ODESSA WATER DISTRICT
JUNE 30, 2024
BASIC FINANCIAL STATEMENTS AND
INDEPENDENT AUDITORS’ REPORT
ODESSA WATER DISTRICT
Basic Financial Statements and
Independent Auditors’ Report
For the Year Ended June 30, 2024
ODESSA WATER DISTRICT
Basic Financial Statements and
Independent Auditors’ Report
For the Year Ended June 30, 2024
Table of Contents
Page
Number
FINANCIAL SECTION
INDEPENDENT AUDITORS’ REPORT ................................................................................................................ 1 BASIC FINANCIAL STATEMENTS:
Government-Wide Financial Statements:
Statement of Net Position ......................................................................................................................... 6 Statement of Activities .............................................................................................................................. 7 Fund Financial Statements:
Balance Sheet .......................................................................................................................................... 9 Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide Statement of Net Position ........................................................................ 10 Statement of Revenues, Expenditures and Changes in Fund Balances .......................................................................................................................................... 11 Reconciliation of the Government Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Government-Wide Statement of Activities ...................................................................................................................... 12 Notes to Basic Financial Statements ............................................................................................................ 14
REQUIRED SUPPLEMENTARY INFORMATION
Budgetary Basis of Accounting ..................................................................................................................... 21 Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual – General Fund ..................................................................................................... 21 Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards.................................................................. 22 LSLCPAS.COM
INDEPENDENT AUDITOR’S REPORT
To the Board of Directors
Odessa Water District
City of Barstow, California
Report on the Audit of the Financial Statements
Opinion
We have audited the accompanying financial statements of the governmental activities and the general fund information of the Odessa Water District, California (the “District”), a component unit of the City of Barstow, California (the “City”) as of and for the year ended June 30, 2024, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and general fund information of the District as of June 30, 2024, and the respective changes in financial position, for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the United States of America, the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, and the State Controller’s Minimum Audit Standards for California Special Districts.
Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the District and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Emphasis of Matter
As discussed in Note 1, the financial statements of the Odessa Water District are intended to present the financial position, the changes in financial position, and, where applicable, cash flows of only that portion of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City that is attributable to the transactions of the District. They do not purport to, and do not, present fairly the financial position of the City, as of June 30, 2023, the changes in its financial position, or, where applicable, its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Our opinion is not modified with respect to this matter.
Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.
To the Board of Directors
Odessa Water District
City of Barstow, California
Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions.
Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards, Government Auditing Standards, and the State Controller’s Minimum Audit Standards for California Special Districts will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with generally accepted auditing standards, Government Auditing Standards, and the State Controller’s Minimum Audit Standards for California Special Districts, we:
x Exercise professional judgment and maintain professional skepticism throughout the audit. x Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. x Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, no such opinion is expressed. x Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. x Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the budgetary comparison schedule for the General Fund presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. 2 To the Board of Directors
Odessa Water District
City of Barstow, California
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated March 31, 2025, on our consideration of the District’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering District’s internal control over financial reporting and compliance.
Irvine, California
March 31, 2025
3 BASIC FINANCIAL STATEMENTS
4 GOVERNMENT-WIDE FINANCIAL STATEMENTS
5 ODESSA WATER DISTRICT
Statement of Net Position
Governmental
Activities
Assets:
Capital assets not being depreciated $ 85,000
Total Assets 85,000
Liabilities:
Due to Barstow Successor Agency 104,813
Total Liabilities 104,813
Net Position:
Invested in capital assets 85,000
Unrestricted (104,813)
Total Net Position $ (19,813)
June 30, 2024
See Notes to Financial Statements.
6 ODESSA WATER DISTRICT
Statement of Activities
Year Ended June 30, 2024
Net (Expense)
Revenue and
Changes in Net
Position
Operating Capital
Charges for Contributions Contributions Governmental
Expenses Services and Grants and Grants Activities
Functions/Programs
Primary Government:
Governmental Activities:
Public works $ 4,200 $ - $ - $ - $ (4,200)
Total Governmental Activities 4,200 - - - (4,200)
Total Primary Government $ 4,200 $ - $ - $ - (4,200)
Change in Net Position (4,200)
Net Position at Beginning of Year (15,613)
Net Position at End of Year $ (19,813)
Program Revenues
See Notes to Financial Statements.
7 FUND FINANCIAL STATEMENTS
8 ODESSA WATER DISTRICT
Balance Sheet
Governmental Funds
June 30, 2023
General Fund
Liabilities and Fund Balances
Liabilities:
Due to Successor Agency $ 104,813
Total Liabilities 104,813
Fund Balances:
Unassigned (104,813)
Total Fund Balances (104,813)
Total Liabilities and Fund Balances $ -
See Notes to Financial Statements.
9 ODESSA WATER DISTRICT
Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position
June 30, 2024
Fund balances of governmental funds $ (104,813)
Amounts reported for governmental activities in the statement of net position are different because:
Capital assets net of depreciation have not been included as financial resources in governmental fund activity. 85,000
Net Position of Governmental Activities $ (19,813)
See Notes to Financial Statements.
10 ODESSA WATER DISTRICT
Statement of Revenues,
Expenditures and Changes in Fund Balances
Governmental Funds
Year Ended June 30, 2023
General Fund
Expenditures:
Public Works
Fees and Services $ 4,200
Total Expenditures 4,200
Net Change in Fund Balances (4,200)
Fund Balances
Beginning of year (100,613)
End of Year $ (104,813)
See Notes to Financial Statements.
11 ODESSA WATER DISTRICT
Reconciliation of the Statement of Revenues, Expenditures, And Changes in Fund Balances of Governmental Funds
to the Statement of Activities
Year Ended June 30, 2024
Net change in fund balances - total governmental funds (4,200) $ Change in Net Position of Governmental Activities $ (4,200) See Notes to Financial Statements.
12 NOTES TO BASIC FINANCIAL STATEMENTS
13 ODESSA WATER DISTRICT
Notes to Financial Statements
For the Year Ended June 30, 2024
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The basic financial statements of the Odessa Water District (District) have been prepared in conformity with generally accepted accounting principles (GAAP) in the United States as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant of the District’s accounting policies are described below:
A. Description of Reporting Entity
The Odessa Water District (District) was established on July 5, 1993, pursuant to legislation approved by the State in 1991 to provide water resources to the City. The City Council acts as the District’s governing board and exerts significant influence over its operations. The City is responsible for the District’s obligations.
The District is an integral part of the City of Barstow (City), and the accompanying basic financial statements are included as a component unit of the basic financial statements prepared by the City.
B. Basis of Accounting/Measurement Focus
The accounts of the District are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses, as appropriate. Governmental resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled.
Government - Wide Financial Statements - The District’s government-wide financial statements include a Statement of Net Position and a Statement of Activities. These statements present summaries of governmental activities for the District.
These financial statements are presented on an “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all of the District’s assets and liabilities, including capital assets and long-term liabilities, are included in the accompanying Statement of Net Position. The Statement of Activities presents changes in net position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred.
Certain eliminations have been made as prescribed by GASB Statement No. 34 in regard to interfund activities, payables and receivables. All internal balances in the Statement of Net Position have been eliminated except those representing balances between the governmental activities, which are presented as internal balances and eliminated in the total primary government column. The District had no interfund activities for the fiscal year ended June 30, 2024.
Governmental Fund Financial Statements - Governmental fund financial statements include a Balance Sheet and a Statement of Revenues, Expenditures and Changes in Fund Balances for all major governmental funds. An accompanying schedule is presented to reconcile and explain the differences in net position as presented in these statements to the net position presented in the government-wide financial statements. The District has one major fund.
The following is the District’s major fund:
General Fund - This fund is the District’s primary operating fund. It accounts for all financial resources of the District.
All governmental funds are accounted for on a spending, or "current financial resources" measurement focus and the modified accrual basis of accounting. Accordingly, only current assets and current liabilities are included on the Balance Sheet. The Statement of Revenues, Expenditures and Changes in Fund Balances present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Under modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period. 14 ODESSA WATER DISTRICT
Notes to Financial Statements
For the Year Ended June 30, 2024
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Revenues are recorded when received in cash, except that revenues subject to accrual (generally received within 90 days after year-end). The primary revenue sources, which have been treated as susceptible to accrual by the District, are property taxes, intergovernmental revenues, and other taxes and investment income. Expenditures are recorded in the accounting period in which the related fund liability is incurred except for claims, judgments, compensated absence, interest on long-term debt, which is recognized when paid.
Unavailable revenues arise when potential revenues do not meet both the “measurable” and “available” criteria for recognition in the current period. Unavailable revenues also arise when the government receives resources before it has a legal claim to them, as when grant monies are received prior to incurring qualifying expenditures.
In subsequent periods when both revenue recognition criteria are met or when the government has a legal claim to the resources, the unavailable revenue is removed from the combined balance sheet and revenue is recognized.
The Reconciliation of the Fund Financial Statements to the Government-Wide Financial Statements is provided to explain the differences created by the integrated approach of GASB Statement No. 34.
C. Cash and Cash Equivalents
The District considers cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition to be cash and cash equivalents.
D. Investments
The District has adopted the provisions of Governmental Accounting Standards Board (GASB) Statement No. 31 “Accounting and Financial Reporting for Certain Investments and External Pools”, which require governmental entities to report certain investments at fair value in the balance sheet and recognize the corresponding change in the fair value of investments in the year in which the change occurred. In accordance with GASB Statement No. 31, the District has adjusted certain investments to fair value (when material).
Investments, if any, are reported in the financial statements at fair value, unless fair value reasonably approximates cost, in which case cost is used.
E. Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
F. Capital Assets
The District’s buildings, machinery, equipment, infrastructure and intangible assets with useful lives of more than two years are stated at historical cost or estimated historical cost and reported in the government-wide financial statements. Donated assets are stated at fair value on the date donated. The District updated its Capital Asset Policy on June 16, 2014 per Board approval. The District capitalizes its assets as follows:
Buildings and Building Improvement Costs of $50,000 or more Furniture Costs of $20,000 or more
Equipment Costs of $20,000 or more
Infrastructure Costs of $100,000 or more
The costs of normal maintenance and repairs that do not add to the asset value or materially extend useful lives are not capitalized. Capital assets are depreciated using the straight-line method. When capital assets are disposed, the cost and applicable accumulated depreciation are removed from the respective accounts, and the resulting gain or loss is recorded in operations.
15 ODESSA WATER DISTRICT
Notes to Financial Statements
For the Year Ended June 30, 2024
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Amortization of assets acquired under capital leases is based on the shorter of the lease term or the estimated useful life of the asset and is included in depreciation and amortization. Water rights, which are intangible assets, are not amortized. Estimated useful lives, in years, for depreciable assets are as follows:
Buildings 50 years
Infrastructure and improvements other than buildings 10-100 years Machinery and equipment 3-15 years
G. Fund Balances
In the fund financial statements, fund balances represent the net current assets of each fund. Net current assets generally represent a fund’s cash and receivables, less its liabilities.
As prescribed by GASB Statement No. 54, governmental funds report fund balance in classifications based primarily on the extent to which the District is bound to honor constraints on the specific purposes for which amounts in the funds can be spent. As of June 30, 2024, fund balances for governmental funds are made up of the following:
Nonspendable Fund Balance includes amounts that are (a) not in spendable form, or (b) legally or contractually required to be maintained intact. The “not in spendable form” criterion includes items that are not expected to be converted to cash, for example: inventories, prepaid amounts, and long-term loans receivable. The District does not have any nonspendable fund balances.
Restricted Fund Balance includes amounts that can be spent only for the specific purposes stipulated by external resource providers, constitutionally or through enabling legislation. Restrictions may effectively be changed or lifted only with the consent of resource providers. The District does not have any restricted fund balances.
Committed Fund Balance includes amounts that can only be used for the specific purposes determined by a formal action of the District’s highest level of decision-making authority, the Board of Directors, by passage of an ordinance or resolution. Commitments may be changed or lifted only by the District taking the same formal action that imposed the constraint originally. The District does not have any committed fund balances.
Assigned Fund Balance comprises amounts intended to be used by the District for specific purposes that are neither restricted nor committed. The District has not designated any level of authority for assigning fund balance; therefore, the Board of Directors can assign fund balance. The District does not have any assigned fund balances.
Unassigned Fund Balance is the residual classification for the general fund and includes all amounts not contained in the other classifications. Unassigned amounts are technically available for any purpose. In other governmental funds, if expenditures exceed amounts restricted, committed, or assigned, the negative amount is reflected as negative unassigned fund balance.
In circumstances when an expenditure is made for a purpose for which amounts are available in multiple fund balance classifications, fund balance is generally depleted in the order of restricted, committed, assigned, and unassigned.
The District is required to recognize a liability for compensated absences when future payments for such absences have been earned by employees based on pay and salary rated in effect at the balance sheet date. For the District, this consists of accumulated sick leave, vacation and compensation time. 16 ODESSA WATER DISTRICT
Notes to Financial Statements
For the Year Ended June 30, 2024
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) H. Net Position
In the government-wide financial statements, net position is classified in the following categories:
Net Investment in Capital Assets – This amount consists of capital assets net of accumulated depreciation and reduced by outstanding debt that attributed to the acquisition, construction, or improvement of the assets.
Unrestricted Net Position – This amount is the remaining net position that does not meet the definition of “net investment in capital assets” or “restricted net position.” NOTE 2: CASH AND INVESTMENTS
The City’s treasurer maintains a cash and investment pool used by all funds of the City and by certain component units of the City, including the District. The District does not own specifically identifiable securities of the City’s pool. The District’s portion of this pool is reported on the financial statements as “cash and investments”. Investment policies and associated risk factors applicable to the District’s funds are those of the City of Barstow and are included in the City’s Comprehensive Annual Financial Report.
At June 30, 2024, the District’s cash and investments balance pooled with the City is $0.
The following disclosures are based upon the City of Barstow’s investment policy which the District is subject to.
A. Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits, or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g. broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and the City’s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits.
The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits.
As of June 30, 2024, none of the City’s deposits with financial institutions in excess of federal depository insurance limits were held in uncollateralized accounts. As of June 30, 2024, no City investments were held by the same broker-dealer (counterparty) that was used by the City to buy the securities. 17 ODESSA WATER DISTRICT
Notes to Financial Statements
For the Year Ended June 30, 2024
NOTE 2: CASH AND INVESTMENTS (CONTINUED)
B. Investments Authorized by the California Government Code and the City of Barstow Adopted Investment Policy
The table below identifies the investment types that are authorized for the District (City of Barstow) by the California Government Code and by the City’s adopted investment policy. The table also identifies certain provisions of the California Government Code or the City’s adopted investment policy, where more restrictive, that address interest rate risk, credit risk, and concentration of credit risk.
Authorized Investment Type
Maximum
Maturity
Maximum
Percentage of
Portfolio
Maximum
Investment in
One Issuer
U.S. Treasury Bills, Notes, or Bonds 5 years None None
U.S. Agencies 5 years None None
Time Certificates of Deposit 5 years None 50%
Negotiable Certificates of Deposit N/A 30% 50%
Bankers' Acceptance 180 days 40% 30%
Prime Commercial Paper 270 days 25% 50%
Repurchase Agreements 1 year None 50%
Mutual Funds investing in eligible securities N/A 20% 10% Medium Term Notes 5 years 30% 50%
County Pooled Funds N/A None None
Local Agency Investment Fund (LAIF) N/A 100% $50 million* *Limit set by LAIF Governing Board, not Government Code C. Disclosures Related to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment.
Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the District manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer term investments, and by timing cash flows from maturities so that a portion of the portfolio is maturing, or coming close to maturity, evenly over time as necessary to provide the cash flow and liquidity needed for operations.
Odessa Water District’s cash is pooled with the City of Barstow’s cash to maximize investments.
D. Disclosure Related to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization.
The District’s investment in the City’s investment pool is not rated by a nationally recognized rating organization.
NOTE 3: CAPITAL ASSETS
Balance Balance
July 1, 2023 Additions Deletions Transfers June 30, 2024 Non-depreciable Assets:
Water rights $ 85,000 $ - $ - $ 85,000 - $
Total non-depreciable assets 85,000 - - - 85,000
Total capital assets, net $ 85,000 $ - $ - $ 85,000 - $ 18 ODESSA WATER DISTRICT
Notes to Financial Statements
For the Year Ended June 30, 2024
NOTE 4: AMOUNTS DUE TO BARSTOW SUCCESSOR AGENCY
In fiscal year 2001-2002, the Redevelopment Agency advanced funds to the Odessa Water District for the purchase of water rights in the amount of $85,000. The District leased the water rights in fiscal years 2004 and 2005 for $40,455. The District also incurred expenditures for $916 since fiscal year 2001-2002. As of June 30, 2024, the balance of $104,813 is the remaining amount due to the Redevelopment Agency.
The advances from the City and the Redevelopment Agency will ultimately be resolved with the leasing of the water rights, which will occur with future development.
NOTE 5: NEGATIVE FUND BALANCE AND NET POSITION
The District has an intangible asset, Water Rights of $85,000, but this is offset by amounts due to the RDA Successor Agency, in excess of the District’s assets.
19 REQUIRED SUPPLEMENTARY INFORMATION
20 ODESSA WATER DISTRICT
Notes to Required Supplementary Information
June 30, 2024
NOTE 1: BUDGETARY INFORMATION
A. Budgets and Budgetary Accounting
The District follows these procedures in establishing the budgets.
1. The annual budget is adopted by the City of Barstow City Council acting as the District’s Board of Directors after the holding of a hearing and provides for the general operation of the District. The operating budget includes proposed expenditures and the means of financing them.
2. The City Council approves total budgeted appropriations and any amendments to appropriations throughout the year.
The City manager is authorized to transfer budgeted amounts between departments. Actual expenditures may not exceed budgeted appropriations at the fund level.
3. Formal budgetary integration is employed as a management control devise during the year. Commitments for materials and services, such as purchase orders and contracts, are recorded as encumbrances to assist in controlling expenditures. Capital projects appropriations are an automatic supplemental appropriation for next year. All others lapse unless they are encumbered at year end or re-appropriated through the formal budget process.
4. Annual budgets are adopted for the General Fund on a basis substantially consistent with accounting principles generally accepted in the United States of America. Accordingly, actual revenues and expenditures can be compared with related budgeted amounts without any significant reconciling items.
B. Encumbrances
Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of moneys are recorded in order to reserve that portion of the applicable appropriation is employed as an extension of formal budgetary integration. Encumbrances outstanding at year-end are reported as restricted or committed fund balance since they do not constitute expenditures or liabilities and are added to the subsequent year’s adopted appropriations.
C. Budgetary Comparison Schedules
Budgetary Comparison Schedule, General Fund
Variance with
Final Budget
Budget Amounts Actual Positive
Original Final Amounts (Negative)
EXPENDITURES:
General Government-public works 4,825$ 4,200$ $ 4,200 $ - Total expenditures 4,825 4,200 4,200 -
Net change in fund balance $ (4,825) $ (4,200) (4,200) $ - FUND BALANCE:
Beginning of year (100,613)
End of year $ (104,813)
21 INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON
COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN
ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the Board of Directors
Odessa Water District
City of Barstow, California
We have audited, in accordance with the 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, the financial statements of the governmental activities and general fund information of the Odessa Water District (the District), a component unit of the City of Barstow, as of and for the year ended June 30, 2024, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements, and have issued our report thereon dated December 28, 2024.
Report on Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the District’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements, on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the District’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that were not identified.
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether District’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements.
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 or other matters that are required to be reported under Government Auditing Standards.
LSLCPAS.COM
To the Board of Directors
Odessa Water District
City of Barstow, California
Purpose of This Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Irvine, California
March 31, 2025
23