The URL can be used to link to this page

Home My WebLink About; ; 1975-76 Audit Report; 1977-01-17� '-�'" FiOUSING AUTHORITY OF THE CITY OF CARLSBAD ; FINANC.tAL STATEMENTS Tr�TITFi REPORT 4*?kw�a�,rNamrnN �3Y*,CF.itTIFiED PU87+IC ACCO�ITNTANTS �'une 30, 1976 DIEHL. EVANS AND COMPANY GViTIFIlO PUBLIC ACCOUNTANTB 2980 ROOBEVlLT STR�LT CARL88AC� CAUFORNIA C i�' µ•' • e .._ '_ HOUSINC AU'PHORITY OF THE CITY OF CARLSBAD June 30, 1976 TABLE OF CONTENTS ACCOUNTAi�I'I'S' F�;PORT FINANCIAL STATr'�'IENTS Balance S�eet Statem�nt of Income and Expense Sta�ement of Changes in Fund Aalance Notes �o F'inancial Statements COMMENTS AND SUPPLEMENTARY INFORMATION Computation Of Maximum Fixed Annual Contribu�ions - Leased Housing (Schedule 1) Computatii.ons Of Deficit And Basic Annual Contributions Earned (Schedule 2) Analysis Of General Funds Available For Reductions of Annual Con�ributions (Schedule 3) Comments on Compliance and Iaternal Control Findings and Recommenda�ions Pr�or Audit Repcx�� Findings Jourr,al Entries page Number 1 2 3 4 5 6 T 8 9 10 11 12 - 13 1 3 r [tUS C OIfN4C.P A,U9t3•�956i OqYN B,CVAHS.C.P.A. ONIU.� N.NOLiKAMP, C P.A. W�N 1S.PCTCRS.C.RA. 09NAL0 N.P[TLFSON,C o A. OONAtO C,CACCANAN,C V A �,►(tCR SCHCNER,C.P.A, JONN A,PAABCR6.C,P,A DIEHL. EVANS AND COMPANY CERTIFIED PUOLIC ACCOUNTANTS 2965 ROOSEVGI� 3TRECT CARLSAAO, CAIIfORN1A 92008 (711) �29`2i47 �71�5 71�•4411 January 17, 1977 ACCOUNTANTS' REPORT THE BOARD OF COMMISSIONERS HOUSiNG AUTHORITY OF THE CITY OF CARLSBAD Carlsbad, California OTM6R O�F�CES AT: 1910 NORTH OU511 57REET SANTA ANA, CALIFORNIA (714� S42 • 4�30 �OS EAST MAIN STiiEET SANTA MARIA,GALIFORNIA (6031 923• 2579 IOE4 6qAN0 AVENUE ARAOYO 6RANDE�CAl1iORN1A (BOS) 409•33�8 REGION�L INSPECTOR GENERAL FOR AUDIT DEPARTMENT OF HOUSIr"3 AND URBAN DnJELOPMENT San Fra:�cisco, California We have examined the balance sheet of the HOUSING AUTHORITY OF THE CITY OF CARY,SBAD as of June 30, 1976 and the related s�atements ef income and ekpense and changes in fund balance for the twenty-four months then ended. Our examination was made in accordance with geneially accepted auditing standards and the audit requirements set forth in the Department of Housing �snd Urban Development Audit Guide for the Low-Rent Housing Program and accnrdingly included such tests of the accounting records and such other audi�ing pro- cedures as we considered necessary in the circumstances. In our opinion, guch financial statements present fairly the financial position of the HOUSING AUTEiORITY OF THE CITY OF CARLSBAD at June 30, 1976 and tY�e results of its operations for �he twenty- four months then ended, in conformity with generally accepted accounting principles applied on a basis con�istent with that of the preceding period and wii:h HUD proceclures except for the change, with which we concur, in the method of acco��nting for receivables as describP9 in Note 1 to �he finsncial statements. Our examination also include3 the accompanying comments and supplementary information in accordance with �lie requirements of the F�UD Audit Guide for the Low-Rent Housinq Program. The commen�s and suppl^.mental inforMation have been subjected to the tests and other auditing procedures applied in the examination ot the financial statements meti�ned above and, in our opinion, when considered in relation to the basa.c financial statements, present fairly in all materi«1 respects the information show:� therein. ��:�.'-�'C.� �L�Y�G't'Z+7 C�"H�. "�'�i�G30t.'�f/ / �/ � -1- HOUSING AUTHORITY OF THE CITY OF CARLSBAD BALANCE SHEET June 30, 1976 ASSETS CURRENT ASSETS: Cash Investments, at cost (Note 1) Accrued interest receivable (Note 1) Accounts receivable (Note 1): Tenants Owne�� TOTA7� CURRENT ASSETS FIXED ASSETS, at cost (I3ot � 1) TOTAL ASSETS $ 54,453 29,406 13 3,�04 370 87,3n� 7,580 �4 •�926e + LIABTLITIES AND FUND BALAN�E CURRENT LIABILITIES: Accounts payable, vendors Accounts payable, HUD Tenants' security deposits Tenants' prepaid rents TOTAL CURRENT LIABILITIES COM:dITMENTS (Note 2) FUI�'D BAT�ANCE TOTAL LIA$ILITIES AND FUND BALANCE $ 11,57� 32,855 7,245 1.228 52,901 42,025 S 9.� See accompanying accountants' report and notes to financial 3tatements. -2- i 's� � � I i I �i i � } r .. { 4 f � � Y ; .t �M �� ' FIOUSING AUTHORITY OF THE CITY OF CF,RLSBAD STATEMEI3T OF INCOME AND EXPENSE For �he twenty-four months ended June 30, 1976 1 a7 5 197 6 T�'�'�_ OL'ERATING INCOME: Dwelling rental $ 89,062 $ 100,i47 $ 1R9.209 Interest earned 4,910 2,399 7,'s�9 Miscellaneous 720 250 970 Total Income 94,692 102,:'96 197,488 OPERATING EXPENSES: Rent to lessors Administrdtive salaries Employee benefits �undry ex�enses Tenant se�-vices Insurance Travel OrdinaLY maintenance and ogeration Aud ;ing fee Collection losses pzoperty betterments and additions Total Expenses NET OPERATING T.NCOME (LOSS) 257,931 22,351 5,845 �,977 13,491 315 1,513 3,6F�0 1,575 1,494 46 313,218 (218,526) 265,031 27,12� 5,805 5,411 1�, 953 3,101 1,A�E5 5,317 (295) 710 329.642 (226,846) 522,�62 49,475 11,650 10,338 29,444 3,416 2,998 8. 9�7 1,575 1,199 7 56 642,860 (�45.372) 0'I'H:�R CHARGE : Loss on disposition of 654 2.1�6 2•836 non expendable e�ruipment 1�tET xNCUME (LOSS) ,S,f2?9.180) �,22�9.�02�2) �,(448�.�0�) See accompanying accountants' repori and notes to financial statements. -3- , 0 � Sj t i ` . . i { k � a �,� .� .. . .,. . .. . ,_ HOUSIiQG AUTHORITY OF TTiE CITY OH' CARLSBA� STATEMENT OF CHANGES IN FUND BALANCE For the twenty-f�ur months ended June 30, 1976 $ (405,005) (219,180) (22�.022) (7,252) (1,885) (862,344) 25; 974 7,252 , � 1,885 , 35,111 UNRESERVED SURPLUS: DeEicit, Jt�ly 1, 1974 Net loss for the twa�-r� «<onths ended June 30, 1975 Net 2oss far the twelve months ended June 30, 1976 �rovisxon for operating reserve for twelve months ende3 June 30, 1975 Pr�vision for operating reserve for twelve months ended June 30, 1976 Balance (Deficit), June 30� 1976 RESERVED SURPLUS - OPERFsTING RESERVE: BalancP, July l, 19:4 Provision for operatir.g reserve for twelve montlzs endsd June 30, 1975 Provision for operating reserve for twelve months ended June 30, 1°�6 :332,430 227,976 232,695 793,101 Balance, June 30, 1976 C[JI�lU: �TIVE CONTRIBU'rZONS : Ba�ance, July 1, 1574: 333,096 As previously reported $ (666) .?ldjustment (N��:e 3) As adjusted Basic annual ccntribution for the twelve months ended June 30, 1975 Basic annual contribution for the twelve months ended June 30, 1976 Balance, June 30, 1976 CUMULATIVE OPERATING SUBSIDIES: Balance, JvZy 1, 1974 and June 30, 197b gUNA BALANCE, June 30, 1976 76,157 � 4, 2�02 5 S�� accompanying accountants' report and note� to financial statements. -4- i t I f �.. � F ; � � 0 FiOUSING AUTHORITY OF THE CITY OF CARLSBAD I30TES TO FINI�NCIAL STATEMEN`1S June 30, 1976 1. SUMMARY OF SIGNIFICANT ACGOUNTING P�`�ICIES: (a) The A��thority has entered into an annua� coritributions contract (Sr - 436) with the United States Government to provide leased housing for families of low income. The contract, subje:.t to various restrictions, provides for Governmen:. rent subsidies at varying rates for housing leased by the �uthority and rented to low-income families. (b) The Authority uses an accrual system of fund accounting. 'IYhis is a change from prior periods in which amounts due from tenants and owners were recorded on the cash basis. The change had no effect on the ba?ances at July 1, 1974 as no amounts were due on that date. The effect of this change on the accompanying financial statements is to reduce the total net loss for the twenty-four month period ended June 30, 1976 by $ 3,�74. (c) Investment�: are stated at cost and consist of short-term Time Certificates of Depasits. (d) Fixed assets are recorded at cost. Depreciation is not provided on fixed assets. 2. LEASE AGREEMENTS: Z'he Authority has entered into various lease agreements to provide suitable housing for low-income fa,�►ilies. These lease� are for. terms of from 12 to 60 months. 3. ADJUSTMENT TO CUMULI�TIVE CONTRIBUTIONS: Cumulative contributions from HUD as of July 1, 1974 have been � adjusted by $ 666 for differences between the Authority's prior � firancial statements and the Area O�fice records which were deemed � by the Regional Inspector General not to be material in his letter � to the Authority dated June 24, 1975. % . � � See accompan��ing accountants' report. -5- � �, SCF?EDULE 1 HOUSING AUTHOkITY OF THE CITY OF CARLSBAD COMPUTATSON OF MAXIMUM FIXED ANNUAL CON'�RIBUTIONS - LEASED HOUSING For the twenty-four months enc�ea June 30, Z976 DAILY ItATE OF NUMBER OF MAXIMUM FIXED ANNiJAL UNIT DAYS FIX�D ANNUAL SIZE_OF UA?IT CONTRIBUTION UNDER LEASE CONTRIBUTION E'or tlie twelve months ended June 3J, 1975: One bedroom, �lderly $ 5.50411 21,436 $ 117,986 One bedroom -0- -0- �0- Two bedroom 4.50959 8,654 35,C�26 Three bedroom 5.35068 8,6E7 46,374 Four bedroam 6.42740 8,760 �Es,304 259,590 For the twelve months ended June 30, 1976: Or.e bedroom, elderly $ 5.50411 22,265 One bedroom �0- -0- i'vo b�droom 4.50959 8,395 Th.ree bedroom 5.35068 9,125 Four bedroom 6.42740 8,760 MAXIMUM FIXED ANNUAL CONTRIBUTIONS 122,549 -G- 37,858 48,825 56, 3(�4 265,53b �S� 525 22'v See accompanying accountants' report and notes to financial statements, - 6- t { 5 4 ;. � ; � � i ' � !; �., r ; ; � , i � � � SCFiEDULE 2 iiOUSING AUTHORITY OF THE CITY OF CARLSBAD COMPUTATION O� DEFICIT AND BASIC ANNUAL CQNTRIFUTIONS EARNED For the twenty-four months ended June 30, 1976 Maximum Fixed Annual C�ntribution Net Operating Loss f�r Period Capital Facpenditures Increase In Maximum Allowable Operating Reserve Total Deficit BASIC ANNUAL CONTRIBUTION 1975 �� $ (218,526) (2,198) (7, 252) � (227.97 ) �� 227.97 197 6 _.---- S 2�� 65•53Fz $ (226.846) (3, 964a (1,885) ; f23� 2.695) Sy�,� 232,�695 � � � + t ! � € s { t� �� s See accompanying accountants' report and notes to financial statements. � � t � s r � -7- �..._,. _.�. �.. � -�, ...� ._... . � _ SCHEDULE 3 HOU5ING AUTHO;tITY OF THE CITY OF CARLuBAD ANALYSIS dr GENERAL FUNDS AVAILABLE FOR R�DUCTION� OF ANA?IJAL CONTRIBU"i IONS J�,ine 30, 1976 CASH AI3D OTHER ASSETS: Cash Inve3tments, at cost Accrued interest receivable Accounts receivable, tenants Accounts receivable, owners TOTAL I,IABILITIE5 AND FtESERVE: Accounts payable, vendors Accounts payable, iiUD Tenants' security deposits Tenants' prepaid xents Opera�ing reserve Prior period adjustment (Note 3) TOTAL $ 5�,453 29,406 13 3,104 37 0 �S� 8� 7.346 $ 11,573 32,855 7,245 i.2as 35,111 (666) .S 8+7.3�46 � See accompanying accountants' report and no�tes to financial statements. -8- i. I i � { r t ; i i � ; k � � i � ;, 5 j�: � ' s ., i � � � i � HQUSING AUTHORITY OF TFiE CITY OF CARLSBAD COMMENTS ON COMPLIANCE AND INTERNAL CONTROL June 30, 1976 Based on our tests of transactions and examination of records, we beliFve that the HOUSING AUTHORITY OF THE CITY OF CARLSBAD has can�plied with the following: (a) The financial tsrms and conditions of the HUD contract. (b) The regulations, policies and procedures prescribed by the Departmen� regardiiig the Low-Rent Housing Progran�. (c) �'he financial regulations and procedures prescribed by management and those o£ its govarning board. As a nart of our examination, we reviewed �nd tested the Authority's s�►stem of internal accounting control to the extent we considered necessary to evaluate the system as required by generally accep�ed auctiting standards. Under these standards the purpose ot such evaluation is to establish a basis for reliance thereon in determining the nature, timing, and extent of other auditing procedures that are necessary for exprassing an opinion on the financial statements. Additionally, our examination included procedures necessary in our judgment to determine compliance with contractual terms and conditions and regulations, policies, and procedu�es prescribed by HUD and by management and the governing board of the Authori�y. In connection with our examination, we noted certain matters regarding �he Authority's system of accounting procedures and internal control which we are presenting under our findi:�gs and r recc�mmenda�ions which follow. Inasmuch as our examination was not intended to be a detailed review of all systems and procedures, these comments should not be considered all inclusive oi the areas where � improvements might be achieved. i{ �. 4� !' �, �i A . 4 �� i See accompanying accountants' report. '�' HOUuING AUTHORTTY OF THE CITY OF CARLSBAD FINDINGS AND RECOMMENDATIOD7S June 30, 1976 The foll�wing findings were discussed with Mr. Robert J. Coles, E�cecutive Director, during the course of the audit and at a conference held January 20, 1977. Accounts Receivable and Tenants' Security Deposits In order to provide accurate financial records we recommend that the Housing Authority's listings oE acaounts receivable and tenants' security deposits bE reconciled on a periodic basis to the accounts as main�aine� by the City Finance Department. The Executive Director stated that these reconciliations will be prepared on a quarterly basis. Investments We noted during our examination that the Housing Au�hority did not retain documentary evidence relating to the amount, length o£ time and applicable interest rate on invested funds. We were able to obtain �his information after extensive research by the banks involved. In order to provide easily accessible support £or such �ransactions the FStecutive Director has stated that duplica�e copies of evidence of investments will be retained. We also no�ed that the Authority has an average mon�hly checking account balance in excess oi $ 10,000. The Executive Director stated that a passbook savings account has been opened subsequent to June 30, 1976 and that it will be utilized to invest excess iunds when feasible. Disbursements As we noted in our prior findings for the year ended June 30, 1974 all documents supporting a disbursement of Housing Authority funds should be eEfec�ively cancelled to prevent �heir possible re-use as support �'or future payments. Z'hp City Finance Department has stated t'hat all such docwnents will be cancelled with a"PAID" stamp. Our examination of �he documents supporting disbursements revealed that some documen�s aro retaine3 at the Housing Authority oifice while others were retained at City Hall. In order to improve record keeping procedures we recommend that all supporting documents be filed at the same location. The Executive Directox stated that steps wauld be initiated to retain documentary evidence for disbursements in the files at City Hall. Annual Statements to HUD Our examination revealed that a proper year end cuteff of funds received is not being �bserved by the Housing Authority thus causing the annual statements to HUD to not properly reflect the financial position of the Authority. The Executive Director stated that all monies on hand as of the last day of the fiscal year will he deposited and recorded An the books of account on that date. See accompanying accountants' report. -10- 1 . � -..�,..._._.. HOUSZNG AUTHORITY OF THE CITY AF CARLSBAD PRIOR AUDIT REPC�RT FINDINGS June 30, 1976 As part of our examination we revir��aed the fin3ings and recommen- dations in our audit report tor thp year er�ded June 30, 1974 and made the following observations: Cash Corrective ac�ion has been taken to safeguard Housing Auth�:-ity funds by making regular bank deposits and by placing any funds an hand in a locking storage container when the otfice is closed. Z'he Housing Au�hority Commissioners apprnved a resolution that au�horizes the City Treasurer to inves� Housing Authority Eunds. Tenants' Security Deposits A list of �enants' security deposits is prepared and forward�d quar�erly to the City Finance Department to provide for an accurate �ccount of such deposits. Disbursements As we no+.:ed in uur curren� findings anii recommendations, documents supporting di.sbursemer.ts of Housing Autharity funds were not being cancelled. Insurance Coveraae The Housing Authority has �b�ained adequa�e and continuous insura:ice coverage. However, we did note that one employee was not ye� covere� by a fidelity bond. Upon being inL�?rmed of thi,s during the course of the audit, the Execu�ive Director prrr,�p��.y obtained coverage tor the employee. Accountina Records Our finding in this area was not accepted b;� the Housing Managemen� Programs BraiZch of HUD in its letter to �he Exec.utive Director. fiher�Eore, no actior. was taken. Annual Statements to HUD The Executive Director has pxepared forms for the geriod under review in acc:rdance with iiitv requizements. See accompanying accountants' repor�. -11- i HOUSING AUTHORITY OF THE CITY OF CARLSBAD ADJiJSTING JOLiF�NA�, ENTRIES June 30, 1976 ACCOUNT NUMBER DERIT CREDIT (1) 1114 Cash-Security deposits $ 5,497.40 2114 Sectirity deposits 7.60 1111 Cash in bank $ 5,497.40 3690 Other income ?•E� To adjust casb in bank £o•r security deposits invested and to remove security deposit differences �z� _ Cash on hand 2114 Security deposi�s 2240 Tenants pxepaid rents 3690 Other inr.ome 4430 Contract cos�s To record cash on hand at June 30, 1976 (3) 2111 Accounts payabls, trade 4710 Rents to owners To remove July, 1976 rr:nt . payment from payables (4) 4Z90 Sundry expense 4710 Ren�s to owners To reclassify office rent payment (5) �510 Insurance expense 4190 Sundry expense To reclassify employee fidelity bor.d payment (6) 2118 Accounts payable, HUD 2111 Accounts payable, trade To reclassify trade accounts payable -12- i,3�:.�? 532.00 225.00 165.00 12,104.98 75.00 1,228.00 1.55 � 68.78 : . � 532.00 � 225.G0 165.00 " : 12,i0�a.98 � ; i i � � ■`- - : m IiOUS�NG AUTHORITY OF �'HE CITY OF CARI,SBAD ADJUSTING JOURNAL ENTRIES June 30, 197h ACCOiJP1�r NUMBER DEBIT i�) 1400.4 Equipment $ 6,162.14 7540 Betterments and additions To reclassify capital expenditures (8) 2890 Fund balance 2,830.18 1400.4 �quipment To remove fixed assets disposed of (9) 4430 Contract casts 16.82 4570 Collection losses 21.40 3110 Dwelling rental 49.60 1222 Tenant receivables To adjust tenant receivables �or posting errors and to adjust for other differences (10) 1122 Tenant receivanles 144.77 1129 Owr•�r rf : eivables Z� coL�ect postings . (11) 2118 Account payable - ?iUD 79,291.44 2890 Fund balance To raclassi£y reimk,urse- ments to FiUD (12) 289p Fund balance 353.60 2118 Account payable - HUD To reclassify remainder of 6/30/7� adjustment not recagnized by iitTD (13) 8Q10 HUD Contributions 79,379.85 2118 Accoun�s payable - HL'D To adjust contributions earned and account payable to actual (14) 2890 Fund balance 26.00 2118 Acc:ount payable - HUD To adjust fox NSF check p..xpensed at June 30, 1974 and subsequently collected -13- CREDIT $ 6,162.14 2,830.18 87.82 144.77 79,291.44 353.60 79,379.a5 26.00 F i + i i`