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HOSPITAL SERVICE DISTRICT NO. 1 Parish of Vermilion State of Louisiana Kaplan, Louisiana

Financial Report

Years Ended September 30,2011 and 2010

inder provisions of state law, this report is a puoli:. c'ocument Acopy of the report has been submitted \o ihe eniity 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 ofthe parish clerk of court

Re'ease Date APR 1 8 2012

TABLE OF CONTENTS

Page No

INDEPENDENT AUDITOR'S REPORT 1 -2

MANAGEMENT'S DISCUSSION AND ANALYSIS (REQUIRED SUPPLEMENTARY INFORMATION) 3-6

BASIC FINANCIAL STATEMENTS Statements of Net Assets 7-8 Statements ofRevenues, Expenses, and Changes \n Net Assets 9 Statements of Cash Flows 10-11 Notes to Financial Statements 12-22

ADDITIONAL INFORMATION Schedules of Net Patient Service Revenue 24 Schedules of In-Patient Service Revenue 25 Schedules of Out-Patient Service Revenue 26 Schedules of Other Revenue 27 Schedules of Professional Expenses 28 Schedules of General and Administrative Expenses 29 Schedules of Nonoperating Income 30 Schedule of Commissioners, Meetings Attended and Compensation 31

INTERNAL CONTROL AND COMPLIANCE Independent Auditor's Report on Intemal Control over

Financial Reporting and on Compliance and Other Matters Based on an Audit of Fmancial Statements Performed in 33-34 Accordance with Govemment Auditing Standards

Schedule of Prior Year Findings 35 Schedule of Findings and Questioned Costs 36-37 Management's Corrective Action Plan 38

Damall, Sikes, Gardes Frederick. (A Corporation of Certifled Publtc Aonxintanu)

Eugene H Damall. CPA, Deceased 1990

E LarTySikes,CPA/PFS.CVA,CFP™ Danny P Frederick. CPA

Clayton E Damall, CPA, CVA Eugene H Damall. III. CPA

Stephanie M Higginbotham. CPA John P Armato, CPA/PFS

J Steven Gardes, CPA. CVA Jennifers Ziegler.CPA/PFS,CFP™

Chris A Miller, CPA. CVA Stephen R Dischler. MBA, CPA

Steven G Moosa,CPA M Rebecca Gardes, CPA

Pamela Mayeaux Bonm, CPA, CVA Joan B Moody, CPA

Erich G I-oewer, III. MTX, CPA. M S Tax l^urenF Hebert, CPA/PFS

Barbara Ann Watts, CPA Craig C Babineaux, CPA/PFS, CFP™

Jeremy C Meaux, CPA

INDEPENDENT AUDITOR'S REPORT

Board of Commissioners Hospital Service District No I Parish of Vermilion, State of Louisiana Kaplan, Louisiana

We have audited the accompanying financial statements of the Hospital Service District No 1, Parish of Vermilion, State of Louisiana, a component unit ofthe Vermilion Parish Police Jury, as of and for the years ended September 30, 2011 and 2010 , as listed in the table of contents These financial statements are the responsibility ofthe Hospital's management Our responsibility is to express an opinion on these financial statements based on our audits

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financiai position of the Hospital Service District No I, Parish of Vermilion, State of Louisiana, as of September 30, 2011 and 2010, and the respective changes in financial position, and cash flows, where applicable, thereof for the years then ended in conformity with accounting principles generally accepted in the United States of America

In accordance with Government Auditing Standards, we have also issued a report dated March 23, 2012, on our consideration ofthe Hospital's intemal control over financiai reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters The purpose ofthe report is to describe the scope of our testing of intemal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on intemal control over financiai reporting or on compliance That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit

Kathleen T Damall, CPA DustinB Baudin, CPA, MBA

Kevin S Young, CPA Adam J Curry, CPA

ChadM Bailey, CPA Carol C Guillory, CPA

Christy S Dew, CPA Cecelia A Hoyt,CPA

Blaine M Crochet, CPA, M S Rachel W Ashford. CPA

Veronica L LeBleu.CPA Jacob C Robene.CPA S Luke Sonnier, CPA

Kyle P Saltzman. CPA Elise B Faucheaux. CPA

2000 Koliste Ssloom Rd

Suite 300

Lifiyene. 1-A 70S08 Phone 337232J3I2 Fax 337 237 3614

1231 E Laurel Ave Eunice U70S35

Phone 337 457 4146 Fax 337 457 S060

120) BiashcarAvc Suite 301

Morgan City LA 70380 Phone 98S 384 6264 Fox 9SS 384 8140

203 S Jefferson Street Abbe\illc LA 70510 Ptione 337 893 5470 Fax 337 893 S470

Member of

Amencan Institute of Certified Public Accountants

Society of LoiusiaRa Certified Public Accountants

www dsfcpas c o m ^ ^

Accounting principles generally accepted in the United States of America require the management's discussion and analysis on pages 3 through 6 be presented to supplement the basic financiai statements Such information, although not part of the basic financiai statements, is required by the Govemmental Accounting Standards Board, who considers it to be an essential part of financiai reporting for placing the basic financiai statements in an appropriate operational, economic, or historical context We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financiai statements, and other knowledge we obtained during our audit ofthe basic financiai statements We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide assurance

Our audits were conducted for the purpose of forming an opinion on the financiai statements that collectively compnse the Hospital Service Distnct No I, Parish of Vermilion, State of Louisiana's financiai statements as a whole The accompanying information on pages 24 through 31 is presented for purposes of additional analysis and is not a required part of the basic financiai statements The information has been subjected to the auditing procedures applied in the audit ofthe financiai statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financiai statements or to the financiai statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America In our opinion, the information is fairly stated in all material respects in relation to the financiai statements as a whole The management's discussion and analysts has not been subjected to the auditing procedures applied in the audit of the basic financiai statements and, accordingly, we do not express an opinion or provide any assurance on it

A Corporation of Certified Public Accountants

Eunice, Louisiana March 23, 2012

HOSPITAL SERVICE DISTRICT NO I Parish of Vermilion State of Louisiana

MANAGEMENT'S DISCUSSION AND ANALYSIS

This section of Hospital's annual financiai report presents our discussion and analysis ofthe Hospital's financial performance dunng the fiscal year that ended on September 30, 2011 Please read it in conjunction with the Hospital's financial statements, which follow this section

FINANCIAL HIGHLIGHTS

• The Hospital's total assets increased $2 6 million dunng the course of this year's operations

• Dunng the year, the Hospital's operating revenues and non-operatmg income of $14 8 million exceeded operating expenses of $12 1 million

• The Hospital had income from operations of $366,000 dunng 2011 compared to income of $126,000 during 2010

• Nonoperating income increased $440,000 from I 9 million in 2010 to 2 3 million in 2011

• The Hospital has net assets of $23 3 million as of September 30, 2011, an increase of $2 7 million or 13% from the previous year

USING THIS ANNUAL REPORT

The Hospital's basic financiai statements consist of three statements - a statement of Net Assets, a statement of Revenues, Expenses, and Changes in Net Assets, and a statement of Cash Flows These financiai statements and related notes provide information about the activities ofthe Hospital

The Statement of Net Assets and Statement ofRevenues, Expenses, and Changes in Net Assets

Our analysis ofthe Hospital's finances begins on page 4 One ofthe most important questions asked about the Hospital's finances is, "Is the Hospital as a whole better or worse off as a result ofthe year's activities'?" The Statement of Net Assets and the Statement of Revenues, Expenses, and Changes in Net Assets report information about the Hospital's resources and its activities m a way that helps answer this question These statements include all restricted and unrestncted assets and all liabilities using the accrual basis of accounting 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 Hospital's net assets as ofthe fiscal year end and changes in net assets for the entire fiscal year You can think ofthe Hospital's net assets - the difference between assets and liabilities - as one way to measure the Hospital's financiai health, or financiai position Over time, increases or decreases in the Hospital's net assets are one indicator of whether its financiai health is improving or detenorating You will need to consider other nonfinancial factors, however, such as changes in the Hospital's patient base and measures ofthe quality of service it provides to the community, as well as local economic factors to assess the overall health of the Hospital

HOSPITAL SERVICE DISTRICT NO 1 Parish of Vermilion State of Louisiana

MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)

The Statement of Cash Flows

The final required statement is the Statement of Cash Flows The statement reports cash receipts, cash payments, and net changes in cash resulting from operations, investing, and financing activities It provides answers to such questions as "Where did cash come from*̂ ", "What was cash used for'>" and "What was the change in cash balance dunng the reporting penod"^"

FINANCIAL ANALYSIS OF THE HOSPITAL AS A WHOLE

Net assets. The Hospital's net assets increased between fiscal years 2011 and 2010 by $2 7 million

Hospital's Net Assets (in Thousands)

2011 2010

Current and other assets Capital assets

Total assets

Current liabilities Long-term debt

Total liabilities

Net assets Invested in capital assets net of related debt Unrestncted

Total net assets

$

s_

21,826 1,980

23.806

512 10 522

1,945 21,339 23.284

$

L.

19,010 2,202

21,212

613 35 648

2,144 18.420 20,564

Net assets from the Hospital's activities increased 13 percent to approximately $23.3 million A significant component ofthe change in the Hospital's net assets is the increase in certificates of deposit of $1 8 million and $598 thousand in accounts receivable

Changes m net assets. The Hospital's total revenues increased by 8 0 percent to $14 8 million Approximately 71 percent of the Hospital's total revenue comes from net patient services, while 69 percent of net patient service revenue is derived from Medicare and Medicaid patients

The total cost of all services increased approximately $401,000 or 3 4 percent which is pnmanly attnbutable to the increase in management fees and salaries



Changes in Hospital's Net Assets (in Thousands)

Operating revenues-Net patient service Rural coalition Other operating

Nonoperatmg income-Sales tax Other nonoperating

Total revenues

Expenses Salaries Medical and other supplies Contract fees Management fees Provision for bad debts Other operating

Total expenses

Increase in net assets

2011 2010

$ 10,457 3 586

1,404

1,626 728

14.801

3,652 1,428 1,048 2,073 1,747 2.133 12.081

$ 2.720 3

: 10,339 1,148 319

1,123 791

13.720

3,417 1,468 1,184 1,797 1,873 1.941 11.680

; 2.040

CAPITAL ASSET AND DEBT ADMINISTRATION

Capital Assets

At the end ofthe fiscal year, the Hospital had $2 0 million invested in capital assets

Hospital's Capital Assets (m Thousands)

Land Buildings and land improvements Equipment

Total capital assets Accumulated depreciation

Net Capital Assets

2011 2010

$

2 _

59 1,973 4.672 6,704 4,724

1,980

$

2_

59 1,960 4,318 6,337 4,135

2,202

HOSPITAL SERVICE DISTRICT NO 1 Pansh of Vermilion State of Louisiana


CONTACTING THE HOSPITAL'S FINANCIAL MANAGEMENT

This financiai report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview ofthe Hospital's finances and to demonstrate the Hospital's accountability for the money it receives If you have any questions about this report or need additional information, contact Mr Lyman Trahan, Administrator, at 1310 W 7*̂ Street, Kaplan, LA 70548, or by phone at 337-643-8300


Statements of Net Assets September 30, 2011 and 2010

ASSETS

CURRENT ASSETS Cash Certificates of deposit Accounts receivable - patients, net Sales tax receivable Other receivables Estimated third-party payor settlements Inventory Accrued interest receivable Prepaid expenses

2011 2010

$ 3,172,622 11,387,787 2,821.237 229,439 17,003

421,034 300,977 85,891 51.261

$ 3,024,316 10,490,000 2,222,854 184,397 33,840 51,831

275,842 203,570 42,234

Total current assets 18.487.251 16.528.884

ASSETS WHOSE USE IS LIMITED BY THE BOARD FOR CAPITAL IMPROVEMENTS

Cash 726,659 721,135 Certificates of deposit 2.612.885 1,759.864

3.339.544 2.480,999

PROPERTY, PLANT, AND EQUIPMENT, net Land 58,893 58,893 Depreciable assets, net accumulated depreciation 1.920.745 2,143,390

Total capital assets, net of accumulated depreciation 1.979.638 2.202.283

TOTAL ASSETS $23.806.433 $21.212.166

LIABILITIES AND NET ASSETS

2011 2010

CURRENT LIABILITIES Accounts payable Current portion of obligation under capital lease Accrued wages Accrued vacation Other payables Estimated third-party payor settlements

Total current liabilities

LONG-TERM DEBT Obligation under capital lease, net of current portion

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

Total net assets

$ 300,870 24,337 53,745 114,282 18,551

-

511,785

10,425 10,425

1,944,876 21.339.347

23.284.223

$ 280,444 23,401 28,031 120,595 69,284 91.460

613.215

34.762 34.762

2,144,120 18,420,069

20.564.189

TOTAL LIABILITIES AND NET ASSETS $23,806,433 $21,212,166

The accompanying notes are an integral part of this statement 8


Statements ofRevenues, Expenses, and Changes in Net Assets Years Ended September 30, 2011 and 2010

OPERATING REVENUE Net patient service revenue Other revenue

Total revenue

OPERATING EXPENSES Salaries Employee benefits Equipment rental Medical and other supplies Contract fees Dietary expenses Professional fees Management fees Other fees Insurance Utilities Telephone Other Depreciation Provision for bad debts

Total expenses

Income from operations

NONOPERATING INCOME

Increase in net assets

NET ASSETS Balance, beginning of year

Balance, end of year

2011 2010

$10,457,219 1.989,836

12.447,055

3,652,229 140,583 63,303

1,427,980 1,048,244

97,796 59,956

2,072,877 59,279

562,169 208,752 90,193

262,376 588,657

1,746,510 12.080.904

366,151

2.353.883

2,720,034

20,564,189

$23,284,223

$10,338,756 1.466.907

11.805.663

3.417,297 122,596 54,917

1,467,848 1,184,168

88,013 85,183

1,797,325 69,336

536,311 220,644 83,340

239,833 439,666

1.873.180 11,679,657

126,006

1.914.234

2,040,240

18.523.949

$20,564,189

The accompanying notes are an integral part of this statement

9

HOSPITAL SERVICE DISTRICT NO I Pansh of Vermilion State of Louisiana

Statements of Cash Flows Years Ended September 30, 2011 and 2010

2011 2010

CASH FLOWS FROM OPERATING ACTIVITIES Cash received fi-om patients and other third - party payors $ 9,658,338 $ 9,729,655 Cash paid to suppliers of goods and services (6,157,978) (6,151,383) Cash paid to employees for services (3.632.828) (3.380.490)

Net cash provided (used) by operating activities

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Millage collections Sales tax receipts

Net cash provided by noncapital financing activities

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Purchases of capital assets Proceeds from sale of capital assets Principal paid on capital debt Interest paid on capital debt

Net cash used by capital and related financing activities

CASH FLOWS FROM INVESTING ACTIVITIES Purchases of certificates of deposit Net (increase) decrease in assets whose use is limited Interest received on investments Other

Net cash used by investing activities

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS, beginning of year

CASH AND CASH EQUIVALENTS, end of year

(132,468)

525,443 1.580.568

2.106.011

(366,012)

(23,401) ri.908)

(391,321)

(897,787) (858,545) 268,719 53.697

ri.433.916)

148,306

3.024.316

$ 3,172,622

197,782

526,582 1.101.885

1.628.467

(960,423) 2,136

(22,501) f2.9371

(983.725)

(1,240,000) (452,322) 186,994 44.030

n.461.298^

(618,774)

3.643.090

$ 3,024,316


10


Statements of Cash Flows (Continued) Years Ended September 30, 2011 and 2010

2011 2010

RECONCILIATION OF REVENUES IN EXCESS OF EXPENSES PROVIDED BY OPERATING ACTIVTIES Income from operations $ 366,151 $ 119,968 Adjustments to reconcile income from operations

to net cash provided by operating activities Depreciation 588,657 439,666

Change m assets and liabilities Accounts receivable - patients Estimated third-party payor settlements Other receivables Inventories Prepaid expenses Accounts payable Other payables and accrued expenses

Net cash provided (used) by operating activities

(598,383) (460,663)

16,837 (25,135) (9,026) 20,426 (31.332)

? (132,468)

(110,161) (82,669) (3,958)

(19.734) 7,263

(211,045) 58,452

$ 197.782


11


Notes to Financial Statements

NOTE 1 PURPOSE AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

The Hospital Service Distnct No 1 (referred to as the "Hospital") is a component unit ofthe Vermilion Parish Police Jury, the governing body ofthe parish and the govemment body with oversight authority

Nature of Business

The Hospital provides a variety of healthcare services including 1) in-patient services such as acute, psychiatric and skilled nursing, 2) out-patient services such as diagnostic and therapeutic ancillaries, emergency room, and physician specialty clinics, and 3) other services

Basis of Accounting

The Hospital utilizes the proprietary fund method of accounting whereby revenues and expenses are recognized on the accrual method The Hospital accounting and reporting procedures also conform to the requirements of Louisiana Revised Statute 24 514 and to the guide set forth in the Louisiana Governmental Audit Guide, and the Audit and Accounting Guide - Health Care Organizations, published by the American Institute of Certified Public Accountants, and standards established by the Govemmental Accounting Standards Board (GASB), which is the accepted standard setting body for establishing governmental accounting and financiai reporting principles

Method of Accounting

GASB issued Statement No 34, Basic Financial Statements and Management's Discussion and Analysts for State and Local Governments, Statement No 37, Basic Financial Statements and Management's Discussion and Analysis for State and Local Governments Omnibus, and Statement No 38, Certain Financial Statement Note Disclosures which establish financial reporting standards for state and local govemments These statements establish that the financiai statements should consist of management's discussion and analysis (MD&A) to provide an analytical overview ofthe entity's financiai activities, basic financiai statements, and required supplementary information (RSI) as required by other GASB statements

Statement No 34 established standards for external financiai reporting for all state and local governmental entities, which include a statement of net assets, a statement of revenue, expenses, and changes in net assets, and a direct method statement of cash flows It requires the classification of net assets into three components - invested in capital assets, net of related debt, restricted, and unrestricted These classifications are defined as follows

12



NOTE 1 PURPOSE AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

• Invested in capital assets, net of related debt - This component of net assets consists of capital assets, including restricted capital assets, net of accumulated depreciation, and reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvements of those assets

• Restricted - This component of net assets consists of constraints placed on net asset use through external constraints imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other govemments or constraints imposed by law through constitutional provisions or enabling legislation There were no restricted assets for years ended September 30, 2011 and 2010

• Unrestncted - This component of net assets consists of net assets that do not meet the definition of "restricted" or "invested in capital assets, net of related debt"

Accounting Standards

Pursuant to Govemmental Accounting Standards Board (GASB) Statement No 20, Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities that use Proprietary Fund Accounting, the Hospital has elected to apply the provisions of all relevant pronouncements of the Financial Accounting Standards Board (FASB) issued after November 30. 1989

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Hospital considers all highly liquid debt instruments with a maturity of three months or less to be cash equivalents The caption "cash and cash equivalents" does not include amounts whose use is limited

Accounts Receivable

The Hospital uses the allowance method to account for uncollectible accounts receivable

Inventory

Inventory is stated at the lower of cost or market, with cost determined by the first-in, first-out, (FIFO) method

Income Taxes

The Hospital is a political subdivision and has been ruled exempt fi'om federal and state income taxes, therefore, no provision for income taxes is necessary

13



NOTE 1 PURPOSE AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Commued)

Propertv. Plant, and Equipment

Purchased fixed assets are stated at cost and donated fixed assets are stated at fair market value at the time of donation Depreciation is computed on the double declining balance method for assets purchased prior to January 1, 1970, and on the straight-lme method for assets purchased after January 1, 1970 The estimated useful lives, as recommended by the Amencan Hospital Association, are as follows

Buildings and Land Improvements 15-50 years Equipment 5-25 years

Net Patient Service Revenue

Net patient service revenue is reported at the estimated net realizable amounts from patients, third-party payors, and others for services rendered, including estimated retroactive adjustments, under reimbursement agreements with third-party payors Retroactive adjustments are accrued on an estimated basis in the period the related services are rendered and adjusted in future penods as final settlements are determined

Use of Estimates

The preparation of financiai statements in conformity with accounting principles generally accepted in the United States of Amenca requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financiai statements and the reported amounts of revenues and expenses during the reporting period Actual results could differ from those estimates

Compensated Absences

The Hospital's policy allows full-time employees to carry forward annual leave beyond the fiscal year end Full-time employees eam a maximum of 10 to 20 days of annual leave per year based upon the employee's length of service Accordingly, annual leave has been accmed as a liability in the financiai statements at the current pay rate of the employee in effect as ofthe balance sheet date

Operating and Nonoperating Revenues

Operating revenues and expenses ofthe Hospital consist of charges for services and the costs of providing those services, including depreciation All other revenues and expenses are reported as nonoperating

14



NOTE I PURPOSE AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Reclassifications

Certain amounts in the 2010 financiai statements have been reclassified to conform to the 2011 presentation

NOTE 2 ASSETS WHOSE USE IS LIMITED

Assets whose use is limited consists of funds designated by the Board of Directors to be used for capital asset acquisitions and improvements

NOTE 3 CASH AND INTEREST-BEARING DEPOSITS

Under state laws, the Hospital may deposit funds within a fiscal agent bank organized under the laws ofthe State of Louisiana, the laws of any other state in the Union, or the laws ofthe United States The Hospital may invest in certificates and time deposits of state banks organized under Louisiana law and national banks having principal offices in Louisiana At September 30, 2011, the Hospital has cash and interest-beanng deposits, including certificates of deposit, (book balances) totaling $17,899,953

These deposits are stated at cost, which approximates market Under state laws, the 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 ofthe pledged secunties plus the federal deposit insurance must at all times equal the amount on deposit with the fiscal agent bank These securities are held in the name ofthe pledging fiscal agent bank in a holding or custodial bank that is mutually acceptable to both parties Deposit balances (bank balances) at September 30, 2011, are as follows

Bank balances

Federal deposit insurance Pledged secunties (category 3)

Total

Kaplan State Bank

$ 9,295,601

$ 500,099 8,003,837 8,503,936

Vermilion Bank

$ 6.184,720

$ 500,000 7,666,853 8.166.853

Ibena Bank

$ 1.615.000

$ 250,000 1,847,740 2.097.740

Edward Jones

$ 1.170.000

$ 1,170,000

1.170,000

Pledged securities in Category 3 include uninsured or unregistered investments for which the securities are held by the broker or dealer, or by its trust department or agent, but not in the Hospital's name Even though the pledged securities are considered uncollateralized (Category 3), Louisiana Revised Statute 39 1229 imposes a statutory requirement on the custodial bank to advertise and sell the pledged securities within 10 days of being notified by the Hospital that the fiscal agent has failed to pay deposited funds upon demand

15



NOTE 4 CERTIFICATES OF DEPOSIT

The Hospital held the following certificates of deposit at September 30,2011

Current Assets Ibena Bank

Vermilion Bank & Trust Co

Kaplan State Bank

Edward Jones

Amount

$ 100,000 865,000 300.000

1.265.000

$ 275,000 150,000 200.000 200,000 200,000 200.000 350,000 900,000 350,000 750,000 600.000

4.175.000

$ 275,000 350,000 400,000

1.452,787 200.000 500,000 550,000 750.000 300.000

4.777.787

134,000 87,000

174,000 95,000 95,000 95,000 75.000 75,000 75,000 95,000 95.000 75.000

1.170.000

S U.5S7.ZS7

Interest Rate

0 90% 1 00% 1 00%

0 90% 0 90% 0 90% 0 90% 0 90% 0 80% 0 80% 0 80% 0 90% 0 90% 0 90%

0 90% 0 90% 0 90% 0 70% 0 90% 0 90% 0 90% 0 90% 0 90%

1 00% 1 35% 1 25% 2 15% 2 40% 1 80% 1 30% 1 35% 1 30% 1 35% 1 35% 1 25%

Matunty

09/18/12 04/30/12 05/30/12

11/14/11 06/13/12 01/23/12 02/01/12 03/10/12 03/21/12 04/08/12 04/17/12 04/25/12 10/27/12 11/30/11

11/15/11 06/14/12 02/01/12 09/02/12 04/21/12 04/25/12 04/29/12 10/27/11 11/30/11

07/29/13 02/14/14 02/04/14 05/04/12 10/30/12 11/07/11 05/07/12 05/07/12 11/05/13 11/05/13 M/12/13 05/14/12

\6



NOTE 4 CERTIFICATES OF DEPOSIT (Continued)

Assets whose use is limited

Kaplan State Bank

Vermilion Bank & Trust Co

Iberia Bank

Amount Interest Rate Maturity

—

$

—

$_

L

200,000 200.000 400.000

10.098 200,000 200,000

1,452,787 1,862,885

350.000

2.612.885

0 90% 1 00%

0 90% 0 90% 0 90% 0 70%

1 01%

05/04/12 10/08/11

04/26/12 01/16/12 01/24/12 08/19/12

04/30/12

NOTE 5 ACCOUNTS RECEIVABLE

Accounts receivable are shown net of provision for doubtftil accounts of $497,895 and $778,859 at September 30, 2011 and 2010, respectively, and contractual allowances of $283,517 and $222,775 for 2011 and 2010, respectively

NOTE 6 PROPERTY, PLANT, AND EQUIPMENT

The following is a summary of property, plant, and equipment and related accumulated depreciation for the years ended September 30, 2011 and 2010

2011

Land Land improvements Buildings Fixed equipment Major moveable equipment Other moveable equipment

Total Accumulated depreciation

Net

September 30, 2010

$

Additions

58,893 91.126

1,868,739 1,729,413 2,502,429

87,106

6,337,706 4,135,423

366,012 588,657

Deletions

$ - $ 13,310

96,800 255,902

$ 2.202,283 $(222,645) £

September 30, 2011

$ 58,893 104,436

1,868,739 1,826,213 2,758,331

87,106

6,703,718 4.724.080

1.979.638

17



NOTE 6 PROPERTY, PLANT, AND EQUIPMENT (Continued)

2010

Land Land improvements Buildings Fixed equipment Major moveable equipment Other moveable equipment

Total Accumulated depreciation

Net

September 30, 2009

$ 58,893 91,126

1,718,739 1,729,413 1,698,081

87.106

5.383,358 3.701.832

Additions

960,423 439.666

Deletions

$ - $

150,000

810,423 6,075

6,075 6.075

i 1.681,526 $ 520.757 £

September 30, 2010

$ 58,893 91,126

1,868,739 1,729,413 2.502,429

87.106

6,337,706 4.135.423

2.202.283

The gross amount of capital assets under capital lease is $113,816 with accumulated amortization of $59,618 and $43,359 as of September 30, 2011 and 2010, respectively Accumulated amortization is included in depreciation expense

NOTE 7 CHANGES IN LONG-TERM DEBT

The Hospital had long-term debt relating to compensated absences and obligation under a capital lease during the year ended September 30, 2011 The following is a schedule ofthe changes in long-term debt

Obligation under capital lease Accrued annual leave Total long-term debt

Balance 9/30/2010

$ 58,163 120.595

$ 178.758 £

Increases

$

Decreases

S 23,401 6.313

S 29.714

Balance 9/30/2011

$ 34,762 114.282

$ 149.044

Capital lease obligation, in the onginal amount of $113,816, beanng interest at an implied rate of 3 9% per annum, payable in 60 monthly installments of $2,106, secured by equipment

Accrued annual leave is expected to be paid during the fiscal year ending September 30, 2011

Unpaid Principal

$ 34,762

114.282

$ 149.044

18



NOTE 7 CHANGES IN LONG-TERM DEBT (Continued)

The annual requirements to amortize all debt outstanding at September 30, 2011, including interest are as follows

Year ending September 30,

2012 2013

Principal

24,337 10.425

$ 34,762

Interest

930 103

$ 1.033

NOTE 8 NET PATIENT SERVICE REVENUE

The Hospital has agreements with third-party payors that provide for payments to the Hospital at amounts different from its established rates A summary of the payment arrangements with major third-party payors follows

Commercial

The Hospital has also entered into payment agreements with certain commercial insurance earners, health maintenance organizations, and preferred provider organizations The basis for payment to the Hospital under these agreements includes prospectively determined rates per discharge, discounts from established charges and prospectively determined daily rales

Medicare

In-patient acute care services rendered to Medicare program beneficianes are paid at per diem rates In-patient non-acute services, certain out-patient services, and defined capital and medical education costs related to Medicare beneficiaries are paid based on a cost reimbursement methodology Psychiatnc services (BHU) rendered to Medicare program beneficiaries are paid at prospectively determined rates

The Hospital is reimbursed for cost reimbursable items at a tentative rate with final settlement determined after submission of annual cost reports by the Hospital and audits thereof by the Medicare fiscal intermediary

Medicaid

In-patient and outpatient services rendered to Medicaid program beneficianes are reimbursed under a cost reimbursement methodology The Hospital is reimbursed at a tentative rate with final settlement determined after submission of annual cost reports by the Hospital and audits thereof by the Medicaid fiscal intermediary

19



NOTE 8 NET PATIENT SERVICE REVENUE (Continued)

The Hospital receives a substantial portion of its revenues from the Medicare and Medicaid programs at discounted rates Dunng the years ended September 30, 2011 and 2010, the following revenues were obtained from these programs

2011 2010

Medicare and Medicaid gross patient charges $ 9,951,780 $ 9,960,148

Contractual adjustments 2.719.552 3.360.361

Net Medicare and Medicaid patient service revenue $ 7.232.228 $ 6,599,787

Net patient service revenue $10.457.219 $10,332,718

Percent of Medicare and Medicaid net service revenue to net patient service revenue 69% 64%

NOTE 9 JOINT VENTURE AGREEMENT

The Hospital entered into a joint venture agreement with Acadian Homecare, Inc, a Louisiana corporation, for the purpose of managing a branch office in Kaplan, Louisiana to provide out-patient home health services This agreement provides the Hospital a 33% interest in the profits and losses and/or liabilities that result from the venture, provided however that the Hospital's liability for said losses shall not exceed the sum of its capital contnbutions and the aggregate distributions received by the Hospital under the joint venture The joint venture pays the Hospital quarterly for the Hospital's share of profits and pays $1,000 per month to lease Hospital owned facilities and equipment Revenue denved by the Hospital from the joint venture totaled $115,385 and $133,455 for the years ended September 30, 2011 and 2010, respectively

NOTE 10 REVENUE RECOGNITION - PROPERTY TAX

The Hospital receives funds from a property tax which was adopted by the voters of Vermilion Parish The parish tax is levied each year by the Vermilion Parish Tax Assessor on November 15 based upon the assessed value on the previous January 1 of all real and business personal property within the Pansh The assessed value of the property on the tax rolls as of January 1, 2010 was approximately $74 million

The tax becomes due on November 15 and is considered delinquent if not paid by December 31 Most of the property tax revenues are collected dunng the months of December, January, and Febmary During May of the subsequent year, properties with delinquent taxes are advertised for auction by the Parish Sheriff The auction is normally scheduled for June or July It IS at this time a lien is placed on the property Properties not sold at the auction are adjudicated to the State of Louisiana

After considenng tax exemptions, the net amount of property taxes received by the Hospital was $525,443 and $526,582 for the years ended September 30, 2011 and 2010, respectively

20



NOTE 11 SALES TAX REVENUE

A one percent sales tax proposition was approved by voters for a 10-year penod effective April 1, 2010 Proceeds of this sales tax are dedicated towards the costs associated with operating, maintaining, and improving the facilities of the Hospital related to providing emergency medical service Revenue for the years ended September 30, 2011 and 2010 totaled $1,580,568 and $1,123,489, respectively

NOTE 12 PENSION PLAN

The Hospital has a compulsory defined contribution pension plan covering all employees Employee and employer each contnbuted four and one half percent of annual pay Total pension expense for the Hospital for the years ended September 30, 2011 and 2010 was $140,583 and $122,596, respectively

NOTE 13 CONCENTRATION OF CREDIT RISK AND ECONOMIC DEPENDENCE

The Hospital, located in Kaplan, Louisiana, grants credit without collateral to its patients, most of whom are local residents and are insured under third-party payor agreements in which payment collection is significantly certain The Hospital also has an economic dependence on Medicare and Medicaid as sources of payments as shown in the following table Changes in federal or state legislation or interpretations of mies could have a significant impact on the Hospital's operations Revenue from patients and third-party payors were as follows

2011 2010

Medicare Medicaid Insurance Private pay

53% 17% 19% 11%

55% 15% 19% 11%

NOTE 14 OPERATING LEASES

The Hospital leases equipment under non-cancelable operating leases with terms ranging from three to ten years The following is a schedule of annual future minimum lease payments as of September 30, 2011

2012 2013 2014 2015

L.

92,805 28,623 22,659 3.869

147.956

Rent expense under these leases totaled $177,023 and $186,039 for the years ended September 30, 2011 and 2010, respectively

21



NOTE 15 CONTINGENT LIABILITIES

Vanous malpractice suits are pending against the Hospital These suits have been turned over to the Hospital's insurance carrier The Hospital is fully insured should any loss be incurred, therefore, no liability is shown in these financiai statements

In the normal course of business, there could be various outstanding contingent liabilities such as, but not limited to, the following

- Lawsuits alleging negligence in care - Environmental pollution - Violation of regulatory body's mIes and regulations - Violation of federal and/or state laws

No accrual for potential contingent liabilities, such as, but not limited to, those descnbed above, are reflected in the accompanying financiai statements No such liabilities have been asserted, and, therefore, no estimate of loss, if any, is determinable

Third Party Cost-Based Revenues - Cost reimbursements are subject to examination by agencies administering the Medicare and Medicaid programs The Medicare program has discontinued its cost-based reimbursement system for in-patient services Currently, the Hospital receives a fixed fee for each patient as determined by the govemment using the patient's diagnosis The Hospital is contingently liable for retroactive adjustments made by the Medicare and Medicaid programs as the result of their examinations as well as retroactive changes in interpretations applying statutes, regulations, and general instmctions of those programs The amount of such adjustments cannot be readily determined

22

ADDITIONAL INFORMATION

23


Schedules of Net Patient Service Revenue Years Ended September 30, 2011 and 2010

IN-PATIENT SERVICE REVENUE OUT-PATIENT SERVICE REVENUE

DEDUCTIONS FROM PATIENT SERVICE REVENUE Contractual allowances Discounts

Net Patient Service Revenue

2011

$ 6,819,340 7.400.025 14,219,365

3,255,944 506.202

3.762.146

$10,457,219

2010

$ 7,017,483 7.723.133 14.740.616

3,921,480 480.380

4.401.860

$10,338,756

See independent auditor's report

24


Schedules of In-Patient Service Revenue Years Ended September 30, 2011 and 2010

2011 2010

ROUTINE SERVICES Room and board

SPECIAL SERVICES Anesthesiology Blood administration Electrocardiology Emergency room Intravenous therapy

Laboratory Medical and surgical Nursing home Nuclear medicine Operating room

Pharmacy Physical therapy Psychiatric Radiology

Recovery room Respiratory therapy Speech therapy Ultrasound

$ 961,385

48,324 69,369 16,916 33,640 124,841

288,122 465,465

194 132.438 68,719

557,045 20.890

3,598,238 47,979

14,742 290,779

3,620 76.634

$ 899,825

54,510 76,490 20,048 37,557

252,170

252,349 439,830

349 171,168 68,181

505,357 24,873

3,819,193 45,565

19,425 265,112

2,048 63,433

$ 6.819.340 $ 7,017,483


25


Schedules of Out-Patient Service Revenue Years Ended September 30. 2011 and 2010

2011 2010

ROUTINE SERVICES Room and board

SPECIAL SERVICES Anesthesiology Blood administration Clinic Dietary Consultant Emergency room

Electrocardiology Intravenous therapy Laboratory Medical and surgical Nuclear medicine

Operating room Nursing home Pharmacy Physical Therapy Radiology

Recovery room Respiratory therapy Speech therapy Ultrasound

11,890 30,655

101,909 48.003

557,370 286

1,392,424

89,180 185,852

1,893,547 480,558

1,200,703

146,202 91

284,289 25,440 589.399

80,052 82,939 2,835

227.056

$ 7.400,025

112,794 25,019

504,138 -

1,497,565

82,633 267,057

1,850,231 550,943

1,229,774

175,129 25,192 346,248 54,685

589,681

91,749 96,271 3,990

189,379

$ 7.723.133


26


Schedules of Other Revenue Years Ended September 30, 2011 and 2010

2011 2010

Cafetena sales Recovery of bad debt Medicare TOPS/Incentive Rural coalition income Joint venture income Other income

$ 79,848 107,147

457 586,075 115,385

1.100.924

$ 1.989.836

$

—

L

72,714 98,507 1,617

1,147,671 133,455 12,943

1.466.907


27


Schedules of Professional Expenses Years Ended September 30, 2011 and 2010

2011 2010

Anesthesia Blood bank Electrocardiology Emergency room Ambulance

Home health Intravenous therapy Laboratory Medical and surgical Medical records Medical staff

Nuclear medicine Nursing service Operating room Pharmacy Physical therapy

Primary care clinic Psychiatnc Radiology Respiratory therapy Speech therapy

Salaries

$ --

645,123 -

. -

262,279 34,654 95,368

-

_ 885,997 199,064

--

257,474 -

215,356 117,884

-

J .2.ZOJ2?

Professional fees.

Supplies and Direct Expenses

$ 252,489 42,374

1.416 399,787

14,550

1,597 6,611

448.975 152,531 96,598 13,867

243,804 51.329 40,079

388,292 26,696

118,892 1,587,103

63,331 61,156

1.137

$ 4.012.614

Total

$ 252,489 42,374

1,416 1,044,910

14,550

1,597 6,611

711,254 187,185 191,966 13,867

243,804 937,326 239.143 388,292

26,696

376,366 1,587,103

278,687 179,040

1-137

Salaries

$ --

691,387 -

_ -

250,588 30.083 86,459

-

_ 787,087 149,840

25 -

264,823 -

205,159 17,949

.

$ 2.483.400

Professional fees.


$ 255.601 20,783

922 450.597

16,250

4.093 5,916

539,779 160,798 74,781 9,264

240,882 39,530 27.712

429,611 35,503

114.900 1,275,992

68,853 210.297

422

$ 3.982.486

Total

$ 255.601 20.783

922 1.141,984

16,250

4,093 5,916

790.367 190.881 161,240

9,264

240,882 826,617 177,552 429,636

35,503

379.723 1,275.992

274,012 228,246

422

S 6.465.886


28


Schedules of General and Administrative Expenses Years Ended September 30, 2011 and 2010

2011 2010

Administrative Administrative - fiscal Administrative - other Business office Credit and collections

Data processing Dietary Dues and subscriptions Employee benefits Housekeeping

Insurance Laundry Linen Personnel Plant operations

Printing and duplicating Supplies, processing and

distribution Telephone and

communications

Salanes

$ 142,658 51,717

-207,935

-

61,871 156,118

--

139,410

----

108.640

-

70,681

-

$ 939.030

Professional fees.


$ 161,228 52,117

111,459 47,134 18,096

143,708 169,124 47,732

628.565 48.752

159,024 41,533 6,994 6,285

320,331

32,958

5,216

80,639

Total

$ 303,886 103,834 111.459 255.069

18,096

205,579 325,242 47,732

628,565 188,162

159.024 41,533 6,994 6,285

428,971

32.958

75.897

80,639

^ 1.0]9.9?,'i

Salaries

$ 179,060 49,014

-194,901

-

64,224 147,125

--

127,794

----

101,896

-

69.883

.

S-2a3-m

Professional fees.


$ 122.347 64,060 85.998 31,433 30,521

176,182 158,786 69,212

551.600 38,434

170,018 40,954 7.255 2,415

300,762

37,987

4,849

74,215

$ 1.967.028

Total

$ 301.407 113,074 85,998

226,334 30.521

240,406 305.911

69.212 551.600 166,228

170,018 40,954

7.255 2,415

402,658

37,987

74,732

74.215

$ 2.900.92S


29


Schedules of Nonoperating Income Years Ended September 30, 2011 and 2010

2011 2010

Interest Millage income Miscellaneous Rent Sales tax income Gain on disposal of assets

$ 151.041 525,443 35,190 16,599

1,625,610 -

$ 226,973 526,582 22,502 12,552

1,123,489 2.136

$ 2.353.883 $ 1,914.234


30


Schedule of Commissioners, Meetings Attended and Compensation Year Ended September 30, 2011

Name of Commissioner

Ivan Bourque

Ronald Menard

Winnie Broussard

Del Dean David

John Francis

Mona Hebert

Paul D Marceaux

Meetings Attended

12

12

9

12

12

12

12

Compensation

$ 1,200

1,200

900

1,200

1,200

1,200

1,200

See independent auditor's report 31

INTERNAL CONTROL AND COMPLIANCE

32

Eugene H DamaJI, CPA, Deceased 1990

A Darnall, Sikes,

Gardes Frederick. (A Corponiiion of Ccmrted Publtc Aooounianis)

E Larry Sikes, CPA/PFS. CVA, CFP™ Danny P Frederick. CPA

Clayton E Damall. CPA, CVA Eugene H Damall. HI. CPA

Stephanie M Higgmbotham, CPA John P Armato, CPA/PFS

J Steven Gardes. CPA. CVA Jennifer S Ziegler. CPA/PFS, CFP™

Chris A Miller, CPA. CVA Stephen R Dischler, MBA, CPA

Steven G Moosa, CPA M Rebecca Gardes, CPA

Pamela Mayeaux Benin, CPA. CVA JoanB Moody. CPA

Erich G Loewer, III, MTX, CPA. M S Tax Lauren F Hebert, CPA/PFS

Barbara Ann Watts, CPA Craig C Babineaux, CPA/PFS, CFP™

Jeremy C Meaux, CPA

INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED

IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

The Board of Commissioners Hospital Service District No I Parish of Vermilion, State of Louisiana Kaplan, Louisiana

Kathleen T Damall, CPA DustinB Baudin,CPA,MBA

KevmS Young, CPA Adam J Curry, CPA

ChadM Bailey,CPA Carol C Guillory, CPA

Christy S Dew, CPA Cecelia A Hoyt,CPA

Blame M Crochet, CPA, M S Rachel W Ashford. CPA

Veronica L LeBleu,CPA JacobC Robene.CPA S Luke Sonnier, CPA

KyleP Saltzman. CPA Elise B Faucheaux, CPA

We have audited the financial statements of Hospital Service District No 1, Parish of Vermilion, State of Louisiana, a component unit ofthe Vermilion Parish Police Jury, as of and for the year ended September 30, 2011, and have issued our report thereon dated March 23, 2012 We conducted our audit in accordance with auditing standards generally accepted in the United States of America, and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States

Intemal Control Over Financial Reporting

In planning and performing our audit, we considered the Hospital's intemal control over financiai reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the HospitaPs intemal control over financial reporting Accordingly, we do not express an opinion on the effectiveness ofthe HospitaPs intemal control over financiai reporting

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis A material weakness is a deficiency, or a combination of deficiencies, in intemal control such that there is a reasonable possibility that a material misstatement ofthe entity's financial statements will not be prevented, or detected and corrected on a timely basis

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

2000 Kaliste Saloom Rd Suite 300

Lafayene LA 70308 Phone 337 232 3312 Fax 557 237 36M

123! E Laurel Ave Eunice LA 70535

Phone 3374574146 fax 337457 5060

1201 Brashcor Ave Suite 30!

Morgan City LA 70380 Phone <)8S 384 6264 ?M 985 384 8)40

203 S Jeffereon Street Abbeville LA 70510 Phone 337 893 5470

Fax 337 893 5470

33

Member of Amencan Institute of

Cemfied Public Accountants Society of Louisiana

Cemfied Public Accountants www dsfcpas com

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Hospital's financiai statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grants, noncompliance with which could have a direct and material effect on the determination of financiai statement amounts However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion The results of our tests disclosed one instance of noncompliance or other matter that is required to be reported under Government Auditing Standards and which are described in the accompanying schedule of findings and questioned costs as item 1 l-l

Hospital Service District No Ts response to the finding identified in our audit is described in the accompanying schedule of findings and questioned costs We did not audit the HospitaPs response and, accordmgly, we express no opinion on it

This report is intended solely for the information and use ofthe board of commissioners, management and others within the organization and is not intended to and should not be used by anyone other than these specified parties However, under Louisiana Revised Statute 24 513, this report is distributed by the Legislative Auditor as a public document

A Corporation of Certified Public Accountants

Eunice, Louisiana March 23, 2012

34


Schedule of Prior Year Findings Year Ended September 30, 2011

This section is not applicable

35


Schedule of Findings and Questioned Costs Year Ended September 30, 2011

Section I Summary of Auditor's Results

FINANCIAL STATEMENTS

Auditor's Report

An unqualified opinion has been issued on the Hospital's financial statements as of and for the year ended September 30, 2011

Significant Deficiencies - Financial Reporting

There were no significant deficiencies in mtemal control noted during the audit of the financial statements

Material Noncompliance - Financial reporting

There was one instance of noncompliance material to the financial statements disclosed during the audit ofthe financiai statements which is shown as item 11-1 in section II

FEDERAL AWARDS


Management Letter


Section II Findings Relating to an Audit in Accordance with Government Auditing Standards

I l-l Uncollateralized Bank Deposits

Finding

Regarding security for deposits Louisiana Revised Statute 39 1225 requires "the amount ofthe secunty shall at all times be equal to one hundred percent ofthe amount of collected funds on deposit to the credit of each depositing authority except that portion of the deposits insured by any govemmental agency insuring bank deposits which is organized under the laws ofthe United States" At September 30, 2011 the Hospital had uninsured and uncollateralized deposits at Kaplan State Bank in the amount of $791,665

Cause

The Hospital did not effectively monitor pledged secunties by requesting the banks to providing monthly pledged security reports

36


Schedule of Findings and Questioned Costs (Continued) Year Ended September 30, 2011

Effect

Failure to have secunties pledged for amount in excess of FDIC insurance coverage places the Hospital in violation of LSA-RS 39 1217 I and subjects the deposits to nsk of loss upon financial failure ofthe institution

Recommendation

We recommend the Hospital implement procedures to ensure all funds on deposit at financial institutions in excess of amounts insured by FDIC coverage are protected from loss by pledged securities in accordance Louisiana State Law

Section III Findings and Questioned Costs Relating to Federal Programs


37

HOSPITAL SERVICE DISTRICT NO Parish of Vermilion State of Louisiana

Management Corrective Action Plan Year Ended September 30, 2011

11-1 Uncollateralized Bank Deposits

Response

Management will implement procedures to ensure monthly pledged security reports are obtained from the financial institutions to determine if adequate securities are pledged to cover the HospitaPs deposit accounts

38

vermilion parish hospital service district no. 1 - a...

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