The following document was not prepared by the Office of the State Auditor, but was prepared by and submitted to the Office of the State Auditor by a

Transcription

1 The following document was not prepared by the Office of the State Auditor, but was prepared by and submitted to the Office of the State Auditor by a private CPA firm. The document was placed on this web page as it was submitted. The Office of the State Auditor assumes no responsibility for its content or for any errors located in the document. Any questions of accuracy or authenticity concerning this document should be submitted to the CPA firm that prepared the document. The name and address of the CPA firm appears in the document.

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3 FINANCIAL REPORT CITY OF ABERDEEN Aberdeen, Mississippi September 30, 2007

4 TABLE OF CONTENTS INDEPENDENT AUDITORS' REPORT MANAGEMENT'S DISCUSSION AND ANALYSIS 3 5 BASIC FINANCIAL STATEMENTS: Statement of Net Assets - Government-Wide 14 Statement of Activities and Changes in Net Assets - Government-Wide 16 Balance Sheet - Governmental Funds 17 Reconciliation of Governmental Funds Balance Sheet to the Government-Wide Statement of Net Assets 18 Statement of Revenues, Expenditures and Changes in Fund Balances- Governmental Funds 19 Reconciliation of Governmental Funds Statement of Revenues, Expenditures and Changes in Fund- Balances to the Government-Wide Statement ofactivities and Changes in Net Assets 20 General Fund Statement of Revenues, Expenditures and Changes in Fund Balances- Budget and Actual- Budgetary Basis, 21 Statement of Net Assets - Proprietary Funds 22 Statement of Revenues, Expenses and Changes in Fund Net Assets Proprietary Funds 24 Statement of Cash Flows - Ptoprietary Funds 25 Combining Balance Sheet - Agency Fund Funds 26 Notes to Financial Statements 27 COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES: Non-Major Governmental Funds: Combining Balance Sheet Non-Major Governmental Funds.45 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance Non-Major Governmental Funds.46 Comparative Balance Sheet - General Fund.47 Comparative Statement of Revenues, Expenditures and Changes in Fund Balance - General Fund.48 Statement of Revenues, Expenditures and Changes in Fund Balance Budget and Actual - General Fund - Budgetary Basis 52 Combining Balance Sheet - Special Revenue Funds 56 Combining Statement ofrevenues, Expenditures and Changes in Fund Balances Special Revenue Fu nds ~ 57 Combined Statement of Revenues, Expenditures and Changes in Fund Balances Budget and Actual- AllSpecial Revenue Funds - Budgetary Basis 58 Combining Statement of Net Assets - Proprietary Fund Types 59 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets- Proprietary Fund Types 61 Combining Statement of Cash Flows - Proprietary Fund Types 62 Combining Balance Sheet - Capital Projects Funds : 63 Combining Statement of Revenues, Expenditures and Changes in Fund Balances -. Capital Projects Funds 64 OTHER SUPPLEMENTAL INFORMATION: Schedule of Expenditures of Federal Awards Schedule of Surety Bonds for Municipal Officials OTHER REPORTS: Independent Auditors' Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Independent Auditors' Report on Compliance with Requirements Applicable To Each Major Program and on Internal Control over Compliance In Accordance with OMB Circular A-133 Schedule of Findings and Responses

5 CEFlTIFIED PUBLIC ACCOUNTANT 114 NORTH HICKORY STREET P. O. BOX 201 ABERDEEN, MISSISSIPPI INDEPENDENT AUDITORS' REPORT PHONE 662 I FAX 662 I Honorable Mayor and City Council City of Aberdeen, Mississippi I have audited the accompanying basic financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information ofthe City of Aberdeen, Mississippi, as of and for the year ended September 30, 2007, which collectively comprise the City ofaberdeen's basic financial statements as listed in the table ofcontents. These financial statements are the responsibility ofthe City ofaberdeen, Mississippi's management. My responsibility is to express an opinion of these financial statements based on my audit. I conducted my 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 ofthe United States. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well.as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion. The City of Aberdeen - Electric Department's financial year ends on June 30, as required by regulatory bodies, and, therefore, all statements and information relating to the Electric Department in this report are for the fiscal year beginning July 1, 2006 and ending June 30, Management has not adopted a methodology for compiling complete and adequate subsidiary records documenting the existence, completeness and valuation of the fixed assets included in the governmental activities of the City or a methodology for determining the outstanding amount of court fines receivable. Accordingly, management has not calculated or provided any accumulated depreciation or depreciation expense or any provision for doubtful accounts related to the court fine receivables in the governmental funds ofthe City. Accounting principles generally accepted in the United States of America require that fixed assets, accumulated depreciation, depreciation expense and court fine receivables and related provision for doubtful accounts be provided. Fixed assets, accumulated depreciation, depreciation expense, court fine receivables and related provision for doubtful accounts would increase the assets, net assets and expenses of the general fund and other governmental funds of the City. The amount by which this departure would affect the assets, net assets and expenses of the general fund and other governmental funds is not reasonably determinable.. In my opinion, except for the effects of not providing information on fixed assets, accumulated depreciation, depreciation expense, court fine receivables and provision for doubtful accounts for the general fund or other governmental funds as described in the preceding paragraph, the primary government financial statements referred to above present fairly, in all material respects, the financial position of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information ofthe City of Aberdeen, Mississippi as ofseptember 30, - 3 MEMBER American Institute of Certified PUblic Accountants Mississippi Society of Certified Public Accountants

6 2007, and the respective changes in financial position, thereof, for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, I have also issued my report dated May 14, 2009 on my consideration of the City of Aberdeen, Mississippi's internal control over financial reporting and on my tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of my 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 GovernmentAuditing Standards and should be considered in assessing the results of my audit. The Management's Discussionand Analysis on pages 5 through 13 is not a required part of the basic financial statements but is supplementary information required by the Governmental Accounting Standards Board. I have applied certain limited procedures, which consisted principally of inquiries to management regarding the methods of measurement and presentation of the required supplementary information. However, I did not audit the information and express no opinion on it. My audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Aberdeen, Mississippi's basic financial statements. The combining and individual fund financial statements and other supplemental information, listed in the table of contents, are presented for purposes ofadditional analysis and are not a required part ofthe basic financial statements. The'accompanying schedule ofexpenditures offederal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is also not a required part of the basic financial statements of the City of Aberdeen, Mississippi. The combining and individual non-major fund financial statements and the schedule of expenditures of federal awards have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in my opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a Whole. R. Dale Pierce Certified Public Accountant May 14, r ~

7 MANAGEMENT'S DISCUSSION AND ANALYSIS Required Supplemental Information for the Year ended September 30, 2007 This section ofthe City ofaberdeen's Financial Report presents our discussion and analysis ofthe City's financial performance during the fiscal year ending September 30, Please read it in conjunction with the City of Aberdeen financial statements, which follow this section. FINANCIAL HIGHLIGHTS The assets of the City exceeded its liabilities at the close of the most recent fiscal year by 19,586,482. Of this amount, 4,182,906 may be used to meet the City of Aberdeen ongoing obligations to citizens and creditors. As of the close ofthe current fiscal year, the City of Aberdeen governmental funds reported. combined ending fund balances of 775,098, a decrease of148,742 in comparison to the prior year. Approximately 77% of the combined fund balances, 595,364 is considered unreserved and is available for spending at the City of Aberdeen discretion. The City's total net assets increased by 1,339,742. This increase is attributable to a significant amount of capital related grant funds receivedin the water and sewer fund and public works of the governmental funds. The City of Aberdeen's total debt is 7,704,368. Debt in the amount of 347,795 was issued in the current fiscal year, of which 272,800 was issued for enterprise fund capital assets or bond refunding. OVERVIEW OF THE FINANCIAL STATEMENTS This annual report consists offourparts-management's discussion andanalysis (this section), the basic financial statements, required supplementary information, and an optional section that presents combining statements for non-majorgovernmental funds. The basic financial statements include two kinds ofstatements that present different views of the City ofaberdeen. The first two statements are government-wide financial statements that provide both longterm and short-term information about the City of Aberdeen's overall financial status. The remaining statements are fund financial statements that focus on individual parts ofthe City of Aberdeen's operations in more detail than the government-wide statements. The Governmental Funds statements tell how general government services such as public safety were financed in the short term as well as what remains for future spending. The City of Aberdeen has four Governmental Fund types: the General, Special Revenue, Capital Projects and Debt Service. Proprietary fund statements offer short- and long-term financial information about the activities the govemment operates in a similar manner as businesses, and include the Electric and Water & Sewer funds. The financial statements also include notes that explain some of the information in the financial statements and provide more detailed data. In addition to these required elements, we have included asection with combining statements that provide details about our nonmajor governmental funds, each of which are added together and presented in single columns in the basic financial statements. -5

8 MANAGEMENT'S DISCUSSION AND ANALYSIS OVERVIEW OF THE FINANCIAL STATEMENTS (continued) Figure A-1 summarizes the major features of the City of Aberdeen's financial statements, including the portion of the City of Aberdeen they cover and the types of information they contain. The remainder of this overview section of management's discussion and analysis explains the structure and contents of each of the statements. Figure A-1 Major Features of the City of Aberdeen's Government - wide and Fund Financial Statements Scope Fund Statements Government - wide Governmental Proprietary Statements Funds Funds Entire City Government (except fiduciary funds) and the City's component units. The activities of the City that are not proprietary or fiduciary, such as police, fire, and parks and recreation Activities the City operates similar to private businesses: Electric Department and Water & Sewer. Required Statement of Net Balance Sheet; Statement of Net financial Assets; Statement of.assets; statements Statement of Activities Revenues, Expenditures, and Changes in Fund Balances Statement of Revenues, Expenses, and Changes in Net Assets' Statement of Net Cash Flows Accounting Accrual accounting Modified accrual Accrual accounting basis and and economic accounting and and economic measurement resources focus current financial resources focus focus resources focus Type of All assets and Only assets expected All assets and Asset/liability liabilities, both to be used up and liabilities, both information financial and capital, and short-term and long-term long~term liabilities that come due during the year or soon thereafter, no capital assets included financial and capital, and short-term and Type of All revenues and Revenues for which All revenues and inflow/outflow expenses during cash is received expenses during information year, regardless of when cash is received or paid during or soon after the end of the year, expenditures when goods or services have been received and payment is due during the year or soon thereafter year, regardless of when cash is received or paid -6

9 MANAGEMENT'S DISCUSSION AND ANALYSIS Government-wide statements The government-wide statements report information about the City of Aberdeen as a whole using accounting methods similar to those used by private-sector companies. The statement of net assets includes all of the government's assets and liabilities. All of the current year's revenues and expenses are accounted for in the statement of activities regardless of when cash is received or paid. The two government-wide statements report the City of Aberdeen's net assets and how they have changed. Net assets-the difference between the City of Aberdeen's assets and liabilities-is one way to measure the City of Aberdeen's financial health, or position. Over time, increases or decreases in the city of Aberdeen's net assets are an indicator of whether its financial health is improving or deteriorating, respectively. To assess the overall health of the City of Aberdeen, the reader should consider additional non-financial factors such as changes in the City of Aberdeen's property tax base. Governmental activities -Most of the City of Aberdeen's basic services are included here, such as the police, fire, public works, and parks and recreation departments, and general administration. Property taxes, sales and use taxes, and state and federal grants finance most of these activities.. Business-type activities - The City of Aberdeen charges fees to customers to help it cover the costs of certain services it provides. The City of Aberdeen's water and sewer systems and electric department services are included here. Fund Financial Statements The fund financial statements provide more detailed information about the City of Aberdeen's most significant funds-not the City as a whole. The "fund" level is where the basic unit of financial organization and operation within the City of Aberdeen exists. Funds are accounting tools that are used to keep track of specific sources of funding and spending for particular purposes. They are the basic budgetary and accounting entities. Some funds are required by State law and by bond covenants. The Board of Alderman establishes other funds to control and manage money for particular purposes or to show that it is properly using certain taxes and grants _..

10 MANAGEMENT'S DISCUSSION AND ANALYSIS The City of Aberdeen has two typesof funds: Governmental funds-most of the City of Aberdeen's basic services are included in governmental funds, which focus on (1) how cash and other financial assets that can readily be converted to cash flow in and out and (2) the balances left at year-end that are available for spending. Consequently,the governmental funds statements provide a detailed shortterm view that help determine whether there are more orfewerfinancialresources that can be spent in the near fljture to finance the City of Aberdeen's programs. Because this information does not encompass the additional long-term focus of the government-wide statements, we provide additional information at the bottom of the governmental funds statement, or on the subsequent page, that explains the relationship (or differences) between them. The measurement focus of governmental funds is upon determination of financial position and changes in financial position (sources, uses, and balance of financial resources) rather than upon net income determination. These funds are maintained on a modified accrual basis of accounting (explained further in the notes to the financial statements under "Summary of Significant Accounting Policies"). The basic financial statements for governmental funds are the Balance Sheet and the Statement of Revenues, Expenditures, and Changes in Fund Balance. The City of Aberdeen utilizes four types of governmental funds: the General Fund, Special Revenue Funds, Capital Projects Funds and Debt Service Funds. Proprietary funds~servicesfor which the City of Aberdeen charges customers a fee are generally reported in proprietary funds. Proprietary funds, like the government-wide statements, provide both long- and short-term financial information. The City has only one. type ofproprietary funds-enterprise funds. The City ofaberdeen's enterprise funds are the same as its business-type activities yet provide more detail and additional information, such as cash flows. The measurementfocus of proprietary funds is upon determination of net income, financial position and change in financial position. These funds are maintained on the accrual basis of accounting. The Balance Sheet, Statement of Revenues, Expenses and Changes in Retained Earnings, and Statement of Cash Flows are all required statements. Government-wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. The City of Aberdeen's assets exceeded liabilities by 19,586,482 at the close of the most recent fiscal year. A large portion, 74%, ofthe City's net assets reflects its investment in capital assets (such as land, buildings, machinery, equipment, and infrastructure), less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; however, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. -8 r

11 MANAGEMENT'S DISCUSSION AND ANALYSIS Table A-1 City of Aberdeen's Net Assets Current and Other Assets 1,574,308 5,110,760 6,685,068 Non-current Assets 1,064,970 22,143,085 23,208,055 Total Assets 2,639,278 27,253,845 29,893,123 Current and Other Liabilities 896,955 1,961,888 2,858,843 Long-Term Liabilities 743,305 6,704,493 7,447,798 Total liabilities 1,640,260 8,666,381 10,306,641 Net Assets: Invested in Capital Assets, Net of Related Debt 117,807 14,444,427 14,562,234 Restricted 179, ; ,342 Unrestricted 701,477 3,481,429 4,182,906 Total Net Assets 999,018 18,587,464 19,586,482 An additional portion of the City's net assets represents resources that are subject to external restrictions on how they may be used. The 4,182,906 of unrestricted net assets provide excess funds to meet the government's ongoing obligations to citizens and creditors. Unrestricted net assets of our business-type activities were 3,481,429 at the end of the current fiscal year. These resources cannot be used to add to the net asset surplus in governmental activities. The City of Aberdeen generally can only use these net assets to finance the continuing operations of the business type activities. Changes in net assets. Approximately 8.57 percent of the qity of Aberdeen's revenue comes from property taxes, with percent of all revenue coming from some type of tax. (See Table A-2.) Another percent comes from fees charged for services, and the balance is from operating and capital grants and contributions and investment earnings. Business- Governmental Type Total Activities Activities -9

12 MANAGEMENT'S DISCUSSION AN D ANALYSIS Table A-2 and the narrative that follows consider the operations of governmental and business-type activities separately. Table A-2 Changes in the City of Aberdeen's Net Assets Revenues Program Revenues: Charges for Services 738,015 14,558,504 15,296,519 Operating Grants & Contributions Capital Grants & Contributions 28,620 1,097,127 1,125,747 General Revenues: Property Taxes 1,762, ,762,833 Other Taxes 1,847, ,847,814 Grants & Contributions - Unrestricted 201, ,804 Investment Income 7,862 44,087 51,949 Other 286, ,326 Total Revenues 4,873,274 15,699,718 20,572,992 Expenses General Govemment 1,548, ,548,318 Public Safety 1,692, ,692,943 Public Works 1,034, ,034,350 Urban & Economic Development 68, ,505 Culture & Recreation 317, ,505 Debt Service 28, ,300 Water & Sewer 0 1,769,688 1,769,688 Electric 0 12,773,641 12,773,641 Solid Waste Management Total Expenses 4,689,921 14,543,329 19,233,250. Excess of Revenue Over Expenses 183,353 1,156,389 1,339,742 Transfers Increase in Net Assets 183,353 1,156,389 1,339,742 Net Assets - Beginning (as originally presented) 815,665 17,431,075 18,246,740 Prior Period Adjustment Net Assets Beginning (restated) 815,665 17,431,075 18,246,740 Net Assets Ending 999,018 18,587,464 19,586,482 Business- Governmental Type Activities Activities Total _ ~-- --~-_.

13 MANAGEMENT'S DISCUSSION AND ANALYSIS Governmental Activities Governmental activities increased the City's net assets by 183,353. Keyelements of this increase are as follows: The largest funding sources for the City's governmental activities, as a percent of total revenues, are other taxes (38%), property taxes (36%), and charges for services (15%). The largest expense categories for the City's governmental activities are public safety (36%), general government (33%) and public works (22%). Business-type Activities Business-type activities increased the City's net assets by 1,156,389. Key elements of this increase are as follows: Charges for services are the major revenue categories for the enterprise funds. Total business-type revenues are comprised of 1,365,002 for water and 13,193,502 for electric. Financial Analysis of the Government's Funds As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with financerelated legal requirements. Governmental funds-the focus of the City's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's financing requirements. In particular, unreserved fund balance may serve as a useful measure of the City's net resources available for spending at the end of the fiscal year. General Fund-The general fund is the chief operating fund of the City. At the end of the current fiscal year, unreserved fund balance ofthe general fund was (387,329), which comprised the total fund balance. As a measure of the general fund's liquidity, it may be useful to compare both the fund balance, reserved and unreserved, to total fund expenditures. Total fund balance represents 0% of total fund expenditures. The fund balance of the City's general fund decreased by 224,207 during the current fiscal year.. Special Revenue Fund-The special revenue fund is used to account for the programs and projects primarily funded by grants from the federal and state governments. At the end of the current fiscal year, the fund balance was 982,693, which will be used for future expenditures. Capital Projects Fund-The capital projects fund accounts for the construction and reconstruction of general public improvements, excluding projects related to business-type activities, which are accounted for elsewhere. At the end of the current fiscal year the fund balance was 179,734. ProprietaryFunds-The City's proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. The net assets of the proprietary funds at the end of the current fiscal year totaled 18,587,464. Changes in net assets, which totaled 1,156,389 were as follows: the electric fund increased by 425,474 and the water & sewer fund increased by 730,

14 MANAGEMENT'S DISCUSSION AND ANALYSIS Budgetary Highlights The City's annual budget, which is prepared on an operating basis, includes estimated revenues and annual appropriations for the proprietary funds as well as the governmental funds. The City's general fund operating budget increased by approximately 308,460 during the current fiscal year. The City's tax millage for the 2007 fiscal year remained constant from the prior year with no increase. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets-Implementation of GASB 34 requires the City to capitalize assets and record depreciation expense on the related assets, including infrastructure. The City has not fully implemented GASB 34 at this time. The City's investment in capital assets for its governmental and business-type activities as of September 30,2007, amounted to 22,266,602, net of accumulated depreciation of 10,985,196. This investment in capital assets includes land, buildings, improvements other than buildings, machinery & equipment, infrastructure, and construction in progress. Table A-3 City of Aberdeen's Capital Assets Land 0 196, ,459 Buildings 0 1, ,445,884 Improvements (other than buildings) 146, ,206 Machinery & Equipment 490,306 29, ,910,549 Infrastructure 427, ,811 Construction-in-progress 0.853, ,889 Accumulated Depreciation 0 (10.985,196) (10,985,196) Total 1,064,970 21,201,632 22,266,602 Business Governmental Type Activities Activities Total -12

15 MANAGEMENT'S DISCUSSION AND ANALYSIS Long-term Debt-At year-end, the city had 7,704,368 in bonds and notes outstanding. More detailed information about the city of Aberdeen's long-term liabilities is presented in the notes to the financial statements. Table A-4 City of Aberdeen's Outstanding Debt Bonds Payable - 695,000 2,940,000 3,635,000 - Notes Payable 252,163 3,817, ,368 Total 947,163 6,757,205 7,704,368 ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES The City considered current year operational expenses and estimated increases based on economic factors when establishing the fiscal year 2008 budget. CONTACTING THE CITY OF ABERDEEN FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the City of Aberdeen finances and to demonstrate the City's accountability for the money it receives. If you have questions about this report or need additional financial information, contact the City ofaberdeen's Accounting Department, 125 W. Commerce St. Aberdeen, MS Business- Governmental Type Activities Activities Total -13, _.. _

16 STATEMENT OF NET ASSETS - GOVERNMENT-WIDE September 30, 2007 Primary Government Governmental Business-Type Activities Activities Total ASSETS: Current Assets: Cash and Cash Equivalents 1,084,076 2,337,507 3,421,583 Accounts Receivable 80,090 2,145,580 2,225,670 Due From Other Funds 205, , ,069 Prepaid Expenses _ 98,400 15, ,215 Inventories 210, ,390 Ad Valorem Tax Receivable 106, ,113 Deferred Debits 132, ,028 TOTAL CURRENT ASSETS 1,574,308 5,110,760 6,685,068 Noncurrent Assets: Cash Invested - Reserved For FutureExpansion 661, ,608 Notes Receivable 279, ,845 Capital Assets: Land 196, ,459 Leasehold Improvements 146, , ,206 Plant, Buildings and Improvements 1,445,884 1,445,884 Machinery and Equipment 490,306 29,420,243 29,910,549 Infrastructure 427, ,811 Construction in Progress 853, ,889 Accumulated Depreciation (10,985,196) (10,985,196) TOTAL NONCURRENT ASSETS 1,064,970 22,143,085 23,208,055 TOTAL ASSETS 2,639,278 27,253,845 29,893, r ~----

17 STATEMENT OF NET ASSETS - GOVERNMENT-WIDE September 30, 2007 Primary Government Governmental Business-Type Activities Activities Total LIABILITIES: Current Liabilities: Accounts Payable and Accrued Expenses 201,051 1,124,459 1,325,510 Due to Other Funds 492, , ,562 Current Maturities of Long-Term Debt 203, , ,842 Customer Deposits 330, ,929 TOTAL CURRENT LIABILITIES 896,955 1,961,888 2,858,843 Noncurrent Liabilities: Advances TVA- Home Insulation Loans 269, ,272 Bonds Payable, net of current maturities 610,000 2,740,000 3,350,000 Notes Payable, net of current maturities 133,305 3,695,221 3,828,526 TOTAL NONCURRENT LIABILITIES 743,305 6,704,493 7,447,798 TOTAL LIABILITIES 1,640,260 8,666,381 10,306,641 NET ASSETS Invested in Capital Assets, Net of Related Debt 117,807 14,444,427 14,562,234 Restricted for: Debt Service 661, ,608 Capital Improvements 179, ,734 Special Revenue Unrestricted 701,477 3,481,429 4,182,906 TOTAL NET ASSETS 999,018 18,587,464 19,586,482 See accompanying notes to financial statements. -15,

18 FUNCTIONS/ PROGRAMS Expenses PRIMARY GOVERNMENT STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS GOVERNMENT-WIDE September 30, 2007 Charge for Servic~ PROGRAM REVENUES Operating Grants and COntribution~ Captial Grants and Contributions Total Governmental Activities Net (Expense) Revenue and Changes in Net Assets PRIMARY GOVERNMENT Business-Type Activities Total I... 0) I Government Activities: General Government 1,548,318 28,620 28,620 (1,519,698) (1,519,698) Public Safety 1,692, , ,685 (1,511,258) (1,511,258) Public Works 1,034, , ,330 (478,020) (478,020) Urban and Economic Development 68,505 - (68,505) - (68,505) Culture and Recreation 317,505 - (317,505) (317,505) Debt Service 28, (28,300) - (28,300) TOTAL GOVERNMENTAL ACTIVITIES 4,689, ,015 28, ,635 (3,923,286) (3,923,286) Business-Type Activities: Water and Sewer Electric 1,769,688 12,773,641 1,365,002 13,193,502-1,097,127 2,462,129 13,193, , ,861 TOTAL BUSINESS TYPE ACTIVITIES 14,543,329 14,558,504 1,097,127 15,655,631 1,112,302 1,112,302 TOTAL PRIMARY GOVERNMENT 19,233,250 = GENERAL REVENUES: 692, ,861 15,296,519 1,125,747 16,422,266 (3,923,286) 1,112,302 (2.,810,984) Taxes: Property Taxes, Levied for General Purposes Property Taxes, Levied for Debt Service Sales Taxes Franchise Taxes In Lieu Taxes Gasoline Taxes & Other Taxes Grants and Contributions not Restricted to Specific Programs Investment Earnings Reimbursements Rentals Miscellaneous Transfers 1,602, , ,294 49, , ,804 7, ,025 65,147 96,154-1,602, , ,294 49, , ,804 44,087 51, ,025 65,147 96,154 TOTAL GENERAL REVENUES AND TRANSFERS 4,106,639 44,087 4,150,726 CHANGE IN NET ASSETS 183,353 1,156,389 1,339,742 NET ASSETS--BEGINNING 815,665 17,431,075 18,246,740 NET ASSETS -ENDING 999,018 18,587,464 19,586,482 See accompanying notes to financial statements,

19 BALANCE SHEET GOVERNMENTAL FUNDS September 30, 2007 General Fund Other Governmental Funds Total Governmental Funds ASSETS: Cash and Cash Equivalents Accounts Receivable Prepaid Expenses Due From Other Funds 35,081 1,048,995 80,090 98,400 91, ,064 1,084,076 80,090 98, ,629 TOTAL ASSETS 206,736 1,261,459 1,468,195 LIABILITIES AND FUND BALANCES: Liabilities: Accounts Payable and Accrued Expenses Due to Other Funds 201, ,014 99, , ,046 TOTAL LIABILITIES 594,065 99, ,097 FUND BALANCES: Reserved: Capital Improvements Special Revenue Funds Undesignated (387,329) 179, , , ,364. TOTAL FUND BALANCES (387,329) 1,162, ,098 See accompanying notes to financial statements

20 RECONCILATION OF GOVERNMENTAL FUNDS BALANCE SHEET TO THE GOVERNMENT-WIDE STATEMENT OF NET ASSETS For the Year Ended September 30, 2007 TOTAL FUND BALANCES - TOTAL GOVERNMENTAL FUNDS 775,098 Amounts reported for Governmental Activities in the Statement of Net Assets are different because: Capital assets used in governmental activities are not current financial resources and therefore are not reported in the Governmental Funds Balance Sheet. 1,064,970 Long-term liabilities are not due and payable in the current period and therefore they are not reported in the Governmental Funds Balance Sheet. (947,163) Deferred revenues for deliquent property taxes deferred in the governmental funds because they will not be received within sixty days of the Consolidated Government's year end. 106,113 Accrual of court fine revenues to qualify as financial resources. NET ASSETS OF GOVERNMENTAL ACTIVITIES 999,018 See accompanying notes to financial statements. -18

21 STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS For the Year Ended Sept imber 30, 2007 General Fund Other Governmental Funds Total Governmental Funds REVENUES: General Property Taxes Sales and Use Taxes In Lieu Taxes Licenses and Permits Intergovernmental Municipal Aid Franchise Fees Penalties and Interest Grant Income Charges for Services Fines and Forfeits Interest Revenues Reimbursements Rentals Miscellaneous Revenues 1,572, , ,780 28,615 12,899 49,740 32,310 28, , , ,025 27,974 30, , ,905 7,336 37,173 2,397 1,732, , ,780 28, ,905 12,899 49,740 32,310 28, , ,685 7, ,025 65,147 32,634 TOTAL REVENUES 4,444, ,272 4,840,579 EXPENDITURES: Current: General Government Public Safety Public Works Culture and Recreation Urban and Economic Development Capital Outlay Debt Service 1,549,564 1,715,617 1,117, ,691 68,294 32,562 42,146 68,505 1, ,300 1,617,858 1,748,179 1,159, ,691 68,505 1, ,300 TOTAL EXPENDITURES 4,746, ,807 5,066,912 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (301,798) 75,465 (226,333) OTHER FINANCING SOURCES (USES) Proceeds from Issuance of Debt Proceeds from Sale of City Property Transfers (to) from Other Funds 74,996 2,595 74,996 2,595 TOTAL OTHER FINANCING SOURCES (USES) 77,591 77,591 NET CHANGE IN FUND BALANCES (224,207) 75,465 (148,742) FUND BALANCES - Beginning (163,122) 1,086, ,840 FUND BALANCES - Ending (387,329) 1,162, ,098 See accompanying notes to financial statements. -19

22 RECONCILATION OF GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE GOVERNMENT WIDE STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS For the Year Ended September 30, 2007 NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS (148,742) Amounts reported for Governmental Activities in the Statement of Activities are different because: Governmental Funds report capital outlay as expenditures; However, in the Govemment Wide Statement of Activities and Changes in Net Assets, the cost of those assets is allocated over their estimated useful lives as depreciation expense. This is the amount of capital assets recorded in the current period. 178,397 Depreciation expense on capital assets is reported in the Government-Wide Statement of Activities and Changes in Net Assets, but they do not require the use of current financial resources. Therefore, depreciation expense is not reported as expenditures in Govemmental Funds. Proceeds from the disposition of capital assets is reported as income in the Governmental Funds. The gain or loss on the sale of the capital assets and not the gross proceeds are reported as income in the Government-Wide Statement of Activities and Changes in Net Assets. Because some property taxes will not be collected for several months after the Govemment's fiscal year ends, they are not considered "available" revenues in the govemmental funds. 30,100 Revenues in the statement of activities that do not provide current financial resources and are not reported as revenues in the funds. Bond proceeds provide current financial resources to Governmental Funds, but issuing debt increases long-term liabilities in the Government-Wide Statement of Net Assets. Repayment of bond principal is an expenditure in Governmental Funds, but the repayment reduces long-term liabilities in the Government-Wide Statement of Net Assets. This amount represents pond proceeds and premiums. (74,996).This amount represents long-term debt repayments and issuance costs. 198,594 CHANGE IN NET ASSETS OF GOVERNMENTAL ACTIVITIES ===1=8=3,=35=3= See accompanying notes to financial statements. -20

23 GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL BUDGETARY BASIS For The Year Ended September 30, 2007 Original Budget Final Actual Variance with Final Budget REVENUES: General Property Taxes Sales and Use Taxes Licenses and Permits Franchise Fees Penalties and Interest Intergovernmental Revenues In Lieu Municipal Aid Grant Income Charges for Services Fines and Forfeits Interest Revenues Reimbursements Miscellaneous Revenues 1,557,750 1,557, , ,000 28,850 28,850 77,800 77,800 10,000 10, , ,000 15,000-15, , , , , ,350 _ 235, ,100 50,100 79,125 79,125 1,572, ,023 28,615 49,740 32, ,780 12,899 28, , , ,025 58,211 14,522 (28,977) (235) (28,060) 22,310 82,780 (2,101) (80,130) (32,070) (53,665) 26 74,925 (20,914) TOTAL REVENUES 4,491,625 4,491,625 4,440,036 (51,589) EXPENDITURES: Current: General Government Public Safety Public Works Culture and Recreation 1,597,419 1,512,478 1,089, ,169 1,624,472 1,689,260 1,133, ,692 1,549,564 1,715,617 1,117, ,691 74,908 (26,357) 15,959 1 TOTAL EXPENDITURES 4,502,156 4,810,616 4,746,105 64,511 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (10,531) (318,991) (306,069) 12,922 OTHER FINANCING SOURCES (USES): Transfers (to) from Other Funds Proceeds from Sale of City Property Proceeds from Issuance of Debt 10,531 10,531 2,595 74,996 (7,936) 74,996 TOTAL OTHER FINANCING SOURCES (USES) 10,531 10,531 77,591 67,060 EXCESS (DEFICIENCY) OF REVENUES AND OTHER SOURCES OVER FINANCING AND OTHER USES (308,460) (228,478) 79,982 See accompanying notes to financial statements

24 STATEMENT OF NET ASSETS PROPRIETARY FUND TYPES September 30,2007 BUSIN ESS-TYPE ACTIVITI ES- PROPRIETARY FUND WATER & ELECTRIC SEWER FUND FUND TOTAL ASSETS: Current Assets: Cash and Cash Equivalents Receivables, net Due from Other Funds Inventories Deferred Debits Prepaid Expenses 672,924 1,717, , ,144 74,906 12,540 1,664, ,003 41,246 57,122 3,275 2,337,507 2,145, , , ,028 15,815 Total Current Assets 2,916,531 2,194,229 5,110,760 Noncurrent Assets: Restricted Assets Notes Receivable Capital Assets: Land and Land Rights Leasehold Improvements. Plant, Buildings & Improvements Machinery and Equipment Accumulated Depreciation Construction Work In Progress 460, ,845 73, ,353 1,293,090 8,471,054 (4,617,130) 18, , , ,794 20,949,189 (6,368,066) 835, , , , ,353 1,445,884 29,420,243 (10,985,196) 853,889 Total Noncurrent Assets 6,249,734 15,893,351 22,143,085 Total Assets 9,166,265 18,087, ,253,

25 STATEMENT OF NET ASSETS PROPRIETARY FUND TYPES September 30, 2007 ELECTRIC FUND WATER & SEWER FUND TOTAL LIABILITIES Current Liabilities: Accounts Payable and Accrued Expenses Due to Other Funds Current Portion of Long-Term Debt Payable to TVA Customer Deposits Total Current Liabilities 1,037, , ,000 86, ,984 1,124, , , ,883 93, ,929 1,625, ,585 1,961,888 Long-Term Liabilities: Bonds, Notes, and Loans Payable, net TVA Home Insulation Advance Total Long-Term Liabilities Total Liabilities 2,070,000 4,365,221 6,435, , ,272 2,339,272 4,365,221 6,704,493 3,964,575 4,701,806 8,666,381 Net Assets Invested in Capital Assets, Net of Related Debt Restricted for: Debt Service Unrestricted Total Net Assets 3,274,183 11,170, ;444, , , ,608 1,466,801 2,014,628 3,481,429 5,201,690 13,385,774 18,587,464 See accompanying notes to financial statements. BUSINESS-TYPE ACTIVITIES ENTERPRISE FUNDS -23

26 CITY OF ABERDEEN; MISSISSIPPI STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2007 BUSINESS-TYPE ACTIVITIES- PROPRIETARY FUND ELECTRIC FUND WATER & SEWER FUND TOTALS OPERATING REVENUE: Charges For Services Other Revenues 13,193,502 1,365,002 14,558,504 Total Operating Revenue 13,193,502 1,365,002 14,558,504 OPERATING EXPENSES: Operations Purchased Power Maintenance Depreciation Taxes 882,587 10,873, , , , , , , ,488 1,547,265 10,873, , , ,335 Total Operating Expenses 12,668,288 1,586,735 14,255,023 Net Operating Income (Loss) 525,214 (221,733) 303,481 NON-OPERATING INCOME (EXPENSES): Interest Income Gain (Loss) on Equipment Sale Miscellaneous Income (Expense) Interest Expense 5,613 (3,539) (101,814) 38,474 (182,953) 44,087 (3,539) (284,767) Net Non-Operating Income (Loss) (99,740) (144,479) (244,219) Capital Contributions 1,097,127 1,097,127 Change in Net Assets 425, ,915 1,156,389 Total Beginning Net Assets 4,776,216 12,654,859 17,431,075 Total Ending Net Assets 5,201,690 13,385,774 18,587,464 See accompanying notes to financial statements ~---

27 CITY OF ABERDEEN,. MISSISSIPPI COMBINING STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS Year Ended September 30,2007 BUSINESS-TYPE ACTIVITIES- PROPRIETARY FUND ELECTRIC FUND WATER & SEWER FUND TOTALS Cash Flows from Operating Activities: Receipts from Customers Payments to Suppliers Payments to Employees Payments for Other Services and Charges Other Receipts (Payments) 13,061,428 1,360,289 (11,050,415) (1,059,350) (269,436) (86,704) (648,513) (476,847) 14,421,717 (12,109,765) (356,140) (648,513) (476,847) Net Cash Provided (Used) by Operating Activities 616, , ,452 Cash Flows from Capital and Related Financing Activities: Due To (From) Municipality Proceeds From Capital Debt Purchases of Capital Assets Proceeds from Sale of Capital Assets Proceeds From Capital Grants Principal Paid on Capital Debt Interest Paid on Capital Debt Conservation Advances From TVA Other Receipts (Payments) 10,715 (80,672) (155,000) (114,455) 17,865 8, ,785 (864,344) 1,289 1,097,127 (140,319) (183,128) 10, ,785 (945,016) 1,289 1,097,127 (295,319) (297,583) 17,865 8,323 Net Cash Provided by (Used In) Capital and Related Financing Activities (313,224) 183,410 (129,814) Cash Flows from Investing Activities: Interest and Dividends Receivable From Customers for Energy Conservation Loans Other Receipts (Payments) 5,613 (17,518) 38,474 44,087 (17,518) Net Cash Provided By (Used In) Investing Activities (11,905) 38,474 26,569 Net Increase (Decrease) In Cash and Cash Equivalents 291, , ,207 Cash and Cash Equivalents--Beginning 842,542 1,429,366 2,271,908. Cash and Cash Equivalents--Ending 1,133,630 1,865,485 2,999,115 Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities: Operating Income (Loss) 525,214 (221,733) 303,481 Adjustments to Reconcile Operating Income to Net Cash Provided (Used) by Operating Activities: Depreciation Expense (Increase) Decrease in Accounts Receivable (Increase) Decrease in Other Current Assets (Increase) Decrease in Inventory Increase (Decrease) in Accounts Payable Increase (Decrease) in Accrued Liabilities Increase (Decrease) in Customer Deposits Total Adjustments 232,898 (133,978) 29,217 (7,708) (54,867) 23,536 1,905 91, , ,694 (167,660) (4,221 ) (35,260) , , ,221 12,716 (138,443) (11,929) (90,127) 24,001 14, ,971 Net Cash Provided (Used) by Operating Activities. 616, , ,452 See accompanying notes to financial statements. -25

28 AGENCY FUNDS COMBINING BALANCE SHEET September 30, 2007 With Comparative Totals for September 30, 2006 Tax City Clerk's Redemption Tax Clearing Totals Fund Fund 9/30/07 9/30/06 ASSETS Cash Due From Other Funds 91,880 3,315 95,195 77,764 TOTAL ASSETS 91,880 3,315 95,195 77,764 ====== LIABILITIES Cash Overdraft Accounts Payable Due to Other Funds 9,309 82,571 3,315 9,309 85,886 3,219 74,545 TOTAL LIABILITIES 91,880 3,315 95,195 ===7=7,=7=64= -26

29 NOTES TO FINANCIAL STATEMENTS September 30, 2007 NOTE 1 - SUMMARY OF SIGNIFICANT POLICIES The City of Aberdeen, Mississippi operates under a Mayor - Alderman form of government and provides the following services: public safety (police & fire), public works (street and waste collection), recreation, building and ground improvements, utilities (electricity and water & sewer), community services, urban redevelopment and housing, public improvements and general administrative services. The primary government financial statements do not include funds of the Aberdeen School District or the Aberdeen Housing Authority, since these entities are administered by separate governing bodies. Government-Wide and Fund Financial Statements The City's basic financial statements consist of government-wide statements, including a statement of net assets and a statement of activities, and fund financial statements which provide a more detailed level of financial information. Government-Wide Financial Statements The statement of net assets and the statement of activities display information on all non-fiduciary activities of the primary government and its component units. The statement distinguishes between those activities of the City that are governmental, which are normally supported by taxes and intergovernmental revenues, and those that are considered business-type activities, which rely to a significant extent on fees and charges for support. The primary government is reported separately from certain legally separate component units for which the primary government is financially accountable. The statement of net assets presents the financial condition of the governmental and business-type activities for the City at year-end. The statement ofactivities presents a comparison between direct expenses and program revenues for each program or function of the City's governmental activities and for the business-type activities of the City. Direct expenses are those that are specifically associated with a service, program or department and therefore clearly identifiable to a particular function. Program revenues include charges paid by the recipient for the goods and services offered by the program, grants and contributions that are restricted to meeting the operational or capital requirements of a particular program and interest earned on grants that is required to be used to support a particular program. Revenues that are notclassified as program revenues are presented as general revenues of the City, with certain limited exceptions. The comparison of direct expenses with program revenues identifies the extent to which each business segment or governmental function is self-financing or draws from the general revenues of the City. Fund Financial Statements During the year, the City segregates transactions related to certain City functions or activities in separate funds in order to aid financial management and to demonstrate legal compliance. Fund financial statements are designed to present financial information of the City at this more detailed level. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the governmental-wide financial -27

30 NOTES TO FINANCIAL STATEMENTS September 30, 2007 NOTE 1 - SUMMARY OF SIGNIFICANT POLICIES (continued) statements. Major individual governmental funds and major individual enterprise funds are reported in separate columns in the fund financial statements. Nonmajor funds, where applicable, are aggregated and presented in a single column. Fiduciary funds are reported by type. Measurement Focus, Basis of Accounting and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are proprietary fund and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of the related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Government fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible in the current period or soon enough thereafter to pay liabilities of the current period. For this purposes, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred. as under accrual accounting. However, debt services expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Significant revenues considered to be susceptible to accrual in addition to general property taxes include sales tax and various categorical grants. The City reports the following governmental funds: General Fund - The General Fund is used to account for all financial resources of the primary government except those required to be accounted for in another fund. The majority of current operations are financed by this fund. Transfers to other funds and agencies are made from this fund. Monies from other funds may be received unless prohibited bythe purpose and object ofsuch funds. This is a major fund. Debt Service Fund - The Debt Service Fund was established to receive and account for resources restricted for the payment of interest and principal on general improvement and school bonds, and notes and capital leases. This is a non-major governmental fund. Special Revenue Fund - The Special Revenue Fund is used to account for the proceeds of specific federal and state grants that are legally restricted to expenditures for specified purposes. This is a non-major governmental fund. Capital Project Fund - The Capital Projects Fund is used to account for the acquisition or construction of major capital facilities other than those financed by proprietary funds. This is a nonmajor governmental fund. -28