Component Unit Financial Statements And Report of ...€¦ · Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The other

Component Unit Financial StatementsAnd Report of Independent Auditors

With Supplemental Information

GRAVITY DRAINAGE DISTRICT NO. 3OF CAMERON PARISH

Cameron, Louisiana

December 31,2005

Under provisions of state law, this report is a publicdocument. Acopy of the report has been submitted tothe entity and other appropriate public officials. Thereport is available for public inspection at the BatonRouge office of the Legislative Auditor and, whereappropriate, at the office of the parish clerk of court.

Release Date

TABLE OF CONTENTS

PAGE

Independent Auditor's Report 2-3

Required Supplement Information (Part 1)Management's Discussion and Analysis 4-9

Basic Financial Statements:Statement of Net Assets 10-11Statement of Activities 12-13

Notes to the Financial Statements 14-19

Required Supplemental Information (Part II):Schedule of Revenues, Expenditures, and

Changes in Fund Balance-Budget andActual-General Fund 20-21

Independent Auditors9 Report Required byGovernment Auditing Standards:Independent Auditors' Report on Internal Control

Over Financial Reporting and on Compliance andOther Matters Based on an Audit of Financial StatementsPerformed in Accordance with Government Auditing Standards 22-23

Schedule of Findings and Questioned Costs 24

Summary Schedule of Prior Auditing Findings 25

Other Supplemental Information:Schedule of Per Diem Paid Commissioners 26

Stulb & Associates, APACCertified Public Acco

James F. Stulb, CPAKristine S. Carter, C.P.A.

Independent Auditors' Report

GRAVITY DRAINAGE DISTRICT No. 3OF CAMERON PARISHCameron, Louisiana

We have audited the accompanying financial statements of the governmental activities, and eachmajor fund, of the Gravity Drainage District No. 3 of Cameron Parish, a component unit of theCameron Parish Police Jury, as of December 31, 2005, and for the year then ended, whichcollectively comprise the basic financial statements as listed in the table of contents. Thesefinancial statements are the responsibility of the Gravity Drainage District No. 3 of CameronParish's management. Our responsibility is to express an opinion on these financial statementsbased on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the UnitedStates of America and the standards applicable to financial audits contained in GovernmentAuditing Standards, issued by the Comptroller General of the United States. Those standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures in the financial statements. An audit alsoincludes assessing the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statement presentation. We believe thatour audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to in the first paragraph present fairly, in allmaterial respects, the respective financial position of the governmental activities, and each majorfund, of the Gravity Drainage District No. 3 of Cameron Parish as of December 31, 2005, andthe respective changes in financial position thereof for the year then ended in conformity withaccounting principles generally accepted in the United States of America.

In accordance with Government Auditing Standardly we have also issued a report datedNovember 21, 2006, on our consideration of the Gravity Drainage District No. 3 of CameronParish's internal control over financial reporting and on our tests of its compliance with certainprovisions of laws, regulations, contracts, and grant agreements and other matters. The purposeof that report is to describe the scope of our testing of internal control over financial reportingand compliance and the results of that testing, and not to provide an opinion on the internalcontrol over financial reporting or on compliance. That report is an integral part of an auditperformed in accordance with Government Auditing Standards and should be considered inassessing the results of our audit.

Member A1CPA * Member LCPAMember PCPS/The A1CPA Alliance for CPA Firms

800 Ryan Street • Suite 200 / P.O. Box 1117 • Ukc Charles, Louisiana 70602(337)494-1240 • (337) 494-1040 Fax

The Management's Discussion and Analysis and budgetary comparison on pages 4 through 9and pages 20 through 21 are not a required part of the basic financial statements but aresupplementary information required by accounting principles generally accepted in the UnitedStates of America. We have applied certain limited procedures, which consisted principally ofinquiries of management regarding the methods of measurement and presentation of the requiredsupplementary information. However, we did not audit the information and express no opinionon it.

Our audit was made for the purpose of forming an opinion on the basic financial statementstaken as a whole. The other supplemental information schedules listed in the table of contentsare presented for the purpose of additional analysis and are not a required part of the basicfinancial statements of Gravity Drainage District No. 3 of Cameron Parish. Such informationhas been subjected to the auditing procedures applied in the audit of the basic financialstatements and, in our opinion, is fairly presented in all material respects in relation to the basicfinancial statements taken as a whole.

November 21,2006

Stulb Be Associates

Required Supplemental Information (Part I):

Management's Discussion and Analysis

As Management of the Gravity Drainage District No. 3, we offer readers of the Gravity Drainage District No. 3financial statements this narrative overview and analysis of the financial activities of the Gravity DrainageDistrict No. 3 as of and for the year ended December 31,2005. We encourage readers to consider theinformation presented here in conjunction with the Gravity Drainage District No. 3 basic financial statementsand supplementary information provided in this report in assessing the efficiency and effectiveness of ourstewardship of public resources.

The Management's Discussion and Analysis (MD&A) is an element of the new reporting model adopted by theGovernmental Accounting Standards Board (GASB) in Statement No. 34, Basic Financial Statements - andManagement's Discussion and Analysis -for State and Local Governments ("GASB No. 34") issued June1999. Certain comparative information between the current year and the prior year is required to be presentedin the MD&A.

FINANCIAL HIGHLIGHTS

The assets of the Gravity Drainage District No. 3 exceeded its liabilities at December 31, 2005, by$787,193 (net assets).

The Gravity Drainage District No. 3 net assets decreased by $428,195 as a result of this year'soperations.

Total net assets are comprised of the following:

(1) Unrestricted net assets of $787,193 represent the portion available to maintain the GravityDrainage District No. 3 continuing obligations to citizens and creditors.

At December 31, 2005, the Gravity Drainage District No. 3 governmental funds consist solely of theGravity Drainage District No. 3 general fund. The Gravity Drainage District No. 3 governmental fundsreported a total ending fund balance of $787,193, a decrease of $428,195 including expenditures forcapital assets. The entire fund balance is unreserved and available for spending at the Gravity DrainageDistrict No. 3 discretion.

OVERVIEW OF THE FINANCIAL STATEMENTS

Management's Discussion and Analysis is intended to serve as an introduction to the basic financial statements.In accordance with GASB No. 34, the Gravity Drainage District No. 3 basic financial statements comprise threecomponents: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the basicfinancial statements. This report also contains other supplementary information in addition to the basicfinancial statements.

Government-wide Financial Statements* The government-wide financial statements of the Gravity DrainageDistrict No. 3 report information about the Gravity Drainage District No. 3 using accounting methods similar tothose used by private sector companies. They present the financial picture of the Gravity Drainage District No.3 from an economic resources measurement focus using the accrual basis of accounting. These statementsinclude all assets of the Gravity Drainage District No. 3 (including capital assets) as well as all liabilities(including long-term obligations).

The Statement of Net Assets presents information on ail of the Gravity Drainage District No. 3 assets andliabilities, with the difference between the two reported as net assets. Over time, increases and decreases in netassets may serve as a useful indicator of whether the financial position of the Gravity Drainage District No. 3 isimproving or deteriorating.

The Statement of Activities presents the current year's revenues and expenses and other information showinghow the Gravity Drainage District No. 3 net assets changed during the year. The change in net assets isreported as soon as the underlying event giving rise to the change occurs, regardless of the timing of relatedcash flows. Thus, revenues and expenses are reported in this statement for some items that will only result incash flows in future fiscal periods.

The government-wide financial statements are presented on pages 10-11 of this report.

Fund Financial Statements. A fund is a grouping of related accounts that is used to maintain control overresources that have been segregated for specific activities or objectives. The Gravity Drainage District No. 3,like other state and local governments, uses fund accounting to ensure and demonstrate compliance withfinance-related legal requirements. All of the funds of the Gravity Drainage District No. 3 are categorized asgovernmental funds.

Governmental Funds. Governmental funds are used to account for essentially the same functions reported asgovernmental activities in the government-wide financial statements. However, unlike the government-widefinancial statements, governmental fund financial statements focus on near-term inflows and outflows ofspendable resources, as well as, on balances of spendable resources available at the end of the fiscal year. Suchinformation may be useful in evaluating a government's near-term financing requirements.

Because the focus of governmental funds is narrower than that of the government-wide financial statements, itis useful to compare the information presented for governmental funds with similar information presented forgovernmental activities in the government-wide financial statements. By doing so, readers may betterunderstand the long-term impact of the government's near-term financing decisions. Both the governmentalfund balance sheet and governmental fund statement of revenues, expenditures, and changes in fund balancesprovide a reconciliation to facilitate this comparison between governmental funds and governmental activitiesThe Gravity Drainage District No. 3 maintains one individual governmental fund - the general fund. TheGravity Drainage District No. 3 adopts an annual appropriated budget for the general fund, and a budgetarycomparison schedule is provided for the general fund to demonstrate compliance with this budget.

The governmental fund financial statements are presented on pages 10-11 of this report.

Notes to the Financial Statements. The notes provide additional information that is essential to a fullunderstanding of the data provided in the government-wide and fund financial statements.

Required Supplemental Information. In addition to the basic financial statements and accompanying notes,this report also presents certain required supplementary information concerning the Gravity Drainage DistrictNo. 3 budget presentation. The general fund's budgetary comparison schedule is included as "requiredsupplementary information." Required supplementary information is information that the accounting rulesstrongly suggest be presented within the Gravity Drainage District No. 3 financial report. This scheduledemonstrates compliance with the Gravity Drainage District No. 3 adopted and final revised budget.

GOVERNMENT-WIDE FINANCIAL ANALYSIS

The Gravity Drainage District No. 3 implemented the new financial reporting model used in this reportbeginning with the calendar year ended December 31,2004. Over time, as we accumulate year-to-year financialinformation on a consistent basis, changes in net assets may be observed and used to discuss the changingfinancial position of the Gravity Drainage District No. 3 as a whole.

The Gravity Drainage District No. 3 net assets at December 31,2005, are summarized as follows:

Summary of Net Assets

GovernmentalActivities

2005

GovernmentalActivities

2004

Assets:Current and Other Assets

Total Assets

Liabilities:Current and Other Liabilities

Total Liabilities

Net Assets:Unrestricted

Total Net Assets

$ 1.026,3611,026,361

239.168239,168

787.193787.193

$ 1,225.9331,225,933

10.54510,545

1.215.3881.215.388

The largest components of Gravity Drainage District No. 3's total assets are: (1) cash and investments of$700,218 or 68%. Of Gravity Drainage District No. 3's total liabilities, the only component is accounts payableof $239,168.

As noted earlier, net assets (total assets less total liabilities) may serve over time as a useful indicator of agovernment's financial position. At the close of the most recent fiscal year, the Gravity Drainage District No. 3net assets totaled $787,193. The unrestricted net assets of the Gravity Drainage District No. 3 are available forfuture use. The unrestricted net assets exceed 100% of the total operating expenses for the fiscal year endedDecember 31, 2005. This measure is an estimate of how long the Gravity Drainage District No. 3 might beexpected to operate on its current resources.

The Gravity Drainage District No. 3 change in net assets for the years ended December 31, 2005 and 2004, issummarized as follows:

Summary Statement of Changes in Net Assets

Governmental GovernmentalActivities Activities

2005 2004

Revenues:Ad Valorem $ 247,926 $ 215,292Federal Grant 553 347State Revenue Sharing 1,554 1,929Use of Money and Property 21,910 7,312

Total Revenues 271,953 224,880

Expenses:Personal Services 47,120 29,880Operating Services 640,112 100,679Materials and Supplies 9,651 9,595Depreciation 3,265 -

Total Expenses 700,148 140,154

Change in Net Assets $ (428,195) $ 84,726

Governmental activities decreased net assets by $428,195 for the year ended December 31,2005.

Key elements of the analysis of government-wide revenues and expenses reflect the following:

• The Gravity Drainage District No. 3 is heavily dependent on ad valorem to support its operations. Advalorem provided 91% of the Gravity Drainage District No. 3 total revenues.

• Use of Money and Property totaled approximately 8% of the Gravity Drainage District No. 3 currentyear resources,

• Operating expense and materials and supplies expenses comprise 91% and 1%, respectively, of totalexpenses.

• Employee salaries and benefits make up approximately 7% of the total expenses.

FINANCIAL ANALYSIS OF GOVERNMENTAL FUNDS

The Gravity Drainage District No. 3 uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The financial statements of the Gravity Drainage District No. 3 present its GeneralFund. The General Fund is the Gravity Drainage District No. 3 operating fund and the source of day-to-dayservice delivery. As discussed, the General Fund is useful in assessing the resources available at the end of theyear in comparison with upcoming requirements.

At December 31, 2005, the Gravity Drainage District No. 3 General Fund balance (total assets less totalliabilities) totaled $787,193, all of which was unreserved. The Gravity Drainage District No. 3 unreserved fundbalance decreased by $428,195 in 2005.

Total operating revenues reflect a 21%, $47,073 increase in 2005 as compared to 2004 due primarily to anincrease in earnings on cash balances and ad valorem taxes.

Total personal expenses increased by $17,240, or 58% from 2004 to 2005. The most significant increase inexpenses occurred in operating and maintenance expense. The total increase in these expenses from 2004 to2005 was $539,433, or 536%. Cameron Parish was devastated by Hurricane Rita and has been declared amajor disaster area by The President of the United States. A substantial amount of these expenditures will bereimbursed with federal and state grants; however this amount is unknown at this time.

GENERAL BUDGETARY ANALYSIS

The Gravity Drainage District No. 3 employs formal budgetary integration as a management control deviceduring the year. Budgeted amounts included in the Schedule of Revenues, Expenditures, and Changes in FundBalances - Budget and Actual include the original adopted budget amounts and the final amended budgetamounts. Original budgets for each year are adopted on or before December 31 of the year preceding thebudget year. The original budget is based on estimated revenues, estimated expenses, and other financialinformation known to the Gravity Drainage District No. 3 at the time of the adoption of the budget.Amendments to the original budget are made throughout the year as changes in operations, in expected fundinglevels, and in estimated expenditures occur. The final amended budget is prepared at the time the GravityDrainage District No. 3 anticipates no additional significant increases or decreases in revenues and expenses forthe year and no expected changes in operations. The Gravity Drainage District No. 3 amended the originalbudget approximately 40% during 2005; however, due to the devastation caused by Hurricane Rita, actualexpenditures exceeded the final approved budget by more than 5%. The difference between the budgetedrevenues and actual revenues for the year ended December 31, 2005, totaled $47,073. The primary reason forthe increase was due to increases in interest rates paid on certificates of deposit in 2005. The budgeted expensesexceeded the actual expenses for the year ended December 31, 2005, by $474,010. Personal services increaseddue to raises given during the remainder of the year after the hurricane and the increase in hours worked.

CAPITAL ASSETS AND LONG-TERM OBLIGATIONS

Capital Assets

At the end of December 31, 2005, the Gravity Drainage District No. 3 had invested in equipment. The capitalassets are summarized below:

Governmental GovernmentalActivities Activities

2005 2004Depreciable Assets:

Equipment $ 57,891 $ 12,188Totals 57,891 i2,i8g

Less Accumulated Depreciation (15,465) (12,188)

Book Value-Depreciable Assets $ 42,426 $

Long-Term Obligations

The Gravity Drainage District No. 3 had no long-term obligations at December 31,2005.

ECONOMIC FACTORS AND FUTURE OUTLOOK

Gravity Drainage District No. 3 was impacted greatly by Hurricane Rita. The District, at this time anticipates achange in revenues and expenditures for fiscal year 2006. However, at this time that impact cannot be fullyrealized. The 2006 budget was amended to reflect those changes. There will be a significant difference in thebeginning and ending fund balance due to Hurricane Rita, as all of Gravity Drainage District No. 3 drainagestructures were completely destroyed and storm debris was put in all drainage laterals that control water levelsin Gravity Drainage District No. 3 drainage laterals after the storm. The Cameron Parish Office of EmergencyPreparedness directed Cameron Parish Drainage District No. 3 to remove high water levels so that the processto restore the Parish's infrastructure could begin. Cameron Parish Drainage District No. 3 began work on themain laterals to drain water from subdivisions, main streets and all areas in lower Cameron Parish. CameronParish Gravity Drainage District No. 3 also began the task of replacing all drainage stations and pump stationssince all these structures were 100% destroyed.

CONTACTING THE GRAVITY DRAINAGE DISTRICT NO. 3 FINANCIAL MANAGEMENT

This financial report is designed to provide our citizens, taxpayers, customers, and creditors with a generaloverview of the Gravity Drainage District No. 3 finances and to show its accountability for the money itreceives. If you have questions about this report or need additional financial information, contact Paula Pool, atthe Gravity Drainage District No. 3 Office, Post Office Box 1067, Cameron, Louisiana 70631 or call (337)478-9308.

GRAVITY DRAINAGE DISTRICT NO. 3 OF CAMERON PARISHCameron, Louisiana

STATEMENT OF NET ASSETSDecember 31,2005

ASSETSCash and cash equivalentsReceivablesCapital assets, net of accumulated depreciation

Total assets

LIABILITIESAccounts payable

Total liabilities

FUND BALANCEFund balance:

Unreserved, reported in:General FundTotal Fund Balance

Total Liabilities and Fund Balance

GeneralFund

239,168

744,767744,767

$ 983,935

Adjustments

42,42642,426

Statement ofNet Assets

$ 700,218283,717

-983,935

239,168

$-

42,42642,426

_

$ 700,218283,71742,426

1,026,361

239,168239,168

787,193787,193

NET ASSETSInvested in Capital Assets, Net of Related DebtUnrestricted

Total net assets

42,426744,767

42,426744,767

$ 787,193 $ 787,193

See accompanying notes to financial statements10


RECONCILIATION OF GOVERNMENTAL FUND BALANCE TO NET ASSETSDecember 31,2006

Total Governmental Fund Balances $ 744,767

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

Capital assets used in the governmental activities are not financialresources and therefore are not reported in the funds. These assetsconsist of:

Vehicles 12,200Equipment 45,690Accumulated depreciation (15,464)

Other capital assets,net of accumulated depreciation 42,426

Total asset adjustments 42,426

Net assets of governmental activities $ 787,193



STATEMENT OF REVENUES AND EXPENSES AND CHANGES IN NET ASSETSFor the Year Ended December 31, 2005

EXPENDITURES/EXPENSESCurrent:

Personal servicesOperating servicesMaterials and suppliesDepreciation

Total expenditures

GENERAL REVENUESAd valorem taxesIntergovernment revenue:

Federal grantState revenue sharing (net)

Use of money and property

EXCESS (Deficiency) OF REVENUESOVER EXPENDITURES

CHANGE IN NET ASSETS

NET ASSETS AT BEGINNING OF YEAR

NET ASSETS AT END OF YEAR

GeneralFund

$ 47,120685,803

9,651

742,574

Adjustments

$(45,691)

3,265(42,426)

247,926

5531,564

21,910271,953

(470,621)

1,215,388

470,621

(470,621)

Statement ofActivities

47,120640,1129,6513,265

700,148

247,926

5531,564

21,910271,953

(428,195)

1,215,388

$ 1,215,388 $ $ 787,193



RECONCILIATION OF CHANGE IN GOVERNMENTAL FUND BALANCETO THE STATEMENT OF ACTIVITIES

December 31,2005

Net change in fund balances - total governmental funds $ (470,621)

Amounts reported for governmental activities in the statement of activitiesare different because:

Governmental funds report operating service, materials and supplies asexpenditures. However, in the statement of activities, assets with anindividual cost of $1,000 or more are capitalized and the cost is allocatedover their estimated lives and reported as depreciation expense.For the current period these amounts are:

Operating services 45,691Depreciation expense (3,265)

Excess of capital outlay over depreciation expense 42,426

Change in net assets of governmental funds $ (428,195)


GRAVITY DRAINAGE DISTRICT NO, 3 OF CAMERON PARISHCameron, Louisiana

Notes to the Financial StatementsDecember 31,2005

I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Gravity Drainage District No. 3 of Cameron Parish was created on April 6, 1931, as a politicalsubdivision of the State of Louisiana under the provisions of Louisiana Revised Statutes38:1751-1802, and was established for the purpose of opening and maintaining all natural drainsin the district where drainage is accomplished using the natural force of gravity. The district isgoverned by a board of 5 commissioners who are appointed by the Cameron Parish Police Jury.

A. BASIS OF PRESENTATION

The accompanying basic financial statements of the District have been prepared inconformity with governmental accounting principles generally accepted in the UnitedStates of America. The Governmental Accounting Standards Board (GASB) is theaccepted standard-setting body for establishing governmental accounting and financialreporting principles. The accompanying basic financial statements have been preparedin conformity with GASB Statement 34, Basic Financial Statements-andManagement's Discussion and Analysis—for State and Local Governments, issued inJune 1999. Certain of the significant changes in the Statement include the following:

• A Management Discussion and Analysis (MD&A) section providing ananalysis of the District's overall financial position and results ofoperations;

• Financial statements prepared using full accrual accounting for all of theDistrict's activities; and

• A change in the fund financial statements to focus on the major funds.

B. REPORTING ENTITY

As the governing authority of the parish, for reporting purposes, the Cameron ParishPolice Jury is the financial reporting entity for Cameron Parish. The financialreporting entity consists of (a) the primary government (police jury), (b) organizationsfor which the primary government is financially accountable, and (c) otherorganizations for which the nature and significance of their relationship with theprimary government are such that exclusion would cause the reporting entity'sfinancial statements to be misleading or incomplete.

Governmental Accounting Standards Board (GASB) Statement No. 14 establishedcriteria for determining which component units should be considered part of theCameron Parish Police Jury for financial reporting purposes. The basic criterion forincluding a potential component unit within the reporting entity is financialaccountability. The GASB has set forth criteria to be considered to be considered indetermining financial accountability. This criteria includes:

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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

1. Appointing a voting majority of an organization's governing body, and;

a. The ability of the police jury to impose its will on thatorganization and/or;

b. The potential for the organization to provide specific financialbenefits to or impose specific financial burdens on the policejury.

2. Organizations for which the police jury does not appoint a votingmajority but are fiscally dependent on the police jury.

3. Organizations for which the reporting entity financial statements wouldbe misleading if the data of the organization is not included because ofthe nature of significance of the relationship.

Because the police jury appoints all board members of the district and can impose itswill on the district, the district was determined to be a component unit of the CameronParish Police Jury, the financial reporting entity. The accompanying financialstatements present information only on the funds maintained by the district and do notpresent information on the police jury, the general government services provided bythat governmental unit, or the other governmental units that comprise the financialreporting entity.

C. FUND ACCOUNTING

The financial transactions of the District are reported in individual funds in the fundfinancial statements. Each fund is accounted for by providing a separate set of self-balancing accounts that compromise its assets, liabilities, fund equity, revenues andexpenditures. Government resources are allocated to and accounted for in individualfunds based upon the purpose for which they are to be spent and the means by whichthe spending activities are controlled. The district's current operations require the useof only one governmental fund type. The governmental fund type is described asfollows:

General Fund

The General Fund is the general operating fund of the district and is used to accountfor all financial activities not required to be accounted for in other funds.

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D. BASIC FINANCIAL STATEMENTS-GOVERNMENT-WIDESTATEMENTS

The District's basic financial statements include both government-wide (reporting theDistrict as a whole) and fund financial statements (reporting the District's funds).

In the government-wide Statement of Net Assets, governmental activities arepresented on a consolidated basis and are reported on a full accrual, economicresource basis, which recognizes all long-term debt and obligations. The District's netassets are reported in three parts - invested in capital assets, net of related debt;restricted net assets; and unrestricted net assets.

The government-wide Statement of Activities reports revenues and expenses on a fullaccrual, economic resource basis. The Statement of Activities recognizes depreciationexpense.

This government-wide focus is more on the sustainability of the District as an entityand the change in the District's assets resulting from current year's activities.

Revenues

Ad valorem taxes and the related state revenue sharing are budgeted in the years thetaxes are due and payable. Ad valorem taxes are assessed on a calendar year basis andattach as an enforceable lien and become due and payable on the date the tax rolls arefiled with the recorder of mortgages. Louisiana Revised Statute 47:1993 requires thatthe tax roll be filed on or before November 15 of each year. Ad valorem taxes becomedelinquent if not paid by December 31. The taxes are normally collected in Decemberof the current year and January through the tax sale to the ensuing year.

Interest income on interest bearing demand deposits is recorded at the end of themonth when credited by the bank. Interest income on time deposits is recorded whenthe time deposits have matured and the interest is available.

Based on the above criteria, ad valorem taxes and state revenue sharing have beentreated as susceptible to accrual.

Expenditures

Expenditures are generally recognized under the modified accrual basis of accountingwhen the related fond liability is incurred.

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E. CAPITAL ASSETS AND LONG-TERM DEBT

The accounting and reporting treatment applied to capital assets associated with a fundare determined by their measurement focus. General capital assets are recorded asexpenditures in the governmental funds and capitalized. All purchased fixed assets arevalued at historical cost, or where historical cost is not available, estimated historicalcost based on replacement cost. The minimum capitalization threshold is anyindividual item with a total cost greater than $1,000.

Depreciation of capital assets is computed and recorded by the straight-line method.Estimated useful lives of the various classes of depreciable capital assets are asfollows:

Description Estimated Lives

Machinery and equipment 5-7 years

The district has no long-term debt at December 31,2005.

F. BUDGET PRACTICES

A preliminary budget for the ensuing year is prepared for the board of commissionersand made available to the public. The budget is then adopted during the regularDecember meeting. The proposed budget for the General Fund is prepared on the cashbasis of accounting. The budget is established and controlled by the board ofcommissioners at the object level of expenditures. Appropriations lapse at year-endand must be appropriated for the following year to be expended. All changes in thebudget must be approved by the board of commissioners.

Formal budgetary integration is employed as a management control device during theyear. Budgeted amounts included in the accompanying financial statements includethe original adopted budget and all subsequent amendments.

G. CASH AND CASH EQUIVALENTS

Under state law, the district may deposit funds within a fiscal agent bank organizedunder the laws of the State of Louisiana, the laws of any other state in the union, or thelaws of the United States. The district may invest in certificates and time deposits ofstate banks organized under Louisiana law and national banks having principal officesin Louisiana.

17




At December 31, 2005, the district had cash and cash equivalents (book balances)totaling $700,218, of which $20,218 was in demand deposits and $680,000 was intime deposits.

These deposits are stated at cost, which approximate market. Under state law, thesedeposits, or the resulting bank balances, must be secured by federal deposit insuranceor the pledge of securities owned by the fiscal agent bank.

Bank balances at December 31, 2005, are secured as follows:Bank balances

Federal deposit insurance $ 100,000Pledged securities (uncollateralized) 1,139.000

Because the pledged securities are held by a custodial bank in the name of the fiscalagent bank rather than the name of the district, they are considered uncollateralized(Category 3) under the provisions of GASB Codification C20.106; however,Louisiana Revised Statue 39:1229 imposes a statutory requirement on the custodialbank to advertise and sell the pledged securities within 10 days of being notified bythe district that the fiscal agent has failed to pay deposited funds upon demand.

H. VACATION/SICK LEAVE POLICY AND PENSION PLAN

The district has no employees; therefore, the district does not have a formal policy onvacation and sick leave and does not contribute to a pension plan.

I. RISK MANAGEMENT

The district is exposed to various risk of loss related to torts; thefts of, damage to, anddestruction of assets and errors and omissions. To handle such risk of loss, the districtmaintains surety bond coverage, a general liability policy, and an errors and omissionspolicy, and automobile liability. No claims were paid on any of the policies during thepast three years which exceeded the policies' coverage amount.

2. LEVIED TAXES

The district has an authorized tax millage of 5.00 mills for general maintenance and operation ofthe district. The tax expires with the 2008 tax roll. For the year ended December 31, 2006, thedistrict levied 5.00 mills.

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3. PRINCIPAL TAXPAYERS

The following are the principal taxpayers for the parish and their 2005 assessed valuation(amounts expressed in thousands):

2005 Assessed Percent of TotalValuation Assessed valuation

Hornbeck Offshore Services $ 3,926 11.77%Omega Protein, Inc. 3,462 10.38%Edison Chouest Offshore, LLC 2,304 6.91%Trico Marine, Inc. 2,290 6.87%Seabulk Offshore, LTD 2,098 6.29%Seacor Offshore, LLC 1,643 4.93%Baroid Drilling Fluids, Inc. 1,408 4,22%Trico Marine International 1,394 4.18%Zapata Gulf Marine 1,350 4.05%Abdon Callais, LLC 1.241 3.72%

Total $ 21,116 63.32%

4. RECEIVABLES

The General Fund receivables of $283,717 at December 31, 2005, consisted of advalorem tax receivable of $249,937, federal revenue sharing of $305, state revenuesharing (net) of $1,995, and FEMA reimbursements of $31,480.

5. LITIGATION AND CLAIMS

The district is not involved in any litigation at December 31,2005, nor is it aware of anyunassorted claims.

6. HURRICANE RITA

In September 2005, Cameron Parish was devastated by Hurricane Rita. At the time of thehurricane, the District had no fixed assets, except a vehicle, so assets were not impaired,however, the costs of debris removal will have a significant impact on the expendituresfor operations. A substantial amount of these costs may be reimbursed by FEMA. Theamount the District will receive cannot be determined at this time.

19

Required Supplemental Information (Part II)

GRAVITY DRAINAGE DISTRICT NO. 3Cameron, Louisiana

GOVERNMENTAL FUND TYPEStatement of Revenues, Expenditures, and Changes in Fund Balance -

Budget (Non-GAAP Basis) and ActualFor the Year Ended December 31,2005

REVENUESAd valorem taxesIntergovernment revenue:

Federal grantState revenue sharing (net)

Interest

EXPENDITURESCurrent-

Personal servicesOperating servicesMaterials and supplies

Total expenditures

EXCESS OF REVENUESOVER EXPENDITURESNET ASSETS -BEGINNING OF YEAR

NET ASSETS END OF YEAR

BUDGETED AMOUNTSVARIANCE

FAVORABLEORIGINAL

$ 230,000

4001,9007,000

239,300

30,000103,500

6,000139,500

99,800

1,215,388

$ 1,315,188

FINAL

$ 230,000

4001,9007,000

239,300

40,320141,500

8,400190,220

49,080

1,215,388

$ 1,264,468

ACTUAL

$ 211,295

248839

22,419234,801

47,120485,062

13,309545,491

(310,690)

1,215,388

$ 904,698

(UNFAVORABLE)

$ (18,705)

(152)(1,061)15,419(4,499)

(6,800)(343,562)

(4,909)(355,271)

(359,770)

$ (359,770)

See the accompanying Note to Required Supplementary Information.20


Note to Required Supplementary Information - Budgetary ReportingFor the Year Ended December 31,2005

General FundSources/inflows of resources

Actual amounts (budgetary basis) "Total Revenues"from Schedule of Revenues , Expenditures, and Changesin Fund Balance $ 234,801

Differences - budget to GAAP:The District budgets for property tax revenue, revenue

sharing revenue, and interest income only to the extentexpected to be received, rather than on the modified accrual basis. 37,152

Total revenues as reported on the Statement of revenues,expenditures, and changes in ftmd balances-governmentalfunds. $ 271,953

Uses/outflows of resources

Actual amounts (budgetary basis) "Total Expenditures"from Schedule of Revenues , Expenditures, and Changesin Fund Balance $ 545,491

Differences - budget to GAAP:The District budgets for expenditures based only to the

extent expected to be paid, rather than on the modifiedaccrual basis. 197,083

Total expenditures as reported on the Statement of revenues,expenditures, and changes in fund balances-governmentalfunds. $ 742,574

21

Stulb & Associates, APACCertified Public Accountants... •==

James F. Stulb, C.PAKristinc S. Carter, CPA

Report on Internal Control Over Financial Reporting andon Compliance and Other Matters Based on an Audit

of Financial Statements Performed in Accordance withGovernment Auditing Standards

GRAVITY DRAINAGE DISTRICT No. 3OF CAMERON PARISHCameron, Louisiana

We have audited the basic financial statements of the Gravity Drainage District No. 3 ofCameron Parish, a component unit of the Cameron Parish Police Jury, as of and for the yearended December 31, 2005, and have issued our report thereon dated November 21, 2006. Weconducted our audit in accordance with auditing standards generally accepted in the UnitedStates and the standards applicable to financial audits contained in Government AuditingStandards, issued by the Comptroller General of the United States.

Internal Control Over Financial ReportingIn planning and performing our audit, we considered the Gravity Drainage District No. 3 ofCameron Parish's internal control over financial reporting in order to determine our auditingprocedures for the purpose of expressing our opinion on the financial statements and not toprovide an opinion on the internal control over financial reporting. However, we noted a certainmatter involving the internal control over financial reporting and its operation that we consider tobe a reportable condition. Reported conditions involve matters coning to our attention relating tosignificant deficiencies in the design of operation of the internal control over financial reporting,that, in our judgment, could adversely affect Gravity Drainage District No. 3 of CameronParish's ability to record, process, summarize and report financial data consistent with theassertions of management in the basic financial statements. Reportable conditions are describedin the accompanying schedule of findings and questioned costs as item 05-01.

A material weakness is a condition in which the design or operation of one or more of theinternal control components does not reduce to a relatively low level the risk that misstatementsin amounts that would be material in relation to the financial statements being audited may occurand not be detected within a timely period by employees in the normal course of performing theirassigned functions. Our consideration of the internal control over financial reporting would notnecessarily disclose all reportable conditions that are also considered to be material weaknesses.However we believe the reportable condition described above is not a material weakness.

Compliance and Other MattersAs part of obtaining reasonable assurance about whether the Gravity Drainage District No. 3 ofCameron Parish's financial statements are free of material misstatement, we performed tests of

Member A1CPA • Member LCPAMember PCPS/The A1CPA Alliance for CPA Firms

SOORyanStreet • Suite200 / P.O.Boxlll7 •(337)494-1240 • (337) 494-1040 Fax

its compliance with certain provisions of laws, regulations and contracts, noncompliance withwhich could have a direct and material effect on the determination of financial amounts.However, providing an opinion on compliance with those provisions was not an objective of ouraudit and, accordingly, we do not express such an opinion. The results of our tests disclosed aninstance of noncompliance or other matters that is required to be reported under GovernmentAuditing Standards which is described in the accompany schedule of findings and questionedcosts as item 05-01.

This report is intended solely for the information and use of the Gravity Drainage District No. 3of Cameron Parish, and the Louisiana Legislative Auditor and is not intended to be and shouldnot be used by anyone other than these specified parties. Under Louisiana Revised Statute24:513, this report is distributed by the Legislative Auditor as a public document.

November 21,2006

Stulb & Associates

GRAVITY DRAINAGE DISTRICT No. 3OF CAMERON PARISH

Cameron, Louisiana

Schedule of Findings and Questioned CostsFor the Year Ended December 31,2005

A. SUMMARY OF AUDIT RESULTS

1. The auditors' report expresses an unqualified opinion on the generalpurpose Financial statements of Gravity Drainage District No. 3 of CameronParish.2. A reportable condition relating to the audit of the basic financial statementsis reported in the Independent Auditors' Report on Compliance and onInternal Control Over Financial Reporting Based on an Audit of FinancialStatements Performed in Accordance With Governmental Auditing Standards.The condition is not reported as a material weakness3. One instance of noncompliance material to the financial statements ofGravity Drainage District No. 3 of Cameron Parish was disclosed during theaudit.

B. FINDINGS-FINANCIAL STATEMENTS AUDIT

05-01 Budget not amended by Gravity Drainage District No. 3 ofCameron Parish

Finding:

In accordance with the Louisiana Local Government Budget Act, when totalrevenues fail to meet total budgeted revenue by 5% or more and/or when totalactual expenditures exceed total budgeted expenditures by 5% or more or therehas been a change in operation upon which the original adopted budget wasdeveloped the Gravity Drainage District No. 3 of Cameron Parish shall adopt abudget amendment in an open meeting to reflect such change. In no event shall abudget amendment be adopted proposing expenditures which exceed the total ofestimated funds available for the fiscal year. For the fiscal year ended December31, 2005, the Gravity Drainage District No. 3 of Cameron Parish's actualexpenditures for the year ended, exceeded the amended 2005 budget by more than5%.

Recommendation:

We recommend that the Gravity Drainage District No. 3 of Cameron Parish (1)review the provisions of the Louisiana Local Government Budget Act, and (2)monitor and amend the budget for the year ending December 31, 2006,accordingly.

24

GRAVITY DRAINAGE DISTRICT No. 3OF CAMERON PARISH

Cameron, Louisiana

Summary Schedule of Prior Audit FindingsFor the Year Ended December 31,2005

FINDINGS-FINANCIAL STATEMENTS AUDIT

There were no audit findings reported in the audit for the year ended December31,2004.

25


SCHEDULE OF PER DIEM PAID TO BOARD MEMBERSAs of and for the Year Ended December 31,2005

PER DIEM PAID COMMISSIONERS

The schedule of per diem paid commissioners was prepared in compliance withHouse Concurrent Resolution No* 54 of the 1979 Session of the LouisianaLegislature. In accordance with Louisiana Revised Statute 38:1766, boardmembers receive $60 per diem for each board meeting they attend.

Recipients Amount

Scott Henry $600Joe Dupont 360Edward Racca, Jr. 720Coy Mudd 300Mike Johnson 720

TOTAL $ 2.700

26

November 21,2006

Office of Legislative Auditor1600 N. Third StreetBaton Rouge, LA 70802

Gentlemen:

In response to finding #05-01 of our recently submitted Audit, this letterrepresents our plan of corrective action. We will perform the followingprocedures:

(1) review the provisions of the Louisiana Local GovernmentBudget Act;(2) monitor and amend the budget for the fiscal year endingDecember 31,2005.

Sincerely,

Scott HenryPresident

Documents

Component Unit Financial Statements And Report of ...€¦ · Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The other