1996 RHDC Financial and Compliance Reportu
ROSEMEAD HOUSING
DEVELOPMENT CORPORATION
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FINANCIAL AND COMPLIANCE REPORT
JUNE 30, 1996
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CONTENTS
INDEPENDENT AUDITOR'S REPORT ON THE
FINANCIAL STATEMENTS I
FINANCIAL STATEMENTS
Balance sheet - governmental fund type and general fixed assets account group 2
' Statement of revenue, expenditures and changes in fund balance (deficit) -
governmental fund type 3
Statement of revenue, expenditures and changes in fund balance - budget and
actual - governmental fund type 4
Notes to financial statements 5 -9
' REPORTS REQUIRED BY GOVERNMENT AUDITING STANDARDS
Independent auditor's report on:
' Compliance based on an audit of the general purpose financial statements 10
Internal control structure I 1 and 12
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N McGLADREY&PULLEN, LLP
® Certified Public Accountants and Consultants
INDEPENDENT AUDITOR'S REPORT ON THE
FINANCIAL STATEMENTS
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We conducted our audit in accordance with generally accepted auditing standards and
' "Governmental Auditing Standards" issued by the Comptroller General of the United States.
Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
To the Governing Board
Rosemead Housing Development Corporation
Rosemead, California
We have audited the accompanying general purpose financial statements of Rosemead Housing
Development Corporation, a component unit of the Redevelopment Agency of the City of
Rosemead, California, as of and for the year ended June 30, 1996. These general purpose
financial statements are the responsibility of the Corporation's management. Our responsibility
is to express an opinion on these general purpose financial statements based on our audit.
RSM
international
' In our opinion, the general purpose financial statements referred to above present fairly, in all
material respects, the financial position of the Rosemead Housing Development Corporation as
of June 30, 1996, and the results of its operations for the year then ended in conformity with
generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued a report dated
' October 21, 1996 on our consideration of the entity's internal control structure and a report dated
October 21, 1996 on its compliance with laws and regulations.
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' Pasadena, California
October 21, 1996
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Suite 300
140 South Lake Avenue
Pasadena, California 91101-2651
(818) 795-7950 PAX (818) 795-9820
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ROSEMEAD HOUSING DEVELOPMENT CORPORATION
BALANCE SHEET - GOVERNMENTAL FUND TYPE
AND GENERAL FIXED ASSETS ACCOUNT GROUP
June 30, 1996
11 Assets
I' Cash and investments
Other assets
Property and Equipment
Liabilities and Fund Balance
Governmental
Account
Fund Type
Group
General
Totals
General
Fixed
(Memorandum
Only)
Fund
Assets
1996
1995
$ 89,460
$
$ 89,460 $
125,600
_
_
2,214
-
3,469,867
3,469,867
3,438,323
$ 89,460
$ 3,469,867
$ 3,559,327 $
3,566,137
Current Liabilities
Accounts payable $ 3,027 $ $ 3,027 $ 162,048
Deposits 14,243 14,243 14,001
17,270 17,270 176,049
Corporation Equity
Investment in general fixed assets $ - $ 3,469,867 $ 3,469,867 $ 3,438,323
Fund balance, unreserved 72,190 - 72,190 (48,235)
72,190 3,469,867 3,542,057 3,390,088
Total liabilities and corporation
equity $ 89,460 $ 3,469,867 $ 3,559,327 $ 3,566,137
See Notes to Financial Statements.
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ROSEMEAD HOUSING DEVELOPMENT CORPORATION
STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN
FUND BALANCE (DEFICIT) - GOVERNMENTAL FUND TYPE
Year Ended June 30, 1996
1995
General (Memorandum
Fund Only)
Revenue:
Contribution from the Rosemead Redevelopment Agency $ 200,000 S 2,200,000
Rental income 161,350 40,766
Miscellaneous 3,798 905
Expenditures:
Improvements to project area
Operating
Professional fees
City administrative services
Revenue over expenditures
Fund balance (deficit), beginning
Fund balance (deficit), ending
See Notes to Financial Statements.
365,148 2,241,671
31,544 1,600,992
109,930 98,917
13,249 51,974
90,000 140,000
244,723 1,891,883
120,425 349,788
(48,235) (398,023)
$ 72,190 $ (48,235)
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ROSEMEAD HOUSING DEVELOPMENT CORPORATION
STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND
BALANCES - BUDGET AND ACTUAL - GOVERNMENTAL FUND TYPE
Year Ending June 30, 1996
General Fund
Over
(Under)
Budget
Actual
Budget
Revenue:
Contribution from the Rosemead Redevelopment Agency
$ 475,100
$ 200,000
$ (275,100)
Rental income
Other
150,000
161,350
3,798
11,350
3,798
625,100
365,148
(259,952)
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Expenditures:
Current
Improvements to project area
Operating
Professional fees
City administrative services
Revenue over expenditures
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Fund balance (deficit), beginning
Fund balance, ending
See Notes to Financial Statements.
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31,544
31,544
549,100
109,930
(439,170)
16,000
13,249
(2,751)
60,000
90,000
30,000
625,100
244,723
(380,377)
$ 120,425 $ 120,425
(48,235)
$ 72,190
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I Fund accounting
ROSEMEAD HOUSING DEVELOPMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 1. Reporting Entity, Nature of Operations, Description of Funds and Account Group,
and Significant Accounting Policies
The Rosemead Housing Development Corporation (the Corporation) was established to account
for the construction, financing and operations of low and moderate income housing. It is a
California nonprofit public benefit corporation organized under Section 501(c)(3) of the Internal
Revenue Code. The Corporation is a component unit of the Rosemead Redevelopment Agency
(the Agency) and the Agency is included in the combined financial statements of the City of
Rosemead (the City). The Corporation has the same fiscal year as the City and the Agency.
These financial statements contain information for the Corporation only.
The financial statements of the Corporation have been prepared in conformity with generally
accepted accounting principals (GAAP) as applied to government units. The Governmental
Accounting Standards Board (GASB) is the accepted standard-setting body for establishing
governmental accounting and financial reporting principles. The more significant of the
Corporation's accounting principles are described below:
' The accounts of the Corporation are organized on the basis of funds or account groups, each of
which is considered to be a separate accounting entity. The operations of each fund are
accounted for by providing a separate set of self-balancing accounts which comprise its assets,
liabilities, equity, revenue and expenditures. The various funds and account groups are presented
as follows:
Governmental Fund Type, General Fund
All receipts are allocated to this fund. The primary. sources of revenue are contributions from
the Rosemead Redevelopment Agency and rental income from tenants of the senior housing
units. General operating expenses are paid out of this fund.
Account Group, the General Fixed Assets Account Group accounts for all Corporation
general fixed assets.
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I means collectible within the current period or soon enough thereafter to pay current liabilities.
ROSEMEAD HOUSING DEVELOPMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 1. Reporting Entity, Nature of Operations, Description of Funds and Account Group,
and Significant Accounting Policies, Continued
The following is a summary of the significant accounting and reporting policies:
Basis of accounting
Governmental fund type is accounted for using the modified accrual basis of accounting.
Revenue is recognized in the accounting period in which it becomes both measurable and
available. "Measurable" means the amount of the transaction can be determined. "Available"
In determining when to recognize intergovernmental revenue, the legal and contractual
t requirements of the individual programs are used as guidance. There are, however, essentially
two bases for this revenue recognition. In one, monies must be expended on the specific purpose
or project before any amounts may be recognized by the Agency; therefore, revenue is
recognized based upon the expenditures recorded. In the other, monies are virtually unrestricted
as to purpose of expenditure and nearly irrevocable, i.e., revocable only for failure to comply
with prescribed compliance requirements, such as equal employment opportunity. These
resources are reflected as revenue at the time of receipt or earlier if they meet the criterion of
availability.
' Expenditures are recognized in the accounting period in which the fund liability is incurred, if
measurable.
Property and equipment
All property, building and leasehold improvements of the Corporation are accounted for in the
general fixed assets account group. Property items acquired or constructed for general
governmental operations are recorded as expenditures in the fund making the expenditure and
capitalized in the General Fixed Assets Account Group.
All general fixed assets which were purchased or constructed are stated at cost. Assets acquired
by gift or bequest are recorded at their fair market value at the date of transfer. No depreciation
is recorded on general fixed assets.
Income taxes
The Rosemead Housing Development Corporation is exempt from federal income taxes under
Section 501(c)(3) of the Internal Revenue Code and a similar exemption under State law.
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ROSEMEAD HOUSING DEVELOPMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 1. Reporting Entity, Nature of Operations, Description of Funds and Account Group,
and Significant Accounting Policies, Continued
Fund balances
Unreserved fund balance represents the amount available for future appropriations-
"Memorandum Only" columns
Included on the combined financial statements are total columns captioned "Memorandum Only"
to indicate that they are presented only for informational purposes. Adjustments to eliminate
interfund transactions have not been recorded in arriving at such amounts and the memorandum
totals are not intended to fairly present the financial position or results of operations of the
reporting entity taken as a whole.
Additionally, the 1995 totals presented in the "Memorandum Only" columns are included to
provide a summarized comparison with comparable 1996 amounts and are not intended to
present all information necessary for a fair presentation of financial position and results of
operations in accordance with generally accepted accounting principles.
Budget matters
Budgets presented in this report for comparison to actual amounts are presented in accordance
with generally accepted accounting principles. Reported budget amounts represent the original
adopted budget as amended.
Unexpended budgeted amounts lapse at the end of the budget year. The legal level of budgetary
control is at the entity level.
Note Z Cash and Investments
Cash
Cash at June 30, 1996 consisted of cash in bank. The carrying amount of the Agency's deposits
was $89,460 and the bank balance was $89,806. All of the bank balance was covered by federal
depository insurance.
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ROSEMEAD HOUSING DEVELOPMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS
I Note 2. Cash and Investments, Continued
In accordance with state statutes, the Agency maintains deposits at those depository institutions
insured by the Federal Deposit Insurance Corporation. The California Government Code
requires California banks and savings and loan associations to collateralize the deposits of
governmental entities by pledging government securities as collateral. The market value of
pledged securities must equal at least 110% of those deposits. California law also allows
' financial institutions to secure the deposits of governmental entities by pledging first trust deed
mortgage notes having a collateral value of 150% of an agency's total deposits.
' Investments
State statutes authorize the Agency to invest any available funds in securities issued or
' guaranteed by the United States Treasury or agencies of the United States, bank certificates of
deposit, bankers acceptances, negotiable certificates of deposit, the State Treasurer's Investment
Pool, repurchase agreements, commercial paper and bonds, and registered warrants or treasury
notes of the State of California and its local agencies.
The Corporation did not have any investments as of June 30, 1996.
' Note 3. Reimbursement Agreements and Related Party Transactions
The Corporation has entered into various reimbursement agreements with the City of Rosemead
' which require the City to provide administrative services, facilities and other operating services.
The Corporation paid $90,000 to the City for these services during the year ended June 30, 1996.
The Corporation is funded by contributions from the Rosemead Redevelopment Agency.
Note 4. Property and Equipment
During the year ended June 30, 1996, the changes in the general
fixed assets were as follows:
Balance
Balance
June 30,
June 30,
1995
Acquisitions 1996
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Land $ 1,837,331
$ - $ 1,837,331
Building and improvements 1,600,992
31,544 1,632,536
$ 3,438,323
$ 31,544 $ 3,469,867
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I ROSEMEAD HOUSING DEVELOPMENT CORPORATION
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NOTES TO FINANCIAL STATEMENTS
I Note S. Risk Management
The Corporation is exposed to various risks of loss related to torts; thefts of, damage to and
destruction of assets; errors and ommissions; and natural disasters. Since the Corporation does
not have any employees (it uses employees from the City of Rosemead), it is not liable for injury
to employees, workers' compensation and employee health and accident insurance.
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McGLADREY&PULLEN, LLP RSM
a Certified Public Accountants and Consultants international
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE BASED
ON AN AUDIT OF THE GENERAL PURPOSE FINANCIAL STATEMENTS
a To the Governing Board
Rosemead Housing Development Corporation
Rosemead, California
We have audited the general purpose financial statements of the Rosemead Housing
Q Development Corporation, a component unit of the Redevelopment Agency of the City of
Rosemead, California, as of and for the year ended June 30, 1996, and have issued our report
thereon, dated October 21, 1996.
We conducted our audit in accordance with generally accepted auditing standards and
"Government Auditing Standards," issued by the Comptroller General of the United States.
Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement.
Compliance with laws, regulations, contracts and grants applicable to the Rosemead Housing
Development Corporation is the responsibility of the entity's management. As part of obtaining
reasonable assurance about whether the financial statements are free of material misstatement,
we performed tests of the entity's compliance with certain provisions of laws, regulations,
contracts and grants. However, the objective of our audit of the financial statements was not to
provide an opinion on overall compliance with such provisions. Accordingly, we do not express
such an opinion.
p The results of our tests disclosed no instances of noncompliance that are required to be reported
u herein under Government Auditing Standards.
This report is intended for the information of the governing board and management of the
Rosemead Housing Development Corporation. However, this report is a matter of public record
and its distribution is not limited.
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Pasadena, California
October 21, 1996
Suite 300
140 South Lake Avenue
Pasadena, California 91101-2651
(818) 795-7950 FAX(818)795-9820
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Worldwide
Services
Through
RSM International
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Q ,`G McGLADREY&PULLEN, LLP RSM
® Certified Public Accountants and Consultants international
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL STRUCTURE
a To the Governing Board
Rosemead Housing Development Corporation
Rosemead, California
We have audited the general purpose financial statements of the Rosemead Housing
Development Corporation, a component unit of the Redevelopment Agency of the City of
Rosemead, California, as of and for the year ended June 30, 1996, and have issued our report
thereon, dated October 21, 1996.
We conducted our audit in accordance with generally accepted auditing standards and
"Government Auditing Standards," issued by the Comptroller General of the United States.
Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement.
The management of the Rosemead Housing Development Corporation, is responsible for
establishing and maintaining an internal control structure. In fulfilling this responsibility,
estimates and judgments by management are required to assess the expected benefits and related
costs of internal control structure policies and procedures. The objectives of an internal control
structure are to provide management with reasonable, but not absolute, assurance that assets are
safeguarded against loss from unauthorized use or disposition, and that transactions are executed
in accordance with management's authorization and recorded properly to permit the preparation
of financial statements in accordance with generally accepted accounting principles. Because of
inherent limitations in any internal control structure, errors or irregularities may nevertheless
occur and not be detected. Also, projection of any evaluation of the structure to future periods is
subject to the risk that procedures may become inadequate because of changes in conditions or
I that the effectiveness of the design and operation of policies and procedures may deteriorate
In planning and performing our audit of the financial statements of the Rosemead Housing
Development Corporation, as of and for the year ended June 30, 1996, we obtained an
understanding of the internal control structure. With respect to the internal control structure, we
obtained an understanding of the design of relevant policies and procedures and whether they
have been placed in operation, and we assessed control risk in order to determine our auditing
procedures for the purpose of expressing our opinion on the financial statements and not to
provide an opinion on the internal control structure. Accordingly, we do not express such an
opinion.
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Suite 300
140 South Lake Avenue
Pasadena, California 91101-2651
(818) 7957950 FAX (818) 795-9820
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Worldwide
Services
Through
RSM International
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Our consideration of the internal control structure would not necessarily disclose all matters in
the internal control structure that might be material weaknesses under standards established by
the American Institute of Certified Public Accountants. A material weakness is a condition in
which the design or operation of one or more of the internal control structure elements does not
reduce to a relatively low level the risk that errors and irregularities in amounts that would be
material in relation io the financial statements being audited may occur and not be detected
within a timely period by employees in the normal course of performing their assigned functions.
We noted no matters involving the internal control structure and its operations that we consider
to be material weaknesses as defined above.
' This report is intended for the information of the governing board and management of the
Rosemead Housing Development Corporation. However, this report is a matter of public record
and its distribution is not limited.
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Pasadena, California
October 21, 1996
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