town of homerapp1.lla.state.la.us/publicreports.nsf/1fd2e60d6b34d5218625776d… · balance sheet 9...

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TOWN OF HOMER HOMER, LOUISIANA

FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION

AS OF AND FOR THE YEAR ENDED DECEMBER 31,2009

U nder provisions of state law, this report is a public document. A copy 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 LegisiativeAuditor and, where appropriate, at the office of the parish clerk of court.

Release Date


TABLE OF CONTENTS FOR THE YEAR ENDED DECEMBER 31,2009

BASIC FINANCIAL STATEMENTS

REQUIRED SUPPLEMENTAL INFORMATION

Page INDEPENDENT AUDITOR'S REPORT ]-2_ MANAGEMENT'S DISCUSSION AND ANALYSIS 3-6

Government-Wide Financial Statements: Statement of Net Assets 7 Statement of Activities 8

Fund Financial Statements: Govemmental Funds:

Balance Sheet 9 Reconciliation ofthe Govemmental Funds' Balance Sheet to the Statement of Net Assets 10 Statement of Revenues, Expendimres, and Changes in Fund Balances 11 Reconciliation ofthe Govemmental Funds' Statement of Revenues, Expenditures, and

Changes in Fund Balances to the Statement of Activities 12 Proprietary Fund - Enterprise Fund;

Statement of Net Assets 13 Statement of Revenues, Expenses, and Changes in Net Assets 14 Statement of Cash Flows 15

Notes to the Financial Statements 16-35

Budgetary Comparison Schedules: General Fund 36 Special Revenue Fund - Street Fund 37 Special Revenue Fund - Industrial Development Fund 38 Special Revenue Fund - Police Fund 39

OTHER SUPPLEMENTAL SCH EDULES Nonmajor Govemmental Funds - Special Revenue Funds:

Combining Balance Sheet 40 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 41

Schedule ofCompensation to Mayor and Town Selectmen 42 OTHER REPORTS

Report on Intemal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 43-44

Schedule of Findings 45-48 Summary Schedule of Prior Audit Findings 49

ii[iiseY9 iiiiHirwoO' d 8c tjikeradainio i l A j

Certified Public Accountants

INDEPENDENT AUDITOR'S REPORT

To the Mayor and Board of Selectmen Town of Homer, Louisiana

Wc have audited the accompanying linancial statements ofthe govemmental activities, business-type activities, each major fund, and the aggregate remaining fund information ofthe Town of Homer (the Town), as of and for the year ended December 31. 2009, which collectively comprise the basic financial statements of the Town's primary government as listed in the table of contents. Tliese financial statements are the responsibility ofthe lovvn of Homer's management. Our responsibility is to express opinions on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to fmancial audits contained in Govenimenl Auditing Standards, issued by the Comptroller General ofthe United States. Those standards require that wc 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 supponing the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. Wc believe that our audit provides a reasonable basis for our opinions.

The financial statements do not include financial data for the Town's legally separate component unit, the Homer Memorial Hospital. Accounting principles generally accepted in the United Stales of America require the financial data for the component unit to be reported with the financial data of the Town's primary government unless the Towii also issues financial statements for the financial reporting entity that include the financial data for its component unit. The Town has not issued such reporting entity financial statements. As the Homer Memorial HospitaPs fiscal year end is June 30'^ the effect of die omission as of December 31, 2009, is not readily determinable.

In our opinion, because ofthe omission ofthe discretely presented component unit, as discussed above, the financial statements referred to above do not present fairly, in confomiity w ith accounting principles generally accepted in the United Stales of America, the financial position ofthe discretely presented component unit of the Town of Homer, as of December 31, 2009, or the changes in financial position thereof for the year then ended.

1900 Roselawn Avenue • Monroe, Louisiana 71201 • (318)525-6500 • Fax (318) 325-1423

Town of Homer Homer, Louisiana

Independent Auditor's Report December31, 2009

Further, in our opinion, the fmancial statements referred to above present fairly, in all material respects, the respective fmancial position ofthe govemmental activities, the business-type activities, each major fund, the aggregate remaining fund information ofthe Town of Homer, Louisiana, as of December 31, 2009, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Management's discussion and analysis on pages 3 through 6 and budgetary comparison information on pages 36 through 39 are not a required part ofthe 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 required supplementary information. However, we did not audit the information and express no opinion on it.

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Town of Homer's primary govemment fmancial statements. The combining nonmajor fund fmancial statements; the schedule of compensation to Mayor and Town Selectmen; and the summary schedule of prior audit findings listed in the table of contents are presented for the purpose of additional analysis and are not a required part of the basic financial statements. The supplemental information has been subjected to the auditing procedures applied in the audit of the basic fmancial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic fmancial statements taken as a whole.

In accordance with Government Auditing Standards, we have also issued our report dated June 7, 2010, on our consideration ofthe Town of Homer's intemal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of 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 Government Auditing Standards and should be considered in assessing the results of our audit.

HULSEY, HARWOOD & SHERIDAN, LLC

^ - j ^ , i\stMjtU.i 4(U^UAK^

June 7, 2010

TOWN OF HOMER, LOUISIANA

Management's Discussion and Analysis As of and for the Year Ended December 31, 2009

Our discussion and analysis ofthe Town of Homer, Louisiana (the Town) provides an overview ofthe Town's activities for the year ended December 31, 2009. Please read it in conjunction with the Town's financial statements.

USING THIS ANNUAL REPORT

This annual report consists of a series of financial statements. The Statement of Net Assets and the Statement of Activities provide information about the activities ofthe Town as a whole.

Reporting the Town as a Whole The Statement of Net Assets and the Statement of Activities

These statements include all assets and liabilities using the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. All ofthe current year's revenues and expenses are taken into account regardless of when cash is received or paid. These two statements report the Town's net assets and changes in them. The Town's net assets (i.e., the difference between assets and liabilities) are a measure of the Town's financial position. The increases or decreases in the Town's net assets are an indicator of whether its fmancial position is improving or deteriorating.

THE TOWN AS A WHOLE

At December 31, 2009, net assets were as follows:

NET ASSETS

Current and other assets Capital assets, net Total assets

Governmental Activities 2009 2008 (Restated)

$ 709,573 $ 1,162,106 3,156,088 3,865,661

3,326,391 4,488,497

Business-type Activities

2009 $ 93U52

5,393,623 6324,975

2008 (Restated) $ 813,271

5.668.486

Total 2009 2008 (Restated)

$1,640,925 $1,975,377 8,549,711 8,994,877

6,481,757 10,190,636 10,970,254

Liabilities: Current and other liabilities 88,471 Long-term debt -Total liabilities 88,471

114,023

114,023

146,270 2350,759 2,497,029

171,049 2,432,007 2,603,056

234,741 2,350,759 2,585,500

285,072 2,432,007 2,717,079

Net assets: Invested in capital assets, net of debt Restricted UnresUicted Total net assets

3,326,391 3,156,088

621,102 $3,777,190 $ 4,374,474 $ 3,827,946 $ 3,878,701 $ 7,605,136 $8,253,175

1.048,083

3,042,864 215,457 569,625

3,261,580 440,507 176,614

6,198,952 215,457

1,190,727

6,587,971 440,507

1,224,697



For the year ended December 31, 2009, net assets changed as follows:

CHANGE IN NET ASSETS

Governmental Activities Buslocss-type ActivHics Total

Progjam revenues: Charges for services Operating grants and contributions Capital grants and contributions General revenues: Taxes Property taxes Sales and use taxes Other taxes, licenses and permits

aher Total revenues Expenses: General govemment Public safety Highways and streets Culture and recreation Economic development Utiliues Depreciation Total expenses

Change in net assets before transfers Transfers ChaBge in net assets Net assets, beginning of year (restated) Net assets, end of year

2009

S 109,677

69,630

4,703

-134,620 891,162

285,653 40,105

1,535,550

372,498 868,351 414,317 115,520 196,895

--

1,%7,581

(432,031) (165,253) (597,284)

4,374,474

$ 3,777,190

2008 (Restated)

$ 95,423

25,000

-

1,351,434 --

-191,828

1,663,685

940,299 293,950 418,968

---

206,642 1,859,859

(196,174) (575,622) (771,796)

5,146,270

$ 4,374,474 $

2009

S 1,054,887

-

-

---

-142

1,055,029

-----

1,271,037 -

1,271,037

(216,008) 165,253 (50,755)

3,878,701

3,827,946

2008 (Restated)

$ 1,037,193

-

35,000

---

-237,443

1,309,636

1,274,390 -

1,274,390

35,246 378,427 413,673

3,465,028

$ 3,878,701 S

2009

$ 1,164,564

69,630

4,703

-134,620 891,162

285,653 40,247

2390,579

372,498 868,351 414,317 115,520 196,895

1,271,037

-3,238,618

(648,039) -

(648,039)

8,253,175

7,605,136

2008 (Restated)

$ 1,132,616

25,000

35,000

1,351,434 --

-429,271

2.973,321

940,299 293,950 418,968

--

1,274,390 206,642

3.134,249

(160,928) (197,195) (358.123)

8.611,298

$ 8,253,175

Amounts for the year ended December 31, 2008, are not classified consistently with 2009 amounts. For example, depreciation has been allocated to the relevant functions in 2009. Future reports will be more consistently classified and provide a more useful comparison.

At the close ofthe fiscal year, assets ofthe Town exceeded liabilities by $7,605,136. Of those net assets, $6,198,952 represents the Town's investment in capital assets net of accumulated depreciation and related debt. These assets are not available for future spending. The remaining net assets consist of bank balances, receivables, and other assets.



Nets assets decreased by $648,039 or 8% in 2009. Current and other assets decreased by $334,452 due, primarily, to the decrease of cash and cash equivalents. Revenues decreased from 2008 by $382,742 primarily due to the interest received on investments, checking and CD's for the 2009 year. Sales tax revenues decreased in 2009 by $120,364 which is a reflection of local buying habits and the overall economy dovm tum in 2009. Ordinary expenses increased by a modest $104,369 primarily due to a more disciplined approach in managing and plarming for the expenses which include salaries, related benefits and other operating costs.

The Town uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The focus ofthe govemmental funds is to provide information on near-term revenue, expenditures, and balances of expendable resources. TTiis information is used in assessing the financing requirements of the Town. Unreserved fund balances may serve as a useful measure of a govemment's net resources available for spending at the end ofthe fiscal year.

As of December 31, 2009, combined govemmental fund balances of $612,752 showed a decrease of $454,914 from December 31, 2008. The General Fund and Street Fund decreases of $286,723 and $87,492, respectively, make up the majority ofthe overall decrease. The decrease in the General Fund is primarily the result of decreased revenues primarily in taxes and licenses. The Street Fund's decrease is also the result of decreased revenues.

BUDGETARY HIGHLIGHTS

During the year ended December 31, 2009, no budget amendments were adopted.

Actual numbers for Ad Valorem Taxes, Sales Taxes, and Severance Taxes were lower than expected.. Interest on money and property was significantly lower than originally anticipated. Expenditures were somewhat higher in 2009.

T O W N O F H O M E R , LOUISIANA


CAPITAL ASSET AND DEBT ADMINISTRATION

Capital Assets As of December 31, 2009, the Town's investment in capital assets for its govemmental and business-type activities amounts to $3,156,088 and $5,393,623, respectively, for a total of $8,549,711 (net of accumulated depreciation). This investment includes land, buildings and improvements, vehicles, machinery, equipment, and water and sewer systems.

This year's additions of $74,162 include two (2) Ford Crown Victoria cars for the Police Department, Water System emergency system setup, Fire protection system for the Ford Museum, and Police Department building improvements to the floor.

Debt At year end, the Town had debt outstanding totaling $2,350,759, consisting of $489,900 in outstanding Series 1996 sewer revenue bonds and $1,880,000 in outstanding Series 2009 utility revenue refunding bonds, net of a bond discount of $19,141. The bonds bear interest at various rates from 3.25% to 5.375% and are due to mature in 2035 and 2034, respectively. Annual debt service requirements range from $87,267 to $147,267.

ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES

The Town of Homer is located in a depressed area ofthe state. The Town's revenues are derived mainly from a special sales and use tax, property tax assessments, and fees for services. The Town anticipates a decrease in revenues of $138,913 from reduced sales tax and utility billings. Additionally, during the fiscal year ending December 31, 2010, the Town anticipates expenses to increase in the amount of $119,564 building expenses, equipment expenses, insurance costs, payroll costs, professional fees, sewer treatment plant repairs, street maintenance, and water well repairs.

CONTACTING THE TOWN'S FINANCIAL MANAGEMENT

This fmancial report is designed to provide our citizens, taxpayers, and creditors with a general overview ofthe Town's finances and to show the Town's accountability for the money it receives. If you have any questions about this report or need additional financial information, contact the Town Clerk at Town Hall. The financial statements of Homer Memorial Hospital are issued separately and may be obtained from the hospital's business office, the parish clerk of court, or the Louisiana Legislative Auditor at www.lla.la.gov.

http://www.lla.la.gov

BASIC FINANCIAL STATEMENTS


STATEMENT OF NET ASSETS AS OF DECEMBER 31,2009

Primary Govemment

ASSETS Cash and cash equivalents Receivables, net of allowance for uncollectibles Intemal balances Prepaid expenses Capital assets not being depreciated Capital assets, net of accumulated depreciation Other assets TOTAL ASSETS

LUBILITIES Accounts payable Payroll and related liabilities Accrued interest payable Due to others Customer deposits payable Noncurrent liabilities:

Due within one year Due in more than one year

TOTAL LIABILITIES

NET ASSETS Investment in capital assets, net of related debt Restricted Unrestricted TOTAL NET ASSETS

Governmental Activities

$ 530,360 215,921 (52,967)

-135,743

3,020,345 16,259

3,865,661

59,314 29,141

-16

-

-.

88,471

3,156,088 -

621,102 $3,777,190

! !

Business-type Activities

$ 663,694 130,229 52,967 84,462 13,330

5,380,293 -

6,324,975

50,611 7,698 2,666

-85,295

72,015 2,278,744 2,497,029

3,042,864 215,457 569,625

$ 3,827,946

Total $ 1,194,054

346,150 -

84,462 149,073

8,400,638 16,259

10,190,636

109,925 36,839

2,666 16

85^95

72,015 2,278,744 2,585,500

6,198,952 215,457

1,190,727 $ 7,605,136

The accompanying notes are an integral pa r t of these financial statements. 1

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GOVERNMENTAL FUNDS

BALANCE SHEET

AS OF DECEMBER 31,2009

ASSETS

Cash aiKl cash equivalents Cash and cash equivalents, restricted

Receivables, net

Due from other funds

Other assets

TOTAL ASSETS

Geoeral

Fund

$ 98,626

-

156,232

89,081

16,260

$360,199

LL^BILITIES AND FUND BALANCES

Liabilities:

Accounts payable

Payroll and related liabilities

Unearned revenue

Due to other funds

Due to others

Total liabilities

Fund balances (deficit):

Unreserved - undesignated Total fund balances

(deficit)

TOTAL UABILITIES AND FUND BALANCES

$ 25,472

3,957

8,349

322,697

-

360,475

(276)

(276)

$360,199

Street

Fund

$ 8,914

-

27,170

9,149

-

$ 45,233

$ 15,115

6,848

-

-

-

21,963

23,270

23,270

$ 45,233

Industrial

Development

Fund

$ 297,172

-

9,057

174,731

-

$ 480,960

$ 868

-

-

5,000

-

5,868

475,092

475,092

$ 480,960

Police

Fund

$ 100

-

9,878

-

-

$ 9,978

$ 11,998

18,286

-

1,911

16

32,211

(22,233)

(22,233)

$ 9,978 ,

Other

Govern mental

Funds

$125,547

-

13,584

90,850

-

$229,981

$ 5,862

50

-

87,170

-

93,082

136,899

136,899

$229,981

Total

Governmental

Funds

$ 530,359

-

215,921

363,811

16,260

$1,126,351

$ 59,315

29,141

8,349

416,778

16

513,599

612,752

612,752

$1,126,351

The accompanying notes are an integral part of these financial statements. 9


RECONCILIATION OF THE GOVERNMENTAL FUNDS' BALANCE SHEET TO THE STATEMENT OF NET ASSETS

AS OF DECEMBER 31, 2009

Amounts reported for governmental activities in the statement of net assets are different because:

Total fund balances $ 612,752

Capital assets used in govemmental activities are not financial resources and, therefore, are deferred in the funds. 3,156,088

Other long-term assets are not available to pay for current period expenditures and, therefore, are deferred in the funds. 8350

Net assets of govemmental activities $3,777,190


TOWN OF HOMER HOMER, LOUISUNA

GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED DECEMBER 31, 2009

Revenues: Taxes;

Property taxes Sales and use taxes Franchise taxes Other taxes, penalties and interest

Licenses and permits hitergovemmental revenues Charges for services Fines Lease income Interest eamed Donations Other revenues

Total revenues

Expenditures: Current:

General govemment Public safety Highways and streets Cuhure and recreation Economic development

Capital outlay Total expenditures

Excess (deficiency) of revenues over (under) expenditures

Other financing sources (uses): Transfers in Transfers out Sale of capital assets Insurance proceeds

Total other financing sources and uses

Net change in fund balances Fund balances at beginning of year (restated) Fund balances (deficit) at end of year

General Fund

$ 126,271 308,939 107,845

4,112 163,917

3,653 4,224

-5,700 4,372 1,205

10,487 740,725

307,165 --

3,440 8,400

-319,005

421,720

-(710,930)

-2,487

(708,443)

(286,723)

286,447

$ (276)

Street Fund

$ 281,433

-------60

-4,152

285,645

--

376,300 ---

376,300

^90,655)

--150

3,013 3,163

(87,492)

110,762

$ 23,270

Industrial Development

Fund

$ 93,811

----------

93,811

----

114,205 .

114,205

(20,394)

-----

(20,394)

495,486

$ 475,092

Police Fund

$ 46,905

---

40,977 10,477 83,074

---980

182,413

-

712,699 ---

43,884 756,583

(574,170)

545,677 -

10,368 -

556,045

(18.125)

(4,108)

$(22,233)

Other Governmental

Funds

$ 160,072

9,779 --

29,703 6,202

--114 -

3,445 209,315

-96,497

-100,660 39,338 15,000

251,495

(42,180)

-----

(42,180)

179,079

$ 136J99

Total Governmental

Funds

$ 126,271 891,160 117,624

4,112 163,917 74,333 20,903 83,074 5,700 4,546 1,205

19,064 1,511,909

307,165 809,196 376300 104,100 161,943 58,884

1,817,588

(305,679)

545,677 (710,930)

10,518 5,500

(149,235)

(454,914)

1,067,666

$ 612,752


TOWN OF HOMER HOMER, LOUISLVNA

RECONCILIATION OF THE GOVERNMENTAL FUNDS' STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES

FOR THE YEAR ENDED DECEMBER 31, 2009

Amounts reported for governmental activities in the statement of net assets are different because:

Net change in fund balances - total governmental funds $ (454,914)

Govemmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which depreciation expense exceeded capital outlays in the current period. (169,573)

The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins, and donations) is to decrease net assets. (726)

Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the fimds. 8,349

Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in govemmental funds. 19,580

Change in net assets of governmental activities $ (597,284)



PROPRIETARY FUND - ENTERPRISE FUND STATEMENT OF NET ASSETS

FOR THE YEAR ENDED DECEMBER 31,2009

ASSETS

Current assets: C:ash and cash equivalents Receivables, net Due from other fiinds

Total current assets Noncurrent assets:

Cash and cash equivalents, restricted Capital assets, net Prepaid expenses

Total noncurrent assets TOTAL ASSETS

LIABILIIIES

448,237 130,229 52,967

631,433

215,457 5393,623

84,462 5,693,542 6,324,975

Current liabilities: Accounts payable Payroll and related liabilities Customer deposits payable Accrued interest on revenue bonds Revenue bonds payable, current

Total current liabilities

Noncurrent liabilities: Revenue bonds payable, net

Total noncurrent liabilities

TOTAL LIABILITIES

NET ASSETS

50,611 7,698

85,295 2,666

72,015

218,285

2,278,744 2,278,744 2,497,029

hivested in capital assets, net of related debt Restricted for debt service Unrestricted TOTAL NET ASSETS

3,042,864 215,457 569,625

$ 3,827,946



PROPRIETARY FUND - ENTERPRISE FUND STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS FOR THE YEAR ENDED DECEMBER 31,2009

Operating revenues: Charges for sales and services:

Water fees Sewer fees Garbage fees

Total operating revenues

Operating expenses: Depreciation Employee compensation expenses Equipment repairs and maintenance expenses Legal, accounting, insurance expenses Materials and supplies expense Power and utilities expenses Sub-contract expenses All other operating expenses

Total operating exf>enses

650,509 281,513 122,865

1,054,887

290,142

174,600

81,413

60,733

26,392

56,291

406,253

31,819

1,127,643

Operating loss (72,756)

Nonoperating revenues (expenses): Interest eamed Interest expense

Total nonoperating revenues (expenses)

Loss before contributions and transfers

142 (143394) (143,252)

(216,008)

Transfers in Change in net assets Net assets at beginning of year (restated) Net assets at end of year

165,253 (50,755)

3,878,701 $ 3,827,946

The accompanying notes are an integral part of these fmancial statements. 14


PROPRIETARY FUND - ENTERPRISE FUND STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31,2009

$ 965,015 (738^63) (170,049)

56,603

165,253 165,253

1,860,859 (15,278)

(1,942,107) (149,831) (246357)

142

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: Transfer from other fiinds

Net cash provided by noncapital and related financing activities

Cash flows from capital and related financing activities: Proceeds from capital debt Purchases of capital assets Principal paid on capital debt Interest paid on capital debt

Net casb used by capital and related financing activities

Cash flows from investing activities: Interest and dividends received

Net cash provided by investing activities

Net decrease in cash and cash equivalents Cash and cash equivalents, beginning of year (including amounts in restricted accounts) Cash and cash equivalents, end of year (including amounts in restricted accounts)

Reconciliation of operating loss to net cash provided by operating activities: Operating loss Adjustments to reconcile operating loss to cash provided by operating activities:

Depreciation expense (Increase) decrease in accounts receivable (Increase) decrease in due from other funds (Increase) decrease in prepaid expenses Increase (decrease) in accounts payable Increase (decrease) in payroll related liabilities Increase (decrease) in customer deposits payable

Total adjustments Net casb provided by operating activities

Noncash investing, capital, and financing activities: None

142

(24359) 688,053

$ 663,694

$ (72,756)

290,142 (3,287)

(52,967) (84,462)

9,000 4351

(33,618) 129359

$ 56,603

The accompanying notes are an integral par t of these financial statements. 15


NOTES TO THE FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2009

Introduction The Town of Homer (the Town) located in Claiborne Parish was incorporated March 13, 1850, and granted a special charter under the provisions of Act No. 111 ofthe Louisiana Legislature. The charter was amended by Louisiana Legislature Act No. 36 of 1876 and various subsequent ordinances. The Town operates under a Mayor-Selectmen form of govemment. The citizens elect the Mayor, who is the executive officer, and the five Selectmen. The Board elects the Mayor Pro-Tern. The Mayor and Selectmen serve four-year terms of office for up to two consecutive terms. The Town's major operations include public safety, streets, recreation and parks, utilities, and other necessary public services serving approximately 3,800 residents including approximately 1,800 utility customers. The Town employs approximately 120 employees.

GASB Statement No. 14, The Reporting Entity, established criteria for determining the govemmental reporting entity and component units that should be included within the reporting entity. Under provisions of this Statement, the Town is considered a primary govemment, since it is a special purpose govemment that has a separately elected goveming body, is legally separate, and is fiscally independent of other state or local govemments. As used in GASB Statement No. 14, fiscally independent means that the Town may, without the approval or consent of another govemmental entity, determine or modify its own budget, levy its own taxes or set rates or charges, and issue bonded debt. In accordance with GASB Statement 14, the reporting entity for the Town consists of (a) the primary govemment (Town), (b) organizations for which the primary govemment is financially accountable, and (c) other organizations for which the nature and significance of their relationship with the primary govenmient are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete.

GASB Statement No. 14 established criteria for determining which component units should be considered part of Town of Homer for financial reporting purposes. The basic criterion for including a potential component unit within the reporting entity is financial accountability. The GASB has set forth criteria to be considered in determining financial accountability. This criterion includes:

1. Appoinfing a voting majority of an organizafion's goveming body, and:

a. The ability ofthe Town to impose its will on that organization and/or

b. The potential for the organization to provide specific financial benefits to or impose specific financial burdens on the Town.

2. Organizations for which the Town does not appoint a voting majority but are fiscally dependent on the Town.

3. Organizations for which the reporting entity financial statements would be misleading if data ofthe organization is not included because ofthe nature or significance ofthe relafionship.

16


NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2009

Introduction (Continued) Based on the previous criteria, the Town has determined that the Homer Memorial Hospital is part of the reporting entity ofthe Town of Homer. Homer Memorial Hospital issues separate audited financial statements.

GASB Statement 14 provides for the issuance of primary govemment financial statements that are separate from those of the reporting entity. However, the primary govemment's (Town's) financial statements are not a substitute for the reporting entity's financial statements. The accompanying primary govemment financial statements have been prepared in conformity with generally accepted accounting principles as applied to govemmental units.

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Government-wide and fund financial statements The govemment-wide financial statements (i.e., the Statement of Net Assets and the Statement of Activities) report information on all ofthe nonfiduciary activities ofthe primary govemment and its component units. For the most part, the effect of interfund activity has been removed from these statements. Govemmental activities, which normally are supported by taxes and intergovemmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary govemment is reported separately from certain legally separate component units for which the primary govemment is financially accountable.

The Statement of Activities demonstrates the degree to which the direct expenses of a given fiinction or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific fiinction or segment. Program revenues include a) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular fiinction or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues.

Separate financial statements are provided for govemmental fiinds, proprietary funds, and fiduciary funds, if applicable, even though the latter are excluded from the govemment-wide financial statements. Major individual govemmental funds and major individual enterprise fiinds are reported as separate columns in the fiind financial statements.

Measurement Focus. Basis of Accounting, and Financial Statement Presentation The govemment-wide financial statements were prepared using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fiind and fiduciary fijnd financial statements. Revenues are recorded when eamed and expenses are recorded when a liability is incurred, regardless ofthe 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.

17



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Measurement Focus, Basis of Accounting, and Financial Statement Presentation (continued) Govemmental fiind 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 ofthe current period.

For this purpose, the govemment considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accmal accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due.

Ad valorem taxes, franchise taxes, licenses, and interest associated with the current fiscal period are all considered tb be susceptible to accmal and so have been recognized as revenues of the current fiscal period. Sales and use tax revenues are recorded in the month collected by the tax collector. All other revenue items are considered to be measurable and available only when cash is received by the govemment.

Expenditures are generally recognized under the modified accrual basis of accounting when the related fiind liability is incurred. Purchases of various operating supplies are regarded as expenditures at the time of purchase.

Transfers between fiinds that are not expected to be repaid (or any other types, such as capital lease transactions, sale of capital assets, debt extinguishment, long-term proceeds, et cetera) are accounted for as other financing sources (uses). These other financing sources (uses) are recognized at the time the underlying events occur.

The Town reports the following major govemmental funds:

The General Fund is the general operating fiind ofthe Town. It is used to account for all financial resources except those required to be accounted for in another fiind. General tax revenues and other sources of revenue used to finance the fundamental operations ofthe Town are included in this fund. The fiind is charged with all costs of operating the govemment for which a separate fiind has not been established.

The Street Special Revenue Fund accounts for sales taxes levied for the construction and maintenance of streets, alleys, sidewalks, and bridges.

The Industrial Development Special Revenue Fund accounts for sales taxes levied for industrial development and the related expenditures.

The Police Special Revenue Fund accounts for sales taxes levied for police operations and all expenditures ofthe PoUce Department.

18




Measurement Focus, Basis of Accounting, and Financial Statement Presentation (continued) The Town reports one major proprietary fiind referred to as the Enterprise Fund. The Enterprise Fund accounts for operations ofthe water system, the sewer system, and garbage services.

Private-sector standards of accounting and financial reporting issued prior to December I, 1989, generally are followed in both the govemment-wide and proprietary fiand financial statements to the extent that those standards do not conflict with or contradict guidance of the Govemmental Accounting Standards Board. Govemments also have the option of following subsequent private-sector guidance for their business-type activities and enterprise funds, subject to this same limitation. The govemment has elected not to follow subsequent private-sector guidance.

As a general mle, the effect of interfiind activity has been eliminated from the govemment-wide financial statements. Exceptions to this general mle are payments in lieu of taxes and other charges between the government's enterprise operations. Elimination of those charges would distort the direct costs and program revenues reported for the various fiinctions concemed.

Amounts reported as program revenues include a) charges to customers or applicants for goods, services, or privileges provided, b) operating grants and contributions, and c) capital grants and contributions, including special assessments. Intemally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes.

Proprietary fiinds 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. Operating expenses for the enterprise fiind includes the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.

When both restricted and unrestricted resources are available for use, it is the Town's policy to use restricted resources first, then unrestricted resources as they are needed.

Deposits and investments The Town's cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition. State law allows the Town to invest in collateralized certificates of deposits, govemment backed securities, commercial paper, the state sponsored investment pool, and mutual fiinds consisting solely of govemment backed securities. The Town has not formally adopted deposit and investment policies that limit the Town's allowable deposits or investments and address the specific types of risk to which the govemment is exposed.

19




Receivables and pavables Activity between fimds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either "due to/from other fiinds" (i.e., the current portion of interfund loans) or "advances to/from other funds" (i.e., the noncurrent portion of interfiind loans). All other outstanding balances between fiinds are reported as "due to/from other fiinds." Any residual balances outstanding between the govemmental activities and business-type activities are reported in the govemment-wide financial statements as "intemal balances."

Advances between funds, as reported in the fiind financial statements, are offset by a fund balance reserve account in applicable govemmental fiinds to indicate that they are not available for appropriation and are not expendable available financial resources.

All trade and property tax receivables are shown net of an allowance for uncollectibles. Uncollectible accounts receivable are recognized as bad debts through the establishment of an allowance account at the time information becomes available which would indicate the uncollectibility of the particular receivable.

The Town levies taxes on real and business personal property located within its boundaries. The Parish Tax Assessor assesses the property values and prepares the Town's property tax roll. The Town bills and collects its own property taxes. Ad valorem taxes are levied and billed to the taxpayer in December, and are payable upon receipt of notice. Ad valorem taxes attach as an enforceable lien on property as of December 31 of each year. Taxes of 8.73 mills were levied on property with assessed valuations totaling $13,403,374 and were dedicated for general operating purposes. Total taxes levied after adjustments were $117,013. Taxes receivable at December 31, 2009, totaled $87,126.

The following are the principal taxpayers and related property tax revenue for the Town:

% of Total Ad Valorem Tax

Taxpayer Individual First Guaranty Bank LWM Property, LLC Regions Bank Brookshire Food Stores, Inc. Totals

Assessed Valuation

$2,616,831 501,110 335,568 278,250 182,272

$4,050,493

Assessed Valuation

19% 4% 2% 2% 1%

28%

Revenue for M l

$

_ $ _

inicipality 22,845

4,375 2,930 2,429 1,591

34,170

20




Receivables and pavables (continued^ Under the provisions ofthe sales and use tax ordinance effective October 1, 1971, twenty percent of a one percent sales and use tax is dedicated for industrial development facilities and the balance may be used for the following purposes:

• Opening, constmcting, paving, resurfacing, improving and/or maintaining streets, alleys, sidewalks, and bridges.

• Constmcting, acquiring, extending, improving, renovating and/or maintaining street lighting facilities, waterworks, sewers and sewerage disposal works, garbage collection and waste disposal facilities, police department stations and equipment, public buildings, and/or fire department stations and equipment, including fire engines, public parks and recreation facilities, and industrial development facilities.

• Purchasing and acquiring the necessary land, equipment, and fumishings for the aforesaid public works, buildings, improvements, and facilities, or for any one or more said purposes.

Under the provisions ofthe sales and use tax ordinance effective January 1, 1986, a one percent sales and use tax may be used for the following purposes:

• Sixty percent for constmcting, paving, resurfacing, improving, and/or maintaining streets in and for the Town.

• Ten percent for constmcting, acquiring, improving, and/or maintaining fire department stations and facilities, including fire tmcks and appurtenances.

• Ten percent for constructing, acquiring, extending, improving, operating, and/or maintaining recreational facilities.

• Ten percent for constmcting, acquiring, extending, improving, operating, and/or maintaining police department facilities, including the acquisition of all necessary equipment.

• Ten percent to be used for any one or more of the above purposes as may be determined by the goveming authority ofthe Town.

Restricted assets Amounts in restricted assets include amounts held for utility customer deposits and amounts held in debt sinking funds established in accordance with bond ordinances.

21




Capital assets Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable govemmental or business-type activities columns in the govemment-wade financial statements. Capital assets are capitalized at historical cost or estimated cost if historical cost is not available. Donated assets are recorded as capital assets at their estimated fair market value at the date of donation. The Town maintains a threshold level of $10,000 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 assets lives are not capitalized.

Major outlays for capital assets and improvements are capitalized as projects are constmcted. Interest incurred during the constmction phase of capital assets of business-type activities is included as part of the capitalized value ofthe assets constmcted.

All capital assets, other than land, are depreciated using the straight-line method over the following usefiil lives:

Land improvements 10-40 years

Buildings and building improvements 7-40 years

Fumiture and fixtures 5-15 years

Vehicles 5-15 years

Equipment 5-40 years

Compensated Absences Employees ofthe Town eam vacation leave depending upon their length of service. Employees may not accumulate and carry forward days of vacation leave beyond the end of each calendar year except in cases of emergency. In addition, employees can eam compensatory leave for working overtime. All vacation and compensatory leave is expected to be liquidated with expendable financial resources and thus is considered short-term and recognized as a liability as appropriate.

Long-term liabilities In the govemment-wide financial statements, and the proprietary fund types in the fijnd financial statements, long-term debt and other long-term obligations are reported as liabilifies in the applicable govemmental acfivities, business-type acfivifies, or proprietary fiind type 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 ofthe related debt.

22




Long-term liabilities (Continued) In the fijnd financial statements, govemmental fiind types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount ofthe debt issued is reported as other financing sources. Premiums received on debt issuances 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.

Fund equity In the fund financial statements, govemmental fiinds report reservations of fiind 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.

Extraordinary and special items Extraordinary items are transactions or events that are both unusual in nature and infrequent in occurrence. Special items are transactions or events within the control of the Town, which are either unusual in nature or infrequent in occurrence.

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 liabilifies and disclosure of confingent assets and liabilities at the date of the financial statements and the reported amounts of revenues, expenditures, and expenses during the reporting period. Actual results could differ from those estimates.

NOTE 2 - STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY

The Town uses the following budget practices:

Formal budgetary accounting is employed as a management control. The Town prepares and adopts a budget each year for the General Fund, each Special Revenue Fund, and the Enterprise Fund. The operating budgets are prepared based on the prior year's revenues and expenditures and the estimated increase therein for the current year, using the modified accmal basis of accounting for govemmental ftinds and the fiill accmal basis of accounting for the Enterprise Fund. The Town amends its budgets when projected revenues are expected to be less than budgeted revenues by five percent or more and/or projected expenditures are expected to be more than budgeted expenditures by five percent of more. All budget appropriations lapse at year end. Encumbrances are not used. The Town Clerk has authority to amend line item amounts within fiinds while Board approval is required to amend total revenues, expenditures, or beginning fiind balance.

23



NOTE 2 - STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY (CONTINUED)

During November of each year, the Town Clerk presents the proposed budgets for the ensuing year to the Board for considerafion. At this time, the proposed budgets are made available for public inspection and published in the official joumal along with a notice of the proposed budget hearing. The budget is adopted in December of each year. The Town's 2009 budgets were adopted on December 30, 2008. No amendments were adopted.

The following individual funds had actual expenditures and other uses over budgeted appropriations for the year ended December 31, 2009:

Fund

General Industrial Development Police Enterprise Fire Tourism

Original Budget

$1,012,065 42,462

694,755 863317 100,700 35,828

Final Budget

$1,012,065 42,462

694,755 863,317 100,700 35,828

Actual

$1,029,935 114,205 756,583

1,127,643 111,497 39,338

Unfavorable Variance

$ 17,870 71,743 61,828

264,326 10,797 3,510

Prior to year end adjustments, management ensured that overall actual expenditures/expenses did not significantly exceed budgeted amounts. However, some individual funds had unfavorable variances. Additionally, year end adjustments in the General Fund eliminated amounts due from the Police Fund and the Enterprise Fund resulting in an unbudgeted operating transfer. Management will closely monitor expenditures/expenses ofthe individual funds in the future.

The following individual fiinds have deficits in unreserved fiind balance (net assets) at December 31, 2009:

Deficit Fund Amount

Police $22,233 Recreation 22,155

Management plans to eliminate the deficits with transfers from the General Fund and a reduction in expenditures.

24


NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) AS OF AND FOR THE YEAR ENDED DECEMBER 31,2009

NOTE 3 - FUND BALANCES/NET ASSETS RESTATED

Beginning balances were restated as follows:

Govemmental Business-type

Activities Activities Total Fund balance/net assets as of December 31,2008, per prior financial statements Correction of interfund

balances Adjust capital assets to depreciation schedules Correction of prior accrued expenditures/expenses Correction of prior compensated absences payable

Fund balance/net assets as of December 31,2008, restated

$ 4,761387

(376,699)

15,034

(5,868)

(19,580)

$ 4374,474

$ 3327,687

376,699

(25,101)

(584)

-

$ 3,878,701

$8,289,274

-

(10,067)

(6,452)

(19,580)

$8,253,175

Fund balance/net assets as of December 31,2008, per prior financial statements Correction of interfund balances Correction of prior accrued expenditures/expenses Fund balance/net assets as of December 31,2008, restated

General

Fund

Street

Fund

Industrial

Development

Fund

PoUce

Fund

Other Total

Govemmental Governmental

Funds Funds

$ 817,981

(531,344)

(190)

$ 286,447

$ 112,897

-

(2,135)

$ 110,762

$ 340,838

154,648

-

$ 495,486

$ (565) $ 179,079

(3,543)

$ 1,450,230

(376,696)

(5,868)

$(4,108) $ 179,079 S 1,067,666

Interfiind balances of $376,699 presented as due from/to other fiinds should have been presented as operating transfers in/out consistent with management intentions. Interfiind balances should have reflected $154,648 due to the Industrial Development Fund from the General Fund to reimburse the Industrial Development Fund for transfers that should not have been made in 2008.

25



NOTE 4 - CASH AND CASH EQUIVALENTS

Custodial credit risk is the risk that, in the event of a bank failure, the Town's deposits may not be retumed to it. The Town's policy to ensure that there is no exposure to this risk is to require each financial institution to pledge its own securities to cover any amount in excess of Federal Depository Insurance Coverage. Louisiana Revised Statute 39:1229 imposes a statutory requirement on the custodial bank to advertise and sell the pledged securities within ten days of being notified by the Town that the fiscal agent bank has failed to pay deposited fiinds upon demand.

At December 31, 2009, the Town has cash and cash equivalents (book balances) totaling $1,194,054 as follows:

Casb and cash equivalents: Demand deposits Time deposits Other

Total Cash and cash equivalents -

Demand deposits Total

Total

- restricted:

$ 833,430 144,667

500 978,597

215,457 215,457

$1,194,054

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 securifies 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 ofthe pledging fiscal agent bank in a holding or custodial bank that is mutually acceptable to both parties. As of December 31, 2009, $854,543 ofthe Town's bank balances of $1,249,210 were exposed to custodial credit risk as follows:

Insured by FDIC

Uninsured and uncollateralized

Collateralized by pledged securities not in the Town's name

Total balances exposed to custodial credit risk

Total bank balances

$ 394,667

854,543 854,543

$ 1,249,210

26



NOTE 5 - RECEIVABLES

The following is a summary of receivables at December 31, 2009:

Nonmajor

Industrial Govemmental

General Street Development Police Funds Enterprise Total

eceivables:

Taxes and licenses

Accounts

Other

Gross receivables

Less allowance for

uncollectibles

Net total receivsblcs

5155,405

-827

156,232

-

$156,232

$27,170

--

27,170

-

$27,170

$ 9,057

--

9,057

-

$ 9,057

$4,528

-

5,350

9,878

-

$9,878

$ 13,584

--

13,584

-

$ 13,584

$ 160,904

229

161,133

(30,904)

S 130,229

S 209,744

160,904

6,406

377,054

(30,904)

$ 346,150

NOTE 6 - INTERFUND BALANCES AND TRANSFERS

The composition of interfund balances as of December 31, 2009, is as follows:

Due from

General Police Other Govemmental

Total

General

$ 1,911

87,170 $ 89,081

Street

$ 4,149 --

$ 4,149

Industrial Development

$138,901 --

$138,901

Other Govemmental

$ 90,850 --

$ 90,850

Enterprise

$ 52,967 --

$ 52,967

Total

$286,867 1,911

87,170 $375,948

During the year, transfers between the General Fund and the Police and Enterprise Funds were recorded to eliminate interfiind balances that the Town does not intend to repay.

27



NOTE 7 - CAPITAL ASSETS

Capital assets and depreciation activity as of and for the year ended December 31, 2009, is as follows:

Governmental activities:

Capital assets not being depreciated:

Land

Total capital assets

not being depreciated

Capital assets being depreciated:

Infrastructure

Land improvements

Buildings

Building in^rovements

Fumiture and equipment

Vehicles


being depreciated

Less accumulated depreciation for:

Infrastructure

Land improvements

Buildings

Building unprovements


Vehicles Total accumulated depreciation


being depreciated

Govemmentai activities,

capita] assets, net

Beginning

Balance

$ 135,743

135,743

3,751,052

1,593,849

1,017,860

121,669

270,633

874,348

7,629,411

1,790,595

1,221,247

536,690

67,507

216,145

621,614

4,453,798

3,175,613

S 3,311,356

Adjustments

$

-

10,405

---

3,816

-

14,221

(812)

--

(606)

606

-(812)

15,033

$ 15,033

Increases

$

-

---

17,384

-41,500

58,884

83,625

47,683

22,182

3,285

11,009

60,673

228,457

(169,573)

$ (169,573)

Decreases

$ -

-

-----

(39,696)

(39,696)

-----

(38,968)

(38,968)

(728)

$ (728)

Ending

Balance

$ 135,743

135,743

3,761,457

1,593,849

1,017,860

139,053

274,449

876,152

7,662,820

1,873,408

1^8,930

558,872

70,186

227,760

643,319

4,642,475

3,020,345

$ 3,156,088

28



NOTE 7 - CAPITAL ASSETS (CONTINUED) Beginning

Balance Adjustntents

Business-type activities:

Capital assets not being depreciated:

Land $ 13,330 $ - $

Increases Decreases

Ending

Balance

13,330


not being depreciated

Capital assets being depreciated:

InfrasUucture

Buildings


Vehicles


being depreciated

Less accumulated depreciation for:

Infrastmcture

Buildings


Vehicles

Total accumulated depreciation


being depreciated

Business-type activities.

capital assets, net

13,330

11,409,780

128,061

136,603

176,925

11,851,369

5,783,071

125,839

92,191

170,011

6,171,112

5,680,257

$ 5,693,587

-

-(694)

(24,408)

-

(25,102)

-(66)

67

-I

(25,103)

$ (25,103) !

-

15,278

--.

15,278

277,458

1,594

6,856

4,231

290,139

(274,861)

£ (274,861) $

13,330

11.425,058

127,367

112,195

176,925

11,841,545

6,060,529

127,367

99,114

174,242

6,461,252

5,380,293

$ 5,393,623

Depreciation expense of $228,457 for the year ended December 31, 2009, was charged to the following govenmiental functions:

General govemment $ 70,757

Public safety 70,274

Highways and Streets 41,054

Culture and recreation 11,420

Economic development 34,952

Total $ 228,457

Minor adjustments were recorded to adjust reported assets to the depreciation schedules. The largest adjustment was to adjust capital assets for a portable building that was expensed in 2008 due to the estimated useful life ofthe building and the nature of its use.

29



NOTE 8 - LONG-TERM LIABILITIES

The following is a summary of long-term liabilities transactions of the Town for the year ended December 31, 2009:

Beginning

Balance Additions Reductions

Ending Due Within Balance One Year

Govemmental activities: Compensated absences 19,580 $ 12,840 $ (32,420) $

Govemmental activity long-term "'abilities $ 19,580 $ 12,840 $ (32,420) $

Business-type activities:

Revenue bonds payable

Less deferred amounts

Total revenue bonds payable

Compensated absences

Beginning

Balance

$2,432,007

-

2,432,007

3,786

Additions

$ 1,880,000

(19,141)

1,860,859

3,101

Reductions

$(1,942,107)

-

(1,942,107)

(6,887)

Ending

Balance

$ 2,369,900

(19,141)

2,350,759

-

Due Within

One Year

$72,015

-

72,015

-

Business-type activity long-term liahilities $2,435,793 $ 1,863,960 $ (1,948,994) $ 2,350,759 $ 72,015

On December 29, 2009, the Town issued $1,880,000 in current refunding bonds with interest rates ranging from 3.25% to 5.375% to current refund $906,611 and $988,982 of outstanding 1988 and 1994 Series bonds, respectively, with interest payable at 6.375% and 5.25%, respectively. The net proceeds of $1,795,538 (after payment of $84,462 in underwriting fees, insurance and other issuance costs) plus an additional $111,646 from the 1988 and 1994 Series sinking fund monies were used to pay off the 1988 and 1994 Series bonds. The current refunding resulted in a difference between the reacquisition price and the net carrying amount ofthe old debt of $19,141. This difference, reported in the accompanying financial statements as a deduction from bonds payable, is being charged to operations through the year 2034 using the effective-interest method. The Town completed the current refund to reduce its total debt service payments over the next 25 years by approximately $300,000.

30



NOTE 8 - LONG-TERM LIABILITIES (CONTINUED)

The individual debt issues are as follows:

Sewer Revenue Bonds,

Series 1996

Utilty Revenue

Refunding Bonds,

Series 2009 Totals

Issue Date 6/28/1996 12/27/2009

Interest Rate 4.50% 3.25% to 5.375%

Annual Payment $32,267 $55,000to $115,000

Final Payment Date 11/28/2035 12/1/2034

Principal Outstanding $489,900 $1,880,000 $2,369,900

Interest to Maturity $952,218 $1,265,495 $2,217,713

Funding Source Enterprise Enterprise

31



NOTE 8 - LONG-TERM LIABILITIES (CONTINUED)

The annual requirements to amortize all long-term debt outstanding as of December 31, 2009, including interest payments of $2,217,713 are as follows:

2010

2011

2012

2013

2014

2015-2019

2020-2024

2025-2029

2030-2034

Totals

Business-typ«

Revenue

Bonds

Principal

$ 72,015

65,863

71,351

71,862

72,396

425,867

518,313

600,053

472,180

$ 2,369,900

: Activities

Revenue

Bonds

Interest

$ 103,897

108,389

106,112

103,651

101,168

730,168

552,185

308,405

103,738

$2,217,714

Included in utilities activities on the Statement of Activities is interest expense of $143,394.

NOTE 9 - RETIREMENT SYSTEMS

Substantially all employees ofthe Town of Homer are members ofthe following statewide retirement systems: Municipal Employees Retirement System of Louisiana and Municipal Police Employees Retirement System of Louisiana. These systems are cost-sharing, multiple-employer defmed benefit pension plans administered by separate boards of trustees. Pertinent information relative to each plan follows:

32



NOTE 9 - RETIREMENT SYSTEMS (CONTINUED)

Municipal Emplovees Retirement System Of Louisiana (System^ The System is composed of two distinct plans, Plan A and Plan B, with separate assets and benefit provisions. All eligible employees ofthe Town are members of Plan A.

Plan Description All permanent employees working at least 35 hours per week who are not covered by another pension plan and are paid wholly or in part from municipal funds and all elected municipal officials are eligible to participate in the System. Under Plan A, employees who retire at or after age 60 with at least 10 years of creditable service, at or after age 55 with at least 25 years of creditable service, or at any age with at least 30 years of creditable service are entitled to a retirement benefit, payable monthly for life, equal to 3% of their final average salary for each year of creditable service. Final average salary is the employee's average salary over the 36 consecutive or joined months that produce the highest average. Employees who terminate with at least the amount of creditable service stated above, and do not withdraw their employee contributions, may retire at the ages specified above and receive the benefit accrued to their date of termination. The System also provides death and disability benefits. Benefits are established or amended by state statute.

The System issues an annual publicly available financial report that includes financial statements and required supplementary information for the System. That report may be obtained by writing to the Mimicipal Employees Retirement System of Louisiana, 7937 Office Park Boulevard, Baton Rouge, Louisiana 70809, or by calling (225) 925-4810.

Funding Policy Under Plan A, members are required by state statute to contribute 9.25% of their annual covered salary and the Town of Homer is required to contribute at an actuarially determined rate. The current rate is 13.5% of annual covered payroll. Contributions to the System also include one-fourth of \% ofthe taxes shown to be collectible by the tax rolls of each parish. These tax dollars are divided between Plan A and Plan B based proportionately on the salaries of the active members of each plan. The contribution requirements of plan members and the Town of Homer are established and may be amended by state statute. As provided by R.S. 11:103, the employer contributions are determined by actuarial valuation and are subject to change each year based on the results of the valuation for the prior fiscal year. The Town of Homer's contributions to the System under Plan A for the years ended December 31, 2009, 2008, and 2007, were $40,499, $28,642, and $34,807, respectively, equal to the required contributions for each year.

33



NOTE 9 - RETIREMENT SYSTEMS (CONTINUED)

Municipal Police Emplovees Retirement Svstem of Louisiana f System) Plan Description All full-time police department employees engaged in law enforcement are required to participate in the System. Employees who retire at or after age 50 with at least 20 years of creditable service or at or after age 55 with at least 12 years of creditable service are entitled to a retirement benefit, payable monthly for life, equal to 3 1/3% of their final average salary for each year of creditable service. Final average salary is the employee's average salary over the 36 consecutive or joined months that produce the highest average. Employees who terminate with at least the amount of creditable service stated above, and do not withdraw their employee contributions, may retire at the ages specified above and receive the benefit accrued to their date of termination. The System also provides death and disability benefits. Benefits are established or amended by state statute.

The System issues an annual publicly available financial report that includes financial statements and required supplementary infonnation for the System. That report may be obtained by writing to the Municipal Police Employees Retirement System of Louisiana, 7722 Office Park Boulevard, Suite 200, Baton Rouge, Louisiana 70809-7601, or by calling (800) 443-4248.

Funding Policy Plan members are required by state statute to contribute 7.5%> of their annual covered salary and the Town of Homer is required to contribute at an actuarially determined rate. The current rate is 9.5% of annual covered payroll. The contribution requirements of plan members and the Town of Homer are established and may be amended by state statute. As provided by R.S. 11:103, the employer contributions are determined by actuarial valuation and are subject to change each year based on the results ofthe valuation for the prior fiscal year. The Town of Homer's contributions to the System for the years ended December 31, 2009, 2008, and 2007, were $30,201, $32,948, and $31,519, respectively, equal to the required contributions for each year.

NOTE 10 - RISK MANAGEMENT

The Tovra is exposed to various risks of loss relating to torts, theft of, damage to, and destruction of assets, errors, and omissions, injuries to employees, and natural disasters. These risks are covered by commercial insurance purchased from independent third parties.

NOTE 11 - CONTINGENT LIABILITIES

At December 31, 2009, the Town is involved in two lawsuits. In the estimation of legal counsel for the Town, the ultimate resolution of the matters would not materially affect the financial statements. However, legal counsel estimates the cost of defending the matters to exceed $100,000.

34



NOTE 12 - ON-BEHALF PAYMENTS

Certain employees in the Town's police department receive supplemental pay fi'om the state of Louisiana. In accordance with GASB Statement No. 24, the Town has recorded revenues and expenditures for these payments in the Police Special Revenue Fund. Revenues under this arrangement totaled $40,977. The related expenditures of $40,977 are included in public safety expenditures in the Police Special Revenue Fund.

NOTE 13 - SUBSEQUENT EVENTS

Management has evaluated subsequent events through June 7, 2010, the date on which the financial statements were available to be issued.

In May 2010, the District Attorney took action to declare the Mayor's seat vacated due to residency issues.

35

REQUIRED SUPPLEMENTAL INFORMATION


GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL


Budgeted Amounts

Original Final Actual

Variance with

Final Budget Revenues:

Taxes

Licenses and permits

Intergovemmental revenues

Charges for services

Interest eamed

Donations

Other revenues

Total revenues

Expenditures:

Current:

General government

Culture and recreation

Economic development

Total expenditures

Excess (deficiency) of revenues over expenditures

Other financing sources (uses):

Transfers out

Insurance proceeds

Total other fmancing sources (uses)

Net change in fund balances

Fund balances at beginning of year

Fund balances (deficit) at end of year

$645,000

155,200

-

3,600

13,000

-

28,300

845,100

273,850

3,700

-

277,550

567,550

(734,515)

-

(734,515)

(166,965)

354,618

$187,653

$645,000

155,200

-

3,600

13,000

-

28,300

845,100

273,850

3,700

-

277,550

567,550

(734,515)

-

(734,515)

(166,965)

354,618

$187,653

$ 547,167

163,917

3,653

4,224

4,372

1,205

10,487

740,725

307,165

3,440

8,400

319,005

421,720

(710,930)

2,487

(708,443)

(286,723)

286,447

$ (276)

$ (97,833)

8,717

3,653

624

(8,628)

1,205

(17,813)

(104,375)

(33,315)

260

(8,400)

(41,455)

(145,830)

23,585

2,487

26,072

(119,758)

(68,171)

$ (187,929)

36

TOWN OF HOMER

HOMER, LOUISIANA

SPECIAL REVENUE FUND - STREET FUND

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES

IN FUND BALANCE -BUDGET AND ACTUAL


Budgeted

Original

$ 285,000

3,900

7,000

295,900

Anaounts

Final

$ 285,000

3,900

7,000

295,900

Actual

$ 281,433

60

4,152

285,645

Variance

with

Final Budget

$ (3,567)

(3,840)

(2,848)

(10,255)

Revenues:

Taxes

Interest eamed

Other revenues

Total revenues

Expenditures:

Current:

Highways and streets

Total expenditures


Other financing sources:

Transfers in

Gain (loss) on sale of capital assets

Insurance proceeds

Total other financing sources

Net change in fund balance

Fund balance at beginning of year

Fund balance (deficit) at end of year

408,815 408,815 376300 32,515

408,815

(112,915)

60,000

--

60,000

(52,915)

110,528

$ 57,613

408,815

(112,915)

60,000

--

60,000

(52,915)

110,528

$ 57,613

376,300

(90,655)

150

3,013

3,163

(87,492)

110,762

S 23,270

32,515

22,260

(60,000)

150

3,013

(56,837)

(34,577)

234

$ (34,343)

37


SPECIAL REVENUE FUND - INDUSTRIAL DEVELOPMENT FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES

IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED DECEMBER 31,2009

Budgeted Original

$ 100,000 4,200

104,200

Amounts Final

$ 100,000 4,200

104,200

Actual

S 93,811

93,811

Variance with

Final Budget

$ (6,189) (4,200)

(10,389)

Revenues: Taxes Interest eamed

Total revenues


Economic development Total expenditures


Net change in fund balance Fund balance at beginning of year Fund balance at end of year

42,462 42,462 114,202 71,740 42,462

61,738

61,738 320,304

$382,042

42,462

61,738

61,738 320,304

$382,042

114,202

(20,391)

(20^91) 495,483

$ 475,092

71,740

(82,129)

(82,129) 175,179

$ 93,050

38


SPECIAL REVENUE FUND - POLICE FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES

IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED DECEMBER 31,2009

Budgeted Original

S 47,500 -

12,000 87,200

40 600

147,340

Amounts Final

$ 47,500 -

12,000 87,200

40 600

147,340

Actual

$ 46,905 40,977 10,477 83,074

-980

182,413

Variance with

Final Budget

$ (595) 40,977 (1,523) (4,126)

(40) 380

35,073

Revenues: Taxes Intergovemmental revenues Charges for services Fines Interest eamed Odier revenues

Total revenues


Public safety Capital outlay

Total expenditures


Other financing sources (uses): Transfers in Gain (loss) on sale of capital assets

Total other financing sources (uses)

Net change in fund balance Fund balance (deficit) at beginning of year Fund balance (deficit) at end of year

644,755 50,000

694,755

(547,415)

547,415 -

547,415

-

100 $ 100

644,755 50,000

694,755

(547,415)

547,415 -

547,415

-

100 $ 100

712,699 43,884

756,583

(574,170)

545,677 10368

556,045

(18,125)

(4,108) $(22,233)

67,944 (6,116)

61,828

(26,755)

(1,738) 10,368 8,630

(18,125)

(4,208) S (22,333)

39


NONMAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS COMBINING BALANCE SHEET AS OF DECEMBER 31,2009

ASSETS Cash and cash equivalents Receivables, net Due from other fiinds TOTAL ASSETS

LIABILITIES AND FUND BAL Liabilifies:

Accounts payable Payroll and related liabilities Due to other funds

Total liabilities

Fire $ 76,598

4,528

$ 81,126

ANCES

$ 4,469 50

32,840 37,359

Recreation $ 26,700

4,528

$ 31,228

$ 404

52,979 53,383

Contingency $ 100

4,528 90,850

$ 95,478

$ -

-

Tourism $ 22,149

$ 22,149

$ 989

1,351 2,340

Total Nonmajor

Govemmental Funds

$125,547 13,584 90,850

$229,981

$ 5,862 50

87,170 93,082

Fund balances: Unreserved - undesignated

Total fund balances (deficit) TOTAL LLiBILlTIES AND FUND BALANCES

43,767 (22,155) 95,478 43,767 (22,155) 95,478

19,809 19,809

136,899 136,899

$ 81,126 $ 31,228 $ 95,478 $ 22,149 $229,981

40

TOWN OF HOMER HOMER, LOUISLANA

NONMAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUES, EXPENDFTURES, AND CHANGES IN FUND BALANCES


Revenues: Taxes Intergovemmental revenues Charges for services Interest eamed (Dther revenues

Total revenues


Public safety Culture and recreafion Economic development

Capital outlay Total expenditures

Net change in fund balances Fund balances at beginning of year Fund balances (deficit) at end of year

Fire

$46,905 29,703 5,622

55 -

82,285

96,497 --

15,000 111,497

(29,212) 72,979

$43,767

Recreation

$ 46,903 -580 21

-47,504

-100,660

--

100,660

(53,156) 31,001

$(22,155)

Contingency

S 46,905 --21

-46,926

-----

46,926 48,552

$ 95,478

Tourism

$29,138 --17

3,445 32,600

--

39,338 -

39,338

(6,738) 26,547

$19,809

Total Nonmajor

Govemmental Funds

$169,851 29,703 6,202

114 3,445

209,315

96,497 100,660 39,338 15,000

251,495

(42,180) 179,079

$ 136,899

41


SCHEDULE OF COMPENSATION TO MAYOR AND SELECTMEN FOR THE YEAR ENDED DECEMBER 31, 2009

David M. Newell, Mayor $25,000

Willie Curry^ 2,200 Patricia Jenkins 5,000 Michael T. Johnson 5,000

John C.Moore' 1,000 Michael J. Wade 5,000

Scott Roberson^ 1,000 Carlette Sanford 5,000 Total $49,200

^Served partial year.

^Served in interim period.

^Elected in October 2009 and served the remainder ofthe year.

42

OTHER REPORTS

arwoO' d ^ ^IkeridaM, LLij

Certified Public Accountants

Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Perfomied in Accordance with

Government Auditing Standards Town of Homer Homer, Louisiana

We have audited the accompanying primary government financial statements of the governmental activities, business-type activities, each major fund, and the aggregate remaining fund information ofthe Town of Homer, as of and for the year ended December 31, 2009, which collectively comprise the Town of Homer's primary govemment financial statements and have issued our report thereon dated June 7, 2010. We conducted our audit in accordance with auditing standards generally accepted in the United Slates of America; the standards applicable to fmancial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the Louisiana Govermnental Audit Guide, issued by the Louisiana Society of Certified Public Accountants and the Louisiana Legislative Auditor.

Internal Control over Financial Reportina In planning and performing our audit, wc considered the Town of Homer's intemal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Town of Homer's intemal control over financial reporting. Accordingly, wc do not express an opinion on the eiTectiveness ofthe Town of Homer's internal conlrol over financial reporting.

Our consideration of intemal control over financial reporting was for the hmited purpose described in the preceding paragraph and would not necessarily identif>' all deficiencies in internal control over financial reporfing that might be significant deficiencies or material weaknesses. However, as discussed below, wc identified a certain deficiency in interna! control over financial reporting that we consider to be a significant deficiency.

A control detlciency exists when the design or operation of a control does not allow managenxent 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 Town of Hoiner'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 o^ ihe Town of Homer's financial statements that is more than inconsequential will not be prevented or detected by the Town of Homer's intemal control. We consider the deficiencies identified as 2009-1 and 2009-2. described in the accompanying schedule of findings to be significant deficiencies in internal control over financial reporting.

1900 Roselawn Avenue • Monroe, Louisiana 71201 • (318) 525-6500 • rax (318) 525-1423

Town of Homer Homer, Louisiana

Report on Intemal Control over Financial Reporting and on Compliance and Other Matters December 31, 2009

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

Our consideration ofthe intemal control over financial reporting was for the limited purpose described in the first 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, we consider item 2009-1 and 2009-2 to be material weaknesses.

Compliance and Other Matters As part of obtaining reasonable assurance about whether the Town of Homer's financial statements are fi-ee of material misstatement, we 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 statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

The Town of Homer's responses to the fmdings idenfified in our audit are described in the accompanying correcfive acfion plan. We did not audit the Town of Homer's responses and, accordingly, we express no opinion on them.

This report is intended solely for the information and use ofthe members ofthe Board of Selectmen, management, pass-through entities and the Louisiana Legislative Auditor, and is not intended to be and should not be used by anyone other than these specified parries. Although the intended use of this report may be limited, under Louisiana Revised Statute 24:513, it is issued by the Legislative Auditor as a public document.

HULSEY, HARWOOD & SHERIDAN, LLC

^ ^ , j^tMMiH miSJM^

June 7,2010

44


SCHEDULE OF FINDINGS FOR THE YEAR ENDED DECEMBER 31,2009

A. SUMMARY OF AUDIT RESULTS

1. The auditor's report expresses unqualified opinions on the financial statements of the govemmental activities, business-type activities, each major fiind, and the aggregate remaining fund information of the Town of Homer. Due to the omission of the financial statements ofthe Homer Memorial Hospital, a component unit ofthe Town, the auditor's report expresses an adverse opinion on the aggregate discretely presented component units. The Homer Memorial Hospital issues separate audited financial statements.

2. Two significant deficiencies are reported in the Independent Auditor's Report on Intemal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards. The deficiencies are considered to be material weaknesses.

3. No instances of noncompliance material to the financial statements ofthe Tovm of Homer were disclosed during the audit.

B. FINDINGS - FINANCIAL STATEMENTS

2009-1 Utility Receivables and Revenue Not Properly Reconciled and Managed

First Reported 2003

Condition During our review of intemal control policies and procedures over Enterprise Fund billing and collections and testing of Enterprise Fund receivables and revenues, we noted the following:

• Total revenue did not agree with the sum of the billing and adjustment registers. • Adjustments of $22,741 and $42,136, were recorded to agree the accounts receivable and

meter deposit general ledger accounts, respectively, to the schedules produced by the utility billing system. However, management could not identify the cause ofthe differences.

• Management was unable to produce the detail ofthe accounts receivable schedule that agrees to the recorded receivable. Various printed reports produced inconsistent amounts. The recorded amount of $104,624 agreed to the detailed schedule for which the last page was available. The detailed schedule that was printed during fieldwork totaled $90,753. Of the $90,753, the current portion was negative $14,764.

• We scanned the available December 31, 2009, detailed schedule for past due and unusual account balances. Out of thirty-one accounts selected due to past due or unusual balances, three were determined to be property tax payments posted to the billing system that resulted in negative account balances, and twenty-two were not paid as of March 31, 2010. Out ofthe twenty-two unpaid accounts, nine accounts were still active.

• Out of twenty-five cash receipts selected for testing, nine were payments (counting summary entries made for multiple payments) on ufility accounts. Out of the nine payments, eight payments were deposited three or more days after the payment date.

45


SCHEDULE OF FINDINGS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2009

B. FINDINGS - FINANCIAL STATEMENTS (CONTINUED)

2009-1 Utility Receivables and Revenue Not Properly Reconciled and Managed (Continued)

Criteria • Basic accounting practices include routinely reconciling balance sheet amounts to subsidiary

ledgers. • Basic operating practices include implementing and monitoring a reasonable service termination

policy to prevent loss of revenue. The Town's policy is 40 days.

Cause • The Town's personnel had limited time available after performing their other duties to perform

these procedures or to participate in software training. • The Town's consultant, who works with the Town a limited number of hours per week, was

occupied with various projects including the 2008 audit which was ongoing until late 2009. • The practice of using the utility billing software to track payments on property taxes caused errors

in the utility billing software reports. • Town personnel failed to record billings that were outside of the regular monthly billings. The

Town typically prepares a second billing in the second half of the month to bill customers who have terminated service or whose service has been terminated for lack of payment.

Effect • The risk that financial statement amounts would be misstated due to accounting errors increased.

The increased risk of misstatement increases the nature and extent of audit procedures the auditor must perform thereby increasing the cost ofthe audit.

• The Town may not receive payment for services provided due to allowing service to continue after accounts became past due.

Recommendation We recommend that management implement the following practices:

• Continue working with software support to ensure that the software is operating as designed. • Reconcile the accounts receivable and meter deposit accounts to the appropriate detailed

reports each month end. • In addition to printing registers each fime a billing is prepared, print a monthlv billing register

and a monthlv adjustment register at month end and reconcile monthly billings and adjustments per the utility billing system to revenue recorded in the general ledger.

• Strictly enforce service termination policies. • Continue working with a collection agency. • Ensure that personnel are properly trained to perform their duties including training on the use

of software that must be used to perform their duties.

46




2009-1 Utility Receivables and Revenue Not Properly Reconciled and Managed (Continued)

Corrective Action Plan and Responsible Person The Town has expended extensive effort to reconcile the accounting balance with the Utility Billing System (USB) balance. The results are:

• The income is reconciled monthly with Quickbooks and the UBS to assure all entries on both systems are accounted for. This reconciliation is performed approximately every 10 days to assure timely reporting ofthe income.

• The total Accounts Receivable balance on Quickbooks is reconciled monthly to the aging report on UBS. The reconciliation comprises the income reconciliation as stated above and the payments verified between Quickbooks and UBS. The adjustment is then recorded. If the variance is over 1%, an audit of both systems is performed to determine if any errors occurred and those errors, if discovered, are corrected immediately.

All utility deposits are being sent to the bank within one day of receipt.

The utility service is being terminated as soon as possible upon notice that the payments are not received.

With these steps in place and regular monitoring ofthe utility billing and payment processes, the Town feels the situation is controlled and no longer poses a problem in determining the accuracy of the information contained in the accounts or the two computer systems.

The reconciliations are undertaken by the Town's in-house accountant and reviewed by the Town's financial consuhant each month.

James Colvin, Consultant.


2009-2 Amount Due to the Industrial Development Fund Not Repaid

First Reported 2008

Condition The 2008 audit report included a finding that amounts were improperly transferred from the Industrial Development Fund to the General Fund. Management agreed that $112,861 should not have been transferred. However, the transfer had not been made as of April 2010. The accounting records did not reflect that the amount was due. As a result of further analysis, the amount has been adjusted to $154,648.

47




2009-2 Amount Due to the Industrial Development Fund Not Repaid (Continued)

Criteria A proper intemal control system includes monitoring activities to ensure that necessary actions and related accounting entries are completed.

Cause The responsibility for transferring the funds was assigned to an employee. However, no one followed up to ensure that the transfer was made. The employee stated that funds were not available to make the transfer.

Effect An error has remained uncorrected for more than a year. The 2009 financial statements were misstated by the amount due between funds.

Recommendation We recommend that the Town Clerk be responsible for implementing the Town's corrective action plan each year and that the Board of Selectmen monitor the progress ofthe plan at least on a monthly basis. The Town Clerk may delegate responsibility for portions of the plan but the ultimate responsibility should remain with the Town Clerk. If responsibilities are delegated, the Tovm Clerk should monitor the progress at least monthly and ensure that the plan is implemented on a timely basis.

Corrective Action Plan and Responsible Person We will implement the auditor's recommendations. James Colvin, Consultant.

48


SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS FOR THE YEAR ENDED DECEMBER 31,2009

Fiscal Year Finding Initially

Ref. No. Occurred

Description of

Finding

Planned Corrective Corrective Action/Partial

Action Taken Corrective Yes, No, Partially Action Taken

2008-1 2007 Lack of segregation of duties

2008-2 2008 Complete accounting records not maintained

2008-3 2003 Utility billing software is not operating properly/utility receivable balances not reconciled to general ledger

2008-4 2007 Not adequately managing utility receivables

2008-5 2003 Sales tax proceeds used improperiy

2008-6 2007 Noncompliance with debt agreements

2008-7 2002 Traffic fines not deposited timely and improper

segregation of duties related to traffic fines

2008-8 2007 Reports to retirement system filed late

2008-9 2008 Police supplemental pay reported on IRS Form 1099 instead of Form W-2

2008-10 2008 Transactions with former Mayor violate ethics law

2008-11 2003 Audited financial statements filed late

Yes

Yes

irtially

N/A

N/A

See 2009-1

Partially

No

Yes

Partially

Partially

See 2009-1

N/A

N/A

Segregation of duties has been

improved

One report was filed two days late

Yes

Yes

Yes

N/A

N/A

N/A

49

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