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JEFFERSON DAVIS PARISH WATER & SEWER COMMISSION NO. 1

Annual Financial Statements And Independent Auditor's Report

Year Ended December 31,2008 and 2007

Under provisions of state law, this report is a pubho 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 mki.

JEFFERSON DAVIS PARISH WATER AND SEWER COMMISSION NO. 1 Annual Financial Report

December 31, 2008 and 2007

TABLE OF CONTENTS

Page

Independent Auditor's Report 1 -2

Basic Financial Statements:

Statement of Net Assets 3 Statement of Revenues, Expenses, and Changes in Net Assets 4 Statement of Cash Flows 5 Notes to the Financial Statements 6-16

Supplemental Information Schedules: 17

Schedule of Compensation and Other Expenses Paid to Commissioners 18

Additional Information Required by U.S. Dept. of Agriculture 19-20

Other Reports: 21

Management's Status of Prior Year Audit Findings 22

Independent Auditor's Report on Intemal Control over Financial Reporting 23-24 and on Compliance and Other Matters Based on an Audit of Financial Financial Statements Performed in Accordance with Governmental Auditing Standards

Schedule of Findings & Responses 25-26

Management's Corrective Action Plan for Current Year Audit Findings 27

Mike B. Gillespie, CPA (A Professional Accounting Corporation)

414 East Nezpique Street PO Box 1347, Jennings, LA 70546

Phone (337) 824-7773

INDEPENDENT AUDITOR'S REPORT

To the Board Members of the Jefferson Davis Parish Water & Sewer Commission No. 1 Lake Arthur, Louisiana

I have audited the accompanying basic financial statements of the Jefferson Davis Parish Water & Sewer Commission No. 1 (Commission), a component unit of the Jefferson Davis Parish Pohce Jury, as of and for the years ended December 31, 2008 and 2007, as listed in the table of contents. These financial statements are the responsibility of the Commission's management. My responsibility is to express an opinion on these financial statements based on my audits.

I conducted my audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contamed in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that I plan and perform the audits 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 financial statement presentation. I believe that my audits provide a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Commission as of December 31, 2008 and 2007, and the changes in financial position and cash flows for the years then ended in conformity with accountmg principles generally accepted in the United States of America.

In accordance with Governmental Auditing Standards, I have also issued my report dated May 15, 2009, on my consideration of the Commission's intemal control over financial reporting and my tests of its compliance with certain provision of laws, regulafions, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of my testing of intemal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the intemal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Governmental Auditing Standards and should be considered in assessing the results of my audits.

The Commission has not presented a management's discussion and analysis that accounting principles generally accepted in the United States has determined is necessary to supplement, although not required to be part of, the basic financial statements.

My audits were performed for the purpose of forming an opinion on the financial statements that collectively comprise the Commission's basic financial statements. The supplemental information schedules hsted in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements of the Conmiission. The supplemental information schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in my opinion, are fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.

'VtiAe s. (^die^^. ep^. ^ / i e

Jennings, Louisiana May 15, 2009

JEFFERSON DAVIS PARISH WATER & SEWER COMMISSION NO. 1 STATEMENTS OF NET ASSETS


2008 2007 ASSETS Current assets:

Cash and equivalents Investments- certificates of deposit Accrued interest receivable Customer receivables, net of bad debt allowance of $8,000 and $8,000 Prepaid expenses

Total current assets

Noncurrent assets: Investments- certificates of deposit Restricted assets:

Cash and equivalents Investments- certificates of deposit

Total restricted assets

Loan costs, net of amortization Capital assets, net of accumulated depreciation

Total noncurrent assets

TOTAL ASSETS

174,447 $ 168,854 146,729

1,382 109,399 10,161

442,118

11,192

163,042 345,424 508,466

92,780 7,710,888 8,323,326

8,765,444 $

49,044 666

140,806 9,561

368,931

.

177,817 84,696

262,513

95,841 7,874,445 8,232,799

8,601,730

LIABILITIES Current liabilities:

Accounts payable Contracts and retainage payable Salaries, payroll and other taxes payable Accrued interest payable Due to other governments Current portion of long-term liabilities

Total current liabilities

Current liabilities payable from restricted assets: Customer deposits

Total current liabilities payable from restricted assets

Noncurrent liabilities: Compensated absences, net of current portion Revenue bonds payable, net of current porUon

Total nonciurent liabilities

Total liabiliUes

Net assets Invested in capital assets, net of related debt Restricted for constmction Unrestricted

TOTAL NET ASSETS

15,821 $ -

3,992 6,803 500

85,06S 112,184

159,745 159,745

2,687 6,086,455 6,089,142

6,361,071

1,777,606 204,614 422,153

2,404,373 $

6,409 69,643 8,300

45,661 500

77,104 207,617

150,935 150,935

4,054 6,095,060 6,099,114

6,457,666

1,910,255 1,060

232,749

2,144,064

The accompanying notes are an intergral part of this statement. 3

JEFFERSON DAVIS PARISH WATER & SEWER COMMISSION NO. 1 STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS

December 31,2008 and 2007

2008 2007

OPERATING REVENUES:

Charges for sales and services

OPERATING EXPENSES :

Salaries and related benefits

Operanng services:

Advertising

Copier lease

Software maintenance

Dues and subscriptions Insurance-general

Licenses and fees Miscellaneous expense

Outside labor

Professional fees

Provision for bad debts

Postage

Reimbursements

Seminars Telephone

Travel- lodging, mileage & meals

Utilities Materials, supplies and repairs:

Vehicle expenses

Office expense

Repairs and maintenance

Supplies and chemicals

Depreciation expense Total operating expenses

Operating Income (Loss)

NON-OPERATING REVENUES (EXPENSES) : Other non-operaUng revenue

Interest income FEMA revenue

Gain on the sale of assets Interest expense (net of amounts capitalized of SO and $11,760)

Amortization of bond issue costs

Total non-operating revenues (expenses)

Income (loss) before capital contributions and special item

CAPITAL CONTRIBUTIONS:

Federal grants

Cameron Parish Police Jury

S 909,164 $

219,215

514

1,935

4,896 225

21,322

9,213

1,572

883

11,273 -

9,481

399

460

6,551

278

34,276

18,286

10,023

19,208

66,097

227,262

663,369

245,795

1,454

11,737 -

1,150

(249,668) (3,061)

(238,388)

7,407

52,902

200,000

837,175

204,465

784

2,123

3,206

225

18,999

9,038

1,355

3,260 11,452

2,000

8,678

335

885

6,996

577

31,969

17,238

11,613

28,602

70,881

206,326

641,007

196,168

12,345

11,230 2,075

-

(226,388)

(2,705)

(203,443)

(7,275)

-

-

Change in net assets

TOTAL NET ASSETS - BEGINNING

TOTAL NET ASSETS - ENDING

260,309

2,144,064

2,404,373 $

(7,275)

2,151,339

2,144,064

The accompanying notes are an integral part of this statement. 4

JEFFERSON DAVIS PARISH W A T E R & SEWER COMMISSION NO. 1 STATEMENTS OF CASH FLOWS


2008 2007 CASH FLOWS FROM OPERATING ACTIVITIES

Receipts from customers and users Payments to suppliers Payments to employees

Net cash provided by operating activities

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Other non-operating revenue sources

Net cash provided by noncapital fmancing activities

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES

Proceeds from capital debt Capital contributions Purchases of capital assets Principal paid on capital debt Interest paid on capital debt Deferred charges Proceeds from the sale of assets

Net cash (used) by capital and related financing acfivides

CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sales on investments Purchase of investments Interest received

Net cash provided (used) by investing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents - beginning of the year

Cash and cash equivalents - end of the year

RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES

Operating income (loss) Adjustments to reconcile operating income to net cash

provided (used by) operating activities: Depreciation expense (Increase) decrease in accounts receivable (Increase) decrease in prepaid expenses Increase (decrease) in customer deposits Increase (decrease) in accounts payable Increase (decrease) in accrued payroll expenses

Net cash provided by operating activities

949,381 $

(208,080)

(225,150)

516,151

1,454

1,454

88,030

252,902

(133,348)

(88,411)

(288,526)

-1,150

(168,203)

101,711

(471,316)

11,021

(358,584)

(9,182)

346,671

337,489 $

825,753

(233,329)

(198,596)

393,828

14,420

14,420

1,674,151

-(624,580)

(1,087,587)

(202,154)

(20,246)

-(260,416)

97,324

(103,166)

11,230

5,388

153,220

193,451

346,671

245,795 196,168

227,262

31,407

(600)

8,810

9,412

(5,935)

516,151 $

206,326

(29,407)

(2,788)

19,985

(325)

3,869

393,828

The accompanying notes are an integral part of this statement. 5

JEFFERSON DAVIS PARISH WATER & SEWER COMMISSION NO.l NOTES TO FINANCIAL STATEMENTS

INTRODUCTION

The Water and Sewer Commission No. 1 of the Parish of Jefferson Davis (Commission) was created by the Jefferson Davis Parish Police Jury pursuant to LSA-RS 33:3811 in 1999. The Commission has the power and authority, within its boundaries, to establish, acquire, construct, improve, extend and maintain a waterworks system. The Commission is a subdivision of the State of Louisiana and may issue bonds and levy taxes in accordance with Article 6, Section 30.

Under the provision of LSA-RS 33:8812, the Commission shall be governed and controlled by five commissioners who shall be the governing authority of the district. These commissioners must be a resident of and own at least the five hundred dollars worth of real estate in the district, or they must be the representative of some corporation owning at least five hundred dollars in real estate in the district. These commissioners are appointed by the Jefferson Davis Police Jury. All commissioners shall serve at the pleasure of the authority which appointed them.

1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. BASIS OF PRESENTATION

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles (GAAP) as applicable to govemmental units. The Govemmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing govemmental accounting and financial reporting principles.

B. REPORTING JEFFERSON DAVIS PARISH WATER & SEWER COMMISSION NO 1

For financial reporting purposes in conformance with Govemmental Accounting Standards Board Statement No. 1, the Commission is a component unit of Jefferson Davis Parish Police Jury. The accompanying financial statements present information only as to the transactions of the Commission and are not intended to present fairly the financial position and results of operations of the Jefferson Davis Parish Police Jury.

C. FUND ACCOUNTING

The Jefferson Davis Parish Water and Sewer Commission No. 1 is organized and operated on a fund basis whereby a self-balancing set of accounts (Enterprise Fund) is maintained that comprises its assets, liabilities, fund equity, revenues, and expenses. The operations are financed and operated in a manner similar to a private business enterprise, where the intent of the goveming body is that the cost (expenses, including depreciation) of providing services on a continuing basis be financed or recovered primarily through user charges.

D. BASIS OF ACCOUNTING

The Proprietary Fund is accounted for using the accmal basis of accounting whereby revenues are recognized when they are earned and expenses are recognized when incurred.


In accordance with Statement No. 20 of the Govemmental Accounting Standards Board (GASB), "Accounting and Financial Reporting for Proprietary Funds and Other Govemmental Entities That Use Proprietary Fund Accounting," it is the Commission's policy to apply all applicable GASB pronouncements as well as all Financial Accounting Standards Board Statements and Interpretations, Accounting Principles Board Opinions and Accounting Research Bulletins of the Committee on Accounting Procedure issued on or before November 30, 1989, unless those pronouncements conflict with or contradict GASB pronouncements. The Commission has not adopted any Financial Accounting Standards Board Statements or Interpretations, Accounting Principles Board Opinion or Accounting Research Bulletins of the Committee on Accounting Procedures issued after November 30, 1989.

E. CASH AND CASH EQUIVALENTS

Cash includes amounts in demand deposits, interest-bearing demand deposits, and money market accounts. Cash equivalents include amounts in time deposits and these investments with original maturities of 90 days or less. Under state law, the Commission may deposit funds in demand deposits, interest-bearing demand deposits, money market accounts, or time deposits with state banks organized under Louisiana Law or any other state of the United States, or under the laws of the United States.

F. ALLOWANCE FOR DOUBTFUL ACCOUNTS

The Commission considers accounts receivable to be collectible when received within 60 days of being billed and/or a security deposit is available; accordingly, an allowance for doubtful accounts has been established for amounts not meeting these criteria. Uncollectible amounts are recognized as bad debts at the time information becomes available which would indicate the uncollectibility of the particular receivable.

G. PREPAID EXPENSE

Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items.

H. RESTRICTED ASSETS / RESOURCES

Restricted assets consist of 1) the "Customer Deposif account, which is used to segregate water meter deposits used to pay an outstanding water bill when customers discontinue service, 2) the "Constmction Fund" account, which is used to segregate resources used for capital improvements and renovations, and 3) the "Sinking", "Debt Service Reserve", and "Contingency" accounts, which are all used to segregate resources to pay debt services. When both restricted and unrestricted resources are available for use, it is the Commission's policy to use restricted resources first, then unrestricted resources as they are needed.


I. CAPITAL ASSETS

Capital assets of the Commission are recorded at historical cost. The Commission maintains a individual asset threshold level for capitalization of $1,000 for movable assets. Interest costs incurred during construction are capitalized. Depreciation of all exhaustible capital assets are charged as an expense against operations. Capital assets reported on the statement of net assets are net of accumulated depreciation, exclusive of those reported under constmction in progress. Depreciation has been provided over the estimated useful lives using the straight-line method. The estimated useful lives are as follows:

Water well 30-years Storage and treatment plant 5-50 years Water distribution system 10-50 years Office equipment 5 years Equipment 5-20 years Vehicles 5 years

J. COMPENSATED ABSENCES

Compensation time eamed in lieu of overtime pay is accmed when incurred by the Commission.

K. NET ASSETS

A portion of total net assets of the Commission is isolated to indicate that a part of net assets is legally restricted for a specific future use. Net assets restricted for constmction and debt service are provided for in the financial statements.

L. USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted accounting principles 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 revenue and expenses during the reporting period. Actual results could differ from those estimates.

M. CAPITALIZATION OF INTEREST

Financial Accounting Standards Board (FASB) Statement No. 34 Capitalization of Interest Costs requires that interest expenditures incurred during constmction of assets be capitalized. FASB Statement No. 62 Capitalization of Interest Cost in Situations Involving Certain Tax-Exempt Borrowings and Certain Gifts and Grants concludes that constmcted assets financed with the proceeds of tax-exempt debt (if those funds are extemally restricted to finance the acquisitions of the asset or used to service the related debt) should include capitalized interest only to the extent that interest cost exceeds interest eamed on related interest-bearing investments acquired with proceeds of the related tax-exempt borrowing. Net interest costs capitalized totaled $0 and $11,760 during 2008 and 2007.


N. DEFERRED CHARGES

The various fees incurred in connection with obtaining and issuing the revenue bonds have been capitalized and are being amortized over a period equal to the term of the bond using the interest method. Amortization expense amounted to $3,061 and $2,705 for the years ended December 31, 2008 and 2007, respectively.

O. OPERATING AND NONOPERATEVG ITEMS

Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the Commission are charges to customers for sales and services. Operating expenses included cost of services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.

2. DEPOSTTS AND INVESTMENTS

Deposits

At December 31, the Commission has cash equivalents (book balances) as follows:

2008 2007

Demand deposits $ 337,489 $ 346,671

Total Book Balances $ 337,489 $ 346,671

These deposits are stated at cost, which approximates market. Under state law, these deposits (or the resulting bank balances) must be secured by federal deposit insurance or the pledge of securities owned by the fiscal agent bank. The market value of the pledged securities plus the federal deposit insurance must at all times equal the amount on deposit with the fiscal agent. These 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.

Custodial credit risk is the risk that in the event of a bank failure deposits may not be returned to the Commission. The Commission's deposit policy for custodial credit risk requires that all uninsured deposits must be secured with acceptable collateral as defined in LRS 39:1221 valued at market. As of December 31, 2008 and 2007, the Commission had deposits (collected bank balances) totaling $351,346 and $358,634. Of these bank deposit balances, $101,346 and $258,634 were exposed to custodial credit risk as follows: Uninsured and collateral held by pledging bank's agent not in the Commission's name $101,346 and $258,634.

Even though the pledged securities are considered subject to custodial credit risk under the provisions of GASB Statement 40, Deposits and Investment Risk Disclosures, Louisiana Revised Statute 39:1229 imposes a statutory requirement on the custodial bank to advertise and sell the pledged securities within 10 days of being notified by the district that the fiscal agent has failed to pay deposited funds upon demand.


Investments

The Commission invests only in nonnegotiable certificates of deposits. Pursuant to GASB Statement 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools^ investments in nonparticipating interest-earning contracts, such as nonnegotiable certificates of deposit with redemption terms that do not consider market rates, are reported using a cost-based measure.

At year end, the Commission's investments were as follows:

2008 2007 Carrying

Investment Type

Certificates of Deposit $

Total $

Carrying Carrying Amount Fair Value Amount

1 503,345 $ 503,345 $ 133,740

; 503,345 S 503,345 $ 133,740

Fair Value

$ 133,740

$ 133,740

All of the investments listed above have a maturity of less than one year from year end.

For an investment custodial credit risk is the risk that, in the event of a failure of the counterparty, the Commission will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The Commission's investment policy for custodial credit risk requires that all uninsured investments must be secured with acceptable collateral as defined in LRS 39:1221 valued at market. As of December 31, 2008 and 2007, the Commission had investments totaling $503,345 and $133,740. Of these balances, $170,984 and $0 were exposed to custodial credit risk as follows: Uninsured and collateral held by pledging bank's agent not in the Commission's name $167,737; uninsured and unsecured $3,247 and $0.

A reconciliation of deposits and investments as shown on the statement of net assets are as follows:

2008 2007

Carrying amount of deposits $ 337,489 $ 346,671 Carrying amount of investments 503,345 133,740

Total $ 840,834 $ 480,411

Cash equivalents Cash equivalents - Restricted Investments Investments - Restricted

174,447 $ 163,042 157,921 345,424

168,854 177,817 49,044 84,696

Total $ 840,834 $ 480,411

10


3. RECEIVABLES

The following is a summary of receivables at year end:

Customer receivables: 2008 2007 Current $ 69,361 $ 70,044 Past Due 18,192 39,515

Gross customer receivables 87,553 109,559 Accmed unbilled receivables 29,846 39,247 Other Less: allowance for doubtful accounts (8,000) (8,000) Net total receivables $ 109,399 $ 140,806

Accounts receivables are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a charge to eamings and a credit to a valuation allowance based on an assessment of the current status of individual accounts. Balances still outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to trade accounts receivable. Changes in the valuation allowance have not been material to the financial statements.

4. RESTRICTED ASSETS

Assets were restricted for the following purposes at year end:

2008 2007 Customer deposits Revenue bond constmction account Revenue bond current debt service sinking fund account Revenue bond future debt service reserve account Revenue bond depreciation and contingency account

Total

159,744 204,614

86 72,011 72,011

508,466

150,935 1,060 100

55,209 55,209

262,513

J E F F E R S O N DAVIS PARISH W A T E R & S E W E R C O M M I S S I O N N O . l N O T E S T O FINANCIAL S T A T E M E N T S

5. CAPITAL ASSETS

A summary of capital assets for the year ended December 31, 2008 follows:

Completed Dispositions

Capital assets not being depreciated:

Land Construction in progress

Total capital assets not being depreciated

Capital assets being depreciated:

Water well Storage and treatment plant Buildings Water distribution system Office equipment Equipment Vehicles

Total capital assets being depreciated

Less accumulated depreciation for:


Total accumulated depreciation

Total capital assets being depreciated, net

Capital assets, net

$

Balance Beginning

18,884

18,884

Additions

2,340

2,340

Construction in Progress

-

.

/Reclassifications

-

Balance Ending

21,224

21,224

326,437 1,501,015 235,579

6,534,303 42,601 103,213 71,779

8,814,927

50,247 252,667 20,171

523,306 26,230 31,638 55.107

959,366

7,855,561

5,853 27,249 4,016 1,704

22,543

61,365

10,881 50,034 5,976

130,924 6,943 8,035 14,469

227,262

(165,897)

21.412

21,412

21,412

21,412

326,437 1,501,015 241,432

6,561,552 46,617 104,917 72,910

,854,880

61,128 302,701 26,147

654,230 33,173 39,673 48,164

1,165,216

7,689,664

7,874,445 (163,557) 7,710,f

12


A summary of capital assets for the year ended December 31, 2007 follows:

Capital assets not being depreciated:

Land S Construction in progress

Total capital assets not being depreciated

Capital assets being depreciated:


Total capital assets being depreciated

Less accumulated depreciation for:


Total accumulated depreciation

Total capital assets being depreciated, net

Capital assets, net $

Balance Beginning

18,884 1,014,964

1,033,848

326,437 1,501,015

235,579 4,928,853

39,664 103,213 71,779

7,206,540

39,366 202,633

14,282 407,501

24,739 23,690 45,034

757,245

6,449,295

7,483,143

•Additions

-590,486

590,486

----

7,142 --

7,142

10,881 50,034

5,889 115,805

5,696 7,948

10,073

206,326

(199,184)

391,302

Completed Construction in Progress

-(1,605,450)

(1,605,450)

---

1,605,450 ---

1,605,450

-------

-

1,605,450

_

Dispositions /Reclassifica

tions

--

-

----

4,205 --

4,205

----

4,205 --

4,205

-

-

Balance Ending

18,884 -

18,884

326,437 1,501,015

235,579 6,534,303

42,601 103,213 71,779

8,814,927

50,247 252,667

20,171 523,306

26,230 31,638 55,107

959,366

7,855,561

7,874,445

7. LONG-TERM DEBT

The long-term debt of the Commission consists of various revenue bonds payable to the United States Department of Agriculture as follows:

$1,765,000 US Department of Agriculture revenue bond, dated August 21, 2001, one interest only payment of $57,362.50 due August 21, 2002, thereafter payable in monthly installments of $6,671.70, including principal and interest, to August 21, 2041, interest at 3.25%.

2008 2007

$ 1,605,674 1,633,067

13


$165,000 US Department of Agriculture revenue bond, dated August 21, 2001, one interest only payment of $7,425 due August 21, 2002, thereafter payable in monthly installments of $749.10, including principal and interest, to August 21, 2041, interest at 4.5%. • 152,397 155,698

$3,049,000 US Department of Agriculture revenue bond, dated July 21, 2003, one interest only payment of $133,394 due July 21, 2005, thereafter payable in monthly installments of $13,598.54, including principal and interest, to July 21, 2043, interest at 4.375%. 2,904,542 2,939,814

$1,244,000 Iberia Bank revenue bond anticipation loan, dated April 19, 2006, payable at issuance of revenue bonds on April 19, 2007, including principal and interest, to April 19, 2007, interest of 4.35%.

$306,000 Louisiana Public Facilities Authority revenue bond anticipation loan, dated April 19, 2006, payable at issuance of revenue bonds on April 19, 2007, includes only principal, interest of 0%.

$1,530,000 US Department of Agriculture revenue bond, dated April 17, 2007 one interest only payment of $58,554.38 due March 21, 2008, thereafter payable in monthly installments of $6,594.30, including principal and interest, to July 21, 2043, interest at 4.125%. 1,507,555 1,441,970 Total Long-term Debt 6,170,168 6,170,549 Less current portion (83,713) (75,489)

$ 6,086,455 6,095,060

On April 17, 2007 the Commission issued $1,530,000 of revenue bonds. A portion of the proceeds were used to retire the bond anticipation notes with Iberia Bank and the Louisiana Public Facilities Authority. The balances of the bond anticipation notes, as of December 31, 2006, scheduled for maturity in April 2007, have been reported as long-term as a result of this refinancing event.

The annual requirements to amortize all debts outstanding including interest are as follows:

Year Ending December 31 Principal Interest Total

2009 2010

2011

2012

2013

2014-2018 2019-2023

2024-2028

$ 83,713 87,073

90,586

94,233

98,031

552,811 674,082

822,466

246,804

243,437

239,931

236,283

232,486 1,099,773

978,502

830,119

330,517 330,510

330,517

330,516

330,517 1,652,584

1,652,584

1,652,585

14


2029-2033 2034-2038 2039-2043 2044-2048 2049-2053

1,004,122 1,226,630 1,187,442

248,979

648,462 425,954 163,710

18,395

1,652,584 1,652,584 1,351,152

267,374

Total $ 6,170,168 5,363,856 11,534,024

The following is a summary of long-term liability activity for the year ended December 31, 2008:

Balance Beginning Additions

Compensated absences $ 5,669 $ 704 Revenue bonds 6,170,549 88,030 Total long-term liability $ 6,176,218 $ 88,734 $_

The following is a summary of long-term liabihty activity for the year ended December 31, 2007:

Reductions

2,331 88,411

90,742

$

$_

Balance Ending

4,042 6,170,168

6,174,210

$

$_

Due Within One Year

1,355 83,713

85,068

Compensated absences $ Revenue bonds Total long-term liability $

Balance Beginning

5,516 5,583,985

5,589,501

Additions

$ 1,664 1,674,151

$ 1,675,815

Reductions

$ 1,511 1,087,587

$ 1,089,098

-

$

$^

Balance Ending

5,669 6,170,549

6,176,218

$

$ .

Due Within One Year

1,615 75,489

77,104

8. COMPENSATED ABSENCES

All regular full time employees who work overtime in their daily operations are compensated with time and a half of their regular salary. Employees can accumulate compensatory time in lieu of payment for overtime. The Commission's standard policy for sick and vacation leave is that it does not accumulate or vest past year end. As a result no liability is reported for unpaid accumulated sick or vacation leave at year end.

9. RISK MANAGEMENT

The Commission is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; injuries to employees; and natural disasters. As of December 31, 2008, the Commission carries commercial insurance for the aforementioned risk. General liability coverage is maintained through a commercial insurance policy provided by the Jefferson Davis Parish Police Jury. During the construction


phase, contractor nonperformance and liability risk is protected by requiring each contractor to post a performance bond and a certificate of liability insurance coverage for approved contracts. Settled claims resulting firom these risks have not exceeded commercial insurance coverage in any of the past three fiscal years or since inception of the Commission, which ever is less.

10. EVTEREST COST

Interest costs recorded in fmancial statements consist of the following:

2008 2007 Interest paid Interest accrual change

Total inteirest recorded Less amount capitalized in construction in progress Amount charge to expense

$

$ I

288,386 (38,718) 249,668

-

249,668

202,155 35,993

238,148 (11,760) 226,388

11. LITIGATION AND CLAIMS

The Commission is not presently involved in any litigation as plaintiff or defendant.

12. PENSION PLAN

The Commission began a Simple IRA defined contribution plan effective March 1, 2007 pursuant to Intemal Revenue Code Section 408(p). Under the plan, each employee receiving at least $2,000 in compensation, as defined in the plan, during any one prior year and who are reasonably expected to received at least $2,000 in compensation during the current year are eligible to participate in the plan. Under terms of the plan, participants are able to reduce their taxable compensation per federally mandated calculations for contributions made to the plan. The Commission provides a non-elective contribution of 2% of eligible compensation for all eligible employees. Benefits vest immediately upon contribution by the Commission. Pension expense for the year ending December 31, 2008 and 2007, was $624 and $3,155.

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SUPPLEMENTAL INFORMATION SCHEDULES

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Schedule of Compensation and other Expenses Paid to Commissioners For the Year Ended December 31, 2008

Board Member

Gregory Bordelon $ 760 Mike Perry 480 Don Johnson 920 Irving Jones 920 Raymond Brown 760 Chad Woods 800 John Juneau 860

$ 5,500

JEFFERSON DAVIS PARISH WATER & SEWER COMMISSION NO. I

Additional Information Required by United States Department of Agriculture For the Year Ended December 31, 2008

1. Accounts receivable for sales of water were aged as follows:

Aging Category Current Past Due & Inactive

Number of Customers

3,318 $

Receivable Amount

69,361 18,191 87,552

2. Estimated number of active customers as of year end:

2,611 Residential Commercial 70

3. Schedule of insurance in force was as follows:

Pohcy No. Companv Agent Type

Coverage Amount

Coverage Effective Date From To

M710105-005

LA Parish Government

Risk Management

GWPKG0035 Arch Insurance 501 Company

Arthur J Gallagher Agency

Workers' Compensation

Buildings & contents, General Liability, Auto, Employee Bond

1,000,000

Building & Plant

$1,471,890 Contents &

Pump $57,000 GL

Occurrence $1,000,000

GL aggregate $3,000,000,

Auto $1,000,000 Employee Dishonest $350,000

Wind or hail damage

deductible 2%

1/1/08

4/14/08

12/31/08

4/14/09

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Additional Information Required by United States Department of Agriculture For the Year Ended December 31, 2008

4. Schedule of approved water rates were as follows:

$14.50 minimum per month for the first 2,000 gallons.

$3.50 per thousand or part thereof all over 2.000 gallons for Bell City and Hayes -Phase III customers $2.85 per thousand or part thereof all over 2,000 gallons for all other areas.

$10.00 late fee is assessed on past due residential and commercial accounts, 10% late fee on industrial accounts effective March 2008

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OTHER REPORTS

21

JEFFERSON DAVIS PARISH WATER & SEWER COMMISSION NO.l

MANAGEMENT'S STATUS OF PRIOR YEAR AUDIT FTNDEVGS For the Year Ended December 31, 2008

SECTION I - FINANCIAL STATEMENT FINDINGS

Finding 2007-1: Lack of segregation of duties

Condition: Due to small number of employees, the Commission did not have adequate segregation of functions within the accounting system.

Recommendation: If possible, management should adopt procedures in the office to mitigate lack of segregation of duties.

Current Status/ Management Action Taken: Due to small size of our office staff we are limited in our ability to adequately segregate accounting functions. Contact person: Mr. Alvin Richard, manager.

SECTION H - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

No findings reported.

SECTION III - MANAGEMENT LETTER FINDINGS


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Mike B. Gillespie, CPA (A Professional Accounting Corporation)

414 East Nezpique Street PO Box 1347, Jennings, LA 70546

Phone (337) 824-7773

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 GOVERNMENTAL AUDITING STANDARDS

To the Board Members of the Jefferson Davis Parish Water & Sewer Commission No. 1 Lake Arthur, Louisiana

I have audited the basic financial statements of the Jefferson Davis Parish Water & Sewer Commission No. 1 (Commission), a component unit of the Jefferson Davis Parish Police Jury, as of and for the year ended December 31, 2008, and have issued my report thereon dated May 15, 2009. I conducted my 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.

Internal Control Over Financial Reporting In planning and performing my audit, I considered the Commission's intemal control over financial reporting as a basis for designing my auditing procedures for the purpose of expressing my opinions on the financial statements but not for the purpose of expressing an opinion on the effectiveness of the Commission's intemal control over financial reporting. Accordingly, I do not express an opinion on the effectiveness of the Commission's intemal control over financial reporting.

My consideration of the intemal control over financial reporting was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in the intemal control over financial reporting that might be significant deficiencies or material weaknesses. However, as discussed below, I identified certain deficiencies in intemal control over financial reporting that I consider to be significant deficiencies.

A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the Commission's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the Commission's financial statements that is more than inconsequential will not be prevented or detected by the Commission's intemal control. I consider the deficiency described in the accompanying schedule of findings and responses, identified as items 2007-1, to be a significant deficiency in intemal control over financial reporting.

A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the Commission's intemal control.

My consideration of the intemal control over financial reporting was for the limited purpose described in the fust paragraph of this section and would not necessarily identify all deficiencies in the intemal control that might be significant deficiencies and, accordingly, would not necessarily disclose all significant deficiencies that are also considered to be material weaknesses. However, I believe that the significant deficiency described above is not a material weakness.

Compliance and Other Matters As part of obtaining reasonable assurance about whether the Commission's financial statements are fi"ee of material misstatement, I performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial

23

statement amounts. However, providing an opinion on compliance with those provisions was not an objective of my audit and, accordingly, I do not express such an opinion. The results of my tests disclosed one instance of noncompliance or other matters that are required to be reported under Government Auditing Standards and which is described in the accompanying schedule of findings and responses as item 2008-1.

The Commission's response to the findings identified in my audit are described in the accompanying schedule of findings and responses. I did not audit the Commission's responses and, accordingly, I express no opinions on them.

This report is intended for the information and use of the Commission's board members, management, others within the organization, and the Louisiana Legislative Audit Advisory Council, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parities. However, this report is a matter of public record and its distribution is not limited.

7/tc^ s, ( iiu^ . ep^. /iP^e

Jennings, Louisiana May 15,2009

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SCHEDULE OF FINDINGS & RESPONSES For the Year Ended December 31, 2008

SECTION I - SUMMARY OF AUDITOR'S RESULTS

Financial Statements

1. Type of report issued: unqualified opinion on the basic financial statements

2. Intemal control over fmancial reporting;

• Material weakness(es) identified? - No

• Significant deficiencie(s) identified that are not considered to be material weakness(es)? - Yes

3. Noncompliance material to the fmancial statements noted? - No

4. Was a management letter issued? - No

Federal A wards

5. Intemal control over major programs:

• Material weakness(es) identified? - N/A

• Significant deficiencie(s) identified that that are not considered to be material weakness(es)? - N/A

6. Type of auditor's report issued on compliance for major programs: Not applicable

7. Any audit findings disclosed that are required to be reported in accordance with Section 510(a) of Circular A-133? N/A

8. The programs tested as major programs included:

CFDA No. Program Name

Not applicable Not applicable

9. The threshold used for distinguishing between Type A and B programs was: Not applicable

10. Did the auditee qualify as a low risk auditee? - N/A

SECTION H - FINANCL\L STATEMENT FINDINGS

Unresolved Prior Year Findings:

Internal Control Item: 2007-1 Lack of segregation of duties

Finding/Specific Requirement: Due to the small number of employees, the Commission did not have adequate segregation of functions within the accounting system.

Recommendation: If possible, management should adopt procedures in the office to mitigate lack of segregation of duties.

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SCHEDULE OF FINDINGS & RESPONSES For the Year Ended December 31, 2008

Management Response/ Corrective Action Planned: Due to small size of our office staff we are limited in our ability to adequately segregate accounting functions. Contact person: Mr. Alvin Richard, manager.

Compliance Item: 2008-1 Lack of adequate collateral securing investments

Finding/ Specific Requirement: During a review of collateral securing investments I noted that investments held at one local bank were undersecured by $3,247 as of December 31, 2008. Per LRS 39:1221 local government deposits are required to be secured if balances exceed FDIC coverage. Discussions with bank persormel indicate that the bank failed to identify a renewed certificate of deposit as a govemmental deposit. Since Commission management did not have a procedure in place to review collateral security on a monthly basis this error by the bank and the resulting lack of security was not identified in a timely manner.

Recommendation: Management should implement procedures to review collateral security on at least a monthly basis. Particular attention should be paid to security during periods when investments are renewing or when account changes are being made especially in smaller institutions that may not have the resources to adequately track compliance with security laws and regulations.

Management Response/ Corrective Action Planned: We will implement a procedure to review collateral security on a periodic basis. Contact person: Mr. Alvin Richard, manager.

Current Year Findings:

Internal Control No findings reported.

Compliance No findings reported.

SECTION HI -FINANCIAL AWARD FINDINGS AND QUESTIONED COSTS


26


MANAGEMENT'S CORRECTIVE ACTION PLAN FOR CURRENT YEAR AUDIT FINDINGS For the Year Ended December 31, 2008

SECTION I - FTNANACIAL STATEMENT FINDINGS

Internal Control Item: 2007-1 Finding/Specific Requirement: Lack of segregation of duties Recommendation: If possible, management should adopt procedures in the office to mitigate lack of segregation of duties. Management Response: Due to small size of our office staff we are limited in our ability to adequately segregate accounting fimctions. Contact person: Mr. Alvin Richard, manager.

Compliance Item: 2008-1 Lack of adequate collateral securing investments Finding/ Specific Requirement: During a review of collateral securing investments I noted that investments held at one local bank were undersecured by $3,247 as of December 31, 2008. Per LRS 39:1221 local government deposits are required to be secured if balances exceed FDIC coverage. Discussions with bank personnel indicate that the bank failed to identify a renewed certificate of deposit as a govemmental deposit. Since Commission management did not have a procedure in place to review collateral security on a monthly basis this error by the bank and the resulting lack of security was not identified m a timely manner. Recommendation: Management should implement procedures to review collateral security on at least a monthly basis. Particular attention should be paid to security during periods when investments are renewing or when account changes are being made especially in smaller institutions that may not have the resources to adequately track compliance with security laws and regulations. Management Response/ Corrective Action Planned: We will implement a procedure to review collateral security on a periodic basis. Contact person: Mr. Alvin Richard, manager.

SECTION II - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

No current year findings reported.

SECTION HI - MANAGEMENT LETTER

No current year findings reported.

THIS CORRECTIVE ACTION PLAN HAS BEEN PREPARED BY MANAGEMENT

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