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Town of Roseland
Annual Financial Statements
As of and for the Year Then Ended December 31, 2011 With Supplemental Information Schedules
Town of Roseland
Annual Financial Statements As of and for the Year Ended December 31,2011
With Supplemental Information Schedules
TABLE OF CONTENTS
Independent Auditor's Report
Required Supplemental Information (Part I):
Management's Discussion and Analysis
Basic Financial Statements:
Government-Wide Financial Statements:
Statement of Net Assets
Statement of Activities
Fund Financial Statements;
Governmental Funds Financial Statements:
Balance Sheet, Governmental Funds
Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Fmancial Statement of Net Assets
Statement of Revenues, Expenditures, and Changes in Fund Balances
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities...
Proprietary Fund Financial Statements:
Statement of Net Assets
Statement of Revenues, Expenses and Changes in Net Assets
Statement of Cash Flows
Notes to the Financial Statements
Statement
A
B
D
E
Page
6
10
19
20
22
23
24
25
G
H
I
26
27
28
30
Town of Roseland
Annual Financial Statements As of and for the Year Ended December 31,2011
With Supplemental Information Schedules
TABLE OF CONTENTS
Schedule Page
Required Supplemental Information (Part II):
Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual - General Fund - Summary 1 49
Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual - General Fund - Detail 2 50
Schedule of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual - Special Revenue Fund - Fire Protection Fund 3 53
Other Supplemental Information:
Proprietary Funds - Utility Fund:
Comparative Schedule of Net Assets
Comparative Schedule of Revenues, Expenses and Changes in Net Assets
Comparative Schedule of Cash Flows
Schedule of Revenues, Expenses and Changes in Net Assets
Budget (GAAP Basis) and Actual - Water and Sewer Utility System
Schedule of Water and Sewer Rates
Schedule of Number of Customers
4
5
6
7
8
8
55
56
57
59
60
60
Town of Roseland
Annual Financial Statements As of and for the Year Ended December 31,2011
With Supplemental Information Schedules
TABLE OF CONTENTS
Schedule Page
Schedule of Insurance 9 61
Schedule of Compensation Paid to Board Members 10 62
Summary Schedule of Findings and Questioned Costs 11 63
Summary Scheduleof Prior Year Audit Findings 12 64
Corrective Action Plan for Current Year Audit Findings 13 67
Other Independent Auditor's Reports:
Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Audit Standards 75
This Page Intentionally Left Blank
Bruce c. Harrell, CPA 109 West Minnesota Park • • •• _ . 2 _ n _ | « « _ _ p j^ Place Suite 7
Dale H. Jones, CPA • ^ B • H ^ H B H Eric J. Rodrigue, CPA I K ^ ^ ^ F l Hammond, LA 70403 Kristi U. Bergeron, CPA I B | i 1 ^ H I VOICE: (985) 542-6372 Michael P. Estay, CPA P ^ 2 ^ k H I I ^ ^ ^ - (^85) 345-3156 Jessica H. Jones, CPA • V j ^ ^ g | ^ H | •
^ L ^ H B ^ K V KENTWOOD OFFICE INTERNET ^ B ^ i R l S f l P-0- Box 45 - 909 Avenue G www.teamcpa.com I ' • • Kentwood, LA 70444
B R U C E H A R R E L L VOICE: (985) 229-5955 MEMBERS , P O M P ANY FAX: (985) 229-5951 American Institute of CPAs "^"^ UUIViTATM Y ^ ' Society of Louisiana CPAs CERTIFIED PUBLIC ACCOUNTANTS
A Professional Accounting Corporation
Independent Auditor's Report Honorable Mayor Wanda McCoy and
Members of the Town Council To the Town of Roseland Roseland, Louisiana
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Town of Roseland, Louisiana (hereinafter referred to as "Town") as of and for the year ended December 31,2011, which collectively comprise the Town's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Town's management. Our responsibility is to express opinions on these financial statements based on our audit. The financial statements of the Town of Roseland as of December 31, 2010 were audited by other auditors whose report dated August 22,2011, expressed an unqualified opinion on those statements.
We conducted our audit in accordance with auditing standards, generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are fi-ee 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 accountmg principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit and the report of other auditors provide a reasonable basis for our opinions.
In our opinion based on our audit, the fmancial statements, referred to above present fairly, in all material respects, the financial position of the governmental activities, the business-type activities, and each major fund of the Town of Roseland, Louisiana as of and for the year ended December 31, 2011 in conformity with accoimting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have issued our report dated July 5, 2012 on our consideration of the Town's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on the internal control over fmancial 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 conjunction with this report in considermg the results of our audit.
The management's discussion and analysis on pages 10 -17, and budgetary comparison information on pages 49 -53 are not a required part of the basic financial statements but are supplementary information required by accounting prmcipals generally accepted in the United States of America. Such information, although not a part of the basic financial statements, is required by the Governmental accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economical, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's response to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Town's basic financial statements as a whole. The combining and individual non-major fund financial statements and supplemental information schedules are presented for the purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual non-major fund financial statements have been subjected to the auditing procedures applied in the audit of the basic fmancial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole.
l />^-«^ <^5L.j£ J ^ Bruce Harrell & Company, CPAs A Professional Accounting Corporation
July 5,2012
This Page Intentionally Left Blank
Required Supplemental Information (Part I) Management's Discussion and Analysis
Town of Roseland Management's Discussion and Analysis
As of and for the Year Ended December 31,2011
Introduction
The Town of Roseland, Louisiana (the Town) is pleased to present its Annual Financial Statements developed in compliance with Governmental Accountmg Standards Board Statement No. 34, Basic Financial Statements -Management's Discussion and Analysis - For State and Local Governments (GASB 34), and related standards.
The Town's discussion and analysis is designed to (a) assist the reader in focusing on significant fmancial issues, (b) provide an overview of the Tovm's financial activity, (c) identify changes in the Town's fmancial position, (d) identify any significant variations from the Town's financial plan, and (e) identify individual fund issues or concerns.
Since Management's Discussion and Analysis (MD&A) is designed to focus on the current year's activities, resulting changes, and currently known facts, please read it in conjunction with the Town's financial statements.
Financial Highlights
• At December 31, 2011, the Town's assets exceeded its liabilities by $2,565,872 (net assets). Of this amount, $376,517 (unrestricted net assets) may be used to meet the Town's ongomg obligations to its citizens.
• The most significant on-going continuing revenue sources for governmental activities of the Town consisted of $141,748 m sales tax revenues, $52,242 in property taxes, $29,079 in pubhc utility franchise taxes, and $48,157 for business licenses and permits. Charges for business-type activities of the utility fund were $152,984 in water charges and $90,531 in sewer charges.
• The Town's significant expenditures in the current year for governmental activities included $128,777 for general governmental activities, $120,973 for police and fire protection, and $37,049 for public works, including streets and drainage maintenance. Expenses for business-type activities of the water, and sewer departments totaled $404,086.
• For the year ended December 31, 2011, the Town's bonds payable in long term debt for the proprietary fund decreased by a net of $13,048, resulting in ending bonds payable of $528,161. Debt for governmental activities, consisting of certificates of indebtedness dated July 7, 2008, was paid off to zero with debt payments of $10,000.
10
Town of Roseland Management's Discussion and Analysis
As of and for the Year Ended December 31,2011
Overview of the Annual Financial Report
The fmancial statement focus is on both the Town as a whole and on the major individual funds. Both perspectives, government-wide and major funds, allow the user to address relevant questions, broaden a basis for comparison, and enhance the Town's accountability. The statements then proceed to provide an increasingly detailed look at specific fmancial activities.
The MD&A is intended to serve as an introduction to the Town's basic financial statements, which consist of three components: (1) government-wide fmancial statements, (2) fund fmancial statements, and (3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements.
Government-Wide Financial Statements
The government-wide financial statements are designed to provide readers with a broad overview of the Town's finances in a manner similar to a private-sector business. Governmental activities, which normally are supported by taxes and intergovernmental revenues, and business-type activities, which rely to a significant extent on fees and charges for support are presented in separate columns along with a total column for the primary government. If the Town determines that presentation of a component unit (which are other governmental units for which the Town can exercise significant influences or for which the Primary Government fmancial statements would be misleading if component unit information is not presented) is necessary to allow the reader to determine the relationship of the component unit and primary government, the component unit information is presented in a separate column of the fmancial statements or in a separate footnote. For the current fiscal year, the Town of Roseland has no component units.
The Statement of Net Assets presents information on the Tovra's assets and liabilities using the accrual basis of accounting, in a manner similar to the accounting used by private business enterprises. The difference between the assets and liabilities is reported as net assets. Over time, the increases or decreases in net assets and changes in the components of net assets may serve as a useful indicator of whether the fmancial position of the Town is improving or deteriorating.
The Statement of Activities presents information showing how the Town's net assets changed during the most recent fiscal year, focusing on both the gross and net costs of various activities, both governmental and business-type, that are supported by the Town's general tax and other revenues. This is intended to summarize and simplify the reader's analysis of the cost of various governmental services and/or subsidy to various business-type activities.
In both of the government-wide financial statements, the Town's activities are divided into two types:
Governmental activities - Most of the Town's basic services are reported here, including general government, public safety, streets and sanitation, and health and welfare. These activities are financed primarily by property taxes, franchise taxes, sales taxes, fu-e insurance rebates, and fines.
Business-type activities - The Town charges a fee to customers to help it cover all of the cost of the services provided. The Town's water and sewer utility systems are reported in this section.
11
Town of Roseland Management's Discussion and Analysis
As of and for the Year Ended December 31,2011
As a general rule the effect of interfund activity has been eliminated from the government-wide fmancial statements. Exceptions to this general rule, if applicable, are payments-in-lieu of taxes and other charges between the government's enterprise operations. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned.
Fund Financial Statements
A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Town, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related and legal requirements. The Tovra uses two categories of funds to account for financial transactions: governmental fimds and proprietary funds. Traditional users of governmental financial statements will find the fimd fmancial statements presentation more familiar.
Governmental funds are used to account for most of the Town's basic services. However, unlike the government-wide fmancial statements, governmental fund fmancial statements focus on how money flows into and out of those funds and the balances that are left at year-end that are available for spending. These funds are reported using the modified accrual basis of accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the Town's general government operations and the basic services it provides. Governmental fund information helps to determine whether there are more or fewer fmancial resources that can be spent in the near future to finance the Town's programs.
Proprietary funds account for water and sewer utility services provided by the Town to its customers. Proprietary funds statements provide the same type of information as the government-wide financial statements, but the fund presentation provides more detail.
Because the focus of governmental funds is narrower than that of the government-wide financial statements, there are differences in the information presented for government fimds and for governmental activities in the government-wide fmancial statements. Review of these differences provides the reader of the financial statements insight on the long-term impact of the Town's more immediate decisions on the current use of financial resources. Both the governmental fund Balance Sheet and the governmental fimd Statement of Revenues, Expenditures and Changes in Fund Balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.
Notes to the Financial Statements
The notes to the fmancial statements provide additional mformation that is essential to a full understanding of the data provided in the government-wide and fund financial statements.
12
Town of Roseland Management's Discussion and Analysis
As of and for the Year Ended December 31,2011
Government-Wide Financial Analysis
As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. The following table provides a summary of the Town's net assets for the current year as compared to the prior year.
Assets:
Current and Other Assets $
Capital Assets Total Assets
Liabilities:
Long-Term Debt Outstanding
Other Liabilities Total Liabilities
Net Assets:
Invested in Capital Assets, Net of Related Debt
Restricted Unrestricted
Total Net Assets $ "
Governmei 2011
482,934
705,918 1,188,852
8,014 8,014
705,918
474,920 1,180,838
tal
$
-
$"
Net Assets 2011and2010
Actiwties 2010
(Restated) 368,225 754,313
1,122,538
10,000 14,579 24,579
734,313
3,536 360,110
1,097,959
$
-
$"
Business-! 2011
195,209 1,911,586 2,106,795
509,234 212,527 721,761
1,383,425
100,012 (98,403)
1,385,034
Vpe
$
-
$ '
Activities
2010
222,907 $ 2,017,231 2,240,138
524,570 195,044 719,614
1,469,056
139,039 (87,571)
1,520,524 $
Tota
2011
678,143 2,617,504 3,295,647
509,234 220,541 729,775
2,089,343
100,012
376,517 2,565,872
$
-
$~
2010 (Restated)
591,132 2,771,544 3,362,676
534,570 209,623 744,193
2,203,369
142,575
272,539
2,618,483
Approximately eighty-one percent of the Town's net assets reflect its investment in capital assets (land, buildings, equipment, infrastructure, and improvements) net of any outstanding related debt used to acquire those capital assets. These capital assets are used to provide services to citizens and do not represent resources available for future spending. Although the Town's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets cannot be used to liquidate these liabilities.
Approximately four percent of the Town's net assets represent resources that are subject to external restriction on how they may be used. The Town's restricted net assets primarily consist of cash for capital projects in governmental activities and cash reserves required for customer deposits in business-type activities net of corresponding liabilities. Approximately fifteen percent of the Town's net assets are unrestricted and may be used to meet the Tovra's ongoing obligations to its citizens.
At the end of the current fiscal year, the Town was able to report positive balances in all three categories of net assets, both for the Town as a whole, as well as for separate governmental and business-type activities. The Town's activities decreased its total net assets, before prior period adjustments, by ($52,611), with governmental activities increasing net assets by $82,879 and business-type activities decreasing net assets by ($135,940).
In order to further understand what makes up the changes in net assets, the table on the following page provides a summary of the results of the Town's activities for the current year as compared to the prior year. An analysis of the primary sources of these changes follows the table.
13
Town of Roseland Management's Discussion and Analysis
As of and for the Year Ended December 31,2011
Changes in Net Assets For the years ended December 31, 2011 and 2010
Governmental Activities Business-Type Activities Total
Revenues:
Program Revenues:
Charges for Services $ Operating Grants and Contributions
Capital Grants and Contributions
General Revenues:
Taxes
Intergavemmental
Interest Income
Miscellaneous
Building Lease Proceeds
Total Revenues
Ejqjenses:
General Government
Public Safety
Public Works
Health and Welfare
Water and Sewer Utility
Total Ejqjenses
Change in Net Assets Before Transfers
Transfers (Out) In
Change in Net Assets
Net Assets, Begiiming
Prior Period Adjustments
Net Assets, Beginning
Net Assets, Ending $
2011
52,957 $
-10,750
223,069
5,849
82
2,457
78,000
373,164
128,777
120,973
37,049
3,486
-
290,285
82,879
-
82,879
1,108,649
(10,690)
1,097,959
1,180,838 $
2010
(Restated)
56,366 $ 33,109
24,728
245,346
6,461
148
1,488
76,500
444,146
136,803
175,795
56,796
-
-
369,394
74,752
-
74,752 1,023,207
-1,023,207
1,097,959 $
2011
243,515 $
-25,000
-
-
59
22
-
268,596
-
-
-
-
404,086
404,086
(135,490)
-
(135,490) 1,520,524
-1,520,524
1,385,034 $
2010
267,089 S
• 18,516
-
-
154
582
-
286,341
-
-
-
-
358,819
358,819
(72,478)
-
(72,478) 1,593,002
-1,593,002
1,520,524 $
2011
296,472 $
-35,750
223,069
5,849
141
2,479
78,000
641,760
128,777
120,973
37,049
3,486
404,086
694,371
(52,611)
-
(52,611)
2,629,173
(10,690)
2,618,483
2,565,872 $
2010
(Restated)
323,455
33,109
43,244
245,346
6,461
302
2,070
76,500
730,487
136,803
175,795
56,796
-
358,819
728,213
2,274
-
2,274
2,616,209
-
2,616,209
2,618,483
14
Town of Roseland Management's Discussion and Analysis
As of and for the Year Ended December 31,2011
Governmental Activities
The Town's governmental net assets increased by $82,879 as compared to a prior fiscal year net assets increase of $74,752.
The significant factors in this change in net assets are the result of a ($22,000) decrease in taxes with approximately ($10,000) in sales taxes and ($9,000) in property taxes. Grant revenues decreased ($47,000). The total approximate decrease in revenues was ($71,000).
Operating expenses in governmental activities decreased ($79,000) to offset this drop in revenue. The largest decreases came in fire supplies funded through a 2010 operating grant, which declined ($42,000) and police deputy salaries decreased ($20,000).
Business-Type Activities
The Town's business-type net assets decreased by ($135,490) or nine percent of prior year ending net assets, to $1,520,524. Charges for services decreased by nme percent or ($23,574). Expenses for the utility fund increased $45,267 or thirteen percent. Increases included payroll $12,000, repairs and maintenance $18,000 and deposit differences related to fraud $10,000.
Fund Financial Analysis
As noted earlier, the Town uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.
Governmental Funds
The focus of the Town's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the Town's financing requirements. hi particular, unassigned fimd balance may serve as a useful measure of the Town's net resources available for spending at the end of the year. At the end of the current year, the Town's governmental funds reported combined ending fund balances of $474,920. Fund balance was as follows: non-spendable $2,975, assigned $128,128, and unassigned $343,817.
This represents an increase of $121,274, for all governmental fimds, from the prior year's ending fund balance. Principal payments on long term debt of $10,000 were made in the current fiscal year. The General Fund is the chief operating fund of the Town. At the end of the current year, the total fund balance for the General Fund was $346,792. All funds had a positive ending fund balance.
Proprietary Funds
The Town's proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail.
Governmental Fund Budgetary Highlights Budget information is detailed in Note 2 - Stewardship, Compliance, and Accountability, there were no budget findings Footnote 2 lists budget to-actual reports for other governmental funds, which are presented in die Required Supplementary Information as Schedules 1 -3 .
15
Town of Roseland Management 's Discussion and Analysis
As of and for the Year Ended December 31,2011
Capital Assets and Debt Administration
Capital Assets The Town's investment in capital assets for its governmental and business-type activities as of December 31, 2011 amounts to $2,617,504 (net of depreciation). The total decrease in the Tovm's investment in capital assets for the current fiscal year was $154,040 (net of depreciation). The following table provides a summary of the Town's capital assets (net of depreciation) at the end of the current year as compared to the prior year.
Capital Assets (Net of Depreciation)
2011 and 2010
Capital Assets
Land
BuOdings and Improvements
Machinery and Equipment
Water Utility System
Sewer Utility System
Subtotal Capital Assets
Less: Accumulated Depreciation
Capital Assets, Net
Govemmer
2011
$ 58,693
670,786
482,518
--
1,211,997
(506,079)
$ 705,918
ital
$~
-
^
$_
Activities
2010
58,693
660,036
482,518
--
1,201,247
(446,934)
754,313
Business -Type
Activities
2011
$ 6,500 $
20,640
14,415
2.122.441
2,093,699
4.257,695
(2346,109)
$ 1,911,586 $
2010
6,500 $
20,640
16,871
2,120,930
2,092,754
4,257,695
(2,240,464)
2,017,231 $
Total
2011
65,193
691,426
496,933
2,122,441
2,093,699
5,469,692
(2,852,188)
2,617,504
$ "
-
$
2010
65,193
680,676
499,389
2,120,930
2,092,754
5,458,942
(2,687398)
2,771,544
Significant capital additions for the fiscal year ending December 31, 2011, consisted of the following. For governmental funds, a HVAC unit was added for $10,750 in April 2011. There were no other additions m governmental funds or business-type funds.
Long-Term Debt
At December 31, 2011, the Town had total debt outstanding of $528,161. Of this total, $18,927 (including current bonds payable) is due within one year and $509,234 is due within greater than one year. The following table provides a summary of the Town's outstanding debt at the end of the current year as compared to the prior year.
Outstanding Debt
2011 and 2010
Governmental Activities
2011 2010
Capital Leases $
Revenue Bonds
Total Outstanding Debt $
10,000
Business-Type
Activities Total
2011 2010 2011
528,161
2010
- $ - $ 541,209 528,161 551,209
- $ 10,000 $ 528,161 $ 54139 $ 528,161 $ 551,209
16
Town of Roseland Management's Discussion and Analysis
As of and for the Year Ended December 31,2011
Other Factors Affecting the Town
The Town of Roseland's management approach is conservative. When possible, the Mayor and Aldermen attempt to provide services for the Town based on existing revenues and to borrow for long-term projects only when absolutely necessary, actively pursuing grant funds to minimize the cost of major projects. The Town is facmg increasing costs and has an obligation to its citizens to maintain or increase the level of services being provided.
Contacting the Town's Financial Management
This financial report is designed to provide the Town's citizens, taxpayers, creditors and investors with a general overview of the Town's finances and show the Town's accountability for the money it receives. If you have questions regarding this report or need additional information, contact Stephanie Cutrer, Town Clerk, P.O. Box 302, Roseland, Louisiana 70456.
17
Basic Financial Statements Government-Wide Financial Statements
Statement A Tovm of Roseland
Statement of Net Assets As of December 31,2011
Primary Government
Assets Current Assets:
Cash and Cash Eqiuvalents Recei\̂ fales, Net:
IntergDvemmental Accounts and Other
Due From Other Funds Prepaid Insurance
Total Cuirent Assets
Restricted Assets: Restricted Cash and Cash Equivalents
Total Restricted Assets
Capital Assets: Land Capital Assets, Net
Total Capital Assets
Total Assets
Liabilities Current Liabilities:
Accounts Payable Other Accrued Payables Due To Other Funds Customer Deposits Bonds Payable Accrued Interest on Long Term Debt
Total Current Liabilities
Long Term Liabilities: Bonds Payable
Total Long Term Liabilities
Total Liabilities
Net Assets Invested in Capital Assets, Net of Related Debt Restricted for:
Capital Projects and Debt Service Unrestricted
Total Net Assets
Govenunental Activities
295,778 $
705,918
474,920 1,180,838 $
The accon^anying notes are an integral part of this statement
19
Business-Type Activities
5,813 $
1,383,425
100,012 (98,403)
1,385,034 $
Total
301,591
42,031
8,018
134,132
2,975
482,934
_
-
58,693
647,225
705,918
1,188,852
3,437
4,577
-
-
-
-
8,014
_
-
8,014
-
44,653
-
-
50,466
144,743
144,743
6,500
1,905,086
1,911,586
2,106,795
6,105
990 134,132
44,731
18,927
7,642
212,527
509,234
509,234
721,761
42,031
52,671
134,132
2,975
533,400
144,743
144,743
65,193
2,552,311
2,617,504
3,295,647
9,542
5,567
134,132
44,731
18,927
7,642
220,541
509,234
509,234
729,775
2,089,343
100,012 376,517
2,565,872
statement B
Tonn of Roseland
Statement of Activities
For the year ended December 31,2011
Program Revenues
Capital
Charges Grants &
for Contri-
Services butions
Governmental Activities
General Government
Public Safe^
Public Works
HeaMiandWeiiire
Total Govenunental Activities
Busmess-type Activities
Water and Sewer
Expenses
$ 128,777 $
120,973
37,049
3,486
$ 290,285 $ 52,957 $ 10,750 $ (226,578) (226,578)
48,157 $
4,800
10,750
Net
(Expenses)
Revenues
(80,620)
(116,173)
(26,299)
404,086 243,515 25,( (135,571)
Total Business-type Actffities $ 404,086 $ 243,515 $ 25,000 $ (135,571)
GeneralRevenues:
Taxes:
Property Taxes
Safes Taxes
Franchise Taxes
Intergovernmental
Interest Income
Building Lease Proceeds - Rent
Miscellaneous
Transfers In (Out)
Total General Revenues and Transfer
Change m Net Assets
Net Assets-Beginning
Prior Period Adjustments (Note 18)
Net Assets - Beginnii^ (Restated)
Net Assets-Ending
The accompanying notes are an integral part of this statement
Net (Expenses) Revenues and
Changes of Primaiy Government
Govern- Business-
mental Type
Activities Activities
(80,620)
(116,173)
52,242
141,748
29,079
5,849
82
78,000
2,457
59
22
Total
(80,620)
(116,173)
(226,578)
(135,571) (135,571)
(135,571) (135,571)
52,242
141,748
29,079
5,849
141
78,000
2,479
309,457
82,879
1,108,649
(10,690)
1,097,959
1,180,838 $
81
(135,490)
1,520,524
-
1,520,524
1,385,034 $
309,538
(52,611)
2,629,173
(10,690)
2,618,483
2,565,872
20
Basic Financial Statements Fund Financial Statements
21
Town of Roseland Balance Sheet - Governmental Funds
AsofDecember31,2011
Statement C
Assets Cash Receivables, Net:
Intergovernmental Accounts and Other
Due From Other Funds Prepaid Insurance
Total Assets
General Fund
197,092
22,126 8,018
134,132 2,975
364,343
$
$ '
Fire Protection Special Revenue
Fund
98,686
19,905 -
10,170 -
128,761
$
$ ~
Total Governmental
Funds
295,778
42,031 8,018
144,302 2,975
493,104
Liabilities and Fund Balances Liabilkies:
Accounts Payable Other Accrued E:q)enses Due to Other Funds
Total Liabilities
3,437 3,944
10,170 17,551
633
633
3,437 4,577
10,170 18,184
Fund Balances: Nonspendable Assigned Unass^ed Fund Balances
Total Fund Balances
2,975
343,817 346,792
Total Liabilities and Fund Balances $ 364,343 $
The accon:5>anying notes are an integral part of this statement.
128,128
128,128
128,761 $
2,975 128,128 343,817 474,920
493,104
22
Statement D
Town of Roseland Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide Fmancial Statement of Net Assets AsofDecember31,2011
Amounts reported for governmental activities in tiie Statement of Net Assets are different because:
Fund Balances, Total Govenunental Funds (Statement Q 474,920
Capital assets used in governmental activiies are not financial resources and are therefore not reported in the governmental fimds.
Governmental capital assets net of depreciation 705,918
Net Assets of Governmental Activities (Statement A) $ 1,180,838
The accon^anying notes are an integral part of this statement
23
Statement E Town of Roseland
Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds
For the year ended December 31,2011
Revenues Taxes Licenses and Permits Intergovernmental Charges for Services Interest Other
Total Revenues
Expenditures General Government Public Safety:
Police Fire
Public Works Health and Welfere Capital Outlays
Total Expenditures
Excess of Revenues Over (Under) Expenditures
Other Financing Sources (Uses) Bond Principal Bond Interest Ejipense Building Lease Proceeds
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances, Beginning Before Prior Period Adjustments Prior Perbd Adjustments (Note 18)
Fund Balances, Beginning After Prior Period Adjustments
Fund Balances, Ending
General Fund
$ 191,412 $ 44,632 16,599 4,800
54 4,446
261,943
110,733
49,133 28,056 31,749
3,486 10,750
233,907
28,036
(10,000) (909)
78,000
67,091
95,127
255,585 (3,920)
251,665
$ 346,792 $
Fire Protection Special Revenue
Fund
33,193 $ -
-
-
28 -
33,221
-
-
7,074 -
-
-
7,074
26,147
-
-
-
-
26,147
108,751 (6,770)
101,981
128,128 $
Total Governmental
Funds
224,605 44,632 16,599 4,800
82 4,446
295,164
-
110,733 -
49,133 35,130 31,749
3,486 10,750
240,981
54,183
(10,000) (909)
78,000
67,091
121,274
364,336 (10,690)
353,646
474,920
The accompanying notes are an integral part of this statement.
24
statement F Town of Roseland
ReconciUation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds
to the Statement of Activities Forthe year ended December 31,2011
Amounts reported for governmental activities in the Statement of Activities are diferent because:
Net Change in Fund Balances, Total Governmental Funds, Statement E $ 121,274
Governmental fimds report capital outlays as ejqjenditures. However, in the statement of activities the cost of these assets are allocated over their estimated usefijl lives and reported as depreciation e)q)ense. This is the amount by which depreciation exceeded capital outlays in the current period.
Ejq)enditures for capital assets
Capital asset additbns $ 10,750 Less;
Current year depreciatbn (59,145) (48,395)
Repayment of bond princ^al and capital lease princpal is an ejq5enditure in governmental fimds but the repayment reduces long-term liabilities in tiie statement of net assets. Proceeds obtained from obtaining fong term debt are treated as revenue in governmental fimds but the amounts increase long-term liabilities in the statement of net assets.
Princ5)al payments - fong term debt 10,000 10,000
Change in Net Assets of Governmental Activities, Statement B $ 82,879
The acconpanying notes are an integral part of this statement
25
Sta tement G Town of Rose l and
S t a t emen t of N e t Asse t s - Propr ie tary Funds As of D e c e m b e r S l , 2011
Asse t s Current Assets:
Cash and Cash Equivalents $ 5,813 Accounts Receivables, Ne t 41,276 Other Receivables 3,377
Total Current Assets 50,466
Restricted Assets: Restricted Cash and Cash Equivalents 144,743
Total Restricted Assets 144,743
Capital Assets Land 6,500 Capital Assets, Ne t 1,905,086
Total Capital Assets 1,911,586
Tota l Asse t s 2,106,795
Liabilities Current Liabilities (Payable From Current Assets):
Accounts Payable 6,105 Other Accrued Payables 990 Due To Other Funds 134,132
Total Current Liabilities (Payable From Current Assets) 141,227
Current Liabilities (Payable From Restricted Assets): Customer Deposits 44,731 Revenue Bonds Payable 18,927 Interest Payable on Long Term Debt 7,642
Total Current Liabilities (Payable From Restricted Assets) 71,300
Long Term Liabilities: Bonds Payable 509,234
Total Long Term Liabilities 509,234
Tota l Liabilities 721,761
N e t Asse t s Invested in Capital Assets, Ne t of Related Debt 1,383,425 Restricted for:
Capital Projects and Debt Service 100,012 Unrestricted (98,403)
Tota l N e t Asse ts $ 1,385,034
The acconqsanying notes are an integral part of this statement.
26
Statement H Town of Roseland
Statement of Revenues, Expenses and Changes in Net Assets - Proprietary Funds
Forthe year ended December 31, 2011
Business-Type Activities
UtiUty Fund Operating Revenues
Water Sales $ 141,029 Sewer Service Charges 90,531 Penalties 11,015 Intergovernmental 25,000 Other 962
Total Operating Revenues 268,537
Operating Expenses Contract Services 18,000 Deficit in Deposits due to Fraud 10,005 Depreciation 105,644 Insurance 15,985 Meter Reading 6,525 Payroll Taxes 6,017 Professional Fees 12,430 Repairs and Maintenance 69,367 Salaries and Wages 78,655 Si^plies 4,779 Utilities 20,237 Other 17,241
Total Operating Expenses 364,885
Operating Income (Loss) (96,348)
Nonoperating Revenues (Expenses)
Interest Income 59 Interest E?q)ense (39,201)
Total Nonoperating Revenues (Expenses) (39,142)
Change m Net Assets (135,490)
Total Net Assets, Beginning 1,520,524 Total Net Assets, Ending $ 1,385,034
The acconpanying notes are an integral part of this statement.
27
Statement I Town of Roseland
Statement of Cash Flows -Proprietaiy Funds
Forthe year ended December 31,2011 Enterprise Fund
Cash Flows From Operating Activities Received From Customers $ 241,196 Paid for Meter Deposit Fees (1,087) Other Rece5)ts 25,166 Receq t̂ for Interfund Services 17,749 Payments for Operations (176,712) Payments to Einployees (̂ 4,672)̂
Net Cash Provided (Used) by Operating Activities
Cash Flows From Capital and Related Financing Activities Repayments for Long Term Debt Interest Payments for Long Term Debt
Net Cash Provided (Used) by Capital and Related Financing Activities
Cash Flows From Investing Activities Receq t̂ of Interest
Net Cash Provided (Used) by Investing Activities
Net Decrease in Cash and Cash Equivalents Cash and Cash Equivalents, Beginning of Year
Cash and Cash Equivalents, End of Year
Reconciliation of Cash and Cash Equivalents to the Statement of Net Assets: Cash and Cash Equivalents, Unrestricted Cash and Cash Equivalents, Restricted
Total Cash and Cash Equivalents
Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities Operating hicome (Loss) $ (96,348) Adjustments to Reconcile Operating Loss to Net Cash Provided by Operating Activities:
Depreciation and amortization 105,644 (Increase) Decrease in Accounts Receivable (1,379) Decrease in Other Receivable (796) Decrease in Due (to) and from Other Funds 17,749 (Decrease) Increase in Accounts Payable (2,395) (Decrease) Increase in Accrued Ej^enses 252 (Decrease) Increase in Customer Deposits (1,087)
Net Cash Provided by Operating Activities $ 21,640
The acconpanying notes are an integral part of this statement.
28
21,640
(13,048)
(38,525)
(51,573)
60 60
(29,873)
180,429
$
$
$
150,556
5,813
144,743
150,556
Basic Financial Statements *̂ otes to the Financial Statements
29
Town of Roseland Notes to the Financial Statements
As of and for the Year Ended December 31,2011
Iiitroduction
The Town of Roseland was incorporated January 4, 1892, under the provisions of the Lawrason Act (Louisiana Revised Statutes (R.S.) 33:321-481) of the constitution of the State of Louisiana. The Town is located in the Parish of Tangipahoa and has a population of approximately 1,123, per the 2010 U.S. Census. The Town operates under a Board of Councilman - Mayor form of government and, as permitted under the act, provides police protection, fire protection, roads, streets, and sidewalks; sponsorship of federal and state supported programs; water and sewer utilities and other necessary public services.
Utility services are provided for 584 water customers, and 345 sewer customers. The Town employed approximately nine full-time employees in addition to the Mayor and Board of Aldermen.
The accounting and reporting policies of the Town of Roseland conform to generally accepted accounting principles as applicable to governments. Such accoimting and reporting procedures also conform to the requirements of Louisiana Revised Statutes 24:513 and to the guides set forth in the Louisiana Governmental Audit Guide, and to the industry audit guide. Audits of State and Local Governmental Units.
Governmental Accounting Standards Board (GASB) Statement No. 14 established criteria for determining the reporting entity and component units that should be included within the reporting entity. Under provisions of this statement, the Town of Roseland is considered a primary govemment, since it is a special purpose govemment that has a separately elected governing body, is legally separate, and is fiscally independent of other state and local governments. As used in GASB Statement No. 14, fiscally independent means that the Town may, without the approval or consent of another governmental entity, determine or modify its own budget, levy its own taxes or set rates or charges, and issue bonded debt. There are no other component units which the Town of Roseland has an oversight relationship.
1. Summary of Significant Accounting Policies
A. Government-Wide and Fund Financial Statements
The govemment-wide financial statements (i.e., the statement of nets assets and the statement of changes in net assets) report information on all nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. Likewise, a 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 function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use or directly benefit fi*om goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues.
30
Town of Roseland Notes to the Financial Statements
As of and for the Year Ended December 31,2011
Separate financial statements are provided for govenmiental funds, proprietary funds, and fiduciary fimds, even though the latter are excluded fi^om the govemment-wide financial statements. Major individual governmental fimds and major individual enterprise funds are presented as separate columns in the fund financial statements.
6 . Measurement Focus, Basis of Accounting, and Financial Statement Presentation
The govemment-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.
Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accmal basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the govemment considers revenues to be available if they are collected withm 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.
Property taxes, franchise taxes, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessment receivable, if any, due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the govemment.
The Town reports the following major governmental funds:
The General Fimd is the Town's primary operating fund. It accounts for all financial resources of the general govemment, except those required to be accounted for in another fund.
The Fire Protection Special Revenue Fund accounts for the receipt and disbursement of a ten year ten mill ad valorem tax dedicated for acquiring, constmcting, improving, maintaining, and operating facilities and equipment to provide fire protection and emergency medical service.
The Town reports the following major proprietary funds:
The Enterprise Funds account for operations (a) that are financed and operated in a maimer similar to private business enterprise where the intent of the goveming body is that costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user fees, or (b) where the goveming body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes. The Town maintains one Enterprise fund, the Waterworks and Sewer Fund, which provides water and sewer services.
31
Town of Roseland Notes to the Fmancial Statements
As of and for the Year Ended December 31,2011
private-sector standards of accounting and financial reporting issued prior to December 1,1989, generally are followed in both the govemment-wide and proprietary fund fmancial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent 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 rule, the effect of interfiind activity has been eliminated from the govemment-wide financial statements. Exceptions to this general rule, if applicable, are payments-in-lieu of taxes and other charges between the government's enterprise operations. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned.
Amounts reported as program revenues include 1) charges to customers or applicants for goods, services. Of privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes.
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 proprietary funds are user charges for the services provided by the enterprise funds. Operating expenses for enterprise funds and internal service funds include 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.
C. 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 and the Town's investment policy allow the Town to invest in collateralized certificates of deposit, government-backed securities, commercial paper, the state-sponsored investment pool, and mutual funds consisting solely of government-backed securities.
Investments for the Town are reported at fair market value. The state investment pool, LAMP, operates in accordance with state laws and regulations. The reported value of the pool is the same as the fair value of the pool shares.
D, Receivables and Payables
Activity between funds that are representative of lendmg/borrowing arrangements outstanding at the end of the fiscal year are referred to as either "due to/from other funds" (i.e., ihe current portion of interfund loans) or "advances to/from other funds" (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as "due to/from other funds." Any residual balances outstanding between the governmental activities and business-type activities are reported in the govemment-wide financial statements as "intemal balances."
32
Town of Roseland Notes to the Financial Statements
As of and for the Year Ended December 31,2011
Advances between funds, as reported in the fund fmancial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available fmancial resources.
All trade and property tax receivables are shown net of an allowance for uncollectible amounts.
Property taxes are levied on a calendar year basis and become due on January 1 of each year. The following is a summary of authorized and levied ad valorem taxes
Authorized Levied Millage Millage
General Alimony 5.79 mills 5.79 mills Fire Protection 10 mills 10 mills
Sales and use taxes are levied at one percent as authorized by Ordinance Number 158 adopted November 6, 1967. An additional one percent sales and use tax was authorized by the adoption of Ordinance Number 182, which revised and extended the sales tax to two percent effective April 12, 1982. The tax may be used for any lawful purpose.
E. Inventories and Prepaid Items
All inventories are valued at cost using the first-in/first-out method. Inventories of the governmental funds are recorded as expenditures when consumed rather than when purchased. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both govemment-wide and fund financial statements.
F. Restricted Assets
Certain proceeds of the enterprise fund revenue bonds, as well as certain resources set aside for their repayment, are classified as restricted assets because their use is limited by applicable bond covenants.
G. Capital Assets
Capital assets, which include property, plant, equipment, and infi-astructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the govemment-wide 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 municipality maintains a threshold level of $500 or more for capitalizing capital assets.
The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized.
Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the constmction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed.
33
Town of Roseland Notes to the Financial Statements
As of and for the Year Ended December 31,2011
All capital assets, other than land, are depreciated using the straight-line method over the following useftil Hves:
Description Estimated Lives Governmental Funds: Buildings & Improvements 20 - 40 Years Furniture and Fixtures 5 - 10 Years Vehicles 5 Years Machinery and Equipment 5 - 1 5 Years
Water and Sewer Fund:
Wells 20 - 40 Years Storage Tanks 20 - 40 Years Lines and Meters 30 - 50 Years Water System 20 - 50 Years Sewer System 20 - 50 Years Miscellaneous Equipment 5 - 10 Years
H, Compensated Absences
Permanent (full-time employees subject to a six-month probationary period) earn annual leave on the anniversary date of their employment based on years of service. Annual leave is earned as follows: after one year, five days of leave, after two years, ten days and after four years, fifteen days.
Annual leave accrues without limit. Leave is paid to an employee at the time of separation of employment provided that the employee was not dismissed for theft of Town property. The accrued annual leave is not considered material. No liability is recorded for leave in the accompanying statements.
Sick Leave is eamed at the rate of one day per month. Any unused sick leave at the end of a calendar year may be accmed up to ninety days but can be used only for major medical leave. There is no payment for accrued sick or medical leave upon retirement or termination. Therfore, accmal of the liability for unused sick leave is not required.
I. Long-Term Obligations
In the govemment-wide financial statements and the proprietary fund types in the fund financial statements, Jong-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund 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 of the related debt.
In the fund financial statements, governmental fund types recognize bond premiums and discounts as well as bond issuance costs during the current period. The face amount of the debt issued is reported as other
34
Town of Roseland Notes to the Financial Statements
As of and for the Year Ended December 31,2011
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.
J. Fund Equity
In the govemment-wide financial statements, net assets are classified in the following categories:
• Invested in capital assets, net of related debt. This component of net assets mcludes capital assets, net of accumulated depreciation, reduced by the outstanding balance of any bonds, or indebtedness attributable to the acquisition, constmction, or improvement of those assets. If there are significant unspent proceeds at year-end, the portion of the debt attributable to the unspent proceeds is not included in the calculation of invested in capital assets, net of related debt. Rather, that portion of the debt is included in the same net asset calculation as unspent proceeds.
35
Town of Roseland Notes to the Financial Statements
As of and for the Year Ended December 31,2011
• Restricted. This component of net assets consists of constraints placed on net asset use through external constraints imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments or constraints imposed by law through constitutional provisions or enabling legislation.
• Unrestricted. This component of net assets consists of net assets that do not meet the definition of "restricted" or "invested in capital assets, net of related debt."
In the fund statements, governmental fund equity is classified as fund balance. The Town adopted GASB 54 for the year ended December 31,2011. As such, fund balances of governmental funds are classified as follows:
• Nonspendable. These are amounts that can not be spent either, because they are in a nonspendable form or because they are legally or contractually required to be maintained intact.
• Restricted. These are amounts that can be spent only for specific purposes, because of constitutional provisions, enablmg legislation or constraints that are extemally imposed by creditors, grantors, contributors, or the laws or regulations of other governments.
• Committed. These are amounts that can be used only for specific purposes determined by a formal decision of the Board, which is the highest level of decision making authority for the Tovm.
• Assigned. These are amounts that do not meet the criteria to be classified as restricted or committed, but are intended to be used for specific purposes.
• Unassigned. These are all other spendable amounts.
K. Comparative Data/Reclassifications
Comparative total data for the prior year have been presented only for individual enterprise funds in the fimd financial statements in order to provide an understanding of the changes in the financial position and operations of these funds. Certain amounts presented in the prior year data have been reclassified in order to be consistent with the current year's presentation. All prior period adjustments recorded in the current period have been reflected in prior period data presented wherever possible.
L, Extraordinary and Special Items
Extraordinary items are transactions or events that are both unusual in nature and infi-equent in occurrence. Special items are transactions or events within the control of the municipality, which are either unusual in nature or infrequent in occurrence.
M. 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 amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the fmancial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ fi-om those estimates.
36
Town of Roseland Notes to the Financial Statements
As of and for the Year Ended December 31,2011
N. Reconciliations of Government-Wide and Fund Financial Statements
Explanation of certain differences between the governmental fund balance sheet and the govemment-wide statement of net assets is presented in Statement D of the basic financial statements. Explanation of certain differences between the govemmental fund statement of revenues, expenses, and changes in fund balances and the govemment-wide statement of activities is presented in Statement F of the basic financial statements.
2. Stewardship, Compliance and Accountability
The Town uses the following budget practices:
1. The Town Clerk prepares a proposed budget and submits same to the Mayor and Board of Aldermen no later than fifteen days prior to the beginning of each fiscal year.
2. A summary of the proposed budget is published and the public notified that the proposed budget is available for public mspection. At the same time, a public hearing is called.
3. A public hearing is held on the proposed budget at least ten days after publication of the call for the hearing.
4. After the holding of the public hearmg and completion of all action necessary to finalize and implement the budget, the budget is adopted through passage of an ordinance prior to the commencement of die fiscal year for which the budget is being adopted.
5. After the holding of the public hearing and completion of all action necessary to finalize and implement the budget, the budget is adopted through passage of an ordinance prior to the commencement of the fiscal year for which the budget is being adopted.
6. Budgetary amendments involving the transfer of funds from one department, program or function to another or involving the increase in expenditures resultmg fr"om revenues exceeding amounts estimated require the approval of the Board of Aldermen.
7. All budgetary appropriations lapse at the end of each fiscal year.
8. Budgets for the general and enterprise funds are adopted on a basis consistent with generally accepted accounting principles (GAAP). Budgets for enterprise funds are presented on the accmal basis of accounting. Other governmental funds are presented on the modified accmal basis of accounting. Accordingly, the budgetary comparison schedules present actual expenditures in accordance with the accounting principles generally accepted m the United States on a basis consistent with the legally adopted budgets as amended. All budgetary amounts presented reflect the original budget and the amended budget (which have been adjusted for legally authorized revisions of the annual budget during the year).
37
Town of Roseland Notes to the Financial Statements
As of and for the Year Ended December 31,2011
The proposed budget for December 31, 2011 was made available for public mspection on November 24, 2010. The proposed budget, prepared on the modified accmal basis of accountmg, was published on November 24, December 1 and December 8, prior to the public hearing which was held at the Town of Roseland's City Hall on December 9, 2010, for comments by taxpayers. The budget was legally adopted by the board of aldermen on December 9, 2010.
The Town was in compliance with the Local Government Budget Act, for the fiscal year ended December 31,2011.
3. Cash and Cash Equivalents
At December 31,20II, the Town has cash and cash equivalents (book balances), as follows:
Demand Deposits $ 446,334 $ 446,334
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.
At December 31, 2011, the Town has $496,908 in deposits (collected bank balances), within one bank, consisting of demand deposits. The demand deposits are secured from risk by $250,000 of federal deposit insurance and $246,908 of pledged securities held by the custodial bank in the name of the fiscal agent bank (GASB Category 3).
Even though the pledged securities are considered uncollateralized (Category 3) under the provisions of GASB Statement 3, Louisiana Revised Statute 39:1229 imposes a statutory requirement on the custodial bank to advertise and sell the pledged securities within 10 days of being notified by the municipality that the fiscal agent has failed to pay deposited funds upon demand.
4. Investments
Investments are categorized into these three categories of credit risk:
1. Insured or registered, or securities held by the town or its agent in the Town's name 2. Uninsured and unregistered, with securities held by the counterparty's trust department or agent
in the Town's name 3. Unmsured and unregistered, with securities held by the counterparty, or by its trust department or
agent but not in the Town's name
At December 31,2011, the Town's did not hold any mvestments.
38
Town of Roseland Notes to the Financial Statements
As of and for the Year Ended December 31,2011
When held all investments are typically stated on the balance sheet (carrying value) at market value. All investments are in the name of the Town and are held at the Town's office. Because these investments are in the name of the Town and are held by the Town or the Town's agent, the investments are considered insured and registered. Category (1), in applying the credit risk of GASB Codification Section 150.164.
Interest Rate Risk: The Town does not have a formal investment policy that limits investments maturities as a means of managing its exposure to fair value arising from increasing interest rates.
5. Receivables
In the govemment-wide statements, receivables consist of all revenues eamed at year-end and not yet received. Allowances for uncollectible accounts are based upon historical trends and the period aging and write-off of accounts receivable. Major receivables balances for the govemmental activities include sales taxes, franchise taxes, occupational licenses, and fines. Business-type activities report utilities earnings as their major receivable.
In the fund financial statements, material receivables in governmental funds include revenue accmals such as sales tax, franchise taxes, occupational licenses, fines, and other similar intergovernmental revenues since they are usually both measurable and available. Non-exchange transactions collectible but not available are deferred in the fund financial statements in accordance with modified accrual, but not deferred in the govemment-wide financial statements in accordance with the accmal basis. Interest and investment earnings are recorded only if paid within 60 days since they would be considered both measurable and available. Proprietary fund revenues consist of all revenues eamed at year-end and not yet received. Utility accounts receivable comprise the majority of proprietary fund receivables. Allowances for uncollectible accounts receivable are based upon historical trends and the periodic aging and write-off of accounts receivable.
The Govemmental Fund receivables at December 31,2011 consist of the following:
Govemment Receivables Taxes:
Ad Valorem Sales Tax Receivable Franchise Tax
Total Govemment Receivables
—
$
$ 1
General Fund
11,525 10,601 8,018
30,144
—
$
$ 1
Special Revenue
Funds
19,905 --
19,905
$
sZ
Total
31,430 10,601 8,018
50,049
39
Town of Roseland Notes to the Financial Statements
As of and for the Year Ended December 31,2011
The Enterprise Fund accounts receivable at December 31,2011 consist of the following: Enterprise Accounts Receivable Fund
Current $ 20,946 31 -60 Days 8,142 61-90 Days 6,041 Over 90 Days 45,973
Subtotal 81,102 Less Allowance for Bad Debt (45,000) Accounts Receivables, Net 36,102 Other Receivables 3,377 Unbilled Receivables 5,174
Total Accounts Receivable $ 44,653
6. Restricted Assets
The following is a listing of the restricted assets for the fund financial statements on December 31,2011:
The Restricted Assets for all funds at December 31,2011 consist of the folfowing:
Restricted Assets
Cash and Cash Equivalents Customer Deposits Bond Reserve Account
Bond Contingency Account Total Restricted Assets
-
$
$'
Special General Revenue
Fund Funds
- $ -
-
- $
$
$
Enterprise Fund Total
45,124 $ 45,124
55,143 55,143 44,476 44,476
144,743 $ 144,743
7. Interfund Receivables/Payables
The following is a detailed list of interfund balances for fund financial statements on December 31,2011:
Due From Due To Interfund Balances Other Funds Other Funds
Genera! Fund Volunteer Fire Fund $ - $ 10,170 Enterprise Fund 134,132
Special Revenue Funds Volunteer Fire Fund
General Fund 10,170 Enterprise Fund
General Fund -_ 134,132 Total Inte rfimd B alances $ 144,302 $ 144,302
40
Town of Roseland Notes to the Financial Statements
As of and for the Year Ended December 31,2011
8. Capital Assets
The following is a summary of the changes in capital assets for govemmental activities for the fiscal ended December 31,2011:
year
Govemmental Activities Capital Assets: Capital Assets Not Being Depreciated:
Land Construction in Progress
Total Capital Assets Not Being Depreciated
Capital Assets Being Depreciated: Buildings and Improvements Machinery and Equipment
Total Capital Assets Being Depreciated
Less Accumulated Depreciation for: Buildings and Improvements Machinery and Equipment
Total Accumulated Depreciation
Total Capita! Assets Being Depreciated, Net Total Govemmental Activities Capital Assets, Net
Beginning Balance
58,693 $
58,693
660,036 482,518
$
1,142,554
(167,926) (279,008) (446,934)
695,620
754,313 $ Depreciation was charged to governmental functions as follows:
General Govemment Public Safety - Police Public Safety - Fire Public Works
Increases Decreases
10,750
10,750
(17,940) (41,205) (59,145)
(48,395)
(48,395) $
Ending Balance
58,693
58,693
670,786 482,518
1,153,304
(185,866) (320,213) (506,079)
647,225
705,918
17,135 6,778
29,932 5300
59,145
41
Town of Roseland Notes to the Financial Statements
As of and for the Year Ended December 31,2011
Capital assets and depreciation activity as of and for the year ended December 31, 2011 for business activities is as follows:
Beginning
Balance
-type
Business -Type Activities Capital Assets:
Capital Assets Not Being Depreciated:
Land
Constructbn in Progress
Total Capital Assets Not Being Depreciated
Capital Assets Being Depreciated:
Buildings and Improvements
Machinery and Equipment
Water Utility System
Sewer Utilily System
Total Capital Assets Being Depreciated
Less Accumulated Depreciation for:
Buildings and Improvements
Machineiy and Equipment
Water Utilily System
Sewer Utility System
Total Accumulated Depreciation
Total Capita! Assets Being Depreciated, Net
Total Business - Type Activities Capital Assets, Net
Increases Decreases
6,500 $
6,500
20,640
16,871
2,120,930
2,092,754
4,251,195
(18304)
(13,958)
(U32,862)
(975,341)
(2,240,465)
2,010,730
2,017,230 $
-
-
-
-
-
-
(872)
(243)
(39,005)
(65,524)
(105,644)
(105,644)
(105,644)
$
Adjustments
- $
-
(2,456)
1,511
945
-
-
-
- $
Ending
Balance
6,500
6,500
20,640
14,415
2,122,441
2,093,699
4,251,195
(19,176)
(14,201)
(1,271,867)
(1,040,865)
(2,346,109)
1,905,086
1,911,586
42
Town of Roseland Notes to the Financial Statements
As of and for the Year Ended December 31,2011
9. Interfund Transfers
There were no interfund transfers between funds for the year ended December 31,2011.
10. Accounts, Salaries, and Other Payables
Fund payables at December 31, 2011 are as follows:
Funds Payable
Accounts
Payroll Tax Related Liabilities
Deferred Ad Valorem Revenue
Other
General
Fund
3,437 $
2,683
367 894
Volunteer
Fire Fund
- $
-
633 -
Utilty Fund
6,105
-
-
990
$
Total
9,542
2,683
1,000
1,884
7,381 $ 633 $ 7,095 $ 15,109 Total Funds Payable
11. Short-Term Debt
The Town had no short-term debt outstanding at December 31, 2011, other than the current portions of revenue bonds payables described in the long term debt footnote.
12, Long-Term Obligations
The following is a summary of long-term obligation transactions for the year ended December 31, 2011;
Governmental Activities Business-Type Activities Total
Beginning Balance $
Additbns
Deletions
Scheduled Payments
Ending Balance $
Capital Leases
-
-
-
-
$
1 $
Certificates of Indebtedness
10,000 $
-
(10,000)
- $
Capital Leases
-
-
-
$
z$z
Revenue
Bonds
541,209 $
-
(13,048)
528,161 $
Long-Term
Obligations
55139 -
(23,048)
528,161
The following is a summary of the current (due in one year or less) and the long-term (due in more than one year) portions of the long-term obligations:
Govemmental Activities Business-Type Activities
Cuirent LongTeim
Poition Portion Total
Current Long Terra Portion Portion Total
Govemmental Activities
Revenue Bonds $ 18,927 $ 509,234 $ 528,161 $
$ 18,927 $ 509,234 $ 528,161 $
Total
Long-Term
Obligations
528,161
528,161
43
Town of Roseland Notes to the Financial Statements
As of and for the Year Ended December 31,2011
Bonds Payable as of December 31,2011 are as follows: Bonds Payable Due Within One
End of Year Year Business Type: $ 472,500 of Sewer Revenue Bonds, Series A
Dated 01/22/88 , due in monthty installments of princqial and interest of $2,758 , through 01/22/2028, interest at 6.34%. $ 334,545 $ 12,117
Business Type: $ 272,000 of Sewer Revenue Bonds, Series B Dated 5/23/88 , due in monthly installments of principal and interest of
$1,540 , through 05/23/2028, interest at 6.125%. 193,616 6,810
$ 528,161 $ 18,927
The annual requirements to amortize all debt outstanding at December 31, 2011, including interest payments of $320,565 are as follows:
Year Ending 12/31/11
2012 2013 2014 2015 2016
2017 to 2021 2022 to 2026 2027 to 2031
$472,000 Utility Revenue Bonds
91-01 $ 33,094 $
33,094 33,094 33,094 33,094
165,470 165,470 41,826
$ 538,236 $
$272,000 Utility Revenue Bonds
92-03 18,480 $ 18,480 18,480 18,480 18,480 92,400 92,400 33,290
310,490 $
Total 51,574 51,574 51,574 51,574 51,574
257,870 257,870 75,116
848,726
13. Flow of Funds, Restrictions on Use - Enterprise Fund Bonds
Water and Sewer Revenue Bonds
The Water and Sewer Revenue Bonds, Series A and B, issued by the United States Department of Agriculture, Rural Utilities Service, require that all income and revenues eamed or derived from the operation of the system be deposited in the Revenue Fund. Out of the funds on deposit in the Revenue Fund, after reasonable and necessary expenses of operating the system have been paid, moneys are to be transferred to the Reserve Fund and/or the Contingency Fund as provided in the Resolution.
The Reserve Fund is maintained solely for the purpose of paying the principal of and mterest on bonds payable as to which there would otherwise be default. A monthly sum equal to one twelfth of five percent of the highest annual bond payments or $137 for Series A and $77 for Series B must be deposited mto this fimd no later than the 20* day of each month until $33,094 for Series A and $18,480 for Series B is on deposit therein for a total of $51,574. This Reserve Fund is fully funded at December 31, 2011 with a balance maintained of $55,143.
44
Town of Roseland Notes to the Financial Statements
As of and for the Year Ended December 31,2011
The Contingency Fund is established to care for depreciation, extensions, additions, improvements, renewals and replacements necessary to operate properly the System, by transferring from die Revenue Fund on or before the 20''' day of each month of each year a sum of $221. In addition to caring for depreciation, extensions, additions, improvements, renewals and replacements necessary to properly operate the System, the money in the Contingency Fund may also be used to pay the principal of and the interest on the bonds including any additional pari passu bonds issued hereafter in the manner provided by the Resolution, for the payment of which there is not sufficient money in the Reserve Funds. This Contingency Fund is fully funded at December 31,2011 with a balance maintained of $44,476.
Per Bond Covenants, the Town Council and the Mayor must maintain rates for utility services to provide for the payment of all reasonable and necessary expenses of the System, bond principal and interest payments, and the funding of required reserve accounts. As noted within the Corrective Action for Current Year Audit Findings (Finding 11-1), the Tovm incurred a net loss of $135,490 forthe fiscal year ended December 31, 2011. The Town is also required by bond covenants to shut off delinquent customer accounts water services to a customer whose account is not paid within forty days of the billing date. Past due and delinquent accounts are detailed in Footnote 5- Receivables.
14. Retirement Systems
All employees of the town are members of the social security system. In addition to employee payroll deductions. Town funds are remitted to match employee contributions. Town contributions to the social security system for the year ended December 31, 2011 were $12,582.
15. Economic Development Award Agreement and Building Lease Proceeds and Revenue
On May 3, 2000 an Economic Development Award Agreement between the Louisiana Department of Economic Development, Karts International, (the Company), and the Town of Roseland (the Sponsoring Entity) was approved by the Governor of the State of Louisiana. The grant award of $300,000 was used to assist the Town in building a new manufacturing facility that is located in the Town's industrial park. The agreement was effective from May 3, 2000 through November 10, 2003.
As part of the agreement, the Company was required to meet specific performance objectives each year. Karts International is now bankrupt. The Company failed to meet the required performance objectives.
The total cost to construct the building was $500,000. To pay for the construction the Tov™ used the $300,000 award money plus $200,000 advanced lease payments received from Karts International Inc. The $200,000 advanced lease payments were for the full monthly net rental that would otherwise become due over both the primary term of the lease commencing October 1, 2000 and ending September 30, 2007, and the optional term commencing October 1, 2007 and ending September 30,2009.
On September 30, 2009, the advanced lease payments ended. The Town entered into a lease agreement with American Sportworks, LLC. The current lease running through December 31, 2011 was for a monthly rent of $6,500, which totaled $78,000 for the current fiscal period. The lease payments continued for a two-year period at fiscal year end, per lease agreement provisions.
45
Town of Roseland Notes to the Financial Statements
As of and for the Year Ended December 31,2011
16. Fund Balances and Net Assets
At December 31, 2011, the General Fund had a nonspendable fund balance created from $2,975 of prepaid insurance. The fund balance of $128,128 in the Volunteer Fire Fund, a special revenue fund, is assigned at fiscal year end. The Utility fund has $393 of net assets restricted for customer deposits and $99,619 of net assets restricted for debt service.
17. Risk Management
The Tov™ is exposed to various risks of loss related to theft, damage, or destruction of assets, torts, injuries, natural disasters, and many other unforeseeable events. The Town purchases commercial insurance policies and bonds for any and all claims related to the aforementioned risks. The Town's payment of the insurance policy deductible is the only liability associated with these policies and bonds. There has been no significant decrease in insurance coverage from the prior year.
18. Prior Period Adjustments
The Town of Roseland recorded the following prior period adjustments.
Governmental Funds General Fund
Beginning Fund Balance Before Prior Period Adjustments,
To adjust ad valorem taxreceivable for uncollectible amount Subtotal of Prior Period Adjustments to the General Fund
Beginning Fund Balance After Prior Period Adjustments
Volunteer Fire Department Fund Beginning Fund Balance Before Prior Period Adjustments
To adjust ad valorem tax receivable for uncollectible amount
Beginning Fund Balance After Prior Period Adjustments
Govemmental Activities Governmental Activities Net Assets, Beginning Before Prior Period Adjustments
Net of all fund basis prior period adjustments to govemmental funds
Govemmental Activities Net Assets, Beginning After Prior Period Adjustments
255,585
(3,920) (3,920)
251,665
108,751
(6,770)
101,981
1,108,649
(10,690)
1,097,959
19. Subsequent Events
These fmancial statements considered subsequent events through July 5, 2012, the date the fmancial statements were available to be issued. No events were noted that require recording or disclosure in the fmancial statements for the fiscal year ending December 31, 2011, except as noted in the following paragraph.
46
Town of Roseland Notes to the Financial Statements
As of and for the Year Ended December 31,2011
During the last four months of the fiscal year ending December 31, 2011, at total of $9,494 was reported as missing within the Town's Utility Fund. The investigation continued at fiscal year end. Finding 11-5 within the Corrective ^c/zo« Plan for Current Year Audit Findings includes a description of the finding, recommended changes in internal controls for cash collections, with the Tovm's progress in implementing the recormnended controls and planned corrective actions listed separately.
47
Required Supplemental Information (Part II)
48
Schedule 1 Town of Roseland
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual General Fund - Sununaty
Forthe yearendedDecember31, 2011
Revenues Taxes Licenses and Permits Intergovernmental Charges for Services Interest Miscellaneous
Total Revenues
Expenditures General Govemment Public Safety:
Police Fire
Public Works Health and Welfere Capital Outlays
Total Expenditures
Excess Revenues (Expenditures)
Other Ftnancing Sources (Uses) Bond Princpal Bond Interest Esqjense Capital Lease Proceeds
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances, Beginning Before Prbr Period Adjustments Prior Period Adjustments (Note 18)
Fund Balances, Beginning After Prior Period Adjustments
Fund Balances, Ending
Budgeted Amounts
Original
$ 161,000 $ 45,000 2,200
10,000 -
13,000 231,200
109,000
93,300 32,000 28,000
-3,700
266,000
(34,800)
--
78,000 78,000
43,200
255,585 (3,920)
251,665
$ 294,865 $
Final
161,000 $ 45,000 2,200
10,000 -
13,000 231,200
114,300
62,300 32,000 28,000 2,000
27,400 266,000
(34,800)
--
78,000 78,000
43,200
255,585 (3,920)
251,665
294,865 $
Actual Amounts GAAP Basis
191,412 $ 44,632 16,599 4,800
54 4,446
261,943
110,733
49,133 28,056 31,749 3,486
10,750 233,907
28,036
(10,000) (909)
78,000 67,091
95,127
255,585 (3,920)
251,665
346,792 $
Variance Favorable
(Unfavorable)
30,412 (368)
14,399 (5,200)
54 (8,554) 30,743
3,567
13,167 3,944
(3,749) (1,486) 16,650 32,093
62,836
(10,000) (909) -
(10,909)
51,927
--
-
51,927
See independent auditor's report.
49
Schedule of Revenues,
Taxes Ad Vabrem Sales Taxes Franchise Taxes
Total Taxes
Intei^ove nimental State Grants Beer Tax
Fire Insurance Rebate Total Intergovernmental
Other Revenues Licenses and Permits Charges for Services Interest Miscellaneous
Total Other Revenues
Total Revenues
Continued
See independent auditor's report.
Tovm of Roseland Expenditures, and Changes in Fund Balances
General Fund • Detail Forthe year ended December 31,2011
Budgeted Amounts
Original
$ 11,000 $ 125,000
25,000 161,000
1,200 1,000
-
2,200
45,000 10,000
-
13,000 6S,000
231,200
Final
11,000 $ 125,000 25,000
161,000
1,200 1,000
-
2,200
45,000 10,000
-
13,000 68,000
231,200
Schedule 2
- Budget to Actual
Actual Amounts
GAAP Basis
20,069 $ 142,264 29,079
191,412
10,750 1,275 4,574
16,599
44,632 4,800
54 4,446
53,932
261,943
Variance Favorable
(Unfavorable)
9,069 17,264 4,079
30,412
9,550 275
4,574
14,399
(368) (5,200)
54 (8,554)
(14,068)
30,743
50
Schedule 2 Town of Roseland
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual General Fund - Detail
Forthe yearended December31, 2011
General Government Salaries Benefits Payroll Taxes General and Administrative Insurance Other opemting Professbnal Fees Repairs and Maintenance Supplies Utilities
Total General Government
Public Safety: Police
Salaries Payroll Taxes Insurance Vehicle Ejq^enses Other opemting Repairs and Maintenance Supplies Utilities
Total Police
Fire Salaries Payroll Taxes Insurance Ottier operating Repairs and Maintenance Supplies Utilities
Total Fire
Total Public Safety
Continued See independent auditor's report.
Budgeted
Original
40,500 -
3,200 1,500
17,000 3,000
24,800 4,000
12,000 3,000
109,000
56,220 4,500
12,000 10,000 4,580
-2,000 4,000
93,300
22,000 1,800
--
3,000 -
5,200 32,000
125,300
Amounts
Final
40,500 -
3,500 1,500
17,000 3,000
29,800 4,000
12,000 3,000
114,300
33,720 3,000 9,000 6,000 4,580
-2,000 4,000
62,300
22,000 1,800
--
3,000 -
5,200 32,000
94,300
Actual Amounts GAAP Basis
37,215 734
2,852 2,401 9,906 3,621
39,542 2,724 8,086 3,652
110,733
33,696 2,578 5,826 2,319
837 532 201
3,144 49,133
14,830 1,135
87 2,672 3,889 1,351 4,092
28,056
77,189
Variance Favorable
(Unfavorable)
3,285 (734) 648
(901) 7,094 (621)
(9,742) 1,276 3,914 (652)
3,567
24 422
3,174 3,681 3,743 (532)
1,799 856
13,167
7,170 665 (87)
(2,672) (889)
(1,351) 1,108 3,944
17,111
51
Schedule 2 Town of Roseland
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual
General Fund - Detail Forthe year ended December 31,2011
Public Works Other operating Repairs and Maintenance S Implies Utilities
Total Public Works
Health and Welfare Other operating
Total Health and Welfare
Capital Outlays
Total Expenditures
Excess Revenues (Expenditures)
Other Financing Sources (Uses) Bond Principal Bond Interest Expense Capital Lease Proceeds
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances, Beginning Before Prior Period Adjustments Prior Period Adjustments
Fund Balances, Beginning After Prior Period Adjustments
Fund Balances, Ending
Concluded See independent auditor's report.
Budgeted Amounts
Original
500 7,500 5,000
15,000 28,000
3,700
266,000
(34,800)
78,000 78,000
43,200
255,585 (3,920)
251,665
Final
500 7,500 5,000
15,000 28,000
2,000
2,000
27,400
266,000
(34,800)
78,000 78,000
43,200
255,585 (3,920)
251,665
Actual Amounts GAAP Basis
740 11,529
940 18,540 31,749
$ 294,865 $ 294,865 $
3,486 3,486
10,750
233,907
28,036
(10,000) (909)
78,000 67,091
95,127
255,585 (3,920)
251,665
Variance Favorable
(Unfavorable)
(240) (4,029) 4,060
(3,540) (3,749)
346,792 $
(1,486) (1,486)
16,650
32,093
62,836
(10,000) (909)
(10,909)
51,927
51,927
52
Schedule 3 Town of Roseland
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget (GAAP Basis) to Actual Special Revenue Fund - Fire Protection For the year ended December 31,2011
Variance Favorable
(Unfavorable) Budgeted Amounts
Revenues Ad Vatorem Taxes Interest Miscellaneous
Total Revenues
Expenditures Public Safety:
Fire
Insurance Other operating Repairs and Maintenance Siq>plEs
Total Expenditures
Excess Revenues (Expenditures)
Net Change in Fund Balances
Fund Balances, Beginning Before Prior Period Adjustments Prior Period Adjustments
Fund Balances, Beginning After Prior Period Adjustments
Fund Balances, Endii^
See Independent Auditor's Report
Original Final Actual Amounts
GAAP Basis
$ 20,000 $ 20,000 $
20,000
20,000
20,000
108,751 (6,770)
101,981
20,000
20,000
20,000
108,751 (6,770)
101,981
$ 101,981 $ 101,981 $
33,193 $ 28
33,221
4,918 176
1,405 575
7,074
26,147
26,147
108,751 (6,770)
101,981
128,128 $
13,193 28
13,221
20,000
(4,918) (176)
(1,405) (575)
12,926
26,147
26,147
26,147
53
Other Supplemental Information
54
Schedule 4 Town of Roseland
Conqjarative Schedule of Ne t Assets - Proprietary Fund Type As of D e c e m b e r S l , 2011 and 2010
Enterprise Funds
Assets Current Assets:
Cash and Cash Equivalents Receivables, Net
Accounts Other Receivables
Total Current Assets
Restricted Assets: Restricted Cash and Cash Equivalents
Total Restricted Assets
Property, Plant, and Equipment Land Property, Plant and Equq^ment, Net
Total Property, Plant, and Equ?)ment
Total Assets
Liabilities Current Liabilities (Payable From Current Assets):
Accounts Payable Other Accrued Payables Due To Other Funds
Total Current Liabilities (Payable From Current Assets)
Current Liabilities (Payable From Restricted Assets): Customer Deposits Revenue Bonds Payable Interest Payable on Long Term Debt
Total Current Liabilities (Payable From Restricted Assets)
Long Term Liabilities: Bonds Payable
Total Long Term Liabilities
Total Liabilities
N e t Assets Invested in Capital Assets, Net of Related Debt Restricted for:
Capftal Projects and Debt Service Unrestricted
Total Ne t Assets
See Independent Auditor's Report
2011
5,813 $
41,276 3,377
50,466
144,743 144,743
6,500 1,905,086 1,911,586
2,106,795
6,105 990
134,132 141,227
44,731 18,927 7,642
71,300
509,234 509,234
721,761
1,383,425
100,012 (98,403)
1,385,034 $
2010
41,390
39,897 2,581
83,868
139,039 139,039
6,500 2,010,731 2,017,231
2,240,138
8,500 738
116,383 125,621
45,818 16,639 6,966
69,423
524,570 524,570
719,614
1,469,056
139,039 (87,571)
1,520,524
55
Schedule 5 Town of Roseland
Comparative Schedule of Revenues, Expenses and Chaises in Net Assets Proprietaiy Fund lype
Forthe years ended December31,2011 and 2010 Enterprise Funds
2011 Operating Revenues
Water Sales Sewer Service Charges Penalties Intergovernmental Other
Total Operating Revenues
Operating Expenses Contract Services Deficit in Deposits due to Fraud Depreciation Insurance Meter Reading Payroll Taxes Professional Fees Repairs and Maintenance Salaries and Wages Si:5)plies Utilities Other
Tota! Operating Expenses
Operating Income (Loss)
Nonoperating Revenues (Expenses)
Interest Income Interest E^qjense
Total Nonoperating Revenues (Expenses)
Change in Net Assets
Total Net Assets, Beginning Total Net Assets, Ending
See Independent Auditor's Report
2011
141,029 $
90,531
11,015
25,000
962 268,537
18,000
10,005 105,644
15,985
6,525
6,017
12,430
69,367
78,655
4,779
20,237
17,241
364,885
(96,348)
59 (39,201)
(39,142)
(135,490)
1,520,524
1,385,034 $
2010
156,210
96,691
12,558
18,516
2,212
286,187
_
-
105,827
17,275
8,309
5,093
9,125
51,310
66,578
5,513
21,208
39,186
329,424
(43,237)
154 (29,395)
(29,241)
(72,478)
1,593,002
1,520,524
56
Schedule 6
Enterptise
2011
241,196 $ (1,087) 25,166 17,749
(176,712)
(84,672)
Funds
2010
276,875 -
18,516 -
(151,331) (72,673)
Town of Roseland Comparative Schedule of CashFloTW
Proprietaiy Fund lype Forthe years endedDecember31,2011 and2010
Cash Flo^w Fnom Operating Activities Received From Customers
Paid for Meter Deposit Fees Other Rece^ts Recept (Paid) for Interfund Services Payments for Operations Payments to Empbyees
Net Cash Provided (Used) by Operating Activities 21,640 71,387
Cash Flows Ftom Capital and Related Fmancing Activities Princq)al Proceeds from (Repayments for) Long Term Debt (13,048) (17,610) Interest Payments for Long Term Debt (38,525) (29,665)
Net Cash Provided (Used) by Capital and Related Financing Activities (51,573) (47,275)
Cash Flows Fnom Investing Activities Recept of Interest 60_ 154
Net Cash Provided by Investing Activities 60_ 154
Net Increase (Decrease) in Cash and Cash Equivalents (29,873) 24,266 Cash and Cash Equivalents, Beginning of Year 180,429 156,163 Cash and Cash Equivalents, End of Year $ 150,556 $ 180,429
Reconciliation of Cash and Cash Equivalents to the Statement of Net Assets:
Cash and Cash Equivalents, Unrestricted $ 5,813 $ 41,390
Cash and Cash Equivalents, Restricted 144,743 139,039 Total Cash and Cash Equivalents $ 150,556 $ 180,429
(Continued)
See Independent Auditor's Report
57
Schedule 6 Town of Roseland
Comparative Schedule ofCashflo^^s
Proprietaiy Fund lype Forthe years ended December 31,2011 and 2010
Enterprise Funds 2011 2010
Reconciliation of Operating Income (Loss) to Net Cash Provided (Use^ by Operating Activities
Operating Income (Loss) $ (96,348) $ (43,237) Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided by Operating Activities:
Depreciation and amortization (Increase) Decrease in Accounts Receivable (Increase) Decrease in Otiier Receivable (Increase) Decrease in Due (to) and from Other Funds Increase (Decrease) in Accounts Payable Increase (Decrease) in Accrued Ejq^enses Increase (Decrease) in Customer Deposits
Net Cash Provided by Operating Activities $
105,644
(1,379)
(796)
17,749
(2,395)
252 (1,087)
21,640 $
105,827
17,160
(8,094)
641 (1,046)
-
136 71,387
See Independent Audior's Report
(Concluded)
58
Schedule 7 Town of Roseland
Schedule of Revenues, Expenses and Changes in Net Assets Budget (GAAP Basis) and Actual, Proprietary Fund Type, Water and Sewer Utility System
Forthe yearended DecemberSl, 2011
Operating Revenues Water Sales $ Sewer Charges Penafcies Intergovernmental Other
Total Operating Revenues
Operating Expenses Contract Services Deficit in Deposfts due to Fraud Depreciation Insurance Meter Reading Payroll Taxes Professional Fees Repairs and Mairrtenance Salaries and Wages Siqjplies Utilities Other
Total Operating Expenses
Operating Income (Loss)
Nonoperating Revenues (Expenses)
Interest Income Interest Ejqsense
Total Nonoperating Revenues (Expenses)
Income (Loss) Before Transfers
Budget
155,000 $ 95,000 7,500
-4,500
262,000
18,000 --
14,000 8,000 4,800
12,000 24,295 59,560 10,000 36,000 13,500
200,155
61,845
---
61,845
Actual
141,029 $ 90,531 11,015 25,000
962 268,537
18,000 10,005
105,644 15,985 6,525 6,017
12,430 69,367 78,655 4,779
20,237 17,241
364,885
(96,348)
59 (39,201) (39,142)
(135,490)
Variance Favorable
(Unfavorable)
(13,971) (4,469) 3,515
25,000 (3,538) 6,537
-(10,005)
(105,644) (1,985) 1,475
(1,217) (430)
(45,072) (19,095)
5,221 15,763 (3,741)
(164,730)
(158,193)
59 (39,201) (39,142)
(197,335)
Transfers Operating Transfers In Operating Transfers Out
Change in Net Assets
See Independent Auditor's Report
61,845 $ (135,490) $ (197,335)
59
Schedule 8
Town of Roseland
Schedule of Water and Sewer Rates
Proprietary Fund Type
Forthe year ended December 31,2011
Water
InTow!
Residential Rates Commercial Rates
In Town
$ 10.25 - Base Charge $ 24.25 - Base Charge
$ 1.90 - Per 1,000 Gallons ofWater over 2,000 Gallons $ 1.90 - Per 1,000 Galtans of Water over 10,000 GaUons
Out of Town Out of Town
$ 12.25 - Base Charge $ 26.25 - Base Charge
$ 2.00 - Per 1,000 Gallons ofWater over 2,000 Galfons $ 2.00 - Per 1,000 Gallons of Water over 10,000 Galbns
$ 85.00 - Flat Rate Customers
Sewer
Residential Rates Commercial Rates
Metered
$ 11.00 -
$ 3.25 -
In Town
$ 24.00 -
Base Charge Per 1,000 Gallons ofWater over 2,000 Galbns
Flat Rate
$ 28.00
$ 3.25
Wholesale
$ 125.00
Base Charge Per 1,000 Galbns ofWater over 2,000 Gallons
Water
Sewer
Total
Schedule of Number of Customers Proprietary Fund Type
For the year ended December 3 1 , 2011 Residential Commercial School
540 327
44 17
Total 584 345
867 61 929
60
Schedule 9 Town of Roseland
Schedule oflnsurance Forthe year ended December 31,2011
Coverage Insurance Company /
Policy Number Louisiana Municipal Risk Management Agency 100-0294-00013489 Commercial General Liability
Commercial Automobile Law Enforcement Offiicer's Comprehensive Liability Public Officials' Errors and Ommissions Liability
Workers Compensation at Statutory Limitations:
American Alternative Insurance Corporation GPPA-PF6050522-01 Commercial Property Coverage
Water and Sewer Dept. Property
CM1051305-04 Business Auto Liability - Fire Department
Amount
500,000 500,000 500,000
500,000
1,599,557
1,000,000 per accident
Period
11/6/2011 to 11/6/2012 11/6/2011 to 11/6/2012 11/6/2011 to 11/6/2012
11/6/2011 to 11/6/2012
12/29/2011 to 12/29/2012
5/5/2011 to 5/5/2012
4/1/2011 to 4/1/2012
Lexon Insurance Company 1031418 BondonCbrk
Western Surety Company 24695223 Bond on Mayor
15,000 3/1/2011 to 3/1/2012
50,000 6/11/2011 to 6/11/2012
Essex Insurance Company 5TRD4818 Commercial Automobile Physical
Damage - Police Department
See independent auditor's report.
17,300 8/18/2011 to 8/18/2012
61
Schedule 10 Town of Roseland
Schedule of Compensation Paid to Board Members Forthe yearendedDecember31,2011
Name and Title / Contact Number Wanda McCoy, Mayor (985) 748-2768
Yvette Brooks, Council Member (985) 474-2864
Jerrol Jones, Council Member (985) 747-19S8
Van Showers, Council Member (985) 517-4043
Sandra Turner, Council Member (985) 748-9589
Ruthie Vernon, Council Member (985) 748-3445
Address P.O. Box 511 Roseland, Louisiana 70456
P.O. Box 559 Roseland, Louisiana 70456
62303 Turner Chapel Roseland, Louisiana 70456
12536 Roseland Avenue Roseland, Louisiana 70456
P.O. Box 89 Roseland, Louisiana 70456
12184 Buchanan Lane Roseland, Louisiana 70456
Compensation Received
13,500
1,500
2,175
2,250
2,175
2,175
23,775
62
Town of Roseland Schedule 11 Roseland, Louisiana
Summary Schedule of Findings and Questioned Costs For the Year Ended December 31,2010
P a r t i : Summary of Auditor's Results
Financial Statements
Type of Auditor's Report Issued: Unqualified.
Internal Control Over Financial Reporting: Material Weakness(es) Identified: Yes Significant Deficiency(ies) that are not considered to be Material Weaknesses: Yes
Noncompliance Material to the Financial Statements: No
Federal Awards
There were no Major Programs for the Town for the fiscal year ended December 31,2011
Part n : Findings which are required to be reported in accordance with generally accepted Governmental Auditing Standards. These findings are included within the Summary Schedule of Prior Year Audit Findings, and the Corrective Action Plan for Current Year Audit Findings, with current year fmdings categorized as follows:
A. Compliance Findings -
No compliance fmdings.
B. Internal Control Findings -
Internal control fmdings within the Corrective Action Plan for Current Year Audit Findings include Finding 11-1 and 11-3, significant deficiencies not constituting material weaknesses, and Fmdings 11-2 and 11-5 classified as material weaknesses in internal controls.
Part m : Findings and Questioned Costs for Federal Awards which include audit findings as defined in Section 510(a) of Circular A-133:
N/A.
Part IV: Management Letter Items:
There were no management findings for the Town for the fiscal year ending December 31,2011.
63
Town of Roseland Schedule 12 Roseland, Louisiana
Summary Schedule of Prior Year Audit Findings For the Year Ended December 31,2010
CompHance Findings (Reported in Accordance with Government Auditing Standards)
Reference Number: 10-4 (Audit Report Filing Deadline)
Type Finding: Compliance Finding Required to be Reported under Government Auditing Standards.
Description of Finding: Forthe fiscal year ending December 31, 2010, the Town of Roseland failed to comply with state audit law to have their audit completed within six months of the close of the fiscal year.
Corrective Action Taken:
The audit report for the fiscal year endmg December 31,2011, was filed within the required filing deadline.
Description of Corrective Action Taken: Final
Contact Person: Wanda McCoy, Mayor
P.O. Box 511, Roseland, LA 70456, (985-748-9063)
Internal Control Findings (Reported in Accordance with Government Auditing Standards)
Reference Number: 10-1 (Failure to comply with bond resolutions)
Type Finding: Significant deficiency not constituting a material weakness. Description of Finding: The prior year fmding noted the Town of Roseland's failure to comply to bond covenants related to funding obtained fi-om the United States Department of Agriculture, Rural Development. Specific findings included:
1) Failure to establish adequate utility rates. Loan covenants for USDA assistance require that the Town maintain rates sufficient to provide for payment for all reasonable and necessary expenses of operating the utility system, to provide for bond and interest payments as they come due, and to fiind required debt reserves. The finding noted that the Town's utility fimd has recorded net losses since fiscal year 2004, with a net loss of $72,478 incurred for fiscal year 2010. It was noted that a rate increase was implemented on January 1, 2008 (Ordinance # 280), but that rates were not sufficient to cover the operating expenses and debt service requirements of the utility system. It was recommended that the Town be more diligent in collecting past due accounts and attempt to reduce operating expenses.
64
Town of Roseland Schedule 12(Continued) Roseland, Louisiana
Summary Schedule of Prior Year Audit Findings For the Year Ended December 31,2010
2) Failure to consistently apply a disconnect policy for overdue utility customer accounts. The finding noting that bond covenants require that the Town disconnect customer accounts not paid within 40 days of the billmg date, and noted that inconsistencies in the disconnect policy have resulted in continued deficits and reduced cash flow. It was recommended that the Town enforce the disconnect policy.
Corrective Action Taken: Corrective action is continued in the current year fmdings section since the net loss increased to $135,490 for the fiscal year ending December 31,2011, and the over 60 days past due amount increased to $52,014.
Description of Corrective Action Taken: Continued as Finding 11-1 within the Corrective Action Plan for Current Year Audit Findings.
Contact Person: Wanda McCoy, Mayor P.O. Box 511, Roseland, LA 70456, (985-748-9063)
Reference Number: 10-2 (Lack of Segregation of Duties)
Year Initial Finding Occurred: Fiscal Year Ending December 31, 2009
Type Finding: Significant deficiency constituting a material weakness.
Description of Finding: This finding noted that the limited number of employees precludes an optimum segregation of duties, but that compensating controls are required to make certain that year-end adjusting entries are made, fmancial statements are prepared on a consistent basis, and financial transactions are processed and recorded accurately.
Corrective Action Taken: The Town responded by noting that they also employ an Assistant Clerk to review and process fmancial transactions, and an outside Certified Public Accountant to review and report financial transactions. Since limited segregation of duties is inherent to smaller entities, and since a separate fmding related to segregation of duties occurred and is reported as Finding # 11-2 within the Corrective Action Plan for Current Year Audit Findings, this fmding is continued within the current year finding section.
Description of Corrective Action Taken: This finding is continued as Findmg 11-2 within the Corrective Action Plan for Current Year Audit Findings. Contact Person; Wanda McCoy, Mayor P.O. Box 511, Roseland, LA 70456, (985-748-9063)
65
Town of Roseland Schedule 12(Continued) Roseland, Louisiana
Summary Schedule of Prior Year Audit Findings For the Year Ended December 31,2010
Reference Number: 10-3 (Lack of collection of utility customer receivables, unpaid property taxes, and unpaid occupational licenses)
Type Finding: Significant deficiency not constituting a material weakness.
Description of Finding: The prior year fmding noted the Tovm of Roseland's failure to collect revenues for utility customer receivables, property taxes, and occupational licenses, as follows:
1) For utility fund customer accounts, the finding noted that the utility fund customer receivable increased from $79,014 at December 31, 2009, to $84,898 at December 31, 2010. The Town at December 31, 2010, reported $50,255 in the over 60 days past due category. It was recommended that the Town enforce its disconnect policy, file charges and take corrective measures if water service is being obtained illegally, and consider increasing the customer deposit to $150.
2) For ad valorem taxes, the finding noted that unpaid property taxes are recorded each fiscal year, that four delinquent notices are sent to property owners for payment of taxes, but that tax sales are not conducted for unpaid taxes. The finding noted that as of May 16, 2011, the Town has a total of $13,448 in unpaid property taxes, and that the unpaid property taxes increased by $3,862 for fiscal year 2010, as compared to an increase of $3,236 for fiscal year 2009. it was recommended that the Tovm consult the attorney regarding alternatives to a tax sale.
3) For occupational licenses, the fmding noted that there were three businesses that had not paid their occupational license fees for 2010, and at May 16, 2011, there were 6 businesses that had not paid their occupational license fees. It was recommended that businesses not paying their occupational licenses not be allowed to operate or receive utility services.
Corrective Action Taken: Corrective action is continued in the current year findings section since as of December 31, 2011, the over 60 days past due utility receivable amount increased to $52,014. For unpaid ad valorem taxes, the amount increased by $7,448 for fiscal year 2011. At June 30, 2012, there were two occupational licenses that were unpaid.
Description of Corrective Action Taken: Continued as Finding 11-3 within the Corrective Action Plan for Current Year Audit Findings.
Contact Person: Wanda McCoy, Mayor P.O. Box 511, Roseland, LA 70456, (985-748-9063)
66
Town of Roseland Schedule 13 Roseland, Louisiana
Corrective Action Plan for Current Year Findings For the Year Ended December 31,2011
Compliance Findings (Reported in Accordance with Government Auditing Standards)
No compliance fmdings.
Internal Control Findings (Reported in Accordance with Government Auditing Standards)
Reference Number: 11-1 (Failure to comply with bond resolutions) Continued from prior fiscal year findmg 10-1.
Year Finding First Occurred: Fiscal year ending December 31,2001, for finding related to disconnectmg past due accounts; Fiscal year ending December 31, 2006, for finding related to maintaining an adequate rate structure.
Type Finding: Significant deficiency not constituting a material weakness.
Criteria: Loan assistance for the Town of Roseland, at December 31, 2011, consisted of bonds financed by the United States Department of Agriculture (USDA), Rural Development. Bonds financed by USDA require the Town to maintain rates sufficient to pay all reasonable and necessary expenses, payment of bond installments, and payment of requked bond reserves. USDA also mcludes bond covenants that require the Town disconnect service for overdue utility customer accounts that are 40 days past due from the billing date.
Condition: At December 31, 2011, loan installments on USDA bonds were current, and all required reserves were fiilly-fiinded. However, the Town's utility fund has consistently operated at a net loss, posting net losses ranging from $62,496 to $121,038 for fiscal years 2004 through 2010, to a net loss of $135,490 for the current fiscal year ending December 31, 2011. During the time period of fiscal years 2001 through 2008, USDA also authorized $50,283 in expenditures from the Depreciation & Contingency account for operating and capital expenditures. Customer balances over 60 days past due have increased each fiscal year.
We also noted that the Town is currently m the process of reviewing 127 closed accounts to determine if any prior customers have illegally reconnected utility service.
Effect: Funds must be available, after payment of debt-related obligations, to pay for the costs of operation of the utility fund.
Findings: For the fiscal year ending December 31, 2011, the Town recorded a net operatmg loss of $135,490. In addition, recorded a total of $52,014 for customer account balances over 60 days past due.
67
Town of Roseland Schedule 13 (Continued) Roseland, Louisiana
Corrective Action Plan for Current Year Findings For the Year Ended December 31,2011
Recommendations: We recommend the following:
1) Continue to review the closed accounts listing and disconnect utility service for any customers that have illegally connected to the utility system. When necessary, consult the town's attorney for legal action that may be required.
2) Enforce the disconnect policy, required by USDA bond covenants, to maximize the revenue needed for utility operations.
3) If the above actions do not increase utility system revenues to an acceptable level, implement a rate mcrease.
4) Consider increasing the meter deposit fee for new accounts or re-connects, to cover the cost of unpaid utility fees when the account is disconnected.
Response by Management As noted above, the Town of Roseland has improved operation of the utility system to a point that USDA bond installments are paid as due, the Reserve Account requked by the bond covenants is fiiUy fiinded, and the Depreciation & Contingency Fund (required as a reserve for friture repairs and capital replacements) is, after consideration of USDA authorized withdrawals, fully fimded. The remaining problem involves creating a revenue level sufficient to meet USDA bond requirements to not only cover the costs of operation, but to accumulate fiinds for needed repairs and capital replacements. The Town's plan to increase revenues is as follows:
1) The Town will continue review of the "Closed Account Listing" (consisting of 127 customers), determine if there are illegal hookups, and if illegal hookups are found, consuh our attorney on necessary actions.
2) We will improve enforcement of our disconnect policy, reviewing each month the status of payments received for customers on the disconnect list, and we will verify that service is disconnected as required.
3) If the above actions do not increase revenues sufficiently, we will increase rates, and will consider increasing the meter deposit fee. If a rate increase is required, and because many of our customers are on a fixed income, our plan is to implement rate increases gradually over a period of several years.
Description of Action Taken: Partial
Anticipated Completion Date: The Town feels that they will be able to evaluate by December 31,2012, the effectiveness of actions described in Items 1 & 2 above. If deemed necessary, we will implement a rate increase by March 31,2013.
Contact Person:
Wanda McCoy, Mayor P.O. Box 511, Roseland, LA 70456, (985-748-9063)
68
Town of Roseland Schedule 13 (Continued) Roseland, Louisiana
Corrective Action Plan for Current Year Findings For the Year Ended December 31,2011
Reference Number: 11-2 (Lack of segregation of duties) Contmued from prior fiscal year finding 10-2.
Year Finding First Occurred: Fiscal Year ending December 31,2001
Type Finding: Significant deficiency constituting a material weakness.
Criteria: The Town of Roseland must demonstrate that activities relating to the receipt and disbursement of fiinds are properly segregated.
Condition: With all smaller agencies, there will be limited personnel for recording receipts and disbursements and for reporting financial transactions. The Town has implemented the following compensating controls:
1) Direct approval by the Mayor for all key fmancial transactions. 2) Maintenance of detail registers to support all disbursements. 3) Monthly reconciliation of bank accounts by an outside accountant, and monthly financial reporting
to the board by the outside accountant. 4) Approval and signing of checks by Mayor, with a second required signature.
However, in numerous cases responsibility was not separated for initial receipt of fimds, approval of deposit slips and supporting documentation, and deposit of funds.
Effect: Having a limited number of personnel increases the need to closely review fmancial transactions. The Town compensates for the lack of personnel with outside reporting, but needs to strengthen controls for receipt and recording of funds.
Findings:
Although the Town has implemented controls for the disbursement of funds, cash receipts controls were not always in place. In numerous cases, responsibility was not separated for initial receipt of funds, approval of deposit slips and supporting documentation, and deposit of funds.
Recommendations:
Controls must be implemented to counter the effect of a limited number of personnel performing financial transactions. It is recommended that the Town implement the recommended controls for the utility system, as described in Finding 11-5 within this Corrective Action Plan for Current Year Audit Findings, and unprove the controls for all receipt of funds as following:
1) For deposits of all funds, implement procedures that identify the party receiving the fiinds, approving the deposit, and provide for the deposit of funds by a party not collecting funds.
2) For each deposit, require that categories of funds be separately identified on deposit slips, and documentation continue to be maintained as support for deposit totals.
69
Town of Roseland Schedule 13 (Continued) Roseland, Louisiana
Corrective Action Plan for Current Year Findings For the Year Ended December 31,2011
Response by Management We agree with the recommendations to improve controls for cash collections and deposit of funds, and have already begun improving controls. We are now making deposits on a daily basis as practicable, and our Town Clerk does not deposit funds. As the deposits are made, the deposit slip is brought back to the Town Clerk who reconciles the deposit to supportmg documentation and categories of deposits. We will also comply with recommendations by creating a separate cash drawer for each employee receiving payments, and will have deposits made by a separate employee not involved in the receipt or reporting of collections.
Description of Action Taken: Partial
Anticipated Completion Date: Controls are now being implemented and we anticipate compliance to all recommendations by September 30,2012.
Contact Person:
Wanda McCoy, Mayor P.O. Box 511, Roseland, LA 70456, (985-748-9063)
Refereuce Number: 11-3 (Lack of collection of utility fund customer receivables, unpaid ad valorem taxes, and occupational licenses). Continued from prior year Finding 10-3.
Type Finding: Significant deficiency not constituting a material weakness.
Date Finding First Occurred: Fiscal Year Ending December 31, 2006.
Criteria: The Town must optimize the collection of revenues in maintain streets and related improvements, provide police and fire protection, and to provide utility services.
Condition: Prior fmdings noted three main areas where all revenues were not being collected - ad valorem taxes, occupational licenses, and utility department collections. The last category, utility department collections, is not contmued as a part of this finding since it is included in Finding 11-1 above.
Effect: Revenue collection must be optimized for the Town to provide for needed services to its citizens.
Findings: For prior years, it was noted that part of ad valorem taxes remain unpaid each fiscal year, with taxes reported as unpaid since fiscal year 2001. The prior year unpaid taxes total $13,448 for prior fiscal years, increasing by $7,448 for fiscal year 2011. The Town sends four notices when taxes are unpaid, but has not held tax sales for numerous years. For occupational licenses, a total of 3 occupational licenses remain unpaid for 2009, 6 for 2010, and 2 for 2011.
70
Town of Roseland Schedule 13 (Continued) Roseland, Louisiana
Corrective Action Plan for Current Year Findings For the Year Ended December 31,2011
Recommendations: For unpaid occupational licenses, the recommendation is basically the same. Requu-e the businesses to pay the occupational license as a condition of operation, or refer the account to the attorney or an outside party for collection.. For unpaid ad valorem taxes, the recommendations are as follows:
1) The records for unpaid ad valorem taxes go back to year 2010. Research records and segregate those records to compile and organize records on unpaid ad valorem taxes.
2) Transfer the documentation on the unpaid taxes to the Town's attorney, and request a determination on the Town's legal obligation to collect the taxes and options that the Town has for collection of unpaid ad valorem taxes.
3) If other alternatives are not available, hold a tax sale.
Response by Management For occupational license collections, we reduced the amount to two businesses that have not paid their occupational licenses. We will continue our collection efforts.
The problem with unpaid ad valorem taxes is a continuing problem, beginning in fiscal year 2001, and will take a little time to correct. We plan the following corrective actions:
1) We will research our records and will consult with the Tangipahoa Parish Assessor's Office, as is necessary, to develop an accurate listing of unpaid ad valorem taxes since year 2001.
2) We will refer the documentation compiled to our attorney for review and determination of acceptable procedures for collection of taxes.
3) If we are unable to collect unpaid ad valorem taxes by other methods, we will conduct a tax sale. Since the Town has limited funds, we will also discuss with other agencies, and our attorney, the feasibility of conducting tax sales jointly with other govemmental entities.
Description of Action Taken: Partial
Anticipated Completion Date: We anticipate completion of Items I & 2 above by December 31, 2012. Any required tax sale would be held durmg fiscal year 2013.
Contact Person: Wanda McCoy, Mayor P.O. Box 511, Roseland, LA 70456, (985-748-9063
71
Town of Roseland Schedule 13 (Continued) Roseland, Louisiana
Corrective Action Plan for Current Year Findings For the Year Ended December 31,2011
Reference Number: 11-5 (Utility fund - internal control for cash collections) Type Finding: Significant deficiency constituting a material weakness.
Date Finding First Occurred: Fiscal Year Ending December 31,2011
Criteria: The Town of Roseland must enforce internal control procedures that ensure all customer payments made to the Town of Roseland are properly recorded, deposited into the bank in a timely manner, and accurately recorded as customer payments within the Town's utility billing software. Louisiana Revised Statute 39:1212 requires that all funds of all local depositing authorities be deposited daily, whenever practicable.
Condition: This finding relates to an on-gomg investigation by the Tangipahoa Parish Sherriff s Office of cash funds reported as missing, estimated at $9,494, in the Utility Fund of the Town of Roseland. The cash was reported as missing during the time period of July 2011 through October 2011. The cash missing includes the difference from receipted payments recorded in the Town's utility billing system to actual deposit of funds.
Effect: Each local govemmental entity must demonstrate legal compliance that all revenues received are properly recorded and accounted for. This involves maintaining evidence that the initial receipt of funds was correctly recorded, included within a bank deposit made on a timely basis, and timely recorded in the Town's utility billmg system and financial statements.
Findings: Our findings relate to controls for recording the initial receipt, deposit, and recording of customer payments within the utility fund for the Town of Roseland.
For the initial recording of receipts, we noted that a receipt is issued to the customer as either a copy of the payment stub, or separate receipt issued. However, we noted the following:
1) The receipt stubs are not, in most cases, initialed and date stamped. 2) Receipt stubs are grouped together and a total calculated for all receipts attached. However, the
receipt totals for several months are combmed into one folder. This does not facilitate review and comparison of receipt totals to a separately maintained monthly billmg reconciliation form.
3) Receipt totals do not, in most cases, correspond to payment batch totals in the utility billing system.
In relation to procedures for controlling deposits, we noted the following:
1) Written procedures were not developed that required identification of the person collectmg the payment (dating and initialing the mdividual customer receipt), the preparation of the deposit slip, and approval of the deposit slip.
72
Town of Roseland Schedule 13 (Continued) Roseland, Louisiana
Corrective Action Plan for Current Year Findings For the Year Ended December 31,2011
2) Deposits were generally not made on a daily basis, or as practicable, as required by LSA RS:39:1212. Procedures usually involved preparation of deposit slips, but not depositing funds until a later date. For the first eight months of fiscal year 2011, we noted that the final deposit of funds ranged from one day to eighteen days after the receipt of funds. For this time period there were only three instances of deposits made within one day of receipt, but for seven of the eight months there were instances of deposits not being made for ten days or more. For the last four months of fiscal year 2011, days since last deposit ranged from one to seven days, and there were 20 instances m which deposits were made within one day of initial receipt of funds.
3) Detail was not included on deposit slips and no procedures in place to ensure that customer payments were included in separate deposit slip books.
To control the recordmg of transactions m the utility billing system, the Town of Roseland maintains a monthly utility fund reconciliation that begins with the prior month ending accounts receivable balance, adds or subtracts the daily transactions of the month (billings, payment totals per day, billings per month, and penalties and adjustments on a daily basis), to obtain ending accounts receivable balance. We tested total monthly postings as included in the monthly reconciliation, and customer payments included in the customer receipt batch totals, and found no significant variations from source data. This would indicate that there are controls in place for balancing utility fimd input to the monthly utility fund reconciliation form. However, as noted in findings above, sufficient controls for the deposit of funds were not in place to ensure that all funds included within the monthly reconciliation form were actually collected. Also, for the fiscal year ending December 31, 2011, we noted that adjustments were kept to a minimum and that adjustments were reviewed directly with the Mayor, although a procedure was not in place for sign-off of credit and debit adjustments to accounts.
Recommendations:
It is recommended that the Town of Roseland periodically follow up on the pending investigation, provide any additional documentation requested by the Tangipahoa Parish Sheriff's Office, and obtain a final status on the investigation.
In relation to controls for the initial receipt of fimds, deposit of funds, and controls relating to the processing of utility fund transactions, the following is recommended:
1) Initial and date stamp ail customer receipts, providing a copy to the customer, and a copy to be included m the customer batch of receipts. For customers that do not have a copy of the billing card, issue a receipt from a sequentially numbered receipt book, with a signature of the employee receiving the payment. The receipt book should include an original copy to be given to the customer, a receipt copy to be included in the payment batch, with a receipt copy left in the receipt book. For receipts received by mail, date and initial the bill stub and include a separate subtotal for mail receipts.
2) Run a tape total on all receipt batches for the day, and place that receipt batch, along with the tape total, in a separate folder for each month.
3) Adopt procedures that require sign-off by the employee preparing the deposit and the employee reviewing the deposit, and have the deposits made by a separate party not involved in the collection of funds.
4) Include sufficient detail on the deposit slip to identify the main categories of receipts, identifying customer payments separately, or require that all customer deposits be included in a separate deposit slip book.
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Town of Roseland Schedule 13 (Continued) Roseland, Louisiana
Corrective Action Plan for Current Year Findings For the Year Ended December 31,2011
5) Make deposits on a daily basis. 6) Input batches of payments into the utility billing system that correspond to deposit totals for
customer receipts. 7) For any debit or credit adjustments made in the utility billing system, maintain a separate form
that includes the date and amount of the adjustment, a brief description of the adjustment, and written authorization for the adjustment.
8) Continue to maintain the monthly accounts receivable reconciliation worksheet, reconcilmg the accounts receivable balance to the utility billmg customer account balance on both a daily and monthly basis.
9) Continue to have monthly bank reconciliations completed by a party not involved in the collection of funds.
Response by Management We agree with the above recommendations, and have already begun implementing additional internal control procedures for cash collections, deposits, and controls for controlling the input of transactions into the utility billing system software. Our response to controlling cash collections is as documented in response to Finding 11-2 (Lack of Segregation of Duties). We anticipate implementing any remaining recommendations within a period of three months.
In relation to the investigation of missing funds, we will continue to cooperate with investigating authorities.
Description of Action Taken: We anticipate implementation of recommended controls by September 30, 2012.
Anticipated Completion Date: Contact Person: Wanda McCoy, Mayor P.O. Box 511, Roseland, LA 70456, (985-748-9063
Internal Control and Compliance Material to Federal Awards
There were no findings related to federal awards.
Management Letter
There were no management letter findings.
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Bruce C. Harrell, CPA
Dale H. Joties, CPA Eric J. Rodrigue, CPA Kristi U. Bergeron, CPA Michael P. Estay, CPA Jessica H. Jones, CPA
INTERNET www.teamcpa.com
MEMBERS American Institute of CPAs Society of Louisiana CPAs
BRUCE HARRELL aW COMPANY
CERTIFIED PUBLIC ACCOUNTANTS A Professional Accounting Corporation
109 West Minnesota Park Park Place Suite 7
Hammond, LA 70403 VOICE: (985) 542-6372
FAX: (985) 345-3156
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Kentwood, LA 70444 VOICE: (985) 229-5955
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REPORT ON COMPLL^CE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN
ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To Town of Roseland Roseland, Louisiana
We have audited the accompanying financial statements of the govemmental activities and the business type activities, each major fund, and the aggregate remaining fund information of the Town of Roseland, as of and for the year ended December 31, 2011, which collectively comprise the Town's basic financial statements and have issued our report thereon dated July 5, 2012. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
Compliance
As part of obtaining reasonable assurance about whether the Town of Roseland's, financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of fmancial 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 that are required to be reported under Government Auditing Standards.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the Town of Roseland's internal control over financial reporting as a basis for designing our audit procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing our opinion on the effectiveness of the Town's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Town's internal control over financial reporting.
Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over financial reporting that m i ^ t be significant deficiencies or material weaknesses and therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses have been identified. However, as described in the Corrective Action Plan for Current Year Audit Findings and the Schedule of Findings and Questioned Costs, we identified certain deficiencies in mtemal control that we consider to be material weaknesses, and other deficiencies that we consider to be significant deficiencies.
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To the Town of Roseland Roseland, Louisiana Page 2
A deficiency in internal control 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 and correct misstatements on a timely basis. A material weakness is a deficiency or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the Town's financial statements will not be prevented or detected and corrected on a timely basis. We consider the deficiencies as referenced in the Schedule of Findings and Questioned Costs, and as described in the accompanying Corrective Action Plan for Current Year Audit Findings, as finding 11-2, and finding 11-5 to be material weaknesses.
A significant deficiency is a deficiency, or combination of deficiencies, that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider the deficiencies described in the accompanying Corrective Action Plan for Current Year Audit Findings as finding 11-1, and finding 11-3, to be significant deficiencies over financial reporting.
This report is intended solely for the information of management, federal awarding and pass-through entities and the Louisiana Legislative Auditor and should not be used by anyone other than these specified parties. However, this report is a matter of public record and its distribution is not limited.
I /^^-"^ ( ; 5 L o ^ ^ ^ Bruce Harrell 8c Company, CPAs A Professional Accounting Corporation July 5, 2012
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Recommended