Audit - 2011I
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SALINE COUNTY -CITY BUILDING AUTHORITY
' December 31, 2011
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' Thomas G. Arnett, CPA, P.A.
' 717 Roach Street
Salina, Kansas 67401
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SALINE COUNTY -CITY BUILDING AUTHORITY
December 31, 2011
TABLE OF CONTENTS
Summary of Cash Receipts, Expenditures
and Unencumbered Cash I
General Fund Statement of Cash Receipts
and Expenditures — Actual and Budget 2
Notes to Financial Statements 3-7
Independent Auditor's Report
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1 The accompanying notes are an intetral part of these financial statements.
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SALINE COUNTY -CITY BUILDING AUTHORITY
Salina, Kansas
SUMMARY OF CASH RECEIPTS, EXPENDITURES,
AND UNENCUMBERED CASH
For the year ended December 31, 2011
Beginning Endine
Add Outstanding
'
Unencumbered Cash Unencumbered
Encumbrance and
Ending Cash
Funds Cash Balance Receipts Expenditures Cash Balance
Accounts Payable
Balance
General Fund $ 1,178,134 S 748,166 $ 995,260 $ 931,040
$ 61,620
S 992,660
Composition of Ending Cash Balances:
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Checking account
$ 992,660
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1 The accompanying notes are an intetral part of these financial statements.
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' The accompanying notes are an integral part of these financial statements.
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SALINE COUNTY -CITY BUILDING AUTHORITY
Salina, Kansas
GENERALFUND
STATEMENT
OF CASH RECEIPTS AND
EXPENDITURES
- ACTUAL AND BUDGET
For the
year ended December 31, 2011
'
Over (Under)
Actual
Budget
Budget
Cash Receipts
City of Salina - Regular
278,756
278,716
40
Miscellaneous receipts
1,977
600
1,377
Salina Public Library
9,000
9,000
-
Saline County
454,746
454,746
Interest income
1,200
2,500
(1,300)
Vending commissions
2,487
3,000
(513)
Total Cash Receipts
748,166 $
748,562
$ (396)
Expenditures
Salaries
288,347
290,000
(1,653)
Health insurance
85,180
97,000
(11,820)
KPERS retirement plan
21,580
21,000
580
FICA & Medicare tax
21,769
23,000
(1,231)
Unemployment tax
Education
340
1,254,
290
3,000
50
(1,746)
Employee services
1,000
1,500
(500)
Equipment repair
18,313
48,000
(29,687)
Property insurance
40,158
52,500
(12,342)
Audit fee
5,584
6,500
(916)
Janitor supplies
28,205
33,000
(4,795)
Maintenance agreement
46,166
60,000
(13,834)
Miscellaneous expenditures
5,133
5,000
133
Repairs & maintenance
14,335
5,000
9,335
Utilities
155,463
180,000
(24,537)
Yard & beautification
3,387
3,000
387
Capital outlay
259,046
58,000
201,046
Total Expenditures and Transfers
995,260 $
886,790
$ 108,470
Receipts Over (Under) Expenditures
(247,094)
Unencumbered Cash, Beginning
1,178,134
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Unencumbered Cash, Ending
$ 931,040
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' The accompanying notes are an integral part of these financial statements.
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SALINE COUNTY -CITY BUILDING AUTHORITY
Salina, Kansas
NOTES TO FINANCIAL STATEMENTS
December 31, 2011
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 U.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.
A. Reporting Entity
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
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.
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 responsibility 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
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.
SALINE COUPITY -CITY BUILDING AUTHORITY
' NOTES TO FINANCIAL STATEMENTS — continued
December 31, 2011
C. Basis of Accounting
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
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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.
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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
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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 75- 1120a(c),
waiving the requirement for application of generally accepted accounting principles and
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allowing the Commission to use the statutory basis of accounting.
D. Departure from Accounting Principles Generally Accepted In the United States
of America
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The basis of accounting described above results in a fmancial 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.
E. Budgetary Information
The Authority does not have tax levying powers and is not required to publish a budget.
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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
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.
SALINE COUNTY -CITY BUILDING AUTHORITY
' NOTES TO FINANCIAL STATEMENTS — continued
December 31, 2011
G. Risk Management
Commercial Insurance — 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.
J. Other Post Employment Benefits
' As provided by KSA 12 -5040, the local government allows retirees to participate in the
group health insurance plan. While each retiree pays the full amount of the applicable
' premium, conceptually, the local government is subsidizing the retirees because each
participant is charged a level of premium regardless of age. However, the cost of this
subsidy has not been quantified in these financial statements.
' Under the consolidated Omnibus Budget Reconciliation Act (COBRA); the government
makes health care benefits available to eligible former employees and eligible
dependents. Certain requirements are outlined by the federal government for this
coverage. The premium is paid in full by the insured. There is no cost to the government
under this program.
Note 2 Deposits — Cash Balances
' As of December 31, 2011, the Authority had cash in financial banking institutions of
$1,074,200. Outstanding checks were $81,540 and the cash balance per books was
$992,660. These deposits were secured by $250,000 FDIC insurance and pledged
securities having a market value of $963,480.
The Authority does not have any activity in investment -type assets.
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' SALINE COUNTY -CITY BUILDING AUTHORITY
' NOTES TO FINANCIAL STATEMENTS — continued
December 31, 2011
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
t 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.
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 any one 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 744901, 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.
' Funding Policy — KSA 74 -4919 establishes the KPERS member - employee contribution
rate at 4% for employees hired before July 1, 2009 and 6% for those hired after July 1,
2009 of covered salary. Member - employees' contributions are withheld by their
' employer and paid to KPERS according to the provisions of section 414(h) of the Internal
Revenue Code. The State of Kansas is required to contribute the remaining amount
necessary to achieve the actuarially determined contribution rate. Kansas currently
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SALINE COUNTY -CITY BUILDING AUTHORITY
' NOTES TO FINANCIAL STATEMENTS — continued
December 31, 2011
' contributes 9.17% of covered payroll. These contribution requirements are established
by KPERS and are periodically revised. The Authority's employer contributions to
KPERS for the years ending December 31, 2011, 2010 and 2009 were $21,580, $19,484,
and $14,282 respectively, equal to the required contribution for each year.
Note 4 Subsequent Events
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There are no subsequent events that were identified in procedures performed through
February 20, 2012, which also is the date these financial statements were available to be
issued.
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Thomas G. Arnett, CPA, P.A.
CERTIFIED PUBLIC ACCOUNTANT
717 ROACH STREET PHONE: (785) 827 -7244
SALINA, KANSAS 67401 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 component unit of Saline County, as of and for the
year ended December 31, 2011 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 Municipal Audit 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 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. I believe that my audit provides a
' reasonable basis for my opinion.
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, 2011, 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, 2011, and the cash receipts, expenditures, and budgetary results for the year
then ended, on the basis of accounting described in Note 1.
Thomas G. Arnett, CPA, P.A.
February 20, 2012
MEMBEROF
' DIVISION FOR CPA FIRM PRIVATE COMPANIES PRACTICE SECTION
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
KANSAS SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS