City of Salisbury, NC
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CITY OF SALISBURY NORTH CAROLINA COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Year Ended June 30, 2004 MAYOR, CITY COUNCIL, AND CITY OFFICIALS MAYOR AND CITY COUNCIL Susan W. Kluttz - Mayor Paul B. Woodson, Jr. - Mayor Pro-tem William R. Burgin William R. Kennedy Mark N. Lewis OFFICIALS David W. Treme John A. Sofley, Jr. City Manager Finance Director Report Prepared By City Management Services Department John A. Sofley, Jr. – Finance Director S. Wade Furches - Finance Manager Teresa P. Harris – Budget and Performance Management Manager Mark D. Drye - Productivity Analyst Renee A. Pierson - Accountant Melissa H. Drye - Finance Specialist C. Michael Crowell - Technology Services Manager Dewey D. Peck - Purchasing Agent Clara A. Bost - Customer Service Supervisor C O N T E N T S Page INTRODUCTORY SECTION Table of contents 1 - 3 Letter of transmittal 4 - 11 GFOA Certificate of Achievement 12 Organizational chart 13 List of principal officials 14 Facts and information about the City of Salisbury, North Carolina 15 - 17 FINANCIAL SECTION INDEPENDENT AUDITOR'S REPORT 21 - 22 MANAGEMENT’S DISCUSSION AND ANALYSIS 23 - 32 BASIC FINANCIAL STATEMENTS GOVERNMENT-WIDE FINANCIAL STATEMENTS: A-1 Statement of Net Assets 33 A-2 Statement of Activities 34 FUND FINANCIAL STATEMENTS A-3 Balance Sheet – Governmental Funds 35 A-4 Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds 36 A-5 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 37 A-6 Statement of Revenues, Expenditures, and Changes in Fund Balances – Annual Budget and Actual - General Fund 38 A-7 Statement of Fund Net Assets – Proprietary Funds 39 A-8 Statement of Revenues, Expenses, and Changes in Funds Net Assets – Proprietary Funds 40 A-9 Statement of Cash Flows – Proprietary Funds 41 A-10 Statement of Fiduciary Net Assets 42 A-11 Statement of Changes in Fiduciary Net Assets 43 Notes to financial statements 44 - 64 REQUIRED SUPPLEMENTAL FINANCIAL DATA A-12 Law Enforcement Officers’ Special Separation Allowance - Schedule of Funding Progress 67 A-13 Law Enforcement Officers’ Special Separation Allowance - Schedule of Employer Contributions 68 SUPPLEMENTARY FINANCIAL DATA Combining and individual Fund and account group financial statements and schedules General Fund: B-1 Schedule of Revenues and Expenditures, and Changes in Fund Balance – Budget and Actual 73 - 75 -1- C O N T E N T S Page Non-Major Governmental Funds: C-1 Combining Balance Sheet – All Non-Major Governmental Funds 79 C-2 Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances – All Non-Major Governmental Funds 80 C-3 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual – Special Revenue Fund 81 C-4 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual – Capital Projects Fund 82 Proprietary Fund Types: D-1 Water and Sewer Fund – Schedule of Revenues and Expenses – Budget and Actual 85 D-2 Water and Sewer Capital Project Fund – Schedule of Revenues and Expenses – Budget and Actual 86 D-3 Transit Fund – Schedule of Revenues and Expenses – Budget and Actual 87 Internal Service Funds: E-1 Combining Balance Sheet 91 E-2 Combining Statement of Revenues, Expenses, and Changes in Fund Balances 92 E-3 Combining Statement of Cash Flows 93 Agency Funds: F-1 Combining Balance Sheet 97 F-2 Statement of Changes in Assets and Liabilities 98 Capital Assets: G-1 Schedule of Capital Assets by Function and Activity 101 G-2 Schedule of Changes in Capital Assets by Function and Activity 102 Other schedules: H-1 Property Taxes Receivable 105 H-2 Analysis of Current Tax Levy 106 H-3 Schedule of Cash and Investment Balances 107 H-4 Schedule of Interfund Transfers 108 STATISTICAL SECTION Table 1 General Governmental Expenditures by Function - Last Ten Fiscal Years 111 Table 2 General Governmental Revenues by Source - Last Ten Fiscal Years 112 Table 3 Tax Revenue by Source - Last Ten Fiscal Years 113 Table 4 Property Tax Levies, Tax Collections and Credits - Last Ten Fiscal Years 114 Table 5 Assessed Value of Taxable Property - Last Ten Fiscal Years 115 Table 6 Property Tax Levies and Tax Rates - Direct and Overlapping Governments - Last Ten Fiscal Years 116 Table 7 Computation of Direct and Overlapping Debt 117 Table 8 Computation of Legal Debt Margin 118 Table 9 Schedule of Principal Taxpayers 119 Table 10 Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General Expenditures - Last Ten Fiscal Years 120 -2- C O N T E N T S Page Table 11 Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt Per Capita - Last Ten Fiscal Years 121 Table 12 Property Value, Construction, and Bank Deposits - Last Ten Fiscal Years 122 Table 13 Miscellaneous Statistics 123 Table 14 Demographic Statistics 124 COMPLIANCE SECTION INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS 127 INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR FEDERAL PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 AND THE STATE SINGLE AUDIT IMPLEMENTATION ACT 128 - 129 INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR STATE PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 AND THE STATE SINGLE AUDIT IMPLEMENTATION ACT 130 - 131 Schedule of Expenditures of Federal and State Awards 132 - 133 Notes to Schedule of Expenditures of Federal and State Awards 134 Schedule of Compliance Findings and Questioned Costs 135 Schedule of Prior Audit Findings 136 -3- October 29, 2004 The Honorable Mayor Susan W. Kluttz, City Council, City Manager, and the Citizens of the City of Salisbury, North Carolina We are pleased to present the Comprehensive Annual Financial Report (Report) of the City of Salisbury (City) for the fiscal year ended June 30, 2004 (FY04). We are particularly proud of the fact this Report has been entirely prepared by the City's Management Services Department. Responsibility for both the accuracy of the data presented and the completeness and fairness of presentation, including all disclosures, rests with the City. We believe the data is accurate in all material respects, and it is presented in a manner designed to set forth fairly the financial position and the results of operations of the City as measured by the financial activity of its various funds. All disclosures necessary to enable the reader to gain the maximum understanding of the City's financial affairs have been included. The accompanying financial statements have been audited by McGladrey & Pullen, LLP, an independent firm of certified public accountants, and their opinion is included in the Report. Generally accepted accounting principles require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of a Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. GENERAL The financial statements have been prepared in compliance with applicable requirements of the General Statutes of North Carolina and are consistent with the standards and guidelines recognized for governmental accounting and reporting contained in both Audits of State and Local Governmental Units, an audit guide prepared by the Committee of Governmental Accounting of the American Institute of Certified Public Accountants (AICPA) and Government Auditing Standards, issued by the Comptroller General of the United States. Among the other resources used in the preparation of the financial statements, the Management Services Department Staff has given particular attention to the Governmental Accounting, Auditing and Financial Reporting (GAAFR) issued by the Government Finance Officers Association of the United States and Canada (GFOA), and Governmental Accounting Standards Board (GASB) pronouncements. The Comprehensive Annual Financial Report is presented in four sections: introductory, financial, statistical, and compliance. The Introductory section contains this letter of transmittal and information about the City’s organization and principal officials. The Financial section is composed of the independent auditor’s report, the Management’s Discussion and Analysis, the basic financial statements, required supplementary information, and other supplemental information. The Statistical section includes selected financial and demographic information, generally presented on a multi-year basis. City of Salisbury Management Services Department Telephone (704) 638-5303 Post Office Box 479 Salisbury, NC 28145-0479 Fax (704) 638-8545 The City is also required to undergo an annual single audit in conformity with the provisions of the Single Audit Act Amendments of 1996, the State Single Audit Implementation Act, and U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Nonprofit Organizations. Information related to the compliance audit and the schedule of expenditures of federal and state awards are included in the Compliance section of this report. The City participates in the Certificate of Achievement for Excellence in Financial Reporting awards program sponsored by the Government Finance Officers Association of the United States