TOWN OF GRAND COTEAU. LOUISIANA FINANCIAL REPORT FOR THE YEAR ENDED JUNE

Transcription

1 FINANCIAL REPORT FOR THE YEAR ENDED JUNE

2 TABLE OF CONTENTS INDEPENDENT AUDITOR'S REPORT 1-3 FINANCIAL SECTION BASIC FINANCIAL STATEMENTS 4 GOVERNMENT-WIDE FINANCIAL STATEMENTS (GWFS1 Statement of Net Position 5 Statement of Activities 6 PAGE FUND FINANCIAL STATEMENTS Balance Sheet - Governmental Funds 7 Reconciliation of the Governmental Funds' Balance Sheet to the Statement of Net Position 8 Statement of Revenues. Expenditures, and Changes in Fund Balances - Governmental Funds 9 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statements of Activities 10 Statement of Net Position - Proprietary Funds Statement of Revenues, Expenses, and Changes in Fund Net Position - Proprietary Funds 13 Statement of Cash Flows - Proprietary Funds Notes to Basic Financial Statements REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULES General Fund 33 Sales Tax Fund Sales Tax Fund 35 OTHER SUPPLEMENTARY INFORMATION MAJOR GOVERNMENTAL FUND General Fund - 36 Balance Sheet 37 Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual 38 Detailed Schedule of Revenues - Budget and Actual 39 Detailed Schedule of Expenditures - Budget and Actual 40-42

3 TABLE OF CONTENTS NON-MAJOR GOVERNMENTAL FUNDS Special Revenue Funds 43 Sales Tax Fund Balance Sheet 44 Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Sales Tax Fund Balance Sheet 46 Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual 47 COMPLIANCE AND INTERNAL CONTROL PAGE Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Schedule of Findings and Responses Schedule of Prior Year Findings 52 OTHER SUPPLEMENTARY SCHEDULES Enterprise Funds - Schedule of Operating Expenses Combined Schedule of Bonds Payable 55 Combined Schedule of Investments - All Funds 56 Schedule of Insurance in Force - Unaudited 57 Schedule of Compensation Paid to Mayor and Council 58

4 James L. Nicholson, Jr., CPA John S. Dowling, CPA G. Kenneth Pavy, II, CPA Michael A. Roy, CPA "" John Newton Stout, CPA Lisa Trouille Manuel, CPA A ^ Oana D. Quebedeaux, CPA Chizal S. Fontenot, CPA JOHN S. DOWLING & COMPANY A CORPORATION OF CERTIFIED PUBLIC ACCOUNTANTS Harold Dupre, CPA 1996 Dwight Ledoux, CPA 1998 Joel Lanclos, Jr., CPA 2003 Russell J. Stelly, CPA INDEPENDENT AUDITOR'S REPORT The Honorable Mayor, and Members of the Board of Aldermen and Alderwomen Grand Coteau, Louisiana Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Town of Grand Coteau, Louisiana, as of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise the Town's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatements of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting principles used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. P. O. Box North Service Road Opelousas, Louisiana Telephone Telefax

5 The Honorable Mayor. and Members of the Board of Aldermen and Alderwomen Page 2 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Town of Grand Coteau, Louisiana, as of June 30, 2014, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Management has omitted the management's discussion and analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic financial statements are not affected by this missing information. Accounting principles generally accepted in the United States of America require that the budgetary comparison information on pages 33 through 35 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Government Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Town of Grand Coteau, Louisiana's basic financial statements. The other supplementary information on pages 36 through 47 and pages 53 through 58 is presented for purposes of additional analysis and is not a required part of the basic financial statements. The other supplementary information on pages 36 through 47 and pages 53 through 56 and page 58 is the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the other supplementary information, except for the schedule of insurance in force, is fairly stated in all material respects in relation to the basic financial statements as a whole. The schedule of insurance in force on page 57 has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them.

6 The Honorable Mayor, and Members of the Board of Aldermen and Aiderwomen Page 3 Other Reporting Required by Government Auditing Standards In accordance with Government Auditina Standards, we have also issued our report dated December 9, 2014, on our consideration of the Town of Grand Coteau's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Town of Grand Coteau's internal control over financial reporting and compliance. Opelousas, Louisiana December 9, 2014 O^OnrTVp'

7 FINANCIAL SECTION

8 BASIC FINANCIAL STATEMENTS The Town of Grand Coteau's basic financial statements are comprised of the following three components; Government-wide financial statements - provide readers with a broad overview of the Town of Grand Coteau's finances in a manner similar to a private sector business. Fund financial statements - provide readers information with an emphasis on inflows and outflows of resources useful for making decisions in a budgetary context where the focus is on meeting the Town's near-term financial needs. Notes to basic financial statements - provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements.

9 GOVERNMENT-WIDE FINANCIAL STATEMENTS (GWFS)

10 STATEMENT OF NET POSITION JUNE ASSETS PRIMARY GOVERNMENT GOVERNMENTAL BUSINESS-TYPE ACTIVITIES ACTIVITIES TOTAL Cash and cash equivalents $ 273,261 $ 154,252 $ 427,513 Investments - 1,262 1,262 Receivables, (net of allowance for uncollectibles) 26,675 51,429 78,104 Accrued interest receivable - 1,786 1,786 Due from other governments 37,208-37,208 Internal balances (63,367) 63,367 - Restricted assets - 220, ,339 Prepaid expenses 6,706-6,706 Capital assets (net) 1,098,102 2,166,849 3,264,951 Total assets 1,378,585 2,659,284 4,037,869 LIABILITIES Accounts payable and accrued expenses 35,872 10,245 46,117 Payable from restricted assets - 47,951 47,951 Interest payable Long-term liabilities Due within one year 98 26,100 26,198 Due in more than one year 27, , ,525 Total liabilities 63, , ,361 NET POSITION Net investment in capital assets 1,098,102 1,964,457 3,062,559 Restricted for: Customer deposits - 63,778 63,778 Bond retirement - 93,940 93,940 Unrestricted 216, , ,231 Total net oosition 1,314,873 2,356,635 3,671,508 The accompanying notes are an integral part of the basic financial statements.

11 EXPENSES FEES, FINES AND CHARGES FOR SERVICES STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE PROGRAM REVENUES OPERATING GRANTS AND CONTRIBUTIONS CAPITAL GRANTS AND CONTRIBUTIONS NET (EXPENSES) REVENUES AND CHANGES IN NET POSITION GOVERNMENTAL ACTIVITIES BUSINESS-TYPE ACTIVITIES TOTAL FUNCTION^ / PROGRAMS Governmental Activities General government Public safety Public works Culture and recreation $ 279, , ,919 2,731 $ 333,286 $ $ $ (279,667) (202,363) (259,919) (2,731) $ $ (279,667) (202,363) (259,919) (2.731) activities 1,077, ,286 (744,680) (744,680) Business-type Activities Gas Water Sewer 235, , , , , ,449 34, ,088 63,006 (88,642) 35,088 63,006 (88,642) Total businesstvoe activities 586, ,254 34,125 9,452 9, , ,125 (744,680) 9,452 (735,228) General revenues Taxes Property taxes, levied for general purposes Sales taxes, levied for general purposes Franchise taxes Interest and Investment earnings Occupational licenses and other permits I ntergovernm ental Miscellaneous Extraordinary item Transfers Total general revenues and transfers 32, ,557 74,367 44, ,899 12,434 42, , (32,225) (42,469) (74,465) 32, ,557 74, , ,899 12,434 (32,225) ~ Changes In net position (26,482) (65,013) (91,495) Net position - July 1, ,421,648 3,763,003 Net position - June 30, , ,671,508 The accompanying notes are an integral part of the basic financial statements.

12 FUND FINANCIAL STATEMENTS

13 BALANCE SHEET GOVERNMENTAL FUNDS JUNE ASSETS GENERAL SPECIAL REVENUE FUNDS TOTAL GOVERNMENTAL FUNDS Cash and cash equivalents Receivables, net of allowance for uncollectibles Taxes Franchise Intergovernmental Other receivable Prepaid insurance Due from other funds $ 109,149 2,783 17,970 37,208 5,922 6,706 10,119 $ 164,112 13,694 $ 273,261 2,783 17,970 37,208 5,922 6,706 23,813 Total assets , LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable Compensated absences payable Due to other funds Total liabilities $ 33, $ 2, , , ,150 FUND BALANCES Restricted Assigned Unassigned Total fund balances 64,197 51, , , , ,332 64, Total liabilities and fund balances ,663 The accompanying notes are an integral part of the basic financial statements.

14 RECONCILIATION OF THE GOVERNMENTAL FUNDS' BALANCE SHEET TO THE STATEMENT OF NET POSITION JUNE Total fund balances for governmental funds at June 30, 2014 $ 244,513 Cost of capital assets at June 30, 2014 $ 2,105,048 Less: Accumulated depreciation as of June 30, 2014 (1,006,946) 1,098,102 Elimination of interfund assets and liabilities Due from other funds Due to other funds 23,813 (23,813) Long-term liabilities at June 30, 2014 Compensated absences (27,742) (27,742) Net position at June 30, ,314,873 The accompanying notes are an integral part of the basic financial statements.

15 STATEMENT OF REVENUES. EXPENDITURES. AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE REVENUES Taxes Licenses and permits Intergovernmental Fines and forfeits Miscellaneous Total revenues GENERAL $ 107,192 44, , ,286 12, ,457 SPECIAL REVENUE FUNDS $ 234, ,558 TOTAL GOVERNMENTAL FUNDS $ 341,750 44, , ,286 12,433 1,009,015 EXPENDITURES Current operating Executive and administrative Street department Police department Fire department Capital outlay Total expenditures 254, , ,802 11,926 6, ,630 10,347 10, , , ,802 11,926 6, ,977 EXCESS (DEFICIENCY^ OF REVENUES OVER (UNDER1 EXPENDITURES (214,173) 224,211 10,038 OTHER FINANCING SOURCES fusest Transfers in Transfers out Total other financing sources (uses) 244,219 (5,829) 238,390 10,219 (206,140) (195,921) 254,438 (211,969) 42,469 NET CHANGE IN FUND BALANCES 24,217 28,290 52,507 FUND BALANCES, beginning of year 91, , ,006 FUND BALANCES, end of year 116, ,513 The accompanying notes are an integral part of the basic financial statements.

16 10 RECONCILIATION OF THE STATEMENT OF REVENUES. EXPENDITURES. AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE Total net change in fund balances for the year ended June 30, 2014 per Statement of Revenues, Expenditures and Changes in Fund Balances $ 52,507 Capital outlay which is considered expenditures on Statement of Revenues, Expenditures and Changes in Fund Balances $ 6,726 Depreciation expense for year ended June 30,2014 (81,275) (74,549) Book value of capital assets disposed of Differences between compensated absences on modified accrual basis versus accrual basis (4,440) Total change in net position for the vear ended June per Statement of Activities (26,482) The accompanying notes are an integral part of the basic financial statements.

17 11 STATEMENT OF NET POSITION PROPRIETARY FUNDS JUNE ASSETS BUSINESS-TYPE ACTIVITIES - ENTERPRISE FUNDS TOTAL GAS WATER SEWER ENTERPRISE FUND FUND FUND FUNDS CURRENT ASSETS Cash and cash equivalents $ 77,572 $ 66,841 $ 9,839 $ 154,252 Investments 1, ,262 Accounts receivable, net 16,962 20,455 14,012 51,429 Prepaid insurance ,786 Due from other funds 26,084 30,183 44, ,067 Total current assets 122, ,158 69, ,796 RESTRICTED ASSETS Cash 38,022 89,037 18, ,919 Investments 43,665-30,755 74,420 Total restricted assets 81, , ,339 PROPERTY AND EQUIPMENT Utility plant, net 21, ,860 1,508,234 2,166,849 Total assets 225, ,055 1,627,094 2,696,984 LIABILITIES AND NET POSITION CURRENT LIABILITIES (from current assets) Accounts payable 4,511 2,340 3,394 10,245 Due to other governmental agencies 4,000 4,000 4,000 12,000 Due to other funds 20, ,747 37,700 Total 28,722 7,082 24,141 59,945 CURRENT LIABILITIES (from restricted assets) Revenue bonds payable - 9,000 5,100 14,100 Interest payable Customers' deposits 33,017 14,934-47,951 Total current liabilities 33,017 24,504 5,100 62,621 Continued on next page. The accompanying notes are an integral part of the basic financial statements.

18 12 STATEMENT OF NET POSITION (CONTINUED) PROPRIETARY FUNDS JUNE BUSINESS-TYPE ACTIVITIES - ENTERPRISE FUNDS GAS FUND WATER FUND SEWER FUND TOTAL ENTERPRISE FUNDS NONCURRENT LIABILITIES Revenue bonds payable $ $ 29,000 $ 159,292 $ 188,292 Compensated absences Due to other governmental agencies 17,600 3,386 1,733 3,386 3,386 19,333 10,158 Total noncurrent liabilities 20,986 34, , ,783 Total liabilities 82,725 65, , ,349 NET POSITION Net investment in capital assets Restricted for customer deposits Restricted for bond retirement Unrestricted 21,755 48,670 72, ,860 15,108 49, ,957 1,343,842 44,515 46,818 1,964,457 63,778 93, ,460 Total net oosition 143, ,350 1,435,175 2,356,635 The accompanying notes are an integral part of the basic financial statements.

19 13 STATEMENT OF REVENUES. EXPENSES. AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE BUSINESS-TYPE ACTIVITIES - ENTERPRISE FUNDS GAS FUND WATER FUND SEWER FUND TOTAL ENTERPRISE FUNDS OPERATING REVENUES Charges for services Miscellaneous income $ 266,999 4,006 $ 179, $ 111,449 $ 557,738 4,516 Total ooeratina revenues 271, , , ,254 OPERATING EXPENSES Personal services Contractual services Supplies Other expenses Depreciation 67, ,870 24,068 34,923 6,427 31,659 8,594 53,111 54,650 1,307 1, ,088 85, , ,870 34, , ,474 Total ooeratina exoenses 235, , , ,505 OPERATING INCOME tlosst 35,088 31,786 (81,125) (14,251) NON-OPERATING REVENUES (EXPENSES^ Grants Interest income Interest expense - 34, (2,905) 126 (7,517) 34, (10,422) Total non-operatinq revenues fexoenses^ 31,323 (7,391) 23,932 INCOME floss^ BEFORE CONTRIBUTIONS. TRANSFERS. AND EXTRAORDINARY ITEM 35,088 63,109 (88,516) 9,681 EXTRAORDINARY ITEM Impairment loss on water well improvements (32,225) (32,225) Total extraordinary item - (32,225) - (32,225) INCOME flosst BEFORE CONTRIBUTIONS AND TRANSFERS 35,088 30,884 (88,516) (22,544) OPERATING TRANSFERS IN (OUT) Operating transfer in Operating transfer out (54,024) 96 (43,849) 55,308 1,380 (43,849) Total ooeratina transfers in (out) (54,024) (43,753) 55,308 (42,469) CHANGE IN NET POSITION (18,936) (12,869) (33,208) (65,013) NET POSITION, beainnina of vear 162, ,219 1,468,383 2,421,648 NET POSITION, end of vear The accompanying notes are an integral part of the basic financial statements.

20 14 STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE BUSINESS-TYPE ACTIVITIES - ENTERPRISE FUNDS TOTAL GAS FUND WATER FUND SEWER FUND ENTERPRISE FUNDS CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers Cash payments to suppliers for goods and services Cash payments to employees for services $271,964 (164,790) (65,250) $178,637 (61,671) (31,732) $109,792 (113,667) (1.307) $ 560,393 (340,128) (98,289) Net cash provided (used) bv ooeratino activities 41,924 85,234 (5,182) 121,976 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers in (out) Principal payment to other governmental agencies Net cash orovided (used) bv noncapital financinq activities (28,417) (2,333) (30,750) (63,442) (2,333) (65,775) 49,390 (2,333) 47,057 (42,469) (6,999) (49,468) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Intergovernmental grants Acquisition of capital assets Principal paid on revenue bonds and notes Interest paid on revenue bonds and notes - 34,125 (33,921) (8,000) (3.025) (21,002) (4,876) (7,517) 34,125 (54,923) (12,876) (10,542) Net cash used bv capital and related financino activities (10,821) (33,395) (44,216) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investments Interest on investments Net cash orovided (used) bv investina activities (163) (42) NET INCREASE IN CASH 11,011 8,741 8,498 28,250 (163) 103 (108) 126 (271) 229 CASH AND CASH EQUIVALENTS. Julv , ,137 20, ,921 CASH AND CASH EQUIVALENTS. June , ,171 Continued on next page. The accompanying notes are an integral part of the basic financial statements.

21 15 STATEMENT OF CASH FLOWS (CONTINUED) PROPRIESTARY FUNDS FOR THE YEAR ENDED JUNE BUSINESS-TYPE ACTIVITIES - ENTERPRISE FUNDS TOTAL GAS WATER SEWER ENTERPRISE FUND FUND FUND FUNDS RECONCILIATION OF OPERATING INCOME flosst TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income (loss) $35,088 $ 31,786 $ (81,125) $ (14.251) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation 6,427 54,650 85, ,474 (Increase) decrease in accounts receivable 1,184 (1,037) (1,670) (1,523) Increase (decrease) in accounts payable (2,416) 712 (7.202) (8,906) (Increase) decrease in interest receivable (Increase) decrease in prepaid insurance (513) (679) (594) (1,786) Increase (decrease) in compensated absences 2,379 (73) - 2,306 Increase (decrease) in customers' deposits (225) (125) - (350) Total adiustments 6,836 53,448 75, ,227 Net cash orovided fused) bv ooeratina activities 41,924 85,234 (5,182) 121,976 RECONCILIATION OF CASH AND CASH EQUIVALENTS PER STATEMENT OF CASH FLOWS TO THE BALANCE SHEET TOTAL GAS WATER SEWER ENTERPRISE FUND FUND FUND FUNDS Cash and cash equivalents, beginning of period Cash - unrestricted Cash - restricted $65,243 39,340 $ 59,172 87,965 $ 2,620 17,581 $127, ,886 Total cash and cash equivalents 104, ,137 20, ,921 Cash and cash equivalents, end of period Cash - unrestricted Cash - restricted 77,572 38,022 66,841 89,037 9,839 18, , ,919 Total cash and cash equivalents 115, ,878 28, ,171 Net increase 11,011 8,741 8,498 28,250 The accompanying notes are an integral part of the basic financial statements.

22 16 TOWN OF GRAND CQTEAU. LOUISIANA NOTES TO BASIC FINANCIAL STATEMENTS JUNE NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying financial statements of the Town of Grand Coteau, Louisiana have been prepared in conformity with accounting principles generally accepted in the United States of America as applied to governmental units, hereinafter referred to as GAAP (generally accepted accounting principles). The accepted standard-setting body for establishing governmental accounting and financial reporting principles is GASB (the Governmental Accounting Standards Board), The following is a summary of certain significant accounting policies and practices of the Town of Grand Coteau: A. FINANCIAL REPORTING ENTITY Governmental Accounting Standards Board Statement No. 14 established criteria for determining which component units should be considered part of the Town of Grand Coteau for financial reporting purposes. The basic criterion for including a potential component unit within the reporting entity is financial accountability. The GASB has set forth criteria to be considered in determining financial accountability. This criteria includes: 1. Appointing a voting majority of an organization's governing body, and a. The ability of the Town to impose its will on that organization and/or b. The potential for the organization to provide specific financial benefits to or impose specific financial burdens on the Town. 2. Organizations for which the Town does not appoint a voting majority but are fiscally dependent on the Town. 3. Organizations for which the reporting entity financial statements would be misleading if data of the organization is not included because of the nature or significance of the relationship. The Town of Grand Coteau is a primary government and has no component units. The accompanying financial statements present information only on the funds maintained by the Town and do not present information on any other governmental unit. B. BASIS OF PRESENTATION GOVERNMENT-WIDE FINANCIAL STATEMENTS fgwfs) The Statement of Net Position and the Statement of Activities display information on all of the nonfiduciary activities of the Town of Grand Coteau, the primary government, as a whole. They include all funds of the reporting entity. For the most part, the effect of interfund activity has been removed from these statements. 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. Fiduciary funds are not included in the GWFS. Fiduciary funds are reported only in the Statement of Fiduciary Net Position at the fund financial statement level. 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 specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Program revenues include (a) fees, fines, and charges paid by the recipients of goods or services offered by the programs, and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes are presented as general revenues.

23 17 NOTES TO BASIC FINANCIAL STATEMENTS JUNE NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED B. BASIS OF PRESENTATION - Continued FUND FINANCIAL STATEMENTS The accounts of the Town are organized and operated on the basis of funds. A fund is an independent fiscal and accounting entity with a separate set of self-balancing accounts. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with financerelated legal and contractual provisions. The minimum number of funds is maintained consistent with legal and managerial requirements. The various funds of the Town are classified into two categories: governmental and proprietary. The emphasis on fund financial statements is on major governmental and enterprise funds, each displayed in a separate column. A fund is considered major if it is the primary operating fund of the Town or meets the following criteria: a. Total assets, liabilities, revenues or expenditures/expenses of that individual governmental or enterprise fund are at least 10 percent of the corresponding total for all funds of the category or type; and b. Total assets, liabilities, revenues, or expenditures/expenses of the individual governmental or enterprise funds are at least 5 percent of the corresponding total for all governmental and enterprise funds combined. The Town reports the following major governmental funds: Govemmental Fund General Fund. The General Fund is the general operating fund of the Town. It is used to account for all financial resources except those that are required to be accounted for in another fund. The Town reports the following nonmajor governmental funds: Non-Major Governmental Funds Special Revenue Funds Sales Tax Fund. The Sales Tax Fund is used to account for the proceeds of a one percent sales and use tax that is legally restricted to expenditures for specific purposes Sales Tax Fund The 2010 Sales Tax Fund is used to account for the proceeds of a one percent sales and use tax that is legally restricted to expenditures for specific purposes. The Town reports the following major proprietary funds: Enterprise Funds Gas Fund. The Gas Fund accounts for gas services to residents of the Town of Grand Coteau. All activities necessary to provide such services are accounted for in this fund including, but not limited to, operations, construction, administration, maintenance, financing and related debt service, and billing and collection. Water Fund. The Water Fund accounts for water services to residents of the Town of Grand Coteau. All activities necessary to provide such services are accounted for in this fund including, but not limited to, operations, construction, administration, maintenance, financing and related debt service, and billing and collection.

24 18 NOTES TO BASIC FINANCIAL STATEMENTS JUNE N0TE1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED B. BASIS OF PRESENTATION - Continued FUND FINANCIAL STATEMENTS - Continued Sewer Fund. The Sewer Fund accounts for sewer services to the Town of Grand Coteau. All activities necessary to provide such services are accounted for in this fund including, but not limited to, operations, construction, administration, maintenance, financing and related debt service, and billing and collection. 0. MEASUREMENT FOCUS/BASIS OF ACCOUNTING Measurement focus is a term used to describe "which" transactions are recorded within the various financial statements. Basis of accounting refers to "when" transactions are recorded regardless of the measurement focus applied. MEASUREMENT FOCUS On the government-wide Statement of Net Position and the Statement of Activities, both governmental and business-type activities are presented using the economic resources measurement focus as defined in item b. below. In the fund financial statements, the "current financial resources" measurement focus or the "economic resources" measurement focus is used as appropriate: a. All governmental funds utilize a "current financial resources" measurement focus. Only current financial assets and liabilities are generally included in their balance sheets. Their operating statements present sources and uses of available spendable financial resources during a given period. These funds use fund balance as their measure of available spendable financial resources at the end of the period. b. The proprietary fund utilizes an "economic resources" measurement focus. The accounting objective of this measurement focus is the determination of operating income, changes in net position (or cost recovery), financial position, and cash flows. All assets and liabilities (whether current or noncurrent) associated with their activities are reported. Proprietary fund equity is classified as net position. BASIS OF ACCOUNTING In the government-wide Statement of Net Position and Statement of Activities, both governmental and businesstype activities are presented using the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred or economic asset used. Revenues, expenses, gains, losses, assets, and liabilities resulting from exchange and exchangelike transactions are recognized when the exchange takes place. 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. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures (including capital outlay) generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures are recorded only when payment is due. Expenditures are generally recognized under the modified accrual basis of accounting when the related fund liability is incurred except that accumulated unpaid vacation and sick pay are not accrued and principal and interest on general long-term debt are recognized when due. Purchases of various operating supplies are regarded as expenditures at the time purchased.

25 19 NOTES TO BASIC FINANCIAL STATEMENTS JUNE NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED 0. MEASUREMENT FOCUS/BASIS OF ACCOUNTING - Continued BASIS OF ACCOUNTING - Continued The proprietary fund utilizes the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred or economic asset used. Bad debts are written off when accounts became worthless. Transfers between funds that are not expected to be repaid are accounted for as other financing sources (uses). These transactions are recorded when the transfers occur. Program Revenues Program revenues included in the Statement of Activities are derived directly from the program itself or from parties outside the Town's taxpayers or citizenry, as a whole; program revenues reduce the cost of the function to be financed from the Town's general revenues. Allocation of Indirect Expenses The Town reports all direct expenses by function in the Statement of Activities. Direct expenses are those that are clearly identifiable with a function. Indirect expenses of other functions are not allocated to those functions, but are reported separately in the Statement of Activities. Depreciation expense is specifically identified by function. CASH AND INVESTMENTS Louisiana statutes authorize the Town to invest in United States bonds, treasury notes or certificates, time certificates of deposit in state and national banks, or any other federally insured investment. At year-end, the carrying amount of the Town's cash and investments was $649,115. The bank balance of cash was $585,704 and of investments was $75,680. Investments are stated at cost or amortized cost, which approximates market. Investments consist of time certificates of deposits. Cash and certificates of deposits are fully secured through the pledge of bank-owned securities or federal deposit insurance. Custodial credit risk for deposits is the risk that in the event of the failure of a depository financial institution, the Town's deposits may not be recovered or will not be able to recover the collateral securities that are in the possession of an outside party. These deposits are stated at cost, which approximates market. Under state law, these deposits, (or the resulting balances) must be secured by federal deposit insurance or similar federal security 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 bank. These securities are held in the name of the Town or the pledging fiscal agent bank by a holding or custodial bank that is mutually acceptable to both parties. The Town does not have a policy for custodial credit risk. As of June 30, 2014, the Town's total bank balances were secured as follows. Bank Balances $ 661,384 Federal deposit insurance $ 325,680 Pledged securities 335,704 Total FDIC insurance and collateral 661,384

26 20 NOTES TO BASIC FINANCIAL STATEMENTS JUNE NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED 0. MEASUREMENT FOCUS/BASIS OF ACCOUNTING - Continued INTERFUND RECEIVABLES AND PAYABLES During the course of operations, numerous transactions occur between individual funds that may result in amounts owed between funds. Those related to goods and services type transactions are classified as "due to and from other funds." Short-term interfund loans are reported as "interfund receivables and payables." Interfund receivables and payables between funds within governmental activities are eliminated in the Statement of Net Position. CAPITAL ASSETS The accounting treatment of property plant and equipment (capital assets) depends on whether they are used in governmental fund operations or proprietary fund operations and whether they are reported in the governmentwide or fund financial statements. Prior to GASB No. 34, governments were not required to report general infrastructure assets. The Town of Grand Coteau did not capitalize infrastructure expenditures. During the fiscal year ending June 30, 2004, the Town began to capitalize infrastructure. In the government-wide financial statements, capital assets are capitalized at historical cost, or estimated historical cost if actual is unavailable, except for donated assets, which are recorded at their estimated fair value at the date of donation. The Town of Grand Coteau maintains a threshold level of $500 or more for capitalizing capital assets. Depreciation of all exhaustible capital assets is recorded as an allocated expense in the Statement of Activities, with accumulated depreciation reflected in the Statement of Net Position. Depreciation is provided over the assets' estimated useful lives using the straight-line method of depreciation. The range of estimated useful lives by type of assets is as follows: Building and improvements Furniture and equipment Vehicles Water system Sewerage system Meters years 5-10 years 5-15 years years years years The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. It is the policy of the Town to capitalize material amounts of interest resulting from borrowings in the course of the construction of fixed assets. In the fund financial statements, capital assets used in governmental fund operations are accounted for as facilities acquisition and construction expenditures of the governmental fund upon acquisition. BAD DEBTS Uncollectible amounts due for ad valorem taxes, miscellaneous liens, and sundry claims are recorded as bad debts through the establishment of an allowance account at the time information available indicated the uncollectibility of the particular receivables.

27 21 NOTES TO BASIC FINANCIAL STATEMENTS JUNE NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED 0, MEASUREMENT FOCUS/BASIS OF ACCOUNTING - Continued BAD DEBTS - Continued Allowance for uncollectible accounts receivable at June 30, 2014 in the General Fund and Enterprise Funds was $8,624 and $20,361, respectively. BUDGETS AND BUDGETARY ACCOUNTING The Town follows these procedures in establishing the budgetary data reflected in these financial statennents: 1. A public meeting is scheduled by the Town Council after allowing for at least 10 days notice to the public at the time the budget is initially submitted to the Town Council. 2. The budget must be finally adopted by the Council no later than the last day of the preceding fiscal year. 3. The Mayor and Town Council may authorize transfers of budgetary amounts within departments and revisions requiring alteration of levels of expenditures or transfers between departments. 4. Operating appropriations, to the extent not expended or encumbered, lapse at year-end. Capital appropriations continue in force until the project is completed or deemed abandoned. 5. Formal budgetary integration is employed as a management control device during the year for the General Fund and Special Revenue Funds. Budgets are adopted on a basis consistent with generally accepted accounting principles (GAAP). The budgeted accounts shown in these financial statements include the original and final budget amounts for the year ending June 30, The budget was amended during a public meeting prior to the fiscal year-end. ENCUMBRANCES Encumbrances accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is not employed by the Town as an extension of formal budgetary integration in the funds. INVENTORY The Town practices the policy of recording materials and supplies as expenditures or expenses when acquired. The Town does not record any of these items as inventory because the amount of the items in stock is insignificant. COMPENSATED ABSENCES The Town's policy is that employees earn and must use their vacation as of the end of each calendar year. Unused sick leave can be carried forward to the next calendar year. Upon termination, unused sick leave up to 90 days is paid to the employee at the employee's current rate of pay. The entire compensated absence liability is reported on the government-wide financial statements. For governmental fund financial statements, the current portion of unpaid compensated absences is the amount that is normally expected to be paid using expendable available financial resources. These amounts are recorded in the account "compensated absences payable" in the fund from which the employees who have accumulated leave are paid. CASH AND CASH EQUIVALENTS For purposes of the Statement of Cash Flows, the Town considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.

28 22 NOTES TO BASIC FINANCIAL STATEMENTS JUNE NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED 0. MEASUREMENT FOCUS/BASIS OF ACCOUNTING - Continued CASH AND CASH EQUIVALENTS For purposes of the Statement of Cash Flows, the Town considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. RESTRICTRED ASSETS Restricted assets include cash and interest-bearing deposits of the proprietary fund that are legally restricted as to their use. The restricted assets are related to the utility meter deposits. LONG-TERM DEBT The accounting treatment of long-term debt depends on whether the assets are used in governmental fund operations or proprietary fund operations and whether they are reported in the government-wide or fund financial statements. All long-term debt to be repaid from governmental and business-type resources are reported as liabilities in the government-wide statements. Long-term debt for governmental funds is not reported as liabilities in the fund financial statements. The accounting for proprietary fund long-term debt is the same in the fund statements as it is in the government-wide statements. REVENUES. EXPENDITURES. AND EXPENSES Operating Revenues and Expenses Operating revenues and expenses for proprietary funds are those that result from providing services and producing and delivering goods and/or services. It also includes all revenue and expenses not related to capital and related financing, noncapital financing or investing activities. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. Expenditures/Expenses In the government-wide financial statements, expenses are classified by function for both governmental and business-type activities. In the fund financial statements, expenditures are classified as follows: Governmental Funds - By Character Proprietary Fund - By Operating and Nonoperating In the fund financial statements, governmental funds report expenditures of financial resources. Proprietary funds report expenses relating to use of economic resources. Interfund Transfers Permanent reallocations of resources between funds of the reporting entity are classified as interfund transfers. For the purposes of the Statement of Activities, all interfund transfers between individual governmental funds have been eliminated.

29 23 NOTES TO BASIC FINANCIAL STATEMENTS JUNE N0TE1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED 0. MEASUREMENT FOCUS/BASIS OF ACCOUNTING - Continued EQUITY CLASSIFICATIONS In the government-wide statements, equity is classified as net position and displayed in three components; 1. Net investment in capital assets - Consists of capital assets including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. 2. Restricted net position - Consist of net position with constraints placed on the use either by (1) external groups, such as creditors, grantors, contributors, or laws or regulations of other governments; or (2) law through constitutional provisions or enabling legislation. 3. Unrestricted net position - Ail other net position that do not meet the definition of "restricted" or "net investment in capital assets." In the fund financial statements, governmental fund equity is classified as fund balance. Fund balance reports aggregate amounts for five classifications of fund balances based on the constraints imposed on the use of these resources. Proprietary fund equity is classified the same as in the government-wide statements. The nonspendable fund balance classification includes amounts that cannot be spent because they are either (a) not in spendable form - prepaid items or inventories; or (b) legally or contractually required to be maintained intact. The spendable portion of the fund balance comprises the remaining four classifications: restricted, committed, assigned and unassigned. 1. Restricted fund balance - This classification reflects the constraints imposed on resources either (a) externally by creditors, grantors, contributors, or laws or regulations of other governments; or (b) imposed by law through constitutional provisions for enabling legislation. 2. Committed fund balance - These amounts can only be used for specific purposes pursuant to constraints imposed by formal resolutions or ordinances of the Board of Aldermen - the government's highest level of decision making authority. Those committed amounts cannot be used for any other purpose unless the Board of Aldermen removes the specified use by taking the same type of action imposing the commitment. This classification also includes contractual obligations to the extent that existing resources in the fund have been specifically committed for use in satisfying those contractual requirements. 3. Assigned fund balance - This classification reflects the amounts constrained by the Town's "intent" to be used for specific purposes, but are neither restricted nor committed. The Board of Aldermen, Mayor and Town Clerk have the authority to assign amounts to be used for specific purposes. Assigned fund balances include all remaining amounts (except negative balances) that are reported in governmental funds, other than the General Fund, that are not classified as nonspendable and are neither restricted nor committed. 4. Unassigned fund balance - This fund balance is the residual classification for the General Fund. It is also used to report negative fund balances in other governmental funds.

30 24 NOTES TO BASIC FINANCIAL STATEMENTS JUNE N0TE1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED C. MEASUREMENT FOCUS/BASIS OF ACCOUNTING - Continued EQUITY CLASSIFICATIONS - Continued When both restricted and unrestricted resources are available for use, it is the Town's policy to use externally restricted resources first, then unrestricted resources - committed, assigned and unassigned - in order as needed. 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 the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues, expenditures, and expenses during the reporting period. Actual results could differ from those estimates. NOTE 2 - RECEIVABLES Receivables at June 30, 2014 consist of the following: Governmental Business- type Activities Activities Total Taxes receivable $11,407 $ - $11,407 Accounts - 71,790 71,790 Allowance for bad debts (8,624) (20,361) (28,985) Other receivable 5,922-5,922 Franchise receivable 17,970 17,970 Total 26, ,104