HomeMy Public PortalAbout2010-2011 Final Audit and Mgmt LetterMOAB CITY CORPORATION
Grand County, Utah
ANNUAL FINANCIAL REPORT
For the Year Ended June 30, 2011
MOAB CITY CORPORATION
TABLE OF CONTENTS
June 30, 2011
INDEPENDENT ACCOUNTANT'S 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
Beginning
on page
1
3
13
15
16
18
Statement of Revenues, Expenditures, and Changes
in Fund Balances - Governmental Funds 19
Reconciliation of the Balance Sheet of Governmental
Funds to the Statement of Net Assets 20
Reconciliation of the Statement of Revenues, Expenditures,
and Changes in Fund Balances of Governmental
Funds to the Statement of Activities
21
Statement of Net Assets - Proprietary Funds 22
Statement of Revenues, Expenses, and Changes
in Fund Net Assets - Proprietary Funds 23
Statement of Cash Flows - Proprietary Funds
Notes to Financial Statements
24
26
REQUIRED SUPPLEMENTARY INFORMATION 40
Schedule of Revenues, Expenditures, and Changes
in Fund Balances - Budget and Actual - General Fund
COMPLIANCE REPORTS
Report on Compliance and on Internal Control over
Financial Reporting
43
45
Report on Compliance with State Fiscal Laws 47
LARSON LSD ROSENBERGER LLP
C E R T I F I E D PUBLIC ACCOUNTANTS
INDEPENDENT AUDITORS' REPORT
October 24, 2011
Honorable Mayor
Members of the City Council
City of Moab, Utah
Mayor and Council Members:
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 Moab, as of and for the year ended June 30, 2011, which collectively comprise
the City of Moab's basic financial statements as listed in the table of contents. These
financial statements are the responsibility of the City of Moab's management. Our
responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the
United States 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 are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our 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 of
Moab, as of June 30, 2011, and the respective changes in financial position and cash flows,
where applicable, for the year then ended in conformity with accounting principles generally
accepted in the United States of America.
i
765 NORTH MAIN + SPANISH FORK, UTAH 84660 + (801) 798-3515 + FAX (801) 798-3678 + WWW.LARSCO,COM
SIX OFFICE LOCATIONS IN VTAH. CALIFORNIA AND NEVADA
The Management's Discussion and Analysis on pages 3 through 11, and the budgetary
comparison for the general fund on page 44, are not a required part of the basic financial
statements but are supplementary information required by accounting principles generally
accepted in the United States 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 express no opinion on it.
In accordance with Government Auditing Standards, we have also issued a report dated
October 24, 2011, on our consideration of the City of Moab's internal control over financial
reporting and on our tests of its compliance with certain provisions of laws, regulations,
contracts, and grants. That report is an integral part of an audit performed in accordance with
Government Auditing Standards and should be read in conjunction with this report in
considering the results of our audit.
J.t - ; LGA
Larson & Rosenberger, LLP
Certified Public Accountants
2
MANAGEMENT'S DISCUSSION AND ANALYSIS
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4
MOAB CITY CORPORATION
Management's Discussion and Analysis
June 30, 2011
As management of MOAB CITY CORPORATION (the City), we offer readers of the City's
financial statements this narrative overview and analysis of financial activities of the City for the
fiscal year ended June 30, 2011.
FINANCIAL HIGHLIGHTS
*Total net assets for the City as a whole increased by $1,611,822.
*Total unrestricted net assets for the City as a whole decreased by $5,201,648.
*Total net assets for governmental activities increased by $1,620,301.
*Total net assets for business -type activities decreased by $8,479.
BASIC FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the basic financial statements
of MOAB CITY CORPORATION. The basic financial statements comprise three components: (1)
government wide financial statements, (2) fund financial statements, and (3) notes to the financial
statements.
Government -wide financial statements. The government -wide financial statements are designed to
provide readers with a broad overview of the City's finances, in a manner similar to a private -sector
business.
The statement of net assets presents information on all of the City's assets and liabilities, with the
difference between the two reported as net assets. Over time, increases or decreases in net assets may
serve as a useful indicator of whether the financial position of the City is improving or deteriorating.
The statement of activities presents information showing how the City's net assets changed during
the fiscal year reported. All changes in net assets are reported as soon as the underlying event giving
rise to the change occurs, regardless of the timing of related cash flows. Thus revenues and expenses
are reported in this statement for some items that will only result in cash flows in future fiscal
periods.
Both of the government -wide financial statements distinguish functions of the City 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 statement of activities is presented on two pages. The first
page reports the extent to which each function or program is self-supporting through fees and
intergovernmental aid. The second page identifies the general revenues of the City available to cover
any remaining costs of the functions or programs.
5
MOAB CITY CORPORATION
Management's Discussion and Analysis
June 30, 2011
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 also uses fund
accounting to ensure and demonstrate compliance with finance -related legal requirements. All of the
funds of the City can be divided into two categories: governmental funds and proprietary funds.
Governmental funds. These funds are used to account for the same functions reported as
governmental activities in the government -wide financial statements. Governmental fund financial
statements focus on near -term inflows and outflows of spendable resources, as well as on balances of
spendable resources available at the end of the fiscal year.
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 government 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 government fund balance sheet and the government fund statement of the
revenues, expenditures, and changes in fund balances provide reconciliation to facilitate this
comparison between governmental funds and governmental activities.
The City maintains two major governmental funds, the general fund and the capital projects fund.
The City adopts an annual appropriated budget for its general fund. A budgetary comparison schedule
has been provided to demonstrate legal compliance with the adopted budget for the general fund.
The basic governmental fund financial statements can be found later in this report; see Table of
Contents.
Proprietary funds. The City maintains one type of proprietary fund. Enterprise funds are used to
report the same functions presented as business -type activities in the government -wide financial
statements. The City uses two enterprise funds to account for the operations of the water, sewer, and
storm drain utilities.
Proprietary funds provide the same type of information as the government -wide financial statements,
only in more detail. The enterprise funds are considered major funds of the City.
The proprietary fund financial statements can be found later in this report; see Table of Contents.
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 are reported later in this report; see Table of Contents.
Other information. In addition to the basic financial statements and accompanying notes, this report
also presents certain required supplementary information concerning the City.
6
MOAB CITY CORPORATION
Management's Discussion and Analysis
June 30, 2011
FINANCIAL ANALYSIS
MOAB CITY CORPORATION's Net Assets
Governmental Business -type
Activities Activities
Total Total
Current Previous Current Previous Current Previous
Year Year Year Year Year Year
Current and other assets $ 3,504,153 7,777,846 4,268,631 4,038,782 7,772,785 11,816,627
Net capital assets 18,537,090 13,414,075 6,471,201 6,723,979 25,008,291 20,138,054
Total assets 22,041,243 21,191,921 10,739,833 10,762,761 32,781,076 31,954,682
Long-term liabilities 6,844,569 6,958,477 - 6,844,569 6,958,477
Other liabilities 714,142 1,371,213 59,477 73,926 773,619 1,445,139
Total liabilities 7,558,710 8,329,689 59,477 73,926 7,618,188 8,403,615
Net assets:
Capital assets, net of debt 11,692,521 6,455,599 6,471,201 6,723,979 18,163,723 13,179,578
Restricted 1,912,602 456,694 2,413,127 2,039,710 4,325,729 2,496,404
Unrestricted 877,410 5,949,939 1,796,027 1,925,146 2,673,437 7,875,085
Total net assets $14,482,533 12,862,232 10,680,355 10,688,835 25,162,888 23,551,066
As noted earlier, net assets may serve over time as a useful indicator of financial position. Total assets
exceeded total liabilities at the close of the year by $25,162,888, an increase of $1,611,822 from the
previous year. This change is equivalent to the net income for the year, in private sector terms.
Total unrestricted net assets at the end of the year are $2,673,437, which represents a decrease of
$5,201,648 from the previous year. Unrestricted net assets are those available to finance day-to-day
operations without constraints established by debt covenants, enabling legislation, or other legal
requirements.
The amount of current and other assets represent the amounts of cash and receivables on hand at the
end of each year. Other liabilities are the amounts of current and other assets due, at year end, for
goods and services acquired.
Changes in capital assets are the result of the difference, in the current year, of the cost of acquisition
of capital assets and any depreciation charges on capital assets. Change in long-term debt is the
difference in the amount of debt issued and that which has been paid during the year.
7
MOAB CITY CORPORATION
Management's Discussion and Analysis
June 30, 2011
FINANCIAL ANALYSIS (continued)
MOAB CITY CORPORATION's Change in Net Assets
Governmental Business -type
Activities Activities
Total Total
Current Previous Current Previous Current Previous
Year Year Year Year Year Year
Program revenues:
Charges for services 1,389,236 1,382,723 1,375,370 1,366,830 2,764,606 2,749,553
Operating grants 199,989 193,933 - - 199,989 193,933
Capital grants 913,503 6,694,756 77,278 390,363 990,781 7,085,119
General revenues:
Sales tax 1,338,286 1,303,089 1,338,286 1,303,089
Other taxes 3,889,991 3,679,557 3,889,991 3,679,557
Unrestricted investment earnings 89,645 87,537 4,379 12,098 94,024 99,635
Other revenues 684,484 538,192 684,484 538,192
Gain on sale of fixed assets 2,875 2,875
Total revenues 8,505,134 13,882,663 1,457,027 1,769,291 9,962,161 15,651,954
Expenses:
General government 1,913,714 1,773,938 1,913,714 1,773,938
Public safety 1,950,842 1,832,365 1,950,842 1,832,365
Highways and improvements 2,072,908 2,155,593 2,072,908 2,155,593
Parks and recreation 1,275,677 1,004,199 1,275,677 1,004,199
Interest on long-term debt 61,692 66,372 61,692 66,372
Water and sewer - 1,068,233 1,009,327 1,068,233 1,009,327
Storm drain 7,273 261,813 7,273 261,813
Total expenses 7,274,833 6,832,467 1,075,507 1,271,140 8,350,339 8,103,608
Excess (deficiency)
before transfers 1,230,301 7,050,195 381,521 498,151 1,611,822 7,548,346
Transfers in (out) 390,000 344,500 (390,000) (344,500)
Change in net assets
1,620,301 7,394,695 (8,479) 153,651 1,611,822 7,548,346
For the City as a whole, total revenues decreased by $5,689,793 compared to the previous year, while
total expenses increased by $119,519. The total net change of $1,611,822 is, in private sector terms,
the net income for the year which is $5,936,524 less than the previous year.
Governmental activities revenues of $8,505,134 is a decrease of $5,377,529 from the previous year.
This is primarly due to a significant decrease in grants received. Governmental activities expenses of
$7,274,833 is an increase of $442,365 from the previous year. Spending for all departments increased
during the year, with the exception of the highways and improvements department.
Business -type activities revenue of $1,457,027 is a decrease of $312,264 from the previous year. This
is due to a decrease in grants received during the year. Business -type activities expenses of
$1,075,507 is a decrease of $195,634 from the previous year. Expenses for storm water operations
decreased significantely compared to the previous year.
8
MOAB CITY CORPORATION
Management's Discussion and Analysis
June 30, 2011
BALANCES AND TRANSACTIONS OF INDIVIDUAL FUNDS
Some of the more significant changes in fund balances and fund net assets and any restrictions on
those amounts is described below:
General Fund
The fund balance of $1,076,799 reflects a decrease of $505,359 from the previous year. Total
revenues increased by $80,109. Tax revenues increased by $245,631. Intergovernmental revenue
increased by $46,506. Proceeds from bonds decreased by $301,880. All other revenues increased by
$89,852.
Total expenditures, excluding transfers out, increased by $120,238. Expenditure changes from the
previous year, by department were: general government increased by $111,813; public safety
increased by $121,503; streets and highways decreased by $88,956; and parks and recreation
decreased by $183,306. Capital outlay expenditures increased by $85,170. Expeditures for princpal
and interest decreased by $296,701 and $5,897, respectively.
The amount restricted for Class C roads is $94,644. The unassigned fund balance amounts to
$982,155.
Capital Projects Fund
The fund balance of $1,969,970 reflects a decrease of $3,085,590 from the previous year. Total
revenue, excluding transfers, decreased by $5,436,480. In the prior year, proceeds from bonds issued
and grant revenues were received were received in the amount of $6,614,346, while in the current
year proceeds from bonds issued and grant revenues were $860,907. Expenses increased during the
year by $2,280,673. This increase is primarily due to continued construction on the Aquatic Center.
Water and Sewer Fund
The change in net assets (net loss) was $112,312. The amounts restricted for construction is
$2,413,127. Unrestricted net assets amount to $937,914.
Storm Drain Fund
The change in net assets (net income) was $103,833. Unrestricted net assets amount to $858,113.
GENERAL FUND BUDGETARY HIGHLIGHTS
Revenues for the current year, exclusive of transfers and fund balance appropriations, were originally
budgeted in the amount of $6,148,550. This amount was amended in the final budget to $6,167,350.
Actual revenues, excluding transfers, amounted to $6,825,809.
Expenditures for the current year, excluding transfers, were originally budgeted in the amount of
$6,715,578. This amount was amended in the final budget to $6,735,878. Actual expenditures
amounted to $6,292,196.
Net transfers for the year were budgeted for net transfers in of $35,028. This amount was amended
during the year to net transfers out of $889,972. Actual net transfers out were made in the amount of
$1,039,972.
9
MOAB CITY CORPORATION
Management's Discussion and Analysis
June 30, 2011
CAPITAL ASSETS AND DEBT ADMINISTRATION
MOAB CITY CORPORATION's Capital Assets (net of depreciation)
Governmental Business -type
Activities Activities
Total Total
Current Previous Current Previous Current Previous
Year Year Year Year Year Year
Net Capital Assets:
Land and water rights $ 476,884 476,884 262,935 262,935 739,819 739,819
Buildings 11,208,139 4,290,809 - 11,208,139 4,290,809
Improvements other than
buildings 2,192,461 1,193,220 - 2,192,461 1,193,220
Machinery and equipment 1,975,301 1,964,635 192,807 175,768 2,168,108 2,140,403
Infrastructure 2,337,035 2,088,078 - 2,337,035 2,088,078
Water system 2,448,487 2,553,231 2,448,487 2,553,231
Sewer system - - 3,566,972 3,670,298 3,566,972 3,670,298
Work in progress 347,271 3,400,449 - 61,746 347,271 3,462,195
Totals
$18,537,090 13,414,075 6,471,201 6,723,979 25,008,291 20,138,054
The total amount of capital assets, net of depreciation, of $25,008,291 is an increase of $4,870,237
from the previous year.
Governmental activities capital assets, net of depreciation, of $18,537,090 is an increase of
$5,123,015 from the previous year.
Business -type activities capital assets, net of depreciation, of $6,471,201 is a decrease of $252,778
from the previous year.
Additional information regarding capital assets may be found in the notes to financial statements.
10
MOAB CITY CORPORATION
Management's Discussion and Analysis
June 30, 2011
CAPITAL ASSETS AND DEBT ADMINISTRATION (continued)
MOAB CITY CORPORATION's Outstanding Debt - Revenue Bonds
Current Previous
Year Year
Governmental activities:
2011 Equipment Lease $ 62,127
2009 Equipment Lease 169,003 220,807
2010 Refinance Vehicles -
2003 Sales Tax Revenue 1,666,000 1,734,000
2009 Sales Tax Revenue 4,764,000 4,764,000
Total governmental 6,661,130 6,718,807
Total outstanding debt $ 6,661,130 6,718,807
Additional information regarding the long-term liabilities may be found in the notes to financial
statements.
ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES
No significant economic changes that would affect the City are expected for the next year. Budgets
have been set on essentially the same factors as the current year being reported.
REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of the MOAB CITY
CORPORATION'S finances for all those with an interest in the City's finances. Questions concerning
any information provided in this report or requests for additional financial information should be
addressed to: City Recorder, 217 East Center Street, Moab, UT 84532.
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12
BASIC FINANCIAL STATEMENTS
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14
MOAB CITY CORPORATION
STATEMENT OF NET ASSETS
June 30, 2011
ASSETS:
Current Assets:
Cash and cash equivalents
Accounts receivable, net of allowances
Other assets
Total current assets
Non -current assets:
Restricted cash and cash equivalents
Capital assets:
Not being depreciated
Net of accumulated depreciation
Total non -current assets
Total assets
LIABILITIES:
Current Liabilities:
Accounts payable
Customer security deposits
Accrued interest
Deferred revenues
Revenue bonds due within one year
Capital leases due within one year
Total current liabilities
Non -current liabilities:
Compensated absences
Revenue bonds due after one year
Capital leases due after one year
Total non -current liabilities
Total liabilities
NET ASSETS:
Invested in capital assets, net of related debt
Restricted:
Class C roads
Debt service
Construction
Unrestricted
Total net assets
Total liabilities and net assets
Governmental Business -type
Activities Activities
$ 2,505,795
625,477
9,840
3,141,113
363,040
824,155
17,712,936
18,900,131
$ 22,041,243
$ 357,102
34,630
(8,399)
70,000
323,595
776,928
330,809
1,596,000
4,854,973
6,781,782
7,558, 710
11,692,521
94,644
152,013
2,543,354
14,482,533
$ 22,041,243
The notes to the financial statements are an integral part of this statement.
15
3,416,191
104,040
3,520,231
748,400
262,935
6,208,266
7,219,601
Total
5,921,987
729,517
9,840
6,661,344
1,111,440
1,087,090
23,921,201
26,119,732
10,739,833 32,781,076
14,007
5,850
19,857
371,109
5,850
34,630
(8,399)
70,000
323,595
796,785
39,620 370,429
1,596,000
4,854,973
39,620 6,821,402
59,477 7,618,188
6,471,201 18,163,723
2,413,127
1,796,027
10,680,355
10 739 833
94,644
2,565,140
4,339,381
25,162,888
32 781 076
7 7 7 7
MOAB CITY CORPORATION
STATEMENT OF ACTIVITIES
For the Year Ended June 30, 2011
Net
(Expense)
Charges Operating Capital Revenue
for Grants and Grants and (To Next
Expenses Services Contributions Contributions Page)
FUNCTIONS/P ROGRAMS :
Primary government:
Governmental activities:
Administration $ 1,913,714 1,069,951 - 55,450 (788,313)
Public safety 1,950,842 16,962 15,358 (1,918,522)
Streets and highways 2,072,908 - 184,631 (1,888,277)
Culture and recreation 1,275,677 302,322 858,053 (115,301)
Interest on long-term debt 61,692 - (61,692)
Total governmental activities 7,274,833 1,389,236 199,989 913,503 (4,772,104)
Business -type activities:
Water & Sewer Utilities 1,068,233 1,239,264 77,278 248,309
Storm Drain Utility 7,273 136,106 128,833
Total business -type activities
1,075,507
1, 375,370
77.278 377,142
Total primary government $ 8,350,339 2 764 606 199,989 990,781 (4,394,963)
(continued on next page)
The notes to the financial statements are an integral part of this statement.
16
MOAB CITY CORPORATION
STATEMENT OF ACTIVITIES (continued)
For the Year Ended June 30, 2011
Governmental Business -type
Activities Activities
CHANGES IN NET ASSETS:
Total
Net (expense) revenue
(from previous page) $ (4,772,104) 377,142 (4,394,963)
General revenues:
Sales tax 1,338,286 1,338,286
Other taxes 3,889,991 3,889,991
Unrestricted investment earnings 89,645 4,379 94,024
Miscellaneous 684,484 684,484
Transfers in (out) 390,000 (390,000)
Total general revenues and transfers 6,392,406 (385,621) 6,006,785
Change in net assets 1,620,301 (8,479) 1,611,822
Net assets - beginning 12,862,232 10,688,835 23,551,066
Net assets - ending $ 14,482,533 10,680,355 25,162,888
The notes to the financial statements are an integral part of this statement.
17
MOAB CITY CORPORATION
BALANCE SHEET - GOVERNMENTAL FUNDS
June 30, 2011
Capital Other Total
General Projects Governmental Governmental
Fund Fund Funds Funds
ASSETS
Cash and cash equivalents $ 440,556 1,953,797 111,443 2,505,795
Accounts receivable, net of allowances 620,202 5,276 625,477
Other assets 9,840 - 9,840
Restricted cash and cash equivalents 211,027 152,013 363,040
TOTAL ASSETS
$1,281,625 2,111,086 111,443 3,504,153
LIABILITIES
Accounts payable $ 213,224
Deferred revenues (8,399)
TOTAL LIABILITIES
FUND BALANCES:
Restricted for:
Class C roads
Capital projects
Assigned for:
Capital projects
USU Set -aside
Recreation
Youth city council
Unassigned:
General fund
TOTAL FUND BALANCES
140,115
3,762 357,102
(8,399)
204,825 140,115 3,762 348,703
94,644 94,644
152,013 - 152,013
982,155
1,742,957 - 1,742,957
75,000 75,000
104,647 104,647
3,034 3,034
982,155
1,076,799 2,045,970 107,681 3,230,451
TOTAL LIABILITIES AND
FUND BALANCES $1,281,625 2,186,086 111,443 3,579,153
The notes to the financial statements are an integral part of this statement.
18
MOAB CITY CORPORATION
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS
For the Year EndedJune 30, 2011
REVENUES:
Taxes:
Sales
Other taxes
Licenses and permits
Intergovernmental revenues
Charges for services
Fines and forfeitures
Interest
Miscellaneous revenue
Total revenues
EXPENDITURES:
Current:
General government
Public safety
Highways and public improvements
Parks, recreation and public property
Capital outlay
Debt service:
Principal
Interest
Total expenditures
General
Fund
$ 1,338,286
3,889,991
117,335
255,439
1,112,813
35,105
Capital
Projects
Fund
799,780
Other Total
Governmental Governmental
Funds Funds
1,338,286
3,889,991
117,335
58,273 1,113,492
123,983 1,236,796
35,105
39,019 50,626 - 89,645
37,820 541,530 105,134 684,484
6,825,809 1,391,936 287,389 8,505,134
1,579,626
1,878,893
1,874,666
683,016
148,389
44,090
5,678,212
108,035 68,000
18,570 43,350
6,291,196 5,833,653
385,740
25,282
1,579,626
1,878,893
1,874,666
1,112,847
5,851,884
176,035
61,920
411,022 12,535,871
Excess (Deficiency) of Revenues over
(Under) Expenditures 534,613 (4,441,717) (123,632) (4,030,737)
Other Financing Sources and (Uses):
Proceeds from capital lease
Transfers in
Transfers (out)
Total other financing sources and (uses)
Net Change in Fund Balances
Fund balances - beginning of year
Fund balances - end of year
390,000
(1,429,972)
62,127
1,295,000
62,127
134,972 1,819,972
(1,429,972)
(1,039,972) 1,357,127 134,972 452,127
(505,359) (3,084,590) 11,340 (3,578,610)
1,582,159 5,055,560 96,341 6,734,060
$ 1,076,799 1,970,970 107,681 3,155,451
The notes to the financial statements are an integral part of this statement.
19
MOAB CITY CORPORATION
RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF NET ASSETS
June 30, 2011
Total Fund Balances for Governmental Funds $ 3,155,451
Total net assets reported for governmental activities in the statement
is different because:
Capital assets used in governmental funds are not financial resources and
therefore are not reported in the funds.
Capital assets, at cost 22,911,151
Less accumulated depreciation (4,374,061)
Net capital assets 18,537,090
Long-term liabilities, for funds other than enterprise funds are recorded
in the government -wide statements but not in the fund statements.
General long-term debt
Interest accrued but not yet paid on long-term debt
Compensated absences
(6,844,569)
(34,630)
(330,809)
Total Net Assets of Governmental Activities $ 14,482,533
The notes to the financial statements are an integral part of this statement.
20
MOAB CITY CORPORATION
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
For the Year Ended June 30, 2011
Net Change in Fund Balances - Total Governmental Funds $ (3,578,610)
Amounts reported for governmental activities in the statement of
activities are different because:
Governmental funds report capital outlays as expenditures. However,
in the statement of activities, assets with a material cost are
capitalized and the cost is allocated over their estimated useful
lives and reported as depreciation expenses.
Capital outlays 5,851,884
Depreciation expense (728,869)
Net 5,123,015
Bond proceeds are reported as financing sources in government funds.
In the statement of net assets, however, issuing debt increases long-term
liabilities and does not affect the statement of activities.
Debt issued - capital leases
Repayment of debt principal is an expenditure in the governmental funds, but
the repayment reduces long-term liabilities in the statement of net assets.
Long-term debt principal repayments
Accrued interest for long-term debt is not reported as expenditure for
the current period, while it is recorded in the statement of activities.
Change in accrued interest
Compensated absences expenses reported in the statement of activities do
not require the use of current financial resources and are not reported as
expenditures in governmental funds.
Change in compensated absence liability
(62,127)
176,035
229
(38,2 40)
Change in Net Assets of Governmental Activities $ 1,620,301
The notes to the financial statements are an integral part of this statement.
21
MOAB CITY CORPORATION
STATEMENT OF NET ASSETS - PROPRIETARY FUND
June 30, 2011
Water & Sewer Storm Drain
Fund Fund
Total
ASSETS:
Current assets:
Cash and cash equivalents $ 2,572,792 843,399 3,416,191
Accounts receivable, net 89,327 14,714 104,040
Total current assets 2,662,119 858,113 3,520,231
Non -current assets:
Restricted cash and cash equivalents 748,400 748,400
Capital assets:
Not being depreciated 262,935 262,935
Net of accumulated depreciation 6,208,266 6,208,266
Total non -current assets 7,219,601 7,219,601
Total assets $ 9,881,720
858,113 10,739,833
LIABILITIES:
Current liabilities:
Accounts payable $ 14,007 14,007
Customer security deposits 5,850 5,850
Total current liabilities 19,857 19,857
Non -current liabilities:
Compensated absences 39,620 39,620
Total non -current liabilities 39,620 39,620
Total liabilities
59,477 59,477
NET ASSETS:
Invested in capital assets,
net of related debt 6,471,201 6,471,201
Restricted for:
Construction 2,413,127 2,413,127
Unrestricted 937,914 858,113 1,796,027
Total net assets 9,822,243 858,113 10,680,355
Total liabilities and net assets $ 9,881,720 858,113 10,739,833
The notes to the financial statements are an integral part of this statement.
22
MOAB CITY CORPORATION
STATEMENT OF REVENUES, EXPENSES, AND CHANGES
IN FUND NET ASSETS - PROPRIETARY FUND
June 30, 2011
Water & Sewer Storm Drain
Fund Fund
Total
Operating income:
Charges for sales and service $ 1,179,171 136,106 1,315,277
Connection fees 9,821 9,821
Other operating income 50,272 50,272
Total operating revenue 1,239,264 136,106 1,375,370
Operating expenses:
Personal services 257,362 257,362
Utilities 81,051 81,051
Repair & maintenance 56,839 7,273 64,113
Other supplies & expenses 318,369 318,369
Insurance expense 1,560 1,560
Depreciation expense 353,053 353,053
Total operating expense 1,068,233 7,273 1,075,507
Net operating income (loss) 171,031 128,833 299,864
Non -operating income (expense):
Impact fees 77,278 77,278
Interest income 4,379 4,379
Total non -operating income (expense) 81,657 81,657
Income (loss) before transfers
and capital contributions 252,688 128,833 381,521
Transfers (out) 365,000 25,000 390,000
Change in net assets (112,312) 103,833 (8,479)
Net assets, beginning 9,934,555 754,280 10,688,835
Net assets, ending $ 9,822,243 858,113 10,680,355
The notes to the financial statements are an integral part of this statement.
23
MOAB CITY CORPORATION
STATEMENT OF CASH FLOWS
For the Year Ended June 30, 2011
Water & Sewer Storm Drain
Fund Fund
Total
Cash flows from operating activities:
Cash received from customers - service $ 1,242,373 134,234 1,376,607
Cash paid to suppliers (472,137) (7,273) (479,410)
Cash paid to employees (256,892) - (256,892)
Net cash provided (used) in operating activities 513,344 126,961 640,305
Cash flows from noncapital financing activities:
Change in customer deposits (600) (600)
Net interfund activity (365,000) (25,000) (390,000)
Net cash provided (used) in
noncapital financing activities (365,600) (25,000) (390,600)
Cash flows from capital and
related financing activities:
Cash received from impact fees 77,278 77,278
Cash payments for capital assets (100,275) (100,275)
Net cash provided (used) in capital
and related financing activities (22,997) (22,997)
Cash flows from investing activities:
Cash received from interest earned 4,379 4,379
Net cash provided (used) in investing activities 4,379 4,379
Net increase (decrease) in cash 129,126 101,961 231,086
Cash balance, beginning 3,192,066 741,439 3,933,505
Cash balance, ending $ 3,321,192 843,399 4,164,591
Cash reported on the balance sheet:
Cash and cash equivalents $ 2,572,792 843,399 3,416,191
Non -current restricted cash 748,400 748,400
Total cash and cash equivalents $ 3,321,192 843,399 4,164,591
The notes to the financial statements are an integral part of this statement.
24
MOAB CITY CORPORATION
STATEMENT OF CASH FLOWS (continued)
For the Year Ended June 30, 2011
Reconciliation of Operating Income
to Net Cash Provided form Operating Activity:
Net operating income (expense)
Adjustments to reconcile operating
income or (loss) to net cash provided (used)
in operating activities:
Depreciation and amortization
Water & Sewer Storm Drain
Fund Fund
Total
$171,031 128,833 299,864
353,053 353,053
Changes in assets and liabilities:
(Increase) decrease in receivables 3,109 (1,872) 1,237
Increase (decrease) in payables (13,849) (13,849)
Net cash provided in operating activity
$ 513,344 126,961 640,305
The notes to the financial statements are an integral part of this statement.
25
MOAB CITY CORPORATION
NOTES TO FINANCIAL STATEMENTS
June 30, 2011
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1-A. Reporting entity
MOAB CITY CORPORATION (the City), a municipal corporation located in Grand County, Utah,
operates under a Council -Manager form of government. The accompanying financial statements present
the City and its component units, entities for which the City is considered to be financially accountable.
1-B. Government -wide and fund financial statements
Government -wide Financial Statements
The government -wide financial statements, consisting of the statement of net assets and the statement of
changes in net assets report information on all of the non -fiduciary activities of the primary government
and its component units. For the most part, the effect of inter -fund activity has been removed from these
statements. 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 reports the expenses of a given function offset by program revenues directly
connected with the functional program. A function is an assembly of similar activities and may include
portions of a fund or summarize more than one fund to capture the expenses and program revenues
associated with a distinct functional activity. Direct expenses are those that are clearly identifiable with a
specific function or segment. Indirect expenses are not allocated. All expenses are included in the
applicable function. Program revenues include (1) charges to customers or applicants who purchase, use,
or directly benefit from goods, services, or privilege 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 as general revenues.
Fund Financial Statements
Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds,
if any, even though the latter are excluded from the government -wide financial statements. Major
individual governmental funds and major individual enterprise funds are reported as separate columns in
the fund financial statement.
26
MOAB CITY CORPORATION
NOTES TO FINANCIAL STATEMENTS
June 30, 2011
1-C. Measurement focus, basis of accounting and financial statement presentation
The financial statements of the City are prepared in accordance with generally accepted accounting
principles (GAAP). The City's reporting entity applies all relevant Governmental Accounting Standards
Board (GASB) pronouncements and applicable Financial Accounting Standards Board (FASB)
pronouncements and Accounting Principles Board (APB) opinions issued on or before November 30,
1989, unless they conflict with GASB pronouncements. The City's reporting entity does not apply FASB
pronouncements or APB opinions issued after November 30, 1989.
The government -wide statements are reported using the economic resources measurement focus and the
accrual basis of accounting, generally including the reclassification of internal activity (between or within
funds). However, internal eliminations do not include utility services provided to City departments or
payments to the general fund by other funds for providing administrative and billing services for such
funds. Reimbursements are reported as reductions to expenses. Proprietary and any fiduciary fund
financial statements are also reported using this same focus and basis of accounting although internal
activity is not eliminated in these statements. Revenues are recorded when earned and expenses are
recorded when a liability is incurred, regardless of the timing of related cash flows. Property tax revenues
are recognized in the year for which they are levied while grants are recognized when the grantor
eligibility requirements are met.
Governmental fund financial statements are reported using the current financial resources measurement
focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both
measurable and available. Revenues are considered to be available when they are collectible within the
current period or soon enough thereafter to pay liabilities of the current period. The City considers
revenues to be available if they are collected within 60 days of the end of the current fiscal period.
Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However,
debt service expenditures, as well as expenditures related to compensated absences and claims and
judgments, are recorded only when payment is due.
Property taxes, sales taxes, intergovernmental revenues, and interest associated with the current fiscal
period are all considered to be susceptible to accrual and so have been recognized as revenues of the
current fiscal period. Only the portion of special assessments, if any, receivable within the current fiscal
period is considered to be susceptible to accrual as revenue of the current period. All other revenue items
are considered to be measurable and available only when cash is received by the government.
Proprietary funds distinguish operating revenues and expenses from non -operating items. Operating
income and expense reported in proprietary fund financial statements include those revenues and
expenses related to the primary, continuing operations of the fund. Principal operating revenues for
proprietary funds are charges to customers for sales or services. Principal operating expenses are the costs
of providing goods or services, including administrative expenses and depreciation of capital assets. Other
revenues and expenses are classified as non -operating in the financial statements.
27
MOAB CITY CORPORATION
NOTES TO FINANCIAL STATEMENTS
June 30, 2011
1-C. Measurement focus, basis of accounting, and financial statement presentation (continued)
Policy regarding use of restricted resources
When both restricted and unrestricted resources are available for use, it is the City's policy to use
restricted resources first, then unrestricted resources as needed. Restricted assets and liabilities payable
from restricted assets current in nature are reported with current assets and current liabilities. Restricted
assets, non -current reports assets restricted for acquisition or construction of non -current assets, or are
restricted for liquidation of long-term debt.
1-D. Fund types and major funds
Governmental funds
The City reports the following major governmental funds:
The general fund is the government's primary operating fund. It accounts for all financial resources of the
general government, except those required to be accounted for in another fund.
The capital projects fund accounts for financial resources used for the acquisition or construction of the
capital facilities of the City (other than those of the enterprise funds).
The City reports the following as non -major governmental funds:
The recreation fund accounts for the revenues and expenditures for the activities relation to recreation.
The youth city council fund accounts for revenues and expenditures for activities with the youth city
council.
Proprietary funds
The City reports the following major proprietary funds:
The water and sewer fund is used to account for the activities of water and sewer utilities.
The City reports the following non -major proprietary funds:
The storm drain fund is used to account for the revenues and expenditures of the storm drain utility.
1-E. Assets, Liabilities, and Net Assets or Equity
1-E-1. Deposit and investments
Investments are reported at fair value. Deposits are reported at cost, which approximates fair value.
Investments of the City are accounts at the Utah Public Treasurers Investments Fund. Additional
information is contained in Note 2.
28
MOAB CITY CORPORATION
NOTES TO FINANCIAL STATEMENTS
June 30, 2011
1-E. Assets, Liabilities, and Net Assets or Equity (continued)
1-E-2. Cash and Cash Equivalents
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.
1-E-3. Receivables and Payables
Accounts receivable other than property taxes and intergovernmental receivables are from customers
primarily for utility services. Property tax and intergovernmental receivables are considered collectible.
Customer accounts are reported net of an allowance for uncollectible accounts. The allowance amount is
estimated using accounts receivable past due more than 90 days.
During the course of operations, there may be transactions occur between funds that are representative of
lending/borrowing arrangements outstanding at year-end. These are reported as either due to or due from
other funds.
1-E-4. Restricted Assets
In accordance with certain revenue bond covenants, resources may be required to be set aside for the
repayment of such bonds, and, on occasion, for the repair and maintenance of the assets acquired with the
bond proceeds. These resources are classified as restricted assets on the balance sheet because of their
limited use. Most capital grant agreements mandate that grant proceeds be spent only on capital assets.
Unspent resources of this nature are also classified as restricted. The limited use resources described
above involve a reported restriction of both cash and net assets.
Unspent proceeds of bonds issued to finance capital assets are also reported as restricted cash
1-E-5. Inventories and Prepaid items
Inventories in governmental funds are not reported. These consist of immaterial amounts of expendable
supplies for consumption. Such supplies are acquired as needed. Proprietary fund inventories, where
material, are stated at the lower of cost or market, using the first -in, first -out basis.
Prepaid items record payments to vendors that benefit future reporting and are reported on the
consumption basis. Both inventories and prepayments are similarly reported in government -wide and
fund financial statements.
29
MOAB CITY CORPORATION
NOTES TO FINANCIAL STATEMENTS
June 30, 2011
1-E. Assets, Liabilities, and Net Assets or Equity (continued)
1-E-6. Capital Assets
Capital assets includes property, plant, equipment, and infrastructure assets (e.g., roads, bridges,
sidewalks, and similar items), and are reported in the applicable governmental or business -type activities
columns in the government -wide financial statements. Capital assets are defined by the government as
assets with an initial, individual cost of $5,000 or more and an estimated useful life in excess of two
years. Such assets are recorded at historical cost or at estimated historical cost if purchased or constructed.
Donated capital assets are recorded at estimated fair market value at the date of donation. Infrastructure is
depreciated.
The cost of normal maintenance and repairs that does not add to the value of an asset or materially extend
the assets' life is not capitalized. Major outlays for capital assets and improvements are capitalized as
projects are constructed. Interest incurred during the construction phase of capital assets of business -type
activities is included as part of the capitalized value of the assets constructed.
Upon retirement or disposition of capital assets, the cost and related accumulated depreciation are
removed from the respective accounts. Depreciation of capital assets is computed using the straight-line
method over their estimated useful lives.
Property, plant, and equipment of the primary government, as well as the component units if any, is
depreciated using the straight line method over the following estimated useful lives:
Assets Years
Buildings and improvements 30-45
Machinery and equipment 10-15
Vehicles 5-10
Infrastructure 30
1-E-7. Long-term Obligations
In the government -wide and proprietary fund financial statements, long-term debt and obligations are
reported as liabilities in the applicable governmental activities, business -type activities, or proprietary
fund statement of net assets. Bond issuance costs, bond discounts or premiums, and the difference
between the reacquisition price and the net carrying value of refunded debt are deferred and amortized
over the terms of the respective bonds using the effective interest method. Bonds payable are reported net
of the applicable bond premium or discount. Significant or material bond issuance costs are reported as
deferred charges.
The governmental fund financial statements recognize the proceeds of debt and premiums as other
financing sources of the current period. Issuance costs are reported as expenditures.
30
MOAB CITY CORPORATION
NOTES TO FINANCIAL STATEMENTS
June 30, 2011
1-E. Assets, Liabilities, and Net Assets or Equity (continued)
1-E-8. Fund Equity
The governmental fund financial statements report reserved fund balance for amounts not available for
appropriation of legally restricted for specified purposes. The General Fund reserve for restricted
purposes includes fund balance/net assets resulting from Class C road allotments restricted for eligible
road maintenance. Designations of fund balance represent tentative management plans that are subject to
change
NOTE 2 - STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
2-A. Budgetary data
Annual budgets are prepared and adopted by ordinance by total for each department, in accordance with
State law, by the Mayor and City Council on or before June 22 for the following fiscal year beginning
July 1. Estimated revenues and appropriations may be increased or decreased by resolution of the City
Council at any time during the year. A public hearing must be held prior to any proposed increase in a
fund's appropriations. Budgets include activities in the General Fund.. The level of the City's budgetary
control (the level at which the City's expenditures cannot legally exceed appropriations) is established at
the department level. Each department head is responsible for operating within the budget for their
department. All annual budgets lapse at fiscal year end.
Utah State law prohibits the appropriation of unreserved General Fund balance to an amount less than 5%
of the General Fund revenues. The 5% reserve that cannot be budgeted is used to provide working capital
until tax revenue is received, to meet emergency expenditures, and to cover unanticipated deficits. Any
unreserved General Fund balance greater than 18% of the next year's budgeted revenues must be
appropriated within the following two years.
Once adopted, the budget may be amended by the City Council without hearing provided the budgeted
expenditures do not exceed budgeted revenues and appropriated fund balance. A public hearing must be
held if the budgeted expenditures will exceed budgeted revenues and any fund balance which is available
for budgeting. With the consent of the Mayor, department heads may reallocate unexpended appropriated
balances from one expenditure account to another within that department during the budget year. Budgets
for the General Fund are prepared on the modified accrual basis of accounting. Encumbrances are not
used.
2-B. Deficit fund net assets
As of June 30, 2011, none of the City's funds have deficit fund balances.
31
MOAB CITY CORPORATION
NOTES TO FINANCIAL STATEMENTS
June 30, 2011
NOTE 3 - DETAILED NOTES
3-A. Deposits and investments
Cash and investments as of June 30, 2011 consist of the following:
Fair Value
Cash on hand $ 650
Demand deposits - checking 1,399,942
Savings 2,181,076
Deposits - PTIF 3,451,759
Total cash $ 7,033,427
Cash and investments listed above are classified in the accompanying government -wide statement of net
assets as follows:
Cash and cash equivalents (current)
Restricted cash and cash equivalents (non -current)
$ 5,921,987
1,111,440
Total cash and cash equivalents $ 7,033,427
Cash equivalents and investments are carried at fair value in accordance with GASB Statement No. 31.
The Utah Money Management Act (UMMA) establishes specific requirements regarding deposits of
public funds by public treasurers. UMMA requires that city funds be deposited with a qualified
depository which includes any depository institution which has been certified by the Utah State
Commissioner of Financial Institutions as having met the requirements specified in UMMA Section 51,
Chapter 7. UMMA provides the formula for determining the amount of public funds which a qualified
depository may hold in order to minimize risk of loss and also defines capital requirements which an
Institution must maintain to be eligible to accept public funds. UMMA lists the criteria for investments
and specifies the assets which are eligible to be invested in, and for some investments, the amount of time
to maturity.
UMMA enables the State Treasurer to operate the Public Treasurer's Investment Pool (PTIF). PTIF is
managed by the Utah State Treasurer's investment staff and comes under the regulatory authority of the
Utah Money Management Council. This council is comprised of a select group of financial professionals
from units of local and state government and financial institutions doing business in the state. PTIF
operations and portfolio composition is monitored at least semi-annually by the Utah Money Management
Council. PTIF is unrated by any nationally recognized statistical rating organizations. Deposits in PTIF
are not insured or otherwise guaranteed by the State of Utah. Participants share proportionally in any
realized gains or losses on investments which are recorded on an amortized cost basis. The balance
available for withdrawal is based on the accounting records maintained by PTIF. The fair value of the
investment pool is approximately equal to the value of the pool shares. The City maintains monies not
immediately needed for expenditure in PTIF accounts.
32
MOAB CITY CORPORATION
NOTES TO FINANCIAL STATEMENTS
June 30, 2011
3-A. Deposits and investments (continued)
Deposit and Investment Risk
The City maintains no investment policy containing any specific provisions intended to limit the City's
exposure to interest rate risk, credit risk, and concentration of credit risk other than that imposed by
UMMA. The City's compliance with the provisions of UMMA addresses each of these risks.
Interest rate risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an
investment. All deposits and investments of the City are available immediately.
Credit risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligations. Custodial
credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a
government will not be able to recover its deposits. At June 30, 2011, $500,000 of the City's demand and
bank trust deposits are covered by FDIC insurance.
Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g.,
broker -dealer) to a transaction, a government will not be able to recover the value of its investment or
collateral securities that are in the possession of another party. This risk is addressed through the policy of
investing excess monies only in PTIF.
Concentration of credit risk
Concentration of credit risk is the risk of loss attributed to the magnitude of a government's investment in
a single issuer. PTIF falls under the constraints of UMMA in limiting concentrations of investments.
3-B. Receivables
The allowance policy is described in Note 1-E-3. Receivables as of year-end for the City's funds are
shown below:
Governmental Business -Type
Activities Activities Total
Customers $ 95,464 108,499 203,963
Intergovernmental 519,129 - 519,129
Other receivables 10,884 10,884
Total receivables $ 625,477 108,499 733,977
Allowance for uncollectibles (4,459) (4,459)
Net receivables
$ 625,477 104,040 729,517
33
MOAB CITY CORPORATION
NOTES TO FINANCIAL STATEMENTS
June 30, 2011
3-C. Capital Assets
Capital asset activity for the governmental activities was as follows:
Governmental activities:
Capital assets, not being depreciated:
Land and rights
Construction in progress
Total capital assets, not being depreciated
Capital assets, being depreciated:
Buildings
Improvements other than buildings
Machinery and equipment
Infrastructure
Total capital assets, being depreciated
Less accumulated depreciation for:
Buildings
Improvements other than buildings
Machinery and equipment
Infrastructure
Total accumulated depreciation
Total capital assets being depreciated, net
Governmental activities capital assets, net
Beginning
Balance
Ending
Additions Retirements Balance
$ 476,884 476,884
3,400,449 5,055,945 8,109,123 347,271
3,877,333
4,982,916
2,147,484
3,346,632
2,704,902
13,181,934
692,108
954,264
1,381,997
616,824
5,055,945 8,109,123
7,092,776
1,137,484
310,121
364,681
824.155
- 12,075,693
3,284,967
3,656,754
3,069,583
8,905,062 - 22,086,997
175,446
138,242
299,456
115,725
- 867,554
1,092,506
1,681,453
732,548
3,645,192 728,869 - 4,374,061
9,536,742 8,176,194
- 17,712,936
$13,414,075 13,232,139 8,109,123 18,537,090
Depreciation expense was charged to functions/programs of the primary government governmental
activities as follows:
Governmental activities:
General government
Public safety
Highways and public improvements
Parks, recreation and public property
Total
34
$ 295,848
71,949
198,242
162,830
$ 728,869
MOAB CITY CORPORATION
NOTES TO FINANCIAL STATEMENTS
June 30, 2011
3-C. Capital assets (continued)
Capital asset activity for business -type activities was as follows:
Beginning
Balance
Business -type activities:
Capital assets, not being depreciated:
Land and water shares $ 262,935
Construction in progress 61,746
Total capital assets, not being depreciated 324,682
Capital assets, being depreciated:
Water system
Sewer system
Machinery & equipment
Total capital assets, being depreciated
Less accumulated depreciation for:
Water system
Sewer system
Machinery & equipment
Total accumulated depreciation
Total capital assets being depreciated, net
Business -type activities capital assets, net
5,203,710
6,879,898
831,064
Ending
Additions Retirements Balance
58,042
51,579
52,400
12,914,672 162,021
2,650,479
3,209,599
655,296
6,515,375
162,786
154,905
35,362
353.053
6,399,297 (191,031)
$ 6,723,979 (191,031)
61,746
262,935
61.746 262,935
- 5,261,752
6,931,477
883,465
13,076,693
- 2,813,265
3,364,505
690,658
- 6,868,427
- 6,208,266
61,746 6,471,201
Depreciation expense was charged to functions/programs of the primary government business -type
activities as follows:
Business -type activities:
Water
Sewer
Total
35
$ 192,747
160,306
$ 353,053
3-D. Long-term debt
MOAB CITY CORPORATION
NOTES TO FINANCIAL STATEMENTS
June 30, 2011
Due
Original % Within
Principal Rate 6/30/2010 Additions Reductions 6/30/2011 One Year
Governmental activities:
2011 Equipment Lease $ 62,127 3.66 62,127 62,127 19,969
Matures 1/25/2014
2009 Equipment lease 270,500 4.25 220,807 51,805 169,003 54,006
Matures 3/24/2014
REFINANCE VEHICLES 2010 332,080 4.25 269,869 56,230 213,639 58,620
Matures 6/24/2014
2003 Sales Tax Revenue 2,050,000 2.50 1,734,000 68,000 1,666,000 70,000
Matures 10/1/2029
2009 Sales Tax Revenue Bonds 4,764,000 - 4,764,000 - 4,764,000 191,000
Matures 10/1/2035
Total governmental activity
long-term liabilities $6,988,676 62,127 176,035 6,874,769 393,595
Debt service requirements to maturity for governmental activities are as follows:
Principal Interest Total
2012 $ 393,595 58,903 452,498
2013 400,113 51,635 451,748
2014 407,861 44,112 451,973
2015 266,000 36,300 302,300
2016 268,000 34,425 302,425
2017 - 2021 1,370,000 142,250 1,512,250
2022 - 2026 1,423,000 87,800 1,510,800
2027 - 2031 1,372,000 26,400 1,398,400
2032 - 2035 944,000 944,000
Other long-term liabilities:
Total $6,844,569 481,825 7,326,394
Increase
Beginning (Decrease) Ending
Compensate absences:
Governmental $ 292,569 38,240 330,809
Business -type 39,151 469 39,620
Total $ 331,720 38,709 370,429
36
MOAB CITY CORPORATION
NOTES TO FINANCIAL STATEMENTS
June 30, 2011
3-E.Interfund receivables, payables, and transfers
Interfund transfers:
Transfers Out:
General
Water and
Sewer Storm Drain Total
Transfers In:
General fund $ - 365,000 25,000 390,000
Recreation 134,972 134,972
Capital projects 1,295,000 1,295,000
Total 1,429,972 365,000 25,000 1,819,972
Transfers are used to move unrestricted general fund revenues to finance various programs that the
government must account for in other funds in accordance with budgetary authorizations, including
amounts provided as subsidies or matching funds for various grant programs.
NOTE 4- OTHER INFORMATION
4-A. Risk management
The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets;
errors and omissions; and natural disasters. The City participates in the Utah Local Government Trust, a
public agency insurance mutual, which provides coverage for property damage and general liability. The
City is subject to a minimal deductible for claims. There have been no significant reductions in insurance
coverage from coverage in the prior year. Amounts of settlements have not exceeded insurance coverage
in any of the past three fiscal years.
4-B. Employee pension and other benefit plans
Plan Description:
The City contributes to the Local Governmental Noncontributory Retirement System (Noncontributory
System) and Public Safety Retirement System (Public Safety System) for employers with (without)
Social Security coverage, all of which are cost -sharing multiple -employer defined benefit pension plans
administered by the Utah Retirement Systems (Systems). The Systems provide retirement benefits,
annual cost of living adjustments, death benefits and refunds to plan members and beneficiaries in
accordance with retirement statutes established and amended by the State Legislature.
The Systems are established and governed by the respective sections of Chapter 49 of the Utah Code
Annotated 1953 (Chapter 49) as amended, which also establishes the Utah State Retirement Office
(Office) for the administration of the Utah Retirement Systems and Plans. Chapter 49 places the Systems,
the Office and related plans and programs under the direction of the Utah State Retirement Board
(Board) whose members are appointed by the Governor. The Systems issue a publicly available financial
report that includes financial statements and required supplementary information for the Systems and
Plans. A copy of the report may be obtained by writing to the Utah Retirement Systems, 540 East 200
South, Salt Lake City, UT 84102 or by calling 1-800-365-8772.
37
MOAB CITY CORPORATION
NOTES TO FINANCIAL STATEMENTS
June 30, 2011
4-B. Employee pension and other benefit plans (continued)
Funding Policy:
The City is required to contribute a percent of covered salary to the respective systems: 13.37% to the
Noncontributory and 26.13% to the Public Safety Noncontributory Systems. The contribution rate is the
actuarially determined rate and is approved by the Board as authorized by Chapter 49.
The City's contributions to the various systems for the years ending June 30, 2011, 2010 and 2009
respectively, were: for the Noncontributory System, $251,908, $211,007, and $211,289, and for the
Public Safety Noncontributory $125,207, $119,256, and $126,600, respectively. The contributions were
equal to the required contributions for each year.
IRC Code Section 401K Plan:
The City participates in a 401k plan offered through the Utah State Retirement Systems. The City's
contributions for the years ending June 30, 2011, 2010 and 2009 were $15,677, $12,859 and $15,091,
respectively.
4-C. Landfill agreement
Moab City entered into an agreement with the Grand County Sold Waste Management Special Service
District No. 1 and Grand County in which the City agreed to guarantee the performance of closure and
post -closure care at the Klondike and Moab Landfills. Should the escrow moneys set aside by the District
not cover all costs associated with the closure and post -closure of the landfill, Moab would be liable for
one half of the uncovered costs. Total closure and post -closure costs are currently estimated to be no
more than $164,126 for the Klondike Landfill and for the Moab Landfill.
38
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39
REQUIRED SUPPLEMENTAL INFORMATION
(Unaudited)
40
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41
MOAB CITY CORPORATION
Notes to Required Supplementary Information
June 30, 2011
Budgetary Comparison Schedules
The Budgetary Comparison Schedules presented in this section of the report are for the Town's
General Fund.
Budgeting and Budgetary Control
Budgets for the General Fund are legally required and are prepared and adopted on the modified
accrual basis of accounting.
Original budgets represent the revenue estimates and spending authority authorized by the City
Council prior to the beginning of the year. Final budgets represent the original budget amounts plus
any amendments made to the budget during the year by the Council through formal resolution. Final
budgets do not include unexpended balances from the prior year because such balances automatically
lapse to unreserved fund balance at the end of each year.
Current Year Excess of Expenditures over Appropriations
For the year ended June 30, 2011, spending for all departments spending was within the appropriated
budget.
42
MOAB CITY CORPORATION
SCHEDULE OF REVENUES, EXPENDITUES AND
CHANGED IN FUND BALANCES - BUDGET AND ACTUAL - GENERAL FUND
(Unaudited)
For the Year Ended June 30, 2011
Revenues
Taxes
Licenses and permits
Intergovernmental revenues
Charges for services
Fines and forfeitures
Interest
Miscellaneous revenue
Total revenues
Expenditures
General government
Public safety
Highways and public improvements
Parks and recreation
Debt Service:
Principal
Interest
Total expenditures
Budgeted Budgeted
Original Final Actual
$ 4,641,000 4,641,000 5,228,277
107,100 107,100 117,335
263,500 265,300 255,439
994,650 1,011,650 1,112,813
51,400 51,400 35,105
36,000 36,000 39,019
39,900 39,900 37,820
Variance with
Final Budget
Under (Over)
587,277
10,235
(9,861)
101,163
(16,295)
3,019
(2,080)
6,133,550 6,152,350 6,825,809 673,459
1,628,685
2,056,510
2,185,381
717,818
1,635,635
2,059,860
2,188,081
724,618
1,579,626
1,949,112
1,952,837
683,016
105,922 118,221 108,035
21,262 9,463 18,570
6,715,578 6,735,878 6,291,196
Excess (Deficiency) of Revenues
Over (Under) Expenditures $ (583,528) (583,528) 534,613
Other Financing Sources and (Uses)
Proceeds from sale of fixed assets
Transfers in
Transfers (out)
Total Other Financing Sources and (Uses)
Net Change in Fund Balances
Fund Balances - beginning of year
Fund Balances - end of year
15,000
540,000
(504,972)
15,000
540,000 390,000
(1,429,972) (1,429,972)
50,028 (874,972) (1,039,972)
(533,500) (1,458,500) (505,359)
1,582,159 1,582,159 1,582,159
$ 1,048,659 123,659
43
56,009
110,748
235,244
41,602
10,186
(9,107)
444,682
1,118,141
(15,000)
(150,000)
(165,000)
953,141
1,076,799 953,141
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44
LARSON & ROSENBERGER LLP
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE AND ON
INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN
AUDIT OF GENERAL-PURPOSE FINANCIAL STATEMENTS PERFORMED
IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
October 24, 2011
Honorable Mayor and
Members of the City Council
Moab City, Utah
Mayor and Council Members:
We have audited the accompanying basic financial statements of Moab City, Utah (herein
referred to as the "City"), as of and for the year ended June 30, 2011, and have issued our report
thereon dated October 24, 2011. We conducted our audit in accordance with auditing standards
generally accepted in the United States of America and the standards applicable to fmancial
audits contained in Government Auditing Standards issued by the Comptroller General of the
United States.
Compliance
As part of obtaining reasonable assurance about whether the City's basic fmancial statements are
free of material misstatement, we performed tests of its compliance with certain provisions of
laws, regulations, contracts and grants, 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 that are required to be reported under Government Auditing Standards.
However, we noted certain immaterial instances of noncompliance that we have reported to
management of the City in the management letter.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the City's internal control over fmancial
reporting as a basis for designing our auditing procedures for the purpose of expressing our
opinions on the fmancial statements, but not for the purpose of expressing an opinion on the
effectiveness of the City's intemal control over fmancial reporting. Accordingly, we do not
express an opinion on the effectiveness of the City's internal control over financial reporting.
45
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SIX OFFICE LOCATIONS IN VTAH. CALIFORNIA AND NEVADA
Our consideration of internal control over financial reporting was for the limited purpose
described in the preceding paragraph and would not necessarily identify all deficiencies in
internal control over financial reporting that might be significant deficiencies or material
weaknesses. However, as discussed below, we identified certain deficiencies in internal control
over fmancial 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 City's ability to initiate, authorize, record,
process, or report fmancial data reliably in accordance with generally accepted accounting
principles such that there is more than a remote likelihood that a misstatement of the City's
financial statements that is more than inconsequential will not be prevented or detected by the
City's internal control. We consider the deficiencies described in the accompanying management
letter to be significant deficiencies in internal control over fmancial 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 fmancial statements
will not be prevented or detected by the City's intemal control.
Our consideration of the 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 the internal control that might be significant deficiencies and, accordingly, would not
necessarily disclose all significant deficiencies that are also considered to be material
weaknesses. However, we believe that none of the significant deficiencies described in the
management letter are a material weakness.
This report is intended for the information of the Mayor and City Council, management, and
various federal and state funding and auditing agencies and is not intended to be and should not
be used by anyone other than these specified parties.
LAP
Larson & Rosenberger, LLP
Certified Public Accountants
46
1
Al
LARSON & ROSENBERGER LLY
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITORS' REPORT ON LEGAL COMPLIANCE WITH
APPLICABLE UTAH STATE LAWS AND REGULATIONS
October 24, 2011
Honorable Mayor and
City Council Members
Moab City, Utah
Mayor and Council Members:
We have audited the basic fmancial statements of Moab City, Utah, (herein referred to as the
"City") as of and for the year ended June 30, 2011, and have issued our report thereon dated
October 24, 2011. As part of our audit, we have audited Moab City's compliance with the
requirements governing types of services allowed or un allowed; eligibility; matching, level of
effort, or earmarking, reporting; special tests and provisions applicable to each of its major State
assistance programs as required by the State of Utah Legal Compliance Audit Guide for the year
ended June 30, 2011. The City received the following major State assistance programs from the
State of Utah:
B & C Road Funds (Department of Transportation)
Liquor Law Enforcement (State Tax Commission)
Our audit also included test work on the City's compliance with those general compliance
requirements identified in the State of Utah Legal Compliance Audit Guide, including:
Public Debt
Cash Management
Purchasing Requirements
Budgetary Compliance
Truth in Taxation and Property Tax Limitations
Other General Compliance Issues
Impact Fees and Other Development Fees
Justice Courts Compliance
Asset Forfeiture
Utah Retirement System Compliance
Uniform Building Code Standards
Fund Balance
47
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SIX OFFICE LOCATIONS IN UTAH, CALIFORNIA AN❑ NEVAOA
The management of Moab City is responsible for the City's compliance with all compliance
requirements identified above. Our responsibility is to express an opinion on compliance with
those requirements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards and
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 material noncompliance with the requirements referred to above occurred. An audit
includes examining, on a test basis, evidence about the City's compliance with those
requirements. We believe that our audit provides a reasonable basis for our opinion.
The results of our audit procedures disclosed immaterial instances of noncompliance with the
requirements referred to above, which are described in a the management letter dated October
24, 2011. We considered these instances of noncompliance in forming our opinion on
compliance, which is expressed in the following paragraph.
In our opinion, Moab City, Utah, complied, in all material respects, with the general compliance
requirements identified above and the requirements governing types of services allowed or un
allowed; eligibility; matching, level of effort, or earmarking; reporting; and special tests and
provisions that are applicable to each of its major State assistance programs for the year ended
June 30, 2011.
Y6'4'47)
Larson & Rosenberger, LLP
Certified Public Accountants
G
48
MOAB CITY, UTAH
MANAGEMENT LETTER - COMMUNICATION TO
THOSE CHARGED WITH GOVERNANCE
YEAR ENDED JUNE 30, 2011
MOAB CITY, UTAH
TABLE OF CONTENTS
YEAR ENDED JUNE 30, 2011
MANAGEMENT LETTER:
Beginning
on page
Communication with Those Charged with Governance 1
Schedule of Findings
State Compliance Finding — Current Year 3
Internal Control Findings — Current Year 4
Status of State Compliance Findings — Prior Year 5
Status of Internal Control Findings — Prior Year 6
LARSON (ST ROSENBERGER LLP
CERTIFIED PUBLIC ACCOUNTANTS
October 24, 2011
To the Honorable Mayor and
Members of the City Council
City of Moab, Utah
We have audited the financial statements of the governmental activities, the business -type activities, each major
fund, and the aggregate remaining fund intonation of Moab City for the year ended June 30, 2011. Professional
standards require that we provide you with information about our responsibilities under generally accepted
auditing standards (and, if applicable, Government Auditing Standards and OMB Circular A-133), as well as
certain information related to the planned scope and timing of our audit. We have communicated such information
in our letter to you dated October 24, 2011. Professional standards also require that we communicate to you the
following information related to our audit.
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant
accounting policies used by Moab City are described in Note 1 to the financial statements. No new accounting
policies were adopted and the application of existing policies was not changed during 2011. We noted no
transactions entered into by the governmental unit during the year for which there is a lack of authoritative
guidance or consensus. All significant transactions have been recognized in the financial statements in the proper
period.
Accounting estimates are an integral part of the financial statements prepared by management and are based on
management's knowledge and experience about past and current events and assumptions about future events.
Certain accounting estimates are particularly sensitive because of their significance to the financial statements
and because of the possibility that future events affecting them may differ significantly from those expected.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during the audit,
other than those that are trivial, and communicate them to the appropriate level of management. Management
has corrected all such misstatements.
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a financial
accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to
the financial statements or the auditor's report. We are pleased to report that no such disagreements arose during
the course of our audit.
Management Representations
We have requested certain representations from management that are included in the management
representation letter dated October 24, 2011.
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SIX OFFICE LOCATIONS IN VTAH. CALIFORNIA AND NEVADA
2
Management Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and accounting matters,
similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting
principle to the governmental unit's financial statements or a determination of the type of auditor's opinion that
may be expressed on those statements, our professional standards require the consulting accountant to check
with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such
consultations with other accountants.
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and auditing
standards, with management each year prior to retention as the governmental unit's auditors. However, these
discussions occurred in the normal course of our professional relationship and our responses were not a condition
to our retention.
This information is intended solely for the use of Moab City, management of Moab City, and other various Federal
and State funding and auditing agencies and is not intended to be and should not be used by anyone other than
these specified parties.
Very truly yours,
G---,op,"`F
Larson & Rosenberger, LLP
Certified Public Accountants
GAP
(Continued)
3
SCHEDULE OF FINDINGS — CURRENT YEAR
State Compliance Finding (s)
Impact Fee Report
Finding:
Each municipality shall present an impact fee report which identifies impact fee funds by the year
in which they were received, the project from which the funds were collected, the capital projects
for which the funds were budgeted, and the projected schedule for expenditure in a format
developed by the State Auditor, certified by their financial officer and transmitted annually to the
State Auditor. Due to an oversight by management, the City's report was not filed in a timely
manner.
Recommendation:
It is recommended that the City complete and finalize the impact fee report in the correct format
laid out by the State Auditor and submit it to the State Auditor's office by the due date each year.
Client Response:
The City received a letter from the State Auditor requesting the report. The report was
subsequently filed on August 9, 2011 for the fiscal years 2010 and 2011.
`Remaining part of page intentionally left blank'
(Continued)
4
Internal Control Finding (s)
Cash Disbursements
Finding:
It was noted during the cash disbursement testing that 2 of the 60 checks sampled did not contain
all of the information or documentation tested for. One of the disbursements tested was mis-
coded in the general ledger. It was determined that had the check been properly coded it would
not have caused a budgetary compliance issue. Therefore the finding is limited to the miscoding
of the check. Another disbursement did not contain supporting documentation required to be
attached to the check stub when filed.
Recommendation:
We recommend that the City double check accounts when posting to the general ledger and that
all disbursements issued should have supporting documentation attached and filed with the
records.
Client Response:
The City understands the need to retain all documentation and keep accurate and proper records.
They will fortify controls already in place to prevent this happening in the future.
Separation of Duties (Significant Deficiency)
Finding:
Proper separation of duties is a key effective internal control because it can aid in reducing the
risk of mistakes and inappropriate actions, and can help fight fraud through discouraging collusion.
We noted during our audit that the City lacks proper segregation of duties which results in
weakness in internal controls.
Recommendation:
We recommend that, to the extent possible, the City segregate duties to serve as a check and
balance to maintain the best control system possible. Due to the limited number of staff at the
City we also recommend that the Council provide oversight on the financial operations of the City.
Client Response:
The city plans to remain vigilant in separating duties where possible, and provide mitigating
controls where adequate separation is not possible due to the limited staff size at the City.
Cash Handling Policies
Finding:
Quality internal controls over cash require proper documentation and verification by more than
one employee. It was noted during our inquiry at the Moab Arts and Recreation Center (MARC)
that forms documenting beginning and ending cash amounts are not currently being used. Cash
received is stored in drawers without locks.
Recommendation:
We recommend that personnel at the MARC adopt proper cash handling procedures similar to
those at other cash collecting venues controlled by the City. In particular the use of some type of
form to document beginning and ending daily cash balances and have at least two people count
and verify cash.
Client Response:
The client understands and agrees with the need for internal controls over cash handling and
reporting. They will adopt and follow appropriate cash management procedures at the MARC.
(Continued)
5
SCHEDULE OF FINDINGS — PRIOR YEAR
State Compliance Finding (s)
Underfunded State Treasurers Bond
Finding:
Every public treasurer shall secure a fidelity bond, based on the previous year's budgeted gross
revenue, which includes funds collected or handled by the Public Treasurer. It was noted that the
City's bond was under the required limit set by the State of Utah
Recommendation:
It is recommended that the City increase its treasurer's bond to the appropriate level based on
budgeted revenues.
Status:
No issues noted during current period under audit.
General Fund Balance
Finding:
Utah Code 10-6-116(4) indicates that only the fund balance in excess of 5% of total revenues of
the general fund may be utilized for budget purposes. The remaining 5% must be maintained as a
minimum fund balance. The maximum fund balance in the general fund may not exceed 18% of
the total estimated revenue within the general fund. The City had fund balance in excess of the
18% limit. This was due to an oversight by management.
Recommendation:
We recommend that the City use the available funds. If the City is accumulating funds for projects,
then they should budget and allocate those funds to a capital projects fund to be used at a later
date.
Status:
No issues noted during current period under audit.
Impact Fee Report
Finding:
Each municipality shall present an impact fee report which identifies impact fee funds by the year
in which they were received, the project from which the funds were collected, the capital projects
for which the funds were budgeted, and the projected schedule for expenditure in a format
developed by the State Auditor, certified by their financial officer and transmitted annually to the
State Auditor. Due to an oversight by management, the City's report was not filed in a timely
manner.
Recommendation:
It is recommended that the City complete and finalize the impact fee report in the correct format
laid out by the State Auditor and submit it to the State Auditor's office by the due date each year.
Status:
See Current Year Findings
(Continued)
6
Internal Control Finding (s)
Cash Disbursements
Finding:
It was noted during the cash disbursement testing that 1 of the checks out of 60 could not be
located. A former employee had the file containing the check stub and documentation, who was
subsequently let go for other reasons. It is believed that the check documentation was lost in his
office.
Recommendation:
The City was able to recreate all documentation, and provided a copy of the cancelled check.
However, the city needs to put controls in place to ascertain and retain all necessary
documentation and approvals for expenditures.
Status:
See Current Year Findings.
Separation of Duties
Finding:
Proper separation of duties is a key effective internal control because it can aid in reducing the
risk of mistakes and inappropriate actions, and can help fight fraud through discouraging collusion.
We noted during our audit that the City lacks proper segregation of duties which results in
weakness in internal controls.
Recommendation:
We recommend that, to the extent possible, the City segregate duties to serve as a check and
balance to maintain the best control system possible. Due to the limited number of staff at the
City we also recommend that the Council provide oversight on the financial operations of the City.
Status:
See Current Year Findings.
(Continued)