HomeMy WebLinkAboutTSHA Audit 08-31-11TEXAS STUDENT HOUSING AUTHORITY
FINANCIAL REPORT
AUGUST 31, 2011
TEXAS STUDENT HOUSING AUTHORITY
TABLE OF CONTENTS
AUGUST 31, 2011
FINANCIAL SECTION
Page
Number
Independent Auditors' Report............................................................................................. 1 -2
Management's Discussion and Analysis............................................................................ 3-4
Financial Statements:
Statement ofNet Assets................................................................................................... 5
Statement of Revenues, Expenses and Changes in Net Assets........................................ 6
Statement of Cash Flows . ....... ...... ......................... ..................... ................................. .. .. 7
Notes to Financial Statements.......................................................................................... 8-11
SUPPLEMENTAL INFORMATION
Budgetary Comparison Schedule........................................................................................ 12
IH~'ll
PATTI L L 0, B R 0 W N & HILL, r..L.P.
CERTIFIED PUBLIC ACCOUNTANTS. BUSINESS CONSULTANTS
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Texas Student Housing Authority
Westlake, Texas
We have audited the accompanying financial statements of Texas Student Housing Authority (the
"Authority") (a component unit of the Town of Westlake), as of and for the year ended August 31, 2011,
which collectively comprise the Authority's basic financial statements, as listed in the table of contents.
These financial statements are the responsibility of the Authority's management. Our responsibility is to
express an opinion on these fmancial 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 the 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 ofthe Texas Student Housing Authority as of August 31, 2011, and the respective
changes in its financial position, and cash flows, where applicable, thereof for the year then ended in
conformity with accounting principles generally accepted in the United States of America.
Accounting principles generally accepted in the United States of America require that the
management's discussion and analysis on pages 3 through 4 be 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.
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401 WEST HIGHWAY 6 • P. 0. BOX20725 • WACO, TX 76702-0725 • (254) 772-4901 • FAX: (254) 772-4920 • www.pbhcpa.com
AFFILIATE OFFICES: BROWNSVILLE, TX (956) 544-7778 • HILLSBORO, TX (254) 582-2583
TEMPLE, TX (254) 791-3460 • ALBUQUERQUE, NM (505) 266-5904
Our audit was conducted for the purpose of forming an opinion on the financial statements that
collectively comprise the Authority's financial statements as a whole. The accompanying supplemental
information on page 12 is presented for purposes of additional analysis and is not a required part of the
financial statements. The supplemental information is the responsibility of management and was
derived from and relate directly to the underlying accounting and other records used to prepare the
financial statements. The information has been subjected to the auditing procedures applied in the audit
of the financial statements and certain additional procedures, including comparing and reconciling such
information directly to the underlying accounting and other records used to prepare the financial
statements or to the financial statements themselves, and other additional procedures in accordance with
auditing standards generally accepted in the United States of America. In our opinion, the information is
fairly stated in all material respects in relation to the financial statements as a whole.
f oiJi.Jk, f5 A.WJN~-f 1/j}j L. L. f.
I I
January 11, 2012
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MANAGEMENT'S
DISCUSSION AND ANALYSIS
MANAGEMENT'S DISCUSSION AND ANALYSIS
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, 2011. We encourage readers to consider the information
presented herein in conjunction with the Authority's financial statements. The Authority is a component
unit 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's Discussion and Analysis-for State and Local Governments has been implemented. The
reader should note that this financial report addresses only the financial condition 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
$584,703, an increase of $59,253 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 cash balances were $578,277, an
increase of$49,185 over the prior fiscal year.
• All revenues are generated from management of the properties and scholarship
activity of the authority and totaled $921,549. Total expenses incurred were
$862,296.
OVERVIEW OF THE FINANCIAL STATEMENTS
This 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's Discussion and Analysis, the
basic financial statements, and notes to financial statements. The basic financial statements include a
statement of net assets, statement of revenues, expenses and changes in net assets, a statement of cash
flows and supplemental schedules.
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 all of 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, noncapital financing and
capital related financing activities during the year.
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NOTES TO THE FINANCIAL STATEMENTS
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
It is anticipated that fiscal year 201112012 will end with less income to the Authority as we have
increased scholarships at our facility in College Station.
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 any questions
about this report, or need additional information, please contact Pete Ehrenberg at (817) 490-5723.
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FINANCIAL STATEMENTS
TEXAS STUDENT HOUSING AUTHORITY
STATEMENT OF NET ASSETS
AUGUST 31, 2011
ASSETS
Current assets:
Cash $ 578,277
Accounts receivable 36,432
Total current assets 614,709
Total assets 614,709
LIABILITIES
Accounts payable 2,753
Unearned revenue 27,253
Total liabilities 30,006
NET ASSETS
Unrestricted 584,703
Total net assets $ 584,703
The accompanying notes are an integral part of these financial statements.
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TEXAS STUDENT HOUSING AUTHORITY
OPERATING REVENUES
Basic property administration
Scholarship value
Scholarship administration
Total operating revenues
OPERATING EXPENSES
Scholarship
Scholarship expense
Labor
Professional fees
Office and other
Total operating expenses
OPERATING INCOME
STATEMENT OF REVENUES, EXPENSES
AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED AUGUST 31, 2011
NONOPERATING REVENUES (EXPENSES)
Interest income
Total nonoperating revenues (expenses)
CHANGE IN NET ASSETS
NET ASSETS, BEGINNING
NET ASSETS, ENDING
The accompanying notes are an integral part of these financial statements.
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$ 254,731
504,000
162,679
921,410
504,000
209,721
113,929
5,765
28,881
862,296
59,114
139
139
59,253
525,450
$ 584,703
TEXAS STUDENT HOUSING AUTHORITY
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED AUGUST 31, 2011
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from scholarships and scholarship properties $ 398,846
Cash paid to contract services ( 5,765)
Cash paid to others ( 344,035)
Net cash provided for operating activities 49,046
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received 139
Net cash provided by investing activities 139
NET CHANGE IN CASH AND CASH EQUIVALENTS 49,185
CASH AND CASH EQUIVALENTS, BEGINNING 529,092
CASH AND CASH EQUIVALENTS, ENDING $ 578,277
RECONCILIATION OF OPERATING GAIN TO
NET CASH USED FOR OPERATING ACTIVITIES
Operating gain $ 59,114
Adjustments to reconcile operating income to
net cash provided (used) by operating activities:
Accounts receivable ( 18,564)
Prepaid assets 12,724
Accounts payable 269
Deferred revenue ( 4,497)
Net cash provided for operating activities $ 49,046
The accompanying notes are an integral part of these financial statements.
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TEXAS STUDENT HOUSING AUTHORITY
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2011
I. GENERAL STATEMENT
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, fmance, 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.
II. 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:
A. 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 is as follows:
Financial Accountabilitv -The primary government is deemed to be fmancially
accountable if it appoints a voting majority of the organization's governing body and
1) is able to impose its will on that organization; or 2) there is a potential for the
organization to provide specific fmancial benefits to, or impose specific fmancial
burdens on, the primary government. Additionally, the primary government may be
fmancially 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.
(continued)
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II. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
B. Measurement Focus and Basis of Accounting
Measurement 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 noncurrent) 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.
Private-sector standards of accounting and financial reporting issued prior to December 1,
1989, generally are followed in both the government-wide and proprietary fund financial
statements to the extent that those standards do not conflict with or contradict guidance of the
Governmental Accounting Standards Board. Governments also have the option of following
subsequent private-sector guidance for their business-type activities and Enterprise Funds,
subject to this same limitation. The government has elected not to follow subsequent private-
sector guidance.
C. Assets, Liabilities and Net Assets or Equity
Income Taxes
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, 2011, the Authority had no such
investments included in cash and cash equivalents.
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, 2011, 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.
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III. DETAILED NOTES ON ALL FUNDS
A. 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.
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.
Credit Risk
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.
Concentration of Credit Risk
Texas Student Housing Authority holds no investments at August 31, 2011, 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 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, 2011, the Authority's cash balances totaled $578,277 (bank balance of
$578,278). Of the bank balance, $250,000 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$228,278.
(continued)
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III. DETAILED NOTES ON ALL FUNDS (Continued)
B. Net Assets
Net assets represent the residual assets after liabilities are deducted. These assets are
reported in the following categories:
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, 2011, the Authority has no restricted net assets or capital assets.
All net assets are unrestricted.
C. Concentrations
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.
D. Related Party Transactions
The Town of Westlake charges an oversight fee to the Authority. The fee of $0 is included
in expenses at August 31, 2011. The Authority also received revenues of $254,731 related to
its oversight of the various properties.
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SUPPLEMENTAL INFORMATION
TEXAS STUDENT HOUSING AUTHORITY
BUDGETARY COMPARISON SCHEDULE
FOR THE YEAR ENDED AUGUST 31, 2011
Budget Actual Variance
REVENUES
Basic property administration $ 315,483 $ 254,731 $( 60,752)
Scholarship value 504,000 504,000
Scholarship administration 177,100 162,679 ( 14,421)
Interest income 139 139
Total revenues 996,583 921,549 ( 75,034)
EXPENDITURES
Scholarships 504,000 504,000
Scholarship expense 279,810 209,721 70,089
Contract labor 120,000 113,929 6,071
Professional fees 5,500 5,765 ( 265)
Contingency fund 25,000 25,000
Office and other 31,780 28,881 2,899
Total expenditures 966,090 862,296 103,794
CHANGE IN NET ASSETS OVER EXPENSES 30,493 59,253 28,760
NET ASSETS, BEGINNING 525,450 525,450
NET ASSETS, ENDING $ 555,943 $ 584,703 $ 28,760
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