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1 ['" '" Ir?R []0 [,{ _ :1 12 f:; ~'.qn W ATERW O RK S DISTRICT NO.8 O F W A RD S 3 A ND 8 O F CA L CA SIEU PA RISH,LO U ISIA N A A nnualfinancialr eport June 30,2000 and 1999 Underprovisions ofstnte.i~:w,th!s reportis a public dotum ent:.a copy c,ft!:e rui.'~:[~ ";!:,:~:'.~ s,,bh~,itted to lh(:(::ltity and r'.ti~:!u!;i:, ~,:i :,~;~":]i=oi[i~.kfi.~;.-ihe lcpoltis ~w ~.ik.!,!:.~,~-l,tt; :.,:~:~:ii:n ~;tthc l~a[on I~,bune of~ice c.',lth,:t.,; ' : / io[~.d,w ilere c,i;;co c.,ti,e i~a,i:,i/clcd~ofcourt. Release o ~~oja _Q Ozz_cL)

2 T A B L E O F C O N T E N T S P~ge IndependentA uditor'sreporton the FinancialStatements Com bined Balance Sheet-AllFund Typesand AccountG roup StatementofP,evenues,Expenditures,and Changesin Fund Balance -D ebtservice Fund Statementof Revenues,Expenses,and Changesin Retained Earnings-Enterprise Fund Stateme ntofcash Flows-Enterprise Fund N otesto FinancialStatem ents IndependentA uditor'sreporton Com pliance and on InternalControl O verfinancialr eporting B ased on an A uditof FinancialStateme nts Perform ed in A ccordance W ith G overnm enta uditing Standards ScheduleofFindingsand Questioned Costs Sum mary of PriorYear Findings

3 B ROUSSARD ~ C OM PANY CI~:RTIFIED PU BLIC A C CO U N TA N TS,L.L.C. IN D EPEND EN T AUD ITO R'S REPO RT Board ofcom m issioners W aterworksd istrictn o.8 ofw ards3 and 8 ofcalcasieu Parish,Louisiana W e have audited the generalpurpose financialstatements of W aterworks D istrict N o.8 of W ards 3 and 8 of Calcasieu Parish,Louisiana,a com ponentunitof tile Calcasieu Parish Police Jury,as ofand forthe yearsended June 30,2000 and 1999,as listed in the table ofcontents. These generalpurpose financialstatements are the responsibility ofthe D istrict's m anagem ent. O urresponsibility is to express an opinion on these generalpurpose financialstatem entsbased on ouraudit. W e conducted our audits in accordance with genetally accepted auditing standards and G overnme nt A uditing Standards, issued by the Com ptroller G eneralof the United States. Those standards r~luire that we plan and perform the auditto obtain reasonable assurance aboutwhetherthe generalpurpose financialstatementsare free of m aterial m isstatem ent. A n audit includes exam ining, on a test basis, evidence supporting the am ounts and disclosures in the generalpurpose financialstatem ents. An auditalso includes assessing the accounting principles used and significantestim ates n~tde by m anagem ent,as wellas evaluating the overallgeneralpurpose financial statementpresentation. W e believe thatourauditsprovide a reasonable basisforouropinion. In ouropinion,the generalpurpose financialstatem entsreferred to above presentfairly,in allm aterialrespects,the financialposition ofw aterworks D istrictno.8 of W ards 3 and 8 of Calcasieu Parish,Louisiana as of June 30, 2000 and 1999,and the results of its operations and its cash flows for the years then ended in conform ity with generally accepted accounting principles. In accordance with G overnm enta uditing Standards,we have also issued a reportdated Septem ber25,2000,on ourconsideration ofw aterw orksd istrictn o.8 ofw ards3 and 8 of Calcasieu Parish,Louisiana's internalcontrol structure and a reportdated Septem ber25,2000,on itscom pliance w ith law sand regnlations. Lake C harles,louisiana Septem ber25,2000 /dkb ;, SUI,PIItIR O FI"I(~E 7(14 FirstAvcnuc.Sulphol.IO/li~ialla70G63 Ph(ulc:(318) lax:( ()14 LAK E CIIARLES O ICFICI,; Lakeshore Drive,SIc.120,Lake Charles,I,ouisiana7(1629 Phone:(318) (IFax:(318)31(I66(17

4 W A TER W O R KS DISTRICT NO.8 O F W ARDS 3 A ND 8 O F CALCASIEU PA RISIt,LO UISIA NA Com bined Balance Sheet.A llfund Typesand A ccountg roup June 30, G overnm ental Fund Type Prop~eta ry Fund Type Account G roup Totals (M emorandum Only) Debt Service Enterprise G eneral Long.Term D ebt A SSETS Cash and equivalents Investments Receivables(netof allowancesof$-0-) Taxes W atersales U nbilled w atersales Accrued interest Prepaid expense Due from debtservice fund Restricted assets: Cash and equivalent:s Investm ents Pr ope rty.plant. and equipm ent: Land Plantand distribution system Furniture.fixtures. and equipm ent Construction in Progress Accum ulated depreciation O therassets Deferred chargesbond issuecosts,net Am ountavailable in debtservice fund A m ountto be provided forretirem entof long-term debt (I ) , ( ) ( ) ( ) TOTAL ASSETS $ $ $ $ $ The accompanying notesare an integralpartofthe financialstatements 2

5 W ATERW O RKS DISTRICT NO.8 O F W A RDS 3 A ND 8 O F CALCASIEU PAR ISH,LO UISIA NA Com bined Balance Sheet-A llfund Typesand A ccountg roup June 30, G overnm ental Fund Type Proprietary Fund Type Account G roup Tota ls (M emorandum Only) Debt Service Enterprise G eneral Lo~g-Term D ebt 2000 I.IA BiI.ITIES A ND FUND EQUITY Liabilities: Accounts payable Accrued wages Payrolland salestax payable Due to enterprise fund Payable from restricted assets: Revenue bonds, Revenue bonds Accrued interest Custom erdeposits G eneralobligationbo nd~ p~,~ab~c Revenue bondspayable (netofcurrentpo liorl unamortized discount and deferred loss) 2,000 $ 9,052 6,392 7,807 60,000 10,155 95,512 2,173,532 $ 9,052 $ 6,392 7,807 2,000 60, ,512 1,505,000 1,505,000 6,116 8, ,000 55, , ,000 2,231,895 2,231,895 2,000 2,362,450 1,505,000 3,869,450 2,556,818 Contributed capital Retained earnings: Reserved forrevenue bond retirem ent Unreserved Fund Balance-reserved fordebtservice 318,393 TotalRetained Eam ing~' Fund Balance 318,393 2,499,77 460, , ,308 2,499,771 1,031, , , , , ,508 2,179,438 TO TAl.LIA BILITIES AND FUND EQUITY $ 320,393 $ 5,815,758 $,505,000 $ 7,641,151 $ 4,736,256 'rhe accom panying notesare alintegralpan of the financialstatem ents.

6 W A TER W O RK S D ISTR ICT N O.8 O F W A R D S 3 A ND 8 O F CA LCA SIEU PA R ISH,LO U ISIA NA D ebtservice Fund Statem ents of Revenues,Expenditures,and Changes in Fund Balance For the YearsEnded June 30 REV ENU ES Ad valorem taxes Revenue sharing funds Interestincom e TotalRevenues EXPEND ITURES Interestand fiscalcharges Principalretirem ent TotalExpenditures ExcessofRevenuesOver(under)Expenditures FUND BALA N CE A T BEG IN NIN G O F YEA R 148,835 4, , , , ,5(18 155,313 4,726 7, , , , ,501 FUND BALANCE AT END O F YEAR 318,393 $ 310,508 The accom panying notesare an integralpartofthe financialstatem ents 4

7 W ATERW O RKS DISTRICT NO.8 O F W ARDS 3 AND 8 O F CALCASIEU P[ARIStI,LO UISIANA Lake C harles,louisiana Enterprise Fund Statem ents of R evenues,expenses,and Changesin R eta ined Earnings For the Y ears Ended June 30, 2000 O PERA TING REVENUES W atersales Tap fees Lute charges $ 515,]06 20,100 6, ,425 15, TotalO perating R evenues ~79 O PERA TING EXPENSES A ccounting and audit Legalfees Com m issionersfees Office suppliesand postage Plantsupplies M iscellaneous Repairsand m aintenance Insurance Truck expense Telephone Utilities Salaries Payrolltaxes D uesand fees A m ortization Depreciation Uniform sand cleaning Equipm entrental 11,100 1,025 3,960 9,855 40,311 4,627 13,700 46,595 12,153 8,813 22, ,104 11,703 2,396 3, ,536 2, , ,366 32,970 2,737 14,642 39A34 7,037 7,369 21, ,994 9, , ,359 2,788 5A 16 TotalO perating Expenses INCOM E FRO M O PERATIO NS 472, ,507 69, ,472 NO N-O PERATING REVENUES (EXPENSES) md valorem taxes-m aintenance Interestincom e Interestand fiscalcharges M iscellaneousincom e Gain(loss)sale ofassets 57,690 60,733 (124,032) 15,492 51,078 27,801 (125,146) 18,214 1,352 TotalNon-Ope rating Revenues(Expenses) N etincom e A dd currentyear'sdepreciation on fixed assets acquired by fu~dsexternally restricted forconstruction thatreducescontributed capital 9,883 (26,701) 79,378 98,771 36,596 36,596 Increase in Retained Eam ings RETA INED EA RNING S AT BEG INN ING O F YEA R 115, , , ,196 R ETA INED EA R NING S AT END O F Y EAR $ 953,537 $ 837,563 The accom panying notesare an integralpart ofthe financialstatem ents. 5

8 W A TERW O R K S D ISTR ICT N O.8 O F W A RD S 3 A ND 8 O F C ALCASIEU PARISH,LO U ISIANA Enterprise Fund Statem entof Cash Flow s Forthe YearEnded June 30, CASH FLO W S FRO M O PERA TING ACTIVITIES Incom e from operations Adjustmentsto reconcilenetincome to net cash provided by operating activities: Depreciation and amortization (Increase)decrease in accountsreceivable (Increase)decrease in accrued interestreceivable (Increase) in prepaid expense Increase in accountspayable and other accrued expenses Increase in custom erdeposits TotalAdjustments NetCash Provided (Used )by Ope rating Activities $ 69,495 $ 125,472 23,214 (4.114) (1,735) (1,472) 3,557 7,440 26,890 96, ,604 (7.470) 1,203 (2,934) (705) 5, , CASIIFLO W S FRO M INV ESTING A CTIVITIES: Purchase of investm ents-netof m aturities Interestincom e NetCash Provided (Used)forInvesting Activities (22,334) 60,733 38,399 (22,162) 27, CASH FLO W S FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Capitalexpenditures Principalpaym ents on revenue bonds Intereston revenue bo nds Ad valorem taxes Proceedsfrom G eneralo bligation Bonds M iscellaneousincom e O ther NetCash Provided (Used )by Capital and Related Financing A ctivities NetIncrease (Decrease)in Cash Cash and Cash EquivalentsatBeginning of Year (12,034) (55,000) (122,831) 57,690 1, ,623, (34,358) (55,000) 125,146) ,214 (650) 106, ,307 C ash and Cash EquivalentsatEnd ofy ear $ 2,221, ,939 Cashand CashEq uivalentscomprised of: U nrestricted Restricted 247,635 1,973,405 $ 2,221, , , ,939 The accom panying notesare an integralpartof the financialstatem ents. 6

9 W ATER W O R K S D ISTR ICT N O.8 O F W A RD S 3 A N D 8 O F CALCASIEU PA RISH,LO UISIANA Notes to FinancialStatem ents June 30,2000 and 1999 The accounting policies of W aterworks D istrict N o. 8 of W ards 3 and 8 of Calea sieu Parish, Louisiana,conform to generally accepted accounting principles as applicable to governmentalunits. Such accounting and reporting proced ures also conform to the requirements of Louisiana Revised Statutes 24:517 and to the guides setforth in the and to the industry auditguide,anudil~~~f_~ tate~and G A SB N o. 20 requires that governme nts' proprietary activities apply all applicable G A SB pronouncem ents,as wellas the following pronounceme nts issued on or before N ovem be r 30, 1989, unlessthose pronouncem entsconflictw ith orcontradicto A SB pronouncements: FinancialAccounting StandardsBoard ("FASB")Statementsand Interpretations,Accounting PrinciplesBoard Opinionsand Accounting Research Bulletins. Govern ments are given the option whetherornotto apply allfa SB Statem ents and Interpretations issued aftern ovem ber 30,1989,exceptforthose thatconflictw ith or contradictg A SB pronounceme nts. The D istricthas elected notto im pleme ntfasb Stateme nts and Intert,retations issued aftern ovem ber30,1989. The follow ing isa sum mary of the m ore significant policies: A. FinancialReporting Entity This reportincludes allfunds and accountgroup which are controlled by ordependenton the Com m issioners. Controlby or dependence on the D istrict was determ ined on the basis of budgetadoption,taxing authority,authority to issue debt,election orappointmentof governing body,and othergeneraloversightresponsibility. Based on the foregoing criteria,w aterworks D istrictn o.8 has no other fiscalor significant m anagerialresponsibility overany othergovernm entalunitthatis notincluded in the financial statementsofw aterworksd istrictn o.8 of W ards3 and 8 ofcalcasien Parish,Louisiana.The D istrictisa com ponentunitof the C alcasieu Parish Police Jury. B. Fund Accounting The accounts of the D istrictare organized on the basis of fundsand an accountgroup,each of which isconsidered a separate accounting entity. The operationsof each fund are accounted for with a separate setof self-balancing accounts thatcom prise itsassets,liabilities,fund eq uity, revenues,and expendituresorexpenses,asappropriate. G overnm entresourcesare allocated to and accounted for in individualfunds based upon the purposes for w hich they are to be spent and the m ea ns by which spending activities are controlled. The various fundsare grouped,in the financialstatem entsin thisreport,into two generic fund typesand two broad fund categories asfollow s: G O VERN M ENTA L FUN D Dd~LYqervlee Fund -D ebtservice Fundsare used to accountforthe accum ulation ofresources for,and the paym entof,generallong-term debt,principal,interest,and related costs. Continued 7

10 W AT ER W O R K S D ISTR ICT N O.8 O F W A RD S 3 A N D 8 O F C A LCASIEU PA RISH,LO U ISIA N A Lake C harles,louisiana Notesto FinancialStatements (Continued) June 30,2000 and 1999 N ote 1 - PRO PRIETARY FUN D [:,ntes'pri~e Fund -Enterprise Fundsare used to accountforoperations(a)thatare financed and operated in a m annersim ilarto private businessenterprises -where the intentof the governing body isthatthe costs(expenses,including depreciation)ofproviding goodsorservicesto the generalpublic on a continuing basisbe financed orrec overed prinm rily through usercharges;or (b) where the governing bod y has decided that periodic determination of revenues earned, expenses incurred, and/or net incom e is appropriate for capital maintenance,public policy, m anagem entcontrol,accountability,orotherpurposes. C. Fixed A ssetsand Long-Term Liabilities The accounting and reporting treatment applied to the fixed assets and long-term liabilities associated w ith a fund are determ ined by its m easurem entfocus. A llgovernm entalfund types are accounted foron a spending or "financialflow " measurementfocus. This meansthatonly current assets and current liabilities are generally included on their balance sheets. Their reported fired balance (netcurrentassets) is considered a measure of "available spendable resources". Govern me ntalfund operating statements present increa ses (revenues and other financing sources)and decrea ses(expendituresand otherfinancing uses)in netcurrentassets. Accordingly,they are said to presenta sum m ary of sources and uses of "available spendable resources"during a period. I,ong-term liabilitiesexpected to be financed from govern mentalfundsare accounted forin the G enerallong-term D ebtaccountg roup,notin the governm entalfunds. The accountgroup is nota "fund". It is concern ed only w ith the m easureme ntof financia position. Itisnotinvolved with m ea surementof resultsofoperations. For governmentalfund types,bond prem iums and discounts,as wellas issuance costs,are recognized during the currentperiod. Bond proc eedsare reported asan otherfinancing source netof the applicable prem ium ordiscount. Issuance costs,even ifw ithheld from the actualnet proc eeds rec eived,are reported asdebtservice expenditures. Forproprietary fund types,bond prem iums and discounts,as wellas issuance costs,are deferred and am ortized overthe life of the bondsusing the effec tive interestme thod. Bondspayable are reported netofthe applicable bond prenlium ordiscount. Issuance costsare reported asdeferred charges. A ll proprietary funds are accounted for on a cost of services or "capital m aintenance" measurementfocus. Thismeansthatalassetsand liabilities(whethercurrentornon-current) assoc iated w ith their activity are included on theirbalance she ts. Theirreported fund equity (net total assets) is segregated into contributed capital and retainexlea rnings components. Proprietary fund type operating statements present increa ses (revenues) and decrea ses (expenses)in nettotalassets. A ll fixed assets of the proprietary fund are rec orded at historicalcosts.d eprec iation of all exhaustible fixed assetsischarged asan expense againsttheiroperations. D eprec iation w illbe provided overthe estima ted usefullivesusing the straight-line m ethod. Continued 8

11 W AT ER W O R K S D ISTR ICT N O.8 O F W A RD S 3 A N D 8 O F CA LCA SIEU PA R ISH,LO UISIA N A Notesto FinancialStatem ents(continued) June 30,2000 and 1999 Depreciation expense forthe period ending June 30,2000 was$119,536. The estimated usefullivesare asfo lows Plantand distribution system Furniture,fixturesand equipment years 5-15 yea rs D. Basisof Accounting Basisof accounting refersto when revenuesand expendituresorexpensesare recognized in the accotm ts and reported in the financialstateme nts. Basis of accounting relates to the tim ing of the measureme ntsm ade,regardlessof the measureme ntfocusapplied. A llgovernme ntalfundsare accounted forusing the m od ified accrualbasisof accounting. Their revenues are rec ognized w hen they become m easurable and available as net current assets. Taxpayer-assessed income,grossreceipts,and salestaxesare considered "rr~_..asurable"when in the hands of interm ed iary collec ting governments and are rec ognized as revenue atthattime. A nticipated refundsof such taxesare recorded asliabilitiesand reductionsof revenue when they are measurable and theirvalidity seem scertain. Expenditures are generally rec ognized underthe m od ified accrualbasisof accounting when the related fund liability is incurred. Exceptions to this generalrule include principaland interest on generallong-term debtw hich isrecognized w hen due. A llproprietary funds are accounted forusing the accrualbasis of accounting. Theirrevenues are rec ognized when they are earn ed and their expenditures are rec ognized when they are incurred. E. TotalColum nson Com bined Stateme nts-o verview TotalColum ns on the Com bined Stateme nts -O verview are captioned M em orandum O nly to indicate thatthey are presented only to facilitate financialanalysis. Data in these colum nsdo not present financial position, results of operations, or changes in financial position in conform ity w ith generally accepted accounting principles. N eitherissuch data comparable to a consolidation. Interfund elim ination'shave notbeen m ade in the aggregation of thisdata. F. SupplementalD isclosuresofcash Flow Information -Enterprise Fund The D istrictconsiders allshort-term investments with an originalma turity of thre months or lessto be cash eq uivalents. Cash paid during the yearforinterestwas$124,033 Continued 9

12 W AT ER W O R K S D ISTR IC T NO.8 O F W A R DS 3 A N D 8 O F CA LCA SIEU PA R ISH,LO U ISIA NA Notesto FinancialStatements (Continued) June 30,2000 and 1999 G. Ad Valorem Taxes Ad valorem taxesattach asan enforceable lien on property asof January 1of each yea r. Taxes are levied by the Parish in Septem ber or O ctober and are actually billed to the taxpayers in N ovem be r. Billed taxesbecome delinquenton January 1of the following yea r. Forthe yea rended D ecem ber31,1999,taxesof m illswere levied on property with gross assessed valuationsof$16,207,870 lesshomestead and otherexemptionsof$5,475,000. The m illswere ded icated asfollows: M aintenance fund Sinking fund 5.83 m ills m ills H. Estim ates The preparation of financial statements in conform ity w ith generally accepted accounting principles requires ma nageme nt to m ake estimates and assum ptions that affec t the reported am ountsofassetsand liabilitiesand disclosure of contingentassetsand liabilitiesatthe date of the financialstateme ntsand the reported am ountsof revenuesand expensesduring the reporting period. Actualresultscould differfrom those estimates. The follow ing is a sum ma ry of bond payable transactions of the D istrictfor the yea rended June reported in the generallong-term debtaccountgroup: O utstanding atjuly 1,1999 Bondsissued Bonds retirea O utstanding atjuly 1,2000 G eneral O bligation $ 150,000 1,505,000 ( lsnnnn ) $.Isnsnnn Long-term debtatjune 30,2000 consistsof the following G eneralobligation bonds: $1,505,000 GeneralObligation Refunding Bonds,Series 1994,of W aterworksd istrictn o.8 of W ards3 and 8 of the Parish Calcasieu Louisiana;dated A pril1,2000;due in annualinstallm entsincluding interestat5.75% to 8% of$95,907 to $144,130 through the yea r2020; $1,505,000 Continued 10

13 W AT ERW O R K S D ISTR ICT N O.8 O F W A RD S 3 A N D 8 O F CA LCA SIEU PA R ISH,LO U ISIA N A Notesto FinancialStatem ents (Continued) June 30,2000 and 1999 N ote 2 - R evenue bonds: $2,455,(100 W aterworksrevenue Refunding Bonds,Series 1997;dated January 1,1997;due in annualinstallmentsincluding interestat3.95 % to 5.55 % of$178,645 to $183,697 through December1,2021;netofan amortized discountof$12,678 and deferred lossof$33,791. $ 2,233,531 The D istrict issued the above bonds to refund the revenue bonds thatwere due to Farme r's H ome Adm inistration. The refunding was undertaken to reduce totalfuture debt service payme nts. The reacquisition price exceeded the netcarrying amountofthe old debtby $36,627. Thisamountisbeing netted againstthe new debtand am ortized overthe new debt'slife,which isshorterthan the life of the refunded debt.the balance ofthe deferred lossnetofamortization atjune 30,2000 is$33,791. The annual requireme nts to am ortize alldebt outstanding as of June 30, 2000, including interest payn~ ntsof$2,831,835,are asfollows: Y earending June Thereafter G eneral O bligation $ 50, , , , ,108 2~094:6A _2. $ 2.,659~628 Revenue $ 180, , , , ,998.3~ 1'~:cJ43 $ 2~ 1n "7~8 Total $ 231, , , , ,106 $ 6 ~7~ q66 The generalobligation bonds are to be retired from the avails of property taxes levied and co lected w ithin the lim itsof the D istrict. The revenue bonds are to be retired from the income and revenuesderived from the operation of the System ofw aterworksd istrictn o.8 ofw ards3 and 8 of Calcasieu Parish,Louisiana. N ote 3 - AtJune 30,2000,the D istricthad cash,cash equivalentsand certificatesofdeposit(book balances) totaling $2,728,564. Thesedepositsare stated atcost,which approximatesmarket. Understate law these deposits(orthe resulting bank balances)mustbe secured by federaldepositinsurance orthe pled ge ofsec uritiesowned by the fiscalagentbank. The marketvalue ofthe pled ged sec uritiesplusthe fed eraldepositinsurance m ustatalltim es eq ualthe am ounton depositw ith the fiscalagent. These securities are held in the name of the pled ging agentbank in a holding or custodialbank that is m utually acceptable to both parties.atjune 30,2000,the Districthad $2,734,428 in deposits(collec ted bank balances). Continued 11

14 W ATER W O R K S D ISTR ICT N O.8 O F W A RD S 3 A N D 8 O F CALCASIEU PARISH,LO UISIANA Notesto FinancialStatemenls (Continued) June 30,2000 and 1999 N ote 3 - These deposits are secured from risk by $300,000 of fed eraldeposit insurance and $2,650,744 of pled ged sexzuritiesheld by the custodialbank in the name ofthe fiscalagentbank (GASB Category 3). H owever,one of the D istrict's financialinstitutions had pled ged less than the required am ount by $126,891. Even though the pled ged securitiesare considered uncollateralized (Category 3)underthe provisiotasof G A SB Statem ent 3, Louisiana Revised Statute 39:1229 im poses a statutory req uireme nt on the custodialbank to advertise and sellthe pled ged sec urities within 10 days of being notified by the D istrictthatthe fiscalagenthasfailed to pay deposited fundsupon dem and. U nder state law,the m unicipality m ay invest in U nited States bonds,treasury notes,or certificates. These are classified as investme nts. In addition,localgovernme nts in Louisiana are authorized to investin the Louisiana AssetM anagementpool,inc.(lam P),a nonprofitcorporation formed by an initialive of the State Trea surerand organized underthe lawsof the State of Louisiana,which operates a loc ztlgovern m entinvestm entpool. Investmentsheld in LAM P atjune 30,2000 of$328,013 are valued attheirfiiirvalue. In accordance w ith G A SB Codification Sec tion I50.165,the investme nt in LAM P, is not categorized in the risk categoriesprovided by G A SB because the investme ntisa po lof fundsnotevidenced by securitiesthat existin physicalorbo k entry form. A reconciliation of cash and investme ntsasshow n on the com bined balance sheetfollow s Cash on hand Carrying am ountofdeposits C arrying am ountof investme nts 2,398, =522 $ a os6 5_s'L7 Contributed capitalatjune 30,2000 consistsof the follow ing: Generalobligation bonds Capitalized interestscostson generalobligation bonds I)eprec iation on assetsacquired from contributed capital N on-refundable customerdeposits $2,705, ( 469,050) 65SaSfl Conti0ued 12

15 W ATERW O RKS D ISTRICT NO.8 O F W A RDS 3 A ND 8 O F CA LCA SIEU PA RISH,LO U ISIA N A Lake C harles,louisiana Notesto FinancialSta tements (Continued) June 30,2000 and 1999 N ote 5 - M em bers ofthe Board of Comm issionersare paid a perdiem allowance forattending board meetings The totalexpensesform eetingsattended during the yearare asfo lows: Teresa Ryan Helen D uhon Laurie Ezell Rodney Frey C urtisarm entor Total $ $ "~q60 N ote 6 - A c~ tm ulaled Vacation and.~irk l~eave Em ployees are entitled to certain compensated absences based on their length of employment. C om pensated absenceseithervestoraccum ulate and are accrued w hen they are earned. Restricted assets consistofcash and investments restricted forthe retirementof the D istrict'srevenue bondsand repayme ntofrefundable customerdeposits. Restricted assets asofjune 30,2000 consists ofthe fo lowing: Construction Fund 1997 Bond Sinking Fund Depreciation and Contingency Fund 1997 Reserve Fund C ustom erd eposits $ 1,528, , , ,788 90~965 $==62.~ 052. The D istrictis exposed to various risks ofloss related to torts;theftof,da nutge to and destruction of assets; errors and om issions; and natural disasters for which the governm ent carries corrar~rcial insurance. N ote 9 - AsofJune 30,2000,the D istricthad $7,314 of construction in progresson a ground storage tank. The remaining construction comm itmentis approximately $293,000. The estimated date ofcom pletion is O ctober

16 B R O U SSA RD & C O M PA N Y C I~R'I'IH EI)PU BIJlC A C CO U N TA N TS,I,.1,.C. ~oultded ht197~' IND EPEN D ENT A UD ITO R'S REPO RT O N CO M PLIAN CE AN D O N IN TERN AL CO NTRO L O VER FIN AN CIAL REPO RTING BA SED O N AN AUD IT O F FINAN CIAL STATEM ENTS PERFO RM ED IN A CCO RD AN CE W ITH G O VE RN M EN T A UD ITIN G STAN D ARD S Board of Com m issioners W aterworks District8 of W ards3 and 8 ofcalcasieu Parish,Louisiana Lake C harles.louisiana W e have audited lhe generalpurpose financialstatementsofthe W aterworksd istrict8 ofw ards3 and 8 of Calcasieu Parish,Louisiana,asofand forthe yearended June 30,2000,and have issued ourreportthereon dated Septem be r 25, W e conducted our audit irlaccordance with generally accepted auditing standards and the standards applicable to financialaudits contained in G overnmenta uditing Standards, issued by the Com ptrollerg eneralof the U nited States. C nm plianee As part of obtaining reasonable assurance about whether W aterworks D istrict 8 of W ards 3 and 8 of C alcasieu Parish,Louisiana's generalpurpose financialstatem ents are free of m aterialm isstatem ent,we perform ed tests of its com pliance w ith certain provisions of law s, regulations, contracts, and grants, noncom pliance with which could have a direct and material effect on the determ ination of financial statement am ounts. However, providing an opinion on com pliance w ith those provisions was not an objec tiveofourauditand,accordingly,we do notexpresssuch an opinion. The resultsofourtests disclosed an instance of noncom pliance that is required to be reported under G overnment A uditing Standards,w hich isdescribed in the accom panying sched ule offindingsand questioned costsasitem In planning and perform ing ouraudit,we considered W aterworksd istrict 8 of W ards3 and 8 ofcalcasieu Parish,Louisiana's internalcontrolover financialreporting in order to determ ine ourauditing proced ures forthe purpose ofexpressing ouropinion on the generalpurpose financialstatements and notto provide assurance on the internalcontroloverfinancialreporting. However,we noted certain m attersinvolving the internalcontrolover financial reporting and its operation that we consider to be reportable conditions. Reportable conditions involve matters com ing to our attention relating to significantdeficiencies in the designoroperationoftheinternalcontroloverfinancialreporting that,in ourjudgment,could adversely affec tw aterworksd istrict 8 ofw ards3 and 8 ofcalcasieu Parish,Louisiana'sability to rec ord,process, sum m arize,and reportfinancialdata consistentwith the assertions of managementin the generalpurpose financialstateu~nts.reportable conditions are described in the accom panying sched ule of findings and questioned costsasitem SI.II,PIIU I{O I"FI( E 7[)~];ll~tAkc ltlc,stlldhtl.i~otlisiala7o663 Phlm~:(337) I:ax ( (1014 LA KF ('IIARI,FS O FFICE Il,akeshole t)rivc,ste 120,I.akeCharles,I,ouisiana70629 Phone:(337) Fax:(337) /(337)3n)6648

17 Board of Com m issioners W aterworksd istrict8 of W ards3 and 8 of Calcasieu Parish,Louisiana A nm terialweakness is a condition in which the design oroperation of one orm ore ofthe internalcontrol com ponents doesnotreduce to a relatively low levelthe risk thatm isstatem ents in am ountsthatwould be m aterialin relation1to the generalpurpose financialstatementsbeing audited m ay occurand notbe detected w ithin a timely period by em ployees in the norma lcoursed of perform ing their assigned functions. O ur consideration ofthe internalcontrolover financialreporting would notnecessarily disclose allm atters in the internalcontrolthatm ightbe reportable conditionsthatare also considered to be materialweaknesses. H owever,w e believe none ofthe reportable conditionsdescribed above isa ma terialw eakness. This reportis intended forthe informa tion of the m anagementof W aterworksd istrict8 of W ards3 and 8 ofcalcasieu Parish,Louisiana. H owever,thisreportisa matterof public record and itsdistribution isnot Lake C harles,louisiana Septem ber25,2000 /dkb

18 W A TER W O R K S D ISTR ICT NO.8 O F W A RD S 3 A N D 8 O F CA LCASIEU PARISH,LO UISIAN A Lake C harles,louisiana Schedule offindingsand Questioned Costs For the YearEnded June 30,2000 A. Sununary of IndependentA uditor's R esults: 1. U nqualified opinion on generalpurpose financialstatements. 2. The auditdisclosed one instance of noncom pliance considered m aterialto the financialstateme nts of the D istrict. 3. Reportable conditionsin internalcontrol-referto B-1, B. G A G AS Findings: One ofthe financialinstitutionsofthe D istrictwas$126,891deficientin required pledged collatera Subseq uentto June 30,2000,the financialinstitution pled ged the req uired am ountof funds. R ex~nm rn~ndafion The D istrictshould m onitorthe pled ged collateralreq uireme ntson an interim basis A propersegregation ofdutiesisnotpossible due to the sm allnum berof people involved in the D istrict'sday-to-day operations. 16

19 W A TER W O R K S D ISTR ICT N O.8 O F W A RD S 3 A ND 8 O F CALCASIEU PARISH,LO U ISIANA Sum m ary of Prior Year Findings For the Year Ended Jm le 30, Finding: There wasnota propersegregation of duties in the D istrict. Recom m endation: Itisnotcosteffective to add any additionalpersonnel. The Board w ill take a m ore active role in the financialoperationsofthe D istrict.