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Home My WebLink About; ; 1973-74 Audit Report; 1974-10-29, . � . � , . �� . .t �.�..__..__,_..�.._.._,,._�_.___......_._.. +.- __�•---- - ' --.__-_.__ . i . � � . a � ' } tY7 0�4 � � _�� g� DEPARTMENT OF HOUSING AND URBAN RHVELOPMENT , LOS ANCE ES �REA OFFiCE • �+,b I�I�� e° ?500 WIISNIRE BOULEVARD, 60S ANCElES, CALIFORNIA 90�57 ; �+a» + , i xsoron ix hiAR •$ 1975 ♦SO dald<n Gnle Arenun � - P.O. Dei J6007 IN R6PLY NGFCR TO! , Sm PnneAco, Calttamt� 9110I 9.2A ?dr. R. J. Coles, Executive Director � Housirig Authority of the City of Caisbad . " 2777 Jefferson Street ` Carlsbad, California 92008 Dear Mr. Goles: , Subject: Audit Report on the Hou�ing Au� o� ity of the Cit�� of Carl�bad Enclosed for your infarrr.atian and oftic3al use only is a copy of the IPA Report on Audit for the progxam anci period identified above . A copy of this letter and of the enclosed audit report is being sert to tixe chief of�cial of }our lceality for information. The IPA Report on Audit has not been subject to full administrative , xeview �ay this office. Upon comp2etion of that administrative review, we will notify you oE the administrative determinations �n which you will - • be xequired to talce action. Any additianal comment, which your , • agency may have submitted priar to such review will be given full - � eonsideration. Ii t2:exe is any way in. which we can help you in evaluating this report • or in dealin� wit�`� its findings, please contact the Housuig Management Of$cer for your area. Si�ncerely, � � ...+�_� _,,.--� �� ' � oland �, Camfi�rl, x. Ar�ea Airect.or �nnlosure � �-, ,.. • --�` ' ':E'a:,�:�+�;; � .: . �'; �'�.�i .t t�: ' 0 � � HOUSING AU'PHORITY OF TiYE CITX OF CARLSBAD FINAtdCTAT, STAiBb1EIJTS iJiTH RRPORT QN EXANINATION BY CERT�.�'IED PUBLIC ACCOUNTANTS Jt7I�TE� 30, 1974 �. � . s� 0 4 f � Y G � � , � � • � + � . IiOUSING AUTH012ITY OF THE CITY OF CARLSBAD ` June 30, 1974 TAF3LE OF CONTENTS � • ' Page . Number � ACCOUNTAN'PS' REPORT �' = FI1�7ANCTA% STATEMENTS Balance Sheet 2 Statement df Income Ar,d Expense 3 S�atement OE Cfiange� In I'und Balance � Not�s To Financial Statements S COMMENTS AND SWPLEMENTARY Tt3FORMATION � Camputa�ion Qi Maximum Fixed Annual 6 Contributions (Schedule 1) Com�utations O£ Deficit And Basic • Annual Con�ributians Earned 7 , (Schedule 2) ' Analys�is Of Genera], Funds Available For Reduc�ions OE Annual Con�ribu�ions g (SchednlQ 3) Cammen�s On Compliancs and znternal Con�rol 9 Find3.ngs And Recommenclations 10 - 11 �ournal Entries 12,- '3 . � � � tW{ qDRNpGRA.11pt5•�93G .Mwca w.c�ua,c.Rw /MN �.LVRMS.i.RA. MfILi► M. NOITMAM�� C• RA. W7NO.KICNS�C.BA. p01UlD M.I[1IRSON.C.11A DONAID C.CAIIANAN� C,► A. L.►LiCN SCNCN[R,C.AA. xmM �au�tcc,e.an. �' ,' JnMEs M. GAISER MihOCD wITN I71EHL, EVANS APlD COMPANY CCRTIFIGO PU�1l.IC ACCOUNTANS3 t066 ROOSCVCLT STACCT CARlSDAO�CALif�RNIA 07000 (714� 7�A•'1�17 October 29, 1974 excep� tAr No�a 3 which is as af December 23, 1974 ACCOUNTRNTS' REPORT otHcn brr�ecs �r: fANTA ANA�CAl110PNIA fAMA NAqM� WLIIQRNU TiiE POAE2D OF CODfMISS20NGRS REGIONAL INSPECTOR GENERAT. I'QR AUDIT ii0U52NG AUTHORIZ"X OF TFiE DEPI�RxMENT OF FiOUSING ANll UP '1N CITY OF CARLSHIID DEVELQPt�'.EN'P Carlsbad, CaliEornia San Franci.sco, California � We have examined �ha balancca sheet a£ �hQ FiOUSING AUTHORxTY OI' THE CITX OF CARLSPAD as of �une 3Q, 1974 and the zelated �tatements v� incomc an8 expensa and changes in fund balanco For the thirty-six month� then ended. Qur exFun�nation wus made in accordance with generaZly accep�ed auditing a�andards and the a�rdit requireme�ts set �oxth in the Department Q� Housinq and Urban Development Audit �Guide for the Law-Rent Hausing Pr�gram t�nd accorslingly incl�rded sueh tests aE the accnuntin� records and suc�i o�her auditing pxo- caduros as we consiciexcsd neces�ary in the circamst�n�es. In our'opinion, such Einunci�� tatements gre�ent fairly the �3.nanc{.al position of �he HQUSING AtJ'�Ht?RITX O� �iE CITX OF CAItL59FiD at �una 3Q, 3.97� and �he rQsults c£ ,its aperatians iaz the thirty-s�x months ti:en ended, in canformity with generally ACCC�2tC� accountinct principJ.es appliasi on a busi� cansiste»t with that of tl:e grecerading period and w3th HUD pxocedures. Tha £inancia]. statements ref�rxed ta in tha greeeeding paragragh havQ beei� rev,ised and refssund an�i supazsedc our rep4rt dated Cctobor 29, �,97� as e.�cplain�d a.n Na�e 3, to �he EinAncia], s�atements. Our examinatfon also included tha m�company3ng comman�� unc3 �upplem�n*t�ry information in aceardancc with thc requirwme�nts of khe FND Aud3fi Gu3.dy fox khe T�ow-Ren� I3oasing Pzogzam. Tha cammenta ana sup�lemental inEarmation hava been subj�cted ta th� tea`a and other Audi�ing pracedures appli�d in thc examinakian o£ tho �inancial �tate- mQn�s me�n�ionGd ai�ave and, in our ogS.nion, when ccansicic:red in r�elation �o �he t�asia financial statementa, �ar�sents Pairly in nl� material xcspcct� �he infor�„_�ion shown �hercin. , r �LL r��:k� ac�� Cc�� f'� U r «�,_ , d � . / � � HOUSING AUTFIORITY OF TFiE Ctii OF CARLSIIAD ` BAT.ANCE SH�ET June 30, 1974 ASSETS CURREI3T ASSETS: Cash ` investments. at co�t (No�e 1) Accrued interes� receivable (No�e 1), Tatal Current 2lssets .FiXED ASSETS, at cost (Note 1) TOT�z, nssE�rs LiAbII,IT2�� AND FUND BALANCE CURRENT LIABILYTZE3: Accounts payable, vendozs Accoun� �ayable, HUD �.'enunts" secur3,�y deposi�s T.otal �urren� Li,�bili�ies FUND BAT�ANCE , TpT}1I, LTABTI�ITIES AND FUND BALANCE $ 19,311 76,220 364 95,895 a.aas .y � ��`�3 $ 688 63,178 6,055 6�,921 3Q.222 �S.�,Q+. `� Ser� ac;companying accountants' repor� and no�es Co financxal sta�ementrs. 0 _2- � 0 � 9 • � � '• � , + ...... __�.�...-... '_" • HOUSYNG At3',CHORITX OF TFiE CITY OF CARLSBAD , 5TATr^.M�NT OF INCOME AND EXPENSE For thQ thirty-six months ended �une 3L, 1974 � 197 2 197 3 197 A_ TaTAL OPER2�TING INCOME: Uwell.ing rental $ 13,2I2 $ 49,944 � 65e764 $ 128,920 Tnt�rest earned 242 791 3,109 4,].42 Miacollaneous - 90 360 450 Total income 13.A5a 50.825 69,233 133,512 OEEt2ATING EXPENSES: Rent to lAs,ors 45,922 167,447 193,76Q 407,129 Salaries 23,290 22,608 19,848 65,?46 kinployea beaefits 2,863 3,018 3,366 9,187 Sundry expenses 2,OQ9 2,365 2,972 7,346 Tenant services - - 6,000 6,Q00, T�l�phane 614 606 748 1,9G8 Trave3 168 207 1,035 1,410 . Ordanary maintenanee and op�ra�ion , - 32 7.,u82 1,714 Lagal 3Q0 - 5 305 General expense - 196 134 280 Memberships - 90 149 239 Fublications 29 32 10 _ 71 , To�a]. Expenses 7S.1Q5� 196,551 229,649 501.395 fT�"T {LOSS} .i�.6,�7� ) $( h�],5�726) SslFiny]�f) � 36 88?) 0 0 Sea accampan�ing accountAnts' report and notes ta ii�ancial �t3+emQnts. . -�- u . • ■ t� c; �. � m �" , , � • See Accompany+.ng accauntants' rcport and notes to Einanc.ial statements. . _a.. `. � � . , ,, ' HO�SIN3 AUTFTORITX OF THE CIT'I OF �ARLSBI�D S'P7ITEMENT OF CH71I3GE5 IN FUND E3A.LI�NCE � Foz the �hirty-six months ende3 �ur.e 30, 1974 UNF2ESERVED ST,TRpLUS: Deficit, July l, 1971 rist loss for the twelve month� ended Jur�e 30, 1972 Net loss for the twe.lve �nonLhs ended June 30, 1973 Net los� for th� twelve montha ended Jsne 30, 1974 Provisaon far operatiny reserve £or twelve month� ended June 30, 1974 Bal�ance (Aeficit), June 30, 1974 RESERVED SURPLUS - nPERATItdG ItES.:RVE: Prcavfsxon for cperating reserve for twelve tnonths ended Jura 3Q, 1974 Aalance, June 30, 19�4 CUI.UI,ATIVE CON'PRIBUTIONS: ` $asic annual contra.butiion ior �he twelve months $ ill:l48) (61.741) (145,726) (160,416) {25.974) (405 L005) 25.R74 25,974 endsd JunQ 3Q, 1972 � 34,772 Basic annual con_ribution for the twelve months endnd June 30, 1973 3,56,299 Basic annual contribu�ion fcr ths twcslve montys ended June 30, 1974 ].A2,025 Balance, June 30, 1974 333,�96 CUMUI,i1TIVE QPERATING SUBSIDTES: Oparati•ng subszdy £or �he twelve manths en�]ed �una 3U, 1,973 34,576 Opera�ing subei,ay Eor the twelve mon�hs ended June 30, 197�1 �31,581 Halance, June 30, 1974 76,157 FUND B1;,,71NC:., JUt;`5 30, 19"4 , ^�,�3�22� � � . . _._._. _ ___ _ . r .. _ ._ . ... , , HOUSING AUTFiORITY OF �rtE CiTY OF CARLSBAD . NOTES TO FINAL3CTAL �TATEMEII'PS - 3une 3Q, 1974 Z. StIN4f71RY OF SIGNIFICANT ACCOUNTx23G POLxCIES: (a) 7`he Authority has entered into an annuaY contribufiions contract (SF - 436) with the United States Government � � to provide leased housinq for �amiliPs of low income. Z'he contract, subject to vazious restrict�ons, provides for Government rent subsidins at varying rates for :�ous:.ng leased bx the Authori�y and ren�c�i to low- income families. (b) R'he Authority uses a m�+dified accrual system of £und accounting with revenues and expenses general.ly l�eing xecorded on the accrual basis except for tenant rental inaome which is recorded on the cash basis. � (c) Investments are s.tated at cost and consist oE short- term Time Certificates ot reposits. (d) Fi�:ed assets aze recorde@ at cost. �epreciation is nnt pxovided �n fixed assets. " 2. LEASE AGREEMENTS: ' The Authori.ty has entered into various lease agrsemants to ' ' prov�dQ suitable hcusing for low-income Eamilies, These leases are for term5 of from 12 to 60 months. 3. �REVIOUS REPORT: , � Z'hese £inancial s�atements supersede the financxal statemAnts pxeviously da�ed October 29, 197�. Capital exgenditures in the amount o£ $ 913 have bQen rec?a�sitied from AccounC Payable, Ht7D �o Fund Balance. Presentation oE the 5tatement oP Changes in Func1 Balanc�: has beeu expanded to show the vari.ous aetail 3urglus accnunts comprising Fund Balance and the Gompu�ation oF Deficit (Sc'hedule 2? has been revised to include one column far each Ei3cal year. Additiox�ally, an Analysis oE General Funds A��uiluble for Reductions oE Anuual Contributions (Schedule 3) has benn prcvided. The ne� efiec� aE the above revisions, which were requested by FIUD, i� to increase Fund Balance by $ 313 and de- cre�se A�coun� Payable, HUD by a like amaunt as of June 3U, 1974. � SQe accompanying accoun�an�s' report. . -5- 0 0 � � <. , • j � . ..__ . _ . � e Y _ �_ _ .�.e�.+.. - — A • � SCHEDULE 1 ° �• iiOUSING AUTiiORITY OF THE CITY OF CARLSBAD COt*tpUTATION OF MAXIb1UM FIXE� ANNUAL CONTRIBUTTONS ' � • LEASED HOUS3`7G For the �hirty-six mbnths endcd June 30, i974 . . DAILY RATE OF NUMBER OF NiP.XIMUM FTXED ANNUAL UNIT DAY.ri FIXEA P.NNUAL SI2E OF UNIT CON'i'RI}3UTTON UNDER LEASE COIdTKIBUTION For the tw�lve months ended June 30, 1972: One bedroom, elderly $ 3.93973 2,55G $ 10,070 Two bedroom 4.37808 996 4,361 Three hedroom , 5.25479 1,799 9,453 Four bedr�om 6.56712 1,658 10,888 , 34.792 For �he twelve mont'hs ended June 3Q, 1973: � One bedroom, elderly � 3.93973 12,896 50,807 One bedroom 3.50137 336 1,176 'it+t� bedroom 4.37808 3,825 16,i46 . Three bearoom 5,25479 5,717 30,042 Four bedroom , 6.56712 8,760 57,528 - 1�6.299 For bhe twaelve months ended June 30, 1974: � ` One bedroom, elderly 3.93973 13,993 55,129 One bedroom 3.501�7 973 3,407 �t,+o bedroo.�� 4.378�8 6,050 26,=�87 Three bedroom 5.25479 6,9&7 36,715 Four k�edroom 6.56712 8,760 57�528 ` � • , 179,266 � DIAXIMUM FIXEU ANIv'U�1L CONTRTBUTIONS � 370�337 5Qe accompanying accountants' report and r�ates to financial statements. -6- , 0 0 , v , � � � � .' ` . �• scHsnuz.� 2 . , HOUSING AUTHaRITY OF THE CITY OF CARLSBAD CO.�UTATION OF DEFICIT AND BASIC ANNUAL CONTRTBUTIONS EFIR:TED For the �hirty-six months ended June 30, 1974 1972 1973 1974 Maxamum Fixed Annual Contribution 34 7 2 S 156�299 � 179,266 Net Loss For Period $ (61,741) $ (145,726) $ (160,41fr) Capi.tal Expenditures - - (313) Deficiency In Reszdual . ' Receipts At End of Pre- ceding FiscaZ Year � - i42.Q52) - 7:hcrease in Maximum Allowable Operating Reserve (2,050) (19,200) (22,877) Opexating Subsidy - 34,576 41,58I Total Deficit � 63 ) ,S�(1,�2.402) 3114�.025) SXSIC ANNUAL CONTRISUTIONS S 3�,�.772 3 7�5�6.,299 s,S�l 7..025 See accampanyinq accosantants' repert and notes to financial statements. 0 . �%" � � � � r , ^ , � � . ' / � , . ,..- - � sr.xFDvz� s + , HOUSIPIG AUTHORZ�'7C OF THE CTTY OS CARLSB.AD At7ALYSIS OF GENERAL fiUI3DS AVAILAIILE FOR REDUCTIONS p� ANNUAL COi3TRIBUT�ONS June 30, 2974 ` CASH AND OTHER ASSETS: $ 1g,311 Cash , ' ' Inves�ments, at cost 76,220 . Accrued in�erest recexvable 3F4 TOTAL Q� -� LZABTY,iT=ES AND FtESERVE: 688 Accounts payable, vendo::s $ 63,178 Accaunt payable,,HUD Tenan�s' security de�:osits _ 5,055 � Operating resarve • , 25,974 " TOTAL -- S 9-� See accompanying accauntants' report and notes to finanaial statements. , � � � � ' ' ..g.. .1j 1 � � . ` I y. , ' _ _�.., _ .___. `. _ . $OUSING AUTFIOFtI2Y OF 'i'iiE CITY OF CARLSi3AD �OMMENTS ON COA'IPLIANCE AND INTERBiAL COIQTROL June 30, 1974 � Based on our tests of transactinns and examination of rec�rds, we believe that the IiOUSING AUTHORITY OF TIiE CITY OP CAI:LSI3AD has complied with the iollowing; (a) The financial terms and,conditians of the HUD contract. , (b) R'he regulations, policies and procedures prescribed by the Department reyarding the Low-Rent Housing Program. (c) 2'he tinancial regulations and procedures prescribed by management a:�d those oi its governing board. As a part of our examination, we reviewed and tested the Authority's system of internal accountzng control to the extent we considered nec�ssary to evaluate t"he system as required by '" generally acceptecl auditing standards. Under these standards the purpose of such evaZuation is to establish a basis for reliance � thereon in 3etermining the nature, timing, and extent of o�her auditing pzocedures that are necessary �o� exgxessing an opinion on t2�e financial statements. Additionally, our examination in- cluded procedures necessary in our judgment to deternine compliance with contractual tezms and conditions and regulations, policies, and procedures prescribed by HUD and by management and the gov�rning board o� the Authority. • In connection with our examinat3.on, we noted certain matters _ regarding the Au�hority's system of accountinq procedures and internal con�rol which we are presenting under our findings and recommendations which £ollow. Inasmuch as our examinatian was not in�ended to be a detailed review of all systems and procedures, these comments shoul�l not be considered ail inclusive of the areas where impravements might be achieved. ' See accampanying accouni:ants' repor�. � � -9- ' 0 , � � , . , , HOUSING AUTHORITY Or THE CIiY OF CARLSIIAD ' FINDINGS AND FtECOMMENDAT�ONS � , June 30, 1974 . The folZowing findings were discussed with Mr. Robert J'. Coles, Executive Director, during the course of thE audit and at a conference held October 28, 1974. • Cash , • Ren�al receipts are presently retained in an envelope in a desk drawer for as long as a month before being deposited in �he bank. In order to better safeguard Housing Authority Funds, we recommend that all receipts be promptly deposited in the bank and that any ieceipts on hand be kept under lock and key. During our examination it was noted that the FIouszng . Authority �s currently combining its funds with iunds from the City of Carlsbad to purcnase Time Certificates oF Deposi:t recorded in the name of the City. This , practice provides a higher interest rate but transfers control of Housing Authority Eunds to City oEEicials. If it is the intent of the Housing Authority Commissioners to allow tl�e City Treasurer to invest Hou:;ing Authority funfls, formal appzoval should be enactEd,and documentation should be created to secure the Housing Authcarity's funds. • . 7.'he Execu�ive Airector has stated that bank deposits will . be_made promptly a�,� zeceipts will be kept under lock anri key. �Approval oE the Board oE Commissioners will be sought to allow the City Treasurer to invest Housing Authority funds " and a method of securing the Housing Authority funfls will be �aught if the approval is ob�ained. Tenan�s' Securit� Deposits To insure �hat the City Finance Department maintains an accura�e account of tenants' security deposits, we re- ' . commenfl that an updated lisi: of tenan�s and their related security depasi� be forwarded on a regula� basis tay the , Housing Authority �o the Finance Director. Tl:e Executive Director has �tated that this list will be prepared quarterly ttnd forwarded. ' D3sbursemen�s ' To fmprove internal contr4l ovez the disbursement of Iiousing Authority funds, we xecor,vnend tiiat once a disbursement is made, a13. supportiing documents should be effectively cancelled ' to prevent their possible re-use as support �or future paymen�s. ��ea accompanying accountan�s' repor�, » . -10-• . __—___ , � � � r� • _„ _- ' . 1 0 ' �iOUSING AUTHORI�Y OF TFiE CITY OF CARLSBAD � ' k'INDINGS AND RECOMMEiJDATIONS � • , June 30, 1974 (Continued) Xnsurance Coveraae ' � It was noted that insurance coverage was not in effect - in�the event of an outside robber,y. Also, one employee ts not covered undex the fidelity bond. We recommen3 that � coverages be obtained in these instances to comply with HUD requirements. The Executive Director has statad that this coverage will be provided. T'he Authority's fidelity,bond and of�ice contents coverage was not �:ontinuous �3uring the period. Fortunately, no losses were noted as having occurred during the period. We recommend that insurance coverage be continually reviewed so that no . lapse in coverage occurs. 1�ccountinq Reco�ds , With the amendment on June 25, 1974 to the Housing Authori.ty's contract creating a new project (CAL 77-2), v�e noted that tha accounting records sixbsequent to the date of the amend- ment have not been kept in accordance with Subsection I, SectSon l, Part l, of the Aanual Contributions Contrac� for , Leaszng Private Accomodations. We recommend that the books of account and records of the Local Authozity be maintained in a manner that wi1.1 at all times show the Operating Recsipts, Operating Expenditures, Reserves and Residual Receipts for - th� Project separate and distinct,Erom all othex Projects of the Local .Authority. • The ratecutive Airectur will meet with the Finance Director of the City oE Carlsbad to establish procedures Eor the main�aining o� separa�e records. Annual Statements To H'UD T� caas noted that computation oi tkie Maximum Basia Annual Contribution, Form 52981, and the Provision E..r Operating � Reserve, Form 52599, were not always prepared in accorc�ance with HUb rcquirements. The Executive Director has amended the preuiously �ubmitted figures and will file the amended cc�pies with FIUD. , See accompanying accountan�s' rejaort., . -11- 0 0 0 . , � � I� ' �� __ �__ _ .. , , HOUSING AUTHORITY OF THE CITY OF CP.RLSBAD � iJ0l3RNi1L ENTRIES ` f ,7une 30, 1974 �ggY� CREDIT ACCCUNT NUMBER �l� Security Deposi� Fund $ 1•98 .�,9 1114 $ 33-25 Cash � .99 2114 Tenants' Security Deposits . - To correct posting of dis- bursements at Sep�ember 30, 1973 and to correct general journal voucher • No. 12 � 2') ' Awelling Rental 26.00 33-3000 26.00 33-25 Cash To record creck returned by � � bank''�ecause oE insu�Eicient . Eunds , (3) 686.43 1114 Security Deposi� Fund ��106.43 � 33-3000 Dwelling Rentai l,1U6.43 2�� Tenants' Security Deposits 6g6.43 33-25 Cash ` � To adjust security deposit • �" � fund and tenants' secur- _ ity deposit accounts to , aatual balance at June � ' 30, 1.974 � (4) 364.35 33-31 Aacrued Inter�st Receivable . 35�}.35 33-21 Interest Income • To record accrued interest � receivable due at June 30, 197� , . � t ` 5, Cash On Hand 5►��8'5�1 33-25 �,77g.5A 33-300t� Dwelling Ticn�al To record undeposi�ed ze- ceipts a� June 30,�197� 0 0 0 "12" ,