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Audit - 1996/1997 . \~ . SALINE COUNTY -CITY BUILDING AUTHORITY Salina, Kansas . . <;' FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT December 31, 1997 and December 31, 1996 HARRISON & ARNETI, CHARTERED Certified Public Accountants Salina, Kansas I. I. I~~ , """- L,._.- - ".'., O"""-::"':-!': ",-,,"'. .',", " ,.. .,.". -.., ,. ---.-- .. .". ...... - . - _. - . ... - "..0. ---- ~-- . .--.'--~'-- - ~""~""- - ~ . SALINE COUNTY-CITY BUILDING AUTHORITY Salina, Kansas MEMBERS (1) Mr. Michael White (1) Mr. Deane Allen (1) Mr. Doug Forsberg (2) Dr. Peter Brungardt (2) Mr. Monte Shadwick (3) Mr. Douglas Smith (4) Mrs. Jean McArthur <;' OFFICERS Mr. Douglas Smith Mr. Michael White Ms. Sherri Barragree Dr. Peter Brungardt Chairman Vice-Chairman Secretary Treasurer Representative from: (1) Board of County Commissioners (2) Board of Commissioners of the City of Salina, Kansas (3) District Court Representative (4) Member at Large .- SALINE COUNTY-CITY BUILDING AUTHORITY Salina, Kansas INDEPENDENT AUDITORS' REPORT CONTENTS BALANCE SHEETS-GENERAL FUND AND ACCOUNT GROUPS STATEMENTS OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES-GENERAL FUND AND GENERAL FIXED ASSET ACCOUNT GROUP STATEMENTS OF REVENUES, EXPENDITURES, AND CHANGES IN UNRESERVED FUND BALANCES-GOVERNMENTAL FUND- AND COMPARISON WITH BUDGET (STATUTORY BASIS) NOTES TO FINANCIAL STATEMENTS SUPPLEMENTAL INFORMA nON SCHEDULE OF EXPENDITURES- GENERAL FUND ~~-"":""""'.-':"':.""';;:7' ;,.:':"'"-,:;:..:.~,,.- ",;, .. Page <;' 1 2 3 4-5 6-10 11 .~_. .-. """'" .-.... ~~c.~. ".' ~"". ,~ -,..-.'-~ HARRISON & ARNETT CHARTERED CERTIFIED PUBLIC ACCOUNTANTS EUGENE O. HARRISON, C.P.A. THOMAS G. ARNETT, C.P.A. 719 EAST CRAWFORD. SALINA. KANSAS 67401 INDEPENDENT AUDITORS' REPORT PHON E: (913) 827-7244 FAX: (913) 827.0048 To the Governing Board Saline County-City Building Authority Salina, Kansas: We have audited the accompanying general purpose financial statements of the Salina County-City Building Authority, Salina, Kansas, as of December 31, 1997, and December 31, 1996, and for the years then ended. 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. We conducted our audits in accordance with generally accepted auditing standards 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 tree 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, 1997, and December 31, 1996, and the results of its operations and changes in its fund balances for the years then ended in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an pinion on the general purpose financial statements taken as a whole. The supplemental information contained in Schedule 1 is presented for purposes of additional analysis and is not a required part of the general purpose financial statements. Such information has been subjected to the auditing procedures applied in the audits 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. Very truly yours, ~{~~ I Salina, Kansas February 28, 1998 ~~ Certified Public Accountant in charge of and actively engaged on this audit. -1- MEMBERS OF DIVISION FOR CPA FIRMS PRIVATE COMPANIES PRACTICE SECTION AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS KANSAS SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS SALINE COUNTY -CITY BUILDING AUTHORITY Salina, Kansas BALANCE SHEETS - GENERAL FUND AND ACCOUNT GROUPS December 31 , ASSETS Cash in bank Land Building and improvements Equipment Amount to be provided 1997 General Long Fixed Term General Asset Debt Fund Group Group $ 255,070 $ - $ 220,228 2,626,303 111 ,032 $ 250,371 General Fund 240,467 Total Assets $ 255,070 $ 2,957,563 $ 240,467 $ 250,371 LIABILITIES AND FUND BALANCE Liabilities Accounts payable Accrued leave Lease obligation $ 19,497 $ $ $ 23,659 22,963 21 7,504 Total Liabilities 19,497 240,467 23,659 Fund Balance Unreserved Reserved for encumbrances Investment in general fixed assets 233,573 2,000 - 2,957,563 235,573 2,957,563 $ 255,070 $ 2,957,563 $ 240,467 202,838 23,874 Total Fund Balance 226,712 Total Liabilities and Fund Balance $ 250,371 ~ The accompanying notes are an integral part of the financial statements. -2- 1996 General Long Fixed Term Asset Debt Group Group $ - $ 200,228 2,526,147 123,037 274,014 $ 2,849,412 $ 274,014 $ $ 24,554 249,460 274,014 2,849,412 2,849,412 $ 2,849,412 $ 214,014 I SALINA COUNTY-CITY BUILDING AUTHORITY Salina, Kansas STATEMENTS OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES-GENERAL FIXED ASSET ACCOUNT GROUP 1997 1996 General Fund General Fixed Asset Group General Fund General Fixed Asset Group Revenues Regular appropriations Maintenance charges Snack bar commissions Interest Miscellaneous Total Revenues $ 574,616 $ - $ 576,139 $ 7,864 - 6,900 2,656 - 2,958 10,856 - 7,309 4,244 - 10,225 600,236 - 603,531 Expenditures General operations 591,375 538,840 Excess of Revenues over Expenditures 8,861 64,691 Fixed Asset Changes Additions Dispositions 117,814 (9,663) 71,649 Fund Balance, Beginning of Period 226,712 2,849,412 162,021 2,777,763 Fund Balance, End of Period $ 235,573 $ 2,957,563 $ 226,712 $ 2,849,412 The accompanying notes are an integral part of these' financial statements. "I -3- SALINE COUNTY-CITY BUILDING AUTIiORITY Salina, Kansas STATEMENTS OF REVENUES, EXPENDI11JRES, AND CHANGES IN UNRESERVED FUND BALANCES-GOVERNMENTAL FUND- AND COMPARISON WITH BUDGET (STATUTORY BASIS) 1997 1996 General Fund General Fund Variance Variance Favorable Favorable Actual Budget (Unfavorable) Actual Budget (Unfavorable) Revenues Appropriations from Municipalities Regular Appropriations Saline County City of Salina $ 356,230 218,386 Total Regular Appropriations 574,616 Maintenance Charges , Salina Public Library Saline County-City Health City of Salina 6,000 964 900 Total Maintenance Charges 7,864 Total Appropriations from Municipalities 582,480 Snack Bar Commissions Interest Miscellaneous 2,656 10,856 4,244 Total Revenues 600,236 $ 356,313 218,386 $ (83) $ 391,039 184,019 574,699 (83) 575,058 6,000 1,000 900 (36) 6,000 1,080 900 7,900 (36) 7,980 582,599 (119) 583,038 3,000 3,500 (344) 7,356, 4,244 . 2,958 7,309 10,225 589,099 11,137 603,530 (continued) -4- "\ $ 391,039 184,019 $ 575,058 6,000 900 900 180 7,800 180 582,858 180 3,000 3,500 (42) 3,809 10,225 589,358 14,172 Expenditures Salaries and wages Payroll taxes Employees' group insurance and retirement Utilities Insurance Repairs and maintenance Janitor supplies Equipment Special Projects Beautification Payments to Saline County for clerical services provided Audit Education Maintenance agreement Debt service Contingency, repair & replacement & leave Miscellaneous SALINE COUNTY -CITY BUILDING AUTHORITY Salina, Kansas 1997 General Fund Variance Favorable Actual Budget (Unfavorable) 203,077 205,500 2,423 15,535 15,725 190 28,495 39,620 11,125 89,553 100,000 10,447 12,966 16,000 3,034 28,647 31,000 2,353 9,538 15,000 5,462 3,064 3,000 (64) 95,815 100,000 4,185 3,188 5,000 1,812 1,500 1,500 2,000 2,000 1,554 2,000 446 27,302 27,500 198 45,819 45,816 (3) - 50,000 50,000 1,448 2,000 552 569,501 661,661 92,160 30,735 $ (72,562) $ 103,297 202,838 $ 233,573 Total Expenditures Excess (Deficit) of Revenues over Expenditures Unreserved Fund Balance, Beginning of Period Unreserved Fund Balance, End of Period The accompanying notes are an integral part of these financial statements. -5- 1996 General Fund Variance Favorable Actual Budget (Unfavorable) 197,933 199,820 1,887 15,064 15,286 222 31,893 37,166 5,273 94,130 90,000 (4,130) 12,672 16,000 3,328 31,778 31,000 (778) 9,712 14,000 4,288 1,552 2,500 948 32,215 75,000 42,785 - - 1,500 1,500 1,875 1,875 1,221 1,500 279 26,378 26,052 (326) 45,819 45,816 (3) - 20,000 20,000 4,309 6,700 2,391 508,051 584,215 76,164 95,479 $ 5,143 $ 90,336 107,359 $ 202,838 'I - SALINE COUNTY-CITY BUILDING AUTHORITY Salina, Kansas NOTES TO FINANCIAL STATEMENTS December 31, 1997 and 1996 1. Summary of Significant Accounting Policies The Saline County-City Building authority was formed on March 22, 1965, and restated 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 A2ency Number of Members on Authority Board Saline County City of Salina District Court Member at large 3 2 1 --L Total 7 - The following is a summary of the significant accounting policies: a. The Saline County-City Building Authority maintains its accounting records in accordance with the principles of fund accounting in order to insure observance of limitations and restrictions placed on the use of resources available. This is the procedure by which resources are classified for accounting and reporting into funds established according to their nature and purposes. b. For general financial statement purposes, the accrual method of accounting is followed. For statutory purposes, the accrual method is modified for the recording of encumbrances as expenditures at year end. c. General fixed assets are recorded for statutory basis statements as expenditures in the General Fund at the time of purchase. Fixed assets costing $500 or more are capitalized and accounted for in the general fixed asset group of accounts. Depreciation is not recognized, which is in accordance with generally accepted accounting principles applicable to municipalities. -6- - 2. Appropriations from Municipalities 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 ftom participating municipalities to cover net operating and maintenance costs of the building. These appropriations are borne by the participating municipalities. In 1996, the municipalities agreed to restate the Interlocal Cooperation Agreement to relieve Salina Unified School District #305 of any ongoing responsibility or expense related to operations of the Building Authority, while allowing the District to retain its beneficial ownership interest for the limited purpose of sharing net sale proceeds if the building is ever sold. 3. Compliance with Kansas Statutes In management's opinion, there were no statutory violations. (' 4. Deposits and Investments Deposits. At December 31, 1997 and 1996, respectively, the carrying amount of the Building Authority's deposits were $255,070 and $250,371, and the bank balances were $263,148 and $263,148: Of the bank balances, $100,000 and $100,000 were covered by FDIC insurance at December 31,1997 and 1996, respectively, and the remaining balances were collateralized by pledged securities held under joint custody receipts issued by a third-party bank in the Building Authority's name. The third-party bank holding the pledged securities is independent of the 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 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 2. Investments. 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 such investments during the year ended December 31, 1997 or December 31, 1996. 5. Defined Benefit Pension Plan Plan description. 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 a 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. -7- -..- .-"--'.~ . ~_'h L ~ .. '-~'~-.. -. "",,~,,-._--'.' '.~...~;....,- .. Funding Policy. 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 èmployers. The employer rate established by statute for calendar year 1997 is 2.63. The non-school municipality employer contributions to KPERS for the years ending December 31, 1997 and 1996 were $4,349 and $4,854, respectively, equal to the statutory required contributions for each year. " 6. 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 ITom 12 to 21 days of vacation pay per year based on the number of years of continuous service. Vacation pay may accumulate from a minimum of 18 days 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 no 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. . c. Personal Leave: 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. 7. Long Term Debt a. Lease Obligation The following summarizes the lease obligation included in the long-term account group. Debt Issue Date ~ Interest Rm Maturity ~ Original Amount Equipment Lease Purchase Agreement 9/1/95 9/1/03 $291,629 5.9% -8- The lease purchase agreement was entered into for the purpose of financing a contract for services in connection with upgrading the heating and cooling system in the building, Annual debt service requirements to maturity for the equipment lease purchase agreement follow: Ym Principle Due Interest Due Total Due 1998 $ 33,562 $ 12,257 $ 45,819 1999 35,597 10,222 45,819 2000 37,755 8,064 45,819 2001 40,043 5,776 45,819 2002 42,471 3,348 45,819 Thereafter 28,076 1,142 29,218 Totals $ 217,504 $ 40,809 $ 258,313 b. Summary (" The following summarizes the changes in the long-tenn debt group of accounts for the year ended December 31, 1997. Balance, beginning of year Accrued Lease Leave Obligation Total $ 24,554 $ 249,460 $274,014 (1,591) (1,591) Change in accrued leave Lease Purchase Obligation New issue Principle payments (31,956) (31,956) Balance, end of year $ 22,963 S 217,504 $ 240,467 Interest paid during 1997 was $13,863. General Fixed Asset Group The following summarizes the changes in the general fixed asset group of accounts for the year ended December 31, 1997, Balance Reclassifications Balance December 31, 1996 Additions & Dispositions December 31, 1997 Land $ 200,228 $ $ 20,000 $ 220,228 Building & Improvements 2,486,147 74,798 3,703 2,564,648 Equipment 123,037 21,361 (33,366) III ,032 Parking Lot 40,000 21,655 61,655 Total $ 2,849,412 $ 117,814 $ (9,663) $ 2,957,563 -9- Additions during 1997 consisted of the following: Equipment Two engines Transformers Payroll and accounting system Flush valves Parking lot seal Power factor capacitors Thermal and safety glass Snack bar remodeling Door closures and panic bars Storage building Parking Total -10- - $ 18,646 2,125 2,715 10,275 10,000 4,474 23,845 8,800 3,000 22,279 11,655 (' $ 117,814 . - -, -- ----- .,"' '> --,~.~-,- ",,' . SALINE COUNTY-CITY BUILDING AUTHORITY Salina, Kansas SCHEDULE OF EXPENDITURES-GENERAL FUND 1997 Salaries and wages Payroll taxes Employees' group insurance and retirement Utilities Insurance Repairs and maintenance Janitor supplies Equipment Special projects Beautification Payments to Saline county for clerical services provided Audit Education Maintenance agreement Debt service Miscellaneous Totals $ 203,077 15,535 28,495 89,553 12,966 28,647 9,538 3,064 117,814 3,188 1,500 1,875 1,553 27,302 45,819 1,449 $ 591,375 Schedule 1 1996 $ 197,934 15,064 31,893 94,130 12,672 23,132 9,712 1,552 71,649 1,500 1,875 1,221 26,378 45,819 4,309 $ 538,840 Schedule 2 ADJUSTMENTS TO GENERALLY ACCEPTED ACCOUNTING PRINCIPLES Excess of Revenues over Expenditures (Statutory Basis) Current Year Encumbrances Included in Expenditures Prior Year Encumbrances Included in Expenditures Excess of Revenues over Expenditures (GAAP Basis) -11- $ 30,7~5 2,000 (23,874) $ 8,861 -' - - ('