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MAYOR
Jan Haugen
COUNCI L
Kristi Stover
Robert Gagne
Barb Branca[
Vern Watten
CITY OF
SHOREWOOD
5755 COUNTRY CLUB ROAD • SHOREWOOD, MINNESOTA 55331 a (612) 474 -3236
TO: MAYOR, COUN ILMEMBERS MEMBERS OF FINANCIAL ADVISORY BOARD
FROM: LARRY WHIT AK R AND AL r-
0
DATE: MAY 31, 1989
SUBJECT: COMMENTS TO AUDIT AND AUDIT MANAGEMENT LETTER
The following comments relate to the issues raised in the audit management
letter. They are intended to give some insight into the issues and to
offer alternative solutions.
DEBT SERVICE FUNDS
The auditor's letter suggests defeasing the bonds in the 1971 -72 Sewer
'
Improvement fund as there are sufficient funds available to retire the
outstanding bonds. The advantage of this would be to free up present cash
and future assessment revenue which could then be used for other city
purposes. The following shows present cash available and future
'
assessement revenue, as well as bond payments in the coming years:
1989 1990 1991 1992
Cash on Hand $1,110,991 $929,837 $761,986 $607,525
Assessment Revenue 112,429 112,429 112,429 112,429
'
Bond & Interest (293,583) (280,280) (266,890) (228,500)
Totals 929,837 761,986 607,525 491,454
If the fund is left as it is, as you can see, it would be very well
funded; however, the excess money in the fund remains committed to the
payment of the bonds and cannot be used for other purposes until all of
the bonds are retired. Defeasing the bonds assures payment by setting up
amount of money sufficient to retire bonds maturing in future years and
an
thereby frees the excess cash for immediate use. The effects of
defeasance is as follows:
1989 1990 1991 1992
Cash on Hand $1,110,991
Assessment Revenue 112,429 112,429 112,429• 112,429
'
Bond and Interest 293,583
Estimated Cost to
Defease Bonds (700,000)
Cash Available 229,837 112,429 112,429 112,429
'
A Residential Community on Lake Minnetonka's South Shore
PAGE 2
Audit Comments
May 31, 1989
'
Defeasing the bonds will make an estimated $567,124 available in the next
four years.
Other Debt Service Funds are not as healthy as the 171 -72 Sewer
'
Improvement Fund. The 1973 Water Improvement Fund shows a present deficit
of $10,697. There are $15,000 in bonds outstanding. Even with future
revenue of $6,170, this fund still comes up short. The 1974 Sewer
'
Improvement Fund (Island Sewer System) has $270,000 bonds outstanding.
With a fund balance of $17,928 and future revenue of $124,330, this fund
will run a deficit. The shortfalls in both of these funds will have to be
'
funded from an additional source. In the past, special tax levies have
been made to general property taxes to generate revenue for the 174 Sewer
Debt Service fund. This could be a possibility in the future.
Reassessment of the project costs to property owners could be done to
'
finance the deficits. Excess cash from the 171 -72 Sewer fund could also
be committed to the future maturities of bonds in these funds.
CAPITAL PROJECT FUNDS
The management letter mentions that the Southeast Project is at a deficit
of $73,119. This indicates that construction costs have exceeded the
financing provided through bond proceeds. The debt service fund for this
project, however, is quite healthy. A total of $1,005,293 in fund balance
and future revenue exceeds the $935,000 of outstanding bonds by $70,293.
Since the construction on this project is essentially complete and is in
the stages of being finalized, further construction costs will be
minimal. The debt service fund may absorb this shortfall in the normal
closing process at the projects end. The validity of this action should be
discussed with the City Attorney. Another alternative would be to fund
the deficit from the proceeds of the defeased bond issues.
WATER ENTERPRISE FUND
This fund has been in deficit for many years. The fund balance is a
$273,314 deficit and the cash balance is a deficit of $42,054. The Water
' Revenue Bond issue, which is to be paid from excess water revenues, have
required special levies each year. The city's water policies will have to
be addressed in the near future. Items to be addressed should include
rate study /policy, hook -up charges, availability charges, fire rating
advantages, well policies, extension policy, affect on city's bond rating,
future of special levy availability, and others.
POSSIBLE USES OF EXCESS FUNDS
Other than those used mentioned in the previous comments, the Council may
wish to fund other capital projects with the excess funds provided from
the bond defeasance. Projects that have been discussed include a Public
Works garage site and salt /sand building, park improvement, senior
' housing, capital improvement program and /or infrastructure management
program, and computers, among others. Some of these projects may be
possible now that funding is available.
MAYOR
Jan Haugen
COUNCIL
Kristi Stover
Robert Gagne
Barb Brancel
Vern Watten
CITY OF
SHOREWOOD
5755 COUNTRY CLUB ROAD • SHOREWOOD, MINNESOTA 55331 • (612) 474 -3236
TO: MAYOR, COUNCILMEMBERS AND MEMBERS OF THE FINANCIAL ADVISORY BOARD
FROM: ALAN ROLEK, FINANCE DIRECTOR
DATE: MAY 30, 1989
SUBJECT: 1989 ANNUAL FINANCIAL AUDIT REPORT
cc: Larry Whittaker
0
A Residential Community on Lake Minnetonka's South Shore
Attached for your review is the 1989 annual financial audit report for the
City of Shorewood. Also included is the audit management letter and
letter of internal control.
'
The annual audit of the city's financial statements is required by law to
examine the city's compliance with legal requirements and with generally
accepted accounting principles. The auditor examines the city's financial
condition and other financial data and comments on these in the audit
'
management letter.
The audit management letter points out many areas (primarily in the Debt
t
Service , Capital Projects, and Water Funds) that the city will need to
address in the coming months. These areas will be discussed in greater
detail in the audit presentation and workshop on June 5.
have
Please review the audit report and give me a call if you any
questions or comments. I will be happy to discuss any part of the audit
report with you.
cc: Larry Whittaker
0
A Residential Community on Lake Minnetonka's South Shore
ABDO, ABDO & EICK
CERTIFIED PUBLIC ACCOUNTANTS
1060 NORTHLAND PLAZA, 3800 WEST 80th STREET
MINNEAPOLIS, MINNESOTA 55431
TELEPHONE 612 -835 -9090
FAX 612 - 896 -3620
May 23, 1989
Honorable Mayor and City Council
City of Shorewood
Shorewood, Minnesota
C M
Offices In:
Bloomington
Mankato
Owatonna
Dear Council Members:
We have examined the financial statements of the City of Shorewood, Minnesota
for the year ended December 31, 1988 and have issued our report dated April 7,
1989. We have not performed any substantive auditing procedures subsequent to
that date. As part of our examination, we have made a study and evaluation of
the City's system of internal accounting control to the extent we considered
necessary to evaluate the system as required by generally accepted auditing
standards. The purpose of our study and evaluation was to determine the
nature, timing and extent of the auditing procedures necessary for expressing
an opinion on the financial statements.
Our study and evaluation, made for the limited purpose described in the first
paragraph, would not necessarily disclose all material weaknesses in the
system. Accordingly, we do not express an opinion on the system of internal
accounting control of the City of Shorewood taken as a whole. However, our
study and evaluation disclosed that because of the limited size of your office
staff, your organization has limited segregation of duties. A good system of
internal accounting 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 are aware of this condition.
The following is a listing of other items that warrant your review:
General Fund
The fund balance at December 31, 1988 was $771,598 which was an increase of
$85,554 over the prior year. The fund balance represents approximately forty
' percent of the 1988 General Fund expenditures. This should be sufficient to
meet your present working capital requirements.
However, we recommend the fund balance continue to increase as the level of
activity in the General Fund increases. In addition, a portion of the fund
balance beyond your working capital requirements should be designated for
1 contingencies, capital outlay program requirements, etc.
Member of American
Institute of Certified
'
Public Accountants
ABDO, ABDO & EICK
CERTIFIED PUBLIC ACCOUNTANTS
1060 NORTHLAND PLAZA, 3800 WEST 80th STREET
MINNEAPOLIS, MINNESOTA 55431
TELEPHONE 612 -835 -9090
FAX 612 - 896 -3620
May 23, 1989
Honorable Mayor and City Council
City of Shorewood
Shorewood, Minnesota
C M
Offices In:
Bloomington
Mankato
Owatonna
Dear Council Members:
We have examined the financial statements of the City of Shorewood, Minnesota
for the year ended December 31, 1988 and have issued our report dated April 7,
1989. We have not performed any substantive auditing procedures subsequent to
that date. As part of our examination, we have made a study and evaluation of
the City's system of internal accounting control to the extent we considered
necessary to evaluate the system as required by generally accepted auditing
standards. The purpose of our study and evaluation was to determine the
nature, timing and extent of the auditing procedures necessary for expressing
an opinion on the financial statements.
Our study and evaluation, made for the limited purpose described in the first
paragraph, would not necessarily disclose all material weaknesses in the
system. Accordingly, we do not express an opinion on the system of internal
accounting control of the City of Shorewood taken as a whole. However, our
study and evaluation disclosed that because of the limited size of your office
staff, your organization has limited segregation of duties. A good system of
internal accounting 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 are aware of this condition.
The following is a listing of other items that warrant your review:
General Fund
The fund balance at December 31, 1988 was $771,598 which was an increase of
$85,554 over the prior year. The fund balance represents approximately forty
' percent of the 1988 General Fund expenditures. This should be sufficient to
meet your present working capital requirements.
However, we recommend the fund balance continue to increase as the level of
activity in the General Fund increases. In addition, a portion of the fund
balance beyond your working capital requirements should be designated for
1 contingencies, capital outlay program requirements, etc.
tPage Two
ABDO, ABDO & Eicx
CERTIFIED PUBLIC ACCOUNTANTS
The bonds issued to finance this improvement are temporary bonds. The City
will need to provide permanent financing for this project in the near future
as the entire $1,450,000 bond issue is payable July 1, 1990. Cash on hand
can be applied to reduce the size of the permanent issue.
I1971 and 1972 Sewer Improvement
This debt service fund has $1,110,991 in cash and investments and only
$955,000 in bonds outstanding. Bonds will mature through November 1, 1992.
Sufficient cash is available in this fund to defease the bonds outstanding
' and free up the excess cash and future assessment collections in this fund
for other city purposes immediately.
C
1973 Water Improvement
This fund has a fund balance deficit of $10,697 and bonds outstanding of
$15,000.. A source of funding will need to be identified to eliminate the
deficit and pay the remaining bonds outstanding.
1974 Sewer Improvement
The fund balance plus the future special assessments will not be sufficient
to repay all the bonds outstanding. The source of the additional funding
required over the remaining five years should be identified. If this funding
is a tax levy, the City should begin to provide these funds with the 1989
levy.
Capital Projects Fund
Southeast Project
This fund has a fund balance deficit of $73,119 at year end. Financing
sources must be identified to eliminate this deficit and provide for any
other project costs.
Debt Service Funds
'
Governmental financial reporting for
debt service funds and the related
bonds
outstanding is somewhat fragmented.
The following schedule will
assist you in
matching the debt service fund and related
bond issue:
'
December 31, 1988
Fund
Deferred
Bonds
Debt Service Fund
Balance
Revenue
Outstanding
1984 Improvement (1987 Refunding)
$ 685 894
$ 105 750
$ 810 000
Shorewood Oaks (1987 Temporary)
294 212
1 202 546
1 450 000
1971 and 1972 Sewer Improvement
1 110 991
449 717
955 000
1973 Water Improvement
(10 697)
6 170
15 000
1974 Sewer Improvement
17 928
124 330
270 000
Southeast Water (1986 Improvement)
578 981
426 312
935 000
In reviewing these debt service funds,
the following
items should
be noted:
'
Shorewood Oaks (1987 Temporary Bond
Issue)
The bonds issued to finance this improvement are temporary bonds. The City
will need to provide permanent financing for this project in the near future
as the entire $1,450,000 bond issue is payable July 1, 1990. Cash on hand
can be applied to reduce the size of the permanent issue.
I1971 and 1972 Sewer Improvement
This debt service fund has $1,110,991 in cash and investments and only
$955,000 in bonds outstanding. Bonds will mature through November 1, 1992.
Sufficient cash is available in this fund to defease the bonds outstanding
' and free up the excess cash and future assessment collections in this fund
for other city purposes immediately.
C
1973 Water Improvement
This fund has a fund balance deficit of $10,697 and bonds outstanding of
$15,000.. A source of funding will need to be identified to eliminate the
deficit and pay the remaining bonds outstanding.
1974 Sewer Improvement
The fund balance plus the future special assessments will not be sufficient
to repay all the bonds outstanding. The source of the additional funding
required over the remaining five years should be identified. If this funding
is a tax levy, the City should begin to provide these funds with the 1989
levy.
Capital Projects Fund
Southeast Project
This fund has a fund balance deficit of $73,119 at year end. Financing
sources must be identified to eliminate this deficit and provide for any
other project costs.
' Page Three ABDO, ABDO & Eicx
' CERTIFIED PUBLIC ACCOUNTANTS
' Water Enterprise Fund
The Water Fund reported an operating loss of $2,506 in 1988. The fund also has
a cash deficit of $42,054 at year end. Because the revenues have not been
sufficient, the G.O. Water Revenue Bonds have been repaid through a tax levy.
' We recommend the Council review the Water Fund operation and establish rates
which are sufficient to cover the fund's operating costs, meet its debt service
requirements, and establish cash reserves for major maintenance needs.
Computer System
The City is in the process of implementing a computer system. The process is
not complete as the City still has the monthly general ledger processing done
through a local accounting firm. The software is provided by a vendor located
outside of Minnesota. It is my understanding that this vendor has few, if any,
other Minnesota clients.
' We recommend the finance department evaluate the selection of this software
vendor. The distance raises concerns about the ability to provide technical
support and the related costs of training and support.
This report is intended solely for the use of management and the council. The
comments and recommendations in the report are purely constructive in nature
and should be read in this context.
Our examination would not necessarily disclose all weaknesses in the system
' because it was based on selected tests of the accounting records and related
data.
If you have any questions or wish to discuss this, please contact us. Thank
you for the opportunity to be of continued service to you, and for the courtesy
and cooperation extended to us by your staff.
' Sincerely,
ABDO, ABDO & EICK
Certified Public ccountants
' Gary Groen, CPA
1
ABDO, ABDO & EICH
' CERTIFIED PUBLIC ACCOUNTANTS
1060 NORTHLAND PLAZA, 3800 WEST 80th STREET
MINNEAPOLIS, MINNESOTA 55431
TELEPHONE 612 - 835 -9090
FAX 612 - 896 -3620
Member of American Offices In:
' Institute of Certified Bloomington
Public Accountants Mankato
Owatonna
May 23, 1989
' Honorable Mayor and City Council
City of Shorewood
Shorewood, Minnesota
' Dear Council Members:
We have examined the financial statements of the City of Shorewood, Minnesota
for the year ended December 31, 1988 and have issued our report dated April 7,
1989. We have not performed any substantive auditing procedures subsequent to
that date. As part of our examination, we have made a study and evaluation of
the City's system of internal accounting control to the extent we considered
necessary to evaluate the system as required by generally accepted auditing
standards. The purpose of our study and evaluation was to determine the
nature, timing and extent of the auditing procedures necessary for expressing
an opinion on the financial statements.
Our study and evaluation, made for the limited purpose described in the first
' paragraph, would not necessarily disclose all material weaknesses in the
system. Accordingly, we do not express an opinion on the system of internal
accounting control of the City of Shorewood taken as a whole. However, our
' study and evaluation disclosed that because of the limited size of your office
staff, your organization has limited segregation of duties. A good system of
internal accounting 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 are aware of this condition.
The following is a listing of other items that warrant your review:
General Fund
The fund balance at December 31, 1988 was $771,598 which was an increase of
$85,554 over the prior year. The fund balance represents approximately forty
percent of the 1988 General Fund expenditures. This should be sufficient to
meet your present working capital requirements.
However, we recommend the fund balance continue to increase as the level of
activity in the General Fund increases. In addition, a portion of the fund
balance beyond your working capital requirements should be designated for
contingencies, capital outlay program requirements, etc.
I
I
CIS
~ Page Two
Debt Service Funds
ABDO, ABDO & EiCx
CERTIFIED PUBLIC ACCOUNTANTS
Governmental financial reporting for debt service funds and the related bonds
outstanding is somewhat fragmented. The following schedule will assist you in
matching the debt service fund and related bond issue:
December 31, 1988
Fund Deferred Bonds
Debt Service Fund Balance Revenue Outstanding
1984 Improvement (1987 Refunding)
Shorewood Oaks (1987 Temporary)
1971 and 1972 Sewer Improvement
1973 Water Improvement
1974 Sewer Improvement
Southeast Water (1986 Improvement)
$ 685 894 $ 105 750 $ 810 000
294
212
1 202
546
1 450
000
1 110
991
449
717
955
000
(10
697)
6
170
15
000
17
928
124
330
270
000
578
981
426
312
935
000
In reviewing these debt service funds, the following items should be noted:
' Shorewood Oaks (1987 Temporary Bond Issue)
The bonds issued to finance this improvement are temporary bonds. The City
' will need to provide permanent financing for this project in the near future
as the entire $1,450,000 bond issue is payable July 1, 1990. Cash on hand
' can be applied to reduce the size of the permanent issue.
1971 and 1972 Sewer Improvement
This debt service fund has $1,110,991 in cash and investments and only
$955,000 in bonds outstanding. Bonds will mature through November 1, 1992.
Sufficient cash is available in this fund to defease the bonds outstanding
' and free up the excess cash and future assessment collections in this fund
for other city purposes immediately.
1973 Water Improvement
1 This fund has a fund balance deficit of $10,697 and bonds outstanding of
$15,000.. A source of funding will need to be identified to eliminate the
' deficit and pay the remaining bonds outstanding.
1974 Sewer Improvement
' The fund balance plus the future special assessments will not be sufficient
to repay all the bonds outstanding. The source of the additional funding
required over the remaining five years should be identified. If this funding
is a tax levy, the City should begin to provide these funds with the 1989
levy.
1 Capital Projects Fund
Southeast Project
' This fund has a fund balance deficit of $73,119 at year end. Financing
sources must be identified to eliminate this deficit and provide for any
other project costs.
n Page Three ABDO, ABDO & Eics
CERTIFIED PUBLIC ACCOUNTANTS
Water Enterprise Fund
' The Water Fund reported an operating loss of $2,506 in 1988. The fund also has
a cash deficit of $42,054 at year end. Because the revenues have not been
sufficient, the G.O. Water Revenue Bonds have been repaid through a tax levy.
' We recommend the Council review the Water Fund operation and establish rates
which are sufficient to cover the fund's operating costs, meet its debt service
' requirements, and establish cash reserves for major maintenance needs.
Computer System
The City is in the process of implementing a computer system. The process is
not complete as the City still has the monthly general ledger processing done
through a local accounting firm. The software is provided by a vendor located
outside of Minnesota. It is my understanding that this vendor has few, if any,
other Minnesota clients.
We recommend the finance department evaluate the selection of this software
vendor. The distance raises concerns about the ability to provide technical
support and the related costs of training and support.
IThis report is intended solely for the use of management and the council. The
comments and recommendations in the report are purely constructive in nature
and should be read in this context.
Our examination would not necessarily disclose all weaknesses in the system
' because it was based on selected tests of the accounting records and related
data.
If you have any questions or wish to discuss this, please contact us. Thank
' you for the opportunity to be of continued service to you, and for the courtesy
and cooperation extended to us by your staff.
Sincerely,
ABDO, ABDO & EICK
' Certified Public ccountants
14Gary Groen, CPA
0
I �*
ABDO, ABDO & EICK
' Certified Public Accountants
1060 Northland Plaza
3800 West 80th Street
Bloomington, Minnesota 55431
In connection with your audit of the general purpose financial
statements of the City of SluRe,r o J , Minnesota as of December 31,
1988 and for the year then ended for the pupose of expressing an
opinion as to whether the financial statements present fairly, in
all material respects, the financial position of the City of Zee-;�aj
Minnesota and the results of its operations and the changes in
financial position of its proprietary fund types in conformity
' with generally accepted accounting principles, we confirm, to the
best of our knowledge and belief, the following representations
made to you during your audit.
1. We are responsible for the fair presentation in the
financial statements of financial position anyl
results of operations of the City of SkateA),w
Minnesota and changes in financial position of its
proprietary fund types in conformity with generally
accepted accounting principles. The financial
' statements include all properly classified funds and
account groups of the oversight unit and all
component units required by generally accepted
accounting principles to be included in the
financial reporting entity.
2. We have made available to you all -
' a. Financial records and related data.
b. Minutes of meetings of the City Council for the
year ended December 31, 1988 or summaries of
actions of recent meetings for which minutes
have not yet been prepared.
3. There have been no -
a. Irregularities involving management or employees
who have significant roles in the internal
control structure.
b. Irregularities involving other em 10 ees that
CD
could have a material effect on the.financial
statements.
C. Communications from regulatory agencies
' concerning noncompliance with, or deficiencies
in financial reporting practices that could have
a material effect on the financial statements.
Page Two
4. We have no plans or intentions that may materially
affect the carrying value or classification of
assets, liabilities, or fund balances.
' 5. The following have been properly recorded in the
financial statements:
0
u
u
1
C
n
C
r
a. Joint ventures and related party transactions
and related accounts receivable or payable,
including revenues, expenditures, loans,
transfers, leasing arrangements, and guarantees.
b. Arrangements with financial institutions
involving repurchase or reverse repurchase
agreements, compensating balances, or other
arrangements invloving restrictions on cash
balances and line -of- credit or similar
arrangements.
c. Agreements to repurchase assets previously sold.
6. There are no -
a. Violations or possible violations of budget
ordinances, or laws or regulations (including
those pertaining to adopting and amending
budgets) whose effects should be considered for
disclosure in the financial statements or as a
basis for recording a loss contingency.
b. Other material liabilities or gain or loss
contingencies that are required to be accrued or
disclosed by Statement of Financial Accounting
Standards No. 5.
C. Reservations or designations of fund equity that
were not properly authorized and approved.
7. There are no unasserted claims or assessments that
our lawyer had advised us are probable of assertion
and must be disclosed in accordance with Statement
of Financial Accounting Standards No. 5.
8. There are no material transactions that have not
been properly recorded in the accounting records
underlying the financial statements.
9. Provision, when material, has been made to reduce
excess or obsolete inventories to their estimated
net realizable value.
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
Page Three
10. The City of s)4ecJo6d , Minnesota has satisfactory
title to all owned assets, and there are no liens or
encumbrances on such assets nor has any asset been
pledged.
11. We have complied with all aspects of contractual
agreements that would have a material effect on the
financial statements in the event of noncompliance.
12. We have identified all accounting estimates that
could be material to the financial statements,
including the key factors and significant assumptions
underlying those estimates, and we believe the
estimates are reasonable in the circumstances.
13. No events have occured subsequent to the balance
sheet date that would require adjustments to, or
disclosure in, the financial statements.
Signed:
Title.
Date: %. 1921
' CITY OF SHOREWOOD, MINNESOTA
TABLE OF CONTENTS
1
fl
1
I. INTRODUCTORY SECTION
Elected and Appointed Officials
'
II. FINANCIAL SECTION
Page
Independent Auditor's Report
General Purpose Financial Statements
Combined Balance Sheet - All Fund Types and Account
Groups
2
'
Combined Statement of Revenues, Expenditures and Changes
in Fund Balance - All Governmental Fund Types
3
Statement of Revenues, Expenditures and Changes
'
in Fund Balance - Budget and Actual - General Fund
4
Combined Statement of Revenues, Expenses and Changes in
Retained Earnings - All Proprietary Fund Types
5
'
Combined Statement of Changes in Financial Position -
All Proprietary Fund Types
6
Notes to Financial Statements
7 - 19
'
Combining and Individual Fund Statements
General Fund
'
Balance Sheet
Statement of Revenues, Expenditures and Changes in
20
Fund Balance - Budget and Actual
21 25
Debt Service Funds
'
Combining Balance Sheet
26
Combining Statement of Revenues, Expenditures and
Changes in Fund Balance
27
Capital Projects Funds
'
Combining Balance Sheet
28
Combining Statement of Revenues, Expenditures
'
and Changes in Fund Balance
Proprietary Fund Types
29
Combining Balance Sheet
30
Combining Statement of Revenues, Expenses
and Changes in Retained Earnings
31
Combining Statement of Changes in Financial Position
32
Report on Internal Controls
33 - 34
'
Report on Compliance
35
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CITY OF SHOREWOOD, MINNESOTA
ELECTED AND APPOINTED OFFICIALS
DECEMBER 31, 1988
Elected Officials
Robert Rascop
Barbara Brancel
Robert Gagne Jr.
Jan H au gen
Kristi Stover
Appointed Officials
Daniel Vogt
Alan Rolek
Term
Expires
Mayor
1988
Council
Member
1990
Council
Member
1988
Council
Member
1990
Council
Member
1988
City Administrator
Finance Director
Resigned February 8, 1989; Larry Whittaker
appointed April 17, 1989
Member of American
' Institute of Certified
Public Accountants
ABDO, ABDO & EICK
CERTIFIED PUBLIC ACCOUNTANTS
1060 NORTHLAND PLAZA, 3800 WEST 80th STREET
MINNEAPOLIS, MINNESOTA 55431
TELEPHONE 612 -835 -9090
FAX 612 - 896 -3620
INDEPENDENT AUDITOR'S REPORT
Offices In:
Bloomington
Mankato
Owatonna
' Honorable Mayor and City Council
City of Shorewood, Minnesota
' We have audited the accompanying general purpose financial statements of the
City of Shorewood, Minnesota, for the year ended December 31, 1988 as listed in
the table of contents. These financial statements are the responsibility of the
' City of Shorewood, Minnesota's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
Except as discussed in the following paragraph, we conducted our audit in
' accordance with generally accepted auditing standards. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
' evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
Property, plant and equipment records do not exist for acquisitions prior to
' January 1, 1978. As a result those assets are not included in the City's
financial statements and depreciation expense on those assets has not been
recorded in the enterprise funds.
In our opinion, except for the effects on the financial statements of such
adjustments, if any, as might have been determined to be necessary had we
' audited the property, plant and equipment acquisitions prior to 1978, the
general purpose financial statements referred to above present fairly, in all
material respects, the financial position of the City of Shorewood, Minnesota
' at December 31, 1988 and the results of its operations and the changes in
financial position of its Proprietary Fund Types for the year then ended, in
conformity with generally accepted accounting principles.
' Our audit was made for the purpose of forming an opinion on the general purpose
financial statements taken as a whole. The combining and individual fund
financial statements 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 of Shorewood, Minnesota. The
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.
' April 7, 1989 ABDO, ABDO & EICK
Minneapolis, Minnesota Certified Public Accountants
0
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CITY OF SHOREWOOD, MINNESOTA
COMBINED BALANCE SHEET
ALL FUND TYPES AND ACCOUNT GROUPS
DECEMBER 31, 1988
CITY OF SHOREWOOD, MINNESOTA
COMBINED BALANCE SHEET
ALL FUND TYPES AND ACCOUNT GROUPS
DECEMBER 31, 1988
Assets
Cash and investments
Cash on hand
Receivables
Taxes
Accounts
Accrued interest
Contracts
Special assessments
Inventories, at cost
Prepaid expenses
Property and equipment, net
Bond discount, net
Other debits
Amounts available
Amounts to be provided for
general long -term debt
Total Assets
Liabilities and Fund Equity
Liabilities
Accounts and contracts payable
Salaries and compensated absences
Refundable deposits payable
Accrued interest payable
Deferred revenue
Bonds payable
Total liabilities
Fund equity
Investment in general fixed assets
Contributed capital
Retained earnings - unreserved
Fund balance
Reserved
Unreserved
Total fund equity
Total liabilities and
fund equity
See Notes to Financial Statements
-2-
Governmental Fund Tvpes
$1 010 667 $4 992 134 $140 364
$ 43 963 $ - $ 99 479
16 133 - -
19 500 - -
159 473 2 314 825 -
239 069 2 314 825 99 479
- 2 677 309 -
771 598 - 40 885
771 598 2 677 309 40 885
$1 010 667 $4 992 134 $140 364
Debt
Capital
General
Service
Projects
$ 798
422
$2 617 767
$137 722
100
-
-
76
577
-
-
25
102
-
-
15
758
50 333
2 642
94
708
-
-
-
2 324 034
-
$1 010 667 $4 992 134 $140 364
$ 43 963 $ - $ 99 479
16 133 - -
19 500 - -
159 473 2 314 825 -
239 069 2 314 825 99 479
- 2 677 309 -
771 598 - 40 885
771 598 2 677 309 40 885
$1 010 667 $4 992 134 $140 364
Proprietary
Fund Type
Account
Groups
944
3
829
General
General
Total
19
Fixed Assets
Long -term
(Memorandum
Enterprise
(Unaudited)
Debt
Only)
- - 2 481
$ 382 884
$ -
$ -
$ 3 936
795
1 200
-
-
1
300
76
577
166 856
-
-
191
958
7 274
-
-
76
007
94
708
8 348
-
-
2 332
382
155 336
-
-
155
336
14 140
-
-
14
140
2 009 137
1 793 975
-
3 803
112
1 474
-
-
1
474
2 677 309 2 677 309
$2 746 649 $1 793 975 $4 447 452 $15 131 241
$ 61
502 $
- $ - $ 204
944
3
829
- 12 452 32
414
19
500
931
- -
931
7
467
- - 2 481
765
95
000
- 4 435 000 4 530
000
168
729
- 4 447 452 7 269
554
- 1 793 975 1 793 975
2 281 460 - - 2 281 460
296 460 - - 296 460
- - - 2 677 309
- - - 812 483
2 577 920 1 793 975 - 7 861 687
$2 746 649 $1 793 975 $4 447 452 $15 131 241
-2-
CITY OF SHOREWOOD, MINNESOTA
COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE
ALL GOVERNMENTAL FUND TYPES
YEAR ENDED DECEMBER 31, 1988
Revenues
General property taxes
Licenses and permits
Intergovernmental
Charges for services
Fines
Miscellaneous
Special assessments
Interest on investments
Park dedication fees
Other
Total revenues
Expenditures
General government
Public safety
Police protection
Fire protection
Other
Public works
Parks and recreation
Debt service
Principal
Interest and
service charges
Total expenditures
Excess revenues (expenditures)
Other financing sources
Operating transfer in
Excess revenues and other
financing sources over
(under) expenditures
Fund balance, January 1
Fund balance, December 31
Debt
General Service
$1 087 099 $ —
330 408 -
368 288 -
10 526 -
91 385 -
200 1 204 701
50 164 147 427
1 968 148
646 923
344 714
68 414
110 589
669 990
57 964
1 898 594
69 554
16 000
435 000
Total
Capital (Memorandum
Projects Only)
$ — $1 087 099
- 330 408
- 368 288
6 10 532
- 91 385
- 1 204 901
21 346 218 937
99 102 99 102
1 000 31 078
121 454 3 441 730
646 923
- 344
714
- 68
414
- 110
589
667 759 1 337
749
194 348 252
312
709
636
862
107
642
492
(740
653)
435 000
274 636
(28 607)
85
554
642
492
(740
653)
(12
607)
686
044
2 034
817
781
538
3 502
399
$ 771
598
$2 677
309
$ 40
885
$3 489
792
See Notes to Financial Statements
-3-
CITY OF SHOREWOOD, MINNESOTA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL
GENERAL FUND
YEAR ENDED DECEMBER 31, 1988
Revenues
General property taxes
Licenses and permits
Intergovernmental
Charges for services
Fines
Miscellaneous
Special assessments
Interest on investments
Other
Total revenues
Expenditures
General government
Public safety
Police protection
Fire protection
Other
Public works
Parks and recreation
Total expenditures
Excess revenues (expenditures)
Other financing sources
Operating transfer in
Excess revenues and other
financing sources over
(under) expenditures
Fund balance, January l
Fund balance, December 31
See Notes to Financial Statements
1
Budget Actual
$1 274 189 $1 087 099
145
400
330
408
183
628
368
288
19
700
10
526
75
000
91
385
200
200
35
000
50
164
1 754 436
IV= l•I
346 723
68 395
85 527
687 599
61 104
(161 002)
16 000
$ (145 002)
-4-
1 968 148
646 923
344 714
68 414
110 589
669 990
57 964
1 898 594
69 554
16 000
85 554
686 044
$ 771 598
Variance
Favorable
$(187 090)
185 008
184 660
(9 174)
16 385
15 164
8 759
213 712
19 167
2 009
(19)
(25 062)
17 609
3 140
16 844
230 556
$ 230 556
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CITY OF SHOREWOOD, MINNESOTA
COMBINED STATEMENT OF REVENUES, EXPENSES AND CHANGES IN RETAINED EARNINGS
ALL PROPRIETARY FUND TYPES
YEAR ENDED DECEMBER 31, 1988
Sales
Cost of sales
Gross profit
Charges for services
Permits and connection fees
Gross profit and revenues
Expenses
Personal services
Supplies
Repairs and maintenance
Depreciation
Professional services
Contractual services
Communication
Insurance - general
Water purchases
Utilities
Other
Metropolitan Waste Control Commission
disposal charge
Rent
Advertising
Total expenses
Operating income
Other revenues (expenses)
Taxes
Special assessments
Property tax credits
Interest income
Other income
Interest expense
Other expenses
Total other revenues (expenses)
Net income before transfers
Other financing uses
Operating transfers out
Net income
Retained earnings, January 1
Retained earnings, December 31
See Notes to Financial Statements
-5
$1 148314
908 147
240 167
638 514
899 678
133 722
25 071
24 700
36 444
24 854
91 646
1 164
19 962
15 649
40 860
3 042
382 893
33 741
16 530
4 028
2 725
23 043
51
(11 435 )
34 476
95 286
(16
000)
79
286
217
174
$ 296
460
'
CITY OF SHOREWOOD, MINNESOTA
COMBINED STATEMENT OF CHANGES IN FINANCIAL POSITION
ALL PROPRIETARY FUND TYPES
'
YEAR ENDED DECEMBER 31, 1988
'
Sources of working capital
Operations
Net income after transfers
$
79
286
'
Add depreciation, an expense
not requiring working capital
36
444
Working capital from
operations
115
730
Contributions of capital
Decrease in receivables from
996
110
other funds
104
359
Total sources of working
capital
1
216
199
Uses of working capital
Acquisition of property and
equipment, net
1
055
877
'
Bond discount
1
659
Total uses of working
capital
1
057
536
'
Increase in
working capital
$
158
663
Changes in components of
working capital
Increase (decrease) in
current assets
'
Cash and investments
$
86
153
Accounts receivable, net
38
904
Other receivables
9
631
Accrued interest
1
150
Inventory
13
111
Prepaid expenses
(2
686)
146
263
(Increase) decrease in
current liabilities
Accounts and contracts
payable
3
523
Accrued salaries payable
1
138
Accrued interest payable
(931)
Deferred revenue
(7
467)
'
Current portion of long —term
debt
16
137
12
400
Increase in working capital
$
158
663
'
See Notes to Financial Statements
-6-
' CITY OF SHOREWOOD, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1988
N 1
Note . Summary of Significant Accounting Policies
' A. City Structure and Scope of the Entity
The City of Shorewood operates under "Optional Plan A" as defined
in the State of Minnesota Statutes. Under this Plan, the
the government of the City is directed by a Council composed of
an elected mayor and four elected trustees or 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
1 City.
For financial reporting purposes, in conformance with section
2100 of the Governmental Accounting and Reporting Standards of
the Governmental Accounting Standards Board, the City's
financial statements and footnotes include all Boards and
Commissions over which City officials exercise oversight
' responsibility.
Oversight responsibility includes such aspects as appointment of
governing body members, budget review, approval of property tax
' levies, outstanding debt secured by City full faith and credit
or revenues, responsibility for funding deficits, and others.
' The accounting policies of the City of Shorewood conform to
generally accepted accounting principles as applicable to
governments. The following is a summary of the more significant
' policies.
B. Basis of Presentation
The accounts of the City are organized on the basis of funds and
account groups, each of which is considered a separate
accounting entity. The operations of each fund are accounted
for with a separate set of self — balancing accounts that comprise
'
its assets, liabilities, fund equity, revenues and expenditures,
or expenses, as appropriate. Government resources are allocated
'
to and accounted for in individual funds based upon the purposes
for which they are to be spent and the means by which spending
activities are controlled. The various funds are grouped, in
the financial statements in this report, into four generic fund
types and two broad fund type categories as follows:
GOVERNMENTAL FUNDS
'
General Fund — The General Fund is the general operating fund of
the City and accounts for all revenues and expenditures not
required to be accounted for in another fund.
1
CITY OF SHOREWOOD, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1988
Note 1: Summary of Significant Accounting Policies - continued
' Debt Service Funds - The Debt Service Funds are used to account
for the accumulation of resources for, and the payment of,
general long -term debt principal, interest and related costs.
Capital Projects Funds - Capital Projects Funds account for all
resources used for the acquisition and construction of major
' capital facilities.
PROPRIETARY FUNDS
Enterprise Funds - Enterprise Funds are used to account for
operations (a) that are financed and operated in a manner
similar to private business enterprises where the intent of the
governing body is that the costs (expenses, including
depreciation) of providing goods or services to the general
public on a continuing basis be financed or recovered primarily
through user charges; or (b) where the revenues earned, expenses
incurred, and /or net income is appropriate for capital
maintenance, public policy, management control, accountability,
or other purposes.
' Fixed Assets and Long -term Liabilities Account Groups
The Governmental Fund Types previously discussed are designed to
account for the financial flow of a particular fund; therefore,
generally include only current assets and current liabilities on
their balance sheets. Their reported fund balance is considered
a measure of available spendable resources. The City also
maintains two account groups for noncurrent assets and
liabilities. These account groups are concerned only with
the measurement of financial position. They are as follows:
General Fixed Assets Group of Accounts (unaudited) -
' This separate group of accounts contains the fixed assets
used in the Governmental Fund Type operations. They are
assets of the City as a whole and not of individual funds.
Public domain general fixed assets consisting of certain
improvements other than buildings, including curbs and
gutters, streets and sidewalks and drainage systems, are
capitalized along with other general fixed assets. No
depreciation has been provided on the assets in this account
group.
1 All fixed assets are valued at historical or estimated
historical cost. Donated fixed assets are valued at their
estimated fair value on the date donated.
S
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CITY OF SHOREWOOD, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1988
Note 1: Summary of Significant Accounting Policies - continued
General Long -term Debt Group of Accounts - This separate
group of accounts contains the long -term liabilities of
the City expected to be financed from Governmental Funds.
They are liabilities of the City as a whole and not of
individual funds. The exception to this rule is for
Enterprise Fund long -term debt which is accounted for in
that fund type.
All Proprietary Funds are accounted for on a cost of
services or capital maintenance measurement focus.
Therefore, all assets and liabilities, both current and
noncurrent, are included on their balance sheets. All
fixed assets are stated at historical or estimated
historical cost and are depreciated using the straight-
line method over their estimated useful lives.
Depreciation on contributed assets is also charged to
operations. Their estimated useful lives are as follows:
Assets
Furniture and
Equipment
Distribution and
Collection System
C. Basis of Accounting
Estimated
Useful Lives
10 years
40 years
Basis of accounting refers to when revenues and expenditures or
expenses are recognized in the accounts and reported in the
financial statements. Basis of accounting relates to the timing
of the measurements made, regardless of the measurement focus
applied.
Governmental Funds are accounted for using the modified accrual
basis of accounting. Their revenue is recognized when it becomes
measurable and available. Substantially all sources of revenue
are accrued except special assessments which are recognized when
received in cash and tax revenue which is recognized when received
in cash or within sixty days after year end.
Expenditures are generally recognized under the modified
accrual basis of accounting when the related fund liability
is incurred. Exceptions to this general rule include: (1)
' principal and interest on long -term debt which are recognized when
due.
Proprietary Funds are accounted for using the accrual basis of
accounting. Their revenue is recognized when it is earned and
expenses are recognized when they are incurred.
-9-
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CITY OF SHOREWOOD, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1988
Note 1: Summary of Significant Accounting Policies - continued
D. Budgets and Budgetary Data
The City's budgeting procedures are as follows:
The City Clerk submits to the City Council a proposed
operating budget for the fiscal year commencing the
following January 1. The operating budget includes
proposed expenditures and the means of financing them.
Budgets for the General Fund are adopted on a basis
consistent with generally accepted accounting principles
(GAAP). Budgeted amounts shown in the financial statements
are as originally adopted by the City Council. Unencumbered
appropriations lapse at year end.
E. Accumulated Unpaid Vacation and Sick Pay
Accumulated unpaid vacation has been accrued in the Enterprise
Funds and recognized as an expense when earned. In the Governmental
Funds, the liability has been recorded in the general long -term
debt account group and is recognized as an expenditure when paid.
Sick leave may be accumulated but is not payable upon termination
from City employment and therefore no liability is reported at
year end.
F. Total Memorandum Only
Total columns on the combined financial statements are captioned
"memorandum only" to indicate that they are presented only to
facilitate analysis. Data in these columns does not present
financial position, results of operations, or changes in financial
position in conformity with generally accepted accounting
principles. Neither is such data comparable to a consolidation.
Interfund eliminations have not been made in the aggregation of
this data.
Note 2: Compliance and Accountability
' The following funds had fund balance deficits at year end:
Deficit
' Fund Amount
Debt Service Fund
1973 Water Improvement $ 10 697
' Capital Projects Fund
Southeast Project 73 119
Enterprise Fund
Water Fund 273 314
u
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'
CITY OF SHOREWOOD, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1988
Note 3: Detail on Accounts
A. Cash and Temporary Investments
Cash balances from all funds are pooled and invested, to the
'
extent available, in certificates of deposit and other authorized
investments. Investments are carried at cost which approximates
market value. Earnings from such investments are allocated on the
'
basis of applicable participation by each of the funds.
In accordance with Minnesota Statutes, the City maintains deposits
at those depository banks authorized by the City Council.
'
Minnesota Statutes require that all City deposits be protected by
insurance, surety bond, or collateral. The market value of
collateral pledged must equal 110% of the deposits not covered by
'
insurance or bonds (140% 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 government obligations. Minnesota Statutes require
that securities pledged as collateral be held in safekeeping by
the City treasurer or in a financial institution other than that
furnishing the collateral. At December 31, 1988, the City did
'
have sufficient collateral to secure its deposits.
r
Cash and investment balances are summarized as follows:
Bank Carrying
Balances Amount
(1) Cash and certificates of deposit
insured or collateralized by securities
held by the City or its agent in the
City's name $3 512 832 $3 436 863
(2) Uncollateralized cash and certificates
of deposit - -
Total
$3 512 832 $3 436 863
Investments
The City also invests idle funds as authorized by Minnesota
Statutes, as follows:
(a) Direct obligation or obligations guaranteed by the United
States or its agencies.
' (b) Shares of investment companies registered under the
Federal Investment Company Act of 1940 and whose only
investments are in securities described in (a) above.
' (c) Bankers acceptances of United States Banks eligible for
purchase by the Federal Reserve System.
=11-
'
CITY OF SHOREWOOD, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1988
Note 3: Detail on Accounts - continued
(d) Commercial paper issued by United States corporations or
their Canadian subsidiaries, of the highest quality, and
'
maturing in 270 days of less.
(e) Repurchase or reverse repurchase agreements with banks
that are members of the Federal Reserve System with
'
capitalization exceeding $10,000,000, a primary reporting
dealer in U.S. government securities to the Federal
Reserve Bank of New York, or certain Minnesota securities
broker- dealer.
Balances at December 31, 1988:
Securities Credit Risk Category Carrying
Type 1 2 3 Amounts
'
Commercial Paper $ - $ - $499 932 $499 932
The City's investments are categorized above to give an indication of
'
the level of risk assumed at year end. Category 1 includes investments
that are incurred or registered or for which the securities are held
'
by the City or its agent in the City's name. Category 2 includes
uninsured and unregistered investments for which the securities are
held by the broker's or dealer's trust department or agent in the
City's name. Category 3 includes uninsured and unregistered
'
investments for which the securities are held by the broker or dealer,
or by its trust department or agent but not in the City's name.
'
B. Property Taxes
The City Council annually adopts a tax levy and certifies it to
the County for collection. The County is responsible for
'
collecting all property taxes for the City. These taxes attach an
enforceable lien on taxable property within the City on January 1
and are payable by the property owners in May and October each
year. The taxes are collected by the County Treasurer and tax
'
settlements are made to the City three or four times each year.
Taxes payable on homestead property, as defined by State Statutes,
'
are partially reduced by a homestead credit. These credits are
paid to the City by the State of Minnesota in lieu of taxes levied
against homestead property. The State remits this credit in two
'
equal installments in July and December each year. Another tax
credit referred to as a small business credit also reduces the
taxes levied and is payable along with the homestead credit.
Allowances are provided for the amount of delinquent taxes
receivable, which are not remitted to the City within sixty days
after the year end. This allowance is reported as deferred
'
revenue.
-12-
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CITY OF SHOREWOOD, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1988
Note 3: Detail on Accounts - continued
C. Special Assessments Receivable
Special assessments are recognized as a receivable and deferred
revenue when the assessments are certified to the County for collection.
Special assessments are recognized as revenue when received in cash.
D. Inventory
The inventories of the Proprietary Funds are stated at the lower
of cost or market on the first -in, first -out basis.
E. Property, Plant and Equipment
A summary of Proprietary Fund Type property, plant and equipment
at December 31, 1988 follows:
Liquor Funds
Water Sewer Store I Store II Total
Fixtures and
equipment $ 13 303 $ 21 786 $ 24 917 $ 8 804 $ 68 810
Collection and
distribution systems 1 926 208 411 989 - - 2 338 197
Total 1 939 511 433 775 24 917 8 804 2 407 007
Less accumulated
depreciation (237 446) (129 725) (24 917) (5 782) (397 870)
Net $1 702 065 $304 050 $ - $ 3 022 $2 009 137
A summary of general fixed assets (unaudited) and changes are as
follows:
-13-
Balance
Balance
Beginning
End
of Year
Additions
of Year
Land and
buildings
$ 747 624
$347 566
$1 095 190
Furniture and
equipment
539 114
159 671
698 785
Total
$1 286 738
$507 237
$1 793 975
-13-
' CITY OF SHOREWOOD, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1988
Note 3: Detail on Accounts - continued
F. Long -term Debt
' The following is a summary of bond transactions of the City for
the year ended December 31, 1988:
Bonds payable, end of year $4 435 000 $ 95 000 $4 530 000
' Bonds payable at December 31, 1988 are comprised of the following
types of issues:
' General Long -term Debt
$875,000 General Obligation Improvement Refunding
' Bonds dated April 1, 1987 are payable in annual
principal installments of $60,000 to $65,000
through February 1, 2001 together with interest
at 4.3 to 6.6 %. $ 810 000
w
$1,450,000 General Obligation Temporary Improvement
General
Bonds dated July 1, 1987 are payable in one
'
Long -term
Revenue
Total
along with 5.3% interest which is payable semi -
Bonds payable, beginning
annually to that date.
1 450 000
of year
$4 870 000
$105 000
$4 975 000
Bonds retired
435 000
10 000
445 000
1991 together with interest at 5.0 %.
75 000
$2,300,000 General Obligation Sewer Improvement Bonds
Bonds payable, end of year $4 435 000 $ 95 000 $4 530 000
' Bonds payable at December 31, 1988 are comprised of the following
types of issues:
' General Long -term Debt
$875,000 General Obligation Improvement Refunding
' Bonds dated April 1, 1987 are payable in annual
principal installments of $60,000 to $65,000
through February 1, 2001 together with interest
at 4.3 to 6.6 %. $ 810 000
w
$1,450,000 General Obligation Temporary Improvement
Bonds dated July 1, 1987 are payable in one
'
principal installment of $1,450,000 on July 1, 1990
along with 5.3% interest which is payable semi -
annually to that date.
1 450 000
$415,000 General Obligation Sewer Improvement Bonds
dated December 1, 1971 are payable in annual
principal installments of $25,000 through December 1,
1991 together with interest at 5.0 %.
75 000
$2,300,000 General Obligation Sewer Improvement Bonds
'
dated June 1, 1972 are payable in annual principal
installments of $130,000 through June 1, 1992
together with interest at 5.5 to 5.6 %.
520 000
'
$1,600,000 General Obligation Sewer Improvement Bonds
are payable in annual principal installments of
$90,000 through November 1, 1992 together with
'
interest at 5.3 to 5.4 %.
360 000
$80,000 General Obligation Water Improvement Bonds
'
dated July 1, 1973 are payable in annual principal
installments of $5,000 through July 1, 1991 together
with interest at 5.5 %.
15 000
-14-
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
CITY OF SHOREWOOD, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1988
Note 3: Detail on Accounts - continued
$1,250,000 General Obligation Improvement Bonds
dated January 1, 1974 are payable in annual
principal installments of $30,000 to $70,000
through January 1, 1994 together with interest
at 5.4 to 5.7 %. $ 270 000
$985,000 General Obligation Improvement Bonds
dated August 1, 1986 are due in annual principal
installments of $65,000 to $70,000 through
February 1, 2002 together with interest at 5.75
to 7.90 %. 935 000
Total General Long -term Debt $4 435 000
Revenue Bonds
$140,000 General Obligation Water Revenue Bonds of
1980 dated September 1, 1980 are payable in annual
principal installments of $10,000 to $15,000 through
September 1, 1996 together with interest at 7.75 to
8.5 %. $ 95 000
The annual requirements to amortize all
debt
outstanding as of
December 31, 1988,
including interest payments
totalling
$1,101,491
are as follows:
Year Ending
General
December 31
Long -term
Revenue
Total
1989
$ 588 160
$ 17
925
$ 606
085
1990
2 132 078
17
125
2 149
203
1991
580 373
16
325
596
698
1992
525 078
15
500
540
578
1993
245 680
14
675
260
355
Thereafter
1 425 922
52
650
1 478
572
Total
$5 497 291
$134
200
$5 631
491
The amount available for debt service, in the Debt Service Funds, is
$2,677,309. Future tax levies and special assessments will be the
primary source of revenue to retire the bonds.
-15-
CITY OF SHOREWOOD, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1988
Note 3: Detail on Accounts - continued
On April 29, 1987 the City issued general obligation refunding bonds
in the amount of $875,000 to advance refund $1,250,000 outstanding
1984 general obligation bonds. The proceeds of the refunding issue
plus additional cash from the debt service have been placed in an
irrevocable escrow account and have been invested in U.S. Government
obligations. The maturities of these investments coincide with the
principal and interest payment dates of the refunded bonds and have
been certified to be sufficient to pay all principal and interest on
the refunded bonds when due, as required by applicable laws.
Accordingly, the original refunded bonds have been removed and the new
advance refunding bonds are reported on the financial statements. The
City remains contingently liable in the remote possibility that the
escrow account is insufficient to pay the refunded bonds.
G. Fund Equity
Fund equity balances are classified as follows to reflect the
limitations and restrictions of the respective funds:
Proprietary Funds Contributed Capital - This balance represents the
cost of property contributed to the Proprietary Funds by other City
funds. Changes occurring in this account during the year were as
follows:
Sewer Water
Fund Fund Total
Balance, beginning of year $353 540 $ 931 810 $1 285 350
Additions 58 449 937 661 996 110
Balance, end of year $411 989 $1 869 471 $2 281 460
Investment in General Fixed Assets represents the City's equity in
its general fixed assets.
Reserved fund balance represents amounts restricted by provisions
of the various bonds which have been issued.
Unreserved and undesignated fund balance represents resources
available to meet future years' expenditures.
-16-
0
0
CITY OF SHOREWOOD, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1988
Note 4: Segment Information for Proprietary Funds
The City provides services which are accounted for in the Enterprise
Funds. The segment information for these Enterprise Funds for the
year ended December 31, 1988, is as follows:
Note 5: Statutory Debt Limit
In accordance with Minnesota Statutes, the City may not incur or be
subject to net debt in excess of two percent of its market value. Net
debt is payable solely from ad valorem taxes and, therefore, excludes
debt financed partially or entirely by special assessments, enterprise
fund revenues or tax increments.
Note 6: Defined Benefit Pension Plan
A. Plan Description
All full -time and certain part -time employees of the City of
Shorewood are covered by a defined benefit pension plan administered
by the Public Employees Retirement Association of Minnesota
(PERA). PERA administers the Public Employees Retirement Fund
(PERF) which is a cost - sharing multiple - employer Public Employee
Retirement Fund. The payroll for employees covered by the PERA
plan for the year ended December 31, 1988 was $416,456, the City's
total payroll was $484,797.
All full -time employees and certain part -time employees are
required to participate in PERA plans. PERF members belong to
either the Coordinated plan or the Basic plan. Coordinated
members are covered by Social Security and Basic members are not.
PERA plans provide pension benefits, deferred annuity, and death
and disability benefits. Benefits are established by State
Statute.
-17-
Liquor
Funds
Water
Sewer
Store I
Store
II
Total
Gross profit and
operating revenue
$ 158
474
$501
037
$101
953
$138
214
$ 899
678
Depreciation expense
25
083
10
781
28
552
36
444
Operating income (loss)
(2
506)
9
672
18
779
34
865
60
810
Operating transfer out
-
-
5
300
10
700
16
000
Net income after transfers
5
316
29
454
17
218
27
298
79
286
Contributed capital
1 869
471
411
989
-
-
2 281
460
Net working capital
(12
382)
450
344
90
372
133
975
662
309
Total equity
1 596
157
754
394
90
372
136
997
2 577
920
Note 5: Statutory Debt Limit
In accordance with Minnesota Statutes, the City may not incur or be
subject to net debt in excess of two percent of its market value. Net
debt is payable solely from ad valorem taxes and, therefore, excludes
debt financed partially or entirely by special assessments, enterprise
fund revenues or tax increments.
Note 6: Defined Benefit Pension Plan
A. Plan Description
All full -time and certain part -time employees of the City of
Shorewood are covered by a defined benefit pension plan administered
by the Public Employees Retirement Association of Minnesota
(PERA). PERA administers the Public Employees Retirement Fund
(PERF) which is a cost - sharing multiple - employer Public Employee
Retirement Fund. The payroll for employees covered by the PERA
plan for the year ended December 31, 1988 was $416,456, the City's
total payroll was $484,797.
All full -time employees and certain part -time employees are
required to participate in PERA plans. PERF members belong to
either the Coordinated plan or the Basic plan. Coordinated
members are covered by Social Security and Basic members are not.
PERA plans provide pension benefits, deferred annuity, and death
and disability benefits. Benefits are established by State
Statute.
-17-
CITY OF SHOREWOOD, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1988
Note 6: Defined Benefit Pension Plan - continued
'
B. Contributions Required and Made
Minnesota Statutes Chapter 353 provide statutory authority for
employer and employee contribution rates and provide required
dates for achieving full funding. The City makes annual
contributions to the pension plans equal to the amount required by
'
State Statutes. As part of the annual actuarial valuation, PERA's
actuary determines the sufficiency of the statutory contribution
rates towards meeting the required full funding deadline. The
actuary compares the actual contribution rate to a "required"
'
contribution rate. Current statutory contribution rates and
actuarially required contribution rates for the plans are as
follows:
'
Statutory Rates Required
Employee Employer Rates
'
Public Employees Retirement Fund:
Basic Plan 8% 102% 9.46%
Coordinated Plan 4% 4k% 5.11%
'
Total contributions made during fiscal year 1988 amounted to
$34,358 of which $17,700 was made by the City and $16,658 was made
by employees.
C. Funding Status and Progress
The "pension benefit obligation" is a standardized disclosure
'
measure of the present value of pension benefits, adjusted for the
effects of projected salary increases and step -rate benefits,
estimated to be payable in the future as a result of employee
service to date. The measure, which is the actuarial present
value of credited projected benefits, is intended to help users
'
assess PERA's funding status on a going - concern basis, assess
progress made in accumulating sufficient assets to pay benefits
when due, and make comparisons among Public Employee Retirement
Systems and employers. PERA does not make separate measurements
of assets and pension benefit obligations for individual
'
employers.
The pension benefit obligation as of June 30, 1988 is shown below:
PERF
1
(In Millions)
Total pension benefit obligations $3 334
Net assets available for
'
benefits, at market 2 749
Unfunded (excess) pension
benefit obligation $ 585
-18-
CITY OF SHOREWOOD, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1988
Note 6: Defined Benefit Pension Plan - continued
The measurement of the pension benefit obligation is based on an
actuarial valuation as of June 30, 1988. Net assets available to
pay pension benefits were valued as of June 30, 1988.
The City's contribution for the year ended December 31, 1988 to
PERA plans represented .03 percent of the total contributions
required of all participating entities.
Ten -year historical trend information is presented in PERA's State
PERS Comprehensive Annual Financial Report for the year ended June
30, 1988. This information is useful in assessing the pension
plan's accumulation of sufficient assets to pay pension benefits
as they become due.
D. Related Party Investments
During fiscal year 1988, and as of June 30, 1988, PERA held no
securities issued by the City or other related party.
-19-
CITY OF SHOREWOOD, MINNESOTA
GENERAL FUND
BALANCE SHEET
DECEMBER 31, 1988
Assets
Cash and investments
Cash on hand
Receivables
Taxes
Accounts
Accrued interest
Contract
Total assets
Liabilities and Fund Balance
Liabilities
Accounts and contracts payable
Salaries payable
Refundable deposits payable
Deferred revenue
Total liabilities
Fund balance
Unreserved - undesignated
Total liabilities and
fund balance
1
1
1
1
-20-
$ 798 422
100
76 577
25 102
15 758
94 708
$1 nin 667
$ 43 963
16 133
19 500
159 473
239 069
$1 010 667
CITY
OF SHOREWOOD, MINNESOTA
GENERAL FUND
STATEMENT OF REVENUES,
EXPENDITURES AND
CHANGES
IN FUND
BALANCE
BUDGET AND ACTUAL
'
YEAR
ENDED DECEMBER 31,
1988
Variance
'
Budget_
Actual
Favorable
(Unfavorable)
Revenues
General property taxes
General property taxes
$1 274
189 $1
008
874
$(265
315)
Fiscal disparities
55
387
55
387
Forfeit tax sales
-
3
039
3
039
'
Penalties and interest
-
19
799
19
799
Total
1 274
189 1
087
099
(187
090)
'
Licenses and permits
Business
8
800
8
681
(119)
Nonbusiness
136
600
321
727
185
127
'
Total
145
400
330
408
185
008
Intergovernmental
State
Local government aid
160
088
160
088
-
Property tax credits
-
177
760
177
760
Other
-
3
160
3
160
County
Road
18
500
24
992
6
492
tRecycling
5
040
2
288
(2
752)
Total
183
628
368
288
184
660
'
Charges for services
General government
15
000
5
046
(9
954)
Streets and highways
900
1
800
900
Refuse
3
400
3
680
280
Parks and recreation
400
(400)
'
Total
19
700
10
526
(9
174)
Fines
75
000
91
385
16
385
'
Other revenue
Interest on investments
35
000
50
164
15
164
Sale of property
-
16
169
16
169
O
Special assessment
200
200
-
Other
21
319
13909
(7
410)
'
Total
56
519
80
442
23
923
Total revenues
1 754
436 1
968
148
213
712
-21-
CITY OF SHOREWOOD, MINNESOTA
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL - CONTINUED
YEAR ENDED DECEMBER 31, 1988
Expenditures
General government
Mayor and Council
Personal services
Supplies
Other services and charges
Total
Administrator
Personal services
Supplies
Other services and charges
Capital outlay
Total
Finance
Personal services
Supplies
Other services and charges
Capital outlay
Total
Professional services
Supplies
Other services and charges
Total
Planning and zoning
Personal services
Supplies
Other services and charges
Capital outlay
Total
Municipal building
Supplies
Other services and charges
Capital outlay
Total
1
1
1
Variance
Favorable
Budget_
$ 9
626
$ 9
626
$
-
450
191
259
29
150
16
708
12
442
39
226
26
525
12
701
47
524
51
096
(3
572)
100
-
100
5
385
6
697
(1
312)
210
160
50
53
219
57
953
(4
734)
74
775
58
608
16
167
3
270
3
068
202
14
085
23
941
(9
856)
15
950
10
193
5
757
108
080
95
810
12
270
300
420
(120)
88
650
102
681
(14
031)
88
950
103
101
(14
151)
39
910
45
013
(5
103)
875
819
56
1
205
767
438
5
500
-
5
500
47
490
46
599
891
3
995
7
486
(3
491)
91
346
82
867
8
479
155
330
149
911
5
419
250
671
240
264
10
407
-22-
CITY OF SHOREWOOD, MINNESOTA
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL - CONTINUED
YEAR ENDED DECEMBER 31, 1988
Expenditures - continued
General government
Other general government services
Personal services
Supplies
Other services and charges
Capital outlay
Total
Total general government
Public safety
Police protection
Other services and charges
Capital outlay
Total
Fire protection
Other services and charges
Protective inspection
Personal services
Supplies
Other services and charges
Capital outlay
Total
Total public safety
Public works
General maintenance
Personal services
Supplies
Other services and charges
Capital outlay
Total
Garage
Supplies
Other services and charges
Capital outlay
Total
Budget Actual
$ 54
816
$ 52
919
8
200
8
704
2
205
4
342
13
233
10
706
78 454 76 671
346 723
346 723
343 172
344714
Variance
Favorable
$ 1 897
( 504)
(2 137)
2 527
1 783
19 167
3 551
(1 542)
2 009
68
395
68
414
(19)
20
273
22
069
(1
796)
500
483
17
63
350
86
791
(23
441)
1
404
1
246
158
85
527
110
589
(25
062)
500
645
523
717
(23
072)
86
178
85
537
641
29
000
25
757
3
243
6
315
6
764
(449)
162
000
135
824
26
176
283
493
253
882
29
611
2
400
1
350
1
050
7
300
8
106
(806)
250
-
250
9
950
9
456
494
-23-
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
CITY OF SHOREWOOD, MINNESOTA
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL — CONTINUED
YEAR ENDED DECEMBER 31, 1988
Expenditures — continued
Public works
Streets and roadways
Personal services
Supplies
Other services and charges
Capital outlay
Total
Snow and ice removal
Personal services
Supplies
Total
Traffic control
Personal services
Supplies
Other services and charges
Total
Sanitation and waste removal
Personal services
Other services and charges
Total
Tree maintenance
Personal services
Other services and charges
Total
Total public works
Parks and recreation
Personal services
Supplies
Other services and charges
Total parks and recreation
Total expenditures
Variance
Favorable
Budget
$ 51
095
$ 60
080
$ (8
985)
50
000
56
460
(6
460)
1
500
985
675
150
825
200
000
197
655
2
345
302
595
314
870
(12
275)
15 648
25 648
3 908
3 700
23 308
6 015
15 474
8 692
24 166
7 176
19 026
26 202
4 265
21
715
16
410
10
840
9
855
10
050
15
149
174
1 308
1 482
3 908
(3 476)
(3 326)
(2 894)
1 750
3 555
5 305
985
(5 099)
(4 114)
687
599
669
990
17
609
43
579
41
594
1
985
7
150
7
684
(534)
10
375
8
686
1
689
61
104
57
964
3
140
1 915
438
1 898
594
16
844
—24—
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
CITY OF SHOREWOOD, MINNESOTA
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL - CONTINUED
YEAR ENDED DECEMBER 31, 1988
Excess revenues (expenditures)
Other financing sources
Operating transfer in
Excess revenues and other
financing sources over
(under) expenditures
Fund balance, January 1
Fund balance, December 31
Budget_ Actual
$ (161 002) $ 69 554
16 000
-25-
16 000
85 554
686 044
$ 771 598
Variance
Favorable
(Unfavorable)
$ 230 556
$ 230 556
CITY OF SHOREWOOD, MINNESOTA
DEBT SERVICE FUNDS
COMBINING BALANCE SHEET
DECEMBER 31, 1988
Well
1984
Shorewood
1971 and
Improvement
Oaks
1972
(1987
(1987
Temporary
Sewer
Refunding)
Bond Issue)
Improvement
Assets
Cash and investments
$673 314
$
288
721
$1
087
463
Accrued interest receivable
12 580
5
491
19
853
Special assessments receivable
Delinquent
—
—
11
920
Deferred
105 750
1
202
546
441
472
Total assets
$791 644
$1
496
758
$1
560
708
Liabilities and Fund Balance
Liabilities
Deferred revenue
$105 750
$1
202
546
$
449
717
Fund balance
Reserved for debt service
685 894
294
212
1
110
991
Total liabilities and
fund balance
$791 644
$1
496
758
$1
560
708
Well
I
1
1
1
1
1
1
$ 6
170
Southeast
330
$ 426
1973
1974
Water
825
(10
Water
Sewer
(1986
578
981
Improvement
Improvement
Improvement)
Total
527)
$142
$(10 697)
$ 10 521
$ 568 445
$2 617
767
—
2 010
10 399
50
333
—
6 739
2 010
20
669
6 170
122 988
424 439
2 303
365
$ (4 527)
$142 258
$1 005 293
$4 992
134
$ 6
170
$124
330
$ 426
312
$2
314
825
(10
697)
17
928
578
981
2
677
309
$ (4
527)
$142
258
$1 005
293
$4
992
134
-26—
CITY OF SHOREWOOD, MINNESOTA
DEBT SERVICE FUNDS
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE
YEAR ENDED DECEMBER 31, 1988
Revenues
Special assessments
Interest on investments
Total revenues
Expenditures
Principal
Interest and service charges
Total expenditures
Excess revenues (expenditures)
Fund balance, January 1
Fund balance, December 31
1984
Shorewood
1971 and
Improvement
Oaks
1972
(1987
(1987 Temporary
Sewer
Refunding)
Bond
Issue)
Improvement
$257 645
$351
512
$ 255
361
34 320
9
248
70
386
291 965
360
760
325
747
65 000
-
245
000
49 206
76
850
60
349
114 206
76
850
305
349
177 759
283
910
20
398
508 135
10
302
1 090
593
$685 894
$294
212
$1 110
991
-27-
5
000
Southeast
000
1973
1974
Water
721
Water
Sewer
(1986
721
Improvement
Improvement
Improvement)
Total
(6
$ 2 824
$ 60 371
$276 988
$1 204 701
-
5 071
28 402
147 427
2 824
65 442
305 390
1 352 128
5
000
70
000
1
692
18
721
6
692
88
721
(3
868)
(23
279)
(6
829)
41
207
$(10
697)
$ 17
928
50
000
435
000
67
818
274
636
117
818
709
636
187
572
642
492
391
409
2 034
817
$578 981 $2 677 309
-27-
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
CITY OF SHOREWOOD, MINNESOTA
CAPITAL PROJECTS FUNDS
COMBINING BALANCE SHEET
DECEMBER 31, 1988
Assets
Cash and investments
Accrued interest receivable
Total assets
Liabilities and Fund Balance
Liabilities
Accounts and contracts
payable
Fund balance
Unreserved
Total liabilities and
fund balance
Park Capital Southeast Shorewood
Improvement Project Oaks Total
$ 47
880
$08
873)
$128
715
$137
722
888
—
1
754
2
642
$ 48
768
$(38
873)
$130
469
$140
364
$ 6
421
$ 34
246
$ 58
812
$ 99
479
42
347
(73
119)
71
657
40
885
$ 48
768
$08
873)
$130
469
$140
364
—28—
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
CITY OF SHOREWOOD, MINNESOTA
CAPITAL PROJECTS FUNDS
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE
YEAR ENDED DECEMBER 31, 1988
Revenues
Charges for services
Donations
Interest on investments
Park dedication fees
Total revenues
Expenditures
Professional services
Construction costs
Total expenditures
Excess revenues
(expenditures)
Fund balance, January 1
Fund balance, December 31
Park
Capital
Southeast
Shorewood
Improvement
Project
Oaks
Total
$
6
$
—
$
—
$
6
1
000
—
—
1
000
5
301
6
943
9
102
21
346
99
102
—
—
99
102
105
409
6
943
9
102
121
454
29
212
23
114
12
596
64
922
165
136
545
378
86
671
797
185
194
348
568
492
99
267
862
107
(88
939)
(561
549)
(90
165)
(740
653)
131
286
488
430
161
822
781
538
$ 42
347
$03
119)
$ 71
657
$ 40
885
ME
CITY OF SHOREWOOD, MINNESOTA
PROPRIETARY FUND TYPES
COMBINING BALANCE SHEET
DECEMBER 31, 1988
Assets
Current assets
Cash and investments
Cash on hand
Receivables
Accounts
Accrued interest
Special assessment
Delinquent
Deferred
Inventories, at cost
Prepaid expenses
Total current assets
Property and equipment, at cost
Less accumulated depreciation
Total property and equipment
Other assets
Bond discount, net of amortization
Total assets
Liabilities and Fund Equity
Current liabilities
Accounts and contracts payable
Accrued salaries payable
Accrued interest payable
Deferred revenue
Total current liabilities
Long -term liabilities
Bonds payable
Total liabilities
Fund equity
Contributed capital
Retained earnings - unreserved
Total fund equity
Total liabilities and fund equity
-30-
Water Sewer
Fund Fund
$ (42 054) $314 902
33 958 132 268
- 5 263
$1 707 044 $760 730
$ 7428 $ 6311
61 25
931 -
7 467
15 887 6 336
110 887 6 336
1 869
384
411
497
7
467
342
-
3
750
3
750
3
505
456
680
1 939
511
433
775
(237
446)
(129
725)
1 702
065
304
050
$1 707 044 $760 730
$ 7428 $ 6311
61 25
931 -
7 467
15 887 6 336
110 887 6 336
1 869
471
411
989
(273
314)
342
405
1 596
157
754
394
$1 707
044
$760
730
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
Liquor Fund
Store I Store II Total
$ 58
965
$ 51
071
$ 382
884
$112 359 $166 516 $2 746
600
600
1
200
307
323
166
856
1
137
874
7
274
-
-
881
-
-
7
467
48
505
106
831
155
336
2
845
3
795
14
140
112
359
163
494
736
038
24
917
8
804
2 407
007
(24
917)
(5
782)
(397
870)
-
3
022
2 009
137
- - 1 474
$112 359 $166 516 $2 746 649
$ 20 946 $ 26 817 $ 61 502
1 041 2 702 3 829
- - 931
7 467
21 987 29 519 73 729
- - 95 000
21 987 29 519 168 729
- - 2 281
460
90 372 136 997 296
460
90 372 136 997 2 577
920
$112 359 $166 516 $2 746
649
-30-
CITY OF SHOREWOOD, MINNESOTA
PROPRIETARY FUND TYPES
COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN RETAINED EARNINGS
YEAR ENDED DECEMBER 31, 1988
Expenses
Personal services
4
Water
Sewer
185
Supplies
Fund
Fund
Sales
277
$ -
$ -
Cost of
sales
-
Depreciation
25
Gross profit
-
-
Charges
for services
153 177
485 337
Permits
and connection fees
5 297
15 700
64
Gross profit and revenues
158 474
501 037
Expenses
Personal services
4
713
13
185
Supplies
21
498
1
277
Repairs and maintenance
19
531
5
169
Depreciation
25
083
10
781
Professional services
18
957
2
671
Contracted services
24
521
64
456
Communication
1
164
-
Insurance - general
4
250
5
320
Water purchases
15
649
-
Utilities
25
198
5
144
Other
416
469
Metropolitan Waste Control
Commission disposal charges
-
382
893
Rent
-
-
Advertising
-
-
Total expenses
160
980
491
365
Operating income
(2
506)
9
672
Other revenues (expenses)
Taxes
16
530
-
Special assessments
-
4
028
Property tax credits
2
725
-
Interest income
-
15
708
Other income
2
46
Interest expense
(11
435)
-
Other expenses
-
-
Total other revenues (expenses)
7
822
19
782
Net income before transfers
5
316
29
454
Other financing uses
Operating transfers out
-
-
Net income
5
316
29
454
Retained earnings, January 1
(278
630)
312
951
Retained earnings, December 31
$(273
314)
$342
405
-31-
1
1
1
1
1
1
1
1
1
-31-
Liquor
Fund
Store I
Store II
Total
$483
962
$664
352
$1 148
314
382
009
526
138
908
147
101
953
138
214
240
167
-
-
638
514
-
-
20
997
101
953
138
214
899
678
55
104
60
720
133
722
741
1
555
25
071
-
-
24
700
28
552
36
444
1
613
1
613
24
854
1
560
1
109
91
646
-
-
1
164
5
050
5
342
19
962
-
-
15
649
4
937
5
581
40
860
955
1
202
3
042
-
-
382
893
10
670
23
071
33
741
2
516
2
604
5
120
83
174
103
349
838
868
18
779
34
865
60
810
-
-
16
530
-
-
4
028
-
-
2
725
4
160
3
175
23
043
3
-
51
-
-
(11
435)
(424)
(42)
(466)
3
739
3
133
34
476
22
518
37
998
95
286
(5
300)
(10
700)
(16
000)
17
218
27
298
79
286
73
154
109699
217
174
$ 90
372
$136
997
$ 296
460
-31-
CITY OF SHOREWOOD, MINNESOTA
PROPRIETARY FUND TYPES
COMBINING STATEMENT OF CHANGES IN FINANCIAL POSITION
YEAR ENDED DECEMBER 31, 1988
Water Sewer Liquor
Fund_ Fund_ Fund
Sources of working capital
Operations
Net income after transfers
Add depreciation, an expense
not requiring working capital
Working capital from
operations
Contributions of capital
Decrease in receivables from
other funds
Total sources of working
capital
Uses of working capital
Acquisition of property and
equipment, net
Bond discount
Total uses of working
capital
Increase (decrease) in working
capital
Changes in components of
working capital
Increase (decrease) in
current assets
Cash and investments
Accounts receivable, net
Other receivable
Accrued interest
Inventory
Prepaid expenses
(Increase) decrease in
current liabilities
Accounts and contracts
payable
Accrued salaries payable
Accrued interest payable
Deferred revenue
Current portion of long -term
debt
Increase (decrease) in working
capital
Total
$ 5
316
$ 29
454
$ 44 516
$ 79
286
25
083
10
781
580
36
444
(7
(87)
10 000
497
740
1
150.
30
399
40
235
45 096
115
730
937
661
58
449
-
996
110
6
152
98
207
-
104
359
974
212
196
891
45 096
1 216
199
994
398
60
801
678
1 055
877
1
659
-
-
1
659
996
057
60
801
678
1 057
536
$(21 845) $136 090 $ 44 418 $ 158 663
$(44 151) $102 003 $ 28 301 $ 86 153
9
832
28
881
191
38
904
7
851
1
780
-
9
631
(7
(87)
10 000
497
740
1
150.
7 634 3 806
-
400
-
13 111
13
111
3
750
(4
705)
(1 731)
(2
686)
(22
805)
128
456
40 612
146
263
(718)
354 3 887
3
523
76
1 143 (81)
1
138
(931)
- -
(931)
(7 467)
- -
(7
467)
10 000
6 137 -
16
137
960
7 634 3 806
12
400
$(21 845) $136 090 $ 44 418 $ 158 663
-32-
t
I!
fl
0
1
1
ABDO, ABDO do EiCK
CERTIFIED PUBLIC ACCOUNTANTS
1060 NORTHLAND PLAZA, 3800 WEST 80th STREET
MINNEAPOLIS, MINNESOTA 66431
TELEPHONE 612 -836 -9090
FAX 612 - 896 -3620
Member of American Offices In:
Institute of Certified Bloomington
Public Accountants Mankato
Owatonna
Honorable Mayor and City Council
Shorewood, Minnesota
We have examined the general purpose financial statements of the City of
Shorewood, Minnesota, for the year ended December 31, 1988, and have issued our
report thereon dated April 7, 1989. As part of our examination, we made a
study and evaluation of the internal control systems of the City of Shorewood,
Minnesota, to the extent we considered necessary to evaluate the systems as
required by generally accepted auditing standards; the standards for financial
and compliance audits contained in the U.S. General Accounting Office Standards
for Audit of Governmental Organizations, Programs, Activities, and Functions.
For the purpose of this report, we have classified the significant internal
accounting controls in the following categories:
Cash Receipts
Cash Disbursements
Payroll
Cash and Investments
General Ledger
Our study included all of the control categories listed above. The purpose of
our study and evaluation was to determine the nature, timing, and extent of the
auditing procedures necessary for expressing an opinion on the entity's
financial statements. Our study and evaluation was more limited than would be
necessary to express an opinion on the system of internal control taken as a
whole or on any of the categories of controls identified above.
The management of the City of Shorewood, Minnesota, is responsible for
establishing and maintaining a system of internal accounting control. In
fulfilling this responsibility, estimates and judgments by management are
required to assess the expected benefits and related costs of control
procedures. The objectives of a system are to provide management with
reasonable, but not absolute, assurance that assets are safeguarded against
loss from unauthorized use or disposition, and that transactions are executed
in accordance with management's authorization and recorded properly to permit
the preparation of financial statements in accordance with generally accepted
accounting principles. Because of inherent limitations in any system of
internal accounting control, errors or irregularities may nevertheless occur
and not be detected. Also, projection of any evaluation of the system to
future periods is subject to the risk that procedures may become inadequate
because of changes in conditions or that the degree of compliance with the
procedures may deteriorate.
IPage Two
Arno, ABDO & EiCx
CERTIFIED PUBLIC ACCOUNTANTS
Our study and evaluation made for the limited purpose described in the first
paragraph would not necessarily disclose all material weaknesses in the system.
Accordingly, we do not express an opinion on the system of internal accounting
control of the City of Shorewood, Minnesota, taken as a whole or on any of the
categories of controls identified in the first paragraph. However, our study
and evaluation disclosed the following conditions that we believe result in
more than a relatively low risk that errors or irregularities in amounts that
would be material in relation to the financial statements of the City of
1 Shorewood, Minnesota, may occur and not be detected within a timely period.
The City has a limited office staff and therefore has very
' limited segregation of duties.
In addition, we have issued a separate management letter
which contains other discussion items none of which are
' considered material internal control weaknesses.
These conditions were considered in determining the nature, timing and extent
of the audit tests to be applied in our examination of the 1988 financial
statements, and this report does not affect our report on the financial
statements dated April 7, 1989.
This report is intended solely for the use of management, the City Council, and
Office of State Auditor and should not be used for any other purpose. This
restriction is not intended to limit the distribution of this report which upon
' acceptance by the City Council of the City of Shorewood is a matter of public
record.
' April 7, 1989 ABDO, ABDO & EICK
Minneapolis, Minnesota Certified Public Accountants
ABDO, ABDO & EiCK
CERTIFIED PUBLIC ACCOUNTANTS
1060 NORTHLAND PLAZA, 3800 WEST 80th STREET
MINNEAPOLIS, MINNESOTA 55431
' TELEPHONE 612 -835 -9090
FAX 612 -896 -3620
Member of American Offices In:
I institute of Certified Bloomington
Public Accountants Mankato
Owatonna
iHonorable Mayor and City Council
Shorewood, Minnesota
We have examined the general purpose financial statements of the City of
Shorewood, Minnesota, for the year ended December 31, 1988, and have issued our
' report thereon dated April 7, 1989. Our examination was made in accordance
with generally accepted auditing standards; the standards for financial and
compliance audits contained in the Standards for Audit of Governmental
' Organizations, Programs, Activities, and Functions issued by the U.S. General
Accounting Office and the provisions of the Legal Compliance Audit Guide
promulgated by the Legal Compliance Task Force pursuant to Minnesota Statutes
Sec, 6.65. Accordingly, the examination included such tests of the accounting
records and such other auditing procedures as we considered necessary in the
circumstances.
' The management of the City of Shorewood, Minnesota, is responsible for the
City's compliance with laws and regulations. In connection with the examination
referred to above, we selected and tested transactions and records to determine
the City's compliance with laws and regulations; noncompliance with which we
believe could have a material effect on the general purpose financial
statements of the City.
'
The results of our tests, and those
of other auditors, indicate that
for the
items tested, the City of Shorewood,
Minnesota, complied with those
provisions
of the laws and regulations referred
to above. However, with respect
to the
transactions that were not tested by
us, or other auditors, nothing
came to our
'
attention to indicate that the City
of Shorewood, Minnesota, had not
complied
with laws and regulations.
April 7, 1989
Minneapolis, Minnesota
ABDO, ABDO & EICK
Certified Public Accountants