HomeMy WebLinkAboutTSHA Audit 08-31-05TEXAS STUDENT HOUSING
AUTHORITY
FINANCIAL REPORT
AUGUST 31, 2005
CONTENTS
Page
INDEPENDENT AUDITOR'S REPORT ................................................................................... 1
MANAGEMENT'S DISCUSSION AND ANALYSIS (unaudited) ................................................ 2
FINANCIAL STATEMENTS
Statement of Net Assets .................................................................................................. 4
Statement of Revenues, Expenses, and Changes in Net Assets ..................................... 5
Statement of Cash Flows ................................................................................................. 6
Notes to Financial Statements ......................................................................................... 7
SUPPLEMENTAL INFORMATION
Budgetary Comparison Schedule ................................................................................. 11
I I
CERTIFiED PUBLIC
ACCOUNTANTS
AND CONSULT.A.NTS
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INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Texas Student Housing Authority
We have audited the accompanying financial statements of the business type
activities, as listed in the accompanying table of contents, of Texas Student Housing
Authority (a component unit of the Town of Westlake), as of and for the year ended
August 31, 2005. These financial statements are the responsibility of the Texas
Student Housing Authority's management. Our responsibility is to express an opinion
on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in
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
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. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material
respects, the financial position of the business type activities of Texas Student
Housing Authority at August 31, 2005 and the respective changes in it's financial
position and cash flows for the year then ended in conformity with accounting
principles generally accepted in the United States.
Management's discussion and analysis on pages 2 and 3 are 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. We have
applied certain limited procedures, which consisted principally of inquiries of
management regarding the methods of measurement and presentation of the
required supplementary information. However, we did not audit the information and
express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial
statements that collectively comprise the business type activities of Texas Student
Housing Authority's basic financial statements. The budgetary comparison schedule
on page 11 is presented for purposes of additional analysis and is not a required part
of the basic financial statements. The information has been subjected to the auditing
procedures applied in the audit of the financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements taken as a
whole.
WEAVER AND TIDWELL, L.L.P.
Fort Worth, Texas
November 28, 2005
MANAGEMENT'S DISCUSSION AND ANALYSIS
(unaudited)
TEXAS STUDENT HOUSING AUTHORITY
MANAGEMENT'S DISCUSSION AND ANALYSIS
YEAR ENDED AUGUST 31, 2005
UNAUDITED
Page2
As Staff of the Texas Student Housing Authority( the "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 fiscal year ended August 31, 2005. We encourage readers to consider
the information presented here in conjunction with the Authority's financial statements. The
Authority is an instrumentality of the Town of Westlake and is considered a governmental entity;
accordingly, the Authority has adopted Governmental Accounting Standards Board Statement
34, Basic Financial Statements-and Management Discussion and Analysis-for State and Local
Governments (Statement 34). The reader should note that this financial report addresses only the
financial condition of the business type activities of the Authority itself. Properties managed by
the Authority are reported individually by property, under separate cover.
FINANCIAL HIGHLIGHTS
The Assets of the Authority exceeded its Liabilities at the close of the fiscal year by $401,168, an
increase of$59,869 over the prior fiscal year. All of the assets and liabilities of the Authority are
classified as current.
At the end of the current fiscal year, the total of the bank balances were $479,393, an increase of
$112,357 over the prior fiscal year
All revenues are generated from management of the properties and scholarship activity of the
Authority and totaled $504,189. Total expenses incurred were $484,455.
OVERVIEW OF THE FINANCIAL STATEMENTS
The discussion and analysis is intended to serve as an introduction to the Authority's basic
financial statements. The Authority's report consists of three parts-Management Discussion and
Analysis, the basic financial statements, and notes to the financial statements. The basic financial
statements include a statement of net assets, statement of revenues, expenses, and changes in net
assets, and a statement of cash flows.
The statement of net assets presents information on the Authority's assets and liabilities with the
difference between the two reported as net assets.
The statement of revenues, expenses, and changes in net assets accounts for the Authority's
revenues and expenses regardless of when cash is paid or received.
The statement of cash flows reflects cash inflows and outflows by operating, non-capital
financing and capital related financing activities during the year.
TEXAS STUDENT HOUSING AUTHORITY
MANAGEMENT'S DISCUSSION AND ANALYSIS
YEAR ENDED AUGUST 31, 2005
UNAUDITED
NOTES TO THE FINANCIAL STATEMENTS
Page 3
The notes provide additional information that is essential to a full understanding of the data
provided in the financial statements.
ECONOMIC FACTORS AND NEXT YEAR'S BUDGET
We anticipate that FY 2005/2006 will end with approximately the same income to the Authority
as this year. Although the number of scholarship slots available has declined in two of our
properties, the number of full scholarships has also declined, thus increasing revenue from
additional incremental scholarships. In addition, we have been able to secure an Asset
Management fee from the Bondholder on two additional properties.
CONTACTING THE AUTHORITY'S FINANCIAL MANAGEMENT
This financial report is designed to provide the reader with a general overview of the Authority's
finances and to demonstrate the Authority's accountability for the money it receives. If you have
questions about this report or need additional information, contact the Authority's Finance
Manager, Pete Ehrenberg at 817-490-5723 or the Executive Director, Hank Smyth at 817-281-
5053.
FINANCIAL STATEMENTS
Cash
Accounts receivable
Prepaid expenses
Total Assets
Accounts payable
Deferred revenue
Total Liabilities
Unrestricted
Total net assets
TEXAS STUDENT HOUSING AUTHORITY
STATEMENT OF NET ASSETS
AUGUST 31, 2005
ASSETS
LIABILITIES
NET ASSETS
The Notes to Financial Statements
are an integral part of this statement.
$
$
Page 4
479,393
60,676
7,537
547,606
69,836
76,602
146,438
401 '168
401 '168
Page 5
TEXAS STUDENT HOUSING AUTHORITY
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS
YEAR ENDED AUGUST 31, 2005
OPERATING REVENUES
Basic property administration
Scholarship administration
Total operating revenue
OPERATING EXPENSES
Scholarship expense
Labor expenses
Professional fees
Oversight fee
Office expense and other
Total operating expenses
OPERATING INCOME
NON-OPERATING REVENUES (EXPENSES)
Interest income
Other income
TOTAL NON-OPERATING INCOME
CHANGE IN NET ASSETS
NET ASSETS, AUGUST 31, 2004
NET ASSETS, AUGUST 31, 2005
The Notes to Financial Statements are
an integral part of this statement.
$ 159,807
344,382
504,189
197,431
173,126
48,836
50,000
15,062
484,455
19,734
14,808
25,327
40,135
59,869
341,299
$ 401,168
TEXAS STUDENT HOUSING AUTHORITY
STATEMENT OF CASH FLOWS
YEAR ENDED AUGUST 31, 2005
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from scholarships
Cash received from scholarship properties
Cash paid for contract services
Cash paid to others
Net cash provided by operating activities
CASH FLOWS FROM NON CAPITAL FINANCING ACTIVITIES
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received
Investment fees
Net cash provided by investing activities
Net change in cash and cash equivalents
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS AT END OF YEAR
RECONCILIATION OF OPERATING INCOME TO
NET CASH PROVIDED BY OPERATING ACTIVITIES
Operating income
Adjustments to reconcile operating income to
net cash provided by operating activities
Accounts receivable
Accounts payable
Prepaid expense
Deferred revenue
Net cash provided by operating activities
The Notes to Financial Statements are
an integral part of this statement.
Page6
$ 385,174
102,131
167, 126)
247,957)
72,222
14,808
25,327
40,135
112,357
367,036
$ 479,393
$ 19,734
( 57,676)
67,547
1,825
40,792
$ 72,222
TEXAS STUDENT HOUSING AUTHORITY
NOTES TO THE FINANCIAL STATEMENTS
NOTE1. GENERALSTATEMENT
Page 7
Texas Student Housing Authority (the "Authority"), a higher education authority, was
established on January 23, 1995, as a duly constituted authority of the Town of
Westlake (the Town), Texas, pursuant to Section 53.11 of Chapter 53 of the Texas Education
Code, as amended. The Authority's purpose among other things is to acquire, finance, and
operate student housing facilities and to provide scholarships to students from High Schools
and Community Colleges in Texas. The Authority operates several student housing projects in
Texas. The accompanying financial statements do not present the projects, but the
scholarship administration of the Authority.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the Authority's significant accounting policies consistently applied in the
preparation of the accompanying financial statements follows:
Reporting Entity
For financial reporting purposes, management has considered all potential component
units. The decision to include a potential component unit in the reporting entity was made
by applying the criteria set forth in GASB Statement No. 14 as amended by GASB
statement No. 39. The criteria used are as follows:
Financial Accountability -The primary government is deemed to be financially
accountable if it appoints a voting majority of the organization's governing body and (1)
it is able to impose its will on that organization or (2) there is a potential for the
organization to provide specific financial benefits to, or impose specific financial
burdens on, the primary government. Additionally, the primary government may be
financially accountable if an organization is fiscally dependent on the primary
government regardless of whether the organization has a separately elected governing
board appointed by a higher level of government or a jointly appointed board.
Measurement Focus and Basis of Accounting
Measurements focus refers to what is being measured; basis of accounting refers to when
revenues and expenditures are recognized in the accounts and reported in the financial
statements. The Authority uses the economic resources measurement focus and the
accrual basis of accounting. The economic resources measurement focus means all
assets and liabilities (whether current or non current) are included on the statement of net
assets and the operating statement present increases (revenues) and decreases
(expenses) in net total assets under the accrual basis of accounting, revenues are
recognized when earned, and expenses are recognized at the time the liability is incurred.
In applying the requirements of GASB Statement No. 20, the Authority has chosen to apply
all applicable GASB pronouncements as well as Financial Accounting Standards Board
pronouncements issued on or before November 30, 1989, unless those pronouncements
conflict with or contradict GASB pronouncements.
TEXAS STUDENT HOUSING AUTHORITY
NOTES TO THE FINANCIAL STATEMENTS
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -CONTINUED
Income Taxes
Page 8
The Authority is an instrumentality of the Town and, therefore, its income is not subject to
federal income taxation pursuant to Section 115 of the Internal Revenue Code.
Cash and Cash Equivalents
The Authority considers all highly liquid investments with maturity of three months or less
when purchased to be cash equivalents. At August 31, 2005, the Authority had no such
investments included in cash and cash equivalents. For additional disclosures on cash see
Note 3.
Accounts Receivable
Accounts receivable are stated at amounts management expects to collect from
outstanding balances. At year end management assesses the accounts receivable
balance and establishes a valuation allowance based on historical experience and an
evaluation of the outstanding balances. As of August 31, 2005, management has
determined that all accounts doubtful of collection have been charged to operations and an
allowance is not required.
Capital Assets
Texas Student Housing Authority utilizes space within the Town of Westlake offices and
does not have capital assets at this time.
NOTE 3. CASH AND INVESTMENTS
The Public Funds Investment Act (Government Code Chapter 2256) contains specific
provisions in the areas of investment practices, management reports and establishment of
appropriate policies relating to a governmental entity's cash and investments.
Disclosure Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the
fair value of an instrument. Generally, the longer the maturity of an investment the greater
the sensitivity of its fair value to changes in market interest rates. Texas Student Housing
Authority is not significantly exposed to interest rate risk as all investments earn a variable
rate.
TEXAS STUDENT HOUSING AUTHORITY
NOTES TO THE FINANCIAL STATEMENTS
NOTE 3. CASH AND INVESTMENTS-CONTINUED
Disclosure Relating to Credit Risk
Page9
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to
the holder of the investment. This is measured by the assignment of a rating by a
nationally recognized statistical rating organization. The Public Funds Investment act has
a minimum rating that is required for investments. Texas Student Housing Authority holds
all of its cash and investments with commercial banks in liquid investments.
Concentration of Credit Risk
Texas Student Housing Authority holds no investments at August 31, 2005 and is not
exposed to concentration of credit risk.
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository
financial institution, a government will not be able to recover its deposits or will not be able
to recover collateral securities that are in the possession of an outside party. The custodial
credit risk for investments is the risk that, in the event of the failure of the counterparty to a
transaction, a government entity will not be able to recover the value of its investment or
collateral securities that are in the possession of another party. The Public Funds
Investment Act does not contain legal or policy requirements that would limit the exposure
to custodial credit risk for deposits or investments, other than the following provision for
deposits: The Public Funds Investment Act requires that a financial institution secure
deposits made by state or local governmental units by pledging securities in an undivided
collateral pool held by a depository regulated under state law (unless so waived by the
governmental unit). The market value of the pledged securities in the collateral pool must
equal at least the bank balances less FDIC insurance at all times.
As of August 31, 2005, the Authority's cash balances totaled $479,393 (bank balance of
$479,393) of the bank balance, $100,000 was covered by federal depository insurance
while the remaining amount was collateralized by a Bank Deposit Guarantee Bond from
the Authority's depository in the amount of $2,000,000.
NOTE 4. NET ASSETS
Net assets represents the residual assets after liabilities are deducted. These assets are
reported as follows.
Unrestricted Net Assets consists of the portion of net assets after Invested in Capital Assets,
Net of Related Debt and Restricted for net assets has been satisfied. At August 31, 2005, the
Authority has no restricted net assets or capital assets. All net assets are unrestricted.
TEXAS STUDENT HOUSING AUTHORITY
NOTES TO THE FINANCIAL STATEMENTS
NOTE 5. CONCENTRATIONS
Page 10
The Authority services scholarships for Texas students attending Texas higher education
facilities and is dependent upon the geographic areas and the higher education facilities in
Texas.
NOTE 6. RELATED PARTY TRANSACTIONS
The Authority's transactions are made up significantly of payment to the Town of Westlake and
payments to the Authorities properties. Total payments to the Town of Westlake and the
properties were $24,102 and $197,431, respectively for the period ended August 31, 2005.
In addition, the Town of Westlake charges an oversight fee to the Authority. The fee of
$50,000 is included in accounts payable at August 31, 2005. The Authority also received
revenue of $159,807 related to its oversight of the various properties.
SUPPLEMENTAL INFORMATION
TEXAS STUDENT HOUSING AUTHORITY
BUDGETARY COMPARISON SCHEDULE
YEAR ENDED AUGUST 31, 2005
Original and Final
Budgeted amounts Actual
Revenues
Basic property administration $ 187,653 $ 159,807
Scholarship administration 151,170 344,382
Interest income 6,000 14,808
Other income 54,750 25,327
Total revenues 399,573 544,324
Expenditures:
Scholarship expense 67,700 197,431
Labor expenses 195,000 173,126
Professional fees 50,000 48,836
Oversight fee 50,000 50,000
Office expense and other 28,800 15,062
Total expenses 391,500 484,455
Change in Net Assets
over expenses 8,073 59,869
Net assets -beginning of year 341,299 341,299
Net assets -end of year $ 349,372 $ 401 '168
Page 11
Variance with
Final Budget
Positive (Negative)
($ 27,846)
193,212
8,808
29,423)
144,751
129,731)
21,874
1,164
13,738
92,955)
51,796
$ 51,796