Audit - 2015/2016 HOUSING AUTHORITY OF THE CITY OF SALINA
SALINA, KANSAS
INDEPENDENT AUDITOR'S REPORT
AND
FINANCIAL STATEMENTS
AND SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED JUNE 30,2016
HOUSING AUTHORITY OF THE CITY OF SALINA
Salina,Kansas
TABLE OF CONTENTS
PAGE
FINANCIAL SECTION
Independent Auditor's Report 1-2
Management's Discussion and Analysis(un-audited) i-vi
Basic Financial Statements:
Statement of Net Position 3-4
Statement of Revenue,Expenses and Changes in Net Position 5
Statement of Cash Flows 6-7
Notes to the Basic Financial Statements 8-24
SUPPLEMENTAL INFORMATION
PHA's Statement of Certification of Actual Modernization Costs 25
Schedule of Expenditures of Federal Awards 26
Financial Data Schedule 27-31
COMPLIANCE SECTION
Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance
and Other Matters Based on an Audit of Financial Statements Performed in Accordance with 32-33
Government Auditing Standards
Independent Auditor's Report on Compliance for each Major Federal Program and on Internal 34-35
Control over Compliance Required by the Uniform Guidance
Schedule of Findings and Questioned Costs 36
INDEPENDENT AUDITOR'S REPORT
Board of Commissioners
Housing Authority of the City of Salina
Salina. Kansas
Report on the Financial Statements
I have audited the accompanyine financial statements of the business-type activities of the Housing Authority of the City of
Salina(Authority), Kansas, as of and for the year ended June 30, 2016, and the related notes to the financial statements, which
collectively comprise the Authority's basic financial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with
accounting principles generally accepted in the United States of America; this includes the desien, implementation, and
maintenance of intemal control relevant to the preparation and fair presentation of financial statements that are free from
material misstatement,whether due to fraud or error.
Auditor's Responsibility
My responsibility is to express opinion on these financial statements based on my audit. I conducted my audit in accordance
with auditing standards generally accepted in the United States of America and the standards applicable to financial audits
contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require
that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material
misstatement of the financial statements,whether due to fraud or error. In making those risk assessments, the auditor considers
internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the entity's internal control. Accordingly. I express no such opinion. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of significant accounting estimates made by management, as well as
evaluating the overall presentation of the financial statements.
I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.
Opinion
In my opinion,the financial statements referred to above present fairly, in all material respects, the respective financial position
of the business-type activities of the Housing Authority of the City of Salina, Kansas, as of June 30, 2016, and the respective
changes in financial position and cash Flows thereof for the year then ended in accordance with accounting principles generally
accepted in the United States of America.
1
Otter Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management's discussion and
analysis on pages i-vi be presented to supplement the basic financial statements. Such information, although not a pan of the
basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential
part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical
context. I have applied certain limited procedures to the required supplementary information in accordance with auditing
standards generally accepted in the United States of America, which consisted of inquiries of management about the methods
of preparing the information and comparing the information for consistency with management's responses to my inquiries,the
basic financial statements, and other knowledge I obtained during my audit of the basic financial statements. I do not express
an opinion or provide any assurance on the information because the limited procedures do not provide me with sufficient
evidence to express an opinion or provide any assurance.
Supplementary Information
My audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Housing
Authority of the City of Salina. Kansas's basic financial statements. The accompanying PHA's Statement of Certification of
Actual Modernization Costs and the Financial Data Schedule are presented for purposes of additional analysis and are not a
required part of the basic financial statements. The schedule of expenditures of federal awards is presented for purposes of
additional analysis as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is also not a required part of the basic
financial statements.
The accompanying PHA's Statement of Certification of Actual Modernization Costs, the Financial Data Schedule and the
Schedule of Expenditures of Federal Awards are the responsibility of management and were derived from and relate directly to
the underlying accounting and other records used to prepare the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures,
including comparing and reconciling such information directly to the underlying accounting and other records used to prepare
the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance
with auditing standards generally accepted in the United States of America. In my opinion, the accompanying PHA's
Statement of Certification of Actual Modernization Costs, the Financial Data Schedule and the Schedule of Expenditures of
Federal Awards are fairly stated in all material respects in relation to the basic financial statements as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, I have also issued my report dated November I. 2016, on my
consideration of the Housing Authority of the City of Salina, Kansas's intemal control over financial reporting and on my tests
of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose
of that report is to describe the scope of my testing of intemal control over financial reporting and compliance and the results of
that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an
integral part of an audit performed in accordance with Government Auditing Standards in considering Housing Authority of the
City
�oJf�Salina,Kansas's internal control over financial reporting and compliance.
Shoaib Khar,CPA
Aud,%tSdurum* LLC.
Chesterfield, Missouri
November 1,2016
2
HOUSING AUTHORITY OF THE CITY OF SALINA
Salina, Kansas
MANAGEMENT'S DISCUSSION AND ANALYSIS(MD&A)
June 30, 2016
Management's Discussion & Analysis (MD&A) is an element of the reporting model adopted by the Governmental
Accounting Standards Board (GASB) in their Statement No. 34 Basic Financial Statements — and Management's
Discussion&Analysis—for State and Local Governments issued in June 1999.
This discussion and analysis of the financial performance for the Housing Authority for the City of Salina, Kansas,
provides an overview of the financial activities for the fiscal year ended June 30, 2016. Please read the MD&A in
conjunction with the Housing Authority's financial statements.
Financial Highlights
• Assets:
Current assets increased by S195,297 when compared to 2015 and net capital assets decreased by S157,396.
Total assets increased by S27,658 from S7,561,852 as of June 30,2015 to$7,589.510 as of June 30, 2016.
• Liabilities:
Total liabilities increased$47,648 from $528,147 as of June 30,2015,to$575,795 as of June 30.2016.
• Revenue:
Total revenue increased from $2,364,932 for the year ended June 30, 2015, to $2.544,070 for the year
ended June 30, 2016, an increase of S179,138. Tenant revenue increased S47,414; operating grants
increased $225,091, while investment income decreased S88 and other income decreased $98,947. Capital
grants increased S5,218 from 2015 making 2016 receipts S102,743.
• Expenses:
Total expenses increased from 2015 to 2016. Total expenses were $2,328,836 for the year ended June 30,
2015, and increased $235,224 to $2,564,060 for the year ended June 30, 2016. Administrative expenses
increased by $114,133 and maintenance expenses increased by $51,198, with both increases due mostly to
an increase in KPERS' underfunded liability. Non-capitalized casualty loss expense decreased S106,185
and HAP payments increased 16%or S177,669.
For accounting purposes, the Housing Authority is categorized as an enterprise fund. Enterprise funds account for
activities similar to those found in the private business sector where the determination of net income is necessary or
useful to sound financial administration. Enterprise funds are reported using the full accrual method of accounting in
which all assets and all liabilities associated with the operation of these funds are included on the balance sheet. The
focus of enterprise funds is on income measurement,which,together with the maintenance of equity, is an important
financial indication.
Overview of Financial Statements
This annual report includes this Management Discussion & Analysis report, the Basic Financial Statements and the
Notes to the Financial Statements. The Housing Authority's financial statements are presented as fund level
financial statements because the Housing Authority only has proprietary funds.
HOUSING AUTHORITY OF THE CITY OF SALINA
Salina, Kansas
MANAGEMENT'S DISCUSSION AND ANALYSIS(MD&A)—(Continued)
June 30.2016
Overview of Financial Statements—(Continued)
The financial statements of the Housing Authority report information of the Housing Authority using accounting
methods similar to those used by private sector companies. These statements offer short-term and long-term
financial information about the Housing Authority's activities. The Statement of Net Position includes all the
Housing Authority's assets and liabilities and provides information about the nature and amounts of investments in
resources (assets) and obligations to the Housing Authority's creditors (liabilities). It also provides the basis for
evaluating the capital structure of the Housing Authority and assessing the liquidity and financial flexibility of the
Housing Authority.
All of the current year's revenues and expenses are accounted for in the Statement of Revenues. Expenses and
Changes in Net Position. This statement measures the success of the Housing Authority's operations over the past
year and can be used to determine whether the Housing Authority has successfully recovered all its costs through its
user fees and other charges, profitability and credit worthiness.
The Statement of Cash Flows reports cash receipts,cash payments,and net changes in cash resulting from operating,
investing and financing activities and provides answers to such questions as where did cash come from, what was
cash used for and what was the change in the cash balance during the reporting period.
Notes to the financial statements provide additional information that is essential to a full understanding of the data
provided in the basic financial statements.
The section Supplemental Information Required by HUD contains the Financial Data Schedule (FDS). HUD has
established Uniform Financial Reporting Standards that require the Housing Authority to submit financial
information electronically to HUD using the FDS format.
Financial Analysis
The Housing Authority's basic financial statements are the Statement of Net Position and the Statement of
Revenues. Expenses and Changes in Net Position. The Statement of Net Position provides a summary of the
Housing Authority's assets and liabilities as of the close of business on June 30, 2016. The Statement of Revenues,
Expenses and Changes in Net Position summarizes the revenues and sources of those revenues generated during the
year ended June 30, 2016 and the expenses incurred in operating the Housing Authority for the year ended June 30,
2016.
Net position may serve, over time, as a useful indicator of a government's financial position. In the case of the
Authority, assets exceeded liabilities by 57,013,715 at the close of the year ended June 30, 2016. This represents a
decrease of S 19,990 from the previous year.
The Housing Authority accounts for its housing activities in several programs. The main Housing Authority
programs are a low rent program that provides housing for qualified tenants, a capital fund program that the Housing
Authority uses for improvements to its low rent property,and a housing choice voucher program that provides rental
assistance to tenants living in private housing. The following analysis focuses on the net position and the change in
net position of the Housing Authority as a whole and not the individual programs.
HOUSING AUTHORITY OF THE CITY OF SALINA
Salina, Kansas
MANAGEMENT'S DISCUSSION AND ANALYSIS(MD&A)—(Continued)
June 30,2016
Financial Analysis—(Continued)
Net Position
June 30,
2016 2015 Change
Current Assets $2,072,945 S1,877,648 $195,297
Capital Assets,Net $5,506,148 $5,663,544 ($157,396)
Total Assets 57,579,093 S7,541,192 $37,901
Deferred Outflow of Resources S10,417 S20,660 (S10,243)
Total Assets and Deferred Outflow of Resources $7,589,510 $7,561,852 527.658
Current Liabilities S200,930 $181,824 $19,106
Non-Current Liabilities $374,865 346,323 $28,542
Total Liabilities S575,795 5528,147 547,648
Deferred Inflow of Resources - - -
Net Position:
Net Investment in Capital Assets $5,506,148 $5,663,544 (S157,396)
Restricted Assets S27,390 528.140 (5750)
Unrestricted Assets 51,480,177 $1,342,021 $138,156
Total Net Position $7,013,715 S7,033,705 ($19,990)
Total Liabilities, Deferred Inflow of Resources
and Total Net Position $7,589,510 $7,561,852 $27,658
Assets:
Total current assets were S1,877,648 as of June 30, 2015 and increased by $195,297 to 52,072,945 as of June 30,
2016. The balance of cash increased by 5199,196 as of June 30, 2016. The increase was due to numerous factors
including,but not limited to, an increase in rent revenue,an increase in Operating Subsidy, and a change in timing in
drawing CFP Operations.
Net capital assets decreased to 55.506.148 as of June 30, 2016 from 55,663,544 as of June 30, 2015. This decrease
of S157,396 in net capital assets includes net purchases of S118,738, less depreciation of 5276,134.
Deferred Outflow of Resources:
Deferred outflows of resources are expenditures that are applicable to a future reporting period. This has a positive
effect on net position similar to assets.
Deferred outflows of resources consisted of S10,417 related to a pension plan.
[tt
HOUSING AUTHORITY OF THE CITY OF SALINA
Salina,Kansas
MANAGEMENT'S DISCUSSION AND ANALYSIS (MD&A)—(Continued)
June 30,2016
Financial Analysis—(Continued)
Liabilities:
Total current liabilities increased from$181,824 as of June 30, 2015,to S200,930 as of June 30,2016,an increase of
$19,106. The increase includes a 512,010 FSS graduation disbursement and increased payments in lieu of taxes
(PILOT) from S27,447 as of June 30, 2015 to$33,115 as of June 30,2016.
Deferred Inflow of Resources:
Deferred inflows of resources are an acquisition of net assets by the Authority that are applicable to a future
reporting period.This has a negative effect on net position similar to liabilities.
There were no deferred inflows of resources reported at year-end.
Net Position:
Net position decreased by $19,990 as of June 30, 2016 as total expenses of 52,564,060 exceeded total revenue of
52,544,070. As of June 30, 2016, there was S27,390 set aside as Restricted Assets for the Housing Choice Voucher
program.
Expendable Fund Balance:
Expendable Fund Balance
2016 2015 Change %-Change
Expendable Fund Balance S1,772,750 $1,611,064 $161,686 10.04%
No.of Months Expendable Fund 21.14 20.51 0.63 3.09%
The expendable fund balance of an authority is a measure of liquidity of the entity. If all of the Authority's
unrestricted current assets, less materials inventory, are converted to cash, and the Authority pays all the current
liabilities, the amount of cash left on hand is the expendable fund balance. The expendable fund balance was
S1,772.750 at the end of the 2016 fiscal year.
The number of months in expendable funds is a measure of how many months the authority could operate under
current conditions without any additional income. The number of months in expendable funds is calculated by
dividing the total expenses for the year, less depreciation and HAP expense, by twelve (12) to arrive at the average
monthly expense of$83,843. The expendable fund balance is then divided by the average monthly expenses to
arrive at the number of months expendable fund balance. The ratio as of June 30,2016 was 21 months.
Changes in Net Position
For the Year Ended June 30,
2016 2015 Change
Revenue:
Tenant Revenue $416,769 $369,355 S47,414
Federal Grants& Subsidy 52,100,869 $1,870,560 S230,309
Investment Income $7,154 $7,242 (S88)
Other Income S 19,278 S117,775 (S98,497)
Total Revenue S2,544,070 52,364,932 $179,138
iv
HOUSING AUTHORITY OF THE CITY OF SALINA
Salina, Kansas
MANAGEMENT'S DISCUSSION AND ANALYSIS(MD&A)—(Continued)
June 30.2016
Financial Analysis—(Continued)
Changes in Net Position—(Continued)
For the Year Ended June 30,
2016 2015 Change
Expenses:
Administrative $486,871 $372,738 $114,133
Tenant Services 563,679 S60,209 $3,470
Utilities 514,741 $15,027 ($286)
Routine Maintenance $295,543 $244,345 $51,198
Protective Services $167 $168 (SI)
General Expenses S145,119 $143,937 51.182
Non-Routine Expenses SO S106,185 (S 106,185)
Housing Assistance Payments 1,281,806 1,104,137 $177,669
Depreciation 5276,134 $282,090 ($5,956)
Total Operating Expenses S2.564,060 $2,328,836 $235.224
Increase(Decrease) in Net Position ($19,990) S36.096 ($56,086)
Revenue:
The Authority has two basic sources of revenue. Rent and other tenant charges and funds received from the
Department of Housing and Urban Development (HUD) in the form of operating subsidies, tenant assistance, and
capital improvement grants.
Total tenant revenue increased by approximately 13% for the current year from $369,355 for the year ended June
30, 2015 to $416,769 for the year ended June 30, 2016. Tenant revenue includes rent charged as well as any move-
out charges or other maintenance charges incurred. The amount collected from tenants for charges other than rent
increased by $2,624. Tenant rents are also affected by the tenant's reported income and other tenant attributes. The
amount of rent that a tenant pays decreases as the tenant's income decreases.
Total federal grants and subsidy revenue increased from $1,870,560 for the year ended June 30, 2015 to $2,100,869
for the year ended June 30, 2016, for an increase of $230,309. Capital grant revenue increased by $23,341 and
operating subsidy funding increased by $31,493. Housing choice voucher HAP assistance and admin fees earned
increased by $161,385 due to increased leasing. Security deposit assistance funding (TBRA), new in fiscal year
2015, increased from $28,496 to $74,393. ROSS and Shelter Plus Care grants decreased for a combined total of
$31.807.
Other income decreased $98.497 as the amount recorded for the year ended June 30, 2015 was SI 17,775 and
S 19,278 for the year ended June 30, 2016. Insurance proceeds for casualty losses on two low rent units in 2015 are
attributed to the decrease.
Expenses:
Administrative expenses increased by $114,133 from $372,738 for the year ended June 30, 2015 to $486,871 for
year ended June 30, 2016 and routine maintenance expense increased by $51,198, from $244,345 for fiscal year
2015 to $295,543 for fiscal year 2016. The majority of both increases is attributable to accounting for the Kansas
Public Employees Retirement System (KPERS) underfunded liability. As a result of increased leasing, housing
assistance payments increased by $177,669, which is a 16% increase. Non-capitalized casualty loss expense
decreased$106,185 as a result of losses on two low rent units in the prior year and none in the current year.
v
HOUSING AUTHORITY OF THE CITY OF SALINA
Salina, Kansas
MANAGEMENT'S DISCUSSION AND ANALYSIS (MD&A)—(Continued)
June 30,2016
Financial Analysis—(Continued)
Capital Assets:
At June 30, 2016, the Housing Authority had 55,506,148 invested in net capital assets. This amount represents a net
decrease of S 157,396 in net capital assets when compared to net capital assets as of June 30,2015.
Capital expenditures for FY 2016 were limited to the purchase of an automobile. Disposals consisted of various non-
functioning kitchen appliances and computer-related devices and software,one mower,and one automobile.
During the current year, some work in progress projects were completed and certain assets of S93,894 were
transferred from construction in progress to other capital assets categories.
As of June 30, 2016, the Housing Authority has approximately 592,932 in Capital program funds to spend on future
improvements.
Capital Assets at Year End
(Net of Accumulated Depreciation)
June 30,
2016 2015 Chance
Land 51,456,891 $1,456,891 SO
Buildings S7,266,666 7,175,474 $91,192
Equipment-dwellings $4,341 S13,751 (59,410)
Equipment-administration $226,898 S226,214 $684
Leasehold improvements $709,752 707,050 S2,702
Construction in progress $153,252 144,403 S8,849
Subtotal 59,817,800 S9,723,783 S94,017
Accumulated depreciation (S4,311,652) (4,060,239) ($251,413)
Net Capital Assets $5,506,148 55,663,544 ($157.396)
Debt
As of June 30, 2016, the Authority does not have any outstanding debt, bonds, mortgages, or notes payable. There
are non-current liabilities as of June 30, 2016 for employee compensated absences of approximately $27,038.
escrow amounts of 529.717 held for participating tenants of the FSS escrow program and net pension liability of
$318,110 resulting from GASB Statement 68.
Economic Factors
The Housing Authority is dependent upon HUD for the funding of operations; therefore, the Housing Authority is
affected both by federal budget and,to a lesser degree,local economic conditions.The funding of programs could be
significantly affected by HUD and the 2017 federal budget.
Contacting the Housing Authority's Financial Management
Our financial report is designed to provide our citizens, taxpayers and creditors with a general overview of the
Housing Authority's finances and to show the Housing Authority's accountability for the money it receives. If you
have questions about this report or wish to request additional financial information, contact Kim Deal, Finance
Manager,at the Salina Housing Authority,469 S. 5th St., Salina, KS 67401,telephone number 785-827-0441.
vi
HOUSING AUTHORITY OF THE CITY OF SALINA
Salina, Kansas
STATEMENT OF NET POSITION
June 30.2016
ASSETS
Current Assets:
Cash and cash equivalents S 1.013.980
Cash-restricted 164,725
Investments 808,574
Receivables-net of allowances 15,567
Inventory-net of allowances 30,148
Prepaid expenses 39.951
Total Current Assets 2,072,945
Non-current Assets:
Capital assets:
Land and construction in progress 1,610,143
Other capital assets, net of depreciation 3,896,005
Total capital assets-net 5,506,148
Total Non-current Assets 5.506,148
DEFERRED OUTFLOW OF RESOURCES
Accrued pension 10.417
Total Deferred Outflow of Resources 10,417
Total Assets and Deferred Outflow of Resources S 7,589.510
See accompanying notes to the basic financial statements
3
HOUSING AUTHORITY OF THE CITY OF SALINA
Salina, Kansas
STATEMENT OF NET POSITION-(Continued)
June 30,2016
LIABILITIES
Current Liabilities:
Accounts payable S 57.861
Accrued salaries and benefits 38,546
Tenant security deposit liability 95,608
Accrued compensated absences 3,004
Unearned revenues 5,911
Total Current Liabilities 200,930
Non-current Liabilities:
Compensated absences 27,038
Non-current liabilities-Other 347,827
Total Non-current Liabilities 374,865
Total Liabilities 575.795
DEFERRED INFLOW OF RESOURCES
Accrued pension -
Total Deferred Inflow of Resources -
NET POSITION
Net investment in capital assets 5,506,148
Restricted 27,390
Unrestricted 1,480,177
Total Net Position 7,013,715
Total Liabilities,Deferred Inflow of Resources and Net Position S 7,589,510
See accompanying notes to the basic financial statements
4
HOUSING AUTHORITY OF THE CITY OF SALINA
Salina, Kansas
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
For the Year Ended June 30,2016
OPERATING REVENUES
Tenant revenue S 416,769
Governmental grants and subsidy 1,998.126
Miscellaneous 19,278
Total operating revenue 2,434,173
OPERATING EXPENSES
Administrative 486,871
Tenant services 63,679
Utilities 14,741
Ordinary maintenance and operations 295,543
Protective services 167
Insurance 102,152
General 42,967
Housing assistance payment 1,281,806
Depreciation expense 276,134
Total operating expenses 2.564,060
Operating income(loss) (129,887)
NON-OPERATING REVENUES(EXPENSES)
Investment income 7,154
Net non-operating revenues(expenses) 7,154
Income(loss)before contributions and transfers (122,733)
Capital contributions 102,743
Change in net position (19,990)
Total net position-beginning of year 7,033,705
Total net position-end of year S 7,013,715
See accompanying notes to the basic financial statements
5
HOUSING AUTHORITY OF THE CITY OF SALINA
Salina,Kansas
STATEMENT OF CASH FLOWS
For the Year Ended June 30,2016
CASH FLOWS FROM OPERATING ACTIVITIES
Received from tenants S 405,189
Received from governmental grants and subsidy 2,007,539
Received from other operating activities 283,328
Payments for goods and services (606,015)
Payments to employees (594,380)
Payment in lieu of taxes (27,447)
Payment for housing assistance (1,281,806)
Net cash provided by(used in)operating activities 186,408
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Proceeds from capital contributions 105,472
Proceeds from sale of capital assets 3,440
Purchases of capital assets (122,178)
Receipts(payments)from deferred credits and escrow deposits 22,268
Net cash provided by(used in)capital and related financing activities 9,002
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds(payments) from sale(purchase)of investments (3,342)
Receipts of interest and dividends 7,128
Net cash provided by(used in)investing activities 3,786
Net increase(decrease) in cash and cash equivalents 199,196
Cash and cash equivalents at beginning of year 979,509
Cash and cash equivalents at end of year S 1,178,705
See accompanying notes to the basic financial statements
6
HOUSING AUTHORITY OF THE CITY OF SALINA
Salina, Kansas
STATEMENT OF CASH FLOWS-(Continued)
For the Year Ended June 30,2016
Reconciliation of operating income(loss)to net cash provided(used)by operating
activities
Operating income(loss) S (129,887)
Adjustments to reconcile operating income(loss)to net cash provided(used)
by operating activities:
Depreciation expense 276,134
Change in assets and liabilities:
Receivables,net 11,543
Inventories,net (4,036)
Prepaid expenses 7,274
Accounts and other payables 21,230
Tenant security deposit 629
Deferred revenues (4,354)
Compensated absences 6,971
Accrued expenses 904
Net cash provided by(used)by operating activities S 186,408
See accompanying notes to the basic financial statements
7
HOUSING AUTHORITY OF THE CITY OF SALINA
Salina,Kansas
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30,2016
NOTE I —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Housing Authority of the City of Salina (Authority) is a public body and a body corporate and politic
organized under the laws of the State of Kansas that is legally separate, fiscally independent and governed
by a Board of Commissioners. The Authority was established to provide low-rent housing for qualified
individuals in accordance with the rules and regulations prescribed by the Department of Housing and
Urban Development (HUD) and other applicable federal agencies. Additionally. HUD has entered into
Annual Contributions Contract with the Authority for the purpose of administering housing and housing
relating programs described herein. The Authority is not subject to federal or state income taxes and is not
required to file federal or state income tax returns.
The financial statements of the Authority have been prepared in conformity with generally accepted
accounting principles (GAAP). GAAP includes all relevant Govemmental Accounting Standards Board
(GASB) pronouncements. The accounting and reporting framework and the more significant accounting
policies are discussed in subsequent subsections of this Note.
IA. Financial Reporting Entity
The Authority's financial reporting entity comprises the following:
Primary Government: Housing Authority
In determining the financial reporting entity, the Authority complies with the provisions of GASB
Statement No. 14 as amended by GASB No.39 and No. 61,"The Financial Reporting Entity," and includes
all component units of which the Authority appointed a voting majority of the units' board;the Authority is
either able to impose its will on the unit or a financial benefit or burden relationship exists. On the basis of
the application of these criteria, there are no component units which are required to be included in the
Authority's financial statements.
1 B. Basis of Presentation
The accounts of the reporting entity are organized into funds, each of which is considered to be separate
accounting entities. The operations of each fund are reported as a separate set of self-balancing accounts
that are comprised of each fund's assets, liabilities, fund equity, revenues, and expenditure/expenses. Funds
consist of three major categories: governmental, proprietary and fiduciary. Funds within each major
category are grouped by fund type in the combined financial statements. The Authority uses the following
fund:
Proprietary Fund Types - This fund is used to account for the Authority's ongoing activities that
are similar to those often found in the private sector. The accounting objectives are a
determination of net income, financial position and changes in cash flow. All assets and liabilities
associated with a proprietary fund's activities are included on its statement of net position.
Proprietary fund equity is segregated into net investment in capital assets and restricted and
unrestricted net position. The following are the Authority's proprietary fund types:
Enterprise Fund - Enterprise funds are used to account for business-like activities provided to the
general public. These activities are financed primarily by user charges and the measurement of
financial activity focuses on net income measurement similar to the private sector. The reporting
entity includes all of the Authority's programs as an enterprise fund.
8
HOUSING AUTHORITY OF THE CITY OF SALINA
Salina, Kansas
NOTES TO THE BASIC FINANCIAL STATEMENTS-(Continued)
June 30,2016
NOTE I —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-(Continued)
1B. Basis of Presentation -(Continued)
The Authority operates the following programs in the enterprise fund:
Low Rent — The objective of the program is to provide decent, safe and sanitary housing and
related facilities for eligible low-income individuals.
Capital Fund Program — The purpose of this program is to provide funds annually to Housing
Authorities for the modernization of the housing development and for management improvements.
Housing Choice Vouchers—The objective of the program is to help low-income families obtain
decent, safe, and sanitary housing through a system of rental assistance. HUD reimburses the
Authority for the rental supplements paid to private landlords and the administrative costs of
managing the program.
Resident Opportunity and Supportive Services — The objective of this program is to provide
housing residents with supportive services, resident empowerment activities and assistance in
becoming economically self-sufficient.
Shelter Plus Care — The Shelter Plus Care Program provides rental assistance to homeless
persons with disabilities (primarily persons who are seriously mentally ill; have chronic problems
with alcohol, drugs, or both, or have acquired immunodeficiency syndrome and related diseases)
and their families.
Business Activities—The funds in this program are set aside for the development of new public
housing units.
Home Investment Partnerships Program—The objective of the program is to expand the supply
of affordable housing, particularly rental housing, for low and very low income Americans; to
strengthen the abilities of state and local governments to design and implement strategies for
achieving adequate supplies of decent, affordable housing; and to extend and strengthen
partnerships among all levels of government and the private sector, including for-profit and
nonprofit organizations, in the production and operation of affordable housing.
Central Office Cost Center (COCC) — Under the Asset Management rule, the purpose of this
program is to provide day-to-day operation of other programs of the Housing Authority funded
through property management, asset management,bookkeeping, program management and fee for
service fee.
1C. Measurement Focus and Basis of Accounting
Measurement focus is a term used to describe `which" transactions are recorded within the various
financial statements. Basis of accounting refers to "when" transactions are recorded regardless of the
measurement focus applied.
9
HOUSING AUTHORITY OF THE CITY OF SALINA
Salina, Kansas
NOTES TO THE BASIC FINANCIAL STATEMENTS-(Continued)
June 30,2016
NOTE I —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-(Continued)
1C. Measurement Focus and Basis of Accounting-(Continued)
Measurement Focus - The proprietary fund utilizes an "economic resources" measurement focus. The
accounting objectives of this measurement focus are the determination of operating income, changes in net
position(or cost recovery), financial position, and cash flows. All assets and liabilities (whether current or
non-current) associated with their activities are reported. Proprietary fund equity is classified as net
position.
Basis of Accounting - In the financial statements, the proprietary fund utilizes the accrual basis of
accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are
recorded when the liability is incurred or economic asset used.
ID. Budgets
Budgets are prepared for regulatory purposes in accordance with the Authority's contract with HUD on an
annual basis for all operating programs and on a project length basis for capital projects funds which are
approved by the Board of Commissioners and submitted to HUD for their approval, if required.
1E. Estimates and assumptions
The preparation of financial statements in conformity with generally accepted accounting principles require
management to make estimates and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could vary from those estimates.
IF.Assets, Liabilities,and Equity
Cash and Investments
For the purpose of the Statement of Net Position,"cash and cash equivalents" includes all demand, savings
accounts,and certificates of deposits or short-term investments with an original maturity of three months or
less. For the purpose of the Statement of Cash Flows, "cash and cash equivalents" include all demand and
savings accounts, and certificates of deposit or short-term investments with an original maturity of three
months or less.
Investments are carried at fair value except for short-term U.S. Treasury obligations, if any, with a
remaining maturity at the time of purchase of one year or less. Those investments, if any, are reported at
amortized cost. Fair value is based on quoted market price. Additional cash and investment disclosures are
presented in Notes 2B and 3A.
Inter-fund Receivables and Payables
During the course of operations, numerous transactions occur within individual funds that may result in
amounts owed between funds. Inter-fund receivables and payables between funds are eliminated for
financial statement presentation.
Receivables
Receivables consist of all revenues earned at year-end and not yet received. Allowances for uncollectible
accounts receivable are based upon historical trends and the periodic aging of accounts receivable. Major
receivable balances consist of HUD and tenant accounts receivable.
10
HOUSING AUTHORITY OF THE CITY OF SALINA
Salina, Kansas
NOTES TO THE BASIC FINANCIAL STATEMENTS-(Continued)
June 30, 2016
NOTE I —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-(Continued)
IF. Assets, Liabilities,and Equity-(Continued)
Inventories
Inventories are accounted for under the consumption method and recorded at lower of cost or market.
Inventories consist primarily of maintenance materials and supplies held for consumption. The cost of these
supplies is regarded as an expenditure at the time the items are consumed. Inventories are classified as
current assets on the Statement of Net Position,net of an allowance for obsolete inventory.
Fixed Assets
Fixed assets in the proprietary fund types are stated at historical cost,or estimated historical cost if actual is
unavailable, except for donated fixed assets which are recorded at their estimated fair value at the date of
donation. It is the policy of the Authority to capitalize all assets with a cost of S500 or greater. The cost of
maintenance and repairs are charged to operations as incurred. Costs of major additions, improvements,and
betterments are capitalized.
Depreciation of all exhaustible fixed assets is charged as an expense against operations and is recorded in
the Statement of Revenues, Expenses and Changes in Net Position with accumulated depreciation reflected
in the Statement of Net Position. Depreciation is provided over the assets estimated useful lives using the
straight-line method of depreciation. The range of estimated useful lives by type of asset is as follows:
Building 20-40 years
Site Improvements 15 years
Furniture,equipment and machinery-dwelling 7 years
Furniture,equipment and machinery-administrative 3-10 years
Restricted Assets
Restricted assets include cash of the proprietary fund that are legally restricted as to their use. The primary
restricted assets are related to the security deposit fund, FSS escrow and HAP funds under the Low Rent
program and Housing Choice Voucher program.
Compensated Absences
The Authority's policies regarding vacation time permit employees to accumulate earned but unused
vacation leave. The liability for these compensated absences is recorded as long-term and short-term
liabilities based on historical trends. Amounts not expected to be paid within the next fiscal year are
classified as long-term liabilities.
Equity Classifications
Equity is classified as net position and displayed in three components:
I) Net investment in capital assets - Consists of capital assets including restricted capital assets, net of
accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages,notes, or other
borrowing that are attributable to the acquisition,construction,or improvement of those assets.
2) Restricted net position - Consists of net position with constraints placed on the use either by (i) external
groups such as creditors, grantors, contributors, or laws or regulations of other governments; (ii) law
through constitutional provisions or enabling legislation.
3) Unrestricted net position - All other net position that do not meet the definition of"restricted" or "net
investment in capital assets."
11
HOUSING AUTHORITY OF THE CITY OF SALINA
Salina, Kansas
NOTES TO THE BASIC FINANCIAL STATEMENTS-(Continued)
June 30,2016
NOTE I —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-(Continued)
1F. Assets, Liabilities, and Equity-(Continued)
Use of Restricted/Unrestricted Net Position
When an expense is incurred for purposes for which both restricted and unrestricted net position are
available,the Authority's policy is to apply restricted assets first.
IG. Revenues, Expenditures, and Expenses
Operating Revenues and Expenses
Operating revenues and expenses are those that result from providing services and delivering goods and/or
services. It also includes all revenue and expenses not related to capital and related financing, non-capital
financing, or investing activities.
Inter-fund Transfers
Permanent reallocation of resources between programs of the reporting entity is classified as inter-fund
transfers. For the purposes of the Statement of Revenues, Expenses and Changes in Net Position, all inter-
fund transfers between individual programs, if any,have been eliminated.
NOTE 2—STEWARDSHIP,COMPLIANCE AND ACCOUNTABILITY
The Authority and its component units, if any, are subject to various federal, state, and local laws and
contractual regulations. An analysis of the Authority's compliance with significant laws and regulations
and demonstration of its stewardship over Authority resources follows.
2A. Program Accounting Requirements
The Authority's complies with all state and local laws and regulations requiring the use of separate
programs. The programs used by the Authority are as follows:
Program Required By
Public and Indian Housing U.S. Department of Housing and Urban Development
Capital Fund Program U.S. Department of Housing and Urban Development
Housing Choice Vouchers U.S. Department of Housing and Urban Development
Resident Opportunity and Supportive Services-ROSS U.S. Department of Housing and Urban Development
Shelter Care Plus U.S. Department of Housing and Urban Development
HOME Program U.S. Department of Housing and Urban Development
Central Office Cost Center-COCC U.S. Department of Housing and Urban Development
Business Activities Housing Authority
2B. Deposits and Investments Laws and Regulations
It is the Authority's policy for deposits to be secured by collateral valued at market or par, whichever is
lower, less the amount of the Federal Deposit Insurance Corporation(FDIC) insurance. The Authority must
maintain a written collateral agreement from all financial institutions pledging collateral to the Authority.
As reflected in Note 3A,all deposits were fully insured or collateralized.
12
HOUSING AUTHORITY OF THE CITY OF SALINA
Salina, Kansas
NOTES TO THE BASIC FINANCIAL STATEMENTS-(Continued)
June 30, 2016
NOTE 2—STEWARDSHIP,COMPLIANCE AND ACCOUNTABILITY-(Continued)
213. Deposits and Investments Laws and Regulations-(Continued)
Investing is performed in accordance with HUD regulations and State Statutes. Funds may be invested in
the following type of investments:
Direct obligations of the U.S. Government pledged by its full faith and credit.
i Demand, savings, money-market and certificates of deposit at commercial banks, mutual savings
banks, savings and loan associations and credit unions provided that the entire deposit be insured
by the FDIC and any deposits in excess of insured amounts are adequately collateralized.
2C. Revenue Restrictions
The Authority has various restrictions placed over certain revenue sources. The primary restricted revenue
sources include:
Revenue Source Legal Restrictions of Use
Capital Fund Program Modernization
Housing Choice Vouchers Housing assistance payments
ROSS Resident supportive services
Shelter Care Plus Housing assistance payments
HOME Program Housing assistance payments
For the year ended June 30, 2016, the Authority complied, in all material respects, with these revenue
restrictions.
NOTE 3—DETAIL NOTES ON TRANSACTION CLASSES/ACCOUNTS
The following notes present detail information to support the amounts reported in the basic financial
statements for its various assets, liabilities,equity,revenues,and expenditures/expenses.
3A. Cash and Investments
As of June 30,2016,the Authority had the following cash deposits and investments:
Cash deposits S 1,178,655
Certificate of deposit 808,574
Petty cash/change fund 50
Total S 1,987,279
Following is a reconciliation of the Authority's deposit balances as of June 30,2016:
Cash-unrestricted S 1,013,980
Cash-restricted 164,725
Investments—unrestricted 808,574
Total S 1,987,279
13
HOUSING AUTHORITY OF THE CITY OF SALINA
Salina, Kansas
NOTES TO THE BASIC FINANCIAL STATEMENTS-(Continued)
June 30,2016
NOTE 3—DETAIL NOTES ON TRANSACTION CLASSES/ACCOUNTS-(Continued)
3A. Cash and Investments—(Continued)
Deposits
Custodial Credit Risk-Deposits
The custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial
institution, the Authority will not be able to recover deposits or will not be able to recover collateral
securities that are in the possession of an outside party. At June 30, 2016, the Authority's bank balances of
S1.195,259 were entirely covered by FDIC insurance or by pledged collateral held by the Authority's agent
bank in the Authority's name.
Investments
Custodial Credit Risk-Investments
The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty, the
Authority will not be able to recover the value of its investment or collateral securities that are in the
possession of an outside party. At June 30, 2016, the Authority's investment balance of $808,574 was
entirely covered by FDIC insurance or by pledged collateral held by the Authority's agent bank in the
Authority's name.
Interest Rate Risk
The Authority does not have a formal investment policy that limits investment maturities as a means of
managing its exposure to fair value losses arising from increasing interest rates.
Credit Risk
State law limits investment in commercial paper, corporate bonds, and mutual bond funds to the top two
ratings issued by nationally recognized statistical rating organization. As the Authority's investments
consist entirely of certificate of deposits,credit risk is not applicable to the Housing Authority.
Concentration of Credit Risk
The Authority places no limit on the amount the Authority may invest in any one issuer. At June 30, 2016,
the concentration of the Authority's investment(excluding cash deposits)was as follows:
Type of Investment Market Value Maturity Date
Certificate of Deposit S 152,574 8/15/2016
Certificate of Deposit 64,896 10/27/2016
Certificate of Deposit 109,846 8/25/2016
Certificate of Deposit 103,723 1/26/2017
Certificate of Deposit 109,873 9/30/2016
Certificate of Deposit 205,800 5/29/2017
Certificate of Deposit 32,014 11/12/2016
Certificate of Deposit 29,848 3/10/2017
S
808.574
14
HOUSING AUTHORITY OF THE CITY OF SALINA
Salina, Kansas
NOTES TO THE BASIC FINANCIAL STATEMENTS-(Continued)
June 30, 2016
NOTE 3—DETAIL NOTES ON TRANSACTION CLASSES/ACCOUNTS-(Continued)
3B. Restricted Assets
Restricted assets at June 30,2016 consist of the following:
Type of Restricted Assets Cash Investments Accrued Interest Total
FSS Escrow S 41,727 S ---- S ---- S 41,727
HAP funds 27,390 ---- ---- 27.390
Security deposit 95,608 ---- ---- 95.608
S 164,725 S ---- S ---- S 164,725
3C. Receivables
Receivables at June 30,2016,consist of the following:
Tenants-net of allowance S 10,047
Less:Allowance or doubtful account-tenants (1,000)
Tenants-net of allowance 9,047
HUD 5,544
Miscellaneous 585
Interest 391
Total Accounts Receivable S 15,567
3D. Inventory
Inventory at June 30,2016 comprised of the following:
Inventory S 31,560
Less: Allowance for obsolete inventory (1,412)
Inventory-net of allowance S 30,148
15
HOUSING AUTHORITY OF THE CITY OF SALINA
Salina, Kansas
NOTES TO THE BASIC FINANCIAL STATEMENTS-(Continued)
June 30,2016
NOTE 3—DETAIL NOTES ON TRANSACTION CLASSES/ACCOUNTS-(Continued)
3E. Capital Assets •
A summary of capital asset activity for the year ended June 30, 2016 is as follows:
Balance Reclass/ Balance
July 1, Transfers June 30,
2015 Additions (Retirement) in (out) 2016
Non-depreciable assets:
Land S 1,456,891 S - S - S - S 1,456,891
Construction in progress 144,403 102,743 - (93,894) 153.252
Total non-depreciable assets 1,601,294 102.743 - (93,894) 1.610,143
Depreciable assets:
Building 7,175,474 - - 91,192 7,266,666
Equipment-dwelling 13,751 - (9,410) - 4,341
Equipment- administration 226,214 19,435 (18,751) - 226,898
Leasehold improvements 707,050 - - 2,702 709,752
Infrastructure - - -Total depreciable assets 8,122,489 19,435 (23,161) 93,894 8 207,657
Accumulated depreciation (4,060,239) (276,134) 24.721 - (4.311.652)
Total depreciable assets, net 4,062,250 (256.699) (3,440) 93,894 _ 3.896,005
Capital assets,net S 5,663,544 S (153,956) S (3,440) S - S 5,506,148
Depreciation expense is charged to programs as follows:
Business-type Activities
Low Rent S 262,639
COCC 13,026
Housing Choice Voucher 469
Total depreciation expense S 276,134
3F. Accounts Payable
Accounts payable at June 30,2016,consist of the following:
Vendors& contractors S 8,488
PILOT 33,115
Miscellaneous 15,134
Accrued utilities 1,124
Total Accounts Payable S 57,861
16
HOUSING AUTHORITY OF THE CITY OF SALINA
Salina, Kansas
NOTES TO THE BASIC FINANCIAL STATEMENTS-(Continued)
June 30,2016
NOTE 3—DETAIL NOTES ON TRANSACTION CLASSES/ACCOUNTS-(Continued)
3G. Non-current Liabilities
Non-current liabilities at June 30, 2016,consist of the following:
Accrued compensated absences S 27,038
Accrued pension 318,110
FSS escrow 29,717
Total Non-Current Liabilities S 374,865
The following is the summary of changes in non-current liabilities:
Balance Balance Amounts
July I, June 30, Due within
2015 Additions Deductions 2016 One Year
Accrued compensated
absences S 20,764 S 6,274 S --- S 27,038 S 3,004
Accrued pension 295,051 23,059 --- 318,110
FSS escrow 30.508 --- 791 29,717 12,010
S 346,323 S 29,333 S 791 S 374,865 S 15,014
3H. Inter-program Transactions and Balances
Operating Transfers
Transfers are used to move revenues from one program to the other program in accordance with the
budgetary authorizations.
Transfers In Transfers Out
Low Rent S 95,000 S -
Capital Fund Program - 95,000
Total S 95,000 S 95,000
Inter-program Receivable/Pavable
Inter-program receivable/payable is eliminated for financial statement presentation. The following inter-
program receivable/payable existed at June 30,2016:
Due From Due To
Low Rent S 3,577 S -
COCC 23,000 -
Housing Choice Voucher (23,000)
ROSS - (3,577)
Total S 26,577 S (26,577)
17
HOUSING AUTHORITY OF THE CITY OF SALINA
Salina, Kansas
NOTES TO THE BASIC FINANCIAL STATEMENTS-(Continued)
June 30,2016
NOTE 4—OTHER NOTES
4A. Pension Plan
Description of Pension Plan
The Housing Authority of the City of Salina (Authority) participates in a cost-sharing multiple-employer
pension plan (Pension Plan), as defined in Governmental Accounting Standards Board Statement No.67,
Financial Reporting for Pension Plans. The Pension Plan is administered by the Kansas Public Employees
Retirement System (KPERS), a body corporate and an instrumentality of the State of Kansas. KPERS
financial statements are included in its Comprehensive Annual Financial Report which can be found on the
KPERS website at www.kpers.org.
KPERS provides benefit provisions to the following statewide pension groups under one plan, as provided
by K.S.A. 74,article 49:
• Public employees,which includes:
o State/School employees
o Local employees
• Police and Firemen
• Judges
Substantially all public employees in Kansas are covered by the Pension Plan. The State of Kansas and
Kansas schools are required to participate,while participation by local political subdivisions is optional,but
irrevocable once elected.
Those employees participating in the Pension Plan for the Authority are included in the Local employee
group.
Benefits
Benefits are established by statute and may only be changed by the General Assembly. Members (except
Police and Firemen) with ten or more years of credited service, may retire as early as age 55 (Police and
Firemen may be age 50 with 20 years of credited service), with an actuarially reduced monthly benefit.
Normal retirement is at age 65, age 62 with ten years of credited service, or whenever a member's
combined age and years of credited service equal 85 "points" (Police and Firemen' normal retirement ages
are age 60 with 15 years of credited service,age 55 with 20 years, age 50 with 25 years,or any age with 36
years of service).
Monthly retirement benefits are based on a statutory formula that includes final average salary and years of
service. When ending employment, members may withdraw their contributions from their individual
accounts, including interest. Members who withdraw their accumulated contributions lose all rights and
privileges of membership. For all pension coverage groups, the accumulated contributions and interest are
deposited into and disbursed from the membership accumulated reserve fund as established by K.S.A. 74
4922.
Members choose one of seven payment options for their monthly retirement benefits. At retirement a
member may receive a lump sum payment of up to 50% of the actuarial present value of the member's
lifetime benefit. His or her monthly retirement benefit is then permanently reduced based on the amount of
the lump sum. Benefit increases, including ad hoc post retirement benefit increases, must be passed into
law by the Kansas Legislature. Benefit increases are under the authority of the Legislature and the
Govemor of the State of Kansas.
18
HOUSING AUTHORITY OF THE CITY OF SALINA
Salina, Kansas
NOTES TO THE BASIC FINANCIAL STATEMENTS-(Continued)
June 30,2016
NOTE 4—OTHER NOTES-(Continued)
4A. Pension Plan-(Continued)
Benefits-(Continued)
The 2012 Legislature made changes affecting new hires, current members and employers. A new KPERS 3
cash balance retirement plan for new hires starting January 1, 2015,was created.Normal retirement age for
KPERS 3 is 65 with five years of service or 60 with 30 years of service. Early retirement is available at age
55 with ten years of service, with a reduced benefit. Monthly benefit options are an annuity benefit based
on the account balance at retirement.
For all pension coverage groups, the retirement benefits are disbursed from the retirement benefit payment
reserve fund as established by K.S.A. 74-4922.
Contributions
Member contributions are established by state law, and are paid by the employee according to the
provisions of Section 414(h) of the Internal Revenue Code. State law provides that the employer
contribution rates be determined based on the results of each annual actuarial valuation for each of the three
state-wide pensions groups. The contributions and assets of all groups are deposited in the Kansas Public
Employees Retirement Fund established by K.S.A. 74-4921. All of the retirement systems are funded on an
actuarial reserve basis.
For fiscal years beginning in 1995, Kansas legislation established statutory limits on increases in
contribution rates for KPERS employers. Annual increases in the employer contribution rates related to
subsequent benefit enhancements are not subject to these limitations. The statutory cap increase over the
prior year contribution rate is 1.0% of total payroll for the fiscal year ended June 30, 2015 (Plan's year-
end).
The actuarially determined employer contribution rates (not including the 0.85% contribution rate for the
Death and Disability Program) and statutory contribution rates for Local employees are 9.48% and 9.48%,
respectively. Member contribution rates as a percentage of eligible compensation for the fiscal year ended
June 30,2015 are 5.00%or 6.00%for Local employees.
Employer and Nonemplover Allocations
Although KPERS administers one cost sharing multiple-employer defined benefit pension plan, separate
(sub) actuarial valuations are prepared to determine the actuarial determined contribution rate by group.
Following this method, the measurement of the collective net pension liability, deferred outflows and
resources, deferred inflows of resources, and pension expense are determined separately for each of the
following groups of the plan:
• State/School
• Local
• Police and Firemen
• Judges
To facilitate the separate (sub) actuarial valuations, the System maintains separate accounts to identify
additions, deductions, and fiduciary net position applicable to each group. The allocation percentages
presented for each group in the schedule of employer and nonemployer allocations are applied to amounts
presented in the schedules of pension amounts by employer and nonemployer. The allocation percentages
19
HOUSING AUTHORITY OF THE CITY OF SALINA
Salina, Kansas
NOTES TO THE BASIC FINANCIAL STATEMENTS-(Continued)
June 30. 2016
NOTE 4—OTHER NOTES-(Continued)
4A. Pension Plan-(Continued)
Employer and Nonemplover Allocations-(Continued)
for each group as of June 30, 2015, are based on the ratio of each employer's contributions to total
employer and nonemployer contributions of the group for the fiscal years ended June 30, 2015. The
contributions used exclude contributions made for prior service, excess benefits and irregular payments.
At June 30. 2015 (Plan's year-end), the Authority's proportion was 0.024227%, which was an increase
from its proportion measured at June 30,2014.
Net Pension Liability
At June 30, 2016 and 2015, the Authority reported a liability of$318,110 and$295,051 respectively, for its
proportionate share of the net pension liability.
Actuarial Assumptions
The total pension liability for the June 30, 2015, measurement date was determined by an actuarial
valuation as of December 31, 2014, which was rolled forward to June 30, 2015. The actuarial valuation
used the following actuarial assumptions,applied to all periods included in the measurement:
Price inflation 3.00%
Wage inflation 4.00%
Salary increases, including wage increases 4.00%to 16.00%, including inflation
Long-term rate of return,net of investment 8%
expenses,and including price inflation
Mortality rates were based on the RP-2000 Combined Mortality Table for Males and Females, as
appropriate,with adjustments for mortality improvement based on Scale AA.
The actuarial assumptions used in the December 31, 2014 valuation were based on the results of an
actuarial experience study conducted for three years ending December 31,2012.
The long-term expected rate of return of pension plan investments was determined using a building-block
method in which best-estimate ranges of expected future real rates of return (expected returns, net of
pensions plan investment expense and inflation) are developed for each major asset class. These ranges are
combined to produce the long-term expected rate of return by weighting the expected future real rates of
return by the target asset allocation percentage and by adding expected inflation. Best estimates of
arithmetic real rates of return for each major asset class included in the pensions plan's target asset
allocation as of June 30,2015 are summarized in the following table:
20
HOUSING AUTHORITY OF THE CITY OF SAUNA
Salina,Kansas
NOTES TO THE BASIC FINANCIAL STATEMENTS-(Continued)
June 30, 2016
NOTE 4—OTHER NOTES-(Continued)
4A. Pension Plan -(Continued)
Actuarial Assumptions-(Continued)
Long-Term Target Long-Term Expected
Asset Class Allocation Real Rate of Return
Global equity 47.00% 6.30%
Fixed income 13.00% 0.80%
Yield driven 8.00% 4.20%
Real return 11.00% 1.70%
Real estate 11.00% 5.40%
Altematives 8.00% 9.40%
Short-term investments 2.00% --
Total 100.00%
Discount Rate
The discount rate used to measure the total pension liability was 8.00%. The projection of cash flows used
to determine the discount rate assumed that contributions from plan members will be made at the
contractually required rate. Based on those assumptions, the pension plan's fiduciary net position was
projected to be available to make all projected future benefits payments of current plan members.
Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of
projected benefit payments to determine the total pension liability.
Sensitivity of the Authority's Proportionate Share of the Net Pension Liability to Changes in the Discount
Rate
The following presents the Authority's proportionate share of the net pension liability calculated using the
discount rate of 8.00%, as well as what the Authority's proportionate share of the net pension liability
would be if it were calculated using a discount rate that is 1-percentage point lower (7.00%) or 1-
percentage point higher(9.00%)than the current rate:
1%Decrease(7.00%) Discount rate(8.00%) 1%Increase(9.00%)
S451,576 S318,110 S204,959
Pension Expense
For the year ended June 30,2016,the Authority recognized pension expense of S20,212 which includes the
changes in the collective net pension liability, projected earnings on pension plan investments, and the
amortization of deferred outflows of resources and deferred inflows of resources for the current period.
21
HOUSING AUTHORITY OF THE CITY OF SALINA
Salina, Kansas
NOTES TO THE BASIC FINANCIAL STATEMENTS-(Continued)
June 30,2016
NOTE 4—OTHER NOTES-(Continued)
4A. Pension Plan-(Continued)
Deferred Outflows of Resources and Deferred Inflows of Resources
At June 30, 2016, the Authority reported deferred outflows of resources and deferred inflows of resources
related to pensions from the following sources:
Deferred Deferred
outflows of inflows of
resources resources
Differences between actual and expected experience -- S9.005
Net differences between projected and actual
earnings on investments -- S12,383
Changes of Assumptions -- $4,446
Changes in proportion 53,128 $5,484
Employer contributions subsequent to June 30,2015 538,607 --
Total 541,735 S31,318
Amounts reported as deferred inflows of resources related to pension will be recognized in pension expense
as follows:
Year ended June 30:
2017 S28,215
2018 (S10.392)
2019 S3,546
2020 ($561)
2021 (S10.391)
Thereafter --
The Authority's balance of deferred outflows of resources of$41,735 will be included as a reduction of the
collective net pension liability in future years.
413. Contingencies
The Authority is subject to possible examinations made by Federal and State authorities who determine
compliance with terms, conditions, laws and regulations governing other grants given to the Authority in
the current and prior years. No significant violations of finance-related legal or contractual provisions
occurred.
4C. Financial Data Schedule
The Authority prepares its Financial Data Schedule (FDS) in accordance with HUD requirements in a
prescribed format which differs from the presentation of the basic financial statements. The FDS format
excludes depreciation expense and housing assistance payment(HAP) and includes investment income and
capital contributions in operating activities, which differs from the presentation of basic financial
statements.
22
HOUSING AUTHORITY OF THE CITY OF SALINA
Salina, Kansas
NOTES TO THE BASIC FINANCIAL STATEMENTS-(Continued)
June 30,2016
NOTE 4—OTHER NOTES-(Continued)
411 Commitments
At June 30, 2016, the Authority had the following pending Capital Fund, ROSS, Shelter Care Plus and
HOME projects in progress. The commitments related to these projects are summarized as follows:
Funds Funds Expended-
Approved Project to Date
Capital Fund Program:
CFP 501-15 $ 195,275 S 102,343
ROSS:
ROSS 2015 S 60,000 S 33,888
Shelter Care Plus:
SNAP 1405 S 103,365 $ 84,459
HOME:
2016 S 107,000 S 102,338
4E. Risk Management
The Authority is exposed to various risks of losses related to torts; theft of, damage to, or destruction of
assets; errors and omissions; injuries to employees; employee's health and life; and natural disasters.
Claims liabilities are reported when it is probable that a loss has occurred and the amount of that loss can
be reasonably estimated. The Authority manages these various risks of loss as follows:
Type of Loss Method Managed
a. Torts, errors and omissions Purchased insurance with Housing Authority
Property Insurance,A Mutual Co.
b. Injuries to employees Purchased insurance with QBE Insurance Co.
(workers'compensation) Claims are administered by the same company.
c. Physical property loss and Purchased commercial insurance with $5,000
natural disasters deductibles.
d. Health and life Purchased health with Blue Cross Blue Shield of
Kansas- Life insurance is provided by KPERS.
Management believes such coverage is sufficient to preclude any significant uninsured losses to the
Authority. Settled claims have not exceeded this insurance coverage in any of the past three fiscal years.
23
HOUSING AUTHORITY OF THE CITY OF SALINA
Salina, Kansas
NOTES TO THE BASIC FINANCIAL STATEMENTS-(Continued)
June 30,2016
NOTE 4—OTHER NOTES-(Continued)
4F.Subsequent Events
Events that occur after the balance sheet date but before the financial statements were issued must be
evaluated for recognition or disclosure. The effects of subsequent events that provide evidence about
conditions that existed at the balance sheet date are recognized in the accompanying financial statements.
Subsequent events, which provide evidence about conditions that existed after the balance sheet date,
require disclosure in the accompanying notes. Management evaluated the activity of the Authority through
November I,2016 and concluded that no subsequent events have occurred that would require adjustment to
or disclosures within these financial statements.
4G. Economic Dependency
The Authority is primarily dependent upon HUD for the funding of operations; therefore, the Authority is
affected more by the federal budget than by local economic conditions. The funding of programs could be
significantly affected by the 2017 federal budget.
24
HOUSING AUTHORITY OF THE CITY OF SALINA
Salina, Kansas
PHA'S STATEMENT OF CERTIFICATION OF ACTUAL MODERNIZATION COST
June 30, 2016
I. Actual Capital Fund Program costs are as follows:
CFP 501-14
Funds approved S 199,093
Funds expended 199,093
Excess of Funds Approved S
Funds advanced S 199,093
Funds expended 199.093
Excess(deficiency)of Funds Advanced S
2. The costs as shown on the Actual Cost Certificate dated February 25, 2016 submitted to HUD for approval
is in agreement with the Authority's records as of June 30, 2016.
3. All costs have been paid and all related liabilities have been discharged through payments.
25
HOUSING AUTHORITY OF THE CITY OF SALINA
Salina, Kansas
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Year Ended June 30,2016
Federal
Federal Grantor CFDA# Expenditures
U.S. Department of Housing and Urban Development
Low Rent Program 14.850 S 351,806
Capital Fund Program 14.872 227.758
Housing Choice Vouchers 14.871 1,301,846
ROSS 14.870 60,689
Shelter Care Plus 14.238 84,377
Pass-through Kansas Housing Resources Corporation(KHRC)
HOME Investment Partnership Program 14.239 74,393
Total Federal Awards S 2,100,869
NOTE 1 —BASIS OF PRESENTATION
The accompanying schedule of expenditures of federal awards (Schedule) includes the federal grant activity of the
Housing Authority of the City of Salina, Kansas(Authority) under programs of the federal government for the year
ended June 30, 2016. The information in this Schedule is presented in accordance with the requirements of Title 2
U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit
Requirements of Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the
operations of the Authority, it is not intended to and does not present the financial position, changes in net position,
or cash flows of the Authority.
NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are
recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures
are not allowable or are limited as to reimbursement.
26
HOUSING AUTHORITY OF THE CITY OF SALINA
Salina, Kansas
FINANCIAL DATA SCHEDULE
Year Ended June 30,2016
14.870 i , •
I •
t i
Resident 14.871 14239
•
Project € Opportunity ( 14.238 HOME I ( I
Total and Choice Shelter Investment Business t COCC Subtotal ELIM Total
Supportive Vouchers Plus Care Partnerships Activities
Services i Program ••
( $462,068 I $6,487 ( $1,020 SO $55,269 $489,136 I $1,013,980 I i 51,013.980
$28,243 528,864 $57,107 $57,107
, j $95,608 I I I 1 1 595.608 1 595,608
-1 Current $12,010 I $12,010 $12,010
( $597,929 1 SO $35,351 1 $1,020 1 $0 $55,269 $489,136 51,178,705 I SO i 51,178.705 I
I i i •
her Projects I $1,967 i $3,577 I I I I ! I $5,544 1 I $5,544 I
neous I I 5585 i I I I $585 1 5585 I
$10.047 1 I i I $10,047 ' I $10,047 I
unts-Tenants 1 -$1,000 i_ I i I -$1,000 i i -$1,000 I
$252 ( 1 5139 ( i $391 1 I $391
:antes for I 511,266 $3,577 I $585 SO I SO $139 SO I SI 5.567 I SO $15,567
i i i I
$540,912 I I I i I $267,662 I 1 $808,574 1 $808,574 I
sets $38,362 I $702 I $887 $39,951 I 539,951
531,560 i I I I 531,560 1 1 $31,560
.tories -$1,412 I I -$1,412 I I -$1,412 I
53,571 SO I I $23,000 $26,577 -526,577 I SO I
$1,222,194 i $3,577 $36,638 i $1,020 I 50 $323.070 j $513,023 I $2,099,522 -$26,577 i $2,072,945
$1,415,417 I $41,474 $1,456,891 $1,456,891
57,099891 I l I 1 $166,775 57.266.666 I ( $7,266,666
cry-Dwellings 54.341 54,341 I $4,341
et I $148,938 $12,375 I $65,585 $226,898 $226,898
$709,752 I I I $709,752 I I $709,752
-$4,142,864 -512,130 -$156,658 -$4,311,652
$4,311,652
I $153,252 I i I $153,252 j I $153,252
:umulated I 55,388,727 SO I $245 SO SO ( $0 $117,176 I $5,506,148 '; SO $5,506,148
27
HOUSING AUTHORITY OF THE CITY OF SALINA
Salina, Kansas
FINANCIAL DATA SCHEDULE-(Continued)
Year Ended June 30,2016
14.870 14.239 !
Resident - 14.871
Project Opportunity I Housing 14.238 HOME ! I
Shelter Investment Business COCC Subtotal ELBA Total
Total and Choice ! I
Supportive Vouchers Plus Care Partnerships Activities j
Services Program
$5,388,727 I $0 $245 SO I $0 I $0 I $117,176 $5,506,148 SO $5506,148
$6,146 I i $1,146 I I I $3.125 $10,417 I $10,417 I
I ! I I 1 1 I
ow of Resources $6,617,067 $3,577 $38,029 $1,020 SO $323,070 $633,324 $7,616,037 -$26,577 $7,589,510
$5,568 ? $982 I I ( I $1,938 I $8,488 I $8.488
iyable I $22,951 I 1 54.266 I I I I $11,329 I $38,546 $38546
s-Curren $1,661 $176 ( 1 I $1,167 $3,004 j $3,004
mment $33,115 I I 1 $33,115 I I $33,115
$95,608 I I I $95.608 I $95.608
$5,908 I I $3 I I I $5.911 I 55.911
$13,805 i i SI,329 I i i i $15.134 i $15,134
$986 j $68 I I I $70 SI,I24 $1,124
$3,577 $23,000 I ( I $26,577 I -$26,577 I $0
$179.602 $3,577 j $29,821 S3 $0 I SO $14,504 i $227.507 -526,577 I $200,930
I
I $28,243 i $1,474 I I i i 529.717 I 529,717
s-Non Current r $14,951 j $1,584 $10,503 $27,038 j $27.038
abilities $187.685 I $34,992 $95,433 $318,110 i I $318,110
$230,379 $0 $38.050 $0 $0 I SO $105,936 I $374,865 i SO I $374.865
1 I I f I i I I
I $410,481 1 53,577 $67,871 I S3 I SO I SO I $120.440 I $602,372 -326,577 I S575395
I I I I I I I !
SO $0 I I I SO I $0 SO
-
ets $5,388,727 $245 I $117,176 $5,506,148 I $5,506,148
$27,390 I I I $27,390 I I $27,390
$817,859 ' SO -$57,477 I $1,017 I 50 I $323,070 $395,708 I $1,480,177 I $1,480,177
tion I $6,206,586 I SO -$29,842 I $1,017 I SO I $323,070 I $512,884 I $7,013,715 $0 I $7,013,715
I I I I
as of Resources
56,617,067 I 53,577 t $38,029 $1,020 I SO $323.070 ( $633,324 $7,616,087 -526,577 $7,589,510
28
HOUSING AUTHORITY OF THE CITY OF SALINA
Salina, Kansas
FINANCIAL DATA SCHEDULE-(Continued)
Year Ended June 30,2016
. 14.870 I14,239
Resident 14.871 14.238 HOME !
Project Opportunity Housing Shelter Investment I Business COCC Subtotal ELIM Total
Total I and Choice I Activities
Plus Care Partnerships I
Supponive Vouchers Program j
Services
$351.896 $351,896 $351.896
I I I I I
$64,873 I $64,873 564.873
$416,769 50 i SO i $0 I $0 I SO ! SO I $416,769 I SO i $416,769
I i
$476.821 $60,689 I $1.301,846 I $84377 I $74,393 I I $1,998,126 I I $1,998,126
$102.743 I I I $102,743 i $102,743
I I ( $159,311 1 $159.311 -$159,311 SO
$19,440 $19,440 -$19,440 $0
I I I I I $45,360 I 545,360 1 -$45,360 1 SO
I I I I I I I $224.111 I $224,111 I -$224,111 SO
I I
cted I $3,426 I $54 I I $2 ( $1.671 ! $2,001 I $7,154 I I $7,154
$8,876 3 I ( $8,876 I I $8.876
$9,127 i I $4,654 I $136 I I $35.737 J $49,654 -$39,252 $10,402
$1,008,886 I $60,689 I $1,315,430 $84,377 I $74,531 I $1,671 I $261,849 I $2,807,433 ( -$263,363 i $2,544,070
$85,272 I I $47,085 I I I $122,695 $255,052 $255,052
$5,564 I $1,688 I 1 $1,688 $8.940 I I $8.940
$111.316 I $46,896 $545 I $186 $368 I $159.311 -$159,311 I $0
$14,400 I $29,310 I $1.650 I I I I 545,360 I -545,360 i SO
-ns-Administrative 541,119 I $21,171 I I I $62,210 i $124,500 I 1 $124,500
I 540,983 . $18,471 I 53,332 $1,676 $8,183 I $72,645 -$39,252 $33,393
$7,239 I ( $126 ( $206 I S7,571 I $7,571
_ $943 $540 I $4.619 $6,102 $6,102
$20.717 i I $12,578 ! I 1 SO I $18,018 I $51,313 I 1 $51,313
:ive $327,553 SO $177,865 $5,527 SI.862 I $368 I $217,619 I $730,794 I -$243,923 5486,871
! I I I
$19.440 I I I fIf ( 519,440 I -$19,440 ' S0
I I $38,624 I i I I I $38,624 I $38,624
ars-Tenant ( $22,065 ( I I I $22,065 ( ( $22,065
. I 52.990 1 I I I I $2.990 1 I $2,990
$2,990 I $60.689 I SO SO I SO I SO I SO I $63,679 I $0 i $63,679
29
HOUSING AUTHORITY OF THE CITY OF SALINA
Salina,Kansas
FINANCIAL DATA SCHEDULE-(Continued)
Year Ended June 30,2016
i 14.870 14.239
Resident 14.871
14.238 HOME
Project O rtuni HousingI 1 Business
Total
P and 6 Choice I Shelter Investment COCC Subtotal ELIM Total
Plus Care Partnerships
Activities
Supportive Vouchers I 1 I
Services I j Program
$1,545 I ( ! $239 I $1.734 { i $1,784 !,
$6,519 I I $895 57,414 57.414
1 $3.887 I I i I 1 I $140 I $4,027 I 54.027 j
$1,452 $64 $1,516 I $1.516
$13,403 SO SO SO SO SO $1,338 $14,741 ! SO $14,741 j
I I I
aerations-Labor 1 $107,049 I I I I I I $107,049 i I $107,049
'aerations• I $41,689 $209 I I $579 I 542,477 $42,477
perations Contracts , $78,454 I I I I I 52,431 I $80,885 I $80,835 I
arts-Ordinaq i $65,132 I ( I ( $65,132 $65,132
j $292,324 I $0 I $209 I SO $0 I SO $3,010 I $295,543 j SO I $295,543 I
I i I I I
ontract Costs $80 $38 1-----1 $49 $167 $167
$80 I SO I $38 1 $0 I SO I SO I $49 I $167 I SO I $167
$80,437 I I I I I I $80,437 ` I 580.437
$1,702 I $405 I I i $621 $2.723 $2,728 I
$8,159 I $2,402 I 1 I $3,377 $13,938 i $13,938 I
$4,439 I I I I 1 I $610 I $5,049 I $5,049 I
- I $94,737 I $0 I $2,807 I $0 I S0 1 SO I $4,608 I 5102,152 I SO I $102.152 I
I j $554 1 I I I $554 1 5554
$33,115 I I I I $33,115 I $33.115 I
S9.298 I I I 1 $9,298 j S9,298
3 $42,413 I SO $554 I SO $0 $0 SO I 5- 96M I SO 542,967
I I I I I I I i I i
. I $792,940 I $60,689 I $181.473 I $5,527 I $1,862 I $368 I $226,624 I $1,269,483 -$263,363 I $1,006,120
over Operating I2
5_15,946 I $0 ! $1,133,957 j 578,850 I $72,669 51,303 $35,225 $1,537,950 SO 151,537,950
30
HOUSING AUTHORITY OF THE CITY OF SALINA
Salina, Kansas
FINANCIAL DATA SCHEDULE-(Continued)
Year Ended June 30,2016
14.870 i
14.239 i
Resident 14.871
14.238 HOME
Project Opportunity Housing I Business
Shelter Investment COCC Subtotal I EL IM Total
Total and Choice I Activities
Supportive Vouchers Plus Care Partnerships
Services Program
I I I $1,130,341 I $78,932 572.533 I SI,281,806 I 1.51281,806
$262,639 $469 $13,026 I $276134 5276,134
51,055.579 I 560.689 I $1,312,283 I $84,459 I $74,395 I $368 I $239,650 I $2,827,423 1 -$263,363 I $2,564,060
$95.000 I I ! I I I I $95,000 -$95,000 I SO
-$95,000 I 1 t i I -$95,000 $95,000 SO
Revenue OverI I
j -S46,693 SO $3,147 -$82 5136 51,303 $22,199 -$19,990 SO -$19,990
111 I
$6,253,279 SO -$32,989 I 51,099 -$136 $321.767 I 5490,685 I $7.033,705 57,033.705
I -557,232 1 I I I I -557,232 1 I -557,232
I ! I
s Equity I I I $27,390 I I I I I $27,390 , I $27.390
1896 4010 241 0 0 I 0 6147 6147
ed I 1869 I I 3915 I 241 I 0 I 0 0 I 6025 I 6025
$882,2625882,262 I I! $882,262
, $102,743 i I SO $102,743 I I $102,743
31
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL
STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Board of Commissioners
Housing Authority of the City of Salina
Salina,Kansas
I have audited, in accordance with the auditing standards generally accepted in the United States of America and the
standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller
General of the United States, the financial statements of the business-type activities of the Housing Authority of the
City of Salina(Authority), Kansas, as of and for the year ended June 30, 2016, and the related notes to the financial
statements, which collectively comprise the Authority's basic financial statements, and have issued my report
thereon dated November 1,2016.
Internal Control Over Financial Reporting
In planning and performing my audit of the financial statements, I considered the Authority's internal control over
financial reporting to determine the audit procedures that are appropriate in the circumstances for the purpose of
expressing my opinion on the financial statements, but not for the purpose of expressing an opinion on the
effectiveness of the Authority's internal control.Accordingly, I do not express an opinion on the effectiveness of the
Authority's internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or
employees, in the normal course of performing their assigned functions, to prevent, or detect and correct,
misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal
control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements
will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a
combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to
merit attention by those charged with governance.
My consideration of internal control was for the limited purpose described in the first paragraph of this section and
was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant
deficiencies. Given these limitations, during my audit I did not identify any deficiencies in internal control that I
consider to be material weaknesses. However,material weaknesses may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Authority's financial statements are free from material
misstatement, I performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant
agreements, noncompliance with which could have a direct and material effect on the determination of financial
statement amounts. However,providing an opinion on compliance with those provisions was not an objective of my
audit, and accordingly, I do not express such an opinion. The results of my tests disclosed no instances of
• noncompliance or other matters that are required to be reported under Government Auditing Standards.
32
Purpose of this Report
The purpose of this report is solely to describe the scope of my testing of internal control and compliance and the
results of that testing, and not to provide an opinion on the effectiveness of the Authority's internal control or on
compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards
in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any
otherth1p'u'rpose.
4," ,�
Shoaib!Char,CPA
Aatilt Sotatwri ', LLC
Chesterfield,Missouri
November 1,2016
33
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON
INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNFORM GUIDANCE
Board of Commissioners
Housing Authority of the City of Salina
Salina, Kansas
Report on Compliance for Each Major Federal Program
I have audited the City of Housing Authority of the City of Salina(Authority), Kansas's compliance with the types
of compliance requirements described in the OMB Compliance Supplement that could have a direct and material
effect on each of the Authority's major federal programs for the year ended June 30, 2016. The Authority's major
federal program is identified in the summary of auditor's results section of the accompanying schedule of findings
and questioned costs.
Management's Responsibility
Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants
applicable to its federal programs.
Auditor's Responsibility
My responsibility is to express an opinion on compliance for each of the Authority's major federal programs based
on my audit of the types of compliance requirements referred to above. I conducted my audit of compliance in
accordance with auditing standards generally accepted in the United States of America; the standards applicable to
financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United
States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards
and the Uniform Guidance require that I plan and perform the audit to obtain reasonable assurance about whether
noncompliance with the types of compliance requirements referred to above that could have a direct and material
effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the
Authority's compliance with those requirements and performing such other procedures as I considered necessary in
the circumstances.
1 believe that my audit provides a reasonable basis for my opinion on compliance for each major federal program.
However,my audit does not provide a legal determination of the Authority's compliance.
Opinion on Each Major Federal Program
In my opinion,the Housing Authority of the City of Salina, Kansas,complied, in all material respects,with the types
of compliance requirements referred to above that could have a direct and material effect on each of its major federal
programs for the year ended June 30,2016.
Report on Internal Control Over Compliance
Management of the Authority, is responsible for establishing and maintaining effective internal control over
compliance with the types of compliance requirements referred to above. In planning and performing my audit of
compliance. I considered the Authority's internal control over compliance with the types of requirements that could
have a direct and material effect on each major federal program to determine the auditing procedures that are
appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal
program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but
not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, I
do not express an opinion on the effectiveness of the Authority's internal control over compliance.
34
A deficiency in internal control over compliance exists when the design or operation of a control over compliance
does not allow management or employees, in the normal course of performing their assigned functions, to prevent,
or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis.
A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal
control over compliance, such that there is a reasonable possibility that material noncompliance with a type of
compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A
significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in
internal control over compliance with a type of compliance requirement of a federal program that is less severe than
a material weakness in internal control over compliance, yet important enough to merit attention by those charged
with governance.
My consideration of internal control over compliance was for the limited purpose described in the first paragraph of
this section and was not designed to identify all deficiencies in internal control over compliance that might be
material weaknesses or significant deficiencies. I did not identify any deficiencies in internal control over
compliance that I consider to be material weaknesses. However, material weaknesses may exist that have not been
identified.
The purpose of this report on internal control over compliance is solely to describe the scope of my testing of
internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance.
Accordingly,this report is not suitable for any other purpose.
Shoaib Khar,CPA
Aud(ttSo uttoiw,, LLC
Chesterfield, Missouri
November 1.2016
35
HOUSING AUTHORITY OF THE CITY OF SALINA
Salina, Kansas
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
June 30.2016
Section I-Summary of Auditor's Results
Financial Statements
Type of auditor's report issued: Unqualified
Internal control over financial reporting:
> Material weakness(es)identified? No
> Significant deficiency(ies)identified? No
Noncompliance material to financial statements noted? No
Federal Awards
Internal control over major programs:
> Material weakness(es)identified? No
> Significant deficiency(ies)identified? No
Type of auditor's report issued on compliance for major programs: Unqualified
Any audit findings disclosed that are required to be reported in accordance
with 2 CFR 200.516(a)? No
Identification of major programs:
> CFDA#14.871 Housing Choice Voucher
Dollar threshold used to distinguish between type A and type B programs: S750,000
Auditee qualified as low-risk auditee? Yes
Section II- Financial Statement Findings
The current audit report for the year ended June 30,2016 disclosed no Financial Statement audit fording.
Section III-Federal Award Findings and Questioned Costs
The current audit report for the year ended June 30,2016 disclosed no Federal Awards audit fording and questioned
costs.
36