Financial Statements Audit Report Lake Whatcom Water and Sewer District Whatcom County
35 Pages
English

Financial Statements Audit Report Lake Whatcom Water and Sewer District Whatcom County

-

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

Description

Washington State Auditor’s Office Financial Statements Audit Report Lake Whatcom Water and Sewer District Whatcom County Audit Period January 1, 2009 through December 31, 2009 Report No. 1004531 Issue Date November 15, 2010 Washington State Auditor Brian Sonntag November 15, 2010 Board of Commissioners Lake Whatcom Water and Sewer District Bellingham, Washington Report on Financial Statements Please find attached our report on the Lake Whatcom Water and Sewer District’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 Lake Whatcom Water and Sewer District Whatcom County 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 ...

Subjects

Informations

Published by
Reads 35
Language English

Washington State Auditor’s Office

Financial Statements Audit Report






Lake Whatcom Water and Sewer District
Whatcom County



Audit Period
January 1, 2009 through December 31, 2009


Report No. 1004531























Issue Date
November 15, 2010




Washington State Auditor
Brian Sonntag



November 15, 2010


Board of Commissioners
Lake Whatcom Water and Sewer District
Bellingham, Washington


Report on Financial Statements

Please find attached our report on the Lake Whatcom Water and Sewer District’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

Lake Whatcom Water and Sewer District
Whatcom County
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

Lake Whatcom Water and Sewer District
Whatcom County
January 1, 2009 through December 31, 2009


Board of Commissioners
Lake Whatcom Water and Sewer District
Bellingham, Washington


We have audited the basic financial statements of the Lake Whatcom Water and Sewer District,
Whatcom County, Washington, as of and for the year ended December 31, 2009, and have
issued our report thereon dated October 27, 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.

_________________________________________________________________________________________________________
Washington State Auditor's Office
1COMPLIANCE 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
provisions 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

October 27, 2010

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

Lake Whatcom Water and Sewer District
Whatcom County
January 1, 2009 through December 31, 2009


Board of Commissioners
Lake Whatcom Water and Sewer District
Bellingham, Washington


We have audited the accompanying basic financial statements of the Lake Whatcom Water and
Sewer District, Whatcom 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 the Lake Whatcom Water and Sewer District, 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 13 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
_________________________________________________________________________________________________________
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

October 27, 2010

_________________________________________________________________________________________________________
Washington State Auditor's Office
4Financial Section

Lake Whatcom Water and Sewer District
Whatcom County
January 1, 2009 through December 31, 2009


REQUIRED SUPPLEMENTAL INFORMATION

Management’s Discussion and Analysis – 2009


BASICFINANCIAL STATEMENTS

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


_________________________________________________________________________________________________________
Washington State Auditor's Office
5LAKE WHATCOM WATER AND SEWER DISTRICT

MANAGEMENT’S DISCUSSION AND ANALYSIS


SUMMARY OF ORGANIZATION AND BUSINESS

Lake Whatcom Water and Sewer District (formerly known as Whatcom County Water District
No. 10) is a public, special purpose entity organized under Washington State law governing
municipal governments, R.C.W. 57.04.050. It was established in 1968 by petition of the voters
within the proposed boundary to provide sewer service to the residences of the Lake Whatcom
watershed outside of the Bellingham City limits. The voters within the District elect a five-
member board of commissioners to administer the District. The commissioners serve a six-year
term of office. The commissioners develop the policies for the operation of the entity within the
dictates of the R.C.W.s. Management is delegated the task of implementing the policies
approved by the Board. In 1977, the District became a water purveyor when it accepted
ownership and operation of the Geneva Water Corporation and the Sudden Valley Community
Association water and sewer system.

As a special purpose entity, the District does have taxing authority if approved by the voters. To
date, no such authority has been requested from the voters. Operations are funded from
customer revenues. Capital assets are funded by contributions from customers through
connection fees, developer extension fees, state grants and loans and utility local improvement
district assessments as well as from customer revenues.

The District provides reliable high quality supplies of potable water used for drinking, irrigation,
fire protection and other purposes. The District draws its water from Lake Whatcom through
surface water intakes and ground water systems taken from the Squalicum aquifer. The Lake
Whatcom watershed covers an area of about 56 square miles (36,000 acres). That total includes
the surface of Lake Whatcom, which is about 4,994 acres. Its boundaries are defined by five
major surrounding peaks: Squalicum Mountain (1,585 ft) to the north of the lake, Stewart
Mountain (3,080 ft) to the northeast, Anderson Mountain (3,364 ft) to the southeast, Lookout
Mountain (2,677 ft) south of Sudden Valley, and Galbraith Mountain (1,745 ft) southwest of
Sudden Valley.

In all, 23 sub-watersheds comprise the Lake Whatcom watershed. There are approximately 36
creeks and tributaries that flow into Lake Whatcom. The primary perennial flows into the lake
are from Austin, Smith, and Anderson Creeks. Perennial creeks are those that have flowing water
year-round. Additional creeks in the watershed include Fir, Brannian, Silver Beach, Carpenter,
Olsen, and numerous no-name creeks.


_________________________________________________________________________________________________________
Washington State Auditor's Office
6The District owns and operates a water treatment plant at Sudden Valley. The District has ten
booster stations to distribute water and six reservoirs to store water. The District currently has
approximately 75 miles of sewer lines and 57 miles of water lines. Twenty-eight sewer pump
stations are used to pump sewage to the city of Bellingham for treatment at its wastewater
treatment plant. The District has three ground water wells, with two well water systems. The
Agate Heights Well system has a 10” diameter and serves 35 customers. The Johnson Well
system has a 4”diameter and serves 2 customers. The District customer base is almost
exclusively residential with 3,527 water customers and 3,856 sewer customers. Operations are
funded from customer revenues.


FACTORS AFFECTING FINANCIAL CONDITION

Local Economy. The District is situated on the Eastern edge of the City of Bellingham and
along the shores of the Lake Whatcom watershed. The Lake Whatcom watershed provides the
drinking water for the District as well as for the City of Bellingham and the surrounding area,
totaling over 85,000 people.
The District is charged with the task of balancing the provision of services to its customers as
well as participating in the protection of the watershed. To this end, the District has initiated
numerous water conservation programs and has also initiated programs to restrict wastewater and
sewage discharges into Lake Whatcom.

The District had experienced a moderate but consistent growth rate through 1992. In May of
1992, however, the Whatcom County Hearing Examiner denied the District’s application for a
shoreline substantial development permit to upgrade and expand its Lake Whatcom Boulevard
sewer interceptor. In September of 1992, the Board of Commissioners announced a moratorium
on sewer connections to the Lake Whatcom Boulevard sewer interceptor while it considered
options for providing sewer capacity to the existing lots of record on the south shore of Lake
Whatcom. A sewage detention facility was constructed in Sudden Valley in 1998 to store
sewage during peak flows and to pump sewage during non-peak times. Construction on a new
sewer interceptor along Lake Louise Road was begun in 2001. The Lake Louise Road
Interceptor was completed in the fall of 2002 and became operational in December of 2002. In
January 2003, the Board of Commissioners was able to finally lift the moratorium on sewer
service on the south shore of Lake Whatcom.

Financing Limitations. Current plans are to finance needed improvements, upgrades and
additions to utility assets by borrowing from the Washington State Public Works Trust Fund, a
fund established by the State of Washington to provide low interest loans for local public works
projects, using the existing funds on hand in the construction funds (including additions from
developer construction charges), and/or issuing revenue bonds if necessary. There is currently no
debt limitations anticipated that would prevent financing future needs.

Long-Term Financial Planning. In 2009 $6,080,000 of Revenue bonds was issued for the
purpose of constructing upgrades to water and sewer pump stations, replacing telemetry
equipment throughout the District, refunding the District’s outstanding Water and Sewer
Revenue Refunding Bonds 1997 and paying the costs of issuance of the bonds, with a twenty-
_________________________________________________________________________________________________________
Washington State Auditor's Office
7

)