Lake Bruin Waterworks District No. 1 in Tensas Parish District reported capital assets (net of accumulated depreciation) totaling $1,188,176 for the fiscal year ended December 31, 2018.
The financial report was prepared by certified public accountant M. Carlene Dumas of Calhoun and released Monday by the Louisiana Legislative Auditor.
According to the report, “Capital assets include the water system and improvements, land, and construction in progress costing $250 or more. During 2018, the District incurred $955,328 in connection with its water system improvement project.
In 2017, “ the District entered into a loan agreement with the Louisiana Department of Health (LDH) Drinking Water Revolving Loan Fund (DWRLF) to fund improvements to the water system. The District received $950,935 in loan proceeds during 2018.”
The district says it “anticipates that operating revenues and expenses are expected to remain fairly constant for 2019. During 2019, the District expects to receive and expend approximately $109,347 in loan proceeds from the Louisiana Department of Health (LDH) Drinking Water Revolving Loan Fund (DWRLF) to fund improvements to the water system.”
A change in net position -- a $247,672 increase – was recorded during 2018.
“Unrestricted net position (those assets available to finance the daily operations of the district) was $93,496 at year end. Net position restricted for construction was $25,313 and restricted for debt service was $225,154. The net investment in capital assets was $341,654 at year end.”
In a statement of revenues, expenses and changes in net position, the district’s operating revenue totaled $215,334, including $214,679, waters sales; $300, reconnect fees; and $355, transfer fees.
Operating expenses totaled $159,160, resulting in an excess of revenue over expenses totaling $56,174.
Expenses included: $33,568, management fee; $2,157, supplies; $496, bank fees; $1,099, utilities; $5,274, insurance; $1,500, accounting expenses; $210, legal expense; $1,857, postage and delivery; $323, office supplies; $608, dues and subscriptions; $21,414, repairs and maintenance; $6,489, depreciation; $78,478, water purchases; $4,722, safe drinking water fee; $832, sales tax; and $133, other operating expenses.
During 2018, the “total amount billed for water services was $220,283 with an average monthly billing per customer of 37.87. The District had 416 active customers at December 31, 2018. Residential and commercial customers are billed $29 for the first 2,000 gallons of water used plus $6.50 per thousand gallons for all gallons thereafter. New customers are charged a $500 meter installation fee which includes the required meter deposit. Homeowners must pay a $35 refundable meter deposit and renters must pay a $60 refundable meter deposit. Customers are also charged a $35 transfer fee and a $100 reconnect fee when service is disconnected for nonpayment.”
The report says that in 2018 the district “entered into a loan agreement with the Louisiana Department of Health (LDH) Drinking Water Revolving Loan Fund (DWRLF) by issuing $1,200,000 in water revenue bonds to make improvements to its water system. LDH will give 20% principal forgiveness on each principal drawdown (up to a maximum of $500,000 forgiveness) so the maximum amount of principal repayment will be $960,000. The total amount of principal drawdowns as December 31, 2018 is $1,090,653.
“The bonds bear interest at 1.95%, payable semi-annually on March 1 and September 1 of each year, which began on March 1, 2018. Lake Bruin Waterworks District No. 1, also pays a .50% administrative fee to LDH on the outstanding principal amount of the bond, payable on each interest payment date. The principal will be repaid in twenty annual installments which began September 1,2018.
“The bonds are secured and payable from a pledge and dedication of water revenues after the payment of the reasonable and necessary operating and maintenance expenses.”
The Lake Bruin waterworks district “entered into an agreement with JCP Management to operate and maintain the water system in accordance with the rules, regulations, and by-laws adopted by the Board of Commissioners of the District and in accordance with the annual budget and fee schedule adopted by the District. The monthly fee for providing basic operation and maintenance services is $10 per user per month. Other services are billed based on the fee schedule included in the agreement.
“During the year ended December 31, 2018, the district paid JCP Management a total of $58,707 for services under the agreement. In addition, the water system paid Womack and Sons Construction Group a total of $876,913 in connection with its water system improvement project. The president of JCP Management is also the president of Womack and Sons Construction Group. The amount due JCP Management at December 31, 2018 was $4,940.
On October 31, 2017, the district “awarded a construction contract in the amount of $899,194 to Womack and Sons Construction Group, Inc., in connection with its water system improvement project that is being financed with a loan from the Louisiana Department of Health, Drinking Water Revolving Loan Fund … On May 14, 2018, a change order was approved increasing the total amount of the construction contract to $938,528. The District also had a commitment under an engineering and consultant contract for $210,200 in connection with its water system improvement project. As of December 31, 2018, $876,913 costs have been paid under the construction contract and the balance remaining under the engineering/consulting contract was $22,522.”
There were four findings:
2018-001. Inadequate Segregation of Accounting Duties: “Proper internal controls require that accounting duties be performed by separate individuals so that one individual could not perpetrate and conceal errors or irregularities without them being detected by another individual who was performing his or her assigned duties … The accounting duties of billing, collecting, and posting customer payments to customers accounts are performed by one management company employee.”
Management's Response: “It is not economically feasible to correct this deficiency based on the size of the District.
2018-002. Inadequate Controls Over Collections and Accounts Receivable: “Proper internal controls, as well as the Louisiana Legislative Auditor's bestpractices guidance for local governments, require that collections be deposited in the bank on at least a weekly basis and that accounts receivable recorded in the general ledger be reconciled on a monthly basis to the detailed accounts receivable listing maintained in the billing software.
“The following deficiencies in internal controls were noted:
“1. Collections are not deposited in the bank in a timely manner. Of the 25 detail payment listings that were tested, 14 of these amounts were deposited more than a week after collection. Collections for the period May 15, 2018, through May 18, 2018, were deposited on July 2, 2018, or 48 days … At December 31, 2018, a total of $6,024 that was collected between December 11, 2018, and December 28, 2018, was on hand and was not deposited in the bank until January 10, 2019.
“2. The accounts receivable balance recorded in the general ledger is not reconciled on a monthly basis to the detailed accounts receivable listing maintained in the billing software. It was noted that only water charges and collections are posted to accounts receivable in the general ledger. Collections posted to the billing software are not always posted to the general ledger during the same month. Collections are not posted to the general ledger until they are deposited into the bank … The District's bank is located 30 miles from the collection location which causes delays in depositing funds. The accounting personnel were unaware of the requirement to reconcile the accounts receivable balance on a monthly basis.”
Management's Response: “Collections will be deposited on at least a weekly basis. The accounts receivable balance recorded in the general ledger will be reconciled on a monthly basis to the detailed accounts receivable listing maintained in the billing software.”
2018-003. Failure to Maintain Complete Customer Meter Deposit Records: “At December 31, 2018, the District had approximately 416 customers. The listing of customers' meter deposits maintained in the billing software at December 31, 2018, included only 128 customers. Of the 128 listed, there were approximately 18 customers that appeared to have incorrect amounts recorded as their deposit amount. The listing of customers' meter deposits maintained in the billing software was not reconciled to the customer meter deposit liability recorded in the general ledger on a monthly basis … The customer meter deposits for customers who paid their deposits prior to 2003 have not been recorded in the billing software. The accounting personnel were unaware of the requirement to reconcile the customer meter deposit liability on a monthly basis.”
Management's Response: “Meter deposits will be recorded or corrected for all active customers. The customer meter deposit liability recorded in the general ledger will be reconciled on a monthly basis to the listing of customers' meter deposits maintained in the billing software.”
2018-004. Receipts and Disbursements in Construction Account Not Posted to Proper General Ledger Accounts: “The loan proceeds deposited into the Construction Account that accounts for the Louisiana Department of Health (LDH), Drinking Water Revolving Loan Fund, were incorrectly posted to the general ledger as miscellaneous income and the costs associated with the water system improvement project that were paid from the Construction Account were incorrectly posted as repairs and maintenance and professional fees.
Management's Response: “Loan proceeds from LDH will be posted to the Loan Payable - LDH general ledger account or the Loan Principal Forgiveness general ledger account and Construction account disbursements will be posted as construction in progress in the Water System Other general ledger account.”
The waterworks district was created by the Tensas Parish Police Jury “for the purpose of supplying safe drinking water to the population of the district. The District is governed by a five-member board appointed by the police jury who serve without benefit of compensation. The District has no employees.”
Members of the board include Alphonse Coco (president), Paula Wilhite, David McEachem, Mike Rogers and Donna Ratcliff. Board members are not compensated.