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Washington State Auditor’s Office
                 Financial Statements Audit Report




                   City of Des Mo...
Washington State Auditor
                                        Brian Sonntag


March 17, 2008


Council
City of Des Moin...
Table of Contents
                                              City of Des Moines
                                       ...
Schedule of Audit Findings and Responses
                                  City of Des Moines
                            ...
Not having timely and accurate financial reports limits the access to financial information used by
       City officials,...
The financial statements were prepared by the Finance Director, a Certified Public Accountant,
       with over 17 years o...
The reports shall contain accurate statements, in summarized form, of all
               collections made, or receipts rec...
Independent Auditor’s Report on Internal
     Control over Financial Reporting and on
  Compliance and Other Matters in Ac...
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in
more than a r...
Independent Auditor’s Report on Financial
                    Statements
                                   City of Des Mo...
management regarding the methods of measurement and presentation of the required supplementary
information. However, we di...
Financial Section
                                  City of Des Moines
                                     King County
  ...
CITY OF DES MOINES, WASHINGTON
Management’s Discussion and Analysis


                                    CITY OF DES MOIN...
CITY OF DES MOINES, WASHINGTON
Management’s Discussion and Analysis


Figure A-1 provides a summary of the major features ...
CITY OF DES MOINES, WASHINGTON
Management’s Discussion and Analysis


Governmental activities include most of the City’s b...
CITY OF DES MOINES, WASHINGTON
      Management’s Discussion and Analysis


      compensation reserves. Because internal ...
CITY OF DES MOINES, WASHINGTON
Management’s Discussion and Analysis


Changes in Net Assets. Governmental activities incre...
CITY OF DES MOINES, WASHINGTON
Management’s Discussion and Analysis


The City’s expenses cover a range of services, with ...
CITY OF DES MOINES, WASHINGTON
Management’s Discussion and Analysis


Figure A-4 provides the elements comprising the sour...
CITY OF DES MOINES, WASHINGTON
Management’s Discussion and Analysis


Proprietary Funds. The City of Des Moines’s propriet...
CITY OF DES MOINES, WASHINGTON
Management’s Discussion and Analysis


    •     Vehicle and equipment acquisitions totalin...
CITY OF DES MOINES, WASHINGTON
Management’s Discussion and Analysis


ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES

...
CITY OF DES MOINES, WASHINGTON                                                                               Page 1 of 1
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CITY OF DES MOINES, WASHINGTON                                                                                            ...
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  1. 1. Washington State Auditor’s Office Financial Statements Audit Report City of Des Moines King County Audit Period January 1, 2006 through December 31, 2006 Report No. 74152 Issue Date March 17, 2008
  2. 2. Washington State Auditor Brian Sonntag March 17, 2008 Council City of Des Moines Des Moines, Washington Report on Financial Statements Please find attached our report on the City of Des Moines’ financial statements. We are issuing this report in order to provide information on the City’s financial condition. In addition to this work, we look at other areas of our audit client’s operations for compliance with state laws and regulations. The results of that audit will be included in a separately issued accountability report. Sincerely, BRIAN SONNTAG, CGFM STATE AUDITOR Insurance Building, P.O. Box 40021 Olympia, Washington 98504-0021 (360) 902-0370 (866) 902-3900 TDD Relay (800) 833-6388 FAX (360) 753-0646 http://www.sao.wa.gov
  3. 3. Table of Contents City of Des Moines King County January 1, 2006 through December 31, 2006 Schedule of Audit Findings and Responses ................................................................................................. 1 Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters in Accordance with Government Auditing Standards ........................................ 5 Independent Auditor’s Report on Financial Statements ............................................................................... 7 Financial Section........................................................................................................................................... 9
  4. 4. Schedule of Audit Findings and Responses City of Des Moines King County January 1, 2006 through December 31, 2006 1. The City lacks adequate internal controls over the preparation of its financial statements. Background City management, the state Legislature, state and federal agencies and bondholders rely on the information included in financial statements and reports to make decisions. It is the responsibility of City management to design and follow internal controls that provide reasonable assurance regarding the reliability of financial reporting. Controls must ensure that financial data is reliably authorized, processed and reported. Our audit identified a significant deficiency in controls that adversely affects the City’s ability to produce reliable financial statements. Government Auditing Standards, prescribed by the Comptroller General of the United States, require the auditor to communicate significant deficiencies, as defined below in the Applicable Laws and Regulations section, as a finding. Description of Condition We identified the following deficiencies in internal controls over financial reporting that, when taken together, represent a significant deficiency: • The City does not have policies and procedures in place to ensure its annual report is prepared and filed by the required deadline. This concern has been identified in previous audits. • Annual reports were compiled by one individual without adequate management oversight. Upon completion of the City’s annual report, no independent review was performed by City management to detect material errors prior to submitting final financial statements for audit. We were unable to identify compensating controls for the weaknesses described above. Cause of Condition The City has not placed adequate emphasis on producing timely financial statements. In addition, the City’s review process was not adequate to detect errors in the financial statements and schedules. Effect of Condition The annual financial report for 2006 was not submitted to the State Auditor's Office by the required deadline of 150 days after the close of the fiscal year (May 31, 2007), as prescribed by state law . The City’s financial statements were not completed until November 2007. ____________________________________________________________________________________________________________ Washington State Auditor's Office 1
  5. 5. Not having timely and accurate financial reports limits the access to financial information used by City officials, the public, state and federal agencies and other interested parties. In addition, not having a complete set of financial statements can delay or hinder the audit process and increase audit costs. The City’s financial information contained errors that were not detected by City management. During our review of the City’s financial statements, we found the following errors in the original electronic financial statements we received for audit. These errors were subsequently corrected by the City. • The Municipal Capital Improvement Fund on the Statement of Revenues, Expenditures and Changes in Fund Balances was not visible due to a hidden column in the Excel spreadsheet provided to the auditor. Had the auditor not identified this issue, it would have resulted in a major fund being unreported on the previously mentioned statement in the final published financial report. Additionally, the following immaterial misstatement was noted: • Other Receivables of $17,758 were not reported in the General Fund because the financial statement spreadsheet did not properly link to the City’s financial data from its software system. We also identified several other immaterial misstatements that were corrected on the final financial statements. The deficiencies in internal controls make it reasonably possible that serious misstatements could continue to occur and not be prevented or detected by the City in future years. Despite these internal control issues and noted errors, the City ultimately provided financial statements upon which we are issuing an unqualified opinion. Recommendation We recommend City perform the following: • Establish and follow internal control procedures that include a review of the financial statements after final preparation to ensure the accurate preparation of the financial statements and related schedules. • Provide training to City personnel to ensure they have an adequate understanding of the financial reporting requirements. • Establish policies and procedures in order to comply with state reporting requirements by preparing and filing annual reports by the required deadline. City’s Response The City agrees that the financial statements are not prepared timely to be filed within the deadline of 150 days after the close of the fiscal year as prescribed by state law. A schedule for preparation of the financial statements is undertaken each year, but inadequate qualified finance staffing levels due to revenue constraints and other priorities have contributed to the delay in the preparation of the financial statements each year. The City plans to make preparation of the 2007 financial statements and timely submittal a priority for the year 2008. A work schedule has been prepared for the preparation of the 2007 financial statements with target dates for completion. ____________________________________________________________________________________________________________ Washington State Auditor's Office 2
  6. 6. The financial statements were prepared by the Finance Director, a Certified Public Accountant, with over 17 years of experience preparing government financial statements. The City acknowledges that the Finance Director as preparer did not have adequate time to review the financial statements prior to distributing to the State Auditors. While no material errors were detected, the City agrees that the functions of preparer and reviewer be performed by more than one individual. The City has evaluated the cost vs. benefit of establishing internal controls over the preparation of financial statements in accordance with GAAP, and determined that it is in the best interests of the City to delegate responsibility of preparation of the financial statements to the Finance Operations Manager, with oversight and review of the draft financial statements by the Finance Director. The Finance Operations Manager has previously attended courses on advanced governmental accounting sponsored by the Government Finance Officers Association and has an adequate understanding of the financial reporting requirements. The City’s financial statements are Excel worksheets linking to financial data downloaded from the City’s financial system software. The Finance Director reclassified other receivables separately from customer receivables and, as a result, the link to the financial data was not updated for other receivables and caused it to be omitted on the General Fund’s Balance Sheet. The City will plan accordingly to meet the requirements of state law in completing and filing the financial statements within 150 days of the close of the fiscal year, and to implement a review process of the financial statements to ensure accurate financial statements are prepared. Auditor’s Remarks We thank City officials for the assistance we received during the audit. Applicable Laws and Regulations RCW 43.09.200 states: The state auditor shall formulate, prescribe, and install a system of accounting and reporting for all local governments, which shall be uniform for every public institution, and every public office, and every public account of the same class. The system shall exhibit true accounts and detailed statements of funds collected, received, and expended for account of the public for any purpose whatever, and by all public officers, employees, and other persons. The accounts shall show the receipt, use, and disposition of all public funds properly, and the income, if any, derived therefrom; all sources of public income, and the amounts due and received from each source; all receipts, vouchers, and other documents kept, or required to be kept, necessary to isolate and prove the validity of every transaction; all statements and reports made or required to be made, for the internal administration of the office to which they pertain; and all reports published or required to be published, for the information of the people regarding any and all details of the financial administration of public affairs. RCW 43.09.230 states: The state auditor shall require from every local government financial reports covering the full period of each fiscal year, in accordance with the forms and methods prescribed by the state auditor, which shall be uniform for all accounts of the same class. Such reports shall be prepared, certified, and filed with the state auditor within one hundred fifty days after the close of each fiscal year. ____________________________________________________________________________________________________________ Washington State Auditor's Office 3
  7. 7. The reports shall contain accurate statements, in summarized form, of all collections made, or receipts received, by the officers from all sources; all accounts due the public treasury, but not collected; and all expenditures for every purpose, and by what authority authorized; and also: (1) A statement of all costs of ownership and operation, and of all income, of each and every public service industry owned and operated by a local government; (2) a statement of the entire public debt of every local government, to which power has been delegated by the state to create a public debt, showing the purpose for which each item of the debt was created, and the provisions made for the payment thereof; (3) a classified statement of all receipts and expenditures by any public institution; and (4) a statement of all expenditures for labor relations consultants, with the identification of each consultant, compensation, and the terms and conditions of each agreement or arrangement; together with such other information as may be required by the state auditor. The reports shall be certified as to their correctness by the state auditor, the state auditor's deputies, or other person legally authorized to make such certification. Their substance shall be published in an annual volume of comparative statistics at the expense of the state as a public document. Budget Accounting and Reporting System (BARS) Manual – Part 3, Accounting, Chapter 1, Accounting Principles and General Procedures, Section B, Internal Control, states in part: Internal control is a management process for keeping an entity on course in achieving its business objectives, as adopted by the governing body. This management control system should ensure that resources are guarded against waste, loss and misuse; that reliable data is obtained, maintained, and fairly disclosed in financial statement and other reports; and resource use is consistent with laws, regulations and policies. Each entity is responsible for establishing and maintaining an effective system of internal control throughout their government. Government Auditing Standards, January 2007 Revision – Section 5.11, states in part: For all financial audits, auditors should report the following deficiencies in internal control: a. Significant deficiency: a deficiency in internal control, or combination of deficiencies, that adversely affects the entity’s ability to initiate, authorize, record, process or report financial data reliably in accordance with generally accepted accounting principles such that there is a more than remote likelihood that a misstatement of the entity’s financial statements that is more than inconsequential will not be prevented or detected. b. Material weakness: a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected . . . . ____________________________________________________________________________________________________________ Washington State Auditor's Office 4
  8. 8. Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters in Accordance with Government Auditing Standards City of Des Moines King County January 1, 2006 through December 31, 2006 Council City of Des Moines Des Moines, Washington We have audited the financial statements of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the City of Des Moines, King County, Washington, as of and for the year ended December 31, 2006, which collectively comprise the City‘s basic financial statements, and have issued our report thereon dated January 18, 2008. During the year ended December 31, 2006, the City implemented Governmental Accounting Standards Board Statement 46, Net Assets Restricted by Enabling Legislation. 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 City’s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control over financial reporting. Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses. However, as discussed below, we identified certain deficiencies involving the internal control over financial reporting that we consider to be significant deficiencies. A control deficiency 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 misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the City's ability to initiate, authorize, record, process or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the City's financial statements that is more than inconsequential will not be prevented or detected by the City's internal control over financial reporting. We consider the deficiencies described in the accompanying Schedule of Audit Findings and Responses to be significant deficiencies in internal control over financial reporting, and are reported as Finding 1. ____________________________________________________________________________________________________________ Washington State Auditor's Office 5
  9. 9. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the City's internal control. Our consideration of the 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 the internal control that might be significant deficiencies and, accordingly, would not necessarily disclose all significant deficiencies that are also considered to be material weaknesses. However, we believe that none of the significant deficiencies described above is a material weakness. COMPLIANCE AND OTHER MATTERS As part of obtaining reasonable assurance about whether the City’s financial statements are free of material misstatement, we performed tests of the City’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 Council. 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 January 18, 2008 ____________________________________________________________________________________________________________ Washington State Auditor's Office 6
  10. 10. Independent Auditor’s Report on Financial Statements City of Des Moines King County January 1, 2006 through December 31, 2006 Council City of Des Moines Des Moines, Washington We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the City of Des Moines, King County, Washington, as of and for the year ended December 31, 2006, which collectively comprise the City’s basic financial statements as listed on page 9. These financial statements are the responsibility of the City’s management. Our responsibility is to express opinions 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 opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the City of Des Moines, as of December 31, 2006, and the respective changes in financial position and, where applicable, cash flows thereof, and the respective budgetary comparison for the General, Street and Arterial Street funds, for the year then ended in conformity with accounting principles generally accepted in the United States of America. As described in Note 1, during the year ended December 31, 2006, the City implemented Governmental Accounting Standards Board Statement 46, Net Assets Restricted by Enabling Legislation. In accordance with Government Auditing Standards, we have also issued our report on our consideration of the City’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 10 through 19 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 ____________________________________________________________________________________________________________ Washington State Auditor's Office 7
  11. 11. 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 January 18, 2008 ____________________________________________________________________________________________________________ Washington State Auditor's Office 8
  12. 12. Financial Section City of Des Moines King County January 1, 2006 through December 31, 2006 REQUIRED SUPPLEMENTAL INFORMATION Management’s Discussion and Analysis – 2006 BASIC FINANCIAL STATEMENTS Statement of Net Assets – 2006 Statement of Activities – 2006 Balance Sheet – 2006 Reconciliation to the Balance Sheet to the Statement of Net Assets – Governmental Funds – 2006 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds – 2006 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities – 2006 Statement of Revenues, Expenditures and Changes in Fund Balances – Budget (GAAP Basis) and Actual – General Fund – 2006 Statement of Revenues, Expenditures and Changes in Fund Balances – Budget (GAAP Basis) and Actual – Street Fund – 2006 Statement of Revenues, Expenditures and Changes in Fund Balances – Budget (GAAP Basis) and Actual – Arterial Street Fund – 2006 Statement of Net Assets – Proprietary Funds – 2006 Statement of Revenues, Expenses and Changes in Net Assets – Proprietary Funds – 2006 Statement of Cash Flows – Proprietary Funds – 2006 Notes to the Financial Statements – 2006 ____________________________________________________________________________________________________________ Washington State Auditor's Office 9
  13. 13. CITY OF DES MOINES, WASHINGTON Management’s Discussion and Analysis CITY OF DES MOINES MANAGEMENT’S DISCUSSION AND ANALYSIS For the Year Ended December 31, 2006 The management discussion and analysis section of this report provides a narrative overall review of the City of Des Moines’s (the “City”) financial performance for the fiscal year ended December 31, 2006. The intent of this discussion and analysis is to assist the reader in focusing on significant financial issues and trends impacting the current financial activities of the City and should be read in conjunction with the independent auditor’s report, basic financial statements, and notes to the financial statements. FINANCIAL HIGHLIGHTS • Net assets, the amount by which total assets exceed total liabilities, equal $155.0 million. Of this amount, $143.3 million, or 92.5%, is invested in capital assets such as land, infrastructure, buildings, equipment, and other improvements. The remaining net assets of $11.7 million are available for debt service, capital projects, repair and replacement reserves, and to meet the government’s ongoing activities and obligations. • The government’s net assets increased by $1.7 million in 2006. Government activities provided $1.05 million or 61% with the remainder being provided by the business-type activities. • As of the close of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $8,337,645. Approximately 99.9% of this total amount, or $8,331,733, is available for spending at the government’s discretion. • At the end of the current fiscal year, unreserved fund balance for the general fund was $916,021, or 6.5% of total general fund expenditures. • The City’s total debt decreased by $1,185,654. Debt principal retirements during 2006 totaled $ 1,332,121. A contract for the leasing of citywide copiers was implemented March 2006 and recognized as a capital lease totaling $50,118. The remainder of the long-term debt activity primarily relates to compensated absences. OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the City of Des Moines’s basic financial statements. The basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. The first two statements, Statement of Net Assets and Statement of Activities, comprise the government- wide financial statements. These statements provide both long-term and short-term information about the City’s overall financial status. The remaining statements are fund financial statements that focus on individual parts of the city government, reporting the City’s operations in more detail than the government-wide statements. These statements are presented with a focus on major funds. All other nonmajor funds are presented in total in one column. The financial statements also include notes that explain some of the information in the financial statements and provide more detailed data. ____________________________________________________________________________________________________________ Washington State Auditor's Office 10
  14. 14. CITY OF DES MOINES, WASHINGTON Management’s Discussion and Analysis Figure A-1 provides a summary of the major features of the City’s financial statements, including the portion of the City government they cover and the types of information they contain. The remainder of this overview section of management’s discussion and analysis explains the structure and contents of each of the statements. Figure A-1 Major Features of the City of Des Moines's Governm ent-w ide and Fund Financial Statem ents Fund Statem ents Governm ent-Wide Statem ents Governm ental Funds Proprietary Funds Scope Entire City government The activities of the City that Activities the City operates are not proprietary, such as similar to private police, public w orks, and businesses: Marina and the parks Surface Water Management Utility Required financial ●Statement of net assets ●Balance sheet ●Statement of net assets Statements ●Statement of activities ●Statement of revenues, ●Statement of revenues, expenditures, and expenses, and changes changes in fund balances in net assets ●Statement of cash flow s Accounting basis and Accrual accounting and Modified accrual accounting Accrual accounting and measurement focus economic resources focus and current financial economic resources focus resources focus Type of asset/liability All assets and liabilities, Only assets expected to be All assets and liabilities, information both financial and capital, used up and liabilities that both financial and capital, and short-term and long- come due during the year or and short-term and long- term soon thereafter; no capital term assets included Type of inflow /outflow All revenues and expenses Revenues for w hich cash is All revenues and expenses information during year, regardless of received during or soon during year, regardless of w hen cash is received or after the end of the year; w hen cash is received or paid expenditures w hen goods paid or services have been received and payment is due during the year or soon thereafter Government-wide Financial Statements The government-wide financial statements report information about the City as a whole using accounting methods similar to those used by private-sector companies. The government-wide financial statements only include activities of the City of Des Moines, Washington. The City has no component units or entities over which it exercises influence over operations or financial control or accountability. The statement of net assets includes all of the City funds’ assets and liabilities. The difference between assets and liabilities is reported as net assets. All of the current year’s revenues and expenses are accounted for in the statement of activities regardless of when cash is received or paid. The two government-wide statements report the City’s net assets and how they have changed. Overtime, increases or decreases in net assets provide a measure of the financial position of the City. The change in net assets provides an indication of whether the City’s financial health is improving or deteriorating. ____________________________________________________________________________________________________________ Washington State Auditor's Office 11
  15. 15. CITY OF DES MOINES, WASHINGTON Management’s Discussion and Analysis Governmental activities include most of the City’s basic services such as public safety, engineering, public works, and building regulation (physical environment and transportation), community land use planning (economic environment), human services (mental and physical health), culture and recreation, and general administration. These activities are primarily supported by taxes, intergovernmental revenues, building permits, and plan review fees. Business-type activities are financed primarily from user fees and charges. The Marina and Surface Water Management Utility are included under this category. Fund Financial Statements Traditional users of governmental financial statements will find the Fund Financial Statements presentation familiar. However, the focus for these presentations is on major funds, rather than fund types. A fund is an accounting device for grouping related accounts used to maintain control over resources that are segregated for specific activities or objectives. Some funds are required by State law and by bond covenants. The City Council establishes other funds to control and manage money for particular purposes. All of the funds of the City can be divided into two categories: governmental funds and proprietary 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 provide a short-term view focusing 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 a government’s ability to finance the City’s programs in the near future. Because the focus of the governmental funds is short-term versus long-term, we have provided additional information that explains the differences between the government-wide financial statements and the fund financial statements. This additional information is provided in a reconciliation format on both the governmental balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances. The City of Des Moines’s maintains seventeen 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, Street Fund, Arterial Street Fund, and Municipal Capital Improvements Fund. The General Fund, Arterial Street Fund, and Municipal Capital Improvements Fund are major funds based on the criteria established by GASB Statement No. 34. The Street Fund does not meet the criteria for a major fund but is shown separately at the discretion of the City. All remaining nonmajor governmental funds’ data are combined into a single, aggregated presentation. The City of Des Moines adopts an annual appropriated budget for its major funds: General Fund, Street Fund, Arterial Street Fund, and Municipal Capital Improvements Fund. Budget comparison statements have been provided for these funds to demonstrate budgetary compliance. Proprietary Funds. The City of Des Moines maintains two different types of proprietary funds. Enterprise funds are use to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its Marina and Surface Water Management Utility. Internal service funds represent an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City uses internal service funds to account for its equipment rental operations and equipment replacement, computer operations and equipment and software replacement, self-insurance programs, and unemployment ____________________________________________________________________________________________________________ Washington State Auditor's Office 12
  16. 16. CITY OF DES MOINES, WASHINGTON Management’s Discussion and Analysis compensation reserves. Because internal service funds predominantly benefit governmental rather than business-type activities, they have been included within governmental activities in the government-wide financial statements. Proprietary fund financial statements provide the same type of information as the government-wide financial statements, but in greater detail. The internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. 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. GOVERNMENT-WIDE FINANCIAL ANALYSIS Net Assets. As noted earlier, net assets may serve over time as a useful indicator of a government’s financial position. For the City of Des Moines, total assets exceeded liabilities by $155,023,521 at December 31, 2006. Table A-1 displays the City’s net assets for the current fiscal year. Table A-1 City of Des Moines's Net Assets Governmental Business-type Activities Activities Total 2006 2005 2006 2005 2006 2005 Current and other assets $ 13,273,706 $ 12,542,337 $ 5,604,510 $ 6,224,499 $ 18,878,216 $ 18,766,836 Capital assets 129,587,749 129,908,978 18,953,366 18,234,414 148,541,115 148,143,392 Total assets 142,861,455 142,451,315 24,557,876 24,458,913 167,419,331 166,910,228 Long-term debt outstanding 4,874,751 5,596,123 4,320,968 4,785,250 9,195,719 10,381,373 Other liabilities 2,500,245 2,423,136 699,846 716,254 3,200,091 3,139,390 Total liabilities 7,374,996 8,019,259 5,020,814 5,501,504 12,395,810 13,520,763 Net assets Invested in capital assets, net of related debt 126,900,100 126,391,399 16,419,218 15,343,349 143,319,318 141,734,748 Restricted 1,429,888 1,390,679 2,406,683 2,896,926 3,836,571 4,287,605 Unrestricted 7,156,471 6,649,978 711,161 717,134 7,867,632 7,367,112 Total net assets $ 135,486,459 $ 134,432,056 $ 19,537,062 $ 18,957,409 $ 155,023,521 $ 153,389,465 The largest portion of the City’s net assets (92.5 percent) reflects its investment in capital assets (e.g., land, infrastructure, buildings, machinery and equipment) less any related outstanding debt to acquire those assets. A portion of the City’s net assets (2.5 percent) represents resources that are subject to constitutional or external restrictions on how they may be used. The remaining balance of unrestricted net assets may be used to meet the City’s ongoing obligations to citizens and creditors. ____________________________________________________________________________________________________________ Washington State Auditor's Office 13
  17. 17. CITY OF DES MOINES, WASHINGTON Management’s Discussion and Analysis Changes in Net Assets. Governmental activities increased the City of Des Moines’s net assets by $1,054,403, thereby accounting for 61 percent of the total growth in the net assets of the City. Key elements of this increase are provided in Table A-2. Table A-2 City of Des Moines's Changes in Net Assets Governmental Business-type Activities Activities Total 2006 2005 2006 2005 2006 2005 Revenues: Program revenues: Charges for services $ 3,458,727 $ 3,849,816 $ 4,912,367 $ 4,793,641 8,371,094 $ 8,643,457 Operating grants and contributions 1,352,744 1,154,170 3,698 2,375 1,356,442 1,156,545 Capital grants and contributions 711,690 2,896,506 457,269 156,329 1,168,959 3,052,835 General revenues: Property taxes 3,392,392 3,246,773 - - 3,392,392 3,246,773 Retail sales and use taxes 2,586,570 2,389,364 - - 2,586,570 2,389,364 Business taxes 3,878,935 3,693,593 - - 3,878,935 3,693,593 Other taxes 1,490,638 1,706,870 - - 1,490,638 1,706,870 State entitlements 451,778 471,818 - - 451,778 471,818 Unrestricted investment earnings 465,823 176,561 246,875 166,802 712,698 343,363 Equity in income of joint venture 13,753 (2,959) - - 13,753 (2,959) Gain on sale of capital assets 16,633 26,703 - - 16,633 26,703 Loss on disposal of capital assets - - - - - - Miscellaneous 76,473 56,294 (61,190) (73,454) 15,283 (17,160) Total Revenues 17,896,156 19,665,509 5,559,019 5,045,693 23,455,175 24,711,202 Program expenses: General government 2,000,133 1,730,293 - - 2,000,133 1,730,293 Public safety 7,605,119 7,163,230 - - 7,605,119 7,163,230 Physical environment 1,119,453 886,697 - - 1,119,453 886,697 Transportation 3,129,456 3,192,606 - - 3,129,456 3,192,606 Economic environment 589,277 714,046 - - 589,277 714,046 Mental and physical health 329,693 319,887 - - 329,693 319,887 Culture and recreation 2,196,579 2,142,255 - - 2,196,579 2,142,255 Interest on long-term debt 146,713 181,006 - - 146,713 181,006 Marina - - 3,389,736 3,146,065 3,389,736 3,146,065 Surface Water Utility - - 1,226,098 1,218,386 1,226,098 1,218,386 Total Expenses 17,116,423 16,330,020 4,615,834 4,364,451 21,732,257 20,694,471 Increase (decrease) in net assets before special items and transfers 779,733 3,335,489 943,185 681,242 1,722,918 4,016,731 Special item: insurance recoveries 703 20,000 - 12,532 703 32,532 Transfers 273,967 25,283 (273,967) (25,283) - - Increase (decrease) in net assets $ 1,054,403 $ 3,380,772 $ 669,218 $ 668,491 $ 1,723,621 $ 4,049,263 Property and other taxes total $11,348,535 and represent 48.4 percent of the total revenues of the City. The other major revenue sources are charges for services and operating and capital grants and contributions. Combined, these revenue sources total $10,896,495, or 46.5 percent of the City’s total revenues. Figure A-2 provides the percentage distribution of revenue sources for the City. ____________________________________________________________________________________________________________ Washington State Auditor's Office 14
  18. 18. CITY OF DES MOINES, WASHINGTON Management’s Discussion and Analysis The City’s expenses cover a range of services, with about 35 percent related to public safety. Figure A-3 provides the percentage allocation of functional expenses for the City. Figure A-2 Figure A-3 Capital Sources of Revenue Int erest on LT Functional Expenses General Grants Debt Government Other Property 5% 2% 9% 3% Taxes Operating 14% Culture & Economic Grants Recreat ion Environment 6% 25% 3% Sales Taxes 11% M ental & Charges for Physical Health Transportat'n Services 1% 14% 36% Other Taxes 23% Physical State Environment Public Safety Entitlements 11% 35% 2% Governmental activities. As stated, governmental activities account for 61 percent of the total growth in net assets for the City. Key elements of this increase are as follows. • Growth in property taxes, retail sales and use taxes, and business taxes. • Building permit and plan review fees related to new development. • Unrestricted investment interest earnings. Business-type activities. Business-type activities increased the City of Des Moines’s net assets by $669,218, accounting for 39 percent of the total growth in the City’s net assets. Key elements of this increase are as follows: • Net operating income of $503,094 less non-operating expense of $17,178 account for $485,916 of the increase. • Transfers out of $273,967 related to the Marine View Drive Bridge Culvert Replacement project. • Capital contributions of $457,269 account for the remainder of the net change. ____________________________________________________________________________________________________________ Washington State Auditor's Office 15
  19. 19. CITY OF DES MOINES, WASHINGTON Management’s Discussion and Analysis Figure A-4 provides the elements comprising the sources of revenues in comparison to the functional expenses for the business-type activities of the City. Figure A-4 Business-type Activities Program Revenues and Expenses $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $- Revenues Expenses Revenues Expenses Marina Surface Water Utility REVENUES EXPENSES Charges for Services Personal Services Other Income Supplies & Expenses Depreciation Other Expenses Transfers FINANCIAL ANALYSIS OF THE CITY’S FUNDS As noted earlier, the City of Des Moines uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds. As discussed earlier, the focus of the City of Des Moines’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City of Des Moines’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 the current fiscal year, the City of Des Moines’s governmental funds reported combined ending fund balances of $8,337,645. Approximately 99.9 percent of this total amount ($8,331,733) constitutes unreserved fund balance, which is available for spending at the government’s discretion. The remaining .1 percent ($5,912) of fund balance is reserved to indicate that it is not available for new spending because it has already been committed to Imprest Funds and Prepaid Items. The General Fund is the primary operating fund of the City of Des Moines. At the end of the fiscal year, total fund balance for the General Fund equaled $921,933. Unreserved fund balance, the amount considered available to spend, totaled $916,021. Of the General Fund balance, $18,836 has been designated for maintenance of the Sierra permitting system. The remaining amount $897,185 is designated for continuing appropriations. The City is required to maintain an unreserved fund balance of seven percent of the General Fund’s operating expenditures, net of capital expenditures and equipment replacement assessments. At the end of the fiscal year, the unreserved fund balance of $916,021 equaled 6.7 percent of the general fund’s operating expenditures. The fund balance of the City of Des Moines’s General Fund decreased by $95,943 during the current fiscal year. ____________________________________________________________________________________________________________ Washington State Auditor's Office 16
  20. 20. CITY OF DES MOINES, WASHINGTON Management’s Discussion and Analysis Proprietary Funds. The City of Des Moines’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. BUDGETARY HIGHLIGHTS FOR GENERAL AND MAJOR FUNDS Differences between the General Fund original budget and the final amended budget total $488,466. Following are the main components of the increase: • $87,296 supplemental appropriation for 2005 primary and general elections and 2006 special election costs; • $74,375 supplemental appropriation for legal fees settlement; • $73,100 supplemental appropriation for federal government lobbying services; • $39,958 supplemental appropriation for public safety records management system; • $34,000 supplemental appropriation for emergency management consultant; • $30,000 supplemental appropriation for limited-term construction manager for the 16th Avenue South transportation project; • $58,595 supplemental appropriation for various grant funded programs: Shoreline Master Plan ($23,966), Recycling events ($18,629), Washington State Traffic Commission for police staff overtime incurred participating in traffic enforcement programs ($12,000), and police vests ($4,000). Funding sources for the increase, excluding the grant revenues and the limited-term construction manager, primarily are from fund balance. The limited-term construction manager is funded by a transfer to the General Fund from the Arterial Street Fund. A transfer of $50,000 to the General Fund was also made from the Marina Fund and represents the balance of 2005 administrative fees. The Street Fund’s supplemental appropriations include $3,741 for legal fees settlement and $2,756 for fuel cost increases. Differences between the Arterial Street Fund original budget and the final amended budget total $817,763 and relate to continuing appropriations for capital projects. Funding sources are grants, and transfers from the Transportation Impact Fee Fund and Local Improvement District Fund. The Municipal Capital Improvements Fund supplemental appropriations of $505,440 relate to continuing appropriations for capital projects funded primarily by grants. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets. The City of Des Moines’s investment in capital assets for its governmental and business-type activities as of December 31, 2006 totals $148,541,115 (net of accumulated depreciation). This investment in capital assets includes land, buildings and structures, machinery and equipment, park facilities, sidewalks, roads, highways, and bridges as shown in Table A-3. During the fiscal year, major capital asset additions included: • Des Moines Creek Basin projects totaling $769,123. • Traffic signal installation and improvements totaling $340,353. • Marine View Drive Bridge Culvert Replacement Project stream and trail improvements paid for with funds from the Des Moines Creek Basin Interlocal agreement and Surface Water Management revenues totaling $321,173. • th th 16 Avenue South to 260 pedestrian and mobility improvements totaling $312,501. ____________________________________________________________________________________________________________ Washington State Auditor's Office 17
  21. 21. CITY OF DES MOINES, WASHINGTON Management’s Discussion and Analysis • Vehicle and equipment acquisitions totaling $302,237. • Slide repairs totaling $286,212 for Marine View Drive, Des Moines Memorial Drive, and Saltwater State Park Bridge. • Steven J. Underwood Memorial Park Phase 1-C restrooms totaling $156,497. • Des Moines Beach Park Auditorium rehabilitation project totaling $90,197. • Activity Center street frontage improvements totaling $74,732. • Woodmont Culvert replacement project totaling $61,561. • Capital lease for copiers totaling $50,118. The Marina continues with its major renovations addressed in the Marina Master Plan. Additions for 2006 total $246,665 all funded by proceeds from the 2002 general obligation bond issue. Other improvements include updates to the Marina Master Plan ($40,418) and outlays for a security camera system ($29,476) using fund balance as a source of revenue. More detailed information about the City’s capital assets is presented in Note 6 to the financial statements. Table A-3 City of Des Moines's Capital Assets (net of depreciation) Governmental Business-type Activities Activities Total 2006 2005 2006 2005 2006 2005 Land $ 100,508,719 $ 100,491,334 $ 3,757,984 $ 3,755,837 $ 104,266,703 $ 104,247,171 Buildings & structures 6,867,735 7,077,703 1,782,456 1,866,245 8,650,191 8,943,948 Capital lease 36,181 - 5,584 - 41,765 - Other improvements 3,372,015 3,675,436 11,208,669 10,629,114 14,580,684 14,304,550 Machinery & equipment 1,301,297 1,462,505 37,557 22,659 1,338,854 1,485,164 Leasehold improvements - - 59,835 65,066 59,835 65,066 Infrastructure 15,609,284 16,095,760 - - 15,609,284 16,095,760 Construction in progress 1,842,396 1,019,063 2,008,124 1,779,323 3,850,520 2,798,386 Intangible assets 50,122 87,177 93,157 116,170 143,279 203,347 Total $ 129,587,749 $ 129,908,978 $ 18,953,366 $ 18,234,414 $ 148,541,115 $ 148,143,392 Long-term debt. At the end of the current fiscal year, the City of Des Moines had total bonded debt outstanding of $6,080,000 which is backed by the full faith and credit of the government. Of this amount, $4,210,000 is also backed by revenues of the Marina. The remainder of the City’s debt represents Public Works Trust Fund Loans and Capital Lease. Table A-4 provides a breakdown of the City’s outstanding debt. Table A-4 City of Des Moines's Outstanding Debt Governmental Business-type Activities Activities Total Total 2006 2005 2006 2005 2006 2005 General obligation bonds $ 1,870,000 $ 2,590,000 $ 4,210,000 $ 4,670,000 $ 6,080,000 $ 7,260,000 Public Works Trust Fund Loans 2,183,705 2,328,190 - - 2,183,705 2,328,190 Capital Lease 36,802 - 5,680 - 42,482 - Total $ 4,090,507 $ 4,918,190 $ 4,215,680 $ 4,670,000 $ 8,306,187 $ 9,588,190 The City’s received its latest bond rating of A3 in November 2002. The rating was assigned to its 2002 Limited Tax General Obligation and Refunding Bonds. The rating and stable outlook reflected the improved financial position of the City since voter approval of I-695 eliminated the motor vehicle excise tax revenues, a major funding source for the City. More detailed information about the City’s long-term liabilities is presented in Note 11 to the financial statements. ____________________________________________________________________________________________________________ Washington State Auditor's Office 18
  22. 22. CITY OF DES MOINES, WASHINGTON Management’s Discussion and Analysis ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES The region’s economy continues to experience growth with low unemployment and increased housing values. Preparation of the 2007 budget process will take into consideration these factors. Voter approval of a six-year levy lid lift ballot measure in May 2006 will provide additional property taxes of approximately $1,356,700 in 2007 to be utilized to restore police department staffing. The 2007 budget process continues to face a structural imbalance with its General and Street Funds. Strategies include operating budget reductions and use of one-time revenues to balance the budget. Significant one-time revenues from building and development activities are expected in the next few years. Also, the Marina and Surface Water Management Utility will implement their annual rate increases on moorage and surface water management fees. REQUESTS FOR INFORMATION This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the City’s finances and to demonstrate the City’s accountability for the money it receives. If you have questions about this report or need additional financial information, contact Paula A. th Henderson, Finance Director, 21630 11 Ave. S., Suite A, Des Moines, Washington, 98198. ____________________________________________________________________________________________________________ Washington State Auditor's Office 19
  23. 23. CITY OF DES MOINES, WASHINGTON Page 1 of 1 GOVERNMENT-WIDE FINANCIAL STATEMENTS STATEMENT OF NET ASSETS December 31, 2006 GOVERNMENTAL BUSINESS-TYPE DESCRIPTION ACTIVITIES ACTIVITIES TOTAL ASSETS Cash and cash equivalents $ 11,130,422 $ 1,959,389 $ 13,089,811 Cash with fiscal agent 5,000 - 5,000 Investments - - - Receivables: Taxes 1,239,700 - 1,239,700 Customer accounts 521,818 223,995 745,813 Other 100,718 44,238 144,956 Due from other governments 195,248 725,091 920,339 Internal balances - - - Inventories 15,676 17,197 32,873 Prepaid items 1,312 5,118 6,430 Restricted assets: Cash and cash equivalents - 2,544,364 2,544,364 Investments - - - Investment in Joint Venture 35,293 - 35,293 Capital assets: Land 100,508,719 3,757,984 104,266,703 Depreciable capital assets, net 27,236,634 13,187,258 40,423,892 Construction in progress 1,842,396 2,008,124 3,850,520 Deferred charges 28,519 85,118 113,637 TOTAL ASSETS $ 142,861,455 $ 24,557,876 $ 167,419,331 LIABILITIES Accounts payable $ 669,200 $ 278,894 $ 948,094 Matured interest payable 5,000 - 5,000 Due to other governments 135,898 - 135,898 Accrued interest payable 13,509 14,850 28,359 Other current liabilities 1,510,721 63,172 1,573,893 Liabilities payable from restricted assets: General obligation bonds principal - 480,000 480,000 Deposits - 147,622 147,622 Deferred revenues 165,917 195,308 361,225 Long-term liabilities: Due within one year 833,986 1,274 835,260 Due in more than one year 4,040,765 3,839,694 7,880,459 TOTAL LIABILITIES 7,374,996 5,020,814 12,395,810 NET ASSETS Invested In capital assets, net of related debt 126,900,100 16,419,218 143,319,318 Restricted for: Capital projects 1,372,301 1,622,060 2,994,361 Debt service 57,587 463,349 520,936 Repair and replacement - 321,274 321,274 Unrestricted 7,156,471 711,161 7,867,632 TOTAL NET ASSETS $ 135,486,459 $ 19,537,062 $ 155,023,521 The accompanying notes are an integral part of this statement. ____________________________________________________________________________________________________________ Washington State Auditor's Office 20
  24. 24. CITY OF DES MOINES, WASHINGTON GOVERNMENT-WIDE FINANCIAL STATEMENTS STATEMENT OF ACTIVITIES For the Year Ended December 31, 2006 PROGRAM REVENUES NET (EXPENSES) REVENUE AND CHANGES IN NET ASSETS OPERATING CAPITAL GRANTS CHARGES FOR GRANTS AND AND GOVERNMENTAL BUSINESS-TYPE FUNCTIONS/PROGRAMS EXPENSES SERVICES CONTRIBUTIONS CONTRIBUTIONS ACTIVITIES ACTIVITIES TOTAL Governmental activities: General government $ 2,000,133 $ 741,841 $ 206 $ 27,223 $ (1,230,863) $ - $ (1,230,863) Public safety 7,605,119 278,867 291,868 - (7,034,384) - (7,034,384) Physical environment 1,119,453 369,211 61,099 - (689,143) - (689,143) Transportation 3,129,456 213,081 876,363 532,136 (1,507,876) - (1,507,876) Economic environment 589,277 1,090,026 - - 500,749 - 500,749 Mental and physical health 329,693 89,405 47,275 - (193,013) - (193,013) Culture and recreation 2,196,579 676,296 75,933 152,331 (1,292,019) - (1,292,019) Interest on long-term debt 146,713 - - - (146,713) - (146,713) Total governmental activities 17,116,423 3,458,727 1,352,744 711,690 (11,593,262) - (11,593,262) Business-type activities: Marina 3,389,736 3,503,722 200 19,542 - 133,728 133,728 Surface Water Utility 1,226,098 1,408,645 3,498 437,727 - 623,772 623,772 Total business-type activities 4,615,834 4,912,367 3,698 457,269 - 757,500 757,500 21 Total government $ 21,732,257 $ 8,371,094 $ 1,356,442 $ 1,168,959 $ (11,593,262) $ 757,500 $ (10,835,762) General revenues: Property taxes $ 3,392,392 $ - $ 3,392,392 Retail sales and use taxes 2,586,570 - 2,586,570 Business taxes 3,878,935 - 3,878,935 Washington State Auditor's Office Other taxes 1,490,638 - 1,490,638 State entitlements 451,778 - 451,778 Unrestricted investment earnings 465,823 246,875 712,698 Equity in income of joint venture 13,753 13,753 Gain on sale of capital assets 16,633 - 16,633 Miscellaneous 76,473 (61,190) 15,283 Special item: Insurance Recoveries 703 - 703 Transfers 273,967 (273,967) - Total general revenues and transfers 12,647,665 (88,282) 12,559,383 Change in net assets 1,054,403 669,218 1,723,621 Net assets beginning of the year 134,432,056 18,957,409 153,389,465 Prior year adjustments (89,565) (89,565) Net assets beginning of the year restated 134,432,056 18,867,844 153,299,900 Net assets end of the year $ 135,486,459 $ 19,537,062 $ 155,023,521 ____________________________________________________________________________________________________________ The accompanying notes are an integral part of this statement.
  25. 25. CITY OF DES MOINES, WASHINGTON Page 1 of 2 FUND FINANCIAL STATEMENTS BALANCE SHEET December 31, 2006 MUNICIPAL NONMAJOR GENERAL STREET ARTERIAL CAPITAL GOVERNMENTAL DESCRIPTION FUND FUND STREET IMPRV FUNDS ASSETS Cash and cash equivalents $ 1,246,991 $ 596,192 $ 4,091,062 $ 1,864,483 $ 1,341,547 Cash with fiscal agent - - - - 5,000 Investments - Receivables: Taxes 1,092,868 2,433 - 105,609 29,603 Customer accounts 434,755 - - 4,391 82,672 Other 17,758 9,684 66,213 - 20 Due from other funds - - - - - Due from other governments 37,012 - 21,633 68,024 41,280 Prepaid items 1,312 - - - TOTAL ASSETS $ 2,830,696 $ 608,309 $ 4,178,908 $ 2,042,507 $ 1,500,122 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 406,721 $ 49,435 $ 23,686 $ 90,210 $ 5,203 Matured interest payable - - - - 5,000 Due to other funds - - - - - Due to other governments 6,817 - - - - Customer deposits 425,543 - - - - Other current liabilities 421,783 14,146 573,153 7,285 70 Deferred revenues 647,899 631 - - 145,315 Total liabilities 1,908,763 64,212 596,839 97,495 155,588 Fund balances: Reserved for: Imprest funds $ 4,600 $ - $ - $ - $ - Prepaid items 1,312 - - - - Unreserved, designated for: Maintenance agreement 18,836 - - - - Continuing appropriations 897,185 52,736 - - - Capital projects funds - - 1,372,301 - - Unreserved, undesignated reported in: General fund - - - - - Special revenue funds - 491,361 2,209,768 - 1,286,947 Debt service funds - - - - 57,587 Capital projects funds - - - 1,945,012 - Total fund balances 921,933 544,097 3,582,069 1,945,012 1,344,534 TOTAL LIABILITIES AND FUND BALANCES $ 2,830,696 $ 608,309 $ 4,178,908 $ 2,042,507 $ 1,500,122 The accompanying notes are an integral part of this statement. ____________________________________________________________________________________________________________ Washington State Auditor's Office 22
  26. 26. Page 2 of 2 CITY OF DES MOINES, WASHINGTON FUND FINANCIAL STATEMENTS RECONCILIATION OF THE BALANCE SHEET TO THE STATEMENT OF NET ASSETS GOVERNMENTAL FUNDS December 31, 2006 TOTAL GOVERNMENTAL FUNDS Fund balances - total governmental funds $ 8,337,645 $ 9,140,275 5,000 Amounts reported for governmental activities in the statement of - net assets are different because: 1,230,513 Capital assets used in governmental activities are not financial 521,818 resources and therefore are not reported in the governmental funds. 93,675 - Land $ 100,508,719 167,949 Depreciable capital assets, net 26,262,866 1,312 Construction in progress 1,842,396 $ 11,160,542 128,613,981 Other assets used in governmental activities are not financial resources and therefore are not reported in the governmental funds. $ 575,255 5,000 Other accounts receivable 12,037 - Due from other governments 18,299 6,817 Unamortized bond issuance costs 28,519 425,543 Investment in joint venture 35,293 1,016,437 94,148 793,845 Current liabilities includes amounts not payable in the current 2,822,897 period and therefore are not reported in the governmental funds. Accounts payable and other accrued liabilities (120,392) Accrued interest payable (13,509) $ 4,600 Due to other governments (129,081) 1,312 (262,982) Deferred revenue in governmental funds is susceptible to full 18,836 accrual and therefore are not reported in the governmental funds. 949,921 1,372,301 Deferred revenue - current period 155,089 Deferred revenue - prior period 472,839 - 3,988,076 Long-term liabilities, including bonds, notes, and loans payable are 57,587 not due and payable in the current period and therefore are not reported 1,945,012 in fund balance in the governmental funds. 8,337,645 $ 11,160,542 Governmental bonds, notes, and loans payable (4,088,469) Compensated absences (765,619) (4,854,088) Internal service funds are used by management to charge the costs of certain activities to individual funds. The assets and liabilities of internal service funds are included in governmental activities in the statement of net assets. 2,929,827 Net assets of governmental activities $ 135,486,459 The accompanying notes are an integral part of this statement. ____________________________________________________________________________________________________________ Washington State Auditor's Office 23

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