MOSQUITO ABATEMENT DISTRICT NO.l OF THE PARISH OF TANGIPAHOA. Hammond, Louisiana ANNUAL FINANCIAL STATEMENTS

Transcription

1 73/2 05JUL5 M : MOSQUITO ABATEMENT DISTRICT NO.l Hammond, Louisiana ANNUAL FINANCIAL STATEMENTS As of and for the Two Years Ended December 31,2004 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 Annual Financial Statements As of and for the Two Years Ended December 31,2004 With Supplemental Information Schedules TABLE OF CONTENTS Statement Page Independent Auditor's Report 3 Required Supplemental Information (Part I): Management's Discussion and Analysis 512 Basic Financial Statements: GovernmentWide Financial Statements: Statement of Net Assets A 14 Statement of Activities B 15 Fund Financial Statements: Governmental Funds: Balance Sheet C 17 Reconciliation of the Governmental Fund Balance Sheet to the GovernmentWide Statement of Net Assets D 18 Statement of Revenues, Expenditures, and Changes in Fund Balances E 19 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities F 20 Notes to the Financial Statements 2236

3 MOSQUITO ABATEMENT DISTICT NO. 1 Annual Financial Statements As of and for the Two Years Ended December 31,2004 With Supplemental Information Schedules TABLE OF CONTENTS Schedule Page Required Supplemental Information (Part II): Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual General Fund Year Ended December 31, Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual General Fund Year Ended December 31, Other Supplemental Schedule: Schedule of Compensation Paid Board Members 3 43 Corrective Action Plan for Current Year Audit Findings 4 44 Other Independent Auditor's Reports: Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Audit Standards 46

4 Bruce C. Harrell, CPA ^^^^^^ [09 Wes[ Minnesota Park Park Place Suite 7 Dale H. Jones, CPA II 2k^ ^B I Hammond, LA Charles P. Hebert, CPA II R J!S I < 985 > FAX: (985) m^^m ^^^H ^^^^ INTERNET MEMBERS BRUCE HARRELL P.O. Box Avenue G American Institute of CPAs ""' C **?/ N? Kentwood, LA Society of Louisiana CPAs Cotifadftbik A»««VOICE: (985) FAX: (985) To the Board of Commissioners Mosquito Abatement District No. 1 Of the Parish of Tangipahoa Hammond, Louisiana INDEPENDENT AUDITOR'S REPORT We have audited the accompanying financial statements of the governmental activities and the major fund of the Mosquito Abatement District No. 1 of the Parish of Tangipahoa (hereinafter referred to as the "District") as of and for the year ended December 31, 2004, and for the two years then ended as listed in the table of contents. These financial statements are the responsibility of the District's management. Our responsibility is to express an opinion 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 Governmental 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 of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall basic financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and the major fund of the District as of December 31, 2004, and the respective changes in financial position for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated June 24, 2005 on our consideration of the Mosquito Abatement District's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards, and should be read in conjunction with this report in considering the results of our audit.

5 BRUCE HARRELL & CO. CERTIFIED PUBLIC ACCOUNTANTS A Professional Accounting Corporation To the Board of Commissioners Mosquito Abatement District No. 1 Of the Parish of Tangipahoa Page 2 As described in Note 1 to the financial statements, the District has implemented a new financial reporting model, as required by the provisions of Governmental Accounting Standards Board Statement No. 34, Basic Financial Statements ana 1 Management's Discussion and Analysis for State and Local Governments, as of January 1, The Management's Discussion and Analysis and the other Budgetary Comparison schedules on pages 6 through 12 and pages 38 through 41, respectively, are not a required part of the basic financial statements, but are supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the District's basic financial statements. The supplementary information on pages 43 through 45 is presented for purposes of additional analysis and is not a required part of the basic financial statements of the District. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. Bruce Harrell & Company, CPAs A Professional Accounting Corporation June 24, 2005

6 Required Supplemental Information (Part 1) Management's Discussion and Analysis

7 Management's Discussion and Analysis As of and for the Two Years Ended December 31, 2004 Introduction Mosquito Abatement District No.l of the Parish of Tangipahoa (the "District") is pleased to present its Annual Financial Report developed in compliance with Governmental Accounting Standards Board Statement No. 34, Basic Financial Statements Management's Discussion and Analysis For State and Local Governments (GASB 34), and related standards. The District's management discussion and analysis is designed to (a) assist the reader in focusing on significant financial issues, (b) provide an overview of the District's financial activity, (c) identify changes in the District financial position, (d) identity any significant variations from the District's financial plan, and (e) identify individual fund issues or concerns. As with other sections of this financial report, the information contained within this Management's Discussion and Analysis should be considered only a part of a greater whole. The readers of this statement should take time to read and evaluate all sections of this report, including the footnotes and the other Required Supplemental Information ("RSI") that is provided in addition to this Management's Discussion and Analysis. Financial Highlights At December 31, 2004, the District's assets exceeded its liabilities by $1,738,501 (net assets). Total net assets consist of $152,028 Invested in Capital Assets, Net of Accumulated Depreciation, with the balance of $1,586,473 consisting of Unrestricted Net Assets. The District's Unrestricted Net Assets of $1,586,473 may be used to meet the District's ongoing obligations for mosquito protection. At December 31, 2004, the District's government funds reported combined ending fund balances of $1,494,141, an increase of $421,334 for the year. This amount is available for spending for mosquito protection. For the year ended December 31, 2004, the District's total liabilities, on the governmentwide Statement of Net Assets (Statement A), increased by $13,353 or approximately 21% due primarily to an increase in deductions from ad valorem taxes for pension funds. Interest income for the year ended December 31, 2004 was $9,176, an increase of $3,935. This increase is due primarily to a $235,903 increase in invested funds.

8 Management's Discussion and Analysis As of and for the Two Years Ended December 31,2004 Ad valorem taxes on the governmentwide Statement of Activities (Statement B) for the year ended December 31, 2004 were $1,169,858 which represents an increase of $121,336. Overview of the Annual Financial Report The financial statement focus is on both the District as a whole and on its major individual fund. Both perspectives, governmentwide and its major fund, allow the user to address relevant questions, broaden a basis for comparison, and enhance the District's accountability. The statements then proceed to provide an increasingly detailed look at specific financial activities. The Management's Discussion and Analysis is intended to serve as an introduction to the District's basic financial statements, which consist of three components: (1) governmentwide financial statements, (2) fund financial statements, and (3) notes to the financial statements. GovernmentWide Financial Statements The governmentwide financial statements are designed to provide readers with a broad overview of the District's finances in a manner similar to a privatesector business. The Statement of Net Assets presents information on the District's assets and liabilities using the accrual basis of accounting, in a manner similar to the accounting used by private business enterprises. The difference between the assets and liabilities is reported as net assets. Over time, the increases or decreases in net assets and changes in the components of net assets may serve as a useful indicator of whether the financial position of the District is improving or deteriorating. The Statement of Activities presents information showing how the District's net assets changed during the most recent fiscal year, focusing on both the gross and net costs of various activities that are supported by the District's various revenues. This is intended to summarize and simplify the reader's analysis of the cost and/or subsidy of various governmental services. In both the governmentwide financial statements, the District's activities are of single type: Governmental activities The District's basic services are reported here, and are financed primarily through ad valorem taxes.

9 Management's Discussion and Analysis As of and for the Two Years Ended December 31, 2004 The governmentwide financial statements include Mosquito Abatement District No. 1 of the Parish of Tangipahoa only and can be found on page 14 and 15 of this report. Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The District, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with financerelated and legal requirements. The District uses a single category of funds to account for financial transactions: governmental funds. Traditional users of governmental financial statements will find the fund financial statements presentation more familiar. Governmental funds are used to account for all the District's basic services. However, unlike the governmentwide financial statements, governmental fund financial statements focus on how money flows into and out of those funds and the balances that are left at yearend that are available for spending. These funds are reported using the modified accrual basis of accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed shortterm view of the District's general government operations and the basic services it provides. Governmental fund information helps to determine whether there are more or fewer financial resources that can be spent in the near future to finance the District's programs. The basic governmental fund financial statement can be found on page 17 and 19 of this report. Because the focus of governmental funds is narrower than that of the governmentwide financial statements, there are differences in the information presented for government funds and for governmental activities in the governmentwide financial statements. Review of these differences provides the reader of the financial statements insight on the longterm impact of the District's more immediate decisions on the current use of financial resources. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The reconciliation can be found on pages 18 and 20 of this report. Notes to the Financial Statements The notes to the financial statements provide additional information that is essential to a full understanding of the data provided in the governmentwide and fund financial statements. The notes to the financial statements can be found on pages 22 through 36 of this report.

10 Management's Discussion and Analysis As of and for the Two Years Ended December 31,2004 GovernmentWide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. The following table provides a summary of the District's net assets for the current year as compared to the prior year. For more detailed information, see the Statement of Net Assets on page 14 of this report. Assets: Current and Other Assets Capital Assets (net) Total Assets Net Assets December 31,2004 and 2003 Governmental Activities SChanee $1,663,741 $1,215, , ,493 1,815,769 1,359,303 %Change $447,931 37% 8,535 6% 456,466 34% Liabilities: LongTerm Debt Outstanding Other Liabilities Total Liabilities 77,268 77,268 63,915 63,915 13,353 13,353 21% 21% Net Assets: Invested in Capital Assets, Net Unrestricted Total Net Assets 152,028 1,586,473 $1,738, ,493 1,151,895 $1,295,388 8, ,578 $443,113 6% 38% 34% Approximately 9% of the District's net assets reflect its investment in capital assets (furniture, and equipment) net of any outstanding debt used to acquire those assets. These capital assets are used to provide services to citizens and do not represent resources available for future spending. 91% of the District's net assets are unrestricted and may be used to meet the District's ongoing obligations to its citizens at the District's discretion. At the end of the current fiscal year, the District was able to report positive balances in its sole category of net assets, governmental activities. The same held true for the prior fiscal year. The District's activities increased its net assets by $443,113, the total increase attributable to its governmental activities for mosquito abatement.

11 Management's Discussion and Analysis As of and for the Two Years Ended December 31,2004 In order to further understand what makes up the changes in net assets, the following table provides a summary of the results of the District's activities for the current year as compared to the prior year. An analysis of the primary sources of these changes follows the table presented below. For more detailed information, see the Statement of Activities on page 15 of this report. Changes in Net Assets Years Ended December 31,2004 and 2003 General Revenues: Ad Valorem Taxes Interest Earnings Miscellaneous Income Total General Revenues 2004 $1,169,858 9,176 15,055 1,194,089 Governmental Activities 2003 SChanse $1,048,522 5,241 7,929 1,061,692 %Chanee $121,336 12% 3,935 75% 7,126 90% 132,397 12% Expenses: Personal Services Materials and Supplies Other Charges Depreciation Total Expenses 381, , ,590 34, , , , ,205 16, , ,057 16,213 1,385 18, ,663 73% 10% 1% 111% 35% Change in Net Assets 443, ,379 64,266 13% Net Assets, Beginning Before Prior Period Adjustment Prior Period Adjustment (Note 15) Net Assets, Beginning After Prior Period Adjustment 1,295,388 1,295, ,467 26, , ,921 26, ,379 70% 100% 64% Net Assets, Ending $1,738,501 $1,295,388 $443,113 34% The District's governmental net assets increased by $443,113, or 34% of the prior year ending net assets, to $1,738,501. Changes in net assets decreased by $64,266 compared to the prior year, as the District operations were fully implemented. Revenues were up by $132,097 and expenses increased by $196,663 causing the net decrease in changes in net assets. The increase in revenues noted above is primarily comprised of increased ad valorem tax revenue. 10

12 Management's Discussion and Analysis As of and for the Two Years Ended December 31,2004 The increase in expenses noted above is primarily comprised of an increase in personal services (including wages) and material and supplies. Fund Financial Analysis As noted earlier, the District uses fund accounting to ensure and demonstrate compliance with financerelated legal requirements. The analysis for fund financial statements (Statements "C" and "E") is similar to the governmentwide analysis presented above. The differences for the governmentwide statements involve primarily conversion to accrual accounting and implementation of GASB 34 standards for governmentwide reporting. Changes in expenditures for the District are similar to governmentwide reporting with the exception that capital expenditures and related depreciation are reported on the governmentwide Statement of Net Assets (Statement "A"), whereas only current capital expenditures are recorded on the Statement of Revenues, Expenditures, and Changes in Fund Balance (Statement "E"). On the governmentwide statements, revenue is recognized for the total advalorem taxes estimated to be collected, whereas on the fund financial statements, deferred revenue is recorded for advalorem taxes not available for current expenditures (collected over sixty days after end of fiscal year). Government Funds The focus of the District's governmental funds is to provide information on nearterm inflows, outflows, and balances of spendable resources. Such information is useful in assessing the District's financing requirements. In particular, unreserved fund balance may serve as a useful measure of the District's net resources available for spending at the end of the year. The basic governmental fund financial statements can be found on pages 17 and 19 of this report. At the end of the current year, the District's governmental fund reported ending fund balances $1,494,411. This represents an increase of 421,334 or 39% of the prior year's ending balances, Major Governmental Fund Budgetary Highlights The District demonstrated legal compliance by adopting and amending its budget in accordance with provisions of the Local Government Budget Act. As required by state law, actual revenues and other sources were within 5% of budgeted revenues and other sources, and actual expenditures and other uses did not exceed budgeted expenditures and other uses by 5%. Detailed budget schedules are presented on pages 38 through 41. There were no significant variations from the original and final budgets for the years ended December 31, 2004 and

13 Management's Discussion and Analysis As of and for the Two Years Ended December 31,2004 Capital Assets and Debt Administration Capital Assets The District's investment in capital assets for its governmental activities as of December 31, 2004 and 2003 amounted to $152,028 and 143,493 respectively (net of depreciation). Asset purchases during 2004 and 2003 respectively were $42,826 and $159,776. The following table provides a summary of the District's capital assets (net of depreciation) at the end of the current year as compared to the prior year. For more detailed information see Note 7 to the financial statements on pages 32 and 33 of this report. Capital Assets (Net of Depreciation) December 31,2004 and 2003 Land Buildings Equipment Office Furniture and Equipment Governmental Activities 2004 LongTerm Debt At December 31, 2004, the District had no long term debt outstanding nor did it have any as of December 31,2003. Contacting the District's Financial Management This financial report is designed to provide the District's users with a general overview of the District's finances and show the District's accountability for the money it receives. Questions regarding this report or requests for additional information should be addressed to Mosquito Abatement District No.l of the Parish of Tangipahoa, Post Office Box 1555, Hammond, Louisiana The District's telephone number is (985)

14 Basic Financial Statements GovernmentWide Financial Statements 13

15 STATEMENT A STATEMENT OF NET ASSETS December 31,2004 and 2003 Assets Cash and cash equivalents Receivables, ad valorem taxes net Miscellaneous Receivable Chemicals Inventory Capital Assets, Net Total Assets Governmental Activities $ 465,905 1,169,558 1,736 26, ,028 $ 230, ,266 26, , Liabilities Accounts payable Accrued annual leave Accrued salaries Payroll withholdings and related payables Deductions from ad valorem taxes payable Total Liabilities Net Assets Invested in Capital Assets, Net Unrestricted Total Net Assets 6,817 7,721 16, , ,473 S1.738.S01 5,066 4,196 5,779 10,676 38, , $1, The accompanying notes are an integral part of this statement. 14

16 STATEMENT B STATEMENT OF ACTIVITIES Years Ended December 31,2004 and 2003 Governmental Activities Expenses: Personal services Materials and supplies Other charges Depreciation Total Expenses General Revenues Ad valorem taxes Interest earnings Miscellaneous Income Total General Revenues Change in Net Assets Net Assets at Beginning of Year Before Prior Period Adjustment Prior Period Adjustment (Note 15) Net Assets at Beginning of Year After Prior Period Adjustment $(381,322) (181,773) (153,590) ( 34,291) (750,976) 1,169,858 9, ,194, ,113 1,295,388 1,295,388 $(220,265) (165,560) (152,205) ( 16,283) (554,313^ 1,048,522 5,241 7,929 1,061, , ,467 26, ,009 Net Assets at End Of Year $1.738,501 $1,295,388 The accompanying notes are an integral part of this statement. 15

17 Basic Financial Statements Governmental Fund Financial Statements 16

18 STATEMENT C MOSQUITO ABATEMENT DISTRICT NO. 1 Hammond, Louisiana Balance Sheet Governmental Fund December 31, 2004 and 2003 General Fund Assets Cash and cash equivalents Receivables, ad valorem taxes, net Miscellaneous Receivable Chemicals Inventory Total Assets $ $ 465,905 $ 1,169,558 1,736 26,542 1,663,741 $ 230, ,266 26,542 1,215,810 Liabilities and Fund Balance Liabilities: Accounts payable Accrued annual leave Accrued salaries Payroll withholdings & related payables Deductions from ad valorem taxes payable Deferred revenue Total Liabilities 6,817 7,721 16,347 46,383 92, ,600 5,066 4,196 5,779 10,676 38,198 79, ,003 Fund Balance: Unreserved Reserved Total Fund Balance Total Liabilities and Fund Balance $ 1,494,141 1,494,141 1,663,741 $ 1,072,807 1,072,807 1,215,810 The accompanying notes are an integral part of this statement. 17

19 STATEMENT D Hammond, Louisiana Reconciliation of the Governmental Fund Balance Sheet To The GovernmentWide Statement of Net Assets December 31,2004 and Total Fund Balances, Governmental Fund $ 1,494,141 $ 1,072,807 Amounts reported for governmental activities in the statement of net assets are different because: Some of the District's advalorem taxes will be collected after yearend but are not available soon enough to pay for the current period expenditures and therefore are deferred in the funds 92,332 79,088 Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds. These assets consist of: Governmental capital assets, net of depreciation 152, Net Assets, Governmental Activities $ $ The accompanying notes are an integral part of this statement. 18

20 STATEMENT E MOSQUITO ABATEMENT DISTRICT NO. 1 Hammond, Louisiana Statement of Revenues, Expenditures, and Changes in Fund Balances GOVERNMENTAL FUND Years Ended December 31,2004 and 2003 Revenues Ad valorem taxes Interest earnings Miscellaneous income Total Revenues General Fund $ 1,156,614 $ 9,176 15,055 1,180, ,434 5,241 7, ,604 Expenditures Personal services Materials and supplies Other charges Capital outlay Total Expenditures Excess of Revenues Over Expenditures Fund Balances at Beginning of Year Before Prior Period Adjustment Prior Period Adjustment Note 15 Fund Balances at Beginning of Year After Prior Period Adjustment 381, , ,590 42, , ,334 1,072,807 1,072, , , , , , , ,467 26, ,009 Fund Balances at End of Year $ 1,494,141 $ 1,072,807 The accompanying notes are an integral part of this statement. 19

21 STATEMENT F Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities Years Ended December 31,2004 and Total Net Change in Fund Balances, Governmental Fund $421,334 $284,798 Amounts reported for governmental activities in the statement of Activities are difference because: Because some revenues will not be collected for several months after the District's fiscal year ends, they are not considered "available" revenues and are deferred in the governmental funds. Deferred revenues changes by the following amounts: 13,244 79,088 Capital outlays are reported in governmental funds as expenditures. However, in the Statement of Activities, the cost of these assets is allocated over their estimated useful lives as depreciation expense. These differences consist of: Capital outlay 42, ,776 Depreciation expense (34.291) (16,283) Change in Net Assets, Governmental Activities $443,113 $507,379 The accompanying notes are an integral part of this statement. 20

22 Basic Financial Statements Notes to the Financial Statements 21

23 As of and for the Two Years Ended December 31,2004 NOTES TO THE FINANCIAL STATEMENTS Introduction The Mosquito Abatement District No.l of the Parish of Tangipahoa (hereinafter referred to as 4t the District"), was created by the Tangipahoa Parish Council by Tangipahoa Parish Ordinance Number 0118 on June 25, 2001, under the authority conferred by Chapter 23 of Title 33 of the Louisiana Revised Statutes of 1950, and thereby constitutes a political subdivision of the State of Louisiana. The District is governed by a board of commissioners consisting of seven (7) members. Five (5) of the commissioners are appointed by the Tangipahoa Parish Council, and one (1) commissioner is to be appointed by the governing authority of the City of Hammond, and one (1) commissioner is to be appointed by the governing authority of the City of Ponchatoula. Commissioners receive no compensation for serving on the District board. The board has the authority to purchase, maintain, and operate machinery and equipment necessary or useful in the eradication, abatement, or control of mosquitoes and other arthropods of public health importance, and to maintain an adequate administrative staff. I. Summary of Significant Accounting Policies A. Reporting Entity The District is a component unit of the Tangipahoa Parish Council, the financial reporting entity. The Council is financially accountable for the District because it appoints a voting majority of the board and has the ability to impose its will on them. The accompanying financial statements present information only on the funds maintained by the District and do not present information on the Tangipahoa Parish Council, the general government services presented by that governmental unit, or the other governmental units that comprise the financial reporting entity. B. Basis of Presentation The accompanying basic financial statements of the District have been prepared in conformity with governmental accounting principles generally accepted in the United States of America. The Governmental Accounting Standards Board (GASB) is the accepted standardsetting body for establishing governmental accounting and financial reporting principles. The accompanying basic financial statements have been prepared in conformity with GASB Statement No. 34, Basic Financial Statements ~ and Management's Discussion and Analysis for State and Local Governments, issued in June Such accounting and reporting procedures also conform to the requirements of Louisiana Revised Statutes 24:513 and to the guides set forth in the Louisiana Governmental Audit Guide, and to the industry audit guide, Audits of State and Local Governmental Units. 22

24 As of and for the Two Years Ended December 31, 2004 NOTES TO THE FINANCIAL STATEMENTS C. GovernmentWide and Fund Financial Statements The governmentwide financial statements (i.e., the statement of net assets and the statement of changes in net assets) report information on all of the nonfiduciary activities of District. For the most part, the effect of interfund activity has been removed from these statements. The District does not have any businesstype activities and reports only governmental activities. Governmental activities are supported by funds received mainly from taxes, and interest earnings from investments. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is 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. The District reports only general revenues. Separate financial statements are provided for the governmental fund. D. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The governmentwide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. 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, the government considers revenues to be available if they are collected within sixty (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 23

25 As of and for the Two Years Ended December 31, 2004 NOTES TO THE FINANCIAL STATEMENTS expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes, and interest earnings 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 government. This District reports the following governmental fund: General Fund The General Fund is the General operating fund of the District. financial resources. It accounts for all Privatesector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the governmentwide and proprietary 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 privatesector guidance for their businesstype activities and enterprises funds, subject to this same limitation. The government has elected not to follow subsequent privatesector guidance. As a general rule, the effect of interfund activity has been eliminated from the governmentwide financial statements. Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. When both restricted and unrestricted resources are available for use, it is the District's policy to use restricted resources first, then unrestricted resources as they are needed. E. Deposits and Investments The District's cash and cash equivalents are considered to be cash on hand, demand deposits, and shortterm investments with original maturities of three months or less from 24

26 As of and for the Two Years Ended December 31, 2004 NOTES TO THE FINANCIAL STATEMENTS the date of acquisition. State law and the District's investment policy allow the District to invest in collateralized certificates of deposit, governmentbacked securities, commercial paper, the state sponsored investment pool, and mutual funds consisting solely of governmentbacked securities. Investments for the District are reported at fair market value. The state investment pool (LAMP) operates in accordance with state laws and regulations. The reported value of the pool is the same as the fair value of the pool shares. F. Accounts Receivables Property tax receivables are shown net of an allowance for uncollectible. The District uses.5 to 2!/2 % of the property tax receivable as an allowance for uncollectible depending on information available. Property taxes are levied on a calendar year basis and become due on January 1 of each year. The following is a summary of authorized and levied ad valorem taxes: Authorized Levied Expiration Millage Millage Date Taxes due for: Acquiring, purchasing, maintaining and Operating machinery, facilities, equipment and materials necessary or useful in the eradication, abatement or control of mosquitoes and other arthropods of public health importance. G. Inventory and Prepaid Items All inventories are valued at cost using the firstin/firstout method. Inventories of the governmental fund are recorded as expenditures when consumed rather that when purchased. However, certain payments to vendors, including payments for chemicals inventory, reflect costs applicable to future accounting periods and are recorded as prepaid items in both governmentwide and fund financial statements. H. Restricted Assets Certain proceeds of specific revenue sources that are legally restricted to expenditures for a specified purpose are classified as restricted assets because their use is limited to specific expenditures. 25

27 As of and for the Two Years Ended December 31, 2004 NOTES TO THE FINANCIAL STATEMENTS I. Capital Assets Capital assets, which include property, plant, and equipment, are reported in the applicable governmental column in the governmentwide financial statements. Capital assets are capitalized at historical cost or estimated costs if historical costs are not available. Donated assets are recorded as capital assets at their estimated fair market value at the date of donation. The District 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 asset lives are not capitalized. All capital assets, other than land, are depreciated using the straightline method over the following useful lives: Description Machinery & Equipment Furniture and Fixtures Vehicles Building and Building Improvements Estimated Lives 510 Years 5 Years 510 Years Years J. Compensated Absences From 15 years employment, 4 hours per pay period will be accrued; 515 years, 6 hours per pay period; 15 and above, 8 hours per pay period (a pay period is two (2) work weeks).. Vacation leave will be scheduled at the beginning of the year subject to approval of the Director based on seniority and known or anticipated workload. At the time of retirement from the District, employees will be paid for any unused vacation leave at the straight time rate of pay earned at the time of separation. Any change from this policy will be considered on a case by case basis and must be approved by the Director prior to the end of the calendar year and must be of benefit of the District. 26

28 As of and for the Two Years Ended December 31,2004 NOTES TO THE FINANCIAL STATEMENTS Sick leave shall accumulate for regular, fulltime employees at the rate of four (4) hours per pay period. At the time of retirement or a reduction in force from the District, employees will be paid for any unused sick leave at the straight time rate of pay earned at the time of separation up to one hundred eighty (180) working days or 1440 hours. Unused sick leave, in excess of one hundred eighty (180) working days or 1440 hours may be utilized in computing benefits at the time of retirement in accordance with retirement system policy. No payment for unused sick leave will be permitted if any employee is discharged or leaves voluntarily prior to retirement. In addition, the District Board has instituted an extended sick leave compensation of a maximum of fifteen (15) working days in any two (2) year calendar period. This compensation may be extended past fifteen (15) days due to dire circumstances such as terminal illness. This extended sick leave is intended to provide for those medical and health conditions involving hospitalization and/or physician directed rehabilitation involving a catastrophic type illness/injury. The cost of current leave privileges, computed in accordance with GASB Codification Section C60, is recognized as a current year expenditure in the General Fund when leave is actually taken. K. LongTerm Obligations In the governmentwide financial statements, longtern debt and other longterm obligations are reported as liabilities in the applicable governmental activities statement of net assets. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of the debt issued is reported as other financing sources. Premiums received on debt issuance are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. L. 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 use for a specific purpose. Designations of fund balance represent tentative management plans that are subject to change. 27

29 As of and for the Two Years Ended December 31, 2004 NOTES TO THE FINANCIAL STATEMENTS M. Extraordinary and Special Items Extraordinary items are transactions or events that are both unusual in nature and infrequent in occurrence. Special items are transactions are events within the control of the District, which are either unusual in nature or infrequent in occurrence. N. Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America require 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 reported period. Actual results could differ from those estimates. O. Reconciliations of GovernmentWide and Fund Financial Statements The following reconciles the fund balances of governmental funds to the governmentwide statement of net assets: Total Fund Balances, Governmental Fund $1,494,141 $1,072,807 Plus Deferred Revenue Recognized on Advalorem Taxes 92,332 79,088 Plus Govt'l Capital Assets, Net of Depreciation Net Assets, Governmental Activities $1,738,501 $1,295,388 The following reconciles the net change in fund balances for governmental funds to the changes in net assets of governmental activities: Net Change in Fund Balances, Total Govt'l Funds $421,334 $284,798 Plus Change in Deferred Revenue Advalorem Taxes 13,244 79,088 Less Depreciation Expense (34,291) (16,283) Capital Outlay ,776 Change in Net Assets, Governmental Activities $443,113 $507,379 28

30 As of and for the Two Years Ended December 31, 2004 NOTES TO THE FINANCIAL STATEMENTS 2. Stewardship, Compliance, and Accountability Budget Information The Mosquito Abatement District uses the following budget practices: 1. The Mosquito Abatement District prepares budgets on the modified accrual basis of accounting in accordance with generally accepted accounting principles (GAAP). 2. The Mosquito Abatement District's director prepares the proposed budget and submits it to the board of commissioners no later than fifteen (15) days prior to the beginning of each fiscal year. The proposed budget for 2003 was presented to the board of commissioners on March 19, This exception was due to the fact that the director of the District was not hired until March 10, The proposed budget for 2004 was presented to the board of commissioners on September 24, The proposed budget for 2003 was adopted on March 19, The proposed budget for 2004 was adopted on September 24, Budgetary amendments require the approval of the board of commissioners. The budget for 2003 was amended on April 23, 2003, August 27, 2003, and December 17, The budget for 2004 was amended on June 9, 2004 and December 8, All budgetary appropriations lapse at yearend. 6. Periodic budget comparisons are made as a part of interim reporting. Budgeted amounts included in accompanying financial statements include the originally adopted budget amounts and all subsequent amendments legally adopted prior to yearend. 3. Cash and Cash Equivalents At December 31, 2004 and 2003, the District had cash and cash equivalents (book balances) totaling $465,905 and $230,002 as follows: Interestbearing demand deposits $465,905 $230,002 These bank 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 29

31 As of and for the Two Years Ended December 31, 2004 NOTES TO THE FINANCIAL STATEMENTS 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 securities are held in the name of the pledging fiscal agent bank in a holding or custodial bank that is mutually acceptable to both parties. At December 31, 2004 and 2003 the District had $476,376 and $234,664 in bank deposits (collected bank balances). These deposits are secured from risk by $100,000 of federal deposit insurance. The remaining bank balances of $376,376 at December 31, 2004, and $134,664 were unsecured, in violation of state law. Even though the pledged securities are considered uncollateralized (category 3) under the provisions of GASB Statement 3, Louisiana Revised Statute 39:1229 imposes a statutory requirement on the custodial bank to advertise and sell the pledged securities within ten (10) days of being notified by the District that the fiscal agent has failed to pay deposited funds upon demand. 4. Investments Investments are categorized into these three (3) categories of credit risk: 1. Insured or registered, or securities held by the District or its agent in the District's name. 2. Uninsured and unregistered, with securities held by the counterparty's trust department or agent in the District's name 3. Uninsured and unregistered, with securities held by the counterparty, or by its trust department or agent but not in the District's name. At December 31, 2004 and 2003 the District did not have any investments. 30

32 As of and for the Two Years Ended December 31, 2004 NOTES TO THE FINANCIAL STATEMENTS 5. Receivables The following is a summary of receivables at December 31, 2004 and 2003: Class of Receivable Ad valorem taxes $1,175,435 $964,086 Other receivable i Total 1,177, ,086 Less allowance for uncollectible Ad valorem taxes (5,877) (4,820) Total $1,171,294 $959,266 The District used.5% of the property tax receivable as an allowance for uncollectible. 6. Interfund Receivable/Payable Interfund receivables and payables are recorded when one fund overpays or underpays its portion of an expenditure. The District had no interfund receivables and payables since it had only one fund. 31

33 As of and for the Two Years Ended December 31, 2004 NOTES TO THE FINANCIAL STATEMENTS 7. Capital Assets Capital assets and depreciation for governmental activities as of and for the year ended December 31, 2004 and 2003: Balance Balance 12/31/03 Increases Decreases 12/31/04 Capital Assets Not Being Depreciated: Land $ _ $ _ $ _ $ _ Total Capital Assets Not Being Depreciated Capital Assets Being Depreciated; Building 2,750 2,750 Equipment 132,067 37, ,907 Office Furniture and Equipment 24,959 4,986 _ 29,945 Total Capital Assets Being Depreciated ,826 _ 202,602 Less Accumulated Depreciation For: Building Equipment 12,782 28,613 41,395 Office Furniture and Equipment 3,386 5,541 _ 8,927 Total Accumulated Depreciation 16,283 34,291 ;_ 50,574 Capital Assets Being Depreciated, Net 143,493 8,535 _ 152,028 Government Activities Capital Assets, Net $ 143,493 S 8,535 $ _ $ 152,028 Depreciation expenses of $34,291 for the year ended December 31, 2004 were charged to the Governmental activities. Capital assets and depreciation for governmental activities as of and for the year ended December 31,2003 are as follows: Balance Balance 12/31/02 Increases Decreases 12/31/03 Capital Assets Not Being Depreciated: Land $ _ $ _ $ _ $ :_ Total Capital Assets Not Being Depreciated Capital Assets Being Depreciated: Building 2,750 2,750 Equipment 132, ,067 Office Furniture and Equipment _ 24,959 _ 24,959 Total Capital Assets Being Depreciated 159,776 _ 159,776 Less Accumulated Depreciation For: Building Equipment 12,782 12,782 Office Furniture and Equipment 3,386 _ 3,386 Total Accumulated Depreciation 16,283 _ 16,283^ Capital Assets Being Depreciated, Net 143,493 _ 143,493 Government Activities Capital Assets, Net $ $ 143,493 $ $ 143,493 32

34 As of and for the Two Years Ended December 31, 2004 NOTES TO THE FINANCIAL STATEMENTS Depreciation expenses of $16,283 for the year ended December 31, 2003 were charged to the Government activities. 8. Accounts, Salaries and Other Payables The payables at December 31, 2004 and 2003 were as follows: Accounts payable $ 6,817 $ 5,066 Accrued annual leave 7,721 4,196 Accrued salaries 5,779 Payroll withholdings and related payables 16,347 10,676 Deductions from ad valorem taxes payable 46,383 38,198 Deferred revenue ,088 Total Liabilities SI $ ShortTerra Debt The District had no shortterm debt outstanding at December 31, 2004, and had no shortterm debt activity during the year then ended. 10. Leases The District records items under capital leases as an asset and an obligation in the accompanying financial statements. The District had no capital leases outstanding at December 31, 2004 and The District began leasing a building from another governmental agency on February 26, 2003 for a five (5) year term. The lease automatically renews after each year unless either party cancels the lease. The District does not pay any rental payments, but lets the lessor use a storage building rent free. 11. LongTerm Obligations The District has no longterm debt outstanding at December 31, 2004 and 2003, and had no longterm debt activity during the year ended. 33