C ITY O F P INEVILLE,L O UISIANA A NNU A L F INA N CIA L R EPO R T

Transcription

1 C ITY O F P INEVILLE,L O UISIANA A NNU A L F INA N CIA L R EPO R T F O R T H E Y EA R E N D ED JUN E 30,2001

2 T A B L E O F C O N T E N T S PA G E IN D EPEN D EN T A U D ITO R S'R EPO R T 12 IN D EPEND EN T A U D ITO R S'R EPO R T O N C O M PLIA N C E A N D O N IN TERN A L C O N TR O L O V ER FIN A N C IA L R EPO R TIN G B A SED O N AN A U D IT O F FIN AN C IA L STA TEM EN TS PER FO R M ED IN A C C O R D AN C E W ITH G O VERN M EN T A UD IT1N G STA N D A RD S 34 G EN ERA L PU R PO SE FIN A N C IA L STA TEME N TS C om bined B alance Sheet 5 Com bined Statem entof R evenues,expenditures an d Chan ges in Fund B alance A llg overnm enta lfund Types 6 C om bin ed Sta tem entof R evenues,expenditures an d C han ges in Fun d Balance Budget(GAAP Basis)an d Actual General an d SpecialR evenue Funds 7 Com bined Sta tem entof R evenues,expenses an d Chan ges in R etained Earnings Proprietary Fund Typ es 8 C om bined Sta tem entof C ash Flow s Proprietary Fund Types 9 N otes To Fin an cial Sta tem ents 1025 SU PPLEME N TAL FIN AN C IA L IN FO R M A TIO N G eneralfun d Schedule of Expenditures by D epartm ent SpecialR evenue Fun ds Com bining B al an ce Sheet SpecialR evenue Fun ds C om bining Sta tem entof R evenues an d Expenditures D ebtservice Funds Com bining Bal an ce Sheet D ebtservice Funds Com bining Sta tem entof R evenues an d Expendi tures CapitalProjectFun ds Combining Balan ce Sheet CapitalProjectFun ds Combining Statem entof Revenuesan d Expenditures Enterprise Fun ds C om bining B al an ce Sheet Enterp rise Fun ds C om bining Sta tem entof R evenues an d Expenses Schedule of Per D iem Paid to B oard M em bers SCHEDULE OF FIN DIN GS AND QUESTIONED COST 36 M A N A G EM EN T 'S C O R R EC TIV E A C TIO N PLAN 37 SUM M ARY OF PRIOR YEAR FINDIN GS AND QUESTINED COST 3840

3 R O ZIER,H ARR IN G TO N & M CK A Y C ertifi ed P ublic A ccountants JOHN S.R O~ ER,IV,CPA M.DALE HARRINGTON,CPA M ARK S.M CKAY,CPA LEE W.W ILLIS,CPA LAWRENCE E.M AYEAUX,CPA STEVEN E.KIMBALL,CPA 1407 Peterm an D rive ~ A lexandria,l ouisiana POST O FFICE B OX A LEXANDRIA,LOUISIANA 'f78 TELEPHONE (318) TELECOPIER (318) IndeoendentA uditors'r eoort To the H onorable M ayor and B oard of A lderm en City of Pineville,Louisiana W e have audited th e accom pan ying generalpurpose finan cialstatem ents of the City of Pineville, Louisiana as of and for the year ended June 30,2001,as listed in the ta ble of contents. These general purpose fm ancialstatem entsar e the responsibility of the City 'sm an agem ent. Our responsibility isto express an opinion on these generalpurpose finan cialsta tem ents bas ed on our audit. W e conducted our audit in accordan ce w ith auditing standar ds generally accepted in the U ni ted Sta tes an d th e stan dar ds applicable to finan cial audits contained in the G overnm ent A uditing Standards issued by the C om ptroller G eneralof th e U ni ted Sta tes. Those stan dar ds require thatw e plan and perform the audit to obta in reasonable assurance about w heth er the general purpose finan cialsta tem ents ar e free of m aterialm issta tem ent. A n auditincludes exam ini ng,on a testbasis, evidence supporting the am ounts an d disclosur es in th e general purpose finan cial sta tem ents. An audit also includes as sessing th e accounting principles used an d significan t estim ates m ade by m an agem ent,as w ellas evaluating th e overallgeneralpurpose finan cial sta tem entpresenta tion. W e believe thatour auditprovides a reas onable bas is for our opini on. In our opini on, the general purpose finan cial sta tem ent s referred to above present fairly, in all m aterialrespects,th e finan cial position of th e City of Pineville,Louisian a,as of June 30,2001,and the results of its operations an d cash flow s of its proprietary fund types for the year then ended in conform ity wi th general ly accepted accoun tin g principles. In accordan ce w ith G overnm enta uditing Standar ds,w e have also issued a reportdated D ecem ber 5, 2001,on our consideration of the C ity's internalcontr olover finan cial reportin g an d our tests of its com plian ce wi th certain provisions of law s, regulations, contr acts, and gran ts. That report is an integralpartof an auditperform ed in accordan ce wi th G overnm enta uditing Standards an d should be read in conjun ction wi th th isreport in considering th e resultsof our audit. O ur audit w as perform ed for the purpose of form ing an opinion on the general purpose finan cial sta tem ents taken as a w hole. The accom pan ying schedul e of expenditures of federal aw ar ds is presented for purposes of additional an alysis as required by U.S.O fi ce of M an agem entan d B udget M em be rs A m erican Institute of Certified Public A ccountants ~ Society of Louisiana,C PA s 1

4 City of Pineville D ecem ber 5,2001 P age 2 CircularA133,Audits of States,LocalGovernments,and NonProfitOrganizations,and isnota required partof the finan cialstatem ents. Such inform ation has been subjected to the auditing procedures applied in the auditof the financialsta tem ents and,in our opinion,is fairly stated,in all m aterialrespects,in relation to the finan cialstatem ents taken as a w hole. O ur audit w as m ade for the purpose of form ing an opinion on th e general purpose fin an cial statem ents taken as a w hole. The supplem ental inform ation listed in the Table of Contents is presented for purposes of additional an alysis an d is not a required part of the general purpose f'man cialstatem entsof th e City of Pineville. Such inf orm ation has been subjected to th e auditing procedur es applied in the audit of the generalpurpose financial statem ents an d in our opinion, is fairly presented in al lm aterialrespects in relation to the general purpose finan cial statem ents taken as a w hole. R O ZIER,H A R R IN G TO N & M ck A Y C ertified Public A ccountants 2

5 R O ZIER,H ARRIN G TO N & M CK AY C ertifi ed P ublic A ccountants JOHN S.R OZlER,IV,CPA M.DALE HARRINGTON,CPA M ARK S.M ckay,cpa LEE W.W ILLIS,CPA LAWRENCE E.M A YEAUX,CPA STEVEN E.KIMBALL,CPA 1407 Peterm an D rive ~ A lexandria,louisiana POST OFR CE B OX A LEXANDRIA,LOUtStANA 'f78 TELEPHONE (318) TELECOPIER (318) D ecem ber 5,2001 IN D EPEN D EN T A U D ITO R S'RE PO R T O N C O M PLIA N CE AN D O N IN TERN A L C O N TR O L O V ER FIN A N C IA L RE PO R TIN G B A SED O N AN A U D IT O F FIN AN C IA L STA TEM EN T S PER FO R M ED IN A C C O RD AN C E W ITH G O VER NM EN T A UD IT1N G STA N D A R D S To the H onorable M ayor and the B oard of A lderm en C ity of Pineville,Louisiana W e have audited the fm an cialstatem ents of the C ity of Pineville,as of and for th e year ended June 30, 2001, and have issued our report thereon dated D ecem ber 5, W e conducted our audit in accordan ce w ith auditing standards generally accepted in the U nited States and the standar ds applicable to finan cial audits contained in the G overnm ent A uditing Standards issued by the C om ptroller G eneralof the U ni ted States. C om plian ce A spartof obtaining reasonable assurance aboutwhether th e City of Pin eville'sfinan cialstatem entsar e free of m aterial m isstatem ent,w e perform ed tests of its com plian ce w ith certain provisions of law s, regulations,contracts an d gran ts,noncom plian ce wi th w hich could have a directan d m aterial efecton the determ ination of financial sta tem entam ounts.h ow ever,providin g an opinion on com plian ce wi th those provisionswas notan objective of our auditan d,accordingly,we do notexpresssuch an opinion. The resul ts of our tests di sclosed no instances of noncom plian ce th atare required to be reported un der G overnm enta uditing Standards. In tern al C ontrolo ver Fin an cial R eoortin ~ In planning an d perform ing our audit,w e consider ed City of Pin eville's in ternalcontrolover fm an cial reporting in order to determ ine our auditin g procedures for the purpose of expressin g our opinion on the fin an cial statem ents an d notto provide as sur an ce on th e in ternal controlover finan cial reportin g.o ur consideration of the in tern al control over finan cial reporting w ould not necessarily disclose all m atters in the intern alcontrolover finan cial reporting thatm ightbe m aterialw eaknesses. A m aterial w eakness is a condition in w hi ch the design or operation of one or m ore of the intern al control com ponents does not reduce to a relatively low level the ri sk that m issta tem ents in am ounts th at w ould be m aterialin relation to the generalpurpose fin ancial statem ents being audited m ay occur an d not be detected wi thin a tim ely period by em ployees in th e norm alcour se of perf orm ing their M e m be rs A m erican Institute of Certified Public A ccountants ~ Society of Louisiana,C PA s 3

6 City of Pineville D ecem ber 5,2001 P age 2 assigned functions. W e noted no m atters involving the internalcontrolover financialreporting and its operation thatw e consider to be m aterialw eaknesses. This reportis intended for the inform ation of m anagem ent. H ow ever,this report is a m atter of public record an d its distribution is notlim ited. R O ZIER,H A R R IN G TO N & M ck A Y C ertified Public A ccountan ts 4

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8 C om bin ed S ta tem en t of R e ven ues, F or th e Year E n ded J un e 3 0, G overnm entalfunds Ge neral Fund Spe ci~ Revenue Funds D ebt Serv ice Funds Capital Projects Funds Total (M emoran dum Only) _ R EVENUE S: Taxes: A d valorem $ 309, , ,292 $ 1,061,633 Sales 3,396,483 2,539,659 5,936,142 Licenses and perm its Fran chise fees 710, ,626 O ccupationallicenses Other Intergovem m ental 396,184 24, , , , ,184 24, ,877 Sanitation fees 802, ,402 Fines an d forfeitures 66,262 66,262 Other 215, , ,465 Totalrevenues , EXPEND ITURE S: Current: Generalgovern m ent: Judicial 315, ,497 Executive 138, ,167 Finan ce & A dm inistrative 1,168,632 23,258 1,191,8913 Public safety Public w orks 4,273,849 2,170,950 4,273,84'9 2,170,95,3 H ealth & W elfare 120, ,914 Culture & Recreation 388,882 8, ,982 CapitalExpenditures 148,922 1,653,980 1,802,902 DebtService ,077,70:~ Totalexpenditures 8,942,481 8,100 1,884, Excess(deficiency)of revenues over expenditures (2,396,767) 3,353,900 (1,645,328) (1,469,839) (2,158,03.1) OTHER FINANCING SOURCES (USES): O pe rating tran sfers in 3,010, ,120 1,277,971 4,877,954 Ope rating transfers out Proceedsfrom longterm debt (266,875) 102,393 (3,680,711) (209,380) (81,000) (4,237,966) Excess(deficiency)of revenuesand other sources over expenditures and other uses 449,614 (326,811) (120,088) 176, ,706 Fund balance (deficit)beginning of year ,745,127 Fund balance (deficit)end of year $ 436,613 $ 646,843 $ 502,599 The accom panying notes are an integral part of this statem en~

9 C om bined S ta tem en t of R e ven ues, Budget (GAAP Basis) and A ctual For th e Year En ded Jun e 30, R EV EN U ES: Taxes: A d valorem Sales Licenses and perm its Franchise fees Occupational licenses Other Intergovem m ental Sanitation fees Fines and forfeitures Other A m ended Budget $ 340,000 3,396, , ,530 24, , ,490 68, General Fund A ctual Varian ce Favora ble Am ended (Unfavorable) 309,229 $ (30,771) $ 3,396, , ,184 24, , ,402 66, ,411 74,654 (31) 287,753 (73,088) (1,853) 53,241 Budset Special Revenue Funds A ctual 501,000 $ 543,112 2,542,500 2,539, , , Varian ce Favorable (Unfavorable) $ 42,112 (2,84 t) 17,25(} (16,09~9 T otalrevenues '; EX PEND IT U R ES: Current: G eneralgovernm ent Public safety Public w orks H ealth & W elfare Culture & Recreation Capita lexpenditure DebtService 1,693,972 4,108,695 2,116, , ,975 1,622,296 4,273,849 2,170, , , , ,676 (165,154) (54,890) 241 (907) (148,922) (216,668) 13,600 8,100 8,100 13,600 8,100 (8,10(9 Totalexpenditures ,942,481 (514,624) ( Excess(deficiency)of revenues over expenditu res (2,200,907) (2,396,767) (195,860) 3,299,875 3,353,900 54,025 OTHER FINANCING SO URCES (USES): O perating tran sfers in Operating transfers out Proce ds from longterm debt 3,020,250 (405,880) 3,010,863 (266,875) 102,393 (9,387) 13~ ,393 (3,691,500) (3,680,711) t0,785 Excess(deficiency)of revenuesand other sources over expenditures and other uses Fund balance (deficit)beginning of year 413, ,614 36,151 (391,625) (326,811) , Fund balance (deficit)end of year $ $ $ $ TI~ accom panying notes are an Integral part of this s~ tem en~ 7

10 C IT Y O F P IN E V IL L E P rop rie ta ry F un ds C om bined S ta tem en t of R e venue, Exp enses and C hang es in R etained E arning s For the Year Ended June 30, Enterprise Funds Internal Service Fund Total (M em oran dum Only) O PE R A T IN G R E V E N U E S: U tility revenue O ther 2,708,267 $ $ 2,708, ,949 1, ,022 T otaloperating revenues 2,905,216 1,073 2,906,289 O PE R A T IN G EX PE N SE S: Salaries 706, ,375 C ontractlabor 37,236 37,236 Legaland professional 65,265 65,265 R epairs an d m aintenan ce 199, ,841 Supplies an d chem icals 287, ,353 Em ployee benefits 251,105 5, ,478 U tilities 417, ,724 Perm its an d testin g 23,959 23,959 D epreciation 773, ,269 B ad debts 49,441 49,441 O ther 20, T otaloperating expenses 5,373 2,837,745 O pera ting incom e (loss) 72,844 (4,300) 68,544 N O N O PE R A T IN G R E V E N U E S (E X PE N SE S~: Interestrevenue In terestexpense Loss on D isposalof Equipm ent 60,750 (109,568) (24,140) 60,750 (109,568) (24,140) Netincom e (loss)before opera ting tra nsfers (114) (4,300) (4,414) O THER FIN ANCIN G SO URCES (USES): O perating transfers in Operatin g transfers out 6,000 (675,989) 30,000 36,000 Netincom e (loss) (670,103) 25,700 (644,403) R etained earnings beginning of year: R etained earnings end of year The accom panying notes are an Integral part of this statem en~ 8

11 C IT Y O F P IN E VlL L E P rop rie tary F un ds For the Year En ded Jun e 30, H O perating incom e Adjustmentsto reconcile operating inco me to netcash Internal Enterprise Service Funds Fund Total (M emorandum Only) _ 72,844 $ (4,300) $ 68,544 provided by operat ing activities: D epreciation (Increase)decrease in receivable Increase (decrease)in accountsand otherpayables Increase (decrease)in co mpe nsated 773,269 I50,021 24, , ,021 24,119 ab sences payable 37,844 3L844 Increase (decrease)in healtheare claimspayable (39,514) (39,514) Increase (decrease)in depositsdue others 32,995 32,995 Netcash provided (used)by operating activities 1,091,092 (43,814) 1,047,278 CA SH FLO W FR O M N O NCAPITA L FIN A N CIN g A C TIV ITIES: Operating transfer s in Operating transfersout Net(increase)decrease in interfund rece ivables 6,000 (675,989) 157,462 30,000 36,000 (675,989) 157,462 Netincrease (decrease)in interfim d payab les (793,587) Netcash provided (used)by noncapital financing activities (1,306,114) ~W S FR O M CA PIT G A C T IV IT IE g_. In terestpaid on revenue bonds Capitalexpe nditure s Principalpaid on revenue bonds (lo9,568) (159,454) (60,000) (109,568) (159,454) (60,000 ) _ Netcash provided (used)by capitaland related financing activities (329,022) CA SH FLO W S FR O M IN V E STIN G A C TIV ITIE S Interestin com e ,750 Netcash provided (used)by capitaland related financing activities ,750 Netincrease (decrease) in cash B eginning cash balance Ending cash balance R estricted cash balance U nrestricted cash balance (483,294) 1,375, , ,310 (13,814) 14, $ 355,662 $ 780 (49L 108) 1,389, , ,310 $ 356,442 u Vt..~,n g,,iaju J~l.lu~llit:UI L ;I~;I!,flOW lll][orm lillon: D uring the year,the C ity's capitalim provem entfund expended $159, 454 for the im provementof the utility system. The accom p an. V/n8 notes are an infesv'a/p art of t~/$ stafem e~. 9

12 N OTE 1 SUM M ARY O F SIGNIFICANT A CCOUNTING POLICIES The City of Pineville (the City)wasincorporated underthe provisionsof the Lawrason Act. The City isgoverned by a M ayorand a Board of Alderm an consisting of five (5)m em bers. Services provided by the C ity include police protection, fire protection, street m aintenan ce, drainage, recreation an d sanitation.the C ity also operates a w ater distribution system,a sew er system and a m unicipalairp ort. The accom pan ying policies conform to generally accepted accoun ting principles for governm ental units. FinancialR edortin2 E ntity A s the m unicipal govern in g authority,for reportin g purposes,the City is considered a separate finan cialreporting entity. The fm an cialreportin g entity consistsof (a)th e prim ary governm ent(the City),(b)organizationsforwhich the prim ary governm entisfinan cially accoun table,an d (c)oth er organizations for w hich nature an d significance of their relationshi p w ith the prim ary governm entar e such that exclusion w ould cause th e report ing entity's financial sta tem ents to be m isleading or incom plete. Governm ental Accounting Standards Board (GASB) Statem ent No. 14 established criteria for determ ining w hi ch com ponentunits should be considered partof the City of Pineville for fm ancial reportin g purposes. The basic criterion for in cludin g a potentialcom ponent unitwi thin the reportin g entity is finan cialaccountability. The GA SB has setforth criteria to be considered in determ ini ng financialaccoun tability. Thiscriteria in cludes: 1. Appointing a voting m ajority of an organization'sgovern ing body,an d a) The ability of th e City to impose itswi llon thatorganization and/or b) The potential for the organization to provide specific fm an cial benefits to or im pose specific finan cialburdens on th e City. 2. Organizationsforwhi ch the City doesnotappoint a voting m ajority butare fiscally dependent on the City. 3. Organizationsforwhi ch th e reportin g ent ity finan cialsta tem ent sw ould be m isleading if data of the organization is notincluded because of the nature or significan ce of th e relationshi p. Based on the criteria presented above,the City hasno com ponent units.in reaching thi sconclusion, th e operations of the City CourtSystem w ere considered;how ever itw as determ ined thatthe City C ourtsystem did notm eetthe necessary criteria for clas sification as a com ponentunit.c om ponent 10

13 unit status does not apply because the C ity C ourt System is m anaged by elected ofi cials an d it functions in a fiscally independentm anner. Fund A ccounting The accounts of the C ity are organized on the basis of funds or account groups, each of w hich is considered a separate accounting entity. The operationsof each fund are accounted for w ith a separate set of selfbalancing accounts that com prise its assets, liabilities, fund equity, revenues, and expenditures. The variousfu ndsare sum m arized by ty pe in the financialstatem ents. Th e follow ing fu nd typesand accountgr oupsare used by the City : G overnm entalfund Type G eneralfund The G eneralfund is the generaloperating fu nd of the C ity. Itis used to account for allfinancialresources exceptthose required to be accounted for in another fu nd. SoecialR evenue Funds A ccoun tfor the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes. D ebtservice Funds A ccountfor transactions relating to resources retained and used for the paym entof principaland intereston generallongterm obligations. CapitalProjectFunds Account for financialresources received and used for the acquisition,construction,or im provem ent of capita lfacilities not reported in the other governm entalfunds. P roprietarỵ Funds Enterprise Funds Enterprise Fun ds are used to accountfor operations thatare financed and operated in a m anner sim ilar to private business enterprises w here the intentof the governing body isthatthe costs(expenses,including depreciation)of providing goodsor services to the generalpublic on a continuing basis be financed or recovered prim arily through user charges. Intern alservice Funds A ccount for the goods and serv ices provided to other fu nds on a costreim bursem entbasis. Fiduciary F unds _A gency Funds A ccount for assets that are held on behalf of others as their agent. A gency fu nds are custodial in nature and do not involve m easurem ent of results of operations. A ccount G roups G eneralfixed A ssets A ccount G ro This group of accounts is used to account for fixed assets of th e City other than those accounted for in the proprietary fu nd. 11

14 G enerallon~term D ebta ccountg rou This group of accounts is used to accountfor longterm debtof the C ity notaccounted for in the proprietary fund. B ASIS O F A CCOUNTING B asis of account ing refers to w hen revenues and expenditures or expenses are recognized in the account s and reported in the financialsta tem ents. B asis of accounting relates to the tim ing of the m easurem ents m ade,regardless of the m easurem entfocus applied. A llgovem m entalfunds and expendable trustfu nds are accounted for using the m odified accrualbasis of accounting. Their revenues are recogn ized w hen th ey becom e m easurable and available as netcurrent assets. Taxpayerassessed incom e and gross receipts are considered "m easurable" w hen in the hands of collecting governm ents and are recognized as revenue atthattim e. A nticipated refu nds of such taxes are recorded as liabilities and reductions of revenue w hen they are m easurable and their validity seem s certain. Expenditu res are generally recogn ized under the m odified accru albasis of accounting w hen the related fund liability is incured. An exception to this generalru le isprincipaland intereston longterm debt, w hich is recogn ized w hen due. In both governm entaland proprietary fu nds,inventories of supplies are considered im m aterialand are notrecorded. The proprietary fu nds are account ed for using the accrualbasis of accounting. R evenues are recogn ized w hen they are earned,and expensesare recogn ized w hen they are incured. Utility revenuesare billed on a cycle basis and are recogn ized in the m onth billed. U nbilled service receivables resulting from utility services rendered betw een cycle billing and the end of the m onth have been recogn ized in the accom pan ying financialsta tem ents. Th e basis of accounting follow ed by proprietary funds is sim ilar to accounting practices utilized by business enterprises. D ue to these sim ilarities, proprieta ry fu nds are allow ed to follow certain pronouncem entthatare developed by the FinancialAccounting StandardsBoard (FASB)forbusiness enterprises. H ow ever,the City only applies those FA SB pronouncem entsthatw ere issued on or before N ovem ber 30,1989. U se O f E stim ates The preparation of financial statem ent in conform ity w ith generally accepted accounting principles requires m anagem ent to m ake estim ates and assum ptions that afect certain reported am ounts and disclosures. A ccordingly,actu alresults could difer from those estim ates. R estricted A ssets: R estricted assets representresources thatm ustbe expended in a specific m anner. R estrictions of this nature are im posed by various contractu alobligations including grantagr eem ents and bond covenants. 12

15 J u n e 3 0, B udget Practices: B udgets including any am endm ents are prepared in the m anner prescribed by Louisiana revised statutes. C ity budgets present revenue and expenditures on a basis w hich is consistent w ith generally accepted accounting principles.b udgets are adopted annually for the generalfund and each specialrevenue fu nd. The rem aining fu nds are notrequired to adoptbudgets. Fixed A ssets: Fixed assets of governm enta lfu nds are recorded as expenditu res atthe tim e purchased or constructed, and the related assets are reported in the generalfixed assets accountgroup. Since the City does not capitalize infrastructu res,these item s are excluded from the general fixed assets account gr oup. N o depreciation has been provided on generalfixed assets.g eneralfixed assets are reported at historical cost,including any interestincurred during construction. Property and equipm ent used in the proprietary fund operations are recorded at cost or estim ated historicalcost including interestincurred during construction. D epreciation is com puted using the straightlin e m eth od over the estim ated usefullives of the assets.fixed assets are reported athistorical cost,including any interestincurred during construction. C ash A nd C ash E ouivalents: Am ountsreported ascash and cash equivalents(restricted and unrestricted)include allcash on hand, cash in bank accounts,certificates of depositand highly liquid investm ents. C om nensated A bsences: Personnelpolicy adopted by the C ity does not allow em ployees to carryover m aterial am ounts of vested leave.a s a result,no provision for com pensated absences is included in the accom pan yin g finan cialstatem ents. E ncum brance A ccounting: Purchase orders,contracts,and other com m itm ents to engage in fu tu re expenditu res are referred to as encum brances. Since encum brances do notrepresent liabilities or cur entexpenditu res,encum brances are notreported in the accom panying financialstatem ents. Interfund R eceivables A nd Payables: Interfund receivables and payables occur w hen transactions betw een individual fu nds are executed. These balances are typically liquidated w ithin one year of origination.the interfund receivables and payables are notelim inated in the preparation of com bined financialstatem ents. T otalc olum ns O n C om bined Statem ents: Tota l colum ns on the com bined sta tem ents are captioned "M em orandum " to indicate that they are presented only to facilitate financialanalysis. D ata in these colum ns do notpresentfinancialposition, resultsof operations,or changesin financialposition in conform ity w ith generally accepted accounting 13

16 principles. N either is such data com parable to a consolidation. Interfund elim inations have not been m ade in the aggregation of this data. C om pensated A bsences Full tim e and regular parttim e em ployees earn vacation at rates that vary depending of length of service an d civilservice classification.u nused vacation thatem ployees ar e allow ed to carryforw ar d is reported as longterm debt.a m ounts attributable to the utility fund ar e reported as an expense during th e year w hen leave is earned.am ounts attributa ble to governm entalfunds are reported in th e G eneral LongTerm D ebta ccoun tg roup an d an expenditure is reported w hen the unused vac ation is actually liquidated. U se O f E stim ates The preparation of financial statem ent in conform ity w ith generally accepted accounting principles requires m anagem ent to m ake estim ates and assum ptions that afect certain reported am ounts and disclosures. A ccordingly,actualresults could difer from those estim ates. Statem ent O f C ash Flow s: For the purpose of repo rting cash flow s,cash and cash equivalents includes allcash on hand,cash in banks and certificates of deposit. C ontributed C apital Contributed capital is recorded in proprieta ry funds that have received capita l gr ants or contributions from developers,custom ers,or other funds w hen such resources are restricted for the acquisition or construction of capita l assets. C ontributed capita l reported by the City isnotsubjectto am ortization. R eserves Reserves represent those portionsof fu nd equity legally segregated fora specific fu ture u se. N O TE 2 A CCOUNTS R ECEIVABLE A ccountsreceivable for the year ended June 30,2001are sum m arized as follow s: 14

17 N o te s To F in a n c ia l S ta te m e n ts J u n e 3 0, Special Capital G eneral R evenue Project Enterprise Fund Funds Funds Fun ds A ccounts R eceivable U tility A ccounts $ $ $ $ 589,282 Sanita tion 164,563 N OTE 3 C ASH A ND C ASH E QUIVALENTS D eposits are stated atcost,w hich approxim ates m ar ket.u nder sta te law,these deposits m ustbe secured by federaldeposit insurance or th e pledge of securities ow ned by th e fiscal agent bank.the m arket val ue of th e pledged securities plus th e federaldepositinsurance m ustatalltim es equalthe am ounton depositw ith the fiscal ag ent.th ese securities are held in the nam e of the pledgin g fiscal agentbank in a holding or custodial bank th atis m utually accepta ble to both parties. AtJune 30,2001,th e City has $3,275,651 in deposits(collected bank balan ce).th ese depositsare secur ed from risk by $133,827 of federa ldepositin surance an d $3,696,475 of pledged securitiesheld by the custodial bank in the nam e of the fiscalag entbank (GASB Category 3). Even though th e pledged securitiesare considered un collateralized (Category 3)underth e provisionsof G A SB Sta tem entn o.3,sta te law im poses a sta tutory requirem enton the custodial bank to advertise an d sellthe pledged securities wi thin 10 days of bein g notified thatth e fiscal ag ent has failed to pay deposited funds upon dem an d. N O TE 4 L ONG T ERM D EBT D ebtattributa ble to the acquisition of the City 'sutility system and the operation of the utility system is reported asan obligation of the City 'sproprietary (enterprise)funds.rem aining debtsare reported in the generallongterm debtaccountgroup.the City 'sdebts are sum m arized asfollow s: 15

18 N o te s To F in a n c ia l S ta te m e n ts Proprietary Fund O bligations G eneral Longterm D ebt Certificatesof Indebtedness $ $ 1,623,000 $ 1,623,000 R evenue B onds 1,680,000 25,000 1,705,000 Changes in the C ity's general longterm debt for the year ended June 30, 2001 ar e presented as follow s: B eginning D ebt D ebt Ending B alan ce Issued R etired B alance Certificatesof Indebtedness $ 1,867,000 $ $ 244,000 $ 1,623,000 R evenue B onds 175, ,000 25,000 G eneralo bligations 1,215,000 1,160,000 1,215,000 1,160,000 C ertificates of Indebtedness The C ity has issued certificates w hich are secured by and payable from a pledge of the excess of annual revenues above statutory,necessary and usualcharges incurred by the C ity.c ertificates of indebtedness outsta nding atjune 30,2001are described as follow s: $2,000,000 Taxable Certificates of Indebtedness, Series 1995 dated Septem ber 19, 1995, bearing interest at a rate of 8.5%. Principle is payable in annualinstallm entsranging from $135,000 to $281,000,w ith the finalinstallm entdue Septem ber 1,2005. $ 1,201,000 $630,000 Certificates of Indebtedness,Series 1997 dated M ay 21,1997, bearing interest at a rate of 4.95%. Principle is payable in annual installm entsranging from $47,000 to $81,000,w ith the finalinstallm ent due M arch 1, ,000 TotalCertificatesof Indebtedness $ 1,623,000 16

19 C IT Y O F N o te s To F in a n c ia l S ta te m e n ts J un e 3 0, R evenue B onds The C ity has issued revenue bonds that are secured by and payable solely from a pledge of funds generated by a specific revenue source.r evenue bonds outstanding at June are described as, follow s: $900,000 Utilities Revenue BondsSeries 1994,dated July 1,1994 w ith an effective rate of interestranging from 5. 0% to 6.0% depending on the length of m aturity.the bonds m atu re serially on M ay 1stof each yearin am ountsranging from $5,000 to $75,000.Finalm aturity isscheduled for M ay 1, 2019, unless the C ity elects to redeem the bonds prior to m atu rity.bondsbecom e eligible forredem ption on M ay 1,of $ 785,000 $1,100,000 Utilities Revenue Bonds,Series 1991 dated N ovem ber 1, 1991 bearing interestatrates ranging from 6% to 10% depending on the length of m aturity.the bondsm ature serially on M ay 1 of each yearin am ounts ranging from $20,000 to $95,000.Finalm aturity is scheduled for M ay 1,2016,unless the City elect to redeem the bonds prior to m aturity.bonds becom e eligible for redem ption on M ay 1, ,000 $ 1,750,000 Public Im provem ent Sales Tax Bonds,Series 1980 dated Septem ber 1,1980,bearing interestata rate of 8.0%.The bonds m ature serially on Septem ber 1stof each year in am ountsranging from $5, 000 to $150,000.Finalm atu rity isscheduled for Septem ber I,2005,unlessthe City electsto redeem the bondspriorto m aturity.bondsm aturing on or afterseptember1,1991are subjectto early redemption.the bondsare payable solely from and secured by an irrevocable pledge and dedication of the specialone percent(1% )salesand used tax being levied by the G eneralo bli2ation B onds The City has issued has issued generalobligations bonds payable from property ta xes levied in the m anner provided by Sta te Law. G eneral obligations outsta nding at June are described as, follow s: $1,160,000 General Obligation Refunding Bonds, Series 2001 dated June 1,2001 w ith interestrates ranging from 3.8% to 4.7%.Th e bonds m ature serially on M arch 1st of each year in am ounts ranging from $105,000 to $135,000.Finalm aturity is scheduled for M arch 1,2011, 17

20 unless the City elects to redeem the bonds prior to m aturity.bonds become subjectto early redemption on M arch 1,2007.The bondsare secured by the fullfaith and creditof the City and a specialtax levied on C apitall eases The C ity has acquired equipm ent by entering into capital leas ing arrangem ent s. For fin ancial reporting purposes,m inim um leas e paym ents relating to leas ed equipm ent have been capitalized. Th e leas ed property is reported by the generalfixed as sets accountgroup atits originalcost.capital lease obligations outsta nding atjune 30,2001are described as follow s: Lease agreem entdated July, 1999,executed in exchange for com puter equipm ent, w ith an original balance of $19,415, w ith an assum ed interestrate of 5.0%,payable in 3 annualinsta llm entsof $6,790 $ 6,467 Lease agr eem ent dated O ctober 1999, executed in exchange for an autom obile,w ith an originalbalance of $19,800,bearing interestata rate of 6.0%,payable in 48 m onthly insta llm entsof $465. 7,133 Installm ent purchase agr eem ent dated D ecem ber, 1999, executed in exchange for five Ford cars,w ith an original balance of $100,800, bearing interestata rate of 6%,payable in 48 m onthly installm ents of $1, ,732 Lease agr eem ent dated July 25, 2000, executed in exchange for equipm ent,w ith an originalbalance of $449,859,bearing interestata rate of 5.6%,payable in 60 m onthly insta llm ents of $6, ,372 Lease agr eem ent dated January 25,2001,executed in exchange for 5 autom obiles,w ith an originalbalance of $102,393,bearing interestata rate of 5.4%,payable in 24 m onthly insta llm entsof $5, ,954 Lease agr eem ent dated A ugust, 1999, executed in exchange for com puter equipm ent, w ith an original balance of $27,563, w ith an assum ed interest rate of 5.0%, payable in 3 annual insta llm ents of $9,639. 9,181 TotalCat~itallease oblieations $ 486,839 18

21 N o te s To F in a n c ia l S ta te m e n ts M aturity of L ongterm D ebt A schedule of m aturities of longterm debtexcluding capitalleases is presented as follow s: Y ear Ended June 30th Proprieta ry Fund O bligations G eneral Longterm D ebt 2002 $ 65,000 $ 373,000 $ 438, , , , , , , , , , , , ,000 Future m inim um lease paym ents due under capitallease arrangem ents are presented as follow s: Y earended June 30~ 2002 $ 210, , , ,070 A d V alorem T axes: The C ity bills and collects its ow n property taxes using the assessed values determ ined by the Tax A ssessorof RapidesParish. For the year ended June 30,2001,the City haslevied ad valorem taxesas follow s: 19

22 M ills L evied Levied for general alim ony as perm itted by State Law. Revenue from taxes levied for generalalim ony is reported by the generalfund Levied per proposition originally approved M ay 14, 1991 and subsequently renew ed,authorizing 10 m ills for a period of 10 year beginning w ith 1991 for the purpose of paying salaries of the em ployees of the fire and police departm ents. D ue to the restricted nature of these taxes,the revenue is reported in a special revenue fu nd Levied per proposition approved M ay 14, 1991,authorizing general obligation debt to run for a period of 20 years payable from a levy of ad valorem ta xes. Since these taxes are dedicated to debt service, revenue is reported in a debt 4.00 serv ice fund A d valorem taxes are assessed on a calendar year basis and are due on or before D ecem ber 31 in the year the tax is levied. R evenues fr om ad valorem taxes are recognized as revenue in the year billed. Sales T axes: Sales taxes are collected by the Parish of R apides and rem itted to the C ity on a m onthly basis.for the year ended June 30 the City has levied salestaxesas follow s: P ercentage L evied Levied per proposition approved A pril4,1987,authorizing a tax for th e operation of the G eneralfund.r evenue generated by this tax is reported by th e G eneral fu nd 1% Levied per proposition approved Septem ber 16,1978,authorizing a tax "w ith the avails or proceeds of said tax to be dedicated and pledged to the paym ent of principle an d in terestand other am ounts required on an y sales tax revenue bonds issued by the C ity for an y law fulpublic purp ose;provided,how ever,that the avails or proceeds of said tax notrequired in each m onth for principle,interest and other paym ents on any sales ta x revenue bonds, shall be allocated in an am ountequalto 50% of the proceeds of the tax for paying salaries of m unicipal em ployees of said C ity and the rem ain in g proceeds of the tax for constructing, acquiring and im proving capital im provem ents for said City including streets, sidew alks,bridges,w aterw orks,sew ers,drains an d recreation an d fire protection facilities.since revenue from thissource issubjectto variousrestrictions,itis reported in a specialrevenue fund 1% 20

23 N o te s To F in a n c ia l S ta te m e n ts J un e 3 0, In addition to the taxesdescribed above,the City isalso entitled to receive a portion (5% )of a parishw ide sales tax.since the parishw ide tax is unrestricted, its proceeds are reported as revenue by the generalfund. N OTE 6 PROPERTY A ND E OUIPM ENT Changes in generalfixed assets ar e presented as follow s: B eginnin g Endin g B alance B alance Land,Buildings & Im provem ents $ 2,712,712 $ 339,879 $ 230,929 $ 2,821,662 Furniture,Fixtures and Equipm ent 3,421, ,033 1,205,449 2,324,730 C onstruction in Process TotalG eneralfixed A ssets $ 6,382,773 $ 477,541 $ 1,637,325 $ 5,222,989 A sum m ary of the property and equipm entatjune 30,2001consists of the follow ing: U tility System Equipm ent M unicipala irportim provem ents C onstruction in Progress $ 21,064, , , ,340 N O TE 7 R ISK M A NAGEM ENT The C ity is exposed to various risk of loss related to torts;theft,dam age or destruction of as sets; errorsand om issions;injuriesto employees;and naturaldisas ters.the City insuresagainstthese risks by participation in public entity risk pools thatoperate as com m on in sur ance program s and by pur chasin g com m ercial in suran ce. Settled claim s resulting from these risk have not exceeded in sur ance coverage in an y of the pas tthree fi scal year s. N OTE 8 R ESTRICTED RE SOURCES Bond covenan ts require th e City to establish bank accoun ts w hich serv e as debt serv ice an d depreciation reserves. Funds m ay be disbursed from th ese accoun ts only un der specific circum stan ces described by the bond covenan ts. 21

24 N o te s To F in a n c ia l S ta te m e n ts J un e 3 0, N OTE 9 C ONTRm UTED C APITAL The City receivescontributed capitalfrom a variety of sources,including grants,developers,an d the capitalim provem entfund. C ontributed capita land chan ges in contributed capita lfor each enterprise fund is presented as follow s: B eginning B alance A dditions D isposals Ending B alan ce U tility Fund A irportfund $ 15,208,902 $ 236,072 $ 563,451 $ 14,881, Total $ 15,526,484 $ 236,072 $ 563,451 $ 15,199,105 N OTE 10 PENSION PLANS: Substantially allcity em ployees are m em bers of sta tew ide retirem ent system s.th ese system s ar e costsharing,m ultipleem ployer defined benefit pension plan s adm inistered by separ ate boards of trustees.inform ation regarding each plan is presented as follow s: M unicipale m ployees'r etirem ent System of L ouisiana: Plan D escription Th e System is com posed of tw o distinctplans,plan A and Plan B,w ith separate assets an d benefitprovisions. A llem ployeesof the City participating in the retirem entsystem are m em bers of Plan B. A ll perm anent em ployees w orking at leas t 35 hour s per w eek w ho are not covered by an other pension plan and ar e paid w holly or in partfr om m unicipalfunds an d allelected m unicipalofficials ar e eligible to participate in th e System. U nder Plan B,em ployees w ho retire at or after age 60 w ith atleast 10 year s of credita ble service,ator after age 55 w ith atleast30 years of credita ble service ar e entitled to a retirem entbenefit,payable m onthly for life,equalto 2 percentof their fm alaverage m onthl y salary in excess of $100 for each year of creditable serv ice.furtherm ore, em ployees wi th at leas t 10 year s of creditable service, but less than 30 years m ay take ear ly retirem entbenefits com m encing ator after age 60,w ith the basic benefitreduced 3 percentfor each year retirem entprecedes age 62.In an y cas e,m onthl y retirem entbenefits paid under Plan B cannot exceed 100 percent of finalaverage salary.fin alaverage salary is the em ployee's average sal ary over the 36 consecutive or joined m onth s that produce the highest average. Employees who term inate wi th at least the am ount of credita ble serv ice sta ted above,and do not wi thdraw their em ployee contributions,m ay retire at the ages specified above an d receive the benefit accrued to th eir date of term ination. Th e System al so provides death an d disability benefits. Benefits ar e established by state sta tute. Th e System issued an annualpublicly available finan cial report that in cludes financial sta tem ents an d required supplem entary inform ation for the System. Thatreport m ay be obta ined by w ritin g to the M unicipal Em ployees R etirem ent System of Louisian a, 7937 O fi ce Par k B oulevar d, B aton Rouge,Louisiana 70809,or by calling (225)

25 their annualcovered salary an d the C ity is required to contribute at an actua fial ly determ ined rate. N o te s To F in a n c ia l S ta te m e n ts J u n e 3 0, Funding Policy U nder Plan B,m em bers are required by state sta tute to contribute 5.0 percentof Contributions to the System also include onefourth of one percent of the taxes show n to be collectible by th e tax rolls of each parish,excepto rlean s an d EastB aton R ouge Parishes. These tax dollars are divided betw een Plan A an d Plan B based proportionately on the salaries of the active m em bers of each plan.the contribution requirem ents of plan m em bers an d the City ar e esta blished an d m ay be am ended by state sta tu te.a s provided by State law, the em ployer contributions ar e determ ined by actu arial valuation an d are subjectto chan ge each year bas ed on th e resultsof the valuation forthe priorfiscal year.the City 'scontributionsto the system w ere equalto the required contributions for the year. Firefi2hters'R eti rem ent System of L ouisiana Plan D escription M em bership in the Louisian a Firefighters'R etirem ent System is m an datory for allfulltim e fire fighters em ployed by a m unicipality,parish or fire protection districtthat did not enact an ordinan ce before Jan uary 1, 1980, exem pting itself from participation in the System. Em ployees ar e eligible to retire ator after age 55 w ith atleas t 12 year s of creditable service or ator after age 50 wi th atleas t20 year s of creditable service.u pon retirem ent,m em bers ar e entitled to a retirem entbenefit,payable m onthly for life,equalto 31/3percentof their finalaverage salary for each year of credita ble serv ice, not to exceed 100 percent of their finalaverage salary. Finalaverag e salary isth e employee'saverage salary over the 36 consecutive orjoined m onthsthatproduce the hi ghestaverage.em ployees w ho term inate wi th atleas t12 year s of serv ice an d do notwi thdraw their employee contributionsm ay retire ator afterage 55 (oratorafterage 50 with atleast20 yearsof creditable serv ice atterm ination)an d receive the benefitaccrued to th eir date of term ination.the system also provides death an d disability benefits.benefits ar e esta blished or am ended by sta te statute. The System issued an annual publicly available finan cial report that in cludes finan cial statem ents and required supplem entary inform ation for the System.Thatreportm ay be obtain ed by w ritin g to th e Firefighters'R etirem ent System,PostO ffice B ox 94095,B aton R ouge,loui sian a 70804,or by calling (225) Funding Policy Plan m em bers ar e required by sta te sta tute to contribute 8.0 percentof their annual covered salary and the City is required to contribute atan actuarial ly determ ined rate.the current rate is 9.0 percentof annualcovered payroll.the contribution requirem ents of plan m em bers an d the City ar e esta blished an d m ay be am ended by sta te sta tu te.a s proved by sta te law,the em ployer contributionsare determined by actu arialvaluation an d are subjectto chan ge each year bas ed on th e results of the valuation for the prior fiscalyear.the City's contributions to the equa lthe required contributions for the year. M unicipalpolice E m ployees R eti rem entsystem of L ouisiana Plan D escription A llfulltim e police departm entem ployees engaged in law enf orcem entar e eligible to participate in th e System. Em ployees w ho retire ator after ag e 50 wi th atleas t20 years of creditable 23

26 N o te s To F in a n c ia l S ta te m e n ts J u n e 3 0, service or at or after age 55 w ith at least 12 years of creditable serv ice ar e entitled to a retirem ent benefit,payable m onthly for life, equal to 3 percent of th eir finalaverage salary for each year of creditable serv ice. Finalaverage sal ary is the em ployee's averag e sal ary over th e 36 consecutive or joined monthsthatproduce the highestaverage.employeeswho terminate wi th atleastthe amountof credita ble serv ice sta ted above,and do no wi th draw their em ployee contributions,m ay retire atthe ages specified previously an d receive the benefit accrued to their date of term ination. The System also provides death an d disability benefits. B enefits are esta blished or am ended by sta te statute. The System issues an annualpublicly available finan cialreportth atin cludes fm ancial sta tem ents an d required supplem entary inform ation for the System. Th at reportm ay be obtained by w riting to th e M unicipal Police Em ployees R etirem ent System of Loui siana, 8401 U nited Plaza B oulevar d,baton Rouge,Louisian a ,orby calling (225) Funding Policy Plan m em bers are required by state statu te to contribute 7.5 percentof their annual covered salary and the City is required to contribute at an actuarial ly determ ined rate. The contribution requirem entsof plan m em bersan d the City isesta blished an d m ay be am ended by sta te statu te. A s provided by Louisian a R evised Statu te 11:103, the em ployer contributions ar e determ ined by actu arialvaluation an d are subjectto chan ge each year based on the resultsof th e valuation for the prior fiscalyear. Th e C ity's contributions to the plan w ere equa lto the required contributions for the year. N OTE 11 INTERFUI~ B ALANCES A m oun ts receivable an d payable am ong the C ity's various funds ar e sum m arized as follow s: Interfund R eceivables Interfund Payables G eneralfund SpecialR evenue Funds: D edicated 1% Sales Tax Fund D edicated 10 M illa d V alorem Tax Fund SpecialEconom ic DevelopmentProjects D ebtservice Funds: Public Im provem entsales Tax B ond Fund G eneralo bligation R efunding Series 2001 CapitalProjectsFunds: CapitalIm provem ents Fund M ajorequipmentpurchases Susek D rive Im provem ents M otor V ehicle O fi ce Enterpri se Funds: U tility Fund $ 107,409 48,597 1,658,460 1, ,364 $ 461, ,817 29,459 84,627 62,687 84, ,920 24

27 Existing conditions that m ay have financial consequences are referred to as contin gencies. Interfund R eceivables Interfund Payables M unicipala irportfund 43,972 A gency Funds: Consolidated Cash 1,175,316 1,619,384 $ 3,095,943 $ 3,095,943 N OTE 12 C ONTINGENCIES: C ontingencies existin g atjune 30,2001 ar e described as follow s: L itigation: Like m ostgovernm entalunits w ith extensive an d diverse operations,the C ity is occasionally nam ed as a defendan tin litigation.the ultim ate outcom e of litigation thatis pendin g or an ticipated cannot be estim ated atthe presenttim e. 25

28

29 C om b ining B alan ce Sh ee t J un e 3 0, D edicated Special 10 M ill D edicated A d Val orem 1% SalesTax Tax Cem etery Fun d Eco nom ic D evelopm ent Projects Total Cash Receivables Interfund receivable 1 214, $ 48,597 92,693 $ 493,591 42,242 $ 586, ,05g 48,597 Totalas sets $ $ 92,693 $ LIA BILITIE S AN D E O UITY LIAB ILITIE S: A ccounts and other payables Interfund payables 214,817 $ 1,233 $ $ 1,233 29, ,276 TotalLiabilities 214,817 1,233 29, ,50!) EQUITY: Fund Bal an ce,u nreserved 47,776 92, , ,843 Totalliab ilities an d equity 214,817 $ 49,009 $ 92,693 $ 535,833 27

30 Sp ecia l R e ven u e F un ds C om bining S ta tem en t of R e ven ues an d Exp en ditures F or th e Year E n ded J un e 3 0, D edicated Special D edicated 10 M ill A d V alore m Cem etery Econom ic D evelopm ent 1% SalesTax Tax Fun d Projects Total REVENU E S: Taxes: A d val orem $ 543,112 $ $ $ 543,11~ Sales Intergovem m ental Other 2,539, ,059 92, ,500 19,942 2,539,65~ 144,50( ~ Totalrevenues 2,539, ,171 92, ,362,00( EXPEND ITUR E S: Finance an d A dm inistration Culture an d Recreation 8,100 8,100 Totalexpenditures 8,100 Excess(deficiency)of revenues over expenditures , ,342 OTHER FINANCING SOURCES (USES): O perating tran sfers out To G eneralfund (1,269,847) (1,141,017) (2,410,864) To CapitalIm provem ents Fund (1,269,847) (1,269,847) Totalope rating tran sfers out Excess(deficiency)of revenuesand other sources over expenditures and other uses $ (575,846) $ 92,693 $ 156,342 $ (326,