Finance - Annual Audit - 09/30/2007 STATE OF IDAHO
CITY OF EAGLE
AUDITED FINANCIAL STATEMENTS
AS OF
SEPTEMBER 30, 2007
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
Notes to the Financial Statements 12-24
Required Supplementary Information:
Statement of Revenue, Expenditures and Changes in Fund 25-26
Balances - Budget and Actual - Major Governmental Funds
Supporting schedules:
Individual Fund Schedules:
Statement of Revenues - Budget and Actual - General Fund 27
Statement of Expenditures - Budget and Actual - General Fund 28
Statement of Revenues and Expenditures - Budget and Actual - 29
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 - 30
Library G.O. Bond Debt Service Fund
Statement of Revenues and Expenses - Budget (Non-GAAP 31
Budgetary Basis) and Actual -Water Enterprise Fund
32
Operation in Tax Rolls
Report on Internal Control over Financial Reporting and on Compliance
and Other Matters Based on an Audit of Financial Statements Performed 33-34
in Accordance with Government Auditing Standards
Gibbons, Scott & Dean LLP
Certified Public Accountants
Professional Building (208)459-4649
FA (208)454- 64
Terry L.Scott,CPA 1803 Ellis Avenue Caldwell,Idaho 83605
John P.Dean,CPA
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 re
whicg
fund information of the City of Eagle as of and for the year ended September 30,
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 o n Eagle's
audit.
anageent. Our responsibility is to
express an opinion on these financial statements
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, 2007, 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 November 3,
2008 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 25-
26 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
s of
limited procedures, which consisted the supplementary principally inquiries
information.management
not audit the
measurement and presentation of
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.
>8 ' 5 Le,—
GIBBONS, SCOTT & DEAN LLP
Certified Public Accountants
November 3, 2008
—2—
State of Idaho
City of Eagle
Statement of Net Assets
September 30, 2007
Primary Government Component Unit
Governmental Business-type Eagle Urban
Activities Activities Total Renewal Agency
Assets
Cash $ 50,498 $ 394 $ 50,892 $ 55,429
Investments 2,129,898 346,642 2,476,540
Receivables (net of allowance
for uncollectibles) 1,041,522 30,603 1,072,125
Prepaid expenses 73,014 73,014
Noncurrent assets: 255,272
Investments 255,272
Receivables (net of allowance 2,596
for uncollectibles) 2,596
Deferred charges 35,250 35,250
Capital assets (net of
accumulated depreciation) 13,232,889 1,615,338 14,848,227
Total assets 16,820,939 1,992,977 18,813,916 55,429
Liabilities
Accounts payable 207,464 1,039,711 1,247,175 2,460
Accrued payroll 74,151 74,151
Deferred revenue 120,000 120,000
Deposits payable 208,530 208,530
Accrued interest
27,286 4,914 32,200 2,260
Noncurrent liabilities: 274,408
Due within one year 274,408
Due in more than one year 4,182,608 246,392 4,429,000 75,000
Total liabilities 5,094,447 1,291,017 6,385,464 79,720
Net Assets
Invested in capital assets,
net of related debt 8,970,067 1,368,946 10,339,013
Restricted for: 20,651
Tree fund 20,651
Special revenue 245,841 245,841
Debt service 36,714 36,714
Unrestricted 2,453,219 (666,986) 1,786,233 (24,291)
Total net assets $ 11,726,492 $ 701,960 $ 12,428,452 $ (24,291)
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
$ (2,228,731) $ $ (2,228,731) $
(310,541)
(27,213) (27,213)
(1,506,113) (1,506,113)
(337,078) (337,078)
(4,409,676) (4,409,676)
(137,966) (137,966)
(4,409,676) (137,966) (4,547,642)
(24,291)
2,061,436 2,061,436
927,620 927,620
328,195 328,195
185,471 185,471
1,028,001 72,750 1,100,751
17,813 17,813
181,436 8,146 189,582
4,729,972 80,896 4,810,868
320,296 (57,070) 263,226 (24,291)
11,406,196 759,030 12,165,226
$ 11,726,492 $ 701,960 $ 12,428,452 $ (24,291)
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State of Idaho
City of Eagle
Balance Sheet
Governmental Funds
September 30, 2007
Other
Governmental
Fund Total
Debt Governmental
General Library Service Funds
Assets 447 $ 50,498
Cash $ 22,599 $ 27,452 $
Investments 1,871,399 219,832 38,667 2,129,898
Receivables (net of allowance for
uncollectibles) 992,623 44,459 4,440 1,041,522
Prepaid expenses 54,551 18,463 73,014
Noncurrent assets: 255,272
Investments 255,272
Receivables (net of allowance for 2,596
uncollectibles) 2,596
Total assets $ 3,199,040 $ 310,206 $ 43,554 $ 3,552,800
Liabilities and Fund Balances
Liabilities: $ 207,464
Accounts payable $ 192,564 $ 14,900 $ 74,151
Accrued payroll 50,470 23,681
Deferred revenue 136,104 36,038 3,687 175,829
Deposits payable 208,530
Total liabilities 587,668 74,619 3,687 665,974
Fund balances:
Reserved for: 73,014
Prepaid expenses 54,551 18,463
Loan
75,000 75,000
20,651
Tree fund 20,651 3g 867 20,657
Debt service
Unreserved, reported in: 2,461,170
General fund 2,461,170 217,124
Special revenue funds 217,124
Total fund balances 2,611,372 235,587 39,867 2,886,826
Total liabilities and fund balances $ 3,199,040 $ 310,206 $ 43,554
Amounts reported for governmental activities in the statement
of net assets are different because:
Capital assets used in governmental activities are not financial 13,232,889
resources and, therefore, are not reported in the funds.
Other long-term assets are not available to pay for current-period 55,829
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. (4,449,052)
Net assets of governmental funds $ 11,726,492
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, 2007
Other
Governmental
Fund Total
Debt Governmental
General Library Service Funds
Revenues:
Taxes $ 1,937,292 $ 807,724 $ 224,219 $ 2,969,235 3 957,643
1,
Licenses and permits 957,643 957,643
Intergovernmental 1,842,373 60,000 802,373
Charges for services 872,596 38,596
Fines 115 38,015
Miscellaneous
192,382 18,569 5,541 216,492 Total revenues 5,802,401 924,308 229,760 6,956,469
Expenditures:
Current: ,203,137
General government 3,203,137 3 3,203,837
Public safety 1,446,857 27 853
Highways and streets 27,213 2,621,477
Culture and recreation 1,629,971 991,506
Debt service: 155,000 155,000
Principal 69 208 69,208
Interest and fiscal charges
Total expenditures 6,307,178 991,506 224,208 7,522,892
Excess (deficiency) of revenues 5,552 (566,423)
over (under) expenditures (504, 77) (67,198)
Other financing sources (uses): 17,638 17,638
Refunding Interest income 2,043,783 2,017,638
Proceeds from refunding bond (33 213) (33,783
Refunded bond issuance costs (2 (38,212) (2, (38,212)
Payment for principal and interest
Total other financing
- -
sources (uses)
504,777 (67,198) 5,552 (566,423)
Net change in fund balances ( ) ( 7198)
Fund balances - beginning 3,116,149 302,785 34,315 3,453,249
Fund balances - ending $
2,611,372 $ 235,587 $ 39,867 $ 2,886,826
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, 2007
Amounts reported for governmental activities in the statement of activities
are different because:
Net change in fund balances -total governmental funds
$ (566,423)
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 608,517
amount by which capital outlays exceeded depreciation in the current period.
The net effect of various miscellaneous transactions involving capital assets 91,173
(i.e., sales, trade-ins, and donations) is to increase net assets.
Revenues in the statement of activities that do not provide current 28 286
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 154,995
effect of these differences in the treatment of long-term debt and related items.
Some expenses reported in the statement therefore,activities do
not require
as
use of current financial resources and, 3,748
expenditures in the governmental funds.
Change in net assets of governmental activities
$ 320,296
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, 2007
Business-type
Activities -
Enterprise
Funds
Assets
Current assets: 394
Cash 346,642
Investments
Receivables (net of allowance 30,603
for uncollectibles) 330,603
Total current assets
Noncurrent assets: 1,615,338
Capital assets (net of accumulated depreciation)
1,992,977
Total assets
Liabilities:
Current liabilities: 1,039,711
Accounts payable
Accrued interest 1,044,625 9,714
Total current liabilities 914
Noncurrent liabilities: 246,392
Loan payable 1 24,2466,392
Total liabilities
Net assets: 368,946
Invested in capital assets, net of related debt 1,,368,946)
Unrestricted
$ 701,960
Total net assets
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, 2007
Business-type
Activities -
Enterprise
Funds
Operating revenues: 372,412
Charges for services
Operating expenses: 8
Personal services 29,772
534,47
Utilities 534,172
31,
Other services and charges 172
Depreciation 525,116
Total operating expenses
(213,066)
Operating loss
Nonoperating revenues (expenses): 6
8,
Interest income 7 8,17440
Revenue sharing 72,750
Total nonoperating revenues (expenses)
Income (loss) before contributions
(132,170)
75,100
Capital contributions
(57,070)
Change in net assets
759,030
Total net assets - beginning
$ 701,960
Total net assets - end
The accompanying notes are an integral part of this statement.
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State of Idaho
City of Eagle
Statement of Cash Flows
Proprietary Fund
For the Year Ended September 30, 2007
Business-type
Activities -
Enterprise
Funds
Cash flows from operating activities: ,958
(7373 58)
(4
Cash received from customers 373,958
Cash payments to employees for goods and services 79,778)
Cash payments to suppliers for goods and services ( 72,005)
Net cash provided by (used for) operating activities
Cash flows from noncapital financing activities: 72,750
Revenue sharing
Cash flows from capital and related financing activities: (173,232)
Acquisition of capital assets 32
,23
Proceeds from loan 45 273, 92
Capital contributed by customers and developers 175,200
Net cash provided by capital and related financing activities
Cash flows from investing activities: 6,732
Interest received
Net increase (decrease) in cash and cash equivalents
99,917
Cash and cash equivalents - cost - beginning of year
245,539
Cash and cash equivalents - cost - end of year
345,456
Net decrease in the fair value of investments
1,580
Cash and cash equivalents - carrying amount - end of year
$ 347,036
Reconciliation of operating loss to net cash provided by operating activities
$ (213,066)
Operating loss
Adjustments to reconcile operating loss to net cash
provided by operating activities: ,116
Depreciation (9 2121 ,116
Capital assets in accounts payable
Change in assets and liabilities: 6
(Increase) decrease in accounts receivable 981,1,546
Increase (decrease) in accounts payable 85,241
Total adjustments
Net cash provided by (used for) operating activities
$ (127,825)
The accompanying notes are an integral part of this statement.
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State of Idaho
City of Eagle
Notes to the Financial Statements
September 30, 2007
I. Summary of Significant Accounting Policies with
generally
The financial statements of the City of Eagle a been aentallnunits.forTne Governmental
accepted accounting principles (GAAP) as applied to 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.
—12--
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
of the
they are collectible within the current period or soon
to be aafaeablepay
t ely alrlel collected
current period. For this purpose, the City considers ers
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 susceptible to accaual and so havecbeedn intergovernmentl revenues
with the current fiscal period are all consid ered to be
recognized as revenues of the current fiscal period. Only the portion of special assessments
as
receivable due within the current fiscal eved items dconsideredsto be (measurable accrual
and
revenue of the current period. All other revenue
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.accounted or for
n alnother fundesources of
the general government, except those required
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
general revenues rather than as program revenues. Likewise, general revenues include all
taxes.
items.
Proprietary funds distinguish operating expenses
dings services and produging and
Operating revenues and expenses generally esult from pro
delivering goods in connection with a proprietary se fundds are charges l tongustomeroperations.
s for sales
principal operating revenues of the City's enterprise
es,
and services. Operating expenses for enterprise funds ds include the cost
u f sale expensesicnot
administrative expenses and depreciation of capital
this definition are reported as nonoperating revenues and expenses.
When both restricted and unrestricted resources are as they are needed.
use,
e its the City's policy to use
restricted resources first, then unrestricted resources
D. Assets, Liabilities and Net Assets or Equity
1. Deposits and Investments
The City's cash and cash equivalents are deof three months or lessdfrom tdhe date iof
and short-term investments with original maturities
acquisition,
local
State statutes authorize the city to invest in obligations eements; United
Govern In, vesdtment
governments; time deposit accounts; repurchase agreements;
and the Diversified Bond Fund.
Investments for the City are reported at fair Local
iate state wsland reguregulations.psl
and Diversified Bond Fund operate in accordance with appropriate
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
e paid in two
taxes levied on the third Monday of following
and June 20 September. da County bbls and collects
installments with payments due by De cember
the taxes and remits them to the City monthly.t. City property per y tax revenues are recognized
when entered on the tax rolls to the extent that Y
Taxes receivable represent balances due as on deposit with tthe Taxes ITreadsubrerthThedse
County Tax Collector in September, are p os
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
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.
-15--
8. Net Assets
The government-wide statement of net assets reports $303,206 of restricted net assets, of
which $36,714 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 $4,449,052 difference are as
follows:
Bonds payable $ (1,880,350)
Deferred charges 35,250
Leases payable (2,482,822)
Accrued interest payable (27,286)
Compensated absences (93,844)
Net adjustment to reduce fund balance—total
governmental funds to arrive at net assets —
governmental activities $ (4,449.052)
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 $608,517 difference are as follows:
Capital outlay $ 1,187,260
Depreciation expense (578,743)
Net adjustment to increase net changes in
fund balances—total governmental fund to
arrive at changes in net assets of
governmental activities $ 608,517
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 $91,173 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
-16-
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. $ (14,105)
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. 105,278
Net adjustment to increase net changes in fund
balances—total governmental funds to arrive at
changes in net assets of governmental activities $ 91.173
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 $154,995 difference are as follows:
Debt issued or incurred:
Issuance of general obligation refunding bonds $ (2,043,783)
Principal repayments:
Bond paid with refunding proceeds 1,975,000
General obligation bond 155,000
Capital leases 30,566
Payment to escrow agent for refunding 38,212
Net adjustment to increase net changes in fund
balances —total governmental funds to arrive at
changes in net assets of governmental activities $ 154.995
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 $3,748 difference are as
follows:
Compensated absences $ (11,155)
Amortization of deferred charges (2,962)
Amortization of bond premium 8,433
Accrued interest 9,432
Net adjustment to increase net changes in fund
balances -total governmental funds to arrive at
changes in net assets of governmental activities $ 3,748
III. Stewardship, Compliance and Accountability
A. Budgetary Information
The City follows these procedures in establishing the budgetary data reflected in the financial
statements:
—17—
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.
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,
2007.
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, 2007, City of Eagle had the following investments:
Weighted
Average
Maturity
Investment Type Fair Value (Years)
Local government investment pool $ 2,476,540 .23
Diversified bond fund 255,272 4.40
$ 2,731,812
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, 2007, $249,250 of the City's bank
balance of $349,250 was exposed to custodial credit risk because it was uninsured and
uncollateralized.
-18-
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 $ 19,419 $ 15,784 $ $ 4,440 $ 39,643
Accounts 414,887 39,425 30,603 484,915
Intergovernmental 481,057 481,057
Loan 75,000 75,000
Interest 4,856 4,856
Gross receivables 995,219 55,209 30,603 4,440 1,085,471
Less allowance for
uncollectibles 10,750 10,750
Net total receivables $995,219 $ 44,459 $ 30,603 $ 4,440 $1,074,721
The only receivables not expected to be collected within one year are $6,345 of taxes and
$12,905 of accounts.
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) $ 16,104 $
Delinquent property taxes receivable (library fund) 13,098
Delinquent property taxes receivable (debt service fund) 3,687
Capital assets donation (general fund) 110,000
Study donation (general fund) 10,000
Delinquent fines, fees, etc. receivable (library fund) 22,940
Total deferred/unearned revenue for governmental funds $ 55,829 $ 120.000
C. Capital Assets
Capital asset activity for the year ended September 30, 2007, 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 93,752 35,875 129,627
Construction in progress 1,231,302 768,590 1,767,397 232,495
Total capital assets,
not being depreciated 3,026,762 804,465 1,767,397 2,063,830
-19-
Beginning Ending
Balance Additions Deletions Balance
Governmental activities (continued):
Capital assets
being depreciated:
Buildings $ 5,166,358 $ 670,007 $ $ 5,836,365
Improvements other
than buildings 4,059,964 749,666 2,928 4,806,702
Equipment 2,666,473 835,797 93,998 3,408,272
Total capital assets
being depreciated 11,892,795 2,255,470 96,926 14,051,339
Less accumulated
depreciation for:
Buildings 509,813 130,444 640,257
Improvements other
than buildings 857,944 186,456 945 1,043,455
Equipment 1,018,601 261,843 81,876 1,198,568
Total accumulated
depreciation 2,386,358 578,743 82,821 2,882,280
Total capital assets, being
depreciated, net 9,506,437 1,676,727 14,105 11,169,059
Governmental activities
capital assets, net $ 12,533,199 $ 2,481,192 $ 1,781,502 $ 13,232,889
Business-type activities:
Capital assets not
being depreciated:
Land $ 93,250 $ $ $ 93,250
Construction in progress 27,655 1,076,118 1,103,773
Total capital assets,
not being depreciated 120,905 1,076,118 1,197,023
Capital assets
being depreciated:
Buildings 45,729 6,725 52,454
Improvements other
than buildings 346,625 4,707 351,332
Equipment 201,810 9,954 211,764
Total capital assets
being depreciated 594,164 21,386 615,550
Less accumulated
depreciation for:
Buildings 1,552 1,311 2,863
Improvements other
than buildings 128,252 11,322 139,574
Equipment 46,315 8,483 54,798
Total accumulated
depreciation 176,119 21,116 197,235
-20-
Beginning Ending
Balance Additions Deletions Balance
Business-type activities (continued):
Total capital assets, being
depreciated, net $ 418,045 $ 270 $ $ 418,315
Business-type activities
capital assets, net $ 538.950 $ 1.076,388 $ $ 1.615.338
Depreciation expense was charged to functions/programs of the City as follows:
Governmental activities:
General government $ 147,738
Public safety 2,505
Culture and recreation 428,500
Total depreciation expense -
governmental activities $ 578,743
Business-type activities:
Water $ 21.116
Construction Commitments
The City has an active construction project for improvements to the water system as of
September 30, 2007. At year end the City's commitment with the contractor is as follows:
Remaining
Project Spent-to-Date Commitment
Water system improvements $ 810.682 $ 807,458
D. Leases
Operating Leases
The City leases office equipment under cancelable operating leases. Total costs for such
leases were $18,886 for the year ended September 30, 2007. The future minimum lease
payments for these leases are as follows:
Year Ending
September 30, Amount
2008 $ 20,849
2009 20,849
2010 13,922
2011 8,965
2012 3,682
$ 68,267
—21—
Capital Lease
The City has entered into lease agreements to finance the acquisition of land and a
building. These lease agreements qualify as capital leases 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 assets acquired through the capital leases are as
follows:
Governmental
Activities
Asset:
Land $ 109,115
Building 2,460,577
Less accumulated
depreciation (102,258)
Total $ 2,467,434
The future minimum lease obligations and the net present value of these minimum lease
payments as of September 30, 2007, were as follows:
Year Ending Governmental
September 30, Activities
2008 $ 268,093
2009 239,593
2010 239,593
2011 239,593
2012 239,593
2013-2017 1,197,965
2018-2022 1,197,965
2023-2027 1,186,965
2028-2032 1,142,965
2033-2037 1,142,965
2038-2042 1,142,965
2043-2047 1,142,965
2048-2052 1,142,965
2053-2056 914,372
Total minimum lease payments 11,438,557
Less amount representing interest (8,955,735)
Present value of minimum
lease payments $ 2,482,822
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. The original amount of general obligation bonds
issued in prior years was $2,850,000.
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. They are to
be repaid over the next 20 years with an interest rate of 3.9% - 6.25%. In November 2006
-22-
the bonds were refinanced with the Idaho Bond Bank Authority in the amount of $1,935,000.
In February 2007 the general obligation bonds in the amount of $1,975,000 were paid off.
General obligation bonds currently outstanding are in the amount of$1,780,000. Annual debt
service requirements to maturity for general obligation bonds are as follows:
Year ending Governmental Activities
September 30, Principal Interest
2008 $ 145,000 $ 82,081
2009 150,000 75,919
2010 155,000 69,544
2011 165,000 63,150
2012 170,000 56,550
2013-2017 995,000 154,750
$1,780,000 $ 501,994
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, 2007, the City had
received $246,392.
Current Refunding. The general obligation bond was refunded by a new bond with the
Idaho Bond Bank Authority in the amount of $1,935,000. The new bond was issued at a
premium of $108,783. Proceeds of the new bond were used to pay off the old bond. The
transaction resulted in a reduction of $81,354 of future debt service payments and an
economic gain of $73,289.
Total interest incurred and expensed by the City was $337,078 in the government-wide
financial statements and $307,734 in the fund financial statements. Total interest incurred
and capitalized by the City was $4,914 in the enterprise and business-type financial
statements.
Changes in Long-Term Liabilities. Long-term liability activity for the year ended September
30, 2007 was as follows:
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Governmental activities:
General obligation bonds $1,975,000 $1,935,000 $2,130,000 $1,780,000 $ 145,000
G.O. bond premium 108,783 8,433 100,350 10,119
Leases 2,513,388 30,566 2,482,822 31,745
Compensated absences 84,592 137,009 127,757 93,844 87,544
Governmental activity
long-term liabilities $4,572,980 $2,180,792 $2,296,756 $4,457,016 $ 274,408
Business-type activities:
Loan $ $ 246,392 $ $ 246,392 $ 0
-23-
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.
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, 2007, 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 $151,643; $114,383; and $90,122 for the years ended September 30, 2007, 2006 and
2005 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, 2007, Eagle Urban Renewal Agency had a loan payable to the City of
Eagle for $75,000. Interest has been calculated at 5.5% until the terms of repayment are
established.
-24-
Library Fund
Budgeted
Amounts -
Original Variance with
and Final Actual Final Budget -
$ 793,456 $ 807,724 $ 14,268
60,000 60,000
45,500 38,015 (7,485)
8,250 18,569 10,319
907,206 924,308 17,102
1,190,590 991,506 199,084
1,190,590 991,506 199,084
(283,384) (67,198) 216,186
302,785 302,785
$ 19,401 $ 235,587 $ 216,186
-26--
State of Idaho
City of Eagle
Schedule of Revenues - Budget and Actual
General Fund
For the Year Ended September 30, 2007
Budgeted Amounts- Variance with
Original Final Actual Final Budget-
Taxes:
Property taxes $ 990,729 $ 990,729 $ 1,006,961 $ 16,232
Penalties and interest 2,000 2,000 2,711 711
Franchise 750,000 750,000 927,620 177,620
Total taxes 1,742,729 1,742,729 1,937,292 194,563
Licenses and permits:
Alcoholic beverages 20,000 20,000 17,461 (2,539)
Business 16,000 16,000 17,263 1,263
Building inspection 1,468,542 1,468,542 914,354 (554,188)
Miscellaneous 1,500 1,500 1,770 270
Animal 6,000 6,000 6,795 795
Total licenses and permits 1,512,042 1,512,042 957,643 (554,399)
Intergovernmental:
Grants 129,650 129,650 117,410 (12,240)
State revenue sharing 1,000,062 1,000,062 1,028,001 27,939
State liquor apportionment 93,852 93,852 328,195 234,343
Inventory phase-out 160,727 160,727 185,471 24,744
Building inspection 90,000 90,000
Court revenue 65,000 65,000 93,296 28,296
Total intergovernmental 1,449,291 1,449,291 1,842,373 393,082
Charges for services:
Annexation, planning and zoning,
design review, plan review 510,957 510,957 676,939 165,982
Street lights 1,500 1,500 (1,500)
Impact fees 385,140 385,140 143,758 (241,382)
Impact processing fees 7,050 7,050 1,800 (5,250)
Energy standards 30,000 30,000 16,800 (13,200)
Saturday market fees 15,185 15,185 20,237 5,052
Park/recreation fees 7,600 7,600 13,062 5,462
Total charges for services 957,432 957,432 872,596 (84,836)
Fines:
Code enforcement 1,000 1,000 115 (885)
Miscellaneous:
Interest 105,800 105,800 144,933 39,133
Tree fund 1,000 1,000 4,050 3,050
Rent 5,120 5,120 6,224 1,104
Poster sales 10,921 10,921
Donations 13,500 13,500 11,645 (1,855)
Miscellaneous 9,000 9,000 14,609 5,609
Total miscellaneous 134,420 134,420 192,382 57,962
Total general fund $ 5,796,914 $ 5,796,914 $ 5,802,401 $ 5,487
-27-
State of Idaho
City of Eagle
Schedule of Expenditures - Budget and Actual
General Fund
For the Year Ended September 30, 2007
Budgeted Amounts- Variance with
Original Final Actual Final Budget-
General government:
Personal services $ 1,461,777 $ 1,461,777 $ 1,459,438 $ 2,339
Supplies 30,000 30,000 42,591 (12,591)
Other services and charges 2,202,570 2,202,570 1,391,844 810,726
Capital outlay 350,771 350,771 142,476 208,295
Total 4,045,118 4,045,118 3,036,349 1,008,769
Election 2,500 2,500 326 2,174
Legal 186,113 186,113 166,462 19,651
Total general government 4,233,731 4,233,731 3,203,137 1,030,594
Public safety:
Law enforcement 1,349,722 1,349,722 1,335,861 13,861
Inspection 60,000 60,000 64,746 (4,746)
Animal control 46,250 46,250 46,250
Total public safety 1,455,972 1,455,972 1,446,857 9,115
Highways and streets:
Street lighting 20,000 20,000 17,402 2,598
Other services and charges 10,000 10,000 9,811 189
Capital outlay 25,000 25,000 25,000
Total highways and streets 55,000 55,000 27,213 27,787
Culture and recreation:
Cultural and arts:
Personal services 13,998 13,998 23,415 (9,417)
Supplies 1,400 1,400 1,751 (351)
Other services and charges 80,780 80,780 94,717 (13,937)
Capital outlay 42,554 42,554 37,875 4,679
Total cultural and arts 138,732 138,732 157,758 (19,026)
Parks/recreation:
Personal services 431,845 431,845 65,248 366,597
Supplies 1,427 (1,427)
Other services and charges 503,214 (503,214)
Capital outlay 2,013,798 2,013,798 865,166 1,148,632
Total parks 2,445,643 2,445,643 1,435,055 1,010,588
Historical commission:
Personal services 12,798 12,798 22,191 (9,393)
Supplies 1,000 1,000 2,341 (1,341)
Other services and charges 24,575 24,575 10,526 14,049
Capital outlay 10,627 10,627 2,100 8,527
Total historical commission 49,000 49,000 37,158 11,842
Library:
Other services and charges 14,035 14,035 14,035
Total culture and recreation 2,647,410 2,647,410 1,629,971 1,017,439
Total general fund $ 8,392,113 $ 8,392,113 $ 6,307,178 $ 2,084,935
-28-
State of Idaho
City of Eagle
Schedule of Revenues and Expenditures- Budget and Actual
Library Special Revenue Fund
For the Year Ended September 30, 2007
Budgeted Amounts- Variance with
Original Final Actual Final Budget-
Revenues:
Taxes:
Property taxes $ 791,956 $ 791,956 $ 805,511 $ 13,555
Penalties and interest 1,500 1,500 2,213 713
Total taxes 793,456 793,456 807,724 14,268
Intergovernmental:
City of Boise 60,000 60,000 60,000
Fines:
Fines 45,500 45,500 38,015 (7,485)
Miscellaneous:
Miscellaneous 1,250 1,250 3,204 1,954
Interest 5,000 5,000 13,324 8,324
Donations 2,000 2,000 2,041 41
Total miscellaneous 8,250 8,250 18,569 10,319
Total library $ 907,206 $ 907,206 $ 924,308 $ 17,102
Expenditures:
Culture and recreation:
Personal service $ 659,938 $ 659,938 $ 653,872 $ 6,066
Supplies 18,656 18,656 18,195 461
Other services and charges 335,544 335,544 169,796 165,748
Capital outlay 176,452 176,452 149,643 26,809
Total culture and recreation $ 1,190,590 $ 1,190,590 $ 991,506 $ 199,084
-29-
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, 2007
Budgeted Amounts- Variance with
Original Final Actual Final Budget-
Revenues:
Taxes:
Property taxes $ 219,610 $ 219,610 $ 223,594 $ 3,984
Penalties and interest 600 600 625 25
Total taxes 220,210 220,210 224,219 4,009
Miscellaneous:
Interest 2,000 2,000 5,541 3,541
Total revenues $ 222,210 $ 222,210 $ 229,760 $ 7,550
Expenditures:
Principal $ 140,000 $ 140,000 $ 155,000 $ (15,000)
Interest 92,760 92,760 68,368 24,392
Payment reserve 19,400 19,400 19,400
Fiscal charges 840 840 840
Total expenditures $ 253,000 $ 253,000 $ 224,208 $ 28,792
—30—
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, 2007
Budgeted Amounts- Variance with
Original Final Actual Final Budget-
Revenues:
Sales $ 336,470 $ 336,470 $ 372,412 $ 35,942
Water hookups 85,000 85,000 850 (84,150)
STL fee 150,000 150,000 74,250 (75,750)
Revenue sharing 72,750 72,750
Loan proceeds 2,590,000 2,590,000 246,392 (2,343,608)
Interest 4,500 4,500 8,146 3,646
Total revenues $ 3,165,970 $ 3,165,970 $ 774,800 $ (2,391,170)
Expenses:
Personal service $ 86,224 $ 86,224 $ 29,778 $ 56,446
Utilities 412 (412)
Other services and charges 426,476 426,476 534,172 (107,696)
Capital outlay 2,783,114 2,783,114 1,097,504 1,685,610
Total expenses $ 3,295,814 $ 3,295,814 $ 1,661,866 $ 1,633,948
—31—
State of Idaho
City of Eagle
Operation in Tax Rolls
September 30, 2007
Total 2006 2005 2004 2003
Balance - beginning of
year $ 28,878 $ $ 17,722 $ 6,174 $ 4,982
Roll charge 2,055,346 2,055,346
Penalties 11,179 11,179
Adjustments 13 13
2,095,416 2,066,525 17,735 6,174 4,982
Collections 2,048,771 2,023,170 14,602 6,021 4,978
Adjustments 10,652 10,620 28 4
2,059,423 2,033,790 14,630 6,021 4,982
Balance - end of year $ 35,993 $ 32,735 $ 3,105 $ 153 $ -
—32—
Gibbons, Scow & 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, 2007, which collectively comprise the City of Eagle's basic financial
statements and have issued our report thereon dated November 3, 2008. 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.
-33-
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.
However, we noted other matters involving the internal control over financial reporting that we have
reported to management of City of Eagle in a separate letter dated November 3, 2008.
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
November 3, 2008
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Gibbons, Scott & Dean T,T, '
Certified Public Accountants NOV
Professional Building r
Terry L.Scott,CPA 1803 Ellis Avenue '1� (20$)459-4649
John P.Dean,CPA Caldwell,Idaho 83605 Rot o; X208)454-9091
Honorable Mayor and Members
of the City Council
City of Eagle
Eagle, Idaho
As the result of our audit of the accounting records of City of Eagle for the year ended September 30,
2007, we submit the following comments. As reported in the audited financial statements in the 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, there are two
significant internal control deficiencies. Of these, we consider both to be material weaknesses:
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.
2-Due to its relatively small size, City of Eagle has inadequate segregation of duties.
In addition to the above significant deficiencies, we noted the following matters involving the internal
control and its operation that are not considered significant deficiencies.
During our examination of payroll transactions, there were two employees where the federal and state
withholding was not in agreement with the marital status on the W-4. The deputy clerk was aware of
this problem. They will be having all employees complete a new W-4.
It appears that you are complying with the Idaho Code as it relates to the budgeting process and you
are maintaining your accounting records in compliance with the uniform system of accounting in all
material respects. We again wish to compliment your Clerk for the manner in which the records are
being maintained.
The following represents a schedule of working capital available as of September 30, 2007 and 2006.
Working capital is described as current assets minus current liabilities and generally equates to
unreserved, undesignated fund balance. Also included below is the percent of working capital to total
expenditures.
September 30, 2007 September 30, 2006
Working Percent to Working Percent to
Fund Capital Expenditures Capital Expenditures
General $ 2,461,170 39.0% $ 3,064,067 49.5%
Library 217,124 21.9% 293,346 34.9%
—1—
MEMBER OF
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
IDAHO SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
We generally recommend working capital at September 30 should be between at least 25 to 30% of
expenditures to maintain a positive cash flow position. Working capital ranges from fair to good. The
large drop in the percent to expenditures in the general fund is mainly due to revenues decreasing
($60,462) and expenditures increasing ($116,551). The main areas where revenues decreased were in
building inspection ($213,802), annexation/reviews ($293,343), impact fees ($327,999) and interest
income ($18,126). These decreases were offset by increases in grants ($111,560), other government
payments ($316,730) and taxes ($368,365). Expenditures increased mainly in the areas of personal
services ($403,896), lease payments ($120,297), law enforcement ($147,861), engineering/legal-
developer charge ($124,940), art commission projects ($24,345), downtown study ($20,019), healing
fields display ($23,607) and parks ($66,955). These increases were offset by decreases in capital
outlay ($709,121) and transmission line payments ($196,291).
The following is a condensed comparative statement of revenues and expenses for the water fund:
Variance-
September 30, Favorable
2007 2006 (Unfavorable)
Operating revenues $ 372,412 $ 367,520 $ 4,892
Operating expenses:
Personal services 29,778 (29,778)
Utilities 412 (412)
Other expenses 534,172 415,654 (118,518)
Depreciation 21,116 17,810 (3,306)
Total 585,478 433,464 (152,014)
Operating loss (213,066) (65,944) (147,122)
Nonoperating revenues 80,896 5,590 75,306
Net income (loss) $(132.170) $ (60.354) $ (71,816)
As you will note the net loss increased $71,816 over the prior year. Operating revenues increased due
to higher collections from United Water. Operating expenses mainly increased in the area of personal
services and engineering. While the customer revenue appears to be covering the operating expenses
for the system (payment to United Water), it is not enough to also cover the additional expenses
incurred by the city. It is important to monitor the activity on a monthly basis so that the city will be in a
position to consider raising rates or decreasing expenses as needed.
We wish to thank your staff for the assistance and cooperation extended to our staff during the course
of the audit. We are pleased to have served you in an auditing capacity and hope that we can be of
service to you in the future. If you have any questions concerning our comments, we would appreciate
the opportunity to discuss them with you.
GIBBONS, SCOTT & DEAN LLP
Certified Public Accountants
November 3, 2008
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