solutions images bingham 11-02-2010

City of Bingham Project Solution Page Images

for Required Trial Balances, financial

statements and Schedules, and Reports and Analyses

To Accompany

Accounting for Governmental and Nonprofit Entities, 15e

Earl R. Wilson, Jacqueline L. Reck, and Susan C. Kattelus

Debits CreditsCash $70,000Taxes Receivable-Delinquent 470,000Estimated Uncollectible Delinquent Taxes $42,500Interest and Penalties Receivable on Taxes 23,690Estimated Uncollectible Interest and Penalties 1,304Vouchers Payable 354,000Due to Other Funds 13,000Fund Balance 152,886 Totals for all accounts $563,690 $563,690

City of BinghamGeneral Fund

Post-Closing Trial BalanceFor year 2010

Debits CreditsCash $444,056Taxes Receivable-Delinquent 245,020Estimated Uncollectible Delinquent Taxes $203,396Interest and Penalties Receivable on Taxes 52,442Estimated Uncollectible Interest and Penalties 10,574Vouchers Payable 57,640Due to Other Funds 40,000Reserve for Encumbrances 78,020Fund Balance 351,888 Totals for all accounts $741,518 $741,518



Estimated Revenues Dr(Cr) Revenues Cr(Dr)

Unrealized Balance Dr(Cr)

Acct 3/4020 Taxes-Real Property $6,000,000 $6,012,700 ($12,700)Acct 3/4030 Taxes-Sales 250,000 251,000 (1,000)Acct 3/4040 Interest and Penalties on Taxes 44,000 42,010 1,990Acct 3/4050 Licenses and Permits 577,000 578,200 (1,200)Acct 3/4060 Fines and Forfeits 703,000 710,700 (7,700)Acct 3/4070 Intergovernmental Revenue 500,000 500,000 0Acct 3/4080 Charges for Services 210,000 222,400 (12,400)Acct 3/4090 Miscellaneous Revenues 110,000 110,500 (500)

Encumbrances Dr(Cr)

Expenditures Dr(Cr)

Appropriations Cr(Dr)

Available Balance Cr(Dr)

Acct 5/6/7020 General Government $2,840 $1,630,349 $1,640,000 $6,811Acct 5/6/7030 Public Safety 24,400 3,309,955 3,345,000 10,645Acct 5/6/7060 Public Works 27,800 1,429,106 1,462,000 5,094Acct 5/6/7070 Health and Welfare 12,900 957,485 975,000 4,615Acct 5/6/7080 Parks and Recreation 9,080 713,245 735,000 12,675Acct 5/6/7100 Miscellaneous 1,000 110,348 112,000 652


Operating Statement Account BalancesFor year 2011

19

4.b CITY OF BINGHAM

General Fund - Balance Sheet As of December 31, 2011 Assets Cash $444,056

Taxes receivable delinquent $245,020

Less: Estimated uncollectible delinquent

taxes 203,396 41,624

Interest and penalties receivable on taxes 52,442

Less: Estimated uncollectible interest

and penalties 10,574 41,868

Total Assets $527,548

Liabilities and Fund Balances Liabilities:

Vouchers payable $57,640

Due to other funds 40,000

Total Liabilities 97,640

Fund Balances:

Reserve for Encumbrances 78,020

Fund Balance 351,888

Total Fund Balances 429,908

Total Liabilities and Fund Balances $527,548

20

4.c CITY OF BINGHAM General Fund Statement of Revenues, Expenditures, and Changes in Fund Balances For the Year Ended December 31, 2011 Revenues:

Property taxes $6,012,700

Sales taxes 251,000

Interest and penalties on taxes 42,010

Licenses and permits 578,200

Fines and forfeits 710,700

Intergovernmental revenues 500,000

Charges for services 222,400

Miscellaneous revenues 110,500

Total Revenues 8,427,510

Expenditures:

General government 1,630,349

Public safety 3,309,955

Public works 1,429,106

Health and welfare 957,485

Parks and recreation 713,245

Miscellaneous appropriations 110,348

Total Expenditures 8,150,488

Excess of Revenues over Expenditures 277,022

Other Financing Sources (Uses) -0-

Increase in Fund Balances for Year 277,022

Fund Balances, December 31, 2010 152,886

Fund Balances, December 31, 2011 $ 429,908

21

4.d

CITY OF BINGHAM

General Fund Statement of Revenues, Expenditures*, and

Changes in Fund Balances—Budget and Actual (non-GAAP basis) For the Year Ended December 31, 2011

Budgeted Amounts Actual Over Original Final Actual (Under) Final Budget Revenues:

Property taxes $6,000,000 $6,000,000 $6,012,700 $ 12,700 Sales taxes 250,000 250,000 251,000 1,000 Interest and penalties on taxes 44,000 44,000 42,010 (1,990) Licenses and permits 577,000 577,000 578,200 1,200 Fines and forfeits 703,000 703,000 710,700 7,700 Intergovernmental revenues 500,000 500,000 500,000 -0- Charges for services 210,000 210,000 222,400 12,400 Miscellaneous revenues 150,000 110,000 110,500 500 Total Revenues 8,434,000 8,394,000 8,427,510 33,510 Expenditures and Encumbrances:

General government 1,510,000 1,640,000 1,633,189 ( 6,811) Public safety 3,325,000 3,345,000 3,334,355 (10,645) Public works 1,450,000 1,462,000 1,456,906 ( 5,094) Health and welfare 965,000 975,000 970,385 ( 4,615) Parks and recreation 770,000 735,000 722,325 (12,675) Miscellaneous appropriations 130,000 112,000 111,348 ( 652) Total Expenditures and Encumbrances 8,150,000 8,269,000 8,228,508 (40,492) Excess of Revenues over Expenditures 284,000 125,000 199,002 74,002 Add: Increase in Reserve for Encumbrances -0- -0- 78,020 78,020 Change in Fund Balances for Year 284,000 125,000 277,022 152,022 Fund Balances, December 31, 2010 152,886 152,886 152,886 -0- Fund Balances, December 31, 2011 $436,886 $ 277,886 $ 429,908 $152,022

*Including encumbrances of FY2011 appropriation outstanding as of December 31, 2011.

Debits CreditsOFS - Proceeds of Bonds $5,000,000Exp. - Construction Expenditures $4,980,200OFU - Interfund Transfers Out 19,800 Totals for all accounts $5,000,000 $5,000,000

City of BinghamCity Hall Annex Construction Fund

Pre-Closing Trial BalanceFor year 2011

54

5.c. CITY OF BINGHAM City Hall Annex Construction Fund Statement of Revenues, Expenditures and Changes in Fund Balance For the Year Ended December 31, 2011 Revenues $ -0-

Expenditures:

Construction Expenditures 4,980,200

Excess of Revenues over (under) Expenditures (4,980,200)

Other Financing Sources/(Uses):

Proceeds of Bonds 5,000,000

Interfund Transfers Out (19,800)

Excess of Revenues and Other Sources

over (under) Expenditures and Other Financing Uses -0-

Fund Balance, December 31, 2010 -0-

Fund Balance, December 31, 2011 $ -0-

Debits CreditsCash $1,032,315Taxes Receivable - Delinquent 167,000Estimated Uncollectible Delinquent Taxes $106,000Interest and Penalties Receivable on Taxes 7,285Estimated Uncollectible Interest and Penalties 880Investments – Temporary 430,000Fund Balance 1,529,720 Totals for all accounts $1,636,600 $1,636,600

City of BinghamDebt Service Fund


64

6.d City of Bingham Debt Service Fund Balance Sheet As of December 31, 2011

Assets Cash $1,032,315

Investments—temporary 430,000

Taxes receivable—delinquent $167,000

Less: Estimated uncollectible Delinquent Taxes 106,000 61,000

Interest and penalties receivable 7,285

Less: Estimated uncollectible Interest and Penalties 880 6,405

Total assets $1,529,720

Liabilities -0-

Fund Balance 1,529,720

Total Liabilities and Fund Balance $1,529,720

Debits Credits

Cash $1,032,315Taxes Receivable - Delinquent 167,000Estimated Uncollectible Delinquent Taxes $106,000Interest and Penalties Receivable on Taxes 7,285Estimated Uncollectible Interest and Penalties 880Investments – Temporary 430,000Fund Balance 1,014,840Budgetary Fund Balance 531,800Est. Revenue - Taxes 1,800,000Est. Revenue - Interest and Penalties on Taxes 7,000Est. Revenue - Investment Income 32,000Estimated Other Financing Sources-Premium on Bonds 100,000Estimated Other Financing Sources-Interfund Transfers In 19,800Revenue - Taxes 1,800,000Revenue - Interest and Penalties on Taxes 1,080Revenue - Investment Income 21,000Other Financing Sources-Premium on Bonds 100,000Other Financing Sources-Interfund Transfers In 19,800Appropriations 1,427,000Expenditures – Bond Principal 600,000Expenditures - Bond Interest 827,000Totals for all accounts $5,022,400 $5,022,400

City of BinghamDebt Service Fund


65

6.e

City of Bingham Debt Service Fund Statement of Revenues, Expenditures, and Changes in Fund Balance For the Year Ended December 31, 2011 Revenues:

Property taxes $1,800,000

Interest on investments 21,000

Interest and penalties on taxes 1,080

Total revenues 1,822,080

Expenditures:

Interest on bonds 827,000

Principal of matured bonds 600,000

Total expenditures 1,427,000

Excess of revenues over expenditures 395,080

Other Financing Sources:

Premium on bonds sold 100,000

Interfund transfers in 19,800 119,800

Excess of revenues and other financing sources

over expenditures 514,880

Fund balance, December 31, 2010 1,014,840

Fund balance, December 31, 2011 $1,529,720

66

6.f City of Bingham Debt Service Fund Statement of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual For the Year Ended December 31, 2011 Actual Original Final Over (Under) Budget Budget Actual Budget___ Revenues:

Property taxes $1,800,000 $1,800,000 $1,800,000 $ -0-

Interest on investments 32,000 32,000 21,000 (11,000)

Interest and penalties on taxes 7,000 7,000 1,080 (5,920)

Total revenues 1,839,000 1,839,000 1,822,080 (16,920)

Expenditures:

Interest on bonds payable 827,000 827,000 827,000 -0-

Principal of matured bonds 600,000 600,000 600,000 -0-

Total expenditures 1,427,000 1,427,000 1,427,000 -0-

Excess of revenues over expenditures 412,000 412,000 395,080 (16,920)

Other Financing Sources:

Premium on bonds sold 100,000 100,000 100,000 -0-

Interfund transfer in -0- 19,800 19,800 -0-

Excess of revenues and other financing

sources over expenditures 512,000 531,800 514,880 (16,920)

Fund Balance, December 31, 2010 1,014,840 1,014,840 1,014,840 -0-

Fund Balance, December 31, 2011 $1,526,840 $1,546,640 $1,529,720 $(16,920)

67

6.g CITY OF BINGHAM Computation of Legal Debt Margin

December 31, 2011 Assessed valuation of taxable property $400,000,000 Legal debt limit (10% of assessed valuation) 40,000,000 Debt outstanding subject to the legal limit: 6% general obligation serial bonds $11,400,000 5% general obligation serial bonds 5,000,000 Total debt outstanding subject to limit 16,400,000 Legal debt margin $23,600,000

Debits CreditsCash $284,904Restricted Cash - Customer Deposits 57,200Customer Accounts Receivable 160,440Accumulated Provision for Uncollectible Accounts $4,720Inventory of Supplies 94,146Due from Other Funds 13,000Utility Plant in Service 19,000,390Accumulated Depreciation – Utility Plant 4,011,278Construction Work in Progress 1,189,400Vouchers Payable 72,420Customer Deposits 57,200Accrued Interest Payable 434,1006% Revenue Bonds Payable 14,470,000Unamortized Bond Discounts on Revenue Bonds Payable 65,200Net Assets - Invested in Capital Assets, Net of related Debt 1,773,712Net Assets - Unrestricted 41,250 Totals for all accounts $20,864,680 $20,864,680

City of BinghamWater Utility Fund


Cash $985,168Restricted Cash - Customer Deposits 58,460Customer Accounts Receivable 199,490Accumulated Provision for Uncollectible Accounts $5,820Inventory of Supplies 101,546Due from Other Funds 40,000Utility Plant in Service 19,902,990Accumulated Depreciation – Utility Plant 4,391,286Construction Work in Progress 664,300Vouchers Payable 94,020Customer Deposits 58,460Accrued Interest Payable 434,1006% Revenue Bonds Payable 14,470,000Unamortized Bond Discounts on Revenue Bonds Payable 61,940Net Assets - Invested in Capital Assets, Net of related Debt 1,767,944Net Assets - Unrestricted 792,264 Totals for all accounts $22,013,894 $22,013,894



75

7.e CITY OF BINGHAM

Water Utility Fund Statement of Net Assets As of December 31, 2011

ASSETS: Current Assets:

Cash $ 985,168

Due from other funds 40,000

Customer accounts receivable $ 199,490

Less: Accumulated provision uncollectible accounts 5,820 193,670

Inventory of supplies 101,546

Total Current Assets 1,320,384

Restricted Assets: Cash 58,460

Utility Plant:

Utility plant in service 19,902,990

Less: Accumulated provision for depreciation 4,391,286 15,511,704

Construction work in progress 664,300

Total Utility Plant 16,176,004

Total Assets 17,554,848 LIABILITIES: Current and Accrued Liabilities:

Vouchers payable 94,020

Accrued interest payable 434,100

Total Current and Accrued Liabilities 528,120

Liabilities Payable from Restricted Assets: Customer deposits 58,460

Long-Term Debt: 6% Revenue bonds 14,470,000

Less: Unamortized bond discount 61,940 14,408,060

Total Liabilities 14,994,640

NET ASSETS:

Invested in capital assets, net of related debt 1,767,944

Unrestricted 792,264

Total Net Assets $ 2,560,208

Debits Credits

Cash $985,168Restricted Cash - Customer Deposits 58,460Customer Accounts Receivable 199,490Accumulated Provision for Uncollectible Accounts $5,820Inventory of Supplies 101,546Due from Other Funds 40,000Utility Plant in Service 19,902,990Accumulated Depreciation – Utility Plant 4,391,286Construction Work in Progress 664,300Vouchers Payable 94,020Customer Deposits 58,460Accrued Interest Payable 434,1006% Revenue Bonds Payable 14,470,000Unamortized Bond Discounts on Revenue Bonds Payable 61,940Net Assets - Invested in Capital Assets, Net of related Debt 1,773,712Net Assets - Unrestricted 41,250Sales of Water 3,066,700Operation Expense 826,786Maintenance Expense 268,400Depreciation Expense 380,008Uncollectible Accounts 3,800Interest on Long-Term Debt 842,460Totals for all accounts $24,335,348 $24,335,348



76

7.e CITY OF BINGHAM Water Utility Fund Statement of Revenues, Expenses, and Changes in Net Assets For the Year Ended December 31, 2011 Operating Revenues:

Sales of water (net of provision for

uncollectible accounts of $3,800) $3,062,900

Operating Expenses:

Operation expense $ 826,786

Maintenance expense 268,400

Depreciation expense 380,008

Total Operating Expense 1,475,194

Operating Income 1,587,706

Nonoperating Revenue and Expense:

Interest on long-term debt 842,460

Change in Net Assets 745,246

Net Assets, December 31, 2010 1,814,962

Net Assets, December 31, 2011 $2,560,208

77

7.f

CITY OF BINGHAM Water Utility Fund Statement of Cash Flows For Year Ended December 31, 2011 Cash flows from operating activities:

Cash received from customers and City $2,994,100

Cash provided by customer

deposits (see Note A) 3,854

Cash payments to employees for services(less: $70,500

for construction) (746,930)

Cash payments to suppliers (332,800)

Net cash provided by operating activities $1,918,224

Cash flows from capital and related

financing activities:

Construction of capital assets (348,500)

Interest paid on long-term debt (868,200)

Net cash used for capital and related

financing activities (1,216,700)

Net increase in cash and cash equivalents 701,524

Cash and cash equivalents, December 31, 2010 342,104

Cash and cash equivalents, December 31, 2011 $1,043,628

Reconciliation of cash and cash equivalents to the balance sheet:

End Beginning of Year of Year Cash and cash equivalents in current

and accrued assets $ 985,168 $284,904

Restricted cash and cash equivalents 58,460 57,200

Total cash and cash equivalents $1,043,628 $342,104

78

7.f (Cont’d)

Reconciliation of operating income to net cash provided by

operating activities:

Operating income $1,587,706

Adjustments:

Depreciation $ 380,008

Increase in accounts receivable, net (37,950)

Increase in inventory of supplies (7,400)

Increase in due from other funds (27,000)

Increase in accounts payable 21,600

Increase in customer deposits 1,260

Net adjustments 330,518

Net cash provided by operating activities $1,918,224

Note A: Entry 7-b-13, deposits received, $6,904, minus deposits refunded to customers,

$3,050.

Debits CreditsCash $33,440Investments 3,003,360Interest Receivable on Investments 60,000Accounts Payable and Accrued Expenses $24,000Net Assets Held in Trust for Pension Benefits $3,072,800 Totals for all accounts $3,096,800 $3,096,800

City of BinghamEmployees' Retirement FundPost-Closing Trial Balance

For year 2010

Debits CreditsCash $39,440Investments 3,358,760Interest Receivable on Investments 64,000Accounts Payable and Accrued Expenses $12,000Net Assets Held in Trust for Pension Benefits 3,072,800Additions - Employer Contributions 363,000Additions - Investment Income 184,000Additions - Change in Fair Value of Investments 130,400Deductions - Annuity Benefits 300,000 Totals for all accounts $3,762,200 $3,762,200

City of BinghamEmployees' Retirement Fund


Debits CreditsCash $39,440Investments 3,358,760Interest Receivable on Investments 64,000Accounts Payable and Accrued Expenses $12,000Net Assets Held in Trust for Pension Benefits 3,450,200 Totals for all accounts $3,462,200 $3,462,200

City of BinghamEmployees' Retirement FundPost-Closing Trial Balance

For year 2011

81

8.c CITY OF BINGHAM

Employees' Retirement Fund Statement of Plan Net Assets

As of December 31, 2011 Assets: Cash $ 39,440 Accrued interest receivable 64,000 Investments, at fair value 3,358,760 Total Assets 3,462,200 Liabilities: Accounts payable and accrued expenses 12,000 Net assets held in trust for pension benefits $3,450,200 8.d CITY OF BINGHAM Employees' Retirement Fund Statement of Changes in Plan Net Assets For the Year Ended December 31, 2011 Additions: Employer contributions $ 363,000 Investment income: Interest 184,000 Increase in fair value of investments 130,400 Total investment income 314,400 Total additions 677,400 Deductions: Annuity benefits 300,000 Net increase in plan net assets 377,400 Net assets, December 31, 2010 3,072,800 Net assets, December 31, 2011 $3,450,200

Debits Credits

Cash $1,476,371Taxes Receivable - Delinquent 412,020Estimated Uncollectible Delinquent Taxes $309,396Interest and Penalties Receivable on Taxes 59,727Estimated Uncollectible Interest and Penalties 11,454Investments - Temporary 430,000Land 1,350,000Improvements other than Buildings 9,000,000Accumulated Depreciation - Improvements other than Buildings 2,280,000Infrastructure 29,190,000Accumulated Depreciation - Infrastructure 11,860,000Buildings 13,532,000Accumulated Depreciation - Buildings 2,560,000Equipment 8,098,200Accumulated Depreciation - Equipment 5,484,000Vouchers Payable 57,640Accrued Interest Payable on Long-term Debt 467,000Internal Payables to Business-Type Activities 40,000Current Portion of Long Term Debt 850,0005% Serial Bonds Payable 4,750,0006% Serial Bonds Payable 10,800,000Unamortized Premium on Serial Bonds Payable 95,000Net Assets - Invested in Capital Assets, Net of Related Debt 25,046,000Net Assets - Restricted for Debt Service 1,014,840Net Assets - Unrestricted 207,114Program Revenues - General Govt. - Charges for Services 1,085,600Program Revenues - General Government - Operating Grants and Contributions 500,000Program Revenues - Public Safety - Charges for Services 425,700General Revenues - Property Taxes 7,812,700General Revenues - Taxes - Sales 251,000General Revenues - Interest and Penalties on Taxes 43,090General Revenues - Miscellaneous 110,500General Revenues - Investment Earnings 21,000Exp. - General Government 2,371,197Exp. - Public Safety 4,589,955Exp. - Public Works 1,909,106Exp. - Health and Welfare 1,277,485Exp. - Parks and Rec. 1,033,245Exp. - Interest on Long-Term Debt 929,000Exp. - Interest on Tax Anticipation Notes 9,500Totals for all accounts $75,874,920 $75,874,920

City of BinghamGovernmental Activities, Government-Wide Level


Debits Credits

Cash $1,476,371Taxes Receivable - Delinquent 412,020Estimated Uncollectible Delinquent Taxes $309,396Interest and Penalties Receivable on Taxes 59,727Estimated Uncollectible Interest and Penalties 11,454Investments - Temporary 430,000Land 1,350,000Improvements other than Buildings 9,000,000Accumulated Depreciation - Improvements other than Buildings 2,280,000Infrastructure 29,190,000Accumulated Depreciation - Infrastructure 11,860,000Buildings 13,532,000Accumulated Depreciation - Buildings 2,560,000Equipment 8,098,200Accumulated Depreciation - Equipment 5,484,000Vouchers Payable 57,640Accrued Interest Payable on Long-term Debt 467,000Internal Payables to Business-Type Activities 40,000Current Portion of Long Term Debt 850,0005% Serial Bonds Payable 4,750,0006% Serial Bonds Payable 10,800,000Unamortized Premium on Serial Bonds Payable 95,000Net Assets - Invested in Capital Assets, Net of Related Debt 22,491,200Net Assets - Restricted for Debt Service 1,529,720Net Assets - Unrestricted 37,092Totals for all accounts $63,585,410 $63,585,410

City of BinghamGovernmental Activities, Government-Wide Level


97

9.d

CITY OF BINGHAM

Statement of Net Assets As of December 31, 2011

Governmental

Activities Business-type

Activities

Total Assets

Cash and cash equivalents $ 1,476,371 $ 985,168 $ 2,461,539 Receivables (net of estimated uncollectibles)

150,897 193,670 344,567

Internal balances (40,000) 40,000 0 Inventories 101,546 101,546 Restricted assets: cash 58,460 58,460 Investments 430,000 430,000 Capital assets (net of accumulated depreciation)

38,986,200 16,176,004 55,162,204

Total Assets 41,003,468

17,554,848 58,558,316

Liabilities

Vouchers payable 57,640 94,020 151,660 Accrued interest payable 467,000 434,100 901,100 Customer deposits 58,460 58,460 Current portion of long-term debt 850,000 850,000 Bonds payable(net of discounts and premiums)

15,645,000 14,408,060 30,053,060

Total Liabilities 17,019,640 14,994,640 32,014,280

Net Assets

Invested in capital assets, net of related debt

22,491,200

1,767,944

24,259,144

Restricted for: Debt service 1,529,720 1,529,720 Unrestricted (37,092) 792,264 755,172 Total Net Assets $23,983,828 $ 2,560,208 $ 26,544,036

98

9.d CITY OF BINGHAM Statement of Activities

For the year ended December 31, 2011

Program Revenues Net (Expense) Revenue and Changes in Net Assets

Functions/Programs Expenses Charges for services

Operating grants and

contributions

Capital Grants and

Contributions

Governmental Activities

Business-type Activities

Total

Governmental activities: General government $ 2,371,197 $1,085,600 $ 500,000 $ (785,597) $ (785,597)

Public safety 4,589,955 425,700 (4,164,255) (4,164,255) Public works 1,909,106 (1,909,106) (1,909,106) Health and welfare 1,277,485 (1,277,485) (1,277,485) Parks and recreation 1,033,245 (1,033,245) (1,033,245) Interest expense 938,500 ______ _______ (938,500) (938,500) Total 12,119,488 1,511,300 500,000 (10,108,188) (10,108,188) Business-type activities: Water utility 2,321,454 3,066,700 745,246 745,246 Total government $14,440,942 $4,578,000 $ 500,000 (9,362,942) General revenues: Property taxes 7,812,700 7,812,700 Sales taxes 251,000 251,000 Interest and

penalties 43,090 43,090

Investment earnings 21,000 21,000 Miscellaneous 110,500 110,500 Total general revenues 8,238,290 8,238,290 Decrease in net assets (1,869,898) 745,246 (1,124,652) 25,853,726 1,814,962 27,668,688

Net assets, December 31, 2010 Net assets, December 31, 2011 $ 23,983,828 $ 2,560,208 $26,544,036

99

9.d CITY OF BINGHAM

Balance Sheet Governmental Funds

As of December 31, 2011

General

Fund

Debt Service Fund

Total Governmental

Funds ASSETS Cash and cash equivalents $ 444,056 $1,032,315 $ 1,476,371Investments 430,000 430,000Receivables (net) 83,492 67,405 150,897 Total assets $ 527,548 $ 1,529,720 $ 2,057,268 LIABILITIES AND FUND BALANCES Liabilities: Vouchers payable $ 57,640 $ 57,640Due to other funds 40,000 40,000 Total liabilities

97,640 97,640

Fund balances: Reserved for Encumbrances 78,020 78,020Unreserved, reported in: General fund 351,888 351,888 Debt service funds _______ 1,529,720 1,529,720 Total fund balances 429,908 1,529,720 1,959,628Total liabilities and fund balances $ 527,548 $ 1,529,720 $ 2,057,268

Reconciliation of governmental funds fund balances to governmental activities

net assets at the government-wide level Total governmental funds fund balances $ 1,959,628 Amounts reported for governmental activities in the statement of net assets differ from the total fund balances reported in this statement because:

Capital assets used in governmental activities, net of depreciation, are not reported in the funds.

38,986,200 Long-term liabilities are not due and payable and therefore are not reported in the funds.

(16,495,000)

Accrued interest payable are not a liability of the funds (467,000)Net assets of governmental activities $23,983,828

Note: The City Hall Annex Construction Fund is excluded from the balance sheet since the fund was closed prior to year-end.

9.dCITY OF BINGHAMStatement of Revenues, ExpendituresAnd Changes in Fund BalancesGovernmental FundsFor the Year Ended December 31, 2011

City Hall

DebtGeneral

ConstructionServiceFund

FundFundTotalsREVENUES: Taxes

$6,012,700$1,800,000$ 7,812,700Interest and penalties

42,0101,08043,090Sales taxes

251,000 251,000Licenses and permits

578,200 578,200

Fines and forfeits

710,700 710,700Intergovernmental revenue

500,000 500,000Charges for services

222,400 222,400Miscellaneous revenues

110,500 110,500Investments earnings

21,00021, 000Total revenues

8,427,510-0-1,822,08010,249 ,590

EXPENDITURES:Current:General government

1,630,349 1,630,349Public safety

3,309,955 3,309,955Public works

1,429,106 1,429,106Health and welfare

957,485 957,485Parks and recreation

713,245 713,245Miscellaneous appropriations

110,348 110,348Capital outlay

4,980,2004,980,200Debt service: Interest

827,000827,000Principal

600,000600,000Total expenditures

8,150,4884,980,2001,427,00014,557,688

100

101

9.d Cont’d.

CITY OF BINGHAM Statement of Revenues, Expenditures

And Changes in Fund BalancesGovernmental Funds For the Fiscal Year Ended December 31, 2011

Capital Debt General Projects Service Fund Fund Fund Totals

Excess (deficiency) of revenues over expenditures 277,022 (4,980,200) 395,080 (4,308,098) Proceeds of tax supported bonds 5,000,000 5,000,000 Premium on Bonds Sold 100,000 100,000 Interfund transfers in (out) ________ (19,800) 19,800 ______-0- Total other financing sources ________ 4,980,200 119,800 5,100,000 (uses) Net change in fund balances 277,022 0 514,880 791,902 Fund balances, December 31, 2010 152,886 0 1,014,840 1,167,726 Fund balances, December 31, 2011 $ 429,908 $ 0 $1,529,720 $ 1,959,628

102

9.d Cont’d.

CITY OF BINGHAM Reconciliation of the Statement of Revenues, Expenditures And Changes in Fund Balances Governmental Funds to

the Statement of Activities For the Year Ended December 31, 2011

Net changes in fund balances – total governmental funds $ 791,902 Amounts reported for the governmental activities in the statement of activities are different because:

Governmental funds report capital outlay as expenditures. However, in the statement of activities, the cost of these assets is allocated over their estimated useful lives as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period.

1,940,200

Bond proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net assets. Repayment of bond principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net assets.

(4,495,000)

Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. On the accrual basis, interest expense exceeded interest expenditures by $102,000 for the year. In addition, amortization of premium of $5,000 was reported in the statement of activities.

(107,000)

Change in net assets of governmental activities ($1,869,898)

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9.d Cont’d. CITY OF BINGHAM

Statement of Net Assets – Proprietary Funds As of December 31, 2011

Water Utility

Fund ASSETS Current assets: Cash and cash equivalents $ 985,168 Customer accounts receivables, net 193,670 Internal receivables 40,000 Inventories 101,546 Total current assets 1,320,384 Noncurrent assets: Restricted cash and cash equivalents 58,460 Capital assets: Utility plant in service 19,902,990 Less: accumulated depreciation (4,391,286) Construction work in progress 664,300 Total capital assets 16,176,004 Total Assets 17,554,848 LIABILITIES Current liabilities: Accounts payable 94,020 Accrued interest payable 434,100 Total current liabilities 528,120 Noncurrent liabilities: Customer deposits 58,460 Advance from General Fund 6% revenue bonds payable, net of discount 14,408,060 Total Liabilities 14,994,640 NET ASSETS Invested in capital assets, net of related debt 1,767,944 Unrestricted 792,264 Total Net Assets $2,560,208

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Combined Statement of Revenues, Expenses, and Changes in Proprietary Net Assets—Proprietary Funds

For the Year Ended December 31, 2011

Operating revenues: Sales of water (Net of provision for Uncollectible accounts of $3,800)

$3,062,900

Operating expenses: Operation expense 826,786 Maintenance expense 268,400 Depreciation expense 380,008 Total operating expenses 1,475,194 Operating income

1,587,706

Other income and deductions: Interest expense, net of amortization (842,460) Change in net assets 745,246

Net assets – December 31, 2010 1,814,962 Net assets – December 31, 2011 $2,560,208

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9.d. Cont’d. CITY OF BINGHAM

Proprietary Funds Statement of Cash Flows

For Year Ended December 31, 2011

Water Utility Fund

Cash flows from operating activities: Cash received from customers and City $2,994,100 Cash provided by customers’ deposits 3,854 Cash paid to employees (746,930)Cash paid to suppliers (332,800) Net cash provided by operating activities 1,918,224 Cash flows from capital and related financing activities: Construction of capital assets (348,500) Interest paid on long-term debt (868,200) Net cash used for capital and related financing activities (1,216,700) Net increase in cash 701,524 Cash and cash equivalents, December 31, 2010 342,104 Cash and cash equivalents, December 31, 2011 $1,043,628

Reconciliation of Operating Income to Net Cash Provided by Operating Activities

Water Utility Fund

Operating Income $1,587,706 Adjustments: Depreciation Expense 380,008 Increase in receivables, net (37,950) Increase in inventory of supplies (7,400) Increase in due from other funds (27,000) Increase in accounts payable 21,600 Increase in customer deposits 1,260 Net cash provided by operating activities $1,918,224

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Statement of Fiduciary Net Assets For Year Ended December 31, 2011

Employees’

Retirement

Plan

ASSETS Cash and cash equivalents $ 39,440 Interest receivable 64,000 Investments, at fair value 3,358,760 Total Assets 3,462,200 LIABILITIES Accounts payable and accrued expenses 12,000 NET ASSETS Held in trust for pension benefits $3,450,200

CITY OF BINGHAM

Statement of Changes in Fiduciary Net Assets For Year Ended December 31, 2011

Employees’

Retirement Plan

Additions: Employer contributions $ 363,000 Investment earnings: Net increase in fair value of investments 130,400 Investment income 184,000 Total investment earnings 314,400 Total additions

677,400

Deductions: Annuity benefits 300,000 Change in net assets 377,400 Net assets, December 31, 2010 3,072,800 Net assets, December 31, 2011 $3,450,200

107

Chapter 10 Considerable variation in the content of the financial analysis is to be expected since the analysis of a City’s financial information is not an exact science. Some students may attempt to extrapolate beyond what can reasonably be supported by the information in the problem, particularly since time series data for multiple years are unavailable. Moreover, the lack of demographic or economic data about the City of Bingham essentially precludes a complete analysis. Thus, the somewhat limited financial analysis we provide here should not be construed as a template by which you should judge your students’ analyses. a. Calculation of Crawford Performeter ratios: (Values of ratios are rounded)

Performance Category

Performance

Measure

Numerator

Denominator

Value ofRatio

Financial Position

Unrestricted net assets

($37,092) (a) $10,249,590 -(.004)

Same General Fund budgetary fund balance

$351,888 (b) $8,427,510 .042

Same Capital asset Condition

$22,184,000 (c) $57,455,100 .386

Same Pension plan funding

See Note (d) (d) See Note (d) Note (d)

Same Debt to assets $17,019,640 (e) $41,003,468 .415 Same Current ratio $2,057,268 (f) $1,414,640 1.454 Same Quick ratio $444,056 (g) $1,414,640 0.314

Financial

Performance Change in net assets $26,544,036 (h) $27,668,688 -$1,124,652

Same Interperiod equity $10,249,590 (i) $12,119,488 .846 Same Sales tax growth See Note (j) (j) See Note (j) Note (j) Same BTA self-sufficiency $3,066,700 (k) $2,321,454 1.321 Same Debt service

coverage $10,249,590 (l) $1,427,000 7.183

Financial Capability

Revenue dispersion $2,011,300 (m) $10,249,590 .196

Same Debt service load $1,427,000 (n) $11,254,600 .127 Same Financing margin—

bonded debt per capita

$16,495,000 (o) 50,000 $329.90

Same Financing margin—legal debt limit

$16,495,000 (p) $40,000,000 .412

Same Financing margin—property taxes per capita

$7,812,700 (q) 50,000 $156.25

Same Financing margin—sales tax rate

See Note (r) (r) See Note (r) Note (r)

Notes: Unless indicated otherwise, government-wide ratios use governmental activities data.

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(a) Unrestricted net assets / Total governmental activities revenue (Source: GW financial

statements) (b) Unreserved General Fund fund balance / Total GF revenues (Source: Governmental fund

financial statements) (c) Accumulated depreciation / Average cost of depreciable assets (Sources: December 31, 2010

trial balance from p. 6 of instructions; GW statement of net assets) (d) Fair value of plan assets / actuarial accrued liability. Since actuarial information is not

provided for the City of Bingham problem, this ratio cannot be calculated. (e) Total GA liabilities / total GA assets (Source: GW statement of net assets) (f) Current assets ($1,476,371 cash and cash equivalents + $150,897 net receivables + $430,000

temporary investments in debt service fund) / current liabilities ($57,640 vouchers payable + $40,000 internal balances payable + $467,000 interest payable + $850,000 current portion of long-term debt) (Sources: 12-31-2011 pre-closing trial balance; GW statement of net assets)

(g) Unrestricted cash in the General Fund / current liabilities (Sources: Governmental funds

balance sheet; GW statement of net assets) (h) Total net assets (governmental and business-type activities), end of year minus total net

assets, beginning of year (Source: GW statement of activities) (i) Net revenues, governmental activities / total expenses, governmental activities (Source: GW

statement of activities) (j) Sales tax growth cannot be calculated because sales tax information for FY 2010 was not

provided. (k) Service charge revenues, business-type activities / total expenses of business-type activities.

(Sources: GW statement of activities) (l) net revenues, governmental activities / total expenditures for principal and interest of general

long-term debt (Source: GW statement of activities and governmental funds statement of revenues, expenditures, and changes in fund balances).

(m) Non-tax revenues (i.e., program revenues) / total revenues, governmental activities (Source:

GW statement of activities) (n) Total expenditures for principal and interest on general long-term debt / total noncapital cash

outlays, governmental activities (Sources: Governmental funds statement of revenues, expenditures, and changes in fund balances; inspection of governmental activities Cash account—all credits except those for the capital projects fund)

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(o) General bonded debt (including unamortized premium) / Population (Given in instructions as 50,000). (Source: GW statement of net assets.)

(p) Bonded debt over legal debt limit, which from 6.g of this case was given as $40,000,000. (q) Property tax levy (General Fund and debt service fund, as adjusted for transaction 4.a.14) /

Population of 50,000. (Source: Governmental activities general ledger, Taxes Receivable—Current account)

(r) (Sales tax revenue current year minus sales tax revenue prior year) / sales tax revenue prior

year. Since information about sales taxes or the prior year was not provided, this ratio cannot be calculated.

Analysis: Although there is no information provided by which to compare the City of Bingham’s ratios to those of comparable small cities, certain tentative conclusions can be made regarding the city’s financial condition, as explained below: 1. As shown by several of the financial position ratios, the City of Bingham does not have

adequate financial reserves and could suffer significant problems in the following year should a revenue shortfall or unforeseen expenditures occur. Its unrestricted net assets ratio, current ratio, and quick ratio, all reflect lower than needed levels of current financial resources. The ratio of its General Fund budgetary fund balance to general revenues is only .042, slightly below the “red flag” level of .05 commonly considered a level of financial distress.

2. As a further indication of possible financial distress, the city’s net assets decreased

substantially during the year. In addition, its interperiod equity declined during the year because total expenses for the year exceeded total revenues.

3. In the long-run, the fact that capital assets are only about 39 percent depreciated suggests

that financing needs for replacement capital assets may be only moderate in the next few years. On the other hand, the rather high debt to asset ratio (about .42) and moderate ratios of bonded debt per capita ($329.90) and property taxes per capita ($156.25) suggests that although the citizens of the City of Bingham will be supporting a significant debt service load for many years to come, resource growth may not meet the needs. This is also reflected in the “fixed charge” debt service load of 12.7 percent of noncapital expenditures being used for debt service. Overall, the city’s debt burden is contributing significantly to the observed financial weakness, and this is likely to continue for quite some time.

4. A "much needed" annex to the city hall was built at a cost of approximately $4,230,000.

A $5,000,000 general obligation bond issue ("sold at an advantageous 5 percent annual

interest rate") financed the construction and the cost of land which had to be purchased as

110

a site for the annex ($250,000) and furniture and equipment for the annex ($498,200).

Construction efficiencies allowed $19,800 to be saved. Premium on the sale of the bonds

amounted to $100,000. This premium was invested during the year, as was all other cash

received in advance of required disbursements. Interest of $21,000 was earned on these

investments, and $1,080 interest and penalties on taxes levied for debt service were

earned. The savings on construction, bond premium, and interest earnings helped cover

bond interest payments during the year. Revenue from taxes levied for debt service

amounted to $1,800,000. This amount plus the $100,000 premium added, after

expenditures, more than $500,000 to the debt service fund fund balance for future

redemption of bonds and interest due on December 31, 2011.

5. Net income of the water utility for the year amounted to $745,246, on sales of

$3,066,700, or about 24 percent of sales. This may appear excessive, depending on the

Utility manager’s future plans for the fund’s unrestricted net assets. Perhaps, the billing

rate is set at the current high level in anticipation of future plant expansion or

replacement.

6. Over $377,000 was added to the net assets available for benefits to members of the

Employees' Retirement Fund of the City of Bingham during the year.

In conclusion, the City of Bingham appears to be struggling with a high debt burden and low

operating reserves. The current year saw some improvement in operating reserves, but

$4,400,000 ($5,000,000 new bond issue less $600,000 retired) was added to bonded debt during

the year.

111

Chapter 12 The auditor's report for the City of Bingham should follow the wording of Illustration 12-2. An unqualified report, similar to that shown in Illustration 12-2 appears to be

appropriate for the year ended December 31, 2011. Nevertheless, some students may have issued a "qualified" report for some perceived reason. If so, it should use the wording specified in the audit guide, although most probably will not use the exact wording specified. If not, this will provide you with an opportunity to explain to the student why the specified report wording is critical to an auditor.

An unqualified audit report on the City of Bingham should appear as follows:

The Honorable Mayor, City Council, and City Manager, City of Bingham We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Bingham (State), as of and for the year ended December 31, 2011, which collectively comprise the City’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City of Bingham’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Bingham (State), as of December 31, 2011, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.

In addition, one or more explanatory paragraphs are usually required in most situations, such as those shown in Illustration 12-2.

--End--

solutions images bingham 11-02-2010

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