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WATERWORKS DISTRICT # 7OF EAST FELICIANA PARISH

CLINTON, LOUISIANABASIC FINANCIAL STATEMENTS

YEAR ENDED JUNE 30, 2007

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

WATERWORKS DISTRICT #7OF EAST FELICIANA PARISH

TABLE OF CONTENTS

PAGE

Independent Auditor's Report 1

Management's Discussion and Analysis 3

Statement of Net Assets 7

Statement of Revenues, Expenses and Changes in Net Assets 9

Statement of Cash Flows 10

Schedule of Expenditures for Federal Awards 11

Notes to Financial Statements 12

Independent Auditor's Report on Supplementary Information 20

Statement of Revenues and Expenses - Percentageof Total Operating Revenue 21

Statistical Data 22

Schedule of Insurance in Force 23

Comparative Data 24

Schedule of Revenues and Expenses - Budget Comparison 25

Other Required Reports:

Report on Internal Control Over Financial Reporting and on Complianceand Other Matters Based on an Audit of Financial Statements Performedin Accordance with Government Auditing Standards 26

Schedule of Findings and Questioned Costs 28

BASIC FINANCIAL STATEMENTS

JAMES M. CAMPBELLCERTIFIED PUBLIC ACCOUNTANT

(225) 926-6047 A PROFESSIONAL CORPORATION

(225) 928-0146 8939 Jefferson Hwy., First Floor, Suites ABC(225) 926-6270 Fax Baton Rouge, Louisiana 70809

November 21,2007

INDEPENDENT AUDITOR'S REPORT

To the Board of DirectorsWaterworks District #7East Feliciana ParishClinton, Louisiana

We have audited the accompanying financial statements of


a component unit of East Feliciana Parish Police Jury, as of and for the years ended June 30, 2007 and2006, which collectively comprise the Waterworks District # 7 Basic Financial Statements as listed inthe table of contents. These financial statements are the responsibility of Waterworks District #7 of EastFeliciana Parish'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 United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards,issued by the Comptroller General of the United States. Those standards require that we plan and performthe audit to obtain reasonable assurance about whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements. An audit also includes assessing the accounting principles usedand significant estimates made by management, as well as evaluating the overall financial statementpresentation. We believe that our audit provides a reasonable basis for our opinions.

Member of:American Institute of Certified Public AccountantsArkansas Society of Certified Public Accountants

Society of Louisiana CPAs

INDEPENDENT AUDITOR'S REPORT(CONCLUDED')

In our opinion, the financial statements referred to above present fairly, in all material respects, thefinancial position of Waterworks District #7 of East Feliciana Parish as of June 30, 2007 and June 30,2006, and the changes in financial position, and cash flows, for the year then ended in conformity withaccounting principles generally accepted in the United States of America.

In accordance with Government Auditing Standards, we have also issued our report dated November 21,2007 on our consideration of the Waterworks District #7 of East Feliciana Parish's internal control overfinancial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts,and other matters. The purpose of that report is to describe the scope of our testing of internal control overfinancial reporting and compliance and the results of that testing, and not to provide an opinion on theinternal control 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 in assessing theresults of our audit.

The Management's Discussion and Analysis and budgetary comparison information on pages 3 through6 are not a required part of the Basic Financial Statements but are supplementary information required byaccounting principles generally accepted in the United States of America. We have applied certain limitedprocedures, which consisted principally of inquiries of management regarding the methods ofmeasurement and presentation of the required supplementary information. However, we did not audit theinformation and express no opinion on it.

Our audit was conducted for the purpose of forming opinions on the financial statements that collectivelycomprise the Waterworks District # 7 basic financial statements. The statements of revenues andexpenses-percentage of total operating revenue, statistical data, schedule of insurance in force,comparative data, and schedule of revenues and expenses-budget comparison, are presented for thepurpose of additional analysis and are not a required part of the basic financial statements. Theaccompanying schedule of federal awards is presented for the purpose of additional analysis as requiredby U. S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, andNon-Profit Organizations, and is also not a required part of the basic financial statements of WaterworksDistrict # 7. The other accompanying supplemental schedules listed in the table of contents are presentedfor purposes of additional analysis, and also are not a required part of the basic financial statements ofWaterworks District #7 of East Feliciana Parish. The accompanying schedule of Federal Awards has beensubjected to the auditing procedures applied in the audit of the basic financial statements and is in ouropinion, fairly stated in all material respects in relation to the basic financial statements taken as a whole.The statistical sections have not been subjected to the auditing procedures applied in the audit of the basicfinancial statements and, accordingly, we express no opinion on them.

WATERWORKS DISTRICT NO. 7 OF EAST FELICIANA PARISHMANAGEMENT'S DISCUSSION AND ANALYSIS (UNAUDITED)

JUNE 30, 2007

Our discussion and analysis of Waterworks District No. 7 of East Feliciana Parish's financialperformance provides an overview of Waterworks District No. 7's financial activities for the fiscalyear ended June 30, 2007. The intent of this discussion and analysis is to look at the District'sperformance as a whole. Readers should also review the notes to the basic financial statements andthe financial statements to enhance their understanding of the District's financial performance.

This discussion and analysis is required supplementary information specified in the "GovernmentalAccounting Standards Board's (GASB) Statement No. 34 - Basic Financial Statements andManagement's Discussion and Analysis for State and Local Governments" issued June 1999.

FINANCIAL HIGHLIGHTS

1. The District's net assets decreased by $31,829 during the year ended June 30, 2007 due toa net loss of $31,829. Revenues increased by approximately $31,000 but operatingexpenditures increased by approximately $53,000 mainly due to a renewal of themanagement contract which increased the management fee expense.

2. The District had $293,813 in revenues which were primarily from water sales and relatedincome and from interest income. There were $325,642 in expenditures. Of the totalexpenditures, $52,585 was for depreciation and amortization expense which is calculated asa straight-line write off over the estimated useful lives of the District's capital assets.Depreciation expense does not require a cash outlay as the capital assets being depreciatedhave already been paid for, or are being paid for over time with financing through revenuebonds. Expenditures also included $162,560 for bill processing and management fees.

3. While total net assets decreased by $31,829, there was a decrease of $36,221 in unrestrictednet assets. This decrease in unrestricted net assets was caused by $4,392 additional fundsbeing restricted as required by the loan agreement and there was a $31,829 net loss for theyear. Unrestricted net assets are those assets available to meet the day-to-day operating needsof the District.

OVERVIEW OF FINANCIAL STATEMENTS

This discussion and analysis is intended to serve as an introduction to the Waterworks District'sbasic financial statements. The District's basic financial statements comprise three parts: 1)Management's Discussion and Analysis, 2) the financial statements, and 3) notes to the financialstatements.

The proprietary fund financial statements are designed to provide readers with a broad overview ofthe District's finances, in a manner similar to a private-sector business.

The statement of net assets presents information on all of the District's assets and liabilities, with thedifference between the two reported as net assets. Over time, increases or decreases in net assetsmay serve as a useful indicator of whether the financial position of the District is improving or


JUNE 30,2007

deteriorating.

The statement of revenues, expenses and changes in net assets presents information showing howthe District's net assets changed during the most recent fiscal year. All changes in net assets arereported as soon as the underlying event giving rise to the change occurs, regardless of timing ofrelated cash flows. Certain revenues and expenses are reported in this statement that will result incash flows in future periods.

The statement of cash flows presents information showing how the District's cash changed duringthe most recent fiscal year. It shows the sources and uses of cash.

Notes to the financial statements. The notes provide additional information that is essential to a fullunderstanding of the data provided in the fund financial statements.

FUND FINANCIAL ANALYSIS

Net assets may serve as a useful indicator of a government's financial position, hi the case of theDistrict, assets exceeded liabilities by $849,656 and $881,485 as of June 30, 2007 and 2006respectively.

The following is a condensed statement of Waterworks District No. 7's net assets as of June 30,2007and 2006:

Table 1Condensed Statement of Net Assets

2007 2006Current AssetsRestricted AssetsNoncurrent Assets-Capital AssetsTotal Assets

$ 133,14771,134

1.270.740$ 1,475,021

Current Liabilities $ 76,325Current Liabilities-Payable from Restricted Assets 0Long-term Liabilities 549,040Total Liabilities 625,365

Net AssetsInvested in capital assets, net of related debtRestricted for debt serviceUnrestrictedTotal Net Assets

$ 117,19766,742

1.323.325$ 1.507.264

% Change13.61%6.58 %

(3.97)%(2.14)%

$ 64,4120

561.367625,779

18.50%0.00 %

(2.20)%(0.07)%

709,372 750,326 (5.46)%71,134 66,742 6.58%69,150 64.417 7.35 %

$ 849.656 $ 881,485 (3.61)%

The largest portion of the District's net assets ($709,372 or 84 % as of June 30,2007 and $750,326or 85% as of June 30, 2006) is its investment in capital assets such as the water system and


JUNE 30,2007

equipment less related debt expended in the acquisition of those assets. Another portion of theDistrict's net assets ($71,134 or 8% as of June 30,2007 and $66,742 or 8% as of June 30,2006) isrestricted to paying long-term debt. The remaining balance of the net assets ($69,150 or 8% as ofJune 30, 2007 and $64,191 or 7% as of June 30, 2006) may be used to pay current operatingexpenses.

The business type of activities of the District which result from fees charged to customers for wateruse and related charges decreased net assets by $31,829 during the current year.

A summary of changes in net assets is presented below:

Table 2Condensed Statements of Revenues,Expenses, and Changes in Net Assets

RevenueOperating—charges for servicesNon-operating—Interest incomeTotal Revenue

ExpensesDepreciationOther operating expensesTotal Operating Expenses

Non-operating—Interest expenseTotal ExpensesChange in Net Assets

Net Assets, BeginningAdjustment to increase customer depositsNet Assets, Ending

2007 2006291,188

2.625293,813

52,585241,412293.997

260,0382.853

262.891

% Change11.98%(7.99)%11.76%

52,136188.898241,034

.86 %27.80 %21.97%

32.29931.645325.642

$ (31.829) $ (10.442)273.333

(2.58)%19.14%

(204.82)%

881.4850

849.656

898.052(6,125)

881.485

CAPITAL ASSETS AND DEBT ADMINISTRATION

At June 30,2007 and 2006, the District had $709,372 and $750.326 respectively, net of accumulateddepreciation and net of related debt, invested in capital assets, including land, right of ways, plantand distribution system, and equipment. There were no capital additions for the year ended June 3 0,2007. Capital additions for the year ended June 30, 2006 amounted to $41,155.

At June 30, 2007 and 2006, the District had $561,368 and $572,999 in bonds outstandingrespectively. The non-current liabilities decreased by $12,327 in the current year due to thescheduled payments made on the debt.


JUNE 30,2007

Table 3Outstanding Debt at Year-End

Water Revenue Bonds: 2007 2006Long-term $ 549,040 $ 561,3 67Current 12328 11.632

Total $ 561.368 $ 572.999

BUDGETARY HIGHLIGHTS

Water revenues were under budget by $26,053 due to the rate increase not taking effect until thesecond quarter of the current fiscal year. Bill processing fees exceeded the budget by $2,360 due tothe increase in the number of customers during the year. Repairs and maintenance were underbudget by $29,819. Insurance exceeded budget by $1,699 due to an increase in coverage and rateincreases. Legal and profession expense exceeded budget by $1,663 due to increases in fees andservices used.

OTHER CURRENTLY KNOWN FACTS, DECISIONS, OR CONDITIONS

In management's opinion, the cash flow from the District's operations will continue to increase dueto the growth of the customer base and implementation of a rate increase that went into effect inOctober of 2006. The average number of customers increased from 821 in the prior year to 846 inthe current year. As the number of customers increase, the water revenues will also increase. Themanagement fee will decrease significantly in the year ending June 30,2008 due to a board decisionto operate the system with their own employees rather than using a management company. Thecontract for management services expired on August 31,2007. This will decrease the managementfee but other expenses such as salaries and payroll taxes, rent, telephone, utilities, supplies andinsurance will increase. Also, the amount of capital expenditures for the year ending June 30,2008will increase due to the purchase of the necessary equipment to operate the system. This decision wasmade after careful consideration of anticipated costs to run the system versus the anticipatedincreases in monthly management fees.

CONTACTING THE DISTRICT'S MANAGEMENT

This financial report is designed to provide our customers and other users with a general overviewof the District's finances and to show the District's accountability for the money it receives. If youhave any questions about this report or need additional information, contact Waterworks District No.7 of East Feliciana Parish's office in Clinton, Louisiana, phone number 225-683-9124.

WATERWORKS DISTRICT #7 OF EAST FELICIANA PARISHA COMPONENT UNIT OF EAST FELICIANA PARISH POLICE JURY

CLINTON. LOUISIANASTATEMENT OF NET ASSETS

JUNE 30. 2007(WITH COMPARATIVE DATA AS OF JUNE 30. 2006)

ASSETS

2007 2006CURRENT ASSETS

Cash - operatingLess: restricted cashAccounts receivable (net of allowance

for bad debts of $3,800 for 2007and $3,300 for 2006)

Prepaid Insurance

CAPITAL ASSETSLand and land leaseWater Utility SystemLess accumulated depreciation

RESTRICTED ASSETSCash:Reserve fundDepreciation fundRestricted portion of currentcash accounts

93,402(2,224)

35,4346.535

133.147

9,5001,938,231(676.991)1.270.740

1.403.887

31,67137,239

2.22471.134

83,199(2,161)

29,3206.839

117.197

9,5001,938,231(624.406)1323.325

1.440.522

29,55435,027

2.16166.742

Total Assets $ 1.507.264

The accompanying notes are an integral part of the financial statements.7

LIABILITIES. RESERVES. AND NET ASSETS

2007 2006CURRENT LIABILITIES

Accounts payable $ 20,647 $ 11,730Customer deposits 43,350 41,050Current amount of bonds payable 12.328 11.632

76325 64.412

LONG TERM LIABILITIESRevenue bonds payable less current portion 549.040 561.367

Total Liabilities 625.365 625.779

NET ASSETSContributed capital -

governmental grants 1,169,600 1,169,600Contribution in aid of construction 7.180 7,180

1.176.780 1.176.780

Reserve for depreciation fund 34,896 32,676Reserve for revenue note fund 36,238 34,066Net assets (deficit) (398.258) (362.037)

(327.124) (295.295)

Total Net Assets 849.656 881.485

Total Liabilities. Reserves and Net Assets

WATERWORKS DISTRICT #7 OF EAST FEL1CIANA PARISHA COMPONENT UNIT OF EAST FELICIANA POLICE JURY

STATEMENT OF REVENUES. EXPENSES AND CHANGES IN NET ASSETSFOR THE YEAR ENDED JUNE 30. 2007

(WITH COMPARATIVE DATA FOR THE YEAR ENDED JUNE 30. 2006)

2007

OPERATING REVENUESWater salesSafe water drinking feeMiscellaneous incomeLate fees

OPERATING EXPENSESAdvertisingAutoBank chargesBill processing and management feesBoard feesDepreciationDues and subscriptionsInsuranceLegal and professionalMiscellaneousOffice expensesRepairs and maintenanceSafe water drinking feeSalariesSuppliesTravelUtilities

OPERATING INCOME (LOSS)

NONOPERATING REVENUES (EXPENSES')Interest incomeBad debtsInterest expense

CHANGE IN NET ASSETS

Net assets at beginning of yearPrior Period AdjustmentNet assets end of year

281,9982,617

96,565

291.189

235466

69162,560

4,26052,585

43210,69913,663

47570

8,5972,3763,459

16,584261

16JQ7293,498

(2309)

2,625(500)

(31.645)(29.520)

(31.829)

2006

251,4702,489

546,025

260.038

2979171

86,4813,900

52,136434

8,51611,842

17528,8492,2494,084

24,489645

16.075240334

19.704

2,853(700)

(32.299)(30.146)

898,052(6,125)

881.485


WATERWORKS DISTRICT # 7 OF EAST FELICIANA PARISHSTATEMENT OF CASH FLOWS

JUNE 30. 2007(WITH COMPARATIVE DATA FOR THE YEAR ENDED JUNE 30. 2006)

2007CASH FLOWS FROM OPERATING ACTIVITIES

Cash received from customersCash payments to suppliers for goods and servicesCash payments to employees for services

Net Cash Provided by (used for) Operating Activities

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIESPrincipal paid on bonds payableInterest paid on bonds payableAcquisition of capital assets

Net Cash (used for) Capital and Related Financing Activities

CASH FLOWS FROM INVESTING ACTIVITIESInterest on Investments

Cash flows from Investing ActivitiesInterest on investments

INCREASE (DECREASE) IN CASHCash and Cash Equivalents, Beginning of Year

CASH AND CASH EQUIVALENTS, END OF YEARCash and Cash Equivalents -UnrestrictedRestricted

RECONCILIATION OF OPERATING INCOME TO NET CASHPROVIDED BY (USED FOR) OPERATING ACTIVITIESIncome from operationsAdjustments to reconcile operating income to net cash provided by

(used for) operating activities:DepreciationNet Change in Assets and Liabilities -

Increase (Decrease) in bad debt reserve(Increase) Decrease in accounts receivableLand and Land Lease(Increase) Decrease in prepaid expenseAdditional reserve for note & depreciation fundIncrease (Decrease) in accounts payableIncrease (Decrease) in bonds payableIncrease (Decrease) in customer security depositsPrior Period Adjustment

Total AdjustmentsNet Cash provided by (used for) operating activities

$ 285,075(230,762)

(3.459)

50,854

(11,631)(31,645)

(43,276)

2.625

10,20383.199

93.402

91,1782.224

93.402

(2,309)

52,585

500(4,255)

660(304)

4,3928,917

(11,632)2,300

53.163

2006

$ 255,300(187,368)

(7.984)

64,948

(10,979)(32,299)(41.155)

(84,433)

2.853

(16,632)99.831

83.199

81,0382.161

83.199

19.704

52,137

700(4,738)

660(401)

4,392123

(10,979)9,475

(6.125)45.244

The accompanying notes are an integral part of the financial10

statements.

WATERWORKS DISTRICT #7 OF EAST FELICIANA PARISHSCHEDULE OF EXPENDITURES FOR FEDERAL AWARDS

FOR THE YEAR ENDED JUNE 30. 2007

Federal Grantor/Pass-throughGrantor/Program Title

U.S. Department of Agriculture,Office for Rural Development

Water and Waste DisposalSystems for Rural Communities

FederalCFDA

Number

10.418*

FederalFinancial

AssistanceExpenditures

S 561.368

Outstanding loan balances—Major Programs as defined by OMB Circular A-133


WATERWORKS DISTRICT #7 OF EAST FELICIANA PARISHNOTES TO THE FINANCIAL STATEMENTS

JUNE 30. 2007

NOTE #1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Waterworks District #7 of East Feliciana Parish is a component unit of East Feliciana Parish PoliceJury and was organized to provide water distribution services to residents of East Feliciana Parish.

This fund is a proprietary fund of the East Feliciana Parish Police Jury. A proprietary fund, alsoknown as an enterprise fund, is used to account for operations (a) that are financed and operatedin a manner similar to private business enterprises - where the intent of the governing body is tofinance or recover the cost (expenses, including depreciation) of providing goods or services tothe general public on a continuing basis primarily through user charges; or (b) where the governingbody has decided that periodic determination of revenues earned, expenses incurred, and/or netincome is appropriate for capital maintenance, public policy, management control, accountability,or other purposes.

A. Basis of Accounting

The financial statements of Waterworks District #7 are maintained on an accrual basis ofaccounting. This method recognizes revenues when they are earned, and expenses when theyare incurred. The District complies with Generally Accepted Accounting Principles.

For the year ended June 30, 2004, the Waterworks District # 7 of East Feliciana Parishimplemented GASB Statement No. 34, Basic Financial Statements - and ManagementDiscussion and analysis for State and Local Governments.

June 30,2004 was the first time the financial statements included:

A Management Discussion and Analysis (MD&A) section providing an analysis of theoverall financial position and results of operations.

Financial statements prepared using full accrual accounting for all of the Water District'sactivities.

These and other changes are reflected in the accompanying financial statements(including notes to the financial statements).

B. Accounts Receivable

The District's billing cycle may extend into the subsequent year. If that occurs, accountsreceivable at June 30, 2007 have been adjusted to allow for a year end cut-off date.

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JUNE 30, 2007

NOTE #1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

C. Taxes

Waterworks District #7 is a proprietary fund of East Feliciana Parish Police Jury.Consequently, they are exempt from paying federal and state income tax. All other local,state and federal taxes are paid current.

D. Deposited Funds

Under state law, Waterworks District #7 of East Feliciana Parish may deposit funds withina fiscal agent bank organized under the laws of the State of Louisiana, the laws of any otherstate in the Union, or the laws of the United States. The District may invest in United Statesbonds, treasury notes or certificates, and time deposits of state banks organized underLouisiana law and national banks having principal offices in Louisiana. Deposits (cash andcertificates of deposits) are reported at cost which equals market value. The balance of thesedeposits as of June 30,2007 was $162,312.

E. Reporting Entity

The accompanying financial statements include only the accounts and transactions ofWaterworks District #7 of East Feliciana Parish. The Waterworks District is owned by theEast Feliciana Parish Police Jury which is the governing authority of East Feliciana Parish,State of Louisiana. The governing authority appoints members of the Water District's Boardof Directors. The board exercised all administrative functions with respect to the operationand management of the Water District.

F. Plant and Equipment

Plant and equipment are stated at cost and do not purport to represent replacement orrealizable values. The cost of depreciable property, plant and equipment is charged toearnings over the estimated useful lives of the assets. Expenditures for maintenance andrepairs are charged to expenses as incurred; expenditures for renewals and betterments aregenerally capitalized. When properties are retired or otherwise disposed of, the cost andrelated accumulated depreciation are removed from the accounts and any resulting gain orloss is recognized in revenue. Depreciation of all depreciable property, plant and equipmentis computed using the straight-line method over the following lives:

ESTIMATEDASSET USEFUL LIFE

Water System 10-40 yearsLand N/A

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JUNE 30.2007

NOTE#1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

G. Statement of Cash Flows

For the purposes of the statement of cash flows, the District considers all unrestricted bankaccounts and certificates of deposit with an initial maturity of six months or less to be cash.

H. Comparative Data

Comparative data for the prior period has been presented in the accompanying financialstatements to provide an understanding of the changes in the District's financial position andoperations.

I. Interest Capitalization

Interest costs are capitalized when incurred on debt where proceeds were used to financeconstruction costs. For the year ending June 30,2006, no interest was capitalized.

J. Concentration of Credit Risk

In the normal course of business, the District extends unsecured credit to its customers inEast Feliciana Parish in the State of Louisiana.

K. Use of Estimates

The preparation of financial statements in conformity with generally accepted accountingprinciples the United States of America requires management to make estimates andassumptions that affect certain reported amounts and disclosures. Accordingly, actual resultscould differ from those estimates.

L. Basis of Presentation

The District applies all GASB pronouncements as well as the Financial AccountingStandards Board pronouncements issued on or before November 30, 1989, unless thosepronouncements conflict with or contradict GASB pronouncements.

M. Net Assets

The District utilizes reserves to denote that portion of net assets, which is not available forexpenditures or is legally segregated for specific use. Reserves are as indicated on thebalance sheet.

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JUNE 30. 2007

NOTE #2: RESTRICTED ASSETS

The Revenue Bond Resolution, Section 8, adopted the 5th day of September 1985, amendedon the 19th day of February 1987 and on the 3rd day of August 2001 provides for all incomeand revenue derived from the operation of the District to be pledged for the security andpayment of Series A Bond and Series 2001 Water Revenue Bonds.

All income and revenues derived from the operation or ownership of the System shall bedeposited periodically as the same may be collected in a separate and special bank accountto be established with the regularly designated fiscal agent bank of the District and to beknown as the Waterworks System Revenue Fund (the "Revenue Fund"). Said fund shall beestablished, maintained and administered and the money deposited therein shall be expendedfor the following expenses payable in the following order of priority:

(A) The payment of current expenses of the System from month to month as the same becomedue and payable. Current expenses will not exceed the reasonable and necessary costs ofoperating, repairing, maintaining and insuring the System.

(B) The establishment and maintenance of a Waterworks System Revenue Bond and InterestSinking Fund (the "A Bond Sinking Fund"), sufficient in amount to pay promptly and fullythe principal of and interest on the Bond, including any pari passu bonds issued hereafter,in the manner provided in the resolution, as they severally become due and payable, bydepositing with the depositary bank by transferring from said Revenue Fund to the BondSinking Fund before the 20th day of each month of each year beginning on the first day ofthe month following delivery of this bond, a sum equal to one-twelfth (1/12) of the interestfalling due on the Bond on the next interest payment date and, in addition, a sum equal toone-twelfth (1/12) of the principal on the bond falling due on the next principal paymentdate, together with such additional proportionate sum as may be required as the same shallrespectively become due. Money in the Sinking Funds shall be deposited as trust funds andshall be used solely and is hereby expressly and exclusively pledged for the purpose ofpaying principal and interest on the Bond and parity bonds.

The payment is now being remitted monthly, by bank draft, to USDA Department of RuralDevelopment, the current bond holder. As of June 30, 2007 Waterworks District # 1 hadmade the payments as required by the agreement. Following the required payments to theBond Sinking Fund, the monies remaining in the Revenue Fund shall be distributed inaccordance with the following paragraphs:

(C) The establishment and maintenance of a Waterworks System Revenue Bond Reserve Fund(hereinafter called the "Reserve Fund"), by transferring to the depository bank (a member ofthe Federal Deposit Insurance Corporation) monthly, in advance, on or before the 20th dayof each month of each year, beginning not later than the first full month in which the Systembecomes revenue-producing, a sum equal to One Hundred Eighty One dollars ($181.00) thepayments to continue until such time as there has been accumulated therein a sum equal to

15

WATERWORKS DISTRICT # 7 OF EAST FELICIANA PARISHNOTES TO THE FINANCIAL STATEMENTS

JUNE 30. 2007

NOTE #2: RESTRICTED ASSETS (CONTINUED)

Forty Three Thousand Two Hundred Seventy Five dollars and Ninety cents ($43,275.90) thehighest annual debt service, including both principal and interest payable in any future fiscalyear on the outstanding principal of the Bond. The money in the Reserve Fund is to beretained solely for the purpose of paying the principal and the interest on all bonds payablefrom the Bond Sinking Fund as to which there would otherwise be default. As of June 30,2007, Waterworks District #7 had made the payments as required by the agreement.

(D) The establishment and maintenance of a "Depreciation and Contingency Fund" bytransferring from the said Revenue Fund on or before the 20th day of each monthcommencing with the first full month in which the complete System becomes revenue-producing, to the depositary bank, the sum of One Hundred and Two dollars ($102.00) untilthe project being funded with the Series 2001 Bonds is completed, and then One HundredEighty Five dollars ($185.00) per month over the life of the bonds. All monies in theDepreciation and Contingency Fund may be drawn on and used by the District for thepurpose of paying the cost of unusual or extraordinary maintenance, repairs, replacementsand extensions; and the costs of improvements to the System which will either enhance itsrevenue-producing capacity or provide a higher degree of service. In the event the availablebalances in the Bond Sinking Fund and/or Reserve Fund shall at any principal or interestpayment date be insufficient to pay the next installment of principal and/or interest and tomaintain the required debt service, reserve funds on deposit in the Depreciation andContingency Fund shall be transferred in such amounts as are necessary to eliminate thedeficiencies, respectively, in the Bond Sinking Fund and the Reserve Fund. As of June 30,2007 Waterworks District #7 had remitted the required payments to this fund.

NOTE #3: BONDS PAYABLE

The following is a summary of bond transactions of the Waterworks District #7 for the yearended June 30, 2007:

Revenue bonds issued July 8, 1988 (Beginning)Revenue bonds retired, during the yearRevenue bonds payable, end of year

Revenue bonds issued July 29, 1993 (Beginning)Revenue bonds retired, during the yearRevenue bonds payable, end of year

Revenue bonds issued August 3,2001 (Beginning)Revenue bonds retired, during the yearRevenue bonds payable, end of year

Total revenue bonds payable, end of yearRevenue bonds payable, current amountTotal revenue bonds payable, long term amount

$ 242,0236.965

235.058

57,1761.600

55.576

274,4973.763

270.734=..- a^^^^^

561,36812.328

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JUNE 30, 2007

NOTE #3: BONDS PAYABLE (CONTINUED^

Bonds payable are comprised of the following individual issues:

$305,600 - Waterworks Revenue Bonds, Series 1987 dated July 8, 1987; due in annualinstallments of $21,863, including interest at 6.5%, beginning with the third anniversary dateof the bond and thereafter, for a period of forty (40) years. The first two payments were forinterest only in the amount of $19,900.

$74,800 - Waterworks Revenue Bonds, Series 1991 dated July 29, 1993; due in monthlyinstallments of $397.94, including interest at 5.625%, beginning on August 8, 1995 andthereafter, for a period of thirty eight (38) years.

$295,000 - Waterworks Revenue Bonds, Series 2001 dated August 3,2001; due in monthlyinstallments of $1,386.50, including interest at 4.75%, beginning on September 3,2002 andthereafter, for a period of forty (40) years.

The annual requirements to amortize all debt outstanding as of June 30, 2006, includinginterest payments are as follows:

YEAR ENDINGJUNE 30.20082009201020112012Thereafter

INTEREST30,94930,21229,42828,43923,011

311.479$453.518

PRINCIPAL12,32813,06513,84914,83820,266

487,022$561,368

TOTALREQUIREMENT

43,27743,27743,27743,27743,277

798.500$1.014.886

Total requirements for the reserve and contingency requirements for the next five years are$4,392 each year.

NOTE #4: PROPERTY. PLANT AND EQUIPMENT

The following is a summary of changes in property, plant and equipment for the fiscal year:

LandWater System

AccumulatedDepreciationand AmortizationWater System

BALANCE6/30/06

$ 9,5001,938,2311,947.731

S 624.406

ADDITIONS DEDUCTIONSBALANCE

6/30/07$ 9,500

1.938.2311.947.731

17


JUNE 30.2007

NOTE #5: RELATED PARTY TRANSACTIONS

The Water District obtains water under the terms of a local service agreement entered intowith East Feliciana Parish Police Jury. The water is obtained from a well which wasconstructed with proceeds from a H.U.D. grant ($155,000) to East Feliciana Parish PoliceJury. The well is located on property owned by Waterworks District #7 of East FelicianaParish.

The service agreement provides for a fifty (50) year lease commencing on the date the wellis first placed into service. The District is to operate and maintain the water well. TheParish has granted to the District a franchise to operate a waterworks utility system.

The sole consideration obligated to be paid by the District is to issue waterworks revenuebonds to place into operation a waterworks utility system for use and benefit of customersin East Feliciana Parish.

The District has the option to purchase the water well from the Parish at any time by payingto the Parish a sum equal to the original cost of the well less depreciation as may be certifiedby the District's Consulting Engineer.

The District and the Parish covenant agree that no action will ever be taken by the Parish orDistrict which would have the effect of impairing the security for, or the payment of theWaterworks Revenue Bond.

NOTE #6: CERTIFICATES OF DEPOSIT

The District has the following certificates of deposit with Feliciana Bank & Trust Company:

MATURITYDATE

November 2, 2006Septemberl2, 2006

ANNUALINTEREST

RATE2.75%1.00%

NOTE #7: COMPENSATION PAID TO BOARD MEMBERS

BOARD MEMBERMary DunnSamuel BrownLarry GranierRobert TaylorJohn Stewman

TERM EXPIRESJuly 2007July 2007July 2007July 2007July 2007

AMOUNT$ 10,000$ 39,961

AMOUNT$ 900

900900840720

18


JUNE 30. 2007

NOTE #8: AGING OF ACCOUNTS RECEIVABLE

Aging of accounts receivable as of June 30,2007 is as follows:

CURRENT 30 DAYS 60 DAYS 90 DAYS TOTALTotal $ 1.634

Provision for uncollectible accounts receivable was $3,800 at June 30,2007. Included in theaccounts receivable balance is $8,852 unbilled receivables due to the billing cycle.

NOTE #9: LEASE

The District entered into a sixty (60) year lease for land commencing on August 3,1999 andterminating on August 2,2058 after prepaying $5,000 for the entire term of the lease. Thisamount has been recorded as a fixed asset and is being amortized over the lease period.Amortization was recorded in the amount of $83 for the current year and is included indepreciation expense. Accumulated amortization was $743 as of June 30, 2007.

NOTE #10: RISK MANAGEMENT

The District is exposed to various risk of loss related to torts; theft of, damage to, anddestruction of assets and errors and omissions. To handle such risk of loss, the Districtmaintains commercial liability and surety bond insurance policies. No claims were paid onany of the policies during the past three years which exceeded the policies' coverageamounts. There were no significant reductions in insurance coverage during the year endedJune 30, 2007 or June 30, 2006.

19



(225) 928-0146 8939 Jefferson Hwy., First Floor, Suites ABC(225) 926-6270 Fax Baton Rouge, Louisiana 70809

November 21,2007

INDEPENDENT AUDITOR'S REPORTON SUPPLEMENTARY INFORMATION

To the Board of DirectorsWaterworks District #7 ofEast Feliciana ParishClinton, Louisiana 70722

Our report on our audit of the basic financial statement of


as of and for the year ended June 30,2007, appears on Page 1. That audit was made for the purposeof forming an opinion on the basic financial statement taken as a whole. The supplementaryinformation and statistical data on pages 21 through 25 is presented for purposes of additionalanalysis and is not a required part of the basic financial statements of Waterworks District #7 of EastFeliciana Parish. This information has not been subjected to the auditing procedures applied in theaudit of the basic financial statements, and accordingly, we express no opinion on it.

20

WATERWORKS DISTRICT #7 OF EAST FELICIANA PARISHSUPPLEMENTARY INFORMATION

STATEMENT OF REVENUES AND EXPENSESPERCENTAGE OF TOTAL OPERATING REVENUE


AMOUNTOPERATING REVENUE

Water sales $ 281,998Safe water drinking fee 2,617Late fees 6,565Miscellaneous Income 9_Total 29U89

OPERATING EXPENSESAdvertising 235Auto 466Bank charges 69Bill processing and management fees 162,560Board fees 4,260Depreciation 52,5 85Dues and subscriptions 432Insurance 10,699Legal and professional 13,663Miscellaneous 475Office supplies 70Repairs, maintenance and supplies 8,597Safe water drinking fee 2,376Salaries 3,459Supplies 16,584Travel 261Utilities 16.707

293.498

NET OPERATING INCOME (LOSS) (2.309)

NONOPERATING REVENUES (EXPENSES)Interest income 2,625Bad debts (500)Interest expense (31.645)

(29.520)

PERCENTAGE OF TOTALOPERATING REVENUE

96.8.9

2.300

100.0

0.1.2

55.81.5

18.1.2

3.74.7

.2

2.3.8

1.25,7

5J_100.8

CHANGE IN NET ASSETS $ (31.829)

.9(-2)

(10.9)(10.2)

(11.0)

See auditor's report on supplementary information.21


STATISTICAL DATAWATER SALES


NUMBER OF GALLONSMONTH CUSTOMERS (THOUSANDS) AMOUNTJuly 825 6,859.9 $ 22,384August 829 6,662.0 21,943September 833 5,612.2 19,586October 838 6,217.3 26,699November 833 4,427.1 21,615December 842 5,332.3 24,141January 850 4,744.2 22,772February 855 4,846.9 23,994March 858 4,203.4 21,211April 863 4,930.9 23,333May 867 4,868.5 23,216June 867 6,495.2 25.810

TOTAL 65.199.9 $276,704

AVERAGE 847



SCHEDULE OF INSURANCE IN FORCEJUNE 30. 2007

NUMBER EXPIRATION DATE

SLI70300009 5/17/07 - 5/17/08

68686855 2/18/07-2/18/08

GGCF2850 12/2/06 -12/2/07

22983-A 5/5/07 - 5/4/08

COMPANY AND COVERAGE

Evanston Insurance CompanyGeneral Liability InsuranceAggregate LimitPersonal and AdvertisingEach Occurrence LimitDamage to Rented PremisesMedical Expense Limit

CNA Surety CompanyFidelity Bond

Gailand General Agency, Inc.Property (business/personal)Damage Aggregate Limit

Louisiana Worker's CompensationCorporation Worker's Compensation

AMOUNT

$ 600,000$ 300,000$ 300,000$ 50,000$ 1,000

$ 30,000

$ 80,000

Statutory


WATERWORKS DISTRICT #7 OF EAST FELICIANA PARISHSUPPLEMENTAL INFORMATION

COMPARATIVE DATAJUNE 30, 2007

JUNE 30.

Operating Revenues

Operating Expenses

Operating Income (Loss)

Nonoperating Revenue

Nonoperating Expenses

NET INCOME CLOSS^

OTHER DATA:

Property, Plant andEquipment (net)

Net Working Capital

Total Assets

Bonds and Other Long-termLiabilities

Total Equity

Average # of CustomersCubic Feet of WaterNumber of Residential Users:Number of Commercial Users:Number of Commercial Users

2007

$281,998

293,997

(2,809)

2,625

(29,020)

(31,829)

1,270,740

59,046

1,475,021

549,040

849,656

84765,199.9

84621

0

2006

$ 260,038

241,032

19,006

2,625

(32,298)

(10,668)

1,323,325

50,624

1,507,264

561,367

881,485

80066,910.8

79922

0

2005

$ 225,475

214,067

11,408

1,960

(33,222)

(19,854)

1,334,306

74,350

1,525,424

572,954

898,052

76658,116.0

75880

2004

$ 200,276

187,604

12,672

1,852

(33,702)

(19,178)

1,380,954

63,047

1,559,117

584,053

917,906

73653,815.9

73160

with 3/4" Meter


WATERWORKS DISTRICT #7 OF EAST FELICIANA PARISHSCHEDULE OF REVENUES AND EXPENSES

BUDGET COMPARISONFOR THE YEAR ENDED JUNE 30. 2007

ACTUAL BUDGET

OPERATING REVENUES

Water sales $ 281,998 $ 308,051Safe water drinking fee 2,617 2,489Late fees 6,565 6,025Miscellaneous 9_ 54

291.189 316.619

OPERATING EXPENSESAdvertising 235 300Auto 466 100Bank charges 69 100Bill processing and management fees 162,560 160,200Board fees 4,260 4,000Depreciation 52,585 53,000Dues and subscriptions 432 500Insurance 10,699 9,000Legal and professional 13,663 12,000Miscellaneous 475 500Office supplies 70 200Repairs, maintenance and supplies 25,181 55,000Safe water drinking fee 2,376 4,100Salaries 3,459 2,300Travel 261 700Utilities 16.707 17.000

293.498 319.000

OPERATING INCOME (LOSS) (2.309) (2.381)

NON-OPERATING REVENUES (EXPENSES)Interest income 2,625 2,625Bad debt expense (500) (700)Interest expense (31.645) (32.000)

(29.520) (30.075)CHANGE IN NET ASSETS $ (31.829) $ (32.456J

See auditor's report for supplementary information.25



(225) 928-0146 8939 Jefferson Hwy., First Floor, Suites A, B, & C(225) 926-6270 Fax Baton Rouge, Louisiana 70809

REPORT ON INTERNAL CONTROL OVER FINANCIALREPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL

STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

November 21,2007

Waterworks District #7 ofEast Feliciana ParishClinton, Louisiana

We have audited the financial statements of the business type activities of the Waterworks District #7 ofEast Feliciana Parish, as of and for the year ended June 30, 2007 and June 30, 2006, which collectivelycomprise the Waterworks District # 7 basic financial statements, and have issued our report thereon datedNovember 21,2007. We conducted our audit in accordance with auditing standards generally accepted inthe United States of America and the standards applicable to financial audits contained in GovernmentAuditing Standards, issued by the Comptroller General of the United States.

Internal Control Over Financial Reporting

In planning and performing our audit, we considered Waterworks District #7 of East Feliciana Parish'sinternal control over financial reporting as a basis for designing our auditing procedures for the purposeof expressing our opinion on the financial statements, but not for the purpose of expressing an opinion onthe effectiveness of the Waterworks District # 7 internal control over financial reporting. Accordingly,we do not express an opinion on the effectiveness of the Waterworks District # 7 internal control overfinancial reporting.

A control deficiency exists when the design or operation of a control does not allow management oremployees, in the normal course of performing their assigned functions, to prevent or detect misstatementson a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies,that adversely affects the Waterworks District # 7 ability to initiate, authorize, record, process, or reportfinancial data reliably in accordance with generally accepted accounting principles such that there is morethan a remote likelihood that a misstatement of the Waterworks District # 7 financial statements that ismore than inconsequential will not be prevented or detected by the Waterworks District # 7 internalcontrol.

26

REPORT ON INTERNAL CONTROL OVER FINANCIALREPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL

STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS(CONCLUDED)

A material weakness is a significant deficiency, or combination of significant deficiencies, that results inmore than a remote likelihood that a material misstatement of the financial statements will not beprevented or detected by the Waterworks District # 7 internal control.

Our consideration of internal control over financial reporting was for the limited purpose described in thefirst paragraph of this section and would not necessarily identify any deficiencies in internal control thatmight be significant deficiencies or material weaknesses. We did not identify any deficiencies in internalcontrol over financial reporting that we consider to be material weaknesses, as defined above.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Waterworks District #7 of East FelicianaParish's financial statements are free of material misstatement, we performed tests of its compliance withcertain provisions of laws, regulations and contracts, noncompliance with which could have a direct andmaterial effect on the determination of financial statement amounts. However, providing an opinion oncompliance with those provisions was not an objective of our audit and accordingly, we do not expresssuch an opinion. The results of our tests disclosed no instances of noncompliance or other matters thatare required to be reported under Government Auditing Standards.

This report is intended solely for the information and use of the Board of Directors of Waterworks District#7 of East Feliciana Parish, East Feliciana Parish Police Jury, United States Department of Agricultureand the Legislative Auditor of the State of Louisiana and is not intended to be and should not be used byanyone other than these specified parties. Under LA. Revised Statute 24:513, the Legislative Auditordistributes this report as a public document.

.(̂ ^

27

WATERWORKS DISTRICT #7 OF EAST FELICIANA PARISHSCHEDULE OF FINDINGS AND QUESTIONED COSTS

JUNE 30. 2007

A, Summary of Audit Results

1. The auditor's report expresses an unqualified opinion on the basic financial statements ofWaterworks District #7 of East Feliciana Parish.

2. No reportable conditions were disclosed during the audit of the basic financial statements.

WATERWORKS DISTRICT #7 OF EAST FELICIANA PARISHSCHEDULE OF FINDINGS AND QUESTIONED COSTS

JUNE 30. 2006

A. Summary of Audit Results

1. The auditor's report expressed an unqualified opinion on the basic financial statements ofWaterworks District #7 of East Feliciana Parish.

2. No reportable conditions were disclosed during the audit of the basic financial statements.

28


JUNE 30. 2007

This report is intended solely for the information and use of the Board of Directors of WaterworksDistrict #7 of East Feliciana Parish, East Feliciana Parish Police Jury, United States Department ofAgriculture and the Legislative Auditor of the State of Louisiana and is not intended to be and shouldnot be used by anyone other than these specified parties. Under LA. Revised Statute 24:513, theLegislative Auditor distributes this report as a public document.

Section 6 Management letter

None

Contact Person: Sammie Brown, President or Judith Kelly, Secretary

29

basic financial statements -...

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