Loading...
Audit - 2010 I I' I I I ,I I I I I I I I I ,I I I I I SALINE COUNTY-CITY BUILDING AUTHORITY December 31, 2010 / Thomas G. Arnett, CPA, P.A. 717 Roach Street Salina, Kansas 67401 I I I I I I I I I I I I I I ,I f ,I ,I 'I SALINE COUNTY -CITY BUILDING AUTHORITY December 31, 2010 TABLE OF CONTENTS Summary of Cash Receipts, Expenditures and Unencumbered Cash General Fund Statement of Cash Receipts and Expenditures ~ Actual and Budget 2 Notes to Financial Statements 3 - 7 Independent Auditor's Report I I I I ,I I I I I I I I I I I I I I I SALINE COUNTY -CITY BUILDING AUTHORITY Salina, Kansas SUMMARY OF CASH RECEIPTS, EXPENDITURES, AND UNENCUMBERED CASH For the year ended December 31, 2010 Beginning Ending Add Outstanding Unencumbered Cash Unencumbered Encumbrance and Ending Cash Funds Cash Balance Receipts Expenditures Cash Balance Accounts Payable Balance General Fund $ 1,212,901 $ 783,531 $ 818,298 $ 1,178,134 $ 73,792 $ 1,251,926 Composition of Ending Cash Balances: Checking account Checking Account -Flex spending $ 1,250,884 1,042 1,251,926 Cash on hand Total $ 1,251,926 The accompanying notes are an intetral part of these fmancial statements. 1 I I I I I I I I, I I I I I I 'I I, I I I SALINE COUNTY-CITY BUILDING AUTHORlTY Salina, Kansas GENERAL FUND STATEMENT OF CASH RECEIPTS AND EXPENDITURES,- ACTUAL AND BUDGET For the year ended December 31, 2010 Actual Budget Over (Under) Budget I Cash Receipts City of Salina - Maintenance 900 900 City of Salina - Regular 290,329 290,329 " Miscellaneous receipts 5,021 600 4,421 ; Salina Public Library 9,000 9,000 Saline County 473,694 473,694 ,Interest income 1,823 2,500 (677) Vending commissions 2,764 3,000 (236) Total Cash Receipts 783,531 $ 780,023 $ 3,508 Expenditures and Transfers Audit fees 5,000 6,500 (1,500) Beautification 3,890 5,000 (1,110) Capital projects 116,967 279,500 (162,533) Clerical services 1,500 1,500 'Consultant fees 2,322 5,000 (2,678) 'Education 1,634 3,000 (1,366) ,Equipment 2,699 8,000 (5,301) Group insurance 78,075 88,000 (9,925) Insurance - Work comp., Auto & Building 33,940 52,000 (18,060) :Janitor supplies 25,835 33,000 (7,165) 'KPERS - Retirement 19;484 17,000 2,484 :Maintenance agreement 50,988 58,120 (7,132) Miscellaneous expenditures 3,720 5,000 (1,280) Repairs & maintenance 19,816 50,000 (30,184) Salaries 284,685 280,000 4,685 ;,social Security 21,257 22,000 (743) Unemployment insurance 252 280 (28) Utilities 146,234 190,000 (43,766) Tptal Expenditures and Transfers 818,298 $1,103,900 $ (285,602) Receipts Over (Under) Expenditures (34,767) Unencumbered Cash, Beginning 1,212,901 Unencumbered Cash, Ending $ 1,178,134 The accompanying notes are an integral part of these financial statements. 2 I I I SALINE COUNTY-CITY BUILDING AUTHORITY Salina, Kansas NOT,ES TO FINANCIAL STATEMENTS December 31; 2010 I I I I I Note 1 Summary of Significant Accounting Policies The Saline County-City Building Authority (Authority) was formed March 22, 1965, under the Interlocal Cooperation Act of Kansas (KSA 12-2907) by Saline County (County), the City of Salina (City), and the Board of Education D.S.D. #305 (School District). The Authority was created to provide for the acquisition of land and the construction, equipping, operating, and maintenance of a building and parking area to house the county offices and courts, the city offices and courts, and the school district offices. On January 16, 1996, the Interlocal Agreement was restated to relieve the School District from any ongoing responsibility or expense relating to the Authority. The School District retained its beneficial ownership interest in the Building Authority. The accounting policies of the Authority conform to the statutory basis of accounting, as regulated by the State of Kansas, which demonstrates compliance with the cash basis and budget laws of Kansas. The following is a summary of the more significant policies. I A. Reporting Entity I I I The governing board of the Authority is composed of seven members, six of whom are appointed from the governing boards of the participating municipalities, and one of who I is selected at large by the six appointed members. The makeup of the appointed members is three from Saline County, two from the City of Salina, and one from the District Court. The accompanying financial statements include all funds which are controlled by or are dependent on the Authority. I I I' The Authority is considered to be a joint venture because it is a separate legal entity that is jointly controlled by the County and City. The County and the City both have an ongoing financial re~ponsibility for the Authority. The Authority's Interlocal Cooperation Agreement grants a beneficial interest to the County, City, and the School District in proportion to the respective share of the original acquisition costs of the building. B. Fund Accounting I I I I A fund is defined as an independent fiscal and accounting entity with a self-balancing set of accounts recording cash, receipts, expenditures and unencumbered cash balance. The funds segregate specific activities or certain objectives in accordance with special regulations, restrictions, or limitations. The following types of funds were utilized in recording the financial activities of the Authority: General Fund""': to account for all unrestricted resources except those required to be accounted for in another fund. 3 I I I SALINE COUNTY -CITY BUILDING AUTHORITY NOTES TO FINANCIAL STATEMENTS - continued December 31, 2010 C. Basis of Accounting I I I I I The statutory basis of accounting, as used in the preparation of these statutory financial statements, is designed to demonstrate compliance with the cash basis and budget laws of the State of Kansas. Cash receipts are recognized when the cash balance of a fund is increased. Expenditures include disbursements, accounts payable, and encumbrances, with disbursements being adjusted for prior year's accounts payable and encumbrances. Encumbrances are commitments related to unperformed (executory) contracts for goods and services, and are evidenced by a purchase order or written contract. For an interfund transaction, a cash receipt is recorded in the fund receiving cash from another fund, and an expenditure is charged in the fund from which the transfer was made. The Authority has approved a resolution that is in compliance with KSA 7 5-1120a( c), waiving the requirement for application of generally accepted accounting principles and allowing the Commission to use the statutory basis of accounting. I D. Departure from Accounting Principles Generally Accepted In the United States of America I I The basis of accounting described above results in a financial statement presentation which shows cash receipts, expenditures, cash, unencumbered cash balances, and expenditures compared:to budget. Balance sheets that would have shown noncash assets such as receivables, inventories, and prepaid expense; liabilities such as deferred revenue, outstanding debt, and interest payable; and reservations of the fund balance are not presented. Under generally accepted accounting principles, encumbrances are only recognized as a reservation of fund balance; encumbrances outstanding at year-end do not constitute expenditures or liabilities. Consequently, the expenditures as reported do not present the cost of goods and services received during the fiscal year in accordance with generally accepted accounting principles. Capital assets that account for the land, buildings, and equipment owned by the municipality are not presented in the financial statements. I I I E. Budgetary Inform~tion I The Authority does not have tax levying powers and is not required to publish a budget. A budget is adopted annually by the Board of Directors to determine the amount of appropriations to request from Saline County. F. Cash and Investments I I Cash includes amounts; in time deposits and certificates of deposit. Kansas Statute 12- 1675 authorizes the Authority to invest in time deposits, certificates of deposit, U.S. Obligations, and certain other investments. I I 4 I I I I I I I I I I I SALINE COUNTY-CITY BUILDING AUTHORITY NOTES TO FINANCIAL STATEMENTS - continued December 31, 2010 G. Risk Management Commercial Insurance T The Authority carries commercial insurance to limit its exposure to the various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; injuries to employees; and natural disasters. Settled claims have not exceeded commercial insurance coverage in any of the past three years. H. Compensated Absences The Authority is liable for payments to employees for sick pay and vacation pay earned according to Authority personnel policies. This liability is recorded as an encumbrance and is included as an expenditure in the accompanying financial statements. I. Estimates The preparation of financial statements requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Actual results may differ from those estimates. Note 2 Deposits - Cash Balances As of December 31, 2010, the Authority had cash in financial banking institutions of $1,252,074. Outstanding checks were $148 and the cash balance per books was $1,251,926. These deposits were secured by $250,000 FDIC insurance and pledged securities having a market value of $1, 162,527. The Authority does nothave any activity in investment-type assets. I I I I I I I I Interest rate risk - KSA 9-1401 establishes the depositories which may be used by Kansas governments. The statue requires banks eligible to hold the government's funds have a main or branch bank in the county in which the government is located, or in an adjoining county if such institution has been designated as an official depository, and the banks provide an acceptable rate of return on funds. In addition, KSA 9-1402 requires the banks to pledge securities for deposits in excess of FDIC coverage. The Authority has no other policies that would further limit interest rate risk. Credit risk - KSA 12-1675 limits the government's investment of idle funds to time deposits, open accounts, and certificates of deposit with allowable financial institutions; U.S. government securities; temporary notes; no-fund warrants; repurchase agreements; and the Kansas Municipal Investment Pool. The Authority has no investment policy that would further limit its investment choices. The Authority's practice is to place idle funds in certificates of deposit. 5 I I I I I I I I I I I SALINE COUNTY -CITY BUILDING AUTHORITY NOTES TO FINANCIAL STATEMENTS - continued December 31, 2010 Custodial credit risk - The custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover deposits or will not be able to recover collateral securities that are in the possession of an outside party. Kansas Statutes 9-1402 and 9-1405 require that governments obtain security for all deposits: The Authority manages its custodial credit risk by requiring the financial institutions to grant a security interest in securities held by third-party custodial banks. Concentration of credit risk - State statutes place no limit on the amount the government may invest in anyone issuer as long as the investments are adequately secured under KSA 9-1402 and 9-1405. The Authority has placed all of its resources with one financial institution. Note 3 Defined Benefit Pension Plan Plan Description - The Saline County-City Building Authority participates in the Kansas Public Employees Retirement System (KPERS), a cost-sharing multiple- employer defined benefIt pension plan as provided by KSA 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 to KPERS (611 S. Kansas, Suite 100, Topeka, KS 66603) or by calling 1-888-275-5737. I I I I I I I I Funding Policy - KSA 74-4919 establishes the KPERS member-employee contribution rate at 4% (new employees after June 1, 2009 6%) of 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 contribution rates for KPERS employers. The employer rate established for calendar year 2010 was 6.54%. The Authority's employer contributions to KPERS for the years ending December 31, 2010, 2009 and 2008 were $19,484, $14,282, and $11,048 respectively, equal to the required contribution for each year. 6 I I I I I I I I I I I I I I I I I I I SALINE COUNTY-CITY BUILDING AUTHORITY NOTES TO FINANCIAL STATEMENTS - continued December 31, 2010 Note 4 Capital Assets The presentation of the financial statements in accordance with the statutory basis of accounting does not include the capital assets of the Authority. The Authority maintains records on these capital assets. Depreciation expense is not calculated. The balances and activity are reported at. cost except for the initial value of the building $2,371,947 and initial land $200,228 which are reported at appraised values at date of acquisition. Balance Balance 01/01/10 Additions Deletions 12/3 1/1 0 Building, Land & Improvements Building & improvements $3,452,754 $3,452,754 Land 220,228 88,697 308,925 Land improvements 216,238 - 216,238 - 3,889,220 88,697 - 3,977,917 - Equipment Floor machines 20,338 20,338 Ladders 1,465 1,465 Lawn equipment 55,752 55,752 Office equipment 17,941 17,941 Security system 21,351 21,351 Shop tools 8,939 8,939 Telephone system 252,418 252,418 Vacuums 4,429 4,429 Vehicles 36,548 - 36,548 - 419.181 - 419.181 - Total $4.308.40 I $88.697 $ - $4 397.098 Note 5 Subsequent Events There are no subsequent events that were identified in procedures performed through March 15,2011, which also is the date these financial statements were available to be issued. 7 I I I I I I I I I I I I I I I I I I I Thomas G. Arnett, CPA, P.A. CERTIFIED PUBLIC ACCOUNTANT 717 ROACH STREET SALINA, KANSAS 67401 PHONE: (785) 827-7244 FAX: (785) 827-0048 INDEPENDENT AUDITOR'S REPORT To the Board of Directors Saline County-City Building Authority Salina, Kansas 67401 I have audited the accompanying statutory basis financial statements of Saline County- City Building Authority, Salina, Kansas, a compon~nt unit of Saline County, as of and for the year ended December 31, 2010 as listed in the table;' of contents. These financial statements are the responsibility of the Authority's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with auditing standards generally accepted in the United States of America and the Kansas MunicipalAudit Guide. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit inclJ.1des examining, on a test basis, evidence supporting the amounts and disclosures in the fiml.llcial statements. An audit also includes assessing the accounting principles used and signifid'ant estimates made by management, as well I as evaluating the overall financial statement presentation. I believe that my audit provides a . reasonable basis for my opiniort. As described more fully in Note 1, the Authority has prepared these financial statements using accounting practices prescribed or permitted by the State of Kansas, which practices differ from accounting principles generally accepted in the United States of America. The effect on the financial statements of the variances between these regulatory accounting practices and accounting principles generally accepted in the United States of America, although not readily determinable, are presumed to be material. In my opinion, because of the effects of the matter discussed in the preceding paragraph, the financial statements referred to above do not present fairly, in conformity with accounting principles generally accepted in the United States' of America, the financial position of the Authority as of December 31, 2010, the changes in its financial position, or where applicable, its cash flows for the year then ended. In my opinion, the financial statements referred to above present fairly, in all material respects the cash and unencumbered cash balances of the Saline County-City Building Authority, as of December 31, 2010, and the cash receipts, expenditures, and budgetary results for the year then ended, on the basis of accounting described in Note 1. ,cYJAI ~A-~ Thomas G. Arnett, CPA, P.A. March 15,2011 MEMBER OF DIVISION FOR CPA FIRM PRIVATE COMPANIES PRACTICE SECTION AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS KANSAS SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS I Thomas G. Arnett, CPA, P .A. I CERTIFIED PUBLIC ACCOUNTANT I 717 ROACH STREET SALINA, ~NSAS 67401 PHONE: (785) 827-7244 FAX: (785) 827-0048 I M~rch 15,2011 I To the Board of Directors S~line County-City Building Authority I I have audited the financial statements of Saline Comity-City Building Authority for the year ended December 31, 2010, and have issued my report thereon dated March 15, 2011. Professional standards require that I provide you with the following information related to my audit. I My Responsibility under U.S. Generally Accepted Auditing Standards As stated in my engagement letter dated January 21,2011, my responsibility, as described by professional standards, is to express an opinion about whether the financial statements prepared by management with your oversight are fairly presented, in all material respects, in conformity with U.S. generally accepted accounting principles. My audit of the financial statements does not relieve you or management of your responsibilities. . I I Planned Scope and Timing of the Audit I I performed the audit according to the planned scope and timing previously communicated to you in my engagement letter January 21,201 L I Significant Audit Findings I Qualitative Aspects of Accounting Practices I I I M!lnagement is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by Saline County-City Building Authority are. described in Note 1 to the financial statements. No new accounting policies were adopted and the application of existing policies was not changed during 2010. I no~ed no transaction.s entered into by the organization during the year for which there is a lack of authoritatiye guidance or consensus. There are no significant transactions that have been recognized in the financial. statements in a different period than when the transaction occurred.; I I Accounting estimates are an integral part of the financial statements prepared by management and are bised on management's knowledge and experience abo* past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the firtancial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimate affecting the financial statements was: Calculation of accrued leave and sick pay I I MEMBER OF DIVISION FOR CPA FIRM PRIVATE COMPANIES PRACTICE SECTION AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS KANSAS SOCIElY OF CERTIFIED PUBLIC ACCOUNTANTS I I The disclosures in the financial statements are neutral, consistent, and clear. Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. The most sensitive disclosure affecting the financial statements was: I Note 4. Capital Assets I Difficulties Encountered in Performing the Audit I I ~ncountered no significant difficulties in dealing with management in performing and completing my m,ldit. Corrected and Uncorrected Misstatements I Professional standards require me to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. The following misstatements were detected as a result of audit procedures. I 1. Accrue leave and sick pay, thereby increasing salaries expenditure to $2,074. I 2. Adjust fLEX account $1,131. I Disagreements with Management I For purposes of this letter, professional standards define a disagreement with management as a financial accounting, reporting, or auditing matter, whether or, not resolved to my satisfaction, that could be significant to the financial statements or the auditor's report. I am pleased to report that no such disagreements arose during the course of my audit. I Management Representation I I have requested certain representations from management that are included In the management representation letter dated March 15, 2011. Management Consultations with Other Independent Accountants I I I In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting prin~iple to the organization's financial statements or determination of the type of auditor's opinion that may be expressed on those statements, my professional standards require the consulting accountant to check, with me to determine that the consultant has all of the relevant facts. To my knowledge, there were no such consultations with other accountants. Other Audit Findings or Issues II I I I: generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the organization's auditors. However, these discussions occurred in the normal course of our professional relationship and my responses were not a condition to my retention. I I I I I I I I I I I I I I I I I I I I I This information is intended solely for the use of the Board of Directors and management of Saline CQunty-City Building Authority arid is not intended to be and should not be used by anyone other than these specified parties. Very truly yours, c!./;f-, ~ If, I Thomas G. Arnett, CPA, P.A.