment of principal and interest on long-term
debt.
The tax levy per $ 10 0 of assessed valuation which supports the 2007 budget was:
General Fund $ 0.4860
Capital Projects Fund 0.0960
Debt Service Fund 0.0618
$ 0.6438
Taxe s receivable represent property taxes levied for 2007 and prior year s that have not yet been
collected, net of estimated uncollectibles.
Prepaid Items
Certain payments to vendors reflect costs applicable to future accounting periods and ar e
recorded a s prepaid items in both government-wide and fund financial statements.
Restricted Cas h and Investments
The City is statutorily required to maintain customer utility deposits separat e from City assets.
Restricted cas h and investments ar e als o set asid e for debt service payments and for required
debt reserves .
-31-
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
1 - Summary of Significant Accounting Policies (Continued)
Capital Assets
Capital assets, which include property, plant, equipment, infrastructure (e.g., roads, bridges,
sidewalks and similar items) and construction in progress are reported in the applicable
governmental or business-type activities columns in the government-wide financial statements.
As the City is a Phas e III government under Governmental Accounting Standards Board
Statement No. 34 (GASB 34), it has elected to exercise fts option to forego retroactively
reporting governmental infrastructure assets acquired prior to December 31, 2003.
Governmental infrastructure assets on the statement of net assets include only roads, bridges,
sidewalks and similar items acquired subsequent to December 31, 2003.
Capital assets, excluding land, are defined by the City a s assets with a cost of more than $ 2,500
and an estimated useful life of a t least one year. All land purchases are capitalized regardless of
cost. All purchased capital assets are valued at cost where historical records are available and a t
an estimated historical cost where no historical records exist. Donated capital assets are valued
at their estimated fair market value on the date received.
The costs of normal maintenance and repairs that do not add to the value of the asset or
materially extend the life of the asse t are not capitalized.
Major outlays for capital improvements are capitalized a s projects are constructed. Interest
incurred during the construction phase of capital assets of the business-type activities is included
a s part of the capitalized value of the assets constructed. There was no interest capitalized during
the year ended December 31, 2007.
The City defines infrastructure a s the basic physical assets that allow the City to function. The
assets include the street network, storm drainage network, and pedestrian and vehicle bridges and
buildings combined with the site amenities such a s parking and landscaped area s used by the
City in the conduct of its business. Each major infrastructure network can be divided into
subsystems. For example, the street network can be subdivided into pavement, curbs, gutters,
sidewalks, land, medians, etc. These networks and subsystems are not delineated in the basic
financial statements.
-32-
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
1 - Summary of Significant Accounting Policies (Continued')
Capital Assets (Continued)
Governmental street and parking lot assets ar e reported using the modified approach a s defined
in GASB Statement 34 for infrastructure reporting of these assets. When using the modified
approach, only those projects that add efficiency or capacity to street and parking lot assets are
capitalized. Street and parking lot assets ar e not depreciated. Expenditures that preserve those
assets are expensed.
Capital assets are depreciated using the straight-line method over the following estimated useful
lives:
Buildings
Sewer plant and collection system
Machinery and equipment
Infrastructure
20 - 40 years
20-50 years
5-7 years
35 years
Compensated Absences
City policies permit full-time employees to accumulate sick pay benefits and vacation time based
on the number of years of service. Accumulated vacation payable is accrued when incurred in
the government-wide financial statements and proprietary fund statements. In the governmental
fund financial statements, a liability is accrued when it has matured, for example, a s a result of
employee resignations and retirements.
Long-Term Obligations
In the government-wide financial statements, and proprietary fund types in the fund financial
statements, long-term debt and other long-term obligations are reported a s liabilities in the
applicable governmental activities, business-type activities, or proprietary fund type statement of
net assets. Bond premiums and discounts, a s well a s issuance costs, are deferred and amortized
over the life of the bonds using the effective interest method. Bonds payable are reported net of
the applicable bond premium or discount. Bond issuance costs are reported a s deferred charges
and amortized over the term of the related debt.
-33-
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
1 - Summary of Significant Accounting Policies (Continued)
Long-Term Obligations (Continued')
In the fund financial statements, governmental fund types recognize bond premiums and
discounts, a s well a s bond issuance costs, during the current period. The face amount of debt
issued is reported a s another financing source. Premiums received on debt issuances ar e reported
a s other financing source s while discounts on debt issuances ar e reported a s other financing uses .
Issuance costs, whether or not withheld from the actual debt proceeds received, ar e reported a s
debt service expenditures.
Fund Balance
hi the fund financial statements, governmental funds report reservations of fund balance for
amounts that ar e not available for appropriation or ar e legally restricted by outside parties for us e
for specific purposes.
Concentration of Credit Risk
Unsecured credit is extended to customers for sewe r and grinder pump fees. Credit is extended
to citizens for special assessment s levied by the City for capital improvements. Thes e
assessment s ar e secured by loans on the related properties.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities a t the date of the financial statements and the reported amounts of revenues
and expense s during the reporting period. Actual results could differ from those estimates.
-34-
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
1 - Summary of Significant Accounting Policies (Continued)
Pending Governmental Accounting Standards Board Statements
At December 31, 2007, the Governmental Accounting Standards Board (GASB) had issued
several statements not yet implemented by the City. The statements that might impact the City
are a s follows:
GASB Statement No. 45, Accounting and Financial Reporting by Employers for
Postemployment Benefits Other Than Pensions, was issued in June 2004. This statement
establishes standards for the measurement, recognition and display of other postemployment
benefits (OPEB) expense/expenditures and related liabilities (assets), note disclosures, and, if
applicable, required supplementary information in the financial reports of state and local
governmental employers. The term "other postemployment benefits" refers to postemployment
benefits other than pension benefits and includes (a) postemployment healthcare benefits and, (b)
other types of postemployment benefits (i.e., life insurance) if provided separately from a
pension plan. The provisions of this statement are effective for periods beginning after
December 15, 2008.
GASB Statement No. 49, Accounting and Financial Reporting for Pollution Remediation
Obligations, was issued in November 2006. The provisions of this statement are effective for
periods beginning after December 15, 2007. This statement addresse s accounting and financial
reporting standards for pollution (including contamination) remediation obligations, which ar e
obligations to addres s the current or potential detrimental effects of existing pollution by
participating in pollution remediation activities such a s site assessment s and cleanups. The scope
of the document excludes pollution prevention or control obligations with respect to current
operations, and future pollution remediation activities that ar e required upon retirement of an
asset, such a s landfill closure and postclosure care and nuclear power plant decommissioning.
GASB Statement No. 51, Accounting and Financial Reporting for Intangible Assets, was issued
in June 2007. This statement establishes standards for when and whether intangible assets
should be considered capital assets for financial reporting purposes. It requires that all intangible
assets not specifically excluded by its scope provisions be classified a s capital assets.
Accordingly, existing authoritative guidance related to the accounting and financial reporting for
capital assets should be applied to thes e intangible assets, a s applicable. This statement also
provides authoritative guidance that specifically addresse s the nature of these assets. Such
guidance should be applied in addition to the existing authoritative guidance for capital assets.
The provisions of this statement ar e effective for periods beginning after June 15, 2009.
-35 -
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
2 - Reconciliation of Government-Wide and Fund Financial Statements
Explanation of Certain Differences Between the Governmental Fund Balance Shee t and the
Government-Wide Statement of Net Assets
The governmental fund balance shee t includes a reconciliation between fund balance - total
governmental funds and net assets of governmental activities a s reported in the government-wide
statement of net assets. One element of that reconciliation explains that "long-term liabilities,
including bonds payable, are not due and payable in the current period and therefore ar e not
reported in the funds." The details of this $ (15,861,764) difference ar e a s follows:
Bonds payable $ (3,405,000)
Certificates of participation payable (6,330,000)
Neighborhood Improvement District Limited General Obligation Temporary Notes (6,275,000)
Capital lease s payable (34,123)
Accrued interest payable (143,075)
Compensated absence s (62,943)
Issuance discount 52,848
Costs of issuance 232,596
Deferred refunding difference 102,93 3
Net adjustment to reduce fund balance - total governmental funds to
arrive at net assets - governmental activities $ (15,861,764)
-36-
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
2 - Reconciliation of Government-Wide and Fund Financial Statements (Continued)
Explanation of Certain Differences Between the Governmental Fund Statement of Revenues,
Expenditures and Changes in Fund Balances and the Government-Wide Statement of Activities
The governmental fund statement of revenues, expenditures, and changes in fund balances
includes a reconciliation between net changes in fund balances - total governmental funds and
changes in net assets of governmental activities as reported in the government-wide statement of
activities. One element of that reconciliation explains that "Governmental funds report capital
outlays a s expenditures. However, in the statement of activities the cost of those assets is
allocated over their estimated useful lives and reported a s depreciation expense." The details of
this $ 3,768,264 difference are a s follows:
Capital outlay
Depreciation expens e
Net adjustment to increase net change in fund balance s -total governmental
funds to arrive a t change in net assets of governmental activities
$ 3,986,769
______(218,505)
$ 3,768,264
-37-
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
2 - Reconciliation of Government-Wide and Fund Financial Statements ('Continued')
Explanation of Certain Differences Between the Governmental Fund Statement of Revenues,
Expenditures and Changes in Fund Balances and the Government-Wide Statement of Activities
(Continued)
Another element of that reconciliation states that "The issuance of long-term debt (e.g., bonds,
leases ) provides current financial resource s to governmental funds, while the repayment of the
principal of long-term debt consumes the current financial resources of governmental funds.
Neither transaction, however, has any effect on net assets. Also, governmental funds report the
effect of issuance costs, premiums, discounts, and similar items when debt is first issued,
whereas these amounts are deferred and amortized in the statement of activities." The details of
this $ (5,890,216) difference ar e a s follows:
Debt issued or incurred:
Issuance of Neighborhood Improvement District Limited General Obligation
Temporary Notes
Capital lease financing
Principal repayments:
General obligation bonds
Certificates of Participation
Leases
$ (6,275,000)
(35,866)
290,554
75,000
55,096
Net adjustment to decreas e net changes in fund balances - total governmental
funds to arrive at changes in net assets of governmental activities $ (5,890,216)
Another element of that reconciliation states that "Some expense s reported in the statement of
activities do not require the us e of current financial resources and therefore are not reported a s
expenditures in governmental funds." The details of this $ (19,286) difference are a s follows:
Compensated absence s
Accrued interest
Amortization of issuance costs
Amortization of deferred refunding difference
Amortization of bond discounts
Accretion of interest-capital appreciation bonds
$ 6,178
4,912
(12,634)
(10,834)
(2,782)
34,446
Net adjustment to increase net changes in fund balances - total governmental funds to
arrive at changes in net assets of governmental activities $ 19,286
-38-
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
3 - Stewardship, Compliance and Accountability
Budgets and Budgetary Accounting
Missouri statutes require that all political subdivisions of the State prepare an annual budget.
Governmental funds required to have legally adopted annual budgets ar e the general fund, the
special revenue funds, and the debt service fund. Legally adopted annual budgets ar e not
required for the capital projects fund and the permanent fund. Annual budgets for all
governmental funds are adopted using the modified accrual basis of accounting, further modified
by the encumbrance method of accounting, that is, commitments such a s purchase orders,
contracts and other commitments, in addition to disbursements and accounts payable are
recorded a s expenditures.
Budgeted expenditures cannot exceed budgeted revenues and unencumbered positive fund
balances a s required by Section 67.010 RSMo.
The appropriated budget is prepared by fund, function, and department. State statutes set the
legal level of budgetary control a t the fund level (i.e., the level at which expenditures may not
legally exceed appropriations). Department heads may make transfers of appropriations within
their departments. Upon written request, the City Administrator or the Board of Aldermen may
by ordinance transfer part or all of any unencumbered appropriate balance from one department
to another.
The reported budgetary data represents the final approved budget after amendments a s adopted
by the Board of Aldermen.
-39-
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
4 - Deposits and Investments
As of December 31, 2007, the City had the following deposits and investments:
Reported
Amount/
Fair Value
US Treasuries
Deposits
Guaranteed investment contracts
Federated treasury obligation fund
$ 568,517
7,390,013
190,076
682,916
$ 8,831,522
Reconciliation of Government-wide Statement of Net Assets to total deposits and investments:
Cash and cash equivalents $ 1,907,694
Restricted cash and investments ____6,923,828
Total deposits and investments $ 8,831,522
Interest Rate Risk
Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an
investment. The City does not have a formal investment policy that limits investment maturities
a s a means of managing its exposure to fair value losses arising from increasing interest rates. It
is the City practice to place operating funds in either money market accounts or Treasury Bills
with 3 to 6 month maturities. All longer-term investments are placed in certificates of deposit or
Treasury securities having maturities of 1 to 5 years. These consist of funds whose use is
restricted and are unlikely to be needed prior to maturity (e.g. the Fewson Trust and Sewer Debt
Reserve).
-40-
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
4 - Deposits and Investments
Credit Risk
Missouri statute s prohibit municipalities from investing in derivative, leveraged, or speculative
securities. City agents invest funds for restricted debt reserves and unexpended debt proceeds in
money market mutual funds, guaranteed investment contracts and repurchase agreements. The
City's investments in money market mutual funds are rated AAA by Standard & Poor's, and the
repurchase agreements and guaranteed investment contracts are unrated.
Custodial Credit Risk-Deposits
In the case of deposits, this is the risk that in the event of a bank failure, the City's deposits may
not be returned. As of December 31, 2007, the carrying amount of the City's deposits was
$ 7,860,738. The City had bank balances of deposits of $ 7,390,013 which were covered by
federal depository insurance or by collateral held by the City's agent in the City's name. The
City does not have a formal deposit policy for custodial credit risk. It is City practice to require
banks to provide collateral equal to any deposited amounts exceeding federal depository
insurance limits.
Custodial Credit Risk-Investments
For an investment, custodial credit risk is the risk that, in the event of the failure of the
counterparty, the City will not be able to recover the value of its investments or collateral
securities that ar e in the possession of an outside party. At December 31, 2007, the City's
investments were not exposed to custodial credit risk.
-41-
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
Capital Assets
Capital asset activity for the year ended December 31, 2007, was a s follows:
Governmental activities:
Capital assets not being depreciated
Land
Construction in progres s
Infrastructure
Total capital assets not being depreciated
Capital assets being depreciated
Buildings and improvements
Machinery and equipment
Infrastructure
Total capital assets being depreciated
Les s accumulated depreciation for
Buildings and improvements
Machinery and equipment
Infrastructure
Total accumulated depreciation
Total capital assets being depreciated, ne t
Governmental activities capital assets, ne t
Business-type activities:
Capital assets not being depreciated
Land
Construction in progress
Total capital assets not being depreciated
Capital assets being depreciated
Buildings and improvements
Machinery and equipment
Infrastructure
Total capital asset s being depreciated
Less accumulated depreciation for
Buildings and improvements
Machinery and equipment
Infrastructure
Total accumulated depreciation
Total capital assets being depreciated, net
Business-type activities capital assets, net
Beginning
Balance
$ 906,486
1,850,962
1,449,38 4
4,206,832
1,570,314
1,096,200
44,663
2,711,177
(467,485)
(731,585)
(1,276)
(1,200,346)
1,510,831
$ 5,717,663
$ 59,975
47,954
107,929
4,767,271
244,109
1,847,350
6,858,730
(1,236,061)
(159,835)
(538,146)
(1,934,042)
4,924,688
$ 5,032,617
Increases
$
751,572
1,960,919
2,712.491
3,532,184
238,737
3,770,921
(86,646)
(130,583)
(1,276)
(218,505)
3,552,416
$ 6,264,907
$
88,900
88,900
-
-
(238,364)
(22,644)
(36,869)
(297,877)
(297,877)
$ (208,977)
Decreases
$ (100,000) $
(1,496,642)
(1,596,642)
(1,000,000)
(1,000,000)
322,917
322,917
(677,083)
$ (2,273,725) $
$ - $
-
-
-
(1,474,425)
(182,479)
(575,015)
(2,231,919)
-
$ - $
Ending
Balance
806,486
1,105,892
3,410,303
5,322,681
4,102,498
1,334,937
44,663
5,482,098
(231,214)
(862,168)
(2,552)
(1,095,934)
4,386,164
9,708,845
59,975
136,854
196,829
4,767,271
244,109
1,847,350
6,858,730
4,626,811
4,823,640
-42-
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
5 - Capital Assets (Continued')
Depreciation expense was charged to functions/programs of the primary government a s follows:
Governmental activities:
General government $ 78,795
Public safety 32,22 8
Public works 62,79 3
Culture and recreation 44,689
Business-type activities:
Water and sewer
Stormwater
Total depreciation expens e - business-type activities
Total depreciation expens e - governmental activities $ 218,505
$ 287,936
______9,941
$ 297,877
-43-
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
Long-Term Obligations
The following is a summary of the debt transactions of the City for the year ended December 31,
2007:
Governmental activities:
Bonds payable
General obligation bonds
Accreted interest payable on capital
appreciation bonds
Certificates of Participation
Neighborhood Improvement District
Limited Obligation Temp Notes
Less deferred amounts
For issue discounts
For deferred refunding difference
Capital leases
Compensated absence s
Governmental activity long-term
liabilities
Business-type activities:
Bonds payable
Refunding revenue bonds
Plus deferred amounts
For issu e premiums
Leas e purchase agreement
Compensated absences
Business-type activity long-term
liabilities
Of the $ 3,374,446 in general obligation debt shown above, $ 3,250,000 is special assessmen t
debt with governmental commitment.
For governmental activities, compensated absence s and other long-term debt ar e generally
liquidated by the general fund.
Beginning
Balance
$ 3,665,000
65,000
6,405,000
-
(55,630)
(113,767)
53,353
69,121
$ 10,088,077
$ 2,815,000
123,097
221,686
2,521
$ 3,162,304
Additions
$
-
6,275,000
35,86 6
$ 6,310,866
$
452
$ 452
Reductions
$ (290,554)
(34,446)
(75,000)
6,275,000
2,782
10,834
(55,096)
(6,178)
$ (447,658)
$ (175,000)
(7,241)
(8,104)
$ (190,345)
Ending
Balance
$ 3,374,446
30,554
6,330,000
(52,848)
(102,933)
34,123
62,943
$ 15,951,285
$ 2,640,000
115,856
213,582
2,973
$ 2,972,411
Due Within
One Year
$ 174,44 6
30,554
165,000
(2,782)
(5,417)
22,129
$ 383,930
$ 185,000
7,241
7,874
2,973
$ 203,088
-44-
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
Long-Term Obligations (Continued)
General Obligation Bonds
The City issue s general obligation bonds to provide funds for the acquisition and construction of
major capital assets.
General obligation bonds currently outstanding consist of the following:
Interest
Rate s
Original
Issue
Final
Maturity
Date
Principal
Payment s
During 2007
Outstanding
Decembe r 31,
2007
General Obligation Bonds:
Governmental activities:
Serie s 1998 3.70% to 4.45% $ 325,000
Accreted interest payable
capital appreciation bonds
Series 2001 4.50% to 5.50% 3,985,000
Series 2003 1.30% to 2.50% 449,000
9/1/2011 5,554 $ 124,446
3/1/2021
9/1/2007
34,446
160,000
125,000
$ 325,000
30,554
3,250,000
$ 3,405,000
The annual requirements to amortize governmental activities general obligation bonds
outstanding a s of December 31, 2007, ar e a s follows:
Governmenta l Activities
Principal Interes t
2008
2009
201 0
2011
2012
2013-2017
2018-2022
205,00 0
210,000
225,000
235,000
200,00 0
1,160,00 0
1,170,00 0
158,61 0
152,859
142,641
132,14 0
121,313
450,833
124,37 3
3,405,00 0 1,282,76 9
-45-
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
6 - Long-Term Obligations (Continued)
General Obligation Debt Margin
The State Constitution permits a city, by vote of two-thirds of the voting electorate, to incur
general obligation indebtedness for "city purposes" not to exceed 10% of the assessed value of
taxable tangible property and to incur additional general obligation indebtedness not exceeding,
in the aggregate, an additional 10% of the assessed value of taxable tangible property for the
purpose of acquiring rights-of-way, construction, extending and improving street s and avenue
and/or storm sewer systems, and purchasing or construction waterworks, electric, or other light
plants, provided that the total general obligation indebtedness of the City doe s not exceed 20% of
the assessed valuation of taxable property.
Certificates of Participation
The City issued certificates of participation serie s 2006 in the original amount of $ 6,405,000
with interest rate s ranging from 3.5% to 4.4% and with a final maturity in 2027. Principal
payments ar e scheduled annually ranging from $ 75,000 to $ 490,000. The balance a t
December 31, 2007 is $ 6,330,000.
Proceeds from the certificates of participation were used for City Hall renovation. Rush Creek
stabilization, land acquisition and other scheduled capital improvements.
The annual requirements to amortize thes e certificates of participation are a s follows:
Principal Interest
2008
2009
201 0
2011
2012
2013-2017
2018-2022
2023-2027
$ 165,00 0 $ 260,949
175,000
190,00 0
200,000
215,000
1,350,000
1,880,00 0
2,155,000
254,870
248,205
240,940
233,105
1,020,023
688,112
257,950
6,330,000 $ 3,204,154
-46-
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
Long-Term Obligations (Continued)
Neighborhood Improvement District Limited Obligation Temporary Notes
The City issued Neighborhood Improvement District Limited Financial Obligation Temporary
Notes Series 2006A and 2007 in the original amount of $3,575,00 0 and $2,700,000,
respectively, with an interest rate of 4.0% and a final maturity of August 1, 2009. The balance a t
December 31, 2007 is $ 3,575,000 and $ 2,700,000, respectively
Proceed s from the temporary note s ar e to be used for the Brink Meyer Road Neighborhood
Improvement Project in the amount of $ 2,700,000 and the Brush Creek Drainage Area
Neighborhood Improvement Project in the amount of$ 3,575,000.
The annual requirements to amortize thes e notes ar e a s follows:
Principal Interest
2008
2009 6,275,000 629,808
6,275,000 629,808
Capital Lease s - Governmental Funds
The City has entered into the following capital leases:
Cost
Accumulated depreciation
Term
Vehicles
67,889
13,791
3 year s
The annual debt service requirements for the capital lease s to be paid with governmental funds a t
December 31, 2007 ar e a s follows:
Year Principal Interest Total
2008
2009
22,129
11.994
34,123
1,900
547
2,447
24,029
12,541
36,570
-47-
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
6 - Long-Term Obligations ('Continued)
Capital Leases - Governmental Funds ("Continued)
Amortization of$ 30,137 on the assets acquired through capital lease s has been included in 2007
depreciation expense in the governmental activities.
Revenue Bonds
The City issued Sewer System Refunding Revenue Bonds Series 1998 in the original amount of
$ 640,000 with interest rates ranging from 3.75% to 4.65% and with a final maturity in 2011.
Principal payments are scheduled annually ranging from $ 25,000 to $ 70,000. The balance at
December 31, 2007 is $ 255,000.
Series 1998 Sewer System Refunding Revenue or portions thereof maturing in 2007 and
thereafter may be called for redemption and payment prior to the stated maturity thereof on
November 1, 2006 and thereafter in whole a t any time or in part on any interest payment date at
par plus accrued interest.
The bonds are special obligations of the City payable solely from, and secured a s to the payment
of principal and interest by a pledge of, the net income and revenues derived from the operation
of the system. The bonds shall not be or constitute a general obligation of the City.
The City issued Sewerage System Revenue Bonds Series 2004 in the original amount of
$ 2,740,000 with interest rates ranging from 3.0% to 5.25% and with a final maturity in 2025.
Principal payments are scheduled annually ranging from $ 30,000 to $ 170,000. The balance a t
December 31, 2007 is $ 2,385,000.
Series 2004A Sewage System Refunding Revenue Bonds are special, limited obligations of the
City payable solely from, and secured by a pledge of, the net revenues. The taxing power of the
City is not pledged to the payment of the bonds. The bonds do not constitute a general
obligation of the City or an indebtedness of the City within the meaning of any constitutional,
statutory or charter provision, limitation or restriction.
Bonds maturing on January 1, 2015 and thereafter may be called for redemption and payment
prior to maturity in whole or in part on any date with the consent of the bondholder, or on each
June 1 and December 1, commencing December 1, 2013, a t the redemption price of 100% of
principal amount of the bonds redeemed, plus accrued interest to the redemption date. Bonds
maturing on January 1, 2019, January 1, 2020 and January 1, 2021 are not subject to redemption
prior to maturity.
-48-
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
6 - Long-Term Obligations (Continued)
Revenue Bonds (Continued)
The annual requirements to amortize these bonds outstanding a s of December 31, 2007, are a s
follows:
2008
2009
2010
2011
2012
2013-2017
2018-2022
2023-2027
Principal Interest
$ 185,000 $ 119,650
185,000 113,290
195,000 106,870
205,000 97,413
135,000 89,702
725,000 361,728
810,000 170,637
200,000 10,350
$ 2,640,000 $ 1,069,640
Lease-purchase
In July 2003, the City entered into a lease-purchase agreement wherein the City sold its sewer
plant for $ 585,000 and leased it back for a period of twenty-two years. The proceeds from the
lease-purchase are to be used to make certain improvements to the sewer plant property. Under
the lease the City will have the full use of the property and will make rental payments, which
will apply to the principal and interest under the lease.
-49-
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
6 - Long-Term Obligations (Continued)
Lease Purchase Agreement
Required payments under the leas e purchase agreement on the sewer plant are a s follows:
2008
2009
2010
2011
2012
2013-2017
2018-2022
2023-2027
Principal Interest
$ 7,874 $ 10,582
8,273
8,691
9,131
9,594
55,764
71,383
42,872
10,183
9,764
9,325
8,862
36,515
20,896
3,269
$ 213,582 $ 109,396
Defeased Debt
In prior years, the City defeased certain bonds by placing the proceeds of new bonds in an
irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly,
the liability for the defeased bonds is not included in the City's financial statements. At
December 31, 2007, $ 5,545,000 of the bonds which were considered defeased in prior years
remained outstanding.
Combined Waste Water and Sewerage Revenue Bonds
The Sewerage Revenue Bond ordinance requires that the Sewerage System Fund be accounted
for in a separate Enterprise Fund. It also requires that, after sufficient current assets have been
set aside to operate the system, all remaining monies held in the Sewerage System Fund be
segregated and restricted in separat e special reserves and accounts. In accordance with the bond
ordinance, thes e bonds are serviced by the Sewerage System Fund operations and are included a s
a liability of that fund.
-50-
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
6 - Long-Term Obligations (Continued)
Combined Waste Water and Sewerage Revenue Bonds (Continued)
Restricted assets of the principal and interest account ar e to be used for payment of current
principal and interest on bonds. Restricted assets of debt service ar e available to pay principal
and interest in the event of a deficiency in the principal and interest account. Restricted assets of
the depreciation and replacement account ar e available to operate, maintain, or improve the
system, call bonds or for payment of debt service in the event of a deficiency in other restricted
assets.
7 - Risk Management
The City is exposed to various risks of los s related to torts; theft of, damage to, and destruction
of assets; errors and omissions; employee injuries and illnesses; natural disasters; and employee
health, dental and accident benefits. To protect itself against risks of loss, the City is a member
of the Mid-America Regional Council Insurance Trust (MARCIT), a not-for-profit corporation
consisting of governmental entities incorporated in 1984 to acquire insurance for its members.
MARCIT operate s a s a purchasing pool and is not a joint venture activity of the City. The City
ha s no control over budgeting, financing, management selection, or the governing body.
MARCIT provides both conventional and self-insurance coverage for its members, including
medical, dental, property, casualty, general liability, and workers' compensation. The City
participates in property, casualty, general liability, and workers' compensation insurance
coverage through MARCIT.
MARCIT manages the cash and investment pool, funded by insurance premiums, on behalf of its
members. MARCIT's investment pool consist s of interest-bearing deposits, U.S. Treasury strips,
U.S. Governmental agency obligations, and collateralized mortgage obligations.
-51-
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
7 - Risk Management (Continued)
In the event that a deficit occurs with respect to any fiscal year of MARCIT for which the City
was a participant at any time during such year, and in the event that MARCIT determines that an
assessmen t is required in order to provide additional funds for the obligations of MARCIT for
such year, and further, in the event that the City was covered by the types of benefits requiring
the assessment during the time period in which the assessmen t arose, the City is obligated to pay
its pro rata share of any such assessmen t whether or not the City is a member of MARCIT at the
time of such assessment . Management of the City is not aware of any deficit situation in
MARCIT that would require an accrual of a liability a s of December 31, 2007. MARCIT's
financial statements are presented in its Comprehensive Annual Financial Report for the year
ended December 31, 2007.
There ha s been no significant change in insurance coverage from the previous fiscal year.
Settled claims have not exceeded insurance coverage in any of the past three years.
Retirement Plan
The City retirement plan consists of individual retirement accounts established for employees.
All full-time employees after six months of service are eligible to participate. The City
contributes five percent of the employee's gross earnings on a monthly basis to the individual
retirement accounts. The City's contributions for the year ended December 31, 2007 were
$ 65,124.
Investments - Trust Fund
The City of Parkville was the recipient of funds from a resident's estate during calendar year
2002. The funds are held by a trustee for the benefit of the City. The trustee of the fund is to
distribute one-half of the income from the fund to be used on various city projects. The balance
of the annual net income is to be reinvested in the principal of the fund. The trust fund is to
remain in existence for twenty-one years from the date of the death of the Trustor, April 9, 2001.
On that date, April 9, 2022, the balance remaining in the fund is to be distributed to the City. At
December 31, 2007, the trust assets had an account balance of $ 514,851 which are recorded in
the permanent trust fund.
-52-
CITY OF PARKVILLE, MISSOURI
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
8 - Commitments and Contingencies
Litigation
The City is a defendant in various lawsuits relating to easements, condemnations and other
matters a s a result of the ordinary course of City activities. The City's management and legal
counsel anticipate that the potential claims against the City not covered by insurance, if any,
resulting from such matters would not materially affect the financial position of the City.
9 - mterfund Transactions
mterfund transfers for the year ended December 31, 2007, consisted of the following:
Transfer to capital projects fund from:
General fund $ 726,602
Transfer to debt service fund from:
Capital projects fund
Transfer to non-major governmental funds from:
General fund
$ 204,018
$ 432,259
Transfer to non-major proprietary fund from:
General fund $ 227,640
Transfers ar e used to (1) move revenues from the fund that statute or budget requires to collect
them to the fund that statute or budget requires to expend them, (2) move receipts restricted to
debt service from the funds collecting the receipts to the debt service fund a s debt service
payments become due, and (3) us e unrestricted revenues collected in the general fund to finance
various programs accounted for in other funds in accordanc e with budgetary authorizations.
-53 -
REQUIRED SUPPLEMENTARY INFORMATION
CITY OF PARKVILLE, MISSOURI
REQUIRED SUPPLEMENTARY INFORMATION
Year Ended December 31, 2007
Information needed to support the use of the Modified Approach for Infrastructure Reporting:
Street and Parking Lot Assets
The street and parking lot condition rating is accomplished every other year or triennially. Every street
and parking lot of Parkville is visually rated for observed structural conditions to determine the level of
preservation need. The field rating reflects the condition of the type of street or parking lot being
reviewed. It is the City's goal to repair all streets and parking lots rated a t a 6.0 or above and to maintain
all streets within the City at a service level of 5.0 for each respective type of street or parking lot.
A field rating scale has been developed to indicate the overall condition of the observed street or parking
lot.
1 - Indicates an equivalent of a newly constructed street or parking lot [crack sealing & minor patching]
2 - Indicates slight imperfections in the street or parking lot condition [crack sealing, slurry sealing,
and/or patching]
3 - Indicates some deterioration has occurred and minor maintenance may be required [Street or parking
lot needs various repairs to maintain condition; patches; poss. milling & overlay]
4 - Indicates noticeable deterioration maintenance is required [deterioration is significant and visually
noticeable; repair mill & overlay]
5 - Indicates significant maintenance is required [considerable cracking, potholes or other fatigue
demands repair work and overlay]
6 - Indicates serious deficiency [deterioration mandates edge milling (to prevent total base failure) needs
overlay]
7 - Indicates severe deficiency [severe deterioration needing various repairs]
8 - Indicates major failure [Some good street is left within a total replacement street or parking lot
condition]
9 - Indicates nearly total replacement is required [limited salvage of street or parking lot are a is
possible]
10 - Indicates total replacement is required.
-54-
CITY OF PARKVILLE, MISSOURI
REQUIRED SUPPLEMENTARY INFORMATION
(Continued)
While the City has goals to maintain these systems a t higher levels, minimum acceptable condition
levels have been defined a s having at least 80 percent of the streets and parking lots at or below a rating
of 5. The following table compares the minimum acceptable condition levels with the actual condition
levels for the current and prior years.
Minimum
Fiscal Acceptable Actual Condition
Year Condition Level * Level *
2005 80 94
2006 80 94
2007 80 94
* Percentage of streets and parking lots rated at 5 or
below
The City's goal is to continually improve the condition of its streets and parking lots. To achieve this
goal, it is necessary to perform maintenance activities and replace those assets that can no longer be
economically maintained. To maintain the City's street s and parking lots at or above the stated minimum
condition level, it is estimated that annual preservation and replacement expenditures must exceed
$ 292,000 annually. The following table compares the estimated expenditures needed to maintain the
system a t a minimum acceptable condition level with actual amounts spent for the current and prior
years.
Fiscal Estimated Actual
Year Expenses Expenses
2 0 0 5$ 246,519 $ 241,190
2006 292,227 292,579
2007 246,819 213,183
-55 -
OTHER SUPPLEMENTARY INFORMATION
CITY OF PARKVILLE, MISSOURI
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
December 31,2007
Assets
Cash and cash equivalents
Restricted cash and investments
Other receivable
Total assets
Liabilities
Accounts payable
Fund balance s
Unreserved, reported in
Special revenu e funds
Permanent fund
Total fund balance s
Total liabilities and fund balances
Special Revenue
Reserve Municipal Equip Guest Room Nature Palk Parkland
Funds Reserv e Tax Sanctuary Donations Dedication
$ 556,567 $ 10,225 $ 13,266 $ 27,138 $ 3,788 $ 46,794
$ 556,567 $ 10,225 $ 13,266 $ 27,138 $ 3,788 $ 46,794
$ 31,641 $ - $ - $ - $ - $
524,926
524,926
10,225 13,266 27,138 3,788
10,225 13,266 27,138 3,788
46,794
46,794
$ 556,567 $ 10,225 $ 13,266 $ 27,138 $ 3,788 $ 46,794
(Continued)
CITY OF PARKVILLE, MISSOURI
COMBINING BALANCE SHEET
(Continued)
NONMAJOR GOVERNMENTAL FUNDS
December 31,2007
Assets
Cash and cash equivalents
Restricted cash and investments
Other receivable
Total assets
Liabilities
Accounts payable
Fund balances
Unreserved, reported in
Special revenue funds
Permanent fund
Total fund balances
Total liabilities and fund balance s
Special Revenue
Train Depot Court Police Training
Restoration Recoupment Fee s Fee s - LET Court
$ 2,397 $ 20,727 $ 23,183 $ 5,270
514,851 514,851
-
$ 2,397 $ 20,727 $ 23,183 $ 5,270
$ - $ - $ - $ 5,270
2,397 20,727 23,183
514,851 514,851
2,397 20,727 23,183
$ 2,397 $ 20,727 $ 23,183 $ 5,270
TIF
Development
$ 12,323
191
$ 12,514
$
12,514
12,514
$ 12,514
Permanent Total
Total
721,678
19 1
$ 721,869
$ 36,911
684,958
684,958
$ 721,869
Nonmajor
Governmental
Fewson Project Funds
$ - $ 721,678
191
$ 5)4,851 $ 1,236,720
$ - $ 36,911
684,958
514,851 1,199,809
$ 514,851 $ 1,236,720
CITY OF PARKVILLE, MISSOURI
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
Year Ended December 31,2007
Revenue s
Investment earnings
Miscellaneous
Total revenues
Expenditures
Current
General government
Debt service
Principal
Interest
Capital outlay
Total expenditures
Excess (deficiency) of revenues
over (under) expenditures
Other financing sources (uses)
Transfers in
Capital leases
Total other financing sources
Net change in fund balances
Fund balances, beginning of year
Fund balances, end of year
Special Revenue
Reserve
Funds
$ 30
30
90,944
90,944
(90,914)
358,378
358,378
267,464
257,462
$ 524,926
Municipal Equip
Reserv e
104,647
(104,647)
$ 10,225
$
-
55,096
2,738
46,813
73,881
35,866
109,747
5,100
5,125
Guest Room
Tax
$
5,930
5,930
-
5,930
-
-
5,930
7,336
$ 13,266 $ 27,138
Nature
Sanctuary
$
5,111
5,111
3,700
3,700
1,411
-
1,411
25,727
Park
Donations
$
$
3
3,788 $ 46,794
-
-
-
-
-
,788
Parkland
Dedication
$
2,891
2,891
(2,891)
-
-
(2,891)
49,685
(Continued)
CITY OF PARKVILLE, MISSOURI
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
(Continued)
NONMAJOR GOVERNMENTAL FUNDS
Year Ended December 31, 2007
Special Revenue
Revenue s
Investment earnings
Miscellaneous
Total revenues
Expenditures
Current
General government
Debt service
Principal
Interest
Capital outlay
Total expenditures
Excess (deficiency) of revenue s
over (under) expenditures
Other financing sources (uses )
Transfers in
Capital lease s
Total other financing sources
Net chang e in fund balances
Fund balances; beginning of year
Fund balances , end of year
Special Revenue
Train Depot Court Police Training TIF
Restoration Recoupment Fee s Fee s - LET Court Development Total
$ -$ -$ -$ -$ -$ 30
3,717 7,464 - - 22,222
3,717 7,464 - - 22,252
630 - - 95,274
55,096
2,738
49,704
630 - - 202,812
3,717 6,834 - - (180,560)
432,259
35,866
468,125
3,717 6,834 - - 287,565
2,397 17,010 16,34 9 - 12,514 397,393
$ 2,397 $ 20,727 $ 23,183 $ - $ 12,514 $ 684,958
Permanent
Fewson Project
$ 32,951
32,951
22,528
22,528
10,423
-
-
10,423
504,428
$ 514,851
Total
Nonmajor
Governmental
Funds
$ 32,981
22,222
55,203
117,802
55,096
2,738
49,704
225,340
(170,137)
432,259
35,866
468,125
297,988
901,821
$ 1,199,809
BTMo .
BERBERICHTRAHAN6fCO.,P.A .
Certifie d Publi c AccoiiiitttMs
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND
ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF
FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT A UDITING STANDARDS
Honorable Mayor and Board of Aldermen
City ofParkville, Missouri:
We have audited the financial statements of the governmental activities, the business-type activities, each major
fund, and the aggregate remaining fund information of the City ofParkville, Missouri (the City) a s of and for the
year ended December 31, 2007, which collectively comprise the City's basic financial statements and have issued
our report thereon dated December 18, 2008. We conducted our audit in accordance with auditing standards
generally accepted in the United State s of America and the standards applicable to financial audits contained in
Government Auditing Standards, issued by the Comptroller General of the United States.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the City's internal control over financial reporting a s a basis
for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but
not for the purpose of expressing an opinion on the effectiveness of the City's internal control over financial
reporting. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over
financial reporting.
Our consideration of internal control over financial reporting was for the limited purpose described in the first
paragraph of this section and would not necessarily identify all deficiencies in internal control that might be
significant deficiencies or material weaknesses. However, a s discussed below, we identified certain deficiencies
in internal control over financial reporting that we consider to be significant deficiencies.
A control deficiency exists when the design or operation of a control does not allow management or employees, in
the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A
significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the
entity's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally
accepted accounting principles such that there is more than a remote likelihood that a misstatement of the entity's
financial statements that is more than inconsequential will not be prevented or detected by the entity's internal
control. We consider the deficiencies described in the accompanying schedule of findings and responses a s
Findings 2007-1, 2007-2, 2007-3, 2007-4, 2007-5 and 2007-6 to be significant deficiencies in internal control
over financial reporting.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more
than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected
by the entity's internal control.
RS M McGladre y Network
A n Independentl y Owne d Membe r
Our consideration of internal control over financial reporting was for the limited purpose described in the first
paragraph of this section and would not necessarily identify all deficiencies in internal control that might b e
significant deficiencies and, accordingly, would not necessarily disclose all significant deficiencies that are also
considered to be material weaknesses. We consider the deficiencies in the accompanying schedule of findings
and responses a s Findings 2007-1, 2007-2, 2007-3, 2007-4, 2007-5, and 2007-6 to be material weaknesses in
internal control over financial reporting.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City's financial statements ar e free of material
misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and
grant agreements, noncompliance with which could have a direct and material effect on the determination of
financial statement amounts. However, providing an opinion on compliance with those provisions was not an
objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no
instances of noncompliance or other matters that are required to be reported under Government Auditing
Standards.
The City's responses to the findings identified in our audit are described in the accompanying schedule of
findings and responses. We did not audit the City's responses and, accordingly, we express no opinion on them.
This report is intended solely for the information and use of management and federal awarding agencies and pass-
through entities and is not intended to be and should not be used by anyone other than those specified parties.
December 18,200 8
-61-
CITY OF PARKVILLE, MISSOURI
SCHEDULE OF FINDINGS AND RESPONSES
Year Ended December 31, 2007
Finding 2007-1 - Cash Receipts and Expenditures - Material Weakness
An important aspect of control in any accounting system is segregation of duties. Segregating certain
routine tasks, particularly in the receipts and expenditure cycles can significantly improve controls.
Lack of segregation of duties can lead to increased risks of fraud, errors, or material misstatement of the
financial statements.
In reviewing the cash receipts and expenditures cycles during our audit, we noted certain duties which
appear to be too centralized, which could create a lack of maximum control in this area. One employee
receives cash, prepares the deposit, makes the deposit, prepares checks for payment, mails checks,
makes the majority of the journal entries, and prepares the bank reconciliation. There is also no formal
review of the bank reconciliation and the bank reconciliations are not being prepared timely. Check
signers are not reviewing invoices and supporting documents prior to signing checks. We recommend
that the City segregate duties in the cash receipts and expenditures cycles, implement review procedures
for expenditures and that bank reconciliations be prepared timely and be reviewed by a knowledgeable
employee for accuracy and completeness.
Pre-numbered permits are not being used by the Community Development department so the cash
receipts are not traceable to a particular permit. Also, cash and checks received in this department are
not kept in a locked area overnight and are not turned in for deposit in a timely manner. We recommend
that the City implement procedures to track permits issued and the related cash received. We also
recommend that cash received and held overnight be locked up and that cash be deposited in a timely
manner.
A monthly municipal court activity report is given to accounting from which a batch journal entry is
made to record the month's activity. This report is not being reviewed by the accounting department
prior to the posting to the general ledger. We recommend that the accounting department agree the daily
cash receipts to the monthly report before posting the entry to the general ledger.
Without such procedures cash receipts ar e exposed to the risk of loss.
Repeat comment from prior year.
Response (Unaudited) - This finding'is copied from the 2006 Schedule of Findings. The addition of
staff in November of 2007 helped to segregat e the cash receipts and expenditures procedures and allow
for internal controls to be put into place.
-62-
CITY OF PARKVILLE, MISSOURI
SCHEDULE OF FINDINGS AND RESPONSES
(Continued)
Pre-numbered permits and other traceable solutions ar e being researched by Community Development
staff. This department does not accept payments in any form since moving from the old City Hall
building (May 25, 2007) where the public did not have interior access from the basement level
department to the cash collections desk on the main floor. Citizen comfort and convenience during
inclement weather dictated any exceptions to the collections of fees.
Court activity reports ar e computer generated, reviewed and initialed daily by the accounting
department. Month end reports are a computer generated sum of the periods daily activity reports.
Finding 2007-2 - Payroll - Material Weakness
An important aspect of control in any accounting system is segregation of duties. Segregating certain
routine tasks, particularly in the receipts and expenditure cycles can significantly improve controls.
Lack of segregation of duties can lead to increased risks of fraud, errors, or material misstatement of the
financial statements.
We noted that the City doe s not have adequate segregation of duties over its payroll process. One
employee is responsible for entering timesheet information, preparing and reviewing the payroll run, and
cutting checks and preparing the direct deposits. This same employee also maintains all the information
for the employee human resource files. The Board and Treasurer sign the checks but a process needs to
be implemented to review and approve the checks and direct deposit amounts before they are mailed or
submitted for payment to the payroll ledger. We recommend that the duties within the payroll function
be segregated in order to safeguard the City's assets.
We also noted that the timesheets submitted by employees are not readily traceable to the payroll
registers due to the timing difference between regular pay and overtime, vacation and sick leave pay.
Also, we noted several timesheets during our testwork that were not approved by an appropriate
supervisor and several timesheets that were not turned in to be verified by the payroll processor. We
recommend that employees be paid in a timely manner based on the number of hours worked or number
of hours taken off a s recorded on the employees' timesheets. We also recommend that all timesheets be
reviewed and approved by an appropriate supervisor before paychecks are issued.
Repeat comment from prior year.
Response (Unaudited) - This finding is copied from the 2006 Schedule of Findings. The addition of
staff in November of 2007 helped to segregate the payroll procedures and allow for internal controls to
be put into place.
-63-
CITY OF PARKVILLE, MISSOURI
SCHEDULE OF FINDINGS AND RESPONSES
(Continued)
Due to City policy requiring Board approval with advance submission of all Bill Paying Ordinances, pay
checks must be prepared well in advance of the actual pay dates . It is thus not possible to have the
overtime, etc., periods coincide exactly with pay periods. Once this is taken into account it is possible to
trace timesheet adjustments to the computer payroll registers. Timesheets are approved and signed by
supervisors. There were no unsigned timesheets for this fiscal year.
Finding 2007-3 - Capital Assets - Material Weakness
The City is responsible for maintaining complete and accurate schedules of capital assets with related
depreciation. The City does not maintain complete depreciation schedules for capital assets. Significant
adjustments were made to record additions and adjustments to capital assets during the audit process, m
addition, annual depreciation expense was not calculated or recorded by the City prior to the audit. We
recommend that capital asset additions and disposals be identified and recorded in a timely manner. We
also recommend that depreciation schedules be updated periodically for these changes and that
depreciation expense be calculated and recorded on the general ledger.
Repeat comment from prior year.
Response (Unaudited) - This rinding is copied from the 2006 Schedule of Findings. Capital assets
schedules, produced in a spreadsheet format, are maintained for insurance a s well a s auditing purposes.
Significant adjustments were made in the previous year due to a change in audit firms and their different
directives. Previously, our audit firms have reviewed the depreciation schedules then advised the staff of
the required recordings.
Finding 2007-4 - Journal Entries - Material Weakness
Preparation of the financial statements in accordance with generally accepted accounting principles is
the responsibility of the City's management. During the course of the audit, we identified significant
misstatements in the trial balance that were not initially identified by the City's internal control. We
recommend that the City review its trial balance and make all necessary adjustments to ensure that the
accounts on the trial balance are not materially misstated.
Repeat comment from prior year.
Response (Unaudited) - This finding is copied from the 2006 Schedule of Findings. During the audit
process there were no misstatements found in the trial balance.
-64-
CITY OF PARKVILLE, MISSOURI
SCHEDULE OF FINDINGS AND RESPONSES
(Continued)
Finding 2007-5 -Accounts Payable - Material Weakness
The City is responsible for tracking its accounts payable balances. A listing of the City's accounts
payable a t the end of the year was not prepared or recorded on the City's books, resulting in a
misstatement of expenditures and liabilities on the City's trial balance. During testwork, there was one
check that was selected that no support could be obtained other then the hicode print off. Also, the City
doe s not us e its purchase order system when requesting authorization for a purchase. We recommend
that the City begin to us e its purchase order system so that every purchase is properly authorized before
disbursement. We also recommend that the City maintain an updated listing of all accounts payable a t all
times in order to track all debts owed by the City and that proper support be maintained in a complete
and organized form.
Repeat comment from prior year.
Response (Unaudited) - This finding is copied from the 2006 Schedule of Findings. A listing of year-
end accounts payable is performed a s an adjusting journal entry recommended by the auditor a s part of
the audit process. This has been the practice with previous auditors.
Finding 2007-6 - Municipal Court - Material Weakness
Every cas h account of the City should be recorded on the City's general ledger. We noted that the year-
end cash balance of the municipal court was not recorded on the City's books a t the beginning or end of
the current fiscal year. This resulted in a misstatement of cas h on the City's general ledger. We
recommend that all activities and functions of the City be recorded on the City's books so that the
financial statements ar e complete.
Repeat comment from prior year.
Response (Unaudited) - This finding is copied from the 2006 Schedule of Findings. The Municipal
Judge has a longstanding policy of keeping the Court finances independent of the City. Funds do not
become the property of the City until released by the Court, a t which time they ar e recognized a s City
revenue. All court funds and accounts ar e fully reported separately by the court and their records ar e
audited separately.
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CITY OF PARKVILLE, MISSOURI
SCHEDULE OF PRIOR YEAR FINDINGS
Year Ended December 31, 2007
Finding 2006-1 - Cash Receipts and Expenditures - Material Weakness
An important aspect of control in any accounting system is segregation of duties. Segregating certain
routine tasks, particularly in the receipts and expenditure cycles can significantly improve controls.
Lack of segregation of duties can lead to increased risks of fraud, errors, or material misstatement of the
financial statements.
In reviewing the cash receipts and expenditures cycles during our audit, we noted certain duties which
appear to be too centralized, which could create a lack of maximum control in this area. One employee
receives cash, prepares the deposit, makes the deposit, prepares checks for payment, mails checks,
makes the majority of the journal entries, and prepares the bank reconciliation. There is also no formal
review of the bank reconciliation and the bank reconciliations ar e not being prepared timely. Check
signers are not reviewing invoices and supporting documents prior to signing checks. We recommend
that the City segregate duties in the cash receipts and expenditures cycles, implement review procedures
for expenditures and that bank reconciliations be prepared timely and be reviewed by a knowledgeable
employee for accuracy and completeness.
Pre-numbered permits are not being used by the Community Development department so the cash
receipts are not traceable to a particular permit. Also, cash and checks received in this department ar e
not kept in a locked area overnight and are not turned in for deposit in a timely manner. We recommend
that the City implement procedures to track permits issued and the related cash received. We also
recommend that cash received and held overnight be locked up and that cash be deposited in a timely
manner.
A monthly municipal court activity report is given to accounting from which a batch journal entry is
made to record the month's activity. This report is not being reviewed by the accounting department
prior to the posting to the general ledger. We recommend that the accounting department agree the daily
cash receipts to the monthly report before posting the entry to the general ledger.
Without such procedures cash receipts are exposed to the risk of loss.
Response (Unaudited) - A personnel transition left many procedural functions undone for a period
during this fiscal year, placing the Finance department in 'catch-up' mode for some time.
Follow-up: This comment is repeated in the current year a s finding 2007-1.
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CITY OF PARECVILLE, MISSOURI
SCHEDULE OF PRIOR YEAR FINDINGS
(Continued)
Finding 2006-2 - Payroll - Material Weakness
An important aspect of control in any accounting system is segregation of duties. Segregating certain
routine tasks, particularly in the receipts and expenditure cycles can significantly improve controls.
Lack of segregation of duties can lead to increased risks of fraud, errors, or material misstatement of the
financial statements.
We noted that the City doe s not have adequate segregation of duties over its payroll process. One
employee is responsible for entering timesheet information, preparing and reviewing the payroll run, and
cutting checks and preparing the direct deposits. This same employee also maintains all the information
for the employee human resource files. The Board and Treasurer sign the checks but a process needs to
be implemented to review and approve the checks and direct deposit amounts before they are mailed or
submitted for payment to the payroll ledger. We recommend that the duties within the payroll function
be segregated in order to safeguard the City's assets.
We also noted that the timesheets submitted by employees are not readily traceable to the payroll
registers due to the timing difference between regular pay and overtime, vacation and sick leave pay.
Also, we noted several timesheets during our testwork that were not approved by an appropriate
supervisor. We recommend that employees be paid in a timely manner based on the number of hours
worked or number of hours taken off a s recorded on the employees' timesheets. We also recommend that
all timesheets be reviewed and approved by an appropriate supervisor before paychecks are issued.
Response (Unaudited) - Due to City policy requiring Board approval with advance submission of all
Bill Paying Ordinances, pay checks must be prepared well in advance of the actual pay dates. It is thus
not possible to have the overtime, etc., periods coincide exactly with pay periods. Once this is taken into
account it is possible to trace timesheet adjustments to the computer payroll registers. Timesheets are
normally approved by supervisors. The "several" unsigned timesheets represent a very small percentage
of the total timesheets submitted. The City's finance department is understaffed and it is hoped that
additional personnel will be budgeted for in the next fiscal year so that a segregation of duties can be
realized.
Follow-up: This comment is repeated in the current year a s finding 2007-2.
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CITY OF PARKVILLE, MISSOURI
SCHEDULE OF PRIOR YEAR FINDINGS
(Continued)
Finding 2006-3 - Capital Assets - Material Weakness
The City is responsible for maintaining complete and accurate schedules of capital assets with related
depreciation. The City doe s not maintain complete depreciation schedules for capital assets. Significant
adjustments were made to record additions and adjustments to capital assets during the audit process, m
addition, annual depreciation expense was not calculated or recorded by the City prior to the audit. We
recommend that capital asset additions and disposals be identified and recorded in a timely manner. We
also recommend that depreciation schedules be updated periodically for these changes and that
depreciation expense be calculated and recorded on the general ledger.
Response (Unaudited) - Capital assets schedules, produced in a spreadsheet format, are maintained for
insurance a s well a s auditing purposes. Determining and recording capital assets often requires more
expertise than is possessed by City staff. In the past we have expected and received expert guidance
from our auditors to ensure these entries are done correctly.
Follow-up: This comment is repeated in the current year a s finding 2007-3.
Finding 2006-4 - Journal Entries - Material Weakness
Preparation of the financial statements in accordance with generally accepted accounting principles is
the responsibility of the City's management. During the course of the audit, we identified significant
misstatements in the trial balance that were not initially identified by the City's internal control. We
recommend that the City review its trial balance and make all necessary adjustments to ensure that the
accounts on the trial balance are not materially misstated.
Response (Unaudited) - The journal entry process has been revised allowing one staff member to affect
entries generated by all departments.
Follow-up: This comment is repeated in the current year a s finding 2007-4.
Finding 2006-5 -Accounts Payable - Significant Deficiency
The City is responsible for tracking its accounts payable balances. A listing of the City's accounts
payable at the end of the year was not prepared or recorded on the City's books, resulting in a
misstatement of expenditures and liabilities on the City's trial balance. Also, the City doe s not use its
purchase order system when requesting authorization for a purchase. We recommend that the City begin
to use its purchase order system so that every purchase is properly authorized before disbursement. We
also recommend that the City maintain an updated listing of all accounts payable at all times in order to
track all debts owed by the City.
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CITY OF PARKVILLE, MISSOURI
SCHEDULE OF PRIOR YEAR FINDINGS
(Continued)
Response (Unaudited) - A listing of year-end accounts payable is performed a s an adjusting journal
entry recommended by the auditor a s part of the audit process. This has been the practice with previous
auditors.
Follow-up: This comment is repeated in the current year a s finding 2007-5 and is considered a material
weakness.
Finding 2006-6 - Municipal Court - Significant Deficiency
Every cash account of the City should be recorded on the City's general ledger. We noted that the year-
end cash balance of the municipal court was not recorded on the City's books at the beginning or end of
the current fiscal year. This resulted in a misstatement of cash on the City's general ledger. We
recommend that all activities and functions of the City be recorded on the City's books so that the
financial statements are complete.
Response (Unaudited) - The Municipal Judge has a longstanding policy of keeping the Court finances
independent of the City. Court bond activities have no impact on city finances except for any revenue
which may be generated. These revenues are recorded when received by the City. It is unclear what
advantage would be served by including court cash balances a s part of the City finances.
Follow-up: This comment is repeated in the current year a s finding 2007-6 and is considered a material
weakness.
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