Audit - 1982/1983
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CITY OF SALINA
Salina, Kansas
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WATER AND SEWERAGE DEPARTMENT
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FINANCIAL STATEMENTS AND AUDITORS' REPORT
December 31, 1983 and 1982
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KENNEDY AND COE
Certified Public Accountants
Salina, Kansas
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I Exhibit A
Exhibit B
I Exhibit C
I Exhibit D
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CITY OF SALINA
Salina, Kansas
WATER AND SEWERAGE DEPARTMENT
CONTENTS
AUDITORS' REPORT
BALANCE SHEETS
STATEMENTS OF INCOME
STATEMENTS OF CONTRIBUTED CAPITAL AND RETAINED EARNINGS
STATEMENTS OF CHANGES IN FINANCIAL POSITION
NOTES TO FINANCIAL STATEMENTS
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Contents
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MEMBERS OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
KENNEDY AND COE
CERTIFIED PUBLIC ACCOUNTANTS
HOME OFFICE:
P. O. BOX' '711
SALINA. KANSAS 6740'
1113.82!l.'!l6'
OFFICES IN
KANSAS
NEBRASKA
OKLAHOMA
To the Mayor and
The Board of City Commissioners:
We have examined the balance sheets of the Water and Sewerage Department of the
City of Salina, Kansas, as of December 31, 1983 and 1982, and the related state-
ments of income, contributed capital and retained earnings, and changes in financial
position for the years then ended. Our examinations were made in accordance with
generally accepted auditing standards and, accordingly, included such tests of
the accounting records and such other auditing procedures as we considered nec-
essary in the circumstances.
In our opinion, the financial statements referred to above present fairly the finan-
cial position of the Water and Sewerage Department of the City of Salina, Kansas,
as of December 31, 1983 and 1982, and the results of its operations and the changes
in its financial position for the years then ended, in conformity with generally
accepted accounting principles applied on a consistent basis.
Respectfully submitted,
Salina, Kansas
April 20, 1984
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CITY OF SALINA
Salina, Kansas
WATER AND SEWERAGE DEPARTMENT
BALANCE SHEETS
December 31,
1983 1982
$ 891,098 $ 690,738
222,128 225,180
112,475 123,858
1,225,701 1,039,776
ASSETS
Current Assets
Cash and investments
Accounts receivable, net of allowance for
doubtful accounts
Prepaid supplies
Total Current Assets
Restricted Assets
System sinking fund
Cash and investments
Plant reserve fund
Cash and investments
System reserve fund
Cash and investments
Total Restricted Assets
1,277 ,222
691,994
1,160,452
3,129,668
Property, Plant, and Equipment
Land
Water plant and equipment
Sewerage plant and equipment
Furniture and office equipment
Construction in progress
116,263
14,515,380
9,940,200
58,266
52,794
24,682,903
11 ,584,351
13,098,552
Less accumulated depreciation
Total Property, Plant, and Equipment
Other Assets
Deferred issuance costs, net of amortization
53,545
Totals
$17,507,466
The accompanying notes are an integral part
of these financial statements.
1,070,133
618,326
778,185
2,466,644
116,263
14,393,218
9,755,599
53,384
24,318,464
11 ,020,304
13,298,160
55,776
$16,860,356
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LIABILITIES
Current Liabilities
Accounts payable
Customers' meter deposits
Accrued interest payable
Long-term obligations due within one year
Total Current Liabilities
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Long-Term Obligations
Revenue bonds due after one year (Note 2)
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Reserves, Contributed Capital and Retained Earnings
Reserves
System sinking fund
Plant reserve fund
System reserve fund
Total Reserves
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Contributed capital and retained earn1ngs
(Exhibit C)
Total Reserves, Contributed Capital and
Retained Earnings
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Tot als
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Exhibit A
December 31,
1983 1982
$
118,381
76,670
104,174
1,000
300,225
$
108,519
79,795
104 , 174
1,000
293,488
4,388,000
4,389,000
1,277,222 1,070,133
691,994 618,326
1,160,452 778,185
3,129,668 2,466,644
9,689,573 9,711 ,224
12,819,241 12,177 ,868
$17 .507 .466 $16.860,356
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CITY OF SALINA
Salina, Kansas
Exhibit B
WATER AND SEWERAGE DEPARTMENT
STATEMENTS OF INCOME
Year Ended December 31,
1983 1982
Operating Revenues
Water revenue
Sewerage revenue
Tapping service and frontage charges
Service charge - Sanitation department
Miscellaneous income
Total Operating Revenues
$2,870,708
647,678
11 ,807
12,079
6,185
3,548,457
$2,413,157
652,500
5,694
10,696
10,112
3,092,159
Operating Expenses
Water supply
Softening and treatment
Pumping
Distribution
Customers' accounting and collection
Administrative and general
Sewage treatment and collection
Depreciation
Total Operating Expenses
73,318
716,789
166,219
252,297
274,785
544,722
520,712
572,091
3,120,933
63,351
714,173
153,202
236,475
263,522
499,410
534,794
580,973
3,045,900
Operating Income
427,524
46,259
Other Income
Interest on investments
236,567
246,061
Other Expenses
Interest on revenue bonds
Amortization of deferred issuance costs
Loss on retirement of assets
Total Other Expenses
277 ,702
2,231
3,429
283,362
277 , 765
2,231
279,996
Net Income
$ 380.729
$
12.324
The accompanying notes are an integral part
of these financial statements.
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CITY OF SALINA
Salina, Kansas
Exhibit C
WATER AND SEWERAGE DEPARTMENT
STATEMENTS OF CONTRIBUTED CAPITAL AND RETAINED EARNINGS
Year Ended December 31,
1983 1982
Balance, Beginning of Year
$9,711 ,224
$10,069,047
Additions
Net income for the year (Exhibit B)
Contributions of property, plant and equipment
Transfers from system sinking fund reserve
Total Additions
380,729
260,644
278,702
920,075
12,324
278,765
291,089
Deductions
Transfers to restricted reserves
System sinking fund
Plant reserve fund
System reserve fund
Total Deductions
485,791
73,668
382,267
941,726
469,269
80,590
99,053
648,912
Balance, End of Year
$9.689.573
$ 9,711 ,224
The accompanying notes are an integral part
of these financial statements.
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CITY OF SALINA
Salina, Kansas
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WATER AND SEWERAGE DEPARTMENT
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STATEMENTS OF CHANGES IN FINANCIAL POSITION
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Sources of Working Capital
From Operations
Net Income
Charges against net Income not affecting
working capital
Depreciation
Amortization of deferred issuance costs
Working capital provided by operations
Net book value of dispositions of property, plant
and equipment
Contributions of property, plant and equipment
Total Sources of Working Capital
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Applications of Working Capital
Additions to property, plant, and equipment
Increase In reserve account assets
Decrease In long-term liabilities
Total Applications of Working Capital
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Increase In Working Capital
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Changes in Components of Working Capital
Increase (Decrease) 1n Current Assets
Cash and investments
Accounts receivable
Inventories
Total Increase (Decrease) In Current Assets
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Increase (Decrease) 1n Current Liabilities
Accounts payable
Customers' meter deposits
Accrued expenses
Total Increase (Decrease) In Current Liabilities
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Increase In Working Capital
Exhibit D
Year Ended December 31,
1983 1982
$ 380,729
572,091
2,231
955,051
621
260,644
1,216,316
373,104
663,024
1,000
1,037,128
$ 179,188
$ 200,360
0,052)
(11,383)
185,925
9,862
0,125)
6,737
$ 179,188
The accompanying notes are an integral part
of these financial statements.
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$ 12,324
580,973
2,231
595,528
595,528
33,132
370,147
1,000
404,279
$191,249
$187,579
27,419
12,512
227,510
42,250
3,345
(9,334)
36,261
$191,249
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CITY OF SALINA
Salina, Kansas
WATER AND SEWERAGE DEPARTMENT
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NOTES TO FINANCIAL STATEMENTS
December 31, 1983 and 1982
I 1. Summary of Significant Accounting Policies
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a. Fund Accounting: The City maintains its accounting records in accordance
with the principles of fund accounting in order to ensure observance
of limitations and restrictions placed on the use of resources available.
Resources are classified for accounting and reporting into funds
established according to their nature and purposes. The Water and
Sewerage Department of the City of Salina is a separate fund of the
City which is supported by user charges from its customers rather than
by tax monies.
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The Department uses the accrual method of accounting in the preparation
of its financial statements. Revenue is recorded as earned and expenses
as incurred.
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b. Deferred Issuance Costs: Deferred issuance costs are amortized to expense
over the term of the related revenue bonds.
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c. Property, Plant, and Equipment and Depreciation: Property, plant, and
equipment are stated at cost. Assets acquired prior to 1981 have been
adjusted to reflect cost as determined by a firm of professional
appraisers. Depreciation is determined using the straight-line method
over the estimated useful life of each asset.
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d. Investments: Investments are stated at cost which approximates market.
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2. Long-Term Obligations
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The City issued its Waterworks and Sewage System Refunding Revenue Bonds,
Series of 1978, on May 1, 1978, for the purpose of refunding its Combined Water
and Sewage System Revenue Bonds of 1961 and 1977. Proceeds of the 1978 bond
issue were invested in United States government obligations deposited with
Planters Bank and Trust Company, Salina, Kansas, pursuant to an escrow trust
agreement dated May 1, 1978. Total funds deposited and interest earned on such
funds will be sufficient to pay all principal and interest on the 1961 and 1977
bonds as they become due. Neither the assets deposited with the escrow agent
nor the outstanding 1961 and 1977 obligations totaling $3,610,000 are reflected
in the accompanying financial statements.
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The new bond issue in the original amount of $4,394,000 matures serially between
February 15, 1979, and February 15, 2007, and bears interest at rates varying
from 6 l/4 to 6 3/8 percent per annum. Maturities of the 1978 revenue bonds in
subsequent years are as follows:
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1984 through 1988 - $1,000 per year
Thereafter
$ 5,000
4,384,000
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Total Bonds Outstanding, December 31, 1983
$4,389,000
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The City has established certain reserve accounts pursuant to the 1978 bond
ordinance to provide funds for the retirement of the bonds and payment of
interest thereon and for making replacements to the system in the event other
funds are not available. The gross revenues of the Department are pledged to
secure payment of the bonds; however, the pledge is subordinate to a similar
pledge to secure payment of the 1961 and 1977 bonds.
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The amounts required to be maintained in the reserve accounts established
by the 1978 bond ordinance have been provided and the net operating income of
the system for 1983 and 1982 is sufficient to meet the requirements of the
ordinance.
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3. Retirement Plan
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The City participates in the State of Kansas Public Employees' Retirement
System which is a defined contribution plan covering substantially all employees.
The Department's portion of pension costs, which are funded as accrued,
was $39,595 and $34,751, for the years 1983 and 1982, respectively.
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4. Commitments
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Commitments to acquire additional water and sewerage equipment totaled $141,036
as of December 31, 1983.
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