audit Report & footnotes 06-30-2006[1]

Kathie

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• Publié par: Phawying
• Nombre de lectures: 38
• Langue: English

Extrait

David J. Oswald & Co . Certified Public Accountant David J. Oswald CPA (A Professional Corporation) Phone [phone] Mindy L. Metsker CPA 5741 Palmer Way, Suite A Fax [phone] Joanne Goddard-Hackett CPA Carlsbad, California 92010 September 22, 2006 INDEPENDENT AUDITOR'S REPORT Board of Directors Coronado, California  I have audited the accompanying balance sheet of CORONADO CAY HOMEOWNERS ASSOCIATION (a California corporation) as of June 30, 2006 and the related statements of revenues, expenses and changes in fund balances and cash flows for the year then ended. These financial statements are the responsibility of the Association's management. My responsibility is to express an opinion on these financial statements based on my audit.  I conducted my audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion.  In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of CORONADO CAY HOMEOWNERS ASSOCIATION at June 30, 2006 and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.  The supplementary information on future major repairs and replacements is not a required part of the basic financial statements but is supplementary information required by accounting principles generally accepted in the United States of America. I have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of supplementary information. However, I did not audit the information and express no opinion on it.

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CORONADO CAY HOMEOWNERS ASSOCIATION NOTES TO FINANCIAL STATEMENTS June 30, 2006 ASSETS  OPERATING REPLACEMENT  FUND FUND 2006 CURRENTS ASSETS: $  Cash - cash & cash equivalents$ (25,158) 250,644 225,486  $  Investments 0 1,958,371 1,958,371  Assessments receivable 25,526 0 25,526  Interest receivable 0 18,175 18,175  Prepaid expenses 54,014 0 54,014  Property & equipment net of  $1,051,385 accum. deprec. 361,027 0 361,027 $  TOTAL ASSETS $ 415,409 $ 2,227,190 2,642,599 LIABILITIES AND MEMBER'S EQUITY CURRENT LIABILITIES: $  Accounts payable $ 14,120 $ 0 14,120  Prepaid assessments 85,920 0 85,920  Accrued expenses 74,998 0 74,998  Refundable deposits 12,508 0 12,508  Income taxes payable 38,769 0 38,769  Total Current Liabilities 226,315 0 226,315 CONTINGENT LIABILITY (note 7):  MEMBERS' EQUITY 189,094 2,227,190 2,416,284  TOTAL LIABILITIES  AND MEMBERS $  EQUITY $ 415,409 $ 2,227,190 2,642,599

CORONADO CAY HOMEOWNERS ASSOCIATION

NOTES TO FINANCIAL STATEMENTS June 30, 2006

STATEMENT OF REVENUE, EXPENSES AND CHANGES IN MEMBERS’ EQUITY

For the Year Ended June 30, 2006

 OPERATING  FUND REVENUE:  Assessments (note 2) $ 2,276,844  Lease & rental 362,241  Interest 2,196  Other income 28,510  Total Revenue 2,669,791 EXPENSES:  Common Area Maintenance:  Wages & related 272,060  Supplies & related 70,808  Total Common Area Maint. 342,868  Landscaping:  Wages & related 595,262  Supplies & related 199,618  Total Landscaping 794,880  Security:  Wages & related 310,660  Supplies & related 17,837  Total Security 328,497  Other Member Services:  Water & sewer 172,514  Insurance 157,377  Gas & electric 124,740  Refuse removal 115,915  Outside services 75,200  Supplies & other 17,064  Total Other Member Svcs. 662,810  Administrative:  Wages & related 294,753  Income tax 92,969  Professional fees 74,881  Depreciation 73,437  Office & related 59,931  Outside services 43,170  Total Administrative 639,141  Replacements 0  Total Expenses 2,768,196 Exess (Deficit) of Revenues  Over (Under) Expenses (98,405)  Inter-fund Transfers 6,747  Beginning Fund Balances 280,752 Ending Fund Balances $ 189,094

REPLACEMENT FUND

$ 789,116 0 73,157 0 862,273

0 0 0

0 0 0

0 0 0

0 0 0 0 0 0 0

0 0 0 0 0 0 0 729,756 729,756

132,517 (6,747) 2,101,420 $ 2,227,190

2006 $ 3,065,960 362,241 75,353 28,510 3,532,064 272,060 70,808 342,868 595,262 199,618 794,880 310,660 17,837 328,497 172,514 157,377 124,740 115,915 75,200 17,064 662,810 294,753 92,969 74,881 73,437 59,931 43,170 639,141 729,756 3,497,952 34,112 0 2,382,172 $ 2,416,284

CORONADO CAY HOMEOWNERS ASSOCIATION NOTES TO FINANCIAL STATEMENTS June 30, 2006 STATEMENT OF CASH FLOWS For the Year Ended June 30, 2006  OPERATING REPLACEMENT  FUND FUND 2006 CASH FLOWS FROM OPERATING ACTIVITIES:  Excess (deficit) of revenues  over (under) expenses$ (98,405)132,517 $  $ 34,112  Adjustment to reconcile  excess of revenue over expenses to  expenses to net cash provided by  (used) in operating activities:  Depreciation 73437 0 73,437  (Increase) decrease in:  Assessments receivable (23,108) 0 (23,108)  Interest receivable 0 (6,915) (6,915)  Prepaid expenses (14,448) 0 (14,448)  Accounts payable 428 0 428  Other Liabilities (390,661) 0 (390,661)  Net cash provided by (used in)  operating activities (452,757) 125,602 (327,155) CASH FLOWS FROM INVESTING ACTIVITIES  Purchases of Property & Equipment (18,518) 0 (18,518)  Change in investment (73,156)0 (73,156) Net cash provided by (used in) (18,518) (73,156) (91,674)investing activities CASH FLOWS FROM FINANCING ACTIVITIES  Net Interfund Transfers (6,373) 6,373 0  Net increase (decrease)  in  cash (477,648) 58,819 (418,829) CASH AT BEGINNING OF YEAR 644,315452,490 191,825 CASH AT END OF YEAR $ 25,158225,486250,644 $  $ SUPPLEMENTAL DISCLOSURE  Cash paid for income taxes $ 49,183 $ 0 $ 49,183

CORONADO CAY HOMEOWNERS ASSOCIATION NOTES TO FINANCIAL STATEMENTS June 30, 2006 1. NATURE OF ORGANIZATION CORONADO CAY HOMEOWNERS ASSOCIATION was incorporated July 14, 1969, in the State of California. The Association is responsible for the operation and maintenance of the common property within the development. The development consists of 1,200 units located in Coronado, California. There are ten Communities within the Association that are governed by a Board of Directors. Members are represented by one elected Board Member from each community. The Association derives its authority and responsibilities from its governing documents including its Articles of Incorporation, Bylaws and CC&R’s (Covenants, Conditions and Restrictions) and from federal, state and local statutes. An elected Board of Directors makes most policy decisions and overseas daily operations, but decisions are referred to the general membership if required by the governing documents. Membership is mandatory for homeowners. Voting members consist of all owners, who are entitled to one vote for each unit owned. Each owner is obligated to pay annual assessments in monthly installments to the Association to support its operations and purposes. 2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Fund Accounting The Association’s governing documents provide certain guidelines for governing its financial activities. To ensure observance of limitations and restrictions on the use of financial resources, the Association maintains its accounts using fund accounting. Financial resources are classified for accounting and reporting purposes in the following funds established according to their nature and purpose: Operating Fund – This fund is used to account for financial resources available for the general operation of the Association. Replacement Fund – This fund is used to accumulate financial resources designated for future major repairs and replacements. Member Assessments The CC&R’s require that the Association charge its members a monthly assessment for the purpose of supporting maintenance operations and the reserve program. During the year ended June 30, 2006 regular assessments were levied in the amount of $3,065,980. The annual budget and owners’ assessments are determined by the Board of Directors. Annual budgets are approved and assessments are divided between the operating fund to meet normal operating costs and contributions to the replacement funding program.

CORONADO CAY HOMEOWNERS ASSOCIATION NOTES TO FINANCIAL STATEMENTS June 30, 2006 2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Income Taxes The Association has received an exemption under California Revenue & Taxation Code section 23701t with regard to assessments only and has an election available for Federal tax purposes which also exempts assessments from taxation. Amounts other than assessments such as interest, rents and miscellaneous income, net of directly related expenses, are subject to taxation. Federal and State income tax liabilities for the year ended June 30, 2006 were $71,634 and $21,335 respectively. Property and Equipment Replacement and improvements to the real property are not capitalized as all beneficial rights of ownership belong to the members and not the Association. They are instead charged directly to either operating or replacement funds in the period they are incurred. The Association can recognize as assets any property to which it holds title that it can dispose of for cash or claims to cash or is used by it to generate significant cash flows from members or non-members on the basis of usage. Property and equipment consisted of the following as of June 30, 2006:  Equipment, Furniture & Fixtures $ 179,745  Vehicles 224,886  Buildings & Improvements 752,192  Docks 255,589  Total Cost 1,412,412  Less: Accumulated Depreciation (1,051,385)  Net Book Value $ 361,027  ======== Pervasiveness of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Association Records The Associations’ records are kept, and these financial statements are presented, on the accrual basis of accounting in accordance with Generally Accepted Accounting principles (GAAP) which recognizes revenues and the related assets when earned, and expenses and the related liabilities when the obligation is incurred.

CORONADO CAY HOMEOWNERS ASSOCIATION NOTES TO FINANCIAL STATEMENTS June 30, 2006 3.FUTURE MAJOR REPAIRS AND REPLACEMENTS The Association’s governing documents require funds to be accumulated for future major repairs and replacements. Accumulated funds, which aggregated approximately $2,177,000 at June 30, 2006, are held in separate accounts that are generally not available for operating purposes. The Association engaged an independent consultant who conducted a study to estimate the remaining useful lives and the replacement costs of the common property components. The study was completed in March 2006 and the Association is funding for such major repairs and replacements over the estimated useful lives of the components based on the study’s estimates of current replacement costs, considering amounts previously designated for future repairs and replacements. Actual expenditures, however, may vary from the estimated amounts and the variations may be material. Therefore, amounts accumulated in the replacement fund may not be adequate to meet future needs. If additional funds are needed, the Association has the right, subject to member approval, to increase regular assessments or levy special assessments, or it may delay major repairs and replacements until funds are available. 5. CONCENTRATION OF RISK: The Association maintains bank accounts as various institutions. Occasionally, the balance may exceed the FDIC insured amount of $100,000. Also, the Association holds a money market account that is privately insured under the SIPC, a securities industry insurance protection program. 6. RETIREMENT PLAN: Eligible employees may elect to participate in the Associations’ salary reduction simplified employee pension plan (SARSEP). Employees are immediately vested in the Plan for both the employee elected salary reduction contributions and the 3% employer contribution. 7. CONTINGENT LIABILITY: In September 2006 the Association filed suit against the City of Coronado alleging that the City is responsible for the maintenance of certain bulkheads located within the Association. As of June 30, 2006 the Association had not included repair and/or replacement of the bulkheads as part of the Replacement Reserve Study (see Note 3). At the present time, the outcome of the lawsuit is uncertain and the amount of potential cost to the Association is unknown, however, if the Association does not prevail in this action, the ultimate cost to members to repair and/or replace the bulkheads could be significant.

Boats Equipment Exterior Doors Exterior Finishe Exterior Floor Surfaces Facilities Fences, Walls & Gates Fixtures Furniture Grounds Interior Finishes Interior Floor Surfaces Irrigation Equipment HVAC Equipment Lighting Landscape Office Equipment Partitions & Dividers Paving Roofing Signage Structural Utilities Unallocated  Totals

Remaining Useful Lives (Years) 3-9 0-24 3-19 0-102 0-3 0-49 0-39 0-19 0-7 0-9 0-11 0-12 0-1 10-14 3-39 0-19 0-8 1-14 4-39 0-39 0-24 0-1 0-2 N/A

Est. Current Replacement Costs $ 19,278 810,288 69,550 2,482,014 15,393 3,059,961 711,719 97,921 114,602 962,637 13,442 41,301 1,201 24,000 19,154 10,200 56,756 7,856 185,492 3,074,605 40,076 4,000 193,856 $ 12,015,302

June 30, 2006 Cash Balance  2,177,259  2,177,259

Funding For Fiscal Year June 30, 2007  1,132,868  1,132,868