Community Development Block Grant Funds - 12-31-1980
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CITY OF SALINA
Salina, Kansas
COMMUNITY DEVELOPMENT BLOCK GRANT FUNDS
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REPORT ON EXAMINATION
December 31, 1980
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KENNEDY AND COE
Certified Public Accountants
Salina, Kansas
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Exhibit A-I
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Exhibit A-2
I Exhibit A-3
I Exhibit A-4
I Exhibit B-1
I Exhibit B-2
Exhibit B-3
I Exhibit B-4
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CITY OF SALINA
Salina, Kansas
COMMUNITY DEVELOPMENT BLOCK GRANT FUNDS
TABLE OF CONTENTS
Page
ACCOUNTANTS' REPORT
1
STATEMENT OF SOURCE AND STATUS OF FUNDS, PROGRAM YEAR
1976
2
STATEMENT OF SOURCE AND STATUS OF FUNDS, PROGRAM YEAR
1977
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STATEMENT OF SOURCE AND STATUS OF FUNDS, PROGRAM YEAR
1978
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STATEMENT OF SOURCE AND STATUS OF FUNDS, PROGRAM YEAR
1979
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STATEMENT OF PROGRAM COSTS - PROGRAM YEAR 1976
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STATEMENT OF PROGRAM COSTS - PROGRAM YEAR 1977
7-8
STATEMENT OF PROGRAM COSTS - PROGRAM YEAR 1978
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STATEMENT OF PROGRAM COSTS - PROGRAM YEAR 1979
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ACCOUNTANTS' COMMENTS
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Table of Contents
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KENNEDY AND COE
CERTIFIED PUBLIC ACCOUNTANTS
HOME OFFICE;
P. O. BOX 1178
S...UN.... KANSAS 47401
813.825-1581
OFFICES IN:
KANSAS
NEBRASKA
OKLAHOMA
COLORADO
The Mayor and
The Board of City Commissioners:
We have examined the Statements of Source and Status of Funds and the Statements of
Program Costs applicable to the following described Community Development Grant
programs of the City of Salina, Kansas, for the period ended December 31, 1980.
Program
Year
Community
Development
Grant Number
1976
1977
1978
1979
B-76-HN-20-001S
B-77-HN-20-001S
B-78-HN-20-001S
B-79-llN-20-001S
Our examination was made in accordance with the prescribed auditing standards and
audit requirements set forth in the Department of Housing and Urban Development's
Audit Guide and Standards for Community Development Block Grant Recipients and,
accordingly, included such tests of the accounting records and such other auditing
procedures as we considered necessary in the circumstances.
In our opinion, the accompanying statements present fairly the disposition and status
of the Community Development funds at December 31, 1980, in conformity with generally
accepted accounting principles applied on a consistent basis and the requirements
of HUD. Further, costs incurred are eligible under the Grant Agreement and are in
accordance with Federal Management Circular (FMC) 74-4.
We have also reviewed compliance and internal control matters in accordance with
the provisions of the HUD audit guide for the Community Development Block Grant
Program, and have included applicable comments on pages 11 to 14.
Respectfully submitted,
Salina, Kansas
February 26, 1981
K~ ~ ~.u--
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MEMBERS OF: AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
SEe AND PRIVATE COMPANIES PRACTICE SECTIONS OF AICPA
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CITY OF SALINA
Salina, Kansas
Exhibit A-1
COMMUNITY DEVELOPMENT BLOCK GRANT FUNDS
Program Year 1976, CDBG No. B-76-HN-20-0015
STATEMENT OF SOURCE AND STATUS OF FUNDS
June 5, 1976, to December 31, 1980
Grant
Amount
Total Program Year 1976 funds allocated to recipient
Less - Unobligated funds reprogrammed to Program Year 1977,
No. B-77-HN-20-0015
$695,000.00
46,375.00
Total adjusted Program Year 1976 resources
Less - Total Program Year 1976 funds drawn down by recipient
648,625.00
643,102.59
Funds still available from HUD - Program Year 1976
5.522.41
Total Program Year 1976 funds drawn down by recipient
Program income applicable to Program Year 1976
643,102.59
Total Program Year 1976 funds received
Funds applied to Program Year 1976 costs - Exhibit B-1
643,102.59
643,102.59
Total Program Year 1976 funds held by recipient
Total Program Year 1976 funds available for disposition
$ 5.522.41
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CITY OF SALINA
Salina, Kansas
COMMUNITY DEVELOPMENT BLOCK GRANT FUNDS
Program Year 1977, CDBG No. B-77-HN-20-0015
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STATEMENT OF SOURCE AND STATUS OF FUNDS
June 5, 1977, to December 31, 1980
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Total Program year 1977 funds allocated to recipient
Add - Unobligated funds reprogrammed from prior program years
Program Year 1975, No. B-75-HN-20-0015 $363,000.00
Program Year 1976, No. B-76-HN-20-0015 46,375.00
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Add - Surplus from urban renewal settlement
Project No. KS A-8
Project No. KS R-29
73,141.00
133,814.00
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Total adjusted Program Year 1977 resources
Less - Total Program Year 1977 funds drawn down by recipient
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Funds still available from HUD - Program Year 1977
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Total Program Year 1977 f~nds drawn down by recipient
Program income applicable to Program Year 1977
Total Program Year 1977 funds received
Funds applied to Program Year 1977 costs - Exhibit B-2
Total Program Year 1977 funds held by recipient
Total Program Year 1977 funds available for disposition
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Exhibit A-2
Grant
Amoun t
$ 695,000.00
409,375.00
206,000.00
1,311,330.00
1,282,554.31
28.775.69
1,282,554.31
49,976.00
1,332,530.31
1,332,530.31
S 28.775.69
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CITY OF SALINA
Salina, Kansas
Exhibit A-3
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COMMUNITY DEVELOPMENT BLOCK GRANT FUNDS
Program Year 1978, CDBG No. B-78-HN-20-0015
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STATEMENT OF SOURCE AND STATUS OF FUNDS
June 5, 1978, to December 31, 1980
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Grant
Amount.
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Total Program Year 1978 funds a1rocated to recipient
Less - Total Program Year 1978 'funds drawn down by recipient
$452,000.00
426,350.02
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Funds still available from HOO - Program Year 1978
2S.649.98
Total Program Year 1978 funds drawn down by recipient
Program income applicable to Program Year 1978
426,350.02
16,081. 25
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Total Program Year 1978 funds received
Funds applied to Program Year 1978 costs - Exhibit B-3
II Total Program Year 1978 funds held by recipient
442,431. 77
442,431. 77
Total Program Year 1978 funds available for disposition
$ 25.649.98,
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CITY OF SALINA
Salina, Kansas
. Exhibit A-4
COMMUNITY DEVELOPMENT BLOCK GRANT FUNDS
Program Year 1979, CDBG No. B-79-HN-20-0015
STATEMENT OF SOURCE AND STATUS OF FUNDS
June 5, 1979, to December 31, 1980
Grant.
Amount
Total Program Year 1979 funds allocated to recipient
Less - Total Program Year 1979 funds drawn down .by recipient
$226,000.00
103,255.14
Funds still available from HUD - Program Year 1979
122.744.86
Total Program Year 1979 funds drawn down by recipient
Program income applicable to Program Year 1979
103,255.14
23,558.33
Total Program Year 1979 funds received
Funds applied to Program Year 1979 costs - Exhibit B-4
Total Program Year 1979 funds held by recipient
Total Program Year 1979 funds available for disposition
126,813.47
126,813.47
$122.744.86
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CITY OF SALINA
Salina, Kansas
COMMUNITY DEVELOPMENT GRANT FUNDS -
CDBG No. B-76-HN-20-0015
Program Year 1976, Program Year Period June 5, 1976, to June 4, 1977
STATEMENT OF PROGRAM COSTS
Period Ended December 31, 1980
Relocation Payments and Assistance
(1) Rehabilitation loan/grant
program 28,226.55 1,099.27 28,226.55
Planning and Management Development 30,000.00 4,336.78 27,794.07
Administrative 30,000.00 30,000.00
Subtotals 646,563.92 74,013.46 643,102.59
Contingencies and/or Unspecified
Local Option Activities 2,061. 08
Totals $648.625.00 $74.013.46 $643.102.59 $
Authorized
Costs
Program Activity and Related Projects
Public Works, Facilities, Site
Improvements
(1) Multi-use neighborhood center
(2) Urban renewal project
$278,605.59
16,326.26
294,931.85
Rehabilitation Loans and Grants
(1) C D program area
228,405.52
Special Projects for Elderly and
Handicapped
(1) Senior citizen activity center
building improvements 35,000.00
Expendi-
tures,
Year
Ended
12-31-80
$49,171.89
49,171.89
19,405.52
Expendi-
tures,
Cumulative
to 12-31-80
$277 ,350.19
16,326.26
293,676.45
228,405.52
35,000.00
Exhibit B-1
Ques-
t ioned
Costs
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CITY OF SALINA
Salina, Kansas
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COMMUNITY DEVELOPMENT GRANT FDNDS -
CDBG No. B-77-HN-20-0015
Program Year.1977, Program Year Period June 5, 1977 to June 4, 1978
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STATEMENT OF PROGRAM COSTS
Period Ended December 31, 1980
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Provision of Public Services
(1) YWCA building improvements
for handicapped accessi-
bility
(2) Equipment for existing child
care facilities
(3) Salvation Army building
improvements
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Payment of Non-Federal Shares
(1) Match for Title III winteri-
zation grants
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Planning and Management Develop-
ment
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Author-
ized
Costs
5,359.48
35,017.22
90,000.00
130,376.70
20,000.00
17,283.15
Expendi-
tures,
Year
Ended
12-31-80
1,844.17
1,844.17
14,531.00
Expendi-
tures,
Cumu-
lative
to
12-31-80
5,359.48
35,017.22
90,000.00
130,376.70
20,000.00
17,283.15
Exhibit B-2
Ques- .
t ioned
Costs
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CITY OF SALINA
Salina, Kansas
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COMMUNITY DEVELOPMENT GRANT FUNDS -
CDBG No. B-77-HN-20-0015
Program Year 1977, Program Year Period June 5, 1977 to June 4, 1978
Exhibit B-2 (Contd.)
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STATEMENT OF PROGRAM COSTS
Period Ended December 31, 1980
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Expendi-
Expendi- tures,
tures, Cumu-
Author- Year 1ative Ques-
ized Ended to tioned
Costs 12-31-80 12-31-80 Costs
Program Activity and Related Projects
(Contd. )
Administrative $ 77;000.00 $ 1,222.47 $ 76,320.02 $
Subtotals 1,361, 306.00 175,354.83 1,332,530.31
Contingencies and/or Unspecified
Local Option Activities
Totals $1. 361. 306.00 $175.354.83 $1.332.530.31 $
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CITY OF SALINA
Salina, Kansas
Exhibit B-3
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COMMUNITY DEVELOPMENT GRANT FUNDS -
CDBG No. B-78-HN-20-0015
Program Year 1978, Program Year Period June 5, 1978, to June 4, 1979
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STATEMENT OF PROGRAM COSTS
Period Ended December 31, 1980
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Authorized
Costs
Expendi-
tures,
Year
Ended
12-31-80
Expendi..,
tures,
Cumulative
to 12-31-80
Ques-
t ione d
Costs
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Program Activity and.Re1ated Projects
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Public Works, Facilities, Site
Improvements
(1) Separation of storm/sanitary
sewers $200,000.00 $200,000.00 $200,000.00 $
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Rehabilitation Loans and Grants
(1) C D Program area
247,081. 25
171,580.30
242,431. 77
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Planning and Management Develop-
ment
21,000.00
Subtotals
468,081. 25
371,580.30
442,431. 77
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Contingencies and/or Unspecified
Local Option Activities
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Totals
$468.081.25 $371.580.30 $442.431.77 $
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CITY OF SALINA
Salina, Kansas
Exhibit B-4
COMMUNITY DEVELOPMENT GRANT FUNDS
CDBG No. B-79-HN-20-0015
Program Year 1979, Program Year Period June 5, 1979, to June 4, 1980
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STATEMENT OF PROGRAM COSTS
Period Ended December 31, 1980
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Expendi-
tures, Expendi-
Year tures, Ques-
Authorized Ended Cumulative tioned
Costs 12-31-80 to 12-31-80 Costs
Program Activity and Related Projects
Separation of storm/sanitary sewers $215,000.00 $126,813.47 $126,813.47 $
Contingencies and/or Unspecified
Local Option Activities 34,558.33
Totals $249.558.33 $126 .813.47 $126.813.47
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CITY OF SALINA
Salina, Kansas
COMMUNITY DEVELOPMENT BLOCK GRANT FUNDS
ACCOUNTANTS I COMMENTS
December 31, 1980
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CITY OF SALINA
Salina, Kansas
COMMUNITY DEVELOPMENT BLOCK GRANT FUNDS
COMMENTS ON COMPLIANCE AND INTERNAL CONTROL
We have examined the Statements of Source and Status of Funds and the Statements of
Program Costs applicable to the Community Development Block Grant programs of the
City of Salina, Kansas, for the period ended December 31, 1980, and have issued our
report thereon dated February 26, 1981. As a part of our examination, we reviewed
and tested the City's system of internal accounting control to the extent we con-
sidered necessary to evaluate the system as required by generally accepted auditing
standards. Under these standards, the purpose of such evaluation is to establish
a basis for reliance thereon in determining the nature, timing, and extent of other
auditing procedures that are necessary for expressing an opinion on the financial
statements. Additionally, our examination included procedures necessary in our
judgment to determine compliance with regulations, policies, and procedures pre-
scribed by HUD, insofar as such compliance review was necessary under the provisions
set forth in Paragraph 31 of the HUD Audit Guide for Community Development Block
Grant Recipients, dated May, 1976.
The objective of internal accounting control~is to ~provide reasonable, but not ab-
solute, assurance as to the safeguarding of assets against loss from unauthorized
use or disposition, and the reliability of financial records for preparing financial
statements and maintaining accountability for assets. The concept of reasonable
assurance recognizes that the cost of a system of internal accounting control should
not exceed the benefits derived and also recognizes that the evaluation of these
factors necessarily requires estimates and judgments by management.
There are inherent limitations that should be recognized in considering the potential
effectiveness of any system of internal accounting control. In the performance of
most control procedures, errors can result from misunderstanding of instructions,
mistakes of judgment, carelessness, or other personal factors. ~Control procedures
whose effectiveness depends upon segregation of duties can be circumvented by
collusion. Similarly, control procedures can be circumvented intentionally by man-
agement with respect either to the execution and recording of transactions or with
respect to the estimates and judgments required in the preparation of financial
statements. Further, projection of any evaluation of internal accounting control
to future periods is subject to the risk that the procedures may not be adequate
because of changes in conditions, and that the degree of compliance with the pro-
cedures may deteriorate.
Based on our study and evaluation of the City's system of internal accounting con-
trol and our review of its compliance with various statutes and regulations, as pre-
scribed in Paragraph 31 of the HUD Audit Guide for Community Development Block Grant
Recipients, the City has, in our opinion, complied with HUD's statutory and regula-
tory requirements except for those conditions described in the "Findings and Recom-
mendations" section on the following pages.
FINDINGS AND RECOMMENDATIONS
Finding - The City has not reported all program income or reduced amounts requested
for payment on Form TFS 7578 by all program income received.
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Condition - We found the City had not reported $1,000 program income from the sale
of land acquired in connection with the relocation of a family.
Criteria - United States Treasury and HUD policies require the reporting of program
income.
Effect - The status of Federal funds on Form TFS 7578 is understated by program
income in the amount of $1,000, which had not been applied as a reduction
of reimbursable program costs.
Cause - Proceeds from the sale of real estate purchased under the City's relocation
program was overlooked in determining the status of Federal funds and re-
quests for payments.
Recommendation - We recommend the City correct the status of their Federal funds by
including the unreported program income on their next request for
payment and reduce their next request for payment by the amount of
program income received which has not been used to reduce a prior
payment request.
Grantee's Response - The City will correct the next request for payment by including
all program income not reported and reduce the next request for
payment to correctly report program income as a reduction of the
reimbursable amount.
ALLOCATION OF INDIRECT COSTS
Indirect costs were not allocated to the CDBG program during the period under review.
OTHER COMMENTS
REHABILITATION LOAN AND GRANT PROGRAMS
Funds totaling $200,000 applied .to the rehabilitation loan and grant programs for
1975 and 1976 were deposited in a separate savings account for the purpose of making
loans and grants to qualified individuals. The composition of the assets available
at December 31, 1980, for future loans and grants is shown below.
Amount
Savings account
Loans receivable
$174,503
66,140
Total
$240.643
The total amount available exceeds the $200,000 originally deposited because interest
received on the savings account and loans has been redeposited for use in the pro-
gram as shown in the following schedule for the year 1980.
Assets available, December 31, 1979
Interest received
Savings account
Loans
$228,172
$11,153
1,318
12,471
Assets Available, December 31, 1980
$240.643
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The City granted twenty-seven loans totaling $21,239 during the year ended December
31, 1980 and received loan repayments totaling $16,630.
Interest received and loan repayments totaling $38,994 through December 31, 1979,
were previously considered program income and included with authorized costs for
rehabilitation loans and grants in program year 1978; however, to clarify the pres-
entation of authorized costs interest and loan repayments have been eliminated from
authorized costs for 1980 and accounted for as changes in the separate savings
account as explained above. Program income in the amount of $89,616 from the sale
of land received upon dissolution of the City's urban renewal program and other
program income has been added to authorized costs in accordance with HUD policy.
ESCROW CHECKING ACCOUNT
An escrow checking account. maintained to provide funds for payment of rehabilitation
and winterization work completed by contractors is not being reconciled on a monthly
basis. We recommend reconciliation of the account monthly.
CUMULATIVE EXPENDITURES
Certain reclassifications in the amounts shown as cumulative expenditures at December
31, 1979 have been made to reflect changes in the use of funds available.
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