Loading...
Audit - 1996/1997 ~ , Housing Authority of the City of Salina Salina, Kansas Report on Audit of Financial Statements and Supplemental Data for the twelve months ended June 30, 1997 DAVID O. TATE Certified Public Accountant Mangum, Oklahoma 73554 4 ~ Housing Authority of the City of Salina Salina, Kansas June 30, 1997 Table of Contents Independent Certified Public Accountant's Report Financial statements: OWNED HOUSING: Exhibit A-Statement of Assets, Liabilities, and Surplus-Regulatory Basis Exhibit B-Statement of Operating Income, Operating Expenses, Other Credits and Other Charges-Regulatory Basis Exhibit C-Analysis of Surplus-Regulatory Basis HAP CERTIFICATES: Exhibit D-Statement of Assets, Liabilities, and Surplus-Regulatory Basis Exhibit E-Statement of Operating Income and Operating Expenses-Regulatory Basis Exhibit F-Analysis of Surplus-Regulatory Basis HAP VOUCHERS: Exhibit G-Statement of Assets, Liabilities, and Surplus-Regulatory Basis Exhibit H-Statement of Operating Income, Operating Expenses, Other Credits and Other Charges-Regulatory Basis Exhibit I-Analysis of Surplus-Regulatory Basis HOME PROGRAM: Exhibit J-Statement of Assets, Liabilities, and Surplus-Regulatory Basis Exhibit K-Statement of Operating Income and Operating Expenses-Regulatory Basis Exhibit L-Analysis of Surplus-Regulatory Basis Notes to the Financial Statements Supplementary data: OWNED HOUSING: Schedule I-Computation of Residual Receipts and Accruing Contribution-Regulatory Basis Schedule 2-Schedule of Adjusting Journal Entries HAP CERTIFICATES: Schedule 3-Computation of Annual Contribution Earned-Project Account and Operating Reserve Changes-Regulatory Basis HAP VOUCHERS: Schedule 4-Computation of Annual Contribution Earned-Project Account and Operating Reserve Changes-Regulatory Basis ALL PROGRAMS: Schedule 5-Schedule of Expenditures of Federal Awards-Regulatory Basis Report on Compliance with Requirements Applicable to Each Major Program and Internal Control Over Compliance in Accordance with U. S. Office of Management and Budget Circular A-133 29 Summary Schedule of Prior Audit Findings 32 Findings 33 Annual 22 23 3 5 6 7 9 10 11 13 14 15 17 18 19 20 24 26 28 .. '" DAVID O. TATE Certified Public Accountant 112 North Oklahoma, Suite A Mangum, Oklahoma 73554 Telephone: (580) 782-5541 Board of Commissioners Housing Authority of the City of Salina Independent Certified Public Accountant's Report I have audited the accompanying financial statements of the Housing Authority of the City of Salina as of June 30, 1997, and for the year then ended, as listed in the table of contents. These financial statements are the responsibility of the Housing Authority of the City of Salina's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my 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 I 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. I believe that my audit provides a reasonable basis for my opinion. As described in note 2 to the financial statements, it is the policy of the Housing Authority of the City of Salina to prepare its financial statements on the basis of accounting practices prescribed or permitted by the U. S. Department of Housing and Urban Development. These practices differ in some respects from generally accepted accounting principles. Accordingly, the accompanying financial statements are not intended to present financial position and results of operations in conformity with generally accepted accounting principles. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Housing Authority of the City of Salina as of June 30, 1997, and the results of its operations and changes in surplus for the year then ended on the basis of accounting practices referred to above. 3 .' J.. Housing Authority of the City of Salina internal control over financial reporting and my tests of its compliance with certain laws, regulations, contracts and grants. My audit was made for the purpose of forming an opinion on the financial statements of the Housing Authority of the City of Salina taken as a whole. The accompanying schedule of federal expenditures is presented for purposes of additional analysis as required by U. S. Office of Management and Budget Circular A-133, "Audits of States, Local Governments, and Non-Profit Organizations" , and is not a required part of the financial statements. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and, in my opinion, is fairly stated in all material respects, in relation to the financial statements taken as a whole. J~-i od,~ Certified Public Accountant October 29, 1997 4 .~ " Housing Authority of the City of Salina Salina, Kansas Annual contributions contract: FW-1271 (Owned housing) Project number: KS038001005 Statement of Assets, Liabilities, and Surplus-Regulatory Basis June 30, 1997 Exhibit A Assets Cash Accounts receivable: Tenants' Interprogram Debt amortization funds Deferred charges Land, structures, and equipment 189,780.08 24,474.07 16,388.67 67,888.11 5,212.24 6,568,893.42 ---------------- Total assets 6,872,636.59 ---------------- ---------------- Liabilities and Surplus ----------------------- Tenants' security deposits Accounts payable: Interprogram Other Accrued paYments in lieu of taxes Prepaid rents Deferred credits Fixed liabilities 18,673.00 16,413.57 22,910.95 27,742.07 2,541.00 6,020.00 681,396.08 Total liabilities ---------------- 775,696.67 Surplus (Exhibit C) 6,096,939.92 ---------------- Total liabilities and surplus 6,872,636.59 ---------------- ---------------- The accompanying notes to the financial statements are an integral part hereof. 5 ." , .' Exhibit B Housing Authority of the City of Salina Salina, Kansas Annual contributions contract: FW-1271 (Owned housing) Project number: KS038001005 Statement of Operating Income, Operating Expenses, Other Credits, and Other Charges-Regulatory Basis For the twelve months ended June 30, 1997 Operating income: Dwelling rental Interest on general fund investments Other income 157,914.00 2,968.50 22,992.44 Total operating income 183,874.94 Operating expenses: Administration Tenant services Utilities Ordinary maintenance and operation General expense Nonroutine maintenance 46,241.52 513.56 8,900.36 94,012.12 47,360.99 1,993.41 Total operating expenses 199,021.96 Net operating income (loss) (15,147.02) Other credits: Prior years' adjustments affecting residual receipts Operating transfers in 49,429.20 9,116.35 Total other credits 58,545.55 Total operating income and other credits 43,398.53 Other charges: Interest on notes and bonds payable 46,510.16 Total other charges 46,510.16 Net income (loss) (3,111.63) ---------------- ---------------- The accompanying notes to the financial statements are an integral part hereof. 6 ." ,'\ Exhibit C Page 1 of 2 Housing Authority of the City of Salina Salina, Kansas Annual contributions contract: FW-1271 (Owned housing) Project number: KS038001005 Analysis of Surplus-Regulatory Basis for the twelve months ended June 30, 1997 Unreserved surplus: Balance per prior audit Prior audit adjustments recorded in a subsequent period (2,253,285.53) (33,809.06) Balance per books at the beginning of the year Net income (loss) for the year (Provision for) reduction of operating reserve ---------------- (2,287,094.59) (3,111.63) (108,473.24) Total unreserved surplus ---------------- (2,398,679.46) ---------------- Operating reserve: Balance per prior audit Prior audit adjustments recorded in a subsequent period 102,134.16 Balance per books at the beginning of the year Provision for (reduction of) reserve ---------------- 102,134.16 108,473.24 Total operating reserve ---------------- 210,607.40 ---------------- Cumulative HUD contributions: Balance per prior audit Prior adjustments recorded in a subsequent period 3,152,320.77 Balance per books at the beginning of the period Operating subsidy Annual contributions Other adjustments/corrections ---------------- 3,152,320.77 67,380.00 67,888.11 967,444.99 Total cumulative HUD contributions ---------------- 4,255,033.87 The accompanying notes to the financial statements are an integral part hereof. ---------------- 7 .,..... - -...............-.---... , , ' Exhibit C Page 2 of 2 Housing Authority of the City of Salina Salina, Kansas Annual contributions contract: FW-1271 (Owned housing) Project number: KS038001005 Analysis of Surplus-Regulatory Basis for the twelve months ended June 30, 1997 Cumulative grants: Balance per prior audit Prior audit adjustments recorded in a subsequent period 2,746,529.06 Balance per books at the beginning of the period Grants received ---------------- 2,746,529.06 1,406,508.58 Total grants ---------------- 4,153,037.64 Cumulative donations: Balance per prior audit Prior audit adjustments recorded in a subsequent period ---------------- 2,917.79 Balance per books at the beginning of the period Donations received ---------------- 2,917.79 2,821.01 Total donations ---------------- 5,738.80 Cumulative cost of dwellings conveyed to homebuyers: Balance per prior audit Prior audit adjustments recorded in a subsequent period ---------------- (96,271.98) Balance per books at the beginning of the period Dwellings conveyed during the year ------------------ (96,271.98) (32,526.35) Cumulative cost of dwellings conveyed to homebuyers ---------------- (128,798.33) ---------------- Total surplus 6,096,939.92. The accompanying notes to the financial statements are an integral part hereof. ---------------- ---------------- 8 .. Exhibit D Housing Authority of the City of Salina Salina, Kansas Annual Contributions Contract: KC-7015 (HAP certificates) Project number: KS038E002008 Statement of Assets, Liabilities, and Surplus-Regulatory Basis June 30, 1997 Assets Cash Accounts receivable: Interprogram Other Investments Land, structures, and equipment 121,944.96 22,665.49 434.59 22,594.24 15,418.27 Total assets 183,057.55 ---------------- ---------------- Liabilities and Surplus Accounts payable: Interprogram HUD Other Deferred credits-rounding 11,934.86 54,095.00 503.08 1. 34 Total liabilities 66,534.28 Surplus (Exhibit F) 116,523.27 Total liabilities and surplus 183,057.55 ---------------- ---------------- The accompanying notes to the financial statements are an integral part hereof. 9 " Housing Authority of the City of Salina Salina, Kansas Annual Contributions Contract: KC-7015 (HAP certificates) Project number: KS038E002008 Statement of Operating Income and Operating Expenses-Regulatory Basis for the twelve months ended June 30, 1997 Exhibit E Operating income: Interest on general fund investments 4,185.16 Total operating income ---------------- 4,185.16 Operating expenses: Administration General expense Housing assistance payments ---------------- 66,911. 35 16,302.55 493,627.99 Total operating expenses ---------------- 576,841.89 ---------------- Net income (loss) (572,656.73) ---------------- ---------------- The accompanying notes to the financial statements are an integral part hereof. 10 '- Housing Authority of the City of Salina Salina, Kansas Annual Contributions Contract: KC-7015 (HAP certificates) Project number: KS038E002008 Analysis of Surplus-Regulatory Basis for the twelve months ended June 30, 1997 Exhibit F Page 1 of 2 Unreserved surplus: Balance per prior audit Prior audit adjustments recorded in a subsequent period (875,844.38) 43,541.26 Balance per books at the beginning of the year Net income (loss) for the year Interest earned on operating reserve (Provision for) reduction of operating reserve (Provision for) reduction of project account-unfunded Other adjustments or corrections (8,732,303.12) (572,656.73) 2,358.32 397.46 (320,121.25) 0.15 Total unreserved surplus (9,622,325.17) Operating reserve: Balance per prior audit Prior audit adjustments recorded in a subsequent period 103,944.24 ----------------- Balance per books at the beginning of the year 103,944.24 Provision for (reduction of) reserve Other adjustments or corrections (397.46) (2,441.78) Total operating reserve 101,105.00 ---------------- The accompanying notes to the financial statements are an integral part hereof. 11 " Exhibit F Page 2 of 2 Housing Authority of the City of Salina Salina, Kansas Annual Contributions Contract: KC-7015 (HAP certificates) Project number: KS038E002008 Analysis of Surplus-Regulatory Basis for the twelve months ended June 30, 1997 Project account-unfunded: Balance per prior audit Prior audit adjustments recorded in a subsequent period 1,272,383.26 (43,541.26) Balance per books at the beginning of the year Provision for (reduction of) project account 1,228,842.00 320,121.00 Total project account-unfunded 1,548,963.00 Cumulative HUD contributions: Balance per prior audit Prior adjustments recorded in a subsequent period 7,518,709.34 Balance per books at the beginning of the period Annual contributions Other adjustments/corrections 7,518,709.34 570,071.00 0.10 Total cumulative HUD contributions 8,088,780.44 Total surplus 116,523.27 ---------------- ---------------- The accompanying notes to the financial statements are an integral part hereof. 12 '- Exhibit G Housing Authority of the City of Salina Salina, Kansas Annual Contributions Contract: KC-7015 (HAP vouchers) Project number: KS038V001004 Statement of Assets, Liabilities, and Surplus-Regulatory Basis June 30, 1997 Assets Cash Land, structures, and equipment 21,453.12 1,669.83 Total assets 23,122.95 ---------------- ---------------- Liabilities and Surplus Accounts payable: Interprogram HUD Deferred credits 4,591.38 10,496.00 1. 74 Total liabilities 15,089.12 Surplus (Exhibit I) 8,033.83 Total liabilities and surplus 23,122.95 ---------------- ---------------- The accompanying notes to the financial statements are an integral part hereof. 13 ..!:=."""'Ii4f~"l' c _ "_ ~ Exhibit H Housing Authority of the City of Salina Salina, Kansas Annual Contributions Contract: KC-7015 (HAP vouchers) Project number: KS038V001004 Statement of Operating Income and Operating Expenses-Regulatory Basis for the twelve months ended June 30, 1997 Operating income: Interest on general fund investments 916.12 Total operating income 916.12 Operating expenses: Administration General expense Housing assistance payments 12,433.38 753.23 70,252.78 Total operating expenses 83,439.39 Net income (loss) (82,523.27) ---------------- ---------------- The accompanying notes to the financial statements are an integral part hereof. 14 --- - ~-~- '. Exhibit I Page 1 of 2 Housing Authority of the City of Salina Salina, Kansas Annual Contributions Contract: KC-701S (HAP vouchers) Project number: KS038V001004 Analysis of Surplus-Regulatory Basis for the twelve months ended June 30, 1997 Unreserved surplus: Balance per prior audit Prior audit adjustments recorded in a subsequent period (840,564.62) (5.72) Balance per books at the beginning of the year Net income (loss) for the year Interest earned on operating reserve (Provision for) reduction of operating reserve (Provision for) reduction of project account-unfunded Other adjustments or corrections ---------------- (840,570.34) (82,523.27) 248.45 618.11 (72,688.00) (0.34) Total unreserved surplus ---------------- (994,915.39) ---------------- Operating reserve: Balance per prior audit Prior audit adjustments recorded in a subsequent period 7,159.47 Balance per books at the beginning of the year ---------------- 7,159.47 Provision for (reduction of) reserve Other adjustments or corrections (618.11) (177.36) Total operating reserve ---------------- 6,364.00 ---------------- The accompanying notes to the financial statements are an integral part hereof. 15 " Exhibit I Page 2 of 2 Housing Authority of the City of Salina Salina, Kansas Annual Contributions Contract: KC-7015 (HAP vouchers) Project number: KS038V001004 Analysis of Surplus-Regulatory Basis for the twelve months ended June 30, 1997 Project account-unfunded: Balance per prior audit Prior audit adjustments recorded in a subsequent period 279,147.28 5.72 Balance per books at the beginning of the year Provision for (reduction of) project account 279,153.00 72,688.00 Total project account-unfunded 351,841.00 Cumulative HUD contributions: Balance per prior audit Prior adjustments recorded in a subsequent period 562,917.22 Balance per books at the beginning of the period Annual contributions 562,917.22 81,827.00 Total cumulative HUD contributions 644,744.22 Total surplus 8,033.83 ---------------- ---------------- The accompanying notes to the financial statements are an integral part hereof. 16 . , Housing Authority of the City of Salina Salina, Kansas HOME Program Statement of Assets, Liabilities, and Surplus-Regulatory Basis June 30, 1997 Exhibit J Assets Cash Accounts receivable: Interprogram Mortgage notes receivable Investments 149,010.52 12,549.22 59,061. 05 24,000.00 Total assets 244,620.79 ---------------- ---------------- Liabilities and Surplus ----------------------- Accounts payable: Interprogram 18,663.57 ---------------- Total liabilities 18,663.57 Surplus (Exhibit L) 225,957.22 ---------------- Total liabilities and surplus 244,620.79 ---------------- ---------------- The accompanying notes to the financial statements are an integral part hereof. 17 " Exhibit K Housing Authority of the City of Salina Salina, Kansas HOME Program Statement of Operating Income and Operating Expenses-Regulatory Basis For the twelve months ended June 30, 1997 Operating income: Interest on investments 2,799.21 Total operating income 2,799.21 Operating expenses: Administration General expense 1,602.46 584.87 Total operating expenses 2,187.33 Net income (loss) 611. 88 ---------------- ---------------- The accompanying notes to the financial statements are an integral part hereof. 18 Exhibit L Housing Authority of the City of Salina Salina, Kansas HOME Program Analysis of Surplus-Regulatory Basis for the twelve months ended June 30, 1997 Unreserved surplus: Balance per prior audit Prior audit adjustments recorded in a subsequent period 193,211.32 Balance per books at the beginning of the year Net income (loss) for the year 193,211.32 611.88 Contributions Other adjustments or corrections 32,526.35 (392.33) Total surplus 225,957.22 ---------------- ---------------- The accompanying notes to the financial statements are an integral part hereof. 19 Page 1 of 2 Housing Authority of the City of Salina Salina, Kansas Notes to the Financial Statements June 30, 1997 Note 1-The Reportinq Entitv. The agency was created under the provisions of the laws of the State of Kansas. The purpose of the agency is to administer Public Housing Programs authorized by the United States Housing Act of 1937. The governing board employs executives; authorizes contracts of subsidy with the U. S. Department of Housing and Urban Development (Annual Contributions Contract) pursuant to that agency's regulations and statutory authorizations; and causes the agency to construct, own, and operate public housing facilities. The financial liability of the housing agency is essentially supported by the operating and debt service subsidies received under contract from the Federal government. In determining how to define the reporting entity, all potential component units have been considered. Each potential component unit was evaluated using the criteria set forth in Governmental Accounting Standards Board pronouncements. These criteria include, but are not limited to manifestation of oversight responsibility, scope of public service, and special financing relationships. Oversight responsibility is determined by the extent of financial interdependency, control over the selection of the governing board and management, ability to significantly influence operations, and accountability for fiscal matters. Based on these criteria, there are no additional entities which should be included in the financial statements. While the governing body is appointed by the ultimate beneficiary of the agency, it does not approve the budget and is not able to significantly influence operations. Therefore, the Housing Authority of the City of Salina is not a component unit of any other entity. Note 2-Basis of Accountinq. The financial statements of the authority are presented in accordance with a basis permitted or prescribed by the U. S. Department of Housing and Urban Development, and differ from generally accepted accounting principles, in that: A. Funds and activities of the agency are not classified by fund type or account group. 20 , , Housing Authority of the City of Salina Salina, Kansas Notes to the Financial Statements June 30, 1997 Page 2 of 2 B. Government statement, accounts. grants but are are not credited reflected directly in to the the income surplus C. In the event any of the activities of the agency were classified as an Enterprise Fund, no depreciation is provided as a charge against earnings. D. Most of the disclosures required by generally accepted accounting principles are omitted. E. Comparative data is not presented. F. Nearly all expenses are recognized when paid rather than when incurred, and all revenue, with the exception of income from tenants/participants, are recognized when received rather than when earned. G. A statement of cash flows is not presented. H. There is no allowance for doubtful accounts as uncollectible accounts are charged against earnings using the specific charge-off method. I. Inventories of materials and supplies are not maintained. J. Prior year's adj ustments are reflected in the income statement rather than in the equity statement. K. The balance of equity accounts for the beginning of the period is reconciled to the prior audited financial statement balances. L. No budgeted to actual comparisons are presented. M. No combined or combining financial presented. statements are N. The costs of compensated absences are reported in the period paid rather than in the period earned. I 21 \, Schedule 1 Housing Authority of the City of Scllina Salina, Kansas Annual contributions contract: FW-1271 (Owned housing) Project number: KS038001005 Computation of Residual Receipts and Accruing Annual contribution-Regulatory Basis June 30, 1997 Computation of Residual Receipts: Operating receipts: Operating income (Exhibit B) BUD operating subsidy Prior years' adjustments affecting residual receipts Operating transfers in 183,874.94 67,380.00 49,429.20 9,116.35 Total operating receipts 309,800.49 Operating expenditures: Operating expenses (Exhibit B) Capital expenditures: Property betterments and additions Replacement of nonexpendable equipment 199,021.96 1,823.99 281.30 Total operating expenditures 201,127.25 Residual receipts (deficit) per audit 108,673.24 Audit adjustments (200.00) Residual receipts (deficit) per LHA before provision for reserve Provision for (reduction of) operating reserve 108,473.24 108,473.24 Residual receipts (deficit) per LHA (0.00 ) ---------------- ---------------- Computation of Accruing Annual Contribution: Fixed annual contribution 67,888.11 I Less amounts available for reduction of annual contribution: Residual receipts 0.00 I Part II adjustments 0.00 Total reductions 0.00 I I Accruing annual contribution 67,888.11 ---------------- ---------------- 22 \. Schedule 2 Housing Authority of the City of Salina Salina, Kansas Annual contributions contract: FW-1271 (Owned housing) Project number: KS038001005 Schedule of Adjusting Journal Entries June 30, 1997 Account number for audit purposes Dr. Account number for posting to LHA's books Cr. (1 ) Insurance deposits Insurance To record investment 1212 200.00 4510 200.00 in a mutual insurance company. 1212 6010 (2 ) Permanent notes-HUD Cumulative HUD contributions To cancel HUD held 2311 967,444.99 2311 2840 967,444.99 debt per COBRA of 1986. 2840 23 \. Schedule 3 Page 1 of 2 Housing Authority of the City of Salina Salina, Kansas Annual Contributions Contract: KC-7015 (HAP certificates) Project number: KS038E002008 Computation of Annual Contribution Earned-Project Account and Operating Reserve Changes-Regulatory Basis For the twelve months ended June 30, 1997 Maximum contributions available: Maximum annual contributions authorized Pro rata maximum annual contribution applicable to a period of less than twelve months 810,460.00 79,732.00 Maximum contribution for the period Project account balance at the beginning of the year, as adjusted 890,192.00 1,228,842.00 Total annual contributions available 2,119,034.00 Annual contribution required: Administrative fee Audit fee Housing assistance paYments 79,308.00 1,320.00 493,628.00 Total funds required 574,256.00 Project receipts other than annual contributions 4,185.00 Total project receipts other than annual contributions 4,185.00 Total annual contributions required 570,071.00 Project account change: provision for project account (Exhibit F) 320,121.00 ---------------- ---------------- Annual contribution earned 570,071.00 ---------------- ---------------- 24 " Schedule 3 Page 2 of 2 Housing Authority of the City of Salina Salina, Kansas Annual Contributions Contract: KC-7015 (HAP certificates) Project number: KS038E002008 Computation of Annual Contribution Earned-Project Account and Operating Reserve Changes-Regulatory Basis For the twelve months ended June 30, 1997 Operating reserve changes: Operating receipts: Operating income (Exhibit E) Interest on operating reserve Annual contribution earned 4,185.16 2,358.32 570,071.00 Total operating receipts 576,614.48 Operating expenditures: Operating expenses (Exhibit E) Capital expenditures 576,841.99 169.95 Total operating expenditures 577,011.94 Net operating receipts available per audit Audit adjustments (397.46) Provision for operating reserve (397.46) ---------------- ---------------- 25 '. '. -- Schedule 4 Page 1 of 2 Housing Authority of the City of Salina Salina, Kansas Annual Contributions Contract: KC-7015 (HAP vouchers) Project number: KS038V001004 Computation of Annual Contribution Earned-Project Account and Operating Reserve Changes-Regulatory Basis For the twelve months ended June 30, 1997 Maximum contributions available: Maximum annual contributions authorized Pro rata maximum annual contribution applicable to a period of less than twelve months Maximum contribution for the period Project account balance at the beginning of the year, as adjusted Total annual contributions available Annual contribution required: Administrative fee Audit fee Housing assistance paYments Total funds required Project receipts other than annual contributions Total project receipts other than annual contributions Total annual contributions required Project account change: Provision for project account (Exhibit I) Annual contribution earned 26 154,515.00 154,515.00 279,153.00 433,668.00 12,368.00 122.00 70,252.78 82,742.78 916.12 916.12 81,826.66 72,688.34 ---------------- ---------------- . 81,826.66 ---------------- ---------------- .... Schedule 4 Page 2 of 2 Housing Authority of the City of Salina Salina, Kansas Annual Contributions Contract: KC-7015 (HAP vouchers) Project number: KS038V001004 Computation of Annual Contribution Earned-Project Account and Operating Reserve Changes-Regulatory Basis For the twelve months ended June 30, 1997 Operating reserve changes: Operating receipts: Operating income (Exhibit H) Interest on operating reserve Annual contribution earned 916.12 248.45 81,826.66 ---------------- Total operating receipts 82,991.23 ---------------- Operating expenditures: Operating expenses (Exhibit H) Capital expenditures 83,439.39 169.95 ---------------- Total operating expenditures 83,609.34 ---------------- Net operating receipts available per audit Audit adjustments (618.11) ---------------- Provision for operating reserve (618.11) ---------------- ---------------- 27 ", " Schedule 5 Housing Authority of the City of Salina Salina, Kansas Schedule of Expenditures of Federal Awards-Regulatory Basis for the twelve months ending June 30, 1997 Federal grantor: Program title: U. S. Department of Housing and Urban Development Public and Indian Housing Housing Assistance Payments Comprehensive Improvement Assistance Program Total expenditures 28 CFDA numbers Amount expended 14.85 14.855-14.857 1,505,664.00 651,898.00 14.852 36,112.39 -------------- 2,193,674.39 -------------- -------------- \ ". .. '.. DAVID O. TATE Certified Public Accountant 112 North Oklahoma, Suite A Mangum, Oklahoma 73554 Telephone: (580) 782-5541 Report on Compliance with Requirements Applicable to Each Major Program and Internal Control Over Compliance in Accordance with U. S. Office of Management and Budget Circular A-133 Board of Commissioners Housing Authority of the City of Salina Compliance I have audited the compliance of the Housing Authority of the City of Salina with the types of compliance requirements described in the "U. S. Office of Management and Budget Circular A-133 Compliance Supplement" that are applicable to each of its maj or programs for the year ended June 30, 1997. the Housing Authority of the City of Salina's major federal programs are identified in the summary of auditor t s results section of the accompanying schedule of findings and questioned costs. Compliance with requirements of laws, regulations, contracts and grants applicable to each of its major federal program is the responsibility of the Housing Authority of the City of Salina's management. My responsibility is to express an opinion on the Housing Authority of the City of Salina's compliance based on my audit. I conducted my audit of compliance in accordance with generally accepted auditing standards; the standards applicable to financial audits contained in "Government Auditing Standards", issued by the Comptroller General of the United States; and U. S. Office of Management and Budget Circular A-133, "Audits of States, Local Governments, and Non-Profit Organizations". Those standards and U. S. Office of Management and Budget Circular A-133 require that I plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the Housing Authority of the City of Salina's compliance with those requirements and performing such other procedures as I considered necessary in the circumstances. I believe that my audit provides a reasonable basis for my opinion. My audit does not provide a legal determination on the Housing Authority of the City of Salina's compliance with those requirements. 29 ..:...J.i......______ _ \. ... .... As described in item 063097-01 in the accompanying schedule of findings and questioned costs, the Housing Authority of the City of Salina did not comply with statutory, regulatory, and contractual requirements that are applicable to its Public and Indian Housing program.. Compliance with such requirements is necessary, in my opinion, for the Housing Authority of the City of Salina to comply with requirements applicable to that program. In my opinion, except for the noncompliance describe in the preceding paragraph, the Housing Authority of the City of Salina complied, in all material respects, with the requirements referred to above that are applicable to each of its major programs for the year ended June 30, 1997. Internal Control Over Compliance The management of the Housing Authority of the City of Salina is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to federal programs. In planning and performing my audit, I considered the Housing Authority of the City of Salina internal control over compliance with requirements that could have a direct and material effect on a major program in order to determine my auditing procedures for the purpose of expressing my opinion on compliance and to test and report on internal control over compliance in accordance with U. S. Office of Management and Budget Circular A-133. I noted certain matters involving the internal control over compliance and its operation that I consider to be reportable conditions. Reportable conditions involve matter coming to my attention relating to significant deficiencies in the design or operation of the internal control over compliance, that, in my judgment, could adversely affect the Housing Authority of the City of Salina I s ability to administer a major federal program in accordance with applicable requirements of laws, regulations, contracts and grants. Reportable conditions are reported in the accompanying schedule of findings and questioned costs as items 063097-01. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that noncompliance with applicable requirements of laws, regulations, contracts and grants that would be material to a major federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. My consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that might 30 .. \0 . ~ ~ be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, I believe none of the reportable conditions described above is a material weakness. This report is intended for the information of management, federal awarding agencies and pass-through agencies. However, this report is a matter of public record and its distribution is not limited. J --.' J /). d-.~ Certified Public Accountant October 29, 1997 31 .~~ ~ Housing Authority of the City of Salina Salina, Kansa3 Summary Schedule of Prior Audit Findings June 30, 1997 063096-01-lnsufficient bonding insurance. increased to $75.000. The bond has been 063096-02-lncomplete board minutes. The minutes of the meetings of the governing body have been reconstructed and are now complete. 063096-03-lmproper handling of signature stamp. The person whose signature is on the stamp has retrieved it and maintains it in his possession. 063096-04-Failure to development expenses. all disbursements. maintain documentation for ClAP and Properly approved original invoices support 063096-05-lnsufficient accounting for ClAP and development. The accounting records for all programs are adequate. 063096-06-Failure to provide annual accounting. accounting was prepared for the HOME program. An annual 063096-07-Failure to establish reserve account. A separate account in the amount of $20,000 has been established. 063096-08-Payroent of housing authority operating expenses from home ownership funds. These funds have been reimbursed to the HOME program. I I I I I I 32 33 t-(" .. Housing Authority of the City of Salina Salina, Kansas Findings June 30, 1997 1. Finding 063097-01. A. Owned housing program. B. CFDA number 14.850 C. U. S. Department of Housing and Urban Development. D. Kansas statutes, regulations promulgated by the U. S. Department of Housing and Urban Development, and cooperation agreements between the housing authority and the City of Salina and other taxing authorities require an annual payment in lieu of taxes be made as soon as possible after the end of the fiscal period. E. Payment in lieu of taxes have not been paid for the period ending June 30, 1996, in the amount, of $12,520.75. F. No questioned cost is involved. G. It appears this may be an isolated occurrence as all prior years have been paid. H. Failure to make this payment is a violation of Kansas statutes, program regulations, and cooperation agreements, and may cause a fiscal hardship on the taxing authorities. I. As soon as possible after the end of the fiscal year, the balance due the taxing authorities should be paid. The amount is reflected on line 60, Page 2, HUD-52599. J. This amount has been paid and a voucher copy of the check has been provided to the auditor.