Loading...
HomeMy WebLinkAboutAUDIT 09-30-1993,! NORTH ANDOVER HOUSING AUTHORITY NORTH ANDOVER, MASSACHUSETTS FINANCIAL STATEMENTS SEPTEMBER 30, 1993 KEVlN P. MARTIN & ASSOCIATES, P. C. Certified Public Accountants I I I I I I i I I I I I I I I I I I TABLE OF CONTENTS Independent Auditors' Report Independent Auditors' Report On Compliance With Laws And Regulations Based On An Audit Of Financial Statements Performed In Accordance With Government Auditing Standards Independent Auditors' Report On Internal Control Structure Related Matters Noted In A Financial Statement Audit Conducted In Accordance With Government Auditing Standards Balance Sheet - Federally Funded Programs September 30, 1993 State-Aided Programs in Management - Combined Balance Sheet September 30, 1993 State-Aided Programs in Modernization Combined Balance Sheet September 30, 1993 State-Aided Programs in Development - Combined Balance Sheet September 30, 1993 Balance Sheet - Other Programs September 30, 1993 Statement of Income and Expenses - Federally Funded Programs - For The Year Ended September 30, 1993 State-Aided Programs in Management Combined Operating Statement For The Year Ended September 30, 1993 Analysis of Surplus - Federally Funded Programs For The Year Ended September 30, 1993 State-Aided Programs in Management Analysis of Surplus For The Year Ended September 30, 1993 Computation of Residual Receipts Federally Funded Programs For the year ended September 30, 1993 State-Aided Programs in Modernization Combined Statement of Modernization Costs September 30, 1993 State-Aided Programs in Development Combined Statement of Development Costs September 30, 1993 Notes to Financial Statements Exhibit A-1 A-2 A-3 A-4 A-5 B-1 B-2 C-1 C-2 D-1 D-2 D-3 I I I I I I I I I I I I I I I I I I TABLE OF CONTENTS Continued ADDITIONAL INFORMATION Independent Auditors' Report On Compliance With Specific Requirements Applicable To Major Federal Financial Assistance Programs Independent Auditors' Report On Compliance With the General Requirements Applicable To Federal Financial Assistance Programs Single Audit Report On The Internal Control Structure Used In Administering Federal Financial Assistance Programs Independent Auditors' Report On Compliance With Specific Requirements Applicable To Nonmajor Federal Federal Financial Assistance Program Transactions Schedule of Federal Assistance Findings, Recommendations and Replies Exhibit E I KEVIN P. MARTIN, CPA J. THOMAS HURLEY, CPA, MST IKENNETH J. DAVIN, CPA GARRETT H. DALTON III, CPA, MBA KEVIN P. MARTIN JR., CPA, MST KEVIN P. MARTIN & ASSOCIATES, P.C. Certified Public Accoun tan ts SOUTH SHORE EXECUTIVE PARK TEN FORBES WEST BRAINTREE. MA 02184-2696 TELEPHONE (617) 380-3520 FACSIMILE (617) 380-7836 To The Board of Commissioners, North Andover Housing Authority IndeDendent Auditors' ReDort I I I I I I I I I We have audited the financial statements of the North Andover Housing Authority as of and for the year ended September 30, 1993 as listed in the foregoing table of contents. The financial statements are the responsibility of the Authority's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and the standards for financial and~compliance audits contained in the Government AuditinH Standard, issued by the U. S. General Accounting Office. Those standards required 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 assess- ing 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. As described in Note 1, the Authority's policy is to prepare its financial statements on the bases of accounting practices prescribed or permitted by the Department of Housing and Urban Development and the Commonwealth of Massachusetts. These practices differ in some respects from generally accepted accounting principles. Accordingly, the accom- panying financial statements are not intended to present financial position and results of operations in conformity with generally accepted accounting principles. -1- I I I I I I I I I I I ! I I I I I I I In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the North Andover Housing Authority, at September 30, 1993 and for the year then ended, in conformity with the basis of accounting described in Note 1. Our audit was conducted for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying Schedule of Federal Financial Assistance is presented for purposes of additional analysis and is not a required part of the financial statements. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, is fairly pre- sented in all material respects in relation to the financial statements taken as a whole This report is intended for the information of the Commissioners, Management, the Commonwealth of Massachusetts and the U.S. Department of Housing and Urban Development. This restriction is not intended to limit the distribution of this report, which upon acceptance by the North Andover Housing Authority, is a matter of public record. Braintree, Massachusetts June 15, 1994 I KEVIN P. MARTIN, CPA J. THOMAS HURLEY, CPA, MST IKENNETH J. DAVIN. CPA GARRETT H. DALTON III, CPA, MBA KEVIN P. MARTIN JR., CPA, MST KEVIN P. MARTIN & ASSOCIATES, P.C. Certified Public Accountants SOUTH SHORE EXECUTIVE PARK TEN FORBES WEST BRAINTREE, MA 02184-2696 TELEPHONE (617) 380-3520 FACSIMILE (617) 380-7836 I I To The Board of Commissioners, North Andover Housing Authority I I I I I I I I I I I INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH LAWS AND REGULATIONS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED-IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS We have audited the financial statements of North Andover Housing Authority, as of and for the year ended September 30, 1993, and have issued our report thereon dated June 15, 1994. We conducted our audit in accordance with generally accepted auditing standards, Government Auditinq Standards, issued by the Comp- troller General of the United States~ the provisions of Office of Management and Budget Circular A-128, "Audits of State and Local Govern- ments,'' and the Commonwealth of Massachusetts Standards for Local Housinq Authorities for the Sinqle Audit of Housinq Authorities, issued by the Office of the State Auditor. Those standards and the OMB Circu- lar A-128 require that we plan and perform the audit tO obtain reason- able assurance about whether the financial statements are free of material misstatement. Compliance with laws, regulations, contracts, and grants applicable to the North Andover Housing Authority, is the responsibility of the North Andover Housing Authority's management. As part of obtaining reasonable assurance about whether the financial statements are free from material misstatement, we performed tests of the Authority's compliance with certain provisions of laws, regulations, contracts and grants. However, the objective of our audit of the financial statements was not to provide an opinion on overall compliance with such provi- sions. Accordingly, we do not express such an opinion. The results of our tests indicate that, with respect to the items tested, the North Andover Housing Authority 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 materi- al respects, with those provisions. -3- I I I I I I I I I I I I I I I I I I I This report is intended for the information of the Commissioners, Management, the Commonwealth of Massachusetts and the Department of Housing and Urban Development. This restriction is not intended to limit the distribution of this report, which upon acceptance by the North Andover Housing Authority, is a matter of public record. Braintree, Massachusetts June 15, 1994 -4- ! I I I I I I I I I I I I I I I I I i }(EVIN P. MARTIN, C PA J. THOMAS HURLEY, CPA, MST KENNETH J. DAVIN. CPA GARRETT H. DALTON III, CPA, MBA KEVIN P. MARTIN JR., CPA, MST KEVlN P. MARTIN & ASSOCIATES, P.C. Certified P;z blic Accou n tan ts SOUTH sHORE EXEcUTIvE PARK TEN FORCES WEST 8RAINTREE. MA 02184-2696 TELEPHONE (617) 380-3520 FACSIMILE (617) 380-7836 Board of Commissioners North Andover Housing Authority INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL STRUCTURE RELATED MATTERS NOTED IN A FINANCIAL STATEMENT AUDIT CONDUCTED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS We have audited the financial statements of the North Andover Housing Authority as of and for the year ended September 30, 1993, and have issued our report thereon dated June 15, 1994. We conducted our audit in accordance with Generally Accepted Auditing Standards and Government Auditinq Standards, issued by the Comptroller General of the United States, and the provisions of Office of Management and Budget Circular A-128, "Audits of State and Local Governments," and the Commonwealth of Massachusetts Standards for Loca% Housinq Authorities for the Sinqle Audit of Housinq Authorities, issued by the Office of the State Auditor. Those standards.and OMB Circular A-128 require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. In planning and performing our audit of the financial statements of the North Andover Housing Authority, for the year ended September 30, 1993, we considered its internal control structure in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control structure. -5- I I I I I I I I I I I I I I I I I I The management of the Authority is responsible for establishing and maintaining an internal control structure. In fulfilling this responsi- bility, estimates and judgements by management are required to assess the expected benefits and related costs of internal control structure, policies and procedures. The objectives of an internal control struc- ture are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management's authorization and recorded properly to permit the prepara- tion of financial statements in accordance with the bases of accounting described in Note 1. Because of inherent limitations in any internal control structure, errors or irregularities may nevertheless occur and not be detected. Also, projection of any evaluation of the structure to future periods is subject to the risk that procedures may become inade- quate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate. For the purpose of this report, we have classified the significant internal control structure policies and procedures in the following categories: Treasury/Financing Revenues/Receipts Purchases/Disbursements External Financial Reporting For all of the internal control structure categories listed above, we obtained an understanding of the design of relevant policies and procedures and whether they have been placed in operation, and we assessed control risk. Our consideration of the internal control structure would not necessarily disclose all matters in the internal control structure that might be material weaknesses under standards established by the American Institute of Certified Public Accountants. A material weakness is a reportable condition in which the design or operation of one or more of the internal 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 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 described above. -6- I I i I I I I I i ! ! I I I I I I i I This report is intended for the information of the Commissioners, Management, the Commonwealth of Massachusetts and the Department of Housing and Urban Development. This restriction is not intended to limit the distribution of this report, which upon acceptance by the North Andover Housing Authority, is a matter of public record. Braintree, Massachusetts June t5, 1994 -7- EXHIBIT A-1 NORTH ANDOVER HOUSING AUTHORITY NORTH ANDOVER, MASSACHUSETTS BALANCE SHEET - FEDERALLY FUNDED PROGRAMS September 30, 1993 ASSETS Cash Tenants accounts receivable Accounts receivable - other Advances Debt amortization funds Deferred charges Land, structures and equipment Total assets B-1468 $ 116,080 931 38,250 8,658 13,461 5,289,306 $ 5{466,686 ANNUAL CONTRIBUTIONS CONTRACT B-1332 B-1332 EXISTING VOUCHER $ 23,041 $ 11,087 31,698 2,250 1,864 556 1,197 $ 60,050 $ 11,64~ LIABILITIES AND SURPLUS Accounts payable Accrued liabilities Deferred credits Fixed liabilities Total liabilities Surplus Exhibit C Total liabilities and surplus $ 9,387 2,780,636 384 4,819,94~ 7,610,348 (2,143,662) $ 5,466,686 $ 23,917 $ 5,799 23,917 5,799 36,t33 5,844 $ 60¢050 $ 11,643 See accompanying notes. --8-- I I I I I I I I I ! I I I I I I I I I NORTH ANDOVER HOUSING AUTHORITY NORTH ANDOVER, MASSACHUSETTS STATE AIDED PROGRAMS IN MANAGEMENT COMBINED BALANCE SHEET September 30, 1993 ASSETS Cash Accounts receivable - tenants Accounts receivable - other Advances Deferred charges Development costs Less: Development cost liquidation Inventory furniture and equipment Development costs inventory contra Completed modernization costs Total assets PROGRAM 4001 $ 177,181 8,438 12,312 45,500 10,350 3,953,095 ( 459,000) 156,555 ( 37,800) 145,091 $ 4-011 722 LIABILITIES AND SURPLUS Accounts payable Accrued liabilities Deferred credits Grants issued Bonds and notes issued Bonds and notes retired Cumulative EOCD modernization contributions Total liabilities $ 1,496 1,375 3,353,019 459,000 (459,000) 145,091 3,500,981 Gifts and donations Valuation of fixed assets Capital reserve Operating reserve Total surplus Total liabilities and surplus _141,076 118,755 6,012 244,898 , 510,741 $ 4 011 722 See accompanying notes. -9- EXHIBIT A-2 PROGRAM .MRVP $ 3,837 154 $~ $ 1,518 1,518 2,473 2,473 $ ~,991 I I I I I I I I I I I I I I I I I I I EXHIBIT A-3 NORTH ANDOVER HOUSING AUTHORITY NORTH ANDOVER, MASSACHUSETTS STATE - AIDED PROGRAMS IN MODERNIZATION BALANCE SHEET SEPTEMBER 30, 1993 ASSETS Cash Accounts receivable Modernization costs (net) Total assets LIABILITIES Accounts payable Grants issued See accompanying notes. '-10 - Total liabilities $ 4,675 44 320,855 $ 325,574 $ 1,985 323,589 $ 325,574 I I I I I I I I I I I I I I I I I I I EXHIBIT A~4 NORTH ANDOVER HOUSING AUTHORITY NORTH ANDOVER, MASSACHUSETTS BALANCE SHEET - STATE AIDED PROGRAMS IN DEVELOPMENT September 30, 1993 ASSETS Development costs PROGRAM 705-5 $ 550,867 Total assets $ 550 867 LIABILITIES Accounts payable Grants issued Total liabilities $ 227 550,640 $ 550 867 See accompanying notes. -11- I I I I I I I I I I I I I I I I I I I ASSETS Cash Accounts receivable Total assets LIABILITIES Advances payable Accounts payable Payroll withholdings Total liabilities EXHIBIT A-5 NORTH ANDOVER HOUSING AUTHORITY NORTH ANDOVER, MASSACHUSETTS BALANCE SHEET - OTHER PROGRAMS SEPTEMBER 30, 1993 REVOLVING FUND $ 96,891 interprogram 5,1.79 $ 102,070 $ 86,000 10,590 5,480 $ 102,070 See accompanying notes. -12-' NORTH ANDOVER HOUSING AUTHORITY NORTH ANDOVER, MASSACHUSETTS STATEMENT OF INCOME AND EXPENSES FEDERALLY FUNDED PROGRAMS For the year ended September 30, 1993 EXHIBIT B-1 OPERATING INCOME Dwelling rental Total rental income Interest on general'fund investment Interest on operating reserve investment Other income Total operating income OPERATING EXPENSES Administrative Utilities Ordinary maintenance and operation General expense Nonroutine maintenance Housing assistance payments Total operating expenses Net operating profit (loss) OTHER (CREDITS) CHARGES Interest on notes and bonds payable Loss on disposition of equipment Prior years adjustments affecting residual receipts Prior year adjustments not affecting Residual receipts Total other (credits) charges B-1468 289,491 289,491 2,308 7,558 299,357 53,087 109,422 60,080 60,705 8,400 291,694 7,663 319,321 48,148 2,058 686,034 1,055,561 ANNUAL CONTRIBUTIONS CONTRACT B-1332 B-1332 EXISTING VOUCHER $ $ 121 741 165 6,464 1,832 7,205 2,118 32,119 12,603 25,281 9,164 422,327 159,540 479,727 181,307 (472,522) (179,189) 473 137 473 137 Net income (loss) $(1~047,898) $ (472,99.5) $(179,326) See accompanying notes. -13- I ! I ! I I I I I I I I I I I I I I I NORTH ANDOVER HOUSING AUTHORITY NORTH ANDOVER, MASSACHUSETTS STATE AIDED PROGRAMS IN MANAGEMENT COMBINED OPERATING STATEMENT For the year ended September 30, 1993 OPERATING RECEIPTS Shelter rent Interest on investments Other operating receipts Administrative fee Total operating receipts PROGRAM 4001 $ 478,037 3,098 3,259 484,394 OPERATING EXPENDITURES Administration Utilities Ordinary maintenance and operation General expense EOCD directed costs Total operating expenditures Income/(deficit) before nonroutine expenditures NONROUTINE EXPENDITURES Nonroutine maintenance Prior year adjustment Replacement of equipment Total nonroutine expenditures Net income (deficit) 73,927 172,777 115,457 58,600 782 421,543 62,851 6,769 2,380 2,701 11,850 $ 51.oo! Year-end Settlement of Leased Housing Program Total landlord payments Total charges to tenants Net rental assistance payments Total partial payments received from EOCD for fiscal year Overpayment due EOCD See accompanying notes. -14- EXHIBIT B-2 PROGRAM MRVP $ 385 122 1,380 1,887 4,443 1,108 5,551 ( 3,664) 95 95 $(3,.759) $ 44,842 44,842 45,791 $ 949 UNRESERVED SURPLUS Balance at September 30, 1992 Reversal of prior audit adjustments Balance at September 30, 1992 when books were closed Adjustment to balance at September 30, 1992 Adjusted balance at September 30, 1992 Net loss year ended September 30, 1993 (Provision for) Reduction of operating reserve for the year ended September 30, 1993 (Provision for) Reduction of project account unfunded for the year ended September 30, 1993 Balance at September 30, 1993 NORTH ANDOVER HOUSING AUTHORITY NORTH ANDOVER, MASSACHUSETTS FEDER/LLLYFUNDED PROGRAMS ANALYSIS OF SURPLUS For the year ended September 30, 1993 B-1468 ANNUAL CONTRIBUTIONS CONTRACT B-1332 EXISTING $(3,508,921) 686,041 $(3,362,901) ( 165,754) (2,822,880) (3,528,655) (2,822,880 165,754 (3~362,901) (1,047,898) ( 472,995) ( 5,605) 527 (3,876,383) 149,315 (3,686,054) EXHIBIT C- 1 B-1332 VOUCHER $ (674,744) (674,744) (674,744) (179,326) 761 ( 18,921) (872,230) See accompanying notes. -15- NORTH ANDOVER HOUSING AUTHORITY NORTH ANDOVER, MASSACHUSETTS FEDERALLY FUNDED PROGRAMS ANALYSIS OF SURPLUS For the year ended September 30, 1993 EXHIBIT C-1 B-1468 ANNUAL CONTRIBUTIONS CONTRACT B-1332 B-1332 EXISTING VOUCHER RESERVED SURPLUS OPERATING RESERVE Balance at September 30, 1992 Reversal of prior audit adjustments Balance at September 30, 1992 when books were closed Provision for (Reduction of) operating reserve for the year ended September 30, 1993 Balance at September 30, 1993 135,080 259 $ 35,463 $ 6,605 135,339 35,463 6,605 5,605 140,944 ( 527) ( 761) 34,936 5,844 PROJECT ACCOUNT - UNFUNDED Balance at September 30, 1992 Reversal of prior audit adjustments Balance at September 30, 1992 when books were closed Adjustment to balance at September 30, 1992 Adjusted balance at September 30, 1992 Provision for (Reduction of) project account - unfunded for the year ended September 30, 1993 Balance at September 30, 1993 204,406 165,754 220,888 370,160 220,888 ( 165,754) 204,406 220,888 ( 149,315) 18,921 55,091 239,809 See accompanying notes. -16- m m m m m m m m NORTH ANDOVER HOUSING AUTHORITY NORTH ANDOVER, MASSACHUSETTS FEDERALLY FUNDED PROGRAMS ANALYSIS OF SURPLUS For the year ended September 30, 1993 m m EXHIBIT C-1 m m B-1468 ANNUAL CONTRIBUTIONS CONTRACT B-1332 B-1332 EXISTING VOUCHER CUMULATIVE HUD CONTRIBUTIONS Balance at September 30, 1992 Operating subsidy for the year ended September 30, 1993 Balance at September 30, 1993 $ 1,591,777 1,591,777 $ 3,159,692 $ 453,856 472,468 178,565 3,632,160 632,421 Total surplus $(2,143,662) $ 36,133 $ 5 844 See accompanying notes. -17- I I I I I I I I I I I I I ! I I I I ! NORTH ANDOVER HOUSING AUTHORITY NORTH ANDOVER, MASSACHUSETTS STATE AIDED PROGRAMS IN MANAGEMENT ANALYSIS OF SURPLUS For the year ended September 30, 1993 VALUATION OF FIXED ASSETS Balance at September 30, 1992 Purchase of fixed assets Adjustments Balance at September 30, 1993 PROGRAM 4001 $ 89,172 2,702 26,881 118,755 CAPITAL RESERVE Balance at September 30, 1992 Balance at September 30, 1993 6,012 6,012 OPERATING RESERVE Balance at September 30, 1992 Net income (loss) Balance at September 30, 1993 193,897 51,00! 244,898 DONATIONS Balance at September 30, 1992 Balance at September 30, 1993 141,076 141,076 Total surplus $ 51o,7~1 See accompanying notes. -18- EXHIBIT C-2 PROGRAM MRVP 6,232 (3,759) 2,473 $2,473 m m m? 0 0 I I i I I I Z 0 0 -~ · ~0 -,-I 0 4-) 0 m I I I I I I I I I I I I I I I I I I I EXHIBIT D-2 NORTH ANDOVER HOUSING AUTHORITY NORTH ANDOVER, MASSACHUSETTS STATE-AIDED PROGRAMS IN MODERNIZATION COMBINED STATEMENT OF MODERNIZATION COSTS September 30, 1993 Administration Planning Contract Costs Furniture and equipment Gross Modernization Costs Less: Interest Income Modernization Costs (Net) WORK PLAN 19602-1003 $ 4,175 42,666 272,815 14,691 334,347 13,492 $ 320,855 See accompanying notes. -20- I ! I I I I I I I I I I I I I I I I I NORTH ANDOVER HOUSING AUTHORITY NORTH ANDOVER, MASSACHUSETTS STATE AIDED PROGRAMS IN DEVELOPMENT STATEMENT OF DEVELOPMENT COSTS September 30, 1993 Administration Architectural and Engineering Site Acquisition Structures Construction costs Equipment Total Development Costs Less: Interest Income Other Income Development Costs See accompanying notes. -21- EXHIBIT D-3 PROGRAM 705-5 12,616 58,620 254,272 264,392 7,399 4,220 601,519 26,299 24,353 $ 550,867 I I I I i I I I I I I I I I I I I I I NORTH ANDOVER HOUSING AUTHORITY NORTH ANDOVER, MASSACHUSETTS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1993 Note 1 - Suaunary of Si.qnificant Accountinq Policies and ReDortinq Entity A) Orqanization - The North Andover Housing Authority ("The Authority") is a government entity which was organized under the laws of the Commonwealth of Massachusetts to provide low rent housing for qualified individuals in accordance with the rules and regulations prescribed by the Department of Housing and Urban Development and the Commonwealth of Massachusetts. ReDortinq Entity The Authority is governed by a Board Commissioners. The Board has governance responsibilities over all activities related to low rent housing within the Town of North Andover. The Authority receives funding from federal government sources and must comply with the applicable requirements of those funding sources. The Housing Authority is not included in any other governmental "reporting entity" as defined in Section 2100 Codification of Governmental Accountinq and Financial ReDortinq Standards since the Board members have decision making authority, the power to designate management, the responsibility to significantly influence operations, and primary accountability for fiscal matters. The criteria used in determining the scope of the entity for financial reporting purposes are as follows: The ability of the Board to exercise supervis'ion of a component unit's .financial interdependency. The Board's governing authority extends to the final decision making authority and is held primarily ac- countable for decisions. The Board appoints the management of an agency who is responsible for the day-to-day operations, and this management is directly accountable to the Board. The ability of the Board to significantly influence operations through budgetary approvals, sign and autho- rize contracts, exercise control over facilities, and approve the hiring or retention of key managerial personnel. The ability of the Board to have absolute authority over all funds of the agency and to have accountability in fiscal matters. -22 - I i I I I I I I I I ! I I I I I I I I NORTH ANDOVER HOUSING AUTHORITY NORTH ANDOVER, MASSACHUSETTS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1993 Continued Note i Summary of Organization, Si.qnificant Acco,,ntinq Policies and ReDortinq Entity Continued The activity of a component unit is for the benefit of the reporting entity and/or its residents, and is conducted within the geographic boundaries of the reporting entity. Based upon the above criteria all the operations of the PHA are included in these financial statements and there are no operations or component units which have been excluded in this report. The financial statements are prepared on the basis of accounting prescribed or permitted by the Department of Housing and Urban Development and the Commonwealth of Massachusetts, since all of its assets are aided by these programs. Under this basis of accounting, the public housing operations are not considered to be a self-sustaining activity. The financial statements include PHA owned under Annual Contributions Contract number B-1468 and Section 8 Housing Assis- tance Existing and Voucher Programs under Annual Contributions Contract number B-1332. A description of the Non-Federally Aided programs is as follows: State-Aided Projects The Authority prepares its financial statements for its state-aided projects on the basis of accounting prescribed by the Executive Office of Communities and Development. Under this method of accounting, the Authority's operations are not considered to be self-sustaining, and, therefore, its financial statements do not show provisions for depreciation of structure and equipment. Capital facilities are financed either by grants from the State or by debt, which the State guarantees and subsidizes. The Authority receives from the State additional subsidies that are applicable to operating deficits that are credited to income. -23 - I I I I I I I I I I I I i I i I I I ! NORTH ANDOVER HOUSING AUTHORITY NORTH ANDOVER, MASSACHUSETTS NOTES TO FINANCIAL STATEMENTS - Continued SEPTEMBER 30, 1993 Note I - Summary of Organization, Significant Accountinq Policies and Reportinq Entity Continued B) C) D) E) F) G) H) I) J) Revolvinq Fund - This fund is maintained as a common paying agent for all programs. Accounts receivable are due from PHA programs and advances represent funds received from the same program. Buildings and equipment are recorded at cost and no provisions for depreciation of these facilities is provided. Donated assets are recorded at fair market value at the date of donation. Major repair expenditures funded out of operations, such as painting, roofing and plumbing, are charged against income. Collection losses on accounts receivable are charged against income on the specific write-off method. The Authority is a government entity which is subsidized by the Federal Government and the Commonwealth of Massachusetts. The Authority is not subject to Federal or State income taxes, nor is it required to file Federal or State income tax returns. Subsidies received from the Department of Housing and Urban Development, whether for capital expenditure or operating purposes, are recorded as a contribution to surplus. Investments are stated at cost. Investment securities are normally held to mature at par value and adjustments are made to the investment portfolio to reflect increases/(decreases) in gains made. Inventories of materials are valued at lower of cost or market, cost being determined on a first-in, first-out basis. The costs of accumulated unpaid vacation and sick leave are reported in the period paid rather than in the period earned. Interest expenses on notes and bonds and interest income on the related debt proceeds are capitalized during the project development period through the date of full availability in accordance with regulations from the department of Housing and Urban Development -24- I I I I I I I I I I I i I ! I I i I I NORTH ANDOVER HOUSING AUTHORITY NORTH ANDOVER, MASSACHUSETTS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1993 Continued Note 2 - Notes Payable and Lonq-Term Debt The notes payable and long-term debt at September 30, 1993 consisted of the following: Notes Payable HUD permanent notes, interest rate 6.625% $4,819,941 Note 3 - Summary of Fixed Assets The following is a summary of changes in general fixed assets: Building and equipment: Project MA107-1 & 2 (Federal) Project 4001 (State) Equipment: Section 8 Existing B-1332 (Federal) Balance at 09-30-92 Additions Disposal Balance at 09-30-93 $5,337,454 $ -0- $ 48,148 $5,289,306 4,187,359 29,582 -0- 4,216,941 1,197 -0- -0- 1,197 Construction in Progress: Modernization (State) 308,744 12,111 -0- 320,855 Development Project 705-5 (State) 542,493 8,374 -0- 550,867 -25- I I I ! i I I I I I I ! I I I I i I I NORTH ANDOVER HOUSING AUTHORITY NORTH ANDOVER, MASSACHUSETTS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1993 Continued Note 4 InterprogramAdvances At September 30, 1993, interprogram advance of the Authority were as follows: Program Owing Program Owed $ Amount Revolving Fund LHA Owned Revolving Fund Section 8 Existing Section 8 Voucher Revolving Fund Program 707 Program 705 Devel Program 705 Devel LHA Owned Revolving Fund Section 8 Existing Revolving Fund Revolving Fund Program 4001 Revolving Fund Revolving Fund Program 4001 $ 38,250 8,861 2,250 5,640 2,195 45,500 569 187 40 Note 5 - Insurance and collateralization of deposits Bank balances of deposits, classified as cash or investments as of September 30, 1993 are entirely insured or collateralized with securities held by the depositories in their name. -26- I I I I I I I I I I I I I i I I I I I ADDITIONAL INFORMATION -27- I I I I I I I I I i I I I I I I I I I KEVIN P. MARTIN, CPA J. THOMAS HURLEY, CPA, MST KENNETH J. DAVIN. CPA GARRETT H. DALTON III, CPA, MBA KEVIN P. MARTIN JR., CPA, MST KEVIN P. MARTIN & ASSOCIATES, P.C. Certified P. blic Accou. ta. ts SOUTH SHORE EXEcUTIvE PARK TEN FORBES wEST BRAINTREE, MA 02184-2696 TELEPHONE (617) 380-3520 FACSIMILE (617) 380-7836 Board of Commissioners North Andover Housing Authority INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO MAJOR FEDERAL FINANCIAL ASSISTANCE PROGRAMS We have audited the financial statements of the North Andover Housing Authority as of and for the year ended September 30,-1993, and have issued our report thereon dated June 15, 1994. We have also audited the North Andover Housing Authority's compliance with the requirements governing types of services allowed or unallowed; eligibility; reporting; special tests and provisions as required by the Compliance Supplement for Single Audits of State and Local Governments; 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 September 30, 1993. The management of the Authority, is responsible for the Authority's compliance with those requirements. Our responsibility is to express an opinion on compliance with those requirements based on our audit. We conducted our audit of compliance with these requirements in accordance with Generally Accepted Auditing Standards, Government Auditinq 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 North Andover Housing Authority's compliance With those requirements. We believe that our audit provides a reasonable basis for our opinion. -28 - I I I I I I I I I I I I I I I I I I I The results of our audit procedures did not disclose any immaterial instance of noncompliance with requirements referred to above. In our opinion, the North Andover Housing Authority complied in all material respects with the requirements governing types of services allowed or unallowed; eligibility; reporting; and special tests and provisions as required by the Compliance Supplement for Single Audits of State and Local Governments that are applicable to each of its major federal financial assistance programs for the year ended September 30, 1993. This report is intended for the information of the Commissioners, Management, the Commonwealth of Massachusetts, and the U.S. Department of Housing and Urban Development. This restriction is not intended to limit the distribution of this report, which upon acceptance by the North Andover Housing Authority, is a matter of public record. Braintree, Massachusetts June 15, 1994 I KEVlN P. MARTIN, CPA J. THOMAS HURLEY, CPA, MST IKENNETH J. DAVIN, CPA GARRETT H. DALTON III, CPA, MBA KEVlN P. MARTIN JR., CPA, MST KEVlN P. MARTIN & ASSOCIATES, P.C. Certified Public Accountants SOUTH SHORE EXECUTIVE PARK TEN FORBES WEST BRAINTREE, MA 02184-2696 TELEPHONE (617) 380-3520 FACSIMILE (617) 380-7836 I I I Board of Commissioners North Andover Housing Authority INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH THE GENERAL REQUIREMENTS APPLICABLE TO FEDERAL FINANCIAL ASSISTANCE PROGRAMS I I I I I I I I I I I We have audited the financial statements of the North Andover Housing Authority as of and for the year ended September 30, 1993, and have issued our report thereon dated June 15, 1994. We have applied procedures to test the North Andover Housing Authority's compliance with the following requirements applicable to its federal financial assistance programs, which are identified in the schedule of federal financial assistance for the year ended September 30, 1993: Political Activity Civil Rights Cash Management Federal Financial Reports 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 Authority's 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 second paragraph of this report. With respect to items not tested, nothing came to our attention that caused us to believe that the Authority had not complied, in all material respects, with those requirements. Also, the results of our procedures did not disclose any immaterial instances of noncompliance with these requirements. -30- I I I I I I I I I I I I I I ! I I I I This report is intended for the information of the Commissioners, Management, the Commonwealth of Massachusetts and the U.S. Department of Housing and Urban Development. This restriction is not intended to limit the distribution of this report, which upon acceptance by the North Andover Housing Authority, is a matter of public record. Braintree, Massachusetts June 15, 1994 -31- I I I I I I I I I I I I I I I I I I I KEVIN P. MARTIN, CPA J. THOMAS HURLEY, CPA, MST KENNETH J. DAVIN, CPA GARRETT H. DALTON III, CPA, MBA KEVIN P. MARTIN JR., CPA, MST KEVIN P. MARTIN & ASSOCIATES, P.C. Certified Public Accountants SOUTH SHORE ExEcUTIvE PARK TEN FORBEs WEST BRAINTREE, MA 02184-2696 TELEPHONE (617) 380-3520 FACSIMILE (617) 380-7836 Board of Commissioners North Andover Housing Authority SINGLE AUDIT REPORT ON THE INTERNAL CONTROL STRUCTURE USED IN ADMINISTERING FEDERAL FINANCIAL ASSISTANCE PROGRAMS We have audited the financial statement of the North Andover Housing Authority for the year ended September 30, 1993 and have issued our report thereon dated June 15, 1994. We have also audited the North Andover Housing Authority's compliance with requirements applicable to major federal financial assistance programs and have issued our report thereon dated September 30, 1993. We conducted our audits in accordance with generally accepted auditing standards; Government Auditinq 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 Circular A-128 require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether the North Andover Housing Authority complied with laws and regulations, noncom- pliance with which would be material to a major federal financial assistance program. In planning and performing our audit for the year ended September 30, 1993 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 financial statements and on its compliance with requirements applicable to major programs and not to provide assurance on the internal control structure. This report addresses our consideration of internal control structure policies and procedures relevant to compliance with requirements applicable to federal financial assistance programs. We have addressed policies and procedures relevant to our audit of the financial statements in a separate report dated September 30, 1993. -32 - I I I I I I I I I I I i I I I I I i I The management of the North Andover Housing Authority, is responsible for establishing and maintaining an internal control 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 objectives of an internal control structure are to provide management with reasonable, 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 financial statements in accordance with the bases of accounting described in Note 1, 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 evaluation of the structure to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate. For the purpose of this report, we have classified the significant internal control structure policies and procedures used in administering federal financial assistance programs in the following categories: Accounting Controls: Treasury/Finance Revenues/Receipts Purchases/Disbursements External Financial Reporting Administrative Controls-General: Political Activity Civil Rights Cash Management Federal Financial Reports Allowable Costs/Cost Principles Drug-Free Workplace Administrative Requirements Administrative Controls-Specific: Types of services allowed or unallowed Eligibility Reporting Cost Allocation Special Requirements - HUD Housing Assistance Programs 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. -33 - I I I I I I I I I I I I I I I I I I I During the year ended September 30, 1993, the North Andover Housing Authority expended 80.6% of its total federal financial assistance 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 noncom- pliance with specific requirements, and general requirements that are applicable to each of the Authority's major federal financial 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 Our consideration of the internal control structure would not necessarily disclose all matters in the internal control structure that might be material weaknesses under standards established by the American Institute of Certified Public Accountants. A material weakness is a reportable condition in which the design or operation of one or more of the internal 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 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 described above. This report is intended solely for the use of The Commissioners, Management, the Commonwealth of Massachusetts and the U.S. Department of Housing and Urban Development and should not be used for any other purpose. This restriction is not intended to limit the distribution of this report, which upon acceptance by the North Andover Housing Authority, is a matter of public record. Braintree, Massachusetts June 15, 1994 -34- I KEVIN P. MARTIN, CPA J. THOMAS HURLEY, CPA, MST IKENNETH J. DAVIN, CPA GARRETT H. DALTON III, CPA, MBA KEVIN P. MARTIN JR., CPA, MST KEVlN P. MARTIN & ASSOCIATES, P.C. Certified Public Accoun tan ts SOUTH SHORE EXECUTIVE PARK TEN FORBES WEST BRAINTREE. MA 02184-2696 TELEPHONE (617) 380-3520 FACSIMILE (617) 380-7836 To The Board of Commissioners North Andover Housing Authority I I I I I ! I I I I I I INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO NONMAJOR FEDERAL FINANCIAL ASSISTANCE PROGRAM TRANSACTIONS We have audited the financial statement of the North Andover Housing Authority as of and for the year ended September 30, 1993 and have issued our report thereon dated June 15, 1994. In connection with our audit of the financial statements of the North Andover Housing Authority and with our consideration of the North Andover Housing Authority internal control structure used to administer federal financial assistance programs, as required by Office of Management and Budget Circular A-128, "Audits of State and Local Governments," we selected certain transactions applicable to certain nonmajor federal financial assistance programs for the year ended September 30, 1993. As required by OMB Circular A-128, we have performed auditing procedures to test compliance with the requirements governing types of services allowed or unallowed; eligibility; reporting; special tests and provisions as required by the Compliance Supplement for Single Audits of States and Local Governments, that are applicable to those transactions. Our procedures were substantially less in scope than an audit, the objective of which is the expression of an opinion on the North Andover Housing Authority's compliance with these requirements. 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 preceding paragraph. With respect to items not tested, nothing came to our attention that caused us to believe that the North Andover Housing Authority had not complied, in all material respects, with those requirements. Also, the results of our procedures did not disclose any immaterial instances of noncompliance with those requirements. -35- I I I I I I I I I I I I I I I I I I I This report is intended for the information of the Commissioners, Management, the Commonwealth of Massachusetts, and the U.S. Department of Housing and Urban Development. This restriction is not intended to limit the distribution of this report, which upon acceptance by the North Andover Housing Authority, is a matter of public record. Braintree, Massachusetts June 15, 1994 -36- I I I I I I I ! i I I I I i I I I I I NORTH ANDOVER HOUSING AUTHORITY NORTH ANDOVER, MASSACHUSETTS SCHEDULE OF FEDERAL ASSISTANCE FOR THE YEAR ENDED SEPTEMBER 30, 1993 Federal Financial CFDA Assistance Program Number Received Income Major Federal Assistance Proqrams: Department of Housing and Urban Development: LHA Owned Programs : Debt Service 14.850 Operations 14.850 Section 8 Programs: Operations Total major programs 14. 857 Exhibit E Total Federal Financial Assistance Expenditures -0- -0- 319,321 -0- 299,357 293,752 -0- 299,357 613,Q73 472,468 $ 7,205 472,468 $ 306,562 Non Major Federal Assistance Proqram: Department of Housing and Urban Development: 178,565 178,565 $ 645,299 2,118 2,118 $ 313-175 -37- Section 8 Voucher Programs: Operations 14.855 $ 480,200 $ 1,021,273 181,444 181,444 $.1 266 871 NORTH ANDOVER HOUSING AUTHORITY NORTH ANDOVER, MASSACHUSETTS SEPTEMBER 30, 1993 FINDINGS, RECOMMENDATIONS AND REPLIES The audits for the years ended September 30, 1993 and 1992 disclosed no material instances of non-compliance with laws and regulations, material weaknesses in internal control structure, or questioned costs. -38-