Town of Roselandapp1.lla.la.gov/PublicReports.nsf/D7A8B2153BBF9FB... · consisted of $141,748 m...

Town of Roseland

Annual Financial Statements

As of and for the Year Then Ended December 31, 2011 With Supplemental Information Schedules

Town of Roseland

Annual Financial Statements As of and for the Year Ended December 31,2011

With Supplemental Information Schedules

TABLE OF CONTENTS

Independent Auditor's Report

Required Supplemental Information (Part I):

Management's Discussion and Analysis

Basic Financial Statements:

Government-Wide Financial Statements:

Statement of Net Assets

Statement of Activities

Fund Financial Statements;

Governmental Funds Financial Statements:

Balance Sheet, Governmental Funds

Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Fmancial Statement of Net Assets

Statement of Revenues, Expenditures, and Changes in Fund Balances

Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities...

Proprietary Fund Financial Statements:

Statement of Net Assets

Statement of Revenues, Expenses and Changes in Net Assets

Statement of Cash Flows

Notes to the Financial Statements

Statement

A

B

D

E

Page

6

10

19

20

22

23

24

25

G

H

I

26

27

28

30

Town of Roseland



TABLE OF CONTENTS

Schedule Page

Required Supplemental Information (Part II):

Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual - General Fund - Summary 1 49

Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual - General Fund - Detail 2 50

Schedule of Revenues, Expenditures, and Changes in Fund Balances

Budget and Actual - Special Revenue Fund - Fire Protection Fund 3 53

Other Supplemental Information:

Proprietary Funds - Utility Fund:

Comparative Schedule of Net Assets

Comparative Schedule of Revenues, Expenses and Changes in Net Assets

Comparative Schedule of Cash Flows

Schedule of Revenues, Expenses and Changes in Net Assets

Budget (GAAP Basis) and Actual - Water and Sewer Utility System

Schedule of Water and Sewer Rates

Schedule of Number of Customers

4

5

6

7

8

8

55

56

57

59

60

60

Town of Roseland



TABLE OF CONTENTS

Schedule Page

Schedule of Insurance 9 61

Schedule of Compensation Paid to Board Members 10 62

Summary Schedule of Findings and Questioned Costs 11 63

Summary Scheduleof Prior Year Audit Findings 12 64

Corrective Action Plan for Current Year Audit Findings 13 67

Other Independent Auditor's Reports:

Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Audit Standards 75

This Page Intentionally Left Blank

Bruce c. Harrell, CPA 109 West Minnesota Park • • •• _ . 2 _ n _ | « « _ _ p j^ Place Suite 7

Dale H. Jones, CPA • ^ B • H ^ H B H Eric J. Rodrigue, CPA I K ^ ^ ^ F l Hammond, LA 70403 Kristi U. Bergeron, CPA I B | i 1 ^ H I VOICE: (985) 542-6372 Michael P. Estay, CPA P ^ 2 ^ k H I I ^ ^ ^ - (^85) 345-3156 Jessica H. Jones, CPA • V j ^ ^ g | ^ H | •

^ L ^ H B ^ K V KENTWOOD OFFICE INTERNET ^ B ^ i R l S f l P-0- Box 45 - 909 Avenue G www.teamcpa.com I ' • • Kentwood, LA 70444

B R U C E H A R R E L L VOICE: (985) 229-5955 MEMBERS , P O M P ANY FAX: (985) 229-5951 American Institute of CPAs "^"^ UUIViTATM Y ^ ' Society of Louisiana CPAs CERTIFIED PUBLIC ACCOUNTANTS

A Professional Accounting Corporation

Independent Auditor's Report Honorable Mayor Wanda McCoy and

Members of the Town Council To the Town of Roseland Roseland, Louisiana

We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Town of Roseland, Louisiana (hereinafter referred to as "Town") as of and for the year ended December 31,2011, which collectively comprise the Town's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Town's management. Our responsibility is to express opinions on these financial statements based on our audit. The financial statements of the Town of Roseland as of December 31, 2010 were audited by other auditors whose report dated August 22,2011, expressed an unqualified opinion on those statements.

We conducted our audit in accordance with auditing standards, generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are fi-ee 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 accountmg principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit and the report of other auditors provide a reasonable basis for our opinions.

In our opinion based on our audit, the fmancial statements, referred to above present fairly, in all material respects, the financial position of the governmental activities, the business-type activities, and each major fund of the Town of Roseland, Louisiana as of and for the year ended December 31, 2011 in conformity with accoimting principles generally accepted in the United States of America.

In accordance with Government Auditing Standards, we have issued our report dated July 5, 2012 on our consideration of the Town's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on the internal control over fmancial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in conjunction with this report in considermg the results of our audit.

http://www.teamcpa.com

The management's discussion and analysis on pages 10 -17, and budgetary comparison information on pages 49 -53 are not a required part of the basic financial statements but are supplementary information required by accounting prmcipals generally accepted in the United States of America. Such information, although not a part of the basic financial statements, is required by the Governmental accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economical, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's response to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Town's basic financial statements as a whole. The combining and individual non-major fund financial statements and supplemental information schedules are presented for the purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual non-major fund financial statements have been subjected to the auditing procedures applied in the audit of the basic fmancial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole.

l />^-«^ <^5L.j£ J ^ Bruce Harrell & Company, CPAs A Professional Accounting Corporation

July 5,2012

This Page Intentionally Left Blank

Required Supplemental Information (Part I) Management's Discussion and Analysis

Town of Roseland Management's Discussion and Analysis

As of and for the Year Ended December 31,2011

Introduction

The Town of Roseland, Louisiana (the Town) is pleased to present its Annual Financial Statements developed in compliance with Governmental Accountmg Standards Board Statement No. 34, Basic Financial Statements -Management's Discussion and Analysis - For State and Local Governments (GASB 34), and related standards.

The Town's discussion and analysis is designed to (a) assist the reader in focusing on significant fmancial issues, (b) provide an overview of the Tovm's financial activity, (c) identify changes in the Town's fmancial position, (d) identify any significant variations from the Town's financial plan, and (e) identify individual fund issues or concerns.

Since Management's Discussion and Analysis (MD&A) is designed to focus on the current year's activities, resulting changes, and currently known facts, please read it in conjunction with the Town's financial statements.

Financial Highlights

• At December 31, 2011, the Town's assets exceeded its liabilities by $2,565,872 (net assets). Of this amount, $376,517 (unrestricted net assets) may be used to meet the Town's ongomg obligations to its citizens.

• The most significant on-going continuing revenue sources for governmental activities of the Town consisted of $141,748 m sales tax revenues, $52,242 in property taxes, $29,079 in pubhc utility franchise taxes, and $48,157 for business licenses and permits. Charges for business-type activities of the utility fund were $152,984 in water charges and $90,531 in sewer charges.

• The Town's significant expenditures in the current year for governmental activities included $128,777 for general governmental activities, $120,973 for police and fire protection, and $37,049 for public works, including streets and drainage maintenance. Expenses for business-type activities of the water, and sewer departments totaled $404,086.

• For the year ended December 31, 2011, the Town's bonds payable in long term debt for the proprietary fund decreased by a net of $13,048, resulting in ending bonds payable of $528,161. Debt for governmental activities, consisting of certificates of indebtedness dated July 7, 2008, was paid off to zero with debt payments of $10,000.

10



Overview of the Annual Financial Report

The fmancial statement focus is on both the Town as a whole and on the major individual funds. Both perspectives, government-wide and major funds, allow the user to address relevant questions, broaden a basis for comparison, and enhance the Town's accountability. The statements then proceed to provide an increasingly detailed look at specific fmancial activities.

The MD&A is intended to serve as an introduction to the Town's basic financial statements, which consist of three components: (1) government-wide fmancial statements, (2) fund fmancial statements, and (3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements.

Government-Wide Financial Statements

The government-wide financial statements are designed to provide readers with a broad overview of the Town's finances in a manner similar to a private-sector business. Governmental activities, which normally are supported by taxes and intergovernmental revenues, and business-type activities, which rely to a significant extent on fees and charges for support are presented in separate columns along with a total column for the primary government. If the Town determines that presentation of a component unit (which are other governmental units for which the Town can exercise significant influences or for which the Primary Government fmancial statements would be misleading if component unit information is not presented) is necessary to allow the reader to determine the relationship of the component unit and primary government, the component unit information is presented in a separate column of the fmancial statements or in a separate footnote. For the current fiscal year, the Town of Roseland has no component units.

The Statement of Net Assets presents information on the Tovra's assets and liabilities using the accrual basis of accounting, in a manner similar to the accounting used by private business enterprises. The difference between the assets and liabilities is reported as net assets. Over time, the increases or decreases in net assets and changes in the components of net assets may serve as a useful indicator of whether the fmancial position of the Town is improving or deteriorating.

The Statement of Activities presents information showing how the Town's net assets changed during the most recent fiscal year, focusing on both the gross and net costs of various activities, both governmental and business-type, that are supported by the Town's general tax and other revenues. This is intended to summarize and simplify the reader's analysis of the cost of various governmental services and/or subsidy to various business-type activities.

In both of the government-wide financial statements, the Town's activities are divided into two types:

Governmental activities - Most of the Town's basic services are reported here, including general government, public safety, streets and sanitation, and health and welfare. These activities are financed primarily by property taxes, franchise taxes, sales taxes, fu-e insurance rebates, and fines.

Business-type activities - The Town charges a fee to customers to help it cover all of the cost of the services provided. The Town's water and sewer utility systems are reported in this section.

11



As a general rule the effect of interfund activity has been eliminated from the government-wide fmancial statements. Exceptions to this general rule, if applicable, are payments-in-lieu of taxes and other charges between the government's enterprise operations. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned.

Fund Financial Statements

A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Town, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related and legal requirements. The Tovra uses two categories of funds to account for financial transactions: governmental fimds and proprietary funds. Traditional users of governmental financial statements will find the fimd fmancial statements presentation more familiar.

Governmental funds are used to account for most of the Town's basic services. However, unlike the government-wide fmancial statements, governmental fund fmancial statements focus on how money flows into and out of those funds and the balances that are left at year-end that are available for spending. These funds are reported using the modified accrual basis of accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the Town's general government operations and the basic services it provides. Governmental fund information helps to determine whether there are more or fewer fmancial resources that can be spent in the near future to finance the Town's programs.

Proprietary funds account for water and sewer utility services provided by the Town to its customers. Proprietary funds statements provide the same type of information as the government-wide financial statements, but the fund presentation provides more detail.

Because the focus of governmental funds is narrower than that of the government-wide financial statements, there are differences in the information presented for government fimds and for governmental activities in the government-wide fmancial statements. Review of these differences provides the reader of the financial statements insight on the long-term impact of the Town's more immediate decisions on the current use of financial resources. Both the governmental fund Balance Sheet and the governmental fimd Statement of Revenues, Expenditures and Changes in Fund Balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.

Notes to the Financial Statements

The notes to the fmancial statements provide additional mformation that is essential to a full understanding of the data provided in the government-wide and fund financial statements.

12



Government-Wide Financial Analysis

As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. The following table provides a summary of the Town's net assets for the current year as compared to the prior year.

Assets:

Current and Other Assets $

Capital Assets Total Assets

Liabilities:

Long-Term Debt Outstanding

Other Liabilities Total Liabilities

Net Assets:

Invested in Capital Assets, Net of Related Debt

Restricted Unrestricted

Total Net Assets $ "

Governmei 2011

482,934

705,918 1,188,852

8,014 8,014

705,918

474,920 1,180,838

tal

$

-

$"

Net Assets 2011and2010

Actiwties 2010

(Restated) 368,225 754,313

1,122,538

10,000 14,579 24,579

734,313

3,536 360,110

1,097,959

$

-

$"

Business-! 2011

195,209 1,911,586 2,106,795

509,234 212,527 721,761

1,383,425

100,012 (98,403)

1,385,034

Vpe

$

-

$ '

Activities

2010

222,907 $ 2,017,231 2,240,138

524,570 195,044 719,614

1,469,056

139,039 (87,571)

1,520,524 $

Tota

2011

678,143 2,617,504 3,295,647

509,234 220,541 729,775

2,089,343

100,012

376,517 2,565,872

$

-

$~

2010 (Restated)

591,132 2,771,544 3,362,676

534,570 209,623 744,193

2,203,369

142,575

272,539

2,618,483

Approximately eighty-one percent of the Town's net assets reflect its investment in capital assets (land, buildings, equipment, infrastructure, and improvements) net of any outstanding related debt used to acquire those capital assets. These capital assets are used to provide services to citizens and do not represent resources available for future spending. Although the Town's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets cannot be used to liquidate these liabilities.

Approximately four percent of the Town's net assets represent resources that are subject to external restriction on how they may be used. The Town's restricted net assets primarily consist of cash for capital projects in governmental activities and cash reserves required for customer deposits in business-type activities net of corresponding liabilities. Approximately fifteen percent of the Town's net assets are unrestricted and may be used to meet the Tovra's ongoing obligations to its citizens.

At the end of the current fiscal year, the Town was able to report positive balances in all three categories of net assets, both for the Town as a whole, as well as for separate governmental and business-type activities. The Town's activities decreased its total net assets, before prior period adjustments, by ($52,611), with governmental activities increasing net assets by $82,879 and business-type activities decreasing net assets by ($135,940).

In order to further understand what makes up the changes in net assets, the table on the following page provides a summary of the results of the Town's activities for the current year as compared to the prior year. An analysis of the primary sources of these changes follows the table.

13



Changes in Net Assets For the years ended December 31, 2011 and 2010

Governmental Activities Business-Type Activities Total

Revenues:

Program Revenues:

Charges for Services $ Operating Grants and Contributions

Capital Grants and Contributions

General Revenues:

Taxes

Intergavemmental

Interest Income

Miscellaneous

Building Lease Proceeds

Total Revenues

Ejqjenses:

General Government

Public Safety

Public Works

Health and Welfare

Water and Sewer Utility

Total Ejqjenses

Change in Net Assets Before Transfers

Transfers (Out) In

Change in Net Assets

Net Assets, Begiiming

Prior Period Adjustments

Net Assets, Beginning

Net Assets, Ending $

2011

52,957 $

-10,750

223,069

5,849

82

2,457

78,000

373,164

128,777

120,973

37,049

3,486

-

290,285

82,879

-

82,879

1,108,649

(10,690)

1,097,959

1,180,838 $

2010

(Restated)

56,366 $ 33,109

24,728

245,346

6,461

148

1,488

76,500

444,146

136,803

175,795

56,796

-

-

369,394

74,752

-

74,752 1,023,207

-1,023,207

1,097,959 $

2011

243,515 $

-25,000

-

-

59

22

-

268,596

-

-

-

-

404,086

404,086

(135,490)

-

(135,490) 1,520,524

-1,520,524

1,385,034 $

2010

267,089 S

• 18,516

-

-

154

582

-

286,341

-

-

-

-

358,819

358,819

(72,478)

-

(72,478) 1,593,002

-1,593,002

1,520,524 $

2011

296,472 $

-35,750

223,069

5,849

141

2,479

78,000

641,760

128,777

120,973

37,049

3,486

404,086

694,371

(52,611)

-

(52,611)

2,629,173

(10,690)

2,618,483

2,565,872 $

2010

(Restated)

323,455

33,109

43,244

245,346

6,461

302

2,070

76,500

730,487

136,803

175,795

56,796

-

358,819

728,213

2,274

-

2,274

2,616,209

-

2,616,209

2,618,483

14



Governmental Activities

The Town's governmental net assets increased by $82,879 as compared to a prior fiscal year net assets increase of $74,752.

The significant factors in this change in net assets are the result of a ($22,000) decrease in taxes with approximately ($10,000) in sales taxes and ($9,000) in property taxes. Grant revenues decreased ($47,000). The total approximate decrease in revenues was ($71,000).

Operating expenses in governmental activities decreased ($79,000) to offset this drop in revenue. The largest decreases came in fire supplies funded through a 2010 operating grant, which declined ($42,000) and police deputy salaries decreased ($20,000).

Business-Type Activities

The Town's business-type net assets decreased by ($135,490) or nine percent of prior year ending net assets, to $1,520,524. Charges for services decreased by nme percent or ($23,574). Expenses for the utility fund increased $45,267 or thirteen percent. Increases included payroll $12,000, repairs and maintenance $18,000 and deposit differences related to fraud $10,000.

Fund Financial Analysis

As noted earlier, the Town uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.

Governmental Funds

The focus of the Town's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the Town's financing requirements. hi particular, unassigned fimd balance may serve as a useful measure of the Town's net resources available for spending at the end of the year. At the end of the current year, the Town's governmental funds reported combined ending fund balances of $474,920. Fund balance was as follows: non-spendable $2,975, assigned $128,128, and unassigned $343,817.

This represents an increase of $121,274, for all governmental fimds, from the prior year's ending fund balance. Principal payments on long term debt of $10,000 were made in the current fiscal year. The General Fund is the chief operating fund of the Town. At the end of the current year, the total fund balance for the General Fund was $346,792. All funds had a positive ending fund balance.

Proprietary Funds

The Town's proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail.

Governmental Fund Budgetary Highlights Budget information is detailed in Note 2 - Stewardship, Compliance, and Accountability, there were no budget findings Footnote 2 lists budget to-actual reports for other governmental funds, which are presented in die Required Supplementary Information as Schedules 1 -3 .

15

Town of Roseland Management 's Discussion and Analysis


Capital Assets and Debt Administration

Capital Assets The Town's investment in capital assets for its governmental and business-type activities as of December 31, 2011 amounts to $2,617,504 (net of depreciation). The total decrease in the Tovm's investment in capital assets for the current fiscal year was $154,040 (net of depreciation). The following table provides a summary of the Town's capital assets (net of depreciation) at the end of the current year as compared to the prior year.

Capital Assets (Net of Depreciation)

2011 and 2010

Capital Assets

Land

BuOdings and Improvements

Machinery and Equipment

Water Utility System

Sewer Utility System

Subtotal Capital Assets

Less: Accumulated Depreciation

Capital Assets, Net

Govemmer

2011

$ 58,693

670,786

482,518

--

1,211,997

(506,079)

$ 705,918

ital

$~

-

^

$_

Activities

2010

58,693

660,036

482,518

--

1,201,247

(446,934)

754,313

Business -Type

Activities

2011

$ 6,500 $

20,640

14,415

2.122.441

2,093,699

4.257,695

(2346,109)

$ 1,911,586 $

2010

6,500 $

20,640

16,871

2,120,930

2,092,754

4,257,695

(2,240,464)

2,017,231 $

Total

2011

65,193

691,426

496,933

2,122,441

2,093,699

5,469,692

(2,852,188)

2,617,504

$ "

-

$

2010

65,193

680,676

499,389

2,120,930

2,092,754

5,458,942

(2,687398)

2,771,544

Significant capital additions for the fiscal year ending December 31, 2011, consisted of the following. For governmental funds, a HVAC unit was added for $10,750 in April 2011. There were no other additions m governmental funds or business-type funds.

Long-Term Debt

At December 31, 2011, the Town had total debt outstanding of $528,161. Of this total, $18,927 (including current bonds payable) is due within one year and $509,234 is due within greater than one year. The following table provides a summary of the Town's outstanding debt at the end of the current year as compared to the prior year.

Outstanding Debt

2011 and 2010


2011 2010

Capital Leases $

Revenue Bonds

Total Outstanding Debt $

10,000

Business-Type

Activities Total

2011 2010 2011

528,161

2010

- $ - $ 541,209 528,161 551,209

- $ 10,000 $ 528,161 $ 54139 $ 528,161 $ 551,209

16



Other Factors Affecting the Town

The Town of Roseland's management approach is conservative. When possible, the Mayor and Aldermen attempt to provide services for the Town based on existing revenues and to borrow for long-term projects only when absolutely necessary, actively pursuing grant funds to minimize the cost of major projects. The Town is facmg increasing costs and has an obligation to its citizens to maintain or increase the level of services being provided.

Contacting the Town's Financial Management

This financial report is designed to provide the Town's citizens, taxpayers, creditors and investors with a general overview of the Town's finances and show the Town's accountability for the money it receives. If you have questions regarding this report or need additional information, contact Stephanie Cutrer, Town Clerk, P.O. Box 302, Roseland, Louisiana 70456.

17

Basic Financial Statements Government-Wide Financial Statements

Statement A Tovm of Roseland

Statement of Net Assets As of December 31,2011

Primary Government

Assets Current Assets:

Cash and Cash Eqiuvalents Recei\̂ fales, Net:

IntergDvemmental Accounts and Other

Due From Other Funds Prepaid Insurance

Total Cuirent Assets

Restricted Assets: Restricted Cash and Cash Equivalents

Total Restricted Assets

Capital Assets: Land Capital Assets, Net

Total Capital Assets

Total Assets

Liabilities Current Liabilities:

Accounts Payable Other Accrued Payables Due To Other Funds Customer Deposits Bonds Payable Accrued Interest on Long Term Debt

Total Current Liabilities

Long Term Liabilities: Bonds Payable

Total Long Term Liabilities

Total Liabilities

Net Assets Invested in Capital Assets, Net of Related Debt Restricted for:

Capital Projects and Debt Service Unrestricted

Total Net Assets

Govenunental Activities

295,778 $

705,918

474,920 1,180,838 $

The accon^anying notes are an integral part of this statement

19


5,813 $

1,383,425

100,012 (98,403)

1,385,034 $

Total

301,591

42,031

8,018

134,132

2,975

482,934

_

-

58,693

647,225

705,918

1,188,852

3,437

4,577

-

-

-

-

8,014

_

-

8,014

-

44,653

-

-

50,466

144,743

144,743

6,500

1,905,086

1,911,586

2,106,795

6,105

990 134,132

44,731

18,927

7,642

212,527

509,234

509,234

721,761

42,031

52,671

134,132

2,975

533,400

144,743

144,743

65,193

2,552,311

2,617,504

3,295,647

9,542

5,567

134,132

44,731

18,927

7,642

220,541

509,234

509,234

729,775

2,089,343

100,012 376,517

2,565,872

statement B

Tonn of Roseland

Statement of Activities

For the year ended December 31,2011

Program Revenues

Capital

Charges Grants &

for Contri-

Services butions


General Government

Public Safe^

Public Works

HeaMiandWeiiire

Total Govenunental Activities

Busmess-type Activities

Water and Sewer

Expenses

$ 128,777 $

120,973

37,049

3,486

$ 290,285 $ 52,957 $ 10,750 $ (226,578) (226,578)

48,157 $

4,800

10,750

Net

(Expenses)

Revenues

(80,620)

(116,173)

(26,299)

404,086 243,515 25,( (135,571)

Total Business-type Actffities $ 404,086 $ 243,515 $ 25,000 $ (135,571)

GeneralRevenues:

Taxes:

Property Taxes

Safes Taxes

Franchise Taxes

Intergovernmental

Interest Income

Building Lease Proceeds - Rent

Miscellaneous

Transfers In (Out)

Total General Revenues and Transfer

Change m Net Assets

Net Assets-Beginning

Prior Period Adjustments (Note 18)

Net Assets - Beginnii^ (Restated)

Net Assets-Ending

The accompanying notes are an integral part of this statement

Net (Expenses) Revenues and

Changes of Primaiy Government

Govern- Business-

mental Type

Activities Activities

(80,620)

(116,173)

52,242

141,748

29,079

5,849

82

78,000

2,457

59

22

Total

(80,620)

(116,173)

(226,578)

(135,571) (135,571)

(135,571) (135,571)

52,242

141,748

29,079

5,849

141

78,000

2,479

309,457

82,879

1,108,649

(10,690)

1,097,959

1,180,838 $

81

(135,490)

1,520,524

-

1,520,524

1,385,034 $

309,538

(52,611)

2,629,173

(10,690)

2,618,483

2,565,872

20

Basic Financial Statements Fund Financial Statements

21

Town of Roseland Balance Sheet - Governmental Funds

AsofDecember31,2011

Statement C

Assets Cash Receivables, Net:

Intergovernmental Accounts and Other

Due From Other Funds Prepaid Insurance

Total Assets

General Fund

197,092

22,126 8,018

134,132 2,975

364,343

$

$ '

Fire Protection Special Revenue

Fund

98,686

19,905 -

10,170 -

128,761

$

$ ~

Total Governmental

Funds

295,778

42,031 8,018

144,302 2,975

493,104

Liabilities and Fund Balances Liabilkies:

Accounts Payable Other Accrued E:q)enses Due to Other Funds

Total Liabilities

3,437 3,944

10,170 17,551

633

633

3,437 4,577

10,170 18,184

Fund Balances: Nonspendable Assigned Unass^ed Fund Balances

Total Fund Balances

2,975

343,817 346,792

Total Liabilities and Fund Balances $ 364,343 $

The accon:5>anying notes are an integral part of this statement.

128,128

128,128

128,761 $

2,975 128,128 343,817 474,920

493,104

22

Statement D

Town of Roseland Reconciliation of the Governmental Funds Balance Sheet

to the Government-Wide Fmancial Statement of Net Assets AsofDecember31,2011

Amounts reported for governmental activities in tiie Statement of Net Assets are different because:

Fund Balances, Total Govenunental Funds (Statement Q 474,920

Capital assets used in governmental activiies are not financial resources and are therefore not reported in the governmental fimds.

Governmental capital assets net of depreciation 705,918

Net Assets of Governmental Activities (Statement A) $ 1,180,838

The accon^anying notes are an integral part of this statement

23

Statement E Town of Roseland

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

For the year ended December 31,2011

Revenues Taxes Licenses and Permits Intergovernmental Charges for Services Interest Other

Total Revenues

Expenditures General Government Public Safety:

Police Fire

Public Works Health and Welfere Capital Outlays

Total Expenditures

Excess of Revenues Over (Under) Expenditures

Other Financing Sources (Uses) Bond Principal Bond Interest Ejipense Building Lease Proceeds

Total Other Financing Sources (Uses)

Net Change in Fund Balances

Fund Balances, Beginning Before Prior Period Adjustments Prior Perbd Adjustments (Note 18)

Fund Balances, Beginning After Prior Period Adjustments

Fund Balances, Ending

General Fund

$ 191,412 $ 44,632 16,599 4,800

54 4,446

261,943

110,733

49,133 28,056 31,749

3,486 10,750

233,907

28,036

(10,000) (909)

78,000

67,091

95,127

255,585 (3,920)

251,665

$ 346,792 $

Fire Protection Special Revenue

Fund

33,193 $ -

-

-

28 -

33,221

-

-

7,074 -

-

-

7,074

26,147

-

-

-

-

26,147

108,751 (6,770)

101,981

128,128 $

Total Governmental

Funds

224,605 44,632 16,599 4,800

82 4,446

295,164

-

110,733 -

49,133 35,130 31,749

3,486 10,750

240,981

54,183

(10,000) (909)

78,000

67,091

121,274

364,336 (10,690)

353,646

474,920

The accompanying notes are an integral part of this statement.

24

statement F Town of Roseland

ReconciUation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds

to the Statement of Activities Forthe year ended December 31,2011

Amounts reported for governmental activities in the Statement of Activities are diferent because:

Net Change in Fund Balances, Total Governmental Funds, Statement E $ 121,274

Governmental fimds report capital outlays as ejqjenditures. However, in the statement of activities the cost of these assets are allocated over their estimated usefijl lives and reported as depreciation e)q)ense. This is the amount by which depreciation exceeded capital outlays in the current period.

Ejq)enditures for capital assets

Capital asset additbns $ 10,750 Less;

Current year depreciatbn (59,145) (48,395)

Repayment of bond princ^al and capital lease princpal is an ejq5enditure in governmental fimds but the repayment reduces long-term liabilities in tiie statement of net assets. Proceeds obtained from obtaining fong term debt are treated as revenue in governmental fimds but the amounts increase long-term liabilities in the statement of net assets.

Princ5)al payments - fong term debt 10,000 10,000

Change in Net Assets of Governmental Activities, Statement B $ 82,879

The acconpanying notes are an integral part of this statement

25

Sta tement G Town of Rose l and

S t a t emen t of N e t Asse t s - Propr ie tary Funds As of D e c e m b e r S l , 2011

Asse t s Current Assets:

Cash and Cash Equivalents $ 5,813 Accounts Receivables, Ne t 41,276 Other Receivables 3,377

Total Current Assets 50,466

Restricted Assets: Restricted Cash and Cash Equivalents 144,743

Total Restricted Assets 144,743

Capital Assets Land 6,500 Capital Assets, Ne t 1,905,086

Total Capital Assets 1,911,586

Tota l Asse t s 2,106,795

Liabilities Current Liabilities (Payable From Current Assets):

Accounts Payable 6,105 Other Accrued Payables 990 Due To Other Funds 134,132

Total Current Liabilities (Payable From Current Assets) 141,227

Current Liabilities (Payable From Restricted Assets): Customer Deposits 44,731 Revenue Bonds Payable 18,927 Interest Payable on Long Term Debt 7,642

Total Current Liabilities (Payable From Restricted Assets) 71,300

Long Term Liabilities: Bonds Payable 509,234

Total Long Term Liabilities 509,234

Tota l Liabilities 721,761

N e t Asse t s Invested in Capital Assets, Ne t of Related Debt 1,383,425 Restricted for:

Capital Projects and Debt Service 100,012 Unrestricted (98,403)

Tota l N e t Asse ts $ 1,385,034

The acconqsanying notes are an integral part of this statement.

26

Statement H Town of Roseland

Statement of Revenues, Expenses and Changes in Net Assets - Proprietary Funds

Forthe year ended December 31, 2011


UtiUty Fund Operating Revenues

Water Sales $ 141,029 Sewer Service Charges 90,531 Penalties 11,015 Intergovernmental 25,000 Other 962

Total Operating Revenues 268,537

Operating Expenses Contract Services 18,000 Deficit in Deposits due to Fraud 10,005 Depreciation 105,644 Insurance 15,985 Meter Reading 6,525 Payroll Taxes 6,017 Professional Fees 12,430 Repairs and Maintenance 69,367 Salaries and Wages 78,655 Si^plies 4,779 Utilities 20,237 Other 17,241

Total Operating Expenses 364,885

Operating Income (Loss) (96,348)

Nonoperating Revenues (Expenses)

Interest Income 59 Interest E?q)ense (39,201)

Total Nonoperating Revenues (Expenses) (39,142)

Change m Net Assets (135,490)

Total Net Assets, Beginning 1,520,524 Total Net Assets, Ending $ 1,385,034

The acconpanying notes are an integral part of this statement.

27

Statement I Town of Roseland

Statement of Cash Flows -Proprietaiy Funds

Forthe year ended December 31,2011 Enterprise Fund

Cash Flows From Operating Activities Received From Customers $ 241,196 Paid for Meter Deposit Fees (1,087) Other Rece5)ts 25,166 Receq t̂ for Interfund Services 17,749 Payments for Operations (176,712) Payments to Einployees (̂ 4,672)̂

Net Cash Provided (Used) by Operating Activities

Cash Flows From Capital and Related Financing Activities Repayments for Long Term Debt Interest Payments for Long Term Debt

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

Cash Flows From Investing Activities Receq t̂ of Interest

Net Cash Provided (Used) by Investing Activities

Net Decrease in Cash and Cash Equivalents Cash and Cash Equivalents, Beginning of Year

Cash and Cash Equivalents, End of Year

Reconciliation of Cash and Cash Equivalents to the Statement of Net Assets: Cash and Cash Equivalents, Unrestricted Cash and Cash Equivalents, Restricted

Total Cash and Cash Equivalents

Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities Operating hicome (Loss) $ (96,348) Adjustments to Reconcile Operating Loss to Net Cash Provided by Operating Activities:

Depreciation and amortization 105,644 (Increase) Decrease in Accounts Receivable (1,379) Decrease in Other Receivable (796) Decrease in Due (to) and from Other Funds 17,749 (Decrease) Increase in Accounts Payable (2,395) (Decrease) Increase in Accrued Ej^enses 252 (Decrease) Increase in Customer Deposits (1,087)

Net Cash Provided by Operating Activities $ 21,640

The acconpanying notes are an integral part of this statement.

28

21,640

(13,048)

(38,525)

(51,573)

60 60

(29,873)

180,429

$

$

$

150,556

5,813

144,743

150,556

Basic Financial Statements *̂ otes to the Financial Statements

29

Town of Roseland Notes to the Financial Statements


Iiitroduction

The Town of Roseland was incorporated January 4, 1892, under the provisions of the Lawrason Act (Louisiana Revised Statutes (R.S.) 33:321-481) of the constitution of the State of Louisiana. The Town is located in the Parish of Tangipahoa and has a population of approximately 1,123, per the 2010 U.S. Census. The Town operates under a Board of Councilman - Mayor form of government and, as permitted under the act, provides police protection, fire protection, roads, streets, and sidewalks; sponsorship of federal and state supported programs; water and sewer utilities and other necessary public services.

Utility services are provided for 584 water customers, and 345 sewer customers. The Town employed approximately nine full-time employees in addition to the Mayor and Board of Aldermen.

The accounting and reporting policies of the Town of Roseland conform to generally accepted accounting principles as applicable to governments. Such accoimting and reporting procedures also conform to the requirements of Louisiana Revised Statutes 24:513 and to the guides set forth in the Louisiana Governmental Audit Guide, and to the industry audit guide. Audits of State and Local Governmental Units.

Governmental Accounting Standards Board (GASB) Statement No. 14 established criteria for determining the reporting entity and component units that should be included within the reporting entity. Under provisions of this statement, the Town of Roseland is considered a primary govemment, since it is a special purpose govemment that has a separately elected governing body, is legally separate, and is fiscally independent of other state and local governments. As used in GASB Statement No. 14, fiscally independent means that the Town may, without the approval or consent of another governmental entity, determine or modify its own budget, levy its own taxes or set rates or charges, and issue bonded debt. There are no other component units which the Town of Roseland has an oversight relationship.

1. Summary of Significant Accounting Policies

A. Government-Wide and Fund Financial Statements

The govemment-wide financial statements (i.e., the statement of nets assets and the statement of changes in net assets) report information on all nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. Likewise, a primary govemment is reported separately from certain legally separate component units for which the primary govemment is financially accountable.

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

30



Separate financial statements are provided for govenmiental funds, proprietary funds, and fiduciary fimds, even though the latter are excluded fi^om the govemment-wide financial statements. Major individual governmental fimds and major individual enterprise funds are presented as separate columns in the fund financial statements.

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

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

Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accmal basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the govemment considers revenues to be available if they are collected withm 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accmal accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due.

Property taxes, franchise taxes, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessment receivable, if any, due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the govemment.

The Town reports the following major governmental funds:

The General Fimd is the Town's primary operating fund. It accounts for all financial resources of the general govemment, except those required to be accounted for in another fund.

The Fire Protection Special Revenue Fund accounts for the receipt and disbursement of a ten year ten mill ad valorem tax dedicated for acquiring, constmcting, improving, maintaining, and operating facilities and equipment to provide fire protection and emergency medical service.

The Town reports the following major proprietary funds:

The Enterprise Funds account for operations (a) that are financed and operated in a maimer similar to private business enterprise where the intent of the goveming body is that costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user fees, or (b) where the goveming 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. The Town maintains one Enterprise fund, the Waterworks and Sewer Fund, which provides water and sewer services.

31

Town of Roseland Notes to the Fmancial Statements


private-sector standards of accounting and financial reporting issued prior to December 1,1989, generally are followed in both the govemment-wide and proprietary fund fmancial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent private-sector guidance for their business-type activities and enterprise funds, subject to this same limitation. The govemment has elected not to follow subsequent private-sector guidance.

As a general rule, the effect of interfiind activity has been eliminated from the govemment-wide financial statements. Exceptions to this general rule, if applicable, are payments-in-lieu of taxes and other charges between the government's enterprise operations. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned.

Amounts reported as program revenues include 1) charges to customers or applicants for goods, services. Of privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes.

Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the proprietary funds are user charges for the services provided by the enterprise funds. Operating expenses for enterprise funds and internal service 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 nonoperating revenues and expenses.

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

C. Deposits and Investments

The Town's cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition. State law and the Town's investment policy allow the Town to invest in collateralized certificates of deposit, government-backed securities, commercial paper, the state-sponsored investment pool, and mutual funds consisting solely of government-backed securities.

Investments for the Town are reported at fair market value. The state investment pool, LAMP, operates in accordance with state laws and regulations. The reported value of the pool is the same as the fair value of the pool shares.

D, Receivables and Payables

Activity between funds that are representative of lendmg/borrowing arrangements outstanding at the end of the fiscal year are referred to as either "due to/from other funds" (i.e., ihe current portion of interfund loans) or "advances to/from other funds" (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as "due to/from other funds." Any residual balances outstanding between the governmental activities and business-type activities are reported in the govemment-wide financial statements as "intemal balances."

32



Advances between funds, as reported in the fund fmancial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available fmancial resources.

All trade and property tax receivables are shown net of an allowance for uncollectible amounts.

Property taxes are levied on a calendar year basis and become due on January 1 of each year. The following is a summary of authorized and levied ad valorem taxes

Authorized Levied Millage Millage

General Alimony 5.79 mills 5.79 mills Fire Protection 10 mills 10 mills

Sales and use taxes are levied at one percent as authorized by Ordinance Number 158 adopted November 6, 1967. An additional one percent sales and use tax was authorized by the adoption of Ordinance Number 182, which revised and extended the sales tax to two percent effective April 12, 1982. The tax may be used for any lawful purpose.

E. Inventories and Prepaid Items

All inventories are valued at cost using the first-in/first-out method. Inventories of the governmental funds are recorded as expenditures when consumed rather than when purchased. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both govemment-wide and fund financial statements.

F. Restricted Assets

Certain proceeds of the enterprise fund revenue bonds, as well as certain resources set aside for their repayment, are classified as restricted assets because their use is limited by applicable bond covenants.

G. Capital Assets

Capital assets, which include property, plant, equipment, and infi-astructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the govemment-wide financial statements. Capital assets are capitalized at historical cost or estimated cost if historical cost is not available. Donated assets are recorded as capital assets at their estimated fair market value at the date of donation. The municipality maintains a threshold level of $500 or more for capitalizing capital assets.

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

Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the constmction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed.

33



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

Description Estimated Lives Governmental Funds: Buildings & Improvements 20 - 40 Years Furniture and Fixtures 5 - 10 Years Vehicles 5 Years Machinery and Equipment 5 - 1 5 Years

Water and Sewer Fund:

Wells 20 - 40 Years Storage Tanks 20 - 40 Years Lines and Meters 30 - 50 Years Water System 20 - 50 Years Sewer System 20 - 50 Years Miscellaneous Equipment 5 - 10 Years

H, Compensated Absences

Permanent (full-time employees subject to a six-month probationary period) earn annual leave on the anniversary date of their employment based on years of service. Annual leave is earned as follows: after one year, five days of leave, after two years, ten days and after four years, fifteen days.

Annual leave accrues without limit. Leave is paid to an employee at the time of separation of employment provided that the employee was not dismissed for theft of Town property. The accrued annual leave is not considered material. No liability is recorded for leave in the accompanying statements.

Sick Leave is eamed at the rate of one day per month. Any unused sick leave at the end of a calendar year may be accmed up to ninety days but can be used only for major medical leave. There is no payment for accrued sick or medical leave upon retirement or termination. Therfore, accmal of the liability for unused sick leave is not required.

I. Long-Term Obligations

In the govemment-wide financial statements and the proprietary fund types in the fund financial statements, Jong-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net assets. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt.

In the fund financial statements, governmental fund types recognize bond premiums and discounts as well as bond issuance costs during the current period. The face amount of the debt issued is reported as other

34



financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.

J. Fund Equity

In the govemment-wide financial statements, net assets are classified in the following categories:

• Invested in capital assets, net of related debt. This component of net assets mcludes capital assets, net of accumulated depreciation, reduced by the outstanding balance of any bonds, or indebtedness attributable to the acquisition, constmction, or improvement of those assets. If there are significant unspent proceeds at year-end, the portion of the debt attributable to the unspent proceeds is not included in the calculation of invested in capital assets, net of related debt. Rather, that portion of the debt is included in the same net asset calculation as unspent proceeds.

35



• Restricted. This component of net assets consists of constraints placed on net asset use through external constraints imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments or constraints imposed by law through constitutional provisions or enabling legislation.

• Unrestricted. This component of net assets consists of net assets that do not meet the definition of "restricted" or "invested in capital assets, net of related debt."

In the fund statements, governmental fund equity is classified as fund balance. The Town adopted GASB 54 for the year ended December 31,2011. As such, fund balances of governmental funds are classified as follows:

• Nonspendable. These are amounts that can not be spent either, because they are in a nonspendable form or because they are legally or contractually required to be maintained intact.

• Restricted. These are amounts that can be spent only for specific purposes, because of constitutional provisions, enablmg legislation or constraints that are extemally imposed by creditors, grantors, contributors, or the laws or regulations of other governments.

• Committed. These are amounts that can be used only for specific purposes determined by a formal decision of the Board, which is the highest level of decision making authority for the Tovm.

• Assigned. These are amounts that do not meet the criteria to be classified as restricted or committed, but are intended to be used for specific purposes.

• Unassigned. These are all other spendable amounts.

K. Comparative Data/Reclassifications

Comparative total data for the prior year have been presented only for individual enterprise funds in the fimd financial statements in order to provide an understanding of the changes in the financial position and operations of these funds. Certain amounts presented in the prior year data have been reclassified in order to be consistent with the current year's presentation. All prior period adjustments recorded in the current period have been reflected in prior period data presented wherever possible.

L, Extraordinary and Special Items

Extraordinary items are transactions or events that are both unusual in nature and infi-equent in occurrence. Special items are transactions or events within the control of the municipality, which are either unusual in nature or infrequent in occurrence.

M. Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America require management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the fmancial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ fi-om those estimates.

36



N. Reconciliations of Government-Wide and Fund Financial Statements

Explanation of certain differences between the governmental fund balance sheet and the govemment-wide statement of net assets is presented in Statement D of the basic financial statements. Explanation of certain differences between the govemmental fund statement of revenues, expenses, and changes in fund balances and the govemment-wide statement of activities is presented in Statement F of the basic financial statements.

2. Stewardship, Compliance and Accountability

The Town uses the following budget practices:

1. The Town Clerk prepares a proposed budget and submits same to the Mayor and Board of Aldermen no later than fifteen days prior to the beginning of each fiscal year.

2. A summary of the proposed budget is published and the public notified that the proposed budget is available for public mspection. At the same time, a public hearing is called.

3. A public hearing is held on the proposed budget at least ten days after publication of the call for the hearing.

4. After the holding of the public hearmg and completion of all action necessary to finalize and implement the budget, the budget is adopted through passage of an ordinance prior to the commencement of die fiscal year for which the budget is being adopted.

5. After the holding of the public hearing and completion of all action necessary to finalize and implement the budget, the budget is adopted through passage of an ordinance prior to the commencement of the fiscal year for which the budget is being adopted.

6. Budgetary amendments involving the transfer of funds from one department, program or function to another or involving the increase in expenditures resultmg fr"om revenues exceeding amounts estimated require the approval of the Board of Aldermen.

7. All budgetary appropriations lapse at the end of each fiscal year.

8. Budgets for the general and enterprise funds are adopted on a basis consistent with generally accepted accounting principles (GAAP). Budgets for enterprise funds are presented on the accmal basis of accounting. Other governmental funds are presented on the modified accmal basis of accounting. Accordingly, the budgetary comparison schedules present actual expenditures in accordance with the accounting principles generally accepted m the United States on a basis consistent with the legally adopted budgets as amended. All budgetary amounts presented reflect the original budget and the amended budget (which have been adjusted for legally authorized revisions of the annual budget during the year).

37



The proposed budget for December 31, 2011 was made available for public mspection on November 24, 2010. The proposed budget, prepared on the modified accmal basis of accountmg, was published on November 24, December 1 and December 8, prior to the public hearing which was held at the Town of Roseland's City Hall on December 9, 2010, for comments by taxpayers. The budget was legally adopted by the board of aldermen on December 9, 2010.

The Town was in compliance with the Local Government Budget Act, for the fiscal year ended December 31,2011.

3. Cash and Cash Equivalents

At December 31,20II, the Town has cash and cash equivalents (book balances), as follows:

Demand Deposits $ 446,334 $ 446,334

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, 2011, the Town has $496,908 in deposits (collected bank balances), within one bank, consisting of demand deposits. The demand deposits are secured from risk by $250,000 of federal deposit insurance and $246,908 of pledged securities held by the custodial bank in the name of the fiscal agent bank (GASB Category 3).

Even though the pledged securities are considered uncollateralized (Category 3) under the provisions of GASB Statement 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 municipality that the fiscal agent has failed to pay deposited funds upon demand.

4. Investments

Investments are categorized into these three categories of credit risk:

1. Insured or registered, or securities held by the town or its agent in the Town's name 2. Uninsured and unregistered, with securities held by the counterparty's trust department or agent

in the Town's name 3. Unmsured and unregistered, with securities held by the counterparty, or by its trust department or

agent but not in the Town's name

At December 31,2011, the Town's did not hold any mvestments.

38



When held all investments are typically stated on the balance sheet (carrying value) at market value. All investments are in the name of the Town and are held at the Town's office. Because these investments are in the name of the Town and are held by the Town or the Town's agent, the investments are considered insured and registered. Category (1), in applying the credit risk of GASB Codification Section 150.164.

Interest Rate Risk: The Town does not have a formal investment policy that limits investments maturities as a means of managing its exposure to fair value arising from increasing interest rates.

5. Receivables

In the govemment-wide statements, receivables consist of all revenues eamed at year-end and not yet received. Allowances for uncollectible accounts are based upon historical trends and the period aging and write-off of accounts receivable. Major receivables balances for the govemmental activities include sales taxes, franchise taxes, occupational licenses, and fines. Business-type activities report utilities earnings as their major receivable.

In the fund financial statements, material receivables in governmental funds include revenue accmals such as sales tax, franchise taxes, occupational licenses, fines, and other similar intergovernmental revenues since they are usually both measurable and available. Non-exchange transactions collectible but not available are deferred in the fund financial statements in accordance with modified accrual, but not deferred in the govemment-wide financial statements in accordance with the accmal basis. Interest and investment earnings are recorded only if paid within 60 days since they would be considered both measurable and available. Proprietary fund revenues consist of all revenues eamed at year-end and not yet received. Utility accounts receivable comprise the majority of proprietary fund receivables. Allowances for uncollectible accounts receivable are based upon historical trends and the periodic aging and write-off of accounts receivable.

The Govemmental Fund receivables at December 31,2011 consist of the following:

Govemment Receivables Taxes:

Ad Valorem Sales Tax Receivable Franchise Tax

Total Govemment Receivables

—

$

$ 1

General Fund

11,525 10,601 8,018

30,144

—

$

$ 1

Special Revenue

Funds

19,905 --

19,905

$

sZ

Total

31,430 10,601 8,018

50,049

39



The Enterprise Fund accounts receivable at December 31,2011 consist of the following: Enterprise Accounts Receivable Fund

Current $ 20,946 31 -60 Days 8,142 61-90 Days 6,041 Over 90 Days 45,973

Subtotal 81,102 Less Allowance for Bad Debt (45,000) Accounts Receivables, Net 36,102 Other Receivables 3,377 Unbilled Receivables 5,174

Total Accounts Receivable $ 44,653

6. Restricted Assets

The following is a listing of the restricted assets for the fund financial statements on December 31,2011:

The Restricted Assets for all funds at December 31,2011 consist of the folfowing:

Restricted Assets

Cash and Cash Equivalents Customer Deposits Bond Reserve Account

Bond Contingency Account Total Restricted Assets

-

$

$'

Special General Revenue

Fund Funds

- $ -

-

- $

$

$

Enterprise Fund Total

45,124 $ 45,124

55,143 55,143 44,476 44,476

144,743 $ 144,743

7. Interfund Receivables/Payables

The following is a detailed list of interfund balances for fund financial statements on December 31,2011:

Due From Due To Interfund Balances Other Funds Other Funds

Genera! Fund Volunteer Fire Fund $ - $ 10,170 Enterprise Fund 134,132

Special Revenue Funds Volunteer Fire Fund

General Fund 10,170 Enterprise Fund

General Fund -_ 134,132 Total Inte rfimd B alances $ 144,302 $ 144,302

40



8. Capital Assets

The following is a summary of the changes in capital assets for govemmental activities for the fiscal ended December 31,2011:

year

Govemmental Activities Capital Assets: Capital Assets Not Being Depreciated:

Land Construction in Progress

Total Capital Assets Not Being Depreciated

Capital Assets Being Depreciated: Buildings and Improvements Machinery and Equipment

Total Capital Assets Being Depreciated

Less Accumulated Depreciation for: Buildings and Improvements Machinery and Equipment

Total Accumulated Depreciation

Total Capita! Assets Being Depreciated, Net Total Govemmental Activities Capital Assets, Net

Beginning Balance

58,693 $

58,693

660,036 482,518

$

1,142,554

(167,926) (279,008) (446,934)

695,620

754,313 $ Depreciation was charged to governmental functions as follows:

General Govemment Public Safety - Police Public Safety - Fire Public Works

Increases Decreases

10,750

10,750

(17,940) (41,205) (59,145)

(48,395)

(48,395) $

Ending Balance

58,693

58,693

670,786 482,518

1,153,304

(185,866) (320,213) (506,079)

647,225

705,918

17,135 6,778

29,932 5300

59,145

41



Capital assets and depreciation activity as of and for the year ended December 31, 2011 for business activities is as follows:

Beginning

Balance

-type

Business -Type Activities Capital Assets:

Capital Assets Not Being Depreciated:

Land

Constructbn in Progress

Total Capital Assets Not Being Depreciated

Capital Assets Being Depreciated:

Buildings and Improvements

Machinery and Equipment

Water Utility System

Sewer Utilily System

Total Capital Assets Being Depreciated

Less Accumulated Depreciation for:

Buildings and Improvements

Machineiy and Equipment

Water Utilily System

Sewer Utility System

Total Accumulated Depreciation

Total Capita! Assets Being Depreciated, Net

Total Business - Type Activities Capital Assets, Net

Increases Decreases

6,500 $

6,500

20,640

16,871

2,120,930

2,092,754

4,251,195

(18304)

(13,958)

(U32,862)

(975,341)

(2,240,465)

2,010,730

2,017,230 $

-

-

-

-

-

-

(872)

(243)

(39,005)

(65,524)

(105,644)

(105,644)

(105,644)

$

Adjustments

- $

-

(2,456)

1,511

945

-

-

-

- $

Ending

Balance

6,500

6,500

20,640

14,415

2,122,441

2,093,699

4,251,195

(19,176)

(14,201)

(1,271,867)

(1,040,865)

(2,346,109)

1,905,086

1,911,586

42



9. Interfund Transfers

There were no interfund transfers between funds for the year ended December 31,2011.

10. Accounts, Salaries, and Other Payables

Fund payables at December 31, 2011 are as follows:

Funds Payable

Accounts

Payroll Tax Related Liabilities

Deferred Ad Valorem Revenue

Other

General

Fund

3,437 $

2,683

367 894

Volunteer

Fire Fund

- $

-

633 -

Utilty Fund

6,105

-

-

990

$

Total

9,542

2,683

1,000

1,884

7,381 $ 633 $ 7,095 $ 15,109 Total Funds Payable

11. Short-Term Debt

The Town had no short-term debt outstanding at December 31, 2011, other than the current portions of revenue bonds payables described in the long term debt footnote.

12, Long-Term Obligations

The following is a summary of long-term obligation transactions for the year ended December 31, 2011;

Governmental Activities Business-Type Activities Total

Beginning Balance $

Additbns

Deletions

Scheduled Payments

Ending Balance $

Capital Leases

-

-

-

-

$

1 $

Certificates of Indebtedness

10,000 $

-

(10,000)

- $

Capital Leases

-

-

-

$

z$z

Revenue

Bonds

541,209 $

-

(13,048)

528,161 $

Long-Term

Obligations

55139 -

(23,048)

528,161

The following is a summary of the current (due in one year or less) and the long-term (due in more than one year) portions of the long-term obligations:

Govemmental Activities Business-Type Activities

Cuirent LongTeim

Poition Portion Total

Current Long Terra Portion Portion Total

Govemmental Activities

Revenue Bonds $ 18,927 $ 509,234 $ 528,161 $

$ 18,927 $ 509,234 $ 528,161 $

Total

Long-Term

Obligations

528,161

528,161

43



Bonds Payable as of December 31,2011 are as follows: Bonds Payable Due Within One

End of Year Year Business Type: $ 472,500 of Sewer Revenue Bonds, Series A

Dated 01/22/88 , due in monthty installments of princqial and interest of $2,758 , through 01/22/2028, interest at 6.34%. $ 334,545 $ 12,117

Business Type: $ 272,000 of Sewer Revenue Bonds, Series B Dated 5/23/88 , due in monthly installments of principal and interest of

$1,540 , through 05/23/2028, interest at 6.125%. 193,616 6,810

$ 528,161 $ 18,927

The annual requirements to amortize all debt outstanding at December 31, 2011, including interest payments of $320,565 are as follows:

Year Ending 12/31/11

2012 2013 2014 2015 2016

2017 to 2021 2022 to 2026 2027 to 2031

$472,000 Utility Revenue Bonds

91-01 $ 33,094 $

33,094 33,094 33,094 33,094

165,470 165,470 41,826

$ 538,236 $

$272,000 Utility Revenue Bonds

92-03 18,480 $ 18,480 18,480 18,480 18,480 92,400 92,400 33,290

310,490 $

Total 51,574 51,574 51,574 51,574 51,574

257,870 257,870 75,116

848,726

13. Flow of Funds, Restrictions on Use - Enterprise Fund Bonds

Water and Sewer Revenue Bonds

The Water and Sewer Revenue Bonds, Series A and B, issued by the United States Department of Agriculture, Rural Utilities Service, require that all income and revenues eamed or derived from the operation of the system be deposited in the Revenue Fund. Out of the funds on deposit in the Revenue Fund, after reasonable and necessary expenses of operating the system have been paid, moneys are to be transferred to the Reserve Fund and/or the Contingency Fund as provided in the Resolution.

The Reserve Fund is maintained solely for the purpose of paying the principal of and mterest on bonds payable as to which there would otherwise be default. A monthly sum equal to one twelfth of five percent of the highest annual bond payments or $137 for Series A and $77 for Series B must be deposited mto this fimd no later than the 20* day of each month until $33,094 for Series A and $18,480 for Series B is on deposit therein for a total of $51,574. This Reserve Fund is fully funded at December 31, 2011 with a balance maintained of $55,143.

44



The Contingency Fund is established to care for depreciation, extensions, additions, improvements, renewals and replacements necessary to operate properly the System, by transferring from die Revenue Fund on or before the 20''' day of each month of each year a sum of $221. In addition to caring for depreciation, extensions, additions, improvements, renewals and replacements necessary to properly operate the System, the money in the Contingency Fund may also be used to pay the principal of and the interest on the bonds including any additional pari passu bonds issued hereafter in the manner provided by the Resolution, for the payment of which there is not sufficient money in the Reserve Funds. This Contingency Fund is fully funded at December 31,2011 with a balance maintained of $44,476.

Per Bond Covenants, the Town Council and the Mayor must maintain rates for utility services to provide for the payment of all reasonable and necessary expenses of the System, bond principal and interest payments, and the funding of required reserve accounts. As noted within the Corrective Action for Current Year Audit Findings (Finding 11-1), the Tovm incurred a net loss of $135,490 forthe fiscal year ended December 31, 2011. The Town is also required by bond covenants to shut off delinquent customer accounts water services to a customer whose account is not paid within forty days of the billing date. Past due and delinquent accounts are detailed in Footnote 5- Receivables.

14. Retirement Systems

All employees of the town are members of the social security system. In addition to employee payroll deductions. Town funds are remitted to match employee contributions. Town contributions to the social security system for the year ended December 31, 2011 were $12,582.

15. Economic Development Award Agreement and Building Lease Proceeds and Revenue

On May 3, 2000 an Economic Development Award Agreement between the Louisiana Department of Economic Development, Karts International, (the Company), and the Town of Roseland (the Sponsoring Entity) was approved by the Governor of the State of Louisiana. The grant award of $300,000 was used to assist the Town in building a new manufacturing facility that is located in the Town's industrial park. The agreement was effective from May 3, 2000 through November 10, 2003.

As part of the agreement, the Company was required to meet specific performance objectives each year. Karts International is now bankrupt. The Company failed to meet the required performance objectives.

The total cost to construct the building was $500,000. To pay for the construction the Tov™ used the $300,000 award money plus $200,000 advanced lease payments received from Karts International Inc. The $200,000 advanced lease payments were for the full monthly net rental that would otherwise become due over both the primary term of the lease commencing October 1, 2000 and ending September 30, 2007, and the optional term commencing October 1, 2007 and ending September 30,2009.

On September 30, 2009, the advanced lease payments ended. The Town entered into a lease agreement with American Sportworks, LLC. The current lease running through December 31, 2011 was for a monthly rent of $6,500, which totaled $78,000 for the current fiscal period. The lease payments continued for a two-year period at fiscal year end, per lease agreement provisions.

45



16. Fund Balances and Net Assets

At December 31, 2011, the General Fund had a nonspendable fund balance created from $2,975 of prepaid insurance. The fund balance of $128,128 in the Volunteer Fire Fund, a special revenue fund, is assigned at fiscal year end. The Utility fund has $393 of net assets restricted for customer deposits and $99,619 of net assets restricted for debt service.

17. Risk Management

The Tov™ is exposed to various risks of loss related to theft, damage, or destruction of assets, torts, injuries, natural disasters, and many other unforeseeable events. The Town purchases commercial insurance policies and bonds for any and all claims related to the aforementioned risks. The Town's payment of the insurance policy deductible is the only liability associated with these policies and bonds. There has been no significant decrease in insurance coverage from the prior year.

18. Prior Period Adjustments

The Town of Roseland recorded the following prior period adjustments.

Governmental Funds General Fund

Beginning Fund Balance Before Prior Period Adjustments,

To adjust ad valorem taxreceivable for uncollectible amount Subtotal of Prior Period Adjustments to the General Fund

Beginning Fund Balance After Prior Period Adjustments

Volunteer Fire Department Fund Beginning Fund Balance Before Prior Period Adjustments

To adjust ad valorem tax receivable for uncollectible amount

Beginning Fund Balance After Prior Period Adjustments

Govemmental Activities Governmental Activities Net Assets, Beginning Before Prior Period Adjustments

Net of all fund basis prior period adjustments to govemmental funds

Govemmental Activities Net Assets, Beginning After Prior Period Adjustments

255,585

(3,920) (3,920)

251,665

108,751

(6,770)

101,981

1,108,649

(10,690)

1,097,959

19. Subsequent Events

These fmancial statements considered subsequent events through July 5, 2012, the date the fmancial statements were available to be issued. No events were noted that require recording or disclosure in the fmancial statements for the fiscal year ending December 31, 2011, except as noted in the following paragraph.

46



During the last four months of the fiscal year ending December 31, 2011, at total of $9,494 was reported as missing within the Town's Utility Fund. The investigation continued at fiscal year end. Finding 11-5 within the Corrective ^c/zo« Plan for Current Year Audit Findings includes a description of the finding, recommended changes in internal controls for cash collections, with the Tovm's progress in implementing the recormnended controls and planned corrective actions listed separately.

47

Required Supplemental Information (Part II)

48

Schedule 1 Town of Roseland

Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual General Fund - Sununaty

Forthe yearendedDecember31, 2011

Revenues Taxes Licenses and Permits Intergovernmental Charges for Services Interest Miscellaneous

Total Revenues

Expenditures General Govemment Public Safety:

Police Fire

Public Works Health and Welfere Capital Outlays

Total Expenditures

Excess Revenues (Expenditures)

Other Ftnancing Sources (Uses) Bond Princpal Bond Interest Esqjense Capital Lease Proceeds



Fund Balances, Beginning Before Prbr Period Adjustments Prior Period Adjustments (Note 18)



Budgeted Amounts

Original

$ 161,000 $ 45,000 2,200

10,000 -

13,000 231,200

109,000

93,300 32,000 28,000

-3,700

266,000

(34,800)

--

78,000 78,000

43,200

255,585 (3,920)

251,665

$ 294,865 $

Final

161,000 $ 45,000 2,200

10,000 -

13,000 231,200

114,300

62,300 32,000 28,000 2,000

27,400 266,000

(34,800)

--

78,000 78,000

43,200

255,585 (3,920)

251,665

294,865 $

Actual Amounts GAAP Basis

191,412 $ 44,632 16,599 4,800

54 4,446

261,943

110,733

49,133 28,056 31,749 3,486

10,750 233,907

28,036

(10,000) (909)

78,000 67,091

95,127

255,585 (3,920)

251,665

346,792 $

Variance Favorable

(Unfavorable)

30,412 (368)

14,399 (5,200)

54 (8,554) 30,743

3,567

13,167 3,944

(3,749) (1,486) 16,650 32,093

62,836

(10,000) (909) -

(10,909)

51,927

--

-

51,927

See independent auditor's report.

49

Schedule of Revenues,

Taxes Ad Vabrem Sales Taxes Franchise Taxes

Total Taxes

Intei^ove nimental State Grants Beer Tax

Fire Insurance Rebate Total Intergovernmental

Other Revenues Licenses and Permits Charges for Services Interest Miscellaneous

Total Other Revenues

Total Revenues

Continued


Tovm of Roseland Expenditures, and Changes in Fund Balances

General Fund • Detail Forthe year ended December 31,2011

Budgeted Amounts

Original

$ 11,000 $ 125,000

25,000 161,000

1,200 1,000

-

2,200

45,000 10,000

-

13,000 6S,000

231,200

Final

11,000 $ 125,000 25,000

161,000

1,200 1,000

-

2,200

45,000 10,000

-

13,000 68,000

231,200

Schedule 2

- Budget to Actual

Actual Amounts

GAAP Basis

20,069 $ 142,264 29,079

191,412

10,750 1,275 4,574

16,599

44,632 4,800

54 4,446

53,932

261,943

Variance Favorable

(Unfavorable)

9,069 17,264 4,079

30,412

9,550 275

4,574

14,399

(368) (5,200)

54 (8,554)

(14,068)

30,743

50


Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual General Fund - Detail

Forthe yearended December31, 2011

General Government Salaries Benefits Payroll Taxes General and Administrative Insurance Other opemting Professbnal Fees Repairs and Maintenance Supplies Utilities

Total General Government

Public Safety: Police

Salaries Payroll Taxes Insurance Vehicle Ejq^enses Other opemting Repairs and Maintenance Supplies Utilities

Total Police

Fire Salaries Payroll Taxes Insurance Ottier operating Repairs and Maintenance Supplies Utilities

Total Fire

Total Public Safety

Continued See independent auditor's report.

Budgeted

Original

40,500 -

3,200 1,500

17,000 3,000

24,800 4,000

12,000 3,000

109,000

56,220 4,500

12,000 10,000 4,580

-2,000 4,000

93,300

22,000 1,800

--

3,000 -

5,200 32,000

125,300

Amounts

Final

40,500 -

3,500 1,500

17,000 3,000

29,800 4,000

12,000 3,000

114,300

33,720 3,000 9,000 6,000 4,580

-2,000 4,000

62,300

22,000 1,800

--

3,000 -

5,200 32,000

94,300


37,215 734

2,852 2,401 9,906 3,621

39,542 2,724 8,086 3,652

110,733

33,696 2,578 5,826 2,319

837 532 201

3,144 49,133

14,830 1,135

87 2,672 3,889 1,351 4,092

28,056

77,189

Variance Favorable

(Unfavorable)

3,285 (734) 648

(901) 7,094 (621)

(9,742) 1,276 3,914 (652)

3,567

24 422

3,174 3,681 3,743 (532)

1,799 856

13,167

7,170 665 (87)

(2,672) (889)

(1,351) 1,108 3,944

17,111

51


Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual

General Fund - Detail Forthe year ended December 31,2011

Public Works Other operating Repairs and Maintenance S Implies Utilities

Total Public Works

Health and Welfare Other operating

Total Health and Welfare

Capital Outlays

Total Expenditures


Other Financing Sources (Uses) Bond Principal Bond Interest Expense Capital Lease Proceeds



Fund Balances, Beginning Before Prior Period Adjustments Prior Period Adjustments



Concluded See independent auditor's report.

Budgeted Amounts

Original

500 7,500 5,000

15,000 28,000

3,700

266,000

(34,800)

78,000 78,000

43,200

255,585 (3,920)

251,665

Final

500 7,500 5,000

15,000 28,000

2,000

2,000

27,400

266,000

(34,800)

78,000 78,000

43,200

255,585 (3,920)

251,665


740 11,529

940 18,540 31,749

$ 294,865 $ 294,865 $

3,486 3,486

10,750

233,907

28,036

(10,000) (909)

78,000 67,091

95,127

255,585 (3,920)

251,665

Variance Favorable

(Unfavorable)

(240) (4,029) 4,060

(3,540) (3,749)

346,792 $

(1,486) (1,486)

16,650

32,093

62,836

(10,000) (909)

(10,909)

51,927

51,927

52


Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget (GAAP Basis) to Actual Special Revenue Fund - Fire Protection For the year ended December 31,2011

Variance Favorable

(Unfavorable) Budgeted Amounts

Revenues Ad Vatorem Taxes Interest Miscellaneous

Total Revenues

Expenditures Public Safety:

Fire

Insurance Other operating Repairs and Maintenance Siq>plEs

Total Expenditures



Fund Balances, Beginning Before Prior Period Adjustments Prior Period Adjustments


Fund Balances, Endii^

See Independent Auditor's Report

Original Final Actual Amounts

GAAP Basis

$ 20,000 $ 20,000 $

20,000

20,000

20,000

108,751 (6,770)

101,981

20,000

20,000

20,000

108,751 (6,770)

101,981

$ 101,981 $ 101,981 $

33,193 $ 28

33,221

4,918 176

1,405 575

7,074

26,147

26,147

108,751 (6,770)

101,981

128,128 $

13,193 28

13,221

20,000

(4,918) (176)

(1,405) (575)

12,926

26,147

26,147

26,147

53

Other Supplemental Information

54


Conqjarative Schedule of Ne t Assets - Proprietary Fund Type As of D e c e m b e r S l , 2011 and 2010

Enterprise Funds

Assets Current Assets:

Cash and Cash Equivalents Receivables, Net

Accounts Other Receivables

Total Current Assets

Restricted Assets: Restricted Cash and Cash Equivalents

Total Restricted Assets

Property, Plant, and Equipment Land Property, Plant and Equq^ment, Net

Total Property, Plant, and Equ?)ment

Total Assets

Liabilities Current Liabilities (Payable From Current Assets):

Accounts Payable Other Accrued Payables Due To Other Funds

Total Current Liabilities (Payable From Current Assets)

Current Liabilities (Payable From Restricted Assets): Customer Deposits Revenue Bonds Payable Interest Payable on Long Term Debt

Total Current Liabilities (Payable From Restricted Assets)

Long Term Liabilities: Bonds Payable

Total Long Term Liabilities

Total Liabilities

N e t Assets Invested in Capital Assets, Net of Related Debt Restricted for:

Capftal Projects and Debt Service Unrestricted

Total Ne t Assets


2011

5,813 $

41,276 3,377

50,466

144,743 144,743

6,500 1,905,086 1,911,586

2,106,795

6,105 990

134,132 141,227

44,731 18,927 7,642

71,300

509,234 509,234

721,761

1,383,425

100,012 (98,403)

1,385,034 $

2010

41,390

39,897 2,581

83,868

139,039 139,039

6,500 2,010,731 2,017,231

2,240,138

8,500 738

116,383 125,621

45,818 16,639 6,966

69,423

524,570 524,570

719,614

1,469,056

139,039 (87,571)

1,520,524

55


Comparative Schedule of Revenues, Expenses and Chaises in Net Assets Proprietaiy Fund lype

Forthe years ended December31,2011 and 2010 Enterprise Funds

2011 Operating Revenues

Water Sales Sewer Service Charges Penalties Intergovernmental Other

Total Operating Revenues

Operating Expenses Contract Services Deficit in Deposits due to Fraud Depreciation Insurance Meter Reading Payroll Taxes Professional Fees Repairs and Maintenance Salaries and Wages Si:5)plies Utilities Other

Tota! Operating Expenses

Operating Income (Loss)


Interest Income Interest E^qjense

Total Nonoperating Revenues (Expenses)


Total Net Assets, Beginning Total Net Assets, Ending


2011

141,029 $

90,531

11,015

25,000

962 268,537

18,000

10,005 105,644

15,985

6,525

6,017

12,430

69,367

78,655

4,779

20,237

17,241

364,885

(96,348)

59 (39,201)

(39,142)

(135,490)

1,520,524

1,385,034 $

2010

156,210

96,691

12,558

18,516

2,212

286,187

_

-

105,827

17,275

8,309

5,093

9,125

51,310

66,578

5,513

21,208

39,186

329,424

(43,237)

154 (29,395)

(29,241)

(72,478)

1,593,002

1,520,524

56

Schedule 6

Enterptise

2011

241,196 $ (1,087) 25,166 17,749

(176,712)

(84,672)

Funds

2010

276,875 -

18,516 -

(151,331) (72,673)

Town of Roseland Comparative Schedule of CashFloTW

Proprietaiy Fund lype Forthe years endedDecember31,2011 and2010

Cash Flo^w Fnom Operating Activities Received From Customers

Paid for Meter Deposit Fees Other Rece^ts Recept (Paid) for Interfund Services Payments for Operations Payments to Empbyees

Net Cash Provided (Used) by Operating Activities 21,640 71,387

Cash Flows Ftom Capital and Related Fmancing Activities Princq)al Proceeds from (Repayments for) Long Term Debt (13,048) (17,610) Interest Payments for Long Term Debt (38,525) (29,665)

Net Cash Provided (Used) by Capital and Related Financing Activities (51,573) (47,275)

Cash Flows Fnom Investing Activities Recept of Interest 60_ 154

Net Cash Provided by Investing Activities 60_ 154

Net Increase (Decrease) in Cash and Cash Equivalents (29,873) 24,266 Cash and Cash Equivalents, Beginning of Year 180,429 156,163 Cash and Cash Equivalents, End of Year $ 150,556 $ 180,429

Reconciliation of Cash and Cash Equivalents to the Statement of Net Assets:

Cash and Cash Equivalents, Unrestricted $ 5,813 $ 41,390

Cash and Cash Equivalents, Restricted 144,743 139,039 Total Cash and Cash Equivalents $ 150,556 $ 180,429

(Continued)


57


Comparative Schedule ofCashflo^^s

Proprietaiy Fund lype Forthe years ended December 31,2011 and 2010

Enterprise Funds 2011 2010

Reconciliation of Operating Income (Loss) to Net Cash Provided (Use^ by Operating Activities

Operating Income (Loss) $ (96,348) $ (43,237) Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided by Operating Activities:

Depreciation and amortization (Increase) Decrease in Accounts Receivable (Increase) Decrease in Otiier Receivable (Increase) Decrease in Due (to) and from Other Funds Increase (Decrease) in Accounts Payable Increase (Decrease) in Accrued Ejq^enses Increase (Decrease) in Customer Deposits

Net Cash Provided by Operating Activities $

105,644

(1,379)

(796)

17,749

(2,395)

252 (1,087)

21,640 $

105,827

17,160

(8,094)

641 (1,046)

-

136 71,387

See Independent Audior's Report

(Concluded)

58


Schedule of Revenues, Expenses and Changes in Net Assets Budget (GAAP Basis) and Actual, Proprietary Fund Type, Water and Sewer Utility System

Forthe yearended DecemberSl, 2011

Operating Revenues Water Sales $ Sewer Charges Penafcies Intergovernmental Other

Total Operating Revenues

Operating Expenses Contract Services Deficit in Deposfts due to Fraud Depreciation Insurance Meter Reading Payroll Taxes Professional Fees Repairs and Mairrtenance Salaries and Wages Siqjplies Utilities Other

Total Operating Expenses

Operating Income (Loss)


Interest Income Interest Ejqsense

Total Nonoperating Revenues (Expenses)

Income (Loss) Before Transfers

Budget

155,000 $ 95,000 7,500

-4,500

262,000

18,000 --

14,000 8,000 4,800

12,000 24,295 59,560 10,000 36,000 13,500

200,155

61,845

---

61,845

Actual

141,029 $ 90,531 11,015 25,000

962 268,537

18,000 10,005

105,644 15,985 6,525 6,017

12,430 69,367 78,655 4,779

20,237 17,241

364,885

(96,348)

59 (39,201) (39,142)

(135,490)

Variance Favorable

(Unfavorable)

(13,971) (4,469) 3,515

25,000 (3,538) 6,537

-(10,005)

(105,644) (1,985) 1,475

(1,217) (430)

(45,072) (19,095)

5,221 15,763 (3,741)

(164,730)

(158,193)

59 (39,201) (39,142)

(197,335)

Transfers Operating Transfers In Operating Transfers Out



61,845 $ (135,490) $ (197,335)

59

Schedule 8

Town of Roseland

Schedule of Water and Sewer Rates

Proprietary Fund Type

Forthe year ended December 31,2011

Water

InTow!

Residential Rates Commercial Rates

In Town

$ 10.25 - Base Charge $ 24.25 - Base Charge

$ 1.90 - Per 1,000 Gallons ofWater over 2,000 Gallons $ 1.90 - Per 1,000 Galtans of Water over 10,000 GaUons

Out of Town Out of Town

$ 12.25 - Base Charge $ 26.25 - Base Charge

$ 2.00 - Per 1,000 Gallons ofWater over 2,000 Galfons $ 2.00 - Per 1,000 Gallons of Water over 10,000 Galbns

$ 85.00 - Flat Rate Customers

Sewer

Residential Rates Commercial Rates

Metered

$ 11.00 -

$ 3.25 -

In Town

$ 24.00 -

Base Charge Per 1,000 Gallons ofWater over 2,000 Galbns

Flat Rate

$ 28.00

$ 3.25

Wholesale

$ 125.00

Base Charge Per 1,000 Galbns ofWater over 2,000 Gallons

Water

Sewer

Total

Schedule of Number of Customers Proprietary Fund Type

For the year ended December 3 1 , 2011 Residential Commercial School

540 327

44 17

Total 584 345

867 61 929

60


Schedule oflnsurance Forthe year ended December 31,2011

Coverage Insurance Company /

Policy Number Louisiana Municipal Risk Management Agency 100-0294-00013489 Commercial General Liability

Commercial Automobile Law Enforcement Offiicer's Comprehensive Liability Public Officials' Errors and Ommissions Liability

Workers Compensation at Statutory Limitations:

American Alternative Insurance Corporation GPPA-PF6050522-01 Commercial Property Coverage

Water and Sewer Dept. Property

CM1051305-04 Business Auto Liability - Fire Department

Amount

500,000 500,000 500,000

500,000

1,599,557

1,000,000 per accident

Period

11/6/2011 to 11/6/2012 11/6/2011 to 11/6/2012 11/6/2011 to 11/6/2012

11/6/2011 to 11/6/2012

12/29/2011 to 12/29/2012

5/5/2011 to 5/5/2012

4/1/2011 to 4/1/2012

Lexon Insurance Company 1031418 BondonCbrk

Western Surety Company 24695223 Bond on Mayor

15,000 3/1/2011 to 3/1/2012

50,000 6/11/2011 to 6/11/2012

Essex Insurance Company 5TRD4818 Commercial Automobile Physical

Damage - Police Department


17,300 8/18/2011 to 8/18/2012

61


Schedule of Compensation Paid to Board Members Forthe yearendedDecember31,2011

Name and Title / Contact Number Wanda McCoy, Mayor (985) 748-2768

Yvette Brooks, Council Member (985) 474-2864

Jerrol Jones, Council Member (985) 747-19S8

Van Showers, Council Member (985) 517-4043

Sandra Turner, Council Member (985) 748-9589

Ruthie Vernon, Council Member (985) 748-3445

Address P.O. Box 511 Roseland, Louisiana 70456

P.O. Box 559 Roseland, Louisiana 70456

62303 Turner Chapel Roseland, Louisiana 70456

12536 Roseland Avenue Roseland, Louisiana 70456

P.O. Box 89 Roseland, Louisiana 70456

12184 Buchanan Lane Roseland, Louisiana 70456

Compensation Received

13,500

1,500

2,175

2,250

2,175

2,175

23,775

62

Town of Roseland Schedule 11 Roseland, Louisiana

Summary Schedule of Findings and Questioned Costs For the Year Ended December 31,2010

P a r t i : Summary of Auditor's Results

Financial Statements

Type of Auditor's Report Issued: Unqualified.

Internal Control Over Financial Reporting: Material Weakness(es) Identified: Yes Significant Deficiency(ies) that are not considered to be Material Weaknesses: Yes

Noncompliance Material to the Financial Statements: No

Federal Awards

There were no Major Programs for the Town for the fiscal year ended December 31,2011

Part n : Findings which are required to be reported in accordance with generally accepted Governmental Auditing Standards. These findings are included within the Summary Schedule of Prior Year Audit Findings, and the Corrective Action Plan for Current Year Audit Findings, with current year fmdings categorized as follows:

A. Compliance Findings -

No compliance fmdings.

B. Internal Control Findings -

Internal control fmdings within the Corrective Action Plan for Current Year Audit Findings include Finding 11-1 and 11-3, significant deficiencies not constituting material weaknesses, and Fmdings 11-2 and 11-5 classified as material weaknesses in internal controls.

Part m : Findings and Questioned Costs for Federal Awards which include audit findings as defined in Section 510(a) of Circular A-133:

N/A.

Part IV: Management Letter Items:

There were no management findings for the Town for the fiscal year ending December 31,2011.

63


Summary Schedule of Prior Year Audit Findings For the Year Ended December 31,2010

CompHance Findings (Reported in Accordance with Government Auditing Standards)

Reference Number: 10-4 (Audit Report Filing Deadline)

Type Finding: Compliance Finding Required to be Reported under Government Auditing Standards.

Description of Finding: Forthe fiscal year ending December 31, 2010, the Town of Roseland failed to comply with state audit law to have their audit completed within six months of the close of the fiscal year.

Corrective Action Taken:

The audit report for the fiscal year endmg December 31,2011, was filed within the required filing deadline.

Description of Corrective Action Taken: Final

Contact Person: Wanda McCoy, Mayor

P.O. Box 511, Roseland, LA 70456, (985-748-9063)

Internal Control Findings (Reported in Accordance with Government Auditing Standards)

Reference Number: 10-1 (Failure to comply with bond resolutions)

Type Finding: Significant deficiency not constituting a material weakness. Description of Finding: The prior year fmding noted the Town of Roseland's failure to comply to bond covenants related to funding obtained fi-om the United States Department of Agriculture, Rural Development. Specific findings included:

1) Failure to establish adequate utility rates. Loan covenants for USDA assistance require that the Town maintain rates sufficient to provide for payment for all reasonable and necessary expenses of operating the utility system, to provide for bond and interest payments as they come due, and to fiind required debt reserves. The finding noted that the Town's utility fimd has recorded net losses since fiscal year 2004, with a net loss of $72,478 incurred for fiscal year 2010. It was noted that a rate increase was implemented on January 1, 2008 (Ordinance # 280), but that rates were not sufficient to cover the operating expenses and debt service requirements of the utility system. It was recommended that the Town be more diligent in collecting past due accounts and attempt to reduce operating expenses.

64

Town of Roseland Schedule 12(Continued) Roseland, Louisiana


2) Failure to consistently apply a disconnect policy for overdue utility customer accounts. The finding noting that bond covenants require that the Town disconnect customer accounts not paid within 40 days of the billmg date, and noted that inconsistencies in the disconnect policy have resulted in continued deficits and reduced cash flow. It was recommended that the Town enforce the disconnect policy.

Corrective Action Taken: Corrective action is continued in the current year fmdings section since the net loss increased to $135,490 for the fiscal year ending December 31,2011, and the over 60 days past due amount increased to $52,014.

Description of Corrective Action Taken: Continued as Finding 11-1 within the Corrective Action Plan for Current Year Audit Findings.

Contact Person: Wanda McCoy, Mayor P.O. Box 511, Roseland, LA 70456, (985-748-9063)

Reference Number: 10-2 (Lack of Segregation of Duties)

Year Initial Finding Occurred: Fiscal Year Ending December 31, 2009

Type Finding: Significant deficiency constituting a material weakness.

Description of Finding: This finding noted that the limited number of employees precludes an optimum segregation of duties, but that compensating controls are required to make certain that year-end adjusting entries are made, fmancial statements are prepared on a consistent basis, and financial transactions are processed and recorded accurately.

Corrective Action Taken: The Town responded by noting that they also employ an Assistant Clerk to review and process fmancial transactions, and an outside Certified Public Accountant to review and report financial transactions. Since limited segregation of duties is inherent to smaller entities, and since a separate fmding related to segregation of duties occurred and is reported as Finding # 11-2 within the Corrective Action Plan for Current Year Audit Findings, this fmding is continued within the current year finding section.

Description of Corrective Action Taken: This finding is continued as Findmg 11-2 within the Corrective Action Plan for Current Year Audit Findings. Contact Person; Wanda McCoy, Mayor P.O. Box 511, Roseland, LA 70456, (985-748-9063)

65

Town of Roseland Schedule 12(Continued) Roseland, Louisiana


Reference Number: 10-3 (Lack of collection of utility customer receivables, unpaid property taxes, and unpaid occupational licenses)

Type Finding: Significant deficiency not constituting a material weakness.

Description of Finding: The prior year fmding noted the Tovm of Roseland's failure to collect revenues for utility customer receivables, property taxes, and occupational licenses, as follows:

1) For utility fund customer accounts, the finding noted that the utility fund customer receivable increased from $79,014 at December 31, 2009, to $84,898 at December 31, 2010. The Town at December 31, 2010, reported $50,255 in the over 60 days past due category. It was recommended that the Town enforce its disconnect policy, file charges and take corrective measures if water service is being obtained illegally, and consider increasing the customer deposit to $150.

2) For ad valorem taxes, the finding noted that unpaid property taxes are recorded each fiscal year, that four delinquent notices are sent to property owners for payment of taxes, but that tax sales are not conducted for unpaid taxes. The finding noted that as of May 16, 2011, the Town has a total of $13,448 in unpaid property taxes, and that the unpaid property taxes increased by $3,862 for fiscal year 2010, as compared to an increase of $3,236 for fiscal year 2009. it was recommended that the Tovm consult the attorney regarding alternatives to a tax sale.

3) For occupational licenses, the fmding noted that there were three businesses that had not paid their occupational license fees for 2010, and at May 16, 2011, there were 6 businesses that had not paid their occupational license fees. It was recommended that businesses not paying their occupational licenses not be allowed to operate or receive utility services.

Corrective Action Taken: Corrective action is continued in the current year findings section since as of December 31, 2011, the over 60 days past due utility receivable amount increased to $52,014. For unpaid ad valorem taxes, the amount increased by $7,448 for fiscal year 2011. At June 30, 2012, there were two occupational licenses that were unpaid.

Description of Corrective Action Taken: Continued as Finding 11-3 within the Corrective Action Plan for Current Year Audit Findings.

Contact Person: Wanda McCoy, Mayor P.O. Box 511, Roseland, LA 70456, (985-748-9063)

66


Corrective Action Plan for Current Year Findings For the Year Ended December 31,2011

Compliance Findings (Reported in Accordance with Government Auditing Standards)

No compliance fmdings.

Internal Control Findings (Reported in Accordance with Government Auditing Standards)

Reference Number: 11-1 (Failure to comply with bond resolutions) Continued from prior fiscal year findmg 10-1.

Year Finding First Occurred: Fiscal year ending December 31,2001, for finding related to disconnectmg past due accounts; Fiscal year ending December 31, 2006, for finding related to maintaining an adequate rate structure.


Criteria: Loan assistance for the Town of Roseland, at December 31, 2011, consisted of bonds financed by the United States Department of Agriculture (USDA), Rural Development. Bonds financed by USDA require the Town to maintain rates sufficient to pay all reasonable and necessary expenses, payment of bond installments, and payment of requked bond reserves. USDA also mcludes bond covenants that require the Town disconnect service for overdue utility customer accounts that are 40 days past due from the billing date.

Condition: At December 31, 2011, loan installments on USDA bonds were current, and all required reserves were fiilly-fiinded. However, the Town's utility fund has consistently operated at a net loss, posting net losses ranging from $62,496 to $121,038 for fiscal years 2004 through 2010, to a net loss of $135,490 for the current fiscal year ending December 31, 2011. During the time period of fiscal years 2001 through 2008, USDA also authorized $50,283 in expenditures from the Depreciation & Contingency account for operating and capital expenditures. Customer balances over 60 days past due have increased each fiscal year.

We also noted that the Town is currently m the process of reviewing 127 closed accounts to determine if any prior customers have illegally reconnected utility service.

Effect: Funds must be available, after payment of debt-related obligations, to pay for the costs of operation of the utility fund.

Findings: For the fiscal year ending December 31, 2011, the Town recorded a net operatmg loss of $135,490. In addition, recorded a total of $52,014 for customer account balances over 60 days past due.

67

Town of Roseland Schedule 13 (Continued) Roseland, Louisiana


Recommendations: We recommend the following:

1) Continue to review the closed accounts listing and disconnect utility service for any customers that have illegally connected to the utility system. When necessary, consult the town's attorney for legal action that may be required.

2) Enforce the disconnect policy, required by USDA bond covenants, to maximize the revenue needed for utility operations.

3) If the above actions do not increase utility system revenues to an acceptable level, implement a rate mcrease.

4) Consider increasing the meter deposit fee for new accounts or re-connects, to cover the cost of unpaid utility fees when the account is disconnected.

Response by Management As noted above, the Town of Roseland has improved operation of the utility system to a point that USDA bond installments are paid as due, the Reserve Account requked by the bond covenants is fiiUy fiinded, and the Depreciation & Contingency Fund (required as a reserve for friture repairs and capital replacements) is, after consideration of USDA authorized withdrawals, fully fimded. The remaining problem involves creating a revenue level sufficient to meet USDA bond requirements to not only cover the costs of operation, but to accumulate fiinds for needed repairs and capital replacements. The Town's plan to increase revenues is as follows:

1) The Town will continue review of the "Closed Account Listing" (consisting of 127 customers), determine if there are illegal hookups, and if illegal hookups are found, consuh our attorney on necessary actions.

2) We will improve enforcement of our disconnect policy, reviewing each month the status of payments received for customers on the disconnect list, and we will verify that service is disconnected as required.

3) If the above actions do not increase revenues sufficiently, we will increase rates, and will consider increasing the meter deposit fee. If a rate increase is required, and because many of our customers are on a fixed income, our plan is to implement rate increases gradually over a period of several years.

Description of Action Taken: Partial

Anticipated Completion Date: The Town feels that they will be able to evaluate by December 31,2012, the effectiveness of actions described in Items 1 & 2 above. If deemed necessary, we will implement a rate increase by March 31,2013.

Contact Person:

Wanda McCoy, Mayor P.O. Box 511, Roseland, LA 70456, (985-748-9063)

68



Reference Number: 11-2 (Lack of segregation of duties) Contmued from prior fiscal year finding 10-2.

Year Finding First Occurred: Fiscal Year ending December 31,2001

Type Finding: Significant deficiency constituting a material weakness.

Criteria: The Town of Roseland must demonstrate that activities relating to the receipt and disbursement of fiinds are properly segregated.

Condition: With all smaller agencies, there will be limited personnel for recording receipts and disbursements and for reporting financial transactions. The Town has implemented the following compensating controls:

1) Direct approval by the Mayor for all key fmancial transactions. 2) Maintenance of detail registers to support all disbursements. 3) Monthly reconciliation of bank accounts by an outside accountant, and monthly financial reporting

to the board by the outside accountant. 4) Approval and signing of checks by Mayor, with a second required signature.

However, in numerous cases responsibility was not separated for initial receipt of fimds, approval of deposit slips and supporting documentation, and deposit of funds.

Effect: Having a limited number of personnel increases the need to closely review fmancial transactions. The Town compensates for the lack of personnel with outside reporting, but needs to strengthen controls for receipt and recording of funds.

Findings:

Although the Town has implemented controls for the disbursement of funds, cash receipts controls were not always in place. In numerous cases, responsibility was not separated for initial receipt of funds, approval of deposit slips and supporting documentation, and deposit of funds.

Recommendations:

Controls must be implemented to counter the effect of a limited number of personnel performing financial transactions. It is recommended that the Town implement the recommended controls for the utility system, as described in Finding 11-5 within this Corrective Action Plan for Current Year Audit Findings, and unprove the controls for all receipt of funds as following:

1) For deposits of all funds, implement procedures that identify the party receiving the fiinds, approving the deposit, and provide for the deposit of funds by a party not collecting funds.

2) For each deposit, require that categories of funds be separately identified on deposit slips, and documentation continue to be maintained as support for deposit totals.

69



Response by Management We agree with the recommendations to improve controls for cash collections and deposit of funds, and have already begun improving controls. We are now making deposits on a daily basis as practicable, and our Town Clerk does not deposit funds. As the deposits are made, the deposit slip is brought back to the Town Clerk who reconciles the deposit to supportmg documentation and categories of deposits. We will also comply with recommendations by creating a separate cash drawer for each employee receiving payments, and will have deposits made by a separate employee not involved in the receipt or reporting of collections.


Anticipated Completion Date: Controls are now being implemented and we anticipate compliance to all recommendations by September 30,2012.

Contact Person:

Wanda McCoy, Mayor P.O. Box 511, Roseland, LA 70456, (985-748-9063)

Refereuce Number: 11-3 (Lack of collection of utility fund customer receivables, unpaid ad valorem taxes, and occupational licenses). Continued from prior year Finding 10-3.


Date Finding First Occurred: Fiscal Year Ending December 31, 2006.

Criteria: The Town must optimize the collection of revenues in maintain streets and related improvements, provide police and fire protection, and to provide utility services.

Condition: Prior fmdings noted three main areas where all revenues were not being collected - ad valorem taxes, occupational licenses, and utility department collections. The last category, utility department collections, is not contmued as a part of this finding since it is included in Finding 11-1 above.

Effect: Revenue collection must be optimized for the Town to provide for needed services to its citizens.

Findings: For prior years, it was noted that part of ad valorem taxes remain unpaid each fiscal year, with taxes reported as unpaid since fiscal year 2001. The prior year unpaid taxes total $13,448 for prior fiscal years, increasing by $7,448 for fiscal year 2011. The Town sends four notices when taxes are unpaid, but has not held tax sales for numerous years. For occupational licenses, a total of 3 occupational licenses remain unpaid for 2009, 6 for 2010, and 2 for 2011.

70



Recommendations: For unpaid occupational licenses, the recommendation is basically the same. Requu-e the businesses to pay the occupational license as a condition of operation, or refer the account to the attorney or an outside party for collection.. For unpaid ad valorem taxes, the recommendations are as follows:

1) The records for unpaid ad valorem taxes go back to year 2010. Research records and segregate those records to compile and organize records on unpaid ad valorem taxes.

2) Transfer the documentation on the unpaid taxes to the Town's attorney, and request a determination on the Town's legal obligation to collect the taxes and options that the Town has for collection of unpaid ad valorem taxes.

3) If other alternatives are not available, hold a tax sale.

Response by Management For occupational license collections, we reduced the amount to two businesses that have not paid their occupational licenses. We will continue our collection efforts.

The problem with unpaid ad valorem taxes is a continuing problem, beginning in fiscal year 2001, and will take a little time to correct. We plan the following corrective actions:

1) We will research our records and will consult with the Tangipahoa Parish Assessor's Office, as is necessary, to develop an accurate listing of unpaid ad valorem taxes since year 2001.

2) We will refer the documentation compiled to our attorney for review and determination of acceptable procedures for collection of taxes.

3) If we are unable to collect unpaid ad valorem taxes by other methods, we will conduct a tax sale. Since the Town has limited funds, we will also discuss with other agencies, and our attorney, the feasibility of conducting tax sales jointly with other govemmental entities.


Anticipated Completion Date: We anticipate completion of Items I & 2 above by December 31, 2012. Any required tax sale would be held durmg fiscal year 2013.

Contact Person: Wanda McCoy, Mayor P.O. Box 511, Roseland, LA 70456, (985-748-9063

71



Reference Number: 11-5 (Utility fund - internal control for cash collections) Type Finding: Significant deficiency constituting a material weakness.

Date Finding First Occurred: Fiscal Year Ending December 31,2011

Criteria: The Town of Roseland must enforce internal control procedures that ensure all customer payments made to the Town of Roseland are properly recorded, deposited into the bank in a timely manner, and accurately recorded as customer payments within the Town's utility billing software. Louisiana Revised Statute 39:1212 requires that all funds of all local depositing authorities be deposited daily, whenever practicable.

Condition: This finding relates to an on-gomg investigation by the Tangipahoa Parish Sherriff s Office of cash funds reported as missing, estimated at $9,494, in the Utility Fund of the Town of Roseland. The cash was reported as missing during the time period of July 2011 through October 2011. The cash missing includes the difference from receipted payments recorded in the Town's utility billing system to actual deposit of funds.

Effect: Each local govemmental entity must demonstrate legal compliance that all revenues received are properly recorded and accounted for. This involves maintaining evidence that the initial receipt of funds was correctly recorded, included within a bank deposit made on a timely basis, and timely recorded in the Town's utility billmg system and financial statements.

Findings: Our findings relate to controls for recording the initial receipt, deposit, and recording of customer payments within the utility fund for the Town of Roseland.

For the initial recording of receipts, we noted that a receipt is issued to the customer as either a copy of the payment stub, or separate receipt issued. However, we noted the following:

1) The receipt stubs are not, in most cases, initialed and date stamped. 2) Receipt stubs are grouped together and a total calculated for all receipts attached. However, the

receipt totals for several months are combmed into one folder. This does not facilitate review and comparison of receipt totals to a separately maintained monthly billmg reconciliation form.

3) Receipt totals do not, in most cases, correspond to payment batch totals in the utility billing system.

In relation to procedures for controlling deposits, we noted the following:

1) Written procedures were not developed that required identification of the person collectmg the payment (dating and initialing the mdividual customer receipt), the preparation of the deposit slip, and approval of the deposit slip.

72



2) Deposits were generally not made on a daily basis, or as practicable, as required by LSA RS:39:1212. Procedures usually involved preparation of deposit slips, but not depositing funds until a later date. For the first eight months of fiscal year 2011, we noted that the final deposit of funds ranged from one day to eighteen days after the receipt of funds. For this time period there were only three instances of deposits made within one day of receipt, but for seven of the eight months there were instances of deposits not being made for ten days or more. For the last four months of fiscal year 2011, days since last deposit ranged from one to seven days, and there were 20 instances m which deposits were made within one day of initial receipt of funds.

3) Detail was not included on deposit slips and no procedures in place to ensure that customer payments were included in separate deposit slip books.

To control the recordmg of transactions m the utility billing system, the Town of Roseland maintains a monthly utility fund reconciliation that begins with the prior month ending accounts receivable balance, adds or subtracts the daily transactions of the month (billings, payment totals per day, billings per month, and penalties and adjustments on a daily basis), to obtain ending accounts receivable balance. We tested total monthly postings as included in the monthly reconciliation, and customer payments included in the customer receipt batch totals, and found no significant variations from source data. This would indicate that there are controls in place for balancing utility fimd input to the monthly utility fund reconciliation form. However, as noted in findings above, sufficient controls for the deposit of funds were not in place to ensure that all funds included within the monthly reconciliation form were actually collected. Also, for the fiscal year ending December 31, 2011, we noted that adjustments were kept to a minimum and that adjustments were reviewed directly with the Mayor, although a procedure was not in place for sign-off of credit and debit adjustments to accounts.

Recommendations:

It is recommended that the Town of Roseland periodically follow up on the pending investigation, provide any additional documentation requested by the Tangipahoa Parish Sheriff's Office, and obtain a final status on the investigation.

In relation to controls for the initial receipt of fimds, deposit of funds, and controls relating to the processing of utility fund transactions, the following is recommended:

1) Initial and date stamp ail customer receipts, providing a copy to the customer, and a copy to be included m the customer batch of receipts. For customers that do not have a copy of the billing card, issue a receipt from a sequentially numbered receipt book, with a signature of the employee receiving the payment. The receipt book should include an original copy to be given to the customer, a receipt copy to be included in the payment batch, with a receipt copy left in the receipt book. For receipts received by mail, date and initial the bill stub and include a separate subtotal for mail receipts.

2) Run a tape total on all receipt batches for the day, and place that receipt batch, along with the tape total, in a separate folder for each month.

3) Adopt procedures that require sign-off by the employee preparing the deposit and the employee reviewing the deposit, and have the deposits made by a separate party not involved in the collection of funds.

4) Include sufficient detail on the deposit slip to identify the main categories of receipts, identifying customer payments separately, or require that all customer deposits be included in a separate deposit slip book.

73



5) Make deposits on a daily basis. 6) Input batches of payments into the utility billing system that correspond to deposit totals for

customer receipts. 7) For any debit or credit adjustments made in the utility billing system, maintain a separate form

that includes the date and amount of the adjustment, a brief description of the adjustment, and written authorization for the adjustment.

8) Continue to maintain the monthly accounts receivable reconciliation worksheet, reconcilmg the accounts receivable balance to the utility billmg customer account balance on both a daily and monthly basis.

9) Continue to have monthly bank reconciliations completed by a party not involved in the collection of funds.

Response by Management We agree with the above recommendations, and have already begun implementing additional internal control procedures for cash collections, deposits, and controls for controlling the input of transactions into the utility billing system software. Our response to controlling cash collections is as documented in response to Finding 11-2 (Lack of Segregation of Duties). We anticipate implementing any remaining recommendations within a period of three months.

In relation to the investigation of missing funds, we will continue to cooperate with investigating authorities.

Description of Action Taken: We anticipate implementation of recommended controls by September 30, 2012.

Anticipated Completion Date: Contact Person: Wanda McCoy, Mayor P.O. Box 511, Roseland, LA 70456, (985-748-9063

Internal Control and Compliance Material to Federal Awards

There were no findings related to federal awards.

Management Letter

There were no management letter findings.

74

Bruce C. Harrell, CPA

Dale H. Joties, CPA Eric J. Rodrigue, CPA Kristi U. Bergeron, CPA Michael P. Estay, CPA Jessica H. Jones, CPA

INTERNET www.teamcpa.com

MEMBERS American Institute of CPAs Society of Louisiana CPAs

BRUCE HARRELL aW COMPANY

CERTIFIED PUBLIC ACCOUNTANTS A Professional Accounting Corporation

109 West Minnesota Park Park Place Suite 7

Hammond, LA 70403 VOICE: (985) 542-6372

FAX: (985) 345-3156

KENTWOOD OFFICE P.O. Box 45 - 909 Avenue G

Kentwood, LA 70444 VOICE: (985) 229-5955

FAX: (985) 229-5951

REPORT ON COMPLL^CE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN

ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

To Town of Roseland Roseland, Louisiana

We have audited the accompanying financial statements of the govemmental activities and the business type activities, each major fund, and the aggregate remaining fund information of the Town of Roseland, as of and for the year ended December 31, 2011, which collectively comprise the Town's basic financial statements and have issued our report thereon dated July 5, 2012. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.

Compliance

As part of obtaining reasonable assurance about whether the Town of Roseland's, financial statements are free of material misstatement, we 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 fmancial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards.

Internal Control Over Financial Reporting

In planning and performing our audit, we considered the Town of Roseland's internal control over financial reporting as a basis for designing our audit procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing our opinion on the effectiveness of the Town's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Town's internal control over financial reporting.

Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over financial reporting that m i ^ t 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 Corrective Action Plan for Current Year Audit Findings and the Schedule of Findings and Questioned Costs, we identified certain deficiencies in mtemal control that we consider to be material weaknesses, and other deficiencies that we consider to be significant deficiencies.

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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 combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the Town's financial statements will not be prevented or detected and corrected on a timely basis. We consider the deficiencies as referenced in the Schedule of Findings and Questioned Costs, and as described in the accompanying Corrective Action Plan for Current Year Audit Findings, as finding 11-2, and finding 11-5 to be material weaknesses.

A significant deficiency is a deficiency, or combination of deficiencies, that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider the deficiencies described in the accompanying Corrective Action Plan for Current Year Audit Findings as finding 11-1, and finding 11-3, to be significant deficiencies over financial reporting.

This report is intended solely for the information of management, federal awarding and pass-through entities and the Louisiana Legislative Auditor and should not be used by anyone other than these specified parties. However, this report is a matter of public record and its distribution is not limited.

I /^^-"^ ( ; 5 L o ^ ^ ^ Bruce Harrell 8c Company, CPAs A Professional Accounting Corporation July 5, 2012

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