EAST RICHLAND WATERWORKS DISTRICT Delhi, Louisiana ANNUAL FINANCIAL REPORT AS OF AND FOR THE TWO YEARS ENDED DECEMBER 31,2013 WITH SUPPLEMENTAL INFORMATION SCHEDULES Under provisions of state law. this report is a public document. Acopy of the report has been submitted to the entity and other appropriate public officials. The report is available for public inspection at the Baton Rouge office of the Legislative Auditor and. where appropriate, at the office of the parish clerk of court Release Date SEP 1 7 201*
Transcript
EAST RICHLAND WATERWORKS DISTRICT Delhi, Louisiana
ANNUAL FINANCIAL REPORT AS OF AND FOR THE TWO YEARS ENDED
DECEMBER 31,2013 WITH SUPPLEMENTAL INFORMATION SCHEDULES
Under provisions of state law. this report is a public document. Acopy of the report has been submitted to the entity and other appropriate public officials. The report is available for public inspection at the Baton Rouge office of the Legislative Auditor and. where appropriate, at the office of the parish clerk of court
Release Date SEP 1 7 201*
EAST RICHLAND WATERWORKS DISTRICT Delhi, Louisiana
BASIC FINANCIAL STATEMENTS WITH INDEPENDENT AUDITOR!S REPORT AS OF AND FOR THE TWO YEARS ENDED
DECEMBER 31,2013
CONTENTS
STATEMENT
MANAGEMENT'S DISCUSSION AND ANALYSIS FINANCIAL SECTION
INDEPENDENT AUDITOR'S REPORT
BASIC FINANCIAL STATEMENTS;
Proprietary Fund:
Statements of Net Position
Statements of Revenues, Expenses and Changes in ,Net Position
Statements of Cash Flows
Notes to the Financial Statements
SUPPLEMENTAL INFORMATION SCHEDULES:
Schedule of Water Rates
Schedule of Insurance Coverage
Compensation Paid Board Members
B
C
SCHEDULE
1
2
3
PAGE
1-3
4-6
8
9-10
11-18
19
20
21
22
EAST RICHLAND WATERWORKS DISTRICT Delhi, LoDlslana
BASIC FINANCIAL STATEMENTS WITH INDEPENDENT AUDITOR'S REPORT AS OF AND FOR THE TWO YEARS ENDED
DECEMBER 31,2013
CONTENTS (Contioued)
SCHEDULE PAGE
INDEPENDENT AUDITOR'S REPORTS ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF BASIC FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS 23-24
SCHEDULE OF FINDINGS AND QUESTIONED COSTS 25-28
STATUS OF PRIOR YEAR FINDINGS 29
EAST RICHLAND WATERWORKS DISTRICT (A Component unit of the Richland Parish Police Jury)
MANAGEMENT'S DISCUSSION AND ANALYSIS
The nian^ement*s Discussion and Analysis of the East Richland Waterworks District (the District) presents a narrative overview and analysis of the District's financial activities for the year ended December 31,2013. This document focuses on the current year's activities, resulting changes, and currently known facts in comparison with the prior year's information. Pl^e read this document in conjunction with the additional information contained in the financial statements.
FINANCIAL HIGHLIGHTS
• The District's as^ts exceeded its liabilities by $567,219 (net position).
• Total net position is comprised of the following:
(1) Net investment in capital assets of $170,568 include property and equipment, net of accumulated depreciation, and reduced for any outstanding debt related to the purchase or construction of capital assets. Land valued at'$ 17,500 was purchased in 2013.
(2) Unrestricted net position of $396,351 represents the portion available to maintain the Districts continuing obligations to customers and creditors.
• Total revenues of$467,274 exceeded totarexpendituresof$384^77, which resulted in a cu^nt year.income of $82,997, compared to the prior year's operating income of $105,424.
• Total operating revenues decreased by $21,849 from the prior year, mainly from a decrease in water usage and operating expenses increased by $578 irom.the priofyear,.due to the hiring of additional personnel in 2013.
OVERVIEW OF ANNUAL FINANCIAL REPORT
Management's Discussion and Analysis (MD&A) serves as an introduction to the basic financial statements and supplemehtaiy information. The MD&A presents an overview of management's examination and analysis of East Richland Waterworks District's financial condition and performance.
The financial stMements report information on the District using fill accrual accounting methods similar to those used'in the private business s^tor. Financial statements include the Statement of Net Position, Statement
and Change in Net Position, and the Statement of Cash flows. The Statement of Net about the nature and amount of the District's resources and obligations at year-end,
and i^rovldes a basis for. evaluating the capital structure of the District and assessing the liquidity and financial I
The Statement of Revenues, Expenses, and Changes in Net Position, accounts for the revenues and expenses for the fiscal year, and provides infdnhation on how net position changed during the year. This statement rheasures the success of the district's operations in a format that can be used to determine if the District has recovered its costs through user fees and other charges.
EAST RICHLAND WATERWORKS DISTRICT (A CompoDent unit of the Richland Parish Police Jury)
MANAGEMENT'S DISCUSSION AND ANALYSIS
The Statement of Cash Flows reports cash receipts, cash payments, and net chwges:m .each resulting from operations, .investing, and financing activities, and provides information on the source of cash receipts, what the cash was used for, and the total change in cash for the reporting period.
The notes to the financial statements provide required disclosures essential to an understanding of the financial statements. The notes present information about District's accounting policies, significant account balances and activities, commitments, contingencies, and subsequent events, if any. Supplementary information includes key information schedules on operations of the District
FINANCIAL ANALYSIS OF THE DISTRICT
2013 2012
Current Assets $436,806 $389;520
Restricted Assets 30.552 30,060
Capital Assets 153,068 122,750
Land 17.500 0
Total Assets 637,926 542,330
TotalLiabilities 70.707 58.550
Net Position:
Net Investment in Capital Assets 170,568 122,750
Unrestricted 396.651 361.030
Total Net Position $567,219 $483,780
Net position of the District increased by $83,439 from December 31,2012 to December 31,2013..
2013 2012
Operating Revenues $467,274 $489,123
Operating Bcpenses 384.277 383.699
Operating Income 82,997 105,424
Non-opereting revenues (Expenses) 442 6.391
Net increase (decrease) in net position $83,439 $111,815
EAST RICHLAND WATERWORKS DISTRICT (A Component unit of the Richland Parish Police Jury)
MANAGEMENT'S DISCUSSION AND ANALYSIS
CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets
As of December 31,2013, the District had $ 170,568 net of accumulated depreciation, invested in a broad range of capital assets, including land, water lines and office equipment. (See Table below)
2013 2012
Water Lines $292,150 $292,150
New lines arid equipment 147,387 143,876
Office equipment 10,056 8,333
Construction in progress 36,127 0
Less Accumulated deprecation (332.652^ f32L609)
Subtotal $153,068 $122,750
Land $17.500 Sfi
Total $170.568 $122.750
The District purchased'land and buildings at a cost of $50,000 during 2013. At the end of 2013, the Hi^way 80 building was in.the process of being renovated.
Debt
The District paid off its outstanding loan to Fanners Home Administration in 2011. The debt originated in 1977 to construct water lines.
CONTACTING THE DISTRICT'S MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, customers and creditors with a general overview of the District's finances and to show the District's accountability for the money it receives. If you have any questions about this report or need additional financial information, contact Ms. Lynda Best, Clerk, 136 Hwy. 855, Delhi, LA 71232.
THE ROBINETTE FIRM A Professional Accounting Corpbration
1900 N. iS^ Stnet, Suite 606 Monroe, LA 71201
(318)361-0007 Fax:(3i8)36i-0008
INDEPENDENT AUDITOR'S REPORT
BOARD OF COMMISSIONERS EAST RICHLAND WATERWORKS DISTRICT RICHLAND PARISH. LOUISIANA
Report on the Financial Statements
We have audited the accompanying financial ^tements of the business-type activities of East Richland Waterworks District, of the parish of Rich land, state of Louisiana. acomp>onent unit of the Richland Parish Police Jury, as-of December 31, 2013 and 2012 and for the years then ended, and the related notes to the financial statements, whfch collectively comprise the District's basic financial statements as listed in the table of contents.
Management's Respohribility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accouiiting principals generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or eitor.
Auditor's Responsibility
Ourresponsibilily is to express opinions on these financial statements based on our audit. We condiictedbur audit iri accordance wi^ auditing standards generally accepted in the United Statesbf America and the standards applicable to fmancjal audits contained in Goverjiment AudUing Standards^ issued ̂ the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assuriuice about whether the financial statements are free from material misstatement
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial .statements. The procedures selected depend on the auditor's judgment, including the assessment of the risk of material misstatement of the financial statements, whether due to error or fraud. In making those risk assessments, the auditor considers internal controlrelevant to the entity's preparation and fair preseiitation of the financial statements in orderto design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's interna! control..^ Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Bq^ ofCoiTunissioners East Richland Waterworks District Richland Parish, Louisiana
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the business-type activities, of East Richland Waterworks District, aspfDecember 31^2013, and die respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Other Matters
Required Supplementarv Information
Accountingprinciples generally accepted In the United States of America require that the; Management's Discussion and Analysis on pages 1 - 3 be presented to supplement the basic financial statements. Such information, although not a part of those basic financial statements, is required by the Governmental Accounting Standards Bo^ who considers it to be an, essential part of. financial reporting for placing the basic financial Statements in appropriate operational, economic, 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 responses to our Inquiries, the basic financial statements, and otherknowledge we obtained during our audit of the basic financial statements. We do not express aii opinion orprovide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Infonnation
Our audit was conducted for the purpose of forming opinions of the financial statements that collectively comprise East Richland Waterworks District's basic financial statements. The.accompanying supplementary information included.on pages 21 - 23 are presented for purposes of additional analysis and are not a required part of the basic financial statements.
The accompanying supplementary information listed above is the responsibility of management and was derived fiom and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to ̂ e underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the accompanying supplementary information is fairly stat^, in all material respects, in relation to the basic financial statements as a whole.
Board of Commissioners EasttRichjand Waterworks District RicHland Parish, Louisiana
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards^ we have al^ issued our repoit dated July 18,2014 on our consideration of East Richland Waterworks District's internal control over financial reporting and on our tests of Its compliance with certain provisions of laws, regulations, contracts^ and grant agreements and other matters. The purpose of that repprt.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 internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering East Richland Waterworks District's internal control over financial reporting and compliance.
Monroe, Louisiana July 18,2014
Jju, ^ The Robinette Firm, A Professional Accounting Corporation
EAST RICHLAND WATERWORKS DISTRICT Delhi, Lonislaha
BASIC FINANCIAL STATEAIENTS WITH INDEPENDENT. AUDITORS' REPORT AS OF AND FOR THE TWO YEARS ENDED
DECEMBER 31,2013
STATEMENTS OF NET POSITION
STATEMENT A
ASSETS 2013 2012 Current assets:
Cash S364J94 $312,386 Investments 32,546 32,434 Accounts receivable - net of allowance of S4,289
in 2013 and 2012 36,565 43,623 Other receivables 2,004 105 Prepaid expenses and other a^ets 1.497 972
Total restricted assets 30,552 30,060 Capital Assets (net of
accumulated depreciation) 153.068 122.750 Land 17.500 -
TOTALASSETS $637,926 $542,330
LIABILITIES AND FUND EQUITY CurTentiliabilities:.
Accounts payable $ 23.683. $ 19;799 Due to Warden Water 6,879 -Accrued salaries and other expenses 9,593 8,691 Customer deposits 30.552 30.060
Total current iiaBilities 70,707 58,550 Long-term, iiabilities - -
Total liabilities 70.707 58.550 Net position:
Net investment capital assets 170,568 122,750 Restricted for capital improvements - -Unrestricted 396.651 mm
Total net position 567.219 483.780
TOTAL LIABILiriES AND NET POSITION $637,926 $542,330
The accompanying notes are an integral part of this statement.
7
EAST RICHLAND WATERWORKS DISTRICT STATEMENTS Delbi, Louisiana
BASIC FINANCIAL STATEMENTS WITH BSnDEPENDENT AUDITORS' REPORT AS OF AND FOR THE TWO YEARS ENDED
DECiEiMB£RM,20i3
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSltldiN
2013 2012 OPERATING REVENUES
Charges for.services $438;47J $451i731. Other fees Md ch^es 28:803 37.392
Tdtafoperatihgrevenues 4iS'7:274 489.123
OPERATING.EXPENSES Administrative i5i965 10,952
'Badidebtiexpense 2;650 3^427 Depreciation 11,043 11>033 iDirectprs fees 6^000 6,000 Insurance 11,926 6;517 Operatorfees 53,097 58;595 Other expensK 13,397 12;269 Professional fees 1,799 685 Repairs and maintenwce 16^295 13;983 Salves and.76,181 65,373 Taxes and licenses 6>0Sp 4,592 UtiiitiesA &wer 3,548 3;042 Water purchases 166.926 187:231
Total operating expenses 384.277 383^699
OPERATING INCOME 82,997 105,424
N0N-0PERATING;REVENUES (EXPENSES) Gain on sale of assets - 6^000 Interestiincome, 458 391 Interestexpense J6 ; Total-hon-operatihg revenues (ejqjenseO 442 6.391
NET CHANGE 83,439 111,815
TOTAL NET POSITION AT BEGINNINQlOF YEAR 483:780 371.965
TOTAL NET POSITION AT END OF YEAR $567^19 $483.780
The accompanying notes are an.Integra) part of this statement
8
EAST RICHLAND WATERWORKS DISTRICT STATEMENT C Delhi, Louiaiana
FINANCIAL STATEMENTS WITH mbEFENDENt AUDITORS* REPORT AS OF AND FOR THE TWO YEARS ENDED
DECEMBER 31,2013
STATEMENT OF CASH FLOWS
The accompanying notes are an Integral part of this statement.
9
2013 2012 CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers $479,757 $490,993 Cash paid to suppliers (232,434) (263,201) Cash paid to employees ( 76,303) ( 64,647) Cash paid to others for services, taxes, etc. f 60.189^ ( 44.2163
Net cash provided by operating activiti^ 110.831 118.929
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from sale of capital assets - 18,000 Acquisition and construction of capital assets ( 58,861) 0 Interest paid ( 163 0
Net cash used for capital financing activities ( 58.8773 18.000
GASH FLOWS FROM INVESTING ACTIVITIES Interest on deposits 458 368 Purchase long-term certificate of deposit ( 112) ( 115) Transfer from restricted accounts ( 492) 20.407
Net cash (used for) provided by investing activities ( m 20.660
NET INCREASE (DECREASE) IN CASH 51.808 157.589
CASH AT BEGINNING OF YEAR 312.386 154.797
CASH AT END OF YEAR $364,194 $312,386
EAST RICHLAND WATERWORKS DISTRICT Delhi, Louisiana
STATEMENT C
FINANCIAL STATEMENTS WITH INDEPENDENT AUDITGRS' REPORT AS OF AND FOR THE TWO YEARS ENDED
DECEMBER 31,2013
STATEMENT OF CASH FLOWS
RECONCiLIATION OF OPERATING INCOME TO NET 2013 2012 CASH PROVIDED BY OPERATING ACTIVITIES
Operating income $ 82,997 S105,424 Adjustments to.reconcile operating income to net cash provided by operating activities:
Bad debt expense 2,050 3,427 Depreciation 11,043 11,033 Changes in assets and liabilities:
(Increase) decrease in accounts receivable 5,008 (4,754) (Increase) decrease in other receivables (U899) 3,858 (Increase) decrease in prepaid expenses ( 525) 156 Increase (decrease) in accounts payable 10,763 (UI87) Increase (decrease) in accrued expenses 902 (1,793) Increase in customer deposits 492 2.765
Total adjustments 27.834 13.505
Net cash provided by operating activities SI 10.831 $118,929
10
EAST RICHLAND WATERWORKS DISTRICT STATEMENT C DelbiijLouIsiana
FINANCIAL STATEMENTS WITH INDEPENDENT AUDITORS' REPORT AS OF AOT FOR THE TWO YEARS ENDED
DECEMBER 31,2013
INTRODUCTION
East Richlwd Waterworks District (the District) was created by the Richland Parish Police Jury, as authorized by ChapterS of Title 33 of the Louisiana Revised Statutes of 1950. The District is governed by a five-member boanl appointed by the police Jiiiy. The District is responsible for maintaining and operating the water distribution system within ihe boundaries of the district. The District employs 5 persons as well as an operator on a contract basis to operate the water system. At December 31,2013, the District had 733 residential custoihers.
GASB Statement N6..14, The Reporting Entity, and No. 39, Determining Whether Certain Organizations Are Component Units- an amendment of GASB StatementNp. 14, established criteria for determining the governmental reporting entity and component units that should be included within the reporting entity. Under provisions of this Statement, the East Richland Waterworks District is considered a component unit of the Richland Parish Police Jury.
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. MEASUREMENT FOCUS AND BASIS OF ACCOUNTING AND FINANCIAL STATEMENT PRESENTATION
The District's financial statements are presented on the full accrual basis in accordance with accounting principles generally accepted in the United States of America. The District applies all Governmental Accounting Standards Board (GASB) pronouncements as well as Financial Accounting Standards Board (FASB) statements and interpretations, and the Accounting Principle Board (APB) of the Committee.Oh Accounting Procedure, issued on or before November 30, 1989, unless those pronouncements conflict or contradict with GASB pronouncements.
These financial statements are presented in conformance with GASB Statement No. 34,:B^ic Financial statements. Management's Discu^ion and Analysis, for State and Local Governments. Statement No. 34 established standards for financial reporting, with presentation requirements including a statement of net assete (or balance sheet), a statement of activities and changesJn net assets, wd a statement of cash flows. The District h^ also adopted the provisionsof GASB StatementNo. 33, Accounting and Financial Reporting for Nphexchange'Transactions, that require capital contributions to the District be presented as a change in net assets.
The District is a spi^ial purpose government engaged only in business type activities. All activities of the District are accounted for in a single proprietary (enterprise) fund. Proprietary funds are used,to account for operations that are finwced and operated in a manner similar to private business enterprise, where the intent of the governing authority is that the cost (expenses, including depreciation) of providing services on a continuing basis be financed or recovered primarily through user charges. Under the accrual basis of accounting, revenues are recogniz^ when earned and expenses are recognized at the time liabilities are incurred.
11
EA^ RICHLAND WATERWORKS DISTRICT Delhi, Louisiana
NOTES TO FINANCIAL STATEMENTS AS OF AND FOR THE TWO YEA^ ENDED
DECEMBER 31,2013
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
The tenn measurement focus denotes what is being measured and reported in the District's operating statement Financial operations of the District ^ accounted for on the flow of economic resources measurement focus. With this measurement focus, all of the assets and liabilities, available to the District for the purpose of providing goods and services to the public, are included on the balance sheet. The activity statement includes all costs of providing goods and services during the period.
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 funds principal ongoing operations, primarily the provision of water to rural areas of Richland Parish. Operating expenses for enterprise funds include the cost of sdes and services, administrative expenses, and depreciation on capital assets. All revenues and expenses hot meeting this definition are reported as nonoperating revenues and expenses.
When both re^icted and unre^cted resources are available for use, it is the entity'is policy to use restricted resources first, then unrestricted resources as they are needed.
B. CASH AND CASH.EQUIVALENTS
Cash includes amounts in demand deposits, interest-bearing deihand deposits, and money market accounts. Cash equivalents include amounts in time deposits and those investments with original maturities of 90 days or less. Under, state law, the District may deposit funds in demand deposits, intere^-bearing demand deporits, moriey market accounts, or time deposits with state bahks organlzed under Louisiana law; or any otherstate of the United States, or under the laws of the United States.
C INVESTMENTS
Investments are limited by Louisiana RS 33:29SS and the District's investment policy. If the original maturities of investment exceed ninety days, they are classified as investments; however, if the original maturities are nine^ days or less, they are classified as cash equivalents.
D. ACCOUNTS RECEIVABLE
Receivables for water sales ̂ shown net of an allowance for uncollectible accounts. The allowwce is an estimate based on the amount of receivables that are past due and historical collection rates.
E. PREPAID ITEMS
Payments made to vendors that will benefit periods beyond the end of the current calendar year are recorded as prepaid items. Prepaid items consist primarily of prepaid insurance premiums.
12
EAST RICHLAND WATERWORKS DISTRICT Delhi, Lonisiana
NOTES TO FINANCIAL STATEMENTS AS OF AND FOR THE TWO YEARS ENDED
DECEMBER 31,2013
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POUCIES, continued
F. RESTRICTED ASSETS
Certain assets are lestricted to set aside funds for customer deposit accounts.
G. CAPITAL ASSETS
Capital ^sets of the District are defined by the District as assets with an initial, individual cost of more than $300, and an estimated useful life in excess of the year. Capital assets are recorded at either historical cost or estimate historical cost. Donated assets, including water systems donated for continued maintenance by the District, are valued at their estimated fair market value on the date donated. Depreciation of all exhaustible fixed assets is charged as an expense against operations. Depreciation is computed using the straight-line me^od over the estimated useful lives of the assets, as follows:
Buildings 15-30 years Equipment & Furniture 3-7 years Water System 20-40 years
The costs of nbrmal maintenance and repairs that do not add to the .value of the asset or materially extend asset lives are not capitalized,
Major outlays for capita! assets and improvements are capitalized as projects are-constructed. Interest incurred during the construction phase of capital assets is included as part of the capitalized value of these assets constriicted.
H. VACATION AND SICK UEAVE
The Districts five part-time employees receive no vacation and sick leave each year.
L LONG-TERM LIABILmES
Long-term liabilities are recognized within the Enterprise Fund. Bond premiums and discounts, as well as issuMce costs, are deferred and amortized over the life of the bonds. Bonds payable are reported net of the applicable bond premium or diiKOunt. Bond Issuance costs are reported as deferred charges and amortized over the term of the related debt.
13
EAST RICHLAND WATERWORKS DISTRICT Delhi, Louisiana
NOTES TO FINANCIAL STATEMENTS AS OF AND FOR THE TWO YEARS ENDED
DECEMBER 31,20i3
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
J. NET POSITION
GASB Statement No. 34, Basic Financial Statements, Management-s Discussion and Analysis, for State and Local Governments, required classification of net ^sets into three separate component. GASB Statement No, 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and.Net Position, revised the terminology by incorporating deferred outflows of resources and deferred inflows of resources into the definitions of the required component of the residual measure and by renaming that measure as net position, rather than liet assets. GASB Statement No. 63 requires the following components of net position:
• Net investment in capital assets - This component of net position consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of bonds, mortgages, notes or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. Deferred outflows of resources and deferred inflows of resources that are attributable to the acquisition, construction, or improvement of those assets or related debt also should be included in this component of net position. If there are significant unspent related debt proceeds or deferred inflows of resources at the end of the reporting period, the portion of the debt or deferred inflows of resources attributable to the unspent amount should not be included in the calculation of net investment in capital assets. Instead, that portion of the debt or deferred inflow of resources should be included in the same net position component (restricted or unrestricted) as the unspent amount;
• Restricted - This component of net position consists of restricted assets reduced by liabilities and defeired inflows of resources related to those assets. Generally, a liability relates to restricted assets if the asset results from a resource flow that also results in the recognition of a liability or if the liability will be liquidated with the restricted assets reported.
• Unrestricted • This component of net position is the net amount of the assets, deferred outflows of resources, liabilities, and deferred inflows of resources that are not included in the determination of net investment in capital assets or the restricted component of net position.
K. DEFERRED OUTFLOWS OF RESOURCES AND DEFERRED INFLOWS OF RESOURCES
In some instances GASB requires a government to delay the recognition of decreases in net porition as expenditures or increases in net position as revenues until a further period. In these circumstances, deferred outflows of resources or deferred inflows of resources result from the delayed recognition of expenditures or revenues, respectively. There are no deferred inflows or deferred outflows as of December 31,2013.
14
EAST RICHLAND WATERWORKS DISTRICT Delhi, Louisiana
NOTES TO FINANCIAL STATEMENTS AS OF AND FOR THE TWO YEARS ENDED
DECEMBER 31,2013
NOTE 1 - SUMMARY OF SIGNIFICAOT ACCOUNTING POLICIES, continued
L. USE OF ESTIMATES
The pitp^tiori offihancial statements in conformance with generally accepted accounting principles requires 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 financial statements and the reported amounts of revenues ahd expenses during the reported period. Actual results could differ from those estimates.
M. RECLASSIFICATIONS
Certain reclassifications.have been made to amounts for prior years in order to conform to the current year's premutation.
NOTE 2 - CASH, CASH EQUIVALENTS AND INVESTMENTS
Louisiana state jaw allows all political subdivisions to invest funds in obligations of the United States or any other federally iilsufed investment, certificates of deposit or any bank domiciled or having a branch office in the State of Louisiana, guaranteed investment contracts and investment grade cornmercial paper of domestic con>ofatidns.
State law requires deposits (cash and certificated of deposit) of all political subdivisions to be fuUy collateralized at all times. Acceptable collateralization includes FDIC insurance and the market value of securities; purchased and pledges to the political subdiyisions. Obligations of the United States, the State of Louisiana and certain political subdivisions are allowed as security for deposits. Obligations furnished as security must be held.by the political subdivision or with an unaffiliatedbank or trust company for the accpunts of the political subdivision.
At December 31,2013, the District has cash and cash equivalents (book balance), savings and investments in certificates of deposits as follows:
NOTES TO FINANCIAL STATEMENTS AS OF AND FOR THE TWO YEARS ENDED
DECEMBER 31,2013
NOTE 2 - CASH, CASH EQlltVALENTS AND INVESTMENTS, continued
These deposits are steted at cost, which approximates riwket. Understate law; these deposits (orthe r^iiltihg bank balances) must>be secured by federal deposit insuranceior the pledge of securities owned by^e fiscal agent bank. The maiicet value of the pledged securities plus the feder^ deposit itisiirance miist at all tim^ equal the amount on deposit with theTiscal agent These securities are held in the name of the pledgingTiscal agent bank in athplding or custodial b^k that is mutually acceptable to both p^es. At December 31,'2013, the District has
, $427,958: in deposits (cbllected barik balances) at twb local banks. These deposits are secured from risk by.S265i444 oflfederal deposit insurance and $198^229 of pledged securities held by the custodial bank in die name of die fiscal agent baiik (GASB Category 3).
Custodial credit risk is the.riskthatin the event of a b^k failure,the Districfs deposits may not be returned to it: The District'has no fdnhal policy for managing custodial credit risk but dto District's practicejs to eliminate this risk by requiring financial institutions to pledge their own securities to cover any amount in excess of federal deposit ihsuiance. As of December 3 U 2013 die District has $198,229 in securities pledged by the bank and are overrcollateralized by $35,715.
Pledged securities in GASB Category 3 include uninsured or uhfe^stered investments for which the securities ^ heldby die broker or dealer; or by its^doistdepa^ent'or agent, but not in the District's name. Even though ithe pledged.securities are considered uncbUaterallzed (Category 3) Louisiana Revised Statute 39:1229 imposes a ^tatuto^ requirenient on the custodial bank to advertise and selhthe pledged securities within lO days bf being notified,!^ the District that the fiscal agent has failed to pay deposited>liinds upon demand^,
NOTE 3 - INVESTRmNTS
At December 31, 2013 and 2012, the^District'SNinvestmeht balances were in certificates bfdeposit. The invesdnents are^cairied at cost, which approxirnates market value.
NOTE 4 - ACGOlINTSraCEIVABLE
At December 31,2013 the District has net receivables of $36,565 as follows: 2m 2m
EAST RICHLAND WATERWORKS DISTRICT Delhi, Louteiana
NOTES TO FINANCIAL STATEMENTS AS OF AND FOR THE TWO YEARS ENDED
DECEMBER 31,2013
NOTE 5 - CAPITAL ASSETS
A summaiy of the changes in Capital assets is as follows:
2012 ADDITIONS DELETIONS 2013
Water lines $292,150 $0 $0 $292,150
New Lines and Equipment 143,876 3,511 0 147,387
Office Equipment 8,333 1,723 0 10,056
Construction in Progress 0 36.127 0 36.127
Total 444.359 41J61 0 485.720
Accumulated Depreciation 321.609 11.043 0 332.652
Net Capital Assets $122,750 $153,068
Land SO $17,500 |0 $17,500
2011 ADDITIONS DELETIONS 2012
Water jines $292,150 $292,150
New Lines and Equipment 143,876 0 0 143,876
Office Equipment 8.333 0 Q. 8.333
Total 444J59 0 0 444.359
Accumulated Depreciation. 310.576 n.033 0 321.609
Net Capital Assets $133,783 $122,750
Land $12,000 $0 $12,000
Depreciation expense amounted to $11,043 and $ 11,033 for the years ended December 31,2013 and 2012. The District sold land, purchased for future expansion during 2012 for $18,000 and recognized a gain of $6,000.
17
EAST lUCmAm WATERWORKS Delhi, Louisiana
NOTES TO FIN^CIAL STATiEMENTS AS OF AND FOR THE TWO YEARS ENDED
DEG£lNraER31,26l3
NO^ 6 - LTTIGATIGN AND CLAIMS
l^e District not inyplyed in litigation at D^mber31, 2013, nor isi^ware ofany iuiasserted;claiTns.
NOTE 7 - RISK MANAGEMENT
Inthe ordinaxy course of business the district is atrisk forproperty damage, liability and theft; The District provides insurance coverage through commercial insurance companies.
NOTE 8 - ECONOMIC DEPENDENCE and CREDIT CONCENTRATION
The district supplies water to residents in East Richland Parish. Tie district purchases all of its water supply from the Town of Delhi.
The disd'ict's customers are concentrated in,EastRichlwd Parish. The balance of feceivables^due from these customers if $40,854..
NOTE 9 - SUBSEQUENT EVENTS
Management evaluates events occurring subsequent to the date of the financial statements in determining the accduiiting for wd disclosure of transactions and events that effect the ̂ nancial statements. Subsequent events have been evaluaied through July 18,2014; which;is'the date the.financial statements were.available to be issued.
Monthly minimum for 4,000 gallons 4,000 - 6i000 gallons over 6^000, gallons
0 - 15,000 gallons 1 5,000 gallons and up
Per 1,000 gallons
Mon^ly minimum for 15,000 gallons 15,000 gallons wd up
Rate
$22.00 22.00 + 5.50/1,000 44:00 + 7,50/1,000
$44:00 44.00 + 5.50/1,000 88.00 + 7.50/1,000
$98:85 98.85 + 5.50/1,000
$2.90
$98.85 98:85 + 5.50/1,000
20
EAST RICHLAND WATERWORKS DISTRICT Delhi, LonisiaDa
SCHEDULE2
SUPPLEMENTAL INFORMATION SCHEDULE
SCHEDULE OF INSURANCE COVERAGE
Type of Coveraee
Name of Insurer
Policy Nuniber
Amount of Coverase
Expiration Date
Liability American Alternative Ins. Co. GPPA-PF-6053994 $1,000,000/ $3,000,000
February 11,2014
Fire American Alternative Ins. Co. GPPA-PF-6053994 $1,000,000 February 11,2014
Medical Payments American Alternative Ins. Co. GPPA-PF-6053994 S 10,000 February 11,2014
Fidelity Bond CNA Surety 161052203 $ 30,000 September 19,2014
Cyber Liability Ammcan Alternative Ins. Co. GPPA-PF-6053994 $1,000,000 February 11,2014
Umbrella American Alternative Ins. Co. GPPA-XS-305I687 $1,000,000 February 11,2014
Worker's Comp LUBA Casualty Insurance Co. 28000016569110 $1,000,000 February 11,2014
21
EAST RI€HLAND WATERWORKS DISTRICT SCHEDULE 3 Delhi^ Loublana
SUPPLEMENTAL INFORMATION SCHEDULE FOR THE TWO YEARS ENDED DECEMBER 31,2012
COMPENSATIONPAID BOARD MEl^ERS
Thei^he^ule of cqm(»nsation toard members'is pre^nted in compliance with House Cbncurient Resolution No. 54 of the 1979 Session of the Louisiana Legislature.
2013 2012
Donald Green $1,200 .$lv200
Shane Lester 1,200 1,200
RichanlKing 1^00 1^200
ClarehceMcCall 1^00 1,200
Mary Jp Clack :i:200 1.200
$61000 $6:000
22
THE ROBINETTE FIRM A Professional Accounting Corporation
1900 N. 18^ Street. Suite 606 Monroe, LA 71201
(318)361^7 Fax: (318)361-0008
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL
STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
BOARD OF COMMISSIONERS EAST RICHLAND WA^RWORKS DISTRICrr RICHLAND PARISH, LOUISIANA
We have audited in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained InGovernmeni Auditing Standards \ssued by the Comptroller General of the United States, the financial statements of the busines^type activities of East Richland Waterworks District as of and for the year ended December 31,2013, and the related notes to the financial statements, which collectively comprise the District's basic financial statements, and have issued our report thereon dated.
Internal Control Over FinanclM Reporting
In planning and perfbnning our audit of the financial statements, we considered the District's internal control over financial reporting (internal control) to deteimihe the audit procedures that'are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but ndf for ̂ e purpose of expressing an opinion on the effectiveness of the District's internal control. Accordingly, we do hot express an opinion oh the effectiveness of the District's internal control.
Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that niight be material weaknesses orsigniflcant deficiencies and therefore, material. weaknesses or significant deficiencies may exist that were not identifi^. However, as described in the accompanying Schedule of Findings and Questioned Costs, we idehtiifled certain, deficiencies in internal control that we consider to be material weaknesses or significant'deficiencies.
A deficiency in internal control exists when the design or operation of a control does not allow manageihent or employees, in the normal course of performing their assigned functions, to prevent^ or detect and correct, misstatements on a timely basis. A material weakness is a .deficiency, or a combination,of,deficiencies, in internal control such that there is a reasonable possibility that a materia! niisstatement of the entity's financial statemeiits will:not be prevented, or detected and corrected on a timely basis. We conrider the deficiencies dewiibed as finding 2013-1 and 2013-2, in the accompanying schedule of findings and questioned costs to be a material weakness.
23
Board of Comm i ̂ ioners East Richland Wateiwprks District Richland'Parish, Louisiana
A significant deficiency isadelHciency, or a combination of deficiencies, in interna! control thafis less severe than a material wealmess, yet important enough to ment attention by those charged with governance; Finding 2013-3 and 2013-4, are determined to be significant deficiencies.
Compliance and Other Matters
As part of obtaining reasohableassurance about whether^the Distfict*s financial statements are free from matenaJmisstatementf we performed, tests of its compliMcerwith certain provisions of laws, regulations; contracts, and giant agreements, npncompliance with which could have a direct and materiaj effect on jhe determination of financial statement amounts. However, providing an opiniph on compliance with those provisions was not an objective of our audit, and accordingly^ we do not express such an opinion. The results of buratests disclosed,an instance of honcompiiaiice that is required to be reported underiGoverrimeht Aud^^^^ Standards.
East Richland Waterworks District'S Response to Findings;
East Richland Watenvorks pistrict^s resppnse to the findings'identifi^ iniour audit are de^ribed in the accompanying schedule of findings and questionedicosts. The District's respond was hot subjected to the auditing procedures applied in the auditiof the financiafstatemente and,iaccordihgly, we express no opinion oniit.
Purpose of this Report
The purpose of this report is solely to de^ribe the scope of oiir testing bf interhalxontrofahd compliance and the resiiit of that testing, and not to,proyide an opinion pn the effectiveness of the entity's intemahcontrpl or on cbmpliance. This report;is an ihte^l p^ of an audit perfprmed in Government Auditing ^/omforals'in considering the entity's internal control and compliance. Accordingtyi this communication is not suitabie;fprany other purpose.
TheRPbinette Firm; A Professional; Accounting Corporation
Monroe/Louisiana July 18,2014
24
EAST RICHLAND WATERWORKS DISTRICT RICHLAND PARISH, LOUISIANA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the year ended December 91,2012
Section L Snmmary of Andltor*s Reports
a. Report on Internal Control and Compliance Material to the Financial Statements
btemal Control Material Weakness JLYCS „NO Reportable ConditionsjLYes_No
Compliance Compliance.Material to Financial Statements J( Yes _No
b. Not applicable
c. Not applicable
Section II. Financiai Statement Findinp
Material Weakness
2013-1 Inadequate Segregation of Dntles Farmer's Home Administration
CONDITIONt Inadequate segregation of duties exist in that personnel perform incompatible functions, those that allow an error or irregularity that is material to the financial statements to occur and remain undetected:
CAUSE! Limited number of employees
CRITERIA: A fundamental concept in a good system of internal control is the segregation of duties.
EFFECT OF CONDITION! Errors could occur and not be detected in a timely, manner.
RECOMMENDATION: Management should review the practicality of achieving adequate segregation ofduties.
MANAGEMENT'S CORRECTIVE ACTION PLAN: We hope to hire a CPA to oversee ouraccountihg on a quarterly basis to ensure any mistakes can be corrected in a timely manner.
Responsible Person: Board of Commissioners
25
EAST RICHLAND WATERWORKS DISTRICT RICHLAND PARISH, LOUISIANA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the year ended December 31,2013
Section n. Financial Statement.Findlngs, continued
2013-2 Inadequate Reconciliation of Receivables to the General Ledger
CONDITION! During December 31. 2013 the District did not reconcile to accounts receivable detail with the generalledger on a timely basis:
•CAUSE: Employee error
CRIIERIA: A monthly reconciliation of the accounts receivable detail to the general ledger provides appropriate control over cash receipts, charges and credits to customer accounts.
EFFECT OF CONDITION: Receipts could be misappropriated and not be detected in a timely manner.
RECOMMENDATION: The accounts receivable detail should be reconciled to the general ledgereach month on a timely basis by an employee without access to the detail accounts receivable.
MANAGEMENT'S CORRECTION ACTION PLAN: We hope to hire a CPA to oversee our accounting on a quarterly basis to make sure the Accounts Receivable and General Ledger balance.
Responsible Person: Lynda Best
2013-3 Reconciliation of customer deposits to the general ledger
CONDITION! During December 31,2013, the District did not reconcile the listing of customer deposits with the general ledger.
CAUSE: Unknown
CKIIKRIA: A monthly reconciliation of the customer deposits to the general.ledger provides appropriate control over cash receipts, refunds and credits to customer accounts.
EFFECT OF CONDITION: Deposit refunds could be misappropriated and not be detected in a timely manner.
RECOMMENDATION: The listing of customer deposits should be reconciled to the general ledger each month on a timely basis.
MANAGEMENT'S CORRECT'lON ACTION PLAN: We are purchasing another Accounts Receivable program that will keep count of all deposits.
Responsible Person: Lynda Best
26
EAST RICHLAND WATERWORKS DISTRICT RICHLAND PAi^H, LOUISIANA
SCHEDULE OF FILINGS AND QUESTIO^D COSTS For the y^r ended December 91,2013
CONDITION! During our test procedures we noted disbursements are made without documented approval btherthm the sighing of the checlu. We noted disbursements paid bydraft that wpuld not be subject to,the approval process. We airo noted one time sheet that did not have aisupervisoiy approval..
CAUSE: Pr6cedures=have not been set in place.
CRITERIA: Approyarpf disbursements is anjmpprtant,control element oyer expenditures.
EFFECT OF CONDITION: Unauthprired expenditures could tie made and remain undetected.
RECOMMENDATION: We recommend a purchase order be iuued for all disbursements and signed to note approval before funds ̂ disbursed., \ye also recommend all time sheets be feviewedfbr acci^^ and approved by. a supervisor.
MANAGEhCTNT'S CORRECTION ACTION PLAN: We "will make sure evervjtime sheet is signed by a supervisor and eveiy^disbursement-is approved!
Riespbasible Person: Lynda Best
Compliance Findings
2013^5 Lateisnbmission of report
CONDITION: The accompanyihg financial statements and report are due to the Legislative Auditor within six mpriths'of yeiw-ehd. Theifinancial.statements were not subinitted within the prescribed,period.
CAUSE: Health conditions of the water district clerk caused die delaiy.
GRTIERIA: Lpuisiana Revised Statute 24:513 requires financial statements to be submitted to the Legislative Auditor witliihi6 mohdis of year-end.
EFFECT jQF CONDITION! pie Di^ict is out of compliance with rtate law;
RECOMMEND ATION: We recommend,the District obtain the necess^ ac'cbunting suppoit to a^ure books can be posted and flhancial statements can be prepared in a timely rhanner.
MANAGEMBJTT'S CORREC'TION ACTION PLAN: We will gather all the irifbrmation for the audit very early in,theyear20l5fso that>the auditor willhave time to audit our books before Jiine 30,2015.
Rappnsible Pe^n: Lynda Best
27
EAST RICHLAND WATERWORKS DISTRICT RICHLAND PARISH, LOUISIANA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the year ended December 31,2013
Section IH. Federal Award Findings and Questioned Costs
Not applicable
28
EAST RICHLAND WATERWORKS DISTRICT RICHLAND PARISH, LOUISIANA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the year ended December 31,2013
SCHEDULE OF PRIOR YEAR FINDINGS
CONTROL INSTANCES
2002-1 Inadeqnate Segregation of Duties
Status: See Reportable Condition 2013-1
INSTANCES OF NONCOMPLIANCE - Not applicable
2012-2 Inadequate coHateral pledge on bank accounts
Status: Resolved
29
THE ROBINETTE FIRM
A; Professional Accounting Corporation 1900 N. 18^ Street. Suite 606
Monroe, LA,71201 (3)8^01-0007
Fax;pi8) 361-0068
MANAGEMENT LETTER:
Board of Commissioners East lUchland Waterwbrte'District Delhi, LA 71232
Inplanning and performing our audit of the financial statements of ̂ t RichiandWaterworks District for the year ended December,31,2013, we considered its internal control structure in order to detemiine our auditing proceduresifor the purpose of expiring our ppinion pn the financiM stat^ents and^not tb^provide assunince on the;ihterha] cohtrbr-sthicture. The fbllowihg recommendations are submitted to assist in improving the District's ability to report data consistent with the assertions of management in the fmancjai stateihents.
PAYMENT OF SALES TAX
During our test procedm^i we noted several instances wh^e the pi^ct paid sales tax. Since the pistrict is exempt fipm salesjUix, this results in an imnecessary ex^ We recornmend all vendors be fiinijshed with the sale^ exemptioniletter and that employees be instructed to not pay any sales tax charged.
Corrective Actlon-PianrWe plan to hotify;each of bur suppliers that we are an exempt corporation and funiish them with our Louisiana sales tax exemption form.
Person ResppnslblerXynda Best, Clerk Date to be completed: July 31,2014
CANCELLATION OF INVOICES
We noted J,] mpenditures where the documentation supporting the disbureement was not marked '*paidV to cancel tiie invoice. Cancellatibfi of invoices prevents duplicate payments. We recommend all invoices supporting a disbursement be mvked as"paidV.
Corrective Action Plan: We plan, In the future, to mark all invoices "paid" when we write a check to pay diem to avoid di^iicate payments
Person Responsible: Lynda Be^ Cleric Date to be completed: July.31,2014
Board of Commissioners page 2
CHECK AMOUNT DIFFERENT THAN STATEMENT
We noted one check was written for rrioreithain the statement amount in error, but the check was still Jssued. We recommend all checks be compared to the supporting documentation before disbursing haids and that checks only be issued when they match the amount owed.
Corrective Action Plan: We will be more careful when issuing checks to make sure each is for the correct invoice amount.
Person Responsible: Lynda Best, Cleik Date to be completed: July 31,2014
EXPENDITURE INCORRECTLY POSTED
We selected one LA One Call expenditure what was coded to telephone when others were coded to maintenance. We recommend that care be taken when entering.expenditu^;to ensure they are coded properly and the^accounts be reviewed periodically to ensure items are being posted properly.
Corrective Action Plan: All One Call invoices should be coded "maintenance". We will make sure all expenditures are properly coded.
Person Responsible: Lynda Best, Cleric bate to be completed: July 31,2014
We appreciate the opportunity to present these comments for your consideration. We are prepared to discuss them at your convenience and to provide such assistance in their implementation as you may desire.
Monroe, Louisiana July 18,2014
The Robinette Firm, A Professional Accounting Corporation
