Audit - 2002/2003
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SALINE COUNTY-CITY BUILDING AUTHORITY
Salina, Kansas
FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT
December 31, 2003 and 2002
HARRISON & ARNETT, CHARTERED
Certified Public Accountants
Salina, Kansas
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SALINE COUNTY-CITY BUILDING AUTHORITY
Salina, Kansas
CONTENTS
COMPARATIVE BALANCE SHEETS
COMPARATIVE STATEMENTS OF REVENUES, EXPENSES AND
CHANGES IN RETAINED EARNINGS
COMP ARA TIVE STATEMENTS OF CASH FLOWS (DIRECT METHOD)
and
RECONCILIATION OF OPERATING INCOME TO NET CASH
FLOWS FROM OPERATING ACTIVITIES
NOTES TO FINANCIAL STATEMENTS
INDEPENDENT AUDITORS' REPORT
Page
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SALINE COUNTY-CITY BUILDING AUTHORITY
Salina, Kansas
COMP ARA TIVE BALANCE SHEETS
ASSETS
December 31
2003 2002
CURRENT ASSETS
Cash in bank
NET INVESTMENT IN FIXED ASSETS
$ 742,879 $ 679,290
742,879 679,290
2,033,860 2,079,886
$ 2,776,739 $2,759,176
Total Current Assets
TOTAL ASSETS
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable and payroll liabilities
Accrued interest
Accrued leaves and vacation pay
Current portion long-term lease payable
EQUITY
Retained earnings
$ 25,190 $ 14,380
6,282 7,925
27,502 51,908
39,911 71,602
98,885 145,815
85,711 125,623
184,596 271,438
2,592,143 2,487,738
$ 2,776,739 $2,759,176
Total Current Liabilities
LONG-TERM LEASE PAYABLE NET
Total Liabilities
TOTAL LIABILITIES AND EQUITY
The accompanying notes are an integral part of these financial statements.
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SALINE COUNTY -CITY BUILDING AUTHORITY
Salina, Kansas
COMP ARA TIVE STATEMENTS OF REVENUES, EXPENSES AND CHANGES
IN RETAINED EARNINGS
RETAINED EARNINGS, January I
January 1 to December 31
2003 2002
$ 771,813 $ 750,636
50,800 46,000
8,780 9,500
3,452 3,591
738 3,052
835,583 812,779
340,728 315,582
133,431 69,273
97,832 95,412
25,839 19,746
9,537 7,658
607,367 507,671
228,216 305,108
122,900 114,943
105,316 190,165
(911) (8,294)
104,405 181,871
2,487,738 2,305,867
$2,592,143 $2,487,738
OPERA TINO REVENUES
Regular appropriations
Appropriations - equipment
Maintenance charges
Snack bar commissions
Miscellaneous
Total Operating Revenues
OPERATING EXPENSES
Salaries, payroll taxes and benefits
Maintenance & repairs
Utilities
Insurance
Other expenses
Total Operating Expenses
OPERATING INCOME BEFORE DEPRECIATION
DEPRECIATION EXPENSE
NET OPERA TINO INCOME
NON-OPERA TINO INCOME
Interest net
NET INCOME
RETAINED EARNINGS, December 31
The accompanying notes are an integral part of these financial statements.
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SALINE COUNTY -CITY BUILDING AUTHORITY
Salina, Kansas
COMP ARA TIVE STATEMENTS OF CASH FLOWS (DIRECT METHOD)
January 1 to December 31
2003 2002
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from operating revenue
Cash paid to or for employees for services
Cash paid to suppliers for goods and services
$ 835,583
(365,134)
(255,830)
$ 812,779
(311,309)
(223,870)
Net Cash Provided (Used) in Operating Activities
214,619
277,600
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Purchase of property and equipment
Interest paid on debt
Principal payment on debt
Net Cash Provided (Used) From Capital and Related
Financing Activities
(76,873) (101,505)
(4,938) (2,974)
(71,603) (78,780)
(153,414) (183,259)
2,384 2,605
63,589 96,946
679,290 582,344
$ 742,879 $ 679,290
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received
INCREASE (DECREASE) IN CASH
CASH BALANCE - January 1
CASH BALANCE - December 31
RECONCILIA nON OF OPERATING INCOME TO NET CASH FLOWS FROM OPERATING ACTIVITIES
NET CASH PROVIDED BY OPERATING ACTIVITIES
$ 105,316 $ 190,165
122,900 114,943
10,810 (32,006)
(24,407) 4,498
$ 214,619 $ 277,600
OPERA TING INCOME
ADJUSTMENT RECONCILING OPERATING INCOME
Add depreciation expense
CHANGE IN LIABILITIES
Increase (decrease) in accounts payable
Increase (decrease) in accrued vacations
The accompanying notes are an integral part of these financial statements.
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SALINE COUNTY-CITY BUILDING AUTHORITY
Salina, Kansas
NOTES TO FINANCIAL STATEMENTS
December 31, 2003 and 2002
NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
A. ORGANIZATION - The Saline County-City Building Authority was formed on March 22,
1965, and the organizing agreement restated in January 16, 1996, under the Interlocal
Cooperation Act of Kansas (K.S.A. 12-2901 to 12-2907). The Building Authority is a joint
venture organized by the three participating municipalities for the purpose of acquiring facilities
to house and accommodate the county, city, the county and city courts, and such other offices as
may be expedient, and to equip, operate, and maintain the facility so acquired.
The Governing Board of the Building Authority is composed of seven members, six of whom are
appointed from the governing boards of the participating municipalities in the ratios listed below,
and one of whom is selected at large by the six members.
Name of Agency
Number of
Members on
Authority Board
Saline County
City of Salina
District Court
Member at large
3
2
1
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Total
7
B. BASIS OF ACCOUNTING - The Building Authority consists of an enterprise fund.
Enterprise funds are classified as proprietary funds by the Governmental Accounting Standards
Board (GASB) and are accounted for using a total economic resource measurement focus. The
enterprise fund is used to account for operations that are financed and operated in a manner
similar to private business enterprises. The intent of the Board is that the cost of providing
services on a continuing basis be recovered through user fees and rents. The financial statements
are prepared on the accrual basis of accounting. Under the accrual basis, revenues are recognized
as earned and expenses as incurred. It is the Building Authority's policy to follow all Financial
Accounting Standards Board (F ASB) standards issued after November 30, 1989 for its
proprietary activities unless those new F ASB pronouncements conflict with GASB guidance.
C. CASH AND CASH EQUIVALENTS - For the purpose of the comparative statement of cash
flows, the Building Authority considers all highly liquid investments (including restricted assets)
with maturities of three months or less when purchased to be cash equivalents.
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D. PROPERTY AND EQUIPMENT - Additions to property and equipment are recorded at
cost. Maintenance and repairs are expensed as incurred. When properties are disposed of, the
related cost and accumulated depreciation are removed from the respective accounts and any gain
or loss on disposition is credited or charged to operations.
Assets are depreciated using the straight-line method over the estimated useful lives of the assets
as follows:
Buildings and Improvements
Infrastructure Items
Equipment
Years
5-50
10-40
5-25
In accordance with Financial Accounting Standard Board Statement No. 62, interest during
construction periods, when significant, is capitalized and included in the cost of property.
E. INVENTORY - The Building Authority maintains no significant inventory of office and
maintenance supplies. These items are expensed as purchased and no inventory is recorded in
these financial statements.
F. TAXES - The Building Authority is exempt from payment of federal and state income,
property and certain other taxes.
G. BUDGET LAW COMPLIANCE - The Saline County-City Building Authority does not have
tax levying powers and is not required to publish a budget. A budget is adopted annually by the
Governing Board for the purpose of determining appropriations required from participating
municipalities to cover net operating and maintenance costs of the building. These
appropriations are borne by the participating municipalities.
H. COMPLIANCE WITH KANSAS STATUTES - In management's opinion, there were no
statutory violations.
NOTE 2. DEPOSITS AND INVESTMENTS
At December 31, 2003 and 2002, respectively, the bank balances of the Building Authority were
$743,105 and $679,975. Of the bank balances, $100,000 and $100,000 were covered by FDIC
insurance at December 31, 2003 and 2002, respectively, and the remaining balances were
collateralized by pledged securities held under joint custody agreements with a third-party bank
in the Building Authority's name. The third-party bank holding the pledged securities is
independent ofthe pledging bank.
Building Authority money on deposit is categorized into one of three risk categories to give an
indication of the level of risk assumed by the Building Authority at year-end. Category 1
includes deposits insured or collateralized with securities held by the Building Authority or by its
agent in the Building Authority's name. Category 2 includes deposits collateralized with
securities held by the pledging financial institution's trust department or agent in the
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Building Authority's name. Category 3 includes deposits that are uncollateralized, including any
deposits that are collateralized with securities held by the pledging financial institution, or by its
trust department or agent, but not in the Building Authority's name. All deposits of the Building
Authority in excess of FDIC coverage are Risk Category 1.
Kansas statutes authorize the Building Authority to invest in u.S. Treasury bills and notes,
repurchase agreements, and the State Treasurer's investment pool. The Building Authority had
no investments during the year ended December 31, 2003 or December 31, 2002.
NOTE 3. DEFINED BENEFIT PENSION PLAN
The non-school municipality participates in the Kansas Public Employees Retirement System
(KPERS), a cost-sharing multiple-employer defined benefit pension plan as provided by K.S.A.
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
publicly available financial statements and required supplementary information. That report
may be obtained by writing to: KPERS (400 SW 8th Avenue, Suite 200; Topeka, KS 66603-
3925) or by calling 1-800-228-0366.
K.S.A 74-4919 establishes the KPERS member-employee contribution rate at 4% of covered
salary. The employer collects and remits member-employee contributions according to the
provisions of section 414(h) of the Internal Revenue Code. State law provides that the employer
contribution rate be determined annually based on the results of an annual actuarial valuation.
KPERS is funded on an actuarial reserve basis. State law sets a limitation on annual increases in
the contribution rates for KPERS employers. The employer rate established by statute for
calendar year 2003 is 3.22%. The non-school municipality employer contributions to KPERS
for the years ending December 31, 2003 and 2002 were $9,035 and $7,810, respectively, equal
to the statutory required contributions for each year.
NOTE 4. COMPENSATED ABSENCES
The Building Authority compensates employees for the following types of absences at their
current rate of pay.
A. VACATION - Full-time employees earn from 12 to 21 days of vacation pay per year based
on the number of years of continuous service. Vacation pay may accumulate to a maximum
of 24 days depending upon the employee's number of years of continuous service. Upon
termination, an employee is entitled to a lump sum payment for all accumulated vacation
earned.
B. SICK LEAVE - Full-time employees earn one day of sick leave for each month of full-time
service to be used for illness or death in the family. Accumulation is unlimited. Upon
termination due to retirement, an employee is entitled to a lump sum payment for one-half
of all accumulated sick leave not to exceed 90 days. Upon termination for any other reason
except dismissal for cause, an employee with at least five continuous years of service is
entitled to a lump sum payment for one-half of all accumulated sick leave, not to exceed 30
days.
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C. PERSONAL LEA VB - One day of personal leave is granted to each full-time employee
annually. There is no accumulation of personal leave beyond the year it is allowed.
NOTE 5. LONG TERM DEBT
The following summarizes the lease obligations included in the long-term account group.
Debt Issue
Date
Issued
Maturity
Date
Original
Amount
Interest
Rate
Telephone Lease Purchase Agreement
2/7/01
2/7/06
200,000
4.84%
The lease purchase agreements were entered into for the purpose of financing a contract for
the telephone system.
Annual debt service requirements to maturity for the equipment lease purchase agreement
follow:
Year
2004
2005
2006
Totals
Principal Due
39,910
41,843
43.869
$ 125.622
Interest Due
6,082
4,150
2.124
$ 12.356
Total Due
45,992
45,993
45.993
$137.978
NOTE 6. GENERAL FIXED ASSET GROUP
The following summarizes the changes in the general fixed asset group of accounts for the
year ended December 31, 2003.
Beginning Ending
Balance Additions Dispositions Balance
Land $ 223,874 $ $ $ 223,874
Building & Improvements 3,026,862 52,342 3,079,204
Equipment 417,605 24,532 (1,507) 440,630
Parking Lot 86.559 86.559
Total 3,754,900 76,874 (1,507) 3,830,267
Accumulated depreciation 0.675.014) 022.900) 1.507 ( 1.796,407)
Net Investment in
Fixed Assets $2.079.886 $ ( 46.026) $ $2.033.860
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HARRISON & ARNETT
CHARTERED
CERTIFIED PUBLIC ACCOUNTANTS
EUGENE O. HARRISON, C.P.A.
THOMAS G. ARNETT, C.P.A.
717 ROACH STREET. SALINA, KANSAS 67401
PHONE: (785) 827-7244
FAX: (785) 827-0048
INDEPENDENT AUDITORS' REPORT
To the Governing Board
Saline County-City Building Authority
Salina, Kansas
We have audited the accompanying general purpose financial statements of the Saline County-City
Building Authority, Salina, Kansas, as of December 31, 2003, and December 31, 2002, and for the
years then ended as listed in the table of contents. These general purpose financial statements are the
responsibility of the Building Authority's management. Our responsibility is to express an opinion
on these general purpose financial statements based on our audits.
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We conducted our audits in accordance with auditing standards generally accepted in the United
States of America and the Kansas Municipal Audit Guide. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the general purpose financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the general purpose financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by management, as
well as evaluating the overall general purpose financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the general purpose financial statements referred to above present fairly, in all
material respects, the financial position of the Saline County-City Building Authority as of December
31, 2003, and December 31, 2002, and the results of its operations and changes in its retained
earnings for the years then ended in conformity with auditing standards generally accepted in the
United States of America.
v~{~.~.
Salina, Kansas
May 28, 2004
MEMBERS OF
DIVISION FOR CPA FIRMS PRIVATE COMPANIES PRACTICE SECTION
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
KANSAS SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS