West Baton Rouge Parish Waterworks District No. 2app1.lla.state.la.us/PublicReports.nsf/9EF01BAB374D6B7286257C2700… · Govemment Auditing Standards Schedule of Findings and Questioned

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WEST BATON ROUGE PARISH WATER WORKS DISTRICT NO, 2

BRUSLY, LOUISIANA

ANNUAL FINANCIAL REPORT

JUNE 30, 2013

under provisions of state law. this report is a public document. A copy 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 ofthe Legislative Auditor and, where appropriate, at the office of the parish clerk of court.

Release Date NOV 2 0 2013

WEST BATON ROUGE PARISH WATER WORKS DISTRICT NO. 2 BRUSLY, LOUISIANA

JUNE 30, 2013

TABLE OF CONTENTS

EXHIBIT PAGE

Independent Auditor's Report

Management's Discussion & Analysis

BASIC FINANCIAL STATEMENTS

Statement of Net Position

Statement of Revenues. Expenses and Changes in Net Position

Statement of Cash Flows

NOTES TO FINANCIAL STATEMENTS

SUPPLEMENTAL INFORMATION

Schedule of Per Diem Paid to Board Members

Comments on Operations on Water Utility System

Independent Auditor's Report on Internal Control Over Financial Reporting And On Compliance And Other Matters Based On An Audit Of Financial Statements Perfonned In Accordance With Govemment Auditing Standards

Schedule of Findings and Questioned Costs

Schedule of Prior Year Findings and Questioned Costs

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A

B

C

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2

1-2

3-8

9

10-11

12

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14-22

23

24

25

26-27

28

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BAXLEY AND ASSOCIATES. LLC P. O. Box 482 Hugh F. Baxley, CPA/CVA/PFS/FCPA 58225 Belleview Drive Margaret A. Pritchard, CPA

PIaquemine» Louisiana 70764 Phone (225) 687-6630 Fax (225) 687-0365 Staci H. Joffrion, CPA

To the Board of Water Works Commissioners West Baton Rouge Parish Water Works District No. 2 Brusly, Louisiana

INDEPENDENT AUDFTOR'S REPORT

Report on the Financial Statements We have audited the accompanying financial statements of the business-type activities of the West Baton Rouge Parish Water Worics District No. 2, a component unit of the West Baton Rouge Parish Council, as of and for the year ended June 30. 2013, and the related notes to the financial statements, which collectively comprise the Districfs basic financial statements as listed in the table of contents.

Management's Responsibiiity for tiie Financiat Statements Management is responsible fbr the preparation and feir presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this Includes the design, implementation, and maintenance of intemal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud o r error.

Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Govemment Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of 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 risks of material misstatement of the financiat statements, whether due to fraud or error. In making those risk assessments, the auditor considers intemal control relevant to the entity's preparation and fair presentation of the financial statements in order to 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 Intemal 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 fbr our opinions.

Opinions In our opinion, the financial statements refen̂ ed to above present fairiy. in all material respects, the respective financial position of the business-type activities of the West Baton Rouge Parish Water Wori<s District No. 2 as of June 30,2013. and the respective changes in financial position and cash flows fbr the year then ended in accordance with accounting principles generally accepted in the United States of America.

1

INDEPENDENT AUDITOR'S REPORT (continued)

Ot/ier Matters

Required Supplementary Infonnation Accounting principles generally accepted in the United States of America require that the managements discussion and analysis on pages 4 through 8 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements. Is required by the Govemmental Accounting Standards Board, who considers it to be an essential part of financial reporting fbr placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary infonnation in accordance with auditing standards generally accepted in the United States of America, which consisted of Inquiries of management about methods of preparing the infonnation and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the infbnnation 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 fbr the purpose of fbnning an opinion on the financial statements that collectively comprise the District's basic financial statements. The other supplementary information listed in the table of contents Is presented for purposes of additional analysis and Is not a required part of the basic financial statements.

Such information Is the responsibility of management and was derived fi^om and relates directly to the underiying accounting and other records used to prepare the basic financial statements. The infbnnation has been subjected to auditing procedures applied in the audit of the basic financial statements and certain additional procedures. Including comparing and reconciling such infbnnation directly to the underiying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairiy stated in all material respects in relation to the basic financial statements as a whole.

Other Reporting Required by Govemment Auditing Standards In accordance with Govemment Auditing Standards, we have also issued our report dated August 16,2013, on our consideration of the West Baton Rouge Parish Water Works District No. 2's intemal 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 report is to describe the scope of our testing of intemal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the intemal control over financial reporting or on compliance. That report is an integral part of an audit perfbnned in accordance with Govemment Auditing Standards in considering the West Baton Rouge Parish Water Worths District No. 2 *s intemal control over financial reporting and compliance.

(Ba?(!ey & Slssociates, LLC Plaquemine. Louisiana August 16. 2013

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MANAGEMENT'S DICUSSION AND ANALYSIS

WBRP WATERWORKS DISTRICT #2

p. O. Box 128 D Brusly, LA 70719 D 225-749-3744 D Fax: 225-749-8576

Management's Discussion and Analysis

As management of the Parish of West Baton Rouge, Louisiana, Waterworks District #2, we oflFer readers ofthe Parish of West Baton Rouge, Louisiana, Waterworks District #2's financial statements, this narrative overview and analysis ofthe financial activities ofthe Parish of West Baton Rouge, Louisiana, Waterworks District #2 for the fiscal year ended June 30, 2013. We encourage readers to consider the information presented here in conjunction with additional infonnation that is presented in the report.

Financial Highlights

The assets of the Parish of West Baton Rouge, Louisiana, Waterworks District #2 exceeded its liabilities at the close of the most recent fiscal year by $3,371,887 (net position). Of this amount, $571,317 (unrestricted net position) may be used to meet the government's ongoing obligations to citizens and creditors.

The government's total net position increased by $36,166. The increase is due to a more efficient management of tfie District's resources. At the same time, depreciation increased and major maintenance programs were completed.

Overview of Financial Statements

This discussion and analysis is intended to serve as an introduction to the Parish of West Baton Rouge, Louisiana, Waterworks District #2's basis financial statements. The Parish of West Baton Rouge, Louisiana, Waterworks District #2 basic financial statements comprise three components: 1) govemment-wide financial statements, 2) proprietary fiind fmancial statements, and 3) notes to fmancial statements. This report also contains other supplementary information in addition to the basic financial statements themselves.

Govemment-wide Financial Statements

The government-wide financial statements are designed to provide readers with a broad overview of the Parish of West Baton Rouge, Louisiana, Waterworks District #2's finances, in a manner similar to a private-sector business.

The statement of net position presents information on all of the Parish of West Baton Rouge, Louisiana, Waterworks District #2's assets and habilities, with the difference between the two reported as net position. Over time, increases or decreases in net

position may serve as a useful indicator of whether the financial position ofthe Parish of West Baton Rouge, Louisiana, Waterworks District #2, is improving or deteriorating.

The statement of activities presents information showing how the District's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless ofthe timing of related casii flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash fiows in fiiture fisc^ periods (e.g. eamed by unused vacation leave).

Fund Financial Statements. A fimd is a grouping of related accoimts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Parish of West Baton Rouge, Louisiana, Waterworks District #2, like other state and local govemments, uses fimd accounting to ensure and demonstrate compliance with finance-related legal requirements. The Parish of West Baton Rouge, Louisiana, Waterworks District #2 uses only enterprise fimds to account for its operations.

Enterprise fimds are used to report the same fimctions presented as business-type activities in the govemment-wide financial statements. The Parish of West Baton Rouge, Louisiana, Waterworks District #2 uses only enterprise fimds to accoimt for its operations.

Notes to Financial Statements

The notes provide additional information that is essential to a fiill imderstanding of the data provided in the govemment wide and fimd financial statements. The notes to the financial statements can be found on pages 14-22 of this report.

Other Infomiation

In addition to the basic financial statements and accompanying notes, this report also presents certain other information conceming the Parish of West Baton Rouge, Louisiana, Waterworks District #2's. Other supplementary information can be found on pages 23-25 of this report.

Govemment-wide Financial Analysis

As noted earlier, net assets may serve over time as a usefiil indicator of a government's fmancial position. In the case of the Parish of West Baton Rouge, Louisiana, Waterworks District #2, assets exceeded liabilities by $3,172,583 at tiie close ofthe most recent fiscal year.

By far, the largest portion of the Parish of West Baton Rouge, Louisiana, Waterworks District #2 net assets is the investment in capital assets (e.g. land, buildings, machinery, and equipment); less any related debt used to acquire those assets that is still outstanding. The Parish of West Baton Rouge, Louisiana, Waterworks District #2 uses these capital assets to provide services to citizens; consequentiy, these assets are not available for fiiture spending.

Table 1 Net Position

ASSETS 2012 2013

1,651,050 1.720.837 3,371,887

199.304 199.304

1,720.837 880,429 571.317

3,172,583

Current and other assets Capital assets Total assets Current and other liabilities

Total liabilities

Net position: Invested in capital assets.

Net of related debt Restricted Unrestricted

Total net position

1,552,795 1.822.821 3,375,616 239,199 239,199

1.822,821 880,429 433.167

3.375,616

At the end ofthe current fiscal year, Parish of West Baton Rouge, Louisiana, Waterworks District #2 is able to report positive balances in its net position. The same situation held tme for the prior fiscal year.

Key elements of this increase are as follows:

Table 2 Changes in Net Position

Revenues Program revenues

Charges for services Non-operating revenue Other general revenues

Total Revenues Other expenditures Total Expenses Increase (decrease) in net

Position Net Position Beginning

2012

641,241 7,387

78.654 727.282 538.378 538.378

188.904 2,947.513

2013

630,061 533

92.543 723.137 686.971 686.971

36.166 3.136.417

Net Position Ending 3.136.417 3.172.583

The government's total net position increased by $36,166. The increase is due to more efficient management ofthe district's resources and an increased customer base.

Capital Asset and Debt Administration

Capital Assets. The Parish of West Baton Rouge, Louisiana, Waterworks District #2 investment in capital assets for its business type activities as of June 30,2013 amounts to $1,720,837 (net of accumulated depreciation). This investment in capital assets includes land, buildings and system improvenients, machinery and equipment. The total decrease in Waterworks District #2's investment in capital assets for the current fiscal year was $(101,984) due to depreciation exceeding current year additions.

Major capital asset events during the current fiscal year included the following:

Upgrade of Existing Water Lines

Table 3 Water District #2 - Capital Assets (Net of Depreciation)

2012 2013

Buildings and system $1.822,821 $1.720.837

Additional information on the Parish of West Baton Rouge, Louisiana, Waterworks District #2's capital assets can be found on page 19 of this report.

Long-term debt. At the end of tiie 2012-2013 fiscal year, tiie Parish of West Baton Rouge, Louisiana, Waterworks District #2 had no outstanding long-term debt.

Anticipated Rate Changes

The Parish of West Baton Rouge, Louisiana, Waterworks District #2 last increased its rates in September 2012. Ehiring the fiscal year ended on June 30, 2013, unrestricted net position increased to $571,317. It is anticipated that unrestricted net assets will avoid the need to raise rates during the 2013-2014 fiscal year; however the rapid growth in the area may necessitate a rate increase.

Requests for Information

This financial report is designed to provide a general overview of the finances of the Parish of West Baton Rouge, Louisiana, Waterworks District #2 for all those with an interest in the government's fmances. Questions conceming any of the information provided in this report or requests for additional financial infomiation should be addressed to the West Baton Rouge Parish, Natural Gas & Water Office Manager, Pam Keowen.

BASIC FINANCIAL STATEMENTS

EXHIBIT A

WEST BATON ROUGE PARISH WATER WORKS DISTRICT NO. 2 STATEMENT OF NET POSITION

JUNE 30, 2013

ASSETS

Current Assets: Cash and cash equivalents $ 535,001 Accounts receivable - customers 118,705 Prepaid expense 14,869

Total Current Assets 668,575

Noncurrent Assets: Restricted Assets:

Cash a nd cash eq uivalents 982.475

Total Restricted Assets 982,475

Capital Assets: Property, plant and equipment 3.301,045 Less accumulated depreciation (1.580.208)

Total Capital Assets (Net) 1,720,837

TOTAL ASSETS $ 3,371,887

(Continued)

The accompanying notes are an integral part of this statement.

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EXHIBIT A ^continued)

WEST BATON ROUGE PARISH WATER WORKS DISTRICT NO. 2 STATEMENT OF NET POSITION

JUNE 30,2013

LIABILITIES AND NET POSITION

Current Liabilities: Payable from Current Assets -

Accounts payable $ Due to other govemmental agencies 54,334 Accrued salaries

54.334

Noncurrent Liabilities: Payable from Restricted Assets -

Customer deposits 144,970 144.970

Total Liabilities 199,304

Net Position: Invested in capital assets, net of related debt 1,720,837 Restricted net assets:

Restricted for system maintenance, well and emergencies 880,429

Unrestricted net assets 571,317

Total Net Position 3,172,583

TOTAL LIABILITIES AND NET POSITION $ 3,371,887


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EXHIBITS WEST BATON ROUGE PARISH WATER WORKS DISTRICT NO. 2

STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION

FOR THE YEAR ENDED JUNE 30, 2013

OPERATING REVENUE Charges for services Installations and reconnection fees Penalties Other

TOTAL OPERATING REVENUE

OPERATING EXPENSE Depreciation Maintenance and meter installation Utilities Personnel (salaries and benefits) Other

TOTAL OPERATING EXPENSE

OPERATING INCOME (LOSS)

NON-OPERATING REVENUE

Interest revenue

TOTAL NON-OPERATING REVENUE

CHANGE IN NET ASSETS

NET POSITION, BEGINNING

NET POSITION, ENDING


$ 630.061 53.384 35.731 3.428

722,604

101.984 54,322 54.702

358.924 117.039

686,971

36,633

533

533

36,166

3,136,417

$ 3,172,583

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EXHIBIT C WEST BATON ROUGE PARiSH WATER WORKS DISTRICT NO. 2

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED JUNE 30,2013

CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers Cash payments for goods and services Payments to employees

NET CASH PROVIDED BY OPERATING ACTIVHIES

CASH FLOWS FROM NON-CAPrTAL FINANCING ACmVPTES Customer deposits refunded Customer deposits received

NET CASH PROVIDED BY NON-CAPITAL FINANCING ACTIVITIES

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition of capital assets

NET CASH USED IN CAPITAL AND REUTED FINANCING ACTIVITIES

CASH FLOWS FROM INVESTING ACTIVITIES Matured certificates of deposit transferred to cash Interest on investments

NET CASH PROVIDED BY INVESTING ACTIVITIES

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS-BEGINNING OF YEAR

CASH AND CASH EQUIVALENTS-END OF YEAR

SUMMARY OF CASH AND CASH EQUIVALENTS Cunent assets Restricted assets

CASH AND CASH EQUIVALENTS-END OF YEAR

RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Operating income Adjustments to reconciie operating income to net

cash provided by operating activities: Depreciation Changes in operating assets and liabilities:

Accounts and miscellaneous receivables Prepaid expense Due to other govemmental agencies Accounts payable Accrued salaries

Total adjustments

NET CASH PROVIDED BY OPERATING ACTIVITIES

742,542 (270,904) (372.294)

99,344

(32.326) 49.961 17,635

533 533

117.512

1.399.964

$

$

$

1,617.476

535.001 962.475

1,617,476

35.633

101.984

19.938 (681) 318

(44.478) (13.370) 63.711

99.344


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NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2013

INTRODUCTION

West Baton Rouge Parish Water Works District No. 2 was established by the West Baton Rouge Parish Council as provided by Louisiana Revised Statute 33:3811 - 3821. The District is govemed by a Board of Commissioners, appointed by the West Baton Rouge Parish Council. The District is responsible for providing water utility service within the boundaries of District No. 2.

The accounting and reporting policies of the District relating to the funds included in the accompanying financial statements confomi to generally accepted accounting principles applicable to state and local govemments. Generally accepted accounting principles for local govemments include those principles prescribed by the Govemment Accounting Standards Board (GASB), the American Institute of Certified Public Accountants in the publication entitled Audits of State and Local Govemmental Units, and by the Financial Accounting Standards Board (when applicable).

The accounting and reporting framework and the more significant accounting principles and practices are discussed in subsequent sections of this Note. The remainder of the notes are organized to provide explanations, including required disclosures, of the District's financial activities for the fiscal year ended June 30. 2013.

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Reporting Entity

As the goveming authority of the Parish, for reporting purposes, the West Baton Rouge Parish Council is the financial reporting entity of West Baton Rouge Parish. The financial reporting entity consists of (a) the primary govemment (Council), (b) organizations for which the primary govemment is financially accountable, and (c) other organizations for which nature and significance of their relationship with the primary govemment are such that exclusion would cause the reporting enfit/s financial statements to be misleading or incomplete.

Governmental Accounting Standards Board Codification Section 2100 established criteria for determining which component units should be considered part of the West Baton Rouge Parish Council for financial reporting purposes. The basic criterion for including a potential component unit within tiie reporting entity is financial accountability. The GASB has set forth criteria to be considered in determining financial accountability. This criteria includes: (1) appointing a voting majority of an organization's goveming body, and the ability of the Council to impose its will on the organization, and/or the potential for the organization to provide specific financial benefits to or impose specific financial burdens on the Council; (2) organizations for which the Council does not appoint a voting majority but are fiscally dependent on the council; and (3) organizations for which the reporting entity financial statements would be misleading if data of the organization is not included because of the nature or significance of the relationship.

Because the West Baton Rouge Parish Council appoints a goveming board and because ofthe scope of public service, tfie District is deemed to be a component unit of tfie West Baton Rouge Parish Council, the goveming body of the Parish and the govemmental body with oversight responsibility.

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The accompanying financial statements present only information on the fijnds maintained by the District and do not present information on the Parish Council, the general govemment services provided by that governmental unit, or the other govemmental units tiiat comprise the govemmental reporting entity.

6. Basis of Presentation (Fund Accounting)

The accompanying financial statements of the Water District No. 2 of the Parish of West Baton Rouge. Louisiana have been prepared in conformity with accounting principles generally accepted in the United States of America as applied to governmental units. The Govemmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing govemmental accounting and financial reporting principles.

C. Defen'ed Compensation

Beginning with fiscal year 1999, defen'ed compensation plan transactions fomneriy reported on the Districfs balance sheet as a restiicted asset and a liability payable from restiicted assets, are excluded from the Districfs financial reporting.

D. Fund Stmcture

Water Distiict No. 2 of the Parish of West Baton Rouge, Louisiana, a component unit of the Parish, is an enterprise fund. Enterprise funds are used to account for operations that are financed and operated in a manner similar to private business enterprises - where the intent ofthe goveming body is that cost (expenses, including depreciation) of providing goods or services to the general public on a continuing basis will be financed or recovered primarily through user charges.

E. Method of Accounting

The accompanying financial statements of the West Baton Rouge Water Worics Distiict No. 2 have been prepared in conformity with GASB Statement No. 34. Basic Financial Statements - and Management's Discussion and Analysis - for Local and State Govemments, issued in June 1999. This statement established standards for financial reporting, witii presentation requirements originally including a statement of net assets (or balance sheet), a statement of activities, and a statement of cash fiows. The definition and composition of these statements, as originally defined in GASB Statement No. 34, are as amended by the GASB statement included in the following paragraph. The District also adopted the provisions of GASB Statement No. 33, Accounting and Financial Reporting for Nonexciiange Transactions, which require capital contributions to tfie District to be presented as change in net position.

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WEST BATON ROUGE PARISH WATER WORKS DISTRICT NO. 2 BRUSLY. LOUISIANA


GASB Statement No, 63, Financial Reporting of Deferred Outflows of Resources, Defened Inflows of Resources, and Net Position, was adopted for the fiscal year ended June 30. 2013. GASB Statement No. 63 provides financial reporting guidance for deferred outfiows of resources and deferred inflows of resources. Concepts Statement No. 4, Elements of Financial Statements, inti-oduced and defined those elements as a consumption of net assets by the govemment that is applicable to a future reporting period and an acquisition of net assets by the govemment that is applicable to a future reporting period, respectively. Previous financial reporting standards do not include guidance for reporting those financial elements, which are distinct firom assets and liabilities. Concepts Statement No. 4 also identifies net position as the residual of all other elements presented in a statement of financial position.

This Statement amends the net asset reporting requirements in GASB Statement No. 34, Basic Financial Statements - and t̂ anagemenVs Discussion and Analysis - for Local and State Govemments, and other pronouncements by incorporating defen'ed outflows of resources and deferred inflows of resources into the definitions ofthe required components of the residual measure and by renaming tiiat measure as net position, rather than net assets.

The Water Distiict utilizes the aecmal basis of accounting. Revenues are recognized in the accounting period in which they are eamed and expenses are recognized when they are incurred. Revenues for utility services are accmed through year-end.

F. Revenues and Expenses

Utility customers are billed throughout the month in cyclical billings by route. Revenues are accrued at year end from the date of last billing. Operating and non-operating revenues are recorded as they are incunred.

When an expense is incunred for purposes for which there are both restiicted and unrestricted net assets available, it is the Districfs policy to apply those expenses to restricted net assets to the extent such are available and then to unrestiicted net assets.

G. Budgetary Practices

The District uses budgets for management purposes but does not utilize any formal budgetary controls in its reporting system.

H. Encumbrances

Encumbrance accounting is not employed by the District.

I. Cash and Cash Equivalents

For purposes of the Statement of Cash Flows, all restricted and unrestricted cash in banks (demand deposits, interest-bearing demand deposits and money market accounts) and highly liquid investments, having a maturity of three months or less when purchased are considered to be cash equivalents.

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J. Accounts Receivable

Receivables include amounts due from customers for the use of utilities. All receivables are cunrent and therefore due within one year. Receivables are reported net of an allowance for uncollectible accounts and revenues net of uncollectibles. Allowances are reported when accounts are proven to be uncollectible. Accounts receivable of $118,705 are reported net of allowance for uncollectible accounts for the year ended June 30, 2013. Revenues of $722,604 are reported net of uncollectible amounts for the year ended June 30, 2013.

K. Prepaid Expenses

Payments made to vendors for services that will benefit periods beyond June 30,2013 are recorded as prepaid expenses.

L. Capital Assets

The cost of property plant and equipment, including significant betterments to existing facilities and infrastructure is recorded in the enterprise fund on its balance sheet. Interest costs during construction are capitalized. Depreciation of all exhaustible fixed assets is charged as an expense against operations and has been computed under the straight-line method based on the estimated useful lives ofthe individual assets. Estimated useful lives are as follows:

Office equipment 5 years Distribution system 10-30 years

Plant and equipment are valued at historical cost or estimated historical cost if actual cost is not available. The Districfs policy has set the capitalization threshold for reporting capital assets at $1,000.

M. Compensated Absences

All employees and other personnel are part-time. Accordingly, vacation and sick pay expenses are not incurred.

N. Risk Management

The District purchases insurance to provide workers' compensation coverage, and general liability and property insurance. There are no significant reductions in insurance coverage from the prior year. Settled claims have not exceeded commercial excess coverages in the last three years.

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NOTES TO FINANCIAL STATEMENTS O. Use of Estimates

The preparation of financiat statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabtiities at the date of tiie financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

P. Net Position

GASB Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for Local and State Govemments, required reclassification of net assets into three separate components. GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Defened 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 components of the residual measure and by renaming that measure as net position, raUier than net assets. GASB Statement No. 63 requires the following component of net position:

Net invested in capital assets - Consist of capital assets including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balance of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvements of those assets.

- Restricted net position - Consists of net position with constraints placed on use either by (1) extemal groups such as creditors, grantors, contributors, laws, or regulation of other govemments; or (2) taw through constitutional provisions or enabling legislation.

- Unrestricted net position - All other net position that does not meet the definition of "restricted" or "net invested in capital assets.

2. Cash and Cash Equivalents

For reporting purposes, cash and cash equivalents include cash, demand deposits, time deposits, and certificates of deposit. Under state law. West Baton Rouge Water Works District No. 2 may deposit funds with a fiscal agent under the laws of the State of Louisiana, any otiier state in the Union, or the laws of the United States. Further, West Baton Rouge Water Wort<s Distiict No. 2 may invest in the deposits or certificates of deposit of state banks organized under Louisiana law and national banks having principal offices in Louisiana. For the yearended June 30,2013. West Baton Rouge Water Worths District No.2 entered into a fiscal agency contract with a commercial bank domiciled within the Parish. The contract provided that all deposits are to be in Super NOW (negotiable orders of withdrawal) accounts paying a maricet rate of interest which approximates the interest rate on 13 week U.S. Treasury Bills. The contract called for 100% participation by American Gateway Bank.

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Under the contract, American Gateway Bank actedas the sen/icing bank or agent for all deposits and withdrawals of the District. At June 30, 2013. West Baton Rouge Water Worics District No. 2 had bank balances totaling $1,641,725.

American Gateway Bank maintains accounts in the name of West Baton Rouge Water Works District No. 2 and thus has federal deposit insurance in the amount of $250,000 for interest-bearing accounts and $250,000 for non-interest bearing accounts. Any excess of deposits over federal deposit insurance must be secured under state law by the pledge of bankowned securities. The maricet value of the pledged securities plus the federal deposit insurance must at all times be at least equal to the amount on deposit with the banks. These pledged securities are held in the name of the pledging banks in an independent custodial bank that is mutually acceptable to the parties involved.

The following is a summary of cash and cash equivalents of West Baton Rouge Water Worics District No. 2 in the fiscal agency contract at June 30, 2013, with the related federal deposit insurance and pledged securities:

Cash

Uncollateralized • Securities pledged and held by custodial banks in the name of fiscal agent banks at fair market value, at June 30, 2013

Bank Balances June 30.2013

$ 1,641,726

FDIC Insurance

$ 500,000

Balances Uninsured

$ 1,141,725

1.220.366

Excess of FDIC insurance and pledged securities over cash at June 30, 2013 $ 78,641

Even though the pledged securities are considered uncollateralized under the provisions of GASB Statement 3, Louisiana Revised Statute 39:1229 imposes a statutory requirement on the custodial banks to advertise and sell the pledged securities within ten (10) days of being notified by tiie Distiict that the flscal agency bank has failed to pay deposited funds upon demand.

3. Restricted Assets

Restricted assets of $982,475 at June 30,2013 consist of $837,505 of interest bearing deposits for future capital expenditures and emergency maintenance and repairs, and $144,970 of non-Interest bearing deposits for customer meter deposits.

19



4. Accounts Receivable

At June 30,2013, accounts receivable from customers are comprised ofthe following:

2013

Water Gari3age Unbilled water services

$ 58,356 60.349

$ 118,705

5. Propeity, Plant and Equipment

Property, plant and equipment andthe related accumulated depreciation for the yearended June 30, 2013 are as follows:

Water System Office Equipment Building/Office Constr. in progress

Balance 6/30/2012

$ 3.002,075 33,590

265.380 -

$ 3.301,045

Additions $

---

$

Deletions $

--

-$

Balance 6/30/2013

$ 3,002.075 33,590

265,380 -

$ 3.301.045

Accumulated Depreciation 6/30/2013

$ 1.449.364 33.412 97.432

-$ 1,580.208

Net Book Value 6/30/2013

$ 1.552.711 178

167.948 -

$ 1.720,837

The total depreciation expense for the year ended June 30, 2013 was $101,984.

6. Local Services Agreements

For the year ended June 30,2013, the District remitted coiiections to other govemmental agencies for services provided by the units. Such fees are not included in these flnancial statements and are as follows:

2013

West Baton Rouge Parish

Town of Addis, Louisiana

Town of Bmsly, Louisiana

Total local sen/ice agreements

$ 724.506

232.318

211.080

$ 1,167.904

20



The amount due to other govemment agencies at June 30, 2013 is listed as follows: 2013

West Baton Rouge Parish

Town of Addis. Louisiana

Town of Bnjsly, Louisiana

Total due to other govemments

$

$

53.503

350

481

54.334

7. Operating Lease

The District had the following lease at June 30, 2013:

- Greater Baton Rouge Port Commission - Land. The term of the lease commenced on May 1,2010 and will continue through April 30,2050. The District shall have the right to drill a test well for the purpose of obtaining portable water. The annual lease payment is $3,600.

The following is a schedule of future minimum lease payments required underthe operating lease:

Years Total Years Total

2014 J 2015 2016 2017 2018

2019-2022

B 3,600 3.600 3,600 3.600 3.600

14.400

2023-2027 2028-2032 2033-2038 2039-2043 2044-2048 2049-2050

$

$

18.000 18.000 18.000 18.000 18.000 17.400

139.800

8. Litigation

There is no litigation pending against the Board at June 30, 2013. An assessment has been asserted against West Baton Rouge Parish Water District Number Two by the State of Louisiana in the amount of $400,000 for work perfonned underthe direction ofthe Louisiana State Department of Transportation and Development during the year 2004. The work performed was a relocation of certain water lines owned by the District. At the time the work was performed, the District was informed that the cost would be shown as uncollectible, thereby relieving the District of payment. The District was informed that they would not owe any monies for the costof the relocation of the lines on various locations, and it Intends to oppose the assessment. As of July 1,2013, the Water District is underthe control ofthe Parish of West Baton Rouge. After discussing matters witii Parish officials, it is the Intent of the Parish of West Baton Rouge to make annual installments toward the payment of this assessment. No adjustments have been reflected in the cun-ent year financial report.

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9. Restricted Net Assets

On February 17, 2011, the Board made a resolution to restrict assets of $880,429 as follows:

- $503,614 for Major Maintenance on Water System - $160,102 for Emergencies - $216,713 for New Well Constmction

10. Abolishment of West Baton Rouge Water Worics District NO. 2

On April 25, 2013, the West Baton Rouge Parish Council issued Ordinance #9 of 2013 to abolish the West Baton Rouge Parish Water Worics District No. 2. The ordinance shall become effective July 1,2013. All property, equipment, materials, supplies and funds shall become the property of West Baton Rouge Parish Council. The West Baton Rouge Parish Council will provide for the continued water service to the former District Area and such action will ensure the maximum feasible coordination of govemment service to provide potable water to the area.

The West Baton Rouge Parish Council has the necessary personnel to provide for all matters related to the functioning of the District and will continue providing the daily management and operation of all activities associated with the District.

As a result of this ordinance, the assets, liabilities and net position ending balances at June 30, 2013 of the West Baton Rouge Parish Water Worics District No. 2 will be transfen-ed to the West Baton Rouge Parish Council as of July 1, 2013.

11. Subsequent Events

These financial statements considered subsequent events through August 16,2013, the date the financial statements were available to be issued.

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SUPPLEMENTAL INFORMATION

23

SCHEDULE 1

WEST BATON ROUGE PARISH WATER WORKS DISTRICT NO. 2 SCHEDULE OF PER DIEM PAID TO BOARD MEMBERS

FOR THE YEAR ENDEDJUNE 30, 2013

The per diem ofthe board members is included in the operating expenses ofthe enterprise fund. In accordance with Louisiana Revised Statute 33.3819, each member received $60 for each regular monthly meeting they attended.

Board Member Charies Prejean Philip Smith, Secretary Mary Williams, Vice Pres. James Rills, President Addie Crochet, Treas.

Total

$

$

540 480 600 720 660

3,000

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SCHEDULE 2

WEST BATON ROUGE PARISH WATER WORKSDISTRICT NO. 2 COMMENTS ON OPERATIONS OF WATER UTILITY SYSTEM


Customer statistics relative to water billed and number of customers for the year ended June 30, 2013 are as follows:

2013

Water Revenue

Quantity of water sold (in thousand gallons)

Average number of customers billed

Average quantity of water used per customer (in tiiousand gallons)

Annual average revenue per customer

Average revenue per thousand gallons sold

Cost of operations per 1,000 gallons sold

There are 2,753 residential and 103 commercial water utility customere as June 30,2013.

$

$

$

$

630.061

239.790

2.795

85.80

225.43

2.63

2.86

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BAXLEY AND ASSOCIATES, LLC P. O. Box 482 58225 Belleview Drive Plaquemine, Louisiana 70764 Phone (225) 687-6630 Fax (225) 687-0365

To the Board of Water Worths Commissioners West Baton Rouge Parish Water Worics District No. 2 Brusly, Louisiana

Hugh F. Baxley, CPA/CVA/PFS/FCPA Margaret A. Pritchard, CPA

Staci H. Joffrion, CPA

SCHEDULE 3

INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER IVIATTERS BASED ON AN AUDIT OF

FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE \imHGOVERNii/iENT AUDiTiNG STANDARDS

We have audited, in accordance with the auditing standards generally accepted in tiie United States of America and the standards applicable to financial audits contained in Govemment Auditing Standards issued by the Comptroller General of the Unites States, the financial statements of the business-type activities ofthe West Baton Rouge Parish Water Works District No. 2, a component unit ofthe West Baton Rouge Parish Council, as of and for the yearended June 30,2013, and the related notes to the financial statements, which collectively the District's basic financial statements, and have issued our report thereon dated August 16,2013.

Intemal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered West Baton Rouge Parish Water Works District No. 2's intemal control over financial reporting (intemal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District's intemal control. Accordingly, we do not express an opinion on the effectiveness of the West Baton Rouge Parish Water Works District No. 2's intemal controL

A deficiency in intemal contmi exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and con-ect misstatements on a timely basis. A material wealcness is a deficiency, or a combination of deficiencies, in intemal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and con-ected on a timely basis. A significant deftciency\s a deficiency, or a combination of deficiencies, in intemal control that is less severe than a material weakness, yet important enough to merit attention by those charged with govemance.

Our consideration of intemal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in intemal control that might be materia! weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in intemal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

26

SCHEDULES (CONTINUED)

INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUIDT OF

FINANCIAL STATEMENT S PERFORMED IN ACCORDANCE yNYTHGOVERNMENT AUDiTiNG STAA/DARDS (CONTINUED)

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the West Baton Rouge Parish Water Works District No. 2's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance witii those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Govemment Auditing Standards.

Purpose of this Report

The purpose of this report is solely to described the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's intemal control or on compliance. This report is an integral part of an audit performed in accordance with Govemment Auditing Standards In considering the entity's intemal control and compliance. Accordingly, this communication is not suitable for any other purpose. Under Louisiana Revised Statute 24:513, this report is distributed by the Legislative Auditor as a public document.

CB(K(!ey & dissociates, LLC

Plaquemine, Louisiana August 16. 2013

27

SCHEDULE 4

WEST BATON ROUGE WATER WORKS DISTRICT NO. 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS


A. Summary of Auditor's Results

1. The auditor's report expresses an unqualified opinion on the financial statements of West Baton Rouge Water Works District No. 2.

2. There were no significant deficiencies relating to tiie audit of tiie financial statements reported in the Report on Intemal Control Over Financial Reporting and On Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Govemment Auditing Standards.

3. No instances of noncompliance material to the financial statements of West Baton Rouge Water Worics District No. 2 were disclosed during the audit.

B. Findings - Financial Statement Audit- None

28

SCHEDULE 5

WEST BATON ROUGE WATER WORKS DISTRICT NO.2 SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS


2012-1 - RECONCILIATION OF COLLECTION REPORTS

Condition: It was noted during the audit that the monthly collection reports did not agree with the cash received in the general ledger revenue accounts.

Recommendation: The Water District should reconcile collection reports to the general ledger revenue accounts on a monthly basis. Management should perform a review of the general ledger revenue accounts for proper classification.

Cun-ent Status: The finding was corrected in the cunrent year.

29

Documents

West Baton Rouge Parish Waterworks District No. 2app1.lla.state.la.us/PublicReports.nsf/9EF01BAB374D6B7286257C2700… · Govemment Auditing Standards Schedule of Findings and Questioned