to the operation ofthenew jailfacility.the Commission receivesfrom the Sherif

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1 6 CAD D O CORREC"I'ION AL CENTER N otesto the FinancialStatem ents June 30,1996 The Caddo CorrectionalCenter("Center")wascreated by the Caddo Parish Comm ission ("Commission")underthe provisionsoflouisiana Revised Statute 33:1236 providing forthe m aintenance and operation of a parish prison.the Center's originalfacility had a m axim um capacity of 464 m ale and fem ale inm ates. This facility w as located iu the southw estportion of the parish on approxim ately 1,247 acres. Effective February 1995, inmatesbegan moving to the new parish jail. The new jailisamodem correctional facility thathasa m axim um capacity of 1,017 m ale and fem ale inm ates. (A ) Reporting Entity The basic criterion fordeterm ining whethera governm entalorganization should be included in a prim ary governm ental unit's reporting entity for general purpose financialstatem ents is financial accountability. Financial accountability includes theappointmentofavoting majority ofthe organization'sgoverning bodyand the ability of the prim ary governm entto im pose its w illon the organization or ifthere is a financialbenefit/burden relationship. In addition,an organization w hich is fiscally dependenton the prim ary governm entshould be included in its reporting entity. O n A pril6, 1982,an agreem ent w as reached betw een the C addo Parish Sheriff ("Sheriff")and tire Com m ission whereby operationsofthe Centerwere transferred from the Com m ission to the Sheriff. The Sheriff w as to operate the facility, m aintain accounting records, prepare an am m al budget, and prepare financial inform ation forthe C om m ission. The C om m ission w as to m aintain the facility. The m aintenance and operation of the Center w as funded by an ad valorcm property tax levied by the Sherif on the property ow ners in the Parish ofc addo. A nnually, upon m utual agreem ent by the Sheriff and the Com m ission, appropriation w as m ade to provide the funds necessary for the Sheriffto ope rate the Center. The financialrecords of the Centerare included in the Caddo Parish Com m ission (governing authority ofthe parish)comprehensive AnnualFinancial Reportto com ply w ith generally accepted governm entalaccounting standards. In D ecem be r 1994, a new agreem ent w as reached betw een the Sherif and the Commission.In thisagreement,thesheriffwilmanageandoperatethenew jail facility.the Sheriffw illstillm aintain accounting records,prepare aunualbudgets, and prepare financial information for the Com m ission. The m aintenance and operation of the C enter is funded by the one-quartercent sales tax. The Sheriff receives directly allfundsgenerated from any source asa resultofoperationsatthe new jail,including concessions,telephones,and grants,allofwhich are dedicated to the operation ofthenew jailfacility.the Commission receivesfrom the Sherif a portion of the m onies received by the Sherif from the housing of nonparish prisonersforitsmaintenancecostsofthenew jailfacility related to theseprisoners. Thisam ountisto be negotiated by the Parish Adm inistratorand the Sheriffbased on actualm aintenance and operating costs. an (Continued)

2 Schedule 1 CA DD O CORRECTION AL CENTER Fiduciary Funds -A gency Funds Com bining B alance Sheet June 30,1996 Inm ate Personal Fund Inm ate W elfare Fund Total A ssets C ash and ca~sh equivalents Rex:eivable $ 41,387 16,0 19 6,186 57,406 6,186 $ 41,38 _ 7 22,205 63,592 Liability D ue to others $ 4!,387 22~ 20~} 63~ 92 See accom panying independentauditors'report.

3 CA D D O CO RRECTION AL CEN TER N otesto the FinancialStatem ents (9) A sum m ary of changesin agency fund balancesdue to othersfollow s A gency funds: Inm ate PersonalFund Inm ate W elfare Fund Total B alance, Balance July 1, June Ạ dd tons Reductions 1996 $ 23,161 18,973 $ _ 42,13zl 537,148 62, , ,922 41, ,477 22, ,399 6~ (10) A tjune 30,1996,the C enterisnam ed as a defendantin severallaw suits. In the opinion of m anagem ent,sufficientinsurance coverage existsto coverthese suits. Accrued claim spayable in the amountof$149, 864 have been established fora settlem ent thatisto be paid overthe nextnine yearsatapproxim ately $18, 000 peryear.

4 CA D D O CO RR ECq'ION AL CEN TER N otesto the FinancialStatem ents A llem ployers Actuarially determ ined em ployer'scontribution for1995 Totalestim ated payroll Tile Center Estim ated actuarially determ ined em ployer'scontribution C overed payroll Percentage ofcentercontribution requirem entto total contribution requirem ent Em ployercontributions Em plc~yee c~3at~ibutions Percentage of em ployercontributionsto totalpayroll Percentage of em ployee contributionsto totalpayroll $ 11,742, ,714, ,301 6,555, % 390, ,828 6% 8.7% Percentage of netassetsavailable forbenefitsto pension benefit obligations 125.5% 88.3% 83.6% Percentage of unfunded pension benefitobligation to annual covered payroll 36.3% 27.2% 37.9% Percentage of Sheriffcontribution to annualcovered payroll 6.0% 5.0% 5.0% (8) stretirem ent B enefits In addition to the pension benefits described in N ote 7, the Center provides certain continuing postm tirem enthealth care and life insurance benefits through the Louisiana Sheriffs'A ssociation G roup BenefitsPlan in accordance w ith state statutes to allretired em ployees w ho w ere participants of the plan prior' to their retirem ent date. prem ium sforretiree health insurance arc paid by the Centerw ith life ordependentcare prem ium sbeing paid by the retiree. The Centerrecognizes the costof providing these benefits as an expenditure w hen the m onthly prem ium s are due. The Center's cost of benefitsprovided to retireeswasapproxim ately $17,268 for1996. The

5 CA D D O CO RREC I'IO N AL CEN TER N otesto the FinancialStatem ents At June 30, 1995, the date of the latest actuarial valuation, the pension benefit obligation of the System w as$71,200,358 asfollows: Pension benefitobligation: Retireesand beneficiariescurrently receiving benefits C urrentem ployees: A ccm nulated em ployee contributions Em ployer-financed vested Em ployer-financed nonvested Totalpension benefitobligation N etassets available forbenefits,book value (m arketvalue $427,651,447) U nfunded pension benefitobligation $ 152,233,579 _399~291,542 $ 71~2~ 358 The foregoing actuari~d assum ptions are based upon the presum ption thatthe plans w illcontinue. W ere the plans to terminate,differentactuar ialassum ptions and other factorsm ightbe applicable in determ ining the pension benefitobligations. Significantactuarialassum ptionsused to com pute actuarially detem lined contribution retirem ents are the sam e as those used to com pute the pension benefit obligations. The unfunded pension benefitobligation of the System is to be am ortized over a forty-yearperiod,w ith thirty-fouryearsrem aining. (C ) C ontribution R eouirem ents and C ontributions M ade The System 'sfunding policy providesforcontributionsto be m ade by the Centerand the individualemployeesparticipating in the plan asdescribed in (A)above. The follow ing information has been obtained fi om the latestactuarialinform atiou of the System which was June 30, 1995,exceptfor individualemployee (Center) am ountsw hich are estim ated based on the C enter'spayrollasa percentage ofthe total estim ated payroll.

6 C AD D O CO RRECTION AL CENTER N otesto the FinancialStatem ents A llsheriffsand alldeputiesw ho are found to be physically fitand who are betwcen the agesof 18 and 50 atthe tim e of original em ploym entare required to participate in the System.Em ployeesare eligible to retire atorafterage 55 w ith atleast12 years of credited service and receive a benefit,payable m onthly forlife,equalto a percentage of theirfinal-average salary foreach yearofcredited service.the percentage factorto be used foreach yearofservice is2.5 percentforeach yeariftotalservice is atleast 12 butlessthan 15 years,2.75 percentforeach year iftotal serv ice is atleast 15 but lessthan 20 year s,and 3 percentforeach yeariftotalservice is atleas t20 years. In any case,the retirem ent benefit cannot exceed 100 percent of their final-average salary.final-average salary isthe em ployee'saverage salary overthe 36 consecutive orjoined monthsthatproduce the highestaverage.employeeswho term inatewith at least12 yearsofservice and do notw ithdraw theirem ployee contributionsm ay retire ator after age 55 and receive the benefit ae m ed to their date of term ination as indicated previously. Em ployees w ho term inate w ith atleas t20 years of credited service are also eligible to electearly benefits between ages 50 and 55 w ith reduced benefitsequalto the actuarialequivalentofthe benefitto which they w ould otherwise be entitled at age 55. The System also provides death and disability benefits. Benefitsare established by state statute. Funding~ ources Contributionsto the System include one-halfofone percentofth e taxesshow n to be collectible by the tax rolls of each parish and a directappropriation from the State of Louisiana. State statute requires covered em ploye s to contribute a pe rcentage of theirsalariesto the System. A sprovided by Louisiana Revised Statute 11:103,the employercontributionsarc detemdned by an actuarialvaluation and are subjectto change each yearbased on the results ofthe valuation forthe priorfiscalyear. The Sheriff w as required to contribute 6% of covered em ployees salaries in Covered em ployees ar e required to contribute 8.7% oftheirsalary to the System in Total Payroll and A m ount C ontributed Total1996 payrollforcenterem ployeescovered by the System was $6,555,023 and the anrountcontributed by the Centerto th e System was $393,301 or6% ofthe total covered payroll.totalcurrentyearpayrollforallcenterem ployeesw as$6,762,649. ndin,~ Status and P rovress The am ountshow n below as"pension benefitobligation" isa standardized disclosure measureofthepresentvalueofpension benefits,adjusted fortheeffectsofprojected sal m7 increas es and step-rate benefits,estim ated to be payable in the future as a result of em ployee service to date. The m easure is intended to help users assess a plan's funding status on a going-concern basis, assess progress m ade in accum ulating sufficient assets to pay benefits w hen due, and m ake com parisons am ong public em ployee retirem entsystem s and em ployers. The m easure is the actuarial present value ofcredited projected benefitsand isindependentofthe funding method used to determ ine contributionsto the System. (Continued)

7 CAD D O CO RRECTION AL CEN TER N otesto the FinancialStatem ents (4) Receivables The G eneralfund receivablesatjune 30, 1996,are asfollow s (5) (6) Salestax Intergovem m entalrevenues State funds: H ousing state prisoners Supplem entalpay Caddo Parish Sherif C addo Parish Com m ission Telephone revenue C om m issions forservices-com m issary sales Refunds and reim bursem ents Total A sum m ary of changes in generalfixed assetsfollow s B alance,july 1,1995 A dditions-prim arily ofi ce filrnishingsand equipm ent D eletions B alance,june 30, I t $ 702, , ,222 2, ,829 18,559 5,936 14,825 $ 1~!16~ 29t $ 1,588, ,046 56~ 53 $ 1~ A sum m ary of changesin accrued com pensation absencesand accru ed claim sfoll ow s (7) Balance,July l,1995 N etadditions B alance,june 30,1996 [)efined B enefit Pension Pla (A ) D_ escrip!ion of Plan C laim ~ $ 125,000 8,278 $ 133~278 C om pensated A bsences 325, ,~ 07 2 :3~ p9_1 (Continued)

8 CAD D O CO RRECq'IO N AL CEN TER N otesto the FinancialStatem ents The budgetis adopted on a cash basis w hich m eans thatforbudgetary purposes revenues and expendituresare recorded in theyear received (paid)ratherthan in the yearearned (incurred). Inventory itemsare also recorded atthe time purchased ratherthan when consum ed. Adjustmentsnecessary to convertthe excessofrevenuesoverexpendituresatthe end ofthe year on the budgetary basis to a basis consistent w ith generally accepted accounting principlesare asfollow s: Excessofrevenuesoverexpenditures(cash basis) Adjustments: Revenue accru als E xpenditure accruals Excessofrevenuesoverexpenditures(GAAP basis) $ 2,107,489 1, L1.28~ 046) $ (3) C ash and ('.ash E auivalents At June 30, 1996, the Center's deposits were entirely insured by federal depository insurance orcollateralized w ith securitiesheld in the nam e ofthe pledging fiscalagent bank in a holding or custodialbank thatis m utually acceptable to both parties. The carrying value of the Center's deposits w as $1,684,996 and the bank balance w as $2,098,214. The difference isdue to the outstanding checksatjune 30,1996. State statutes generally authorize the Center to invest in direct U nited States Treasury obligations; indebtedness issued or guaranteed by federal govern m ental agencies' (provided such obligations are backed by the full faith and credit of the U.S. governm ent); indebtedness issued or guaranteed by federally sponsored U.S. govern m entagencies;tim e certificatesof depositof state banks organized underthe law s of Louisiana and nationalbanks having theirprincipaloffice in the state of Louisiana;or m utualortrustfund institutions w hich,are registered w ith the Securities and Exchange C om m ission. (Continued)

9 CAD D O CORRECTIONAL CENTER N otesto the FinancialStatem ents (G ) The accounting and reporting treatm entapplied to the fixed assets and long-term liabilities associated w ith the Center are determ ined by the fund's m easurem ent focus. The GeneralFund is accounted for on a spending or "financial flow" m easurenlentfocus.thism eansthatonly currentassets and currentliabilitiesare generally included on the balance sheet.reported fund balance (netcurrentassets) is considered a m easure of "available spendable resources." G overnm ental fnnd operating statementspresentincreases(revenuesand otherfinancing sources)and decreases (expenditures and other financing uses) in net current assets. A ccordingly,the GeneralFund is said to presenta sum m ary of sources and uses of"available spendable resources" during a period. Fixed assetsused in governmentalfund type operations(generalfixed assets)are accounted for in the G eneral Fixed A ssets A ccount G roup, rather than in governm entalfunds. Such assets are valued athistoricalcost,if purchased,and at fairm arketvalue atdate of gift,ifdonated.n o depreciation has been provided for assets accounted forin the G eneralfixed A ssetsa ccountg roup. Long-term liabilities expected to be financed from govern m ental funds are accounted forin the GeneralLong-Term O bligations AccountG roup, notin lhe G eneralfund. funds." They are concern ed only w ith the They are not involved w ith m easurem entof Because of their spending m easurem ent focus, expenditnre recognition for governm entalfund types is lim ited to exclude am ounts represented by noncurre nt liabilities. Since they do notaffectnetcurrentassets,such long-term am ounts are notrecognized as governm entalfund type expenditures or fund liabilities. They are instead reported as liabilities in the G enerallong-term O bligations Account G roup. (n ) C om nensated A bsences Full-tim e em ployeesofthe Centerearn from 10 to 20 days ofvacation leave each year depending upon their length of service. Em ployees resigning or heirs of deceased em ployees m ay be paid for unused vacation leave of up to 25 days at theircurrentrate ofpay. Sick leave is granted atthe discretion of the Sheriff,but em ployeesarc notpaid foraccum ulated sick leave upon retirem entorresignation. The Center accru es costs incun'ed for vacation leave in the G enerallong-term O bligation A ccountg roup. A ccrued sick leave benefits are notaccrued due to the Center'spolicy ofnotpaying benefitsupon term ination.n o accru alism ade in the G eneralfund because the currentportion of the liability does notexceed a norm al year'saccum ulation of benefitsand isdeem ed im m aterial. (Continued)

10 Schedule 2 CAD D O CORRECTIONAL CENTER Fiduciary Funds-A gency Funds SchedulesofChangesin B alancesd ue to O thers Forthe yearended June 30,1996 Balancesatbeginning of period A dditions: D eposits -inm ates Telephone com m issions hltereston investm ents O theradditions Totaladditions R eductions: A ccounts closed to inlnate w elfare fund Purchasesof personalitem s Subscriptions Postage P ecreationalequipm entand supplies G eneralsupplies Ialnate supplies I!ducationalprogram s B uilding and groundsm aintenance P efundsto inm ates O therreductions Totalrcductions Balancesatend of period Inm ate Personal Fund $.23,16! 536, ,148 2, ,764 20, ,453 5 _ 18,922 s 4 L3382_ Inm ate W elfare Fund 18,973 58, ,232 62,709 2,686 5,073 4,735 14,964 17,466 1,196 13,357 59,477 Total 42, ,295 58, , ,857 2, ,764 2,686 20,319 5,073 4,735 14,964 17,466 1, ,453 13, ~399 22,205 6~ 592 Sec accom panying independcntauditors'report

11 7 CAD D O CORRECTION AL CENTER N otes to the FinancialStatem ents (B) Basis of Presentation The Center's operations are accounted for w ith a separate set of self-balancing accounts that com prise its assets, liabilities, fund balance, revenues, and expenditures. The follow ing fund typesand accountgroups are utilized G overnm ental Funds The G eneralfund, as provided by Louisiana Revised Statute 33:1422, is the principalfund ofthe Centerand accounts forthe operations of the Center. The Center'sprim ary source ofrevenue is a 1/4 centsales tax and appropriations from the C om m ission and the Sheriff. O thersources of revenue include per diem for housing state prisoners,state supplem entalpay for deputies,telephone revenue, and cm nm issary sales. G eneraloperating expendituresare paid from thisfund. A gency Funds A gency Funds are used to accountfor assets held in a trustee capacity. Tire Center's A gency Funds are used for the receipt aud disbursem ent of funds for inm ates of the Caddo CorrectionalCenter. The A gency Funds are custodial in nature and do notinvolve m easurem entof resultsof operations. A ccount G roug~ A ccountgroupsare used to establish accounting controland accountability forthe Center's generalfixed assets and general long-term obligations. The G eneral

12 CAD D O CORR ECT IONAL CENTER N otesto the FinancialStatem ents (l) Reservation of Fund B alance Reservesrepresentthose portionsoffund balance notappropriable forexpenditure orlegally segregated fora specific future use. (J) Deferred C om nensation Em ployees of the Center can contribute to a deferred com pensation plan established by the Sheriff.T he plan is reported as an agency fund in the financial statem ents of the Sheriff and includesthe contributing em ployeesof the C enter. (K ) C ~m narati,~e T otal D ata Amountsin the "Totals(M emorandum Only)"columnsofthefinalcialstatements represent a sum m ation of the com bined financial statem ent line item s of the

13 CA DD O CORRECTIONAL CENTER G eneralfund Statem entofrevenues,expenditures,and Changesin Fund B alance -Budgetand A ctualon a Budgetary Basis Y earended June 30,1996 Bud g. ~ Actual Variance - Favorable LU_nfavorab!e_). Revenues: Salestax revenue lntergovernm entalrevenues; Federalgrants-Food D istribution Program State grants: H ousing state prisoners State supplem entalpay Localgrants: C addo Parish Com m ission C addo Parish Sheriff C om m issionsforservices-com m issary sales Telephone revenue Interest M iscellaneous Totalrevenues $ 6,600,000 7,110,358._ 43,000 1,900, ,000 1,750,000 1,350, , ,000 10,000 44,000 _!2,638,000 2,418, ,403 2,307,997 1,350, , ,992 31, ,2~ ,358 (43,000) 518,451 (41,597) 557,997 I 48,286 7,992 21, ,580,131 Expenditures: Public safety: Personalservicesand related benefits lvlaterialsand supplies Statutory charges Contractualservices O therchm-ges Capitaloutlay Totalexpenditures Excessofrevenuesoverexpenditures Othelfinancing source-sale offixed assets 8,403, ,600 1,574, , , , ,900 7,500 8,605, ,796 1,523, , ,745 _ 220,71~ 12~ _ 117,738 2,100,393. 7,096 (202,332) (76,196) 50,417 24,735 (59,545) ~ ) 1,296,493 Excessofrevenuesand othersource over expenditures 811,400 2,107,489 1,296, A) Fund balance atbeginning of year Fund balance atend ofyear 332,05_3. 33 _2,~5~3 $ _ 1j~43,453 2,439,542 1,296,089 See accom panying notesto financialstatem ents.

14 CAD D O CO RRECT ION A L CEN TER G eneralfund Statem entof Revenues,Expenditures, and C hangesin Fund B alance Yearended June 30,1996 Revenues: Salestax lntergovernm entalrevenues: State sources: H ousing state prisoners State supplem entalpay C addo Parish Sheriff Caddo Parish Com m ission C om m issions forservices-com m issary sales Telephone revenue Interest M iscellaneous T otalrevenues E xpenditures: C urrent-public safety: Personalservices and related benefits M aterialsand supplies Statutory charges C ontractualcharges O thercharges C apitaloutlay Totalexpenditures Excessof revenuesoverexpenditures O therfinancing source -proceedsfl'om sale of generalfixed assets Excessofrevenues and otherfinancing source overexpenditures Fund balance atbeginning ofyear Fund balance atend of year $ 7,172,012 2,471, ,910 1,350,000 2,454, , ,567 31,461 44,183 14,449~70 1 8,610, ,978 1,516, , , ,273,036 2,176,665 _ 7,096 2,183, ,053 $ _ 2,51 515,814 See accom panying notesto financialstatem ents

15 CADDO CORRECTIONAL CENTER Com bined Balance Sheet-A llfund Typesand A cconntgroups June 30,1996 (with comparative totalsforjune 30,1995) Fiduciary Govern m ental EU_n~ T~v,I~_ V um_d~ _ Agency GeneralFuad _ EKnds AccountGrou gs_~ ~. G eneral G eneral Totals F:xed Long-Term ~ Only)_ ~ ns Cash and cash equivalents Receivables Inventory; Com m odities Other Fixed assets Am ountto be provided for acccaed claim s A m ountto be provided for accrued com pensated absences Totalassets $ 1,627,590 57,406 1,160,291 6,186 46, ,344-1,797,240 2_ 8~8450~48 63~592-1,684, ,477 46,823 10,344 1,797~ , , ~ 2_69 _ 3L6A61& 93_ ~201~149 48, ,893 24,287 33, , , ~ L~ 3,098,687 Liabilities,Fund Balance,and Qdh_erCr j its Liabilities: D ue to Caddo Parish Sheriff $ Accountspayable 234, Accnaed expen ses 78, D ue to others - 63,592 Accru ed claim spayable 16, Accrued com pensated absences Totalliabilities Fund Balance and OtherCredits Investm entin general fixed assets Fond balance: R eserved forcontingencies Reserved forinventory Unreserved -undesignated Totalfund balance and othercredits ~ ~29~2~34 100,000 57,167 2_3~ ~3 5_ ,8t , ,542 78,106 63, , , ,979 42, ,991 36!,99! 325 j% c~ 2& = _ 09 _ 5 ~ U~78 ~0~ 7 1,797,240-1,797,240 1,588, ,000 57,167 2~3.5~ 64~7 4~ ~ 13~0~4 100,000 57, I T otalliabili~.ies, fund balaaee,and othercredits $ 2, _ 845~O 48 63~592 j.~79_7,24_q 49GS26~9 5~201,149 & 09k,68 ~_d See accom panying notesto financialstaterrlen'ts.

16 O urauditw as m ade forthe purpose of form ing an opinion on the fin ancialstatem ents taken as a w l'lole. The accom panying supplem entalinform ation schedules li sted in the foregoing table of contents are presented for purposes of additional analysis and are not a required part financialstatem entsof the of the Caddo Con'ectionalCenter. auditing Suchinformationhasbeensubjected to the procedures applied in the auditof the financialstatem ents and, in our opinion, is fairly stated in allm ate rialrespects in relation to the financialstatem ents taken asa w hole. A ugust23,1996

17 K PM G PeatM arw ick L.LP 1900 Com m ercialnationaljow er 333 Texas Street Shreveport,I.A N D EPEND ENT A U D ITO RS'REPO RT The H onorable D onald E.H athaw ay C addo C orrectionalcenter : W e have audited the accom panying financial statem ents of the Caddo Correctional Center, a com ponentunitof the C addo Parish C om m ission,asof and for the yearended June 30, 1996,as listed in the foregoing table ofcontents.these financialstatem entsare the responsibility ofcaddo CorrectionalCenter'sm anagem ent. O urresponsibility is to express an opinion on these financial statem ents based on ouraudit. Asdescribed in note I(A),the accompanying financialstatementsofthe Caddo CorrectionalCenter arc intended to presentthe financialposition and results of operations of only thatportion of th e filnds and accountgroups ofthe Caddo Parish Sheriffthatis attributable to th e operationsofthe C addo C orrectional Center covered in the intergovem m enta~ agreem ent executed between the C addo Parish Com m ission and the Caddo Parish Sheriff. In accordance w ith G overnm ent Auditing Standards, we have also issued a report dated A ugust23, 1996, on our consideration of th e C addo Corectional C enter's intern al control structure and a reportdated A ugust23,1996,oilitscom pliance w ith law sand regulations.

18 K PM G PeatM arw ick LLP 1900 Com rnercialnational7ow er 333 3exas Stroot Shreveport,LA B ased on an A uditof the FinancialStatem ents Perform ed n A ccordance w ith G overnm enta uditine Standards The H onorable Sherif D onald E.H athaway C addo C orrectionalcenter : W e have audited the financialstatem ents of the Caddo Correctional Center as of and for th e yearended June 30,1996,and have issued ourreportthereon dated A ugust23,1996. C om pliance w ith law s, regulations,contracts,and grants applicable to the C addo Correctional Centeristhe responsibility of the C addo CorrectionalCenter's m anagem ent. A s partof obtaining reasonable assurance aboutw hetherthe financialstatem ents are free of m aterialm isstatem ent,w e perform ed tests ofthe Caddo CorrectionalCenter's com pliance w ith certain provisions of law s, regulations,contracts,and grants.however,the objective ofourauditofthe financialstatements w as notto provide an opinion on overallcom pliance w ith such provisions. A ccordingly,w e do not,express such an opinion. The resultsofourtests disclosed no instancesof noncom pliance thatare required to be reported herein underg overnm enta uditing Standards. Thisreportis intended for the inform ation of th e Caddo CorectionalCenter,m anagem ent,th e cognizantagency,and the State oflouisiana Legislative A uditor. H ow ever,this reportis a m atter of public record and its distribution isnotlim ited. A ugust23, 1996

19 ~'~P F~ ~ ~P.~ ~ ~.~ L L P A ugust23, 1996

20 K PM G PeatM arw ick LLP 1900 Com m ercialnationaltow er 333 ]exasstreet Shreveport,LA R ased on an A uditof the FinancialStatem ents Perform ed in A ccordance w ith G overnm enta uditine Standards The H onorable Sherif D onald E.H athaway Caddo CorrectionalCenter : W e have audited the financial statem ents of the Caddo Correctional Center as of and for the yearended June 30,1996,and have issued ourreportthereon dated A ugust23,1996. W e conducted ourauditin accordance w ith generally accepted auditing standards and G overnm ent Auditing Standards,issued by the Com ptroller Generalof the U nited States. Those standards require that w e plan and perform the audit to obtain reasonable assurance about w hether the financialstatem ents are free of m aterialm isstatem ent. The m anagem entof the Caddo CorectionalCenteris responsible forestablishing and m aintaining an intern alcontrol structure. In fulfilling this responsibility,estimates and judgments by m anagem ent are required to assess the expected benefits and related costs of internal control struc.turepoliciesand procedures. The objectivesofan internalcontrolstructure are to provide m arlagem entw ith reasonable,butnotabsolute,assurance thatassets are safeguar ded againstless from unauthorized use or disposition and that transactions ar e executed in accordance with m anagem ent's authorization and recorded properly to perm itthe preparation of financialstatem ents in accordance w ith general ly accepted accounting principles.because of inherentlim itationsin any internalcontrolstructure,errorsorirregularities m ay neverthelessoccurand notbe detected. A lso, projection ofany evaluationofthestructureto futureperiodsissubjectto therisk thatprocedures maybecomeinadequatebecauseofchangesinconditionsorthattheeffectivenessofthedesignand operation of policies and proceduresm ay deteriorate. In planning and perform ing ourauditofthe financialstatem entsofthe C addo CorrectionalCenter, forlhe yearended June 30,1996,we obtained an understanding ofthe intern alcontrolstru cture. W ith respect to the internalcontrol stru cture, w e obtained an understanding of the design of relevantpolicies and procedures and w hetherthey have been placed in operation,and w e assessed control risk in order to determ ine our auditing procedures for the purpose of expressing our opinion on the financialstatem entsand notto provide an opinion on the intern alcontrolstructure. Accordingly,we do notexpresssuch an opinion. O urconsideration ofthe internalcontrolstru cture would notnecessarily disclose allm atters in the intern alcontrol structure thatm ightbe m aterial w eaknesses under standards established by th e A m erican Institute ofcertified Public Accountants. A m aterialw eakness is a condition in which the design oroperation of one orm ore of the internalcontrolstru cture elem ents does notreduce to

21 CA D D O CO RREC I'ION AL CEN TER FinancialStatem ents June Table of C ontents Page(s) IndependentA uditors'report 1-2 FinancialStatem ents Com bined B alance Sheet - A ll Fund Types and A ccount G roups G overn m entalfund -G eneralfund: Statem entof Revenues,Expenditures,and C hanges in Fund Balance Statem entof Revenues,Expenditures,and C hanges in Fund Balance -B udgetand A ctualon a Budgetary Basis N otesto the FinancialStatem ents Schedule ~ c~s) Supplem entalinform ation Schedules -Fiduciary Funds-A gency Funds: Com bining Balance Sheet Schedule ofchangesin B alancesd ue to O thers 18 19

22 KPM G ~ FF~C'I~,k FILE CO PY DO NOT SEND OUT (Xerox nec~ss~ y CoI~es from this Copy and PLACE" P~ CK in FILE) CAD D O CORRECTION AL CENTER FinancialStatem ents June 30,1996 (W ith IndependentAuditors'ReportThereon) anoerprovisions ofstate law,ihls report is a public dc)cum ent. A copy ofthe reporti~as been subm itted to the m ~cli"ed, or reviewed, entity and othc;rafpropria{e public officials. [he r~.portis available for public insp(~ tion at the Baton Rouge office ofthe Legislative A uditor and,w here appropriate, at the office ofthe parish clerk of Rp.lease Date

23 CAD D O CO RRECTION AL CEN TER N otesto the FinancialStatem ents (C ) ]lasis of Accounting B asisof accounting refers to w hen revenuesand expenditures are recognized in the accountsand reported in the financialstatem ents. Basisofaccounting relatesto tile tim ing of tile m easurem ents m ade regardless of the m easurem entfocusapplied. G overn m ental Funds are accounted for using the m odified accrual basis of accounting. U nder the m odified accru al basis of accounting, revenues are recorded w hen susceptible to accrual, i.e., both m easurable and available. Expenditures are recognized w hen the related fund liability isincurred. The G eneral Fund uses the follow ing practices in recording revenues and expenditures: R evellles Intcrgovem m entalrevenuesand com m issions forservices are recorded w hen the Centerisentitled to tile funds. Salestaxes in the hands of the interm ediary collecting agency are recognized as revenue. Interestincom e on tim e depositsisrecorded asearned E~ x. l~e n d itu re,5 G overnm entalfund expendituresar e generally recognized underthe m odified accrualbasisof accounting w hen the related fund liability is incurred. The Fiduciary Funds (Agency Funds) use the following practices in recording additions and reductions: A dditions ar e not becom e R eduelions Reductions ar e generally recognized under the m odified accru al basis of accounting w hen the related fund liability isincurred. (Continued)

24 9 CAD D O CORREC I'ION AL CENTER N otes to the FinancialStatem ents (D ) B udeetarv A ccountin~ The Centerutilized the follow ing proceduresin establishing the budgetary data for the fiscalyear ended June 30,1996,w hich isreflected in the financialstatem ents: (1) During June,the Sherif'sofi ce prepared theproposed operating budgetfor the fiscal year com m encing the follow ing July 1. The operating budget includesproposed expendituresand the m eansof financing them. (2) The proposed budgetwasthen subm itted to the Com mission forreview (3) A public hearing washeld on tile proposed budget (4) The adopted budgetwas published in the officialjournal prior to the com m encem entofthe fiscalyear forw hich the budgetw asbeing adopted. (5) Allbndgetary appropriationslapsed atthe end ofthe fiscalyear (6) The budgetwasprepared oilthe basisofcash estim ateswhich meantthatfor budgetary purposesrevenuesw ere budgeted in the year ofreceiptratherthan the yearearned,and expenditures were budgeted in the yearpaid ratherthan in the yearincurred. Inventory purchases w ere recorded as expenditures at the tim e of purchase ratherthan underthe consum ption m ethod. Expenditures m ay notlegally exceed appropriationson a fund basis, (E) ncum branee~; and R ud~,e Encum brance accounting is notused. ttow ever,formalintegration of the budget into the accounting records is em ployed as a m anagem entcontroldevice. Budget am ounts included in the accom panying financial statem ents include the original adopted budgetand allsubsequentam endm ents. (F) Inventory Inventory consistsofcom m odities,dietary,and com m issary item s. C om m odities are valued at unit prices established by the U nited States D epartm ent of A griculture. O ther inventories are valued atcost. A llinventories are recorded as expenditures under the consum ption m ethod using the first-in, first-out cost m ethod. R eported inventory is equally offsetby a fund balmlce reserve that indicates that this portion offund balance doesnotconstitute available spendable resources even though itisa com ponentof netcurrentassets. (Continued)