Finance - Annual Audit - 09/30/2005 STATE OF IDAHO
CITY OF EAGLE
AUDITED FINANCIAL STATEMENTS
AS OF
SEPTEMBER 30, 2005
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 12-23
Required Supplementary Information:
Statement of Revenue, Expenditures and Changes in Fund 24-25
Balances - Budget and Actual - Major Governmental Funds
Supporting schedules:
Individual Fund Schedules:
Statement of Revenues - Budget and Actual - General Fund 26
Statement of Expenditures - Budget and Actual - General Fund 27
Statement of Revenues and Expenditures - Budget and Actual - 28
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 - 29
Library G.O. Bond Debt Service Fund
Statement of Revenues and Expenses - Budget (Non-GAAP 30
Budgetary Basis) and Actual -Water Enterprise Fund
31
Operation in Tax Rolls
Report on Compliance and on Internal Control over Financial Reporting
Based on an Audit of Financial Statements Performed in Accordance 32
With Government Auditing Standards
Gibbons, Scott & Dean LLP
Certified Public Accountants
Professional Building
Terry L.Scott,CPA 1803 Ellis Avenue FA
John (208)459-4649 459- 6
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 for the City of Eagle as
of and for the year ended September 30, 2005, 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 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
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, 2005, and the changes
in financial position and cash flows 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 December
12, 2005 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 grants. That report is an
integral part of an audit performed in accordance with Government Auditing Standards and should be
read in conjunction with this report in considering the results of our audit.
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 24-
25 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 States of America. We have applied certain
limited procedures, which consisted of the s pal supplementary information.geHoweverg,awendid not audit the
measurement and presentation pp
information and express no opinion on it.
Our audit was conducted for the purpose of forming an opinion on the financial statements that
collectively comprise City of Eagle's basic financial statements. The accompanying financial
information listed as supporting schedules in the table of contents is presented for purposes of
additional analysis and is not a required part of the basic financial statements. Such information has
been subjected to the auditing procedures applied in the audit of the basic financial statements and, in
our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a
whole.
GIBBONS, SCOTT & DEAN LLP
Certified Public Accountants
December 12, 2005
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State of Idaho
City of Eagle
Statement of Net Assets
September 30, 2005
Governmental Business-type
Activities Activities Total
Assets
Cash $ 59,006 $ 57,217 $ 116,223
Investments 3,281,697 128,631 3,410,328
Receivables (net of allowance 716,777 29,758 746,535
for uncollectibles) 69,305 69,305
Prepaid expenses
Capital assets (net of
accumulated depreciation) 8,515,140 379,575 8,894,715
Total assets 12,641,925 595,181 13,237,106
Liabilities 188,746 19,046 207,792
Accounts payable 45,157 45,157
Accrued payroll 6,000 _ 6,000
Deferred revenue 150,074 150,074
Deposits payable 18,423 18,423
Accrued interest
Noncurrent liabilities: 217,640 217,640
Due within one year 217, 2,038,144
Due in more than one year 2,038,144
Total liabilities 2,664,184 19,046 2,683,230
Net Assets
Invested in capital assets,
net of related debt 6,324,525 379,575 6,704,100
Restricted for: 14,077 14,077
Debt service
Unrestricted 3,639,139 196,560 3,835,699
Total net assets $ 9,977,741 $ 576,135 $ 10,553,876
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 Total
Activities Activities
$ (849,317) $ $ (849,317)
615,485 615,485
(118,791) (118,791)
(483,206) (483,206)
(110,105) (110,105)
(945,934) (945,934)
5,270 5,270
(945,934) 5,270 (940,664)
1,579,045 1,579,045
628,249 628,249
243,976 243,976
106,945 106,945
767,232 89,106 856,338
33,563 33,563
52,135 52,135
25,206 1,553 26,759
(21,009) 21,009
3,415,342 111,668 3,527,010
2,469,408 116,938 2,586,346
7,508,333 459,197 7,967,530
$ 9,977,741 $ 576,135 $ 10,553,876
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State of Idaho
City of Eagle
Balance Sheet
Governmental Funds
September 30, 2005
Other
Governmental
Fund Total
Debt Governmental
General Library Service Funds
Assets $ 59,006
Cash 40,155 $ 18,851 $ $
Investments 3,012,114 243,229 26,354 3,281,697
Receivables (net of allowance for 699,082 13,106 4,589 716,777
uncollectibles)
Prepaid expenses 55,597 13,708 69,305
Total assets $ 3,806,948 $ 288,894 $ 30,943 $ 4,126,785
Liabilities and Fund Balances
Liabilities:
Accounts payable $ 172,539 $ 16,207 $ $ 188,88,74746
Accrued payroll 29,677 15,480
Deferred revenue 10,745 16,916 3,880 31,541
Deposits payable 150,074 150,074
Total liabilities 363,035 48,603 3,880 415,518
Fund balances:
Reserved for: 69,305
Prepaid expenses 55,597 13,708
Debt service 27,063 27,063
Unreserved, reported in: 3,388,316
General fund 3,388,316
Special revenue funds 226,583 226,583
Total fund balances 3,443,913 240,291 27,063 3,711,267
Total liabilities and fund balances $ 3,806,948 $ 288,894 $ 30,943
Amounts reported for governmental activities in the statement
of net assets are different because:
Capital assets used in governmental activities are not financial 8,515,140
resources and, therefore, are not reported in the funds.
Other long-term assets are not available to pay for current-period 25,541
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. (2,274,207)
Net assets of governmental funds $ 9,977,741
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, 2005
Other
Governmental
Fund Total
Debt Governmental
General Library Service Funds
Revenues:
Taxes $ 1,315,035 $ 654,416 $ 234,984 $ 2,204,435
43
Licenses and permits 1,628,119 1,231,314
Intergovernmental 1,192,314 39,000
Charges for services 1,522,977 1,522,977 22,97
Fines 105 33,283
Miscellaneous 85,471 7,341 1,417 94,229
Total revenues 5,744,021 734,040 236,401 6,714,462
Expenditures:
Current: 1,730,367
General government 1,730,367
Public safety
1,099,578 1,099,578
119,911
Highways and streets 119,911 2,119,915
Culture and recreation 1,323,546 700,669
Debt service: 125,000 125,000
Principal
Interest and fiscal charges 109,850 109,850
Total expenditures 4,273,402 700,669 234,850 5,208,921
Excess (deficiency) of revenues
over (under) expenditures 1,470,619 33,371 1,551 1,505,541
Other financing sources (uses): 6 89,106
,1010
Sale of capital assets 89 89,106
Proceeds from lease 6 89,10(80,615)
Purchase of capital asset (80,615)
Transfers in (out) (75,802) 45,210 9,583 (21,009)
Total other financing
sources (uses) 13,304 45,210 9,583 68,097
Net change in fund balances 1,483,923 78,581 11,134 1,573,638
Fund balances - beginning 1,959,990 161,710 15,929 2,137,629
Fund balances -ending $ 3,443,913 $ 240,291 $ 27,063 $ 3,711,267
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, 2005
Amounts reported for governmental activities in the statement of activities
are different because:
Net change in fund balances -total governmental funds
$ 1,573,638
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 647,521
amount by which capital outlays exceeded depreciation in the current period.
The net effect of various miscellaneous transactions involving capital assets 91,855
(i.e., sales, trade-ins, and donations) is to decrease net assets.
Revenues in the statement of activities that do not provide current 2 858
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 153,500
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
expenditures in the governmental funds.
Change in net assets of governmental activities
$ 2,469,408
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, 2005
Business-type
Activities -
Enterprise
Funds
Assets
Current assets: 57,217
Cash 128,631
Investments
Receivables (net of allowance 29,758
for uncollectibles) 2 229,758
Total current assets
Noncurrent assets: 379,575
Capital assets (net of accumulated depreciation)
Total assets 595,181
Liabilities:
Current liabilities: 19,046
Accounts payable
Net assets: 79,575
Invested in capital assets, net of related debt 3 379,575
Unrestricted
Total net assets $ 576,135
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, 2005
Business-type
Activities -
Enterprise
Funds
Operating revenues: 325,055
Charges for services
Operating expenses: ,644
Other services and charges 1 3511
Depreciation 316,,844
818
Total operating expenses
(43,407)
Operating loss
Nonoperating revenues (expenses): ,106
Revenue sharing 89 9,503
Interest 1,553
Total nonoperating revenues
Income (loss) before contributions
47,252
48,677
Capital contributions 48,077
Transfers in
116,938
Change in net assets
459,197
Total net assets - beginning
$ 576,135
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, 2005
Business-type
Activities -
Enterprise
Funds
Cash flows from operating activities:
Cash received from customers (295,295,297 7
Cash payments to suppliers for goods and services (54,244)
Net cash provided by (used for) operating activities
Cash flows from noncapital financing activities: 21,009
211,0
Transfers in 209
Revenue sharing 189,106
Net cash provided by noncapital financing activities
Cash flows from capital and related financing activities: (14,000)
Acquisition of capital assets 3,000
Capital contributed by customers and developers 4 43,350
Net cash provided by capital and related financing activities
Cash flows from investing activities: 1,635
Interest received
Net increase (decrease) in cash and cash equivalents
86,856
Cash and cash equivalents - cost- beginning of year
104,916
Cash and cash equivalents - cost- end of year
191,772
Net decrease in the fair value of investments
(597)
Cash and cash equivalents - carrying amount - end of year
$ 191,175
Reconciliation of operating loss to net cash provided by operating activities
$ (43,407)
Operating loss
Adjustments to reconcile operating loss to net cash
provided by operating activities: 16,818
Depreciation
Change in assets and liabilities: 58)
(Increase) decrease in accounts receivable (29,758)
Increase (decrease) in accounts payable (10,837)
Total adjustments
Net cash provided by (used for) operating activities
$ (54,244)
Noncash capital and related financing activities: 5,327
Donation of waterline costs
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, 2005
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 period is considered to be susceptible to accrual as
revenue of the current period. All other revenue items are considered to be measurable and
available only when cash is received by the City.
The City reports the following major governmental funds:
The general fund is the City's primary operating fund. It accounts for all financial resources of
the general government, except those required to be accounted for in another fund.
The library fund accounts for the resources accumulated for the operation of the library.
The City reports the following major proprietary fund:
The water fund accounts for the activities of the City's water distribution operations.
Private-sector standards of accounting and financial reporting issued prior to December 1, 1989,
generally are followed in both the government-wide and proprietary fund financial statements to
the extent that those standards do not conflict with or contradict guidance of the Governmental
Accounting Standards Board. Governments also have the option of following subsequent
private-sector guidance for their business-type activities and enterprise funds, subject to this
same limitation. The City has elected to follow subsequent private-sector guidance.
As a general rule the effect of interfund activity has been eliminated from the government-wide
financial statements. Exceptions to this general rule are payments-in-lieu of taxes and other
charges between the City's water function and various other functions of the City. Elimination of
these charges would distort the direct costs and program revenues reported for the various
functions concerned.
Amounts reported as program revenues include 1) charges to customers or applicants for goods,
services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and
contributions, including special assessments. Internally dedicated resources are reported as
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
and services. Operating expenses for enterprise funds include the cost of sales and services,
administrative expenses and depreciation of capital assets. All revenues and expenses not
meeting this definition are reported as nonoperating revenues and expenses.
When both restricted and unrestricted resources are available for use, it is the City's policy to use
restricted resources first, then unrestricted resources as they are needed.
D. Assets, Liabilities and Net Assets or Equity
1. Deposits and Investments
The City's cash and cash equivalents are considered to be cash on hand, demand deposits
and short-term investments with original maturities of three months or less from the date of
acquisition.
State statutes authorize the city to invest in obligations of the United States, state and local
governments; time deposit accounts; repurchase agreements; 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 City monthly. City property tax revenues are recognized
when entered on the tax rolls to the extent that they result in receivables.
Taxes receivable represent balances due as of August 31. Taxes collected by the Ada
County Tax Collector in September, are on deposit with the Ada County Treasurer. These
collections were turned over to the City of Eagle subsequent to September 30.
3. Prepaid Expenses
Certain payments to vendors reflect costs applicable to future accounting periods and are
recorded as prepaid expenses in both government-wide and fund financial statements.
4. Capital Assets
Capital assets, which include property, plant, equipment, and infrastructure assets (e.g.,
roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or
business-type activities columns in the government-wide financial statements. Capital assets
are defined by the City as assets with an initial, individual cost of more than $300 and an
estimated useful life in excess of three years. Such assets are recorded at historical cost or
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.
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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 prepaid expenses and debt service.
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 $2,274,207 difference are as
follows:
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Bonds payable $ 2,110,000
Lease payable 80,615
Accrued interest payable 18,423
Compensated absences 65,169
Net adjustment to reduce fund balance-total
governmental funds to arrive at net assets-
governmental activities $ 2,274,207
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 $647,521 difference are as follows:
Capital outlay $ 1,036,811
Depreciation expense (389,290)
Net adjustment to increase net changes in
fund balances-total governmental fund to
arrive at changes in net assets of
governmental activities $ 647.521
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 $91,855 difference are as follows:
In the statement of activities, only the gain 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. $ (63,900)
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. 155,755
Net adjustment to increase net changes in fund
balances-total governmental funds to arrive at
changes in net assets of governmental activities $ 91.855
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
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issued, whereas these amounts are deferred and amortized in the statement of activities."
The details of the $153,500 difference are as follows:
Principal repayments:
Bonds $ 125,000
Capital leases 28,500
Net adjustment to increase net changes in fund
balances-total governmental funds to arrive at
changes in net assets of governmental activities $ 153.500
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 $35 difference are as
follows:
Compensated absences $ 290
Accrued interest (255)
Net adjustment to increase net changes in fund
balances -total governmental funds to arrive at
changes in net assets of governmental activities $ 35
Ill. 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.
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 amended for the fiscal year ended September 30, 2005.
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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, 2005, City of Eagle had the following investments:
Weighted
Average
Maturity
Investment Type Fair Value (Years)
State Treasurer's investment pool $ 3.410.328 .74
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.
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, 2005, $166,291 of the City's bank balance
of$266,291 was exposed to custodial credit risk because it was uninsured and uncollateralized.
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 $ 12,774 $ 12,900 $ $ 4,589 $ 30,263
Accounts 320,650 206 29,758 350,614
Intergovernmental 365,658 365,658
Gross receivables 699,082 13,106 29,758 4,589 746,535
Less allowance for
uncollectibles
Net total receivables $699,082 $ 13.106 $ 29,758 $ 4,589 $746,535
The only receivables not expected to be collected within one year are $7,759 of taxes ($3,359
in general, $3,239 in library, $1,161 in debt service) and $2,914 of accounts ($2,616 in
general, $298 in water).
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:
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Unavailable Unearned
Delinquent property taxes receivable (general fund) $ 10,745 $
Delinquent property taxes receivable (library fund) 10,916
Delinquent property taxes receivable (debt service fund) 3,880
Sculpture donation (library fund) 6,000
Total deferred/unearned revenue for governmental funds $ 25.541 $ 6.000
C. Capital Assets
Capital asset activity for the year ended September 30, 2005, was as follows:
Beginning Ending
Balance Additions Deletions Balance
Governmental activities:
Capital assets not
being depreciated:
Land $ 1,637,093 $ 109,115 $ 44,500 $ 1,701,708
Artwork/collectibles 38,632 37,495 76,127
Construction in progress 367,588 169,543 209,725 327,406
Total capital assets,
not being depreciated 2,043,313 316,153 254,225 2,105,241
Capital assets
being depreciated:
Buildings 2,354,136 2,354,136
Improvements other
than buildings 3,064,991 881,738 3,946,729
Equipment 1,798,407 318,626 56,755 2,060,278
Total capital assets
being depreciated 7,217,534 1,200,364 56,755 8,361,143
Less accumulated
depreciation for:
Buildings 357,008 59,175 416,183
Improvements other
than buildings 511,358 162,850 674,208
Equipment 725,832 167,800 32,779 860,853
Total accumulated
depreciation 1,594,198 389,825 32,779 1,951,244
Total capital assets, being
depreciated, net 5,623,336 810,539 23,976 6,409,899
Governmental activities
capital assets, net $ 7.666.649 $ 1.126.692 $ 278.201 $ 8.515.140
Business-type activities:
Capital assets not
being depreciated:
Land $ 17,500 $ $ $ 17,500
-19-
Beginning Ending
Balance Additions Deletions Balance
Business-type activities
(continued):
Capital assets
being depreciated:
Buildings $ 4,040 $ $ $ 4,040
Improvements other
than buildings 308,579 18,654 327,233
Equipment 183,111 6,000 189,111
Total capital assets
being depreciated 495,730 24,654 520,384
Business-type activities
(continued):
Less accumulated
depreciation for:
Buildings 1,220 101 1,321
Improvements other
than buildings 108,293 9,721 118,014
Equipment 31,978 6,996 38,974
Total accumulated
depreciation 141,491 16,818 158,309
Total capital assets, being
depreciated, net 354,239 7,836 362,075
Business-type activities
capital assets, net $ 371.739 $ 7.836 $ $ 379.575
Depreciation expense was charged to functions/programs of the City as follows:
Governmental activities:
General government $ 26,928
Public safety 1,850
Culture and recreation 361,047
Total depreciation expense -
governmental activities $ 389.825
Business-type activities:
Water $ 16.818
D. Interfund Transfers
The composition of interfund transfer balances as of September 30, 2005, is as follows:
Transfer In
Library Debt Service Water Enterprise
Transfer out-general fund $ 45.210 $ 9.583 $ 21.009
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E. Leases
Operating Leases
The City leases office equipment and space under cancelable operating leases. Total
costs for such leases were $16,128 for the year ended September 30, 2005. The future
minimum lease payments for these leases are as follows:
Year Ending
September 30, Amount
2006 $ 13,828
2007 7,641
2008 7,212
2009 4,371
2010 285
$ 33.337
Capital Lease
The City has entered into a lease agreement to financing the acquisition of land with a
down payment of $28,500. This lease agreement qualifies as a capital lease for
accounting purposes. The asset acquired through a capital lease is as follows:
Governmental
Activities
Asset---Land $ 109.115
The future minimum lease obligations and the net present value of these minimum lease
payments as of September 30, 2005, were as follows:
Year Ending Governmental
September 30, Activities
2006 $ 28,500
2007 28,500
2008 28,500
Total minimum lease payments 85,500
Less amount representing interest (4,885)
Present value of minimum
lease payments $ 80.615
F. 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
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bonds currently outstanding are in the amount of $2,110,000. Annual debt service
requirements to maturity for general obligation bonds are as follows:
Year ending _Governmental Activities
September 30, Principal Interest
2006 $ 135,000 $ 101,198
2007 140,000 92,760
2008 150,000 86,670
2009 155,000 80,070
2010 160,000 73,172
2011-2015 930,000 246,233
2016-2017 440,000 32,810
$2.110.000 $ 712.913
Changes in Long-Term Liabilities. Long-term liability activity for the year ended September
30, 2005 was as follows:
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Governmental activities:
General obligation bonds $2,235,000 $ $ 125,000 $2,110,000 $ 135,000
Lease 0 109,115 28,500 80,615 26,082
Compensated absences 65,459 65,281 65,571 65,169 56,558
Governmental activity
Long-term liabilities $2.300.459 $174.396 $ 219.071 $2.255.784 $ 217.640
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.
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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, 2005, 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 $90,122;
$77,738; and $69,540 for the years ended September 30, 2005, 2004 and 2003 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.
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Library Fund
Budgeted
Amounts -
Original .Variance with
and Final Actual Final Budget-
$ 635,374 $ 654,416 $ 19,042
39,000 39,000
25,000 33,283 8,283
6,700 7,341 641
667,074 734,040 66,966
866,614 700,669 165,945
866,614 700,669 165,945
(199,540) 33,371 232,911
61,065 45,210 (15,855)
61,065 45,210 (15,855)
(138,475) 78,581 217,056
161,710 161,710
$ 23,235 $ 240,291 $ 217,056
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State of Idaho
City of Eagle
Schedule of Revenues - Budget and Actual
General Fund
For the Year Ended September 30, 2005
Budgeted Amounts- Variance with
Original Final Actual Final Budget-
Taxes:
Property taxes $ 665,263 $ 665,263 $ 684,549 $ 19,286
Penalties and interest 3,000 3,000 2,237 (763)
Franchise 377,500 457,500 628,249 170,749
Total taxes 1,045,763 1,125,763 1,315,035 189,272
Licenses and permits:
Alcoholic beverages 15,500 15,500 14,029 (1,471)
Business 10,500 10,500 16,858 6,358
Building inspection 779,615 779,615 1,591,965 812,350
Miscellaneous 1,000 1,000 264 (736)
Animal 3,700 3,700 5,003 1,303
Total licenses and permits 810,315 810,315 1,628,119 817,804
Intergovernmental:
Grants 125,000 125,000 4,862 (120,138)
State revenue sharing 745,793 745,793 767,232 21,439
State liquor apportionment 165,000 165,000 243,976 78,976
Inventory phase-out 64,113 64,113 106,945 42,832
VA program 10,250 10,250
Court revenue 60,000 60,000 59,049 (951)
Total intergovernmental 1,159,906 1,159,906 1,192,314 32,408
Charges for services:
Annexation, planning and zoning,
design review, plan review 314,500 314,500 797,872 483,372
Street lights 1,000 1,000 1,120 120
Impact fees 228,000 228,000 659,842 431,842
Impact processing fees 6,840 6,840 4,440 (2,400)
Energy standards 10,150 10,150 41,900 31,750
Saturday market fees 4,000 4,000 10,126 6,126
Park fees 6,500 6,500 7,677 1,177
Total charges for services 570,990 570,990 1,522,977 951,987
Fines:
Code enforcement 1,000 1,000 105 (895)
Miscellaneous:
Interest 28,000 28,000 46,249 18,249
Tree fund 1,000 1,000 511 (489)
Rent 4,000 4,000 3,000 (1,000)
Sale of capital assets 18,136 108,136 89,106 (19,030)
Donations 1,000 1,000 4,680 3,680
Miscellaneous 22,920 22,920 31,031 8,111
Total miscellaneous 75,056 165,056 174,577 9,521
Total general fund $ 3,663,030 $ 3,833,030 $ 5,833,127 $ 2,000,097
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State of Idaho
City of Eagle
Schedule of Expenditures - Budget and Actual
General Fund
For the Year Ended September 30, 2005
Budgeted Amounts- Variance with
Original Final Actual Final Budget-
General government:
Personal services $ 817,508 $ 817,508 $ 856,779 $ (39,271)
Supplies 25,000 25,000 26,493 (1,493)
Other services and charges 1,186,608 1,186,608 637,808 548,800
Capital outlay 620,000 620,000 '59,105 560,895
Total 2,649,116 2,649,116 1,580,185 1,068,931
Election 2,525 2,525 438 2,087
Legal 140,000 140,000 149,744 (9,744)
Total general government 2,791,641 2,791,641 1,730,367 1,061,274
Public safety:
Law enforcement 957,025 957,025 960,577 (3,552)
Inspection 48,720 48,720 114,001 (65,281)
Animal control 25,000 25,000 25,000
Total public safety 1,030,745 1,030,745 1,099,578 (68,833)
Highways and streets:
Street lighting 10,000 10,000 17,971 (7,971)
Other services and charges 10,000 90,000 81,331 8,669
Capital outlay 90,000 90,000 20,609 69,391
Total highways and streets 110,000 190,000 119,911 70,089
Culture and recreation:
Cultural and arts:
Other services and charges 94,675 94,675 69,021 25,654
Capital outlay 51,277 (51,277)
Total cultural and arts 94,675 94,675 120,298 (25,623)
Parks/recreation:
Other services and charges 324,648 324,648 349,461 (24,813)
Capital outlay 958,598 1,048,598 831,940 216,658
Total parks 1,283,246 1,373,246 1,181,401 191,845
Historical commission:
Personal services 1,184 (1,184)
Supplies 200 200 1,134 (934)
Other services and charges 3,200 3,200 5,231 (2,031)
Capital outlay 8,453 8,453 2,012 6,441
Total historical commission 11,853 11,853 9,561 2,292
Library:
Other services and charges 12,978 12,978 12,286 692
Total culture and recreation 1,402,752 1,492,752 1,323,546 169,206
Total general fund $ 5,335,138 $ 5,505,138 $ 4,273,402 $ 1,231,736
_27_
State of Idaho
City of Eagle
Schedule of Revenues and Expenditures- Budget and Actual
Library Special Revenue Fund
For the Year Ended September 30, 2005
Budgeted Amounts- Variance with
Original Final Actual Final Budget-
Revenues:
Taxes:
Property taxes $ 632,874 $ 632,874 $ 652,165 $ 19,291
Penalties and interest 2,500 2,500 2,251 (249)
Total taxes 635,374 635,374 654,416 19,042
Intergovernmental:
City of Boise 39,000 39,000
Fines:
Fines 25,000 25,000 33,283 8,283
Miscellaneous:
Miscellaneous 2,500 2,500 2,532 32
Interest 2,200 2,200 4,469 2,269
Donations 2,000 2,000 340 (1,660)
Total miscellaneous 6,700 6,700 7,341 641
Total library $ 667,074 $ 667,074 $ 734,040 $ 66,966
Expenditures:
Culture and recreation:
Personal service $ 430,924 $ 430,924 $ 447,190 $ (16,266)
Supplies 30,155 30,155 15,446 14,709
Other services and charges 295,180 295,180 135,122 160,058
Capital outlay 110,355 110,355 102,911 7,444
Total culture and recreation $ 866,614 $ 866,614 $ 700,669 $ 165,945
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State of Idaho
City of Eagle
Schedule of Revenues and Expenditures - Budget and Actual
Library G.O. Bond Debt Service Fund
For the Year Ended September 30, 2005
Budgeted Amounts- Variance with
Original Final Actual Final Budget-
Revenues:
Taxes:
Property taxes $ 227,535 $ 227,535 $ 234,180 $ 6,645
Penalties and interest 1,000 1,000 804 (196)
Total taxes 228,535 228,535 234,984 6,449
Miscellaneous:
Interest 1,500 1,500 1,417 (83)
Total revenues $ 230,035 $ 230,035 $ 236,401 $ 6,366
Expenditures:
Principal $ 125,000 $ 125,000 $ 125,000 $
Interest 109,010 109,010 109,010
Payment reserve 19,372 19,372 19,372
Fiscal charges 930 930 840 90
Total expenditures $ 254,312 $ 254,312 $ 234,850 $ 19,462
—29—
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, 2005
Budgeted Amounts- Variance with
Original Final Actual Final Budget-
Revenues:
Sales $ 273,538 $ 273,538 $ 325,055 $ 51,517
Water hookups 42,500 42,500 43,350 850
Revenue sharing 89,106 89,106
Interest 6,566 6,566 1,553 (5,013)
Total revenues $ 322,604 $ 322,604 $ 459,064 $ 136,460
Expenses:
Other services and charges $ 389,700 $ 389,700 $ 351,644 $ 38,056
Capital outlay 46,563 46,563 19,327 27,236
Total expenses $ 436,263 $ 436,263 $ 370,971 $ 65,292
—30—
State of Idaho
City of Eagle
Operation in Tax Rolls
September 30, 2005
Total 2004 2003 2002 2001 2000
Balance - beginning of
year $ 31,140 $ $ 23,338 $ 5,420 $ 2,373 $ 9
Roll charge 1,575,088 1,575,088
Penalties -
Adjustments 6,225 6,208 8 9
1,612,453 1,581,296 23,346 5,429 2,373 9
Collections 1,575,222 1,556,282 13,709 3,808 1,417 6
Adjustments 10,537 7,410 1,033 1,279 812 3
1,585,759 1,563,692 14,742 5,087 2,229 9
Balance - end of year $ 26,694 $ 17,604 $ 8,604 $ 342 $ 144 $ -
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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 Compliance and on Internal Control Over Financial Reporting 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, 2005, which collectively comprise the City of Eagle's basic financial
statements and have issued our report thereon dated December 12, 2005. We conducted our audit in
accordance with auditing standards generally accepted in the United States of America and the
standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States.
Compliance
As part of obtaining reasonable assurance about whether the City of Eagle's financial statements are
free of material misstatement, we performed tests of its compliance with certain provisions of laws,
regulations, contracts, and grants, noncompliance with which could have a direct and material effect on
the determination of financial statement amounts. However, providing an opinion on compliance with
those provisions was not an objective of our audit, and accordingly, we do not express such an opinion.
The results of our tests disclosed no instances of noncompliance that are required to be reported under
Government Auditing Standards.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the 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 assurance on the internal control over financial reporting. Our
consideration of the internal control over financial reporting would not necessarily disclose all matters in
the internal control over financial reporting that might be material weaknesses. A material weakness is
a condition in which the design or operation of one or more of the internal control components does not
reduce to a relatively low level the risk that misstatements in amounts that would be material in relation
to the 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.
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 those specific parties.
e Goa LLP
GIBBONS, SCOTT& DEAN LLP
Certified Public Accountants
December 12, 2005 -32—
MEMBER OF
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
IDAHO SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
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
RECEIVED& FILED
CITY OF EAGLE
MAY 2 V 2008
Honorable Mayor and Members
of the City Council File:
Route to:
City of Eagle
Eagle, Idaho
We have audited the financial statements of the City of Eagle for the year ended September 30, 2005,
and have issued our report thereon dated December 12, 2005.
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, 2005, 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 CERIIMED PUBLIC ACCOUNTANTS
IDAHO SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
During our examination of expenses, we found that the invoices for library expenditures were not
always being submitted to the clerk. Frequently, only the statement was submitted. Since the city is
responsible for paying the bills, the original invoices need to be submitted as well as the statements.
The following represents a schedule of working capital available as of September 30, 2005 and 2004.
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 2005 September 30 2004
Working Percent to Working Percent to
Fund CaCa Expenditures
Capital Expenditures
General $ 3,388,316 79.3%79.3
Library 226,583 32.3% $ 1 937,375 63.9%
151,889 25.2%
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 strong.
The following is a condensed comparative statement of revenues and expenses for the water fund:
Variance-
September 30, Favorable
2005 2004 (Unfavorable)
Operating revenues $ 325,055 $ $ 325,055
Operating expenses:
Other expenses 351,644 107,982 (243,662)
Depreciation
16,818 14,901 (1,917)
Total 368,462 122,883
(245,579)
Operating loss (43,407) (122,883) 79,476
Nonoperating revenues 90,659 2,254
88,405
Net income (loss) $ 47.252 $(120.629) $ 167.881
As you will note the net loss decreased $167,881 over the prior year. This is due to the change in the
accounting of the water revenue and operating expenses. 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.
. LCL„ LLP
GIBBONS, SCOTT& DEAN LLP
December 12, 2005 Certified Public Accountants
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