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FY1995 Financial Reports Sewer FundCITY OF BLAIR, NEBRASKA SEWER FUND JULY 31, 1995 CERTIFIED PUBLIC ACCOUNTANT 1904 SOUTH STREET BOX 486 BLAIR, [NEBRASKA 68008 Honorable Mayor and Members of the City Council City of Blair, Nebraska Gentlemen: RESIDENCE: (402) 4685253 OFFICE: (402) 426-4080 November 27, 1995 "Independent Auditor's Report" I have audited the accompanying financial statements of the Sewer Fund, City of Blair, Nebraska, as of and for the year ended July 31, 1995. The financial statements are the responsibility of the City of Blair, Nebraska management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with generally accepted auditing standards. Those standards require that I 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. I believe that my audit provides a reasonable basis for my opinion. As discussed in Note B, the financial statements present only the Sewer Fund and are not intended to present fairly the financial position of the City of Blair, Nebraska, and the results of its operations and the cash flows of its proprietary fund types and expendable trust funds in conformity with generally accepted accounting principles. In my opinion, the financial statements referred to in the first paragraph present fairly, in all material respects, the financial position of the Sewer Fund of the City of Blair, Nebraska, as of July 31, 1995, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. Edward W. Schroeder Certified Public Accountant -2- CITY OF BLAIR, NEBRASKA SEWER FUND BALANCE SHEET JULY 31, 1995 ASSETS CURRENT ASSETS: Cash $ 19,369 Accounts receivable - user fees 59,351 Accounts receivable - other 1,790 Investments 100,000 Prepaid expenses 2,546 Total current assets 183,056 PROPERTY: Plant in service 3,613,897 Accumulated depreciation (11988,801) Property - net 1,625,096 TOTAL ASSETS $1,808,152 LIABILITIES AND FUND BALANCE CURRENT LIABILITIES: Accounts payable $ 28,028 FUND BALANCE: Contributed capital 2,770,834 Retained earnings: Reserved - Unreserved (990,710) Total fund balance 1,780,124 TOTAL LIABILITIES AND FUND BALANCE $1,808,152 See Notes to Financial Statements -3- CITY OF BLAIR, NEBRASKA SEWER FUND STATEMENT OF REVENUES, EXPENSES AND CHANGES IN RETAINED EARNINGS FOR THE YEAR ENDED JULY 31, 1995 OPERATING REVENUES: User fees $ 341,390 Sale of merchandise 5,650 Total revenues 347,040 EXPENSES: Personal services: Salaries 120,615 FICA 9,546 Workman's compensation 4,083 H.A.L. insurance 20,253 Retirement (city share) 6,820 Unemployment and disability 634 Total 161,951 Operating expense: Auditing 765 Consulting/engineering 15,865 Employee appreciation 171 Postage 3,271 Printing and publication 326 Computer programming 51 School, travel and training 1,293 Dues 1,230 Utilities 43,605 Telephone 736 Insurance 6,173 Maintenance 22,736 Car expense 180 Total 96,402 Materials and supplies 29,172 Rental expense 636 Total expenses 288,161 OPERATING INCOME (LOSS) BEFORE DEPRECIATION 58,879 DEPRECIATION 77,286 OPERATING INCOME (LOSS) (18,407) OTHER REVENUE (EXPENSE): Interest income 4,572 Transfers - in 1,600 NET INCOME (LOSS) (12,235) RETAINED EARNINGS (DEFICIT) (978,475) JULY 31, 1994 RETAINED EARNINGS (DEFICIT) JULY 31, 1995 $(990,710) See Notes to Financial Statements -4- CITY OF BLAIR, NEBRASKA SEWER FUND STATEMENT OF CASH FLOW FOR THE YEAR ENDED JULY 31 1995 CASH FLOW FROM OPERATIONS: Net operating income (loss) $(18,407) Adjustment to reconcile net income to net cash from operations: Depreciation 77,286 Decrease (increase) in accounts receivable - user fees (3,134) Decrease (increase) in accounts receivable - other (1,790) Decrease (increase) in inventory - Decrease (increase) in prepaid expenses (431) Increase (decrease) in accounts payable 6,195 Net cash provided (used) by operations 59,719 CASH FLOW FROM INVESTING: Purchase of property (48,198) Interest income 4,572 Transfers - net 1,600 Cash flow from (used in) investing (42,026) NET INCREASE (DECREASE) IN CASH 17,693 CASH AND CASH EQUIVALENTS Beginning of the period 101,676 CASH AND CASH EQUIVALENTS End of the period $119,369 See Notes to Financial Statements -5- CITY OF BLAIR, NEBRASKA SEWER FUND NOTES TO FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Blair accounts for its financial position and results of operations in accordance with generally accepted accounting principles applicable to governmental units. Accordingly, the City uses several funds and account groups which are described below. A. Fund Types and Account Groups: A fund or account group is an accounting entity with a self -balancing set of accounts established to record the financial position and results of operations of a specific governmental activity. The City maintains the following fund types and account groups: Governmental fund types, that include the General Fund, Special Revenue Funds, and the Debt Service Fund, are used to record the general operations of the City; Proprietary fund types, that are used to account for activities conducted on a fee for service basis in a manner similar to commercial enterprises, provide services to the public (enterprise funds); Fiduciary fund types (trust and insurance funds), that are used to account for assets held by the City as an agent for private individuals or organizations or in trust; General fixed assets and general long-term obligation account groups, that are used to account for property and equipment and long-term obligations of governmental funds. General long-term bonded debt was repaid through the Debt Service Fund. B. Reporting Entity: Only the Sewer Fund activities have been included in these financial statements, for the years ended July 31, 1995. The statements are not intended to present the combined financial position of the City of Blair. The following criteria regarding manifestation of oversight were considered by the City in its evaluation of the City organizations and activities: Financial interdependency -The City is responsible for its debts and.is entitled to surpluses. No separate agency receives a financial benefit nor imposes a financial burden on the City. Election of the government authority -The locally elected City Council is exclusively responsible for all public decisions and accountable for the decisions it makes. CITY OF BLAIR, NEBRASKA NOTES TO FINANCIAL STATEMENTS, Continued 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Designation of management -The City Council appoints the City Administrator. The City Administrator hires other members of City management. The activities under the purview of management are within the scope of the reporting entity and management is accountable to the City Council for the activities being managed. Ability to significantly influence operations -The City Council has the statutory authority under the provisions of the Revised Statutes to significantly influence operations. This authority includes, but is not limited to, adoption of the budget, control over all assets, including facilities and properties, short term borrowing, signing contracts, and developing the programs to be provided. Accountability of fiscal matters -The responsibility and accountability over all funds is vested in the City management. C. Basis of Accounting: The Sewer Fund is a proprietary fund type and all proprietary fund types and similar trust funds are accounted for using the accrual basis whereby revenues are recognized when earned and expenses are recognized when incurred. D. Property• All fixed assets are recorded at cost or estimated cost if actual cost is not available. The proprietary and fiduciary fund assets are presented on the respective balance sheets except for the cost of any underground utility lines which are not included in the assets. Depreciation of the assets is computed on a straight-line method over the estimated useful lives of the assets. The range of estimated lives is from five to fifty years. E. Compensated Absences: The City of Blair does not record accrued compensated absences as they are unmeasurable as of July 31, 1995. 1WZ CITY OF BLAIR, NEBRASKA NOTES TO FINANCIAL STATEMENTS, Continued 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) F. Investments: The Investments are bank Certificates of Deposit or U.S. Government Securities with no unusual restrictions other than penalty for early withdrawal. All unrestricted investments are short-term. Investments are stated at cost, which approximates market value. All investments are entirely insured or collateralized with U.S. Government Securities and are considered cash equivalents. The City's investments are categorized to give an indication of the level of risk assumed by the City at year end. The City's investments are all category 1, which means that the investments are insured or registered. The securities are held by the City or its agent in the City's name. 2. PENSION PLANS The city has two pension plans covering substantially all of its employees. Employees other than policemen are covered by a defined contribution plan. All contributions up to 4% of gross wage in employee contributions and 40 of gross wage in contributions from the City are invested with an investment manager. The employees must have accumulated one year of service to participate in the plan. The plan is a single employer plan with the City maintaining fiduciary responsibility for it. Sewer Fund contributions for the fiscal year ended July 31, 1995, were $9,904. Contributions are expected to remain relatively level from year to year. The 1995 covered payroll and total payroll were $120,615 and $120,615 respectfully. 3. CONCENTRATION OF CREDIT RISK All of the receivables of the City of Blair proprietary funds are from the local Blair area therefore creating a concentration of credit risk. If the Blair area economy was depressed this could have an adverse effect on the collection of the outstanding accounts receivable. WO