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CATAHOULA PARISH HOSPITAL SERVICE DISTRICT NO. 2
ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED DECEMBER 31,2009
Under provisions of slate law, this report is a public document. A copy of the report hasbeen submitted to the entity and other appropriate public officials. The report is available for public Inspection at the Baton Rouge office of the Legislative Auditor and, where appropriate, at the office of the parish clerk of court.
Release Date
TABLE OF CONTENTS
Independent Auditors'Report 1-2
Required Supplemental Information Management's Discussion and Analysis 3-5
Govemmental Funds Balance Sheet 6 Statement of Revenues, Expenditures, and Changes in Net Assets 7 Statement of Cash Flows 8
Notes to Financial Statements 9-14
Independent Auditors* Report on Intemal Control over Financial Reporting and Other Matters Based on An Audit of Financial Statements Performed in Accoidsace'mfh Government Auditing Standards 15-16
Independent Auditors' Report on Compliance with Requirements Applicable to Each Major Program and Intemal Control over Compliance in Accordance With OMB Cu-cular A-133 17-18
Schedule of Findings and Questioned Costs 19-20
Management's Corrective Action Plan 21-22 Summary ofPrior Year Fuidings and Questioned Costs..! 23
Other Supplemental Information Schedule of Expenditure of Federal Financial Awards 24
RoziER, HARRINGTON 4& MCKAY CERTIFIED PUBLIC ACCOUNTANTS 1407 PETERMAN DRIVE • ALEXANDRIA, LOUISIANA 71301
MAILING ADDRESS JOHNS. ROZIEH, IV. CPA POST OFFICE BOX 12178
MARKS. MCKAY, CPA ALEXAHmiA, LOUISIANA 71315-2178 LEE W. WILLIS, CPA TB.EPHONe(318) 442-1808
STEVEN E. KIMBALL, CPA TtLECOPtER (318} 487-2027 RHONDA L. RACHAL, CPA
GEORGETTE VERGHER, CPA M. DALE HARRINGTON, CPA
RETIRED ~200S
September 17,2010
INDEPENDENT AUDITORS' REPORT
Board of Commissioners Catahoula Parish Hospital Service District No. 2
We have audited the accompanying financial statements ofthe business-type activities of Catahoula Parish Hospital Service District No. 2, as of and for the year ended December 31, 2009, which collectively comprise the District's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Catahoula Parish Hospital Service District's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of. America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, Those standards reqmie that we plan and perform the audit to obtain reasonable assurance about whether the basic financial statements are fiee of material misstatement. An audit includes examining, on a test basis, evidence supportmg the amounts and disclosures in the financial statements. An audit also includes assessing the accountmg principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position ofthe business-type activities of Catahoula Parish Hospital Service District No 2., as of December 31, 2009, and the changes in financial position and cash flows, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.
The management's discussion and analysis listed in the accompanying table of contents are not a required part of the financial statements but are supplementary information reqinred by accounting principles generally accepted hi tiie United States of America. We have applied certain limited procedures, which consisted principally of inquires of management regarding the methods of measurement and presentation ofthe reqinred supplemental information. However, we did not audit the information and express no opinion on it.
-Members-Amorlcati Institute of Cortlflod PubllB Aeeauntants • Soeiaty of Louisiana, CPAs
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Catahoula Parish Hospital Service District No. 2 September 17,2010 Page 2
In accordance with Government Auditing Standards, we have also issued a report dated September 17, 2010, on our consideration of Catahoula Parish Hospital Service District's intemal control over financial reporting and our tests of its compliance with certaui provisions of laws, regulations, contracts, grants, and other matters. That report is an integral part of an audit performed in accordance writh Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements ofthe Catahoula Parish Hospital Service District No, 2. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as reqmred by OMB Circular A-133, Audits of States. Local Governments, and Non-Profit Organizations, and is not a required part ofthe primary govemment financial statements ofthe Catahoula Parish Hospital Service District No. 2. The schedule of expenditures of federal awards have been subjected to the auditing procedures applied m the audit ofthe basic financial statements and, in our opinion, are fairly stated m all material respect in relation to the basic financial statements taken as a whole.
ROZIER, HARRINGTON. & McKAY Certified Public Accountants
Catahoula Parish Hospital Service Distr ict No. 2
MANAGEMENT'S DISCUSSION AND ANALYSIS December 3 i , 2009
This section of the annual financial report presents our discussion and analysis of the District's financial performance during the fiscal year ended December 31,2009.
nVF.RVTEW OF ffTNANCTAT. STATEMENTS The basic financial statements report mformation about the District as a whole using accounting methods similar to those used by private-sector companies. These financial statements report all revenues and expenses regardless of when cash is received or paid. Furtiiermore, the basic'financial statements mclude all ofthe District's assets and all ofthe District's liabilities (mcludmg long-term debt).
FTNANCTAL ANALYSTS OF THE DISTRICT ;
This portion of management's discussion and analysis provides a comparative financial analysis.
Balance Sheet A condensed version ofthe District's Balance Sheet is presented as follows:
December 31, December 31, 2009 2008
Assets: Current and Other Assets Capital Assets Total Assets
Liabilities: Current and Other Liabilities Long-term Liabilities Total Liabilities
Net Assets: Invested in Capital Assets (Net) Restricted Unrestricted Total Net Assets
$ 874,329 S 1,304,094 969.517 1,034,957
1,843,846
323,032 140,265 463,297
804,710 76,450
499,389 5 1,380,549 %
2,339.051
420,914 164.807 585.721
846,665 72,808
833,857 1.753.330
As the presentation appearing above demonstrates, the significant portion of the net assets are invested in capital assets. Capital assets are used by the District to provide medical needs for their patients.
A small portion of net assets is restricted for debt service. These assets are limited to cash that is encumbered by revenue bond agreements.
The remaming balance of unrestricted assets may be used to meet tiie District's ongoing obligations to citizens and creditors.
Catahoula Parish Hospi ta l Service Dis t r ic t No. 2
MANAGEMENTS DISCUSSION AND ANALYSIS December 31,2009
Changes in Net Assets ^
A condensed version'of the Statement of Revenues, Expenses, and Changes in Net Assets is presented as follows:
For the Year Ended December 31, December 31,
2009 2008
Revenues: Program Revenues
Charges for service S 1,771,133 S 1,877,322 • Grant Proceeds 1,744,135 1,596,614 General Revenues 33.842 31,377 Total Revenues 3.549,110 3.505.313
Program Expenses 3,921,891 3,786.206
Change in Net Assets (372,781) (280,893) Net Assets Beginning . 1.753,330 2.034,223 Net Assets Ending S 1,380.549 $ 1.753,330
The District's net assets decreased by $372,781, This decrease hi net assets is due to using a portion ofthe reserves to enhance services.
CAPITAL ASSET ADMINISTRATION
Capital asset activity for the year ended December 31,2009, is summarized as follows;
Additions: OfEce Equipment S 549 Medical and Dental Equipment 8,602 Total Additions 9,151 Depreciation (74,591) Net Increase / Decrease (65,440) Beginning Capital Asset (Net) 1.034,957
Ending Capital Asset (Net) $ 969,517
Highlights ofthe District's capital asset administration are provided as follows:
• The office equipment purchased is a new refrigerator for the Wisner Clinic. • The medical and dental equipment purchased mclude a vital signs monitor with a stand and
other small miscellaneous equipment necessary for the cUnic.
DEBT AnMTNTSTRATION
The District did not incur any new debt during the year ended December 31, 2009. Existing debt in the busmess-type activities includes revenue bonds that were issued to acqmre, construct, and
Catahoula Parish Hospi ta l Service D is t r ic t No. 2
MANAGEMENT'S DISCUSSION AND ANALYSIS December 3 1 , 2 0 0 9
improve health care facilities. At year end revenue bonds payable totaled $164,807. Principal payments totaled $23,485.
FACTORS E X P E r T F B TO EFFECT FTTTTTRE OPERATIONS
The factors that will efiect fiiture operations include:
• The District has been awarded a grant from the State of Louisiana to expand the Concordia Community Health Center.
• The District has been awarded federal sthnulus funds to renovate the Concordia Community Health Center.
CATAHOULA PARISH HOSPITAL DISTRICT NO 2.
Balance Sheet
December 31 ,2009
Business-Type Activities Enterprise Fund
ASSETS Current Assets:
Cash and cash equivalents S 452,606 Receivables (net) 274,548 Prepaid expenses 14,048 Inventory 56,677 Assets restricted by bond indenture:
Cash and cash equivalents 76,450 Total current assets 874,329
Non Current Assets: Land Depreciable capital assets, net
Total assets
LIABILITIES Current Liabilities:
Accounts and other payables Accmed Expenses Compensated Absences Liabilities payable Jrom restricted assets
Current portion of long term debt Total Cunent Liabilities
Long-term debt due in more than one year
Total liabilities
NET ASSETS
Invested in Capital Assets (Net) Restricted for debt service Unrestricted
Total net assets (deficit)
Total Liabilities and Net Assets
ar
S
See QccompniiyliiB na lu nnd accountnnts' report
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31,077 938,440
1,843,846
163,319 79,002 56,169
24,542 323,032
140,265
463,297
804,710 76.450
499,389
1,380,549
1.843,846
CATAHOULA PARISH HOSPITAL DISTRICT NO 2 .
Statement of Revenues, Expenses and Changes In Fund Net Assets Proprietary Funds Year Ended December 31 f 2009
Business-Tvpe Activities Enterprise Fund
Operating Revenues; Net patient revenues pledged as security $ 1,771,133
Total Operating Revenues 1,771,133
Operating Expenses: Salaries, 2,155,636 Payroll taxes and related benefits 409,978 Insurance 51,254 Medical sv^plies 157,165 Contract labor 646,740 Utilities and telephone 140,584 Depreciation " 74,591 Repairs and maintenance 77,198 Rent and lease expense 59,711 Other expenses 140,561
Total Operating Expenses 3,913,418
Operating Income (Loss) (2,142,285)
Nononerating Revenues (Expenses); (jrant proceeds 1,744,135 Interest revenue 13,536 Ad Valorem taxes 6,849 Otiier revenues 13,457 Interest expense (8,473)
Change in Net Assets (372,781)
Net Assets - beginninig 1,753,330
Total net assets - ending $ ' 1,380,549
Sec nccompan^nE notes and nccDunUnts' report
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CATAHOULA PARISH HOSPITAL DISTRICT NO 2,
Statement of Cash Flows Proprietary funds Year Ended December 31, 2009
^nsh floy from oneratine nc<)vities;
Cash received &om patients Cosli payments to suppliers orgoods and services Cash payments to employees for services
Net cash providctl (used) by operating activities
Cash flows from non-cnnltal nnanclng activitica!
Operating grants received
Ad Valorem taxes received
Net cash provided (used) by non-capital fmancing activities
Cash flows from capital and related financlnB ncttvitlcs:
Acquisition of capital assets Principal paid on revenue bonds Interest paid on debt instruments
Net cash provided (used) by capital nnd related financing
octivltics
Cash flows from investing nctivttles;
Interest and other income
Net cash provided (used) by Investing activities
Net increase (decrease) In cash
Beginning cash balance
Ending cash balance
Restricted cash
Cash and cash cqulv&lcnia
Rcconclllatinn of oncrating Income flossl to net cash Operating income (loss) Adjustmenls lo rcconQiIe operatmg incomo to net cosh
provided by operating activities: Depreciation Oncrcasc) decrease in accounts receivable (Increase) decrease in prepaid expenses (Increase) decrease in Inventory (Decrease) increase in operating accounts payable (Decrease) Increase in accrued expenses (Decrease) increase in compensated absences
Net cash provided (used) by operating activities
Business-Tvpe Activities Enterprise Fund
1,987.573
(1.747,771) (^168.696)
(1.928.894)
1,744,135 6.849
1.750.984
(9,151) (23,485)
(8.473)-
(41.109)
26.993
26.993
(192,026) 721.082
529,056 76.450
452,606
(2.142.285)
74,591 216,440 21.852
(553) (85.879) (17.867)
4.807
(1.928.894)
Supplemental Disclosure of Cosh Flow Information: During the year ended December 31,2009, there were no investing, capital, or financing activities that did not result in
cosh receipts or payments.
S M icmnpaBylae notn pud attminiinli' rtpan
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Catahou la Pa r i sh H o s p i t a l Serv ice D i s t r i c t NOM 2
Notes to Financial Statements December 31, 2009
NOTE 1 - SUMMARY O F SIGNIFICANT ACCOUNTING POLICIES
Organization and Basis of Presentation The Catahoula Parish Hospital Service District No. 2 (the District) is a political subdivision of the Catahoula Parish PoUce Jury. The District was organized pursuant to an ordinance adopted by the Catahoula Parish Police Jury on April 5, 1976. The hospital district has a service area that includes Catahoula Parish, Concordia Parish, and parts of Franklin and Tensas Parishes. The District has three medical clinics and a dental clinic. The District is govemed by a board of commissioners appointed for terms of various years by the Catahoula Parish Police Jury.
The following is a summary ofthe more significant accounting policies.
Financial Reporting Entity Governmental Accounting Standards Board (GASB) Statement No. 14 established criteria for determining which component units should be considered part of a financial reporting entity. The basic criterion for mcludmg a potential component unit witiiin the reporting entity is financial accoimtability. The GASB has set forth criteria to be considered m determmmg financial accountability. This criteria includes:
1. Appointing a votmg majority of an organization's goveming body, and
a. The ability ofthe reporting entity to impose its will on that organization and/or
b. The potential for the organization to provide specific financial benefits to or unpose specific financial burdens on the reporting entity.
2. Organizations for which the reportmg entity does not appomt a voting majority but are fiscally dependent on the reporting entity.
3. Organizations for which the reporting entity financial statements would be misleading if data of the organization is not mcluded because of the nature or significance of the relationship.
Based on the previous criteria, the District is a component unit ofthe Catahoula Parish Police Jury. The accompanymg component unit financial statements present mformation only on the fund maintained by the Dishict and do not present information on the police jury, the general govemment service provided by that govemmental unit, or other govemmental units that comprise the financial reporting entity.
Basis of Presentation
The District uses an enterprise fund for financial reporting purposes. Enterprise funds are proprietary fiands used to account for busmess-like activities. These activities are financed primarily
Catahoula Parish Hospi ta l Service D is t r ic t NOo 2
Notes to F inancia l Statements December 3 i , 2009
by user charges and the measurement of financial activity focuses on net income measurement similar to the private sector. Due to these sunilarities, proprietary fimds are allowed to follow certain pronouncements that are developed by the Financial Accoimting Standards Board (FASB) for business enterprises. However, the District only applies those FASB pronoimcements that were issued on or before November 30,1989.
Measurement Focus and Basis of Accounting Measurement focus is a term used to describe which transactions are recorded within the various financial statements. Basis of accounting relates to the timing ofthe measurements made, regardless of the measurement focus applied.
The District's enterprise fund utilizes an economic resources measurement focus. The accounting objectives of this measurement focus are the determination of operating income, changes in net assets, financial position, and cash fiows. All assets and liabilities associated witii their activities are reported. Proprietary fiind equity is classified as net assets.
In addition, the District's enterprise fiind utilizes the accmal basis of accounting. Under the accraal basis of accounting and the economic resources measurement focus, revenues are recorded when eamed and expenses are recorded when a liability is incurred.
The District distinguishes operatuvg revenues and expenses ftom nonoperating items. Operating revenues and expenses generally result fi-om providing services in coimection with the District*s principal ongoing opemtions.
Use of Estimates The preparation of financial statement in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
Cash and Cash Equivalents Amounts reported as cash and cash equivalents (restricted and imrestricted) include all cash on hand, cash in bank accounts, certificates of deposit, and highly liquid investments. Credit risk associated with bank deposits is limited by requiring fiscal agent banks to pledge securities as requhed by State Law, Furthermore, mtexest rate risk associated with certificates of deposits is typically mitigated by purchasing instruments that mature in one year or less.
Statement Of Cash Flows
For the purpose of reporting cash flows, cash and cash equivalents mcludes all cash on hand, cash in banks, and certificates of deposit.
Restricted Assets
Any amounts reported as restricted assets, represent resources that must be expended m a specific manner. Restrictions of this nature can be imposed by tax propositions and various contractual obligations mcluding grant agreements and bond covenants. Whenever restricted assets can be used
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Catahoula Parish Hospi ta l Service D is t r ic t NO. 2
Notes to F inancia l Statements December 31, 2009
to satisfy an obligation, the restricted assets are typically consiraied before utilizing any unrestricted resources.
Compensated Absences Accumulated unpaid vacation and compensatory pay have been accrued when incurred.
Capital Assets Capital assets, which mclude all property and equipment, are reported as assets m the financial statements.
All capital assets are valued at historical cost or estimated historical cost if actual historical cost is not available. Donated assets are valued at theu* fau: market value when received by the District.
Capital assets are depreciated using the straight-line method and estimated useful Uves ranging fi-om 4 to 50 years. Useful lives are selected depending on the expected dm-ability ofthe particular asset.
Inventory The District maintains an uiventory list that is stated at the lower of cost or market value. Materials and supplies purchased during the year are charged to expense. Inventory is adjusted to actual at year end.
NOTE 2-CASH AND CASH EOmVALENTS
At December 31, 2009, cash and cash equivalents were $529,056, which includes restricted cash of $76,450.
Deposits are stated at cost, which approximates market value. Under state law, these deposits must be secured by federal deposit msurance or die pledge of securities ovraed by the fiscal agent bank. The market value of the pledged securities plus the federal deposit msurance must at all tunes equal the amount on deposit with the fiscal agent. These securities are held m tiie name of tiie pledging fiscal agent bank in a holdmg or custodial bank tiiat is mutually acceptable to both parties.
At December 31, 2009, tiie District has $573,795 in deposits (collected bank balance). These deposits are secured firom risk by $260,866 of federal deposit msurance and $782,000 of pledged securities held by the custodial bank m the name ofthe fiscal agent bank.
Even tiiough tiie pledged securities are considered uncollateralized under the provisions of GASB Statement No. 3, State law unposes a statutory reqmrement on the custodial bank to advertise and sell the pledged securities witiim 10 days of being notified tiiat the fiscal agent has failed to pay deposited funds upon demand.
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Catahou la Par i sh H o s p i t a l Serv ice D i s t r i c t NOM 2
Notes to F inancia l Statements December 31,2009
NOTE 3 - AD VALOREM TAXES
Ad Valorem taxes attach as an enforceable Hen on property as of January 1 of each year. Taxes are levied by the Catahoula Parish Sheriffe OfBce and remitted to the District the montii subsequent to collection.
Billed taxes become delinquent on January 1 of the following year. Revenues from ad valorem taxes are budgeted m the year billed.
For tiie year ended December 31, 2009, taxes of 1 mill totaling $6,849 were levied and collected on property. The mill may be used for general corporate purposes,
NOTE 4 - RECEIVABLES The receivables at December 31,2009, are as follows:
Accounts Receivable Medicare $ Medicaid Otiier Total accounts receivable
Due From Otiier Governmental Units Ad Valorem Taxes Total due From Otiier Govemments
Total Receivables Allowance for contractual adjustment Total Receivables $
183,178 216,212 130,563 529,953
3,736 3,736
533,689 (259,141) 274,548
The allowance is due to the District experiencing contractual adjustments from most of its revenue sources. There were no bad debts recorded for the current year.
NOTE 5 - CAPITAL ASSETS
Changes in govemmental and business-type capital assets are presented as follows:
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Catahoula Parish Hospi ta l Service Dis t r ic t NO, 2
Notes to F inancia l Statements December 3 1 , 2009
Non Depi ciable Capital Assets Land
Total
Depreciable Capital Assets Buildings and Improvements Medical Equipment OfHce Equipment Vehicles Accumulated Depreciation
Total Depreciable Capital Assets
Total Capital Assets
Beginning Balance
$ 31,077 31,077
1,308,272 516,431 414,400 36,778
(1,272,001) 1,003.880
$ 1,034,957
Additions Disposals
$ __ s — — —
8,602 — 549 ~
(74,591) — (65,440) —
$ (65,440) $ —
Ending Balance
S 31.077 31,077
1,308,272 525.033 414,949 36,778
(1,346,592) 938,440
$ 969,517
Depreciation expense for the year ended December 31,2009, is $74,591.
NOTE 6 - LONG-TERM LTARn.TTIES
Changes in the District's long-term debt for the year ended December 31,2009, are presented as follows:
Beginning Ending Balance Additions Reductions Balance
Revenue Bonds Compensated Absences
Total Long-term Debts
Revenue Bonds
$
$
188,292 51,362
239.654
$
$
4,807
4,807 $
23,485 $
23.485 $
164,807 56.169
220,976
The District has issued revenue bonds that are secured by real estate and a pledge of income and revenues. The bonds arc payable from the income and revenues. Revenue bonds outstanding at December 31,2009, are described as follows:
$359,000 Hospital Revenue Bonds, dated December 13, 1995, with an effective rate of interest of 4.5%. Final maturity is scheduled for May 22.2015, unless the District elects to redeem the bonds prior to maturity. $ 164,807
Portion due within one year 24,542
Long-Term Debt ^ $ 140,265
Maturity of Long-term Debt A schedule of maturities of long-term debt is presented as follows:
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Catahoula Par ish Hospi ta l Service Dis t r ic t NO, 2
Notes to F inancia l Statements December 3 1 , 2009
Year Ended December 31' 2010 2011 2012 2013 2014 2015 Total Govemmental
$
$
Revenue Bonds
Principal 24,542 $ 25,646-26,800 28,006 29,267 30,546
164,807 $
Interest 7,416 6,312 5,158 3,952 2,692 1,412
26,942
NOTE 7- RLSK MANAGEMENT
The District is exposed to various risk of loss related to torts; theft, damage or destruction of assets; ertors and omissions; injuries to employees; and natural disasters. Settled claims resultmg from these risk have not exceeded insurance coverage in any ofthe past three fiscal years.
NOTE 8- RETTREMENT PLAN
The District participates in a retfrement plan for its employees. This plan allows for elective deferrals for participants with an employer match.
NOTE 9- CONTINGENCIRS
Existmg conditions that may have friture financial consequences are referred to as contmgencies. Contingencies existing at December 31,2009 are described as follows:
Grant Contingencies Grant funds received from the grantor agencies are subject to audit and adjustment by grantor agencies, principally the federal govemment. Any disdlowed expenditures, includmg amounts akeady collected, may constitute a liability. The amoimt, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time.
Potential fines and penalties The District has withheld retirement contributions from employees compensation but the amounts withheld and related matching contributions have not been remitted to the retirement system m a timely manner. Failure to tunely fimd tiie District's retirement plan could result m the unposition of substantial frnes and penalties.
Bond Covenants
Agreements witii bondholders reqmre the District to collect sufficient revenues to pay reasonable and necessary expenses of operation and maintenance. The covenants also require collections to provide an adequate amount for paying principal and interest on revenue bonds. The District has failed to comply with these covenants. Consequences of failing to comply cannot be determined at the present time.
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RoziER, HARRINGTON & MCKAY CERTIFIED PUBLIC ACCOUNTANTS 1407 PETERMAN DRIVE • ALEXANDRIA, LOUISIANA 71301
J O H N S . ROZIBR, IV, CPA P O S T O F F I C E B O X 12178 MARKS. MCKAY, CPA ALBCANORIA, LOUISIANA 71315-2178
LEEW. WILLIS, CPA TELEPHONE (318) 442'IBOB STEVEN e . KIMBALL, CPA TELECOPIER (318) 4B7-2027 KHONDA U RACHAL, CPA
GEORGETTE VERCHER, CPA Af. DALEHARRiNOTON, CPA
RETIRED-ZOOS
September 17,2010
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT
OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Board of Commissioners Catahoula Parish Hospital Service District No. 2
We have audited tiie financial statements ofthe busmess-type activity ofthe Catahoula Parish Hospital Service District No. 2 as of and for tiie year ended December 31, 2009, which collectively comprise the basic financial statements and have issued our report thereon dated September 17, 2010. We conducted our audit in accordance with auditing standards generally accepted m the United States and tile standards applicable to financial audits contamed m Government Auditing Standards, issued by the Comptroller General ofthe United States.
INTERNAL CONTROL OVER FINANCIAL REPORTING
In planning and performing our audit, we considered the Catahoula Parish Hospital Service District's intemal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressmg our opinion on the financial statements but not for the purpose of expressing an opmion on the effectiveness of tiie Catahoula Parish Hospital Service District's mtemal control over financial reporting. Accorduigly, we do not express an opmion on the effectiveness of tiie Catahoula Parish Hospital Service District's internal control over financial reportmg.
A deficiency in internal contj'ol exists when tiie design or operation of a control does not allow management or employees, in the nomial course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combmation of deficiencies, in internal control such that tiiere is a reasonable possibility that a material misstatement ofthe entity's financial statements will not be prevented, or detected and corrected on a timely basis.
Our consideration ofthe intemal control over financial reporting was for tiie Hmited purpose described in the first paragraph of tiiis section and was not designed to identify all deficiencies m internal control over financial reporting tiiat might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above.
-MembBTs* Amorlcnit InstUuto of Cortlflod Public Accountants • Socloty of toulslana, CPAs
15
Catahoula Parish Hospi ta l Service D is t r ic t NO. 2 September 17, 2010
COMPLIANCE AND OTHER MATTERS
As part of obtairung reasonable assurance about whether the Catahoula Parish Hospital Service District's financial statements are free of material misstatement, we performed tests of its compliance with certam provisions of laws, regulations, contracts, and grants, noncompliance with which could have a direct and material efiect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed instances of noncompliance that are reqmred to be reported under Government Auditing Standards and which are described in the accompanying schedule of findings and questioned costs as items 2009-1, 2009-2, 2009-3.
We noted certain matters that we reported to management of the Catahoula Parish Hospital Service District m a separate letter dated September. 17,2010.
The Catahoula Parish Hospital Service District's response to the findings identified hi our audit is described in the accompanying schedule of findings and questioned costs. We did not audit the Catahoula Parish Hospital Service District's response and accordmgly, we express no opinion on it. v
This report is intended for the mformation of management. However, this report is a matter of public record and its distribution is not limited.
ROZIBR, HARRINGTON & McKAY Certified PubUc Accountants
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RoziER, HARRINGTON & MCKAY CERTIFIED PUBLIC ACCOUNTANTS 1407 PETERMAN DRIVE • ALEXANDRIA, LOUISIANA 71301
J O H N S. ROZWR. IV , CPA POST OFFICE BOX 1217B
M A R K S . M C K A Y , CPA ALEXANDRIA, LOUISIANA 71315-2178 L E E W . WILL IS , CPA TELEPHONE(318)442-1608
S T E V E N E. K I M B A L L , CPA TELECOPIER (318) 487-2027
RHONDA L. RACHAL, CPA GEOROBTTE VERCHER, CPA
M. DALEHARRINOTON, CPA RETIRED-2005
September 17,2010
REPORT ON COMPLIANCE WTTH REOUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133
Board of Commissioners Catahoula Parish Hospital Service District No. 2
COMPLIANCE
We have audited the compliance of the Catahoula Parish Hospital Ser\dce District No. 2 with the types of compUance requirements described in the U. S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that could have a direct and material effect on each of its major federal programs for the year ended December 31, 2009. The Catahoula Parish Hospital Service District's major federal programs are identified in the summary ofauditor's results section of the accompanying schedule of findmgs and questioned costs. Compliance with tiie requkements of laws, regulations, contracts, and grants applicable to each of its major federal programs is the responsibility ofthe Catahoula Parish Hospital Service District's management. Our responsibility is to express an opmion on the Catahoula Parish Hospital Service District's compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contamed m Government Auditing Standards^ issued by the Comptroller General ofthe United States; and OMB Ckcular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Cncular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit mcludes examining, on a test basis, evidence about the Catahoula Parish Hospital Service District's compliance with those requirements and performing such other procedures as we considered necessary in the cu-cumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on the Catahoula Parish Hospital Service District's compliance with those requirements.
In our opmion, the Catahoula Parish Hospital Service District complied, m all material respects, witii tiie requfrements referred to above tiiat could have a direct and material effect on each of its major federal programs for the year ended December 31, 2009.
-Membeis-Amoriean InstKuto of Cortlflod Pubnc Accountants • Socloty of Louistana, CPAs
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Catahoula Par ish Hospi ta l Service D is t r i c t NO, 2 September 17, 2010
INTERNAL CONTROL OVER COMPLIANCE
The management of the Catahoula Parish Hospital Service District is responsible for establishing and mamtaining effective intemal control over compliance with requhrements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered the Catahoula Parish Hospital Service District's intemal control over compliance with requhements that could have a dhect and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compUance and to test and report on intemal control over compliance m accordance with OMB Chcular A-133, but not for tiie purpose of expressing an opinion on the effectiveness of intemal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Catahoula Parish Hospital Service District's intemal control over compliance.
A deficiency in internal conti'ol over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct noncomphance with a type of compliance requkement of a federal program on a tunely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, m internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compUance requirement of a federal program vrill not be prevented, or detected and corrected, on a tunely basis.
Our consideration of intemal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify deficiencies in internal control over compUance that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in intemal control over compliance that we consider to be material weaknesses, as defined above.
This report is intended for the infomiation of management. However, this report is a matter of pubUc record and its distribution if not Ihnited.
ROZIER, HARRINGTON & McKAY Certified Public Accoimtants
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Catahou la Pa r i sh H o s p i t a l Serv ice D i s t r i c t NOM 2 Schedule o f Findings a n d Quest ioned Costs For the Year Ended December 3 1 , 2009
PART I - SUMMARY OF AUDITORS' RESULTS:
• The Independent Auditor's Report on the financial statements for the Catahoula Parish Hospital Service District No. 2 as of December 31,2009, and for tiie year then ended expressed an unqualified opinion.
• The results ofthe audit disclosed three instances of noncompliance that are considered to be material to the financial statements of tlie Catahoula Parish Hospital Service District No. 2.
• The Independent Auditor's Report on Compliance witli Requirements Applicable to Each Major . Program and Intemal Control over Compliance in Accordance with OMB Circular A-133 expressed
an unquaUfied opinion on compliance requirements for the major program described below. • The audit did not disclose an audit finding which is required to be reported as a significant deficiency
in internal control over financial reporting. • Major programs for the year ended December 31,2009 are presented as follows:
UNITED STATES DEPARTMENT OP HEALTH AND HUMAN SERVICES CFDA No. 93.224 - Community Health Centere
• A threshold of $300,000 was used for distinguishing between Type A and Type B programs for purposes of identifying major programs.
• The Catalioula Parish Hospital Service District No. 2 was not considered to be a low risk auditee as defined by OMB Circular A-133.
PART n - FINDINGS RELATING TO THE FINANCIAL STATEMENTS WHICH ARE REQUIRED TO BE REPORTED IN ACCORDANCE WITH GENERALLY ACCEPTED GOVERNMENTAL AUDITING STANDARDS;
• 2009-1 - Late filing of audit The revised statutes require that an entitites audited financial statements be submitted no later than six months after year end. The condition ofthe District's financial records did not permit the audit to be completed in a timely manner.
• 2009-2 - Payroll taxes and retirement plan contributions Tlie following items have come to our attention regarding payroll taxes and retirement plan contributions: i
• The District has an obligation to remit retirement contributions within a specified period of time. As part of our analysis of the retirement plan contributions it was determined tiiat employee withholdings and the corresponding match by the District were remitted well after the deferrals were withheld from the employee.
• We determined tiiat the District was remitting State withholding taxes but not mailing the appropriate forms in a timely manner as required by law.
• The District was delinquent in filing and paying the State unemployment contributions. • We noted civil penalties resulting from Intemal Revenue Service penalties were being levied
from the District's bank accounts.
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Catahoula Parish Hospital Service Distr ict No. 2 Schedule o f Findings a n d Quest ioned Costs For the Year Ended December 31 ,2009
• 2009-3 - District losses The District has engaged in long-term borrowing by issuing revenue bonds. Under the temis of its agreement with bondholders the District is required to collect fees that are sufficient to pay the following:
• Reasonable and necessary expenses of operation and maintenance • Principal and interest maturing on bonds • Contributions to sinking funds, reserve accounts, and other accounts established by the bond
agreement.
The District has experienced an operating loss that represents a violation of the preceding covenant The District has reserves to continue to operate for a period of time but profitability should be addressed to secure the District's long-term future. Some matters that should be considered are listed as follows:
• The District is currently not receiving compensation for flu shots. The District should review their policies to ensure that individuals receiving flu shots either pay for the shot or the appropriate third party payer is billed.
• The District has received a grant from Louisiana State University. Management has failed to timely request reimbursement for procedures performed under the grant
PART m -FINDINGS AND OUESTIONED COSTS FOR FEDERAL AWARDS WHICH SHALL INCLUDE AUDIT FINDINGS AS DEFINED BY OMB CIRCULAR A-133:
• There are no matters to report.
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Catahoula Parish Hosp i ta l Service D is t r i c t No. 2 Managements Corrective Action Plan For the Year Ended December 31 , 2009
SECTION I - INTERNAL CONTROL AND COMPLIANCE MATERIAL TO THE FINANCIAL STATEMENTS
2009-1 - Late flHng of audit The revised statutes require that an entitites audited financial statements be submitted no later than six months after year end. The condition of the District's fmancial records did not permit the audit to be completed in a timely manner.
2009-2 - Payroll taxes and retirement plan contributions Tlie following items have come to our attention regarding payroll taxes and retirement plan contributions:
• Tlie District has an obligation to remit retirement contributions within a specified period of time. As part of our analysis ofthe retirement plan contributions it was determined tiiat employee withholdings and tlie corresponding match by the District were remitted well afrer the deferrals were withheld from the employee.
• We determined that the District was remitting State withholding taxes but not mailing the appropriate forms in a timely manner as required by law.
• The District was delinquent in filing and paying the State unemployment contributions.
• We noted civil penalties resulting from Intemal Revenue Service penalties were being levied from die District's bank accounts.
2009-3 •- District losses The District has engaged in long-term borrowing by issuing revenue bonds. Under the terms of its agreement with bondholders tiie District is required to collect fees that are sufficient to pay the following:
• Reasonable and necessaiy expenses of operation and maintenance
• Principal and interest maturing on bonds
Response The auditor determined that the reclassing of charges between payor codes as requested by a reviewer from the Health Resources and Services Administration-Uniform Data System was not working properly. The auditors investigation into this matter extended the work process necessaiy and an extension was requested. The District will discontinue the practice of reclassifying patient charges.
Response
New hire and clerical oversight of management lead to bookkeeping process breakdown and the unfortunate delays in processing. Review of financial manual with accounting department shall strengthen these processes and eliminate any future discrepancies of this nature.
Response The District is aware of circumstances over the last two or three years contributing to losses in revenues. These circumstances include increases in indigent care, the loss of Medicaid payor sources due to community care autoassignment, the decline in dental providers, and billing problems. The District has addressed these situations by out sourcing billing and recraitment
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Catahoula Parish Hospi ta l Service D is t r i c t No. 2 Managements Corrective Action Plan For the Year Ended December 3 1 , 2009
• Contributions to sinking fiinds, reserve accounts, and otiier accounts established by the bond agreement.
The District has experienced an operating loss that represents a violation ofthe preceding covenant The District has reserves to continue to operate for a period of time but profitability should be addressed to secure the District's long-term future. Some matters that should be considered are listed as follows:
• The District is currently not receiving compensation for flu shots. The District should review their policies to ensure that individuals receiving flu shots either pay for tiie shot or the appropriate third party payer is billed.
• The District has received a grant from Louisiana State University. Management has failed to timely request reimbursement for procedures performed under the grant
for provider replacement. Also, efforts continue to identify indigent patients eligible for Medicaid and preparing for statewide managed care. Provider recruitment continues in efforts to lower locum tenum costs. With these changes the District agrees that monitoring of individual health centers is the most efficient way to identify areas for corrective action.
SECTION n - INTERNAL CONTROL AND COMPLLVNCE MATERIAL TO FEDERAL AWARDS
There are no matters to report Not Applicable
SECTION m - MANAGEMENT LETTER
ML - 2009-1 -Billings to third parties The District has experienced some problems with billings to certain third parties. The District should continually review all payor codes and contact their software vendor or a third party biUer to correct any billing issues in a timely manner.
Response hi 2008, the District staff developed procedures for verifying claims submitted, claims paid, and necessary refiles. The District has made drastic changes mcluding outsourcing billing for all possible claims.
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Catahoula Parish Hospi ta l Service D is t r i c t No. 2 Schedule o f Pr ior Year Findings and Quest ioned Costs For the Year Ended December 3 1 , 2009
SECTION I - INTERNAL CONTROL AND COMPLIANCE MATERIAL TO THE FINANCIAL STATEMENTS
2008-1 -La te fding of audit Tlie revised statutes require that an entitites audited financial statements be submitted no later than six montlis after year end.
Unresloved See 2009-1.
SECTION n - INTERNAL CONTROL AND COMPLIANCE MATERIAL TO FEDERAL AM^ARDS
No fmdings were reported in the schedule of findings and questioned costs.
Response-N/A.
SECTION m - MANAGEMENT LETTER
No findings were reported in the schedule of findings and questioned costs.
Response-N/A.
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CATAHOULA PARISH HOSPITAL
SERVICE DISTRICT NO. 2
Schedule of Expenditure of Federal Financial Awards For the year ended December 31, 2009
FEDERAL GRANTOR / Pass-throueh Grantor / PrQeram Title
Federal CFDA Federal
Number Expenditures
UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES Direct Program - Community Health Center Direct Program - Community Health Center - ARRA
Passed through Vanderbuilt University Medical Center Southern Communis Cohort Study
Passed through Louisiana State Universi^ NIH Health Literacy and Cancer Screening Grant
93.224 1,588.083 93.703 114.000
93.393
93.393
22.500
19452
Total Expenditure of Federal Awards S 1,744.135
Note The schedule of expenditures of federal awards was prepared m conformify with generally accepted accounting principles for Govemmental Units. See notes to the accompanymg financial statements for further details.
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RoziER, HARRINGTON & MCKAY CERTIFIED PUBLIC ACCOUNTANTS 1407 PETERMAN DRIVE • ALEXANDRU, LOUISIANA 71301
JOHNS. ROZIER, tV, CPA MARKS. MCKAY, CPA LEEW.WILUS,CPA
STEVEN E. lOMBAU^ CPA RHONDA L. RACHAL, CPA
GEOROBTTE VERCHER, CPA
MAILIHa ADDRESS POST QPFlce Box 12178
ALEXANDRIA, LoutsiANA 71315-217B TBLEPHONE (31B} 442-16QB TELECOPIER (318) 487-2027
M. DALEHARRtNGTON, CPA RETIRED'SOOS
September 17,2010
Catahoula Parish Hospital Service District No. 2
In planning and performing our audit ofthe financial statements ofthe Catahoula Parish Hospital Service District No. 2 for tiie year ended December 31, 2009, we considered the District's mtemal control structure to determine our auditing procedures for the purpose of expressing an opinion on the financial statements and not to provide assurance on the intemal control stmcture. However, during our audit we became aware of several matters that are opportunities for strengthening internal controls and operating efficiency. Our comments and suggestions regarding those matters are provided as follows:
ML - 2009-1 - Billings to third parties The District has experienced some problems vwth billmgs to certain tWrd parties. The District should continually review all payor codes and contact then* software vendor or a tiurd party biller to correct any billing issues in a timely manner.
We will be available at your convenience to discuss oiu* comments and suggestions ui greater detail. Our firm will also be available to assist m implementing these recommendations.
AM ROZIER, HARRINGTON & McKAY, Certified Public Accountants
-Members-American InstltutB of CerUnod Public Aceountanta • Soclaty or Loulslans, CPAs