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HomeMy WebLinkAboutAUDIT 04-01-1959 -- 04-30-1960The Commonwealth of Massachusetts DEPARTMENT OF THE AUDITOR :;'ep°rt on the P~xamlnat~on of the Accountr · of the North Andover ~usIn~; From Aprli 1, 19D9 to April 30, 1960 SE'P I ,5 1960 Mr. John J. Lyons Town Clerk 518 Great Pond Road North Andover, Massachusetts Dear Sir: This Department has completed an examination of the accounts of the North Andover Housing Authority for the period from April l, 1959 to April 30, 1960. herewith. A report covering this examination is enclosed Very truly yours, Auditor 60-H-88 TABLE OF CONTENTS Organization Statutory References Statistical Data Introduction Scope of Audit Notes and Comments Financial Statements: I II III V VI VII VIII IX X ?roJ,ect 200-1 Receipts and Disbursements, April 1, 1959 to April 30, 1960 Operating Statement, October 1, 1959 to April BO, 1960 Analysis of Operating Reserve, April l, 1959 to April 30, 1960 Balance Sheet, April 30, 1960 Debt Service Schedule, April 30, 1960 Comparison of Approved Budget with Actual Operations, Fiscal Year Ended September 30, 1959 Comparative Operating Statement, Five Fiscal Years Ended September 30, 1959 Project 667,-1,, Receipts and Disbursements, September 14, 1959 to April 30, 1960 Balance Sheet, April 30, 1960 Analysis of Development Costs, April 30, 1960 ~age, 1 2 4 5 9 lO ll 12 13 15 16 17 18 19 60-H-88 -1- ORGANIZATION April 30, 1960 The North Andover Housing Authority is authorized by the General Laws, Chapter 121, Section 26K, as amended. Name Bernard W. Bingham Joseph J. Morkeski Members Title Vice-Chairman Assistant Treasurer and Representative of the State Housing Board Chairman Treasurer Member Officer Raymond C. Fountain Thomas L. Foulds Alfred H. McKee * Annual Town Election T~er~..Expires March 1961- July 27, 1961 March 1962' March 1964- March 1965' Na~.e Titl~ Salar2. Executive Director and Acting Secretary Positions Bonded Stewart P. Wilson $1,200 O0 per year All positions are bonded in the amount of $10,000.00 each under the blanket bond of the State Housing Board. With Project 667-1 currently under Development additional coverage was secured in the amount of $10,000.00 for each of the following positions: Check Signer Check Countersigner Alternate Check Signer Alternate Check Countersigner 60-I4-88 -2- STATUTORY Housing Authority ~aw: Section 26I to 26CCC inclusive, of Chapter 121 of the General Laws, as amended Act to Provide Housing for Veterans: Chapter 200 of the Acts of 1948, as amended Act to Provide Housing for Elderly Persons of Low Income: Chapter 667'of the Acts of 1954, as amended STATISTIqAL DATA Project 200-1 Location Baldwin Street Francis Street Number of Units Number of Units Occupied Bonds Outstanding Interest Rate Due Dates Maximum Annual Subsidy Final Subsidy Payment Average Rent (April 1960) 24 24 $195,000 O0 i 3/4 Serially until October 1, 1990 $5,85o co For Year Ending September 30, 1990 $45 90 Contract for Financial Assistance, Dated March 3, 1949, as amended August 31, 1950: Number of Development Costs~ Number of Units,,, Total" Per ,Unit Bu,i!dings ~4 ~2~,~, 000 O0 ~ 6 ~Descrlption 2} story row, woodframe, ashphalt shingles, sane brick veneer 60-H-88 -3- STATISTICAL DATA (CONTINUED - 2) Project 200-1 (Co, n, tinued) Rents: Number of Percentage of Minor Admission Continued Income Used Dependents Income Occupancy in Computing in Family Limit Limit , ~ Rents, Minimum Rent i $3,900 oo $4,400 oo 2 ~,150 O0 4,600 O0 16%~ 3* 4,300 oo 4,800 oo $30 oo 26 50 23 50 * $200.00 deduction from total family income for each minor dependent in excess of three. project 667-1 Preliminary Deve~0Pment Status Location Street Unnamed Number of Units Proposed 4O Notes Outstanding $440,000 O0 Interest Rate 2.49~ Premium Received $2 00 Date of Notes September 11, 1959 Due Date September 14, 1960 Maximum Annual Subsidy Not Yet Determined Contract for Financial Assistance Dated July 17, 1959: $440,000 O0 60-H-88 -4- In confoEnance with Chapter 682 of the Acts of 1949,an examination has been made of the accounts of the North Andover Housing Authority.covering the period from April l, 1959 to April 30, 1960. The Authority maintains a separate set of books for each project under its direction. The financial records of the Authority which are subject to audit follow: Chapter 200 - Project 200-1 Chapter 66? - Project 667-1 SCOPE OF AUDIT General: Trial balances were taken of the general ledgers as of April 30, 1960 and necessary adjustments were made for audit purposes. The financial reports sent to the State Housing Board during the period under audit were checked to the Authority's books. The minutes of the meetings were read. The insurance policies were exam- ined and listed. Cash: The cash was balanced and the bank accounts were reconciled as of April 30, 1960 and May 10, 1960. Cash book footings %~ere tested. Bank deposit slips were test checked to the cash books. Income: A trial balance was taken of the tenants' ~ccounts as of April 30, 1960 and May 10, 1960 and the accounts out- .~tanding as of May 10, 1960 were verified by correspondence. The ~ecorded income was checked by applying the proper rental percentage~ ~tlined in the Management Resolution to the tenants' reported Inc¢~e. The potential income thus determined was checked to the rent schedules. Used rent receipts were checked to the cash book and the tenants, accounts. An inventory was taken of the unused rent receipts. The miscellaneous income was verified. Investments: The investments were verified by correspond- ence with the depositories. The funds in the custody of the fiscal 60-H-88 agent were likewise verified. Contracts: of the awards. .Expenditures: celed checks and invoices. -5- Contract awards were checked for the propriety The expenditures were test checked to can- Fiscal Agent,s Account: The activity in the Debt Service Fund relative to the retirement of bonds and interest on outstanding bonds was checked. State Financial Assistance: The contmact between the Commonwealth of Massachusetts, acting through the State Housing Board, and the Authority relevant to the guaranty of notes of the Authority issued to finance the cost of the Housing for the Elderly Project was examined and found to be in proper form. The guaranty of the bonds and interest on Project 200-1, together with the annual Commonwealth Contributions, was also checked. Project 667-1: This project is in the preliminary stages of development, construction has not yet begun. The development costs to April 30, 1960 were analyzed and the Certificate of Purposes and Cash Requirements as prepared by the State Housing Board was checked. P.roJect Visit: Project 200-1 was visited during the progress of the audit and a visual inspection was made of the exteriors of the dwellings and the grounds. 60-H-88 -6- NOTES AND COMNEN~S Pr.o.~ect 200-1: 1. Debt Service .Payment: This project pays into its Debt Service Fund each fiscal year from rental income an amount which, together with amounts received from other sources, equals the fiscal year,s debt requirements. For the fiscal year ending September 30, 1960, the debt service requirements for this project were computed as follows: Funds Required: Interest Payable: April 1, 1960 October 1, 1960 Bonds Payable: October 1, 1960 $1,706 25 1,706 25 5,000 O0 $8,412 50 Funds Provided: Commonwealth Contribution Project Requirement oo 562 50 50 2. Commonwealth Contribution: Chapter 200 of the Acts of 1948 was enacted by the General Court to provide housing principally for veterans of low income. Since the rental rates charged tenants are set at a comparatively low figure an annual deficit from operations would result if it were not for the annual subsidy paid by the Commonwealth. Annual comtributions by the Commonwealth toward the operations of this Chapter 200 Project since it acquired Management Status on October 1, 1950 have been as follows: 60-H-88 -7- Maximum Annual Contribution $5,85o co Actual Commonwealth Contributions: Fiscal Year Ended I, September. 30 . Amount 1951 $ 5,85O O0 1952 5,850 OO 1953 5,850 OO 1954 4,831 68 1955 5,850 co 1956 4,850 00 1957 2,466 34 1958 5,850 O0 1959 5,850 09 47, 48 3. Cash: The balance of the Administration~und Cash account as of April 30, 1960 was $12,898.30. Since this balance is greatly in excess of the amount required to meet normal operating ex- penditures it is suggested that a large portion of the balance be placed in investments to produce income for the project. 4. Operating ReserM~: The balance in the Operating Reserve account as of April 30, 1960 was $11,519.31. This balance was $1,919.31 in excess of the prescribed maximum balance of $9,600.00 established for this project. Charges to operations to provide for this reserve are being continued in the current fiscal year. The excessive ~eserve balance has been created to absorb charges which will result from the following proposed expenditures: Windows and Doors Painting $2,300 O0 3,700 09 $6,000 O0 5. Tenants' Accounts: It was noted that a ledger for the tenants' accounts was not being maintained. Instead, charges for rents and subsequent collections were being recorded directly on the "Rent Rolls." 60-H-88 -8- In order to establish a complete chronological record of transactions with each tenant it is suggested that a tenants, ledger be installed as part of the accounting system. 6. Commonwealth Contribution and Contribution Reduction: It was noted that the Authority,s books and the quarterly operating statements prepared during the current fiscal year did not include the proportionate shares of the Commonwealth Contribution and the Contribution Reduction. It is suggested that the Authority comply with a recent directive of the State Housing Board which requires that these accounts be adjusted quarterly so that the results of operations may be accurate- ly reflected. 7. Project Visit: The project was visited during the progress of the audit and a visual inspection of the exteriors of the buildings and grounds was made. Several of the buildings were badly in need of painting. Prg~ect 667-1: 1. General: Construction of this project is expected to begin in the near future. The Development Costs to the date of audit April 30, 1960 consisted mainly of architectural and engineering fees and cost of site acquisition. As shown on Schedule No. X of this report the Development Costs account reflects a credit balance at the present time because income from investments in U. S. Treasury Bills has exceeded the minor expenditures to date. 2. Accrued Interest on Notes: A check of the accounts and the quarterly report submitted to the State Housing Board as of March 31, 1960 showed that Interest in Development had been incorrectly 60-H-88 -9- computed and was understated on the records by $1,826.00, the amount of accrued interest for 2 months on the notes issued. Schedule No. X of this report reflects the adjustment of the item referred to above plus an additional $913.00 for the month of April 1960 to bring the interest items up to the date of audit. The Executive Director was advised of the error in the interest computation so that the books of account could be adjusted. FINANCIAL STATEMENTS The financial statements listed in the "Table of Contents" follow: 60-H-88 -10- Schedule No. I project 200-1 R=eceipts ~nd Disbursements April l, 1959 to April 30, 1960 Balance April l, 1959: Administration Fund Debt Service Fund Receipt.~ Administration Fund: Tenants' Accounts Receivable Income on Investments Insurance Rebate Reimbursement from Project 667-1 Employees, Wage Deductions: Withholding Tax Debt Service Fund: Commonwealth Contribution From Administration Fund Disbursements Administration Fund: Management Utilities Repairs, Maintenance and Replacements Insurance Payment in Lieu of Taxes Operating Reserve Charges To Debt Service Fund Accounts Receivable, Project 667-1 Employees, Wage Deductions: To Director of Internal Revenue Debt Service Fund: Retirement of Bonds Interest on Bonds Balance April 30, 1960: Administration Fund Debt Service Fund Cash in Banks: Arlington Trust Co., Lawrence, North Andover Branch Second Bank - State Street Trust Co., Boston $11,111 97 ~ ~,850 O0 $16,961 97 $14,195 O0 150 53 16 08 31 72 9 55 14,402 88 $3,850 O0 2,, 650 oo 6,500 Oq 37,864 85 $1,6o8 46 2,499 O0 4,299 O0 2,650 O0 4 72 9 55 $ 5,000 O0 5,206 25 $12,616 55 10,206 25 $22,822 80 $12,898 30 2,143 75 15,o42 85 $12,898 30 ,,2, la'3 75 ,$15,0, 2 05 60-H-88 -11- Schedule No. II Pro~ect 200-,,1 Operatln~Statement October 1, 1959 to April 30, 1960 Project Income: D~elling Rent Miscellaneous Operating Expenses: Management Utilities Repairs, Maintenance and Replacements Insurance Payment in Lieu of Taxes Operating Income Other Charges: Provision for Operating Reserve Provision for Debt Service Reserve Debt Service Expense Loss before Commonwealth Contribution Commonwealth Contribution Net Project Income after Commonwealth Contribution Contribution Reduction from Prior Surplus Net Surplus Credit from Operations $7,682 o0 150 53 $7,832 53 $ 906 97 348 57 1,471 40 422 76 904 O0 L 3~653,70 '$4,178'"83 $ 672 O0 423 33 4~9o~ 50 6,ooz 83 $1,82~ oo $ ~1 83 1,166 67 l,SSS 50_ Analysis of Surplus Balance October 1, 1959 Add: Net Surplus Credit from Operations October 1, 1959 to April 30, 1960 Less: Transfer to Operating Reserve Transfer to Contribution Reduction Reserve Balance April 30, 1960 $3,003 93 1,58,8 50 $4,592 ~3 $1,003 93 ~,qO0 ,00 , 3,003 93 $,~,,588 50 60-H-88 -12- Schedule No. III Projec~ 200-1, ,, Analysis of Operatin$ Rese,rve April 1, 1959 to April 30, 1960 Balance April 1, 1959 Add: Accruals Charged to Operations Transfer from Surplus Transfer from Insurance Accrued and Prepaid $1,248 O0 1,003 93 2,7,08.0T Less: Charges to Operating Reserve: 132 Aluminum Storm Doors and 48 Aluminum Storm Wlndows Balance April 30, 1960 $10,858 31 4,,,960 OO $15,818 31 4,,299 O0 Note: The Maximum Operating Reserve for this project has been set at $9,600.00, which represents an amount of $400.00 per unit. The current accrual to provide for this reserve is computed on the basis of $4.00 per unit per month. 60-H-88 -13- Schedule No. IV 2oo-1 Balance Sheet April 30, 1960 Assets Administratlon~und Cash Investments: Arlington Trust Co., Lawrence Savings Account Receivable from Administration Fund Fiscal Agent: Debt Service Fund Cash Other Assets: Prepaid Insurance Development Cost Less: Development Cost Liquidation Liabilities and Surplus Accounts Payable: Administration Fund to Savings Account Accrued Liabliities: Payment in Lieu of Taxes Matured Interest and Principal Deferred Income: Commonwealth Contribution Contribution Reduction Bonds Authorized and Issued Less: Bonds Retired Reserves: Debt Service Operating Surplus $10,060 94 15o 53 $234,000 O0 288 oo 3,20.1. 2,5. $1,604 17 833 33 $234,000 O0 39,000 O0 6,948 33 ...11,519 .3,1 $ 12,898 30 10,211 47 2,143 75 879 90 195~000 O0 $221,133 ~' $ 15o 53 3,489 25 2,437 50 195,000 O0 18,467 64 1,588 50 $221,133 4.2 60-H-88 -14- Schedule No. V Project 200-~, Debt Service Schedule April 30, 1960 Fiscal Year Ending September 30, Principal Amortization* Interest Expense 1960 $ 5,000 O0 $ 1,706 25 1961 5,000 O0 3,325 O0 1962 5,000 O0 3,237 50 1963 5,000 O0 3,150 O0 1964 5,000 O0 3,062 50 1965 5,000 00 2,975 O0 1966 5,000 O0 2,887 50 1967 5,000 O0 2,800 O0 1968 5,000 O0 2,712 50 1969 6,000 O0 2,625 O0 1970 6,000 O0 2,520 O0 1971 6,000 O0 2,415 O0 1972 6,000 oo 2,310 oo 1973 6;000 oo 2,205 oo 1974 6,000 O0 2,100 O0 1975 6,000 O0 1,995 O0 1976 6,000 oo 1,89o oo 1977 6~000 O0 1,785 O0 1978 7,000 O0 1,680 O0 1979 7,000 O0 1,557 50 1980 7,000 O0 1,435 O0 1981 7,000 O0 1,312 50 1982 7,000 O0 1,190 O0 1983 7,0OO O0 1,067 5O 1984 7,000 O0 945 O0 198~ 7,000 O0 822 50 1986 8,000 O0 700 O0 1987 8,000 O0 560 O0 1988 8,000 O0 420 O0 1989 8,000 O0 280 O0 1990 8~000 O0 140 O0 $195, ooo o~ $~7~811 25 Total Debt Service Expense $ 6,706 25 8,325 O0 8,237 50 8,150 O0 8,062 50 7,975 oo 7,887 50 7,800 oo 7,712 50 8,625 O0 8,520 O0 8,415 oo 8,310 O0 8,205 O0 8,100 O0 7,995 oo 7,890 oo 7,785 oo 8,68o oo 8,557 50 8,435 O0 8,312 50 8,190 oo 8,067 50 7,945 O0 7,822 50 8,700 O0 8,560 O0 8,420 O0 8,280 O0 8~,!4o,o,q $252,,,811 2~ The principal maturities fall due on the first day of the following fisaal year. 60-H-88 -15- Schedule No. VI Project. 200-1 Comparison of, Approved Budget, w, ith Actual Operations Fiscal Year Ended September 30, 1959 Budget Project Income: Dwelling Rent Miscellaneous Total Project Income Operating Expenses: Management Utilities Repairs, Maintenance and Replacements Insurance Payment in Lieu of Taxes Total Operating Expenses Operating Income Other Charges: Provision for Operating Reserve Provision for Debt Service Reserve Debt Service Expense Total Other Charges Loss before Commonwealth Contribution Commonwealth Contribution Surplus September 30, 1959 $12,672 O0 294 O0 $1,75o 0o 520 O0 3,185 O0 799 O0 864 O0 $5~848 oo $ 1,152 O0 725 oo 8,413 oo ~!o, 29o 0o $4,442 oo 5,85000 $1,4o8, oo Actual $13, o5~ Z5 ,~ 294,,.51, $1,187 66 465 66 2,337 27 960 34 864 O0 $~,530 93 $ 1,152 O0 725 O0 8~5oo o0 $.10,37700 $2,846 07 5,850 oo ~3,003 93 S PEB LE "0. v!! ROJEC7 ~.O~I. PAR.ATIVE O~ERATING..STATEHENT FIVE FISCAL YEARS ENDED SEPTEHBER 30, 1959 19~5 1956 PROJECT INCOHE: DWELL lNG RENT $11,534 15 H1SCELLANEOUS 1 O0 71 TOTAL PROJECT INCOHE OPERATING EXPENSES: HANAGEHENT $1,227 1 0 UTILITIES 26T 36 REPAIRS, HAINTENANCE AND REPLACEFIENT$ 2,291 61 INSURANCE 1,295 73 COLLECTION LOSSES 163 36 PAYHENT IN LIEU OF TAXES 664 O0 TOTAL OPERATING EXPENSES ~6.106 16 OPERATING INCOHE $5o525.7Q OTHER CHARGES: PROVISION FOR OPERATING RESERVE $ 361 12 PROVISION FOR DEBT SERVICE RESERVE 726 O0 DEBT SERVICE EXPENSE 7.8!5 O0 TOTAL OTHER CHARGES LOSS BEFORE COHHONWEALTN CONTRIBUTION $3,365 42 COI'S40NWE AL TH CONTRleUTION 5.850 QO NET PROJECT INCOPIE (LOSS) AFTER COHHONWEALTH CONTRIBUTION $2,484 56 CONTRIBUTION REDUCTION FROH PRIOR SUR PLUS - SURPLUS SEPTEHBER 30 ,,, ~2o464 58 DISTRIBUTION OF SURPLUS: TO OPERATING RESERVE TO CONTRIBUTION REDUCTION $11,933 80 176 29 ~12,110 09 $1,147 59 285 42 2,166 69 T26 26 664'00 $ 916 48 725 O0 $9.366 46 $2,466 34 .eso oo $2,383 66 $1,464 58 1.000 O0 $2.484 56 $3, .383'66 $3.3836P 1957 $12,603 51 233._.56 $1,133 29 340 41 2,001 10 TT8 47 864 O0 ~5o117 2T e e2 $ 1,152 O0 725 O0 $10.552_00 $2,632 18 .2.466 34 $ (365 3.383 66 ,o17 o2 $3,01 7 82 3,01T 82 $13,649 13 239 18 $!3.eee__31 $1,245 50 476 1T 2,337 47 850 2T 864 O0 $8.112_90 $ 1,152 O0 725 00 e.seT 50 $2,351 60 .5.650 O0 $3,498 40 3.498 $3,498 40 $3.498 40 1959 $13,051 35 294 5!. $13,345 86 $1,18T 66 465 66 2,,337 2T 960 34 864 O0 $7.530 $ 1,152 O0 725 O0 8,500__00 $1 0,377 PP $2,646 07 5,850 O~ $3. 003 03 $3,po3 93 $1,003 93 2~ 000 O0 $3.003_9~3 60-H-88 -17- Schedule No. VIII ProSect 667-1 Receip,,t~s and ,Dlsbu,?sements September 14, 1959 to April 30, 1960 Receipts Development Fund: Sale of First Series Notes Premium on Notes $440,000 OO Disbursements Development Fund: Purchase of Investments, $424,000.00 U. S. Treasury Bills Due June 22, 1960 Development Costs Balance April 30, 1960: Development Fund $409,745 36 3,576 2I Cash in Bank: Arlington Trust Co., Lawrence North Andover Branch $440,00200 $413,321 63 26,680 137' 4 o,,oo OO 60-H-88 -18- Schedule No. IX Project 667-1 Balance Sheet April 30, 1960 Assets Development Account Cash Investments U. S. Treasury Bills Due June 22, 1960 Development Costs Accrued Interest on Notes Notes Authorized and Issued Liabilities $ 26,680 37 424,000 O0 . (3,680 70) ~46,999 67. $ 6,999 67 440,000 O0 $~6,999 6? 60-H-88 -19- Schedule No. X p~oJect 667-1 AqalMs, is of, Development Costs April 30, 1960 Administrative: Office Expenses Fidelity Bond and Insurance Fiscal and Other Fees Carrying Charges: Interest in Development Architectural and Engineering: Fees under Contract Borings and Test Pits Acquisition of Site: Survey and Maps Appraisals Legal Services and Expenses Development Costs April 30, 1960 (Credit) $ 79 ~2 70 O8 271 39 800 O0 585 66 $400 O0 200 O0 169 72 $ 420 89 ( 7,256 97) 2,385 66 769 72 ($3, 68o 70)