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Town of Eros
Eros, Louisiana
Annual Financial Statements
As of and For the Year Ended December 31, 2011
With Supplemental Information Schedules
Under provisions of state law. Ihis report is a public document. Acopy of the report has been submitted to the entity and other appropriate public officials. The report is available for public inspection at the Baton Rouge office of the Legislative Auditor and, v/here appropriate, at the office of the parish clerk of court.
Release Date AUG 1 5 2012
KENNETH D. FOLDEN & CO. CERTIFIED PUBLIC ACCOUNTANTS
302 EIGHTH STREET JONESBORO.LA 71251
(318)259-7316 FAX (318) 259-7315
Town of Eros Eros. Louisiana
Annual Financial Statements As of and For the Year Ended December 31,2011
With Supplemental Infonnation Schedules
CONTENTS
Statement/ Page Schedule
c D
E
F
9
9
10
11
Independent Auditor's Report 2 - 3
Basic Financial Statements:
Government-Wide Financial Statements:
Statement of Net Assets A 6
Statement of Activities B 7
Fund Financial Statements:
Govemmental Funds:
Balance Sheet
Reconciliation of the Govemmental Funds - Balance Sheet to the Statement of Net Assets
Statement of Revenues, Expenditures, and Changes in Fund Balances
Reconciliation of the Govemmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities
Proprietary Funds:
Statement of Net Assets
Statement of Revenues, Expenditures, and Changes in Fund Net Assets
Statement of Cash Flows
Notes to the Financial Statements
Required Supplemental Information:
Budgetary Comparison Schedule
Govemmental Fund 1 24
Independent Auditor's Report on Internal Control and on Compliance and 25 - 26 Other Matters:
Independent Auditor's Report on Intemal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government A uditing Standards
Supplemental Information Schedules:
Schedule of Findings 2 28 - 29
Schedule of Per Diem Paid Aldermen 3 30
G
H
I
12
13
14
16-22
Kenneth D. Folden. CPA
Kenneth D. Folden & Co. Certified Public Accountants
Members Society of Louisiana
Certified Public Accountants email: [email protected]
302 Eighth Street Jonesboro, LA 71251
(318)259-7316 FAX (318) 259-7315
Ted W. Sanderlin. CPA Members
American Institute of Certified Public Accountants
email: tsanderlinfg)foldencpa.com
INDEPENDENT AUDITOR'S REPORT
Town of Eros Eros, Louisiana
We have audited the accompanying fmancial statements of the govemmental activities, the business-type activities, and each major fund of the Town of Eros as of December 31, 2011, and for the year then ended, which collectively comprise the Town's basic fmancial statements as listed in the table of contents. These financial statements are the responsibility of the Town of Eros's management. Our responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with U. S. generally accepted auditing standards and the standards applicable to fmancial 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 fmancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fmancial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the govemmental activhies, the business-type activities, and each major fund of the Town of Eros as of December 31,2011, and the respective changes in financial position and cash flows, where applicable, thereof, for the year then ended in conformity with U. S. generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued our report dated June 28, 2012, on our consideration of the Tovra of Eros's intemal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of intemal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the intemal control over financial reporting or on compliance. That report is an integral part of an audh performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.
The budgetary comparison information, on page 24, is not a required part of the basic financial statements but is supplementary information required by United States generally accepted accounting principles. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it.
Management has not presented the discussion and analysis information that the Govemmental Accounting Standards Board has determined is necessary to supplement, although not required, to be a basic part of the financial statements.
Our audit was conducted for the purpose of forming opinions on the fmancial statements that collectively comprise the Town of Eros's basic financial statements. The supplemental information schedules listed in the table of contents is presented for the purpose of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairiy stated in all material respects in relation to the basic financial statements taken as a whole.
The accompanying financial statements have been prepared assuming that the Town of Eros will continue as a going concern. The conditions of the Town that indicate it might not be able to continue as a going concern are described in Note 7 to the financial statements. These conditions raise substantial doubt about its ability to continue as a going concem. Management's plans regarding those matters also are described in Note 7. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Jonesboro, Louisiana June 28, 2012
GOVERNMENT-WIDE FINANCIAL STATEMENTS
Statement A
Town of Eros Eros, Louisiana
Statement of Net Assets AsofDecember31,2011
Governmental Activities
Business-Type Activities Total
ASSETS
Cash and equivalents Investments Accounts receivable Capital assets (net of ace depr)
TOTAL ASSETS
LIABILITIES Accounts, salaries, and other payables Payroll taxes payable Customer deposits
TOTAL LIABILITIES
NET ASSETS Invested in capital assets, net of related debt Unrestricted
TOTAL NET ASSETS
3,012 $
1,479 493,330
538
10,499
11,037
493,330 (6.547)
486,783
10,402 $ 23,983 4,133
1,025,777 _
1,582
1,065 10,657 3,303
1,025,777 25,216
13,414 23,983 5,613
1,519,107 497,820 $ 1,064,296 $ K562J17
2,119 11,564 10,657
24,340
1,519,107 18,670
$ 1,050,994 $ 1,537,776
The accompanying notes are an integral part of these financial statements.
6
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Statement C
Town of Eros Eros, Louisiana
Balance Sheet - Govemmental Funds AsofDecember31,2011
General Fund
ASSETS
Cash and equivalents
Receivables, net
TOTAL ASSETS
3,012 1,479 4,491
LIABILITIES AND FUND BALANCE Liabilities:
Accounts payable Payroll taxes payable
TOTAL LIABILITIES
Fund Balances: Unassigned
TOTAL FUND BALANCE
TOTAL LIABILITIES AND FUND BALANCE
Reconciliation of the Govemmental Funds Balance Sheet to the Statement of Net Assets
AsofDecember31,2011
Total Fund Balances of General Fund at December 31, 2011
Total Net Assets reported for Govemmental Activities in the Statement of Net Assets (Statement A) are different because:
Capital Assets used in Govemmental Activities are not financial resources, and therefore, are not reported in the govemmental fund.
Net Assets of govemmental activities at December 31, 2011
The accompanying notes are an integral part of these financial statements.
9
$
$
$
$
538 10,499
11,037
(6,547) (6,547)
4-490
Statement D
(6,547)
493,330
486,783
Statement E
Town of Eros Eros, Louisiana
Statement of Revenues, Expenditures and Changes in Fund Balance - Govemmental Fund
For the Year Ended December 31, 2011
General Fund
REVENUES
Taxes:
Franchise tax Licenses and permits Fines and forfeitures Fees and charges Investment eamings Other Revenues
Rent
Grant revenue
Other revenues
TOTAL REVENUES
EXPEITOITURES
General government: Personal services
Operating services Materials and supplies
Capital outlay Other charges
Public safety:
Personal services Operating services Other
TOTAL EXPENDITURES
Excess (Deficiency) of Revenues
Over (Under) Expenditures
Operating transfers in
Total othCT financing sources (uses)
NET CHANGES IN FUND BALANCES
FUND BALANCES - December 31,2010
FUND BALANCES - December 31,2011
1,849 18,081 11,608
36 50
850 457,255
10,567 500,295
32,148
22,717 197
454,035 4,228
11,303 800 135
525,562
(25,268)
15,000
15,000
(10,268)
3,721
(6,547)
The accompanying notes are an integral part of these financial statements.
10
Statement F
Town of Eros Eros, Louisiana
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Govemmental Funds to the Statement of Activities
For the Year Ended December 31, 2011
Total net change in fund balances - govemmental funds (Statement E) $ (10,268)
Amount reported for govemmental activities in the Statement of Activities (Statement B) are different because:
Govemmental funds report capital outlays as expenditures. However, in the Statement of Activities (Statement B), the cost of those assets is allocated over their estimated useful lives as depreciation expense. This is the amount by which depreciation expense exceeds capital outlay in the current period. 443,530
Change in net assets of govemmental activities (Statement B) ^ A'\'̂ 26'̂
The accompanying notes are an integral part of these financial statements.
II
Statement G
Town of Eros Eros, Louisiana
Balance Sheet - Proprietary Fund AsofDecember3l ,20l l
Water & Sewer Fund
ASSETS
Current Assets:
Cash and equivalents
Investments
Receivables
Total Current Assets Noncurrent Assets:
Capital Assets - net of accumulated depreciation
Total Noncurrent Assets
TOTAL ASSETS
10,402
23,983
4,133
38,519
1,025,777
1,025,777
1,064,296
LIABILITIES
Current Liabilities:
Accounts payable
Payroll taxes payable
Customer deposits TOTAL LIABILITIES
1,582
1,065
10,657
13,303
NET ASSETS
Invested in capital assets
Unrestricted
TOTAL NET ASSETS
1,025,777
25,216
1,050,994
TOTAL LIABILITIES AND NET ASSETS 1,064,297
The accompanying notes are an integral part of these financial statements.
12
Statement H
Town of Eros, Louisiana Eros, Louisiana
Statement of Revenues, Expenditures, and Changes in Net Assets - Proprietary Fund
For the Year Ended December 31,2011
OPERATING REVENUES Water and sewer sales
Total operating revenues
Water & Sewer Fund
$ 55,107 55,107
OPERATING EXPENDITURES Gas and oil Repairs and maintenance Utilities Supplies Office supplies and expense Testing fees Insurance Salaries and payroll taxes Fees and dues Advertising Depreciation Miscellaneous expense
Total operating expenses OPERATING INCOME (LOSS)
2,633 5,199
12,940 1,476 1,681
869 4,589
16,647 1,209
227 89,330 7,649
144,450 (89,343)
NON-OPERATING REVENUES (Expenditures)
Investment eamings Total non-operating revenues (expenditures)
Income (loss) before contributions and transfers
Operating transfers in Operating transfers out Net operating transfers
CHANGES IN NET ASSETS
316 316
(89,027)
(15,000) (15,000)
(104,027)
TOTAL NET ASSETS - December 31, 2010 1,155,020
TOTAL NET ASSETS - December 31, 2011 1,050,994
The accompanying notes are an integral part of these financial statements.
13
Statement I
Town of Eros Eros, Louisiana
Statement of Cash Flows - Proprietary Fund For the Year Ended December 31,2011
Water & Sewer Fund
CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers Customer deposit receipts, net Payments to suppliers Payments to employees
Net cash provided by operating activities
CASH FLOWS FROM NON-CAPITAL FINANCING State grant Transfers from other funds Transfer to other funds Net cash provided by noncapital financing activities
CASH FLOWS FROM CAPITAL AND RELATED Acquisition of capital assets Grant receivable
Net cash used for capital and related financing activities
CASH FLOWS FROM INVESTING ACTIVITIES Interest eamings on bank deposits f
Net cash provided by investing activities
Net increase (decrease) in cash and cash equivalents
CASH AND CASH EQUIVALENTS - December 31, 2010
CASH AND CASH EQUIVALENTS - December 31, 2011
56,562 1,469
(36,936) (16,647) 4,449
78 78
4,527
5,876
10 409
RECONCILLATION OF OPERATING INCOME TO NET PROVIDED BY OPERATION ACTIVITIES
Operating income (loss) Adjustments
Depreciation Net changes in assets and liabilities:
Accounts receivable Due to other funds Accounts payable
Customer deposits Net cash provided by (used for) operating activities
$
$
(89,343)
89,330
1,455
1,537 1,469 4,449
The accompanying notes are an integral part of these financial statements.
14
NOTES TO THE FINANCIAL STATEMENTS
Town of Eros Eros, Louisiana
Notes to the Financial Statements December 31, 2011
INTRODUCTION
The Town of Eros was incorporated under the provisions of the Lawrason Act. The Town is governed by the mayor-board of aldermen form of government. The mayor and five aldermen serve four-year terms which expire on December 31, 2014. The aldermen receive $25 per diem for attending each regular and special meeting. The Town provides public safety, general government, and water and sewer services to its residents. The Town has an elected Chief of Police and two other full-time employees.
GASB Statement No. 14, The Reporting Entity, established criteria for determining the govemmental reporting entity and component units that should be included within the reporting entity. Under provisions of this Statement, the Town of Eros is considered a primary government, since it is a special purpose government 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 municipality may, without the approval or consent of another govemmental entity, determine or modify its own budget, levy its own taxes or set rates or changes, and issue bonded debt. The Town has no component units.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Government-Wide and Fund Financial Statements
The government-wide financial statements (i.e., the statement of net assets and the statement of activities) report information on all of the activhies of the Town of Eros. Govemmental 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.
The statement of activities demonstrates the degree to which the direct expenses of a given function or segments 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 from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues.
Govemmental funds account for most of the Town's general activities. These funds focus on the sources, uses, and balances of current financial resources. Expendable assets are assigned to the various govemmental funds according to the purposes for which they may be used. Current liabilities are assigned to the fund from which they will be paid. The difference between a govemmental fimd's assets and liabiHties is reported as fund balance. In general, fund balance represents the accumulated resources which may be used to finance future period programs or operations of the Town. For the year ended December 31, 2011, the Town of Eros adopted GASB Statement No. 54, Fund Balance Reporting and Govemmental Fund Type Definitions^ which states that fund balance can be classified as non-spendable, restricted, committed, assigned, and unassigned. Non-spendable funds are typically noncash or prepaid items that are identified as a part of fund balance, but they are not available to be expended. Spendable items include restricted, committed, assigned, and unassigned funds. The restricted fund balance category includes amounts that can be spent only for the specific purposes stipulated by constitution, external resource providers, or through
16
enabling legislation. The committed fund balance classification includes amounts that can be used only for the specific purposes determined by a formal action of the government's highest level of decision-making authority. Amounts in the assigned fund balance classification are intended to be used by the government for specific purposes but do not meet the criteria to be classified as restricted or committed. In govemmental flinds other than the General Fund, assigned fund balance represents the remaining amount that is not restricted or committed. Unassigned fund balance is the residual classification for the government's General Fund and includes all spendable amounts not contained in the other classifications.
Separate financial statements are provided for govemmental funds and business-type activities funds. All individual govemmental funds and individual enterprise funds are reported as separate columns in the fund financial statements.
B. Measurement Focus, Basis of Accounting, and Financial Statement Presentation
The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the business-type fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash fiows. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.
Govemmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, revenues are considered to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due.
Sales taxes, franchise taxes, licenses and permits, and interest associated with the current fiscal period are all considered to be susceptible to accmal and so have been recognized as revenues of the current fiscal period. All other revenue items are considered to be measurable and available only when cash is received by the Town.
The Town of Eros reports the following govemmental funds:
General Fund
The General Fund is the general operating fund of the Town and accounts for all financial resources of the general government.
The Town of Eros reports the following business-type activity fund:
Utilities Enterprise Fund
The Utilities Enterprise Fund accounts for the operations of the Town's water and sewer systems.
Private-sector standards of accounting and financial reporting issued prior to December 1,1989, generally are followed in the government-wide and business-type activities fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Govemmental Accounting Standards Board. Governments also have the option of following subsequent private-sector guidance for their business-type activities and enterprise funds, subject to the same limitation. The Town has elected not to follow subsequent private-sector guidance.
17
As a general rule, the effect of interfund activity is eliminated from the government-wide financial statements.
Amounts reported as program revenues include charges to customers for goods, services, or privileges provided and operating grants. General revenues include all taxes.
Business-type activities funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with the fund's ongoing operations. The Utilities Enterprise Fund's operating revenues consist of charges for water and sewer sales and connection fees and meter charges. Operating expenses for enterprise funds include the cost of services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting these definitions are reported as non-operating revenues and expenses.
C. Deposits and Investments
Cash includes amounts in demand deposits, interest-bearing demand deposits, and petty cash. State law allows the Town to invest in collateralized certificates of deposits, govemment-backed securities, commercial paper, the state sponsored investment pool, and mutual funds consisting solely of govemment-backed securities. If the original maturities of investments exceed 90 days, they are classified as investments; however, if the original maturities are 90 days or less, they are classified as cash equivalents. At December 31, 2011, the Town's investments consist of nonnegotiable certificates of deposits with original maturities that exceed 90 days that are reported in the accompanying financial statements at cost.
D. Receivables
All receivables are generally shown net to an allowance for uncollectible amounts. These statements contain no provision for uncollectible accounts. The Town is of the opinion that such an allowance would be immaterial in relation to the financial statements taken as a whole.
E. Capital Assets
Capital assets, which include the water and sewer systems and improvements, land, buildings, vehicles, and equipment, are reported in the applicable govemmental or business-type activities columns in the government-wide financial statements. Capital assets are capitalized at historical cost or estimated cost. Approximately 95 percent of the town's capital assets have been capitalized at cost and the remaining 5 percent have been capitalized at estimated cost based on the historical cost of similar assets. The Town of Eros 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 the asset's life are not capitalized.
All capital assets, other than land, are depreciated using the straight-line method over the following useful lives:
Estimated Lives
Infrastructure - roadway improvements 40 years Infrastmcture - water and sewer system and improvements 25 years Buildings . 25-40 years Vehicles and equipment 5-15 years
F. Fund Equity
In the fund financial statements, govemmental funds report reservations of fund balance for amounts that are not available for appropriation as non-spendable. Restricted fund balances are legally restricted by outside parties, purposes stipulated by constitution, or through enabling legislation for use for a specific purpose. Committed fund balances include amounts that can only be used for a specific purpose determined by a formal action of the government's highest level of decision-making authority. Assigned fund balances are intended to be used by the Town for a specific purpose but do not meet the criteria for restricted or committed classification. Unassigned fiind balances are the residual classification for the Tovm's General Fund and include all spendable amounts not designated as restricted, committed, or assigned. At December 31, 2011, the Town's govemmental fund balances were unassigned.
G. Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities, disclosures, and revenues, expenditures, and expenses during the reporting period. Actual results could differ from those estimates.
H. Restricted Net Assets
In the government-wide and proprietary fund financial statements, net assets are classified into three components:
-Invested in capital assets - consists of capital assets, net of accumulated depreciafion. -Restricted for capital projects or debt repayment - currently, no funds restricted. -Unrestricted - consists of all other assets.
\. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
A. Budget Information
The Town of Eros uses the following budget practices:
A proposed budget for the General Fund, prepared on the modified accmal basis of accounting, was formally adopted by the mayor and board of aldermen at the December 20, 2010 board meeting, and was amended on December 29, 2011. The budget is established and controlled by the mayor and board of aldermen at the object level of expenditure. Appropriations lapse at year-end and must be reappropriated for the following year to be expended. Encumbrance accounting is not utilized by the Town. Budgeted amounts included in the accompanying financial statements include the original adopted budget amounts and all budget amendments.
19
B. Deficit Fund Balances
The Town of Eros General Fund has a deficit fund balance as of December 31,2011 of ($6,547). This deficit will be financed through future revenues of the General Fund and the Utilities Enterprise Fund.
3. DEPOSITS IN FINANCIAL INSTITUTIONS
At December 31, 2011, the Town has cash and investments (book balances) as follows:
Checking accounts $ 1,765 Interest-bearing checking accounts 11,602 Petty cash 47 Investments-certificates of deposit 23,983 Total $37,397
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 mumally acceptable to both parties. At December 31,2011, the Town of Eros has $38,108 in deposits (collected bank balances). These deposits are secured from risk by $250,000 of federal deposit insurance.
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 Town that the fiscal agent bank has failed to pay deposited funds upon demand.
i. RECEIVABLES
The following is a summary of receivables at December 31,2011:
Fines and forfeitures Occupational licenses Grant revenues Water sales Reconnect water fees Other revenues Total
General Fund $
$
-
453 1,000
-
-
26 1,479
Water and Sewer^Fund
$ . -
-
4,133 --
$ 4,133
$
A.
Total -
453 1,000 4,133
-
26 5,612
20
CAPITAL ASSETS
Capital assets and depreciation activity as of and for the year ended December 31, 2011, is as follows:
Governmental Activities: Capital assets being depreciated:
Buildings Vehicles and equipment Roadway improvements
Total capital assets being depreciated Less accumulated depreciation for:
Buildings Vehicles and equipment Roadway inprovements
Total accumulated depreciation Total assets being depreciated, net
Business-Type Activities: Capital assets not being depreciated:
Land Capital assets being depreciated:
Water and sewer systems and improvements Equipment
Total capital assets being depreciated Less accumulated depreciation for:
Water and sewer systems and improvements Equipment
Total accumulated depreciation Total assets being depreciated, net
Balance at January 1,2011 Increases Decreases
53,270 $ 66,471
- $
454,035 119,741 454,035
,789 ,152 -
1,781 5,886 2,838
69,941 10,505 49,800 $ 443,530 $
Balance at December 31,
2011
- $ 53,270 66,471
454,035 573,775
35,569 42,039 2,838
80,446 493,330
$
$
$
121
2,190,056 59,580
2,249,636
1,097,972 36,677
1,134,649 1,115,107
$
$
_$
- $
-
.
82,260 7,070 89,330 (89,330) $
- $
-
.
$
-- $
121
2,190,056 59,580
2,249,636
1,180,232 43,747
1,223,980 1,025,777
Depreciation expense of $ 10,505 for the year ended December 31, 2011 was charged to the following govemmental functions:
General government
Public safety - police
Total
5,105
5,400
$ 10,505
Depreciation expense of $89,330 for the year ended December 31,2011 was charged to the business-type activities function.
21
6. RISK MANAGEMENT
The Town of Eros purchases commercial insurance to reduce the risk of loss resulting from property damage or liability claims. There have been no significant reductions in insurance coverage from coverage in the prior year. Settlements have not exceeded insurance coverage in any of the past three fiscal years.
7. GOING CONCERN AND MANAGEMENT'S PLAN
As indicated in the accompanying financial statements, the Town of Eros showed a decrease in unrestricted net assets of $24,963 during the year ended December 31, 2011. As of that date, the Town's govemmental activities current liabilities exceeded its current assets by $6,547. These factors, as well as the uncertain conditions that the Town faces regarding continuance of revenue sources, create uncertainty about the Town's ability to continue as a going concem. The Tovm of Eros must derive all govemmental revenues from occupational licenses, franchise fees based on usage, and fines and forfeitures revenues. Although the Town has tried repeatedly to pass sales and property taxes to increase revenues, these initiatives have not been approved by the residents of the Town of Eros. In the past year, the Board of Aldermen took a reduction in per diem paid for meeting attendance, the Mayor's and Town Clerk's salaries were reduced, and the Police Chief received a salary reduction. These measures were taken to aid the Town in fiilfilling its obligations to vendors. In addifion, payroll taxes due to the federal and state government have not been paid since Febmary of 2011, totaling $11,564 due to those taxing bodies at the year ended December 31, 2011. Management of the Town is developing a plan to reduce its liabilities by selling surplus equipment, appointing a new Police Chief which the Town anticipates will increase fines and forfeitures revenues, and including a sales tax to be voted on by the citizens during the general elections in November of 2012. The financial statements do not include any adjustments that might be necessary if the Town is unable to continue as a going concem.
8. SUBSEQUENT EVENTS
Management has evaluated subsequent events through the date that the financial statements were available to be issued, June 28,2012, and determined that no events occurred that require disclosure. No subsequent events occurring after this date have been evaluated for inclusion in these financial statements.
22
OTHER REQUIRED SUPPLEMENTARY INFORMATION
Town of Eros, Louisiana Budgetary Comparison Schedule - Govemmental Fund
For the Year Ended December 31,2011
Schedule I
REVENUES
Taxes:
Franchise tax Licenses and permits Fines and forfeitures Fees and charges Investment eamings Other Revenues
Rent Grant revenue Other revenues
TOTAL REVENUES
EXPENDFTURES
General government: Personal services
Operating services Materials and supplies
Capital outlay Other charges
Public safety:
Personal services Operating services Materials and supplies Other
TOTAL EXPENDITURES
EXCESS (Deficiency) OF REVENUES Over(Under) Expenditures
Operating transfers in Total other financing sources (uses)
NET CHANGES IN FUND BALANCES
FUND BALANCES - December 31,2010 FUND BALANCES - December 31,2011
Original
$ 5,500 18,150 11,500
100 900
800 8,200 7,005
52,155
37,600
24,350 1,250
-2,100
12,300 1,100
350 100
79,150
(26,995)
-
-
(26,995)
3,721 $ f23.274)
Final
$ 3,000 17,100 11,500
50 200
850 2,000 7,005
41,705
26,700
30,400 350
-5,400
11,300 1,000
300 150
75,600
(33,895)
-
-
(33,895)
3,721 $ ..(30J74)
Actual Amounts (GAAP Basis)
$
$
1,849 18,081 11,608
36 50
850 457,255
10,567 500,295
32,148
22,717 197
454,035 4,228
11,303 800
-135
525,562
(25,268)
15,000
15,000
(10,268)
3,721 (6.547)
Variance with 1 Final Budget-
Favorable (Unfavorable)
$ (1,151) 981 108 (14)
(150)
-
455,255 3,562
458,590
(5,448) 7,683
153 (454,035)
1,172
(3) 200 300
15 (449,962)
8,627
15,000 15,000
23,627
-
S 23.627
The accompanying notes are an integral part of these financial statements.
24
Kenneth D. Folden. CPA
Kenneth D. Folden & Co. Certified Public Accountants Ted W. Sanderlin. CPA
Members Society of Louisiana
Certified Public Accountants email: kFolden(@,foldencpa.com
302 Eighth Street Jonesboro, LA 71251
(318)259-7316 FAX (318) 259-7315
Members American Institute of
Certified Public Accountants email: [email protected]
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND
OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENTAUDfriNGSTANDARDS
Town of Eros Eros, Louisiana
We have audited the financial statements of the govemmental activities, the business-type activities and each major fund of the Town of Eros, as of and for the year ended December 31, 2011, which collectively comprise the Town of Eros's basic financial statements and have issued our report thereon dated June 28,2012, 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.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the Town of Eros's intemal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the fmancial statements, but not for the purpose of expressing an opinion on the effectiveness of the Town of Eros's intemal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Town of Eros's internal control over financial reporting.
A deficiency in intemal 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 a combination of deficiencies, in intemal control such that there is a reasonable possibility that a material misstatement of the entity's fmancial statements will not be prevented, or detected and corrected on a timely basis.
Our consideration of intemal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in intemal control over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did not identity any deficiencies in intemal control over financial reporting that we consider to be material weaknesses, as defined above.
26
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Town of Eros's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed instances of noncompliance or other matters that are required to be reported under Government Auditing Standards and which are described in the accompanying schedule of findings and questioned costs as Finding 2011-1 and Finding 2011-2.
We noted certain matters that we reported to management of the Town of Eros in a separate letter dated June 28, 2012.
The Town of Eros's response to the findings identified in our audit is described in the accompaning schedule of findings and questioned costs. We did not audit the Town of Eros's response and, accordingly, we express no opinion on it.
This report is intended solely for the information and use of the members of the Board of Aldermen of the Town of Eros, management of the Tovm of Eros, the Louisiana Legislative Auditor, federal awarding agencies, and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Under Louisiana Revised Statute 24:513, this report is distributed by the Legislative Auditor as a public document.
Jonesboro, Louisiana June 28,2012
27
SUPPLEMENTAL INFORMATION SCHEDULES
Schedule 2
Town of Eros Eros, Louisiana
Schedule of Findings and Questioned Costs For the Year Ended December 31, 2011
We have audited the basic financial statements of the Town of Eros as of and for the year ended December 31, 2011, and have issued our report thereon dated June 28, 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 Govemmental Auditing Standards, issued by the Comptroller General of the United States. Our audit of the financial statements as of December 31,2011 resulted in an unqualified opinion.
SECTION 1. SUMMARY OF AUDITOR'S REPORT
A. Report on Intemal Control and Compliance Material to the Financial Statements
Intemal Control
Material Weaknesses Yes _X No Significant Deficiencies Yes X No
Compliance
Compliance Material to Financial Statements _X_Yes No
2011-1-Noncoinpliance with Payment of Payroll Taxes
Criteria: Management is responsible for compliance with laws and regulations regarding the payment of payroll taxes due to the federal and state govemments on behalf of the Town and its employees.
Condition: During the audit of the Town of Eros, it was discovered that payroll taxes collected by the Town due to federal and state govemmental agencies were not remitted to the agencies in a timely manner. The Town Clerk is responsible for accounting for and remitting the payments and forms to the correct agency on behalf of the employees of the Town of Eros in a timely manner. Inquiries to the Town Clerk and the Mayor were made as to the reason for the delinquency in the tax payments/
Cause: Due to shortage of funds, the Town did not submit taxes as required.
Effect: As a fiduciary agent for the employees of the Town of Eros, payments to govemmental agencies must be made timely. If payments are not made timely, the Town will be held responsible for payments and any penalties and interest associated with late payment of the taxes.
Recommendation: The Town should collect and remit tax payments as the payments become due.
Management Response: The Town of Eros will resume payment of current payroll taxes, and the Town has formulated a plan to raise funds in order to satisfy their obligations. The plans include selling surplus equipment, appointing a new Police Chief to charge traffic violations increasing revenues from fines, and including a sales tax to be voted on by the citizens of the Town of Eros during the general elections in November of 2012.
28
2011-2-Compllance with Local Government Budget Law
Criteria: Louisiana state statute (RS 39:1311) requires that the budget be properiy amended if actual expenditures are more than budgeted expenditures by five percent or more. In addition, the total proposed expenditures shall not exceed the total estimated funds available for the year (RS 39:1305).
Condition: For the year ended December 31, 2011, a grant was received that increase both revenue and expenditures in the General Fund. The budget was not amended in anticipation of the increased expenditures.
Effect: The Town of Eros is in violation of the Local Government Budget Act.
Recommendation: The Town of Eros should modify procedures to ensure that the annual budget is properly amended when necessary.
Management Response: The Tovm of Eros will adopt procedures to ensure that the annual budget is amended as required by state law.
B. Findings - Financial Statements Audit
Current Year
No findings.
Prior Year
No findings.
29
Schedule 3
Town of Eros Eros, Louisiana
Schedule of Per Diem Paid Aldermen For the Year Ended December 31,2011
Irene Baugh Amy Costin Melba Creech Glenda Tullos Carolyn Waldroup William Wheelis Total
$
$
105 105 455 330 100 205
1,300
30
Kenneth D. Folden & Co. Kenneth D. Folden, CPA Certified Public Accountants Ted W. Sanderlin, CPA
Members 302 Eighth Street Members Society of Louisiana Jonesboro, LA 71251 American Institute of
Certified Public Accountants (318) 259-7316 Certified Public Accountants EMAIL: kfoldenfgifoldencpa.com FAX (318) 259-7315 EMAIL: tsanderlinfg)foldencpa.com
June 28,2012
Mayor William Wheelis Town of Eros Post Office Drawer 200 Eros, Louisiana 71238
Dear Mayor Wheelis:
In planning and performing our audit of the financial statements of the Town of Eros for the year ended December 31,2011, we considered the Town's ability to continue as a going concern. Our responsibility was to evaluate whether there is substantial doubt about the Town's ability to continue as going concem for a reasonable period of time. Information about such uncertainties and conditions is obtained from the application of auditing procedures planned and performed to achieve audit objectives that are related to management's assertions embodied in the financial statements being audited.
During the audit we became aware of conditions that cause substantial doubt about the Town's ability to continue as a going concem. These conditions include the decrease in unrestricted net assets from the prior year and the deficit in the govemmental activities net assets of $6,547. In addition, the Town is not current in paying payroll taxes to the federal and state government, totaling a liability of $11,564 to those taxing bodies.
Management of the Town of Eros has the responsibility to formulate a plan that is intended to mitigate the effect of the conditions mentioned above and assess the likelihood that the plan can be effectively implemented. In accordance with this responsibility, please develop a plan and provide the plan to us for evaluation.
Sincerely,
Kenneth D. Folden & Co., CPAs
TOWN OF EROS
P0B0X200 9890HWY34 £ROS,LA7]L239
Phone: 33i8-:a49-2i83 Fax: 313-249-2269 E-m^: townafeTos@ceintUTyte).net
June 28,2012
Louisiana Legislative Auditor 1600 Third Street Baton Rouge, Louisiana 70804
The folioiving is our response to the management letter issued to us by the fixm, Kenneth D, Folden & Co.» CPAs for the year ended December 31,2011.
Management's Corrective Action Plan
Hie Town of Eros will take Hbs following actions to deal with the adverse effects of tibie conditions presented by the auditors. Fiist, the Town of Eros will resume paying current payroll taxes. The Town currently has suzplus equipment avaUable for sale through the biddmg process. In addition, tiie Town has appointed a new Police Chief, and the Town anticipates that the revenues bom fines and forfeitures will increase. Lastly, the Tovm will include a sales tax (o be voted on by the citizens of the Town of Eros duting g e n ^ elections in November of 2012. The funds received fiom these actions will be used to satisfy obligations of the Town.
'^' //#^ A d/s^/. William Wheelis Mayor, Town of Eros
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