Calcasieu Parish Waterworks District No. 9, Ward 4 - LLA …FILE/00020269.pdf · ·...

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WATERWORKS DISTRICT NO. 9 OF WARD 4 OF CALCASIEU

PARISH, LOUISIANA Sulphur, Louisiana

Annual Financial Report December 31,2010 and 2009

Under provisions of state law, tlils report is a public document. Acopy of the report has been submitted to the entity and other appropriate pubfic officials. The report is available for public inspection at tl̂ e Baton Rouge office of the Legislative Auditor and, where appropriate, at the office of the parish clerk of court.

Release Dale C I^^J/

T A B L E OF C O N T E N T S

Page

Independent Auditors' Report 1 - 2

Management's Discussion and Analysis 3-6

Balance Sheets 7 -8

Statements of Revenues, Expenses, and Changes in Net Assets 9

Statements of Cash Flows 10 - H

Notes to Financial Statements 12-22

Independent Auditors' Report on Compliance and Internal Control Over Financial Reporting Based On An Audit Of Financial Statements Performed In Accordance With Government Auditing Standards 23-24

Schedule of Findings and Questioned Costs 25

STEVEN M. DEROUEN, CPA P.O. BOX 4265

LAKE CHARLES, LA 70606 (337) 513-4915 O m C E | (337) 513-4737 FAX

Member American Institute of [email protected] Member Louisiana Society of Certified Public Accountants Certified Public Accountants

Certified Public Accountants

INDEPENDENT AUDITORS' REPORT

Board of Commissioners Waterworks District No. 9 of Ward 4 of Calcasieu Parish, Louisiana Sulphur, Louisiana

I have audited the accompanying balance sheet of Waterworks District 9 of Ward 4 of Calcasieu Parish, Louisiana, component unit of Calcasieu Parish Police Juiy, as of December 31, 2010 and 2009, and the related statements of revenues, expenses, and changes in net assets, and cash flows for the year then ended. These financial statements are the responsibility of the District's management. My responsibility is to express an opinion on these financial statements based on my audits.

I conducted my audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Stcmdards, issued by the Comptroller General of the United States. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present feirly, in all material respects, the financial position of Waterworks District 9 of Ward 4 of Calcasieu Parish, Louisiana as of December 31, 2010 and 2009, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on pages 3 through 6 be presented to supplement basic financial statements. Such information, although not a basic part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. I have applied certain limited procedures to the required supplementary information for consistency with management's responses to my inquiries, the basic financial statements, and other knowledge I obtained during my audit of the basic financial statements. I do not express an opinion or provide any assurance on the information because the limited procedures do not provide me with sufficient evidence to express an opinion or provide ^ y assurance.

mailto:[email protected]

Board of Commissioners Waterworks District No. 9 of Ward 4 of Calcasieu Parish, Louisiana

In accordance with Government Auditing Standards, I have also issued a report dated April 6, 2011 on my consideration of Waterwoilcs District 9 of Ward 4 of Calcasieu Parish, Louisiana's internal control over financial reporting and my tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of my testing of internal control over financial reporting and con^liance 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 Govemmens Auditing Standards and should be consid^d in assessing the results of my audits.

^ T f ^ O A ^ c f i ^ Lake Charles, Louisiana ^ April 6,2011

WATERWORKS DISTRICT NO. 9 OF WARD 4 OF CALCASIEU PARISH, LOUISIANA

MANAGEMENT'S DISCUSSION AND ANALYSIS AS OF DECEMBER 31,2010

The Management's Discussion and Analysis of the Waterworks District No. 9 of Ward 4 of Calcasieu Parish, Louisiana's (the District) financial performance presents a narrative overview and analysis of the District's financial activities for the year ended December 31, 2010. This document focuses on the current year's activities, resulting changes, and currently known facts in comparison with the prior year's information. Please read this document in conjunction with the additional information contained in the financial statements.

HNANCIAL HIGHLIGHTS

The District's assets exceeded its liabilities at the close of 2010 by $7,261,108 which represents an 8.2% increase from last fiscal year. Of this amount, $2,878,113 (unrestricted net assets) may be used to meet the District's ongoing obligations to its users.

The District's operating revenue increased $294,993 (or 20.4%) and the net results from operations increased by $109,719. A significant portion of this increase in net results from operations is due to the increase in operating revenues.

OVERVIEW OF THE FINANCIAL STATEMENTS

The following graphic illustrates the minimum requirements for Special Purpose Governments Engaged in Business-Type Activities established by Governmental Accounting Standards Board Statement 34, Basic Financial Statements—and Management's Discussion and Analysis—for State and Local Governments.

Management's Discussion and Analysis

I Basic Financial Statements < |

These financial statements consist of two sections - Management's Discussion and Analysis (this section) and the basic financial statements (including the notes to the financial statements).



Basic Financial Statements

The basic financial statements present information for the District as a whole, in a format designed to make the statements easier for the reader to understand. The statements in this section include the Balance Sheet; the Statement of Revenues, Expenses, and Changes in Net Assets; and the Statement of Cash Flows.

The Balance Sheets (pages 7 - 8 ) presents the current and long term portions of assets and liabilities separately. The difference between total assets and total liabilities is net assets and may provide a usefiil indicator of whether the financial position of the District is improving or deteriorating.

The Statements of Revenues. Expenses, and Changes in Net Assets (page 9) presents information showing how the District's assets changed as a result of current year operations. Regardless of when cash is affected, all changes in net assets are reported when the underlying transactions occur. As a result, there are transactions included that will not affect cash unfil future fiscal periods.

The Cash Flow Statements (pages JO - U.) presents information showing how the District's cash changed as a result of current year operations. The cash flow statement is prepared using the direct method and includes the reconciliation of operating income (loss) to net cash provided (used) by operating activities (indirect method) as required by GASH 34.

FINANCIAL ANALYSIS OF THE ENTITY

Current and other assets Capital assets

Total assets Other liabilities Long-term debt outstanding

Total liabilities Net assets:

Invested capital assets, net of debt Restricted Unrestricted Total net assets

Total liabilities and net assets

2010 $3,149,439

7,564,437 10,713,876

58,020 3,394,748 3,452,768

4,169,689 213,306

2,878,113 7,261,108

$10,713,876

2009 $2,951,099

7,714,227 10,665,326

102,824 3,848,809 3,951,633

3,865,418 268,960

2,579,315 6.713,693

$10,665,326

2008 $2,861,206

7,934,621 10,795,827

207,310 4,283,423 4,490,733

3,651,198 370,230

2,283,666 6,305,094

$10,795,827



Restricted net assets represent those assets that are not available for spending as a result of bond agreements. Conversely, unrestricted net assets are those that do not have any limitations for which these amounts may be used.

Net assets of the Disfrict increased by $547,415, or 8.2%, from December 31, 2009 to December 31, 2010.

Operating revenues Operating expenses

Operating income (loss)

Non-operating revenues (expenses)

Net increase (decrease) in net assets

2010

$ 1,737,691 (1,513,506)

224,185

323,230

$ 547,415

2009

$ 1,442,698 (1,328,232)

114,466

294,133

$ 408,599

2008

$ 1,355,897 (1,272,528)

83,369

367,736

$ 451,105

CAPITAL ASSET AND DEBT ADMINISTRATION

Capital Assets

As of December 31, 2010, the District had $7,564,437, net of accumulated depreciation, invested in a broad range of capital assets, including land, right of ways, plant and distribution system, and furniture, fixtures, and equipment, (see table below). This amount represents a net decrease (including additions and deductions) of $149,790, or 1.9%, from last year.

2010 2009 2008

Land and Right of Ways Plant and Distribution System Furniture, Fixtures, and Equipment Construction in progress

Less Accumulated Depreciation (6,158,228) (5,717,088) (5,274,705)

Totals $ 7,564,437 $ 7,714.227 $ 7.934.621

This year's Major Capital addifions included above were:

• Various Water Line Extensions $ ] 90,820 • Meter Installations $ 10,640

$ 113,486 13,200,595

187,309 221,275

$ 113,486 13,135,082

182,747 -0-

$ 113,486 12,780,757

167,137 147,946

WATERWORKS DISTRICT NO. 9 OF WARD 4 OF CALCASIEU PARISH, LOUISL^NA


Debt

The District had $3,555,000 in bonds outstanding at year-end, compared to $3,970,000 last year, a decrease of 10.4%. A summary of this debt is shown in the table below.

Outstanding Debt at Year-end

2010 2009 2008

Revenue Bonds $ 3,000,000 $ 3,245,000 $ 3,485,000

General Obligation Bonds 555.000 725,000 885,000

Totals $ 3,555,000 $ 3.970,000 $ 4.370,000

The District's General Obligation bonds are un-rated. The District's Revenue bonds are AAA insured.

CONTACTING THE DISTRICT'S MANAGEMENT

This financial report is designed to provide our citizens, taxpayers, customers and creditors with a general overview of the District's finances and to show the District's accountability for the money it receives. If you have questions about this report or need additional financial information, contact Alice Webb-Silver, District Supervisor, Waterworks District No. 9 of Ward 4 of Calcasieu Parish.

Waterworks District No. 9 of Ward 4 of Calcasieu Parish, Louisiana Sulphur, Louisiana

Balance Sheets As of December 31,

ASSETS 2010 2009

CURREM ASSETS Cash and cash equivalents Investments Restricted assets:

Cash and cash equivalents - construction Cash and cash equivalents - revenue bonds Cash - sinking fund - general obligations bonds Certificate of deposit - revenue bonds Investments - revenue bonds Investments - construction Taxes receivable - ad valorem - sinking futwi

Receivables - net of allowance for uncollectibles of $55,394 for 2010 and $46,912 for 2009: Water accounts Unbilled Taxes - ad valorem - maintenance Interest

Inventory Prepaid expenses

Total Current Assets

P R O P E R T Y ; PLANT, AND EQUIPMENT Furniture, fixtures, and equipment Vehicles Plant and distribution system

Less: accumulated depreciation and amortization

Construction in progress Land

Net Property, Plant, and Equipment

OTHER ASSETS Deferred charges - bond issue costs, net

TOTAL ASSETS

$ 264,145 1,486,446

3 8,766

68,177 46,913

388,912 7,764

125,911

163,212 116,549 313,518

1,434 65,731 9.382

3.066.863

118,089 69,220

13-200.595 13,387,904 (6,158.228) 7,229,676 221,275 113.486

7,564,437

82.576

$ 10,713,876

$ 123,948 1,449,078

3 4,484

139,821 46,889 372,210

7,751 123,435

115,703 74,527

307,353 323

73,719 16,266

2,855,510

118,089 64,658

13.135.082 13,317,829 (5,717,088) 7,600,741

-113,486

7,714,227

95,589

$ 10,665,326

The accompanying notes are an integral part of the financial statements.


Balance Sheets (Continued) As of December 31,

LIABILITIES AND NET ASSETS 2010 2009

CURRENT LIABILITIES Accounts payable Payroll taxes and retirement payable Wages payable Due to DOTD Current portion of capital lease

Total Current Liabilities

38,353 7,418 4,109

42.751

58,115 5,924 1,990

26,162 70,625

92.631 162,816

CURRENT LIABILITIES (Payable from Restricted Assets) Interest payable - bonds Current portion of revenue bonds Current portion of general obligation bonds

Total Current Liabilities (Payable From Restricted Assets)

LONG-TERM LIABILITIES Capital lease (net of current portion) Revenue bonds (net of current portion, bond discount and deferred loss) General obligation bonds (net of current portion)

Total Long-Term Liabilities

8,140 250,000 175,000

10,633 245,000 170,000

433,140

2,546,997 380.000

425.633

42,751 2,765,433

555,000 2,926,997 3,363,184

Total Liabilities 3,452,768 3,951.633

NET ASSETS Investment in capital assets, net of related debt Restricted for debt service Unrestricted

Total Net Assets

TOTAL LIABILITIES AND NET ASSETS

4,169,689 213,306

2.878,113 7,261.108

$ 10,713,876

3,865,418 268.960

2,579,315 6.713,693

$ 10,665.326


Wateworks District No. 9 of Ward 4 of Calcasieu Parish, Louisiana Sulphur, Louisiana

Statements of Revenues, Expenses, and Changes in Net Assets For The Years Ended December 31,

2010 2009

OPERATING REVENUES Water sales and fees

OPERATING EXENSES Wages - plant Payroll tax and employee benefits Amortization expense Commissioner fees [)epreciation expense Insurance Accounting and legal expenses Meter reading Miscellaneous Office supplies Plant supplies Repairs and maintenance Telephone Utilities Vehicle expense Bad debt expense

Total Operating Expenses

INCOME FROM OPERATIONS

NON-OPERATING REVENUES (EXPENSES) Ad valorem taxes - sinking fund Ad valorem taxes - maintenance Investment Income Joint service income Miscellaneous Revenue sharing Interest expense

Total Non-Operating Revenues

NET INCOME

NET ASSETS - Beginning of Year

NET ASSETS - End of Year

$• 1.737.691

315,897 132,983 44,577 4,800

441,140 70,745 22,160 52,884 38,233 29,984 116,411 113,289 16,270 76,701 29,041 8.391

1,513.506

224,185

122,562 305,181 20,896 9,191 13,817 6,366

(154.783) 323,230

547.415

6,713.693

$ 7,261.108

$ 1,442,698

278,532 106,030 46,474 4,080

442,383 58,374 16,950 51,364 47,794 27,911 90,217 61,772 16,132 61,499 13,822 4,898

1.328.232

114.466

123,866 308,427 10,898

-14,101 6,495

(169,654) 294,133

408,599

6,305.094

$ 6,713,693



Statements of Cash Flows For The Years Ended December 31,

Cash Flows From Operating Activities: Receipts from customers and users Payments to suppliers Payments to employees Odier

Net Cash Provided (Used) by Operating Activities

Cash Flows From Investing Activities: Investment income Cash received (paid) for certificates of deposit Investment in LAMP and mutual fimds, net

Net Cash Provided (Used) by Investing Activities

Cash Flows From Capital and Related Financing Activities: Capital expenditures for plant and equipment Principal payments on bonds Principal payments on capital lease Cash received for ad valorem taxes Intergovernmental - revenue sharing and riverboat funds Interest expense Miscellaneous

Net Cash Provided (Used) by Capital and Related Financing Activities

Net Increase (Decrease) in Cash

Cash and Cash Equivalents - Beginning of Year

Cash and Cash Equivalents - End of Year

Cash and Cash Equivalents: Cash - unrestricted Cash - restricted

2010 2009

$ 1,648,160 (616,442) (445,267)

(6.625) 579.826

20,896 (24)

(54,083) (33.211)

(281,848) (415,000) • (70,625) 419,102 15,557

(154,783) 13.817

(473,780)

72,835

268,256

341,091

264,145 76.946

$ 341,091

$ 1,436,578 (558,720) (383,515)

(7.245) 487.098

10,898 (599)

(76.835) (66.536)

(221,989) (400,000) (67,395) 452,177

6,495 (169,654) 14,101

(386,265)

34,297

233,959

268,256

123,948 144,308

$ 268.256

The accompanying notes are an integral part of the financial statements. 10


Statements of Cash Flows (Continued) For The Years Ended December 31,

2010 2009

Reconciliation of Operating Income to Net Cash Provided (Used) by Operating Activities: Operating income (loss) Adjustments to reconcile net operating income

to net cash provided by operating activities: Depreciation Provisions for bad debts Amortization (Increase) decrease in receivables (Increase) decrease in prepaid insurance (Increase) decrease in inventory Increase (decrease) in accounts payable

and other accrued expenses

Total Adjustments

Net Cash Provided (Used) by Operating Activities

Supplemental Disclosure: Cash paid for interest (net of amount capitalized)

224,185

(45,574)

355.641

$

$

579.826

157.276

114,466

441,140 8,391

44,577 (107,765)

6,884 7,988

442,383 4,898

46,474 13,764 (762)

(4,859)

(129,266)

372,632

S

$

487,098

172.001

The accompanying notes are an integral part of die financial statements. It


Sulphur, Louisiana Notes to Financial Statements December 31,2010 and 2009

Note 1 - Summary of Significant Accounting Policies

The accoimting policies of Waterworks District No. 9 of Ward 4 of Calcasieu Parish, Louisiana conform to generally accepted accounting principles as applicable to governmental units. Such accoimting and reporting procedures also conform to the requirements of Louisiana Revised Statutes 24:517 and to die guides set forth in the Louisiana Municipal Audit and Accounting Guide, and to the industry audit guide. Audits of State and Local Governmental Units.

GASB No. 20 requires that governments' proprietary activities apply all applicable GASB pronouncements, as well as the following pronouncements issued on or before November 30, 1989, unless those pronouncements conflict with or contradict GASB pronouncements: Financial Accounting Standards Board ("FASB") Stetements and InterpreUitions, Accounting Principles Board Opinions and Accounting Research Bulletins. Governments are given the option whether or not to apply all FASB Statements and Interpretations issued after November 30, 1989, except

^ for those that conflict with or contradict GASB pronouncements. The district has elected not to implement FASB Statements and Interpretations issued after November 30, 1989. The following is a summary of the more significant policies:

Financial Reporting Entity

This report includes all fimds and account groups which are controlled by or dependent on the Commissioners. Control by or dependence on die District was determined on the basis of budget adoption, taxing authority, authority to issue debt, election or appointment of governing body, and other general oversight responsibility.

Based on the foregoing criteria, the Waterworks District No. 9 has no other fiscal or significant managerial responsibility over any other governmental unit that is not included in the financial statements of the Waterworks District No. 9 of Ward 4 of Calcasieu Parish, Louisiana. The district is a component unit of the Calcasieu Parish Police Jury.

Fund Accounting

The accounts of the district are organized on the basis of a proprietary fimd, which is considered a separate accounting entity or enterprise fund. Enterprise ftmds are used to account for operations (a) that are financed and operated in a manner similar to private business enterprises - where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods or services to the genera! public on a continuing basis be financed or recovered primarily through user charges; or (b) where the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes.

Basis of Accounting

The District has implemented GASB Statement No. 34, "Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments".

12


Sulphur, Louisiana Notes to Financial Statements (Continued)

December 31,2010 and 2009

Note I - Summary of Sienificant Accountine Policies (Continued)

The district uses the accrual basis of accounting. The revenues are recognized when they are earned, and expenses are recognized when incurred.

Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operafions. The principal operating revenues of the District's enterprise fund are charges to customers for sales and services. The District also recognizes as operating revenue the portion of tap fees intended to recover the cost of connecting new customers to the system. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses.

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

Accounts Receivable

Accounts receivable are stated at cost less an allowance for doubtful accounts. Accoimts are considered delinquent when 30 days past due (based on days since last payment). The allowance account consists of an estimate of uncollectible specifically identified accounts and a general reserve. Management's evaluation of the adequacy of the allowance is based on a continuing review of all accounts and includes a considerafion of past user history, any adverse situations that might affect the user's ability to repay, and current economic conditions. The need for an adjustment to the allowance is considered at year end. Amounts charged-off that are subsequently recovered are recorded as income.

Estimates

The preparation of the financial statements in conformity with generally accepted accoimting principles requires management to make assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

13




Note 1 - Summary of Sienificant Accountine Policies (Continued)

Property. Plant and Equipment and Long-Term Liabilities

The proprietary fimd is accounted for on a cost of services or capital maintenance measurement focus, and all assets and liabilities (whether current or non-current) associated with its activity are included in the balance sheet

Depreciation of all exhaustible fixed assets is charged as an expense against the operations. Depreciation has been provided over the estimated useful lives using the straight-line method. The estimated usefiil lives are as follows:

Furniture, fixtures, and equipment 3-40 years Vehicles 5 years Plant and distribution system 15 - 40 years

All fixed assets are stated at historical cost All property and equipment in excess of $1,000 are capitalized. Depreciation amounted to $441,140 for the year ended December 31, 2010 and $442,3 83 for die year ended December 31,2009.

Deferred Charges and Bond Discount

The various fees incurred in connection with obtaining and issuing the general obligation and revenue bonds have been capitalized and are being amortized over a period of fifteen to twenty-five years using the effective interest method. Amortization expense amounted to $44,577 for the year ended December 31, 2010 and $46,474 for the year ended December 31, 2009. Bond discounts are amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond discount.

Cash and Cash Equivalents •

The District considers all short-term investments witfi an original maturity of three months or less to be cash equivalents.

Inventory

Inventory is valued at the lower of cost (first-in, first-out) or market.

14




Note 2 - Ad Valorem Taxes

Ad valorem taxes attach as an enforceable lien on property as of January 1 of each year. Taxes are levied by the Parish in September or October and are actually billed to the taxpayers in November. Billed taxes become delinquent on January 1st of the following year.

For the year ended December 31,2010, taxes of 3.49 mills were levied on property widi assessed valuations, net of homestead exemption. Total taxes levied were $455,700. Taxes receivable at December 31,2010 were $439,429, all of which were considered collectible. The 3.49 mills were dedicated as follows:

Maintenance fund Sinking fimd

Note 3 - Chanees in Lone-Term Debt

2.49 mills 1.00 mills

The following is a summary of bond payable transactions of the District for the years ended December 31,2010 and 2009:

Outstanding at December 31,2008 Bonds retired Deferred Loss Bond discount Outstanding at December 31, 2009

Outstanding at December 31,2009 Bonds retired Deferred Loss Bond discount Outstanding at December 31,2010

General Obligation

$ 885,000 ( 160,000 )

-0-:0-

$ 725.000

General Obligation

$ 725,000 ( 170,000 )

-0--0-

Revenue $3,485,000 ( 240,000 ) ( 209,907 ) ( 24.660 ) $3.010.433

Revenue $3,245,000 ( 245,000 ) ( 181,721 ) ( 21.282 ) S2.796.997

Total $4,370,000 ( 400,000 ) ( 209,907 ) ( 24.660 ) $3.735.433

Total $3,970,000 ( 415,000 ) ( 181,721 ) ( 21.282 ) $3.351.997

Long-term debt consists of the following at December 31:

General obligation bonds:

$2,000,000 General Obligation Waterworks Improvement Bonds of Waterworks District No. 9 of Ward 4 of Calcasieu Parish, Louisiana due in annual installments of $75,000 to $195,000 through March 1,2013; interest at4.1 %to 8.0%

2010

$555,000

2009

$725,000

15

http://S2.796.997

WATERWORKS DISTRICT NO. 9 OF WARD 4 OF CALCASIEU PARISH, LOUISLVNA

Sulphur, Louisiana Notes to Financial Statements (Continued) ^


Note 3 - Changes in Lon^Term Debt (Continued)

Revenue bonds: 2010 2009

$4,225,000 Waterworks Revenue Refimding Bonds, Series 2004, due in annual installments of $20,000 to $1,650,000 through January 1,2021; interest at 3.0% to 4.125% $3,000,000 $3,245,000

The annual requirements to amortize all debt outstanding as of December 31,2010, are as follows:

General Obligation Bonds Year Ending December 31, 2011 2012 2013

Total

Principal $ 175,000

185,000 195.000

$ 555.000

Interest $ 20,570

12,650 4.290

$ 37.510

Total $ 195,570

197,650 199.290

$ 592.510

Revenue Bonds Year Ending December 31, 2011 2012 2013 2014 2015 2016-2020

Total

Principal Interest Total $ 250,000

260,000 270,000 280,000 290,000

1.650.000 $ 3,000,000

$ 111,160 102,710 93,598 83,833 73,428 175.725

$ 640,454

s

$

361,160 362,710 363,598 363,833 363,428

1.825.725 3.640.454

The general obligation bonds are to be retired from the avails of property taxes levied and collected within the limits of the District.

The revenue bonds are to be retired from the income and revenues derived from the operation of the System of the Waterworks District No. 9 of Ward 4 of Calcasieu Parish, Louisiana.

Note 4 - Accumulated Unpaid Vacation and Sick Pay

There was no liability for accumulated unpaid vacation and sick pay at December 31, 2010 and 2009.

16




Note 5 - Board of Commissioners' Fees

Members of the Board of Commissioners are paid a per diem allowance for attending board meetings. The total expenses for meetings attended during the year are as follows:

2010 2009 MatyEllender $ 1,020 $ 840 Larry Mouton 1,020 840 Byron Chamblee 960 780 Vito Tramonte 960 900 Carson Carson 840 720

Total $ 4,800 $ 4,080

Note 6 - Cas/i, Cash Equivalents, and Investments

At December 31, 2010 and 2009, the District has cash and certificates of deposit (book balances) as follows:

Demand deposits Certificate of deposit

Total

A reconciliation of cash and certificates of deposit follows:

Cash on hand Carrying amount of deposits

Cash and cash equivalents $ 341,091 $ 268,256

Certificates of deposit (non-cash equivalents) 46,913 46,889

$ 388,004 $ 315,145

2010 $ 340,591

46,913 $ 387,504

2010 $ 500

387,504 $ 388,004

2009 $ 267,756

46,889 $ 314,645

2009 $ 500

314,645 $ 315,145

17

WATERWORKS DISTRICT NO, 9 OF WARD 4 OF CALCASIEU PARISH, LOUISLVNA



Note 6 - Cash, Cash Equivalents, and Investments (Continued)

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 both parties.

At December 31, 2010, die District had $388,399 in deposits (collected bank balances). These deposits are secured from risk by $296,913 of federal deposit insurance and $921,280 of pledged securities held by the custodial bank in the name of the fiscal agent bank.

At December 31, 2009, the District had $319,784 in deposits (collected bank balances). These deposits are secured from risk by $2%,889 of federal deposit insurance and $877,843 of pledged securities held by the custodial bank in the name of the fiscal agent bank.

Even though the pledged securities are considered uncollateralized under the provisions of GASB Statement 3, Louisiana Revised Statute 39:1229 imposes a statutory requirement on the custodial bank to advertise and sell the pledged securities witiiin 10 days of being notified by the district that the fiscal agent bank has failed to pay deposited fimds upon demand.

Under Louisiana Revised Statutes 39:2955, the District may deposit fimds in demand deposit accounts, interest bearing demand deposit accounts, money market accoimts, and time certificates of deposit with state banks, organized under Louisiana Law and National Banks having a principal offices in Louisiana. Additionally, Louisiana statutes allow the District to invest in United States Treasury obligations, obligations issued or guaranteed by the United States government or federal agencies, and mutual or trust fimds registered with the Securities and Exchange Commission which has underlying investments consisting solely of and limited to the United States government or its agencies. In addition, local governments in Louisiana are authorized to invest in the Louisiana Asset Management Pool, Inc. (LAMP). The carrying amount of die District's investment in LAMP was $1,494,210 as of December 31, 2010 and $1,456,829 as of December 31,2009.

The District had $388,912 (fair market value) as of December 31,2010 and $372,210 (fair market value) as of December 31,2009 invested in bond mutual fimds which had underlying investments consisting solely of United States government instruments. The LAMP and bond mutual funds have a maturity of less than 1 year.

LAMP is administered by LAMP, Inc., a non-profit corporation organized under the laws of the State of Louisiana. Only local government entities having contracted to participate in LAMP have an investment interest in its pool of assets. The primary objective of LAMP is to provide a safe environment for the placement of public fimds in short-term, high quality investments. The LAMP portfolio includes only securities and other obligations in which local governments in Louisiana are authorized to invest in accordance with LA - R.S. 33:2955.




Note 6 - Cash. Cask Equivalents, and Investments (Continued)

GASB Statement No. 40 Deposit and Investment Risk Disclosure, requires disclosure of credit risk, custodial credit risk, concentration of credit risk interest rate risk, and foreign currency risk for all public entity investments.

LAMP is a 2a7-like investment pool. The following facts are relevant for 2a7 like investment pools:

Credit risk: LAMP is rated AAAm by Standard & Poor's. The Dishict does not have credit risk policies for invesfanents.

Custodial credit risk: LAMP participants' investments in die pool are evidenced by shares of the pool. Investments in pools should be disclosed, but not categorized because they are not evidenced by securities that exist in physical or book-entry form. The public entity's investment is with die pool, not the securities that make up the pool; therefore, no disclosure is required.

Concentration of credit risk: Pooled investments are excluded fi-om the 5 percent disclosure requirement.

Interest rate risk: 2a7-like investment pools are excluded from this disclosure requirement, per paragraph 15 of the GASB 40 statement. The District does not have interest rate risk policies for investments.

Foreign currencv risk: Not applicable to 2a7-like pools.

The dollar weighted average portfolio maturity of LAMP assets is restricted to not more than 90 days, and consists of no securities with a maturity in excess of 397 days. LAMP is designed to by highly liquid to give its participants immediate access to their account balances. The investments in LAMP are stated at fair value based on quoted market rates. The feir value is determined on a weekly basis by LAMP and die value of the position in the external investment pool is the same as the value of the pool shares.

LAMP, Inc. is subject to the regulatory oversight of Uie state treasurer and die board of directors. LAMP is not registered widi the SEC as an investment company.

Note 7- Other Information

The District had 3,778 and 3,769 active metered customers at December 31, 2010 and 2009, respectively.

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Note 8 - Canital Lease

The District has entered into a lease agreement as lessee for financing the purchase of the generator and preparation of the generator site. This lease agreement qualifies as a capital lease for accounting purposes and, therefore, has been recorded at the lower of the present value of tfie future minimum lease payments or the fair value of the asset. The capitalized cost on this lease at December 31, 2010 is $312,451 and has been recorded in plant equipment. The asset is being depreciated over tiie lesser of the lease term or its estimated productive life. Accumulated depreciation on this asset under capital lease is $218,716 at December 31, 2010 and $156,226 at December 31,2009.

The following is a schedule of die future minimum lease payments under this lease, and Uie present value of the net minimum lease payments at December 31,2010:

Year Ending December 31, 2011

Total Minimum Lease Payments Less: Amount Representing Interest Present Value of Future Minimum

Lease Payments

S 43.402

43,402 651

£ 42.751

Note 9 - Capital Assets

Capital asset activity for the year ended December 31,2010, was as follows:

Land Construction In Progress Capital Assets Being Depreciated: Plant and Distribution System Furniture, Fixtures, & Equipment Total Capital Assets being

Depreciated Less Accumulated Depreciation Total Capital Assets Being

Depreciated, Net of Depreciation

Total Capital Assets, Net

Beginning Balances

$ 113,486 -0-

13,135,082

182.747

13,317,829

5,717,088

7,600,741 $ 7.714,227

Increases $ -0-

221,275

65,513

4,562

70,075

441.140

(371,065) $ (149,790)

Decreases $

$

-0--0-

-0-

-0-

-0-

-0-

-0--0-

Ending Balances

$ 113,486 221,275

13,200,595

187.309

13,387,904

6,158,228

7,229,676 $ 7.564.437

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Note 9- Capital Assets (Continued)

Capital asset activity for the year ended December 31,2009, was as follows:

Beginning Balances

$ 113,486 147.946

Increases K -0-

134,060

Decreases $ -0-

282,006

Ending Balances

$ 113,486 -0-

12,780,757

167,137

12,947,894

5,274,705

7,673,189 $ 7,934,621

354,325

15.610

369,935

442,383

(72,448) $ 61,612

-0-

-0-

-0-

-0-

-0-$ 282,006

13,135,082

182,747

13,317,829

5,717,088

7,600.741 $ 7,714,227

Land Consuiiction in Progress Capital Assets Being Depreciated: Plant and Distribution System Furniture, Fixtures, & Equipment Total Capital Assets being

Depreciated Less Accumulated Depreciation Total Capital Assets Being

Depreciated, Net of Depreciation

Total Capital Assets, Net

Note 10 -Deferred Compensation Plan

The District provides a defined contribution plan to all of its employees created in accordance with Internal Revenue Code Section 457. Contributions to the plan by employees equaled $18,631 for the year ended December 31, 2010, and $15,831 for the year ended December 31, 2009. The District must contribute an amount equal to 5% of the employee's compensation. Pension expense for 2010 and 2009 paid by die Distiict was $16,878 and $13,983, respectively.

Note 11 - Prior Year Balances

Certain prior year amounts may have been reclassified to conform to current year presentation.

Note 12 - Risk Manaeement

The Distiict is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; and natural disasters for which the government carries commercial insurance.

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Note 13 - Restricted Assets

Restricted assets consist of cash and investments and tax receivables restricted for die retirement of the District's revenue bonds, general obligation bonds, and construction. Restricted assets consisted of the following as of December 31:

2010 2009 Construction $ 7,764 $ Debt Services Funds 638.682

$ 646.446

Note 14 - Subsequent Events

The District evaluated its December 31, 2010 financial statements for subsequent events through April 6,2011, the date of the financial statements were available to be issued. The District is not aware of any subsequent events which would required recognition or disclosure in the financial statements.

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STEVEN M, DEROUEN, CPA P.O. BOX 4265

LAKE CHAKLES, LA 70606 (337) 513-4915 OFFICE | (337) 513-4737 FAX

Member American Institute of [email protected] Member Louisiana Society of Certified Public Accountants Certified Fablic Accountants

Certified Public Accountants

REPORT ON INTERNAL CONTROL OVER FINANCUL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH

GOVERNMENT AUDFTING STANDARDS

Board of Commissioners Waterworks District No. 9 of Ward 4 of Calcasieu Parish, Louisiana Sulphur, Louisiana

I have audited the financial statements of Waterworks District No. 9 of Ward 4 of Calcasieu Parish, Louisiana as of and for the year ended December 31,2010, and have issued my report thereon dated April 6, 2011. I conducted my audit in accordance with auditing standards generally Accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards^ issued by the Comptroller General of the United States.

Internal Control Over Financial Reporting

In planning and performing my audit, I considered Waterworks District No. 9 of Ward 4 of Calcasieu Parish, Louisiana's internal control over financial reporting as a basis for designing my auditing procedures forthe purpose of expressing my opinion on the financial statements, but not for the puipose of expressing an opinion on the effectiveness of Waterworks District No. 9's internal control over financial reporting. Accordingly, I do not express an opinion on the effectiveness of the District's internal control over financial reporting.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. I consider Item 2010-02 on tiie Schedule of Findings to be a material weakness.

My consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed 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, I identified certain deficiencies in internal control over financial reporting that I consider to be a material weakness and other deficiencies that I consider to be significant deficiencies

A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. I consider Item 2010-01 on the Schedule of Findings to be a significant deficiency.

mailto:[email protected]

Board of Conomissioners Waterworks District No. 9 of Ward 4 of Calcasieu Parish, Louisiana

Compliance and Other Matters

As part of obtaming reasonable assurance about whether financial statements of Waterworks District No. 9 are ftee of material misstatement, I performed tests of its compliance with certain provisions of laws, regulations, contracts, and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of my audit, and accordingly, I do not express such an opinion. The results of my tests disclosed no instances of noncompliance or odier matters that are required to be reported under Government Auditing Standards.

Waterworks District No. 9 of Ward 4 of Calcasieu Parish's response to the findings identified in my audit is described in the accompanying schedule of findings and questioned costs. I did not audit Waterworks District No. 9 of Ward 4 of Calcasieu Parish's responses and, accordingly, I express no opinion on it

This report is mtended solely for the information and use of the management of Waterworks District No. 9 and the Legislative Auditor and is not intended to be and should not be used by anyone other dian these specified parties. Under Louisiana Revised Statute 24:513, this report is distributed by the Legislative Auditor as a public document.

^|e--w >f. A f«? -^ , <~ Lake Charles, Louisiana April 6,2011


Sulphur, Louisiana Schedule of Findings and Questioned Costs

December 31,2010

A. Summary of Independent Auditor's Results: 1. Unqualified opinion on financial statements. 2. Significant deficiencies and material weaknesses in internal control - Refer to B. 3. No instances of noncompliance noted.

B. GAGAS Findings: Finding: 2010-1 Accounts Payable ~ The District maintains its books and records on an accrual basis of accounting, except for the recording of accounts payable. The District relies on the audit firm to record accounts payable at year end. Under U. S. generally accepted auditing standards, I cannot be considered part of the District's internal control structure. The District's control structure does not include procedures to record or prevent a material misstatement from the lack of recording accounts payable. This is a repeat finding.

Response: The District will start recording accounts payable on an interim basis. The District Supervisor will also review the accounts payable monthly for accuracy and completeness.

Finding: 2010-2 Financial Statement Reporting - The District relies on the auditing firm to assist in the preparation of external financial statements and related disclosures. Under U. S. generally accepted auditing standards, 1 cannot be considered part of the District's internal control structure and because of limitations of the accounting staff; the design of the District's internal control structure does not otherwise include procedures to prevent or detect a material misstatement in the external financial statements. TTiis is a repeat finding.

Response: Management does not believe it would be cost effective to hire or contract the personnel necessary to resolve the above issue.

C. Prior Year Findings: Finding: 2009-1 Accounts Payable - The District maintains its books and records on an accrual basis of accounting, except for the recording of accounts payable. The District relies on the audit firm to record accounts payable at year end. Under U. S. generally accepted auditing standards, I cannot be considered part of the District's internal control structure. The District's control structure does not include procedures to record or prevent a material misstatement from the lack of recording accounts payable.

Finding: 2009-2 Financial Statement Reporting - The Disdict relies on the auditing firm to assist in the preparation of external financial statements and related disclosures. Under U. S. generally accepted auditing standards, I cannot be considered part of the District's internal control structure and because of limitations of the accounting staff; the design of the District's internal control structure does not otherwise include procedures to prevent or detect a material misstatement in the external financial statements.

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