Audit - 1988/1989
HOUSING AUTHORITY OF
THE CITY OF SALINA
---
Salina, Kansas
REPORT ON EXAMINATION OF
FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
FOR THE TWELVE MONTHS ENDED
June 30, 1989
SAUNDERS & ASSOCIATES
Certified Public Accountants
P. O. Box 1406
630 E. 17th
Ada, Oklahoma
(405) 332-8548
(405) 436-5330
Exhibit
A
B (1)
B(2)
C(1)
C ( 2 )
D
E (1)
E(2)
F
G
HOUSING AUTHORITY OF
THE CITY OF SALINA, KANSAS
INDEX TO FINANCIAL STATEMENTS
June 30, 1989
Page
Independent Auditor's Report.
1
3
Balance Sheet.
Statement of Income and Expenses - Low Rent.
4
statement of Income and Expenses
Assistance Payments Program.
Housing
5
Analysis of Surplus - Low Rent
6
Analysis of Surplus - Housing Assistance
Payments Program.
7
Notes to Financial statements.
\
8
Isupplemental Information:
Independent Auditor's Report on Schedule of
Federal Financial Assistance.
9
Schedule of Federal Financial Assistance.
10
Computation of Residual Receipts and
Accruing Annual Contribution - Low Rent.
11
computation of Annual Contributions Earned
Project Account - Operating Reserve Changes -
Housing Assistance payments Program.
12
Schedule of Development Cost ~ Uncompleted.
13
Analysis of General Fund Cash Balance.
14
Activities of the Housing Authority.
15
Schedule of Adjusting Journal Entries.
16
Independent Auditor's Report on Compliance.
17
Independent Auditor's Report on Internal
control.
19
Status of Prior Audit Findings, Current Audit
Findings, Recommendation and Replies.
21
i
(405) 332-8548
S~cuuL~
~~~
630 &. 17~,
ç:e.ð. 93<= H06
Cfda" ð ~""'" 7 1f 8 2 0
(405) 436-5330
Independent Auditor's Report
Board of Commissioners
Housing Authority of the
City of Salina
P. O. Box 1202
Salina, Kansas 67402
Regional Inspector General for Audit
Office of the Inspector General
Department of Housing and Urban Dev.
Region VII, 1103 Grand Avenue
Kansas City, MO 64106
We have audited the balance sheet of the Housing Authority of the City
of Salina, Kansas pertaining to its Low-Rent and Housing Assistance
Payment Programs as of June 30, 1989 and the related statements of
income and expenses and analysis of surplus. Our examination was made
in accordance with generally accepted auditing standards, Office of
Management'and Budget Circular A-128, the OMB Circular supplement for
Single Audits pf state and Local Governments (revised) and Standards
for Audits 0, Governmental Organizations, Programs, Activities and
Functions (revised), issued by the U. S. General Accounting Office
applicable to financial and compliance elements of an audit. These
financial statements are the responsibility of the Housing Authority
of the City of Salina's management. Our responsibility is to express
an opinion on these financial statements based on our aud:it.
We conducted our examination in accordance with generally accepted
auditing standards. Those standards require that we 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. We believe that our audit provides a
reasonable basis for our opinion.
As described in Note A, the authority's policy is to prepare its
financial statements on the laws of accounting practices prescribed or
permitted by the Department of Housing and Urban Development. These
practices 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 cognizant agency and is
not intended for any other purpose.
]
Independent Auditor's Report
Page 2
In our opinion, the financial statements referred to above present
fairly the financial position of the Housing Authority of the City of
Salina, Kansas at June 30, 1989, and the results of its operations for
the twelve months then ended, in conformity with accounting practices
generally followed by local authorities applied on a basis consistent
with the Department of Housing & Urban Development procedures.
The supplemental financial data as listed in the Table of Contents 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, is fairly stated in all material respects in relation to
the financial statements taken as a whole.
./.z¿CAÆ cic -l <Ý 9 ~ ,,~ led&:..
SAUNDERS & ASSOCIATES
September 22, 1989
7.
HOUSING AU~HORITY OF THE
CITY OF SALINA, KANSAS
BALA:!CE SHEET
June 30, 1989
Assets
Cash (Exhibit G)
Accounts receivable:
HUD
Tenants
Other
Interfund
Investments - general fund
Debt amortization funds - HUD
annual contributions
Deferred charges prepaid insure lce
Development cost
Development cost - contra
Land, structures and equipment
TOTA~ ASSETS
Liabilities and Surplus
Accounts payable:
Tenants security deposits
HUD
Other
Interfund
Accrued liabilities:
Interest payable - development notes
Payments in lieu of taxes
Deferred credits - tenants prepa'i rents
Fixed liabilities - permanent
notes - HUD
Total Liabilities
Surplus (Exhibit C-1,2)
TOTAL LIABILITIES AND SURPI. ~
KC-1029
$
12,487.55
J':xh i hit A
KC-7051
$ 3,842.11
8,273.45
28,479.24
5,138.83
$45,733.63
---------
---------
$
6,700.70
6,700.70
39,032.93
$45,733.63
---------
---------
* The accompanying notes are anntegral part of the financial
statements.
3
2,236.74
325.00
6,700.70
~)7,398.20
67,888.11
3,590.22
2,487,967.95
(2,487,967.95)
2,516,279.46
$ 2,666,905.98
---------------
--~-----------
$
9,753.00
2,600.00
2,170.10
68,951.91
10,956.37
892.08
2,246,671.01
2,341,994.47
324,911.51
$ 2,666,905.98
----------------
---------------
l':xhi hi t: II-}
HOUSING AUTHORITY OF THE
CITY OF SALINA, KANSAS
STATEMENT OF INCOME AND EXPENSES
For the Twelve Months Ended June 30, 1989
Lolt¡-Rent
KC-I029
Operating Income
Dwelling rental
Nondwelling rental
$ 116,084.22
Total Rental Income
116,084.22
Interest on general fund investments
Other income
3,909.30
Ij, :" ,1:;. . 2 f;
Total Operating Income (Exh. E-1)
125,538.80
Operating Expenses
,
Administrátion
Utilities
Ordinary maintenance and
General expense
Nonroutine maintenance
operation
28,356.06
4,019.47
56,242.88
36,197.93
l~, ::;70. Of;
Total Operating Expenses (Exh. E-1)
11l0,H;f,.II;'
Net Operating Income (Loss)
( 14,647.62)
Other Credits and (Charqes)
Interest on notes
Prior year adjustment:
Affecting residual
Not affecting residual receipts
( 55,125.86)
349.00
-.L~I J.J 9 ~-19-
NET INCOME (LOSS) (Exh. C-l)
$
59,694.71
-----------
-----------
* The accompanying notes are an integral part of the financial
statements.
~
}.:xhihit: B-2
HOUSING AUTHORITY OF THE
CITY OF SALINA, KANSAS
STATEMENT OF INCOME AND EXPENSES
For the Twelve Months Ended June 30, 1989
Housing Assistance Payments Program
KC-7051
Operatinq Income
Interest income (Exh. E-2)
$
7..f,OF,.:n
Operatinq Expenses
Housing assistance payments
Administrative expenses
General expense
Audit
446,799.61
66,294.16
2,765.00
604.50
Tota~ Operating Expenses (Exh. E-2)
(~1(~.4¡:;':;_?7)
Net Operating Income (Loss)
,
Other Credits and (Charqes)
(513,857.06)
Prior year adjustments - affecting
residual receipts
.1.922.')F,)
NET INCOME (LOSS) (Exh. C-2)
$(515,780.02)
-----------
-----------
* The accompanying notes are an integral part of the financial
statements.
5
JI:xhihit. c-l
HOUSING AUTHORITY OF THE
CITY OF SALINA, KANSAS
STATEMENT OF ANALYSIS OF SURPLUS
For the Twelve Months Ended June 30, 1989
Low-Rent
KC.-I029
Unreserved Surplus
Balance per audit June 30, 1988
Audit adjustments backed out
$(1,438,520.63)
891.1.7
Balance per books at June 30, 1988
(1,437,629.46)
Net income (loss) for year ended
June 30, 1989 (Exh. B-1)
Provision for operating reserve for
year ~nded June 30, 1989
59,694.71
j
1,lfl<).:;O)
Balance ~t June 30, 1989
\
Operating Reserve
Balance per audit June 30, 1988
Provision for (reduction of) operating reserve
for year ended June 30, 1989 (Exh. E-1.)
j I, :; 7 <) , .:;!:' ,1 . 0 ~\ )
54,6'11..29
1,1f19.30
Balance at June 30, 1989 (Exh. G)
~f"Of,O.~\<)
Cumulative HUD Contributions
Balance per audit June 30, 1988
HUD operating subsidy
Annual HUD contribution for year
ended June 30, 1989
1,565,508.86
17,408.00
6:;,2(',:=;_11
Balance at June 30, 1989
.1,f,IfB,20'1_97
TOTAL SURPLUS (Exhibit A)
$
324,911.51
.-------------
.-------------
* The accompanying notes are an integral part of the financial
statements.
6
J':xh i hit c- 2
HOUSING AUTHORITY OF THE
CITY OF SALINA, KANSAS
STATEMENT OF ANALYSIS OF SURPLUS
For the Twelve Months Ended June 30, 1989
Housing Assistance Payments Program
KC-7051
Unreserved Surplus
Balance per audit June 30, 1988
Net income (loss) for year ended
June 30, 1989 (Exh. B-2)
Provision for operating reserve for
year ended June 30, 1989
Provision for project account unfunded
for year ended June 3D, 1989
$(2,805,337.63)
515,780.02)
2,532.13)
1
109,848.55)
Balance at June 30, 1989
j3,'1::;3"F¡H_33)
1
Operating Reserve
Balance per- audit June 30, 1988
Provisionlfor operating reserve
for year ended June 30, 1989
31,361.97
'"> r.'" ") 1_,
/. , .J .-.' ,.. .-,
Balance at June 30, 1989 (Exh. G)
3.1,Hij'1..l0
Project Account ~ Unfunded
Balance per audit June 30, 1988
Provision for project account for
year ended June 30, 1989
546,846.58
10'),f;'1g_:.\~
Balance at June 30, 1989
f,~f,,6C¡::._.l3
Cumulative HUD Contributions
Balance per audit June 30, 1988
Annual HUD contributions for year
ended June 30, 1989
2,261,897.58
~7.0,0/H,'1~
Balance at June 30, 1989
_7.,7Hl,~H2_(¡3
TOTAL SURPLUS (Exh. A)
$
39,032.93
---------------
-.-------------
* The accompanying notes are an integral part of the financial
statements.
7
HOUSING AUTHORITY OF THE
CITY OF SALINA, KANSAS
NOTES TO FINANCIAL STATEMENTS
June 30, 1989
Note A:
Summary of Significant Accounting Policies:
--
Basis of Accounting:
The accounting records are maintained in accordance with the standards
set forth by the U. S. Department of Housing and Urban Development for
Public Housing Authorities.
Note B:
Land, Structures, and Equipment
--
All costs related to the acquisition of land, original construction of
the housing units, completed modernization costs, and equipment costs
are carried in this account.
* The accompanying notes are an integral part of the financial
statements.
8
SUPPLEMENTAL INFORMATION
(405) 332-8548
S~cuuL~
~.,J, ~ ~
630 &. 17~,
ç:e.ð. 93<= 1406
Cfda" ð~ 71f820
(405) 436-5330
Accountant's Report on Schedule of
Federal Financial Assistance
Board of Commissioners
Housing Authority of the
City of Salina
P. O. Box 1202
Salina, Kansas 67402
Regional Inspector General for Audit
Office of the Inspector General
Department of Housing & Urban Dev.
Region VII, 1103 Grand Avenue
Kansas City, MO 64106
We have examined the financial statements of the Housing Authority of
the City of Salina, Kansas, for the twelve month period ended June 30,
1989, and pave issued our report thereon dated September 22, 1989.
Our examination of such general purpose financial statements was made
in accordance \with generally accepted auditing standards and the
standards fo~ financial and compliance audits contained in the
"Standards for Audit of Governmental Organizations, Programs,
Activities, and Functions," issued by the U. S. General Accounting
Office, and accordingly, included such test of the accounting records
and such other auditing procedures as we considered necessary in the
circumstances.
Our examination was made for the purpose of forming an opinion on the
general purpose financial statements taken as a whole. The
accompanying schedule of federal financial assistance is presented for
purpose of additional analysis and is not a required part of the
general purpose financial statements. The information in that
schedule has been subjected to the auditing procedures applied in the
examination of the general purpose financial statements and, in our
opinion, is fairly stated in all material respects in relation to the
general purpose financial statements taken as a whole.
SAUNDERS & ASSOCIATES
September 22, 1989
9
Kxhibit D
HOUSING AUTHORITY OF THE
CITY OF SALINA, KANSAS
SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE
For the Twelve Months Ended June 30, 1989
Federal Grantor - U. S. Department of Housing and
Urban Development
CF'DA
No.
Grant
ID No.
Program
Expenditures
--
Low-Income Housing
HUD operating subsidy
Development costs
14.850
14.850
KC-I029
KC-I029
$ 17,408.00
15,600.85
Section .ê..
Exist~ng
14.156
KC-7051
!J?O,11H.:."::
TOT Af¥
$553,127.38
-----------
----------
* The accompanying notes are an integral part of the financial
statements.
J 0
l':xh i hi t E-1
HOUSING AUTHORITY OF THE
CITY OF SALINA, KANSAS
COMPUTATION OF RESIDUAL RECEIPTS AND
ACCRUING ANNUAL CONTRIBUTION
For the Twelve Months Ended June 30, 1989
Low-Rent
KC-1029
Computation of Residual Receipts
Operating Receipts:
Total Operating Income
HUD operating subsidy
Prior year adjustment
residual receipts
(Exh. B,-I)
$ 125,538.80
17,408.00
affecting
3-19.00
Total Operating Receipts (Exh. 0-1,2)
l-1l,"?<j:).f:O
Operating E~penditures:
Total O~erating Expenses (Exh. B-])
Capital expenditures
140,186.42
_----1L~8}_._61
Total Operating Expenditures
(Exh. D-l,2)
1-11,:)70.0':':
ReulJu~l Receipts Per Audit
1,725.77
Audit adjustment backed out
306.47)
Residual Receipts Per PHA
1,419.30
Provision for operating reserve (Exh. C-1)
( 1 419.30)
_--::::J-------------
RESIDUAL RECEIPTS
$
00.00
-----------
-----------
Computation 2..f Accruing Annual Contribution
Fixed annual contribution
Adjustments - residual receipts from
sale of property due back to HUD
ACCRUING ANNUAL CONTRIBUTION (Exh. C-1)
$ 67,888.11
7.,f,OO.OO
$ 65,288.11
-----------
----------~
* The accompanying notes are an integral part of the financial
statements.
1]
HOUSING AUTHORITY OF THE
CITY OF SALINA, KANSAS
COMPUTATION OF ANNUAL CONTRIBUTIONS EARNED
PROJECT ACCOUNT - OPERATING RESERVE CHANGES
For the Twelve Months Ended June 30, 1989
Housing Assistance Payment Program
KC-705l
Maximum Contribution Available
Maximum annual contribution authorized
Project account balance at beginning
of period
TOTAL ANNUAL CONTRIBUTION AVAILABLE
Annual Contribution Required
Housing assistance payments
Administration fees earned
Hard-to~house fees earned
Independent public accountant
Preliminary, administrative expense
Prelimina~y non-expendable equipment
Total of Fund Required
Project receipts other than annual
contribution
TOTAL ANNUAL CONTRIBUTION REQUIRED
Project Account ChanGe
PROVISION FOR PROJECT ACCOUNT
OperatinG Reserve ChanGe
Total Operating Income (Exh. B~2)
Annual contributions earned
Total Operating Receipts
Total operating expense (Exh. B-2)
Capital expenditures
Prior year adjustment
Total Operating Expenditures
Residual Receipts Per Audit
Residual Receipts Per PHA
PROVISION FOR OPERATING RESERVE (Exh. C-2)
}':xhi bi t B-2
ë
....
629,893.00
:,4h,<i4f,.58
$ 1,176,739.58
-------------
-------------
$
446,799.61
67,769.89
585.00
604.50
2,765.00
1,732.30
520,256.30
(
(:,
"i
211.85)
520,044.45
-------------
------.-------
~,
..'
109,848.55
-------------
-------------
~,
..'
2,606.21
5 2 0 .LiL4~---!~
:;77,6~O_f,6
516,463.27
1,732.30
1,922.96
!i?O,J IH.!)3
2,532.13
2, 5 3.~_~J~.1
~: (
2,532.13)
-------------
-------------
* The accompanying notes are an integral part of the financial
statements.
12
J':xhi hi t F
HOUSING AUTHORITY OF THE
CITY OF SALINA, KANSAS
SCHEDULE OF DEVELOPMENT COST - UNCOMPLETED
June 30, 1989
K!; - .:; F;.- n:i
Funds approved
$ 1,270,607.00
Funds advanced
Interest to DOFA
(1,181,233.84)
L~ß-L- ~- 51~~J )
EXCESS OF FUNDS APPROVED
$
20,421.25
--.-----------
--.-----------
Funds advanced
Interest to DOFA
$ 1,181,233.84
68,951.91
JJ..,~~_Ql J85 .95)
Funds expended
,
EXCESS (DEFICIENCY) OF
FUNDS ADVANCED (Exh. G)
$ (
.20 )
--.------------
--.-----------
* The accompanying notes are an integral part of the financial
statements.
J .i
HOUSING AUTHORITY OF THE
CITY OF SALINA, KANSAS
ANALYSIS OF GENERAL FUND CASH
June 30, 1989
Composition Before Adjustments
KC-1029
Net operating receipts retained:
Operating reserve (Exhibit C-l,2)
Tenants security deposits
Excess (deficiency) in development
funds (Exhibit F)
Deferred credits - tenants prepaid
rents
$ 56,060.59
9,753.00
.20 )
892.08
Adjustments
Expenses/costs not paid:
Accounts payable:
HUD \
Interfund
Accrued liabilities - PILOT
2,600.00
2,170.10
10,956.37
Income not received:
Accounts receivable:
HUD
Tenants
Other
Interfund
( 1,930.27)
( 325.00)
( 6,700.70)
73,475.97
General Fund Cash Available
General Fund Cash APplied
Investments
Deferred charges - prepaid insurance
(57,398.20)
( 3,590.22)
GENERAL FUND CASH (Exhibit A)
$ 12,487.55
-----------
-----------
l~xhibit lì
KC-7051
$ 33,894.10
6,700.70
( 8,273.45)
32,321.35
(28,479.24)
$
3,842.11
----------
----------
* The accompanying notes are an integral part of the financial
statements.
J ,.,
HOUSING AUTHORITY OF THE
CITY OF SALINA, KANSAS
ACTIVITIES OF THE HOUSING AUTHORITY
At June 30, 1989 the Housing Authority of the City of Salina, Kansas
had the following units under lease:
Low-Rent
100
Section 8
216
TOTAL UNITS
316
-- ---
* The accompanying notes are an integral part of the financial
statements.
J :¡
Audit
Acct.
1122
6010
HOUSING AUTHORITY OF THE
CITY OF SALINA, KANSAS
SCHEDULE OF ADJUSTING JOURNAL ENTRIES
June 30, 1989
Low-Rent
KC-70!!1
( 1 )
Dr.
Cr.
~;306.47
* The accompanying notes are an integral part of the financial
statements.
Accounts receivable - tenants
Prior year adjustment - affecting
residual receipts
$306.47
To adjust accounts receivable
to match Housing Authority
records.
] ¡:;
LHA
Acct.
1122
6010
(405) 332-8548
S~cuuL~
~~~
630 &. 17~,
ç:e.ð. 93<= 1406
Cfda" ð~ 74820
Independent Auditor's Report on Compliance
(405) 436-5330
Board of Commissioners
Housing Authority of the
City of Salina
P. O. Box 1202
Salina, Kansas 67402
Regional Inspector General for Audit
Office of the Inspector General
Department of Housing and Urban Dev.
Region VII, 1103 Grand Avenue
Kansas City, MO 64106
We have audited the financial statements of the Housing Authority of
the City of Salina, Kansas, for the twelve months ended June 30, 1989.
Our examination was made in accordance with generally accepted
auditing standards; the General Accounting Office Standards for Audit
of Governmental Organizations, Programs, Activities and Functions, as
they pertain to financial and compliance audits; the provisions of the
Office of Management and Budget's (OMB) Compliance Supplement for
Single Audits of state and Local Governments; and the provisions of
OMB's Circular A-128, Audits of state and Local Governments, and
accordingly included such tests of the accounting records and such
other auditing procedures as we considered necessary in the
circumstances.
The management of the Housing Authority of the City of Salina, Kansas
is responsible for the entity's compliance with laws and regulations.
In connection with the examination referred to above, we selected and
tested transactions and records from each major federal financial
assistance program and certain nonmajor federal financial assistance
programs. The purpose of our testing of transactions and records from
those federal financial assistance programs was to obtain reasonable
assurance that the Housing Authority of the City of Salina, Kansas
had, in all material respects, administered major programs, and
executed the tested nonmajor program transactions, in compliance with
laws and regulations, including those pertaining to financial reports
and claims for advances and reimbursements, noncompliance with which
we believe could have a material effect on the allowability of program
expenditures.
The results of our tests indicate that for the transactions and
records tested, the Housing Authority of the City of Salina, Kansas
complied with the laws and regulations referred to above, except as
described in the accompanying schedule of findings and questioned
costs.
J 7
Independent Auditor's Report of Compliance
Page 2
In our opinion, subject to the effect of the ultimate resolution of
those instances of noncompliance referred to in the preceding
paragraph, for the twelve months ended June 30, 1989, the Housing
Authority of the City of Salina, Kansas administered each of its
major federal financial assistance programs in compliance, in all
material respects, with laws and regulations, including those
pertaining to financial reports and claims for advances and
reimbursements, noncompliance with which we believe could have a
material effect on the allowability of program expenditures.
The results of our testing of transactions and records selected from
nonmajor federal financial assistance programs indicate that for the
transactions and records tested the Housing Authority of the City of
Salina, Kansas complied with the laws and regulations referred to in
the second paragraph of our report, except as noted in the
accompanying schedule of findings and questioned costs. Our testing
was more limited than would be necessary to express an opinion on
whether the Housing Authority of the City of Salina, Kansas
administered those programs in compliance with all material respects
with those laws and regulations noncompliance with which we believe
,
could have a material effect on the allowability of program
expenditures; \however, with respect to the transactions and records
that were n~t tested by us, nothing came to our attention to indicate
that the Housing Authority of the City of Salina, Kansas had not
complied with laws and regulations other than those laws and
regulations for which we noted violations in our testing referred to
above.
~ /, G/~; ,-?
/ tZt..-G-yzo/" {!. {,¿,/ .r (,¿l-J ,,¿ r.:... ,- .~,
SUNDERS & ASSOCIATES
September 22, 1989
] R
(405) 332-8548
S~cuuL~
~ ~£¡." Ct~
630 &. 17~,
ç:e.ð. 93""" H06
Cfda" ð~ 74820 (405) 436-5330
Independent Auditor's Report on Internal Control
Board of Commissioners
Housing Authority of the
city of Salina
P. O. Box 1202
Salina, Kansas 67402
Regional Inspector General for Audit
Office of Inspector General
Department of Housing and Urban Dev.
Region VII, 1103 Grand Avenue
Kansas City, MO 64106
We have audited the financial statements of the Housing Authority of
the City of Salina, Kansas, for the twelve months ended June 30, 1989,
and have issued our report thereon dated September 22, 1989. As a
part of our examination, we made a study and evaluation of the Housing
Authority's system of internal accounting control and those controls
which provide a reasonable assurance of compliance with laws and
regulations to the extent we considered necessary to evaluate the
system as required by the standards for financial and compliance
audits contained in the U. S. General Accounting Offices' stanaaras
for Audit of GovernmentalOrqanizations, Proqrams, Activities, and
Functions and Office of Management and Budget Circular A-128, Audits
of State and Local Government.
In planning and performing our audit of the financial statements of
the Housing Authority of the City of Salina, Kansas for the twelve
months ended June 30, 1989, we considered its internal control
structure in order to determine our auditing procedures for the
purpose of expressing our opinion on the financial statements and not
to provide assurance on the internal control structure.
The management of the Housing Authority of the City of Salina, Kansas
is responsible for establishing and maintaining an internal control
structure. In fulfilling this responsibility, estimates and judgments
by management are required to assess the expected benefits and related
costs of internal control structure policies and procedures. The
objectives of an internal control structure are to provide management
with reasonable, but not absolute, assurance that assets are
safeguarded against loss from unauthorized use or disposition, and
that transactions are executed in accordance with management's
authorization and recorded properly to permit the preparation of
financial statements in accordance with generally accepted accounting
principles. Because of inherent limitations in any internal control
structure, errors or irregularities may nevertheless occur and not be
detected. Also, projection of any evaluation of the structure for
future periods is subject to the risk that procedures may become
inadequate because of changes in conditions or that the effectiveness
of the design and operation of policies and procedures may
deteriorate.
] <)
Independent Auditor's Report on Internal Control
Page 2
For the purpose of this report, we have classified the Authority's
significant internal accounting controls into the following
categories:
(1) Payroll/Personnel
(2) Revenue/Cash Receipts/Receivables
(3) Expenditures/Cash Disbursements/Payables
(4) Property and Equipment
Further, we have classified the significant administrative controls
designed to provide reasonable assurance that federal programs are
being managed in compliance with laws and regulations into the
following categories:
(1) Political activity
(2) Davis-Bacon Act compliance
(3) Civil Rights
(4) Cash management
(5) Eligibilities
(6) Real property acquisition
and relocation
(7) Federal financial reports
(8) Reporting
(9) Special tests & provisions
,
Our study included all of the control categories listed above which
are applicable to this Housing Authority. The purpose of our study
and evaluation was to determine the nature, timing and extent of the
auditing procedures necessary for expressing an opinion on the
Authority's financial statements. Our study and evaluation was more
limited than would be necessary to express an opinion on the system of
internal control taken as a whole, or on any of the aforementioned
categories of controls.
Our consideration of the internal control structure would not
necessarily disclose all matters in the internal control structure
that might be material weaknesses under standards established by the
American Institute of Certified Public Accountants. A material
weakness is a reportable condition in which the design or operation of
one or more of the specific internal control structure elements does
not reduce to a relatively low level the risk that errors or
irregularities in amounts that would be material in rE!lation to the
financial statements being audited may occur and not be detected
within a timely period by employees in the normal course of performing
their assigned functions. We noted no matters involving the internal
control structure and its operation that we consider to be material
weaknesses as defined above.
This report is intended
cognizant Federal agency,
purpose.
~ LÁ-A / ?i ~Jc~-eL ~;-,~
Ç2)a~A/l.c> <..:- "-
SAUNDERS & ASSOCIATES
solely for the use of management and the
and should not be used for any other
September 22, 1989
20
HOUSING AUTHORITY OF THE
CITY OF SALINA, KANSAS
STATUS OF PRIOR AUDIT FINDINGS,
CURRENT AUDIT FINDINGS, RECOMMENDATIONS AND REPLIES
June 30, 1989
Prior Audit Findings
1. )
Budqet Overruns. There were no budget overruns for the current
audit period. This finding is cleared.
2 )
Annual Unit Inspections.
See Current Audit Findings.
Current Audit Findings
1 )
Annual Unit Inspections. Documentation of annual unit inspections
during the prior twelve months could not be located in low-rent
tenants' files.
RecIDmmendation:
possible.
\
Annual inspections should be scheduled as soon as
Reply~ Annual inspections are being performed at the time of
recertification.
2 )
Excessive Accounts Receivable - Tenants. The Housing Authority
accounts receivable for tenants is in excess of the $15 per
dwelling unit limit established by HUD.
Recommendation: The Housing Authority collection policy should be
strictly enforced.
Reply: We will comply with the recommendation.
* The accompanying notes are an integral part of the financial
statements.
71