City of fort wayne utilities

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  • CITY OF FORT WORTH, TEXAS FIRE LANE AND FIRE HYDRANT ...
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City of Fort Wayne Wastewater Treatment Plant

B46848
City of Fort Wayne Utilities
A Division of the
City of Fort Wayne, Indiana
Financial Statements FI08
L/26/2
E016
D
December 31, 2015
CITY OF FORT WAYNE UTILITIES
Table of Contents
Page
INDEPENDENT AUDITORS' REPORT 1-2
MANAGEMENT'S DISCUSSION AND ANALYSIS 3-9
FINANCIAL STATEMENTS:
Statement of Net Position ............................................................ 10
Statement of Revenues, Expenses, and Changes in Net Position ........ 11
Statement of Cash Flows ............................................................. 12
Notes to Financial Statements 13-40
REQUIRED SUPPLEMENTARY INFORMATION:
Schedule of Proportionate Share of Net Pension Liability........................... 41
Schedule of Contributions - Pension Plan............................................... 41
Notes to Required Supplementary Information......................................... 42
STATE OF INDIANA
AN EQUAL OPPORTUNITY EMPLOYER STATE BOARD OF ACCOUNTS
302 WEST WASHINGTON STREET
ROOM E418
INDIANAPOLIS, INDIANA 46204-2769
Telephone: (317) 232-2513
Fax: (317) 232-4711
Web Site: sboa
INDEPENDENT AUDITOR'S REPORT
TO: THE OFFICIALS OF THE CITY OF FORT WAYNE UTILITIES, ALLEN COUNTY, INDIANA
Report on the Financial Statements
We have audited the accompanying financial statements of the business-type activities and each
major fund of the City of Fort Wayne Utilities (Utilities), departments of the City of Fort Wayne (City), as of and
for the year ended December 31, 2015, and the related notes to the financial statements, which collectively
comprise the Utilities' basic financial statements as listed in the Table of Contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes the
design, implementation, and maintenance of internal control relevant to the preparation and fair presentation
of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We con-
ducted our audit in accordance with auditing standards generally accepted in the United States of America.
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 involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial statements. The procedures selected depend on the auditor's judgment, including the assess-
ment of the risks of material misstatement of the financial statements, whether due to fraud or error. In
making those risk assessments, the auditor considers internal control relevant to the entity's preparation and
fair presentation of the financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal
control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of significant accounting estimates made by management,
as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the business-type activities and each major fund of the Utilities as of December
31, 2015, and the respective changes in financial position and cash flows, where applicable, thereof and for
the year then ended, in accordance with accounting principles generally accepted in the United States of
America.
INDEPENDENT AUDITOR'S REPORT
(Continued)
Emphasis of Matter
As discussed in Note 1, the financial statements of the Utilities are intended to present the financial
position, the changes in financial position and, where applicable, cash flows of only that portion of the
business-type activities of the City that is attributable to the transactions of the Utilities. They do not purport
to, and do not, present fairly the financial position of the City, as of December 31, 2015, the changes in its
financial position, or where applicable, its cash flows for the year then ended in conformity with accounting
principles generally accepted in the United States of America. Our opinion is not modified with respect to this
matter.
As discussed in Note 12 to the financial statements, the Utilities adopted new accounting guidance,
GASB Statement 68 Accounting and Financial Reporting for Pensions. Our opinion is not modified with
respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
Management's Discussion and Analysis, Schedule of Proportionate Share of the Net Pension Liability, and
Schedule of Contributions as listed in the Table of Contents, be presented to supplement the basic financial
statements. Such information, although not a part of the basic financial statements, is required by the
Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for
placing the basic financial statements in an appropriate operational, economic, or historical context. We have
applied certain limited procedures to the required supplementary information in accordance with auditing
standards generally accepted in the United States of America, which consisted of inquiries of management
about the methods of preparing the information and comparing the information for consistency with manage-
ment's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our
audit of the basic financial statements. We do not express an opinion or provide any assurance on the
information because the limited procedures do not provide us with sufficient evidence to express an opinion or
provide any assurance.
Paul D. Joyce, CPA
State Examiner
June 21, 2016
Management's Discussion and Analysis
Introduction
As management of the City of Fort Wayne Utilities (Utilities), we offer readers of
the Utilities' financial statements, this narrative overview and analysis of the
financial activities of the Utilities for the fiscal year ended December 31, 2015.
We encourage readers to consider the information presented here in conjunction
with additional information that we have furnished in the basic financial
statements and the notes to the basic financial statements.
Financial Highlights
? The Utilities acquired water assets serving approximately 12,500
customers and settled litigation regarding the condemnation of water and
sewer assets serving 9,600 customers. The purchase price of $67 million,
less $16.9 million paid in 2008, was financed through revenue bonds
issued in December 2014.
? The assets and deferred outflow of resources of the Utilities exceeded its
liabilities and deferred inflow of resources (net position) as of December
31, 2015 and 2014 by $538.4 million and $517.0 million, respectively.
? The Utilities' net position increased for the years ended December 31,
2015 and 2014 by $10.4 million before restatement for change in
accounting principle of $11.0 million and $18.6 million before restatement
for change in accounting principle of $0.9 million, respectively.
? The Utilities added new bonded debt and long-term loans payable for
years ended December 31, 2015 and 2014 of $67.4 million and $72.7
million, respectively. The 2015 increase in debt consists of one new
additional SRF pooled loan and additional withdrawals against existing
SRF loans. The 2014 increase in debt consists of one new Water
Revenue Bond, three new Wastewater SRF loans and additional
withdrawals against existing SRF loans.
? The Utilities' net investment in capital assets for the years ended
December 31, 2015 and 2014 increased approximately $32.8 million and
$10.6 million. Significantly, the Utilities continue to meet all 2009-2015
capital investment milestones required by the 2008 Federal Consent
Decree.
? The Utilities adopted GASB 68 and GASB 71, Accounting and Reporting
for Pension in 2015. This change in accounting principle resulted in a
restatement in 2015 of $11.0 million.
3
Overview of the Financial Statements
This discussion and analysis is an introduction to the Utilities' basic financial
statements. The Utilities are governmental entities classified as enterprise funds,
subsets of proprietary funds. When an entity charges a fee to cover the entire
cost of its operation, these services are classified as a proprietary fund. And
more specifically, when an entity is self-supported completely by providing
services to outside customers, it is an enterprise fund. An enterprise fund's
financial statements are comprised of three statements and the accompanying
notes to these statements. The three statements are: 1) statement of net
position, 2) statement of revenues, expenses and changes in net position and 3)
statement of cash flows. The notes provide additional information that is
essential to a full understanding of the data provided in the Utilities' financial
statements. The notes can be found on pages 13-40 of this report.
The Utilities provide water, wastewater, stormwater, and yard waste services.
The Utilities' financial statements have been prepared to reflect the activity of
each of these services. The Electric Utility's generation and distribution systems
(operating system) were leased to a private firm in 1975 and the entire operating
system was purchased by that private firm in 2011. Since 1975 portions of the
lease payments were accumulated in a Community Trust Fund and that Trust
Fund coupled with the assets generated from the sale of the Electric Utility's
operating assets were transferred to the City Community Legacy Fund in 2012.
City of Fort Wayne Utilities
Condensed Statement of Net Position
($millions) Variance
December 31 2014-2015
2015 2014 $millions %
Net capital assets $ 910.8 $ 853.0 $ 57.8 6.8%
Other assets 176.3 166.4 9.9 5.9%
Total assets $ 1,087.1 $ 1,019.4 $ 67.7 6.6%
Deferred Outflows of Resources $ 7.6 $ 1.9 $ 5.7 300.0%
Current liabilities 53.6 47.4 6.2 13.1%
Long term liabilities 501.0 454.8 46.2 10.2%
Total liabilities 554.6 502.2 52.4 10.4%
Deferred Inflows of Resources $ 1.7 $ 2.1 $ (0.4) -19.0%
Total net position $ 538.4 $ 517.0 $ 21.4 4.1%
Net investment in capital assets $ 474.6 $ 441.8 32.8 7.4%
Restricted 54.2 54.5 (0.3) -0.6%
Unrestricted 9.6 20.7 (11.1) -53.6%
Total net position $ 538.4 $ 517.0 $ 21.4 4.1%
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