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GRAVrrV 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, 2009

,.;cr provisioDG of stale law, this report is a p^u • uocument.Acopyofthereporthas been submitted to the entity and other appropriate public officials. The report (s available forpublic inspection at the Baton Rouge office of the Legislative Auditor and, v^here appropriate, at the office of the parish clerk of court.

R3l3ase Date [_ d ^ - ^ X ^ ^

CONTENTS Page

INDEPENDENT AUDITOR'S REPORT 1

BASIC FINANCIAL STATEMENTS:

GOVERNMENT-WIDE FINANCIAL STATEMENTS:

Statement of Net Assets 3

Statement of Activities 4

FUND FINANCL\L STATEMENTS:

Balance Sheet - All Fund Types 5

Reconciliation of the Balance Sheet - Governmental Funds to the Statement of Net Assets 6

Statement of Revenues, Expenditures and Changes in Fund Balances - Govemmental Funds 7

Budgetary Comparison Schedule General Fund 8 Special Revenue Fund 9 Coital Projects Fund 10

Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Govemmental Funds to the Statement of Activities 11

Notes to Financial Statements 12

SUPPLEMENTAL INFORMATION SCHEDULES:

Schedule ofCompensation Paid Board Members 21

INDEPENDENT AUDTIOR'S REPORT SECTION:

Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed m Accordance vAih Government Auditing Standards 22

Schedule of Findings and Responses 24

Status of Prior Year Audit Findings 26

Stutzman & Gates, LLC Certified Public Accountants Mmbm:

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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 PoUce 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, 2009, which collectively 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 responsibihty 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 firee 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 governmental activities and each major fiind of the Gravity Drainage District No. 5 of Ward 4 of Calcasieu Parish, as of December 31, 2009, and the respective changes in financial position thereof and the respective budgetary comparison for the General Fimd, the Special Revenue Fund, and the Qqjital Projects Fund for the year then ended in conformity with accounting principles generally accepted in the United States of America.

In accordance with Government Auditing Standards, we have also issued our report dated May 26,2010, on our consideration of the Gravity Drainage District No. 5 of Ward 4 of Calcasieu Parish'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 to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be 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 supplement, although not required to be a part of, the basic financial statements.

p. O. Box 1238 Sulphur, Louisiana 70664-1238 • 037) 533-1700 521N, fl* Street • Kinder, Louisiana 70648 • (337? 73B-2101

Board of Cortmiissioncrs Page 2

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Gravity Drainage District No, 5 of Ward 4 of Calcasieu Parish's basic financial statements. The other supplemental schedules as listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. The per diem paid board members has been subjected to the auditing procedures ^plied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

Stutzman & Gates, LLC May 26,2010

GOVERNMENT-WIDE FINANCDVL STATEMENTS

GRAVTTY DRAINAGE DISTRICT NO. 5 OF WARD 4 OF CALCASIEU PARISH A COMPONENT UNIT OF THE CALCASIEU PARISH POLICE JURY STATEMENT OF NET ASSETS December 31,2009

ASSETS

Current Assets: Cash $ 4,198,809 Receivables:

Taxes (net) 3,095,595 State revenue sharing 23,279 Interest 1,907

Prepaid assets 56,578 TOTAL CURRENT ASSETS 7,376,168

Noncurrent Assets:

Cq)ital assets, net of accumulated depreciation 6,583,126

TOTAL ASSETS 13,959,294

LIABILIIIES

Current Liabilities:

Accounts payable 19,497 Salaries payable 27,419 Compensated absences 4,719

TOTAL LL\BILITIES 51,635

Net Assets: Investment in cq)ital assets 6,583,126 Unrestricted 7,324,533

TOTAL NET ASSETS $ 13,907,659

The accompanying notes are an integral part of this statement.

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GRAVTFY DRAINAGE DISTRICT NO. 5 OF WARD 4 OF CALCASIEU PARISH A COMPONENT UNIT OF THE CALCASIEU PARISH POLICE JURY STATEMENT OF ACTIVnTES For the Year Ended December 31,2009

Function/Program Drainage work

TOTAL

EXPENSES

$ (2,064,483)

$ (2,064,483)

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

PROGRAM REVENUES OPERATING GRANTS. &

CONTRIBUTIONS

$

$

TOTAL GENERAL REVENUES

CHANGE IN NET ASSETS

NET ASSETS - BEGINNING

NET ASSETS-ENDING

_$_

$

$

NET (EXPENSES) REVENUES &

CHANGES IN NET ASSETS

GOA^RNMENTAL ACnVHIES

(2,064,483)

(2,064,483)

3,143,685 34,572 39,938

259 11,063

3,229,517

1,165,034

12,742,625

13,907,659


-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 ALL FUND TYPES BALANCE SHEET December 31,2009

GOVERNMENTAL FUNDS

ASSETS Cash

ivcLClVaDICo.

Taxes (net) State revenue sharing Interest

Prepaid assets

General Fund

$ 3,679,212

3,008,922 23,279

1,802 56,578

Special Revenue Fund

$ 504,650

-

-

105 -

Capital Projects

Fund

$ 14,947

_

-

--

Total

$ 4,198,809

3,008,922 23,279

1,907 56,578

TOTAL ASSETS $ 6,769,793 $ 504,755 $ 14,947 $ 7,289,495

LIABILTIES AND FUND BALANCES iabilties:

Accounts payable Salaries payable Compensated absences

TOTAL LLSLBILHIES

$ 19,497 27,419 4,719

51,635

19,497 27,419 4,719

51,635

Fund Balances: Reserved - capital outlay Unreserved - undesignated 6,718,158

TOTAL FUND BALANCES 6,718,158

504,755

504,755

14,947

14,947

519,702 6,718,158 7,237,860

TOTAL LL\BILiriES AND FUND BALANCES $ 6,769,793 $ 504,755 $ 14,947 $ 7,289,495


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GRAVflY DRAINAGE DISTRICT NO. 5 OF WARD 4 OF CALCASIEU PARISH A COMPONENT UNIT OF THE CALCASIEU PARISH POLICE JURY RECONCILIATION OF THE BALANCE SHEET

GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS December 31,2009

TOTAL FUND BALANCE FOR GOVERNMENTAL FUNDS AT DECEMBER 31,2009 $ 7,237,860

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

Cq)ital Assets used in gov^nmental activities are not financial resources and therefore are not reported in the fimds.

Cqjital Assets, net of accumulated depreciation 6,583,126

Certain property tax revenue receivable that will not be collected within 60 days of year end are not considered available in the govemmental fimds. 86,673

TOTAL NET ASSETS OF GOVERNMENTAL A C H V H I E S

AT DECEMBER 31,2009 S 13.907.659


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GRAVITY DRAESIAGE DISTRICT NO. 5 OF WARD 4 OF CALCASIEU PARISH A COMPONENT UNII OF THE CALCASIEU PARISH POLICE JURY GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES For the Year Ended December 31, 2009

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

TOTAL REVENUES

EXPENDirURES: Current:

Advertising Audit fees Engineer fees Equipment rentals Fuel & gas Insurance Insurance - group Maintenance & repairs Materials & supplies Miscellaneous OfGce supplies Per diem Pipe program Retirement Right of way agent fees Salaries Taxes Tools & equipment Travel Uniforms Utibties

Capital outlay TOTAL EXPENDHURES

EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES

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

EXCESS PEFICIENCY) OF REVENUES

AND OTHER SOURCES OVER EXPENDITURES

FUND BALANCE - BEGINNING

FUND BALANCE - ENDING

Genera] Fund

S 3.114.946 34^72 35,895 8,285

68 3.193.766

204 8.393 6,600

279 74,223

108,181 206.878

86,877 80,957

8,717 3,060

24,000

. 114,285

225 915,007

10,389 6,354

748 1.790

12,047 206,977

1.876.191

Special Revenue Fund

$ -

3,856

--

3,856

--. ----. --------

6,343

_ --

89.585 95,928

Capital Projects Fund

S - $ -

187 -

10,995 11,182

-----------

34,521

-. -------

34,521

Total

3.114.946 34,572 39,938 8,285

11,063 3,208,804

204 8,393 6,600

279 74,223

108,181 206.878

86,877 80,957 8,717 3,060

24,000 34,521

114,285 225

915,007 10389 12,697

748 1.790

12.047 296,562

2,006,640

1,317,575

(145,000)"

(92,072)

120,000

(23.339)

25,000

1,202,164

$

1,172,575

5,545,583

6,718,158 $

27,928

476,827

504,755 $

1,661

13,286

14,947 $

1,202,164

6.035,696

7,237,860


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GRAVITY DRAINAGE DISTRCH NO. 5 OF WARD 4 OF CALCASIEU PARISH A COMPONENT U N H OF THE CALCASIEU PARISH POLICE JURY

REVENUES: Ad valorem taxes - net State revenue sharing Interest on Investments Sale of assets N&cellaneous

TOTAL REVENUES

EXPENDITURES: Current

Advertising Appraisal Audit fees Englseerfees Equipment rental Fuel&gas Insurance Insurance - group Maintenance & Repairs Mateiiab &. supplies Miscellaneous OfSce supplies Per diem Retirement Right of way agent fees Salaries Taxes Tools & equipment Travel Uniforms Utilities

Capital outlay TOTAL EXPENDITURES

EXCESS (DEnCIENCY) OF REVENUES OVER EXPENDrrURES

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

EXCESS (DEFICIENCY) OF REVENUES

General Fund Budgetary Comparison Schedule

For the Year Ejided December 31,2009

Budgeted

Original

$ 2,809,732 34,918 48.000

-100,000

2,992,650

1,000 2,100 8.000 6,600 2.000

125,000 167.000 230,975 136,500 120,000 40.000 3.000

24.000 123,000

1300 979,110

11.000 5,000 1.000 1,700

18.000 1,600.000 3,606,485

(613.835)

(145,000)

AND OTHER SOURCES OVER EXPENDFTURES (758.835)



5,545.583

S 4,786,748

Amounts

S

5

Final

2,809,732 34,918 35,000

-18,000

2,897.650

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

125,000 167.000 230,975 136.500 120,000 40,000

3.000 24,000

123,000 1.500

979,110 11.000 5,000 1,000 1,700

18,000 1,600,000 3,606.485

(708.835)

(145.000)

(853.835)

5,545,583

4.691.748

Actual Amounts

$ 3,114,946 34472 35,895

8,285 68

3,193.766

204

-8,393 6.600

279 74.223

108.181 206,878

86,877 80,957

8,717 3,060

24,000 114,285

225 915,007

10389 6354

748 1,790

12.047 206,977

1,876.191

1317^75

(145.000)

1.172,575

5345.583

S 6,716,158

Variance with Final Budget

Positive (Negative)

$ 305;il4 (346) 895

8,285 (17.932) 296,116

796 2,100 (393)

-1.721

50,777 58,819 24.097 49,623 39,043 31383

(60)

8,715 1375

64,103 611

(1.354) 252 (90)

5,953 1393,023 1,730394

2,026,410

•

2.026,410

.

$ 2,026.410


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

REVENUES: Interest

TOTAL REVENUES

EXPENOrrURES: Tools & equipment Equipment purchase

TOTAL EXPENDITURES

EXCESS (DEFICIENCY) OF REVENUES OVEREXPENDTFURES

OTHER FINANCING S0URC:ES (USES): Operating transfer in (out)

EXCESS (DEFICIENCY) OF REVENUES AND OlliER SOURCES OVER EXPENI



Special Revenue Fund Budgetary Comparison Schedule

For the Year Ended December 31,2009

5ITURES

Budgeted Amounts

Original

$ 6,000 $ 6,000

103,000 103,000

(97,000)

120,000

23,000

476,827

$ 499,827 $

Final

3,700 3,700

103,000 103,000

(99,300)

120,000

20,700

476,827

497,527

Actual Amounts

S 3,856 3,856

6.343 89.585 95,928

(92,072)

120,000

27.928

476,827

5 504,755


Positive (Negative)

S 156 156

(6,343) 13,415 7,072

7,228

7328

_

$ 7,228


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

Capital Projects Fund Budgetary Comparison Schedule

For the Year Ended December 31.2009

REVENUES: Interest Other Income

TOTAL REVENUES

EXPENDTTURES: Pipe program

TOTAL EXPENDTTURES

EXCESS (DEHCIENCY) OF REVENUES OVER EXPENDTTURES

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

EXCESS (DEFICIENCY) OF REVENUES AND OTHER SOURCES OVER EXPENDTTURES



Budgeted

Original

$ 300 25,000 25300

50,000 50,000

(24.700)

25,000

300

13386

S 13,586

Amounts

S

$

Final

185 25,000 25,185

50,000 50,000

(24,815)

25,000

185

13,286

13,471

Actual Amounts

S 187

$

10,995 11,182

34,521 34,521

(23339)

25,000

1,661

13,286

14,947


Positive (Negative)

S 2 (14,005) (14.003)

15,479 15,479

1,476

1,476

.

$ 1,476

Notes to the Schedules: The budgets are adopted on a basis consistent with generally accepted accounting principles. There was one amendment to the General Fund, Special Revenue Fund, and the Capital Projects Fund

General Fund: The amendments to the original budget consisted of decreasing Interest on Investments by S13,000 and decreasing Miscellaneous Income by $82,000. Tools and equipment were underbudgeted by $1,354.

Special Revenue Fund: The amendment to the original budget consisted of decreasing Interest on Investments by $2,300. Tools and equipment were underbudgeted by $6,343.

Capital Projects Fund: The amendment to the original budget consisted of decreasing Interest on Investments by $115. Other Income was underbudgeted by $ 14,005.

The accompanymg notes are an integral part of this statement.

10

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 31,2009

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

NET CHANGE IN FUND BALANCE - TOTAL GOVERNMENTAL FUNDS INCREASE (DECREASE) $ 1,202,164

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

Coital outlay $ 296,562 Depreciation expense (354.406) (57,844)

The book value of equipment sold recognized in the govemment-wide financial statements is not recorded in the govemmental fund statements. (8,026)

Certain property tax revenues receivable will not be collected for several months after year end and are not considered available in the govemmental funds. 86,673

Certain property tax revenues fi-om the prior year were not collected imtil after 60 days into the current year. These amoimts were not considered available in last year's govemmental funds and have been included in the current year's revenue in governmental funds. (57,933)

CHANGE IN NET ASSETS OF GOVERNMENTAL ACTIVmES S 1.165.034

The acconq)anying notes are an integral 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 NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31,2009

INTRODUCTION

Gravity Drainage District No. 5 of Ward 4 of Calcasieu Parish was created by the Calcasieu Parish PoHce Jury, as authorized by Louisiana Revised Statute 38:1751. The District is govemed 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 governmental 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 Parisi 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 government, eittier blended into those financial statements or separately reported as discrete component imits.

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Govemmcnt-Widc 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 Gravity Drainage District No. 5 of Ward 4 of Calcasieu Parish. For the most part, the effect of interfund activity has been removed fixjm 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 ^plicants who purchase, use or directly benefit fi'om goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues.

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

B. Reporting Entity

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

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G R A V H Y 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 31,2009


The accompanying financial statements present information only on the funds maintained by the District and do not present information on the police jury, the general government 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 earned and expenses are recorded when a liabihty 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 recognized as revenue as soon as all ehgibihty requirements imposed by the provider have been met

Govemmental fund 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 tiiereafler 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 hability 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 accrual 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 government. Interfund transfers are made to meet current or anticipated needs of the District.

The Gravity Drainage District No. 5 of Ward 4 of Calcasieu Parish reports the following govemmental funds:

The General Fund is the entity's primary operating fund. It accounts for all financial resources of the entity, except those 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 UNIT OF THE CALCASIEU PARISH POLICE JURY NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31,2009


The Capital Projects Fund is used to account for financial resoiurces to be used for the acquisition or constmction of major capital faciUties.

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 rule the effect of interfund activity has been ehminated fiom the govemment-wide financial statements.

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

D. Deposits 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 fi-om the date of acquisition. State law and the Gravity Drainage District No. 5 of Ward 4 of Calcasieu Parish's investment poficy allow the entity to invest in collateralized certificates of deposits, government backed securities, commercial paper, the state sponsored investment pool, and mutual funds consisting solely of govemm^it backed securities.

E. Budgets and Budgetary Accountuig

A budget is adopted on a basis consistent with generally accepted accounting principles for all govemmental fimds. All aimual appropriations lapse at fiscal year end. In November of each year, the budget is prepared by fund, function and activity, and includes information 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 fix)m or change appropriations, but may not change the form of the budget. Any changes in the budget must be within the revenues and reserves estimated. The budget was amended once during 2009.

F. Prepaid Items

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

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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 31,2009

NOTEl- SUMMARY OF SIGNIFICANT ACCOUNTING POUCIES

G. Capital Assets

Cz^ital assets, which include property, plant, equipment, and infi astmcture assets (e.g., drainage structures, bridges, and similar items), are reported in the govemment-wide financial statements. Coital 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 hves are not c^italized.

All coital assets, other than land, are depreciated using the straight-Une method over the following useful lives:

Estimated Description Lives

Infirastructure assets 25 years Buildings and building improvements 40 years Furniture and fixtures 5-12 years Vehicles 5 years Equipment 10 years

H. Compensated Absences

The District allows employees to accumulate unlimited unused sick leave. Earned vacation time is expected to be used within one year of accmal with a maximum of one week carryforward to the next year, if not used. The liabihty for accrued sick leave could not be reasonably estimated.

L Fund Equity

Reserved fund balances represent those portions of fund equity legally segregated for capital outlay.

J. Estimates

The preparation of financial statements in conformity with accounting principles generally accepted m the United States of America require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and habilities at the date of the financial statements and the reported amounts of revenues, expenditures, and expenses during the reporting period. Actual results could differ firom 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 FINANCIAL STATEMENTS As of and for the Year Ended December 31,2009


K. Interfund Transfers

Transfers are made from the General Fund to the Special Revenue Fund and Capital Projects Fund to assist hi the payment of normal operating expenditures.

NOTEl- AD VALOREM TAXES

For the year ended December 31,2009 taxes of 4.65 mills were levied on property with assessed valuations totaling $694,670,968 and were dedicated as follows:

General corporate purposes 4.65 mills

Total taxes levied were $3,231,531.

Property tax millage rates are adopted in July for the 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 February are subject to lien.

NOTE 3- CASH AND CASH EQUIVALENTS

Custodial Credit Risk-Deposits, Custodial credh risk is the risk that in the event of a bank failure, the government's deposits may not be returned to it.

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

Interest Rate Risk. The District does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising fiom 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, 2009, the District has cash and cash equivalents (book balances) totaUng $4,198,809 as follows:

Demand deposits S Interest-bearing demand deposits 2,193,769 Tune deposits 2,005,000 Other 40

Total $ 4.198.809 -16-

GRAVITY DRAINAGE DISTRICT N0.5 OF WARD 4 OF CALCASIEU PARISH A COMPONENT UNIT OF THE CALCASIEU PARISH POLICE JURY NOTES TO FINANCL\L STATEMENTS As of and for the Year Ended December 31,2009

NOTE 3 - CASH AND CASH EQUIVALENTS

These deposits are stated at cost, which approximates market. Under state law, these deposits (or the resulting 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 in the name of the pledging fiscal agent bank in a holding or custodial bank that is mutually acceptable to botii parties.

At December 31, 2009, the District has $4,266,154 in deposits (collected bank balances). These deposits are secured fix>m risk by $250,000 of federal deposit insurance and $4,016,154 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 requirement 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 - RECEIVABLES

The following is a summary of receivables at December 31, 2009:

Total Class of Receivable Ad valorem taxes $ 3,095,595 Other 25,186

Total $ 3.120.781

The District's receivables consist of ad valorem taxes receivable and interest receivable fix)m bank deposits. No allowance for uncollectible taxes has been recorded.

NOTES- CHANGES IN CAPITAL ASSETS

The following is a summary of changes in coital assets for the year ending December 31, 2009.

Current year roll forward:

CostatDeceroba31,2008 $

Additions

Deletions

Cost at December 31, 2009 $

Land

195,986

--

195.986

Buildings

$ 554,116

--

$ 554,116

$

T

Equipment

1,929,307

89,585

(59,404)

1,959,488

Drainage Infrastructure

$ 6,130,711

206,977

$ 6,337,688

$

$~

Total

8,810,120

296,562

(59,404)

9,047,278

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GRAVITY DRAINAGE DISTRICTI 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 31,2009

NOTES- CHANGES IN CAPITAL ASSETS

Depreciation: Accumulated Depreciation

December 31,2008 Additions Deletions

Accumulated Depreciation December 31,2009

Drainage Land Buildings Equipment Infrastructure Total

$ (98.702) 5 (U05,457) $ (856,965) $ (2,161,124) (12,469) (122,171) (219.766) (354,406)

: 51,378 : 51,378

(111,171) (1,276,250) (1.076.731) (2.464.152)

Capital assets, net of accumulated depredationatDecember31,2009 $ 195^86 $ 442.945 $ 683,238 S 5;Z60.957 S 6.583,126

Depreciation expense of $354,406 for the year ended December 31, 2009 was charged to the following govemmental functions:

Dramage work $ 354,406 I — . . H I • _

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 tmstees. 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 paid wholly or in part fi'om 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 5 5 with 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 fmal-average salary for each year of creditable service. However, for those employees who were members of the supplemental plan only before January 1,1980, the benefit is equal to 1% of final average salary plus $24 for each year of supplemental-plan-only service earned before January 1,1980. Fmal-average salary is the employee' average salary over the 36 consecutive or joined months that produce the highest average. Employees who tenninate with at least the amount of creditable service stated above and do not withdraw their employee contributions may retire at the ages specified above and receive the benefit accmed to their date of termination. The System also provides death and disabiUty benefits. Benefits are established or amended by state statute.

-18

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, 2009

NOTE 6- RETIREMENT SYSTEM

The System issues an annual pubhcly available financial report that includes financial statements and required si^)plementary information for the System. That report may be obtained by writing to the Parochial Employees' Retirement System, Post Office Box 14619, Baton Rouge, Louisiana 70898-4619, orbycalhng(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 determined rate. The current rate is 12.25 percent of annual covered payroll. Contributions to the System also include one-fourth of one percent (except Orleans and East Baton Rouge parishes) of the taxes shown to be collectible by the 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 requirranents of plan members and the District are estabhshed 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 tiie System under Plan A for the years ending December 31, 2009, 2008, and 2007 were $114,285, $114,165, and $119,781 respectively, equal to the rcqmred contributions for each year.

NOTE 7- COMPENSATED ABSENCES

At December 31,2009, employees of the District have accumulated and vested $4,719 of employee leave benefits, which was computed in accordance with GASB Codification Section C60. Of this amount, $4,719 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 insurance coverage covering each of those risks of loss. Management beUeves such coverage is sufficient to preclude any significant uninsured losses to the District Settied claims have not exceeded this commercial coverage m any of the past three fiscal years.

NOTE 9- COMMITMENTS

The District has ongoing capital outlay commitments relative to dramage and flood control projects. Management believes future revenues and fund balances currently available are more than sufficient to cover these commitments.

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SUPPLEMENTAL INFORMATION SCHEDULES

GRAVITY DRAINAGE DISTRICT NO. 5 OF WARD 4 OF CALCASIEU PARISH A COMPONENT UNIT OF THE CALCASIEU PARISH POLICE JURY SUPPLEMENTAL INFORMATION SCHEDULE For the Year Ended December 31,2009

COMPENSATION PAID BOARD MEMBERS

A schedule of compensation paid board members is presented in compHance with House Concurrent Resolution No. 54 of the 1979 Session of the Louisiana Legislature. LA Rev. Statute 3 8:1794 authorizes the District to pay each board member SlOO for each meeting attended, up to 48 meetings per year.

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GRAVITY DRAINAGE DISTRICT N0.5 OF WARD 4 OF CALCASIEU PARISH A COMPONENT UNIT OF THE CALCASIEU PARISH POLICE JURY SUPPLEMENTAL INFORMATION SCHEDULE SCHEDULE OF COMPENSATION PAID BOARD MEMBERS For die Year Ended December 31,2009

Name Amount Harvey Boyd $ 4,800 Johnnie Hardy, Sr, 4,800 Patrick Fitts 4,800 Neil Nelson 4,800 Lewis i^pleby 4,800

Total $ 24.000

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INDEPENDENT AUDHOR'S REPORT SECTION

stutzman & Gates, LLC Certified Public Accountants

Anwricvt fnsUota o/ CorWatf Pubtle AeeountaMM SocMyo/Lout$l»nC*rtmt lPubBc Accountants

REPORT ON INTERNAL CONTROL OVER FINANCL\L REPORTING AND ON COMPLL\NCE AND OTHER MATTERS BASED ON AN AUDIT OF

FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT A UDITING STANDARDS

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

We have audited the financial statements of the govemmental activities and each major fund of Gravity Drainage District No. 5 of Ward 4 of Calcasieu Parish as of and for the year ended December 31,2009, 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 26, 2010. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards appHcable to financial audits contauied in Government Auditing Standards, issued by the Comptroller General of the United States.

Internal Control Over Financial Reporting

In planning and performing our audit, we considered (Gravity Drainage District No. 5 of Ward 4 of Calcasieu Parish's internal control over financial reportmg as a basis for designing our auditing procedures for the purpose of expressmg 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 internal 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 internal control over financial reporting.

Our considCTation of intemal control over financial reporting was for the Hmited purpose described in the preceding paragraph and was not designated to identify all deficiencies in internal control over financial reporting that might be significant 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 intemal 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 functions, to prevent, or detect and correct 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 possibiUty 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 2009-1, 2009-2. and 2009-3.

p. O. Box 1238 Sulphur, Louisiana 70664-1238 • (337) 533-1700 521N. 8" Street • Kinder. Louisiana 70648 • 037} 738-2101

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^e of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompUance with which could have a direct and material effect on the detemiination 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 instances of noncompUance or other matters that are requked to be reported undw Government Auditing Standards and which are described in the accompanying schedule of findings and responses as item 2009-3.

Gravity Drainage District No. 5 of Ward 4 of Calcasieu Parish's response to the findings identified in our audit are described in 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 infomiation and use of management, the Board of Commissioners, others within the entity, the Calcasieii Parish PoUce Jury, and the 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 the Legislative Auditor as a pubhc document.

Stutzman & Gates, LLC May 26,2010

GRAVITY DRAINAGE DISTRICT NO. 5 OF WARD 4 OF CALCASIEU PARISH A COMPONENT UNH OF THE CALCASIEU PARISH POLICE JURY SCHEDULE OF FINDINGS AND RESPONSES For the Year Ended December 31,2009

2009-1 Segregation of Duties Condition:

Criteria:

EfiFect:

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 fimction 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 funding Imiitations of the District. We recommend that the commissioners take an active interest in the review of aU of the financial mformation. This was also a prior year finding.

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

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

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.

2009-2 Controls Over Financial Reporting Condition: In our judgment, the District's accounting personnel and those charged with

govemance, in the course of their assigned duties, lack the capable skills to prepare the financial statements and related footnotes 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 smaU organizations rely on then auditor to generate the annual financial statements includmg footnotes. SAS No. 112 emphasizes that the auditor cannot be part of your system of internal control over financial reporting.

Material misstatements in financial statements could go undetected.

In our judgment, due to the lack of resources available to management to coirect this material weakness in financial reporting, we recommend management mitigate this weakness by having a heightened awareness of all transactions being reported.

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

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GRAVITY DRAINAGE DISTRKTI NO. 5 OF WARD 4 OF CALCASIEU PARISH A COMPONENT UNIT OF THE CALCASIEU PARISH POUCE JURY SCHEDULE OF FINDINGS AND RESPONSES For the Year Ended December 31,2009

2009-3 Local govemmept bndget act - Budgetarv authority and control Condition: Actual revenues and other sources failed to meet budgeted revenues and other

sources by 28% m the Capital Proj ects Fund for the year ended December 31, 2009.

CritCTia:

Effect:

Recommendation:

Rc )onse*.

La. Rev. Stat. §39:1311 (A) (1). Whenever total actual revenues and other sources plus projected revenues and other sources for the remainder of the year, within a fund, are faihng to meet total budgeted revenues and other sources by five percent or more, the budget shall be amended.

Violation of local govermnent budget act.

The District should amend its budget whenever actual revenues and other sources plus projected revenues and other sources fail to meet budgeted revenues and other sources by five percent or more.

We concur with this recommendation. The District will amend its budget whenever necessary m the fiiture.

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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 AUDU FINDINGS For the Year Ended December 31,2009

2008-1 Segregation of Duties

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

2008-2 Controls Over Financial Reporting

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

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