BASILS HOUSING AUTHORITY Annual Financial … HOUSING AUTHORITY Annual Financial Report For the Year Ended December 31, ... C E Rn EIE D PU B LIC ACCOU NTANTS ... It details the cost

BASILS HOUSING AUTHORITY

Annual Financial Report

For the Year Ended December 31, 2014

BASILS HOUSING AUTHORITY Table of Contents

Page

Independent Auditors'Report 1 -2

Required Supplementary luformation

Management's Discussion and Analysis 4 - 7

Basic Financial Statements

Statement of Net Position 9

Statement of Revenues, Expenses, and Changes in Fund Net Position 10

Statement of Cash Flows 11

Notes to Financial Statements 12 - 20

Other Supplementary Information (Part I)

Schedule of Expenditures of Federal Awards 22

Schedule of Compensation, Benefits and Other Payments to Agency Plead 23

Other Reports Required by Government Auditing Standards •, OMB Circular Audits of States, Local Governments, and Non-Profit

Organizations; and the Single Audit Act Amendments of 1996

Independent Auditors' Report on Internal Control Over Financial Reporting 25 - 26 and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards

Schedule of Findings and Questioned Costs

I. Summary of Auditors' Results 27

II. Findings - Financial Statement Audit 28 - 30

Summary of Prior Year Findings 31-32

Other Supplementary Information (Part H)

Statement of Modernization Costs- Uncompleted at December 31, 2013 34

Statement and Certification of Actual Modernization Costs 35 - 37

Management's Corrective Action Plan 38

OFFICES:

2740 RUE DE JARDIN STE.IOO

LAKE CHARLES LOUISIANA 70605 (O) 337-478-7902 (F1 337-478-3345

WWW.IWALKERCO.COM

MEMBER OF:

AMERICAN INSTITUTE or C E Rn EIE D PU B LIC ACCOU NTANTS

.WALKER & COMPANYAPC ACCOUNTANTS AND ADVISORS —

INDEPENDENT AUDITORS' REPORT

To the Board of Commissioners of the Basile Housing Authority

Basile, Louisiana

: We have audited the accompanying financial statements of the Basile Housing Authority, a : component unit of the Town of Basile, .Louisiana, as of and for the year ended December 31, I 2014, and the related notes to the financial statements, which collectively comprise the Basile i Housing Authority's basic financial statements as listed in the table of contents.

i Management's Responsibility' for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control

i relevant to the preparation and fair presentation of financial statements that are fi'ee fi'om I material misstatement, whether due to fraud or en'or.

Auditors' Responsibility

; 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 the i United States of America. Those standards require that we plan and perfbnn the audit to ; obtain reasonable assurance about whether the financial statements are free from material

misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or eiTor. In making those risk assessments, the auditor considers inteimal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

Mfr believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

hi our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Basile Llousing Authority as of December 31, 2014, and the changes in its financial position, and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Other Matters

SOCIE lY or LOUISIANA Required Supplementary Information CERTI El ED I'UBLIC ACCOUNTANTS . ... ,, , • ^ -r, r, r . • -IT

Accounting principles generally accepted in the United States ot America require that the management's discussion and analysis on pages 4 - 7 be presented to supplement the basic

ACCOUNTING | ASSURANCE | AUDITING | TAX | PLANNING | BUSINESS CONSULTANTS

financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essentia] part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementaiy information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of ]3re]3aring the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information

Our audit was conducted for the puiqrose of forming opinions on the financial statements that collectively comprise the Basile Housing Authority's basic financial statements. The schedule of expenditures of federal awards is presented for puiposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the basic financial statements. The additional schedules listed under Other Supplementary Information in the table of contents are also presented for additional analysis and are not a required part of the basic financial statements.

The schedule of expenditures of federal awards and other supplementary information are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America, fir our opinion, the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the basic financial statements as a whole.

The schedules listed under Other Supplementaiy Infonnatioii in the table of contents have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated September 20, 2015, on our consideration of Basile Housing Authority's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and othei" matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and ]iot to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part: of an audit perfonned in accordance with Government Auditing Standards in considering Basile Housing Authority's internal contj'ol over financial reporting and compliance.

TfJctMen. & Lake Charles, Louisiana September 20, 2015

REQUIRED SUPPLEMENTARY INFORMATION

BASILE HOUSING AUTHORITY Management's Discussion and Analysis

For the Fiscal Year Ended December 31, 2014

As management of the Basile Flousing Authority, we offer the readers of the Authority's financial statements this narrative overview and analysis of the financial activities of the Authority for the year ended December 31, 2014. We encourage readers to consider the information presented here in conjunction with the Authority's financial statements.

Questions concerning any of the information provided in this report or request for additional information should be addressed to the Executive Director, Flousing Authority of the Town of Basile, P.O. Drawer 820, Basile Louisiana 70515.

Financial Highlights

9 The assets of the Authority exceeded its liabilities as of December 31, 2014 by $422,156 (net position).

9 The Authority's cash and cash equivalent balance as of December 31, 2014 was $20,953. 9 The Authority had intergovernmental revenue of $57,520 in HUD operating subsidies and

$33,190 in capital grant income for the year ended December 31, 2014. Tenant rental revenue equaled $45,864 for the year ended December 31, 2014.

Ovendew of Financial Statements

The financial statements included in this annual report are those of a special-purpose government engaged in a business-lype activity. The following statements are included:

9 Statement of Net Position- reports the Authorit}''s assets and liabilities at the end of the operating year and provides information about the nature and amount of investment of resources and obligations to creditors.

9 Statement of Revenue, Expenses, and Changes in Fund Net Position- reports the results of activity over the course of the current year. It details the cost associated with operating the Authority and how those costs were funded. It also provides an explanation of the change in net position from the previous operating period to the current operating period.

9 The Notes to the Financial Statements- provide additional information that is essential to a full understanding of the data provided in the financial statements.

9 Other information in addition to the basic financial statements and accompanying notes - presents certain supplementaiy information regarding the Authority's electronic data submitted to the United States Department of Flousing and Urban Development's Real Estate Assessment Center.

Our analysis of the Authority as a whole begins on this page. The most important question asked about the Authority's finances is, "Is the Authority, as a whole, better or worse off as a result of the year's activities?"

The attached analysis of the entity wide net position, revenue, and expenses are provided to assist with answering the above question. A comparative analysis of government-wide results is presented.

This analysis included all assets and liabilities using the accrual basis of accounting. Accrual accounting is similar to the accounting used by most private sector companies. Accrual accounting recognizes revenue and expenses when earned regardless of when cash is received or paid.

BASILE HOUSING AUTHOMTY Management's Discussion and Analysis


Overview of Financial Statements (Continued)

Our analysis also presents the Authority's net position and changes in it. You can think of the Authority's net position as the difference between what the Authority owjis (assets) and what the Authority owes (liabilities). The change in net position analysis will assist the reader with measuring the health or financial position of the Authority.

Overtime, significant changes in the Authority's net position is an indicator of whether its financial health is improving or deteriorating. To fully assess the financial health of any Authority, the reader must also consider other non-financial factors such as changes in family composition, fluctuations in the local economy, HUD mandated program administrative changes, and physical condition of the Authority's capital assets.

Total Assets as of December 31, 2014 were $445,885. This represents a net increase of $6,076 from the 2013 total assets.

Current Assets decreased by $282 in 2014. The decrease in current assets is not significant.

Restricted Assets decreased by $14,490 in 2014. This decrease is the result of funds from the Authority's Capital Improvements Program expended during the year on capital improvements.

Net Capital Assets increased by $6,358 in 2014. This increase is the result of an increase in capital assets from the purchase of capital assets totaling $44,350.

Current Liabilities reflects an increase of $5,377 in 2014. This was the result of an increase in the amount of accrued payments in lieu of taxes outstanding at year-end.

Net Position - The difference between an organization's assets and its liabilities is its net position. Net positions are categorized as one of three types.

1. Net investment in capital assets — Capital assets, net of accumulated depreciation and reduced by debt attributable to the acquisition of those assets;

2. Restricted - Net assets whose use is subject to constraints imposed by law or agreement; 3. Unrestricted - Net assets that are neither invested in capital assets nor restricted.

BASILS HOUSING AUTHORITY Management's Discussion and Analysis


Housing Aiithority of the Town ol'Basile - Net Position

2014 2013

Current assets $ 32,560 $ 32,842

Capital assets (net) 413,325 406,967

Restricted assets - -

Total assets ,11 445.885 .t 439.809

Current liabilities $ 19,109 $ 14,452

Tenant security deposits 4.620 3.900

Total liabilities 23,729 18,352

Invested in capital assets 413,325 406,967

Restricted for Capital Improvement - 14,490

Unrestricted 8.831 -Unrestricted net position - -

Total net position 422.156 421.457

Total liabilities and net position ,1; 445.885 ,51 439.809

Total Operating Expenses decreased in 2014. This decrease is mainly due to the net result of general decreases in administrative and maintenance expenses for the year.

Genera] and Administrative costs decreased significantly when compared to the prior year primarily due to a decrease in administrative expenses, insurance, and general expenses.

Maintenance expenditures increased in 2014 due to an increase in the amount of maintenance performed.

Depreciation expenses in 2014 amounted to $37,992 which is a decrease from 2013 due to items reaching full depreciation.

Economic Factors

Significant economic factors affecting the Authority are as follows: 8 Federal funding provided by Congress to the Department of Housing and Urban Development, in

the form of operating subsidies. 9 Local inflationary, recessionary and employment trends, which can affect resident incomes and

therefore tenant rental income. 9 Inflationary pressure on utility rates, supplies and other costs.

BASILE HOUSING AUTHORITY Management's Discussion and Analysis


Basilc Housing Authority - Changes in Net Position:

2014 2013 Revenues: Operating revenues:

Public housing operating subsidy $ 57,520 $ 62,594

Other income 1,881 2,760

Dwelling rental 45,864 42,265

Non-operating revenues:

Capital grants 33,190 40,890

Interest revenue 18 18

Total revenues 138,473 148,527

Expenses: General and administrative 48,834 88,142 Repairs and maintenance 33,932 26,165 Utilities 7,041 3,524 Insurance 9,975 -Depreciation and amortization 37.992 44.802

Total expenses 137.774 162.633 Change in net position 699 (14,106)

Net position - beginning of year 421.457 435.563 Net position - end of year S 422.156 ,11 421.457

Capital Assets

The Basile Housing Authority's investment in capital assets as of December 31, 2014, amounts to $413,325 (net of accumulated depreciation). This investment in capital assets includes land, buildings and improvements, and furniture and equipment.

The Basile Housing Authority's Capital Assets include:

Land

Structures and equipment

Total Accumulated Depreciation

2014

$ 10,000

1.198.375

1,208,375

1795.0501 S 413.325

2013

10,000

1.154.025

1,164,025

(757.0581 406.967

The Authority primarily acquires its assets with the proceeds from federal capital gi'ants.

BASIC FINANCIAL STATEMENTS

BASILS HOUSING AUTHOIHTY Statement of Net Position As of December 31, 2014

ASSETS

Current Assets Cash Investments Tenant receivables, net Other receivables Prepaid expenses

Total Current Assets

Property and Equipment, Net

Total Assets

LIABILITIES AND NET POSITION

Current Liabilities Accounts payable Tenant security deposits Payroll liabilities Payments in lieu of taxes (PILOT)

Total Current Liabilities

Net Position Net investment in capital assets Uinestricted

Total Net Position

Total Liabilities and Net Position

20,953 6,000 1,376 344

3,887 32,560

413,325

445.885

1,197 4,620 973

16,939 23,729

413,325 8,831

422,156

$ 445.885

The accompanying notes are an integral part of the financial statements 9

BASILS HOUSING AUTHORITY Statement of Revenues, Expenses, and Changes in Fund Net Position


Operating Revemies Tenant rental revenue Public housing operating subsidy Other income

Total Operating Revenues

Operating Expenses Administrative Depreciation expense Insurance Repairs and maintenance Utilities

Total Operatmg Expenses

Income (Loss) from Operations

Non-Operating Revenues (Expenses) Interest income

Total Non-Operating Revenues (Expense

Capital contributions/grants (loss)

Change in Net Position

Net Position, Beginning of Year

Net Position, End of Year

$ 45,864 57,520 L881

105,265

48,834 37,992 9,975

33,932 7.041

137,774

(32,509)

1^ 18

33,190

699

421,457

$ 422,156

The accompanying notes are an integral part of the financial statements 10

BASILE HOUSING AUTIIORri Y Statement of Cash Flows


Cash Flows irom Operating Activities: Cash received from tenants $ 45,864 Cash received form FIUD (Operations) 57,520 Cash received from others 1,881 Cash payments to employees (37,141) Cash payments to suppliers (54,506)

Net cash pi'ovided (used) in operating activities 13,618

Cash Flows from Capital and Related Financing Activities: Grant receipts 33,190 Purchase of capital assets (44,350)

Net cash provided (used) for capital and related financing activities (11,160)

Cash Flows from Investing Activities: Investment income 18

Net cash (used) provided by investing activities 1_8^

Net Increase (Decrease) in Cash and Cash Equivalent 2,476

Cash at Beginning of the Period 18,477

Cash at End of the Period $ 20,953

Reconciliation of Operating Income (Loss) to Net Cash Pro\'ided (Used) by Operating Activities:

Operating income (loss) $ (32,509)

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation/Amortization 37,992 Changes in assets and liabilities:

(Ercrease) decrease in tenant receivables 1,104 (Increase) decrease in other receivables 2,983 (Increase) decrease in prepaid expenses and other assets (1,329) hicrease (decrease) in accounts payable 1,197 Increase (decrease) in payroll taxes payable 202 hicrease (decrease) in accmed PILOT 3,258 hrcrease (decrease) in tenant deposits 720

Net cash provided (used) in operating activities $ 13,618

The accompanymg notes are an mtegral part of the financial statements 11

BASILE HOUSING AUTHORITY Notes to Financial Statements


Note I - Nature of Activities and Sigiiilieant Accounting Policies

Organization and Purpose

The Basile Flousing Authority (Authority) was created by Louisiana Revised Statute (LSA-R.S.) 40,391 to engage in the acquisition, development, and administration of a low rent housing program to provide safe, sanitary, and affordable housing to the citizens of Basile, Louisiana,

The Authority is administered by a five-member board appointed by the Mayor of the Town of Basile, Louisiana. Members of the board serve five-year terms. Under the United States Housing Act of 1937, as amended, the U.S. Department of Housing and Urban Development (FIUD) has direct responsibility for administering low rent housing programs in the United States, Accordingly, FIUD has entered into an annual contributions contract with the Authority for the purpose of assisting the Authority in financing the acquisition, construction, and leasing of housing units and to make annual contributions (subsidies) to the Authority for the purpose of maintaining this low rent character.

At December 31, 2014, the Authority manages 22 public housing units and two capital funding programs.

Scope of Reporting Entitw

Entity status for financial reporting purposes is governed by GASB Statement No, 14, The Financial Reporting Entity, and No, 39, Determining Whether Certain Organizations Are Component Units - an amendment of GASB Statement No. 14. The GASB is the standard-setting body for the establishment of GAAP in governmental entities. Since the Authority is legally separate and fiscally independent, the Authority is a separate governmental reporting entity. As used in GASB Statement 14, fiscally independent means that the Authority may, without the approval or consent of another governmental entit>', determine or modily its own budget, le\y its own taxes or set rates or charges, and issue bonded debt with ITUD approval.

The Authority is a related organization of the Town of Basile, Louisiana, since the Mayor appoints a voting majority of the Authority's governing board. The Town of Basile, Louisiana is not financially accountable for the Authority as it cannot impose its will on the Authority and there is no potential for the Authority to provide financial benefit to, or impose financial burdens on, the Town of Basile, Louisiana, Accordingly, the Authority is not a component unit of the financial reporting entity of the Town of Basile, Louisiana,

The financial statements include all funds and activities that are within the oversight responsibilit)' of the Authority,

GASB Codification Section 2100 defines criteria for determining which component units should be considered part of the Authority for financial reporting purposes. The basic criterion for including a potential component unit within the reporting entity is financial accountability'. The GASB has set forth criteria to be considered in determining financial accountability. These criteria include:

], Appointing a voting majority of an organization's governing body, and

a. The ability of the Authority to impose its will on that organization and/or

12



Note 1 - Nature of Activities and Signillcant Accounting Policies (Continued)

b. Tlie potential for the organization to provide specific financial benefits to, or impose specific financial burdens on the Authority.

2. Organizations for which the Authority does not appoint a voting majority, but are fiscally dependent on the Authorit}/.

3. Organizations for which the reporting entity's financial statements would be misleading if data of the organization is not included because of the nature or significance of the relationship.

Based on the previous criteria, the Authority has detennined that there are no component units that should be considered as part of the Authority reporting entity.

Basis of Presentation

The accom]3anying financial statements of the Authority have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles.

Fund Accounting

The Authority uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions relating to certain government functions or activities. A fund is a separate accounting entity wi th a self-balancing set of accounts.

The Authority accounts for its business-type activities as proprietary funds.

The transactions of the Authority are reported in a proprietary enterprise fund, which include the transactions of the Public Housing Low Rent progi'am and the Capital Fund program.

Proprietary funds are used to account for activities similar to those found in the private sector, where the determination of net income is necessary or useful to sound financial administration. Operating income reported in proprietary fund financial statements includes revenues and expenses related to the primary, continuing operations of the fund such as charges to tenants for rents or other services as well as operating subsidies received from FIUD. Principal operating expenses are the costs of providing these services and include administrative expenses and depreciation of capital assets. Other revenues and expenses are classified as non-operating in the financial statements.

Operating revenues and expenses generally result from providing services, or producing and delivering goods in connection with a proprietary funds' principal ongoing operations. According to the Authorit)''s policy, governmental operating grants are considered operating revenues. Operating expenses for proprietary funds include the administrative costs of providing the service. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses.

13

BASILE HOUSING AUTHOMTY Notes to Financial Statements


Note 1 - Nature of Activities and Significant Accounting Policies (Continued)

Measurement Focus and Basis of" Accounting

Proprietary funds are accounted for on the flow of economic resources measurement focus and the accrual basis of accounting. Under this method, revenues are recorded when earned and expenses are recorded at the time the liabilities are incurred. With this measurement focus all assets and all liabilities associated with the operation of these funds are included on the statement of net positions.

Budgets

The Authority prepares its financial statements in accordance with generally accepted accounting principles. In accordance with the provisions of its annual contributions contract with the Department of Housing and Urban Development, the Authority prepares an annual budget. This budget is prepared in conformity with the accounting practices prescribed by HUD, which is a comprehensive basis of accounting other than generally accepted accounting principles. Because of the differences in accounting practices, no budgetary information is provided in this report.

The following are the budgetary j^ractices prescribed by HUD and used by the Authority;

The Executive Director prepares a proposed budget and submits same to the Board of Commissioners no later than thiiiy days prior to the beginning of each fiscal year. Following discussion and acceptance of the budget by the Board, it is sent to HUD for approval. Upon approval by HUD, the budget is formally adopted. Any budgetary amendments require the approval of the Executive Director and the Board of Commissioners. All budgetary appropriations lapse at the end of each fiscal year.

Cash and Cash Equivalents

Cash includes amounts in demand deposits, interest-bearing demand deposits, and time deposits. Cash equivalents include amounts in certificates of deposit with original maturities of 90 days or less. Under state law, the Authority may deposit funds in demand deposits, interest-bearing demand deposits, money market accounts, or time deposits with state banks organized under Louisiana law and national banks having their principal offices in Louisiana. The market value of the pledged securities plus the federal deposit insurance must at all times equal the amount on deposit with the fiscal agent. These securities are held in the name of the pledging fiscal agent bank in a holding or custodial bank that is mutually acceptable to both parties.

Investments

Investments are limited to L.S.-R.S. 33:2955 and the Authority investment policy. If the original maturities of investments exceed 90 days, they are classified as investments; however, if the original maturities are 90 days or less, they are classified as cash equivalents.

14


For the Fiscal Year Ended December 31,2014

Note I - Nature of Activities and Signilicant Accounting Policies (Continued)

The investments are reflected at quoted market process except for the following which are required/permitted as perGASB Statement No, 31:

e Investments in nonparUcipalms interest-earning contracts, such as nonnegotiable certificates of deposit with redemption terms that do not consider market rates, are reported using a cost-based measure.

» Interest-earning investment contract include time deposits with financial institutions (such as certificates of deposit), repurchase agreements, and guaranteed investment contracts.

Revenue Recognition

Revenues and other governmental fund financial resource increments are recognized in the accounting period in which they become susceptible to accrual- that is, when they become measurable and available to the finance expenditures of the fiscal period. "Available" is determined as collectible within the 12 months of the fiscal year or soon enough thereafter to be used to pay liabilities of the current period.

Prepaid Items

Payments made to insurance companies for coverage that will benefit the period beyond December 31, 2014 are recorded as prepaid insurance. The Authority reports prejiaid revenues on its statement of net position. Prepaid revenues arise when resources are received by the Authority before it has a legal claim to them, as when grant monies are received prior to the occurrence of qualifying expenditures, hr subsequent periods, when the Authority has a legal claim to the resources, the liability for prepaid revenue is removed from the statement of net position and the revenue is recognized.

Capital Assets

Capital assets are recorded at either historical cost or estimated historical cost if actual historical cost is not available, and depreciated over their estimated useful lives (excluding salvage value). The capitalization threshold for equipment is $500. Estimated useful life is management's estimate of how long the asset is expected to meet service demands.

The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized.

Depreciation of all exhaustible capital assets used by the proprietary fund is charged as an expense against their operations. Depreciation has been provided over the estimated useful lives using the straight-line method. The estimated useful lives are as follows:

Dwelling structures and improvements 27.5 years Vehicles, machinery and equipment 5 years

15


"or the Fiscal Year Ended December 31, 2014

Note 1 - Nature of Activities and Signilicant Accounting Policies (Continued)

Post Employment Benefits

The Authority does not recognize or pay any post employment benefits. Accordingly, Governmental Accounting Standards Board (GASB) Statement Number 45 does not apply.

Compensated Absences

The Authority follows Civil Service guidelines pertaining to the accumulation of vacation and sick leave. This leave may be accumulated and carried over between fiscal years, with a maximum of 300 hours of payment of leave upon termination or retirement at their then current rate of pay. Employees do not receive payment for unused sick leave upon termination or retirement. The cost of current leave privileges, computed in accordance with GASB Codification Section C60, is recognized as a current expense in the proprietary fund. The unpaid portion of leave privileges is recorded as a non-current liability in the proprietary fund.

Impact of Recently Issued Accounting Principles

In June 2011, the Governmental Accounting Standards Board (GASB) issued Statement 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position. GASB No. 63 provides guidance for reporting deferred outflows of resources, deferred inflows of resources, and net position in a statement of financial position and includes five components: assets, deferred outflows of resources, liabilities, deferred inflows of resources, and a residual amount, referred to as the net position. The provisions of Statement No. 63 do not have any impact on the Authority's financial statements.

In March 2012, GASB issued Statement No. 65, Items Previously Reported as Assets and Liabilities, which expands account classifications that are affected by GASB No. 63. GASB No. 65 establishes accounting and financial reporting standards that reclassify, as deferred outflows or defemed inflows of resources, certain items that were previously reported as assets and liabilities and recognizes, as outflows of resources or inflows of resources, certain items that were previously reported as assets and liabilities.

Net Position and Flow Assumptions

The difference between the Authority's assets and its liabilities are its net position, which is categorized as one of three types:

• Net investment in capital assets - capital assets, net of accumulated depreciation and reduced by debt attributable to the acquisition of those assets;

o Restricted - net assets whose use is externally imposed by creditors (such as debt covenants), grantors, contributors, or laws or regulation of other governments or imposed by law through constitutional provisions or enabling legislation;

® Unrestricted ~ wA assets that are neither invested in capital assets nor restricted.

When both restricted and unrestricted resources are available for use, it is the Authority's policy to use restricted resources first, then unrestricted resources as they are needed.

16

BASILS HOUSING AUTHORITY Notes to Financial Statements


Note 1 - Nature of Activities and Significant Accounting Policies (Continued)

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimates.

Note 2 - Cash and Investments

As of December 31, 2014, the Authority's bank balances totaled $20,953. These balances were fully covered by FDIC insurance.

The Authority has reported its investments with a maturity at time of purchase of one year or less at amortized cost. There were no investments with maturities at time of purchase of greater than one year at December 31, 2014. Deposits are stated at cost, which approximates fair value. At December 31, 2014, the Authority had its assets in certificates of deposits managed by a financial institution. The carrying amount of the certificates of deposits was $6,000, and is classified as investments. This amount represents 100% of the Authority's investment as of this date. The Authority's investments were fully covered by FDIC insurance.

The Authority's deposits are categorized to give an indication of the level of risk assumed by the Authority at year end. The categories are described as follows:

9 Category 1 - Insured or collateralized with securities held by the Authority or by its agent in the Authority's name.

9 Category 2 - Collateralized with securities held by the pledging financial institution's trust department or agent in the Authority's name.

e Category 3 -Uncollateralized.

Amounts on deposit are secured by the following pledges:

Description Market Value FDIC (Category 1) Securities (Category 2) Uncollateralized (Category 3)

Total

The cash, cash equivalents, and investments of the Authority are exposed to the following risks:

Interest Rate Risk.' The Authority's policy does not address interest rate risk.

Credit Rate Risk: GASB 40 disclosure of credit rate risk does not apply, since the Authority's only investments are certificates of deposit.

17

$ 26,953

$ 26.953



Note 2 - Cash and Investments (Continued)

Custodial Credit Risk: The Authority's policy requires the financial institution to cover the first $250,000 of deposit with FDIC coverage. Any excess deposits must be collateralized with securities held by the pledging financial institution, with a fair market value that equals or exceeds the amount of excess deposits.

Note 3 - Accounts Receivable

The accounts receivable balances at December 31, 2014, are as follows:

Class of Receivable Tenants (net of allowance for doubtful accounts of $417) $ 1,376 Restitution (see Note 8) 338 Interest Receivable 6

Total $ 1.720

Note 4 - Restricted Assets

The Authority had no restricted assets remaining at December 31, 2014.

Note 5 - Capital Assets

The changes in capital assets are as follows:

Beginning Ending Balance Additions Deletions Balance

Non-depreciable assets: Land $ 10,000 $ - $ - $ 10,000

Depreciable assets: Buildings 761,435 - - 761,435 Furniture and equipment 37,026 - - 37,026 Leasehold improvements 355,564 44,350 i 399,914

Total capital assets 1,164,025 44,350 - 1,208,375

Less: Accumulated depreciation Buildings 627,562 21,572 - 649,134 Furniture and equipment 36,742 209 - 36,951 Leasehold improvements 92,754 16,211 ; 108,965

Total accumulated depreciation 757,058 37,992 ; 795,050

Total capital assets, net $ 406.967 $ 6,358 $

Depreciation expense for the year ended December 31, 2014 totaled $37,992.

18



Note 6 - Retirement Systems

The Authority does not paiticipate in any retirement system.

Note 7 - Compensated Absences

At December 31, 2014 no liability for compensated absences has been calculated and recorded for the executive director and assistant director, who are the sole employees of the Authority. Because of the part-time nature of the position, any liability would be minimal. Therefore, no adjustment has been recorded for compensated absences.

Note 8 - Misappropriation of Tenant Fees

It was noted during the audit for the year ended December 31, 2012 that the former Executive Director of the Housing Authority misappropriated at least $4,600 in tenant fees for her personal use. The Louisiana Legislative Auditor issued an investigative audit report on July 23, 2014 which provided additional details to the misappropriation. Based on the Louisiana Legislative Auditor's report, the former Director misappropriated at least $7,698 in rental and other fees. The former Director has entered into a plea agreement with the Authority to repay the misappropriated funds. As of December 31, 2014, the amount of restitution outstanding was recorded as a receivable in the amount of $338, as reflected in Note 3. The remaining balance is still being pursued by the Evangeline Parish District Attorney's office. The former Executive Director has a court date scheduled September 24, 2015 to address the outstanding balance.

Note 9 - Economic Dependence

Statement of Financial Accounting Standard (SFAS) No. 14 requires disclosure in financial statements of a situation where one entity provides more than 10% of the audited entity's revenues.

The Department of Housing and Urban Development provided $57,520 to the Authority, which represents approximately 41% of the Housing Authority's total revenue and capital contributions for the year.

Note 10 - Federal Compliance Contingencies

The Authority is subject to possible examinations by federal regulators who determine compliance with terms, conditions, laws and regulations governing grants given to the entity in the current and prior years. These examinations may result in required refunds by the entity to federal grantors and/or program beneficiaries. No questioned or disallowed costs were noted for inclusion in our report. However, several deficiencies were noted and are discussed in the findings and recommendations section of our report.

Note 11 - Related Party Transactions

The Tenant Commissioner on the Board of Director is also a resident of the Basile Housing Authority.

Note 12 - Compensation of Board Members

During the year ended December 31, 2014, all board members served without compensation or per diem.

19



Note 13 - Subsequent Events

Management of Basile Flousing Authority has evaluated subsequent events and transactions for potential recognition or disclosure in the financial statements through September 20, 2015 the date the financial statements were available to be issued.

20

OTHER SUPPLEMENTARY INFORMATION

(Part I)

BASILE HOUSING AUTHORITY Schedule of Expenditures of Federal Awards


Federal Grantor/ Program Title

Grant Federal Award Program CFDA No. ID No. Received Expenditures

U.S. Department of Housing and Urban Development

Direct Programs: Capital Fund Programs Low-income FIAP

14.872 FW-340 14.85 FW-340

33,190 $ 33,190 57,520 57,520

Total U.S. Department of Housing and Urban Development 90,710 90,710

Total Federal Assistance 90,710 90,710

Federal funds on hand, beginning of year Federal funds received during year Federal funds disbursed during year

90,710 (90,710)

Federal funds on hand, end of year

22

BASILE HOUSING AUTHORITY

Schedule of Compensation, Benefits and Other Payments to Agency Idead For the Year Ended December 31, 2014

Agency Head: Joscy Brisco, Executive Director October 2014 - Current

Purpose: Amount: Salary $ 4,461 Benefits - health Benefits - retirement Benefits - social security insurance 277 Car allowance Vehicle provided by government Per diem Reimbursements Travel Registration fees Conference travel Continuing professional education fees Housing Unvouchered expenses Special meals ;

Total S 4.738

Agency Head: Anisa Richardson, Executive Director Januaiy 2014 - July 2014

Purpose: Amount: Salary $ 17,728 Benefits - health Benefits - retirement Benefits - social security insurance 1,099 Car allowance Vehicle provided by government Per diem 700 Reimbursements Travel 1,665 Registi'ation fees Conference travel Continuing professional education fees Housing Unvouchered expenses Special meals z

Total .S 21.192

See Independent Auditors' Report 23

OTHER REPORTS REQUIRED BY GOVERNMENT AUDITING STANDARDS-, OMB CIRCULAR A UDITS OE STA TES, LOCAL GOVERNMENTS, AND NON-PROEIT ORGANIZATIONS-, AND THE

SINGLE AUDIT ACT AMENDMENTS OF 1966

.WALKER & COMPANY A CCO UN J'A N TS A ND A D V!SO RS

A PC

INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COIMILLIANCE AND OTHER MAl'TERS

BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERI^ORISIED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

OFFICES:

2740 RUE DE JARDIN

S EE, I GO

LAKE CHARLES

LOUISIANA 70605

(O) 337M78O902

(F) 337-478-3345

WWW.JWALICERCO.COM

MEMBER OF:

AMERICAN INSTITUTE OE

CERTI El ED PUBLIC ACCOUNTAN1S

SOCIETY OE LOUISIANA

CEICEIEIED PUBLIC ACCOUN'I AN'I S

To the Board of Commissioners Basile Housing Authority Basile, Louisiana

We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Goyermnent Auditing Standards issued by the Comptroller General of the United States, the financial statements of the business-tj'pe activities of Basile Housing Authority, as of and for the 3'ear ended December 31, 2014, and the related notes to the financial statements, which collectively comprise Basile Housing Authority's basic financial statements and have issued our report thereon dated September 20, 2015.

Internal Control over Financial Reporting

In planning and performing our audit of the financial statements, we considered Basile Housing Authority's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the pnipose of expressing an ojiinion on the effectiveness of Basile Housing Authorit)''s internal contiol. Accordingl}', we do not express an opmion on the effectiveness of Basile Housing Authorit3''s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weahiess is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, materia] weaknesses or significant deficiencies may exist that were not identified. Given these limitations, during our audit we did not identify' any deficiencies in internal control

ACCOUNTING | ASSURANCE | AUDITING I TAX I PLANNING I BUSINESS CONSULTANTS

that we consider to be material weaknesses. We did identify certain deficiencies in internal control, described in the accoinpanying schedule of findings and questioned costs, as items 2014-01, 2014-02, and 2014-03 that we consider to be signiilcant deficiencies.

Compliance and Other Matters

As pari; of obtaining reasonable assurance about whether Basile Housing Authority's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance witli those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed an instance of noncompliance or other matters that is required to be reported under Government Auditing Standards and which is described in the accompanying schedule of ;findings and questioned costs as item 2014-01.

Basile Housing Authority's Response to .Findings

Basile Housing Authority's response to the :fmdings identified in our audit is described in the accompanying schedule of findings and questioned costs. Basile Housing Authority's response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it.

Purpose of this Report

The puiqrose of this report is solely to describe the scope of our testing of intenial control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on co:nip]iance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

p. 7{/cii£e^ & Lake Charles, Louisiana September 20, 2015

26

BASILE HOUSING AUTHORITY Schedule of Findings and Questioned Costs


I. Summary of Auditors' Results

a. Financial Statements

1. The independent auditors' report expresses an unqualified opinion on the financial statements of the Basile Housing Authority.

2. There were three (3) control deficiencies disclosed during the audit of the financial statements and reported in the Independent Auditors' Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards. None of these deficiencies are reported as a material weakness.

3. One (1) instance of noncompliance material to the financial statements of the Basile Housing Authority was reported in the Independent Auditors' Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards.

b. Federal Awards

The entity reported they received less than $500,000 of federal awards during the year ended December 31, 2014, and therefore, is exempt from the audit requirements under the Single Audit Act and 0MB Circular A-133, of States, Local Government, and Non-Profit Organizations.

c. Management Letter

A management letter was not issued in connection with the audit for the year ended December 31, 2014.

27


For the Year Ended December 3 i, 2014

H. Findings - Financial Statement Audit

INTERNAL CONTROL AND COMPLIANCE FINDINGS

2014 - 01 Timely Filing of Report

Condition:

The report was not submitted to the Louisiana Legislative Auditor's office on a timely basis.

Criteria: LSA-R.S.24.516 states that "ail engagements must be completed and transmitted to the legislative auditor within six months of the close of the auditee's fiscal year."

Cause:

The cause appears to be the need to audit 2013 and 2014 within the six months following the close of the auditee's fiscal year.

Recommendation:

The Authority should remain in compliance with all State laws governing audit engagements. A CPA firm should be selected and submitted to the Louisiana Legislative Auditor for approval early enough to allow an audit firm to begin and complete the engagement within the six month allotted time frame.

Response:

See Management's Corrective Action Plan.

2014 - 02 Lack of Adequate Doeumeiitatioii

Condition:

The Basile Housing Authority failed to maintain proper documentation for expenses in the first three (3) quarters of the fiscal year.

Criteria:

The Authority should maintain proper documentation to support all transactions and account balances.

Cause:

While written procedures are in place, they were not followed consistently.

28



Effect:

Without proper supporting documentation, the completeness and accuracy of the Authority's transactions and accounts cannot be assured.

Recommendation:

Continue to follow the procedures for required documentation and signatures. Upon the appointment of a new Executive Director, the policies and procedures for documentation were followed on a more consistent basis.

Response:


2014 - 03 Travel Reinibtirsemeiit Policy and Procedures

Condition:

Policies and procedures for approval of travel and submission for reimbursement were not followed. During the months of February and May, 2014, txvo conferences were attended by the executive director. Checks were issued in advance of travel in the amounts of $606.03 and $499.26 for lodging and $300.00 and $400.00 for meal per diem, respectively.

Criteria:

Per the Authority's Travel Policy and Procedure manual. Board approval is required when travel expenses are incurred by the Executive Director. Expenses should be claimed on the Area Travel/Miscellaneous Expense Reimbursement Form. Meals will be reimbursed at a flat rate of $75/day or the Federal per diem for that City, whichever is higher. The Federal meal per diem for the conferences was $56/day and $71/day respectively.

Per the Authority's Travel Policy and Procedure manual, lodging will be reimbursed on an actual cost basis. Excessive charges will be reviewed and reimbursement may be limited to a reasonable allowance.

Cause:

While written procedures are in place, they were not followed. No support was provided to show travel was approved by the Board prior to checks being issued. The existing backup does not contain proper receipts for fuel, hotel or meal expenses.

All payments were issued in advance of travel, made out to the executive director and signed by the executive director and a board member.

As the Flousing Authority's Travel per diem rates were higher than the Federal per diem for the city where the conferences took place, the amounts paid to the executive director should have been per the Authority's rate. However, the payments exceeded the maximum allowed by the Housing Authority's Travel Policy and Procedure manual.

29

BASILS HOUSING AUTHORITY Schedule of Findings and Questioned Costs


At the conclusion of travel, no support was provided to show that charges were reviewed after travel to determine if excessive charges were made or if a reimbursement was required.

Effect:

By not following the policies and procedures that are in place, the Authority's internal control fails and leaves the Authority open to misappropriation and the Authority's ability to fairly state expenses is compromised.

Recommendation:

The Authority should ensure that all travel reimbursements follow the policies and procedures in place. The Authority should look at different ways of handling payment of hotels and other expenses other than issuing checks to the traveler to cover expenses. All travel should include receipts to account for fuel, meals, hotel, and any other expenses incurred.

Response:


30

BASILE HOUSING AUTHORITY Summary of Prior Year Findings


INTEIWAL CONTROL AND COMPLIANCE EINDINGS

2013 - 01 Lack of Adequate Documentation

Condition:

The Basile Flousing Authority failed to maintain projoer documentation for revenue and expenses.

Recommen dat i on:

The Authority should review and revise its procedures relative to the receipt of rental payments from tenants and disbursement of funds, to ensure that all recorded transactions have adequate supporting documentation.

Current Status:

Partially Resolved, See Finding 2014-02

2013 - 02 Failure to Update Policies and Procedures Manual

Condition:

The Authority has introduced new policies and procedures in accordance with its response to the prior year's audit finding on updating its manual. However, through a review of the Board's minutes, and interviews with management, it does not appear that the policies and procedures were voted on and authorized by the governing body. The Board does not appear to be exercising adequate oversight of the development and performance of internal control over the Authority by failing to ensure that appropriate management policies and practices are being instituted and employed.

Recommendation:

We recommend that policies and procedures not be implemented prior to the j-eview and approval of the Authority's Board of Commissioners.

Current Status:

Resolved

2013 - 03 Timely Filing of Repoi t

Condition:

The report was not submitted to the Louisiana Legislative Auditor's office on a timely basis.

31

BASILS HOUSING AUTHORITY Summary of Prior Year Findings


Recommendation:

The Authority should remain in compliance with all State laws governing audit engagements. A CPA firm should be selected and submitted to the Louisiana Legislative Auditor for approval early enough to allow an audit firm to begin and complete the engagement within the six month allotted time frame.

Current Status:

Unresolved, see Finding 2014-01

32

OTHER SUPPLEMENTARY INFORMATION

(Part II)

BASILE HOUSING AUTHORITY Statement of Modernization Costs-

Uncompleteci at December 31, 2014

Annual Contributions Contract FW-340

CAPITAL FUNDING PROGRAM LA 48PO58501I4

Funds approved

Funds advanced

Funds expended

$ 25,847

Excess funds advanced over funds expended

Total funds available at year end

34

BASILE HOUSING AUTHORITY

Statement of Certification of Actual Modernization Costs

At December 31, 2014

2004 PHASE LA 48PO5850104

Funds Approved $ 39,954 Funds Expended 39,954

Excess of Funds Approved

Funds Advanced 39,954 Funds Expended 39,954

Excess of Funds Advanced $

2005 PHASE LA 48SO5850105





2008 PHASE LA 48PO5850108





35

BASILE HOUSING AUTHORITY Statement of Certi fication of Actual Modernization Costs

At December 31, 20 HI

2010 PHASE LA 48PO5850110

Funds Approved Funds Expended

33,921 33,921


Funds Advanced Funds Expended

33,921 33,921

Excess of Funds Advanced

2011 PHASE LA 48PO5850111


28,006 28,006



28,006 28,006


2012 PHASE LA 48PO5S50112


25,924 25,924



25,924 25,924


36

BASILE HOUSING AUTHORn Y

Statement of Certi fication of Actual Modernization Costs

At December 31, 2014

2013 PHASE LA 48P0585Qn3





2014 PHASE LA 48PO5850114

Funds Approved $ 25,847 Funds Obligated ^

Unexpended Approved Funds 25,847



1) The distribution of costs by project as shown on the Financial Statement of Modernization Cost submitted to HUD for ap]3roval is in agreement with the PHA's records.

2) All modernization costs have been paid and all related liabilities have been discharged through payment,

3) Funds for 2014 were not expended until 2015.

Basile Housing Authority P.O. Box 820

Basile, LA 70515 (Phone & Fax) (337) 432-5423

Email: [email protected]

Management's Corrective Action Plan

2014-01 Timely Filing of Report

The Authority is implementing procedures to begin the engagement process earlier going forward in order to give the auditor a sufficient amount of time to complete the engagement.

2014-02 Lack of Adequate Documentation

The Authority has invested in software which provides for improved tracking of rental receipts from tenants and issues computer generated receipts. The Authority has also implemented procedures and internal controls to assist with ensuring that all disbursements are supported by adequate documentation before any approvals are given, or payments are authorized.

2014-03 Travel Reimbursement Policy and Procedures

The Authority will ensure that all travel policy and procedures will be followed going forward. Executive Director travel will be approved by a board member and sufficient backup will be provided to validate funds expended.

Future travel will be reviewed after travel is completed to determine overpayment or the need for reimbursement.

38

Documents

BASILS HOUSING AUTHORITY Annual Financial … HOUSING AUTHORITY Annual Financial Report For the Year Ended December 31, ... C E Rn EIE D PU B LIC ACCOU NTANTS ... It details the cost