FY2005 Audit Rpt-Web Format
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FY2005 Audit Rpt-Web Format

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NORTH DAKOTA HOUSING FINANCE AGENCY FINANCIAL STATEMENTS JUNE 30, 2005 AND 2004 CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS INDEPENDENT AUDITOR'S REPORT The Industrial Commission State of North Dakota Bismarck, North We have audited the accompanying financial statements of the business-type activities of the North Dakota Housing Finance Agency, a department of the State of North Dakota, as of and for the years ended June 30, 2005 and 2004, which collectively comprise the North Dakota Housing Finance Agency's basic financial statements as listed in the table of contents. These financial statements are the responsibility of North Dakota Housing Finance Agency's management. Our responsibility is to express an opinion on these financial based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as ...

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NORTH DAKOTA HOUSING FINANCE AGENCY 
FINANCIAL STATEMENTS JUNE 30, 2005 AND 2004    
NORTH DAKOTA HOUSING FINANCE AGENCY MANAGEMENT’S DISCUSSION AND ANALYSIS JUNE 30, 2005 (In Thousands)  The discussion and analysis of the financial performance of the North Dakota Housing Finance Agency (Agency) that follows is meant to provide additional insight into the Agency’s activities for the year ended June 30, 2005. Please read it in conjunction with the Agency’s financial statements and footnotes, which are presented within this report.  North Dakota Housing Bonds issued by North Dakota Housing Finance Agency are revenue bonds that are neither a general nor a moral obligation of the state but are a general obligation of the Agency.  Financial Highlights    is the net ThisMortgage loans receivable has increased $29,894 to $533,060 from the previous year. change of $116,638 in loans being purchased and $86,744 of repaid principal and amortized loan discounts.  Bonds payable and Loan from Bank of North Dakota have increased by $28,606 with $135,000 new bonds issued, $14,145 loan obtained from Bank of North Dakota and $120,539 bonds called or matured.  to $76,267 as a result from this year’s program operations andAgency’s net assets increased by $5,200 financing activities.  result of the leveling in market value ofNet income of $5,200 is up from the prior year by $2,881 as a investments and deceleration of bond financing costs due to the decrease in bond calls from loan prepayments.  Income from operations of $36,643 was down $2,684 from the prior year as a result of lower interest rates on mortgages outstanding and lower interest rates on recent series investment contracts.  expenses of $33,298 were down $3,061 from the previous year due to lower rates on bondsOperating outstanding resulting in less interest expense and deceleration of bond financing costs due to the decrease in bond calls from loan prepayments.  Overview of the Financial Statements  This annual financial report consists of two parts: Management’s Discussion and Analysis (this section) and the Basic Financial Statements. The financial statements of the Agency provide accounting information similar to that of many other business entities. The Balance Sheet summarizes the assets and liabilities, with the difference between the two reported as net assets. The Statement of Revenues, Expenses and Changes in Fund Net Assets summarizes the Agency’s operating performance for the year. The Statement of Cash Flows summarizes the flow of cash through the Agency.
 
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MANAGEMENT’S DISCUSSION AND ANALYSIS – page 2 (In Thousands)
   CONDENSED BALANCE SHEETS – JUNE 30, 2005 AND 2004  2005 2004 ASSETS Unrestricted current assets Restricted current assets Total current assets Unrestricted noncurrent assets Restricted noncurrent assets Total assets
LIABILITIES Current liabilities Noncurrent liabilities NET ASSETS Invested in capital assets Restricted for pledged assets Restricted for debt service Unrestricted Total liabilities and net assets    
 
$ 4,992  162,162  167,154  2,072  556,238  558,310 $ 725,464
$ 57,887  591,310  649,197
 15  11,200  50,028  15,024  76,267 $ 725,464
$ 6,813  158,038  164,851  1,926  525,738  527,664 $ 692,515
$ 29,756  591,692  621,448
 35  18,037  45,457  7,538  71,067 $ 692,515
Change
$ (1,821)  4,124  2,303  146  30,500  30,646 $ 32,949
$ 28,131  (382)  27,749
 (20)  (6,837)  4,571  7,486  5,200 $ 32,949
Percentage
 (27) %  3  1  8  6  6  5 %
 95 %  (0)  4
 (57)  (38)  10  99  7  5 %
 
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MANAGEMENT’S DISCUSSION AND ANALYSIS – page 3 (In Thousands)
$ 30,810  4,247  1,586  36,643
 27,198  324  1,517  2,412  1,827  20  33,298  3,345
$ 32,616  5,212  1,499  39,327
 29,615  416  2,346  2,165  1,796  21  36,359  2,968
$ (1,806)  (965)  87  (2,684)
 (2,417)  (92)  (829)  247  31  (1)  (3,061)  377
 (6) %  (19)  6  (7)
 (8)  (22)  (35)  11  2  (5)  (8)  13
   CONDENSED STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS – YEAR ENDED JUNE 30, 2005 AND 2004  2005 2004 Change Percentage OPERATING REVENUES Mortgage interest income Investment income Fee income Total revenues OPERATING EXPENSES Interest expense Agency grants Amortization of deferred bond financing costs Administrative and operating expenses Salaries and benefits Depreciation Total expenses OPERATING INCOME NONOPERATING REVENUES (EXPENSES) HUD Section 8 Assistance Investment income HUD Section 8 Assistance INCOME BEFORE TRANSFERS TRANSFERS Transfer to Information Technology Department -Transfer to Industrial Commission 25 CHANGE IN NET ASSETS 5,200 TOTAL NET ASSETS, BEGINNING OF YEAR 71,067 TOTAL NET ASSETS, END OF YEAR $ 76,267
 
 12,629  1,880  (12,629)  1,880
 5,225
 13,289  (600)  (13,289)  (600)
 2,368
 24  25  2,319  68,748 $ 71,067
 (660)  2,480  660  2,480
 2,857
 (24)               - 2,881  2,319 $ 5,200
 (5)  (413)  (5)  (413)
 121
 (100)               - 124  3  7 %
 
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MANAGEMENT’S DISCUSSION AND ANALYSIS – page 4 (In Thousands)
   Investment Income  Operating interest income is comprised of the sum of interest earnings on funds held in trust for the Home Mortgage Finance Program. These funds are invested in investment contracts as reported in Notes 1 and 2 to the financial statements. The decline in interest earnings was due to the decline in the amount of funds invested and lower interest rates on recent series investment contracts.  Non-operating interest income represents earnings on the Agency’s investments. These funds are invested in US Treasury securities or the Bank of North Dakota money market and demand accounts. The increase in interest earnings was due to the leveling in market value of the treasuries.  Budgetary Information  As discussed in Note 1 to the financial statements, the North Dakota Housing Finance Agency is funded under a biennial appropriation approved by the state legislature. The biennial appropriation does not provide any state General Fund dollars. Hence, total Agency appropriation is funded from Agency operations.  Contacting the North Dakota Housing Finance Agency’s Financial Management  The information in this report is intended to provide the reader with an overview of the Agency’s operations along with the Agency’s accountability for those operations. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the North Dakota Housing Finance Agency, PO Box 1535, Bismarck, ND 58502-1535.   
 
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2005
NORTH DAKOTA HOUSING FINANCE AGENCY BALANCE SHEETS JUNE 30, 2005 AND 2004 (In Thousands)   ASSETS CURRENT ASSETS - UNRESTRICTED Cash and cash equivalents Investments Due from State Agencies Receivables Interest Loans Investments Due from HUD Other Prepaid expenses Total unrestricted current assets CURRENT ASSETS - RESTRICTED Cash and cash equivalents Receivables Current portion of loans receivable Interest Loans Investments Other Total restricted current assets Total current assets NONCURRENT ASSETS - UNRESTRICTED Service release premium, ne Equipment, ne Total unrestricted noncurrent assets NONCURRENT ASSETS - RESTRICTED Loans receivable, net of current portio Investments Deferred bond financing costs, ne Total restricted noncurrent assets Total noncurrent assets Total assets
 
The accompanying notes are an integral part of these financial statements.
$ 1,424  2,229  30  95  240  210  748  16  4,992  148,846  10,534  2,366  296  120  162,162  167,154  2,057  15  2,072  522,526  28,298  5,414  556,238  558,310 $ 725,464
2004
$ 1,486  4,164  41                - 239  349  504  30  6,813  145,655  9,851  2,465  67 -                158,038  164,851  1,891  35  1,926  493,315  26,583  5,840  525,738  527,664 $ 692,515
 
 
      LIABILITIES CURRENT LIABILITIES Due to HUD Due to state agencies Current portion of rebate due to IRS Othe Current portion of compensated absences Current portion of bonds payable Loan from Bank of North Dakota Accrued interes Funds held in trus Deferred credits Total current liabilities NONCURRENT LIABILITIES Compensated absences, net of current portio Rebate due to IRS, net of current portion Bonds payable, net of current portion Total noncurrent liabilities Total liabilities NET ASSETS Invested in capital assets Restricted for pledged assets Restricted for debt service Unrestricted Total net assets Total liabilities and net assets  
 
2005
$ 232  31  1,155  719  105  22,715  14,145  12,658  6,110  17  57,887  58  867  590,385  591,310  649,197  15  11,200  50,028  15,024  76,267  $ 725,464
2004
$ 313  31  954  622  110  8,870                - 13,318  5,473  65  29,756  38  1,885  589,769  591,692  621,448   35  18,037  45,457  7,538  71,067  $ 692,515
 
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NORTH DAKOTA HOUSING FINANCE AGENCY STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS YEARS ENDED JUNE 30, 2005 AND 2004 (In Thousands)   2005 2004 OPERATING REVENUES Mortgage interest income $ 30,810 $ 32,616 Investment income 4,247 5,212 Fee income 1,586 1,499 Total revenues 36,643 39,327  OPERATING EXPENSES Interest expense 27,198 29,615 Agency grants 324 416 Amortization of deferred bond financing costs 1,517 2,346 Administrative and operating expenses 2,412 2,165 Salaries and benefits 1,827 1,796 Depreciation 20 21 Total expenses 33,298 36,359 OPERATING INCOME 3,345 2,968 NONOPERATING REVENUES (EXPENSES) HUD grants 12,629 13,289 Investment income 1,880 (600) HUD grants (12,629) (13,289)  1,880 (600) INCOME BEFORE TRANSFERS 5,225 2,368 TRANSFERS Transfer to Information Technology Department - 24 Transfer to Industrial Commission 25 25 CHANGE IN NET ASSETS 5,200 2,319  TOTAL NET ASSETS, BEGINNING OF YEAR 71,067 68,748  TOTAL NET ASSETS, END OF YEAR $ 76,267 $ 71,067    
The accompanying notes are an integral part of these financial statements.
 
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NORTH DAKOTA HOUSING FINANCE AGENCY STATEMENTS OF CASH FLOWS YEARS ENDED JUNE 30, 2005 AND 2004 (In Thousands)
  OPERATING ACTIVITIES Receipts from customers Payment of grants Payments to service providers State agencies Other Payments to employees Payment of rebate to IRS Net cash provided by operating activities NONCAPITAL FINANCING ACTIVITIES Principal payments on notes and bonds Proceeds from note borrowings and bond issuance Interest paid on notes and bonds Payment of bond issue costs Transfer to Information Technology Department Transfer to Industrial Commission Net cash used for noncapital financing activities INVESTING ACTIVITIES Proceeds from sale of investments Interest received from investments Net cash provided by (used for) investing activities INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR CASH AND CASH EQUIVALENTS AT END OF YEAR   
(continued on next page)
2005 $ 115,367  (267)  (90)  (111,032)  (1,827)  (816)  1,335  (120,539)  149,145  (27,859)  (1,091)                 - (25)  (369)  283  1,880  2,163  3,129  147,141 $ 150,270
2004 $ 191,196  (396)  (50)  (103,938)  (1,793)  (1,205)  83,814  (177,594)  101,634  (33,115)  (990)  (24)  (25)  (110,114)  264  (600)  (336)  (26,636)  173,777 $ 147,141
 
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