city of kaplan...an audit includes examining, on a test basis, evidence supporting the amounts and...

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CITY OF KAPLAN, LOUISUNA

Financial Report

Year Ended June 30, 2009

Under provisions of state law, tliis report is a public document. Acopy of the report has been submitted to the entity and other appropriate public officials. The report is available for public inspection at the Baton Rouge office of the Legislative Auditor and. where appropriate, at the office of the parish clerk of court.

Release Date U y l o l / 0 J 3 I

TABLE OF CONTENTS

Page

Independent Auditors' Report 1-2

BASIC FINANCIAL STATEMENTS

GOVERNMENT-WIDE FINANCIAL STATEMENTS (GWFS) Statement of net assets 5 Statement of activities 6

FUND FINANCIAL STATEMENTS (FFS) Balance sheet - governmental fimds 9 Reconciliation of the governmental funds balance sheet

to the statement of net assets 10 Statement of revenues, expenditures, and changes in fund balances-

governmental funds 11 Reconciliation of the statement of revenues, expenditures, and

changes in fund balances of governmental funds to the statement of activities 12 Statement of net assets - proprietary funds 13 Statement of revenues, expenses, and changes in fund net assets-

proprietary funds 14 Statement of cash flows - proprietary funds 15-16

Notes to basic financial statements 17-42

REQUIRED SUPPLEMENTARY INFORMATION Budgetary comparison schedules:

General Fund 44 Sales Tax Fund 45

OTHER SUPPLEMENTARY INFORMATION

OTHER FINANCIAL INFORMATION

Nonmajor Governmental Funds -Combining balance sheet 50 Combining statement of revenues, expenditures, and changes in fund balances 51

Schedule of number of utility customers and rates (unaudited) 52 Schedule of insurance in force (unaudited) 53 Comparative Staterhent of Net Assets - utility fund 54 Comparative departmental analysis of revenues and expenses - utihty fimd 55

TABLE OF CONTENTS (contmued)

Page

INTERNAL CONTROL, COMPLLWCE AND OTHER MATTERS 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 57-58

Report on Compliance with Requirements Applicable to Each Major Progam and Intemal Control over Compliance in Accordance with OMB Circular A~133 59-60

Schedule of Expenditures of Federal Awards 61

Notes to Schedule of Expenditures of Federal Awards 62

Schedule of Findings and Questioned Costs 63

Summary schedule of current and prior year audit findings and management's corrective action plan 64-65

C. Burton Kotder, CPA* , • Rusasll F. ChampegnB. CPA* Victor R. Slavan, CPA* p. Troy Courville. CPA* GBTaW A Thibodmux, Jr.,CPA* Roberts, Carter, CPA* Arthur R, Mixon, CPA*

KOLDER, CHAMPAGNE, SLAVEN & COMPANY, LLC

Tyoas E. Mixon, Jr., CPA AJien J. LaBry, CPA • Alljert R, Legor, CPA.PFS.CSA* Panny flnQeK» ScnJdglnj, CPA Chriatino L. Cousin. CPA Mary T. ThibodsauK. CPA HerahaN W. Gui*y, CPA Alan M. Teytor. CPA jamM R. Roy, CPA Robert J. Metz, CPA Kelly M Doucst, CPA Cheryl L Barttey, CPA • Msndy B. Self, CPA Paul L. HWcambra, Jr. CPA W*nda F. Areement, CPA. CVA Kristin B 0BU2al,.CPA Richard'R. Anderson Sr„ CPA Carolyn C. Anderson,,CPA

ReKrsd: " .' Conrod 0. Chapmaa CPA* 2006 Harry J. ClostiO, CPA 2007

CERTIFIED PUBLIC ACCOUNTANTS

P.O. Box 1055 Abbeville, LA.70511

Phone (337) 893-7944-Fax (337) 893-7946

INDEPENDENT AUDITORS' REPORT

OFFICES

183 South Beadle Rd. LafayettB, LA 70506 Phone (337) 232-4141 Fax (337) 232-6660

lia'EaslBrldBeSt Brsaux Bridge, LA 70517 Phorie (337) 332-4020 Fax (337) 332-2867

1234 David Dr. Stfl 203 Morgan Crty.'LA 70380' Phone t98S) 384-2020 Fax (965) 384-3020 •

408 West Cotton Street VHIe Platte, LA 70588 Phofie (337) 363-2792 Fax (337)363-3049

332 West Sixth Avenue ' Oberlin. LA 70655 Phone (337) 639-4737

.Fax (337) 639-4S68

450 East Main Street New It)ef1fl. LA 70560

Phone (337) 387-9204 Fax (337) 367-9208

200 South Mam Street Abbeville, LA 70510

Phone (337) 893-7944 Fax (337) 893-7948

1013 Mam Street FranWia LA 70538

Phone (337) B2&^72 Fax (337) 828-0290

133EattWaddllSt Merksville LA 71351

Phone (318) 253-9252 , Fax (318) 253^681

621 Main Street Plneville, LA 71360

Phone (318) 442-4421 Fax (318) 442-9333

• A Pnrfesilonal Accounting corporaUon

WEBSnE WWW.KCSRCPAS.COM

The Honorable Linda Hardee, Mayor, •and Members of the City Council , City'of Kaplan, Louisiana

We have audited the accompanying financial statements.of the governmental activities, the busmess-type activities, each major fund, and the aggregate remaining fund, information of. the City of Kaplan, Louisiana, as of and for the year ended June 30, 2009, which collectively comprise the City's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City's management. Our responsibility is to express an opinion on these fmancial statements based ohour audit

We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to fmancial,audits contained in Government Auditing Standards, issued.by the Comptroller General of the United-States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the fmancialstatements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estiniates niade by management, as well as evaluating.the overall fmancial statement presentation. ~ We believe that our audit provides a reasonable basis for our opinion.

In OUT opinion, the fmancial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Kaplan, Louisiana, as, of June 30, 2009, and the respective changes in financial position, and cash flows, where applicable, thereof for the year then ended in conformit>' with accounting pririciples generally accepted in the Uiiited States of America.

In accordance; with Government Auditing Standards, we have also issued a report dated October 7, 2009 on our consideration of the City of Kaplan, Louisiana's intemal control over financial reporting and on oiir tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is-to describe the scope of our testing of intemal control over fmancial reporting and compliance and the results of that testing, and not to provide an opinion on the mtemal control over financial reporting or on compliance. That report is an integral part.of an audit performed.in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.

Member of: AWeWCAN INSTITUTE OF-CERTIFIED PUBLIC ACCOUNTANTS

Member of: SOCIETY OF LOUISIANA

CERTIFIED PUBLIC ACCOUNTANTS

http://CPA.PFS.CSA*

http://WWW.KCSRCPAS.COM

The required supplementary information on pages 44 and 45 is not a required part of the basic financial statements but is supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management. regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and exjsress no opinion on it.

The City of Kaplan has not presented management's discussion and analysis that the Governmental Accounting Standards Board has determined is necessary to supplement, although not required to be part of, the basic financial statements.

Our audit was conducted for the purpose of forming opinions on the fmancial statements that collectively comprise the City of Kaplan's basic fmancial statements. The other supplementary information on pages 50 through 55 is presented for purposes of additional analysis and is not a required part of the basic fmancial statements. The accompanying schedule of expenditures of federal awards (p. 61) is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, "Audits of States, Local Governments, and Non-Profit Organizations", and is also not a required part of the basic fmancial statements of the City. Such information, except for that portion marked "unaudited" on which we express no opinion, has been subjected to the auditing procedures applied iii the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic fmancial statements taken as a whole.

Kolder, Champagne, Slaven & Company, LLC Certified Public Accountants

Abbeville, Louisiana October 7,2009

BASIC FINANCIAL STATEMENTS

GOVERNMENT-WIDE FINANCIAL STATEMENTS (GWFS)

CITY OF KAPLAN, LOUISIANA

Statement of Net Assets June 30,2009

ASSETS Current assets:

Cash and interest-bearing deposits Receivables, net Due from other governmental units

Total current assets

Noncurrent assets; Restricted assets:

Cash and interest-bearing deposits Capital assets, net

Total noncurrent assets

Total assets

LL\BILITIES Current liabilities:

Accounts and other payables Compensated absences payable Claims payable Accmed interest Capital lease payable Bonds payable

Total current liabihties

Noncurrent liabihties: Customer deposits payable Capital lease payable Bonds payable

Total noncurrent liabihties

Total liabihties

NET ASSETS Invested in capital assets, net of related debt Restricted for debt service Unrestricted

Total net assets

Governmental Activities

$1^747,846 12,652

114,188 1,874,686

-6,494,994 6,494,994

8,369,680

68,749 17,366 28,000 10,166 34,260 65,000

223,541

-101,730 630.000 731,730

955,271

5,653,838 94,133

1,666,438 $ 7,414,409

Business-Type Activities

$ 1,974,960 1,046,487

81,406 3,102,853

668,717 13,584.935 14,253,652

17,356,505

376.234 33,917

-4,662 -

30,329 445,142

306,422 -

2,602,411 2,908,833

3,353.975

10,947,533 327,304

2.727,693 $14,002,530

Total

$ 3,722,806 1,059.139

195.594 4,977,539

668,717 20.079,929 20,748,646

25,726,185

444,983 51,283 28,000 14,828 34,260 95,329

634,423

306,422 101,730

3.232,411 3,640,563

4,309,246

16,601.371 421,437

4,394,131 $21,416,939

The accompanying notes are an integral part of the basic fmancial statements.

5

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FUND FINANCIAL STATEMENTS (FFS)

FUND DESCRIPTIONS

General Fund

The General Fund is used to account for resources traditionally associated v/ith governments which are not required to be accounted for in another fiind.

Special Revenue Fund

Special revenue funds are used to account for specific revenues that are legally restricted to expenditures for particular purposes.

Sales Tax Fund

To accoimt for the receipts and use of proceeds of the City's one percent sales and use tax. These taxes are dedicated for, the following purposes: (1) Constructing, acquiring, extending, and/or improving public parks and recreational facilities, drainage facilities, streets and street lighting facilities, sewers and sewerage disposal works, waterworks, natural gas facilities, electrical distribution facilities, public buildings (including a jail and/or fire department stations and equipment) and purchasing and acquiring equipment and fiimishings for the aforesaid public, works, buildings, improvements and facilities, title to which improvements shall be in tiie public and (2) Paying principal and interest on any bonded or fimded indebtedness of said City or for any one or more of said purposes, and such tax to be subject to fimding into bonds by said City in the manner authorized by Sub Part D, Part I, Chapter 6, Title 33 of the Louisiana Revised Statutes of 1950.

Enterprise Fund

To account for operations (a) that are financed and operated in a maimer similar to private business enterprises - where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or (b) where the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriated for capital maintenance, public policy, management control, accountability, or other purposes.

Utility Fund -

To account for the provision of electric, gas, water and sewer services to residents of the City. All activities necessary to provide such services are accounted for in this fund, including, but not limited to, administration, operations, maintenance, fmancing and related debt service, and billing and collection.

CITY OF KAPLAN, LOUISLWA

ASSETS

Cash and cash equivalents Receivables:

Due from other funds Due from other governmental entities Accrued interest receivable Other receivables

Total assets

Balance Sheet Govermnental Funds

June 30, 2009

General

$ 310,860 $

500 6,315 -

7,350 $ 325,025 . $

Sales Tax

815,696

100 107,873

1,279 881

925,829

Other Governmental

Funds

$ 159,334

3,244 -348 499

$ 163,425

Total

$1,285,890

3,844 114,188

1,627 8,730

$1,414,279

LIABILITIES AND FUND BALANCES

Liabilities: Accounts payable Compensated absences payable Due to other funds

Total liabilities

Fund balances: Reserve for debt retirement Unreserved, undesignated

Total fund balances

Total liabilities and fimd balances

$ 52,643 17,366 3,244

73,253

_

251,772 251,772

$ 325,025

$ 2,543 --

2,543

.

923,286 923,286

$ 925,829

$ 1,532 -600

2,132

94,133 67,160

161,293

$ 163,425

$ 56,718 17,366 3,844

77,928

94,133 1,242,218 1,336,351

$1,414,279

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

9


Reconcihation of the Govermnental Funds Balance Sheet to the Statement of Net Assets

June 30, 2009

Total fund balances for governmental funds at June 30, 2009 $ 1,336,351

Total net assets reported for governmental activities in the statement of net assets is different because:

Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the fimds. Those assets consist of:

Land Construction in progress Building, net of $545,815 accumulated depreciation Infrastructure, net of $5,197,794 accumulated depreciation Equipment, net of $1,180,446 accumulated depreciation

Long-term liabilities at Jime 30, 2009: Claims payable Capital lease payable Bonds payable Accrued interest payable

Net assets of the Group Insurance Self - Insurance Intemal Service Fund

Total net assets of governmental activities at June 30, 2009

S 114,547 84,820

511,829 4,928,858

854,940

(28,000) (135,990) (695,000) (10,166)

6,494,994

(869,156)

452,220

$ 7,414,409

The accompanying notes are an integral part of the basic fmancial statements.

10


Statement of Revenues, Expenditures, and Changes in Fund Balances-Governmental Funds

For the Year Ended June 30, 2009

Revenues: Taxes Licenses and permits Intergovernmental Fines and forfeits Interest income Miscellaneous

Total revenues

Expenditures; Current -

General government Public safety:

Police Fire

Streets, bridges, and drainage Culture and recreation

Capital outlay Debt service -

Principal retirement Interest and fiscal charges

Total expenditures

(Deficiency) excess of revenues over expenditures

Other financing sources (uses): Proceeds from capital lease Transfers in Transfers out

Total other financing sources (uses)

Net changes in fund balances

Fund balances, beginning

Fund balances, ending

General

$ 78,506 217,804 203,949 30,279 241

64,937

595,716

Sales Tax

$ 620,376 ---

11,013 -

631.389

Other Govermnental

Funds

$ 114,101 -

439,030 6,277 1,871

450

561,729

Total

$ 812,983 217,804 642,979 36,556 13,125 65,387

1,788,834

677,438 166,260 843,698

804,494 203,190 384,038 45,978 220,515

-

2,335,653

(1.739,937)

2.092,857 (32,989)

2,059.868

319,931

(68,159)

$ 251,772

218,132

30,903 1,370

416.665

214,724

133,388

(554,434)

(421.046)

(206,322)

1,129.608

$. 923,286

3,028 48,367

415,163

62,000 30,737

559,295

2,434

32,989

(3,755)

29;234

31,668

129,625

$ 161,293

807,522 251.557 384,038 45,978 853,810

92,903 32,107

3,311,613

(1,522.779)

133.388 2.125,846

(591.178)

1,668,056

145,277

1.191.074

$ 1,336,351


11


Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds

to the Statement of Activities For the Year Ended June 30, 2009

Total net changes in fimd balances at June 30,2009 per Statement of Revenues, Expenditures and Changes in Fund Balances $ 145,277

The change in net assets reported for governmental activities in the statement of activities is different because:

Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives andreported as depreciation expense.

Capital outlay which is considered expenditures on Statement of Revenues, Expenditures and Changes in Fund Balances $ 853.810

Depreciation expense for the year ended June 30.2009 (236,600) 617,210

Effect of disposal of capital assets is to decrease net assets. 2,613

Governmental funds report bonded debt repayments as expenditures.

However, this expenditure does not q)pear in the statemrat of activities since the payment is applied against the bond payable balance on the statement of net assets 92,903 Issuance of long-term debt (e.g., bonds and leases) (133,388)

Add: Net income on the Group Insurance Self- Insurance Intemal Service Fund 965

Some expenses reported in the statemait of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds 24,000

Difference between interest on long-term debt on modified accrual basis versus interest on long-term debt on accnial basis 981

Total changes in net assets at June 30,2009 per Statement of Activities $ 750,561


12


Proprietary Funds Statement of Net Assets

June 30,2009

Business-type Activities Enter^se

Fund

Govermnental Activities Intemal Service Fund

ASSETS Current assets:

Cash Receivables:

Accounts, net of allowance for xmcollecn'ble of $421,673

Unbilled utility receivables Grant receivable Accmed interest receivable

Total current assets Noncurrent assets:

Restricted assets -

Interest-bearing deposits Capital assets, net of accumulated depreciation

Total noncurrent assets

Total assets

LL^ILmES Current liabilities:

Accounts payable Compensated absences payable Claims payable Payable from restricted assets -

Revenue bonds, net of deferred amount on refimding Accrued interest payable

Total current liabilities

Noncurrent Uabilities: Customers' deposits payable Revenue bonds, net of deferred amount on refimding

Total noncurrent Uabilities

Total Uabilities


Total net assets

$ 1.974,960

558,475 482,544

81,406 5.468

3,102.853

668,717 13,584,935 14,253,652

17,356,505

376,234 33.917

-

30,329 4,662

445,142

306,422 2,602.411 2,908,833

3,353,975

10,947,533 327,304

2,727,693 $ 14,002,530

$461,956

.

--

2.295

464,251

-_

464,251

-12.031

_

-12,031

_

-_

12,031

_

-452,220

$452,220


13

CITY OF KAPLAN. LOUISIANA

Proprietary Funds Statement of Revenues, Expenses, and Changes in Fund Net Assets

Year Ended June 30, 2009

Operating revenues: Charges for services

Operating expenses: Electricity department expenses Gas department expenses Water department expenses Sewerage department expenses Depreciation expense Self insurance expenses

Total operating expenses

Operating mcome (loss)

Nonoperating revenues (expenses): Interest income Franchise fee Interest expense

Total nonoperating revenues (expenses)

Income before contributions and transfers

Capital contributions

Transfers in (out): Transfers in Transfers out

Total transfers in (out)

Change in net assets

Net assets, beginning

Net assets, ending

Business-type Activities Entertprise

Fund

$ 6,641,978

2,945,514 780,495 320,901 343,518 565,540

-4,955,968

1,686,010

51,300 24,536

(117,032)

(41,196)

1,644,814

278,589 ,

558,188 (2,092,856)

(1,534,668)

388,735

13.613,795

$14,002,530

Governmental Activities Intemal Service Fund

$357,901

.

----

365,131

365,131

(7,230)

8,195 --

8,195

965

_

-

965

451,255

$452,220


14


Statement of Cash Flows Proprietary Funds

For the Year Ended June 30, 2009

Cash flows from operating activities; Receipts from customers Payments to suppliers Payments to employees

Net cash provided (used) by operating activities

Cash flows from noncapital financing activities: Franchise fees Cash paid to other funds Meter deposits, net of refunds Transfers from other funds Transfers to other funds

Net cash used by noncapital financing activities

Cash flows from capital and related financing activities: Capital contribution Principal paid on bonds and notes Interest and fiscal charges paid on bonds Acquisition of capital assets

Net cash used by capital and related financing activities

Cash flows from investing activities: Interest on investments

Net cash provided by investing activities

Net decrease in cash and cash equivalents

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

Business-type Activities Enterprise

Fimd

$ 6,730,589 (3,729,949)

(654,113)

2,346,527

24,536 (245,869)

11,677 558,188

(2,092,856)

(1,744.324)

197,183 (481.707) (126,034) (347,530)

(758,088)

55,751 55.751

(100,134)

2,743,811

$ 2,643.677

Governmental Activities Intemal Service Fund

$ 357,901 (386^24)

(28,323)

-

_

-

10,975 10,975

(17.348)

479,304

$ 461,956

(continued)

15


Statement of Cash Flows I

Proprietary Funds (continued) For the Year Endek June 30,2009

Reconcihation of operating income to net cash providec by operating activities: Operating income (loss) Adjustments to reconcile operating income to net cash

provided by operating activities: Depreciation Changes in current assets and liabilities:

Decrease in accounts receivable, net Decrease in unbilled utility receivables Increase in accoimts payable Decrease in claims in process Decrease in compensated absences payable

Net cash provided (used) by operating activities

Reconciliation of cash and cash equivalents per statement of cash flows to the balance sheet:

Cash and cash equivalents, beginning of period -Cash - imrestricted Interest-bearing deposits - restricted

Total cash and cash equivalents

Cash and cash equivalents, end of period -Cash - unrestricted Interest-bearing deposits - restricted

Total cash and cash equivaleiits

Net decrease

Business-type Activities Enterprise

Fund

Govenmiental Activities Intemal Service Fund

$1,686,010

565,540

72,363 16,248 23,368

(17,002)

$2,346,527

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

16

$ (7.230)

(21,093)

$ (28,323)

$1,953,567 790,244

2,743,811

1,974,960 668,717

2,643,677

$ (100,134)

$ 479,304

479,304

461,956

461,956

$ (17,348)

CFFY OF KAPLAN, LOUISL\NA

Notes to Basic Financial Statements

(1) Surrmaarv of Significant Accounting Policies

The accompanying financial statements of the City of Kaplan (the City) have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental units. GAAP includes all relevant Governmental Accounting Standards Board (GASB) pronouncements. In the government-wide fmancial statements and the fund financial statements for the proprietary funds, , Financial Accounting Standards Board (FASB) pronouncements and Accounting Principles Board (APB) opinions on or before November 30, 1989, have been apphed unless those'pronouncements conflict with or coiitradict GASB pronouncements, in which case, GASB prevails. The accounting and reporting framework and the more significant accoimting policies are discussed in subsequent subsections of this note.

A. Financial Reporting Entity

The City of Kaplan was incorporated in 1902 under the provisions of the Lav/rason Act. The City operates under a Mayor-City Council form of government and provides the foljowing services as authorized by its charter: public safety, police, fire, civil defense, highways and streets, sanitation, culture - recreation, public improvements, planning and zoning, and general administrative services.

A financial reporting entity consists of (1) the primary government, (2) organizations for which the prirnary government is financially accomitable, and (3) other organizations for which the primary government is not accountable, but for which the nature and "significance of their relationship with the primary government are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete. GASB Statement No. 14, The Financial Reporting Entity. estabhsheis criteria for determining which entities should be considered a component unit and, as such, part of the reporting entity for financial reporting purposes. The basic criteria are as follows:

1. A potential component unit must have separate corporate powers that distinguish it as being legally separate from the primary government. These include the right to incur its own debt, levy its own taxes and charges, expropriate property in its own name, sue and be sued in its own name without recourse to a State or local government, and the right to buy, sell, lease, and mortgage property in its own name.

2. The primary government must be financially accountable for a potential component unit. Financial "accbiintabihty may exist as a result of the primary government appointing a voting majority of the potential component unit's governing body; their ability to impose their will on the potential component unit by significantly influencing the programs, projects, activities, or level of services performed or provided by the potential component unit; or the existence of a financial benefit or burden. In addition, financial accountability may also exist as a result of a potential component unit being fiscally dependent on the primary govenmient.

17

CFTY OF KAPLAN, LOUISIANA

Notes to Basic Financial Statements (Continued)

In some instances, the potential component unit should be included in the reporting entity (even when the criteria in No. 2 above are met), if exclusion would render the reporting entity's financial statements incomplete or misleading.

Based on the foregoing criteria, the following governmental organizations are not considered part of the City and are thus excluded from the accompanying financial statements for the reasons noted:

The Kaplan Housing Authority was chartered by the City, and its Board of Directors was appointed by the Mayor and City Council. However, the City's oversight responsibilities in the management of operations and financial accountability are remote.

The City of Kaplan has no authority over nor is it involved with the record keeping of the Kaplan Volunteer Fire Department.

The Kaplan City Court is operated under the directorship of the Kaplan City Judge who is an elected public official. Revenues are derived from court costs and appropriations from the City's General Fund. However, the City carmot significantly influence operations nor does it have responsibility for fiscal management.

B. Basis of Presentation

Government-Wide Financial Statements (GWFS)

The statement of net assets and statement of activities displays information about the City of Kaplaii," the reporting govemhaent, as a whole. They include all fimds of the reporting entity. The statements distinguish between governmental and business-type activities. Govermnental activities generally are financed through taxes, intergovernmental revenues, and other nohexchange revenues. Business-type activities are financed in whole or in part by fees charged to external parties for goods or services. The City's intemal service fund is a govenmiental activity. Intemal service fimd activity is eliminated to avoid "doubling up" revenues and expenses.

The statement of activities presents a coiriparison between direct expenses and program revenues for the business-type activities of the City and for each function of the City's governmental activities. Direct expenses are those that are specifically associated vnth a program or function and therefore, are clearly identifiable to a particular fimction. Program revenues include (a) fees, fines, and charges paid by the recipients of goods or services offered by the programs, and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.

18

CITY OF KAPLAN, LOUISLWA


Fund Financial Statements

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

The various fimds of the City are classified into two categories: governmental and proprietary. The emphasis on fund financial statements is on major governmental and enterprise fimds, each displayed in a separate column. A fund is considered major if it is the primary operating fund of the City or meets the. following criteria:

a. Total assets, liabilities,,revenues or expenditures/expenses of that individual governmental or entetprise.fund are at least 10 percent of the corresponding total for all fimds of that category or type; and

b. Total assets, liabilities, revenues, or expenditures/expenses of the individual governmental or enterprise fimd are at least 5 percent of the corresponding • total of all governmental and enterprise funds combmed.

The major funds of the City are described below:

Governmental Funds -

General Fund

The General fund is the general operating fund of the City. It is used to account for all financial resources except-those required to be accounted for in another fimd. All general .tax revenues and other receipts that are not allocated by law or contractual agreement to some other fund are accounted for in this fimd. General operating expenditures and the capital in^rovement costs that are not paid through other funds are paid from the general fund.

Special Revenue Fund -

Sales Tax Fund

The Sales Tax Fund is used to account for the proceeds of a one percent sales and use tax that is legally restricted to expenditures for a specific purpose.

19



Proprietary Funds -

The City reports the following major enterprise fimd:

Utility Fund

The Utility fund is used to account for operations (a) that are financed and operated in a manner similar to private business enterprises - where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or (b) where the goveriiing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accoimtability, or other purposes. The City applies all applicable FASB pronoimcements issued after November 30, 1989 in accounting and reporting for its enterprise fund.

Other Fund Types-

The City also reports the following fund types:

Intemal Service Funds

Intemal service fimds are used to account for the financing of goods or services provided by one department or agency to other departments or agencies of the governmental unit, or to other governmental units, on a cost-reimbursement basis. The City's intemal service fimd is the Self Insurance Fund. This proprietary fund is reported with governmental activities in the govemment-wide statements.

C. Measurement Focus/Basis of Accounting

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

Measurement Focus

On the government-wide statement of net assets and the statement of activities, both governmental and bushiess-type activities are presented using the economic resources measurement focus as defined in item b. below.

In the fimd financial statements, the "current financial resources" measurement fociis or the "economic resources" measurement focus is used as appropriate:

20


Notes to Basic Financial Statements (Contmued)

a. All governmental fimds utilize a "current financial resources" measurement focus. Only current fmancial assets and liabilities are generally included on thefr balance sheets. Their operating statements present sources and uses of available spendable financial resources during a given period. These fimds use fimd balance as their measure of available spendable financial resources at the end of the period.

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

Basis of Accounting

In the govemrhent-wide statement of net assets and statement of activities, both governmental and business-type activities are presented using the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred or-economic asset used. Revenues, expenses, gains, losses, assets, and liabilities resulting from exchange and exchange-like transactions are recognized when the exchange takes place.

Governmental fund financial statemeiits are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they. are both measurable and available. Revenues are considered to be^available when they are collectible within the current period or soon enough thereafter to pay Uabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures (including capital outlay) generally" are recorded when .a liability is mcurred, as under accrual accounting. However, debt service expenditures are recorded only when payment is due.

The proprietary fimd utilizes the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when eamed and expenses are recorded when the liabiUty isincurred or economic asset is used.

Program revenues

Program revenues included in the statement of activities are derived directly from the program itself or from parties outside the City's taxpayers or citizenry, as a whole; program revenues reduce the cost of the function to be financed from the City's general revenues.

21



Allocation of indirect expenses

The City reports all direct expenses by fimction in the statement of activities. Direct expervses are those that are clearly identifiable with a function. Indirect expenses of other functions are not allocated to those fimctions but are reported separately in the statement of activities. Depreciation expense is specifically identified by function and is included in the direct expense of each function. Interest on general long-term debt is considered an indirect expense and is reported separately on the statement of activities.

D. Assets. Liabihties and Equity

Cash, interest-bearing deposits, and investments

For pmposes of the statements of net assets, cash and interest-bearing deposits include all demand accounts, saving accounts, and certificates of deposits of the City. For the purpose of the proprietary fimd statement of cash flows, "caish and cash equivalents" include all demand and savings accounts, and certificates of deposit or short-term investments with an original maturity of three months or less when purchased. See Note (4) for other GASB No. 3 disclosures.

Investments

Under state, law, the City may deposit fiinds with a fiscal agent organized under the laws of the State of Louisiana, the laws of any other state in the union, or the laws of the Uiiited States. The City may invest in United States bonds, treasury notes and bills, government backed agency securities, or certificates and time deposits of state banks organized under Louisiana Law and national banks having principal offices in Louisiana. In addition, local govenmaents in Louisiana are authorized to invest in the Louisiana Asset Management Pool (LAMP), a noi^rofit corporation formed by the State Treasurer and organized under the laws of the State of Louisiana, which operates a local government investment pool.

Interfund receivables and payables

During the course of operations, numerous transactions occur between individual funds that may result in amounts owed between fimds. Those related to goods and services type transactions are classified as "due to and from other funds." Short-term interfimd loans are reported as "interfimd receivables and payables." Long-term interfimd loans (noncurrent portion) are reported as "advances from and to other funds." InterfimdTeceivables and payables between fimds vidthin govenmiental activities are eliminated in the statement of net assets.

22



Receivables

In the govemment-vdde statements, receivables consist of all revenues eamed at year-end and not yet received. Major receivable balances for the governmental activities include ad valorem and sales and use taxes. Business-type activities report customer's utility service receivables as their majoi: receivables. Uncollectible utility service receivables are recognized as bad debts through the establishment of an allowance accoiuit at the. time information becomes available which would indicated the uncollectiblity of the particular receivable. The allowance for imcollectibles for customers' utility receivables was $421,673 at June 30, 2009. Unbilled utility service receivable resulting from utiUty services rendered between the date of meter reading and billing and the end of the month are recorded at year-end.

Capital Assets

Capital assets, which include property, plan^ equipment, and infi-astmcture assets, are reported in the applicable govenmiental or business-type activities columns in the government-wide financial statements. Capital assets are capitalized at historical cost or estimated cost if historical is not available. Donated assets are recorded as capital assets at their estimated fair market value at the date of donation. The City maintains a threshold level of $1,000,or more for capitalizing capital assets.

The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Prior to July 1, 2001, governmental funds' infrastmcture assets were not capitahzed. These assets have been valued at estimated historical cost.

Depreciation of all exhaustible capital assets is recorded as an allocated expense in the statement of activities, with accumiJated depreciation reflected in the statement of net assets. Depreciation is provided over the assets' estimated useful lives using the straight-line method of depreciation. The range of estimated useful lives by type of asset is as follows:

Buildings 40 years Equipment 5-30 years Utility system and improvements 25 years Infrastructure 20-50 years

In the fimd finaiicial statements, capital assets, used in govemmental fimd operations are accounted for as capital outlay expenditures of the govemmental fimd upon acquisition. Capital assets used in proprietary fund operations are accounted for the same as in the govenunent-wide statements.

23


Notes to Basic Fmancial Statements (Continued)

Compensated Absences

It is the City's pohcy to permit employees to accumulate eamed but unused vacation and sick leave benefits. Sick leave vest only upon retirement, therefore an accrual is made only when an employee is eligible for retirement. Amounts are accmed when incurred iii proprietary, fimds and reported as a fund liability. Amounts that are expected to be liquidated with expendable available financial resources is reported as expenditure and a fund liabiUty of the govemmental fund that will pay it.

Restricted Assets

Restiicted assets include cash and-interest-bearing deposits of the proprietary fund that are legally restricted as.to their use. The restricted assets are related to the revenue bond accounts and utihty meter deposits.

Long-term debt

The accounting treatment of long-term debt depends on whether the assets are used in govemmental fund operations or proprietary fimd operations and whether they are reported m the government-wide or fund financial statements.

All long-term debt to be repaid from govemmental and business-type resources are reported as liabilities in the govemment-wide statements. The long-term debt consists primarily of the revenue bonds payable and utility meter deposits payable.

Long-term debt for governmental funds is not reported as liabilities in the fund financial statements. The debt proceeds are reported as other financing sources and payment of principal and interest reported as expenditures. The accounting for proprietary fund long-term debt is the same in'the fund statements as it is in the govemment-wide statements.

Equity Classification

In the govemment-v^ade statements, equity is classified as net assets and displayed in three coriiponents:

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

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

24



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

In the fimd statements, govemmental fund equity is classified as fund balance. Fund balance is further classified as reserved and imreserved, with unreserved further split between designated and undesignated. Proprietary fund equity is classified the same as in the govemment-wide statements.

E. Revenues, Expenditures, and Expenses

Operating Revenues and Expenses

Operating revenues and expenses for proprietary funds are those that result from providing services and producing and delivering goods and/or services. It also includes all revenue and expenses not related to capital and related financing, noncapital financing, or inyestuig activities.

Expenditures/Expenses

In the govemment-wide financial statements, expenses are classified by fimction for both govemmental and business-type activities.

In the fund financial statements, expenditures are classified as foUows:

Govemmental Funds - By Character Proprietary Fund - By Operating and Nonoperating

In the fund financial statements, govemmental funds report expenditures of financial resources. Proprietary fimds report expenses relating to use of economic resources.

Interfund Transfers

Permanent reallocations of resources between funds of the reporting entity are classified as interfimd transfers.. For the purposes of the statement of activities, all interfimd transfers between individual govenmiental funds have been eliminated.

F. Revenue Restrictions

The City has various restrictions placed over certain revenue sources from state or local requirements. The primary restricted revenue sources include:

Revenue Source Legal Restrictions of Use

Sales tax See Note 3 Electricity, gas, water and sewer revenue Debt service and utility operations

25

CITY OF KAPLAN. LOUISIANA


The City uses unrestricted resources only when restricted resources are fully depleted.

G. Budgets and Budgetary Accounting

The City follows these procedures in establishing the budgetary data reflected in the financial statements:

1. The City Clerk prepares a proposed budget for the fiscal year and submits it to the Mayor and Council no later than fifteen days prior to the beginning of each fiscal year.

2. A summary of the proposed budget is published and the public is notified that the proposed budget is available for public inspection. At the same time, a pubhc hearing is called.

3. A public hearing is held on the proposed budget at least ten days after publication of the call for the hearing.

4. After the holding of the public hearing and completion of all action necessary to firialize, and intplement the budget, the budget is adopted through passage of a resolution prior to the conunencement of the fiscal year for which the budget is being adopted

5. Budgetary amendments involving the transfer of funds from one department, program or function to another or involving increases in expenditures, resulting &om revenues exceeding amounts estimated require the approval of the Council.

6. All budgetary appropriations lapse at the end of each fiscal year.

7. Budgets for all funds are adopted on a basis consistent with generally accepted accounting principles (GAAP). Budgeted amounts are as originally adopted or as finally amended by the Council.

H. Use of Estiniates

The preparation of financial statements in conformity with generally accepted accoimting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures during the reported period. Actual results could differ from those estimates.

26



(2) Ad Valorem Taxes

Ad valorem taxes attach as an enforceable lien on property as of January 1 of each year. Taxes are levied by the City on September I and are actually billed to taxpayers in November. The taxes are generally coUected in December of the current year and January and February of the subsequent year. Property tax revenues are recognized when levied to the extent that they result in current receivables.

For the years ended June 30,2009, taxes of 10.31 mills were levied on property with assessed valuations totaling $18,733,830 and were dedicated as follows:

General corporate purposes 420 mills Boad indebtedness 6.11 mills

Total 1031 miUs

Total taxes levied at June 30, 2009 were $193,146. There were no ad valorem taxes receivable at June 30,2009.

(3) Dedication of Proceeds and Flow of Funds - Sales and Use Tax Levies

Proceeds of the one percent sales and use tax levied by the City (2009 collections $620,376) are dedicated to the follovidng purposes:

a. Constmcting, acquiring, extending, and/or improving public parks and recreational facilities, drainage facilities, streets and street lighting facilities, sewers and sewerage disposal works, waterworks, natural gas facilities, electrical distribution facilities, public buildings (including a jail and/or fire department stations and equipment) and purchasing and acquiring equipment and furnishings for the aforesaid public works, buildings, improvements and facilities, title to which improvements shall be in the public.

b. Paying principal and interest on any bonded or funded indebtedness-of said City or for any one or more of said pinposes, and such tax to be subject to fimding into bonds by said City in the marmer authorized by Sub Part D, Part I, Chapter 6, Title 33 of the Louisiana Revised Statutes of 1950.

(4) Cash and Interest-Bearing Deposits

Under state law, the City may deposit funds within a fiscal agent bank organized under the laws of the State of Louisiana, the laws of any other state in the Union, or the laws of the United States. The City may invest in certificates and time deposits of state banks organized under Louisiana law and national banks having principal offices in Louisiana. The City may also invest in shares of any homestead and building and loan association in any amount not exceeding the federally insured amount. At June 30, 2009, the City has cash and interest-bearing deposits (book balances) totaling $4,391,523 as follows:

27



Demand deposits $ 420,541 Savings and certificates of deposits 3,970.982

Total $ 4.391.523

Custodial credit risk for deposits is the risk that- in the event of the failure of a depository financial institution, the City's deposits may not be recovered or will not be able to recover the collateral securities that are in the possession of an outside party. These deposits are stated at cost, which approximates market. Under state law, these deposits (or the resulting bank balances) must be secured by federal deposit insurance or the pledge of securities owned by the fiscal agent bank. The rnarket value of the pledged securities plus the federal deposit insurance must at all times equal the amount on deposit with the fiscal agent bank. These securities are held in the name of the pledging fiscal agent bank in a holding or custodial bank that is mutually acceptable to both parties. Deposit balances (bank balances) at June 30, 2009, are as follows:

Bank balances $ 3,949,452

Federal deposit insurance 1,112,715 Pledged securities (Category 3) 2,836,737

Total insurance and pledged securities $ 3,949,452

As of Jime 30, 2009, the City's total bank balances were fully insured and collateralized with securities held in the name of the City by the pledging financial institution's agent and, therefore, they were not exposed to custodial credit risk.

(5) Receivables

Receivables at June 30, 2009 of $1,059,139 consist of the following:

Business Govemmental Type

Activities Activities Total

Accounts Unbilled revenue Accmed interest Other

Totals

$

$ _

-3,922 8,730

12,652

$ 551,870 482,544

5,468 6,605

$ 1,046.487

$ 551,870 482,544

9,390 15,335

$ 1,059,139

28

CriY OF KAPLAN, LOUISIANA


Allowance for uncollectible accoimts in the business type activities was $421,673 for 2009 and 411,033 for 2008. The aging of the Accounts Receivable is as follows:

Cunent $ 537,067 31 -60 days 23,569 60-90 days 27,127 Over 90 days 385,780 Less allowances for uncollectible accoimts (421,673)

Total $ 551,870

(6) Due from Other Govemmental Units

Amounts due from other govemmental units consisted of the following at June 30,2009:

Amount due from the State of Louisiana Department of Transportation at fiscal year ending June 30, 2009 $ 2,302

Amount due from the State of Louisiana Department of Revenue for Beer Taxes owed at fiscal year ending June 30. 2009 4,013

Amount due from the Vermilion Parish School Board for sales taxes owed at fiscal year ending June 30, 2009 107,873

Amount diie from the State of Louisiana Department of Treasury for the Lime Sludge Thickener Project at June 30,2009. 81,406

$ 195.594

(7) Restricted Assets - Propriety Fund Type (Enterprise Utility Fund)

Restricted assets were applicable to the following at June 30, 2009:

Customers' deposits $ 306,422 Bond sinking fund account 362,295

Total restricted assets $ 668,717

29



(8) Capital Assets

Capital asset activity for the year ended June 30,2009, was as follows:

Govemmental activities; Capital assets not being depreciated:

Land Construction in progress

Other capital assets: Buildings Infrastmcture Equipment, furniture and fixtures

Totals Less accumulated depreciation

Buildings Infi-astructure Equipment, furniture and fixtures

Total accumulated depreciation

Govemmental activities, capital assets, net

Business-type activities: Capital assets not being depreciated:

Land

Other capital assets: Buildings and systems Machinery and equipment Automobiles

Total other capital assets

Less accumulated depreciation Buildings and systems Machinery and equipment Automobiles

Total accumulated depreciation

Business-type activities, capital assets, net

Balance 7/1/2008

$ 114,547 134,122

1,052,644 9.421.169 1,847,373

12,569,855

513,997 5,171,011 1,009,676

6,694,684

$ 5.875,171

Additions

$ 84,820

5,000 705,483 192,629

987,932

31,818 26,783

177,999

236,600

$ 751,332

Deletions

$ -134,122

-

-4,616

138,738

-

-7,229

7,229

$ 131,509

Balance 6/30/2009

$ 114,547 84,820

1,057,644 10,126,652 2,035,386

13,419,049

545,815 5,197.794 1,180,446

6,924,055

$ 6,494,994

$ 179,309 $ 179,309

21,328,088 577,004 187,477

22,271,878

7,955,792 365.819 147,322

8,468,933

$.13,802,945

336,553 4,777 6,200

347,530

507,463 48,481

9,596

565,540

$ (218,010)

--

20,641 20,641

-

-20,641

20,641

$ -

21,664,641 581,781 173,036

22,598.767

8,463.255 414,300 136,277

9,013,832

$ 13.584,935

30



Depreciation expense was charged to govemmental activities as follows:

General government $ 42,751 PoUce 47,784 Fire 74,781 Streets 58,257 Recreation 13,027

Total depreciation expense $236,600

Depreciation expense was charged to business-type activities as foUows:

Electric $ 71,443 Gas 81,108 Water 104,584 Sewer 308,405

Total depreciation expense $565,540

(9) Accounts and Other Payables

The accounts and other payables consisted of the following at June 30, 2009:

Governmental Business-type Activities Activities Total

Accounts Claims in process

Totals

(10) Changes in Long-Term Debt

The following is a summary of long-term debt for the year ended June 30, 2009:

Govemmental Business-type Activities Activities Total

$ 56,718

12,031

$ 68,749

$ 376,234

$ 376,234

$ 432,952

12,031

$ 444,983

Long-tennbonds payable, July 1,2008 $ 757,000 $ 3,114,447 $ 3,871,447

Additions . . _

Reductions (62,000) (481,707) (543,707)

Long-tenn bonds payable, June 30,2009 S 695,000 $ 2,632,740 $ 3,327,740

31

CIFY OF KAPLAN, LOUISIANA


Bonds payable at June 30,2009, are comprised of the following individual issues:

General Obligation Bonds (G.O. Bonds): $367,000 General Obligation Refunding Bonds, Series 2005, due in annual installments of $29,000 to $46,000 through February I, 2015; at interest rates of 2.40% to 4.30% (to be retired from the proceeds of ad valorem taxes)

$550,000 General Obligation Bonds, Series 2005, for the purpose of resurfacmg and improving city streets, due in annual installments of $23,000 to $53,000 through March 1, 2020; at an interest rate of 4.15% (to be retired from the proceeds of ad valorem

Total general obligation bonds

Revenue Bonds: $2,720,000 Uitilities Revenue Bonds, Series 2005, due in monthly instaUments of $11,914 through June 15, 2045; interest rate of 4.250% (to be retired from excess

$242,000

453,000 S 695,000

armual revenue) $ 2,632.740

The bonds are due as follows:

Year Ending June 30,

2010 2011 2012 2013 2014

2015-2019 2020-2024 2025-2029 2030-2034 2035-2039 2040-2044

2045 Totals

Govemmental Activities Principal Interest payments

65,000 69,000 72,000 79,000 81,000

276,000 53,000

-----

$ 695,000

payments

28,480 26,008 23,293 20,363 17,106 42,606

2,200 -----

$ 160,056

Business-type Principal payments

31,643 33,015 34.446 35,938 37,496

213,309 263,715 326,031 403,073 498,320 616,073 139,681

$ 2,632,740

1 Activities Interest

payments

111,280 109,908 108,478 106,985 105,427 501,307 450,902 388.585 311,544 216,297 98,543 3,236

$ 2,512,492

Total

236,403 237,931 238,217 242,286 241,029

1,033,222 769,817 714,616 714.617 714,617 714,616 142,917

$ 6,000,288

32



Defeasance of Debt:

On March 23, 2005, the City issued $367,000 of General Obligation Refimding Bonds, Series 2005, with an interest rate of 2.40% to 4.30% for the purpose of refunding $335,000 of outstanding General Obligation Bonds, Series 1995 A, maturing February 1, 2015, bearing interest of 5.20% to 9.00%, and $200,000 of General ObUgation Bonds, Series 1995 B, maturing February 1, 2015. bearing interest of 5.20% to 9.00% and paying the costs of issuance of the bonds. As a result, the General Obligation Bond, Series 1995 A & B, maturing on February 1. 2015, are considered to be defeased and the liability has been removed from the City's books. This current refunding was undertaken to reduce total debt service payments over the next six years by $83,197 and resulted in an economic gain (difference between the present value of debt service payments on the old and new debt) of $36,936.

Bond Covenants:

The various bond indentures identified above contain significant limitations and restrictions on annual debt service requirements, maintenance of and flow of monies through various restricted accounts, minimum amounts to be maintained in various sinking funds, and minimum revenue bond coverage. The City is substantially in compUance with aU siich significant limitations and restrictions for the year ended June 30,2009.

(11) Compensated Absences

Employees of the City eani sick leave at the rate of one day per month, up to a maximum of 120 days. No sick leave is paid upon resignation. Eniployees separated due to retirement are paid for accumulated sick leave at the hourly rates being eamed by that employee at separation. As of Jime 30, 2009. an accrual of $20,650 for accumulated sick leave has been recorded, all of which is attributable to business-type activities.

Employees of the City cam vacation when they are hired and it is based upon the number of years of full-tirtie service and varies from 5 to 15 days per year. Vacation leave cannot carryover to the following year.

Employees of the City eam paid time off, instead of overtime pay at a rate of time and a half which is based on the en^loyee's hourly rate, up to a maximum of 240 days. Employees separated due to resignation or termination are paid for the amount of accumulated paid time off they eamed by that employee at separation. As of June 30, 2009, an accrual of $30,633 for accumtilated paid time off has been recorded. The amounts attributable to the govemmental activities and business-type activities are $17,366 and $13,267, respectively.

33



(12) Flows of Funds: Restrictions on Use - Utilities Revenues

Bonds and Interest Sinking Fund

The City is required to set aside uito a Utilities Revenue Bond Sinking Fund each month a sum equal to 1/6 of the interest falling due on the next payment dated plus 1/12 of the principal falling due on the next principal payment date. Funds deposited in this account are available only for the retirement of maturing bonds and interest.

Reserve Fund

The Utilities Revenue Bond Reserve Fund is maintained solely for the purpose of paying the principal of and interest on bonds payable from the sinking fimd as which there would otherwise default. The fimd is required to be funded in an amount equal to the reserve fund requirement ($102,851 at June 30,2009).

(13) Employee Retirement

Substantially all City, employees are coyered under the Municipal Employees' Retirement System of Louisiana except firemen, policemen, and judges, who are covered under the Firefighters' Retirement System, Municipal Police Employees' Retirement System, and Louisiana State Employees' Retirement System, respectively. Details concerning these plans follow:

A. Municipal Employees' Retirement System of Louisiana

Plan description: The Municipal Employees' Retirement System of Louisiana (the System) is a cost-sharing multiple-employer public employee retirement system (PERS) as established and provided for by R,S. 11:1731 of the Louisiana Revised Statutes (LRS). The System is composed of two distinct plans. Plan A and Plan B, with separate assets and benefit provisions. Employees of the City are members of Plan B.

Membership is mandatory as a condition of employment beginning on the date employed if the employee is on a permanent basis working at least thirty-five hours per week, not participating in another public funded retirement system and under age sixty (60) at date of employment. Those individuals paid jointly by a participating employer and the City are not eligible for membership in the System. Under Plan B. employees who retire at or after age 60 with at least 10 years of creditable service or at or after age 55 with 30 years of creditable service are entitled to a retirement benefit, payable monthly for life, equal to 2% of their final compensation multipUed by the employee's years of creditable service. Final compensation is the employee's monthly earnings during the 36 consecutive or joined months that produce the highest average. The System also provides death and disability benefits. Benefits are established by State statute.

The Municipal Employees' Rethement System of Louisiana issues a publicly available financial report that includes financial statements and required supplemental information. That report may be obtained by writing to Municipal

34



Employees' Retirement System of Louisiana, 7937 Office Park Boulevard, Baton Rouge. Louisiaria 70809.

Fimding policy:' Plan members are reqiured to contribute 5.0% of their annual covered salary and the City is required to contribute at an actuarially determined rate. The cunent rate is 6.75% of annual covered payroU. The contribution requirements of plan members and the City are established and may be atnended by the System's Board of Trustees. The City's contributions to the System for the years ended June 30, 2009, 2008, and 2007, were $63,460, $57,306, and $73,688, respectively equal to the required contributions for each year.

B. Municipal Police Employees' Retirement System

Plan description: The Municipal Police Employees' Retirement System (the System) is a cost-sharing multiple-employer public employee retfrement system (PERS).

Membership is mandatory for any full-time police officer employed by a municipality of the State of Louisiana and engaged in law enforcement, empowered to make arrest, providing they do not have to pay social security and providing they meet the statutory criteria. Employees who retire at or after age 50 with at least 20 years of creditable service, or. at or after age 55 with at least 12 years of creditable service are entitied to a retirement benefit payable monthly for life, equal to 3-1/3% of their average final compensation multiplied by the employee's years of creditable service. Final compensation is the en:^)loyee's monthly earnings during the 36 consecutive or joined months.that produce the highest average. The System also provides death and disabihty benefits. Benefits are established by State stamte.

The Municipal Police Employees' Retirement System issues a pubUcly available report that includes financial statements and required supplemental information. That report may be obtained by writing to Mimicipal Police Employees' Retfrement System, 8401 United Plaza Boulevard, Suite 270, Baton Rouge, Louisiana 70809-7017.

Funding poUcy: Plan members are required to contnljute 7.5% of thefr annual covered salary and the City is requfred to contribute 9.50% as established by State statute. The City's contributions to the System for the years ended June 30, 2009, 2008, and 2007 were $8,526, $9,213, and $8,532, respectively, equal to the required contributions for each year.

C. Firefighters' Retirement System

Plan description: The Ffrefighters' Retirement System (the System) is a cost-sharing multiple-employer public retirement system (PERS), as established and provided for by R.S. 11:2251 through 2269 of the Louisiana Revised Statutes (LRS).

35



Membership is mandatory as a condition of employment begiiming on date employed if the employee is on a permanent basis as a firefighter, not participating in another public funded retirement system and under age fifty (50) at date of employment. Employees who retire at or after age 50 with at least 20 years of creditable service, or at or after age 55 with at least 12 years of creditable service are entitied to a retirement benefit payable monthly for life, equal to 3-1/3% of thefr average final compensation multiplied by the employee's years of creditable service. Final compensation is the employee's monthly earnings during the 36 consecutive or joined months that produce the highest average. The System also provides death and disability benefits. Benefits are established by State statute.

The Firefighters' Retfrement System issues a pubUcly available financial report that includes financial statements and requfred supplemental information. That report may be obtained by writing to Firefighters' Retfrement System, Post Office Box 94095 Capitol Station, Baton Rouge, Louisiana 70804-9095.

Funding policy: Plan meinbers are requfred to contribute 8.0% of thefr aimual covered salary, and; the City is requfred to contribute at an actuarially determined rate. The current rate is 12.50% of aimual covered payroll. The contribution requirenients of Plan members are established and may be amended by the Systein's Board of Trustees. The City's contributions to the System for the years ended June 30, 2009, 2008, and 2007 were $15,861, $13,380. and $9,034, respectively, equal to the requfred contributions for each year.

D. Louisiana State Employees' Retirement System

Plan description: The Louisiana State Employees' Retfrement System (the System) is a single-enployer public employee retirement system established under the provisions of Title n. Section 401, of the Louisiana Revised Statutes of 1991, controlled and administered by a separate board of trustees.

All State permanent employees are mandated by State Law to participate in the System and all elected or appointed officials are eligible to participate in the System. Employees who retire at or after age 60 with at least 10 years of creditable service, at or after age 55 v«th 25 years of creditable service, or at any age with at least 30 years of creditable service are entitled to a retirement benefit payable monthly for lifCi equal to 2-1/2% of thefr average annual compensation for every year of service plus $300. " Average compensation is the employee's monthly earnings during the 36 consecutive months that produce the highest average. Employees who terminate with at, least the amoimt of creditable, service stated previously and who do not withdraw their employee contributions, may retire at the ages specified previously and receive the benefit accmed to thefr date of termination. The System also provides death and disability benefits. Benefits are established by State stamte.

The Louisiana State Employees' Retirement System issues a publicly available fmancial report that includes fmancial statements and required supplementary information. That report may be obtained by writing Louisiana

36



State Employees' Retirement System, Post Office Box 44213. Baton Rouge, Louisiana 70804-4213.

Funding policy: Plan members (judges) are requfred to contribute 11.50% of thefr annual covered salary and the City is requfred to contribute at ah actuarially determined rate. The current rate is 20.4% of annual covered payroU. The contribution requfrements of Plan members and the City are established and may be amended by the System's Board of Tmstees. The City's contributions to the System for the years ended June 30,. 2009, 2008, and 2007 were $2,237, $2,393, and $3,358, respectively, equal to the required contributions for each year.

(14) Litigation and Claims

la August of 1973, a judgment in the amount of $189,540, plus interest, was rendered in favor of the plaintiff in the case of Leroy J. Romero, et al vs. the City of Kaplan, The United States Fidelity & Guaranty frisurance Company, the City's insurer, has paid its policy limits of $100,000 plus interest, leaving ah outstanding judgment against the City of Kaplan for $89,540, plus interest.

hi July of 2006, the City and the plaintiff in the above mentioned case agreed to a settlement in the amount of-$100,000. This settlement is to be paid in monthlyinstallments of $2,000 per month ending in June 2010.

Annual payments are due as follows:

Year Ending Jiine 30, Amount

2010 $ 28,000

On January 3, 1994, the City entered into a consent judgment awarding Washington National Insurance Company $25,988. plus attorney fees in the amount of $6,000, plus legal interest from May 1,1990 until paid for suras due on the group health and accident insurance.policy.

In the opiiiion of the City's legal counsel, this judgment operates as an encumbrance against the City, although it is judiciaUy unenforceable based on legal precedents, which have held that property, which~is owned by the pubhc and is being used for public purposes, is exempt from seizure. However, legal counsel further states that the property owned by a municipality, but which is being used in a nongovernmental, profit-making way, may be seized.

As a result of this legal opinion, no provisions have been made in the financial statements for the amount of the outstanding judgment.

The City is also a defendant in various other lawsuits; however, management and counsel for the City of Kaplan are unable to reasonably estimate at this time the amount of liability in excess of insurance coverage which may be incurred if adverse decisions are rendered.

37



(15) Entemrise Fund Operations

Operations of the City of Kaplan's Utility System consist of electric and gas distribution systems, and water and sewer utiUties, The City purchases electricity and gas for resale in its distribution systems from Slemco and Magnum Gas Marketing Company, respectively.

Plant and equipment acqufred by the utility fimd in years prior to 1975 have not been segregated on the accounting records in such a manner that the actual investment in each of the operating utiUty systems can be determined. For financial statement purposes, depreciation on such plant and equipment during those fiscal years were allocated to the individual operating departments on the ratio of gross utility sales in each department. Depreciation on additions to plant and equipment smce 1975, have been charged directly to the applicable department. Other operating revenues and expenses which cannot be identified as appUcable to a single department have been allocated on the basis of gross utiUty sales or, if associated with payroll, on the basis of payroll costs in the individual departments.

Operating results of the individual utilities for the year ended June 30,2009, are as follows:

Operating revenues

Operating expenses: Depreciation Other

Total operating

expenses

Operating income (loss)

Electric Dept.

$ 4,863,518

71.443 2,945,514

3,016,957

$ 1,846,561

Gas Dept.

$815,389 .

81,108 780,495

861,603

$ (46,214)

Water Dept.

$468,440

104,584 320,901

425,485

$ 42,955

Sewerage Dept.

$ 494.631

308,405 343,518

651,923

$ (157,292)

Total EntCTprise

Fund

$ 6,641,978

565,540 4,390,428

4,955,968

S 1,686,010

38


Notes to Basic Fmancial Statements (Continued)

(16) Leases

A. Operating leases

The City is engaged in various operating leases for the use of machinery and equipment. Total' expenditures for these leases totaled $40,475 for the year ended June 30,2009. The fiiture minimum payments for these leases are as foUows:

Year Ending June 30 Amount

2010 $ 32,414 2011 20,190

Total $ 52,604

B. Capital Lease

In August 2007, the City entered into a lease agreement as lessee for financing the acquisition of a sewer cleaner. In May 2008, the City entered into a lease agreement for the financing of a motor grader. In October 2008, the City entered into a lease agreement for the financing of an asphalt paver. These lease agreements qualify as capital leases for accounting purposes and, therefore, has been recorded at the present value of the fiiture minimurii lease payments as of the inception date.

The future minimum lease obligations and the net present value of the minimum lease payments as of June 30, 2009 are as foUows:

Year Ending December 31,

2010 $ 34,260

2011 35,883

2012 35,883

2013 28,514

2014 5,230

Total minimum lease payments 139,770 Less; amount representing interest (3,780)

Present value of minimum lease payments $ 135,990

39



(17) Compensation of City Officials

A detail of compensation paid to the Mayor and City Council for the year ended June 30, 2009, follows:

Linda Hardee , Mayor $ 27,000

City Council: Kfrk Champagne 4,200 Eva Dell Monison 4,200 Gerard Jerry Touchet 4,200 Brent Dubois 4,200 Kevin Guidry 4,200

Total $ 48,000

(18) Risk Management

Effective August 1, 1990, the City established a risk management program for its group health and life insurance,coverage "and accounts for it in the Group Insurance Fund. This program provides employees and thefr dependents health benefits up to $1,000,000 in a lifetime maximum. The City purchases commercial insurance for claims in excess of $35,000 per individual per year of coverage provided by the program.

During the fiscal year 1991, the City adopted the provisions of GASB Statement No. 10, Accounting and Financial Reporting for Risk Financing and Related Insurance Issues. As requfred by the standard, a reconciliation of claims liabilities is shown below. All funds of the City participate in the program and make payments to the Group Insurance Fund based on premiums needed to pay prior and current year claims, administrative cost, and commercial insurance premiums. For the year ended June 30, 2009, the claims liabUity.of $12,031 was reported in the Group Insurance Fund. The claims liabiUty is based on the requirements of GASB Statement No. 10, which are that a liabiUty for claims be reported as of. the financial statement date if information prior to the issuance of the financial statements indicates that it is probable that a liabiUty has been incurred and the amount of the loss can be reasonably estimated.

Reconciliation of Claims Liabilities

Unpaid claims at July 1,2008 $ 33,124 Claims incuned 234,795 Claims payments (255.888)

Unpaid claims at June 30,2009 $ 12,031

40



Claims payable of $12,031 at June 30,2009 was determined as follows:

A. Claims incuned prior to June 30, 2008 and paid in July, 2008 and August, 2008 $ 11,000

B. Claims incurred prior to June 30, 2008 and pending at August 31, 2008

C. Prpvision for claims incurred but not reported 1,031

Total claims payable $ 12,031

The provision for claims incurred but not reported of $1,031 was calculated utilizing historical information adjusted for cunent trends.

(19) Interfund Transactions

A. Interfund receivables and payables, by fund, at June 30, 2009 are as follows:

Major fimds: General Fund Sales Tax Fund

Nonmajor fimds:

Fire Protection Fund 3,244 Police Special Fund Capital Projects Fund

Interfund Receivables

$ 500 100

600

Interfund Payables

$ 3,244 -

3,244

--

3,244

3,844

500 100 600

3,844 Total govemmental funds

The amounts due from the Genefal Fund to various other fimds are for reimbursements owed for expenditures paid for those funds.

41



B. Transfers consisted of the foUovdng at June 30,2009:

Major funds: General Fund Sales Tax Fund

Nonmajor funds:

Capital Projects Fund

Total govemmental funds

Proprietary funds: Enterprise fund

Total

Transfers are used to (a) move revenues from the fund that statute or budget requfres to collect them to the fimd that statute.or budget requfres to expend them and to (b) use unrestricted revenues collected in the general fimd to finance various programs accoimted for in other funds in accordance with budgetary authorizations.

Transfers In

$ 2,092,857 -

2,092,857

32,989

2.125,846

558,188

$ 2,684.034

Transfers Out

$ 32,989 554.434

587,423

3,755

591,178

2,092,856

$ 2,684,034

42

REQUIRED SUPPLEMENTARY INFORMATION

43

CfTY OF KAPLAN, LOUISLWA General Fund

Budgetary Comparison Schedule For the Year Ended June 30, 2009

Revenues: Taxes Licenses and permits Intergovernmental Fines and forfeitures Interest Miscellaneous

Total revenues

Expenditures: Current-

General government Public safety

Police Ffre

Streets, bridges, and dramage Culture and recreation

C^tial outlay

Total expenditures

Deficiency of revenues over expenditures

Budget Original

$ 64.250 144,900 18,000 25,000

-51^850

304.000

664,138

738,910 144,222 354,775 22,955 87,000

2,012.000

(1,708,000)

Final

$ 132,195 174,565 202,188

34,115 -

46,600 589,663

799,188

815,250 203,700 406,575

57,200 237.750

2,519.663

(1.930,000)

Actual

$ 78,506 217,804 203,949

30,279 241

64,937 595,716

677,438

804,494 203.190 384,038 45,978

220,515

2,335,653

(1,739,937)

Variance with Final Budget

Positive (Negative)

$ (53,689) 43,239

1,761 (3.836)

241 18,337 6,053

121,750

10,756 510

22.537 11,222 17,235

184,010

190,063

Other financing sources (uses): Traiisfers in Transfers out

1,708,000 1,950,000 2,092,857 142,857 (32,989) (32.989)


Net change in fimd balance

Fund balance, beginning

Fund balance, ending

1,708,000

-

(68.159)

$ (68,159)

1,950,000

20.000

(68,159)

$ (48,159)

2,059.868

319,931

(68,159)

109,868

299,931

-

$ 251,772 $ 299,931

44

CITY OF KAPLAN. LOUISIANA Special Revenue Fund

Sales Tax Fund

Budgetary Comparison Schedule For the Year Ended June 30, 2009

Revenues: Sales tax Interest income

Total revenues

Budget Original

$ 604,000 3.500

607,500

. Final

$ 620,500 15,000

635,500

Actual

$ 620,376 11,013

631,389

Variance with Final Budget

Positive (Negative)

$ (124) (3.987) (4,111)

Expenditures: Current-

General government

Capital outlay

Debt Service -Principal retfrement Interest Expense

Total expenditures

106,000

297,300

403,300

112,000

302,750

414,750

166,260 218,132

30,903 1,370

416,665

(54,260)

84,618

(30,903) (1.370)

_iL915)

Excess of revenues over expenditures

Other financing sources (uses): Proceeds from capital lease Transfers out


Net change in fund balance

Fund balances, beginning


204,200 220,750 214,724 (6,026)

-(204,200)

r204.200)

-

1,129,608

$1,129,608

-(475,000J (475,000)

(254,250)

1,129,608

$ 875,358

133,388 (554,434) (421,046)

(206.322)

1,129,608

$ 923,286

133,388 (79,434) 53,954

47,928

_

$ 47,928

45

OTHER SUPPLEMENTARY INFORMATION

46

OTHER FINANCIAL INFORMATION

47

NONMAJOR GOVERNMENTAL FUNDS

48

NONMAJOR SPECIAL REVENUE FUNDS

To account for the proceeds of specific revenue sources tiiat are legally restricted to expenditures for specific purposes.

Parish Fire Protection Fund -

To account for monies received from the Vermilion Parish Police Jury to defi*ay costs of the ffre department.

Police Special Fund -

To account for monies received from a 15% dedication of court fines received by the General Fund and used to defray costs of the police department.

NONMAJOR DEBT SERVICE FUNDS

To account for the accumulation of resources for, and the payment of, general long-term debt principal, interest and related costs.

General Obligation Refunding Bonds, Series 2005 and General Obligation Bonds, Series 2005 To accumulate monies for the General Obligation Bonds, Series 2005 A & B issued in the amounts of $550,000 and $367,00.0, respectively. Debt service is financed by specifically dedicated ad valorem tax levies.

NONMAJOR CAPITAL PROJECTS FUND

LCDBG Street Improvement Fund

To account for capital improvements within the City. Improvements are funded by federal grants and general fund monies.

49


Nonmajor Govemmental Funds

Combining Balance Sheet June 30.2009

ASSETS Cash and cash equivalents Due from other fiinds Accrued interest receivable Other receivables

Total assets

Special ]

Fire Protection

Fund

$ 53,818 3,244

348 -

Revenue

Police Special Fund

$11,283 --499

Debt Service General

Obligation Refunding

Bonds Series 2005

Fund

$ 94,133 ---

Capital Projects

Fund

$ 100 ---

Totals

$ 159,334 3,244

348 499

$ 57,410 $11,782 $ 94,133 100 $163,425

LL^ILmES AND FUND BALANCES

Liabilities: Accoimts payable Due to other fimds

Total liabilities

Fund balances: Reserve for debt retirement Unreserved - undesignated

Total fimd balances

Total liabilities and fund balances

$ 1.532

1.532

55,878 55,878

$ 57,410

$ -500

500

11,282 11,282

$11,782

$ -

_

94,133

94,133

94,133

$

L=

100 100

-

100

$ 1.532 600

2.132

94.133 67,160

161,293

$163,425

50


Nonmajor Govemmental Funds

Combining Statement of Revenues, Expenditures and Changes in Fund Balances Year Ended June 30, 2009

Revenues: Taxes Intergovemmental Fines Interest income Miscellaneous

Total revenues

Special:

Fire Protection

Fimd

$ -62,333

-962

-

63,295

Revenue

PoUce Special Fimd

$ --

6,277 -450

6,727

Debt Service General

ObUgation Refimding

Bonds Series 2005

Fimd

$114,101 --909

_

115,010

Capital Projects

Fund

$ 376,697

---

376.697

Totals

$114,101 439,030

6,277 1.871

450

561,729

Expenditures: PubUc safety -

PoUce Fire

Capital outlay Debt service -

Principal retirement Interest paid

Total expenditures

Excess (deficiency) of revenues over expenditures

Other financing sources (uses):

Transfers in Transfers out

Total other fmancing sources (uses)

Net change in fund balances

Fund balances, begiiming


48,367 2,501

50,868

12,427

3,028

2.976

6,004

62.000 30.737 92,737

723 22,273

3,028 48.367

409,686 415,163

62,000 - 30,737

409,686 559,295

(32.989) 2,434

--

_

12,427

43,451

$ 55,878

--

_

723

10,559

$11,282

--

_

22.273

71,860

$ 94.133

32,989 (3,755)

29,234

(3,755)

3,755

$

32,989 (3,755)

29,234

31,668

129.625

$161,293

51

CITY OF KAPLAN, LOUISIANA Enterprise Fund

Utility Fund

Schedule of Number of Utility Customers and Rates (Unaudited)

June 30,2009 and 2008

Records maintained by the City mdicated the following number of customers were being serviced during the month of June, 2008 and 2007.

Department 2009 2008

Electric (metered) Gas (metered) Water (metered) Sewerage

2,119 1,651 2,349 2,183

2,118 1,664 2,342 2,180

The monthly water rates of the City are as follows:

Residential (minimum charge) $8.00 Additional gallons in excess of 2000, $1.75 per 1000 gallons

Commercial $13.00 - $135.00 Each additional 1000 gallons, $1.75

The monthly sewer rates of the City are as follows:

Minimum charge $ 10.00 Additional gallons in excess of 2000, $2.00 per 1000 gallons

52

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CITY OF KAPLAN, LOUISIANA Enterprise Fund Utihty Fund

Comparative Statement of Net Assets Years Ended June 30, 2009 and 2008

2009 2008 ASSETS

Current assets: Cash Receivables:

Accounts, net of allowance for uncollectible of $421,673 and $411,033, 2009 and 2008, respectively

Unbilled utihty receivables Grant receivable Accmed interest receivable

Total current assets Noncurrent assets:

Restricted assets -Interest-bearing deposits

Capital assets, net of accumulated depreciation Total noncurrent assets

Total assets

LIABILITIES Current liabihties:

Accounts payable Compensated absences payable Due to other fimds Payable fiom restricted assets -

Revenue bonds, net of deferred amount on refimding Accmed interest payable

Total current Uabitities

Noncurrent liabihties: Customers' deposits payable Revenue bonds, net of deferred amount on refunding

Total noncurrent habilities

Total liabihties


Total net assets

$ 1,974,960 $ 1,953,567

558,475 482,544

81.406 5.468

3,102,853

668,717 13,584,935 14.253,652

17,356.505

376.234 33.917

30,329 4,662

445.142

306,422 2,602,411 2,908,833 3^353.975

10,947,533 327.304

2,727,693 $ 14,002,530

630.838 498,792

9,919

3,093.116

790,244 13,802,945 14,593,189

17,686.305

352,866 50.919

245.869

481,835 13,664

1,145,153

294.745 2,632,612 2.927,357 4.072,510

10,674,834

2,938,961 $13,613,795

54

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INTERNAL CONTROL, COMPLUNCE

AND

OTHER MATTERS

56

C Burton Koltter. CPA* Ruasoll'F Champagne, CPA* Victor R. Slavers. CPA* P, Troy Courville, CPA* GeraldA Thlbodaaux, Jr.,CPA* Robert S. Certer, CPA' Arthur R. Mixon. CPA*

Tyrwe E. Wxon, Jr.. CPA Allen J. LaBry, CPA AlCiertR Leger, CPA.PFS.CSA-Penny Angel/a Savgains. CPA Christine L Couan, CPA Mary T. Thl iodeauK, CPA Marshall W. Gutdry. CPA Alan M. Taytof. CPA, Jamea R. Roy, CPA RoberlJ Metz;CPA KoUy M. Ooucet. CPA Chwyi L. Bartley, CpA

. Mandy B Self, CPA Paul L. DfllcamttfB, Jr CPA Wanda F. Areement, CPA, CVA Krialin B. Dauzat, CPA Richard R Anderson Sr., CPA

• Carolyn C. Anderson, CPA

Retired: Conrad 0. Chapman, CPA* 2006 Harry J, CkiWlo, CPA 2007

- A ProftMStonsI AcoDunllna Corpomtlon

KOLDtR, CHAMPAGNE, SLAVEN & COMPANY, LLC CERTIFIED PUBLIC ACCOUNTANTS

P.O. Box 1055 Abbeville, LA 70511

Phone (337) 893-7944 Fax (337j 893-7946

OFFICES

183 South Boadte Rd Lafay«ttB, U 70508 Phone (337) 232-4141 Fax (337) 232-8660

450 East Main Street New Iberia, LA 70560

Phone (337) 367-9204 "Fax (337) 367-9208

113 East Bndge St 200 South Mam Street Breaujt Bndfle. LA 70517 Abbeville. U 70510 Phone (337) 332-4020 Ptwne (337) 893-7944 Fax (337) 332-2867 Fax (337) 893-7948

1234 Oav(dDf,S(9 203 Moroan City, LA 70380 Phone (985) 384-2020 Fax (965) 384-3020

408 Wast Cotton Street VillB Platte. IJ\ 70586 Phone (337) 363-2792 " Fax (337) 363-3049

332 West Sixth Avenue Oberlin, LA 70655 Phone (337) 639-4737 Fax (337) 63&-4568

1013 Main Street . FranWn, LA 70538 Phone (337) 828-0272

Fax (337) 828-0290

133fa5tWaddilSt MarksviUe LA 71351.

Phone (318) 253^9252 Fax (318) 253-6881

621 Main StrBet Pineville, LA71360

Phono (318) 442-4421 Fax (318) 442-9833

WEBSfTE WWW KCSRCPAS.COM

. REPORT ON INTERNALCONTRpL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF

FINANCIAL-STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

The Honorable Linda Hardee, Mayor and Members of the City Council. City of Kaplan, Louisiana

We have audited the financial statements of the govemmental activities, the business-type activities, each major.fund, and the aggregate remaining fund information of the City of Kaplan, Louisiana, as of and for the year ended June 30, 2009,,which collectively comprise the City of Kaplan, Louisiana's basic financial statements and have issued our report thereon dated October 7, 2009. We conducted oiir audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards: issued by the Comptroller General of the United States.

Internal Control Ovei- Financial Reporting

In planning and performing our audita we considered the City of Kaplan, Louisiana's intemal control over financial re^rting as a basis for designing pur auditing procedures for the purpose of expressing our opinion on the fmancial statements, biit not for the purpose of expressing an opinion on the effectiveness of the City of Kaplan, Louisiana's.intemal control over fmancial reporting. Accordingly, we do not express an opinionon the effectiveness of the City of Kaplan, Louisiana's intemal control over financial reporting.

Our consideration of intemal control over financial.reporting was for the limited purpose described m the preceding paragraph and would not necessarily identify all deficiencies in intemal control over fmancial reporting that might be significant deficiencies or material weaknesses. However, as discussed below, we identified certain deficiencies in internal control over financial.reporting that we consider to be significant deficiencies.

Member of: AMERICAN iNSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS

57 Member of;

SOCIETY OF LOUISIANA CERTIFIED PUBLIC ACCOUNTANTS

http://KCSRCPAS.COM

A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the City of Kaplan, Louisiana's ability to initiate, authorize, record, process, or report fmancial data in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the City of Kaplan, Louisiana's fmancial statements that is more than inconsequential will not be prevented or detected by the City of Kaplan, Louisiana's intemal control. We consider the deficiencies described in the accompanying summary schedule of current and prior year audit findings and management's corrective action plan as items 09-l(IC), 09-2(IC), and 09-3(IC) to be significant deficiencies in intemal control over financial reporting.

A materia! weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the City of Kaplan, Louisiana's intemal control.

Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in the intemal control that might be significant deficiencies and, accordingly, would not necessarily disclose all significant deficiencies that are also considered to be material weaknesses. We believe the significant deficiencies identified as items 09-1 (IC), 09-2(IC), and 09-3(IC) in the accompanying summary schedule of current arid prior year audit findings and management's corrective action plan are material weaknesses.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the City of Kaplan, Louisiana's fmancial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providmg 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 no instances of noncompliance or other matters that are required to be reported under Govemmerit Auditing Standards.

The City of Kaplan's response to the findings identified in our audit is described in the accompanying summary schedule of current and prior year audit findings and management's corrective action plan. We did not audit the City's response and, accordingly, we express no opmion on it.

This report is intended solely for the information and use of management. City Council, others within the entity, and federal awarding agencies and pass-through entities and is hot intended to be and should not be used by anyone other than these specified parties. However, under Louisiana Revised Statute 24:513, this report is distributed by the Legislative Auditor as a public document.


Abbeville, Louisiana October 7, 2009

58

C. Burton Kotdsr, CPA* RijBsell F. Champagno, CPA*-Viclor R-Slaven, CPA* P. Troy Courville, CPA* Gerald A * Thibodeaux, Jr.,CPA' Robert S, Carter, CPA* Arthur R- Mixon, CPA*

KOLDER, CHAMPAGNE, SLAVEN & COMPANY, LLC CERTIFIED PUBLIC ACCOUNTANTS

Tynes E Mixon, Jr., CPA ' AJlen J LaBry, CPA . Albert R. Leoer, CPA;PFS,CSA* Penny Arioelle'Scruggint, CPA' Chnstine L, Cousin,.CPA Mary T. Thibodoaux, CPA MerBhall W, Guidry, CPA Alan M. Taytor, CPA Jamea R. Roy, CPA Robert J. Metz, CPA Kelly M. Doucet. CPA Cheryl L Bartley, CPA Mandy B, Self, CPA Paul L Delcambre, Jr. CPA Wanda F. Areement CPA, CVA Kristin B. Dauzat, CPA Richard R. Andenon ST., CPA Carolyn C. Anderson, CPA

Retired: ~ \ Conrad 0. Ch^sman, CPA* 2006 Harry J, ClOBtia, CPA 2007

• A Pro<«alO(isl Accounttng corporaUon

P.O. Box 1055 Abbeville, l_A 70511

Phone (337) 893-7944 Falx (337) 893r7946

OFFICES

183 South Beadle Rd. Lafayette, LA 70503 Phone (337) 232-4141 Fax {337) 232-8680

113 East Bridge SL Breaux Bridge, LA 70517 Phone (337) 332-4020 Fpx (337) 332-2867

1234 David Dr. Ste 203 ' Morgan City, LA 70380 Phone (985),384-2020 Fax (985) 384-3020

40e West Cotton Street .Vllle Platte. LA 70586 Phone (337) 36S-2792 Fax (337) 363-3049 ,

332 West Sixth Avenue . ObOriln, LA 70655 Phone (337) 639-4737 Fax (337) 633-45S8

450 Eaet Main Street New Iberia, LA 70560

Phone (337) 387-9204 Fax (337) 367-9208

200 Soiith Main Street Abbeville, UA 70510

Phone (337) 893-7944 Fa>; (337) 893-7946

1013 Main'Street Franklin, LA 70538

Phone (337) 828-0272 Fax (337) 828-0290

133 East WaddH St Uari<3vllleLA71351

Phone (318) 253-9262 Fax (318) 253-8681

621 Main Street Pineville, LA 71360

PhofW (318) 442-4421 Fax (318) 442-9833

WEB SITE WWW.KCSRCPAS,COM

REPORT ON COMPLIANCE WITH REQUIREMENTS APPUCABLE TO BACH MAJOR PROGRAM AND INTERNAL CONTROL OVER

~ COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 .

The-Honorable Linda Hardee^ Mayor and Members of the City Council City of Kaplan, Louisiana

Compliance

We have audited the compliance of the City of Kaplan (the City), with the types of compliance requirements described in the U. S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to each of its major federal programs for the year ended June 30, 2009. ITie City's major federal programs are identified iri the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its.major federal programs is the responsibility of the City's management Our responsibility is to express an opinion on the City'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 applicableto fmancial audits contained in Government Auditing Standards, issued by the Comptroller General of the United Statespand OMB Circular Arl33, Audits of States. Local Governments aind Non-Profit Organizations. Those standards and OMB Circular 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 includes examining, on a test basis, evidence about the City's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of the City's compliance with those requirements.

In our opinion, the City complied, in all materiaUrespects, with the requirements referred to above that are applicable to each of its major federal programs for the year ended June 30, 2009;

Member of: AMERICAN INSTFTUTE OF CERTIFIED PUBLIC ACCOUNTAI^S

59 Member of:

SOCIETY OF LOUISIANA CERTIFIED PUBLIC ACCOUNTANTS

http://WWW.KCSRCPAS,COM

Intemal Control Over Compliance

The management of the City is responsible for establishing and maintaining effective intemal control over compliance with requirements of laws, regulations, contracts and grants applicable to federal programs. In planning and performing our audit, we considered the City's internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City's intemal control over compliance.

A control deficiency in an entity's intemal control over compliance exists when the design or operation of a control does not allow management or employees, in the normal course of performmg their assigned functions, to prevent or detect noncompliance with a type of compliance requirement of a federal program on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the entity's ability to administer a federal pi-ogram such that there is more than a remote likelihood that noncompliance with a type of compliance requirement of a federal program that is more than inconsequential will not be prevented or detected by the entity's intemal control.

A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a federal program will not be prevented or detected by the entity's intemal control.

Our consideration of the intemal control over compliance was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in intemal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in intemal control over compliance that we consider to be material weaknesses, as defmed above.

This report is intended solely for, the information and use of management, the City Council, others within the entity, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. However, under Louisiana Revised Statute 24:513, this report is distributed by the Legislative Auditor as a public document.


Abbeville, Louisiana October 7,2009

60


Schedule of Expenditures of Federal Awards Year Ended June 30, 2009

Federal Grantor/Pass-Through CFDA Giantor/Program Name Number Expenditures

U.S. Department of Housing and Urban Development -Pass-through State Department, Division of Administration, Office of Community Development

Community Development Block Grants/State's program * 14.228 $ 376,697

U.S. Department of Homeland Security -Pass-through State Department of Homeland Security

and Emergency Preparedness Disaster Grants - Public Assistance 97.036 146,700

Total $ 523,397

* Denotes major fimds.

61

CfTY OF KAPLAN, LOUISIANA

Notes to Schedule of Expenditures of Federal Awards Year Ended June 30,2009

(1) General

The accompanying Schedule of Expenditures of Federal Awards presents the activity of all federal financial assistance programs of the City of Kaplan (the City). The City of Kaplan reporting entity is defined in Note 1 to the basic financial statements for the year ended June 30, 2009. All federal financial assistance received directly from federal agencies is included on the schedule as well as federal financial assistance passed through other government agencies. The following program is considered a major federal program of the City: Community Development Block Gh-ants/State's program.

(2) Basis of Accounting

The accompanying Schedule of Expenditures of Federal Awards is presented using the modified accrual basis of accounting, which is described in Note 1 to the City's basic financial statements for the year ended June 30, 2009.

62


Schedule of Findings and Questioned Costs Year Ended June 30, 2009

Part I. Summary of Auditor's Results:

1. An unqualified report was issued on the basic financial statements.

2. Significant deficiencies in intemal control were disclosed by the audit of the basic financial statements. The significant deficiencies noted are considered material weaknesses.

3. There were no material instances of noncompliance.

4. No significant deficiencies in intemal control over the major programs were disclosed by the audit of the basic financial staten^nts.

5. An unqualified opinion was issued on compliance for the major programs.

6. The audit disclosed no findings required to be reported under Section 510(a) of Circular A-133.

7. The following progranis were considered to be major programs: U.S. Department of Housing and Urban Development: Community Development Block

Grants/State's program, CFDA 14.228.

8. The dollar threshold used to distinguish between Type A and Type B programs, as described in Section 520(b) of Circular A-133 was $300,000.

9. The auditee did not qualify as a low-risk auditee under Section 530 of Circular A-133.

PartU. Findings which are required to be reporfed in accordance with generally accepted Govemmental Auditing Standards:

A. Intemal Control Findings -

See intemal control finding 09-l(IC), 09-2(IC), and 09-3(IC) on the summary schedule of current and prior year audit findings and management's corrective action plan.

B. Compliance Findings -

There are no compliance findings at June 30, 2009.

Part in. Findings and questioned costs for Federal awards which include audit findings as defmed in Section 510ra^ of Cireular A-133:

There are no findings and questioned costs related to federal programs.

63

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