The URL can be used to link to this page

Audit - 2001/2002 HOUSING AUTHORITY OF THE CITY OF SALINA, KANSAS GENERAL PURPOSE FINANCIAL STATEMENTS AND SUPPLEMENTAL INFORMATION Year Ended June 30,2002 <OC\ TLl\AL- TABLE OF CONTENTS FINANCIAL SECTION Paqe No. Independent Auditor's Report 1 Financial Statements: Combined Balance Sheet - All Fund Types 3 Combined Statement of Revenues, Expenses and Changes in Equity, All Proprietary Fund Types Combined Statement of Cash Flows - All Proprietary Fund Types 4 5 Notes to Financial Statements 7 Supplemental Information: Combining Balance Sheet - All Fund Types 16 Combining Statement of Revenues, Expenses and Changes in Equity, All Proprietary Fund Types 17 Combining Statement of Cash Flows - All Proprietary Fund Types Supplemental Data Required By HUD 18 Financial Data Schedule 20 SINGLE AUDIT SECTION Schedule of Expenditures of Federal Awards 22 Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Governmental Auditing Standards 23 Report on Compliance With Requirements Applicable to Each Major Program and Internal Control Over Compliance in Accordance With OMB Circular A-133 25 27 Summary Schedule of Prior Audit Findings Schedule of Findings and Questioned Costs 28 Nie'wedde -(9- Wiens CERTIFIED PUBLIC ACCOUNTANTS Qandal D. Niewedde. CP^ Jeffrey J. Wiens. CP^ INDEPENDENT AUDITOR'S REPORT To the Board of Commissioners Housing Authority of the City of Salina, Kansas We have audited the accompanying general purpose financial statements of the Housing Authority of the City of Salina, Kansas, as of and for the year ended June 30, 2002, as listed in the table of contents. These general purpose financial statements are the responsibility of the Housing Authority of the City of Salina, Kansas' management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally acceptE!d in the United States of America and the standards applicable to financial audits contained in (;overnment Auditinq Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the general purpose financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall general purpose financial statement presentation. We believe that our audit provides a fi9asonable basis for our opinion. In our opinion, the general purpose financial statements referred to above present fairly, in all material respects, the financial position of the Housing Authority of the City of Salina, Kansas, as of June 30, 2002, and the results of its operations and cash flows of its proprietary fund types for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditino Standards, we have also issued our report dated October 8, 2002 on our consideration of the Housing Authority of the City of Salina, Kansas' internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditinq Standards and should be read in conjunction with this report in considering the results of our audit. Our audit was performed for the purpose of forming an opinion on the general purpose financial statements taken as a whole. The combining financial statements and the Financial Data Schedule as listed in the table of contents are presented for purposes of additional analysis and are not a required part of the general purpose financial statement of the Housing Authority of the City of Salina, Kansas. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Orqanizations, and is also not a required part of the general purpose financial statements. Such information has 1 P.o. oox 98 . York. Nebraska 68467 . Ph: 402-362-4410 . fax: 402-362-4410 . nwcpa@allleLnel been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, in our opinion, is fairly presented in all material respects in relation to the general purpose financial statements taken as a whole. AJ~ ~ ~~ c4~ October 8, 2002 2 GENERAL PURPOSE FINANCIAL STATEMENTS ASSETS CURRENT ASSETS: Cash and cash equivalents Investments Accounts receivable Due from other governmental units Accrued interest receivable Interfund receivable Prepaid insurance Inventories RESTRICTED ASSETS: Cash and cash equivalents HOUSING AUTHORITY OF THE CITY OF SALINA, KANSAS COMBINED BALANCE SHEET - ALL FUND TYPES June 30, 2002 TOTAL CURRENT ASSETS TOTAL RESTRICTED ASSETS PROPERTY, PLANT AND EQUIPMENT Fixed assets (net of accumulated depreciation) NONCURRENT ASSETS Mortgage receivables LIABILITIES AND EQUITY CURRENT LIABILITIES: Accounts payable Compensated absences payable Accrued payroll and benefits Due to other governmental units Deferred revenue Interfund payable CURRENT LIABILITIES PAYABLE FROM RESTRICTED ASSETS: Tenant security deposits Deferred revnue NONCURRENT LIABILITIES Compensated absences payable EQUITY Contributed capital Retained earnings: Unreserved See accompanying notes. TOTAL PROPERTY, PLANT AND EQUIPMENT TOTAL NONCURRENT ASSETS TOTAL ASSETS $ TOTAL CURRENT LIABILITIES TOTAL CURRENT LIABILITIES PAYABLE FROM RESTRICTED ASSETS TOTAL NONCURRENT LIABILITIES TOTAL EQUITY TOTAL LIABILITIES AND EQUITY $ 3 Proprietary Fund Type $ 445,503.31 347,835.91 3,851.29 96,157.54 87.62 21,365.22 15,460.11 12,045.69 942,306.69 41,474.92 41,474.92 6,112,172.13 6,112,172.13 /""",.- 34,118.78 34,118.78 7,130,072.52 $ 53,925.48 64.33 3,370.75 25,839.24 1,7 46.69 21,365.22 106,311.71 30,139.48 11,335.44 41,474.92 11,764.26 11,764.26 5,330,76663 1,639,755.00 6,970,521.63 7,130,07252 HOUSING AUTHORITY OF THE CITY OF SALINA, KANSAS COMBINED STATEMENT OF REVENUES, EXPENSES AND CHANGES- IN FUND EQUITY - ALL PROPRIETARY FUND TYPES Year Ended June 30, 2002 OPERATING REVENUES Rental income $ 271,516.28 HUD Section 8 contributions 981,011.00 Other income 21,355.25 TOTAL OPERATING REVENUES 1,273,882.53 OPERATING EXPENSES Administrative 331,897.44 Tenant services 1,093.62 Utilities 13,123.85 Ordinary maintenance and operations 246.438.44 General expense 64,730.76 Housing assistance payments 847,228.00 Depreciation 169,225.53 TOTAL OPERATING EXPENSES 1,673,737.64 NET OPERATING INCOME (LOSS) (399,855.11 ) NONOPERATING REVENUES (EXPENSES) HUD operating subsidy 217,836.00 HUD modernization grants revenue 323,896.14 Interest income 24,866.32 PHDEP grants revenue 26,112.05 PHDEP grants expenditures (26,112.05) Other grant revenue 4,542.50 Other grant expenditures (4,542.50) Property casualty loss (1,838.48) Donated fixed assets 5,000.00 Gain on dispositon of fixed assets 56,263.29 TOTAL NONOPERATING REVENUES (EXPENSEE;) 626,023.27 NET INCOME(LOSS) 226,168.16 Depreciation on fixed assets acquired by contributions 157,888.37 INCREASE (DECREASE) IN RETAINED EARNINGS 384.056.53 RETAINED EARNINGS: Retained earnings, beginning balance 1,256,908.66 Prior period adjustments (1,210.19) Beginning balance, restated 1,255.698.47 RETAINED EARNINGS - ENDING BALANCE 1,639,755.00 CONTRIBUTED CAPITAL: Contributed capital, beginning balance 5,507,305.00 Prior period adjustments (18,650.00) Beginning balance, restated 5.488,655.00 Depreciation transferred from retained earnings (157,888.37) CONTRIBUTED CAPITAL - ENDING BALANCE 5,330,766.63 TOTAL EQUITY $ 6,970,521.63 See accompanying notes. 4 HOUSING AUTHORITY OF THE CITY OF SALINA, KANSAS COMBINED STATEMENT OF CASH FLOWS - ALL PROPRIETARY FUND TYPES Year Ended June 30, 2002 CASH FLOWS FROM OPERATING ACTIVITIES: Rental receipts HUD Section 8 receipts Other receipts Tenant security deposits Cash payments for goods and services Cash payments to employees for services NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: HUD operating subsidy HUD modernization grants - operations PHDEP grant receipts PHDEP grants expenditures Other grant receipts Other grant expenditures Propety casualty proceeds Propety casualty expense Net change in cash overdrafts NET CASH PROVIDED (USED) BY NONCAPITAL FINANCING ACTIVITIES CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Acquisition of property, plant and equipment Real property donation Proceeds from sale of capital assets HUD modernization grants NET CASH PROVIDED (USED) BY CAPITAL AND RELATED FINANCING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES: Net deposits to investments Interest received CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR NET CASH PROVIDED (USED) IN INVESTING ACTIVITIES NET INCREASE (DECREASE) IN CASH CASH AND CASH EQUIVALENTS AT END OF YEAH $ See accompanying notes. 5 $ 268,604.81 867,293.38 21,355.25 6,589.98 (1,087,576.69) (362,757.79) (286,491.06) 217,836.00 27,207.83 30,675.55 (26,112.05) 10,000.00 (4,542.50) 3,734.01 (5,572.49) (130.00) 253,096.35 (332,390.96) 5,000.00 74,913.29 212,199.49 (40,278.18) (14,352.63) 24,935.19 10,582.56 (63,090.33) 550,068.56 486,978.23 HOUSING AUTHORITY OF THE CITY OF SALINA, KANSAS STATEMENT OF CASH FLOWS - ALL COMBINED PROPRIETARY FUND TYPES (CONT'D) Year Ended June 30, 2002 RECONCILIATION OF INCOME (LOSS) FROM OPERATIONS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Income (Loss) from operations Adjustments to reconcile income (loss) from operations to net cash provided by operating activities: Depreciation Change in assets and liabilities: (Increase) decrease in account receivable (Increase) decrease in due from other governments (Increase) decrease in prepaid insurance Increase (decrease) in accounts payable Increase (decrease) in tenant security deposits Increase (decrease) in accrued leave Increase (decrease) in due to other governments Increase (decrease) in deferred revenue Increase (decrease) in inventories $ (399,855.11 ) 169,225.53 NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES $ (3,250.96) (3,961.58) (1,344.55) 53,393.54 6,589.98 (26,403.11 ) (6,963.80) (76,613.51) 2,692.51 (286,491.06) See accompanying notes. 6 HOUSING AUTHORITY OF THE CITY OF SALINA, KANSAS NOTES TO FINANCIAL STATEMENTS June 30, 2002 NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Orqanization The Authority was created under the laws of the State of Kansas. The Authority is governed by a Board of Commissioners appointed by the Mayor of the City of Salina, Kansas, subject to approval by the City Council, and has substantial autonomy. The Authority administers housing programs subsidized by the Federal Government through the U.S. DE~partment of Housing and Urban Development (HUD) and manages various unsubsidized projects owned by the Authority. The accounting and reporting policies of the Authority relating to the funds included in the accompanying financial statements conform to generally accepted accounting principles applicable to state and local governments. Generally accepted accounting principles for local governments include those principles prescribed by the Governmental Accounting Standards Board (GASB), the American Institute of Certified Public Accountants in the publication entitled Audits of State and Local Governmental Units and by the Financial Accounting Standards Board (where applicable). As allowed in Section P80 of GASB's Codification of Governmental Accountina and Financial Reoortina Standards, the Authority has elected not to apply to its proprietary activities Financial Accounting Standards Board Statements and Interpretations, Accounting Principles Board Opinions, and Accounting Research Bulletins of the Committee of Accounting Procedure issued after November 30, 1989. The more significant accounting policies of the Authority are described below. Financial Reportinq Entitv In determining how to define the reporting entity, management has considered all potential component units. The decision to include a component unit in the reporting entity was made by applying the criteria set forth in Section 2100 and 2600 of the Government Accounting Standards Board Codification. These criteria state that the financial reporting entity consist of (a) the primary government, (b) organizations for which the primary government is financially accountable, and (c) other organizations for which the primary government is not accountable, but for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete. Based on these criteria, there are no additional agencies or entities which should be included in the financial statements of the Agency, Basis of Presentation The accounts of the Authority are organized on the basis of funds, each of which is considered a separate accounting entity, The transactions of each fund are summarized by providing a separate set of self-balancing accounts which include assets, liabilities, fund equity, revenues and expenses. Budqetarv Process The Authority establishes a budget for the fiscal year and is adopted by the Board of r-~~_:_~:~____ vUIIIIIII:::>:::>IUIIt::I:::>. 7 HOUSING AUTHORITY OF THE CITY OF SALINA, KANSAS NOTES TO FINANCIAL STATEMENTS June 30, 2002 NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Proprietary Fund Types Proprietary Funds are accounted for on a flow of economic resources measurement focus, 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 balance sheet. Proprietary Fund equity is segregated into contributed capital and retained earnings. The following are the Authority's Proprietary Fund types: Enterprise Funds - The Enterprise Funds are used for activities which are financed and operated in a manner similar to private business enterprise where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods or services on a continuing basis be financed or recovered primarily through user charges, or where the governing body has decided that periodic determination of revenues earned, expenses incurred, or net income is appropriate for capital maintenance, public policy, management control, accountability or other purposes. Measurement Focus/Basis of Accountinq Measurement focus refers to what is being measured; basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurement made, regardless of the measurement focus applied, The Proprietary Fund Types are accounted for on an economic resources measurement focus using the accrual basis of accounting. Revenues are recorded when they are earned. Expenses are recorded at the time liabilities are incurred. Cash and Investments All investments are recorded at fair value based on quoted market prices, Fair value is the amount at which a financial instrument could be exchanged in a current transaction between willing parties. Cash and Cash Investments are available upon demand and are considered to be "cash equivalents" when preparing these financial statements. In addition, any marketable securities that are owned by a specific amount and that are purchased with a maturity of ninety days or less are also considered to be "cash equivalents". The Authority's deposits can only be invested in the following HUD approved investments: direct obligations of the federal government backed by the full faith and credit of the United States, obligations of federal government agencies, securities of government-sponsored agencies, demand and savings deposits, money-market deposit accounts, municipal depository fund, super now accounts, certificate of deposit, repurchase agreements, sweep accounts, separate trading of registered interest and principal securities (STRIPS), and mutual funds that consist of securities purchased from the HUD approved list. 8 HOUSING AUTHORITY OF THE CITY OF SALINA, KANSAS NOTES TO FINANCIAL STATEMENTS June 30, 2002 NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Prepaid Items Prepaid balances are for payments made by the Authority in the current year to provide services occurring in the subsequent fiscal year. Inventories Inventories in the Proprietary Fund Type consist of supplies and are recorded at the lower of weighted average cost or market. Interfund Receivables and Pavables Short-term amounts owed between funds are classified as interfund receivables and payables. Fund Chanqes and Transactions Between Funds Authorized transfers are treated as operating transfers and are included in the results of operations in the Proprietary Funds. Property. Plant and Equipment Property, plant and equipment owned by the Authority are recorded at cost or, if contributed property, at their fair market value at the time of contribution. Repairs and maintenance are recorded as expenses; renewals and betterments are capitalized, The method used to calculate Capitalization of Interest Cost for construction in progress is based on SFAS No. 62. Assets capitalized have an original cost of $500 or more and over a one year of life. Depreciation has been calculated on each class of depreciable property using the straight- line method, Estimated useful lives are as follows: Buildings Building improvements Furniture and fixtures Equipment 20-40 years 10-30 years 5-7 years 3-10 years GASB Codification, Section G60.116, allows enterprise funds to close out depl"eciation expense on contributed assets to "contributed capita'" rather than to "retained earnings". The Authority has elected to close depreciation to contributed capital in accordance with the referenced GASB. 9 HOUSING AUTHORITY OF THE CITY OF SALINA, KANSAS NOTES TO FINANCIAL STATEMENTS June 30, 2002 NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Compensated Absences The Authority's policy allows employees to accumulate unused vacation leave. Sick leave may be accrued but is not paid upon termination, except upon retirement. Income Taxes The Authority is a governmental subdivision of the State of Kansas and is exempt from Federal and State income taxes. Leases The majority of leases and subleases are short-term operating leases. Schedule of Expenditures of Federal Awards The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of the Housing Authority of Salina, Kansas and is presented in accordance with generally accepted accounting principles. The information in this schedule is presented in accordance with the requirements of Office of Management and Budget Circular A-133, Audits of States, Local Governments and Non-Profit Organizations. NOTE B--DEPOSITS AND INVESTMENTS Deposits At June 30, 2002, the Authority's carrying amount of deposits was $752,602.02 and the bank balances were $844,938.74. Of the bank balance, $421,455.40 was covered by federal depository insurance and $423,483.34 was covered by collateral held by the financial institution's agent in the Authority's name. The Authority had $50.00 of cash on hand as of June 30, 2002. Investments Investments are categorized into these three categories of credit risk: (1) Insured or registered, or securities held by the Authority or its agent in tile Authority's name. (2) Uninsured and unregistered, with securities held by the counterparty's trust department or agent in the Authority's name. (3) Uninsured and unregistered, with securities held by the counterparty, or by its trust department or agent but not in the Authority's name. 10 HOUSING AUTHORITY OF THE CITY OF SALINA, KANSAS NOTES TO FINANCIAL STATEMENTS June 30, 2002 NOTE B--DEPOSITS AND INVESTMENTS (CONT'D) At year-end, the Authority's investment balances were as follows: 1 Category 2 3 $ $ $ $ Fair Value U.S, Government securities $ Total $ $ Items not subject to categorization: Municipal investment pool 82,162.12 Totallnvestments $ 82,162.12 A reconciliation of cash and investments as shown on the Combined Balance Sheet - is as follows: Cash on hand Carrying amount of deposits Carrying amount of investments $ 50.00 752,602.02 82,162.12 $ 834,814.14 Cash Investments Restricted cash $ 445,503.31 347,835.91 41,474.92 $ 834,814.14 NOTE C--ACCOUNTS RECEIVABLE The following is a summary of accounts receivable as presented in the Combined Balance Sheet - All Fund Types at June 30, 2002: Tenants Repayment agreements Allowance for uncollectable accounts Other $ Total 4,946.42 1,819.60 (3,199.73) 285.00 3,851.29 $ 11 HOUSING AUTHORITY OF THE CITY OF SALINA, KANSAS NOTES TO FINANCIAL STATEMENTS June 30, 2002 NOTE D-DUE FROM OTHER GOVERNMENTAL UNITS The following is a summary of due from other governmental units as presented in the Combined Balance Sheet - All Fund Types at June 30, 2002: HUD - Capital Grant HUD - Drug Elimination Grant HUD - Section 8 year-end settlement $ Total 90,683.93 1,443.61 4,030.00 96,157.54 $ NOTE E - INTERFUND RECEIVABLE/PAYABLE The following is a summary of interfund receivable/payables at June 30, 2002: Public Housing Section 8 Voucher Home Program Receivable $ 21,365.22 $ Payable $ 21,365.22 $ 14,275.66 7,089.56 21,365.22 NOTE F-RESTRICTED ASSETS The following is a summary of restricted cash and cash equivalents as presented in the Combined Balance Sheet - All Fund Types at June 30, 2002: Tenant security deposits Drug elimination grant revenue Juvenile justice grant revenue $ Total 30,139.48 5,877.94 5,457.50 41,474.92 $ NOTE G - FIXED ASSETS A summary of property, plant and equipment as presented in the Combined Balance Sheet _ All Fund Types is as follows: Land $ Buildings Furniture, equipment and machinery - Dwelling Furniture, equipment and machinery - Administration Construction in Progress Total 1,456,890.23 5,413,670.98 25,690.87 164,345.4:2 331,098.77 7,391,696.27 (1,279,524.14L 6,112,172.13 Less accumulated depreciation $ 12 HOUSING AUTHORITY OF THE CITY OF SALINA, KANSAS NOTES TO FINANCIAL STATEMENTS June 30, 2002 NOTE H - MORTGAGE RECEIVABLE The Authority sold three housing units to individuals and the down payment nl3eded by the individuals to obtain a mortgage from a financial institution was financed by the Housing Authority. As of June 30, 2002, the mortgage receivable balance represents three different promissory notes entered into by the individual purchasing the house and the Authority. According to the notes, no interest shall accrue upon this sum until such amount is due and owing. The note shall be due and owing upon the sale of the real estate for which the said sums have been advanced, or at such time the individual ceases to use the home as the primary residence. In addition, beginning in the seventh year of the term for each note, the deferred loan amount is reduced by an amount equal to 1/168th of the original! deferred loan amount multiplied by the number of full months the Borrower has retained title and ownership. The balances of these mortgages as of June 30, 2002 are as follows: Address of Mortgaged Property 908 Custer Street 1109 Fairway Street 917 Seneca Street Balance $ 13,145.80 13,801.98 7,171.00 34,118.78 $ NOTE I-ACCOUNTS PAYABLE A summary of accounts payable as presented in the Combined Balance Sheet - All Fund Types as of June 30, 2002 is as follows: Vendors and contractors Other $ 53,371,28 554.20 53,925.48 Total $ NOTE J-DUE TO OTHER GOVERNMENTAL UNITS A summary of due to other governmental units as presented in the Combined Balance Sheet - All Fund Types at June 30, 2002 is as follows: Payments in lieu of taxes $ 25,839.24 13 HOUSING AUTHORITY OF THE CITY OF SALINA, KANSAS NOTES TO FINANCIAL STATEMENTS June 30, 2002 NOTE K-DEFERRED REVENUE A summary of deferred revenue as presented in the Combined Balance Sheet - All Fund Types at of June 30, 2002 is as follows: Tenant prepaid rents Drug elimination grant revenue Juvenile justice grant revenue $ 1,746.69 5,877.94 5,457.50 13,082,13 Total $ NOTE L- SEGMENT INFORMATION - PROPRIETARY-TYPE FUND Public Section 8 Section 8 Home Housing Voucher Certificates Program Operating revenues $ 292,871.53 $ 981,011.00 $ -- $ Operating expenses (excluding) depreciation) 531,472.98 962,587.58 10,451.55 Depreciation 168,614.11 611.42 Operating income (loss) $ (407,215.56) $ 17,812.00 $ -- $ (10,451.55) Non-operating revenues (expenses) 557,923.23 2,491.51 65,608.53 Operating transfers in Operating transfers out Net income (loss) $ 150,707.67 $ 20,303.51 $ -- $ 55,156.98 Residual equity transfers $ (18,650.00) $ 24,868.98 $ ~868.98) $ 18,650.00 Fixed asset additions $ 311 ,717.48 $ 5,981.71 $ -- $ 14,691.77 Net working capital $ 484,499.30 $ 93,145.95 $ -- $ 258,349.73 Total assets $ 6,687,733.24 $ 123,087.51 $ -- $ 319,251.77 Total equity $ 6,562,491.68 $ 96,222.60 $ -- $ 311,807.35 Total Operating revenues $ 1,273,882.53 Operating expenses (excluding) depreciation) 1,504,512.11 Depreciation 169,225.53 Operating income (loss) $ (399,855.11 ) Non-operating revenues (expenses) 626,023.27 Operating transfers in Operating transfers out Net income (loss) $ 226,168,16 Residual equity transfers $ Fixed asset additions 332,390.96 Net working capital $ 835,994.98 Total assets $ 7,130,072.52 Total equity $ 6,970,521.63 14 HOUSING AUTHORITY OF THE CITY OF SALINA, KANSAS NOTES TO FINANCIAL STATEMENTS June 30, 2002 NOTE M-PRIOR PERIOD ADJUSTMENTS The prior period adjustment of $18,650.00 recorded to contributed capital is the correction of a housing unit sold in a previous year. The prior period adjustment of $1 ,210.19 recorded to retained earnings consists of miscellaneous adjustments. NOTE N-PENSION PLAN Plan description. The non-school municipality participates in the Kansas Public Employees Retirement System (KPERS), a cost-sharing multiple-employer defined benefit pension plan as provided by K.S.A. 74-4901, et seq. KPERS provides retirement benefits, life insurance, disability income benefits, and death benefits. Kansas law establishes and amends benefit provisions. KPERS issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained by writing KPERS (400 W 8th Avenue, Suite 200, Topeka, KS 66603-3925) or by callin9 1-800-228- 0366. Funding Policy. K.S.A. 74-4919 establishes the KPERS member-employee contribution rate at 4% covered salary. The employer collects and remits member-employee contributions according to the provisions of section 414(h) of the Internal Revenue Code. State law provides that the employer contribution rate be determined annually based on the results of an annual actuarial valuation. KPERS is funded on an actuarial reserve basis. State law sets a limitation on annual increases in the contributions rates for KPERS employers. The employer rate established by statute for calendar year 1999 is 2.33%. The non-school municipality employer contributions to KPERS for the period of April 1 , 2001 through June 30,2001 was 2.62%, from July 1,2001 through December 31,2001 and from January 1, 2002 through June 30, 2002 was 3.52%, equal to the statutory required contributions for each period. The total covered payroll for the fiscal year ended June 30, 2002 was $216,693.75. The employer and employee contributions were $7,099.74 and $8,667.75, respectively, NOTE O--RISK MANAGEMENT The Authority is insured for losses from fire or casualty, injury to workers, and misappropriation of funds, The various insurance policies are subject to deductible amounts and maximum coverages, if the deductibles and maximums are exceeded, this could cause the Authority to suffer losses if a loss is incurred from any such incidents. The ultimate outcome of uninsured losses cannot presently be determined, and no provision for any liability that may result, if any, has been made in the financial statements. 15 SUPPLEMENTAL INFORMATION HOUSING AUTHORITY OF THE CITY OF SALINA, KANSAS COMBINING BALANCE SHEET - PROPRIETARY FUND TYPES June 30, 2002 ASSETS Public Section 8 Section 8 Housing Voucher Certificates CURRENT ASSETS: Cash and cash equivalents $ 205,819.45 $ 83,905.89 $ Investments 208,851.93 29,3:11.18 Accounts receivable 3,851.29 Due from other governmental units 92,127.54 4,0:10.00 Accrued interest receivable 39.16 :18.01 Interfund receivable 21,365.22 Prepaid insurance 15,460.11 Inventories 12,045.69 TOTAL CURRENT ASSETS 559,560.39 117,305.08 RESTRICTED ASSETS: Cash and cash equivalents 41,474.92 TOTAL RESTRICTED ASSETS 41,474.92 PROPERTY, PLANT AND EQUIPMENT Fixed assets (net of accumulated depreciation) 6,086,697.93 5,782.43 TOTAL PROPERTY, PLANT AND EQUIPMENT 6,086,697.93 5,782.43 NONCURRENT ASSETS Mortgage receivables TOTAL NONCURRENT ASSETS TOTAL ASSETS $ 6,687,733.24 $ 123.087.51 $ LIABILITIES AND EQUITY CURRENT LIABILITIES: Accounts payable $ 44,056.81 $ 9,868.67 $ Compensated absences payable 47,60 14.80 Accrued payroll and benefits 3,370.75 Due to other governmental units 25,839.24 Deferred revenue 1,7 46.69 Interfund payable 14,275.66 TOTAL CURRENT LIABILITIES 75,061.09 24,159.13 CURRENT LIABILITIES PAYABLE FROM RESTRICTED ASSETS: Tenant security deposits 30,139.48 Deferred revenue 11,335.44 CURRENT LIABILITIES PAYABLE FROM RESTRICTED ASSETS 41,474.92 NONCURRENT LIABILITIES Compensated absences payable 8,705.55 2,70~i.78 TOTAL NONCURRENT LIABILITIES 8,705.55 2,70!i.78 EQUITY Contributed capital 5,312,116.63 Retained earnings: Unreserved 1,250,375.05 96,222.60 TOTAL EQUITY 6,562,491.68 96,22;~.60 TOTAL LIABILITIES AND EQUITY $ 6,687,733.24 $ 123,08i'.51 $ Home Program Totals $ 155,777 ,97 $ 445.503.31 109.652.80 347,835.91 3.851.29 96.157.54 10.45 87.62 21.365.22 15,460.11 12.045.69 265,441.22 942,306.69 41,474.92 41,474.92 19,691.77 6,112,172.13 19.691.77 6.112,172.13 34,118.78 34,118.78 34.118.78 34.118.78 $ 319.251.77 $ 7.130.072.52 $ $ 53,925.48 1.93 64.33 3.370.75 25,839.24 1.746.69 7,089.56 21,365.22 7.091.49 106,311.71 30,139.48 11,335.44 41,474.92 352.93 11,764.26 352.93 11,764.26 18.650.00 5,330.766.63 293.157.35 1.639,755.00 ")04.. 01'\"'7 I)t:' ~ ,.....,,... ~""... .....", V II,OUI .~;J o.>lru,::J<<; 1.0,) $ 319,251.77 $ 7,130,072.52 16 HOUSING AUTHORITY OF THE CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES- IN FUND EQUITY - PROPRIETARY FUND TYPES Year Ended June 30, 2002 Public Section 8 Section 8 Housing Voucher Certificates OPERATING REVENUES Rental income $ 271,516.28 $ $ HUD Section 8 contributions 981,01'1.00 Other income 21,355.25 TOTAL OPERATING REVENUES 292,871.53 981,01'1.00 OPERATING EXPENSES Administrative 219,053.00 104,686.09 Tenant services 1,093.62 Utilities 13,123.85 Ordinary maintenance and operations 235,764.95 10,673.49 General expense 62,437.56 Housing assistance payments 847,228.00 Depreciation 168,614.11 61":.42 TOTAL OPERATING EXPENSES 700,087.09 963,19(l.00 NET OPERATING INCOME (LOSS) (407,215.56) 17,812.00 NONOPERATING REVENUES (EXPENSES) HUD operating subsidy 217,836.00 HUD modernization grants revenue 323,896.14 Interest income 18,029.57 2,491.51 PHDEP grants revenue 26,112.05 PHDEP grants expenditures (26,112.05) Other grant revenue 4,542.50 Other grant expenditures (4,542.50) Property casualty loss (1,838.48) Donated fixed assets Gain on dispositon of fixed assets TOTAL NONOPERATING REVENUES (EXPENSES) 557,923.23 2,491.51 NET INCOME(LOSS) 150,707.67 20,302.51 Depreciation on fixed assets acquired by contributions 157,888.37 INCREASE (DECREASE) IN RETAINED EARNINGS 308,596.04 20,302.51 RETAINED EARNINGS: Retained earnings, beginning balance 940,126.00 51,050.11 24,868.98 Prior period adjustments 1,653.01 Beginning balance,'restated 941,779.01 51,050.11 24,868.98 Residual equity transfer 24,?68.98 (24,868.98) RETAINED EARNINGS - ENDING BALANCE 1,250,375.05 96,222.60 CONTRIBUTED CAPITAL: Contributed capital, beginning balance 5,507,305.00 Prior period adjustments (18,650.00) Beginning balance, restated 5,488,655.00 Depreciation transferred from retained earnings (157,888.37) Residual equity transfer (18,650.00) CONTRIBUTED CAPITAL - ENDING BALANCE 5,312.116.63 TOTAL EQUITY $ 6,562,491.68 $ 96,222.60 $ 17 HOUSING AUTHORITY OF THE CITY OF SALINA, KANSAS COMBINING STATEMENT OF CASH FLOWS- PROPRIETARY FUND TYPES Year Ended June 30, 2002 Public Section 8 Section 8 Housing Vouchl3r Certificates CASH FLOWS FROM OPERATING ACTIVITIES: Rental receipts $ 268,604.81 $ $ HUD Section 8 receipts 870:' 81.42 (2,888.04 ) Other receipts 21,355.25 Tenant security deposits 6,589.98 Cash payments for goods and services (205,453.86) (880,061.21 ) Cash payments to employees for services (287,891.59) (70,627.09) (655.34) NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (196,795.41) (80,e06.88) (3,543.38) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: HUD operating subsidy 217,836.00 HUD modernization grants - operations 27,207.83 PHDEP grant receipts 30,675.55 PHDEP grants expenditures (26,112.05) Other grant receipts 10,000.00 Other grant expenditures (4,542.50) Propety casualty proceeds 3,734.01 Propety casualty expense (5,572.49) Section 8 transfer 24,8138.98 (24,868.98) Net change in cash overdrafts (130.00) Net change in interfund borrowing (110,491.97) 14,003.91 286.22 NET CASH PROVIDED (USED) BY NONCAPITAL FINANCING ACTIVITIES 142,734.38 38,872.89 (24,712.76) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Acquisition of property, plant and equipment (311,717.48) (5,9a1.71) Real property donation Proceeds from sale of capital assets HUD modernization grants 212,199.49 NET CASH PROVIDED (USED) BY CAPITAL AND RELATED FINANCING ACTIVITIES (99,517.99) (5,9Ci1.71) CASH FLOWS FROM INVESTING ACTIVITIES: Net deposits to investments (8,851.93) (29,321.18) 28,184.79 Interest received 18,056.03 2,4e3.50 71.35 NET CASH PROVIDED (USED) IN INVESTING ACTIVITIES 9,204.10 (26,877.68) 28,256.14 NET INCREASE (DECREASE) IN CASH (144,374.92) (74,493.38) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 391,669.29 158,399.27 CASH AND CASH EQUIVALENTS AT END OF YEAR $ 247,294.37 $ 83,905.89 $ Home Program Totals $ $ 268,604.81 867,293.38 21,355.25 6,589.98 (2,061.62) (1,087,576.69) (3,583.77) (362,757.79) (5,645.39) (286,491.06) 217,836.00 27,207.83 30,675.55 (26,112.05) 10,000.00 (4,542.50) 3,734.01 (5,572.49) (130.00) 96,201.84 96,201.84 253,096.35 (14,691.77) (332,390.96) 5,000.00 5,000.00 74,913.29 74,913.29 212,199.49 65,221.52 (40,278.18) (4,354.31) (14,352.63) 4,354.31 24,935.19 10,582.56 155,777.97 (63,090.33) 550,068.56 $ 155,777.97 $ 486,978.23 18 HOUSING AUTHORITY OF THE CITY OF SALINA, KANSAS COMBINING STATEMENT OF CASH FLOWS - ALL PROPRIETARY FUND TYPES (CONTD) Year Ended June 30, 2002 Public Section 8 Section 8 Housing Voucher Certificates RECONCILIATION OF INCOME (LOSS) FROM OPERATIONS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Income (Loss) from operations $ (407,215.56) $ 17,812.00 $ Adjustments to reconcile income (loss) from operations to net cash provided by operating activities: Depreciation 168,614.11 611.42 Change in assets and liabilities: (Increase) decrease in account receivable (3,250.96) (Increase) decrease in due from other governments (3,961.58) (Increase) decrease in prepaid insurance (1,344.55) Increase (decrease) in accounts payable 39,091.80 9,834.04 Increase (decrease) in tenant security deposits 6,589.98 Increase (decrease) in accrued leave (28,151.47) 2,065.24 (655.34) Increase (decrease) in due to other governments 25,839.24 (29,915.00) (2,888.04 ) Increase (decrease) in deferred revenue 339.49 (76,953.00) Increase (decrease) in. inventories 2,692.51 NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES $ (196,795.41) $ (80,506.88:~ $ (3,543.38) Home Program Totals $ (10,451.55) $ (399,855.11 ) 169,225.53 (3,250.96) (3,961.58) (1,344.55) 4,467.70 53,393.54 6,589.98 338.46 (26,403.11 ) (6,963.80) (76,613.51 ) 2,692.51 $ (5,645.39) $ (286,491.06) 19 SUPPLEMENTAL INFORMATION - REQUIRED BY HUD HOUSING AUTHORITY OF THE CITY OF SALINA, KANSAS FINANCIAL DATA SCHEDULE June 30, 2002 Section 8 Rental Section 8 Section 8 Cert Drug Home Rental Housing Prgm./ Elimination Investment Voucher Choice Exist. Grant Capital Partnership Low Rent Program Voucher Housing Program Funds ClAP Prc,gram Business Line Item # Account Description 14850 14.855 14.871 14.857 14.854 14.872 14.852 14.239 Activities TOTAL ASSETS: CURRENT ASSETS: Cash 111 Cash - unrestricted 205.819 83,906 155,778 445,503 113 Cash - other restricted 5.457 5,878 11.335 114 Cash. tenant security deposits 30.139 30.139 100 Total cash 241.415 83,906 5.878 155,778 486.977 Accounts and notes rec~ivab,es: 122 Accounts receivable - HUD other projects 4.030 1,444 90,684 96.158 125 Accounts receivable. miscellaneous 285 285 126 Accounts receivable- tenants - dwelling rents 6,766 6,766 1261 Allowance for doubtful accounts - dwelling rents (3.200) (3.200) 129 Accrued interest receivable 39 38 10 87 120 Total receivables. net of allowances 3,890 4.D68 1.444 90.684 10 100.096 Current investments 131 Investments - unrestricted 208.852 29,331 109.653 347,836 142 Prepaid expenses and other assets 15.480 15,460 143 Inventories 12,046 12,048 144 Interprogram - due from 113,493 113.493 150 TOTAL CURRENT ASSETS 595,156 117.305 7,322 90.684 265.441 1,075.908 NONCURRENT ASSETS: Fixed assets 161 land 1.453.890 3,000 1,456.890 162 Buildings _ 5,413.870 5.413,670 163 Furniture, equipment & ffijchinery - dwellings 4,780 20.911 25,691 164 Furniture, equipment &:macinery . admininstration 84,150 19.410 60.785 164,345 166 Accumulated depreciation (1,255,170) (13,628) (10,726) ( 1,279,523) 167 Construction in progress 314,407 16,892 331.099 160 Total fixed assets, net of accumulated depreciation 5,701,320 5,782 385,378 19.692 6.112.172 171 Notes and mortgages receivable. non-current 34,119 34,119 180 TOTAL NONCURRENT ASSETS 5,701,320 5,782 385,378 53,811 6,146.291 190 TOTAL ASSETS 6,296.4 76 123,088 7,322 476,062 319,252 7,222.200 LIABILITIES AND EQUITY: LIABILITIES: CURRENT LIABILITIES 312 Accounts payable < 90 days 44,057 9.869 53,925 321 Accrued wage/payroll taxes payable 3,371 3.371 322 Accrued compensated absences ~current 48 15 64 333 Accounts payable - other government 25,839 25.839 341 Tenant security deposits 30,139 30.139 342 Deferred revenues 7.204 5,878 13.082 347 Inter-program - due to 14.276 1.444 90.684 7.090 113.493 310 TOTAL CURRENT LIABILITIES 110.658 24.159 7.322 90.684 7.091 239,915 NONCURRENT LIABILITIES' 354 Accrued compensated absences - noncurrent 8.708 2,706 353 11,764 350 TOTAl NONCURRENT LIABILITIES 8.706 2,706 353 11,764 300 TOTAL LtABILITIES 119.364 26.865 7,322 90,684 7.444 251.679 EQUITY: Contributed Capital: 504 Net HUD PHA contributions 5.312,117 18.650 5,330.767 505 Other HUO contributions 507 Other contributions 508 Total contributed capital 5.312.117 18.650 5.330,767 512 Undesignated fund balance/retained earnings 864.996 96,223 385,378 293,157 1.639.754 51:1 TOTAL EQUITY 6,177,113 96,223 385.378 311.807 6,970,521 600 TOTAL LtABILlTIES AND EQUITY 6,296,476 123,088 7,322 476.062 319,252 7,222.200 20 HOUSING AUTHORITY OF THE CITY OF SALINA, KANSAS FINANCIAL DATA SCHEDULE Year Ended June 30, 2002 Section 8 Section 8 Rental Cert Drug Home Rental Prgml Elimination Investment Voucher Section 8 Exist. Grant Capital Partnership Low Rent Program Housing Choice Housing Program Funds ClAP Program Business Une Item # Account Description 14.850 14.855 Voucher 14.871 14.857 14,854 14.872 14.852 14.239 Activities TOTAL REVENUE: 703 Net tenant rental revenue 271.516 271.516 705 Total tenant revenue 271,516 271.516 706 HUD PHA grants 217.836 981,011 26.112 27.208 1,252.167 7061 Capital grants 296,688 296,688 708 Other government grants 4,543 4.543 711 Investment income. unrestricted 18,030 2.492 4.345 24,867 715 Other revenue 21,355 5.000 26,355 716 Gain or loss on the sale of fixed assets 56,263 56.263 700 TOTAL REVENUE 533.280 983.503 26,112 323,896 65,609 1.932,399 EXP ENS ES: Administrative 911 Administrative salaries 96,716 56,418 6,295 159.429 912 Auditing fees 2,100 395 2.495 914 Compensated absences 1,560 2,720 338 4,618 915 Employee benefit contributions~ administrative 37,917 13,519 1.419 52.854 916 Other operating. administrative 53,553 31,633 27.208 107 112.501 Tenant services 924 Tenant services. other 1,094 26,112 27,206 Utilities 931 Water 1,888 1.888 932 Electncity 5,578 5.578 933 Gas 5,627 5.627 938 Other utilities expense 30 30 Ordinary maintenance & operation 941 Ordinary maintenance. labor 86,210 86.210 942 Ordinary maintenance. materials & other 51,774 51,774 943 Ordinary maintenance - contract costs 58,866 10,673 69.540 945 Employee benefits - maintenance 38.915 38,915 General expenses 961 Insurance premiums 37,029 37.029 962 Other General Expenses 4,543 2.293 6,836 963 Payments in lieu of taxes 25,839 25,839 964 Bad debt - tenant rents (431) (431) 968 Severance expense 969 TOTAL OPERATING EXPENSES 508,808 115,359 26.112 27.208 10.452 687.939 970 EXCESS OPERATING REVENUE OVER OPERATING EXPENSES 24,4 72 868,143 296,688 55.156 1,244.460 972 Casualty losses. non-capitalized 1,838 1.838 973 Housing assis!~:1ce payments e47,228 847,22e 974 Depreciation expense 157.888 611 10.726 169,225 900 TOTAL EXPENSES 668,534 963.198 26,112 37,934 10,452 1.706.230 1000 REVENUE OVER (UNDER) TOTAL EXPENSES (135,254) 20.304 285,962 55,156 226.169 MEMO account Information 1103 Beginning equity 5.975,362 51,050 24,869 99,415 372,654 240.864 6.764.214 1104 Prior period adjustments (16,997) (2,863) (19,860) Residual equity transfers 354,004 (51,050) 75,919 (24,869) (372,654) (240,864 ) 259,514 (0) 1112 Depreciation "add back" 157,888 157,888 1113 Maximum annual contributions commitment 932,087 932,087 1114 Prorata maximum annual contributions applicable to a period of less than twelve months 11 ~ I:' C0~tin.gef1cJ' reser/c. ACe program reserve 232,179 232.179 1116 Total annual contnbutions available 1,164,266 1,164.266 1120 Unit months available 1,896 3.444 5.340 , 121 Number of unit months teased 1,848 3.433 5.281 21 SINGLE AUDIT SECTION HOUSING AUTHORITY OF THE CITY OF S,t.,L!N,LI" f<ANSAS SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Year Ended June 30, 2002 Federal Grantor Contract Number U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Section 8 Housing Choice Voucher Program Section 8 Voucher KC 7015V Public and Indian Housing Program Operating subsidy KC-1029 Public Housing Drug Elimination Program Public Housing KC-1029 Capital Grant Program Public Housing Federal CFDA Number 14.871 $ 14.850 14.854 KC-1029 14.872 Total Federal Awards Expended $ Significant Accounting Policies - The Schedule of Expenditures of Federal Awards was' prepared in accordance with the basis of accounting described in Note A to the financial statements. 22 Federal Expenditures 981,011.00 217,836.00 26,112.05 323,896.14 1,548,855.19 However, we noted other matters involving the internal control over financial reporting that we have reported to management of the Housing Authority of the City of Salina, Kansas in a separate letter dated October 8, 2002. This report is intended solely for the information and use of the Board of Commissioners, management and the U.S. Department of Housing and Urban Development and is not intended to be and should not be used by anyone other than these specified parties. M~ ~ AJ~. c~1h October 8,2002 24 Internal Control Over Compliance The management of the Housing Authority of the City of Salina, Kansas is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to federal programs. In planning and performing our audit, we considered the Housing Authority of the City of Salina, IKansas' internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133. Our consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that noncompliance with applicable requirements of laws, regulations, contracts and grants that would be material in relation to a major federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over compliance and its operation that we consider to be material weaknesses. This report is intended solely for the information and use of the Board of Commissioners, management and the U.S. Department of Housing and Urban Development and is not intended to be and should not be used by anyone other than these specified parties. M~ :yM~C/A-; October 8,2002 26 HOUSING AUTHORITY OF THE CITY OF SALINA, KANSAS SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS June 30, 2002 The prior audit for the year ended June 30, 2001 contained no findings or questioned costs. 27 HOUSING AUTHORITY OF THE CITY OF SALINA, KANSAS SCHEDULE OF FINDINGS AND QUESTIONED COSTS June 30, 2002 Section I - Summary of Auditors Results: · We issued a unqualified opinion on the financial statements of the Housing Authority of the City of Salina, Kansas for the fiscal year ended June 30, 2002. Financial Statements: · The results of our audit procedures disclosed no material weakness(es) in internal control over financial reporting for the fiscal year ended June 30, 2002. · The results of our audit procedures disclosed no reportable conditions in internal control over financial reporting for the fiscal year ended June 30, 2002. · The results of our audit procedures disclosed no noncompliance which is material to the financial statements for the fiscal year ended June 30, 2002. Federal Awards: · The results of our audit procedures disclosed no material weakness(es) in internal control over major programs for the fiscal year ended June 30, 2002. · The results of our audit procedures disclosed no reportable condition in internal control over major programs for the fiscal year ended June 30, 2002. · We issued an unqualified opinion on compliance for major programs for the fiscal year ended June 30, 2002, · The results of our audit procedures disclosed no audit finding that is required to be reported under code section .51 O(a) of the OMS A-133 Circular. · The programs identified and audited as major are as follows: Section 8 HOLlsing Choice Voucher Program. · The dollar threshold used to distinguish between Type A and Type S programs was $300,000. · For the fiscal year ended June 30, 2002, the Housing Authority of the City of Salina, Kansas qualified as a low-risk auditee, 28 HOUSING AUTHORITY OF THE CITY OF SALINA, KANSAS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONT'D) June 2002 Section 11- Financial Statement Findinas: Reportable Conditions: · The results of our audit procedures disclosed no reportable conditions in internal control over financial reporting for the fiscal year ended June 30, 2002, Material Weakness(es): · The results of our audit procedures disclosed no material weakness(es) in internal control over financial reporting for the fiscal year ended June 30, 2002. Instances of Noncompliance: · The results of our audit procedures disclosed no instances of noncompliance which is material to the financial statements for the fiscal year ended June 30, 2002. Section 11/ - Federal A ward Findinas and Questioned Costs: Reportable Conditions: · The results of our audit procedures disclosed no reportable condition in internal control over major programs for the fiscal year ended June 30, 2002. Material Weakness(es): · The results of our audit procedures disclosed no material weakness(es) in internal control over major programs for the fiscal year ended June 30, 2002, Instances of Noncompliance: · The results of our audit procedures disclosed no instances of noncompliance which is required to be reported in accordance with Circular A-133, Section .51 O(a) for the fiscal year ended June 30, 2002. 29