WATERWORKS DISTRICT 8 OF WARDS 3 & 8

LAKE CHARLES, LA

SCHEDULE OF FINDINGS AND RESPONSES

Six Months Ended December 31, 2023

SECTION I - SUMMARY OF AUDITORS' RESULTS

Financial Statements
Type of auditor's report issued: Unmodified

Internal control over financial reporting:

Material weakness identified? X Yes No
Significant deficiency identified not
considered to be material weakness? Yes X None reported

Noncompliance material to financial statements

noted? X Yes No

SECTION II - FINANCIAL STATEMENT FINDINGS

2023a-001 Segregation of Duties

Condition: Because of the entity's size and the limited number of

accounting personnel, it is not feasible to maintain a
complete segregation of duties to achieve effective internal
control.

Criteria: Effective internal control requires adequate segregation of

duties among client personnel.

Effect: Without proper segregation of duties, errors within the

financial records or fraud could go undetected.

Cause: The District's staff size was insufficient to design and

implement proper segregation of duties.

Recommendation: To the extent cost effective, duties should be segregated and

management should attempt to mitigate this weakness by
supervision and review procedures.

Response: As of January 14, 2024, the Board of Commissioners was

suspended and the Calcasieu Parish Police Jury assumed the
position of governing authority of the District. The District
will now adhere to all of the Parish's internal controls and
accounting processes and procedures which include the proper
segregation of duties.

24
 WATERWORKS DISTRICT 8 OF WARDS 3 & 8
LAKE CHARLES, LA

SCHEDULE OF FINDINGS AND RESPONSES

Six Months Ended December 31, 2023
(continued)

2023a-002 Bond Covenants

Condition: The District did not meet bond covenants for the six months
ended December 31, 2023.

Criteria: The revenue bonds of the District have various covenants that
are required to be met in accordance with the bond agreement
with issuers of the bonds.

Effect: Non-compliance with bond covenants.

Cause: The District did not have adequate cash on hand to maintain
proper bank balances.

Recommendation: As soon as available, the District should replenish bond

reserves and review water rates.

Response: As of January 14, 2024, the Board of Commissioners was

suspended and the Calcasieu Parish Police Jury assumed the
position of governing authority of the District. The District
will work to replenish all restricted accounts as quickly as
fiscally possible.

2023a-003 Failure to Maintain Custody of Customer Security Deposits

Condition: As of December 31, 2023, the District had an outstanding

customer security deposit liability of $100,180. However, the
District's balance of cash in the customer security deposit
cash account only had a balance of $3,731.

Criteria: Cash security deposits received from utility system customers

are required to be maintained as restricted cash until
customers are no longer active.

Effect: The District failed to exercise its fiduciary duty to

safeguard customer security deposits and was at risk for not
having sufficient funds to refund customer deposits due to
customers.

Cause: The District used customer security deposits to fund other

activities.

Recommendation: The District should make every effort to replenish the

Customer Security Deposit and any other restricted cash
accounts.

25
 WATERWORKS DISTRICT 8 OF WARDS 3 & 8
LAKE CHARLES, LA

SCHEDULE OF FINDINGS AND RESPONSES

Six Months Ended December 31, 2023
(continued)

Response: As of January 14, 2024, the Board of Commissioners was

suspended and the Calcasieu Parish Police Jury assumed the
position of governing authority of the District. The District
will work to replenish all restricted accounts as quickly as
fiscally possible.

2023a-004 Failure to Maintain Accounting Records

Condition: During the audit, we conducted a test of a total of forty-five

(45) cash and credit card disbursements. Of those
transactions, seventeen (17) lacked supporting documentation.

Criteria: Local governments are required to maintain accounting records

sufficient to support the receipts and disbursements of all
public funds.

Effect: Unsupported transactions may be indicative of instances of

fraud or abuse.

Cause: The District kept poor accounting records and documentation,

possibly in an effort to conceal misappropriations of cash.

Recommendation: A11 transactions of the District should be adequately

supported by appropriate documentation and such documentation
should be retained according to record retention statutes.

Response: In January 2024, the management of the District was assumed by

the Calcasieu Parish Police Jury and will ensure that all
transactions are properly supported by appropriate supporting
documentation.

Findings 2023a-005 through 2023a-013

Effective January 14, 2024, the District Board of Commissioners was suspended,
and the Calcasieu Parish Police Jury assumed the position of governing authority
of the District. This transition was one of the first steps in the process of
consolidating the District with other Calcasieu Parish Water Districts. Effective
that day, day-to-day operations of the District were placed under the Parish's
Division of Public Works and Engineering. The Parish's Division of Finance was
tasked with incorporating the accounting activities of the District into the
Parish's accounting processes.

During the transition process, Parish Finance staff immediately noticed several
financial related issues and requested access to all accounting

26
 WATERWORKS DISTRICT 8 OF WARDS 3 & 8
LAKE CHARLES, LA

SCHEDULE OF FINDINGS AND RESPONSES

Six Months Ended December 31, 2023
(continued)

software and banking sites. A full review of the financial activity of the
District was immediately undertaken by the Parish staff, resulting in the
identification of the loss of cash collections, the identification of improper
and possibly illegal disbursement activities and numerous other instances of
suspected fraud and abuse which are described in the subsequent findings.

On April 5, 2024, the Calcasieu Parish Police Jury notified the Louisiana
Legislative Auditor of the alleged misappropriations of funds discovered as part
of their investigation. The investigation's results were also submitted to the
Calcasieu Parish District Attorney's office and Calcasieu Parish Sheriff's
Office.

On May 20, 2024, we were engaged to conduct the audit of the District for the
six-month period ended December 31, 2023. This represented the "gap" period
between the District's previous fiscal year end of June 30th and its new fiscal
year end of December 319t, as part of the Calcasieu Parish Police Jury. Prior to
the engagement, we were informed of the Parish's investigation into the
District's finances for the calendar years 2020-2023. In response to our audit
and fraud inquiries, we were given access to their investigation's results. That
information was utilized to plan and perform our audit for the six-month period
ended December 31, 2023. To the extent that items noted during their
investigation occurred during the audit period, those items were specifically
tested and tests were reperformed as necessary. The results of our testwork were
consistent with the results of the investigation performed by Calcasieu Parish
Police Jury.

The following findings, 2023a-005 through 2023a-013 include activity during the
entire timeframe of the Parish's investigation, 2020-2023. To provide context
for the magnitude and seriousness of the items we felt that it would be
misleading to only present transactions which occurred during the audit period
and to exclude known instances of suspected fraud. We are presenting results of
the Parish's investigation relating to prior periods since these have not been
reported in previous audit reports.

2023a-005 Cash Collections

Condition: It is estimated that the District has incurred a loss of cash

collections for billing and security deposit payments in the
amount of $481,439 for the periods 2020 through 2023. It is
probable that this loss is higher and extends into periods
prior to 2020. In addition to the estimated $481,439 loss for
billing and security deposit cash collections, there is
another estimated loss of $15,265 related to the return of
collections of bank accounts that were closed or had
insufficient funds for water billing payments made by check or
automatic withdrawal during 2020 through 2023.

27
 WATERWORKS DISTRICT 8 OF WARDS 3 & 8
LAKE CHARLES, LA

SCHEDULE OF FINDINGS AND RESPONSES

Six Months Ended December 31, 2023
(continued)

The loss was discovered by the Parish's Division of Finance

when the Division of Finance was preparing to transition the
accounting and financial activities of the District into the
Parish's accounting and financial system. This transition to
the Parish's financial system was in anticipation of the
Parish becoming the governing authority for Waterworks
District No. Eight of Wards Three and Eight ("District")
effective January 14, 2024 which was one of the first steps in
the process of consolidating the District with other Calcasieu
Parish Water Districts.

While the day-to-day oversight of the District operations was

placed under the Parish's Division of Public Works and
Engineering effective January 14, 2024, the Division of
Finance was responsible for incorporating the accounting
activities of the District into the Parish's accounting
processes. In preparation for this transition, the Parish
Finance staff began meeting with District personnel on January
9, 2024. The Parish Finance staff immediately noticed several
financial related issues and requested access to all
accounting software and banking sites. A full review of the
financial activity of the District was immediately undertaken
by Parish staff, resulting in the identification of the loss
of cash collections and numerous other issues.

As background for the procedures established by the District,

when cash or check payments are received at the District
Office for either water billing payments, initial security
deposits, or other one-time payments, the cashier accepted the
payments and tracked all receipts. The cashier entered the
water sales related receipts in Sequoyah Accounts Receivable
Software so that the individual billing accounts are kept up
to date on a daily basis and issued a manual cash receipt for
other non-water sales deposits.

At the end of each day, the cashier counted the collections

and segregated the cash collected into an envelope with the
daily amount and cashier's initials written on the outside of
the envelope while the checks collected were accumulated,
placed into a different envelope with the date, amount and
cashier's initials denoted on the outside of the second
envelope. The Office Manager or the Plant Manager would
recount the funds with the cashier and one of the three would
then place the funds in the safe located in the District
Office. On occasions the Office Manager or Plant Manager were
not available, another office employee would count the drawers
with the cashier.
 WATERWORKS DISTRICT 8 OF WARDS 3 & 8
LAKE CHARLES, LA

SCHEDULE OF FINDINGS AND RESPONSES

Six Months Ended December 31, 2023
(continued)

As stated previously, all check payments were segregated from

cash payments since those payments were deposited using a
remote deposit scanner by another office employee. These
transactions are reflected in the bank account as remote
deposit capture items. A11 cash water sale payments and non-
cash water sale payments were deposited separately using a
bank deposit slip. Because (1) credit cards settle to the
bank through the credit card processing company, (2) ACH
payments (i.e. pre-authorized payments on customer accounts)
were only processed once a month and denoted separately by the
bank, and (3) checks were deposited via a remote deposit
scanner and were denoted with a remote deposit notation by the
bank, the Parish Division of Finance and Division of Public
Works and Engineering were able to pull banking data by type
of payment and then further analyze the data in order to
quantify the missing funds.

On a daily basis, the Cashier entered the payment information

in the Quickbooks Accounting System as separate entries by
payment type (i.e. credit card, cash, or check payments) via
the "Make Deposits" function. According to the District
employees, the Office Manager was responsible for preparing
the deposit slips to be given to the Plant Manager who would
take the deposit to the bank. Bank reconciliations were
performed by the Office Manager. Any cash deposits entered
into the Quickbooks Accounting System that were not deposited
at the bank had to be deleted, or adjusted, in order to
reconcile the bank account and the accounting software general
ledger entries. The Office Manager has admitted to deleting
the cash entries made by the Cashiers in the Quickbooks
Accounting System.

In addition to the daily entries made into Sequoyah AR System

and Quickbooks Accounting Software, the Cashier also logged
the daily payment amounts and types into a manual log system
referred to as the "Blue Book." This log tracks the date
received, the amount of cash, the amount of checks, and the
amount of credit cards processed by the Cashier on that day.
Monthly utility billings are entered as a total into the "Blue
Book" and then the daily payments are subtracted from this
amount. while the balance denoted in the Blue Book is not
representative of the existing accounts receivable balance in
the Sequoyah Accounts Receivable Software due to the fact that
not all billing adjustments are logged and the running balance
was simply adjusted to the billing amount on a monthly basis,
the daily payment listing itself was useful from a secondary
reasonableness test perspective when the Parish was
identifying missing deposits. This "Blue Book" is a manual,

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 WATERWORKS DISTRICT 8 OF WARDS 3 & 8
LAKE CHARLES, LA

SCHEDULE OF FINDINGS AND RESPONSES

Six Months Ended December 31, 2023
(continued)

contemporaneous log of collection activity which does not

appear to have been manipulated.

Funds related to new service accounts would not be included in

the daily deposit procedures above. The Cashiers would simply
put the new security deposits in an envelope with the name of
the individual, service location, and the amount of the
deposit denoted on the outside of the envelope. These
envelopes would be given to the Office Manager pending the
set-up of the billing account and connection of service.
Several of these envelopes (without funds) were located in
both the Plant Manager's office and the Office Manager's desk.
There was at least one envelope that had partial funds for
regular billing sales collections located in the Office
Manager's desk when the Parish transitioned financial
activities.

With respect to returns by the bank of prior collections

(check, ACH, etc.) for insufficient funds, unable to locate
accounts, or closed accounts, the customer would be contacted
by the Office Manager and required to come and pay the
returned payment as well as an additional fee of $25. These
payments were required to be made in cash within 2-3 days or
the water meter would be locked. The Cashier would collect
the cash payment and then put the funds in an envelope with
the customer information on the outside and give the envelope
to the Office Manager. With the exception of 6 individual
collections, these returned payments were not deposited into
the District's bank account for the period 2020 through 2023.

The Parish located approximately $18,000 in checks in the

District Office that were not timely deposited. Two of them
totaled $9,240 and were cashiers' checks related to a 2022
sale of a vehicle and the 2022 closing of another District
account. The other checks related to a 2022 state
reimbursement check for disaster related expenses, two 2023
state revenue sharing checks and various refunds of business
activity. The Parish was able to negotiate the deposit of the
majority of the checks, however there are a few that were too
old. Cash in the amount of $2,695 was located in the Office
and was immediately deposited into the District's bank
account.

Criteria: Proper segregation of duties and internal controls prevent one

employee from having the ability to impact all aspects of the
accounting cycle. When segregation of duties is difficult to
achieve due to any entity's size, it is paramount that the
Management and/or the Board of Commissioners provide proper

30
 WATERWORKS DISTRICT 8 OF WARDS 3 & 8
LAKE CHARLES, LA

SCHEDULE OF FINDINGS AND RESPONSES

Six Months Ended December 31, 2023
(continued)

review and oversight in order to fulfill the District's

fiduciary responsibility to the citizens of the District.

In accordance with Louisiana Revised Statute (La. R.S.)

42:1461 all officials, both appointed and elected, as well as
employees of any "public entity" assume a personal obligation
not to misappropriate, misapply, convert, misuse, or otherwise
wrongfully take any funds, property, or anything of value
belonging to or under the custody or control of the public
entity in which they hold office or are employed.

Effect: A11 of the data obtained by the Parish has been turned over to
law enforcement agencies for further analysis and review.
However, it appears that the Plant Manager and/or the Office
Manager may have violated LA R.S. 42:1461, as well as other
criminal statutes, with the alleged misappropriation of the
customer payments related to security deposits and monthly
water usage billing. In addition, these actions compromised
the District's ability to properly operate the water system.

Cause: As a result of poor internal controls and a lack of oversight,

it is alleged that the District Plant Manager and/or Office
Manager were able to misappropriate large amounts of cash.
While the Office Manager has admitted to the theft of a much
smaller amount of cash than indicated in this report, she has
implicated the District Plant Manager in misappropriation of
the cash as well. The District Plant Manager has denied any
wrongdoing even though he was the only employee that brought
the cash to the bank. In the Plant Manager's interview, he
knew that the deposits were not being made but simply stated
that he cannot take the deposits to the bank until the Office
Manager prepares the deposits. This statement does not appear
to be reasonable given that from July 1, 2023 to December 31,
2023, the District had no cash deposits during the months of
July, August, or September 2023 and the only cash deposits
made were on 10-12-23, 11-27-23 and 12-14-23. Law enforcement
is currently reviewing this matter.

Recommendation: Proper internal controls should not allow one employee to

perform incompatible duties. Incompatible duties with respect
to cash collections would be the receipt of the deposit, the
recording of the deposit in the accounting software (including
later deleting the transaction), and the reconciliation of the
bank accounts.

31
 WATERWORKS DISTRICT 8 OF WARDS 3 & 8
LAKE CHARLES, LA

SCHEDULE OF FINDINGS AND RESPONSES

Six Months Ended December 31, 2023
(continued)

Response: Effective January 14, 2024, the District Board of

Commissioners was suspended, and the Calcasieu Parish Police
Jury assumed the position of governing authority of the
District. The District will now adhere to all of the Parish's
internal controls and accounting processes and procedures
which include the above recommended segregation of duties.

2023a-006 Disbursement Activity

Condition: It is estimated that the District has incurred a loss of

approximately $291,758 related to District funded disbursement
activity that appears to be related to personal activity of
the Plant Manager or related parties of the Plant Manager.
The period of time for this loss was focused on 2020 to 2023
but the Parish was able to locate some activity in 2019.
There is also another estimated loss of $4,761 related to
District funded disbursement activity that appears to be
related to personal activity of the Office Manager.

As stated in Finding 2023a-005, the loss was discovered by the

Parish's Division of Finance when the Division of Finance was
preparing to transition the accounting and financial
activities of the District into the Parish's accounting and
financial system. This transition to the Parish's financial
system was in anticipation of the Parish becoming the
governing authority for Waterworks District No. Eight of Wards
Three and Eight ("District") effective January 14, 2024 which
was one of the first steps in the process of consolidating
this District with other Calcasieu Water Districts.

While the day-to-day oversight of the District operations was

placed under the Parish's Division of Public Works and
Engineering effective January 14, 2024, the Division of
Finance was responsible for incorporating the accounting
activities of the District into the Parish's accounting
processes. In preparation for this transition, the Parish
Finance staff began meeting with District personnel on January
9, 2024. The Parish Finance staff immediately noticed several
financial related issues and requested access to all
accounting software and banking sites. A full review of the
financial activity of the District was immediately undertaken
by Parish staff resulting in the identification of improper
and possibly illegal disbursement activities along with
numerous other issues.

32
 WATERWORKS DISTRICT 8 OF WARDS 3 & 8
LAKE CHARLES, LA

SCHEDULE OF FINDINGS AND RESPONSES

Six Months Ended December 31, 2023
(continued)

While the Parish focused on the period 2020 to 2023, it is

probable that this loss is higher and extends into periods
prior to 2020. The Parish had to reconstruct a lot of the
disbursement activity since the District's system for
requiring and maintaining proper documentation of
disbursements was extremely antiquated and limited. It is
unknown as to whether the lack of proper documentation was
intentional or not. At the end of the Parish review, there
were some disbursement records that could not be located or
requested from the appropriate vendor. As a result, the
estimated loss could be significantly higher.

Debit and credit card documentation is a prime example of this

lack of documentation. The Plant Manager and Office Manager
had access to bank debit and credit cards while not requiring
proper documentation be maintained at the time of the use of
the card. There appeared to be no oversight on this unlimited
access or use of debit and credit cards by others in the
District including the Board of Commissioners. The
documentation related to numerous debit and credit card
charges could not be located and because of the nature of the
charges, the Parish was not able to obtain documentation from
the vendors. An example would be internet vendors, especially
those accounts set up by the Plant Manager or Office Manager
in their names. The Parish would not have access to those
accounts. Regular vendor account documentation was also
problematic but the Parish was able, in some cases, to obtain
invoices from the vendors.

The questioned disbursement costs attributed to the Plant

Manager appear to be indicative of the Plant Manager's
financing, using District funds, of the following suspected
personal activities, which of course have been referred to the
appropriate law enforcement agencies for further review and
confirmation since the Parish review had some limitations:

• operating a salvage vehicle business,

• funding various activities or repairs of personally owned
vehicles and equipment,
• funding various home improvements or home furnishings,
• funding operations of a separate legal entity,
• disbursing funds to himself, or related parties, for
questionable District service invoices, some of which were
altered in Quickbooks accounting system, or other District
staff questioned completion of work,
• funding personal hunting or other recreational endeavors,
and
• funding personal or related party medical expenditures.

33
 WATERWORKS DISTRICT 8 OF WARDS 3 & 8
LAKE CHARLES, LA

SCHEDULE OF FINDINGS AND RESPONSES

Six Months Ended December 31, 2023
(continued)

Additional questioned costs, included in the estimated

$291,757 above, that are attributed to the Plant Manager
include automated teller machine (ATM) withdrawals and sales
of scrap metal.

There are additional payments of $10,838 that were made

payable to the Plant Manager that are clear violations of the
State Ethics law prohibiting contracting with your agency but
that were initially excluded from the $291,758 calculation.
Because there were no invoices, descriptions in Quickbooks,
and other staff could not comment on specifics, these amounts
were moved to a state law violation listing. Regardless as to
whether the disbursements were classified initially as
questionable from a fraudulent standpoint or listed as a
verified ethics violation, the District experienced a loss
that needs to be reimbursed.

The questioned costs attributable to the Office Manager are

estimated to be $4,761 and relate to Hurricane Laura personal
evacuation expenses, a perfume purchase, and payments on
personal capital one and chase credit card payments. Because
the Parish could not obtain the details of the personal credit
card statements and there was no supporting documentation
indicating any business purpose, these amounts are being
questioned and turned over to the appropriate law enforcement
agency for further review and confirmation.

With respect to the Hurricane Laura personal evacuation

expenses, credit card purchases for three hotel rooms for the
Office Manager, and a related party to the Office Manager,
were incurred along with purchases at the Dallas/Grapevine
Target and Bass Pro Shop while the Office Manager was
evacuated. The third room included one night's cancellation
fee and was assumed to be for another related party of the
Office Manager since all three rooms were registered under the
Office Manager's name.

The Parish reviewed the Hurricane Laura activity as it relates

to the Office Manager's evacuation credit card charges, and
denoted that there were employees, tasked with keeping the
water system operational, who remained at the facility during
the disaster. There did not appear to be a valid reason for
the District to pay for a hotel room to evacuate the Office
Manager, much less for two hotel rooms for family members of
the Office Manager. Payroll time of the Office Manager for
those days that she stayed in the hotel also indicated that
the Office Manager did not work during the hotel stay (no
overtime was paid) so there does not appear to be business

34
 WATERWORKS DISTRICT 8 OF WARDS 3 & 8
LAKE CHARLES, LA

SCHEDULE OF FINDINGS AND RESPONSES

Six Months Ended December 31, 2023
(continued)

need for her hotel room or the other two rooms for family
members.

Criteria: In accordance with La. R.S. 42:146.1, all officials, both

appointed and elected, as well as employees of any "public
entity" assume "a personal obligation not to misappropriate,
misapply, convert, misuse, or otherwise wrongfully take any
funds, property, or anything of value belonging to or under
the custody or control of the public entity in which they hold
office or are employed."

In addition, La. R.S. 14:140 states that public contract fraud

is committed "when any public officer or public employee shall
use his power or position as such officer or employee to
secure any expenditure of public funds to himself, or to any
partnership of which he is a member, or to any corporation of
which he is an officer, stockholder, or director."

Effect: A11 of the data obtained by the Parish has been turned over to
law enforcement agencies for further analysis and review.
However, it appears that the Plant Manager and the Office
Manager may have violated La. R.S. 42:1461, and La. R.S.
14:140, as well as other criminal statutes, by using District
funds to purchase or fund the activities identified in this
section. The alleged actions of these individuals compromised
the District's ability to properly operate the water system.

Cause: As a result of poor internal controls and a lack of oversight,

it is alleged that the District Plant Manager and Office
Manager were able to misappropriate District assets for
personal benefit.

Recommendation: The District Board should provide better oversight of District

finances, ensuring their fiduciary duty to the citizens of the
District is properly accomplished. A11 disbursement
documentation, including debit and credit card documentation,
should be obtained, reviewed and properly maintained in the
District's record system.

Response: Effective January 14, 2024, the District Board of

Commissioners was suspended, and the Calcasieu Parish Police
Jury assumed the position of governing authority of the
District. The District will now adhere to all of the Parish's
internal controls and accounting processes and procedures
which include the proper segregation of duties and
disbursement reviews and approvals.

35
 WATERWORKS DISTRICT 8 OF WARDS 3 & 8
LAKE CHARLES, LA

SCHEDULE OF FINDINGS AND RESPONSES

Six Months Ended December 31, 2023
(continued)

2023a-007 Alterations of Public Documents

Condition: As denoted in Findings 2023a-005 and 2023a-006, the Office

Manager and the Plant Manager altered public documents for
their benefit. The Office Manager altered public documents
with respect to entries in Quickbooks Accounting System
initiated and posted by the Cashiers for daily cash
collections (See Finding 2023a-005). The Office Manager
deleted the entries in order to reconcile the monthly bank
account to the accounting system since cash deposits were not
made. The Plant Manager denoted improper equipment/vehicle
unit numbers on invoices that were later determined to be for
personal purchases.

The Office Manager, possibly at the direction of the Plant

Manager, altered public documents in in the Quickbooks
Accounting Software to reflect different payees in the
Quickbooks Accounting System than what the invoice or
cancelled check endorsement reflected. These disbursements
were flagged as questionable personal activity because of this
alteration. The following disbursements were altered:

(a)Check 18785 - $260 - Quickbooks payee was a Hoffpauir

Brothers, LLC. The invoice was from Hoffpauir Brothers,
LLC. The canceled check was endorsed by the Plant
Manager. Two different entities.
(b)Check 19209 - $3,500 - Quickbooks payee was to Plant
Manager for road repairs but the Quickbooks entry had a
reference "Per Hoffpauir Brothers, LLC." The invoice was
from Hoffpauir Brothers, LLC. The canceled check reflects
that payee was Hoffpauir Brothers, LLC but the endorsement
is the Plant Manager. Two different entities.
(c)Check 19256 - $3,700 - Quickbooks payee was to Hoffpauir
Brothers, LLC. The invoice was from Hoffpauir Brothers,
LLC. The canceled check reflects that payee was
Hoffpauir Brothers, LLC but the endorsement is the Plant
Manager. Two different entities.
(d)Check 19298 - $3,652 - Quickbooks shows Payee as Chet's
Electrical Service. The invoice was for Chet's Electric.
Canceled check reflects that payee and endorsement were
Plant Manager. Two different entities.
(e)Check 19301 - $4,000 - Disbursement entry was posted in
Quickbooks to Maricio Santacalomn but the canceled check
shows that the payee is the Plant Manager. Two different
entities.

36
 WATERWORKS DISTRICT 8 OF WARDS 3 & 8
LAKE CHARLES, LA

SCHEDULE OF FINDINGS AND RESPONSES

Six Months Ended December 31, 2023
(continued)

(f)Check 19339 - $1,400 - Quickbooks payee was to Plant

Manager for road repairs but the Quickbooks entry has a
reference "Per Hoffpauir Brothers, LLC." An invoice was
not located. The canceled check reflects that payee was
Hoffpauir Brothers, LLC but the endorsement is the Plant
Manager. Two different entities.
(g)Check 19669 - $5,000 - Quickbooks originally showed Payee
as Chet's Electrical on Check 19664 but that check was
voided and Check 19669 was reissued to reflect payee as
Chet Hoffpauir. The invoice is from Chet's Electric. Two
different entities.

Criteria: La. R.S. 14:133 states that "Filing false public records is
the filing or depositing for record in any public office or
with any public official, or the maintaining as required by
law, regulation, or rule, with knowledge of its falsity, of
any of the following: (1) any forged document, (2) any
wrongfully altered document, (3) any document containing a
false statement or false representation of a material fact."

Effect: The Office Manager and Plant Manager appear to have violated
La. R.S. 14:133. The actions of these individuals compromised
the District's ability to properly operate the water system
and to fund the District's other operating expenditures.

Cause: As a result of poor internal controls and a lack of oversight,

it is alleged that the District Plant Manager and Office
Manager were able to misappropriate District assets for
personal benefit and to avoid detection of those actions by
altering documentation.

Recommendation: The District Board should provide better oversight of District

finances, ensuring their fiduciary duty to the citizens of the
District is properly accomplished. A11 disbursement
documentation should be obtained, reviewed and properly
maintained in the District's record system.

Response: Effective January 14, 2024, the District Board of

Commissioners was suspended, and the Calcasieu Parish Police
Jury assumed the position of governing authority of the
District. The District will now adhere to all of the Parish's
internal controls and accounting processes and procedures
which include the proper segregation of duties and
disbursement reviews and approvals including those prohibited
by state ethics rules.

37
 WATERWORKS DISTRICT 8 OF WARDS 3 & 8
LAKE CHARLES, LA

SCHEDULE OF FINDINGS AND RESPONSES

Six Months Ended December 31, 2023
(continued)

2023a-008 Private Development

Condition: During the transition of the District's accounting and

financial system to the Parish's accounting and financial
system, the Parish identified issues with a private
development (Sugarcane Towne Utilities LLC) in the District
boundaries. At this point, the full extent of the financial
impact between the District and the private development is not
known but is continuing to be reviewed and the findings will
be turned over to the appropriate law enforcement agency.

The issues that have been identified thus far are:

(a) Meter Supplies - Various water meter supplies (meters,

curb stops, etc.) appear to have been ordered and paid
for by the District but were used in the private
development. The Board of Commissioners approved in its
July 2, 2019 meeting that a master meter would be
utilized for this development. Yet the individual
meters and supplies were ordered on a District account.
There is a corresponding deposit for a portion of the
amount of those supplies identified. However, that
partial reimbursement does not change the fact that the
District's tax-exempt status was used for a private
development. Employees have also stated that there were
at least two shipments of product that were stored on
District premises for this development and that one
group of the supplies was actually delivered to the
development by two District employees at the request of
the Plant Manager.

(b) Plant Manager's Business Operations - In addition to the

supply issue, the Plant Manager's business (Hoffpauir
Brothers LLC) appears to have been contracted to do work
inside this development even though the Plant Manager
has admitted that his business is not properly licensed
to do that type of work. One of the District employees
stated that he assisted the Plant Manager on a job in
the development while on District time. The Plant
Manager denies using the District employee on his job.

The District's Level 4 Operator was performing the water

testing for this development that was reported to
Louisiana Department of Health so there may be
additional unreported District revenue related to the
water sample testing.

38
WATERWORKS DISTRICT 8 OF WARDS 3 & 8
LAKE CHARLES, LA

SCHEDULE OF FINDINGS AND RESPONSES

Six Months Ended December 31, 2023
(continued)

It also appears that the Office Manager was assisting in

the preparation of various billings for items related to
the Plant Manager's business operations with this
private development. The following billings were
located:

(a) 10 meters and supplies ($5,931).

(b) Auto flusher installation and 5-meter installations
on Lots 2, 3, 4, 7 and 8 ($2,600)
(c) DHH approved auto flusher ($2,700).
(d) Meter installations and road bores for Lots 57, 58,
59, 60, 70, 85, 86 and 87, 5 DHH sample stations'
parts and installation ($5,903.50).
(e) Invoice 3652 - meter installations and road bores
for Lots 4, 5, 88, 89, 90, 91 and 92 ($1,900).
(f) Invoice 3682 - meter installations and short side
work for Lots 71, 72, 73, 74, 75, 77, 78, and 79
($1,600).
(g) Invoice 3684 - meter installations, road bores, and
repairs for Lots 90, 81, 82, 83 and 84 ($1,125).
(h) Parts for bore, 1"water, electrical labor and
installation of 5 DHH sample stations ($2,350) -
this could be a duplication of the $5,903.50
invoice).

As reported in Finding 2023a-007 - Alterations of Public

Documents, at least a portion of the work that the Plant
Manager performed for the development was paid through
the District. Check 19301 - $4,000 was posted in
Quickbooks to Maricio Santacalomn but the canceled check
shows that the payee is the Plant Manager with a
reference to "SugarCane Installations." A billing
invoice from Hoffpauir Brothers LLC to the development
in the amount of $35,101.50 was located on the Office
Manager's computer. This billing is comprised of a
Lafayette Winwater invoice of $31,101.50 for 50 meters
and supplies dated February 14, 2023 and the $4,000
check denoted above. On March 6, 2023 Hoffpauir
Brothers, LLC wrote a check to the District for $29,000
with a reference "meters." On this transaction alone,
the District is still unreimbursed $6,101.50. Lafayette
Winwater is the District's main water meter and supply
vendor.

In addition to the $31,101.50 invoice denoted in the

previous paragraph, there were two District invoices
located in District files that totaled $14,350 from
Lafayette Winwater that had a notation which appears to

39
 WATERWORKS DISTRICT 8 OF WARDS 3 & 8
LAKE CHARLES, LA

SCHEDULE OF FINDINGS AND RESPONSES

Six Months Ended December 31, 2023
(continued)

be the Plant Manager's handwriting, "Paid by Blake

Hines." Blake Hines was another contractor working for
this private development. It appears that the Plant
manager allowed not only his company to order supplies
from a District Vendor utilizing the District account
but he also allowed other vendors to have the same
benefit.

On June 21,2022, the Plant Manager on behalf of the

District and Hoffpauir Brothers, LLC sent a letter to
the development's owner that the District would be
disconnecting water service on June 23, 2023 if the past
due water billing of $2,551.68 was not paid and the
District would be returning all meters and supplies that
were located at District office. The District employees
would no longer have any affiliation with this privately
owned system. This correspondence validated the
employees' statements that there were at least two
shipments of meters and supplies made to the District
and stored for the development (see second paragraph of
this finding). The Hoffpauir Brothers, LLC
correspondence stated that they would no longer be
affiliated with the development due to nonpayment of an
auto flusher ($2,600) and numerous repairs made after
hours.

(c) Billing of Development Water Usage - The development was

purchasing water from the District. The Sequoyah
billing account reflected meter reading activity in
January 2022 with the first billing occurring in June
2022. The meter reading usages from January 2022 to the
end of May 2022 totaled $2,651.55 and were written off
via an adjustment in Sequoyah. The Plant Manager sent
the development correspondence dated June 13, 2022
notifying the development that the District has to
establish a water account beginning with the month of
June 2022 and billing will continue each month
thereafter. The first payment on the account was not
made until June 23, 2022 - after the June 13th
correspondence from the Plant manager.

In addition to the $2,651.55 billing that was written

off, there is correspondence in the development file
that the Office Manager and Plant Manager were billing
the development for monthly usage. The first
correspondence located in the file for water billing was
May 24, 2107 and appears to be a manual invoicing ticket
pre-printed but with no amount. That billing was to

40
 WATERWORKS DISTRICT 8 OF WARDS 3 & 8
LAKE CHARLES, LA

SCHEDULE OF FINDINGS AND RESPONSES

Six Months Ended December 31, 2023
(continued)

IDIM Construction with a service address on I-10 service

road. Another non-Sequoyah invoice for water billing
was dated October 23, 2017 for $51.75 for water usage.
It appears that the initial construction account as well
as the master meter for the completed homes were not set
up in Sequoyah. The first two homes in the subdivision
were completed by October 31, 2020 based on a Board
meeting reference on August 14, 2020 that the first two
homes would be completed within thirty days. If the
master meter subdivision account was not set up in
Sequoyah billing software until 2022, then the
collections of any water usage from the master meter
from October 31, 2020 until January 2022 appears to be
diverted.

The Parish located correspondence on the Office

Manager's computer where she was billing for Hoffpauir
Brothers LLC and billing for the construction water
usage. The Parish has estimated the water billing loss
from January 2022 until the first billing in June 2022,
as disclosed above, but we cannot determine how much
billing was paid by this development or its construction
contractor from May, 2017 until December, 2021 without
law enforcement assistance.

Criteria: In accordance with La. R.S. 42:1461 all officials, both

appointed and elected, as well as employees of any "public
entity" assume a personal obligation not to misappropriate,
misapply, convert, misuse, or otherwise wrongfully take any
funds, property, or anything of value belonging to or under
the custody or control of the public entity in which they hold
office or are employed.

In addition, La. R.S. 14:140 states that public contract fraud

is committed "when any public officer or public employee shall
use his power or position as such officer or employee to
secure any expenditure of public funds to himself, or to any
partnership of which he is a member, or to any corporation of
which he is an officer, stockholder, or director."

As further denoted in the Ethics Finding, La. R.S. 42:1111(A),

La. R.S. 42:1111(C)(1)(a), and La. R.S.
42:1111(C)(2)(d)prohibits employees, and certain related
entities, from receiving anything of economic value for the
performance of any duties or responsibilities or for services
that are related to any duties or responsibilities carried out
by the public employee.

41
 WATERWORKS DISTRICT 8 OF WARDS 3 & 8
LAKE CHARLES, LA

SCHEDULE OF FINDINGS AND RESPONSES

Six Months Ended December 31, 2023
(continued)

Effect: It appears that the Plant Manager may have violated the above-
referenced state laws, as well as other state law
requirements, with respect to actions he took with respect to
this private development.

Cause: There was no oversight of the day-to-day operations of the

District.

Recommendation: The District should continue to coordinate with law

enforcement agencies regarding this development and the
interactions between the Plant Manager and the owner of the
development.

Response: Effective January 14, 2024, the District Board of

Commissioners was suspended, and the Calcasieu Parish Police
Jury assumed the position of governing authority of the
District. The District will continue to coordinate with law
enforcement agencies regarding this issue.

2023a-009 Property Insurance Claim Issue

Condition: During the transition of the District's accounting and

financial system to the Parish's accounting and financial
system, it was determined that the District's Plant Manager
may have filed a false insurance claim related to valid loss
incurred by the District. Based on employee interviews, it
was determined that the District filed a claim on its property
insurance policy related to the theft of a trailer and lawn
mower owned by the District. The District's Assistant Plant
Manager wrote a handwritten statement about the circumstances
surrounding the discovery of the stolen trailer and lawn
mower. At the bottom of the handwritten statement of the
Assistant Plant Manager, the Plant Manager added the wording
"Also missing from the location is a 2013 Polaris Ranger 800
with 40-gal spray tank and battery in bed." The Plant Manager
provided the insurance company with the specific details of
the lawnmower, utility trailer, and Polaris ATV. It is not
known whether this equipment was used for District purposes or
whether it was at the site when the theft of the trailer and
lawn mower occurred. In an interview with the Plant Manager's
spouse, it was stated that the Polaris Ranger was damaged by
Hurricane Laura in 2020. The District theft in question
occurred in 2021.

42
 WATERWORKS DISTRICT 8 OF WARDS 3 & 8
LAKE CHARLES, LA

SCHEDULE OF FINDINGS AND RESPONSES

Six Months Ended December 31, 2023
(continued)

During an interview with the Plant Manager, the Plant Manager

confirmed that the District did replace this ATV and that it
is in his possession. When asked why he added that
information to the statement when the equipment was not owned
by the District and not listed on the property policy, his
response was "it was added because it was stolen."

Criteria: In accordance with La. R.S. 42:1461 all officials, both

appointed and elected, as well as employees of any "public
entity" assume a personal obligation not to misappropriate,
misapply, convert, misuse, or otherwise wrongfully take any
funds, property, or anything of value belonging to or under
the custody or control of the public entity in which they hold
office or are employed.

Effect: The District Plant Manager may have filed a fraudulent

insurance claim on a District owned policy. The estimate for
the loss was $34,107 for the stolen mower, trailer and Polaris
Ranger. Since there was a $10,000 deductible, the District
received a payment of $24,107. The same day that the
insurance proceeds were received, the Plant Manager then had
the District pay $14,807 for a new 2021 Honda SXSY00M4M which
was delivered to the Plant Manager's residence. In addition
to the question of the validity of the claim, the deductible
was only applied to the District owned lawn mower and trailer,
not the Plant Manager's equipment. It is noted that this 2021
Honda ATV is different than another 52" zero turn mower that
was purchased by the District but delivered to the Plant
Manager's residence (check dated 7-31-23) and is part of
Finding 2023a-006 on Disbursement Activity.

Cause: There was no oversight authority of the District for

operational issues besides the Plant Manager and the Office
Manager.

Recommendation: The District should consult with legal counsel and the
property insurance carrier on the disposition of this finding.

Response: The District has turned this information over to local law
enforcement and has consulted with District's property
insurance carrier regarding additional action that may be
warranted.

43
 WATERWORKS DISTRICT 8 OF WARDS 3 & 8
LAKE CHARLES, LA

SCHEDULE OF FINDINGS AND RESPONSES

Six Months Ended December 31, 2023
(continued)

2023a-010 Payroll Processing Issues

Condition: During the transition of the District's accounting and

financial system to the Parish's accounting and financial
system, payroll records were reviewed by the Parish Division
of Finance. The following issues were identified during that
review:

(a) Vacation payouts to employees who have not separated from

service. The District policy states, "If the Plant
Manager (only) has more than eighty (80) hours of vacation
to take, the time can be bought back due to the lack of
time that was not able to be taken through the year due to
projects or emergencies that went on at the plant site or
throughout the District." The District should obtain a
legal opinion as to whether any vacation can be paid out
before separation of employment, even for the Plant
Manager. This may be considered a prohibited donation of
public funds under state law. The District paid:

(i) Plant Manager ($5,000 on 11-17-21, $5,000 on 10-7-

22, and $5,000 on 11-28-23),
(ii) Office Manager ($1,600 on 11-23-21 and $2,500 on
11-28-23), and
(iii)Assistant Plant Manager ($1,779 on 12-2-20).

A11 other employees forfeited any hours beyond the annual

eighty-hour rollover limit from year to year. The Plant
Manager and Office Manager payouts were not processed
through payroll; therefore, these amounts were not
included in IRS reporting formats and had no corresponding
payroll tax withholdings made. In addition, the notations
reflected a certain number of hours but the final paid
amount could not be recalculated using the employee's
current rate of pay. Under the District policy, the
Office Manager and Assistant Plant Manager were not
authorized to receive any vacation payout.

(b) Retroactive payroll approved by the Board of Commissioners

on two occasions. State law prohibits retroactive payroll
adjustments, yet the Board of Commissioners approved the
following retroactive payroll adjustments:

44
 WATERWORKS DISTRICT 8 OF WARDS 3 & 8
LAKE CHARLES, LA

SCHEDULE OF FINDINGS AND RESPONSES

Six Months Ended December 31, 2023
(continued)

(i) May 4, 2023 - $13,986. This payroll was not

processed in the payroll system and therefore not
included in IRS reporting formats and had no
corresponding payroll tax withholdings made. The
payments were also coded to "Dues and Fees." The
back pay was recalculated going back eight pay
periods.

(ii) August 2020 - $25,913.60. This retroactive payroll

was included in the payroll system.

(c) Payroll withholdings were improperly handled in the

following instances:

(i) The Office Manager discontinued AFLAC withholdings

for all employees for nine payroll periods. Once
the withholdings were restarted, the Office Manager
did not restart her withholdings. The total amount
of AFLAC withholdings that needed to be recouped was
$3,934.90. The Office Manager also paid another
$985.38 in contributions for employees that were not
entitled to receive the benefit coverage.

(ii) Individual Retirement Account (IRA)

contributions being withheld from employees' checks
for February 2023 through July 2023 were not paid
until August 1, 2023, which is when the Office
Manager discontinued her IRA payroll withholdings.
Withholdings after that date were not paid until the
Parish paid them on behalf of the District ($2,696).

(iii)July 2023 to December 2023 District health insurance

premiums were improperly set up as pre-tax
deductions.

(iv) Commuting in District vehicles was not reported on

payroll.

Criteria: With respect to the vacation payouts, retroactive payroll, and

missed AFLAC withholdings, Article 7 Section 14(A) of the
Louisiana Constitution states that "the funds, credit,
property, or things of value of the state or of any political
subdivision shall not be loaned, pledged, or donated to or for
any person, associations, or corporation, public or private."
The Louisiana Attorney General has previously opined that
retroactive pay raises are a prohibited donation of public
funds unless the public entity can demonstrate that it "has
the legal authority to make the expenditure and must show (i)

45
 WATERWORKS DISTRICT 8 OF WARDS 3 & 8
LAKE CHARLES, LA

SCHEDULE OF FINDINGS AND RESPONSES

Six Months Ended December 31, 2023
(continued)

a public purpose of the expenditure or transfer that comports

with the governmental purpose for which the public entity has
legal authority to pursue; (ii) that the expenditure or
transfer, taken as a whole, does not appear to be gratuitous;
and (iii) that the public entity has a demonstrable,
objective, and reasonable expectation of receiving at least
equivalent value in exchange for the expenditure or transfer
of public funds."

With respect to the various other issues, the District had a

fiduciary responsibility to its employees to process payroll,
including any related benefits, according to the benefit
policies approved by the District and in accordance with
various state and federal regulations.

Effect: It appears that the transactions related to the vacation

payouts and the retroactive pay may be violations of state law
and compromised the District's ability to properly operate the
water system and to fund the District's other operating
expenditures. The other items reflect the fact that the
District was not handling its fiduciary responsibility to the
employees and citizens of the District.

Cause: There was no oversight of the day-to-day operations of the

District. As to the retroactive pay issue, the District Board
of Commissioners apparently did not consult with legal counsel
or the outside auditor prior to acting on these agenda items.

Recommendation: The District should reconcile all outstanding liabilities for

employee withholdings to ensure that proper remittance is
made.

Response: Effective January 14, 2024, the District Board of

Commissioners was suspended, and the Calcasieu Parish Police
Jury assumed the position of governing authority of the
District. The District will now adhere to all of the Parish's
internal controls and accounting processes and procedures
which include the proper segregation of duties and
disbursement reviews and approvals including those prohibited
by state ethics rules.

2023a-011 Sales Tax Compliance

Condition: During the transition of the District's accounting and

financial system to the Parish's accounting and financial
system, it was determined that the District's sales tax
returns were not timely filed causing the District to incur

46
 WATERWORKS DISTRICT 8 OF WARDS 3 & 8
LAKE CHARLES, LA

SCHEDULE OF FINDINGS AND RESPONSES

Six Months Ended December 31, 2023
(continued)

interest and penalties. For the calendar year 2023, only one
month's sales tax was paid timely. In anticipation of the
District's annual audit for the year ending June 30, 2023, the
Office Manager remitted sales tax payment on July 17, 2023.
The last six months' sales tax for 2023 was prepared and
remitted by the Parish when the Parish filed the January 2024
sales tax report.

Criteria: Sales tax requirements state that the previous months' sales
tax reporting must be filed by the 20th of the following
month.

Effect: The District is not in compliance with the state and local
sales tax reporting requirements.

Cause: It appears that the Office Manager was overwhelmed with

certain responsibilities and there was no management
oversight.

Recommendation: The District Management and Board should provide better

oversight of the District, ensuring their fiduciary duty to
the citizens of the District is properly accomplished.

Response: Effective January 14, 2024, the District Board of

Commissioners was suspended, and the Calcasieu Parish Police
Jury assumed the position of governing authority of the
District. The District will now adhere to all of the Parish's
internal controls and accounting processes and procedures
which include the timely reporting of sales tax reports.

2023a-012 Possible Ethics Violations

Condition: During the transition of the District's accounting and

financial system to the Parish's accounting and financial
system, the Parish identified the following reportable ethics
issues:

(a) The Plant Manager contracted with himself, or related

parties, on numerous occasions which appear to be in
violation of State law.
(b) Board Member Request for Employee Work - Several
employees identified multiple instances of Board Members
requesting that the employees work on personal property
for the benefit of themselves or relatives. These
allegations/instances have been reported to the
appropriate law enforcement agency as well as to the
State Board of Ethics as required by law.

47
 WATERWORKS DISTRICT 8 OF WARDS 3 & 8
LAKE CHARLES, LA

SCHEDULE OF FINDINGS AND RESPONSES

Six Months Ended December 31, 2023
(continued)

(c)The Plant Manager requested other District employees work

on several personal projects while on District time.
There were several instances whereby a District Employee
welded equipment for the Plant Manager, another employee
accompanied the Plant Manager on another job performed by
the Plant Manager for his related company, and the Office
Manager prepared invoicing for the Plant Manager's
related company transactions.
(d)One Board Member owns a local restaurant. The District
made seven payments to this restaurant in 2022 and 2023.
It is not known if the Board Member is aware of the
payments; however, one of the disbursements was for cakes
for the Board Christmas party referenced in Finding
2023a-013.

Criteria: La. R.S. 42:1111(A) prohibits a public employee from receiving

anything of economic value, other than compensation and
benefits from the governmental entity to which he is duly
entitled, of the performance of the duties and
responsibilities of his office or position.

La. R.S. 42:1111(C)(1)(a) prohibits a public servant from

receiving anything of economic value for any service, the
subject matter of which is devoted substantially to the
responsibilities, programs, or operations of the agency of the
public servant and in which the public servant has
participated.

La. R.S. 42:1111(C)(2)(d) provides that no public servant and

no legal entity in which the public servant exercises control
or owns an interest in excess of twenty-five percent, shall
receive anything of economic value for or in consideration of
services rendered, or to be rendered, to or for any person
during his public service.

La. R.S. 42:1161(A) requires the District to report to the

Louisiana Board of Ethics any matters that may constitute a
violation of the ethics laws.

Effect: The Plant Manager and the Board Members may be in violation of
the above referenced ethics statutes.

Cause: There was no oversight of the day-to-day operations of the

District.

Recommendation: The District should communicate with the Louisiana Board of

Ethics regarding the above referenced issues.

48
 WATERWORKS DISTRICT 8 OF WARDS 3 & 8
LAKE CHARLES, LA

SCHEDULE OF FINDINGS AND RESPONSES

Six Months Ended December 31, 2023
(continued)

Response: The District will provide the necessary communication with the
Louisiana Board of Ethics regarding these issues.

2023a-013 Other Disbursement Activities

Condition: During the transition of the District's accounting and

financial system to the Parish's accounting and financial
system, it was determined that the Board of Commissioners
authorized the following:

(a) Cash safety bonuses to be paid to employees:

12/02/20 - $2,000 (check made payable to Mitch

Hoffpauir)
12/08/21 - $2,700 (check made payable to Mitch
Hoffpauir)
11/02/22 - $6,360 (check made payable to Mitch
Hoffpauir)
11/13/23 - $5,500 (check made payable to cash)

These safety awards were posted to the Quickbooks

software as miscellaneous expense, repairs and
maintenance expense, office/postage expense, etc. None
of these payments were processed through the payroll
system and there is no listing as to who received the
payments. Some of the current employees do recall
receiving safety bonuses but there are no detailed
accounting records. At least one employee hired in 2022
says that he has never received any safety bonus.

(b) Christmas Dinners and Christmas Hams/Turkeys:

(i) 12/21/23 - $394.88 Walk Ons Christmas Dinner for

Employees
(ii) 11/30/23 - $176.00 Cakes for Party for Board
Members
(iii) 11/29/23 - $219.97 Supplies for Gumbo for Board
Members
(iv) 11/14/23 - $473.86 5 Spiral hams and Pecan Tins
for Board Members
(v) 12/22/22 - $294.54 Christmas Dinner at Casa
Manana
(vi) 12/01/22 - $854.09 Christmas Dinner for Board
Members
(vii) 11/01/22 - $576.97 Hams, Gift Bags, Etc for
Christmas

49
 WATERWORKS DISTRICT 8 OF WARDS 3 & 8
LAKE CHARLES, LA

SCHEDULE OF FINDINGS AND RESPONSES

Six Months Ended December 31, 2023
(continued)

(viii) 03/04/22 - $547.55 Crawfish Boil

(ix) 01/17/21 - $393.14 Hams for Employees and Board
Members
(x) 12/24/19 - $427.32 Food, Cakes and Drinks for
Christmas
(xi) 11/14/19 - $409.17 Spiral Hams and Gift Bags for
Board Members & Christmas

It is noted that, in addition to these above two areas,

there also appears to be excessive "safety meetings"
where food was purchased. While necessary meetings can
have a food component, if necessary, the fact that the
District was struggling to pay its financial obligations
would dictate that unnecessary spending measures be
avoided. The disbursements related to safety meetings do
not contain the agenda of what was discussed and some of
the meetings did not identify the attendees. There is no
way to determine the business necessity of these meetings
or to differentiate the expenses from normal personal
meals.

Criteria: Louisiana Attorney General has opined in the past that

incentive type programs, such as a safety program, is an
"ordinary, expected, or required duty of the employee and,
therefore, the payment of a bonus as a reward for an
employee's performance of his or her normal duties would be
prohibited by Louisiana Constitution Article VII, Section 14."

The Louisiana Attorney General has opined in the past that "in
general, the payment or reimbursement for food, drink, or the
expenses associated with luncheons, banquets, parties or
similar functions, from public funds is improper under
Louisiana Constitution Article VII, Section 14."

If compensation of any kind is received by an employee there

are tax reporting consequences of those payments which were
not adhered to by District personnel.

Effect: While the District was struggling financially to pay its

vendors and employees, the Board of Commissioners and
Management was authorizing payments for safety bonuses and
holiday celebrations. These amounts appear to be in violation
of the Louisiana Constitution Article VII, Section 14. The
Plant Manager admitted that the outside District auditor has
discussed the prohibition about holiday celebrations in prior
years but the Board approved them anyway.

50
 WATERWORKS DISTRICT 8 OF WARDS 3 & 8
LAKE CHARLES, LA

SCHEDULE OF FINDINGS AND RESPONSES

Six Months Ended December 31, 2023
(continued)

Cause: There was no oversight authority of the District.

Recommendation: The District should discontinue all future payments for safety
bonuses and holiday celebrations. In addition, any required
meeting where food is provided should have the appropriate
listing of attendees and the agenda of items discussed so that
the business purpose of the meeting and related expenses can
be evaluated.

Response: Effective January 14, 2024, the District Board of

Commissioners was suspended, and the Calcasieu Parish Police
Jury assumed the position of governing authority of the
District. The District will now adhere to all of the Parish's
internal controls and accounting processes and procedures
which include a prohibition on bonuses and holiday
celebrations as well as requiring minimum compliance
documentation for meeting expenses.

51
 WATERWORKS DISTRICT 8 OF WARDS 3 & 8
LAKE CHARLES, LA

SCHEDULE OF PRIOR YEAR FINDINGS

Six Months Ended December 31, 2023

SECTION III - FINANCIIAL STATEMENT FINDINGS

2023-001 Segregation of Duties

Condition: This finding was a material weakness relating to the entity's

size and limited number of accounting personnel which made it
impossible to achieve effective internal accounting control.

Recommendation: To the extent cost effective, duties should be segregated and

management should attempt to mitigate this weakness by
supervision and review procedures.

Current Status: The condition still exists. See finding 2023a-001.

2023-002 Controls over Financing Reporting

Condition: This finding was a material weakness relating to the inability

of the entity to produce financial statements and footnotes in
accordance with generally accepted accounting principles.

Recommendation: We recommend management mitigate the weakness by having a

heightened awareness of all transactions being reported.

Current Status: This condition has been resolved.

2023-003 Bond Covenants

Condition: This finding was a material weakness relating to the inability

of the entity to meet bond covenants.

Recommendation: We recommend the District should replenish bond reserves and

review water rates.

Current Status: This condition still exists. See finding 2023a-002.

52
 WATERWORKS DISTRICT 8 OF WARDS 3 & 8
LAKE CHARLES, LA
MISCELLANEOUS SUPPLEMENTARY INFORMATION RELATED TO
2009 WATER REVENUE BONDS
SIX MONTHS ENDED DECEMBER 31, 2023

Section I:

A Schedule of Insurance with expiration dates:

National Union Fire Insurance Company of Pittsburgh, Pa

GPNU-PF-0027729-03/000 12/08/23- Property:
12/08/24 $4,151,814 RC Replacement Cost
$25,000 Any One Crisis Incidient
$250,000 Loss of Income per
occurrence
$250,000 Extra Expense per
Occurrence
$50,000 Windstorm or Hail
Deductible Each Occurence

GPNU-PF-0027729-03/000 12/08/23- Crime:

12/08/24 $250,000 Employee Theft per Loss
$250,000 Forgery or Alteration
per Occurrence
$250,000 Inside the Premises
Theft of Money & Securities per
Occurrence
$100,000 Inside the Premises
Robbery/Safe Burglary per
Occurrence
$250,000 Outside the Premises per
Occurrence
$250,000 Computer and Funds
Transfer Fraud per Occurrence
$250,000 Money Order per
Occurrence
$250,000 Fraudulent Impersonation
per Occurrence

GPNU-PF-0027729-03/000 12/08/23- Inland Marine:

12/08/24 $30,718 Blanket Tools and
Equipment (Not to Exceed $10,000
per item)
$21,275 2010 MP0605
Tractor/Loader
$40,000 2006 NH B95 Backhoe
$40,000 2015 Bobcat E42 Excavator

GPNU-PF-0027729-03/000 12/08/23- Automobile:

12/08/24 $1,000,000 Covered Autos
Liability Each Accident
S500,000 Uninsured Motorists
$500.000 Underinsured Motorists
$1,000 Auto Medical Payments

53
(Continuation of Miscellaneous Supplementary Information related to 2009 Water
Revenue Bonds)

GPNU-PF-0027729-03/000 12/08/23- General Liability:

12/08/24 $1,000,000 Each Occurrence
$1,000,000 Damage to Premises
Rented to You
$10,000 Medical Expense
$1,000,000 Personal and
Advertising Injury
$3,000,000 General Aggregate
$3,000,000 Products - Complete
Operation Aggregate

GPNU-PF-0027729-03/000 12/08/23- Public Officials and Management

12/08/24 Liability:
$3,000,000 Aggregate Limit of
Each Wrongful Act or Offense and
Each Action for Injunctive Relief
Combined
$1,000,000 Each Wrongful Act or
Offence
$5,000 Each Action for Injunctive
Relief
$1,000,000 Coverage D Cyber
Liability - Each "electronic
information security event"
$1,000,000 coverage D Cyber
Liability - Aggregate
$50,000 Coverage E Privacy Crisis
Management Expense Each
"privacy event"
$20,000 Coverage F Cyber
Extortion Expense - Each "cyber
extortion t.hreat"
$50,000 Coverage E and Coverage F
Aggregate Limit of Insurance
Aggregate

GPNU-PF-0027729-03/000 12/08/23- Excess Liability:

12/08/24 $1,000,000 Each Occurrence
$1,000,000 Products - Completed
Operation Aggregate Limit
$1,000,000 Aggregate Limit
$1,000,000 Unmanned Aircraft
Liability Each Occurrence
$1,000,000 Unmanned Aircraft
Liability Aggregate Limit

Section II:

There were 2,232 customers on the system at December 31, 2023.

54
(Continuation of Miscellaneous Supplementary Information related to 2009 Water
Revenue Bonds)

Section III:

The following is the calculated balance of reserves at December 31, 2023:

2009 Revenue Bond Sinking Fund $ 14,408

Section IV:

Present Rates:

Water Rate Classification and Schedule:

Residential and Parish Non Tax

$ 25.00 up to 2,000 gallons

$ 4.25 per 1,000 gallons thereafter

Commercial, Commercial II, Commercial Non Tax

$55.00 up to 2,000 gallons

$ 4.25 per 1,000 gallons thereafter

Industrial

$180.00 up to 2,000 gallons

$ 4.25 per 1,000 gallons thereafter

Double Minimum

$48.50 up to 2,000 gallons

$ 4.25 per 1,000 gallons thereafter

The average monthly billing per user of the system was $55.21.

The aggregate dollar billed for services rendered by the system during the six
months ended December 31, 2023 was $726,279.

55
 MCELROY, QUIRK 8c BURCH
Mollie C. Broussard, CPA
Jason L. Guillory, CPA
A Professional Corporation • Certified Public Accountants • Since 1925 Greg P. Naquin, CPA, CFPINI
Billy D. Fisher, CPA
X) Kirby Street • PO. Box 311711 • 1.14 Charle5, 1..1. ' 1 V•ii 2, - 3i
J
Joc G. Peshoff, II, CPA, CVA
337 433-1063 • Fax 337 436-6618 • Web rage: www.mqh-cpa.com David M. DesOrmeaux, CPA
03409 000 2023 AUP REPORT Samuel W. Harrison, CPA, CVA
Caitlin D. Guillory, CPA, CFE

Robert M. Gani, CPA, MT

Paula J. Thompson, CPA

MT - Matters of Taxation
CVA - Certified Valuation Analyst
CFP Certified Financial Planncr

INDEPENDENT ACCOUNTANTS' REPORT CFE - Certified Fraud Examiner

ON APPLYING AGREED-UPON PROCEDURES

To the Board of Commissioners of the Waterworks District 8 of Wards 3 and 8

of Calcasieu Parish, Louisiana
and the Louisiana Legislative Auditor:

We have performed the procedures enumerated below on the control and compliance (C/C) areas
of Waterworks District 8 of Wards 3 and 8 of Calcasieu Parish, Louisiana (the District) identified
in the Louisiana Legislative Auditor's (LLA's) Statewide Agreed-Upon Procedures (SAUPs) for
the fiscal periad July 1, 2023 through December 31, 2023, The District's management is
responsible far those C/C areas identified in the SAUPs.

The District has agreed to and acknowledged that the procedures performed are appropriate to
meet the intended purpose of the engagement, which is to perform specified procedures on the
C/C areas identified in LLAs SAUPs for the fiscal period July 1, 2023 through December 31,
2023. Additionally, LLA has agreed to and acknowledged that the procedures performed are
appropriate for its purposes. This report may not be suitable for any other purpose. The
procedures performed may not address all the items of interest to a user of this report and may
not meet the needs of all users of this report and, as such, users are rsponsible for determining
whether the procedures performed are appropriate for their purposes.

The procedures and associated findings are as follows:

1) Written Policies and Procedures

A. Obtain and inspect the entity's written policies and procedures and observe whether they
address each of the following categories and subcategories if applicable to public funds and
the entity's operations:-

Budgeting, including preparing, adopting, monitoring, and 'amending the budget.

As of December 31, 2023, the District did not have written procedures that addressed
this area.

1 lr
Members American Institute of Certified Public Accountants • Society of Louisiana Certified Public Accountants
 Purchasing, including (1) how purchases are initiated; (2) how vendors are added to
the vendor list; (3) the preparation and approval process of purchase requisitions and
purchase orders; (4) controls to ensure compliance with the Public Bid Law; and (5)
documentation required to be maintained for all bids and price quotes.

As of December 31, 2023, the District did not have written procedures that addressed
this area.

iii. Disbursements, including processing, reviewing, and approving.

As of December 31, 2023, the District did not have written procedures that addressed
this area.

iv. Receipts/Collections, including receiving, recording, and preparing deposits. Also,

policies and procedures should include management's actions to determine the
completeness of all collections for each type of revenue or agency fund additions (e.g.
periodic confirmation with outside parties, reconciliation to utility billing after cutoff
procedures, reconciliation of traffic ticket number sequences, agency fund forfeiture
monies confirmation).

As of December 31, 2023, the District did not have written procedures that addressed
this area.

v. Payroll/Personnel, including (1) payroll processing, (2) reviewing and approving time
and attendance records, including leave and overtime worked, and (3) approval
process for employee rates of pay or approval and maintenance of pay rate schedules.

As of December 31, 2023, the District did not have written procedures that addressed
this area.

vi. Contracting, including (1) types of services requiring written contracts, (2) standard
terms and conditions, (3) legal review, (4) approval process, and (5) monitoring
process.

As of December 31, 2023, the District did not have written procedures that addressed
this area.

vii. Travel and Expense Reimbursement, including (1) allowable expenses, (2) dollar
thresholds by category of expense, (3) documentation requirements, and (4) required
approvers.

As of December 31, 2023, the District did not have written procedures that addressed
this area.

21P a ge
viii. Credit Cards (and debit cards, fuel cards, purchase cards, if applicable),
including (1) how cards are to be controlled, (2) allowable business uses, (3)
documentation requirements, and (4) required approvers of statements, and (5)
monitoring card usage (e.g. determining the reasonableness of fuel card purchases).

As of December 31, 2023, the District did not have written procedures that addressed
this area.

ix. Ethics, including (1) the prohibitions as defined in Louisiana Revised Statute 42:1111-
1121, (2) actions to be taken if an ethics violation takes place, (3) system to monitor
possible ethics violations, and (4) a requirement that documentation is maintained to
demonstrate that all employees and officials were notified of any changes to the
entity's ethics policy.

As of December 31, 2023, the District did not have written procedures that addressed
this area.

x. Debt Service, including (1) debt issuance approval, (2) continuing disclosure/EMMA
reporting requirements, (3) debt reserve requirements, and (4) debt service
requirements.

As of December 31, 2023, the District did not have written procedures that addressed
this area.

xi. lnformation Technology Disaster Recovery/Business Continuity, including (1)

identification of critical data and frequency of data backups, (2) storage of backups in
a separate physical location isolated from the network, (3) periodic testing/verification
that backups can be restored, (4) use of antivirus software on all systems, (5) timely
application of all available system and software patches/updates, and (6) identification
of personnel, processes, and tools needed to recover operations after a critical event.

As of December 31, 2023, the District did not have written procedures that addressed
this area.

xii. Prevention of Sexual Harassment, including R.S. 42:342-344 requirements for (1)
agency responsibilities and prohibitions, (2) annual employee training, and (3) annual
reporting.

As of December 31, 2023, the District did not have written procedures that addressed
this area.

3 I Page
2) Board or Finance Committee

A. Obtain and inspect the board/finance committee minutes for the fiscal period, as well as the
board's enabling legislation, charter, bylaws, or equivalent document in effect during the fiscal
period, and:

Observe that the board/finance committee met with a quorum at least monthly, or on
a frequency in accordance with the board's enabling legislation, charter, bylaws or
other equivalent document.

No exceptions noted.

ii For those entities reporting on the governmental accounting model, observe whether
the minutes referenced or included monthly budget-to-actual comparisons on the
general fund, quarterly budget-to-actual, at a minimum, on proprietary funds, and
semi-annual budget-to-actual, at a minimum, on all special revenue funds.

Minutes did not reference monthly budget-to-actual comparisons.

iii. For governmental entities, obtain the prior year audit report and observe the
unassigned fund balance in the general fund, If the general fund had a negative
ending unassigned fund balance in the prior year audit report, observe that the minutes
for at least one meeting during the fiscal period referenced or included a formal plan
to eliminate the negative unassigned fund balance in the general fund.

No exceptions noted.

iv. Observe whether the board/finance committee received written updates of the
progress of resolving audit finding(s), according to management's corrective action
plan at each meeting until the findings are considered fully resolved.

Minutes did not reference progress of resolving audit findings.

3) Bank Reconciliations

A. Obtain a listing of entity bank accounts for the fiscal period from management and
management's representation that the listing is complete. Ask management to identify the
entity's main operating account. Select the entity's main operating account and randomly
select 4 additional accounts (or all accounts if less than 5). Randomly select one month from
the fiscal period, obtain and inspect the corresponding bank statement and reconciliation for
selected each account, and observe that:

4
 Bank reconciliations include evidence that they were prepared within 2 months of the
related statement closing date (e.g., initialed and dated or electronically logged).

No exceptions noted.

Bank reconciliations include evidence that a member of management or a board

member who does not handle cash, post ledgers. or issue checks has reviewed each
bank reconciliation within 1 month of the date the reconciliation was prepared (e.g.,
initialed and dated, electronically logged).

No evidence that bank reconciliations were reviewed by someone who does not
handle cash, post ledgers, or issue checks.

Management has documentation reflecting that it has researched reconciling items

that have been outstanding for more than 12 months from the statement closing date,
if applicable.

Reconciling items have not been researched.

4) Collections (excluding electronic funds transfers)

A. Obtain a listing of deposit sites for the fiscal period where deposits for cash/checks/money
orders (cash) are prepared and management's representation that the listing is complete.
Randomly select 5 deposit sites (or all deposit sites if less than 5):

No exceptions noted.

B. For each deposit site selected, obtain a listing of collection locations and management's
representation that the listing is complete. Randomly select one collection location for each
deposit site (e.g., 5 collection locations for 5 deposit sites), obtain and inspect written policies
and procedures relating to employee job duties (if there are no written policies or procedures,
then inquire of employees about their job duties) at each collection location, and observe that
job duties are properly segregated at each collection location such that:

Employees responsible for cash collections do not share cash drawers/registers.

Employees share cash drawers/registers.

ii. Each employee responsible for collecting cash is not also responsible for
preparing/making bank deposits, unless another employee/official is responsible for
reconciling collection documentation (e.g. pre-numbered receipts) to the deposit.

No exceptions noted.

5
 iii. Each employee responsible for collecting cash is not responsible for posting collection
entries to the general ledger or subsidiary ledgers, unless another employee/official is
responsible for reconciling ledger postings to each other and to the deposit.

Employee responsible for collecting cash also posts collection entries to general
ledger.

iv. The employee(s) responsible for reconciling cash collections to the general ledger
and/or subsidiary ledgers, by revenue source and/or agency fund additions is (are) not
responsible for collecting cash, unless another employee/official verifies the
reconciliation.

Employee responsible for collecting cash also reconciles cash to general ledger.

C. Obtain from management a copy of the bond or insurance policy for theft covering all
employees who have access to cash. Observe the bond or insurance policy for theft was in
force during the fiscal period.

No exceptions noted.

D. Randomly select two deposit dates for each of the 5 bank accounts selected for Bank
Reconciliations procedure #3A (select the next deposit date chronologically if no deposits
were made on the dates randomly selected and randomly select a deposit if multiple deposits
are made on the same day). Obtain supporting documentation for each of the 10 deposits
and:

i. Observe that receipts are sequentially pre-numbered.

No exceptions noted.

Trace sequentially pre-numbered receipts, system reports, and other related collection
documentation to the deposit slip.

No exceptions noted.

iii. Trace the deposit slip total to the actual deposit per the bank statement.

No exceptions noted.

iv. Observe that the deposit was made within one business day of receipt at the collection
location (within one week if the depository is more than 10 miles from the collection
location or the deposit is less than $100 and the cash is stored securely in a locked
safe or drawer).

Deposits were not made within one business day of receipt.

6lPage
 v Trace the actual deposit per the bank statement to the general ledger.

No exceptions noted_

5) Non-Payroll Disbursements (excluding credit card purchases/payments, fravel

reimbursements, and petty-cash purchases)

A. Obtain a listing of locations that process payments for the fiscal period and management's
representation that the listing is complete. Randomly select 5 locations (or all locations if less
than 5).

No exceptions noted.

B. For each location selected under procedure #5A above, obtain a listing of those employees
involved with non-payroll purchasing and payment functions. Obtain written policies and
procedures relating to employee job duties (if the agency has no written policies and
procedures, then inquire of employees about their job duties), and observe that job duties are
properly segregated such that:

At least two employees are involved in initiating a purchase request, approving a

purchase, and placing an order or making the purchase.

As of December 31, 2023, the District did not have writter7 procedures relafing to
employee job duties.

ii At least two ernployees are involved in processing and approving payments to

vendors

As of December 31, 2023, the District did not have written procedures relatmg to
employee job duties.

The employee responsible for processing payments is prohibited from

adding/modifying vendor files, unless another employee is responsible for periodically
reviewing changes to vendor files.

As of December 31, 2023. the District did not have written procedures relating to
ernployee job duties.

IV Either the employee/official responsible for signing checks mails the payment or gives
the signed checks to an employee to mail who is not responsible for processing
payments.

As of Decernber 31, 2023, the District did not have written procedures relating to
employee job duties.
 v. Only employees/officials authorized to sign checks approve the electronic
disbursement (release) of funds, whether through automated clearinghouse (ACH),
electronic funds transfer (EFT), wire transfer, or some other electronic means.

As of December 31, 2023, the District did not have written procedures relating to
employee job duties.

C. For each location selected under procedure #5A above, obtain the entity's non-payroll
disbursement transaction population (excluding cards and travel reimbursements) and obtain
management's representation that the population is complete. Randomly select 5
disbursements for each location, obtain supporting documentation for each transaction and:

Observe whether the disbursement, whether by paper or electronic means, matched

the related original itemized invoice and supporting documentation indicates
deliverables included on the invoice were received by the entity.

Disbursements did not show evidence of segregation of duties.

Observe whether the disbursement documentation included evidence (e.g.,

initial/date, electronic logging) of segregation of duties tested under procedure #5B
above, as applicable.

No exceptions noted.

D. Using the entity's main operating account and the month selected in Bank Reconciliations
procedure #3A, randomly select 5 non-payroll-related electronic disbursements (or all
electronic disbursements if less than 5) and observe that each electronic disbursement was
(a) approved by only those persons authorized to disburse funds (e.g., sign checks) per the
entity's policy, and (b) approved by the required number of authorized signers per the entity's
policy. Note: If no electronic payments were made from the main operating account during the
month selected the practitioner should select an alternative month and/or account for testing
that does include electronic disbursements.

Electronic disbursements were not authorized by persons authorized to disburse funds and
were not approved by required number of authorized signers.

6) Credit Cards/Debit Cards/Fuel Cards/Purchase Cards

A. Obtain from management a listing of all active credit cards, bank debit cards, fuel cards, and
purchase cards (cards) for the fiscal period, including the card numbers and the names of the
persons who maintained possession of the cards. Obtain management's representation that
the listing is complete.

No exceptions noted.

8
B. Using the listing prepared by management, randomly select 5 cards (or all cards if less than
5) that were used during the fiscal period. Randomly select one monthly statement or
combined statement for each card (for a debit card, randomly select one monthly bank
statement). Obtain supporting documentation, and:

Observe whether there is evidence that the monthly statement or combined statement
and supporting documentation (e.g., original receipts for credit/debit card purchases,
exception reports for excessive fuel card usage) were reviewed and approved, in
writing (or electronically approved) by someone other than the authorized card holder.

The monthly statement was not approved in writing.

ii. Observe that finance charges and late fees were not assessed on the selected
statements.

No exceptions noted.

C. Using the monthly statements or combined statements selected under procedure #7B above,
excluding fuel cards, randomly select 10 transactions (or all transactions if less than 10) from
each statement, and obtain supporting documentation for the transactions (e.g., each card
should have 10 transactions subject to inspection). For each transaction, observe that it is
supported by (1) an original itemized receipt that identifies precisely what was purchased, (2)
written documentation of the business/public purpose, and (3) documentation of the
individuals participating in meafs (for meal charges only). For missing receipts, the practitioner
should describe the nature of the transaction and observe whether management had a
compensating control to address missing receipts, such as a "missing receipt statement" that
is subject to increased scrutiny.

Transactions were not supported by original itemized receipts and business purpose was not
documented.

7) Travel and Expense Reimbursement

A. Obtain from management a listing of all travel and travel-related expense reimbursements
during the fiscal period and management's representation that the listing or general ledger is
complete. Randomly select 5 reimbursements and obtain the related expense reimbursement
forms/prepaid expense documentation of each selected reimbursement, as well as the
supporting documentation. For each of the 5 reimbursements selected:

If reimbursed using a per diem, observe that the approved reimbursement rate is no
more than those rates established by the State of Louisiana or the U.S. General
Services Administration (www.gsa.gov).

No exceptions noted.

9lPage
 If reimbursed using actual costs, observe that the reimbursement is supported by an
original itemized receipt that identifies precisely what was purchased.

No exceptions noted.

iii Observe that each reimbursement is supported by documentation of the

business/public purpose (for meal charges, observe that the documentation includes
the names of those individuals participating) and other documentation required by
Written Policies and Procedures procedure #1A(vii).

No exceptions noted.

iv. Observe that each reimbursement was reviewed and approved, in writing, by someone
other than the person receiving reimbursement.

No exceptions noted.

8) Contracts

A. Obtain from management a listing of all agreements/contracts for professional services,

materials and supplies. leases, and construction activities that were initiated or renewed
during the fiscal period. Obtain management's representation that the listing is complete.
Randomly select 5 contracts (or all contracts if less than 5) from the listing, excluding the
practitioner's contract, and:

Observe whether the contract was bid in accordance with the Louisiana Public Bid
Law (e.g., solicited quotes or bids, advertised), if required by law.

No exceptions noted.

ii. Observe whether the contract was approved by the governing body/board, if required
by policy or law (e.g. Lawrason Act, Home Rule Charter).

No exceptions noted.

iii If the contract was amended (e.g. change order), observe that the original contract
terms provided for such an amendment: and that amendments were made in
compliance with the contract terms (e.g., if approval is required for any amendment,
the documented approval).

No exceptions noted.

10 l
 iv. Randomly select one payment from the fiscal period for each of the 5 contracts, obtain
the supporting invoice, agree the invoice to the contract terms, and observe that the
invoice and related payment agreed to the terms and conditions of the contract.

No exceptions noted.

9) Payroll and Personnel

A. Obtain a listing of employees and officials employed during the fiscal period and
management's representation that the listing is complete. Randomly select five employees
or officials, obtain related paid salaries and personnel files, and agree paid salaries to
authorized salaries/pay rates in the personnel files.

No exceptions noted.

B. Randomly select one pay period during the fiscal period. For the 5 employees or officials
selected under procedure #9A above, obtain attendance records and leave documentation for
the pay period. and:

Observe that all selected employees or officials documented their daily attendance
and leave (e.g.. vacation, sick, compensatory).

No exceptions noted.

ii Observe whether supervisors approved the attendance and leave of the selected
employees or officials:

No exceptions noted.

iii. Observe that any leave accrued or taken during the pay period is reflected in the
entity's cumulative leave records:

No exceptions noted.

iv. Observe the rate paid to the employees or officials agree to the authorized salary/pay
rate found within the personnel file

Salary/pay rates were not found in the personnel files.

11
C. Obtain a Iisting of those employees or officials that received termination payments during the
fiscal period and management's representation that the list is complete. Randomly select two
employees or officials and obtain related documentation of the hours and pay rates used in
management's termination payment calculations and the entity's policy on termination
payments. Agree the hours to the employee's or official's cumulate leave records, agree the
pay rates to the employee/officials' authorized pay rates in the employee's or official's
personnel files, and agree the termination payment to entity policy.

No exceptions noted.

D. Obtain management's representation that employer and employee portions of third-party

payroll related amounts (e.g., payroll taxes, retirement contributions, health insurance
premiums, garnishments, and workers' compensation premiums, etc.) have been paid, and
any associated forms have been filed, by required deadlines.

No exceptions noted.

10) Ethics

A. Using the five randomly selected employees/officials from Payroll and Personnel procedure
#9A, obtain ethics documentation from management and:

Observe whether the documentation demonstrates each employee/official completed

one hour of ethics training during the calendar year as required by R.S. 42:1170.

Employees did not complete one hour of ethics training.

ii. Observe whether the entity maintains documentation which demonstrates that each
employee and official were notified of any changes to the entity's ethics policy during
the fiscal period, as applicable:

The District did not have a written ethics policy.

B. Inquire and/or observe whether the agency has appointed an ethics designee as required by
R.S. 42:1170.

The District did not appoint an ethics designee.

12 I Page
11) Debt Service

A. Obtain a listing of bonds/notes and other debt instruments issued during the fiscal period and
management's representation that the listing is complete. Select all debt instruments on the
listing, obtain supporting documentation, and observe that State Bond Commission approval
was obtained for each debt instrument issued as required by Article VII, Section 8 of the
Louisiana Constitution.

N/A — No bonds or debt instruments issued during the fiscal period.

B. Obtain a listing of bonds/notes outstanding at the end of the fiscal period and management's
representation that the listing is complete. Randomly select one bond/note, inspect debt
covenants, obtain supporting documentation for the reserve balance and payments, and
agree actual reserve balances and payments to those required by debt covenants (including
contingency funds, short-lived asset funds, or other funds required by the debt covenants):

The District did not maintain required cash reserve balances.

12) Fraud Notice

A. Obtain a listing of misappropriations of public funds and assets during the fiscal period and
management's representation that the listing is complete. Select all misappropriations on the
listing, obtain supporting documentation, and observe that the entity reported the
misappropriation(s) to the legislative auditor and the district attorney of the parish in which the
entity is domiciled as required by R.S. 24:523.

No exceptions noted.

B. Observe that the entity has posted on its premises and website, the notice required by R.S.
24:523.1 concerning the reporting of misappropriation, fraud, waste, or abuse of public funds:

Notice was not posted on its premises or its website.

13) information Technology Disaster Recovery/Business Continuity

A. Perform the following procedures, verbally discuss the results with management, and report
"We performed the procedure and discussed the results with management."

i. Obtain and inspect the entity's most recent documentation that it has backed up its
critical data (if there is no written documentation, then inquire of personnel responsible
for backing up critical data) and observe evidence that such backup (a) occurred within
the past week, (b) was not stored on the government's local server or network, and (c)
was encrypted.

131PaEe
 We performed the procedure and discussed the results with management.

Obtain and inspect the entity's most recent documentation that it has tested/verified
that its backups can be restored (if no written documentation, inquire of personnel
responsible for testing/verifying backup restoration) and observe evidence that the
test/verification was successfully performed within the past 3 months.

We performed the procedure and discussed the results with management.

iii. Obtain a listing of the entity's computers currently in use and their related locations,
and management's representation that the listing is complete. Randomly select 5
computers and observe while management demonstrates that the selected computers
have current and active antivirus software and that the operating system and
accounting system software in use are currently supported by the vendor.

We performed the procedure and discussed the results with management.

B. Randomly select 5 terminated employees (or all terminated employees if less than 5) using
the list of terminated employees obtained in Payroll and Personnel procedure #9C. Observe
evidence that the selected terminated employees have been removed or disable from the
network.

We performed the procedure and discussed the results with management.

C. Using the 5 randomly selected employees/officials from Payroll and Personnel procedure #9A,
obtain cybersecurity training documentation from management, and observe that the
documentation demonstrates that the following employees/officials with access to the
agency's information technology assets have completed cybersecurity training as required by
R.S. 42:126725. The requirements are as follows:

• Hired before June 9, 2020 — completed the training; and

• Hired on or after June 9, 2020 — completed the training within 30 days of initial service
or employment.

We performed the procedure and discussed the results with management.

/4) Prevention of Sexual Harassment

A. Using the 5 randomly selected employees/officials from Payroll and Personnel procedure #9A,
obtain sexual harassment training documentation from management, and observe the
documentation demonstrates each employee/official completed at least one hour of sexual
harassment training during the calendar year as required by R.S. 42:343.

Sexual harassment training was not completed.

14 l
B. Observe the entity has posted its sexual harassment policy and complaint procedure on its
website (or in a conspicuous location on the entity's premises if the entity does not have a
website).

Sexual harassment policy was not posted on its website or on the premises.

C. Obtain the entity's annual sexual harassment report for the current fiscal period, observe that
the report was dated on or before February 1, and observe that the report includes the
applicable requirements of R.S. 42:344:

Number and percentage of public servants in the agency who have completed the
training requirements.

The District did not submit the annual sexual harassment report.

ii. Number of sexual harassment complaints received by the agency.

The District did not submit the annual sexual harassment report.

iii. Number of complaints which resulted in a finding that sexual harassment occurred.

The District did not submit the annual sexual harassment report.

iv. Number of complaints in which the finding of sexual harassment resulted in discipline
or corrective action.

The District did not submit the annual sexual harassment report.

v. Amount of time it took to resolve each complaint.

The District did not submit the annual sexual harassment report.

We were engaged by the Waterworks District 8 of Wards 3 and 8 of Calcasieu Parish, Louisiana
to perform this agreed-upon procedures engagement and conducted our engagement in
accordance with attestation standards established by the American Institute of Certified Public
Accountants and applicable standards of Government Auditing Standards. We were not engaged
to and did not conduct an examination or review engagement, the objective of which would be
the expression of an opinion or conclusion, respectively, on those C/C areas identified in the
SAUPs. Accordingly, we do not express such an opinion or conclusion. Had we performed
additional procedures, other matters might have come to our attention that would have been
reported to you.

15
We are required to be independent of Waterworks District 8 of Wards 3 and 8 of Calcasieu Parish,
Louisiana and to meet our other ethical responsibilities, in accordance with the relevant ethical
requirements related to our agreed-upon procedures engagement.

This report is intended solely to describe the scope of testing performed on those C/C areas
identified in the SAUPs, and the result of that testing, and not to provide an opinion on control or
compliance. Accordingly, this report is not suitable for any other purpose. Under Louisiana
Revised Statute 24:513, this report is distributed by the LLA as a public document.

Lake Charles, Louisiana

June 27, 2024

16lPage
 CaI,,cAs rEu PaRrsH Por,rcE Iunv
GOVERNING AUTHORITY OF CALCASIEU PARISH LOUISIANA

DIVISIoN oF FINANCE
P.O. Box 3287
Loke Cho rles, Loui si ono 70602-3 287
337/ 72t.3650
Fox337/ 721-41 5l
w.colcosieu.gov

MANAGEMI]NT'S RESPONSE TO AGI{BED-UPON PROCEDTJRI]S I]XCI]PTIONS

DECI]MBER 31.2023

On January 13,2024, the Calcasicu Parish Waterworks District No. 8 of Wards 3 & 8 (the District) Board of
Commissioners was suspendcd and thc Calcasicu Parish Police Jury (the Parish) assumed thc position of
governing authority of the District on January 14,2024. The District willadhere to all of the Parish's internal
controls and accounting processes and procedures.

Vision . Colloborolion Dependobility Finonciol Stewordship