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Story Archives: Utility billings eyed in Ferriday financial report


Utility billings eyed in Ferriday financial report
posted Thursday, March 13th, 2008 @ 8:09 amE-mail Story E-mail Story | Print Story Print Story 
Why did some utility customers in Ferriday receive credits totaling $55,400 and why were some billed for only 10 gallons or less of water per month?

These are two of the questions asked in an independent auditor's report released by the Louisiana Legislative Auditor this week and among the reasons the town's finances are being audited by the state agency.

Additionally, the report shows that the town's net assets increased from $5,5 million in 2006 to $6.5 million in 2007, and that the town's cash balance was $1.79 million as of June 30, 2007, up from $1.5 million on June 30, 2006.

Governmental revenues dropped from $3.5 million in 2006 to $2.8 million in 2007 in sales taxes, property taxes, occupational license taxes, franchise taxes and fines. Governmental expenses were up from $1.9 million in 2006 to $2.1 million in 2007.

In the report released this week for the fiscal year ending June 30, 2007, by Switzer, Hopkins & Mange, CPA Myles Hopkins noted that the firm was "unable to determine the correct amount of water consumption for the year and the related water and sewer billings that should have been made in the business-type activities and the water and sewer funds. The mathematical calculations that the Town of Ferriday uses in its commutation of water consumption does not allow for the billing of correct utility fees according to the water and sewer rate schedule approved by the town. The amount by which these calculations would affect the assets, net assets and revenues in the business activities and the water and sewer funds is not reasonably determinable."

On a sample of utility billings, the report noted that "56 of 60 customers...received minimum bills. Eighteen of the customers used from zero to 10 gallons of water for the month. Our sample included houses and businesses that we believe are large consumers of water. We believe the consumptions recorded by the town are unreasonably low in almost every case that we reviewed.

"We believe that the water consumptions used are incorrect across the board and the result is that the Town is under billing the water and sewer charges by substantial amounts that are material to financial statements. The town is providing customers water and they are not being billed for correct consumption," a violation of state law.

The recommendation? The town should "input water consumption using arithmetic that allows the water bills to be commuted using the correct water consumption."

The report says that credits to "customer accounts receivable records were made for approximately $55,400 during the year that were for other than cash deposits. These credits could not be identified as to what their purpose was. They were not supported by authorization for the credits and the source of the credits could not be identified."

A recommendation was made "that no credits be made to customers accounts without authorization of the Town Clerk. A listing of credits given should be maintained on a daily basis. Also the accounts receivable subsidiary ledger should be reconciled to the accounts receivable balance at the end of each month."

In another finding, the report said that individual accounts receivable "that are known to be uncollectible have not been written off during the year. Utility accounts receivables totaled $239,391 as of June 30, 2007, according to the subsidiary ledger. Collections of $71,203 were made on accounts receivable during the subsequent month of July 2007. An allowance of bad debts of $173,000 has been established to justify the fairness of the accounts receivable balance."

The report recommends that "the accounts receivable subsidiary ledger be reviewed monthly and those that are inactive should be written off against their utility deposits."

Other aspects of the financial report show that the town paid off its debt on the water plant with a settlement from a class action lawsuit, while the police car fleet was upgraded with funds from grants.

Revenues for the year in governmental funds totaled $2.84 million, including $1.5 million from taxes, $123,914 for licenses and permits, and $751,154 for fines.

Expenses totaled $2.34 million, including $662,164 in general government and administration, $668,476 in the police department and $193,967 in the fire department.

The report notes that the population of Ferriday as of July 1, 2005, was 3,698, the town had 44 employees, and 1,640 utility customers, including 1,410 residential and 230 commercial.

Additionally, notes the audit, Mayor Gene Allen earned $30,000 in salary last year while aldermen Johnnie Brown and Gloria Lloyd each earned $3,200 and aldermen Robin Charpentier, Jerome Harris and Glen Henderson each earned $3,100.

Aldermen are paid $200 for regular meetings and $100 for special meetings.
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