HomeMy WebLinkAboutMINUTES - 01152002 - HA.1 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
TO: BOARD OF COMMISSIONERS • 1
FROM: Robert McEwan, Executive Director
DATE: January 15, 2002
SUBJECT: ACCEPTANCE OF AUDITED FINANCIAL STATEMENTS AND INDEPENDENT
AUDITORS REPORT FOR FISCAL YEAR ENDING MARCH 31, 2001
SPECIFIC REQUEST(S) OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION
I. RECOMMENDED ACTION:
ACCEPT audited financial statements and independent auditors report for the period April 1, 2000
through March 31, 2001, performed by Patel and Associates, Certified Public Accountants, Oakland,
California, as recommended by the Advisory Housing Commission.
Il. FINANCIAL IMPACT:
Funding has been provided in the Housing Authority's Fiscal Year 200112002 Consolidated
Operating Budget for the audit contract with Patel and Associates.
lll. REASONS FOR RECOMMENDATION/BACKGROUND
Patel and Associates has completed their audit of the financial records of the Housing Authority of
the County of Contra Costa. Patel and Associates reports that the general purpose financial statements
present fairly, in all material respects, the financial position of the Housing Authority of the County of
Contra Costa as of March 31, 2001. There were no findings. Additionally, a separate management letter
was issued that contains two recommendations to strengthen the internal controls and operating efficiency
of the Housing Authority. The Housing Authority agrees with the recommendations stated in the
management letter.
IV. CONSEQUENCES OF NEGATIVE ACTION:
Should the Board of Commissioners elect not to accept the financial audit report as performed by
the certified public accountancy firm of Patel and Associates, it would become necessary to expend
additional funds to either redo the financial audit report or contract with another certified public
accountancy firm.
CONTINUED ON ATTACHMENT: YES SIGNATURE
RECOMMENDATION OF EXECUTIVE DIRECTOR RECOMMENDATION OF BOARD
COMMITTEE
APPROVE OTHER
SIGNATURE(S):
ACTION OF BOARD ON January 15, 2002 APPROVED AS RECOMMENDED XX OTHER
VOTE OF COMMISSIONERS
I HEREBY CERTIFY THAT THIS IS A
X UNANIMOUS (ABSENT Nonp ) TRUE AND CORRECT COPY OF AN
AYES: NOES: ACTION TAKEN AND ENTERED ON THE
ABSENT: ABSTAIN: MINUTES OF THE BOARD OF
COMMISSIONERS ON THE DATE SHOWN.
ATTESTED January 15, 2002
JOHN SWEETEN,CLERK OF
THE BOARD OF COMMISSIONERS
AND COUNTY ADMINISTRATOR
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Patel
Associates Telephone: (510)452-5051
21011,Webster Street, Suite.1650 Facsimile: (510)452-3432
Certifteci Public Accountant oakland,California 9461.2 E-Mail: Pate1cpa@a0l.com
The]Board of Commissioners
Housing Authority of the County of Contra.Costa
Martinez,California
In planning and performing our audit of the financialstatements of the Housing Authority of the
County of Contra Crista (the "Authority") for the year ended lwi:lrch 31., 2001, we considered the
Authority's internal control in order to determine our auditing procedures for the purpose of
expressing an opinion: on the financial statements and not to provide assurance on the internal
control.
However, during our audit, we became aware of matters that are opportunities for strengthening
internal controls and operating efficiency.The memorandum that accompanies this letter summarizes
our'comments and suggestions regarding those matters: This letter does not affect our report: dated.
November 26, 2001,on the financial statements of the Authority.
We will review the status of these comments during our next audit engagement. We have already
discussed many of these comments and suggestions with the Authority's management, and we will
be pleased to discuss them in further detail at your convenience, to perform any additional study of
these matters,or to assist you in implementing the recommendations.
Our comments are summarized as follows-
1. Payroll Dishurselments
During our review of the controls over payroll disbursements,we noted the following:
- One incidence of vacation hours deducted per an employee pay record that did not agree
to the employee's time carol.
We recommend that management monitor payroll transactions and personnel files to enure
the recorded transactions are accurate and employees are aware of personnel policies.
2. Project Expenses
Project expenses per the accounting records are not reconciled in a t-Imely manner to ilhe
Development Department's records.
We mc€mmend that management establish a formal written policy that requires the month-1,
reconciliation of project expenses per the Fiscal Department to the Development
Department's records.
r '
ov 26
,2001
Oakland,California
HOUSING AUTHORITY OF THE COUP OF CONTRA COSTA
AUDITED FINANCIAL STATEMENTS
FOTO THE YEAR ENDED MARCH 31, 2001
Patel &
Associates
Certified Public Accountant
HOUSING AUTHORITY OF THE COUNTY OF CON'T'RA COSTA
MARCH 31,2001
TABLE OF CONTENTS
INDEPENDENT AUDITOR'S REPORT 1
FINANCIAL STATEMENTS
Combined Balance Sheet 3
Combined Statement of Revenues,Expenses and Changes in Fund Equity 4
Combined Statement of Cash.Flows
Notes to Financial Statements 6-114
SUPPLEMENTARY INFORMATION.
Combining Balance Sheet .Federal Programs
Combining Statement of Revenues,Expenses and Changes in Fund Equity-
Federal Programs 16
Combining Balance Sheet-Local Programs 17
Combining Statement of Revenues,Expenses and Changes in Fund Equity
Local Programs .18
Schedule of Expenditures of Federal Awards 119
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE AND ON
INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN
AUDIT OF FINANCIAL STATEMEN'T'S PERFORMED IN ACCORDANCE
WITH GOVERVWNT A UDrRNG STANDARDS 20-21
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH
REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON
INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB
CIRCULAR A-133 22-23
SCHEDULE OF FINDINGS AND QUEST10NED COSTS 24-25
STATUS OF PRIOR YEAR:FINDINGS AND RECOMMENDATIONS 26-27
Patel &
Associates Telephone: (5 0)452-5051
2101 Webster Street,suite 1650 t'acsimfle; ;510)4.523432
Certified Public Accountant Oakland,California 94612 i,-tnsil: 1'etelepaC2xol.com
INDEPENDENT AUDITOR'S REPORT
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 (the Authority) as of and for the year ended March 31,
2001, as listed in the table of contents. These general-purpose financial statements are the
responsibility of the Authority's 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 U.S. generally accepted auditing standards and the
standards applicable to financial audits contained in Government Auditing Standards, issued by
the Comptroller General of the United States. Those standards require that we plan and perform,
the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement. 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 the 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.
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
as of March 31, 2001, and the results of its operations and its cash flows for the year then ended
in conformity with U.S. generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued our report dated.
November 26, 2001 on our consideration of the Housing Authority of the County of Contra
Costa's internal control over financial reporting and on our tests of its compliance with certain
provisions of laws, regulations, contracts, and grants. That report is an integral part of an audit
performed in accordance with Government Auditing Standards and should be read in conjunction
with this report in considering the results of our audit.
{Jur audit was performed for the purpose of forming an opinion on the general-purpose financial
statements of the Housing Authority of the County of Contra Costa taken as a. whole, `The
accompanying financial information listed as supplementary information in the table of contents
is presented for purposes of additional analysis. Also, the accompanying schedule of
expenditures of federal awards 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,
1
and Nonprofit Organizations. These are not a required part of the general-purpose financial
statements. Such information has been subjected to the auditing procedures applied in the audit
of the general-purpose financial statements and, in our opinion, is fairly stated, in all material
respects in relation to the generalepurpose financial statements taken as a whole_
Oakland,California
November 26,2001
2
s
HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
COMBINED BALANCE SHEET
MARCH 31,2001
TOTAL
FEDERAL LOCAL (Memorandum
PROGRAMS PROGRAMS (?nlyl
ASSM
Cash and Cash Equivalents(Nate 3) $ 3,058,764 $ 223,097 $ 3,281,861
Accounts Receivable a HL`D 890,137 890,137
Accounts Receivable-Other 418,981 179,377 598,358
Accounts Receivable-Tenants 72,917 72,917
Investments(Note 13) 4,059,350 768,436 4,827,78,
Note Receivable 1,823,998 1,825,998
Prepaid Expenses and Other Assets 183,340 183,340
Interest:Receivable 34,135 34,135
Interfund Receivable(Note 4) 1,726,998 218 1,727,216
Land,Structures and Equipment(Note 14) 19,170,742 5,057 �19 175,799N
Total Assets $ 31,441,362 $ 1,176,185 $ 32,£17,547
1JADELInES AND FUND t1 JT'I Y
LIABILITIES
Accounts payable $ 303,420 $ $ 303,420
Accounts Payable- HUD 1,294,462 1;294,462
Tenants SecurityDeposits 273,499 275,499
Accrued Liabilities(Note 5) 434;457 434,45 7
Other:Liabilities 436,792 436,792
Unearned Revenue 1,601,406 179,378 1,780,78
Interfused Payable(Note 4) 1,716,562 1.0,654 1,727,216
Total Liabilities 6,062,598 190,032 6,252,630
Fluid Equity
Unreserved/Undesignated 25,378,764 986,153 25,364,417
Total Fund Equity 25,378,764 986,153 26,364,917
Total Liabilities and Fund Equity $ 31,441,362 $ 1,176,185 $ 32,617,547
The accompanying notes are an integral part of these financial statements
3
9
ROUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
COMBINED;STATE aNTOF REVENUES,EXPENSES ANIS CHANGES IN FUND EQUITY
FOR I=3MAR EMM MACH 31,2091
TOTAL
FEDERAL LOCAL (:Vlemoranducn
GUAM PROGRAM WY)
' RAT NG ��I'F NI
Rental Revenue-Tenant $ 3,432,328 $ $ 3,432,328
HLJD PHA Grants 50,182,613 50,182,613
Other Revenue 2,078,674 203,083 2,281,757
Total Operating Revenues 55,693,615 203,083 55,896,698
O=A IY jETP .S
Administration 5,488,738 79,251 5.557,999
Tenant Service 130,14I 130„141
Utilities 1,122,003 1,122,003
Ordinary Maintenance and Operations 4,216,220 4,216,220
General Expenses 501,406 501,406
Depreciation Expense 2,751,836 2,751,836
Housing Assistance Payments 41,206,170 41,246,170
Total Operating Expenses 55,416,514 79,261 55,495,775
Operating Income 277,101 123,822 4110,923
NONwO RAIM REYEWIES ZENRES)
Investment Income 223,750 27,850 251,600
Net Non-Operating Revenues(Expenses) 223,750 27,850 251,600
Net Income 500,851 151,672 652,523
Beginning Equity as of April 1,2000(As RestaW,Note 12) 90,350,398 913,3+07 91;263,705
Lose Due to Change its Accounting Policy(Note 11) (2,549,944) (4,411) (2,554,355)
Prior Period Adjustments(Moto 10) (62,922,541) (74,415) (62,995,956)
Ending Equity as of March 31,:2001 $ 25,378,764 $ 986,153 5 26,364,917
The accompanying notes are an integral part of these financial statements.
4
HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
COMBINED STATEMENT OF CASH FLOWS
FOIL Tom:::YttAtt El�$Tt:TV�,tuc>�'fit.2Q�i
Cash flows from operating activities:
Cash collected from:
HUD $ 48,850 549
Dwelling Rental 3,492,625
Repayments 469,795
Cather Miscellaneous 411,334
Cash used for:
Housing Assistance Payments 41,206,174
Employee Expenses 5,162,(;39
Administrative Expenses 6,791,758
Net cash collected from operating activities 73,833
Cash flows from investing activities:
Cash collected from:
Interest 251,600
Net cash collected from investment activities 25;,600
Cash flaws from capital and related financing activities:
Cash used for,
Construction of capital assets
Net cash used for capital and related financing activities 2,7� 88 8671
Cash flows from noncapital financing activities:
Cash used for:
Notes payable 4 285,355)
Net cash used for non capital financing activities '285,355}
Net decrease in cash (2,741+,784)
Cash and cash equivalents at beginning>ofyear 5,030,650
Cash and crash equivalents at of year $ 3,281,861
Reconciliation of operating income to net cash flows from operating activities:
Cash flows from operating activities:
Operating Income $ 400,923
Adjustments to Reconcile Operating Income to
Net Cash Provided by Operating Activities:
Prior year adjustments (339,012)
Depredation expense 2,751,836
Bad debt expense 29,583
Decrease in accounts receivable-HUD 629,705
Increase in accounts receivable-other (577,7811
Increase in accounts receivable-Tenants (2,977)
Increase in accrued interest receivable (34,135)
Decrease in prepaid expenses and other assets 40,357
Increase in Interfirnd Receivable (685,824;
Increase in Other Assets (1011,357;
Decrease in notes receivable 472,667
Decrease in accounts payable (104.532)
Decrease in accounts payable-HUD (2,856,736)
Decrease in deferred revenue {528,871}
Decrease in accrued liabilities (11 0,450;
Increase in Interfund Payable 686,559
Increase in tetrant security deposits 16,630
Increase in other liabilities 43(,792
Net cash provided by operating activities g 73,833
The accompanying notes ars an integral part of this financial statement.
5
HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED MARCH 31,2401
DOTE 1: ORGANIZATION AND CONTRACTS
A. Or ization
The Housing Authority of the County of Contra Costa (the Authority) was
established pursuant to the State Health and Safety Code in 1941 to provide
affordable housing options to low and moderate income families. The
Authority's Board of Commissioners are appointed by the County of Contra,
Costa Board of Supervisors. The members of the County's Board of
Supervisors and the Authorities Board of Commissioners are the same.
The Authority is a legally separate Agency maintaining separate accounting
records front those of the County and with its own employees. For purposes of
these financial statements the Authority is not considered to be a component
unit of the County. However, these financial statements are included in those
of the County as a non-discrete component unit. The Authority's .financial
statements include all fiends, and organizations over which Authority officials
exercise oversight responsibility.
The accompanying financial statements are those of the Loin Dent Housing
Program (Contract SF-477) and the Section. 8 Housing Progra.tn (Contract SF-
473), which includes Existing Certificate, Moderate rehabilitation and
Voucher programs and the Local Programs. A summary, of the programs
administered by the Authority is provided below to assist the reader in
interpreting such financial statements.
Following is a summary of the major programs operated by the Authorit-,r:
B. Conventional
The Authority has contracted with the HUD(Contract No. SF-477)to provide
housing for families of low-income in public housing facilities o-wned and
maintained, pursuant to the United States Housing Act of 1931 and the
Department of Housing and Urban Development Act.
Under this program, the public housing agency develops and owns properties
which are rented to qualified lave income families. The Authority has financed
these housing developments through the issuance of nates; under which HUD
has guaranteed the debts and made specific annual debt and service
contributions to the Authority.
C. Section 8
The Authority has contracted with the HUD (Contract No. SF-473) to provide
rent subsidy payments to love and moderate income families pursuant to the
United States Housing Act of 1937 and the Department Of Housing and Urban
Development Act.
6
HUD makes annual contributions to the program for housing assistance
payments on behalf of the families. Included in this annual contribution is an
allowance for administrative costs. Under this program, tenants lease directly
with private owners after being certified as eligible under program guidelines.
Tenants make payments directly to owners and the Authority makes ontbly
subsidy payments to the owners. Programs included it this annual
contribution are the Section 8 Existing Certificate, 'Voucher and Moderate
Rehabilitation. Also included are the Drug.Elimination/Weed Seed and Shelter
Plus Care Programs. The Authority monitors program compliance annually
and makes monthly Housing Assistance Payments to owners.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Basis of Accountirta
Basis of accounting refers to when revenue and expenditures or expenses are
recognized in the accounts and reported in the financial statements.
The Authority uses the accrual basis of accounting. Revenue is recognized in
the accounting period in which it becomes both earned and measurable.
Expenses are recognized in the accounting period in wbich the liability is
incurred (when goods are received or services rendered). Funds received in
advance for which services have not been performed are treated as unearned
revenue. In such instances, revenue is recognized as the earning process is
completed.
In fiscal year 1999/2000, the Authority converted the preparation of financial
statements from HUD's basis of accounting, which is an accounting practice
prescribed or permitted by the Department of Housing and Urban
Development, which varies in some respects from U.S. generally accepted
accounting principles (GAAP) to GAAP using the Governmental Model for
reporting purposes. However, the Authority has converted to the Enterprise
Model for the 2000/2001 fiscal year. The Authority applies all applicable
FASB pronouncements issued subsequent to November 30, 1989, except for
those that conflict with or contradict GASB pronouncements. The more
significant of these changes are:
1. Provision for depreciation of assets has been recorded and only hard
modernization costs are capitalized.
2. HUD's annual contributions, operating subsidy, and grants for other
programs are recorded as program income.
3. Statement of cash flows has been presented.
B. Land;Structures and Equipment
Under HUD basis accounting, Land, structures and equipment were stated at
original cost without distinguishing between soft modernization costs and hard
modernization costs and were presented in the funds to which they relate. Soft
modernization costs are used in connection with HUD capital projects but do
7
not extend the useful life of the assets. (lard modernization costs are incurred
for projects associated with the purchase of capital assets and major
constructions and improvements. No provision was made for the possible
decrease in values because of wear and tear or obsolescence and income were
not charged for the depreciation of such assets.
After the conversion from HUD basis accounting to GAAP basis accounting,
the Authority established a new capitalization policy, which requires all
acquisitions of property and equipment in excess of $5,000 and all
expenditures for repairs, maintenance, renewals, and betterments that
materially prolong the useful lives of assets be capitalized. Property arjd
equipment are carried at cost or, if donated,at the approximate fair value at the
date of donation. Depreciation is computed on a straight-line basis over the
useful lives of the assets generally as follows:
Fears
Computer Hardware and Software 3
Furniture and Equipment 5
Vehicles 5
Building Improvements ;0
Buildings
As a result, the Housing Authority wrote off all soft modernization costs and
all the property and equipment,which cost less than$5,000.
C. Accounts.Recetvsble
Receivables are principally amounts due from HUD and tenants. Allowance
for doubtful accounts has not been provided due to immateriality.
D. Estimates
Management uses estimates and assumptions in preparing financial statements,
Those estimates and assumptions affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities, and the reported
revenues and expenses. Actual results could differ from those estimates.
E. Fund Equity
Fund equity consists of unreserved/undesignated fund balance.
F. Total Columns on Combined Financial Statements
Total columns on the accompanying general-purpose financial statements are
captioned "Memorandum Only" to indicate that they are presented only to
facilitate financial analysis. Such data is not comparable to a consolidation.
G. Taxes
The Authority is exempt from federal and state income taxes. The AuthoritTd is
also exempt from property taxes but makes payments in lieu of taxes on
owned housing.
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H. Budaeb and Budgetaxy Accountfn
The Board of Commissioners adopts an operating budget no later than April 1,
This budget is revised by the Beard of Commissioners during the year to give
consideration to unanticipated revenue and expenditures primarily resulting
from events unknown at the time of budget adoption. The Authority employs
budget control by minor object and by individual appropriation accounts.
Expenditures cannot legally exceed appropriations by major abject account,
NOTE 3: CASH AND CASH EQI ALEINT
All cash held by the Authority are maintained in checking or savings accounts and
certificates of deposits. The California Government Code requires California banks
and savings and loan associations to secure the Authority's deposits not covered by
federal deposit insurance by pledging mortgages or government securities as
collateral. The market value of mortgages must equal at least 150% of the face
value of deposits. The market value of government securities must equal at least
110% 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.
Cash equivalents are short term, highly liquid investments that are both readily
convertible to known amounts of cash and so near their maturity that they present
significant risk of changes in value due to changes in interest rates,
NOTE 4 PMR-FUND RECEIVABLES f PAYABLES
Receivables Payables
Federal Programs:
Aided-Low lent 1.,691,061
Certificate Program 31,828 42,293
Moderate Rehabilitation 7,840
Shelter Plus Care 15,971
Voucher 603,431
CIA:PiCGP 514,890
Drug Elimination 61,266
Weed Seed 42,565
EDSS 65,395
CDBG 4,109 11,043
Rental Rehabilitation 4,109
County Homeless Program - 347,759
TOTAL FEDERAL PROGRAMS 1,726,998 1;716,562
Local Programs:
Management Fund 218 . 10,654
TOTALLOCALPROGRAMS 218 10.654
TOTAL FEDERAL AND LOCAL
PROGRAMS $ 1,727,216 1,7.21,216
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NOTE5: PA.YIMNT IN LIEU OF TAXES
In connection with the Conventional Housing Program, the Authority is obligated to
make annual payments in lieu of property taxes based on the lesser of assessable
value of owned housing times the current tax rate or 10% of the dwelling rents net
of utilities expense. At March 31, 2001, accrued liabilities include $65,594 for
payment in lieu of taxes.
NOTE 6: RETIREMENT PLAN
The Authority participates in a defined benefit retirement plan that is administered
by the Contra Costa County Employees' Retirement Association. All ffill-time
employees of the Authority participate 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 89 participants at March 31, 2001. "Flee
Authority contributes 15% of eligible employees' annual compensation, In
addition, the Authority also paid approximately 50% of the employees'basic annual
contributions pursuant to agreements during salary negotiations. Employer
contributions are vested (1) after 10 years of service and employee attain age 50 or
(2) 30 years of service regardless of age or (3) at mandatory 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 -nay be
withdrawn only at termination of employment or at retirement. Total payroll
subject to contributions was $3,877,139 for the year ended March 31, 2001.,
Employer contributions were $709,584 and employee contributions were $132,593,
representing 18.30% and 3.42% of payroll subject to contribution, respectively, for
the fiscal year ended March 31,2001.
The ten-year trend analysis and other disclosures required by U.S, generally
accepted accounting principles are described in the general-purpose Financial
statements of the County of Contra Costa, California as of June 30,2001.
NOTE 7: 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 err}ployees
upon separation from the Authority. Accrued vacation leave has been valued by the
Authority and has been recorded at$284,253 as of March 31, 2001.
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 Authority. The cast of vacation and sick leave is
recognized when.payments are made to employees.
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NOTE g: IES
The Authority has received funds from various Federal, and local grant programs.
It is possible that at some future date, it may be determined that the Authority was
not in compliance with applicable grant requirements. The amounts, if any, of
expenditures which may be disallowed by the granting agencies cannot be
determined at this time, although, the Authority does not expect such disallowed
amounts,if any,to materially affect the financial statements.
During September 2000 the HousingAuthority of Centra Costa County was named
as a defendant in a case of litigation. The claimant has filed for S10,000,000 in
damages for a claim involving personal injuries. The Authority's legal counsel
believes that the probability of liability exposure is high. However, he is unable to
say with any certainty as to what the possible exposure to the Housing Authority
will be, since there are two other large corporate defendants who could potentially
be held liable for the injuries.
NOTE 9 RISK MAINAGEMENT
The Authority is exposed to all common perils associated with the ownership and
rental of real estate properties. A risk management program has been established to
minimize loss occurrence and to transfer risk through various levels of insurance,
Property, casualty, employee dishonesty and public official's liability forms are
used to cover the respective perils. Insurance for these perils is carried by C=alifornia
Housing Authority Risk Management Agency (CHARMA), a Joint powers
Agreement(JPA).
Excess insurance from. $250,000 to $5,000,000 is carried through, the Housing
Authorities Risk Retention Group(HARRG), a Housing Authority Insurance Poo!
NOTE 10: PRIOR PERIOD AWTUSTMENTS
In fiscal year 200012001, the Authority converted the presentation of financial
statements from the Governmental Model to the Enterprise Model.
Accordingly,prior period adjustments to fund balances were made as follows:
Write-off fixed soft assts $ (9,065,437)
Accumulated depreciation as of March 31, 2000 (52,863,237)
Accrued compensated absences as of March 31,2:000 (285,272)
Total of adjustments related to change in reporting model (62,213,946)
HUD adjustments (87,349)
Miscellaneous Corrections (5,061)
CTAP as of April 1, 2000 (690,600)
Total of ether adjustments and corrections (783,010)
Total Prior Period Adjustments $ (62,996,956)
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NOTE 11: LOSS DUE TO CHANGE IN ACCOUNTING POLICY
The Authority changed its capitalization policy for fixed assets during the fiscal
year ending March 31, 2001. The policy prior to this change was to capitalize
all fixed assets acquired with a value of$300 or greater. Under the new policy
the Authority will only capitalize fixed assets with a value equal to or greater
than $5,000. As a result of this change in accounting policy the Authority has
written off all fixed assets acquired prior to the policy change with a value less
than the new threshold amount of$5,000.
NOTE 12. RESTATEMENT OF BEGINNING EQUITY
As part of the conversion of the Authority's financial statement presentation
from the Governmental Model to the Enterprise Model the beginning equity was
restated for each fund to reflect the investment in fixed assets previously
presented in the General Fixed Asset Account Group.
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HOUSING AUTHORITY OF THE COUNTY OF CONTRA COST
COMBEqNG BALANCE SHEET-LOCAL PROGRAMS
FGA THE YEAR=ED MARCH 3 . M
Management
F _.
ASSEI
Cash $ 223,497
Investments 768,436
Interfund Receivable 218
Land, Structures and Equipment 5,057
Accounts Receivable-Other 179,377
Total Assets $ 1,176,185
11ARMITIES AND EIM EW 3 V
LIABILITIES
Unearned Revenue $ 179,378
Interfimd Payable 10,654
Total Liabilities $ 190,432
FUND EQUITY
Fund Equity
Unreserved/Undesipated 986,153
Total Fund Equity 986,153
Total Liability and Fund Equity $ 1,176,185
17
HtiUNNG AUTHORITY OF THE COUNTY OF CONTRA COSTA
COM23TNTNG STATEMENT OF REVDWES,EXPENSES AND CHANGES IN FUND EQUITY
LOCAL PROGRAM
MR THE U"ENM MARCH 31,2001
Management
Diad
OPER MNQ U IFS
Other Revenue $ 203,083
Total Opetuting Revenues203,003
Administration 79._261
Ordinary Maintenance and Operations
General Expenses
Depreciation Expense
Total Operating Expenses 79,,261
Operating Income(Loss) 123,822
Investment Income 27,850
Net Non-Operating Revenues(Expenses) 27,850
Net Income(boss) 151,672
Beginning Equity as of April 1,2000(As Restated,Note 12) 913,307
Loss Due to Change in accounting Policy (4,+11)
Prior Period Adjustments (74,415)
Ending Equity as of March 31,2001 986,153
is
HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Pass-Through
Federal Entity
Federal Grantor/Pus-Through CFDA Identifying Federal
C rt►ntt z1 Prearam at Cluster 11t1p N untie ersclut=r c
II S_ftatm.fm of Housing and IJrhan 1hyriMucat�
Shelter Plus Care 14.238 1,325,195
Aided Low hent Housing 14.850 2,401,156
Public Housing-Comprehensive Grant Program 14.859 1,907,926
Public Housing-Drug Elimination Program 14.854 236,005
Section 8 Rental Voucher Program 14.855 40,760,055
Section 8 Moderate Rehabilitation 14.856 424,114
Section 8 Rental certificate Program 14.857 3,1-M,742
Rental Housing Rehabilitation 14.230 17,045
Passed through the City of Antioch, CA:
Community Development Block Grant(CD13G) 14.218 N/A 23,978
Passed through the County of Contra Costa.
Community Development Block Grant(CDBG) 14.218 N/A 135,030
Total HUD 50,337,458
D=Artmot of ZWtb and Hmnarn Sonim
Passed through the County of Contra Costa
Health Care for the Homeless Program(Homeless) 93.151 NIA 32,700
Total Federal Expenditures 50,370,158
Neste: Basis of Presentation
The accompanying schedule of expenditures of federal awards includes the federal grant activity of the Autl crit v
and is presented on the accrual basis of'accounting. The information in this schedule is presented it_accordance
with the requirements of()MB Circular A-133,Audits of States,Local Governments,and Non-Profit
Organizations. Therefore,some amounts presented in this schedule may differ from amounts presented in,
or used in the preparation of,the basic financial statements.
NIA: Not Available
19
This report is intended for the information of management, federal awarding agencies and pass-
through-entities and is not intended to be and should not be used by anyone other than these
specified parties.
Y A ..4>
Oakland, California
November 26,2001
21
Patel
Associates Telephon,-: (51(1)452-5051
2101 Webster Street, Suite 1650 facsimile: (510)452-3432
Certified Public Accountant Oakland, California 94612 E-mail: Patelcpa@8eLcom
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH REQUMEEMENI'S
APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER
COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133
Hoard of Commissioners
Housing Authority of the County of Contra Costa
Martinez,California
Compliance
We have audited the compliance of the Housing Authority of the County of Contra Costa (the
Authority) with the types of compliance requirements described in the U.S, QTwe of
Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to
each of its major federal programs for the year ended March 31, 2001, The Authority's major
federal programs are identified in the summary of auditor's results section of the accompanying
schedule of findings and questioned costs. Compliance with the requirements of laws,
regulations, contracts, and grants applicable to each of its major federal programs, is the
responsibility of the Authority's management. Our responsibility is to express an opinion on the
Authority's compliance based on our audit.
We conducted our audit of compliance in accordance with U.S. 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 OMB Circular AAI-33,
Audits of States, Local Governments, and Non-Profits Organizations and the previsions of the
Public and Indian Housing Compliance Supplement HUD Notices 96-32 and 97--30. 'Those
(standards and OMB A-133 require that we 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 Authority's compliance with those
requirements and performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion,. Our audit
does not provide a legal determination of the Authority's compliance with those requirements..
In our opinion, the Authority complied,in all material respects,with the requirements referred to
above that are applicable to each of its major federal programs for the year ended March 31,
2001.
Internal Control Over Compliance
The management of the Authority is responsible for establishing and maintaining effective
internal control over compliance with the requirements of laws,regulations, contracts, and grants
applicable to federal programs. In planning and performing our audit, we considered the
22
Authority's internal control over compliance with requirements that could lave a direct and
material effect on a major federal program in order to determine our auditing procedures for the
purpose;of expressing our opinion on compliance and to test and report on the internal control
over compliance in accordance with OMB Circular A-133.
Our consideration of the internal control over compliance would not necessarily disclose all
matters in the internal control that might be material weaknesses. 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 in relation 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. We noted no matters
involving the internal control over compliance and its operation that we consider to be material
weaknesses,
This report is intended for the information of management, federal awarding agencies and pass-
through entities and is not intended to be and should not be used by anyone other than these
specified parties.
' v °
Oakland,California
November 26,2001
23
HOUSING AU'T'HORITY OF THE COUNTY of CONTRA COSTA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED MARCH 31.2001
SECTION I-SUNT`WARY OF AUDITOR'S RESULTS
Financial Statements
Type of auditor's report issued: Unqualified
Internal control over financial reporting:
* Material weaknesses identified? No
• Reportable conditions identified that are not considered to be
material weaknesses? Mone reported
Noncompliance material to financial statements noted? No
Federal Awards
Internal control over major programs:
• Material weaknesses identified.? No
• Reportable conditions identified that are not considered to be
material weaknesses? ' No
Type of auditor's report issued on compliance for major programs: Unqualified
Any audit findings disclosed that are required to be reported in
accordance with section 510(a)of Circular A-133? No
Identification of major programs:
CFDA Number Kure oLFederal Prggram
14.855 section 8-Voucher Program
14.859 Comprehensive Grant Program
Dollar threshold used to distinguish between type A and type B
programs: $1,511,105
A.uditee qualified as low-tisk auditee? No
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HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR TSE YEAR ENDED MARCH 31,2001
SECTION II-FINANCIAL STATEMENT FINDINGS
No matters were reported.
SECTION III-FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
No matters were reparted.
25
HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
STA'T'US OF PRIOR YEAR FINDINGS AND RECOMMENDATIONS
MARCH 31,2001
Current Status
1, Accounting Records and Real Estate Assessment Center(REAL) Implemented
Electronic Submission(All ProMMs)
At the commencement of our audit field work we discovered that
the accounting-records contained numerous errors. We also
noted that the accounting records for some of the Authority's
programs were not being maintained in a current and up to date
manner. Numerous adjustments were required to correct the
account balances forseveralof the Authority's programs. As of
July 2000, the programs which are accounted for on a fiscal year
ending June 30 basis had not been closed for the fiscal year
ended.lune 30, 1999. Several of the accounts for these programs
also required adjustments to correctly state the account balances.
Due to the accounting records not being maintained in an
accurate and timely manner, the required unaudited electronic
submission was not prepared and submitted to R.EAC as required.
This submission had not been prepared as of the November 22,
2000,audit report date.
2. The hpTntog of Fixed Assets was not CoMpleted(All Implemented
Programs)
The results of the annual physical inventory of the Authority's
fixed assets was not reconciled to either the general ledger or to
the results of the previous years physical inventory.
3. Circumvention of internal Controls(All Programs) Implemented
During our examination of the Authority's internal controls we
noted numerous instances where established internal control
procedures were not followed. Several travel reports were paid
without 'tieing properly approved. It appears that hundreds of
unauthorized phone calls were made and charged to the
Authority. The billings for there calls were paid without being
questioned for allowability.
26
HOUSING AUTHORITY 4F THE COUNTY OF CONTRA COSTA
STATUS''OF PRIOR YEAR FINDINGS AND RECOMMENDATIONS
MARCH 31,2001
FInLins Current Status
4. Numerous Errors were noted in the files of narticants in the
Family Self Sufficiency(CFDA#s 14.855 & 14.857)
During our examination of the internal controls and tenant files
for the Family Self Sufficiency (FSS) Program we noted the
following:
1. There was no documentation available to indicate that the Implemented
FSS programs' tenants were being monitored to ensure their
program goals were being met.
2. We examined nine files for tenants participating in the FSS Implemented
Program. The result of our review of these tenants' files is as
fellows:
a. The FSS contract in four of the tenant files was Implemented
incomplete or contained incorrect information.
b. For five of the tenants an incorrect escrow amount was Implemented
paid to the tenant. These incorrect amounts were paid
due to errmrs in the escrow calculations.
C. The results of two tenants' annual reexaminations were Implemented
not calculated for the FSS Program. This resulted in the
tenant making incorrect escrow contributions.
d. For one tenant the original FSS calculation was Implemented
performed incorrectly which resulted in the tenant
making an escrow contribution.
e. The required annual escrow statement sent to one of the Implemented
FSS Program'stenants was not correct. The statement
reflected a zero balance in the tenant's account, when the
tenant actually had a balance of$2,324 plus any accrued
interest.
27