1989 Annual Financial ReportELECTED CITY OFFICIALS
CITY COUNCIL
- Nel Armstrong
Jerry Jenkins
Glenn Shaw
Danny McDaniel
Carroll McNeill
Harvey W. Thomas
APPOINTED OFFICIALS
John Hamilton
Rosalie Garcia
Mayor
Alderman
Mayor ProTem
Alderman
Alderman
Alderman
Alderman
City Manager
City Secretary
Tax Collector
CITY OF SANGERr TEXAS
- TABLE OF CONTENTS (CONT'D)
Page
Combined Schedule of Bonds Payable 33-34
Utility Revenue Bonds -Principal and Interest Requirements 35
Utility Rates 36
Management Letter 37-39
1111OVIII&MANAM
•
520 SOUTH HIGHWAY 377 P.O. BOX 33 PILOT POINT, TEXAS 76258
Honorable Mayor and City Council
City of Sanger, Texas
(817) 686.2449
Dece►nber 27, 1989
We have examined the financial statements of the various funds
L. and account groups of the City of Sanger, Texas, for the fiscal year
ended September 30, 1989, listed in the foregoing table of contents.
Our examination was made in accordance with generally accepted
auditing standards and, accordingly, included such tests of the
accounting records and such other auditing procedures as we considered
necessary in the circumstances.
In our opinion, such financial statements present fairly the
financial position of the various funds and account groups of the
City of Sanger, Texas, at September 30, 1989, and the results of
operations of such funds for the fiscal year then ended in conformity
with generally accepted accounting principles applied on a basis
consistent with that of the preceding year. It is our further opinion
that the accounting requirements of the bond ordinances for the
revenue bond issues have been met.
The accompanying supplemental schedules and statistical section
listed in the foregoing table of contents are not considered essential
for the fair presentation of financial position, results of
operations, or changes in financial position in conformity with
generally accepted accounting principles, but are presented as
additional analytical data. This information has been subjected
to the audit procedures applied in the examination of the financial
statements mentioned above and, in our opinion, is fairly stated
in all material respects in relation to the financial statements
taken as a whole.
w
`Jrdves
Certified Public Accountant
1
Wil
r� ml�
IN I ea fifiel
520 SOUTH HIGHWAY 377 P.O. BOX 33 PILOT POINT, TEXAS 7U258
REPORT ON INTERNAL CONTROLS (ACCOUNTING AND
ON A STUDY AND EVALUATION MADE AS A PART OF
GENERAL PURPOSE FINANCIAL STATEMENTS AND THE
BY THE SINGLE AUDIT ACT
To the City Council
Sanger, Texas
(817) 686.2449
December 27,
ADMINISTRATIVE) -BASED
AN EXAMINATION OF THE
ADDITIONAL TESTS REQUIRED
We have examined the general purpose financial statements of the
City of Sanger, for the year ended September 30, 1989, and have issued
our report thereon dated December 27, 1989. As part of our
examination, we made a study and evaluation of the internal control
systems, including applicable internal administrative controls, used
in administering Federal financial assistance programs to the extent
we considered necessary to evaluate the systems as required by
generally accepted auditing standards, the standards for financial
and compliance audits contained in the Standards for Audit of
Governmental Organizations, Programs, Activities, and Functions,
issued by the U.S. General Accounting Office, the Single Audit Act
of 1984, and the provisions of OMB Circular A-128, Audits of State
and Local Governments.
:L The management of the City of Sanger is responsible for establishing
and maintaining internal control systems used in administering Federal
financial assistance programs. In fulfilling that responsibility,
estimates and judgements by management are required to assess the
expected benefits and related costs of control procedures. The
objectives of internal control systems used in administering Federal
financial assistance programs are to provide management with
I_ reasonable, but not absolute, assurance that, with respect to Federal
financial assistance programs, resource use is consistent with laws,
regulations, and policies; resources are safeguarded against waste,
loss, and misuse; and reliable data are obtained, maintained, and
fairly disclosed in reports.
Because of inherent limitations in any system of internal accounting
and administrative controls used in administering Federal financial
assistance programs, errors or irregularities may nevertheless occur
and not be detected. Also, projection of any evaluation of the
systems 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 included ail of the applicable control categories listed
() in the first paragraph. With respect to internal control systems
used in administering major Federal financial. assistance programs,
our study and evaluation included considering the types of errors
and irregularities that could occur, determining the internal control
II procedures that should prevent or detect such errors and
irregularities, determining whether the necessary procedures are
prescribed and are being followed satisfactorily, and evaluating
any weaknesses.
With respect to the internal control systems used solely in
Itadministering the nonmajor Federal financial assistance programs
of the City of Sanger, our study and evaluation was limited to a
preliminary review of the systems to obtain an understanding of the
control environment and the flow of transactions through the
�. accounting system. Our study and evaluation of the internal control
systems used solely in administering the nonmajor Federal financial
I assistance programs of the City of Sanger, did not extend beyond
LI. this preliminary review phase.
Our study and evaluation was more limited than would be necessary
to express an opinion on the internal control systems used in
-I administering the Federal financial assistance programs of the City
of Sanger. Accordingly, we do not express an opinion on the internal
control systems used in administering the Federal financial assistance
II programs of the City of Sanger. Further, we do not express an opinion
on the internal control systems used in administering the major
Federal financial assistance programs of the City of Sanger.
Also, our examination, made in accordance with the standards mentioned
iIL the first paragraph, would not necessarily disclose material
weaknesses in the internal control systems used solely in
administering nonmajor Federal. financial assistance programs.
Any weaknesses were considered in determining the nature, timing,
and extent of the audit tests to be applied in (1) our examination
of the 1989 general purpose financial statements and (2) our
examination and review of the City's compliance with laws and
regulations noncompliance with which we believe could have a material
effect on the allowability of program expenditures for each major
Federal financial assistance program and nonmajor Federal financial
assistance programs. This report does not affect our reports on
the general purpose financial statements and on the City's compliance
with laws and regulations dated December 27, 1989.
This report is intended solely for
not be used Fo.r any other purpose.
the use of management and should
3
Proprietary Fund Account Groups _ Totals
General General
Fixed Long -Term (Memorandum Only)
Enterprise Assets Debt 1989 1988
$ 83,264
57,752
294,277
65,400
61,445
849,482
943,290
1,790,298
1,528,466
223,930
14,623
(11648,489)
0
$ 96,660
136,799
87,380
294,277
68,255
61,445
849,482
$ 129, 991
116,919
76,255
254,532
68,255
67,949
733,945
58,683 60,183 60,183
125,945 125,945 125,945
943,290 943,290
1,790,298 1,790,298
11528,466 1,491,029
367,165 591,095 584,353
474,555 489,178 446,577
(11648,489) (1,503,886)
663,106 663,106 713,686
$ 4,265,238 T $ 11026,348 $ 663,106 $6,137,370 $6,099,321
Proprietary Fund Account Groups ,� _ Totals
General General
Fixed Long -Term (Memorandum Only)
Enterprise.... Assets Debt 1989 1988
$ 121,263 $ $ $ 122,073 $ 133,988
41321 72,695 64,721
61,108 61,108 81,825
86,811 76,505
95,000
48,062
11565,000
29,675
585,000
78,106
95,000
48,062
1,565,000
585,000
107, 781
90,000
51,802
1,655,000
G45,000
108 , 771
r
$ 1j924r429 $ $ 663,106 % $2,743,530 $2,907,612
100,196 100,196 100,196
1,026,348 1,026,348 996,128
871,231 871,231 871,231
1,369,382 1,369,382 1,197,007
26,683 27�147
$ 21340,809 $1r026f348 $ $3,393,840 $3,1911709
$ 4,265,238 $1,026,348. $ 663,106 $6,137,370 $6,099,321
7
Totals
Memorandum Onl
$ 347,871 $ 314,544
28,925 22,741
95,003 90,237
145,733 140,757
17,442 26,437
11,814 11,038
61311 7,037
46.925 49,074
$ 700,024 $ 661,865
$ 206,098
212, 446
21 2, 842
30,220
20, 812
86,276
54,877
1.033
$ 203,385
214, 493
193,114
13,944
17,900
69, 51 3
1 68, 790
751
$ (1241580) $ (220,025)
$ 123,245 $ 163,881
$ 123,245 $ 163,881
$ (11335) $ 56,144
$ 28,018 $ 83,291
$ 26,683 $ 27�147
0
CITY OF SANGER, TEXAS
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 1989
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The City of Sanger operates under a Council -Manager form of government
and provides the following services as authorized by its charter:
public safety (police and fire), highway and streets, sanitation,
health and social services, culture -recreation, public improvements,
planning and zoning, and general administrative services.
The City's comprehensive annual financial report included the accounts
A all City operations.
The accounting policies of the City of Sanger, Texas conform to
generally accepted accounting principles. The following is a summary
of such significant policies:
Principles Determining Scope of Reporting Entity
The financial statements of the City consists only of the funds and
account groups of the City. The City has no oversight responsibility
for any other governmental entity since no other entities are
considered to be controlled by or dependent on the City. Control
or dependence is determined on the basis of budget adoption, taxing
authority, funding, and appointment of the respective governing board.
Fund Accounting.
The accounts of the City are organized on the basis of fund and
account groups, each of which is considered a separate accounting
entity. The operations of each fund are accounted for with 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 means by which spending activities are controlled. The various
funds are grouped, in the financial statements in the report, into
generic fund types and inroad fund categories as follows.
Governmental Funds
General Fund - The General Fund is the general operating fund of
the City. It is used to account for all financial resources except
those required to be accounted for in another fund.
Sp
ecial Revenue funds - The Special Revenue Funds account for revenues
derived from specific taxes or other earmarked revenue sources.
The Revenue Sharing Fund is a special revenue fund used to account
for revenue from Federal Revenue Sharing.
11
Long -Term liabilities expected to be financed from governmental funds
are accounted for in the General Long -Term Debt Account Group, not
in the governmental funds.
The two account groups are not "funds". They are concerned only
with the measurement of financing position. They are not involved
with measurement of results of operations.
Because of their spending measurement focus, expenditure recognition
for governmental fund types is limited to exclude amounts represented
by noncurrent liabilities. Since they do not affect net current
assets, such long term amounts are not recognized as governmental
fund type expenditures or fund liabilities. They are instead reported
as liabilities in the General Long -Term Debt Account Group.
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 noncurrent) associated with
their 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 operating
statements present increases (revenues) and decreases (expenses)
I
n net total assets.
Depreciation of all exhaustible fixed assets used by proprietary
funds is charged as an expense against their operations. Accumulated
depreciation is reported on proprietary fund balance sheets.
Depreciation has been provided over the estimated useful lives using
straight line method. The estimated useful lives are as follows:
Utty Plant 40-50 years
Improvements 20-30 years
Machinery and Equipment 5.10 years
Basis of Accounting
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
measurements made, regardless of the measurement focus applied.
All governmental funds are accounted for using the modified accrual
basis of accounting. Their revenues are recognized when they become
measurable and available as net current assets. Property Taxes are
recorded as revenue when levied even though a portion of the taxes
may be collected in subsequent -years. Penalties and Interest, Court
and Miscellaneous Revenues are recorded when received in cash because
they are generally not measurable until actually received. Franchise
Taxes, Sales Taxes, Intergovernmental Revenue, and Interest Income
are accrued, when their receipt occurs soon enough after the end
of the accounting period so as to be both measurable and available.
mac.,
Revenue Recognition - Property Taxes
Property taxes attach as an enforceable lien on property as of January
1. Taxes are levied on October 1 and are due and payable at that
time. All unpaid taxes levied October 1 become delinquent February
1 of the following year.
Property tax revenues are recognized when they become available.
Available includes those property tax receivables expected to be
collected within sixty days after year end. Delinquent taxes are
considered fully collectable and therefore no allowance for
uncollectable taxes is provided.
General Obligation Enter rise Bonds
The Water, Electric, and Sewer System Fund provides the annual debt
service requirements on certain general obligation enterprise bonds
(not secured by system revenues) issued to finance system
improvements. Since the Water, Electric, and Sewer System Fund
provides the annual debt service on these general obligation
enterprise bonds, the bonds are considered to be obligations of the
Water, Electric, and Sewer System Fund and have been reported on
the balance sheet of the Water, Electric, and Sewer System Fund.
Although the general obligation enterprise bonds are reported on
the balance sheet of the Water, Electric, and Sewer System Fund,
they are backed by the full faith and credit of the City and are
therefore a contingent liability to the general government.
Total Columns on Combined Statements - Overview
Total columns on the Combined Statements - Overview are captioned
Memorandum Only to indicate that they are presented only to facilitate
financial analysis. Data in these columns do not present financial
position, results of operations, or changes in financial position
in conformity with generally accepted accounting principles. Neither
I
s such data comparable to a consolidation. Interfund eliminations
have not been made in the aggregation of this data.
NOTE 2 - DEBT SERVICE REQUIREMENTS
The City is required under provision of revenue bond ordinances to
maintain interest and sinkin funds ade uate for
g q payments of interest
and principal on the revenue bonds, and to establish reserve and
emergency funds which are to be used only for payment of interest
and principal in the event there are not sufficient funds available
in the required interest and sinking funds. For the year ended
September 30, 1989, the required interest and sinking funds were
adequately maintained and the required amounts of reserve and
emergency funds had been established.
CITY OF SANGER, TEXAS
GENERAL FUND
BALANCE SHEET
SEPTEMBER 30, 1989
ASSETS
Sept. 30, Sept. 30,
1989 1988
Cash $ 12,583 $ 32,691
_ Investments 23,836
Due from other Funds: Sanger Electric 2,855 21855
Taxes Receivable -Delinquent 87,380 76,255
Fire Department CD 50,000 50go000
TOTAL ASSETS $ 176,654 $ 161,801
LIABILITIES, REVENUES, AND FUND BALANCE
Accounts Payable
Reserve for Uncollected Taxes -Delinquent
Due to Other Funds
Fund Balance
TOTAL LIABILITIES, RESERVES, AND FUND
BALANCE
$ (460)
86,811
68,374
21,929
$ 176,654
$ 9,606
76,505
60,400
15,290
These financial statements and accompanying notes are subject to
the accountant's opinion.
CITY OF SANGER, TEXAS
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE
FOR THE YEAR ENDED SEPTEMBER 30, 1989
1989
OTHER FINANCING SOURCES (USES):
Debt Service $(142,186)
Operating transfers in 123,245
Operating transfers out
TOTAL OTHER FINANCING
SOURCES (USES) $ (18,941)
EXCESS OF REVENUES AND
OTHER FINANCING SOURCES
OVER EXPENDITURES AND
OTHER USES $ 6,639
FUND BALANCE (DEFICIT) -
Beginning of Year
FUND BALANCE (DEFICIT) -
End of Year
See Notes to Financial Statements
1988
$(239,054)
1 63, 881
19
CITY OF BANGER, TEXAS
BANGER ELECTRIC SYSTEM
BALANCE SHEET
SEPTEMBER 30, 1989
Current Assets•
Cash
Investment
Accounts Receivable
(Net of Allowance
Inventory
Due From General Fund
Interest Receivable
ASSETS
for Bad Debts)
Total Current Assets
Restricted Assets:
Customer Deposits
Total Restricted Assets
Property, Plant, and Equipment:
Electric Plant.
Furniture and Equipment
Less: Accumulated Depreciation
$ 79,431
224,463
240,591
61,445
65,400
2,450
33, 1 91
1,528,466
134,530
(801,256)
Total Property, Plant, and Equipment
Total Assets
$ 673,780
33,1 91 i
`""
861 , 740
$1,568,711
21
CITY OF SANGER, TEXAS
SANGER WATER AND SEWER SYSTEM
BALANCE SHEET
SEPTEMBER 30, 1989
ASSETS
Current Assets•
Cash
Investments -Savings
Investments-CD's
Accounts Receivable
Less: Allowance for Doubtful
Accounts
Interest Receivable
Total Current Assets
Restricted Assets:
Customer. Water Deposits
Total Restricted Assets
Property, Plant, and Equipment:
Water System
Sewer System
-- Furniture and Fixtures
Easement -Utility Fund
Less: Accumulated Depreciation
$ 3,833
57,752
563,911
44, 1 50
(1,053)
8,139
27, 917
943,290
1,790,298
1 04, 023
1,500
(847,233)
Total Property, Plant, and Equipment
Total Assets
$ 676,732
27,917
1,991,878
$2,696,527
CITY OF BANGER, TEXAS
ENTERPRISE FUNDS -COMBINED
BALANCE SHEET
SEPTEMBER 30, 1989
ASSETS
Current Assets•
Cash $ 83,264
Investments 846,126
Accounts Receivable
(Net of Allowance for Doubtful Accounts) 283,688
Inventory 61,445
Due from General Fund 65,400
Interest Receivable 10,589
Total Current Assets
Restricted Assets:
Customer Deposits 61,108
Total Restricted Assets
Property, Plant, and. Equipment:
Electric Plant 1,528,466
Water System 943,290
Sewer System 1,790,298
Furniture and Fixtures 238,553
Easement -Utility Fund 1,500
Less: Accumulated Depreciation (1,648,489)
Total Property, Plant, and Equipment
Total Assets
$1,350,512
61,108
2,853,618
$4,265,238
25
CITX OF SAIQGER, TEXAS
UTILITY FUND
SUMMARY .SCHEDULE OF REVENUES AND EXPENDITURES
FOR THE YEAR ENDED SEPTEMBER 30, 1989
REVENUES:
Electricity System
Water System
Sewer System
Sanitation
Miscellaneous
Interest
Grant
EXPENDITURES:
Sanger Electric System
Water Department
Sewer Department
Debt Service
Transfer to General Fund (Net)
1989
$1 , 761 , 675
259,220
177,442
1 45, 444
2,450
62,076
4,490
$2,412,797
$1,367,455
193,553
125,265
1 64, 975
$1,851,248
$1,727,587
281,372
1 91 , 424
141,658
8,857
39,890
12,300
�� �::
$1,430,220
277, 91 9
285,453
152,407
$2,145,999
$ 152,487 $ 145,636
These Financial Statements and accompanying notes are subject to
the accountant's opinion.
CITY OF SANGER, TEXAS
PAYROLL FUND
BALANCE SHEET
SEPTEMBER 301 1989
ASSETS
— Cash
Due from Other Funds
Total Assets
1989 1988
$ (328) $ 5,169
$ (328) $ 5,169
LIABILTTTES AND FUND BALANCE
Fund Balance $ (328) $ 5,169
Total Fund Balance $ (328) $ 5,169
These financial statements and accompanying notes are subject
to the accountant's opinion.
CITY OF BANGER, TEXAS
STATEMENT OF CHANGES IN GENERAL FIXED ASSETS -BY SOURCE
(Rounded to the Nearest Dollar)
FOR THE YEAR ENDED SEPTEMBER 30, 1989
"zeneral Fixed Assets
Beginning of Year
Capital Expenditures
General Fixed Assets
End of Year
TOTAL LAND BUILDING
$ 996,128 $58,683 $125,945
30,220
1.026,348 $58,683 $125,945
IMPROVEMENTS MACHINERY
OTHER THAN AND
BUILDING EQUIPMENT
$446,577 $364,923
446.577
30,220
395,143
These financial statements and accompanying notes are subject to the accountant's opinion.
31
� I I � I __ i I I i I I I I
CITY OF BANGER, TEXAS
PROPERTY TAX LEVIES AND COLLECTIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1989
Tax Assessed Tax Current Total
Year Value _ Levy Collections Percent Collections Percent
1974 $5,411,061 $ 32,466 $ 29,088 89.60$ $ 29,907 92.12�
1975 5,974,913 35,846 33,067 92.25� 36,040 100.54$
1976 6,478,717 38,873 35,643 91.69$ 39,244 100.96�
1977 6,782,337 40,694 37,601 92.40� 39,885 98.00�
1978 7,740,725 46,444 41,947 90.30� 44,389 95.57�
1979 8,655,680 60,821 52,391 86.10� 54,650 89.85�
1980 9,597,5,14 65,951 58,384 88.50$ 64,049 97.11$
1981 21,378,529 106,870 99,068 92.70� 107,153 100.26$
1982 40,919,840 184,139 172,019 93.42� 178,008 96.67�
1983 43,073,043 202,443 192,500 95.09� 205,379 101.48�
1984 44,445,069 215,559 205,218 95.20$ 210,657 97.73�
1985 51,763,572 271,672� 243,201 89.52� 250,397 92.17$
1986 62,066,231 295,496 264,530 89.52� 297,677 100.74$
1987 74,735,416 308,107 280,328 90.98g 280,328 90.98�
1988 78,458,315 328,387 - 310,486 94.55� 310,486 94.55�s
TAX RATE:
1
971-1977
1978-1980
1
981
1982
1983
1984
1985
1986
1987
1988
.60
.70
.50
.45
.47
.485
.524
.4740
.4163
. 41
81
These financial statements and accompanying notes are subject to the accountant's opinion.
32
Authorized
$ 700,000
Issued
$ 700,000
BONDS
Retired
$ 115,000
Outstanding
$ 585,000
295,000 295,000 190,000 105,000
305,000 305,000 110,000 195,000
360,000 360,000 155,000 205,000
450,000 450,000 120,000 330,000
845,000 _ 845,000 25,000 __ _ 820,000
$ 2,255,000 �_ $ 21255,000 $ 600,000 $ 1�655,000
$ 2,955,000 � $ 2,955,000 $ 715,000 $ 2,240,000
39
CITY OF BANGER, TEXAS
UTILITY RATES
SEPTEMBER 30, 1989
Water Rates:
_ First 2,000 gallons (minimum} $ 9.00
Per 1,000 gallons thereafter 1.20
Sanitation Rates:
Residential - Flat Rate $ 6.50
Commercial - Flat Rate 9.00
Sewer Rates:
-- Residential
First 1,OOO gallons $ 8.00
Per 1,000 gallons thereafter .60
Commercial
First 1,000 gallons $ 14.00
Per 1,000 gallons thereafter .60
Number of Connections (September 30, 1989):
Water 1,231
Sewer 1,383
Electric 1,741
Water Usage � 157,920,000 gallons
These financial statements and accompanying notes are subject to the
accountant's opinion.
36
,�, r ► �
� •
520 SOUTH HIGHWAY 377 P.O. BOX 33 PILOT POINT, TEXAS 76258 (817) 686.2449
Honorable City Council
City of Sanger, Texas
Sanger, Texas
Gentlemen:
In connection with our examination of the financial statements
of the City of Sanger, Texas for the year ended September 30, 1989,
we reviewed the City's accounting procedures and system of internal
accounting control. We believe the existing controls and procedures
are adequate to provide reasonable assurance that assets are
safeguarded against loss from unauthorized use or disposition, and
that transactions are executed in accordance with management's
authorization anc3 recorod properly to permit the preparation of
financial statements in accordance with generally accepted accounting
principles. In addition, we discovered the following problems:
�1) FINDING:
In doing `an analysis of the general ledger, it was
discovered the genr.ral ledger by fund did not balance.
Although each fund was not in balance, the overall general
ledger was. Discrepancies between fund postings is not
being reconciled due to lack of time available and the
volume of transactions processed.
RECOMMENDATION:
Each fund must be in balance for each monthly accounting
cycle. Code ;�lleets should be used with batch totals, or
some similar control total, to insure proper posting o�
entries. Any discrepancies shoul�� bc' reviewed by
management.
(2) FINDING:
During the audit for FY); 9-30-88, it was discovered checks
were written in October for expenses that should have been
accrued and applied to that FYF. This same problem was
discovered for FY3� 9-30-89.
RECOMMENDATION:
In order to properly accoun
during any fiscal year, an
Order/Voucher system should
to rush at year. end to pay
be accrued at yF�ar end. Le
control will noi: be lost by
t for all expenses incurred
accurate and controlled Purchase
be in place. There is no need
fo.r bills that could very easily
ss effort will be expended and
using this method.
37
( 3 ) 1'INDING:
In analyzing the internal accounting controls in place
at the City of Sanger, it a�as discovered improper
segregation of duties exists in the Electric Fund. One
employee controls all functions; billing, collections,
A/R, checkwriting, etc.
RECOMMENDATION:_
Generally accepted accounting standards rec7ui.re the
ae��aratiori of functions when nancompatible duties are
present. The sane individual should never have the
control for billings and collections. Also, the individual
maintaining the source files (cu>tomer accounts) should
not be allowed to handle customer payments and cash
recc�i��ts . No one indi , idual should bo� left with full
control and not have some type of checl; and balance in
place. To solve this problem, several chane�es need to
b�� ►nade. First, billings should be done by one indi��idual
and cash receipt recap by another. Posting to custo►ner
accounts �_.an be handled by the bill9.ng cl�:�rk as long as
that billing clerk does not have access to cash receipts.
Secondly, funds paid. out �f the bank account should be
done only by management personnel. A/R or cash receipts
clerks have no need to, and should not bc�, disbursing any
funds.
�4) FINDING:
As was discussed in the FYE 9-30-88 audit, the Firemen`s
fund is not under the control or direction of the General
Fu►�d in any way. The General Fund is paying on a note
for a Fire Truck while the Fire Depdr_tment holds a CD in
the amount of $50,000. Also, the funds f_ro►n county sources
are not being accounted fur by the City. r'or the FYE
9-30-89 a total of $35,194.00 was deposited in the bank
and a total of $35,313.18 was disbursed. Also, a draw
of $16,000 on a $40,000 line o.f c►-edit was made 10-12-88
to purchase a Fire Truck. This purchase was not put out
on bid. These discrepancies we:r�e discusses in the
management. letter for >±YE 9-30-8E1.
RECOMMENDATION:
A11 operations of the Sanger Fire Department should come
under_ the control and direction of the City of Sanger.
Because the majority of funds generated comes from other
governmental agencies, a proper accounting and control
must be done. Also, by allowing any deplrt►nent to borrow
funds and buy equipment without the approval of the City
Council only exposes the City of Sanger to the liabilj.ty.
Since the City supports the Fire department and has paid
expenses of,$28,367 from other fund revenue, any income
generated. by the Fire department should be controlled by
the City, not the Fire department.
38
In discussion with the City Administrator and City Secretary,
they informed me as to the changes being made to combine a7.1 General
Fund types and Enterprise Fund types into two funds and account for
each activity by department. I fully concur with this action as
it was the first recommended action on the 9.30-88 audit.
I am glad to see the implementation of prior recommendations
but am also concerned with those still not corrected.
I would like to commend both the City Administrator and the
City Secretary on the aggressive management of investments. By
placing most idle funds into high yield CD's, the interest income
for the City has increased by $22,186 for FYE 9-30-89. This relates
to a 56% increase in passive revenue.
The aUove findings and recommendations and pos�;ible �:orrective
action have been discussed with the City Administrai.,.or.
I will be happy to discuss any and all .findings in detail at
your convenience. I would also like to offer my services to help
institute those recommendations.
This management report is designed
management and should not be used in any
when accepted by the City Council, City
of public record.
Sincerely,
ohn P. ,raves
Certified Public Accountant
solely for the use of
other context. This letter.,
of Sanger, becomes a matter
CITY Or SANGER, TEXAS
PRINCIPAL AND INTEREST REQUIREMENTS
SEPTEMBER 30, 1989
UTILITY REVENUE BONDS
Year Ended
September 30 Principal Interest Total
1990 95,000 148,495 243,495
1991 105,000 140,737 245,737
1992 115,000 132,066 247,066
1993 120,000 122,387 242,387
1994 130,000 112,788 242,788
1995 145,000 101,938 246,938
1996 160,,000 89,180 249,180
1997 170,000 75,210 245,210
1998 190,000 56,510 246,510
1999 210,000 39,220 249,220
2000 210,000 19,900 229,900
2001 51000 475 5,475
$ 1,655,000 $ 1�038,906 ___ $ 2,693,906
GENERAL OBLIGATION BONDS
1990 65,000 48,125 113,125
1991 70,000 41,300 111,300
1992 75,000 33,950 108,950
1993 80,000 28,700 108,700
1994 90,000 22,900 112,900
1995 100,000 16,150 116,150
1996 105,000 8,400 113,400
$ 585,000 _ $ 199,525 _` $ 784,525
These financial statements and accompanying notes are subject to the
accountant's opinion.
35
CITY OF BANGER, TEXAS
COMBINED SCHEDULE OF BONDS PAYABLE
SEPTEMBER 30, 1989
Description
General Obligation Bonds:
Series 1986
'IUtilities
Revenue Bond:
Series
1973
Series
1976
Series
1977
Series
1982
Series
1985
..;Total Utility Revenue Bonds
Totals
Interest Rates
•
5 1/2�-5 7/8�
5 1 /2�-7 1 /A�
4.9�-6�
12.71�
9.3835�
Issues
Dates Date
05/15, 11/15
05/15, 11/15
05/15, 11/15
05/15, 11/15
05/1 5, 11 /1 5
05/15, 11/15
•:.
1973
1976
1977
1982
1985
Final
Maturity
Date
these financial statements and accompanying notes are subject to the
accountant's opinion.
•:.
1993
1995
1996
1997
2001
33
CITY OF BANGER, TEXAS
STATEMENT OF GENERAL FUNDED DEBT
SL'PTEMBER 30, 1989
Amounts to be provided for
Retirement of Debt
'.TOTAL ASSETS
ASSETS
1989
•::
$663,106 $713,686
$663,106 $713,686
LIABILITIES AND FUND BALANCE
Certificate of Obligation $585,000 $645,000
Note Payable 78,106 68,686
TOTAL LIABILITIES AND FUND BALANCE $663,106 _ $713,686
These financial statements and accompanying notes are subject
to the accountant's opinion.
30
CITY OF BANGER, TEXAS
ENTERPRISE FUND
SCHEDULE OF INCOME AND EXPENDITURES
BUDGET VERSUS ACTUAL
FOR THE YEAR ENDED SEPTEMBER 30, 1989
Revenue:
Electric System
Water
Sewer
Sanitation
Miscellaneous
Interest
Grant
Total Revenue
Operating Expenditures:
Electric System
Water Department
Sewer Department.
Debt Service
Transfer to General
Total Operating
Expenditures
Excess
Over/(Under)
___ Budget Actual Budget
$1,715,079 $1,761,675 $ (46,596)
303,553 259,220 44,333
217,000 177,442 39,558
141,000 145,444 (4,444)
6,000 2,450 3,550
7,500 62,076 (54,576)
_ 4,490 (4,490)
$2,390,132 $'2,412,797 $ (22,665)
$1,585,752 $1,367,455 $ (218,297)
180,434 193,553 13,119
116,646 125,265 8,619
296,556 164,975 (131,581)
Fund `__152,487 152,487
2,179,388 $2,003,735 $ (175,65
Excess Income
Over Expenditures $ 210,744 $ 409,062
Prior Period Adjustment (236,687)
Beginning Retained Earnings 2,068,238
Retained Earnings $2,240,613
(198,318)
These Financial Statements are subject to the accountant's opinion.
CITY OF BANGER, TEXAS
ENTERPRISE FUNDS -COMBINED
BALANCE SHEET
SEPTEMBER 30, 1989
(Continued)
LIABILITIES AND EQUITY
Current Liabilities:
Accounts Payable $ 121,263
Due to Other Funds 4,321
Customer Deposits 61 , 1 08
Accrued Interest Payable 48,062
Current Portion of Long -Term
Liabilities 1 03, 01 7
Total Current Liabilities
Long -Term Liabilities:
Bonds Payable
Notes Payable
Less: Current Portion
Total Long -Term Liabilities
Contributions:
Customers
In Aid of Construction
Total Contributions
Equity:
Retained Earnings, September 30,
Current Period Income
Total Equity
Total Liabilities and Equity
1,660,000
29,675
(103,017)
25,314
74,882
1988 2,068,238
172,375
$ 337,771
1,586,658
100,196
2,240,613
$4,265,238
26
CITY 0�� BANGER, TEXAS
SANGER WATER AND SEWER SYSTEM
BALANCE SHEET
SEP'rEMBER 30, 1989
(Continued)
LIABILITIES AND EQUITY
Current Liabilities:
Accounts Payable $ 199
Customer Deposits 27,917
Current Portion of Bonds Payable 95,000
Accrued Interest Payable 48,062
Total Current Liabilities
Long -Term Liabilities:
Bonds Payable 1,66U,000
Less: Current Portion (95,000)
Total Long -Term Liabilities
Contributions:
Contribution in Aid o:E Construction 74,882
Total Contributions
Equity:
Retained Earnings, September 30, 1988 871,231
Current Period Income (Loss) �� 14,236
Total Equity
Total Liabilities and Equity
$ 171,178
1,565,000
74,882
885,467
$2,696,527
29
CITY OF SANGER, TEXAS
SANGER ELECTRIC SYSTEM
BALANCE SHEET
SEPTEMBER 30, 1989
(Continued)
LIABILITIES & EQUITY
Current Liabilities:
Due to Other Fund
Accounts Payable
Customer Deposits
Notes Payable (Current Portion)
Total Current Liabilities
Long -Term Liabilities:
Notes Payable
Less: Current Portion
Total Long -Term Liabilities
Contributions:
Customers
Total Contributions
121 , 064
33,191
8.017
29,675
(8,017)
25.314
Equity:
Retained Earnings, September 30, 1988 1,197,007
Current Period Income 158,139
Ending Retained Earnings
Total Liabilities and Equity
$ 1 66, 593
21,658
1 � 355,146
$1,568,711
These Financial Statements are subject to the accountant's opinion.
CITY OF BANGER, TEXAS
GENERAL FUND
SCHEDULE OF INCOME AND EXPENDITURES
BUDGET VERSUS ACTUAL
FOR THE YEA22 ENDED SEPTEMBER 30, 1989
Excess
Over/(Under)
Budget Actual Budget
Revenue:
Ad valorem Taxes:
Penalties and Interest $ 335,831 $ 347,871 $ (12,040)
Franchise Taxes 23,000 28,925 (5,925)
Municipal Sales Taxes 95,000 95,003 (3)
Sanitation 141,000 145,733 (4,733)
Court/Fines 25,000 17,442 7,558
Intergovernmental Revenue 11,925 12,839 (914)
Interest Income 2,500 5,901 (3,401)
Miscellaneous Income 24,000 46,310 (22,310)
Total Revenue $ 658,256 $ 700,024 $ (41,768)
Expenditures:
Current:
General Government $ 201,470 $ 206,098 $ 4,628
Public Works 226,679 212,446 (14,233)
Public Safety 230,469 212,842 (17,627)
Non -Departmental 15,906 20,812 4,906
Capital Outlay 46,549 30,220 (16,329)
Debt Service:
Principal Retirement 152,448 86,276 (66,172)
Interest 54,500 54,877 377
Fees 1,033 1,033
Total Expenditures $ 928,021 $ 824,604 $ (103,417)
Excess Expenditures
Over Revenue $(269,765) $(124,580) $ (145,185)
Operating Transfers In $ 29,000 $ 123,245 $ (94�245)
Operating Transfers Out
Remaining Excess $(240,765) $ (1,335)
Fund Balance, Beginning 28,018
Fund Balance, Ending $ 26,683
$ (239,430)
These Financial Statements are subject to the accountant's opinion.
20
CITY OF BANGER, TEXAS
GENERAL FUND
STATEMENT Or' REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE
FOR THE YEAR ENDED SEPTEMBER 30, 1989
1989
REVENUES:
Ad valorem taxes, penalties
and interest $ 347,871
Franchise taxes 28,925
Municipal sales tax 95,003
Sanitation 145,733
Court/Fines 17,442
Interest Income 5,901
Miscellaneous 46,311
TOTAL REVENUES $ 687,186
EXPENDITURES:
General Government $ 206,098
TOTAL GENERAL GOVERNMENT $ 206,098
Public Works:
Sanitation $ 133,356
Streets 70,270
Planning/Parks 8,820
TOTAL PUBLIC WORKS $ 212,446
Public Safety:
Police $ 184,475
Fire - 28.367
TOTAL PUBLIC SAFETY $ 212,842
TOTAL CURRENT EXPENDITURES $ 631,386
Capital Outlay 30,220
TOTAL EXPENDITURES $ 661,606
Ste^ Notes to Financial Statements
�::
$ 314, 544
22,741
90,237
140,757
26,437
6,370
47,683
.-: .•
$ 203,385
$ 203,385
$ 158,855
46,938
8,700
$ 21 4, 493
$ 1 63, 641
29 �473
$ 193,114
$ 610, 992
17,900
:�
m
NOTE 3 - CERTIFICATES OF OBLIGATION/NOTES PAYABLE
Certificates of Obligation consisted of the following:
Original Current
Description Use Amount Amount
General Fund -Street
Construction
8-11% interest rate Road Improve. $700,000 $585,000
Notes Payable consisted of the following:
Description Use
First National Bank
of Sanger Utility
9.5% interest rate Truck $ 54,487 $ 29,675
Gruman Emergency Products,
Inc.
8.25% interest rate Fire Truck 76,688 39,393
First National Bank '
of Sanger
9.5% interest rate Police Car 23,914 10,778
First National Bank
of Sanger
9.5� interest rate Patchman 23,675 11,936
TOTAL $878,764
$676,782
NOTE 4 - SECURITY BOND
The First National Bank of Sanger operates as the depository bank
for the City of Sanger. The First National Bank of Sanger pledged
bonds totaling $989,145 as security for the City's cash accounts.
Expenditures are generally recognized under the modified accrual
basis of accounting when the related fund liability is incurred.
Exceptions to this general rule include principal and interest on
general long-term debt which is recognized when due.
All proprietary funds are accounted for using the accrual basis of
accounting. Their revenues are recognized when they are earned,
and their expenses are recognized when they are incurred. Unbilled
Water Works, Electric, and Sewer System Fund Utility service
receivables are recorded at year end.
Investments
Investments are stated at cost or amortized cost, which approximates
market.
Inventories
Inventory held by the Water Works, Electric, and Sewer System Fund
is priced at the lower of cost (first -in, first -out) or market.
Minimum amounts of inventory are not maintained, therefore, equity
reserves for inventory have been presented on an average cost basis.
Restricted Assets
These assets consist of cash and short-term investments restricted
for Water Works, Electric, and Sewer System Fund debt service.
Reserves
The City records reserves to indicate that a portion of the fund
balance is legally segregated for a specific future use.
Following is a list of all reserves used by the City and a description
of each.
Reserved for Revenue.. Bond Debt Service - An account used to segregate
a portion of fund balance for debt service resources legally
restricted to the payment of long-term debt principal and interest
amounts maturing in future years.
Reserved for Revenue Bond Retirement - An account used to segregate
a portion of fund balance for debt service resources restricted to
the payment of long-term debt principal and interest amounts maturing
in future years when sufficient amounts are not reserved in bond
debt service accounts.
Reserved for Revenue Bond Contingency - An account used to segregate
a portion of fund balance for debt service resources restricted to
the payment of long-term principal and interest amounts maturing
in future years when sufficient amounts are not reserved in the bond
debt service and bond retirement reserve accounts.
Debt Service Fund - The General Debt Service Fund is used to account
for the accumulation of resources for, and the payment of, general
long-term debt principal, capitalized lease obligations, interest,
and related costs.
Proprietary Funds
Enterprise Fund - The Water Works, Electric and Sewer System Fund
is used to account for the operations of the Water, Electric and --
Sewer Utility Enterprise Fund. Enterprise Funds are used to account
for operations (a) which are financed and operated in a manner similar
to private business enterprises - where the intent of the governing —
body is the 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 (b) where
the governing body has decided that periodic determination of revenues
earned, expenses incurred, and/or net income is appropriate for
capital maintenance, public policy, management control,
accountability, or other purposes. —
Fixed Assets and Long -Term Liabilities
The accounting and reporting treatment applied to the fixed assets
and long-term liabilities associated with a fund are determined by
its measurement focus. All 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 their balance sheets. Their fund balance (net current
assets) is considered a measure of "available spendable resources."
Governmental fund operating statements present increases (revenues
and other financing sources) and decreases (expenditures and other
financing uses) in net current assets. Accordingly, they are said
to present a summary of sources and uses of "available spendable
resources" during a period.
Fixed assets used in governmental fund type operations (general fixed
assets) are accounted for in the General Fixed Assets Account Group,
rather than in governmental funds. Public domain ("infrastructure")
general fixed assets consisting of certain improvements other than --
buildings, including roads, bridges, curbs and gutters, streets and
sidewalks, drainage. systems, and lighting systems, have not been
capitalized. Such assets are normally immovable and of value only —
to the City, therefore, the purpose of stewardship for these items
is satisfied without recording of these assets. No depreciation
has been provided on general fixed assets. _
All fixed assets are valued at historical cost or estimated historical
cost if actual historical cost is not available. Donated fixed assets
are valued at their estimated fair value on the date donated.
12
CITY OF BANGER, TEXAS
UTILITY FUND
STATEMENT OF REVENUE AND EXPENSE AND CHANGES
FOR THE YEAR ENDED SEPTEMBER 30,
Operating Revenue:
Electricity
Water Sales
Sewer Charges
Sanitation
Miscellaneous
Total Operating Revenues
Operating Revenue Deductions:
Sanger Electric System
Water Department
Less: Utilities Expense and
Capital Outlays
Sewer Department
Less: Utilities Expense and
Capital Outlays
Total Operating Revenue
Deductions
Operating Revenue before Depr.
Depreciation
Operating Revenue
Non -Operating Revenue:
Interest Earnings
EPA Grant
Total Non -Operating Revenue
Non -Operating Expense:
Interest Expense and
Fees on Revenue Bonds
Transfer to Other Funds (Net)
Total Non -Operating Expense
Net Revenue
Prior Period Adjustment
Retained Earnings:
Beginning of Year
End of Year
1989
IN RETAINED EARNINGS
1989
•::
$1,761,675 $1,727,587
259,220 281,372
177,442 191,424
145,444 141,658
2,450 8,857
$2,346,231 $2,350,898
$1,309,833
139,709
$1,541,670
$ 804, 561
$1,373,942
231,935
$1,696,355
$ 654,543
(144, 603 ) (1 38, 218 j
$ 659,958 $ 516,325
$ 62,076 $ 39,890
4,490 12,300
$ 66,566 $ 52,190
$ (164,975) $ (165,790)
$ 409,062 $ 257,089
$ (236,687) $ (11,648)
2,068,238 $1,822,797
$2,240,613 $2,068,238
These Financial Statements are subject to the accountant's opinion.
10
COMBINED STATEMENT OF
FOR
REVENUES*
CITY OF SANGER, TEXAS
REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
ALL GOVERNMENTAL FUND TYPES
THE YEAR ENDED SEPTEMBER 30, 1989
Ad valorem taxes,
penalties, and interest
Franchise taxes
Municipal sales tax
Sanitation
Court/Fines
Intergovernmental
Interest Income
Miscellaneous
Governmental Fund Types
Special Debt Library
General Revenue Service Projects
28,925
95,003
145,733
17,442
revenue 11,814
51901 410
46,311 _ 614
TOTAL REVENUES
EXPENDITURES:
Current:
General Government $ 206,098
Public Works 212,446
Public safety 212,842
Non -departmental
Capital Outlay 30,220
Debt Service:
Principal Retirement 86,276
Interest 54,877
033
Fees 1 _ ___1
TOTAL EXPENDITURES
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES):
Operating transfers in
Operating transfers out
TOTAL OTHER FINANCING
SOURCES (USES)
EXCESS OF REVENUES AND OTHER
SOURCES OVER (UNDER)
FUND BALANCES -BEG. OF YEAR
FUND BALANCES -END OF YEAR
0
0
$(116,606) $ $ $ (7,974)
$ 123,245 $
$ 6,639 $ $ $ (7,974)
$ 1 5, 290 $ $ _ _ ____$ 12, 728
$ 21,929 $ it $ 4,754
8
CITY OF SANGER, TEXAS
COMBINED BALANCE SHEET (CONT'D)
ALL FUND TYPES AND ACCOUNT GROUPS
SEPTEMBER 30, 1989
Governmental Fund Ty es
Special Debt Library
General Revenue Service Projects
Liabilities and Fund Equity
LIABILITIES:
Accounts Payable $ (460) $ $ $ 1,270
Due to other funds 68,374
Customer Deposits
Deferred tax revenue 86,811
PAYABLE FROM RESTRICTED ASSETS:
Revenue bonds payable (current)
Accrued interest payable
REVENUE BONDS PAYABLE
CERTIFICATES OF OBLIGATION
INSTALLMENT NOTE PAYABLE
TOTAL LIABILITIES $154,725 $ $ $ 1,270
FUND EQUITY:
Contributed capital. $ $ $ $
Investment in general
fixed assets
Retained Earnings
Reserved for revenue
bond retirement:
Unreserved
Fund Balances
Unreserved
Undesignated 21,929 4,754
TOTAL FUND EQUITY $ 21,929 $ $ $ 4,754
TOTAL LIABILITIES & FUND EQUITY $176,654 $ $ $ 6,024
See Notes to Financial Statements
0
CITY OF SANGER, TEXAS
COMBINED BALANCE SHEET
ALL FUND TYPES AND ACCOUNT GROUPS
SEPTEMBER 30, 1989
Governmental Fund Ty es
Special Debt Library
General Revenue Service Projects
Assets
CASH AND INVESTMENTS:
Cash $ 12,583
Certificates of Deposits
and Savings 73,836
RECEIVABLES:
Taxes 87,380
Accounts (Net)
DUE FROM OTHER FUNDS 21855
INVENTORY - at cost
RESTRICTED ASSETS:
Investments at cost
PROPERTY, PLANT, AND EQUIPMENT:
Land/Easement
Building
Water System
Sewer System
Electric System
Equipment
Improvements
Accumulated Depreciation
AMOUNT TO BE PROVIDED FOR RETIREMENT
OF GENERAL LONG-TERM DEBT
0
TOTAL ASSETS $176,654
See Notes to Financial Statements
CITY OF SANGER, TEXAS
TABLE OF CONTENTS
SEPTEMBER 30, 1989
Accountant's Report on Financial Statements and
Supplemental Schedules 1
Single Audit 2-3
Combined Balance Sheet -All Funds 4-7
Combined Statement of Revenue, Expenditures, and Changes
I
n Fund Balances -All Governmental Fund Types 8-9
Statement of Revenue, Expense, and Changes in Retained
Earnings -Utility Fund 10
Notes to the Financial Statements 11-16
Balance Sheet -General Fund 17
Statement of Revenue, Expenditures, and Changes in Fund
Balances -General Fund 18-19
Statement of Revenue, Expenditures, and Changes in Fund
Balances -Budget and Actual -General Fund 20
Balance Sheet -Sanger Electric 21-22
Balance Sheet -Water and Sewer 23-24
Balance Sheet -Enterprise Fund -Combined 25-26
Schedule of Revenue and Expenditures -Enterprise Fund 27
Schedule of Revenue and Expenditures -Budget and
Actual -Enterprise Fund 28
Balance Sheet -Payroll Fund 29
Statement of General Funded Debt 30
Statement of Changes in General Fixed Assets -By Source 31
Property Tax Levies and Collections 32