<iM^

LEGISLATIVE AUDITOR

2010 JUL " 5 AM 10-^6

CAMERON PARISH WATERWORKS DISTRICT NO.7

FINANCIAL STATEMENTS

December 31, 2009 and 2008

Under provisions of state law, this report is a public document. A copy of the report has been submitted to the entity and otherappropriate public officials. The report is available for public inspection at the Baton Rouge office ofthe LegislativeAuditor and, where appropriate, at the office of the parish clert< of court.

Release Date ^

CAMERON WATERWORKS DISTRICT No. 7 December 31, 2009 and 2008

TABLE OF CONTENTS

EXHIBIT PAGE

Independent Auditor's Report 1 - 2

Basic Financial Statements-December 31, 2009 and 2008 Statement of Net Assets A 4 - 5 Statement of Revenues, Expenses and Ctianges in Fund Net Assets B 6

Statement of Cash Flows C 7

Notes to Financial Statements 8 - 2 2

Required Supplementary Information 2 3

Schedule of Funding Progress 24

Report on Internal Control over Financial Reporting and on Compliance and other Matters Based on an Audit of Financial Statements

Performed in Accordance with Government Auditing Standards 2 5 - 2 7

Summary Schedu le of C u r r e n t and P r i o r Year A u d i t F i n d i n g s

and Management ' s C o r r e c t i v e A c t i o n P l a n 28 - 29

S u p p l e m e n t a l I n f o r m a t i o n 30

Schedu le of Compensa t ion P a i d Board Members - Sch 1 31

ELLIOTT & ASSOCLVTES, INC. A Professional Accounting Corporation

P. O. Box 1287 Leesville, Louisiana 71496-1287

(337)239-ZS35 W. Micheal EllioU, CPA (337)238-5135 Fax 239-2295

INDEPENDENT AUDITOR'S REPORT

Board of Commissioners Cameron Parish Waterworks District No. 7

I have audited the accompanying financial statements of the business-type and major fund activities of the Cameron Parish Waterworks District No. 7, "the District," a component unit of the Cameron Parish Police Jury, as of and for the years ended December 31, 2009 and 2008, which collectively comprise the District's basic financial statements, as listed in the table of contents. These basic financial statements are the responsibility of the District's management. My responsibility is to express an opinion on these basic financial statements based on my audit.

I conducted my audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government A u d i t i n g S t a n d a r d s , issued by the Comptroller General of the United States. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the basic financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence, supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall basic financial statement presentation. I believe that my audit provides a reasonable basis for my opinion.

In my opinion, the basic financial statements referred to above present fairly, in all material respects, the respective financial position of the Cameron Parish Waterworks District No. 7 as of December 31, 2009 and 2008, and the results of its operations and cash flows for the two years then ended in conformity with accounting principles generally accepted in the United States of America.

In accordance with Government Auditing Standards, I have also issued my report dated June 9, 2010 on my consideration of the Cameron Waterworks District No. 7's internal control over financial reporting and my tests of its compliance with certain provision of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of my 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 financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in conjunction with this report in considering the results of my audit.

The schedule of funding progress on page 24 is not a required part of the basic financial statements but is supplementary information required by the Governmental Accounting Standards Board. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and in my opinion is fairly stated in all material respects in relation to the basic financial statements taken as a whole. Cameron Parish Waterworks District No.7 has not presented management's discussion and analysis that the Government Accounting Standards Board has determined is necessary to supplement, although not required to be part of, the basic financial statements.

My audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the District's basic financial statements. The accompanying financial information listed as "Supplementary Information" in the table of contents is presented for purposes of additional analysis and is not a required part of the basic financial statements. This information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in my opinion, is fairly stated in relation to the basic financial statements taken as a whole.

Leesville, Louisiana June 9, 2010

BASIC FINANCIAL STATEMENTS

CAMERON PARISH WATERWORKS District No. 7

STATEMENTS OF NET ASSETS

December 31, 2009 and 2008

ASSETS

ASSETS Current asset 2009 2008

Cash and cash equivalents(Note 2) $20,472 57,552 Cash-protested taxes (Note 2) 100,939 100,958 Receivables (Note 3): Water service customers 8,397 5,934 Ad valorem taxes 77,708 80,235 Fema 45,898

Total current assets 207,516 290,577

Restricted assets Cash-sinking fund (Note 2) 16,949 19,538 Ad valorem taxes receivable (Note 3) 49,349 49,478

Total restricted assets 66,298 69,016

Noncurrent assets Capital assets, net of accumulated

depreciation(Note 4) 1,427,637 1,409,314

Total noncurrent assets 1,427,637 1,409,314

TOTAL ASSETS 1,701,451 1,768,907

The accompanying notes are an integral part of this statement

Exhibit A

LIABILITIES

Current liabilities 2009 2008

Sales tax payable 126 Accounts payable 1,911 2,820 Salaries payable 6,872 6,501 Deferred revenue 885 2,898 Retirement deductions payable 2,311 2,525

Total current liabilities 11,979 14,870

Current liabilities payable from restricted assets:

Retirement deductions payable 1,465 1,601 Accrued interest payable 8,917 27,921 General obligation bonds payable—current (Note 5) 22,575 18,788

Total current liabilities payable from restricted assets 32,957 48, 310

Long-term liabilities General obligation bonds payable (net of current portion)—(Note 5) 382,822 410,654 Due to Cameron Police Jury 45,292 45,292

OPEB benefits payable (Note 8) $2,885

Total long-term liabilities

TOTAL LIABILITIES

430

4 7 5 ,

, 9 9 9

935

455

5 1 9 ,

, 9 4 6

126

NET ASSETS

Invested in capital assets, net of related debt 1,013,323 951,951 Restricted for debt service 64,833 67,415 Unrestricted 147,360 230,415

TOTAL NET ASSETS $1,225,516 1,249,781

EXHIBIT B

CAMERON PARISH WATERWORKS District No, 7 Statements of Revenues, Expenses and

Changes in Fund Net Assets For the years ended December 31, 2009 and 2008

OPERATING REVENUES Charges for sales and services:

Water sales Installation and service fees

Total operating revenues

OPERATING EXPENSES Salaries and related benefits Per diem of board members Operation of plant Depreciation (Note 4) OPEB benefits expense (Note 8)

Total operating expenses

OPERATING LOSS

NON-OPERATING REVENUES(EXPENSES): Ad valorem taxes - unrestricted Ad valorem taxes - restricted interest income interest expense Fema proceeds

Total nonoperating revenues(expenses)

2009

$ 73,811 330

74,141

67,865 1,590

191,619 17,427 2,885

2008

79,292 1,500

80,792

72,673 1,300

157,706 14,581

281,386 246,260

(207,245) (165,468)

71,691 45,939

214 (18,157) (32,972) 83,293 99,994

49,528 37,014 2,321

182,980 155,885

NET DECREASE IN NET ASSETS

NET ASSETS - BEGINNING OF YEAR

NET ASSETS - END OF YEAR

(24,265) (9,583)

1,249,781 1,259,365

$ 1,225,516 1,249,781

The accompanying notes are an integral part of this statement.

6

CAMERON PARISH WATERWORKS District No,. 7 Statements of Cash Flows

For the years ended December 31, 2009 and 2008

EXHIBIT C

CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers Cash payments to suppliers For goods and service

Cash payments to employees for services Net cash used by operating activities '

2009 2008 71,248 $80,210

(150,279) (67,494)

(146,525)

(205,065) (69,376)

(194,231)

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Ad valorem taxes Fema Proceeds

NET CASH FROM NONCAPITAL FINANCING ACTIVITIES

120,157 83,293

203,450

90,454 99,994

190,448

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Ad valorem taxes Repayment of indebtedness Acquisition of property, plant and equipment Interest paid

NET CASH USED BY CAPITAL FINANCING ACTIVITIES

129 (24,045) (8,900)

(35,750) (1,020) (37,161) (19,920) (96,827) (29,840)

CASH FLOWS FROM INVESTING ACTIVITIES Interest received

DECREASE IN CASH CASH, BEGINNING OF YEAR CASH, END OF YEAR

214 2,321 (39,688) 178,048

(31,302) 209,350

$ 138,360 $178,048

CLASSIFIED AS: Unrestricted Restricted TOTAL CASH

RECONCILIATION OF NET OPERATING INCOME TO NET CASH ACTIVITIES Operating income (loss) Adjustments to reconcile operating income

to net cash provided by operating activities: Depreciation Changes in assets and liabilities: Accounts receivable Fema receivable Accounts payable Other current liabilities Retirement deductions payable Deferred revenue OPEB benefits payable

NET CASH USED BY OPERATING ACTIVITIES

20,472 117,888

$57,552 120,496

$138,360 $178,048 PROVIDED BY OPERATING

$(207,245)$(165,469)

17,428

(2,463) 45,898

(909) 244 (350)

(2,013) 2,885

14,580

582 (45,898)

676 97

1,201

$(146,525)$(194,231)

The accompanying notes are an integral part of this statement 7

CAMERON PARISH WATERWORKS District No. 7 December 31, 2009 and 2008

Notes to the Financial Statements

Note 1. Summary of Significant Accounting Policies

The accounting and reporting policies of Cameron Waterworks District No, 7 (the District) conform to accounting principles generally accepted in the United States of America as applicable to governments. Such accounting and reporting procedures also conform to the requirements of Louisiana Revised Statutes 24:517 and to the guidance set forth in the L o u i s i a n a Governmenta l Aud i t Gu ide , and to the industry audit guide. A u d i t s o f S t a t e and Loca l Governmenta l U n i t s , The following is a summary of certain significant accounting policies.

Reporting Entity The reporting entity for Cameron Waterworks District No, 7 consists of the Cameron Parish Council, which, as governing authority of the parish, has oversight responsibility over other governmental units (component units) within the parish. In accordance with GASB Codification Section 2100, Cameron Waterworks District No. 7 is considered a component unit of the parish reporting entity because (1) commissioners of the District are appointed by the Cameron Parish Council and (2) the District provides water service to residents within Cameron Parish. While Cameron Waterworks District No. 7 is an integral part of the parish reporting entity and should be included within the financial statements of that reporting entity, GASB Codification Section 2600 provides that a component unit may also issue financial statements separate from those of the reporting entity. Accordingly, the accompanying financial statements present information only on the financial operations of Cameron Waterworks District No. 7 and do not present information on the Cameron Parish Waterworks District No.7, the general government services provided by the District or on other component units that comprise the Cameron Parish reporting entity.

The District applies all applicable FASB pronouncements passed on or before November 30, 1989, in accounting and reporting for its proprietary fund operations unless those pronouncements conflict with or contradict GASB pronouncements,

CAMERON WATERWORKS DISTRICT NO. 7 December 31, 2009 and 2008

Notes to the Financial Statements (continued)

Basic Financial Statements

The statement of net assets, and related statements of revenues, expenses, and changes in fund net assets, and cash flows display information about the reporting government as a whole. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange revenues. Business-type activities are financed in whole or in part by fees charged to external parties for goods or services. Cameron Waterworks District No. 7 does not have governmental activities. Its operation is a business-type activity.

The District maintains only one fund and it is described below:

Proprietary Fund -

Enterprise Fund

The Enterprise Fund is used to account for operations (a) that are financed and operated in a manner similar to private business enterprises - where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or (b) where the governing 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.

Fund Accounting

The accounts of the District are organized and operated on the basis of funds. A fund is an independent fiscal and accounting entity with a separate set of self-balancing accounts. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with finance-related legal and contractual provisions. The minimum number of funds is maintained consistent with legal and managerial requirements.

Measurement Focus/Basis of Accounting

Measurement focus is a term used to describe "which" transactions are recorded within the various financial statements. Basis of accounting refers to "when" transactions are recorded regardless of the measurement focus applied.

CAMERON PARISH WATERWORKS District No. 7 December 31, 2009 and 2008

Notes to the Financial Statements

Measurement Focus

The enterprise fund utilizes an "economic resources" measurement focus. The accounting objectives of this measurement focus are the determination of operating income, changes in net assets (or cost recovery), financial position, and cash flows. All assets and liabilities (whether current or noncurrent) associated with their activities are reported. Proprietary fund equity is classified as net assets.

Basis of Accounting

The proprietary fund statements are presented using the accrual basis o accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recognized when the liability is incurred or economic asset used. Revenues, expenses, gains, losses, assets, and liabilities resulting from exchange and exchange-like transactions are recognized in accordance with the requirements of GASB Statement No. 33, "Accounting and Financial Reporting for Nonexchange Transactions."

Cash and Cash Equivalents

For the purpose of the statement of cash flows, the District considers all demand deposits and certificates of deposit with an original maturity of three months or less when purchased to be cash equivalents.

Utility Customer Receivables Utility customer receivables on the accompanying Statements of Net Assets are considered to be fully collectible at December 31, 2009. Uncollectible amounts are recognized as bad debts through the establishment of an allowance account at the time information becomes available, which would indicate the uncollectibility of an account.

Capital Assets All capital assets of the proprietary fund are recorded at historical costs. Depreciation of all exhaustible capital assets is charged as an expense against their operations. Pre-construction costs associated with the development of the water system, which include engineering, legal, and interest costs are capitalized and will be amortized over their estimated useful lives using the straight-line method. The District maintains a threshold level of $1,000 or more for capitalizing capital assets.

The costs of normal maintenance and repairs that do not add to the value of the assets or materially extend asset lives are not capitalized. Improvements are capitalized and depreciated over the remaining useful lives and methods are used to compute depreciation:

10

CAMERON WATERWORKS DISTRICT NO. 7 December 31, 2009 and 2008

Notes to the Financial Statements (continued)

Improvements other than Building Furniture, Fixtures and Equipment

Equity Classifications

45 years 3-11 years

Straight Line Straight Line

Equity is classified as net assets and displayed in three components:

Invested in capital assets, net of related debt—consists of capital assets including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets.

Restricted net assets—consists of net assets with constraints placed on the use either by (1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments; or (2) law through constitutional provisions or enabling legislation.

Unrestricted net assets—all other net assets that do not meet the definition of "restricted" or "invested in capital assets, net of related debt."

The District uses unrestricted assets only when restricted assets are fully depleted.

Revenues and Expenses

Operating Revenues and Expenses

Proprietary 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 a proprietary fund's principal ongoing operations. The principal operating revenues of the District's enterprise fund are charges to customers for sales and services. The District also recognizes as operating revenue the portion of tap fees intended to recover the cost of connecting new customers to the system. Operating expenses for enterprise 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 non-operating revenues and expenses.

11

CAMERON PARISH WATERWORKS District No. 7 December 31, 2009 and 2003

Notes to the Financial Statements

Compensated Absences

Annual leave—Upon resignation, death, removal, or other termination of employment of an employee, annual leave accrued to his credit shall be computed and the value thereof shall be paid to him or his heirs, provided that the annual leave has been accrued under established leave regulations and daily attendance record has been maintained for the employee by his supervisor, except that such payment shall not exceed three thousand ($3,000.00) . The rate of pay shall be computed on the basis of the rate employee is receiving at the time of termination.

Sick leave—In no instance shall an employee be paid for any accumulated sick leave left to an employee's credit at the time of termination from the service.

Upon retirement, accumulated annual leave and sick leave may be used to enhance the employee's retirement pension; however, it may not be considered a part of service time.

The cumulative amount of unpaid vacation for the District at December 31, 2009 is not material to the financial statements.

Estimates The preparation of financial statements in conformity with accounting

principles generally accepted in the United States of America requires management to make estimated and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimates.

2. CASH AND CASH EQUIVALENTS

Under state law, the District may deposit funds with a fiscal agent bank organized under the laws of the State of Louisiana, the laws of any other state in the Union, or the laws of the United States. The District may invest in United States bonds, treasury notes, time certificates of deposit of any bank domiciled or having a branch office in the State of Louisiana, investments as stipulated in state law, or any other federally insured investment.

12

CAMERON PARISH WATERWORKS District No. 7 December 31, 2009 and 2008

Notes to the Financial Statements

Custodial credit risk for deposits is the risk that in the event of the failure of a depository financial institution, the District's deposits may not be recovered or will not be able to recover collateral securities that are in the possession of an outside party. 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 similar federal security or the pledge of securities owned by the fiscal agent bank.

At December 31, 2009, the District had cash and cash equivalents as follows:

UNRESTRICTED RESTRICTED TOTAL

Cash (demand deposits) and certificate of deposit $121,J11 $16,949 $138,360

At year end, the carrying amount of the District's deposits (demand deposits and certificates of deposit) was $138,360, bank balances were $138,360. A surmnary of collateralization of bank balances is presented below.

Insured (Federal deposit insurance) $138 , 360

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 at least equal the amount on deposit with the fiscal agent.

At Deceraber 31, 2009, the District's total bank balances were fully insured and, therefore, they were not exposed to custodial credit risk.

13

CAMERON PARISH WATERWORKS DISTRICT NO December 31, 2009 and 2008

Notes to the Financial Statements

3. RECEIVABLES

Receivables at December 31 consisted of the following:

2009 2008 Ad valorem taxes—unrestricted $ 77,708 80,235 Ad valorem taxes--restricted-sinking 49,349 49,478 Accounts 8,397 5,934

Net total receivables $ 135.454 135,647

The amount included in the ad valorem receivable on the balance sheet is for ad valorem taxes which attach as an enforceable lien on property as of January 1 of each year. Taxes are levied to the taxpayers in November. Billed taxes become delinquent on January 1 of the following year. Revenues from ad valorem taxes are budgeted in the year billed.

The District utilizes the Cameron Parish Tax Collector/Sheriff to bill and collect its property taxes using the assessed values determined by the tax assessor of Cameron Parish,

For the year ended December 31, 2009, taxes of 9.28 mills was levied on property with assessed valuation totaling at $12,621,823 and was dedicated to the operations of the water district and its related debt.

For the year ended December 31, 2008, taxes of 11.68 mills was levied on property with assessed valuation totaling at $7,295,811 and was dedicated to the operations of the water district and its restricted portion dedicated to the related debt.

The total amount levied in 2 009 was $117, 130. Furthermore, collections of delinquent taxes and other adjustments resulted in total collections of $117,130. The total amount levied in 2008 was $85,217. Furthermore, collections of delinquent taxes and other adjustments resulted in total collections of $86,542.

14

CAMERON PARISH WATERWORKS DISTRICT NO, 7 December 31, 2009 and 2008

Notes to the Financial Statements

4. CHANGES IN CAPITAL ASSETS

Balance Balance 12/31/07 Additions Retirements 12/31/08

Improvements other than building 1,826,799 1,826,799 Furniture & Equipment 25,046 25,046

Totals $ 1,851,845 $ 1,851,845 Accumulated Depreciation (427,950) (14,581) (442,531)

Net capital assets $2,42J,89^ Xl_4,581) $ 1,409^14

Depreciation expense included in the financial statements for the fiscal year ended December 31, 2008 is $14,581.

Balance Balance 12/31/08 Additions Retirements 12/31/09

Improvements other than building 1,826,799 35,750 1,862,54 9

Furniture & Equipment 25,046 25,046

Totals $ 1,851,845 35,750 $ 1,887,595 Accumulated Depreciation (442,531) (17,427) (459,958)

Net capital 1,409,314 25,323 $ 1,42J^637 Assets

Depreciation expense included in the financial statements for the fiscal year ended December 31, 2009 is $17,427.

15

CAMERON PARISH WATERWORKS District No. 7 December 31, 2009 and 2008

Notes to the Financial Statements (Continued)

NOTE 5-LONG -TERM DEBT GENERAL OBLIGATION BONDS PAYABLE

During the year ended December'31, 2001, the District borrowed $518,000 at 4,375% through general obligation bonds sold to USDA-Rural Development to help finance water line expansion, plus grant capital. The debt is secured by a collateral mortgage on the District's plant system and equipment. Principal payments with interest began on April 2, 2002. Annual debt service is $27,920 with the final installment due on April 2, 2034 at an interest rate of 4.375%.

December 31, 2 008

Additions Deletions

$ 429,442

(24,045)

December 31, 2 009 $ 405,397

Maturities, including interest expense of $219,445, are as follows:

Year ended

2010 2011 2012 2013 2014 2015-2019 2020-2024 2025-2029 2030-2031

Total

Total Amount

$ 27,920 27,920 27,920 27,920 27,920 139,600 139,600 139,600 63,293

$ 621,693

Principal Interest

22,575 11,210 11,700 12,212 12,746 72,602 89,934 111,406 61,012

5,345 16,710 16,220 15,708 15,174 66,998 49,666 28,194 2,281

405,397 $217,296

Principal paid in 2008 was $24,045 and total interest expense was $18,157. An additional payment on debt service was made in the fiscal year ended December 31, 2009 thus accounting for increased principal retirement and lesser interest expense.

16

CAMERON PARISH WATERWORKS District No. 7 December 31, 2009 and 2008

Notes to the Financial Statements (Continued)

6. RISK MANAGEMENT

The District is exposed to various risks of loss related to torts, theft or damage and destruction of assets, errors and omissions, injuries to employees, and natural disasters. The District carries commercial insurance as outlined in the following table. Settled claims did not exceed commercial coverage for any of the past three fiscal years.

LIMITS OF

COVERAGE Workmen's compensation $ 350,000 Auto liability 1,000,000 Commercial general liability 2,000,000 District-owned buildings and equipment None

The District covers all other losses, claim settlements, and judgments from operating results. Claims expenditures and liabilities are reported when it is probable that a loss has occurred and the amount of that loss can be reasonably estimated.

The District was not involved in any litigation nor did it have asserted claims lodged against it,

7, DEFINED BENEFIT PENSION PLANS

All permanent employees of the District participate in the Parochial Employees' Retirement System of Louisiana.

Parochial Employees' Retirement System of Louisiana (PERS): Plan description -

All permanent parish employees who work at least 28 hours a week are members of the plan. Members of the plan hired prior to January 1, 2007 may retire with thirty years of creditable

age 55, with ten years of service at age 60, and with service at age 65. Members of the plan hired January later may retire with thirty years of creditable age 55, with ten years of service at age 62, and with service at age 6 7. The retirement allowance is equal

of the member's final compensation multiplied by his years of creditable service. Their retirement allowance may not exceed the greater of 100% of a member's final salary or final compensation. The System also provides disability and survivor benefits. Benefits are established by State statute.

17

service 7 1, years 2007

service 7 years to 3% o:

at of or at of f t

CAMERON PARISH WATERWORKS DISTRICT NO. 7 December 31, 2009 and 2008

Notes to the Financial Statements

PERS issues a publicly available financial report that includes financial statements and required supplemental information, That report may be obtained by writing to Parochial Employees' Retirement System of Louisiana, Post Office Box 14619, Baton Rouge, Louisiana 70898-4619.

Funding policy -

Plan members are required to contribute 9.50% of their annual covered salary and the parish is required to contribute at an actuarially determined rate. The current rate is 12,25% of covered payroll. The contribution requirements of the plan members and the parish are established by State statute. The parish's contributions for the years ended December 31, 2009, 2008, and 2007 were $4,388, $4,964, and $4,563, respectively, equal to the required contributions for each year,

8, POST RETIREMENT HEALTH CARE AND LIFE INSURANCE BENEFITS

From an accrual accounting perspective, the cost of postemployment healthcare benefits should be associated with the periods in which the cost occurs, rather than in the future year when it will be paid. In adopting the requirements of GASB Statement No. 45 during the year ended December 31, 2009, the District recognizes the cost of postemployment healthcare in the year when employee services are received, reports the accumulated liability from prior years, and provides information useful in assessing potential demands on the District's future cash flows. Because the District is adopting the requirements of GASB Statement No. 45 prospectively, recognition of the liability accumulated from prior years will be phased in over 30 years, commencing with the 2009 liability.

Annual Required Contribution. The District's Annual Required Contribution (ARC) is an amount actuarially determined in accordance with GASB 45. The Annual Required Contribution (ARC) is the sum of the Normal Cost plus the contribution to amortize the Actuarial Accrued Liability (AAL). A level dollar, closed amortization period of 30 years (the maximum amortization period allowed by GASB 43/45) has been used for the post-employment benefits. The total ARC for the fiscal year beginning January 1, 2009 is $2,770, as set forth below:

Medical Normal Cost $ 1,971 30-year UAL amortization amount 7 99

Annual required contribution (ARC) $2,770

CAMERON PARISH WATERWORKS DISTRICT NO. 7 December 31, 2009 AND 2008

Notes to the Financial Statements

Net Post-employment Benefit Obligation (Asset). The table below shows the District's Net Other Post-employment Benefit (OPEB) Obligation (Asset) for fiscal year ending December 31, 2009:

Medical Beginning Net OPEB Obligation (Asset) 1/1/2009 $0 Annual required contribution 2,770 Interest on Net OPEB Obligation 115 OPEB Cost 2,885 Contribution 0 Current year retiree premium 0 Change in Net OPEB Obligation 2,885 Ending Net OPEB Obligation (Asset) 12/31/2009 $2,885

The following table shows the District's annual post employment benefits (PEB) cost, percentage of the cost contributed, and the net unfunded post employment benefits (PEB) liability (asset):

Percentage Post of Annual Net OPEB Employment Annual Cost Obligation Benefit Fiscal Year Ended OPEB Cost Contributed (Asset) Medical December 31, 2009 $2,885 0,0% $2,885

Funded Status and Funding Progress. In the fiscal year ending December 31, 2009, the District made no contributions to its post employment benefits plan. The plan was not funded at all, has no assets, and hence has a funded ration of zero. As of January 1, 2009, the first and most recent actuarial valuation, the Actuarial Accrued Liability (AAL) was $12,815, which is defined as that portion, as determined by a particular actuarial cost method (the District uses the Unit Credit Cost Method), of the actuarial present value of post employment plan benefits and expenses which is not provided by normal cost. Since the plan was not funded in fiscal year 2 009, the entire actuarial accrued liability of $12,815 was unfunded.

Medical Actuarial Accrued Liability (AAL) Actuarial Value of Plan Assets Unfunded Act, Accrued Liability (UAAL) Funded Ratio (Act. Val, Assets/AAL)

Covered Payroll (active plan members) UAAL as a percentage of covered payroll

19

$ 1 2 ,

1 2 ,

6 2 , 2C

815 0

815 0%

609 ).4%

CAMERON PARISH WATERWORKS DISTRICT NO, December 31, 2009 and 2008

Notes to the Financial Statements

Actuarial Methods and Assumptions. Actuarial variations involve estimates of the value of reported amounts and assumptions about the probability of events far into the future. The actuarial valuation for post employment benefits includes estimates and assumptions regarding (1) turnover rate; (2) retirement rate; (3) health care cost trend rate; (4) mortality rate; (5) discount rate (investment return assumption); and (6) the period to which the costs apply (past, current, or future years of service by employees). Actuarially determined amounts are subject to continual revision as actual results are compared to past expectations and new estimates are made about the future.

The actuarial calculations are based on the types of benefits provided under the terms of the substantive plan (the plan as understood by the District and its employee plan members) at the time of the valuation and on the pattern of sharing costs between the District and its plan members to that point. The projection of benefits for financial reporting purposes does not explicitly incorporate the potential effects of legal or contractual funding limitations on the pattern of cost sharing between the District and plan members in the future. Consistent with the long-term perspective of actuarial calculations, the actuarial methods and assumptions used include techniques that are designed to reduce short-term volatility in actuarial liabilities and the actuarial value of assets.

Actuarial Cost Method, The ARC is determined using the Unit Credit Cost Method. The employer portion of the cost for retiree medical care in each future year is determined by projecting the current cost levels using the healthcare cost trend rate and discounting this projected amount to the valuation date using the other described pertinent actuarial assumptions, including the investment return assumption (discount rate), mortality, and turnover.

Actuarial Value of Plan Assets, Since this is the first actuarial valuation, there are not any assets. It is anticipated that in future valuations, should funding take place, a smoothed market value consistent with Actuarial Standards Board ASOP 6, as provided in paragraph number 125 of GASB Statement 45 will be used.

20

CAMERON PARISH WATERWORKS DISTRICT NO, 7 December 31, 2009 and 2008

Notes to the Financial Statements

Turnover Rate. An age-related turnover scale based on actual experience as described by administrative staff has been used. The rates, when applied to the active employee census, produce an annual turnover of approximately 5%, The rates for each age are below:

Age Percent Turnover 18-25 10.0% 26-40 6.0% 41-54 5,0% 55+ 4.0%

Post employment Benefit Plan Eligibility Requirements. Based on past experience, it has been assumed that entitlement to benefits will commence three years after eligibility to enter the D.R.O.P, Medical benefits are provided to employees upon actual retirement. Most employees are covered by the Parochial Employees' Retirement System of Louisiana, whose retirement eligibility (D.R.O.P, entry) provisions are as follows: 30 years of service at any age; age 55 and 25 years of service; age 60 and 10 years of service; or, age 65 and 7 years of service. For employees hired on and after January 1, 2008, retirement eligibility (D.R,0,P. entry) provisions are as follows: age 55 and 3 0 years of service; age 62 and 10 years of service; or, age 67 and 7 years of service. For the few employees not covered by that system, the same retirement eligibility has been assumed. Entitlement to benefits continue through Medicare to death.

Investment Return Assumption (Discount Rate). GASB Statement 45 states that the investment return assumption should be the estimated long-term investment yield on the investments that are expected to be used to finance the payment of benefits (that is, for a plan which is funded). Based on the assumption that the ARC will not be funded, a 4% annual investment return has been used in this valuation. This is a conservative estimate of the expected long term return of a balanced and conservative investment portfolio under professional management.

Health Care Cost Trend Rate. Because the employer provided medical cost of retirees is limited to a flat $150 per month, we have assumed a flat 3% annual "trend" as the expected rate of increase in medical cost assuming general inflation will cause the flat amount to increase. Conventional medical trend factors have not been used.

21

CAMERON PARISH WATERWORKS DISTRICT NO. 7 December 31, 2009 and 2008

Notes to the Financial Statements

Mortality Rate. The 1994 Group Annuity Reserving (94GAR) table, projected to 2002, based on a fixed blend of 50% of the unloaded male mortality rates and 50% of the unloaded female mortality rates, is used. This is the mortality rate which the IRS requires to be used in determining the value of accrued benefits in defined benefit pension plans.

Method of Determining Value of Benefits. The "value of benefits" has been assumed to be the portion of the premium after retirement date expected to be paid by the employer for reach retiree and has been used as the basis for calculating the actuarial present value of OPEB benefits to be paid. The employer pays a flat $150 per month of the cost of the medical and life insurance combined for the retirees only (not dependents). Because of the combined nature of the flat monthly employer payment, we have valued only the medical benefits,

22

REQUIRED SUPPLEMENTARY INFORMATION

23

CAMERON PARISH WATERWORKS DISTRICT NO,7 CREOLE, LA

Schedule of Funding Progress For the Year Ended December 31, 2009

Actuarial Actuarial Valuation Value of Date Assets

January 1, 2009 $

Actuarial Accrued Liabilities

(AAL)

$12,815

Unfunded Actuarial Accrued Liabilities

(UAAL)

$12,815

Funded Ratio

0%

Covered Payroll

$62,609

UAAL as a Percentage of Covered Payroll

20.4%

24

REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS

BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

25

ELLIOTT & ASSOCIATES, INC. A Professional Accounting Corporation

P. O. Box 1287 Leesville, Louisiana 71496-1287

(337)^39-2535 W. Micheal Elliotl, CPA (337)238-5135 Fax 239-2295

REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS

BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

Board of Commissioners CAMERON WATERWORKS DISTRICT NO.7

I have audited the financial statements of the Cameron Waterworks District No.7, as of and for the two years ended December 31, 2009 and 2008, and have issued my report thereon dated June 9, 2010. I conducted my audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government A u d i t i n g S t a n d a r d s , issued by the Comptroller General of the United States.

Internal Control Over Financial Reporting

In planning and performing my audit, 1 considered Cameron Waterworks District No.7's internal control over financial reporting as a basis for designing my auditing procedures for the purpose of expressing my opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District's internal control over financial reporting. Accordingly, I do not express an opinion on the effectiveness of the District's internal control over financial reporting.

A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the entity's ability to initiate, authorize, process, record, or report financial data reliably in accordance with generally accepted accounting principles, such that there is more than a remote likelihood that a misstatement of the entity's financial statements that is more than inconsequential will not be prevented or detected by the entity's internal control.

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

My consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. I did not identify any deficiencies in internal control over financial reporting that I consider to be material weaknesses, as defined above.

26

However, I identified certain deficiencies in internal control over financial reporting, described in the accompanying summary schedule of current and prior year audit findings and management's corrective action plan as items 09-1(IC) and 09-2(IC), that I consider to be significant deficiencies in internal control over financial reporting. A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether Cameron Waterworks District No.7's financial statements are free of material misstatement, I performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of my- audit and, accordingly, I do not express such an opinion. The results of my tests disclosed no instances of noncompliance or other matters that are required to be reported under Govern;nent Auditing S t a n d a r d s ,

This report is intended solely for the information and use of management and the Louisiana Legislative Auditor and is not intended to be, 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.

Leesville, Louisiana June 9, 2010

27

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SUPPLEMENTARY INFORMATION

30

Schedule 1

CAMERON PARISH WATERWORKS District No. 7 SCHEDULE OF COMPENSATION PAID BOARD MEMBERS

FOR THE YEARS ENDED December 31, 2009 and 2008

The schedule of per diem paid to board members was prepared in compliance with House Concurrent Resolution NO. 54 of the 1979 session of the Legislature.

As provided by Louisiana Revised Statute 33:4564, the Board Members received $20 per diem per meeting for January 2008 and $30 per meeting thereafter during 2009.

Wilson Conner Vernon Primeaux Guy Murphy, Jr. Sandra Ford Greg Comeaux

Number Attended

11 11 13 11 7

2009 Amount $ 330

330 390 330 210

Totals 53 $1,590

Wilson Conner Vernon Primeaux Guy Murphy, Jr. Sandra Ford Greg Comeaux

Number Attended

9 9 11 10 6

2008 Amount $ 250

250 340 300 160

Totals 45 $1,300

31