FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT HOUMA-TERREBONNE HOUSING AUTHORITY YEAR ENDED SEPTEMBER 30, 2004 Under provisions of state law, this report is a public document. A copy of the report has been submitted to the entity and other appropriate public officials. The report is available for public inspection at the Baton Rouge office of the Legislative Auditor and, where appropriate, at the office/of the parish clerk of court. Release Date
Under provisions of state law, this report is a publicdocument. A copy of the report has been submitted tothe entity and other appropriate public officials. Thereport is available for public inspection at the BatonRouge office of the Legislative Auditor and, whereappropriate, at the office/of the parish clerk of court.
Release Date
Houma-Terrebonne Housing Authority
TABLE OF CONTENTS
Page
INDEPENDENT AUDITORS' REPORT 4
MANAGEMENT'S DISCUSSION AND ANALYSIS 6
BASIC FINANCIAL STATEMENTS
BALANCE SHEET 13
STATEMENT OF REVENUES, EXPENSES, AND CHANGES INNET ASSETS 15
STATEMENT OF CASH FLOWS 16
NOTES TO FINANCIAL STATEMENTS 18
INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROLOVER FINANCIAL REPORTING AND ON COMPLIANCE ANDOTHER MATTERS BASED ON AN AUDIT OF THE FINANCIALSTATEMENTS PERFORMED IN ACCORDANCE WITHGOVERNMENT AUDITING STANDARDS 31
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITHREQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAMAND INTERNAL CONTROL OVER COMPLIANCE INACCORDANCE WITH OMB CIRCULAR A-133 33
SCHEDULE OF FINDINGS AND QUESTIONED COSTS 35
SUPPLEMENTAL INFORMATION
FINANCIAL DATA SUBMISSION SUMMARY -COMBINING BALANCE SHEET 37
FINANCIAL DATA SUBMISSION SUMMARY -COMBINING INCOME STATEMENT 39
SCHEDULE OF EXPENDITURES OF FEDERAL FINANCIAL AWARDS 41
PUBLIC HOUSING BUDGET VS. ACTUAL COMPARISON 42
SHEDULE OF CAPITAL FUND COSTS -UNCOMPLETED 43
CERTIFICATION OF ACTUAL MODERNIZATION COSTS ANDADVANCES - COMPREHENSIVE GRANT PROGRAM 44
Houma-Terrebonne Housing Authority
TABLE OF CONTENTS - CONTINUED
Page
CERTIFICATION OF ACTUAL MODERNIZATION COSTS ANDADVANCES - CAPITAL FUND PROGRAM 45
ReznickRedder &Silverman
INDEPENDENT AUDITORS' REPORT
To the Board of CommissionersHouma-Terrebonne Housing Authority
We have audited the accompanying basic financial statements of Houma-TerrebonneHousing Authority as of and for the year ended September 30, 2004, as listed in the table ofcontents. These basic 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 auditing standards generally accepted in theUnited States of America and the standards applicable to financial audits contained in GovernmentAuditing Standards, issued by the Comptroller General of the United States. Those standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures in the financial statements. An audit alsoincludes assessing the accounting principles used and significant estimates made by management,as well as evaluating the overall financial statement presentation. We believe that our auditprovides a reasonable basis for our opinion.
In our opinion, the basic financial statements referred to above present fairly, in allmaterial respects, the financial position of Houma-Terrebonne Housing Authority as of September30, 2004, and the changes in financial position and cash flows for the year then ended, inconformity with accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report datedDecember 10, 2004, on our consideration of the Authority's internal control over financialreporting and our tests of its compliance with certain provisions of laws, regulations, contractsand grants and other matters The purpose of that report is to describe the scope of our testing ofinternal control over financial reporting and compliance and the results of that testing, and not toprovide an opinion on the internal control over financial reporting or on compliance. That reportis an integral part of an audit performed in accordance with Government Auditing Standards andshould be considered in assessing the results of our audit.
The Management's Discussion and Analysis on pages 6 to 12 is not a required part of thebasic financial statements, but is supplementary information required by accounting principlesgenerally accepted in the United States of America and the Governmental Accounting StandardsBoard. We have applied certain limited procedures that consisted principally of inquiries ofmanagement regarding the methods of measurement and presentation of the supplementaryinformation. However, we did not audit the information and we express no opinion on it.
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Our audit was performed for the purpose of forming an opinion on the basic financialstatements of Houma-Terrebonne Housing Authority taken as a whole. The accompanyingsupplemental information on pages 37 through 45, including the schedule of expenditures offederal awards as required by U.S. Office of Management and Budget Circular A-133, "Audits ofStates, Local Governments, and Non-Profit Organizations," and the Financial Data Schedulerequired by the U.S. Department of Housing and Urban Development, are presented for purposesof additional analysis and are not a required part of the basic financial statements. Suchinformation has been subjected to the auditing procedures applied in the audit of the basicfinancial statements and, in our opinion, is fairly stated, in all material respects, in relation to thebasic financial statements taken as a whole.
f
Charlotte, North CarolinaDecember 10, 2004
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Houma-Terrebonne Housing Authority
MANAGEMENT'S DISCUSSION AND ANALYSIS
September 30, 2004(Unaudited)
Our discussion and analysis of the Houma-Terrebonne Housing Authority's financial performanceprovides an overview of the Authority's financial activities for the fiscal year ended September 30,2004. Please read it in conjunction with the financial statements, which begin on page 13.
FINANCIAL HIGHLIGHTS
• The assets of the Authority exceeded its liabilities at September 30, 2004 byapproximately $4,585,000 (net assets), an increase of 54.8% from September 30, 2003.
• The Authority's unrestricted cash balance at September 30, 2004 was approximately$1,113,000, representing an increase of approximately $826,000, or 287.8%, fromSeptember 30, 2003.
• The Authority had total revenue of approximately $4,419,000, including capital grantsrevenues of approximately $1,467,000, and total expenses of approximately $2,795,000for the year ended September 30, 2004.
• Net assets increased by approximately $1,624,000 for the year.• The Authority's capital asset additions for the year were approximately $1,725,000.
USING THIS ANNUAL REPORT
This discussion and analysis is intended to serve as an introduction to the Authority's basicfinancial statements. The Authority's basic financial statements are comprised of twocomponents: (1) fund financial statements, and (2) notes to the financial statements. This reportalso contains other supplementary information in addition to the basic financial statementsthemselves. The Authority is a special-purpose government engaged only in a business-typeactivity. Accordingly, only fund financial statements are presented as the basic financialstatements.
The financial statements are designed to provide readers with a broad overview of the Authority'sfinances in a manner similar to a private sector business.
The balance sheet presents information on all of the Authority's assets and liabilities, with thedifference between the two reported as net assets. Over time, increases or decreases in net assetsmay serve as a useful indicator of whether the financial position of the Authority is improving ordeteriorating, or otherwise changing in a dramatic manner.
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Houma-Terrebonne Housing Authority
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED
September 30, 2004(Unaudited)
The statement of revenue, expenses and changes in net assets presents information detailing howthe Authority's net assets changed during the fiscal year. All changes in net assets are reported assoon as the underlying event giving rise to the change occurs, regardless of the timing of relatedcash flows. Thus, revenues and expenses are reported in this statement for some items that willonly result in cash flows in future fiscal periods (e.g., depreciation and earned but unused vacationleave).
The statement of cash flows provides information about the Authority's cash receipts and cashpayments during the reporting period. The statement reports cash receipts, cash payments, andnet changes in cash resulting from operations, investing, and financing activities.
These financial statements report on the functions of the Authority that are principally supportedby intergovernmental revenues. The Authority's function is to provide decent, safe, and sanitaryhousing to low-income and special needs populations, which is primarily funded with grantrevenue received from the U.S. Department of Housing and Urban Development (HUD).
MAJOR PROGRAMS
The Authority has many programs that are consolidated into a single enterprise fund. The majorprograms consist of the following:
Low- Income Public Housing - Under the Conventional Public Housing Program, the Authorityrents units it owns to low-income families. The Conventional Public Housing Program isoperated under an Annual Contribution Contract (ACC) with HUD, and HUD provides anOperating Subsidy to enable the Authority to provide housing at a rent that is based upon 30 % ofadjusted gross household income.
Capital Fund Program (CFP) - The Conventional Public Housing Program also included the CFPwhich is the primary funding source for the Authority's physical and management improvements.CFP funding is based on a formula allocation that takes into consideration the size and age of theAuthority's housing stock.
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Houma-Terrebonne Housing Authority
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED
September 30, 2004(Unaudited)
FINANCIAL ANALYSIS
Fund Financial Statements
A fund is a grouping of related accounts that is used to maintain control over resources that havebeen segregated for specific activities or objectives. The Authority, like other state and localgovernments, uses fund accounting to ensure and demonstrate compliance with finance-relatedlegal requirements. The Authority has only one fund type, namely an enterprise fund which is aproprietary fund type. The financial statements can be found on pages 13 through 17 of thisreport.
Notes to the Financial Statements
Notes provide additional information essential to a full understanding of the data provided in thefinancial statements. Notes to the financial statements can be found on pages 18 through 30 ofthis report.
Houma-Terrebonne Housing Authority
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED
September 30, 2004(Unaudited)
Balance Sheet
The following table represents a condensed Balance Sheet as of September 30, 2004 and 2003:
Current liabilities $ 354,367 $ 3,388,079Long-term liabilities 3,502,954 23,673
Total Liabilities 3,857,321 3,411,752
Net assets:Invested in capital assets, net of related liabilities 10,571,393 3,551,484Unrestricted net assets 964,138 1,033,918
Total Net Assets 11,535,531 4,585,402
Total Liabilities and Net Assets $ 15,392,852 $ 7,997,154
As noted earlier, net assets may serve over time as a useful indicator of a government's financialposition. In the case of the Authority, assets exceeded liabilities by approximately $11,535,000at September 30, 2004 $4,585,000 at September 30, 2003.
By far the largest portion of the Authority's net assets reflects its investments in capital assets(e.g., buildings, machinery, and equipment). The Authority uses these capital assets to providehousing services to residents; consequently, these assets are not available for future spending.The unrestricted net assets of the Authority are available for future use to provide programservices.
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Houma-Terrebonne Housing Authority
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED
September 30, 2004(Unaudited)
Statement of Revenues. Expenses, and Changes in Net Assets
The following table reflects the condensed Statement of Revenues, Expenses, and Changes in NetAssets for the years ended September 30, 2004 and September 30, 2003.
The net assets of the Authority increased by approximately $6,950,000 during the year endedSeptember 30, 2004 and $1,624,000 during the year ended September 30, 2003. The Authority'srevenues are largely governmental revenues received from cost reimbursement grants. TheAuthority draws down monies from the grants' awards for allowable program expenses, exceptfor non-cash transactions, such as depreciation expense and changes in compensated absences.The Authority's governmental revenues and charges for services were sufficient to cover allexpenses incurred during the year.
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Houma-Terrebonne Housing Authority
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED
September 30, 2004(Unaudited)
CAPITAL ASSETS
As of September 30, 2004 and 2003, the Authority's investment in capital assets for its business-type activity was approximately $14,619,000 and $3,551,000 (net of accumulated depreciation),respectively, as reflected in the following schedule.
2004 2003$
$
556,72821,951,325
341,010503,684
10,508,034-
(19,589,890)
14,270,891
$ 556,72818,886,047542,370466,710
1,867,583473,352
(19,241,306)
$ 3,551,484
LandBuildings and improvementsFurniture and equipment - dwellingFurniture and equipment - administrativeLeasehold improvementsConstruction in progressAccumulated depreciation
Total
Major capital asset purchases during the year ended September 30, 2004 and 2003 includedwelling structure improvements.
Additional information on the Authority's capital assets can be found in Note G on page 27 of thisreport.
ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES
The Authority is primarily dependent upon HUD for the funding of operations; therefore, theAuthority is affected more by the Federal budget than by local economic conditions. The budgetsfor 2004-2005 have already been approved by HUD.
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Houma-Terrebonne Housing Authority
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED
September 30, 2004(Unaudited)
FUTURE EVENTS THAT WILL FINANCIALLY IMPACT THE AUTHORITY
During the years ended September 30, 2004 and 2003, approximately 71% and 75%, respectively,of the Authority's revenues come from governmental grants. The Authority engaged in acomprehensive redevelopment project that encompassed its Senator Circle community. Thisredevelopment project required the demolition of 64 low-income housing units, the rehabilitationof 78 buildings and the conversion of 36 buildings to 18 larger units, resulting in a net loss of 82units, or approximately 13.67% of the Authority's housing portfolio.
CONTACTING THE AUTHORITY'S FINANCIAL MANAGEMENT
This financial report is designed to provide a general overview of the Authority's finances for allthose with an interest. Questions concerning any of the information provided in this report orrequests for additional financial information should be addressed to the Executive Director,Houma-Terrebonne Housing Authority, 7491 Park Avenue, Houma, LA 70363, or call (985)876-4755.
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Houma-Terrebonne Housing Authority
BALANCE SHEET
September 30, 2004
ASSETS
Current AssetsCash and cash equivalents - unrestricted $ 411,136Cash and cash equivalents - restricted 60,361Investments 323,188Accounts receivable - tenants 6,670Accounts receivable - HUD 208,877Accrued interest receivable 663Prepaid expenses 111,066
Total Current Assets 1,121,961
Capital AssetsLand 556,728Buildings and improvements 21,951,325Furniture, equipment and machinery - dwelling 341,010Furniture, equipment and machinery - administration 503,684Leasehold improvements 10,508,034
Cash flows from operating activitiesDwelling rent receiptsOperating subsidy and grant receiptsOther income receipts
Total receipts
Payments to vendorsPayments to employees
Total disbursements
Net cash provided by operating activities
Cash flows from investing activitiesDecrease in investmentsInvestment income
Net cash provided by investing activities
Cash flows from capital and related financing activitiesCapital grant receiptsCapital asset additionsInterest paidInsurance proceeds
Net cash used by capital and related financing activities
995,3241,253,573
27,6842,276,581
(1,474,878)(676,982)
(2,151,860)
124,721
2,471,50017,695
2,489,195
5,044,685(8,246,453)
(169,793)65,454
(3,306,107)
NET DECREASE IN CASH
Cash and cash equivalents, beginning
Cash and cash equivalents, ending
Supplementary schedule of non-cash investing, capital and financing transactions:During the year, fixed assets were acquired with a capital lease
(692,191)
1,163,688
S 471,497
$ 3,699,498
(Continued)
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Houma-Terrebonne Housing Authority
STATEMENT OF CASH FLOWS - CONTINUED
For the year ended September 30, 2004
Reconciliation of operating loss to netcash provided by operating activities
Operating loss
Adjustments to reconcile operating loss to netcash provided by operating activitiesDepreciationChanges in asset and liability accounts(Increase) decrease in assets
The Houma-Terrebonne Housing Authority (the "Authority") was created by Act 80 of the2001 Regular Session of the Louisiana Legislature and is the successor to the HousingAuthority of the City of Houma. The Authority, a public corporate body, was organizedsolely for the purpose of providing decent, safe and sanitary dwelling accommodations forpersons of low income.
The Authority is engaged in the acquisition, modernization and administration of low-renthousing. In addition, the Authority has administrative responsibility for various othercommunity development programs whose primary purpose is the development of viable urbancommunities by providing decent housing, a suitable living environment and economicopportunities principally for persons of low and moderate income.
The Authority is administered by a five-member governing Board of Commissioners (the"Board"), whose members are appointed by the President of the Terrebonne ParrishConsolidated Government. At least one commissioner appointed shall be a resident living in ahousing development property operated by the Authority. Each member serves a five-yearterm on a rotating basis. Board members do not receive compensation for their service to theAuthority.
A significant amount of the Authority's revenue is derived from subsidy contracts with theU.S. Department of Housing and Urban Development ("HUD"). The Annual ContributionsContracts entered into by the Authority and HUD provides operation subsidies for Authority-owned public housing facilities and housing assistance payments for eligible individuals. As ofSeptember 30, 2004, the Authority operates 537 public housing units. The Authority alsoparticipates in HUD's Capital Fund.
Reporting Entity
GASB Statement No. 14 established criteria for determining the governmental reporting entityand component units that should be included within the reporting entity. Because theAuthority is legally separate and fiscally independent, the Authority is a separate governmentalreporting entity.
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Houma-Terrebonne Housing Authority
NOTES TO FINANCIAL STATEMENTS
September 30, 2004
NOTE A - ORGANIZATION (Continued)
The Authority is a related organization of the Terrebonne Parish Consolidated Governmentsince it's President appoints a voting majority of the Authority's governing board. TheTerrebonne Parrish Consolidated Government is not financially accountable for the Authorityas it cannot impose its will on the Authority and there is no potential for the Authority toprovide financial benefit to, or impose financial burdens on, the Terrebonne ParrishConsolidated Government. Accordingly, the Authority is not a component unit of thefinancial reporting entity of the Terrebonne Parrish Consolidated Government.
The Authority includes all funds, account groups, activities, et cetera, that are within theoversight responsibility of the Authority.
Certain units of local government over which the Authority exercises no oversightresponsibility, such as the parish police jury, school board, and municipalities within theparish, are excluded from the accompanying financial statements. These units of governmentare considered separate reporting entities and issue financial statements separate from those ofthe Authority. In addition, the accompanying financial statements do not include any varioustenant associations that may exist, which are legally separate entities.
Programs Administered by the Authority
The Authority administers annual contribution contracts to provide low-income housing withprimary financial support from the U.S. Department of Housing and Urban Development("HUD"). Program administered by the Authority are as follows
Low Rent Public Housing - The Authority owns, operates and maintains 600 units of PublicHousing in 2 properties located in Houma, Louisiana. Under the Low Rent HousingAssistance Program, low-income tenants pay monthly rents, which are determined by theirneed for assistance. Revenues consist primarily of rents and other fees collected from tenantsand an Operating Subsidy from HUD.
Capital Fund Programs (CFP) - Funds from the Capital Fund Program provided by HUD areused to maintain and improve the Public Housing portfolio. Substantially all additions to land,structures and equipment for these properties are accomplished through the capital grantfunds.
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Houma-Terrebonne Housing Authority
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2004
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis Of Presentation
In accordance with both the Louisiana State Reporting Law (LAS-R.S.24:514) and theuniform financial reporting standards for HUD housing programs, the accompanying financialstatements of the Authority have been prepared in conformity with accounting principlesgenerally accepted in the United States of America (GAAP) as applied to governmental units.The Governmental Accounting Standards Board (GASB) is the accepted standard settingbody for establishing governmental accounting and financial reporting principles. Pursuant tothe election option made available by GASB Statement No. 20, Accounting and FinancialReporting for Proprietary Funds and Other Governmental Entities That Use ProprietaryFund Accounting, pronouncements of the Financial Accounting Standards Board (FASB)issued after November 30, 1989 are applied in the preparation of the financial statements.
Fund Accounting
The Authority uses funds and account groups to report on its financial position and the resultsof its operations. Fund accounting is designed to demonstrate legal compliance and to aidfinancial management by segregating transactions relating to certain government functions oractivities.
Based upon compelling reasons offered by the U.S. Department of HUD, the Authorityreports under the governmental proprietary fund type (enterprise fund). Enterprise fundsaccount for activities similar to those found in the private sector, where the determination ofnet income is necessary or useful to sound financial administration. The focus for enterprisefunds is on income measurement, which, together with the maintenance of equity, is animportant financial indicator.
All of the Authority's programs are accounted for as one business-type activity reported in asingle enterprise fund.
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Houma-Terrebonne Housing Authority
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2004
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Basis of Accounting
The accounting and financial reporting treatment applied to a fund is determined by itsmeasurement focus.
All proprietary iunds are accounted for on a flow of economic resources measurement focusand a determination of net income and capital maintenance. With this measurement focus, allassets and all liabilities associated with the operation of these funds are included on thebalance sheet. Proprietary funds use the accrual basis of accounting. Revenues arerecognized when earned, and expenses are recognized at the time the liabilities are incurred.
Operating Revenues and Expenses
Operating revenues and expenses consist of those revenues and expenses that result from theongoing principal operations of the Authority. Operating revenues consist of tenant rents andfees and HUD operating grants. Non-operating revenues consist of interest income and othernon-operating revenues. Non-operating expenses consist of interest expense.
Budgets
The Authority is required by its HUD Annual Contributions Contracts to adopt annualbudgets for the Low-Rent Housing Program. Annual budgets are not required for CapitalGrant Program, Capital Fund Program or Drug Elimination Program grants as their budgetsare approved for the length of the project. Both annual and project length budgets requiregrantor approval.
The Authority is under a limited budget review from HUD with the control category of totaloperating expenditures. If there are no overruns of the total operating expenditures, thenHUD does not require budget revisions other than when there are substantial additions tononroutine expenditures.
The budget is prepared on a statutory (HUD) basis and does not contain a provision foruncollectible tenant receivables or depreciation.
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Houma-Terrebonne Housing Authority
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2004
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Cash And Cash Equivalents
Cash and cash equivalents includes amounts in demand deposits, interest-bearing demanddeposits, and time deposits and other investments with original maturities of 90 days or less.Under state law, the Authority may deposit funds in demand deposits, interest-bearing demanddeposits, or time deposits with state banks organized under Louisiana law or any other stateof the United States, or under the laws of the United States.
Investments
Investments are limited by R.S. 33:2955 and the Authority's investment policy. If the originalmaturities of investments exceed 90 days, they are classified as investments; however, if theoriginal maturities are 90 days or less, they are classified as cash equivalents. Investments arecarried at fair market value.
Inter-Program Receivables and Payables
Inter-program receivables/payables are all classified as either current assets or currentliabilities, and are the result of the use of the Public Housing Program as the commonpaymaster or "general fund" for shared costs of the Authority. Cash settlements are madeperiodically, and all inter-program balances are reconciled. These inter-program receivablesand payables have been eliminated in the preparation of the basic financial statements. Thedetail by program can be found in the Combining Schedules of this report.
Prepaid Items
Certain payments to vendors reflect costs applicable to future accounting periods and arerecorded as prepaid items.
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Houma-Terrebonne Housing Authority
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2004
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Capital Assets
Land, buildings, furniture, equipment, machinery and leasehold improvements are carried athistorical costs. Donated assets are recorded at fair market value at the date of donation.Depreciation is recorded on the straight-line method over the following estimated useful lives:
Buildings 33 yearsBuilding improvements 15 yearsFurniture, equipment and machinery 3-7 yearsLeasehold improvements 15 years
Deferred Revenues
The Authority reports deferred revenues on its balance sheet. Deferred revenues arise whenresources are received by the Authority before it has legal claim to them, as when grantmonies are received prior to the occurrence of qualifying expenditures. In subsequent periods,when the Authority has a legal claim to the resources, the liability for deferred revenue isremoved from the balance sheet and the revenue is recognized.
Compensated Absences
The Authority employees accrue personal leave, or compensated absences, by a prescribedformula based on length of service.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generallyaccepted in the United States of America requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the financial statements and the reportedamounts of revenue and expenses during the reporting period. Actual results could differfrom those estimates.
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Houma-Terrebonne Housing Authority
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2004
NOTE C - CASH AND CASH EQUIVALENTS
It is the Authority's policy for deposits to be secured by collateral valued at market or par,whichever is lower, less the amount of the Federal Deposit Insurance Corporation insurance.The Authority's deposits are categorized to give an indication of the level of risk assumed bythe Authority. The categories are described as follows:
Category 1 - Insured or collateralized with securities held by the Authority or by its agent inthe Authority's name.
Category 2 - Collateralized with securities held by the pledging financial institution's trustdepartment or agent in the Authority's name.
Category 3 - Uncollateralized, which includes any bank balance that is collateralized withsecurities held by the pledging financial institution, or by its trust department oragent but not in the Authority's name.
Cash balances at September 30, 2004, categorized by level of risk, were as follows:
Bank BalancesCategory
CarryingTotal Amount
$ 471,497 $ $ $ 471,497 $ 471,497
Cash and cash equivalents are reported on the balance sheet as follows:
Cash and cash equivalents - unrestricted $ 411,136Cash and cash equivalents - restricted 60,361
Total cash and cash equivalents $ 471,497
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Houma-Terrebonne Housing Authority
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2004
NOTE C - CASH AND CASH EQUIVALENTS (Continued)
Even though pledged securities would be considered uncollateralized (Category 3) under theprovisions of GASB Statement 3, R.S. 39:1229 imposes a statutory requirement on thecustodial bank to advertise and sell the pledged securities within 10 days of being notified bythe Authority that the fiscal agent has failed to pay deposited iunds upon demand.
NOTE D - INVESTMENTS
Investments are categorized into these three categories of credit risk:
1. Insured or registered, or securities held by the Authority or its agent in theAuthority's name
2. Uninsured and unregistered, with securities held by the counterparty's trustdepartment or agent in the Authority's name
3. Uninsured and unregistered, with securities held by the counterparty, or by its trustdepartment or agent but not in the Authority's name.
At fiscal year-end, the Authority's investment balances were as follows:
CategoryType of Carrying
Investment 1 2 3 Amount CostCertificate ofdeposit at federallyinsured depository $ 323,188 $ S $ 323,188 $ 303,323
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Houma-Terrebonne Housing Authority
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2004
NOTE E - RECEIVABLES
The receivables at September 30, 2004, are as follows:
Class of Receivables
Local Sources:Tenants
Less allowance for doubtfulaccounts
LowRent
$ 7,595
(925)
CapitalFund
Program
$
-
Total
$ 7,595
(925)
Federal Sources:Due from HUD
Total
6,670
129,358 79,519
6,670
208,877
$ 136,028 $ 79,519 $ 215,547
NOTE F - DEFERRED REVENUE
Deferred revenue, consisting of prepaid tenant rents, as of September 30, 2004 was $5,809.
Capital assets - net $ 3,551,484 $ 10,722,206 $ $ (2,799) $14,270,891
NOTE H - ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses at September 30, 2004, are as follows:
CapitalLow FundRent Program Total
Accounts payable
$ 556,728
18,886,047
542,370466,710
1,867,583473,352
$ - :
2,591,926
208,47736,974
8,640,451-
$ - $ - $ 556,728
473,352 - 21,951,325
(409,837) 341,010503,684
10,508,034(473,352)
Vendors $ 40,384 $ 2,430 $ 42,814
Accrued expensesPayroll 8,747 - 8,747
Total $ 49,131 $ 2,430 $ 51,561
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Houma-Terrebonne Housing Authority
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2004
NOTE I - CAPITAL LEASE
The Authority financed certain improvements to its facilities via a long-term capital lease.These improvements were made to improve energy efficiency and management. The leaserequires quarterly payments as follows: March 26, 2004 $68,057, June 26, 2004 $50,868,September 26, 2004 $50,868, followed by 48 quarterly payments of $105,795. Theoutstanding portion of this lease is reported as a capital lease obligation. The final maturitydate is September 26, 2016.
The cost of the assets under capital lease is $3,699,498 and accumulated depreciation atSeptember 30, 2004 is $123,317. Depreciation expense of assets under capital lease isincluded in depreciation expense.
Future minimum payments under the capital lease of September 30, 2004, for the followingfive years and thereafter, are as follows:
Present value of net minimumlease payments $ 3,699,498
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Houma-Terrebonne Housing Authority
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2004
NOTE I - CAPITAL LEASE (Continued)
The obligation under the capital lease is shown on the balance sheet as follows:
Current portion $ 226,829Long-term portion 3,472,669
$ 3,699,498
NOTE J - RETIREMENT PLAN
The Authority provides retirement benefits for all of its full-time employees through a definedcontribution plan. In a defined contribution plan, benefits depend solely on amountscontributed to the plan, plus investment earnings. Employees are eligible to participate after asix month exclusionary period. The employee may contribute 2% and the Authoritycontributes 3% of the participating employee's base salary each month. The Authority'scontributions for each employee, and interest allocated to the employee's account, are vestedafter 5 years of participation.
The Authority's total payroll during the year ended September 30, 2004 was approximately$551,000. The Authority's contributions were calculated using the base salary amount ofapproximately $94,016. Contributions to the plan were $2,795 and $1,864 by the employeesand the Authority, respectively.
NOTE K - INTER-PROGRAM ASSETS/LIABILITIES
Inter-program receivables and payables that have been eliminated in the combined balancesheet as of September 30, 2004 were as follows:
Receivable Program Payable Program AmountLow Rent Capital Fund Program $ 77,089
NOTE L - RISK MANAGEMENT
The authority is subject to the normal risks associated with rental and business activities andpurchases insurance to protect against the risk of loss.
-29-
Houma-Terrebonne Housing Authority
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2004
NOTE M - FEDERAL COMPLIANCE CONTINGENCIES
The Authority is subject to possible examinations made by federal regulators who determinecompliance with terms, conditions, laws and regulations governing grants given to theAuthority in the current and prior years. These examinations may result in required refunds bythe Authority to federal grantors and/or program beneficiaries.
NOTE N - ECONOMIC DEPENDENCY
The Authority is economically dependent upon annual contributions and grants from HUD.For the year ended September 30, 2004, HUD provided approximately 71% of the Authority'srevenue.
INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIALREPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT
OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITHGOVERNMENT AUDITING STANDARDS
To the Board of DirectorsHouma-Terrebonne Housing Authority
We have audited the basic financial statements of Houma-Terrebonne Housing Authorityas of and for the year ended September 30, 2004, and have issued our report thereon datedDecember 10, 2004. We conducted our audit in accordance with auditing standards generallyaccepted in the United States of America and the standards applicable to financial auditscontained in Government Auditing Standards, issued by the Comptroller General of the UnitedStates.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered Houma-Terrebonne HousingAuthority's internal control over financial reporting in order to determine our auditing proceduresfor the purpose of expressing our opinion on the financial statements and not to provide assuranceon the internal control over financial reporting. Our consideration of the internal control overfinancial reporting would not necessarily disclose all matters in the internal control over financialreporting that might be material weaknesses. A material weakness is a condition in which thedesign or operation of one or more of the internal control components does not reduce to arelatively low level the risk that misstatements caused by error or fraud in amounts that would bematerial in relation to the financial statements being audited may occur and not be detected withina timely period by employees in the normal course of performing their assigned functions. Wenoted no matters involving the internal control over financial reporting and its operation that weconsider to be material weaknesses.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Houma-Terrebonne HousingAuthority's financial statements are free of material misstatement, we performed tests of itscompliance with certain provisions of laws, regulations, contracts and grant agreements,noncompliance with which could have a direct and material effect on the determination offinancial statement amounts. However, providing an opinion on compliance with those provisionswas not an objective of our audit and, accordingly, we do not express such an opinion. Theresults of our tests disclosed no instances of noncompliance or other matters that are required tobe reported under Government Auditing Standards.
-31-
This report is intended solely for the information and use of the Board of Commissioners,management and federal awarding agencies and pass-through entities and is not intended to beand should not be used by anyone other than these specified parties.
Fedder & 309 E. Morehead Street Fax: {704) 332-6444
Silverman suite 100 www.rfs.comCharlotte. NC 28202-2307
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH REQUIREMENTSAPPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER
COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133
To the Board of DirectorsHouma-Terrebonne Housing Authority
Compliance
We have audited the compliance of Houma-Terrebonne Housing Authority with the typesof compliance requirements described in the U.S. Office of Management and Budget (OMB)Circular A-133 Compliance Supplement that are applicable to each of its major federal programsfor the year ended September 30, 2004. Houma-Terrebonne Housing Authority's major federalprograms are identified in the summary of auditors' results section of the accompanying Scheduleof 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 ofHouma-Terrebonne Housing Authority's management. Our responsibility is to express an opinionon Houma-Terrebonne Housing Authority's compliance based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in theUnited States of America; the standards applicable to financial audits contained in GovernmentAuditing Standards, issued by the Comptroller General of the United States; and OMB CircularA-133, "Audits of States, Local Governments, and Non-Pro fit Organizations." Those standardsand OMB Circular A-133 require that we plan and perform the audit to obtain reasonableassurance about whether noncompliance with the types of compliance requirements referred toabove that could have a direct and material effect on a major federal program occurred. An auditincludes examining, on a test basis, evidence about Houma-Terrebonne Housing Authority'scompliance with those requirements and performing such other procedures as we considerednecessary in the circumstances. We believe that our audit provides a reasonable basis for ouropinion. Our audit does not provide a legal determination on Houma-Terrebonne HousingAuthority's compliance with those requirements.
In our opinion, Houma-Terrebonne Housing Authority complied, in all material respects,with the requirements referred to above that are applicable to each of its major federal programsfor the year ended September 30, 2004.
-33-
Internal Control Over Compliance
The management of Houma-Terrebonne Housing Authority is responsible for establishingand maintaining effective internal control over compliance with requirements of laws, regulations,contracts and grants applicable to federal programs. In planning and performing our audit, weconsidered Houma-Terrebonne Housing Authority's internal control over compliance withrequirements that could have a direct and material effect on a major federal program in order todetermine our auditing procedures for the purpose of expressing our opinion on compliance andto test and report on internal control over compliance in accordance with OMB Circular A-133.
Our consideration of the internal control over compliance would not necessarily discloseall matters in the internal control that might be material weaknesses. A material weakness is acondition in which the design or operation of one or more of the internal control components doesnot reduce to a relatively low level the risk that noncompliance with applicable requirements oflaws, regulations, contracts and grants caused by error or fraud that would be material in relationto a major federal program being audited may occur and not be detected within a timely period byemployees in the normal course of performing their assigned functions. We noted no mattersinvolving the internal control over compliance and its operation that we consider to be materialweaknesses.
This report is intended solely for the information and use of the Board of Commissioners,management and federal awarding agencies and pass-through entities and is not intended to beand should not be used by anyone other than these specified parties.
?fM«. f
Charlotte, North CarolinaDecember 10, 2004
-34-
Houma-Terrebonne Housing Authority
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Year ended September 30, 2004
Summary of Auditors' Results
1. The auditors' report expresses an unqualified opinion on the basic financial statements ofHouma-Terrebonne Housing Authority.
2. No reportable conditions were identified during the audit of the basic financial statements.
3. No instances of noncompliance material to the basic financial statements of Houma-Terrebonne Housing Authority were disclosed during the audit.
4. No reportable conditions were identified during the audit of the major federal awardprograms.
5. The auditors' report on compliance for the major federal award programs for Houma-Terrebonne Housing Authority expresses an unqualified opinion.
6. The programs tested as major programs include:• CFDA #14.872 Public Housing Capital Fund Program
7. The threshold for distinguishing Type A and B programs was $300,000.
8. Houma-Terrebonne Housing Authority was not determined to be a low-risk auditee.
-35-
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Houma-Terrebonne Housing Authority
SCHEDULE OF EXPENDITURES OF FEDERAL FINANCIAL AWARDS
Year ended September 30, 2004
TypeFederalCFDA# Expenditures
U.S. DEPARTMENT OF HOUSING &URBAN DEVELOPMENT:
Public Housing:Operating Subsidy
Capital Fund program
TOTAL FEDERAL FINANCIAL AWARDS
A-Major 14.850 $ 1,149,952
A-Major 14.872 5,925,549
$ 7,075,501
Note: The accompanying schedule of expenditures of federal awards includes the federal grantactivity for Houma-Terrebonne Housing Authority and is presented on the accrual basis ofaccounting. The information in this schedule is presented in accordance with the requirements ofOMB 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, orused in the preparation of, the basic financial statements.
-41-
Houma-Terrebonne Housing Authority
PUBLIC HOUSING BUDGET VS. ACTUAL COMPARISON
Year ended September 30, 2004
REVENUES:Net tenant rental revenueHUD PHA grantsInvestment income - unrestrictedOther revenue
TOTAL REVENUES
OPERATING EXPENSES:AdministrativeTenant servicesUtilitiesOrdinary maintenance and operationProtective servicesGeneral expensesNonroutine maintenance
CERTIFICATION OF ACTUAL MODERNIZATION COSTS AND ADVANCESCOMPREHENSIVE GRANT PROGRAM
September 30, 2004
GRANT NUMBER LA48P090708-99
PROGRAM CGP 1999
BUDGET $ 125,950
Advances $ 125,950
Costs 125,950
Excess/(Deficiency) of Advances Due To/(From) HUD $ -
The Actual Modernization Cost Certificateis in agreement with the Authority's records Yes
All modernization work in connection withthe grant have been completed Yes
All liabilities have been paid and there are noundischarged mechanics', laborers' contractors' ormaterial-men's Hens against the Project on file inany public office where the same should be filedin order to be valid. The time in which such Henscould be filed has expired. Yes
There were no budget overruns. Yes
-44-
Houma-Terrebonne Housing Authority
CERTIFICATION OF ACTUAL MODERNIZATION COSTS AND ADVANCESCAPITAL FUND PROGRAM
September 30, 2004
GRANT NUMBER
PROGRAM
BUDGET
Advances
Program Income - Interest
Costs
Excess/(Deficiency) of Advances Due To/(From) HUD
The Actual Modernization Cost Certificateis in agreement with the Authority's records
All modernization work in connection withthe grant have been completed
All liabilities have been paid and there areno undischarged mechanics', laborers'contractors' or material-men's liens againstthe Project on file in any public officewhere the same should be filed in order tobe valid. The time in which such lienscould be filed has expired.
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