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HomeMy Public PortalAbout2008-2009 annual final auditMoab City Grand County, Utah ANNUAL FINANCIAL REPORT For the Year Ended June 30, 2009 Moab City TABLE OF CONTENTS June 30, 2009 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 REQUIRED SUPPLEMENTARY INFORMATION Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - General Fund (Continued on next page) 24 26 41 44 Moab City TABLE OF CONTENTS June 30, 2009 (Continued from previous page) COMPLIANCE REPORTS Beginning on page Report on Compliance and on Internal Control over Financial Reporting 45 Report on Compliance with State Fiscal Laws 47 LARSON & ROSENBERGER LLP CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITORS' REPORT December 10, 2009 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, 2009, 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, 2009, and the respective changes in financial position and cash flows, where applicable, and the budgetary comparison for the general fund thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. SALT LAKE CITY OFFICE 9065 SOUTH 1300 EAST SANDY, UTAH 24094 (801)313-1900 FAX (901) 313-1912 LOS ANGELES OFFICE 801 NORTH BRAND BLVD STE 1180 GLENDALE, CALIFORNIA. 91203 (9113) 334-8623 FAX (819) 241-7353 SPANISH FORK OFFICE 765 NORTH MAIN SPANISH FORK, UTAH 84660 (601) 790-3545 FAX (801) 798-3678 MOAB OFFICE 115 WEST 200 SOUTH N4 MOAB, UTAH 94532 (435) 259-9100 FAX (4351 259-1100 MEMBER OF THE INTERNATIONAL ACCOUNTING GROUP ( T I A G) + W W W. L A R S C O. C O M The Management's Discussion and Analysis on pages 3 through 11, and the budgetary comparison for the general fund, 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 December 10, 2009, 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. 4 Au.hv,- L P Larson & Rosenberger, LLP Certified Public Accountants 2 MANAGEMENT'S DISCUSSION AND ANALYSIS 3 This page intentionally left blank. 4 Moab City Management's Discussion and Analysis June 30, 2009 As management of Moab City (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, 2009. FINANCIAL HIGHLIGHTS *Total net assets for the City as a whole increased by $405,971. *Total unrestricted net assets for the City as a whole increased by $763,258. *Total net assets for governmental activities decreased by $683,356. *Total net assets for business -type activities increased by $1,089,327. BASIC FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the basic financial statements of Moab City. 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 Management's Discussion and Analysis June 30, 2009 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 shedule 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 FINANCIAL ANALYSIS Moab City's Net Assets Moab City Management's Discussion and Analysis June 30, 2009 Governmental Business -type Activities Activities Total Total Current Previous Current Previous Current Previous Year Year Year Year Year Year Current and other assets $ 3,225,445 4,235,543 3,724,637 2,653,116 6,950,082 6,888,659 Net capital assets 10,593,800 10,113,040 6,896,381 6,943,120 17,490,181 17,056,159 Total assets 13,819,245 14,348,583 10,621,018 9,596,236 24,440,263 23,944,819 Long-term liabilities Other liabilities Total liabilities 2,363,333 2,333,307 36,481 114,481 2,399,814 2,447,788 927,381 803,389 49,354 35,899 976,735 839,288 3,290,715 3,136,696 85,835 150,380 3,376,549 3,287,076 Net assets: Capital assets, net of debt 8,230,467 7,779,733 6,859,901 6,828,639 15,090,368 14,608,372 Restricted 173,553 228,362 748,400 1,532,874 921,953 1,761,236 Unrestricted 2,124,511 3,203,792 2,926,883 1,084,343 5,051,394 4,288,135 Total net assets $ 10,528,531 11,211,886 10 535 184 9 445 856 21,063,714 20,657,743 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 $21,063,714, an increase of $405,972 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 $5,051,394, which represents an increase of $763,258 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 Management's Discussion and Analysis June 30, 2009 FINANCIAL ANALYSIS (continued) Moab City'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 1,240,286 1,282,589 1,386,480 1,270,876 2,626,766 2,553,466 Operating grants 244,964 235,189 - - 244,964 235,189 Capital grants 130,172 281,110 57,679 189,243 187,851 470,353 General revenues: Sales tax 1,454,430 1,427,015 1,454,430 1,427,015 Other taxes 3,683,646 3,510,795 3,683,646 3,510,795 Unrestricted investment earnings 103,178 153,312 55,217 104,267 158,395 257,579 Other revenues 167,030 156,345 93,105 260,135 156,345 Gain on sale of assets 8,024 2,325 - 8,024 2,325 Total revenues 7,031,731 7,048,679 1,592,481 1,564,386 8,624,212 8,613,065 Expenses: General government 1,799,849 1,481,817 - 1,799,849 1,481,817 Public safety 1,976,923 1,775,588 - 1,976,923 1,775,588 Highways and improvements 2,202,589 2,030,718 - 2,202,589 2,030,718 Parks and recreation 1,177,536 947,250 - 1,177,536 947,250 Interest on long-term debt 102,690 53,533 - 102,690 53,533 Water and sewer - - 958,013 917,734 958,013 917,734 Storm drain - 641 10,048 641 10,048 Total expenses 7,259,587 6,288,905 958,654 927,782 8,218,241 7,216,687 Excess (deficiency) before transfers (227,856) 759,774 633,827 636,604 405,971 1,396,378 Transfers in (out) (455,500) - 455,500 Change in net assets (683,356) 759,774 1,089,327 636,604 405,971 1,396,378 For the City as a whole, total revenues increased by $11,147 compared to the previous year, while total expenses increased by $1,001,554. The total net change of $405,971 is, in private sector terms, the net income for the year which is $990,407 less than the previous year. Governmental activities revenues of $7,031,731 is a decrease of $16,948 from the previous year. Governmental activities expenses of $7,259,587 is an increase of $970,681 from the previous year. Expenditures for all departments increased substantially during the year. Business -type activities revenue of $1,592,481 is an increase of $28,096 from the previous year. Business -type activities expenses of $958,654 is an increase of $30,872 from the previous year. This is due to an overall increase in water and sewer operation expenses. 8 Moab City Management's Discussion and Analysis June 30, 2009 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 $926,653 reflects a decrease of $1,449,589 from the previous year. Total revenues, excluding transfers in, increased by $28,836. Tax revenues increased by $200,266. Intergovernmental revenue increased by $4,080. All other revenues decreased by $175,510. Transfers in for the year amounted to $344,500. Total expenditures, excluding transfers out, increased by $652,839. Expenditure changes from the previous year, by department: general government increased by $6,275; public safety increased by $256,631; streets and highways decreased by $104,726; and parks and recreation increased by $68,008. Capital oulay expenditures increased by $404,305. Debt service expenditures increased by $22,346. Transfers out for the year amounted to $2,071,848. The amount restricted for Class C roads is $173,553. Unreserved fund balance amounts to $753,100. Water and Sewer Fund The change in net assets (net income) was $182,005. The amount restricted for debt service and construction is $36,481 and $711,919, respectively. Unrestricted net assets amount to $2,018,796. Storm Drain Fund The change in net assets (net income) was $907,322. Unrestricted net assets amount to $908,086. GENERAL FUND BUDGETARY HIGHLIGHTS Revenues for the current year, exclusive of transfers and fund balance appropriations, were originally budgeted in the amount of $6,493,009. This amount was amended in the final budget to $6,498,009. Actual revenues, excluding transfers, amounted to $6,907,615. Expenditures for the current year, excluding transfers, were originally budgeted in the amount of $6,969,258. This amount was amended in the final budget to $6,974,195. Actual expenditures amounted to $6,629,856. 9 Moab City Management's Discussion and Analysis June 30, 2009 CAPITAL ASSETS AND DEBT ADMINISTRATION Moab City's Capital Assets (net of depreciation) Governmental Activities Net Capital Assets: Land and water rights Buildings Improvements other than buildings Machinery and equipment Infrastructure Water system Sewer system Work in progress Current Previous Year Year $ 476,884 371,977 4,404,485 4,360,651 1,298,780 1,330,281 2,217,377 2,159,600 2,196,274 1,890,531 Business -type Activities Current Previous Year Year Total Current Year Total Previous Year 262,935 262,935 739,819 634,912 - 4,404,485 4,360,651 141,429 112,543 2,672,162 2,676,582 3,739,499 3,891,059 80,356 - 1,298,780 1,330,281 2,358,807 2,272,143 2,196,274 1,890,531 2,672,162 2,676,582 3,739,499 3,891,059 80,356 Totals $10,593,800 10,113,040 6,896,381 6,943,120 17,490,181 17,056,159 The total amount of capital assets, net of depreciation, of $17,490,181 is an increase of $434,022 from the previous year. Governmental activities capital assets, net of depreciation, of $10,593,800 is an increase of $480,760 from the previous year. Business -type activities capital assets, net of depreciation, of $6,896,381 is a decrease of $46,738 from the previous year. Additional information regarding capital assets may be found in the notes to financial statements. 10 Moab City Management's Discussion and Analysis June 30, 2009 CAPITAL ASSETS AND DEBT ADMINISTRATION (continued) Moab City's Outstanding Debt - Revenue Bonds Current Previous Year Year Governmental activities: 2006 Lease F-353 $ 9,514 2006 Lease F-150s 14,736 2007 Lease Chargers(3) 26,149 51,172 2008 Lease Vehicles 59,264 87,500 2008 Lease Equipment 207,420 305,385 2009 Lease Equipment 270,500 2003 Sales Tax Revenue 1,800,000 1,865,000 Total governmental 2,363,333 2,333,307 Business -type activities: 1993A BWR Water Revenue 3,240 43,240 1993B BWR Water Revenue 33,240 71,240 Total business -type 36,481 114,481 Total outstanding debt $ 2,399,814 2,447,788 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'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, UT 84532. 11 This page intentionally left blank. 12 BASIC FINANCIAL STATEMENTS 13 This page intentionally left blank. 14 Moab City STATEMENT OF NET ASSETS June 30, 2009 Governmental Business -type Activities Activities Total ASSETS: Current Assets: Cash and cash equivalents $ 1,937,420 2,861,182 4,798,602 Accounts receivable, net of allowances 1,042,813 115,055 1,157,868 Other assets 71,659 - 71,659 Total current assets 3,051,892 2,976,237 6,028,129 Non -current assets: Restricted cash and cash equivalents 173,553 748,400 921,953 Capital assets: Not being depreciated 476,884 343,292 820,176 Net of accumulated depreciation 10,116,916 6,553,090 16,670,006 Total non -current assets 10,767,353 7,644,781 18,412,135 Total assets $ 13,819,245 10,621,018 24,440,263 LIABILITIES: Current Liabilities: Accounts payable $ 103,658 7,075 110,733 Customer security deposits 8,200 8,200 Accrued interest 37,954 37,954 Deferred revenues 504,748 504,748 Revenue bonds due within one year 66,000 36,481 102,481 Capital leases due within one year 206,745 - 206,745 Total current liabilities 919,105 51,756 970,861 Non -current liabilities: Compensated absences 281,021 34,079 315,100 Revenue bonds due after one year 1,734,000 1,734,000 Capital leases due after one year 356,588 356,588 Total non -current liabilities 2,371,609 34,079 2,405,688 Total liabilities 3,290,715 85,835 3,376,549 NET ASSETS: Invested in capital assets, net of related debt 8,230,467 6,859,901 15,090,368 Restricted: Class C roads 173,553 173,553 Debt service 36,481 36,481 Impact fees 711,919 711,919 Unrestricted 2,124,511 2,926,883 5,051,394 Total net assets 10,528,531 10,535,184 21,063,714 Total liabilities and net assets $13,819,245 10,621,018 24,440,263 The notes to the financial statements are an integral part of this statement. 15 FUNCTIONS/PROGRAMS: Primary government: Governmental activities: Administration Public safety Streets and highways Culture and recreation Interest on long-term debt Total governmental activities Business -type activities: Water & Sewer Utilities Storm Drain Utility Total business -type activities Total primary government (continued on next page) Moab City STATEMENT OF ACTIVITIES For the Year Ended June 30, 2009 Expenses $ 1,799,849 1,976,923 2,202,589 1,177,536 102,690 Charges for Services 1,056,456 12,417 171,413 Operating Grants and Contributions 52,291 14,980 177,693 Capital Grants and Contributions 130,172 Net (Expense) Revenue (To Next Page) (691,103) (1,949,526) (2,024,895) (875,951) (102,690) 7,259,587 1,240,286 244,964 130,172 (5,644,164) 958,013 1,259,017 - 57,679 358,683 641 127,463 - 126,822 958 654 1 386 480 $ 8 218 241 2 626 766 57.679 485.505 244,964 187,851 (5,158,659) The notes to the financial statements are an integral part of this statement. 16 Moab City STATEMENT OF ACTIVITIES (continued) For the Year Ended June 30, 2009 Governmental Business -type Activities Activities CHANGES IN NET ASSETS: Total Net (expense) revenue (from previous page) $ (5,644,164) 485,505 (5,158,659) General revenues: Sales tax 1,454,430 1,454,430 Other taxes 3,683,646 3,683,646 Unrestricted investment earnings 103,178 55,217 158,395 Miscellaneous 167,030 93,105 260,135 Gain on sales of capital assets 8,024 - 8,024 Transfers in (out) (455,500) 455,500 Total general revenues and transfers 4,960,809 603,822 5,564,631 Change in net assets (683,356) 1,089,327 405,971 Net assets - beginning, as reported 11,731,576 9,445,856 21,177,432 Prior period adjustments (519,689) - (519,689) Net assets - beginning, adjusted 11,211,886 9,445,856 20,657,743 Net assets - ending $ 10,528,531 10,535,184 21,063,714 The notes to the financial statements are an integral part of this statement. 17 Moab City BALANCE SHEET - GOVERNMENTAL FUNDS June 30, 2009 Capital Other Total General Projects Governmental Governmental Fund Fund Funds Funds ASSETS Cash and cash equivalents $ 241,319 1,593,766 102,335 1,937,420 Accounts receivable, net of allowances 531,768 510,024 1,021 1,042,813 Other assets 71,659 71,659 Restricted cash and cash equivalents 173,553 173,553 TOTAL ASSETS $ 1,018,300 2,103,790 103,356 3,225,445 LIABILITIES Accounts payable $ 91,647 7,044 4,967 103,658 Deferred revenues 504,748 504,748 TOTAL LIABILITIES 91.647 511.792 4.967 608.406 FUND BALANCES: Reserved for: Class C roads 173,553 173,553 Recreation - - 95,382 95,382 Youth city council 3,007 3,007 Unreserved, reported in: General fund 753,100 753,100 Capital projects funds 1,591,997 1,591,997 TOTAL FUND BALANCES 926,653 1,591,997 98,389 2,617,039 TOTAL LIABILITIES AND FUND BALANCES $ 1,018,300 2,103,790 The notes to the financial statements are an integral part of this statement. 18 103,356 3,225,445 Moab City STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS For the Year Ended June 30, 2009 Capital Other Total General Projects Governmental Governmental Fund Fund Funds Funds REVENUES: Taxes: Sales $ 1,454,430 1,454,430 Other taxes 3,683,646 3,683,646 Licenses and permits 114,990 114,990 Intergovernmental revenues 244,964 70,174 59,998 375,137 Charges for services 954,277 119,344 1,073,621 Fines and forfeitures 51,675 - 51,675 Interest 50,613 51,630 934 103,178 Miscellaneous revenue 57,701 58,768 50,561 167,030 Total revenues 6,612,297 180,573 230,837 7,023,707 EXPENDITURES: Current: General government 1,505,281 1,505,281 Public safety 1,970,364 1,970,364 Highways and public improvements 2,110,095 2,110,095 Parks, recreation and public property 617,465 107,914 368,450 1,093,829 Capital outlay 404,305 739,150 1,143,455 Debt service: Principal 4,235 65,000 69,235 Interest 18,111 46,625 64,736 Total expenditures 6,629,856 958,689 368,450 7,956,995 Excess (Deficiency) of Revenues over (Under) Expenditures (17,559) (778,116) (137,613) (933,288) Other Financing Sources and (Uses): Proceeds from sale of bonds 270,500 270,500 Proceeds from sale of assets 24,818 24,818 Transfers in 344,500 1,136,000 135,848 1,616,348 Transfers (out) (2,071,848) - - (2,071,848) Total other financing sources and (uses) (1,432,030) 1,136,000 135,848 (160,182) Net Change in Fund Balances (1,449,589) 357,884 (1,765) (1,093,470) Fund balances - beginning, as reported 2,376,242 1,753,802 100,154 4,230,198 Prior period adjustments - (519,689) (519,689) Fund balances - beginning, adjusted 2,376,242 1,234,113 100,154 3,710,509 Fund balances - end of year $ 926,653 1,591,997 98,389 2,617,039 The notes to the financial statements are an integral part of this statement. 19 Moab City RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS June 30, 2009 Total Fund Balances for Governmental Funds $ 2,617,039 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 13,575,685 Less accumulated depreciation (2,981,885) Net capital assets 10,593,800 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 (2,363,333) (37,954) (281,021) Total Net Assets of Governmental Activities $ 10,528,531 The notes to the financial statements are an integral part of this statement. 20 Moab City 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, 2009 Net Change in Fund Balances - Total Governmental Funds $ (1,093,470) 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 1,143,455 Depreciation expense (645,902) Net 497.554 Cost of retired assets sold is not reported in government fund statements, while it is reported in the statement of activities. Book cost of assets retired 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 - bonds 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 (16,794) (270,500) 240,474 (37,954) (2,666) Change in Net Assets of Governmental Activities $ (683,356) The notes to the financial statements are an integral part of this statement. 21 Moab City STATEMENT OF NET ASSETS - PROPRIETARY FUNDS June 30, 2009 Water & Sewer Storm Drain Fund Fund Total ASSETS: Current assets: Cash and cash equivalents $ 1,966,409 894,773 2,861,182 Accounts receivable, net 101,741 13,314 115,055 Total current assets 2,068,150 908,086 2,976,237 Non -current assets: Restricted cash and cash equivalents 748,400 - 748,400 Capital assets: Not being depreciated 343,292 343,292 Net of accumulated depreciation 6,553,090 - 6,553,090 Total non -current assets 7,644,781 - 7,644,781 Total assets $ 9,712,932 908,086 10,621,018 LIABILITIES: Current liabilities: Accounts payable $ 7,075 - 7,075 Customer security deposits 8,200 - 8,200 Revenue bonds, current portion 36,481 36,481 Total current liabilities 51,756 51,756 Non -current liabilities: Compensated absences 34,079 34,079 Revenue bonds, long-term - - Total non -current liabilities 34,079 34,079 Total liabilities 85.835 85.835 NET ASSETS: Invested in capital assets, net of related debt 6,859,901 6,859,901 Restricted for: Debt service 36,481 36,481 Construction 711,919 711,919 Unrestricted 2,018,796 908,086 2,926,883 Total net assets 9.627.097 908.086 10.535,184 Total liabilities and net assets $ 9,712,932 908,086 10,621,018 The notes to the financial statements are an integral part of this statement. 22 Moab City STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS - PROPRIETARY FUNDS June 30, 2009 Operating income: Charges for sales and service Connection fees Other operating income Total operating revenue Operating expenses: Personal services Utilities Repair & maintenance Other supplies & expenses Insurance expense Depreciation expense Total operating expense Water & Sewer Storm Drain Fund Fund $ 1,176,901 13,594 68,522 1,259.017 222,863 72,208 30,802 299,448 1,560 330,705 957.585 Net operating income (loss) 301,432 Non -operating income (expense): Impact fees Other contributions Interest income Interest on long-term debt Total non -operating income (expense) 57,679 93,105 55,217 (428) 205.573 Income (loss) before transfers and capital contributions 507,005 Transfers in Transfers (out) Change in net assets Net assets, beginning Net assets, ending (325,000) 182,005 9,445,092 $ 9,627,097 The notes to the financial statements are an integral part of this statement. 23 Total 127,463 1,304,364 - 13,594 - 68,522 127,463 1,386,480 11 630 641 126.822 126.822 222,863 72,208 30,813 300,078 1,560 330,705 958.226 428.254 57,679 93,105 55,217 (428) 205.573 633,827 800,000 800,000 (19,500) (344,500) 907,322 1,089,327 765 9,445,856 908,086 10.535,184 Moab City STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS For the Year Ended June 30, 2009 Water & Sewer Storm Drain Fund Fund Total Cash flows from operating activities: Cash received from customers - service $ 1,262,227 124,924 1,387,150 Cash paid to suppliers (396,943) (641) (397,584) Cash paid to employees (217,027) - (217,027) Net cash provided (used) in operating activities 648,257 124,283 772,540 Cash flows from noncapital financing activities: Change in customer deposits 544 544 Miscellaneous contributions 93,105 93,105 Net interfund activity (314,990) 770,490 455,500 Net cash provided (used) in noncapital financing activities (221,341) 770,490 549,149 Cash flows from capital and related financing activities: Cash received from impact fees 57,679 - 57,679 Cash payments for capital assets (283,966) - (283,966) Cash payments for long-term debt principal (78,000) (78,000) Cash payments for long-term debt interest (428) (428) Net cash provided (used) in capital and related financing activities (304,715) - (304,715) Cash flows from investing activities: Cash received from interest earned 55,217 55,217 Net cash provided (used) in investing activities 55,217 55,217 Net increase (decrease) in cash 177,418 894,773 1,072,191 Cash balance, beginning 2,537,391 2,537,391 Cash balance, ending $ 2,714,809 894,773 3,609,582 Cash reported on the balance sheet: Cash and cash equivalents $ 1,966,409 894,773 2,861,182 Non -current restricted cash 748,400 - 748,400 Total cash and cash equivalents $ 2,714,809 894,773 3,609,582 The notes to the financial statements are an integral part of this statement. 24 Moab City STATEMENT OF CASH FLOWS (continued) For the Year Ended June 30, 2009 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 $ 301,432 126,822 428,254 330,705 330,705 Changes in assets and liabilities: (Increase) decrease in receivables 3,210 (2,539) 670 Increase (decrease) in payables 12,911 12,911 Net cash provided in operating activity $ 648,257 124,283 772,540 The notes to the financial statements are an integral part of this statement. 25 Moab City NOTES TO FINANCIAL STATEMENTS June 30, 2009 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1-A. Reporting entity Moab City (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 NOTES TO FINANCIAL STATEMENTS June 30, 2009 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 NOTES TO FINANCIAL STATEMENTS June 30, 2009 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 fund: 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 relating 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 the 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 NOTES TO FINANCIAL STATEMENTS June 30, 2009 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. Property taxes are assessed and collected for the City by Grand County and remitted to the City shortly after collection. Property taxes become a lien on January 1 and are levied on the first Monday in August. Taxes are due and payable on November 1, and are delinquent after November 30. All dates are in the year of levy. 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 NOTES TO FINANCIAL STATEMENTS June 30, 2009 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 NOTES TO FINANCIAL STATEMENTS June 30, 2009 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. 1-E-9. Prior Period Adjustments The beginning fund balance of the capital projects fund and the beginning net assets reported on the government -wide financial statements have been restated. The restatement represents a decrease in the Capital Projects fund of $519,689. 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 City Manager, 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, 2009, none of the City's funds have deficit fund balances. 31 Moab City NOTES TO FINANCIAL STATEMENTS June 30, 2009 NOTE 3 - DETAILED NOTES 3-A. Deposits and investments Cash and investments as of June 30, 2009 consist of the following: Fair Value Cash on hand $ 650 Demand deposits - checking 394,202 Deposits - PTIF 5,325,704 Total cash $ 5,720,555 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) $ 4,798,602 921,953 Total cash and cash equivalents $ 5,720,555 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 NOTES TO FINANCIAL STATEMENTS June 30, 2009 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, 2009, $500,000 of the City's demand deposits are covered by FDIC insurance while $155,401 is uninsured. 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 parry. 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. Accounts not expected to be received within one year are captioned as non -current receivables. Receivables as of year end for the City's funds are shown below. All receivables are deemed collectible. Governmental Business -Type Activities Activities Total Customers $ 116,446 119,514 235,960 Intergovernmental 421,619 421,619 Other receivables 35,606 35,606 Total receivables $ 573,671 119,514 693,185 Allowance for uncollectibles (4,459) (4,459) Net receivables $ 573,671 115,055 688,726 33 Moab City NOTES TO FINANCIAL STATEMENTS June 30, 2009 3-C. Capital Assets Capital asset activity for the governmental activities was as follows: Beginning Ending Balance Additions Retirements Balance Governmental activities: Capital assets, not being depreciated: Land and rights $ 371,977 104,907 - 476,884 Construction in progress - Total capital assets, not being depreciated 371,977 104,907 476,884 Capital assets, being depreciated: Buildings 4,806,693 165,582 4,972,275 Improvements other than buildings 2,032,257 91,318 - 2,123,575 Machinery and equipment 2,950,422 372,840 25,212 3,298,050 Infrastructure 2,296,094 408,808 - 2,704,902 Total capital assets, being depreciated 12,085,465 1,038,548 25,212 13,098,801 Less accumulated depreciation for: Buildings 446,041 121,749 - 567,790 Improvements other than buildings 701,976 122,819 - 824,795 Machinery and equipment 790,822 298,269 8,418 1,080,672 Infrastructure 405,563 103,065 - 508,628 Total accumulated depreciation 2,344,402 645,901 8,418 2,981,885 Total capital assets being depreciated, net 9,741,063 392,647 16,794 10,116,916 Governmental activities capital assets, net $ 10,113,040 497,554 16,794 10,593,800 Depreciation expense was charged to functions/programs of the primary government governmental activities as follows: Governmental activities: General government $ 291,903 Public safety 70,319 Highways and public improvements 190,459 Parks, recreation and public property 93,222 Total $ 645,902 34 Moab City NOTES TO FINANCIAL STATEMENTS June 30, 2009 3-C. Capital assets (continued) Capital asset activity for business -type activities was as follows: Beginning Ending Balance Additions Retirements Balance Business -type activities: Capital assets, not being depreciated: Land and water shares $ 262,935 262,935 Construction in progress 80,356 80,356 Total capital assets, not being depreciated 262.935 80.356 343.292 Capital assets, being depreciated: Water system 5,008,065 152,292 5,160,358 Sewer system 6,795,542 - 6,795,542 Machinery & equipment 714,888 51,318 766,206 Total capital assets, being depreciated 12,518,495 203,610 12,722,105 Less accumulated depreciation for: Water system 2,331,483 156,713 2,488,196 Sewer system 2,904,483 151,560 3,056,043 Machinery & equipment 602,345 22,431 624,777 Total accumulated depreciation 5,838,311 330,705 - 6,169,016 Total capital assets being depreciated, net 6,680,184 (127,094) - 6,553,090 Business -type activities capital assets, net $ 6,943,120 (46,738) - 6,896,381 Depreciation expense was charged to functions/programs of the primary government business -type activities as follows: Business -type activities: Water $ 178,423 Sewer 152,281 Total $ 330,705 35 3-D. Long-term debt Moab City NOTES TO FINANCIAL STATEMENTS June 30, 2009 Original % Due Within Principal Rate 6/30/2008 Additions Reductions 6/30/2009 One Year Governmental activities: 2006 Lease F353 $ 27,485 3.90 $ 9,514 9,514 Matures 8/31/2008 2006 Capital Lease F150s 44,207 4.10 14,736 14,736 Matures 6/30/2009 2007 Lease Chargers(3) 75,118 4.50 51,172 - 25,023 26,149 26,149 Matures 11/28/2009 2008 Lease Vehicles 87,500 3.26 87,500 - 28,236 59,264 29,157 Matures 3/5/2011 2008 Lease Equipment 305,385 3.86 305,385 - 97,965 207,420 101,746 Matures 6/24/2011 2009 Equipment lease 270,500 4.25 - 270,500 - 270,500 49,693 Matures 3/24/2014 2003 Sales Tax Revenue 2,050,000 2.50 1,865,000 65,000 1,800,000 66,000 Matures 10/1/2029 Total governmental activity long-term liabilities $2,333,307 270,500 240,474 2,363,333 272,745 Bond debt service requirements to maturity for governmental activities are as follows: Principal Interest Total 2010 $ 272,745 67,611 340,356 2011 255,586 57,795 313,380 2012 124,006 48,833 172,839 2013 127,302 44,787 172,089 2014 131,695 40,620 172,314 2015 - 2019 395,000 162,250 557,250 2020 - 2024 446,000 110,375 556,375 2025 - 2029 503,000 51,850 554,850 2030 - 2029 108,000 2,700 110,700 Total $2,363,333 586,821 2,950,154 36 Moab City NOTES TO FINANCIAL STATEMENTS June 30, 2009 3-D. Long-term debt (continued) Original % Due Within Principal Rate 6/30/2008 Additions Reductions 6/30/2009 One Year Business -type activities: 1993B BWR Water Revenue $ 764,000 - $ 71,240 38,000 33,240 33,240 Matures 1/1/2010 1993A BWR Water Revenue 765,000 43,240 - 40,000 3,240 3,240 Matures 1/1/2014 Total business -type activity long-term liabilities $114,480 78,000 36,480 36,480 Revenue bond debt service requirements to maturity for business -type activities are as follows: Principal Interest Total 2010 $ 36,481 36,481 2011 2012 2013 - 2014 - - Total $36,481 36,481 Other long-term liabilities: Increase Beginning (Decrease) Ending Compensate absences: Governmental $ 278,355 2,666 281,021 Business -type 28,243 5,836 34,079 Total 37 $ 306,598 8,502 315,100 Moab City NOTES TO FINANCIAL STATEMENTS June 30, 2009 3-E. Interfund receivables, payables, and transfers Interfund transfers: Transfers Out: General Water and Sewer Storm Drain Total Transfers In: General Fund $ - 325,000 19,500 344,500 Recreation 135,848 - 135,848 Capital projects 1,136,000 1,136,000 Storm drain 800,000 - 800,000 Total $ 2,071,848 325,000 19,500 2,416,348 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 Noncontributory Retirement System (Public Safety Noncontributory 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. 38 Moab City NOTES TO FINANCIAL STATEMENTS June 30, 2009 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: 11.62% to the Noncontributory System and 22.61 % to the Public Safety Noncontributory System. 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, 2009, 2008 and 2007, respectively, were: for the Noncontributory System, $211,289, $183,919, and $162,836 and for the Public Safety Noncontributory $126,200, $108,375, and $96,588. The contributions were equal to the required contributions for each year. 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. 39 This page intentionally left blank. 40 REQUIRED SUPPLEMENTAL INFORMATION (Unaudited) 41 This page intentionally left blank. 42 Moab City Notes to Required Supplementary Information June 30, 2009 Budgetary Comparison Schedules The Budgetary Comparison Schedules presented in this section of the report are for the City'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, 2009 spending for all departments spending was within the appropriated budget. 43 Moab City SCHEDULE OF REVENUES, EXPENDITUES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - GENERAL FUND (Unaudited) For the Year Ended June 30, 2009 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 Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources and (Uses) Proceeds from sale of bonds Proceeds from sale of assets Transfers in Transfers (out) Budgeted Original $ 4,704,728 126,800 283,091 949,260 64,500 78,000 9,600 6,215,979 1,591,615 2,076,014 2,573,228 728,401 Budgeted Final 4,704,728 126,800 283,091 954,260 64,500 78,000 9,600 Variance with Final Budget Actual Under (Over) 5,13 8,076 114,990 244,964 954,277 51,675 50,613 57,701 (433,348) 11,810 38,127 (17) 12,825 27,387 (48,101) 6,220,979 6,612,297 (391,318) 1,601,552 2,090,014 2,578,228 704,401 1,558,708 2,021,006 2,371,572 656,223 4,235 18,111 6,969,258 6,974,195 6,629,856 $ (772r,843) (772r,843) 42,844 69,008 206,656 48,178 (4,235) (18,111) 344,339 (17,55a (755,284) 277,030 277,030 270,500 24,818 1,371,661 2,571,661 344,500 (875,848) (2,075,848) (2,071,848) Total Other Financing Sources and (Uses) 772,843 772,843 (1,432,030) Net Change in Fund Balances (1,449,589) Fund Balances - beginning of year 2,376,242 2,376,242 2,376,242 Fund Balances - end of year $ 2,376,242 2,376,242 926,653 44 6,530 (24,818) 2,227,161 (4,000) 2,204,873 1,449,589 1,449,589 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 December 10, 2009 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, 2009, and have issued our report thereon dated December 10, 2009. 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. Compliance As part of obtaining reasonable assurance about whether the City's basic financial 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 financial reporting as 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. SALT LAKE CITY OFFICE 9065 SOUTH 1300 EAST SANDY, UTAH 84094 (301)313-1900 FAX (801) 313-1912 47 LOS ANGELES OFFICE 801 NORTH BRAND BLVD STE 1180 GLENDALE, CALIFORNIA 91203 (818) 334-8623 FAX (813) 241-7353 SPANISH FORK OFFICE 765 NORTH MAIN SPANISH FORK, UTAH 84660 (801) 798-3545 FAX (801) 795-3678 MOAB OFFICE 115 WEST 200 SOUTH #4 MOAB. UTAH 84532 (435) 259-9100 FAX (4351 255)-1100 MEMBER OF THE I N T E R N A T I O N A L ACCOUNTING GROUP ( T I A G) + W W W. L A R S C O. C O M 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 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 City'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 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 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 City's internal 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. Y LL ° Larson & Rosenberger, LLP Certified Public Accountants 48 .. .. LARSON LSD ROSENBERGER LLP CERTIFIED P U B L I C ACCOUNTANTS INDEPENDENT AUDITORS' REPORT ON LEGAL COMPLIANCE WITH APPLICABLE UTAH STATE LAWS AND REGULATIONS December 10, 2009 Honorable Mayor and City Council Members Moab City, Utah Mayor and Council Members: We have audited the basic financial statements of Moab City, Utah, (herein referred to as the "City") as of and for the year ended June 30, 2009, and have issued our report thereon dated December 10, 2009. 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, 2009. 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 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. SALT LAKE CITY OFFICE 9065 SOUTH 1300 EAST SANDY, UTAH 84094 (601)313-1900 FAX (801) 313-1912 49 LOS ANGELES OFFICE 801 NORTH BRAND BLVD STE 1180 GLENDALE, CALIFORNIA 91203 (818) 334-8623 FAX (818) 241-7353 SPANISH FORK OFFICE 765 NORTH MAIN SPANISH FORK, UTAH 84660 (601) 798-3545 FAX (801) 798-3878 MOAB OFFICE 115 WEST 200 SOUTH N4 MOAB, UTAH 84532 (435) 259-9100 FAX (4351 259-1100 MEMBER ā‘ F THE INTERNATIONAL ACCOUNTING GROUP ( T I A G) + W W W. L A R S Cā‘. Cā‘ M 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. 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, 2009. LIJ) Larson & Rosenberger, LLP Certified Public Accountants 50