Audit - 1976
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CITY OF SALINA
Salina, Kansas
COMMUNITY DEVELOPMENT BLOCK GRANT FUNDS
REPORT ON EXAMINATION
December 31, 1976
KENNEDY AND COE
Certified Public Accountants
Salina - Kansas
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Exhibit A-l
Exhibit A-2
Exhibit B-1
Exhibit B-2
CITY OF SALINA
Salina, Kansas
COMMUNITY DEVELOPMENT BLOCK GRANT FUNDS
INDEX
ACCOUNTANTS' REPORT
STATEMENT OF SOURCE AND STATUS OF FUNDS, PROGRAM YEAR
1975
STATEMENT OF SOURCE AND STATUS OF FUNDS, PROGRAM YEAR
1976
STATEMENT OF PROGRAM COSTS - PROGRAM YEAR 1975
STATEMENT OF PROGRAM COSTS - PROGRAM YEAR 1976
ACCOUNTANTS' COMMENTS
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Index
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KENNEDY AND CaE
MEMBERS
CERTIFIED PUBLIC ACCOUNTANTS
O~
OFFICES IN KANSAS
SALINA
CONCORDIA
GREAT BEND
COLBY
GOODLAND
WICHITA
AMERICAN INSTITUTE
O~
CERTIFIED
PUBLIC ACCOUNTANTS
The Mayor and
The Board of City Commissioners:
We have examined the Statements of Source and Status of Funds and the Statements of
Program Costs of the City of Salina, Kansas, for the period ended December 31, 1976,
applicable to program years 1975 and 1976 under the Community Development grant
numbers B-75-HN-20-00l5 and B-76-HN-20-00l5. Our examination was made in accordance
with the prescribed auditing standards and audit requirements set forth in the Depart-
ment of Housing and Urban Development's Audit Guide and Standards for Community
Development Block Grant Recipients and accordingly included such tests of the accounting
records and such other auditing procedures as we considered necessary in the circum-
stances.
In our opinion, the accompanying statements present fairly the disposition and status
of the Community Development funds at December 31, 1976, in conformity with generally
accepted accounting principles applied on a consistent basis and the requirements of
HUD. Further; costs incurred are eligible under the Grant Agreement and are in accor-
dance with Federal Management Circular (FMC) 74-4.
We have also reviewed compliance and internal control matters in accordance with
the provisions of the HUD audit guide for the Community Development Block Grant
Program, and have included applicable comments on pages 7 and 8.
Respectfully submitted,
Salina, Kansas
July 15, 1977
tr ~ ~ (!.øÁ.-
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CITY OF SALINA
Salina, Kansas
COMMUNITY DEVELOPMENT BLOCK GRANT FUNDS
Program Year 1975, CDBG No. B-75-HN-20-00l5
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STATEMENT OF SOURCE AND STATUS OF FUNDS
April 3, 1975, to December 31, 1976
Total Program Year 1975 funds allocated to recipient
Less - Total Program Year 1975 funds drawn down by recipient -
Net of repayment
Funds still available from HUD - Program Year 1975
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Total Program Year 1975 funds drawn down by recipient
Program income applicable to Program Year 1975
Total Program Year 1975 funds received
Funds applied to Program Year 1975 costs - Exhibit B-1
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Total Program Year 1975 funds held by recipient
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Total Program Year 1975 funds available for disposition
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Exhibit A-l
Grant
Amount
$695,000.00
175,447.90
519.552.10
175,447.90
85.32
175,533.22
75,447.90
100.085.32
$619.637.42
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CITY OF SALINA
Salina, Kansas
COMMUNITY DEVELOPMENT BLOCK GRANT FUNDS
Program Year 1976, CD~G No. B-76-HN-20-00l5
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STATEMENT OF SOURCE AND STATUS OF FUNDS
April 3, 1976, to December 31, 1976
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Total Program Year 1976 funds allocated to recipient
Less - Total Program Year 1976 funds drawn down by recipient
Funds still available from HUD - Program Year 1976
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Total Program Year 1976 funds drawn down by recipient
Program income applicable to Program Year 1976
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Total Program Year 1976 funds received
Funds applied to Program Year 1976 costs - Exhibit B-2
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Total Program Year 1976 funds held by recipient
Total Program Year 1976 funds available for disposition
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Exhibit A-Z
Grant
Amount
$695,000.00
101,065.75
593.934.25
10 1,065.75
101,065.75
1,065.75
100.000.00
$693.934.25
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CITY OF SALINA
Salina, Kansas
Exhibit B-1
COMMUNITY DEVELOPMENT GRANT FUNDS -
CDBG No. B-75-HN-20-00l5
Program Year 1975, Program Year Period June 5, 1975, to June 4, 1976
STATEMENT OF PROGRAM COSTS
June 5, 1975, to December 31, 1976
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Program Activity and Related Projects
Acquisition of Real Property
(1) Senior citizen housing site
(2) Multi-use neighborhood center site
Code Enforcement
Clearance, Demolition, Rehabilitation
(1) Multi-use neighborhood center
(2) Senior citizen housing
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Rehabilitation Loans and Grants
(1) CD program area
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Relocation Payments and Assistance
(1) Senior citizen housing
(2) Multi-use neighborhood center
Planning and Management Development
Administrative
Subtotal
Contingencies and/or Unspecified Local
Option Activities
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Totals
Authorized
Costs
Expenditures
Period Ended Questioned
12-31-76 Costs
$113,750.00 $ $
72,000.00
185,750.00
16,500.00 7,998.80
20,000.00
20,000.00
40,000.00
240,000.00 405.00
50,000.00
50,000.00
100,000.00
60,250.00 56,521.73
39,500.00 10,522.37
682,000.00 75,447.90
13,000.00
$695.000.00 $75.447 . 90 $
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CITY OF SALINA
Salina, Kansas
Exhibit B-2
COMMUNITY DEVELOPMENT GRANT FUNDS -
CDBG No. B-76-HN-20-00l5
Program Year 1976, Program Year Period June 5, 1976 to June 4, 1977
STATEMENT OF PROGRAM COSTS
June 5, 1976 to December 31, 1976
Program Activity and Related Projects
Public Works, Facilities, Site Improvements
(1) Public improvements - CD target area
(2) Multi-use neighborhood center
Code Enforcement
Clearance, Demolition, Rehabilitation
(1) Multi-use neighborhood center
Rehabilitation Loans and Grants
(1) CD program area
Special Projects for Elderly and Handicapped
(1) Senior citizen activity center
building improvements
Relocation Payments and Assistance
(1) Multi-use neighborhood center
(2) Rehabilitation loan/grant program
Planning and Management Development
Administrative
Subtotal
Contingencies and/or Unspecified Local
Option Activities
Totals
Authorized
Costs
$100,000.00
150,000.00
250,000.00
27,000.00
20,000.00
190,000.00
35,000.00
25,000.00
25,000.00
50,000.00
30,000.00
30,000.00
632,000.00
63,000.00
$695.000.00
Expenditures
Period Ended Questioned
12-31-76 Costs
$
$
1,065.75
$1.065.75
$
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CITY OF SALINA
Salina, Kansas
COMMUNITY DEVELOPMENT BLOCK GRANT FUNDS
ACCOUNTANTS' COMMENTS
December 31, 1976
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CITY OF SALINA
Salina, Kansas
COMMUNITY DEVELOPMENT BLOCK GRANT FUNDS
COMMENTS ON COMPLIANCE AND INTERNAL CONTROL
We have examined the Statement of Source and Status of Funds and the Statement of
Program Costs applicable to the Community Development grant of the City of Salina,
Kansas, for the period ended December 31, 1976, and have issued our report thereon
dated July 15, 1977. As a part of our examination, we reviewed and tested the City's
system of internal accounting control to the extent we considered necessary to
evaluate the system as required by generally accepted auditing standards. Under
these standards, the purpose of such evaluation is to establish a basis for reliance
thereon in determining the nature, timing, and extent of other auditing procedures
that are necessary for expressing an opinion on the financial statements. Additionally,
our examination included procedures necessary in our judgment to determine compliance
with regulations, policies, and procedures prescribed by HUD, insofar as such com-
pliance review was necessary under the provisions set forth in Paragraph 31 of the
HUD Audit Guide for Community Development Block Grant Recipients, dated May, 1976.
The objective of internal accounting control is to provide reasonable, but not
absolute, assurance as to the safeguarding of assets against loss from unauthorized
use or disposition, and the reliability of financial records for preparing financial
statements and maintaining accountability for assets. The concept of reasonable
assurance recognizes that the cost of a system of internal accounting control should
not exceed the benefits derived and also recognizes that the evaluation of these
factors necessarily requires estimates and judgments by management.
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 from misunderstanding of instructions,
mistakes of judgement, carelessness, or other personal factors. Control 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 judgments required in the preparation of financial
statements. Further, projection of any evaluation of internal accounting control to
future periods is subject to the risk that the procedures may not be adequate because
of changes in conditions, and that the degree of compliance with the procedures may
deteriorate.
Based on our study and evaluation of the City's system of internal accounting control
and our review of its compliance with various statutes and regulations, as prescribed
in Paragraph 31 of the HUD Audit Guide for Community Development Block Grant Recipients,
the City has complied with HUD's statutory and regulatory requirements except for
those conditions described in the "Findings and Recommendations" section on the
following page.
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FINDINGS AND RECOMMENDATIONS
Finding - The City did not comply with HUD political activity or personal gain
requirements.
Condition - We found that the City did not "have a plan developed to prevent or
detect the following situations:
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the use of Program Funds to finance ineligible
political activity
the participation of employees in ineligible
political activity and
employees using the Program Funds to obtain
private gain for themselves or others.
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Criteria -
HUD Community Development Block Grant Regulations [section 570 20l(e),
570.608, and 570.303(e)(14)] specify that recipients may not use
Community Development funds and the persons employed in administering
the program for the purposes of conducting any political activities;
and recipient officials and employees may not use their positions to
effect private gain for themselves or others.
Effect - No assurance can be made that the City is in compliance with these
regulations.
Cause - The small number of persons involved and the minimum amount of activity
to date had not evidenced a need for a formal plan.
Recommendation - We recommend that the City formulate and institute a system to
review the program and personnel activities in order to assure
compliance with the regulations.
Grantee's Response - We will develop a system to meet the requirements of the
regulations.
ALLOCATION OF INDIRECT COSTS
Indirect costs were not allocated to the CDBG program during the period under review.
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