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Audit - 1990/1991 HOUSING AUTHORITY OF THE CITY OF SALINA Salina, Kansas Annual Contributions Contract FW-1114 Project Kansas 38-2 & 38-3 FINANCIAL STATEMENTS Twelve Months Ended June 30, 1991 JOHN M. MIDDLETON CERTIFIED PUBLIC ACCOUNTANT 8340 Mission Road Suite 235 Prairie Village, Kansas 66206 (913) 648-3687 HOUSING AUTHORITY OF THE CITY OF SALINA Salina. Kansas TABLE OF CONTENTS EXHIBIT PAGE Accountant's Report 1-2 FINANCIAL STATEMENTS Balance Sheet at June 30, 1991 Statements of Income and Expenses - Twelve Months Ended June 30, 1991 A 3-4 B 5-6 C 7-8 Analysis of Surplus - Twelve Months Ended June 30, 1991 SUPPLEMENTARY INFORMATION Schedule of Federal Financial Assistance for the Twelve Months Ended June 30, 1991 C (1) 9 Computation of Residual Receipts and Accruing Annual Contributions D 10-12 Actual Development Costs - Completed F(l) F(2) 13 Reconciliation of Development Funds 14 Analysis of General Funds Available for Reduction of Annual Contributions G 15-16 Notes to the Financial Statements 17-18 Report on Compliance to Laws and Regulations 19 Report on Accounting and Administrative Internal Controls 19-20 Findings, Recommendations and Replies 21 Journal Entries 22 JOHN M. MIDDLETON CERTIFIED PUBLIC ACCOUNTANT 8340 MISSION ROAD - SUITE 235 PRAIRIE VILLAGE. KANSAS 66206 913-&4.8-3687 Board of Directors Salina Housing Authority P.O. Box 1202 Salina, Kansas 67402-1202 Department of Housing and Urban Development National Review Center 950 N. King's Highway Cherry Hill, New Jersey 08034-1518 Independent Auditor's Report I have audited the accompanying balance sheet of the Housing Authority of the City of Salina, Kansas as of June 30, 1991 and the related statements of income and expenses and analysis of surplus for the year then ended. These financial statements are the respon:sibil ity of the Housing Authority's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with generally acGepted auditing standards, Government Auditing Standards, and OMB Circular A-128. 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 includes examin:lng, on a test basis, evidence supporting the amounts and disclosures in the finan- cial statements. An audit also includes assessing the accounting principles used and the overall financial statement presentation. I believe that my audit provides a reasonable basis for n~ opinion. As described in Note A, these financial statements were prepared in conformity with the accounting practices prescribed or permitted by the Department of Housing and Urban Development, which is a comprehen- sive basis of accounting other that generally accepted accounting principles. In my opinion, the financial statements referred to above present fairly, in all material respects, the assets, liabilities, and surplus of the Housing authority of the City of Salina. Kansas. as of June 30, 1991 and the results of its operations and its changes in surplus for the twelve months then ended. on a basis of accounting described in Note A. The supplemental financial information as listed in the Table of Contents has been tested by me as a part of my auditing procedures followed in the examination of the financial statements mentioned above. and in my opinion, it is fairly stated in 1:111 material respects in relation to the financial statements taken as a whole. (continued) This report is intended solely for the information ônd use of the Board of Directors, Management of the Housing Authority of the City of Salina, and the Department of Housing and Urban Development and should not be used for any other purpose. rCtfj~ ohn M. Middleton ertified Public Accountant September 19, 1991 Prairie Village, Kansas 66206 Exh:,bìt A HOUSING AUTHORITY OF THE CITY OF SALINA Sallna. Kansas BALANCE SHEET As of June 30, 1991 Annual Contribution Contract FW-1114 Project Kansas 38-2 & 38-3 Low Rent ASSETS Cash Petty Cash Accounts Receivable Accounts Receivable Accounts Receivable Accounts Receivable Investments HUD Annual Contributions Receivable Prepaid Insurance Development Costs Development Costs - Contra Land, Structures and Equipment $ 27,577.34 50.00 8:32.81 1.211.76 7,523.56 185.00 51, 921. 57 67,888.11 4,128.47 2,497,739.57 (2,497,739.57) 2,526.508.71 - Tenants - Section 8 - Voucher - Section 8 - Certificate Other -------------- TOTAL ASSETS $ 2,687,827.33 ============== LIABILITIES AND SURPLUS Tenants Security Deposits Other Accounts Payable Interest Payable - Development Tenant's Prepaid Rents PILOT Permanent Notes - HUD Permanent Notes - FFB Permanent Notes - FFB - Retired Notes Dropped from Security Ledger $ 8,387.00 3,625.65 69,014.93 364.08 10,126.35 1,192,692.84 925..423.04 (133,645.20) 19,346.65 ---------.----- TOTAL LIABILITIES $ 2.095,3.35.34 Surplus - Exhibit C 592.491.99 --------------- TOTAL LIABILITIES AND SURPLUS $ 2,687.827.33 ---------.----- --------------- SEE ATTACHED INDEPENDENT AUDITOR'S REPORT NOTES AR~ AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS - 3 - Exhibit A - Section 8 HOUSING AUTHORITY OF THE CITY OF SALINA Salina. Kansas BALANCE SHEET As of June 30. 1991 Annual Contribution Contract FW-1114 Project Kansas 38-2 & 38-3 Section 8 ASSETS Certificate Cash Investments Land, Structures and Equipment $ 37,380.84 30,604.88 9,053.40 ----------- TOTAL ASSETS $ 77,039.12 ----------- ----------- LIABILITIES AND SURPLUS Payable to HUD Payable to Low Rent $ 13,507.93 7,523.56 ----------- TOTAL LIABILITIES $ 21,031.49 56,007.63 Surplus(Deficit) - Exhibit C - Section 8 TOTAL LIABILITIES AND SURPLUS ----------- $ 77,039.12 ----------- ----------- Voucher $ 11,839.50 799.88 ------------ $ 12,639.38 ------------ -------.---- $ 12, 08:5 . 79 1, 211. 76 ------------ $ 13,297.55 ( 65H.17) ------------ $ 12,639.38 ------------ ------------ SEE ATTACHED INDEPENDENT AUDITOR'S REPORT NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS - 4 - Exhibit B HOUSING AUTHORITY OF THE CITY OF SALINA Salina. Kansas STATEMENT OF INCOME AND EXPENSES Twelve Months Ended June 30. 1991 Annual Contributions Contract FW-1114 Project Kansas 38-2 & 38-3 Low Rent OPERATING INCOME Dwelling Rental Interest on General Fund Investments Other Income $ 108,325.31 3,506.31 6,088.07 ------------ TOTAL OPERATING INCOME - Exhibit D OPERATING EXPENSES $ 117,919.69 Administration Utilities Ordinary Maintenance and Operations General Expense Non-Routine Maintenance $ 28,182.80 5,205.43 59,821. 29 35,056.41 20,961. 24 --------.---- TOTAL OPERATING EXPENSE - Exhibit D $ 149,22'7.17 ---------.---- NET INCOME (LOSS) BEFORE OTHER CHARGES OTHER CHARGES $ ( 31, 30'7.48) Prior Period Adjustment Affecting Residual Receipts Prior Period Adjustment Not Affecting Residual Receipts Loss from Disposition of Nonexpendable Equipment Interest on Notes and Bonds Payable $ 3,622.53 66,267.30 $ 9,516.02 53,22~5.10 -------------- TOTAL OTHER CHARGES $( 132,630.95) -------------- NET INCOME (LOSS) - Exhibit C $( 163,93e.43) -------------- -------------- SEE ATTACHED INDEPENDENT AUDITOR'S REPORT NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS - 5 - Exhibit B - Section 8 HOUSING AUTHORITY OF THE CITY OF SALINA Salina. Kansas STATEMENT OF INCOME AND EXPENSES Twelve Months Ended June 30, 1991 Annual Contributions Contract FW-1114 Project Kansas 38-2 & 38-3 Section 8 OPERATING INCOME Interest Earned on Investments Operating Reserve General Fund $ 2.547.65 793.16 $ 193.05 ------------ ------------- TOTAL OPERATING INCOME $ 3,340.81 $ 193.05 OPERATING EXPENSES Administration Housing Assistance Payments Independent Public Accountant Costs $ 74,166.32 507,943.89 608.60 $ 5,464.43 25,021. 00 ------------ ------------- TOTAL OPERATING EXPENSE - Exhibit D $ 582,718.81 $ 30,485.43 ------------ ------------- NET INCOME (LOSS) BEFORE OTHER CREDITS AND CHARGES OTHER CREDITS $( 579,378.00) $( 30,292.38) Prior Period Adjustment Affecting Residual Receipts $ 5,563.10 ------------- TOTAL OTHER CREDITS $ 5,563.10 ------------- OTHER CHARGES Loss on Disposition of Non-Expendable Equipment $ 1.135.43 ------------- TOTAL OTHER CHARGES $ 1,135.43 ------------- NET INCOME (LOSS) - Exhibit C $( 574.950_33) $( 30,292.38) ------------- ------------- ------------- ------------- SEE ATTACHED INDEPENDENT AUDITOR'S REPORT NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS - 6 - Exhibit C HOUSING AUTHORITY OF THE CITY OF SALINA Salina. Kansas ANALYSIS OF SURPLUS Twelve Months Ended June 30, 1991 Annual Contributions Contract FW-1114 Project Kansas 38-2 & 38-3 UNRESERVED SURPLUS Balance, Audit June 30, 1990 Net Income (Loss) for the Year Ended June 30, 1991 - Exhibit B (Provision For) Reduction of Operating Reserve - Exhibit D $ (1 ,469,028.78) 163,938.43) 6,778.55 ------------- BALANCE AT JUNE 30, 1991 $ (1 , 626,188.66) ============= RESERVED SURPLUS OPERATING RESERVE Balance Per Audit/Books at June 30, 1990 Reduction of Operating Reserve $ ( 71,434.21 6,778.55) ----------.---- BALANCE AT JUNE 30, 1991 $ 64,655.66 ==========,==== CUMULATIVE CONTRIBUTIONS Balance Per Audit/Books at June 30, 1990 Accruing Annual Contributions Year Ended June 30, 1991 - Exhibit D HUD Operating Subsidy - Exhibit D HUD Note Cancellation Interest Cancelled Note Cancelled by Sale $ 1,753,300.08 67,88B.11 38, 07~5. 00 225,894.50 66,267.30 2,600.00 --------------- BALANCE AT JlmE 30, 1991 $ 2,154,024.99 =============== TOTAL SURPLUS - Exhibit A $ 592,491.99 =============== SEE ATTACHED INDEPENDENT AUDITOR'S REPORT NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS - 7 - Exhibit C - Section 8 HOUSING AUTHORITY OF THE CIT! OF SALINA Salina. Kansas ANALYSIS OF SURPLUS Twelve Months Ended June 30. 1991 Annual Contributions Contract FW-1114 Project Kansas 38-2 & 38-3 UNRESERVED SURPLUS Section 8 Certificate Book Balance, June 30, 1990 $(4,063,061.61) Prior Period Adjustment Subsequently Posted ( 329.72) -------------- Audit Balance, June 30 1990 Net Income (Loss) for the Year June 30, 1991 - Exhibit B (Provision For) Reduction of Operating Reserve - Exhibit D (Provision For) Reduction of Project Fund - Exhibit D Voucher $(4,063,391.33) Ended ( 574,950.33) $( 30,292.38) ( 9,926.17) 78.116.18) -------------- BALANCE AT JUNE 30, 1991 1,458.05 (112,122.79) ----------- ------------- ------------- $(4,726,384.01) $(140,957.12) ----------- ----------- RESERVED SURPLUS OPERATING RESERVE Balance Per Audit/Books at June 30, 1990 Provision for Operating Reserve $ 37,028.06 9,926.17 -------------- BALANCE AT JUNE 30, 1991 $ 46,954.23 -------------- -------------- PROJECT FUND Balance per Audit/Books at June 30, 1990 Provision for Project Account $ 718,897.67 78,116.18 ------------- BALANCE AT JUNE 30, 1991 $ 797.013.85 ------------- ------------- CUMULATIVE CONTRIBUTIONS Balance Per Audit/Books at June 30, 1990 $ 3.349,632.49 Accruing Annual Contributions Year Ended June 30. 1991 - Exhibit D 588,791.07 -------------- BALANCE AT JUNE 30, 1991 $ 3.938.423.56 -------------- -------------- TOTAL SURPLUS - Exhibit A $ 56,007.63 -------------- -------------- $ ( 1,458.05) --.--------- $( 1,458.05) --.--------- --.--------- $ 112,122.79 --.--------- $ 112,122.79 --.--------- --.--------- $ 29,634.21 ------------ $ 29,634.21 ------------ ------------ $ ( 658.17) ------------ ------------ SEE ATTACHED INDEPENDENT AUDITOR'S REPORT NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS - 8 - SUPPLEMENTARY INFORMATION Exhibit C (1) HOUSING AUTHORITY OF THE CITY OF SALINA Salina. Kansas SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE For the Twelve Months Ended June 30, 1991 Annual Contributions Contract FW-1114 Project Kansas 38-2 & 38-3 Federal Grantor: U.S. Department of Housing and Urban Development Federal [FDA: 14.850 Low Income Housing Federal [FDA: 14.156 Section 3 Housing ProQraiA Title: Program Amount Beginning Balance July 1, 1990 Receipts Endi n9 Balance Disbursements June :;0, 1991 ------------ ------------- -------------- ------------- ------.---------- HUD Operating Subsidy Annual Contributions Contract f 67,883.11 Housing Authority Operations 0.(10 0.00 71,434.21 38,075.(10 67,388.11 117,919.69 33,075.00 67,888.11 124,693.24 0.00 0.00 b4~655.66 ------------ ------------- -------------- ------------- --------------- TOTAL LOW INCOME $ 67,338.11 71,434.21 223,882.80 230,661. 35 641655.66 Section 3 Annual Contribution - Cert. $ 629,823.00 0.00 588,791.07 588,791. 07 0.00 Annual Contribution - Vouch. 147,757.00 0.00 29,634.21 29,634.21 0.00 Housing Authority Operations Certificate 37,028.06 3,340.81 ( 6,585.36) 46,954,23 Voucher 0.00 193.05 1,651.10 ( 1,458.05) ------------- ------------- ------------- -------------- ------------ TOTAL SECTION 3 $ 777,580.00 37,028.06 621,959.14 613,491.02 45,496.18 TOTAL FEDERAL ASSISTANCE $ 845,468.11 $ 108,462,27 $ 845,841.94 $ 844,152.37 $ 110,151.84 ------------ ------------- ------------- ------------- ------------- ------------ ------------- ------------- ------------- ------------- SEE ATTACHED INDEPENDENT AUDITOR'S REPORT NOTES ARE AN INTEGRAL PAHT OF THESE FINANCIAL STATEMENTS - 9 - HOUSING AUTHORITY OF THE CITY OF SALINA Salina, Kansas Exhibit D COMPUTATION OF RESIDUAL RECEIPTS AND ACCRUING ANNUAL CONTRIBUTIONS Twelve Months Ended June 30, 1991 Annual Contributions Contract FW-1114 Project Kansas 38-2 & 38-3 OPERATING RECEIPTS Operating Income - Exhibit B HUD Subsidy - Exhibit C TOTAL OPERATING RECEIPTS OPERATING EXPENDITURES Operating Expenses - Exhibit B Capital Expenditures: Replacement of Nonexpendable Equipment Property Betterments and Additions Prior Period Adjustment Affecting Residual Receipts TOTAL OPERATING EXPENDITURES Residual Receipts (Deficit) per Audit Audit Adjustment Backed Out Residual Receipts per LHA Before Provision for Reserve Provision for (Reduction of) Operating Reserve - Exhibit C RESIDUAL RECEIPTS PER LHA ACCRUING ANNUAL CONTRIBUTIONS Fixed Annual Contributions For Year Ended June 30, 1991 ACCRUING ANNUAL CONTRIBUTION - Exhibit C $ 117,919.69 38,075,00 ------------- $ 155,994.69 $ 149,227.17 596.97 7,405.00 3,622.53 ---------.---- $ 160,851. 67 ---------.---- $( ( 4,856.98) 1,921.57) ------------- $( 6,77B.55) 6,77B.55 -------------- $ D.OO -------------- $ 67,88B.11 -------------- $ 67,88(3.11 -------------- -------------- SEE þ,TTACHED INDEPENDENT AUDITOR'S REPORT NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS - 10 - Exhibit D - Section 8 HOUSING AUTHORITY OF THE CITY OF SALINA Salina. Kansas CŒ1PUTATION OF ANNUAL CONTRIBUTIONS EARNED - PROJECT ACCOUNT AND OPERATING RESERVE CHANGE~3 Twelve Months Ended June 30. 1991 Annual Contributions Contract FW-1114 Project Kansas 38-2 & 38-3 Section 8 Maximum Contribution Available Maximum Annual Contribution Authorized Additional Authorized for Period in Excess of Twelve Months Project Account Balance at June 30, 1990 TOTAL CONTRIBUTIONS AVAILABLE Annual Contributions Required Housing Assistance PaYments Administrative Fee Hard-to-house fees earned Independent Public Accountant fees Preliminary Expenses Capital Expenditures TOTAL FUNDS REQUIRED Less: Project Receipts other than Annual contributions TOTAL ANNUAL CONTRIBUTION REQUIRED $ Project Account Chanqe Provision for project account Exhibit C - Section 8 ANNUAL CONTRIBUTIONS EARNED Lesser of contribution available or contribution required - Exhibit C $ $ 629,823.00 37,014.25 $ 147,757.00 718,897.15 0.00 ------------ ----.-------- $ 1,385,734.40 $ 147,757.00 ------------ ------------ =========== $ 507,943.89 $ 25,021.00 75,883.49 3,383.00 540.00 608.60 308.25 623.38 4,300.00 799.88 ------------- ------------ $ 589,584.23 $ 29,827.26 $ 793.16 $ 193.05 ------------- ------------ 588,791.07 $ 29,634.21 ------------ ------------ ----------- ----------- $ 78,116.18 $ 112,122.79 ------------ ------------ ----------- ----------- 588,791.07 $ 29,634.21 ------------ ------------ --.-------- --.-------- SEE ATTACHED INDEPENDENT AUDITOR'S REPORT NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS - 11 - Exhibit D - Section 8 HOUSING AUTHORITY OF THE CITY OF SALINA Salina. Kansas COMPUTATION OF ANNUAL CONTRIBUTIONS EARNED -: PROJECT ACCOUNT AND OPERATING RESERVE CHANGES CONT'D Twelve Months Ended June 30, 1991 Annual Contributions Contract FW-1114 Project Kansas 38-2 & 38-3 Section 8 Operatinq Reserve Chanqe Total operating receipts Certificate Voucher $ 3,340.81 $ 193.05 588,791.07 29,634.21 ------------ ------------ $ 592,131.88 $ 29,827.26 Operating Receipts: Operating Income - Exhibit B Annual Contribution Earned Operating Expenditures: Operating Expenses - Exhibit B $ Property Betterments and Additions Capital Expenditures Prior Period Adjustments Affecting Residual Receipts ( 582,718.81 750.00 4,300.00 5,563.10) $ 30,485.43 799.88 ------------ ------------- Total operating expenditures $ 582,205.71 $ 31,285.31 ------------ ------------- Residual Receipts per Audit Residual Receipts per LHA $ $ 9,926.17 9,926.17 $ ( $( 1,458.05) 1,458.05) ------------- ------------- Provision for (Reduction of) Operating Reserve $ 9,926.17 $( 1, 458 . 05 ) ------------ ------------ ------------- ----.-------- SEE ATTACHED INDEPENDENT AUDITOR'S REPORT NOTES ,t_RE AN INTEGHAL PART OF THESE FINANCIAL STATEMENTS - 12 - Exhibit F(l) HOUSING AUTHORITY OF THE CITY OF SALINA Salina. Kansas ACTUAL DEVELOPMENT COSTS - COMPLETED Twelve Month Period Ended June 30, 1991 Annual Contributions Contract FW-1114 Project Kansas 38-2 & 38-3 Proiect 38-3 Prior Current Audit Audit Period Period Total ------ ------- --------- CLASSIFICATION Indirect Development $1,057,506.33 $ 0.00 $ 1, 057,506.33 Site Improvement 15,375.86 0.00 15,375.86 Dwelling Structures 61, 043.33 0.00 61, 043 . 33 Non-Dwelling Structure 98,575.34 0.00 98,575.34 Non-Dwelling Equipment 50.50 0.00 50.50 Office Equipment 7,901.54 0.00 7,901.54 Maintenance Equipment 2,323.24 0.00 2,323.24 Automotive Equipment 8,449.00 0.00 8,449.00 Expendable Equipment 245.94 0.00 245.94 Contract Work in Progress 6,352.49 2,134.00 8,486.49 ------------ ----------- ------------- TOTAL COST $ 1,257,823.57 $ 2,134.00 $ 1,259,957.57 -------------- ----------- --------------- -------------- ----------- --------------- SEE ATTACHED INDEPENDENT AUDITOR'S REPORT NOTES Þ.RE AN INTEGRAL PAra OF THESE FINANCIAL STATEMENTS - 13 - Exhibit F(2) HOUSING AUTHORITY OF THE CITY OF SALINA Salina. Kansas RECONCILIATION OF DEVELOPMENT FUNDS ADVANCED WITH DEVELOPMENT COSTS June 30. 1991 Annual Contributions Contract FW-1114 Project Kansas 38-2 & 38-3 1. The amount of Funds provided for Development and Development Costs are incurred as follows: the Actual Funds Approved $ 1, 270,607.00 $(1,195,292.84) Funds Advanced Interest to DOFA $ ( 69,014.93) -------------- Excess of Funds Approved $ 6,299.23 -------------- -------------- Funds Advanced Interest to DOFA $ 1,195,292.84 69,014.93 Funds Expended (1,259,957.57) -------------- Excess of Funds Advanced $ 4,350.20 -------------- ---------.----- 2. As of the audit date the Actual Cost Development Certificate had not been filed with HUD pending the audit report. 3. All Development Costs have been paid and all related ties have been discharged through payment. liabili- SEE ATTACHED INDEPENDENT AUDITOR'S REPORT NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS - 14 - Exhibit G HOUSING AUTHORITY OF THE CITY OF SALINA Salinët. Kansas ANALYSIS OF GENERAL FUNDS AVAILABLE FOR REDUCTION OF ANNUAL CONTRIBUTIONS At June 30, 1991 Annual Contributions Contract FW-1114 Project Kansas 38-2 & 38-3 Low Rent CASH AND OTHER ASSETS Cash Accounts Receivable - Tenants Accounts Receviable - Section 8 Investments Prepaid Insurance Excess Development Funds Advanced Audit Adjustment Backed Out TOTAL LIABILITIES, RESERVES. AND AMOUNTS AVAILABLE FOR CONTRIBUTIONS REDUCTION Tenants' Security Deposits Tenants' Prepaid Rent Accounts Payable - Other PILOT Operating Reserve TOTAL $ 27,627.34 832.81 8,920.32 51, 921. 57 4,128.47 4,350.20) 1,921.57) ( ( ---------.--- $ 87,158.74 ------------- ---------.--- $ 8,387.00 364.08 3..625.65 10,126.35 64,655.66 ------------- $ 87,158..74 ------------- ------------- SEE ATIACHED INDEPENDENT AUDITOR'S REPORT NOTE;:; ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS - 15 - Exhibit G - Section 8 HOUSING AUTHORITY OF THE CITY OF SALINA Salina, Kansas ANALYSIS OF GENERAL FUNDS AVAILABLE FOR REDUCTION OF ANNUAL CONTRIBUTIONS At June 30, 1991 Annual Contributions Contract FW-1114 Project Kansas 38-2 & 38-3 Section 8 CASH AND OTHER ASSETS Certificate Voucher Cash Investments $ 37,380.84 30,604.88 $ 11,839.50 ------------ ------------ TOTAL $ 67,985.72 $ 11, 839.50 ------------ ------------ ------------ ------------ LIABILITIES, RESERVES, AND AMOUNTS AVAILABLE FOR CONTRIBUTIONS REDUCTION Accounts Payable - HUD Accounts Payable - Low Rent Operating Reserve $ 13,507.93 7,523.56 46,954.23 $ 12,085.79 1,211.76 1, 458 . 05) ------------ ---.--------- ,TOTAL $ 67,985.72 $ 11, 839.50 ============ ---'--------- ---.--------- SEE ATTACHED INDEPENDENT AUDITOR'S REPORT NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STAT~1ENTS - 16 - HOUSING AUlliORITY OF 1HE CIT! OF SALINA SalIna. Kansas June 30. 1991 Notes to the Financial Statements l'K)1E A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This summary of the significant accounting policies of the Hous:lng Authority of the City of Salina (HA) is presented to assist in understanding the HA's financial statements. The financial statements and notes are representations of the HA's management, which is responsible for their integrity and objectiv- ity. These accounting policies conform to practices prescribed o~' permitted by the Department of Housing and Urban Development (HUD) and have been consist- ently applied in the preparation of the financial statements. Principles Used to Determine Scope of Entity The HA' s reporting entity includes the HA' s governing board and all organizations for which the HA exercises oversight responsibility. related The HA has developed criteria to determine whether outside agencies should be included within its financial reporting entity. The criteria includes, but is not limited to, whether the HA exercises oversight responsibility (which includes financial interdependency, selection of governing authority, designa- tion of management ability to significantly influence operations, and account- ability for fiscal matters), scope of public service, and special financing relationships. The HA has determined that no other outside agency meets the above criteria and, therefore, no other agency has been included as a component. unit in the HA's financial statements. In addition, the HA is not aware of any entity which would exercise such oversight responsibility which would result in the HA being considered a component unit of that entity. Basis of Accountinq The accounts of the HA are maintained, and the accompanying financial state- ments have œen prepared. on the basis of accounting practices prescribed or permitted by HUD. These practices differ in some respects from generally accepted accounting principles. Revenue is generally recognized when received rather than when earned except for federal financial assistance and tenant rent. Expenses are generally recognized when payments are made rather than when a liability is incurred. Accounts Receivable The HA uses the direct write-off method for bad debts. No allowance for doubt- ful accounts is L~ed in the valuation of the receiv,~les. - 17 - HOUSING AUlliORI1Y OF TIlE CITY OF SALINA Sa 1 i na. Kansas June 30. 1991 Notes to the Financial Statements NOTE A - SUMMARY OF SIGNIFICANT' ACCOUNTING POLICIES (Continued) Land. Structures and EQuipment Land, structures and equipment are stated at cost. No provision is made for the decrease in value of structure and equipment because of wear and tear or obsolescence and income is not charged for depreciation of such assets. BudGet am Buooetary Accountincr The HA prepares an annual operating budget which is approved by !-IUD. Budgeted amounts are as originally adopted, or as revised by the .Board of Commission- ers. Individual revisions were not material to the original èlppropriations which were approved. Vacation and Sick Pay Vacation time, personal business days and sick leave are considered as expend- itures in the year paid. NOTE B - CASH As required by law, the depository is required to have either FDIC or FSLIC insurance. As of June 30, 1991 the Housing Authority was fully insured. NOTE C - WNG TERM DEBT Permanent Notes - HUD Construction of the housing project was originally financed by the sale of project notes. Project notes which were converted to permanent notes with the Federal Finance Bank. During 1987, HUD received budgetary authority to pay the permanent notes and has suspended payments on the annual contribution contract required for permanent note payments. Therefore, interest on the permanent notes has not been accrued dUl'ing the year ended June 30, 1991. At June 30, 1991 the amount payable was $1,192,692.84 and no interest was paid for the year then ended. A note in the amount of $225,894.50 and accrued interest in the amount of $66,267.30 was forgiven during the year ended June 30, 1991. Bonds Payabl e Bonds payable are from a 6.6% issue dated July 8, 1983 in an oriiJinal amount of $925,423.04. Bonds amounting to $133,645.20 have been retired leaving a relance due at June 30, 1991 of $791,777.84. Interest paid during the year ended June 30, 1991 amounted to $53,225.10. - 18 - I-K..1iJSING AlJlliORITY OF 1HE CITY OF SALINA Salina. Kansas REPORT ON COMPLIANCE TO LAWS AND REGULATIONS .;md REPORT ON ACCOUNTING AND ADMINISTRATIVE INTERNAL CON11~L Twelve Months Ended June 30. 1991 Annual Contrib~tions Contract ~v-1114 Project Kansas 38-2 & 38-3 I have audited the financial statements of the Housing Authority of the City of Salina. Kansas, as of and for the year ended June 30, 1991, and have issued my audit report dated September 19. 1991. I conducted my audit in accordance with generally accepted audit:ing standards, Government Auditing Stamards issued by the Comptroller General of the United States, am the OMB Circular A-128. Those standards require that I plan am perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. Report on Compliance to Laws am Requlations Compliance with laws, regulations, contracts, and grants applicable to the Housing Authority of the City of Salina, Kansas, is the responsibility of the Housing Authority of the City of Salina, Kansas. As part of obtaJLning reasona- ble assurance about whether the financial statements are free of material misstatement, I performed tests of the Housing Authority of Salina, Kansas, compliance with certain provisions of laws, regulations, contracts and grants. However, my objective was not to provide an opinion on overall compliance with such provisions. The results of my tests imicate that with respect to the items tested, the Housing Authority of the City of Salina, Kansas, complied, in all material respects, with the provisions referred to in the preceding paragraph. With respect to items not tested, nothing came to my attention that caused me to believe that the Housing Authority of the City of Salina, Karu::as, had not complied, in all material respects, with those provisions. Report on Accountinq and Administrative Internal Control In planning and performing my audit of the financial statements of the Housing Authority of the City of Salina, Kansas for the year ended June 30, 1991. I considered its internal control structure in order to determine my auditing procedures for the purpose of expressing my opinion on the financial state- ments and not to provide assurance on the internal control structure. The management of the Housing Authority of the City of Salina, Kansas is responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits ônd related costs of internal control structure policies and procedures. The objectives of internal control struc- ture ôre to provide management with reasonable. but not absolute. assurance that assets are safeguarded against loss from unauthorized use or disposition. SEE ATTACHED INDEPENDENT AUDITOR'S REPORT NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS - 19 - and that transactions are executed with management's authorization and record- ed properly to permit the preparation of financial statements in accordance with generally accepted accounting principles. Because of inherent limitations in a.ny internal control structure. errors or irregularities may nevertheless occur and not be detected. Also. projection of any evaluation of the structure to future pericds is subject to the risl< tha.t procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate. For the purpose of this report. I have classified the significant internal control structure policies and procedures in the following cat~¡ories: cash. receivables, property and equipment, payables and surplus. For all of the internal control sbìlcture categories 1 isted ö.bove I have obtained an understanding of the design and relevant pol icies and procedures and whether they have been placed in operation, and I have assessed internal control risk. I noted certain matters involving the internal control structure and its operation that I consider to be reportable conditions under standards estab- lished by the American Institute of Certified Public Accountants. Reportable conditions involve matters coming to my i~ttention relating to significant deficiencies in the design or operation of the internal control structure that, in my judgment, could adversely affect the entity's ability to record, process, summarize and report financial data consistent with the assertions of management in the financial statements. The reportable condition noted was a weakness in internal control in that separation of duties is not maintained for receipts, deposits, expenses, and bookkeeping. One person has control and/or access to all of the above func- tions and a separation of duties is not possible. Other controlE¡ that are in place to compensate for this weakness are prenumbered receipts, two signatures on a check, with one being a member of the Board of Directors, ard all expend- itures being reviewed by the Board of Directors. Management .beUeves, and I agree, that due to the small size of the office these procedures are adequate and cost effective. This report is intended for the information of the Board of Directors, manage- ment, and the Department of Housing and Urban Development. This restriction is not intended to limit the distribution of this report, which is a matter of public record. SEE ATTACHED INDEPENDENT AUDITOR'S REPORT NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS - 20 -- HOUSING AUTHORITY OF THE CITY OF SALINA Salina, Kansas FINDINGS. RECOMMENDATIONS ANr REPLIES Twelve Months Period Ended June 30. 1991 Annual Contributions Contract FW-1114 Project Kansas 38-2 & 38-3 Prior Audit Findinqs None. Current Audit Findinqs 1. FINDING Budget overruns occurred in three areas, Non-Routine Maintenance and Utilities. General Expense Budqet General Expense 33,700.00 Non-Routine Maintenance 17,492.00 Utilities 4,950.00 Actual 35,056.41 20,961. 24 5,205.43 Overrun 1,356.41 3,469.24 255.43 RECOMMENDATION The Director revise the budget when it becomes apparent that additional expenses will be incurred. REPLY We will do so. SEE ATTACHED INDEPENDENT AUDITOR'S REPORT NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS - 21 - HOUSING AUTHORITY OF THE CITY OF SALINA Salina, Kansas JOURNAL ENTRIES Twelve Months Period Ended June 30, 1991 Annual Contributions Contract FW-1114 Project Kansas 38-2 & 38-3 1. Investments 1162 Prior Period Adjustments Affecting Residual Receipts 6010 $ 1,921.57 $ 1, 921. 57 Accrue Interest on investment as of March 31, 1991. 2. Permanent Notes - HUD Permanent Notes - HUD 2311-03 2311-02 $ 2,600.00 $ 2,600.00 Reclassify note closed through sale. SEE ATTACHED INDEPENDENT AUDITOR'S REPORT NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS - 22 -