town of cullen · 2021. 2. 1. · kristine h. cole. cpa email krisline@w7ik^3a.bi2 jennifer smith,...

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TOWN OF CULIEN. LOUISIANA

ANNUAL FINANCIAL REPORT

JUNE 30,2010

Under provisions of state law, this report is a public document. A copy 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 ij^^jii

TOWN OF CULLEN, LOUISIANA

Annual Financial Statements

As of and for the Year Ended June 30, 2010

TABLE OF CONTENTS

Statement Page

Independent Auditors' Report 1

Management's Discussion and Analysis (Unaudited) 3

Basic Financial Statements:

Govemment-wide Financial Statements:

Statcmentof Net Assets A 12

Statement of Activities B 13

Fund Financial Statements:

Govemjmental Funds -

Balance sheet C 14

Reconciliation of the Govemmental Fimds Balance Sheet to

The Govemment-wide Statement of Net Assets D 15

Statement of Revenues, Expenditures, and changes in Fund

Balances E 16

Reconciliation of the Statement of Revenues, Expenditures and

Changes in Fund Balances of Governmental Funds to the

Statement of Activities F 17

Proprietary Funds -

Statement of Net Assets G 18

Statement of Revenue, Expenses, and Changes in Net Assets H 19

TOWN OF CULLEN, LOUISIANA Annual Financial Statements

As of and for the Year Ended June 30, 2010

TABLE OF CONTENTS

Statement of Cash Flows Statement

T

Page 20

Notes to financial statements 21

Required Supplemental Information:

Budget Comparison Schedules Notes to Budgetary Comparison Schedules

la 39 42

Other Supplementary Information:

Schedule of Compensation Paid Board Members 43

Other Reports

Report on Intemal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Govemment Auditing Standards 44

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

46

Schedule of Expenditures of Federal Awards

Schedule of Current Year Findings & Questioned Costs

Status of Prior Audit Findings

48

49

55

JAMIESON, WISE & MARTIN A Professional Accounting Corporation

601 Main Street P. O. Box 897 Minden, Louisiana 71058-0897

(318)377-3171 Fax (318) 377-3177

MICHAEL W. WISE. CPA Emal mikeguwmcpabiz CARLOS E MARriN, CPA Email car1os@iwmcpa biz KRISTINE H. COLE. CPA Email krislIne@W7iK^3a.bi2

JENNIFER SMITH, CPA Email JBnnifef^wmcpa b(z KRISTIE K f>MRTiN. CPA Email mstiaQjwmcpa biz

WM. PEARCE JAMIESON. CPA(199l)

MEMBERS ~ AMERICAN INSTITUTE OF

CERTIFIED PUBLIC ACCOUNTANTS SOCIETY OF LOUISIANA

CERTIFIED PUBLIC ACCOUNTANTS

INDEPENDENT AUDITORS' REPORT

The Honorable Bobby R. Washington, Mayor, and the Members of the Board of Aldermen

Town of Cullen, Lx)uisiana

We have audited the accompanying financial statements of the govemmental activities, the business-type activities, each rnajor fund, and the aggregate remaining fund information of Town of Cullen, Louisiana, as of and for the year ended June 30 2010, which collectively comprise the Town's basic financial statements as listed in the table of contents. These financial statements are the responsibility of Town of Cullen's management. Our responsibility is to express opinions on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to fmancial audits contained in Government Auditing Standards^ issued by the Comptroller of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the fmancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. 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 fmancial position of the govemmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Town of Cullen, Louisiana, as of June 30, 2010, and the respective changes in financial position and, cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.

hi accordance with Govemment Auditing Standards^ we have also issued a report dated December 13, 2010 on our consideration of the Town of Cullen's intemal control over 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 to describe the scopje of our testing of intemal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over fmancial reporting or on compliance. That report is an integral part of an audit performed in accordance with Govemment Auditing Standards and important for assessing the results of our audit.

Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and budgetary comparison information on pages 3 through 10 and 39 through 42 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required b the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placmg the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of mquiries of management about the methods of preparing the iiLformation and comparing the mformation for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic fmancial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us sufficient evidence to express an opinion or provide any assurance.

Our audit was conducted for the purpose of forming opinions on the fraancial statements that collectively comprise the Town of Cullen, Louisiana's financial statements as a whole. The information listed as other supplementary information in the table of contents is presented for purposes of additional analysis and is not a required part of the fmancial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Aiidits of States, Local Governments, and Nonprofit Organizations, and is also not required part of the financial statements. The schedule of expenditures of federal awards is the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The infomiation has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such inforraatiOTi directly to the underlying accounting and other records use to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted m the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole.

Minden, Louisiana December 13, 2010

TOWN OF CULLEN, LOUISLSJSA

Management's Discussion and Analysis As of and for the Year Ended June 30,2010 (Unaudited)

Our discussion and analysis of the Town of Cullen, Louisiana's financial performance provides an overview of the Town's financial activities for the fiscal year ended June 30,2010. Please read it in conjunction with the Town's financial statements, which begin on page 12.

USING XmS ANNUAL REPORT

This aianual report consists of a series of financial statements. The Statement of Net Assets and the Statement of Activities (on pages 12-13) provide information about the activities of the Town as a whole and present a longer-term view of the Town's finances. Fimd financial statements start on page 14. For govemmental activities, these statements tell how these services were financed in the short term as well as what remains for future spending; Fund fmancial statements also report the Town's operations in more detail than the govermnent-wide statements by providing information about the Town's most significant fimds. The remaining statements provide financial information about activities for which the Town acts solely as a tmstee or agent for the benefit of those outside the govenmient.

Reporting the Town as a Whole

Our analysis of the Town as a whole begins on page 12. One of the most important questions asked about the Town's finances is, "Is the Town as a whole better off or worse off as a result of the year's activities?" The Statement of Net Assets and the Statement of Activities report information about the Town as a whole and about its activities in a way that helps answer this question. These statements include all assets and habilities using the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. All of the current year's revenues and expenses are taken into account regardless of when cash is received or paid.

These two statements report the Town's net assets and changes in them. You can think of the Town's net assets—the difference between assets and liabilities—as one way to measure the Town's financial health, ov financial position. Over time, increases or decreases in the Town's net assets axe one indicator of whether its financial health is improving or deteriorating. You will need to consider other nonfinancial factors, however, such as changes in the Town's property tax base and the condition of the Town's roads, to assess the overall health of the Town.

In the Statement of Net Assets and the Statement of Activities, we divide the Town into two kinds of activities:

• • Govemmental activities - Most of the Town's basic services are reported here, including the police, fire, public works, parks and recreation, sanitation and health, highway and streets, and general administration. Property taxes, sales taxes, franchise fees, and state and federal grants finance most of these activities.

• Business-type activities - The Town charges a fee to customers to help it cover all or most of the cost of certain services it provides. The Town's water and sewer systems are reported here.

TOWN OF CULLEN, LOUISL^A

Management's Discussion and Analysis As of and for the Year Ended June 30, 2010 (Unaudited)

Reporting the Town's Most Significant Funds

Our analysis of the Town's major fimds begins on page 14. The fund financial statements begin on page 14 and provide detailed information about the most significant funds-not the Town as a whole. Some fimds are required to be established by State law and by bond covenants. However, the Town Council establishes many other fiinds to help it control and manage money for particular purposes or to show that it is meeting legal responsibilities for using certain taxes (sales taxes with restricted for specific use). The Town's two kinds of funds - govemmental and proprietary - use different accounting approaches.

• Govemmental fimds - Most of the Town's basic services are reported in govermriental which focus on how money flows into and out of those fiinds and the balances left at year-end that are available for spending. These hinds are reported using an accounting method called modified accrual accounting, which measures cash and all othor financial assets that can readily be converted to cash. The govemmental fimd statements provide a detailed short-term view of the Town's general govemment operations and the basic services it provides. Govemmental fund information helps you determine whether there are more or fewer financial resources that can be spent in the near fiiture to finance the Town's programs. We describe the relationship (or differences) between govemmental activities (reported in the Statement of Net Assets and the Statement of Activities) and govemmentalyi/Wiis in a reconciliafion following the fund fmancial statements.

• Proprietary fimds - When the Town charges customers for the services it provides -whether to outside customers or to other units of the Town - these services are generally reported in proprietary funds. Proprietary fimds are reported in the same way that all activities are reported in the Statement of Net Assets and the Statement of Activities. In fact, tlie Town's enterprise funds (a component of proprietary funds) are the same as the business-t3T?e activities we report m the govemment-wide statements but provide more detail and additional information, such as cash flows, for proprietary funds.

THE TOWN AS A WHOLE

As year-to-year financial information is accumulated on a consistent basis, changes in net assets may be observed and used to discuss the changing financial position of the Town as a whole.

The Town's net assets at fiscal year-end are $5,709,796. This is a $1,355,318 increase from last year's net assets of $4,354,478.



The following table provides a summary of the Town's net assets at June 30:

Current and other assets Capital assets Total assets

Long-term liabilities Other liabilities Total liabilities

Net assets: Invested in capital assets, net of debt

Restricted Unrestricted (deficit) Total net assets

Table 1 Summary of Net Assets

Gk)vernmental Activities

2010

$ 429,053 502,642 93L695

4,814 16,478 2U92

502,642

407,761 $ 910.403

2009

548,742 532,666

1,081,408

5,540 142,028 147,568

532,666 -

401,174

Business-type Activities

2010

1,630,330 3,719,456 5,349,786

41,528 508,865 550,393

3,719,456 -

J,079,937

2009

1,781,671 2,350,524 4,132,195

44,625 666,932 711,557

2,350,524 -

1,070,114 933.840 4.799.393 3_A2S1.MB.

Total 2010

2,059,383 4,222,098 6,281,481

46,342 525,343 571,685

4,222,098 -

1,487.698 5,7(}9J%

2009

2,"608,125 2,883.190 5,491,315

50,165 808,960 859,125

2,883,190 -

1,471,288 4.354.478

The Town reported positive balances in net assets for both govemmental and business-type activities. Net assets decreased $23,437 for govemmental activities and increased $1,378,755, for business-t)^e activities. The City's overall financial position increased during fiscal year 2010.

The largest portion of tlie Town's net assets (74%) reflects its investment in capital assets (e.g. land, building, improvements other than buildings, and equipment, less any related debt used to acquire those assets. The increase in net assets of $1,355,318 is largely due to a grant received for capital asset acquisitions.



Table 2 Change in Net Assets

Revenues Program revenues: Charges for services Operating grants/contributions Capital grants/contributions

General revenues: property taxes Sales taxes Franchise taxes Occupational hcenses Investment earnings Other general revenues Total revenues

Governmental Activities

2010

$130,857 78,125

16,133 95,579 31,342 31,868

1,285 3.739

2009

136,651 10,200 63,000

15,900 99,810 31,546 35,720 6,815

17.301


2010

480,609

1^414,094

1.406

2009

330,680

593,112

12,222

Total 2010 2009

611,466 78,125

1,414,094

16,133 95,579 31,342 31,868

1,285 3.739

467,331 10,200

656,112

15,900 99,810 31,546 35,720 19,037 17,301

388.928 416.943 1,896.109 936,014 2.285.037 1.352.957

Program expenses: General govemment 157,279 92,047 Public safety 216,855 214,805 Highway and streets 37,270 46,332 Sanitation and health 47,790 38,016 Parks and recreation 3,171 4,056 Water Sewer ^ : Total expenses 462.365 395,256

Excess (deficiency) before special items and transfers (73,437) 21,687

201,504 265.850 467,354

1,428,755

167,241 215.214 382,455

553,559

157,279 216,855 37,270 47,790 3,171

201,504 265,850 929,719

1,355,318

92,047 214,805 46,332 38,016 4,056

167.241 215,241 777,711

575,246

Special item Transfer in (out)

Change in net assets Beginning net assets Ending net assets

50,000

(23,437) 933.840

^910.403

21,687 912,153 933.840

f50.000'

1,378,755 3,420,638

553,559 2.867.079

1,355,318 4.354.478 5-709.796

575,246 3.779,232


The net assets of the govemmental activities decreased by $23,437.



Business-type activities

During this year, the town received $1,562,981 in grants for water meters, water system improvements, and wastewater system improvements. The remaining revenues and expenses for the Town's busmess-type activities were considered normal operating revenues and expenses.

THE TOWN'S FUNDS

As discussed, governmental funds are reported in the fund statements with a short-term, inflow and outflow of spendable resources focus. This information is usefiil in assessing resources available at the end of the year in comparison with upcoming financing requirements. Govemmental funds reported ending fund balances of $412,676. The total ending fiind balances of governmental funds show a $5^850 increase over the prior year.

Major Govemmental Funds

The General Fund is the Town's primary operating fund is the largest source of day-to-day operations. In comparison with prior year amounts, revenues decreased 7% and expenditures increased by 5%, The fund balance of the General Fund decreased $30,880.

The General Fund had to rely on increasing support from the sales tax and sewer funds. The amount of funding transferred into the general fimd was $104,782.

The Two Percent and 2 Percent Sales Tax Funds experienced an increase in fund balance of $32,129 and an increase in fund balance of $4,600 respectively after the transfers to the General Fund. Sales taxes collected decreased $4,231 compared to the prior year, but the amount transferred to the general fundof $54,782 was a decrease from the prior year of $95,017.


Management's Discussion and Analysis As of and for the Year Ended Jnne 30,2010 (Unaudited)

The following schedule presents a summary of for the fiscal year ended June 30, 2010, and the relation to the prior year.

revenues and expenditures of the governmental funds amount of percentage of increases and decreases in

Revenues Taxes Intergovemmental Charges for services Licenses, permits Fines and forfeits hiterest Miscellaneous

Total revenues

FYE 6/30/10 Amoimt $111,711

81,088 76,662 66,160 47,259

1,284 3,312

$^.426

Percent of Total

29% 21% 20% 17% 12% 0% 1%

109%

Increase (decrease)

from FYE 6/30/09 (3,999) 1,762

(3,547) (3,421) (2,260) (5,531)

(11,754)

(2S,750)

Percent increase

fdecrease) (4%)

2% (4%) (5%) (5%)

(81%) (78%)

(175%)

FYE 6/30/10 Expenditures General govemment Public safety Highway and streets Sanitation and health Culture and recreation

Amount $ 151,312

202,359 27,121 47,790

3,047

Percent of Total

35% 47% 6%

11% 1%

Increase (decrease)

from FYE 6/30/09 63,442

(55,871) 2,620 9,083

297

Percent increase

(decrease) 72%

(22%) 2%

23% 2%

Total expenditures $ 431.629 100%

Overall expenditures increased in comparison to prior year.

19.571 18%

The Town's proprietary fimd statements provide the same type of information found in the govemment-wide financial statements but in more detail. Operations m the proprietary fiind statements are comparative with last year's activity except for $1,562,981 in grant revenues for the water meters, water system improvements, and wastewater system improvements.


Management's Discussion and Analysis As of and for the Year Ended June 30, 2010 (Unaudited)

GENERAL FUND BUDGETAIiY fflGHLIGHTS

The final adopted General Fund budget for fiscal year 2010 included total budgeted revenues and transfers from other funds of $289,530 and $105,000, respectively.

Over the course of the year, the Town Council revised the budget one time. The budget amendment was approved to recognize changes in the overall revenues and expenditures within the General Fund and bodi Sales Tax Funds.

CAPITAL ASSET AND DEBT ADMINISTRATION

The Town's mvestment in capital assets, net of accumulated depreciation, for the govemmental and business-type activities as of June 30, 2010, was $502,642 and $3,719,456, respectively. The total decrease in this net investment was 6% for governmental and an increase of 58% for business-type activities. The overall mcrease was 46% for the Town as a whole.

Land Constniction in progress BuildiQg Improvements other than buildings Equipment Vehicles Infrastructure Totals (net of depreciation)


2010 200^ S 34,693 34,693

-260,560 272.025

-4,278 1,313

41,426 52,791 161.685 171,844

•t 502.642 532.6^6


2010 2009 7,675 7,675

633,049 -

3,516,852 1,604,589 194,929 105,211

-_

3,719-456 2,350.524

Totals 2010 2009

42,368 42,368 - 633,049

260,560 272,025 3,516,852 1,604,589

199,207 106,524 41,426 52,791

161.685 171.844 4.222,098 2,883,190

DEBT

At year-end June 30,2010, long term obligations consisted of $11,908 m compensated absences. More detailed information about the City's long-term Habilities is presented in Note 8 to the fmancial statements.

ECONOMIC FACTORS AND NEXT YEAR'S BUDGET AND RATES

The millage rate for ad valorem taxes is 8.180 mills. This rate is not expected to change and at this time we are not aware of any factors that will increase or decrease the amount of revenue that will be collected.

The Town has submitted applications to the State for $150,000 in funding to purchase solar power street lights that will be placed within the corporate limits of the Town. If granted this will have a large impact on the utility expenses of the town as the increase in electricity, gas and fuel rates has already begun to strain the Town's resources.



CONTACTING THE CITY'S FINANCIAL MANAGEMENT

This financial report is designed to provide our citizens, taxpayers, customers, and creditors with a general overview of the Town's finances and to show the Town's accquntabihty for the money it receives. If you have qiiestions about this report or rifeed additional information, contact the Town Clerk's office at 405 Coyle Avenue, CuDen, Louisiana, 71021.

10

BASIC FINANCIAL STATEMENTS

TOWN OF CULLEN, LOUISIANA Statement of Net Assets June 30, 2010

STATEMENT A

ASSETS Current assets:

Cash and'cash equivalents Investments Receivables Due from other ftmds Prepaid Items Supplies Inventory

Noncurrent assets: Restricted assets " Capital assets (net)

Total assets

Primary Govemment Govemmental

Activities

S 270,599 133,847 23,947

150 510

-

-

. 502,642

$ 931,695

Business-Type Activities

473,901 520,986 491,885

91,462 -

10,331

41,765 3,719,456

5,349,786

Total

744,500 654,833 515,832 91,612

510 10,331

41,765 4,222,098

6,281,481

LLVBILITIES Current liabilities: Accounts, salaries, and other payables Deferred revenue Due to other funds

Due to other governments

Total current liabihties

Noncurrent liabihties:

Payable from restricted assets

Compensated absences payable

Total noncurrent liabilities

Total liabilities

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

Total net assets.

$

$

$

$

11,379

-

5,099

16,478

_

4,814

4,814

21,292

502,642 407,761

910,403

417,253

91,612 -

508,865

34,434 7,094

41,528

550,393

3,719,456 1,079,937

4,799,393

428,632

91,612 5,099

525,343

34,434 11,90S

46,342

571,685

4,222,098 1,487,698

5,709,796

The accompanying notes are an integral part of this statement.

12

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13

STATEMENT C

TOWN OF CULLEN, LOUISIANA Balance Sheet Governmental Funds June 30,2010

ASSETS Cash and cash equivalents Investments Receivables Due from other ftmds Prepaid/deposits

Total assets

LIABILITIES AND FUND BALANCES Liabilities:

Accounts, salaries, and other payables Due to other fiinds Due to other governments

Total liabilities

Fund balances: Unreserved, reported in:

General fimd Special revenue ft^ds

Total ftind balance

Total liabilities and fimd balances

One-half

General Fund

$ 74,726 655

23,930 150 510

$ 99,971

$ 11,279

5,099

16,378

Two Percent Sales Tax

Fund

114,620 538

14 --

115,172

-

_

-

Percent Sales Tax

Fund

81,253 132,654

3 --

213,910

-

_

-

Total Govemmental

Funds

270,599 133,847 23,947

150 510

429,053

11,279

5,099

16,378

$

$

83,593 -

83,593

99,971

-115,172

115,172

115,172

-213,910 213,910

213,910

83,593 329,082

412,675

429,053

The accompanying notes are an integral part of this statement

14

STATEMENT D

TOWN OF CULLEN, LOUISLVNA

Reconciliation of the Govemmeatal Funds Balance Sheet to the Govemment-Wide Fmancial Statement of Net Assets

June 30, 2010

Amounts reported for govenmiental activities in the Statement of Net Assets are different because:

Fund Balances, Total Goveminental Funds (Statement C) $ 412,675

Capital assets used in govemmental activities are not financial resom"ces and, therefore, are not reported in the govemmental funds 502,642

Other assets used in govemmental activities that are not fmancial resources and, therefore, are not reported in the govemmental funds

Liabilities includmg bonds payable are not due and payable in the current period and, therefore, are not reported in the govemmental funds:

Other liabihties (100) Compensated absences (4,814)

Net Assets of Govemmental Activities (Statement A) $ 910,403

The accompanying notes are an integraJ part of this statement.

15


Statement of Revenues, Expenditures and and Changes in Fund Balances

Governmental Funds

STATEMENT E

For the Year Ended June 30,2010

REVENUES Taxes:

Ad valorem Sales and use

Licenses and permits Charges for services Intergovernmental revenues:

State/Parish Other

Fines and forfeitures Investment earnings Other revenues

Total revenues

EXPENDITURES General govemment Culture and recreation Public safety Highways and streets Sanitation and health Debt service

Total expenditures

Excess (deficiency) of revenues over (under) expenditures

OTHER FINANCING SOURCES (USES) Proceeds from sale of assets Transfers in Transfers out

Total other fmancmg sources and uses

Net change in fimd balance

Fund balances - beginning

Fund balances - ending

General Fund

$ 16,133 -

66,160 76,662

Two Percent Sales Tax

Fund

77,895 --

One-half Percent

Sales Tax Fund

17,684 --

(Non major) Capital Projects

Fund

---

Total Governmental

Funds

16,133 95,579 66,160 76,662

81,088

(135,661) 76,837 14.674

81,088-

47,259 930

3,312

291,544

149.935 -

202,359 27,121 47,790

427,205

-81

-77,976

1,048 91

---

1,139

-274

-17,958

,328 2.956

---

3,284

---_

--

• -

-

-

47,259 1,285 3,312

387,478

151,311 3,047

202,359 27,121 47,790

431,628

(44,150)

104,782

104,782

(30,879)

114,472

$ 83,593

(44,708) (44,708)

32.129

98,828

130,957

(10,074) (10,074) .

4,600

193.526

198,126

104,782 (54,782)

50,000

5,850

406,826

412,676

The accompanying notes are an integral part of this statement

16

STATEMENT F


Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Govemmental Funds to the Statement of Activities

For the Year Ended June 30, 2010

Amounts reported for govemmental activities in the Statement of Activities are different because:

Net Change in Fund Balances, Total Govemmental Funds, Statement E $ 5,850

Govermnental funds report capital oudays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period. (30,024)

Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in govemmental fiinds 737

Change in Net Assets of Govemmental Activities, Statement B

The accompanying notes are an uitegral part of this statement.

17

STATEMENT G


Statement of Net Assets, Proprietary Funds

June 30,2010 Business Type Activities -

ASSETS

Current assets: Cash and cash equivalents Investments

Accounts receivable - customers

Accounts receivable - other

Grants receivable

Due from other funds

Supplies Inventory

Total current assets

Noncurrent assets:

Restricted assets -

Cash and interest-bearing bank deposits

Investment Capital assets (net of accumulated depreciation)

Total noncurrent assets

Total assets

LIABILITIES

Current liabilities:

Accounts payable

Deferred revenue

Due to other funds

Total current liabilities

Noncurrent liabilities:

Compensated absences payable

Tola! noncurrent liabilities

Noncurrent liabilities payable from restricted assets

Total liabilities

NET ASSETS

Irivested in capital assets

Restricted net assets

Unrestricted

Total net assets

Water Fund

$ 213,724 159,275

16,797

• 28,726

-• -

10,331

428,853

Enterprise Funds

Sewer

Fund

260,113

361,711 39,708

-406,654

91,462.

-1.159,648

LCDBG

Scwcr iraDrovements

64

------

64

Totals

473,901

520,986 56,505

28,726 406,654

91.462 10,331

1,588,565

16,853

24,912 U73,095

1,314,860

$ 1,743,713

2,446.361

2,446,361

3,606,009

-

-

64

16.853

24,912 3,719,456

3,761,221

5,349,786

$ 7,689

91,462

99.151

3,547

3,547

34,434

137,132

1,273,095

333,486

$ 1,606,581

409,564

_

409,564

3,547 .

3,547

413,111

2,446,361

746,537

3,192,898

-

150

150

_

150

-

(86)

(86)

417,253

91,612

508,865

7,094

. 7.094

34,434

550,393

3,719,456

1,079,937

4,799,393

The accompanying notes are an integraJ part of this statement.

18

STATEMENT H

TOVi'N OF CULLEN, LOUISIANA Statement of Revenues, Expenses and Changes in Net Assets Proprietary Funds For the Year Ended June 30, 2010

Operating revenues: Charges for services

Water Sewerage Penalties/service charges

Other charges for services

Total operating revenues

Operating expenses: Personal services Materials and supplies Insurance claims and expenses Repairs and maintenance Other services and charges Depreciation Total operating expenses

Operating income (loss)

Nonoperating revenues (expenses): Grant revenues

Interest income

Gain (Loss) on asset disposal

Total nonoperating revenues and expenses

Income before contributions and transfers

Transfers in

Transfers out

Change in net assets

Net assets - beginning

Net assets - end of year

Business Type Activities

Water Fund

$ 142,547 --

6,520

149,067

65,830 5,975

12,050 34,200 26,313 55,883

200,251

Enterprise Funds

Sewer Fund

170,797 11,748

no 182,655

63,415 2,018 7,594 9,780

70,041 113,005

265,853

LCDBG Sewer

improvements

----

--

---

-

Totals

142,547 170,797 11,748 6,630

331,722

129,245 7,993

19,644 43,980 96,354

168,888

466,104

(51,184) (83,198) (134,382)

440,202 480

(L250)

439,432

388,248

362,391 -

750,639

855,942

$ 1,606,581

836,208 926

-

837,134

753,936

517,291 (50,000)

1,221,227

1,971,671

3,192,898

286,571 --

286,571

286,571

.

(879.682)

(593,111)

593,025

(86)

1,562,981 1,406

(1,250)

1,563,137

1,428,755

879,682

(929,682)

1,378,755

3,420,638

4,799,393

The accompanying notes are an integral part of this financial statement.

19

TOWN OF CULLEN, LOUISIANA Statements of Cash Flows Proprietary Funds Years Ended June 30, 2010

STATEMENT I

Cash flows from operating activities: Cash received &om customers Other Qperaling cash receipts Cash payments to employees for service Other operating cash payments

Net cash provided by operating activities

Cash flows from noncapital financing Bctivtttes: Net increase in loeter deposits

Transfer (to)/from other fiinds

Net cash used for noncapital financing activities

Cash flows from capital and related financing activities: Grant revenues

Proceeds on di^osition of assets

Acquisition and construction of capital assets

Net cash used for coital and related financing activities

Cash flows from investing activities: Interest on inter^-bcaring deposits Purchase of investments Redemption of investments

Net cash provided by investing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

Business Type Activities -

Water Ftmd

$ 116,871 6,523

(67,003) 9,983

66,374

(759) 362,391

361,632

440,202 (1,250)

(784,757)

(345,805)

Enterprise Funds

Sewer Fund

182,397 (406,544)

(64,588) 223,S49

(64,886)

467,291

467,291

836,208

-(1,386,112)

(549,904)

LCDBG Sewer

impTDvements

---_

(879,682)

(879,682)

789,325

-90,358

879,683

Totals

299,268 (400,021) (131,591) 233,832

1,488

(759) (50,000)

(50,759)

2,065,735 (L250)

(2,080,511)

(16,026)

480 926 1.406

59,657

60,137

142,338

88,239

$ 230,577

49^47

50,273

(97,226)

357,339

260,113

-.

1

63

64

109,004

110,410

45,113

445,641

490,754

Reconciliation of operating income to net cash provided by operating activities:

Operating income (loss) Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation Loss on sale of flsset Bad debt

Changes in assets and liabilities -Decrease (increase) in accounts receivable Decrease (increase) in inventory Increase (decrease) in accounts payable Increase (decrease) in due to other fiinds

Increase (decrease) in accrued compensated absences

Net cash provided by operating activities

S (52,434)

55,883 1,250

(25,676) (5,210) 2,551

91,179

(1.169)

$ 66.374

(83,198)

113,004

(406,802)

404^21 (91,642)

(1,169)

(64,886)

(135,632)

168,887 1,250

(432,478) (5,210)

407,472 (463)

(2.338)

1,488

The accompanying notes arc an integral part of this financial statement.

20

TOWN OF CULLEN, LOUISLANA

NOTES TO THE FINANCL^L STATEMENTS As of and for the Year Ended June 30, 2010

INTRODUCTION

The Town of CuUen was incorporated June 16,1955, under the provisions of the Lawrason Act and is located in northern Webster Parish. The Town operates under a Mayor-Board of Aldermen form of govemment and provides the following services as authorized by its charter: general administrative services, public safety (police), highways and streets, sanitation, health and social services, culture-recreation, public improvements, and planning and zoning. The Board of Aldermen is made up of five members who are elected.by the citizens of Cullen to serve four-year terms. They are compensated for their services.

The accounting and reporting policies of,the Town of Cullen conform to generally accepted accounting principles as ^jplicable to govemments. Such accounting and reporting procedures also conform to the requirements of the Louisiana Municipal Audit and Accounting Guide and to the industry audit guide. Audits of State and Local Govemmental Units.

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

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Government-Wide and Fund Financial Statements

The govemment-wide fmancial statements (i.e., the statement of net assets and the statement of changes in net assets) report information on all of the nonfiduciary activities of the primary govemment and its component imits. For the most part, the effect of interfimd activity has been removed from these statements. Govemmental activities, which normally are supported by taxes and intergovermnental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support.

21


NOTES TO THE FINANCIAL STATEMENTS As of and for the Year Ended June 30,2010

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

Separate financial statements are provided for govemmental funds and proprietary ftmds. Major individual govemmental funds and major enterprise funds are reported as separate columns in the fund fmancial statements.

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

The govemment-wide financial statements are reported using the economic resources measiiremenf focus and the accrual basis of accounting, as are the proprietary fund. Revenues are recorded when eamed and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as aU eligibility requirements imposed by the provider have been met.

Governmental fund financial statements are reported using fbe current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the govemment considers revenues to be available if they are collected within 30 days of the end of the current fiscal period. Expenditures generally are recorded when a Uability is incurred, as under accrual accoimting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due.

Property taxes, franchise taxes, licenses, and interest associated with the current fiscal period are all considered susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessment receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the govemment.

22

TOWN OF CULLEN, LOUISLWA

NOTES TO THE FINANCL\L STATEMENTS As of and for the Year Ended June 30,2010

The municipality reports the following major govemmental fimds:

The GeneralFund is the municipality's primary operating fund. It accounts for all financial resources, of the general govemment, except those required to be accounted for in another fimd.

The Two Percent Sales Tax Fund accoimts for the receipt and use of the municipaHty's two percent (2%) sales and use tax levied by the Town of Cullen to be used for any.lawful purpose for the Town. - •

The One-half Percent Sales Tax Fund accounts for the receipt and use of the municipality's one-half (1/2%) sales and use tax levied by the Town of Cullen to be used for any lawfiil purpose

• other than expenditures for police supplies and equipment.

The municipality reports the following major proprietaiy funds:

The Water Fund accoimts for the receipts and use of the municipality's water system.

The Sewer Fund accounts for the receipts and use of the mimicipality's sewer system.

The LCDBG - Water and Sewer improvement fund accounts for LCDBG grant proceeds to be used for water and sewer system improvements.

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

As a general mle the effect of interfimd activity has been eliminated from the govemment-wide financial statements. Exceptions to this general mle are payments-in-lieu of taxes and other charges between the government's enterprise operations. Eliminations of these charges would distort direct costs and program revenues reported for the various fimctions concemed.

23

TOWN OF CULLEN, LOUISLANA

NOTES TO THE FINANCLAL STATEMENTS As of and for the Year Ended June 30,2010

Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues iuclude all taxes.

Proprietary fimds distinguish operating revenues and expenses from nonoperating items. Operating revenues -and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fundus principal ongoing operations. The principal operating revenues of the proprietaiy fimds are from charges for water and sewerage services. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.

When both restricted and unrestricted resources are available for use, it is the municipality's poUcy to use restricted resources first, then unrestricted resources as they are needed.

C. Deposits and investments

The municipality's cash and cash equivalents are considered to be cash on hand,-demand deposits, and short-term investment with prigiual maturities of three months or less from the date of acquisition. State law and the mimicipality's investment policy allow the municipality to invest m collateralized certificates of deposits, govemment backed securities, commercial paper, the state sponsored investment pool, and mutual funds consisting solely of govemment backed securities.

Investments for the municipality are reported at fair value. The state investment pool (LAMP) operates in accordance with state laws and regulations. The reported value of the pool is the same as the fair value of the pool shares.

D. Receivables and payables

Activities between funds that are representative of lendingA)orrowing arrangements outstanding at the end of the fiscal year are referred to as due to/from other fimds. Any residual balances outstanding between the governmental activities and business-type activities are reported in the govemment-wide financial statements as "internal balances."

24



In the govemment-wide statements, receivables consist of all revenues eamed at year-end and not yet received. Major receivable balances for the govemmental activities include sales and use taxes, franchise taxes, police fines, and grants.

Business-type activities report utilities as their major receivable. The Town considers substantiaUy all customers' utility receivables and other receivables to be fiaUy collectible; accordingly, an allowance for doubtful accounts is not required. If amounts become uncollectible, in the opinion of management, they are charged to operations at that time.

In the fund financial statements, material receivables in govemmental funds include revenue accruals such as sales tax, franchise tax, grants and other intergovemmental revenues since they are usually both measurable and available. Nonexchange transactions collectible but not available are deferred m the fimd fmancial statements in accordance with modified accrual, but not deferred in' the govemment-wide financial statements in accordance with the accrual basis. Interest and investment eamings are recorded when eamed and only if paid within 30 days since they would be considered both measurable and available.

Ad valorem taxes For the year ended Jime 30, 2010, taxes of 8.18 mills were levied on property with assessed valuations totaling $1,994,940 and were dedicated as foUows:

General corporate purposes 8.18 nulls

Ad valorem taxes attach as an enforceable lien on the valuation of property as of January 1, of each year. The Town of CuUen bills and collects its property taxes using the assessed values determined by the tax assessor of Webster Parish. Total taxes levied were $16,319.

Sales taxes

The voters of the Town of Cullen approved a 1% sales and use tax on January 20,1970. The proposition approved by the voters specifies that the revenue may be used for any lawful corporate purpose. On November 21,1987, the voters approved a 1/2% sales and use tax which specifies that the revenue may be used for the purpose of constmcting, operating and maintaining the sewer system, waterworks, garbage collection and waste disposal facilities, ^ c department stations and related facilities, public parks and related facilities, and streets, alleys, sidewalks and bridges and for payment of salaries of non-elected municipal employees.

25

TOWN OF CULLEN, LOUISLMSfA

NOTES TO THE FINANCIAL STATEMENTS

As of and for the Year Ended June 30,2010

On April 29, 1995, the voters approved an additional 1% sales and use tax which specifies that

revenue may be used for any lawfiil purpose for the town and authority to fund the tax proceeds into

bonds to pay the costs of any lawfiil capital improvements for the town.

E. Restricted assets

Restricted assets in the Water Fimd include cash and iuvestments set aside for the refunding of

customers' meter deposits. Restricted assets in the General Fund include cash and investments to

repay xmused bond proceeds and grant funds to be spent in the next fiscal year.

F. Capital assets

Capital assets; which include property, plant, equipment, and infrastmcture assets (e.g. roads,

bridges, sidewalks, and similar items) are reported in the applicable govemmental or business-type

activities columns in the govemment-wide financial statements. Capital assets are capitalized at

historical cost or estimated cost if historical cost is not available. Donated assets are recorded as

capital assets at their estimated fair market value at the date of donation. The municipahty maintains

a threshold level of $2,500 or more for capitalizing capital assets.

The costs of normal maiatenance and repairs that do not add to the value of the asset or materially

extend asset lives are not capitalized.

Major outlays for capital assets and improvements are capitalized as projects are constructed. All

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

useful lives:

Estimated

Description Lives

Roads, bridges, and infrastmcture 25-50 years

Land improvements 10-30 years

Buildings and building improvements 10^0 years

Improvements other than buildings 10-33 years

Furniture and fixtures 5-15 years

Vehicles 5-15 years

Equipment 5-10 years

26



G. Compensated absences

Employees are allowed to accrue ten days of sick leave each year. Employees can be paid sick leave only when sick. Since the employees' accumulating rights to receive compensation for fiiture absences are contingent upon the absences being caused by future illnesses and such amounts cannot be reasonably estimate4 a liability for unused sick leave is not recorded in the financial statements.

Employees are granted annual leave as follows:

> 3 years of service 5 days (40 hours) 3-8 years of service 10 days (80 hours) > 8 years of service 15 days (120 hours)

Annual leave is granted to each employee on their anniversary date of employment based on years of service. No carryover is allowed for annual leave. Upon termination of employment, an employee will be paid for unused vacation as of the termination date.

Employees are also eligible to accuniulate comp time. Comp time is overtime hours that the employee works which are accumulated to be taken at a later date. Any hours worked by an employee which is over the regular time of forty (40) hours is equal to one and one-half (1 Vz) hours of comp time. Upon termination, an employee is paid for unused comp time. Comp time is carried forward indefinitely until used or paid to the employee.

Both annual leave and comp time are recognized as a liability as the benefits are eamed by the employees when both of the following conditions are met:

1. The employees' rights to receive compensation are attributable to the services already rendered.

2. It is probable that the employer wiQ compensate the employees for the benefits through paid time off or some other means, such as cash payments at termination or retirement.

27


NOTES TO THE FINANCIAL STATEMENTS As of and for the Year Ended June 30, 2010

The entire compensated absence liability is reported on the govemment-wide fiaancial statements. For govemmental fimd financial statements, the current portion of unpaid compensated absences is the amount that is normally expected to be paid using expendable available financial resources. These amounts are recorded iu the account "compensated absences payable" in the fund from which the employees who have accumulated leave are paid. The noncurrent portion of the liability is not reported,

H. Long-term obligations

In the govemment-wide ftuancial statements, and the proprietary fimd types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable govemmental activities, business-type activities, or proprietary fund type statement of net assets. The long-term debt consists primarily of accrued compensated absences.

Long-term debt for governmental funds is hot reported as liabilities in the fimd financial statements. The debt proceeds are reported as other financing sources and payment of principle and iaterest reported as expenditures.

I. Fnnd equity

In the fund fmancial statements, govemmental funds report reservations of fimd balances for amounts that are not available for appropriation or are legally restricted by parties for use for a specific purpose. Designations of fimd balance represent tentative management plans that are subject to change.

J. Estimates

The preparation of financial statements in conformity with accounfing principles generally accepted in the United States of America require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabihties at the date of the financial statements and the reported amounts of revenues, expenditures, and expenses during the reporting period. Actual results could differ from those estimates.

28

TOWN OF CULLEN, LOUISUNA

NOTES TO THE FINANCL\L STATEMENTS As of and for the Year Ended June 30,2010

2. Stewardship, compliance and accountability

The Town follows the following budget practices:

a) The Town Clerk prepares a proposed budget and submits same to the Mayor and Board of Aldermen no later than fifteen days prior to the beginning of each fiscal year.

b) The public is notified that the proposed budget is available for public inspection. At the same • time, a pubHc hearing is called.

c) A pubhc heatibag is held on the proposed budget at least ten days after pubUcation of the call for . the hearing.

d) After the holding of the public hearing and completion of all action necessary to finalize and implement the budget, the budget is adopted through passage of an ordinance prior to the commencement of the fiscal year for which the budget is being adopted.

e) Budgetary amendments involving the transfer of funds fit)m one department, program or ftinction to another or involving increases or decreases in expenditures resulting from revenues exceeding or failing to meet amounts estimated require the approval of the Board of Aldermen.

All budgetary appropriations lapse at the end of each fiscal year.

Budgets for the General and Special Revenue Funds were adopted on a modified accmal basis for the year ended June 30,2010. Budgeted amounts, as originally adopted, are amended fix)m time to time by the Board of .Aldermen. Such amendments were not material in relation to the original appropriations.

29


NOTES TO THE FTNANCIAL STATEMENTS AsofandfortheYearEndedJune30,2010

3. Cash and cash equivalents

At June 30,2010, the Town of Cullen had cash and cash equivalents are as follows:

Petty cash $ 1,215 Demand deposits 179,45 5 Certificates of deposit 57L176 Total S 751.846

These deposits are stated at cost, which approximates market. Under state law, these deposits (or the resulting bank balances) must be secured by federal deposit insurance or the pledge of securities owned by the fiscal agent bank. The market value of the pledged securities plus the federal deposit insurance must at all times equal the amount on deposit with the fiscal agent. These securities are held in the name of the pledging fiscal agent bank in a holding or custodial bank that is mutually acceptable to both parties.

At June 30,2010, the Town of Cullen had $776,952 in bank deposits. These deposits are secured from risk by $250,000 of federal deposit insurance and $526,265 of pledged securities held by the custodial bank in the name of the fiscal agent bank (GASB Category 3). $587 of their deposits was not secured from risk.

Even though the pledged securities are considered uncollateralized (Category 3) imder the provisions of GASB Statement 3, Louisiana Revised Statute 39:1229 imposes a statutory requirement on the custodial bank to advertise and sell the pledged securities within 10 days of being notified by the Town that the fiscal agent has failed to pay deposited fimds upon demand.

30

TOWN OF CULLEN, LOUISLMSTA


4. Investments

Investments held at the Town of Cullen consist of $679,745 (current assets of $654,833 and restricted assets of $24,912) in the Louisiana Asset Management Pool (LAMP), a local govemment investment pool. In accordance with GASB Codification Section 150.126, the investment in LAMP at the Town of Cullen is not categorized in the three risk categories provided by GASB Codification Section 150.125 because the investment is in the pool of funds and therefore not evidenced by securities that exist in physical or book entry form.

LAMP is administered by LAMP, Inc., a non-profit corporation organized imder the laws of the State of Louisiana. Only local government entities having contracted to participate in LAMP have an investment interest in its pool of assets. The primary objective of LAMP is to provide a safe environment for the placement of public funds in short-term, high quality investments. The LAMP portfolio includes only securities and other obligations in which local govemments in Louisiana are authorized to invest in accordance with LSA - R.S. 33:2955. Accordingly, LAMP investments are restricted to securities issued, guaranteed, or backed by the U.S. Treasury, the U.S. Government, or one of its agencies, enterprises, or instrumentalities, as well as repurchase agreements collateralized by those securities.

Efiective August 1,2001, LAMP'S investment guidelines were amended to permit the investment in government-only money market funds. In its 2001 Regular Session, the Louisiana Legislature (Senate Bill No. 512, Act 701) enacted LSA-R.S. 33:2955(A)(l)(h) which allows all municipalities, parishes, school boards, and any other political subdivisions of the State to invest in "Investment grade (A-l/P-1) commercial paper of the domestic United States corporations." Effective October 1, 2001, LAMP'S Investment Guidelines were amended to allow the limited investment in A-1 or A-1+ commercial paper.

The dollar weighted average portfolio maturity of LAMP assets is restricted to not more than 90 days, and consists of no securities with a maturity in excess of 397 days. LAMP is designed to be highly liquid to give its participants unmediate access to their account balances. The investments m LAMP are stated at fau- value based on quoted market rates. The fair value is determined on a weekly basis by LAMP and the value of the position in the extemal investment pool is the same as the value of the pool shares.

31


NOTES TO THE FINANCIAL STATEMENTS As of and for the Year Ended June 30, 2010

LAMP, Inc. is subject to the regulatory oversight of the state treasurer and the board of directors. LAMP is not registered with the SEC as an investment company.

5. Receivables

The receivables at June 30, 2010 within the govermnental fiinds are as follows:

Class of receivable; Taxes:

Ad valorem Sales and use Franchise

Accounts - Garbage service Other Total

General Fund

$ 1413 -

5,216 8,246 9,055

$ 23.930

Special Revenue

Fund

-

17 -

--

17

Total

1413 17

5,216 8,246 9,055

23.947

All receivables are considered ftilly collectible and, therefore, no allowance for uncollectible amounts is provided. If amounts become uncollectible, they are charged to operations when that determination is made.

6. Interfund receivables/payables

During the course of operations, numerous transactions occur between individual funds for goods provided or services rendered. These receivables and payables are classified as "due from other ftmds" or "due to other fiinds" on the balance sheet. At June 30, 2010, such interfund receivables and payables were as follows:

Interfimd Interfimd Receivables Payables

GeneralFund $ 150 91,462

Enterprise Fund 9L462 150

$ 9L6I2 9L612

32



Capital assets

Capital assets and depreciation activity as of and for the year ended June 30, 2010, for the primary govemment is as follows:

Beginning Ending

Balance Increases Etecreases Balance

Governmental activities: Capital assets, not being depreciated Land 34,693 - - 34,693

Construction in progress Total capital assets, not being dejireciated

Coital assets, being depreciated

Buildings

Equipment

Vehicles

Infrastructure Total capital assets being depreciated

Less accumulated depreciation for

Buildings

Equipment

Vehicles

Infrastructure Total accumulated depreciation Total capital assets being depreciated, net

34,693

458,569

24,443

224,209

203.184 910.405

186,544

23,130

171,418

3IJ40

412.432 497.973

3,761

1,450

_ 5,211

11,465

796

12,815

10,159

35.235 (30.024-1

34,693

458,569

28,204

225,659 203,184

915.616

198,009

23,926

184,233

41.499

447,667

407.949

Business-type activities: Capital assets, not being depreciated

Land Construction in progress

Total capital assets, not being depreciated

Capital assets, being depreciated

Buildings

Improvements other than buildings

Equipment

Total capital assets being depreciated

7.675 633,049 640,724

3,745

3,836,928

684.833

4,525,506

-

.

2,056,869

114,000

2,170,869

633,049 633,049

-

7,675

7,675

3,745

5,893,797

798,833

6.696,375

33



Capital assets (conf)

Less accumulated depreciation for.

buildings

Improvements other than buildings

Equipment

Total accumulated depreciation

Total capital assets being depreciated, net

• Beginning

Balance

3,745

2,233,117

_ 578,844.

2,815.706

L7.09,8QQ

Ending

Increases Decreases Balance

' 144,607

24:281 168.888

2.0019SI

3,745

2,377,724

603.125

2.984.594

3r71L781

8. Long-term obligations

The following is a summary of changes in long-term debt for the year ended June 30,2010:

Long-term obligations at July I, 2009 Additions

Deductions Long-term obtigations at June 30,2010

Compensated Absences $ 14,792

2,884

snjfls

The following is a summary of the current (due in one year or less) and the long-tema (due in more than one year) portions of long-term obligations as of Jtme 30, 2010:

Govermnent Business-Type Compensated Activities Activities Absences

Ciurent portion Long-term portion Total

$ 4,814

$ 4.814 7.094 1L9Q8

11.908

34

TOWN OF CULLEN, LOUISLWA


9. Retirement system

Prior to the current fiscal year, the employees of the Town elected to terminate their participation in the Municipal Employee's Retirement System. The plan was terminated effective July 1,1992, following the conclusion of the plan's prescribed waiting period. All fimds on deposit with the system were subsequently distributed to the employees according to plan terms and conditions. Subsequent to July 1,1992 employees are covered by the Federal Social Security System.

Municipal Police Employees Retif ement System of Louisiana (System)

Plan Description. All full-time & certified poHce department employees engaged in law enforcement are required to participate in the System. Employees who retire at or after age 50 with at least 20 years of creditable service or at or after age SS with at least 12 years of creditable service are entitied to a retirement benefit, payable monthly for life, equal to 3 1/3 percent of their final average salary for each year of creditable service. Final-average salary is the employee's average . salary over the 36 consecutive or joined months that produce the highest average. Employees who terminate with at least the amount of creditable service stated above, and do not withdraw their employee contributions, may retire at the ages specified above and receive the benefit accmed to their date of termination. The System also provides death and disability benefits. Benefits are established or amended by state statute.

The System issues an annual publicly available financial report that includes financial statements and required supplementary information for the System. That report may be obtained by writing to the Municipal Police Employees Retirement System of Louisiana, 8401 United Plaza Boulevard, Baton Rouge, Louisiana 70809-2250, or by calling (225)929-7411.

Funding Policy. Plan members are required by state statute to contribute 7.5 percent of their.annual covered salary and the Town of Cullen is required to contribute at an actuarially determined rate. The current rate is 11 percent of annual covered payroll. The contribution requirements of plan members and the Town of Cullen are established and may be amended by state statute. As provided by Louisiana Revised Statute 11:103, the employer contributions are determined by actuarial valuation and are subject to change each year based on the results of the valuation for the prior fiscal year. The Town of Cullen contributions to the System for the years ended June 30, 2010 and 2009, were $4,599 and $7,115, respectively, equal to the required contributions for each year.

35



10. Operating leases

The Town of Cullen has two op'eratiag leases with Centurytel Telephone System. These leases are for telephone equipment for both City Hall and the Pohce Department. Both lease terms are for 60 months with a monthly minimmn rent of $49.99 for the City Hall system and $44.67 for the Pohce Department system. Operating lease payments for the year ended June 30,2010 was $1,136.

The minimum annual conunitments imder noncancelable operating leases are as foDows:

Fiscal Year Equipment 2010 1.136 Total $ 1.136

11. Restricted assets

For the business-type activities, restricted assets were applicable to the follo^ying at June 30, 2010:

Customers' meter deposits - cash $ 16,853 Customers' meter deposits - investment 24,912 Total $ 41,765

12. On-behalf payments

During the fiscal year ended June 30, 2010, the town's police chief and officers received $18,125 in police supplemental pay from the State of Louisiana, Department of Pubtic Safety and Corrections. The town recognizes this supplemental pay received by the employees as revenues and expenditures of the town. The revenues are reported in the general fund and the expenditures are included in the public safety expenditures.

36


NOTES TO THE FINANCIAL STATBiVENTS As of and for the Year Ended June 30,2010

13. Contingent liabilities

At June 30, 2010, there was no litigation pending against the Town of Cullen.

14. Risk management

The town is exposed to various risks of loss related to torts; theft of, damage to, and destmction of assets; errors and omissions; injuries to employees; and natural disasters. The town attempts to minimize risk fi-om significant losses through the purchase of insurance.

15. Subsequent Events

Subsequent events have been evaluated through December 13, 2010. This date represents the date the financial statements were available to be issued.

37

REQUIRED SUPPLEMENTAL INFORMATION

TOWN OF CULLEN, LOUISIANA Statement of Revenues, Expenditures, and Changes in Fund Balances

Budget and Actual General Fund For the Year Ended June 30,2010

SCHEDULE la

Variance with Final Budget

Revenues Taxes - ad valorem Licenses and permits Charges for services Fines and forfeitures Intergovemmental Interest Miscellaneous

Total revenues

Expenditures General Govemment Public Safety Highway and streets Sanitation and health Debt service

Total expenditures

Excess (deficiency) of revenues over (under) expenditures

Other Financing Sources (Uses) Proceeds from sale of assets Operating transfers in Operating transfers out

Total other financing sources (uses)

Net change in fund balance

Fund balance at beginning of year

Budgeted Amounts Original

$ 16,000 52,815 76,000 48,300 78,400 3,498

13,800

288,813

86,288 246,764 25,300 35,454

393,806

$

—

Final

16,000 55,815

• 76,000 42,000 83;200

860 4,800

278,675

155,231 183,764 25,300 51,382

415,677

Actual Amounts

$ 16,133 66,160 76,662 47,259 81,088

930 3,312

291,544

149,936 202,359 27,121 47,790

427,206

Positive (Negative)

$ 133 10,345

662 5,259

(2,112) 70

(1,488)

12,869

5,295 (18,595) (1,821) 3,592

(11,529)

(104,993) (137,002) (135,662) 1,340

717 105,000

105,717

724

114,472

$ 115,196

-165,000

165,000

27,998

114,472

$ 142,470

-104,782

104,782

(30,880)

114,472

$ 83,592 $

-60,218

. 60,218

61,558

_

(58,878]

The accompanying notes are an integral part of this statement.

39

SCHEDULE lb

TOWN OF CULLEN, LOUISLANA Statement of Revenues, Expenditures and Changes in Fund Balances Budget and Actual

Special Revenue Fund - Two Percent Sales Tax Fund For the Year Ended June 30, 2010

Budgeted Amounts

Original Final

Actual

Amount


Positive (Negative)

Revenues: Taxes-sales $ 90,000 $ Interest

Total revenues

Expenditures: General government Culture and recreation

Total expenditures

Excess of revenues over expenditures

Other financing (uses): Operating transfers out

Total other financing (uses)

Excess (deficiency) of revenues over (under) expenditures and other uses


Fund balance at end of year 3

700

90,700

1,290 -

1,290

89,410

(80,000)

(80,000)

9,410

98,828

> 108,238 $

80,000 $ 100

80,100

985 -

985

79,115

(60,000)

(60,000)

19,115

98,828

117,943 $

77,895 $ 81

77,976

1,048 91

1,139

76,837

(44,708)

(44,708)

32,129

98,828

130,957 $

(2,105) (19)

(2,124)

(63) (91)

(154)

(2,278)

15,292

15,292

13,014

-

13,014

The accompanying notes are an integral part of this fmancial statement.

40

SCHEDULE Ic

TOWN OF CULLEN, LOUISIANA Statement of Revenues, Expenditures and Changes in Fund Balances Budget and Actual

Special Revenue Fund - One-half Percent Sales Tax Fund For the Year Ended June 30,2010

Budgeted Amounts

Fmal Original Actual

Amounts


Positive (Negative)

Revenues: Taxes - sales $ Interest

Total revenues

Expenditures: General govemment Culture and recreation

Total expenditures

Excess of revenues over expenditures

Other financing (uses): Operating transfers out

Total other financing (uses)

Excess (deficiency) of revenues over (under) expenditures and other uses


Fund balance at end of year $_

22,500 $ 6,000

28,500

325 3,000

3,325

25,175

(25,000)

(25,000)

175

193,526

193,701 $

18,000 $ -

18,000

320 2,500

2,820

15,180

(7,644)

(7,644)

7,536

193,526

201,062 $

17,684 $ 274

17,958

328 2,956

3,284

14.674

(10,074)

(10,074)

4,600

193,526

198,126 S

(316) 274

(42)

(8) (456)

(464)

(506)

(2,430)

(2,430)

(2,936)

-

(2,936)


41


NOTES TO BUDGETARY COMPARISON SCHEDULES June 30,2010

Note 1 - Budget basis

The budget for the general fund and special revenues fimds are adopted on a modified accrual basis.

42

Schedule 2


SCHEDULE OF COMPENSATION PAID BOARD MEMBERS June 30, 2010

The Mayor and Board of Aldermen for the Town of Cullen were compensated for the year ended

June 30, 2010 as follows:

Bobby R. Washington Floydean White Barbara Green Tarcus Hawthorne Gary Sullivan Dexter Turner Compensation paid

Mavor $ 12,000

---

-

-$ 12.000

Alderman -

1800 1800 1800 1800 ' 1800

J^OOO

43

JAMIESON, WISE & MARTIN A Professional Account ing Corporation

601 Main Street P. 0. Box 897 Minden, Louisiana 71058-0897

(318) 377-3171 Fax (318) 377-3177

MICHAEL W. WISE, CPA Email mlkeejwmcpa.biz CARLOS E. HARTIN. CPA Erriail cart06@fwmqj3 biz KRISTINEH. COLJE, CPA Email kistine@)wincpa,biz

JENNIFER SMITH. CPA Enaail ieonUafQpmj cpa biz KRISTIE K. MARTIN, CPA Email kri3tie@^vmcpa..61z

WM. PEARCE JAMIESON, CPA (1991)

MEMBERS AMERICAN INSTITUTE OF

CERTIFieO PUBLIC ACCOUMTANTS SOCIETY OF LOUISIANA

CERTIFIED PUBLIC ACCOUMTANTS

REPORT ON INTERNAL CONTROL OVER FINANCLAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDII OF

FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WTTH GOVERNMENT A UDITING STANDARDS

TTae Honorable Bobby R. Washington, Mayor, and the Members of the Board of Aldermen

Town of Cullen, Louisiana

We have audited the financial statements of the govemmental activities, the business-type activities, each major fund, and the aggregate remaining fimd information of the Town of Cullen, Louisiana, as of and for the year ended June 30, 2010, which collectively comprise the Town of Cullen, Louisiana, basic financial statements and have issued our report thereon dated December 13, 2010. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards appHcable to fmancial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.

Internal Control Over Financial Reporting

In planning and performing our audit, we considered Town of Cullen, Louisiana's intemal control over fmancial reporting as a basis for designing our auditing procedures for the purpose of expressing oiu-opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Town of CuUen, Louisiana's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Town of Cullen, Louisiana, intemal control over financial reporting.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing theu" assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement

44

of the entity's financial statements will not be prevented, or detected and corrected on a timely basis.

Our consideration of intemal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in intemal control over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in intemal control over financial reporting that we consider to be material weaknesses, as defmed above. However we identified certain deficiencies in intemal control over financial reporting, described in the accompanying schedule of findings and cpiestioned costs that we consider to be significant deficiencies in intemal control over financial reporting. Item2010-1. A significant deficiency is a deficiency, or a combination of deficiencies, in intemal control that is less severe than, a material weakness, yet important enough to merit attention by those charged with governance.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether Town of Cullen, Louisiana's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a dhect and material effect on the determination of fmancial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such aji opinion.

The Town of Cullen, Louisiana, response to the items identified in our audit is described in the accompanying schedule of findings. We did not audit the Town of Cullen, Louisiana, response and, accordingly, we express no opinion on it.

This report is intended solely for the information and use of .management,. Board of Alderman, others within the entity, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by any other than these specified parties.

V p j i ^ ^ r ^

Minden, Louisiana December 13,2010

45

MICHAEL W. WfSe. C.P.A. CARLOS E. MARTIN. C.P.A. KRJSTINE H. COLE CPA.

JENNIFER C. SMfTH, C.RA KRISTIE K. MARTIN, C P A

JAMIESON, WISE & MARTIN A PROFESSIONAL ACCOUNTING CORPORATION

601 MAIN STREET RO. BOX 897 MINDEN, LOUISIANA 71058-0897

(318)377-3171 FAX (318) 377-3177

WM. PEARCE JAMIESON, C.PA(1991)

MEMBERS

^ ^ . ^ E R ' C A N INSTTTUTE OF CERTIFIED PUBUC ACCOUNTANTS ^ ^ SOCIETY OF LOUISIANA CEFniFIEDPUaiC ACCOUNTANTS .

REPORT ON COMPLIANCE WTTH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER

COMPLIANCE IN ACCORDANCE WTTH OMB CIRCULAR A-133

The Honorable Bobby R. Washington, Mayor, and the Members of the Board of Aldermen

Town of Cullen, Louisiana

Compliance

We have audited the compliance of Town of Cullen, Louisiana with the types of conqjliance requirements described in the OMB Circular A-13SCompliance Supplement that are apphcable to each of its major federal programs for the year ended June 30, 2010, The Town of Cullen, Louisiana, major federal programs are identified in the summary of auditor's results section of the accompanying schedule of fmdings and questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major federal programs is the responsibiUty of the Town of Cullen, Louisiana's management Our responsibility is to express an opinion on the Town of Cullen, Louisiana's compliance based on our audit.

We conducted our audit of con^}liance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Govemment Auditing Standards^ issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Govemments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether nohcompliance with the types of compliance requirements referred to above that could have a direct and material effect ori a major federal program occurred. An audit includes examining, on a test basis, evidence about the Town of Cullen, Louisiana's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of the Town of Cullen, Louisiana's compliance with those requirements.

In our opinion, the Town of Cullen, Louisiana, complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2010.

46

Intemal Control over Compliance

Management of the Town of Cullen, Louisiana, is responsible for establishing and maintaining effective intemal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered the Town of Cullen, Louisiana's mtemal control over compliance with the requirements that could have a direct and material effect on a major federal program to determine the auditing procedures for the purpose of expressing our opinion on compliance and to test and report on intemal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of intemal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Town of Cullen, Louisiana's intemal control over compliance.

A deficiency in intemal control over compliance exists when the design or operation of a control over compliance docs not allow management or employees, in the normal course of performing their assigned fimctions, to prevent, or detect and correct, noncompliance with a type of comphance requirement of a federal program on a timely basis. A material weakness in intemal control over compliance is a deficiency, or combination of deficiencies, in intemal control over con^liance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis.

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

This report is intended solely for the information and use of management, Members of the Board of Aldermen, others within the entity, federal awarding agencies, and pass-through entities and is not mtended to be and should not be used by anyone other than these specified parties.

^*CX^O-^JU—Vi'^—^^

iden, Louisiana December 13,2010

47

TOWN OF CULLEN, LOUISIANA Schedule of Expenditures of Federal Awards For the Year Ended June 30, 2010

Federal Grantor/Pass-through Grantor/Program or Cluster Title

Federal CFDA

Nnmber Federal

Expenditures

Environmental Protection Agency:

Pass-through programs from: Louisiana Department of Environmental Quahty:

ARRA - Capitalization Grants for Clean Water State Revolving Funds 66.458 687,322

Total Environmental Protection Agency

United States Department of Agriculture:

Pass-through programs fi'om: Louisiana Rural Development:

Community Facilities Loans and Grants

Total United States Department of Agriculture

United States Department of Housing and Urban Development:

Pass-through programs from: Louisiana Office of Community Development:

Community Development Block Grant

Total United States Department of Housing and Urban Development

Total expenditures of federal awards

687.322

10.766

14.218

45,000

45,000

286,570

286,570

$ 1,018,892


48

TOWN OF CULLEN SCHEDULE OF FINDINGS AND QUESTIONED COSTS

YEAR ENDED JUNE 30, 2010

SECTION I - SUMMARY OF THE AUPITOR^S RESULTS

Financial Statement Audit

i. The type of audit report issued was unqualified.

ii. There was a significant deficiency required to be disclosed by Govemment Auditing Standards issued by the Comptroller General of the United States. See Section II

iii. There was no instances of noncompliance considered material, as defined by the Government Auditing Standards to the financial statements.

Audit of Federal Awards

iv. There were no significant deficiencies required to be disclosed by OMB Circular No. A-133.

V. The type of report the auditor issued on compliance for major programs was unqualified.

vi. The audit disclosed no audit findings which the auditor is required to report under OMB Circular A-133.

vii.The major federal programs are: CFDA#66.458 Capitalization Grants for Clean Water State Revolving Funds CFDA#14.218 Commimity Development Block Grant

viii. The dollar threshold used to distinguish between Type A and Type B programs as descnbed in OMB Circular No. A-133, Section .520(b) was $300,000.

ix. The auditee does not qualify as a low-risk auditee under OMB Circular No. A-133, Section .530.

49

TOWN OF CULLEN, LOUISL'\NA

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

June 30, 2010

Section I I - Findings related to the financial statements which are required to be reported in accordance with Govemmental Auditing Standards generally accepted in the United States of America:

The results of our auditing procedures of the basic financial statements as of and for the year ended Jxme 30, 2010, of the Town of Cullen, Louisiana, disclosed the following items that are required to be reported in accordance with GAGAS (Generally accepted govemmental auditing standards).

2010-1 Significant Deficiency in Internal Control over Financial Reporting

Condition & Criteria: As is common in small organizations, management has chosen to engage the auditor to propose certain year-end adjusting entries and to prepare their annual fmancial statements. This condition is intentional by management based upon the Town's financial complexity, along with the cost effectiveness of acquiring the ability to prepare financial statements in accordance with generally accepted accounting principles. In relation to this decision, intemal controls over the preparation of year-end adjusting entries and annual fmancial statements, complete with notes, in accordance with generally accepted accounting principles, have not been established. Under generally accepted auditing standards, this condition represents a significant deficiency in intemal controls.

Statement on Auditing Standards (SAS) 112, effective for audits of financial statements for periods alter December 15, 2006, requires that we report the above condition as a control deficiency. The SAS does not provide exceptions to reporting deficiencies that are adequately mitigated with nonaudit services rendered by the auditor or deficiencies for which the remedy would be cost proliibitive or otherwise impractical.

Cause: The condition is due to economic limitations.

Effect: Misstatements in the fmancial statements or footnotes may not be detected.

Recommendation: No recommendation is made for tills deficiency. Management must determine whether the benefit from an intemal control exceeds its cost, and therefore it may be impractical to correct all deficiencies required to be reported under SAS 112. The cost benefit analysis is not a factor in the reporting requirements of SAS 112. We do not believe that

50


SCHEDULE OF CURRENT YEAR FINDINGS WITH MANAGEMENT'S RESPONSE AND PLANNED CORRECTP/E ACTION

June 30, 2010

correcting the significant deficiency as described above would be cost effective or practical for the Town of Cullen therefore no corrective action is recommended.

Management Response: Town of Cullen agrees with the above finding.

51



June 30,2010

Following are additional items for management's consideration and compliance matters

2010-2: Adequate Pledged Securities over Cash Deposits

Criteria: To comply with Fiscal Agency and Cash Management laws of LSA-RS 39:1211-45 and to maintain proper control over cash, the town should maintain adequate pledged securities to cover cash deposits in excess of FDIC insurance.

Condition: We noted during the audit for the year ended June 30, 2010 that as of June 30, 2010 the town had pledged securities, whose cost was in adequate amount, however the fair market value of the pledged securities left the town imcollateraUzed by $587.

Cause: Fair market value of pledged securities were less than cost basis of securities

Effect: Lack of security over cash deposits

Recommendation: Management should review at least quarterly the pledged securities the banks have to collateratize the deposits.

Management response: Concur with finding and will review the market value of pledged securities in the future.

2010-3: FaUure to Publish All Minutes

Criteria: To comply with LSA-RS 43:143-144; which requires the publication of all minutes, ordinances, resolutions, budgets, and proceedings.

Condition: There was no record of the December 18, 2009 or April 26, 2010 minutes or their corresponding publications.

Cause: Town employee responsible for duties failed to perform duties.

Effect: Records required by LSA-RS 43:143 not available

52


SCHEDULE OF CURRENT YEAR FINDINGS WITH MANAGEMENTS RESPONSE AND PLANNED CORRECTIVE ACTION

June 30, 2010

Recommendation: Town should ensure monthly meetings are documented. Possibly, at each council meeting the minute book could be verified from the past meeting. Management Response: Town of Cullen agrees with finding. Historically all minutes have been properly recorded. The new Town Clerk will be reminded of the law requiring documentation of these.

53



June 30, 2010

Section III - Findings and questioned costs for federal awards which are required to be reported under OMB Circular No. A-133 Section ,510 (a):

None

54


SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS June 30, 2010

2009-1 Significant Deficiency in Internal Control over Financial Reporting

Condition & Criteria: As is common m small organizations, management has chosen to engage the auditor to propose certain year-end adjusting entries and to prepare their annual financial statements. This condition is intentional by management based upon the Town's financial complexity, along with the cost effectiveness of acquiring the ability to prepare financial statements in accordance with generally accepted accounting principles. In relation to this decision, intemal controls over the prepai"ation of year-end adjusting entries and annual financial statements, coinplete with notes, in accordance with generally accepted accounting principles, have not been estabUshed. Under generally accepted auditing standards, this condition represents a significant deficiency in intemal controls.

Statement on Audituig Standards (SAS) 112, effective for audits of financial statements for periods after December 15, 2006, requires that we report the above condition as a control deficiency. The SAS does not provide exceptions to reporting deficiencies that are adequately mitigated with nonaudit services rendered by the auditor or deficiencies for which the remedy would be cost prohibitive or otherwise impractical.

Cause: The condition is due to economic limitations.

Effect: Misstatements in the financial statements or footnotes may not be detected.

Status: There has been no change in the status of this finding.

55

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