Norco Area Volunteer Fire Department - area volunteer fire department, inc. for the year ended december 31.2005 o^^^^^sf state law, ... norco area volunteer fire department, inc. statement

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  • ANNUAL FINANCIAL REPORT

    NORCO AREA VOLUNTEER FIRE DEPARTMENT, INC.

    FOR THE YEAR ENDED

    DECEMBER 31.2005

    of state law, this report is a public

    ^^^^^s^oie entity and other appropriate P^ c o*cws. Thereport is available for public inspechon attt ,e B*on

    ^^appropriate, a

    E R I C K S E N K R E N T E L &LAPORTEL.LRC E R T I F I E D P U B L I C A C C O U N T A N T S ~& C 0 N S U L T A N T S

    4227 CANAL STREETNEW ORLEANS, LOUISIANA 70119-5996TELEPHONE (504) 486-7275 PAX (504} 482-2516WWW.ERICKSENKRENTEL.COM

  • TABLE OF CONTENTS

    EXHIBIT PAGE

    FINANCIAL SECTION

    INDEPENDENT AUDITORS' REPORT ; 1-2

    REQUIRED SUPPLEMENTARY INFORMATION:

    Managements Discussion and Analysis (Unaudited) 3-5

    BASIC FINANCIAL STATEMENTS:

    GOVERNMENTAL-WIDE FINANCIAL STATEMENTS (GWFS)

    Statement of Net Assets A 6

    Statement of Activities B 7

    FUND FINANCIAL STATEMENTS (FFS)

    Governmental Funds:

    Balance Sheet C 8

    Reconciliation of the Governmental Funds Balance Sheet to theStatement of Net Assets D 9

    Statement of Revenues, Expenditures, and Changes inFund Balances E 10

    Reconciliation of the Statement of Revenues, Expenditures, andChanges in Fund Balances of Governmental Funds to theStatement of Activities F 11

    NOTES TO FINANCIAL STATEMENTS 12-18

    Report on Internal Control Over Financial Reporting and on Complianceand Other Matters Based on an Audit of Financial Statements Performedin Accordance with Government Auditing Standards 19 - 20

    Schedule of Findings and Questioned Costs.... 21 - 22

    Schedule of Prior Year Findings 23

  • --, T f -Y ^ JAMES E.

    E RICKS ENKRENTEL & LAPORTEt L r. .N, Jff.

    CERTIFIED PUBLIC A C C O U N T A N T S & CONSULTANTS

    KENNETH J.

    4227 CANAL STREET W. ERIC POWERS

    NEW ORLEANS, LOUISIANA 70119-5996 ITOFESSIONAL CORPORATIONTELEPHONE (504) 486-7275 - FAX (504) 482-2516 BENJAMIN J. BUCKSEN - RETIRED

    WWW.ERtCKSENKRENTEL.COM J-v- ^ERE KREMTEI. - RE

    INDEPENDENT AUDITORS' REPORT

    Norco Area Volunteer Fire Department, Inc.P.O. Box 321Norco, Louisiana 70079

    We have audited the accompanying financial statements of the governmental activities and eachmajor fund of the Norco Area Volunteer Fire Department, Inc. (the Fire Department) as of andfor the year ended December 31,2005, which collectively comprise the Fire Department's basicfinancial statements as listed in the table of contents. These financial statements are theresponsibility of the Fire Department's management. Our responsibility is to express opinions onthese financial statements based on our audit.

    We conducted our audit in accordance with auditing standards generally accepted in the UnitedStates of America, the Louisiana Governmental Audit Guide and the standards applicable tofinancial 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 obtainreasonable assurance about whether the financial statements are free of material misstatementAn audit includes examining, on a test basis, evidence supporting the amounts and disclosures inthe financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial statementpresentation. We believe that our audit provides a reasonable basis for our opinions.

    In our opinion, the financial statements referred to above present fairly, in all material respects,the respective financial position of the governmental activities and each major fund of the NorcoArea Volunteer Fire Department, Inc. as of December 31,2005, and the respective changes infinancial position, thereof for the year then ended in conformity with accounting principlesgenerally accepted in the United States of America.

    In accordance with Government Auditing Standards, we have also issued our report dated June 2,2006, on our consideration of the Norco Area Volunteer Fire Department, Inc.'s internal controlover financial reporting and on our tests of its compliance with certain provisions of laws,regulations, contracts, and grant agreements and other matters. The purpose of that report is todescribe the scope of our testing of internal control over financial reporting and compliance andthe results of that testing and not to provide an opinion on the internal control over financialreporting or on compliance. That report is an integral part of an audit performed in accordancewith Government Auditing Standards and should be considered in conjunction with this report inconsidering the results of our audit.

  • E RICKS EN KRENTEL& LAPORTEI.L.P.CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS

    Norco Area Volunteer Fire Department, Inc.June 2,2006Page 2

    The management's discussion and analysis information on pages 3 through 5 are not a requiredpart of the basic financial statements but are supplementary information required by accountingprinciples generally accepted in the United States of America. We have applied certain limitedprocedures, which consisted principally of inquiries of management regarding the methods ofmeasurement and presentation of the required supplementary information. However, we did notaudit the information and express no opinion on it.

    June 2,2006

    Certified Public Accountants

  • REQUIRED SUPPLEMENTARY INFORMATION

  • NORCO AREA VOLUNTEER FIRE DEPARTMENT, INC.NORCO, LOUISIANA

    MANAGEMENT'S DISCUSSION AND ANALYSISAS OF AND FOR THE YEAR ENDED DECEMBER 31. 2005

    This section of the Norco Area Volunteer Fire Department (the Fire Department) annualfinancial report presents management's analysis of the Fire Department's financial performancefor the year ended December 31,2005. This analysis should be read in conjunction with theaudited financial statements, which follow this section.

    FINANCIAL HIGHLIGHTS

    1. The Fire Department's net assets increased by $81,080.2. The general revenues of the Fire Department were $321,747.3. The total expenses of the Fire Department were $240,668.

    OVERVIEW OF THE FINANCIAL STATEMENTS

    This report consists of two sections: Management's Discussion and Analysis and auditedfinancial statements. The financial statements also include notes that provide additional detail ofthe information included in the financial statements.

    BASIC FINANCIAL STATEMENTS

    The financial statements of the Fire Department report information about the Fire Departmentusing accounting methods similar to those used by private companies. These financialstatements provide financial information about the activities of the Fire Department.

    The Statement of Net Assets presents the current and long-term portions of assets and liabilitiesseparately,

    The Statement of Revenues, Expenditures and Changes in Fund Balance and the Statement ofActivities presents information on how the Fire Department's net assets changed as a result ofcurrent period operations.

    The following presents condensed financial information of the Fire Department.

    SUMMARY OF NET ASSETSFOR THE YEARS ENDED DECEMBER 31. 2005 AND 2004

    ASSETS

    Current assetsCapital assets, net of accumulateddepreciation

    December 31, December 31,2005 2004

    $ 315,451 $ 251,484

    794,405 797,317

    Total assets S _LJQ

  • NORCO AREA VOLUNTEER FIRE DEPARTMENT, INC.NORCO, LOUISIANA

    MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)AS OF AND FOR THE YEAR ENDED DECEMBER 31.2005

    LIABILITIESDecember 31, December 31,

    2005 2004

    Current liabilities S 20,195 $ 5,220Long-term liabilities 160,000 195,000

    Total liabilities S 180.195 S 200.220

    NET ASSETS

    Invested in capital assets, net ofrelated debt $ 643,172 $ 602,317

    Unrestricted 286.489 246.264

    Total net assets S 929.661 $ 848.581

    Total assets increased by $61,055 (5,8%). This increase was caused primarily by the FEMAgrant receivable of approximately $20,000 and an increase in cash from operations.

    Total liabilities decreased by $20,025 (10%) primarily because of principal payments on long-term debt.

    Total net assets increased by $81,080 (9.5%) as a result of operations.

    SUMMARY OF REVENUES, EXPENDITURES/EXPENSESAND CHANGES IN NET ASSETS

    FOR THE YEARS ENDED DECEMBER 31. 2005 AND 2004

    December 31, December 31,2005 2004

    General revenues $ 321,748 $ 335,000Expenditures/ expenses (240,668) (290,024)

    Change in net assets S 81.080 S 44.976

    The change in net assets increased by $36,104 (80%). A decrease in grant income caused anoverall decline in general revenues. This decline was offset by a decrease in operating expenses.

  • NORCO AREA VOLUNTEER FIRE DEPARTMENT, INC.NORCO, LOUISIANA

    MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)AS OF AND FOR THE YEAR ENDED DECEMBER 31.2005

    CAPITAL ASSETS

    Following is a schedule of capital assets, net of accumulated depreciation:

    December 31, December 31,2005 2004

    Land $ 52,533 $ 41,644Buildings and improvements 484,587 525,656Equipment 112,422 138,669Computers 2,840 2,296Vehicles 142.023 89.052

    Total capital assets, net ofaccumulated depreciation $ 794.405 S 797.317

    The major additions to capital assets during 2005 consisted of land, vehicles and various fireequipment.

    LONG-TERM DEBT

    At December 31, 2005, the Fire Department had $160,000 in long-term debt which consisted ofbonds payable. During the year, the Fire Department's long-term debt decreased by $35,000.

    This report is designed to provide a general overview of the Fire Department and to demonstratethe Fire Department's accountability for its finances. If you have any questions about this reportor need additional information, please contact Kenny Wenning, Norco Area Volunteer FireDepartment, P.O. Box 321, Norco, Louisiana 70079.

  • BASIC FINANCIAL STATEMENTS

  • Exhibit "A"

    NORCO AREA VOLUNTEER FIRE DEPARTMENT, INC.STATEMENT OF NET ASSETS

    DECEMBER 31. 2005

    ASSETS:Cash $ 255,457Grant receivable 20,880Due from Parish 11,587Prepaid expenses 27,527Capital assets, net of accumulated depreciation 794,405

    Total assets 1,109,856

    LIABILITIES:Accounts payable 12,862Accrued interest payable 7,333Bonds payable:

    Due within one year 60,000Due after one year 100,000

    Total liabilities 180,195

    NET ASSETS:Invested in capital assets, net of related debt 643,172Unrestricted 286,489

    Total net assets $ 929,661

    The accompanying notes are an integral part of this statement6

  • Exhibit "B'

    NORCO AREA VOLUNTEER FIRE DEPARTMENT, INC.STATEMENT OF ACTIVITIES

    FOR THE YEAR ENDED DECEMBER 31. 2005

    GOVERNMENTAL ACTIVITIES:Public safety - fire protection

    Total expenses

    Net (expense) from governmental activities

    GENERAL REVENUES:Sales tax-1/8 centAd valorem taxFire insurance rebateOther revenues

    Total general revenues

    Change in net assets

    Net assets - beginning

    Net assets - ending

    240,668

    240,668

    (240,668)

    142,400123,42816,57639,344

    321,748

    81,080

    848,581

    $ 929,661

    The accompanying notes are an integral part of this statement7

  • Exhibit "C"

    NORCO AREA VOLUNTEER FERE DEPARTMENT, INC.BALANCE SHEET

    DECEMBER 31.2005

    CashGrant receivableDue from ParishPrepaid expenses

    Total assets

    ASSETS

    LIABILITIES AND FUND BALANCE

    LIABILITIES;Accounts payable

    Total liabilities

    FUND BALANCE;Reserved for prepaid expensesUnreserved

    Total fund balance

    Total liabilities and fund balance

    $

    $

    $

    255,45720,88011,58727,527

    315,451

    12,862

    12,862

    27,527275,062

    302,589

    $ 315,451

    The accompanying notes are an integral part of this statement

  • Exhibit "D"

    NORCO AREA VOLUNTEER FIRE DEPARTMENT, INC.RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

    TO THE STATEMENT OF NET ASSETSFOR THE YEAR ENDED DECEMBER 31. 2005

    Fund balance - total governmental funds $ 302,589

    Amounts reported for governmental activities in the Statement of Net Assetsare different because:

    Net capital assets used in governmental activities are not financial resourcesand, therefore, are not reported in the governmental funds. 794,405

    Long-term liabilities, including bonds payable, are not due and payable inthe current period and, therefore, are not reported in the governmentalfunds. Interest on long-term debt is not accrued in governmental funds,but rather is recognized as an expenditure when due. All liabilities (bothcurrent and long term) are reported in the Statement of Net Assets.

    Accrued interest payable (7,333)Bonds payable (160,000)

    Net assets of governmental activities $ 929,661

    The accompanying notes are an integral part of this statement9

  • Exhibit "E"

    NORCO AREA VOLUNTEER FIRE DEPARTMENT, INC.STATEMENT OF REVENUES, EXPENDITURES AND

    CHANGES IN FUND BALANCEFOR THE YEAR ENDED DECEMBER 31, 2QQ5

    REVENUES:Sales tax -1/8 centAd valorem taxFire insurance rebateOther revenues

    Total revenues

    EXPENDITURES:Utilities:

    ElectricityGasInternetTelephoneWater

    Equipment:MaintenanceFuelInsurance

    Buildings:Maintenance

    Personnel:Training

    Firefighting expenditures:Fire supplies

    Miscellaneous:Accounting and auditingDues and subscriptionsOffice expenseMeetings and other

    Capital outlay:Equipment purchases and building additions

    Debt repayment:Debt retirementInterest expense

    Total expenditures

    Excess of revenues over expenditures

    FUND BALANCE, BEGINNING OF YEAR

    FUND BALANCE, END OF YEAR

    142,400123,42816,57639,344

    321,748

    9,8261,937

    8483,0231,309

    22,7623,969

    30,748

    7,801

    1,797

    3,711

    3,700633

    2,06313,340

    114,689

    35,00010,949

    268,105

    53,643

    248,946

    302,589

    The accompanying notes are an integral part of this statement10

  • Exhibit "F"

    NORCO AREA VOLUNTEER FIRE DEPARTMENT, INC.RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND

    CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDSTO THE STATEMENT OF ACTIVITIES

    FOR THE YEAR ENDED DECEMBER 31. 2005

    Net change in fund balance - governmental fund $ 53,643

    Amounts reported for governmental activities in the Statement of Activitiesare different because:

    Governmental funds report capital outlays as expenditures. However inthe Statement of Activities the cost of those assets is allocated overtheir estimated useful lives and reported as depreciation expense. This isthe amount by which capital outlays of $114,689 was exceeded bydepreciation expense of $117,601 in the current period. (2,912)

    Repayments of bond and note principal are reported as financing uses ingovernmental funds and thus contribute to the reduction in fund balance.In the statement of net assets, however, repayment of debt decreases thelong-term liabilities and does not affect the statement of activities. 35,000

    Under the modified accrual basis of accounting used in the governmentalfunds, interest on long-term debt is not recognized until due, ratherthan as it accrues. (4,651)

    Change in net assets of governmental activities $ 81,080

    The accompanying notes are an integral part of this statement11

  • NORCO AREA VOLUNTEER FIRE DEPARTMENT, INC.NOTES TO FINANCIAL STATEMENTS

    DECEMBER 31.2005

    (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    Reporting Entity

    The Norco Area Volunteer Fire Department, Inc. (Fire Department) receives fundingfrom local and state government sources and must comply with the concomitantrequirements of these funding source entities. However, the Fire Department is a"primary government" and is not included as a component unit of any other St. CharlesParish governmental "reporting entity" as defined in GASB pronouncements, since theentity is a non-profit corporation, and the board members have decision making authority,the power to designate management, the ability to significantly influence operations andprimary accountability for fiscal matters. The Fire Department includes all activities thatare controlled by it as a quasi-public non-profit corporation organized to provide fireprotection to the Parish of St. Charles. The Fire Department has no component units.

    The accounting and reporting policies of the Fire Department conform to generallyaccepted accounting principles as applicable to governmental units.

    Basis of Presentation

    The Fire Department's financial statements are prepared in accordance with U.S.generally accepted accounting principles (GAAP). The Governmental AccountingStandards Board (GASB) is responsible for establishing GAAP for state and localgovernments through pronouncements (Statements and Interpretations). Governments arealso required to follow the pronouncements of the Financial Accounting Standards Board(FASB) issued through November 30,1989 (when applicable) that do not conflict with orcontradict GASB pronouncements. The more significant accounting policies establishedin GAAP and used by the Fire Department are discussed below.

    The accompanying basic financial statements have been prepared in conformity withGASB Statement No. 34, Basic Financial Statements-and Management 's Discussion andAnalysis-far State and Local Governments, issued in June 1999.

    Basic Financial Statements - Government-Wide Financial Statements (GWFS)

    The Fire Department's basic financial statements include both government-wide(reporting the Fire Department as a whole) and fund financial statements (reporting theFire Department's major funds). Both the government-wide and fund financialstatements categorize primary activities as either governmental or business type. The FireDepartment's fire protection activities and related general administrative services areclassified as governmental activities. The Fire Department does not have any business-type activities.

    12

  • NORCO AREA VOLUNTEER FIRE DEPARTMENT, INC.NOTES TO FINANCIAL STATEMENTS (CONTINUED)

    DECEMBER 31.2005

    (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

    Basic Financial Statements - Government-Wide Financial Statements (GWFS)(continued)

    In the government-wide Statement of Net Assets (Exhibit A), the governmental activitiescolumn is presented on a consolidated basis and is reported on a full accrual, economicresource basis, which recognizes all long-term assets and receivables, as well as long-term debt and obligations. The Fire Department's net assets are reported in two parts -invested capital assets and unrestricted net assets.

    The government-wide Statement of Activities (Exhibit B) reports both gross and net costof the Fire Department's function. The function is supported by general governmentrevenues (1/8 cent sales tax and ad valorem tax). The Fire Department does not receiverelated program revenues and operating grants which would reduce gross expenses in theStatement of Activities.

    This government-wide focus is on the sustainability of the Fire Department as an entityand the change in the Fire Department's net assets resulting from current year's activities.

    Basic FSnancial Statements - Fund Financial Statements (FFS)

    The financial transactions of the Fire Department are reported in individual funds in thefund financial statements. Each fund is accounted for by providing a separate set of self-balancing accounts that comprises its assets, liabilities, reserves, fund equity, revenuesand expenditures. The Fire Department's current operations require the use of only thefollowing fund type:

    Governmental Fund:

    The focus of the governmental fund's measurement (in the fund statement) is upondetermination of financial position and changes in financial position (sources, uses, andbalances of financial resources) rather than upon net income. In general, fund balancerepresents the accumulated expendable resources, which may be used to finance futureoperations of the Fire Department.

    General Fund

    The General Fund is the principal fund of the Fire Department and is used to account forthe operations of the Fire Department. General revenues are accounted for in this fund.General operating expenditures are paid from this fund.

    13

  • NORCO AREA VOLUNTEER FIRE DEPARTMENT, INC.NOTES TO FINANCIAL STATEMENTS (CONTINUED)

    DECEMBER 31.2005

    (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

    Basis of Accounting

    Basis of accounting refers to when revenues and expenditures are recognized and reportedin the financial statements. Basis of accounting relates to the timing of the measurementsmade, regardless of the measurement focus applied.

    Accrual

    The governmental activities in the government-wide financial are presented on theaccrual basis of accounting. Revenues are recognized when earned and expenses arerecognized when incurred.

    Modified Accrual

    The governmental fund financial statements are presented on the modified accrual basisof accounting. Under the modified accrual basis of accounting, revenues are recordedwhen susceptible to accrual; i.e., both measurable and available. "Available" meanscollectible within the current period or within 60 days after year end. Expenditures aregenerally recognized under the modified accrual basis of accounting when the relatedliability is incurred. The exception to this general rule is that principal and interest ongeneral obligation long-term debt, if any, is recognized when due.

    The Fire Department records are maintained on the cash basis of accounting. However,the General Fund reported in the accompanying financial statements has been convertedto a modified accrual basis of accounting utilizing the following practices in recordingrevenues and expenditures:

    Revenues

    Sales taxes are recorded in the month the taxes are collected by the St. Charles ParishSchool Board. Sales taxes become payable to the St. Charles Parish School Board on thefirst day of the month and become delinquent on the 20th day of the month followingincurrence of the taxes by businesses.

    An ad valorem issue is dedicated to the operations of the nine volunteer fire departmentsin St. Charles Parish. The tax millage expires in 2010. Each department is to receive oneninth of annual collections. Taxes levied in November each year are available forexpenditures in the subsequent year.

    Interest income on investments is recorded when the investments have matured andincome is available.

    14

  • NORCO AREA VOLUNTEER FIRE DEPARTMENT, INC.NOTES TO FINANCIAL STATEMENTS (CONTINUED)

    DECEMBER 31.2005

    (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

    Basis of Accounting (continued)

    Revenues (continued)

    All other revenues are recorded when received.

    The majority of the Fire Department's revenues are derived from the one-eighth of onepercent sales tax and the ad valorem tax for operations.

    Expenditures

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

    Cash

    The Fire Department is authorized under state law to deposit funds within a fiscal agentbank organized under the laws of the State of Louisiana, the laws of any other state in theUnion, and the laws of the United States. The Fire Department may also invest in timecertificates of deposit with state banks organized under Louisiana law and national bankshaving their principal offices in Louisiana. Under state law, these deposits must besecured by the fiscal agent bank. The market value of such pledged securities and federaldeposit insurance must equal or exceed the amount on deposit with the fiscal agent.

    Custodial credit risk is the risk that in the event of a bank failure, the Fire Department'sdeposits may not be returned to it. As of December 31,2005, $ 109,316 of the FireDepartment's bank balance of $260,398 was exposed to custodial credit risk as follows:

    Uninsured and collateralized by FHLMCletters of credit held by pledging bank notin Fire Department's name S 109.316

    Budgets and Budgetary Accounting

    The Fire Department was not required to prepare a budget for the year ended December31,2005.

    15

  • NORCO AREA VOLUNTEER FIRE DEPARTMENT, INC.NOTES TO FINANCIAL STATEMENTS (CONTINUED)

    DECEMBER 31.2005

    (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

    Capital Assets

    Capital assets are capitalized at historical cost or estimated cost if historical cost is notavailable. Donated assets are recorded as capital assets at their estimated fair marketvalue at the date of donation. The Fire Department maintains a threshold level of $300 ormore for capitalizing capital assets. Additions, improvement and other capital outlaysthat significantly extend the useful life of an asset are capitalized. Other costs incurredfor repairs and maintenance are expensed as incurred.

    Capital assets are recorded in the Statement of Net Assets and depreciation is recorded inthe Statement of Activities. Since surplus assets are sold for an immaterial amount orscrapped when declared as no longer needed for public purposes, no salvage value istaken into consideration for depreciation purposes. All capital assets are depreciatedusing the straight-line method over the following useful lives:

    EstimatedDescription Lives

    Computer and communications equipment 5 yearsEquipment 5 yearsOther vehicles 5 yearsFire trucks 10 yearsFire stations and other buildings 20 years

    In the fund financial statements, fixed assets are accounted for as capital outlayexpenditures of the fund upon acquisition.

    (2) SALES TAX REVENUE

    Effective March 1,1980, sales tax in the amount of one-eighth of one percent is collectedby the St. Charles Parish School Board and administered by the Parish President. Thesales tax is to be used for fire protection of the Parish of St. Charles. The funds aredistributed monthly by the Parish President to the individual fire departments of the St.Charles Parish Firemen's Association, hie. Effective January, 2000, the sales tax isdistributed on the following basis:

    Percent ofMonthly Remaining

    Basis FundsBayou Gauche Volunteer Fire Dept., Inc. $ 2,500 3.69%Des Allemands Volunteer Fire Dept., Inc. $ 2,500 4,68%East Side St. Charles Volunteer Fire Dept., Inc. $ 2,500 23.07%Hahnville Volunteer Fire Dept., Inc. $ 2,500 5.88%KJllona Volunteer Fire Dept, Inc. $ 2,500 1.47%

    16

  • (2)

    NORCO AREA VOLUNTEER FIRE DEPARTMENT, INC.NOTES TO FINANCIAL STATEMENTS (CONTINUED)

    DECEMBER 31.2005

    SALES TAX REVENUE (CONTINUED)

    Luling Volunteer Fire Dept., Inc.Norco Area Volunteer Fire Dept., Inc.Paradis Volunteer Fire Dept., Inc.St. Rose Volunteer Fire Dept., Inc.

    DUE FROM PARISH

    $$SS

    2,5002,5002,5002,500

    29.52%10.19%4.79%

    16.71%

    (3)

    Revenue receivable at December 31, 2005 consists of the Fire Department's share of thel/8th cent sales tax for the month of November 2005, collected on or beforeDecember 20, 2005 by the St. Charles Parish School Board and remitted by St. CharlesParish in January 2006.

    An allowance for uncollectible receivables is not recorded by the Fire Departmentbecause it considers all receivables collectible at December 31, 2005.

    (4) CAPITAL ASSETS

    Fire protection vehicles $EquipmentComputersBuildingsLandVehicles

    Less: accumulateddepreciation

    Total capital assets, net $

    Balance1/1/05

    897,496823,198

    4,050821,38441,644

    2,587,772

    1,790,455

    797r3l7

    Additions2005

    $20,128

    1,625

    10,88982,047

    114.689

    117.601

    S /"> 01 o^L^iXJjfel

    Retirements Balance2005 12/31/05

    $ - $ 897,496843,326

    5,675821,38452,53382,047

    2,702,461

    1,908.056

    $ - $ 794T405

    Depreciation expense for the year ended December 31,2005 was $ 117,601.

    17

  • NORCO AREA VOLUNTEER FIRE DEPARTMENT, INC.NOTES TO FINANCIAL STATEMENTS (CONTINUED)

    DECEMBER 31.2005

    (5) LONG-TERM DEBT

    Balance1/1/05 Additions

    Balance at Due WithinReductions 12/31/05 One Year

    Bonds payable - Certificateof Indebtedness Series 2001,bearing an interest rate of5.5% with principal dueannually and interest in semi-annual installments.Matures on March 1, 2008. S 195.000 35.000 $ 160.000 $_ 60.000

    (6)

    Following is a summary of future principal and interest requirements:

    YearEnding

    200620072008

    Principal Interest Total

    60,000 $50,00050.000

    6,738 $4,1251.375

    66,73854,12551.375

    S 160.000 S 12.238 S 172.238

    Interest incurred and expensed for the year ended December 31,2005 was $18,282.

    RISK MANAGEMENT

    The Fire Department is exposed to various risks of losses related to torts; theft of, damageto, and destruction of assets; injuries to firemen; and natural disasters. The FireDepartment carries commercial insurance in amounts sufficient to insure itself againstclaims resulting from any of those risks.

    18

  • t-, --,- T JAMES E. UPORTE*ERICKSENKRENTEL & LAPORTEL i p. *o *.-.....--. ,...,,.....,,,,,...... ^'_'!rj:"'--.:L:"-""' ;- - -.;.-.._.............. - RwtfU3 H. OAWSOM, JR.

    .. Nefl fCERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS

    KENNETH J. ABfflEY*

    4227 CANAL STREET W, Ewe POWERSNEW ORLEANS, LOUISIANA 7C119-5996 TROFEarctwL CORPORATETELEPHONE (504) 486-7275 FAX (504) 482-2516 BEKJAMW J. ERCKSEN - RETIREDWWW.ERICKSENKRENTEL.COM J.V. LECLERE KRENTCI - RETIRED

    REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ONCOMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL

    STATEMENTS PERFORMED IN ACCORDANCE WITHGOVERNMENT AUDITING STANDARDS

    Norco Area Volunteer Fire Department, Inc.P.O. Box 321Norco, Louisiana 70079

    We have audited the financial statements of the governmental activities and each major fund ofthe Norco Area Volunteer Fire Department, Inc. (the Fire Department), as of and for the yearended December 31,2005, which collectively comprise the Fire Department's basic financialstatements, and have issued our report thereon dated June 2, 2006. We conducted our audit inaccordance with auditing standards generally accepted in the United States of America and thestandards applicable to financial audits contained in Government Auditing Standards, issued bythe Comptroller General of the United States.

    Internal Control Over Financial Reporting

    In planning and performing our audit, we considered Norco Area Volunteer Fire Department,Inc.'s internal control over financial reporting in order to determine our auditing procedures forthe purpose of expressing our opinion on the financial statements and not to provide assurance onthe internal control over financial reporting. However, we noted a certain matter involving theinternal control over financial reporting and its operation that we consider to be a reportablecondition.

    Reportable conditions involve matters coming to our attention relating to significant deficienciesin the design or operation of the internal control over financial reporting that, in our judgment,could adversely affect Norco Area Volunteer Fire Department, Inc.'s ability to record, process,summarize and report financial data consistent with the assertions of management in the financialstatements. The reportable condition is described in the accompanying schedule of findings andquestioned costs as item 2005-1.

    A material weakness is a condition in which the design or operation of one or more of theinternal control components does not reduce to a relatively low level the risk that misstatementsin amounts that would be material in relation to the financial statements being audited may occurand not be detected within a timely period by employees in the normal course of performing theirassigned functions. Our consideration of the internal control over financial reporting would notnecessarily disclose all matters in the internal control that might be reportable conditions and,accordingly, would not necessarily disclose all reportable conditions that are also considered tobe material weaknesses. However, we consider the reportable condition described above to be amaterial weakness.

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  • ERICKSENKRENTEL&CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS

    Norco Area Volunteer Fire Department, Inc.June 2,2006

    Compliance

    As part of obtaining reasonable assurance about whether Norco Area Volunteer Fire Department,Inc.'s financial statements are free of material misstatement, we performed tests of itscompliance with certain provisions of laws, regulations, contracts and grants, noncompliancewith which could have a direct and material effect on the determination of financial statementamounts. However, providing an opinion on compliance with those provisions was not anobjective of our audit and, accordingly, we do not express such an opinion. The results of ourtests disclosed no instances of noncompliance that are required to be reported under GovernmentAuditing Standards.

    This report is intended solely for the information and use of Norco Area Volunteer FireDepartment, Inc., St. Charles Parish and the Louisiana Legislative Auditor and is not intended tobe and should not be used by anyone other than these specified parties. Under Louisiana RevisedStatute 24:513, this report is distributed by the Legislative Auditor as a public document.

    June 2, 2006

    /Certified Public Accountants

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  • NORCO AREA VOLUNTEER FIRE DEPARTMENT, INC.SCHEDULE OF FINDINGS AND QUESTIONED COSTS

    FOR THE YEAR ENDED DECEMBER 31.2005

    We have audited the financial statements of Norco Area Volunteer Fire Department, Inc. as ofand for the year ended December 31,2005, and have issued our report thereon dated June 2,2006. We conducted our audit in accordance with auditing standards generally accepted in theUnited States of America and the standards applicable to financial audits contained inGovernment Auditing Standards, issued by the Comptroller General of the United States. Ouraudit of the financial statements as of December 31,2005 resulted in an unqualified opinion.

    SECTION I SUMMARY OF AUDITORS' REPORTS

    a. Report on Internal Control and Compliance Material to the Financial Statements

    Internal ControlMaterial Weaknesses X^ Yes NoReportable Conditions _X_Yes No

    ComplianceCompliance Material to Financial Statements Yes X No

    b. Federal Awards Not Applicable

    Internal ControlMaterial Weaknesses Yes NoReportable Conditions Yes No

    Type of Opinion on Compliance Unqualified Qualifiedfor Major Programs Disclaimer Adverse

    Are their findings required to be reported in accordance with Circular A-133, Section.510(a)? Yes No

    c. Identification of Major Programs: Not Applicable

    CFDA Number(s) Name of Federal Program (or Cluster)

    21

  • NORCO AREA VOLUNTEER FIRE DEPARTMENT, INC.SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED)

    FOR THE YEAR ENDED DECEMBER 31. 2005

    Dollar threshold used to distinguish Type A and Type B Programs $_Is the auditee a "low-risk* auditee, as defined by OMB Circular A-133?

    Yes No Not Applicable

    SECTION II FINANCIAL STATEMENT FINDINGS

    2005-1 Segregation of Duties

    Criteria: Safeguarding of assets requires adequate segregation of duties in an effectiveinternal control structure. No one person should have access to both physical assets andthe related accounting records or to all phases of a transaction.

    Condition: Our evaluation of the internal control structure revealed an absence ofappropriate segregation of duties consistent with appropriate control objectives regardingcash receipts and disbursements.

    Effect: Intentional or unintentional errors could be made and not be detected.

    Cause: The Department is small and therefore it is not feasible to maintain an adequatesegregation of duties among accounting personnel. All personnel are volunteers.

    Recommendation: The Board of Directors should remain involved in the day-to-dayfinancial affairs of the Department to provide oversight and independent reviewfunctions. The bookkeeper should not be an authorized check signer and should not haveaccess to cash receipts. Instead, someone independent of the bookkeeper should preparea list of checks received and should make bank deposits. The list would be given to thebookkeeper for general ledger recording.

    Management's Response: Management agrees with the recommendation; however, theyfeel that because of the small number of personnel in the Department it is not possible toremove the bookkeeper from the depositing and check signing responsibilities. TheBoard of Directors, however, thoroughly monitors and reviews all financial transactionsof the Department.

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  • NORCO AREA VOLUNTEER FIRE DEPARTMENT, INC.SCHEDULE OF PRIOR YEAR FINDINGS

    FOR THE YEAR ENDED DECEMBER 31. 2005

    2004-1 Segregation of Duties

    Our evaluation of the internal control structure revealed an absence of appropriatesegregation of duties consistent with appropriate control objectives relative to cashreceipts and disbursements.

    The Department is small, and it was determined not to be feasible to maintainadequate segregation of duties. This issue remains unresolved.

    SECTION II INTERNAL CONTROL AND COMPLIANCE MATERIAL TOFEDERAL AWARDS

    Not Applicable

    SECTION HI MANAGEMENT LETTER

    Not Applicable

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