Calcasieu Parish Gravity Drainage District No. 5 · /^4^ gravity drainage district no. 5 of ward 4...

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GRAVITY DRAINAGE DISTRICT NO. 5 OF WARD 4 OF CALCASIEU PARISH

A COMPONENT UNIT OF THE CALCASIEU PARISH POLICE JURY

Sulphur, Louisiana

ANNUAL FINANCIAL STATEMENTS

As of and For the Year Ended December 31.2010

Under provisions of state law, this report is a public document. Acopy of the report hasbeen submitted to the entity and other appropriate public officiais. The report is available for public inspection at the Baton Rouge office of the Legislative Auditor and, where appropriate, at the office of the parish clerk of court.

Release Date ikU

CONTENTS

Page

INDEPENDENT AUDITOR^S REPORT 1

BASIC FINANCIAL STATEMENTS:

GOVERNMENT-WIDE FINANCIAL STATEMENTS:

Statement of Net Assets 2

Statement of Activities 3

FUND FINANCLVL STATEMENTS:

Balance Sheet - All Fund Types 4

Reconciliation of the Balance Sheet - Governmental Funds to the Statement of Net Assets 5

Statement of Revenues, Expenditures and Changes in Fund Balances - Govemmental Funds 6

Budgetaiy Comparison Schedule General Fund 7 Special Revenue Fund 8 Capital Projects Fund 9

Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances ofGovemmental Funds to the Statement of Activities 10

Notes to Financial Statements 11

INDEPENDENT AUDITOR'S REPORT SECTION:

Report on Intemal Control Over Financial Reportiilg and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Govemment Auditing Standards 20

Schedule of Findmgs and Responses 22

Status ofPrior Year Audit Findings 23

Stutzman & Gates, LLC Certified Public Accountants

Annrictn Institutt of CttStM PiAlie Acvmiataats Sockitf ot Louisiana C^ntnad Public Accoiintantt

INDEPENDENT AUDITOR'S REPORT

Board of Commissioners Gravity Drainage District No. 5 of Ward 4 of Calcasieu Parish A Component Unit of the Calcasieu Parish Police Jury Sulphur, Louisiana

We have audited the accompanying financial statements of the govemmental activities and each major fund of Gravity Drainage District No. 5 of Ward 4 of Calcasieu Parish, component unit of the Calcasieu Parish Police Jury, as of and for the year ended December 31, 2010, which coUectively comprise the District*s basic financial statements as listed in the table of contents. These financial statements are the responsibility of Gravity Drainage District No. 5 of Ward 4 of Calcasieu Parish's management. Our responsibility is to express opinions on these 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 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 the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions.

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the govenmiental activities and each major fimd of the Gravity Drainage District No. 5 of Ward 4 of Calcasieu Parish, as of December 31,2010, and the respective changes in fmanciai position thereof and the respective budgetary comparison for the General Fund, the Special Revenue Fund, and the Capital Projects Fund for the year then ended in confonnity with accounting principles generally accepted in the United States of America.

In accordance with Govemment Auditing Standards, we have also issued our report dated May 27,2011, on our consideration of the Gravity Drainage District No. 5 of Ward 4 of Calcasieu Parish's intemal 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 to describe the scope of our testing of intemal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the intemal control over financial reporting or on compliance. That report is an integral part of an audit performed in accoMance with Govemment Auditing Standards and should be considered in assessing the results of our audit.

Gravity Drainage District No. 5 of Ward 4 of Calcasieu Parish has not presented management's discussion and analysis that the Govemmental Accounting Standards Board has determined is necessary to supplonent, although not required to be a part of, the basic financial statements.

Stutzman & Gates, LLC May 27,2011

GOVERNMENT-WIDE FINANCIAL STATEMENTS

GRAVITY DRAINAGE DISTRICT NO. 5 OF WARD 4 OF CALCASIEU PARISH A COMPONENT UNIT OF THE CALCASIEU PARISH POLICE JURY STATEMENT OF NET ASSETS December31,2010

ASSETS

Current Assets: Cash $ 5,177,737 Receivables:

Taxes (net) 3,150,144 State revenue sharing 23,279 Interest 1,404

Prepaid assets 57,037 TOTAL CURRENT ASSETS 8,409,601

Noncurrent Assets: Capital assets, net of accumulated depreciation 6,722,932

TOTAL ASSETS 15,132,533

LIABILITIES

Current Liabilities: Accounts payable 22,839 Salaries payable 31,262 Compensated absences 4,861

TOTAL LIABILITIES 58,962

Net Assets: Invested in capital assets, net of related debt 6,722,932 Unrestricted 8,350,639

TOTAL NET ASSETS $ 15,073,571

The accompanying notes are an mtegrai part of this statement.

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GRAVITY DRAINAGE DISTRICT NO. 5 OF WARD 4 OF CALCASIEU PARISH A COMPONENT UNIT OF THE CALCASIEU PARISH POLICE JURY STATEMENT OF ACTIVrTIES For the Year Ended December 31,2010

Function/Program Drainage work

TOTAL

EXPENSES

$ (2,136,824)

$ (2,136.824)

General Revenues: Ad Valorem Taxes State Revenue Sharing Interest Sale of Assets Miscellaneous

TOTAL GENERAL RE

CHANGE IN NET ASSETS

NET ASSETS - BEGINNING

NET ASSETS-ENDING

PROGRAM REVENUES OPERATING GRANTS &

CONTRIBUTIONS

$

$

•VENUES

$

$

^ _

$

NET (EXPENSES) REVENUES &

CHANGES IN NET ASSETS

GOVERNMENTAL ACUVITIES

(2,136,824)

(2,136,824)

3,217,331 33.880 41,157 4.079 6,289

3,302,736

1.165,912

13,907,659

15,073.571

The accompanying notes are an integral part of this statement.

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FUND FINANCIAL STATEMENTS

GRAVny DRAINAGE DISTRICT NO. 5 OF WARD 4 OF CALCASIEU PARISH A COMPONENT UNIT OF THE CALCASIEU PARISH POLICE JURY ALL FUND TYPES BALANCE SHEET December 31, 2010

GOVERNMENTAL FUNDS

ASSETS Cash Receivables:

Taxes (net) State revenue sharing Interest

Prepaid assets

General Fund

$ 4,602,444

3.081,793 23,279

1,339 57,037

Special Revenue Fund

$ 541,371

-

-

65 -

Capital Projects

Fund

$ 33,922

-

-

-

-

Total

$ 5,177.737

3.081,793 23,279

1,404 57.037

TOTAL ASSETS $ 7,765.892 $ 541,436 $ 33.922 $ 8,341,250

LIABILTIES AND FUND BALANCES Liabilties:

Accounts payable Salaries payable Compensated absences

TOTAL LIABILITIES

$ 22,839 31,262 4,861

58,962

22,839 31.262 4,861

58,962

Fund Balances: Designated Unreserved - undesignated 7,706,930

TOTAL FUND BALANCES 7,706.930

541,436

541,436

33.922

33,922

575,358 7,706,930 8,282.288

TOTAL LIABILTTIES AND FUND BALANCES $ 7.765.892 $ 541.436 $ 33.922 $ 8,341,250


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GRAVTFY DRAINAGE DISTRICT NO. 5 OF WARD 4 OF CALCASIEU PARISH A COMPONENT UNIT OF THE CALCASIEU PARISH POLICE JURY RECONCILLVTION OF THE BALANCE SHEET -

GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS December 31,2010

TOTAL FUND BALANCE FOR GOVERNMENTAL FUNDS AT DECEMBER 31,2010 $ 8,282,288

Total net assets reported for govemmental activities in the Statement of Net Assets are different because:

Capital assets used in govemmental activities are not fmanciai resources and therefore are not reported in the fimds.

Coital assets, net of accumulated depreciation 6,722,932

Certain property tax revenue receivable that will not be collected within 60 days of year end are not considered available in the govemmental fimds. 68,351

TOTAL NET ASSETS OF GOVERNMENTAL ACTIVmES AT DECEMBER 31,2010 $ 15.073.571


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GRAVTTY DRAINAGE DISTRICT NO. 5 OF WARD 4 OF CALCASIEU PARISH A COMPONENT UNTT OF THE CALCASIEU PARISH POLICE JURY GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES. AND CHANGES IN FUND BALANCES Forthe Year Ended December 31.2010

REVENUES: Ad valorem taxes - net State revenue stiaring Interest Sale of assets Miscellaneous

TOTAL REVENUES

EXPENDrrURES: Current

Advertising Appraisals Audit fees Engineer fees Fuel & gas Insurance Insurance - group Maintenance & repairs Materials & supplies Miscellaneous Office supplies Per diem Pipe program Retirement Right of way agent fees Salaries Taxes Tools & equiijment Travel Uniforms Utilities

Capital outlay TOTAL EXPENDITURES

EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDrrURES

OTHER FINANCING SOURCES (USES): operating transfer in (out)

EXCESS (DEFICIENCY) OF REVENUES

AND OTHER SOURCES OVER EXPENDITURES

FUND BALANCE - BEGINNING

FUND BALANCE - ENDING

General Fund

$ 3.235,653 33.880 38.143 12,895

225 3.320,796

324 450

8.393 6,600

100,000 103,773 208,891 98,123 70,056

3.901 1,902

23.700

-152,197

450 955.114

10,790 1,566

781 U81

14,639 424,093

2,187.024

1,133,772

(145.000)

988,772

6,718,158

S 7,706,930

Special Revenue Fund

S , -

2,885

--

2.885

----------------

3.966

---

82.238 86,204

(83,319)

120,000

36,681

504.755

S 541,436

Capital Projects Fund

S S -

129 -

6,064 6,193

-----------

12.218

---------

12.218

(6.025)

25,000

18,975

14.947

S 33.922 S

Total

3,235,653 33,880 41,157 12,895 6.289

3329,874

324 450

8,393 6,600

100.000 103,773 208,891 98,123 70.056

3,901

1,902 23,700 12,218

152,197 450

955,114 10.790 5.532

781 1.281

14.639

506331 2,285,446

1,044.428

1.044,428

7,237,860

8.282,288


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GRAVrTY DRAINAGE DISTRCIT NO. 5 OF WARD 4 OF CALCASIEU PARISH A COMPONENT UNIT OF THE CALCASIEU PARISH POLICE JURY

REVENUES: Ad valorem taxes - net State revenue sharing Interest on investments Sale of assets Miscellaneous

TOTAL REVENUES

EXPENDrrURES: Current

Advertising Appraisal Audit fees Engineer fees Equipment rental Fuel & gas Insurance Insurance - group Maintenance & repairs Materials & supplies Miscellaneous Office stq)plies

Per diem Retirement Right of way agent fees Salaries ' Taxes Tools & equipment Travel Uni forms Utilities

Capital outlay TOTAL EXPENDrrURES

EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDrrURES

OTHER FINANCING SOURCES (USES): Operating transfer in (out)

EXCESS (DEFICIENCY) OF REVENUES

General Fund Budgetaiy Comparison Schedule

For die Year Ended December 31.2010

Budgeted

Original

$ 3389,047 34,918 28,000

-10,000

3,461 ,%S

1,000 2,100 8,650 6,600 2,000

125,000 113300 225346 147,000 125,000 40,000 3,000

24,000 151,000

1,500 960,225

11.000 6,000 1,000 1,800

18,000 2,000,000 3,973,721

(511,756)

(145,000)

AND OTHER SOURCES OVER EXPENDITURES (656,756)


FUND BALANCE • ENDING

6.718,158

% 6,061.402

Amounts

.$

'

S

Final

3,100.000 34.918 28,000

-10,000

3,172,918

1,000 2.100 8,650 6.600 2,000

125,000 113.500 225.346 147,000 125,000 40,000

3,000 24,000

151.000 1300

960,225 11,000 6.000 1,000 1.800

18.000 2.000,000 3,973.721

(800,803)

(145,000)

(945.803)

6,718,158

5,772355

Actual Amounts

$ 3.235,653 33,880 38.143 12,895

225 3,320,796

324 450

8,393 6,600

-100.000 103,773 208.891

98.123 70,056

3,901 1,902

23,700 152,197

450 955,114

10.790 1366

781 USI

14,639 424,093

2,187,024

1,133,772

(145,000)

988,772

6,718,158

$ 7,706,930

Variance with Final Biulget

Positive (Negative)

S 135,653 (1,038) 10,143 12,895 (9,775)

147,878

676 1.650

257 -

2.000 25.000 9.727

16.455 48,877 54,944 36.099

1.098

300 (1.197) 1.050 5.111

210 4.434

219 519

3361 1375,907 1,786.697

; 1,934375

-

1.934,575

,

$ 1,934,575


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GRAVITY DRAINAGE DISTRICT NO. 5 OF WARD 4 OF CALCASIEU PARISH A COMPONENT UNIT OF THE CALCASIEU PARISH POLICE JURY

special Revenue Fund Budgetary Comparison Schedule

For the Year Ended December 31,2010

REVENUES: Interest

TOTAL REVENUES

EXPENDrrURES: Tools & equipment Equipment purchase

TOTAL EXPENDrrURES

EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES

OTHER FINANCING SOURCES (USES): Operating transfer in (out)

EXCESS (DEFICIENCY) OF REVENUES AND OTHER SOURCES OVER EXPENDITURES



Budgeted

Original

$ 3,000 3,000

10,000 70,000 80.000

(77,000)

120,000

43.000

504,755

$ 547,755

Amounts

Final

$ 2.700 2.700

10.000 85,000 95,000

(92.300)

120,000

27,700

504,755

S 532,455

Actual Amounts

S 2.885 2,885

3,966 82.238 86.204

(83319)

120,000

36.681

504,755

$ 541,436

Variance with Final Budget

Positive (NcKative)

$ 185 185

6,034 2,762 8,796

8,981

-

8,981

.

S 8,981


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GRAVITY DRAINAGE DISTRICT NO. 5 OF WARD 4 OF CALCASIEU PARISH A COMPONENT UNIT OF THE CALCASIEU PARISH POLICE JURY

Capital Projects Fund Budgetary Comparison Schedule

Forthe Year Ended December 31,2010

REVENUES: Interest Other Income

TOTAL REVENUES

EXPENDrrURES: Pipe program

TOTAL EXPENDITURES

EXCESS (DEHCIENCY) OF REVENUES OVER EXPENDrrURES

OTHER FINANONG SOURCES (USES):

Operating transfer in (out)

EXCESS (DEFICIENCY) OF REVENUES AND OTHER SOURCES OVER EXPENDFTURES

FUND BALANCE - BEGIKNING


Budgeted

O r i ^ a l

$ 100 25,000 25.100

50.000

50,000

(24,900)

25,000

too

14,947

$ 15,047

Amounts

$

$

Final

100 6,000 6,100

50,000 50,000

(43,900)

25,000

(18,900)

14,947

(3,953)

Actual Amounts

S 129 6,064 6,193

$

12,218 12,218

(6,025)

25.000

18,975

14,947

33.922

Variance with Final Budget

Positive (Negative)

$ 29 64 93

37,782 37,782

37,875

37,875

.

$ 37,875

Notes to the Schedules: The budgets are adopted on a basis consistent with generally accepted accounting principles. The General Fund, Special Revenue Fund, and Capital Projects Fund were amended one time in 2010.

General Fund: Tbe amendments to the original budget consisted of decreasing Ad Valorem Tax Income by $289,047.00

Special Revenue Fund: The amendment to the original budget consisted of decreasing Interest on investments by $300 and increasing Equipment Purchases by $15,000.

Coital Projects Fund: The amendment to the original budget consisted of decreasing Other Income by $19,000.


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GRAVITY DRAINAGE DISTRICT NO. 5 OF WARD 4 OF CALCASIEU PARISH A COMPONENT UNIT OF THE CALCASIEU PARISH POLICE JURY RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For the Year Ended December 31,2010

Amounts reported for govemmental activities in the statement of activities are different because:

NET CHANGE IN FUND BALANCE - TOTAL GOVERNMENTAL FUNDS INCREASE (DECREASE) $ 1,044,428

Govenmiental fimds report capital outlays as expenditures, however, in the Statement of Activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlay exceeded depreciation expense:

Capital outlay $ 506,331 Depreciation expense (357.709) 148,622

The book value of equipment sold recognized in the govemment-wide financial statements is not recorded in the govemmental fimd statements. (8,816)

Certam property tax revenues receivable will not be collected for several months after year end and are not considered available in the govemmental fimds. 68,351

Certain property tax revenues from the prior year were not collected until after 60 days into the current year. These amounts were not considered available in last year's govemmental fimds and have been included in the current year's revenue in govemmental funds. (86,673)

CHANGE IN NET ASSETS OF GOVERNMENTAL ACTIVITIES $ 1,165.912


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GRAVITY DRAINAGE DISTRICT NO. 5 OF WARD 4 OF CALCASIEU PARISH A COMPONENT UNIT OF THE CALCASIEU PARISH POLICE JURY NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31,2010

INTRODUCTION

Gravity Drainage District No. 5 of Ward 4 of Calcasieu Parish was created by the Calcasieu Parish Police Jury, as authorizedbyLouisianaRevised Statute 38:1751. The District is governed by a board of five compensated commissioners appointed by the Calcasieu Parish Police Jury and is authorized to constmct, maintain and improve the system of gravity drainage within the District. The District has 18 employees in addition to the five board members.

GASB Statement No. 14, The Reporting Entity, established criteria for determining the govemmental reporting entity and component units that should be included within the reporting entity. Under provisions of this Statement, the Gravity Drainage District No. 5 of Ward 4 of Calcasieu Parish is considered a component unit of Calcasieu Parish Police Jury. As a component unit, the accompanying financial statements are included within the reporting of the primary govemment, either blended into those fmanciai statements or separately reported as discrete component units.

NOTE 1 - SUMMARV OF SIGNinCANT ACCOUNTING POLICIES

A. Govemment-Wide and Fund Financial Statements

The govemment-wide financial statements (i.e., the statement of net assets and the statement of activities) report information on all of the nonfiduciary activities of the (jravity Drainage District No. 5 of Ward 4 of Calcasieu Parish. For the most part, the effect of interfiind activity has been removed from these statements.

The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use or directly benefit from goods, services, or privileges provided by a given fimction or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular fimction or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues.

Separate financial statements are provided for govemmental fimds. All individual govemmental fimds are reported as separate columns in the fund financial statements.

B. Reporting Entitv

The District is a component unit of the Calcasieu Parish Police Jury, the financial reporting entity. The police jury is financially accountable for the District because it appoints a voting majority of the board and has the ability to impose its will on them.

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GRAVITY DRAINAGE DISTRICT NO. 5 OF WARD 4 OF CALCASIEU PARISH A COMPONENT UNTT OF THE CALCASIEU PARISH POLICE JURY NOTES TO FINANCLSkL STATEMENTS As of and for the Year Ended December 31,2010

NOTE 1" SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying financial statements present information only on the fimds maintained by the District and do not present information on the police jury, the general govemment services provided by that govemmental unit, or the other govemmental units that comprise the financial reporting entity.

C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation

The govemment-wide financial statements are reported using the economic resources measurement focus and the accmal basis of accounting. Revenues are recorded when eamed and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recogmzed as revenue as soon as all eligibility requirements imposed by the provider have been met.

(jovemmental fimd financial statements are reported using the current financial resources measurement focus and the modified accmal 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 within the current period or soon enough tiiereafter to pay liabilities of the current period. For this purpose, 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 service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due.

Property taxes, reimbursements, and interest associated with the current fiscal period are all considered to be susceptible to accmal and so have been recognized as revenues of the current fiscal period. All other revenue items are considered to be measurable and available only when cash is received by the govenunent. Interfimd transfers are made to meet current or anticipated needs of the District.

The G a ty Drainage District No. 5 of Ward 4 of Calcasieu Parish reports tiie following govemmental funds:

The General Fund is the entity's primary operating fimd. It accounts for all financial resources of tiie entity, except tiiose required to be accounted for in another fund.

The Special Revenue Fund is used to account for the accumulation of financial resources for equipment acquisitions.

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GRAVITY DRAINAGE DISTRICT NO. 5 OF WARD 4 OF CALCASIEU PARISH A COMPONENT UNTI OF THE CALCASIEU PARISH POUCE JURY NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31,2010

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Capital Projects Fund is used to account for financial resources to be used for tiie acquisition or constmction of major capital facilities.

Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in the govemment-wide financial statements to the extent that those standards do not conflict with or contradict guidance of the Govemmental Accounting Standards Board.

As a general mle the effect of interfimd activity has been eliminated fix>m tiie govemment-wide financial statements.

When both restricted and unrestricted resomces are available for use, it is the entity's policy to use restricted resources first, then unrestricted resources as they are needed.

D. Dqjosits and Investments

The entity's cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less fijom the date of acquisition. State law and the Gravity Drainage District No. 5 of Ward 4 of Calcasieu Parish's investment policy allow the entity to invest in collateralized certificates of deposits, govenunent backed securities, commercial paper, the state sponsored investment pool, and mutual fimds consisting solely of govemment backed securities.

E. Budgets and Budgetarv Accounting

A budget is adopted on a basis consistent with generally accepted accounting principles for ail governmental fimds. All annual appropriations lapse at fiscal year end. In November of each year, the budget is prepared by fund, fimction and activity, and includes mformation on the past year, current year estimates and requested appropriations for the next fiscal year.

The proposed budget is presented to the government's Board of Commissioners for review. The board holds a public hearing and may add to, subtract from or change appropriations, but may not change the form of the budget. Any changes in the budget must be witiiin the revenues and reserves esthnated. The budget was amended once during 2010.

F. Prepaid Items

The District records as prepaid assets, expenditures during the current period that will benefit tiie subsequent period.

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GRAVITY DRAINAGE DISTRICT NO. 5 OF WARD 4 OF CALCASIEU PARISH A COMPONENT UNTT OF THE CALCASIEU PARISH POLICE JURY NOTES TO FINANCIAL STATEMENTS As of and for ttie Year Ended December 31,2010


G. Capital Assets

Capital assets, which include property, plant, equipment, and infrastmcture assets (e.g., drainage stmctures, bridges, and similar items), are reported in the govemment-wide financial statements. Capital assets are capitalized at historical cost. The District has established a $5,000 capitalization threshold.

The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized.

All capital assets, other than land, are depreciated using the straight-line method over the following usefiil Hves:

Estimated Description Lives

Infrastmcture assets 25 years Buildings and building improvements 40 years Fumiture and fixtures 5-12 years Vehicles 5 years Equipment 10 years

H. Compensated Absences

The District allows employees to accumulate untimited unused sick leave. Eamed vacation time is expected to be used within one year of accrual with a maximum of one week carryforward to the next year, if not used. The liability for accmed sick leave could not be reasonably estimated.

I. Designated Fund Equitv

Designated fimd balances represent those portions of fimd equity designated for capital outlay.

J. Estimates

The pr^aration of financial statements in conformity with accounting principles generally accepted in the United States of America require management to make estimates and assumptions tiiat affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at tfie date of tiie financial statements and the reported amounts of revenues, expenditures, and expenses during the reporting period. Actual results could differ from those estimates.

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GRAVITY DRAINAGE DISTRICT N0.5 OF WARD 4 OF CALCASIEU PARISH A COMPONENT UNIT OF THE CALCASIEU PARISH POLICE JURY NOTES TO FINANCLU. STATEMENTS As of and for the Year Ended December 31,2010


K. Interfimd Transfers

Transfers are made Qxtm tiie General Fund to tiie Special Revenue Fund and Capital Projects Fund to assist in the payment of nonnal operating expenditures.

NOTE 2 - AD VALOREM TAXES

For the year ended December 31,2010 taxes of 4.65 mills were levied on property with assessed valuations totaling $712,792,473 and were dedicated as foUows:

General corporate purposes 4.65 mills

Total taxes levied were $3,314,485.

Property tax millage rates are adopted in July for tiie calendar year in which the taxes are levied and recorded. All taxes are due and collectible when the assessment rolls are filed on or before November 15th of the current year, and become delinquent after December 31. Property taxes not paid by the end of Febmary are subject to lien.

NOTE 3- CASH AND CASH EQUIVALENTS

Custodial Credit Risk-Deposits. Custodial credit risk is tiie risk tiiat in the event of a bank failure, tiie govemment's deposits may not be retumed to it.

In accordance with a fiscal agency agreement that is approved by the Board of Commissioners, the District maintains demand and time deposits through local depositary banks that are members of the Federal Reserve System.

Interest Rate Risk. The District does not have a formal investment policy that limits investment maturities as a means of mana^g its exposure to fair value losses arising fix)m increasing interest rates.

Concentration of Credit Risk. The District places no limitation on the amount the District may invest in any one issuer.

At December 31, 2010, the District has cash and cash equivalents (book balances) totaling $5,177,737 as follows:

Demand deposits $ Interest-bearing demand deposits 3,172,697 Time deposits 2,005,000 Otiier 40

Total % 5.177.737 - 1 5 -

GRAVny DRAINAGE DISTRICT N0.5 OF WARD 4 OF CALCASIEU PARISH A COMPONENT UNIT OF THE CALCASIEU PARISH POLICE JURY NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31,2010

NOTE 3 - CASH AND C ^ H EQUIVALENTS

These deposits are stated at cost, which approximates market. Under state law, these deposits (or the resultmg bank balances) must be secured by federal deposit insurance or the pledge of securities owned by the fiscal agent bank. The market value of the pledged securities plus the federal deposit insurance must at all times equal the amount on deposit with the fiscal agent. These securities are held m the name of the pledging fiscal agent bank in a holding or custodial bank that is mutually acceptable to both parties.

At December 31,2010, tiie District has $5,178,679 in deposits (collected bank balances). These deposits are secured from risk by $250,000 of federal deposit insurance and $4,928,679 of pledged securities held by the custodial bank in the name of the fiscal agent bank (GASB Category 3).

Even though the pledged securities are considered uncollateralized (Category 3) under the provisions of GASB Statement No. 3, Louisiana Revised Statute 39:1229 imposes a statutory requfrement on the custodial bank to advertise and sell the pledged securities within 10 days of being notified by the District that the fiscal agent has failed to pay deposited funds upon demand.

NOTE 4 - RECETVABLES

The following is a summary of receivables at December 31,2010:

Total Class of Receivable Ad valorem taxes $ 3,150,144 Otiier 24.683

Total $ 3.174.827

The District's receivables consist of ad valorem taxes receivable and interest receivable from bank deposits. Historically, virtually all ad valorem taxes receivable were collected since they are secured by property; therefore, no allowance for doubtfiil accounts has been estabUshed for ad valorem taxes.

NOTES- CHANGES KVCAPrrAL ASSETS

The following is a summary of changes in capital assets for the year ending December 31,2010.

Not being depreciated

Land Drainage

Buildings Equipment Infrastructure Total Current year roll forward:

Cost at December 31,2009 $ 195,986 $ 554,116 S 1,959,488 $ 6,337,688 $ 9,047,278

Additions - . 82.238 424,093 506,331

Deletions -_ -_ (88,160) -_ (88,160)

Cost at December 31,2010 $ 195,986 $ 554,116 $ 1.953,566 $ 6.761.781 J 9,465,449

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GRAVITY DRAINAGE DISTRICT N0.5 OF WARD 4 OF CALCASIEU PARISH A COMPONENT UNIT OF THE CALCASIEU PARISH POLICE JURY NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31,2010

NOTES- CHANGES IN CAPITAL ASSETS

'

Depreciation: Accumulated Depreciation

December 31,2009 Addition Deletions

Accumulated Depreciatton December 31,2010

Capital assets, net of accumulated depreciation at December 31,2010

Not being depreciated

Land

$

$ 195,986

$

S

Buildings

(111,171) (12,469)

(123,640)

430,476

Equipment

$ (1,276,250) (112,854)

79,344

(1,309,760)

$ 643,806

Drainage Infrastructure

$ (1,076,731) (232,386)

(1,309,117)

J 5,452,664

S

JL

Total

(2,464,152) (357,709)

79,344

(2,742,517)

6,722,932

Depreciation expense of $357,709 for tiie year ended December 31,2010 was charged to the following govemmental fimctions:

Dtmnage woik $ 357,709

NOTE 6- RETIREMENT SYSTEM

Plan Description. Substantially all employees of the District are members of the Parochial Employees* Retirement System of Louisiana (System), a cost-sharing, multiple - employer defined benefit pension plan administered by a separate board of trustees. The System is composed of two distinct plans, Plan A and Plan B, with separate assets and benefit provisions. All employees of the District are members of Plan A.

All permanent employees working at least 28 hours per week who are pmd wholly or in part from parish funds and all elected parish officials are eligible to participate in the System. Under Plan A, employees who retire at or after age 60 with at least 10 years of creditable service, at or after age 55 witii at least 25 years of creditable service, or at any age with at least 30 years of creditable service are entitled to a retirement benefit, payable monthly for life, equal to 3% of their final-average salary for each year of creditable service. However, for those employees who were members of the supplemental plan only before January 1,1980, tiie benefit is equal to 1% of final average salary plus $24 for each year of supplemental-plan-only service eamed before January 1,1980. Fmal-average salary is the employee's average salary over the 36 consecutive or joined monttis that produce the highest average. Employees who terminate with at least the amoimt of creditable service stated above and do not withdraw then" employee contributions may retire at the ages specified above and receive tiie benefit accrued to tiieir date of termination. The System also provides death and disability benefits. Benefits are estabUshed or amended by state statute.

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GRAVITY DRAINAGE DISTRICT N0.5 OF WARD 4 OF CALCASIEU PARISH A COMPONENT UNIT OF THE CALCASIEU PARISH POLICE JURY NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31,2010

NOTE 6- RETIREMENT SYSTEM

The System issues an annual publicly available financial report that includes financial statements and required supplementary information for the System. That report may be obtained by writing to tiie Parochial Employees' Retirement System, Post Office Box 14619, Baton Rouge, Louisiana 70898-4619, or by calling (225) 928-1361.

Funding Policy. Under Plan A, members are required by state statute to contribute 9.5 percent of their annual covered salary and the District is required to contribute at an actuarially detennined rate. The current rate is 15.75 percent of armual covered payroll. Contributions to tiie System also include one-fourth of one percent (except Orleans and East Baton Rouge parishes) of the taxes shown to be collectible by tiie tax rolls of each parish. These tax dollars are divided between Plan A and Plan B based proportionately on the salaries of the active members of each plan. The contribution requirements of plan members and the District are established and may be amended by state statute. As provided by R.S. 11:103, the employer contributions are determined by actuarial valuation and are subject to change each year based on the results of the valuation for the prior fiscal year. The District's contributions to the System under Plan A for the years ending December 31, 2010, 2009, and 2008 were $152,197, $114,285, and $114,165 respectively, equal to tiie required contributions for each year.

NOTE 7 - COMPENSATED ABSENCES

At December 31,2010, employees of the District have accumulated and vested $4,861 of employee leave benefits, which was computed in accordance with GASB Codification Section C60. Of this amoimt, $4,861 is recorded as an obligation of the General Fund.

NOTES- RISK MANAGEMENT

The District is exposed to various risks of loss related to torts; theft of, damage to and destmction of assets; errors and omissions; injuries to employees; and natural disasters. The District maintains commercial msurance coverage covering each of those risks of loss. Management believes such coverage is sufficient to preclude any significant uninsured losses to the District. Settled claims have not exceeded this commercial coverage in any of the past three fiscal years. The District did not reduce insiu'ance coverage during 2010.

NOTE 9- COMMITMENTS

The District has ongoing capital outlay commitments relative to drainage and flood contix)l projects. Management believes fiiture revenues and fund balances currentiy available are more tiian sufficient to cover these commitments. In 2011, the District approved an option for unprovement on Lateral 12A witii an estimated cost of $2,717,438.

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GRAVITY DRAINAGE DISTRICT NO. 5 OF WARD 4 OF CALCASIEU PARISH A COMPONENT UNIT OF THE CALCASIEU PARISH POUCE JURY NOTES TO THE FINANCIAL STATEMENTS As of and for tiie Year Ended December 31,2010

NOTE 10 - COMPENSATION OF BOARD MEMBERS

A schedule of compensation paid board members is presented in compliance with House Concurrent Resolution No. 54 of tiie 1979 Session of tiie Louisiana Legislature. LA Rev. Statute 38:1794 autiiorizes the District to pay each board member $ 100 for each meeting attended, up to 48 meetings per year.

Name Amount Harvey Boyd $ 800 Johnnie Hardy, Sr. 4,800 Patrick Fitts 4,800 Neil Nelson 4,800 James Perry 3,700 Lewis Appleby 4,800

Total $ 23.700

NOTE 11 - SUBSEQUENT EVENT REVIEW

The District's management has evaluated subsequent events through May 27,2011, the date which the financial statements were available to be issued.

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INDEPENDENT AUDITOR'S REPORT SECTION

stutzman & Gates, LLC Certified Public Accountants Hembora.-

Amarican Inatitata ot CarOfiad Putllc Aeeounttnts Sodaty ot Louisiana CartifSad Public Aecountanta

REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF

FINANCL\L STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

Board of Commissioners Gravity Drainage District No. 5 of Ward 4 of Calcasieu Parish A Component Unit of the Calcasieu Parish Police Jury Sulphur, Louisiana

We have audited the financial statements of the governmental activities and each major fimd of Gravity Drainage District No. 5 of Ward 4 of Calcasieu Parish as of and for the year ended December 31.2010, which collectively comprise the Gravity Drainage District No. 5 of Ward 4 of Calcasieu Parish's basic financial statements and have issued our report thereon dated May 27, 2011. We conducted our audit in accordance witii auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Govemment Auditing Standards, issued by the Comptroller General of the United States.

Intemal Control Over Financial Reporting

In planning and performing our audit, we considered Gravity Drainage District No. 5 of Ward 4 of Calcasieu Parish's intemal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Gravity Drainage District No. 5 of Ward 4 of Calcasieu Parish's intemal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of Gravity Drainage District No. 5 of Ward 4 of Calcasieu Parish's intemal control over financial reporting.

Our consideration of intemal control over financial reporting was for the limited purpose described m the preceding paragraph and was not designated to identify all deficiencies in intemal control over financial reporting that might be sigmficant deficiencies or material weaknesses and therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses have been identified. However, as described in the accompanying schedule of findings and responses, we identified certain deficiencies in mtemal control over financial reporting that we consider to be material weaknesses.

A deficiency in intemal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned fimctions, to prevent, or detect and conrect misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in intemal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiencies described in the accompanying schedule of findings and responses to be material weaknesses. See items 2010-1 and 2010-2.

^f f l jft« »A . a ^ r w ^ ^ F . I V A ^ ^ A _ ^ A ^ f l ^ « t 4 •«•#/

Board of Commissioners Page 2

Compliance and Other Matters

As part of obtaining reasonable assurance about whether Gravity Drainage District No. 5 of Ward 4 of Calcasieu Parish's financial statements are fi'ee of material misstatement, we performed tests of its compliance witii certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of 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 noncompUance or other mattes that are required to be reported under Govemment Auditing Standards.

Gravity Drainage District No. 5 of Ward 4 of Calcasieu Parish's response to the findings identified in our audit are described hi the accompanying schedule of findings and responses. We did not audit Gravity Drainage District No. 5 of Ward 4 of Calcasieu Parish's response and, accordingly, we express no opinion on it.

This report is intended solely for the information and use of management, the Board of Commissioners, others within the entity, the Calcasieu Parish Police Jury, and tiie Legislative Auditor and is not intended to be and should not be used by anyone other than these specified parties. Under Louisiana Revised Statute 24:513, this report is distributed by tiie Legislative Auditor as a public document.

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stutzman & Gates, LLC May 27,2011

GRAVny DRAINAGE DISTRICT NO. 5 OF WARD 4 OF CALCASIEU PARISH A COMPONENT UNIT OF THE CALCASIEU PARISH POLICE JURY SCHEDULE OF FINDINGS AND RESPONSES For tiie Year Ended December 31.2010

2010-1 Segregation of Duties Condition:

Criteria:

Effect:

Because of the lack of a large staff, more specifically accounting personnel, there is a problem with segregation of duties necessary for proper controls. One person is currently performing the fiinction of preparing disbursements and reconciling the bank statements. We do note that this situation is inherent to most entities of this type and is difficult to solve due to the fimding limitations of the District. We recommend that the commissioners take an active interest in the review of all of the financial information. This was also a prior year finding.

Effective intemal control requires adequate segregation of duties among client personnel.

Without proper segregation of duties, errors within the financial records or fraud could go imdetected.

Recommendation: To the extent cost effective, commissioners should attempt to mitigate this weakness by supervision and review procedures.

Response: We concur with this recommendation. Commissioners have implemented supervision and review procedures to the extent possible.

2010-2 Controls Over Financial Reporting Condition: In our judgment, the District's accounting personnel and those charged with

govemance, in tiie course of tiieir assigned duties, lack the capable skills to prepare the financial statements and related foomotes in accordance with generally accepted accounting principles and to detect and correct a material misstatement, if present.

Criteria:

Effect:

Recommendation:

Response:

The Auditing Standards Board recently issued guidance to auditors related to entity's intemal controls over financial reporting. Many small organizations rely on their auditor to generate the annual fmanciai statements including footaotes. SAS No. 112 emphasizes that the auditor cannot be part of your system of intemal control over fmanciai reporting.

Material misstatements in financial statements could go undetected.

In our judgment, due to tiie lack ofresources available to management to correct this material weakness in financial reporting, we recommend management mitigate ttiis weakness by having a heightened awareness of all transactions bemg reported.

We concur witii this recommendation. Commissioners have implemented supervision and review procedures to tiie extent possible.

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GRAVITY DRAINAGE DISTRICT NO. 5 OF WARD 4 OF CALCASIEU PARISH A COMPONENT UNIT OF THE CALCASIEU PARISH POLICE JURY STATUS OF PRIOR YEAR AUDIT FINDINGS Forthe Year Ended December 31,2010

2009-1 Segregation of Duties

Corrective action taken - Due to lack of sufficient financial resources, this finding carmot be resolved.

2009-2 Controls Over Financial Reoortipg

Corrective action taken - Due to lack of sufficient financial resources, this finding cannot be resolved.

2009-3 Local government budget act - Budgetary authority and control

Resolved.

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