CITY OF DEMOREST
DEMOREST, GEORGIA
ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED
CITY OF DEMOREST
ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED
DECEMBER 31,2006
TABLE OF CONTENTS
EXHIBITS
Independent Auditor's Report 1-2
BASIC FINANCIAL STATEMENTS
Government-Wide Financial Statements
Exhibit 1 Statement of Net Assets 3
Exhibit 2 Statement of Activities 4
Fund Financial Statements
Governmental Funds Financial Statements
Exhibit 3 Balance Sheet 5
Exhibit 4 Statement of Revenues, Expenditures and Changes in Fund Balances 6
Proprietary Fund Financial Statements
Exhibit 5 Statement of Net Assets 7
Exhibit 6 Statement of Revenues, Expenses and Changes in Fund Net Assets 8
Exhibit 7 Statement of Cash Flows 9
Component Units Financial Statements
Exhibit 8 Combining Statement of Net Assets 10
Exhibit 9 Statement of Activities 11
Notes to the Financial Statements 12-25
REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN
MANAGEMENT'S DISCUSSION AND ANALYSIS
Budgetary Comparison Schedules
Exhibit 10 General Fund 26
OTHER SUPPLEMENTARY INFORMATION
Other Reports
Report on Compliance and on Internal Control over Financial Reporting and on
Compliance and other Matters Based on an audit of Financial Statements Performed
In Accordance with Government Auditing Standards 27-28
Schedule of Audit Findings 29
INDEPENDENT AUDITOR'S REPORT
Amos&
'Certified Public Accountants
Marshall C. Amos, CPA 210 Professional Drive • P.O. Box 216 Members of
Cornelia, Georgia 30531 American Institute and
706-778-2129 Georgia Society of
FAX 706-776-1783 Certified Public Accountants
www.AmosCPA.com
INDEPENDENT AUDITOR'S RFPr>PT
June 19,2007
To The Mayor and City Council
City of Demorest
Demorest, Georgia
We have audited the accompanying basic financial statements of the governmental activities, the business-
type activities, the aggregate discretely presented component units, and each major fund of the City of
Demorest, Georgia, as of and for the year ended December 31, 2006, which collectively comprise the City's
basic financial statements as listed in the table of contents. These basic financial statements are the
responsibility of the City of Demoresfs Management. Our responsibility is to express opinions on these
financial statements based on the audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards
issued by the Comptroller General of the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the basic financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures m the basic financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by Management, as well as evaluating the overall basic financial
statement presentation. We believe that our audit provides a reasonable basis for our opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, the business-type activities, the aggregate
discretely presented component units, and each major fund of the City of Demorest as of December 31,
2006, and the respective changes in financial position and cash flows, where applicable, thereof for the year
then ended m conformity with accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report dated June 19 2007 on
our consideration of the City of Demoresfs internal control over financial reporting and our tests of its
compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters.
The purpose ofthat report is to describe the scope of our testing of internal control over financial reporting
and compliance and the results of that testing, and not to provide an opinion on the internal control over
financial reporting or on compliance That report is an integral part of an audit performed in accordance
with Government Auditing Standards and should be read in conjunction with this report in considering the
results of our audit. *
Our audit was performed for the purpose of forming opinions on the basic financial statements taken as a
whole. The budgetary comparison schedule identified as Exhibit 10 in the Financial Section of the
accompanying table of contents is not part of the basic financial statements but is supplementary
information required by the Governmental Accounting Standards Board. We have applied certain limited
procedures, which consisted principally of inquiries of Management regarding the methods of measurement
and presentation of the required supplementary information. However, we did not audit the information and
express no opinion on it.
The City has not presented Management's Discussion and Analysis that the Governmental Accounting
Standards Board has determined is necessary to supplement, although not required to be part of, the basic
financial statements.
Amos & Company, CPAS
ASSETS
Taxes Receivable
Accounts Receivable
Prepaid Expenses
Restricted Assets:
Cash
Capital Assets
Land
Depreciable Assets, Net
Total Capital Assets
TOTAL ASSETS
CITY OF DEMOREST
STATEMENT OF NET ASSETS
DECEMBER 31,2006
Primary Government
EXHIBIT 1
Governmental Business-Type
Activities Activities
Total
Component
Units
$ 42,773 $ 266,789 $
226,966
78,035 273,889
20,662
309,562
226,966
351,924
20,662
$ 51,163
15,547
208,955
224,502
572,276
446,005
20,000
9,302,237
9,322,237
10,329,582
446,005
35,547
9,511,192
9,546,739
10,901,858
10,000
206,375
216,375
267,538
LIABILITIES
Accounts Payable
Accrued Payroll
Accrued Interest
Water Deposits
Notes Due in One Year
Bonds Due in One Year
Noncurrent Liabilities:
Notes Payable
Bonds Payable
TOTAL LIABILITIES
21,569
10,117
31,686
318,325
339,894
8,630
18,747
52,392
52,392
101,074
101,074
6,236
6,236
140,596
140,596
37,655
37,655
5,607,581
5,607,581
6,272,489
6,304,175
493
27,087
72,543
100,123
NET ASSETS
Invested in Capital Assets, Net of
Related Debt
Restricted for:
Water Renewal and Extension Reserve
Unrestricted Assets
TOTAL NET ASSETS $"
224,502
316,088
540,590
/
3,477,777/
446,005
133,311
$ 4,057,0937'
3,702,279
446,005
449,399
116,252'
$ 4,597,683 $ 167,415 '
The accompanying notes are an integral part of this statement.
CITY OF DEMOREST
BALANCE SHEET
GOVERNMENTAL FUND
DECEMBER 31,2006
EXHIBIT 3
ASSETS
Cash
Taxes Receivable
Accounts Receivable
TOTAL ASSETS
GENERAL
$ 42,773
273,746
78,035
$ 394,554
LIABILITIES
Accounts Payable
Accrued Payroll
Deferred Revenue - Taxes
TOTAL LIABILITIES
$ 21,569
10,117
119,170
150,856
FUND BALANCE
Unreserved
TOTAL FUND BALANCE
TOTAL LIABILITIES AND
FUND BALANCE
243,698
243,698 /
$ 394,554
Adjustments to the Statement of Net Assets
Fund Balance Governmental Fund
Capital Assets used in governmental activities are not current financial
resources and therefore are not reported in the governmental funds.
Other long-term assets are not available to pay current-period expenditures
and therefore are offset by deferred revenue in the governmental funds
(Net of allowance for bad debts)
$ 243,698'
224,5o/
72,390/
Net Assets of Governmental Activities (Exhibit 1)
$ 540,590>
The accompanying notes are an integral part of this statement.
CITY OF DEMOREST
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2006
EXHIBIT 4
REVENUES
Taxes
Franchise and Other
License and Permits
Charges for Services
Fines & Forfeitures
Miscellaneous
Total Revenue
EXPENDITURES
Current:
General Government
Police Department
Fire Department
Streets and Sanitation
Debt Service
Principal Retirement
Interest
Total Expenditures
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers In (Out)
Total Other Financing
Sources (Uses)
GENERAL
272,161
• 156,718
39,070
368,217
34,286
109,270
979,722
183,379
485,867
130,645
176,666
16,192
28_
992,777
(13,055)
12,593
12.593
NET CHANGE IN FUND BALANCE
(462)
/
FUND BALANCE - BEGINNING OF YEAR
FUND BALANCE - END OF YEAR
Adjustments to the Statement of Activities
Excess of Revenues and Other Sources over Expenditures and other uses
Repayment of debt is reported as an expenditure in the governmantal funds
but the repayment reduces long-term liabilities in the Statement of Activities
Governmental funds report capital outlays as expenditures while governmental
activities report depreciation over the life of the assets. This is the amount
by which Capital outlays ($61,751) exceeded depreciation ($27,579).
Revenues in the Statement of Activities that do not provide current financial
resources are not reported as revenues in the governmental funds, this includes
adjustment to allowance for bad debt ($33,873) less deferred revenue ($34,468)
Changes in net assets of governmental activities Exhibit 2:
The accompanying notes are an integral part of this statement.
244,160
y
243,698/
(462)
/
16,192 '
34,172/
JSSSí
49,307
CITY OF DEMOREST
STATEMENT OF NET ASSETS
PROPRIETARY FUND
DECEMBER 31,2006
EXHIBIT 5
ASSETS
Current Assets:
Cash
Accounts Receivable
Prepaid Bond Payments
Total Current Assets
Noncurrent Assets:
Restricted Cash
Capital Assets:
Land
Other Capital Assets, Net
Total Noncurrent Assets
TOTAL ASSETS
Business-type Activities
Enterprise Fund
WATER & SEWER
FUND
266,789
273,889
20,662
561,340
446,005
20,000
9,302,237
9,768,242
$ 10,329,582
LIABILITIES
Current Liabilities:
Accounts Payable
Accrued Payroll
Accrued Interest
Notes Payable
Bonds Payable
Total Current Liabilities
Noncurrent Liabilities:
Water Deposits
Notes Payable
Bonds Payable
Total Noncurrent Liabilities
TOTAL LIABILITIES
NET ASSETS
Invested in Capital Assets, Net of
Related Debt
Restricted for :
Water Renewal and Extension Reserve
Unrestricted Assets
TOTAL NET ASSETS
318,325
8,630
52,392
6,236
140,596
526.179
101,074
37,655
5,607,581
5,746,310
6,272,489
3,477,777
446,005
133,311
4,057,093 /
The accompanying notes are an integral part of this statement.
CITY OF DEMOREST EXHIBIT 6
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS
PROPRIETARY FUND
FOR THE YEAR ENDED DECEMBER 31, 2006
Business-type Activities
Enterprise Fund
WATERAND
SEWER FUND
OPERATING REVENUES
Water Sales $ 2,489,857
Sewer Fees 135,830
Water and Sewer Taps 93 210
Rental Income 13 345
Miscellaneous Receipts 124 541
TOTAL OPERATING REVENUES 2,856,784"
OPERATING EXPENSES - By Department
Personnel 520,366
Utilities 91,275
Water Purchases 746,732
Purification & System Maintenance 166,629
Equipment Rental & Maintenance 43,514
Bad Debt Expense 6,077
Insurance 113,856
' ". Qffice Expense 63,150
Professional Fees 319,869
Depreciation 316,157
Other 111,199
TOTAL OPERATING EXPENSES 2,498,824
OPERATING INCOME 357,960
NON-OPERATING REVENUES (EXPENSE)
Interest Income 14,386
Interest Expense (296,044)
TOTAL NON-OPERATING INCOME (EXPENSE) (281,658)
INCOME ( LOSS) BEFORE TRANSFERS 76,302
Transfers out (12,593)
CHANGE IN NET ASSETS 63,709 '
TOTAL NET ASSETS - BEGINNING OF YEAR 3,993,384 7
TOTAL NET ASSETS - END OF YEAR $• 4 057 093 ''
The accompanying notes are an integral part of this statement.
CITY OF DEMOREST
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2006
EXHIBIT 7
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from Customers
Payments to Suppliers
Payments to Employees
NET CASH PROVIDED BY OPERATING ACTIVITIES
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Net Transfers
NET CASH PROVIDED BY NONCAPITAL FINANCING ACTIVITIES
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Principal Paid on Notes
Interest Paid
Acquisition Of Capital Assets-Net Of Trade Allowance
NET CASH USED FOR CAPITAL AND RELATED
FINANCING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Interest Earned
NET CASH PROVIDED BY INVESTING ACTIVITIES
NET INCREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS AT END OF YEAR
Reconciliation of Operating Income (Loss) to Net Cash
Provided by Operating Activities
Operating Income (Loss)
Adjustments To Reconcile Operating
Income (Loss) To Net Cash Provided By
Operating Activities
Depreciation
Increase in Customer Deposits
Decrease in Accounts Receivable
Increase in Accounts Payable
Increase in Accrued Payroll
TOTAL ADJUSTMENTS
NET CASH PROVIDED BY OPERATING ACTIVITIES
2,869,134
(1,660,951)
(519,674)
(12,593)
(143,312)
(296,433)
(213,042)
14,386
316,157
7,717
4,633
1,350
692
688,509
(12,593)
(652,787)
14,386
37,515
675,279 /
$ 712,794y
$ 357,960
•
330,549
$ 688,509 /
The accompanying notes are an integral part of this statement.
CITY OF DEMOREST
COMBINING STATEMENT OF NET ASSETS
COMPONENT UNITS
DECEMBER 31,2006
EXHIBIT 8
ASSETS
Current Assets
Cash
Governmental
Downtown
Finance
Development
Authority
Authority
51,163
Total
51,163
Noncurrent Assets
Capital Assets:
Land
Depreciable Assets, Net
Total Capital Assets
TOTAL ASSETS
10,000
124,527
81,848
134,527
81,848
134,527
133,011
10,000
206,375
216,375
267,538 /
LIABILITIES
Current Liabilities
Accrued Expenses
Current Portion Long-Term Debt
Noncurrent Liabilities
Notes Payable
TOTAL LIABILITIES
493
493
7,737
19,350
27,087
2,914
69,629
72,543
10,651
89,472
100,123
?
NET ASSETS
Invested in Capital Assets, Net of
Related Debt
Unrestricted Assets
TOTAL NET ASSETS
123,876
$ 123,876
(7,624)
51,163
43,539
116,252
51,163
167,415 X
The accompanying notes are an integral part of this statement.
10
CITY OF DEMOREST EXHIBIT 9
STATEMENT OF ACTIVITIES
COMPONENT UNITS
FOR THE YEAR ENDED DECEMBER 31, 2006
Program Revenues Net (Expense) Revenue and Changes in Net Assets
Governmental Downtown
Charges for Finance Development
Functions/Programs Expenses Services Corporation Authority Totals
Governmental Finance Corporation $ 26,018 $ 8,178 $ (17,840) $ $ (17,840)
Downtown Development Authority 11,654 24,677 13,023 13,023
Total Component Units $ 37,672 / $ 32,855y (17,840) 13^023 (4317)
Change in Assets (17,840) 13,023 (4,817) J
Net Assets-Beginning 141,716 30,516 172,232
NetAssets-End $ 123,876 $ 43,539 $ 167,415 ^
The accompanying notes are an integral part of this statement.
11
CITY OF DEMOREST
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31,2006
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Narrative Profile
The City of Demorest was incorporated under the laws of the state of Georgia in 1891 and operates
under an elected mayor and four council members. The City's basic financial statements include
the accounts of all the City operations.
The financial statements of the City of Demorest have been prepared in conformity with generally
accepted accounting principles (GAAP) as applied to government units. The Governmental
Accounting Standards Board (GASB) is the accepted standard setting body for establishing
governmental accounting and financial reporting principles. In accordance with Governmental
Accounting Standards Board (GASB) Statement No. 20, the City has elected to follow GASB
statements issued after November 30, 1989, rather than the Financial Accounting Standards Board,
in accounting for proprietary funds.
The more significant of the City's accounting policies are described below.
A. Financial Reporting Entity
As required by generally accepted accounting principles, these financial statements present the
government and its component units, entities for which the government is considered to be
financially accountable. The criteria for including organizations as component units within the
City's reporting entity, as set forth in section 2100 of GASB's Codification of Governmental
Accounting and Financial Reporting Standards, include whether:
-the organization is legally separate
-the City holds the corporate powers of the organization
-the City appoints a voting majority of the organization's board
-the City is able to impose it's will on the organization
-the organization has the potential to impose a financial benefit/burden on the City
-there is a fiscal dependency by the organization on the City
Based on the aforementioned criteria, the City of Demorest has two component units. Separate
financial statements are nor'prepared on the component units.
Component Units
a. Demorest Governmental Finance Corporation
Was organized as a non-profit corporation to acquire properties and lease them to the
City under terms of an operating lease. This was done to obtain additional financing for
Capital projects. The Mayor and Council are the Board of Directors.
b. Downtown Development Authority
The authority was organized to acquire properties and to improve them for use in the
downtown district. The City Council appoints Authority members.
All component units above are presented using accounting principles in accordance with
GASB 34.
B. Government-wide and Fund Financial Statements
The basic financial statements include both government-wide (based on the City as a whole) and
fund financial statements. While the previous model emphasized fund types (the total of all funds
of a particular type), in the new reporting model the focus is on either the City as a whole or major
individual funds (within the fund financial statements). The focus is on both the City as a whole
12
CITY OF DEMOREST
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31,2006
NOTE 1 - (Continued)
and the fund financial statements, including the major individual funds of the Governmental and
Business-type categories and the component units. Both the government-wide and fund financial
statements (within the basic financial statements) categorize primary activities as either
governmental or business type. In the government-wide Statement of Net Assets, both the
governmental and business-type activities columns (a) are presented on a consolidated basis by
column, and (b) are reflected, on a full accrual, economic resource basis, which incorporates long-
term assets and receivables as well as long-term debt and obligations. Each presentation provides
valuable information that can be analyzed and compared (between years and governments) to
enhance the usefulness of the information. The City generally first uses restricted assets for
expenses incurred for which both restricted and unrestricted assets are available. The City may
defer the use of restricted assets based on a review of the specific transaction.
The government-wide Statement of Activities reflects both the gross and net cost per functional
category (public safety, streets and sanitation, etc.) which are otherwise being supported by general
government revenues (property, certain intergovernmental revenues, fines, permits and charges,
etc.) The Statement of Activities reduces gross expenses (including depreciation) by related
program revenues, operating and capital grants, and contributions. The program revenues must be
directly associated with the function (public safety, public works, etc.) or a business-type activity.
Program revenues include (1) charges to customers or applicants who purchase, use, or directly
benefit from goods, services or privileges provided by a given function and (2) grants and
contributions that are restricted to meeting the operation or capital requirements of a particular
function or activity. Taxes and other items not properly included among program revenues are
reported as general revenues. The City does not allocate indirect expenses. The operating grants
include operating-specific and discretionary (either operating or capital) grants while the capital
grants column reflects capital-specific grants.
In the fund financial statements, financial transactions and accounts of the City are organized on
the basis of funds. The operation of each fund is considered to be an independent fiscal and
separate accounting entity, with a self-balancing set of accounts recording cash and/or other
financial resources together with all related liabilities and residual equities or balances, and
changes therein, which are segregated for the purpose of carrying on specific activities or attaining
certain objectives in accordance with special regulations, restrictions or limitations.
The governmental funds in the fund financial statements are presented on a current financial
resource and modified accrual basis of accounting. This is the manner in which these funds are
normally budgeted. Since the governmental funds are presented on a different measurement focus
and basis of accounting than the government-wide statement's governmental column,
reconciliation is presented which briefly explains the adjustment necessary to reconcile funds
based on financial statements with the governmental column of the government-wide financial
statements.
1. Major Governmental Funds
Governmental Funds are those through which most governmental functions typically are
financed.
a. General Fund
The General Fund is the primary operating fund of the City. This fund is used to account
for all financial transactions and resources except those required to be accounted for in
another fund. Revenues are derived primarily from property and other local taxes, state
and federal distributions, licenses, permits, charges for service, and interest income.
13
CITY OF DEMOREST
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31,2006
NOTE 1 - (Continued)
2. Major Proprietary Funds
Proprietary Funds are used to account for activities that are similar to those often found
in the private sector. All assets, liabilities, equities, revenues, expenses, and transfers
relating to the government's business activities are accounted for through proprietary
funds. The measurement focus is on determination of net income, financial position, and
cash flows. Operating revenues include charges for services. Operating expenses
include cost of services as well as, materials, contracts, personnel, and depreciation.
a. Enterprise Fund or Business Funds
The Enterprise Fund accounts for operations that are financed in a manner similar to
private business enterprises, where the intent is that costs of providing goods or services
to the general public on a continuing basis be financed or recovered primarily through
user charges. The City's Enterprise Fund accounts for the operations of the City's water
and sewer system.
C. Basis of Accounting
The accounting and financial reporting treatment applied to a fund is determined by its
measurement focus. All governmental funds are accounted for using the current financial
resources measurement focus, only current assets and current liabilities generally are included on
the balance sheet in the fund statements. Long-term assets and long-term liabilities are included
in the government-wide statements. Operating statements of these funds present increases (i.e.,
revenues and other financing sources) and decreases (i.e., expenditures and other financing uses)
in net current assets.
The Government-wide statements of net assets and statement of activities, proprietary fund and
component units are accounted for on a flow of economic resources measurement focus. With
this measurement focus, all assets and liabilities associated with the operation of these activities
are included on the statement of net assets. Proprietary fund-type operating statements present
increases (e.g. revenues) and decreases (e.g. expenses) in net total assets.
The statements of net assets, statements of activities, financial statements of the proprietary fund
and component units are presented on the accrual basis of accounting using the current financial
resources measurement focus. Under this method of accounting, revenues are recognized when
earned and expenses are recorded when liabilities are incurred without regard to receipt or
disbursement of cash. Real and personal property taxes are recognized in the period for which
levied, provided the City has an enforceable legal claim to the resources. Grants, shared
revenues, and contributions are recognized when all eligibility requirements have been met.
The fund financial statements of the General fund are maintained and reported on the modified
accrual basis of accounting using the current financial resources measurement focus. Under this
method of accounting, revenues are recognized in the period in which they become measurable
and available. With respect to real and personal property tax revenue and other local taxes, the
term "available" is limited to collection within sixty days of the fiscal year-end. Levies made
prior to the fiscal year-end but which are not available are deferred. Interest income is recorded
as earned. Federal and State reimbursement-type grants are recorded as revenue when related
eligible expenditures are incurred. Expenditures, other than accrued interest on long-term debt,
are recorded when the fund liability is incurred.
Proprietary funds distinguish operating revenues and expenses from non-operating items.
Operating revenues and expenses generally result from providing services and producing and
delivering goods in connection with a proprietary fund's principal ongoing operations. The
principal operating revenues of the City's enterprise fund and general fund are charges to
14
CITY OF DEMOREST
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31,2006
NOTE 1-(Continued)
customers for sales and services. The City also recognizes as operating revenue the portion of
tap fees intended to recover the cost of connecting new customers to the system. Operating
expenses for enterprise funds and general funds include the cost of sales and services,
administrative expenses, and depreciation on capital assets. All revenues and expenses not
meeting this definition are reported as non-operating revenues and expenses.
D. Budgets and Budgetary Accounting
The City Council annually adopts budgets for the General Fund of the Primary government. All
appropriations are legally controlled at the departmental level for the General Fund. On
December 20, 2005, the City Council adopted the original budget. During the year the budget
was amended $20,000 from General Government to Public Safety to cover the cost of a building
remodel.
The budgets are integrated into the accounting system, and the budgetary, as presented in
financial statements for all funds with annual budgets, compare the expenditures with the budget.
All budgets are presented on the modified accrual basis of accounting. Accordingly, the
Budgetary Comparison Schedule for the General Fund presents actual expenditures in
accordance with the accounting principles generally accepted in the United States on a basis
consistent with the legally adopted budgets. Unexpended appropriations on annual budgets
lapse at the end of each fiscal year.
Encumbrance accounting-under which purchase orders, contracts and other commitments for the
expenditure of resources are recorded to reserve that portion of the applicable appropriation - is
not utilized by the City.
E. Cash and Deposits
Cash includes amounts in demand deposits, certificates of deposit and money market accounts.
State statutes authorize the City to invest only in obligations of the United States and of its
agencies and instrumentality's, or bonds or certificates of indebtedness of the State of Georgia
and of its agencies and instrumentality's, or certificates of deposit of banks which have deposits
insured by the FDIC with any uninsured amounts collateralized by direct obligations of the
United States or State of Georgia.
For purposes of the statement of cash flows, the Water and Sewer Fund considers all highly
liquid investments (including restricted assets) to be cash equivalents.
F. Receivables
All receivables are reported at their gross value and, where appropriate, are reduced by the
estimated portion that is expected to be uncollectible.
G. Prepaid Expenses
Prepaid expenses are advance payment on debt which will be recognized in the next accounting
period.
H. Short-Term Interfund Receivables/Payables
During the course of operations, numerous transactions occur between individual funds for
goods provided or services rendered. These receivables and payables are classified as "due from
other funds" or "due to other funds" on the balance sheet. Transfers not anticipated to be repaid
15
CITY OF DEMOREST
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31,2006
NOTE 1 - (Continued)
are presented as other financing sources and uses. Transfers are made to enable the appropriate
fund to pay debt.
I. Inventories
Purchases of supplies are shown as expenditures when acquired and are not inventoried at year
end due to lack of materiality.
J. Restricted Assets
The Enterprise Fund has certain resources set aside, as required by bond ordinance, for debt
service and the future renewal and extension of its current water and wastewater facilities.
K. Capital Assets
Capital outlays are recorded as expenditures of the General Fund and as assets in the
government-wide financial statements to the extent that the City's capitalization threshold is met
Interest incurred during construction is expensed on a government-wide basis. Interest
attributable to capitalized assets as of December 31, 2006 was immaterial. Depreciation is
recorded on general fixed assets on a government-wide basis. Capital outlays of the Proprietary
Fund are recorded as fixed assets and depreciated over their estimated useful lives on a straight-
line basis on both the funds basis and the government-wide basis. AH fixed assets are valued at
historical cost or estimated historical cost if actual cost was not available. Donated fixed assets
are valued at their estimated fair market value on the date donated. Maintenance, repairs, and
minor equipment are charged to operations when incurred. Expenditures of the greater of
$5,000 or that materially change capacities or extend useful lives are capitalized. Upon sale or
retirement of land, buildings, and equipment, the cost and related accumulated depreciation, if
applicable, are eliminated from the respective accounts and any resulting gain or loss is included
in the results of operations.
L. Compensated Absences
The City's policy does not allow the accumulation of vacation pay beyond the current period
end; therefore vacation is not accrued. Sick pay benefits are non-vesting accumulating rights
and are not accrued as allowed by FASB-43 (Accounting for Compensated Absences).
M. Interfund Transactions
Interrund transactions are either loans, services provided, reimbursements or transfers. Loans
are reported as receivables and payables as appropriated and are subject to elimination upon
consolidation. Services, deemed to be reasonably equivalent in value, are treated as revenues
and expenditures/expenses. Reimbursements are when one fund incurs a cost, charges the
appropriate benefiting fund and reduces its related cost as a reimbursement. All other Interfund
transactions are presented as transfers. Transfers within governmental activities and within
business-type activities are eliminated upon consolidation.
NOTE 2 - LEGAL COMPLIANCE - BUDGETS
The City is required by law to adopt a budget. The procedures used in establishing the budgetary
data reflected in the financial statements are as follows:
16
CITY OF DEMOREST
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31,2006
NOTE 2-(Continued)
1. Prior to the beginning of the year a proposed budget for the fiscal year is prepared and
submitted to the City Council. The operating budget includes proposed expenditures and the
means of financing them.
2. The budget is prepared on a basis consistent with generally accepted accounting principles.
3. A public hearing is held for citizen input.
4. The budget is approved by the Council.
There were no supplementary appropriations made during the year. During the year the General,
Public Safety, Street and Sanitation Departments, exceeded their budget due to adding additional
equipment repairs and capital expenditures without amending the budget for the additional
expenditures.
In the General Fund, actual expenditures exceeded appropriations in the following departments:
Department Excess
Public Safety $ 27,222 '
Streets $ 8,006'
Debt Service $ 1,220^
Revenues and prior year surplus funds sufficient to provide for the excess expenditures were made
available in the funds above.
NOTE3-DEPOSITS
The carrying amount of the City's deposits of the primary government on December 31,2006, was
$ 755,566 and the bank balance was $ 1,170,750. The carrying amount of the discretely presented
component units on December 31, 2006 was $51,163 and the bank balance was $51,163. All bank
balances as of December 31,2006 are entirely insured or collateralized with securities held by the
agent in the City's name.
NOTE 4 - RESTRICTED ASSETS
The restricted cash in bank is to be used for:
Bond Reserve Account
NOTE 5 - RECEIVABLES
Water
Utility
$ 446,005
Receivables at December 31,2006 consist of the following:
General Enterprise
Receivables:
Accounts $ 78,035 $ 380,231
Property Tax 273.746
Gross Receivables 351,781 380,231
Less Allowances for
Uncollectibles 46.780 106.342
Total
$305.001
273.889
Total
$ 458,266
273,746
732,012
153.122
* 578*90
Property taxes were levied on October 10, 2006 on property values assessed as of January 1 of the
same year. Property tax bills were mailed on March 12, 2007 and became due in sixty days. On
the sixtieth day the bills are delinquent, and the City may assess penalties and interest. Property
taxes are recognized as revenue when they are billed because the City adopted on January 1,2000
the GASB 34, Basic Financial Statements. An allowance for doubtful accounts is recorded for any
balances over two years past due.
17
CITY OF DEMOREST
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2006
NOTE 6 - CHANGES IN CAPITAL ASSETS:
Primary Government
The following is a summary of changes in Capital Assets by major class and also by function: Primary Government
Governmental activities:
Land
Balance
12/31/05
$
$
/ $
Depreciable Assets:
Buildings $ 163,467 $
Fixtures &
Equipment 356.566 _
Total 520.033 _
Less: Accumulated Depreciation
Buildings 69,615
Fixtures &
Equipment 275.634 _
Governmental activities capital
Additions
10,197
51.553
61.750
4,087
23.492
Transfers &
Deletions
$
Assets, net
Business-type activities:
Land $
Depreciable Assets:
Buildings $
Water & Wastewater
System
Fixtures &
Equipment
Total
/
$ 174.784 x £
34,171.
20.000/ $
22,039 $
12,898,804
322.478
$
$
13.243.321
Less: Accumulated Depreciation
Buildings 4,260
Water & Wastewater
System 3,595,413
Fixtures &
Equipment 238.296
175,806
37.236
213.042
Business-type activities capital
899
286,837
28.421
Assets, net
$ 9.405.35?. ' $ n03.115> £
Depreciation expense was charged to governmental functions as follows:
General Government $ 4,087
Public Safety 19,417
Streets & Sanitation 4.075
Total Depreciation
$ 27.579 /
Discretely Presented Component Units
Balance
12/31/06
/
173,664
4Q8.119
581.783
73,702
299.126
I 208.9gS/
/
20.000 /
22,039
13,074,610
359.714
13,456,363
5,159
3,882,250
266,717
$ 9.302.237/
The following is a summary of component unit's capital assets at December 31,2006:
Downtown Development:
Buildings $ 118,088 $ $ $ 118,088
Less: Accumulated Depreciation
Buildings 33.287 2,952 36.240
Downtown Development capital
Assets, net $ 84.80iy $ (2.9531 $_ £ 81.84«/
18
CITY OF DEMOREST
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31,2006
NOTE 6-(Continued)
Governmental Finance:
Land
Depreciable Assets:
Buildings
Fixtures & Equipment
Total
$ 10.000 /
140,276
231.944
372.220
Less: Accumulated Depreciation
Buildings 42,084
Fixtures & Equipment 180.035
Governmental Finance capital
Assets, net $ 150.101 '
3,507
22,067
10.000'
140,276
372.220
45,591
202.102
(25.5741 J_
Buildings
Machinery & Equipment
Total
Less: Accumulated
Depreciation
Net
Downtown
Development
$ 118,088
118,088
36.240
S SLJ4J
Governmental
Finance
$ 140,276
231.944
372,220
247,693
$ 124.527/
Total
$ 258,364
231,944
490,308
283,933
S 206.37?
The City uses, the following estimated useful lives and the straight line method to compute
depreciation for governmental, business type, and component unit activities. Land is not
depreciated.
Building 30-40 Years
Water & Sewer Plant 25-50 Years
Equipment 4-10 Years
NOTE 7 - CHANGES IN DEBT
CHANGES IN LONG TERM-DEBT
Primary Government
The following is a summary of Long-Term Debt transactions of the City for the year ended
December 31,2006:
General
Payable December 31, 2005 $
Debt Retired
Payable December 31, 2006
Less:
Payable within one year
Total due after one year
Primary Government interest expense:
Direct Interest expense:
Other Interest expense: _
16,193
16.193
/
/
/
M
-21
Water Fund
Bonds
$ 5,885,377-
137.200
5,748,177
140.596y
$ 5.607.581 J
$ 295,090
$ 295rQ90
Water Fund
Notes
50,003 '
6JJ2
43,891'
37.655
/
954
954
19
CITY OF DEMOREST
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31,2006
NOTE 7-(Continued)
Discretely Presented Component Units
Governmental Downtown
Finance Development
Authority Authority Total
Payable December 31,2005 $ 18,385/ $83,888' $102,273
Debt Incurred 9,269 9,269
Debt Retired 7.734 4.178 11.912
Payable December 31,2006 10,65 V 88,979' 99,630
Less:
Payable within one year 7.737 • 19.350- 27.087
Total due after one year $ 2.914- $ 69.629- $ 72.543
Component Units incurred the following interest expense:
Total
Governmental Finance Corporation $ 445
Downtown Development Authority 6.370
Total 6-815
Water Fund Long-Term Debt
Water Revenue Certificates payable to United States Department of Agriculture. The following
bonds were issued to extend and improve the water system of the City:
Revenues in excess of operating expenses of the Water Fund are pledged for the payment of the
1975, 1977 and 1993 Water Revenue Certificates. Water rates are to be adjusted as needed to
provide for payment of all operating and maintenance expense and also the annual principal,
interest and reserves of the Water Revenue Certificates.
1975 Series
Authorized and issued 160 bonds of $5,000 each bearing interest at the rate of five percent per
annum. Interest is payable annually on December 1. Bonds are payable on December 1 of each
year as shown below.
Year
2007
2008
2009
2010
2011
2012
2013
2014
1977 Series
Authorized and issued 181 bonds of $5,000 each bearing interest of 5 percent per annum. Interest
is payable annually on December 1. Bonds are payable on December 1 of each year as shown
below:
Year Principal
2007 $ 30,000 $
2008 35,000
2009 35,000
2010 40,000
2011 40,000
20
Principal
Interest
Total
$ 35,000
$ 16,250
$ 51,250
35,000
14,500
49,500
35,000
12,750
47,750
40,000
11,000
51,000
40,000
9,000
49,000
45,000
7,000
52,000
45,000
4,750
49,750
50.000
2.500
52.500
$ 325,000^
$ 77,750
$ 402.750
Interest
Total
21,250
$ 51,250
19,750
54,750
18,000
53,000
16,250
56,250
14,250
54,250
CITY OF DEMOREST
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31,2006
45,000
12,250
57,250
45,000
10,000
55,000
50,000
7,750
57,750
50,000
5,250
55,250
55.000
2.750
57.750
$ 425,000^
S 127.SOO
S 552,500
NOTE 7-(Continued)
2012
2013
2014
2015
2016
1993 Series
Authorized and issued $1,337,000 bonds bearing interest of 5.25 percent per annum. Interest is
payable annually on June 1. Bonds are payable on June 1 of each year as shown below:
Year Principal Interest Total
2007 $ 16,140 $ 63,112 $ 79,252
2008 17,270 62,264 79,534
2009 18,470 61,658 80,128
2010 19,770 60,388 80,158
2011 21,150 59,350 80,500
2012 22,630 58,239 80,869
2013 24,220 57,052 81,272
2014 25,910 55,780 81,690
2015 27,730 54,420 82,150
2016 29,670 52,964 82,634
2017 31,740 51,406 83,146
2018 33,970 49,740 83,710
2019 36,340 47,957 84,297
2020 38,890 46,049 84,939
2021 41,610 44,007 85,617
2022 44,520 41,823 86,343
2023 47,640 39,485 87,125
2024 50,970 36,984 87,954
2025 54,540 34,308 88,848
2026 58,360 31,445 89,805
2027 62,440 28,381 90,821
2028 66,820 25,103 91,923
2029 71,490 21,595 93,085
2030 76,500 17,842 94,342
2031 81,850 13,825 95,675
2032 87,580 9,528 97,108
2033 93.910 4.930 98.840
S 1.202. ntT fi 1.129.635 .1! 2.331.765
1996-A Series
Authorized and issued $2,000,000 bonds bearing interest of five percent per annum. The balance
is payable in four hundred and sixty-eight monthly payments of $9,740 with first payment due on
February 28,1998. Debt service is as follows:
Year
Principal
Interest
Total
2007
$ 28,024
$ 88,856
$ 116,880
2008
29,458
87,422
116,880
2009
30,965
85,915
116,880
y2010
32,549
84,331
116,880
2011 through 2015
189,498
394,902
584,400
2016 through 2020
243,193
341,207
584,400
21
CITY OF DEMOREST
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31,2006
NOTE 7-(Continued)
2021 through 2025
2026 through 2030
2031 through 2035
2036
Total
1996-B Series
312,105
400,543
514,039
7.937
Sl.7M.3ir
272,295
183,857
70,361
Ui
$ 1-609-257
584,400
584,400
584,400
8.048
$ 3.397.S68
Authorized and issued $2,242,600 bonds bearing interest of five percent per annum. The balance
is payable in four hundred and sixty-eight monthly payments of $10,922 with first payment due on
February 28,1998. Debt service is as follows:
Year
2007
2008
2009
^2010
2011 through 2015
2016 through 2020
2021 through 2025
2026 through 2030
2031 through 2035
2036
Total
Principal
$ 31,432
33,040
34,731
36,508
212,541
272,766
350,078
449,250
576,538
10.852
$2.007.736'
Interest
$ 99,632
98,024
96,333
94,556
442,779
382,554
305,242
206,070
78,782
128
$ 1-804.100
Total
$ 131,064
131,064
131,064
131,064
655,320
655,320
655,320
655,320
655,320
10.980
$ 3.811.836
Series 1975, 1977, 1993 and 1996 Bonds have been authorized in the name of the United States
Department of Agriculture, Farmers Home Administration. The sinking fund agreement requires a
payment of $1,777.37 per month be made to a reserve account beginning June 20, 1993. This
payment must be made until $202,484 has accumulated in the reserve account. The sinking fund
agreement for the 1996A and 1996B requires payments of $996.00 and $1,083.18 per month to be
made to a reserve beginning February 1998. These payments must be made until $245,901 has
accumulated in the reserve account. These funds can be used as follows:
(1) Pay for an unforeseen catastrophe.
(2) Make additions, extensions or improvements to the system upon prior written
consent of bondholders representing 75% of the outstanding principal.
(3) Make bond and interest payments if no monies are available.
Reserve,
Cash Reserve Requirement $ 421,746
Cash in Bank 446.005
Surplus Reserve Requirement $ 24.259
Loans Payable - The Water & Sewer Fund borrowed from Georgia Environmental Facilities
Authority for construction of a water tank. The Note payable is in the amount of $63,912 of which
$65,011 is available. This note is in repayment status as of February 1, 2004. The note is due in
quarterly installments of $1,766.86, including interest at two percent per annum. Debt service
requirements are listed below:
Total
$ 7,067
7,067
7,067
7,067
18-715
Year
Principal
Interest
2007
$ 6,236
$ 831
2008
6,362
2009
6,490
577
2010
6,620
447
2011 through 2013
18.182
$ 43,890y
533
Total
$ 3.093
22
CITY OF DEMOREST
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31,2006
NOTE 7 - (Continued)
Discretely Presented Component Units - Long-Term Debt
The Demorest Governmental Finance Corporation entered into an agreement with the City of
Demorest whereas the short-term debt of the City was converted into long-term debt under the
Corporation. The City now makes payments to the Corporation, which in turn services the bank
debt. The debt of the Corporation is shown as a component unit and the original debt proportion
for each fund remains the same. The rolling stock of the City is pledged as collateral. All notes
are payable to the Community Bank and Trust Company, Demorest, Georgia. Debt service is as
follows:
Note payable in amount of $49,500. Payable in quarterly installments of $2,726.11 including
interest of 3.75 percent per annum. Debt service requirements are listed below:
XsS Principal Interest Total
2007 $ 10-651 $ 253 $ 10.904
Total $ 10-651 ' $ 253 % 10.004
The Downtown Development Authority of Demorest financed improvements to downtown
buildings through Community Bank. Note payable of $ 93,157 bearing interest of 7.00 percent per
annum and is due in 288 monthly installments of $ 1,035 with first payment due on July 24,2002.
The Demorest Post Office building is pledged as collateral.
Debt service requirements are listed below.
Year Principal Interest Total
2007 $44,202 $ 3,477 $ 47,679
2008 9,589 2,831 12,420
2009 10,283 2,137 12,420
2010 11,026 1,394 12,420
2011 11,823 597 12,420
2012 2,056. J4 2JT2Û
Total % 88.979/ $ 10.450 $ 99.429
NOTE 8 -INTERFUND TRANSFERS
Water & Sewer enterprise fund transferred $12,593/to the General fiWfor operating expenses.
NOTE 9- RISK MANAGEMENT
The City is exposed to various risks of loss related to torts, theft of, damage to, and destruction of
assets; errors and omissions; injuries to employees; and natural disasters. The City carries
commercial insurance for all risks of loss, including property, accident, and employee health
except for worker's compensation. Settled claims resulting from these risks have not exceeded
commercial insurance in any of the past three fiscal years.
The City has elected to be a member of the Georgia Municipal Association Workers'
Compensation Self-Insurance Fund, a risk management agency created under Georgia law. As a
participant in the Plan the City has no legal obligation to pay its own insurance claims. The City is
required to make an annual contribution to the Plan in an amount that is determined on the basis of
actuarial projections of losses.
With payment of the City's annual contribution, the City has effectively transferred the risk and
responsibility for payment of its workers' compensation claims. However the enabling statute
creating the Plan permits the fund to levy an assessment upon its members to make up any
23
CITY OF DEMOREST
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31,2006
NOTE 9-(Continued)
deficiency the Plan may have in surplus or reserves. Since excess insurance is purchased by the
Plan to protect them from catastrophic losses, no amount has been recorded in the financial
statements for this contingency, as Management believes the likelihood for assessment is remote.
NOTE 10- ECONOMIC DEPENDENCY
The City has only one major supplier of water.
NOTE 11 - JOINT VENTURE
The City of Demorest, in conjunction with cities and counties in the Northeast Georgia area, is a
member of the Georgia Mountains Regional Development Center (RDC). Membership in an RDC
is automatic for each municipality and county in the state. The official Code of Georgia Section
50-8-34 (Georgia Planning Act of 1989) provides for the organizational structure of the RDCs.
Each county and municipality in the state is required by law to pay minimum annual dues to the
RDC. The City's annual dues to the RDC for the year ended December 31, 2006, were paid by
Habersham County. The RDC Board membership includes the chief elected official of each
county and the chief elected official of each municipality. The county board members and
municipal board members from the same county elect one member of the board who is a resident
(but not an elected or appointed official or employee of the county or municipality) to serve as the
non-public board member from a county. Financial statements can be obtained at Georgia
Mountains Regional Development Center, P. O. Box 1720, Gainesville, Georgia 30501.
The Georgia Planning Act of 1989 (O.C.G.A. 50-8-34) defines RDCs as "public agencies and
instrumentalities of their members". Georgia laws also provide that the member governments are
liable for any debts or obligations of an RDC beyond its resources. (O.C.G.A. 50-8-39.1)
NOTE 12 - DEFINED BENEFIT PENSION PLAN
The City, by ordinance on December 1,2005, established a retirement plan for its employees to be
funded through the Georgia Municipal Employees Benefit System. The name of the plan is City of
Demorest Retirement Plan (the Plan).
A. Plan Description
The City's defined benefit pension plan provides retirement, disability and death benefits to plan
members and beneficiaries. These retirement provisions were established by an adoption
agreement executed by the City Council. The Plan is affiliated with the Georgia Municipal
Employees Benefit System (GMEBS), an agent multiple-employer pension plan administered by
the Georgia Municipal Association. The Georgia Municipal Association issues a publicly
available financial report on GMEBS that includes financial statements and required
supplementary information. That report may be obtained by writing to Georgia Municipal
Association, 201 Pryor Street, SW Atlanta, GA 30303.
Funding Policy
City employees are not required to contribute to the Plan. The City is required to contribute at an
actuarially determined rate; the current rate is 12.45% of annual covered payroll. The City's
payroll for employees covered by the plan according to the November 1,2006 actuarial report was
$608,626. The City's total payroll for the year ended December 31, 2006 was $778,045. The
contribution requirements of the City are established and may be amended by the Georgia
Municipal Employees Benefit System Board of Trustees.
24
CITY OF DEMOREST
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31,2006
NOTE 12-(Continued)
Annual Pension Cost
For the plan year, December 1, 2006, the City's annual pension cost of $75,766 was equal to the
City s required and actual contributions. The required contribution was determined as part of the
November 1, 2006 actuarial valuation using the projected unit credit actuarial cost method The
achianal assumptions included (a) 8.0% investment rate of return (net of actoiinistranve expenses)
and (b) projected salary increases of 5.5% per year. The actuarial value of the Plan assets was*
determined usmg techniques that smooth the effects of short-term volatility in the market value of
investments over a ten-year period.
™/laiî \Unfimded aCtuarial accrued Iiabi,ity is bein8 mortized over a period of 30 years from
¿006 and changes in the unfunded actuarial accrued liabilities over 15 years for actuarial gains and
osses, 20 years for plan provisions and 30 years for actuarial assumptions and cost methods as a
level dollar amount. These amortization periods, if applicable, are closed for this plan year.
Three Year Trend Information for
The City of Demorest's Retirement Plan
Fiscal
Annual
Percentage
Year
Pension
ofAPC
Ending
Cost fAPQ
Contributed
12-31-06
$
75,766
100.0%
Trend information is not available since the Plan's first actuarial report is for period ending November
1,2006.
NOTE 13 - COMMITMENTS
The City is in the process of applying for a loan to improve the water system. Money will come
from GEFA Revolving Fund. Project cost is anticipated at approximately $1,555,100. The
proposed project includes rehabilitation of an existing tank, a new 300,000 to 400,000 gallon
elevated storage tank, upgrades to SCADA system, new booster pump and piping changes,
completion of system study, system audit and leak survey, and updating system maps.
NOTE 14 - CONTINGENT LIABILITIES
The City is a defendant in various lawsuits. Although the outcome of these lawsuits is not
presently determinable, it is the opinion of the City's counsel that resolution of these matters will
not have a material adverse effect on the financial condition of the City.
The City of Demorest has been notified by the Georgia Environmental Protection Division that the
Demorest lake dam is unsafe and they must decide what action to take. The City is trying to get
funding to help with this project. Piedmont College owns the lake and has expressed interest in
helping the City in this project. The estimated cost of this project is about one million dollars.
25
REQUIRED SUPPLEMENTARY INFORMATION
(unaudited)
j
In accordance with the Governmental Accounting Standards Board Statement No. 34, I
The following information is a required part of the financial statements. !
CITY OF DEMOREST, GEORGIA
BUDGETARY COMPARISON SCHEDULE
GENERAL FUND
YEAR ENDED DECEMBER 31,2006
EXHIBIT 10
REVENUES
Taxes • Property
Franchise and Other
License and Permits
Charges for Services
Fines and Forfeitures
Other Revenue
Rent
TOTAL REVENUES
EXPENDITURES
General Government
Public Safety
Streets and Sanitation
Debt Service
TOTAL EXPENDITURES
EXCESS (DEFICIENCY) OF REVENUE
OVER EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers In
Transfers (Out)
TOTAL OTHER FINANCING
SOURCES (USES)
EXCESS OF REVENUE
AND OTHER FINANCING SOURCES
OVER (UNDER) EXPENDITURES AND
OTHER (USES)
FUND BALANCE BEGINNING OF YEAR
Original
Ammended
Budget
Budget
263,000 $
Actual
272,161 $
Variance
263,000 $
9,161
177,800
177,800
156,718
(21,082)
19,500
19,500
39,070
19,570
270,000
270,000
368,217
98,217
40,000
40,000
34,286
(5,714)
42,000
42,000
106,270
64,270
3,000
3,000
815,300
3.000
815,300
979,722
164.422
229,350
209,350
183,379
25,971
569,290
589,290
616,512
(27,222)
168,660
168,660
176,666
(8,006)
15,000
15,000
16,220
(1.220)
982,300
167,000
167,000
982,300
992,777
(167,000) (167,000) (13,055)
167,000
167,000
125,684
(113,091)
12,593
(10,477)
153,945
(41,316)
(113,091)
(154,407)
FUND BALANCE END OF YEAR
$ 243,698
' h
Budget was prepared on the modified accrual basis of accounting. Encumbrances are not included.
26
Marshall G Amos, CPA
Amos&
COMPANY
V-x Certified Public Accountants
210 Professional Drive • P.O. Box 216
Cornelia, Georgia 30531
706-778-2129
FAX 706-776-1783
www.AmosCPA.com
Members of
American Institute and
Georgia Society of
Certified Public Accountants
^ÏS!^0* C0MpLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL RFPORTnsrr
AND ON COMPLIANC|ANDOTHER MATTERS BASEd'oN^A^O^S^
STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STAMnAPpg
June 19,2007
To the Mayor and City Council
City of Demorest
Demorest, Georgia
líJS« *Af . , nanC1? statements of the governmental activities, the business-type activities, the
SSfor T™* Tfnted TP0"6"' UnitS' -d each maJ°r *"» of *e Ci* of DeSst, Ge*t-
of and for the year ended December 31,2006, which collectively comprise the City of Demorest, SSÏi
basic financial statements and have issued our report thereon dated June 19,2007. We conducted our ¿udit
m accordance with auditing standards generally accepted in the United States of America and the standards
SS* SeZZsmt COntaÌned Ìn G0VernmeM Auditing StandardS' iSSUCd by *■ Co*»"011«
Compliance and Other Matt««
As part of obtaining reasonable assurance about whether The City of Demorest's basic financial statements
are free of material misstatement, we performed tests of its compliance with certain provisions of laws,
regulations, contracts and grants, noncompliance with which could have a direct and material effect on the
determination of financial statements amounts. However, providing an opinion on compliance with those
provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The
resulte of our tests disclosed instances of noncompliance that is required to be reported under Government
Auditing Standards, issued by the Comptroller General of the United States, which are described in the
accompanying schedule of audit findings as item 05 - 1. We also noted certain additional matters that we
reported to Management of The City of Demorest in a separate letter dated June 19,2007.
Internal Control over Financial Reporting
In planning and performing our audit, we considered The City of Demorest's internal control over financial
reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the
basic financial statements and not to provide assurance on the internal control oyer financial reporting.
Our consideration of the internal control over financial reporting would not necessarily disclose all matters
m the internal control over financial reporting that might be a material weakness. A material weakness is a
condition m which the design or operation of one or more of the internal control components does not
reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to
the basic financial statements being audited may occur and not be detected within a timely period by
employees in the normal course of performing their assigned functions. We noted no matters involving the
internal control over financial reporting and its operation that we consider to be material weaknesses.
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This report is intended for the information and use of Management, the Mayor, members of City Council
and state and federal regulatory agencies and is not intended to be and should not be used by anyone other
than these specified parties.
Amos & Company, CPAs
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CITY OF DEMOREST
AUDITOR'S SCHEDULE OF FINDINGS AND QUESTIONED COST
FOR THE YEAR ENDED DECEMBER 31,2006
AUDIT FINDINGS - GENERALLY ACCEPTED GOVERNMENTAL AUDITING STANDARDS
COMPLIANCE
Finding
Number
06-1 Condition and Criteria:
Effect-
Recommendation:
Management Response:
Actual expenditures exceeded the legally adopted budget at the
department level. This is a violation of Georgia law.
Fiscal control and accountability over departmental expenditures may
be jeopardized.
The City council should amend the budget to prevent budgetary
deficiencies at the departmental level and salary line item level.
We continue to analyze budgetary financial date periodically and
investigate budgetary deficiencies. In the future we will adopt a
budget amendment when appropriate.
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