West Ouachita Sewerage District No. 5 of Ouachita Parish · Management is res^nsible for the pr^arationand iair presentation of these fmancial statements in accordance with accounting

3OL^

West Ouachita Sewerage District No. 5 (A Component Unit of the Ouachita Parish Police Jury)

Financial Statements

For the Years Ended August 31,2013 and 2012

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

Release Date SEP 1 7 ZOH

WEST OUACHITA SEWERAGE DISIHICT NO. 5 (A COMPONENT UNIT OF THE OUACHITA PARISH POLICE JURY)

FINANCIAL STATEMENTS FOR THE YEARS ENDED AUGUST 31,2013 and 2012

TABLE OF CONTENTS

Page

Independent Auditors' R^jort —r — 1

REOUIRED SUPPLEMENTAL INFORMATION (PART AS

Management's Discussion and Analysis (Unaudited) . 5

FINANCIAL STATEMENTS

Statements of Net Position —-——T r ——r—--—r 11

Statements of Revenues, Expenses and Changes

Statements of Cash Rows ^ 15

Notes to Financial Statern^ts ---- —— ^ . 17

REOUIRED SUPPLEMENTAL INFORjVtATlbN (PART B)

Schedule 1 - Other Post Employment Benefits - Schedule ofiFunding Progress (Unaudited) — 34

OTHER SUPPLEMENTAL INFORMATION

Schedule 2 - Schedule of Changes in Restrict^ Ass^s 36

Schedule 3 - Schedule of Insurance Coverage (Unaudited) 37

REOVTKED BY GOVERNMENT AUDITING STANDAm)S

Independent Auditors' Report on Internal Control over Financial-Reporting arid on Compliance and Other Matters Based on an Audit of Financial Statements Perform^ in Accordance With Government Auditing Standards —————— 38

Schedule of Findings and Response 41

Summary Status of Prior Year Findings-- 43

HUFFMAN & SOIGNIER FrancisJ. Huffman, CPA' Da>ncl Ray Soigni«'. CPA, MBA, COIMA

(A PROFESSIONAI. ACCOUNTINO CORPORATION) CERTIFIED PUBUC ACCOUNTANTS

INDEPENDENT AUDITORS' REPORT

John Herman, CPA Lynn Andiira, CPA, CGMA ÛierAttabeny, CPA Lori'Woodard. MBA, CPA. COnflA, CITP Fernando Cordova, CPA

Board of Comnussioners West Ouachita Sewerage District No. 5 West Monroe, Louisiana

Report on the Financial Statem^s

We have audits Che accompanying finahcial statements of the business-type activities of West Ouachita Sewerage District Ho. 5 (the District), a component unit of the Ouachita Parish Police Jxiry, as ofand for the years ended Au^t3i; 2013 and 2012 ̂ the related notes to the financial statements, which collectively comprise the District's bîc.financial state^nts as listed in the table of contents.

Management's ReônsihUity for the Financial Sêments

Management is res^nsible for the prârationand iair presentation of these fmancial statements in accordance with accounting principle generally accepted in the United States of America; this includes the desi^, implemenUtion, and maintenance of internal control relevant to the preparation and &ir presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these financial statments 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 financial audits contained in Government Auditing Standards, issued by the Comptroller Generalof the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves perfonding procedures to obtain audit evidence about the amounts and disclosures in the fmancial statements. The procedures selected depend on the aiufitor's judgment, including the assessment of die risks of material misstatement of the financial statements, whêr due to fraud gr error. In making those risk assessnients, the auditor considers izttemal control relevant to the District's prâration and foir presentation .of the fmancial statements in order to design audit procedures that are appropriate in the cmmmstances, but not for the puipose of expressing an dpinion on the effectiveness of the District's internal control. Accordingly, we express no such opinion. An audit also includes evaluîpg the appropriateness of accounting policies used and the reasonableness.of si^ficant accounting estimates made by management, as well as evaluating the oyer^l-presentation of the finahcial stetements.

11D0 North 18th Street Monroe, Louisiana 71201 Tel: {318)387-2872 • Fax: (318)322-8868 • Website:'wvirw.efullserviceq)afirm.com

MEMBERS OP TVte AMERICAN INSTTTUTE OF CERnPlEO PUBUC ACCOUNTANTS

We-believe that the audit evidence we have obtain^ is sufficient and appfopriate tp provide a basis for our audit opihion.

Basis for Qjualified Opinion

We were unable to determine the adequacy of the:District*s intern^ controls;byer the billing and collection of sewerage fees for,^13 and 2012 since the third party providers could not provide us with a Service Organization Control report or? other information adequate for gaining an understanding of die service providers' internal controls^ It was not feasible to obtain this informîdh by other means. As such, we-wereiunable tp determine the effect of the service organi^tions' internal controls on the District's sewer accounts receivable and sewer.Tevenues. Consequently, we were unable to determine whether any adjustments to those amounts were necessary.

Qjuaiyied Opinion

In our opinion, exc^t for the.possible effects of the matter discussed in the Basis for Qualified Opinion paragraph^ the financial statements referred to in the first puagraph present feirly, in all material respects, the financial position of the District as of August 31, 2013 and 2012 and the results of its operations and its cash flows for the years then emled in accordance wiA accounting principles generally accepted in the United States of America.

Auditors* Updated Opinion oh 20l2.Fisumdal Statements

In our report dated February 28, 2013, we expressed an unmodifled opinion that the 2012 financial, statements presented feirly, in all material rejects, the financial position, results of operations, and cash flows in accordance with accounting principles generally acc^ted in the United States of 'America. As described in the Basis for Qualified Opinion Paragraph and upon further analysis obtained in the current year, our present opinion on the 2012 financial statem^, as presented herein, is.different from that expressed in our previous r^rt.

Other Matters

Required Supplementary Irtformation

Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on pages 5 through 9 and the Other Po^ Employing Bêfits - Schedule of Funding Progress on page 34 be presîted to supplement the basic finaiîal statements. Such infoimatibn, although not a part of the basic fiiianclal statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of finaQcial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procures 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 fmancial statements, and odief knowledge we obtained duriiig pur audit of the basic fin^ciai statements. We do not e^qpress an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinioii of provide'ahy assurance.

Other Information

Our audits were conducted for the purpose of forming an opinion on the financial statements that collectively comprise the District's basic fmancial statements. The accompmying fmancial information listed as Other Supplement^ Information, Schedules 2 and 3 in.the accompanying table of contents, is presented for purposes of additional analysis and is not a required part of the basic financial statements.

The Schedule of Changes in Restricted Assets - Schedule 2, listed as; Other Supplemental Infprmarion in the accompanying table of contents, is the lespohsibiliiy of management and was derived from and relates directly to the underiyingiaccounting and other records used to:prepare the basic financial^statements. Such infoimatibh has been subjected to the auditing pfocûres applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such informatipn directly to the underlying accounting and other records used to pr^>are the basic financial statements or to die basic fmancial statênts themselves, and other additional procedures in accordance whh auditing standards generally acc^ted in the United States of America. In our opinion, the information is foirly stated in all material respects in relation to the basic financial statements as a whole. The Schedule of Insurance Coverage - Schedule 3 has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do notexpr^s an opinion or provide any assuraixbe on it.

Other Reporting Required by Government Auditing Standards

In accordance with Oovernmeot Auditing Standards, we have also issued our r^bit dated May 30, 2014 on our consideration of the District's mtejma] control over financial reporting and on our tests of its compliance vdtb certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of pur testing of imernal control over financial rq)orting and compliance and the results of that testing, and not to provide an opinion oii internal control oyer financial reporting or on comjpliaik£. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District's internal control over financial reporting and compliance.

r (A Profônal Accountiiig Corporation) May 30,2014

REQUIRED SUPPLEMENTAL INFORMATION (PART A)

WEST OUACHITA SEWERAGE DISTRICT NO. 5 (A Component Unit of the Ouachita Parish Police Jury)

Management's Discussion and Analysis For the Years Ended August 31,2013 and 2012

(UNAUDITED)

As managemOTt of the West Ouachita Sewerage District No. 5 (A Component Unit of the Ouachita Parish Police Jury) (the District), we offer readers of the District's financial statements this nanrative overview and analysis of the,District*s activities for the years ended August 31, 2013 and 2012. Please read it in conjunction with the District's.financial statements.

Required Financial Statements

The Bîc Financial Statements of the District report information^ about the District using the Governmental Accounting Standards 6oard*s (GASH) accoiintihg principles. These stêments offer shoitrterm and long-term financial information about its acti\aties. The Statement of Net Position includes all of the District's assets and liabilities and provides information about the nature and amoimt of investments in resources (assets) and the obligations to the District's creditors (liabilities). All of the current yeai^s revenues and expenses are account^ for in the Statement of Revenue, Expenses, and Changes in Net Position. This statement measures the District's operations over the past year and can be used to determine whether the District has been able to recover ail of its costs through its customer charges and other revenue sources. The final required statement is the Statement of Cash Flows. The primary purpose of this statemratis to provide information about the District's cash from operating, noncapital financing, capital financing, and investing activities and to provide answers to such questions as "Where did.cash come fi-om?^" "What was cadi used for?," and "What w^ the change in cash balance during the reporting period?"

A summary of the District's Statements of Net Position is presented as follows:

Table 1

Condepsed Statements of Net Assets as of August 31,2013 and 2012

2013 2012

Current and other assets $ 4,251,115" $ 5,175,378 -17.86% Restricted assets 292,755 133,000 120.12% Coital assets, net of dêciîon 10,311,265 10,038,155 2.72%

Total assets 14,855,135 15i346,533 -3.20%

Current liabilities 403,344 888,860 -54.62% Current liabilities pay^le from

restricted assets 236,853 232,225 1.99% Long-term liabilities 2,129,431 2;022.701 5.28%

Total liablities 2,769,628 3,143,786 -11.90%

Net investment in capit^ assets 8,152,808 7,935,299 2.74% Restricted net assets - ddiit service 143,901 -

Urir^tricted hetposition 3,788,798' 4,267,448 -11.22%

Total net position S 12,085,507 $ 12,202,747 -0.96%

Investment in capital assets represents the District's long-term investment in capital assets, net of accumulated depreciation, and is not available for current operations.

The tptd net position of the District at August 31, 2013 was $12,085,507. Net position can be separated into, three categories: net investment in capital assets^ restricted, and unrestricted assets.

Net investment in capital assets of $8,152,808 consists of capital assets at origihal cost of $24,299,218 less depreciation of $13i987,953 and related debt of $2,158,457. Accumulated depreciation of $13,987,953 is the aggregate depreciation expense since acquisition. Depreciation expense is recorded on die original cost of the.asset expensed over the estimated useriil life of the asset.

The unrestricted net positipn of $3,788;798 is.sm accumulation of prior years' operating results. This balance is dirrotly affected each year by the District's operating results.

6

A siuximaiy of changeis in nrt position i presented bdow;

Table2 Condensed Siatements of Revenue, £xpens<»,'and Change in NetÂssets

For the Years Ended

20X3 2012

Operating'income Chelating expenses

Operating income Opss)

Non-operating income and.expen^ Capital contributionsi-i,developers

2;810,781 $ 2,945,060

2;838,003 2,491,759

(134,279)

17,039

346,244

18,835 138,082

Increase (decrease) in net position $ (117,240) $ 503,161

% Change

-0.96% 18.19%

-138178%

-9:54% 100.00%

-12330%

Ita fiscal ;2013; sewCTage fees decreêd modwêly due primarily to a decrease in backwash, while sewerage fees saw a rhdd^te increase in 2012 due to an ihcrease-in backwash.

In 2013, the Distnct^s exp^ increased sharply, which ww pimarily due to a;spike in operating m^ten^ce Md expense associated with the City ofWeslMonrpe/West Ouachita Sewaê District No. .5.shafed wastewater txeatment-facility. In fiscal year 2012, the District's expenses increased moderately, which was primarily attributable to increases in tr^tment plant operations ^d rnaiiitenance and repairs.

CAPITAL ASSET AND DEBT ADMINISTRATION

Capitial Assets AtAugust31,;20B'and20l2,theDistiict had $2^,299,218;arid $23,353,722, resp^tively,,myested in capital assetsincluding buildings and improvements, furniture and fixtures, eqiiipihent, vehicles, ihfi^tfucture, wd I^d (See table below).

Tables West Ouachita Sewer District No. 5's Capital Assets

August 31, 2013 2012

Buildings and improvements $ 412,162 $ 410,162 Furniture and fixtures 18,627 18,627 Equipment 485,423 470,323 Vehicles 265,035 265,035 Infiastructure 22,555,538 20,234,624 Construction in progress 131,888 1,524,406 Land 430,545 430^545

Total 24,299,218 23,353,722 Accumulated depreciation (13,987,953) (13,315,567)

Net capital assets $' 10,311,265 $ 10,038,155

This year's major additions primarily consisted of capital outlay in connection with the City ofWest MonroftWest Ouachita Sewerage District No. 5 wastewater treatmoit facility as well as construction in progjress related to Lift Station ''N" Force Main Replacement Project - Phase II. Additions also included improvem^ts to lift station structures wd lines, mains, and manholes.

Debt

As of Au^t 31, 2013 and 2012, the District's outstanding long-tenn debt of .$2,246,431 and $2^139,201, respectively, consisted ofthe following:

Table 4 West Ouachita Sewer.District No. 5!s Outstanding Debt

As of August 31, 2013

2013 2012

Bonds Payable $ 1,561,957 $ 1,477,857 Due to other governments 596,500 625,000 OPEB 87,974 36,344

$ 2,246,431 $ 2,139,201

ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES

The Board of Commissioners authorized an increase in monthly sewer rates-fqr residential and commerdd . customers on October 14, 2013 in response to recommendations from rate studies reports- According to the recommendationsi rates would need to be increased in order to offset the recent spike in operating maintenance and expense associated with the City of West Monroe/West Ouachita,Sewerage District No. 5 wastewater treatment fadlity, as well as to fund needed coital improvements and repairs withiii the District's boundaries. The increase; effective January 1,2014, increases rates for residential, niidti-hpusihg, and multi-unit services from $21 to $30 per month and increases commercial rates' from $2,625 tO'$3.00 per 1,000 gallons of water per month.(metered water usage). Management is optimistic that the increase in sewer rates will be adequate to offset its share in expenses assodated with the treafrnent plant and to fund heeded capital projects and repairs.

During fiscd 2013, the District entered into the engineering phê of capital improvements to Lifr Station **N" Foixje Main^Phase II. The estimated project cost w approximately $600,000 Md will be financed in part with reinaining funds of ̂ proximately $270,000 which are available from the prior year issuance of Dârtmrat of Environmental Quality Sewer Revenue Bonds Series 2011. The remaining cost of approximately $330,000 will be absorbed by the District's unrestricted funds.

CONTACTING THE DISTRICT'S FINANCIAL MANAGEMENT

This financial report is designed to provide our dtizens, taxpayers, customers, and creditors with a general overview of the District's finances and to show the District's accountability for the money it receives. If you have questions about îs report or need additional financial information; contact Terry Gpx, District Manager ofthe West Ouachita Sewerage District No. 5,327 Wallace Road, West Monroe, Louisiana.

BASIC FDVANICAL STATEMENTS

10

WEST OUACHITA SEWERAGE DISTRICT NO. 5 STATEMENTS OF NET POSITION

August 31, 2013 2012

ASSETS (Restated)

Current assets Cash and cash equivalents $ 3,543,514 $ 4,547,846 Accounts receivable - oth^ 1,292 -

Accounts receivable - customers (Note 3) 641,488 578,917 Inventory 56;971 42,497 Prq>aid insurance 7,850 6,118

Total current assets 4,251,115 5,175378

Restricted assets Cash and c^h equivalent - customer deposits (Note 14) 136,060 133,000 Cash and cash equivalents - debt service (Note 5) 156,695 -

292,755 133,000

Capital assets Buildings and improvemrats 412,162 410,162 Furniture and fixtures 18,627 18,627 Equipment 485,423 470,323 Vehicles 265,035 265,035 Lines, mains and manholes 15,057,963 13,101,828 Ofl station - piiitips 1,855,170 1,789,271 Lift station - structures 2,273,862 2,171,967 Treatmrat plant 2,264,264 2,067379 Treatment plant - Sparta water reuse project 1,104,279 1,104379

Total 23,736,785 21398,771 Less: Accumulated depreciation (13,987,953) (13315,567)

Net depred^le assets 9,748,832 8,083304 Gonstmction in progress 131,888 1,524,406 Land 430,545 430,545

Total capital assets 10,311,265 10,038,155

TOTAL ASSETS $ 14;855.135 $ 15346,533

The accompanying notes are an integral part of these financial statements.

11

LIABILITIES AND NET POSITION

August 31, 2013 2012

(Restated)

Current UabUities Payable from current assets

Accounts wdretaihage pâble Accrued p^roH and benefits Due to other governments - current (Note 7)

Total

355,007 19,337 29,000

403344

841,538 18,822 28.500

888,860

Payable from restricted assete Customer deposits Bonds payable / cuuent (Note 5) Accrued interest pay^le

Total Total current liabilities

136,060 88,000 12,793,

236,853 640,197

133,000 88,000 1U25

232325 1,121,085

Long-term liabilities Bonds payable (Note 5) Due to other gbvemments - long term,(Note 7) Otherpost employmrat benefits payable

Total Total liabilities

Net Position Net investment in coital assets Restricted netposition - debt service Unrestricted net position

Total netposition

TOTAL LIABILITIES AND NET POSITION

1,473,957 567;500 87,974

2,129,431 2,769,628

8,152;808 143,901

3,788,798

12,085,507

1,389,857 596,500 36344

2,022,701 3.143386

7,935399

4,267,448

12,202,747

$ 14,855,135 $ 15,346333

12

WEST OUACHITA SEWERAGE DISTRICT NO. 5 STATEMENTS OF REVENUES, EXPENSES

AND CHANGES IN NET POSITION iFOR THE YEARS ENDED

August 31, 2013 2012

• (Restated) operating income

Sewage fees $ 2;799,827 $ 2,818,107 Inspection fees 8,700 13,000 New connection fees 1,600 3,200 Miscellaneous 654 3,696

Total operating revenues 2,810,781 2,838,003

Operating expenses Advertising 665 2^059 Bad debt expê 26,700 22j699 Collection e;q)ense 90,000 132,500 Commissipners' fees 2,160 2,175 Depreciation & Amortization (Note 4) 672,386 634,438 Dues and subscriptions 530 737 Gas and oil 32,670 41,242 Insurance 128,618 121,755 Maintenance and repairs 298,781 291,866 OfGce expense 12,915 13^505 Other post emploênt benefits 51,630 13;485 Payroll taxes 3,390 6,127 Pension wd retimment expense 50,888 46,356 Postage 1,411 623 Professional fees 85,376 51,765 Salaries and wages 333,565 340,747 Telephone 7,912 7,964 Travel 1,323 834 Treatment plant operations 1,007,923 624,147 Utilities 136.217 136,735

Total operating expenses 2,945,060 2,491,759

Operating income (loss) (134,279) 346,244

(Continued)

The accompwying no^ are ah integral part of these financial statements.

13

WEST OUACHITA SEWERAGE DISTRICT NO. 5 STATEMENTS OF REVENUES, EXPENSES

AND CHANGES IN NET POSITION (CONCLUDED) FOR THE YEARS ENDED

August 31,

Non-operating income (expenses) Property tax and interest Interest earned Franchise fees Gain 'on sale of assets Interest expense

Total Non-operating income

Income (loss) before contribntions

Capital contributions r developer^

Changes in net position

Net position at beginning of year as restated (Note 15)

NET POSITION AT END OF YEAR AS RESTATED

2013 2012 (Rotated)

12,500 137 4,239 .4^544 21i014 21,461

- 4,218 (20,714) (11,525) 17,039 18,835

(117,240) 365.079

_ 138,082

(117,240) 503,161

12,202,747 11,699,586

12,085.507 $ 12,202,747

14

WEST OUACHITA SEWERAGE DISTRICT NO. 5 STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED

August 31,

Cash flows from operating activities Receipt from customers Other revenue Payment to suppliers Payment for ^ployee services

Net.cash provided by operating activities

Cash flows from noncapital flnancing activities Property tax millage Franchise fee

Net cash provided by noncapital financing activities

Cash flows from capita] and related financing activities Purchase of capitsd assets Proceeds fi'om issuance of.bon^ Principal paid on bonds Interest paid on bonds Bond iûance costs

Net cash used by coital and related financing activities

Cash flows from investing activities Interest received Gain on sale of assets

Net cash ̂ vided by investing activities

Net Increase (Decrease) in Cash and Cash Equivalents

Cash and Cash Eqnlvalents at Beginning of Year

CASH AND CASH EQUIVALENTS AT END OF YEAR

2013 2012 (Restated)

2,742.624 $ 2,787,770 654 3,108

(2.327.078) (779,587) (389,488) (397,708)

26.712 1,613,583

12,500 137 21.014 21,461 33,514 21.598

(945.496) (2,471,829) 172,100 1,477,857

(116,500) -(19.146) (300)

- (35.986) (909,042) (1,030.258)

4,239 4.544 - 4.218

4,239 . 8.762

(844,577) 613,685

4,680,846 4,067,161

3,836,269 $ 4.680,846

(Continued)

The acconânying not^ are an integral part of these financial statements.

15

WEST OUACHITA SEWERAGE DISTRICT NO. 5 STATEMENTS OF CASH FLOWS (CONCLUDED)

FOR THE YEARS ENDED

Augusts],

Cash and cash equivalents on Che balance sheet as Cuirait assets

Cash and cash equivalents Restrict^ a^ts

2013 2012 Restated)

Recondliatlon of operating incoine to net cash provided by operating activities:

Operating income (loss) $ (134,279) $ 346.244 Adjustments to reconcile operating Income to net cash provided by

operating ac^ties D^reciation 672,386 634,438

- Bad debts 26,700 22,699 Accounts receivable (90,563) (48,008) InvOTtories (14,474) (1,659) Prepaid; insui^ce (1,732) i;899 Accounts payable (486,531) 645,318

. Accrued payroll and behefite 515 (2,303) Other post ̂ plpyment benefits 51,630 13,485 Customer deposits 3,060 1,470

Net cash provlded'by operating acttvities $ 26,712 $ 1,613,583

3,543,514 $ 4,547,846

292,755 . 133,000

TOTAL CA^ AND CASH EQUIVALENTS S 3,836,269. $ 4,680,846

Sapplementai Disclosure of Noncash Operating Activities Other post-employment benefits $ . 51i630 S 13,485

Supplemental Disclosure of Noncash Capital ReiatedFlnancIng Activities Investment in capital assets s S (625,000) Financing by other govenunents $ - $ 625,000

Supplemental Disclosure of Noncash Capital Investing Activities Contribution of sewerage coUection syst^ $ $ 138,082

16

WEST OUAeHITA SEWERAGE DISTRICT NO. 5 NOTES TO FINANCIAL STATEMENTS

AUGUST 31,2013 AND 2012

Note 1 - Summary of Signilicant Accounting Policies

A. History

West Ouadiita Sewerage District No. 5 (the District), was created on January 24, 1974, by the Ouachita Parish Police Jury, through adoption of Ordinance No. 7386, and therefore it is a component unit of the Ouachita Parish Police Jury (the Police Jury) and is an integral part of the Police Jury reporting entity. As a governmental entity, the District is exempt from federd and state income taxes. It is govemed by a board.of commissioners composed of three property taxpay^ residing within the District, all of which are appointed by the Police Jury.

The District was constructed with an EPA grant, which financed 75% of the consbuction and engineering costs. Bonds were sold to provide the funds needed for the local share.

B. Reporting Entity

The Goveriimental Accounting Standards Board (GASB) is the accepted-standard setting authority for geherdly accepted accounting principles as applied to govemmentd entities. GASB,St&temenft^mnhccSly The Financial Reporting Entity : Omnibus—An Amendment of GASB Statements No. 14andNo. 34, establishes criteria for determining whi(^ componeiitimits of governments should be considered part of a primary government for financid reporting purposes.

The basic criterion for ddermining a component unit is accoimtability. As the Police Jury appoints a voting majority of fhe board of comriiiîoners of the District and has the ability to impose its will upon the District, the District is considered a component unit of the Police Jury, the primary governing body of the parish arid the govemmentd body with oversight responsibility.

The accompanying basic financid statements present information only on the funds maintained by the District and do not present information on the Police Jury, the generd govoumCTt services .provided by that primary governmental unit or other component units that comprise the primary government reporting entity.

C. Basis of Accounting

The District has adopted the provisions of the Govemmentd Accounting Standards Board Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis -for State and Local Governments. Statement 34 established standards for extemd reporting for dl state and locd govemmentd entities which includes a

17

WEST OUACHITA SEWERAGE DISTRICT NO. 5 NOTES TO FINANCIAL STATEMENTS

AUGUST 31,2013 AND 2012

statement of net position, a statement of activities, and a statement of cash flows. It also requires the classification of net position: into three components - invested in capital assets, net of related debt; restricted and uiu^tricted. These classificatipns are defined as follows:

Net investment in capital assets - This component of net position consists of capital assets net of accumulated depreciation and reduced by the outstanding balmces on any bonds, itiOrtgês, notes, or other borrowings a.ttributed to the acquisition, construction, or improyement of those assets.

Restricted net position - This component of net position consists of the net position on which constraints have been placed externally by creditors (such as through debt (joyenante), grantors, contributors, laws or regulations of other governments, or laws through constitutional provirions or enabling legislation.

Unrestricted net position - This component of net position consists of the net position that does not meet the definition of **restricted" Or "invested in capital assete, net of related debt;"

The District's financial statements are prepared in accordance with accounting principles accepted in the United States of Ammca as applied to goyemmental units and promulgated by the Governmental Accounting Standards Board (GASH) Codification of Governmental Accounting and Financial Reporting Standards. The financial statements follow the guidance included in GASH Statement No. 62 -Codification of Accounting and Financial Reporting Guidance ContainedJn Pre-November 30,1989 FASB and AICPA Pronouncements.

The financial statements of the District are a Business-Type Activity mi are financed in whole or in part by fees charged to external parties for goods and-services;

The District recognizes income on the accnial basis of accounting, whereby revenues are recognized in the period in which they are earned and expenses are recognized in the period incurred^

When both restricted and unrestricted resources are avmlable, it is the District's policy to use restricted resources first, then unrestricted resources as they are needed.

The District distinguishes operating revenues and expenses fiom nonoperating items. Operating revenues and expenses generally result fi'om providing services in connection with the District's principal ongoing operations. Tbe principal operating revenues are charges to customos for service. Customers are billed monthly for services received during the month. The District also recognize as operating revenues

18


AUGUST 31,2013 AND 2012

the fees int^ded to recover the cost of connecting hew customers to the system. Operating, expenses include the cost of services, administrative expenses, and. depreciation on capital assets. All revenues ̂ d expenses not meeting this definition aire reported as nonoperating revenues and expenses.

1. Residential, multi-housing, and multi-unit services are charged $21 per month.

a. Themulti-housing is based on a 100% occupancy fector. b. The multi-unit is based on a physical count each month.

2. Commercial ,services was charged S2;625 per 1,000 gallons of water per month (metered water usage).

3. Institutional billing is based on monthly water use at $21 per 8,000 gallons used. 4. Industrial billing is based on average monthly water use plus Industrial Cost

Recovery factor and surcharge for excessive pollutant concentration.

The District provided services to 8,279 rerid^tial customers and 357 institutional ^d industrial customers at August31,2013.

D. Accounts Receivable

Rêivables are primarily composed of amounts due from customers located within thedistnct. Thedirectwrite-offmethodforrecognizingbaddebtsisused. Undffthis method, the rîvable is charged to expê when the account is deemed to be uncollectible. The difference between the use of the direct writeoff method and the allowance method for accounting for bad debts is not matâl to the financial statements of the District. With the change in service providers for billing, and collation, an estimate was used to record bad debts for 2013.

The District estimates their unbilled revraues to reflect the 8 billing cycles that are spread throughout the month; As such, 50% of the subsequent month's billings are recognized as revenues for the previous month.

E. Inventory

Inventory consists primarily of pump motors and is valued at estimated recoverable cost as determined by specific identification method. Other materials and supplies needed for maintenaiice and.operations are included in inventory and are valued at lower of cost or market using first in, first out, basis.

19


AUGUST 31,2013 AND 2012

F. Property and Equipment

Upon completion of new subdivisions, developors donate theirsystems to the District for servicing and maintenance. These systems are recorded at fair market value at the date of contribution.

The District considers assets with an individual cost of$500 or more and an estimated useful life of one year or ihore as a capital asset. Property and equipment are recorded at their historical cost and depreciated onthe strai^t-line basis OVCT their estimated useful lives. The estimated useful lives are as follows:

Buildings and Improveinents 15-40 Years Lift Station Structures 40 Years Gravity Lines, Force MainSj and Manholes 40 Years Equipment 3^20 Years Lift Station Pumps 10 Years Vehicles 5 Years Furniture and Fixtures 3-15 Year

CustomCTS are billed a'flat rate for new connection taps which covers the cost of the tap to the District; therefore, hew connectipn costs are expensed rather than capitalized.

G. Statements of Cash Flows

For purposes of the Statements of Cash Flows, the District considers all highly liquid investments (including restricted assets) with a maturity of three months or less wh^ purchased to be cash equivalents.

H. Compensated Absences

The District's policy for paid vacation, which is non-cumulative, is as follows:

Employment 1^-3 years 1 week per year 4-9 years 2 weeks per year

10 —19 years 3 weeks per yek-After 20 years 4 weeks per year

Employees accrue sick leave as follows:

EmpIoymOTt'less than 6 months 0 days per year 6 months - 1 year 4 days per year

20


AUGUST 31,2013 AND 2012

1-3 years 8 days per year After 3 years 12 days per year

Sick leave may be carried forward froin year to year with no limit on the number of hours that may be accrued. Employees are compensated up to a maximum of 30 days accumulated sick leaye only upon normal retirênt The financial statements do not include any accruals for compensated absences because the amount caiinot be reasonably estimated.

/. Use of Estimates

The preparation of financial statements in conformity with generally accepted accouiiting principles requires management to make estimates and assumptions that affect certain rôrted amounts and disclosures. Accordin^y, actual results could differ from those estimates.

J. Reclassifications

Minor reciassificatioiis have been made to prior year financial statements to make them comparable to the current year-s presentation.

Note 2 - Cash and Investments:

Under state law, the District may invest funds in demand deposits; iiit^st bearing demand deposits, or in time deposits with state banks organized under Louisiana law or any.other state and under the laws of the United States.

At August 31, 2013, the District has cash and cash equivalents totaling $3,836,269 as follows:

Demand deposits $ 3i836,174 Petty cash 95

Total $ 3,836;269

Custodial credit risk - deposits. These deposits are stated at-cpst, which approximates market. Under state law, these deposits (or re^lting.bank balances) must be secured by fiêral deposit insurance or the pledge of securities owned by the fiscal.agent bank. The rnarket'value of pledged securities plus the federal deposit insmance must at all times equal the aihount on deposits with the fiscal agent. These securities are held in the name

21

WEST OUACHITA SEWERAGE DISTRICT NO. 5 NOTES TO FINANeiAL STATEMENTS

AUGUST 31,2013 AND 2012

of the pledging fiscal agent in a holding or custodial bank that is mutually accqptable to both parties. Cash and cash equivalents at August 31,2013 are secured asToIlows:

Bank balances $ 3,840,672

Federal deposit insurance $ 250,000 Pledged securities 3,619,296

Total $ 3,869,296

Note 3;- Accounts Receivable

Accounts receivable of consists of the following for the years ended:

August 31, 2013 2012

Receivables billed to customers $ .529,327 475,133

Unbilled Revenues 112,161 103,784 Total Accounts Receivable $ 641,488 578,917

Note 4 - Changes in CapltalAssets

The changes in capital assets are as follows:

22


AUGUST 31,2013 AND 2012

Balance Deletions/ Balance 9/1/2012 Additions Transfers 8/31/2013

Nondepreciable assets: CoDStruction In Progress $ 1.524,406 $ 131,888 S (1.524,406) $ 131,888 Land 430,545 - - 430.545

Total Nondepreciable Assets 1:954.95 i 131,888 ,{1.524.406) 562.433

Depreciable Assets: Buildings and

Improvements 410462 2.000 - 412,162 Furniture and Fixtures 18,627 - - 18,627 'Equipment 470,323 15,100 - 485,423 Vehicles 265,035 - - 265,035 Lines,, Mains and -

Manholes 13,101,828 431,729 1,524,406 15.057,963 Lift Station Pumps 1,789,271 65,899 - 1,855,170 Lift Station Sthjctures 2,171,967 101.895 - 2,273,862 Treatment Plant 2,067,279 196,985 - 2,264364 Treatment Plant - Sparta 1,104.279 -• - 1,104,279

Total Depreciable Assets 21.398.771 813,608 1.524,406 23,736,785 Less Accumulated

Depreciation (I3.315;567) (672.386) (13,987.953) Net Capital Assets S 10;038,155 $ 273,110 $ - S 10,311,265

9/1/2011 Additions Ti^sfers 8/31/2012 Nondepreciable assets:

Construction In Progress $ 282,948 $ 1,456,650 $. (215,192) $ 1,524,406 Land 375.125 55,420 - 430345

Total Nondepreciable Assets 658,073 1,512,070 (215.192) 1.954.951

Depreciable Assets: Buildings and

Inqirovements 410,162 - - 410.162 Furniture and Fixtures 18,627 - - 18,627 Equipment 423320 52303 (5300) 470323 Vehicles 209,580 62355 (7,500) 265,035 Lines, Maiins and -

Manholes 12,723,865 .377,963 - 13,101,828 L^ Station Pumps 1,733377 55,694 - 1,789371 Lift Station Structures 2,118,420 53347 - 2,171,967 Treatment Plant U835,987 16,100 215,192 2,067379 Treatment Plant - Sparta - 1,104379 - 1.104,279

Total Depreciable Assets 19,473338 1,722.841 202,392 21,398,771 Less Accumulated

Etepreciatfon 02,729,915) (598.452) 12,800 (13315367) Net Capital Assets $ 7,401,696 $ 2,636,459 $. - $ 10,038,155

Depreciation of $672,386 and $598,452 was expensed for 2013 and 2012, respectively.

23


AUGUST 31, 2013 AND 2012

Note 5 - Long-Term Obligations

The following is a summaiy of long-^tcrm obligation transactions for the years ended

Total

. August 31, 2013 and 2012:

Long-term Obligations

Balance August 3,1,

2012 Additions Deductions

Balance August 31,

2013

Amounts Due

Widiih One Year

Bonds payable

Due to other governments

OPEB

$ 1,477,857

625i000 36,344

$ 172,100

0 51,630

($ 88,000)

(28,500) 0

$ 1,561,957

596,500 87,974

$ 88;000

29,000

Total $2,139,201 $ 223,730 ($ 116,500) $2,246,431 $ 117,000

Long-tenii Obligations

Balance August 31,

2011 Additions Deductions

Balance August 31,

2012

Amounts Due

Within One Year

Bonds payable

Due to other governments

OPEB

$ 0

0 22,859

$ 1,477.857

625,000 13i485

$ 0

0

0

$ 1,477,857

625,000

36,344

$ 88,000

28,500

$22,859 $2,116,342 $2,139,201 $ 116,500 0

Bonds Payable

In November:2011, the District issued $ 1,918,000 Depatoent of Environmental Quality (DEQ) Sewer Revenue Bonds Series 2011. These bonds are payable over 20 years with interest at the rate of .45% per annum and^ administrative of .50% per annum. As of August 31,2013, ten draws had been made on the lorn totaling $1,649;957, which leaves $268,043 inadditidnal.draws available in future periods.

Both principal and interest are due in total, to maturity, as follows:

24


AUGUST 31,2013 AND 2012

Year Ending August 31, 2013

Principal Payments

Interest Payments Total

2014 $ 88,000 $ 14,380 $ 102,380 2015 89,000 20,727 109,727 2016 90,000 19,429 109,429 2017 91,000 18,117 109,117 2018 92,000 16,790 108,790

2019-2023 471,000 63^659 534,659 2024-2028 495,000 28,671 523,671 .2029-2032 145,957 1,707 147,664

Total ' $ 1,561,957 $ 183,480 $ 1,745,437

TheDEQ loan agreement provides for the establishment of the following bank accounts:

"Sewer Revenue Bond Debt'ServiceFund'* - The Series 2011 DEQ Revenue Bonds require the establishment of a "S ewCT Reveriue Bond Debt Service Fund/' whereby monthly transfers will be made into the account on or before the 20*^ day of each month of each year, a sum equal to one-sixth (1/6*) of the interest falling dueon the^ next interest payment date and one-twelfth (1/12^ of the principal falling due on the next principal payment.date. As of August 31, 2013, ihe balance in the Sewer Revenue Bond Debt Service Fund was $85,580.

"Sewer Revenue Bond Debt Service Reserve Fund" - The agreement for the Swies 2011 DEQ bond provides that at least 20% of the resê fund requiranerit into the reserve fond each bond year, so that thereseive fund is fully funded no later than five years after the delivery date. As of August 31, 2013, the balance in the Sewer Revenue Bond Debt Service Reserve Fund was $53,005.

"Depreciation and Contineencv Fund" - The agreement for the 2011 DEQ bond provides that, on or before the 20* day of each month of each year, a sum equal to five (5%) of the preceding month's-Net Revenues as provided in the agreement for the precedingmonth shdl be transferred to this account, provided'that such sum is available provision is made. Payments in this fund shall continue until such time as $500,000 has accumulated in this ftmd, whereby such payments may cê and need be resumed only if the total amount of money on deposit is reduced below $500;000. As'Of August 31,2013, the balance in the Depreciation and Contingency Fxmd was $18,110.

25


AUGUST 31,2013 AND 2012

Note 6 - Long-Term Leases

On August 1,1984, the District entered into a 25-year lease with the City of West Monroe (the City) for joint lase of the Regional Wastewater Treatment Facility owned by the City. The lease contained a renewal option for one additional 15 year term, which was renewed on August 1,2009. The operation and maintenance of die treatment facility is prorated between the District and the City based on usage. The cost to the District was $1,007,923 and $624,147 for the years ended August 31,2013 and 2012, respectively. The agreement

. also provides for the sharing of costs to upgrade the facility during the term of the lease. The District incurred, capital upgrading costs of $196,984 and $1,388,801 for the years ended August 31,2013 and2012. The costdfupgrading includes a long-term liability to the City of West Monroe as described in Note 7.

Note 7— Joint Agreement with City of West Monroe on .Upgrading Treatment Facility

In fiscal year 2012, the District participated in a capital project with the City of West. Monroe to upgrade the quality arid quantity of wastewater effluent from the West Monroe/West Ouachita Sewerage District No 5 Reônal Wastewater Treatment Facility^ The City financed a portion of the project by means of a $1,250^000 loan fiom the Dq)aztment of Environmental Quality (DHQ) Statie Revolving Fimd Loan Program. The loari is payable oyer 20 years with an interest rate of .45% and an administrative fee of .50%. The financing arrangement for the project calls for the District to share in 50% repayment of the loan as payments are incurred. The District's.total'principal obligation to the City consists of 20 principal payments totaling $625,000 and interest and administiativefees of ,45% arid .50%, respectively.

Both principal and interest are due in total, to maturity, as follows:

year.Ending Principal Interest August'Sl, 2013 Payments Payments Total

2014 $ 29,000 $ 8,852 $ 37,852 2015 29,000 8,432 37,432 2016 29,500 8,007 37,507 2017 29i500 7,580 37,080 2018 30,000 7,149 37,149

2019-2023 154,000 29,123 183,123 2024-2028 161,000 17,635 178,635 2029-2032 134i500 5.372 139.872 Total $ 596,500 $ 92,150 $ 688,650

26


AUGUST 31,2013 AND 2012

Note 8 - Cpmnussioners* Fees

The memb^ of the Board of Commissioners are paid $60 per regular meeting and $25 per special meeting. Amounts due to board ;memb^ for meetings attended during the year ended August 31, 2013 were as follows:

Regular Special Commissioner Meetings" Meetings Gompensôn

Fred Hall - President 12 0 $ 720 Ralph Owens - Vice President 12 0 720 Don Leach- Secretary/Treasurer 12 0 720 Total $ 2,160

Commissioners are paid aRer year end for the meetings that w^ attended during the prior year.

Note 9 - Francluse Fee

The District entered into'a fi^chise agreement with a corrugated container plant located outside their taxing district boundaries. This agreement calls for payment of an unrestricted franchise fee equivalent to the taxes which would have been levied had the plant been in the boundaries of the District, The plmt also pays a monthly user's fee. The fi^chise fees ;were$21j014 and $21,461 forthe yeais ended August 31,2013 and 2012, respectively.

Note 10 - Defined Benefit Pension Plan

Substantially all employees of the District participate in the Parochial Employ^' Retirement System of Louisiana (the Systeni), a defined benefit, multiple-employer public employee retirênt system. All full-time «nployees of the District ^ eligible to participate in the Systern. Employees who retire at or aifler age 60 with 10 years of credited service, age 55 with 25 years of credited service, or with 30 years of credited service regardless of age are entitled to a retiremerit benefit, payable.monthly for'life, equal to 3 percent of their final average salary for each year of credited service. Final average salary is the employee's average salary over the highest thirty six consecutive months of credited service. The system , also provides death and disability benefits. Benefits ^ established by state statute.

27


AUGUST 31,2013 AND 2012

Funding Policy: Contributions to the System .include one-fourth of one percent of the taxes shown to be collected by the tax rolls of each parish (excepting OrleanS'and East Baton Rouge). State statutes require covered employees to contribute a percentage of their salary into the System. The District's contribution is determined by an-actuarial valuation and is subje<k to change each year based on the results of the valuation for the previous year. For the calendar years 2013,2012, and 2011, covered employ^ were required to contribute 9.50% of their salary to the plan. The District was requir^ to contribute 16.75% of employee salaries to the plan diuiiig calendar years 2013i 2012, and 2011. The District's contributions to the plan were$50,888, $46,356, and $49,343 forthe years ended August 31, 2013,2012, and 2011, respectively.

The system issu^ an annual, publicly available, financial report that includes financial statênts ̂ d required supplementary information covering the System. The rqwitmay be obtained by writing the Parochial Employees' Retirement System, P. O. Box 14619, Baton Rouge, LA 70898-4619 or by calling (504):928-l 361.

Note II - Other Postemploymeiit Benefits Plan

Plan Description. The District participates in a group defined health rêment plan ("the Plan"), authorized by Louisiâ Revised St^te, whichis administered by the Office of Group Benefits. The plan provides medical, dental and vision insurance benefits to eli^ble retirees. The Plan does not issue a publicly available financial report.

Furling Policy. The contribution requirements of the plan members and the District are ^tablished and maybe amended by the District. Retirees are required to pay 21% of the medical premiums charged by the Office of Group Benefits. Retirees pay the full cost of dent^.and vision benefits. For the fiscal year 2013, the District did not have any retirees covered undCT the Plan, so no contributions were made to the Plan.

Annual OPEB Cost and Net OPEB Obligation. The District's annual other posteinployment benefit C'OPBB") cost (expense) is calculated based on. the annual required contribution of the employer ("ARC")» an amount actuarially determined in

' accordancewiththeparametersofGASBStatement45. The ARC represents the level of funding that, if paid on an ongoing basis, is projectedto cover normal cost each year and to amortize any unfunded actuarial liabilities (of funding excess) over a period not to exceed thirty ye^. The following table shows the components of the District's annual GPBB cost for the year, the amount actually contributed'to the plan, and changes in the District's net OPEB obligation to the Plan:

28


AUGUST 31,2013 AND 2012

August 31, 2013 2012

Annual Required Contribution $51,824 $15,608 Interest on Net OPEB Obligation $1,018 $437 Adjustment to Annual Required Contribution ($1,211) $0

Annual OPEB Cost (Expense) $51,630 $16,045 Contributions Made $0 $2,560

Increase in Net OPEB Obligation $51,630 $13,485 Net OPEB Obligôn - be^nning of year $36,344 $22,859 NetCPBB Obligation - end of year $87,974 $36,344

The District's annual OPEB costs, the percentage of ̂ ual OPEB cost contribute to the plan, and the net OPEB obligations are as follows:

Fiscal Percentageof Year Annual Annual OPEB Net OPEB

Ende OPEB Cost Cost Contribute Obligation

8/31/2011 $15,607 26.6% $22,859 8/31/2012 $16,045 16:0% $36,344 8/3.1/2013 $51,630 0.0% $87,974

Funded Status and Funding Progress. As of 8/31/2013, the actuarial accrued liability for beefits was $281,416, all of which wasunfimde. The covere payroll (annual payroll of active mployees covere by the plan) was $333,565, and, the ratio of the unfonde actuarial accrue iiability to the covCTe payroll was 82.6%.

The projection of future benefit payments for, an ongoing plan involves estimates of the value of repoite amounts and assumptions about the probability of occurrence of events into the future. Examples include assumptions aboxit future employnient, mortality,.and the healthcare cost trend; Amounts determined regarding the funding status ofthe plan and the annual required contributions of the employer are subject to continual revision as actual results are^compared with past expectations and new. estimates are made about the future. The schedule of funding progress, presented as required supplementary iidformation following the notes to the financial statênts, presents multiyear trend information about whether the actuarial value of the plan assets is increasing or decreasing over tdme relative to the actuarial accrued liabilities for the benefits.

Methods and Assumptions. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members)

29

WEST OUAGHTTA SEWERAGE DISTRICT NO. 5 NOTES TO FINANCIAL STATEMENTS

AUGUST 31,2013 AND 2012

pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce short term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-tenn perspective of the calculations.

Thejfollowing simplifying assumptions weremade:

Retirement age for active employee - Based on the historical average retirement age for the covered group, active plan members were assumed to retire at age earliest eligibility.

Marital Status - Current marital status is assumed to continue throughout retirement.

Mortality - Life expectancies were based on the RP-2000 Combined Hedthy Mortality Table.

Turnover - Non-group-specific age-based tumover data from GASB Statement 45 were used as the basis for assigning active members a probability of remaining employed until the assumed retirênt age and . for developing an expected future working lifetime assumption for purposes of allocating to periods the preset value of total benefits to be paid.

Health cost trend rate - The expected rate if ihdease in he^thcare insurance premiums was based on the Society of Actuaries' Getzen Model. A rate of 7.50% initially, reduced to im ultimate rate of 4.24% after 71 years, was used.

Health Insurance Premiums -^2012 health insurance premiums for retirees were used as the basis .for calculation of the present value of total benefits paid.

Inflation rate - The expected loiig term inflation assumption of 2.8%was based on projected changes in.theGonsumer Price Index for Urban Wage Eamers.and,Clerical Workers (CPI-W)Tn The 2012 Annual'Report of the Board of Trustees of the Fêral Old-Age and Survivors Insurance and Disability Insurance Trust Funds for intermediate growth.

Payroll growth ra/a- The expected long-term payroll growth rate was assumed to equal the rate of inflation.

Based on the District's short-term investment portfolio, a discount rate of 2.80% was used, hi addition, a siinplifi^ version of &e Unit Credit actuarial cost method was used. The unfunded actuarial liability is being Mortized on a level percent of pay, open basis over 30 years.

30


AUGUST 31,2013 AND 2012

Note 12 - Related Party Trwsartions

The District is covered by certain umbrella insurance policies including liability and property, worker's compensation, and group health insurance policies throu^ the Police Jury. During:20l3 and 2012 the District paid the Police Jury $128,618 and $121,755, respectively, for this coverage.

Note 13 - Risk Financing Activities

Through its primary government, the Ouachita Parish Police Jury, the District participates in a self-funded program (the fimd) for potential losses under general liability, property and automdbile coverage, and worker's coihpensatidn. The fund pays the premiums for reinsurance and pays all deductibles up to $ 150,000. per occimence, except for $500 that is paid by the District. TTie premiums, which are modified for expmence andother factors, are computed annually. The reinsurance policy covers all losses ova* the $150,000 deductible with an aggregate general liability coverê of $3,000,000. Two funds are establiêd, one for liability and property one for worker's compensation. These funds had $7,176,686 and $7,100,761 in net position as of December 31,2013 and 2012, reêctively. The District contributed $44,487 and $70,121 into the fond during the years endied.August 31,2013 md 2012, respectively.

Note 14 - Concentrations of Risk

Accounts receivable primarily rq)resCTt amounts due from customers located within the boundaries of the District The District requires a security dôsit of $20'for each new customer being serviced by the system. Failure of the District's customers to perform as required could impact the District's ability to collect approximately $505,428 after applying the security d^sits of $136^060.

Note 15 - Restatement of Net Position

The District has ei^t billing cycles ea^ month that are spread throughout the month. During the current frscal year, management made the decision to recognize unbilled revenues of approximately one-half month due to the timing of the vôus billing cycles and to more accurately reflect revenue with a method that is more ̂ propriate than the one previously used. As a result, net position as of AugusfSl, 2011 as reported in the Statements of Revenues, Expenses,-and Ch^ges in Net Position has been restêd to reflect the unbilled revenues as of that date as follows:

31


AUGUST 31, 20X3 AND 2012

Restatement

Total Net Position, August 31, 2011, as previously reported $ 11,591,713

Unbilled revenues as of August 31,2011 107,873

Total Net Position, August 31,2011, restated $ 11,699,586

Further, the decision to recognize tiiibilled revenues resulted in a decrease in sewerage fee revenues in the amount of $4,089 for the year ended August 31, 2012.

Additionally, the District implemented the provisions of GASB Statement No. 65, Items Previously Reported as Assets and Liabilities. The net effect to the Statement of Net PositionTor ihe year ended AtJgust 31,2012,from the adoption of GASB Statement No. 65 resulted in a decrease in net position of $34,486 which was expensed as of that date.

Upon review of prior year customer deposit r^rte, it was discovered that customer deposits reported for the year ended August 31,2012 were understated by $20,800 due to the District's diange in billing companies in mid-year. In fiscal 2013, management made the decision to restate customer deposits as of August 31, >2012 in the amoimt of $20,800.

32

REQUIRED SUPPLEMENTAL INFORMATION (PARTE)

33

WEST OUACHITA SEWERAGE DISTRICT NO. 5 OTHER POST EMPLOYMENT BENEFITS

SCHEDULE OF FUNDING PROGRESS (UNAUDITED)

Schedule 1

Fisc^ Year

Hading 08/31/13

08/31/12

08/31/11

Actuarial Valuation

Date 09/01/12 $

09/01/11 $

09/01/10 $

Actuarial Value of Assets

(^)

Actual Accrued

Liability (AAL) (b)

Unfunded AAL

(UAAL) (b-a)

Fiêd Ration (a/b)

Covered Payroll

(c)

UAAL as a Percentageof

Covered Payroll ((b-ayc)

$ 281,416 $ 281,416 ^ 0.0% S 333,565 84.4%

$ 113,671 $ 113,671 o

,o

$ 340,747 33.4%

$ 113,671 $ 113,671 o

o

$ 324,999 35.0%

34

OTHER SUPPLEMENTAL INFORMATION

35

Schedule 2 WEST OUAGHTTA SEWERAGE DISTRICT NO. 5

SCHEDULES OF CHANGES IN RESTRICTED ASSETS FOR THE YEAR ENDED AUGUST 31,

2013.

Customer Deposits

BoDd aod Interest

Redemptloii Revenue Bond

Reserve

Depreciation and

Coatliêacy Total

Balance • September 1,2012 Add:

Transfers/adjustmenb Interest earned

Total funds availal)le

133;000 S

2,933 127

136,060

85,602 8

53,000 5

85,610 53,005

18,104 6

18,110

133,000

159,639 146

292,785

Less: Bulk service fees

BALANCE - AUGUST 31,2013 136;060 $

(30)

85,580 $ 53,005 $ 18,110 S

m 292,755

2012 Customer Deposits

Balance • September 1,2011 Add:

Bond Proceeds Transfeis Interest earned

BALANCE - AUGUST 31,2012

127,016

5,863 121

-133,000

36

WEST OUACHltA SEWERAGE DISTRICT NO. 5 SCHEDULE OF INSURANCE COVERAGE

AUGUCT31,2013 (UNAUDITED)

Schedule 3

ProperiyorRlsk and

Insnrance Company Kind of Insurance

and Term

Employee Midwet Employe Casualty Company

Worionen's Compensation Employee's Liability 1/1/13 to l/i/14

Maximum Coverage

Statutory

Multi-Peril Traveler's Indemnity Co.

Coniprehensive General Liability 1/1/13 to 1/1/14

$3,000,000-Aggregate

$1,000.000-Per Occurrence

Vdiicles Travel^s Indemnity Co.

Auto Liability i/l/13to1/l/14

Combined Single Limit.

$1,000,000

3 Commissioners and All Employees Tiaveter's Indemnity Co.

Fidelity Bond 1/1/13 to 1/1/14

SI 00,000 Per Occurrence

$25,000 Deductible

This schedule, prqrared &om the polici^ is intended only as a descriptive summary.

* Policy is covering the Ouachita Parish Police Jury, which includes West Ouachita Sewerage District No. 5.

37

HUFFMAN 8C ÔIGNIER Frands I. Huân, CPA David Ray Solgnier, CPA, MBA, COMA

(AtPiiiOFESsioNAi. ACCOUNTING CoRroRATipN) CERTIFIED PUBWC ACCOUNTANTS

John Herman, CPA LynnAndries, CPA, COMA EkherAtteberry, CPA Lori Woodard, MBA, CPA. COMA, CITP Fernando Cordova, CPA

INDEPENDENT AtJDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTiO^G AJND ON COMPLIANCE AND OTHER MATTERS BASED

PN AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE wrrBGoyBmMBivrAuviriNGsrAJ^ÂRDS

Board of Cdminlssioners West Ouachita.Sewerage District No. 5 West Monroe, Louisiana

We have audited, in accordance with the auditing standards generally accepted jin the United States of Anierica and die standards applicable to financial audits contained in Govemmeni Auditing Standards issiied.by the ComptrpllCT General of the United States, the financi^ sêments of the business-type activities ofW^t Ouachita Sewerage District No. 5 (die District) (a cocnponeat unit of the Ouachita Parish Police Jury) as of and for the years ended August 31,,2013 and 2012, and'the related notes to the financial ^terhents, which ccUectively comprise the District's basic financial statements, and have issuedôur report thereon dated May 30, 2014. It should be noted that we issued a qualified opinion due to a scope limitation since we w^ unable to determine the District's intern^ controls over sewer accounts receivable and sewer revûes as the District's billing and collection service provide could not provide us with sufficient internal control dpcumaitation.

Internal Control over Financial Reporting

In planning and performing our audit of the financial statements, we considered the District's intemal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expr^sing our opinion on the finwcial statements, but not for the purpose of expressing an opinion on tiie effectiveness of the District's iêmd control over financial reporting. Accordingly, we dO' not express an opinion on foe efifectivOTess of the Di^ct's internal control.

GUT consideration of intemal control was for foe limited purpose described in foe preceding paragriaph and not designed to identify all deficiencies m intâl control that rrii^t be material weabês oi significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not idezitified. However, as des^bed in the accompanjdhg Schedule of Findings and Responses, we identified a certain deficiency in intemal control foat we consider to be amaterial weakness.

1100 North 18(h Street; Monroe, Loulelana 71201 Teir (318)3S7-2672 * Fax: (318)322-8866 • Website: www.efunservfcecpaflrm.oom

MEMBERS OF THE AMÎCVtN INSTTfUTE OF CERTIFIED PUBLIC ACCOUNTANTS

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Board of Commissioners West Ouachita Sewerage District No. 5 West Monroe, Louisiana

A deficieacy in internal contml exists when the design or operation of a control does not allow managementbr.employees, in the normal course of performing their assigned factions, to prevent, or detect ^d coirect, misstatements on a timely basis.. A material weakness is a deficiency, or combination of deficiencies, in. internd control ^ch that there is a reasonable possibility that a material misstatement of the District's financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiency described in the accompanying Schedule of Finditrgs and Responses^ 13-01 be a material weakness.

Compliance and .Other Matters

As pari of obtaining reasonable assurance about whether the District's financial statements are free fiom materialmisstatement, weperformed,tests of its compliance with certain provisions of laws, regulations, contracts, and grant aêements, noncompliance with which could have a dire^ and material effect on the determination of financial statement amounts. However, providing an opinion on complianc^.with those provisions was not an objective of our audit, and accordingly, we do not express sudi an opinion. The results of our tests disclosed instances of noncompliance or other matters that are required to be reported under Governmental Auditing Standards and which are described in the accompmying Schedule of Findings and Responses as Finding 13-02.

The District's jResponse to Findings

The District's response to the findings identified in our audit is described in the accompanying Schedule of Findings and Responses. The District's r^ponses were not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on them.

Purpose of this/Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District's internal control or on compliance. This reportis an integral pari of an audit performed in accordance with Government Auditing Standards in considering the District's internal control Md compliance.. Accordingly, this communicôn is not suitable for any other purpose.

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Board of Commissioners West Ouachita Sewerage District No. 5 West Monroe, Louisiana

This report is intended solely for the information and use of manêment of the District, its primary goyerênt, and theXegislative Auditor for the State of Louisiana and is not intended to be and should not be used by anyone other than these specified parties. UndWiRevised Statute 24:513, this report is distributed by the Legislative Auditor as a public document.

( (A. Professional Accounting Corporation)

May 30,2014

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WEST OUACHITA SEWERAGE DISTRICT NO. SCHEDULE OF FINDINGS AND RESPONSES

AUGUST 31,2013

13-01 Internal Controls of the District's Service Organizatiohs

Finding: The District outsources the billing and collection of sewerage fees to a third party service organization. During fiscal year ended August 31, 2013, the District was served bytwo billing and collection providers as the agreement with the existing provider expirediand was contracted to a hew provider.

The District should have an understanding ofthe internal controls of the service organization in oider to assess risks of material misstatement to their financial statements. The District w^ unable to determine the adequacy of their internal controls over the billing and cqllection.of sewerage fees since the third party providers could not provide them with a Service Organization Control (SOC) report or other information adequate for gaining an understanding of the service providers' internal controls. Consequently, since the District did not have an adequate understanding of the service providers' controls over the billing and collection of sewerage fees, mistakes could be made and not detected and corrected in.a timely manner.

Recommendation: We recommend the District obtain an understanding of the internal controls of the service organiizations by requesting SOC reports and other information in order for the^District to gain an adequate underst^ding of the internal controls of the service organizations.

Managements Corrective Action Plan: We will contact our billing and collection company and communicate our need for a SOC i^rt and other information conceniihg their control environment.

13-02 Timely FiUUng of Audit Report

Finding: Louisiana Revised Statute 24:513 requires that the District prepare aind submit its annual audited financial.statements to the Louisiana Legislative Auditor within,six months ofthe District's fiscal year end or.February 28,2014. Due to the internal control issues mentioned in Finding 13-01, the District was not able to submit its audited finwci^ statements within the six month timefiê which resulted in noncompliance ̂ th state law regarding financial reporting.

Recommendation: As mentioned in Finding 13-01, we recommend the District contact the billing and collection company- and address the issues indicated in that finding to ensure that fiiture audits can be completed and submitted to the Legislative Auditor within the prescribed time period.

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WEST OUACHITA SEWERAGE DISTRICT NO. 5 SCHEDULE OF FINDINGS AND RESPONSES

AUGUST 31,2013

Mahagementîs Correcdve Action Plan: We will contact the billing and collection company and ad(êss the issues mentioned in Finding 13-01 to ensure that audits can be completed and submitted to the Legislative Auditor within six months of the eiid of the fiscal year.

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WEST OUACHITA SEWERAGE DISTRICT NO. 5 SUMMARY STATUS OF PRIOR YEAR FINDINGS

FOR THE YEAR ENDED AUGUST 31, 2013

The followmg is a supunary of the status of the prior year finding included jn Luffey, Huffinan, Ragsdale & Soignier's (APAC) audit report dated Febru^ 28j 20l3 ofWest Ouachita Sewerage District No. 5 as of and for the year; ended August 31, 2012.

12-01 Internal Control over Billings and Collections

During the course of the audit of the financial statements of West Ouachita Sewerage District No. 5 (the District) for the years ended August 31, 2012 Md,2011, issues were encountered in obtaining monthly reports from theDistrict*s contracted billing and collection company in a timely manner.

Status:

In response to the finding, the District contacted representatives from the billing company and communicated the urgency of obtaining reports on a monthly basis. Additionally, the Dtoict changed billing companies diiring fiscal year 2013 and experienced similar problems with the new billing company. The reports from the new billing company were not always provided on a timely basis; however, after contacting the new billing company and voicing their concerns, the District washable to obtain billing; reports within a reasonable timeframe. However, the billing and collection compani^ were unable to provide adequate documentation regarding their internal controls which resulted in finding 13-01 in the current year's Schediile of Findings and Responses. The District will continue to voice its concerns regarding the internal control issues until the

issues are.rôlved..

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West Ouachita Sewerage District No. 5 of Ouachita Parish · Management is res^nsible for the pr^arationand iair presentation of these fmancial statements in accordance with accounting

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