Calcasieu Parish Waterworks District No. 11 Ward 4 …FILE/0002D4E5.pdfdecrease of 5.5%. A summary...

WATERWORKS DISTRICT NO. 11 OF WARDS 4 AND 7 OF

CALCASIEU PARISH, LOUISIANA Sulphur, Louisiana

Financial Statements June 30, 2012 and 2011

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

Page

Independent Auditor's 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 10-11

Notes to Financial Statements 12-22

Independent Auditor's Report on Compliance and Intemal Control Over Financial Reporting Based on an Audit of Financial Statements Perfonned in Accordance With Govemment Auditing Standards 23 - 24

Schedule ofFindings and Questioned Costs 25 - 26

STEVEN M. DEROUEN & ASSOCIATES Certified Public Accountants

4827IHLES ROAD RO. BOX 4265

LAKE CHARLES, LA 70606 Member American Institute of (337) 513-4915 OFFICE / (337) 513-4737 FAX Member Louisiana Society of Certified Public Accountants [email protected] Certified Public Accountants

INDEPENDENT AUDITOR'S REPORT

Board of Commissioners Waterworks District 11 of Wards 4 and 7 of Calcasieu Parish, Louisiana Sulphur, Louisiana

I have audited the fmancial statements of Waterworks District 11 of Wards 4 and 7 of Calcasieu Parish, Louisiana, a component unit ofthe Calcasieu Parish Police Jury, as of and for the years ended June 30,2012 and 2011, as listed in the table of contents. These financial statements are the responsibility ofthe 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 Standards, issued by the Comptroller General ofthe United States. Those standards require that I plan and perform the audits 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 fmancial statements referred to in the first paragraph present fairly, in all material respects, the financial position of Waterworks District 11 of Wards 4 and 7 of Calcasieu Parish, Louisiana, as of June 30, 2012 and 2011, and the results of its operations and its cash flows for the years then ended in confomiity 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 fmancial statements. Such information, although not a basic part of the basic financial statements, is required by the Govemmental Accounting Standards Board, who considers it to be an essential part of fmancial 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 in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic fmancial statements, and other knowledge we obtained during our audit ofthe basic fmancial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

mailto:[email protected]

Board of Commissioners Waterworks District 11 of Wards 4 and 7 of Calcasieu Pm ish, Louisiana

In accordance widi Govemment Auditing Standards, I have also issued a report dated October 3, 2012, on my consideration of Waterworks District 11 of Wards 4 and 7 of Calcasieu Pm ish, Louisiana's intemal control over financial reporting and on my tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of my testing of intemal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the intemal control over fin^icial reporting or on compHance. That report is cOi integral part of an audit performed in accordance with Govemment Auditing Standards and should be considered in assessing the results of my audit.

stevei^ M. D£R/)i ei/ ,§ As.s>oalates.

Lake Charles, Louisimia October 3, 2012

WATERWORKS DISTRICT NO. 11 OF WARDS 4 AND 7 OF CALCASIEU PARISH, LOUISIANA MANAGEMENT'S DISCUSSION AND ANALYSIS AS OF JUNE 30, 2012

The Management's Discussion and Analysis ofthe Waterworks District No. 11 of Wards 4 and 7 of Calcasieu Parish, Louisiana's (the District) financial performance presents a narrative overview and analysis ofthe District's financial activities for the year ended June 30, 2012. This document focuses on the current year's activities, resulting changes, and currently known facts in comparison with the prior year's infonnation. Please read this document in conjunction with the additional infonnation contained in the financial statements.

FEVANCIAL HIGHLIGHTS

•*• The District's assets exceeded its liabilities at the close of fiscal year 2012 by $1,449,119 which represents a 4.4% increase from last fiscal year. Of this amount, $467,184 (unrestricted net assets) may be used to meet the District's ongoing obhgations to its users.

ik The District's operating revenue decreased $36,444 (or 4.5%) and the net results from operations decreased by $49,302.

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 Govermnents.

d Management's Discussion and Analysis

I

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 infonnation 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 Sheet (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 useful indicator of whether the financial position ofthe District is improving or deteriorating.

The Statement of Revenues. Expenses, and Changes in Net Assets (page 9) presents information showing how the District's assets changed as a result of cunent 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 until future fiscal periods.

The Cash Flow Statement (pages 10 - 11) presents infonnation showing how the District's cash changed as a result of cunent year operations. The cash flow statement is prepared using the direct method and includes the reconciHation of operating income (loss) to net cash provided (used) by operating activities (indirect method) as required by GASB 34.

FEVANCIAL ANALYSIS OF THE ENTITY

Cunent a n d o m ^ a s s e t s ^ ^ ^ B Capital assets ^ ^ ^ ^ H

Total assets ^ ^ ^ ^ H

Other liabilities Long-term debt outstanding

Total liabilities Net assets:

invested capital assets, Restricted Unrestricted

^ ^ H Total net assets

V Total liabilities and net assets 1

net of debt

2012 1 $ 881,772

3,353,833 4,235,605

181,906 ' 2,604,580

2,786,486

749,253 232,682 467,184

1,449,119

$4,235,605

2011 $ 1,013,976

3,320,707 4,334,683

191,973 2,755,000 2,946,973

565,707 306,814 515,189

1,387,710

$4,334,683

2010 $ 954,668

3,375,542 4,330,210

159,898 2,910,000 3,069,898

465,542 34,664

760,106 1,260,312

$4,330,210


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 ofthe District increased by $61,409, or 4.4%, from June 30, 2011 to June 30, 2012.

Operating revenues ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ V Operating expenses ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ H

Operating income (loss) ^ ^ ^ ^ H

Non-operating revenues (expenses) ^ ^ ^ ^ ^

Net increase (decrease) in net assets

^ 1 ^ " $ 765,899

(860,343)

• (94,444)

155,853

$ 61,409

^ H ^ " $ 802,343

(847,485)

(45,142)

172,540

$ 127,398

^ H ^ $ 763,281

(782,481)

(19,200)

106,153

$ 86,953

CAPITAL ASSET AND DEBT ADMINISTIL4TION

Capital Assets

As of June 30, 2012, the District had $3,353,833, 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 increase (including additions and deductions) of $33,126, or 1.0%, over last year.

2012

Land and Right of Ways

Plant and Distribution System

Fumiture, Fixtures, and Equipment

Less Accumulated Depreciation

Totals

$ 21,364

5,173,297

153,501

(1,994,329)

$ 3,353,833

This year's significant capital additions included above were:

2011

$ 21,364

4,993,176

153,501

(1,847,334)

2010

$ 21,364

4,912,781

155,051

(1,713,654)

$ 3,320,707 $ 3,375,542

IQ Pump Drives Taps/Bores Radio Read Meters

57,136 35,475 87,510


Debt

The District had $2,685,000 in bonds outstanding at year-end, compared to $2,755,000 last year, a decrease of 5.5%. A summary of this debt is shown in the table below.

Outstanding Debt at Year-end

2012 2011 2010

Revenue Bonds $ 2,340,000 $ 2,365,000 $ 2,475,000

General Obligation Bonds 345,000 390,000 435,000

Totals $ 2,685,000 $ 2,755,000 $ 2,910,000

The District issued $2,365,000 of its Water Revenue Refunding Bonds, 2012 Series, during the fiscal year ending June 30, 2012. The bonds were dated April 19, 2012. These bonds were issued for the purpose of refunding the outstanding Water Revenue Bonds, 2006 Series A and 2006 Series B, funding a reserve fund, and paying the cost of issuing the bonds.

The District's Series 1998 General Obligation Bonds and Water Revenue Refunding Boni^, 2012 Series, are un-rated.

CONTACTING THE DISTRICT'S MANAGEMENT

This financial report is designed to provide our citizens, taxpayers, customers and creditors with a general overview ofthe 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 Crystal Nettles, Office Manager, Waterworks District No. 11 of Wards 4 and 7 of Calcasieu Parish.

W A T E R W O R K S D I S T R I C T N O . 11 O F W A R D S 4 AND 7

O F C A L C A S I E U PARISH, LOUISIANA

Sulphur , Louis iana

Balance Sheets

As of J u n e 30,

ASSETS 2012 2011

CURRENT ASSETS Cash and cash equivalents Investments Inventoiy, at cost Restricted assets:

Cash and cash equivalents Investments

Receivables (net of allowances for uncollectibles of $4,800 for 2012 and $4,105 for 2011): Water sales Unbilled water sales Ad Valorem taxes

Prepaid expenses

Total Current Assets

PROPERTY, PLANT, AND EQUIPMENT Plant and distribution system Furniture, fixtures, and equipment

Less accumulated depreciation

Land and right of ways

Net Property, Plant, and Equipment

OTHER ASSETS

DefeiTed charges, bond issue costs, net

TOTAL ASSETS

77,146 $

--

314,613 248,660

66,046

48,986

582 19,119

135,228

28,345 25,252

337,864 245,111

80,795

47,285

582 19,588

775,152

5,173,297 153,501

5,326,798 (1,994,329)

3,332,469

21,364

3,353,833

920,050

4,993,176 153,501

5,146,677 (1,847,334)

3,299,343

21,364

3,320,707

106,620 93,926

4,235,605 $ 4,334,683

The accompanying notes are an integral part ofthe financial statements.




Balance Sheets (Cont inued)

As of J u n e 30,

LIABILITIES AND NET ASSETS 2012 2011

CURRENT LIABILITIES Accounts payable Accmed wages Payroll taxes and retirement payable

Total Current Liabilities

CURRENT LIABILITIES (Payable from Restricted Assets) Accmed interest Cunent portion of revenue bonds Cunent portion of general obligation bonds Refimdabie customer deposits

Total Current Liabilities (Payable From Restricted Assets)

LONG-TERM LIABILITIES Revenue bonds payable (net of cun'ent portion ) General obligation bonds payable (net of cuirent portion)

Total Long-Tenn Liabilities

Total Liabilities

NET ASSETS

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

Total Net Assets

TOTAL LIABILITIES AND NET ASSETS

12,498 $ 38,049 11,454 22,034 17,363 15,729

$

41,315

7,551 140,000

50,000

133,040

330,591

2,119,580

295,000

2,414,580

2,786,486

749,253

232,682

467,184

1,449,119

4,235,605 $

75,812

14,177 115,000

45,000

101,984

276,161

2,250,000

345,000

2,595,000

2,946,973

565,707

306,814

515,189

1,387,710

4,334,683


W A T E R W O R K S D I S T R I C T N O . 11 O F W ARDS 4 AND 7



Sta tements of Revenues , Expenses, a n d Changes in Net Assets

Fo r the Years E n d e d J u n e 30,

2012 2011 OPERATING REVENUES

Water sales Tap fees

Total Operating Revenues

OPERATING EXPENSES Salaries Payroll taxes and employee benefits Retirement expense Insurance Legal and accounting fees Office supplies Plant supplies Repairs and maintenance Tmck expense Utilities and telephone Depreciation Amortization expense Bank charges Dues and fees Commissioners per diem Miscellaneous

Total Operating Expenses

INCOME FROM OPERATIONS

NON-OPERATING REVENUES (EXPENSES) Ad valorem taxes Interest income Interest expense Miscellaneous income

Total Non-Operating Revenues (Expenses)

CHANGE IN NET ASSETS 61,409 127,398

NET ASSETS AT BEGINNING OF YEAR 1,387,710 1,260,312

$ 736,267 $ 29,632

765,899

331,468 30,021 16,795 83,398 10,750 9,071

66,732 42,600 12,330 49,257

146,995 7,942 5,051 7,288 7,400

33,245 860,343

(94,444)

229,401 926

(108,611) 34,137

155,853

766,384 35,959

802,343

307,499 27,028 15,288 83,294 10,345 5,744

96,798 55,401 11,763 53,477

141,480 7,850 4,658 4,967 6,940

14,953 847,485

(45,142)

246,877 1,211

(136,044) 60,496

172,540

NET ASSETS AT END OF YEAR $ 1,449,119 $ 1,387,710





Statements of Cash Flows

For the Years E n d e d J u n e 30,

2012 2011

CASH FLOWS FROM OPERATING ACTIVITIES: Receipts firom customers and users Payments to suppliers Payments to employees

Net Cash Provided (Used) for Operating Activities

CASH FLOWS FROM INVESTING ACTIVITIES: Sale (purchase) of investments Interest eamed

Net Cash Provided (Used) for Investing Activities

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Capital expenditures Proceeds from issuance of bonds Principal payments on bonds Cost of bond issuance Interest expense Cash received for ad valorem taxes Miscellaneous

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

Net Increase (Decrease) in Cash

CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR

CASH AND CASH EQUIVALENTS - END OF YEAR

$ 778,947 $

(348,222)

(342,048)

88,677

24,796

926

25,722

797,469

(385,222)

(303,153)

109,094

(556)

1,211

655

(180,121) 2,365,000

(2,435,000)

(102,271) (108,611)

229,401

35,870

(86,645)

-(155,000)

-(136,044)

246,877

60,496

(195,732)

(81,333)

473,092

(70,316)

39,433

433,659

391,759 473,092

Cash and Cash Equivalents: Um'estticted Restiicted

77,146 314,613

135,228 337,864

391,759 473,092

The accompanying notes are an integral part ofthe financial statements. 10




Sta tements of Cash Flows (Cont inued)

For the Years E n d e d J u n e 30,

2012 2011 Reconciliation of Operating Income to Net Cash

Provided (Used) by Operating Activities: Income (loss) fi'om operations Adjustments to reconcile operating income to net

cash provided by operating activities: Depreciation and amortization Provisions for bad debts (Increase) decrease in inventory (Increase) decrease in accounts receivable (Increase) decrease in prepaid expense Increase (decrease) in accounts payable and other

accmed expenses

Total Adjustments

Net Cash Provided (Used) by Operating Activities

(94,444) $ (45,142)

$

154,937

695 25,252 11,835

469

(10,067)

183,121

88,677 $

149,330

495 (25,252) (5,369)

2,957

32,075

154,236

109,094

Supplemental Disclosure: Cash paid for interest 115,237 136,728

The accompanying notes are an integral part ofthe financial statements. II

WATERWORKS DISTRICT NO. 11 OF WARDS 4 AND 7 OF CALCASIEU PARISH, LOUISIANA

Sulphur, Louisiana Notes to Financial Statements

June 30, 2012 and 2011

Note 1 - Summarv of Sisnificant Accountins Policies

The accounting poHcies of Waterworks District No. 11 of Wards 4 and 7 of Calcasieu Parish, Louisiana, conform to accounting principles generally accepted in the United States of America as applicable to govemmental units. Such accounting and reporting procedures also conform to the requirements ofLouisiana Revised Statutes 24:517 and to die guides set forth in the Louisiana Municipal Audit and Accounting Guide, and to the industiy audit guide. Audits of State and Local Govemmental Units. The following is a summary ofthe more significant policies:

A. Financial Reporting Entity

This report includes all funds which are controlled by or dependent on die Commissioners. Control by or dependence on the Dish ict was detennined on the basis of budget adoption, taxing authority, authority to issue debt, election or appointment of goveming body, and other general oversight responsibiHty.

Based on the foregoing criteria, Waterworks District No. 11 has no other fiscal or significant managerial responsibility over any other govemmental unit that is not included in the fmancial statements of Waterworks District No. 11 of Wards 4 and 7 of Calcasieu Parish, Louisiana. The district is a component unit of die Calcasieu Parish Police Jury.

B. Fund Accounting

The accounts of the district are organized on the basis of a proprietary fund, which is considered a separate accounting entity or enterprise fund. Enterprise fluids are used to account for operations (a) that ^e financed and operated in a manner similar to private business enterprises - where the intent ofthe goveming body is that die costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily tlirough user charges; or (b) where the goveming body has decided diat periodic detemiination of revenues eamed, expenses incurred, aid/or net income is appropriate for capital maintenance, public policy, maiagement control, accoimtability, 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 Govenmients".

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

12


Sulphur, Louisiana Notes to Financial Statements (Continued)

June 30, 2012 and 2011

Note 1 - Summarv of Sisnificant Accountins Policies (Continued):

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 coimection with a proprietary fund's principal ongoing operations. The principal operating revenues ofthe District's enterprise fiind 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, aiininistrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses.

GASB Statement No. 20 states that for proprietary activities, management may elect to apply all FASB Statements and Interpretations issued after November 30, 1989, except for diose that conflict with or contradict GASB pronouncements. The District has elected not to implement FASB Statements and Interpretations issued after November 30,1989, unless they are adopted by GASB.

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

C. Fixed Assets

All fixed assets of the proprietary flind are recorded at historical costs. Depreciation of all exhaustible fixed assets is charged as ;m expense against their operations. Pre-constmction costs associated widi the development of the water system, which includes engineering, legal, and interest costs are capitalized and will be amortized over their estimated useful lives using the sttaight-line method.

The costs of normal maintenance and repairs that do not add to die value of the assets or materially extend asset lives are not capitalized. Improvements are capitalized and depreciated over the remaining useful lives ofthe related fixed assets, as applicable. The following estimated useful lives and methods are used to compute depreciation:

Plant and distribution system 10 - 40 Years Sttaight Line Fumiture, fixtures and equipment 5 - 40 Years Straight Line

Depreciation expense tunounted to $146,995 for the year ended June 30, 2012, and $141,480 for die year ended June 30, 2011.

13



June 30, 2012 and 2011

Note 1 - Summarv of Sisnificant Accountins Policies (Continued):

D. Estimates

The preparation of financial statements in confomiity with generally accepted accounting principles requires management to make estimates and assumptions diat affect the reported amounts of assets and liabilities and disclosure of contingent assets cOid liabilities at the date of the financial statements and die reported amounts of revenues and expenses during die reporting period. Actual results could differ from diose estimates.

E. Accounts Receivable

Accounts receivable are stated at cost less an allowance for doubtful accounts. Accounts 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 consideration of past user history, any adverse situations diat might affect the user's ability to repay, and current economic conditions. The need for an adjustment to die allowance is considered at year end. Amounts ch^ged-off that are subsequently recovered ^e recorded as income.

F. Reclassifications

Certain reclassifications may have been made to the June 30, 2011 financial statements in order for them to be better compared to the June 30, 2012 financial statements.

G. Cash

The Disttict considers all short-tenn investments with an original maturity of three months or less to be cash equivalents.

H. Inventory

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

14



June 30, 2012 and 2011

Note 2 - Ad Valorem Taxes

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

For the year ended December 31, 2011, taxes of 6.51 mills were levied on property widi net assessed valuations of approximately $33,729,566. Total taxes levied, net of pension funds, were $212,758. The 6.51 mills were dedicated as follows:

Maintenance flind Sinking fund

5.51 mills 1.00 mills

Note 3 - Chanses in Lons-Term Debt

The District issued $2,365,000 of its Water Revenue Refunding Bonife, 2012 Series, during the fiscal year ending June 30, 2012. These bonds were issued for the purpose of refunding the outstanding Water Revenue Bonds, 2006 Series A and 2006 Series B, funding a reserve fund, and paying the cost of issuing the bonds. The refunding was undertaken to reduce total future debt service payments over the next fourteen years by the net present value of $84,794.

The following is a summary of bond payable transactions of die District for the ye^ ended June 30, 2012 and 2011:

Outstanding at July 1,2010 Bonds Retired Outstanding at June 30, 2011

General Obligation $ 435,000

(45,000)

Revenue $ 2,475,000

(110,000) S 390.000 $ 2.365,000

Total $ 2,910,000

(155,000) $ 2.755.000

Outstanding at July 1,2011 Bonds Issued Bonds Retired Defened Loss Outstanding at June 30, 2012

General Obligation $ 390,000

-0-(45,000)

-0-S 345.000

Revenue $ 2,365,000

2,365,000 (2,390,000)

(80,420) $ 2.259.580

Total $ 2,755,000

2,365,000 (2,435,000)

(80,420) $ 2.604.580

15



June 30, 2012 and 2011

Note 3 - Chanses in Lons-Term Debt (Continued)

Long-term debt at June 30, 2012 consists ofthe following:

General obhgation bonife: 2012 2011

),000 General Obhgation Bonds, Series 1998, of Waterworks District No. 11 ofWards4and7 ofthe Parish of Calcasieu, Louisiana; dated June 1, 1999; due in annual installments including interest at4.lO%to5.10%dnoughdieyear20l8 $ 345,000 $ 390,000

Revenue bonds:

$2,365,000 Water Revenue Refunding Bonds, 2012 Series, dated April 19, 2012; due in aimual installments of $34,248 to $219,663 dirough June 1,2026, interest at 1.25% to 4.25% $ 2,340,000 $ -0-

$1,945,000 Water Revenue Bonds, 2006 Series A; dated March 15, 2006; due in annual installments of $56,461 to $226,320 dirough June I, 2026; interest at 4.35% to 5.00% $ -0- $1,895,000

$850,000 Water Revenue Refunding Bonds; 2006 Series B, dated March 15, 2006; due in annual installments of $45,135 to $123,840 dirough June 1,2016; interest at 4.00% to 4.20% S O $ 470,000

Total Revenue Bonds $ 2.685.000 $ 2.755.000

The annual requirements to amortize all debt outstanding as of Jime 30, 2012, are as follows:

General Obligation Bonds Year Ending

June 30, 2013 2014 2015 2016 2017 2018 Total

Principal $ 50,000

55,000 55,000 60,000 60,000 65.000

S 345.000

Interest $

$_

17,545 15,045 12,240 9,435 6,375 3.315

63.955

Total $ 67,545

70,045 67,240 69,435 66,375 68.315

$ 408.955

16



June 30, 2012 and 2011

Note 3 - Chanses in Lons-Term Debt (Continued)

Revenue Bonds Year Ending

June 30, 2013 2014 2015 2016 2017

2018-2022 2023-2026

Total

Principal

$ 2.340.000

Interest

$698.174

Total $ 140,000

140,000 145,000 150,000 150,000 830,000 785,000

$ 78,956 76,156 73,356 69,006 64,506

250,981 85,213

$ 218,956 216,156 218,356 219,006 214,506

1,080,981 870,213

$3.038.174

The aimual requirements to amortize all debt outstanding as of Jime 30, 2011, are as follows:

General Obligation Bonds Year Ending

June 30, 2012 2013 2014 2015 2016

2017-2018 Total

Principal Interest Total $ 45,000

50,000 55,000 55,000 60,000 125.000

S 390.000

$ 19,683 17,545 15,045 12,240 9,435 9.690

S 83.638

$ 64,683 67,545 70,045 67,240 69,435 134.690

S 473.638

Revenue Bonds Year Ending

June 30, 2012 2013 2014 2015 2016

2017-2021 2022-2026

Total

Principal Interest Total $ 115,000

120,000 125,000 130,000 135,000 765,000 975.000

$ 2.365.000

$ 110,488 105,635 100,573 95,300 89,818

354,030 151.250

$ 1.007.094

$ 225,488 225,635 225,573 225,300 224,818

1,119,030 1.126.250

$ 3.372.094

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

The revenue bonds are to be retired from the income and revenues derived from the operation of the System of Waterworks Disttict No. 11 of Wards 4 and 7 of Calcasieu Parish, Louisiana.

17



June 30, 2012 and 2011

Note 4 - Restricted Assets

Certain proceeds of enterprise fund revenue bonds and general obligation bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheet because their use is Hmited by applicable bond covenants. Proceeds from refundable customer deposits are also restricted for the repayment of meter deposits. The following is a schedule of restricted assets as of Jime 30,:

2012 2011 Bond Redemption Fund Sinking Fund Expense Fund Reser\'e Fund Constmction Fimd Customer Deposits

$ 133,950 18,718 10,751

219,663 47,151 133.040

S 563.273

$ 158,021 19,262

-0-226,320 77,388 101.984

$ 582.975

Note 5 - Cash, Cash Equivalents, and Investments

At June 30, 2012 and 2011, the District had cash and cash equivalents (book balances) totaling $391,759 and $473,092, respectively.

These deposits are stated at cost, which approximates market. Under state law, diese 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 insuraice must at all times equal the amount on deposit with the fiscal agent. These securities are held in the name of die pledging fiscal agent bank in a holding or custodial bank that is mutually acceptable to both parties.

At June 30, 2012, the District had $367,813 in deposits (collected bank balances). These deposits are secured from risk by $311,305 of federal deposit insurance and $169,414 of pledged securities held by the custodial bank in the name ofthe fiscal agent bank.

At June 30, 2011, the District had $473,758 in deposits (collected bank balances). These deposits are secured from risk by $362,396 of federal deposit insurance and $125,313 of pledged securities held by the custodial bank in the name ofthe 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 within 10 days of being notified by the district that the fiscal agent baik has failed to pay deposited fimds upon demand.

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June 30, 2012 and 2011

Note 5 - Cash, Cash Equivalents, andLnvestments (Continued)

Under Louisiana Revised Statutes 39:2955, the District may deposit funds in demand deposit accounts, interest bearing demand deposit accounts, money market accounts, and time certificates of deposit with state banks, organized under Louisiana Law and National Banks having principal offices in Louisiana. Additionally, Louisiana statues allow the District to invest in United States Treasury obligations, obligations issued or guaranteed by the United States govemment or federal agencies, dnd mutual or mist funds register with the Securities and Exchange Commission which have underlying investments consisting solely of and limited to the United States govermnent or its agencies. In addition, local govemments in Louisiaia are audiorized to invest in die Louisiana Asset Management Pool, Inc. (LAMP). The carrying amount ofthe District's investment in LAMP was $248,660 as of June 30, 2012 and $273,456 as of June 30, 2011.

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

GASB Statement No. 40 Deposit and Investment Risk Disclosure, requires disclosure of credit risk, custodial credit risk, concenfration of credit risk interest rate risk, and foreign cunency 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.

Custodial credit risk: LAMP participants' investments in the 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 fonn. The public entity's investment is widi the pool, not the securities diat make up the pool; therefore, no disclosiu-e is required.

Concentration of credit risk: Pooled investments are excluded from the 5 percent disclosure requirement.

Interest rate risk: 2a7-like investment pools are excluded from this disclosure requirement, perp^agraph 15 of the GASB 40 statement.

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June 30, 2012 and 2011

Note 5 - Cash, Cash Equivalents, and Lnvestments (Continued)

Foreign currency risk: Not apphcable to 2a7-like pools.

The dollar weighted average portfolio maturity of LAMP assets is resfricted 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 fair value is detennined on a weekly basis by LAMP and die value of die position in the extemal investment pool is the same as the value ofthe pool shares.

LAMP, Inc. is subject to the regulatory oversight ofthe state freasurer and the board of directors. LAMP is not registered with the SEC as an investment company.

Note 6 - Capital Assets

Capital asset activity for the year ended June 30, 2012, was as follows:

Land and Right of Ways

Capital Assets Being Depreciated:


Fumitme, Fixtures, & Equipment

Total Capital Assets being Depreciated

Less Accumulated Depreciation Total Capital Assets Beiug

Depreciated, Net of Depreciation

Total Capital Assets, Net

Beginning Balances

$ 21,364

4,993,176

153.501

5,146,677

1,847,334

3,299.343

$3,320,707

Increases

$_

$_

- 0 -

180,121

-0-

180,121

146,995

33,126

33.126

Decreases

$

$

- 0 -

- 0 -

-0-

-0-

-0-

- 0 -

- 0 -

Ending Balances

$ 21,364

5,173,297

153,501

5,326,798

1,994,329

3.332,469

$3,353,833

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Beginning Balances

$ 21,364

4,912,780 155.051

5,067,831 1,713.653

3,354.178

$3,375,542

Increases

$ - 0 -

80,395 6,250

86,645 141,480

(78,182)

$ (78.182)

Decreases

$ _

$_

- 0 -

- 0 -7.800

7,800 7.800

- 0 -

-0-

Ending Balances

$ 21,364

4,993,176 153,501

5,146,677 1.847,333

3.299.343

S3.320.707



June 30, 2012 and 2011

Note 6 - Capital Assets (Continued)

Capital asset activity for the year ended June 30, 2011, was as follows:

Land and Riglit of Ways

Capital Assets Being Depreciated:


Fumiture, Fixtures, & Equipment

Total Capital Assets being Depreciated

Less Accumulated Depreciation Total Capital Assets Being

Depreciated, Net of Depreciation

Total Capital Assets, Net

Note 7 - Board of Commissioners' Fees

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

2012 2011 Neva Martin Roimie Bowers Robert Banentine Wayne Moreau Mike Guidry

Total

Note 8 - Defined Contribution Plan

The District offers its employees a defined contribution plan created in accordance with Intemal Revenue Code Section 457. In a defined contribution plan, benefits depend solely on amounts contributed to the plan, plus investment eamings. All District employees are permitted to conttibute a portion of their salary to the plan. The District makes a matching contribution to the plan up to 6% of the employee's compensation. This plan is administered by Hartford Life Insurance Company.

During the year ending June 30, 2012, contributions by the District amounted to $16,795, covering $286,630 of die District's total payroll of $329,416.

EKiring the year ending June 30, 2011, confributions by the District amounted to $15,288, covering the District's total payroll of $306,010.

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$ 1,400 $ 1,600 1,400 1,500 1,500

$ 7,400 $

1,460 1,560 1,260 1,560 1,100 6,940

http://S3.320.707



June 30,2012 and 2011

Note 9 - Risk Manasement

The District is exposed to various risks of loss related to torts; theft of, damage to and destmction of assets; and natiu al disasters for which the District carries commercial insurance.

Note 10 - Subsequent Events

The Disfrict evaluated its June 30, 2012 financial statements for subsequent events through October 3, 2012, the date die financial statements were available to be issued. The District is not aware of any subsequent events which would require recognition or disclosure in the financial statements.

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STEVEN. M. DEROUEN & ASSOCIATES Certified Public Accountants

4827 IHLES ROAD P.O. BOX 4265

LAKE CHARLES, LA 70606 Member American Institute of (337) 513-4915 O F F I C E / (337) 513-4737 FAX Member Louisiana Society of Certified Public Accountants , [email protected] Certified Public Accountants

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

GOVERNMENT AUDITING STANDARDS

Board of Commissioners Waterworks District 11 of Wards 4 and 7 of Calcasieu Parish, Louisiana Sulphur, Louisiana

I have audited the fmancial statements of Waterworks District 11 of Wards 4 and 7 of Calcasieu Parish, Louisiana, as of and for the year ended June 30, 2012, and have issued my report thereon dated October 3, 2012. I conducted my audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to fmancial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.

Intemal Control Over Financial Reporting

Management of Waterworks District 11 of Wards 4 and 7 of Calcasieu Parish, Louisiana is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing my audit, I considered Waterworks District 11 of Wards 4 and 7 of Calcasieu Pm-ish, Louisiana's intemal control over financial reporting as a basis for designing my auditing procedures for the purpose of expressing my opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Waterworks District 11 of Wards 4 and 7 of Calcasieu Parish, Louisiana's intemal control over financial reporting. Accordingly, I do not express an opinion on the effectiveness of Waterworks District 11 of Wards 4 and 7 of Calcasieu Parish, Louisiana's intemal control over financial reporting.

My consideration of intemal control over financial reporting was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in intemal control over fmancial 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 Schedule of Findings and Quesfioned Costs, I identified certain deficiencies in intemal control over financial reporting that I consider to be a material weakness and another deficiency that I consider to be a significant deficiency.

mailto:[email protected]

Board of Commissioners Waterworks District 11 of Wards 4 and 7 of Calcasieu Parish, Louisiana

A deficiency in intemal control exists when the design or operation of a control does not allow management or employees, in the nonnal course of perfonning their assigned fiinctions, to prevent or detect and conect misstatements on a timely basis. A material wealmess is a deficiency, or a combination of deficiencies, in intemal control such that there is a reasonable possibility that a material misstatement ofthe entity's financial statements will not be prevented, or detected and conected on a timely basis. I consider the deficiency described in item 2012-2 in the accompanying Schedule ofFindings and Questioned Costs to be a material weakness.

A significant deficiency is a deficiency or a combination of deficiencies in intemal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. I consider the deficiency described in item 2012-1 in the accompanying Schedule ofFindings and Questioned Costs to be a significant deficiency.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether financial statements of Waterworks DisUict 11 of Wards 4 and 7 of Calcasieu Parish are free of material misstatement, I performed tests of its compliance with certain provisions of laws, regulations, confracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with diose provisions was not an objective of my audit, and accordingly, I do not express such an opinion. The results of my tests disclosed no instaices of noncompliance or other matters that are required to be reported under Govemment Auditing Standards.

This report is intended solely for die infonnation aid use of die management of Waterworks District No. 11 and the Legislative Auditor and is not intended to be and should not be used by anyone other than these specified p^ies. Under Louisiana Revised Statute 24:513, this report is disfributed by the Legislative Auditor as a public document.

Lake Charles, Louisiana October 3, 2012

WATERWORKS DISTRICT NO. 11 OF WARDS 4 AND 7 OF CALCASIEU PARISH, LOITSIANA

Sulphur, Louisiana Schedule ofFindings and Questioned Costs

For the Year Ended June 30, 2012

A. Summary of Independent Auditor's Results:

1. Unqualified opinion on financial statements.

2. Significait deficiencies in intemal control - refer to B. 2012-01; material weakness in intemal confrol - refer to B. 2012-02.

3. No instances of non-compliance noted.

B. GAGAS Findings:

2012-01 Segregation of Duties -

Finding:

Cause:

Recommendation

Management's response

There is an inadequate segregation of duties at the District to provide effective intemal confrol. This is a repeat finding.

The District employs a small number of people involved in the day-to-day operations.

None

Management has considered diis weakness and detennined that it would not be cost effective to employ sufficient personnel to obtain adequate segregation of duties.

2012-02 Financial Statement Reporting

Finding: The District maintains its books and records on the modified cash basis of accounting. The Disfrict relies on the auditing finn to assist in adjusting the modified cash basis books to accmal basis and to assist in die prep^ation of extemal financial statements and related disclosures. Under U. S. generally accepted auditing standards, die auditing firm cannot be considered part of the District's intemal control stmcture. This is a repeat finding.

Cause:

Recommendation

Management's response

The District lacks the accounting staff to adjust the books from the cash basis to the accmal basis and prep^e the extemal financial statements and related disclosures.

None

Management has considered diis weakness and detemiined that it would not be cost effective at this time to employ or confract the appropriate personnel to remove this deficiency.

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WATERWORKS DISTRICT NO. 11 OF WARDS 4 AND 7 OF CALCASIEU PARISH, LOITSIANA

Sulphur, Louisiana Schedule ofFindings and Questioned Costs (Continued)

For the Year Ended June 30, 2012

C. Summary of Prior Year Findings:

2011-01 Segregation of Duties - A proper segregation of duties is not feasible due to the small number of people involved in the District's day-to-day operations.

2011-02 Financial Statement Reporting - The District maintains its books and records on the modified cash basis of accounting. The District relies on the auditing finn to assist in adjusting the modified cash basis books to accrual basis and to assist in the preparation of extemal financial statements and related disclosures. Under U. S. generally accepted auditing staidards, the auditing firm cannot be considered part of die DisU ict's intemal conU ol smicture and because of the limitations of the accounting staff; the design of the DisUict's intemal confrol structure does not otherwise include procedures to prevent or detect a material misstatement in the extemal financial statements.

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Calcasieu Parish Waterworks District No. 11 Ward 4 …FILE/0002D4E5.pdfdecrease of 5.5%. A summary...

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