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CONSOLIDATED GRAVITY DRAINAGEDISTRICT NO. 2
of the Parish of St. MaryState of Louisiana
FINANCIAL REPORTFor the Year EndedSeptember 30, 2007
Under provisions of state law, this report is a publicdocument. Acopy of the report has been submitted tothe entity and other appropriate public officials. Thereport is available for public inspection at the BatonRouge office of the Legislative Auditor and, whereappropriate, at the office of fye parish clerk of court.
Release Date
Consolidated Gravity Drainage District No. 2of the Parish of St. Mary
State of Louisiana
Financial Report
For the Year EndedSeptember 30,2007
Consolidated Gravity Drainage District No. 2of the Parish of St. Mary
State of LouisianaAnnual Financial Report
For the Year Ended September 30, 2007
TABLE OF CONTENTS
Page
Financial Section:INDEPENDENT AUDITORS' REPORT 1-2BASIC FINANCIAL STATEMENTS:
Government Wide Financial Statements:Statement of Net Assets 3Statement of Activities 4
Fund Financial Statements - Governmental FundsBalance Sheet 5Statement of Revenues, Expenditures, and Changes in
Fund Balances 6Reconciliation of the Governmental Fund Balance Sheet
to the Statement of Net Assets 7Reconciliation of the Statement of Revenues, Expenditures,
and Changes in Fund Balance of Governmental Funds tothe Statement of Activities 8
Notes to Financial Statements 9-21
Required Supplemental Information :BUDGET COMPARISON SCHEDULE:
General Fund 22
Reports Required by Government A uditing Standards:Report on Compliance and on Internal Control Over
Financial Reporting Based on an Audit of Financial StatementsPerformed in Accordance with Government Auditing Standards 23-24
Schedule of Findings and Questioned Costs 25-26
Status of Prior Year Audit Findings 27
Financial Section
HERBERT J. ADAMS, JR., C.RA.
WILLIAM H. JOHNSON, III, C.RA.
ADAMS & JOHNSONCERTIFIED PUBLIC ACCOUNTANTS
P.O. BOX 729 • 517 WISE STREETPATTERSON, LOUISIANA 70392
(985) 395-9545
MEMBERS;
AMERICAN INSTITUTE OFCERTIFIED PUBLIC ACCOUNTANTS
SOCIETY OF LOUISIANACERTIFIED PUBLIC ACCOUNTANTS
To the Board of CommissionersConsolidated Gravity Drainage District No. 2of the Parish of St. MaryState of LouisianaMorgan City, Louisiana
We have audited the accompanying component financial statements of the Consolidated GravityDrainage District No. 2 of the Parish of St. Mary, State of Louisiana, as of and for the year endedSeptember 30, 2007, as listed in the financial section of the table of contents. These financialstatements are the responsibility of the District's management. Our responsibility is to express anopinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United Statesof America. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financialstatements. An audit also includes assessing the accounting principles used and significant estimatesmade by management, as well as evaluating the overall general purpose financial statementpresentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the basic financial statements referred to above present fairly, in all material respects,the financial position of the Consolidated Gravity Drainage District No. 2 as of September 30, 2007,and the respective changes in financial position for the year then ended in conformity with accountingprinciples generally accepted in the United States of America.
The Management's Discussion and Analysis is not a required part of the financial statements but issupplementary information required by the Governmental Accounting Standards Board. However,management elected not to include this information in the financial statements for the year endedSeptember 30, 2007.
Our audit was made for the purpose of forming an opinion on the financial statements taken as awhole. The accompanying supplementary information, as listed in the table of contents, while notconsidered necessary for a fair presentation of the financial statements, is presented as supplementaryanalytical data.
Such information, except for that portion marked "unaudited", on which we express no opinion, hasbeen subjected to auditing procedures applied in the audit of the financial statements, and in ouropinion, the information is fairly stated in all material respects in relation to the financial statementstaken as a whole.
In accordance with Government Auditing Standards, we have also issued a report dated March 17,2008 on our consideration of Consolidated Gravity Drainage District No. 2's internal control overfinancial reporting and our tests of its compliance with certain provisions of laws, regulations,contracts, and grants. That report is an integral part of an audit in accordance with GovernmentAuditing Standards and should be read in conjunction with this report in considering the results of ouraudit.
(^^Adams and JohnsonCertified Public Accountants
Patterson, LouisianaMarch 17, 2008
CONSOLIDATED GRAVITY DRAINAGE DISTRICT NO. 2OF THE PARISH OF ST. MARY
STATE OF LOUISIANAStatement of Net Assets
September 30, 2007
GovernmentalActivities
ASSETSCurrent assets:Cash and cash equivalents $ 2,984,941Prepaid expenses 48,042
Total current assets $ 3,032,983
Non-current assets:
Bond issue and refunding cost, net of amortization $ 126,110Capital assets, net of depreciation 8,721,757
Total non-current assets 8,847,867Total assets $ 11,880,850
LIABILITIESCurrent liabilities:Accounts payable $ 21,638Payroll taxes payable 95Interest payable 22,282
Bonds payable - current 375,000
Total current liabilities $ 419,015
Non-current liabilities:Bonds payable - long term 5,715,000
Total non-current liabilities 5,715,000Total liabilities $ 6,134,015
NET ASSETSInvested in capital assets, net of related debt $ 2,631,757Restricted for:Capital Projects 2,638,016
Debt Service 275,029
Unrestricted 202,033
Total net assets $ 5,746,835
The accompanying notes are an integral part of these financial statements.3
CONSOLIDATED GRAVITY DRAINAGE DISTRICT NO. 2OF THE PARISH OF ST. MARY
STATE OF LOUISIANAStatement of Activities
For the Year Ended September 30, 2007
Governmental Activities - Gravity Drainage
Program expenses:Maintenance labor, pump operatorsFuel and electricityRepairs and maintenanceInsuranceOther operating costsInterestAmortizationDepreciation
Total program expenses
90,05921,860
370,153
68,61676,503
276,03710,321
300,730
$ 1,214,279
General revenues:Ad valorem taxesInterest income earnedParish Council Grant
Total general revenues
Change in net assets
Net assets - beginning
Net assets - ending
$ 1,095,30575,431
1,2911,172,027
$ (42,252)
5,789,087
$ 5,746,835
The accompanying notes are an integral part of these financial statements.
4
CONSOLIDATED GRAVITY DRAINAGE DISTRICT NO. 2OF THE PARISH OF ST. MARY
STATE OF LOUISIANABalance Sheet
September 30, 2007
ASSETS
Cash and cash equivalents
Total assets
LIABILITIES
Accounts payablePayroll taxes payable
Total liabilities
General Capital Project DebtOper/Maint Project Service
$ 21,638 $95
TotalGovernmental
Funds
$ 175,724 $ 2,605,669 $ 203,548 $ 2,984,941
$ 175,724 $ 2,605,669 $ 203,548 $ 2,984,941
$ 21,733 $
$ 21,63895_
$ 21,733
FUND BALANCES
Reserved-reported in:Capital Projects FundDebt Service Fund
Unreserved-reported in:General Fund
Total fund balances
Total liabilities andfund balances
153,991
153,991
$ 2,605,669 $ - $ 2,605,669203,548 203,548
153,991
2,605,669 203,548 2,963,208
$ 175,724 $ 2,605,669 $ 203,548 $ 2,984,941
The accompanying notes are an integral part of these financial statements.5
CONSOLIDATED GRAVITY DRAINAGE DISTRICT NO. 2OF THE PARISH OF ST. MARY
STATE OF LOUISIANAStatement of Revenues, Expenditures, and Changes in Fund Balances
For the Year Ended September 30, 2007
REVENUES
Ad valorem taxes
Interest incomeParish Council Grant
Total Revenues
EXPENDITURESAdvertisingProfessional feesFuel and electricityInsuranceSecretary and accounting
Maintenance labor, pump operators
Office supplies, auto, otherPension costPer diem allowanceRepairs and maintenance
Total current expendituresCapital expenditures:
Capital outlay
Debt service:Bond principalBond interest and fees
Total debt service expendituresTotal Expenditures
Excess of revenues over (under) expenditures
Fund balance, beginning of yearFund balance, end of year
GeneralOper/Maint
$ 501,1685,408
386,749
386,749
$ 119,827
34,164
CapitalProjects
$64,790
1,291
$ 506,576 $ 66,081
2177,965
21,86067,102
3,100
90,05914,80116,8573,900
160,888
9,674
209,265218,939
$ 614,065
833,004
$ (766,923)
3,372,592$ 153,991 $ 2,605,669
$
$
$
$
$
$
$
DebtService
594,1375,233
-599,370
----
--
19,989
--
19,989
-
355,000277,518632,518652,507
(53,137)
256,685203,548
TotalGovernmental
Funds
$ 1,095,30575,431
1,291$ 1,172,027
$ 2177,965
21,86067,102
3,100
90,05924,47536,846
3,900370,153625,677
$ 614,065
$ 355,000277,518632,518
1,872,260
$ (700,233)
3,663,441$ 2,963,208
The accompanying notes are an integral part of these financial statements.6
CONSOLIDATED GRAVITY DRAINAGE DISTRICT NO. 2OF THE PARISH OF ST. MARY
STATE OF LOUISIANA
Reconciliation of the Governmental Fund Balance Sheet to the Statement of Net AssetsSeptember 30, 2007
Total Fund Balances - Governmental Funds (Page 6) $ 2,963,208
The purchase of capital assets are reported as expenditures asthey are incurred in the government funds. The Statement ofNet Assets reports capital assets as an asset and thesecapital assets are depreciated over their estimated usefullives and are reflected as depreciation expense in theStatement of Activities.
Cost of Capital Assets at September 30, 2007 12,781,889Less: Accumulated Depreciation as of September 30, 2007 (4,060,132)
Interest payable on long-term debts does not require currentfinancial resources. Therefore interest payable is not reported asa liability in the governmental funds balance sheet. (22,282)
Expenditures for prepaid expenses in governmental activities are notfinancial resources and therefore are not reported in the funds
Prepaid insurance 48,042Bond isssue and refunding cost 146,752Bond issue and refunding cost accumulated amortization (20,642)
Long-term liabilities are not due and payable in the current periodand, therefore, they are not required in the governmental fundsbalance sheet. (6,090,000)
Net Assets - Government - Wide Statement (Page 4) $ 5,746,835
The accompanying notes are an integral part of these financial statements.7
CONSOLIDATED GRAVITY DRAINAGE DISTRICT NO. 2OF THE PARISH OF ST. MARY
STATE OF LOUISIANAReconciliation of the Statement of Revenues, Expenditures, and
Changes in Fund Balances of Governmental Fundsto the Statement of Activities
For the Year Ended September 30, 2007
Net change in fund balances - total governmental funds (fund financial statements) $ (700,233)
Amounts reported for governmental activities in the statement of activities(government-wide financial statements) are different because:
Governmental funds report capital outlays as expenditures in the individual fund.Governmental activities report depreciation expense to allocate the cost ofthose capital assets over the estimated useful lives of the asset.
Capital outlay $ 614,065Depreciation expense (300,730)
313,335The issuance of long-term debts (e.g. bonds) provides current financial resourcesto government funds, while the repayment of the principal of long-term debtconsumes the current resources of government funds. Neither transactionhowever, has any effect on net assets. Also, governmental funds report theeffect of issuance cost when the debt is first issued, whereas the issuance costare deferred and amortized in the statement of activities,consist of:
Bond principal retirement 355,000Bond issue cost and refunding amortization (10,321)
344,679
Some expenses reported in the statement of activities do not requirethe use of current financial resources; therefore, are not reportedas expenditures in governmental funds.
Accrued interest expense on long-term debt is reported in the 1,481government-wide statement of activities and changes in net assets,but does not require the use of current financial resources;therefore, change in accrued interest expense is not reported asexpenditures in governmental funds.
Current financial resources utilized for prepaid expenses are reportedas expenditures in the governmental funds. (1,514)
Change in net assets of governmental activities (42,252)
The accompanying notes are an integral part of these financial statements.8
CONSOLIDATED GRAVITY DRAINAGE DISTRICT NO. 2OF THE PARISH OF ST. MARY
STATE OF LOUISIANA
Notes to Financial StatementsSeptember 30, 2007
On November 12, 1997, the St. Mary Parish Council created "Consolidated Gravity Drainage DistrictNo. 2 of the Parish of St. Mary," a consolidated gravity drainage district which included theboundaries of Gravity Drainage District No. 3 and Gravity Drainage District No. 5. The ConsolidatedGravity Drainage District No. 2 was created and established pursuant to the provisions of anordinance adopted by the St. Mary Parish Council, all in accordance with the provisions of Part II,Chapter 7, Title 38 of the Louisiana Revised Statutes of 1950, as amended. The District is managedby five board of commissioners as appointed by the St. Mary Parish Council. The District has fullpower and authority to drain lands in the district by construction, maintenance and operation ofgravity and/or forced drainage facilities, including drains, drainage canals, ditches, pumps andpumping plants, dikes, levees and other related works.
Note 1 -Summary of Significant Accounting Policies
The accounting and reporting policies of the Consolidated Gravity Drainage District No. 2(the District) conform to generally accepted accounting principles as applicable togovernments. The Governmental Accounting Standards Board (GASB) is the acceptedstandard-setting body for establishing governmental accounting and financial reportingprinciples.
The following is a summary of certain significant accounting policies:
^.Reporting Entity
As the governing authority of the parish, for reporting purposes, the St. Mary ParishCouncil is the financial reporting entity for St. Mary Parish. The GovernmentalAccounting Standards Board established criteria for determining which component unitsshould be considered part of the St. Mary Parish Council for financial reporting purposes.The St. Mary Parish Council appoints a voting majority of the District's governing bodyand can impose its will on the District. Based on criterion applied, the District is acomponent unit of the St. Mary Parish Council. The accompanying financial statementspresent information only on the funds maintained by the District and do not presentinformation on the St. Mary Parish Council, the general government services provided bythe Council, or the other governmental units that comprise the financial reporting entity forSt. Mary Parish, Louisiana.
The District has no entities or organizations that are required to be included in its financialreport as defined by Government Accounting Standards Board (GASB) Statement 14.
CONSOLIDATED GRAVITY DRAINAGE DISTRICT NO. 2OF THE PARISH OF ST. MARY
STATE OF LOUISIANA
Notes to Financial StatementsSeptember 30, 2007
Note 1 -Summary of Significant Accounting Policies, (Continued)
B.Basic Financial Statements - Basis of Presentation
Government - Wide and Fund Financial Statements
The District's basic financial statements include both government-wide (reporting theDistrict as a whole) and fund financial statements (reporting the District's major funds).Both the government-wide and fund financial statements categorize primary activities asgovernmental type activities. All of the District's administrative services are classified asgovernmental activities.
In the government-wide Statement of Net Assets, the governmental activities are reportedon a full accrual, economic resource basis, which recognizes all long-term assets andreceivables as well as long-term debt and obligations. The District's net assets are reportedin three parts - invested in capital assets, net of related debt; restricted net assets; andunrestricted net assets.
The government-wide Statement of Activities reports both the gross and net cost of eachof the District's functions and activities. These functions are also supported by generalgovernment revenues (ad valorem taxes and interest earned). The Statement of Activitiesreduces gross expenses (including depreciation) by related program revenues, operatingand capital grants. Program revenues must be directly associated with the function.
The net costs (by function) are normally covered by general revenue (ad valorem taxes andinterest earned, etc.). This government-wide focus is more on the sustainability of theDistrict as an entity and the change in the District's net assets resulting from the currentyear's activities.
Fund Accounting
The District uses funds and account groups to report on its financial position and theresults of its operations. Fund accounting is designed to demonstrate legal compliance andto aid financial management by segregating transactions related to certain governmentfunctions or activities. A fund is a separate accounting entity with a self-balancing set ofaccounts.
10
CONSOLIDATED GRAVITY DRAINAGE DISTRICT NO. 2OF THE PARISH OF ST. MARY
STATE OF LOUISIANA
Notes to Financial StatementsSeptember 30, 2007
Note 1-Summary of Significant Accounting Policies, (Continued)
E.Basic Financial Statements - Basis of Presentation. (Continued)
Governmental Funds
Governmental Funds are those through which the governmental functions of the Districtare financed. The acquisition, use, and balances of the District's expendable financialresources and the related liabilities are accounted for through Governmental Funds. Themeasurement focus is upon determination of changes in financial position, rather thanupon net income determination. The Governmental Funds of the District are as follows:
General Fund - The General Fund is the general operating fund of the District. Itis used to account for all financial resources except those that are required to beaccounted for in another fund.
Capital Projects Fund - The Capital Projects Fund is used to account forfinancial resources to be used for the acquisition or construction of major capitalfacilities or repair or replacement of major capital facilities (other than thosefinanced by proprietary funds and trust funds).
Debt Service Fund - The Debt Service Fund is used to account for theaccumulation of resources for, and the payment of general long-term obligationprincipal, interest and related costs.
C. Measurement Focus. Basis of Accounting and Financial Statement Presentation
The government-wide financial statements are reported using the economic resourcesmeasurement focus and the accrual basis of accounting. Revenues are recorded whenearned and expenses are recorded when a liability is incurred, regardless of the timing ofrelated cash flows. Property taxes are recognized as revenues in the year for which they areboth levied and budgeted as general revenue. Grants and similar items are recognized asrevenue as soon as all eligibility requirements imposed by the provider have been met. Thegovernmental fund financial statements are accounted for using a current financialresources measurement focus. With this measurement focus only current assets and currentliabilities are generally included on the balance sheet. Operating statements of these fundspresent increases and decreases in net current assets. The modified accrual basis ofaccounting is used by the governmental fund financial statements. Under the modifiedaccrual basis of accounting, revenues are recognized when susceptible to accrual (i.e.,when they become both measurable and available). "Measurable" means the amount of thetransaction can be determined and "available" means collectible within the current periodor soon enough thereafter to be used to pay liabilities of the current period.
11
CONSOLIDATED GRAVITY DRAINAGE DISTRICT NO. 2OF THE PARISH OF ST. MARY
STATE OF LOUISIANA
Notes to Financial StatementsSeptember 30, 2007
Note 1 -Summary of Significant Accounting Policies, (Continued)
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation,(Continued)
Ad valorem taxes are considered susceptible to accrual. Interest income is recorded whenreceived by the District. Expenditures are generally recognized under the modified accrualbasis of accounting when the related fund liability is incurred.
D.Budgets and Budgetary Accounting
The District complies with the "Louisiana Local Government Budget Act" and henceforth,budgets are adopted for its general fund on a modified accrual basis that is consistent withgenerally accepted accounting principles. Annual budgets are prepared by the Board ofCommissioners of the District along with a budget message and presented to the Board foradoption no later than 15 days prior to the beginning of the fiscal year. Budgets areadopted for the fiscal year and lapse at year-end. The budget is amended by supplementalappropriations as needed to during the year to comply with state law.
The Consolidated Gravity Drainage District No. 2 follows these procedures in establishingthe budgetary data reflected in the financial statements:
a. Formal budgetary integration is employed as a management control deviceduring the year for the General Fund. The budget is prepared and adopted on abasis consistent with generally accepted accounting principles (GAAP), whichfor the General Fund is the modified accrual basis of accounting.
b. The District approves and adopts total budget revenue and expenditures only.The District transfers budget amounts between expenditure classifications withinthe General Fund. Therefore, the level of budgetary responsibility is by totalexpenditures; however, for report purposes, this level has been expanded toclassifications of expenditures. Unused appropriations lapse at the end of theyear.
E. Cash and Investments
Cash includes amounts in demand deposits, interest-bearing deposits, and money marketaccounts. Under state law, the District may deposit funds in demand deposits, interest-bearing demand deposits, money market accounts, or time deposits with state banksorganized under Louisiana law and national banks having their principal offices inLouisiana. Under state law, the District may invest in Louisiana Asset Management Pool(LAMP), United States bonds, treasury notes, or certificates. Investments are stated at cost.
12
CONSOLIDATED GRAVITY DRAINAGE DISTRICT NO. 2OF THE PARISH OF ST. MARY
STATE OF LOUISIANA
Notes to Financial StatementsSeptember 30, 2007
Note 1 -Summary of Significant Accounting Policies, (Continued)
E. Cash and Investments, (Continued)
State law also requires that deposits of all political subdivisions be fully collateralized atall times. Acceptable collateralization includes the FDIC insurance and the market value ofsecurities purchased and pledged to the political subdivision. Obligations of the UnitedStates, the State of Louisiana and certain political subdivisions are allowed as security fordeposits. Obligations furnished, as security must be held by the political subdivision orwith an unaffiliated bank or trust company for the account of the political subdivision.
F. Bad Debts
Uncollectible amounts due for ad valorem taxes are recognized as bad debts in the yearthey are deemed uncollectible. The failure to utilize the allowance method to account forbad debts is not material to the financial statements.
G. Capital Assets
Capital assets, which include property, plant, and equipment, are reported in thegovernment-wide financial statements. Capital assets are capitalized at historical cost.Donated assets are recorded as capital assets at their estimated fair market value at the dateof donation.
The costs of normal maintenance and repairs that do not add to the value of the asset ormaterially extend asset lives are not capitalized. Major outlays for capital assets andimprovements are capitalized as projects are constructed. All capital assets, other thanland, are depreciated using the straight-line method over the following useful lives:
EstimatedDescription Lives
Buildings, pump stations and improvements 15-40 yearsDrainage system improvements 20-25 yearsEquipment, pumps and engines 15-25 yearsLand, canals, levees and construction in progress Not being depreciated
13
CONSOLIDATED GRAVITY DRAINAGE DISTRICT NO. 2OF THE PARISH OF ST. MARY
STATE OF LOUISIANA
Notes to Financial StatementsSeptember 30, 2007
Note 1-Summary of Significant Accounting Policies, (Continued)
^.Long-Term Debt
In the government-wide financial statements, long-term debt and other long-termobligations are reported as liabilities in the applicable governmental activities statement ofnet assets. In the fund financial statements, governmental fund types recognize bondpremiums and discounts, as well as bond issuance costs, during the current period. Theface amount of the debt issued is reported as other financing sources. Premiums receivedon debt issuances are reported as other financing sources while discounts on debt issuancesare reported as other financing uses. Issuance costs, whether or not withheld from theactual debt proceeds received, are reported as debt service expenditures.
\.Fund Equity
In the fund financial statements, governmental funds report reservations of fund balancesfor amounts that are not available for appropriation or legally segregated by outside partiesfor a specific future use.
] .Estimates
The preparation of financial statements in conformity with accounting principles generallyaccepted in the United States of America require management to make estimates andassumptions that affect the reported amounts of assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the financial statements and the reportedamounts of revenues, expenditures, and expenses during the reporting period. Actualresults could differ from those estimates.
Note 2 - Cash and Interest Bearing Deposits
At present, all of the District's cash and cash equivalents are in demand deposits at a fiscalagent bank. These deposits are stated at cost, which approximates market. Under state law,these deposits, (or the resulting bank balances) must be secured by federal depositinsurance or the pledge of securities owned by the fiscal agent bank. The market value ofthe pledged securities plus the federal deposit insurance must at all times equal the amounton deposit with the fiscal agent bank. Acceptable collateralization includes the $100,000FDIC/FSLIC insurance and the market value of securities purchased and pledged.Obligations of the United States, the State of Louisiana and certain political subdivisionsare allowed as security for deposits. Obligations furnished as security must be held by theDistrict or with an unaffiliated bank or trust company for the account of the District.
14
CONSOLIDATED GRAVITY DRAINAGE DISTRICT NO. 2OF THE PARISH OF ST. MARY
STATE OF LOUISIANA
Notes to Financial StatementsSeptember 30, 2007
Note 2 - Cash and Interest Bearing Deposits, (Continued)
The District's deposits are categorized to give an indication of the level of risk assumed bythe District at September 30, 2007:
Category 1 - Insured or collateralized with securities held by the District or by its agent inthe District's name.
Category 2 - Collateralized with securities held by the pledging financial institution's trustdepartment or agent in the District's name.
Category 3 - Uncollateralized (this includes any bank balance that is collateralized withsecurities held by the pledging financial institution, or by its trust departmentor agent but not in the District's name).
At September 30, 2007, the District has cash and interest-bearing deposits (book balances)totaling $2,984,941 as follows:
Operation & Debt CapitalMaintenance Service Project Total
Cash-Interest bearing checking $ 175,724 $203,548 $ 2,605,669 $2,984,941
Total $ 175.724 $ 203.548 $ 2.605.669 $2.984.941
Deposit balances (bank balances) at September 30, 2007, are secured as follows:
Bank balances $ 2.996.876
Federal deposit insurance (Category 1) $ 200,000Pledged securities (Category 1) 4,989,055
Total federal insurance and pledged securities $5.189.055
Excess S2.192.179
15
CONSOLIDATED GRAVITY DRAINAGE DISTRICT NO. 2OF THE PARISH OF ST. MARY
STATE OF LOUISIANA
Notes to Financial StatementsSeptember 30, 2007
Note 3 -Ad Valorem Tax Assessment
Consolidated Gravity Drainage District No. 2 submitted a proposition that received voterapproval in May 1998 that includes millage for operation and maintenance and millage forrepayment of a substantial bond issue for capital improvement projects. 4.67 mills and11.0 mills were assessed for the operation and maintenance fund and the debt service fundrespectively for 2007.
During the year 2007 the Consolidated Gravity Drainage District No. 2, submitted aproposition that received voter approval to change the millage for the Debt Service Fundfrom 11 mills to 8.5 mills and increase the mills for the operations in the MaintenanceFund from 4.67 mills to 7.17 mills.
Property taxes are levied each November 1 on the assessed value listed as of the priorJanuary 1 for all real property, merchandise and movable property located in the District'sboundaries. Assessed values are established by the St. Mary Parish Assessor's Office andthe State Tax Commission at percentages of actual value as specified by Louisiana law. Areevaluation was completed for the list of properties at January 1, 2007. Taxes are due andpayable December 31 and are delinquent after that date with interest being charged. Liendate for all delinquent properties is April 1.
16
CONSOLIDATED GRAVITY DRAINAGE DISTRICT NO. 2OF THE PARISH OF ST. MARY
STATE OF LOUISIANA
Notes to Financial StatementsSeptember 30, 2007
Note 4 - Capital Assets
Cost of Capital assets, not beingdepreciated
Land, canals and leveesConstruction in progress
Total not being depreciated
Cost of Capital assets, being depreciatedPumps & enginesPump station improvements, buildingsDrainage improvements
Total being depreciated
Beginning$ 2,315,352
113,557$ 2,428,909
$ 2,125,8825,622,5251,990,508
$ 9,738,915
Increases$
614,065$ 614,065
$--
$
Decreases---
$--
$
Ending$ 2,315,352
727,622$ 3,042,974
$ 2,125,8825,622,5251,990,508
$ 9,738,915
Less accumulated depreciation:Pumps & enginesPump station improvements, buildingsDrainage improvements
TotalsCapital assets, net
$ 1,708,3201,535,905
515,177$ 3,759,402$ 8,408,422
$ 56,252180,67463,804
$ 300,730-
$
$ 1,764,5721,716,579
578,981$ 4,060,132$ 8,721,757
Note 5 - On-Behalf Payments for Fringe Benefits
Property tax revenues include amounts withheld by the Sheriff to make "on-behalfpayments for fringe benefits" which represent the District's pro-rata share of retirementplan contributions for other governmental units. Because the District is one of severalgovernmental agencies receiving proceeds from a property tax assessment, it has to beara pro-rata share of the pension expense relating to the public employees who participatein the Parochial Employees Retirement System. The District's pro-rata share of therequired contribution $36,846, which was withheld by the Sheriff from property taxcollections to satisfy the District's obligation, has been presented as an "ad valorem taxdeduction" expenditure of the general fund in these financial statements. The Districthas also increased its property tax revenues by the same as the intergovernmentalexpenditure.
17
CONSOLIDATED GRAVITY DRAINAGE DISTRICT NO. 2OF THE PARISH OF ST. MARY
STATE OF LOUISIANA
Notes to Financial StatementsSeptember 30, 2007
Note 6 - Board of Commissioners and Per Diem Allowance
As of September 30, 2007, or during the year then ended, the following individuals servedon the Board of Commissioners for Consolidated Gravity Drainage District No. 2 andwere paid for meetings attended for the District. These amounts were treated as operatingexpenses by the District. During the year there were numerous special meetings held forconstruction projects.
MeetingName Per DiemCarl Kraemer, President $ 845Daniel Wilson 650Harrel Wilson 845Ray Autrey 650Tommy Longman 910
Monthly per diem for attending board meetings is $65.00 for each board member. Therewere five special or emergency meetings held during the year, primarily regardingemergency flooding and construction projects.
18
CONSOLIDATED GRAVITY DRAINAGE DISTRICT NO. 2OF THE PARISH OF ST. MARY
STATE OF LOUISIANA
Notes to Financial StatementsSeptember 30, 2007
Note 7 - General Long-Term Debt
A summary of general long-term debt is as follows:
Balance at Defeased/ Balance atDescription 9-30-06 Issued Retired 9-30-07
$5,240,000 of GeneralObligation Bonds, Series 1998,payable in annual installmentsof $225,000 to $250,000through March 1,2008,with interest rate at 5.4% $485,000 $ -- $235,000 $ 250,000
$2,470,000 of GeneralObligation Refunding Bonds,Series 2005 to defease a portion ofThe General Obligation BondsSeries 1998, payable in annualinstallments of $5,000 to $305,000payable through March 1, 2018with interest at 3.8% 2,465,000 ~ 5,000 2,460,000
$3,600,00 of GeneralObligation Bonds, Series 2005,payable in annual installmentsof $105,000 to $280,000 throughMarch 1, 2025, with interest of4.25% to 5.25% 3,495,000 ^ 115.000 3380,000
- S355.00Q S6.09Q.QOO
19
CONSOLIDATED GRAVITY DRAINAGE DISTRICT NO. 2OF THE PARISH OF ST. MARY
STATE OF LOUISIANA
Notes To Financial StatementsSeptember 30, 2007
Note 7- General Long-Term-Debt, (Continued)
On September 1, 2006, the District issued $2,470,000 in General Obligation Refunding Bonds with aninterest rate of 3.8% for the purpose of advance refunding of the callable maturities of the Issuer'sGeneral Obligation Bonds, Series 1998, dated September 1998, which mature serially on March 1 ofthe years 2009 through 2018, inclusive in principal and accrued interest to their redemption date ofMarch 1, 2008 and paying the cost of the issuance of the Bonds. The 1998 series had an averageinterest rate of 4.62%. The Bond proceeds of the $2,470,000 and $1,045,000 of surplus funds in theDistrict's Debt Service Fund were deposited into an irrevocable trust with an escrow agent to providefuture debt service payments of the Series 1998 General Obligation Bonds, and for payment of the$23,107 in Bond issue cost of the 2007 General Obligation Refunding Bonds. As a result, as ofSeptember 30, 2006, $3,420,000 of the 1998 bonds are considered defeased and that portion of theliability has been removed from the government-wide statement of net assets.
As required by GASB 23 the District did not reflect an economic gain or loss on the advancerefunding of the bonds due to the fact there was not a premium or discount on the call date of theoriginal bonds and there were no unamortized bond issue costs on the original bonds. The differencebetween the cash flows required to service the old debt and the cash flows required to service the newdebt and the complete refunding resulted in a net savings, the present value of which is $119,868.
The deferred amount on refunding on the government-wide financial statements in the amount of$71,893 is reflected as an asset on the statement of net assets. The deferred amount on refunding isthe difference between the reacquistion price of $3,491,893 (which is the funds required to refund theold debt) and the net carrying amount of $3,420,000 of the old debt.
The deferred amount on the refunding and the bond issue cost are being amortized over the life of thedebt on the statement of net assets.
There are a number of limitations and restrictions contained in the general obligation bond indentures.The District is in compliance with all significant limitations and restrictions at September 30, 2007.See page 21 for a summary of bond principal maturities and interest requirements.
20
CONSOLIDATED GRAVITY DRAINAGE DISTRICT NO. 2OF THE PARISH OF ST. MARY
STATE OF LOUISIANANotes to Financial Statements
September 30, 2007
Note 8- General Long-Term-Debt, (Continued)
The following is a summary of bond principal maturities and interest requirements as ofSeptember 30, 2007:
UnrefundedSeries 1998 Bonds
5.40%Payment Prinicpal Interest
Date Due Due3/1/2008 250,000 6,7509/1/20083/1/20099/1/20093/1/20109/1/20103/1/20119/1/20013/1/20129/1/20123/1/20139/1/20133/1/20149/1/20143/1/20159/1/20153/1/20169/1/20163/1/20179/1/20173/1/20189/1/20183/1/20199/1/20193/1/20209/1/20203/1/20219/1/20213/1/20229/1/20223/1/20239/1/20233/1/20249/1/20243/1/2025
Series 2005Refunding Bonds
3.80%Prinicpal
Due5,000
195,000
205,000
215,000
225,000
240,000
245,000
260,000
275,000
290,000
305,000
-
-
-
-
-
-
-
InterestDue46,74046,64546,64542,94042,94039,04539,04534,96034,96030,68530,68526,12526,12521,47021,47016,53016,53011,30511,3055,7955,795
-
-
--
-
-
-
-
-
-
-
-
-
-
Series 2005General Obligation Bond
Principal InterestDue Due120,000
125,000
130,000
140,000
145,000
155,000
160,000
170,000
175,000
185,000
195,000
205,000
215,000
225,000
240,000
250,000
265,000
280,000
80,20377,65377,65374,99674,99672,23472,23469,25969,25966,17866,17862,88462,88459,48459,48455,87155,87151,89051,89047,58947,58942,95842,95837,98637,98632,61132,61126,98626,98620,80620,80614,30614,3067,3507,350
CalendarYear
Totals
632,990
562,234
564,215
570,498
571,081
580,871
574,963
583,355
585,596
591,579
596,341
285,944
285,598
284,598
287,793
285,113
286,656287,350
$ 250.000 $ 6,750 $ 2,460,000 $ 597,740 $ 3,380,000 1,722.285 $ 8,416,775
21
Required SupplementalInformation
CONSOLIDATED GRAVITY DRAINAGE DISTRICT NO. 2OF THE PARISH OF ST. MARY
STATE OF LOUISIANABudget Comparison Schedule - General Fund
For the Year Ended September 30, 2007
REVENUES
Ad valorem taxesInterest
EXPENDITURESGeneral government - current:
Pump operation contractorsFuel and electricity costsRepairs and maintenanceAccounting and secretarialAdvertise, publishing costsCommissioners per diemEmergency operationsInsuranceSMP sheriffs pension deductionOther expenses
Total current expendituresCapital expenditures
Capital outlay - constructionTotal Expenditures
Excess (Deficiency) of RevenuesOver Expenditures
Net Changes in Fund BalancesFund Balances
Fund Balance, Beginning of Year
Fund Balance, End of Year
Budgeted
Original
$ 425,000200
$ 425,200
$ 87,50024,500
150,00011,100
7505,0008,000
70,00013,50012,100
$382,450
5,000387,450
$ 37,750
37,750
34,164
$ 71,914
Amounts
Final
$ 425,000200
$ 425,200
$ 87,50024,500
150,00011,100
7505,0008,000
70,00013,50012,100
$ 382,450
5,000387,450
$ 37,750
37,750
34,164
$ 71,914
Actual
$ 501,1685,408
$ 506,576
$ 90,05921,860
160,88811,065
2173,900
-67,10216,85714,801
$ 386,749
_386,749
$ 119,827
119,827
34,164
$ 153,991
Variance
Favorable
(Unfavorable)
$ 76,1685,208
$ 81,376
$ (2,559)2,640
(10,888)35
5331,1008,0002,898
(3,357)(2,701)
$ (4,299)
5,000701
$ (82,077)
(82,077)
-
$ (82,077)
22
Reports Required by GovernmentAuditing Standards
HERBERT J. ADAMS, JR., C.RA.
WILLIAM H. JOHNSON, III, C.RA.
ADAMS & JOHNSONCERTIFIED PUBLIC ACCOUNTANTS
P.O. BOX 729 • 517 WISE STREETPATTERSON, LOUISIANA 70392
(985) 395-9545
MEMBERS:
AMERICAN INSTITUTE OFCERTIFIED PUBLIC ACCOUNTANTS
SOCIETY OF LOUISIANACERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE AND ONINTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN
AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITHGOVERNMENT A UDITING STANDARDS
To the Board of CommissionersConsolidated Gravity Drainage District No. 2of the Parish of St. MaryState of LouisianaMorgan City, Louisiana
We have audited the financial statements of Consolidated Gravity Drainage District No. 2 acomponent unit of the St. Mary Parish Council, State of Louisiana, as of and for the year endedSeptember 30, 2007, and have issued our report thereon dated March 17, 2008. We conducted ouraudit in conformity with auditing standards generally accepted in the United States of America andthe standards applicable to financial audits contained in Government Auditing Standards, issued bythe Comptroller General of the United States.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered Consolidated Gravity Drainage District No. 2'sinternal control over financial reporting as a basis for designing our auditing procedures for thepurpose of expressing our opinions on the financial statements, but not for the purpose of expressingan opinion on the effectiveness of the Consolidated Gravity Drainage District No. 2's internal controlover financial reporting. Accordingly, we do not express an opinion on the effectiveness of theConsolidated Gravity Drainage District No. 2's internal control over financial reporting.
Our consideration of internal control over financial reporting was for the limited purpose described inthe preceding paragraph and would not necessarily identify all deficiencies in internal control overfinancial reporting that might be significant deficiencies or material weaknesses. However, asdiscussed below, we identified certain deficiencies in internal control over financial reporting that weconsider to be significant deficiencies.
A control deficiency exists when the design or operation of a control does not allow management oremployees, in the normal course of performing their assigned functions, to prevent or detectmisstatements on a timely basis.
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A significant deficiency is a control deficiency, or combination of control deficiencies, that adverselyaffects the Consolidated Gravity Drainage District No. 2's ability to initiate, authorize, record,process, or report financial data reliably in accordance with generally accepted accounting principlessuch that there is more than a remote likelihood that a misstatement of the Consolidated GravityDrainage District No. 2's financial statements that is more than inconsequential will not be preventedor detected by the Consolidated Gravity Drainage District No. 2's internal control. We consider thedeficiency described in the accompanying schedule of findings and questioned costs identified as 07-01 to be significant deficiencies in internal control over financial reporting,
A material weakness is a significant deficiency, or combination of significant deficiencies, that resultsin more than a remote likelihood that a material misstatement of the financial statements will not beprevented or detected by the Consolidated Gravity Drainage District No. 2's internal control.
Our consideration of the internal control over financial reporting was for the limited purposedescribed in the first paragraph of this section and would not necessarily identify all deficiencies inthe internal control that might be significant deficiencies and, accordingly, would not necessarilydisclose all significant deficiencies that are also considered to be material weaknesses. However, webelieve item 07-01 to be a material weakness.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Consolidated Gravity Drainage District No.2's financial statements are free of material misstatement, we performed tests of its compliance withcertain provisions of laws, regulations, contracts, and grant agreements, noncompliance with whichcould have a direct and material effect on the determination of financial statement amounts. However,providing an opinion on compliance with those provisions was not an objective of our audit, andaccordingly, we do not express such an opinion. The results of our tests disclosed no instances ofnoncompliance or other matters that are required to be reported under Government AuditingStandards.
The Consolidated Gravity Drainage District No. 2's response to the findings identified in our audit isdescribed in the accompanying schedule of findings and questioned costs. We did not audit theConsolidated Gravity Drainage District No. 2's response and, accordingly, we express no opinion onit.
This report is intended for the information of the Consolidated Gravity Drainage District No. 2, theLegislative Auditor of the State of Louisiana, and the finance committee of the St. Mary ParishCouncil. This restriction is not intended to limit the distribution of this report which, upon acceptanceby Consolidated Gravity Drainage District No. 2 is a matter of public record.
^^ADAMS & JOHNSONCertified Public Accountants
Patterson, LAMarch 17, 2008
24
CONSOLIDATED GRAVITY DRAINAGE DISTRICT NO. 2OF THE PARISH OF ST. MARY
STATE OF LOUISIANA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
For the Year Ended September 30, 2007
A. Summary of Audit Results:
1. The auditors' report expresses an unqualified opinion on the financial statements ofConsolidated Gravity Drainage District No. 2.
2. No instance of noncompliance material to the financial statements of ConsolidatedGravity Drainage District No. 2, which would be reported in accordance withGovernment Auditing Standards, was disclosed during the audit.
3. One significant deficiency in internal control, which is a material weakness. See findingitem 07-01.
4. The auditor has determined that there were no federal awards.
07-01 Finding: Lack of segregation of duties.
Cause: Our examination disclosed that there is not any segregation of duties within theDistrict's accounting function, (especially in the areas of cash receipts, bankreconciliations, cash disbursements, general ledger, and journal entries). This weaknessis due to the fact that the District employs only one person to handle all accountingfunctions. Due to the lack of segregation of duties, possible errors or irregularities couldoccur in the accounting records and not be detected. Understandably, since the Districtonly has one employee handling the accounting functions, the most ideal system ofinternal control or the most desirable accounting system may not be practicable. Alsothe cost of hiring additional employees to handle the accounting function might exceedany benefits gained. The management of the District is well aware of the loss of internalcontrol that results with one employee handling the accounting functions and areconstantly on watch for any problems that would occur.
25
CONSOLIDATED GRAVITY DRAINAGE DISTRICT NO. 2OF THE PARISH OF ST. MARY
STATE OF LOUISIANA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS(Continued)
For the Year Ended September 30, 2007
Recommendation: Based upon the cost-benefit of hiring additional accountingpersonnel, it may not be feasible to achieve complete segregation of duties. Werecommend the following procedures as to suggestions to compensate for the lack ofsegregation of duties within the District's accounting function.
1) Board approval for all invoices before the invoice is paid.
2) Require signatures of two approved Board members on each check to be written.
3) Have a Board member at each monthly Board meeting review the monthly bankstatements to review the checks clearing the bank and bank reconciliations. Thisreview would include comparing the information on each canceled check to thecheck register maintained by the bookkeeper, verifying payments were made toauthorized vendors, and verifying approved signatures.
4) On a monthly basis the Board should review the cash disbursement journal foragreement to the check register and cancelled checks.
5) On a monthly basis the Board should review the general ledger and journal entries toascertain if the recorded transactions were consistent with those previously approvedby the Board.
6) The Board should review bank statements and journals to verify that sewer fees andtax collections are deposited timely and to agree the remittance stub informationreceived from the sheriff. Also verify that property taxes have been correctlyallocated between the general fund and the debt service fund.
This list is not intended to be all inclusive of procedures that could be instituted tostrengthen internal controls but to provide suggestions that the Board may consider inorder to better monitor its accounting functions.
Response: Management concurs with recommendation.
26
Consolidated Gravity Drainage District No. 2 of the Parish of St. MaryState of Louisiana
Status of Prior Audit FindingsFor The Year Ended September 30, 2006
A. Summary of Prior Year Findings:
06-01 Finding!
Lack of segregation of duties.
Status:
This finding still exists. See 07-01 on the schedule of the current year findings andquestioned costs.
06-02 Finding:
Failure to prudently invest excess cash. In accordance with LSA-R.S. 33:2955, theDistrict should prudently invest excess cash. During the year ended September 30,2006 the District received 3,600,000 from a 2006 general obligation bond issue.These funds were deposited into a money market account paying an estimated.0198% when the average governmental money market yield during the investmentperiod was 4.95%. This rate was obtained using the average rate paid by theLouisiana Asset Management Pool, Inc. for this period. The difference in theinterest rates resulted in an estimated loss of $148,500 in investment revenues.
Status
The Board informed the bank to invest the bond proceeds into a money marketaccount and assumed the bank would pay them the bank's prevailing money marketrate on this account. Instead the bank put the money into a yield restricted accountearning .0198%when the bank's average rate for the year for a governmentalaccount was estimated at 3.85%. The board is still in negotiations with thebank in an effort to recoup the difference between what the yield restricted accountearned and the amount that would have been earned based on the bank's averageyield on governmental money market accounts. The Board will closely monitor allinvestment accounts at their monthly meetings.
27