Finance - Annual Audit - 09/30/2008 STATE OF IDAHO
CITY OF EAGLE
AUDITED FINANCIAL STATEMENTS
AS OF
SEPTEMBER 30, 2008
STATE OF IDAHO
CITY OF EAGLE
TABLE OF CONTENTS
Independent Auditor's Report 1-2
Basic Financial Statements:
Government-wide Financial Statements:
Statement of Net Assets 3
Statement of Activities 4-5
Fund Financial Statements:
Balance Sheet- Governmental Funds
6
Statement of Revenues, Expenditures and Changes in 7
Fund Balances - Governmental Funds
Reconciliation of the Statement of Revenues, Expenditures, and
Changes in Fund Balances of Governmental Funds to the 8
Statement of Activities
Statement of Net Assets - Proprietary Fund
9
Statement of Revenues, Expenses and Changes in 10
Fund Net Assets - Proprietary Fund
Statement of Cash Flows - Proprietary Fund
11-12
Notes to the Financial Statements
13-25
Required Supplementary Information:
Statement of Revenue, Expenditures and Changes in Fund 26-27
Balances - Budget and Actual - Major Governmental Funds
Supporting schedules:
Individual Fund Schedules:
Statement of Revenues - Budget and Actual - General Fund
28
Statement of Expenditures - Budget and Actual - General Fund
29
Statement of Revenues and Expenditures - Budget and Actual - 30
Library Special Revenue Fund
STATE OF IDAHO
CITY OF EAGLE
TABLE OF CONTENTS
(Continued)
Supporting schedules (continued):
Statement of Revenues and Expenditures - Budget and Actual - 31
Library G.O. Bond Debt Service Fund
Statement of Revenues and Expenses - Budget (Non-GAAP 32
Budgetary Basis) and Actual -Water Enterprise Fund
Operation in Tax Rolls 33
Report on Internal Control over Financial Reporting and on Compliance
and Other Matters Based on an Audit of Financial Statements Performed 34-35
in Accordance with Government Auditing Standards
Gibbons, Scott & Dean T I ,P
Certified Public Accountants
Professional Building (208)459 4649
'erry L.Scott,CPA 1803 Ellis Avenue
ohn P.Dean,CPA
Caldwell,Idaho 83605 FAX(208)454-9091
INDEPENDENT AUDITOR'S REPORT
Honorable Mayor and Members
of the City Council
City of Eagle
Eagle, Idaho
We have audited the accompanying financial statements of the governmental activities, the business-
type activities, the discretely presented component unit, each major fund, and the aggregate remaining
fund information of the City of Eagle as of and for the year ended September 30, 2008, 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 of Eagle's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States
of America and the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States. Those standards require that we
plan and perform the audit to obtain reasonable-assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
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, the discretely
presented component unit, each major fund, and the aggregate remaining fund information of the City
of Eagle as of September 30, 2008, and the respective changes in financial position and, where
applicable, cash flows 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 July 28,
2009 on our consideration of City of Eagle's internal control over financial reporting and our tests of its
compliance with certain provisions of laws, regulations, contracts and grant agreements and other
matters. The purpose of that report is to describe the scope of our testing of internal control over
financial reporting and compliance and the results of that testing, and not to provide an opinion on the
internal control over financial reporting or on compliance. That report is an integral part of an audit
performed in accordance with Government Auditing Standards and should be considered in assessing
the results of our audit.
City of Eagle has not presented management's discussion and analysis that accounting principles
generally accepted in the United States has determined is necessary to supplement, although not
required to be part of, the basic financial statements. Budgetary comparison information on pages 26-
27 is not a required part of the basic financial statements but is supplementary information required by
—1—
MEMBER OF
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
IDAHO SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
accounting principles generally accepted in the United States of America. We have applied certain
limited procedures, which consisted
thens pal supplementary information.geHowevergawendid not audit the
measurement and presentation of pp
information and express no opinion on it.
Our audit was conducted for the purpose of forming an opinion on the financial statements that
collectively comprise the City of Eagle basic financial statements. The accompanying financial
information listed as supporting schedules in the table of contents is presented for purposes of
additional analysis and is not a required part of the basic financial statements. Such information has
been subjected to the auditing procedures applied in the audit of the basic financial statements and, in
our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a
whole.
GIBBONS, SCOTT & DEAN LLP
Certified Public Accountants
July 28, 2009
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State of Idaho
City of Eagle
Statement of Net Assets
September 30, 2008
Primary Government Component Unit
Governmental Business-type Eagle Urban
Activities Activities Total Renewal Agency
Assets
Cash $ 9,698 $ 144,447 $ 154,145 $ 55,349
Investments 485,752 144,862 630,614
Receivables (net of allowance
for uncollectibles) 1,075,311 40,099 1,115,410
Prepaid expenses 40,899 40,899
Noncurrent assets: 73,769
Investments 73,769
Receivables (net of allowance 1,003
for uncollectibles) 1,003
Deferred charges 31,695 31,695
Capital assets (net of
accumulated depreciation) 14,246,279 3,050,597 17,296,876
Total assets 15,964,406 3,380,005 19,344,411 55,349
Liabilities 51,643
Bank overdraft 51,643 4,636
Accounts payable 402,161 41,454 443,615
Accrued payroll 86,053 3,196 89,249
Deferred revenue 110,000 110,000
Deposits payable 183,448 183,448
Accrued interest 25,968 57,649 83,617
Noncurrent liabilities:
Due within one year 253,530 3,668 257,198 30,000
Due in more than one year 4,019,709 2,271,231 6,290,940 99,950
Total liabilities 5,132,512 2,377,198 7,509,710 134,586
Net Assets
Invested in capital assets,
net of related debt 10,160,202 780,214 10,940,416
Restricted for: 21,101
Tree fund 21,101
Special revenue 268,111 268,111
Debt service 22,269 22,269
Unrestricted
360,211 222,593 582,804 (79,237)
Total net assets $ 10,831,894 $ 1,002,807 $ 11,834,701 $ (79,237)
The accompanying notes are an integral part of this statement.
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Net (Expense) Revenue and Changes in Net Assets Component Unit
Governmental Business-type Eagle Urban
Activities Activities Total Renewal Agency
$ (1,881,553) $ $ (1,881,553) $
(848,456) (848,456)
(379,545) (379,545)
(1,867,994) (1,867,994)
(307,832) (307,832)
(5,285,380) (5,285,380)
(241,508) (241,508)
(5,285,380) (241,508) (5,526,888)
(54,946)
2,311,448 2,311,448
847,870 847,870
338,861 338,861
173,008 173,008
635,179 512,606 1,147,785
15,554 29,147 44,701
68,862 602 69,464
4,390,782 542,355 4,933,137
(894,598) 300,847 (593,751) (54,946)
11,726,492 701,960 12,428,452 (24,291)
$ 10,831,894 $ 1,002,807 $ 11,834,701 $ (79,237)
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State of Idaho
City of Eagle
Balance Sheet
Governmental Funds
September 30, 2008
Other
Governmental
Fund Total
Debt Governmental
General Library Service Funds
Assets
Cash $ 329 $ 8,810 $ 559 $ 9,698
Investments 193,037 272,137 20,578 485,752
Receivables (net of allowance for
uncollectibles) 1,006,212 61,640 7,459 1,075,311
Prepaid expenses
30,762 10,137 40,899
Noncurrent assets: 73,769
Investments 73,769
Receivables (net of allowance for 1,003
uncollectibles) 1,003
Total assets $ 1,305,112 $ 352,724 $ 28,596 $ 1,686,432
Liabilities and Fund Balances
Liabilities:
Bank overdraft $ 51,643 $ $ $ 51,643 452,
Accounts payable 366,346 35,815 86,053
3
Accrued payroll 60,768 25,285
Deferred revenue 147,939 53,307 6,991 208,237
Deposits payable 183,448
Total liabilities 810,144 114,407 6,991 931,542
Fund balances:
Reserved for: 40,899
Prepaid expenses 30,762 10,137
Loan 99,950 9
4909,,89950
Tree fund 21,101
Debt service 21,605 21,605
Unreserved, reported in: 343,155
General fund 343,155
Special revenue funds
228,180 228,180
Total fund balances 494,968 238,317 21,605 754,890
Total liabilities and fund balances $ 1,305,112 $ 352,724 $ 28,596
Amounts reported for governmental activities in the statement
of net assets are different because:
Capital assets used in governmental activities are not financial 14,246,279
resources and, therefore, are not reported in the funds.
Other long-term assets are not available to pay for current-period g8 237
expenditures and, therefore, are deferred 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. (4,267,512)
Net assets of governmental funds $ 10,831,894
The accompanying notes are an integral part of this statement.
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State of Idaho
City of Eagle
Statement of Revenues, Expenditures and Changes in Fund Balances
Governmental Funds
For the Year Ended September 30, 2008
Other
Governmental
Fund Total
Debt Governmental
General Library Service Funds
Revenues:
Taxes $ 2,012,999 $ 897,850 $ 207,004 $ 3,117,853
Licenses and permits 688,456
Intergovernmental 1,365,522 91,500 1,457,022
Charges for services 1,094,299 1,094,299
Fines 95 40,780 40,875
Miscellaneous 111,679 11,345 2,655 125,679
Total revenues 5,273,050 1,041,475 209,659 6,524,184
Expenditures:
Current: 2,978,745
General government 2,978,745
Public safety 1,700,141 1,700,141
Highways and streets 428,811 428,811
Culture and recreation 2,281,757 1,038,745 3,320,502
Debt service: 145,000 145,000
Principal
Interest and fiscal charges 82,921 82,921
Total expenditures 7,389,454 1,038,745 227,921 8,656,120
Excess (deficiency) of revenues
over (under) expenditures (2,116,404) 2,730 (18,262) (2,131,936)
Fund balances - beginning 2,611,372 235,587 39,867 2,886,826
Fund balances - ending $ 494,968 $ 238,317 $ 21,605 $ 754,890
The accompanying notes are an integral part of this statement.
-7-
State of Idaho
City of Eagle
Reconciliation of the Statement of Revenues, Expenditures, and Changes in
Fund Balances of Governmental Funds to the Statement of Activities
For the Year Ended September 30, 2008
Amounts reported for governmental activities in the statement of activities
are different because:
Net change in fund balances -total governmental funds $ (2,131,936)
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 ggg 313
amount by which capital outlays exceeded depreciation in the current period.
The net effect of various miscellaneous transactions involving capital assets 115,077
(i.e., sales, trade-ins, and donations) is to increase net assets.
Revenues in the statement of activities that do not provide current 42,408
financial resources are not reported as revenues in the funds.
The issuance of long-term debt (e.g., bonds) provides current financial
resources to governmental funds, while the repayment of the principal of
long-term debt consumes the current financial resources of governmental
funds. Neither transaction, however, has any effect on net assets. Also,
governmental funds report the effect of issuance costs, premiums, discounts,
and similar items when debt is first issued, whereas these amounts are
deferred and amortized in the statement of activities. This amount is the net 176,745
effect of these differences in the treatment of long-term debt and related items.
Some expenses reported in the statement of activities do not require the
use of current financial resources and, therefore, are not reported as 4,795
expenditures in the governmental funds.
Change in net assets of governmental activities
$ (894,598)
The accompanying notes are an integral part of this statement.
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State of Idaho
City of Eagle
Statement of Net Assets
Proprietary Fund
September 30, 2008
Business-type
Activities -
Enterprise
Funds
Assets
Current assets: 144,447
Cash
Investments 144,862
Receivables (net of allowance 40,099
for uncollectibles) 3 440,099
Total current assets
Noncurrent assets: 3,050,597
Capital assets (net of accumulated depreciation)
Total assets 3,380,005
Liabilities:
Current liabilities: 41,454
Accounts payable 3,196
Accrued payroll 3,3,1196
Compensated absences 57,649
Accrued interest 105,967
Total current liabilities
Noncurrent liabilities: 848
Compensated absences 2 270,88448
Loan payable 31
Total noncurrent liabilities 2,271,231
Total liabilities
Net assets:
Invested in capital assets, net of related debt 780,214
780,214
Unrestricted
Total net assets $ 1,002,807
The accompanying notes are an integral part of this statement.
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State of Idaho
City of Eagle
Statement of Revenues, Expenses and Changes in Fund Net Assets
Proprietary Fund
For the Year Ended September 30, 2008
Business-type
Activities -
Enterprise
Funds
Operating revenues: 03
Charges for services 344,9,4403
Reimbursement 359,547
Total operating revenues
Operating expenses:
Personal services 46,182 8
Supplies 2,963
733,087
33
Utilities
Other services and charges ,087
Depreciation 838,476
Total operating expenses
Operating loss (467,919)
Nonoperating revenues (expenses): 602
20,6602
Interest income
Intertie fees 520,000
Revenue sharing 533,208
Total nonoperating revenues (expenses)
Income (loss) before contributions 65,289
Capital contributions 235,558
Change in net assets 300,847
Total net assets - beginning 701,960
Total net assets - end $ 1,002,807
The accompanying notes are an integral part of this statement.
-10-
Reconciliation of operating loss to net cash provided by operating activities
Operating loss $ (467,919)
Adjustments to reconcile operating loss to net cash
provided by operating activities: 38,776
Depreciation 936 776
Capital assets in accounts payable
Change in assets and liabilities: 9,496)
(998,257)
(Increase) decrease in accounts receivable ((
8, 56
3,59
Increase (decrease) in accounts payable
Increase (decrease) in accrued payroll 4,516
Increase (decrease) in compensated absences (34,493)
Total adjustments
Net cash provided by (used for) operating activities $ (502,412)
Noncash investing, capital, and financing activities: $ 272,315
Contributions of capital assets from customers
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State of Idaho
City of Eagle
Notes to the Financial Statements
September 30, 2008
I. Summary of Significant Accounting Policies
The financial statements of the City of Eagle have been prepared in conformity with generally
accepted accounting principles (GAAP) as applied to governmental units. The Governmental
Accounting Standards Board (GASB) is the accepted standard-setting body for establishing
governmental accounting and financial reporting principles. Significant City accounting policies are
described below.
A. Reporting Entity
The City of Eagle is an incorporated city of the State of Idaho. The City operates under a Mayor-
Council form of government and provides the following services as authorized by its charter:
public safety (police), culture - recreation, planning and zoning, and general administrative
services.
The accompanying financial statements present the City and its component units, entities for
which the City is considered to be financially accountable. The component unit column in the
government-wide statements is the financial data of the Eagle Urban Renewal Agency. Eagle
Urban Renewal Agency is a separate and distinct legal entity created by state statute. The
directors are appointed by the Mayor and approved by the City Council. Eagle Urban Renewal
Agency provides urban development services for the citizens of the city. Complete financial
statements can be obtained from the City of Eagle.
B. Government-wide and Fund Financial Statements
The government-wide financial statements (i.e., the statement of net assets and the statement of
changes in net assets) report information on all of the nonfiduciary activities of City of Eagle. For
the most part, the effect of interfund activity has been removed from these statements.
Governmental activities, which normally are supported by taxes and intergovernmental revenues,
are reported separately from business-type activities, which rely to a significant extent on fees
and charges for support.
The statement of activities demonstrates the degree to which the direct expenses of a given
function or segment are offset by program revenues. Direct expenses are those that are clearly
identifiable with a specific function or segment. Program revenues include 1) charges to
customers or applicants who purchase, use, or directly benefit from goods, services, or privileges
provided by a given function or segment and 2) grants and contributions that are restricted to
meeting the operational or capital requirements of a particular function or segment. Taxes and
other items not properly included among program revenues are reported instead as general
revenues.
Separate financial statements are provided for governmental funds and proprietary funds. Major
individual governmental funds and major individual enterprise funds are reported as separate
columns in the fund financial statements.
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C. Measurement Focus, Basis of Accounting and Basis of Presentation
The government-wide financial statements are reported using the economic resources
measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary
fund financial statements. Revenues are recorded when earned and expenses are recorded
when a liability is incurred, regardless of the timing of related cash flows. Property taxes are
recognized as revenues in the year for which they are levied. Grants and similar items are
recognized as revenue as soon as all eligibility requirements imposed by the provider have been
met.
Governmental fund financial statements are reported using the current financial resources
measurement focus and the modified accrual basis of accounting. Revenues are recognized as
soon as they are both measurable and available. Revenues are considered to be available when
they are collectible within the current period or soon enough thereafter to pay liabilities of the
current period. For this purpose, the City considers revenues to be available if they are collected
within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a
liability is incurred, as under accrual accounting. However, debt service expenditures, as well as
expenditures related to compensated absences and claims and judgments, are recorded only
when payment is due.
Property taxes, franchise taxes, licenses, interest and intergovernmental revenues associated
with the current fiscal period are all considered to be susceptible to accrual and so have been
recognized as revenues of the current fiscal period. Only the portion of special assessments
receivable due within the current fiscal period is considered to be susceptible to accrual as
revenue of the current period. All other revenue items are considered to be measurable and
available only when cash is received by the City.
The City reports the following major governmental funds:
The general fund is the City's primary operating fund. It accounts for all financial resources of
the general government, except those required to be accounted for in another fund.
The library fund accounts for the resources accumulated for the operation of the library.
The City reports the following major proprietary fund:
The water fund accounts for the activities of the City's water distribution operations.
Private-sector standards of accounting and financial reporting issued prior to December 1, 1989,
generally are followed in both the government-wide and proprietary fund financial statements to
the extent that those standards do not conflict with or contradict guidance of the Governmental
Accounting Standards Board. Governments also have the option of following subsequent
private-sector guidance for their business-type activities and enterprise funds, subject to this
same limitation. The City has elected to follow subsequent private-sector guidance.
As a general rule the effect of interfund activity has been eliminated from the government-wide
financial statements. Exceptions to this general rule are payments-in-lieu of taxes and other
charges between the City's water function and various other functions of the City. Elimination of
these charges would distort the direct costs and program revenues reported for the various
functions concerned.
Amounts reported as program revenues include 1) charges to customers or applicants for goods,
services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and
contributions, including special assessments. Internally dedicated resources are reported as
-14-
general revenues rather than as program revenues. Likewise, general revenues include all
taxes.
Proprietary funds distinguish operating revenues and expenses from nonoperating items.
Operating revenues and expenses generally result from providing services and producing and
delivering goods in connection with a proprietary fund's principal ongoing operations. The
principal operating revenues of the City's enterprise funds are charges to customers for sales
and services. Operating expenses for enterprise funds include the cost of sales and services,
administrative expenses and depreciation of capital assets. All revenues and expenses not
meeting this definition are reported as nonoperating revenues and expenses.
When both restricted and unrestricted resources are available for use, it is the City's policy to use
restricted resources first, then unrestricted resources as they are needed.
D. Assets, Liabilities and Net Assets or Equity
1. Deposits and Investments
The City's cash and cash equivalents are considered to be cash on hand, demand deposits
and short-term investments with original maturities of three months or less from the date of
acquisition.
State statutes authorize the city to invest in obligations of the United States, state and local
governments; time deposit accounts; repurchase agreements; Local Government Investment
Pool; and the Diversified Bond Fund.
Investments for the City are reported at fair value. The Local Government Investment Pool
and Diversified Bond Fund operate in accordance with appropriate state laws and regulations.
The reported value of both is the same as the fair value of the pooled shares.
2. Receivables
Property taxes are an enforceable lien on property. The lien date is January 1 for property
taxes levied on the third Monday of the following September. Taxes can be paid in two
installments with payments due by December 20 and June 20. Ada County bills and collects
the taxes and remits them to the City monthly. City property tax revenues are recognized
when entered on the tax rolls to the extent that they result in receivables.
Taxes receivable represent balances due as of August 31. Taxes collected by the Ada
County Tax Collector in September, are on deposit with the Ada County Treasurer. These
collections were turned over to the City of Eagle subsequent to September 30.
3. Prepaid Expenses
Certain payments to vendors reflect costs applicable to future accounting periods and are
recorded as prepaid expenses in both government-wide and fund financial statements.
4. Capital Assets
Capital assets, which include property, plant, equipment, and infrastructure assets (e.g.,
roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or
business-type activities columns in the government-wide financial statements. Capital assets
are defined by the City as assets with an initial, individual cost of more than $300 and an
estimated useful life in excess of three years. Such assets are recorded at historical cost or
-15-
estimated historical cost if purchased or constructed. Donated capital assets are recorded at
estimated fair market value at the date of donation.
The costs of normal maintenance and repairs that do not add to the value of the asset or
materially extend asset lives are not capitalized.
Major outlays for capital assets and improvements are capitalized as projects are
constructed. Interest incurred during the construction phase of capital assets of business-
type activities is included as part of the capitalized value of the assets constructed, net of
interest earned on the invested proceeds over the same period.
Property, plant and equipment is depreciated using the straight-line method over the following
estimated useful lives:
Assets Years
Buildings 20-40
Improvements other than buildings 10-40
Equipment 5-35
5. Compensated Absences
It is the City's policy to permit employees to accumulate earned but unused annual leave.
Annual leave is accrued when incurred in the government-wide and proprietary fund financial
statements. A liability for these amounts is reported in governmental funds only if they have
matured, for example, as a result of employee resignations and retirements.
6. Long-Term Obligations
In the government-wide financial statements, and proprietary fund types in the fund financial
statements, long-term debt and other long-term obligations are reported as liabilities in the
applicable governmental activities, business-type activities, or proprietary fund type statement
of net assets. Bond premiums and discounts, as well as issuance costs, are deferred and
amortized over the life of the bonds using the effective interest method. Bonds payable are
reported net of the applicable bond premium or discount. Bond issuance costs are reported
as deferred charges and amortized over the term of the related debt.
In the fund financial statements, governmental fund types recognize bond premiums and
discounts, as well as bond issuance costs, during the current period. The face amount of
debt issued is reported as other financing sources. Premiums received on debt issuances
are reported as other financing sources while discounts on debt issuances are reported as
other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds
received, are reported as debt service expenditures.
7. Fund Equity
In the fund financial statements, governmental funds report reservations of fund balance
for amounts that are not available for appropriation or are legally restricted by outside
parties for use for a specific purpose. Designations of fund balance represent tentative
management plans that are subject to change. Reserves have been established for the
amount of the loan that is not available to be appropriated for expenditures, prepaid
expenses, tree fund and debt service.
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8. Net Assets
The government-wide statement of net assets reports $311,481 of restricted net assets, of
which $22,269 is restricted by enabling legislation.
II. Reconciliation of Government-wide and Fund Financial Statements
A. Explanation of Certain Differences Between the Governmental Fund Balance Sheet
and the Government-wide Statement of Net Assets
The governmental fund balance sheet includes a reconciliation between fund balance- total
governmental funds and net assets- governmental activities as reported in the government-
wide statement of net assets. One element of that reconciliation explains that "long-term
liabilities, including bonds payable, are not due and payable in the current period and
therefore are not reported in the funds." The details of this $4,267,512 difference are as
follows:
Bonds payable $ (1,725,231)
Deferred charges 31,695
Leases payable (2,451,077)
Accrued interest payable (25,968)
Compensated absences (96,931)
Net adjustment to reduce fund balance-total
governmental funds to arrive at net assets-
governmental activities $ (4,267,512)
B. Explanation of Certain Difference Between the Governmental Fund Statement of
Revenues, Expenditures, and Changes in Fund Balances and the Government-wide
Statement of Activities
The governmental fund statement of revenues, expenditures, and changes in fund balances
includes a reconciliation between net changes in fund balances - total governmental funds
and changes in net assets of governmental activities as reported in the government-wide
statement of activities. One element of that reconciliation explains that "Governmental funds
report capital outlay 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."
The details of this $898,313 difference are as follows:
Capital outlay $ 1,563,884
Depreciation expense (665,571)
Net adjustment to increase net changes in
fund balances-total governmental fund to
arrive at changes in net assets of
governmental activities $ 898,313
Another element of that reconciliation states that "The net effect of various miscellaneous
transactions involving capital assets (i.e., sales, trade-ins, and donations) is to increase net
assets." The details of this $115,077 difference are as follows:
In the statement of activities, only the loss on the
retirement of capital assets is reported. However,
in the governmental funds, the proceeds from
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the sale increase financial resources. Thus, the
change in net assets differs from the change in
fund balance by the cost of the assets retired. $ (3,346)
Donations of capital assets increase net assets
in the statement of activities, but do not appear
in the governmental funds because they are not
financial resources. 118,423
Net adjustment to increase net changes in fund
balances-total governmental funds to arrive at
changes in net assets of governmental activities $ 115,077
Another element of that reconciliation states that "the issuance of long-term debt (e.g., bonds,
leases) provides current financial resources to governmental funds, while the repayment of
the principal of long-term debt consumes the current financial resources of governmental
funds. Neither transaction, however, has any effect on net assets. Also, governmental funds
report the effect of issuance costs, premiums, discounts, and similar items when debt is first
issued, whereas these amounts are deferred and amortized in the statement of activities."
The details of the $176,745 difference are as follows:
Principal repayments:
General obligation bond $ 145,000
Capital leases 31,745
Net adjustment to increase net changes in fund
balances-total governmental funds to arrive at
changes in net assets of governmental activities $ 176,745
Another element of that reconciliation states that "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." The details of this $4,795 difference are as
follows:
Compensated absences $ (3,087)
Amortization of deferred charges (3,555)
Amortization of bond premium 10,119
Accrued interest 1,318
Net adjustment to increase net changes in fund
balances -total governmental funds to arrive at
changes in net assets of governmental activities $ 4,795
III. Stewardship, Compliance and Accountability
A. Budgetary Information
The City follows these procedures in establishing the budgetary data reflected in the financial
statements:
1. Prior to September 1, the City Clerk/Treasurer, the Mayor and the City Council prepare a
proposed operating budget for the fiscal year commencing the following October 1. The
operating budget includes proposed expenditures and the means of financing them.
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2. Public hearings are conducted at the City Hall to obtain taxpayer comments.
3. Prior to October 1, the budget is legally enacted through passage of an ordinance.
4. The City Council by following the same budgetary procedures used to adopt the original
budget may amend it to a greater amount if additional revenue will accrue to the city as a
result of increases in state or federal grants or allocations, as a result of an increase in
revenues from any source other than ad valorem tax revenues or as a result of an
increase in enterprise funds to finance the operation and maintenance of governmental
facilities and services which are entirely or predominantly self-supporting by user charges.
5. Formal budgetary integration is employed as a management control device during the
year for the general fund, special revenue, debt service and enterprise funds.
6. Budgets for the general, special revenue, and debt service funds are adopted on a basis
consistent with generally accepted accounting principles (GAAP). Budgets for enterprise
funds are adopted on a non-GAAP basis.
7. Budgeted amounts are as originally adopted for the fiscal year ended September 30,
2008.
8. Expenditures may not legally exceed budgeted appropriations at the fund level.
The City of Eagle does not use the encumbrance method of accounting.
IV. Detailed Notes on All Funds
A. Deposits and Investments
As of September 30, 2008, City of Eagle had the following investments:
Weighted
Average
Maturity
Investment Type Fair Value (Years)
Local government investment pool $ 630,614 .14
Diversified bond fund 73,769 4.60
Total fair value $ 704.383
Portfolio weighted average maturity .61
Credit risk. The local government investment pool and diversified bond fund are not
registered with the Securities and Exchange Commission or any other regulatory body. Both
are rated AAAf by Standard & Poor's Rating Services. The City does not have a policy
regarding credit risk of investments.
Custodial credit risk— deposits. In the case of deposits, this is the risk that in the event of a
bank failure, the City's deposits may not be returned to it. The City does not have a deposit
policy for custodial credit risk. As of September 30, 2008, $101,841 of the City's bank
balance of $201,841 was exposed to custodial credit risk because it was uninsured and
uncollateralized.
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B. Receivables
Receivables as of year end for the City's individual major and nonmajor funds in the
aggregate, including the applicable allowances for uncollectible accounts, are as follows:
Debt
General Library Water Service Total
Receivables:
Taxes $ 40,148 $ 31,143 $ $ 7,406 $ 78,697
Accounts 392,711 37,353 40,097 470,161
Intergovernmental 442,972 442,972
Loan 129,950 129,950
Interest 1,434 644 2 53 2,133
Gross receivables 1,007,215 69,140 40,099 7,459 1,123,913
Less allowance for
uncollectibles 7,500 7,500
Net total receivables $1,007,215 $ 61.640 $ 40,099 $ 7,459 $1,116,413
The only receivables not expected to be collected within one year are $22,080 of taxes,
$14,912 of accounts and $99,950 of loan.
Governmental funds report deferred revenue in connection with receivables for revenues that
are not considered to be available to liquidate liabilities of the current period. Governmental
funds also defer revenue recognition in connection with resources that have been received,
but not yet earned. At the end of the current fiscal year, the various components of deferred
revenue and unearned revenue reported in the governmental funds were as follows:
Unavailable Unearned
Delinquent property taxes receivable (general fund) $ 37,939 $
Delinquent property taxes receivable (library fund) 29,425
Delinquent property taxes receivable (debt service fund) 6,991
Capital assets donation (general fund) 110,000
Delinquent fines, fees, etc. receivable (library fund) 23,882
Total deferred/unearned revenue for governmental funds $ 98,237 $ 110,000
C. Capital Assets
Capital asset activity for the year ended September 30, 2008, was as follows:
Beginning Ending
Balance Additions Deletions Balance
Governmental activities:
Capital assets not
being depreciated:
Land $ 1,701,708 $ $ $ 1,701,708
Artwork/collectibles 129,627 3,290 132,917
Construction in progress 232,495 1,386,083 1,618,578
Total capital assets,
not being depreciated 2,063,830 1,389,373 3,453,203
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Beginning Ending
Balance Additions Deletions Balance
Governmental activities (continued):
Capital assets
being depreciated:
Buildings $ 5,836,365 $ 2,428 $ $ 5,838,793
Improvements other
than buildings 4,806,702 14,070 4,820,772
Equipment 3,408,272 276,436 71,358 3,613,350
Total capital assets
being depreciated 14,051,339 292,934 71,358 14,272,915
Less accumulated
depreciation for:
Buildings 640,257 146,705 786,962
Improvements other
than buildings 1,043,455 216,992 1,260,447
Equipment 1,198,568 301,874 68,012 1,432,430
Total accumulated
depreciation 2,882,280 665,571 68,012 3,479,839
Total capital assets, being
depreciated, net 11,169,059 (372,637) 3,346 10,793,076
Governmental activities
capital assets, net $ 13,232,889 $ 1.016,736 $ 3.346 $ 14,246,279
Business-type activities:
Capital assets not
being depreciated:
Land $ 93,250 $ $ $ 93,250
Construction in progress 1,103,773 72,090 1,098,402 77,461
Total capital assets,
not being depreciated 1,197,023 72,090 1,098,402 170,711
Capital assets
being depreciated:
Buildings 52,454 159,900 212,354
Improvements other
than buildings 351,332 2,312,729 2,664,061
Equipment 211,764 27,718 239,482
Total capital assets
being depreciated 615,550 2,500,347 3,115,897
Less accumulated
depreciation for:
Buildings 2,863 3,310 6,173
Improvements other
than buildings 139,574 24,124 163,698
Equipment 54,798 11,342 66,140
Total accumulated
depreciation 197,235 38,776 236,011
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Beginning Ending
Balance Additions Deletions Balance
Business-type activities (continued):
Total capital assets, being
depreciated, net $ 418,315 $ 2,461,571 $ $ 2,879,886
Business-type activities
capital assets, net $ 1.615,338 $ 2,533.661 $ 1.098,402 $ 3,050,597
Depreciation expense was charged to functions/programs of the City as follows:
Governmental activities:
General government $ 156,567
Public safety 2,505
Culture and recreation 506,499
Total depreciation expense -
governmental activities $ 665,571
Business-type activities:
Water $ 38,776
Construction Commitments
The City has an active construction project for the velodrome of September 30, 2008. At
year end the City's commitment with the contractor is as follows:
Remaining
Project Spent-to-Date Commitment
Velodrome $ 984,328 $ 22,206
D. Leases
Operating Leases
The City leases office equipment under cancelable operating leases. Total costs for such
leases were $23,528 for the year ended September 30, 2008. The future minimum lease
payments for these leases are as follows:
Year Ending
September 30, Amount
2009 $ 23,681
2010 16,754
2011 11,797
2012 6,514
2013 236
$ 58,982
Capital Lease
The City has entered into a lease agreement to finance the acquisition of a building. This
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lease agreement qualifies as a capital lease for accounting purposes. The City owns the
land the building is on. The building lease payment has been reduced by the income
received for leasing the ground to the owners of the building. The city receives $1,000
annually for 20 years. The asset acquired through the capital lease is as follows:
Governmental
Activities
Asset:
Building $ 2,460,577
Less accumulated
depreciation (170,430)
Total $ 2,290.147
The future minimum lease obligations and the net present value of these minimum lease
payments as of September 30, 2008, were as follows:
Year Ending Governmental
September 30, Activities
2009 $ 239,593
2010 239,593
2011 239,593
2012 239,593
2013 239,593
2014-2018 1,197,965
2019-2023 1,197,965
2024-2028 1,175,965
2029-2033 1,142,965
2034-2038 1,142,965
2039-2043 1,142,965
2044-2048 1,142,965
2049-2053 1,142,965
2054-2056 685,779
Total minimum lease payments 11,170,464
Less amount representing interest (8,719,387)
Present value of minimum
lease payments $ 2,451.077
E. Long-term Debt
General Obligation Bonds. The City issues general obligation bonds to provide funds for
the acquisition and construction of major capital facilities. General obligation bonds have
been issued for governmental activities.
General obligation bonds are direct obligations and pledge the full faith and credit of the city.
These bonds have been issued to provide funds for the construction of a library. In
November 2006 the original general obligation bonds were refinanced with the Idaho Bond
Bank Authority in the amount of $1,935,000. They are to be repaid over the next 10 years
with an interest rate of 4.0% - 5.0%. General obligation bonds currently outstanding are in
the amount of $1,635,000. Annual debt service requirements to maturity for general
obligation bonds are as follows:
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Year ending Governmental Activities
September 30, Principal Interest
2009 $ 150,000 $ 75,919
2010 155,000 69,544
2011 165,000 63,150
2012 170,000 56,550
2013 175,000 49,750
2014-2017 820,000 105,000
$1.635,000 $ 419.913
Revenue Loan. The City has entered into a loan agreement with the Idaho Department of
Environmental Quality for improvements to the water system in the amount of $2,590,000.
Interest rate is 3.25%. The loan is to be repaid in biannual payments over 20 years.
Amounts are received as the expenses are incurred. At September 30, 2008, the City had
received $2,270,383.
Total interest incurred and expensed by the City was $307,832 in the government-wide
financial statements and $319,270 in the fund financial statements. Total interest incurred
and capitalized by the City was $52,735 in the enterprise and business-type financial
statements.
Changes in Long-Term Liabilities. Long-term liability activity for the year ended September
30, 2008 was as follows:
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Governmental activities:
General obligation bonds $1,780,000 $ $ 145,000 $1,635,000 $ 150,000
G.O. bond premium 100,350 10,119 90,231 10,119
Leases 2,482,822 31,745 2,451,077 4,483
Compensated absences 93,844 143,687 140,600 96,931 88,928
Governmental activity
long-term liabilities $4,457,016 $ 143.687 $ 327.464 $4,273,239 $ 253,530
Business-type activities:
Loan $ 246,392 $2,023,991 $ $2,270,383 $ 0
Compensated absences 4,724 208 4,516 3,668
Business-type activity
long-term liabilities $ 246.392 $2,028,715 $ 208 $2.274,899 $ 3,668
Component Unit. As of September 30, 2008, the City has loaned the Eagle Urban Renewal
Agency $129,950 for operational expenses. They are to repay the City either 15% of taxable
revenue collected or at least $30,000 annually. It is to be repaid in four years. There is no
interest being charged.
V. Other Information
A. Risk Management
The City is exposed to various risks of loss related to torts; theft of, damage to and
destruction of assets; errors and omissions; and natural disasters for which the City carries
commercial insurance.
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B. Defined Benefit Pension Plan
Public Employee Retirement System of Idaho — The Public Employee Retirement System of
Idaho (PERSI), 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. Financial reports for the plan are available from PERSI
upon request.
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.
The contribution requirements of the City of Eagle and its employees are established and
may be amended by the PERSI Board of Trustees. At September 30, 2008, the required
contribution rate for general employees was 10.39% and 6.23% of covered payroll for the City
of Eagle and its employees, respectively. The City of Eagle's contributions required and paid
were $170,235; $151,643; and $114,383 for the years ended September 30, 2008, 2007 and
2006 respectively.
C. Contingencies
The City is currently involved in several cases. Although the outcome of these proceedings is
not presently determinable, in the opinion of management the resolution of these matters will
not have a material adverse effect on the financial condition of the City.
Amounts received or receivable from grantor agencies are subject to audit and adjustment by
grantor agencies, principally the federal government. 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.
D. Component Unit
The Eagle Urban Renewal Agency is created by and exists under the Idaho Urban Renewal
Law of 1965, as amended, and is a separate legal entity.
As of September 30, 2008, Eagle Urban Renewal Agency had a loan payable to the City of
Eagle for$129,950.
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Library Fund
Budgeted
Amounts -
Original Variance with
and Final Actual Final Budget -
$ 894,761 $ 897,850 $ 3,089
91,680 91,500 (180)
45,500 40,780 (4,720)
8,400 11,345 2,945
1,040,341 1,041,475 1,134
1,200,341 1,038,745 161,596
1,200,341 1,038,745 161,596
(160,000) 2,730 162,730
235,587 235,587
$ 75,587 $ 238,317 $ 162,730
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State of Idaho
City of Eagle
Schedule of Revenues- Budget and Actual
General Fund
For the Year Ended September 30, 2008
Budgeted Amounts- Variance with
Original Final Actual Final Budget-
Taxes:
Property taxes $ 1,160,135 $ 1,160,135 $ 1,159,720 $ (415)
Penalties and interest 2,500 2,500 5,409 2,909
Franchise 868,250 868,250 847,870 (20,380)
Total taxes 2,030,885 2,030,885 2,012,999 (17,886)
Licenses and permits:
Alcoholic beverages 20,000 20,000 21,019 1,019
Business 16,500 16,500 14,500 (2,000)
Building inspection 1,303,500 1,303,500 641,658 (661,842)
Miscellaneous 1,500 1,500 3,905 2,405
Animal 6,000 6,000 7,374 1,374
Total licenses and permits 1,347,500 1,347,500 688,456 (659,044)
Intergovernmental:
Grants 258,175 258,175 48,430 (209,745)
State revenue sharing 1,151,260 1,151,260 635,179 (516,081)
State liquor apportionment 350,000 350,000 338,861 (11,139)
Inventory phase-out 175,215 175,215 173,008 (2,207)
Building inspection 90,000 90,000
Court revenue 75,000 75,000 80,044 5,044
Total intergovernmental 2,009,650 2,009,650 1,365,522 (644,128)
Charges for services:
Annexation, planning and zoning,
design review, plan review 650,200 650,200 887,950 237,750
Street lights 1,500 1,500 (1,500)
Impact fees 308,112 308,112 148,655 (159,457)
Impact processing fees 3,000 3,000 1,820 (1,180)
Energy standards 17,500 17,500 14,000 (3,500)
Saturday market/last Thursday fees 23,528 23,528 27,081 3,553
Drainage fees 3,200 3,200
Park/recreation fees 10,100 10,100 11,593 1,493
Total charges for services 1,013,940 1,013,940 1,094,299 80,359
Fines:
Code enforcement 6,500 6,500 95 (6,405)
Miscellaneous:
Interest 123,100 123,100 58,962 (64,138)
Tree fund 1,000 1,000 450 (550)
Rent 5,670 5,670 3,015 (2,655)
Poster sales 1,531 1,531
Donations 27,100 27,100 35,022 7,922
Miscellaneous 8,200 8,200 12,699 4,499
Total miscellaneous 165,070 165,070 111,679 (53,391)
Total general fund $ 6,573,545 $ 6,573,545 $ 5,273,050 $ (1,300,495)
-28-
State of Idaho
City of Eagle
Schedule of Expenditures- Budget and Actual
General Fund
For the Year Ended September 30, 2008
Budgeted Amounts- Variance with
Original Final Actual _ Final Budget-
General government:
Personal services $ 1,873,883 $ 1,873,883 $ 1,680,193 $ 193,690
Supplies 36,500 36,500 42,555 (6,055)
Other services and charges 2,133,671 2,133,671 1,036,855 1,096,816
Capital outlay 653,500 653,500 32,631 620,869
Total 4,697,554 4,697,554 2,792,234 1,905,320
Election 1,500 1,500 9,999 (8,499)
Legal 219,671 219,671 176,512 43,159
Total general government 4,918,725 4,918,725 2,978,745 1,939,980
Public safety:
Law enforcement 1,614,933 1,614,933 1,612,600 2,333
Inspection 133,000 133,000 37,969 95,031
Animal control 49,575 49,575 49,572 3
Total public safety 1,797,508 1,797,508 1,700,141 97,367
Highways and streets:
Street lighting 10,000 10,000 19,824 (9,824)
Other services and charges 10,000 10,000 408,987 (398,987)
Capital outlay 25,000 25,000 25,000
Total highways and streets 45,000 45,000 428,811 (383,811)
Culture and recreation:
Cultural and arts:
Personal services 46,414 46,414 51,517 (5,103)
Supplies 650 650 784 (134)
Other services and charges 83,400 83,400 86,890 (3,490)
Capital outlay 1,000 1,000 3,611 (2,611)
Total cultural and arts 131,464 131,464 142,802 (11,338)
Parks/recreation:
Personal services 538,990 538,990 74,477 464,513
Supplies 788 (788)
Other services and charges 588,372 (588,372)
Capital outlay 1,218,594 1,218,594 1,404,236 (185,642)
Total parks 1,757,584 1,757,584 2,067,873 (310,289)
Historical commission:
Personal services 46,087 46,087 47,531 (1,444)
Supplies 4,150 4,150 4,582 (432)
Other services and charges 18,810 18,810 10,668 8,142
Capital outlay 11,740 11,740 8,301 3,439
Total historical commission 80,787 80,787 71,082 9,705
Library:
Personal services 5,011 5,011 5,011
Capital outlay 8,750 8,750 8,750
Total library 13,761 13,761 13,761
Total culture and recreation 1,983,596 1,983,596 2,281,757 (298,161)
Total general fund $ 8,744,829 $ 8,744,829 $ 7,389,454 $ 1,355,375
-29-
State of Idaho
City of Eagle
Schedule of Revenues and Expenditures- Budget and Actual
Library Special Revenue Fund
For the Year Ended September 30, 2008
Budgeted Amounts- Variance with
Original Final Actual Final Budget
Revenues:
Taxes:
Property taxes $ 893,261 $ 893,261 $ 893,639 $ 378
Penalties and interest 1,500 1,500 4,211 2,711
Total taxes 894,761 894,761 897,850 3,089
Intergovernmental:
City of Boise/Ada
Community Library 91,680 91,680 91,500 (180)
Fines:
Fines 45,500 45,500 40,780 (4,720)
Miscellaneous:
Miscellaneous 1,400 1,400 2,854 1,454
Interest 5,000 5,000 7,245 2,245
Donations 2,000 2,000 1,246 (754)
Total miscellaneous 8,400 8,400 11,345 2,945
Total library $ 1,040,341 $ 1,040,341 $ 1,041,475 $ 1,134
Expenditures:
Culture and recreation:
Personal service $ 729,278 $ 729,278 $ 755,238 $ (25,960)
Supplies 20,116 20,116 19,190 926
Other services and charges 356,383 356,383 166,764 189,619
Capital outlay 94,564 94,564 97,553 (2,989)
Total culture and recreation $ 1,200,341 $ 1,200,341 $ 1,038,745 $ 161,596
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State of Idaho
City of Eagle
Schedule of Revenues and Expenditures- Budget and Actual
Library G.O. Bond Debt Service Fund
For the Year Ended September 30, 2008
Budgeted Amounts- Variance with
Original Final Actual Final Budget-
Revenues:
Taxes:
Property taxes $ 205,455 $ 205,455 $ 206,016 $ 561
Penalties and interest 700 700 988 288
Total taxes 206,155 206,155 207,004 849
Miscellaneous:
Interest 2,000 2,000 2,655 655
Total revenues $ 208,155 $ 208,155 $ 209,659 $ 1,504
Expenditures:
Principal $ 145,000 $ 145,000 $ 145,000 $
Interest 82,082 82,082 82,081 1
Payment reserve 18,923 18,923 18,923
Fiscal charges 840 840 840
Total expenditures $ 246,845 $ _ 246,845 $ 227,921 $ 18,924
—31—
State of Idaho
City of Eagle
Schedule of Revenues and Expenses -
Budget (Non-GAAP Budgetary Basis) and Actual
Water Enterprise Fund
For the Year Ended September 30, 2008
Budgeted Amounts- Variance with
Original Final Actual Final Budget-
Revenues:
Sales $ 1,230,000 $ 1,230,000 $ 344,403 $ (885,597)
Water hookups 210,000 210,000 28,050 (181,950)
Supply trunk line fee 564,000 564,000 6,300 (557,700)
Construction equivalency fees 90,000 90,000 (90,000)
Intertie fee 20,000 20,000
Intertie fee-engineer 9,147 9,147
Loan proceeds 1,590,000 1,590,000 2,023,991 433,991
Revenue sharing 512,606 512,606
LID bond revenue 7,200,000 7,200,000 (7,200,000)
Donations 2,300,000 2,300,000 (2,300,000)
Miscellaneous 30,000 30,000 (30,000)
Interest 9,000 9,000 602 (8,398)
Total revenues $ 13,223,000 $ 13,223,000 $ 2,945,099 $ (10,277,901)
Expenses:
Personal service $ 405,721 $ 405,721 $ 46,182 $ 359,539
Supplies 8,500 8,500 961 7,539
Utilities 47,500 47,500 2,463 45,037
Other services and charges 718,600 718,600 733,087 (14,487)
Debt payment 134,400 134,400 134,400
Capital outlay 12,101,500 12,101,500 1,474,035 10,627,465
Total expenses $ 13,416,221 $ 13,416,221 $ 2,256,728 $ 11,159,493
-32-
State of Idaho
City of Eagle
Operation in Tax Rolls
September 30, 2008
Total 2006 2006 2005 2004
Balance - beginning of
year $ 35,993 $ $ 32,735 $ 3,105 $ 153
Roll charge 2,294,438 2,294,438
Penalties 22,374 22,374
2,352,805 2,316,812 32,735 3,105 153
Collections 2,266,025 2,240,131 23,389 2,352 153
Adjustments 15,739 15,450 238 51
2,281,764 2,255,581 23,627 2,403 153
Balance - end of year $ 71,041 $ 61,231 $ 9,108 $ 702 $ -
-33-
Gibbons, Scott & Dean T ,T ,P
Certified Public Accountants
Professional Building
Terry L.Scott,CPA 1803 Ellis Avenue (208)459-4649
John P.Dean,CPA Caldwell,Idaho 83605 FAX(208)454-9091
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 Members
of the City Council
City of Eagle
Eagle, Idaho
We have audited the financial statements of the governmental activities, the business-type activities,
each major fund, and the aggregate remaining fund information of the City of Eagle as of and for the
year ended September 30, 2008, which collectively comprise the City of Eagle's basic financial
statements and have issued our report thereon dated July 28, 2009. We conducted our audit in
accordance with auditing standards generally accepted in the United States of America and the
standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States.
Internal Control over Financial Reporting
In planning and performing our audit, we considered City of Eagle's internal control over financial
reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions
on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of
City of Eagle's internal control over financial reporting. Accordingly, we do not express an opinion on
the effectiveness of City of Eagle's internal control over financial reporting.
Our consideration of internal control over financial reporting was for the limited purpose described in
the preceding paragraph and would not necessarily identify all deficiencies in internal control over
financial reporting that might be significant deficiencies or material weaknesses. However, as
discussed below, we identified certain deficiencies in internal control over financial reporting that we
consider to be significant deficiencies.
A control deficiency exists when the design or operation of a control does not allow management or
employees in the normal course of performing their assigned functions, to prevent or detect
misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of
control deficiencies, that adversely affects City of Eagle's ability to initiate, authorize, record, process,
or report financial data reliably in accordance with generally accepted accounting principles such that
there is more than a remote likelihood that a misstatement of City of Eagle's financial statements that
is more than inconsequential will not be prevented or detected by City of Eagle's internal control. We
consider the deficiencies described below to be significant deficiencies in internal control over
financial reporting.
1-As is common for small governmental units in Idaho, the accounting staff of City of Eagle do not
possess the knowledge and skills to prepare the annual financial statements in accordance with
governmental accounting principles nor do they have the expertise to prepare the year-end accrual
and closing entries nor maintain the depreciation schedule.
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MEMBER OF
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
IDAHO SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
2-Due to its relatively small size, City of Eagle has inadequate segregation of duties.
Based on the size of City of Eagle, management believes the cost of correcting the first two items
listed above will exceed the benefits to be derived from doing so.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results
in more than a remote likelihood that a material misstatement of the financial statements will not be
prevented or detected by City of Eagle's internal control.
Our consideration of the internal control over financial reporting was for the limited purpose described
in the first paragraph of this section and would not necessarily identify all deficiencies in the internal
control that might be significant deficiencies and, accordingly, would not necessarily disclose all
significant deficiencies that are also considered to be material weaknesses. However, of the
significant deficiencies described above, we consider both items to be material weaknesses.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether City of Eagle'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 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 matters that are required to be
reported under Government Auditing Standards.
This report is intended solely for the information and use of the City Council, management and any
applicable governmental agencies and is not intended to be and should not be used by anyone other
than these specified parties.
GIBBONS, SCOTT & DEAN LLP
Certified Public Accountants
July 28, 2009
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