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HomeMy Public PortalAbout2003-2004 Audit Final Draft for CityCITY OF MOAB, UTAH INDEPENDENT AUDITORS' REPORT BASIC FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2004 CITY OF MOAB, UTAH TABLE OF CONTENTS YEAR ENDED JUNE 30, 2004 Pages INDEPENDENT AUDITORS' REPORT 1-2 MANAGEMENT'S DISCUSSION AND ANALYIS MDA-1 thru MDA-6 BASIC FINANCIAL STATEMENTS: Government -wide Financial Statements: Statement of Net Assets 3 Statement of Activities 4 Fund Financial Statements: Balance Sheet — Governmental Funds 5 Reconciliation of Total Governmental Fund Balances to Net Assets of Governmental Activities 6 Statement of Revenues, Expenditures, and Changes in Fund Balance — Governmental Funds 7 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 8 Statement of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual — General Fund 9-10 Statement of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual — Capital Projects 11 Statement of Net Assets — Proprietary Funds 12 Statement of Revenues, Expenses, and Changes in Fund Net Assets — Proprietary Funds 13 Statement of Cash Flows — Proprietary Funds 14 Notes to the Financial Statements 15-33 REQUIRED SUPPLEMENTARY INFORMATION: Combining and Individual Fund Statements and Schedules: Combining Balance Sheet — Non -major Governmental Funds 34 Combining Statement of Revenues, Expenditures and Changes in Fund Balances — Non -major Governmental Funds 35 INDEPENDENT AUDITORS' REPORT August 19, 2004 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, 2004, 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. 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, 2004, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. As described in Note 1 and the Introduction in the Notes to the Financial Statements, the City has implemented a new financial reporting model as required by the provisions of Governmental Accounting Standards Board Statement No. 34, Basic Financial Statements — and Management's Discussion and Analysis — for State and Local Governments, as of June 30, 2004. 1 The Management's Discussion and Analysis on pages MDA-1 through MDA-6 is not a required part of the basic financial statements but is 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 August 19, 2004, 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. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Moab's basic financial statements. The combining non -major fund financial statements are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining non -major fund financial statements have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. Larson & Peterson Certified Public Accountants 2 MANAGEMENT'S DISCUSSION AND ANALYSIS As management of the City of Moab, we offer readers of the City of Moab financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2004. It is designed to provide an overview of the City's financial activity. It is also intended to assist the reader in focusing on significant financial issues including identifying changes in the City's financial position (its ability to address the next and subsequent years' challenges), identifying any material deviations from the approved budget, and identifying individual fund issues or concerns. We encourage readers to consider the information presented here in conjunction with the Transmittal Letter and the City's financial statements. Because the City is implementing new reporting standards for this fiscal year with significant changes in content and structure, the information looks different than prior years. However, in future years, comparisons will be more meaningful and will go further in explaining the City's financial position and result of operations. FINANCIAL HIGHLIGHTS • The total net assets of City of Moab increased by $505,346 to $15,604,731. The governmental net assets increased by $409,779 and the business -type net assets increased by $95,567. • The total net assets of $15,604,731 are made up of $9,691,418 in capital assets net of related debt and $5,913,313 in other net assets. • The General Fund (the primary operating fund) had a decrease in its fund balance of $401,163, due to transferring funds from the General Fund fund balance to various capital projects funds to pay for capital projects. REPORTING THE CITY AS A WHOLE The discussion and analysis is intended to serve as an introduction to the City of Moab's basic financial statements. The City of Moab's basic financial statements comprise three components: 1) government -wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also includes other supplementary information in addition to the basic financial statements. The government -wide financial statements are designed to provide readers with a broad overview of the City of Moab's finances, in a manner similar to a private -sector business. • The statement of net assets presents information on all of the City of Moab'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 of Moab is improving or deteriorating. However, other non -financial factors will need to be considered. MDA-1 • 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, all of the current year's revenues and expenses are taken into account regardless of when cash is received or paid. Both of the government -wide financial statements distinguish functions of the City of Moab 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 government -wide financial statements can be found on pages 3-4 of this report. REPORTING THE CITY'S MOST SIGNIFICANT FUNDS A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of Moab 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 three categories: governmental funds, proprietary funds, and fiduciary funds. • Governmental funds — These funds are used to account for the same functions reported as governmental activities in the government -wide financial statements. These fund statements focus on how money flows into and out of these funds and the balances left at year-end that are available for spending. These funds are reported using an accounting method called modified accrual accounting, which measures cash and other financial assets that can be readily converted to cash. The governmental fund statements provide a detailed short-term view of the City's general government operations and the basic services it provides. Governmental fund information helps interested persons determine whether there are more or fewer financial resources that can be spent in the near future to finance the City's programs. We describe the relationship (or differences) between governmental activities (reported in the Statement of Net Assets and the Statement of Activities) and governmental funds in a reconciliation included with the fund financial statements. The only major governmental funds (as determined by generally accepted accounting principles) are the General Fund and the Capital Project Fund. The balance of the governmental funds are determined to be non -major and are included in the combining statements within this report. • Proprietary funds — The only type of proprietary funds that the City of Moab maintains are the Water and Sewer Enterprise Funds. As determined by generally accepted accounting principles, the Water and Sewer enterprise funds meet the criteria for major fund classification. MDA-2 • Fiduciary funds — These funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government -wide financial statements because the resources of those funds are not available to support the City's own programs. The accounting method used for these funds is much like that used for proprietary funds. GOVERNMENT -WIDE FINANCIAL ANALYSIS As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. In the case of the City of Moab, assets exceed liabilities by $15,604,731. The largest portion of the City of Moab's net assets (62%) reflects its investment in capital assets (e.g., land, buildings, infrastructure assets, and machinery and equipment), less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. Current and other assets Capital assets Total assets Other liabilities Long-term liabilities outstanding Total liabilities Net assets: Invested in capital assets, net of related debt Restricted Unrestricted Total net assets Net Assets June 30, 2004 and 2003 Governmental Activities Business -type Activities Total 2004 2003 2004 2003 2004 2003 $ 1,562,948 $ 2,290,727 $ 4,046,402 $ 4,050,854 $ 5,609,350 $ 6,341,581 6,343,785 5,175,816 5,240,770 5,409,808 11,584,555 10,585,624 7,906,733 7,466,543 9,287,172 9,460,662 17,193,905 16,927,205 6,343,785 37,663 315,153 295,157 6,658,938 332,820 296,536 235,799 970,148 1,259,201 1,266,684 1,495,000 6,640,321 273,462 1,285,301 1,554,358 7,925,622 1,827,820 5,691,796 114,521 1,796,543 5,175,816 200,747 1,816,518 3,999,622 3,905,659 9,691,418 9,081,475 1,294,100 1,251,888 1,408,621 1,452,635 2,708,149 2,748,757 4,504,692 4,565,275 $ 7,602,860 $ 7,193,081 $ 8,001,871 $ 7,906,304 $15,604,731 $ 15,099,385 Changes in Net Assets June 30, 2004 and 2003 Governmental Activities Business -type Activities Total 2004 2003 2004 2003 2004 2003 Revenues: Program revenues: Charges for services $ 1,236,754 $ 1,177,792 $ 1,270,834 $ 1,223,264 $ 2,507,588 $ 2,401,056 Operating grants and contributions 570,322 765,483 570,322 765,483 Capital grants and contributions 62,212 61,361 62,212 61,361 General revenues: General sales and use tax 991,183 944,440 991,183 944,440 Franchise tax 108,126 106,279 108,126 106,279 Highway tax 275,149 281,870 275,149 281,870 Transient room tax 212,731 180,465 212,731 180,465 Resort community tax 1,677,550 1,516,472 1,677,550 1,516,472 Energy tax 51,700 52,172 51,700 52,172 Unrestricted investment earnings 31,547 39,844 57,158 86,024 88,705 125,868 Other 69,239 37,350 69,239 37,350 Transfers 600,000 (600,000) 0 Total revenues 5,224,301 5,702,167 1,390,204 770,649 6,614,505 6,472,816 Expenses: General government 1,056,551 964,705 1,056,551 964,705 Public safety 1,259,244 1,251,634 1,259,244 1,251,634 Highways and public works 998,304 899,388 998,304 899,388 Sanitation 647,538 647,680 647,538 647,680 Parks and recreation 808,562 731,509 808,562 731,509 Community and economic development 44,323 35,132 44,323 35,132 Water Utility 716,859 617,800 716,859 617,800 Sewer Utility 577,778 577,091 577,778 577,091 Total expenses 4,814,522 4,530,048 1,294,637 1,194,891 6,109,159 5,724,939 Increase in net assets 409,779 1,172,119 95,567 (424,242) 505,346 747,877 Net assets - beginning 7,193,081 6,020,962 7,906,304 8,330,546 15,099,385 14,351,508 Net assets - ending $ 7,602,860 $ 7,193,081 $ 8,001,871 $ 7,906,304 $ 15,604,731 $ 15,099,385 FINANCIAL ANALYSIS OF GOVERNMENT'S FUNDS The focus of the City's governmental funds is to provide information on near -term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's financing requirements. As of June 30, 2004, the City's governmental funds (General, Capital Projects, & Special Revenue) reported combined fund equity of $1,525,455. This represents a decrease of $727,609 from last year's ending balances, due to deficiency of revenues to cover expenditures in the Capital Projects funds, as well as expenditures of previously accumulated fund balances in the Capital Projects funds. The General Fund is the chief operating fund of the City. All activities that are not required to be accounted for in separate funds either by state or local ordinance or by a desire to maintain a matching of revenues and expenses, are accounted for in this fund. Taxes continue to be the largest source of revenue in the General Fund and represent 70% of total general fund revenues. As stated earlier, the City maintains an enterprise fund to account for the business -type activities of the City. The fund statements included in this report provide the same information for business -type activities as is provided in the government -wide financial statements. However, the difference is that the fund statements provide much more detail. GENERAL FUND BUDGETARY HIGHLIGHTS During the fiscal year, the General Fund budget was amended from an original budget expenditure total of $4,486,768 to a final budget of $4,498,368. These increases were made because of the receipt and corresponding expenditure of grant funds. CAPITAL ASSET AND DEBT ADMINISTRATION Capital assets — The City of Moab's investment in capital assets for its governmental and business -type activities as of June 30, 2004, amounts to $11,584,555 (net of accumulated depreciation). This investment in capital assets includes land, buildings and systems, improvements, infrastructure (streets, sidewalks, curb and gutter, etc.), and machinery and equipment. Major capital asset events during this fiscal year included the following: o Construction of Bittle Lane in Cooperation with Grand County and UDOT $45,000 o Construction of Moonstone Gallery Park $64,591 o Purchase of Anonymous Park $224,950 o Completion of Walker Canyon Stormwater Detention Basin $257,680 o Construction of City Shop Roof $67,575 o Construction of Skakel Spring Waterline $39,047 MDA-5 Long-term debt — At June 30, 2004, the City had total long-term bonded debt outstanding of $970,148. All of this debt is revenue bond debt. The City of Moab has no general obligation debt. ECONOMIC FACTORS AND NEXT YEAR'S BUDGET AND RATES • The unemployment rate for Grand County was 7.3% compared with a state unemployment rate of 5.6% and a national rate of 6.3%. (Source: Utah Dept of Workforce Services). • Some capital improvements budgeted for in the FY 2004-05 budget include: o Main Street Waterline Rebuild o North Area Trunk Sewer Line o West Center Street Improvement Project o City Center Renovation Project o East Center Street Improvement Project o Construction of Animal Shelter REQUESTS FOR INFORMATION This financial report is designed to provide a general overview of the City of Moab's finances for all those with an interest in the City's finances. Questions concerning any information provided in this report or request for additional financial information should be addressed to: City Recorder, City of Moab of Moab, 115 West 200 South, Moab, UT 84532. MDA-6 BASIC FINANCIAL STATEMENTS City of Moab Statement of Net Assets June 30, 2004 Primary Government Governmental Business -type Activities Activities Total ASSETS Cash and cash equivalents $ 1,068,779 $ 3,859,182 $ 4,927,961 Accounts receivable - net 373,529 187,220 560,749 Deposits 6,119 6,119 Restricted cash and cash equivalents 114,521 114,521 Capital assets (net of accumulated depreciation): Land 366,827 244,935 611,762 Buildings 1,119,279 277,566 1,396,845 Improvements 1,217,601 4,448,689 5,666,290 Machinery and equipment 892,459 173,290 1,065,749 Automobiles and trucks 692,282 40,453 732,735 Office equipment 374,302 1,255 375,557 Water shares 18,000 18,000 Infrastructure 1,029,046 1,029,046 Construction in progress 651,989 36,582 688,571 Total assets 7,906,733 9,287,172 17,193,905 LIABILITIES Accounts payable and accrued liabilities Customer deposits Accrued interest payable Compensated absences Noncurrent liablitities: Due within one year Due in more than one year Total liabilities 37,493 224,984 34,059 7,337 303,873 6,290 18,620 19,243 271,000 970,148 37,493 6,290 18,620 244,227 305,059 977,485 1,285,301 1,589,174 NET ASSETS Invested in capital assets, net of related debt 5,691,796 3,999,622 9,691,418 Restricted for: Class "C" Roads 114,521 114,521 Bond requirements 665,671 665,671 Impact Fees 628,429 628,429 Unrestricted 1,796,543 2,708,149 4,504,692 Total net assets $ 7,602,860 $ 8,001,871 $ 15,604,731 The Notes to the Financial Statements are an integral part of this statement. 3 Function/Programs Primary government: Governmental activities: General government Public safety Highways and public works Sanitation Parks, recreation and public property Community and economic development Total governmental activities Business -type activities: Water Utility Sewer Utility Total business -type activities Total primary government Expenses City of Moab Statement of Activities For the Year Ended June 30, 2004 Program Revenues Charges for Services $1,056,551 $ 274,871 1,259,244 98,587 998,304 647,538 680,779 808,562 182,517 44,323 4,814,522 1,236,754 716,859 551,730 577,778 719,104 1,294,637 1,270,834 Operating Grants and Contributions Capital Grants and Contributions $ 304,246 $ 210,644 55,432 570,322 Net (Expense) Revenues and Changes in Net Assets Primary Government Governmental Business -type Activities Activities $ (477,434) (1,160,657) (787,660) 33,241 (570,613) (44,323) 0 (3,007,446) 22,323 39,889 0 62,212 $6,109,159 $ 2,507,588 $ General revenues: General sales and use tax Franchise tax Highway tax Transient room tax Resort community tax Energy tax Unrestricted investment earnings Miscellaneous Total general revenues Change in net assets Net assets - beginning (as restated) Net assets - ending 570,322 $ 62,212 (3,007,446) 991,183 108,126 275,149 212,731 1,677,550 51,700 31,547 69,239 $ (142,806) 181,215 38,409 38,409 57,158 3,417,225 57,158 409,779 95,567 7,193,081 7,906,304 Total $ (477,434) (1,160,657) (787,660) 33,241 (570,613) (44,323) (3,007,446) (142,806) 181,215 38,409 (2,969,037) 991,183 108,126 275,149 212,731 1,677,550 51,700 88,705 69,239 3,474,383 505,346 15,099,385 $ 7,602,860 $ 8,001,871 $ 15,604,731 The Notes to the Financial Statements are and integral part of this statement. City of Moab Balance Sheet Governmental Funds June 30, 2004 Capital Other Total General Projects Governmental Governmental Fund Fund Funds Funds ASSETS Cash and cash equivalents $ 422,884 $ 640,832 $ 5,063 $ 1,068,779 Receivables (net): Garbage 57,629 57,629 Franchise tax 15,702 15,702 Sales and use tax 292,499 292,499 Other 7,699 7,699 Deposits 6,119 6,119 Restricted assets: Cash and cash equivalents 114,521 114,521 Total assets $ 917,053 $ 640,832 $ 5,063 $ 1,562,948 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 37,448 $ - $ $ 37,448 Deferred Revenue - LLEBG Interest 45 45 Total liabilities 37,493 0 0 37,493 Fund Balances: Fund balances reserved for: Class "C" Roads 114,521 114,521 Recreation 2,640 2,640 Youth city council 2,423 2,423 Unreserved, reported in: General fund 765,039 765,039 Capital projects funds 640,832 640,832 Total fund balances 879,560 640,832 5,063 1,525,455 Total liabilities and fund balances $ 917,053 $ 640,832 $ 5,063 $ 1,562,948 The Notes to the Financial Statements are an integral part of this statement. 5 City of Moab Balance Sheet Reconciliation to Statement of Net Assets June 30, 2004 Amounts reported for governmental activities in the statement of net assets are different because: Total fund balances - governmental fund types: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds. $ 1,525,455 6,343,785 (266,380) Net assets of government activities $ 7,602,860 The Notes to the Financial Statements are an integral part of this statement. 6 City of Moab Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Year Ended June 30, 2004 Capital Other Total General Projects Governmental Governmental Fund Fund Funds Funds REVENUES Taxes $ 3,316,439 $ $ $ 3,316,439 Licenses and permits 102,623 102,623 Intergovernmental 210,644 304,246 55,432 570,322 Charges for services 763,727 99,569 863,296 Fines and forfeitures 45,835 45,835 Interest Income 10,761 241 11,002 Miscellaneous revenue 275,905 84,155 1,436 361,496 Total revenues 4,715,173 399,162 156,678 5,271,013 EXPENDITURES Current: General government 1,005,357 1,005,357 Public safety 1,211,488 1,211,488 Highways and public works 935,608 935,608 Sanitation 647,538 647,538 Parks, recreation and public property 414,887 243,431 658,318 Community and economic development 44,323 44,323 Capital outlay 83,763 1,404,188 1,487,951 Debt service: Principal retirement 31,556 31,556 Interest and fiscal charges 2,483 2,483 Total expenditures 4,377,003 1,404,188 243,431 6,024,622 Excess revenues over (under) expenditures 338,170 (1,005,026) (86,753) (753,609) OTHER FINANCING SOURCES (USES) Proceeds from capital lease Transfers in Transfers out Total other financing sources and uses Excess of revenues and other sources over (under) expenditures and other uses Fund balances - beginning Fund balances - ending 26,000 (765,333) 695,350 73,593 (3,610) (739,333) 695,350 26,000 768,943 (768,943) 69,983 26,000 (401,163) (309,676) (16,770) (727,609) 1,280,723 950,508 21,833 2,253,064 $ 879,560 $ 640,832 $ 5,063 $ 1,525,455 The Notes to the Financial Statements are an integral part of this statement. 7 City of Moab Statement of Changes Reconciliation to Statement of Activities For the Year Ended June 30, 2004 Amounts reported for governmental activities in the statement of activities are different because: Net changes in fund balances - total governmental funds $ (727,609) Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period. 1,214,681 Repayment of the principal on capital leases is an expenditure in the governmental funds, but the repayment reduces the liability in the statement of net assets. 31,556 The issuance of new debt in the form of a capital lease is shown as revenue in the statement of revenues, expenditures and changes in fund balance, but the issuance increases the long term liabilities in the statement of net assets. (26,000) The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins, and donations) is to increase (decrease) net assets. (46,712) Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds: Compensated Absences (36,137) Change in net assets of governmental activities $ 409,779 The Notes to the Financial Statements are an integral part of this statement. 8 City of Moab Statement of Revenues, Expenditures and Changes in Fund Balance -- Budget and Actual General Fund For the Year Ended June 30, 2004 Taxes: Sales and use taxes Franchise taxes Highway taxes Transient room taxes Resort community taxes Energy taxes Total Taxes Budgeted Amounts Original Final Variance with Budget Budget Actual Final Budget $ 973,600 $ 973,600 $ 991,183 $ 17,583 95,000 95,000 108,126 13,126 289,000 289,000 275,149 (13,851) 179,000 179,000 212,731 33,731 1,540,000 1,544,000 1,677,550 133,550 48,000 48,000 51,700 3,700 3,124,600 3,128,600 3,316,439 187,839 Licenses and permits: Beer licenses 7,500 7,500 7,450 (50) Flat business licenses 48,000 48,000 48,082 82 Building permits - city 14,000 14,000 28,621 14,621 Building permits - commercial 14,000 14,000 13,814 (186) Plan check fees 1,500 1,500 2,867 1,367 Other licenses and permits 3,000 3,000 1,789 (1,211) Total licenses and permits 88,000 88,000 102,623 14,623 Intergovernmental revenue: Local grants State grants Total intergovernmental revenue 10,000 10,000 (10,000) 190,000 190,000 200,000 200,000 210,644 20,644 210,644 10,644 Charges for services: Refuse collection charges 672,000 679,600 680,779 1,179 Swimming pool 32,600 32,600 44,727 12,127 Golf course 15,000 15,000 13,893 (1,107) Other 40,000 40,000 24,328 (15,672) Total charges for services 759,600 767,200 763,727 (3,473) Fines and forfeitures 48,500 48,500 45,835 (2,665) Miscellaneous: Interest 30,000 30,000 20,545 (9,455) Other 10,500 10,500 30,360 19,860 Administration charges 225,000 225,000 225,000 0 Total Miscellaneous 265,500 265,500 275,905 10,405 Total Revenues $ 4,486,200 $ 4,497,800 $ 4,715,173 $ 217,373 9 The Notes to The Financial Statements are an integral part of this statement. City of Moab Statement of Revenues, Expenditures and Changes in Fund Balance -- Budget and Actual (continued) General Fund For the Year Ended June 30, 2004 Budgeted Amounts Original Final Variance with Budget Budget Actual Final Budget General Government: Executive and central $ 131,200 $ 131,200 $ 119,674 $ (11,526) Administrative 150,180 150,180 149,885 (295) Recorder 209,083 209,083 188,683 (20,400) General government 134,140 134,140 130,459 (3,681) Planning 225,725 216,725 214,344 (2,381) Treasurer 130,121 130,121 123,525 (6,596) Attorney 63,200 79,200 78,787 (413) Total General government 1,043,649 1,050,649 1,005,357 (45,292) Public Safety: Police department 1,006,001 1,006,001 1,038,958 32,957 Building inspection 55,000 63,000 57,802 (5,198) Animal control 114,813 114,813 114,728 (85) Total public safety 1,175,814 1,183,814 1,211,488 27,674 Highways and public improvements: Storm drains 6,900 6,900 4,489 Streets 683,503 681,503 661,167 Safety 14,260 14,260 12,379 Class C road 303,900 303,900 257,573 Total highways and public improvements 1,008,563 1,006,563 935,608 Parks, recreation and public property 456,440 447,440 414,887 Sanitation 640,000 647,600 647,538 Community and economic development 44,500 44,500 44,323 Capital outlay 83,763 83,763 83,763 Debt service: Principal retirement Interest and fiscal charges Total expenditures - general fund 31,556 31,556 31,556 2,483 2,483 2,483 34,039 34,039 34,039 (2,411) (20,336) (1,881) (46,327) (70,955) (32,553) (62) (177) 0 4,486,768 4,498,368 4,377,003 (121,126) (568) (568) 338,170 338,499 Proceeds from debt 26,000 26,000 Transfers out (765,333) (765,333) (765,333) 0 Sale of equipment 10,000 10,000 (10,000) Total other financing sources (uses) (755,333) (755,333) (739,333) 26,000 (755,901) (755,901) 1,280,723 (401,163) 354,738 1,280,723 1,280,723 $ 524,822 $ 524,822 $ 879,560 $ 354,738 The Notes to The Financial Statements are an integral part of this statement. 10 City of Moab Statement of Revenues, Expenditures and Changes in Fund Balance -- Budget and Actual Capital Projects Fund For the Year Ended June 30, 2004 Budgeted Amounts Original Final Variance with Budget Budget Actual Final Budget Revenues: Intergovernmental Revenue: Federal grants $ 15,000 $ 15,000 $ 15,000 $ - State grants 48,005 276,930 289,246 12,316 Total Intergovernmental Revenue 63,005 291,930 304,246 12,316 Miscellaneous: Interest 17,000 17,000 10,761 (6,239) Miscellaneous 84,155 84,155 Total Miscellaneous 17,000 17,000 94,916 77,916 Total Revenues 80,005 308,930 399,162 90,232 Expenditures: Capital outlay 3,693,654 3,922,579 1,404,188 (2,518,391) Total expenditures - capital projects 3,693,654 3,922,579 1,404,188 (2,518,391) Excess Revenues Over (Under) Expenditures (3,613,649) (3,613,649) (1,005,026) 2,608,623 Other Financing Sources (Uses): Transfers in 685,350 685,350 695,350 10,000 Proceeds from debt 2,050,000 2,050,000 (2,050,000) Total other financing sources (uses) 2,735,350 2,735,350 695,350 10,000 Excess Revenues and Other Sources Over (Under) Expenditures and Other Uses (878,299) (878,299) (309,676) 2,618,623 Fund balance - beginning 950,508 Fund balance - ending 950,508 950,508 $ 72,209 $ 72,209 $ 640,832 $ 568,623 The Notes to The Financial Statements are an integral part of this statement. 11 City of Moab Statement of Net Assets Proprietary Funds June 30, 2004 Business -Type Activities - Enterprise Water Sewer Total ASSETS Current assets: Cash and cash equivalents $ 792,278 $ 1,766,514 $ 2,558,792 Accounts receivable - net: Utility 47,403 44,359 91,762 Other 95,458 95,458 Total current assets 839,681 1,906,331 2,746,012 Noncurrent assets: Restricted cash and cash equivalents Capital assets Less: Accumulated depreciation Total noncurrent assets Total assets LIABILITIES Current liabilities: Compensated absenses Customer deposits Accrued interest payable Current portion of bonds payable Total current liabilities Noncurrent liabilities: Bonds payable Total noncurrent liabilities Total liabilities NET ASSETS Invested in capital assets, net of related debt Restricted for bond requirements Restricted for impact fees Unrestricted Total net assets 506,914 3,818,592 (2,048,955) 2,276,551 3,116,232 793,476 5,954,473 (2,483,340) 4,264,609 6,170, 940 1,300,390 9,773,065 (4,532,295) 6,541,160 9,287,172 9,605 6,290 78,000 93,895 349,480 349,480 443,375 9,638 18,620 193,000 221,258 620,668 620,668 841,926 19,243 6,290 18,620 271,000 315,153 970,148 970,148 1,285,301 1,342,157 2,657,465 3,999,622 320,467 345,204 665,671 180,157 448,272 628,429 830,076 1,878,073 2,708,149 $ 2,672,857 $ 5,329,014 $ 8,001,871 The Notes to the Financial Statements are an integral part of this statement. 12 City of Moab Statement of Revenues, Expenses, and Changes in Fund Net Assets Proprietary Funds For the Year Ended June 30, 2004 Business -Type Activities - Enterprise Funds Water Sewer Total Operating revenues: Charges for service $ 523,426 $ 614,036 $ 1,137,462 Other operating income 28,304 105,068 133,372 Total operating revenues 551,730 719,104 1,270,834 Operating expenses: Salaries and wages Employee benefits Contractual services Materials and supplies General fund overhead Special department supplies Depreciation Other expenses Total operating expenses Operating income Nonoperating revenues (expenses): Interest revenue Interest expense and fiscal charges Impact fees Total nonoperating revenues (expenses) Change in net assets Total net assets - beginning Total net assets - ending 157,363 79,461 151,549 16,703 100,000 42,428 127,922 41,433 716,859 (165,129) 68,533 39,032 69,122 20,297 125,000 20,831 158,847 41,262 225,896 118,493 220,671 37,000 225,000 63,259 286,769 82,695 542,924 1,259,783 176,180 11,051 28,852 28,306 57,158 (34,854) (34,854) 22,323 39,889 62,212 51,175 33,341 84,516 (113,954) 209,521 95,567 2,786,811 5,119,493 7,906,304 $ 2,672,857 $ 5,329,014 $ 8,001,871 The Notes to the Financial Statements are an integral part of this statement. 13 City of Moab Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2004 Cash Flows From Operating Activities Receipts from customers Payments to suppliers Payments to employees Net cash provided (used) by operating activities Cash Flows From Noncapital Financing Activities Net cash provided (used) by noncapital financing activities Cash Flows From Capital and Related Financing Activities Purchases of capital assets Principal paid on capital debt Interest paid on capital debt Impact fees collected Net cash provided (used) by capital and related financing activities Cash Flows From Investing Activities Interest and dividends received Net cash provided (used) by investing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents - beginning Cash and cash equivalents - ending Reconciliation of operating income to net cash provided (used) by operating activities: Operating income Adjustments to reconcile operating income to net cash provided (used) by operating activities: Depreciation expense (Increase)/decrease in Increase (decrease) in Increase (decrease) in Increase (decrease) in Total adjustments Net cash provided (used) by operating activities accounts receivable compensated absences payable customer deposits accrued interest payable Business -Type Activities - Enterprise Funds Water Sewer Total $ 550,632 $ (351,328) (236,824) (37,520) 0 (75,095) (78,001) 22,323 (130,773) 28,852 28,852 718,274 (283,353) (107,565) 327,356 0 (42,634) (185,000) (34,854) 39,889 $ 1,268,906 (634,681) (344,389) 289,836 0 (117,729) (263,001) (34,854) 62,212 (222,599) (353,372) 28,306 28,306 57,158 57,158 (139,441) 133,063 (6,378) 1,438,633 2,426,927 3,865,560 $ 1,299,192 $ 2,559,990 $ 3,859,182 $ (165,129) $ 176,180 $ 11,051 127,922 (1,098) 2,275 (1,490) 127,609 158,847 286,769 (830) (1,928) (1,052) 1,223 (1,490) (5,789) (5,789) 151,176 278,785 $ (37,520) $ 327,356 $ 289,836 The Notes to the Financial Statements are an integral part of this statement. 14 CITY OF MOAB, UTAH NOTES TO BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2004 INDEX NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Financial Reporting Entity B. Basis of Presentation C. Measurement Focus and Basis of Accounting D. Assets, Liabilities, and Equity E. Revenues, Expenditures, and Expenses NOTE 2. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY A. Fund Accounting Requirements B. Deposits and Investments Laws and Regulations C. Revenue Restrictions D. Debt Restrictions and Covenants E. Fund Equity Restrictions F. Budgetary Basis of Accounting NOTE 3. DETAIL NOTES ON TRANSACTION CLASSES/ACCOUNTS A. Cash and Investments B. Restricted Assets C. Accounts Receivable D. Capital Assets E. Accounts Payable F. Long-term Debt G. Interfund Transactions and Balances H. Fund Equity NOTE 4. OTHER NOTES A. Employee Pension and Other Benefit Plans B. Risk Management C. Landfill Agreement Page 16 23 25 32 15 CITY OF MOAB, UTAH NOTES TO BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2004 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City complies with generally accepted accounting principles (GAAP). GAAP includes all relevant Governmental Accounting Standards Board (GASB) pronouncements. In the government -wide financial statements and the fund financial statements for the proprietary funds, Financial Accounting Standards Board (FASB) pronouncements and Accounting Principles Board (APB) opinions issued on or before November 30, 1989, have been applied unless those pronouncements conflict with or contradict GASB pronouncements, in which case, GASB prevails. For enterprise funds, GASB Statement Nos. 20 and 34 provide the City the option of electing to apply FASB pronouncements issued after November 30, 1989. The City has elected not to apply those pronouncements. The accounting and reporting framework and the more significant accounting policies are discussed in subsequent subsections of this Note. For the fiscal year ended June 30, 2004, the City has implemented the new financial reporting requirements of GASB Statement Nos. 33 and 34. As a result, an entirely new financial presentation format has been implemented. 1.A. FINANCIAL REPORTING ENTITY Moab City is a political subdivision of the State of Utah. The City is governed by a mayor and an elected board of five council members. The financial statements of Moab City include those of separately administered organizations that are controlled by or are dependent on the City. Control or dependence is determined on the basis of financial interdependence, selection of governing authority, designation of management ability to significantly influence operations and accountability for fiscal matters. Using these criteria no potential component units are included in the City's financial statements. The accounting policies of Moab City, Utah, conform to generally accepted accounting principles as applicable to governmental units. The following is a summary of the more significant of such policies. The City's financial reporting entity comprises the following: Primary Government: Component Units: City of Moab None 1.B. BASIS OF PRESENTATION Government -wide Financial Statements: The Statement of Net Assets and Statement of Activities display information about the reporting government as a whole. They include all funds of the reporting entity except for fiduciary funds. The statements distinguish between governmental and business -type activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other non -exchange revenues. Business -type activities are financed in whole or in part by fees charged to external parties for goods or services. Fund Financial Statements: Fund financial statements of the reporting entity are organized into funds, each of which is considered to be separate accounting entities. Each fund is accounted for by providing a separate set of self -balancing 16 CITY OF MOAB, UTAH NOTES TO BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2004 accounts that constitute its assets, liabilities, fund equity, revenues, and expenditure/expenses. Funds are organized into three major categories: governmental, proprietary, and fiduciary. An emphasis is placed on major funds within the governmental and proprietary categories. A fund is considered major if it is the primary operating fund of the City or meets the following criteria: a. Total assets, liabilities, revenues, or expenditures/expenses of that individual governmental or enterprise fund are at least 10 percent of the corresponding total for all funds of that category or type; and b. Total assets, liabilities, revenues, or expenditures/expenses of the individual governmental fund or enterprise fund are at least 5 percent of the corresponding total for all governmental and enterprise funds combined. The funds of the financial reporting entity are described below: Governmental Funds General Fund The General Fund is the primary operating fund of the City and always classified as a major fund. It is used to account for all activities except those legally or administratively required to be accounted for in other funds. Special Revenue Funds Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for certain purposes. Capital Project Fund The Capital Project Fund is used to account for resources restricted for the acquisition or construction of specific capital projects or items. The reporting entity includes only one Capital Project Fund and it is used to account for the acquisition of capital assets with transfers made from the General Fund. Proprietary Fund Enterprise Fund Enterprise funds are used to account for business -like activities provided to the general public. These activities are financed primarily by user charges and the measurement of financial activity focuses on net income measurement similar to the private sector. The reporting entity includes the Water and Sewer funds. Major and Nonmajor Funds The funds are further classified as major or non -major as follows: Fund Brief Description Major: General Capital Projects Fund: See above for description. 17 CITY OF MOAB, UTAH NOTES TO BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2004 Community Development Fund Accounts for activity with the City's Mill Creek Project Fund capital improvements. Capital Project Fund Sanitation Capital Project Fund Enterprise Funds: Water and Sewer Accounts for revenues and expenditures of water and sewer utilities. Nonmajor: Special Revenue Funds: Recreation Fund Arts and Recreation Center Youth City Council Accounts for revenues and expenditures for activities with the recreation, arts and recreation center and youth city council. 1.C. MEASUREMENT FOCUS AND BASIS OF ACCOUNTING Measurement focus is a term used to describe "which" transactions are recorded within the various financial statements. Basis of accounting refers to "when" transactions are recorded regardless of the measurement focus applied. Measurement Focus On the government -wide Statement of Net Assets and the Statement of Activities, both governmental and business -like activities are presented using the economic resources measurement focus as defined in item b. below. In the fund financial statements, the "current financial resources" measurement focus or the "economic resources" measurement focus is used as appropriate: a. All governmental funds utilize a "current financial resources" measurement focus. Only current financial assets and liabilities are generally included on their balance sheets. Their operating statements present sources and uses of available spendable financial resources during a given period. These funds use fund balance as their measure of available spendable financial resources at the end of the period. b. The proprietary fund utilizes an "economic resources" measurement focus. The accounting objectives of this measurement focus are the determination of operating income, changes in net assets (or cost recovery), financial position, and cash flows. All assets and liabilities (whether current or noncurrent) associated with their activities are reported. Proprietary fund equity is classified as net assets. c. Agency funds are not involved in the measurement of results of operations; therefore, measurement focus is not applicable to them. 18 CITY OF MOAB, UTAH NOTES TO BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2004 Basis of Accounting In the government -wide Statement of Net Assets and Statement of Activities, both governmental and business -like activities are presented using the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred or economic asset used. Revenues, expenses, gains, losses, assets, and liabilities resulting from exchange and exchange -like transactions are recognized when the exchange takes place. In the fund financial statements, governmental funds and agency funds are presented on the modified accrual basis of accounting. Under this modified accrual basis of accounting, revenues are recognized when "measurable and available." Measurable means knowing or being able to reasonably estimate the amount. Available means collectible within the current period or within sixty days after year end. Expenditures (including capital outlay) are recorded when the related fund liability is incurred, except for general obligation bond principal and interest which are reported when due. All proprietary funds utilize the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred or economic asset used. 1.D. ASSETS, LIABILITIES, AND EQUITY Cash and Investments For the purpose of the Statement of Net Assets, "cash, including time deposits" includes all demand, savings accounts, and certificates of deposits of the City. For the purpose of the proprietary fund Statement of Cash Flows, "cash and cash equivalents" include all demand and savings accounts, and certificates of deposit or short-term investments with an original maturity of three months or less. Investments of the promissory note trustee accounts are not considered cash equivalents. Investments are carried at fair value except for short-term U.S. Treasury obligations with a remaining maturity at the time of purchase of one year or less. Those investments are reported at amortized cost. Fair value is based on quoted market price. Additional cash and investment disclosures are presented in Notes 2.C. and 3.A. Interfund Receivables and Payables During the course of operations, numerous transactions occur between individual funds that may result in amounts owed between funds. Those related to goods and services type transactions are classified as "due to and from other funds." Short-term interfund loans are reported as "interfund receivables and payables." Long-term interfund loans (noncurrent portion) are reported as "advances from and to other funds." Interfund receivables and payables between funds within governmental activities are eliminated in the Statement of Net Assets. See Note 3.G. for details of interfund transactions, including receivables and payables at year-end. Receivables In the government -wide statements, receivables consist of all revenues earned at year-end and not yet received. Allowances for uncollectible accounts receivable are based upon historical trends and the periodic aging of accounts receivable. Major receivable balances for the governmental activities includes; sales taxes, garbage utilities, franchise taxes, and business licenses. Business -type activities report utilities as their major receivables. 19 CITY OF MOAB, UTAH NOTES TO BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2004 In the fund financial statements, material receivables in governmental funds include revenue accruals such as sales tax, franchise tax, and grants and other similar intergovernmental revenues since they are usually both measurable and available. Non -exchange transactions collectible but not available are deferred in the fund financial statements in accordance with modified accrual, but not deferred in the government -wide financial statements in accordance with the accrual basis. Interest and investment earnings are recorded when earned only if paid within 60 days since they would be considered both measurable and available. Proprietary fund material receivables consist of all revenues earned at year-end and not yet received. Utility accounts receivable and interest earnings compose the majority of proprietary fund receivables. Allowances for uncollectible accounts receivable are based upon historical trends and the periodic aging of accounts receivable. Fixed Assets The accounting treatment over property, plant, and equipment (fixed assets) depends on whether the assets are used in governmental fund operations or proprietary fund operations and whether they are reported in the government -wide or fund financial statements. Election Not to Report Infrastructure Retroactively Management of Moab City has elected not to report infrastructure retroactively. This is allowed by provisions of GASB Statement 34 for all governments with less than $10 million in revenues. The City will report infrastructure prospectively. Government -wide Statements In the government -wide financial statements, fixed assets are accounted for as capital assets. All fixed assets are valued at historical cost, or estimated historical cost if actual is unavailable, except for donated fixed assets which are recorded at their estimated fair value at the date of donation. Depreciation of all exhaustible fixed assets is recorded as an allocated expense in the Statement of Activities, with accumulated depreciation reflected in the Statement of Net Assets. Depreciation is provided over the assets' estimated useful lives using the straight-line method of depreciation. The range of estimated useful lives by type of asset is as follows: Governmental Business -Type Activities Activities Description Estimated Lives Estimated Lives Buildings and Improvements 30-45 years 30-45 years Machinery and Equipment 10-15 years 10-15 years Vehicles 5-10 years 5-10 years Infrastructure 30 years 30 years 20 CITY OF MOAB, UTAH NOTES TO BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2004 Fund Financial Statements In the fund financial statements, fixed assets used in governmental fund operations are accounted for as capital outlay expenditures of the governmental fund upon acquisition. Fixed assets used in proprietary fund operations are accounted for the same as in the government -wide statements. Restricted Assets Restricted assets consist of various cash balances that are restricted as to their use. Certain cash balances are restricted by provisions of the bond resolutions. These include the bond, and emergency repairs accounts in the enterprise funds. Customer deposits are also restricted in the enterprise funds. Amounts are held in the agency fund for future burial and cemetery costs. Class C Road revenue not spent is restricted in the general fund to be used for future roadwork and funds are held for the fire department to be used for future expenditures. Long-term Debt The accounting treatment of long-term debt depends on whether the assets are used in governmental fund operations or proprietary fund operations and whether they are reported in the government -wide or fund financial statements. All long-term debt to be repaid from governmental and business -type resources are reported as liabilities in the government -wide statements. The long-term debt consists primarily of notes payable, accrued compensated absences, and a court -assessed judgment. Long-term debt for governmental funds is not reported as liabilities in the fund financial statements. The debt proceeds are reported as other financing sources and payment of principle and interest reported as expenditures. The accounting for proprietary fund is the same in the fund statements as it is in the government -wide statements. Compensated Absences It is the City's policy to permit employees to accumulate earned but unused vacation and sick pay benefits. No liability is reported for unpaid accumulated sick leave. The liability for these compensated absences is recorded as long-term debt in the government -wide statements. The current portion of this debt is estimated based on historical trends. In the fund financial statements, governmental funds report only the compensated absence liability payable from expendable available financial resources, while the proprietary funds report the liability as it is incurred. 21 CITY OF MOAB, UTAH NOTES TO BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2004 Equity Classifications Government -wide Statements Equity is classified as net assets and displayed in three components: a. Invested in capital assets, net of related debt —Consists of capital assets including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. b. Restricted net assetsConsists of net assets with constraints placed on the use either by (1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments; or (2) law through constitutional provisions or enabling legislation. c. Unrestricted net assets —All other net assets that do not meet the definition of "restricted" or "invested in capital assets, net of related debt." Fund Statements Governmental fund equity is classified as fund balance. Fund balance is further classified as reserved and unreserved, with unreserved further split between designated and undesignated. Proprietary fund equity is classified the same as in the government -wide statements. See Note 3.H. for additional disclosures. 1.E. REVENUES, EXPENDITURES, AND EXPENSES Franchise taxes, licenses, interest and special assessments are susceptible to accrual. Sales taxes collected and held by the state at year-end on behalf of the City are also recognized as revenue. Other receipts and taxes become measurable and available when cash is received by the City and are recognized as revenue at that time. Entitlements and shared revenues are recorded at the time of receipt or earlier if the susceptible to accrual criteria are met. Expenditure -driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other grant requirements have been met. The City does not levy property taxes. Sales taxes are collected by the Utah State Tax Commission and are remitted to the City monthly. Operating Revenues and Expenses Operating revenues and expenses for proprietary funds are those that result from providing services and producing and delivering goods and/or services. It also includes all revenue and expenses not related to capital and related financing, noncapital financing, or investing activities. Expenditures/Expenses In the government -wide financial statements, expenses are classified by function for both governmental and business -type activities. 22 CITY OF MOAB, UTAH NOTES TO BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2004 In the fund financial statements, expenditures are classified as follows: Governmental Funds —By Character: Current (further classified by function) Debt Service Capital Outlay Proprietary Fund —By Operating and Non -operating In the fund financial statements, governmental funds report expenditures of financial resources. Proprietary funds report expenses relating to use of economic resources. Interfund Transfers Permanent reallocation of resources between funds of the reporting entity are classified as interfund transfers. For the purposes of the Statement of Activities, all interfund transfers between individual governmental funds have been eliminated. NOTE 2. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY By its nature as a local government unit, the City is subject to various federal, state, and local laws and contractual regulations. An analysis of the City's compliance with significant laws and regulations and demonstration of its stewardship over City resources follows. 2.A. FUND ACCOUNTING REQUIREMENTS The City complies with all state and local laws and regulations requiring the use of separate funds. The legally required funds used by the City include the following: Fund Required By General Fund State Law 2.B. DEPOSITS AND INVESTMENTS LAWS AND REGULATIONS The City maintains a cash and investment pool that is available for use by all funds. In addition, investments are separately held by several of the City funds. Deposits are not collateralized, nor are they required to be by State statute. The City follows the requirements of the Utah Money Management Act (Utah Code Annotated 1953, Section 51, Chapter 7) in handling its depository and temporary investment transactions. This law requires the deposit of City funds in a "qualified depository." The Act defines a "qualified depository" as any financial institution whose deposits are insured by an agency of the federal government and which has been certified by the Commissioner of Financial Institutions as meeting the requirements of the Utah Money Management Act and adhering to the rules of the Utah Money Management Council. 23 CITY OF MOAB, UTAH NOTES TO BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2004 The Utah Money Management Act also defines the types of securities allowed as appropriate temporary investments for the City and the conditions for making investment transactions. Investment transactions are to be conducted through qualified depositories or primary reporting dealers. Certain assets are restricted by provisions of the revenue bond resolutions. The resolutions also describe how these restricted assets may be deposited and invested. Restricted cash may only be deposited in state or national banks meeting certain minimum net worth requirements or invested in securities representing direct obligations of or obligations guaranteed by the U.S. government, agencies of the U.S. government, any state within the territorial United States of America, repurchase agreements or interest bearing time deposits with state or national banks meeting certain minimum net worth requirements, or certain other investments. The City's investments are categorized as follows to give an indication of the level of risk assumed by the entity at year-end. Category 1 includes investments that are insured or registered or for which the securities are held by the City or its agent in the City's name. Category 2 includes uninsured and unregistered investments for which the securities are held by the broker's or dealers trust department or agent in the City's name. Category 3 includes uninsured and unregistered investments for which the securities are held by the broker or dealer, or by its trust deparinuent or agency, but not in the City's name. The City currently has no investments that are required to be categorized. The Utah Public Treasurers' Investment Fund (PTIF) is an external deposit and investment pool wherein governmental entities are able to pool the moneys from several entities to improve investment efficiency and yield. These moneys are invested primarily in money market securities and contain no withdrawal restrictions. As such, the moneys invested in this fund are not insured and are subject to the same market risks as any similar investment in money market funds. 2.C. REVENUE RESTRICTIONS The City has various restrictions placed over certain revenue sources from state or local requirements. The primary restricted revenue sources include: Revenue Source Sales Tax Water and Sewer B & C Road Funds Federal & State Grants Legal Restrictions of Use See Note 1.E. Debt Service and Utility Operations Eligible B & C Roads Specific to Grant For the year ended June 30, 2004, the City complied, in all material respects, with these revenue restrictions. 2.D. DEBT RESTRICTIONS AND COVENANTS General Obligation Debt No debt in excess of total revenue for the current year shall be created by any city unless the proposition to create such debt shall have been submitted to a vote of qualified electors. Cities shall not contract for debt to an amount exceeding four percent of the fair market value of taxable property in their jurisdictions. For the year ended June 30, 2004, the City had $266,379 of outstanding general obligation debt. 24 CITY OF MOAB, UTAH NOTES TO BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2004 Other Long-term Debt Cities may incur a larger indebtedness for the purpose of supplying such city water, sewer, or electricity when such public works are owned and controlled by the municipality. The additional indebtedness shall not exceed four percent for first and second class cities and eight percent for third class cities. For the year ended June 30, 2004, the City had $1,241,149 of such indebtedness. Notes Payable The various loan agreements relating to the notes payable issuances contain some restrictions or covenants that are financial related. These include covenants such as debt service coverage requirement and required reserve account balances. The following schedule presents a brief summary of the most significant requirements and the Authority's level of compliance thereon as of June 30, 2004. Requirement Level of Compliance a. Note Payable Coverage: 1. Net water operating revenues (excluding depreciation) must equal 1.25 (1.20 for the 1996 Bonds) times the annual debt service plus the unfunded portion of the Debt Service Reserve Requirement to be due and payable for the forthcoming year on the 1993 Water Revenue Bonds, Series A & B and the 1996 Sewer Revenue Bond. b. Reserve Account Requirement: Various escrows are set up as reserves to make the annual debt payments Minimum balances are required to be kept in each of the escrows. 2.E. FUND EQUITY RESTRICTIONS Deficit Prohibition Utah Code 10-6-116(4) indicates the 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 in the general fund may not exceed 18% of the total estimated revenue of the general fund. (10-6-116(2)) The City was within the limitations allowed by law. The City also did not have any deficit fund balances in any of its funds. 2.F. BUDGETARY BASIS OF ACCOUNTING While the City is reporting financial position, results of operations and changes in fund balance on the basis of generally accepted accounting principles (GAAP), the budgetary basis as provided by law is based upon accounting for certain transactions on a basis of cash receipts, disbursements and encumbrances. The Statement of Revenues, Expenditures and Changes in Fund Balances - Budget (Non- GAAP Basis) and Actual presented for the general fund and the special revenue fund are presented on the budgetary basis to provide a meaningful comparison of actual results with the budget. NOTE 3. DETAIL NOTES ON TRANSACTION CLASSES/ACCOUNTS The following notes present detail information to support the amounts reported in the basic financial statements for its various assets, liabilities, equity, revenues, and expenditures/expenses. 25 CITY OF MOAB, UTAH NOTES TO BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2004 3.A. CASH AND INVESTMENTS Deposits As of June 30, 2003 and 2004, deposits with Wells Fargo Bank totaled $277,204 and $462,952 respectively. The carrying amount on the City's books was $(5,106) and $(41,080) respectively. As of June 30, 2003 and 2004, deposits with Zions Bank totaled $2,044,498 and $2,486,510 respectively. The carrying amount on the City's books was $1,841,354 and $2,350,519 respectively. These deposits were covered by Federal Depository Insurance up to $200,000. These deposits are not collateralized nor are they required to be by State Statute. Investments The City has investments with the Utah Public Treasurers' Fund (PTIF) which are not subject to categorization. The carrying amount and market value of the investments at June 30, 2003 and 2004, were $3,300,061 and $2,441,390, respectively. The City's policies regarding deposits of cash are discussed in Note 1.E. The table presented below is designed to disclose the level of custody credit risk assumed by the City based upon how its deposits were insured or secured with collateral at June 30, 2004. The categories of credit risk are defined as follows: Category 1Insured by FDIC or collateralized with securities held by the City (or public trust) or by its agent in its name Category 2—Uninsured but collateralized with securities held by the pledging financial institution's trust department or agent in the City's name Category 3—Uninsured and uncollateralized; or collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the City's name; or collateralized with no written or approved collateral agreement. The City currently has no investments that are required to be categorized. Investments not subject to categorization at June 30, 2004, were as follows: Investments in Utah State Treasurers' Investment Fund $ 2,441,390 Reconciliation to Government -wide Statement of Net Assets: Investments $ 2,441,390 Cash on Hand 650 Deposits 2,600,442 Total $ 5,042,482 26 CITY OF MOAB, UTAH NOTES TO BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2004 Per Statement of Net Assets: Unrestricted Cash $ 4,927,961 Restricted Cash 114,521 Total $ 5,042,482 3.B. RESTRICTED ASSETS The restricted assets as of June 30, 2004, are as follows: Type of Restricted Asset Cash/Time Deposits Investments Accrued Int. Total Business -Type Activities: Bond Requirements 665,671 665,671 Impact Fees 628,429 628,429 Total 1,294,100 - - 1,294,100 Governmental Activities: Class "C" Roads 114,521 114,521 Total 114,521 - - 114,521 Grand Totals $ 1,408,621 $ - $ - $ 1,408,621 3.C. ACCOUNTS RECEIVABLE Accounts receivable for the business -type activities consist of utilities receivable from the water and sewer utilities. Accounts receivable of the governmental activities consist of sales tax (78%), garbage utilities (15%), franchise taxes (4%), and business licenses (2%). Receivables detail at June 30, 2004, is as follows: Governmental Activities Business -Type Activities Total Accounts Receivable $ 373,529 $ 133,443 $ 506,972 Allowance for Doubtful Accounts (3,775) (3,775) Net Accounts Receivable $ 373,529 $ 129,668 $ 503,197 27 CITY OF MOAB, UTAH NOTES TO BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2004 3.D. CAPITAL ASSETS Capital asset activity for the year ended June 30, 2004, was as follows: Governmental Activities: Land Buildings Improvements Other Than Bldgs Machinery & Equipment Autos & Trucks Office Equipment Infrastructure Construction in Process Totals at historical cost Less Accum. Depreciation Buildings Improvements Other Than Bldgs Machinery & Equipment Autos & Trucks Office Equipment Infrastructure Total Accum. Depreciation Governmental Activities capital assets, net Business -type activities: Land Water Shares Sewage Plant Improvements Machinery & Equipment Autos & Trucks Office Furniture Construction in Process Totals at historical cost Less Accum. Depreciation Sewage Plant Improvements Machinery & Equipment Autos & Trucks Office Furniture Total Accum. Depreciaiton Business -type activities capital assets, net Balance at July 1, 2003 $ Additions 141,877 $ 1,145,695 920,352 1,167,519 888,746 389,529 1,102,550 5,756,268 (131,203) (31,159) (171,381) (206,010) (3,947) (36,752) (580,452) 5,175,816 244,935 18,000 1,390,124 7,368,642 455,832 164,714 13,088 9,655,335 (1,077,805) (2,787,417) (259,135) (110,100) (11,070) (4,245,527) 224,950 146,064 420,781 18,166 26,000 651,989 1,487,950 (41,277) (92,374) (49,671) (52,384) (812) (36,752) (273,270) 1,214,680 69,042 12,105 36,582 117,729 (34,753) (201,580) (35,512) (14,160) (763) (286,768) Disposals $ Balance at June 30, 2004 $ (50,397) (10,469) (60,866) 14,154 14,154 (46,712) 366,827 1,291,759 1,341,133 1,135,288 914,746 379,060 1,102,550 651,989 7,183,352 (172,480) (123,533) (221,052) (244,240) (4,759) (73,504) (839,568) 6,343,784 244,935 18,000 1,390,124 7,437,684 467,937 164,714 13,088 36,582 9,773,064 (1,112,558) (2,988,997) (294,647) (124,260) (11,833) (4,532,295) $ 5,409,808 $ (169,039) $ $ 5,240,769 28 CITY OF MOAB, UTAH NOTES TO BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2004 Depreciation expense was charged to governmental activities as follows: General Government $ 15,057 Public Safety 45,273 Highways & Streets 62,696 Parsk, Recreation & Public Property 150,244 Total depreciation expense $273,270 3.E. ACCOUNTS PAYABLE Payables in the general fund and non -major governmental funds are composed of payables that have to do with the building inspector and a parking escrow. 3.F. LONG-TERM DEBT The reporting entity's long-term debt is segregated between the amounts to be repaid from governmental activities and amounts to be repaid from business -type activities. Governmental Activities: As of June 30, 2004, the City had $266,379 governmental long-term debt. Compensated Absences $ 224,983 Capital Leases 2002 Police Ford Motor Credit Original Amt $48,334, Pmts $16,903 16,099 2003 Police Ford Motor Credit Original Amt $24,190, Pmts $8,534 8,054 2004 Police Ford Motor Credit Original Amt $25,864, Pmts $8,621 17,243 Total General Long -Term Debt $ 266,379 29 CITY OF MOAB, UTAH NOTES TO BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2004 Business -type Activities: As of June 30, 2004, the long-term debt payable from proprietary fund resources consisted of the following: Water Revenue Bonds: Water Revenue Bonds, Series A, Dated 1993 0%, (original amount $765,000) Water Revenue Bonds Series A, Dated 1993 0%, (Original amount $764,000) Sewer Revenue Bonds Dated 1996 4.5%, (Original amount $1,821,000) Total Business -type debt $ 203,240 224,240 813,669 $ 1,241,149 Changes in Long-term Debt The following is a summary of changes in long-term debt for the year ended June 30, 2004: Type of Debt Governmental Activities: Compensated Absences Capital Leases Payable Due Within One Year Business -type Activities: Compensated Absences Revenue Bonds Payable Total Enterprise Fund Debt Balance July 1, 2003 $ 188,847 42,260 251,668 18,052 1,252,481 Balance Additions Deductions June 30, 2004 $ 36,137 16,099 19,332 $ 224,984 (16,964) 41,395 271,000 1,191 19,243 (282,332) 970,149 $ 1,522,201 $ $(282,332) $ 1,260,392 The revenue bonds are payable only from the net revenues of the water and sewer systems, as defined in the bond ordinances. The ordinances further provide that the City establish certain accounts and reserves for bond payment and that all revenues of the system are to be used for operation and maintenance costs of the systems, principal and interest on the bonds, and establishment of the defined debt repayment reserves and capital facilities replacement account. 30 CITY OF MOAB, UTAH NOTES TO BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2004 Annual Debt Service Requirements The annual debt service requirements to maturity, including principal and interest, for long-term debt as of June 30, 2004, are as follows: Year Ending June 30 2005 2006 2007 2008 2009 2010-2014 Total Business -type Activities Bonds Payable Principal $ 271,000 279,000 289,000 287,669 81,240 33,240 Interest $ 37,170 28,485 19,440 9,945 $ 1,241,149 $ 95,040 3.G. INTER -FUND TRANSACTIONS AND BALANCES Operating Transfers The City had the following inter -fund transactions for the year ended June 30, 2004. FUND GENERAL FUND CLASS C ROAD ART & RECREATION RECREATION COMMMUNITY DEVELOPMENT MILLCREEK PROJECT CAPITAL PROJECTS WATER & SEWER TOTALS TRANSFER OUT TRANSFER IN $ 755,333 $ 10,000 3,610 225,000 225,000 39,305 34,288 184,700 99,150 411,500 $ 993,943 $ 993,943 31 CITY OF MOAB, UTAH NOTES TO BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2004 3.H. FUND EQUITY Restricted Fund Equity Government Business -Type Activities Activites Totals Net Assets Invested in Capital Assets, Net of Related Debi $ 5,691,796 $ 3,999,622 $ 9,691,418 Restricted for: Class "C" Roads 114,521 114,521 Bond Requirements 665,671 665,671 Impact Fees 628,429 628,429 Unrestricted (Deficit) 1,796,543 2,708,149 4,504,692 Total Net Assets $ 7,602,860 $ 8,001,871 $ 15,604,731 NOTE 4. OTHER NOTES 4A. EMPLOYEE PENSION AND OTHER BENEFIT PLANS The City participates in the following employee pension systems: Local Governmental - Cost Sharing Defined Benefits Pension Plans Plan Description The City of Moab contributes to the Local Governmental Contributory Retirement System and Local Governmental Noncontributory Retirement System, Public Safety Retirement System for employers with Social Security coverage, cost -sharing multiple - employer defined benefit pensions plans administered by the Utah Retirement Systems (Systems). Utah Retirement Systems provide refunds, retirement benefits, annual cost of living adjustments, and death benefits to plan members and beneficiaries in accordance with retirement statutes. The Systems are established and governed by the respective sections of Chapter 49 of the Utah Code Annotated 1953, as amended. The Utah State Retirement Office Act, in Chapter 49, provides for the administration of the Utah Retirement Systems and Plans under the direction of the Utah State Retirement 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 Local Governmental Contributory Retirement System, Local Governmental Noncontributory Retirement System, and Public Safety Retirement System for employers with Social Security coverage. 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. Funding Policy 32 CITY OF MOAB, UTAH NOTES TO BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2004 Plan members in the Local Governmental Contributory Retirement System are required to contribute 1.30% of their annual covered salary (all or part may be paid by the employer for the employee) and Moab City is required to contribute 5.61 % of their annual covered salary. In the Local Governmental Noncontributory Retirement System, Moab City is required to contribute 9.62% of their annual covered salary. In the Public Safety Noncontributory Retirement System for employers with Social Security coverage, Moab City is required to contribute 16.24% of their annual covered salary. The contribution rates are the actuarially determined rates. The contribution requirements of the Systems are authorized by statute and specified by the Board. Moab City contributions to the Local Governmental Contributory Retirement System for the years ending June 30, 2004, 2003, and 2002 were $3,729, $3,037, and $2,696, respectively. For the Noncontributory Retirement System the contributions for June 30, 2004, 2003, and 2002 were $119,456, $103,577, and $91,848, respectively, and for the Public Safety Retirement System the contributions for June 30, 2004, 2003, and 2002 were, $69,466, $55,688, and $47,466, respectively. The contributions were equal to the required contributions for each year. 457 Deferred Compensation Plan The Utah Retirement Systems (URS) have adopted Governmental Accounting Standards Board Statement 32, "Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans." This resulted in reporting the 457 Plans as a "Trust Fund" of URS rather than previously reported as an "Agency Fund" of Moab City. The assets and income of the 457 Plan are held in trust for the exclusive benefit of the participants or their beneficiaries and are not the assets of the employer. 4.B. 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; injuries to employees; and natural disasters. The City has purchased comprehensive general liability insurance through the Utah Local Governments' Trust. The City pays premiums to the Trust for its general insurance coverage, automobile liability, and personal injury protection. The Trust is self sustaining through member premiums. The City is subject to a minimal deductible for claims. 4.C. LANDFILL AGREEMENT Moab City entered into an agreement with the Grand County Solid Waste Management Special Service District No. 1 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 $295,000 for the Klondike Landfill and $20,000 for the Moab Landfill. 33 SUPPLEMENTARY INFORMATION City of Moab Combining Balance Sheet for Nonmajor Funds June 30, 2004 Special Revenue Funds Total Arts and Nonmajor Recreation Recreation Youth City Governmental Fund Center Council Funds ASSETS Cash and cash equivalents $ 622 $ 2,018 $ 2,423 $ 5,063 Total assets $ 622 $ 2,018 $ 2,423 $ 5,063 LIABILITIES AND FUND BALANCES Liabilities: Total liabilities FUND BALANCES Fund balances reserved for: Recreation 622 2,018 2,640 Youth City Council 2,423 2,423 Total fund balances 622 2,018 2,423 5,063 Total Liabilities and fund balance $ 622 $ 2,018 $ 2,423 $ 5,063 The Notes to the Financial Statements are an integral part of this statement. 34 City of Moab Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Non -major Governmental Funds For the Year Ended June 30, 2004 Special Revenue Funds Total Arts and Nonmajor Recreation Recreation Youth City Governmental Fund Center Council Funds REVENUES Intergovernmental revenues $ 51,432 $ 4,000 $ $ 55,432 Charges for service 61,667 37,902 99,569 Interest income 200 41 241 Miscellaneous 1,436 1,436 Total 113,299 43,338 41 156,678 EXPENDITURES Parks, recreation and public property 159,529 83,902 243,431 Total 159,529 83,902 0 243,431 Excess of revenues over (under) expenditures (46,230) (40,564) 41 (86,753) OTHER FINANCING SOURCERS (USES) Transfers in 34,288 Transfers out (3,610) Total other financing sources (uses) 30,678 39,305 39,305 73,593 (3,610) 0 69,983 Excess of revenues and other sources over (under) expenditures and other uses (15,552) (1,259) 41 (16,770) Fund balances - beginning Fund balances - ending 16,174 3,277 2,382 21,833 $ 622 $ 2,018 $ 2,423 $ 5,063 The Notes to the Financial Statements are an integral part of this statement. 35 CITY OF MOAB, UTAH BOND COMPLIANCE YEAR ENDED JUNE 30, 2004 CITY OF MOAB, UTAH TABLE OF CONTENTS YEAR ENDED JUNE 30, 2004 Pages Report on Bond Compliance 1 Flow of Funds--1993 Water Bond 2 Flow of funds--1996 Sewer Revenue Bond 3 Water and Sewer Rates 4 Connection Fees, Connections, and Billings 5 Insurance and Bonding Coverage 6 BOND COMPLIANCE REPORT REPORT ON BOND COMPLIANCE August 19, 2004 Honorable Mayor and Members of the City Council City of Moab, Utah We have audited the general-purpose financial statements of the City of Moab, Utah, as of and for the year ended June 30, 2004, and have issued our report thereon dated August 19, 2004. As part of our audit, we reviewed your compliance with the requirements of your bond issues. Based on our review, we are not aware of any areas of non-conformance. Larson & Peterson Certified Public Accountants 1 CITY OF MOAB, UTAH FLOW OF FUNDS-- 1993 WATER BOND YEAR ENDED JUNE 30, 2004 SINKING FUNDS CAPITAL RESERVE RESERVE FACILITIES BOND ACCOUNT ACCOUNT REPLACEMENT TOTAL ACCOUNT SERIES A SERIES B RESERVE RESERVES $ 40,000 $ 38,000 $ 242,464 Transfers Into Bond Fund 78,000 o 1 PPayments Transfer to Sinking Funds 'Transfer to Capital Facilities Replacement Fund Balance June 30, 2004 $ $ 40,000 $ 38,000 $ 242,464 $ 320,464 Transfers to the bond account are required to be sufficient to cover principal and interest payments on the bonds as well as to make the necessary transfers to the reserve accounts. Transfers were to be made on a monthly basis into the sinking funds until the reserves reached a balance of $40,000 for Series A and $38,000 for Series B. Funds are to used to meet bond payments should the bond fund not have sufficient funds to make the required payments. Transfers equal to 5% of the annual operating budget including debt service and depreciation are required to be deposited into the capital facilities reserve account on a yearly basis. Funds are to be used solely for emergency repairs and replacements to the system. N Balance July 1, 2003� Transfers Into Bond Fund Bond Payments Transfer to Sinking Funds Transfer Emergency Reserve Account Balance June 30, 2004 CITY OF MOAB, UTAH FLOW OF FUNDS-- 1996 SEWER REVENUE BONDS YEAR ENDED JUNE 30, 2004 BOND RESERVE ACCOUNT ACCOUNT $ 11=$ 230,136 230,495 (230,495) A_ $ EMERGENCY RESERVE ACCOUNT $115,068 $ 230,136 $ 115,068 Transfers to the bond account are required to be sufficient to cover principal and interest payments on the bonds as well as to make the necessary transfers to the reserve accounts. Transfers of $3,197 are to be made on a monthly basis into the reserve account until the account reaches a balance of $230,136. The account is to be used to cover future bond payments should the bond account not have sufficient funds to make the required payments. TOTAL RESERVES $ 345,204 Transfers of $1,599 are to be made on a monthly basis into the emergency reserve account until the account reaches a balance of $115,068. The account is to be used solely for emergency repairs and replacements to the system. w WATER RATES Minimum Charge Next 3,000 Gallons Next 5,000 Gallons Next 40,000 Gallons Over 50,000 Gallons Minimum Charge Next 3,000 Gallons Over 50,000 Gallons CITY OF MOAB, UTAH WATER AND SEWER RATES JUNE 30, 2004 Commercial Within the City $9.45 for 2,000 gallons or less per month. $2.10 per thousand gallons per month. $ .54 per thousand gallons per month. $ .62 per thousand gallons per month. $ .74 per thousand gallons per month. Residential Within the City $5.54 for 2,000 gallons or less per month. $ .44 per thousand gallons per month. $ .60 per thousand gallons per month. Commercial Outside the City $18.90 for 2,000 gallons or less per month. $4.20 per thousand gallons per month. $1.08 per thousand gallons per month. $1.24 per thousand gallons per month. $1.48 per thousand gallons per month. Residential Outside the City $11.08 for 2,000 gallons or less per month. $ .88 per thousand gallons per month. $ 1.20 per thousand gallons per month. Bed and Breakfasts Within the City All bed and breakfasts are required to pay the City's prevailing commercial rate on the portion of the dwelling that is used as a bed and breakfast, and the City's prevailing residential rate on the portion of the dwelling that is used as a residence. A three step calculation is used to determine the commercial and residential portions. Minimum Charge Next 8,000 Gallons Over 10,000 Gallons SEWER RATES Firefighter Rate Within the City Free for 2,000 gallons or less per month. $ .44 per thousand gallons per month. $ .60 per thousand gallons per month. Fire Line Rate Flat rate of $5.25 per thousand gallons per month. City Parks and Cemeteries $ .25 per thousand gallons per month. Single -Family Residences $8.65 and $1.00 per thousand gallons of the average winter water usage rate. Multiple Unit Residential Complexes and Single -Family Residences Not Connected to City Water System $17.00 per residence or unit. Moab Golf Course Well #7 $ .10 per thousand gallons per month. Multiple Unit Residential Complexes Commercial Establishments and Governmental Entities and Institutions $11.25 and $1.15 per thousand gallons of water used. Commercial Establishments and Governmental Entities and Institutions Not Connected to City Water System $55.00 and $42.00 respectively. 4 CITY OF MOAB, UTAH CONNECTION FEES, CONNECTIONS, AND BILLINGS JUNE 30, 2004 WATER FEES Meter Size Rates Within the City Rates Outside the City 5/8" x 3/4" $ 825 $ 910 3/4" 935 1,030 1" 1,190 1,310 1 1/2" 1,470 1,620 2" 1,770 1,950 4" 3,540 3,900 SEWER FEES 4" 6" Line Size Rates Within the City Rates Outside the City $ 670 $ 740 750 825 Fees for larger connections and meters are prorated. WATER AND SEWER CONNECTIONS Connections Applications on Hand Water 1,786 0 Sewer 1,577 WATER AND SEWER BILLINGS Billings Water $ 511,454 Sewer 493,483 5 COMPANY Travelers Travelers CITY OF MOAB, UTAH INSURANCE AND BONDING COVERAGE JUNE 30, 2004 COVERAGE AMOUNT $ 100,000 $ 100,000 Fred A. Moreton & Co. $ 75,000 Insurance Company Old Republic Surety Co. $ 460,000 Utah Local Governments' Trust $ 2,000,000 Utah Local Governments' Trust $ 200,000 Utah Local Governments' Trust $ 2,000,000 Utah Local Governments' Trust $ 50,000 Colorado Casualty Colorado Casualty Western Surety $ 6,167,302 $ 22,085 $ 25,000 COVERAGE Boiler & Machinery - Pool Boiler & Machinery - Other Public Employees Blanket Bond Treasurer's Bond General Liability Automotive Liability Automotive Bodily Injury and Property Damage Uninsured Motorists Building Grounds Equipment Property Insurance Notary Public Errors and Ommissions Blanket EXPIRATION DATE 4/1/05 4/1/05 Until Cancelled 1/1/05 7/1/05 7/1/05 7/1/05 7/1/05 4/1/05 4/1/05 1 /24/05 6 CITY OF MOAB, UTAH INDEPENDENT AUDITORS' REPORT IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS, INDEPENDENT AUDITORS' REPORT ON LEGAL COMPLIANCE AND MANAGEMENT LETTER JUNE 30, 2004 CITY OF MOAB, UTAH TABLE OF CONTENTS JUNE 30, 2004 GOVERNMENT AUDITING STANDARDS REPORT 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 STATE COMPLIANCE REPORT Independent Auditors' Report on Legal Compliance with Applicable Utah State Laws and Regulations CURRENT YEAR FINDINGS STATUS OF PRIOR YEAR FINDINGS Pages 1-2 3-4 5-6 7-8 GOVERNMENT AUDITING STANDARDS REPORT o INDEPENDENT AUDITORS' REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF BASIC FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS August 19, 2004 Honorable Mayor and City Council Members City of Moab, Utah We have audited the accompanying basic financial statements of the City of Moab, Utah (herein referred to as the "City"), as of and for the year ended June 30, 2004, and have issued our report thereon dated August 19, 2004. 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 the 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 in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be 1 material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the basic financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over financial reporting and its operations that we consider to be material weaknesses. However, we noted other matters involving the internal control over financial reporting that we have reported to management in the management letter. 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 and is not intended to be and should not be used by anyone other than these specified parties. Larson & Peterson Certified Public Accountants 2 STATE COMPLIANCE REPORT INDEPENDENT AUDITORS' REPORT ON LEGAL COMPLIANCE WITH APPLICABLE UTAH STATE LAWS AND REGULATIONS August 19, 2004 Honorable Mayor and City Council Members City of Moab, Utah We have audited the basic financial statements of the City of Moab, Utah, as of and for the year ended June 30, 2004, and have issued our report thereon dated August 19, 2004. As part of our audit, we have audited the City of Moab's compliance with the requirements governing types of services allowed or unallowed; 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, 2004. The City received the following major State assistance programs from the State of Utah: B and 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 Other General Compliance Requirements Uniform Building Code Standards Impact Fees and Other Development Fees The management of the City of Moab 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, Government 3 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 the management letter. We considered these instances of noncompliance in forming our opinion on compliance, which is expressed in the following paragraph. In our opinion, the City of Moab, Utah, complied, in all material respects, with the general compliance requirements identified above and the requirements governing types of services allowed or unallowed; 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, 2004. Larson & Peterson Certified Public Accountants 4 MANAGEMENT LETTER CITY OF MOAB, UTAH CURRENT YEAR FINDINGS FOR THE YEAR ENDED JUNE 30, 2004 INTERNAL AND ACCOUNTING CONTROL FINDINGS FINDING — DONATIONS TO THE CITY It was noted during our audit that a donation check was cashed by the department to which the donation was made and the cash reportedly used for department purposes. Documentation for the expenditures was unavailable for review in order to determine their propriety. Further, council is required to approve all City expenditures, and in the situation described above this approval could not have taken place. RECOMMENDATION: We recommend that proper accounting procedures be followed by all departments. That is that all City revenue, including donations, be given to the City Treasurer and processed like other cash receipts and recorded as revenue to the City. The funds can be used at that point for department purposes using the normal procedures for expenditures. Budget adjustments can then be made if they become necessary. CITY RESPONSE: The City will ensure that all departments understand and follow the proper accounting policies and procedures. STATE LEGAL COMPLIANCE FINDINGS FINDING — IMPACT FEE ACCOUNTING State laws require that impact fee money be reported separately and be allocated interest. The City is using a spreadsheet to track impact fees but no interest is being allocated. RECOMMENDATION: We suggest that impact fees be recorded in separate funds for both the water and sewer fees to make it easier to account for those fees as required. CITY RESPONSE: The City has separated the impact fees from the Water and Sewer fund for record keeping purposes. Interest will be allocated as required for future fiscal years. 5 CITY OF MOAB, UTAH CURRENT YEAR FINDINGS (CONCLUDED) FOR THE YEAR ENDED JUNE 30, 2004 FINDING — BUDGETARY COMPLIANCE State law requires departmental expenditures be kept within budgeted amounts. The following fund was found to be over budget as of June 30, 2004, by the following amounts: Fund/Department Amount General Funds: Police Department $ 32,957 Special Revenue Funds: Moab Arts & Recreation Center 1,007 RECOMMENDATION: We recommend that expenditures be kept under budget, and if necessary, adjustments be made to the budget after proper public hearings have been held. CITY RESPONSE: The City will monitor expenditures more closely and amend budgets as necessary. 6 CITY OF MOAB, UTAH STATUS OF PRIOR YEAR FINDINGS FOR THE YEAR ENDED JUNE 30, 2004 INTERNAL AND ACCOUNTING CONTROL FINDINGS FINDING — CITY OWNED CELL PHONES We noted during our audit that the policy of the City for employees who carry City owned cell phones to report the purpose of calls when call time becomes excessive is not always being followed. This creates an environment in which personal use of City owned cell phones could be paid for with taxpayer funds. We recommend that the City enforce the policy of reporting on excessive minutes to ensure that taxpayer funds are used only for purposes congruent with the duties of a municipality. STATUS: No problems noted in current year audit. FINDING — TRAVEL EXPENSE POLICY The existing travel expense policy makes it difficult for the accounts payable department to gather all necessary receipts and supporting documents from employees when they are reimbursed for travel expenses or when they use the city credit card. We recommend that the City modify its policy to ensure that documentation can be available for council approval in a timely manner. The City could require that receipts be obtained prior to the reimbursement be made and that charges made on a city credit card that cannot be documented with a receipt be charged to the employee. STATUS: No significant problems noted in current year. FINDING — SEPARATION OF DUTIES Because the same people who handle cash receipts also perform various bookkeeping functions and utility billings, there is no system of "independent checking" as would exist in a city with more accounting personnel. For example, it is usually best to assign the responsibility for receipting utility payments to someone other than the person in charge of utility billing. STATUS: No change. 7 CITY OF MOAB, UTAH STATUS OF PRIOR YEAR FINDINGS (CONCLUDED) FOR THE YEAR ENDED JUNE 30, 2004 STATE LEGAL COMPLIANCE FINDINGS FINDING — IMPACT FEE ACCOUNTING State laws require that impact fee money be allocated interest, and be reported separately. The City is tracking impact fees within the Water and Sewer Fund. We suggest that impact fees be recorded in separate funds for both the water and sewer fees to make it easier to account for those fees as required. STATUS: No change. FINDING — GENERAL FUND BALANCE LIMITATION State law requires that the fund balance in the general fund should not exceed 18% of budgeted revenue. At the end of the year the fund balance in the general fund exceeded the 18% maximum by approximately $318,000. We suggest steps be taken to reduce the fund balance in the general fund below the allowed maximum. STATUS: No problems noted in current year audit. BOND COMPLIANCE FINDINGS FINDING — WATER & SEWER BONDS The water bonds require reporting of water operations separate from sewer operations. The proposed sewer bonding is likely to require the same reporting for the sewer fund. STATUS: No change. Water and sewer operations are segregated within the same fund. 8