HomeMy WebLinkAbout2002-05-22 WS Packet
COUNCIL WORK SESSION
WEDNESDAY, MAY 22,2002
5:30 P.M.
I. CALL TO ORDER
TI. SET AGENDA
III. PUBLIC HEARING(S)
IV. APPEARANCES/AWARDS
1. Mr. Steve McDonald (ABDO, ABDO, EICK & Meyers)
V. CONSIDERATION OF MINUTES
VI. PETITIONS AND COMPLAINTS
VII. OLD BUSINESS
VITI. NEW BUSINESS
1. 2001 Audit
IX. CONSENT AGENDA
X. COMMITTEE REPORTS
XI. ADMINISTRATOR'S REPORT
XU ADJOURNMENT
I-~- -
I !f", -", .
March 29, 2002
7241 Ohms Lane
Suite 200
Edina, MN 55439
Members of the City Council
City of Centerville, Minnesota
We have audited the general purpose financial statements of the City of Centerville for the year ended December 31, 2001 and
have issued our report thereon dated March 29, 2002. Professional standards require that we provide you with the following
information related to our audit
Our Responsibility Under Auditing Standards Generally Accepted in the United States of America and Government
A uditing Standards
As stated in our engagement letter, our responsibility. as described by professional standards, is to plan and perform our audit to
obtain reasonable. but not absolute, assurance that the financial statements are free of material misstatement and are fairly
presented in accordance with accounting principles generally accepted in the United States of America. Because an audit is
designed to provide reasonable, but not absolute, assurance and because we did not perform a detailed examination of all
transactions, there is a risk that material errors, fraud or illegal acts may exist and not be detected by us,
In planning and performing our audit of the general purpose financial statements of the City, for the year ended December 31.
200 I, we considered its internal control in order to detennine our auditing procedures for the purpose of expressing our opinion on
the general purpose fmancial statements and not to provide assurance on the internal control. However, we noted certain matters
involving the internal control and its operation that we consider to be reportable conditions under standards established by the
American Institute of Certified Public Accountants. Reportable conditions involve matters coming to our attention relating to
significant deficiencies in the design or operation of internal control that, in our judgment. could adversely affect the City's ability
to record, process. summarize, and report financial data consistent with the assertions of management in the general purpose
financial statements, We noted the following reportable condition.
Segregation of Duties
Our study and evaluation disclosed that because of the limited size of your office staff, your organization has limited
segregation of duties. Good internal control contemplates an adequate segregation of duties so that no one individual handles
a transaction from inception to completion. While we recognize that your organization is not large enough to permit an
adequate segregation of duties in all respects, it is important, however, that you be aware of this condition.
A material weakness is a reportable condition in which the design or operation of one or more of the internal control components
does not reduce to a relatively low level the risk that errors or fraud in amounts that would be material in relation to the general
purpose financial statements being audited may occur and not be detected within a timely period by employees in the normal
course of perfonning their assigned functions.
Our consideration of internal control would not necessarily disclose all matters in internal control that might be reportable
conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material
weaknesses as defined above. However, the reportable condition described above is believed to be a material weakness.
952.835.9090 Fax 952.835.3261
www.aemcpas.com
.'f t
City of Centerville
March 29, 2002
Page Two
As part of obtaining reasonable assurance about whether the general purpose financial statements are free of material
misstatement, we performed tests of compliance with certain provisions of laws, regulations, contracts and grants. However, the
objective of our tests was not to provide an opinion on compliance with such provisions. We noted one instance of non-
compliance with Minnesota Statutes and it is described below.
Collateral Coverage
In accordance with Minnesota Statutes, section 118A.03, the City is required to pledge collateral equal to 110 percent of the
deposits not covered with insurance. At December 31, 2001, the City did not have the full 110 percent of collateral pledged.
We recommend that the City consider collateral coverage as part of the monthly bank reconciliation and cash flow planning
process.
Significant Accounting Policies
Management has the responsibility for selection and use of appropriate accounting policies. In accordance with the terms of our
engagement letter, we will advise management about the appropriateness of accounting policies and their application. The
significant accounting policies used by the City are described in Note I to the general purpose financial statements. No new
accounting policies were adopted and the application of existing policies was not changed during 2001. We noted no transactions
entered into by the City during the year that were both significant and unnsual, and of which, under professional standards, we are
required to inform you, or transactions for which there is a lack of authoritative guidance or consensus.
Accounting Estimates
Accounting estimates are an integral part of the general purpose financial statements prepared by management and are based on
management's knowledge and experience about past and current events and assumptions about future events. Certain accounting
estimates are particularly sensitive because of their significance to the general purpose financial statements and because of the
possibility that future events affecting them may differ significantly from those expected. The most significant estimate affecting
the financial statements was depreciation on enterprise fund fixed assets.
Management's estimate of depreciation is based on estimated useful lives of the assets. We evaluated the key factors and
assumptions used to develop this estimate in determining that it is reasonable in relation to the financial statements taken as a
whole.
Audit Adjustments
For purposes of this letter, professional standards define an audit adjustment as a proposed correction of the financial statements
that, in our judgment, may not have been detected except through our auditing procedures. An audit adjustment mayor may not
indicate matters that could have a significant effect on the City's financial reporting process (that is, cause future financial
statements to be materially misstated).
In total we recorded 42 journal entries. Our journal entries are attached. Entries number I, 2, 3, 10, II, 12, 26, 34, 40 and 42
would be considered audit adjustments. The remaining are a combination of correcting, reclassifying and year end balance
adjusting entries. The year end balance adjusting entries are typically the responsibility of a City. When we prepare the schedules
and make the entries it results in additional time and expense for the City. We will continue to try to provide you with the
information to do these entries internally. This will result in more relevant, timely information on an on going basis.
We have reported in the past that the correcting and reclassifying entries appear to result from insufficient knowledge on the
purpose of each fund and the lack of complete month end reconciliation. These two factors again appear to be the main cause of
the majority of the entries. This resulted in intemal information that was not reliable for Councilor Administration. Another
factor that also reduced the reliability and accuracy of internal information was a haphazard method of processing data. There was
no systematic way of initiating or approving transactions or coding recurring transactions. This resulted in several duplicate
payments and coding errors. Documented, well-thought out procedures would help the City to consistently code transactions and
report information. We provided staff with a list of specific processing situations that resulted in errors and a recommendation to
fix the error.
~ t
City of Centerville
March 29, 2002
Page Three
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to
our satisfaction, concerning a financial accounting, reporting or auditing matter that could be significant to the general purpose
financial statements or the auditors' report. We are pleased to report that no such disagreements arose during the course of our
audit.
Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to
obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the City's
general purpose financial statements or a determination of the type of auditors' opinion that may be expressed on those statements,
our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant
facts. To our knowledge, there were no such consultations with other accountants.
Issues Discussed Prior to Retention ofIndependent Auditors
We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with
management each year prior to retention as the City's auditors. However. these discussions occurred in the normal course of our
professional relationship and our responses were not a condition to our retention.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing our audit.
Other MaUers
The following are areas that carne to our attention during the audit that we feel should be reviewed:
Financial Position and Results of Operations
General Fund
Overall, the fund balance decreased $192,261 during 2001. The total fund balance is $648,893 and this is approximately 32
percent of current year expenditures and transfers out. We recommend fund balance be maintained between 40 percent to 50
percent of planned expenditures and transfers out. So at the current level, the fund balance is below what is normally
recommended as a minimum. The State has recently indicated they may consider reviewing fund balance reserves of local
governments when adjusting the local government aid formulas. This may negatively impact the City if reserves in excess of
the amount needed for working capital are not designated. A designation indicates intended use of fund balance. We
recommend the City make designations for intended use of fund balance when the amount is above the 50 percent threshold
for working capital.
The table below summarizes fund balance and expenditures from the last five years.
Expenditures Fund Balance
Fund and as a Percent of
Balance Transfers Out Expenditures
2001 $ 648,893 $ 2,051,024 31.6%
2000 841,154 1,817,891 46.3
1999 1,051,596 1,322'\94 79.5
1998 905,692 962,961 94.1
1997 621,746 861,815 72.1
L__
.~ ,
City of Centerville
March 29, 2002
Page Four
Fund balance should be maintained for the following reasons:
Purposes and Benefits
. Expenditures are incurred somewhat evenly throughout the year. However, property tax and state aid revenues are not
received until the second half of the year. An adequate fund balance will provide the cash flow required to finance the
General Fund expenditures. Your fund balance appears to be sufficient to provide this working capitaL
. The City is vulnerable to legislative actions at the State and Federal level. The State eliminated HACA aid with the
2001 legislative session. Levy limits have also been implemented for municipalities in past legislative sessions. An
adequate fund balance will provide a temporary buffer against those aid adjustments and levy limits
. Expenditures not anticipated at the time the annual budget was adopted may need immediate Council action. These
would include capital outlay replacement, lawsuits and other items. An adequate fund balance will provide the
financing needed for such expenditures.
. A strong fund balance will assist the City in maintaining or improving its bond rating.
A summary of the 200 I operations is as follows:
Budget
Actual
Variance -
Favorable
(Unfavorable)
Revenue $ 1,654,582 $ 1,790,729 $ 136,377
Expenditures 1.532.352 1.929.024 (396.672 )
Excess (deficiency) of revenue over expenditures 122.000 (138.295 ) (260.295 )
Other financing sources (uses)
Operating transfers in 68,034 68,034
Operating transfers out (122.000) !122.0oo )
Excess (deficiency) of revenue and other financing sources
over expenditures and other financing uses $ (192,261) $ (]92 261)
Fund Balance, January I 841.154
Fund Balance, December 31 $ 648 893
. The majority of the favorable revenue variance resulted from licenses and permits in excess of budget by $83,438.
. Interest income was $55,908 under budget. Even with a 5 percent rate of return the budget would be too high. Interest
rates were around 3 percent to 5 percent at the beginning of the year and 1.5 percent to 3 percent at the end of the year.
The City needs to consider its current cash balance when setting the budget for interest.
. The majority of the unfavorable expenditure variance resulted from capital outlay in excess of budget by $290,223.
. The City does not budget for the Fire aid revenue and subsequent payment to the relief association. The payment to the
Relief was $100,393 and accounted for over 25 percent of the expenditure variance. We recommend the Fire aid and
payment be reflected in the budget.
L_
1--
." (
City of Centerville
March 29, 2002
Page Five
A more detailed comparison of general fund revenue with the prior year is as follows:
Percent Percent 1ncrease
of of (Decrease)
Revenue Soun:e 2001 Total 2000 Total from 2000
Property taxes $ 1,225,296 65.92% $ 986,446 61.37% $ 238,850
Licenses and permits 235,667 12.67 216,725 13.48 18,942
1ntergovernmeotal 235,367 12.66 263,516 16.39 (28,149)
Charges for services 780 .04 500 .03 280
Fines and forfeits 32,269 1.74 28,162 1.75 4,107
Interest 20,787 1.12 48,357 3.01 (27,570 )
Other 40,563 2.18 42,743 2.66 730
Transfers in 68.034 3.66 21.000 ---.Ul 47.034
Total revenue and transfers $ 1 858 763 ~% $ 1 607 449 lll!M!2 % $ 254 224
The 200 1 revenue is graphically presented as follows
2001 Revenue
Property taxes
65.92%
Other
2.18%
loterest
1.12%
Fines
aod forfeits
1.74%
Traosfers in
3.66%
Charges
for services
0.04%
lotergovemmeotsl
12.66%
Licenses
aodpermits
12.67%
~ l
City of CenterviIIe
March 29, 2002
Page Six
A moze de1ailed comparison of expenditures with the prior year is as follows:
Percent Percent Increase
of of (Decrease)
ProlmllllS 2001 Total 2000 Total from 2000
General government $ 440,071 21.46% $ 446,180 24.54% $ (6,109)
Public safety 648,345 31.61 520,424 28.63 127,921
Public woJks 196,832 9.60 149,930 8.25 46,902
PaIks 88,734 4.33 99,317 5.46 (10,583 )
Other 2,091 .10 4,321 .24 (2,230 )
Capital outlay 552,951 26.96 475,212 26.14 77,739
Transfen; out 122.000 ~ 122.507 6.74 (507)
Total expenditures and transt'en; $ 2.051024 100.00% $ 1 817.891 100 00010 $ 233 133
The 200 1 expenditures are graphically presented as follows:
2001 Expenditures
General government
21.46%
Transfers out
5.94%
Public safety
31.61%
Capital outlay
26.96%
Other
0.10"/0
Plllks
4.33%
Public works
9.60"/0
,) c
City of Centerville
March 29, 2002
Page Seven
Special Revenue Funds
These funds are used to account for revenues derived from specific revenue sources that are restricted to expenditures for
specific purposes.
The fund balances (deficits) of each at year end for 2001 and 2000 are as follows:
Cable TV
Recycling
City Celebration
Gambling Donation
$
Increase
200l 2000 iDecrease )
26,286 $ 20,496 $ 5,790
(10,628 ) (16,459) 5,831
(34,962 ) (19,850) (15,112)
25 .230 2.678 22.552
5926 $ (J3 135) $ 1906]
Fund
Total
$
We recommended that the Recycling and City Celebration fund deficits be eliminated with transfers. The proposed entries
were provided to the City in January 2002 but the Council delayed action due to further research needed by City staff.
Debt Service Funds
A comparison of the assets of each fund and the remaining bonds outstanding at year end are as follows:
Cash and
Investment Total Bonds
Fund Balance Assets Outstanding Maturity
Flood Plains Reduction $ 25,082 $ 31,303 $ 35,100 2002
1979 Improvements 1,192 1,341
1987 Improvements 30,685 37,106 100,000 2003
1993 Acorn Creek Improvements (38,296 ) (25,892 )
Municipal Building (90,361) (31,326) 112,732 2003
Clearwater Meadows 143,349 148,848 94,900 2002
Elementary School Water Extension 261,557 312,875 310,000 2008
Parkview Development 463,165 480,589 510,000 2009
G.O. Improvement Bonds of 2000 432,606 698,456 650,000 2011
G.O. Improvement Bonds of 2001 41.268 41.387 990.000 2013
Total $ 1.270247 $ I 694 687 $ 2.802 732
The 1987 Improvements bond issue is to be paid with special assessments according to the bond resolution. Through
research, the original assessment amount did not appear to be sufficient to pay all principal and interest. The City began
levying in 1997 for this bond and for the Municipal Building capital lease. The City will continue to transfer the amount
levied from the General to the 1987 Improvements and the Municipal Building funds.
The City made a final payment of project costs in the 1993 Acorn Creek Improvements fund. We recommended that this
fund along with the 1979 Improvements be closed with transfers in our prior management letter. These entries were also
provided to the City in January 2002 and delayed pending further research on some capital projects fund transfers.
During the audit we noted several debt transactions that were miscoded and duplicate payments. The duplicate payment was
a result of receiving two invoices for the same payment, but internal records should have caught the double billing. The City
has to establish a master list of all bond issues outstanding, the amounts due and the payment dates. Use of this list would
prevent prepayment and miscoding.
L__ __ _
r~
City of Centerville
March 29, 2002
Page Eight
Capital Projects Funds
The following funds were established to account for the resources used for the acquisition or construction of major capital
facilities. As projects are completed, any remaining funds should be transferred to their funding source. The following funds
along with their fund balance or deficit are included in this group:
Increase
Fund 2001 2000 (Decrease )
Park $ 109,816 $ 107,013 $ 2,803
Fire 5,853 5,704 149
TIP Projects 94,516 136,544 (42,028 )
Pedestrian Trail ways (352) (352)
Storm Water 188,826 171,360 17,466
Eagle Pass Addition (11,152) (10,786) (366)
Lakeland Hills (45,898 ) (45,898)
TIP District 1-4 (2,550) (160) (2,390)
TIP District 1-5 (6,233 ) (6,503) 270
Parkview Development 43,811 24,481 (8,761)
Woods of Clearwater Creek 25,121 52,572 640
Willow Glen Development 10,579 10,311 268
21" Avenue Improvements (8,467 ) (4,900) (3,567)
Center Villa (40,553 ) (36,888 ) (3,665)
Buechler Estates 1,943 2,322 (379)
Deer Pass (3,599) (2,985) (614)
Royal Industrial Park (90,186) (88,857 ) (1,329)
Public Works Building (6,029) (6,029)
Lift Station #2 Renovation (159,422 ) (151,619) (7,803)
Hunters Crossing 64,702 125,549 (60,847 )
Downtown Revitalization (8,560) (3,019) (5,541)
Pheasant Marsh 413,548 (1,328) 414,876
The Shores (1,018) (1,018 )
Economic Development Commission (1521) 2.985 (4.506)
Total $ 573.175 $ 279517 $ 293658
Many of the capital projects funds have a deficit at the end of the year. We have recommended that each fund be researched
to dctermine if the deficits are permanent and to make transfers to close each completed project out. We also provided the
City entries in January to close several of the funds and a list of funds that have had minimal activity but needed further
research. The transfers were delayed pending research on what oversizing was completed for some of the projects. This
research was not completed by the time we were completing audit fieldwork. The City needs to have a better understanding
of the financing of these projects when the project is initiated. There also needs to be timely close out of completed projects.
Several of these projects have been on the financial statements for many years past their completion. There doesn't appear
to be good process for organizing project data. The City should have centralized filing for projects from start to completion
and the files should contain all the necessary financing information. This would eliminate the need for unnecessary research
several years after the financing was discussed. We recommend that transfers and filing be completed in 2002.
)
City of Centerville
March 29, 2002
Page Nine
Enterprise Funds
Water Fund
The results of the operations and cash position of the Water fund for the past three years are as follows:
Percent Percent Percent
2001 of Total 2000 of Total 1999 of Total
Charges for services $ 184,481 100.0% $ 146,321 100.0 % $ 119,627 100.0 %
Operating expenses 154.722 83.9 85.511 58.4 94.208 78.8
Operating income 29,759 16.1 60,810 41.6 25,419 21.2
Nonoperating income 165.916 89.9 129.134 ~ 223.681 187.0
Net income before transfer $ 195.675 ...1Q6.Q % $ I R9 944 ~% $ 249 100 ~%
Cash balance, December 31 $ 1.264755 $ 1 093 145 $ 902 433
Bonds payable $ 267.000 $ 294 000 $ 324 000
The hook-up fees generate revenue for expansion of the system. These fees contributed to the majority of the large
cash balance. The rates currently appear adequate and are at a level sufficient to provide for the operation of the
system, but the City should evaluate them annually.
Sewer Fund
The results of operations and cash position of the Sewer fund for the past three years are as follows:
Charges for services
Operating expenses
$
Percent Percent Percent
2001 of Total 2000 of Total 1999 of Total
202,121 100.0% $ 181,415 100.0 % $ 148,870 100.0%
188.248 -2D 214.089 118.0 240.347 161.5
13,873 6.9 (32,674 ) (18.0) (91,477 ) (61.5)
187 .036 92.5 215.656 118.9 348.897 234.4
200 909 ~% $ I R2.982 ~% $ 251 420 j 72.9 %
Operating income
Nonoperating income
Net income
$
Cash balance, December 31
$ I R I R 376
$ 333 000
$ I 669712
$ I 473267
Bonds payable
$
366.000
$
396 000
The Sewer cash also is very high compared with operating expenses but large hook-up fees have also been a major
factor in the increase. The operations before hook-up fees have been at a loss for several years until 2001.
It is important that the City review rates to ensure that the revenue is high enough to cover operating expenses. As
mentioned in the Water fund analysis, the hook-up fees should be used for the expansion of the system.
J
City of Centerville
March 29, 2002
Page Ten
Other Items
Local Tax on Gambling Organizations
The City has an ordinance that requires a local tax on lawful gaming operations. There seems to be some confusion on what
the gambling organizations owe and why they owe. The City should have a clear understanding of what they are entitled to
and have a system to check the accuracy of what they are provided. This comment was initiated by the fact that the City had
several payments received in January 2002 that were not identified on the receipt and when discussed it still was not clear
what each payment was for.
Investing Funds
At December 31, 2001, the City had $3,328,039 in a checking account earning .75 percent. The lowest balance was
approximately $950,000 in February 2001. The average appeared to be approximately $2,000,000. The City should be
monitoring this balance and invest it appropriately.
Filing Information
We mentioned deficiency in capital projects filing earlier in the letter. We also noted that a thorough process of filing
invoices is lacking. We observed several occasions where a significant time was spent in looking for an invoice. We
recommend that the City consider its current filing system and improve the organization.
Claim Approval
The City's consent agenda indicates the Council is approving disbursements when it is really approving claims. It is
important that the consent agenda accurately reflect that the City is preapproving rather than subsequently approving
expenditures. Statutes don't allow for subsequent approval unless the appropriate resolution delegating approval authority to
staff has been passed and that resolution has not been done.
Invoice Approval Process
According to City staff, several commissions have been allowed to initiate transactions outside the typical approval process.
Normally a commission could make recommendations that a Council would approve and then staff would act upon.
The current structure takes away from some checks and balances that should exist with administrative approvaL We
recommend that any committee or commission only be allowed to recommend action and never initiate transactions.
TIF Revenue Note
The City has a TIP revenue note with Northern Forest Products. The amortization of the note was amended in 2000. The
City paid on the note based on an old amortization. This resulted in what appeared to be a $4,000 to 5,000 overpayment. The
amount paid was also in excess of the TIP received in total of the December 2000 and June 2001 settlement. The City has no
obligation to pay more than what is received. The City has to be aware of the TIP agreements that are in place and the
amount of their obligation. The City should also request reimbursement for the overpayment.
Utility Account Set-up
Water accounts are not set up until the occupancy permits are issued. This leaves a gap between when they are installed and
when they are set up on the billing. We recommend that when the plumbing permit is issued that the account be set up on the
system. The permit form can be modified to include all the pertinent info that would be used by the utility billing clerk. This
would include the serial number on both the meter and the remote and the current reading on the meter if it isn't zero. The
billing information could be changed when the new resident applies for homestead status or at the time the occupancy permit
is issued.
o
City of Centerville
March 29, 2002
Page Eleven
Agency Funds
The City does not maintain a detailed reconciliation of its escrow accounts. This needs completion to ensure the City bills the
account for all appropriate charges obtained from the finance system. We recommend that all escrow accounts be reconciled
on a monthly basis to the finance system.
Building Fee Reporting Requirement
The 2001 Legislature provided for law MS 16B.685 which requires all municipalities to file an annual construction and
development-related fee report to the Department of Administration. The first report will be due April I , 2003 and will cover
the year ended December 31, 2002. The content of the report will be as follows:
1. The number and valuation of units for which fees were paid.
2. The amount of building permit fees, plan review fees, administrative fees, engineering fees, infrastructure fees and other
construction and development related fees.
3. The expenses associated with the municipal activities for which fees were collected.
The first two items have always been available while the third may require additional effort to report the most accurate
information. Most cities have not allocated indirect costs to the Building Department. Some consideration of all the costs
directly and indirectly related to providing Building Department services will help the City report the most accurate
information. It doesn't appear that there is a consequence to reporting profitable operations but this information could be used
for further lobbying efforts and legislation aimed at restricting the amount of the fees. If needed, we are prepared to provide
assistance in completing the form.
Governmental Accounting Standards Board (GASB) Statement No. 34, Basic Financial Statements. and
Management's Discussion and Analysis - for State and Local Governments
GASB Statement No. 34 is the result of an almost decade-long effort by GASB to reexamine the financial reporting model for
state and local govermnents. The most notable change is the presentation of a set of highly aggregated, "full accrual"
financial statements. At the same time, however, the Statement retains many familiar features of current govermnental
fmancial reporting, in particular fund-based financial statements.
State and local govermnental financial statement preparers and auditors will need to comprehend and implement a vast
number of changes in accounting and financial reporting. They will have to explain those changes to perwns who are
unfamiliar with the particulars of accounting, much less the unique area of state and local govermnental accounting.
The following are some specific areas that need to be addressed with the implementation of this new statement:
Timeline
GASB Statement No. 34 is effective in three phases based on the total annual revenues of the primary govermnent's
governmental and proprietary funds, although earlier application is encouraged. For this purpose, revenues include all
revenues except for other financing sources and certain extraordinary items. The total annual revenues of the City for 1999
were $3,210,443. Based on this calculation, the City is considered to be phase 3. Therefore, the City is required to
implement GASB Statement No. 34 for the calendar year ending 2004.
Management's Discussion and Analysis (MD&A)
MD&A gives an objective and easily readable analysis of a govermnent's financial activities based on currently known facts,
decisions, or conditions. It presents short- and long-term analyses of the government's activities, compares current-year
results with those of the prior year, and discusses the positive and negative aspects of that comparison.
City of Centerville
March 29, 2002
Page Twelve
Government-wide Financial Statements
The government-wide financial statements are (1) a statement of net assets and (2) a statement of activities. The statement of
net assets presents the government's financial position at a point in time (like a balance sheet does); the statement of activities
presents its activities during a period (like an operating statement does). These statements present bighly aggregated
information for the overall government; they do not display individual funds or fund types. They also present financial
information in separate rows and columns for the (1) primary government's aggregate governmental activities, (2) primary
government's aggregate business-type activities, (3) total primary government, and (4) discretely presented component units.
Capital Assets
Capital assets are tangible and intangible asset, that are used in operations that have initial useful lives longer than one year.
They include land and improvements, easements, buildings and improvements, equipment, and works of art and historical
treasures. Capital assets also include infrastructure assets - normally stationary capital assets that can be preserved for
significantly greater number of years than most capital assets. Infrastructure assets include roads, bridges and tunnels; water,
sewer and drainage systems; dams; lighting systems; and buildings that are an ancillary part of a network of infrastructure
assets. Capital assets are reported in the statement of net assets at historical cost (or estimated fair value, if donated) and net
of accumulated depreciation. They are depreciated in the statement of activities over their estimated useful lives.
Infrastructure Assets
GASB Statement No. 34 applies prospectively to all general infrastructure assets beginning at the effective dates of the
Statement (or earlier, if the statement is implemented earlier). Governments are also encouraged to apply the Statement
retroactively to all existing major general infrastructure assets at that time. However, phase 1,2 governments need not
retroactively report those assets until calendar year 2006, 2007 - four years after their required implementation of Statement
No. 34. Phase 3 govermnents are encouraged but not required to report major general infrastructure assets retroactively.
If there are inadequate records of the actual historical cost of existing general infrastructure assets, govermnents can estimate
historical cost They also may limit retroactive application to only those major general infrastructure assets that were
acquired or significantly reconstructed, or that received significant improvements, in fiscal years ending after June 30, 1980.
The above gives you some general information on GASB Statement No. 34 implementation. We intend to educate and work
with all of our clients in developing a plan to implement this new statement As a result of implementing this statement, there
will no doubt be additional fees for our services. These expected increases will most likely result from additional time spent
in the areas of (1) training, (2) account structure modifications to provide information necessary to prepare financial
statements, (3) accounting for fixed assets, infrastructure assets and related depreciation, and (4) financial statement
preparation. The more that the City staff can do in the areas of fixed asset accounting and proper account structure will help
in reducing these costs. We will help you as much as possible to accomplish this.
III * * *
This report is intended solely for the information and use of management and CounciL
Our audit would not necessarily disclose all weaknesses in the system because it was based on selected tests of the accounting
records and related data. The comments and recommendations in the report are purely constructive in nature, and should be read
in this context.
If you have any questions or wish to discuss any of the items contained in this letter, please feel free to contact us at your
convenience. We wish to thank you for the continued opportunity to be of service and for the courtesy and cooperation extended
to us by your staff
March 29, 2002
Minneapolis, Minnesota
~/U<:/'7Ii~/LLf'
ABDO, EICK & MEYERS, LLP
Certified Public Accountants
CITY OF CENTERVILLE, MINNESOTA Page: 1
Journal Entries Report : Adjusting Entries Prepared by: SM
5(15(2002 6:49AM December 31, 2001 Reviewed by:
Entry I Status Account/Code Description Debit Credit
----- ---- ------- -----
AJE 1 Posted 101-31000 General Property Taxes 441.49
101-31000 General Property Taxes 23,621.02
101-31000 General Property Taxes 6,598.52
101-10100 Cash 30,661.03
313-36100 SPECIAl ASSESSMENTS 14,841.63
313-10100 Cash 14,841.63
304-36100 Special Assessments 168.21
304-10100 Cash 168.21
303-36100 Special Assessments 5,941.28
303-10100 Cash 5,947.28
325-36100 Special Assessments 245.13
325-10100 Cash 245.13
324-36100 Special Assessments 923.23
324-10100 Cash 923.23
601-36100 Special Assessments 9,010.83
601-36100 Special Assessments 53.65
601-10100 Casb 9,064.48
602-36100 Special Assessments 11,013.23
602-10100 Cash 11,013.23
436-36100 SPECIAl ASSESSMENTS 2,281.41
436-10100 Cash 2,281.41
311-31050 tax increments 160.28
311-10100 Cash 160.28
602-36100 Special Assessments 53.65
602-10100 Cash 53.65
To reverse Anoka Tax Settlement posted as
debit to cash sib receivable
5/15/2002 6:49AM
CITY OF CENTERVILLE, MINNESOTA
Journal Entries Report : Adjusting Entries
December 31, 2001
Page: 3
Prepared by: 8M
Reviewed by:
Entry I Status
AJE
3 Posted
AJE 4 Posted
AJE 5 Posted
AJE 6 Posted
AJE 7 Posted
Account/Code
602-21701
602-21702
602-21703
602-21704
602-21705
602-21706
602-21707
602-21710
101-41110-100
101-41110-122
101-41400-100
D€:scription
Federal Withholding
state Withholding
FICA Tax WIthholding
PERA
Other Retirement
Hospitalization/Medical Ins
Union Dues
Other Deductions
Wages and Salaries (GENERAL)
FICA
Wages and Salaries (GENERAL)
To reverse Payroll for March 2002 posted in
March 2001
614-49840-100
614-49840-122
614-10100
614-21703
101-43000-100
101-43000-121
101-43000-122
101-10100
101-21703
101-21704
Wages and Salaries (GENERAL)
FICA
Cash
FICA Tax WIthholding
Wages and Salaries (GENERAL)
PERA
FICA
Cash
FICA Tax Withholding
PERA
To reverse batches that should have been
posted to 2002 that was 2001
101-36210
101-10450
Interest Earnings
Interest Receivable on Invest
To record Interest receivable
101-10100
101-36200
Cash
Miscellaneous Revenues
To void 2000 o/s checks
101-10100
101-36220
Cash
Miscellaneous
To record unreconciled cash amount
427-10111
427-10100
Fair Value Adjustments
Cash
Reverse FMV adjustment
Debit
43.21
18.51
115.12
79.14
8.12
36.70
2.84
11.91
48.25
B.OO
1l1.2 4
19.52
13.55
34,096.66
8,845.23
459.13
30.81
Credi t
-I
1,250.00
95.64
5,208.25
52.25
4.00
127.50
7.05
9.76
34,096.66
8,845.23
459.13
30.81
5/15/2002 6:49AM
CITY OF CENTERVILLE, MINNESOTA
Journal Entries Report : Adjusting Entries
December 31, 2001
Page: 4
Prepared by: SM
Reviewed by:
Entry I Status Account/Code Description Debit
--~---~~_..- -~
AJE 8 Posted 101-10111 Fair Value Adjustments
101-36210 Interest Earnings 3,323.60
Credit I
3,323.60
To record 2001 market value adjustment
AJE 9 Posted
101-43000-100 Wages and Salaries (GENERAL)
101-43140-220 Repair/Maint Supply
875.52
875.52
to reclass wage exp
AJE 10 Posted
101-42400-130 Employer Paid Ins (GENERAL I
101-21706 Hospitalization/Medical Ins
7,386.44
7,386.44
to reclass insurance exp
CITY OF CENTERVILLE, MINNESOTA Page: 6
Journal Entries Report : Adjusting Entries Prepared by: SM
5/15/2002 6:49AM December 31, 2001 Reviewed by:
Entry f Status AccountlCode Description Debit Credit
-- -~.._-- -
101-43140-194 Deferred Income 26.72
101-45200-121 PERA 15.85
101-45200-122 FICA 13.41
101-45200-130 Employer Paid Ins (GENERAL) 80.70
101-45201-121 PERA 2.64
101-45201-122 FICA 3.90
101-45201-130 Employer Paid Ins (GENERAL) 13.45
101-45202-121 PERA 28.19
101-45202-122 FICA 41.57
101-45202-130 Employer Paid Ins (GENERAL) 161. 02
101-45202-194 Deferred Income 1.35
415-43150-121 PERA 9.07
415-43150-122 FICA 13.43
415-43150-130 Employer Paid Ins (GENERAL) 18.88
415-43150-194 Deferred Income 5.41
601-49400-121 PERA 32.13
601-49400-122 FICA 47.47
601-49400-130 Employer Paid Ins (GENERAL) 171.88
601-49400-194 Deferred Income 1.35
602-49450-121 PERA 26.40
602-49450-122 FICA 38.97
602-49450-130 Employer Paid Ins (GENERAL) 133.97
602-49450-194 Deferred Income 1.35
101-41400-130 Employer Paid Ins (GENERAL) 137.37
601-10100 Cash 9,687.98
101-10100 Cash 16,932.77
415-10100 Cash 46.79
602-10100 Cash 6,973.79
614-10100 Cash 224.21
to adj plr accrual
L __ __
CITY OF CENTERVILLE, MINNESOTA Page: 7
Journal Entries Report : Adjusting Entries Prepared by: SM
5/15/2002 6:49AM December 31, 2001 Reviewed by:
Entry f Status Account/Code Description Debit Credit
--.-
AJE 12 Posted 319-36100 Special Assessments 5,020.69
319-10100 Cash 5,020.69
336-10100 Cash 412,838.69
336-36100 special assessments 412,838.69
601-10100 Cash 382.75
601-36100 Special Assessments 382.75
602-10100 Cash 662.58
602-10100 Cash 662.58
313-36100 SPECIAL ASSESSMENTS 14,465.80
313-10100 Cash 14,465.80
419-36100 Special Assessments 1,959.30
419-10100 Cash 1,959.30
426-36100 Special Assessments 3,061.39
426-10100 Cash 3,061.39
436-36100 SPECIAL ASSESSMENTS 412,838.69
436-10100 Cash 412,838.69
101-31000 General Property Taxes 1,021.65
101-10100 Cash 1,021.65
317-10100 Cash 12,128.53
317-31050 tax increments 12,128.53
413-10100 Cash 270.30
413-31050 Tax Increments 270.30
303-36100 Special Assessments 13,290.16
303-36120 SPECIAL ASSESSMENTS - COUNTY 13,290.16
304-36100 Special Assessments 2,670.97
304-36120 SPECIAL ASSESSMENTS - COUNTY 2,610.91
319-36100 Special Assessments 569.65
319- 36120 SPECIAL ASSESSMENTS - COUNTY 569.65
325-36120 SPECIAL ASSESSMENTS - COUNTY 6,194.30
325-36100 Special Assessments 6,194.30
601-36120 SPECIAL ASSESSMENTS - COUNTY 353.20
601-36100 Special Assessments 353.20
602-36120 SPECIAL ASSESSMENTS - COUNTY 564.81
602-36100 Special Assessments 564.81
602-10100 Cash 662.58
602-36100 Special Assessments 662.58
TO ADJUST SPECIAL ASSESSMENTS TO CORRECT
FUND
L
5/15/2002 6:49AM
CITY OF CENTERVILLE, MINNESOTA
Journal Entries Report : Adjusting Entries
December 31, 2001
Page: 8
Prepared by: SM
Reviewed by:
Credit
Entry I Status
AJE 13 Posted
Account/Code
101-10500
101-13200
101-31000
317-10500
317-31050
303-12100
303-36100
304-12100
304-36100
324-12100
324-36100
325-12100
325-36100
336-12100
336-36100
601-12100
601-36100
602-12100
602-36100
Description
CURRENT TAXES RECEIVABLE
Due From Other Governments
General Property Taxes
CURRENT TAXES RECEIVABLE
tax increments
CURRENT SPECIAL ASSESSMENTS
Special Assessments
CURRENT SPECIAL ASSESSMENTS
Special Assessments
CURRENT SPECIAL ASSESSMENTS
Special Assessments
CURRENT SPECIALS RECEIVABLE
Special Assessments
CURRENT SPECIAL ASSESSMENTS
special assessments
CURRENT SPECIAL ASSESSMENTS
Special Assessments
CURRENT SPECIAL ASSESSMENTS
Special Assessments
RECORD JANUARY SETTLEMENT AS RECEIVABLE
1_ Debit
30,403.68
15,110.98
45,514.66
160.28
160.28
5,947.28
5,947.28
168.27
168.27
923.23
923.23
245.13
245.13
2,287.47
2,287.47
9,064.48
9,064.48
11,066.88
11,066.88
AJE 14 Posted 101-42700-300 Professional Srvs 982.00
101-20200 Accounts Payable 982.00
101-41400-433 Dues and Subscriptions 40.00
10H1400-300 Professional Srvs 360.00
101-42400-550 Motor Vehicles 29.00
101-43000-550 Motor Vehicles 116.00
101-15500 Prepaid Expenses 272.50
101-20200 Accounts Payable 272.50
315-15500 Prepaid Expenses 59,034.81
315-20200 Accounts Payable 59,034.81
315-47000-600 Debt StV Principal (GENERAL) 118,069.62
601-15500 Prepaid Expenses 285.00
601-20200 Accounts Payable 285.00
601-49400-300 Professional Srvs 570.00
602-15500 Prepaid Items 285.00
602-20200 Accounts Payable 285.00
602-43200-300 Professional Srvs 570.00
602-15500 Prepaid Items 8,872.40
602-20200 Accounts Payable 8,872.40
602-43200-300 Professional Srvs 17,744.80
To record 2001 A/P and reclass A/P as
Prepaids
CITY OF CENTERVILLE, MINNESOTA Page: 9
Journal Entries Report : Adjusting Entries Prepared by: SM
5/15/2002 6:49AM December 31, 2001 Reviewed by:
Entry # Status Account/Code Description Debit Crecti t
-----
AJE 15 Posted 101-41400-100 Wages and Salaries (GENERAL) 972.21
101-21600 Accrued Wages & Salaries payab 972.21
415-43150-100 Wages and Salaries (GENERAL) 37.40
415-21600 Accrued Wages & Salaries Payab 37.40
601-49400-100 Wages and Salaries (GENERAL) 54.39
601-21600 Accrued Wages & Salaries payab 54.39
602-49450-100 Wages and Salaries (GENERAL! 23.80
602-21600 Accrued Wages & Salpries Payab 23.80
617-45350-100 Wages and Salaries (GENERAL! 188.18
617-21600 Accrued Wages & Salaries payab 188.18
to record sal pay for 12/31/01
AJE 16 Posted 303-47000-600 Debt Srv Principal (GENERAL! 33,750.00
303-47000-300 Professional Srvs 33,750.00
to correct 2/6/02 je
AJE 17 Posted 601-43220-699 Amortization exp 296.77
601-17000 BOND DISCOUNT 296.77
602-43200-699 Amortization exp 362.72
602-17000 BOND DISCOUNT 362.72
to record bond discount amortization
AJE 18 Posted 601-11500 Accounts Receivable 15,735.89
602-11500 Accounts Receivable 6,321.59
415-11500 Accounts Receivable 94.82
601-37100 Water Sales 15,735.89
602-37200 Sewer Sales 6,321. 59
415-32350 STORM WATER DRAINAGE FUND 94.82
to record 2001 air
AJE 19 Posted 601-16500 Fixed Asset-Canst in Progress 1l,752.87
601-16500 Fixed Assel-Consl in Progress 221,310.78
601-26100 Contributions From City 233,063.65
602-16400 Fixed Asset-Equip/Machinery 7,803.66
602-16500 Fixed Asset-Canst in Progress 14,691. 09
602-16500 Fixed Asset-Const in Progress 293,365.45
602-26100 Contributions From City 315,860.20
to reclass f/a
AJE 20 Posted 601-16410 Fixed Asset-Equip Depreciation 30,420.66
601-43220-420 Depreciation/Depreciation 30,420.66
602-16410 Fixed Asset-Equip Depreciation 28,018.91
602-43200-420 Depreciation 28,018.91
to record 2001 depreciation exp
.
5/15/2002 6:49AM
CITY OF CENTERVILLE, MINNESOTA
Journal Entries Report : Adjusting Entries
December 31, 2001
Page: 10
Prepared by: SM
Reviewed by:
Entry I Status
---
AJE 21 Posted
AJE 22 Posted
AJE 23 Posted
AJE 24 Posted
AJE 25 Posted
1-
AccountJCo~ ~escriptio~___ _ Debit~ _ Credit_~
101-10700 Taxes Receivable-Delinquent 9,882.42
101-10800 Allow for Uncollected Taxes 9,882.42
to adjust delinquent taxes
303-i2200
303-12300
303-22200
304-12200
304-12300
324-12200
324-12300
324-22200
319-i2300
319-22200
325-12300
325-22200
336-12200
336-12300
336-22200
601-12200
601-12300
601-22200
602-12200
602-12300
602-22200
304-22200
324-22200
Special Assess Rec-Delinquent
Special Assess Rec-Deferred
Deferred Revenues
Special Assess Rec-Delinquent
Special Assess Rec-Deferred
Special Assess Rec-Delinquent
Special Assess Rec-Deferred
Deferred Revenues
Special Assess Rec-Deferred
Deferred Revenues
Special Assess Rec-Deferred
Deferred Revenues
SPECIAL ASSESSMENTS - DELINQUE
Special Assess Rec-Deferred
Deferred Revenues
Special Assess Rec-Delinquent
Special Assess Rec-Deferred
Deferred Revenues
Special Assess Rec-Delinquent
Special Assess Rec-Deferred
Deferred Revenues
Deferred Revenues
Deferred Revenues
TO RECORD ADJUSTMENT FOR ENDING DELINQUENT
AND DEFERRED SPECIAL ASSESSMENTS
101-36110
101-34107
SPECIAL ASSESSMENTS - PREPAID
Assessment Search Fees
TO RECLASS ASSESSMENT SEARCH TO CORRECT
ACCOUNT
601-49400-250 Merchandise Resale (GENERAL)
601-14200 Inventory 01 Stores lor Resale
adjust meter inventory to actual
101-33405
101-36250
FIRE RELIEF AID
FIRE DrST REIMBURSEMENTS
to reclass fire aid to correct account
22,816.36
211.96
19,412.44
5,376.04
7,806.88
24.44
333,195.40
19,520.39
27,200.32
4,523.57
60.00
23,819.25
80,393.00
474.66
22,341. 70
4,735.53
2,859.54
12,029.33
5,376.04
7,806.88
333,219.84
7,551. 71
1l,968.68
9,679.84
17 ,520.48
4,523.57
60.00
23,819.25
80,393.00
--
.5
5/15/2002 6:49AM
CITY OF CENTERVILLE, MINNESOTA
Journal Entries Report : Adjusting Entries
December 31, 2001
Ent~! ~tatu,---_ Account/Code
ME 26 Posted 101-10100
101-11500
302-10100
302-11500
601-10100
601- 37100
E
I
AJE 21 Posted
AJE 28 Posted
AJE 29 Posted
ME 30 Posted
AJE 31 Posted
_ ~escripti~____
Cash
Accounts Receivable
Cash
Accounts Receivable
Cash
Water Sales
TO CORRECT FOR UNALLOCATEQ POSTINGs FROM
UTLITY
101-11500
101-13200
101-35000
614-36240
614-11500
622-34950
622- RREOO
801-11500
801-36200
617-13200
611-36210
TO RECORD A/R
Accounts Receivable
Due From Other Governments
Fines and Forfeits
CABLE COMMISSION REIMBURSEMENT
Accounts Receivable
OTHER REVENUES
accounts receivable
Accounts receivable
Miscellaneous Revenues
Due From Other Governments
REFUNDS/REIMBURSEMENTS
Page: 11
Prepared by: SM
Reviewed by:
Debit__ ~redit_ J
939.01 I
939.01 I
33.14
33.14
912 .21
972.21
1,500.00
2,199.53
4,299.53
1,200.00
1,200.00
4,106.00
4,106.00
800.00
800.00
6,497.11
6,491.11
602-31250 Sewer Connect/Reconnect Fee 63,106.50
602-43200-440 MWCC Charges 63,106.50
101-32300 SITE MAINT FEE-BLDG PERMITS 10,312.90
101-42400-452 Bldg. Permit Site Main. Fees 10,312.90
101-42400-451 Bldg. Permit Surcharge Fees 5,666.85
101-32210 Building Permits 5,666.85
TO APPLY REMITTENCES OF WITHOLOINGS AGAINST
REVENUE (SURCHARGE, SAC AND SITE MAINTENCE)
602-43200-440 MWCC Charges 9,900.00
602-43200-300 Professional Srvs 9,900.00
To reclass SAC Charges
436-46000-300 Professional Srvs 4,927.70
436-20600 Contracts Payable 4,927.70
438-41950-300 Professional Srvs 15,290.98
438-20600 Contracts Payable 15,290.98
To record retainage on construction projects
326-10100 Cash 115.00
326-41000-620 2iscal Agent's ~ees 175.00
601-10100 Cash 115.00
601-49400- 300 Professional Srvs 115.00
To reclass agent fees on w/s project
.
'~
~, #'
5/15/2002 6:49AM
CITY OF CENTERVILLE, MINNESOTA
Journal Entries Report : Adjusting Entries
December 31, 2001
Page: 16
Prepared by: SM
Reviewed by:
Credit
Entry t Status
AJE 40 Posted
AJE 41 Posted
AJE 42 Posted
TOTALS
~count/Code__ Descriptio~___
316-10100 Cash
316-20200 Accounts Payable
316-41550-300 Professional 5rvs
316-41000-300 Professional Srvs
316-47000-620 Fiscal Agent's Fees
101-10100 Cash
101-20200 Accounts Payable
101-41150-300 Professional services
To reclass expenditures from closed fund
80H0450
801-10100
801-36210
101-10100
101-36210
Interest Receivable on Invest
Cash
Interest Earnings
Cash
Interest Earnings
to eliminate interest allocated to escrow
account.
10HOIOO
101-49390-430
30HOIOO
30HmO
315-10100
315-39720
Cash
Miscellaneous
Cash
transfer in
Cash
transfer in
to record budgeted transfers
Debit
985.33
5,023.08
6,008.41
1,029.23
799.23
122,000.00
58,000.00
64,000.00
111.00
5,023.08
208.33
985.33
5,023.08
230.00
199.23
199.23
122,000.00
58,000.00
64,000.00
3,363,699.41 3,363,699.41
----- -----
----- ----
~
CITY OF CENTERVILLE
CENTERVILLE, MINNESOTA
ANNUAL FINANCIAL REPORT
YEAR ENDED
DECEMBER 31, 2001
I
CITY OF CENTERVILLE, MINNESOTA
TABLE OF CONTENTS
DECEMBER 31, 2001
Page No.
I. INTRODUCTORY SECTION
Elected Officials
1
II. FINANCIAL SECTION
Independent Auditor's Report
2
General Purpose Financial Statements
Combined Balance Sheet - All Fund Types and Account Groups
Combined Statement of Revenue, Expenditures and Changes in Fund Balance (Deficit) -
All Governmental Fund Types
Statement of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual -
General Fund
Combined Statement of Revenue, Expenses and Changes in Retained Earnings -
All Proprietary Fund Types
Combined Statement of Cash Flows - All Proprietary Fund Types
Notes to Financial Statements
3-4
5-6
7
8
9
10 - 21
Combining and Individual Fund Statements
General Fund
Comparative Balance Sheets
Statement of Revenue, Expenditures and Changes in Fund Balance - Budget
and Actual
Special Revenue Funds
Combining Balance Sheet
Combining Statement of Revenue, Expenditures and Changes in Fund Balance (Deficit)
Debt Service Funds
Combining Balance Sheet
Combining Statement of Revenue, Expenditures and Changes in Fund Balance (Deficit)
Capital Projects Funds
Combining Balance Sheet
Combining Statement of Revenue, Expenditures and Changes in Fund Balance (Deficit)
Enterprise Funds
Combining Balance Sheet
Combining Statement of Revenue, Expenses and Changes in Retained Earnings
Combining Statement of Cash Flows
Other Schedules
Tax and Special Assessment Levies and Collections
22
23 -26
27 -28
29 - 30
31- 32
33 - 34
35 -39
40-44
45
46
47
48
III. OTHER REPORTS
Report on Minnesota Legal Compliance
Report on Compliance and on Internal Control Over Financial Reporting Based on
an Audit of Financial Statements Performed in Accordance With Government
Auditing Standards
49
50 - 51
INTRODUCTORY SECTION
CITY OF CENTERVIllE
CENTERVllLE,MrrNNESOTA
YEAR ENDED
DECEMBER 31,2001
CITY OF CENTERVILLE, MlNNESOT A
ELECTED OFFICIALS
DECEMBER 31, 2001
ELECTED
Tim Swedberg
Richard Travis
Mary Capra
Mari Nelson
Linda Broussard Vickers
Mayor
Council Member
Council Member
Council Member
Council Member
-1-
FINANCIAL SECTION
CITY OF CENTERVILLE
CENTERVILLE,MINNESOTA
YEAR ENDED
DECEMBER 31, 2001
I
7241 Ohms Lane
Suite 200
Edina, MN 55439
INDEPENDENT AUDITOR'S REPORT
Honorable Mayor and City Council
City of Centerville, Minnesota
We have audited the accompanying general purpose financial statements of the City of Centerville, Minnesota, as of and for the
year ended December 31, 2001 as listed in the table of contents. These general purpose financial statements are the responsibility
of the City's management. Our responsibility is to express an opinion on these general purpose financial statements hased on our
audit.
Except as discussed in the following paragraph, 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 whetber the general purpose financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the general purpose financial statements. An audit
also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the
overall general purpose financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
The City does not maintain a record of its general fixed assets as required by accounting principles generally accepted in the
United States of America. Because we were unable to satisfy ourselves by appropriate audit tests or by other means, we are
unable to express an opinion on the accompanying general fixed assets account group.
In our opinion, except for the effects on the general purpose fmancial statements of such adjustments, if any, as might have been
determined to be necessary had we audited the general fixed assets account group, the general purpose financial statements
referred to above present fairly, in all material respects, the results of its operations and the cash flows of its proprietary fund type
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 dated March 29, 2002 on our consideration of
the City's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations,
contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and
should be read in conjunction with this report in considering the results of our audit.
Our audit was performed for the purpose of forming an opinion on the general purpose financial statements taken as a whole. The
combining and individual fund financial statements and schedules listed in the table of contents are presented for the purpose of
additional analysis and are not a required part of the general purpose financial statements of the City. Such information has been
subjected to the auditing procedures applied in the audit of the general purpose financial statements and, in our opinion, is fairly
stated in all material respects in relation to the general purpose financial statements taken as a whole.
March 29, 2002
Minneapolis, Minnesota
~/ W "" J#~/LLP
ABDO, EICK & MEYERS, LLP
Certified Public Accountants
952.835.9090 Fax 952.835.3262
www.aerncpas.CQrn
,
GENERAL PURPOSE
FINANCIAL STATEMENTS
CITY OF CENTERVILLE
CENTER VILLE, MINNESOTA
YEAR ENDED
DECEMBER 31, 2001
CITY OF CENTERVILLE, MINNESOTA
COMBINED BALANCE SHEET
ALL FUND TYPES AND ACCOUNT GROUPS
DECEMBER 31, 2001
(With comparative totals for December 31, 2000)
Governmental Fund Types
Special Debt Capital
General Revenue. Service Projects
ASSETS AND OTHER DEBITS
ASSETS
Cash and temporary investments (deficit) $ 631,421 $ (11,720) $ 1,270,247 $ 762,414
Receivables
Accrued interest 4,700 230 7,192 5,085
Delinquent taxes 60,027 160
Accounts 1,500 11,306 3,929
Special assessments 358,213
Due from other governments 62,911 6,498
Inventories
Prepaid items 273 59,035
Bond discount
Fixed assets, net
OTHER DEBITS
Amount available for debt retirement
Amount to be provided for debt retirement
TOTAL ASSETS AND OTHER DEBITS $ 760,832 $ 6,314 $ 1,694,687 $ 771,588
LIABILITY, EQUITY AND OTHER CREDITS
LIABILITIES
Accounts payable $ 66,441 $ 200 $ 5,023 $ 177,933
Contracts payable 20,220
Accrued salaries payable 15,875 188 260
Deferred revenue 29,623 348,643
Capital lease payable
Bonds payable
TOTAL LIABILITIES 111,939 388 353,666 198,413
EQUITY AND OTHER CREDITS
Investment in general fixed assets
Contributed capital
Retained earnings
Reserved
Unreserved
Fund balance (deficit)
Reserved 273 1,410,643
Unreserved
Designated 648,620
Undesignated 5,926 (69,622) 573,175
TOTAL EQUITY AND OTHER CREDITS 648,893 5,926 1,341,021 573,\ 75
TOTAL LIABILITIES, EQUITY
AND OTHER CREDITS $ 760,832 $ 6,314 $ 1,694,687 $ 771,588
See Notes to Financial Statements.
.3.
Proprietary Fiduciary Totals
Fund Type Fund Type Account Groups (Memorandum Only)
General General
Trust and Fixed Assets Long-term
Enterprise Agency (Unaudited) Debt 2001 2000
$ 3,083,131 $ (2,133) $ $ $ 5,733,360 $ 4,844,286
]6,890 34,097 21,413
60,187 35,232
109,289 2,133 128,157 101,236
472,135 830,348 1,235,238
I 69,409 ]42,678
8,971 8,971 32,790
9,442 68,750 37,009
5,275 5,275 5,935
2,529,786 1,784,314 4,314,100 3,568,208
1,341,02] ],341,021 1,079,667
1,476,162 ],476,162 1,067,657
$ 6,234,919 $ $ 1,784,314 $ 2,817,183 $ 14,069,837 $ ]2,]7],349
$ 21,868 $ $ $ $ 271,465 $ 104,263
20,220
1,661 14,451 32,435 29,334
452,003 830,269 1,255,716
112,732 112,732 166,538
600,000 2,690,000 3,290,000 2,625,000
1,075,532 2,817,183 4,557,121 4,180,851
1,784,314 1,784,314 1,528,908
1,927,511 1,927 ,511 1,418,009
71,631 71,631 71,631
3,]60,245 3,160,245 2,784,747
1,410,916 1,150,715
648,620 1,479,995
509,479 (443,507)
5,159,387 1,784,314 9,5]2,716 7,990,498
$ 6,234,919 $ $ ],784,314 $ 2,817,183 $ 14,069,837 $ 12,171,349
-4-
CITY OF CENTERVILLE, MINNESOTA
COMBINED STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE (DEFICIJ)
ALL GOVERNMENTAL FUND TYPES
YEAR ENDED DECEMBER 3 I, 200 I
(With comparative totals for the year ended December 31, 2000)
Special Debt Capital
General Revenue Service Proj ects
REVENUE
General property taxes $ 1,225,296 $ 7,200 $ $
Tax increments 24,580
Licenses and permits 235,667
Intergovernmental 235,367 10,522
Charges for services 780
Fines and forfeits 32,269
Special assessments 481,718
Interest on investments 20,787 962 32,289 23,128
Miscellaneous 40,563 36,554 33,319
TOTAL REVENUE 1,790,729 55,238 514,007 81,027
EXPENDITURES
Current
General government 440,071
Public safety 648,345
Public works 196,832
Sanitation 4,691
Culture and recreation 88,734 31,486
Miscellaneous 2,091 45,005
Capital outlay 552,951 8,716 662,828
Debt service
Principal 318,806
Interest and other 88,457
TOTAL EXPENDITURES 1,929,024 36,177 415,979 707,833
EXCESS (DEFICIENCY) OF REVENUE OVER
EXPENDITURES (138,295) 19,061 98,028 (626,806)
OTHER FINANCING SOURCES (USES)
Operating transfers in 68,034 122,000
Bond proceeds 41,326 927,990
Operating transfers out (122,000) (7,526)
TOTAL OTHER FINANCING SOURCES (USES) (53,966) 163,326 920,464
EXCESS (DEFICIENCY) OF REVENUE AND OTHER
FINANCING SOURCES OVER EXPENDITURES AND
OTHER FINANCING USES (192,261 ) 19,061 261,354 293,658
FUND BALANCE (DEFICIT), JANUARY 1 841,154 (13,135) 1,079,667 279,517
FUND BALANCE, DECEMBER 31 $ 648,893 $ 5,926 $ 1,341,021 $ 573,175
See Notes to Financial Statements.
-5-
Totals
(Memorandum Only)
2001 2000
$ 1,232,496 $ 986,446
24,580 24,141
235,667 216,725
245,889 263,516
780 34,963
32,269 28,162
481,718 77,610
77,166 122,259
11 0,436 88,882
2,441,001 1,842,704
440,071 446,180
648,345 520,424
196,832 149,930
4,691 3,475
120,220 99,317
47,096 125,566
1,224,495 1,177,012
318,806 327,167
88,457 80,118
3,089,013 2,929,189
(648,012) (1,086,485)
190,034 143,507
969,316 722,035
(129,526) (122,507)
1,029,824 743,035
381,812 (343,450)
2,187,203 2,530,653
$ 2,569,015 $ 2,187,203
-6-
CITY OF CENTERVILLE, MINNESOTA
STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE -
BUDGET AND ACTUAL
GENERAL FUND
YEAR ENDED DECEMBER 3 I, 2001
Variance -
Favorable
Budget Actual (Unfavorable)
$ 1,210,000 $ 1,225,296 $ 15,296
152,229 235,667 83,438
150,308 235,367 85,059
700 780 80
32,580 32,269 (311)
76,695 20,787 (55,908)
31,840 40,563 8,723
1,654,352 1,790,729 136,377
REVENUE
General property taxes
Licenses and permits
Intergovernmental
Charges for services
Fines and forfeits
Special assessments
Interest on investments
Miscellaneous
TOTAL REVENUE
EXPENDITURES
Current
General government
Public safety
Public works
Culture and recreation
Miscellaneous
Capital outlay
447,560 440,071 7,489
531,764 648,345 (116,581)
192,188 196,832 (4,644)
98,112 88,734 9,378
2,091 (2,091)
262,728 552,951 (290,223)
1,532,352 1,929,024 (396,672)
122,000 (138,295) (260,295)
68,034 68,034
(122,000) (122,000)
(122,000) (53,966) 68,034
TOTAL EXPENDITURES
EXCESS (DEFICIENCY) OF REVENUE OVER
EXPENDITURES
OTHER FINANCING SOURCES (USES)
Operating transfer in
Operating transfer out
TOTAL OTHER FINANCING SOURCES (USES)
EXCESS (DEFICIENCY) OF REVENUE
AND OTHER FINANCING SOURCES OVER
EXPENDITURES AND OTHER FINANCING USES
$
(192,261) $ (192,261)
FUND BALANCE, JANUARY 1
841,154
FUND BALANCE, DECEMBER 31
$ 648,893
See Notes to Financial Statements.
.7.
CITY OF CENTERVILLE, MINNESOTA
COMBINED STATEMENT OF REVENUE, EXPENSES AND CHANGES IN RETAINED EARNINGS
ALL PROPRIETARY FUND TYPES
YEAR ENDED DECEMBER 3 I, 200 I
OPERATING REVENUE
Charges for services
Enterprise
$ 386,602
OPERATING EXPENSES
Personal services
Supplies and maintenance
Other services and charges
Utilities
MCES disposal charges
Depreciation
37,175
70,493
34,181
10,886
131,136
59,099
TOTAL OPERATING EXPENSES
342,970
OPERATING INCOME
43,632
NONOPERATING REVENUE (EXPENSE)
Interest on investments
Special assessments
Hook-up fees and unit charges
Interest expense
75,746
104,462
201,297
(28,553)
TOTAL NONOPERATING REVENUE (EXPENSE)
352,952
INCOME BEFORE OPERATING TRANSFERS
396,584
OPERATING TRANSFERS OUT
(60,508)
NET INCOME
336,076
CREDIT FOR DEPREClA TION ON CONTRIBUTED ASSETS
39,422
NET INCREASE IN RETAINED EARNINGS
375,498
RETAINED EARNINGS, JANUARY I
2,856,378
RETAINED EARNINGS, DECEMBER 31
$ 3,231,876
See Notes to Financial Statements.
-8-
CITY OF CENTERVILLE, MINNESOTA
COMBINED STATEMENT OF CASH FLOWS
ALL PROPRIETARY FUND TYPES
YEAR ENDED DECEMBER 31, 2001
NET CASH PROVIDED BY OPERATING ACTIVITIES
Enterprise
$ 43,632
59,099
(22,056)
23,819
(498)
8,805
1,334
(46,721)
67,414
(60,508)
201,297
131,706
(60,000)
(28,553)
244,450
68,918
320,274
2,762,857
$ 3,083,131
CASH FLOWS FROM OPERATING ACTIVITIES
Operating income
Adjustments to reconcile operating income to net cash provided
by operating activities:
Depreciation
(Increase) decrease in assets:
Accounts receivable
Inventories
Prepaid items
Increase (decrease) in liabilities:
Accounts payable
Accrued salaries payable
Deferred revenue
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Operating transfers out
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Hook-up fees and unit charges
Special assessments received
Principal paid on bonds
Interest paid on bonds
NET CASH PROVIDED BY CAPITAL AND RELATED FINANCING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received on investments
INCREASE IN CASH AND CASH EQUlV ALENTS
CASH AND CASH EQUIVALENTS, JANUARY I
CASH AND CASH EQUIVALENTS, DECEMBER 3 I
NONCASH CAPITAL AND RELATED FINANCING ACTIVITIES
Assets contributed by other funds
$ 548,924
See Notes to Financial Statements.
-9-
CITY OF CENTERVILLE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A, Reporting Entity
The City of Centerville is a statutory city operating in accordance with the "Optional Plan A" form of
government, as defined in the State of Minnesota Statutes. Under this plan the government of the City is
directed by a Council composed of an elected Mayor and four elected Council Members. The Council exercises
legislative authority and determines all matters of policy. The Council appoints personnel responsible for the
proper administration of all affairs relating to the City. The City has considered all potential units for which it is
financially accountable, and other organizations for which the nature and significance of their relationship with
the City are such that exclusion would cause the City's financial statements to be misleading or incomplete. The
Governmental Accounting Standards Board (GASB) has set forth criteria to be considered in determining
financial accountability. These criteria include appointing a voting majority of an organization's governing
body, and (I) the ability of the primary government to impose its will on that organization or (2) the potentia] for
the organization to provide specific benefits to, or impose specific financial burdens on the primary government.
The City's reporting entity does not include any component units.
B. Measurement Focus, Basis of Accounting and Basis of Presentation
The accounts of the City are organized and operated on the basis of funds and account groups. A fund is an
independent fiscal and accounting entity with self-balancing sets of accounts. Fund accounting segregates funds
according to their intended purpose and is used to aid management in demonstrating compliance with finance-
related legal and contractual provisions. The minimum number of funds are maintained consistent with legal
and managerial requirements. Account groups are a reporting device to account for certain assets and liabilities
of the governmental funds not recorded directly in those funds.
The City has the following fund types and account groups:
Governmentalfunds are used to account for the City's general government activities. Governmental fund types
use the flow of current financial resources measurement focus and the modified accrual basis of accounting.
Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (i.e., when
they are umeasurable and available"). "Measurable" means the amount of the transaction can be determined,
and "available" means collectible within the current period or soon enough thereafter to pay liabilities of the
current period. The City considers all revenues available if they are collected within 60 days after year end.
Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on general
long-term debt which is recognized when due, and certain compensated absences and claims and judgments
which are recognized when the obligations are expected to be liquidated with expendable available financial
resources.
Property taxes, franchise taxes, licenses, interest and special assessments are susceptible to accrual. Other
receipts and taxes become measurable and available when cash is received by the government and are
recognized as revenue at that time.
I
The preparation of general purpose financial statements in conformity with generally accepted accounting
principles in the United States of America requires management to make estimates and assumptions that affect
certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
I
Entitlements and shared revenues are recorded at the time of receipt or earlier if the susceptible to accrual
criteria are met. Expenditure driven grants are recognized as revenue when the qualifying expenditures have
been incurred and all other grant requirements have been met.
Governmental funds include the following fund types:
I
The genera/fund is the City's primary operating fund. It accounts for all financial resources of the City, except
those required to be accounted for in another fund.
I
The special revenue funds account for revenue sources that are legally restricted to expenditures for specified
purposes (not including major capital projects).
I
The debt service funds account for the servicing of general long-term debt not being financed by proprietary
funds.
I
-10-
CITY OF CENTERVILLE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Compensated Absences
It is the City's policy to pennit employees to accumulate a limited amount of earned but unused vacation, which
is paid to the employee upon separation. Sick leave may be accumulated but is not payable upon termination
from City employment for regular employees. Union employees are allowed severance equal to their unused
compensatory time and half their accrued sick leave up to a maximum of 400 hours after 10 years of service. In
governmental fund types the cost of these benefits is recoguized when payments are made to the employees. A
liability of$14,151 represents accrued vacation, sick and compensatory time unused at year end. The liability
has been recorded in the generaliong-term debt account group.
Long-term Obligations
The City reports long-term debt of governmental funds at face value in the general long-term debt account
group. Certain other governmental fund obligations not expected to be financed with current available fmancial
resources are also reported in the general long-term debt account group. Long-term debt and other obligations
fmanced by proprietary funds are reported as liabilities in the appropriate funds.
For governmental fund types, bond premiums and discounts, as well as issuance costs, are recoguized during the
current period. Bond proceeds are reported as an other fmancing source net of the applicable premium or
discount. Issuance costs, other than those withheld from the actual net proceeds received, are reported as debt
service expenditures. For proprietary fund types, bond issuance costs and discounts are deferred and amortized
over the life of the bonds using the straight line method.
Fund Equity
Reservations of fund balance represent amounts that are not appropriable or are legally segregated for a specific
purpose. Reservations of retained earnings are limited to outside third-party restrictions. Desiguations of fund
balance represent tentative management plans that are subject to change. The proprietary fund's contributed
capital represents equity acquired through capital grants and capital contributions from developers, customers or
other funds.
Memorandum Only - Total Columns
Total colunms on the general purpose financial statements are captioned as "memorandwn only" because they
do not represent consolidated fmancial inIorrnation and are presented only to facilitate fmancial analysis. The
columns do not present infonnation that reflects [mancial position, results of operations or cash flows in
accordance with accounting principles generally accepted in the United States of America. Interfund
eliminations have not been made in the aggregation of this data.
Comparative DataJRec1assifications
Comparative total data for the prior year have been presented in the selected sections of the accompanying
financial statements in order to provide an understanding of changes in the City's fmancial position and
operations. Also, certain amounts presented in the prior year data have been reclassified in order to be
consistent with the current year's presentation.
Note 2: STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
A. Budgetary Information
Annual budgets are adopted on a basis consistent with accounting principles generally accepted in the United
States of America for the general fund. All annual appropriations lapse at fiscal year end. The City does not use
encumbrance accounting.
In August of each year, all departments of the City submit requests for appropriations to the City Administrator
so that a budget may be prepared. Before September 15, the proposed budget is presented to the Council for
review. The Council holds public hearings and a fmal budget is prepared and adopted in early December.
The appropriated budget is prepared by fund, function and department. The City's department heads, with the
approval of the City Administrator, may make transfers of appropriations within a department. Transfers of
appropriations between departments require the approval of the Council. The legal level of budgetary control is
the department level. Budgeted amounts are as originally adopted, or as amended by the Council. There were
no budget amendments made during the year.
-13-
r---
CITY OF CENTERVILLE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001
Note 2: STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY - CONTINUED
B. Excess of Expenditures over Appropriations
For the year ended December 31. 2001. expenditures exceeded appropriations in the general fund as illustrated
below:
Bud~et
Actual
Excess
General Fund
$ ] ';12 1';2 $ 1 929 024 $ 396 672
The excess expenditures were funded by actual revenue in excess of budget and available fund balance.
C. Deficit Fund Equity
The following funds have a deficit fund balance as of December 31. 2001:
Special Revenue Funds
Recycling
City Celebration
Debt Service Funds
1993 Acorn Creek Improvements
Municipal Building
Capital Projects Funds
Pedestrian Trail Ways
Eagle Pass Additions
Lakeland Hills
TIP District 1-4
TIP District 1-5
21st Avenue Improvements
Center Villa
Deer Pass
Royal Industrial Park
Public Works Building
Lift Station #2 Renovation
Downtown Revitalization
The Shores
Economic Development Commission
$ 10.628
34,962
38,296
31,326
352
ll,152
45,898
2,550
6,233
8,467
40,553
3,599
90,186
6,029
159,422
8,560
1,018
1,521
The deficits in these funds will be eliminated by future revenue sources and transfers.
Note 3: DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS
A. Deposits and Investments
Cash balances of the City's funds are combined (pooled) and invested to the extent available in various
investments authorized by Minnesota State Statutes. Each fund's portion of this pool (or pools) is displayed on
the financial statements as "cash and temporary investments." For purposes of identifying the risk of investing
public funds, the balances are categorized as follows:
Deposits
In accordance with Minnesota Statutes and as authorized by the Council, the City maintains deposits at those
depository banks, all of which are members of the Federal Reserve System.
-14-
CITY OF CENTERVILLE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001
Note 3: DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS. CONTINUED
Minnesota Statutes require that all City deposits be protected by insurance, surety bond, or collateral. The
market value of collateral pledged must equal 110 percent of the deposits not covered by insurance or bonds
(140 percent in the case of mortgage notes pledged).
Authorized collateral includes the legal investments described below, as well as certain first mortgage notes, and
certain other State or local govermnent obligations. Minnesota Statutes require that securities pledged as
collateral be held in safekeeping by the City or in a financial institution other than that furnishing the collateral.
At year end, the City's carrying amount of deposits was $4,333,270 and the bank balance was $4,480,218. The
bank balance was covered by federal depository insurance totaling $400,000. The remaining balance of
$4,080,218 was covered by collateral. The City did not have sufficient collateral covering the statutory required
ten percent above deposits.
Investments
Investments are categorized into these three categories of credit risk
1. Insured or registered, or securities held by the City or its agent in the City's name.
2. Uninsured and unregistered, with securities held by the counterparty's trust department or agent in the City's
name.
3. Uninsured and unregistered, with securities held by the counterparty, or by its trust department or agent
but not in the City's name.
At year end, the City's investment balances were as follows:
CateQorv
2
3
Carrying
and Fair
Value
U.S. Government Securities
Investments not subjected
to risk categorization:
Broker money market funds
Minnesota Municipal Money Market fund
$ 356676 $
$
- $
356,676
Total Investments
6,507
1.036.737
$ 1.399 920
Cash on Hand
Cash in the possession of the City consisting of petty cash totals $170.
Cash and Investments Summary
A reconciliation of cash and investments as shown on the Combined Balance Sheet for the City follows:
Cash on hand $ 170
Carrying amount of deposits 4,333,270
Carrying amount of investments 1.399.920
Total Cash and Temporary Investments $ 5 733 360
B, Due From Other Governments
A summary of amounts due from other governments as of December 31, 2001 is as follows:
County
General $ 62,911
Special revenue
Recycling 6.498
Total $ 69 409
-15-
CITY OF CENTERVILLE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001
Note 3: DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS. CONTINUED
C. Fixed Assets
A summary of changes in general fixed assets (unaudited) for the year ended December 3 1.2001 is as follows:
Balance
Beginning Balance
of Year Additions End of Year
Land and land improvements $ 27 ,450 $ $ 27,450
Buildings 742,728 742,728
Furniture and equipment 688,299 255,406 943,705
Other improvement<; 70.431 70.431
Total 3; I 528.908 $ 255.406 $ 1.7843]4
The following is a summary of proprietary fund type fixed assets at December 31, 2001:
Total
Less accumulated depreciation
Enterorise Funds
Water Sewer Total
$ 1,364,761 $ $ 1,364,761
1.683.510 1.683.510
1,364,761 1,683,510 3,048,271
(180.984 ) <337.501) (518.485)
$ ] 183777 $ 1 346.009 $ 2.529 786
Water distribution system
Sewer collection system
Net Fixed Assets
D. Deferred Revenue
Deferred revenue at December 31, 2001 is comprised of the following:
Debt
General Service Enterprise Total
Delinquent taxes $ 29,623 $ $ $ 29,623
Special assessments
Delinquent 1,233 9,548 10,781
Deferred 347.410 442.455 789.865
Total $ 29 623 $ 348 643 $ 452.003 $ 830 269
E. Long-term Debt
General Obligation Bonds. The City issues general obligation bonds to provide funds for the acquisition and
construction of major capital facilities. General obligation bonds have been issued for general government
activities.
General obligation bonds are direct obligations and pledge the full faith and credit of the City. General
obligation bonds currently outstanding are as follows:
-16-
CITY OF CENTERVILLE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001
Note 3: DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS. CONTINUED
General Obligation Improvement Bonds
The following hands were issued to finance various improvements and will be repaid primarily from special
assessments levied on the properties benefiting from the improvements. Some issues, however, are partly
financed by ad valorem tax levies. All special assessment debt is backed by the full faith and credit of the City.
Each year the comhined assessment and tax levy equals 105 percent of the amount required for debt service. The
excess of 5 percent is to cover any delinquencies in tax or assessment payments.
Authorized Balance
and Interest Issue Maturity at
Issued Rate Date Date Year End
G.O. Improvement Refunding
Bonds of 1996 $ 605,000 4.40-4.50% 11-01-96 02-01-02 $ 130,000
G.O. Improvement Bonds
of 1998 615,000 4.10-4.50 08-01-98 02-01-09 510,000
G.O. Improvement Refunding
Bonds of 1998 245,000 4.71 07-01-98 02-01-03 100,000
G.O. Improvement Bonds
of 2000 650,000 4.65-5.25 11-01-00 02-01-11 650,000
G.O. Improvement Bonds
of 200 1 990,000 2.90-4.45 11-01-01 02-01-13 990,000
Total General Obligation Special Assessment Bonds $ 2 380.000
General Obligation Revenue Bonds
The following bonds were issued to finance improvements to the water system. They will be retired by user
charges and are backed by the full faith and credit of the City.
G.O. Water Revenue Bonds
of 1996 $ 410,000 5.05-5.40%
G.O. Water and Sewer Revenue
Bonds of 1998 720,000 4.15-4.80
08-01-96
07-01-98
02-01-08 $ 310,000
02-01-09 600.000
$ 910.000
Total General Obligation Revenue Bonds
Capital Lease Payable
During 1992, the City entered into a lease, with option to purchase, agreement as lessee for financing the
construction of the City administration office and fire department. Title remains with the City so long as they
are not in default of terms in the lease agreement. The lease agreement qualifies as a capital lease for accounting
purposes and, therefore, has been recorded at the present value of the future minimum lease payments as of the
date of its inception.
$ 500,000
6.28%
09-16-92
02-01-03 $
112732
Compensated Absences
This liability represents vested benefits earned by employees through the end of the year, which will be paid at
termination of employment in future years.
Total Compensated Absences
$
14.451
-17-
CITY OF CENTERVILLE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001
Note 3: DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS - CONTINUED
Changes in General Long-term Liabilities, During the year ended December 31, 2001, the following changes
occurred in liabilities reported in the general long-teem debt account group,
Balance Balance
January I, December 31,
2001 Additions Reductions 2001
G,O, Improvement Bonds $ 1,620,000 $ 990,000 $ 230,000 $ 2,380,000
G.O, Revenue Bonds 345,000 35,000 310,000
Capital Lease Payable 166,538 53,806 112,732
Compensated Absences 15.786 1.335 14.451
Total $ 2 147 324 L-22MOO $ 320141 $ 2817183
The annual service requirements to maturity for all bonds and leases outstanding at December 31, 2001 are as
follows:
G.O. G,O. Capital
Improvement Revenue Lease
Bonds Bonds Payable Total
2002 $ 493,577 $ 146,018 $ 60,832 $ 700,427
2003 357,409 141,225 59,035 557,669
2004 398,838 141,248 540,086
2005 203,867 145,853 349,720
2006 207,835 140,123 347,958
Thereafter 1.190.196 373.511 1.563.707
Total 2,851,722 1,087,978 119,867 4,059,567
Less interest (471.722) (177.978 ) (7.135) (656.835 )
Principal $ 2.380 000 $ 910000 $ 112732 $ 3 402 732
Amounts available for debt retirement. Available fund balance in the debt service funds for repayment of
long-term debt totaled $1,341,021 at year end.
Amounts to be provided for debt retirement, This represents future revenue to be generated for debt payments
and severance benefits payable, generally including interest earnings, tax increments, scheduled tax levies and
deferred (future) special assessment levies.
F. Tax Increment District
The City is the administering authority for the following tax increment financing districts:
District Number 1-4 1-5
Adjusted Original Tax Capacity $ 2,275 $ 968
Current Tax Capacity (Payable 2001) 19.832 1.294
Captured Tax Capacity Retained by the City $ 17557 $ 326
Type of District Development Development
-18-
CITY OF CENTERVILLE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 200 I
Note 3: DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS - CONTINUED
G. Fund Equity Reservations and Designations
The components of fund equity are described in Note I. Certain reservations and designations have been made
in the following funds:
Reserved
Puroose
Amount
Enterprise Fund
Sewer
Governmental Funds
General Fund
Debt Service Funds
Senior housing project commitment
$ 71631
$ 273
1.410.643
$ ] 4109]6
Prepaid items
Debt service on bonds issued
Total
Unreserved. Designated
Governmental Funds
General
Working capital
$ 648 620
H. Contributed Capital
The changes in the City's contributed capital accounts for its proprietary funds were as follows:
Sources
Enterorise Funds
Water Sewer Total
$ 627,972 $ 790,037 $ 1,418,009
233,063 315,861 548,924
(\9.045 ) (20.377 ) (39.422 )
$ 841 990 $ 108552] $ 1927511
Beginning balance, contributed capita]
Sources: Fixed assets contributed by other funds
Less: Depreciation on contributed assets
Ending balance, contributed capital
Note 4: DEFINED BENEF1T PENSION PLANS - STATEWIDE
A. PIau Description
All full-time and certain part-time employees of the City are covered by defined benefit plans administered by the
Public Emp]oyees Retirement Association of Minnesota (PERA). PERA administers the Public Employees
Retirement Fund (PERF), which is a cost-sharing, multiple-emp]oyer retirement plan. The plan is established and
administered in accordance with Minnesota Statutes, Chapters 353 and 356.
PERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are covered
by Socia] Security and Basic Plan members are not. All new members must participate in the Coordinated Plan.
PERA provides retirement benefits as well as disability benefits to members, and benefits to survivors upon death
of eligible members. Benefits are established by State Statute, and vest after three years of credited service. The
defined retirement benefits are based on a member's highest average salary for any five successive years of
allowable service, age and years of credit at termination of service.
Two methods are used to compute benefits for PERF's Coordinated and Basic Plan members. The retiring
member receives the higher of a step-rate benefit accrual formula (Method 1) or a level accrual formula (Method
2). Under Method I, the annuity accrual rate for a Basic Plan member is 2.2 percent of average salary for each of
the first 10 years of service and 2.7 percent for each remaining year. The annuity accrual rate for a Coordinated
Plan member is 1.2 percent of average salary for each of the first 10 years and 1.7 percent for each remaining
year. Under Method 2, the annuity accrual rate is 2.7 percent of average salary for Basic Plan members and 1.7
percent for Coordinated Plan members for each year of service.
-19-
CITY OF CENTERVlLLE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001
Note 4: DEFINED BENEFIT PENSION PLANS - STATEWIDE. CONTINUED
For all PERF members whose annuity is calculated using Method I, a full annuity is available when age plus
years of service equal 90. A reduced retirement annuity is also available to eligible members seeking early
retirement.
There are different types of annuities available to members upon retirement. A nonnal annuity is a lifetime
annuity that ceases upon the death of the retiree - - no survivor annuity is payable. There are also various types of
joint and survivor annuity options available which will reduce the monthly nonnal annuity amount, because the
annuity is payable over joint lives. Members may also leave their contributions in the fund upon termination of
public service in order to qualify for a deferred annuity at retirement age. Refunds of contributions are available
at any time to members who leave public service, but before retirement benefits begin.
The benefit provisions stated in the previous paragraphs of this section are current provisions and apply to active
plan participants. Vested, terminated employees who are entitled to benefits but are not receiving them yet are
bound by the provisions in effect at the time they last terminated their public service.
PERA issues a publicly available financial report that includes financial statements and required supplementary
information for PERF. That report may be obtained by writing to PERA, 60 Empire Drive, Suite 200, St. Paul,
Minnesota 55103-1855 or by calling 651-296-7460 or 1-800-652-9026.
B. Funding Policy
Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. These statutes are
established and amended by the state legislature. The City makes annual contributions to the pension plans equal
to the amount required by state statutes. PERF Basis Plan members and Coordinated Plan members are required
to contribute 8.75 percent and 4.75 percent, respectively, of their annual covered salary. The City is required to
contribute the following percentages of annual covered payroll: 11.43 percent for Basic Plan PERF members and
5.18 percent for Coordinated Plan PERF members. Member and employer contribution rates for Basic and
Coordinated members will increase by 0.35 percent effective January 2002. The City's contributions to the
PERF for the year ended December 31,2001,2000 and 1999 were $15,963, $15,736 and $14,953, respectively.
The City's contributions were equal to the contractually required contributions for each year as set by State
Statute.
Note 5: OTHER INFORMA TION
A. Risk Management
The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors
and omissions; injuries to employees; and natural disasters for which the City carries insurance. The City obtains
insurance through participation in the League of Minnesota Cities Insurance Trust (LMCIT), which is a risk
sharing pool with approximately 800 other governmental units. The City pays an annual premium to LMCIT for
its workers compensation and property and casualty insurance. The LMCIT is self sustaining through member
premiums and will reinsure for claims above a prescribed dollar amount for each insurance event. Settled claims
have not exceeded the City's coverage in any of the past three fiscal years.
Liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably
estimated. Liabilities, if any, include an amount for claims that have been incurred but not reported (IBNRs).
The City's management is not aware of any incurred but not reported claims.
-20-
- --I
CITY OF CENTERVILLE, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001
Note 5: OTHER INFORMATION. CONTINUED
B. Segment Information for Enterprise Funds
The City maintains two enterprise funds. The Water and Sewer funds account for the provision of basic utility
services to all citizens. Selected segment information for the year ended December 31, 2001 is as follows:
Water Sewer Total
Operating revenue $ 184,481 $ 202,121 $ 386,602
Depreciation expense 30,717 28,382 59,099
Operating income 29,759 13,873 43,632
Net income 168,243 167,833 336,076
Contributed capital additions 233,063 315,861 548,924
Fixed asset additions 233,Q63 315,861 548,924
Net working capital 1,090,724 1,596,467 2,687,191
Total assets 2,729,427 3,505,492 6,234,919
Bonds payable 267,000 333,000 600,000
Total equity 2,251,810 2,907,577 5,159,387
C. Legal Debt Margin
In accordance with Minnesota Statutes, the City may not incur or be subject to net debt in excess of 2 percent of
the market value of taxable property within the City. The total taxable market value of property within the City is
$154,675,000, which leaves a debt margin of $3,093,500. Net debt is payable solely from ad valorem taxes and,
therefore, excludes debt financed partially or entitely by special assessments, enterprise fund revenues or tax
increments. The City does not have any debt subject to the 2 percent limit.
Note 6: FIRE PROTECTION DISTRICT
In 1985, the City discontinued providing the fire protection services to the Centerville community. The City joined the
Centennial Fire District (District), along with the cities of Circle Pines and Lino Lakes. The City contributed all fire
apparatus and equipment items to the District. The City in turn will be receiving payments from the District of $2,270
for 15 years on the apparatus values and $4,973 for 10 years on the equipment values. Tbe Council passed a resolution
to have these funds recorded in the City's fire capital projects fund. Tbese payments are recognized as revenue when
they are received.
The City pays an annual membership fee to the District based on their percentage of the computed annual depreciation
on the apparatus and equipment values. The District still houses equipment in the City's building and pays for a share
of the utilities.
Note 7: COMMITMENTS
In 1997, the City entered into a Joint Powers agreement with the Anoka County Housing and Redevelopment Authority
(ACHRA) to provide senior bousing within the City. Tbe ACHRA bas issued $1,290,000 of Housing Development
Revenue Bonds to provide for construction costs of the project. The City has reserved $71,631 in the Sewer Enterprise
Fund in accordance with the agreement with ACHRA. This amount is to be used in the event revenue is not sufficient
to cover operating expenses and debt service. The City would also be liable for any deficit above the amount reserved.
This commitment exists until December 31, 2012. No expenses were incurred relating to the commitment in 200!.
-21-
COMBINING AND INDIVIDUAL
FUND STATEMENTS
CITY OF CENTERVILLE
CENTERVILLE, MINNESOTA
YEAR ENDED
DECEMBER 31, 2001
I
I.
-22-
CITY OF CENTERVILLE, MINNESOTA
GENERAL FUND
STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL
YEAR ENDED DECEMBER 31, 2001
(With comparative actual amounts for the year ended December 31, 2000)
2001 2000
Variance -
Favorable
Budget Actual (Unfavorable) Actual
REVENUE
General property taxes $ 1,210,000 $ 1,225,296 $ 15,296 $ 986,446
Licenses and pennits
Business 11,860 16,791 4,931 17,611
Nonbusiness 140,369 218,876 78,507 199,114
Total 152,229 235,667 83,438 216,725
Intergovernmental
State
Local government aid 25,280 25,280 69,987
Property tax credits 11 0,028 11 0,028 110,001
Police aid 15,000 19,666 4,666 19,977
2% Fire relief aid 80,393 80,393 63,551
Total 150,308 235,367 85,059 263,516
Charges for services
General government 600 780 180 500
Culture and recreation 100 (100)
Total 700 780 80 500
Fines and forfeitures 32,580 32,269 (311) 28,162
Interest on investments 76,695 20,787 (55,908) 48,357
Miscellaneous
Other 26,840 15,162 (1 ] ,678) 497
Newsletter 190 190 2,910
Refunds and reimbursements 5,000 25,211 20,211 39,336
Total 31,840 40,563 8,723 42,743
TOTAL REVENUE 1,654,352 1,790,729 136,377 1,586,449
-23-
CITY OF CENTERVILLE, MINNESOTA
GENERAL FUND
STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL. CONTINUED
YEAR ENDED DECEMBER 31, 2001
(With comparative actual amounts for the year ended December 31, 2000)
2001 2000
Variance -
Favorable
Budget Actual (Unfavorahle) Actual
EXPENDITURES
Current
General government
Mayor and council
Personal services $ 13,358 $ 18,612 $ (5,254) $ 10,416
Other services and charges 1,500 6,946 (5,446) 303
Total 14,858 25,558 (10,700) 10,719
Elections
Personal services 1,565
Supplies 186
Total 1,75[
Planning and zoning
Other services and charges 1,540 5,406 (3,866) 2,633
Economic development
Supplies 6,500 176 6,324 4,549
Other services and charges 6,008 (6,008)
Total 6,500 6,184 316 4,549
Administration
Personal services 208,100 [79,612 28,488 171,985
Supplies 10,[00 7,317 2,783 10,912
Other services and charges 84,737 84,503 234 122,773
Total 302,937 271,432 31,505 305,670
Assessing
Other services and charges 14,250 17,594 (3,344) 13,232
Legal and accounting
Other services and charges 49,925 72,071 (22,146) 52,942
Engineering services
Other services and charges 25,250 14,897 10,353 [,585
lnsurance
Other services and charges 15,000 9,447 5,553 12,606
-24-
CITY OF CENTERVILLE, MINNESOTA
GENERAL FUND
STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE
BUDGET AND ACTIJAL - CONTINUED
YEAR ENDED DECEMBER 31, 2001
(With comparative actual amounts for the year ended December 31, 2000)
2001 2000
Variance ~
Favorable
Budget Actual (Unfavorable) Actual
EXPENDITIJRES - CONTINUED
Current - Continued
General government - Continued
I General government building
Personal services $ $ 886 $ (886) $ 4,200
Supplies 50 2,625 (2,575) 71
Other services and charges 17,250 13,971 3,279 36,222
Total 17,300 17,482 (182) 40,493
Total general government 447,560 440,071 7,489 446,180
Public safety
Police protection
Other services and charges 373,335 374,935 (1,600) 319,667
Fire protection
Remittance to relief association 100,393 (100,393) 63,551
Other services and charges 68,128 68,128 61,016
Total 68,128 168,521 (100,393) 124,567
Building inspection
Personal services 69,351 78,387 (9,036) 52,243
Supplies 1,900 1,387 513 842
Other services and charges 18,150 11,873 6,277 22,928
Total 89,401 91,647 (2,246) 76,013
Civil defense
Other services and charges 600 11,278 (10,678) 177
Animal control
Other services and charges 300 1,964 (1,664)
Total public safety 531,764 648,345 (116,581) 520,424
Public works
Streets
Personal services 89,788 105,453 (15,665) 93,303
Supplies 73,850 19,677 54,173 12,386
Other services and charges 28,550 71,702 (43,152) 24,047
Total 192,188 196,832 (4,644) 129,736
-25-
THIS PAGE IS LEFT BLANK
INTENTIONALLY
CITY OF CENTERVILLE, MINNESOTA
GENERAL FUND
STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL - CONTINUED
YEAR ENDED DECEMBER 31, 2001
(With comparative actual amounts for the year ended December 31, 2000)
2001 2000
Variance -
Favorable
Budget Actual (Unfavorable) Actual
EXPENDITURES - CONTINUED
Current - Continued
Public works - Continued
Street lighting
Other services and charges $ $ $ $ 20,194
Total public works 192,188 196,832 (4,644) 149,930
Culture and recreation
Personal services 39,322 21,948 17,374 25,640
Supplies 13,200 6,512 6,688 23,330
Other services and charges 45,590 60,274 (14,684) 50,347
Total culture and recreation 98,112 88,734 9,378 99,317
Miscellaneous
Other services and charges 2,091 (2,091) 4,321
Total current expenditures 1,269,624 1,376,073 (106,449) 1,220,172
Capital outlay
General government 60,000 237,501 (177,501) 57,971
Public safety 3,000 37,469 (34,469) 985
Public works 199,128 257,863 (58,735) 416,256
Culture and recreation 600 20,118 (19,518)
Total capital outlay 262,728 552,951 (290,223) 475,212
TOTAL EXPENDITURES 1,532,352 1,929,024 (396,672) 1,695,384
EXCESS (DEFICIENCY) OF REVENUE OVER
EXPENDITURES 122,000 (138,295) (260,295) (108,935)
OTHER FINANCING SOURCES (USES)
Operating transfer in 68,034 68,034 21,000
Operating transfer Qut (122,000) (122,000) (122,507)
TOTAL OTHER FINANCING SOURCES (USES) (122,000) (53,966) 68,034 (101,507)
EXCESS (DEFICIENCY) OF REVENUE
AND OTHER FINANCING SOURCES OVER
EXPENDITURES AND OTHER FINANCING USES $ (192,261) $ (192,261) (210,442)
FUND BALANCE, JANUARY I 841,154 1,051,596
FUND BALANCE, DECEMBER 31 $ 648,893 $ 841,154
-26-
- -- - .-
CITY OF CENTERVILLE, MINNESOTA
SPECIAL REVENUE FUNDS
COMBINING BALANCE SHEET
DECEMBER 3 I, 2001
(With comparative totals for December 31, 2000)
City Gambling
Cable T.V. Recycling Celebration Donation
ASSETS
Cash and temporary investments (deficit) $ 18,856 $ (16,938) $ (34,762) $ 21,124
Receivables
Accrued interest 230
Accounts 7,200 4,106
Due from other govermnents 6,498
TOTAL ASSETS $ 26,286 $ (10,440) $ (34,762) $ 25,230
LIABILITIES AND FUND BALANCE (DEFICIT)
LIABILITIES
Accounts payable $ $ $ 200 $
Accrued salaries 188
TOTAL LIABILITIES 188 200
FUND BALANCE (DEFICIT)
Unreserved
Undesignated 26,286 (10,628) (34,962) 25,230
TOTAL LIABILITIES AND FUND
BALANCE (DEFICIT) $ 26,286 $ (10,440) $ (34,762) $ 25,230
-27-
Totals
2001 2000
$ (11,720) $ (25,037)
230 39
11,306 8,497
6,498 3,474
$ 6,314 $ (13,027)
$
200 $
188
108
388 108
5,926 (13,135)
$ 6,314 $ (13,027)
-28-
CITY OF CENTERVILLE, MINNESOTA
SPECIAL REVENUE FUNDS
COMBINING STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE (DEFICIT)
YEAR ENDED DECEMBER 31, 2001
(With comparative totals for the year ended December 31, 2000)
City Gambling
Cable T.V. Recycling Celebration Donation
REVENUE
Taxes
Cable franchise fee $ 7,200 $ $ $
Intergovernmental
Recycling grant 10,522
Interest on investments 671 291
Miscellaneous I
Other 14,293 22,261
TOTAL REVENUE 7,871 10,522 14,293 22,552
EXPENDITURES
Current
Culture and recreation
Personal services 1,355
Supplies 212
Other services and charges 514 29,405
Sanitation
Personal services 188
Supplies 1,073
Other services and charges 3,430
TOTAL EXPENDITURES 2,081 4,691 29,405
EXCESS (DEFICIENCY) OF REVENUE OVER
EXPENDITURES 5,790 5,831 (15,1\2) 22,552
FUND BALANCE (DEFICIT), JANUARY 1 20,496 (\ 6,459) (19,850) 2,678
FUND BALANCE (DEFICIT), DECEMBER 31 $ 26,286 $ (10,628) $ (34,962) $ 25,230
-29-
,~
Totals
2001 2000
$
7,200 $
9,132
10,522 3,489
962 427
36,554 22,775
55,238 35,823
1,355 994
212
29,919 28,656
188 472
1,073 1,023
3,430 1,980
36,177 33,125
19,061 2,698
(13,135) (15,833)
$ 5,926 $ (13,135)
-30-
CITY OF CENTERVILLE, MINNESOTA
DEBT SERVICE FUNDS
COMBINING BALANCE SHEET
DECEMBER 31, 2001
(With comparative totals for Dccember 31, 2000)
Flood 1993
Plains Improvements Acorn Creek
Reduction 1979 \987 Improvements
ASSETS
Cash and temporary investments (deficit) $ 25,082 $ 1,192 $ 30,685 $ (38,296)
Receivables
Accrued interest 191
Special assessments
Delinquent 6,030 1,294
Deferred 149 5,127 12,404
Prepaid items
TOTAL ASSETS $ 31,303 $ 1,341 $ 37,106 $ (25,892)
LIABILITIES AND FUND BALANCE (DEFICIT)
LIABILITIES
Accounts payable $ 5,023 $ $ $
Deferred revenue 83 149 6,254 12,404
TOTAL LIABILITIES 5,106 149 6,254 12,404
FUND BALANCE (DEFICIT)
Reserved for debt service 26,197 1,192 30,852
Unreserved
Undesignated (38,296)
TOTAL FUND BALANCE (DEFICIT) 26,197 1,192 30,852 (38,296)
TOTAL LIABILITIES AND
FUND BALANCE (DEFICIT) $ 31,303 $ 1,341 $ 37,106 $ (25,892)
-31-
i---U
Elementary G.O. G.O.
School Improvement Improvement
Municipal Clearwater Water Parkvi ew Bonds of Bonds of Totals
Building Meadows Extension Development 2000 2001 2001 2000
$ (90,361) $ [ 43,349 $ 261,557 $ 463,165 $ 432,606 $ 41,268 $ 1,270,247 $ 1,076,496
1,076 1,609 2,835 1,362 119 7,192 4,564
245 923 2,312 10,804 2,938
4,423 49,464 13,666 262,176 347,409 732,921
59,035 59,035
$ (31,326) $ 148,848 $ 312,875 $ 480,589 $ 698,456 $ 41,387 $ 1,694,687 $ 1,816,919
$ $ $ $ $ $ $ 5,023 $
4,423 49,464 13,666 262,200 348,643 737,252
4,423 49,464 13,666 262,200 353,666 737,252
144,425 263,411 466,923 436,256 41,387 1,410,643 1,150,715
(31,326) (69,622) (71,048)
(31,326) 144,425 263,411 466,923 436,256 41,387 1,341,021 1,079,667
$ (31,326) $ 148,848 $ 312,875 $ 480,589 $ 698,456 $ 41,387 $ 1,694,687 $ 1,816,919
-32-
CITY OF CENTERVILLE, MINNESOTA
DEBT SERVICE FUNDS
COMBINING STATEMENT OF REVENUE, EXPENDITURES AND CHANGES
IN FUND BALANCE (DEFICIT)
YEAR ENDED DECEMBER 31, 200 I
(With comparative totals for the year ended December 31, 2000)
Flood 1993
Plains Improvements Acorn Creek
Reduction 1979 1987 Improvements
REVENUE
Special assessments $ 24,827 $ $ 5,342 $
Interest on investments 857 32
TOTAL REVENUE 25,684 32 5,342
EXPENDITURES
Capital outlay 5,023
Debt service
Bond principal 33,750 50,000
Interest and other 2,468 175 5,888
TOTAL EXPENDITURES 41,241 175 55,888
EXCESS (DEFICIENCY) OF REVENUE OVER
EXPENDITURES (15,557) (143) (50,546)
OTIffiR FINANCING SOURCES (USES)
Operating transfer in 58,000
Bond proceeds
TOTAL OlliER FINANCING
SOURCES (USES) 58,000
EXCESS (DEFICIENCY) OF REVENUE AND
OTHER FINANCING SOURCES OVER
EXPENDITURES AND OTIffiR FINANCING USES (\5,557) (143) 7,454
FUND BALANCE (DEFICIT), JANUARY I 41,754 1,335 23,398 (38,296)
FUND BALANCE (DEFICIT), DECEMBER 31 $ 26,197 $ 1,192 $ 30,852 $ (38,296)
-33-
Elementary a,Q, an,
School Improvement Improvement
Municipa] Clearwater Water Parkview Bonds of Bonds of Totals
Building Meadows Extension Development 2000 2001 2001 2000
$ $ 6,160 $ 12,389 $ 17,874 $ 415,126 $ $ 48],718 $ 77 ,550
4,826 7,215 12,713 6,1]0 536 32,289 49,996
10,986 19,604 30,587 421,236 536 514,007 127,546
3,693 8,716 27,780
53,806 9],250 35,000 55,000 318,806 327,167
8,768 6,278 ]7,576 23,528 23,301 475 88,457 80,118
62,574 97,528 52,576 82,221 23,301 475 415,979 435,065
(62,574) (86,542) (32,972) (51,634) 397,935 61 98,028 (307,519)
64,000 122,000 122,507
41,326 41,326 15,552
64,000 41,326 163,326 138,059
],426
(86,542)
(32,972)
(51,634)
397,935
41,387
261,354
(169,460)
(32,752)
230,967
296,383
518,557
38,321
1,079,667
1,249,127
$ (31,326) $ 144,425
$ 263,411
$ 466,923 $ 436,256 $ 4],387
$ 1,341,021
$ 1,079,667
-34-
CITY OF CENTER VILLE, MINNESOTA
CAPITAL PROJECTS FUNDS
COMBINING BALANCE SHEET
DECEMBER 31,2001
(With comparative totals as of December 31, 2000)
Park Fire TIF
Fund Fund Projects
ASSETS
Cash and temporary investments (deficit) $ 109,191 $ 5,820 $ 93,852
Receivables
Accrued interest 625 33 664
Delinquent taxes
Accounts
TOTAL ASSETS $ 109,816 $ 5,853 $ 94,516
LIABILITIES AND FUND BALANCE (DEFICIT)
LIABILITIES
Accounts payable $ $ $
Contracts payable
Accrued salaries payable
TOTAL LIABILITIES
FUND BALANCE (DEFICIT)
Unreserved
Undesignated 109,816 5,853 94,516
TOTAL LIABILITIES AND
FUND BALANCE (DEFICIT) $ 109,816 $ 5,853 $ 94,516
-35-
Eagle
Pedestrian Storm Pass Lakel.nd TIF TlF ParkYicw Willow Glen
Trail Ways Water Additions Hills District 1-4 District 1-5 Development Development
$ (352) $ 185,724 $ (10,786) $ (45,898) $ (2,710) $ (7,824) $ 43,535 $ 24,978
1,024 276 143
160
2,338 1,591
$ (352) $ 189,086 $ (10,786) $ (45,898) $ (2,550) $ (6,233) $ 43,811 $ 25,121
$
$
$
366 $
$
$
$
$
260
260 366
(352)
188,826
(11,152)
(45,898)
(2,550)
(6,233)
43,811
25,121
$
(352) $ 189,086 $ (10,786) $ (45,898) $ (2,550) $ (6,233) $ 43,811
$ 25,12\
I
-36-
CITY OF CENTERVILLE, MINNESOTA
CAPITAL PROJECTS FUNDS
COMBINING BALANCE SHEET-CONTINUED
DECEMBER 31, 2001
(With comparative totals as of December 31, 2000)
Woods of
Clearwater 21st Avenue Center
Creek Improvements Villa
ASSETS
Cash and temporary investments (deficit) $ 10,579 $ (8,467) $ (40,553)
Receivables
Accrued interest
Delinquent taxes
Accounts
TOTAL ASSETS $ 10,579 $ (8,467) $ (40,553)
LIABILITIES AND FUND BALANCE (DEFICIT)
LIABILITIES
Accounts payable $ $ $
Contracts payable
Accrued salaries payable
TOTAL LIABILITIES
FUND BALANCE (DEFICIT)
Unreserved
Undesignaled 10,579 (8,467) (40,553)
TOTAL LIABILITIES AND
FUND BALANCE (DEFICIT) $ 10,579 $ (8,467) $ (40,553)
-37-
11__ _n
Royal Public Lift Station
Buechler Deer Industrial Works #2 Hunter's Downtown Pheasant
Estates Pass Park Building Renovation Crossing Revitalization Marsh
$ 1,943 $ (3,599) $ (90,100) $ (6,029) $ (159,422) $ 90,950 $ (8,560) $ 582,444
635 1,685
I $ 1,943 $ (3,599) $ (90,100) $ (6,029) $ (159,422) $ (8,560) 584,129
$ 91,585 $
$
$
$
86 $
$
$ 21,955 $
4,928
$ 155,289
15,292
86
26,883
170,581
1,943
(3,599)
(90,186)
(6,029)
(159,422)
64,702
(8,560)
413,548
$
1,943
$ (3,599) $ (90,100) $ (6,029) $ (159,422) $ 91,585 $ (8,560) $ 584,129
-38-
I
THIS PAGE IS LEFT BLANK
INTENTIONALLY
CITY OF CENTERVILLE, MINNESOTA
CAPITAL PROJECT FUNDS
COMBINED BALANCE SHEET - CONTINUED
DECEMBER 31, 2001
(With comparative totals as of December 31, 2000)
Economic
The Development Totals
Shores Commission 200] 2000
ASSETS
Cash and temporary investments (deficit) $ (901) $ (1,401) $ 762,414 $ 299,790
Receivables
Accrued interest 5,085 2,143
Delinquent taxes 160 54
Accounts 3,929 5,244
TOTAL ASSETS $ (901) $ (1,401) $ 771,588 $ 307,231
LIABILITIES AND FUND BALANCE (DEFICIT)
LIABILITIES
Accounts payable $ 117 $ 120 $ 177,933 $ 27,7]4
Contracts payable 20,220
Accrued salaries payable 260
TOTAL LIABILITIES ] 17 120 198,413 27,714
FUND BALANCE (DEFICIT)
Unreserved
Undesignated (1,018) (1,521) 573,175 279,517
TOTAL LIABILITIES AND
FUND BALANCE (DEFICIT) $ (901) $ (1,401) $ 771,588 $ 307,231
-39-
CITY OF CENTERVlLLE, MINNESOTA
CAPITAL PROJECTS FUNDS
COMBINING STATEMENT OF REVENUE, EXPENDITURES AND
CHANGES IN FUND BALANCE (DEFICIT)
YEAR ENDED DECEMBER 31, 2001
(Wilh comparative tOla1s for Ihe year ended December 31, 2000)
Park Fire TIF
Fund Fund Proj eels
REVENUE
Tax increments $ $ $
Charges for services
Interest on investments 2,803 149 2,977
Miscellaneous
Other
TOTAL REVENUE 2,803 149 2,977
EXPENDITURES
Current
Miscellaneous 45,005
Capilal outlay
Public works
Economic development
Olher
TOTAL EXPENDITURES 45,005
EXCESS (DEFICIENCY) OF REVENUE
OVER EXPENDITURES 2,803 149 (42,028)
OTHER FINANCING SOURCES (USES)
Bond proceeds
Operaling transfers oul
TOTAL OTHER FINANCING
SOURCES (USES)
EXCESS (DEFICIENCY) OF REVENUE AND
OTHER FINANCING SOURCES OVER
EXPENDITURES AND OTHER FINANCING USES 2,803 149 (42,028)
FUND BALANCE (DEFICIT), JANUARY 1 107,013 5,704 136,544
FUND BALANCE (DEFICIT), DECEMBER 31 $ 109,816 $ 5,853 $ 94,516
-40-
Eagle
Pedestrian Storm Pass Lakeland TlF District TlF District Parkview Willow Glen
Trail Ways Water Additions Hills 1-4 1-5 Development Development
$ $ $ $ $ 24,310 $ 270 $ -$
4,592 1,239 640
20,707
25,299 24,3iO 270 1,239 640
307
366
10,000
26,700
307
366
26,700
10,000
24,992
(366)
(2,390)
270
(8,761)
640
(7,526)
(7,526)
17,466
(366)
(2,390)
270
(8,761)
640
(352)
171,360
(10,786)
(45,898)
(160)
(6,503)
52,572
24,481
$ (352) $ 188,826 $ (il,152) $ (45,898) $ (2,550) $ (6,233) $ 43,811 $ 25,121
-41-
CITY OF CENTERVILLE, MINNESOTA
CAPITAL PROJECTS FUNDS
COMBINING STATEMENT OF REVENUE, EXPENDITIJRES AND
CHANGES IN FUND BALANCE (DEFICIT) - CONTINUED
YEAR ENDED DECEMBER 31, 2001
(With comparative totals for the year ended December 31, 2000)
Woods of
Clearwater 21st Avenue Center
Creek Improvements Villa
REVENUE
Tax increments $ $ $
Charges for services
Interest on investments 268
Miscellaneous
Other
TOTAL REVENUE 268
EXPENDITURES
Current
Miscellaneous
Capital outlay
Public works 3,567 3,665
Economic development
Other
TOTAL EXPENDITIJRES 3,567 3,665
EXCESS (DEFICIENCY) OF REVENUE
OVER EXPENDITIJRES 268 (3,567) (3,665)
OTHER FINANCING SOURCES (USES)
Bond proceeds
Operating transfers out
TOTAL OTHER FINANCING
SOURCES (USES)
EXCESS (DEFlClENCY) OF REVENUE AND
OTHER FINANCING SOURCES OVER
EXPENDITURES AND OTHER FINANCING USES 268 (3,567) (3,665)
FUND BALANCE (DEFICIT), JANUARY 1 10,311 (4,900) (36,888)
FUND BALANCE (DEFICIT), DECEMBER 31 $ 10,579 $ (8,467) $ (40,553)
-42-
Royal Public Lift Station
Buechler Deer Industrial Works #2 Hunter's Downtown Pheasant
Estates Pass Park Building Renovation Crossing Revitalization Marsh
$ $ $ $ $ $ $ $
55 2,846 7,559
12,500
55 2,846 20,059
434
614
1,329
7,803
63,693
5,541
533,173
434
614
1,329
7,803
63,693
5,541
533,173
(379)
(614)
(1,329)
(7,803)
(60,847)
(5,541)
(513,\14)
927,990
927,990
(379)
(614)
(1,329)
(7,803)
(60,847)
(5,541)
414,876
2,322
(2,985)
(88,857)
(6,029)
(151,619)
125,549
(3,019)
(1,328)
$ 1,943 $ (3,599) $ (90,186) $ (6,029) $ (159,422) $ 64,702 $ (8,560) $ 413,548
-43-
THIS PAGE IS LEFT BLANK
INTENTIONALLY
CITY OF CENTERVILLE, MINNESOTA
CAPITAL PROJECTS FUNDS
COMBINING STATEMENT OF REVENUE, EXPENDITURES AND
CHANGES IN FUND BALANCE (DEFICIT) - CONTINUED
YEAR ENDED DECEMBER 3 I, 200 I
(With comparative totals for the year ended December 31, 2000)
Economic
The Development Totals
Shores Corrunission 2001 2000
REVENUE
Tax increments $ $ $ 24,580 $ 24,141
Charges for services 34,463
Interest on investments 23,128 23,479
Miscellaneous
Other 112 33,319 10,803
TOTAL REVENUE 112 81,027 92,886
EXPENDITURES
Current
Miscellaneous 45,005 63,815
Capital outlay
Public works 1,018 631,510 555,871
Economic development 4,618 31,318
Other ] 45,929
TOTAL EXPENDITURES 1,018 4,618 707,833 765,615
EXCESS (DEFICIENCY) OF REVENUE
OVER EXPENDITURES (1,018) (4,506) (626,806) (672,729)
OTHER FINANCING SOURCES (USES)
Bond proceeds 927,990 706,483
Operating transfers out (7,526)
TOTAL OTHER FINANCING
SOURCES (USES) 920,464 706,483
EXCESS (DEFICIENCY) OF REVENUE AND
OTHER FINANCING SOURCES OVER
EXPENDITURES AND OTHER FINANCING USES (1,018) (4,506) 293,658 33,754
FUND BALANCE (DEFICIT), JANUARY] 2,985 279,517 245,763
FUND BALANCE (DEFICIT), DECEMBER 31 $ (1,018) $ (1,521) $ 573,] 75 $ 279,517
-44-
CITY OF CENTERVILLE, MINNESOTA
ENTERPRISE FUNDS
COMBINING BALANCE SHEET
DECEMBER 31, 2001
(With comparative totals for the year ended December 31, 2000)
Sewer
Totals
Water
2001
2000
ASSETS
CURRENT ASSETS
Cash and temporary investments
Receivables
Accrued interest
Accounts
Inventories
Prepaid items
TOTAL CURRENT ASSETS
$ 1,264,755 $ 1,818,376 $ 3,083,131 $ 2,762,857
6,814 10,076 16,890 10,063
49,516 59,773 109,289 87,233
8,971 8,971 32,790
285 9,157 9,442 8,944
1,330,341 1,897,382 3,227,723 2,901,887
1,364,761 1,683,510 3,048,271 2,499,347
(180,984) (337,501) (518,485) (460,047)
1,183,777 1,346,009 2,529,786 2,039,300
212,935 259,200 472,135 499,379
2,374 2,901 5,275 5,935
215,309 262,101 477,410 505,314
$ 2,729,427 $ 3,505,492 $ 6,234,919 $ 5,446,50 I
FIXED ASSETS, AT COST
LESS ACCUMULATED DEPRECIATION
TOTAL FIXED ASSETS, NET
OTHER ASSETS
Special assessments receivable
Bond discount
TOTAL OTHER ASSETS
TOTAL ASSETS
LIABILITIES AND FUND EQUITY
CURRENT LIABILITIES
Accounts payable
Accrued salaries payable
Current portion of bonds payable
Deferred revenue
TOTAL FUND EQUITY
$ 5,821 $ 16,047 $ 21,868 $ 13,063
927 734 1,661 327
29,000 36,000 65,000 60,000
203,869 248,134 452,003 498,724
239,617 300,915 540,532 572,114
238,000 297,000 535,000 600,000
477,617 597,915 1,075,532 1,172,114
841,990 1,085,521 1,927,511 1,418,009
71,631 71,631 71,631
1,409,820 1,750,425 3,160,245 2,784,747
2,251,810 2,907,577 5,159,387 4,274,387
$ 2,729,427 $ 3,505,492 $ 6,234,919 $ 5,446,501
TOTAL CURRENT LIABILITIES
LONG-TERM LIABILITIES
Bonds payable less current portion above
TOTAL LIABILITIES
FUND EQUITY
Contributed capital
Retained earnings
Reserved
Unreserved
TOTAL LIABILlTIES AND FUND EQUITY
-45-
CITY OF CENTERVILLE, MINNESOTA
ENTERPRISE FUNDS
COMBINING STATEMENT OF REVENUE, EXPENSES AND CHANGES IN RETAINED EARNINGS
YEAR ENDED DECEMBER 31, 2001
(With comparative totals for the year ended December 31, 2000)
Totals
Water Sewer 2001 2000
OPERATING REVENUE
Charges for services $ 184,481 $ 202,121 $ 386,602 $ 327,736
OPERATING EXPENSES
Salaries and benefits 21,640 15,535 37,175 42,504
Supplies 66,645 3,848 70,493 26,999
Other services and charges 26,008 8,173 34,181 15,523
Utilities 9,712 1,174 10,886 10,558
MCES - Disposal charges 131,136 131,136 164,125
Depredation 30,717 28,382 59,099 39,891
TOTAL OPERATING EXPENSES 154,722 188,248 342,970 299,600
OPERATING INCOME 29,759 13,873 43,632 28,136
NONOPERATING REVENUE (EXPENSE)
Interest on investments 30,558 45,188 75,746 109,859
Special assessments 46,579 57,883 104,462 87,567
Hook up fees and unit charges 101,628 99,669 20 J ,297 257,223
Interest expense (12,849) (15,704) (28,553) (31,027)
TOTAL NONOPERATING REVENUE (EXPENSE) 165,916 187,036 352,952 423,622
INCOME BEFORE OPERATING TRANSFERS 195,675 200,909 396,584 451,758
OPERATING TRANSFERS OUT (27,432) (33,076) (60,508) (21,000)
NET INCOME 168,243 167,833 336,076 430,758
CREDIT FOR DEPRECIATION ON CONTRIBUTED
ASSETS 19,045 20,377 39,422 33,610
NET INCREASE IN RETAINED EARNINGS 187,288 188,210 375,498 464,368
RETAINED EARNINGS, JANUARY 1 1,222,532 1,633,846 2,856,378 2,392,010
RETAINED EARNINGS, DECEMBER 31 $ 1,409,820 $ 1,822,056 $ 3,231,876 $ 2,856,378
I
-46-
CITY OF CENTERVILLE, MINNESOTA
ENTERPRISE FUNDS
COMBINING STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2001
(With comparative totals for the year ended December 31, 2000)
Totals
Water Sewer 2001 2000
CASH FLOWS FROM OPERATING ACTIVITIES
Operating income $ 29,759 $ 13,873 $ 43,632 $ 28,136
Adjustments to reconcile operating income to net cash
provided by operating activities:
Depreciation and amortization 30,717 28,382 59,099 39,891
(Increase) decrease in assets:
Prepaid items (285) (213) (498) (8,944)
Accounts receivable (15,735) (6,321) (22,056) (2,433)
Inventories 23,819 23,819 (9,668)
Increase (decrease) in liabilities:
Accounts payable 2,729 6,076 8,805 6,482
Accrued salaries payable 740 594 1,334 (1,140)
Deferred revenue (19,521) (27,200) (46,721) (23,865)
NET CASH PROVIDED BY OPERATING ACTIVITIES 52,223 15,191 67,414 28,459
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Operating transfer out (27,432) (33,076) (60,508) (21,000)
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Hook up fees and unit charges 101,628 99,669 201,297 257,223
Special assessments received 57,348 74,358 131,706 111,471
Principal paid on bonds (27,000) (33,000) (60,000) (60,000)
Interest paid on debt (12,849) (15,704) (28,553) (31,028)
Purchase of fix.ed assets (3,160)
NET CASH PROVIDED BY CAPITAL
AND RELATED FINANCING ACTIVITIES 119,127 125,323 244,450 274,506
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received on investments 27,692 41,226 68,918 105,192
NET INCREASE IN CASH AND CASH EQUIVALENTS 171,610 148,664 320,274 387,157
CASH AND CASH EQUIVALENTS, JANUARY i 1,093,145 1,669,712 2,762,857 2,375,700
CASH AND CASH EQUIVALENTS, DECEMBER 31 $ 1,264,755 $ 1,818,376 $ 3,083,131 $ 2,762,857
NONCASH CAP IT AL AND RELATED FINANCING ACTIVITIES
Assets contributed by other funds $ 233,063 $ 315,861 $ 548,924 $ 317,105
-47-
~---- -
CITY OF CENTERVILLE, MINNESOTA
TAX LEVIES AND COLLECTIONS
DECEMBER 31, 2001
Percentage
Collection Percent Collection of Total
Total of Current of Levy of Prior Total Collections
Year Levv Years' Levv Collected Years' Levy Collections to Levy
1992 $ 338,500 $ 332,270 98.16% $ 6.582 $ 338,852 100.10 %
1993 365,137 373,421 102.27 4,901 378,322 103.61
1994 421,224 414,883 98.49 628 415,511 98.64
1995 449,058 445,422 99.19 4,315 449,737 100.15
1996 531,775 520,523 97.88 5,077 525,600 98.84
1997 536,082 532,625 99.36 9,229 541,854 101.08
1999 562,007 557,814 99.25 4,422 562,236 100.Q4
1999 762,130 748,136 98.16 18,259 766,395 100.60
2000 985,009 968,826 98.36 13,933 982,759 99.77
2001 1,210,000 1.186,697 98.07 14,048 1,200,745 99.24
SPECIAL ASSESSMENT LEVIES AND COLLECTIONS
Percentage
Collection Percent Collection of Total
Total of Current of Levy of Prior Total Collections
Year Levy Years' Levv Collected Years' Levy Collections to Levy
1992 $ 91,788 $ 85,693 93.34 % $ 4,520 $ 90,213 98.28 %
1993 63,248 59,082 93.41 5,765 64,847 102.53
1994 57,881 52,792 91.21 2,591 55,383 95.68
1995 104,251 100,431 96.34 1,470 101,901 97.74
1996 93,420 91,836 98.30 5,904 97,740 104.62
1997 175,539 130,529 74.36 1.614 132,143 75.28
1998 116,286 110,705 95.20 42,760 153,465 131.97
1999 273,814 259,003 94.60 55,058 314,061 117.00
2000 151,401 141,190 93.26 2,414 143,604 94.85
2001 261,982 252,397 96.34 22,385 274,782 104.89
-48-
THIS PAGE IS LEFT BLANK
INTENTIONALLY
rt--
I
I
I
OTHER REPORTS
CITY OF CENTERVILLE
CENTERVILLE,NfiNNESOTA
YEAR ENDED
DECEMBER 31, 2001
I
THlS PAGE IS LEFT BLANK
INTENTIONALLY
7241 Ohms Lane
Suite 200
Edina. MN 55439
REPORT ON MINNESOTA LEGAL COMPLIANCE
Honorable Mayor and City Council
City of Centerville, Minnesota
We have audited the general purpose financial statements of the City of Centerville, Minnesota as of and for the year ended
December 31, 200 I, and have issued our report thereon dated March 29, 2002. In ourreport, our opinion was qualified because
the general fixed asset account group was not audited.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the
provisions of the Minnesota LelZal Compliance Audit Guide for Local Government, promulgated by the Legal Compliance Task
Force pursuant to Minnesota Statute Sec. 6.65. Accordingly, the audit included such tests of the accounting records and such
other auditing procedures, as we considered necessary in the circumstances.
The Minnesota Legal Compliance Audit Guide for Local Government covers five main categories of compliance to be tested:
contracting and bidding, deposits and investments, conflicts of interest, public indebtedness, claims and disbursements. Our study
included all of the listed categories.
The results of our tests indicate that for the items tested, the City complied with the material terms and conditions of applicable
legal provisions except as noted below.
In accordance with Minnesota Statutes, section 118A.03, the City is required to pledge collateral equal to 110 percent of their
deposits not covered with insurance. At December 31, 2001, the City did not have the full1l0 percent of collateral pledged.
This report is intended solely for the information and use of the City Council, management and the Minnesota Office of the State
Auditor and is not intended to be and should not be used by anyone other than these specified parties.
March 29, 2002
Minneapolis, Minnesota
~.1 Uq-7tf~/tLf1
ABDO, EICK & MEYERS, LLP
Certified Public Accountants
952.835.9090 Fax 952.835.3261
-49-
www.aemcpas.com
.
.f
7241 Ohms Lane
Suite 200
Edina, MN 55439
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL
OVER FINANCIAL REPORTING BASED ON AN AUDIT OF
FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE
WITH GOVERNMENT AUDITING STANDARDS
Honorable Mayor and City Council
City of Centerville. Minnesota
We have audited the general purpose financial statements of the City of Centerville, Minnesota as of and for the year ended
December 31. 2001 and have issued our report thereon dated March 29, 2002. In our report. our opinion was qualified because
the general fixed assets account group was not audited. Except as discussed in the preceding sentence, 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.
Compliance
As part of obtaining reasonable assurance about whether the City's general purpose financial statements are free of material
misstatement, we performed tests of its compliance with certain provisions of laws. regulations. contracts and grants,
noncompliance with which could have a direct and material effect on the deteanination 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 an instance of noncompliance that is required to be reported under Government
Auditing Standards. It is identified on page 49.
Internal Control Over Financial Reporting
In planning and perfoaning our audit, we considered the City's internal control over financial reporting in order to determine our
auditing procedures for the purpose of expressing our opinion on the general purpose financial statements and not to provide
assurance on the internal control over financial reporting. However, we noted certain matters involving the internal control over
financial reporting and its operation that we consider to be reportable conditions. Reportable conditions involve matters conting
to our attention relating to significant deficiencies in the design or operation of the internal control over financial reporting that, in
our judgment, could adversely affect the City's ability to record, process, summarize and report financial data consistent with the
assertions of management in the general purpose financial statements.
Our study and evaluation disclosed that because of the lintited size of your office staff, your City has lintited segregation of duties.
A good internal control structure contemplates an adequate segregation of duties so that no one individual handles a transaction
from inception to completion. While we recognize that your City is not large enough to permit an adequate segregation of duties
in all respects, it is important, however, that you be aware of this reportable condition.
952.835.9090 Fax 952.835.3261
-50-
www.aemcpas.com
.
.
~
,
.'
..
Page Two
A material weakness is a condition in which the design or operation of one or more of the internal control components does not
reduce to a relatively low level the risk that misstatements in amonnts that would be material in relation to the general purpose
financial statements being audited may occur and not be detected within a timely period by emplnyees in the normal course of
performing their assigned functions. Our consideration of the internal control over financial reporting would not necessarily
disclose all matters in the internal control that migbt be reportable conditions and, accordingly, would not necessarily disclose all
reportable conditions that are also considered to be material weaknesses. However, we believe the reportable condition described
above is a material weakness,
We also noted other matters involving the internal control over financial reporting that we have reported to management of the
City in a separate letter dated March 29, 2002.
This report is intended solely for the information and use of the City Council, management, others within the City and the
Minnesota Office of the State Auditor and is not intended to be and should not be used by anyone other than these specifies
parties.
March 29, 2002
Minneapolis, Minnesota
~ cu:J2cr ~I u.f
ABDO, ElCK & MEYERS, LLP
Certified Public Accountants
-51-