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Res 03-48 Approving the Comprehensive Annual Financial Report Year Ending September 30, 2002 TOWN OF WESTLAKE RESOLUTION NO. 03-48 A RESOLUTION OF THE BOARD OF ALDERMEN OF THE TOWN OF WESTLAKE, TEXAS APPROVING THE ANNUAL AUDIT FOR THE YEAR ENDED SEPTEMBER 30,2002 PRODUCED BY WHITLEY PENN. BE IT RESOLVED BY THE BOARD OF ALDERMEN OF THE TOWN OF WESTLAKE,TEXAS: SECTION 1: That the Board of Aldermen of the Town of Westlake does hereby approve the annual audit for the year ended September 30, 2002. SECTION 2: That this Resolution shall become effective upon the date of its passage. PASSED AND APPROVED ON THE 11"' DAY OF AUGUST 2003. G Scott Bradley,Mayor ATTEST: lo— Ging Crosswy, Tovit Secretary Trent Petty, Town Manager APPROVED AS TO FORM: L: S anton L© ,�' own attorney S IU3- 1 V TOWN OF WESTLAKE FINANCIAL STATEMENTS Year Ended September 30, 2002 with Report of Independent Auditors TOWN OF WESTLAKE FINANCIAL STATEMENTS Year Ended September 30, 2002 Table of Contents Reportof Independent Auditors ........................................................................................................ I Report on Compliance and on Internal Control over Financial Reporting........................................ 2 General Purpose Financial Statements: Combined Balance Sheet—All Fund Types,Account Groups And Discretely Presented Component Unit.................................................................... 4 Combined Statement of Revenues,Expenditures and Changes in Fund Balances—All Governmental Fund Types And Discretely Presented Component Unit.................................................................... 5 Combined Statement of Revenues; Expenditures and Changes in Fund Balances—Budget and Actual—General And Special RevenueFunds................................................................................................................ 6 Combined Statement of Revenues, Expenses and Changes in Retained Earnings—All Proprietary Fund Types........................................................... 7 Combined Statement of Cash Flows—All Proprietary Fund Types..................................... 8 Notes to the Financial Statements...................................................................................................... 9 Partners WH ' T L E Y PENN Larry G.Autrey, P.C. ter• CPRS AND PROFESSIONAL CONSULTANTS Felix J. Lozano lll, P.C. 5cottA. Mayfield, P.C. Ricky L. McBride, P.C. David L. Neal, P.C, REPORT OF INDEPENDENT AUDITORS James C. Penn, P.C. Thomasi.Rein,P.C. Mark A. Tope), PC. To the Honorable Mayor J.Alan White, P-c. and Board of Aldermen a.Glen,Whitley, P.0 Town of Westlake, Texas We have audited the accompanying general purpose combined financial statements of the Town of Westlake, Texas (the"Town") as of and for the year ended September 30,2002, as listed in the Table of Contents. These general purpose combined financial statements are the responsibility of the Town's management. Our responsibility is to express an opinion on the general purpose combined financial statements based on our 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 perforin the audit to obtain reasonable assurance about whether the general pose combined financial statements are free of material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the general purpose financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall general purpose combined financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the general purpose combined financial statements referred to above present fairly, in all material respects, the financial position of the Town of Westlake, Texas at September 30, 2002, and the results of its operations and the cash flows of its proprietary fund types for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated April 14, 2002, on our consideration of the Town of Westlake, Texas' internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in assessing the results of our audit. WTKC J Pu^— Fort Worth,Texas April 14, 2003 Dallas:5420 LB) Freeway,Suite 74.4o•Dallas,Texas 75240 e (972)392-6600•fax(972)392-66o1 Fart Worth:17o1 River Run Road,Suite 507•Fort Worth,Texas 76107-(817)258-9100 fax(817)877.3036 Mid-Cities:86o West Airport Freeway,Suite 6o1 • Hurst,Texas 76054• (817)258.9100-fax(817) 656.4013 www.w0coo.com REPORT ON COMPLIANCE AND INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Honorable Mayor and Board of Aldermen Town of Westlake,Texas We have audited the combined general purpose financial statements of the Town of Westlake, Texas (the "Town") as of and for the year ended September 30, 2002, and have issued our report thereon dated April 14, 2003. We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Compliance As part of obtaining reasonable assurance about whether the Town's combined general purpose financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grants, noncompliance with which could have a direct and material effect on the determination of combined general purpose financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards. Internal Control over Financial Reporting In planning and performing our audit, we considered the Town of Westlake's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the combined general purpose financial statements and not to provide assurance on the internal control over financial reporting. We noted certain matters involving the internal control over financial reporting and its operation that we consider to be reportable conditions,which we have reported to management of the Town of Westlake, Texas, in a separate letter dated April 14, 2003. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control over financial reporting that, in our judgment, could adverse] affect the Town's abilitti to record, process, sununarize. and report -Financia] data consistent with the assertions of management in the combined general purpose financial statements. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements caused by error or fraud in amounts that would be material in relation to the 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 matters involving the internal control over financial reporting and its operation that we consider to be material weaknesses, which we have reported to management of the Town of Westlake, Texas, in a separate letter dated !April 14, 2003. This report is intended for the information of the audit committee, management, the Honorable Mayor and Board of Aldermen and is not intended to be and should not be used by anyone other than these specified parties. W L,+� P"" April pi++.r*— April 14, 2403 TOWN OF WESTLAKE,TEXAS COMBINED BALANCE STIEET ALL FUND TYPES,ACCOUNT GROUPS AND DISCRETELY PRESENTED COMPONENT UNIT September 30,2002 T.1uh; Totals Proprielary Fiduciary Accuunt Alenrnrandom h1emnrnndum Governmental Fund Types Ftutd Types _ Fund Types Grumps Only Only Special Capital General Fixed General prinmq Cmnpouent Repro-ling General Revenue Projects -Enterprise Agency Assets_ Lang-Tern:Debt Gnverilumnl tfnit Emily ASSETS AND OTl II-.F,DEBUS- Cash and cash iri-iiiirnts S 1,322,795 3 1884 647 13,586,961 S 66,221 3 3,00() $ - $ - $ 16,863,624 $ 11,185 S 16,874,809 Rceaivnbles: Accounlsrecci,ble 29,082 - 5,055 137,136 - - - 171,271 - 171,273 Note rcceivablr-I)P3,currem 14,009 - - - - - - 14,009 - 14,009 Due From other fiund; 1,442,467 1,522,769 - - - - - 4,961 236 - 4465.236 lwer6md.advanee ,Jable - 132,451 - - 132,451 - 132,451 Property and equiperncnL act - - - 11,931,562 - 9,184,378 - 21,115,960 - 21,115,960 Restricled assets 527,761 - - 38,310 - - - 566.071 - 566,071 Note meeivahle-DPS,nomcuarent 85,575 - - - - _ - 65,575 - 85,575 Wastewater Treolmrm Rights,net - - - 566,149 - - - 566,149 - 566,119 Other debits: Amount to be provided for retirement cfbnnds,nobs,and-pi tat leases - - - 13,833,960 13,833,960 13,833,960 Total assets and other rIcbits 3 3421689 3 5,539,867 S 13,592,016 $ 12739,398 $ 3,000 $ 9,164,379 S 13833,960 $ 58,314,308 S 11,185 $ 58325,493 I_fAIIILITIES,FUM I 1-QLRTY, AND O`tl-rER Cf+I:I)ITS: Liahilitier. Accounts payable 3 1,298,430 $ 13.399 $ 8,808 3 147,822 $ 3,000 $ - $ - $ 1,471,459 3 - $ 1,471,459 Customer depcsils parable - - - 38,319 _ - -18,310 - 38,'10 Uire to other funds - 160,698 2,511,888 2,292,650 - _ - 4,965,236 - 4,965,236 Nate payable-Ci IN,nl KeOer - - - 40,308 - - 1.433,960 1.474,268 - 1,474,268 Accmed interest pa}ehle - 78,012 - - - - - 78,012 - 78,012 Bonds payable - - - - 12,400,000 12.400,000 - 12 400000 InterFund advalffies pnyablc - - - 132,451 - - - 132,451 - 132,451 Deferred revenue 423,234 107,321 - 530,555 530,555 Teed liabilities 1,721,664 252,109 2,520,696 2,758,862 3,000 - 53,833,960 21,090,291 - 21,090,291 FUND EQUITY AND OTHER CREDITS" Contrilnaad capital - - - 10,842,614 - 10,842,614 - 10,842614 Investment in general lined assets - - - - - 9,1&4,378 - 9,184,378 - 9,184,378 Relained earnings deficit) - - - (862,078) - _ _ (862,078) 11,185 (850,893) Fund balances Redacted - 5,287,758 - - - - - 5,287,758. - 5,287,755 Reserved Porcapilal projects - - 11,071,320 _ _ _ _ 11,071,320 - S 1,075370 1Jndesip,nalcd 1,700,025 - - _ - - 1,700,025 1,700,025 Total ritnd equity and nthercred'us 1,700,025_ 5,287,755 -11071 320 9,980,536 - 9,184,378 - 37,224,017 $1,185 37,235,202 Total liabilities and Fmd equity $ 3,421,689 S 5539,867 $ F3,592,016 $ t2739,398 $ 3,000 3 9,184,378 S 13,833,960 $ 58,314,308 3 11,185 $ 58325,493 The accnmpanyine nrttrs are an integral part of this statement. q TOWN OF WESTLAKE,TEXAS C1 MBINED STATENTEN'ror REVCNttFS,C\PCNDITURES AND CIIANGES IN FUND I]AI,ANCES ALL GOVERNMENTAL FUND TYPES AND DISCRETELY PRESENTED COMPONENT UNIT Year Ended September 30,2002 Fiduciary Fund Totals Memorandum Tatnls hlemornndum Governmental Fund Types Types Only Only Primary Reporting General Special Revenue Capi LAl Prnjects Agency Government Cumpnnenl Unit Enlily REt'r•_NUrS: 'razes: Sales $ 594,406 $ 594,406 S - $ - $ 1,188,812 S - $ 1,168,612 Mixed bevcrap.e 9,256 - - - 9,756 - 9,2-16 1101CI ocngrmi:y - 317,641 - - 317,641 - 317,841 Franchise 347,346 - - - 347,346 - 347,346 Inlerest income 49,075 65,089 237,079 351,243 196 351,439 Build'ntl;permits micl fees 253,919 - - Fines and pcnaltic, 401,755 _ _ 53,919 253.919 401,755 401,755 011tcrmiscellancaus income 233,578 - 97 8,367 242,042 242,042 Total revenues 1,859,335 977,336 237,176 5,367 3,1 12,214 194 3,1 12,410 E\PENI]ITURl.S: General government and ad-i.r,n tion 1,336,328 90,007 166,262 - 1,592,597 - 09-097 Pllblle snfely 730,998 - - - 730,998 - 7:0,998 Cultural and ieerealionni 10,472 - - 5,367 18,939 - 18,839 Economic development 17,079 - 1,076,594 - 1,093,673 - 1,093,673 1leallband%Mrare 276,591 - - - 276,591 - 276,591 Capital oullay 413,042 605,095 323,000 - 1,344,137 - 1,344,137 Debt Scrviee: Pri nci pal - lnteres[ - 78,012. - - 78,012 78,013 Tota1 ezpendifin- 2,784,510 776,114 1,565,856 8,367 5,134,847 5,134,847 Excess(de feiency)of revenues over expenditures (895,175) 201,222 (1,328,680) - (2,022,633) 196 (2,022,437) OTHER FINANCING SOURCES(USES): Long-tenn mvennr bond proceeds - - 12,400,000 - 12,400,000 - 17,400,000 Opersling transfers in 588,852 - - - 588,852 - 558,852 Operaling transfers not (558,852 - [888,852] (585,552) Net other Iimnicing sources(uses) 588,852 (588,1152) 12,400,000 - 12,400,000 12,400,000 Excess(deficiency)of revenues and ether source:',over expenditures and other uses (306,323) (357,630) 11,071,320 10,377,367 196 10.377,563 Fund balances m beginning ofyear,as previously stated 2,006,348 6,002,623 - - 8,068,971 10,989 8,019,960 Cen'ection of an cn m(Note l') - (327,235) (327,235) (337,235) Fund balances at beginning afyenr,restated 2,006,346 8,675,788 - - - 7,68 1,736 I0,989 7,442,725 Fund balances a1 end of year S 1,700,025 $ 5,287,758 $ 11,071,320 $ - $ 18.059,103 $ 11,185 S 18,070,288 The accompanyimp notes arc an sntcgraI part of dlis slnlenlent. 5 TOWN Of WESTLAKE,TEXAS COMB[NED STATEMENT OF REVENUES,EXPENDITURES AND CIIANGES IN FUND BALANCES BUDGET AND ACTUAL-GENERAL AND SPECIAL REVENUE FUNDS Year Ended September 30,2002 General Fend 5 tecinl Reremrc Ftmds Variance ravornhle/ Variance Favarahle REVENUES: Budget Actual (Dnravorable) Budget Achtal (Unfnvornhlc) - --- Taxes Sa1c3 S 641,215 $ 594,406 S (46,809) $ - $ 594,406 S 594,406 Aitced hcceraec 5,917 9,256 3,339 - - I101elOccup;rin-v - - - 430,675 317,841 (112,874) Franchise 351,291 347,346 (3,945) - - Interestincorne 35,195 49,075 17,880 11,000 65,069 K039 Building permits and fees 237,815 253,919 26,104 - - fines and peaaltie 325,000 401,755 76,755 _ Other miscellaneous income 525 233,578 233,D53 Total revenues 1,586,958 1,889,335 302,377 441,675 977,336 57 S,b61 EXPENDI'T'URES: General governmem and admiai w,6on 1286,875 1,336,325 (49,453) 120,439 90,007 30AJ2 public sarcty 574,534 730,998 (156,464) _ Cultural and rearcatianal 9,717 10,472 (755) 13conomic ticvetnpram 11,010 17,079 (6,069) I Iealth and avcll:rrc 188,500 276,591 (88,091) - Capital omiay 50,000 413,042 (363,042) 505,887 608,095 (99,20&) Deht Service; Principal - _ latcrest - - - - - 78,012 (75,012) Total expenditures 2,120,636 27845{0 (663874) 629,326 776,314 (146,758) Excess(deficiency)fl(revenues over (under)expendirures (537,678) (895,175) (361,497) (187,651) 201,222 388,873 OTITF R FINANCING:SOURCES(USES) Long-term revenue hind proceeds - _ Operating transfers in 620,887 588,852 (32,035) _ _ Operming transfers out - - - - - (588,852) Net other Onnnrirrg sources(uses) 620,887 589,852 (32,035) - (58R,852) (588,852) Excess(derrcicncy)nr revenues and other sources over(corder)expenditures and othcruscs 87,709 (306,373) (393,532) (I87,6S1) (387,630) (199,979) Fund balances at beginning ufycar 2006,348 2,006,348 _ - 6,002,623 6,602,623 - Concclion gran comm(Nate T) _ _ Fund halanec it the hcginning of the year(restated) 2,006348 2,006 348 - 6,002,627 5,675,388 (327,235) Ftmd halanees mend nryear S 2,093,557 $ 1,700,025 $ (393,532) $ 5,814,972 S 5,287,755 S (527,214) The accompanyirfe nores are an integral part orthis stelemenl. 6 TOWN OF WESTLAKE,TEXAS COMBINED STATEN'IENT OF REVENUES,EXPENSES AND CHANGES IN RETAINED EARNINGS ALL PROPRIETARY FUND TYPES Year Ended September 30,2002 Proprietary Fund Types Enterprise OPERATING REVENUES: Charges for services $ 757,786 "Total operating revenues 757,786 OPERATfNG EXPENSES: Payroll costs 29,125 Professional and contract services 73,474 Depreciation 288,561 Amortization of wastewater treatment rights 31,760 Water purchases-City of Fort Worth 531,540 Other operating costs 172,074 Total operating expenses 1,126,534 Operating income(loss) (368,748) NON-OPERATING EXPENSES: Interest expense 4,434 Total non-operating eepenses 4,434 Net income(loss) (373,182) Retained earnings(accumulated deficit)at beginning of year,as previously stated $ (464,753) Correction of an error(Note T) (24,143) Retained earnings(accumulated deficit)at beginning of year,restated (488.896) Accumulated deficit at end ofvear S (86?078) Contributed capital at beginning of year,as previously stated $ 5,952,170 Correction of an error(Note T) 2,168,789 Contributed capital at beginning ofyear,restated 8,120,959 Capital contributions-donated assets 2,721,655 Contributed capital at end of year $ 10.842.614 The accompanying notes are ari integral part of this statement. 7 TONVN OF WESTLAKE,TEXAS COMBINRD STATEMENT OF CASH FLOWS ALL PROPRIETARY FUND TYPES Year Ended September 30,2002 Proprietary Fwid Enterprise CASH FLOWS FROM OPERATING ACTIVITIES: Operating Income(Loss) (373,182) Adjustments to reconchhe Operating income(lass) to net cash provided by(used for)operating activities: Depreciation and amortization 320,321 Changes in operating assets and liabilities: Receivables (130,785) Restricted assets (12,110) Wastewater Treatment Rights - Accounts payable (157424) Customer-deposits payable 12,110 Due to other funds 1,634 Interfund advances payable 132,451 Deferred revenue 107,321 Not cash provided by(used for)operating activities 42:336 CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES - CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES (407308) Net Increase in Cash and Cash Equivalents 2,028 Cash and Cash Equivalents at Beginning of the Year 64,193 Cash and Cash Equivalents at End of the Year 5 66.221 Supplemental Disclosure of Cash Flow Information Acquisition of fixed assets through donations 2,721.655 The accompanying notes are an inte=31 pail of flus statement. 8 TOWN OF WESTLAKE,TEXAS NOTES TO FINANCIAL STATEMENTS September 30, 2002 A. General Statement The Town of Westlake, Texas (the"Town") was incorporated under the provisions of the laws of the State of Texas on December 26, 1956. The Town operates under a Board-Manager form of government and provides the following services as authorized by the laws of the State of Texas: public safety; cultural and recreation; and, economic development. The accounting and reporting policies of the Town conform with generally accepted accounting principles applicable to state and local governments. Generally accepted accounting principles for local governments include those principles prescribed by the Governmental Accounting Standards Board ("GASB"), the American Institute of Certified Public Accountants entitled Audits of State and Local Governmental Units and by the Financial Accounting Standards Board (when applicable). B. Summary of Significant Accounting Policies Financial Reporting Entity The Town's combined financial statements include the accounts of all Town operations. The criteria for including organizations as component units within the Town's reporting entity, as set forth in section 2100 of GASB's Codification of Governmental Accounting and Financial Reporting Standards includes whether: • the organization is legally separate(can sue and be sued in their own name); • the Town holds the corporate powers of the organization; • the Town appoints a voting majority of the organizationsboard; • the Town is able to impose its will on the organization; • the organization has the potential to impose a financial benefit/burden on the Town.; and, • there is fiscal dependency by the organization on the Town. Based on the aforementioned criteria, the Town of Westlake has one component unit, Tone Star Public Facilities Corporation, which uses the current financial resources measurement focus and modified accrual accounting. This component unit is reported discretely in the financial statements. Component Units Lone Star Public Facilities Corporation is a Texas non-profit corporation that acts on behalf of the Town to further the public purposes under the Public Facilities Corporation Act, as its duly constituted authority and instrumentality. 9 TOWN OF WESTLAKE, TEXAS NOTES TO FINANCIAL STATEMENTS (continued) B. Summary of Significant Accounting Policies- continued Basis of Presentation—Funds and Account Groups The accounts of the Town are organized into funds and account groups, each of which is considered to be a separate accounting entity. The major fund categories and account groups are: Governmental Funds: The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds and expendable trust funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. 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. Governmental funds are used to account for the relatively liquid portion of the Town's assets that are not accounted for through proprietary or fiduciary funds, the short-term obligations pertaining thereto and the net balance of these financial resources available for subsequent appropriation and expenditure. General Fund—To account for all financial resources except those required to be accounted for in another fund. The General Fund balance is available for any purpose, provided it is expended or transferred in accordance with the legally adopted budget of the Town. Special Revenue Fund—To account for the proceeds of specific revenue sources (other than special assessments, expendable trusts, or major capital projects) that are legally restricted to expenditures for specified purposes. Debt Service Fund —To account for the accumulation of resources for, and the payment of, general long-term debt principal, interest and related costs. The Town did not utilize this fund for the year ended September 30,2002. Capital .Projects Fund — To account for proceeds from long-term financing and revenue and expenditures related to authorized construction and other capital asset acquisitions. Proprietaa Fund Types: .Proprietary funds are those used to account for the Town's ongoing organizations and activities, which are similar to those found in the private sector. The measurement focus is upon capital maintenance and upon determination of net income, financial position and changes in financial position. The following are the proprietary fund types maintained by the Town: Enterprise Fund—To account for revenues and expenses related to providing water and sewer services to the general public on a continuing basis. Enter}rise fiend equity is segregated into contributed capital and retained camings. 10 TOWN OF WESTLAKE,TEXAS NOTES TO FINANCIAL STATEMENTS (continued) B. Summary of Accounting Policies - continued Fiduciag Fund Ti)pes: Fiduciary funds are used to account for assets held by the Town in a trustee capacity or as an agent for other governmental units and/or other funds. The following are the fiduciary fund types maintained by the Town: Agency Funds — To account for assets held by the Town in a trustee capacity or as an agent for individuals, private organizations, other governments and/or other funds. Agency funds are purely custodial (assets equal liabilities) and thus do not involve measurements of results of operations. Expendable Trust Funds — These funds are accounted for in the same manner as governmental funds. Account Groups.: Account groups are used to establish accounting control and accountability for the Town's general fixed assets and general long-term liabilities. The following are the account groups maintained by the Town: General Fixed Assets Account Group—To account for all fixed assets of the Town other than those accounted for in proprietary funds. Significant net interest expense during construction of assets is capitalized. General Long-Term Debt Account Group—To account for all unrnatured long-term liabilities of the Town other than those accounted for in proprietary funds, Measurement Focus/Basis of Accounting Measurement focus refers to what is being measured,Basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurement made, regardless of the measurement focus applied. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. A one-year availability period is used for recognition of all Governmental Fund revenues. Expenditures are recorded when the related fund liability is incurred. Exceptions to this general rule include accrued vacation and sick leave, which is recorded NT hen payable from cun7-ent available financial resources. The revenues susceptible to accrual are sales taxes, hotel/motel taxes, franchise fees, special assessments, building permits and fees, and interest income, Investment earnings are recorded when earned,because they are both measurable and available, 11 TOWN OF WESTLAKE,TEXAS NOTES TO FINANCIAL STATEMENTS (continued) B. Summary of Accounting Policies - continued Measurement Focus/Basis of Accounting- continued The accrual basis of accounting is used in proprietary fund types. The accrual basis of accounting recognizes revenues when earned. Expenses are recorded when incurred. Budgetary Control As set forth in the Town Charter, the Board of Aldermen adopts an annual budget prior to October 1 for the General and Proprietary Funds. The annual budget for the General and Proprietary Funds is prepared in accordance with the basis of accounting utilized by that fund and is legally enacted through passage of an ordinance. The Board of Alderman throughout the fiscal year can amend the budget. The Combined Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual — General and Special Revenue Funds presents a comparison of budgetary data to actual results of operations for which annual operating budgets are legally adopted. These funds utilize the same basis of accounting for both budgetary purposes and actual results. The formal budgetary accounting is to be employed as a management control for all funds of the Town, However, legal budgets will be adopted only for General Fund. The Town Manager is authorized to transfer budgeted amounts between line items and departments within any fund; however, the Board of Aldermen must approve any revisions that alter the total expenses/expenditures of any fund. Use of Estimates The preparation of the general purpose combined financial statements in conformity with accounting principles generally accepted in the United States of America requires the Town to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results may differ from those estimates. Cash and Investments Cash and Cash Investments of all funds, including restricted cash, are available upon demand and are considered to be"cash equivalents". The reporting entity considers highly-liquid investments (including restricted assets) with an original maturity of three months or less when purchased to be cash equivalents. All inr estrrlents are recorded at fair value based on quoted market prices. Fair-,-aloe is elle amount at which a financial instrument could be exchanged in a current transaction between willing parties. 12 TOWN OF WE STLA.KE' , TEXAS NOTES TO FINANCIAL STATEMENTS (continued) B. Summary of Accounting Policies- continued Interfund Receivables and Payables Short-tern amounts owed between funds are classified as "Due to/from other funds". Fund Changes and Transactions Between Funds Legally authorized transfers are treated as operating transfers and are included in the results of operations of both Governmental and Proprietary Funds. The Town transferred fixed assets from the General Fund to the Water and ,Sewer Fund. These transfers have been accounted for as contributed capital of the respective funds. The Town allocates to the Enterprise Funds an indirect cost percentage of the salaries and wages and related costs of personnel who perform administrative services for those funds but are paid through the General Fund along with other indirect costs deemed necessary for their operations. Property, Plant and Equipment General Fixed Assets Account Group Fixed assets used in Governmental Fund Type operations are accounted for in the General Fixed Assets Account Group, rather than in Governmental Funds. Public domain ("infrastructure") general fixed assets including roads, bridges, curbs and gutters, streets and sidewalks, drainage systems and lighting systems are not capitalized along with other general fixed assets for reporting purposes. No depreciation has been provided on any of the remaining assets. All fixed assets are valued at historical cost or estimated historical cost if actual historical cost is not available. Donated assets are valued at their fair market value on the date donated. Assets capitalized have an original cost of S 1,000 or more and over three years of life. Proprietary Fund Tomes Property, plant, and equipment owned by the Proprietary Fund is recorded at cost or, if contributed property, at their estimated fair value at time of contribution. Repairs and maintenance are recorded as expenses, and renewals and betterments are capitalized. Assets capitalized have an original cost of $1,000 or more and over three years of life. Depreciation has been calculated on each class of depreciable property using the straight-line method. Estimated useful lives are as follows: AYater and. Sev-er System 10-50 veal Machinery and Equipment 5-10 years Improvements 20 years 13 TOWN OF WESTLARE,TEXAS NOTES TO FINANCIAL STATEMENTS (continued) B. Summary of Accounting Policies — continued Compensated Absences The Town's policy allows employees to earn 10 days of vacation per year of employment. After completion of five years of service, 1.5 days per year are earned. After completion of la years of service, 20 days per year are earned. Any earned, but not used amount is payable upon termination.No accumulated, unused sick time is payable upon termination or retirement. Restricted and Designated Fund Equity Restricted fund balances are legally required segregations that are required by state law, corporate charters, or by agreement with third parties. Total Columns (Memorandum Only) Total columns on the combined financial statements are captioned "memorandum only" to indicate that they are presented only to facilitate financial analysis. Data in these columns does present financial position, results of operations, or changes in cash flows in conformity with generally accepted accounting principles. Interfund eliminations, if applicable, have not been made in the aggregation of this data; therefore, it is not comparable to a consolidation. C. Deposits and Investments State statutes govern the Town's investment policies. Town funds are deposited in U.S. federal Deposit Insurance Corporation ("FDIC") insured banks located within the Town and in the State of Texas Local Government Investment Pool ("TexPool"). Permissible investments include the following: 1. Obligations, of the U.S. or its agencies and instrumentalities; 2. Direct obligations of the. State of Texas or its agencies; 3. Other obligations, the principal and interest of which are unconditionally guaranteed by the State of Texas or the United States; 4. Obligations of states, agencies, counties, cities and other political subdivisions of any state having been rated as to the investment quality by a nationally recognized investment firm and having received a rating of not less than A or its equivalent,- 5. quivalent,S. Certificates of deposit issued by state and national banks domiciled in the State of Texas that are (ruaranteed or insured by the FDIC or secured by other obligations that have a Tnarket value of not less than the principal amount of the certificates; and, 14 TOWN OF WESTIAKE,TEXAS NOTES TO FINANCIAL STATEMENTS (continued) C. Deposits and Investments- continued 6. Fully collateralized direct repurchase agreements having a defined termination date, secured by direct obligations of the United States or its agencies and instrumentalities, pledged with a third party selected or approved by the Town, and placed through a primary government securities dealer, as defined by the Federal Reserve, or through a bank domiciled in the State of Texas. The Town did not engage in repurchase or reverse repurchase agreement transactions during the current year. Cash deposits held at financial institutions can be categorized according to three levels of risk. These three levels of risk are: Category 1 Deposits which are insured or collateralized with securities held by the Town or by its agent in the Town's name. Category 2 Deposits which are collateralized with securities held by the pledging financial institution's trust department or agent in the Town's name. Category 3 Deposits which are not collateralized. Based on these three levels of risk, all of the Town's cash deposits are classified as Category 3 at September 30;2002. State statutes, town ordinances and town resolutions authorize the Town to invest in the U.S. Treasury or the State of Texas, certain U.S. agencies, certificates of deposit, money market savings accounts, certain municipal securities, repurchase agreements, common trust funds and other investments specifically allowed by Chapter 2256 Public Funds Investment and Chapter 2257 Collateral for Public Funds of the Government Code. Similar to cash deposits, investments held at a financial institution can be categorized according to three levels of risk. These three levels of risk are: Category 1 Investments that are insured, registered or held by the Town or by its agent in the Town's name. Category 2 Investments that are uninsured and unregistered held by the pledging financial institution's trust department or agent in the Town's name. Category 3 Uninsured and unregistered investments held by the pledging financial institution, its trust department or its agent, but not in the Town's name. At September 30, 2002, the Town had 5534,400 of restricted cash on deposit with a fiscal agent. 15 TOWN OF WESTLAKE,TEXAS NOTES TO FINANCIAL STAMIENTS (continued) C. Deposits and Investments—continued During the year ended September 30, 2002, the Town had investments with TexPool. TexPool, a public funds investment pool created by the Treasurer of the State of Texas acting by and through the Texas Treasury Safekeeping Trust Company, is empowered to invest funds and acts as custodian of investments purchased with local investment funds. These investments are not required to be categorized because the investor is not issued securities, but rather it owns an undivided beneficial interest in the assets of the respective funds. The fair value of the position in TexPool is the same as the value of the pool shares. On September 1, 1989, local government investment pools became authorized investments for the majority of public entities in Texas. The Interlocal Cooperation Act was amended by the 71" Texas Legislature to facilitate the creation of local government investment pools in Texas. This act permits the creation of investment pools to which a majority of political subdivisions (local governments) may delegate, by contract, the authority to mare investments purchased with local investment funds and to hold legal title as custodian of the investments. TexPool was organized to conform with the Interlocal Cooperation Act, Chapter 791 of the Texas Government Code, and the Public Funds Investment Act, Chapter 2256 of the Texas Government Code. At September 30, 2002, the Town's investments included investment pools in the name of the Town or its agent in the Town's name. The Town's investments were as follows: Carrying Fair Amount Value Investments: Government Pool $ 15,322,188 S 15,322,188 Treasury Bills 1,474,869 1,474,869 Total investments 16,797,057 16,797,057 Cash 66,567 66,567 Total cash and investments $ 16,863,624 S 16,863,624 16 TOWN OF WESTLAKE,TEXAS NOTES TO FINANCIAL STATEMENTS (continued) D. Changes In General Fixed Assets A summary of the changes in general fixed assets,recorded at cost, for the year ended September 30, 2002 follows: Balance Balance 1011101 Additions Deletions Transfers 9130102 Automobiles $ - $ 4,515 $ - $ - $ 4,515 Improvements 1,533,722 478,956 - - 2,012,678 Land 2,006,410 2,432,163 - - 4,438,573 Machinery and equipment 196,660 - - - 196,660 Construction in Progress 1,466,000 1,065,952 - - 2,531,952 Total $ 5,202,792 $ 3,981,586 $ - $ - $ 9,184,378 During 2002, the Town received donated fixed assets totaling approximately $2,400,000. These assets have been recorded, at their fair market value at the date of donation, as land within the General Fixed Asset Account Group. The Town has elected under generally accepted accounting principles to not capitalize infrastructure fixed assets. A summary of Proprietary Fund Type property, plant and equipment at September 30, 2002 follows: Total Proprietary Funds Improvements $ 10,308,442 Machinery and equipment 2,145,495 Less Accumulated depreciation 522,355 Total $ 11,931,582 During 2002 the Town received donated fixed assets totaling approximately $2,700,000. These assets have been recorded, at their fair market value at the date of donation, as improvements and contributed capital within the Enterprise Fund. 17 TOWN OF WESTLAKE, TEXAS NOTES TO FINANCIAL STATEMENTS (continued) E. Restricted Assets General Fzzrzcl.° Restricted assets represent amounts received from surrounding towns, businesses, and residents that will benefit from the construction of FM 1938 of approximately $363,000 as of September 30, 2002. Funds received from an individual of approximately $75,000 are held to pay for construction of a trail for the benefit of the Town. Approximately 557,000 collected by the Municipal Court, on top of traditional citation revenue, is restricted to fund court security and technology. The remaining portion of the restricted cash in the general fund represents amounts received for lot development fees of approximately$32,000 that are refundable upon sale of the lot. Proprietary Fund: Within the proprietary fund, approximately $38,000 of funds represent customer deposits received for water and sewer usage that are refundable upon termination of service. F. Interlocal Agreement with Trophy ClublWestlake Department of Public Safety On April 24, 2000, the Town approved an interlocal agreement with the Trophy ClubfWestlake Department of Public Safety("DPS"), which called for the Town of Westlake to participate in the financing of an emergency vehicle for the DPS. The Town recorded a note receivable of $125,000 based on the terms of the interlocal agreement, The Agreement calls for eight principal and interest payments to the Town, with interest calculated at stated rate of interest of 6.75% simple interest. The schedule of future collections by the Town under this agreement,in each of the next six fiscal years, is as follows; Fiscal year ended September 30, Amount of Scheduled Collections Principal Interest Total 2003 S 14,009 S 6,722 S 20,731 2004 14,955 5,776 20,731 2005 15.964 4.767 20731 2006 17,042 3,689 20,731 2007 18,192 2,539 20,731 2008 19,420 1,311 20,731 Total $ 99,582 $ 24,804 S 124,386 18 TOWN OF WESTLAKE,TEXAS NOTES TO FINANCIAL STATEMENTS (continued) F. Interlocal Agreement with Trophy Club./Westlake Department of Public ,Safety- continued Effective June 1, 2002, the Trophy Club/Westlake Department of Public Safety was officially dissolved. The Town of Trophy Club will continue to repay the remaining debt according to the teens of the note. G. Interlocal Agreement with City of Keller for Police Services The Town entered into an interlocal agreement, for an initial term of 28 months commencing on June 1, 2002, and ending September 30, 2004, with the City of Keller in order to provide the Town's residents and businesses with full-time police protection and services. Some of these other services include 24-hour police dispatch services for 911 police dispatch, fire and emergency medical services, animal control and enforcement services,jail capacity and services for housing prisoners and crime reporting and maintenance of all required law enforcement activity reports/statistics pertinent to the Town. The Town's obligation under this agreement includes quarterly payments beginning October 1, 2002 for the following services: • to provide a facility to hold the Town's Municipal Court; • to provide services of a Municipal Judge and prosecuting attorney; and, • to provide a Town Marshall. The City of Keller may amend the annual payment due from the Town based upon the City of Keller's annual budgeted police services. The Town paid approximately$108,000 for these services as of September 30,2002. H. General Long-Term Debt Bonded indebtedness of the Town is reflected in the General Long-Term Debt Account Group and current requirements for principal and interest expenditures are accounted for in the Debt Service Fund. On February 1, 2002, the Town issued approximately $12,400,000 in Combination Tax and Limited Pledge Revenue Certificates of Obligation, Series 2002, with interest rates ranging from 5.75% to 6.50% maturing in 2032. The proceeds from the sale of the -Certificates will be used to build a new municipal complex in Westlake, Texas. Bond issuance costs have been recorded in the General Fund as general government and administrative expenditures at approximately S 155,000 as of Septcmbcr 30; 2002. 19 TOWN OF WESTLAKE, TEXAS NOTES TO FINANCIAL STATEMENTS (continued) H. General Long-Term Debt- continued Debt service requirements are as follows: Amount of Scheduled Requirements Fiscal year ended Total September 30, Principal Interest Requirements 2003 - S 927,600 $ 927,600 2004 - 742,080 742,080 2005 - 742,080 742,080 2006 210,000 742,080 952,080 2007 225,000 728,430 953,430 Thereafter 11,965,000 10,942,193 22,907,193 Total S 12,400,000 S 14,824,463 S 27,224,463 A summary of the changes in general long-term debt for the year ended September 30, 2002 follows: Interest Original Outstanding Outstanding Description Rate Issue 1011101 Issued Retired 9130102 5.00% Elevated Water to Storage Facility 5.65% $ 1,466,000 S 1,466,000 $ - S 32,040 $ 1,433,960 Combination Tax and Limited Pledge Revenue Certificates of 5.75% Obligation, Series to 2002 6.50% 12,400,000 - 12,400,000 - 12,400,000 Total $ 1,466,000 S 12,400,000 $ 32,040 $ 13,833,960 1. Continuing Disclosure The Certificates of Obligation issued during the year ended September 30, 2002, require the Town to provide certain updated financial information and operating data to certain information vendors annually, as permitted by SEC Rule 15c2-12 (the "Rule"). The issuer will provide the updated infonnation to each nationally recognized municipal securities information repository ("NRN-ISIR") and to any state information depository ("SID") that is designated by the State of Texas and approved by the staff of the United States Secuiities and Exchange Commission (the "SEC"}. 20 TOWN OF WESTLAKE, TEXAS NOTES TO FINANCIAL STATEMENTS (con inued) J. Deferred Revenue Deferred revenue accounted in the general fund of approximately $345,000 relates to amounts received from surrounding cities/towns, businesses, and residents that will benefit from the construction of FM 1938. Construction began on this capital project during the fiscal year ending September 30, 2002. Additional deferred revenue in the general fund of approximately $75,000, relates to funding received from an individual to pay for construction of trails, which has not yet begun as of the fiscal year ending September 30,2002. Deferred revenue in the proprietary fund of approximately $107,000 relates to the collection of the entire amount due on a 25 year lease with Verizon Southwest for use of the Town's ductbank. K. Concentrations of Credit Risk The Town maintains deposits in financial institutions, which may at times exceed amounts covered by insurance provided by the FDIC up to 5100,000. At September 30, 2002, the Town had deposits at one financial institution in excess of federally insured limits of approximately $169,000. The Town did not experience any losses as a result of not being fully insured in 2002. L. Commitments and Contingencies Lease Obligations The Town has commitments relative to municipal services, and contractual relationships concerning certain utilities and public safety resources, which are normal in its ongoing activity. Non-cancelable obligations consist of a lease of Town office space and agreements for services at September 30,2002. Minimum lease payments and contractual obligations under these non-cancelable leases and agreements as of September 30, 2002 are as follows: Fiscal Year End, September 30, Amount 2003 S 80,000 2004 65,000 Total S 145,000 Rental In 2003 tia erc approriniatcIy 5"=-1,000. 21 TOWN OF WESTLAKE,TEXAS NOTES TO FINANCIAL STATEMENTS (con inued) L. Commitments and Contingencies- continued Interlocal Agreement with City of Keller for Police Services In June 2002, the Town entered into an agreement with the City of Keller to provide certain services including police patrol units, 24-hour police dispatch, animal control and enforcement, jail capacity and housing for prisoners, and human resources for certain personnel for an initial term of 28 months commencing on June 1, 2002, and ending September 30, 2004. Under the agreement, fiscal year 2003 and 2004 annual payment amounts will be based on the City of Keller's budgeted amount for the police services being provided. Based on the fiscal year 2002/2003 police department operating and general and administrative budgets for the Town, the total base year cost estimated for the Town for fiscal year 2003 is approximately$635,000. Fiscal year 2004 annual payment will be based on the 2003/2004 City of Keller's estimated budget for these services, which has yet to be determined. Total payments under this agreement for fiscal year 2002 approximated$108,000. M. Note Payable City of Keller Surface Area System During 2001,the Town reached a settlement agreement with the City of Keller for certain surface area system equipment to be transferred to Town and included as part of its Enterprise Fund. As a result of this settlement agreement the Town is required to pay a total of$121,016 to the City of Keller over a three-year period, bearing interest at 5.50% per annum, beginning March 1, 2001 and continuing until March 1, 2003. The balance of this note is approximately $40,000 as of September 30, 2002. The schedule of future payments by the Town under this agreement, is as follows: Fiscal Year End September 30, Amount of Scheduled Payment Principal Interest Total 2003 $ 40,308 $ 2,217 $ 42,525 Total $ 40,308 $ 2,217 $ 42,525 Elevated Water Storage Facility On Cctcb-r 9, 2000, the Town approved an interlocal agreement with the Cin., of Keller, r hicl] provided for the joint construction, operation, maintenance and use of an elevated water storage facility and appurtenances. The Town recorded a note payable of$1,466,000 based on the terms of the interlocal agreement, which requires 20 annual principal and interest payments to the City of Keller,with the first payment due on September 30, 2001 at interest rates ranging from 5.0% to 5.65%. 22 TOWN OF WESTLAKE,TEXAS NOTES TO FINANCIAL STATEMENTS (continued) M. Note Payable City of Keller- continued Elevated Water Storage Facility -continued The schedule of future payments by the Town under this agreement, is as follows: Fiscal Year End September 30, Amount of Scheduled Payment Principal Interest Total 2003 $ 86,517 $ 75,569 $ 162,086 2004 46,466 72,984 119,450 2005 49,667 70;273 119,940 2006 52,873 67,374 120,247 2007 56,082 64,292 120,3.74 Thereafter 1,142,355 457,703 1,600,058 Total $ 1,433,960 $ 808;195 $ 2,242,155 N. Retirement Plan Plan Description—The Town provides pension benefits for all of its full-time employees through a non-traditional,joint contributory, defined contribution plan in the statewide Texas Municipal Retirement System ("TMRS"), one of over 700 administered by TMRS, an agent multiple- employer public employee retirement system. Contributions—are at a rate of 7% for the employees, and the Town matching ratio is currently 2 to 1, both as adopted by the governing body of the Town. Under the state law governing TMRS, the actuary annually determines the Town contribution rate. The rate was 9.75% of covered payroll for the months in calendar year 2002. This rate consists of the normal cost contribution rate and the prior service contribution rate, both of which are calculated to be a level percent of payroll from year to year. 23 TOWN OF WESTLAKE,TEXAS NOTES TO FINANCIAL STATEMENTS (continued) O, Individual Fund Disclosures (1) Enterprise Fund -- The Enterprise Fund's deficit balance in retained earnings of approximately $862,000 is the result of revenues inadequate to cover expenses including depreciation. Management intends to recover the accumulated deficit balance in retained earnings through future years' charges for services. (2) Interfund receivables and payables at September 30, 2002 were as follows: Due from Due to Fund Other Funds Other Funds General Fund $ 1,442,467 $ - Special Revenue Fund 3,522,769 160,698 Enterprise Fund - 2,511,888 Capital Projects - 2,292,650 4,965,236 $ 4,965,236 (3) Interfund advances and loans at September 30,2002 were as follows: Advance/Loan Advance/Loan Fund Payable Receivable Special Revenue Fund $ 132,451 $ - Enterprise Fund - 132,451 $ 132,451 $ 132,451 P. Water Purchase and Wastewater Treatment Contracts The Town has a contract with the City of Fort Worth, Texas to purchase water when the Town does not have and cannot provide economically and within a reasonable period of time, any other source of water supply, fully adequate to meet its present and/or future needs or potential emergency needs. Under the contract, the Town may obtain from the City of Fort Worth a supply of potable water at a reasonable rate based on water usage. The rate charges are subject to minimum annual contract payments. Water expense for the year ended September 30, 2002 was approximately $353,000. The Town has an agreement with the Trinity River Authority whereby the Trinity River Authority has agreed to provide a wastewater treatment system for the benefit of the Town. The Town's annual cxpensc for the year ended September 30, 2002 was approximately$78,000. 24 TOWN OF WESTLAKE,TEXAS NOTES TO FINANCIAL STATEMENTS (continued) Q. Self-Insurance As established by the Texas Labor Code Section 504.016 in order to deal with potential liabilities, the Town contracts with the Texas Municipal League to participate in a self-insured retention program ("SIR"), which is accounted for within the General Fund. Claims in excess of the self- insured retention amounts are covercd through third-party limited-coverage insurance policies. The Town is self-insured with excess coverage in these areas: (a)worker's compensation liability with no limit on each occurrence with no an annual aggregate; (b) general liability with a $3,000,000 and a $2,000,000 limit on each occurrence for limits on liability and sudden events involving pollution, respectively with an annual aggregate of $6,000,000; (c) law enforcement liability with a 53,000,000 limit on each occurrence with an annual aggregate of$6,000,000; (d) errors and omissions liability with a $3,000,000 limit for each wrongful act with an annual aggregate of$6,000,000; and., (e) automobile liability with a$3,000,000 limit on each occurrence. R. Contingent Liabilities Various claims and lawsuits are pending against the Town. In the opinion of Town management, after consultation with legal counsel, the potential loss on all claims and lawsuits will not materially effect the Town's financial position. S. Related Party Transactions On September 13, 1999, the Town entered into a five-year agreement with Petty and Associates, Inc. for Mr. Trent Petty to render services to the Town as its Town Manager. The agreement requires the Town to make annual payments to Petty and Associates in the amount of$120,000 per year, beginning September 27, 1999. In 2001, the agreement was amended and extended one year to terminate September 30, 2005. In 2002, this annual payment was increased by 8% to $145,152 beginning October 1, 2002. Payments under the agreement are recorded in the General Fund as general government and administrative expenditures. Future payments under this agreement as of September 30, 2002 are as follows: Fiscal Year End Payment September M, Amount 2003 S 145,000 2004 145,000 2005 145,000 Total 5 4.5,000 25 TOWN OF WESTLAKE,TEXAS NOTES TO FINANCIAL STATEMENTS (con inued) T. New Reporting Standard In June 1999, GASB issued Statement 34 Basic Financial Statements and Management's Discussion and f4nalysis for State and Local Governments. This Statement establishes new financial reporting requirements for state and local governments throughout the United States. When implemented, it will require new information and restructure much of the infonnation that governments have presented in the past. Comparability with reports issued in all prior years will be affected.The Town is required to implement this standard for the fiscal year ending September 30, 2004. The Town has not yet determined the full impact that adoption of GASB Statement 34 will have on the financial statements. U. Correction of an Error Special Revenue Fund During fiscal year 2002, management identified additional depreciation expense of $131,722, which should have been recorded in 2001, additional expenses that were inadvertently recorded in the incorrect fund in the amount of$76,626, as well as principal and interest expense recorded in 2002, which should have been recorded in 2001. The net effect of properly recording these amounts is to reduce fund balance by $327,235 at September 30, 2001. Enterprise Fund During fiscal year 2002, management identified additional depreciation expense of $100,769, which should have been recorded in 2001, as well as additional expenses that were inadvertently recorded twice in the amount of$76,626. The net effect of properly recording these amounts is to reduce retained earnings by$24,143 at September 30,2001. During fiscal year 2002, management identified fixed assets approximating $2,100,000, which should have been recorded in the Enterprise Fund in fiscal year 2001. The effect of recording these amounts is to increase the Enterprise Fund fixed assets by approximately $2,100,000 at of September 30, 2001, General Fixed Asset/Long-Term Debt Account Groups In the prior year, management reported a note payable to the City of Keller for elevated storage tank in the amount of S2,439,053, which inadvertently included interest in the amount of $973,000. During the current year, management restated its 2001 account balances in the General Fixed Asset and General Long-Term Debt Account Groups to properly reduce fixed assets and the associated note payable by$973,000 at September 30, 2001. General Fixed Asset account Group During fiscal year 2002, management identified fixed assets approximating $2,800,000, which should have been recorded in the General Fixed Asset Account Group in fiscal year 2001. The effect of recording these amounts is to increase the General Fixed Asset Account Group and Investments in General Fixed Assets by approximately $2,800,000 at of September 30, 2001. 26 TOWN OF WESTLAKE,TEXAS NOTES TO FINANCIAL STATEMENTS (con inued) V. Federal Emergency Management Agency Grant 7n August of 2002, the Town received notification from the Federal Emergency Management Agency ("FEMA")that its grant application submitted under FEMA's fiscal year 2002 Assistance to Firefighters Grant Program for Firefighting Vehicle was granted. Grant payments under the Assistance to Firefighter Grant Program are made on an advance or reimbursable basis for immediate cash needs. The funds are available to the grantee only during the performance period, which shall be from August 15, 2002 to August 14, 2003. The Town has not submitted any such reimbursement requests as of the year ended September 30, 2002. 27