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HOUSING AUTHORITY
OF THE COUNTY OF CONTRA COSTA
GENERAL PURPOSE FINANCIAL STATE MTS
YEAR ENDED MARCH 31, 1992
(Including Auditors' Reports Thereon)
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HAIRN ROW
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HOUSING AUTHORITY
• OF THE COUNTY OF CONTRA COSTA
GENERAL PURPOSE FINANCIAL STATEMENTS
YEAR ENDED MARCH 31, 1992
(Including Auditors' Reports Thereon)
•
HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
GENERAL PURPOSE FINANCIAL STATEMENTS
MARCH 31, 1992
•
TABLE OF CONTENTS
Page
Independent Auditors' Report 1
Financial Statements:
Combined Balance Sheet - All Fund Types and Account Groups 2
Combined Statement of Revenues, Expenditures, and Changes in
Fund Balances - All Governmental Fund Types 4
Combined Statement of Revenues, Expenditures, and Changes
in Fund Balances - Budget and Actual - Special Revenue Fund 5
Notes to the General Purpose Financial Statements 6
. Supplemental Data:
Statement of Completed CIAP Project 17
Independent Auditors' Report on HUD Method
Financial Statements 18
. HUD Method Financial Statements:
Balance Sheet - HUD Method 19
Statement of Income and Expenses - HUD Method 20
. Analysis of Surplus - HUD Method 21
Notes to HUD Method Financial Statements 22
Independent Auditors' Report on Schedule of Federal
Financial Assistance 24
Schedule of Federal Financial Assistance 25
Compliance Report Based on an Audit of General Purpose Financial
Statements Performed in Accordance with Government
Auditing Standards 26
Single Audit Report on Compliance with the General Requirements
Applicable to Major Federal Financial Assistance Programs 27
Single Audit Opinion on Compliance with Specific Requirements
Applicable to Major Federal Financial Assistance Programs 28
Single Audit Combined Report on Internal Control Structure 29
Status of Prior Audit Findings 32
Findings and Recommendations 33
0
HARN & ROWE
Certified Public Accountants
2255 Morello Avenue
Suite 209
Pleasant Hill, CA 94523
(510) 686-5550
INDEPENDENT AUDITORS' REPORT
To the Board of Commissioners
Housing Authority of the
County of Contra Costa
Martinez, California
We have audited the accompanying general purpose financial statements of
the Housing Authority of the County of Contra Costa, California, as of
March 31, 1992, and for the year then ended. The general purpose finan-
cial statements are the responsibility of the Housing Authority of the
County of Contra Costa, California, management. Our responsibility is to
express an opinion on these general purpose financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the general purpose financial
statements are free of material misstatement. An audit includes exam-
ining, on a test basis, evidence supporting the amounts and disclosures in
the general purpose financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall general purpose financial
statements presentation. We believe that our audit provides a reasonable
basis for our opinion.
0 In our opinion, the general purpose financial statements referred to above
present fairly, in all material respects, the financial position of the
Housing Authority of the County of Contra Costa, California, as of March
31, 1992, and the results of its operations for the year then ended in
conformity with generally accepted accounting principles.
0 Our audit was made for the purpose of forming an opinion on the general
purpose financial statements taken as a whole. The information presented
in the supplemental data section of this report is presented for purposes
of additional analysis and is not a required part of the general purpose
financial statements of the Housing Authority of the County of Contra
Costa, California. Such information has been subjected to the auditing
0 procedures applied in the audit of the general purpose financial state-
ments and, in our opinion, is fairly presented in all niaterial respects in
relation to the general purpose financial statements taken as a whole.
July 22, 1992
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HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
COMBINED STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES - ALL GOVERNMENTAL FUND TYPES
FOR THE YEAR ENDED MARCH 31, 1992
Governmental Fund Types Total
Special Debt (Memorandum
Revenue Service Only)
Revenues
Federal and state grants $39,343,043 $ 410,554 $39,753,597
Dwelling rent 2,453,460 - 2,453,460
Interest 122,824 798 123,622
Other 361,324 361,324
Total revenues 42,280,651 411,352 42,692,003
Expenditures
Current:
Administration 3,575,701 - 3,575,701
Utilities 696,484 - 696,484
Maintenance 2,588,905 - 2,588,905
Protective services 143,879 - 143,879
General 2,323,975 - 2,323,975
Rehabilitation loans 238,760 - 238,760
Housing assistance
payments 28,288,554 - 28,288,554
Grants 140,682 - 140,682
Debt Service:
Principal - 248,468 248,468
Interest - 172,531 172,531
Capital additions 3,410,121 - 3,410,121
Total expenditures 41,407,061 420,999 41,828,060
Excess of revenues over
(under) expenditures 873,590 (9,647) 863,943
Other financing sources (uses) : - - -
Excess of revenues and other
sources over (under)
expenditures and other uses 873,590 (9,647) 863,943
Fund balances - beginning of
year 2,094,082 21,073 2,115,155
Fund balances - end of year $ 2,967,672 $ 11,426 2,979.098
The accompanying notes are an integral part of this statement.
4
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HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
COMBINED STATEKENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BAIANCES - BUDGET AND ACTUAL - SPECIAL REVENUE FUND
FOR THE YEAR ENDED MARCH 31, 1992
Variance
Favorable
Budget Actual (Unfavorable)
Revenues:
Federal and state grants $35,928,396 $39,343,043 $ 3,414,647
Dwelling rent 2,648,710 2,453,460 (195,250)
Interest 158,345 122,824 (35,521)
Other 128,470 361,324 232,854
Total revenues 38,863,921 42,280,651 3,416,730
Expenditures:
Current:
Administration 2,886,240 3,575,701 (689,461)
Utilities 826,060 696,484 129,576
Maintenance 1,895,730 2,588,905 (693,175)
Protective services 115,880 143,879 (27,999)
General 1,956,340 2,323,975 (367,635)
Rehabilitation loans 272,150 238,760 33,390
Housing assistance
payments 26,661,163 28,288,554 (1,627,391)
Grants 30,000 140,682 (110,682)
Capital additions 4,143,647 3,,410,121 733,526
r Total expenditures 38,787,210 41,407,061 (2,619.851)
Excess of revenues over
(under) expenditures 76,711 873,590 796,879
Fund balance - beginning of
. year 2,094,082 2,094,082 -
Fund balance - end of year $ 2,170,793 2,967,672 $ 796,879
The accompanying notes are an integral part of this statement.
5
•
HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
MARCH 31, 1992
•
Descrivtion of the Reporting Entity
The Housing Authority of the County of Contra Costa (the Authority) was
established pursuant to the laws of the State of California in 1941. The
Authority's Board of Commissioners are appointed by the County of Contra
Costa Board of Supervisors. The Authority's financial statements include
activities over which the Board of Commissioners have oversight responsi-
bility.
• The financial statements present information for the activities of only
that portion of funds and account groups of the Housing Authority of the
County of Contra Costa. These financial statements do not present informa-
tion of any other component unit or department of the County of Contra
Costa.
Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Significant accounting policies of the Authority are described in
the following sections.
(a) Basis of Presentation - Fund Accounting
•
The accounts of the Authority are organized on the basis of
funds or account groups, each of which is considered a sepa-
rate accounting entity. The operations of each fund are
accounted for within a separate set of self-balancing
accounts that comprise its assets, liabilities, fund equity,
revenues, and expenditures or expenses, as appropriate. The
various funds are summarized by type in the financial state-
ments. Fund types and account groups used by the Agency are
described as follows:
Governmental Fund Types
Special Revenue Funds - Special Revenue Funds account for
the proceeds of specific revenue sources (other than expend-
able trusts or major capital projects) that are legally
restricted to expenditures for specified purposes.
Debt Service Funds - Debt Service Funds account for the
accumulation of resources for, and payment of, general long-
term debt principal, interest and related costs.
Fiduciary Funds
Fiduciary funds are trust and/or agency funds used to
account for assets held by the Authority in a trustee capac-
ity. The Authority utilizes an agency fund to account for
deferred compensation funds.
6
•
HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
MARCH 31, 1992
` (Continued)
NOTE 1 - (Continued)
Account Groups
General Fixed Assets Account Group - The General Fixed
Assets Account Group accounts for fixed assets of the
Agency.
General Long-Term Debt Account Group - The General Long-Term
Debt Account Group accounts for the long-term obligations of
the Authority and the long-term vacation and vested portion
of sick leave related to the governmental funds.
(b) Basis of Accountine
Governmental fund types are accounted for using the modified
accrual method of accounting. Revenues are recognized in
the accounting period in which they become available and
measurable; expenditures are recognized in the accounting
period in which the liability is incurred, if measurable,
except for unmatured interest on general long-term debt
which is recognized when due. Significant revenue sources
nr that have been treated as susceptible to accrual under the
modified accrual basis include interest on investments and
grants. The revenues from grants which are received as
reimbursement for specific expenditures are recognized based
upon the expenditures recorded.
(c) Total Columns on Combined Financial Statements
Total columns on the combined financial statements are cap-
tioned "Memorandum Only" to indicate that they are presented
only to facilitate financial analysis. Data in these col-
umns does not present financial position or results of oper-
ations in conformity with generally accepted accounting
principles nor is such data comparable to a consolidation.
Interfund eliminations have not been made in the aggregate
of this data.
(d) Fixed Assets
Fixed assets are valued at historical cost. Contributed
fixed assets are recorded at fair market value at the time
received. Interest expense incurred during the development
period is capitalized.
Fixed assets used in Governmental Fund Type operations
(general fixed assets) are accounted for in the General
Fixed Assets Account Group rather than in the Governmental
Fund Types. No depreciation has been provided on the
general fixed assets.
7
HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
MARCH 31, 1992
•
(Continued)
NOTE 1 - (Continued)
(e) Collection Losses
The direct write-off method has been adopted for providing
for uncollectible accounts.
(f) Encumbrances
Encumbrance accounting is not employed by the Authority.
(g) Differing Year Ends
The Authority's Aftercare Housing Assistance Program oper-
ates on a fiscal year from July 1 through June 30. This
differs from its other programs which have a fiscal year
ending March 31. Our reporting period for the Aftercare
Program was July 1, 1991 through June 30, 1992. The- effect
on the financial statements of these differing year ends is
not material.
Note 2 - CASH AND INVESTMENTS
All cash and investments held by the Authority is maintained in
checking or savings accounts or in certificates of deposit. The
California Government Code requires California banks and savings
and loan associations to secure the Authority's deposits not cov-
ered by federal deposit insurance by pledging mortgages or govern-
ment securities as collateral. The market value of mortgages must
equal at least 150% of the face value of deposits. The market
value of governments securities must equal at least 1108 of the
face value of deposits. Such collateral must be held in the
pledging bank's trust department in a separate depository in an
account for the Authority.
8
HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
MARCH 31, 1992
•
(Continued)
Note 3 - CASH WITH TRUSTEE
Funds totaling $16,998 are maintained in the Authority's name by
the Bank of America, which acts as the fiscal agent for previous
bond issuances of the Authority. These funds are required to be
invested in insured or registered U. S. Government securities and
commercial paper.
As indicated in Note 8, $311,808 of assets of the deferred compen-
sation plan are also recorded as cash with trustee.
Note 4 - PREPAID HOUSING ASSISTANCE PAYMENTS
The Authority prepares and mails its Section 8 Programs' Housing
Assistance Payments to the landlords on the last working day of
each month. These amounts are not actually payable until the
first working day of the following month. The reimbursement from
HUD for these landlord payments is also not received until the
first working day of the following month.
The prepayment of these housing assistance payments caused the
Section 8 Program Special Revenue Funds to have a deficit cash
balance of $1,574,398 at March 31, 1992.
Note 5 - DEFERRED LOANS
/ At March 31, 1992, there are $694,065 of Community Development
Block Grant, $803,324 of Rental Rehabilitation Grant Loans, and
$156,611 of other loans outstanding. There are various types of
these loans. Some loans require monthly principal reductions,
others are deferred over several years. Interest rates on the
loans range from zero interest to 78 per annum. Many of these
loans will be forgiven at some specified future date.
The agency has elected to record the loan and interest receivable
on these notes as deferred revenue. Revenue is recognized as
these loans are collected.
During the fiscal year ended March 31, 1992 $82,834 of Community
Development Block Grant and $104,999 of Rental Rehabilitation
Grant loans were determined to be worthless and were written off
the books of accounts.
9
•
HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
MARCH 31, 1992
(Continued)
Note 6 - LAND AND EQUIPMENT
A summary of the changes in general fixed assets for the year
ended March 31, 1992 is as follows:
Balance Balance
Program 4/1/91 Additions Deletions 3/31/92
Conventional $47,659,319 $3,295,777 $ 40,077 $50,915,019
Section 8 1,081,043 113,588 68,893 1,125,738
S Management 166,606 - - 166,606
Drug Elimination - 756 - 756
$48,906,968 ,$3,410,121 108 970 X552.208,119
NOTE 7 - LONG-TERM OBLIGATIONS
A summary of the changes in general long-term obligations for the
year ended March 31, 1992 is as follows:
Balance Balance
4/1/91 Additions Retirements 3/31/92
Federal Financing
• Bank Notes $ 328,765 $ - $ 38,467 $ 290,298
Bonds 3,690,000 - 210,000 3,480,000
Compensated Absences
(Note 12) 191.514 14.773 206.287
$ 4,210,279 S 14.773 248,467 $ 3,976.585
Following is a schedule of debt payment requirements to maturity
for long-term obligations other than compensated absences:
Federal
Year Ending Financing
March 31 Bank Notes Bonds Total
!., 1993 $ 60,166 $ 352,134 $ 412,300
1994 60,166 344,116 404,282
1995 60,166 345,893 406,059
1996 60,166 347,319 407,485
1997 60,166 349,081 409,247
Thereafter 60.168 2.737.220 2.797.388
360,998 4,475,763 4,836,761
Less amount
representing
interest 70.700 995.763 1.066.463
290 298 $3,480,000 $3,770.298
•
The Federal Financing Bank Notes accrue interest at 6.6% per
annum. The Bonds accrue interest at rates from 3-1/8% to 5% per
annum.
10
1
HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
MARCH 31, 1992
(Continued)
NOTE 7 - (Continued)
The Consolidated Omnibus Budget Act of 1985 authorized the Secre-
tary of the Department of Housing and Urban Development (HUD) to
forgive all permanent notes held by the U. S. Treasury. In the
event that the notes are not forgiven by HUD, the Conventional
Program's Annual Contribution Contract (ACC) states that all debt
service requirements related to the notes will be HUD's responsi-
bility. It is management's opinion that the Authority is not lia-
ble for these notes unless the federal government fails to honor
the ACC, therefore, they should not be included on the Authority's
financial statements. Accordingly, $6,822,653 of permanent notes
and accrued interest, recorded on the Authority's books of
account as of March 31, 1992, has not been reflected on the
Authority's current financial statements.
Per the financial reports received from HUD, there is actually
$27,119,597 of the permanent notes payable, and interest on these
notes, that have not been forgiven as of March 31, 1992. The
difference between the amount of notes recorded on the Authority's
books of accounts and the amounts recorded on the HUD reports are
the amount of notes reflected on part III of the HUD report which
the Authority believed had been forgiven prior to March 31, 1989.
. NOTE 8 - DEFERRED COMPENSATION PLAN
The Authority offers its employees a deferred compensation plan
created in accordance with Internal Revenue Code Section 457. The
plan, available to all Authority employees, permits them to defer
a portion of their salary until future years. The deferred com-
pensation is not available to employees until termination, retire-
ment, death, or unforeseeable emergency.
All amounts of compensation deferred under the plan, all property
and rights purchased with those amounts, and all income attribut-
able to those amounts, property, or rights are (until paid or made
• available to the employee or other beneficiary) solely the proper-
ty and rights of the Authority (without being restricted to the
provisions of benefits under the plan) , subject only to the claims
of the Authority's general creditors. Participants' rights under
the plan are equal to those of general creditors of the Authority
in an amount equal to the fair market value of the deferred
S account for each participant.
11
HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
MARCH 31, 1992
•
(Continued)
NOTE 8 - (Continued)
It is the Authority's position that it has a fiduciary obligation
for the due care required of a prudent investor in the management
of the plan's resources but is not responsible for any loss due
the investment or failure of investment funds and assets of
the plan nor shall the Authority be required to replace any loss
which may result from such investments. In the past, plan assets
have been used for no purpose other than to pay benefits. The
Authority believes it is unlikely that it will use the assets to
satisfy the claims of general creditors in the future.
As of March 31, 1992, the assets of the plan, recorded at their
fair market value, amounted to $311,808. This amount is held
under the Authority's name for named employees.
• NOTE 9 - EMPLOYER RETIREMENT PIAN
The Authority participates in a defined benefit retirement plan.
that is administered by the Contra Costa County Employees' Retire-
ment Association. All full-time employees of the Authority par-
ticipate in this plan. The plan provides death, disability and
service retirement benefits. Benefits are based on the employee's
highest level of annual salary, years of service and age at the
time of retirement. The Authority's retirement plan had 87 par-
ticipants at March 31, 1992. The Authority contributes 8.25% of
eligible employees' annual compensation. In addition, the Author-
ity also paid approximately 50% of the employees basic annual
contribution pursuant to agreements during salary negotiations.
Employer contributions are vested (1) after 10 years of service
and employee has attained age 50 or (2) 30 years of service
regardless of age or (3) at mandatory retirement age regardless of
the amount of service.
Employees contribute to the retirement system through biweekly
payroll deductions. The rate of contribution for employees is
determined by age at the time of entrance into the system.
Employee contributions and interest thereon may be withdrawn only
at termination of employment or at retirement. Total payroll sub-
ject to contribution was $3,031,211 for the year ended March 31,
1992. Employer contributions were $437,621 and employee contribu-
tions were $137,093, representing 14.4% and 4.5% of payroll sub-
ject to contribution, respectively, for the fiscal year ended
March 31, 1992.
12
s
HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
MARCH 31, 1992
(Continued)
NOTE 9 - (Continued)
The 10 year trend analysis and other disclosures required by gen-
erally accepted accounting principles are described in the general
purpose financial statements of the County of Contra Costa, Cali-
fornia as of March 31, 1992.
NOTE 10 - CONTINGENCIES
Under the terms of Federal and State grants, audits may be
required and certain costs may be questioned as not being appro-
priate expenditures under the terms of the grants. Such audits
could lead to requests for reimbursement to the grantor agencies.
The Authority's management believes disallowances, if any, would
be immaterial.
NOTE 11 - JOINT POWERS AGREEMENT - PROPERTY AND LIABILITY INSURANCE
The Authority participates in a joint venture under a joint powers
agreement (JPA) with the California Housing Authority's Risk
Management Agency (CHARMA) . CHARMA was formed to provide general
liability, property, and errors and omissions risk financing. In
addition to the Authority there are five other members. The
Authority's property insurance has a $10,000 deductible per occur-
rence. The Authority's liability insurance has a $250,000 deduct-
ible per occurrence. The relationship between the Authority and
CHARMA is such that CHARMA is not a component unit of the Authori-
ty for financial reporting purposes. CHARMA's governing board
controls the operations of the JPA, including selection of manage-
went and approval of operating budgets independent of any influ-
ence by member authorities beyond their representation on the
board. Each member pays a premium commensurate with the level of
coverage requested and shares surpluses and deficits proportion-
ately to their participation in CHARMA.
Condensed audited financial information for the year ended March
31, 1991, (the latest available) is as follows:
Total Assets $ 1,873,673
Total Liabilities (1.150..830)
Retained Earnings S 722.843
Total Revenues $ 1,334,037
Total Expenses (1,090,474)
Cumulative effect of a change
in accounting principle (53.440)
Net increase in fund balance J__190
.123
r 13
•
HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
MARCH 31, 1992
(Continued)
NOTE 11 - (Continued)
. CHARMA had no long-term debt outstanding at March 31, 1991. The
Authority's share of year end assets, liabilities, or fund balance
has not been calculated.
NOTE 12 - COMPENSATED ABSENCES
. It is the Authority's policy to permit employees to accumulate
earned but unused vacation leave up to a maximum of 240 to 560
hours depending on the employee's length of service. This leave
will be used in future periods or paid to employees upon separa-
tion from the Authority. Accrued vacation leave has been valued
by the Authority and has been recorded in the General Long-Term
• Debt Account Group at $206,287 as of March 31, 1992.
It is the Authority's policy to permit employees to accumulate
earned but unused sick leave; however, the value of unused sick
leave is not payable to employees upon separation from the Author-
ity.
The cost of vacation and sick leave is recognized, when payments
are made to employees, in the Special Revenue Funds.
NOTE 13 - HEALTH INSURANCE
Health care benefits for active and retired employees are financed
by the beneficiaries and by the Authority. The Authority's con-
tribution during 1991 - 1992 for active employees was $310,599 and
for retired employees $116,891. The Authority's liability for
health care benefits is limited to its annual contribution. As of
March 31, 1992, there were 91 active and 46 retired employees
being covered by the Authority's health insurance.
NOTE 14 - LEASE COMMITMENTS
Total rental expense for the year ended March 31, 1992 for all
operating leases amounted to $50,348.
At March 31, 1992, the future minimum rental payments required
under operating leases for operating facilities, are as follows:
14
HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS
MARCH 31, 1992
(Continued)
NOTE 14 - (Continued)
Fiscal Year
Endiny- March 31,
1993 $105,923
1994 75,340
1995 79,040
1996 82,720
1997 56.800
399 823
NOTE 15 JOINT POWERS AGREEMENT WORKERS' COMP INSURANCE
The Authority participates in a joint venture under a joint powers
agreement (JPA) with the California Housing Workers' Compensation
Authority (CHWCA) . CHWCA was formed to provide workers' compensa-
tion insurance coverage for member housing authorities. At Decem-
ber 31, 1991 (the fiscal year end for the joint venture) , there
were twenty-one members. The relationship between the Authority
and CHWCA is such that CHWCA is not a component unit of the
Authority for financial reporting purposes.
Condensed audited financial information for the year ended Decem-
ber 31, 1991, is as follows:
Total Assets $ 1,823,218
Total Liabilities (1,225,621)
Retained Earnings S 597,597
Total Revenues $ 2,494,725
Total Expenses (1,897,128)
Net increase in fund balance $ 597,597
CHWCA had no long-term debt outstanding at December 31, 1991. The
Authority's share of year end assets, liabilities, or fund balance
has not been calculated.
15
SUPPLEMENTAL DATA
r
16
HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
STATEMENT OF COMPLETED CLAP PROJECT
ANNUAL CONTRIBUTION CONTRACT SF-182
MARCH 31, 1992
CA 11-910
Funds approved $2,635,000
Funds expended 2.635.000
* Excess of funds expended -
Funds advanced $2,635,000
Funds expended 2.635.000
Excess of funds expended $ -
r
The accompanying notes are an integral part of this statement.
17
HARN & ROWE
Certified Public Accountants
2255 Morello Avenue
Suite 209
Pleasant Hill, CA 94523
(510) 686-5550
INDEPENDENT AUDITORS' REPORT ON
HUD METHOD FINANCIAL STATEMENTS
1
To the Board of Commissioners
Housing Authority of the
County of Contra Costa
Martinez, California
We have audited the special purpose balance sheet - HUD method of the Housing
Authority of the County of Contra Costa, California as of March 31, 1992 and
the related special purpose statements of income and expenses and analysis of
surplus for the year then ended. These financial statements are the
responsibility of the Authority's management. Our responsibility is to
express an opinion on the financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards 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.
The accompanying HUD method financial statements were prepared for the
purpose of complying with HUD Handbook 7476.1 REV-1 as discussed in Note 1 to
the HUD method financial statements, and are not intended to be a
presentation in conformity with generally accepted accounting principles.
In our opinion, the special purpose financial statements referred to above
present fairly, in all material respects, the financial position of the
Housing Authority of the County of Contra Costa, California as of March 31,
1992 and the results of its operations for the year then ended, on the method
of accounting described in Note 1 to the HUD method financial statements.
This report is intended solely for the information and use of the Board of
t► Commissioners and management of the Housing Authority of the County of Contra
Costa, California and the U.S. Department of Housing and Urban Development.
This restriction is not intended to limit distribution of this report, which
is a matter of public record.
l?,a-, d-- A',.—
July 22, 1992
18
!P)
HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
STATEMENT OF INCOME AND EXPENSES - HUD METHOD
FOR THE YEAR ENDED MARCH 31, 1992
. Public
Housing Section 8
Operating Income
Dwelling rent $2,453,460 $ -
Nondwelling rent 16,712 -
Excess utilities 16,919 -
Interest on general fund investments 23,622 27,807
Other income 48.204 142.233
Total operating income 2.558.917 170.040
Operating Expenses
Administration 480,090 2,285,608
Tenant services 18,165 -
Protective services 6,104 -
Utilities 696,484 -
Ordinary maintenance and operation 1,859,141 89,831
General expenses 814,143 1,002,432
Nonroutine maintenance 124,666 -
Housing assistance payments 28.288.554
Total operating expenses 3,998.793 31,666.425
Net operating loss 1,439,876 31,496,385
Other Charges
Interest on notes and bonds payables 564,363 -
Loss on the disposition of equipment 34.931 67.608
r
Net loss $2,039 31.563.993
The accompanying Independent Auditors' Report and notes are an integral part
of this statement.
20
HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
• ANALYSIS OF SURPLUS - HUD METHOD
FOR THE YEAR ENDED MARCH 31, 1992
Public
Housing Section 8
. Unreserved Surplus
Unreserved surplus as of April 1, 1991 $(55,379,132) $(213,221,293)
Net loss for the year ended March 31, 1992 (2,039,170) (31,563,993)
Provision for operating reserve for the
year ended March 31, 1992 1,400 (241,048)
Provision for project account for the
year ended March 31, 1992 - (1.100.438)
Unreserved surplus as of March 31, 1992 (57.416,902) _ (246,126.772)
Operating Reserve
Operating reserve as of April 1, 1991 1,096,515 736,197
• Provision for operating reserve for the
year ended March 31, 1992 (1,400) 241,048
Withdrawals - (82.008)
Operating reserve as of March 31, 1992 1.095.115 895.237
Project Account
Project account as of April 1, 1991 - 19,980,643
Provision for project account for the
year ended March 31, 1992 1.100.438
Project account as of March 31, 1992 21.081.081
w Cumulative HUD Contributions
Cumulative HUD Contributions
as of April 1, 1991 91,674,058 194,115,759
Annual contributions 410,554 31,853,960
Operating subsidy 1,516,142 -
CIAP grants 2.813.315
•
Cumulative HUD Contributions as of
March 31, 1992 96.414.069 225,969.719
Cumulative Donations
Cumulative donations as of April 1, 1991 1,058,774 218,111
Donated fixed assets 467.923
Cumulative donations as of March 31, 1992 1.526.697 218.111
Total surplus as of March 31, 1992 $ 41.618,979 $ 2.037,376
t.
The accompanying Independent Auditors' Report and notes are an integral part of
this statement.
21
HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
NOTES TO HUD METHOD FINANCIAL STATEMENTS
MARCH 31, 1992
NOTE 1 - HUD METHOD FINANCIAL STATEMENTS
The financial statements HUD method were prepared to comply with
the requirements of the U.S. Department of Housing and Urban
Development (HUD) handbook 7476.1 Rev.l. The required HUD method
of preparation and maintenance of accounting records and
S presentation of financial statements differs significantly from
generally accepted accounting principles. Some of the more
significant of these differences are as follows:
A. The financial statements present only information and
activities pertaining to programs funded directly or
indirectly by HUD.
B. The required financial statements and financial statement
presentation differ between the HUD method and generally
accepted accounting principles.
C. Annual contributions, operating subsides, donations, and
grants are recorded as credits directly to fund equity rather
than as revenues.
D. Revenues and expense are recorded on the accrual basis of
accounting versus the modified accrual basis required for
governmental fund types under generally accepted accounting
principles.
E. The HUD method of accounting requires that losses on property
dispositions of fixed assets be recorded as an expense upon
disposition, while capital additions are not recorded as an
expense.
F. The HUD method of accounting requires that interest expense
accrued but not actually paid during the fiscal year be
recorded as an expense.
• NOTE 2 - LONG-TERM OBLIGATIONS
The Consolidated Omnibus Budget Act of 1985 authorized the
Secretary of the Department of Housing and Urban Development (HUD)
to forgive all permanent notes held by the U. S. Treasury. In the
event that the notes are not forgiven by HUD, the Conventional
Program's Annual Contribution Contract (ACC) states that all debt
service requirements related to the notes will be HUD's
responsibility. It is management's opinion that the Authority is
not liable for these notes unless the federal government fails to
22
i
HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
NOTES TO HUD METHOD FINANCIAL STATEMENTS
MARCH 31, 1992
NOTE 2 - (Continued)
honor the ACC, therefore, they should not be included on the
Authority's financial statements. Accordingly, $6,822,653 of
permanent notes and accrued interest, recorded on the Authority's
books of account as of March 31, 1992, has not been reflected on
N the Authority's current financial statements.
Per the financial reports received from HUD, there is actually
$27,119,597 of the permanent notes payable, and interest on these
notes, that have not been forgiven as of March 31, 1992. The
difference between the amount of notes recorded on the Authority's
books of accounts and the amount recorded on the HUD report is the
amount of notes reflected on part III of the HUD report which the
Authority believed had been forgiven prior to March 31, 1989.
M
t
23
i
0 HARN & ROWE
Certified Public Accountants
2255 Morello Avenue
Suite 209
Pleasant Hill, CA 94523
i (510) 686-5550
INDEPENDENT AUDITORS' REPORT ON
SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE
To the Board of Commissioners
Housing Authority of the
County of Contra Costa
Martinez, California
We have audited the general purpose financial statements of the Housing
Authority of the County of Contra Costa, California, for the year ended
March 31, 1992, and have issued our report thereon dated July 22, 1992.
• These general purpose financial statements are the responsibility of the
Housing Authority of the County of Contra Costa, California, management.
Our responsibility is to express an opinion on these general purpose finan-
cial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing stan-
dards 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 general purpose
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the general purpose financial statements. An audit also includes
. assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presenta-
tion. We believe that our audit provides a reasonable basis for our
opinion.
Our audit was made for the purpose of forming an opinion on the general
purpose financial statements of the Housing Authority of the County of
Contra Costa, California, taken as a whole. The accompanying schedule of
federal financial assistance is presented for purposes of additional analy-
sis and is not a required part of the general purpose financial statements.
The information in that schedule has been subjected to the auditing proce-
dures applied in the audit of the general purpose financial statements and,
in our opinion, is fairly presented in all material respects in relation to
the general purpose financial statements taken as a whole.
�f + k-e--
a
July 22, 1992
24
HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE
FOR THE YEAR ENDED MARCH 31, 1992
•
CFDA
Federal Grantor Number Expenditures
Department of Housing
and Urban Development
Direct Programs:
Drug Elimination Program 14.854 $ 213.157
Public Housing 14.850 4.343,710 *
Comprehensive Improvement
Assistance Program 14.852 2.951.616 *
Section 8 Housing Voucher Program 14.177 4.691,702 *
Lower Income Housing
Assistance Program 26,403,423
Passed Through the State
of California:
Lower Income Housing
Assistance Program 766.898
Subtotal 14.156 27.170.321
Passed Through the County of
Contra Costa:
Community Development Block
Grant, Contract No. 16-3 14.218 81.479
Rental Housing Rehabilitation,
Contract No. U.C. -06-0223 14.230 217.338
Total $39,669,323
* This is a major federal financial assistance program.
t
The accompanying notes are an integral part of this statement.
25
1
HARN & ROWE
Certified Public Accountants
2255 Morello Avenue
Suite 209
Pleasant Hill, CA 94523
(510) 686-5550
COMPLIANCE REPORT BASED ON AN AUDIT OF GENERAL
PURPOSE FINANCIAL STATEMENTS PERFORMED IN
ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the Board of Commissioners
Housing Authority of the
County of Contra Costa
Martinez, California
We have audited the general purpose financial statements of the Housing
Authority of the County of Contra Costa, California, as of and for the year
ended March 31, 1992, and have issued our report thereon dated July 22,
1992.
We conducted our audit in accordance with generally accepted auditing stan-
dards 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 general purpose
financial statements are free of material misstatement.
Compliance with laws, regulations, contracts, and grants applicable to the
Housing Authority of the County of Contra Costa, California, is the respon-
sibility of the Housing Authority of the County of Contra Costa, Califor-
nia, management. As part of obtaining reasonable assurance about whether
the general purpose financial statements are free of material misstatement,
we performed tests of the Authority's compliance with certain provisions of
laws, regulations, contracts, and grants. However, our objective was not
to provide an opinion on overall compliance with such provisions.
The results of our tests indicate that, with respect to the items tested,
the Housing Authority of the County of Contra Costa, California complied,
in all material respects, with the provisions referred to in the preceding
paragraph. With respect to items not tested, nothing came to our attention
that caused us to believe that the Authority had not complied, in all mate-
rial respects, with those provisions.
This report is intended for the information of the Board of Commissioners,
management, and the U. S. Department of Housing and Urban Development.
This restriction is not intended to limit the distribution of this report,
which is a matter of public record.
July 22, 1992
26
HARN & ROWE
Certified Public Accountants
2255 Morello Avenue
Suite 209
Pleasant Hill, CA 94523
(510) 686-5550
SINGLE AUDIT REPORT ON COMPLIANCE WITH
THE GENERAL REQUIREMENTS APPLICABLE TO MAJOR
FEDERAL FINANCIAL ASSISTANCE PROGRAMS
• To the Board of Commissioners
Housing Authority of the
County of Contra Costa
Martinez, California
We have applied procedures to test the Housing Authority of the County of
Contra Costa, California, compliance with the following requirements appli-
cable to each of its major federal financial assistance programs, which are
identified in the schedule of federal financial assistance for the year
ended March 31, 1992
Political Activity
Davis - Bacon Act
Civil Rights
Cash Management
Federal Financial Reports
• Relocation Assistance and Real Property Acquisition
Allowable Costs/Cost Principles
Drug-free Workplace
Administrative Requirements
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 Housing Authority of the County of Contra Costa, California 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
first paragraph of this report. With respect to items not tested, nothing
came to our attention that caused us to believe that the Housing Authority
of the County of Contra Costa, California had not complied, in all material
• respects, with those requirements.
This report is intended for the information of the Board of Commissioners,
management, and the U. S. Department of Housing and Urban Development.
This restriction is not intended to limit the distribution of this report,
which is a matter of public record.
July 22, 1992
27
•
HARN & ROWE
Certified Public Accountants
2255 Morello Avenue
Suite 209
Pleasant Hill, CA 94523
(510) 686-5550
SINGLE AUDIT OPINION ON COMPLIANCE WITH
SPECIFIC REQUIREMENTS APPLICABLE TO MAJOR
FEDERAL FINANCIAL ASSISTANCE PROGRAMS
To the Board of Commissioners
Housing Authority of the
County of Contra Costa
Martinez, California
We have audited the Housing Authority of the County of Contra Costa, Cali-
fornia, compliance with the requirements governing types of services
allowed or unallowed; eligibility; reporting; special tests and provisions
for 14.852 - Public Housing - Comprehensive Improvement Assistance Program;
14.156 - Lower Income Housing Assistance Program; and 14.177 - Section 8
Housing Voucher Program; and claims for advances and reimbursements 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 March 31, 1992.
The management of the Housing Authority of the County of Contra Costa, Cal-
ifornia is responsible for the Housing Authority of the County of Contra
Costa, California, compliance with those requirements. Our responsibility
is to express an opinion on compliance with those requirements based on our
audit.
We conducted our audit in accordance with generally accepted auditing stan-
dards, 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 and OMB Circular A-
128 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 Housing Authority of the County of Contra Costa, Cali-
fornia, compliance with those requirements. We believe that our audit pro-
vides a reasonable basis for our opinion.
The results of our audit procedures disclosed immaterial instances of non-
compliance with the requirements referred to above, which are described in
the accompanying schedule of findings and recommendations. We considered
these instances of noncompliance in forming our opinion on compliance,
which is expressed in the following paragraph.
In our opinion, the Housing Authority of the County of Contra Costa, Cali-
fornia complied, in all material respects, with the requirements governing
types of services allowed or unallowed; eligibility; reporting; special
tests and provisions for 14.852 - Public Housing - Comprehensive Improve-
ment Assistance Program; 14.156 - Lower Income Housing Assistance Program;
and 14.177 - Section 8 Housing Voucher Program; and claims for advances and
• reimbursements that are applicable to each of its major federal financial
assistance programs for the year ended March 31, 1992.
f�a fi Ieat'-'_
July 22, 1992
28
•
HARN & ROWE
Certified Public Accountants
2255 Morello Avenue
Suite 209
Pleasant Hill, CA 94523
• (510) 686-5550
SINGLE AUDIT COMBINED REPORT ON
INTERNAL CONTROL STRUCTURE
To the Board of Commissioners
Housing Authority of the
County of Contra Costa
Martinez, California
We have audited the general purpose financial statements of the Housing
Authority of the County of Contra Costa, California, as of and for the year
ended March 31, 1992, and have issued our report thereon dated July 22,
1992.
We conducted our audits 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 Circu-
lar A-128 require that we plan and perform the audit to obtain reasonable
assurance about whether the general purpose financial statements are free
of material misstatement and about whether The Housing Authority of the
County of Contra Costa complied with laws and regulations, noncompliance
with which would be material to a major federal financial assistance pro-
gram.
In planning and performing our audits for the year ended March 31, 1992, we
considered the Authority's internal control structure in order to determine
our auditing procedures for the purpose of expressing our opinions on the
Authority's general purpose financial statements and on its compliance with
requirements applicable to major federal financial assistance programs and
not to provide assurance on the internal control structure.
The management of the Housing Authority of the County of Contra Costa, Cal-
ifornia, is responsible for establishing and maintaining an internal con-
trol 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 objec-
tives of an internal control structure are to provide management with rea-
sonable, 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 general purpose financial statements in accor-
dance 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
may nevertheless occur and not be detected. Also, projection of any evalu-
ation of the structure to future periods is subject to the risk that proce-
dures may become inadequate because of changes in conditions or that the
effectiveness of the design and operation of policies and procedures may
deteriorate.
29
For the purpose of this report, we have classified the significant internal
control structure policies and procedures in the following categories:
Cycles of the Entity's Activity
Revenue/Receipts
Purchases/Disbursements
Payroll
General Requirements
Political Activity
Davis - Bacon Act
Civil Rights
Cash Management
Federal Financial Reports
Relocation Assistance and Real Property Acquisition
Allowable Costs/Cost Principles
Drug-Free Workplace
Administration Requirements
Specific Requirements
Types of Services
Eligibility
Reporting
Special Requirements
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 March 31, 1992, the Housing Authority of the County
of Contra Costa expended 99 percent of its total federal financial assis-
tance under major federal financial assistance programs.
We performed tests of controls, as required by OMB 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 reimburse-
ments that are applicable to each of the Authority's major federal finan-
cial 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.
30
Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be mate-
rial weaknesses under standards established by the American Institute of
Certified Public Accountants. A material weakness is a reportable condi-
tion in which the design or operation of one or more of the specific inter-
nal control structure elements does not reduce to a relatively low level
the risk that errors or irregularities in amounts that would be material in
relation to the general purpose 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.
This report is intended for the information of the Board of Commissioners,
management, and the U. S. Department of Housing and Urban Development.
This restriction is not intended to limit the distribution of this report,
which is a matter of public record.
July 22, 1992
31
HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
STATUS OF PRIOR AUDIT FINDINGS
MARCH 31, 1992
The previous audit report for the year ended March 31, 1991, contained the
following audit finding. This finding was controlled by HUD.
Finding 1 - Various mistakes and missing information, or documentation,
was noted during the examination of the tenants' files.
During the current year's audit, other mistakes and missing
information was found. See current year's finding #1.
32
•
HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
COMPLIANCE FINDINGS AND RECOMMENDATIONS
MARCH 31. 1992
•
1. Tenant Files
•
During our examination of tenant files of the Public Housing Program
and the Lower Income Housing Assistance Program we found the
following:
a. Public Housing Program (CFDA #14.850)
•
We examined 13 Conventional Low Rent Program's tenant files and
found the following:
1. One HUD Form 50058 contained an incorrect reexamination
date.
•
2. The security deposit recorded on one tenants' lease did not
agree to the amount recorded on the security deposit
register.
b. Lower Income Housing Assistance Program (CFDA #14.156)
•
We examined 17 Lower Income Housing Assistance Program's tenant
files and found the following:
1. The PHA did not perform an annual review of the utility
allowances.
2. One HUD Form 50058 indicated an incorrect bedroom size.
We recommend the Authority review its Public Housing Program's and
Lower Income Housing Assistance Program's tenant files to insure that
the above mentioned information is correct and/or included in the
tenants' files. The Authority should examine its certification and
recertification preparation and review procedures to insure that all
future certifications and recertifications are documented in
accordance with HUD regulations. The Authority should also perform
the required annual review of utility allowances.
Authority's Response - Appropriate action will be taken to insure
that staff complies with operating procedures on certifications and
recertifications. The Authority will also perform the required
annual review of utility allowances.
33