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Home My WebLink About1999-09-30 Audit Balukoff Lindstrom Financial 9-30-1999Management Letter CITY OF MERIDIAN September 30,1999 BALUKOFF LINDSTROM & Co., P.A. December 13, 1999 Mayor and Members of City Council City of Meridian, Idaho Meridian, Idaho In planning and perfornring our audit of the financial statements of City of Meridian, Idaho, for the year ended September 30, 1999, we considered the City's internal control structure to determine our auditing procedures for the purpose of expressing an opinion on the financial statements and not to provide assurance on the internal control structure. However, during our audit we became aware of opportunities for strengthening internal controls and operating efficiency. The memorandum that accompanies this letter summarizes our comments and suggestions regarding those matters. We previously reported on the City's internal control structure in our report dated December 13, 1999. This letter does not affect our report dated December 13, 1999 on the financial statements of City of Meridian, Idaho. We have already discussed many of these comments and suggestions with various City persomrel, and we will be pleased to discuss them in further detail at your convenience, to perform any additional study of these matters, or to assist you in implementing the recommendations. Very truly yours, Balukoff, Lindstrom & Co., P.A. UTILITY BILLING Analysis of Revenue and Receivables Condition: An analysis is not completed after each billing cycle to compare current month revenues with prior year or prior months. Recommendation: A trend analysis and comparison with prior months and years should be completed after each billing cycle to determine whether revenues for water, sewer, and trash are reasonable. Any significant variances should be researched. Response: We agree with this recommendation. ACCOUNTING SYSTEM Reconciliation of Balance Sheet Accounts Condition: Balance sheet accounts are not reconciled to supporting documentationon a monthly basis. Recommendation: Balance sheet accounts should be reconciled on a monthly basis, to subsidiary ledgers or supporting documentation. The financial statements should be available monthly at the council meetings to be used as a management tool by the Mayor and Council. Response: The City Treasurer plans to reconcile significant balance sheet accounts each month and provide financial statements to the City Council. Journal Entries Condition: Journal entries to the general ledger are not reviewed or approved by the City Treasurer prior to recording. Recommendation: All journal entries should be reviewed and approved by the City Treasurer before posting to the general ledger. All journal entries should be supported by proper documentation. Response: The City Treasurerwill review and approve the journal entries before they are posted. -2- FIXED ASSETS Physical Inventory Condition: There has not been a physical inventory of fixed assets taken for several years. Recommendation: A complete physical inventory should be taken by each department and reconciled to the assets recorded in the general ledger. Response: The City began tagging all fixed assets in February of 1999 and will complete the physical inventory by then end of fiscal year 2000. Contributed Capital Condition: There is currently no policy for tracking and recording contributed capital. Recommendation: Once the Building Department is contacted by the contributor for final inspection, a notice should be sent to the contributor requesting documentation of the description and value for the property. The final inspection should be completed once this information is received. Each month the Building Department should send letters and final inspection documentation to Reta in the Accounting Department. At the end of the year, all uncompleted projects should be reconciled to verify that contributed capital is not understated. Response: The City Treasurer will develop and implement policies and procedures for tracking and recording contributed capital. LATECOMER AGREEMENTS Condition: The City does not have a system in place to track latecomer fees. This has allowed the City to over collect on some latecomer agreements and reimbursements to developers for their percentage of fees collected have not been made on a timely basis. Recommendation: Each latecomer agreement should be tracked on a monthly basis. No fees should be collected from builders unless a latecomer contract has been recorded or the City Council has approved that latecomer fees should be assessed. The City should also track receipt of fees on a monthly basis and pay developers their portion of the fees collected. A yearly interest calculation should be completed (if applicable) and properly recorded. -3- Response: The City has set up a system to track each latecomer agreement. Each month the City records all receipts from builders on a calculation worksheet. At the end of each month the City reimburses developers for their portion of latecomer fees that have been collected. At the end of each fiscal year the City will calculate interest on each agreement and will increase the receivable accordingly. If amounts are collected from builders without a latecomer agreement in place the accounting department will inform the building department so an agreement or Council approval can be obtained. M To the Mayor and Members of City Council of City of Meridian, Idaho December 13, 1999 We have audited the general purpose financial statements of City of Meridian, Idaho for the year ended September 30, 1999, and have issued our report thereon dated December 13, 1999. Professional standards require that we provide you with the following information related to our audit. Our Responsibility under Generally Accepted Auditing Standards As stated in our engagement letter dated May 26, 1999, our responsibility, as described by professional standards, is to plan and perform our audit to obtain reasonable, but not absolute, assurance about whether the general purpose financial statements are free of material misstatement and are fairly presented in accordance with generally accepted accounting principles. Because of the concept of reasonable assurance and because we did not perform a detailed examination of all transactions, there is a risk that material errors, fraud, or other illegal acts may exist and not be detected by us. As part of our audit, we considered the internal control of City of Meridian, Idaho. Such considerations were solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control. Significant Accounting Policies Management has the responsibility for selection and use of appropriate accounting policies. In accordance with the terms of our engagement letter, we will advise management about the appropriateness of accounting policies and their application. The significant accounting policies used by City of Meridian, Idaho are described in Note A to the general purpose financial statements. We noted the following policy change during 1999 that is not required to be disclosed in the financial statements. The threshold for capitalizing fixed assets was increased from $500 to $1,000. j:\data\client files\meridian, city ot\fiscal year 1999\auditbvorkpapers\report file\auditcom.doc Mayor and Members of City Council City of Meridian, Idaho Page 2 Accounting Estimates Accounting estimates are an integral part of the general purpose financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the general purpose financial statements and because of the possibility that future events affecting them may differ significantly from those expected. Significant Audit Adjustments For purposes of this letter, professional standards define a significant audit adjustment as a proposed correction of the general, purpose financial statements that, in our judgment, may not have been detected except through our auditing procedures. These adjustments may include those proposed by us but not recorded by the City of Meridian, Idaho that could potentially cause future financial statements to be materially misstated, even though we have concluded that such adjustments are not material to the current financial statements. We proposed the following adjustments that were material to the financial statements. A prior period adjustment of $265,000 was made in the Enterprise Fund to properly account of the accrual of latecomers fees payable to customers and developers from prior years. A second prior period adjustment for $237,782 was made in the Enterprise Fund to properly account for the accrual of sanitation contractual services from the prior year. Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter that could be significant to the general purpose financial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit. Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the governmental unit's general purpose financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Mayor and Members of City Council City of Meridian, Idaho Page 3 Issues Discussed Prior to Retention of Independent Auditors We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City of Meridian, Idaho's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing our audit. This information is intended solely for the use of City Council and management of City of Meridian, Idaho and should not be used for any other purpose. However, this report is a matter of public record, and its distribution is not limited. Very truly yours, Balukoff, Lindstrom & Co., P.A. Financial Statements CITY OF MERIDIAN, IDAHO September 30, 1999 TABLE OF CONTENTS Page No. INDEPENDENT AUDITORS'REPORT................................................................ 1 GENERAL PURPOSE FINANCIAL STATEMENTS Combined Balance Sheet - All Fund Types and Account Groups ......................... 3 Combined Statement of Revenues, Expenditures and Changes in Fund Balance- All Governmental Fund Types .................................................. 7 Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - General Fund ..................................................... 8 Statement of Revenues, Expenses and Changes in Retained Earnings - Enterprise Fund................................................................. 9 Statement of Cash Flows - Enterprise Fund........................................................... 10 Notes to Financial Statements............................................................................... 11 OTHER FINANCIAL INFORMATION General Fund Statement of Expenditures - Budget and Actual ................................................ 26 Statement of Revenues - Budget and Actual ....................................................... 29 Enterprise Fund Statement of Revenues - (Non -GAAP Budgetary Basis) Budget and Actual..... 31 Statement of Expenses - (Non -GAAP Budgetary Basis) Budget and Actual ..... 32 Other Operationin Tax Rolls........................................................................................ 33 OTHER INFORMATION Independent Auditors' Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of General Purpose Financial Statements Performed in Accordance with GovernmentAuditing Standards..... 35 Scheduleof Findings............................................................................................... 37 BALUKOFF LINDSTROM & Co., P.A. INDEPENDENT AUDITORS' REPORT Mayor and Members of the City Council City of Meridian, Idaho (9 Meridian, Idaho We have audited the accompanying general purpose financial statements of City of Meridian, Idaho, as of and for the year ended September 30, 1999, as listed in the table of contents. These general purpose financial statements are the responsibility of the management of City of Meridian, Idaho. Our responsibility is to express an opinion on these general purpose financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and 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 general purpose 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 general purpose financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. i In our opinion, the general purpose financial statements referred to above present fairly, in all material respects, the financial position of the City of Meridian, Idaho, as of September 30, 1999, and the results of its operations and the cash flows of its proprietary fund types for the year ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued a report dated December 13, 1999, on our consideration of City of Meridian's internal control over financial reporting and on our tests of its compliance with certain provisions of laws and regulations. -1- Mayor and Members of the City Council City of Meridian, Idaho Meridian, Idaho Our audit was performed for the purpose of forming an opinion on the general purpose financial statements of the City of Meridian, Idaho, taken as a whole. The other financial information listed in the table of contents is presented for purposes for additional analysis and is not a required part of the financial statements of the City of Meridian, Idaho. Such information has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the general purpose financial statements taken as a whole. December 13, 1999 -2- Account Groups General General Fixed Long -Term Assets Debt Totals (Memorandum Only) 1999 1998 $ $ $ 5,754,733 $ 15,875,331 30,883,293 18, 83 8,496 1,770,319 1,534,885 4,151,486 3,746,026 30,312 35,675 616,234 386,796 11,649 246,366 147,354 3,555 - 556,414 110,655 208,686 211,650 10,932 7,235 3,918,555 - 10,992,214 10,579,819 2,130,196 - 4,155,509 2,860,735 _ - 31,443,044 27,283,376 2,244,774 - 6,534,519 5,902,669 470,337 - 6,163,930 2,699,785 _ - (10,342,207) (9,175,668) - 178,101 178,101 129,307 $ 8,763,862 $ 178,101 $ 93,369,089 $ 81,174,126 See accompanying notes -4- I Account Groups General General Totals Fixed Long -Term (Memorandum Only) Assets 1 s Debt 1999 1998 $ $ $ 2,240,008 $ 1,243,358 - 181,297 166,174 161,361 215,442 152,485 - 1,473 2,790 4,063,990 3,608,451 j -190,000 170,000 6,402 6,402 6,037 - 70,678 110,655 _ - 190,000 10,338 10,338 16,740 178,101 6,979,628 5,666,690 8,763,862 - 8,763,862 7,306,150 _ - 47,770,400 41,756,298 9 _ - 219,618 218,885 _ - 19,648,942 17,259,724 _ _ 485,736 107,745 _ - 471,011 446,875 } _ - 734,565 280,389 l _ 8,295,327 8,131,370 _ - 29,855,199 26,444,988 8,763,862 - 86,389,461 75,507,436 $ 8,763,862 $ 178,101 $ 93,369,089 $ 81,174,126 See accompanying notes -6- CITY OF MERIDIAN, IDAHO COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - ALL GOVERNMENTAL FUND TYPES Year Ended September 30, 1999 With Comparative Totals for 1998 REVENUES Taxes Licenses and permits Intergovernmental Fines and forfeitures Charges for services Interest Miscellaneous TOTAL REVENUES EXPENDITURES General government Public safety Highway and streets Culture and recreation Capital outlay TOTAL EXPENDITURES EXCESS OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES Capital lease - EXCESS OF REVENUES AND OTHER FINANCING SOURCES OVER EXPENDITURES FUND BALANCE AT BEGINNING OF YEAR FUND BALANCE AT END OF YEAR Governmental Fund Types Totals Capital (Memorandum Only) General Projects 1999 1998 $ 3,642,678 $ - $ 3,642,678 $ 3,281,848 1,496,721 - 1,496,721 1,367,901 1,776,513 - 1,776,513 1,558,149 5,572 - 5,572 5,185 1,171,024 - 1,171,024 2,826,614 413,307 24,136 437,443 480,497 111,064 - 111,064 42,991 8,616,879 24,136 8,641,015 9,563,185 1,275,847 - 1,275,847 924,368 4,332,160 - 4,332,160 5,179,536 81,826 - 81,826 70,150 444,434 - 444,434 300,965 1,486,488 - 1,486,488 1,305,492 7,620,755 - 7,620,755 7,780,511 996,124 24,136 1,020,260 1,782,674 - - - 22,777 996,124 24,136 1,020,260 1,805,451 8,519,504 446,875 8,966,379 7,160,928 $ 9,515,628 $ 471,011 $ 9,986,639 $ 8,966,379 See accompanying notes 7 CITY OF MERIDIAN, IDAHO STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - GENERALFUND Year Ended September 30, 1999 REVENUES Taxes Licenses and permits Intergovernmental Fines and forfeitures Charges for services Interest Miscellaneous TOTAL REVENUES EXPENDITURES General government Public safety Highways and streets Culture and recreation Capital outlay TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES FUND BALANCE AT BEGINNING OF YEAR FUND BALANCE AT END OF YEAR See accompanying notes - 8 - 8,519,504 $ 9,515,628 General Fund Variance Favorable Budget Actual (Unfavorable) $ 3,627,402 $ 3,642,678 $ 15,276 1,346,973 1,496,721 149,748 1,905,558 1,776,513 (129,045) 6,000 5,572 (428) 1,046,679 1,171,024 124,345 96,000 413,307 317,307 31,140 111,064 79,924 8,059,752 8,616,879 557,127 1,628,394 1,275,847 352,547 4,545,233 4,332,160 213,073 92,000 81,826 10,174 506,886 444,434 62,452 2,663,704 1,486,488 1,177,216 9,436,217 7,620,755 1,815,462 $(1,376,465) 996,124 $ 2,372,589 See accompanying notes - 8 - 8,519,504 $ 9,515,628 I OPERATING REVENUES Charges for services Water revenues Sewer revenues Sanitation revenues Sale of meters Latecomers fees Miscellaneous OPERATING EXPENSES Personal services Other services and charges Depreciation Supplies Heat, lights and power Contractual services CITY OF MERIDIAN, IDAHO STATEMENT OF REVENUES, EXPENSES AND CHANGES IN RETAINED EARNINGS - ENTERPRISE FUND Year Ended September 30, 1999 With Comparative Totals for 1998 TOTAL OPERATING REVENUES TOTAL OPERATING EXPENSES OPERATING INCOME NONOPERATING REVENUES (EXPENSES) Interest revenue Loss on sale of investments Net decrease in fair value of investments Interest expense TOTAL NONOPERATING REVENUES NET INCOME Add depreciation of fixed assets that reduces contributed capital INCREASE IN RETAINED EARNINGS RETAINED EARNINGS AT BEGINNING OF YEAR, as restated RETAINED EARNINGS AT END OF YEAR See accompanying notes -9- 1999 1998 $ 2,585,074 $ 2,299,755 2,393,808 2,266,262 - 1,516,608 178,820 186,577 328,599 429,947 33,415 44,928 - 5,519,716 6,744,077 1,765,705 1,487,141 1,187,742 884,088 1,166,539 949,471 246,664 82,564 129,485 114,028 - 1,731,608 4,496,135 5,248,900 1,023,581 1,495,177 1,302,482 1,206,818 (3,228) - (69,056) (2,008) (32,863) (47,120) 1,197,335 1,157,690 2,220,916 2,652,867 434,035 350,958 2,654,951 3,003,825 17,213,609 14,209,784 $ 19,868,560 $ 17,213,609 CITY OF MERIDIAN, IDAHO STATEMENT OF CASH FLOWS - ENTERPRISE FUND Year Ended September 30, 1999 With Comparative Totals for 1998 1999 1998 CASH FLOWS FROM OPERATING ACTIVITIES Operating income $ 1,023,581 $ 1,732,959 Adjustments to reconcile operating income to net cash provided by operating activities Depreciation 1,166,539 949,471 Changes in assets and liabilities Accounts receivable (172,746) (36,390) Assessments and interest receivable 5,363 29,410 Due from other governments 13,553 (13,553) Prepaid items 1,094 Accounts payable (26,540) 326,148 Accrued payroll and taxes 6,066 36,782 Customer deposits (47,710) 39,954 NET CASH PROVIDED BY OPERATING ACTIVITIES 1,968,106 3,065,875 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Payments on bonds payable (170,000) (160,000) Interest paid (34,180) (48,360) Contributed capital 2,855,915 2,713,413 Acquisition of capital assets (4,912,898) (2,586,259) NET CASH USED BY CAPITAL AND RELATED FINANCING ACTIVITIES (2,261,163) (81,206) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investments (25,487,768) (7,057,472) Sale of investments 17,057,661 - Interest received 1,234,772 1,145,284 NET CASH USED BY INVESTING ACTIVITIES (7,195,335) (5,912,188) NET DECREASE IN CASH AND CASH EQUIVALENTS (7,488,392) (2,927,519) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 11,065,213 13,992,732 CASH AND CASH EQUIVALENTS AT END OF YEAR $ 3,576,821 $ 11,065,213 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Developer and customer contributed sewer and water lines $ 3,592,222 $ 5,859,201 See accompanying notes -10- CITY OF MERIDIAN, IDAHO NOTES TO FINANCIAL STATEMENTS September 30, 1999 NOTE A - SUMMARY OF SIGNIFICANTACCOUNTINGPOLICIES City of Meridian, Idaho (City) was incorporated August, 1903. The City operates under a mayor and council form of government and provides the following services as authorized by its charter: public safety (police and fire), streets, culture and recreation, planning and zoning, and general administrative services. The financial statements of the City have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The significant accounting policies are described below. The accounting and reporting policies of the City relating to the funds and account groups included in the accompanying combined financial statements conform to generally accepted accounting principles applicable to state and local governments. Generally accepted accounting principles for local governments include those principles prescribed by the GASB, the American Institute of Certified Public Accountants in the publication entitled Audits of State and Local Governmental Units and by the Financial Accounting Standards Board (when applicable). As allowed in Section P80 of GASB's Codification of Governmental Accounting and Financial Reporting Standards, the City has elected not to apply to its proprietary activities Financial Accounting Standards Board Statements and Interpretations, Accounting Principles Board Opinions, and Accounting Research Bulletins of the Committee of Accounting Procedure issued after November 30, 1989. Financial Reporting Entity As required by generally accepted accounting principles, these general purpose financial statements present the City in conformance with GASB Statement No. 14, "The Financial Reporting Entity." Under Statement No. 14, component units are organizations that are included in the reporting entity because of the significance of their operational or financial relationships with the City. 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. The City contributes to the multi-employer Public Employer Retirement System of Idaho (the System). The System is administered by the State of Idaho and the City is not the major participant in the plan; therefore, the plan financial statements are not included in this report. -11- CITY OF MERIDIAN, IDAHO NOTES TO FINANCIAL STATEMENTS September 30, 1999 Fund Accounting The accounts of the City are organized on the basis of funds and account groups, each of which is considered a separate accounting entity. The operations of each fund are accounted for within a separate set of self -balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses, as appropriate. Government resources are allocated to, and accounted for in individual funds based upon the purposes for which they are to be spent and the years by which spending activities are controlled. The various funds are grouped, in the financial statements in this report, into two fund types and one account group as follows: Governmental Funds General Fund - The General Fund is the general operating fund of the City. It is used for all financial resources except those required to be accounted for in another fund. Capital Projects Fund- The Capital Projects Fund is used to account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by proprietary funds). Proprietary Fund Enterprise Fund —The Enterprise Fund is used to account for operations financed and operated in a manner similar to private business when the intent of the governing body is that costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges, or the governing body has decided that periodic determination of revenues earned, expenditures incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability or other purposes. Account Groups The account groups are used to establish accounting control and accountability for the City's general fixed assets and general long-term obligations. Because these assets and obligations are long-term, they are not spendable resources and do not require current appropriation. These account groups are not funds since they only measure financial position and not operations. General Fixed Assets Account Group - To account for all fixed assets required for general City purposes, excluding fixed assets of the proprietary funds. General Long -Term Debt Account Group — To account for long-term obligations of the City, except for those accounted for in proprietary and trust funds. This group includes the long-term obligations of the City for certain capital leases and accrued vacation. -12- CITY OF MERIDIAN, IDAHO NOTES TO FINANCIAL STATEMENTS September 30, 1999 Measurement Focus The accounting and reporting treatment applied to a fund is determined by its measurement focus. Governmental funds are accounted for on a spending or "financial flow" measurement focus. This means that only current assets and current liabilities are generally included on the balance sheet. Governmental fund operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. All proprietary funds are accounted for on a cost of services or 'capital maintenance" measurement focus. This means that all assets and all liabilities (whether current or non-current) associated with this activity are included on their balance sheets. Their reported fund equity (net total assets) is segregated into contributed capital and retained earnings components. Proprietary fund type V operating statements present increases (revenues) and decreases (expenses) in net total assets. Basis of Accountin Basis of accounting refers to when revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurement made, regardless of the measurement focus applied. Governmental funds are accounted for using the modified accrual basis of accounting. The revenues are recognized when they become measurable and available as net current assets. Expenditures are generally recognized under the modified accrual basis of accounting when the related fund liability is incurred. Proprietary funds are accounted for using the accrual basis of accounting. Revenues are recognized when earned and expenses are recognized when incurred. Budgets and Budgetary Accounting The City follows these procedures in establishing the budgetary data reflected in the financial statements: Prior to September 1, the City Clerk, Mayor and City Council prepare a proposed operating budget for the fiscal year commencing on October 1. The operating budget includes proposed expenditures and the means of financing them. Public hearings are conducted at City Hall to obtain taxpayer comments. Prior to October 1, the budget is legally enacted through passage of an ordinance. -13- CITY OF MERIDIAN, IDAHO NOTES TO FINANCIAL STATEMENTS September 30, 1999 Budgets are adopted on a basis consistent with generally accepted accounting principles (GAAP) for the general fund. Budgets for enterprise funds are not legally required but are adopted on a non - GAAP basis. All annual appropriations lapse at fiscal year-end. The City Clerk is authorized to transfer budget amounts within departments and between departments within any fund. Revisions that alter the total expenditure appropriation of any fund must be approved by the City Council. State law does not allow fund expenditures to exceed fund appropriations. i Formal budgetary integration is employed as a management control device during the year for all funds. Cash and Cash Equivalents For purposes of the statement of cash flows, the proprietary funds consider .all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Investments Idaho. Code provides authorization for the investment of funds as well as specific direction as to what constitutes an allowable investment. City policy is consistent with this direction. The City currently invests in interest bearing bank accounts, certificates of deposit and U.S. Government and U.S. Government Agency bonds. Property Taxes Receivable and Deferred Revenue Property taxes are recognized as revenue when the amount of taxes levied is measurable, and proceeds are available to finance current period expenditures. Available tax proceeds includes property tax receivables expected to be collected within sixty days after year end. Property taxes attach as liens on properties on January 1, and are levied in September of each year. Tax notices are sent to taxpayers during November, with tax payments scheduled to be collected on or before December 20. Taxpayers may pay all or one half of their tax liability on or before December 20, and if one half of the amount is paid, they may pay the remaining balance by the following June 20. Since the City is on a September 30 fiscal year end, property taxes levied during September for the succeeding year's collection are recorded as deferred revenue at the City's year end and recognized as revenue in the following fiscal year. Ada County bills and collects taxes for the City. Customer Services Receivable Amounts owed to the City for customer services are due from area residents and businesses and relate to water, sewer and trash services provided by the City. -14- CITY OF MERIDIAN, IDAHO NOTES TO FINANCIAL STATEMENTS September 30, 1999 Property Plant and Equipment General Fixed Assets Fixed assets used in governmental fund type operations (general fixed assets) are accounted for in the General Fixed Asset Account Group, rather than in governmental funds. All material fixed assets are valued at cost. Donated fixed assets are valued at their estimated fair value on the date donated. No depreciation has been provided on general fixed assets. Public domain fixed assets consisting of roads, bridges, streets and sidewalks, and lighting systems are not capitalized. There are no public domain (infrastructure)assets included in the General Fixed Asset Account Group. Enterprise Fund Fixed Assets Capital additions, improvements and major renewals are classified as property, plant and equipment and are recorded at cost. Depreciation is recorded by use of the straight-line method. The book value of each asset is reduced by equal amounts over its estimated useful life as follows: Estimated Useful Life (Years) Buildings 30 Sewer plant 25 Sewer and water lines 50 Improvements other than buildings 10-50 Equipment 5-20 Maintenance, repairs and minor renewals are charged to operations as incurred. When an asset is disposed of, accumulated depreciation is deducted from the original cost, and any gain or loss arising from its disposal is credited or charged to operations. Compensated Absences Payable The City provides vacation and sick leave to its full-time employees. Earned vacation is paid to employees when taken or paid to employees or beneficiaries upon the employees' termination, retirement or death. The City does not pay earned sick pay upon the employees' termination, retirement or death. The amount of unused vacation accumulated by City employees is accrued as expense when incurred in the Proprietary Fund, which use the accrual basis of accounting. In the Governmental Funds, only the amount that normally would be liquidated with expendable available financial resources is accrued as current year expenditures. Unless it is anticipated that compensated absences will be used in excess of a normal years accumulation, no additional expenditures are accrued. Therefore, the entire unpaid liability for the Governmental Funds is recorded in the General Long -Term Debt Account Group. -15- CITY OF MERIDIAN, IDAHO NOTES TO FINANCIAL STATEMENTS September 30, 1999 Bonded Indebtedness _ Revenue bonds are issued to provide funding for construction of water fund capital items. Revenues collected from water service fees are the primary source of monies to retire the bonds. Comparative Data Comparative total data for the prior year have been presented in selected sections of the accompanying financial statements in order to provide an understanding of the changes in the t government's financial position and operations. Total Columns on the Combined Statements Total columns on the Combined Statements are captioned Memorandum Only to indicate they are presented only to facilitate financial analysis. Data in these columns does not present financial position. Neither is such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data. Risk Management The City is exposed to various risks of loss related to theft of, damage to, or destruction of assets. The City participates in a public entity risk pool, Idaho Counties Risk Management Pool (ICRMP), for liability, medical and disability insurance. The City's exposure to loss from its participation in ICRMP is limited only to the extent of their deductible. The City also partially self -insures health and accident insurance. Each fund accounts for uninsured risks of loss. Self-insurance is limited to the difference between the deductible paid by the employee and the deductible covered by the insurance policy. Fund Equity Contributions The following transactions are recorded as contributions in the Enterprise Fund: • Receipts of Federal grants for acquisition of fixed assets, net of the related accumulated depreciation. • Contributions from developers, customers and other governments for the acquisition of fixed assets normally capitalized by the City. -16- CITY OF MERIDIAN, IDAHO NOTES TO FINANCIAL STATEMENTS September 30, 1999 Reserved Fund Balance Reservations of fund balance represent amounts that are not appropriable or are legally segregated for a specific purpose. Reservations of retained earnings are limited to outside third -party restrictions. Designations of fund balance represent tentative management plans that are subject to change. The proprietary fund's contributed capital represents equity acquired through capital grants and capital contributions from developers, customers or other funds. The City has established reserves to account for the resources received from donors for future park improvements. The City has also established a reserve to account for future fire truck purchases. Encumbrances Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is not employed by the City. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. NOTE B - DEPOSITS AND INVESTMENTS At year end, the carrying amount of the City's deposits was $6,311,147 and the bank balance was $6,843,999. Of the bank balance, $300,000 was covered by federal depository insurance and $6,543,999 was uninsured and uncollateralized. All cash is held in national financial institutions with branch offices located in Ada County, Idaho. Investments are categorized into these three categories of credit risk: 1. Insured or registered, or securities held by the entity or its agent in the entity's name. 2. Uninsured and unregistered, with securities held by the counterparty'strust department or agent in the entity's name. 3. Uninsured and unregistered, with securities held by the counterparty, or by its trust department or agent but not in the entity's name. -17- CITY OF MERIDIAN, IDAHO NOTES TO FINANCIAL STATEMENTS September 30, 1999 At year end, the government's investment balances were as follows: Certificates ofdeposit $ 400,000 Money market accounts -- U.S. Government securities U.S. Government Agency Repurchase agreements 400,00 Investments not required to be categorized due to their nature Investment in State of Idaho General Category Farr 2 3 Cost Value $10,443,300 $ -- $10,843,300 $10,843,300 - 155,482 155,482 155,482 19,149,997 19,149,997 19,061,845 208,099 208,099 208,686 572,666 -- 572,666 5722666 $11,015,96 30,929,544 30,841,979 Fund Investment Pool 250,000 250,000 Total investments $31,179,544 $31091,979 A reconciliation of cash and investments as shown on the combined balance sheet follows: Cash and cash equivalents Cash and cash equivalents - restricted Investments Investments - restricted Total Cash on hand Fair value of deposits Fair value of investments Total I I -18- $ 5,754,733 556,414 30,883,293 208,686 $ 37,403,126 $ 1,837 6,309,310 31,091,979 $ 37 403,126 I I CITY OF MERIDIAN, IDAHO NOTES TO FINANCIAL STATEMENTS September 30, 1999 NOTE C - DUE FROM OTHER GOVERNMENTAL UNITS The following summarizesthe intergovernmentalreceivablesat September 30,1999: State of Idaho Revenue sharing Liquortax Rural fire district Ada County Total NOTE D - CHANGES IN GENERAL FIXED ASSETS $ 271,122 22,988 248,676 73,448 616 234 Changes to general fixed assets are as follows: Balance Balance Oct. 1, Sept. 30, 1998 Additions Deletions 1999 Land and buildings $ 3,712,791 $ 205,764 $ $ 3,918,555 Improvements other than buildings 866,552 1,263,644 2,130,196 Equipment 1,946,384 327,166 28,776 2,244,774 Construction in progress 780,423 426,082 736,168 470,337 $ 7,306,150 $ 2,222,656 $ 764,944 $ 8,763.862 f NOTE E -BONDS PAYABLE Revenue Bonds The 1985 $1,542,000 Water and Sewer serial bonds are due in annual installments of $17,000 to $190,000 through September 1, 2000, with interest at 9.30% payable semi-annually. The balance due at September 30, 1999 is $190,000. Revenues from water and sewer are pledged as collateral. There are a number of limitations and restrictions contained in the bond indenture. The City is in compliance with all significant limitations and restrictions. -19- CITY OF MERIDIAN, IDAHO NOTES TO FINANCIAL STATEMENTS September 30, 1999 The annual requirementsto amortize all debt outstanding as of September 30, 1999, are as follows: Fiscal Year Principal Interest Total 2000 $ 190,000 $ 17,670 $ 207,670 Refunded Debt -- The City has refunded water and sewer revenue bonds. The proceeds of the bond refunding issue, together with additional cash have been invested in U.S. Government obligations and placed in an irrevocable refunding escrow by the City. The maturing principal and interest of these investments will be used to pay the principal and interest of the redeemed bond issue as those payments fall due. As a result, the 1977 revenue bond is considered defeased and the City has removed the liability from the financial statements. At September 30, 1999, the outstanding principal of the defeased bond is $450,000. NOTE F — CAPITAL LEASES The City entered into a capital lease agreement for the acquisition of a tractor. The lease has a term of five years with monthly payments of $602 and an interest rate of 5.9%. Assets acquired through capital leases are as follows: Balance Oct. 1, 1998 Assets under capital lease $ 25,791 Balance Sept. 30, Additions Deletions 1999 The future minimum lease obligation and the net present value of the minimum lease payments as of September 30, 1999 are as follows: Fiscal Year $ Principal Interest Total 2000 $ 6,402 $ 816 $ 7,218 2001 6,790 428 7,218 2002 32548 61 3,609 16,74 $ 1,305 $ 18,045 -20- CITY OF MERIDIAN, IDAHO NOTES TO FINANCIAL STATEMENTS September 30, 1999 NOTE G - DEFINED BENEFIT PENSION PLAN 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. Designed as a mandatory system for eligible state and school district employees, the legislation provided for 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 year of credited service, the annual service retirement allowance is 1.917% or 2.225% (depending upon employee classification) of the average monthly salary for the highest consecutive 42 months. For PERSI's year ended June 30, 1999, the required contribution rates, as determined by PERSI, are as follows: General Member Police and Fire Member Employee Employer 5.86% 9.77% 7.21% 10.01% Contributions required and paid were $437,103, $367,556, and $340,854 for the three years ended September 30, 1999, 1998, and 1997, respectively. NOTE H - SEGMENT INFORMATION Enterprise Funds The City maintains one enterprise fund. The Water/Sewer fund accounts for the provision of basic utility service (water, sewer services) to substantially all residents. Selected segment information for the year ended September 30, 1999 is as follows: Fixed asset additions $ 8,505,120 Fixed asset deletions $ -- Net working capital $ 27,454,685 Capital contributions $ 2,882,155 -21- CITY OF MERIDIAN, IDAHO NOTES TO FINANCIAL STATEMENTS September 30, 1999 NOTE I - CONTRIBUTED CAPITAL The changes in the City's contributed capital accounts for its proprietary funds were as follows: Balance at October 1, 1998 $ 41,756,298 Contribution sources Customers 2,882,155 Developers 3,565,982 Depreciation on contributed fixed assets(434,035) Balance at September 30, 1999 $ 47 770,400 NOTE J - RESERVED RETAINED EARNINGS AND RESTRICTED ASSET ACCOUNTS The City's ordinances and bond covenants require investment reserves and restriction of the Water and Sewer Fund's retained earnings. The reserved portion is as follows: Reserved for bond retirement $ 219,61 The balances of the City's restricted assets accounts in the enterprise funds are as follows: Deposits to be paid to customers $ 11,520 Bond retirement reserves 219,618 Total restricted assets $ 231,13 NOTE K - OTHER COMMITMENTS The City has the following commitments at September 30,1999: Commitment Amount Purpose Benton Construction $ 533,495 Fire Station ZGA $ 21,207 Municipal Center Hydro Logic $ 1,250 Well #20 McAlvain Construction $ 417,803 Ustick Reservoir storage tank CH2M Hill $ 30,000 Ustick Reservoir construction Turn Key Inc. $3,473,500 Tpad/Clarifier and Dewatering project Keller and Associates $ 49,220 Aeration Basin project and S 19, 20, and 21 electrical projects Ankegam Construction $ 30,000 Dewatering project and S 19, 20, 21 electrical projects Carollo Engineers $ 52,573 Dewatering project JUB Engineers $ 46,913 Waterline extension -22- CITY OF MERIDIAN, IDAHO NOTES TO FINANCIAL STATEMENTS September 30, 1999 Bitterroot Construction $ 159,597 Ustick waterline project Gary Voigt $ 101,565 I-84 crossing project Brown Construction $ 694,876 Overland/Eagle Phase I and II NOTE L - CONTINGENTLIABILITIES The City has been named as a defendant in various legal actions, the results of which are not presently determinable. However, in the opinion of the City Attorney, the amount of losses that might be sustained, if any, would not materially affect the City's financial position. Under the terms of federal and state grants, periodic audits are required and certain costs may be questioned as not being appropriate expenditures under the terms of the grants: Any disallowed claims, including amounts already collected, could become a liability of .the City. City management believes disallowances, if any, will not be material. NOTE M - YEAR 2000 ISSUE The Year 2000 issue is the result of shortcomings in many electronic data processing systems and other electronic equipment that may adversely affect the government's operations. The City has completed an inventory of computer systems and other electronic equipment that may be affected by the Year 2000 issue and that are necessary to conducting City operations. The City has identified the following systems requiring year 2000 remediation: Financial reporting. The City implemented Micro Information Products Non -Profit Series (MIP), a governmental accounting software program, in November 1998. This accounting system accepts dates into the year 2000 and beyond. The utility billing accounting system was replaced in June of 1999 and is year 2000 compliant. Testing and validation of these systems was completed when the hardware and software was installed. i Traffic control system. Ada County Highway District provides the traffic control system located in the City. Ada County Highway District is responsible for remediating the traffic control system. Property tax collection. Ada County collects property taxes for distribution to the City. Ada County is responsible for remediating the tax collection system. A 911 police and fire emergency reporting system. Ada County provides the 911 police and fire emergency system for the City. Ada County is responsible for remediating the 911 police and fire reporting system. Water and sewer treatment and processing. The City owns a water and sewer treatment plant. New software was installed in the computer systems at the plant for compliance. Validation and testing of these systems has been completed. -23- CITY OF MERIDIAN, IDAHO NOTES TO FINANCIAL STATEMENTS September 30, 1999 Payroll. The City is responsible for processing of payroll and sends this information to the bank for payment to employees. Farmers and Merchants Bank is responsible for remediating their systems which handle the payment of funds to City employees through manual checks or direct deposit. The implementation of MIP in November 1998 allowed the City to be year 2000 compliant in the processing of payroll. The MIP software allows the City to issue payroll checks to employees if the Farmers and Merchants Bank system is not compliant. Streetlighting. The streetlights are activated by light sensors which are the responsibility of the City. The sensors draw power provided by Idaho Power. Idaho Power is responsible for remediating the power system used to run the streetlights. Because of the unprecedented nature of the Year 2000 issue, its effects and the success of related remediation efforts will not be fully determinable until the year 2000 and thereafter. Management cannot assure that the City is or will be year 2000 ready, that the remediation efforts will be successful in whole or in part, or that parties whom the City does business will be year 2000 ready. NOTE N — PRIOR PERIOD ADJUSTMENT A prior period adjustment of $265,000 was made in the Enterprise Fund to properly account for the accrual of latecomers fees payable to customers and developers from prior years. A second prior period adjustment for $237,782 was made in the Enterprise Fund to properly account for the accrual of sanitation contractual services from the prior year. -24- OTHER FINANCIAL INFORMATION I CITY OF MERIDIAN, IDAHO STATEMENT OF EXPENDITURES - BUDGET AND ACTUAL - GENERAL FUND Year Ended September 30, 1999 -26- Variance Favorable Budget Actual (Unfavorable) GENERAL GOVERNMENT Legislative $ 24,000 $ 24,042 $ (42) Personal services 75,000 26,951 48,049 Other services and charges Total legislative 99,000 50,993 48,007 Executive 53,608 51,420 2 188 Personal services 6,200 2,886 3,314 Supplies Other services and charges 15,440 13,065 2,375 Total executive 75,248 67,371 7,877 Administrative 262,660 230,938 31,722 Personal services 72,500 63,120 9,380 Supplies Other services and charges 169,560 106, 876 62,684 565 (565) Amortization - 17,416 (17,416) Unrealized loss on investments 504,720 418,915 85,805 Total administrative - Human resources 56,277 55,682 595 Personal services 8,000 8,780 (780) Supplies Other services and charges 24,720 19, 241 5,479 � Total human resources 88,997 83,703 5,294 Legal 1,224 (1,224 ) Personal services Other services and charges 413,579 361,884 51,695 Total legal 413,579 363,108 50,471 Planning and Zoning 226,750 196,142 30,608 Personal services 45,200 20,994 24,206 Supplies Other services and charges 166,900 74,324 92,576 Total planning and zoning 438,850 291,460 147,390 Elections 8,000 297 7,703 Personal services Total elections 8,000 297 7,703 TOTAL GENERAL GOVERNMENT 1,628,394 1,275,847 352,547 -26- I CITY OF MERIDIAN, IDAHO STATEMENT OF EXPENDITURES - BUDGET AND ACTUAL - GENERAL FUND (Continued) Year Ended September 30, 1999 Budget Actual Variance Favorable (Unfavorable) PUBLIC SAFETY Law Enforcement $ 2,518,416 $ 2,479,280 $ 39,136 Personal services Other services and charges 329,037 307,429 21,608 Total law enforcement 2,847,453 2,786,709 60,744 Fire Department 816,408 783,195 33,213 Personal services 51,400 49,400 2,000 Supplies Other services and charges 86,400 74,917 11,483 Total fire department 954,208 907,512 46,696 Facilities Maintenance 151,674 66,424 85,250 Personal services 9,000 6,617 2,383 Supplies Other services and charges 548,410 535,684 12,726 Total facilities maintenance 709,084 608,725 100,359 Animal Control 26,488 24,560 1 928 Personal services 8,000 4,654 3,346 Other services and charges Total animal control 34,488 29,214 5,274 TOTAL PUBLIC SAFETY 4,545,233 4,332,160 213,073 HIGHWAY AND STREETS Highway and Streets 6,328 Other services and charges 7,000 672 Street lighting 85,000 81,154 3,846 Total highway and streets 92,000 81,826 10,174 TOTAL HIGHWAY AND STREETS 92,000 81,826 10,174 -27_ I CITY OF MERIDIAN, IDAHO STATEMENT OF EXPENDITURES - BUDGET AND ACTUAL - GENERAL FUND (Continued) Year Ended September 30, 1999 Im Variance Favorable Budget Actual (Unfavorable) CULTURE AND RECREATION Parks Personal services $ 294,286 $ 253,992 $ 40,294 Supplies 24,700 31,367 (6,667) Other services and charges 115,110 100,148 14,962 Total parks 434,096 385,507 48,589 Recreation 56,290 33;447 22,843 Personal services 16,500 25,480 (8,980) Other services and charges Total recreation 72,790 58,927 13,863 TOTAL CULTURE AND RECREATION 506,886 444,434 62,452 CAPITAL OUTLAY ¢ _ 2,941 (2,941) Executive 117,000 170,906 (53,906) Administrative 5,000 2,967 2,033 Human resources 15,000 8,349 6,651 Planning and zoning 199,740 205,649 (5,909) Law enforcement i 1,135,000 450,845 684,155 Fire department 213,466 46,563 166,903 Facilities maintenance 978,498 598,268 380,230 Parks TOTAL CAPITAL OUTLAY 2,663,704 1,486,488 1,177,216 TOTAL EXPENDITURES $ 9,436,217 $ 7,620,755 $ 1,815,462 Im CITY OF MERIDIAN, IDAHO STATEMENT OF REVENUES - BUDGET AND ACTUAL GENERALFUND Year Ended September 30,1999 -29- Variance Favorable Budget Actual (Unfavorable) Taxes $ 3,624,902 $ 3,629,953 $ 5,051 Property 2,500 12,725 10,225 Penalties and interest 3,627,402 3, 642,678 15,276 Total taxes Licenses and permits 13,525 16,588 3,063 Alcoholic beverage licenses 1,289,400 1,433,096 143,696 Building and utility permits 18,048 23,853 5,805 Dog licenses 26,000 23,184 (2,816) Miscellaneous1,346,973 1,496,721 149,748 Total licenses and permits Intergovernmental 75,000 101,384 26,384 State liquor apportionment 189,000 274,158 85,158 Court revenues 88,500 136,004 47,504 State sales tax 810,000 907,604 97,604 State revenue sharing 558,025 320,522 (237,503) Rural fire 185,033 36,841 (148,192) Grants Total intergovernmental1,905,558 1,776,513 (129,045) Fines and forfeitures 6,000 5,572 (428) Parking fines 6,000 5,572 (428) Total fines and forfeitures -29- CITY OF MERIDIAN, IDAHO STATEMENT OF REVENUES - (NON -GAAP BUDGETARY BASIS) BUDGET AND ACTUAL ENTERPRISE FUND Year Ended September 30, 1999 Charges for services: Water revenues Sewer revenues Sale of meters Latecomers fees Miscellaneous Interest income Contributed capital: Sewer connections Water connections Variance Favorable Budget Actual (Unfavorable) $ 2,730,000 2,449,000 198,000 12,800 3,500 289,500 1,965,600 850,000 -31- $ 2,585,074 2,393,808 178,820 328,599 33,415 1,302,482 1,921,054 934,861 $ 9,678,113 $ (144,926) (55,192) (19,180) 315,799 29,915 1,012,982 (44,546) 84,861 $ 1,179,713 CITY OF MERIDIAN, IDAHO STATEMENT OF EXPENSES - (NON -GAAP BUDGETARY BASIS) BUDGET AND ACTUAL ENTERPRISE FUND Year Ended September 30, 1999 Water Personal services Supplies Heat, lights and power Other services and charges, including depreciation Capital outlay Bond redemption Total water Sewer Personal services Supplies Heat, lights and power Other services and charges, including depreciation Capital outlay Bond redemption Total sewer Construction 187,310 (187,310) Other services and charges, including depreciation Total expenses $ 13,772,562 $ 9,945,022 $ 3,827,540 -32- Variance Favorable Budget Actual (Unfavorable) $ 833,295 $ 727,416 $ 105,879 350,050 216,349 133,701 15,650 11,059 4,591 715,010 1,112,630 (397,620) 4,195,151 2,887,693 1,307,458 50,870 50,774 96 6,160,026 5,005,921 1,154,105 1,116,150 1,038,289 77,861 30,850 30,315 535 106,750 118,426 (11,676) 1,301,485 1,054,341 247,144 4,904,601 2,358,331 2,546,270 152,700 152,089 611 7,612,536 4,751,791 2,860,745 Construction 187,310 (187,310) Other services and charges, including depreciation Total expenses $ 13,772,562 $ 9,945,022 $ 3,827,540 -32- CITY OF MERIDIAN, IDAHO OPERATION IN TAX ROLLS September 30, 1999 33 - 1993 1994 1995 1996 1997 1998 Total Balance at October 1, 1998 $ 158 $ 191 $ 831 $ 15,219 $ 104,725 $ - $ 121,124 - 6,823 64 211 375 3,807,928 3,815,401 Roll charge - _ 18,258 18,258 Penalty - 7,014 895 15,430 105,100 3,826,186 3, 954,783 158 158 259-- 594 (10,886) 25,120 3,666,537 3,681,782 Collections - 6,755 133 24,480 63,119 111,733 206,220 Adjustments 158 7,014 727 13,594 88,239 3,778,270 3, 888,002 $ $ - $ 168 $ 1,836 $ 16,861 $ 47,916 $ 66,781 Balance at September 30, 1999 - 33 - I I OTHER INFORMATION BALUKOFF LINDSTROM & Co., P.A. INDEPENDENT AUDITORS' REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF GENERAL PURPOSE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENTAUDITING STANDARDS Mayor and Members of the City Council City of Meridian, Idaho Meridian, Idaho We have audited the general purpose financial statements of City of Meridian, Idaho, as of and for the year ended September 30, 1999, and have issued our report thereon dated December 13, 1999. We conducted our audit in accordance with generally accepted auditing standards 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 City of Meridian's general purpose 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, y 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 City of Meridian's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the general purpose financial statements and not to provide assurance on the internal control over financial reporting. However, we noted certain matters involving the internal control over financial reporting and its operations that we consider to be reportable conditions. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control over financial reporting that, in our judgment, could adversely affect City of Meridian's ability to record, process, summarize and report financial data consistent with the assertions of management in the general purpose financial statements. Reportable conditions are described in the accompanying schedule of findings. -35- Mayor and Members of the City Council City of Meridian, Idaho Page 2 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 general purpose 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. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. The reportable conditions described in the accompanying schedule, we consider to be material weaknesses. We also noted other matters involving the internal control structure and its operation that we have reported to management of City of Meridian, Idaho, in a separate letter dated December 13, 1999. This report is intended for the information of the City Council and management. However, this report is a matter of public record and its distribution is not limited. December 13, 1999 -36- CITY OF MERIDIAN, IDAHO SCHEDULE OF FINDINGS September 30, 1999 The reportable conditions noted are as follows: I. Journal entries to the general ledger are not reviewed or approved by the City Treasurer prior to recording. 2. Currently there is no policy in place to record and track contributed capital. 3. Currently there is no policy in place to track latecomer fees. We noted the following material weakness: 1. Journal entries to the general ledger are not reviewed or approved by the City Treasurer prior to recording. 2. Currently there is not policy in place to record and track contributed capital. 3. Currently there is no policy in place to track latecomer fees. -37-