Audit - 2014 SALINE COUNTY-CITY BUILDING AUTHORITY
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FINANCIAL STATEMENT
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INDEPENDENT AUDITORS' REPORT
December 31, 2014
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CHARTERED accountants
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SALINE COUNTY-CITY BUILDING AUTHORITY
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FINANCIAL STATEMENT
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I INDEPENDENT AUDITORS' REPORT
December 31, 2014
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WOODS& DURHAM, CHARTERED
Certified Public Accountants
Salina, Kansas
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SALINE COUNTY-CITY BUILDING AUTHORITY
FINANCIAL STATEMENT
For the Year Ended December 31, 2014
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TABLE OF CONTENTS
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INDEPENDENT AUDITORS' REPORT 1 -2
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FINANCIAL STATEMENT
SUMMARY OF RECEIPTS, EXPENDITURES AND
UNENCUMBERED CASH REGULATORY BASIS 3
NOTES TO FINANCIAL STATEMENT 4-8
SUPPLEMENTAL INFORMATION PAGE
GENERAL FUND SCHEDULE OF RECEIPTS AND EXPENDITURES
ACTUAL AND BUDGET REGULATORY BASIS Schedule 1 9
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ffl&cnned
public
CHARTERED accountants
INDEPENDENT AUDITORS' REPORT
ITo the Board of Directors .
Saline County-City Building Authority .
Salina, Kansas 67401
We have audited the accompanying fund summary statement of regulatory basis receipts, expenditures,
I . and unencumbered cash balances of Saline County-City Building Authority,-Salina, Kansas, as of and for
the year ended December 31, 2014, and the related notes to the financial statement.
Management's responsibility for the Financial Statement
. Management is responsible for the preparation and fair presentation of this financial statement in
I accordance with the Kansas Municipal Audit and Accounting Guide as described in Note I to meet the •
financial reporting requirements of the State of Kansas. Management is also responsible for the design,
implementation and maintenance of internal control relevant to the preparation and fair presentation
of the financial statement that is free from material misstatement,whether due to fraud or error.
Auditor's Responsibility •
,' Our responsibility is to express an opinion on the financial statement based on our audit. We conducted
our audit in accordance with auditing standards generally accepted in the United.States of America, and -
' the Kansas Municipal Audit and Accounting Guide. Those standards require we plan and perform.the
audit to obtain reasonable assurance about whether the financial statement is free of material
misstatement.
I. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statement. The procedures selected depend. on auditor's judgment, including the
I assessment of the risks of material misstatement of the financial statement, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity's
preparation and fair presentation of the financial statement in order to design audit procedures that are -
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the entity's internal control. Accordingly, we express no such opinion. An audit also includes
evaluating the appropriateness of accounting,policies used and the reasonableness of significant. _
I accounting estimates made by management, as well as evaluating the overall presentation of the
financial statement.
I We believe that the audit evidence we have obtained is sufficient,and appropriate to provide a basis for
our audit opinion.
Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles
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As described in Note I of the financial statement, the financial statement is prepared by. the Saline
County-City Building Authority to meet the requirements of the State of Kansas on the basis of the , . "
` financial reporting provisions of the Kansas Municipal Audit and Accounting Guide, which is a basis of _ - `•
accounting other than accounting principles generally accepted in the United States of America.
.,• 1619 E. Iron Avenue • P.O. Box 1516 • Salina, Kansas 67402-1516 • Phone 785-825-5494 �•.
Fax 785-825-4450 • www.woodsanddurham.com .
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The effects on the financial statement of the variances .between the regulatory basis of accounting :
described in Note I and accounting principles generally g p p g y accepted in the United States of America, _
although not reasonably determinable, are presumed to be material.
Adverse Opinion on U.S. Generally Accepted Accounting Principles
In our opinion, because of the significance of the matter discussed d in the "Basis for Adverse Opinion on
U.S. Generally Accepted Accounting Principles"Y p g p paragraph, the financial statement referred to above
_ does not present fairly, in conformity with accounting principles generally accepted in the United States '
Iof America, the financial position of the Saline County-City Building Authority as of December 31,.2014,
or changes in financial position and cash flows thereof for the year-then ended.
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IOpinion on Regulatory Basis of Accounting
In our opinion, the financial statement referred to above-presents fairly, in all material respects, the '
-1 aggregate cash and unencumbered cash balance of the Saline County-City,Building Authority as of
December 31, 2014, and the aggregate receipts and expenditures for the year then ended in accordance •
with the financial reporting provisions of the Kansas Municipal Audit and Accounting Guide described in
INote I.
Report on Supplementary Information ..
Our audit was conducted for the purpose of forming an opinion on the_fund summary statement of
• regulatory basis receipts, expenditures, and unencumbered cash balances (basic financial statement) as
a whole. The individual fund schedule of regulatory basis receipts and expenditures-actual and budget
1• (Schedule 1 as listed in the table of contents)is presented for analysis and are not a required part of the
basic financial statement. Such information is the responsibility of man •gement and was derived from
and relates directly to the underlying accounting and other records used to prepare the basic financial ',
statement. The information has been subjected to the auditing procedures applied in the audit of the
basic financial statement and certain additional procedures, including,comparing and reconciling such ,
information directly to the underlying accounting and other records used to prepare the basic financial
statement or to the basic financial statement itself, and other additional procedures in accordance with '•
auditing standards generally accepted in the United States•of America. In our opinion,the information is .
fairly stated in all material respects in relation to the basic financial statement as a whole, on the basis
of accounting described in Note I.
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Woods&Durham, Chtd.
WOODS& DURHAM, CHTD.
March 20, 2015 Certified Public Accountants
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SALINE COUNTY-CITY BUILDING AUTHORITY
1 Summary of Receipts, Expenditures and Unencumbered Cash
Regulatory Basis
For the Year Ended December 31, 2014
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Outstanding
Beginning Ending Encumbrances
Unencumbered Cash Unencumbered and Accounts Ending Cash
Funds Cash Balance Receipts Expenditures Cash Balance Payable Balance
General Fund $ 483,349 $ 1,196,343 $ 1,085,178 $ 594,514 $ 150,216 $ 744,730
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Composition of Ending Cash Balances:
Checking account $ 744,730
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The accompanying notes are an integral part of this financial statement.
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SALINE COUNTY-CITY BUILDING AUTHORITY
1 NOTES TO FINANCIAL STATEMENT
December 31, 2014
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
1 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 statement includes all funds,
lwhich 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
1 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:
tGeneral Fund — to account for all unrestricted resources except those required to be accounted for in
another fund.
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SALINE COUNTY-CITY BUILDING AUTHORITY
' NOTES TO FINANCIAL STATEMENT
December 31, 2014
NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Cont'd.)
C. Basis of Accounting
The statutory basis of accounting, as used in the preparation of this statutory financial statement, 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 75-1120a(c), waiving the
requirement for application of generally accepted accounting principles and allowing the Commission to
use the statutory basis of accounting.
D. Departure from Accounting Principles Generally Accepted In the United States of America
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 statement.
E. Budgetary Information
The Authority does not have tax levying powers and is not required to publish a budget. A budget is
1 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.
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SALINE COUNTY-CITY BUILDING AUTHORITY
' NOTES TO FINANCIAL STATEMENT
December 31, 2014
NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Cont'd.)
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 statement.
I. Estimates
The preparation of financial statement requires management to make estimates and assumptions that
affect the amounts reported in the financial statement 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 this financial statement.
IUnder 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.
' K. Subsequent Events
There are no subsequent events that were identified in procedures performed through March 20, 2015,
which also is the date these financial statement were available to be issued.
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SALINE COUNTY-CITY BUILDING AUTHORITY
NOTES TO FINANCIAL STATEMENT
December 31, 2014
NOTE 2- DEPOSITS—CASH BALANCES
As of December 31, 2014, the Authority had cash in financial banking institutions of $754,264,
outstanding checks were $534 and the cash balance per books was $744,730. These deposits were
secured by$500,000 FDIC insurance and pledged securities having a market value of$363,492.
1 The Authority does not have any activity in investment-type assets.
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.
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 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 statement 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.
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SALINE COUNTY-CITY BUILDING AUTHORITY
NOTES TO FINANCIAL STATEMENT
December 31, 2014
' NOTE 3- DEFINED BENEFIT PENSION PLAN (Cont'd.)
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 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, 2014, 2013, 2012 and 2011 were $29,182, $25,378, $23,445 and $21,580
respectively, equal to the required contribution for each year.
NOTE 4—DEBT SERVICE
The Authority makes the lease payments on improvements to the building's HVAC system. Costs of
those improvements were financed with a capital lease that is the obligation of the City of Salina and
Saline County.
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' SUPPLEMENTAL INFORMATION
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SALINE COUNTY-CITY BUILDING AUTHORITY
Schedule 1
General Fund
ISchedule of Receipts and Expenditures -Actual and Budget
Regulatory Basis
For the year ended December 31, 2014
I Over
(Under)
I Actual Budget Budget
Cash Receipts
City of Salina - Regular $ 448,095 $ 445,095 $ 3,000
I Miscellaneous receipts 5,177 5,177
Salina Public Library 9,000 9,000
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Saline County 731,103 731,103 (0)
Interest income 219 1,000 (781)
IVending commissions 2,749 1,500 1,249
Total Cash Receipts 1,196,343 $ 1,187,698 $ 8,645
I Expenditures
Salaries 310,030 310,256 (226)
Health insurance 89,133 105,428 (16,295)
I KPERS retirement plan 29,182 30,529 (1,347)
FICA 18,660 19,236 (576)
Medicare 4,364 4,499 (135)
I Unemployment tax 599
33 434
30 165
Workers compensation insurance ,215 ,000 3,215
Contractual consultants 322 5,000 (4,678)
I Education 1,505 3,000 (1,495)
Employee services 4,072 1,500 2,572
Equipment repair 16,251 10,000 6,251
Property insurance 59,555 30,000 29,555
I Audit fee 7,250 6,500 750
Supplies building 30,666 35,500 (4,834)
Maintenance agreement 12,250 30,000 (17,750)
I Miscellaneous expenditures 2,328 5,000 (2,672)
Maintenance 23,197 40,000 (16,803)
Telephone 1,318 - 1,318
I Utilities 154,987 185,000 (30,013)
Yard & beautification 5,321 3,000 2,321
Debt service 234,816 234,816 -
Capital outlay 46,156 89,500 (43,344)
Total Expenditures and Transfers 1,085,178 $ 1,179,198 $ (94,020)
Receipts Over (Under) Expenditures 111,165
IUnencumbered Cash, Beginning 483,349
Unencumbered Cash, Ending $ 594,514
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The above exhibit was prepared using the basis of accounting,which documents compliance
I with the cash basis and budget laws of the State of Kansas.
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