Audit - 2018SALINE COUNTY-CITY BUILDING AUTHORITY
Salina, Kansas
FINANCIAL STATEMENT
AND
INDEPENDENT AUDITORS' REPORT
December 31, 2018
WOODS & DURHAM, CHTD.
Certified Public Accountants
Salina, Kansas
SALINE COUNTY-CITY BUILDING AUTHORITY
Salina, Kansas
FINANCIAL STATEMENT
For the Year Ended December 31, 2018
TABLE OF CONTENTS
Page
Number
INDEPENDENT AUDITORS' REPORT ..................................................................................1 - 2
FINANCIAL STATEMENT
SUMMARY OF RECEIPTS, EXPENDITURES AND
UNENCUMBERED CASH REGULATORY BASIS ..............................................................3
NOTES TO FINANCIAL STATEMENT ...................................................................................4 - 7
SUPPLEMENTAL INFORMATION
GENERAL FUND SCHEDULE OF RECEIPTS AND EXPENDITURES -
ACTUAL AND BUDGET REGULATORY BASIS Schedule 1 ............................................8
CAPITAL OUTLAY FUND SCHEDULE OF RECEIPTS AND EXPENDITURES
Schedule 2 ...........................................................................................................................9
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Saline County-City Building Authority
Salina, Kansas 67401
Wehaveauditedtheaccompanyingfundsummarystatementofregulatorybasisreceipts,expenditures,and
unencumberedcashbalancesofSalineCounty-CityBuildingAuthority,Salina,Kansas,asofandfortheyear
ended December 31, 2018, and the related notes to the financial statement.
Management's Responsibility for the Financial Statement
Managementisresponsibleforthepreparationandfairpresentationofthisfinancialstatementinaccordance
withtheKansasMunicipalAuditandAccountingGuideasdescribedinNote1;thisincludesdeterminingthatthe
regulatorybasisofaccountingisanacceptablebasisforthepreparationofthefinancialstatementinthe
circumstances.Managementisalsoresponsibleforthedesign,implementationandmaintenanceofinternal
controlrelevanttothepreparationandfairpresentationofthefinancialstatementthatisfreefrommaterial
misstatement, whether due to fraud or error.
Auditor's Responsibility
Ourresponsibilityistoexpressanopiniononthefinancialstatementbasedonouraudit.Weconductedour
auditinaccordancewithauditingstandardsgenerallyacceptedintheUnitedStatesofAmerica,andtheKansas
MunicipalAuditandAccountingGuide.Thosestandardsrequireweplanandperformtheaudittoobtain
reasonable assurance about whether the financial statement is free of material misstatement.
Anauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosuresinthe
financialstatement.Theproceduresselecteddependon auditor’s judgment,includingtheassessmentofthe
risksofmaterialmisstatementofthefinancialstatement,whetherduetofraudorerror.Inmakingthoserisk
assessments,theauditorconsidersinternalcontrolrelevanttothe entity’s preparationandfairpresentationof
thefinancialstatementinordertodesignauditproceduresthatareappropriateinthecircumstances,butnotfor
thepurposeofexpressinganopinionontheeffectivenessofthe entity’s internalcontrol.Accordingly,we
expressnosuchopinion.Anauditalsoincludesevaluatingtheappropriatenessofaccountingpoliciesusedand
thereasonablenessofsignificantaccountingestimatesmadebymanagement,aswellasevaluatingtheoverall
presentation of the financial statement.
Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforouraudit
opinion.
Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles
AsdescribedinNote1ofthefinancialstatement,thefinancialstatementispreparedbytheSalineCounty-City
BuildingAuthorityonthebasisofthefinancialreportingprovisionsoftheKansasMunicipalAuditandAccounting
Guide,whichisabasisofaccountingotherthanaccountingprinciplesgenerallyacceptedintheUnitedStatesof
America.
Theeffectsonthefinancialstatementofthevariancesbetweentheregulatorybasisofaccountingdescribedin
Note1andaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica,althoughnotreasonably
determinable, are presumed to be material.
1
Adverse Opinion on U.S. Generally Accepted Accounting Principles
Inouropinion,becauseofthesignificanceofthematterdiscussedinthe“Basis forAdverseOpiniononU.S.
GenerallyAcceptedAccounting Principles”paragraph,thefinancialstatementreferredtoabovedoesnot
presentfairly,inconformitywithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica,the
financialpositionoftheSalineCounty-CityBuildingAuthorityasofDecember31,2018,orchangesinfinancial
position and cash flows thereof for the year then ended.
Unmodified Opinion on Regulatory Basis of Accounting
Inouropinion,thefinancialstatementreferredtoabovepresentsfairly,inallmaterialrespects,theaggregate
cashandunencumberedcashbalanceoftheSalineCounty-CityBuildingAuthorityasofDecember31,2018,
andtheaggregatereceiptsandexpendituresfortheyearthenendedinaccordancewiththefinancialreporting
provisions of the Kansas Municipal Audit and Accounting Guide described in Note 1.
Other Matters - Supplementary Information
Ourauditwasconductedforthepurposeofforminganopiniononthefundsummarystatementofregulatory
basisreceipts,expenditures,andunencumberedcashbalances(basicfinancialstatement)asawhole.The
individualfundscheduleofregulatorybasisreceiptsandexpenditures-actualandbudget(Schedule1aslistedin
thetableofcontents)andthenonbudgetedfundscheduleofregulatorybasisreceiptsandexpenditures
(Schedule2aslistedinthetableofcontents)ispresentedforanalysisandisnotarequiredpartofthebasic
financialstatement,however,isrequiredtobepresentedundertheprovisionsoftheKansasMunicipalAuditand
AccountingGuide.Suchinformationistheresponsibilityofmanagementandwasderivedfromandrelates
directlytotheunderlyingaccountingandotherrecordsusedtopreparethebasicfinancialstatement.The
informationhasbeensubjectedtotheauditingproceduresappliedintheauditofthebasicfinancialstatement
andcertainadditionalprocedures,includingcomparingandreconcilingsuchinformationdirectlytothe
underlyingaccountingandotherrecordsusedtopreparethebasicfinancialstatementortothebasicfinancial
statementitself,andotheradditionalproceduresinaccordancewithauditingstandardsgenerallyacceptedinthe
UnitedStatesofAmerica.Inouropinion,theinformationisfairlystatedinallmaterialrespectsinrelationtothe
basic financial statement as a whole, on the basis of accounting described in Note 1.
Woods & Durham, Chtd.
WOODS & DURHAM, CHTD.
Certified Public Accountants
May 30, 2019Salina, Kansas
2
SALINE COUNTY-CITY BUILDING AUTHORITY
Salina, Kansas
Summary of Receipts, Expenditures and Unencumbered Cash
Regulatory Basis
For the Year Ended December 31, 2018
Add
Outstanding
BeginningEndingEncumbrances
UnencumberedCashUnencumberedand AccountsEnding Cash
FundsCash BalanceReceiptsExpendituresCash BalancePayableBalance
General Fund$ 1,173,041$1,227,371$ 2,172,965$ 227,447$ 41,994$ 269,441
Capital Outlay Fund-1,190,000122,8621,067,13812,3231,079,461
Total$ 1,173,041$2,417,371$ 2,295,827$ 1,294,585$ 54,317$ 1,348,902
Composition of Ending Cash Balances:
Checking account$ 1,348,902
The accompanying notes are an integral part of this financial statement.
3
SALINE COUNTY-CITY BUILDING AUTHORITY
Salina, Kansas
NOTES TO FINANCIAL STATEMENTS
December 31, 2018
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
TheSalineCounty-CityBuildingAuthority(Authority)wasformedMarch22,1965,undertheInterlocal
CooperationActofKansas(KSA12-2907)bySalineCounty(County),theCityofSalina(City),andtheBoardof
EducationU.S.D.#305(SchoolDistrict).TheAuthoritywascreatedtoprovidefortheacquisitionoflandandthe
construction,equipping,operating,andmaintenanceofabuildingandparkingareatohousethecountyoffices
andcourts,thecityofficesandcourts,andtheschooldistrictoffices.OnJanuary16,1996,theInterlocal
AgreementwasrestatedtorelievetheSchoolDistrictfromanyongoingresponsibilityorexpenserelatingtothe
Authority. The School District retained its beneficial ownership interest in the Building Authority.
TheaccountingpoliciesoftheAuthorityconformtothestatutorybasisofaccounting,asregulatedbytheStateof
Kansas,whichdemonstratescompliancewiththecashbasisandbudgetlawsofKansas.Thefollowingisa
summary of the more significant policies.
A.Municipal Financial Reporting Entity
ThegoverningboardoftheAuthorityiscomposedofsevenmembers,sixofwhomareappointedfromthe
governingboardsoftheparticipatingmunicipalities,andoneofwhoisselectedatlargebythesixappointed
members.ThemakeupoftheappointedmembersisthreefromSalineCounty,twofromtheCityofSalina,and
onefromtheDistrictCourt.Theaccompanyingfinancialstatementincludesallfunds,whicharecontrolledbyor
are dependent on the Authority.
TheAuthorityisconsideredtobeajointventurebecauseitisaseparatelegalentitythatisjointlycontrolledbythe
CountyandCity.TheCountyandtheCitybothhaveanongoingfinancialresponsibilityfortheAuthority.The
Authority’s InterlocalCooperationAgreementgrantsabeneficialinteresttotheCounty,City,andtheSchool
District in proportion to the respective share of the original acquisition costs of the building.
B.Regulatory Basis Fund Type
Afundisdefinedasanindependentfiscalandaccountingentitywithaself-balancingsetofaccountsrecording
cash,receipts,expendituresandunencumberedcashbalance.Thefundssegregatespecificactivitiesorcertain
objectives in accordance with special regulations, restrictions, or limitations.
The following types of funds were utilized in recording the financial activities of the Authority:
GeneralFund–thechiefoperatingfund.Usedtoaccountforallresourcesexceptthoserequiredtobe
accounted for in another fund.
Special Purpose Fund - used to account for the expenditures intended for specified purposes.
C.Basis of Accounting
RegulatoryBasisofAccountingandDeparturefromAccountingPrinciplesGenerallyAcceptedintheUnited
StatesofAmerica.TheKMAAGregulatorybasisofaccountinginvolvestherecognitionofcash,cash
equivalents,marketableinvestments,andcertainaccountspayableandencumbranceobligationstoarriveatan
unencumberedcashandinvestmentsbalanceonaregulatorybasisforeachfund,andthereportingofchanges
inunencumberedcashandinvestmentsofafundresultingfromthedifferenceinregulatorybasisreceiptsand
regulatorybasisexpendituresforthefiscalyear.Allrecognizedassetsandliabilitiesaremeasuredandreported
atcost,unlesstheyhavebeenpermanentlyimpairedandhavenofuturecashvalueorrepresentnofuture
obligationagainstcash.TheKMAAGregulatorybasisdoesnotrecognizecapitalassets,long-termdebt,accrued
receivablesandpayables,oranyotherassets,liabilitiesordeferredinfloworoutflows,otherthanthose
mentioned above.
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SALINE COUNTY-CITY BUILDING AUTHORITY
Salina, Kansas
NOTES TO FINANCIAL STATEMENTS
December 31, 2018
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
C.Basis of Accounting (Cont'd.)
TheAuthorityhasapprovedaresolutionthatisincompliancewithKSA75-1120a(c),waivingtherequirementfor
applicationofgenerallyacceptedaccountingprinciplesandallowingtheCommissiontousetheregulatorybasis
of accounting.
D.Budgetary Information
TheAuthoritydoesnothavetaxlevyingpowersandisnotrequiredtopublishabudget.Abudgetisadopted
annually by the Board of Directors to determine the amount of appropriations to request from Saline County.
E.Risk Management
CommercialInsurance–TheAuthoritycarriescommercialinsurancetolimititsexposuretothevariousrisksof
lossrelatedtotorts;theftof,damagetoanddestructionofassets;errorsandomissions;injuriestoemployees;
andnaturaldisasters.Settledclaimshavenotexceededcommercialinsurancecoverageinanyofthepastthree
years.
F.Compensated Absences
TheAuthorityisliableforpaymentstoemployeesforsickpayandvacationpayearnedaccordingtoAuthority
personnelpolicies.Thisliabilityisrecordedasanencumbranceandisincludedasanexpenditureinthe
accompanying financial statement.
G.Estimates
Thepreparationoffinancialstatementrequiresmanagementtomakeestimatesandassumptionsthataffectthe
amountsreportedinthefinancialstatementandtheaccompanyingnotes.Actualresultsmaydifferfromthose
estimates.
NOTE 2 - DEPOSITS - CASH BALANCES
The Authority does not have any activity in investment-type assets.
KSA9-1401establishesthedepositories,whichmaybeusedbyKansasgovernments.Thestatuerequires
bankseligibletoholdthe government’s fundshaveamainorbranchbankinthecountyinwhichthegovernment
islocated,orinanadjoiningcountyifsuchinstitutionhasbeendesignatedasanofficialdepository,andthebanks
provideanacceptablerateofreturnonfunds.Inaddition,KSA9-1402requiresthebankstopledgesecuritiesfor
deposits in excess of FDIC coverage. The Authority has no other policies that would further limit interest rate risk.
KSA12-1675limitsthe government’s investmentofidlefundstotimedeposits,openaccounts,andcertificatesof
depositwithallowablefinancialinstitutions;U.S.governmentsecurities;temporarynotes;no-fundwarrants;
repurchaseagreements;andtheKansasMunicipalInvestmentPool.TheAuthorityhasnoinvestmentpolicythat
would further limit its investment choices. The Authority’s practice is to place idle funds in certificates of deposit.
Concentrationofcreditrisk–Statestatutesplacenolimitontheamountthegovernmentmayinvestinanyone
issueraslongastheinvestmentsareadequatelysecuredunderKSA9-1402and9-1405.TheAuthorityhas
placed all of its resources with one financial institution.
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SALINE COUNTY-CITY BUILDING AUTHORITY
Salina, Kansas
NOTES TO FINANCIAL STATEMENTS
December 31, 2018
NOTE 2 - DEPOSITS - CASH BALANCES (Cont'd.)
Custodialcreditrisk–Thecustodialcreditriskfordepositsistheriskthat,intheeventofabankfailure,the
Authority'sdepositsmaynotbereturnedtoit.StatestatutesrequiretheAuthority'sdepositsinfinancial
institutionstobeentirelycoveredbythefederaldepositoryinsuranceorbycollateralheldunderajointcustody
receiptissuedbyabankwithintheStateofKansas,theFederalReserveBankofKansasCity,ortheFederal
HomeLoanBankofTopeka,exceptduringdesignated"peakperiods"whenrequiredcoverageis50%.All
deposits were legally secured at December 31, 2018.
AsofDecember31,2018,theAuthority'scarryingamountofdepositswas$1,348,902andthebankbalancewas
$1,349,217.Thebankbalancewasheldbyonebankresultinginaconcentrationofcreditrisk.Ofthebank
balance,$250,000wascoveredbyfederaldepositoryinsurance,$1,300,000wascollateralizedwithsecurities
held by the pledging financial institutions agent in the Authority's name.
NOTE 3 - INTERFUND TRANSFERS
TheBoardapprovedanoperatingtransferfromtheGeneralFundtothenewlycreatedCapitalOutlayFund(a
nonbudgeted fund) in the amount of $1,190,000 pursuant to K.S.A. 79-2934.
NOTE 4 - OTHER LONG-TERM OBLIGATIONS FROM OPERATIONS
AsprovidedbyK.S.A.12-5040,thelocalgovernmentallowsretireestoparticipateinthegrouphealthinsurance
plan.Whileeachretireepaysthefullamountoftheapplicablepremium,conceptually,thelocalgovernmentis
subsidizingtheretireesbecauseeachparticipantischargedalevelofpremiumregardlessofage.However,the
cost of this subsidy has not been quantified in this financial statement.
UndertheConsolidatedOmnibusBudgetReconciliationAct(COBRA),thegovernmentmakeshealthcare
benefitsavailabletoeligibleformeremployeesandeligibledependents.Certainrequirementsareoutlinedbythe
federalgovernmentforthiscoverage.Thepremiumispaidinfullbytheinsured.Thereisnocosttothe
government under this program.
NOTE 5 - DEFINED BENEFIT PENSION PLAN
PlanDescription–TheSalineCounty-CityBuildingAuthorityparticipatesintheKansasPublicEmployees
RetirementSystem(KPERS),acost-sharingmultiple-employerdefinedbenefitpensionplanasprovidedby
K.S.A.74-4901,etseq.Kansaslawestablishesandamendsbenefitprovisions.KPERSissuesapublicly
availablefinancialreportthatincludesfinancialstatementandrequiredsupplementaryinformation.KPERS'
financialstatementsareincludedinitsComprehensiveAnnualFinancialReportwhichcanbefoundonthe
KPERSwebsiteatwww.kpers.orgorbywritingtoKPERS(611S.Kansas,Suite100,Topeka,KS66603)orby
calling 1-888-275-5737.
Contributions–K.S.A.74-4919andK.S.A.74-49,210establishtheKPERSmember-employeecontributionrate.
KPERShasmultiplebenefitstructuresandcontributionratesdependingonwhethertheemployeeisKPERS1,
KPERS2orKPERS3member.KPERS1membersareactiveandcontributingmembershiredbeforeJuly1,
2009.KPERS2memberswerefirstemployedinacoveredpositiononorafterJuly1,2009,andKPERS3
memberswerefirstemployedinacoveredpositiononorafterJanuary1,2015.EffectiveJanuary1,2015,
KansaslawestablishedtheKPERSmember-employeecontributionrateat6%ofcoveredsalaryforKPERS1,
KPERS2,andKPERS3members.MembercontributionsarewithheldbytheiremployerandpaidtoKPERS
according to the provisions of section 414(h) of the Internal Revenue Code.
6
SALINE COUNTY-CITY BUILDING AUTHORITY
Salina, Kansas
NOTES TO FINANCIAL STATEMENTS
December 31, 2018
NOTE 6 - DEFINED BENEFIT PENSION PLAN (Cont'd.)
StatelawprovidesthattheemployercontributionratesforKPERS1,KPERS2andKPERS3bedetermined
basedontheresultsofeachannualactuarialvaluation.Kansaslawsetsalimitationonannualincreasesinthe
employercontributionrates.Theactuariallydeterminedemployercontributionrate(notincludingthe1%
contributionratefortheDeathandDisabilityProgram)andthestatutorycontributionratewas8.39%forthefiscal
yearendedDecember31,2018.ContributionstothepensionplanfromtheAuthoritywere$25,753fortheyear
ended December 31, 2018.
NOTE 7 - DEBT SERVICE
TheAuthoritymakestheleasepaymentsonimprovementstothe building’s HVACsystem.Costsofthose
improvements were financed with a capital lease that is the obligation of the City of Salina and Saline County.
NOTE 8 - SUBSEQUENT EVENTS
TherearenosubsequenteventsthatwereidentifiedinproceduresperformedthroughMay30,2019,whichalso
is the date these financial statement were available to be issued.
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SUPPLEMENTAL INFORMATION
SALINE COUNTY-CITY BUILDING AUTHORITY
Salina, Kansas
Schedule 1
General Fund
Schedule of Receipts and Expenditures - Actual and Budget
Regulatory Basis
For the year ended December 31, 2018
Over
(Under)
ActualBudgetBudget
Cash Receipts
City of Salina - Regular$ 478,114$ 478,114$ -
Miscellaneous receipts760-760
Salina Public Library9,0009,000-
Saline County717,171717,171-
Interest income19,7081,00018,708
Reimbursements1,353-1,353
Vending commissions1,265-1,265
Total Cash Receipts1,227,371$ 1,205,285$ 22,086
Expenditures
Salaries295,274312,726(17,452)
Health insurance82,49999,406(16,907)
KPERS retirement plan25,75329,206(3,453)
FICA 16,21319,141(2,928)
Medicare3,7924,477(685)
Unemployment tax306432(126)
Workers compensation insurance13,44116,000(2,559)
Contractual consultants-5,000(5,000)
Education6952,000(1,305)
Employee services799-799
Equipment repair4,0305,000(970)
Property insurance33,09138,000(4,909)
Audit fee8,2858,000285
Banking fees50-50
Supplies25,82024,0001,820
Maintenance agreement12,32126,000(13,679)
Miscellaneous expenditures3,4712,0001,471
Maintenance27,14940,000(12,851)
Telephone22,08022,080-
Utilities157,306175,000(17,694)
Yard & beautification11,4175,0006,417
Debt service234,816234,816-
Equipment 4,3579,500(5,143)
Capital outlay - transfer out1,190,0001,190,000-
Total Expenditures and Transfers 2,172,965$ 2,267,784$ (94,819)
Receipts Over (Under) Expenditures(945,594)
Unencumbered Cash, Beginning1,173,041
Unencumbered Cash, Ending$ 227,447
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.
8
SALINE COUNTY-CITY BUILDING AUTHORITY
Salina, Kansas
Schedule 2
Capital Outlay Fund
Schedule of Receipts and Expenditures
Regulatory Basis
For the year ended December 31, 2018
Cash Receipts
Transfers in$ 1,190,000
Total Cash Receipts1,190,000
Expenditures122,862
Total Expenditures122,862
Receipts Over (Under) Expenditures1,067,138
Unencumbered Cash, Beginning-
Unencumbered Cash, Ending$ 1,067,138
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.
9