Finance - Annual Audit - 09/30/2010 CITY OF EAGLE
FINANCIAL STATEMENTS
Year Ended September 30,2010
CITY OF EAGLE
Table of Contents
PAGE (S)
FINANCIAL SECTION
Independent Auditor's Report 1-2
BASIC FINANCIAL STATEMENTS
Government-Wide Financial Statements
Statement of Net Assets 3
Statement of Activities 4
Fund Financial Statements
Balance Sheet—Governmental Funds 5-6
Statement of Revenues, Expenditures, and Changes in Fund Balances —
Governmental Funds 7-8
Statement of Net Assets—Proprietary Fund 9
Statement of Revenues, Expenses, and Changes in Net Assets —
Proprietary Fund 10
Statement of Cash Flows—Proprietary Fund 11
Notes to Financial Statements 12-21
REQUIRED SUPPLEMENTAL INFORMATION
Budgetary Comparison Schedule — General and Major Special Revenue 22-23
Funds
OTHER REPORTS AND SCHEDULES
Report on Internal Control Over Financial Reporting and on Compliance and
Other Matters Based on an Audit of the Financial Statements Performed in
Accordance with Government Auditing Standards .. 24-25
Schedule of Findings and Responses 26
FOege CPAs, P.O.
[finial* S. 3o.d&e—Mixt R. Jai&
P.O.Box 100,Payette,Idaho 83661
www.folkecpas.com,folkecpas @srvinet.com
P:208-642-1417,F:208-642-1582
Independent Auditor's Report
Honorable Mayor and City Council
City of Eagle
We have audited the accompanying financial statements of the governmental activities, the business-
type activities, and each major fund of the City of Eagle (the City) as of and for the year ended
September 30, 2010, which collectively comprise the City's basic financial statements as listed in the
table of contents. These financial statements are the responsibility of the City's management. Our
responsibility is to express an opinion on these financial statements based on our audit. We did not
audit the financial statements of Eagle Urban Renewal Agency (the discretely presented component
unit), which represents 100 percent of the assets, net assets, and revenues of the discretely presented
component unit. Those financial statements were audited by other auditors whose report thereon has
been furnished to us, and our opinion, insofar as it relates to the amounts included for the discretely
presented component unit, is based on the report of the other auditors.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a reasonable basis for our
opinions.
In our opinion, based on our audit and the report of the other auditors, the financial statements
referred to above present fairly, in all material respects, the respective financial position of the
governmental activities, the business-type activities, the discretely presented component unit, and
each major fund of the City as of September 30, 2010 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.
In accordance with Government Auditing Standards, we have also issued our report dated January
13, 2011 on our consideration of the City's internal control over financial reporting and on our tests
of its compliance with certain provisions of laws, regulations, contracts, grant agreements and other
matters. The purpose of that report is to describe the scope of our testing of internal control over
financial reporting and compliance and the results of that testing, and not to provide an opinion on
the internal control over financial reporting or on compliance. That report is an integral part of an
audit performed in accordance with Government Auditing Standards and should be considered in
assessing the results of our audit.
1
Accounting principles generally accepted in the United States of America require that the budgetary
information listed as required supplemental information in the table of contents be presented to
supplement the basic financial statements. Such information, although not required to be a part of the
basic financial statements, is required by the Governmental Accounting Standards Board, who
considers it to be an essential part of financial reporting for placing the basic financial statements in
an appropriate operational, economic, and historical context. We have applied certain limited
procedures to the required supplementary information in accordance with auditing standards
generally accepted in the United States of America, which consisted of inquiries of management
about the methods of preparing the information and comparing the information for consistency with
management's responses to our inquiries, the basic financial statements, and other knowledge we
obtained during our audit of the basic financial statements. We do not express an opinion or provide
any assurance on the information because the limited procedures do not provide us with sufficient
evidence to express an opinion or provide any assurance.
Management has omitted the management's discussion and analysis information that accounting
principles generally accepted in the United States of America require to be presented to supplement
the basic financial statements. Such missing information, although not a part of the basic financial
statements, is required by the Governmental Accounting Standards Board, who considers it to be an
essential part of financial reporting for placing the basic financial statements in an appropriate
operational, economic, and historical context. Our opinion on the basic financial statements is not
affected by this missing information.
Foege CPAs,P.C.
January 13, 2011
2
BASIC FINANCIAL STATEMENTS
CITY OF EAGLE
Statement of Net Assets
September 30, 2010
Governmental Business-Type Total Primary Component
Activities Activities Government Unit
Assets
Current Assets
Cash $1,606,512 $385,785 $1,992,297 $129,350
Receivables:
Taxes 203,372 203,372 180,104
Intergovernmental 378,399 378,399
Accounts 710,211 53,963 764,174
Note Receivable,Current 30,000 30,000
Total Current Assets 2,928,494 439,748 3,368,242 309,454
Noncurrent Assets
Restricted Cash 232,281 232,281
Note Receivable,Noncurrent 39,950 39,950
Nondepreciable Capital Assets 1,851,207 93,250 1,944,457
Depreciable Net Capital Assets 8,850,505 5,034,057 13,884,562
Total Noncurrent Assets 10,741,662 5,359,588 16,101,250 0
Total Assets $13,670,156 $5,799,336 $19,469,492 $309,454
Liabilities
Current Liabilities
Accounts Payable&Accrued Expenses $181,265 $27,129 $208,394 $49,686
Deferred Revenue 0 116,522
Deposits Payable 353,376 12,225 365,601
Accrued Interest,Current 5,262 86,606 91,868
Long-Term Debt,Current 165,000 96,407 261,407 30,000
Total Current Liabilities 704,903 222,367 927,270 196,208
Noncurrent Liabilities
Accrued Interest,Noncurrent 123,605 123,605
Long-Term Debt,Noncurrent 1,234,062 2,364,093 3,598,155 39,950
Total Noncurrent Liabilities 1,234,062 2,487,698 3,721,760 39,950
Total Liabilities 1,938,965 2,710,065 4,649,030 236,158
Net Assets
Invested in Capital Assets,Net of Related Debt 9,297,388 2,456,596 11,753,984
Restricted-Special Programs 222,502 222,502
Restricted-Debt Service 26,835 220,056 246,891
Unrestricted 2,184,466 412,619 2,597,085 73,296
Total Net Assets 11,731,191 3,089,271 14,820,462 73,296
Total Liabilities and Net Assets $13,670,156 $5,799,336 $19,469,492 $309,454
See Accompanying Notes 3
CITY OF EAGLE
Statement of Activities
Year Ended September 30, 2010
Program Revenues
Operating Capital
Charges For Grants And Grants And Net(Expense)
Functions/Programs Expenses Services Contributions Contributions Revenue
Primary Government
Governmental Activities
Current Expenditures
General Government $1,705,515 $297,980 ($1,407,535)
Public Safety 1,155,437 201,873 $200,596 (752,968)
Parks&Streets 588,787 102,870 $4,326 (481,591)
Culture&Recreation 923,197 161,297 1875 (758,025)
Debt Service-Interest&Charges 69,021 12,059 (56,962)
Capital Assets 767,132 134,030 (633,102)
Total Governmental Activities 5,209,089 910,108 $8,201 200,596 (4,090,184)
Business-Type Activities
Water Services 649,718 548.728 (100,990)
Total Business-Type Activities 649,718 548.728 0 0 (100,990)
Total Primary Government $5,858,807 $1.458,836 $8.201 $200,596 ($4,191,174)
Component Unit
Eagle Urban Renewal Agency $30,654 ($30,654)
Total Component Unit $30,654 $0 $0 $0 ($30,654)
Governmental Business-Type Total Primary Component
Changes in Net Assets Activities Activities Government Unit
Net(Expense)Revenue ($4,090,184) ($100,990) ($4,191,174) ($30,654)Revenues )
Taxes 2,647,294 2,647,294 102,536
Franchise Fees 936,813 936,813
Intergovernmental 1,527,674 1,527,674
Interest 5,865 2,292 8,157
Miscellaneous 103,090 4,894 107,984
Transfers 0
Total 5,220,736 7,186 5,227,922 102,536
Change in Net Assets 1,130,552 (93,804) 1,036,748 71,882
Net Assets-Beginning 10,600,639 3,183,075 13,783,714 1,414
Net Assets-Ending $11,731,191 $3,089,271 $14,820,462 $73,296
See Accompanying Notes 4
CITY OF EAGLE Page 1 of 2
Balance Sheet- Governmental Funds
September 30, 2010
Debt Total
General Library Service Governmental
Fund Fund Fund Funds
Assets
Cash $1,363,977 $218,658 $23,877 $1,606,512
Receivables:
Taxes 125,801 57,689 19,882 203,372
Intergovernmental 378,399 378,399
Accounts 685,618 24,593 710,211
Due From Other Funds 0
Note Receivable 30,000 30,000
Total Assets $2,583,795 $300,940 $43,759 $2,928,494
Liabilities
Accounts Payable&Accrued Expenses $138,435 $42,830 $181,265
Due To Other Funds 0
Deferred Revenue 106,741 67,398 $16,924 191,063
Deposits Payable 353,376 353,376
Total Liabilities 598,552 110,228 16,924 $725,704
Fund Balances
Restricted-Special Programs 31,790 190,712 222,502
Restricted-Debt Service 26,835 26,835
Unassigned 1,953,453 1,953,453
Total Fund Balances 1,985,243 190,712 26,835 2,202,790
Total Liabilities and Fund Balances $2,583,795 $300,940 $43,759 $2,928,494
See Accompanying Notes 5
CITY OF EAGLE Page 2 of 2
Balance Sheet- Governmental Funds
September 30, 2010
Reconciliation of Total Governmental Fund Balances to Net
Assets of Governmental Activities
Total Governmental Fund Balances $2,202,790
Amounts reported for governmental activities in the statement of net
assets are different because:
Capital assets used in governmental activities are not financial
resources and therefore are not reported in the funds. 10,701,712
Certain receivables are not available to pay for current period
expenditures and therefore are deferred in the funds. 191,063
The noncurrent portion of the note receivable is not available to
pay for current period expenditures and therefore is not reported in
the funds. 39,950
Certain liabilities, including long-term debt, are not due and
payable in the current period and therefore are not reported in the
funds. (1,404,324)
Net Assets of Governmental Activities $11,731,191
See Accompanying Notes 6
CITY OF EAGLE Page 1 of 2
Statement of Revenues, Expenditures, and Changes in Fund Balances -
Governmental Funds
Year Ended September 30, 2010
Debt Total
General Library Service Governmental
Fund Fund Fund Funds
Revenues
Taxes $1,712,644 $575,584 $236,362 $2,524,590
Franchise Fees 936,813 936,813
Intergovernmental 1,502,674 25,000 1,527,674
Charges for Services 2,876 516 3,392
Licenses&Permits 459,873 459,873
Fines&Fees 413,434 33,409 446,843
Interest 3,759 1,660 446 5,865
Miscellaneous 297,122 14,765 311,887
Total Revenues 5,329,195 650,934 236,808 6,216,937
Expenditures
Current Expenditures
General Government 1,851,619 1,851,619
Public Safety 1,155,437 1,155,437
Parks&Streets 588,787 588,787
Culture&Recreation 98,907 824,290 923,197
Debt Service-Principal 155,000 155,000
Debt Service-Interest&Charges 69,554 69,554
Total Expenditures 3,694,750 824,290 224,554 4,743,594
Excess(Deficiency)of Revenues
Over Expenditures 1,634,445 (173,356) 12,254 1,473,343
Other Financing Sources(Uses)
Proceeds from Tax Anticipation Note 375,000 375,000
Payment of Tax Anticipation Note (375,000) (375,000)
Transfers In 0 0 0 0
Transfers Out 0 0 0 0
Total Other Financing Sources(Uses) 0 0 0 0
Net Change in Fund Balances 1,634,445 (173,356) 12,254 1,473,343
Fund Balances-Beginning 350,798 364,068 14,581 729,447
Fund Balances-Ending $1,985,243 $190,712 $26,835 $2,202,790
See Accompanying Notes 7
CITY OF EAGLE Page 2 of 2
Statement of Revenues, Expenditures, and Changes in Fund Balances -
Governmental Funds
Year Ended September 30, 2010
Reconciliation of the Statement of Revenues, Expenditures, and
Changes in Fund Balances - Governmental Funds to the
Statement of Activities
Net Change in Fund Balances -Total Governmental Funds $1,473,343
Amounts reported for governmental activities in the statement of
activities are different because:
Government funds report capital outlays as expenditures.
However, in the statement of activities the cost of those assets is
allocated over their estimated useful lives as depreciation expense.
This is the excess of capital outlays over(under) depreciation
expense in the current period. 196,020
Revenues in the statement of activities that do not provide current
financial resources are deferred in the funds. 122,404
Repayment of debt principal is an expenditure in the
governmental funds, but the repayment reduces long-term debt in
the statement of net assets. 155,000
In the statement of activities, interest is accrued on long-term
debt, but the expenditure is reported when due in the
governmental funds. (20,106)
The reclassifications of certain long-term assets and liabilities on
the statement of activities are not reflected in the funds. (796,109)
Change in Net Assets of Governmental Activities $1,130,552
See Accompanying Notes 8
CITY OF EAGLE
Statement of Net Assets - Proprietary Fund
September 30, 2010
Water
Fund
Assets
Current Assets
Cash $385,785
Receivables:
Accounts 53,963
Total Current Assets 439,748
Noncurrent Assets
Restricted Cash 232,281
Nondepreciable Capital Assets 93,250
Depreciable Net Capital Assets 5,034,057
Total Noncurrent Assets 5,359,588
Total Assets $5,799,336
Liabilities
Current Liabilities
Accounts Payable& Accrued Expenses $27,129
Deposits Payable 12,225
Accrued Interest, Current 86,606
Long-Term Debt, Current 96,407
Total Current Liabilities 222,367
Noncurrent Liabilities
Accrued Interest,Noncurrent 123,605
Long-Term Debt,Noncurrent 2,364,093
Total Noncurrent Liabilities 2,487,698
Total Liabilities 2,710,065
Net Assets
Invested in Capital Assets,Net of Related Debt 2,456,596
Restricted-Debt Service 220,056
Unrestricted 412,619
Total Net Assets 3,089,271
Total Liabilities and Net Assets $5,799,336
See Accompanying Notes 9
CITY OF EAGLE
Statement of Revenues, Expenses, and Changes in Net Assets - Proprietary Fund
Year Ended September 30, 2010
Water
Fund
Operating Revenues
Charges for Services $548,728
Miscellaneous 2,217
Total Operating Revenues 550,945
Operating Expenses
Personnel 202,178
Operations& Maintenance 75,556
Supplies 3,252
Depreciation 290,968
Total Operating Expenses 571,954
Operating Income(Loss) (21,009)
Nonoperating Revenues (Expenses)
Interest Income 2,292
Interest Expense (77,764)
Other Income (Expense) 2,677
Total Nonoperating Revenue (Expenses) (72,795)
Income (Loss) Before Contributions & Transfers (93,804)
Capital Contributions
Transfers In
Transfers Out
Change in Net Assets (93,804)
Net Assets - Beginning 3,183,075
Net Assets - Ending $3,089,271
See Accompanying Notes 10
CITY OF EAGLE
Statement of Cash Flows - Proprietary Fund
Year Ended September 30, 2010
Water
Fund
Cash Flows From Operations
Receipts from Customers $575,267
Payments for Personnel (216,176)
Payments for Goods & Services (149,047)
Cash Provided (Used)By Operations 210,044
Cash Flows From Noncapital Financing
Receipts from Nonoperating Sources 2,677
Transfers to (From) Other Funds
Cash Provided (Used)By Noncapital Financing 2,677
Cash Flows From Capital & Related Financing
Purchase of Capital Assets (60,271)
Capital Asset Contributions
Issuance of Debt 135,494
Interest Paid on Debt
Principal Paid on Debt
Capital Grants Received
Cash Provided (Used) By Capital & Related Financing 75,223
Cash Flows From Investments
Interest Income 2,292
Cash Provided (Used) By Investments 2,292
Change in Cash & Investments 290,236
Cash &Investments -Beginning 327,830
Cash & Investments -Ending $618,066
Reconciliation of Operating Income (Loss) to Cash
Provided (Used) By Operations
Operating Income (Loss) ($21,009)
Adjustments to Reconcile Operating Income (Loss)to
Cash Provided (Used) by Operations:
Depreciation 290,968
Changes in Assets & Liabilities:
Receivables 18,358
Accounts Payable&Accrued Expenses (78,273)
Cash Provided (Used)By Operations $210,044
See Accompanying Notes 11
CITY OF EAGLE
Notes to Financial Statements
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Reporting Entity—The City of Eagle (the City) provides basic municipal services and operates
under a mayor-council form of government. These financial statements have been prepared in
conformity with accounting principles generally accepted in the United States of America as
applied to cities. The significant accounting policies of the City are described below.
These financial statements present the City (the primary government) and its component unit,
Eagle Urban Renewal Agency (EURA). As defined by GASBS No. 14, component units are
legally separate entities that are included in the City's reporting entity because of the significance
of their operating or financial relationships with the City. The City's mayor appoints and the City
council approves EURA's board of directors and accordingly, EURA is defined as a component
unit of the City. Separate financial statements for the component unit are issued and available
from EURA.
Basic Financial Statements - Government-Wide Statements — The City's basic financial
statements include both government-wide (reporting the City as a whole) and fund financial
statements (reporting the City's major funds). Both government-wide and fund financial
statements categorize primary activities as either governmental or business-type. The
government-wide financial statements follow both governmental accounting standards board
pronouncements and financial accounting standards board pronouncements issued through
November 30, 1989. The City's business-type activities and enterprise funds also follow
financial accounting standards board pronouncements issued subsequent to this date that do not
conflict with or contradict those of the government accounting standards board.
In the government-wide statement of net assets, both the governmental and business-type
activities columns (a) are presented on a consolidated basis by column, (b) and are reported on a
full accrual, economic resource basis, which recognizes all long-term assets and receivables as
well as long-term debt and obligations. The City's net assets may be reported in three parts -
invested in capital assets, net of related debt (when related debt exists), restricted net assets, and
unrestricted net assets. The City first utilizes restricted resources to finance qualifying activities.
The government-wide statement of activities reports both the gross and net cost of each of the
City's functions and business-type activities. The functions are also supported by general
government revenues as reported in the statement of activities. The statement of activities
reduces gross expenses (including depreciation when recorded) by related program revenues and
operating and capital grants. Program revenues must be directly associated with the function.
Internal activity between funds is eliminated in the government-wide statement of activities.
Operating grants include operating-specific and discretionary (either operating or capital) grants
while the capital grants column reports capital-specific grants.
The net costs (by function or business-type activity) are normally covered by general revenues.
The City's sole activity is providing basic municipal services, and substantially all expenses are
directly related to this activity. Accordingly, there is no allocation of indirect costs.
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CITY OF EAGLE
Notes to Financial Statements
The government-wide focus is more on the sustainability of the City as an entity and the change
in the City's net assets resulting from the current year's activities. Fiduciary funds, when present,
are not included in the government-wide statements.
Basic Financial Statements - Fund Financial Statements — The financial transactions of the
City are reported in individual funds in the fund financial statements. Each fund is accounted for
by providing a separate set of self-balancing accounts that comprises its assets, liabilities,
reserves, fund equity, revenues and expenditures/expenses.
The emphasis in fund financial statements is on the major funds. Nonmajor funds by category are
summarized into a single column. Generally accepted accounting principles set forth minimum
criteria (percentage of assets, liabilities, revenues, and expenditures/expenses of the funds) for
the determination of major funds.
The focus of governmental fund measurement (in the fund statements) is upon determination of
financial position and changes in financial position (sources, uses, and balances of financial
resources) rather than upon net income. The activities reported in governmental funds are
reported as governmental activities in the government-wide financial statements. Major
governmental funds of the City include:
General Fund— The general fund is the City's primary operating fund. It is used to account for
all financial resources except those required to be accounted for in another fund.
Special Revenue Funds — Special revenue funds are used to account for the proceeds of specific
revenue sources that are legally restricted to expenditures for specified purposes. Major special
revenue funds include the library fund, which accounts for the revenues earned and expenses
incurred in providing library services.
Debt Service Fund— The debt service fund is used to account for the accumulation of funds for
the periodic payment of principal and interest on long term debt.
The focus of proprietary fund measurement is upon determination of operating income, changes
in net assets, financial position, and cash flows. The generally accepted accounting principles
applicable are those similar to businesses in the private sector. Enterprise funds are required to be
used to account for operations for which a fee is charged to external users for goods or services
and the activity is financed with debt that is solely secured by a pledge of the net revenues. The
activities reported in enterprise funds are reported as business-type activities in the government-
wide financial statements. Major enterprise funds of the City include:
Water Fund — The water fund accounts for the revenues earned and expenses incurred in
providing water services.
Basis of Accounting — Basis of accounting refers to the point at which revenues or
expenditures/expenses are recognized in the accounts and reported in the financial statements. It
relates to the timing of the measurements made regardless of the measurement focus applied.
13
CITY OF EAGLE
Notes to Financial Statements
Both governmental and business-type activities in the government-wide financial statements and
proprietary and fiduciary fund financial statements are reported on the accrual basis of
accounting. Revenues are recognized when earned and expenses are recognized when incurred.
The governmental funds financial statements are presented on the modified accrual basis of
accounting. Under the modified accrual basis of accounting, revenues are recorded when
susceptible to accrual (when they become both measurable and available). "Measurable" means
the amount of the transaction can be determined and "available" means collectible within the
current period or within thirty days after year end. Expenditures are recorded when the related
fund liability is incurred. Exceptions to this general rule include principal and interest on long-
term debt which, if any, are recognized when due and payable.
The City may report deferred revenue on its financial statements. For the fund financial
statements, deferred revenues arise when potential revenue does not meet both the "measurable"
and "available" criteria for recognition in the current period. In subsequent periods, when both
revenue recognition criteria are met, the revenue is recognized. For both the government-wide
and fund financial statements, certain grant revenues are only recognized to the extent they have
been used for qualifying expenditures; any excess revenues are reported as deferred revenue.
Cash—The cash balances of the City's funds are pooled for investment purposes. The individual
funds' portions of the pooled cash are reported in each fund as cash. Interest earned on pooled
cash is allocated to the various funds in proportion to each fund's respective investment balance.
For purposes of the statement of cash flows, the City considers all investments (including
restricted cash) available for immediate withdrawal or with maturities of three months or less to
be cash and cash equivalents (referred to as cash).
Receivables—Receivables are reported net of any estimated uncollectible amounts.
Inventories— Material supplies on hand at year end are stated at cost using the first-in, first-out
method.
Capital Assets and Depreciation— Significant capital asset acquisitions with an original cost of
$300 or more are recorded at cost if purchased or fair value if contributed. Minor repairs and
maintenance are expensed as incurred. Depreciation over the estimated useful lives of all
depreciable assets is recorded using the straight line method. The City is classified as a Phase III
government under GASB 34 and as such, had the option of not capitalizing infrastructure assets
acquired prior to October 1, 2003. The City did not exercise this option.
Compensated Absences and Post-Retirement Benefits — The City provides certain
compensated absences to its employees. The estimated amount of compensation for future
amounts is recorded as a liability in the accompanying financial statements. Government
accounting standards board statement 45 requires employers to accrue future estimated post-
retirement benefits on the employer's government-wide financial statements when such benefits
are deemed material to the employer. The future estimated post-retirement benefits are deemed
14
CITY OF EAGLE
Notes to Financial Statements
immaterial to the City, and accordingly, are not reflected on the government-wide financial
statements.
Net Assets — Net assets is the difference between assets and liabilities. Net assets invested in
capital assets - net of related debt, are capital assets net of accumulated depreciation and reduced
by any outstanding debt related to the financing of those assets. Restricted net assets are net
assets less related debt that are subject to constraints on their use by creditors, grantors,
contributors, legislation, and other parties. All other net assets are reported as unrestricted.
Fund Balance Classifications — Restrictions of the fund balance indicate portions that are
legally or contractually segregated for a specific future use. Nonspendable portions of the fund
balance are those amounts that are not expected to be converted into cash. Committed portions
represent amounts that can only be used for specific purposes pursuant to formal action (i.e.
board approval) of the reporting entity's governing body. Assigned portions represent amounts
that are constrained by the government's intent to be used for a specific purpose. Assigned fund
balance classifications are not actively used by the entity. Remaining fund balances are reported
as unassigned. When expenditures are incurred that qualify for either restricted or unrestricted
resources, the City first utilizes restricted resources. When expenditures are incurred that qualify
for either committed or assigned or unassigned resources, the City first utilizes committed
resources.
Property Taxes — The City is responsible for levying property taxes, but the taxes are collected
by the respective county. Taxes are levied by the second Monday in September for each calendar
year. Taxes are due in two installments — December 20th and June 20th. A lien is filed on real
property three years from the date of delinquency.
Contingent Liabilities — Amounts received or receivable from grantor agencies are subject to
audit and adjustment by grantor agencies. Any disallowed claims, including amounts already
collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures
which may be disallowed by the grantor cannot be determined at this time although the City
expects such amounts, if any, to be immaterial.
Interfund Activity — Interfund activity is reported either as loans, services provided,
reimbursements, or transfers. Loans are reported as interfund receivables and payables as
appropriate and are subject to elimination upon consolidation. Services provided, deemed to be
at market or near market rates, are treated as revenues and expenditures/expenses.
Reimbursements are when one fund incurs a cost, charges the appropriate benefiting fund, and
reduces its related cost as a reimbursement. All other interfund transactions are treated as
transfers.
Use of Estimates — The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires management to make
estimates and assumptions that affect certain reported amounts and disclosures. Accordingly,
actual results could differ from those estimates.
15
CITY OF EAGLE
Notes to Financial Statements
Concentrations of Credit Risk — The City maintains its cash at insured financial institutions.
Periodically, balances may exceed federally insured limits. Balances not covered by FDIC are
collateralized whenever possible.
Risk Management — The City is exposed to various risks related to its operations. Insurance is
utilized to the extent practical to minimize these risks.
Subsequent Events— Subsequent events were evaluated through the date of the auditor's report,
which is the date the financial statements were available to be issued.
B. CASH
Cash consists of the following at year end:
Primary Component
Government Unit
Cash-Deposits $2,224,578 $129,350
Total $2,224,578 $129,350
Deposits — At year end, the carrying amounts of the City's deposits were $2,224,578 and the
bank balances were $2,403,764. Of the bank balances, $560,586 was insured, $979,450 was
collateralized, and the balance was uninsured and uncollateralized. The component unit's cash
was insured.
Investments — State statutes authorize government entities to invest in certain bonds, notes,
accounts, investment pools, and other obligations of the state, U.S. Treasury, and U.S.
corporations pursuant to Idaho Code 67-1210 and 67-1210A. These statutes are designed to help
minimize the custodial risk that deposits may not be returned in the event of the failure of the
issuer or other counterparty, interest rate risk resulting from fair value losses arising from rising
interest rates, or credit risks that an issuer or other counterparty will not fulfill its obligations.
The City's investment policy complies with state statutes.
Restricted Cash — Restricted cash at year end consists of water customer deposits and monies
set aside for the water revenue loan reserve fund.
C. NOTE RECEIVABLE
The City has a note receivable from its component unit, Eagle Urban Renewal Agency (EURA)
with a balance of$69,950 at year end. The note calls for payments of 15% of the tax revenue
collected by EURA or at least $30,000 annually. Consequently, $30,000 of the note (the
minimum annual payment) is classified as current on the statement of net assets. No interest is
charged.
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CITY OF EAGLE
Notes to Financial Statements
D. CAPITAL ASSETS
A summary of capital assets for the year is as follows:
Beginning Ending
Governmental Activities Balance Increases Decreases Balance
Nondepreciable Capital Assets
Land $1,701,708 $1,701,708
Artwork/Collectibles 132,917 132,917
Construction in Progress 674,420 $117,831 $775,669 16,582
Total 2,509,045 117,831 775,669 1,851,207
Depreciable Capital Assets
Buildings* 5,840,485 2,739,749 3,100,736
Improvements 5,872,636 824,879 6,697,515
Equipment 3,674,939 20,442 3,695,381
Subtotal 15,388,060 845,321 2,739,749 13,493,632
Accumulated Depreciation
Buildings* 933,641 77,308 240,475 770,474
Improvements 1,500,811 330,878 1,831,689
Equipment 1,682,018 358,946 2,040,964
Subtotal 4,116,470 767,132 240,475 4,643,127
Total 11,271,590 78,189 2,499,274 8,850,505
Net Capital Assets $13,780,635 $196,020 $3,274,943 $10,701,712
*Decrease in buildings due to reclassification of capital lease to operating lease.
Depreciation expense of$767,132 was charged to the capital assets program in the statement of
activities.
17
CITY OF EAGLE
Notes to Financial Statements
Beginning Ending
Business-Type Activities Balance Increases Decreases Balance
Nondepreciable Capital Assets
Land $93,250
$93,250
Construction in Progress 109,663 $109,663 0
Total 202,913 $0 109,663 93,250
Depreciable Capital Assets
Buildings 499,014 60,271 559,285
Water System 4,657,536 109,663 4,767,199
Equipment 391,808 391,808
Subtotal 5,548,358 169,934 0 5,718,292
Accumulated Depreciation
Buildings 18,648 13,982 32,630
Water System 288,006 238,360 526,366
Equipment 86,613 38,626 125,239
Subtotal 393,267 290,968 0 684,235
Total 5,155,091 (121,034) 0 5,034,057
Net Capital Assets $5,358,004 ($121,034) $109,663 $5,127,307
Depreciation expense of$290,968 was charged to the water services program in the statement of
activities.
E. DEFERRED REVENUE
Deferred revenue consists of the following at year end:
Fund
Financial
Description Statements
Delinquent Property Taxes $172,886
Delinquent Fines, Fees, Etc. 18,177
Total $191,063
F. OPERATING LEASE
The City leases a building under an operating lease agreement. The agreement is subject to
annual appropriation by the City council and therefore is defined as year-to-year for financial
statement purposes. Lease payments for the year amounted to $227,588.
18
CITY OF EAGLE
Notes to Financial Statements
G. LONG-TERM DEBT
Bonded Debt—At year end, the City's bonded debt was as follows:
Outstanding
2006 - $1,935,000 - general obligation bonds for capital improvements
due in annual principal installments and semiannual interest payments
with interest at 4.00% - 5.00% through 2016/17, secured by future taxes,
paid through the debt service fund $1,330,000
Total $1,330,000
Maturities on the bonds are estimated as follows:
Year Ended Principal Interest
9/30/11 $165,000 $63,150
9/30/12 170,000 56,550
9/30/13 175,000 49,750
9/30/14 190,000 41,000
9/30/15 200,000 31,500
9/30/16-17 430,000 32,500
Total $1,330,000 $274,450
Water Revenue Loan — The City has entered into a water revenue loan with DEQ for
improvements to its water system. The balance on the loan at year end excluding accrued interest
was $2,460,500. The loan's terms are in the process of being finalized; however, based on
preliminary estimates, the City believes the loan will be paid in semiannual payments over a 20
year term. Consequently, approximately $96,407 of the loan's principal is classified as current on
the statement of net assets with the balance classified as noncurrent. Accrued interest at year end
on the loan is estimated as $210,211 with $86,606 classified as current on the statement of
activities with the balance classified as noncurrent. The loan will be paid through the water fund.
19
CITY OF EAGLE
Notes to Financial Statements
Changes in long-term debt are as follows:
Beginning Ending Due Within
Description Balance Increases Decreases Balance One Year
Primary Government
Governmental Act.
2006 G.O. Bonds $1,485,000 $155,000 $1,330,000 $165,000
Capital Lease* 2,446,594 2,446,594 0 0
Deferred Charges 80,112 80,112 0 0
Comp. Absences 97,538 28,476 69,062 -
Subtotal 4,109,244 $0 2,710,182 1,399,062 165,000
Business-Type Act.
Water Revenue Loan 2,325,006 135,494 2,460,500 96,407
Comp. Absences 6,304 6,304 0 0
Subtotal 2,331,310 135,494 6,304 2,460,500 96,407
Total $6,440,554 $135,494 $2,716,486 $3,859,562 $261,407
Component Unit $99,950 $0 $30,000 $69,950 $30,000
*Decrease in capital lease due to reclassification of capital lease to operating lease.
Interest costs and related charges during the year amounted to $69,021 and $77,764 and were
charged to the debt service — interest and water services programs, respectively in the statement
of activities.
H. RETIREMENT PLAN
Public Employee Retirement System of Idaho (PERSI) - The PERSI Base Plan, a cost sharing
multiple-employer public retirement system, was created by the Idaho State Legislature. It is a
defined benefit plan requiring that both the member and the employer contribute. The Plan
provides benefits based on members' years of service, age, and compensation. In addition,
benefits are provided for disability, death, and survivors of eligible members or beneficiaries.
The authority to establish and amend benefit provisions is established in Idaho Code. Designed
as a mandatory system for eligible state and school district employees, the legislation provided
for other political subdivisions to participate by contractual agreement with PERSI. After 5 years
of credited service, members become fully vested in retirement benefits earned to date.
Members are eligible for retirement benefits upon attainment of the ages specified for their
employment classification. For each month of credited service, the annual service retirement
allowance is 2.0% (2.3% police/firefighter) of the average monthly salary for the highest
consecutive 42 months.
20
CITY OF EAGLE
Notes to Financial Statements
PERSI issues publicly available standalone financial reports that include audited financial
statements and required supplementary information. These reports may be obtained from
PERSI's website www.persi.idaho.gov.
The contribution requirements of employer and employees are established and may be amended
by the PERSI Board of Trustees. At September 30, 2010, the required contribution rate as a
percentage of covered payrolls for members was 6.23% for general members and 7.69% for
police/firefighters. The employer rate as a percentage of covered payroll was 10.39% for general
members and 10.73% for police/firefighter members. Additionally, PERSI administers the Sick
Leave Insurance Reserve Fund which collects salary-based contributions while employed and
pays insurance premiums for state and school employees at retirement based on a portion of the
accumulated balance of their unused sick leave. State and school employers pre-fund this
termination payment with contributions to PERSI during active employment.
The City's contributions required and paid were $142,336, $170,203, and $170,235, for the three
years ended September 30, 2010, 2009, and 2008 respectively.
I. INTERFUND BALANCES AND TRANSFERS
There were no interfund balances or transfers during the year.
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REQUIRED SUPPLEMENTAL INFORMATION
CITY OF EAGLE Page 1 of 2
Budgetary Comparison Schedule - General and Major Special Revenue Funds
Year Ended September 30, 2010
Final Budget
Budgeted Amounts Variance
(GAAP Basis) Actual Positive
General Fund Original Final Amounts (Negative)
Revenues
Taxes $1,705,288 $1,705,288 $1,712,644 $7,356
Franchise Fees 787,700 787,700 936,813 149,113
Intergovernmental 1,503,814 1,503,814 1,502,674 (1,140)
Charges for Services 1,000 1,000 2,876 1,876
Licenses&Permits 445,411 445,411 459,873 14,462
Fines&Fees 82,857 82,857 413,434 330,577
Interest 4,100 4,100 3,759 (341)
Miscellaneous 90,522 90,522 297,122 206,600
Total Revenues 4,620,692 4,620,692 5,329,195 708,503
Expenditures
Current Expenditures
General Government 2,843,509 2,843,509 1,851,619 991,890
Public Safety 1,155,532 1,155,532 1,155,437 95
Parks&Streets 542,557 542,557 588,787 (46,230)
Culture&Recreation 108,620 108,620 98,907 9,713
Debt Service-Principal 0 0 0 0
Debt Service-Interest&Charges 0 0 0 0
Total Expenditures 4,650,218 4,650,218 3,694,750 955,468 *
Excess(Deficiency)of Revenues
Over Expenditures (29,526) (29,526) 1,634,445 1,663,971
Other Financing Sources(Uses)
Proceeds from Tax Anticipation Note 375,000 375,000 375,000 0
Payment of Tax Anticipation Note (375,000) (375,000) (375,000) 0
Transfers In 0 0 0 0
Transfers Out 0 0 0 0
Total Other Financing Sources(Uses) 0 0 0 0
Net Change in Fund Balances (29,526) (29,526) 1,634,445 1,663,971
Fund Balances-Beginning 29,526 29,526 350,798 321,272
Fund Balances-Ending $0 $0 $1,985,243 $1,985,243
*Total expenditures(over)under appropriations.
See Auditor's Report 22
CITY OF EAGLE Page 2 of 2
Budgetary Comparison Schedule - General and Major Special Revenue Funds
Year Ended September 30, 2010
Final Budget
Budgeted Amounts Variance
(GAAP Basis) Actual Positive
Library Fund Original Final Amounts (Negative)
Revenues
Taxes $553,244 $553,244 $575,584 $22,340
Franchise Fees 0 0 0 0
Intergovernmental 25,000 25,000 25,000 0
Charges for Services 900 900 516 (384)
Licenses&Permits 0 0 0 0
Fines&Fees 44,600 44,600 33,409 (11,191)
Interest 3,100 3,100 1,660 (1,440)
Miscellaneous 2,500 2,500 14,765 12,265
Total Revenues 629,344 629,344 650,934 21,590
Expenditures
Current Expenditures
General Government 0 0 0 0
Public Safety 0 0 0 0
Parks&Streets 0 0 0 0
Culture&Recreation 1,002,827 1,002,827 824,290 178,537
Debt Service-Principal 0 0 0 0
Debt Service-Interest&Charges 0 0 0 0
Total Expenditures 1,002,827 1,002,827 824,290 178,537 *
Excess(Deficiency)of Revenues
Over Expenditures (373,483) (373,483) (173,356) 200.127
Other Financing Sources(Uses)
Proceeds from Tax Anticipation Note 0 0 0 0
Payment of Tax Anticipation Note 0 0 0 0
Transfers In 0 0 0 0
Transfers Out 0 0 0 0
Total Other Financing Sources(Uses) 0 0 0 0
Net Change in Fund Balances (373,483) (373,483) (173,356) 200,127
Fund Balances-Beginning 373,483 373,483 364,068 (9,415)
Fund Balances-Ending $0 $0 $190,712 $190,712
*Total expenditures(over)under appropriations.
See Auditor's Report 23
OTHER REPORTS AND SCHEDULES
Foega CPAs, P.C.
*Timothy y S. .rl�c�P,f e—J t 2. .i a &
P.O.Box 100,Payette,Idaho 83661
www.folkecpas.com,folkecpas @srvinet.com
P:208-642-1417,F:208-642-1582
Report on Internal Control Over Financial Reporting and on
Compliance and Other Matters Based on an Audit of Financial Statements
Performed in Accordance With Government Auditing Standards
Honorable Mayor and City Council
City of Eagle
We have audited the financial statements of the governmental activities, the business-type
activities, and each major fund of City of Eagle (the City) as of and for the year ended September
30, 2010, which collectively comprise the City's basic financial statements and have issued our
report thereon dated January 13, 2011. 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.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the City's internal control over financial
reporting as a basis for designing our auditing procedures for the purpose of expressing our
opinion on the financial statements, but not for the purpose of expressing an opinion on the
effectiveness of the City's internal control over financial reporting. Accordingly, we do not
express an opinion on the effectiveness of the City's internal control over financial reporting.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to
prevent, or detect and correct misstatements on a timely basis. A material weakness is a
deficiency, or combination of deficiencies, in internal control such that there is a reasonable
possibility that a material misstatement of the entity's financial statements will not be prevented,
or detected and corrected on a timely basis.
Our consideration of internal control over financial reporting was for the limited purpose
described in the first paragraph of this section and was not designed to identify all deficiencies in
internal control over financial reporting that might be deficiencies, significant deficiencies or
material weaknesses. We did not identify any deficiencies in internal control over financial
reporting that we consider to be material weaknesses, as defined above.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City's financial statements are free
of material misstatement, we performed tests of its compliance with certain provisions of laws,
regulations, contracts, and grant agreements, noncompliance with which could have a direct and
24
material effect on the determination of financial statement amounts. However, providing an
opinion on compliance with those provisions was not an objective of our audit, and accordingly,
we do not express such an opinion. The results of our tests disclosed no instances of
noncompliance or other matters that are required to be reported under Government Auditing
Standards.
This report is intended solely for the information and use of the management, those charged with
governance, others within the entity, federal awarding agencies, and pass-through entities and is
not intended to be and should not be used by anyone other than these specified parties.
Fogg¢ CPAs, P.C.
January 13, 2011
25
CITY OF EAGLE
Schedule of Findings and Responses
Year Ended September 30, 2010
A. SUMMARY OF AUDITOR'S RESULTS
1. The auditor's report expresses an unqualified opinion on the financial statements of the
City.
2. No significant deficiencies relating to the audit of the financial statements are reported in
the Report on Internal Control Over Financial Reporting and on Compliance and Other
Matters Based on an Audit of the Basic Financial Statements Performed in Accordance
with Government Auditing Standards.
3. No instances of noncompliance material to the financial statements of the City were
disclosed during the audit.
26