RES 2014-0708 - Financial statements from land reutilization commission LAND REUTILIZATION COMMISSION
Serving Douglas, Sarpy and Otoe
= Counties of Nebraska IJI
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Board Members—Chris Rodgers•Ben Gray•Lacey MericaA
141,01
,..�, .. >,..MMay 29, 2014
City Clerk
Buster Brown
LC-1 Civic Center
Omaha,NE 68183
Dear Mr. Brown:
Enclosed please find the General Purpose Financial Statements for the year ended
December 31, 2013 and Independent Auditor's Report for the Land Reutilization
Commission(LRC) of Douglas County. This report is sent to you because of the tax
dollars generated by the sale of tax-foreclosed property.
We appreciate the service of Ben Gray to our Board of Commissioners and hope
that you will present this report in a public meeting in order to thank him for his work. If
you have any questions, please contact me at our office. Thank you.
Sincerely,
David G. Schreiner
Director
TAX FORECLOSED PROPERTY SALES
1819 Farnam Street,Suite 910,Omaha,NE 68183
Phone: (402) 111-7913 • www.lrcnebraska.com
David G.Schreiner,Director
NNAPE
Land Reutilization Commission
Serving Douglas, Sarpy, and Otoe Counties
FINANCIAL STATEMENTS AND
INDEPENDENT AUDITOR'S REPORT
For the year ended December 31, 2013
0.
TABLE OF CONTENTS
Page
INDEPENDENT AUDITOR'S REPORT 2 - 3
MANAGEMENT'S DISCUSSION AND ANALYSIS 4 - 6
FINANCIAL STATEMENTS
Statement of net position 7
Statement of revenues, expenses, and changes in net position 8
Statement of cash flows 9
NOTES TO FINANCIAL STATEMENTS 10 - 15
SUPPLEMENTAL INFORMATION
Schedule of administrative expenditures -budget and actual 17
INDEPENDENT AUDITOR'S 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 18— 19
SCHEDULE OF FINDINGS AND RESPONSES 20—21
„� SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS 22
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HAYES e
&ASSOCIATES,L.L.C.
Certified Public Accountants Consultants
INDEPENDENT AUDITOR'S REPORT
To the Board of Commissioners
PO. Land Reutilization Commission
Report on the Financial Statements
We have audited the accompanying financial statements of the Land Reutilization Commission(the
Commission),as of and for the year ended December 31,2013,and the related notes to the financial
statements,which comprise the Commission's financial statements as listed in the table of contents.
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 relevant to the preparation
PPM and fair presentation of financial statements that are free from material misstatement,whether due to
fraud or error.
Auditor's 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 United States of
America.Those standards require that we plan and perform 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 auditor's judgment,including the
assessment of the risks of material misstatement of the financial statements,whether due to fraud or
error.In making those risk assessments,the auditor considers internal 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
pout of the financial statements.
Westroads Pointe 11015 N.98th St. I Suite 200 I Omaha,NE 68114 I T 402.390.2480 I F 402.390.0885 www.hayes-cpa.com
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
Opinion
In our opinion,the financial statements referred to above present fairly,in all material respects,the
respective financial position of the Commission, as of December 31, 2013, and the changes in
respective financial position and, where applicable, cash flows thereof for the year then ended in
accordance with accounting principles generally accepted in the United States of America.
Other-Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
Management's Discussion and Analysis on pages 4 — 6 and the Schedule of Administrative
Expenditures — Budget and Actual on page 17 are presented to supplement the basic 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 essential 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 supplementary
information in accordance with auditing standards generally accepted in the United States of
America, which consisted of inquiries of management about the methods of preparing 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 Reporting Required by Government Auditing Standards
In accordance with the Government Auditing Standards,we have also issued our report dated April
15,2014 on our consideration of the Commission's internal control over financial reporting and on
our tests of its compliance with certain provisions of laws,regulations,contacts,and grant agreement
t and other 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 not to provide an
opinion on internal control over financial reporting or compliance.That report is an integral part of
an audit performed in accordance with Government auditing Standards in considering the
Commission's internal control over financial reporting and compliance.
Hayes & Associates, L.L.C.
Omaha,Nebraska
"""AA April 15, 2014
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Land Reutilization Commission
MANAGEMENT'S DISCUSSION AND ANALYSIS
Fiscal year ending December 31, 2013
° ' The Land Reutilization Commission (LRC) provides this MD&A of its financial statements. This
overview and analysis of the financial activities is for the fiscal year ending December 31, 2013.
Readers are encouraged to use this information in conjunction with the LRC Audit.
Basic Financial Statements
The LRC receives revenue from the sale of tax foreclosed real estate. In 2013 the LRC had total
operating revenue, sales less refunds and miscellaneous operating revenues of $59,425. This
represents a slight decrease compared to 2012 when operating revenue was $65,107. Sales in 2013
were 47 properties compared to 77 in 2012.
The expenditures in 2013 totaled$54,062 which was $36,590 lower than 2012. This was due to the
Director working part time for the first full year. This figure includes selling costs such as
appraisals, title searches and deed filing fees of$6,716, all paid by the purchaser as a part of their
closing costs. The Interlocal Agreement signed during mid-2006 with Douglas County, the City of
Omaha and Omaha Public Schools continues to financially benefit the LRC.
Government-Wide Financial Analysis
The following is a summary of the LRC's net position for year-end 2013 compared to 2012. As
can be seen by the ending net position, the LRC moved in a very positive direction during 2013.
-- Expenses were kept in check and revenues were close to last year.
2013 2012 Change
Current assets (cash and cash equivalents) $ 114,178 $ 58,870 $ 55,308
Noncurrent assets (equipment less depreciation) 53 111 (58)
"` Liabilities(accrued salaries and 2,126 2,239 (113)
compensated absences)
Revenues (net proceeds less refunds) 59,425 65,107 (5,682)
Total expenses (selling &administrative) 54,062 90,652 (36,590)
Ending net position 112,105 56,742 55,363
MOM
Sift -4 -
Land Reutilization Commission
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED
Fiscal year ending December 31, 2013
Analysis of Financial Position and Results of Operations
Sales in 2013 were close to the same as 2012. Net sales (sales less refunds due to redemptions,
multiple bids, etc.) were $59,425. Net sales in 2012 were $65,107. The LRC, through the
aforementioned Interlocal Agreement, receives in-kind services from Douglas County which saves
the LRC a large amount of money on expenses. The LRC also receives $25,000 each from Omaha
Public Schools and the City of Omaha.
Analysis of Balances and Transactions of Individual Funds
The 2013 year end balance increased significantly compared to 2012. This can also be attributed to
decreased expenditures. The income account can be thought of as the LRC's reserve account. The
LRC is keeping a tight hold on expenses. The table below shows the balance in the income account
for the past seven years and the fluctuations to the account.
Date Income Change from
Account Previous Year
Balance
December 31, 2007 52,897 28,828
December 31, 2008 39,478 (13,419)
December 31, 2009 42,797 3,319
4,401.
December 31, 2010 44,764 1,967
December 31, 2011 26,874 (17,890)
December 31, 2012 47,586 20,712
December 31, 2013 102,871 55,285
If the Interlocal Agreement with Douglas County, the City of Omaha and Omaha Public Schools
continues, it will help the LRC to stay in existence. As previously stated, the retirement and
.�. subsequent part time status of the Director continues to have a positive impact on the expenditures
that the LRC incurs. If the Interlocal Agreement does not continue, a more permanent solution
would be necessary to guarantee the continued existence of the agency. The LRC benefits the
«d. public, and the three aforementioned entities, by returning tax delinquent, non-revenue producing
real estate, back to the tax rolls. Without the LRC, delinquent property that is not sold at the
Sheriff's Sale would just languish.
�. - 5 -
Land Reutilization Commission
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED
Fiscal year ending December 31, 2013
Budgetary Analysis
The LRC's budget for 2013 was $47,400. Total expenses were $47,346. Total expenses include
depreciation of $58, which is not an actual expenditure. The budget will increase just a small
amount for 2014.
S
Capital Asset and Long-term Debt Activity
The LRC did not make any major purchases during 2013. There was only one (1) item that is still
depreciable in 2013. The LRC has no debt and has no plans for any major purchases in 2014.
There was no litigation in 2013 and there is no pending litigation concerning the LRC or its
Director.
Currently Known Facts,Decisions or Conditions
2013 net sales were similar as compared to 2012, but the income account ending balance increased
by $55,285. The LRC continues to operate on a very strict budget. The tight budget, the Director
working part time and the Interlocal payments will help to insure that the LRC will continue it's
purpose of returning non-revenue producing property back to the tax rolls.
ARM
MOO
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Land Reutilization Commission
STATEMENT OF NET POSITION
December 31,2013
ASSETS
Current assets
Cash and cash equivalents $ 114,178
Noncurrent assets
Equipment and leasehold improvements 19,108
Less accumulated depreciation (19,055)
Total noncurrent assets 53
Total assets $ 114,231
F-
LIABILITIES AND NET POSITION
Current liabilities
AMA
Accrued payroll $ 2,126
Net position
Net investment in capital assets 53
Unrestricted 112,052
Total net position 112,105
Total liabilities and net position $ 114,231
S.
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See accompanying notes and independent auditor's report.
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F.
Land Reutilization Commission
STATEMENT OF REVENUES,EXPENSES,
AND CHANGES IN NET POSITION
For the year ended December 31,2013
OPERATING REVENUES
Proceeds from sales of and deposits on property-Douglas County $ 67,020
Less refunds (7,862)
Net proceeds 59,158
Miscellaneous operating revenues 267
Total operating revenues 59,425
OPERATING EXPENSES
Selling expenses
Tax disbursements, special assessments,and related closing costs 2,511
Title and deed expenses 4,205
Total selling expenses 6,716
Administrative
Salaries,payroll taxes, and fringe benefits 40,185
Legal fees 219
Accounting fees 4,500
Postage 267
Supplies 267
Insurance 1,469
Maintenance 310
Other Expenses 71
Depreciation expense 58
Total administrative expenses 47,346
Total operating expenses 54,062
INCOME FROM OPERATIONS 5,363
NON-OPERATING REVENUES
Interlocal agreement 50,000
CHANGE IN NET POSITION 55,363
NET POSITION,BEGINNING OF YEAR 56,742
NET POSITION,END OF YEAR $ 112,105
See accompanying notes and independent auditor's report.
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Land Reutilization Commission
STATEMENT OF CASH FLOWS
For the year ended December 31,2013
CASH FLOWS FROM OPERATING ACTIVITIES
Proceeds from sales of and deposits of property $ 59,158
Proceeds from sales of books 267
Cash paid for tax disbursements, special assessments,and
related closing costs (2,511)
Cash paid for title and deeds (4,205)
Cash paid to employees (40,298)
Cash paid to suppliers for goods and services (7,103)
NET CASH FROM OPERATING ACTIVITIES 5,308
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Interlocal agreement 50,000
CHANGE IN CASH AND CASH EQUIVALENTS 55,308
CASH AND CASH EQUIVALENTS,BEGINNING OF YEAR 58,870
CASH AND CASH EQUIVALENTS,END OF YEAR $ 114,178
RECONCILIATION OF OPERATING LOSS TO NET CASH FROM
OPERATING ACTIVITIES
Income from operations $ 5,363
Adjustment to reconcile income from operations to net cash
from operating activities
Depreciation 58
Change in accrued payroll (113)
NET CASH FROM OPERATING ACTIVITIES $ 5,308
See accompanying notes and independent auditor's report.
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Land Reutilization Commission
NOTES TO FINANCIAL STATEMENTS
For the year ended December 31, 2013
NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies of the Land Reutilization
Commission:
1. Organization
The Land Reutilization Commission (the Commission) is a governmental entity,
which was established under Nebraska State Statute 77-3201 as a political
subdivision of the State,for the purpose of returning tax delinquent real property to
revenue producing status by selling such property to the public. The Commission is
exempt from state and federal income taxes.
Interlocal agreements among Douglas, Sarpy, and Otoe Counties, Nebraska were
signed allowing the Commission to perform marketing and management activities
related to the sale of tax delinquent real property in the respective Counties,
consistent with activities currently in place in Douglas County.
.,.. 2. Basic Financial Statements
The Commission's financial statements are prepared in accordance with accounting
principles generally accepted in the United States (GAAP). The Governmental
Accounting Standards Board(GASB)is responsible for establishing GAAP for state
and local governments. The Commission applies all applicable GASB
pronouncements.
On January 1, 2012, the Commission implemented the provisions of GASB
Statement No. 62, Codification of Accounting and Financial Reporting Guidance
Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements(GASBS
No.62). GASB No.62 incorporates into the GASB's authoritative literature certain
accounting and financial reporting guidance that is included in the following
pronouncements issued on or before November 30, 1989, which does not conflict
with or contradict GASB pronouncements: Financial Accounting Standards Board
(FASB)Statements and Interpretations,Accounting Principles Board Opinions and
M Accounting Research Bulletins of the American Institute of Certified Public
Accountants' (AICPA) Committee on Accounting Procedure.
-- The Commission's accounts are maintained as enterprise fund type. Enterprise fund
financial statements include a statement of net assets, a statement of revenues,
expenses, and changes in net assets,and a statement of cash flows for the enterprise
fund. The statement of revenues, expenses, and changes in net assets presents
increases and decreases in total net assets.
—
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Land Reutilization Commission
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the year ended December 31, 2013
NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—CONTINUED
3. Basis of Accounting
Enterprise funds are accounted for on the economic resources measurement focus
using the accrual basis of accounting. Accordingly, all assets and liabilities are
included on the statement of net assets. Under the accrual basis of accounting,
revenues are recognized in the period in which they are earned while expenses are
recognized in the period in which the liability is incurred. Operating revenues in the
proprietary funds are those revenues that are generated from the primary operations
of the fund and all other revenues are reported as non-operating revenues. Operating
expenses are those expenses that are essential to the primary operations of the fund.
All other expenses are reported as non-operating expenses.
4. Estimates
The preparation of the financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from these estimates.
5. Budgets
The Board of Commissioners approves an annual budget for administrative
expenditures prior to December 31 each year.
6. Cash Equivalents
For purposes of the statement of cash flows,cash equivalents are defined as short-
term investments which are carried at cost and have an original maturity when
purchased of less than 90 days.
7. Capital Assets
Equipment with a useful life of more than one year are capitalized at historical cost.
Other capital outlays that significantly extend the useful life of an asset are
capitalized. Costs incurred for repairs and maintenance are expensed as incurred.
Capital assets are depreciated using the straight-line method. The estimated useful
�- lives of the capital assets are between 5-7 years.
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Land Reutilization Commission
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the year ended December 31, 2013
NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES —CONTINUED
8. Administrative Fees/Proceeds from Sales
The Commission retains an administrative service fee in the amount equal to an
agreed upon percentage of property sale proceeds. During the year ended December
31,2013,the Commission retained a fee of 100%from the property sale proceeds.
This allowed Commission to retain 100% of the proceeds from all property sales
during the year ended December 31, 2013.
The Commission receives property by default at the Sheriff's auction. No funds or
liabilities are incurred when the property is obtained in the Commission's inventory.
The Commission obtains title only when the intended purchasers are unable to
close the purchase. The Commission currently holds title to two (2) properties
located in Douglas County. If the Commission discontinued its existence, these
properties would be remitted back to their respective county.
NOTE B. CASH AND INVESTMENTS
The Douglas,Sarpy,and Otoe County treasurer each serve as ex-officio for the Commission
and, accordingly, funds of the Commission are held by these Treasurers. Receipts from
property sales in Sarpy and Otoe Counties are held by the respective County Treasurer until
sales are closed at which time,the funds are transferred to the Douglas County Treasurer.
The Douglas County Treasurer receipts all funds from property sales in Douglas County
and disburses funds for operating expenditures as directed by the Commission. Cash
deposits are covered by federal depository insurance or collateral held by the Counties'
agent banks in the Counties' names.
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Land Reutilization Commission
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the year ended December 31, 2013
NOTE C. CAPITAL ASSETS
Capital asset and related accumulated depreciation balances at December 31, 2013 are as
follows:
Beginning Ending
balance Additions Deletions balance
Equipment $ 19,108 $ - $ - $ 19,108
Less accumulated
depreciation (18,997) (58) - (19,055)
$ 111 $ (58) $ - $ 53
Equipment with an original cost of$1,430 is idle at year end and is held in storage by the
Commission. This equipment is fully depreciated.
NOTE D. ACCRUED SALARIES
Salaries, payroll taxes, and fringe benefits expense includes $2,126 of accrued salaries
444.
for time worked during the year ended December 31, 2013,but not paid until the next
fiscal year.
NOTE E. RETIREMENT PLAN
The Commission participates in the Douglas County Employees'Retirement Plan(the Plan).
The County maintains a single - employer defined benefit pension plan which provides
retirement,disability,death,and termination benefits to substantially all employees on their
first day of continuous employment.
4.6
The general membership and administration of the Plan, as well as carrying out the
provisions of the Plan,are the responsibility of the Retirement Committee of the County(the
Committee),which consists of at least one County Commissioner and other employees of the
County,as appointed by the Board of County Commissioners.The Committee is responsible
for determining the entitlement of members to benefits and establishing policies regarding
obligations of members and the Commission to contribute to the Plan. Cost-of-living
adjustments determined by the Committee are paid by the County after Board of
Commissioner approval. No additional salary is paid to Committee members. The Plan has
no legally required reserves.
41.11
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Land Reutilization Commission
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the year ended December 31, 2013
NOTE E. RETIREMENT PLAN—CONTINUED
The Plan is not subject to either the minimum funding standards of the Employee Retirement
Income Security Act of 1974 or the maximum funding limitations. Funding standards are
actuarially determined using the projected unit credit cost method. Actuarial reviews are
only required on a biennial basis, the most recent being as of June 30, 2013.
a. Basis of Accounting
The Plan's financial statements are prepared using the accrual basis of accounting
and are presented as a pension trust fund in the basic financial statements of the
County. Plan member and employer contributions are recognized in the period in
which the contributions are due. Benefits are provided based on a percentage of the
member's final average compensation and are recognized when due and payable.
b. Method Used to Value Investments
ONO
Plan assets are invested in readily marketable securities and are carried at fair value.
Investments in securities traded on a national securities exchange are valued at the
latest quoted market prices. For investments where no readily available market value
exists, County management, in consultation with their investment advisors, values
those investments in good faith based upon audited fmancial statements or other
information provided by the underlying investment advisor.
c. Contributions and Retirements
During the year ended December 31,2012,the Commission's only employee retired.
The employee now works 20 hours or less per week and began earning his retirement
benefits. The Commission paid zero contributions to the plan for the year ended
December 31, 2013.
Additional plan information,including trend information and the net pension obligation,is
164.
available in the County's financial statements and can be obtained from the Douglas County
Clerk's office, located at 1819 Farnam Street, Omaha,Nebraska 68102.
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Land Reutilization Commission
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the year ended December 31, 2013
NOTE F. RISK MANAGEMENT
The Commission is exposed to various risks of loss related to torts,theft of,damage to,or
destruction of assets, error or omissions, injuries to employees and natural disasters. The
Commission carries commercial insurance for these risks. The Commission contracts with
reputable carriers and utilizes various deductibles. There were no claims filed during the
year ended December 31, 2013.
MOO
NOTE G. ECONOMIC DEPENDENCY
The Commission has an economic dependency on Douglas County,the City of Omaha and
the School District of Omaha. Under an interlocal agreement, the Commission receives
$25,000 each from the City of Omaha and the School District of Omaha. The Commission
received 45.7% of its revenue from these entities for the year ended December 31, 2013.
Douglas County pays for IT services from the Douglas Omaha Technology Commission
(DOT.Comm), web hosting, office space, and provide legal counsel. No provisions for
Fteil
these in-kind contributions from Douglas County have been made in the accompanying
financial statements.
PIMA
6.41
0.41
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Land Reutilization Commission
SCHEDULE OF ADMINISTRATIVE EXPENDITURES -
BUDGET AND ACTUAL
For the year ended December 31, 2013
Variances
Positive
Budget Actual (Negative)
EXPENSES
Salaries,payroll taxes,and fringe benefits $ 40,377 $ 40,185 $ 192
Maintenance contracts 170 310 (140)
*�- Legal fees 250 219 31
Accounting fees 4,500 4,500 -
Postage 375 267 108
Supplies 278 267 11
Insurance 1,450 1,469 (19)
Other exense - 71 (71)
Depreciation expense - 58 (58)
Total expenses $ 47,400 $ 47,346 $ 54
See accompanying notes and independent auditor's report.
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HAYES
&ASSOCIATES,L.L.C.
Certified Public Accountants I Consultants
INDEPENDENT AUDITOR'S 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
To the Board of Commissioners
Land Reutilization Commission
tb.h 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 Government Auditing
Standards issued by the Comptroller General of the United States,the financial statements of Land
Sala Reutilization Commission(the Commission),as of and for the year ended December 31,2013,and
the related notes to the financial statements, which collectively comprise the Commission's basic
financial statements, and have issued our report thereon dated April 15, 2014.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements,we considered the Commission'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 purpose of expressing an opinion on the effectiveness of the
Commission's internal control. Accordingly, we do not express an opinion on the effectiveness of
the Commission's internal control.
150146
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 weakness 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.
OWN
Westroads Pointe 11015 N.98th St. I Suite 200 I Omaha,NE 68114 I T 402.390.2480 I F 402.390.0885 w w w.h a y e s-c p a.corn
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
4,130
material weaknesses or significant deficiencies and therefore, material 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 that we consider to be material weaknesses. However,
material weaknesses may exist that have not been identified.We did identify a deficiency in internal
control,described in the accompanying schedule of findings and questioned costs as 2013.1 that we
consider to be a significant deficiency.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Commission'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
0.11
and material effect on the determination of financial statement amounts. However, providing an
opinion on compliance with those provisions was not an objective of our audit,and accordingly,we
do not express such an opinion. The results of our tests disclosed no instances of noncompliance or
other matters that are required to be reported under Government Auditing Standards.
The Commission's Response to Findings
The Commission's response to the findings identified in our audit is described in the accompanying
schedule of findings and questioned costs. The Commission'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 purpose of this report is solely to describe the scope of our testing of internal 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 compliance. 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.
Hayes&Associates, L.L.C.
Omaha Nebraska
4.11 April 15, 2014
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Land Reutilization Commission
SCHEDULE OF FINDINGS AND RESPONSES
For the year ended December 31, 2013
VABil
Finding 2013.1: Accrual Journal Entries and Financial Reporting
Condition: As part of our engagement,we were asked to prepare and record certain accrual
and depreciation journal entries. Management reviewed, approved, and accepted
responsibility for the financial statements, footnotes, and journal entries prior to their
issuance. The Commission's unadjusted accounting records did not contain necessary
accrual and depreciation journal entries. As a result, as part of the audit, management
requested us to prepare accrual adjustments.
Criteria: Management is responsible for establishing and maintaining internal controls,
including monitoring, and for the fair presentation in the financial statements of financial
position,results of operations,and cash flows,including the notes to financial statements,in
conformity with U.S. generally accepted accounting principles.
Cause: Management did not record appropriate accrual and depreciation entries to present
the unadjusted accounting records in accordance with GAAP. Management did not possess
the appropriate skill,knowledge or experience to perform a detailed review of the financial
statements and related footnotes.
Effect: At times,management may choose to outsource certain accounting functions due to
cost or training considerations. Such accounting functions and service providers must be
governed by the control policies and procedures of the entity. Management is as responsible
for outsourced functions performed by a service provider as it would be for such functions
performed internally. Specifically, management is responsible for management decisions
and functions;for designating an individual with suitable skill,knowledge,or experience to
oversee any outsourced services; and for evaluating the adequacy and results of those
services and accepting responsibility for them.
Recommendation: The Commission's accrual and depreciation adjustments are typically
similar from year-to-year. We recommend that the Commission prepare and propose
required adjustments to the auditor at the beginning of each audit engagement. The
Commission should review accrual adjustments proposed during prior audits as a guide to
prepare and propose the required accrual and depreciation adjustments.
ONO
0.1414
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Land Reutilization Commission
SCHEDULE OF FINDINGS AND RESPONSES—CONTINUED
For the year ended December 31, 2013
Finding 2013.1: Accrual Journal Entries and Financial Reporting—Continued
Recommendation -Continued: The financial statements and footnotes for the Commission
do not substantially change from year to year. The Commission should implement adequate
internal controls to review the financial statements and footnotes. The Commission should
understand where amounts and information presented in the financial statements and
footnotes are derived to facilitate this review. Internal controls should include a
reconciliation of the financial statements and footnotes prepared by the auditor to
Commission's accounting records.
Management Response: Although the Director does not have the accounting background to
produce the financial statements contained in this audit,the Director certainly has enough
knowledge of the Commission's income, expenses, budget, etc. to review and take
responsibility of the auditor's findings. It is not realistic or economically feasible for the
Commission to utilize additional resources for this process due to the size and budget of the
organization.
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Land Reutilization Commission
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
For the year ended December 31, 2013
Finding 2012.01: Accrual Journal Entries and Financial Reporting
Condition: As part of our engagement,we were asked to prepare and record certain accrual
and depreciation journal entries. Management reviewed, approved, and accepted
responsibility for those financial statements, footnotes, and journal entries prior to their
issuance. The Commission's unadjusted accounting records did not contain necessary
accrual and depreciation journal entries. As a result, as part of the audit, management
requested us to prepare accrual adjustments.
Recommendation: The Commission's accrual and depreciation adjustments are typically
similar from year-to-year. We recommend that the Commission prepare and propose
required adjustments to the auditor at the beginning of each audit engagement. The
Commission should review accrual adjustments proposed during prior audits as a guide to
prepare and propose the required accrual and depreciation adjustments.
The financial statements and footnotes for the Commission do not substantially change from
year to year. The Commission should implement adequate internal controls to review the
financial statements and footnotes. The Commission should understand where amounts and
information presented in the financial statements and footnotes are derived to facilitate this
review. Internal controls should include a reconciliation of the financial statements and
footnotes prepared by the auditor to Commission's accounting records.
Management Response: Although the Director does not have the accounting background to
produce the financial statements contained in this audit,the Director certainly has enough
knowledge of the Commission's income, expenses, budget, etc. to review and take
responsibility of the auditor's findings. It is not realistic or economically feasible for the
Commission to utilize additional resources for this process due to the size and budget of the
organization. However, in 2013 the Director will implement the adjusted accounting
records regarding unrecorded accrual adjustments. This is in regards to payroll hours
worked in one year but paid in another year. This will not be recorded on the normal
expense spread sheets because if the Commission does that, the Commission will not
balance with the County Clerk's records.
Follow Up: This finding was updated and repeated as 2013.01
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No. 7)(
Land Reutilization Commission transmits their
General Purpose Financial Statements for year
ended December 31, 2013 and Independent
Auditor's Report.
clk:001 slm
RECEIVED
Presented to Counj, �,
Mott
May 20, 2014 - j receive
and Oce,tifik
Buster Brown
City Clerk
3