HomeMy WebLinkAboutTSHA Audit 08-31-13TEXAS STUDENT HOUSING AUTHORITY
FINANCIAL REPORT
AUGUST 31, 2013
TEXAS STUDENT HOUSING AUTHORITY
TABLE OF CONTENTS
AUGUST 31, 2013
Page
Number
FINANCIAL SECTION
Independent Auditors’ Report ............................................................................................. 1 – 2
Management’s Discussion and Analysis ............................................................................ 3 – 4
Financial Statements:
Statement of Net Position ................................................................................................ 5
Statement of Revenues, Expenses and Changes in Net Position ..................................... 6
Statement of Cash Flows ................................................................................................. 7
Notes to Financial Statements .......................................................................................... 8 – 11
SUPPLEMENTAL INFORMATION
Budgetary Comparison Schedule ........................................................................................ 12
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FINANCIAL SECTION
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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, TX), as of and for the year ended August
31, 2013, and the related notes to the financial statements, which collectively comprise the Authority’s
basic 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 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 of the
financial statements.
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401 WEST HIGHWAY 6 P. O. BOX 20725 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
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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 Authority as of August 31, 2013 and the respective changes in
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 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 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 of the limited procedures do
not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming an opinion on the financial statements that
collectively comprise the Authority’s financial statements. The budgetary comparison schedule is
presented for purposes of additional analysis and is not a required part of the basic financial statements.
The budgetary comparison schedule is the responsibility of management and was derived from
and relates directly to the underlying accounting and other records used to prepare the basic financial
statements. Such information has been subjected to the auditing procedures applied in the audit of the
basic financial statements and certain additional procedures, including comparing and reconciling such
information directly to the underlying accounting and other records used to prepare the basic financial
statements or to the basic financial statements themselves, and other additional procedures in accordance
with auditing standards generally accepted in the United States of America. In our opinion, the
budgetary comparison schedule is fairly stated, in all material respects, in relation to the financial
statements as a whole.
January 14, 2014
MANAGEMENT’S
DISCUSSION AND ANALYSIS
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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, 2013. 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
$405,274, an increase of $118,368 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 $449,720, an
increase of $131,900 over the prior fiscal year.
All revenues are generated from management of the properties and scholarship
activity of the authority and totaled $819,381. Total expenses incurred were
$701,013.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the Authority’s basic financial
statements. The Authority’s report consists of three parts, Management’s Discussion and Analysis, the
basic financial statements, and notes to financial statements. The basic financial statements include a
statement of net position, statement of revenues, expenses and changes in net position, a statement of
cash flows and supplemental schedules.
The statement of net position presents information on the Authority’s assets and liabilities with the
difference between the two reported as net position.
The statement of revenues, expenses and changes in net position accounts for all of the Authority’s
revenues and expenses regardless of when cash is paid or received.
The statement of cash flows reflects cash inflows and outflows by operating, noncapital financing and
capital related financing activities during the year.
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NOTES TO THE FINANCIAL STATEMENTS
The notes provide additional information that is essential to a full understanding of the data provided in
the financial statements.
ECONOMIC FACTORS AND NEXT YEAR’S BUDGET
It is anticipated that fiscal year 2013/2014 will end with less income to the Authority as we have less
scholarships at our facilities in Austin, Texas.
CONTACTING THE AUTHORITY’S FINANCIAL MANAGEMENT
This financial report is designed to provide the reader with a general overview of the Authority’s finances
and to demonstrate the Authority’s accountability for the money it receives. If you have any questions
about this report, or need additional information, please contact Pete Ehrenberg at (817) 490-5723.
FINANCIAL STATEMENTS
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ASSETS
Current assets:
Cash 449,720$
Accounts receivable 973
Total current assets 450,693
Total assets 450,693
LIABILITIES
Current liabilities:
Accrued liabilities 5,591
Unearned revenue 39,828
Total liabilities 45,419
NET POSITION
Unrestricted 405,274
Total net position 405,274$
The accompanying notes are an integral part of these financial statements.
TEXAS STUDENT HOUSING AUTHORITY
STATEMENT OF NET POSITION
AUGUST 31, 2013
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OPERATING REVENUES
Basic property administration220,187$
Scholarship value 422,100
Scholarship administration 176,783
Total operating revenues 819,070
OPERATING EXPENSES
Scholarship 422,100
Scholarship expense 112,395
Labor 117,061
Professional fees 6,000
Office and other 43,457
Total operating expenses 701,013
OPERATING INCOME 118,057
NONOPERATING REVENUES (EXPENSES)
Interest income 311
Total nonoperating revenues (expenses)311
CHANGE IN NET POSITION 118,368
NET POSITION, BEGINNING 286,906
NET POSITION, ENDING 405,274$
The accompanying notes are an integral part of these financial statements.
TEXAS STUDENT HOUSING AUTHORITY
STATEMENT OF REVENUES, EXPENSES
FOR THE YEAR ENDED AUGUST 31, 2013
AND CHANGES IN NET POSITION
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CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from scholarships and scholarship properties396,970$
Cash paid to contract services6,000)(
Cash paid to others 259,381)(
Net cash provided for operating activities 131,589
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received 311
Net cash provided by investing activities 311
NET CHANGE IN CASH AND CASH EQUIVALENTS 131,900
CASH AND CASH EQUIVALENTS, BEGINNING 317,820
CASH AND CASH EQUIVALENTS, ENDING 449,720$
RECONCILIATION OF OPERATING GAIN TO
NET CASH USED FOR OPERATING ACTIVITIES
Operating gain 118,057$
Adjustments to reconcile operating income to
net cash provided (used) by operating activities:
Accrued liabilities5,591
Deferred revenue 7,941
Net cash provided for operating activities 131,589$
The accompanying notes are an integral part of these financial statements.
TEXAS STUDENT HOUSING AUTHORITY
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED AUGUST 31, 2013
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TEXAS STUDENT HOUSING AUTHORITY
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2013
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, 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 Authoritys in Texas. The accompanying
financial statements do not present the Authoritys, 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 and 61. The criteria used is 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) 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.
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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 position 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 Position 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, 2013, 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, 2013, 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, 2013, 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, 2013, the Authority’s cash balances totaled $449,720 (bank balance of
$464,709). 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 $214,709.
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B. Net Position
Net position represent the residual assets after liabilities are deducted. These assets are
reported in the following categories:
Unrestricted Net Position consists of the portion of net position after net
investment in capital assets and restricted for net position has been satisfied. At
August 31, 2013, the Authority has no restricted net position or capital assets. All
net position is 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 usually charges an oversight fee to the Authority. The town did not
charge a fee in FY 2013. The Authority also received revenues of $220,187 related to its
oversight of the various properties.
SUPPLEMENTAL INFORMATION
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BudgetActualVariance
REVENUES
Basic property administration217,140$ 220,187$ 3,047$
Scholarship value422,100 422,100 -
Scholarship administration177,480 176,783 697)(
Interest income - 311 311
Total revenues 816,720 819,381 2,661
EXPENSES
Scholarships422,100 422,100 -
Scholarship expense106,600 112,395 5,795)(
Contract labor116,640 117,061 421)(
Professional fees6,000 6,000 -
Contingency fund100,000 - 100,000
Office and other 28,950 43,457 14,507)(
Total expenditures 780,290 701,013 79,277
CHANGE IN NET POSITION 36,430 118,368 81,938
NET POSITION, BEGINNING 286,906 286,906 -
NET POSITION, ENDING 323,336$ 405,274$ 81,938$
FOR THE YEAR ENDED AUGUST 31, 2013
TEXAS STUDENT HOUSING AUTHORITY
BUDGETARY COMPARISON SCHEDULE
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