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Audit - 1995/1996 I I I I I I I I I I I I I I I I I I I SALINA-SALINE COUNTY BOARD OF HEALTH Salina, Kansas FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORTS December 31,1996 and 1995 CLUBINE AND RETTELE, CHARTERED Certified Public Accountants Salina, Kansas I I I I I I I I I I I I I ;1 I I I I I SALINA-SALINE COUNTY BOARD OF HEALTH Salina, Kansas CONTENTS Page FINANCIAL SECTION INDEPENDENT AUDITORS' REPORT 1 Exhibit A BALANCE SHEETS 2 Exhibit B STATEMENTS OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE AND COMPARISON WITH BUDGET 3 Exhibit C STATEMENTS OF EXPENDITURES AND COMPARISON WITH BUDGET 4 NOTES TO FINANCIAL STATEMENTS 5-10 Supplemental Information Schedule 1 Grants from the Kansas State Department of Health and Environment 11 Schedule 2 Fees for Services 12 SINGLE AUDIT SECTION INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL STRUCTURE BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS 13-14 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS 15 INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL STRUCTURE USED IN ADMINISTERING FEDERAL FINANCIAL ASSISTANCE PROGRAMS 16-18 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO MAJOR FEDERAL FINANCIAL ASSISTANCE PROGRAMS 19-20 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH THE GENERAL REQUIREMENTS APPLICABLE TO FEDERAL FINANCIAL ASSISTANCE PROGRAMS 21 I I I I I I I I I I I I I I I I I I I SALINA-SALINE COUNTY BOARD OF HEALTH Salina, Kansas CONTENTS (CONTD.) SINGLE AUDIT SECTION (CONTD.) SCHEDULE OF FINDINGS AND QUESTIONED COSTS INDEPENDENT AUDITORS' REPORT ON SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE Page 22 23 24 Contents I I I I I I I I I I I I I I I I I I I SALINA-SALINE COUNTY BOARD OF HEALTH Salina, Kansas FINANCIAL SECTION I I I I I I I I I I I I I I I I I I I CLUBINE AND RETTELE, CHARTERED CERTIFIED PUBLIC ACCOUNTANTS Robert I. Clubine, C.P.A. David A. Rettele, C.P.A. Jay D. Langleyhc.p.A. James R. Cola an, C.P.A. Jon K Bell, C.PA Offices in Salina Ellsworth INDEPENDENT AUDITORS' REPORT To the Governing Board Salina-Saline County Board of Health Salina, Kansas: We have audited the accompanying financial statements of Salina-Saline County Board of Health, Salina, Kansas, as of and for the years ended December 31, 1996 and 1995 as listed in the table of contents. These financial statements are the responsibility of the Board of Health's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards, the Kansas Municipal Audit Guide, Government Auditing Standards, issued by the Comptroller General of the United States, and the provisions of Office of Management and Budget Circular A-128, "Audits of State and Local Governments". Those standards and OMB Circular A-128 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 audits provide a reasonable basis for our opinion. Salina-Saline County Board of Health does not maintain a general fixed assets account group and, accordingly, the accompanying financial statements do not include the general fixed assets account group, which should be included in order to conform with generally accepted accounting principles. In our opinion, except for the effects on the financial statements of the omission of the general fixed assets account group, the financial statements referred to in the first paragraph present fairly, in all material respects, the financial position of the Salina-Saline County Board of Health at December 31, 1996 and 1995, and the results of its operations and changes in its fund balance for the years then ended in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 11 and 12 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements referred to above and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. Respectfully submitted, \11.. h.:- L' c.-S2 ~ -1- I I SALINA-SALINE COUNTY BOARD OF HEALTH Salina, Kansas Exhibit I I I BALANCE SHEETS I December 31, 1996 1995 ASSETS I Cash $ 592,004 $ 628,405 Accounts receivable I State of Kansas Department of Health and Environment (Note 5) 51,291 89,521 Medicare and Medicaid 192,515 112,404 I Other home care services 42,347 13,106 Medicare adjustments receivable (Note 6) 2,372 8,553 I Totals $ 880,529 $ 851,989 I LIABILITIES AND FUND BALANCE Liabilities I Vouchers payable $ 30,088 $ 31,248 Payroll tax liabilities 3,077 Accrued salaries 75,634 59,276 I Accrued liability for compensated absences 111,205 98,417 Animal Shelter Reward Fund 4,966 3,212 Total Liabilities 221,893 195,230 I Deferred Income Funds advanced for future restricted purposes (Note 5) 32,823 31,818 I Fund Balance (Exhibit II) Unreserved 625,813 624,941 I I Totals $ 880,529 $ 851,989 I I The accompanying notes are an integral part of these financial statements. I -2- I I SALlNA- SALINE COUNTY BOARD OF HEALTH I Salina, Kansas Exhibit II I I STATEMENTS OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE I AND COMPARISON WITH BUDGET I 1996 1995 Actual Budget Actual Budget I Revenues Appropriation from Saline County, Kansas (Note 4) $ 276,900 $ 276,000 $ 272,947 $ 273,247 I Appropriation from City of Salina, Kansas (Note 4) 389,742 389,742 382,947 382,947 Grants from the State I Department of Health and Environment 543,812 519,935 598,049 574,823 Fees for services 1,151,449 880,000 1,061,402 880,000 I Interest income 13,749 17,000 20,272 17,000 Miscellaneous revenues 207,623 15,000 97,719 15,000 Total Revenues 2,583,275 2,097,677 2,433,336 2,143,017 I Expenditures (Exhibit III) 2,582,403 2,360,616 2,293,432 2,249,562 I Excess (Deficit) of Revenues over Expenditures 872 (262,939) 139,904 (106,545) I Fund Balance, January 1 624,941 280,000 485,037 150,000 Fund Balance, December 31 $ 625,813 $ 17,061 $ 624,941 $ 43,455 I I I I The accompanying notes are an integral part of these financial statements. I -3- I I SALINA-SALINE COUNTY BOARD OF HEALTH I Salina, Kansas Exhibit III I STATEMENTS OF EXPENDITURES AND COMPARISON WITH BUDGET I 1996 1995 Actual Budget Actual Budget I Personal Services Salaries $ 1,640,513 $ 1,372,669 $ 1,437,744 $ 1,325,000 Social security 117,993 105,010 106,279 101,362 I Retirement 34,267 34,043 27,717 28,000 Health insurance 118,415 180,000 172,864 155,000 Unemployment insurance 20,855 18,394 1 ,443 1,200 I Professional services 153,318 235,000 161,515 235,000 Contractual services Therapeutic devices and I appliances 900 Auditing 6,000 8,500 8,066 8,000 Accounting 151 500 500 I Building and grounds - Remodeling and repair 23,866 15,000 16,311 15,000 Telephone 6,611 10,000 7,380 9,000 Mileage 84,957 70,000 73,220 70,000 I Service contracts and equipment lease 5,183 3,500 4,379 3,500 Insurance 77,027 55,000 52,588 53,000 I Expendable supplies Office supplies 69,159 55,000 52,522 55,000 Office repair and maintenance 213 I Postage and express 14,744 13,000 11,854 11 ,000 Books, dues and subscriptions 8,265 6,000 3,917 6,000 Equipment maintenance and repair 5,839 3,000 4,087 3,000 I Gasoline and oil 3,393 3,000 2,053 3,000 Clinical and medical supplies 108,834 85,000 83,815 85,000 Chemicals 4,410 10,000 4,300 10,000 I Veterinary and medical services 7,333 6,000 4,382 6,000 Animal maintenance 1,563 6,000 2,148 3,000 Professional meetings 23,852 15,000 12,411 15,000 II Utilities and water 14,272 20,000 13,083 17,000 Custodial services 2,212 6,000 5,632 6,000 Miscellaneous expense 13,419 9,521 :1 Capital equipment 15,952 25,000 13,088 25,000 Total Expenditures $ 2,582,403 $ 2,360,616 $ 2,293,432 $ 2,249,562 I The accompanying notes are an integral part I of these financial statements. -4- I I I I I I I I I I I I I I I I I I I I SALINA-SALINE COUNTY BOARD OF HEALTH Salina, Kansas NOTES TO FINANCIAL STATEMENTS December 31, 1996 and 1995 1. Summary of Significant Accounting Policies A. Reporting Entity The Salina-Saline County Board of Health was formed on June 28, 1955, under the Joint Resolution and Agreement of the County of Saline and the City of Salina. The Board of Health is a joint venture organized for the purpose of promoting the public health and sanitation of the county and city. The Governing Body of the Board of Health is composed of eleven members, three appointed City Commissioners, three appointed County Commissioners, and five members selected by the six appointed Commissioners. Based on the criteria set forth in Statement No. 14 of the Governmental Accounting Standards Board, the Board of Health is considered a joint venture between the County of Saline and the City of Salina due to ongoing financial responsibility of those governments for the Board of Health. B. Basis of Statement Presentation The Board of Health maintains its accounting records in accordance with the principles of fund accounting in order to ensure 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. The significant accounting policies followed by the Board of Health are described below to enhance the usefulness of the financial statements to the reader. 1) The accompanying financial statements have been prepared on the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (Le., when they become both measurable and available). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Revenues from cost-reimbursement grants are recognized in the period the expenditure is made. Deferred revenues arise when grant monies are received prior to the incurrence of qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met, or when the Board of Health has a legal claim to the resources, the liability for deferred revenue is removed from the balance sheet and revenue is recognized. 2) Generally accepted accounting principles require that a general fixed assets account group be maintained. The accompanying financial statements do not conform with generally accepted accounting principles in that a general fixed assets account group is not included. The Board of Health has obtained a waiver from the Director of Accounts and Reports of the requirements of K.S.A. 75-1120a as related to the preparation and maintenance of a general fixed assets account group. -5- I I I I I I I I I I I I I I I I I I I 3) Individual accounts receivable are written off to bad debt expense in the period in which it is determined that they are uncollectible. The Board of Health considers accounts receivable to be fully collectible; accordingly, no allowance for doubtful accounts is required. 4) Reimbursements under the Medicare program are subject to adjustment after the end of the year, based upon audited "reasonable costs" incurred in providing the services. Estimated settlements receivable from or payable to Medicare are recognized in the year services are provided. Differences between estimated settlements and final settlements as determined by the Intermediary are recorded as an adjustment in the year settled. 2. Budget The Board of Health 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 to be requested from Saline County and the City of Salina. The budget is prepared on the modified accrual basis of accounting. 3. Cash and Investments Deposits - At December 31, 1996 and 1995, respectively, the carrying amount of the Board of Health's deposits were $585,481 and $628,305, and the bank balances were $638,962 and $619,049. In accordance with Kansas statutes, the collateral securities were held under joint custody receipts issued by a third-party bank, which bank is independent of the depository financial institution. Board of Health money on deposit is categorized into one of three risk categories to give an indication of the level of risk assumed by the Board of Health at year end. Category 1 includes deposits insured or collateralized with securities held by the Board of Health or by its agent in the Board of Health's name. Category 2 includes deposits collateralized with securities held by the pledging financial institution's trust department or agent in the Board of Health'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 Board of Health's name. All deposits of the Board of Health in excess of FDIC insurance coverage are Risk Category 2. Investments - Kansas municipalities, such as the Salina-Saline County Board of Health, are authorized by Kansas statutes to invest cash balances generally in: (1) Temporary notes or no fund warrants issued by the investing governmental unit, (2) Time deposits, open accounts, (3) Time certificates of deposit, and (4) Repurchase agreements. Other investment options are available if eligible financial institutions cannot or will not make the investments described in (2) and (3) above available at interest rates equal to or greater than the statutory investment rate. The Board of Health had no such investments during the years 1996 and 1995. -6- I I I I I I I I I I I I I I I I I I I 4. Appropriations from Taxing Authorities Saline County and the City of Salina share the net operating costs of the Board of Health. Necessary funds are included in the tax levies of the respective municipalities, and are summarized by the following schedule: 1996 1995 Saline County, Kansas Regular tax appropriation $276900 $272.947 City of Salina, Kansas Regular tax appropriation $389742 $382.947 5. Grants from the State of Kansas Department of Health and Environment Agreements were in effect during 1996 and 1995 with the State of Kansas Department of Health and Environment regarding certain grants which were funded by federal and state monies. Current agreements are for the state's fiscal year ended June 30, 1997. Unless specifically noted, the grants are payable 25% on or about July 1, and 12.5% on our about October 1, November 15, January 1, February 15, April 1, and May 15. Unexpended grant amounts are periodically withheld from grant payments. If expenditures for these programs exceed the grant award, the Board of Health is responsible for the excess. Descriptions of the grants follow: Federal Programs Child Health Program Matching funds are provided to furnish programs to promote optimum health for children. The current agreement provides that the Board of Health will receive $8,500. Maternal and Infant Program Matching funds are provided to furnish comprehensive health care for adolescent and other high risk mothers and their infants. The current agreement provides that the Board of Health will receive $77,421. Family Planning Program Matching funds are provided to establish and maintain family planning centers to furnish and disseminate information concerning planned parenthood. The current agreement provides that the Board of Health will receive $33,611. Special Supplemental Food Program for Women, Infants, and Children Reimbursements are provided for administrative costs of the Women, Infants and Children Supplemental Food Program. The program provides nutritious foods for pregnant and nursing women, infants up to age 1 year, and children up to age 5 years. The current agreement provides that the Board of Health will be reimbursed monthly for actual expenses up to an annual total of $259,530. Outreach Clinic Services Reimbursements are provided for coordination of Cardiac and Neurology Outreach Clinics at Salina. The current agreement provides that the Board of Health will be reimbursed quarterly for actual expenses up to an annual total of $10,675. -7- I I I I I I I I I I I I I I I I I I I Healthy Start/Home Visitor Program Matching funds are provided to furnish home and hospital visits by trained lay visitors to families with a newborn infant and to pregnant women. The current agreement provides that the Board of Health will receive $16,721. AIDS Counseling and Testing Site Program Funds are provided for the counseling and testing of Acquired Immune Deficiency Syndrome. The current agreement provides that the Board of Health will receive $4,027. HIV Case Management Program Funds are provided for services performed for new and previously diagnosed HIV positive persons. The current agreement provides that the Board of Health will receive $15,800. Child Care Licensing Program Funds are provided for the evaluation, registration, and licensing of homes and/or centers caring for children. The current agreement provides that the Board of Health will receive $14,523 payable in quarterly amounts based on number of licenses issued. Child Health Assessment Funds are provided to furnish child health assessments at school entry for kindergartners and other first time school entrants. The current agreement, which expired June 30, 1995 provided that the Board of Health received $4,342 for the fiscal year July 1, 1994 through June 30, 1995. Immunization Action Plan Funds are provided for the implementation of an increased age-appropriate level of immunization for children aged birth to two years. The current agreement provides that Board of Health will receive $15,700. State Programs Food Service Licensing Program Funds are provided for the evaluation, registration, and licensing of food service establishments. The current agreement provides that the Board of Health will receive 80% of annual licensing fees, payable monthly. General Health Services - State Formula Grant Matching funds are provided to help insure that adequate health services are available to the Saline County Community. The current agreement provides that the Board of Health will receive $34,145 payable in quarterly installments. AIDS Health Education/Risk Reduction Program Funds are provided to identify, coordinate, and provide public information and education regarding Acquired Immune Deficiency Syndrome. The current agreement provides that the Board of Health will receive $4,492. Local Environmental Protection Program Funds are provided for the development and implementation of the Lincoln, Ellsworth, Ottawa, and Saline County Sanitary Codes. The current agreement provides that the Board will receive $61,480. -8- I I I I I I I I I I I I I I I I I I I The Board of Health periodically receives payments in advance or reimbursements to finance expenditures incurred in administering the above programs. The following schedules summarize accounts receivable and deferred income at December 31, 1996 and 1995: Accounts Receivable Special Supplemenal Food Program for Women, Infants, and Children Food Service Licensing Program Outreach Clinic Services Total Accounts Receivable December 31. 1996 1995 $ 41,844 $ 74,551 7,504 11,640 1.943 3.330 $ 51.291 $ 89.521 $ 8,536 $ 8,934 2,090 2,131 1,063 1,063 9,678 9,864 4,201 4,423 4,937 3,588 1.815 1.815 $ 32.320 $ 31.818 Deferred Income General Health Services - State Formula Grant Healthy Start/Home Visitor Program Child Health Program Maternal and Infant Program Family Planning Immunization Action Plan Child Care Licensing Program Total Deferred Income 6. Home Health Agency The Board of Health provides services to patients which are reimbursed by third party payers, principally Medicare and Medicaid. Total fees for services include reimbursements made under the Medicare and Medicaid programs. Reimbursements under these programs are subject to adjustment after the end of the year, as discussed in Note 1 above. Accounts receivable at December 31, 1996 and 1995, include $2,372 and $8,553, respectively, for the estimated settlement of the annual Medicare cost statement. 7. Defined Benefit Pension Plan Substantially all full-time employees of the Board of Health participate in the Kansas Public Employees Retirement System ("System"), a multiple-employer public employee retirement system. The payroll for employees covered by the System for the years 1996 and 1995 was $1,377,700 and $1,268,649, respectively. The total payroll was $1,554,939 and $1,380,441 for the years 1996 and 1995, respectively. Substantially all employees of the Board of Health are eligible to participate in the System after one year of employment. Employees who retire at or after age 65 or age 62 with ten years service credit or at any age when years of service plus age equal 85 "points" are entitled to a retirement benefit, payable monthly for life, equal to one percent of their final average salary for each year of "prior" service and 1.75 percent for each year of "participating" service. Final average salary is the employee's average salary over the higher of four years of credited service including add-ons such as -9- I I I I I I I I I I I I I I I I I I I accrued sick leave and vacation leave or a three year average without add-ons. For those hired July 1, 1993 or later, final average salary is a three year average with no add-ons. Benefits fully vest on reaching ten years of service. Vested employees may retire at age 55 and receive reduced retirement benefits. The system also provides death and disability benefits. Benefits are established by State statute. Covered employees are required by State statute to contribute four percent of their salary to the plan. The employer is required by the same statute to contribute the remaining amounts necessary to pay benefits when due. The contribution requirement for the years 1996 and 1995, respectively, was $97,456 and $78,617, which consisted of $34,256 and $27,871 from the employer and $63,200 and $50,746 from employees; these contributions represented 2.2% and 4% of covered payroll for 1996 and 2.0% and 4% of covered payroll for 1995. 8. Compliance with Kansas Statutes No statutory violations were noted. -10- I I I I I I I I I II I I I I I I I I I SALINA-SALINE COUNTY BOARD OF HEALTH Salina, Kansas SUPPLEMENTAL INFORMATION I I I I I I I I I I I I I I I I I I I SALINA-SALINE COUNTY BOARD OF HEALTH Salina, Kansas Schedule 1 GRANTS FROM THE KANSAS STATE DEPARTMENT OF HEALTH AND ENVIRONMENT 1996 1995 Federal Programs Child Health Program $ 8,500 $ 8,500 Maternal and Infant Program 78,167 78,912 Family Planning Program 34,494 35,380 Women, Infants, and Children Supplemental Food Program 228,270 271,910 Outreach Clinic Services 9,288 11,848 Healthy Start/Home Visitor Program 16,882 17,045 AIDS Counseling and Testing Site Program 4,027 4,027 HIV Case Management 16,151 14,539 Child Care Licensing Program 14,523 18,523 Immunization Action Plan 14,351 23,760 Child Health Assessment Program 1,022 Total Federal Programs 424,653 485,466 State Programs Food Service Licensing Program 15,672 22,104 General Health Services - State Formula Grant 35,116 36,672 AIDS Health Education/Risk Reduction Program 4,492 4,701 Local Environmental Protection Program 62,517 44,661 Miscellaneous 1,362 4,445 Total State Programs 119,159 112,583 Total Grants $ 543,812 $ 598,049 -11- I I I I I I I I I I I I I I I I I I I SALINA-SALINE COUNTY BOARD OF HEALTH Salina, Kansas Schedule 2 FEES FOR SERVICES 1996 1995 Title XVIII $ 653,755 $ 520,360 Title XIX 280,846 341,965 Patients and insurance 38,161 54,437 Home care services 6,245 5,244 Homemaker services 7,723 13,502 Family planning services 40,267 41,876 General nursing clinics 105,852 61,854 Environmental health fees 5,662 5,015 Day care provider fees 5,706 6,209 Senior care fees 5,335 6,044 Child health assessment fees 1,897 4,896 Total Fees for Services $ 1,151,449 $ 1,061,402 -12- I I I I I I I I I I I I I I I I I I I I SALINA-SALINE COUNTY BOARD OF HEALTH Salina, Kansas SINGLE AUDIT SECTION I I I I I I I I I I I I I I I I I I I CLUBINE AND RETTELE, CHARTERED CERTIFIED PUBLIC ACCOUNTANTS Robert I. Clubine, C.P.A. David A. Rettele, C.P.A. Jay D. Langleyhc.p.A. James R. Cola an, C.P.A. Jon K Bell, C.PA Offices in Salina Ellsworth INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL STRUCTURE BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Governing Board Salina-Saline County Board of Health Salina, Kansas: We have audited the accompanying financial statements of Salina-Saline County Board of Health, for the year ended December 31. 1996 and have issued our report thereon dated May 1, 1997. In our report, our opinion on the financial statements was qualified because the financial statements do not include the general fixed assets account group, which should be included in order for the financial statements to conform with generally accepted accounting principles. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards. issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The management of the Salina-Saline County Board of Health 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 to 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. In planning and performing our audit of the financial statements of Salina-Saline County Board of Health, for the year ended December 31, 1996, we obtained an understanding of the internal control structure. With respect to the internal control structure, we obtained an understanding of the design of relevant policies and procedures and whether they have been placed in operation, and we assessed control risk in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide an opinion on the internal control structure. Accordingly, we do not express such an opinion. 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 condition in which the design or operation of one or more of the internal control structure elements does not reduce to a -13- I I I I I I I I I I I I I I I I I I I I relatively low level the risk that errors and irregularities in amounts that would be material in relation 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. However, we noted certain matters involving the internal control structure and its operation that we have reported to the management of the Salina-Saline County Board of Health, in a separate letter dated May 1, 1997. This report is intended for the information of the Governing Board and management of the Salina- Saline County Board of Health, the State of Kansas Department of Health and Environment, the cognizant federal agency. and other applicable federal audit agencies. This restriction is not intended to limit the distribution of this report which, upon acceptance by the Salina-Saline County Board of Health, is a matter of public record. Salina, Kansas May 1. 1997 Respectfully submitted, CJhj.: . __Q~R. -14- I I I I I I I I I I I I I I I I I I I CLUBINE AND RETTELE, CHARTERED CERTIFIED PUBLIC ACCOUNTANTS Robert I. Clubine, C.P.A. David A. Retlele, C.P.A. Jay D. Langley, C.P.A. James R. Colahan, C.P.A. Jon K Bell, C.P.A. Offices in Salina Ellsworth INDEPENDENT AUDITORS' REPORT ON COMPLIANCE BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Governing Board Salina-Saline County Board of Health Salina, Kansas: We have audited the financial statements of the Salina-Saline County Board of Health for the year ended December 31, 1996, and have issued our report thereon dated May 1, 1997. In our report, our opinion on the financial statements was qualified because the financial statements do not include the general fixed assets account group, which should be included in order for the financial statements to conform with generally accepted accounting principles. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States.Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. Compliance with laws, regulations, contracts, and grants applicable to the Salina-Saline County Board of Health is the responsibility of the Board of Health's management. As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we performed tests of the Board of Health's compliance with certain provisions of laws, regulations, contracts and grants. However, the objective of our audit of the financial statements was not to provide an opinion on overall compliance with such provisions. Accordingly, we do not express such an opinion. The results of our tests, disclosed no instances of noncompliance that are required to be reported under government Auditing Standards. This report is intended for the information of the Governing Board and management of the Salina- Saline County Board of Health, the State of Kansas Department of Health and Environment, the cognizant federal agency, and other applicable federal audit agencies. This restriction is not intended to limit the distribution of this report which, upon acceptance by the Salina-Saline County Board of Health, is a matter of public record. Salina, Kansas May 1, 1997 Respectfully submitted, ~~l.~..'-,.. ,~ ~ -15- I I I I I I I I I I I I I I I I I I I CLUBINE AND RETTELE, CHARTERED CERTIFIED PUBLIC ACCOUNTANTS Robert I. Clubine, C.P.A. David A. Rettele, C.P.A. Jay D. LangleYhC.p.A. James R. Cola an, C.P.A. Jon K. Bell. C.PA Offices in Salina Ellsworth INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL STRUCTURE USED IN ADMINISTERING FEDERAL FINANCIAL ASSISTANCE PROGRAMS To the Governing Board Salina-Saline County Board of Health Salina, Kansas: We have audited the financial statements of Salina-Saline County Board of Health, for the year ended December 31, 1996, and have issued our report thereon dated May 1, 1997. In our report, our opinion on the financial statements was qualified because the financial statements do not include the general fixed assets account group, which should be included in order for the financial statements to conform with generally accepted accounting principles. We have also audited the Salina-Saline County Board of Health's compliance with requirements applicable to major federal financial assistance programs and have issued our report thereon dated May 1, 1997. We conducted our audit in accordance with generally accepted auditing standards; Government Auditing Standards, issued by the Comptroller General of the United States; and Office of Management and Budget (OMB) Circular A-128, "Audits of State and Local Governments." Those standards and OMB Circular A-128 require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement and about whether the Salina-Saline County Board of Health complied with laws and regulations, noncompliance with which would be material to a major federal financial assistance program. In planning and performing our audits for the year ended December 31, 1996, we considered the internal control structure of the Board of Health in order to determine our auditing procedures for the purpose of expressing our opinions on the Board of Health's financial statements and on its compliance with requirements applicable to major federal financial assistance programs and to report on the internal control structure in accordance with OMB Circular A-128. This report addresses our consideration of internal control structure policies and procedures relevant to compliance with requirements applicable to federal financial assistance programs. We have addressed internal control structure policies and procedures relevant to our audit of the financial statements in a separate report dated May 1, 1997. The management of the Salina-Saline County Board of Health 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, 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, and that federal financial assistance programs are managed in compliance with applicable laws and regulations. Because of inherent limitations in any internal control structure, errors, irregularities, or instances of noncompliance -16- I I I I I I I I I I I I I I I I I I I may nevertheless occur and not be detected. Also, projection of any evaluation the structure to 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. For the purpose of this report, we have classified the significant internal control structure policies and procedures used in administering federal financial assistance programs in the following categories: Accounting Controls 1. Revenues/receipts 2. Expenditures/purchases/disbursements 3. Cash and investment balances 4. Financial reporting Administrative Controls General Requirements 1. Political activity 2. Civil Rights 3. Drug-free Workplace 4. Allowable Costs/Cost Principles Specific Requirements 1. Types of services 2. Eligibility 3. Matching 4. Reporting 5. Cost allocation 6. Special tests and provisions For all of the internal control structure categories listed above, we obtained an understanding of the design of relevant policies and procedures and determined whether they have been placed in operation, and we assessed control risk. During the year ended December 31,1996, the Salina-Saline County Soard of Health expended 54% of its total federal financial assistance under major federal financial assistance programs. We performed tests of controls, as required by OMS Circular A-128, to evaluate the effectiveness of the design and operation of internal control structure policies and procedures that we considered relevant to preventing or detecting material noncompliance with specific requirements, general requirements, and requirements governing claims for advances and reimbursements that are applicable to each of the Soard of Health's major federal financial assistance programs, which are identified in the accompanying Schedule of Federal Financial Assistance. Our procedures were less in scope than would be necessary to render an opinion on these internal control structure policies and procedures. Accordingly, we do not express such an opinion. Our consideration of the internal control structure policies and procedures used in administering federal financial assistance 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 internal control structure elements does not reduce to a relatively low level the risk that noncompliance with laws and regulations that would be material to a federal financial assistance -17- I I I I I I I I I I I I I I I I I I I program 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. However, we noted certain matters inVOlving the internal control structure and its operation that we have reported to the management of the Salina-Saline County Board of Health, in a separate letter dated May 1,1997. This report is intended for the information of the Governing Board and management of the Salina- Saline County Board of Health, the State of Kansas Department of Health and Environment, the cognizant federal agency, and other applicable federal audit agencies. This restriction is not intended to limit the distribution of this report which, upon acceptance by the Salina-Saline County Board of Health, is a matter of public record. Salina, Kansas May 1,1997 Respectfully submitted, ~~~ -18- I I I I I I I I I I I I I I I I I I I Robert I. Clubine, C.P.A. David A. Rettele, C.P.A. Jay D. Langley, C.P.A. James R. Colahan, C.P.A. Jon K. Bell, C.P.A. CLUBINE AND RETTELE, CHARTERED CERTIFIED PUBLIC ACCOUNTANTS Offices in Salina Ellsworth INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO MAJOR FEDERAL FINANCIAL ASSISTANCE PROGRAMS To the Governing Board Salina-Saline County Board of Health Salina. Kansas: We have audited the financial statements of the Salina-Saline County Board of Health for the year ended December 31,1996, and have issued our report thereon dated May 1 1997. In our report, our opinion on the financial statements was qualified because the financial statements do not include the general fixed assets account group, which should be included in order for the financial statements to conform with generally accepted accounting principles. We have also audited the Salina-Saline County Board of Health's compliance with the requirements governing types of services allowed or unallowed; eligibility; reporting; and special tests and provisions that are applicable to each of its major federal financial assistance programs, which are identified in the accompanying Schedule of Federal Financial Assistance, for the year ended December 31, 1996. The management of the Salina-Saline County Board of Health is responsible for the Board of Health's compliance with those requirements. Our responsibility is to express an opinion on compliance with those requirements based on our audit. We conducted our audit of compliance with those requirements in accordance with generally accepted auditing standards, Government Auditing Standards. issued by the Comptroller General of the United States, and Office of Management and Budget Circular A-128, "Audits of State and Local Governments." Those standards require that we plan and perform the audit to obtain reasonable assurance about whether material noncompliance with the requirements referred to above occurred. An audit includes examining, on a test basis, evidence about the Salina-Saline County Board of Health's compliance with those requirements. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the Salina-Saline County Board of Health complied. in all material respects, with the requirements governing types of services allowed or unallowed; eligibility; reporting; and special tests and provisions that are applicable to each of its major federal financial assistance programs for the year ended December 31. 1996. -19- I I I I I I I I I I I I I I I I I I I This report is intended for the information of the Governing Board and management of the Salina- Saline County Board of Health, the State of Kansas Department of Health and Environment, the cognizant federal agency, and other applicable federal audit agencies. This restriction is not intended to limit the distribution of this report, which, upon acceptance by the Salina-Saline County Board of Health, is a matter of public record. Salina, Kansas May 1, 1997 Respectfully submitted, ~-3l !d~~_ -20- I I I I I I I ,I I I I I I I I I I I I CLUBINE AND RETTELE, CHARTERED CERTIFIED PUBUC ACCOUNTANTS Robert I. Clubine, C.P.A. David A. Rettele, C.P.A. Jay D. Langleyhc.PA James R. Cola an, C.PA Jon K Bell. C.PA Offices in Salina Ellsworth INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH THE GENERAL REQUIREMENTS APPLICABLE TO FEDERAL FINANCIAL ASSISTANCE PROGRAMS To the Governing Board Salina-Saline County Board of Health Salina, Kansas: We have audited the financial statements of the Salina-Saline County Board of Health for the year ended December 31,1996, and have issued our report thereon dated May 1,1997. In our report, our opinion on the financial statements was qualified because the financial statements do not include the general fixed assets account group, which should be included in order for the financial statements to conform with generally accepted accounting principles. We have applied procedures to test the Salina-Saline County Board of Health's compliance with the following requirements applicable to its federal financial assistance programs, which are identified in the Schedule of Federal Financial Assistance, for the year ended December 31, 1996: political activity, civil rights, Drug-free Workplace Act, and allowable costs/cost principles. Our procedures were limited to the applicable procedures described in the Office of Management and Budget's "Compliance Supplement for Single Audits of State and Local Governments." Our procedures were substantially less in scope than an audit, the objective of which is the expression of an opinion on the Salina-Saline County Board of Health's compliance with the requirements listed in the preceding paragraph. Accordingly, we do not express such an opinion. With respect to the items tested, the results of those procedures disclosed no material instances of noncompliance with the requirements listed in the second paragraph of this report. With respect to items not tested, nothing came to our attention that caused us to believe that the Salina-Saline County Board of Health had not complied, in all material respects, with those requirements. Also, the results of our procedures did not disclose any immaterial instances of noncompliance with those requirements. This report is intended for the information of the Governing Board and management of the Salina- Saline County Board of Health, the State of Kansas Department of Health and Environment, the cognizant federal agency, and other applicable federal audit agencies. This restriction is not intended to limit the distribution of this report, which, upon acceptance by the Salina-Saline County Board of Health, is a matter of public record. Salina, Kansas May 1,1997 Respectfully submitted, ~,,~~,-'.. ,--)..~ -21- I I I I I I il I I I I I I I I I I I I SALINA-SALINE COUNTY BOARD OF HEALTH Salina, Kansas SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year Ended December 31,1996 Current Year Findinas: None Prior Year Findinas: None -22- I I I I I I I I I I I I I I I I I I I Robert I. Clubine, C.P.A. David A. Rettele, C.PA Jay D. Langleyhc.p.A. James R. Cola an, C.P.A. Jon K Bell, C.P.A. CLUBINE AND RETTELE, CHARTERED CERTIFIED PUBLIC ACCOUNTANTS Offices in Salina Ellsworth INDEPENDENT AUDITORS' REPORT ON SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE To the Governing Board Salina-Saline County Board of Health Salina, Kansas: We have audited the financial statements of the Salina-Saline County Board of Health, for the year ended December 31, 1996, and have issued our report thereon dated May 1, 1997. These financial statements are the responsibility of the Salina-Saline County Board of Health's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards, Government Auditing Standards, issued by the Comptroller General of the United States, and the provisions of Office of Management and Budget Circular A-128, "Audits of State and Local Governments." Those standards and OMB A-128 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. Our opinion on the financial statements was qualified because the financial statements do not include the general fixed assets account group, which should be included in order for the financial statements to conform with generally accepted accounting principles. Our audit was conducted for the purpose of forming an opinion on the financial statements of the Salina-Saline County Board of Health taken as a whole. The accompanying Schedule of Federal Financial Assistance is presented for purposes of additional analysis and is not a required part of the financial statements. The information in that schedule has been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, is fairly presented in all material respects in relation to the financial statements taken as a whole. Salina, Kansas May 1,1997 Respectfully submitted, ~-1)~ -23- I I I Revenues Local Grants Match Expenditures I I $ 102,917 $ $ 102,917 I 125,354 125,354 228,271 228,271 I I I 8,522 8,291 16,813 8,360 8,564 16,924 I 4,249 3,194 7,443 4,251 4,038 8,289 4,676 4,676 I 4,611 4,611 39,456 25,736 65,192 38,711 21,469 60,180 I 17,689 27,185 44,874 I 16,805 28,454 45,259 I 7,175 7,175 7,176 7,176 I 2,013 2,013 2,014 2,014 8,321 8,321 I 7,830 7,830 I 7,262 19,959 27,221 7,261 20,745 28,006 196,382 167,635 364,017 I $ 424,653 $ 167,635 $ 592,288 -24- I