Audit - 1998/1999
HOUSING AUTHORITY OF THE CITY
OF SALINA, KANSAS
FINANCIAL STATEMENTS AND
SUPPLEMENTAL INFORMATION
Year Ended June 30, 1999
TABLE OF CONTENTS
FINANCIAL SECTION
Paae No.
Independent Auditor's Report
1
Financial Statements:
Combined Statement of Income and Expenses - Prescribed Basis
3
4
5
6
Combined Balance Sheet - Prescribed Basis
Combined Analysis of Surplus - Prescribed Basis
Notes to Financial Statements
Supplemental Information:
Schedule of Year 2000 Compliance
11
12
13
Computation of Residual Receipts
Statement and Certification of Actual Modernization Costs
Statement of Modernization Grant Costs - Uncompleted
14
Computation of Annual Contributions Earned, Project
Account and Operating Reserve Changes
15
SINGLE AUDIT SECTION
Schedule of Expenditures of Federal Awards
Independent Auditor's Report on Compliance on
Internal Control Structure Over Financial Reporting Based
on an Audit of Financial Statements Performed in
Accordance with Governmental Auditing Standards
16
17
Independent Auditor's Report on Compliance With Requirements
Applicable to Each Major Program and Internal Control Over
Compliance in Accordance With OMB Circular A-133
19
21
Summary Schedule of Prior Audit Findings
Schedule of Findings and Questioned Costs
Corrective Action Plan
22
26
Nie~{edde
-(9 Wiens
CERTIFIED PUBLIC ACCOUNTANTS
Qandal D. Niewedde, CP^
Jeffrey J. Wiens, CP^
INDEPENDENT AUDITOR'S COMBINED REPORT ON THE
FINANCIAL STATEMENTS AND THE
SUPPLEMENTARY SCHEDULE OF EXPENDITURES OF
FEDERAL AWARDS-GOVERNMENTAL ENTITY
To the Board of Commissioners
Housing Authority of the City of Salina, Kansas
We have audited the accompanying financial statements of the Housing Authority of the City of
Salina, Kansas, as of and for the year ended June 30, 1999, as listed in the table of contents.
These 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 generally accepted auditing standards and the
standards applicable to financial audits contained in Government Auditing Standards, issued by
the Comptroller General of the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
As described in Note A, Housing Authority of the City of Salina, Kansas prepares its financial
statements on the basis of accounting practices prescribed by the U.S. Department of Housing
and Urba.Developrn~'lttHUD) which is a comprehensive basis of accounting other than .
generaUy accepted accounting principles.
In our opinion, the financial statements referred to in the first paragraph 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, 1999, and the results of its revenues, expenses, and changes in
surplus for the year then ended in conformity with the basis of accounting described in Note A.
In accordance with Government Auditing Standards, we have also issued our report dated
December 8, 1999 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.
1
P.o. Box 98 . York. Nebraska 68467 . Ph: 402-534-2250 . fax: 402-534-2250 · nw-cpa@navix.nel
Our audit was performed for the purpose of forming an opinion on the financial statements of
the Housing Authority of the City of Salina, Kansas taken as a whole. 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 Organizations, and is not a required part of the financial
statements. The accompanying supplemental financial information is presented for purposes of
additional analysis and is not a required part of the financial statements. Such information,
except for the Schedule of Year 2000 Compliance, has been subjected to the auditing
procedures applied in the audit of the financial statements and, in our opinion, is fairly presented
in all material respects in relation to the financial statements taken as a whole. Because of the
unprecedented nature of the Year 2000 issue, its effects and the success of related remediation
efforts will not be fully determinable until the year 2000 and, thereafter, we are unable to
validate the Authority's assertions as they relate to the Year 2000 issue and offer no assurance
on the Schedule of Year 2000 Compliance.
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.
A I... ":. ~.& d
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December 8, 1999
2
FINANCIAL STATEMENTS
HOUSING AUTHORITY OF THE CITY OF SALINA, KANSAS
COMBINED BALANCE SHEET - PRESCRIBED BASIS
June 30, 1999
Total
Public Section 8 Section 8 Home- (Memorandum
Housing Certificates Voucher Ownership Only)
ASSETS
Cash $ 19,459.42 $ $ 38,954.86 $ $ 58,414.28
Petty cash 50.00 50.00
Accounts receivable:
Tenants 28,303.35 28,303.35
Mortgage receivable 46,517.95 46,517.95
Other 185.00 778.07 963.07
Interfund receivable 32,376.45 18,815.35 22,376.26 166,576.86 240,144.92
Investments - general fund 448,702.12 25,283.13 27,405.32 501,390.57
HUD annual contributions receivable 67,888.11 67,888.11
Prepaid insurance 11,203.21 11,203.21
Land, structures and equipment 6,928,788.43 15,418.27 1,669.83 6,945,876.53
TOTAL ASSETS $ 7,536,956.09 $ 60,294.82 $ 63,000.95 $ 240,500.13 $ 7,900,751.99
LIABILITIES AND SURPLUS
LIABILITIES
Accounts payable:
Bank overdrafts $ $ 272.52 $ $ $ 272.52
Tenant security deposits 19,438.38 19,438.38
HUD 2,342.00 27,120.00 29,462.00
Other 5,112.36 1,708.13 90.54 3.05 6,914.08
Interfund payable 172,605.44 33,617.90 33,921.58 240,144.92
Deferred credits 6,906.00 6,906.00
Payments in lieu of taxes 24,403.32 24,403.32
Permanent notes - F.F.B. 634,051.69 634,051.69
TOTAL LIABILITIES 862,517.19 37,940.55 61,132.12 3.05 961,592.91
SURPLUS 6,674,438.90 22,354.27 1,868.83 240,497.08 6,939,159.08
TOTAL LIABILITIES AND SURPLUS $ 7,536,956.09 $ 60,294.82 $ 63,000.95 $ 240,500.13 $ 7,900,751.99
See accompanying notes.
3
HOUSING AUTHORITY OF THE CITY OF SALINA, KANSAS
COMBINED STATEMENT OF INCOME AND EXPENSES - PRESCRIBED BASIS
Year Ended June 30, 1999
Total
Public Section 8 Section 8 Home- (Memorandum
Housing Certificates Voucher Ownership Only)
OPERATING INCOME
Rental income $ 274,022.56 $ $ $ $ 274,022.56
Excess utilties 48.00 48.00
Interest income 9,546.94 3,373.18 1,371.44 '1,631.19 15,922.75
Other income 21,989.08 1,406.29 517.14 23,912.51
TOTAL OPERATING INCOME 305,606.58 4,779.47 1,888.58 '1,631.19 313,905.82
OPERATING EXPENSES
Administration 87,322.10 110,486.66 10,591.25 :!,143.27 210,543.28
Utilities expense 9,908.47 9,908.47
Ordinary maintenance and operation 118,452.64 118,452.64
General expense 114,758.06 24,034.45 1,692.53 '1,402.96 141,888.00
Nonroutine maintenance 15,334.30 15,334.30
Housing assistance payments 518,853.54 42,741.77 561,595.31
TOTAL OPERATING EXPENSES 345,775.57 653,374.65 55,025.55 ~1,546.23 1,057,722.00
NET OPERATING INCOME (LOSS) (40,168.99) (648,595.18) (53,136.97) (11,915.04) (743,816.18)
OTHER CREDITS AND (CHARGES)
Interest income (43,459.69) (43,459.69)
Prior year adjustments affecting
residual receipts (340.33) (340.33)
TOTAL OTHER CREDITS
AND (CHARGES) (43,800.02) (43,800.02)
NET INCOME (LOSS) $ (83,969.01) $ (648,595.18) $ (53,136.97) $ (1,915.04) $ (787,616.20)
See accompanying notes.
4
HOUSING AUTHORITY OF THE CITY OF SALINA, KANSAS
COMBINED ANALYSIS OF SURPLUS - PRESCRIBED BASIS
Year Ended June 30, 1999
Total
Public Section 8 Section 8 Home- (Memorandum
Housing Certificates Voucher Ownership Only)
UNRESERVED SURPLUS
Balance at beginning of year $ (2,497,426.87) $ (9,367,944.17) $ (824,483.39) $ 242,412.12 $ (12,447,442.31 )
HUD adjustment 646,029.00 86,121.00 732,150.00
Beginning balance, restated (2,497,426.87) (8,721,915.17) (738,362.39) 242,412.12 (11,715,292.31 )
Net income (loss) for the year ended (83,969.01 ) (648,595.18) (53,136.97) (1,915.04) (787,616.20)
(Provision for) reduction of
operating reserve for the year ended 26,157.23 43,327.18 1,042.97 70,527.38
(Provision for) reduction of project
account - unfunded for the year ended (201,771.00) (91,068.00) (292,839.00)
BALANCE AT END OF YEAR (2,555,238.65) (9,528,954.17) (881,524.39) 240,497.08 (12,725,220.13)
OPERATING RESERVE
Balance at beginning of year 437,759.47 50,263.18 1,241.97 489,264.62
Provision for (reduction of)
operating reserve for the year ended (26,157.23 ) (43,327.18) (1,042.97) (70,527.38)
BALANCE AT END OF YEAR 411,602.24 6,936.00 199.00 418,737.24
PROJECT ACCOUNT-UNFUNDED
Balance at beginning of year 749,433.00 116,117.00 865.550.00
HUD adjustment (646,029.00) (86,121.00) (732,150.00)
Beginning balance, restated 103,404.00 29,996.00 133,400.00
Provision for (reduction of) project
account - unfunded for the year ended 201,771.00 91,068.00 292,839.00
BALANCE AT END OF YEAR 305,175.00 121,064.00 426,239.00
CUMULATIVE CONTRIBUTIONS
Balance at beginning of year 4,380,777.98 8,633,929.44 710,036.22 13,724,743.64
Opearting subsidy 14,752.00 14,752.00
Annual contributions for the year ended 67,888.11 605,268.00 52,094.00 725,250.11
BALANCE AT END OF YEAR 4,463,418.09 9,239,197.44 762,130.22 14,464,745.75
CUMULATIVE HUD GRANTS
Balance at beginning of year 4,355,909.70 4,355,909.70
Modernization grants received 88,402.44 88,402.44
BALANCE AT END OF YEAR 4,444,312.14 4,444,312.14
CUMULATIVE DONATIONS
Balance at beginning of year 6,617.06 6,617.06
BALANCE AT END OF YEAR 6,617.06 6,617.06
BOOK VALUE OF CAPITAL ASSETS CONVEYED
TO HOMEBUYERS
Balance at beginning of year (96,271.98) (96,271.98)
BALANCE AT END OF YEAR (96,271.98) (96,271.98)
TOTAL SURPLUS $ 6,674,438.90 $ 22,354.27 $ 1,868.83 $ 240,497.08 $ 6,939,159.08
See accompanying notes.
5
HOUSING AUTHORITY OF THE CITY OF SALINA, KANSAS
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Authority was created under the laws of the State of Kansas. The purpose of the
Authority is to administer the Public Housing programs authorized by the United States
Housing Act of 1937, as amended. These programs are subsidized by the Federal
Government through the U.S. Department of Housing and Urban Development (HUD).
Reporting Entity
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 13ntity 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 operations of each fund are accounted for with
a separate set of self-balancing accounts that comprise assets, liabilities, surplus, revenues,
expenditures and expenses.
Basis of Accounting
The accounts of the Authority are maintained on the basis of accounting practices prescribed
by the U.S. Department of Housing and Urban Development which is a comprehensive basis
of accounting other than generally accepted accounting principles.
Cash and Investments
Investments are stated at cost. Investment securities are normally held to mature at par
value and adjustments are not made to the investment portfolio to reflect markl~t conditions.
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.
6
HOUSING AUTHORITY OF THE CITY OF SALINA, KANSAS
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
Tenant Accounts Receivable
Collection losses on accounts receivable are charged against income on the specified write-
off method.
Land. Structures and Eauipment
Building and equipment are recorded at cost and no provision for depreciation of these
facilities is provided. Donated assets are recorded at fair market value at the date of
donation.
HUD Contributions
Federal financial assistance received from the Department of Housing and Urban
Development is recorded as a contribution to surplus.
Income Taxes
The Authority is a governmental subdivision of the State of Kansas and is exempt from
Federal and State income taxes.
Vacation and Sick Pay
The costs of accumulated unpaid vacation and sick leave are reported in the period paid
rather than in the period earned.
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 on the HUD basis of
accounting. 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. Therefore, some amounts presented in this
schedule may differ from amounts presented in, or used in the preparation of, the financial
statements.
NOTE B--DEPOSITS AND INVESTMENTS
Deposits
At March 31, 1999, the Authority's carrying amount of deposits were $110,830.21 and the
bank balances were $114,178.71. Of the bank balance, $114,178.71 was covHred by federal
depository insurance.
7
HOUSING AUTHORITY OF THE CITY OF SALINA, KANSAS
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
NOTE B--DEPOSITS AND INVESTMENTS (CONTD)
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 tlhe 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.
At year end, the Authority's investment balances were as follows:
Category Carrying Market
1 2 3 Amount Value
U.S. Government securities $ 220,000.00 $ $ $ 220,000.00 $ 220,000.00
Total $ $ $ 220,000.00 220,000.00
Items not subject to categorization:
State Investment Pool 228,702.12 228,702.12
Total Investments $ 448,702.12 $ 448,702.12
A reconciliation of cash and investments as shown on the Combined Balance Sheet -
Prescribed Basis is as follows:
Cash on hand $ 50.00
Carrying amount of deposits 110,830.21
Carrying amount of investments 448,702.12
$ 559,582.33
Cash $ 58,414.28
Petty cash 50.00
Investments 501,390.57
Bank overdrafts (272.52)
$ 559,582.33
8
HOUSING AUTHORITY OF THE CITY OF SALINA, KANSAS
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
NOTE C - DEBT AMORTIZATION FUNDS
HUD annual contribution receivable represent amounts on hand with paying agents, the
current contributions due from HUD for the payment of interest on and the retirement of
notes issued to finance the projects.
NOTE D - LAND, STRUCTURES, AND EQUIPMENT
A summary of changes in land, structures and equipment is as follows:
Public Section 8 Section 8
Housing Certificates Voucher Total
Prior audited balance $ 6,806,482.80 $ 15,418.27 $ 1,669.83 6,823,570.90
Capital expenditures 399.91 399.91
Modernization expenditures 142,989.56 142,989.56
Reimbursements (21,083.84) (21,083.84)
Balance per audit $ 6,928,788.43 $ 15,418.27 $ 1,669.83 6,945,876.53
NOTE E - FIXED LIABILITIES
F.F.B. notes are issued in series to provide permanent financing for completed projects. The
notes require semi-annual interest and scheduled principal repayments. HUD provides
funds to pay principal and interest due during each year under the Annual Contributions
Contract.
Housing Authority F.F.B. notes outstanding at June 30,1999 are as follows:
Original
Issue
Current
Balance
3.375% Issued (1983)
Housing Authority bonds due
Serially through 2013
$ 925,423.04 $ 634,051.69
The principal and interest maturities for future years are as follows:
Principal Interest Total
2000 $ 26,040.70 $ 41,847.41 $ 67,888.11
2001 27,649.44 40,238.67 67,888.11
2002 29,584.25 38,303.86 67,888.11
2003 31,536.81 36,351.30 67,888.11
2004 33,618.24 34,269.87 67,888.11
Thereafter 485,622.25 193,258.85 678,881.10
$ 634,051.69 $ 384,269.96 $ 1,018,321.65
9
HOUSING AUTHORITY OF THE CITY OF SALINA, KANSAS
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
NOTE F - 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.
NOTE G - CONTINGENCY
The Authority's employees participate in the Kansas Public Employees Retirement System
(KPERS). During the year ended June 30, 1999, Authority was deducting the employee's
contribution to KPERS from gross wages prior to calculating the amount of sodal security
and medicare taxes to withhold from the employee and the portion due from the Authority.
Employee contributions to KPERS are not exempt from these taxes and should have been
taxed. The combined employee and employer portions of the tax that should have been paid
during the year ended June 30, 1999 were approximately $960. This practice has been in
effect since at least 1996.
10
SUPPLEMENTAL INFORMATION
HOUSING AUTHORITY OF THE CITY OF SALINA, KANSAS
SCHEDULE OF YEAR 2000 COMPLIANCE
June 30, 1999
The year 2000 issue is the result of shortcomings in many electronic data-processing
systems and other equipment that may adversely affect the operations in the year 1999
and beyond. For many years, programmers eliminated the first two digits from a year
when writing programs. For example, programmers would designate January 1, 1965 as
"01/01/65" instead of "01/01/1965." On January 1,2000 at 12:00:01 a.m., the internal
clock in computers and other equipment will roll over from "12/31/99" to "01/0'1/00."
Unfortunately, many programs (if not corrected) will not be able to distinguish between
the year 2000 and the year 1900. This may cause the programs to process data
inaccurately or to stop processing data altogether. Another factor that may cause
problems in programs is the leap-year calculation. Some programs are unabl13 to detect
the year 2000 as a leap year.
The Authority uses computer hardware and software to process monthly accounting
information and perform tenant-related calculations and documentation. The Authority
contracts with a service organization to process its monthly accounting. The Authority
has contacted both its software providers and service organization and determined that
all software used is year 2000 compliant but has not yet tested the systems to validate
these representations. Due to the Authority's assumption that it is year 2000 compliant,
no resources have been committed.
Because of the unprecedented nature of the year 2000 issue, its effects and the success
of related remediation efforts will not be fully determinable until the year 2000 and
thereafter. Management cannot assure that the Authority is or will be year 2000-ready,
that the Authority's remediation efforts will be successful in whole or in part, or that
parties with whom the Authority does business will be year 2000-ready.
See accompanying notes.
11
HOUSING AUTHORITY OF THE CITY OF SALINA, KANSAS
COMPUTATION OF RESIDUAL RECEIPTS
Year Ended June 30,1999
COMPUTATION OF RESIDUAL RECEIPTS
OPERATING RECEIPTS
Operating revenues
Operating subsidy
TOTAL OPERATING RECEIPTS
OPERATING EXPENDITURES
Operating expenditures
Capital expenditures
Prior year adjustments affecting residual receipts
TOTAL OPERATING EXPENDITURES
RESIDUAL RECEIPT BEFORE PROVISION FOR OPERATING RI:::SERVE
(PROVISION FOR) REDUCTION OF OPERATING RESERVE
RESIDUAL RECEIPTS $
See accompanying notes.
12
Public
Housing
$
305,606.58
14,752.00
320,358.58
345,775.57
399.91
340.33
346,515.81
(26,157.23)
26,157.23
HOUSING AUTHORITY OF THE CITY OF SALINA, KANSAS
STATEMENT AND CERTIFICATION OF ACTUAL MODERNIZATION COST
June 30, 1999
1. The modernization costs of Project 905 are as follows:
Funds approved
Funds expended
EXCESS (DEFICIENCY) OF FUNDS APPI~OVED $
Funds advanced
Funds expended
EXCESS (DEFICIENCY) OF FUNDS ADVANCED $
2. The distribution of costs by project as shown on the final ClAP Budget/Progress Report
of modernization expenditures accompanying the Actual Modernization Cost Certificate
submitted to HUD for approval is in agreement with the records of the Housing Authority
of the City of Salina, Kansas.
3. The Authority has certified that all modernization costs or liabilities therefore incurred by
the Authority have been fully paid.
4. The following modernization advances and expenditures were incurred during the
twelve month period ended June 30, 1999:
Funds advanced
Funds expended
See accompanying notes.
13
$
50,000.00
50,000.00
$
50,000.00
50,000.00
$
$
HOUSING AUTHORITY OF THE CITY OF SALINA, KANSAS
STATEMENT OF MODERNIZATION GRANT COSTS - UNCOMPLETED
June 30, 1999
1. The modernization costs of Phase 906 and 907 are as follows:
Funds approved
Funds expended
Funds advanced
Funds expended
$
906
480,000.00 $
148,651.81
331,348.19 $
EXCESS (DEFICIENCY) OF FUNDS APPROVED $
$ 88,402.44 $
148,651.81
EXCESS (DEFICIENCY) OF FUNDS ADVANCED $ ~,249.37) $
2. The following advances and expenditures were incurred during the twelve months ended
June 30, 1999:
See accompanying notes.
$
$
88,402.44 $
142,935.65 $
14
907
200,000.00
53.91
199,946.09
53.91
(53.91)
53.91
Total
Section 8 Section 8 (Memorandum
Certificates Voucher Only)
MAXIMUM CONTRIBUTIONS AVAILABLE
Maximum annual contributions authorized $ 807,039.00 $ 1~.3,162.00 $ 950,201.00
Project account balance at beginning of year 103,404.00 29,996.00 133,400.00
TOTAL CONTRIBUTIONS AVAILABLE 910,443.00 17'3,158.00 1,083,601.00
ANNUAL CONTRIBUTIONS REQUIRED
Housing assistance payments 518,853.54 42,741.77 561,595.31
Administrative fees earned 87,223.46 9,608.23 96,831.69
Hard to house 855.00 1,035.00 1,890.00
Audit costs 865.00 80.00 945.00
Project receipts (2,529.00) (1,371.00) (3,900.00)
TOTAL ANNUAL CONTRIBUTIONS REQUIRED 605,268.00 52,094.00 657,362.00
ANNUAL CONTRIBUTIONS EARNED
Lesser of contributions available or
contributions required $ 605,268.00 $ 52,094.00 $ 657,362.00
HOUSING AUTHORITY OF THE CITY OF SALINA, KANSAS
COMPUTATION OF ANNUAL CONTRIBUTIONS EARNED,
PROJECT ACCOUNT AND OPERATING RESERVE CHANGES
Year Ended June 30, 1999
CALCULATION OF INCREASE IN PROJECT ACCOUNT - UNFUNDED
Total contribution available
Balance per prior audit
Annual contribution earned
$
910,443.00 $ 173,158.00 $
(103,404.00) (29,996.00)
(605,268.00) ~2,094.00)
PROVISION FOR PROJECT (REDUCTION OF)
PROJECT ACCOUNT-UNFUNDED $
201,771.00 $
91,068.00 $
OPERATING RECEIPTS
Total operating income
Annual contribution earned
$
4,779.47 $
605,268.00
610,047.47
1,888.58 $
5:2,094.00
5:3,982.58
TOTAL OPERATING RECEIPTS
OPERATING EXPENDITURES
Total operating expenses
653,374.65
653,374.65
(43,327.18) $
55,025.55
5!;,025.55
('1,042.97) $
TOTAL OPERATING EXPENDITURES
(PROVISION FOR) REDUCTION OF OPERATING RESERVE $
See accompanying notes.
15
1,083,601.00
(133,400.00)
(657,362.00)
292,839.00
6,668.05
657,362.00
664,030.05
708,400.20
708,400.20
(44,370.15)
SINGLE AUDIT SECTION
HOUSING AUTHORITY OF THE CITY OF SALINA, KANSAS
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Year Ended June 30,1999
Federal Grantor
Contract
Number
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Public and Indian Housing:
Operating subsidy
KC-1029
Comprehensive Improvements Assistance Program
Public Housing
KC-1029
Section 8 Cluster
Section 8 Rental Certificate Program
Section 8 Certificates
KS038CE
Section 8 Rental Voucher Program
Section 8 Voucher
KS038VO
Total - Section 8 Cluster
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.
See accompanying notes.
16
Federal
CFDA
Number
Federal
Expenditures
14.850 $ 14,752.00
14.852 142,989.56
14.857 605,268.00
14.855 52,094.00
657,362.00
$ 815,103.56
Nie~vedde
-(9 Wiens
CERTIFIED PUBLIC ACCOUNTANTS
Randal D. Niewedde, CPi\.
Jeffrey J. Wiens, CPi\.
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE
AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN
ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the Board of Commissioners
Housing Authority of the City of Salina, Kansas
We have audited the financial statements of the Housing Authority of the City of Salina, Kansas
as of and for the year ended June 30, 1999. As described in Note A, the Housing Authority of
the City of Salina, Kansas prepares its financial statements on the basis of accounting practices
prescribed by the U.S. Department of Housing and Urban Development (HUD) which is a
comprehensive basis of accounting other than generally accepted accounting principles. We
conducted our audit in accordance with generally accepted auditing standards and the
standards applicable to financial audits contained in Government Auditina Standards, issued by
the Comptroller General of the United States.
Compliance
As part of obtaining reasonable assurance about whether the Housing Authority of the City of
Salina, Kansas' financial statements are free of material misstatement, we performed tests of its
compliance with certain provisions of laws, regulations, contracts and grants, noncompliance
with which could have direct and material effect on the determination of financial statement
amounts. However, providing an opinion on compliance with those provisions was not an
objective of our audit and, accordingly, we do not express such an opinion. The msults of our
tests disclosed no instances of noncompliance that are required to be reported under
Government Auditing Standards.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the Housing Authority of the City of Salina,
Kansas' internal control over financial reporting in order to determine our auditing procedures for
the purpose of expressing our opinion on the financial statements and not to provide assurance
on the internal control over financial reporting. However, we noted certain matters involving the
internal control over financial reporting its operation that we consider to be reportable
conditions. Reportable conditions involve matters coming to our attention relating to significant
deficiencies in the design or operation of the internal control over financial reporting that, in our
judgement, could adversely affect the Housing Authority of the City of Salina, Kansas' ability to
record, process, summarize and report financial data consistent with the assertions of
management in the financial statements. Reportable conditions are described in the
accompanying schedule of findings and questioned costs as Finding 99-1 and 99-2.
17
P.o. Box 98 . York. Nebra6ka 68467 . Ph: 402-534-2250 . fax: 402-534-2250 . nw-cpa@navixnel
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 misstatements
in amounts that would be material in relation to the financial statements being audited may
occur and not be detected within a timely period by employees in the normal course of
performing their assigned functions. Our consideration of the internal control over financial
reporting would not necessarily disclose all matters in the internal control that mi~lht be
reportable conditions and, accordingly, would not necessarily disclose all reportable conditions
that are also considered to be material weaknesses. However, we believe none of the
reportable conditions described above is a material weakness.
We also 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 December 8, 1999.
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.
/tl...:..u. J tJ~ t:',o~
,
December 8, 1999
18
Nie~xredde
-(9 Wiens
CERTIFIED PUBLIC ACCOUNTANTS
Qandal D. Niewedde. CP^
Jeffrey J. Wiens. CP^
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH REQUIREMENTS
APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER
COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133:
To the Board of Commissioners
Housing Authority of the City of Salina, Kansas
Compliance
We have audited the compliance of the Housing Authority of the City of Salina, Kansas with the
types of compliance requirements described in the U. S. Office of Management and Budaet
(OMB) Circular A-133 Compliance Supplement that are applicable to each of its major federal
programs for the year ended June 30, 1999. The Housing Authority of the City of Salina,
Kansas' major federal programs are identified in the summary of auditor's results section of the
accompanying schedule of findings and questioned costs. Compliance with the requirements of
laws, regulations, contracts and grants applicable to each of its major federal pro!~rams is the
responsibility of the Housing Authority of the City of Salina, Kansas' management Our
responsibility is to express an opinion on the Housing Authority of the City of Salina, Kansas'
compliance based on our audit.
We conducted our audit of compliance in accordance with generally accepted auditing
standards; the standards applicable to financial audits contained in Government Auditing
Standards. issued by the Comptroller General of the United States; and OMB Circular A-133,
Audits of States, Local Governments, and Non-Profit Oraanizations. Those standards and OMB
Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about
whether noncompliance with the types of compliance requirements referred to above that could
have a direct and material effect on a major federal program occurred. An audit includes
examining, on a test basis, evidence about the Housing Authority of the City of Salina, Kansas'
compliance with those requirements and performing such other procedures as WEl consider
necessary in the circumstances. We believe that our audit provides a reasonable basis for our
opinion. Our audit does not provide a legal determination on the Housing Authority of the City of
Salina, Kansas' compliance with those requirements.
In our opinion, the Housing Authority of the City of Salina, Kansas complied, in all material
respects, with the requirements referred to above that are applicable to each of its major federal
programs for the year ended June 30, 1999.
19
Po. !)ox 98 . York. Nebraska 68467 · Ph: 402-534-2250 . fax; 402-534-2250 . nw-cpa@navix.nel
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, Kansas' 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.
We noted certain matters involving the internal control over compliance and its operation that
we consider to be reportable conditions. Reportable conditions involve matters coming to our
attention relating to significant deficiencies in the design or operation of the internal control over
compliance that, in our judgment, could adversely affect the Housing Authority of the City of
Salina, Kansas' ability to administer a major federal program in accordance with applicable
requirements of laws, regulations, contracts and grants. Reportable conditions ane described in
the accompanying schedule of findings and questioned costs as items finding 99-3.
A material weakness is a condition in which the design or operation of one or morle 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. Our
consideration of the internal control over compliance would not necessarily disclose all matters
in the internal control that might be reportable conditions and, accordingly, would not
necessarily disclose all reportable conditions that are also considered to be material
weaknesses. However, we believe none of the reportable conditions described above is a
material weakness.
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.
/Ll.... :'JJ L tJ:,..... QA~
December 8, 1999
20
HOUSING AUTHORITY OF THE CITY OF SALINA, KANSAS
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
June 30, 1999
The prior audit for the year ended June 30, 1998 contained no findings or questioned costs.
21
HOUSING AUTHORITY OF THE CITY OF SALINA, KANSAS
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
June 30, 1999
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, 1999.
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, 1999.
· The results of our audit procedures disclosed two reportable conditions in internal control
over financial reporting for the fiscal year ended June 30, 1999.
· The results of our audit procedures disclosed no noncompliance which is material to the
financial statements for the fiscal year ended June 30, 1999.
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, 1999.
· The results of our audit procedures disclosed one reportable condition in internal control
over major programs for the fiscal year ended June 30, 1999.
· We issued an unqualified opinion on compliance for major programs for the fiscal year
ended June 30, 1999.
· The results of our audit procedures disclosed one audit finding that is required to be
reported under code section .510(a) of the OMS A-133 Circular.
· The programs identified and audited as major are as follows: Section 8 Cluster
· The dollar threshold used to distinguish between Type A and Type S programs was
$300,000.
· For the fiscal year ended June 30, 1999, the Housing Authority of the City of Salina,
Kansas qualified as a low-risk auditee.
22
HOUSING AUTHORITY OF THE CITY OF SALINA, KANSAS
SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONT'D)
June 1999, 1998 and 1997
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, 1999.
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, 1995I.
Section 111- Federal Award Findinas and Questioned Costs:
Reportable Conditions:
· The results of our audit procedures disclosed one reportable condition in internal control
over major programs for the fiscal year ended June 30, 1999.
99-3 HQS Quality Control Inspections
Section 8 Certificates, CFDA 14.857
Section 8 Voucher, CFDA 14.855
Criteria: The Authority is required to perform quality control inspections on 5% of its
Section 8 units which have passed the Housing Quality Standards inspection.
Condition: The Authority did not start performing quality control inspections until
February of 1999 and from that point on, the Authority did not have an ade~quate system
of tracking inspections to ensure that 5% are having a quality control inspection.
Effect: The Authority does not have an adequate system to monitor HQS inspections
and it appears the 5% threshold was not met.
Questioned Cost: None.
Recommendation: We recommend the Authority establish an HQS quallity control
process of where the units reviewed are selected at random after the initial inspection
has been performed. All inspections should be logged to assist in preparcltion of the
SEMAP certification and for audit.
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, 1999.
24
HOUSING AUTHORITY OF THE CITY OF SALINA, KANSAS
SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CaNTO)
June 1999, 1998 and 1997
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 .510(a) for the fiscal
year ended June 30, 1999.
25
SALINA HOUSING AUTHORITY
POST OFFICE BOX 1202
SALINA, KANSAS 67402-1202
469 SOUTH 5TH STREET
PHONE: (785) 827-0441
!5l
EQUAL HOUSING
OPPORTUNITY
February 18,2000
Jeffrey J. Wiens, CPA
Niewedde & Wiens
P.O. Box 98
York, Nebraska 68467
RE: Draft Audit Report Response and Corrective Action Plan, as required By Mr. Wiens.
Mr. Wiens,
As I understand from our phone conversation, as auditor, your expectation is to have the r1espODses to your
findings submitted for Binding with the Audit Report. Contained herein, please find the responses to your
findings of the Audit regarding the Salina Housing Authority for the year ending 6/30/199'9.
Finding 99-1: Physical Inventory
The Salina Housing Authority will begin to complete annual physical inventories. SHA 'will also direct
Lindsey and Company to update the published inventory listing.
Finding 99-2: Unsnpported Journal Vouchers
The Salina Housing Authority will request that adjusting entry information be contained within the General
Ledger when published by Lindsey and Company.
Reportable Condition Response:
99-3 HQS Quality Control Inspections
Section 8 Certificates, CFDA 14.857
Section 8 Voucher, CFDA 14.855
The Salina Housing Authority will continue to utilize it's Section Eight Housing Management Program
Directive with regard to 5% quality assurance inspections.
L
26