desoto parish fire protection district no. 3...parish fire protection district no. 3, a component of...

DESOTO PARISH FIRE PROTECTIONDISTRICT NO. 3

Stonewall, Louisiana

FINANCIAL STATEMENTSAs of and for the Year Ended December 31,2005

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

Release Date & — Q

Deborah D. Dees, MBA, CPA122 Jefferson Street

Mansfield, Louisiana 71052318-872-3007

DESOTO PARISH FIRE PROTECTION DISTRICT NO.3Stonewall, Louisiana

FINANCIAL REPORTAs of and for the Year Ended December 31,2005

Table of Contents

Independent Accountant's Review Report

Required Supplemental Information (Part 0

Management's Discussion and Analysis

Basic Financial Statements:

Government Wide Financial Statements:

Statement of Net Assets

Statement of Activities

Fund Financial Statements:

Balance Sheet-Governmental Funds

Reconciliation of the Governmental Fund Balance Sheet to theGovernment-Wide Statement of Net Assets

Statement of Revenues, Expenditures, and Changes in FundBalances of Governmental Funds

Reconciliation of the Statement of Revenues, Expenditures, andChanges in Fund Balances of Governmental Fund to theStatement of Activities

Notes to the Financial Statements:

Notes to the Financial Statements

Required Supplemental Information (Part II):

Budgetary Comparison Schedule - General Fund

Other Reports Required by Louisiana GovernmentalAudit Guide:

Independent Accountant's Report on Applying Agreed-Upon Procedures

Louisiana Attestation Questionnaire

Statement

A

B

D

Schedule

1

4-8

11

12

14

15

16

17

19-26

Page

28

30-32

33-34

122 JEFFERSON STREET • MANSFIELD, LOUISIANA 71052 • (318) 672-3007 • FAX (318) 872-1357

CERTIFIED PUBLIC ACCOUNTANT

Independent Accountant's Report

Board of CommissionersDeSoto Parish Fire Protection District No. 3Stonewall, Louisiana

I have reviewed the accompanying financial statements of the governmental activities of the DeSotoParish Fire Protection District No. 3, a component of the DeSoto Parish Police Jury, as of and for theyear ended December 31, 2005, which collectively comprise the DeSoto Parish Fire ProtectionDistrict No. 3's basic financial statements as listed in the table of contents. These financialstatements are the responsibility of the DeSoto Parish Fire Protection District No. 3's management

My review was conducted in accordance with attestation standards established by the AmericanInstitute of Certified Public Accountants and applicable standards of Government Auditing Standardsissued by the Comptroller Genera! of the United States of America. A review consists principally ofinquires of personnel and analytical procedures applied to financial data. It is substantially less inscope than an audit in accordance with generally accepted auditing standards, the objective of whichis the expression of an opinion regarding the financial statements as a whole. Accordingly, I do notexpress such an opinion.

Based on my review, nothing came to my attention that caused me to believe that the financialstatements of the DeSoto Parish Fire Protection District No. 3 for the year ended December 31, 2005,are not presented, in all material respects, in conformity with accounting principles generally acceptedin the United States of America.

The managements discussion and analysis and budgetary comparison information, on pages 4-8,and 28 are not a required part of the basic financial statements but are supplementary informationrequired by the Governmental Accounting Standards Board. Such information has not been subjectedto the inquiry and analytical procedures applied in the review of the basic financial statements, butwere compiled from information that Is the representation of management, without audit or review.Accordingly, I do not express an opinion or any other form of assurance on the supplementaryinformation.

In accordance with the Louisiana Governmental Audit Guide and the provisions of state law, I haveissued a report, dated June 14,2006, on the results of our agreed-upon procedures.

v.ooletffifct*Mansfield, LouisianaJune 14,2006

REQUIRED SUPPLEMENTAL INFORMATION (PART I)

DESOTO PARISH FIRE DISTRICT #3Stonewall, Louisiana

Management's Discussion and AnalysisFor The Year Ended December 31,2005

As Management of the Desqto Parish Fire District #3, we offer readers of the fire district's financialstatements this narrative overview and analysis of the financial activities of the Desoto Parish Fire District#3 as of and for the year ended December 31, 2005. We encourage readers to consider the informationpresented here in conjunction with the fire district's basic financial statements and supplementaryinformation provided in this report hi assessing the efficiency and effectiveness of our stewardship of publicresources.

FINANCIAL HIGHLIGHTS

• The assets of the Desoto Parish Fire District #3 exceeded its liabilities at December 31, 2005, by$720,430 (net assets).

• The Desoto Parish Fire District #3's net assets increased by $34,666 as a result of this year'soperations.

• Total net assets are comprised of the following:(1) Capital assets of $584,842, which includes property and equipment, net of accumulated

depreciation and related debt(2) Unrestricted net assets of $243,562 represent the portion available to maintain the fire

district's continuing obligations to citizens and creditors.

• At December 31,2005, the Desoto Fire District #3*s governmental funds consist solely of the firedistrict's general fund. The fire district's governmental funds reported a total ending fund balanceof $243,562, a decrease of $27,890, including expenditures for capital assets. The entire fundbalance is unreserved and available for spending at the fire district's discretion.

OVERVIEW OF THE FINANCIAL STATEMENTS

Management's Discussion and Analysis is intended to serve as an introduction to the Desoto Parish FireDistrict #3*s basic financial statements. In accordance with GASB No. 34, the Desoto Parish Fire District#3's basic financial statements comprise three components: 1) government-wide financial statements, 2)fund financial statements, and 3) notes to the basic financial statements. This report also contains othersupplementary information in addition to the basic financial statements.

Government-wide Financial Statements. The government-wide financial statements of the Fire Districtreport information using accounting methods similar to those used by private sector companies. Theypresent the financial picture of the Fire District from an economic resources measurement focus using theaccrual basis of accounting. These statements include all assets of the Fire District (including capitalassets) as well as all liabilities (including long-term obligations).

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

The Statement of Activities presents the current year's revenues and expenses and other informationshowing how the Fire District's net assets changed during the year. The change in net assets is reported assoon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows.



Thus, revenues and expenses are reported in this statement for some items that will only result in cash flowsin future fiscal periods.

Fund Financial Statements. A fund is a grouping of related accounts that is used to maintain control overresources that have been segregated for specific activities or objectives. The Fire District, like other stateand local governments, uses fund accounting to ensure and demonstrate compliance with finance-relatedlegal requirements. All of the funds of the Fire District are categorized as governmental funds.

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

Because the focus of governmental funds is narrower than that of the government-wide financialstatements, it is useful to compare the information presented for governmental funds with similarinformation presented for governmental activities in the government-wide financial statements. By doingso, readers may better understand the long-term impact of the government's near-term financing decisions.Both the governmental fund balance sheet and governmental fund statement of revenues, expenditures, andchanges in fund balances provide a reconciliation to facilitate this comparison between governmental fundsand governmental activities.

The Fire District maintains one individual governmental fund - the general fund The Fire District adoptsan annual appropriated budget for the general fund, and a budgetary comparison schedule is provided forthe general fund to demonstrate compliance with this budget.

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

Other Supplemental Information. In addition to the basic financial statements and accompanying notes,this report also presents certain required supplementary information concerning the Fire District's budgetpresentation. The general fund's budgetary comparison schedule is included as "required supplementaryinformation." Required supplementary information is information that the accounting rules strongly suggestbe presented within the Fire District's financial report This schedule demonstrates compliance with theFire District's adopted and final revised budget

GOVERNMENT-WIDE FINANCIAL ANALYSIS

The Fire District implemented the new financial reporting model used in this report beginning with thecurrent calendar year ended December 31, 2004. Over time, as we accumulate year-to-year financialinformation on a consistent basis, changes in net assets may be observed and used to discuss the changingfinancial position of the Fire District as a whole.



The Fire District's summary of the Statement of Net Assets is as follows:

Governmental Activities2005 2004

Assets:Current assetsCapital Assets (net of accumulated depreciation)

Total Assets

Liabilities:Current liabilitiesCapital Lease Obligation

Total Liabilities

Net Assets:Invested in Capital Assets, net of related debtUnrestricted

Total Net Assets

245,496584,842

$ 277,314545315

830,338 822,629

1,934107,974

5,862131,003

109,908 136,865

476,868243,562

414^12271,452

$ 720,430 $ 685,764

The largest components of the Fire District's total assets are: (1) Capital assets of $584,842 or 70%, and (2)Assessments Receivables of $225,261 or 27%. Of the Fire District's total liabilities, the largest componentis Note Obligations of $107,974 or 98%.

As noted earlier, net assets (total assets less total liabilities) may serve over time as a 1180101 indicator of agovernment's financial position. At the close of the most recent fiscal year, the Fire District's net assetstotaled $720,430. A portion of the Fire District's net assets reflects its investments in capital assets(equipment). Capital assets are non-liquid assets and cannot be utilized to satisfy the Fire District'sobligations. The unrestricted net assets of the Fire District are available for future use. The unrestricted netassets equal approximately 100% of the total operating expenses for the fiscal year ended December 31,2005, which is equivalent to about one year of these expenses. This measure is an estimate of how long theFire District might be expected to operate on its current resources.

The Fire District's change in net assets is summarized as follows:Governmental Activities

Program Revenues:Charges for ServicesState GrantsFederal Grants

General Revenues:Use of Money and PropertyOther Revenues

Total RevenuesExpenses:

Public SafetyInterest on debt

Total ExpensesChange in Net Assets

2005

170,375 $-

93,760

2,17410,259276,568

236,6365,266

241,90234,666 $

2004

154,74471,5519,830

9968,981

246,102

177,7276,887

184,61461,488



Governmental activities increased net assets by $34,666 for the year ended December 31,2005.

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

• The Fire District is heavily dependent on property assessments to support its operations. Propertyassessments provided 62% in 2005 and 63% in 2004 of the Fire District's total revenues.

• State and Federal Grants totaled approximately 34% in 2005 and 33% in 2004, of the Fire District'scurrent year resources.

• Employee salaries and benefits make up approximately 8% in 2005 and 16% in 2004 of the totalexpenses of the Fire District.

• Current year public safety expenditures increased 34% over 2004 due to the increased spending formaterials and supplies to comply with the federal FEMA grant received in 2005.

FINANCIAL ANALYSIS OF GOVERNMENTAL FUNDS

The Fire District uses fund accounting to ensure and demonstrate compliance with finance-related legalrequirements. The financial statements of the Fire District present its General Fund. The General Fund isthe Fire District's operating fund and the source of day-to-day service delivery. As discussed, the GeneralFund is useful in assessing the resources available at the end of the year in comparison with upcomingrequirements.

At December 31, 2005, the Fire District's General Fund balance (total assets less total liabilities) totaled$243,562 all of which was unreserved The Fire District's unreserved fund balance decreased by $46,819in 2005 due to an increase in capital outlay expenditures of $33,845.

GENERAL BUDGETARY ANALYSIS

The Fire District employs formal budgetary integration as a management control device during the year.Budgeted amounts included in the Schedule of Revenues, Expenditures, and Changes in Fund Balances -Budget and Actual include the original adopted budget amounts and the final amended budget amounts.Original budgets for each year are adopted on or before December 31 of the year preceding the budget year.Hie original budget is based on estimated revenues, estimated expenses, and other financial informationknown to the Fire District at the time of the adoption of the budget. Amendments to the original budget aremade throughout the year as changes in operations, in expected funding levels, and in estimatedexpenditures occur. Hie final amended budget is prepared at the time the Fire District anticipates noadditional significant increases or decreases in revenues and expenses for the year and no expected changesin operations. The Fire District did not amend the original budget during 2005.

The difference between the budgeted revenues and actual revenues for the year ended December 31, 2005,totaled $8,518, an insignificant variance. The actual expenses were more than the budgeted expenses forthe year ended December 31,2005, by $14,587. The District did not budget for a capital loan of $18,929.

DESOTO PARISH FERE DISTRICT #3Stonewall, Louisiana


CAPITAL ASSETS AND LONG-TERM OBLIGATIONS

Capital Assets

The District acquired $103,525 in capital assets in 2005. Firefighting equipment of $83,711 was addedwhich included a thermal imager, 22 airmask units, a generator, and a new communication tower on RedBluff Rd. The District replaced a tile floor in central station and purchased a 1998 International Truck.

Long-Term Obligations

Hie Fire District financed the communication tower in 2005 for an increase in debt of $18,929. During2005, the Fire District paid an annual lease payment of $47,224 consisting of principal in the amount of$41,958 and interest in the amount of $5,266.

ECONOMIC FACTORS AND FUTURE OUTLOOK

The Fire District's budgeted revenues and expenditures for 2006 are comparable to 2005's actual revenuesand expenditures. The Fire District does not anticipate any changes in its day-to-day operations that willhave a material effect on its 2005 budget or operations.

CONTACTING THE FERE DISTRICT'S FINANCIAL MANAGEMENT

This financial report is designed to provide our citizens, taxpayers, customers, and creditors with a generaloverview of the Fire District's finances and to show its accountability for the money it receives. If youhave questions about this report or need additional financial information, contact Carolyn Thomas, at theDesoto Parish Fire District #3, Post Office Box 329, Stonewall, Louisiana 71078 or call at (318) 925-0087.

BASIC FINANCIAL STATEMENTS

GOVERNMENT WIDE FINANCIAL STATEMENTS

STATEMENT A

DESOTO PARISH FIRE PROTECTION DISTRICT NO. 3Stonewall, Louisiana

STATEMENT OF NET ASSETS

December 31,2005

ASSETS

Cash and cash equivalents

Receivables (Note 7}Capital assets, net of depreciation (Note 3}

TOTAL ASSETS

GOVERNMENTALACTIVITIES

24,258

221,238

584,842

830,338

LIABILITIES

Current Liabilities:

Accounts PayablePayroll taxes payable

Notes payable, current

Total current liabilitiesLong-term liabilities:

Notes payable (Note 10)

TOTAL LIABILITIES

NET ASSETS

Invested in capital assets, net of related debtUnrestricted

TOTAL NET ASSETS

$ 1.314620

50,54952,483

57,425

$ 109,908

478,868243,562

720.430

See accountant's review report and accompanying notes.

11


STATEMENT OF ACTIVITIES

For Year Ended December 31, 2005

STATEMENT B

Activities

Governmental Activities:

Public Safety- Rre $Interest on debt

Total Governmental Activities $

Program Revenues

Net (Expenses)Revenuesand Changesin Net Assets

operating Capital GrantsCharges for Grants and and Governmental

Expenses Services Contributions Contributions Activities

236,636 $ 170,375 $ $ 93,760 $5,266

241,902 $ 170,375 $ 0 93,760

27,499(5,266)

22,233

General Revenues:Interest EarningsRre Insurance RebateOther Revenue

Total General Revenues

Change In Net Assets

Net Assets Beginning

Net Assets End ing

2,174

8,7571,502

12,433

34,666

685,764

720,430

See accountant's review report and accompanying notes.12

FUND FINANCIAL STATEMENTS

STATEMENT C

DESOTO PARISH FIRE PROTECTION DISTRICT NO. 3


BALANCE SHEET, GOVERNMENTAL FUNDS

December 31,2005

GENERAL FUND

ASSETS

Cash and cash equivalentsReceivables, net of allowance

TOTAL ASSETS

LIABILITIES AND FUND BALANCES

Liabilities:

Accounts payablePayroll taxes payable

Total Liabilities

Fund Balances:

Unreserved

Total Fund Balance

TOTAL LIABILITIES AND FUND BALANCES

24.258221,238

245,496

1,314620

1.934

243.562

243,562

245,496


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STATEMENT D


RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE GOVERNMENT-WIDE STATEMENT OF NET ASSETS

December 31,2005

Total Net Assets reported for Governmental Activities in the Statement of Net Assets are different because:

Fund Balances, Total Governmental Funds, Statement C 243,562

Capital assets used In governmental activities are not financial resources andtherefore, are not reported In the government funds 584,842

Long-term liabilities are not due an payable in the current period andtherefore are not reported in the funds (107,974)

Net Assets of Governmental Activities, Statement A $ 720,430

See accountant's review report and accompanying notes. 15

STATEMENT E

DESOTO PARISH FIRE PROTECTION DISTRICT NO. 3


STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES

GOVERNMENTAL FUNDS

For the Year Ended December 31. 2005

General FundRevenues:

Service charge feesIntergovernmental revenue-state funds

Fire Insurance rebate

Federal grantOther revenues

Interest fncomeTotal Revenues

Expenditures:Current

Personal ServicesMaterials and supplies

General and administrativeCapital OutlaysDebt service:

Principal payments

Interest expenseTotal Expenditures

Excess of Revenues over Expenditures

Other Financing Sources

Loan proceedsTotal Other Financing Sources

Excess of Revenues and Other Financing Sources over Expenditures

Fund balances, beginning of year

Fund balances, end of year

170,375

8,75793,760

1,5022.174

276,568

18,204135,984

18,450103,525

41,9585,266

323,387

(46.819)

18,92918,929

(27,890)

271.452243.562

See accountent's review report and accompanying notes.

16

STATEMENT F


RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS

TO THE STATEMENT OF ACTIVITIES

For the Year Ended December 31,2005

Amounts reported for governmental activities in the Statement of Activities are differentbecause:

Net Change tn Fund Balances, Total Governmental Funds, Statement E

Capital assets used in governmental activities are not financial resources and.therefore are not reported In the governmental funds:

(27,890)

Capital outlays ($103,525) exceed depreciation expense ($63,997) 39,527

Long-term liabilities are not due and payable in the current period and thereforeare not reported in the governmental funds.

Payments on capital teasesLoan proceeds

Change in Net Assets of Governmental Activities, Statement B

41,958(18,929)

34,666

See accountant's review report and accompanying notes. 17

NOTES TO THE FINANCIAL STATEMENTS


NOTES TO THE FINANCIAL STATEMENTSAs of and for the Year Ended December 31, 2005

INTRODUCTION

DeSoto Parish Fire Protection District No. 3 was created by the DeSoto Parish Police Jury, as authorizedby Louisiana Revised Statute 40:1492 on July 22, 1987. The Fire District is governed by a five-memberboard appointed in accordance to LRS 40:1496 as follows: two members by the Police Jury, twomembers by the Town of Stonewall, and one, the chairman, by the other four members. The Fire Districtis responsible for maintaining and operating five fire stations and related equipment, and providing fireprotection and rescue services to approximately 7,200 residents in the northern part of the parish. TheFire District is staffed by one full-time and one part-time employee and 43 volunteers.

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying baste financial statements of the DeSoto Parish Fire Protection District No. 3 havebeen prepared in conformity with governmental accounting principles generally accepted in the UnitedStates of America. The Governmental Accounting Standards Board (GASB) Is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. Theaccompanying basic financial statements have been prepared in conformity with GASB Statement 34,Basic Financial Statements-and Management's Discussion and Analysis—Jbr State and LocalGovernments, issued in June 1999. Such accounting and reporting policies also conform to therequirements of Louisiana Revised Statutes 24:517 and to the guides set forth In the LouisianaGovernmental Audit Guide.

A. REPORTING ENTITY

As the governing authority of the parish, for reporting purposes, The DeSoto Parish Police Jury is thefinancial reporting entity for DeSoto Parish. The financial reporting entity consists of (a) the primarygovernment (Police Jury), (b) organizations for which the primary government is financially accountable,(c) other organizations for which nature and significance of their relationship with the primary governmentare such that exclusion would cause the reporting entity's financial statement to be misleading orincomplete.

Governmental Accounting Standards Board (GASB) Statement No. 14 established criteria for determiningwhich component units should be considered part of the DeSoto Parish Police Jury for financial reportingpurposes. The basic criterion for including a potential component unit within the reporting entity isfinancial accountability. The GASB has set forth criteria to be considered In determining financialaccountability. This criterion includes:

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

a. The ability of the Police Jury to impose its will on that organization and/or;b. The potential for the organization to provide specific financial benefits to or impose specific

financial burdens on the Police Jury.

2. Organizations for which the Police Jury does not appoint a voting majority but are fiscallydependent on the Police Jury.

3. Organizations for which the reporting entity financial statements would be misleading if data of theorganization is not included because of the nature of significance of the relationship.

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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Because the Police Jury created the Fire District and has the ability to impose its will on the Fire District,the Fire District was determined to be a component unit of the DeSoto Parish Police Jury, the financialreporting entity. The accompanying financial statements present information only on the fundsmaintained by the Fire District and do not present information on the Police Jury, the general governmentservices provided by that governmental unit, or the other governmental units that comprise the financialreporting entity.

B. BASIS OF PRESENTATION

Government-Wide Financial Statements (GWFS)

The Statement of Net Assets and Statement of Activities display information about the reportinggovernment as a whole. They include the fund of the reporting entity, which is considered to be agovernmental activity. Governmental activities generally are financed through taxes, intergovernmentalrevenues, and other non-exchange revenues.

The Statement of Activities presents a comparison between direct expenses and program revenues foreach function of the Fire District's governmental activities. Direct expenses are those that are specificallyassociated with a program or function. Program revenues Include (a) fees and charges paid by therecipients for goods or services offered by the programs, and (b) grants and contributions that arerestricted to meeting the operational or capital requirements of a particular program. Revenues that arenot classified as program revenues, including all taxes, are presented as general revenues.

Fund Financial Statements (FFS)

The accounts of the Fire District are organized and operated on the basis of funds. A fund is anindependent fiscal and accounting entity with a separate set of self-balancing accounts. Fund accountingsegregates funds according to their intended purpose and Is used to aid management In demonstratingcompliance with finance-related legal and contractual provisions. The minimum number of funds ismaintained consistent with legal and managerial requirements.

The one fund of the Fire District is classified as a governmental fund. The emphasis on fund financialstatements Is on major governmental and enterprise funds, each displayed in a separate column. TheFire District has only one fund, a governmental fund. A fund is considered major if it is the primaryoperating fund of the entity or meets the following criteria:

a. Total assets, liabilities, revenues, or expenditures/expenses of that Individual governmental orenterprise fund are a least 10 percent of the corresponding total for all funds of that category ortype; and

b. Total assets, liabilities, revenues, or expenditures/expenses of the individual governmental orenterprise fund are at least 5 percent of the corresponding total for all governmental andenterprise funds combined.

The major governmental fund of the Fire District Is described below:

General Fund. The General Fund is the principal fund of the Fire District and is used to account forthe operations of the Fire District. General operating expenditures are paid from this fund.

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C. MEASUREMENT FOCUS/ BASIS OF ACCOUNTING

Measurement focus Is a term used to describe "which" transactions are recorded within the variousfinancial statements. Basis of accounting refers to "when" transactions are recorded regardless of themeasurement focus applied.

Measurement Focus

On the government-wide Statement of Net Assets and the Statement of Activities, governmental activitiesare presented using the economic resources measurement focus. The accounting objectives of thismeasurement focus are the determination of operating income, changes in net assets (or cost recovery)and financial position. All assets and liabilities (whether current or non-current) associated with itsactivities are reported. Government-wide fund equity is classified as net assets.

In the fund financial statements, the "current financial resources" measurement focus Is used. Onlycurrent financial assets and liabilities are generally included on its balance sheet. Their operatingstatement presents sources and uses of available spendable financial resources during a given period.This fund uses fund balance as Its measure of available spendable financial resources at the end of theperiod.

Basis of Accounting

tn the government-wide Statement of Net Assets and Statement of Activities, the governmental activitiesare presented using the accrual basis of accounting. Under the accrual basis of accounting, revenuesare recognized when earned and expenses are recorded when the liability is Incurred or economic assetused. Revenues, expenses, gains, losses, assets, and liabilities resulting from exchange and exchange-like transactions are recognized when the exchange takes place.

Program Revenues. Program revenues in the Statement of Activities (Statement B) are receipts from aservice charge assessed property owners; program revenues reduce the cost of the function to befinanced from the district's general revenues.

Governmental fund financial statements are reported using the current financial resources measurementfocus and the modified accrual basis of accounting. Revenues are recognized as soon as they are bothmeasurable and available. Revenues are considered to be available when they are collectible within thecurrent period or soon enough thereafter to pay liabilities of the current period. For this purpose, thegovernment considers revenues to be available if they are collected within 60 days of the end of thecurrent fiscal period. Revenues are classified by source, and expenditures are classified by function andcharacter. Expenditures (including capital outlay) generally are recorded when a liability Is incurred, asunder accrual accounting. However, debt service expenditures are recorded only when payment Is due.The government funds use the following practices In recording revenues and expenditures:

Revenues. Property assessments are recognized in the year in which the assessments are billed,interest income on time and demand deposits are recorded monthly when the interest Is earned andcredited to the account.

Expenditures. Expenditures are generally recognized under the modified accrual basis of accountingwhen the related fund liability Is incurred.

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D. ASSETS. LIABILITIES AND EQUITY

Cash and interest-bearing deposits

For purposes of the Statement of Net Assets, cash and interest-bearing deposits include all demandaccounts, savings accounts, and certificates of deposits of the District.

Capital Assets

Capital assets, which include property, plant, and equipment, are reported in the governmental activitiescolumn in the government-wide financial statements. Capital assets are capitalized at historical cost orestimated cost if historical cost is not available. Donated assets are recorded as capital assets at theirestimated fair market value at the date of donation. The Fire District maintains a threshold level of$1,000 or more for capitalizing capital assets. The cost of normal maintenance and repairs that do notadd to the value of the asset or materially extend assets lives are not capitalized.

Depreciation of all exhaustible capital assets is recorded as an expense in the Statement of Activities,with accumulated depreciation reflected In the Statement of Net Assets. Depreciation is provided overthe assets' estimated useful lives using the straight-line method of depreciation. The range of estimateduseful lives by type of asset is as follows:

Buildings 40 yearsFirefighting equipment 5-10 yearsFire trucks 15 yearsOffice equipment 3 years

Equity Classifications

In the government-wide statements, equity is classified as net assets and displayed in three components:

a. Invested in capital assets, net of related debt - Consists of capital assets including restrictedcapital assets, net of accumulated depreciation and reduced by the outstanding balances of anybonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction,or improvement of those assets.

b. 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 othergovernments; or (2) laws through constitutional provisions or enabling legislation.

c. 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 fund statements, governmental fund equity is classified as fund balance. Fund balance Is furtherclassified as reserved and unreserved, with unreserved further split between designated andundeslgnated.

22




E. BUDGETS AND BUDGETARY ACCOUNTING

The Fire District is required by state law to adopt an annual budget. The following procedures arefollowed in establishing the budgetary data reflected in the financial statements:

A proposed budget Is prepared by the governing board in November and made available for publicinspection no later than 15 days prior to December 31, of each year. In open meeting prior to December31, the budget is adopted and becomes part of the official minutes of the Fire District. The proposedbudget for the General Fund is prepared on the modified accrual basis of accounting.

Once a budget is approved, it can be amended by approval of a majority of the Board. Amendments arepresented at a regular open meeting for Board approval. The budget was not amended during the year.

F. USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted accounting principlesrequires management to make estimates and assumptions that affect certain reported amounts anddisclosures. Accordingly, actual results could differ from those estimates.

G. COMPENSATED ABSENCES

Employees are granted from one to three weeks of vacation per year depending on length of service. Inaddition, employees are granted 12 days of sick leave each year. Sick leave may be accumulated to amaximum of 25 days. At December 31, 2005, there are no accumulated and vested benefits relating tovacation and sick leave that require accrual or disclosure. The cost of leave privileges, computed inaccordance with GASB Codification Section C60, is recognized as current-year expenditure in theGeneral Fund when leave is actually taken.

H. ALLOWANCE FOR DOUBTFUL ACCOUNTS

The Fire District recognizes uncollectible service charge receivables as bad debts through theestablishment of an allowance account. The allowance is based on the average percentage ofuncollected accounts In the past five years.

2. CASH AND INTEREST-BEARING DEPOSITS

Under state law, the Fire District may deposit funds In demand deposits, interest-bearing demanddeposits, money market accounts, or time deposits with state banks organized under Louisiana law andnational banks having their principal offices in Louisiana.

At December 31, 2005, the Fire District has cash and cash equivalents totaling $24,258 (book balance).These deposits are stated at cost, which approximates market. Under state law, these deposits must besecured by federal deposit insurance or the pledge of securities owned by the fiscal agent bank. AtDecember 31, 2005, these deposits are secured from risk by $24,249 (bank balance) of federal depositinsurance.

23



3. CAPITAL ASSETS

Capital asset balances and activity for the year ended December 31, 2005 are as follows:

Governmental Activities 01/01/05 Additions Deletions

VehiclesBuildingsFireflghtlng EquipmentOffice EquipmentLand

Total

Less Accumulated DepreciationVehiclesBuildingsFirefighting EquipmentOffice EquipmentLand

Total

Capital Assets, Net

342.45564,25142,8653,149

452,720

545,314 $

50,2884,3409,369

63,997

39,528 $

12/31/05

754,320 $169,05560,0603,149

11,450998,034

16,779 $3,035

83,711

103,525

$ 771,099172,090143,771

3,14911,450

1,101,559

392,74368,59152,2343,149

516,717

584.842

Depreciation expense of $63,997 was charged to the public safety function.

4. RISK MANAGEMENT

The Fire District is exposed to various risks of loss related to limited torts, theft of or damage to anddestruction of asset and errors and omissions. To handle some of the risk, the Fire District maintainssurety bond coverage. No settled claims from these risks have exceeded insurance coverage In the lastthree years. There were no significant changes to insurance coverage during the year ended December31,2005.

5. LITIGATION

There is no litigation pending against the Fire District, at December 31, 2005, nor is it aware of anyunassorted claims.

6. RELATED PARTY TRANSACTIONS

FASB 57 requires the disclosure of the description of the relationship, the transactions, the dollar amountof the transactions, and any amounts due to or from that result from related party transactions. Therewere no related party transactions.

24



7. LEVIED FEES/RECEIVABLES

As per Louisiana RS 40:1502, the Fire District annually levies a service charge of $100 to personsowning assessed property located within its boundaries. The resolution assessing the service chargeswas approved by the district voters December 2,1997, for the charges to commence January 1,1999 fora period of ten years. The assessment is to cover the cost of the purchase of fire protection equipmentand the maintenance and operation of fire protection facilities and equipment, and for obtaining water forfire protection purposes.

The assessment calendar:

Assessment and levy date January 1,2005Bills mailed February 1,2005Total service charges due upon receiptLien date not applicable

The Fire District assessed $190,498 In service charges in 2005, and recognized $170.375 in revenueafter $20,123 of the assessment was recorded as uncollectible.

The service charge receivables at December 31,2005 are as follows:

Service charge fees receivable $ 266,390Allowance for doubtful accounts (45,152)

Receivables 221,238

8. LEASE AGREEMENTS

Desoto Parish Fire District Three has the following lease agreements:

•40-year lease commencing April 1,1990 with North DeSoto Water System to provide water to theFire District. Annual payment due of $1

•25-year lease commencing April 1, 1990 with Town of Stonewall to lease the land at 5200 Hwy.3276 on which Central Station is located. Annual payment due of $1.

•99-year lease (or as long as the Fire District exists) commencing October 1, 1990 with James U.Burford to lease the land at 2426 Hwy. 171 for Station 2. Annual payment due of $1.

9. RETIREMENT COMMITMENTS

All employees of the DeSoto Parish Fire Protection District No. 3 are members of the Federal SocialSecurity System. The District and its employees contribute a percentage of each employee's salary tothe System (7.65% by the employee). The District's contribution during the year ended December 31,2005, amount to $1,607.

25



10. LONG-TERM DEBT

The following is a summary of long-term debt transactions for the year ended December 31, 2005:

Long-term debt payable at December 31, 2004 $ 131,003New debt issued 18,929Less, payments made during the year (41,958)Due within one year (50,549)

Long-term debt payable at December 31,2005 $ 57,425

The Fire District entered into a four-year capital lease with Hibemia National Bank Leasing datedSeptember 16, 2003, for a 1992 GMC truck and a 1987 FEMO truck. The lease calls for annual principalpayments of $47,224 with interest paid annually at a rate of 3.948 percent.

The Fire District entered into a three-year equipment finance agreement with Hfbernfa National BankLeasing, dated January 6, 2006, for a 180 ft Communication Tower on Red Bluff Road. The agreementcalls for annual principal payments of $6,653 with Interest paid annually at a rate of 6.808 percent.

The annual requirements to amortize the debt at December 31,2005, are as follows:

Year ending Principal Interest200620072008Total

$

$

50,548 $51.2096,217

107,974 $

3,5792,670

4376,686

12. COMPENSATION PAID TO BOARD MEMBERS

The members of the Board of Commissioners of the Fire District receive no compensation for theirservices.

26

REQUIRED SUPPLEMENTAL INFORMATION (PART II)

SCHEDULE 1


STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL

(MODIFIED CASH BASIS) GENERAL FUND (MAJOR GOVERNMENTAL FUNDS)

For the Year Ended December 31, 2005

Revenues:

Assessment Charges

Fire Insurance rebate

Federal grant

State grant

Other Revenues

Interest Earned

Total Revenues

Budgeted Amounts Budget to Actual

Original

$ 159,200 $

1.300

103,590

3,100

0

660268,050

Final

159,200 $

1,300

103,590

3,100

0860

268,050

Actual F*osltive(NegaUve)

170,375 $

8.757

93,760

-

1,502

2,174276,568

11,175

7.457

(9,830)

(3,100)

1,502

1,314

8,518

Expenditures:

Current

Public fire safety

Genera! and administrative

Debt Service

Capital Outlay

Total Expenditures

Excess of Revenues over Expenditures

Other Financing Sources (Uses)Loan proceeds

Total Other Financing Sources (Uses)

Net Change in Fund Balance

105,90014t80048,000140,100308,800

(40,750)

105,90014,80048,000140,100308,800

(40,750)

154,18818,45047,224103,525323,387

(46,819)

(48,288)(3,650)776

36.575(14,587)

(6,069)

(40,750)

18.929

18,929

(27,890)

(18,029)

(18,929)

12,860

Fund Balances (Deficit) at Beginning of Year

Fund Balances (Deficit) at End of Year

271,452

$ 243,562


28

OTHER REPORTS REQUIRED BY LOUISIANA GOVERNMENTALAUDIT GUIDE

122 JEFFERSON STREET • MANSFIELD. LOUISIANA 71052 • (318) 872-3007 • FAX (318) 872-1357

CERTIFIED PUBLIC ACCOUNTANT

Independent Accountant's Report on Applying Agreed-Upon Procedures

Board of CommissionersDeSoto Parish Fire Protection District No. 3Stonewall, LA 71078

I have performed the procedures included in the Louisiana Governmental Audit Guide and enumeratedbelow, which were agreed upon by the management of the DeSoto Parish Fire Protection District No. 3and the Legislative Auditor, State of Louisiana, solely to assist the users in evaluating management'sassertions about DeSoto Parish Fire Protection District No. 3's compliance with certain laws andregulations during the year ended December 31, 2005, Included in the accompanying LouisianaAttestation Questionnaire. This agreed-upon procedures engagement was performed in accordance withstandards established by the American Institute of Certified Public Accountants. The sufficiency of theprocedures is solely the responsibility of the specified users of the report Consequently, I make norepresentation regarding the sufficiency of the procedures described below either for the purpose lorwhich this report has been requested or for any other purpose.

Public Bid Law

1. Select all expenditures made during the year for materials and supplies exceeding $20,000, or publicworks exceeding $100,000, and determine whether such purchases were made in accordance withLSA-RS 38:2211-2251 (the public bid law).

There were two expenditures in excess of the $20,000 for materials and supplies, and there wereno expenditures over $100,000 for public works. I examined documentation which Indicated thatboth of these expenditures had been properly advertised and accepted in accordance with theprovisions of LSA-RS 38-2211 -2251.

Code of Ethics for Public Officials and Public Employees

2. Obtain from management a list of the immediate family members of each board member as definedby LSA-RS 42:1101-1124 (the code of ethics), and a list of outside business interests of all boardmembers and employees, as well as their immediate families.

Management provided me with the required list including the noted Information.

3. Obtain from management a listing of all employees paid during the period under examination.

Management provided me with the required list

4. Determine whether any of those employees Included in the listing obtained from management Inagreed-upon procedure (3) were also included on the listing obtained from management in agreed-upon procedure (2) as immediate family members.

None of the employees included on the list of employees provided by management (agreed-uponprocedure No. 3) appeared on the list provided by management in agreed-upon procedure No. 2.

30

Budgeting

5. Obtain a copy of the legally adopted budget and all amendments.

Management provided me with a copy of the original budget. There were no amendments to thebudget during the year.

6. Trace the budget adoption and amendments to the minute book.

I traced the adoption of the original budget to the minutes of a meeting held on December 13,2004 which indicated that the budget had been adopted by the commissioners of the Fire Districtby a vote of 4 in favor and 0 opposed. No amendments were made to the budget during the year.

7. Compare the revenues and expenditures of the final budget to actual revenues and expenditures todetermine if actual revenues failed to meet budgeted revenues by 5% or more if actual expendituresexceed budgeted amounts by 5% or more.

I compared the revenues and expenditures of the final budget to actual revenue andexpenditures. Budgeted expenditures and revenues for the year did not exceed actual amountsby more than 5%, except that the loan proceeds received for the new tower were not included inthe budgeted revenues.

Management comment: The Board is now aware that loan proceeds received by the District shouldbe included in the budget document.

Accounting and Reporting

8. Randomly select 6 disbursements made during the period under examination and:

(a) trace payments to supporting documentation as to proper amount and payee;

Four checks were supported by proper documentation as to proper amount and payee. Two of thepayments were not supported with a receipt Two of the payments could not be verified as to payeebecause cancelled checks during September, 2005 were not available from the bank due toHurricane Katrina. The amounts agreed with the bank's check listing.

Management comment: No payments will be made without the necessary supporting invoice.

(b) determine if payments were properly coded to the correct fund and general ledger account;

The payments were found to be coded to the correct fund and general ledger accounts.

(c) determine whether payments received approval from proper authorities.

Inspection of documentation supporting four of the selected disbursements indicated approvals fromboard members. Approval of two of the transactions could not be verified.

Management comment: Invoices will be initialed as approval of the expenditures when the checksare signed.

31

Meetings

9. Examine evidence indicating that agendas for meetings recorded in the minute book were posted oradvertised as required by RS 42:4.1 through 42:13 (the open meeting law).

The DeSoto Parish Fire Protection District No. 1 is only required to post a notice of each meetingand the accompanying agenda on the door of the district's office building. Management hasasserted that such documents were property posted, copies of agendas were in the files, but Icould find no evidence supporting or denying the posting of the agendas.

Debt

10. Examine bank deposits for the period under examination and determine whether any such depositsappear to be proceeds of bank loans, bonds, or like indebtedness.

I inspected all deposits for the period under examination and found no indication of new bankloans, bonds, or like indebtedness in 2005. I was reading the minutes while performing otherprocedures and it was noted that a loan had been obtained to construct a new communicationtower. The loan and the asset were then recorded.

Management comment: We are now aware that assets and any associated loan proceeds should berecorded when the asset is delivered and put into use.

Advances and Bonuses

11. Examine payroll records and minutes for the year to determine whether any payments have beenmade to employees which may constitute bonuses, advance, or gifts.

In my review of the cash disbursements and payroll records for the year, I noted one instancewhich could indicate an employee was given an advance.

Management comment: Employees will not longer be able to purchase merchandise through theDistrict and then make reimbursement.

Prior-Year Comments and Recommendations

12. Review any prior-year suggestions, recommendations, and or comments to determine the extent towhich such matters have been resolved

Signing and dating of the agendas: It was noted that the agendas in the files had been dated andsigned as recommended.

I was not engaged to, and did not perform an examination, the objective of which would be the expressionof an opinion on management's assertions. Accordingly, I do not express such an opinion. Had Iperformed additional procedures, other matters might have come to my attention that would have beenreported to you.

This report is intended solely for the use of management of the DeSoto Parish Fire Protection District No.3 and the Legislative Auditor, State of Louisiana, and should not be used by those who have not agreedto the procedures and taken responsibility for the sufficiency of the procedures for their purposes. UnderLouisiana Revised Statute 24:513, this report Is distributed by the Legislative Auditor as a publicdocument.

Deborah D. Dees, CPAMansfield, Louisiana June 14. 2006

32

LOUISIANA ATTESTATION QUESTIONNAIRE(For Attestation Engagements of Government)

May 1 . 2006 (Date Transmitted)

Deborah D. Dees, CPA122 Jefferson StreetMansfield, LA 71052

In connection with your review of our financial statements as of December 31 , 2005 and for theyear then ended, and as required by Louisiana Revised Statute 24:513 and the LouisianaGovernmental Audit Guide, we make the following representations to you. We accept fullresponsibility for our compliance with the following laws and regulations and the internal controlsover compliance with such laws and regulations. We have evaluated our compliance with thefollowing laws and regulations prior to making these representations.

These representations are based on the information available to us as of May 2, 2006.

Public Bid Law

It is true that we have complied with the public bid law, LSA-RS Title 38:221 2, and, whereapplicable, the regulations of the Division of Administration, State Purchasing Office.

Code of Ethics for Public Officials and Public Employees

It Is true that no employees or officials have accepted anything of value, whether in the form of aservice, loan, or promise, from anyone that would constitute a violation of LSA-RS 42:1101-1 124.

It is true that no member of the Immediate family of any member of the governing authority, or thechief executive of the governmental entity, has been employed by the governmental entity afterApril 1 , 1 980, under circumstances that would constitute a violation of LSA-RS 42:1 119.

Yes(><|No[ ]

Budgeting

We have complied with the state budgeting requirements of the Local Government Budget Act(LSA-RS 39:1301-14) or the budget requirements of LSA-RS 39:34.

YesJXjNo[ ]

Accounting and Reporting

All non-exempt governmental records are available as a public record and have been retained forat least three years, as required by LSA-RS 44:1, 44:7, 44:31, and 44:36.

We have filed our annual financial statements in accordance with LSA-RS 24:514, 33:463, and/or39:92, as applicable.

We have had our financial statements audited, reviewed, or compiled in accordance with LSA-RS24:513.

Meetings

We have complied with the provisions of the Open Meetings Law, provided in RS 42:1 through42:12.

YesKjNo[ ]

Debt

It is true we have not incurred any indebtedness, other than credit for 90 days or less to makepurchases in the ordinary course of administration, nor have we entered into any lease-purchaseagreements, without the approval of the State Bond Commission, as provided by Article VII,Section 8 of the 1974 Louisiana Constitution, Article VI, Section 33 of the 1974 LouisianaConstitution, and LSA-RS 39:1410.60-1410.65.

Yes XI No [ ]

Advances and Bonuses

It ts true we have not advanced wages or salaries to employees or paid bonuses in violation ofArticle VII, Section 14 of the 1974 Louisiana Constitution, LSA-RS 14:138, and AG opinion 79-729.

We have disclosed to you all known noncompliance of the foregoing laws and regulations, as wellas any contradictions to the foregoing representations. We have made available to youdocumentation relating to the foregoing laws and regulations.

We have provided you with any communications from regulatory agencies or other sourcesconcerning any possible noncompliance with the foregoing laws and regulations, including anycommunications received between the end of the period under examination and the issuance ofthis report. We acknowledge our responsibility to disclose to you any known noncompliancewhich may occur subsequent̂ the issuance of your report

Secretary ~ ~ f o Date

Treasurer c5^T^X^gl Date

President 3~~' f - e*^ Date

Fire Chief £-16- Q£ Date

desoto parish fire protection district no. 3...parish fire protection district no. 3, a component of...

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