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Audit - 1982/1983/1984 J- HOUSING AUTHORITY OF THE CITY OF SALINA SALINA, KANSAS REPORT ON EXAMINATION OF FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA TWENTY - FOUR MONTHS ENDED JUNE 30, 1984 MILLER BAXTER & COMPANY 4121 West 83rd Street Suite 101 Prairie Village, Kansas 66208 Ii ~- :í. Ieêbê_QE_~Q~Iê~I§ ACCOUNTANTS' REPORT I I I I F I NANC I AL STATEMENTS I -------------------- BALANCE SHEET AT JUNE 30, 1984 STATEMENT OF INCOME AND EXPENSES TWENTY-FOUR MONTHS ENDED JUNE 30, 1984 §~eebê~ê~IeBY_Qele ANALYSIS OF SURPLUS - TWENTY-FOUR MONTHS ENDED JUNE 30, 1984 COMPUTATION OF RESIDUAL RECEIPTS AND ACCRUING ANNUAL CONTRIBUTION AND ANNUAL CONTRIBUTION EARNED AND PROJECT ACCOUNT - OPERATING RESERVE CHANGES INCLUDING HOUSING ASSISTANCE PAYMENTS PROGRAM STATEMENT AND CERTIFICATION OF ACTUAL MODERNIZATION COSTS STATEMENT AND CERTIFICATION OF ACTUAL DEVELOPMENT COSTS ANALYSIS OF GENERAL FUND CASH BALANCE COMMENTS ON COMPLIANCE AND ADMINISTRATIVE INTERNAL CONTROL STATUS OF PRIOR AUDIT FINDINGS FINDINGS, RECOMMENDATIONS AND REPLIES SCHEDULE OF ADJUSTING JOURNAL ENTRIES GENERAL COMMENTS NOTES TO FINANCIAL STATEMENTS ê~tH!211 eeêê 1 A 2 B 3-4 C 5-6 D 7-8 E 9 F 10 ¡ ! " I ¡ I, ~ i, t i G 11 12-13 13 14-15 15 15 16 --".,..,...~, _""';i;¡,;.,~, . ¡ ¡ ì ¡ , ì Board of Commissioners Housing Authority of the City of Salina Salina, Kansas 67401 Regional Inspector General for Audit Office of Inspector General Dept. of Housing & Urban Development Kansas City, Missouri 64106 ¡ ì i .j ! e~~Q~~Ie~I§:_BêeQBI We have examined the financial statements listed in the I~~l~_gf ~gQt~Qt§ of the Housing Authority of the City of Salina pertaining to its low-income housing program. Our examination was made in accordance with generally accepted auditing standards, the audit requirements set forth in the Department of Housing & Urban Development Audit Guide for Audits of Public Housing Agencies by Independent Public Accountants dated August 1978 and Attachment P of Circular A-102 and accordingly included such tests of accounting records and other auditing procedures as we considered necessary in the circumstances. The authority"s policy is to prepare its financial statements on the basis of accounting practices prescribed or permitted by the Department of Housing and Urban Development. These principles differ in some respects from generally accepted accounting principles. Accordingly, the accompanying financial statements are not intended to present financial position and results of operations in conformity with generally accepted accounting principles. This report is intended solely for filing with the Department of Housing and Urban Development and is not intended for any other purpose. In our opinion, the above-mentioned financial statements present fairly the financial position of the Housing Authority of the City of Salina with respect to its Low-rent housing program at June 30, 1984, and the results of its operations for the twenty-four months then ended in conformity with generally accepted accounting principles applied on a basis consistent with prior periods and with HUD procedures. The supplemental financial information as listed in the I~~l~_Qf çgQt~Qt§ has been tested by us as a part of our auditing procedures followed in the examination of the financial statements mentioned above, and in our opinion it is fairly stated in all material respects in relation to the financial statements taken as a whole. I1'fJ JÙ,-- ;-¡Jr¿ /.Ú'- I- (,'(ivp(1 H~'r Miller Baxter"& Company Certified Public Accountants August 30, 1984 (1) / -.S' ~ HOUSING AUTHORITY OF THE CITY OF SALINA SALINA, KANSAS !2ebe~~ê_§~êêI_eI_~Y~ê_~Q~_12§~ e§§êI§ Cash Accounts Receivable - Tenants Accounts Receivable - Other Investments Utility Deposits HUD Annual Contribution Receivable Prepaid Insurance Insurance Deposits Modernization Costs Development Cost Development Cost - Contra Land, Structures and Equipment Total Assets ble!2lbIIlê§_e~Q_§YBebY§ Tenants Security Deposits Accounts Payable-Other Tenants Prepaid Rent Prepaid Annual Contribution Project Notes - Non HUD Payments in Lieu of Taxes Payments in Lieu of Taxes 1977-1983 Permanent Notes Total Liabilities Surplus - Exhibit C Total Liabilities and Surplus E>:hibit A eQQYsl_~gQtci~YtigQ_~gQtc~~t __~~_lQ62- --_~~_ZQ1§_- $ 35,855.10 1,258.70 92.81 185.00 59,414.91 1,136.99 3,862.00 19,583.17 969;090.00 ( 969,090.00) _____2Z2~§èQ~~1- !_1~lQl.s..6~2~Q2- --------------- $ 4,789.00 11.27 19.00 18,700.00 6,152.33 42,392.97 ____§Zè~2~è~QQ $ 949,010.57 ____1§6~6~§~§6 !_1~lQl~6~2~Q2 -------------- (2 ) $ 26,593.12 8,061.56 22,660.00 _._---§~Q~QQ !~_~Z~§11~è§ ------------ $ 7,502.53 20,189.00 ------------ ~Ii 27,691. 53 .__~Q.s..l~~~l~ :!_~Z~§11~è§ ,----------- J~ " E>: h i bit B (1) HOUSING AUTHORITY OF THE CITY OF SALINA SALINA, KANSAS §Ielê~ê~I_QE_I~~Q~ê_e~Q_ê~eê~§ê§-=_E~B_Q~~êQ_~QY~~I~ê Twenty-four Months Ended June ~O, 1984 eQQYsl_~gQtci~ytigQ_~gQtcs~t_~~_lQ62 Project Kansas 38-2 1,495.00 $ 175.51 60,468.46 44,294.97 3 316.16 ----------- ----~------ 61,963.46 $ 47,786.64 Year Ended ~YQ~_~Q~_12§~ Qe~~êtiQg_IQ~gm~ Dwelling Rental Total Rental Income $__Z~~~è~~QQ $ 75,564.00 Interest on General Fund Investments Other Income Total Operating Income - E>:hi bi t D 2,656.93 --_6~Q§Z~22 $-_§Q~~Qê~26 Qe~c~tiQg_ê~e~Q§~§ Administrative Utilities Ordinary Maintenance & Operations General E>:pense Nonroutine Maintenance $ 35,620.46 2,292.66 40,598.64 19,385.66 -----~~§~Z~ Total Operating Expense- E>: h i bit D $__2§~~~è~lZ QtQ~~_Q~git§ Loss From Disposition of Non- Expendable Equipment Interest on Notes & Bonds Payable Prior Year Adjustment Affecting Residual Receipts - Exh. D $ Total Other Debits $ QtQ~c_~~~git§ Prior Period Adjustments Affecting Residual Receipts - Exh. D $___6~~1~~Q~ Net Loss - Exhibit C $__ZZ~~èZ~è2 ----------- (3) Ylæar Ended ~YQ!~_~Q.s.._12§~ $ __!2~~Q6~~QQ $ ~~5, 025. 00 1,552.95 __,_6~12~~Z~ $ --~~§~ZZl~è2 $ 23,790.43 5,210.81 39,209.78 15,144.77 ----------- " $ --§~~~~~~Z2 $-------Q--- $__è~~~ZQ~Z1 --,--------- E>:hibi t B (2) HOUSING AUTHORITY OF THE CITY OF SALINA SALINA, KANSAS §Ialê~5~I_QE_I~~Q~ê_B~Q_ê~Eê~§ê§_=_~QYêl~ê_eê§I§IB~~~~ eeY~ê~I§_EBQêBe~ Twenty-four Months Ended June 30, 1984 eQQ~sl_~gQtci~ytigQ_~gQtc~~t_K~_ZQ1~ Year Ended ~YQ~_~Q~_12§~ Project KS 40-E-038-001 & -002 "Qe~~êtiQg_IQ~gm~ Interest on General Fund Investments Total Operating Income-Ex. D Qe~~êtiQg_ê~e~Q§~§ Administrative Expense Housing Assistance Payments Maintenance & Operations Other E>:pense Total Operating Expenses-Ex. D Net Operating (Loss) Qtb~~_~c~git§ Prior Year Adjustment Affecting Residual Receipts-Ex. D Interest Earned on Operating Reserve' Adjustment for Audit Cost not set up as a payable Total Other Credits Qtb~c_Q~~it!ã Prior Year Adjustment Affecting Residual Receipts-Ex. D Net (Loss) - Exhibit C r"'"' Year Ended ~y[!~_~Q~_12§1 $____1~1~6~Zè $ -_.____J.è§~l~) $____1~116~Zè $ -_.____J.è§~l~) $ 18,575.54 178,792.08 311.50 -___6~~16~1§ $ 31,584.60 186,367.00 215.00 -___~~§lè~lZ $-_6QQ~661~èQ $ __,661.:1..2§6~ZZ $ (199,078.84) $ (222,050.90) $ 1,406.64 $ 998.86 3,157.21 ----_Z~Q~QQ ------------ $ 3,155.50 $ 3,157.21 ------------ $____l~~Qg~è~ $ (195 923.34) -----.:1..------ $_J.~~Q~~QQ~~~) ------------ ------------ (4) E>: h i bit C ( 1 ) HOUSING AUTHORITY OF THE CITY OF SALINA SALINA, KANSAS e~BbY§I§_QE_§YBEbY§ Twenty-four Months Ended June 30, 1984 Project Kansas 38-2 & KS 40E-038-001 & 002 Proj ect Karlsas __~ê=6- ~QêQ~ê=QQ1_~_QQ6 ~Q~§§~C~~Q_§YC21Y§ Balance per Audit June 30, 1982 Net Loss for Year Ended June 30, 1983 PHA Leased Housing - Exhibit B(l) Housing Assistance Payments Program Exhibit B(2) Net Loss for Year Ended June 30, 1984 PHA Leased Housing - Exhibit B(l) Housing Assistance Payments Program - Exhibit B(2) (Provision for) Reduction of Operating Reserves for Year Ended June 30, 1983 PHA Owned Housing - Exhibit D Housing Assistance Payments Program Operating Reserve - Exhibit D Project Account Unfunded (Provision for) Reduction of Operating Reserves for Year Ended June 30, 1984 PHA Owned Housing - Exhibit D Housing Assistance Payments Program Operating Reserve - Exhibit D Project Account Unfunded Interest Earned on Operating Reserve ------------ Balance June 30, 1984 $il.:L.Qè1~~2~~èl1 $ (957,750.80) i, (765,100.83) ( 77,567.69) (195,923.34) ( 62,370.74) (220,300.33) 15,644.18 ( 8,590.97) (30,478.83) 17,551.44 1,639.07 (16,800.74) __i___22§~êè) $il.:L.6~è~§§1~§~1 B~§~C~~Q_§Y~e!Y§_=_Qe~cstiQg_B~§~c~~ Balance at Prior Audit-June 30, 1982 Provision for (Reduction of) Operating Reserve for Year Ended June 30, 1983 PHA Owned Housing - Exhibit D Housing Assistance Payments Program E>: h i bit D Provision for (Reduction of) Operating Reserve for Year Ended June 30, 1984 PHA Owned Housing - Exhibit D Housing Assistance Payments Program Exhibit D Interest on Operating Reserve $ 23,732.44 $ 21,672.39 ( 15,644.18) 8,590.97 ( 17, 551. 44 ) ------------- 1,639.07) -______22§~êg Balanc~ June 30, 1984 !_i__2~~è~~1§) !___62~g6~~1~ (5) E¡": hi bit C (2) HOUSING AUTHORITY OF THE CITY OF SALINA Sf'::¡L I NA, KANS{';S e~ebY§l§_QE_§~BEb~§ Twenty-four Months Ended June 30, 1984 Project Kansas 38-2 & KS 40E038-001 &-002 -~--____E[9iê£t_l~Q§~§_-------- ~§=~- 1Q~Q~ê=QQ1~=QQ~ Balance per Books/Audit June 30, 1982 Provision for Project Account for Period Ended June 30, 1983 - Exhibit D June 30, 1984 - Exhibit D $ 253,026.68 B~§~~y~g_§~~Q1Y§_=_E~gi§£t_B~£9~Dt_~D£~D9§9 29,728.83 ____1.è.2.êQQ~Z1 Balance at December 31, 1983 $ 299 556.25 ------.2.------ Ç~mmYl~tiy§_~~Q_~gQtciQ~tiQQ§ ance per Books/Audit June 30, 1982 Annual Contribution for Year Ended "June 30, 1983 - Exhibit D PHA Owned Housing Assistance Payments Program Annual Contribution for Year Ended June 30, 1984 - Exhibit D PHA Owned Housing Assistance Payments Program Adjustment by HUD to Annual Contribution for Year ended June 30, 1982 _____é~~~~~è~ $ 1,092,336.65 $ 512,074.15 59,414.91 206,263.17 67,888.11 219, 191.26 ---"---------- Balance at June 30, 1984 $_1.:L.££é~12~~âl !_-~!âZ~~6§~~ê TOTAL SURPLUS - Exhibit A $ 152 238.52 ------.:L.------ !__._âQ~l~â~l§ ------------- ---.---------- (6 ) E>: h i bit D (1) HOUSING AUTHORITY OF THE CITY OF SALINA SALINA, KANSAS ~Q~e~IaIIQN_QE_Bê§IQYeb_Bê~êleI§_B~Q . e~~BYI~ê_e~~Yeb_~Q~IBI!2~IIQ~_=_E~e_Q~~êQ_~QY§I~ê eQQY~1_~gQtci~ytiQQ_~9QtCê~t_~~_lQ62 EC9i~£t_~sQ§s§_~ê=6 i¡; ,jÔ, II! ~ ~gmQytêtigQ_g£_B~§igYsl_B~~~iQt§ Qe~c~tiQg_B~£~i2t§ Operating Income - Exhibit B Prior Years Adjustment Affecting Residual Receipts - Exhibit B Receipts fron Sale of Nonexpendable Equipment not Replaced , t ;~ ¿ Total Operati ng Recei pts 1~Q~~~tiQg_ê~2~QgitYc~§ ';, :Operating Expenses - Exhibit B \ Prior Year Adjustment Affecting , Residual Receipts ~Capital Expenditures: Replacement of Nonexpendable Equipment Property Betterments & Additions Total Operating Expenditures Residual Receipts per Audit Audit Adjustments - backed out Residual Receipts before Provision Provision for Operating Reserve-Ex. C Residual Receipts per PHA \ ~gmeytêtigQ_gf_e~~~YiQg_eQQYêl ~gQt~iQytigQ Fixed Annual Contribution Ex. C (7) Year Ended JYQ~_~Q~_12§~ $ 80,308.92 2,543.02 ------~QQ~QQ $___§~~1~1~2~ $ 98,456.17 --____~~2~2§ $___2§~Z2è~16 $ (15,644.18) ___1~~é11~1§ $--------Q--- ------------ $___~2.:L.~1~~21 ------------ Ye,ar Ended ~YQgL~Q~_12§~ $ ,~8, 771. 69 -------_Z~~QQ $ ___~a§~ê1é.:-è2 $ B3,355.79 3,316.16 153.80 -__.___6QQ~QQ $ -__~E~Q6§~Z~ $ (¡l8, 179.06) --_____è6Z~é6 $ 07,551. 44) ___lZ~~§1~11 $ ---------Q--- ------------- $ ___~æZ.LsHi}§JL.l1 ------------- HOUSING AUTHORITY OF THE CITY OF SALINA SALINA, KANSAS çQ~E~IeIIQ~_QE_e~~~Bb_Ç9~IBl~~Ilg~_êeB~sQ_B~Q eBQJ~çI_BÇÇQ~~I_=_QEsBBll~ê_Bg§sB~g_Ç~B~gs§ ~QV§l~g_B§§l§IB~Çs_EBYUê~I§_EBggBe~ E)":: h i bit D ( 2 ) Boo~§1_~90~~iQ~tiQo_Ç90~~§ft_LÇ_ZQ1~ EC9j§Et_L§=g=Q]§=QQ1_._=QQ~ a~iæ~ill_Ç90t~ie~ti90_BY§il§Ql~ aximum Annual Contribution Authorized otal Annual Contribution Available Year Ended -~~O§_:JQ..s._1.~§] :t _£~~~22£~QQ $-~]~..s.5::?~~QQ OO~§1_Ç90tcieyti90_B~g~iC~Q ousing Assistance Payments dministrative Fee udit Fee Total Funds Required roject Receipts Other than Contribution - Exhibit B Total Annual Contribution $ 178,792.08 27,863.85 ----_Z~Q~QQ ;4:: 207,405.93 Annual ReqLli red ___l~l~£~Zè $_~Qè..s.~.è].!!..lZ (Qj~E~_BEE9~O~_Çb§og~ rovision for Project Account-Exh. C $ __£2.LZ£ê~!;G oo~§1_ÇQo~~ie~ti90_g§CQ~Q - lesser f contribution available or contribution equired - Exhibit C $_£Qè.L£è~~lZ ----------- e~~§~iog_B~§~cy~_Çb§og~ , perating Income - Exhibit B nnual Contribution Earned etal Operating Receipts $ 1,142.76 _~Qè..s.~.è].!!..lZ $_~QZ..s.1Q~.!!..~] g~~~~iog_ê~Q~OQit~~~§ perating Expenditures - Exhibit B rior Year Adjustment Affecting Residual Receipts apital Expenditures ~ otal Operating Expenditures $ 200,221.60 (1,406.64) ----------- $_1~§..s.§1.1.!!..~.è Net Operating Receipts Available $___§..s.~2Q~~Z on Admin. Fee Provision for Operating Reserve-Ex. C $---§..s.~:?Q.!!..!ÌZ ----------- (8 ) '~. Year Ended J~O~-]Q..s._l5:§.1 $-£~~~1:2£~QQ ::t::-~]~..s.11;;~QQ $ 186,367.00 :':;'2,756. 13 ----------- $ 219, 123. 13 -____ièê~11) $_;;11..s.121~;:;;.è ::1:: __lè.L§QQ~Z~ $_£12.L121~6è ----------- $ (68.13) _;;l!Ì..s.l11~;:;;.è $_;;l:l..s.16]~1] $ 221,982.77 1,406.64 -----§]Q~QQ $_;;;;]..s.211.!!..11 $__11..s.Z2.è~;;§) 3 157.21 ---_..s._----- $__ll..s..è]~~QZ) ----------- E>: h i bit E HOUSING AUTHORITY OF THE CITY OF SALINA SAL I NA , I<ANSAS §Ielê~ê~I_~_~êBIIEI~eIIQ~_QE_e~IYeb_~QQêB~I¡eIIQ~_~Q§I§ eQQYsl_~gQtci~ytigQ_~gQtcs~t_~~_lQ62 The Actual Modernization Costs are as follows: Funds Approved Funds E>:pended $ 18,700.00 19 583.17 ----~------ Deficiency of Funds Approved $---__§§~~lZ ----------- Funds Advanced-Project Notes (Non HUD) Funds E>: pended $ 18,700.00 19 583.17 ----~------ Deficiency of Funds Advanced ( Ex h i bit G) $---__§§~~lZ ----------- 2. The distribution of costs as shown on the Final Statement of "Modernization Costs dated August 17, 1984 accompanying the Actual !Modernization Cost Certificate submitted to HUD for approval is in with the PHA"s records. All modernization costs have been paid and all related liabilities been discharged through payment. (9) E>: h i bit F HOUSING AUTHORITY OF THE CITY OF SALINA SALINA, KANSAS STATEMENT AND CERTIFICATION OF ACTUAL DEVELOPMENT COSTS AT JUNE 30, 1984 PROJECT KANSAS 38-2 Annual Contributions Contract KC1029 The Actual Development Costs of the Project are as follows: ~!!!i!!!.f!.S:êtigQ Prior Current ____Bygit__- _e~Cigg__- ___Igt~l_- $ 56,279.02 $ 0 $ 56,279.02 2,703.42 0 2,703.42 0 161,192.36 161,192.36 896,077.98 (158,780.69) 737,297.29 4,350.13 0 4,350.13 ---Z~6èZ~Z§ -------Q--- ___Z~6èZ~Z§ Interest (net) Initial Operating Deficit Site Acquisition Dwelling Units Non Dwelling Equipment Site Improvements TOTAL COST $ _2èè~èZ§~~~ $___6~~11~èZ $__2è2~Q2Q~QQ ----------- ----------- ------------ The distribution of costs by major cost accounts as shown on the St.tement of Actual Development Costs dated December 28, 1982, accompanying the Actual Development Cost Certificate submitted to HUD f(~r approval is in .greement with the PHA"s records. 3. All development costs have been paid and all related liabilities have been discharged through payment. The PHA incurred the following budget overruns: NONE. ( 10) ~---,............_..,.. E>:hibit F HOUSING AUTHORITY OF THE CITY OF SALINA SALINA, KANSAS e~ebY§I§_QE_êê~êBeb_EY~Q_~e§~_!2ebe~~ê eI_JY~ê_~Q~_12§1 I."" :~~, t~ "'" ';~' ¡",.', ---___Ec9i~~t_~êQ§s§__------ --~§=6- ~QêQ~§=QQ1_~_=QQ6 ;~* gmeg~1t1gQ_ê~fg~~_BgiY§tm~Qt§ .t Operating Receipts Retained: Operating Reserves - Exhibit C $ eficiency in Modernization Funds-Ex. E .nant Prepaid Rents .nant Security Deposits udit Adjustments-b~~ked out "m xpenses/Costs not paid: ~Accounts Payable - Other IAccrued Payments in Lieu of Ta>:es ~ncome not received: '~:~ Accounts Recei vabl e "V ~.' ~~General Fund Cash Available ,j¡;;it'.'., General Fund Cash: i~,4Appl ied to Deferred Charges ~Utility Deposits '4' Invested y:~ General Fund Cash - Exhibit A ( 11> (9,463.18) ( 883.17) 19.00 4,789.00 ( 627.62) 11.27 48,545.30 _ll~~~l~~l) $ 41,039.09 4,998.99 185.00 ----------- $ 35 855.10 -----~------ ------------ '& 29,623.15 27,691.53 --l§~Q21~~è) ~~ 49,253.12 __66~22Q~QQ ~!--62~§2~~1~ -.----------- As part of our examination, we reviewed and tested the PHA"s !ystem of internal control to the extent we considered necessary to èvaluate the system as required by generally accepted auditing .tandards. Under these standards the purpose of such evaluations is to ~stabli5h a basis for reliance on the system of internal accounting control in determining the nature, timing and extent of other auditing ~rocedures that are necessary for expressing an opinion on the financial statements and to assist the auditor in planning and (performing the examination of the financial statements. Additionally, our e>:amination included procedures necessary in our judgement to determine compliance with contractual terms and conditions and aegulation, policies and procedures prescribed by HUD and by '... ..nagement and the governing board of the Authority, insofar as such !ompliance review was necessary"under the provision of Paragraph 20 in the Department of Housing and Urban Development Audit Guide for Audits 9f Public Housing Agencies by Independent Public Accountants, dated øugust, 1978 and Attachment P of Circular A-102. "iI'- ~Q~~ê~I§_Q~-~Q~Eble~~ê e~Q_eQ~I~I§IBeII~ê_I~IêB~eb_~Q~IßQb We have examined the financial statements of the Housing uthority of the City of Salina for the twenty-four months ended June 0, 1984, and have issued our report thereon dated August 30, 1984. ased on our tests of transactions and examination of records as equired by Appendix 2, except as otherwise evidenced by the findings comments in this report, we believe that the Housing Authority of City of Salina has complied with the following: a. The financial terms and conditions of the contracts; with HUD. b. The regulations, policies and procedures prescribed by the Department regarding the Low-income Housing Program. c. The financial regulations and procedures management and those of its governing board. pres.cribed by Ai¡; l The objective of internal accounting control is to provide ¡e..onable, but not absolute, assurance as to the safeguarding of ...eta against loss from unauthorized use or dispostion1s, and the ~.liability of financial records for preparing financial statements and maintaining accountability for assets. The concept of '~easonable ..surance recognizes that the cost of a system of internal ~ccounting control should not exceed the benefits derived and also recognizes that the evaluation of these factors necessarily requires estimates in~ judgements by management. ""'.,",',"..",',",' Î ' '~ \~ ,,~, <I ,ì ~ø ( 12) ..---- ~ x ~ ~Q~~ê~I§_Q~_~Q~ebla~~ê B~Q_eQ~I~I§IBaII~ê_I~IêB~ab_~Q~IBQb (Continued) ~ ~ 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 fr6m misunderstanding of instructions, mistakes of judgement, carelessness, or other personal factors. Contr-ol procedures whose effectiveness depends upon segregation of duties can be circumvented by collusion. Similarly, control procedures can be circumvented intentionally by management with respect either to the execution and recording of transactions or with respect to the estimates and judgements required in the preparation of financial statements. Further, projection of any evaluation of internal accounting control to future periods is subject to risk that the procedures may become inadequate because of changes in conditions, and that the degree of compliance with the procedures may deteriorate. Our examination of the financial statements made in accordance with generally accepted auditing standards, incl~ding the study and evaluation of the PHA"s system of internal accounting control for the year ended June 30, 1984, that was made for the purpose set forth in the first paragraph of this report, would not necessarily disclose all weaknesses in the system because it was based on selective tests of accounting records and related data. êIeIY§_QE_EBIQB_eYQII_EI~QI~ê§ The prior audit report for the period ending June 30, 1982 contained seven findings: a~~gYQt§_Es~sQl~LB~~gYQt§_B~~~iYs~1§__~~t~~~Q_~C9i~~t§ did not agree. This problem has been corrected. E9~~~ê§t__gf__ê~~~§§__EYQg§: interest bearing accounts. All authority monies are currently in Qe~~êtiQg__!2ygg~t_-QY~~C~Q§: finding. Problem still exists. See current Iim~l~_EiQsQ~iêl_B~~g~t§: Problem still exists. See current finding. Çê§b_B~~~iet§: Cash receipts are being deposited on a timely basis. ~gll~~tigQ_bg§§~§: Problem still is present. See current finding. eb~§i~êl_IQY~Qtg~~: See current finding. (13) EI~QI~ê§£_B~~Q~~~~QBIIQ~§_~_B~Ebl~§ êQ~CfLt::!iQy!:g§ Ein~iQg: The minutes of Authority are incomplete. B§çgmmêQ~~tigQ: Minutes of the Board represent the official legal record of the Commissioners' actions and should be complete and appropriately signed. B~e!~: The missing minutes result from the actions of the previ ous E:.: ecut i ve Di rector. I wi 11 ask the Boar'd me-mbens if any of them have copies of the minutes that are missing. All meetings held since I have been director have properly signed minutes in the minute book. the Board as maintained by the Housing ÇQ!lêÇtiQQ_Qf_Q~!iQg~~Qt_a~çgYQt§ EiQ~iQg: The Authority has an excessive balance of tenant accounts receivable. BêçQmm§Q~~tiQQ: The Authority needs to begin to stringently enforce its collection policy. If a tenant does not pay within 5 days, a letter reminding them of their obligation should be sent. If after 8 days, no response is made, the Director should contact them personally. If no payment is received by the 14th day, eviction procedings should commence. Until the Authority starts enforcing its existing collection policy, accounts receivable and collection losses will continue to be excessive. Bêel~: We will work more carefully in this area to attempt to reverse the collection problem. Qffi~§_e~illioi§!:c~!:iQQ EiQ~iQg: The filing system of the Authority is not adequate to allow for easy location of the records on file. 8§£Qillm§O~~!:igo: The files of the Authority should be reorganized into a more usable format. B~21~: We agree to implementing this procedure. ÇbêÇt_~Qyçb§c§_~§§~_QYt_gf_§~gY~QÇ~ EiQ~iQg: In reviewing the cash disbursements transactions of the Authority, it was apparent checks had been issued out of order. 8§£Qmm§Q~~!:igo: Checks should be used in numeric sequence in order to provide assurance that checks are being used properly. 8~Q!~: The majority of these errors occurred in the administration of the previous Executive Director. We will ascertain that checks are used in sequence in the future. êy~g~t_Q~~C~YQ§ EiQ~iQg: As noted in the previous audit, the Authority has a continuing problem with budget overruns. Those noted in the current audit period: __!2y~gêt_- __a£t~~l_- -QY~!:!:YQ- FYE 6-30-84 Uti I i ty E>:pense Ordinary Maintenance 2,400.00 32,610.00 5,210.81 39,209.78 2,810.81 6,599.78 FYE 6-30-83 Administration Ordinary Maintenance 32,280.00 37,860.00 35,620.46 40,598.64 3,340.46 2,738.64 <14) "-""'-,~,.- ... ""~H' EI~QI~ê§~_Bê~Q~~ê~QeIIQ~§-~_BêEblê§ <Continued) Shortfalls in actual income were also experienced. In 1984, actual total income was $ 12,392.78 less than budget and in 1983, actual total income was $ 18,071.08 less than budgeted. B~£gmm~Q~~tigQ: Realistic budgets should be established and revised as variations appear necessary. Bê~l~: We will work more diligently in this area. Rental income was significantly below budget due to a lower average rental than expected and an occupancy problem, especially during the winter months. When the units were vacant during the cold weather, the Authority had to pay the heat costs, hence contributing to the budget overrun for utilities. b~t~_EiliQg_g£_Bê~Qct§ EiQ~iQg: The required reports are not being filed by the due date. For the fiscal year ending 6-30-84, reports were signed 8-15-83 and for the year ending 6-30-84, reports were submitted 8-2-84. , B~~gmm§Q~stigQ: All reports should be filed by the 20th of the i month following the conclusion of the fiscal year. I B~Ql~: We will work to improve the situation. ! I I ¡ §~~êQYb5_gE_eQ~Y§II~ê_~QYB~ab_ê~IBI5§ Acct # for a~~it_B~Qgct -----Q~§~~iQtigQ___- Acct # for E~e_!2ggk§- --_QB__- -_~B__- 6120 Loss on Disposition of Eqmt. (Prior Yrs. Adjustment not Affecting Residual Receipts) Land Structures & Eqmt. 6020 £36.91 1400.4 1400.4 86.91 To write off sander and belts no longer at the Authority. 2119.33 3690 Overdeposit of Funds Miscellaneous Income (Prior Yrs. Adjustment Affecting Res. Receipts) To reclassify overdeposit of funds as 2119.33 39.47 6010 miscellaneous income. 39.47 4510 Insurance Expense (Prior Yrs. Adjustment Affecting Res. Receipts) 1211 Prepaid Insurance 1211 To, correct balance in prepaid insurance. 6010 667.09 667.09 êê~êBab_~Q~t15~I§ R. Abner Perney is the E>:ecuti ve Di rector of the Housi ng ~~uthori ty of the City of Salina. The Authority has 206 units under management, 75 of which are Owned Housing and 131 are in the Section 8 program. We appreciate the cooperation of the Authority during the audit. ( 15) 1J<i""",," - , HOUSING AUTHORITY OF THE CITY OF SALINA SALINA, KANSAS June 30, 1984 NOTES TO THE FINANCIAL STATEMENTS NOTE 1: Q~I§§lQ~_QE_~êBlel~_QI§~bQ§~Bê§ This audit report is intended solely for use by the Housing Authority and the Department of Housing and Urban Development. HUD provides the Housing Authprity with detailed manuals which prescribe and describe accounting principles and procedures to be used by the PHA. Any significant deviation from prescribed principles or prc3cedures are required to be reported as findings in the audit report. For this reason, an enumeration of all significant policies has been ()mitted from this report. In addition, HUD determines and arranges for the temporary and permanent financing for the PHA and provides the funding for repayment of this' indebtedness thus created. As a result, details concerning debt maturities and terms have been omitted from this report. HUD also controls and approves leases entered into in connection with leased housing projects, if any, operated by the PHA. Since HUD"s involvement with leased housing projects is so extensive, details concerning the leases and commitments thereunder have been omitted from this report. Also, in accordance with HUD accounting procedures, depreciation on structures and equipment is not recorded in the financial statements. (16) -