Audit Report

Audit Report

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Washington State Auditor’s Office Financial Statements Audit Report King County Water District No. 90 Audit Period January 1, 2009 through December 31, 2009 Report No. 1004780 Issue Date December 20, 2010 Washington State Auditor Brian Sonntag December 20, 2010 Board of Commissioners King County Water District No. 90 Renton, Washington Report on Financial Statements Please find attached our report on King County Water District No. 90’s financial statements. We are issuing this report in order to provide information on the District’s financial condition. Sincerely, BRIAN SONNTAG, CGFM STATE AUDITOR Insurance Building, P.O. Box 40021  Olympia, Washington 98504-0021  (360) 902-0370  TDD Relay (800) 833-6388 FAX (360) 753-0646  http://www.sao.wa.gov Table of Contents King County Water District No. 90 January 1, 2009 through December 31, 2009 Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters in Accordance with Government Auditing Standards ................. 1 Independent Auditor’s Report on Financial Statements .............................................................. 3 Financial Section ........................................................................................ 5 Independent Auditor’s Report on Internal Control over Financial Ring and on ...

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Washington State Auditor’s Office

Financial Statements Audit Report






King County Water District No. 90



Audit Period
January 1, 2009 through December 31, 2009


Report No. 1004780























Issue Date
December 20, 2010




Washington State Auditor
Brian Sonntag



December 20, 2010


Board of Commissioners
King County Water District No. 90
Renton, Washington


Report on Financial Statements

Please find attached our report on King County Water District No. 90’s financial statements.

We are issuing this report in order to provide information on the District’s financial condition.

Sincerely,

BRIAN SONNTAG, CGFM
STATE AUDITOR


Insurance Building, P.O. Box 40021  Olympia, Washington 98504-0021  (360) 902-0370  TDD Relay (800) 833-6388
FAX (360) 753-0646  http://www.sao.wa.gov
Table of Contents

King County Water District No. 90
January 1, 2009 through December 31, 2009


Independent Auditor’s Report on Internal Control over Financial Reporting and on
Compliance and Other Matters in Accordance with Government Auditing Standards ................. 1
Independent Auditor’s Report on Financial Statements .............................................................. 3
Financial Section ........................................................................................ 5

Independent Auditor’s Report on Internal
Control over Financial Ring and on
Compliance and Other Matters in Accordance
with Government Auditing Standards

King County Water District No. 90
January 1, 2009 through December 31, 2009


Board of Commissioners
King County Water District No. 90
Renton, Washington


We have audited the basic financial statements of King County Water District No. 90, King
County, Washington, as of and for the year ended December 31, 2009, and have issued our
report thereon dated December 3, 2010.

We conducted our audit in accordance with auditing standards generally accepted in the United
States of America and the standards applicable to the financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States.

INTERNAL CONTROL OVER FINANCIAL REPORTING

In planning and performing our audit, we considered the District’s internal control over financial
reporting as a basis for designing our auditing procedures for the purpose of expressing our
opinion on the financial statements, but not for the purpose of expressing an opinion on the
effectiveness of the District’s internal control over financial reporting. Accordingly, we do not
express an opinion on the effectiveness of the District’s internal control over financial reporting.

A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to
prevent, or detect and correct misstatements on a timely basis. A material weakness is a
deficiency, or a combination of deficiencies, in internal control such that there is a reasonable
possibility that a material misstatement of the District's financial statements will not be
prevented, or detected and corrected on a timely basis.

Our consideration of internal control over financial reporting was for the limited purpose
described in the first paragraph of this section and would not necessarily identify all deficiencies
in internal control that might be deficiencies, significant deficiencies or material weaknesses.
We did not identify any deficiencies in internal control over financial reporting that we consider
to be material weaknesses, as defined above.

COMPLIANCE AND OTHER MATTERS

As part of obtaining reasonable assurance about whether the District’s financial statements are
free of material misstatement, we performed tests of the District’s compliance with certain
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Washington State Auditor's Office
1provisions of laws, regulations, contracts and grant agreements, noncompliance with which
could have a direct and material effect on the determination of financial statement amounts.
However, providing an opinion on compliance with those provisions was not an objective of our
audit, and accordingly, we do not express such an opinion.

The results of our tests disclosed no instances of noncompliance or other matters that are
required to be reported under Government Auditing Standards.

This report is intended for the information and use of management and the Board of
Commissioners. However, this report is a matter of public record and its distribution is not
limited. It also serves to disseminate information to the public as a reporting tool to help citizens
assess government operations.


BRIAN SONNTAG, CGFM
STATE AUDITOR

December 3, 2010

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Washington State Auditor's Office
2Independent Auditor’s Report on Financial
Statements

King County Water District No. 90
January 1, 2009 through December 31, 2009


Board of Commissioners
King County Water District No. 90
Renton, Washington


We have audited the accompanying basic financial statements of King County Water District
No. 90, King County, Washington, as of and for the year ended December 31, 2009, as listed on
page 5. These financial statements are the responsibility of the District’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 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 evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects,
the financial position of King County Water District No. 90, as of December 31, 2009, and the
changes in financial position and cash flows thereof for the year then ended in conformity with
accounting principles generally accepted in the United States of America.

In accordance with Government Auditing Standards, we have also issued our report on our
consideration of the District’s internal control over financial reporting and on our tests of its
compliance with certain provisions of laws, regulations, contracts and grant agreements and
other matters. The purpose of that report is to describe the scope of our testing of internal
control over financial reporting and compliance and the results of that testing, and not to provide
an opinion on the internal control over financial reporting or on compliance. That report is an
integral part of an audit performed in accordance with Government Auditing Standards and
should be considered in assessing the results of our audit.

The management’s discussion and analysis on pages 6 through 11 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
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Washington State Auditor's Office
3principally of inquiries of management regarding the methods of measurement and presentation
of the required supplementary information. However, we did not audit the information and
express no opinion on it.


BRIAN SONNTAG, CGFM
STATE AUDITOR

December 3, 2010

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Washington State Auditor's Office
4Financial Section

King County Water District No. 90
January 1, 2009 through December 31, 2009


REQUIRED SUPPLEMENTAL INFORMATION

Management’s Discussion and Analysis – 2009


BASIC FINANCIAL STATEMENTS

Statement of Net Assets – 2009 and 2008
Statement of Revenues, Expenses and Changes in Fund Net Assets – 2009 and 2008
Comparative Statement of Cash Flows – 2009 and 2008
Notes to Financial Statements – 2009 and 2008


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Washington State Auditor's Office
5King County Water District #90
Management’s Discussion and Analysis
Year Ended December 31, 2009


The following Management’s Discussion and Analysis is intended to serve as an introduction to
King County Water District 90’s financial activities for the year ended December 31, 2009.
Readers are encouraged to review this section in conjunction with the accompanying financial
statements.

SUMMARY OF ORGANIZATION AND BUSINESS

King County Water District #90 (KCWD90 or The District) is a Special Purpose District located
in the Renton Highlands area of unincorporated King County. The District is a municipal
corporation as set forth in the Revised Code of Washington (RCW) Title 57 and authorized by
King County ordinances. Three local citizens are elected to KCWD90’s Board of Commissioners
by voters living within the District's Boundaries. The Board of Commissioners establishes
District water rates, sets policies, and oversees operations. The Board meets regularly on the
first and third Tuesday of each month at 4:45 p.m. All meetings are open to the public. Day to
Day District administrative and operational duties are carried out by an eleven-member staff
along with consulting engineers and legal counsel.

DISCUSSION OF BASIC FINANCIAL STATEMENTS

The financial statements of KCWD90 report information about the District using the full-accrual
basis of accounting where revenues are recognized when earned and expenses are recognized
when incurred. Capital asset purchases are capitalized and long-term liabilities are accounted
for in the appropriate funds.

The Statement of Net Assets presents information on all of the District’s assets and liabilities
with the difference between the two reported as net assets. Over time, increases and decreases
in net assets may serve as an indicator of whether the financial position of the District is
improving or deteriorating.

All of the current year’s revenues and expenses are accounted for in The Statement of
Revenues, Expenses and Changes in Net Assets. This statement measures the success of the
District’s operations over the past fiscal year and can be used to determine whether the District
has successfully recovered all the costs through its user fees, profitability and credit worthiness.

The Statement of Cash Flows accounts for the net change in cash and cash equivalents by
summarizing cash receipts and cash disbursements resulting from operating activities, capital
and related financing activities and investment activities. This statement assists the user in
determining the source of cash coming into the District, the items for which cash was expended,
and the beginning and ending cash balance.

The notes provide additional information that is essential to a full understanding of the data
provided in the District’s Financial Statements.

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Washington State Auditor's Office
6King County Water District #90
Management’s Discussion and Analysis
Year Ended December 31, 2009

FINANCIAL ANALYSIS

The overall financial condition of the District remains strong as indicated by the consistent
increases in net assets each year. The District is run in a very conservative manner. District
officials have worked hard to stabilize rates, invest in infrastructure, and keep expenses down
wherever possible. In addition the District is not heavily leveraged as evidence by a debt to net
asset ratio of just 5%.

CONDENSED STATEMENTS OF NET ASSETS
2009 2008 2007 Variance Change%
2009 vs.
Assets 2008
Current Assets
Cash $5,692,079 $5,764,686 $6,338,366 (72,607) -1.3%
Other Current Assets 569,464 595,726 565,857 (26,262) -4.4%
Noncurrent Assets:
Total noncurrent Assets 26,867,331 25,423,919 24,507,181 1,443,412 5.7%
Total Assets 33,128,874 31,784,331 31,411,404 1,344,543 4.2%

Liabilities
Current Liabilities 374,948 234,537 188,867 140,411 59.9%
Restricted Liabilities 407,516 394,744 375,523 12,772 3.2%
Long Term Debt 1,773,804 2,021,434 2,260,691 (247,630) -12.3%
Total Liabilities 2,556,268 2,650,715 2,825,081 (94,447) -3.6%

Net-Assets
Invested in Capital Assets, net
of related debt 24,869,145 23,181,677 22,020,883 1,687,468 7.3%
Restricted 2,076,777 2,347,072 2,628,285 (270,295) -11.5%
Unrestricted 3,626,684 3,604,867 3,937,155 21,817 0.6%
Total Net-Assets 30,572,606 29,133,616 28,586,323 1,438,990 4.9%

Total Net Assets and Liabilities $33,128,874 $31,784,331 $31,411,404 1,344,543 4.2%


Assets
In 2009, the balance of Current Assets, in the form of cash, decreased only modestly by
approximately $72,000 or just over 1%. Operating net income increased cash by $678,365
(please see The Comparative Statement of Cash Flows – Operating for additional detail) after
non operating income and expenses are factored in the net decrease to cash was $72,607. This
is a significant reduction from the $573,680 cash decrease from 2008. However, 2008 included
an unusual operating expense of Tank Painting in the amount of $480,000.

Noncurrent assets
Noncurrent assets in the form of property, plant and equipment increased 5.7%. This increase is
accounted for by donations from developers, construction projects and equipment purchases
that have increased Net Utility Plant Assets by approximately $1.4 million in 2009. Please see
Note 5; Utility Plant for additional information on noncurrent assets.

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Washington State Auditor's Office
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