Audit - 2016 1
1 SALINE COUNTY-CITY BUILDING AUTHORITY
Salina, Kansas
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1 FINANCIAL STATEMENT
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1 INDEPENDENT AUDITORS' REPORT
December 31, 2016
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1 WOODS & DURHAM, CHTD.
Certified Public Accountants
Salina, Kansas
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SALINE COUNTY-CITY BUILDING AUTHORITY
Salina, Kansas
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FINANCIAL STATEMENT
IFor the Year Ended December 31, 2016
ITABLE OF CONTENTS
I Page
Number
IINDEPENDENT AUDITORS' REPORT 1 - 2
IFINANCIAL STATEMENT
SUMMARY OF RECEIPTS, EXPENDITURES AND
UNENCUMBERED CASH REGULATORY BASIS 3
NOTES TO FINANCIAL STATEMENT 4 - 7
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SUPPLEMENTAL INFORMATION
IGENERAL FUND SCHEDULE OF RECEIPTS AND EXPENDITURES -
ACTUAL AND BUDGET REGULATORY BASIS Schedule 1 8
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:1 &
D1� certified
L"" public
CHARTERED accountants
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INDEPENDENT AUDITORS' REPORT
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To the Board of Directors
• I Saline County-City Building Authority
Salina, Kansas 67401
We have audited the accompanying fund summary statement of regulatory basis receipts, expenditures, and
unencumbered cash balances of Saline County-City Building Authority, Salina, Kansas, as of and for the year '
ended December 31, 2016, 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 accordance
1 with the Kansas Municipal Audit and Accounting Guide as described in Note.1; this includes determining that the
. regulatory basis of accounting is an acceptable basis for the preparation of the financial statement in the
-circumstances- 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
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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
1 reasonable assurance about whether the financial statement is free of material misstatement.
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 assessment of the
I 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
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- 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 accounting estimates made by management, as well as evaluating the overall
presentation of the financial statement.
• 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
As described in Note 1 of the financial statement, the financial statement is prepared by the Saline County-City
Building Authority 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
:1 America.
The effects on the financial statement of the variances between the regulatory basis of accounting described in
• Note 1 and accounting principles generally accepted in the United States of America, although not reasonably
determinable, are presumed to be material.
'111619 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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Adverse Opinion on U.S. Generally Accepted Accounting Principles
In our opinion, because of the significance of the matter discussed in the "Basis for Adverse Opinion on U.S.
Generally Accepted Accounting Principles"-paragraph, the financial statement referred to above does not
.I present fairly, in conformity with accounting principles generally accepted in the United States of America, the
financial position of the Saline County-City Building Authority as of December 31, 2016, or changes in financial
position and cash flows thereof for the year then ended.
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Unmodified Opinion on Regulatory Basis of Accounting
In our opinion, the financial statement referred to above presents fairly, in all material respects, the aggregate
cash and unencumbered cash balance of the Saline County-City Building Authority as of December 31, 2016,
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 Note 1.
IOther Matters - 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
I individual fund schedule of regulatory basis receipts and expenditures-actual and budget (Schedule 1 as listed in
the table of contents) is presented for analysis and is not a required part of the basic financial statement,
• however are required to be presented under the provisions of the Kansas Municipal Audit and Accounting Guide.
I Such information is the responsibility of management 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
I 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.
I 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 1.
■ • Woods c Durham, Chtcf.
■ WOODS & DURHAM, CHTD.
Certified Public Accountants
June 7, 2017 Salina, Kansas
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SALINE COUNTY-CITY BUILDING AUTHORITY
Salina, Kansas
Summary of Receipts, Expenditures and Unencumbered Cash
Regulatory Basis
For the Year Ended December 31, 2016
Add
OutstandingOutstanding
Beginning Ending Encumbrances
I Unencumbered Cash Unencumbered and Accounts Ending Cash
Funds Cash Balance Receipts Expenditures Cash Balance Payable Balance
IGeneral Fund S 907,742 S 1,208,449 S 965,840 S 1,150,351 S 42,367 S 1,192,718
1 Composition of Ending Cash Balances:
Checking account S 1,192,718
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The accompanying notes are an integral part of this financial statement.
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SALINE COUNTY-CITY BUILDING AUTHORITY
Salina, Kansas
NOTES TO FINANCIAL STATEMENTS
December 31, 2016
1 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
1 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.
t 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. Municipal Financial 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
1 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, 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. Regulatory Basis Fund Type
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 — the chief operating fund. Used to account for all resources except those required to be
accounted for in another fund.
C. Basis of Accounting
Regulatory Basis of Accounting and Departure from Accounting Principles Generally Accepted in the United
States of America. The KMAAG regulatory basis of accounting involves the recognition of cash and cash
1 equivalents, marketable investments, and certain accounts payable and encumbrance obligations to arrive at an
unencumbered cash and investments balance on a regulatory basis for each fund, and the reporting of changes
in unencumbered cash and investments of a fund resulting from the difference in regulatory basis receipts and
regulatory basis expenditures for the fiscal year. All recognized assets and liabilities are measured and reported
at cost, unless they have been permanently impaired and have no future cash value or represent no future
obligation against cash. The KMAAG regulatory basis does not recognize capital assets, long-term debt, accrued
receivables and payables, or any other assets, liabilities or deferred inflow or outflows, other than those
mentioned above.
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SALINE COUNTY-CITY BUILDING AUTHORITY
Salina, Kansas
NOTES TO FINANCIAL STATEMENTS
December 31, 2016
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
C. Basis of Accounting (Cont'd.)
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 regulatory basis
of accounting.
' D. Budgetary Information
The Authority does not have tax levying powers and is not required to publish a budget. A budget is adopted
1 annually by the Board of Directors to determine the amount of appropriations to request from Saline County.
E. 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.
F. Risk Management
tCommercial 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.
G. Compensated Absences
1 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.
H. Estimates
The preparation of financial statement requires management to make estimates and assumptions that affect the
1 amounts reported in the financial statement and the accompanying notes. Actual results may differ from those
estimates.
I. 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
I 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.
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.
J. Subsequent Events
There are no subsequent events that were identified in procedures performed through June 7, 2017, which also is
the date these financial statement were available to be issued.
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I® SALINE COUNTY-CITY BUILDING AUTHORITY
Salina, Kansas
NOTES TO FINANCIAL STATEMENTS
December 31, 2016
NOTE 2 - DEPOSITS - CASH BALANCES
As of December 31, 2016, the Authority had cash in financial banking institutions of $1,193,118, outstanding
checks were $400 and the cash balance per books was 51,192,718. These deposits were secured by 51,000,000
FDIC insurance and pledged securities having a market value of S995,235.
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.
Contributions — KSA 74-4919 and KSA 74-49,210 establish 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 9.18% 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, 2016, 2015, 2014, 2013 and
2012 were 525,128, $30,519, $29,182, 525,378 and $23,445 respectively, equal to the required contribution for
each year.
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SALINE COUNTY-CITY BUILDING AUTHORITY
Salina, Kansas
NOTES TO FINANCIAL STATEMENTS
December 31, 2016
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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1 SALINE COUNTY-CITY BUILDING AUTHORITY
Salina, Kansas
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Schedule 1
General Fund
Schedule of Receipts and Expenditures -Actual and Budget
Regulatory Basis
IFor the year ended December 31, 2016
Over
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(Under)
Actual Budget Budget
Cash Receipts
I City of Salina - Regular S 449,083 S 400,491 S 48,592
Miscellaneous receipts 3,911 3,911
Salina Public Library 18,000 9,000 9,000
I Saline County 732,714 643,092 89,622
Interest income 3,563 1,000 2,563
Vending commissions 1,325 1,500 (175)
ITotal Cash Receipts 1,208,596 S 1,055,083 S 153,513
Expenditures
Salaries 271,580 291,400 (19,820)
Health insurance 69,092 115,971 (46,879)
KPERS retirement plan 25,128 32,669 (7,541)
FICA 16,381 19,055 (2,674)
I Medicare 3,831 4,456 (625)
Unemployment tax 430 (430)
Workers compensation insurance 10,648 30,000 (19,352)
I Contractual consultants 535 5,000 (4,465)
Education 553 3,000 (2,447)
Employee services 733 1,500 (767)
I Equipment repair 3,508 10,000 (6,492)
Property insurance 30,689 33,000 (2,311)
Audit fee 7,850 7,500 350
Banking fees 80 - 80
I Supplies 21,159 41,000 (19,841)
Maintenance agreement 19,873 36,000 (16,127)
Miscellaneous expenditures 3,734 4,000 (266)
I Maintenance 30,337 40,000 (9,663)
Telephone 3,701 3,701
Utilities 154,535 185,000 (30,465)
I Yard & beautification 4,364 5,000 (636)
Debt service 234,816 234,816
Equipment 6,696 10,000 (3,304)
Capital outlay 46,164 72,000 (25,836)
ITotal Expenditures and Transfers 965,987 S 1,181,797 S (215,810)
Receipts Over(Under) Expenditures 242,609
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Unencumbered Cash, Beginning 907,742
Unencumbered Cash, Ending S 1,150,351
I The above exhibit was prepared using the basis of accounting,which documents compliance
with the cash basis and budget laws of the State of Kansas.
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