Audit 2005 MDA
13 Pages
English

Audit 2005 MDA

Downloading requires you to have access to the YouScribe library
Learn all about the services we offer

Description

THE TOWN OF GEORGETOWNP.O. Box 426Georgetown, Colorado 80444(303-569-2555)As management of the Town of Georgetown, we offer readers of the Town of Georgetown’sfinancial statements this narrative overview and analysis of the financial activities of the Town ofGeorgetown for the fiscal year ended December 31, 2004. Please read the information presentedhere in conjunction with the audited financial statements beginning on page I and the Town’sfinancial statements beginning on page 1.These financial statements are the Town’s first year of financial reporting under the major newreporting format in compliance with the Governmental Accounting Standards Board StatementNumber 34 (GASB S34). It is a significant change in governmental financial reporting. Thischange brought about several new financial statements and this narrative titled Management’sDiscussion and Analysis.The new statements are listed and described below with additional information in theaccompanying text: • Statement of Net Assets – a statement that combines the financial position as ofDecember 31, 2004 for all funds on a government-wide basis. • Statement of Activities – a statement that combines the changes in financial positionfor the year ended December 31, 2004 for all funds on a government-wide basis. • Statements for Governmental funds – these present the governmental funds such as thegeneral fund, Business Promotions Fund, and other funds. • Statements for Business-type ...

Subjects

Informations

Published by
Reads 40
Language English
THE TOWN OF GEORGETOWN P.O. Box 426 Georgetown, Colorado 80444 (303-569-2555) As management of the Town of Georgetown, we offer readers of the Town of Georgetown’s financial statements this narrative overview and analysis of the financial activities of the Town of Georgetown for the fiscal year ended December 31, 2004. Please read the information presented here in conjunction with the audited financial statements beginning on page I and the Town’s financial statements beginning on page 1. These financial statements are the Town’s first year of financial reporting under the major new reporting format in compliance with the Governmental Accounting Standards Board Statement Number 34 (GASB S34). It is a significant change in governmental financial reporting. This change brought about several new financial statements and this narrative titled Management’s Discussion and Analysis. The new statements are listed and described below with additional information in the accompanying text: • Statement of Net Assets – a statement that combines the financial position as of December 31, 2004 for all funds on a government-wide basis. • Statement of Activities – a statement that combines the changes in financial position for the year ended December 31, 2004 for all funds on a government-wide basis. • Statements for Governmental funds – these present the governmental funds such as the general fund, Business Promotions Fund, and other funds. • Statements for Business-type funds – these present proprietary funds, such as the Town’s water and wastewater utility funds. FINANCIAL HIGHLIGHTS • The Town of Georgetown’s financial condition has deteriorated in recent years, but is beginning to rebound. • The assets of the Town of Georgetown exceeded its liabilities at the close of 2004 by $6,210,123 (net assets). Of this amount, $354,948 (unrestricted net assets) may be used to meet the Town’s ongoing obligations to citizens and creditors. • The Town’s total net assets increased by $237,062 or 3.97% in 2004. The Town received $154,903 in capital grants and contributions, most of which was for improvements to the water and wastewater system. • Sales tax collections decreased by $12,087, a 2.69 percent decrease from the prior year. The major factor affecting this decrease was winter month tourism activity. III • At the end of 2004, the Town’s general fund reported a deficit ending fund balance of <$19,328>, which is an increase of $22,892 in comparison with the deficit ending balance of <$42,220> at the end of 2003. The primary reasons for the increase were that the Town is slowly recovering from some incorrect spending decisions and accounting allocations made by a previous Town Administrator which, when corrected by the Town’s auditor, forced the general fund into a deficient fund balance. However, the Town is gradually coming out of that situation and is reporting a positive fund balance in the first half of 2005. • At the end of 2004, the unreserved fund balance for the general fund was $0.00, which is 0% of total general fund expenditures. OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the Town of Georgetown’s basic financial statements. The Town of Georgetown’s basic financial statements comprise three components: 1) the government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. GOVERNMENT-WIDE FINANCIAL STATEMENTS The government-wide financial statements are designed to provide readers with a broad overview of the Town of Georgetown’s finances, in a manner similar to a private-sector business. The statement of net assets presents information on all the Town of Georgetown’s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the Town of Georgetown is improving or deteriorating. The statement of activities presents information showing how the government’s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g. uncollected taxes and earned but unused vacation leave). Both of the government-wide financial statements distinguish functions of the Town of Georgetown that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the Town of Georgetown include general government, public safety, highways and streets, and parks and recreation. The business-type activities of the Town IV of Georgetown include the Town’s water and wastewater utility functions. The government- wide financial statements can be found on page 1 of this report. Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Town of Georgetown, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance related legal requirements. All of the funds of the Town of Georgetown can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating the government’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The Town of Georgetown maintains four individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund, Sales Tax Capital Improvement special revenue fund, the Conservation Trust special revenue fund and the Business Promotions special revenue fund, all of which are considered to be major funds. Individual fund data for each of the special revenue governmental funds is provided in the form of combining statements elsewhere in this report. The Town of Georgetown adopts an annual appropriated budget for all of its funds. To demonstrate compliance, a budgetary comparison statement is provided for each of the major funds and a like schedule are provided for the other funds elsewhere in this report. The basic governmental fund financial statements can be found on page 5 of this report. Proprietary funds. The Town of Georgetown maintains one type of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The Town of Georgetown uses enterprise funds to account for its water and wastewater utility functions. Internal service funds are an accounting V device used to accumulate and allocate costs internally among the Town of Georgetown’s various functions. The Town of Georgetown does not have any internal service funds. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide information on the Town’s Water Enterprise Fund and on the Wastewater Enterprise Fund. The basic proprietary fund financial statements can be found starting on page 7 of this report. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the Town of Georgetown’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The basic fiduciary fund financial statements can be found on pages 11-12 of this report. Notes to the financial statements The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on page 13 of this report. Other information The combining statements referred to earlier in connection with special revenue governmental funds are presented immediately following the notes to the financial statements. Combining and individual fund statements and schedules can be found on pages 32 of this report. GOVERNMENT-WIDE FINANCIAL ANALYSIS As noted earlier, net assets may serve as a useful indicator of a government’s wide financial position. In the case of the Town of Georgetown, assets exceeded liabilities by $4,176,662 at the close of 2004. By far the largest portion of the Town of Georgetown’s net assets (90 percent) reflects its investment in capital assets (e.g., land, buildings, machinery and equipment, and infrastructure), less any related debt used to acquire those assets that are still outstanding. The Town of Georgetown uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the Town’s investment in capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the Town of Georgetown’s net assets ( 4 percent) represents resources that are subjected to external restrictions on how they may be used. The remaining balance of VI unrestricted net assets ($354,948) may be used to meet the Town’s ongoing obligations to citizens and creditors. Town of Georgetown Net Assets Governmental Business-type Activities Activities Total 2004 2003 2004 2003 2004 2003 Current and Other Assets $499,046 $466,565 $462,158 $485,689 $961,204 $952,254 Capital Assets $3,994,745 $3,989,278 $2,101,504 $2,032,156 $6,096,249 $6,021,434 Total Assets $4,493,791 $4,455,843 $2,563,662 $2,517,845 $7,057,453 $6,973,688 Long-term Liabilities Outstanding $0 $0 $473,750 $394,778 $473,750 $394,778 Other Liabilities $317,129 $336,973 $56,451 $268,876 $373,580 $605,849 Total Liabilities $530,201 $663,654 $847,330 $1,000,627 Net Assets: Invested in Capital Assets net of related debt $3,994,745 $3,989,278 $1,612,047 $1,625,368 $5,606,792 $5,614,646 Restricted $32,766 $23,750 $215,617 $30,364 $248,383 $54,114 Unrestricted $149,151 $105,842 $205,797 $198,459 $354,948 $304,301 Total Net Assets $4,176,662 $4,118,870 $2,033,461 $1,854,191 $6,210,123 $5,973,061 VII Town of Georgetown Changes in Net Assets Governmental Activities Business-type Activities Total 2004 2003 2004 2003 2004 2003 Revenues: Program Charges for Services $188,650 $176,956 $532,995 $436,652 $721,645 $613,608 Operating Grants & Contributions $0 $36,600 $0 $0 $0 $36,600 Capital Grants and Contributions $82,903 $931,747 $72,000 $18,000 $154,903 $949,747 General Revenues: Sales and Use Taxes $437,207 $449,294 $0 $0 $437,207 $449,294 Property Taxes $137,888 $134,862 $0 $0 $137,888 $134,862 Other Taxes $37,316 $49,465 $0 $0 $37,316 $49,465 Contributions $22,500 $31,165 $0 $0 $22,500 $31,165 Unrestricted Investment Earnings $1,097 $974 $2,139 $1,650 $3,236 $2,624 Total Revenues $907,561 $1,811,063 $607,134 $456,302 $1,514,695 $2,267,365 Expenses: General Government $185,051 $262,969 $0 $0 $185,051 $262,969 Public Safety $306,905 $325,828 $0 $0 $306,905 $325,828 Highways and Streets $287,904 $382,019 $0 $0 $287,904 $382,019 Economic Development $35,514 $31,165 $0 $0 $35,514 $31,165 Culture and Recreation $34,395 $25,338 $0 $0 $34,395 $25,338 Interest on Long Term Debt $0 $1,306 $23,468 $21,144 $23,468 $22,450 Water and Wastewater $0 $0 $404,396 $450,099 $404,396 $450,099 Total Expenses $849,769 $1,028,625 $427,864 $471,243 $1,277,633 $1,499,868 Increase in net assets $57,792 $782,438 $179,270 -$14,941 $237,062 $767,497 Net assets beginning $4,118,870 $3,336,432 $1,854,191 $1,869,132 $5,973,061 $5,205,564 Net assets ending $4,176,662 $4,118,870 $2,033,461 $1,854,191 $6,210,123 $5,973,061 VIII ? ? At the end of the current fiscal year, the Town of Georgetown is able to report positive balances in all three categories of net assets, both for the Town as a whole, as well as for its separate governmental and business-type activities. The same situation held true for the prior fiscal year. The Town’s net assets increased $237,062 during the 2004 fiscal year. Approximately 64% of this increase is attributed a decrease in total liabilities with the payoff of outstanding obligations. Expenses By Type - All Funds 14% General Government 31% Publi c Saf ety Hi ghways and Str eets Economic Development 24% Cultur e and Recr eation 2% Inter est on Long Ter m Debt Water and Wastewater 3% 23%3% Governmental Activities Governmental activities increased the Town of Georgetown’s net assets by $57,792 thereby accounting for 24 percent of the total growth in the net assets of the Town of Georgetown. Key elements of this increase were frugal spending by department personnel and miscellaneous income of $34,550. 2004 Expense and Program Revenues – Governmental Activities (in millions) • Charges for services increased by $11,694 (6.6 percent) during the year. Most of this increase results from increase in permit sales IX 2004 Revenues by Source – Governmental Activities • Sales tax revenue decreased by 2.7 percent as a result of slower tourist activity in the winter months. • For the most part, increases in expenses closely paralleled inflation and growth in the demand for services. Revenues Sources - Governmental Funds $ 3, 236 Sal es and Use Taxes $ 22, 500 $ 37, 316 Pr oper ty Taxes $ 137, 888 Other Taxes Contr ibutions$ 437, 207 Unrestricted Investment Earnings Business-type Activities Business-type activities increased the Town of Georgetown’s net assets by $179,270, accounting for 76% of the total growth in the Town’s net assets. Key elements of this increase are as follows: • The Board of Selectmen increased water and sewer rates by approximately 25% in the spring of 2004 in order to raise revenues for some important infrastructure improvement projects. • The water and wastewater superintendent was very careful about spending and very frugal in spending decisions. X 2004 Expense and Program Revenues – 2004 Revenues By Source – R e ven u e S o u rc es - Bu s in es s T y p e A ct ivit ie s $ 154,903 $0 Char ges f or Ser vi ces Oper ati ng Gr ants & Contr i buti ons Capital Gr ants and Contr ibutions $ 721,645 FINANCIAL ANALYSIS OF THE TOWN’S FUNDS As noted earlier, the Town of Georgetown uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds The focus of the Town of Georgetown’s governmental funds is to provide information on near- term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the Town of Georgetown’s financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. As of the end of 2004, the Town of Georgetown’s governmental funds (general, special revenue, capital projects, and debt service funds) reported combined ending fund balances of $181,917 an increase of $52,325 in comparison with the prior year. Approximately 82% of this total amount, $149,151, constitutes unreserved fund balance, which is available for spending at the Town’s discretion. The remainder of fund balance ($32,766) is reserved to indicate that it is not available for new spending because it has already been committed to establish emergency reserves as required by the State Constitution (amendment to Article X, Section 20). The general fund is the chief operating fund of the Town of Georgetown. At the end of the current fiscal year, unreserved fund balance of the general fund was <$19,328> while total fund balance was <$19,328> . As a measure of the general fund’s liquidity, it may be useful to compare both unreserved fund balance and total fund balance to total fund expenditures. XI Unreserved fund balance represents 0% of total general fund expenditures, while total fund balance is 3 % of that same amount. The fund balance of the Town of Georgetown’s general fund increased by $129,001 during the current fiscal year. As discussed elsewhere in this analysis, frugal spending by the Town contributed to this increase. In 2004, taxes are the largest source of revenue at 63 % of total general fund revenues. Sales tax represents 57 % of the total taxes in the general fund. This is consistent with the prior year. At year end, the Sales Tax Capital Improvement fund had a total fund balance of $216,284. All of this fund balance is unreserved and available for spending on public improvement capital projects at the Town’s discretion. Fund balance increased by $50,201, up from $166,083 in 2003. Proprietary funds The Town of Georgetown’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. In 2004, the water utility enterprise fund increased its net assets by $47,427 to $712,524. Unrestricted net assets at the end of the year amounted to <$240,795> because of a large Due To amount owed to the Wastewater Fund. Other factors concerning the finances of this fund have already been discussed in the above discussion of the Town of Georgetown’s business-type activities. In 2004, the wastewater (sewer) utility enterprise fund increased its net assets by $131,843 to $1,320,937. Unrestricted net assets at the end of the year amounted to $446,592. Other factors concerning the finances of this fund have already been discussed in the above discussion of the Town of Georgetown’s business-type activities. General Fund Budgetary Highlights The Town continued to work its way out of a deficit fund balance created by the spending decisions and accounting allocations of a prior Town Administrator. With a small town, tourism based economy, and a sales tax revenue base, this recovery took a large step in 2004, but it is a multi-year process. Although sales taxes were down in 2004, miscellaneous income of $34,550 helped general fund revenues exceed the budget estimate. Meanwhile, frugal spending by town officials and staff meant that total expenditures were less than budgeted. In 2004, there were a number of staffing vacancies which created budgetary savings as well. The combination of higher than expected revenues and lower than expected expenditures created a surplus that greatly helped offset the accumulated deficit. XII