Loading...
Audit - 1973/1974 HOUSING AUTHORITY OF SALINA Salina, Kansas FINANCIAL STATill1ENTS June 30, 1974 WOODS & DURHAM Certified Public Accountants Salina, Kansas Schedule 1 Schedule 2 Schedule 3 Schedule 4 Schedule 5 Schedule 6 Schedule 7 HOUSING AUTHORITY OF SALINA Salina, Kansas INDEX Accountant's Report. . . . . . . . . . . . Comments on Compliance and Internal Control. Findings, Recommendations and Replies. General Comments. . . . . Combined Balance Sheet. . . . . Analysis of Surplus. . . . . . . . . . . . . Statement of Initial Operating Period Income and Expense..................... Statement of Income and Expense - LHA Leased Computation of Haximum Fixed Annual Contribution (Total Deficit and Basic Annual Contribution Earned) - Leased Housing. . . . . . . . . . . . . . . . . . . . Journal Entries. . . . . . . . . . . . . . . . . . Analysis of General Funds Available for Reduction of Annual Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page Number 1 2 3- 4 5 6 7 8 9 10 11-13 14 WOODS & D U R H A M- é)l/i"ceJ ù¡ !l'UI;llfl c{:lu!f Cfr'llld $('1,,;/ 7ie¡/;f'ed .ý},I//c . ~lcCt;(OIlalll.j 605 W. NORTH STREET P. O. BOX 1324 TELEPHONE - AREA 913, TAYLOR 5-5494 SALINA, KANSAS, 67401 October 1, 1974 Board of Commissioners Housing Authority of the City of Salina Salina, Kansas 67401 Regional Inspector General for Audit Office of Inspector General Dept. of Housing & Urban Development Kansas City, Missouri 64106 We have examined the combined balance sheet of the Housing Authority of the City of Salina pertaining to its low-rent housing program at June 30, 1974, and the related statements of income and expenses, and analysis of surplus for the thirty-six months then ended. Our examination was made in accordance with generally accepted auditing standards and the audit requirements set forth in the Department of Housing and Urban Development Audit Guide for the Low-Rent Housing Program and accordingly included such testso.f the accounting records and other auditing procedures as we considered necessary in the cir- cumstances. In our opinion, the above-mentioned financial statements present fairly the financial position of the Housing Authority of the City of Salina with res- pect to its low-rent housing program at June 30, 1974, and the results of its operations for the thirty-six months then ended in conformity with gen- erally accepted accounting principles applied on a basis consistent with prior periods and with HUD procedures. We have made comments on compliance matters and have furnished supplementary financial information in accordance with the requirements of the HUD Audit Guide for the Low-Rent Housing Program. The supplemental financial informa- tion has been tested by us as a part of our auditing procedures followed in the examination of the financial statements mentioned above and, in our opinion, it is fairly stated in all material respects in relation to the financial statements taken as a whole. WOODS & DURHAM /¡}¿U¿U,l .~~~, Certified Public Accountants 1. COMMENTS ON COÞPLIANCE NfD INTEm~AL CONTROL 1. Based on our tests of transactions and examination of records, we be- lieve that the Housing Authority of the City of Salina has complied with the following: a. b. The financial terms and conditions of the contracts. The regulations, policies and procedures prescribed by the Department regarding the Low-Rent Housing Program. The financial regulations a~d procedures prescribed by management and those of its governing board. c. 2. As a part of our examination, we reviewed and tested the Authority's system of internal accounting control to the extent we considered nec- essary to evaluate the system as required by generally accepted auditing standards. Under these standards the purpose of such evaluation is to establish a basis for reliance thereon in determining the nature, timing, and extent of other auditing procedures that are necessary for expressing an opinion on the financial statements. Additionally, our examination included procedures necessary in our judgment to determine compliance with contractual terms and conditions and regulations, policies, and procedures prescribed by HUD and by mai1agement and the governing board of the Authority, insofar as such compliance review was necessary under the provisions listed as "A" through "Q" under "Requirements" in the HUD Audit Guide for the Low-Rent Housing Program. Our study and evaluation of the Authority's system of internal accounting control and our review of its compliance with contractual terms, regulations, policies, and procedures which was made for the purpose set forth in the paragraph above, disclosed no conditions that we believe to be material weak- nesses or evidence of noncompliance except for inherent lilnitations resulting from a small number of employees. 2. FINDINGS, RECO~~NDATIONS AND REPLIES Security for Uninvested Funds - Contract ~C1029 The Low-Rent Housing Authority had monies on deposit that were not pro- perly secured as required by Chapter 6, Section 2 of RHA 7510.1, Low- Rent Housing Accounting Handbook, during the period February, 1973, through June, 1974. . The uninvested funds during the above period were a minimum of $24,948.13 to a high of $286,837.06. The uninvested balance at June 30" 1974, was $29,083.06. The only security offered by the bank was $20,000.00 of F.D.r.C. coverage. Recommendation We recommend the bank be asked to pledge securities to cover the amount of uninvested funds on deposit. Reply We understood we had enough security pledged to cover uninvested funds. We will ask for securities to be pledged to cover uninvested funds. Excess Funds Not Fully Invested - Contract KC1O29 The Low-Rent Housing Authority had on deposit at June 30, 1974, uninvested funds of $29,083.06. This amount appeared to be in excess of the amount required for estimated needs for the next 90 days. This matter was discussed with the authority and we found one house was yet to be purchased from FHA and the authority had anticipated the house costing approximately $15,000.00 and vJOuld have been purchased by June 30, 1974. Initial Advance to Revolving Fund to Cover Estimated Share of Joint Costs for One Months Expenditures The local authority has established a revolving fund for the payment of joint costs applicable to various projects, as provided by Chapter 5, RHA 7510.1, Low-Rent Housing Accounting Handbook, and Chapter 1, Section 3, RHA 722l.1, Urban Renewal Handbook Accounting. The local authority has not deposited in the revolving fund an initial advance for the payment of expenditures applicable to contract KCI029, Project Kans. 38-2. 3. FINDINGS, RECOMMENDATIONS AND REPLIES (Cont'd.) Recommendation We recommend the authority deposit in the revolving fund an initial advance equal to one month's expenditures. Reply We will make an initial advance as provided by the Low-Rent Housing Accounting Handbook, RHA 7510.1, Chapter 5, Section 1. 4. GENERAL COMVillNTS The local authority administered Low-Rent Housing Programs under the following contracts: Project Number and Name Contract Number Contract Status Kansas 38-1 Leased Housing FW-1114 Dated 7-16-68 as amended 9-16169,. Fixed Annual Contribution of $172,152.00 Kansas 38-2 Owned Housing KC-1029 Dated 9-18-72 Initial Operating Period Ends 7-31-74 5. HOUSING AUTHORITY OF SALINA Salina, Kansas COMBINED BALANCE SHEET June 30, 1974 Schedule 1 Annual Contribution Contract FW-1114 KC-1029 ASSETS -- Cash in bank Accounts receivable Deferred charges Land, structures and equipment $14,656.21 8,798.65 TOTAL ASSETS $23, 451~. 86 LIABILITIES AND SURPLUS Accounts payable Accrued liabilities Notes payable $1l,074.86 TOTAL LIABILITIES 11,074.86 Surplus (Deficit) - Schedules 2 and 3 12,380.00 $23,454.86 TOTAL LIABILITIES AND SURPLUS $ 29,052.77 228.07 5,440.47 775,627.66 $810,348.97 $ 6,598.16 2,045.53 805,010.84 813,654.53 (3,305.56) $810,348.97 6. HOUSING AUTHORITY OF SALINA Salina, Kansas ANALYSIS OF SURPLUS Thirty-six Months Ended June 30, 1974 Annual Contribution Contract FW 1114 UNRESERVED SURPLUS Balance at June 30, 1971, deficit Deficit year ended June 30, 1972 Provision for operating reserve for year ended June 30, 1972 Deficit for year ended June 30, 1973 Provision for reduction of operating reserve for year ended June 30, 1973 Deficit for year ended June" 30, 1974 Provision for operating reserve for year ended June 30, 1974 BALANCE JUNE 30, 1974 RESERVED SURPLUS Balance June 30, 1971 Provision for operating reserve for year ended June 30, 1972 Provision for reduction of operating reserve for year ended June 30, 1973 Provision for operating reserve for year ended June 30, 1974 BLANACE JUNE 30, 1974 CUMULATIVE CONTRIBUTIONS Balance June 30, 1971 Basic annual contribution for year ended June 30, 1972 Basic annual contribution for year ended June 30, 1973 Basic annual contribution for year ended June 30, 1974 BALANCE JUNE 30, 1974 TOTAL SURPLUS JUNE 30, 1974 Schedule 2 $(190,608.52) (96,032.32) (7,448.00) (92,997.45) 2,490.00 (71,650.31) ---D..1..672. oq) (459,918.60) 3,750.00 7,448.00 (2,490.00) 3,672.00 12,380.00 190,608.52 103,480.32 90,507.45 75,322.31 459,918.60 $ 12,380.00 7. HOUSING AUTHORITY OF SALINA Salina, Kansas STATEÞŒNT OF INITIAL OPERATING INCOME AND EXPENSES For The Period Ended June 30, 1974 Schedule 3 Annual Contribution Contract KC-I029 Project No. Kans. 38-2 INITIAL OPERATING INCOME Dwelling rental Other income $ 20,950.67 170.00 TOTAL INITIAL OPERATING INCOME 21,120.67 INITIAL OPERATING EXPENSES Administration Utilities Ordinary maintenance and operation General expense 15,951. 59 267.30 4,706.89 3,500.45 TOTAL INITIAL OPERATING EXPENSES 24,426.23 NET OPERATING DEFICIT $ 0,305.56) TI1e initial operating period for this project ends July 31, 1974. 8. HOUSING AUTHORITY OF SALINA Salina, Kansas STATR~NT OF INCOME AND EXPENSES - LHA LEASED Thirty-six Months Ended June 30, 1974 Schedule 4 Kans. 38-1 Fiscal Years Ended June 30 1972 1973 1974 INCOME Dwelling rentals $ 60,305.89 $ 58,893.47 $ 42,317,.24 $161,516.60 Interest on general fund investments 919.50 919.50 Other income 619.00 494.50 275.00 1,388.50 TOTAL OPERATING INCOME 61,844.39 59,387.97 42,592.24 163,824.60 OPERATING EXPENSES Administration 15,571. 07 14,913.29 15,583.81 46,068.17 Utilities 242.60 289.99 360.75 893.34 Ordinary maintenance and operation 896.18 1,064.84 2,094.80 4,055.82 General expense 1,166.82 1,219.24 924.87 3,310.93 Non-routine maintenance 1,098.37 1,450.00 2,548.37 Rent to owners of leased dwellings 138,901. 67 134,898.06 93,828.32 367,628.05 TOTAL OPERATING EXPENSES 157,876.71 152,385.42 114,242.55 424,504.68 NET LOSS $ 96,032.32 $ 92,997.45 $ 71,650.31 $260,680.08 Total 9. HOUSING AUTHORITY OF SALINA Salina, Kansas COMPUTATION OF MAXIMUM FIXED ANNUAL CONTRIBUTIONS LEASED HOUSING Schedule 5 Project No. Kans. 38-1 Annual Contributions Contract FH 1114 Year Ended June 30, 1974 Daily Rate No. of Maximum of Fixed Annual Unit Days Fixed Annual Size of Unit Contribution Under Lease Contribution One Bedroom Unit 1. 75068 3435 $ 6,013.57 Two Bedroom Unit 2.18904 18389 40,254.25 Three Bedroom Unit 2.62739 9075 23,,843.56 Four Bedroom Unit 3.27671 4501 14:,748.47 Five Bedroom Unit 3.72054 1130 4,,204.21 MAXIMUM FIXED ANNUAL CONTRIBUTION $89,,064.06 COMPUTATION OF TOTAL DEFICIT fu~ BASIC ANNUAL CONTRIBUTION EARNED LEASED HOUSING Project No. Kans. 38-1 Annual Contribution Contract FW 1114 Year Ended June 30, 1974 Maximum Fixed Annual Contribution - per above $89,064.06 $71,650.31 Net loss - Schedule 4 Net capital expenditures Maximum allowable operating reserve TOTAL DEFICIT ~_672. 00 $75,322.31 BASIC ANNUAL CONTRIBUTION $75,322.31 10. HOUSING AUTHORITY OF SALINA Salina, Kansas JOURNAL ENTRIES June 30, 1974 Annual Contribution Contract FW-1114, Project Kans. '38-1 (1) Fixed Annual Contribution Debit Amortization Funds - Annual Contri- butions Receivable Surplus - Cumulative HUD Annual Contributions To adjust annual contributions receivable to computed balance due on HUD contributions for year ended June 30, 1974, and to close fixed annual contribution account to surplus - cumulative h~D annual contributions (2) Unreserved Surplus Reserved Surplus - Operating Reserve - Leased To record increase in reserved surplus for the year ended June 30, 1974 Account Number 8010 1176 2840 2810 2840 D,ebit -- $89,064.06 3,672 . 00 Annual Contribution Contract KC 1029, Project Kans. 38-2 (1) Sites Net Income/Payment in Lieu of Taxes Accrued Liabilities - Payments in Lieu of Taxes To record amounts due for payments in lieu of taxes through 6-30-74, not previously recorded (2) Property Purchases Project Loan Notes To reclasify receipt from HL~ on 12-6-73 credited in error to property purchases account 1440.20/4520 2137 1440.1 2122 2,045.53 200,000.00 Schedule 6 Credit -- $81,930.75 7,133.31 3,672 . 00 2,045.53 200,000.00 11. HOUSING AUTHORITY OF SALINA Salina, Kansas JOURNAL ENTRIES June 30, 1974 (3) Deferred Charges - Prepaid Insurance Ordinary Maintenance & Operation - Labor Ordinary maintenance & Operation - Materials Accounts payable Other To record additional accounts payable at June 30, 1974 (4) Deferred Charges - Insurance Deposits Insurance To record estimated portion of insurance deposits premiums to be refunded (5) Deferred Charges - Prepaid Insurance Insurance To record portion of insurance premiums prepaid and not earned at 6-30-74 (6) Non-technical Salaries Travel Telephone and telegraph Sundry Administrative Ordinary Maintenance and Ordinary Maintenance and Ordinary Maintenance and Insurance Employee Benefits Dwelling Rentals Reserve Surplus - Operating Reserve Operation - Labor Operation - Materials Operations - Contract To eliminate journal entry June 30, 1973, closing income and expense accounts as initial operating period has not ended Account Number 1211 4410 4420 2119 1212 4510 1211 4510 4110 4150 4180 4190 4410 4420 4430 4510 4540 3110 2820 Debit -- $ 955.00 298.45 87. 72 3,251. 00 1,234.47 2,448.66 8.41 91. 81 797.53 32.20 8.09 .59 1,746.00 139.24 Schedule 6 (Cont'd.) Credit $ 1,341.17 3,251. 00 1,234.47 1,707.50 3,565.03 12. HOUSING AUTHORITY OF SALINA Salina, Kansas JOURNAL ENTRIES June 30, 1974 (7) Ordinary Maintenance and Operations - Labor Accounts payable - Security Deposits To eliminate credit on check 36 voided and replaced with duplicate check No. 121 Account Number 4410 2114 Debit -- $ 16.50 Schedule 6 (Cont'd.) Credit $ 16.50 13. HOUSING AUTHORITY OF SALINA Salina, Kansas ANALYSIS OF GENERAL FUN~S AVAILABLE FOR REDUCTION OF ANNUAL CONTRIBUTIONS June 30, 1974 Schedule 7 TOTALS FW 1114 KC 1029 $ $805,010.84 778,933.22 $ $ 26,077.62 (1) $ 14,656.21 $ 29,052.77 8,798.65 228.07 .,.. 5,440.47 $ 23,454.86 $ 34,721. 31 Development advances Development costs EXCESS ADVANCES CASH AND OTHER ASSETS Cash Accounts receivable Deferred charges LIABILITIES, RESERVES AND AMOUNTS FOR CONTRIBUTION REDUCTION Accounts payable Accrued liabilities Operating reserves Excess development funds AVAILABLE TOTALS $ 11,074.86 $ 6,598.16 2,045.53 12,380.00 26,077.62 $ 23,454.86 $ 34,721. 31 (1) Details of Development Advances and Costs to Date Proj ect Kans. 38-2 Advances Project notes - Non-HUD Development costs Real estate Operating loss to date in this initial operating period $805,010.84 $775,627.66 3,305.56 778,933.22 Excess Funds Provided $ 26,077.62 The initial operating period of Project Kans. 38-2 ends on July31, 1974. There- fore the development advances and development costs are not the final certified actual development costs. 14.