town of clarks - app.lla.state.la.us · of clarks, as of june 30, 2009, and the respective changes...

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TOWNOFCLARKS Clarks, Louisiana

Annual Financial Statements

As of and for the Year Ended June 30, 2009

Under provisions of state law, this report is a public document. Acopy of the report has been submitted \o 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 c!eri< of court.

Release Date o l y l v I / O o l /g /

TOWN OF CLARKS

Clarks, Louisiana

Amiual Financial Statements

As of and for the Year Ended June 30, 2009

C O N T E N T S

Independent Auditor's Report

Required Supplemental Information:

Management's Discussion and Analysis

Basic Financial Statements:

Government-Wide Financial Statements:

Statement of Net Assets

Statement of Activities

Fund Financial Statements:

Govemmental Funds:

Balance Sheet

Statement of Revenues, Expenditures and Changes in Fund Balances

Business-Type Activities:

Statement of Net Assets

Statement of Revenues, Expenses, and Changes in Net Assets

Statement of Cash Flows

Notes to the Financial Statements

Statement Page No.

3

A 11

B 12

D

14

15

17

18

19

20

1-

TOWN OF CLARKS Clarks, Louisiana Armual Financial Statements As of and for the Year Ended June 30, 2009

C O N T E N T S (Contd.)

Schedule Page No. Required Supplemental Information:

Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and And Actual - General Fund 1 30

Other Supplemental Information Schedules:

Schedule of Per Diem Paid Aldermen 2 33

Status of Prior Year Findings 3 34

Schedule of Expenditures of Federal Awards 4 35

Independent Auditor's Reports Required by Government Auditing Standards and OMB Circular A-133:

Report on Intemal Control Over Financial Reporting and on Conphance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 37

Report on Compliance with Requirements Applicable to Each Major Program and on Intemal Control Over Corr5>liance in Accordance with OMB Circular A-133 39

Schedule of Current Year Findings with Management's Corrective Action Plan 41

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M. CARLEEN DUMAS Certified Public Accountant

369 Donaldson Road. Calhoun, Louisiana. Telephone 318/644-5726

Independent Auditor's Report

MAYOR AND BOARD OF ALDERMEN TOWN OF CLARKS Clarks, Louisiana

I have audited the accompanying financial statements of the govemmental activities, the business-type activities, and each major fiind of the Town of Clarks, as of and for the year ended June 30, 2009, which collectively comprise the Town's basic financial statements as hsted in the table of contents. These financial statements are the responsibiUty of the Town's management. My responsibihty is to express opinions on these financial statements based on my audit.

I conducted my audit in accordance with auditing standards generally accepted in the United States of America and the standards apphcable to financial audits contained in Government Auditing Standards, issued by the Conptroller General of the United States. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are fi^ee 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 the significant estimates made by management, as well as evaluating the overall financial statement presentation. I beUeve that my audit provides a reasonable basis for my opinions.

In my opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the govemmental activities, the business-type activities, and each major fund of the Town of Clarks, as of June 30, 2009, and the respective changes in financial position and cash flows, where apphcable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Member of the American Institute of Certified Public Accountants Member of the Society of Louisiana of Certified Public Accountants

MAYOR AND BOARD OF ALDERMEN Town of Clarks Clarks, Louisiana Independent Auditor's Report June 30, 2009

In accordance with Government Auditing Standards, I have also issued a report dated November 21, 2009, on my consideration of the Town of Clarks' intemal control over financial reporting and on my tests of the Town's 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 my testing of intemal control over financial reporting and comphance and the results of that testing, and not to provide an opinion on the intemal 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 my audit.

The management's discussion and analysis and budgetary conparison information on pages 5 through 9 and 30, are not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. I have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the supplementary information. However, I did not audit the information and express no opinion on it.

My audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Town of Clarks' basic financial statements. The Schedule of Per Diem Paid Aldermen and the Status of Prior Year Findings listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. The accompanying Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of State, Local Governments, and Non-Profit Organizations, and is also not a required part of the basic financial statements of the Town of Clarks. The Schedule of Per Diem Paid Aldermen, the Status of Prior Year Findings, and the Schedule of Expenditures of Federal Awards have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in my opinion, are fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.

/s Carleen Dumas Calhoun, Louisiana November 21, 2009

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TOWN OF CLARKS Clarks, Louisiana

MANAGEMENT'S DISCUSSION AND ANALYSIS For the Year Ended June 30, 2009

Our discussion and analysis of the Town of Clarks' (hereafter referred to as the Town) fmancial performance provides an overview of the Town's financial activities for the fiscal year ended June 30, 2009. Please read it in conjunction with the Town's financial statements that begin on page 11.

USING THIS ANNUAL REPORT

This annual report consists of a series of financial statements. The Statement of Net Assets and the Statement of Activities on pages 11 through 13 provide information about the activities of the Town as a whole. Fund financial statements begin on page 14. For govemmental activities, these statements provide information on how the general activities of the TOWTI are financed in the short term as well as what remains for fiiture spending. Fund financial statements report the Town's operations in more detail than the govemment-wide statements.

Reporting the Town as a Whole - The Statement of Net Assets and the Statement of Activities

Our analysis of the Town as a whole begins on page 11 with the Statement of Net Assets and on page 12 with the Statement of Activities. These statements include all assets and habihties using the accrual basis of accounting, which is similar to the accounting used by most businesses. All of the current year's revenues and expenses are taken into account regardless of when cash is received or paid.

These two statements report the Town's net assets and the changes in them. Net assets - the difference between assets (what the Tovm owns) and habilities (what the Town owes) is a way to measure the financial position of the Town. Over time, increases or decreases in the Town's net assets are an indicator of whether the Town's financial position is improving or deteriorating.

In the Statement of Net Assets and the Statement of Activities, the Town is divided into two kinds of activities:

Govemmental activities - all of the Town's govemmental services are reported here including pohce and fire protection and general administration.

Business-type activities - the Towm's water and sewer systems are reported here.

TOWN OF CLARKS Clarks, Louisiana MANAGEMENT'S DISCUSSION AND ANALYSIS For the Year Ended June 30, 2009

Reporting the Town's Funds - Fund Financial Statements

Our analysis of the Town's fiinds begin on page 14 . The flind financial statements provide more detailed information about the Town's funds. The Town's two kinds of fiinds - govemmental and business-type fiinds use different accounting methods.

Govemmental funds focus on how money flows into and out of the flmds and the balances left at year-end that are available for spending. Govemmental funds are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can be readily converted to cash. The govemmental fund statements provide a detailed short-term view of the Town's operations. Govemmental fund information helps to determine whether there are more or fewer financial resources that are available to be spent in the near future. The differences between govemmental activities reported in the Statement of Net Assets and the Statement of Activities and govemmental funds are reported in a reconcihation at the bottom of the fund financial statements.

Business-type activities funds are reported in the same way that the activities are reported in the Statement of Net Assets and the Statement of Activities.

COMPARATIVE ANALYSIS OF FINANCLVL DATA

Government-Wide

The Town's total net assets increased by $538,381 during the year ended June 30,2009. The increase in net assets is due to the completion of the Town's water system improvements which were funded by a federal grant. The Town received $666,816 in state and federal grants that were accounted for in the govemmental activities and $ 19,900 in a state grant that was accounted for in the business-type activities. The grant funds were used to complete constmction on the water system improvements and make repairs to a water well. Federal grant funds in the amount of $16,230 were not expended during the year and are included in restricted cash. The following presents an analysis of net assets and changes in net assets of the Town's govemmental and business-type activities:

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Program revenues Charges for services Operating grants Capital grants

General revenues Property taxes Franchise taxes Sales taxes Intergovemmental Occupational licenses Investment earnings Other

Transfers Special item - loss on

sale of capital assets Total revenue,

transfers and special items

Program expenses General government Water and sewer Total expenses

Change in net assets Net assets - beginning Net assets - ending

GOVERNMENTAL ACTIVITIES

2009 2009

BUSINESS-TYPE ACTIVITIES TOTAL

2009 2009 2009 2009

Assets Current assets Restncted assets Capital assets Total assets

liabilities Current liabilities Long-term liabilities Total liabilities

'Jet Assets Invested in capital assets, net of related debt

Restricted by grantor

Unrestricted Total net assets

$38,794 56,223

533.399 628.416

26,553

26,553

533,399

56,223 12.316

601,938

$13,817 63,709

681.519 759.045

4,081

4,081

681,519

63,709 9.736

754,964

GOVERNMENTAL ACTIVITIES

2009 2008

$34,356

1.719.374 1,753,730

15,765

15,765

1,719,374

18,591 1,737,965

$17,013

1,044.185 1,061,198

14,639

14,639

1,044,185

2,374 1,046,559

BUSINESS-TYPE ACTIVITIES

2009 2008

$73,150

2,252,773 2.325,923

42,318

42,318

2,252,773

56,223 30,907

2.339,903

2009

$30,830 $63,709

1,725.704 1,820.243

18,720

18.720

1,725,704

63,709 12,110

1.801,523

TOTAL

2008

$8,692 16,230

650,586

7,074 10,979 2,503

10,441 61

4,291 (738,220)

$18,654 35,000 169,942

6,812 11,642 2,777 1,713 7,110 188

7,198 52,698

(2,883)

$188,824 19,900

$172,706

47

738.220

60

(52,698)

$197,516 36,130 650,586

7,074 10,979 2,503

0 10,441

108 4,291

(27,363) 310.851

125,663 152,645

946,991 120,068

255,584 125,663

(153,026) 754,964

158,206 596.758

231,471

919,628

125,663 255.584

$191,360 35,000 169,942

6,812 11,642 2,777

7,110 248

7,198

(2M3)

429,206

152,645

255,584 691,407

1.046,558

231,471 381.247 (111,403) 1,157,962

538,381 1,801,522

384,116

$601,938 $754.964 $1.737,965 $1,046.559 $2.339,903

46,803 1,754,720 ;i,801.523


The Town's total revenues increased $487,539 in 2009 primarily due to a $480,644 increase in grant revenue. Total expenses decreased $2,859 in 2009.

Governmental Funds

The revenue from govemmental activities increased S457,615 from govemmental revenues of the prior year due to an increase in grant revenue in 2009. Transfers out increased $790,918 due to the completion of the water system improvements. Expenses from govemmental activities decreased $26,982 mainly from a decrease in debt service resulting from paying off a capital lease obligation in the prior year.

Business-Type Activities

Water and sewer fees of the Water Enterprise Fund and Sewer Enterprise Fund increased $16,118 from the prior year. The increase was due to a rate increase that went into effect in November 2008. Expenses increased $24,113 from prior year amounts due to an increase in depreciation expense for the new water system irtq^rovements and an increase in repairs expense.

OVERALL FINANCIAL POSITION

The Town's net assets increased $538,381 as a result of this year's operations. Unrestricted net assets (those assets available to finance the daily operations of the Town) were $30,907 at year end. The amount invested in capital assets, net of related debt was $2,252,773 at year end and net assets restricted by grantor were $56,223.

TOWN'S FUNDS

At the end of the year, the Town's General Fund reported an unreserved flind balance of $12,241. The decrease in total fund balance for 2009 was $4,906 primarily due to an decrease in grant revenues. The Water and Sewer Enterprise Fund reported unrestricted net assets of $18,591 at year end. The increase in net assets was $691,407 for 2009 due to the completion of the water system improvements. The Sewer Enterprise Fund was combined with the Water Enterprise Fund during the year.

GENERAL FUND BUDGETARY HIGHLIGHTS

At year end, actual revenues and other financing sources were $15,822 more than budgeted revenues and other financing sources. Actual General Fund expenditures were $20,728 more than budgeted expenditures. There was one budget amendment during the year. The Town prepares its General Fund budget on the modified accrual basis of accounting.


CAPITAL ASSETS

At the end of the year, the Town had capital assets (net of accumulated depreciation) totaling $2,252,773. Capital assets include the water and sewer systems and improvements, street improvements, land, buildings, and equipment and vehicles, costing $500 or more. The Town's additions during the year were the purchase of a vehicle in the General Fund for $ 19,857 and the completion of the constmction project for improvements to the Town's water system. Additional information about the Town's capital assets is presented in Note 5 to the financial statements.

ECONOMIC FACTORS AND NEXT YEAR'S BUDGET

The Town prepared its 2010 General Fund budget on the assunption that revenues and expenditures will remain fairly constant next year except the Town expects an increase in state grant revenue. The Town plans to complete the street repair project that will be paid from FEMA grant fiinds reported as restricted cash at June 30, 2009. The Town anticipates an increase in revenues for the Water and Sewer Enterprise Fund resulting from a flill year of the rate increase that went into effect during the year ended June 30, 2009. Expenses of the Water and Sewer Enterprise Fund are expected to remain fairly constant except for an increase in depreciation expense resulting from depreciating the new water system inprovements for a fiill year.

BASIC FINANCIAL STATEMENTS

10-


STATEMENT OF NET ASSETS June 30, 2009

Statement A

GOVERNMENTAL BUSINESS-TYPE ACTIVITIES ACTIVITIES TOTAL

ASSETS Cash Receivables Restricted cash Capital assets (net)

TOTAL ASSETS

LIABILITIES Accounts payable Payroll taxes payable Customer deposits

TOTAL LIABILITIES

NET ASSETS Invested in capital assets, net of related debt Restricted by grantor Unrestricted

TOTAL NET ASSETS

$15,924 22,945 56,223

533,399

628,491

26,369 184

26,553

533,399 56,223 12,316

$601,938

$15,026 19,330

1,719,374

1,753,730

5,188 697

9,880

15,765

1,719,374

18,591

$1,737,965

$30,950 42,275 56,223

2,252,773

2,382,221

31,557 881

9,880

42,318

2,252,773 56,223 30,907

$2,339,903

The accompanying notes are an integral part of this statement.

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Statement C


BALANCE SHEET - GOVERNMENTAL FUNDS June 30, 2009

ASSETS Cash Receivable Restricted cash

TOTAL ASSETS

LIABILITIES AND FUND BALANCES Liabilities:

Accounts payable Payroll taxes payable

Total liabilities Fund balance:

Reserved by grantor Unreserved

Total fiind balances

TOTAL LIABILITIES AND FUND BALANCES

GENERAL FUND

$15,849 22,945 56,223

$95,017

$26,369 184

$26,553

56,223 12,241 68,464

$95,017

LCDBG CAPITAL

PROJECTS FUND

$75

$75

$75 75

$75

TOTAL

$15,924 22,945 56,223

$95,092

$26,369 184

26,553

56,223 12,316 68,539

$95,092

Reconciliation of the Balance Sheet of Governmental Fund To the Statement of Net Assets:

Total Fund balance - Govemmental Funds Amount reported for net assets of govemmental activities

in the Statement of Net Assets (Statement A) is different because: Capital assets used in govemmental activities are not

financial resources and therefore are not reported in the fimd

Net assets of govemmental activities (Statement A)

$68,539

533,399 $601,938


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Statement D TOWN OF CLARKS

Clarks, Louisiana

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS

For the Year Ended June 30, 2009

REVENUES Taxes:

Property Sales Franchise

Occupational licenses Intergovemmental revenues:

Federal grants Traffic fines Mowing fees Use of money and property:

Interest earnings Rent

Other revenues Total revenues

EXPENDITURES General government - current:

Personal services and related benefits Operating services Materials and supplies

Capital outlay Total expenditures

EXCESS (Deficiency) OF REVENUES OVER EXPENDITURES

OTHER FINANCING SOURCES Transfers (net) NET CHANGE IN FUND BALANCE FUND BALANCE AT BEGINNING OF YEAR (Restated) FUND BALANCE AT END OF YEAR

GENERAL FUND

$7,074 2,503

10,979 10,441

16,230 2,300 2,666

61 2,628 5,391

60,273

15,354 58,034 20,683 19,857

113,928

LCDBG CAPITAL

PROJECTS FUND

$650,586

650,586

650,586 650,586

TOTAL

$7,074 2,503

10,979 10,441

666,816 2,300 2,666

61 2,628 5,391

710,859

15,354 58,034 20,683

670,443 764,514

(53,655) NONE (53,655)

48,749 (4,906) 73,370

$68,464

NONE 75

$75

48,749 (4,906) 73,445

S68.539

(Continued) The accorr^anying notes are an integral part of this statement.

15-

Statement D TOWN OF CLARKS Clarks, Louisiana STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS For the Year Ended June 30, 2009

Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balance of Governmental Funds to the Statement of Activities:

Net change in hand balances - Total Govemmental Funds ($4,906) Amount reported for govemmental activities in the

Statement of Activities (Statement B) is different because: Govemmental fionds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated usefiil lives as depreciation expense. This is the amount by which capital outlay exceeded depreciation expense in the current period. 638,849

Construction in progress accounted for in govemmental activities was completed and transferred to business-type activities (786,969)

Change in net assets of governmental activities (Statement B) ($153,026)

(Concluded)


-16-

Statement E


STATEMENT OF NET ASSETS - BUSINESS-TYPE ACTIVITIES June 30, 2009

ASSETS Current assets:

Cash Accounts receivable

Total current assets Noncurrent assets:

Capital assets (net of accumulated depreciation) Total assets

LIABILITIES Current liabilities:

Accounts payable Payroll taxes payable Customer deposits

Total liabilities

NET ASSETS (Deficit) Invested in capital assets Unrestricted

Total net assets

Water and Sewer Fund

$15,026 19,330 34,356

1,719,374 1,753,730

5,188 697

9,880 15,765

1,719,374 18,591

$1,737,965


17-


STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS - BUSINESS-TYPE ACTIVITIES


Statement F

OPERATING REVENUES Service fees

OPERATING EXPENSES Salaries and payroll taxes Contract labor Utihties Telephone Materials and supplies Fees Ofhce expense Postage Repairs Sales tax Miscellaneous Depreciation

Total operating expenses

OPERATING INCOME (Loss)

NON-OPERATING REVENUE (Expenses) Interest income State grant Operating transfers in (out)

Total non-operating revenues (expenses)

CHANGE IN NET ASSETS

NET ASSETS - BEGINNING (Restated)

NET ASSETS - ENDING

..Enterprise Water Fund

$185,906

18,799 32,397 29,662

315 18,768 3,670

729 1,137

23,460 990

6,706 111,781 248,414

(62,508)

47 19,900

1,334,404 1,354,351

1,291,843

446,122

$1,737,965

; Funds.. Sewer Fund

$2,918

2,500 3,354

874

32

410

7,170

(4,252)

(596,184) (596,184)

(600,436)

600,436

NONE

Total Enterprise

Funds

$188,824

18,799 34,897 33,016

19,642 3,670

729 1,169

23,460 990

7,116 111,781 255,584

(66,760)

47 19,900

738,220 758,167

691,407

1,046,558

$1,737,965


-18-

Statement G TOWN OF CLARKS

Clarks, Louisiana

STATEMENT OF CASH FLOWS - BUSINESS-TYPE ACTIVITIES For the Year Ended June 30, 2009

CASH FLOWS FROM OPERATING ACTIVITIES Receipts firom customers Payments to suppbers Payments to employees

Net cash provided (used) by. operating activities

CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES

Operating transfers in (out)

CASH FLOWS FROM INVESTING ACTIVITIES

Interest income NET INCREASE (Decrease) IN CASH CASH AT BEGINNING OF YEAR CASH AT END OF YEAR

..Enterprise Funds.. Water Sewer Fund Fund

$177,449 (114,271)

(17,297) 45,881

(31,026)

47_ 14,902

124

$5,920 (8,173)

(77) 77

Total Enterprise

Funds

$183,369 (122,444)

(17,297) (2,253) 43,628

2,176 (28,850)

47 14,825

201 'K 15.026 NONE 5; IS,026

Reconciliation of Operating Income (Loss) to Net Cash Provided by Operating Activities

Operating Income (Loss) Adjustments:

Depreciation (Increase) decrease in accounts receivable Decrease in accounts and taxes payable Increase in customer meter deposits

Total adjustments Net cash provided by operating activities

($62,508) ($4,252) ($66,760)

111,781

(5,519)

(150)

2,277

108,389

3,000 (1,001)

1,999

111,781

(2,519)

(1,151)

2,277

110,388

$45,881 ($2,253) $43,628


19-


Notes to the Financial Statements As of and for the Year Ended June 30, 2009

INTRODUCTION

The Town of Clarks is governed by the mayor-board of aldermen form of government. The aldermen receive a $50 per diem for attending each regular and special meeting. The town provides public safety, pubhc works, and general government services to its residents. The town has a full-time clerk and an elected Chief ofPohce.

GASB Statement No. 14, The Reporting Entity, established criteria for determining the govemmental reporting entity and component units that should be included within the reporting entity. Under provisions of this Statement, the Town of Clarks is considered a primary government, since it is a special purpose government that has a separately elected governing body, is legally separate, and is fiscally independent of other state and local governments. As used in GASB Statement No. 14, fiscally independent means that the municipahty may, without the approval or consent of another govemmental entity, determine or modify its own budget, levy its own taxes or set rates or charges, and issue bonded debt. The town has no component units.

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Government-Wide and Fund Financial Statements

The govermnent-wide financial statements (i.e., the statement of net assets and the statement of activities) report information on all of the activities of the Town of Clarks. Govenmiental activities, which normally are supported by taxes and intergovemmental revenues, are reported separately fi-om business-type activities, which rely to a significant extent on fees and charges for support.

The statement of activities demonstrates the degree to which the direct expenses of a given fimction or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific fimction or segment. Program revenues inchide 1) charges to customers or appUcants who purchase, use, or directly benefit fi-om goods, services, or privileges provided by a given fimction or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues.

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TOWN OF CLARKS Notes to the Financial Statements

Separate financial statements are provided for govemmental fimds and business-type activities fiands. All individual govemmental fiands and individual enterprise funds are reported as separate columns in the fund financial statements.

B. Measurement Focus, Basis of Accounting, and Financial Statement Presentation

The govemment-wide financial statements are reported using the economic resources measurement focus and the accmal basis of accounting, as are the business-type fiind financial statements. Revenues are recorded when eamed and expenses are recorded when a Uability is incurred, regardless of the timing of related cash flows. Grants and similar items are recognized as revenue as soon as all ehgibility requirements imposed by the provider have been met.

Govemmental fijnd financial statements 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 liabilities of the current period. For this purpose, revenues are considered to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a habihty is incurred, as under accmal accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgements, are recorded only when payment is due.

Property taxes, sales taxes, fi^anchise taxes, and charges for services associated with the current fiscal period are all considered to be susceptible to accmal and so have been recognized as revenues of the current fiscal period. All other revenue items are considered to be measurable and available only when cash is received by the town.

The TowTi of Clarks reports the following govemmental fimds:

General Fund

The General fimd is the general operating fiind of the town and accounts for all financial resources of the general government.

LCDBG Capital Projects Fund

The LCDBG Fund is used to account for a grant fi*om the United States Department of Housing and Urban

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Development, Division of Administration for the improvement of the town's water system.

The Town of Clarks reports the following business-type activity fimds:

Water Enterprise Fund

The Water Enterprise Fund accounts for the operations of the town's water system.

Sewer Enterprise Fund

The Sewer Enterprise Fund accounts for the operations of the town's sewer system. During the year ended June 30, 2009, the Sewer Enterprise Fund was combined with the Water Enterprise Fund.

Private-sector standards of accounting and financial reporting issued prior to December 1,1989, generally are followed in the govemment-wide and business-type activities fimd financial statements to the extent that those standards do not conflict with or contradict guidance of the Govemmental Accounting Standards Board. Governments also have the option of following subsequent private-sector guidance for their business-type activities and enterprise fiinds, subject to the same limitation. The town has elected not to follow subsequent private-sector guidance.

As a general mle, the effect of interfimd activity is eliminated from the govemment-wide financial statements.

Amounts reported as program revenues include charges to customers for goods, services, or privileges provided and operating grants. General revenues include all taxes, occupational hcenses, interest, and other miscellaneous revenue.

Business-type activities fiinds distinguish operating revenues and expenses firom nonoperating items. Operating revenues and expenses generally result fi"om providing services and producing and delivering goods in connection with the fiind's ongoing operations. The Water Enterprise Fund and Sewer Enterprise Fund's operating revenues consist of charges for water and sewer sales. Operating expenses for enterprise flmds include the cost of services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting these definitions are reported as nonoperating revenues and expenses.

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C. Deposits

The town's cash consists of interest-bearing demand deposits. State law allows the town to invest in collateralized certificates of deposits, government-backed securities, commercial paper, the state sponsored investment pool, and mutual fiands consisting solely of government-backed securities.

D. Receivables

Trade receivables are generally shown net of an allowance for uncollectible amounts. The town is of the opinion that an allowance for uncollectible accounts would be immaterial to the financial statements.

Property taxes are levied on a calendar year basis and become due on January I of each year. For the year ended June 30, 2009, the towTi levied 6.23 mills on property with a taxable value of $1,161,098 for operations of the General Fund.

The town receives a pro-rata share of a one-fourth of one percent parishwide (excluding the Town of Columbia) sales tax approved by the voters in Caldwell Parish on October 19,1985 for fire protection in the parish. The sales tax is collected by the pohce jury and remitted to the town net of its pro-rata share of the cost of collection.

E. Capital Assets

Capital assets, which include land, buildings, street inprovements, the water and sewer systems and improvements, and vehicles and equipment are reported in the apphcable govemmental or business-type activities columns in the govemment-wide financial statements. Capital assets are capitahzed at historical cost or estimated cost if historical cost is not available. Approximately 98 percent of the town's capital assets have been capitalized at cost and the remaining 2 percent have been capitalized at estimated cost based on the historical cost of similar assets. The Town of Clarks maintains a threshold level of $500 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 the asset's hfe are not capitalized.

All capital assets, other than land are depreciated using the straight-line method over the following usefial lives:

Estimated Lives

Infrastmcture - water and sewer system and improvements 25 years Infrastructure - street improvements 40 years

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Buildings 25 years Vehicles and equipment 5-15 years

F. Fund Equity

In the fund financial statements, govenmiental fimds report reservations of fimd balance for amounts that are not available for appropriation or are legally restricted by outside parties for a specific purpose. Designations of fiind balance represent tentative management plans that are subject to change.

G. Restricted Assets

Cash in the amount of $56,223 that was received under a federal grant program and restricted for street repairs is reported as restricted cash with a corresponding restriction of net assets.

H. Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts of assets and habihties, disclosures, and revenues, expenditures, and expenses during the reporting period. Actual results could differ from those estimates.

STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY

A. Budget Information

The Town of Clarks uses the following budget practices:

A proposed budget for the General Fund, prepared on the modified accmal basis of accounting, is presented to the board of aldermen in June. The budget is legally adopted by the board of aldermen at a board meeting and amended during the year as necessary. Budgets are established and controlled by the board at the object level of expenditure. Appropriations lapse at year-end and must be reappropriated for the following year to be expended. The budgetary comparison schedule included as supplemental information in the accompanying financial statements includes the original budget amounts and all subsequent budget amendments during the year.

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B. Excess of Expenditures Over Appropriations

The following individual fund had actual expenditures over budgeted appropriations for the year ended June 30, 2009:

Original Budget

Final Budget Actual

General Fund $148,900 $93,200 $113,928

Unfavorable Variance

$20,728

DEPOSITS IN FINANCIAL INSTITUTIONS

At June 30, 2009, the town has cash (book balances) as follows:

Checking accounts $87,173

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 market value of the pledged securities plus the federal deposit insurance must at all times equal the amount on deposit with the fiscal agent. These deposits are secured from risk by federal deposit insurance.

4. RECEIVABLES

The following is a summary of receivables at June 30, 2009:

Sales taxes Franchise taxes State grant Accounts Other

Allowance for doubtful accounts

Total

CAPITAL ASSETS

Capital assets and depreciation activity as of and for the year ended June 30, 2009, is as follows:

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General Fund

$201 1,549

19,900

1,295 NONE

$22,945

Water and Sewer

Enterprise Fund

$19,330

NONE

$19,330

Total

$201 1,549

19,900 19,330

1,295

$42,275


Govemmental activities: Capital assets not being

depreciated: Land Constmction in progress

Total capital assets not being depreciated:

Capital assets being depreciated: Buildings Street improvements Vehicles and equipment

Total capital assets being depreciated

Less accumulated depreciation for:

Buildings Street improvements Vehicles and equipment

Total accumulated depreciation

Total assets being depreciated, net

Business-type activities: Capital assets not being

depreciated: Land

Capital assets being depreciated: Water system and

improvements Sewer system and

improvements Equipment

Total capital assets being depreciated

Balance at Julyl, 2008

$1,700 136,384

$138,084

$61,000 338,007 287,992

686,999

16,775 8,451

118,339

143,565

$543,434

$1,500

$1,093,199

1,479,988 20,738

2,593,925

Increases

$650,585

$650,585

$19,857

19,857

1,525 1,408

28,659

31,592

($11,735)

NONE

$786,969

786,969

Decreases

(786,969)

($786,969)

NONE

NONE

NONE

NONE

NONE

Balance at June 30,

2009

$1,700

$1,700

$61,000 338,007 307,849

706,856

18,300 9,859

146,998

175,157

$531,699

$1,500

$1,880,168

1,479,988 20,738

3,380,894

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Less accumulated depreciation for: Water system and

improvements Sewer system and

improvements Equipment

Total accumulated depreciation

Total capital assets being depreciated, net

Balance at Julyl, 2008

$655,692

885,602 9,945

1,551,239

$1,042,686

Increases

$50,774

59,200 1,807

111,781

$675,188

Decreases

NONE

NONE

Balance at June 30,

2009

$706,466

944,802 11,752

1,663,020

$1,717,874

Depreciation expense of $31,592 for the year ended June 30, 2009 was charged to the general government govemmental fimction and $ 111,781 was charged to the water and sewer service business-type activities fimction.

6. INTERFUND TRANSFERS

The following is a summary of interfund transfers during the year ended June 30, 2009:

Transfer Transfer In Out

General Fund Water Enterprise Fund Sewer Enterprise Fund

Total

$50,968 598,403

2,219

$2,219 50,968

598,403

$651,590 $651,590

The transfers were made to pay operating expenses of the various funds and to combine the Sewer Enterprise Fund with the Water Enterprise Fund.

7. RESERVED FUND BALANCE

At June 30, 2009, the General Fund reported $56,223 in reserved fimd balance. This amount is FEMA grant fiinds that are reserved for street repairs.

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8. RESTATEMENT OF NET ASSETS

Beginning net assets for govemmental activities and beginning fund balance for the General Fund are restated in the accompanying financial statements as follows:

Net Assets/Fund Balance at June 30, 2008 as previously

reported Accounts receivable

understated Cash balances understated Customer meter deposits

overstated Net Assets/Fund Balance at June 30, 2008, restated

Govemmental Activities

$752,574

2,132 258

,<i;7S4 964

General Fund

$70,980

2,132 258

• 7^ ^70

Business-Type

Activities

$1,039,855

3,489

3,214

%] 046 558

Water and Sewer

Enterprise Fund

$439,419

3,489

3,214

, 4 4 . 1 . 2

9. RISK MANAGEMENT AND CONTINGENT LIABILITIES

The town purchases commercial insurance to reduce the risk of loss resulting from property damage or Habihty claims. There have been no significant reductions in insurance coverage from coverage in the prior year. Settlements have not exceeded insurance coverage in any of the past three fiscal years.

The town is involved in two lawsuits at June 30, 2009. Resolution of this lawsuit is not expected to result in any hability in excess of insurance coverage, therefore, no provision for any habihty is recorded in the accompanying financial statements.

During the year ended June 30,2009, the town received $650,586 in grant revenues from the United States Department of Housing and Urban Development, Division of Administration for the improvement of the town's water system. Costs charged to the grant program are subject to audit and adjustment by the grantor agencies; therefore, to the extent that the town has not comphed with the mles and regulations governing the grant, reflmds of any money received may be required. In the opinion of the town management, there are no significant contingent Habihties relating to comphance with the mles and regulations governing the grant; therefore, no provision has been recorded in the accompanying financial statements for such contingencies.

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REQUIRED SUPPLEMENTAL INFORMATION

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Schedule 1 TOWN OF CLARKS

Clarks, Louisiana

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL

GENERAL FUND For the Year Ended June 30. 2009

REVENUES Taxes:

Property Sales Franchise

Occupational licenses Intergovemmental revenue Traffic fines Mowing fees Rent

Investment earnings Other revenue

Total revenues

EXPENDITURES General government:

Personal services Operating services Materials and supplies Capital outlay

Total expenditures

EXCESS (Deficiency) OF REVENUES OVER EXPENDITURES

OTHER FINANCING SOURCES

Transfers (net)

NET CHANGE IN FUND BALANCE

FUND BALANCE AT BEGINNING OF YEAR FUND BALANCE AT END OF YEAR

Budgeted Amounts

Original

$7,000 2,500 7,500 7,500

5,000 1,700 6,000

250 28,500 65,950

22,000 84,100 37,800

5,000 148,900

Final

$6,800 950

12,700 200

14,735 3,800 1,475 2,100

30 8,925

51,715

12,000 45,000 14,200 22,000 93,200

Amoimts (Budgetary

Basis -GAAP)

$7,074 2,503

10,979 10,441 16,230 2,300 2,666 2,628

61 5,391

60,273

15,354 58,034 20,683 19,857

113,928

Variance with Final Budget

Positive (Negative)

$274 1,553

(1,721) 10,241

1,495 (1,500) 1,191

528 31

(3,534) 8,558

(3,354) (13,034)

(6,483) 2,143

(20,728)

(82,950) (41,485)

85,000 41,485

2,050

25,000

$27,050

NONE

70,980

$70,980

(53,655)

48,749

(4,906)

73,370

$68,464

(12,170)

7,264

(4,906)

2,390

($2,516)

There was one budget amendment during the year.

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OTHER SUPPLEMENTAL INFORMATION SCHEDULES

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OTHER SUPPLEMENTAL INFORMATION SCHEDULES As of and For the Year Ended June 30, 2009

COMPENSATION PAID ALDERMEN

The schedule of per diem paid aldermen is presented in compliance with House Concurrent Resolution No. 54 of the 1979 Session of the Louisiana Legislature. Compensation of the aldermen is included in the general government personal services expenditures of the General Fund. Aldermen receive a per diem of $50 for attending each regular meeting.

STATUS OF PRIOR YEAR FINDINGS

The follow-up and corrective action taken on all prior year findings is presented in Schedule 3.

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

The information in this schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations.

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Schedule 2

TOWN OF CLARJCS Clarks, Louisiana

SCHEDULE OF PER DIEM PAID ALDERMEN For the Year Ended June 30, 2009

Buddy Carter $600 Fred Grant 600 PhylUs Hohnes 600 Bonnie Hurst 600 James King 600

Total $3,000

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Clarks, Louisiana

STATUS OF PRIOR YEAR FINDINGS For the Year Ended June 30, 2009

Reference Number

Procedure 7

Procedure 8b

Procedure 8c

Fiscal Year

Finding Initially

Occurred

2003

2008

2008

Description of Finding

Noncomphance with Local Government Budget Act

Disbursements not properly posted to general ledger.

Disbursements not properly approved.

Corrective Action Taken

Partial

No

No

Planned Corrective

Action

See current year findings 2009-6.

See current year finding 2009-4.

See current year finding 2009-4.

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Clarks, Louisiana

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the Year Ended June 30, 2009

Federal Grantor/Program Title

Federal CFDA Federal

Number Expenditures

U.S. Department of Housing and Urban Development: Passed through Louisiana Office of Community Development:

Community Development Block Grant

Department of Homeland Security: Passed through Louisiana Govemor's Office of Homeland Security and

Emergency Preparedness: Disaster Grant

Total

Note to the Schedule of Expenditures of Federal Awards

Note A - Basis of Presentation

14.228 $650,586

97.036 16,230

$666,816

The above schedule of expenditures of federal awards includes the federal grant activity of the Town of Clarks for the year ended June 30,2009 and is presented on the accmal basis of accounting. The information in this schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements.

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Independent Auditor's Reports Required by Government Auditing Standards and OMB

Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations

The following independent auditor's reports on intemal control over financial reporting and comphance and on comphance with laws, regulations, contracts, and grant agreements and other matters are presented in comphance with the requirements of Government Auditing Standards, issued by the Comptroller General of the United States and the Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations.

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M CARLEEN DUMAS Certified Public Accountant


Independent Auditor's Report on Intemal Control Over Financial Reporting and on

Compliance and Other Matters Based on an Audit of Financial Statements

Performed in Accordance with Government Auditing Standards

MAYOR AND BOARD OF ALDERMEN TOWN OF CLARKS Clarks, Louisiana

1 have audited the financial statements of the govemmental activities, the business-type activities and major fund of the Town of Clarks, as of and for the year ended June 30, 2009, which collectively comprise the Tovra of Clarks' basic financial statements and have issued my report thereon dated November 21, 2009. I conducted my audit in accordance with auditing standards generally accepted in the United States of America; the standards apphcable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the Louisiana Govemmental Audit Guide, issued by the Society of Louisiana Certified Pubhc Accountants and the Louisiana Legislative Auditor.

Intemal Control Over Financial Reporting In planning and performing my audit, I considered the Town of Clarks' intemal control over financial reporting as a basis for designing my auditing procedures for the purpose of expressing my opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Tovm of Clarks' intemal control over financial reporting. Accordingly, I do not express an opinion on the effectiveness of the Town's intemal control over financial reporting.

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

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 fimctions, 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 Town's abihty to initiate, authorize, record, process, or report financial data


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MAYOR AND BOARD OF ALDERMEN TOWN OF CLARKS Clarks, Louisiana Independent Auditor's Report

on Comphance and on Intemal Control, etc., June 30, 2009

rehably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the Town's financial statements that is more than inconsequential will not be prevented or detected by the Town's intemal control. I consider the deficiencies described in the accompanying schedule of current year findings and management's corrective action plan as 2009-1,2009-2, 2009-3, 2009-4, and 2009-5 to be significant deficiencies in intemal control over financial reporting.

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

My consideration of the intemal 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. However, of the significant deficiencies described above, I consider all to be material weaknesses.

Compliance and Other Matters As part of obtaining reasonable assurance about whether the Town of Clarks' financial statements are free of material misstatement, I performed tests of the Town's comphance 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 comphance with those provisions was not an objective of my audit and, accordingly, I do not express such an opinion. The resuhs of my tests disclosed instances of noncongjhance or other matters that are required to be reported under Government Auditing Standards and which are described in the accompanymg schedule of current year findings and management's corrective action plan as 2009-6, 2009-7, 2009-8, and 2009-9.

The Town of Clarks' responses to the findings identified in my audit are described in the accompanying schedule of current year findings and management's planned corrective action. I did not audit the Town's responses and, accordingly, I express no opinion on them.

This report is intended solely for the information of the mayor, board of aldermen and management of the Town of Clarks and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.

/s Carleen Dumas Calhoun, Louisiana November 21, 2009

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M. CARLEEN DUMAS Certified Public Accountant


Independent Auditor 's Report on Compliance With Requirements Applicable to Each Major Program

and on Internal Control Over Compliance in Accordance with O M B Circular A-133

MAYOR AND BOARD OF ALDERMEN TOWN OF CLAIUCS Clarks, Louisiana

Compliance I have audited the comphance of the Town of Clarks, with the types of comphance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-J 33 Compliance Supplement, that are apphcable to its major federal program for the year ended June 30,2009. The Town of Clarks' major federal program is identified in the summary of auditor's resuhs section of the accompanying schedule of findings and questioned costs. Comphance with the requirements of laws, regulations, contracts, and grants apphcable to its major federal program is the responsibility of the management of the Town of Clarks. My responsibihty is to express an opinion on Town's comphance based on my audit.

I conducted my audit of corrphance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that I plan and perform the audit to obtain reasonable assurance about whether noncomphance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit mcludes examining, on a test basis, evidence about the Town of Clarks' compliance with those requirements and performing such other procedures as I considered necessary in the circumstances. I beheve that my audit provides a reasonable basis for my opmion. My audit does not provide a legal determination of Town's comphance with those requirements.

In my opinion, the Town of Clarks comphed, in aU material respects, with the requirements referred to above that are apphcable to its major federal program for the year ended June 30, 2009.

I n t ema l Control Over Comphance The management of the Town of Clarks, is responsible for establishing and maintaining effective intemal control over comphance with the requfrements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing my audit, I considered the Town's internal control over comphance with requfrements that could have a dfrect and material effect on a major federal program in order to determine my auditing procedures for the purpose of expressing my ophiion on compliance, but not


•39-

MAYOR AND BOARD OF ALDERMEN TOWN OF CLARKS Clarks, Louisiana Independent Auditor's Report on

Comphance With Requfrements Apphcable to Each Major Program, etc., June 30, 2009

for the purpose of expressuig an opinion on the effectiveness of intemal control over comphance. Accordingly, I do not express an opinion on the effectiveness of the Town's intemal control over comphance.

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 performing thefr assigned functions, to prevent or detect noncon^ihance with a type of comphance requfrement 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 abihty to administer a federal program such that there is more than a remote likehhood that noncomphance with a type of comphance requfrement of a federal program that is more than inconsequential will not be prevented or detected by the entity's mtemal control.

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

My consideration of mtemal control over comphance was for the limited purpose described ui first paragraph of this section and would not necessarily identify aU deficiencies m the intemal control that might be significant deficiencies or material weaknesses as defined above. I did not identify any deficiencies in intemal control over comphance that I consider to be material weaknesses, as defined above.

This report is mtended solely for the mformation of the mayor, board of aldermen and management of the Town of Clarks and federal awarding agencies and pass-through entities and is not fritended to be and should not be used by anyone other than these specified parties.

/s Carleen Dumas Calhoun, Louisiana November 21,2009

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SCHEDULE OF CURRENT YEAR FINDINGS WITH MANAGEMENT'S PLANNED CORRECTIVE ACTION


Summary of Auditor's Results

1. The auditor's report expresses an unqualified ophiion of the financial statements of the Town of Clarks.

2. Five control deficiencies disclosed during the audit of the financial statements are reported in the Independent Auditor's Report on Intemal Control Over Financial Reporting and on Con:^)hance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards. These conditions are considered material weaknesses.

3. Four mstances of noncompliance material to the fmancial statements of the Town of Clarks were disclosed during the audit.

4. No control deficiencies m intemal control over major federal award programs are reported m the Independent Auditor's Report on Comphance With Requfrements Applicable to Each Major Program and on Intemal Control Over Comphance m Accordance with OMB Cfrcular A-133.

5. The auditor's report on compliance for the major federal award progranis for the Town of Clarks expresses an unqualified opinion on the major federal program.

6. No audit findings that are requfred to be reported in accordance with Section 510(a) of OMB Cfrcular A-133 are reported hi this schedule.

7. The program tested as a major program was U.S. Department of Housing and Urban Development, Community Development Block Grant (CFDA #14.228).

8. The threshold for distinguishing Type A and B programs was $300,000.

9. The Town of Clarks was not determined to be a low-risk auditee.

Financial Statement Findings

2009-1. Inadequate Segregation of Accounting Duties

Criteria: Proper intemal controls requfre that accounting duties be performed by separate individuals so that one individual could not perpetrate and conceal errors or irregularities without them bemg detected by another individual who was performing his or her assigned duties.

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MAYOR AND BOARD OF ALDERMEN TOWN OF CLARKS Clarks, Louisiana Schedule of Current Year Findings and

Management's Planned Corrective Action June 30, 2009

Condition: There is an inadequate segregation of duties over receivmg, posting, and depositing cash receipts. One person is responsible for all of the above duties.

Effect: Errors or frregularities may not be detected within a tunely period.

Recommendation: None

Management's Planned Corrective Action : In October 2009, the Town hfred a utihty clerk. Some of the

accounting duties will be divided among the utihty clerk and the town clerk.

2009-2. Inadequate Controls Over the Preparation of Financial Statements

Criteria: Management is requfred to prepare financial statements in accordance with generally accepted accounting principles and should have intemal controls in place to prevent, detect, or correct a misstatement of those financial statements.

Condition: Accounting personnel do not have the expertise to prepare financial statements and disclosures in accordance with generally accepted accounting principles.

Effect: Misstatements in the financial statements may occur and not be detected within a timely period.

Recommendation: I recommend that management make a determination as to whether or not the cost of correcting the deficiency concerning the expertise of accounting personnel exceeds the expected benefits to be derived from douig so.

Management's Planned Corrective Action: It is not economically feasible to correct this deficiency based on the

size of the Town and its limited revenues.

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MAYOR AND BOARD OF ALDERMEN TOWN OF CLARKS Clarks, Louisiana Schedule of Current Year Fmdings and


2009-3. Inadequate Controls Over Accounting for Cash Receipts

Criteria: Management is responsible for estabhshing mtemal control pohcies and procedures that provide reasonable assurance that assets are safeguarded against loss resuhing from unauthorized use and that transactions are executed in accordance with management's authorizations.

Condition: The following deficiencies were noted in the internal controls over accounting for cash receipts:

Effect:

1. Bank deposits were not made in a tunely manner for the months of April and May 2009.

2. Bank accounts were not reconciled on a monthly basis after October 2008. 3. I selected a sanple of 25 bank deposits made in the General Fund during the

year and determined that 6 were not posted to the proper general ledger account.

4. Fees for reconnecting customers water service were deposited in the General Fund m error. Grant receipts for water well repafrs was deposited in the General Fund in error.

5. Property tax collections were not recorded on the tax roll and no list of dehnquent 2008 taxes was prepared.

6. $1,075 hi cash payments for traffic tickets could not be traced to a bank deposit. 8 traffic tickets that were issued during the year could not be accounted for.

7. $1,513 in cash payments for water and sewer fees could not be traced to a bank deposit.

8. $ 1,800 in receipts for customer meter deposits could not be traced to a bank deposit. Of this amount, $1,400 were cash payments.

The failure to maintam proper intemal controls over cash receipts resulted in maccurate accountmg records being maintamed and possible misappropriation of fimds.

Recommendation: I recommend that cash receipts be deposited in a timely manner and recorded m the proper bank account and general ledger account. All receipts pertaining to the Water and Sewer Fund should be deposited and accounted for in that bank account and fiind. All other receipts should be deposited and

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accounted for in the proper bank account of the General Fund. All bank accounts should be reconciled on a monthly basis. Property tax collection records should mclude marking accounts paid on the tax roll when paid and preparing a list of dehnquent accounts for the mayor and board of aldermen to review and determme what action, if any, to be taken. Traffic tickets should be issued in consecutive number order and ah numbers should be accounted for. The clerk should prepare a hsting of aU tickets issued and final disposition. State law requfres that the mayor notify the Legislative Auditor and the District Attorney about any possible misappropriation of pubhc funds. I recommend that such notifications be made regarding the cash receipts that could not be traced to a bank deposit.

Management's Planned Corrective Action: Bank deposits are now bemg made on a daily basis. Bank accounts

are beuig reconciled on a monthty basis. All receipts pertaming to the Water and Sewer Fund are bemg deposited and accounted for in the Water and Sewer Fund. Taxpayers are issued a receipt for all property tax payments and the payment is recorded on the tax roU. The clerk will prepare a hst of delinquent taxes after December 31, 2009. Procedures will be m^lemented to ensure that all traffic ticket numbers are accounted for. The mayor will notify the Legislative Auditor and the District Attorney concerning the cash payments that could not be traced to a bank deposit.

2009-4. Inadequate Controls Over Cash Disbursements

Criteria: Management is responsible for estabhshing internal control pohcies and procedures that provide reasonable assurance that assets are safeguarded agamst loss resulting from unauthorized use and that transactions are executed in accordance with management's authorizations.

Condition: The following deficiencies were noted in the intemal controls over accounting for cash disbursements:

1. I selected a sample of 60 disbursements and determined that 7 were not adequately supported by an invoice or other documentation, 4 of the invoices examined did not contain evidence that a purchase order was obtained prior

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to making the purchase, 5 of the uivoices were not included on list of expenses approved by the board on a monthly basis, and 11 were not properly posted to the general ledger.

2. An individual was paid $2,500 a month without a written contract or other supporting documentation.

3. Forms 941 for the P' and 2" quarter of 2009 contained errors that resulted in the overpayment of payroll taxes.

4. Expenses for a water well repafr was accounted for in the General Fund in error.

Effect: The failure to mamtain proper intemal controls over cash disbursements resuhed m maccurate accounting records being maintained and possibihty of unauthorized transactions.

Recommendation: I recommend that aU disbursements be supported by original, detailed invoices or other appropriate support. Employees should be requfred to obtain purchase orders prior to making purchases in accordance with the Town's established purchasing system. The listing of disbursements approved by the board of aldermen each month should be complete and accurate. All disbursements should be paid from the proper bank account and posted to the proper fund and general ledger account. All expenses relatmg to water and sewer system should be paid from the Water and Sewer Fund and all other expenses should be paid from the proper bank account in the General Fund. AU contract payments should be supported by a written contract specifying the terms of the agreement. Forms 941 should be completed accurately so that the correct amount of payroU taxes wiU be paid.

Management's Planned Corrective Action: All disbursements will be supported by appropriate documentation

including purchase orders, the financial statements approved by the board will be printed from Quickbooks and will include all transactions, and disbursements will be posted to the proper general ledger account. The mayor will begin initialing the invoices when signing checks. All fijture contract payments will be supported by written contracts, payroU tax reports will be accurate, and disbursements wiU be made from the proper ftind.

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2009-5. Inadequate Controls Over Water and Sewer Fund

Criteria: Management is responsible for estabhshing intemal control pohcies and procedures that provide reasonable assurance that assets are safeguarded against loss resulting from unauthorized use and that transactions are executed in accordance with management's authorizations.

Condition: The following deficiencies were noted in the intemal controls over the Water and Sewer Fund:

Effect:

1. Bilhng registers for the months of December 2008 and June 2009 contained significant errors m consumption that went undetected before bills were mailed to customers.

2. It was noted that the March and April 2009 meter readuig worksheets could not be located.

3. The customer meter deposit report includes amounts that have aheady been refunded and also includes the $40 non-refundable amount. It was noted that several customers on the June 2009 billmg register did not have a meter deposit hsted on the meter deposit report.

4. Customer meter deposits received during the year were recorded as installation fees m the accounting records rather than in the customer meter deposit habihty account.

The failure to maintain proper intemal controls over the Water and Sewer Fund resuhed in customers being billed incorrectly and inaccurate and incomplete accounting records being mamtained.

Recommendation: I recommend that consumption and billing reports be reviewed for accuracy and corrections be made before the bills are mailed to customers. I recommend that all supportmg records such as meter readmg worksheets be filed and maintained properly. The customer meter deposit report should be reviewed and purged for refunded deposits and should exclude the nonrefundable amount. The refundable portion of customer deposits should be posted to the customer meter deposit habihty account and the non-refundable portion should be posted as revenue. Refunds of customer deposits should also be posted to customer meter deposit habihty.

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MAYOR AND BOARD OF ALDERMEN TOWN OF CLARKS Clarks, Louisiana Schedule of Current Year Findmgs and


Management's Planned Corrective Action: Consumption and billing reports wUl be reviewed for accuracy before

biUs are printed. The town clerk wiU review the customer meter deposit report and purge it for refunded deposits and the non-refimdable portion paid. Receipts and refionds of refundable meter deposits wiU be posted to the customer meter deposit habihty account.

2009-6. Noncompliance with Local Government Budget Act

Criteria: Louisiana R.S. 39:1310 requfres that the VUlage adopt a budget amendment when actual expenditures exceed budgeted expenditures by 5% or more.

Condition: For the year ended June 30, 2009, actual General Fund expenditures exceeded budgeted expenditures by $20,728 or 18%.

Effect: Violation of the Local Government Budget Act

Recommendation: I recommend that the Towns's monthly financial statements mclude a comparison of actual General Fund revenues and expenditures to budgeted revenues and expenditures and that a budget amendment be adopted when actual expenditures exceed budgeted expenditures by 5% or more.

Management's Planned Corrective Action: The town clerk will post budgeted amounts to Quickbooks so that

monthly financial statements wiU include a comparison of actual revenues and expenditures to budgeted revenues and expenditures. A budget amendment will be adopted whenever actual expenditures exceed budgeted expenditures by 5% of more.

2009-7. Failure to Maintain and PubUsh Minutes of Board Meetings

Criteria: Louisiana R.S. 42:7.1 and 43:143 requfre the board of aldermen meeting minutes to be mamtained and published in the Town's official joumal.

Condition: For the year ended June 30, 2009, the Town did not maintain or publish the minutes of the board of aldermen meetings for the months of Febmary, March, and April 2009.

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MAYOR AND BOARD OF ALDERMEN TOWN OF CLARKS Clarks, Louisiana Schedule of Current Year Fmdings and


Effect: Violation of state law.

Recommendation: I recommend that the Town mamtain and pubhsh the minutes of the board of aldermen meetings in it's official joumal.

Management's Planned Corrective Action: The town clerk will maintain and pubhsh the minutes of the board of

aldermen meetings in accordance with state law.

2009-8. Failure to Assess and Remit Special Court Costs

Criteria: State law requfres that the Town assess and remit certam special court costs for violations of Town ordhiances and for certam traffic offenses to the appropriate state agency.

Condition: The Town failed to assess or remit any special court costs.

Effect: Possible violation of state law.

Recommendation: I recommend that the Town consuh with thefr legal counsel to detemune which special court costs are requfred to be assessed and then collect and remit those costs to the appropriate state agency.

Management's Planned Corrective Action: The town will consult with legal counsel to determine the special costs

to assess, coUect, and remit.

2009-9. Donation or Loan of PubUc Funds

Criteria: Article 7 Section 14 of the Louisiana Constimtion provides that the funds of the Town not be loaned and donated to any person. The Attorney General has opuied that expenditures from pubhc funds must be based on a legal obligation or duty, be for a pubhc purpose, and the expenditure must create a pubhc benefit that is proportionate to its cost.

Condition: The foUowing disbursements appear to be donations or loans of pubhc fiinds during the year ended June 30, 2009:

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MAYOR AND BOARD OF ALDERMEN TOWN OF CLARKS Clarks, Louisiana Schedule of Current Year Fmdkigs and


1. Purchased meals totaling $ 116 in June 2009. 2. Purchased Sam's Club membership for former clerk but the Town made no

purchases at Sam's Club during the entfre year. 3. Purchased clothes and shoes for inmates working in the Town for $345. 4. Purchased Christmas candy and toys totahng $ 160.

Effect: Possible violation of state law.

Recommendation: I recommend that the Town consult with thefr legal counsel or the Attomey General to determine whether any of the above expenditures are considered a donation of pubhc fiinds.

Management's Planned Corrective Action; The town wiU consuh with thefr legal counsel regardmg.the above

types of expenditures.

Section II - Federal Award Findings

None.

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town of clarks - app.lla.state.la.us · of clarks, as of june 30, 2009, and the respective changes...

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