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HomeMy WebLinkAboutTown Audit 09-30-1999TOWN OF WESTLAKE, TEXAS PRINCIPAL OFFICERS SEPTEMBER 30, 1999 MAYOR Scott Bradley ALDERMEN Charla Bradshaw, Mayor Pro -Tem . Abe Bush Jerry Dinsmore David Loeser Fred Held CITY SECRETARY Ginger Crosswy Charles Haynes, CPA 1903 Central Drive, Suite 300 Bedford, TX 76021 Phone (817) 545-1300/ Fax (817) 267-6100 INDEPENDENT AUDITOR'S REPORT To the Board of Aldermen Westlake, TX We have audited the accompanying general purpose financial statements of the Town of Westlake, Texas, as of and for the year ended September 30, 1999. These general purpose financial statements are the responsibility of the Town of Westlake's management. Our responsibility is to express an opinion on these general purpose financial statements, based on our audit. We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as that our audit provides a reasonable basis for our opinion. In our opinion, the general purpose financial statements referred to above present fairly, in all material respects, the financial position of the Town of Westlake, Texas, as of September 30, 1999, and the results of its operations for the year then ended, in conformity with generally accepted accounting principles. The Year 2000 Report on page 17 is not a required part of the basic financial statements, but is supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the supplementary information. However, we did not audit the information and do not express an opinion on it. In addition, we do not provide assurance that the Town of Westlake, Texas is or will become 2000 compliant, that the Town of Westlake, Texas year 2000 remediation efforts will be successful in whole or in part, or that parties with which the Town of Westlake, Texas does business are or will become Year 2000 compliant. Our audit was conducted for the purpose of forming an opinion on the general purpose financial statements taken as a whole and on the combining and individual fluid and account group financial statements. The accompanying financial information is -presented for purposes of additional analysis and is not a required part of the financial statements of the Town of Westlake, Texas. Such information has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, in our opinion, is fairly presented in all material respects in relation to the financial statements of each of the respective individual funds and account groups taken as a whole. Respectfully submitted, Charles Haynes, CPA March 18, 2000 2 ' — T 4 OF ''_STL '_, TE.' _ COMBINED BALANCE SHEET ' ALL FUND TYPES . SEPTEMBER 30, 1999 ' September 3O. 1QQQ September 30. 10S8 ' PUBLIC FIXED ASSET (MEMORANDUM (MEMORANDUM GENERALFUNO8 FACILITIES ACCOUNT ONLY) ONLY) Operating Development CORP. GROUP TOTAL TOTAL ASSETS Cash $ 2.054.890 $ 2.854.883 $ 10.338 $ $ 5.020.221 $ 4.078'100 Receivables Contracted Receipts 135.313 Miscellaneous 3.500 Office Equipment 25.776 25.776 18,045 Utility Infrastructure Costs 45,382 45,382 45,382 TOTAL ASSETS $ 2064990 $ 2964898 $ 10,338 $ 71,158 $ 5091379 $ 4270340 LIABILITIES Accounts Payable 98,574 98,574 205251 TOTAL LIABILITIES 98574 98574 205251 FUND EQUITY Fund Balances: Investment inFixed Assets 71.158 71.158 63.427 Designated 2.954.893 10.338 2'965.231 2.483,300 Undesignated 1956417 1,956,417 1,517,762 TOTAL FUND EQUITY 1056417 2,954,893 10,338 71,158 4902805 4065089 TOTAL LIABILITIES AND FUN[)'E(JU|TY 2054890 $ 2,954,893 $ 10,338 $ 71,158 $ 5091378 $ 4,270,340 ' The accompanying noh»3onaaDiOteg[a| partofUle financial statements ' - ' ,NO| ''—STL '-` TE.- - COKAB|NEDSTATEMENT OFREVENUES, EXPENDITURES . AND CHANGES lNFUND BALANCE ALL FUND TYPES FOR THE YEAR ENDED SEPTEMBER 30, 1999 ' September 3O. 1SSQ September 3O. 1Q8O PUBLIC (MEKAOFQ\NOUK8 8NEK8{JRANDUK0 GENERALFUNDS FACILITIES ONLY) Operating Fund Operating Development CORP. TOTAL TOTAL REVENUES Taxes Sales $ 663.897 $ 054.435 $ $ 1.318'332 $ 2,178.419 Franchise 210.054 210.054 184.528 Interest income 84.864 127.598 70 212,330 178.046 Building permits and fees 516.609 518.609 387.423 Fines and penalties 7.354 7.354 3.997 Other miscellaneous income 1,943 1,943 1,259 TOTALREVENUE8 * 1,484,520 $ 782,031 $ 70 $ 2,266,621 $ 2,914,272 OPERATING EXPENDITURES General government 1,045,865 1 O468S5 1,370,408 TOTAL OPERATING EXPENDITURES 1,045,865 1,045,865 1,370,408 Excess ofrevenues over expenditures 438.655 782.031 70 1.220.758 1.543.884 Fund Balance- September 30, 1998 1,517,762 2 172 882 10,268 3,700,892 2 457 797 Fund Balance- September 3O. 18SQ 1,956,417 $ 2954893 $ 10,338 $ 4,921,648 $ 4001651 - - . WN - NES ._ .�E, , _'-WS GBUEFALFUNO ' BUDGET TO ACTUAL-SCHEDULE [)FEXPENDITURES FOR THE YEAR ENDED SEPTEMBER 30\ 1998 Actual ' Year ended September 3O. 199B | Year Ended Budget Actual Variance September 30, 1998 Operating Fund City Secretary $ 24.333 $ 23.249 $ 1'085 $ 18.076 Payroll taxes 2.360 2.886 (516) 1'517 Office supplies 5.000 1.362 3.638 2.987 Capital outlay' equipment 5.000 7.731 i3.731\ 3.868 Capita| ouUoy- roadnapains 20.000 - 20.000 - Capital outlay-water line infrastructure ovensizing - - - - Maintenance and repairs 7'200 7.140 60 354 Postage and courier 2.100 3.301 U.201l 1.931 K8iooa||aneoua 3.050 210 2.840 2.414 Accounting and consulting 30.000 27.800 2.400 5,000 Engineering 128.000 146.627 U8,837l 58.522 Professional consulting 60,000 207.430 (147.430) 46.389 Contnaotedservioeo- po|ioeondfine 38.000 37.050 950 18'113 Legal 475.000 484.575 (9'575) 1.034'500 Interlocal funding - community service expense 10.000 7,600 2,400 8.250 Inspection . 12.000 12,640 (640) 2.538 Dues, printed material, and video material 1.600 2.448 (848) 2,177 Election expense 1,070 1.084 6 71 Telephone and utilities 2.720 2.712 M 2.452 Planners'fees 40.675 45.804 /4.929l 59.575 Insurance 4'000 3.424 576 3.209 Public notice 1'800 1'390 510 1.234 Training and seminars 2.375 2.353 22 1.784 Internet expense 600 433 167 - Travel expense 1.810 1.809 1 - Recycle expense - 1.213 (1.313) - Office and meeting location rent 13300 14,136 12,902 Total Operating Fund $ 891,983 $ 1,045,865 $ $ 1,287,833 - ~ The accompanying notes are anintegral part ofthe fin5nnia|stoternents TOWN OF WESTLAKE, TEXAS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1999 Note 1. Summary of Accounting; Policies The Town of Westlake, Texas (the "Town") was incorporated under the provisions of the laws of the State of Texas. The Town operates under a Board of Alderman — Mayor — Manager form of government and has established certain funds in conformity with generally accepted accounting principles. The financial statements of the Town have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant of the government's accounting policies are described below. The Town's fiscal year begins on October 1 and ends on September 30th each year. A. The Reporting Entity In evaluating how to define the Town for financial reporting purposes, management has considered all potential component units. The decision to include a potential component unit in the reporting entity was made by applying the criteria set forth in GAAP. The basic -but not the only - criterion for including a potential component unit within the reporting entity is the governing body's ability to exercise oversight responsibility. The most significant manifestation of the ability is financial interdependency. Other manifestation of the ability to exercise oversight responsibility include, but are not limited to, the selection of governing authority, the designation of management, the ability to significantly influence operations and accountability for fiscal matters. The other criterion used to evaluate potential component units for inclusion or exclusion from the reporting entity is the existence of special financing relationships, regardless of whether the Town is able to exercise oversight responsibilities. The Component Units: Active component unit entities consist of the Texas Student Housing Corporation ("TSHC") and the Lone Star Public Facilities Corporation ("Public Facilities Corporation"). TOWN OF WESTLAKE, TEXAS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1999 The Texas Student Housing Corporation is a Texas non-profit corporation acting on behalf of the Town that purchases and operates student -housing facilities. The contracts under which these facilities are operated are ' restrictive, however, they provide for funds to be made available, which the Town awards to local students in the form of college scholarships. Lone Star Public Facilities Corporation is a Texas non-profit corporation that acts on behalf of the Town to further the public purposes of the Public Facilities Corporation Act, as its duly constituted authority and instrumentality. B. Fund Accounting The accounts of the Town are organized on the basis of funds or account groups, each of which is considered to be a separate accounting entity. The operations of each fund or account group are accounted for by providing a separate set of self -balancing accounts which includes its assets, liabilities, fund equity, revenues and expenditures or expenses, as appropriate. Government resources are allocated to and for 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 of this report, into one generic fund type and one broad fund category and the component units, as follows: General Fund The Town currently accounts for its financial activity in general funds: The Operating Fund and the Westlake Development Corporations — 4A and 4B (Development). The Town reports these Economic Development Corporations as one separate column under the General Fund, because they are such a distinct and significant source of revenues. The Operating Fund is a governmental fund used to account for all financial resources except those required to be accounted for in another fund or account group. The two Westlake Development Corporations receive funding from a one- half (1/2) percent sales tax for each development corporation; approved by the voters. The purpose of the two Development Corporations is to promote, for the public welfare, economic development for areas within the Town of Westlake, as authorized by the State under the Texas Economic 7 TOWN OF WESTLAKE, TEXAS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1999 Development Act of 1979, as amended. These entities utilize a modified accrual basis of accounting for financial statement purposes. ACCOUNT GROUPS General Fixed Assets Account Group The General Fixed Assets Account Group is used to account for fixed assets used in governmental fund type operations for control purposes. 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 in the date of donation. No depreciation is recorded on general fixed assets. C. Basis of Accounting The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental fund types are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements of these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. The modified accrual basis of accounting is used by all governmental fund types. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means that the amount of the transaction can be determined and "available" means that the amount of the transaction is collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. A one-year availability period is used for revenue recognition for all governmental fund type revenues. Expenditures are recorded when the related fund liability is recorded as fund liabilities when due or when amounts have been accumulated in the debt service fund for payments to be made early in the following year. Those revenues susceptible to accrual are franchise taxes, special assessments, licenses, interest revenue and charges for services. Fines, permits and parking meter revenues are not susceptible to accrual because generally they are not measurable until received in cash. TOWN OF WESTLAKE, TEXAS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1999 D. Budgets and Budgetary Accounting As set forth in the Town Charter, the Town's Board of Aldermen adopt an annual budget for the General Fund. The annual budget for the General Fund is prepared in accordance with the basis of accounting utilized by that fund and can be amended by the Board throughout the fiscal year. Any revisions that alter the total expenditures/expenses must be approved by the Town's Board of Aldermen. The amended budget for the General Fund is presented in the Statement of Revenues and Expenditures - Budget and Actual - General Fund. The formal budgetary accounting is to be employed as a management control for all funds of the Town; however, legal budgets will be adopted only for General Fund groups. At the fund level, actual expenditures cannot exceed budgeted appropriations; however, with proper approval by the Board of Aldermen, budgetary transfers between departments can be made. E. Comparative Data Comparative totals for the prior year have been presented in the accompanying financial statements in order to provide an understanding of changes in the Town's financial position and operations. However, presentation of prior year totals by fund type have not been presented in each of the statements since their inclusion would make the statements unduly complex and difficult to read. F. Revenue Recognition - Property Taxes The Town does not currently assess ad valorem taxes on real estate or personal property. G. Deposits and Investments Deposits consist of cash demand deposits (principally interest bearing accounts). Investments are recorded at fair value, defined as the price at which two willing parties would exchange. TOWN OF WESTLAKE, TEXAS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1999 H. Inventories Inventories, when applicable, are carried at cost using the first -in, first -out method. I. Property, Plant and Equipment General fixed assets have been acquired for general governmental purposes. Assets purchases are recorded as expenditures in the General, Special Revenue, and Capital Projects Funds, and recorded at historical cost in the General Fixed Asset Account Group. In the case of gifts or contributions, such assets are recorded in the General Fixed Assets Account Group at estimated fair market value on the date received. Generally, fixed assets contributed by subdividers or other contractors 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 normally are immovable and of value only to the Town, therefore, the purpose of stewardship for these items is satisfied without recording these assets. No depreciation has been provided on general fixed assets. J. Compensated Absences The Town allows employees to accumulate up to 10 days of vacation time each year. Carryover of earned vacation time is limited to 40 hours. Upon termination, the Town pays all accumulated vacation time not yet taken. Any accumulated vacation that was not allowed to be taken due to work- related assignments is also paid upon termination. The Town allows employees to earn "comp" time, however it is to be taken within 10 days of its occurrence. Any vested, unpaid amount is payable upon termination. No accumulated, unused sick time is payable upon termination or retirement. K. Designations of Fund Equity Designations of fund balances are not legally required segregations but are segregated for a specific purpose. The City has designated a portion of the General Fund's and Capital Projects Funds' unreserved fund balances for TOWN OF WESTLAKE, TEXAS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1999 construction projects, infrastructure improvements and self insurance claims. L. Total Columns on Combined Statements - Overview Total columns on the Combined Statements 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 is such data comparable to a consolidation. Interfund eliminations, if applicable, have not been made in the aggregation of this data. M. Comparative Data Comparative data for the prior year has been presented in the accompanying general purpose financial statements in order to provide an understanding of changes in the Town's financial position and operations. However, complete comparative data (i.e., presentation of prior year totals by fund type in each of the statements) have not been presented since their inclusion would make the statement unduly complex and difficult to read. Certain comparative data has been reclassified to conform to the current year presentation. Note 2. Cash and Investments The cash and investment policies of the Town are governed by State statutes and the adopted Town Investment Policy. Town policies governing bank deposits require depositories to be FDIC — insured institutions and depositories must fully collateralize all deposits in excess of FDIC insurance limits. Deposits - At September 30, 1999, the Town's bank deposits of all funds totaled $97,044. Of these bank balances, $100,000 was covered by federal insurance at Frost Bank as depository for the Town. The collateral for the Town's deposits is categorized to give an indication of the level of risk assumed by the Town at year end. Category 1 includes 11 TOWN OF WESTLAKE, TEXAS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1999 deposits that are issued or registered or for which the securities are held by the Town or its agent in the Town's name. Category 2 includes uninsured and unregistered deposits for which the securities are held by the counterparty's trust department or agent in the Town's name. Category 3 includes uninsured and unregistered deposits for which the securities are held by the counterparty's trust department or agent, but not in the Town's name. Bank Deposit Covered By Category of Collateral 1 2&3 FDIC Insurance 100,000 - $100,000 $ - Investments - Bank Balance Market Value 100,000 100,000 $100,000 $100,000 The Town is allowed to invest in (1) obligations of the United States or its agencies and instrumentalities; (2) direct obligations, of the State of Texas or its agencies; (3) other obligations, the principal of and interest on which are unconditionally guaranteed or insured by the State of Texas or the United States; (4) obligations of states, agencies, counties, cities and other political subdivisions of any state having been rated as to investment quality by a nationally recognized investment rating firm and having received a rating of not less than "AA" or its equivalent; (5) certificates of deposits issued by state and national banks domiciled in Texas that are guaranteed or insured by the Federal Deposit Insurance Corporation or its successor, or secured by obligations mentioned above; and (6) fully collateralized direct repurchase agreements having a defined termination date. For fiscal year 1999, the Town invested only in interest bearing accounts in state and national banks domiciled in Texas that are insured by FDIC or secured by qualified obligations. The Town records all interest revenue related to investment activities in the respective funds. 12 TOWN OF WESTLAKE, TEXAS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1999 At September 30, 1999, the Town's investments included investment pools in the name of the Town or its agent in the Town's name. The Town's investments were as follows: Market Value TEXPOOL (State investment pool) $5,155,300 The Town's investments are categorized to give an indication of level of risk assumed by the Town at year end. Category 1 includes investements that are insured or registered; or for which the securities are held by the City or its agent in the Town's name. Category 2 includes uninsured and unregistered investments for which the securities are held by the counterparty's trust department or agent, in the Town's name. Category 3 includes uninsured and unregistered investments for which the securities are held by the counterparty's trust department or agent, but not m the Town" name. Investments are stated at cost, and all investment activities are conducted through the depository bank and the Town's financial advisor. During 1999, the Town did not invest through any security brokers or dealers. The cash and investment balances by fund at September 30, 1999 are composed of the following amounts: Account Name Number Location Interest Book Rate Balance Gen] Fund Optg.Acct. 6789085 Frost National Bank .5% $ 94,895 TexPool Fund 22008111000 TexPool 5.0424% 1,960,095 (Variable) Subtotal — General Operating $2,054,990 Development Fund Operating Account 6786289 Frost National Bank .5% $ 2,149 TexPool Fund 22008750111 TexPool 5.0424% 1,649,951 TexPool Fund 22008750000 TexPool 5.0424% 1,302,793 (Variable) Subtotal — Development $2,954,893 Cor oration 4A&4B 13 TOWN OF WESTLAKE, TEXAS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1999 Public Facilities CorpOperating Act 6786461 Frost National Bank .5% $ 10,338 $163,029 2001 163,029 2002 163,029 TSHC Operating Acct. 6762694 Frost National Bank .5% thereafter TexPool Fund 22008650000 TexPool 5.0424% Variable $ 242,461 Total Cash and Investments $5,262,683 =-- Note 3 Liti`ation At September 30, 1999, the Town was involved with one lawsuit involving property annexations and other disputes. The Town is a party to a lawsuit which seeks to nullify its annexation of approximately 60 acres of undeveloped land. The Town is vigorously defending this legal action, which was pending at year end, as well as of the date of this report. The legal proceedings for this case have not progressed to a point that an assessment of the potential outcome can be determined at the date of this report. Note 4 Commitments and Contingencies The Town has commitments relative to municipal services, and contractual relationships concerning certain utilities and public safety resources, which are normal in its ongoing activity. Non -cancelable obligations consist of a lease of Town office space and agreements for services at September 30, 1999. Minimum Lease payments and contractual obligations under these non- cancelable leases and agreements as of September 30, 1999 are as follows: Fiscal year end Payment September 30, Amount 2000 $163,029 2001 163,029 2002 163,029 2003 163,029 2004 152,272 thereafter 0 Total $804,388 14 TOWN OF WESTLAKE, TEXAS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1999 Note -S. Subsequent Events As a result the legal settlements noted in Note 3, above, the owners and developers of some of this property now have an agreement for the ` development of much of this undeveloped land. The development of this land could result in substantial increases in revenues, and associated cost of providing services, by the Town in future years. The Town has filed an application for a Certificate of Convenience and necessity with the Texas Natural Resource Conservation Committee to provide water and sewer service within the corporate limits of the Town. Originally, this application had been protested. However, this opposition to the Town's application has been withdrawn. Note 6. Trinity River Authority The Town has an agreement with the Trinity River Authority to provide wastewater treatment at the Denton Creek Regional Waste Water Treatment Facility. Rates are determined annually by the Trinity River Authority. Note 7. Wholesale Water Contract The Town has an agreement with the City of Fort Worth under which the Town purchases water when the Town's sources are not sufficient. The terms of the agreement provide that the Town will purchase an amount of treated potable water each year, at rates determined on a periodic basis. The rate is adjusted based on a water rate study which is conducted about every three years, on behalf of the wholesale water customers with the City of Fort Worth. Note 8. Retirement Plan The Town has elected to participate in the retirement plan sponsored by the Texas Municipal Retirement System. The plan covers all regular Town employees and requires contributions from both employees and the Town. It is the opinion of the TMRS management that the plans in TMRS are substantially defined contribution plans. 15 TOWN OF WESTLAKE, TEXAS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1999 Note 9. Year 2000 Considerations The Town has corrected all potential year 2000 computer software non- compliance issue at year end. Prior to January 1, 2000 the accounting software was updated to a version that was known to be year 2000 compliant. The Town did not experience any year 2000 computer, information system or related systems problems or incidents. The Town continues to monitor the possibility of year 2000 issues as the year progresses. year progresses. TOWN OF WESTLAKE, TEXAS YEAR 2000 REPORT Year Ended September 30, 1999 The Town of Westlake, Texas has taken actions to address the Year 2000 issue. The Town's plan has allowed it to become Year 2000 compliant prior to December 31, 1999. The Town has new computer equipment, which is represented to be Year 2000 compliant. The Town's financial records are currently maintained on QuickBooks Pro Software, made by Intuit, which is represented to be Year 2000 compliant. The Town has no other computer systems in use. At this time, it is impossible to determine the Year 2000 readiness of significant third parties with which the Town does business. The Year 2000 readiness of these third parties will play a significant role in the Year 2000 readiness of the Town of Westlake, Texas. 17