Finance - Annual Audit - 09/30/2006 RECEIVED&FiLED 4
CITY OF EAGLE
JUN r 2007
File:
Houle to:_
STATE OF IDAHO
CITY OF EAGLE
AUDITED FINANCIAL STATEMENTS
AS OF
SEPTEMBER 30, 2006
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
Operation in Tax Rolls 32
Report on Internal Control over Financial Reporting and on Compliance
and Other Matters Based on an Audit of Financial Statements Performed 33
in Accordance with Government Auditing Standards
Gibber, Scott & Dean LLP
Certified Public Accountants
Professional Building
Terry L.Scott,CPA 1803 Ellis Avenue FAX(208)459-4649
(208)459-46
John P.Dean,CPA Caldwell,Idaho 83605
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, each major fund, and the aggregate remaining fund information of the City of Eagle as of
and for the year ended September 30, 2006, which collectively comprise the City of Eagle'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 tates�nThose standards require Ahattwe
Standards, issued by the Comptroller General of the United
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, each major fund,
and the aggregate remaining fund information of the City of Eagle as of September 30, 2006, and the
respective changes in financial position and cash flows, where applicable, thereof, for the year then
ended in conformity with accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report dated March 8,
2007 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
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MEMBER OF
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
IDAHO SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
accounting principles generally accepted in the United inquiries ited of management regarding certain
limited procedures, which consisted principally
measurement and presentation of the supplementary information. However, we did not audit the
information and express no opinion on it.
nts that
Our audit was conducted for the purpose of forming statements.l on
T financial accomaccompanying efinancial
collectively comprise the City of Eagle basic financial i
information listed as supporting schedules in the table of contents is presented for purposes of
additional analysis and is not a required part of d,nbhe audit financial statements. Such
basic financial st t information
and,in
been subjected to the auditing procedures applied
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
March 8, 2007
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State of Idaho
City of Eagle
Statement of Net Assets
September 30, 2006
Governmental Business-type Total
Activities Activities
Assets $ 105,531 $ 8,903 $ 114,434
Cash 3,507,498 236,802 3,744,300
Investments
Receivables (net of allowance 793,680 32,149 825,829
for uncollectibles) 44,920 44,920
Prepaid expenses
Capital assets (net of 12,533,199 538,950 13,072,149
accumulated depreciation)
Total assets
16,984,828 816,804 17,801,632
Liabilities 537,473 57,774 595,247
Accounts payable 61,247 61,247
Accrued payroll 111,376 111,376
Deferred revenue 258 838 258,838
Deposits payable 36,718 36,718
Accrued interest
Noncurrent liabilities: 247,225 247,225
Due within one year 4,325,755 4,325,755
Due in more than one year
Total liabilities
5,578,632 57,774 5,636,406
Net Assets
Invested in capital assets, 8,044,811 538,950 8,583,761
net of related debt
Restricted for: 16,601 16,601
Tree fund 322,773 773 322,773
Special revenue 14,077 14,077
Debt service 3,007,934 220 3, ,014
Unrestricted 228
Total net assets
$ 11,406,196 $ 759,030 $ 12,165,226
The accompanying notes are an integral part of this statement.
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Net(Expense) Revenue and Changes in Net Assets
Governmental Business-type
Activities Activities Total
$ (1,254,133) $ $ (1,254,133)
(42,432) (42,432)
(263,487) (263,487)
(874,443) (874,443)
(239,984) (239,984)
(2,674,479) (2,674,479)
177,305 177,305
(2,674,479) 177,305 (2,497,174)
1,813,508 1,813,508
755,710 755,710
261,137 261,137
155,257 155,257
914,218 914,218
23,677 23,677
179,427 5,590 185,017
4,102,934 5,590 4,108,524
1,428,455 182,895 1,611,350
9,977,741 576,135 10,553,876
$ 11,406,196 $ 759,030 $ 12,165,226
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State of Idaho
City of Eagle
Balance Sheet
Governmental Funds
September 30, 2006
Other
Governmental
Fund Total
Debt Governmental
General Library Service Funds
Assets
Cash $ 81,318 $ 24,213 $ $ 105,531
Investments 3,184,394 291,723 31,381 3,507,498
Receivables (net of allowance for 751,605 37,388 4,687 793,680
uncollectibles)
Prepaid expenses 35,481 9,439 44,920
Total assets $ 4,052,798 $ 362,763 $ 36,068 $ 4,451,629
Liabilities and Fund Balances
Liabilities: 73
Accounts payable $ 519,800 $ 17,673 $ $ 537,473
Accrued payroll 40,306 20,941 1,247
Compensated absences 1,903
Deferred revenue 115,802 21,364 1,753 138,919
258,838 258,838
Deposits payable 258, 1,753 998,380
Total liabilities 936,649 59,978
Fund balances:
Reserved for:
Prepaid expenses 35,481 9,439 44,920,92
1
Tree fund 16,601 36,605
Debt service 34,315
Unreserved, reported in: 3,064,067 3,064,067
General fund 293,346 293,346
Special revenue funds
Total fund balances 3,116,149 302,785 34,315 3,453,249
Total liabilities and fund balances $ 4,052,798 $ 362,763 $ 36,068
Amounts reported for governmental activities in the statement
of net assets are different because:
Capital assets used in governmental activities are not financial 12,533,199
resources and, therefore, are not reported in the funds.
Other long-term assets are not available to pay for current-period 27,543
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. (4,607,795)
Net assets of governmental funds $ 11,406,196
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, 2006
Other
Governmental
Fund Total
Debt Governmental
General Library Service Funds
Revenues: $ 1,568,927 $ 771,377 $ 241,387 $ 2,581,691
Taxes 3
833 1,165,83
Licenses and permits 1,165,833 1,465,833
Intergovernmental 1,414,083 60,000 1,471,083
Charges for services 1,501,785 45,546
Fines 315 45,231
Miscellaneous
211,817 25,376 2,902 240,095
Total revenues 5,862,760 901,984 244,289 7,009,033
Expenditures:
Current: 2,768,213 2,768,213
General government 1,302,312 1,302,312
Public safety 7 265,377
Highways and streets 265,377 2,265,377
Culture and recreation 1,854,725 839,490
Debt service: 135,000 135,000
Principal 102,037 102,037
Interest and fiscal charges
Total expenditures 6,190,627 839,490 237,037 7,267,154
Excess (deficiency) of revenues 62,494 7,252 (258,121)
over (under) expenditures (327 867)
Other financing sources (uses): 103 103
Sale of capital assets 2,460,577 2,460,577
Proceeds from lease (2,460,577)
Purchase of capital asset (2,460,577)
Total other financing 103 103
sources (uses)
327,764
Net change in fund balances (327,764) 62,494 7,252 (258,018)
Fund balances - beginning 3,443,913 240,291 27,063 3,711,267
Fund balances - ending $ 3,116,149 $ 302,785 $ 34,315 $ 3,453,249
The accompanying notes are an integral part of this statement.
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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, 2006
Amounts reported for governmental activities in the statement of activities
are different because:
Net change in fund balances -total governmental funds
$ (258,018)
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 1,393,831
amount by which capital outlays exceeded depreciation in the current period.
The net effect of various miscellaneous transactions involving capital assets 163,651
(i.e., sales, trade-ins, and donations) is to increase net assets.
Revenues in the statement of activities that do not provide current 2,002
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 162,805
effect of these differences in the treatment of long-term debt and related items.
Some expenses reported in the statement of activities
tivi are do
ot reported the
use of current financial resources and, (35,816)
expenditures in the governmental funds.
Change in net assets of governmental activities
$ 1,428,455
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, 2006
Business-type
Activities -
Enterprise
Funds
Assets
Current assets: 8,903
Cash 236,802
Investments
Receivables (net of allowance 9
for uncollectibles) 232,32,18449
Total current assets
Noncurrent assets: 538,950
Capital assets (net of accumulated depreciation)
816,804
Total assets
Liabilities:
Current liabilities: 57,774
Accounts payable
Net assets: 538,950
Invested in capital assets, net of related debt 220,080
Unrestricted
$ 759,030
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, 2006
Business-type
Activities -
Enterprise
Funds
Operating revenues: 367,520
Charges for services
Operating expenses:
Other services and charges 15 415,654
,654
0
Depreciation 437,810
Total operating expenses
(65,944)
Operating loss
Nonoperating revenues (expenses): 5,590
Interest
(60,354)
Income (loss) before contributions
243,249
Capital contributions
182,895
Change in net assets
576,135
Total net assets - beginning
$ 759,030
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, 2006
Business-type
Activities -
Enterprise
Funds
Cash flows from operating activities: 365,129
Cash received from customers (365,429)
Cash payments to suppliers for goods and services (93,425)
Net cash provided by (used for) operating activities
Cash flows from capital and related financing activities: 1,264)
Acquisition of capital assets (12443,267
Capital contributed by customers and developers 2 82,593
Net cash provided by capital and related financing activities
Cash flows from investing activities: 4 827
Interest received
Net increase (decrease) in cash and cash equivalents
59,094
Cash and cash equivalents - cost- beginning of year
186,445
Cash and cash equivalents - cost- end of year
245,539
Net decrease in the fair value of investments
166
Cash and cash equivalents - carrying amount- end of year
$ 245,705
Reconciliation of operating loss to net cash provided by operating activities
$ (65,944)
Operating loss
Adjustments to reconcile operating loss to net cash
provided by operating activities: 17,810
Depreciation
(16,529)
Capital assets in accounts payable
Change in assets and liabilities: ,391)
(Increase) decrease in accounts receivable (2(2 391
8
Increase (decrease) in accounts payable 38,728
Total adjustments
Net cash provided by (used for) operating activities
$ (28,326)
Noncash capital and related financing activities: 19,392
Wellhouse security system received from grant
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, 2006
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.
For financial reporting purposes, management has considered all potential component units
which are controlled or whose boards are appointed by the City Council. Control by the City was
determined on the basis of budget adoption, the selection of management, the ability to
significantly influence operations, accountability for fiscal matters and other factors. Based on
this criteria, there were no component units included in the City's report.
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.
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
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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
items are considered
consideredto b susceptible accrual
as
be and
revenue of the current p
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 �e eated
ing fund. It accounts fr to be accounted for in alnother fundesources of
the general government, excep t 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 he direct costs City.various other functions of the
and program revenues reported for various
s
io s
these charges would distort
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.
Proprietary funds distinguish operating revenues and expenses from nonoperating items.
Operating revenues and expenses generally result from providing services and producing and
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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
es,
and services. Operating expenses enterprise
capital tal funds
assetsud sales and
expenseslcnot
administrative expenses and depreciation of
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; and the State Treasurer's
Investment Pool.
Investments for the City are reported at fair value. The State Treasurer's Investment Pool
operates in accordance with appropriate state laws and regulations. The reported value of
the pool 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
tee City monthly.that they result property receivables.
ty t enues are recognized in when entered on the tax rolls to
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 o cost if excess
purchased or constructed.assets
Donated recorded at historical cost or are recorded at
estimated historical cost if pu
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.
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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
Issuance costs, whetheer or not withheld frrom the actual debt proceeds
other financing uses.
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 prepaid expenses, tree fund and debt service.
8. Net Assets
The government-wide statement of net assets reports $353,451 of restricted net assets, of
which $14,077 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
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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 $4,607,795 difference are as
follows:
Bonds payable $ 1,975,000
Leases payable 2,513,388
Accrued interest payable 36,718
Compensated absences 82,689
Net adjustment to reduce fund balance-total
governmental funds to arrive at net assets-
governmental activities $ 4.607.795
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 $1,393,831 difference are as follows:
Capital outlay $ 1,886,894
Depreciation expense (493,063)
Net adjustment to increase net changes in
fund balances-total governmental fund to
arrive at changes in net assets of
governmental activities $ 1.393.831
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 $163,651 difference are as follows:
In the statement of activities, only the loss on
the sale of capital assets is reported. However,
in the governmental funds, the proceeds from
the sale increase financial resources. Thus, the
change in net assets differs from the change in
fund balance by the cost of the assets sold. $ (28,353)
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. 192,004
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Net adjustment to increase net changes in fund
balances-total governmental funds to arrive at
changes in net assets of governmental activities $ 163.651
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 $162,805 difference are as follows:
Principal repayments: $ 135,000
Bonds
Capital leases 27,805
Net adjustment to increase net changes in fund
balances-total governmental funds to arrive at
changes in net assets of governmental activities $ 162,805
Another element of that reconciliation states that "Some expenses reported in the statement
t
of activities do not require the use of tfinancial
The(details of this therefore are
a�e
reported as expenditures in governmental funds."
as follows:
Compensated absences $ (17,521)
Accrued interest (18,295)
Net adjustment to decrease net changes in fund
balances -total governmental funds to arrive at
changes in net assets of governmental activities $ (35,816)
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.
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.
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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,
2006.
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, 2006, City of Eagle had the following investments:
Weighted
Average
Maturity
Investment Type Fair Value (Years)
State Treasurer's investment pool $ 3,744.300 .23
Credit risk. The State Treasurer's investment pool is not registered with the Securities and
Exchange Commission or any other regulatory body. It also does not have a credit quality
rating. 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, 2006, $145,211 of the City's bank
balance of $245,211 was exposed to custodial credit risk because it was uninsured and
uncollateralized.
B. Receivables
Receivables as of year end for the City's individual b er accounts, aaeor funds in te
aggregate, including the applicable allowances for uallect
Debt
General Library Water Service Total
Receivables:
Taxes $ 14,520 $ 14,207 $ $ 33 ,
4,687 $ 33,414
Accounts 315,832 23,181 32,149 421,253
Intergovernmental 421,253
Gross receivables 751,605 37,388 32,149 4,687 825,829
Less allowance for
uncollectibles
Net total receivables $751.605 $ 37.388 $ 32.149 $ 4,687 $825.829
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The only receivables not expected to be collected within one year are $11,101 of taxes
($4,906 in general, $4,656 in library, $1,539 in debt service) and $14,475 of accounts (in
library).
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) $ 5,802 $
Delinquent property taxes receivable (library fund) 5,513
Delinquent property taxes receivable (debt service fund) 1,753
Capital assets donation (general fund) 110,000
Sculpture donation (library fund) 1,376
Delinquent fines,fees, etc. receivable (library fund) 14,475
Total deferred/unearned revenue for governmental funds $ 27.543 $ 111.376
C. Capital Assets
Capital asset activity for the year ended September 30, 2006, was as follows:
Beginning Ending
Balance Additions Deletions Balance
Governmental activities:
Capital assets not
being depreciated: $ 1,701,708
Land $ 1,701,708 $ $
Artwork/collectibles 76,127 17,625 93,752
Construction in progress 327,406 1,170,206 266,310 1,231,302
Total capital assets,
not being depreciated 2,105,241 1,187,831 266,310 3,026,762
Capital assets
being depreciated: 5,166,358
Buildings 2,354,136 2,812,222
Improvements other
than buildings 3,946,729 125,707 12,472 4,059,964
Equipment 2,060,278 680,025 73,830 2,666,473
Total capital assets
being depreciated 8,361,143 3,617,954 86,302 11,892,795
Less accumulated
depreciation for: 509,813
Buildings 416,183 93,630
Improvements other
than buildings 674,208 187,824 4,088 857,944
Equipment 860,853 211,609 53,861 1,018,601
Total accumulated
depreciation 1,951,244 493,063 57,949 2,386,358
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Beginning Ending
Balance Additions Deletions Balance
Governmental activities
(continued):
Total capital assets, being
depreciated, net 6,409,899 3,124,891 28,353 9,506,437
Governmental activities
capital assets, net $ 8,515.140 $ 4.312.722 $ 294.663 $ 12.533.199
Business-type activities:
Capital assets not
being depreciated:
Land $ 17,500 $ 75,750 $ $ 93,250
Construction in progress 27,655 27,655
Total capital assets,
not being depreciated 17,500 103,405 120,905
Capital assets
being depreciated:
Buildings 4,040 41,689 45,729
Improvements other
than buildings 327,233 19,392 346,625
Equipment 189,111 12,699 201,810
Total capital assets
being depreciated 520,384 73,780 594,164
Less accumulated
depreciation for:
Buildings 1,321 231 1,552
Improvements other
than buildings 118,014 10,238 128,252
Equipment 38,974 7,341 46,315
Total accumulated
depreciation 158,309 17,810 176,119
Total capital assets, being
depreciated, net 362,075 55,970 418,045
Business-type activities
capital assets, net $ 379.575 $ 159.375 $ $ 538.950
Depreciation expense was charged to functions/programs of the City as follows:
Governmental activities:
General government $ 82,543
Public safety 1,922
Culture and recreation 408,598
Total depreciation expense -
governmental activities $ 493.063
Business-type activities:
Water $ 17.810
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Construction Commitments
The City has an active construction project to develop a park as of September 30, 2006. At
year end the City's commitment with the contractor is as follows:
Remaining
Protect Spent-to-Date Commitment
Park development $ 1.016.091 $ 595.009
D. Leases
Operating Leases
The City leases office equipment under cancelable operating leases. Total costs for such
leases were $15,538 for the year ended September 30, 2006. The future minimum lease
payments for these leases are as follows:
Year Ending
September 30, Amount
2007 $ 16,026
2008 15,597
2009 15,597
2010 8,670
2011 6,301
$ 62.191
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 (34,086)
Total $ 2.535.606
The future minimum lease obligations and the net present value of these minimum lease
payments as of September 30, 2006, were as follows:
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Year Ending Governmental
September 30, Activities
2007 $ 268,093
2008 268,093
2009 239,593
2010 239,593
2011 239,593
2012-2016 1,197,965
2017-2021 1,197,965
2022-2026 1,197,965
2027-2031 1,142,965
2032-2036 1,142,965
2037-2041 1,142,965
2042-2046 1,142,965
2047-2051 1,142,965
2052-2056 1,142,965
Total minimum lease payments 11,706,650
Less amount representing interest (9,193,262)
Present value of minimum
lease payments $ 2.513.388
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%. General obligation
bonds currently outstanding are in the amount of $1,975,000. Annual debt service
requirements to maturity for general obligation bonds are as follows:
Year ending Governmental Activities
September 30, Principal Interest
2007 $ 140,000 $ 92,760
2008 150,000 86,670
2009 155,000 80,070
2010 160,000 73,172
2011 170,000 65,892
2012-2016 975,000 202,014
2017 225,000 11,137
$1.975.000 $ 611.715
Changes in Long-Term Liabilities. Long-term liability activity for the year ended September
30, 2006 was as follows:
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Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Governmental activities:
General obligation bonds $2,110,000 $ $ 135,000 $1,975,000 $ 140,000
Leases 80,615 2,460,577 27,804 2,513,388 30,567
Compensated absences 65,169 102,829 83,406 84,592 76,658
Governmental activity
Long-term liabilities $2.255,784 $2.563.406 $ 246,210 $4.572.980 $ 247.225
Total interest incurred and expensed by the City was $239,984 in the government-wide
financial statements and $221,689 in the fund financial statements.
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, 2006, 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 $114,383; $90,122; and $77,738 for the years ended September 30, 2006, 2005 and
2004 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.
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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.
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Library Fund
Budgeted
Amounts -
Original Variance with
and Final Actual Final Budget-
$ 735,198 $ 771,377 $ 36,179
60,000 60,000
25,000 45,231 20,231
8,000 25,376 17,376
828,198 901,984 73,786
1,012,439 839,490 172,949
1,012,439 839,490 172,949
(184,241) 62,494 246,735
(184,241) 62,494 246,735
240,291 240,291
$ 56,050 $ 302,785 $ 246,735
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State of Idaho
City of Eagle
Schedule of Revenues - Budget and Actual
General Fund
For the Year Ended September 30, 2006
Budgeted Amounts- Variance with
Original Final Actual Final Budget-
Taxes:
Property taxes $ 770,196 $ 770,196 $ 810,928 $ 40,732
Penalties and interest 2,000 2,000 2,289 289
Franchise 603,000 603,000 755,710 152,710
Total taxes 1,375,196 1,375,196 1,568,927 193,731
Licenses and permits:
Alcoholic beverages 15,500 15,500 16,952 1,452
Business 16,000 16,000 13,688 (2,312)
Building inspection 1,152,202 1,152,202 1,128,156 (24,046)
Miscellaneous 1,500 1,500 1,145 (355)
Animal 4,500 4,500 5,892 1,392
Total licenses and permits 1,189,702 1,189,702 1,165,833 (23,869)
Intergovernmental:
Grants 131,150 131,150 5,850 (125,300)
State revenue sharing 888,446 888,446 914,218 25,772
State liquor apportionment 165,000 165,000 261,137 96,137
Inventory phase-out 109,621 109,621 155,257 45,636
VA program 3,460 3,460
Court revenue 60,000 60,000 74,161 14,161
Total intergovernmental 1,354,217 1,354,217 1,414,083 59,866
Charges for services:
Annexation, planning and zoning,
design review, plan review 469,598 469,598 970,282 500,684
Street lights 1,000 1,000 1,890 890
Impact fees 793,500 793,500 471,757 (321,743)
Impact processing fees 6,840 6,840 5,520 (1,320)
Energy standards 40,000 40,000 30,050 (9,950)
Saturday market fees 4,500 4,500 14,403 9,903
Park/recreation fees 9,100 9,100 7,883 (1,217)
Total charges for services 1,324,538 1,324,538 1,501,785 177,247
Fines:
Code enforcement 1,000 1,000 315 (685)
Miscellaneous:
Interest 39,500 39,500 163,059 123,559
Tree fund 1,000 1,000 19,980 18,980
Rent 5,000 5,000 4,682 (318)
Sale of capital assets 103 103
Donations 106,000 106,000 2,189 (103,811)
Miscellaneous 26,635 26,635 21,907 (4,728)
Total miscellaneous 178,135 178,135 211,920 33,785
Total general fund $ 5,422,788 $ 5,422,788 $ 5,862,863 $ 440,075
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State of Idaho
City of Eagle
Schedule of Expenditures - Budget and Actual
General Fund
For the Year Ended September 30, 2006
Budgeted Amounts- Variance with
Original Final Actual Final Budget-
General government:
Personal services $ 1,111,766 $ 1,111,766 $ 1,147,608 $ (35,842)
Supplies 30,000 30,000 37,490 (7,490)
Other services and charges 1,183,072 1,183,072 926,964 256,108
Capital outlay 1,395,000 1,395,000 444,523 950,477
Total 3,719,838 3,719,838 2,556,585 1,163,253
Election 2,500 2,500 2,255 245
Legal 169,000 169,000 209,373 (40,373)
Total general government 3,891,338 3,891,338 2,768,213 1,123,125
Public safety:
Law enforcement 1,188,000 1,188,000 1,188,000
Law enforcement-capital outlay 3,276 (3,276)
Inspection 77,500 77,500 66,036 11,464
Animal control 45,000 45,000 45,000
Total public safety 1,310,500 1,310,500 1,302,312 8,188
Highways and streets:
Street lighting 20,000 20,000 17,514 2,486
Other services and charges 150,000 150,000 241,963 (91,963)
Capital outlay 25,000 25,000 5,900 19,100
Total highways and streets 195,000 195,000 265,377 (70,377)
Culture and recreation:
Cultural and arts:
Personal services 10,732 10,732 8,289 2,443
Supplies 1,599 (1,599)
Other services and charges 112,779 112,779 60,056 52,723
Capital outlay 3,000 3,000 17,600 (14,600)
Total cultural and arts 126,511 126,511 87,544 38,967
Parks/recreation:
Other services and charges 486,188 486,188 437,686 48,502
Capital outlay 1,832,501 1,832,501 1,288,715 543,786
Total parks 2,318,689 2,318,689 1,726,401 592,288
Historical commission:
Personal services 10,953 10,953 10,499 454
Supplies 1,500 1,500 1,721 (221)
Other services and charges 13,512 13,512 14,687 (1,175)
Capital outlay 7,800 7,800 7,800
Total historical commission 33,765. 33,765 26,907 6,858
Library:
Other services and charges 13,367 13,367 13,873 (506)
Total culture and recreation 2,492,332 2,492,332 1,854,725 637,607
Total general fund $ 7,889,170 $ 7,889,170 $ 6,190,627 $ 1,698,543
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State of Idaho
City of Eagle
Schedule of Revenues and Expenditures -Budget and Actual
Library Special Revenue Fund
For the Year Ended September 30, 2006
Budgeted Amounts- Variance with
Original Final Actual Final Budget-
Revenues:
Taxes:
Property taxes $ 732,698 $ 732,698 $ 769,190 $ 36,492
Penalties and interest 2,500 2,500 2,187 (313)
Total taxes 735,198 735,198 771,377 36,179
Intergovernmental:
City of Boise 60000 60000 60,000
Fines:
Fines 25,000 25,000 45,231 20,231
Miscellaneous:
Miscellaneous 2,500 2,500 1,770 (730)
Interest 3,500 3,500 13,466 9,966
Donations 2,000 2,000 10,140 8,140
Total miscellaneous 8,000 8,000 25,376 17,376
Total library $ 828,198 $ 828,198 $ 901,984 $ 73,786
Expenditures:
Culture and recreation:
Personal service $ 560,732 $ 560,732 $ 553,439 $ 7,293
Supplies
16,331 16,331 18,534 (2,203)
Other services and charges 153,159 153,159 142,385 10,774
Capital outlay 282,217 282,217 125,132 157,085
Total culture and recreation $ 1,012,439 $ 1,012,439 $ 839,490 $ 172,949
-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, 2006
Budgeted Amounts- Variance with
Original Final Actual Final Budget-
Revenues:
Taxes:
Property taxes $ 228,732 $ 228,732 $ 240,657 $ 11,925
Penalties and interest 1,000 1,000 730 (270)
Total taxes 229,732 229,732 241,387 11,655
Miscellaneous:
Interest 1,200 1,200 2,902 1,702
Total revenues $ 230,932 $ 230,932 $ 244,289 $ 13,357
Expenditures:
Principal $ 135,000 $ 135,000 $ 135,000 $
Interest 101,198 101,198 101,197 1
Payment reserve 19,683 19,683 19,683
Fiscal charges 947 947 840 107
Total expenditures $ 256,828 $ 256,828 $ 237,037 $ 19,791
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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, 2006
Budgeted Amounts- Variance with
Original Final Actual Final Budget-
Revenues:
Sales $ 323,772 $ 323,772 $ 367,520 $ 43,748
Water hookups 63,750 63,750 4,250 (59,500)
STL fee 150,000 150,000 143,857 (6,143)
Revenue sharing 75,750 75,750
Grants 19,392 19,392
Interest 2,000 2,000 5,590 3,590
Total revenues $ 539,522 $ 539,522 $ 616,359 $ 76,837
Expenses:
Other services and charges $ 408,768 $ 408,768 $ 415,654 $ (6,886)
Capital outlay 271,871 271,871 177,185 94,686
Total expenses $ 680,639 $ 680,639 $ 592,839 $ 87,800
-31-
State of Idaho
City of Eagle
Operation in Tax Rolls
September 30, 2006
Total 2005 2004 2003 2002 2001
Balance - beginning of
year $ 26,694 $ $ 17,604 $ 8,604 $ 342 $ 144
Roll charge 1,809,353 1,809,353
Penalties 9,533 9,533
Adjustments 298 61 58 121 58
1,845,878 1,818,886 17,665 8,662 463 202
Collections 1,805,989 1,790,350 11,441 3,678 462 58
Adjustments 11,011 10,814 50 2 1 144
1,817,000 1,801,164 11,491 3,680 463 202
Balance - end of year $ 28,878 $ 17,722 $ 6,174 $ 4,982 $ - $ -
-32-
Gibbons, Scott & Dean LLP
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, 2006, which collectively comprise the City of Eagle's basic financial
statements and have issued our report thereon dated March 8, 2007. 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 in order to determine our auditing procedures for the purpose of expressing our opinion on the
financial statements and not to provide an opinion on the internal control over financial reporting. Our
consideration of the internal control over financial reporting would not necessarily disclose all matters in
the internal control that might be material weaknesses. A material weakness is a reportable condition in
which the design or operation of one or more of the internal control components does not reduce to a
relatively low level the risk that misstatements caused by error or fraud in amounts that would be
material in relation to the financial statements being audited may occur and not be detected within a
timely period by employees in the normal course of performing their assigned functions. We noted no
matters involving the internal control over financial reporting and its operation that we consider 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
March 8, 2007 -33—
MEMBER OF
AMERICAN INSTITUTE OF CER11HIED PUBLIC ACCOUNTANTS
IDAHO SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
B CITY OF D
EAGLE
Gibbons, Scott & Dean L L P Jut4 1 9 2007
Certified Public Accountants File:
Professional Building Route �r-
Terry L.Scott,CPA 1803 Ellis Avenue (208)459-4649
John P.Dean,CPA Caldwell,Idaho 83605 FAX(208)454-9091
Honorable Mayor and Members
of the City Council
City of Eagle
Eagle, Idaho
We have audited the financial statements of the City of Eagle for the year ended September 30, 2006,
and have issued our report thereon dated March 8, 2007.
As a part of our audit we made a study and evaluation of the internal control to the extent we
considered necessary to evaluate the system as required by generally accepted auditing standards.
The purpose of our study and evaluation was to determine the nature, timing and extent of the auditing
procedures necessary for expressing an opinion on the City's financial statements.
However, our study and evaluation was more limited than would be necessary to express an opinion on
the internal control taken as a whole.
The management of the City is responsible for establishing and maintaining internal control. In fulfilling
this responsibility, estimates and judgments by management are required to assess the expected
benefits and related cost of control procedures. The objectives of a system are to provide management
with reasonable, but not absolute, assurance that assets are safeguarded against loss from
unauthorized use or disposition and that transactions are executed in accordance with management's
authorization and recorded properly to permit the preparation of financial statements in accordance with
generally accepted accounting principles.
Because of inherent limitations in any internal control structure, errors or irregularities may nevertheless
occur and not be detected. Also, projection of any evaluation of the system to future periods is subject
to the risk that procedures may become inadequate because of changes in conditions or that the
degree of compliance with the procedures may deteriorate.
Our study and evaluation made for the limited purpose described in the second paragraph would not
necessarily disclose all material weaknesses in the system. Accordingly, we do not express an opinion
on the internal control of the City of Eagle taken as a whole. However, our study and evaluation
disclosed no condition that we believe to be a material weakness.
As the result of our audit of the accounting records of the City of Eagle for the year ended September
-30, 2006, we submit the following comments.
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.
-1-
MEMBER OF
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
IDAHO SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
The following represents a schedule of working capital available as of September 30, 2006 and 2005.
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, 2006 September 30, 2005
Working Percent to Working Percent to
Fund Capital Expenditures Capital Expenditures
General $ 3,064,067 49.5% $ 3,388,316 79.3%
Library 293,346 34.9% 226,583 32.3%
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 remaining
basically the same and expenditures increasing. Expenditures increased mainly in the areas of
personal services, capital outlay, lease payments, law enforcement, transmission line payments and
parks.
The following is a condensed comparative statement of revenues and expenses for the water fund:
Variance-
September 30, Favorable
2006 2005 (Unfavorable)
Operating revenues $ 367,520 $ 325,055 $ 42,465
Operating expenses:
Other expenses 415,654 351,644 (64,010)
Depreciation 17,810 16,818 (992)
Total 433,464 368,462 (65,002)
Operating loss (65,944) (43,407) (22,537)
Nonoperating revenues 5,590 90,659 (85,069)
Net income (loss) $ (60.354) $ 47.252 $ (107.606)
As you will note the net decreased $107,606 over the prior year. Operating revenues increased due to
higher collections from United Water. Operating expenses mainly increased in the area of engineering,
legal and payments to United Water. While the customer revenue appears to be covering the
operating expenses for the system, 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.
1Q°
GIBBONS, SCOTT& DEAN LLP
Certified Public Accountants
March 8, 2007
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