TOWNOFCLARKS Clarks, Louisiana. Annual Financial Statements. As of and for the Year Ended June 30, 2007

Transcription

1 3357 TOWNOFCLARKS Clarks, Louisiana Annual Financial Statements As of and for the Year Ended June 30, 2007 Under provisions of state law, this report is a public document. Acopy of the report has been submitted to the entity and other appropriate public officials. The report is available for public inspection at the Baton Rouge office of the Legislative Auditor and, where appropriate, at the office of the parish clerk of court. Release Date

2 Clarks, Louisiana Annual Financial Statements As of and for the Year Ended June 30, 2007 CONTENTS Statement Page No. Independent Accountant's Report 3 Required Supplemental Information: Management's Discussion and Analysis Basic Financial Statements: Government-Wide Financial Statements: Statement of Net Assets Statement of Activities Fund Financial Statements: Governmental Funds: Balance Sheet Statement of Revenues, Expenditures and Changes in Fund Balances Business-Type Activities: Statement of Net Assets Statement of Revenues, Expenses, and Changes in Net Assets Statement of Cash Flows Notes to the Financial Statements A B D F G

3 Clarks, Louisiana Annual Financial Statements As of and for the Year Ended June 30, 2007 CONTENTS (Contd.) Required Supplemental Information: Schedule Page No. Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and And Actual - General Fund 1 29 Other Supplemental Information Schedules: Schedule of Per Diem Paid Aldermen 2 32 Status of Prior Year Findings 3 33 Current Year Findings and Corrective Action Plan 4 34 Independent Accountant's Report on Applying Agreed-Upon Procedures 36 Louisiana Attestation Questionnaire 40-2-

4 CERTIFIED PUBLIC ACCOUNTANT 369 DONALDSON ROAD. CALHOUN, LOUISIANA. TELEPHONE 318/ Independent Accountant's Report MAYOR AND BOARD OF ALDERMEN TOWN OF CLARKS Clarks, Louisiana I have reviewed the accompanying financial statements of the governmental activities, the business-type activities, and each major fund of the Town of Clarks, as of and for the year ended June 30, These financial statements are the responsibility of the management of the Town of Clarks. My review was conducted in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants and applicable standards si Government Auditing Standards issued by the Comptroller General of the United States of America. A review consists principally of inquiries of the personnel of the Town of Clarks and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, I do not express such an opinion. Based on my review, I am not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with generally accepted accounting principles. In accordance with the Louisiana Governmental Audit Guide and the provisions of state law, I have issued a report dated November 8, 2007, on the results of my agreed-upon procedures. The management's discussion and analysis and budgetary comparison information on pages 4 and 29, are not a required part of the basic financial statements but are supplementary information required by the Governmental Accounting Standards Board (GASB). Such information has not been subjected to the inquiry and analytical procedures applied in the review of the basic financial statements, but was complied from information that is the representation of management, without audit or review. Accordingly, I do not express an opinion or any other form of assurance on the supplementary information. /s Carleen Dumas Calhoun, Louisiana November 8, 2007 MEMBER OF THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS MEMBER OF THE SOCIETY OF LOUISIANA CERTIFIED PUBLIC ACCOUNTANTS -3-

5 Clarks, Louisiana MANAGEMENT'S DISCUSSION AND ANALYSIS For the Year Ended June 30, 2007 Our discussion and analysis of the Town of Clarks' (hereafter referred to as the Town) financial performance provides an overview of the Town's financial activities for the fiscal year ended June 30, Please read it in conjunction with the Town's financial statements that begin on page 10. USING THIS ANNUAL REPORT This annual report consists of a series of financial statements. The Statement ofnet Assets and the Statement of Activities on pages lothrough 12 provide information about the activities of the Town as a whole. Fund financial statements begin on page 13. For governmental activities, these statements provide information on how the general activities of the Town are financed in the short term as well as what remains for future spending. Fund financial statements report the Town's operations in more detail than the government-wide statements. Reporting the Town as a Whole - The Statement of Net Assets and the Statement of Activities Our analysis of the Town as a whole begins on page 10 with the Statement of Net Assets and on page 11 with the Statement of Activities. These statements include all assets and liabilities using the accrual basis of accounting, which is similar to the accounting used by most businesses. All of the current year's revenues and expenses are taken into account regardless of when cash is received or paid. These two statements report the Town's net assets and the changes in them. Net assets - the difference between assets (what the Town owns) and liabilities (what the Town owes) is a way to measure the financial position of the Town. Over time, increases or decreases in the Town's net assets are an indicator of whether the Town's financial position is improving or deteriorating. In the Statement of Net Assets and the Statement of Activities, the Town is divided into two kinds of activities: Governmental activities - all of the Town's governmental services are reported here including police and fire protection and general administration. Business-type activities - the Town's water and sewer systems are reported here. -4-

6 Clarks, Louisiana MANAGEMENT'S DISCUSSION AND ANALYSIS For the Year Ended June 30, 2007 Reporting the Town's Funds - Fund Financial Statements Our analysis of the Town's funds begin on page 13. The fund financial statements provide more detailed information about the Town's funds. The Town's two kinds of funds - governmental and business-type funds use different accounting methods. Governmental funds focus on how money flows into and out of the funds and the balances left at year-end that are available for spending. Governmental funds are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can be readily converted to cash. The governmental fund statements provide a detailed short-term view of the Town's operations. Governmental fund information helps to determine whether there are more or fewer financial resources that are available to be spent in the near future. The differences between governmental activities reported in the Statement of Net Assets and the Statement of Activities and governmental funds are reported in a reconciliation at the bottom of the fund financial statements. Business-type activities funds are reported in the same way that the activities are reported in the Statement of Net Assets and the Statement of Activities. COMPARATIVE ANALYSIS OF FINANCIAL DATA Government-Wide The Town's total net assets decreased by $7,681 during the year ended June 30,2007. The decrease in net assets is primarily due to the Town's sewer system revenues being inadequate to cover the cost of operating the sewer system including depreciation. The Town received $ 123,796 in state and federal grants that were accounted for in the General Fund and resulted in a $108,112 increase in net assets from governmental activities. The grant funds were used to purchase capital assets totaling $53,228. At June 30, 2007, $43,112 of the grant funds were in the Street Fund checking account to pay for the cost of street repairs in the next fiscal year. The following presents an analysis of net assets and changes in net assets of the Town's governmental and business-type activities: -5-

7 Clarks, Louisiana MANAGEMENT'S DISCUSSION AND ANALYSIS For the Year Ended June 30, 2007 Assets Current assets Capital assets Total assets Liabilities Current liabilities Long-term liabilities Total liabilities Net Assets Invested in capital assets, net of related debt Unrestricted Total net assets GOVERNMENTAL ACTIVITIES $80, , ,361 11,561 41,042 52, ,992 68, ,758 $6, , ,066 3,715 49,705 53, ,446 3, ,646 BUSINESS-TYPE ACTIVITIES $25,471 1,145,473 1,170,944 12,982 12,982 1,145,473 12,489 1,157,962 $41,895 1,247,000 1,288,895 15,140 15,140 1,247,000 26,755 1,273,755 TOTAL $105,798 1,714,507 1,820,305 24,543 41,042 65,585 1,673,465 81,255 1,754,720 $48,810 1,782,151 1,830,961 18,855 49,705 68,560 1,732,446 29,955 1,762,401 Program revenues Charges for services Operating grants Capital grants General revenues Property taxes Franchise taxes Sales taxes Occupational licenses Investment earnings Other Transfers Total revenue and transfers Program expenses General government Water and sewer Total expenses Change in net assets Net assets - beginning Net assets - ending GOVERNMENTAL ACTIVITIES $25,008 51,443 72,353 8,785 9,508 2,432 6, ,843 69, , , , , ,646 $ $22,724 6,692 7,255 3,228 9, ,030 71, , , ,698 (8,157) 496,803 $488,646 BUSINESS-TYPE ACTIVITIES $178, (69,296) 109, , ,899 (115,793) 1,273,755 $1,157,962 $189, (71,000) 118, , ,801 (87,970) 1,361,725 $1,273, $203,272 51,443 72,353 8,785 9,508 2,432 6, , , , , ,624 (7,681) 1,762,401 $1,754,720 TOTAL 2006 $212,363 6,692 7,255 3,228 9, , , , , ,499 (96,127) 1,858,528 $1,762,401-6-

8 Clarks, Louisiana MANAGEMENT'S DISCUSSION AND ANALYSIS For the Year Ended June 30, 2007 The Town's total revenues increased $116,571 in 2007 primarily due to a $123,796 increase in grant revenue. Total expenses increased $28,125 in Governmental Funds The revenue from governmental activities increased $126,296 from governmental revenues of the prior year due to an increase in grant revenue in Expenses from governmental activities increased $10,027. Business-Type Activities Water and sewer fees of the Water Enterprise Fund and Sewer Enterprise Fund decreased $11,375 from the prior year. Expenses increased $18,098 from prior year amounts. OVERALL FINANCIAL POSITION The Town's net assets decreased $7,681 as a result of this year's operations. Unrestricted net assets (those assets available to finance the dairy operations of the Town) were $81,255 at year end. The amount invested in capital assets, net of related debt was $1,673,465 at year end. TOWN'S FUNDS At the end of the year, the Town's General Fund reported an unreserved fund balance of $68,766. The increase in unreserved nind balance for 2007 was $65,567 primarily due to an increase in operating grant revenues that had not expended at June 30, The Water Enterprise Fund reported unrestricted net assets of $2,695 at year end. The decrease in net assets was $48,204 for The Sewer Enterprise Fund reported unrestricted net assets of $9,794 at year end. The decrease in net assets was $67,589 for These decreases in net assets were a result of revenues being insufficient to cover the cost of operations including depreciation and the transfer of $69,296 to the General Fund to cover the expenditures of the General Fund. GENERAL FUND BUDGETARY HIGHLIGHTS At year end, actual revenues and other financing sources were $141,077 more than budgeted revenues and other financing sources. Actual General Fund expenditures were $76,933 more than budgeted expenditures. These variances were due to the fact that the Town did not amend its budget for the grant revenues received and expended during the year. The Town prepares its General Fund budget on the modified accrual basis of accounting. -7-

9 darks, Louisiana MANAGEMENT'S DISCUSSION AND ANALYSIS For the Year Ended June 30, 2007 CAPITAL ASSETS AND DEBT Capital Assets At the end of the year, the Town had capital assets (net of accumulated depreciation) totaling $1,714,507. Capital assets include the water and sewer systems and improvements, street improvements, land, buildings, and equipment and vehicles, costing $500 or more. The Town's additions during the year were the purchase of vehicles and equipment in the General Fund for $55,835 and the purchase of equipment in the amount of $1,399 in the Water Enterprise Fund. Additional information about the Town's capital assets is presented in Note 5 to the financial statements. Debt At year end the Town had an obligation under a capital lease for $41,042. Additional information about the Town's debt is presented in Notes 7 and 8 to the financial statements. ECONOMIC FACTORS AND NEXT YEAR'S BUDGET The Town prepared its 2008 General Fund budget on the assumption that revenues and expenditures will remain fairly constant next year except the Town expects a decrease in grant revenue. The revenues and expenses of the Water Enterprise Fund and the Sewer Enterprise Fund are expected to remain fairly constant for the year ending June 30, 2008.

10 BASIC FINANCIAL STATEMENTS -9-

11 Clarks, Louisiana Statement A STATEMENT OF NET ASSETS June 30, 2007 GOVERNMENTAL BUSINESS-TYPE ACTIVITIES ACTIVITIES TOTAL ASSETS Cash $57,745 $6,625 $64,370 Receivables (net of allowances for uncollectibles) 22,582 18,846 41,428 Capital assets (net) 569,034 1,145,473 1,714,507 TOTAL ASSETS 649,361 1,170,944 1,820,305 LIABILITIES Accounts payable 11,561 2,166 13,727 Customer deposits 10,816 10,816 Capital lease payable 41,042 41,042 TOTAL LIABILITIES 52,603 12, _5_ NET ASSETS Invested in capital assets, net of related debt 527,992 1,145,473 1,673,465 Unrestricted 68,766 12,489 81,255 TOTAL NET ASSETS $ $1.157,962 $ See accompanying notes and accountant's report. -10-

12 ca +-cusu +» CS * * t/3 e cd CA u t> C w *cd -<-» O H > ^ w 5 / S,-K*tf w (U u J5 /S ^.S?%.c 'tt 11 r- W [ i ' *- «.S 3 ^ o C w CQ < O* bo X C &^ T3 "tr* ^ ^ M ^7 (U.W P."ti 1 '1 ON *n r-- m ^ \D ON f& ^^ ro ^ ts. Cp i/^ ^Ti 1 ^^-^ ON r~- m oo CN ^0 m oo CO ro ^" ^O ^~ C^ Vt ^f O^ fo OO OO ON OJ ^O CO OO vo ro ON ^ (N ON \o Sl ~* Vi oo r*>l ^o ro ro ^o oo O ro "^T fn ^~ ON n r-~ 00 oo' CO oo in ON vo ^^ CO ro l>^ V^ Tf^ ON^ (N OO^ (NO oo" ON" of \O o" ONoo' i * \Q o O.a 3O ^ " < $M ou H 0 n u a < 5 u- ^ o-s fc w n! t-i W «M it S >H W «t3 < *- -S H ^ OJ 3 C en *2 ^M O- ed ed fc u u CuO fli >»M _ ^ la C Cc t^ ^ " Q H ed O O 1- p^ t<_i w W (J bo 'F <- h rt «U M 1/3 C 1 w ro»n ^T (N V* S 5 r> *~ * M m i/*) m (N t^ S ^ t t s OO Tf (N O ^O O^ <N (N v-t oo* (N r- O V5 ^^ r^ v^ ON ^(N t^- oo r vq oo" TJ-' rn ^f (N i " (N m o a, OVERNMENT "SVL ACTIVITIES: General governn USINESS-TYP]IzJ; ACTIVITIES: O CQ service nment o > se ^ om! T3 s "cd cd s 2 ENERAL REVMHCNUES: O Property taxes Franchise taxes u X ea OT Id GO i01 n Occupational lici Investment earni Other revenues l-h «ed* 1 j! cd H C O U t= 3O U o ed O c 50 O o on

13 CO +* cue o H o <N' o (N m r--.a & > «u o>.s CA ffl (N m in m (N OO o oo oo (N SO OO m O m O O u c bq O bq p* U <S S &5 o j3 U X W c oq. d> ^ s 00 O i i (N *- ^T >S h S c 3 S O *^3 J.2 H W U. 9 2 ^ ft. 3 Cl] TO ^ -^ \1 r> t-> < O -3 H H U oo H w S O ffi u o a w z «W ' ' CO l» H H W W w w c/3 c» <: ^ H H O C O U o g bq O o rt

14 Statement C TOWN OF CLARKS Clarks, Louisiana BALANCE SHEET - GOVERNMENTAL FUND June 30, 2007 GENERAL FUND ASSETS Cash Receivable TOTAL ASSETS LIABILITIES AND FUND BALANCES Liabilities - accounts payable Fund balance - unreserved TOTAL LIABILITIES AND FUND BALANCES Reconciliation of the Balance Sheet of Governmental Fund To the Statement of Net Assets: Fund balance - unreserved - General Fund Amount reported for net assets of governmental activities in the Statement of Net Assets (Statement A) is different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the fund Capital lease payable is not due and payable in the current period and, therefore, is not reported in the fund Net assets of governmental activities (Statement A) $57,745 22,582 $80327 $11,561 68,766 $80327 $68, ,034 (41,042) $596,758 See accompanying notes and accountant's report. -13-

15 Clarks, Louisiana Statement D STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS For the Year Ended June 30, 2007 REVENUES Taxes: Property Sales Franchise Occupational licenses Building permit Intergovernmental revenues: Federal grants State grants Fire protection fees Traffic fines Mowing fees Use of money and property: Interest earnings Rent Other revenues Total revenues EXPENDITURES General government - current: Personal services and related benefits Operating services Materials and supplies Capital outlay Debt service Total expenditures EXCESS (Deficiency) OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES Transfers in NET CHANGE IN FUND BALANCE FUND BALANCE AT BEGINNING OF YEAR FUND BALANCE AT END OF YEAR GENERAL FUND $8,785 2,432 9,508 6, ,861 49,936 9,815 7,292 2, ,255 12, ,541 28,583 59,129 35,636 55,835 12, ,270 (3,729) 69,296 65,567 3,199 $ (Continued) See accompanying notes and accountant's report. -14-

16 Clarks, Louisiana STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS For the Year Ended June 30, 2007 Statement D GENERAL FUND Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balance of Governmental Funds to the Statement of Activities: Net change in fund balances - Total Governmental Funds $65,567 Amount reported for governmental activities in the Statement of Activities (Statement B) are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense. This is the amount by which capital outlay exceeded depreciation expense in the current period. 33,883 The repayment of the principal of long-term debt consumes current financial resources of governmental funds; however, this transaction has no effect on net assets. This amount is the effect of this difference in the treatment of long-term debt. 8,662 Change in net assets of governmental activities (Statement B) $ (Concluded) See accompanying notes and accountant's report. -15-

17 Statement TOWN OF CLARKS Clarks, Louisiana STATEMENT OF NET ASSETS - BUSINESS-TYPE ACTIVITIES June 30, 2007 ASSETS Current assets: Cash Accounts receivable (net of allowance for doubtful accounts) Total current assets Noncurrent assets: Capital assets (net of accumulated depreciation) Total assets..enterprise Funds... Water Sewer Fund Fund $4,194 11,291 15, , ,232 $2,431 7,555 9, , ,712 Total Enterprise Funds $6,625 18,846 25,471 1,145,473 1,170,944 LIABILITIES Current liabilities: Accounts payable Customer deposits Total liabilities 1,974 10,816 12, ,166 10,816 12,982 NET ASSETS (Deficit) Invested in capital assets Unrestricted Total net assets 487,747 2,695 $ ,726 9,794 $667,520 1,145,473 12,489 $1,157,962 See accompanying notes and accountant's report. -16-

18 Clarks, Louisiana Statement F STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS - BUSINESS-TYPE ACTIVITIES For the Year Ended June 30, 2007 OPERATING REVENUES Service fees OPERATING EXPENSES Salaries Payroll taxes Contract labor Utilities Materials and supplies Dues and fees Office expense Postage Sales tax Miscellaneous Depreciation Total operating expenses OPERATING INCOME (Loss) NON-OPERATING REVENUE (Expenses) Interest income Operating transfers in (out) Total non-operating revenues (expenses) CHANGE IN NET ASSETS NET ASSETS - BEGINNING NET ASSETS - ENDING..Enterprise Funds.. Water Sewer Fund Fund $126,094 14,223 4,875 15,000 15,594 21,323 1, ,749 43, ,335 5, (54,039) (53,963) (48,204) 538,646 $490,442 $52,170 15,493 10,833 14,538 4, , ,564 (52,394) 62 (15,257) (15,195) (67,589) 735,109 $667,520 Total Enterprise Funds $178,264 14,223 4,875 30,493 26,427 35,861 5, , , , ,899 (46,635) 138 (69,296) (69,158) (115,793) 1,273,755 $1,157,962 See accompanying notes and accountant's report. -17-

19 Clarks, Louisiana Statement G STATEMENT OF CASH FLOWS - BUSINESS-TYPE ACTIVITIES For the Year Ended June 30, Enterprise Funds.. Water Sewer Fund Fund Total Enterprise Funds CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers Payments to employees Net cash provided by operating activities CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES Operating transfers in (out) $125,057 $52,173 $177,230 (65,252) (45,462) (110,714) (14,223) (14,223) 45,582 6,711 52,293 (54,039) (15,257) (69,296) CASH FLOWS FROM CAPITAL FINANCING ACTIVITIES Purchase of fixed assets (1,399) (1,399) CASH FLOWS FROM INVESTING ACTIVITIES Interest income NET INCREASE (Decrease) IN CASH CASH AT BEGINNING OF YEAR CASH AT END OF YEAR 76 (9,780) 13,974 $ (8,484) 10,915 S (18,264) 24,889 S6.625 Reconciliation of Operating Income (Loss) to Net Cash Provided by Operating Activities Operating Income (Loss) Adjustments: Depreciation (Increase) decrease in accounts receivable Decrease in accounts and taxes payable Total adjustments Net cash provided by operating activities $5,759 ($52,394) ($46,635) 43,561 (1,843) (1,895) 39,823 59,365 3 (263) 59,105 $6, ,926 (1,840) (2,158) 98,928 See accompanying notes and accountant's report. -18-

20 Clarks, Louisiana Notes to the Financial Statements As of and for the Year Ended June 30, 2007 INTRODUCTION The Town of Clarks is governed by the mayor-board of aldermen form of government. The aldermen receive a $50 per diem for attending each regular and special meeting. The town provides public safety, public works, and general government services to its residents. The town has a full-time clerk, and an elected Chief of Police. GASB Statement No. 14, The Reporting Entity, established criteria for determining the governmental reporting entity and component units that should be included within the reporting entity. Under provisions of this Statement, the Town of Clarks is considered a primary government, since it is a special purpose government that has a separately elected governing body, is legally separate, and is fiscally independent of other state and local governments. As used in GASB Statement No. 14, fiscally independent means that the municipality may, without the approval or consent of another governmental entity, determine or modify its own budget, levy its own taxes or set rates or charges, and issue bonded debt. The town has no component units. 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Government-Wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net assets and the statement of activities) report information on all of the activities of the Town of Clarks. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. See accountant's report. -19-

21 Notes to the Financial Statements Separate financial statements are provided for governmental funds and business-type activities funds. All individual governmental funds and individual enterprise funds are reported as separate columns in the fund financial statements. B. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the business-type fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, revenues are considered to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgements, are recorded only when payment is due. Property taxes, sales taxes, franchise taxes, and charges for services associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. All other revenue items are considered to be measurable and available only when cash is received by the town. The Town of Clarks reports the following governmental funds: General Fund The General fund is the general operating fund of the town and accounts for all financial resources of the general government. See accountant's report. -20-

22 Notes to the Financial Statements The Town of Clarks reports the following business-type activity funds: Water Enterprise Fund The Water Enterprise Fund accounts for the operations of the town's water system. Sewer Enterprise Fund The Sewer Enterprise Fund accounts for the operations of the town's sewer system. Private-sector standards of accounting and financial reporting issued prior to December 1,1989, generally are followed in the government-wide and business-type activities fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent private-sector guidance for their business-type activities and enterprise funds, subject to the same limitation. The town has elected not to follow subsequent private-sector guidance. As a general rule, the effect of interfiind activity is eliminated from the governmentwide financial statements. Amounts reported as program revenues include charges to customers for goods, services, or privileges provided and operating grants. General revenues include all taxes, occupational licenses, interest, and other miscellaneous revenue. Business-type activities funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with the fund's ongoing operations. The Water Enterprise Fund and Sewer Enterprise Fund's operating revenues consist of charges for water and sewer sales. Operating expenses for enterprise funds include the cost of services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting these definitions are reported as nonoperating revenues and expenses. C. Deposits The town's cash consists of interest-bearing demand deposits. State law allows the town to invest in collateralized certificates of deposits, government-backed securities, See accountant's report. -21-

23 Notes to the Financial Statements commercial paper, the state sponsored investment pool, and mutual funds consisting solely of government-backed securities. D. Receivables All receivables are generally shown net of an allowance for uncollectible amounts. The allowance for uncollectibles in the Water Enterprise Fund is based on a historical collection rate. Property taxes are levied on a calendar year basis and become due on January 1 of each year. For the year ended June 30,2007, the town levied 6.33 mills for operations of the General Fund. The town receives a pro-rata share of a one-fourth of one percent parishwide (excluding the Town of Columbia) sales tax approved by the voters in Caldwell Parish on October 19,1985 for fire protection in the parish. The sales tax is collected by the police jury and remitted to the town net of its pro-rata share of the cost of collection.. Capital Assets Capital assets, which include land, buildings, street improvements, the water and sewer systems and improvements, and vehicles and equipment are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are capitalized at historical cost or estimated cost if historical cost is not available. Approximately 98 percent of the town's capital assets have been capitalized at cost and the remaining 2 percent have been capitalized at estimated cost based on the historical cost of similar assets. The Town of Clarks maintains a threshold level of $500 or more for capitalizing capital assets. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the asset's life are not capitalized. All capital assets, other than land are depreciated using the straight-line method over the following useful lives: Estimated Lives Infrastructure - water and sewer system and improvements Infrastructure - street improvements Buildings Vehicles and equipment 25 years 40 years 25 years 5-15 years See accountant's report. -22-

24 Notes to the Financial Statements F. Long-Term Obligations In the government-wide financial statements long-term debt is reported as a liability in the applicable governmental activities and business-type activities statement of net assets. G. Fund Equity In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for a specific purpose. Designations of fund balance represent tentative management plans that are subject to change. At June 30, 2007, the town's governmental fund balances were unreserved and undesignated. H. Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities, disclosures, and revenues, expenditures, and expenses during the reporting period. Actual results could differ from those estimates. 2. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY A. Budget Information The Town of Clarks uses the following budget practices: A proposed budget for the General Fund, prepared on the modified accrual basis of accounting, is presented to the board of aldermen. The budget is legally adopted by the board of aldermen at a board meeting and amended during the year as necessary. Budgets are established and controlled by the board at the object level of expenditure. Appropriations lapse at year-end and must be reappropriated for the following year to be expended. The budgetary comparison schedule included as supplemental information in the accompanying financial statements includes the original budget amounts. There were no budget amendments during the year. B. Excess of Expenditures Over Appropriations The following individual fund had actual expenditures over budgeted expenditures for the year ended June 30, 2007: See accountant's report. -23-

25 Notes to the Financial Statements General Fund Original Budget $114,337 Final Budget $114,337 Actual $191,270 Unfavorable Variance $76, DEPOSITS IN FINANCIAL INSTITUTIONS At June 30, 2007, the town has cash (book balances) as follows: Checking accounts $64,370 These deposits are stated at cost, which approximates market. Under state law, these deposits, or the resulting bank balances, must be secured by federal deposit insurance or the pledge of securities owned by the fiscal agent bank. The market value of the pledged securities plus the federal deposit insurance must at all times equal the amount on deposit with the fiscal agent. These deposits are secured from risk by federal deposit insurance. 4. RECEIVABLES The following is a summary of receivables at June 30, 2007: Sales taxes Grants Accounts Other Allowance for doubtful accounts Total Water Sewer Enterpris Enterpris General e e Fund Fund Fund Total $232 21, NONE $22,582 $14,780 (3,489) $11,291 $7,555 NONE $7,555 $232 21,417 22, (3,489) $41, CAPITAL ASSETS Capital assets and depreciation activity as of and for the year ended June 30, 2007, is as follows: See accountant's report. -24-

26 Notes to the Financial Statements Governmental activities: Capital assets not being depreciated: Land Capital assets being depreciated: Buildings Street improvements Vehicles and equipment Total capital assets being depreciated Less accumulated depreciation for: Buildings Street improvements Vehicles and equipment Total accumulated depreciation Total assets being depreciated, net Balance at July 1, 2006 $61, , , ,164 13,725 5,635 77,353 96,713 $533,451 Increases $55,835 Decreases 55,835 NONE 1,525 1,408 19,019 21,952 NONE $33,883 NONE Balance at June 30, 2007 $61, , , ,999 15,250 7,043 96, ,665 $ Business-type activities: Capital assets not being depreciated: Land Capital assets being depreciated: Water system and improvements Sewer system and improvements Equipment Total capital assets being depreciated Less accumulated depreciation for: $1.500 $1,093,199 1,479,988 19,338 2,592,525 NONE $1,399 NONE $1,500. $1,093,199 1,479,988 20,737 1,399 NONE 2,593,924 See accountant's report. -25-

27 Notes to the Financial Statements Water system and improvements Sewer system and improvements Equipment Total accumulated depreciation Total capital assets being depreciated, net Balance at Julyl, 2006 $573, ,037 6,582 1,347,025 $1,245,500 Increases $42,005 59,365 1,556 Decreases 102,926 NONE ($101,527) NONE Balance at June 30, 2007 $615, ,402 8,138 1,449,951 $1,143,973 ^^^s^^^s^^_^s±^^s Depreciation expense of $21,952 for the year ended June 30, 2007 was charged to the general government governmental function and $ 102,926 was charged to the water and sewer service business-type activities function. 6. INTERFUND TRANSFERS The following is a summary of interfund transfers during the year ended June 30, 2007: General Fund Water Enterprise Fund Sewer Enterprise Fund Total Transfer In $69,296 4,000 3,250 $76 A 546_ Transfer Out $58,039 18,507 $76,546 The transfers were made to pay operating expenses of the General Fund. 7. CAPITAL LEASE The town records assets acquired through capital leases as an asset and an obligation in the accompanying financial statements. On September 18, 2000, the town entered into a capital lease agreement for a fire truck. The lease has an original recorded amount of $85,326. Lease payments are made from the General Fund. The following is a summary of future minimum lease payments, together with the present value of the net minimum lease payments, as of June 30, 2007: See accountant's report. -26-

28 Notes to the Financial Statements December 2, 2007 $12,087 December 2, ,087 December 2, ,087 December 2, ,087 Total lease payments 48,348 Less amount representing interest (7,306) Present value of net minimum lease payments $41, LONG-TERM OBLIGATIONS The following is a summary of long-term debt (capital lease payable) transactions for the year ended June 30, 2007: Capital lease payable at July 1, 2006 $49,704 Additions NONE Reductions (8,662) Capital lease payable at June 30, RISK MANAGEMENT The town purchases commercial insurance to reduce the risk of loss resulting from property damage or liability claims. There have been no significant reductions in insurance coverage from coverage in the prior year. Settlements have not exceeded insurance coverage in any of the past three fiscal years. 10. CONTINGENT LIABILITIES The town is involved in two lawsuits at June 30, No provision for any liability that may result from an unfavorable outcome is recorded in the accompanying financial statements. See accountant's report. -27-

29 REQUIRED SUPPLEMENTAL INFORMATION See accountant's report. -28-

30 Clarks, Louisiana Schedule 1 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - GENERAL FUND For the Year Ended June 30, 2007 Original Budgeted Amounts Final Actual Amounts (Budgetary Basis - GAAP) Variance with Final Budget Positive (Negative) REVENUES Taxes: Property Sales Franchise Occupational licenses Intergovernmental revenue Traffic fines Fire protection fees Rent Investment earnings Other revenue Total revenues $6,600 2,000 6,500 8,000 3,600 4,000 9,000 6, ,000 50,760 $6,600 2,000 6,500 8,000 3,600 4,000 9,000 6, ,000 50,760 $8,785 2,432 9,508 6, ,797 7,292 9,815 5, , ,541 $2, ,008 (1,054) 119,197 3, (745) 163 9, ,781 EXPENDITURES General government: Personal services Operating services Materials and supplies Debt service Capital outlay Total expenditures 32,000 40,250 29,000 12,087 1, ,337 32,000 40,250 29,000 12,087 1, ,337 28,583 59,129 35,636 12,087 55, ,270 3,417 (18,879) (6,636) (54,835) (76,933) EXCESS (Deficiency) OF REVENUES OVER EXPENDITURES (63,577) (63,577) (3,729) 59,848 OTHER FINANCING SOURCES Transfers in 65,000 65,000 69,296 4,296 NET CHANGE IN FUND BALANCE 1,423 1,423 65,567 64,144 FUND BALANCE AT BEGINNING OF YEAR 1,758 1,758 3,199 1,441 FUND BALANCE AT END OF YEAR S3.181 $3,181 $68,766 $65,585 There were no budget amendments during the year. See accountant's report. -29-

31 OTHER SUPPLEMENTAL INFORMATION SCHEDULES See accountant's report. -30-

32 Clarks, Louisiana OTHER SUPPLEMENTAL INFORMATION SCHEDULES As of and For the Year Ended June 30, 2007 COMPENSATION PAID ALDERMEN The schedule of per diem paid aldermen is presented in compliance with House Concurrent Resolution No, 54 of the 1979 Session of the Louisiana Legislature. Compensation of the aldermen is included in the general government personal services expenditures of the General Fund. Aldermen receive a per diem of $50 for attending each regular meeting. STATUS OF PRIOR YEAR FINDINGS The follow-up and corrective action taken on all prior year findings is presented in Schedule 3. CURRENT YEAR FINDINGS AND CORRECTIVE ACTION PLAN The corrective action plan for current year findings is presented in Schedule 4. See accountant's report. -31-

33 Clarks, Louisiana Schedule 2 Schedule of Per Diem Paid Aldermen For the Year Ended June 30, 2007 Brian Brooks $300 Buddy Carter 300 Fred Grant 600 Phyllis Holmes 600 Bonnie Hurst 600 James King 600 Total $3,000 See accountant's report. -32-

34 Clarks, Louisiana Schedule 3 STATUS OF PRIOR YEAR FINDINGS For the Year Ended June 30, 2007 Reference Number Fiscal Year Finding Initially Occurred Description of Finding Corrective Action Taken Planned Corrective Action Noncompliance with Local Procedure Government Budget Act Yes Noncompliance with Local Procedure Government Budget Act No Disbursements not Procedure 8a 2006 Adequately Supported Yes N/A See current year findings. N/A See accountant's report. -33-

35 Clarks, Louisiana Schedule 4 CURRENT YEAR FINDINGS AND CORRECTIVE ACTION PLAN For the Year Ended June 30, 2007 Reference Number Description of Finding Corrective Action Planned Name of Contact Person Anticipated Completion Date Procedure 1 The town did not comply with the public bid law when purchasing a new van. The town will comply with the public bid law for all applicable purchases in the future. Ann Lovelady, Clerk 6/30/08 Procedure 7 Actual General Fund expenditures exceeded budgeted expenditures by $76,933 or 67%. A budget amendment will be adopted by the board of aldermen when General Fund actual expenditures exceed budgeted expenditures by Ann Lovelady, 5% or more. Clerk 6/30/08 See accountant's report. -34-

36 Independent Accountant's Report on Applying Agreed-Upon Procedures The following independent accountant's report on applying agreed upon procedures is presented in compliance with the requirements of the Louisiana Governmental Audit Guide and the Louisiana Attestation Questionnaire, issued by the Society of Louisiana Certified Public Accountants and the Louisiana Legislative Auditor. -35-

37 CERTIFIED PUBLIC ACCOUNTANT 369 DONALDSONROAD. CALHOUN, LOUISIANA. TELEPHONE318/ Independent Accountant's Report On Applying Agreed-Upon Procedures MAYOR AND BOARD OF ALDERMEN TOWN OF CLARKS Clarks, Louisiana I have performed the procedures included in the Louisiana Governmental Audit Guide and enumerated below, which were agreed to by the management of the Town of Clarks and the Legislative Auditor, State of Louisiana, solely to assist the users in evaluating management's assertions about the Town's compliance with certain laws and regulations during the year ended June 30, 2007 included in the accompanying Louisiana Attestation Questionnaire. This agreed-upon procedures engagement was performed in accordance with standards established by the American Institute of Certified Public Accountants. The sufficiency of the procedures is solely the responsibility of the specified users of the report. Consequently, I make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose. Public Bid Law 1. Select all expenditures made during the year for materials and supplies exceeding $20,000, or public works exceeding $100,000, and determine whether such purchases were made in accordance with LSA-RS 38: (the public bid law). A review was made of all disbursements for the year. There was one disbursement for materials and supplies exceeding $20,000 made during the year. This purchase was not made in compliance with the public bid law. There were no disbursements for public works exceeding $100,000 made during the year. Code of Ethics for Public Officials and Public Employees 2. Obtain from management a list of the immediate family members of each board member as defined by LSA-RS 42: (the code of ethics), and a list of outside business interests of all board members and employees, as well as their immediate families. Management provided me with the required list including the noted information. -36-

38 Independent Accountant's Report on Applying Agreed-Upon Procedures June 30, Obtain from management a listing of all employees paid during the period under examination. Management provided me with the required list. 4. Determine whether any of the employees included in the listing obtained from management in procedure number 3 above were also included in the listing obtained from management in procedure number 2 above as immediate family members. Budgeting None of the employees included on the list of employees provided by management in agreedupon procedure (3) were also included on the listing obtained from management in agreedupon procedure (2) as immediate family members. 5. Obtain a copy of the legally adopted budget and all amendments. I obtained a copy of the legally adopted budget. There were no budget amendments during the year. 6. Trace the budget adoption and amendments to the minute book. The 2007 budget was adopted at the June 13, 2006 board meeting. 7. Compare the revenues and expenditures of the final budget to actual revenues and expenditures to determine if actual revenues or expenditures exceed budgeted amounts by 5% or more. Actual General Fund revenues exceeded budgeted revenues. expenditures exceeded budgeted expenditures by $76,933 or 67%. Actual General Fund Accounting and Reporting 8. Randomly select 6 disbursements made during the period under examination and; (a) (b) (c) trace payments to supporting documentation as to correct amount and payee; determine if payments were properly coded to the correct fund and general ledger account; determine whether payments received approval from proper authorities. An examination of six randomly selected disbursements disclosed the following: -37-

39 Independent Accountant's Report on Applying Agreed-Upon Procedures June 30, 2007 (a) (b) (c) The six selected disbursements were supported by adequate documentation. The six selected payments were properly coded to the correct fund and general ledger account. The six selected payments received approval from the proper authorities. Meetings 9. Examine evidence indicating that agendas for meetings recorded in the minute book were posted or advertised as required by LSA-RS 42:1-12 (the opening meetings law). Debt The agendas for the meetings were posted as required by LSA-RS 42: Examine bank deposits for the period under examination and determine whether any such deposits appear to be proceeds of bank loans, bonds, or like indebtedness. Advances and Bonuses I examined all deposits for the period under examination and noted no proceeds that appeared to be from bank loans, bonds, or like indebtedness. 11. Examine payroll records and minutes for the year to determine whether any payments have been made to employees which may constitute bonuses, advances, or gifts. A reading of the minutes of the board meetings and an examination of payroll records indicated no payments which may constitute bonuses, advances, or gifts. I was not engaged to, and did not, perform an examination, the objective of which would be the expression of an opinion on management's assertions. Accordingly, I do not express such an opinion. Had I performed additional procedures, other matters might have come to my attention that would have been reported to you. -38-

40 Independent Accountant's Report on Applying Agreed-Upon Procedures June 30, 2007 This report is intended solely for the use of management of the Town of Clarks and the Legislative Auditor, State of Louisiana, and is not intended to be and should not be used by those who have not agreed to the procedures and taken responsibility for the sufficiency of the procedures for their purposes. Under Louisiana Revised Statute 24:513, this report is distributed by the Legislative Auditor as a public document. /s Carleen Dumas Calhoun, Louisiana November 8,

41 Louisiana Attestation Questionnaire The accompanying Louisiana Attestation Questionnaire has been completed by management and is included in this report as required by the Louisiana Governmental Audit Guide. -40-

42 M. Carleen Dumas, CPA 369 Donaldson Road Calhoun,LA Mrs. Dumas: In connection with your review of our financial statements as of June 30,2007 and for the year then ended, as required by Louisiana Revised Statute 24:513 and the Louisiana Governmental Audit Guide, we make the following representations to you. We accept full responsibility for our compliance with the following laws and regulations and the internal controls over compliance with such laws and regulations. We have evaluated our compliance with the following laws and regulations prior to making these representations. These representations are based on information available to us as of 6/30/07. PUBLIC BID LAW 1. It is true that we have complied with the public bid law, LSA-RS Title 38:2212, and, where applicable, the regulations of the Division of Administration, State Purchasing Office. Yes [ X ] No [ ] N/A [ ] CODE OF ETHICS FOR PUBLIC OFFICIALS AND PUBLIC EMPLOYEES 2. It is true that no employees or officials have accepted anything of value, whether in the form of a service, loan, or promise, from anyone which would constitute a violation of LSA-RS 42: Yes [ X ] No [ ] N/A [ ] 3. It is true that no member of the immediate family of any member of the governing authority, or the chief executive of the governmental entity, has been employed by the governmental entity after April 1, 1980 under circumstances which would constitute a violation of LSA-RS 42:1119. BUDGETING Yes [ ] No [ ] N/A [ ] 4. We have complied with the state budgeting requirements of the Local Government Budget Act (LSA- RS 39: ) or the budget requirements of LSA-RS 39:34. Yes [ X ] No [ ] N/A [ ] -41-

43 ACCOUNTING AND REPORTING 5. All non-exempt governmental records are available as a public record and have been retained for at least three years, as required by LSA-RS 44:1, 44:7, 44:31, and 44:36. Yes [ X ] No [ ] N/A [ ] 6. We have filed our annual financial statements in accordance with LSA-RS 24:514, LSA-RS 33:463, and/or LSA-RS 39:92, as applicable. Yes [ X ] No [ ] N/A [ ] 7. We have had our financial statements audited or compiled in accordance with LSA-RS 24:513. MEETINGS Yes [ X ] No [ ] N/A [ ] 8. We have complied with the provisions of the Opening Meetings Law, LSA-RS 42:1-12. DEBT Yes [ X ] No [ ] N/A [ ] 9. It is true that we have not incurred any indebtedness, other than credit for 90 days or less to make purchases in the ordinary course of administration, nor have we entered into any lease-purchase agreements, without the approval of the State Bond Commission, as provided by Article VII, Section 8 of the 1974 Louisiana Constitution, Article VI, Section 33 of the 1974 Louisiana Constitution, and LSA-RS 39: ADVANCES AND BONUSES Yes [ X ] No [ ] N/A [ ] 10. It is true that we have not advanced wages or salaries to employees or paid bonuses in violation of Article VII, Section 14 of the 1974 Louisiana Constitution, LSA-RS 14:138, and AG opinion Yes [ X ] No [ ] N/A [ ] We have disclosed to you all known noncompliance of the foregoing laws and regulations, as well as any contradictions to the foregoing representations. We have made available to you documentation relating to the foregoing laws and regulations. -42-