WATERWORKS DISTRICT NO. 2 OF NATCfflTOCHES PARISH NATCHEZ, LOUISIANA FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2012

Transcription

1 WATERWORKS DISTRICT NO. 2 OF NATCfflTOCHES PARISH NATCHEZ, LOUISIANA FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 212

2 NATCHEZ, LOUISIANA BOARD OF COMMISSIONERS DECEMBER Commissioners Office Year Elected Term Emile Metoyer 2353 Bermuda Road, Bermuda, LA / John T. Batten, Jr Hwy 494, Natchez, La / J. W. Anthony 911 Hwy 122, Natchez, La / Ted Duggan 4463 Highway 494, Bermuda, La / Donald D. Forest 252 Hwy 119, Natchez, La / Henderson Howard, Jr. P. O. Box 236, Natchez, La / Clyde H. Masson 1527 Hwy. 491, Cloutierville, LA / John N. Rachal P.O. Box 33, Flora, LA /352/4731 President 29 4 yrs. Sec./Treasurer 29 4 yrs yrs yrs yrs yrs yrs yrs

3 NATCHEZ, LOUISIANA TABLE OF CONTENTS DECEMBER Exhibit Schedule Paae Affidavit Independent Auditor's Report Management's Discussion and Analysis Statement of Net Position A - 9 Statement of Revenues, Expenses, and Changes in Fund Net Position B - 1 Statement of Cash Flows C - 11 Notes to the Financial Statements Other Supplementary Information Schedule of Compensation Paid Board Members Schedule of Findings and Questioned Costs 2 21 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 22 Summary Schedule of Prior Audit Findings 24 Corrective Action Plan for Current Year Audit Findings 25

4 L L Legislative Auditor P.O. Box Baton Rouee, LA WATERWORKS DISTRICT NO. 2 OF NATCHITOCHES PARISH NATCHEZ. LOUISIANA FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER AFFIDAVIT L Personally came and appeared before the undersigned authority, Leslie Dunn, Manager of the Waterworks District No. 2 of Natchitoches Parish, who, duly swom, deposes and says, that the fmancial statements herewith given presents fairly the financial position of Waterworks District No. 2 of Natchitoches Parish, at December 31, 212 and the results of operations for the year then ended in accordance with generally accepted accounting principles as prescribed by the Governmental Accounting Standards Board. Sworn to and subscribed before me, this 9^'' day of Mav 213. NOTARY/PUBLIC vluv 4^)^37^ ^3

5 FRANKS. MINES, CPA LEWIS C. MINES, CPA E. MERLIN SQUYRES, CPA JAYM. SHEFFIELD, CPA JAMES S. SHEFFIELD, CPA HiNES, SHEFFIELD & SQUYRES, L.L.C. CERTIFIED PUBLIC ACCOUNTANTS P.O. BOX EAST FIFTH STREET NATCHITOCHES, LA Telephone (318) FAX (318) Board of Commissioners Waterworks District No. 2 of Natchitoches Parish Natchez, Louisiana INDEPENDENT AUDITOR'S REPORT We have audited the accompanying fmancial statements of the Waterworks District No. 2 of Natchitoches Parish, Natchez, Louisiana, a component unit of the Natchitoches Parish Police Jury as of and for the year ended December 31, 212, and the related notes to the fmancial statements, which collectively comprise Waterworks District No. 2 of Natchitoches Parish's basic fmancial 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 fmancial 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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the fmancial 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 judgement, including the assessment of the risks of material misstatement 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 fmancial 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 policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the fmancial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position ofthe Waterworks District No. 2 of Natchitoches Parish, as of December 31, 212, and the respective changes in financial position and cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. -MEMBERS- American Institute of Certified Public Accountants Society of Louisiana Certified Public Accountants

6 Page #2 Other Matters Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on pages 4 to 8 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Govermnental 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 ofthe 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 Waterworks District No. 2 of Natchitoches Parish's financial statements as a whole. The accompanying information identified in the table of contents as Other Supplementary Information is presented for the purposes of additional analysis and is not a required part of the financial statements. The Other Supplementary Information schedules are the responsibility of management and were derived from and related directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit ofthe financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. The financial information for the year ended December 31,211, which is included for comparative purposes was taken from the financial report for that year in which we expressed an unqualified opinion dated May 1, 212, on the basic financial statements ofthe Waterworks District No. 2 of Natchitoches Parish. Hines, Sheffield & Squyres Natchitoches, Louisiana May 9, 213

7 NATCHEZ, LOUISIANA MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER The Management's Discussion and Analysis of Waterworks Disfrict No. 2 of Natchitoches Parish's financial performance presents a narrative overview and analysis of Waterworks District No. 2 of Natchitoches Parish's financial activities for the year ended December 31, 212. This document focuses on the current year's activities, resulting changes, and currently known facts. Please read this document in conjunction with the Waterworks District No. 2 of Natchitoches Parish's financial statements, which begin on page 9. FINANCIAL HIGHLIGHTS 1) The Waterworks District No. 2 of Natchitoches Parish had cash and cash equivalents and investments of 1,785,491 at December 31, 212 which represents an increase of 1,28,43 fiom prior year end. 2) The Waterworks District No. 2 of Natchitoches Parish had accounts receivable of 73,853 at December 31, 212 which represents a decrease of 4,533 from prior year end. 3) The Waterworks District No. 2 of Natchitoches Parish had accounts payable and accruals of 65,568 at December 31, 212 which represents a decrease of 218,317 from prior year end. 4) The Waterworks District No. 2 of Natchitoches Parish had total operating revenues of 1,43,925 for the year ended December 31, 212 which represents a decrease of 47,553 from prior year. 5) The Waterworks District No. 2 of Natchitoches Parish had charges for services revenues of 994,758 for the year ended December 31, 212 which represents a decrease of 59,539 from prior year. 6) The Waterworks District No. 2 of Natchitoches Parish had total operating expenses of 1,25,559 for the year ended December 31, 212 which represents an increase of 51,871 from prior year. 7) The Waterworks District No. 2 of Natchitoches Parish had salaries and board per diem of 253,23 for the year ended December 31, 212 which represents a decrease of 2,122 from prior year. 8) The Waterworks District No. 2 of Natchitoches Parish had interest expense of 227,545 for the year ended December 31,212 which represents a decrease of 27,21 from prior year. 9) The Waterworks District No. 2 of Natchitoches Parish had a net decrease in net position of 179,558 for the year ended December 31, 212 which represents a decrease of 444,15 from prior year. 1) The Waterworks District No. 2 of Natchitoches Parish had capital asset purchases of 59,548 for the year ended December 31, 212 which represents an increase of 319,473 from prior year. 11) The Waterworks District No. 2 of Natchitoches Parish had long-term debt of 7,179,849 for the year ended December 31, 212 which represents an increase of 1,23,528 from prior year. 12) The Waterworks District No. 2 of Natchitoches Parish had long-term debt principal payments of 396,472 for the year December 31,212 which represents an increase of 241,181 from prior year.

8 NATCHEZ, LOUISIANA MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) DECEMBER OVERVIEW OF THE FINANCIAL STATEMENTS The following graphic illustrates the minimum requirements for Waterworks District No. 2 of Natchitoches Parish as established by Governmental Accounting Standards Board Statement 34, Basic Financial Statements-and Management's Discussion and Analvsis-for State and Local Governments. Management Discussion and Analysis Basic Financial Statements Required Supplementary Information (Other than MD&A) These financial statements consist of three sections - Management's Discussion and Analysis (this section), the basic financial statements (including the notes to the financial statements), and required supplementary information. Basic Financial Statements This annual report consist of a series of financial statements. The Statement of Net Position, Statement of Revenues, Expenses, and Changes in Fund Net Position and Cash Flows (on pages 9, 1 and 11) provide information about the activities of Waterworks District No. 2 of Natchitoches Parish as a whole and present a longer-term view ofthe District' s finances. These statements include all assets and liabilities using the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. All ofthe current year' s revenues and expenses are taken into account regardless of when cash is received or paid. The Statement of Net Position and the Statement of Revenues, Expenses, and Changes in Fund Net Position report the District's net position and changes in them. You can think ofthe District's net position, the difference between assets and liabilities, as one way to measure the District's financial health, or financial position. Over time, increases or decreases in the District's net position is one indicator of whether its financial health is improving or deteriorating.

9 NATCHEZ. LOUISIANA MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) DECEMBER FINANCIAL ANALYSIS OF THE ENTITY Statement of Net Position As of Year End Current and other assets Capital assets, net ,61,823 1,965, ,414 Total Assets ,816,25 Accounts payable, accruals and other liabilities Long-term debt and leases Total Liabilities 196, ,376,574 4, ,321 6,376,47 Net Position Investment in capital assets, net of related debt Restricted Unrestricted Total Net Position 1,242, , ,93 738, , ,843 Total Liabilities and Net Position ,816,25 Net position ofthe Waterworks District No. 2 of Natchitoches Parish's decreased by 179,558 or 7.36% from the previous fiscal year. The decrease is the result of operating and other expenses exceeding operating and nonoperating revenues during the fiscal year ended 212 (See table below). Statement of Revenues, Expenses, and Changes in Fund Net Position For the Year Ended Operating Revenues 1,43,925 1,91,478 Operating Expenses Operating Income 18, ,79 Nonoperating Revenues/(Expenses) (197,924) (222,298) Capital Confributions Change in Net Position ( ) The Waterworks Disfrict No. 2 of Natchitoches Parish's total operating revenues decreased by 47,553 or 4.36% from the previous year. The total operating expenses increased by 51,871 or 5.33% from the previous year.

10 NATCHEZ. LOUISIANA MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) DECEMBER CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets At the end of 212, Waterworks District No. 2 of Natchitoches Parish had 7,35,36, net of depreciation, invested in a broad range of capital assets (See table below). This amount represents a net increase (including additions and deductions) of 184,622 or 2.7% from the previous year. Capital Assets at Year End (Net of Depreciation) Land Buildings and building improvements Disttibution system Automobiles Machinery and equipment Construction in progress Total This year's major additions included; ,721 18, ,431 34,843 6,63,684 6,17,92 9,89 14,834 2,398 34,21 25, ,75 7,35,36 6,85,414 Construction in progress 25,912 Distribution system 564,636 This years's major retirements included: Disttibution system 361,14 Machinery and equipment 64 Debt Waterworks Disttict No. 2 of Natchitoches Parish had 7,179,849 in long-term debt outstanding at year end compared to 5,976,321 at the previous year end, an increase of 1,23,528 or 2.14% as shown in the table below. Outstanding Debt at Year End Revenue bonds 5,579,849 5,976,321 Certificate of Indebtedness 1.6. Totals 7, New debt during the year included: Certificate of Indebtedness ,6,

11 NATCHEZ. LOUISIANA MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) DECEMBER ECONOMIC FACTORS AND NEXT YEAR'S RATES AND FEES Management of Waterworks District No. 2 of Natchitoches Parish consider the following factors and indicators when setting next year's rates mid fees. These factors and indicators include: 1) Long-term debt 2) Cost of operations 3) Number of Customers 4) State and federal Grants The Waterworks Disttict No. 2 of Natchitoches Parish does not expect any significant changes in next year's results as compared to the current year. CONTACTING WATERWORKS DISTRICT NO. 2 OF NATCHITOCHES PARISH'S MANAGEMENT This financial report is designed to provide our citizens, taxpayers, customers, investors and creditors with a general overview of the Waterworks Disttict No. 2 of Natchitoches Parish's finances and to show Waterworks District No. 2 of Natchitoches Parish's accountability for the money it receives. If you have questions about this report or need additional financial information, contact Leslie Dunn, Manager, 1665 Highway 119, Natchez, Louisiana

12 NATCHEZ. LOUISIANA STATEMENT OF NET POSITION DECEMBER 31, 212 AND 211 EXHIBIT A ASSETS Current Assets Cash and cash equivalents Investments Accounts receivable Prepaid expenses Total Current Assets ,536, ,532 73, ,284, ,19 843, ,226,219 Noncurrent Assets Restricted assets Capital assets, net Deferred debt expense, net Deposits 249,345 7,35,36 67, ,572 6,85, Total Assets ,25 LIABILITIES AND NET POSITION LIABILITIES Current Liabilities Current portion of long-term debt Accounts payable and accruals Total Current Liabilities Noncurrent Liabilities Long-term debt, net of current portion Customer deposits Total Liabilities NET POSITION Investment in capital assets, net of related debt Restricted Unrestricted Total Net Position Total Liabilities and Net Position 264, ,789 6,915, ,157 7,376,574 1,242, , , , , , , ,338 5,791, ,21 6,376,47 874,93 738, , , ,25 The accompanying notes are an integral part of this statement.

13 EXHIBIT B WATERWORKS DISTRICT NO. 2 OF NATCHITOCHES PARISH NATCHEZ, LOUISIANA STATEMENT OF REVENUES. EXPENSES. AND CHANGES JN FUND NET POSITION FOR THE YEARS ENDED DECEMBER 31, 212 AND 211 OPERATING REVENUES Charges for services Connection and other fees Miscellaneous Total Operating Revenues ,758 47,515 1,652 1,43,925 1,54,297 32, ,91,478 OPERATING EXPENSES Amortization expense Bad debt expense Depreciation Employee benefits Fuel Insurance Legal and accounting Office supplies and other expenses Payroll taxes Repairs and maintenance Salaries and board per diem Supplies Telephone Utilities Total Operating Expenses 1,722 3,53 45,926 6,393 23,64 46,492 11,699 25,269 19,38 81, ,23 33,984 8,69 51,586 1,25,559 7, ,669 52,689 22,592 49,962 13,949 23,36 19,265 73,5 255,352 26,717 8, ,688 Operating Income 18, ,79 Nonoperating Revenues/(Expenses) Interest and investment income Interest expense Total Nonoperating Revenues/(Expenses) Income/{Loss) Before Capital Conttibutions Capital Contributions Change in Net Position Net Position, Begiiming of year Net Position, End of year 29,621 (227,545) (197,924) (179,558) (179,558) 2,439,843 2, ,268 ( ) ( ) (14,58) 369,1 264, ,251 2,439,843 The accompanying notes are an integral part of this statement. 1

14 NATCHEZ. LOUISIANA STATEMENT OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 212 AND 211 EXHIBIT C Cash Flows From Operating Activities Receipts from customers 1,6,236 1,87,97 Cash payments to suppliers for goods and services (36,667) (32,356) Cash payments to employees and board members for services (34,2) (273,557) Other operating revenues/(expenses) Net Cash From Operating Activities 361, ,65 Cash Flows From Capital and Related Financing Activities Capital Contributions Proceeds from revenue bonds Principal payments on revenue bonds Proceeds from certificate of indebtedness Principal payments on certificate of indebtedness Acquisition/construction of capital assets Interest paid Net Cash From Capital and Related Financing Activities Cash Flows From Investing Activities Sale of investments Purchase of investments Interest and investment income Cash Flows From Investing Activities Net Increase/(Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents, Beginning of year Cash and Cash Equivalents, End of year 522,71 (396,472) 1,6, (811,24) (28.54) 76, , ,762 1,28,43 55,61 1,785, ,1 26,634 (155,291) (294,533) ( ) (32,546) (2,614) , ,83 55,61 Reconciliation of Operating Income to Net Cash From Operating Activities Operating income 18, ,79 Adjustments to reconcile operating income to net cash from operating activities Amortization expense Bad debt expense Depreciation expense (Increase)/decrease in operating assets Accounts receivable Prepaid expenses Deferred debt expense Increase/(decrease) in operating liabilities Accounts payable and accruals Customer deposits Net Cash Flows From Operating Activities 1,722 3,53 45,926 (523) 2,733 (68,86) (16,631) ,219 7, ,669 (3,812) (3,168) 1, ,65 The accompanying notes are an integral part of this statement. II

15 NATCHEZ. LOUISIANA NOTES TO FINANCIAL STATEMENTS DECEMBER The Waterworks Disttict No. 2 of Natchitoches Parish (the Disttict) was created by an ordinance of the Natchitoches Parish Police Jury on April 1,1963. The Disttict is a political subdivision ofthe Natchitoches Parish Police Jury, whose jurors are elected officials. The Disfrict's Commissioners are appointed by the Natchitoches Parish Police Jury. NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Basis of Accounting In April of 1984, the Financial Accounting Foundation established the Governmental Accounting Standards Board (GASB) to promulgate generally accepted accounting principles and reporting standards with respect to activities and transactions of state and local governmental entities. The GASB has issued a Codification of Governmental Accounting and Financial Reporting Standards (GASB Codification). This Codification and subsequent GASB pronouncements are recognized as generally accepted accounting principles for state and local governments. The accompanying fmancial statements have been prepared in accordance with such principles. The accompanying financial statements ofthe Disttict present information only as to the fransactions of the programs of the Disttict as authorized by Louisiana statutes and administtative regulations. Basis of accounting refers to when revenues and expenses are recognized and reported in the financial statements. Basis of accounting relates to the timing ofthe measurements made, regardless ofthe measurement focus applied. The accoimts ofthe Disttict are maintained in accordance with applicable statutory provisions: Revenue Recognition Revenues are recognized using the full accrual basis of accounting: therefore, revenues are recognized in the accounting period in which they are earned and become measurable. Expense Recognition Expenses are recognized on the accrual basis; therefore, expenses, including salaries, are recognized in the period incurred, if measurable. B. Cash and Cash Equivalents For the purpose ofthe Statement of Cash Flows mid consistent with GASB Statement 9, the District defines cash and cash equivalents as follows: Cash - includes not only currency on hand but also demand deposits with banks or other financial institutions and other kinds of accounts that have the general characteristics of demand deposits in that the customer may deposit additional frmds at any time and also effectively may withdraw funds at any time without prior notice or penalty. Cash equivalents - includes all short term, highly liquid investments that are readily convertible to known amounts of cash and are so near therr maturity that they present insignificant risk of changes in value because of interest rates. Generally, only investments which, at the day of purchase, have a maturity less than three months qualify. C. Receivables All receivables are reported at their gross value and, where applicable, are reduced by the estimated portion that is expected to be uncollectible. 12

16 NATCHEZ. LOUISIANA NOTES TO FINANCLU. STATEMENTS (CONTINUED) DECEMBER NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Bad Debts Uncollectible accounts receivable are recognized as bad debts through the establishment of an allowance account at the time information becomes available which would indicate the uncouectibility ofthe particular receivable. At December 31, 212, were considered to be uncollectible. E. Capital Assets Capital assets are carried at historical costs. Depreciation of all exhaustible capital assets used by the Disfrict are charged as an expense against operations in the Statement of Revenues, Expenses, and Changes in Fund Net Assets. Capital assets net of accumulated depreciation are reported on the Statement of Net Assets. Depreciation is computed using the straight line method over the estimated useful hfe ofthe assets, generally 1 to 4 years for buildings and building improvements, 7 to 25 years for the distribution system, 5 years for automobiles and 5 to 1 years for machinery and equipment. Expenditures for maintenance, repairs and minor renewals are charged to eamings as incurred. Major expenditures for renewals and betterments are capitalized. F. Deferred Debt Expense Bond issue costs and bond discounts are capitalized and amortized over the terms ofthe respective bonds using a method which approximates the effective interest method. Total bond issue costs and bond discounts (deferred debt expense) paid by the District was 68,86. The amortization e:q>ense related to deferred debt expense was 1,722 for the year ended December 31,212 G. Compensated Absences All full time employees ofthe Disttict are entitled to one week of vacation each year. Vacation time may not be carried over from one year to the next and does not vest or accumulate. Therefore, no liability for compensated absences has been recorded in the accompanying financial statements. H. Restricted Net Position In the government-wide statements, equity is classified as net position and displayed in three components: 1. Investment in capital assets, net of related debt - consists of capital assets including restticted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributed to the acquisition, construction, or improvement of those assets. 2. Restticted net position - consists of net assets with consttaints placed on the use either by a) external groups such as creditors, grantors, contributors, or laws or regulations of other governments; or b) law through constitutional provisions or enabling legislation. 3. Unresfricted net position - all other net assets. The Disttict typically uses restticted funds first, followed by any unassigned funds when an expenditure is incurred for purposes for which amoimts in either of these classifications could be used. 13

17 NATCHEZ. LOUISIANA NOTES TO FINANCLU. STATEMENTS (CONTINUED) DECEMBER I. Estimates The preparation offinancialstatements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date ofthe financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 2 DEPOSITS WTTH FINANCIAL INSTITUTIONS AND INVESTMENTS A. Deposits with Financial Institutions For reporting purposes, deposits with fmancial institutions including savings, demand deposits, time deposits, and certificates of deposit. Under state law the District may deposit funds within a fiscal agent bank selected and designated by the Interim Emergency Board. Further the Fund may invest in time certificates of deposit of state banks organized under the laws of Louisiana, national banks having their principal office in the state of Louisiana, in savings accounts or shares of savings and loan associations and savings banks and in share accounts and share certificate accounts of federally or state chartered credit unions. Deposits in bank accounts are stated at cost, which approximates market. Under state law, these deposits must be secured by federal deposit insurance or the pledge of securities owned by the fiscal agent bank. The market value ofthe pledged securities plus the federal deposit insurance must at all times equal the amount on deposit with the fiscal agent bank. These pledged securities are held in the name ofthe pledging fiscal agent bank in a holding or custodial bank that is mutually acceptable to both parties. The deposits at December 31, 212 were secured as follows: Cash Certificates of Deposit Total Deposits in bank accounts per balance sheet 1.785,91 L _ 1.785,91 Bank Balances (Category 3 Only, If Any) a. Uninsured and uncollateralized b. Uninsured and uncollateralized with securities held by the pledging institution c. Uninsured and uncollateralized with securities held by the pledging institution's trust department or agent but not in the entity's name Cash Certificates of Deposit _ Total Total Category 3 Bank Balances L _ Total Bank Balances (All Categories Including Category 3 Reported Above) 1.799,116 1, The following is a breakdown by banking institution and amount ofthe balances shown above: 14

18 NATCHEZ. LOUISIANA NOTES TO FINANCLU. STATEMENTS (CONTINUED) DECEMBER NOTE 2 DEPOSITS WITH FINANCIAL INSTITUTIONS AND INVESTMENTS (CONTINUED) A. Deposits with Financial Institutions (Continued) Banking Institution Exchange Bank Sabine State Bank Total Amount 43, , ,116 B. Investments Waterworks Disttict No. 2 ofnatchitoches Parish maintains investment accounts as authorized by the Louisiana Revised Statutes. Under state law, the District may invest in obligations ofthe U. S. Treasury and U. S. Agencies, or certificates of deposit. Investments are carried at fair market value as of the balance sheet date. Investments can be classified according to the level of risk to the entity. Investments made by Waterworks Disfrict No. 2 ofnatchitoches Parish as of December 31, 212 are summarized below by the category of risk. Category 1 Category 2 Category 3 Insured or registered in the entity's name, or security held by the entity or its agent in the entity's name. Uninsured or registered with securities held by the counterparty's trust department or agent in the entity's name. Unsecured and unregistered with securities held by the counterparty, or by its trust department or agent but not in the entity's name. Type of Investments Money market accounts Negotiable Certificates of Deposit Total Amount Reported in Risk Category 3. If Anv Held By Counterparty Held By Counterparty's Trust Dept. Or Agent Not In Entity's Name Total Reported Amount - All Categories (Including Category 3) 8,99 652, _ Total Fair Value - All Categories (Including Category 3) 8,99 652, ,532 NOTE 3 RESTRICTED ASSETS At December 31, 212, Waterworks Disttict No. 2 ofnatchitoches Parish had the following restricted assets: Cash and cash equivalents Total 249,345 15

19 NATCHEZ. LOUISIANA NOTES TO FINANCLU. STATEMENTS (CONTINUED) DECEMBER NOTE 4 ACCOUNTS RECEIVABLE The following is a summary of accounts receivable at December 31, 212: Class of Receivable Charges for services Interest Total 69, ,853 NOTES CAPITAL ASSETS A summary of Waterworks District No. 2 ofnatchitoches Parish's capital assets at December 31, 212 follows: Capital Assets, not being depreciated Land Construction in progress Total Capital Assets, not being depreciated Balance December 31, , ,796 Additions ,912 Retirements (271,75) (271,75) Balance December 31, , ,633 Capital Assets, being depreciated Buildings and Building Improvements Less accumulated depreciation Total Buildings and Building Improvements 395,145 (54,32) 34,843 (11.412) (11,412) 395,145 (65,714) 329,431 Distribution System Less accumulated depreciation Total Distribution System 8,274,712 (2,13,792) 6,17,92 835,711 (375,947) 459,764 (361,14) ,749,319 (2,118,635) 6,63,684 Automobiles Less accumulated depreciation Total Automobiles 112,974 (98,14) 14,834 (4.944) (4,944) 112,974 (13,84) 9,89 Machinery and Equipment Less accumulated depreciation Total Machinery and Equipment Total Capital Assets, betag depreciated Total Capital Assets, net 77,43 (43,22) ,56,618 6,85,414 (13,623) (13,623) ,697 (64) 64 (271,75) 76,43 (56,5) ,99,43 7,35,36 16

20 NATCHEZ. LOUISIANA NOTES TO FINANCLU. STATEMENTS (CONTINUED) DECEMBER NOTE 6 ACCOUNTS PAYABLE AND ACCRUALS The following is a summary of accounts payable at December 31, 212: Class of Payable Vendor Payroll taxes Interest Total 15,881 1, ,568 NOTE? LONG TERM-DEBT The following is a summary of debt fransactions of Waterworks Disfrict No. 2 ofnatchitoches Parish for the year ended December : Revenue Bonds Revenue Bonds - 24 Revenue Bonds - 28 Revenue Bonds - 21 Certificate of Indebtedness -212 Balance Dec. 31, ,248 1,482,378 3,279, 993,695 Additions 1.6, Deletions 221, , Balance Dec. 31,212 1,447,527 3,15, 982, , Current Amounts 36, , 11,835 82,92 Total 5,976,321 1,6. 396,472 7,179, ,221 The terms ofthe individual debt issues ofthe District are as follows: Revenue Bonds - 24 Revenue Bonds - 28 Revenue Bonds - 21 Certification of Indebtedness Interest Rate 4.5% 3.45% 4.% 3.5% Maturity Date Amount Issued 1,678,578 3,5, 1,3, 1.6, Amount Outstanding 1,447,527 3,15, 982, , Total 7,781,578 7,179, The annual requirements to amortize all debt outstanding as of December 31, 212, including interest payments are as follows: 17

21 NATCHEZ, LOUISIANA NOTES TO FINANCLU. STATEMENTS (CONTINUED) DECEMBER NOTE? LONG TERM-DEBT (CONTINUED) Year Ending December Revenue Bonds Principal 181,31 188, ,711 24,66 212,526 1,199,573 1,466,893 1,11,93 434, , ,69 97,72 Revenue Certificate Bonds of Indebtedness Interest Principal 211,489 82,92 24,779 85, ,73 88,826 19,443 91, ,841 95, , , , , , ,369 8,368 41,872 4,123 Certificate of Indebtedness Interest 56, 53,98 5,94 46,985 43, ,489 67,369 Total 531,71 532, , , ,287 2,682,947 2,77,247 1,287,75 568, , ,562 11,825 Total k= 5, L 2, ,6. 483,82 1, NOTES LEASES The Waterworks District No. 2 ofnatchitoches Parish was not obligated under any noncancellable capital or operating leases at December 31, 212. NOTE 9 LITIGATION There was no outstanding litigation against the Waterworks Disttict No. 2 ofnatchitoches Parish at December 31,

22 OTHER SUPPLEMENTARY INFORMATION 19

23 NATCHEZ, LOUISIANA SCHEDULE OF COMPENSATION PAID BOARD MEMBERS DECEMBER SCHEDULE 1 Members Meetings Amount J. W. Anthony John T. Batten, Jr. Ted Duggan Donald D. Forest Henderson Howard, Jr. Clyde Masson Emile Metoyer Norman Rachal E. C. Roge Total 5.82 Supplementary information. Presented as additional analytical data. 2

24 NATCHEZ, LOUISIANA SCHEDULE OF FINDE^GS AND QUESTIONED COSTS FOR THE YEAR ENDED DECEMBER 31, 212 SCHEDULE 2 SECTION #1 SUMMARY OF AUDITORS' RESULTS FINANCL\L STATEMENTS 1. Type of auditors' report issued. Unqualified 2. Internal confrol over financial reporting: a) Material weakness(es) identified? No b) Significant deficiency(ies) identified that are not considered to be material weaknesses? None reported 3. Noncompliance material to financial statements noted? No SECTION #2 FINANCIAL STATEMENT FINDINGS None reported. 21

25 FRANKS. HINES, CPA LEWIS C. HINES, CPA E. MERLIN SQUYRES, CPA JAYH. SHEFFIELD, CPA JAMES S. SHEFFIELD, CPA HINES, SHEFFIELD & SQUYRES, L.L.C. CERTIFIED PUBLIC ACCOUNTANTS P.O. BOX EAST FIFTH STREET NATCHITOCHES, LA Telephone (318) FAX (318) 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 Board of Commissioners Waterworks District No. 2 ofnatchitoches Parish Natchez, Louisiana We have audited the accompanying basic financial statements ofthe Waterworks District No. 2 ofnatchitoches Parish, Natchez, Louisiana, a component unit ofthe Natchitoches Parish Police Jury, as of and for the year ended December 31, 212, and have issued our report thereon dated May 9, 213. 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 CompfroUer General ofthe United States. Internal Confrol Over Financial Reporting Management of Waterworks Disttict No. 2 ofnatchitoches Parish is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered Waterworks Disttict No. 2 ofnatchitoches Parish's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Waterworks Disttict No. 2 ofnatchitoches Parish's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of Waterworks District No. 2 ofnatchitoches Parish's internal control over financial reporting. A deficiency in internal conttol exists when the design or operation of a conttol does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement ofthe entity's financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal conttol over financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. Compliance and Other Matters As part of obtaining reasonable assurance about whether Waterworks Disfrict No. 2 ofnatchitoches Parish's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, conttacts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was notanobjectiveof our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. -MEMBERS- American Institute of Certified Public Accountants Society of Louisiana Certified Public Accountants 22

26 Page #2 This report is intended solely for the information and use ofthe Waterworks District No. 2 ofnatchitoches Parish, management and the Louisiana State Legislative Auditor and is not intended to be, and should not be. used by anyone other than the specified parties. Under Louisiana Revised Statute 24:513, this report is distributed by the Legislative Auditor as a public document. Hines, Sheffield & Squyres Natchitoches, Louisiana May 9,

27 NATCHEZ, LOUISIANA SUMMARY SCHEDULE OF PRIOR AUDIT FEMDINGS FOR THE YEAR ENDED DECEMBER 31, 212 SCHEDULE 3 Ref No. Fiscal Year Finding Initially Occurred Description of Finding Corrective Action Taken {Yes, No, Partially) Planned Corrective Action/Partial Corrective Action Taken Nothing came to our attention that would require disclosure under Government Auditing Standards. 24

28 NATCHEZ, LOUISIANA CORRECTIVE ACTION PLAN FOR CURRENT YEAR AUDIT FINDD^GS FOR THE YEAR ENDED DECEMBER 31, 212 SCHEDULE 4 Description Name(s) of Anticipated Ref No. of Finding Corrective Action Planned Contact Personfsl Completion Date Nothing came to our attention that would require disclosure under Government Auditing Standards. 25